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Capital market deals jump 40% in 2024, bolstered by interest rate cuts
By Nicholas Lam | December 25, 2024

ION Orchard is an eight-storey retail mall located in the middle of the Orchard shopping belt (Photo: Samuel Isaac Chua / EdgeProp Singapore)

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The total value of capital market property deals in Singapore is estimated to have reached $25.8 billion between January and November this year, according to Wong Xian Yang, head of research for Singapore & Southeast Asia at (C&W). This marks a 40.2% y-o-y increase from the $18.4 billion recorded in 2023. C&W defines capital market transactions as deals with values exceeding $10 million.

According to Wong, almost 60% of the capital market deals were transacted in 2H2024 amid growing investor appetite and fuelled by increased confidence in interest rate cuts by the US Treasury.

Three deals exceeding $1 billion were made in 2024, all of which were transacted in 2H2024.

The highest-value transaction by absolute price was the sale of a 50% stake in ION Orchard mall for $1.85 billion to CapitaLand Integrated Commercial Trust (CICT) on Sept 3. The seller was CapitaLand Investment (CLI). Hong Kong-listed property developer Sun Hung Kai Properties holds the remaining 50% stake.

Read also: Real estate market to see more investment activity as price gap narrows: Colliers



ION Orchard is an eight-storey retail mall in the middle of the shopping belt and linked directly to the Orchard MRT Station, now an interchange for the North-South and Thomson-East Coast Lines. It has a net lettable area of about 623,000 sq ft and is home to over 300 international and local brands. On top of the mall is the 54-storey, 175-unit luxury condo tower, The Orchard Residences.

Mapletree Anson was the highest-valued office deal of the year, selling for $775 million in 2Q2024 (Photo: The Edge Singapore)

Surge of investment in industrial assets

This year’s bump in investment value was underpinned by a surge of investor interest in the industrial sector. In just the first 11 months of 2024, investments in the segment reached $5.6 billion, says C&W’s Wong. This reflects a 174% increase in transaction value from the previous year.

The biggest deal in the industrial sector is the $1.6 billion divestment of a portfolio of seven industrial properties in Soilbuild Business Space REIT to a joint venture (JV) platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. The portfolio totalled 4.5 million sq ft of business parks and specialist facilities across life sciences, technology, advanced manufacturing and logistics.

(Credit: CBRE Research, Cushman & Wakefield)

Soilbuild Business Space REIT is controlled by global asset manager Blackstone and Lim Chap Huat, executive chairman of Soilbuild Group.

The divestment of the portfolio was also the second-largest capital market deal in 2024.

Rounding out the top three highest-valued transactions of the year was the sale of two data centres to Singapore-listed Keppel DC REIT for $1.38 billion. The seller was a 60:40 JV between Keppel and Cuscaden Peak Investments.

The two data centres — Keppel DC Singapore 7 and Keppel DC Singapore 8 — are capable of large-scale data processing and are fully contracted to cloud services, internet enterprises and telecommunications providers.

Read also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM

Keppel DC Singapore 7 and 8 are capable of large-scale data processing (Photo: Keppel)

Wong says transaction volumes in the sector are expected to hit a five-year high. This, he adds, reflects high liquidity in the sector, with investors favouring new economy assets such as prime logistics and life science assets.

According to Tricia Song, CBRE head of research for Singapore and Southeast Asia, investors have been deploying capital to the industrial sector as it was among the few that still had a positive carry amid the high interest rate environment. However, she expects industrial rent growth to moderate heading into 2025, which could impact yields.

Four GLS sites unawarded in 2024

Despite the unsuccessful sale of several Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders continued to form the bulk (42%) of total investment sales for the year.

This year, four GLS sites on the Confirmed List for 2024 failed to be awarded: the 6.5ha master developer white site in the Jurong Lake District (JLD); the 1.73ha white site at Marina Gardens Crescent; the 62,046 sq ft site at Media Circle fully zoned for long-stay serviced apartments (SA2); and a 262,875 sq ft site at Upper Thomson Road (Parcel A) that included an SA2 component.

The top bids for three sites, JLD ($640 psf per plot ratio (ppr)), Marina Gardens Crescent ($984 psf ppr) and Media Circle ($461 psf ppr) were rejected by URA as they were deemed to be too low. Meanwhile, the Upper Thomson Road site closed in June without any bids.

C&W’s Wong says the main reason for the unawarded sites was the tenders’ low bid prices, driven by site-specific concerns such as large land quantum or untested markets. Interest rate concerns and development risk exacerbated these factors, he adds.

Read also: Asia Pacific real estate investment volume up 3% y-o-y in 4Q2023: JLL

CBRE’s Song does not anticipate the trend of unawarded GLS sites to continue in 2025. “The new sites on the Confirmed List are generally well distributed across Singapore to cater to a variety of demand and needs, and most are within [walking distance of] MRT stations and/or amenities.”

C&W’s Wong expects developers to step up their land acquisition activities, although “with caution and selectivity”.

In November, a 50:50 JV between UOL Group and CapitaLand Development agreed to purchase the 255-unit Thomson View condo for $810 million. The price translates to $1,178 psf ppr after factoring in the land betterment charges and lease upgrading premium for a fresh 99 years. The deal was done after the reserve price was reduced from $918 million to $808 million in October.

A 50-50 JV between UOL Group and CapitaLand Development purchased the 255-unit Thomson View condo for $810 million (EdgeProp Singapore)

Thomson View sits on a land plot spanning 504,314 sq ft with a 99-year lease from Apr 1975 and a plot ratio of 2.1. This translated the acquisition price to $1,178 psf ppr. The developer intends to build a 1,240-unit residential project on the 5ha site.

Retail sector shows signs of further recovery

Singapore’s retail sectors showed notable y-o-y growth in investment value. Deals involving retail assets between Jan and Nov reached $3.3 billion, a 149% y-o-y increase compared to last year.

“Investor interest in the retail sector has been rising amid steady operating fundamentals,” says C&W’s Wong.

Concorde Hotel and Shopping Mall sold for about $821 million via collective sale (Photo: Samuel Isaac Chua / EdgeProp Singapore)

The office segment also showed signs of recovery. According to CBRE’s Song, the market recorded $2.37 billion in investment value this year, marking a 15.7% y-o-y increase bolstered by the normalisation of return-to-office trends.

CBRE also observed a narrowing price gap between buyers and sellers, which has supported the recovery of office deals. “Many investors have been targeting attractively priced assets”, says Song.

Conversely, the shophouse market saw a 49.7% y-o-y fall in investment value to $584 million. According to CBRE’s Song, the slump could be attributed to dampened investor sentiments following the money laundering investigations in Aug 2023.

More capital market deals anticipated in 2025

C&W’s Wong remains optimistic about seeing an increase in high-value deals next year. The US Fed is expected to cut interest rates further next year.

“We are optimistic that investment sales volumes will continue to increase in 2025 as investors prepare for a rebound in capital values, driven by lower interest rates.”

He also points out that while overall borrowing costs are falling, they remain higher than pre-pandemic levels. Faced with higher financing costs next year, asset owners could bring more assets to the market as they seek to divest to rebalance their portfolios.

Institutional investors that have been sitting on the sidelines are likely to return to the market, says CBRE’s Song. However, should rate cuts be slower and lower than market expectations, capital markets could face a slower-than-expected recovery.

Barring macroeconomic shocks, CBRE Research expects investment volumes to grow 10% from 2024’s volumes in 2025.


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