View overlooking the condos along Robertson Quay. The overall investment sales value fell by 33.4% q-o-q to a total of nearly $5 billion in 3Q2022. (Picture: Samuel Isaac Chua/The Edge Singapore)
EDGEPROP (SINGAPORE) - According to a market investment report by Savills Singapore, residential investment sales grew 6.6% q-o-q to reach $3.58 billion in 3Q2022. This is the second consecutive quarter that this sector has clocked an increase and extends the 7.4% q-o-q growth recorded in 2Q2022.
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Last quarter, residential investment sales comprised 72% of the total investment sales value for the entire real estate investment market. This is up from just 45% in 2Q2022. Meanwhile, commercial investments made up 14% of the total investment value last quarter and industrial sales comprised 13%.
However, the overall investment sales value fell by 33.4% q-o-q to a total of nearly $5 billion in 3Q2022. This is the lowest level since 1Q2021, when the sales figure totalled $3.89 billion. On a yearly basis, the investment sales value last quarter was still 32.5% lower than the same period in 2022.
Private residential investment sales last quarter stemmed from larger collective sales deals and a healthy take-up of new launches. Moreover, dwindling landbanks are encouraging developers to consider private collective-sale sites, says Savills.
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The largest collective sale so far this year is the $890 million sale of Chuan Park, which was sold jointly to Chinese developers Kingsford Development and MCC Land in July.
In the industrial sector, sales also clocked in a second consecutive quarterly increase to $673.4 million, more than tripling its $198.1 million performance in 2Q2022. Savills attributes this surge to more and bigger-sized deals. The largest deal last quarter was the acquisition of a cold storage facility by Ascendas Reit for $191.9 million last month.
Conversely, commercial investment sales as a proportion of total investment sales contracted from 30.3% in 2Q2022 to just 14.4% last quarter. This is due to the lack of major transactions as the only notable sale was that of OCN Building for $42 million. (Find Singapore commercial properties with our commercial directory)
According to Alan Cheong, head of Savills Research, “higher and rising interest rates are reining in institutional investors who are sensitive to the net income versus interest expense ratios”, but smaller transaction sizes of under $150 million attract family offices, high-net-worth individuals, boutique private equity and corporate entities.
“[This non-institutional group is] ramping up their action plans here as increasing geopolitical instabilities push funds towards safe havens. For this sub-group of investors, interest rates take a backseat in their decision-making processes as some do not even borrow for a purchase,” says Cheong.
Looking ahead, he says market activity for the rest of this year will likely be dominated by small to medium sized transactions, particularly in the shophouse and strata space markets.