2Q2024 investment sales up 52.6% q-o-q, bolstered by government land sales: Savills

By Nur Hikmah Md Ali

/ EdgeProp Singapore |

July 24, 2024 5:07 PM SGT

The largest office deal in 2Q2024 was Mapletree Pan Asia Commercial Trusts’ divestment of Mapletree Anson at $775 million (Photo: EdgeProp Singapore)

SINGAPORE (EDGEPROP) - Real estate investment sales saw a 52.6% quarterly rise to $6.48 billion in 2Q2024, according to Savills Research’s sales and investments quarterly report.

The growth was backed by higher proceeds from government land sales (GLS), including four residential sites and one industrial site, which were awarded for $3.16 billion during the period in review. This is more than double the amount recorded during the previous quarter and represents the highest proceeds from state residential land sales so far in a single quarter.

The highest quantum recorded for a GLS private residential site was for the Zion Road (Parcel A) site. The 164,439 sq ft site was awarded to a joint venture between CDL and Mitsui Fudosan in April at $1.107 billion, or $1,202 psf per plot ratio.

Revival in luxury home sales

The private sector saw an increase in investment sales value by 14% q-o-q to $3.32 billion in 2Q2024. Transaction volume grew 30.8% q-o-q from 65 deals in 1Q2024 to 85 in 2Q2024.

The report attributes the growth to a revival in the luxury residential market. A total of 52 homes — 40 landed properties and 12 luxury condos — priced at $10 million and above were sold in 2Q2024. This is up 30% from the 40 luxury homes sold in 1Q2024, and on a par with the 53 transactions seen in the same period last year.

Alan Cheong, executive director of research and consultancy at Savills Singapore, says the figures suggest that the buying sentiment in the luxury housing market has gradually returned to the level before the impact of the increase in additional buyer’s stamp duty and the money-laundering case last year.

The largest landed home transaction by absolute value in 2Q2024 was the sale of a new bungalow in the Bin Tong Park Good Class Bungalow Area for $84 million, or $2,988 psf based on a land area of 28,111 sq ft.

In the non-landed residential property segment, the sale of a 7,761 sq ft penthouse on the 57th floor of the 190-unit Skywater Residences was the most expensive condo deal in 2Q2024. The unit was reportedly purchased by a US citizen for $47.3 million, or $6,100 psf.

Overall, including the GLS sites sold, the residential sector accounted for $4.06 billion of investment sales in 2Q2024, surging 115.8% q-o-q and making up 62.6% of total investment value for the quarter.

Retail deals slow, but office market picks up

The commercial property sector also saw an increase in sales in 2Q2024, rising by 16.7% q-o-q to $1.52 billion. This made up 23.5% of the quarter’s total transaction value.

The expansion was driven by four office block transactions, the largest being Mapletree Pan Asia Commercial Trusts’ divestment of Mapletree Anson on Anson Road in Tanjong Pagar. The 19-storey office building was sold at $775 million. The other three transactions were for smaller office buildings outside the core CBD.

On the other hand, retail malls saw a significant slowdown in investment activity, recording only one deal in 2Q2024 — Paragon Reit’s divestment of The Rail Mall for $78.5 million. The report attributes the slowdown to the limited stock of properties for sale.

Investment sales in the industrial sector also declined, by 32.1% q-o-q to $272 million in 2Q2024. This came from 11 deals involving one industrial GLS site at Plot 8 Jalan Papan in Jurong, and 10 properties in the private sector. Overall, the industrial sector accounted for only 4.2% of investment sales value in 2Q2024.

Meanwhile, the mixed-use property sector generated $628.9 million in investment sales last quarter, driven by the sales of Delfi Orchard ($439 million), Fraser Residence River Promenade ($140.9 million) and Sin Ming Centre ($49 million). The deals contributed 9.7% of total investment sales in 2Q2024.

Cheong observes that while borrowing costs remain elevated, the prospect of a rate cut this year may lift sentiments. If the sale of large ticket commercial properties continues, the investment market will see a return of momentum, he adds.

He maintains his total investment sales forecast range of $22 billion to $23 billion for 2024, up from the $19.7 billion recorded last year.

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