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Singapore real estate investment sales tumble in 1Q2019

/ EdgeProp |

April 16, 2019 9:11 PM SGT

Real estate investment sales in Singapore in Q1 this year chalked up $5.3 billion worth of deals across all property segments, according to Colliers International. But this translates into a decline of 21% q-o-q and a fall of 52% y-o-y, as the corresponding period saw a record level of collective sale transactions.

However, the consultancy expects investment activity to pick up and that this will likely include more office and retail deals struck towards the end of the year. For the whole of 2019, total investment volume is expected to reach $38 billion, on a par with last year’s level.

Last quarter, private investment deals were dominated by institutional investors, says Tricia Song, head of research for Singapore at Colliers International. Together with a “bumper quarter” for government land sales, these deals helped to prop up investment sales in the quarter, she adds.

Residential investment sales accounted for $1.7 billion, or 32%, of the total value last quarter. It fell by 82% y-o-y on the back of the July 2018 property cooling measures.

Public land sales surged 17-fold q-o-q and 32% y-o-y to $2.1 billion. Four of the top five transactions last quarter were public land tenders. The largest deal was the Pasir Ris Central mixed-use site that was awarded to companies under Allgreen Properties and Kerry Properties. The winning bid of $700 million works out to $648.48 psf per plot ratio on the gross floor area of 1.02 million sq ft.

Picture: Colliers International

Two other government land plots - an executive condo site at Tampines Avenue 10, and a residential site at Kampong Java Road – were also among the top five largest deals. Colliers expects that the volume of residential investment sales will pick up from June, and more collective sale transactions will be seen towards the end of the year as sentiment improves.

The winning bid for the hotel site on Club Street also set the record price for a 99-year leasehold hotel site. Interest in acquiring hotel sites is likely to persist over the next few years as more potential conversion projects and major hospitality deals materialise, says Govinda Singh, executive director of valuation and advisory services at Colliers International.

Incentive schemes under the Draft Master Plan 2019 could also spark interest in the redevelopment of older office buildings in the CBD into mixed developments with hotel and residential components, he adds.

Commercial deals brought in $1.1 billion last quarter, climbing 307% y-o-y. Industrial investment sales also doubled y-o-y to $555 million, and more manufacturers are looking to acquire industrial properties for business expansion. Meanwhile, institutional investors and Reits are expected to continue to pick up strategic acquisitions over the next few years, and to capitalise on the steady office rental growth and supply shortfall from 2019 to 2021.

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