SINGAPORE: Real estate investment activity in Singapore shrank to about US$4bil (RM18bil) in the first quarter – the lowest quarterly volume registered since the fourth quarter of 2020, at the height of the Covid-19 pandemic, according to a Colliers International report.
Despite a number of residential collective sales and industrial deals, overall real estate investment volume plunged more than 63% in the first quarter, from US$10.9bil (RM48bil) in the same period in 2022.
Analysts cited the volatile interest rate environment and the recent turmoil in the United States banking sector following the collapse of Silicon Valley Bank and the merger of Credit Suisse and UBS Group.
But despite more investors taking a wait-and-see posture, Singapore’s safe-haven appeal remains due to its sound economic and property market fundamentals.
On a quarter-on-quarter (q-o-q) basis, residential investment sales in Singapore gained 17.4% to nearly US$1.6bil (RM7bil).
This is due in part to the three freehold condo collective sales that went through – Meyer Park in Marine Parade, Bagnall Court in Upper East Coast Road and Holland Tower in Holland Heights – which amounted to US$583.8mil (RM2.59bil).
This is the highest quarterly volume for residential collective sales since the fourth quarter of 2021. It suggests that developers are looking to acquire freehold sites, according to Catherine He, head of research for Colliers, and Tang Wei Leng, its managing director and head of capital markets and investment services.
In the second quarter, residential investment activity will likely be dominated by the sale of government land sites, and luxury properties, whose buyers are less affected by the higher mortgage rates, they noted.
Knight Frank Singapore in its investment sales report said that investors were interested in freehold properties in choice locations in the first quarter.
It noted that Holland Tower was the first successful residential collective sale in the prime district since the December 2021 round of property cooling measures.
“This suggests a nascent return of interest in prime location development sites after China opened its borders. Nevertheless, the en bloc environment remains challenging with a seeming gulf in sellers’ and developers’ price expectations,” Knight Frank said.
As for commercial sales, Colliers said these dropped 53.4% q-o-q to around US$1.3bil (RM5.8bil) due to macroeconomic uncertainties and higher interest rates, which make larger assets less digestible.
Two major deals supported this segment: the sale of 39 Robinson Road, a 21-storey freehold commercial building, to mainboard-listed Yangzijiang Shipbuilding for US$399mil (RM1.77bil), and the sale of a 50% stake in Serangoon Mall Nex for US$652.5mil (RM2.89bil).
Industrial sales jumped 91.9% in the first quarter, with deals such as the sale and leaseback of Jardine Cycle and Carriage’s warehouse and showroom portfolio for US$333mil (RM1.48bil) and Ho Bee Land’s disposal of 12 Tannery Road and 31 Tannery Lane for US$115mil (RM510mil).
The J’Forte Building at 26 Tai Seng Street was sold for US$98.8mil (RM438mil) to the Boustead Industrial Fund.
Despite the cautious mood, Knight Frank noted that outbound real estate investment from Singapore was active in the first quarter, hitting US$19.3bil (RM86bil), up 76.7% q-o-q.
This could be because “assets in gateway locations are becoming more attractively priced due to the stormy global economic situation”, it said.
Between January and March 2023, notable deals included City Developments’ acquisition of the St Katharine Docks development in London for US$636mil (RM2.8bil) and the purchase of Suning Life Plaza in Beijing for US$553mil (RM2.45bil) by CapitaLand Investment.
Nonetheless, Knight Frank said financing has become more challenging for buyers, investors, developers and banks and will remain so until there are clear signs of the global economy and financial conditions stabilising. — The Straits Times/ANN
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