Current quarter sees big jump in property investment sales

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(SINGAPORE) Investment sales of Singapore real estate so far this quarter
have hit $953.9 million, a jump of 248 per cent from $273.8 million in the
first quarter, says CB Richard Ellis (CBRE).

The increase came as
residential investment sales quadrupled on the back of a growing number of
high-end condo purchases, a pick-up in transactions of Good Class Bungalows
(GCBs) and the acquisition of a few small residential sites.

The sale of
three office blocks - Parakou and VTB buildings on Robinson Road, and Anson
House - for a total of $259.6 million also helped breathe some life into the
moribund office investment sales market.

Investment sales are a gauge of
developers' and investors' medium to long-term confidence in the property
sector. The pick-up in Q2 was against the backdrop of a dramatic stock-market
rally that has led to an improvement in home buying.

CBRE defines
investment sales as transactions with a value of at least $5 million,
comprising government and private sales of land and buildings, both strata and
en bloc. It also includes change of ownership of real estate via share
sales.

With a tally of $1.2 billion so far in the first half, CBRE
executive director (investment properties) Jeremy Lake reckons full-year
investment sales could come in at $2 billion to $2.5 billion, 'depending on how
long the burst of activity in the residential sector lasts'.

The figure
for the whole of last year was about $18 billion, down from the record $54
billion in 2007.

As for the latest Q2 showing, 63.5 per cent or $605.6
million was from the residential sector.

This sum included 14 GCB
deals, up from just three GCB transactions in the first quarter.

'For
the Singapore investment market, the first movers are the Asian private
investors who are willing to buy at current prices which they deem reflect an
attractive discount from the peak,' Mr Lake said.

'Their sweet spot is
$20 million to $85 million and their focus is office and/or residential
investments.'

On the other hand, institutional investors are mostly
adopting a wait-and-see strategy for Singapore, judging that the fundamentals
are weak and better opportunities will arise in six to 12 months.

'For
second-half 2009 there will be more investment deals, although most of the
owners who wanted or needed to sell have already done so, and accordingly the
choice of investment opportunities could be limited,' Mr Lake said.

Agreeing, DTZ's senior director for investment advisory services Shaun Poh said
investment sales activity may ease slightly in Q3 because of a limited supply
of small investment-quantum commercial properties available for sale.

'However, we may see some deals that are currently cooking being sealed in Q3,'
he said.

'For the residential sector, some developers who have enjoyed
strong sales at their showflats over the past few months are looking to restock
their residential land bank selectively,' he added.

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