Singapore investment sales to grow 5% per annum in 2019-2024

Tim BeerApril 15, 2020

Singapore Marina area

Property investment sales in Singapore is projected to grow 5% per year in the longer term over 2019 to 2024 even as this year’s sales is expected to drop 24% year-on-year, revealed a Colliers International report.

The Ministry of Trade and Industry’s (MTI) advance estimates showed that the city-state’s gross domestic product (GDP) contracted 2.2% year-on-year during the first quarter of 2020 – its worst decline since the global financial crisis.

 Some of the biggest deals registered in Q1 2020 include five residential public land sales totalling $1.4 billion as well as two properties that were transferred during the merger of Frasers Logistics and Industrial Trust (FLT) and Frasers Commercial Trust (FCOT) – namely, China Square Central for $648 million and Alexandra Technopark for $606 million.

 “In the absence of big-tickets deals, the residential sector led the quarter’s total investment volume for the first time since Q3 2018 at 51%. Developers’ sentiment is still cautious, judging from the relatively robust number of bidders but subdued bid prices during the land tenders,” said Tricia Song, Head of Research for Singapore at Colliers International.

 In Q1 2020, residential transactions surged 68.5% quarter-on-quarter to $2.0 billion on strong public land sales. Although developer had cautiously bid for the Government Land Sales sites due to market uncertainties, buyers’ demand “remained sustained at new condominium launches as well as in landed housing and Good Class Bungalow (GCB) sales”.

 Market sentiment is expected to recover in the longer run, underpinning an average annual growth of 12% over 2019 to 2024.

 Commercial investment sales, on the other hand, slumped 46.9% quarter-on-quarter and 35.4% year-on-year to $758 million, possibly due to price mismatch and fewer investible assets, coupled by the impact of Covid-19 outbreak and the slowdown in office rental growth.

Nonetheless, Colliers expect this year’s commercial real estate activities to match the levels achieved in 2019 primarily on the upcoming materialisation of the merger of CapitaLand Malls Trust (CMT) and CapitaLand Commercial Trust (CCT) in the second quarter.

“The commercial sector remains the most attractive for investors, as short-term disruption could give way to long-term opportunities. Investors should remain on the lookout for assets and position for a recovery. A significant rebound in H2 in Singapore is possible, given Singapore’s strong policy response to COVID-19, reinforcing its safe haven status,” said Jerome Wright, Senior Director of Capital Markets at Colliers International.

Meanwhile, industrial investment sales dropped 50.8% quarter-on-quarter, even as sales doubled to $1.1 billion in Q1 2020, anchored by FLT’s purchase of Alexandra Technopark and Ho Bee Land’s tender for Biopolis Phase 6 site.

“We forecast merger and acquisitions in the industrial property sector to pick up in the second half. Full-year volume, however, should ease from a strong 2019. Industrial assets remain attractive to qualifying investors due to their higher yields,” said Steven Tan, Senior Director of Capital Markets at Colliers International

Eugenia Rosaline Shlaen at PropertyGuru edited this story. To contact her e-mail eugenia@propertyguru.com.sg 

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