H1 property investment sales double to S$20.2b from year ago
H1 property investment sales double to S$20.2b from year ago. The property investment market recorded S$8.2 billion in transactions in Q2 2022, bringing the half-year total to S$20.2 billion — an 88.7 percent increase or nearly double the S$10.7 billion recorded in H1 2021.
According to a Knight Frank Research report released on Tuesday (Jul 5), private deals accounted for 76.1 percent of this quarter’s transactions, with the commercial sector leading the way with a series of large ticket transactions. Westgate Tower (S$677.5 million), Twenty Anson (S$600 million), and a freehold luxury commercial development at 28 and 30 Bideford Road (S$515 million) are among them.
Chia Mein Mein, Knight Frank’s head of capital markets (land and collective sale), attributes the rise in investor interest in commercial assets to an economic environment characterized by rising interest rates, inflation, rising raw material and construction costs, and a protracted war between Russia and Ukraine. “Key factors that could influence such investment decisions include the possibility of capital appreciation and organic growth via recurring rental income, as well as the absence of Additional Buyer’s Stamp Duty (ABSD) rates incurred for commercial developments – a defensible asset class against looming economic uncertainty,” Chia explained.
She also anticipates further growth in transactions for larger plots of land, citing recent developer interest in exploring larger land sizes, such as the sale of Lakeside Apartments to Wing Tai Holdings for S$273.9 million and a developer’s offer for Chuan Park for S$860 million in Q2. a keen interest in Sites with appealing attributes such as proximity to amenities such as MRT stations and good views, according to Chia, may generate more interest, particularly those with the potential to yield up to 300 units.
Recent Government Land Sales bids for the Dunman Road site reached as high as S$1.3 billion, while the plot on Pine Grove (Parcel A) settled at S$671.5 million, bringing the price per square foot per plot ratio to around S$1,350 and S$1,318 respectively. Among overseas investment opportunities, Singaporean investors appear to be most interested in office and industrial developments. Sinarmas Land sold a commercial asset in London for approximately S$334 million, and Frasers Logistics & Commercial Trust sold a logistics development in the United Kingdom for approximately S$171.7 million in Q2 2022.
According to Real Capital Analytics, total outbound investment sales from Singapore in the third quarter totaled S$13.5 billion. “With the encouraging pace of sales and keen interest from both local and foreign stakeholders, total investment sales for the year could exceed expectations to hover within the range of S$32 billion to S$35 billion, barring any other major external headwinds,” said Chia, who is also optimistic about real estate growth in the second half of the year despite a looming recession. Chia believes that hospitality asset owners and existing collective sale owners have reason to be optimistic as long as price expectations remain realistic.
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