H1 property investment sales double to S$20.2b from year ago
H1 property investment sales double to S$20.2b from year ago. Property investment transactions totaled S$8.2 billion in Q2 2022, bringing the half-year total to S$20.2 billion, an increase of 88.7 percent or nearly double the S$10.7 billion recorded in H1 2021.
Private deals accounted for 76.1 percent of this quarter’s transactions, according to a Knight Frank Research report released on Tuesday (Jul 5), with the commercial sector leading the way with a series of large ticket transactions. Among them are 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).
Chia Mein Mein, Knight Frank’s head of capital markets (land and collective sale), attributes the increase in investor interest in commercial assets to an economic climate of 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 through 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 said.
She also expects more transactions for larger plots of land, citing recent developer interest in 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 strong interest in
According to Chia, sites with appealing attributes such as proximity to amenities such as MRT stations and good views may generate more interest, especially those with the potential to yield up to 300 units. Recent bids under the Government Land Sales programme reached as high as S$1.3 billion for the Dunman Road site, 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.
Singaporean investors appear to be most interested in office and industrial developments among overseas investment opportunities. The largest transactions in Q2 2022 included Sinarmas Land selling a commercial asset in London for approximately S$334 million and Frasers Logistics & Commercial Trust selling a logistics development in the United Kingdom for approximately S$171.7 million.
According to Real Capital Analytics, total outbound investment sales from Singapore totaled S$13.5 billion in the third quarter. “With the encouraging pace of sales and keen interest from both local and foreign stakeholders,” Chia said, “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.” Chia believes that as long as price expectations remain realistic, hospitality asset owners and existing collective sale owners have reason to be optimistic.
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