MENU

Preliminary property investment sales volume in Q4 2018 slowed by 59% QoQ

by • December 14, 2018 • Research and AnalysisComments (0)499

Preliminary property investment sales volume in Q4 2018 eased by 59% QoQ to S$3.17 billion, said CBRE. On a YoY basis, the 2018 volume reflected a slowdown of 12.5% YoY to S$31.4 billion, the prominent real estate services firm noted.

Muted activity in residential land sales in H2 2018
With property developers vying to shore up their land bank, 31 residential collective sale sites were transacted at a total of S$9.69 billion in the first half of 2018, said CBRE. Such exuberance in the residential collective sale market was subsequently severely curtailed by the cooling measures introduced in July 2018. Consequently, the residential collective sale market in the second half of 2018 dipped to just three deals at S$484.08 million. Moving ahead, developers are expected to continue to be discerning in land acquisition due to heftier costs.

Office sector continues to attract new foreign investors

Despite the slowing property investment sales volume, Singapore remains a hot favorite as an investment destination in 2018, said the report.

CBRE noted that based on the PWC-ULI Emerging Trends in Real Estate Asia Pacific 2019 survey, Singapore climbed one place to the second position in terms of investment prospects.

property investment sales volume

Image credit: Keppel Reit Management

Mr Desmond Sim, Head of Research, Singapore and Southeast Asia, said: “Underpinned by strong rental growth in the occupier market, the office sector continues to gather pace with steady investor interest in office buildings. We noted several new investors making their foray into the Singapore office market this quarter.”

These included Allianz Real Estate’s acquisition of a 20% stake in Ocean Financial Centre, the acquisition of Manulife Centre by a joint venture between ARA and Chelsfield, and a direct 25% stake purchase by Kenedix in Capital Square. There was also the acquisition of 78 Shenton Way led by PGIM Real Estate.

Hotels are back in favor
The report noted that with effect from August 2018, URA revised its approach on development applications for sites that are not zoned or permitted for hotel use. This was on the back of increasing international visitor numbers and higher demand for hotel rooms. As a result, more property developers acquired sites from the private market to convert them into hotel use.

This despite the slowing property investment sales volume, since there were few hotel sites made available for sale via the GLS program.

These included Worldwide Hotels Pte Ltd’s purchase of Golden Wall Centre at S$276.2 million, Fragrance Group’s acquisition of Waterloo Apartments at S$131.1 million and the sale of Darby Park Executive Suites to Royal Group Holdings at S$92.71 million.

Mr Jeremy Lake, Managing Director of Capital Markets, says, “Investors are likely to remain discerning in their investments, given the macroeconomic environment, especially with the rising volatility from interest rates and trade tensions. That said, Singapore remains largely a place where investors are motivated by the potential capital appreciation to achieve their target returns. Fundamentals in Singapore’s investment market remain compelling, and it will continue to garner attention from foreign investors.”

An earlier comment by CBRE on 1H 2019 Government Land Sales Program said it was suggestive of ‘Residential on a Diet’. CBRE said that there has been an obvious cutback on the number of residential units, with a total of 6,475 units (including ECs) from the latest GLS Program due to the strong pipeline as mentioned in the announcement.

This a 19.5% reduction from the previous GLS Program for 2H 2018 and it had an effect on the property investment sales volume. CBRE said that the last time it saw this level of total residential units was in 1H 2007 at 5,475 units, which coincided with a collective sales market blitz.

“The 1H 2019 GLS Program also saw a stronger weightage of sites in the Reserve List at 4,450 units, which is about two-third of the total number of units. The Confirmed List is still expected to yield 2,025 units, unlike in 2009 when there were no units allocated in the Confirmed List. This is as some of the sites listed in 1H 2019 Confirmed List are strategically released to support the residential needs from key development areas like one-north and North Coast Innovation Corridor.”

CBRE noted that it was unsurprising that there were no new commercial sites added to the 1H 2019 GLS Program, as there is a foreseeable pipeline of commercial developments post-2021, despite the relatively short supply hiatus in 2019-2021. This decision may have an impact on property investment sales volume.

“On the back of a much-improved tourism market supported by improving visitor arrivals, the hotel industry seeks to add new hotel offerings to match this demand and industry players can trigger sites from the Reserve List when needed. This contrasts with the absence of hotel sites from 2014 to 1H 2018.”

 

How to Secure the Best Commercial Loans Quickly

iCompareLoan is the best loans portal for commercial-property-seekers, buyers, investors and real estate agents alike in Singapore. On iCompareLoan, you will be able to find all the latest news and views, informational guides, bank lending rates and property buying trends, and research data and analysis.

Whether you are looking to buy, sell or refinance apartments, condominiums, executive condos, HDB flats, landed houses or commercial properties, we bring you Singapore’s the most comprehensive and up-to-date property news and best home loans trends to facilitate your property buying decisions.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

Our trademarked Home Loan Report is a Singapore’s first one-of-a-kind analysis platform that provides latest updates of detailed loan packages and helps property agents, financial advisors and mortgage brokers analyse home loan packages for their clients and give unbiased home loan/commercial loan analysis for their property buyers and home owners. Our distinguished Panel of Property Agents who are users of our Home Loan report can give the best all-rounded advise to real estate seekers.

All the services of our mortgage consultants are ABSOLUTELY FREE, which means it’s all worth it to secure a loan through us.

Whether it is best home loans, best commercial loans or refinancing of existing loans or SME loans, CONTACT US TODAY!

Pin It

Related Posts

Simple Share Buttons