Research from Savills shows that the total value of Singapore Real Estate deals dropped by 23.8% to S$4.13 billion in the first quarter compared to the last quarter.
This decline is attributed to a lack of substantial deals, a slow market for certain property types like strata-titled units and shophouses, as well as the fact that a prime site offered in the Government Land Sales program did not sell. Despite the overall dip, retail and hospitality sectors have shown positive growth, aiding the quarter’s investment figures.
Interest in suburban shopping malls remains high due to increased rents and steady customer traffic, leading to two notable deals: The additional stake in Nex by Frasers Centrepoint Trust for S$3,352 per square foot and Allgreen Properties’ acquisition of The Seletar Mall for approximately S$2,900 per square foot.
The resilience of Singapore’s position as a prime business and travel destination has helped the hospitality sector rebound with three deals worth S$556 million, representing 13.5% of the quarter’s total investments. These included Hotel G’s acquisition by Ascott Limited and CapitaLand Wellness Fund for S$238 million; the sale of Citadines Mount Sophia Singapore for S$148 million; and the purchase of Capri by Fraser, Changi City for S$170 million.
Investment sales in the commercial sector reached S$1.3 billion, which was a 20.9% decrease from the prior quarter. The residential sector saw S$1.79 billion in transactions, a 48.5% drop from last quarter.
Conversely, the industrial sector experienced growth with a 25% increase in investment sales to S$375.4 million in Q1, including state and private sector transactions. The top private sector deal was the sale of the high-tech industrial building OneTen Paya Lebar for S$140 million, demonstrating the continued demand for premium data center locations in Singapore.
Jeremy Lake, Managing Director at Savills Singapore, notes that the investment market is picking up, with more activity from both buyers and sellers, particularly in suburban retail and hospitality properties. He anticipates that this trend will persist, reinforced by potential interest rate drops that could stimulate more deals.
Alan Cheong, Executive Director at Savills Singapore, states that a potential U.S. interest rate reduction would benefit Singapore’s property market, especially for institutional-grade properties. Although lower borrowing costs are expected, he predicts that the volume and size of commercial transactions may still not return to pre-pandemic levels and forecasts a total of S$22 to S$23 billion in investment sales for the year.
To view the chart on the first quarter’s investment sales volume by property type, click here.
For the complete first quarter sales and investment briefing, read here.
http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=0&intNewsSitePageId=215647-1&intNewsMonth=4&intNewsYear=2024
