The Business Times | Mar 26, 2013
[SINGAPORE] Investment sales of property - which refer to transactions of $10 million and above - have fallen sharply this quarter from the high base in the preceding quarter, according to preliminary figures from CBRE and Savills provided separately to BT yesterday.
Savills estimates the figure so far this quarter to be at just over $5 billion (although the final tally including yet-to-be-recorded caveats may be slightly higher), down 39 per cent from $8.25 billion in Q4 last year.
While the Q1 2013 figure is just ahead of the $4.96 billion in the same year-ago period, Savills notes that this is one of the lowest levels since Q1 2010, when the market started to recover after the global financial crisis in 2009.
CBRE's numbers painted a similar trend, with $5.13 billion in deals done so far this quarter - 42 per cent lower than $8.88 billion in the preceding quarter but almost on par with the $5.2 billion in Q1 2012. CBRE predicts the final Q1 figure could reach $5.5 billion. Despite the substantial quarter on quarter (Q-on-Q) drop this quarter, CBRE notes that the four quarter-rolling total of $31.39 billion is close to the $31.45 billion for full-year 2012. It remains positive on the outlook for this year and says that the total sales volume is likely to be at least on par with 2012's level, "possibly even surpassing that".
It remains to be seen if 2013 can match last year's showing of significant deals in the commercial property (office and retail) space - including DBS' purchase of a stake in Marina Bay Financial Centre Tower 3 at $1.035 billion, the sale of a half-stake in nex in Serangoon for $825 million and the $519 million sale of Compass Point mall. However, real estate investment trust (Reit) listings involving Singapore assets are expected to provide a fillip to 2013's investment sales tally, says CBRE's executive director for investment properties Jeremy Lake.
Savills' deputy managing director and head of investment sales Steven Ming forecasts $25-27 billion of deals this year. The firm attributes the Q-on-Q drop in the first three months to the Chinese New Year festive season, fewer state land tender awards, and developers and investors choosing to sit on the sidelines following January's cooling measures.
Deals originating from the private sector have slumped 52 per cent or $2.5 billion Q-on-Q to $2.3 billion so far in Q1, while those emanating from the public sector slipped 22 per cent or $739 million to $2.7 billion, based on Savills' figures.
Investment sales in the residential sector declined 31 per cent Q-on-Q to $2.3 billion. Transactions of private homes costing $10 million or more nearly halved, from 50 deals totalling $835 million in Q4 last year to 27 deals ($456 million) in Q1. Demand, especially for high-end condos, has been dampened as foreigners and permanent residents (PRs) stood back to assess the higher additional buyer's stamp duty (ABSD) rates.
Since the start of this year, three collective sales have been sealed at $247.8 million including the $84.18 million sale of Kismis Lodge announced by Jones Lang LaSalle yesterday. This is an improvement from the $60.16 million for two deals in Q4 last year, based on JLL data. "Collective sales are still weak because of limited availability of reasonably-priced sites and the cooling measures which have made it more difficult to persuade foreign owners (including PRs) to agree to an en bloc sale as they would have to pay ABSD on a replacement property purchase," said JLL's regional director (investments) Tan Hong Boon.
Investment sales of commercial property ebbed 46 per cent Q-on-Q to $1.6 billion in Q1. The biggest private-sector transaction was Goldman Sachs' sale of its remaining 51 per cent stake in 16 Collyer Quay to NTUC Income for $336.6 million or around $2,400 psf on net lettable area. CBRE recently brokered the sale of two units on Level 13 of Samsung Hub for $19.2 million or $3,150 psf - surpassing the previous $3,000 psf record for the building. Quatar Airways picked up the vacant units from Arch Capital.
Savills' senior director of regional capital markets Craig Ward notes that the majority of international institutions were net sellers in Singapore in the past two quarters. However, he predicts Singapore commercial property will become more attractive to these players in the coming 12 months, given "continuous changes in the market fundamentals including early signs of rental upside", he added.
Industrial property investment sales rose 8 per cent Q-on-Q to $608 million in Q1. Major deals include A-Reit's acquisition of The Galen in Science Park II.
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