reporter2
26-09-13, 11:19
http://www.businesstimes.com.sg/archive/wednesday/premium/top-stories/reit-flotations-shore-q3-property-investment-sales-20130925
Published September 25, 2013
Reit flotations shore up Q3 property investment sales
Third-quarter tally of more than $13b highest since Q3 2007
By Kalpana Rashiwala [email protected]
[SINGAPORE] Property investment sales - which refer to big-ticket transactions of at least $10 million - have crossed $13 billion this quarter, roughly double the previous quarter and the strongest showing since Q3 2007.
This quarter's figure has been buoyed by three real estate investment trust flotations (involving nearly $5.7 billion in asset sales), two government land sale sites (at Telok Ayer Street and in Yishun totalling $2.35 billion to Frasers Centrepoint) and the $1.16 billion sale of Grand Park Orchard hotel (including Knightsbridge mall) to Bright Ruby Resources, controlled by a Du family from China.
Industry observers are not counting on a repeat performance next quarter.
Figures from Savills Singapore show that investment sales have risen to $13.4 billion from $6.4 billion in Q2 and $8.7 billion in Q3 last year.
The bulk of the current Q3 figure or $9.3 billion came from deals originating from the private sector.
Reflecting the lumpy nature of transactions this quarter, the number of private-sector deals has slipped to 58 from 90 in Q2. Savills attributed this to the rollout of the Total Debt Servicing Ratio (TDSR) framework, the Hungry Ghosts Month and earlier expectations that a QE3 tapering may lead to higher interest rates.
CBRE's preliminary estimate puts this quarter's investment sales tally at $13.02 billion, up from $6.6 billion in Q2. The latest number is the highest since the $13.67 billion in Q3 2007. CBRE's figure for the first nine months of this year is $25.5 billion. Executive director Jeremy Lake reckoned that, assuming the level of activity in the fourth quarter is around the $6 billion average seen in the first two quarters, 2013 could end at about $31 billion. This would be similar to levels in the past two years - at $30.8 billion in 2012 and $30 billion in 2011. Based on CBRE's data, the record annual figure was $43.1 billion in 2007.
Savills forecasts that investment sales would ease to $2-3 billion in the October-December period, which will take the full-year figure to $27-28 billion. Its deputy managing director, Steven Ming, notes that the global economic environment continues to be volatile. "Coupled with the increasing difficulty in obtaining credit on top of expectations of rising interest rates, the investment sales market is expected to face more challenges ahead."
This quarter, the hospitality sector achieved a high note with seven hotels transacted at a total $2.86 billion - making up 21 per cent of the tally. Besides Grand Park Orchard, the other deals included Mandarin Orchard Singapore ($1.18 billion), The Gallery Hotel ($232 million), The Sentosa Resort & Spa ($210.85 million) and Hotel 1929 along Keong Saik Road ($35 million).
Savills Hotels Asia-Pacific managing director Raymond Clement notes that the average transaction price for most recent deals has exceeded $1 million per room.
Despite weaker revenue per available room in the first seven months for Singapore hotels, the republic continues to be attractive to longer-term investors "not only from South-east Asia but further afield, as a safe destination with continued growth prospects", says Mike Batchelor, managing director of Jones Lang LaSalle Hotels. The company and Jones Lang LaSalle brokered the sale of Grand Park Orchard.
Investment sales in the commercial sector have jumped to $4.8 billion from $1.9 billion in Q2, said Savills. The flotation of SPH Reit, which involved the injection of The Paragon and Clementi Mall at respective purchase considerations of $2.5 billion and $570.5 million, boosted the figure. OUE Hospitality Trust also bought Mandarin Gallery for $525 million as part of its IPO.
However, investment sales deals in the residential sector have eased to $1.9 billion from $3.4 billion in Q2. Private-sector transactions fell to $416.9 million from $1.33 billion in Q2 while those in the public sector dropped to $1.5 billion from $2.05 billion.
Transactions in the industrial segment climbed to $1.5 billion from $333.6 million, helped by Soilbuild Business Space Reit's $905.3 million acquisition of seven properties for its IPO.
Published September 25, 2013
Reit flotations shore up Q3 property investment sales
Third-quarter tally of more than $13b highest since Q3 2007
By Kalpana Rashiwala [email protected]
[SINGAPORE] Property investment sales - which refer to big-ticket transactions of at least $10 million - have crossed $13 billion this quarter, roughly double the previous quarter and the strongest showing since Q3 2007.
This quarter's figure has been buoyed by three real estate investment trust flotations (involving nearly $5.7 billion in asset sales), two government land sale sites (at Telok Ayer Street and in Yishun totalling $2.35 billion to Frasers Centrepoint) and the $1.16 billion sale of Grand Park Orchard hotel (including Knightsbridge mall) to Bright Ruby Resources, controlled by a Du family from China.
Industry observers are not counting on a repeat performance next quarter.
Figures from Savills Singapore show that investment sales have risen to $13.4 billion from $6.4 billion in Q2 and $8.7 billion in Q3 last year.
The bulk of the current Q3 figure or $9.3 billion came from deals originating from the private sector.
Reflecting the lumpy nature of transactions this quarter, the number of private-sector deals has slipped to 58 from 90 in Q2. Savills attributed this to the rollout of the Total Debt Servicing Ratio (TDSR) framework, the Hungry Ghosts Month and earlier expectations that a QE3 tapering may lead to higher interest rates.
CBRE's preliminary estimate puts this quarter's investment sales tally at $13.02 billion, up from $6.6 billion in Q2. The latest number is the highest since the $13.67 billion in Q3 2007. CBRE's figure for the first nine months of this year is $25.5 billion. Executive director Jeremy Lake reckoned that, assuming the level of activity in the fourth quarter is around the $6 billion average seen in the first two quarters, 2013 could end at about $31 billion. This would be similar to levels in the past two years - at $30.8 billion in 2012 and $30 billion in 2011. Based on CBRE's data, the record annual figure was $43.1 billion in 2007.
Savills forecasts that investment sales would ease to $2-3 billion in the October-December period, which will take the full-year figure to $27-28 billion. Its deputy managing director, Steven Ming, notes that the global economic environment continues to be volatile. "Coupled with the increasing difficulty in obtaining credit on top of expectations of rising interest rates, the investment sales market is expected to face more challenges ahead."
This quarter, the hospitality sector achieved a high note with seven hotels transacted at a total $2.86 billion - making up 21 per cent of the tally. Besides Grand Park Orchard, the other deals included Mandarin Orchard Singapore ($1.18 billion), The Gallery Hotel ($232 million), The Sentosa Resort & Spa ($210.85 million) and Hotel 1929 along Keong Saik Road ($35 million).
Savills Hotels Asia-Pacific managing director Raymond Clement notes that the average transaction price for most recent deals has exceeded $1 million per room.
Despite weaker revenue per available room in the first seven months for Singapore hotels, the republic continues to be attractive to longer-term investors "not only from South-east Asia but further afield, as a safe destination with continued growth prospects", says Mike Batchelor, managing director of Jones Lang LaSalle Hotels. The company and Jones Lang LaSalle brokered the sale of Grand Park Orchard.
Investment sales in the commercial sector have jumped to $4.8 billion from $1.9 billion in Q2, said Savills. The flotation of SPH Reit, which involved the injection of The Paragon and Clementi Mall at respective purchase considerations of $2.5 billion and $570.5 million, boosted the figure. OUE Hospitality Trust also bought Mandarin Gallery for $525 million as part of its IPO.
However, investment sales deals in the residential sector have eased to $1.9 billion from $3.4 billion in Q2. Private-sector transactions fell to $416.9 million from $1.33 billion in Q2 while those in the public sector dropped to $1.5 billion from $2.05 billion.
Transactions in the industrial segment climbed to $1.5 billion from $333.6 million, helped by Soilbuild Business Space Reit's $905.3 million acquisition of seven properties for its IPO.