In Q3, Singapore's real estate investment sales increased by 24.8% on a quarterly bas

In Q3, Singapore's real estate investment sales increased by 24.8% on a quarterly basis to S$8.3 billion

In the meantime, residential deals' value drops 24.7% on a quarterly basis to S$3.2 billion.

October 8, 2024

CONDOsingapore.com

According to a Knight Frank Singapore report released on Tuesday (Oct. 8), there have been indications of a recovery in real estate investment activity in Singapore since the US Federal Reserve announced a 0.5% rate cut in September, which gave the market some hope.

According to data gathered by the real estate consulting firm, total sales of real estate investments reached S$8.3 billion in Q3, up 24.8 percent from S$6.7 billion in the previous quarter and 30.5% from S$6.4 billion in the same period last year.

The public sector made S$2.3 billion of the total sales in Q3, while the private sector made S$6 billion.

Quarter over quarter (qoq), the value of residential deals dropped 24.7% to S$3.2 billion. According to Knight Frank, government land sales (GLS) sites accounted for 74.2% of these transactions. Two state plots at Jalan Loyang Besar and Zion Road (Parcel B) were awarded in August for S$557 million and S$730.1 million, respectively.

Additionally, the value of residential investment sales was influenced by the sale of a number of Good Class Bungalows (GCBs) during the quarter. According to Knight Frank, two GCBs at Belmont Road were sold for S$73.7 million and S$57.7 million in July, while a GCB at Tanglin Hill was transacted for S$93.9 million.

No successful collective sale deals were closed in Q3, despite five launches in the collective sales market. "Collective sales for larger sites continued to be challenging, especially for residential developments," according to Knight Frank.

According to the real estate consultancy, developers have greater opportunities at GLS sites because of the "easing land prices" of these locations.

Knight Frank's head of capital markets (land and collective sale), Chia Mein Mein, stated: "Boutique developers continue to seek out landed houses with sizeable land areas or'mini landed en blocs' of several adjoining houses, especially in prime areas where the land size has the flexibility to be subdivided and redeveloped into multiple homes, as developers are reticent towards the larger collective sale plots."

The total sales value in the commercial property segment increased to S$2.7 billion, up 37.2% from Q2, after CapitaLand Integrated Commercial Trust paid S$1.8 billion to acquire a 50% stake in Ion Orchard (including Ion Orchard, Ion Orchard Link, Ion Art Gallery, and Ion Sky) from CapitaLand Investment last month.

At the same time, industrial property sales activity increased to S$2.5 billion, up 567.6% on a quarterly basis and 426.6% on an annual basis.

"This was because in August, Lendlease and Warburg Pincus purchased a S$1.6 billion portfolio of seven industrial properties from a Blackstone and Soilbuild real estate investment trust," Knight Frank explained.

In Q3, sales in the outbound sector were approximately S$3.2 billion, a decrease of 29.3% on a quarterly basis and 39.1% on a year-over-year basis. High interest rates and ongoing international tensions were to blame for this.

Knight Frank, however, anticipates that the recent announcement of interest rate reductions will encourage more outbound investment from Singapore before the year is out.

With the interest rate reduction, the mood of the market appears to be improving overall.

According to Daniel Ding, head of capital markets (land and building, international real estate) at Knight Frank Singapore, "deals that have been brewing prior to the interest rate cut announcement are now likely to surface, especially industrial properties and living sector assets."

According to him, "the brave will increasingly pull the trigger on deals as the bid-ask gap narrows and the prospect of positive carry returns."

According to Knight Frank, mixed-use and commercial developments will have a better chance of succeeding in the current market conditions, even though collective sales are still difficult.

The consultancy projects total property investment sales to fall between S$23 billion and S$25 billion in 2024 and anticipates that the momentum behind investment sales will improve in the upcoming months.