http://www.straitstimes.com/Money/St...ry_618492.html

Dec 29, 2010

Property investment hits $21.4b

Boom year for market driven by Govt's bumper release of land

By Esther Teo


THE investment market for property has enjoyed a boom year with the amount pumped into the sector almost four times that of last year.

Investment in this context is defined as any deal worth more than $5 million in the public and private markets and so includes government land sales (GLS), en bloc deals and commercial building purchases.

Property consultancy Knight Frank said more than $21.4 billion was invested in these markets, putting last year's $5.8 billion well in the shade.

But it is still below the 2007 total of $40 billion, when collective sales alone amounted to a record $12 billion.

Knight Frank said the figures this year were driven by the Government's bumper release of state land and kept buoyant by the economy's strong rebound, healthy investor sentiment and a robust residential market.

Residential sector transactions - including GLS sites snapped up by developers replenishing depleted land banks - dominated investment deals, accounting for 40 per cent of total transactions.

The commercial sector was also relatively active, accounting for 25 per cent - or $5.3 billion - of total investment sales.

Although there were fewer commercial transactions this year, there were some deals in excess of $1 billion, which boosted the tally over last year's $3.3 billion.

These include the sale of Chevron House in Raffles Place to German fund Deka Immobilien for $547 million and Suntec Real Estate Investment Trust's purchase of about 580,000 sq ft of office space in Marina Bay Financial Centre at $1.5 billion, including rental support.

The second half of the year also saw more non-residential GLS sites introduced into the market as the economy gained momentum and foreigners began looking for real estate opportunities, Knight Frank said.

The firm added that strategically located mixed-use, hotel and industrial sites were released and received healthy interest. These included the white site at the corner of Peck Seah Street and Choon Guan Street in Tanjong Pagar which was sold for $1.71 billion to GuocoLand last month.

In all, a total of $10.2 billion worth of GLS sites were sold this year.

Mr Png Poh Soon, head of research and consultancy at Knight Frank, said the outlook for investment sales in the first half of next year is generally optimistic in all sectors.

'Strong economic fundamentals and good governance place Singapore as a healthy and attractive country for foreign investors looking for investment opportunities and local property players to expand further,' added Mr Png.

Tourism is poised to build on this year's rebound, lifting the retail and hotel sectors, thanks in part to the opening of Marina Bay Sands and Resorts World Sentosa.

On the commercial front, Central Business District rents have also bottomed out and appear to have entered the early stages of recovery.

'The near completion of Marina Bay Financial Centre and Ocean Financial Centre will leave older office buildings in the traditional Raffles Place area with refurbishment or upgrading potential open for investors who are keen to participate in the up cycle,' Mr Png added.

Low interest rates and high liquidity should ensure that foreign funds continue to show interest, said Knight Frank.

Strong economic growth and rising wages will also fuel demand for mass-market homes, with larger collective sales providing another source of development land in the coming year.

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