En bloc deals, hotels shine in property investment sales

[mr funny]

http://www.businesstimes.com.sg/sub/...32120,00.html?

Published March 26, 2011

En bloc deals, hotels shine in property investment sales

This despite overall investment sales so far this quarter falling from the high base in Q42010, report CBRE and Savills

By KALPANA RASHIWALA


COLLECTIVE sales and hotels have been two bright stars in the property investment sales sector so far this quarter, despite overall investment sales since the start of the year falling from the high base in the fourth quarter of 2010, according to CB Richard Ellis (CBRE) and Savills Singapore in separate reports.

Savills said that investment sales of property have slipped about 43 per cent quarter on quarter, from $11.8 billion in Q4 last year to $6.7 billion so far this quarter.

However, the quarter-to-date figure for Q1 2011 was 31.9 per cent higher than that for Q1 2010.

The declines were generally across the residential, commercial and industrial property segments following the high base in Q4 2010 when several mega deals were recorded, such as K-Reit Asia's and Suntec Reit's respective purchases of a one-third stake each in Marina Bay Financial Centre's phase one for $1.43 billion and $1.5 billion, as well as the then newly listed Sabana Reit's acquisition of its industrial properties, noted Savills.

The property consultancy includes deals of all sizes for land and block/bulk transactions; however, for individual strata-titled units (such as apartments and office units) and shophouses, it counts deals only if they are at least $10 million.

CBRE's report also showed a decline in investment sales from $11.3 billion in Q4 last year to $7.2 billion this quarter. However, the latest figure is 66.6 per cent ahead of the Q1 2010 number.

CBRE executive director (investment properties) Jeremy Lake said: 'The impact from Japan's recent earthquake and unfolding geopolitical events is likely to affect Singapore's growth to some extent. Total investment sales could exceed $20-25 billion this year, but is unlikely to match last year's $29.38 billion.'

These figures are based on CBRE's revised minimum price criterion for an investment sale deal of $10 million, instead of $5 million previously.

Savills executive director and head of investment sales Steven Ming said that the big challenge for real estate investors today is 'buying into a right opportunity at sensible pricing'.

'We're in a very unique market where there is abundant liquidity and cheap financing but against a backdrop of global uncertainties. The resultant effect is a shift among investors to income-yielding assets and (thus), a compression of yields in the office and industrial sectors.'

Savills said that the number of homes with over $10 million price tags has dropped significantly, probably due to the latest Jan 13 property cooling measures.

On a brighter note, the property consultancy highlighted a pickup in collective sales activity with four transactions in Q1 of over $100 million each - compared with only three such deals between 2008 and 2010.

'However, the jury is still out whether this will see the larger collective sale sites being sold.'

CBRE said that there have been seven collective sales so far this quarter totalling $603.7 million, compared with nine deals at $511.5 million in the preceding quarter.

Total residential investment sales including Good Class Bungalows accounted for 43 per cent of the quarter's total investment sales or $3.1 billion in transacted value. This was 21.5 per cent lower than the $3.96 billion residential investment deals in the October-December 2010 period but 51.7 per cent higher than the $2.05 billion tally for Q1 2010.

Savills said that there had been only one bulk sale of apartments in new developments this quarter - Straits Trading's $50.8 million purchase of 14 units in The Holland Collection.

'Investors remain interested but are generally expecting a deeper bulk discount to buffer the impact of the seller's stamp duty. However, vendors are not prepared to entertain these discounts at this stage as strata sales are still taking place albeit at a slower but steady rate and prices are holding.'

CBRE said that the hotel sector burst into life in Q1 with $875 million of deals done to date or a 12.1 per cent share of total investments sales through three Government Land Sale sites and two private-sector deals.

The office investment market has also been active this quarter, accounting for 26.6 per cent or $1.9 billion of total investment sales, CBRE said.

The biggest transaction was Alpha Investment Partners and NTUC Income's purchase of Capital Square from Ergo Insurance for $889 million or $2,300 per square foot of net lettable area.

Retail space made up $738 million or 10.2 per cent of total investment sales in Q1.

CapitaMall Trust picked up Iluma in the Bugis area for $295 million.

The industrial sector accounted for 7.9 per cent of total investment sales or $570.1 million, said CBRE.

[mr funny]

http://www.straitstimes.com/Money/St...ry_650038.html

Mar 28, 2011

Investment property sales doing well

It's up 67% in Q1, year on year, although down 36% from last quarter

By Cheryl Lim


SALES of investment properties in Singapore have surged by about two-thirds - or 67 per cent - to hit $7.23 billion in the first three months of this year, compared with the same period last year, says a recent report released by CB Richard Ellis (CBRE).

However, compared with a peak in the fourth quarter of $11.3 billion, the number is a drop of about 36 per cent.

Investment sale transactions include deals on residential property, government and private sales of land and buildings, both strata-titled and en bloc. They also include change of ownership of real estate via share sales.

Private sector deals made up a majority of this quarter's total investment sales, accounting for $4.36 billion with public sector sales picking up the remaining 40 per cent or $2.87 billion.

Residential property transactions - at $3.11 billion - made up a significant portion of this quarter's total investment sales. This figure was 22 per cent weaker than the sales recorded in the preceding fourth quarter of last year, but almost 50 per cent higher than the amount chalked up in the first quarter of last year.

The report also noted that residential en bloc sales were particularly active this quarter. Earlier this month, Newton View a condominium near to Novena MRT station sold for $147.6 million sale. Several mega en bloc sites that have failed previously, like former Ulu Pandan HUDC Pine Grove, are also back on the market.

Mr Jeremy Lake, CBRE's executive director for investment properties, said: 'The property cooling measures introduced by the Government have caused some uncertainty in the residential investment sales market, with lower transaction volumes expected for 2011.'

'The tougher investment conditions in the residential sector have shifted some investor attention to other sectors, but there is also a growing price gap between the asking and expected prices,' he said.

CBRE's report also highlighted how hotel investment sales in the first quarter of this year totalled $874.76 million, making up 12 per cent of total investment sales.

This was achieved mainly through three government land sale hotel sites, including the $194.77 million transaction for the site at Gopeng Street and Peck Seah Street, and two private sector deals.

According to a separate report by Savills, office investment sales enjoyed a bullish start this year. Most recently, Capital Square was sold for $889 million and One Finlayson Green for $227 million.

Savills believes there is an upside for international grade A office space both in terms of rentals and capital gains.

However, it predicts that rental growth for the rest of the CBD office market may begin to plateau towards the end of this year and early next year as more offices come onstream.

Mr Steven Ming, head of investment sales at Savills, said: 'We are in a unique market where there is abundant liquidity and cheap financing, but against a backdrop of global uncertainties.'

'The resultant effect is a shift among investors to income-yielding assets and as such, a compression of yields in the office and industrial sectors.'

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Signs of good times

Newton View was sold for $147.6 million earlier this month.

Mega en bloc sites that have failed previously, like former Ulu Pandan HUDC Pine Grove, are back on the market.

Office investment sales enjoyed a bullish start this year. Most recently, Capital Square was sold for $889 million and One Finlayson Green for $227 million.

Hotel investment sales in the first quarter of this year totalled $874.76 million, making up 12 per cent of total investment sales. This was achieved mainly through three government land sale hotel sites, including the $194.77 million transaction for the site at Gopeng Street and Peck Seah Street.