Published June 22, 2007
Investment sales of property may hit $35b
Total chalked up so far is $21.4b, says CBRE
By KALPANA RASHIWALA
(SINGAPORE) CB Richard Ellis is predicting that the level of investment sales of property may hit $35 billion for the whole of this year, after chalking up a figure of $21.4 billion so far this year. The figure for the whole of 2006 was $30.5 billion.
The value of $21.4 billion from Jan 1 to June 20 this year is about 48 per cent higher than that for the first-half of last year.
The strong level of investment sales reflects major property players' continued confidence in the mid-to-long-term prospects for the Singapore real estate sector.
CBRE's investment sales tally includes land deals, collective sales, transactions of entire office and other buildings, as well as strata-titled units above $5 million.
The residential sector accounted for the lion's share, with around $14.6 billion or 68 per cent of total investment sales in the first half of this year.
Residential land sales remained the focus of investment activity in the first half as developers have sought to replenish their landbanks for future development in the face of strong demand at their residential launches, despite higher selling prices, market watchers say.
CBRE executive director (investment properties) Jeremy Lake said: 'As long as response to new launches remains very positive, one can expect developers to continue to compete aggressively for sites. The question now is whether with a larger choice of suburban sites offered by the Government Land Sales (GLS) programme announced last week, developers now have an alternative source of residential land supply other than collective sales, which has been generating prime district residential sites for developers.'
Asked about the implication that the latest GLS programme may have on en bloc sales, Mr Lake said that while choice sites in the prime districts will continue to be sought after through en bloc sales, 'the market may overlook those sites that have overshot pricing expectations or are less appealing for whatever reasons'.
He said: 'Developers will become more choosy when picking sites through collective sales in the prime areas.'
Around $8 billion worth of collective sale deals have been struck so far this year. Big transactions include Leedon Heights ($835 million), Char Yong Gardens ($420 million) and The Ardmore ($262 million, reflecting a record unit land price of $2,337 psf per plot ratio).
Office properties contributed around $4.8 billion, or 23 per cent of the investment sales pie in the first half. Activity in this market segment is expected to remain buoyant on the back of robust rental growth due to a near-term shortage of office space.
For the second quarter of this year (up to June 20), the total investment sales tally was $9.67 billion, up 16 per cent from the figure of $8.34 billion in Q2 2006, after hitting $11.7 billion in Q1 2007.
'At this half-way point, there is every reason to expect that investment sales for the whole of 2007 will surpass the $30.51 billion set in 2006 and may hit $35 billion,' Mr Lake said.
While the private sector accounted for 86 per cent of total investment sales in H1 2007, with the rest contributed by GLS, the public sector is expected to make a strong showing in the second half.
There is much speculation about two forthcoming GLS sites, at Beach Road and in the Marina Bay area, up for tender in Q3 and which are likely to yield over $2 billion of investment sales.