Heavyweight deals anchor preliminary Q2 investment property sales
Singapore’s investment property market put in a robust showing in the second quarter of 2017. Preliminary investment property sales volume increased by 76.2 per cent quarter on quarter to S$9.019 billion, outperforming the previous high of S$8.014 billion in Q4 2016.
Mercatus Co-operative's acquisition of Jurong Point for S$2.199 billion was the largest deal for the quarter, cushioning investment sales. This resulted in a higher domestic investment volume of S$6.231 billion in this quarter, which is an increase of over 3.5 times quarter on quarter.
There was also some momentum in the residential collective sales market. With a total of four transactions by domestic players amounting to S$1.507 billion, this makes it the highest investment volume of collective sales amassed since Q2 2011. This also exceeds the total of three collective sales that were concluded last year.
The largest private collective sale transaction in Q2 2017 was the sale of Eunosville to MCL Land for S$765.78 million.
Under tight residential supply conditions from the GLS scheme, going the private collective sales route is an alternative way to shore up land banks. Not surprisingly, the recent successful sales have kick-started the collective sale process for a number of projects.
Foreign investors accounted for 22.5 per cent of the sales tally in Q2 2017, in a combination of public and private development sites by Malaysian groups and property companies from China and Hong Kong.
They were awarded the government land sale sites which exceeded S$1 billion. This included the land parcel along Upper Serangoon Road (S$1.132 billion), and the land parcel along Stirling Road (S$1.003 billion).
The Hong Kong investors dominated, with joint ventures and direct acquisitions of real estate worth S$1.67 billion from April to June 2017.
Sentiment is very positive now with both developers and investors looking forward to a recovery in the office and residential markets. The turnaround has been very dramatic and noticeable over the last six months and the market place is quite crowded with multiple buyers looking at most assets, assuming they are priced correctly.
The strong interest from Hong Kong-based investors and developers are anticipated to continue.
With the current capital controls curbing the Chinese capital market, it can be expected that some Chinese capital be deployed to other markets via the Hong Kong route.
Singapore investment sales make up S$14.139 billion at present. Investment sales are expected to remain healthy for the remaining year.
Adapted from: The Business Times, 29 June 2017