Real estate investment sales market hits five-year high, says Savills
- POSTED: 27 Sep 2013 19:49
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Property consultancy Savills said the real estate investment sales market recorded S$13.4 billion worth of deals in the third quarter of 2013, as of September 24 -- that is the highest quarterly transaction value in the the past five years.
SINGAPORE: Property consultancy Savills said the real estate investment sales market recorded S$13.4 billion worth of deals in the third quarter of 2013, as of September 24 -- that is the highest quarterly transaction value in the the past five years.
The sales were partly driven by the divestment of several commercial properties into the SPH Real Estate Investment Trust as well as the OUE Hospitality Trust. Savills said investment sales in the commercial sector accounted for a lion's share of transactions in Q3 at nearly 36 per cent.
The hotel segment made up about 21 per cent of the deals in Q3, followed by mixed development accounting at 17.5 per cent, the residential sector at 14.1 per cent, and industrial at 10.9 per cent.
Analysts said the commercial sector, especially the retail segment could see more investment activity. For example, two retail malls was put on the market this week -- Serangoon Plaza, priced at between S$360-368 million; and Cityvibe mall in Clementi, with an asking price of over S$130 million.
Alan Cheong, research head of Savills Singapore, said: "The commercial market, except office, the retail yields are still pretty attractive relative to residential or office sector, so we see some institutional buying of retail malls, because they still yield 4.9 per cent to 5.1 per cent on a nett basis if you are priced at something like S$2,500 psf.
"Serangoon Plaza, Broadway Plaza and Katong Shopping Centre -- I think these are just three example of malls which have the potential to see enhancement of value, they are all trading way below the average of typical strata titled mall development."
Savills added that the residential sector recorded nearly S$1.9 billion in investment sales in Q3 -- the lowest transaction value since the fourth quarter of 2009.
There was also only one en-bloc deal done in the quarter -- that being Singa Court at Jalan Singa, which was sold at S$37.8 million.
Looking ahead, some analysts believe the collective sale of residential properties is likely to remain slow, especially for the larger sites, as long as the cooling measures are still in place.
Meanwhile, consultancy Knight Frank estimated that total investment sales for Q3 could come in at S$12.3 billion, up more than two-fold from the previous quarter.
It said the strong investment activity reflects the investors' continuing confidence in Singapore's real estate market.
Analysts noted that investors are also watching the Singapore Masterplan, which is due for an update this year, as it could potentially create more investment opportunities.
Ian Loh, head of investment & capital transactions at Knight Frank, said: "We've also read announcements, for example, in the medium term the Paya Lebar airport is shifting away, that would be definitely an area to look at.
"Geylang as well, because Geylang is zoned 2.8 but there is some sort of height restriction of up to eight storeys for that area, so if it does really have the potential to go up to 36 storeys -- that could really transform the entire area."
In terms of challenges, analysts said that a potential increase in interest rates and difficulty in obtaining credit could affect the investment sales market going forward.