Hotels and en bloc sales comprised the top property investment sales in the first quarter despite overall investment sales having dropped at the start of the year, according to reports from Savills Singapore and CB Richard Ellis (CBRE).
Savills said that property investment sales plunged 43 percent quarter-on-quarter to S$6.7 billion in Q1 from S$11.8 billion in Q4 2010. The declines generally occurred in the industrial, commercial and residential property sectors, following the high base in the fourth quarter, when some mega transactions were recorded, such as the industrial property acquisitions of Sabana Reit, as well as Suntec Reit’s and K-Reit Asia’s respective acquisitions of a one-third stake each in Marina Bay Financial Centre’s phase one for S$1.5 billion and S$1.43 billion.
The CBRE report also indicated a decline in investment sales to S$7.2 billion in Q1 from S$11.3 billion in Q4 2010. However, the figure was 66.6 percent higher than the Q1 2010 recorded number.
“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 S$20 to 25 billion this year but is unlikely to match last year’s S$29.38 billion,” said Jeremy Lake, Executive Director for Investment Properties at CBRE.
Steven Ming, Savills Executive Director and Head of Investment Sales, said that the big challenge for property 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,” he said.
Savills noted that the number of residential properties that cost more than S$10 million have dropped significantly, due to the 13 January cooling measures.
On a positive note, the property consultancy firm pointed out a rebound in en bloc sales activity with four deals in the first quarter reaching more than S$100 million each, compared with only three such transactions between 2008 and 2010.
However, it said that “the jury is still out (on) whether this will see the larger collective sale sites being sold.”
CBRE said there were seven collective sales in Q1 amounting to S$603.7 million, compared with nine transactions amounting to S$511.5 million in the previous quarter.
Total residential investment sales, including Good Class Bungalows (GCBs) accounted for S$3.1 billion (43 percent) of the total Q1 investment sales. This was 21.5 percent lower than the S$3.96 billion in residential investment deals recorded in Q4 last year but 51.7 percent higher than the S$2.05 billion figure in Q1 2010.
“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,” Savills said.
CBRE added that the hotel sector was revived in the first quarter, with S$875 million worth of deals to date, approximately 12.1 percent of the total investments sales through two private-sector deals and three Government Land Sale (GLS) sites.