Real estate investments in Singapore increased 24 percent quarter-on-quarter to $4.7 billion in Q1 2014, following a tripling in investment from the public sector, a DTZ report said.
But on an annual basis, investment activity last quarter was lower than the $5.4 billion seen in the previous year.
The report noted that the residential and office sectors were the most invested markets in the first three months of 2014, accounting for $3.7 billion or about 80 percent of activity.
A total of 12 land parcels from the Government Land Sales (GLS) programme were awarded during the quarter, making up around 50 percent of investment activity in Q1.
Specifically, eight residential sites (including five executive condominium (EC) sites and the reserve list site at Geylang East Avenue 1) were awarded for a total of $1.9 billion, while the reserve mixed-use site at Joo Chiat Road and three industrial sites made up the remainder of investment activity originating from the public sector.
As for office investments, there were three deals – OUE Commercial REIT’s acquisition of OUE Bayfront for its listing on the Singapore Exchange, CapitaLand’s $579.4 million sale of Westgate Tower, and an acquisition of a 50 percent stake in Finexis Building.
Residential investments contributed 41 percent of the overall investment activity in Q1.
Going forward, investment activity is expected to be driven by non-residential deals, according to Lee Lay Keng, DTZ’s Regional Head (SEA), Research.
“Given the weaker transaction volume in the private residential market, residential collective sales will remain difficult while the government has moderated the supply of residential sites in the H1 2014 GLS programme in view of the large pipeline supply. With interest rate hikes looming next year, an increase in financing costs could be a potential drag on investment activity.
“In light of this, we expect real estate investment volume in 2014 to come in around $20 to $25 billion, about 13 to 30 percent lower than last year’s $28.6 billion,” she added.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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