Singapore’s property investment market looks set for even more quieter times ahead, according to Savills’ Sales and Investment Briefing May 2014 report, published on Friday.
Between January and March 2014, the firm noted that investment sales in Singapore reached S$3.94 billion. In contrast to the last two years, the public sector contributed a larger share of 58.7 percent with a total of S$2.31 billion, while the private sector accounted for the remaining 41.3 percent or S$1.63 billion.
It said property developers have become cautious about the slowing residential property market and this is reflected in the moderation of bid prices in the recent Government Land Sales (GLS) tenders.
Three en-bloc office transactions were sealed in January, including Westgate Tower (S$579.4 million), 700 Beach (S$120.0 million) and a 50 percent stake in Finexis Building (S$61.9 million).
The hotel segment recorded S$477.8 million in investment sales during Q1 2014, making up 12.1 percent of the total transaction value, while the industrial segment contributed the remaining 9.3 percent or S$364.8 million.
Looking ahead, the investment market is expected to be challenging given the slowdown across all sectors
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Despite the latest measures announced in December last year that made it more difficult for people to buy executive condominium (EC) units, developers continued to exude confidence in this market segment, as witnessed at the five tenders of EC sites in the reviewed quarter.
For example, the tenders of EC sites at Westwood Avenue and Anchorvale Crescent attracted 12 bids each. Nevertheless, developers have in general become more cautious as the market shows signs of slowing and this is reflected in the moderation of bid prices in the recent GLS tenders.
The gaps between the top two bids have also narrowed significantly this quarter to 2.7 percent for private housing sites, compared with 14.4 percent in Q4 last year, 3.8 percent in Q3 2013 and 6.3 percent in Q2 2013.
For EC sites, the average winning margin narrowed to 1.6 percent in Q1 2014, from 1.9 percent in Q3 last year and 6.1 percent in Q2 last year.
“We believe that developers will continue to replenish their land banks in the future, but will become more selective and moderate in their bids. Unless there is a marked pick-up in sales activity in the primary market, the anticipated rise in construction and holding costs will result in further moderation of GLS bid prices,” the real estate firm said it the report.
According to REALIS, a total of 23 residential properties were sold for no less than S$10 million each. Among these, 18 were landed houses, up significantly from the 11 recorded in Q4 2013.
Reasonable prices and limited supply helped steady the sales of prime landed residential properties, especially good class bungalows.
In its outlook statement Savills said: “Looking ahead, the investment market is expected to be challenging given the slowdown across all sectors arising from the property cooling measures and the current historically high capital values.
“Anticipated interest rate increases also weigh on the feasibility of buying into assets which are priced at compressed yields. In addition, developers and investors have increasingly set their sights on acquiring overseas assets.”
Andrew Batt, International Group Editor of PropertyGuru
Group, wrote this story. To contact him about this or other stories
email andrew@propertyguru.com.sg
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