After two quiet quarters, the investment market has awakened from its slumber according to the latest report by Savills Research, Singapore.
There was a total of about $4.73 billion of investment sales recorded in Q2 2014, up 19.9 percent from $3.95 billion in Q1 2014 and 21.7 percent from $3.89 billion in Q4 2013.
From April to June this year, 13 state land parcels, comprising four residential sites, eight industrial sites and one commercial site, were sold under the Government Land Sales (GLS) programme and brought the public sector’s investment value to $2.03 billion. This represents a 12.2 percent decline from a quarter ago.
In contrast, private sector investment transactions rose by 61.3 percent quarter-on-quarter to $2.63 billion in Q2. The increase was mainly due to a few large deals in the commercial sector.
Investment sales in the residential segment amounted to $1.68 billion in Q2 2014, making up 35.5 percent of the total transaction value.
Sales of luxury non-landed homes continued to lag because of the cooling measures. The substantial number of completions over the next few years will add further downward pressure on prices.
“With the softening prices, it may be that investors, particularly those from overseas, could return to the luxury market here having come to terms with all the restrictions, to take advantage of the lower prices,” the report said.
Despite positive growth in the first two quarters of 2014, the outlook for real estate investment market remains uncertain for the rest of the year due to continuing concerns over yield compression, cooling measures and rising interest rates.
Alan Cheong, Research Head at Savills, said, “Although acquisition capital is plentiful, yield compression and cooling measures are still dampening market activity.”
The full-year investment volume will be weighed down further with fewer GLS sites sold compared with a year ago. However, the copious amounts of acquisition capital which has been building up during this period of low activity may have to be deployed sometime in the not too distant future.
Muneerah Bee, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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