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[SINGAPORE] Real estate consultancy firm Savills Singapore downgraded its 2025 forecast for total investment sales to S$20 billion, from S$23 billion previously.

This comes as property investment sales in Singapore dropped 24 per cent quarter on quarter (qoq) to S$5.8 billion in the first quarter of 2025, largely driven by subdued activity in the private sector.

Private-sector investment sales fell 47.3 per cent qoq to S$3.01 billion in Q1, said a Savills Singapore report released on Monday (Apr 14).

Economic uncertainties stemming from trade disruptions caused by US President Donald Trump’s tariffs and ongoing geopolitical tensions were some factors dampening investment activity, noted the consultancy.

It added that the price gap between buyers and sellers resulted in some sellers holding off sales until the second half of 2025.

By property type, the residential sector remained the top contributor of Q1’s total investment value. This was followed by the commercial, hospitality and industrial sectors.

Residential sector

Residential investment sales grew 47.4 per cent qoq to S$3.77 billion in Q1. The award of five government land sales (GLS) housing sites during the quarter contributed S$2.78 billion.

Despite improved market sentiment driven by healthy take-up rates in recent launches, developers remained cautious about land acquisitions amid rising development costs and economic uncertainty, said Savills.

The private residential sector had a successful collective sale in Q1 – River Valley Apartments was sold to a Singapore family office for S$56 million. This translated to a land rate of about S$1,622 per square foot per plot ratio (psf ppr) after factoring in a nominal land betterment charge.

Savills noted that while the S$810 million collective sale of Thomson View Condominium last November might have “stirred the market”, activity in the sector is “still low”.

“The disparity in pricing between buyers and sellers, coupled with the sufficient supply from the GLS programme, may be the key factors contributing to this,” said the consultancy.

Commercial sector

Commercial investment sales grew 54.2 per cent qoq to S$1.49 billion in Q1, driven by Frasers Centrepoint Trust’s billion-dollar deal of Northpoint City South Wing.

Despite the rise in value, Savills noted that transaction volume recorded a “notable decline” in Q1 versus the previous quarter.

In Q1, six strata-titled commercial units changed hands at about S$10 million each, down by one deal in the previous quarter.

In similar vein, there were only two shophouse transactions in Q1 priced S$10 million or more, down 71.4 per cent from the preceding quarter.

“While there remains sustained interest from individual investors and family offices in these asset classes, investment activity has been volatile over the last few quarters, likely due to pricing expectations, compressed yields and the availability of suitable properties for sale,” said Savills.

Hospitality sector

The hospitality sector logged a 26.5 per cent qoq increase in investment sales in Q1 to S$332.8 million.

There were three deals inked during the quarter, with the largest transaction being Grand Prestige Land’s acquisition of a serviced apartment complex in Orchard Road for S$152.8 million.

The property consists of 96 studio, one-bedroom and two-bedroom apartments, with the purchase price working out to about S$1.59 million per unit.

The other two hotels deals were 21 Carpenter for S$100 million and Duxton Reserve Singapore, Autograph Collection for S$80 million.

Industrial sector

In contrast, investment sales activity for the industrial segment fell to S$211.2 million, down 90.3 per cent qoq and 47.3 per cent year on year – marking a “significant slowdown”, particularly from Singapore-listed real estate investment trusts.

Response to tenders under the industrial GLS programme also remained “relatively lacklustre”, said Savills. In Q1, a Business 2 industrial GLS site located at Kaki Bukit was awarded to sole bidder Primetop Engineering for S$11.8 million or S$55 per sq ft ppr.

In the private sector, only seven deals were recorded in Q1, contributing a total transaction value of S$199.4 million. The highest-value deal involved a single-use factory at Lok Yang Way that was sold for nearly S$70.1 million.

Another notable deal was the S$62 million sale of industrial building at 21 New Industrial Road.

Savills said the impact of US tariffs on Singapore’s real estate market will depend on negotiations between the US and regional countries.

“If a tit-for-tat war breaks out, the consequences will be highly negative and the fall-out will be harder to predict,” it noted.

Alan Cheong, executive director of Savills Singapore’s research and consultancy, said: “Over time, after prolonged negotiations, these tariffs are likely to be reduced, but this will take time and there are many paths to the destination.”

He added that it is “still too early to determine at this point whether the medium to longer-term impact of these tariffs would be deleterious, neutral or even positive to our real estate market”.