Blog

REAL estate investment activity in Singapore rose by 52.6 per cent quarter on quarter (qoq) to S$6.48 billion in the second quarter of 2024, largely driven by the higher proceeds from the sale of state land under the government land sales (GLS) programme and residential deals.

The award of four GLS housing sites and one industrial site during the quarter contributed S$3.16 billion.

Meanwhile, private-sector investment sales saw an increase of 14 per cent qoq to S$3.32 billion in Q2, said a Savills Singapore report released on Tuesday (Jul 23).

The number of deals rose from 65 in Q1 to 85 deals in Q2. A total of 52 luxury homes (each priced at S$10 million and above), including 40 landed houses and 12 high-end apartments, were transacted in Q2, up from 40 deals in the previous quarter, and on a par with the 53 deals achieved in the same period last year.

“This may suggest that buying sentiment has returned to the level before the negative impact caused by the increase of the Additional Buyer’s Stamp Duty, and the aftermath of the anti-money laundering investigations last year,” said the report.

Commercial investment sales grew by 16.7 per cent qoq to reach S$1.52 billion in the second quarter.

There were four office deals inked during the quarter with the largest transaction for Mapletree Pan Asia Commercial Trust’s S$775 million divestment of Mapletree Anson. This translates to a price of S$2,352 per square foot (psf) based on a net lettable area of 329,487 square feet, and represents a gain of S$10 million over the property’s valuation in March this year.

The other three office sales involved the sales of 20 Harbour Drive for S$160 million, Income at Prinsep at S$147 million and Wilmar Place for S$26.5 million.

In contrast, investment sales activity for the retail segment slowed to one deal during the quarter, which was Paragon Reit’s divestment of The Rail Mall for S$78.5 million or S$1,574 psf on a net lettable area basis.

In the mixed-use property sector, Delfi Orchard, which sold for S$439 million, was the largest collective sale during Q2.

The decreasing transaction volume may not reflect any moderation in buying interest, said Savills, but rather is due to the limited stock of properties available for sale.

Overall, the bulk of the investment activity came from the residential segment with sales value at S$4.06 billion in Q2, up 115.8 per cent qoq. This constituted the highest proportion of investment sales – at 62.6 per cent – for the quarter.

Jeremy Lake, managing director for investment sales and capital markets at Savills Singapore, said: “More properties have been launched for sale in the last six months with some sellers deciding to adopt proactive sale strategies rather than sitting passively and waiting for buyers to come along. While the appetite from buyers has improved, there is still a price gap in many cases and only some of the properties will be sold”.

With the market expecting at least one interest rate cut by the US Federal Reserve for 2024, Savills expects the commercial investment market to see a “return of momentum”.

Alan Cheong, executive director of research and consultancy at Savills Singapore, said: “Although this may just be a symbolic 25 basis point reduction, the mood is now one which believes rates have peaked.”

Savills said that while the all-in borrowing costs are still well above commercial cap rates, the prospect that interest rates are now not likely to rise further gives hope to landlords and investors who now have one less uncertainty to consider.

The consultancy firm maintains its forecast of S$22 billion to S$23 billion in total investment sales for 2024, up from S$19.7 billion recorded in 2023.