Real estate sector shows significant bounce-back in investment sales in 1Q2023: Savills

The real estate sector in Singapore saw a strong bounce-back in investment sales in 1Q2023, according to an April 21 press release by Savills Research. With a q-o-q increase of 100.4% to $5.63 billion, the real estate market remains stable in spite of global economic challenges.

The commercial property sector, which saw a q-o-q surge of 229.6%, was largely underpinned by the closure of big-ticket transactions such as Link REIT’s acquisition of Jurong Point and Swing By @ Thomson Plaza. The two deals alone accounted for a total of $2.81 billion, or roughly 83.3%, of total commercial property value. Strata office units saw a 5.4% dip in investment sales to $290 million in 1Q2023 as compared to 4Q2022. However, buying momentum in the sector continues with The Solitaire on Cecil’s 17th, 18th and 20th floors being sold for $162.8 million.

The shophouse sector also saw an uptick in investment sales, with a q-o-q rise of 11.2% to $193.2 million. The largest deal in terms of quantum price was the purchase of six freehold shophouses along Serangoon Road for $62.5 million by a union affiliated with Singapore’s National Trade Union Congress.

Residential sites and properties witnessed investment sales of $1.58 billion in 1Q2023, despite no Government Land Sale sites being awarded. This figure marked a 12.5% quarterly growth from 4Q2022. The sale of Meyer Park in District 15 saw the biggest transaction, with the joint venture between UOL Group and Singapore Land Group paying $392.2 million.

Tengah Plantation Loop EC GLS Tender is a land tender opened by the Singapore Land Authority, offering developers the chance to create a new eco-friendly executive condominium development in Tengah Plantation. The successful bidder will be awarded the rights to Tengah EC develop and manage the new EC.

Ultra-high net worth individuals (UHNWIs) are the dominant driving force in investment sales according to Savills, as their resilience and activity during times of global economic challenges is due to Singapore’s safe haven status. The uncertainty in US and Swiss banking may be nudging UHNWIs towards real estate investments in the form of luxury apartments, strata offices, and shophouses.

Despite some optimism in the market, developers remain cautious and focus on small to medium-sized sites in prime locations; pricing is the key to a successful collective sale, according to Savills. While publicly available data may show investment sales in line with 2022’s $24.7 billion, the possibility of it being higher is increasing. Nonetheless, headwinds in the global economic arena are unlikely to drag UHNWI investments in Singapore real estate due to their different investment aspirations.