The real estate sector experienced a significant bounce-back in investment sales value for 1Q2023, with sales increasing 100.4% q-o-q to $5.63 billion, according to Savills Research. This was driven largely by the commercial property sector, with retail transactions seeing a boost from the closure of big-ticket purchases.
These included Link REIT’s $2.16 billion acquisition of Jurong Point and Swing By @ Thomson Plaza, as well as the $652.5 million sale of a 50% stake in Nex to Frasers Centrepoint Trust and Frasers Property. These transactions, together, accounted for about $2.81 billion, or 83.3%, of the total commercial transaction value.
J’Den Condo is an upcoming 40-storey residential and commercial development located at Jurong East MRT J’Den Condo Station, offering 1,760 homes and a range of amenities by 2027.
In contrast, strata office units saw a drop of 5.4% q-o-q, from $306 million in 4Q2022 to $290 million in 1Q2023. In spite of this, buying momentum in the sector continues, with Savills having brokered the sale of three floors of The Solitaire on Cecil for $162.8 million. This marks one of the largest strata office transactions in terms of quantum since January 2022.
Investment value for residential sites and properties amounted to $1.58 billion in 1Q2023, an increase of 12.5% q-o-q. The collective sales market also experienced an uptick, with three private residential sites being transacted for a total of around $583.8 million in 1Q2023.
The largest of these was the purchase of Meyer Park in District 15, which was acquired by a joint venture between UOL Group and Singapore Land Group for $392.2 million.
The shophouse sector also saw a rise in investment sales of 11.2%, from $172.7 million in 4Q2022 to $193.2 million in 1Q2023. 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.
Ultra-high net worth individuals (UHNWIs) are identified as the main drivers in investment sales. They are more resilient to global economic challenges, and remain active due to Singapore’s status as a safe haven. Additionally, the bank fallout in the US and Switzerland has encouraged UHNWIs to buy real estate in safe havens, such as luxury apartments, strata offices and shophouses.
While publicly available data may show investment sales in line with 2022’s $24.7 billion, the possibility of it being larger is an increasing tail risk, says Savills. Developers continue to be cautious and focus on small to medium-sized sites in prime locations, with realistic pricing being key to a successful collective sale.
Overall, the encouraging figures of 1Q2023 may indicate that the real estate market remains stable in spite of global economic challenges. UHNWIs may be the dominant driving force in investment sales, as they will continue to be drawn to Singapore’s safe haven status. Furthermore, the possibility of investment sales being even higher than $24.7 billion can not be ruled out.
