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The Singapore real estate market got off to a lackluster start in 2023, with only $4.2 billion in investment sales in total for the first quarter of the year. This marked a steep decrease when compared to the $10.8 billion registered in the first quarter of 2022. Notably, it’s the lowest quarterly total since the circuit breaker period of 2Q2020.

CapitaLand Development transforming Jem’s JCube site into 40-storey J’den Condo, with commercial space, J’Den Condo residential units and amenities connected to Jurong East MRT station and J-Walk. Expected launch in 2023.

Once again, residential deals amounted to the bulk of the sales, standing at $1.6 billion in total. This included the successful collective sale of the Holland Tower – the first in the Core Central Region since the property cooling measures were imposed late in 2021. This suggests a return of interest in prime locations, particularly in light of the reopening of China.

But challenges remain in the market, with the gulf in price expectations between developers and sellers still significant. The success rate of collective sales from 2021 until now stands at 33%, significantly lower than the 63% rate between 2017 to 2018. Chia Mein Mein from Knight Frank Singapore attributes this to owners requiring increasingly higher prices despite the difficult market conditions.

The commercial market saw few deals during the same period. The sale of 39 Robinson Road to Yangzijiang Shipbuilding for $399 million was the standout transaction, while Frasers Centrepoint Trust and Frasers Property also bought a 50% stake in Nex for $652.5 million.

More actively traded was the industrial sector, with an increase of 62.8% q-o-q to $681.1 million. This could be attributed to the market waiting for potential repricing of assets in the commercial sector. Notable industrial deals during the quarter included the acquisition of four Cycle & Carriage properties by M&G Real Estate and disposal of 12 and 31 Tannery Lane by Ho Bee Land for $115 million.

Looking ahead, Knight Frank suggests a tough market in the coming months as macroeconomic uncertainties and volatility in the global banking sector make financing for buyers, investors, developers and banks difficult. It’s predicting a full-year investment sales range of between $20 billion to $22 billion – a cut from the original estimate of $22 to $25 billion. Specialist insight and patience will likely be essential in navigating the Singapore property market in the coming year.