Moving on from a not-so-merry Christmas
2023 brought a host of challenges for property players operating in an environment of worsening sentiment, still-high financing costs and undermined investment demand.
At the top end of the market, in the prime landed sector that draws the most deep-pocketed buyers, sales volume fell back for a second year. But transacted land rates in 2023 are still at least 40 per cent higher than 2019-2020 levels.
Agents are expecting the volume of deals in Good Class Bungalow (GCB) areas to pick up in 2024, fuelled by existing demand and more realistic price expectations from owners who are motivated to sell, Kalpana Rashiwala reports. Anticipation of lower borrowing costs could also improve the buying mood.
Some players are moving to pick up valuable assets yielding stable income. Singapore-based group JBE is understood to have inked a deal to buy one of the three bundles of HDB commercial properties that were put up for sale by NTUC Enterprise unit Mercatus a few months ago. JBE is said to be paying a price in the low-S$80 million range. The other two bundles are also close to a sale, with Evia Real Estate in exclusive due diligence at a price just over S$175 million. Kalpana has the details.
The impact of the broad slowdown is starting to show up in financial statements. City Developments Ltd flagged it would post a substantial drop in profit for 2023, without divestment gains to prop up the bottom line. Higher financing costs made things worse, and CDL has also provided for impairment losses in its investment portfolio. But it expects to remain profitable. For the first half, CDL reported lower net profit of S$66.4 million, compared with S$1.1 billion posted in the year-ago period.
CapitaLand Investment had similarly warned earlier in this month that it would report a substantial fall in profit due to expected fair value losses on its overseas portfolio. Both CDL and CLI will report earnings in February 2024.
Against the clouded outlook with over half of Singapore-listed Reits in the red this year, Digital Core Reit emerged as top-performer. The data centre Reit rallied after announcing it would resolve the bankruptcy of its second-largest customer. Raphael Lim spells out why the future looks bright for the Reit.
In Singapore, landlords holding modern warehouse assets saw another year of strong performance in 2023. But deteriorating business sentiment will weigh on high rents in prime logistics, which have been steadily rising for over four years. And business parks, some of which are already grappling with 25 per cent vacancy, could suffer from a flood of new supply. Samuel Oh reports on the outlook for Singapore’s industrial real estate sector.
More land will be made available for industrial use before the end of the decade. New reclamation works are planned for Tuas, which will yield about 172 ha of land for industrial use and to improve road connections to Tuas Port, The Straits Times reported.
CapitaLand Ascendas Reit struck a deal to sell three logistics properties in Queensland, Australia, for S$64.2 million, at a premium of 6.2 per cent over the valuation. The assets were acquired in 2015. IReit Global said it would divest an office building in Barcelona, Spain, for 24.5 million euros, at 5.2 per cent above valuation.
Link Reit is gearing up for its search for new growth avenues and returns. The Hong Kong-listed Reit named ex-BlackRock leader John Saunders as group chief investment officer, a new role in the company. Link Reit made an eye-opening entrance into the Singapore market with its acquisition of several malls from Mercatus for S$2.16 billion.
At Sabana Industrial Reit, a committee led by activist investor Quarz Capital called for another extraordinary general meeting (EGM), saying it was “highly dissatisfied and concerned” about the lack of progress on the Reit’s internalisation process.
