Colliers forecasts Singapore property investment sales to cross S$31b in 2020

SINGAPORE property investment sales could increase by 6 per cent to S$31.3 billion in 2020 from S$29.5 billion in 2019, real estate services firm Colliers International said in its latest report.

Investment sales volumes fell 12.7 per cent last year "largely due to the pullback in the residential property sector as cooling measures continued to bite", said Colliers.

The commercial property sector led sales in 2019, and is expected to drive investment sales again this year.

Commercial property investment sales accounted for 40 per cent of total transactions in 2019 and Colliers forecasts a 5 per cent year-on-year (y-o-y) increase for commercial sales in 2020, backed by a healthy office rental market.

"Redevelopment potential, the push for decentralisation, coupled with investors' interest and confidence should support an annual growth of 2 per cent per annum over 2019 to 2024," said Colliers.

Tricia Song, head of research for Singapore at Colliers International, said Colliers "expects a few major Reit (real estate investment trust) acquisitions and mergers to materialise in 2020, potentially boosting industrial, commercial and hospitality deals".

The improved economic outlook should help to lift investor confidence, said Colliers. According to Oxford Economics, the Singapore economy could expand by 1.4 per cent this year compared with a 0.7 per cent growth in 2019.

Colliers anticipates a 3 per cent y-o-y increase for residential investment sales, on the back of a stable supply of public land sales, sustained luxury homes demand and developers acquiring sites to shore up their development pipeline towards the end of the year.

The hospitality sector experienced its best year in 2019, with investment sales more than quadrupling to an all-time high of S$5.7 billion.

Colliers said investment demand for Singapore's hospitality assets will remain sustained, supported by steady visitor arrivals and more MICE (meetings, incentives, conferences and exhibitions) events.

"While the new Wuhan coronavirus presents a near-term downside risk, Colliers believes that the long-term growth drivers for the tourism sector remain largely intact," the firm said.

Industrial investment sales climbed 10.7 per cent y-o-y to S$2.3 billion in Q4 2019, anchored by Mapletree Commercial TrustTrust's acquisition of Mapletree Business City (Phase II).

"We forecast industrial sales to accelerate in 2020, on big ticket investments by industrialists, Reits and institutional investors into yield accretive assets like business parks and data centres," said Ms Song.

"Industrial deals should rise by an average 15 per cent per annum from 2019 to 2024 as the overall underlying market bottoms out."

Colliers' definition of investment sales transactions includes all private property sales which transacted for S$10 million and above, and all awarded state land tenders.