H1 property investment sales double to S$20.2b from year ago: Knight Frank

THE property investment market recorded some S$8.2 billion worth of transactions in Q2 2022, bringing the half year’s total to S$20.2 billion — an 88.7 per cent improvement or almost double the S$10.7 billion in transactions registered in H1 2021.

According to figures from a Knight Frank Research report released on Tuesday (Jul 5), private deals accounted for 76.1 per cent of this quarter’s transactions, with the commercial sector taking the lead in driving much of Q2’s string of deals with a series of large ticket transactions. These include the sale of Westgate Tower (S$677.5 million), Twenty Anson (S$600 million), as well as a freehold luxury commercial development at 28 and 30 Bideford Road (S$515 million).

Knight Frank’s head of capital markets (land and collective sale) Chia Mein Mein attributes the rise of investor interest in commercial assets to an economic climate of rising interest rates, inflation, rising costs of raw materials and construction costs as well as a prolonged war between Russia and Ukraine.

“Key factors that could influence such investment decisions are the likelihood of capital appreciation and organic growth through recurring rental income, as well as the lack of Additional Buyer’s Stamp Duty (ABSD) rates incurred for commercial developments – a defensible asset class against looming economic uncertainty,” said Chia.

She also foresees further growth in transactions for larger plots of land, noting the recent interest from developers in exploring larger land sizes, such as the sale of Lakeside Apartments for S$273.9 million to Wing Tai Holdings and an offer for Chuan Park by a developer for S$860 million in Q2.

Sites that possess attractive attributes such as close proximity to amenities like MRT stations and good views, Chia notes, could generate more interest, especially so for those that can potentially yield up to 300 units.

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Recent bids under the Government Land Sales (GLS) programme closed as high as S$1.3 billion for the site at Dunman Road, while the plot on Pine Grove (Parcel A) settled at S$671.5 million, bringing the price per square foot per plot ratio to approximately S$1,350 and S$1,318 respectively.

Amongst overseas investment opportunities, Singaporean investors appear most inclined towards office and industrial developments. The largest deals for Q2 2022 comprised the sale of a commercial asset in London by Sinarmas Land for about S$334 million as well as a logistics development in the United Kingdom by Frasers Logistics & Commercial Trust at some S$171.7 million.

The total outbound investment sales from Singapore summed up to S$13.5 billion in the quarter, according to data from the Real Capital Analytics (RCA).

“With the encouraging pace of sales and keen interest from both local and foreign stakeholders, total investment sales for the whole of the year could surpass expectations to hover within the range of S$32 billion to S$35 billion, barring any other major external headwinds,” said Chia, who is further upbeat on growth in the real estate sector for the next half of the year in spite of a looming recession.

Hospitality asset owners as well as existing collective sale owners have reason to be hopeful as long as price expectations remain realistic, Chia said.