RESIDENTIAL investments made up a significant 41 to 45 per cent of real estate investment activity in Q1, according to various property consultants' research reports, but overall this is expected to come in lower this year.

This is because of a number of factors. Firstly, the combined effects of cooling measures and the Total Debt Servicing Ratio framework have softened demand and led to weaker transaction volumes in the private residential market, which have dampened the residential en bloc sales market. Secondly, the government has moderated its supply of residential sites in H1 2014 due to the large pipeline supply - though the cut in land sales is across the board, extending also to commercial and hotel sites.

The third factor is the interest rate increases, expected to kick in when the United States begins tapering its quantitative easing programme next year, which could raise financing costs and become a drag on investment activity.