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Sharp drop in Singapore property investment sales in Q1; potential upside ahead: Colliers

REAL estate investment sales in Singapore fell 52 per cent year on year to $5.3 billion in the first quarter of 2019, on cooling in the latest bout of en-bloc fever and from residential property curbs.

This is according to a Colliers International research report released on Tuesday. The corresponding period in 2018 had seen a record level of residential collective sales, Colliers noted.

In the residential sector, the July 2018 cooling measures continued to depress sales. Sales plunged by 82 per cent from a year ago to S$1.7 billion amid declines in all sub-segments, including collective sales and Good Class Bungalows. This sector accounted for 32 per cent of the total investment sales in the quarter.

On the other hand, public land sales booked a bumper quarter, recording a 32 per cent growth year on year to S$2.1 billion. They accounted for 40 per cent of total investment sales. Thanks to land sales, compared to the previous quarter, residential investment sales jumped 48.2 per cent. Two Government Land Sales (GLS) sites – at Tampines Avenue 10 and Kampong Java Road – were among the top five largest transactions during the quarter.

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On a year-on-year basis, commercial investment sales quadrupled to S$1.1 billion in the first quarter on a low base. 

Colliers expects investment activity to pick up in the coming quarters, including potentially more commercial - office and retail - deals to be concluded towards the end of this year.

It said the Urban Redevelopment Authority's Draft Master Plan 2019 incentives could spark more investor interest in the redevelopment of older buildings in the Central Business District.

In the industrial property segment, investment sales value doubled to S$555 million in the quarter from the year-ago period, mainly due to SGRE Banyan’s acquisition of warehouse facilities on Jurong Island for S$228 million.

For the whole of 2019, the firm estimated that total investment sales will be S$38 billion, on a par with last year’s level.

Tricia Song, head of research for Singapore at Colliers International, said: “During the quarter, major private investment sales in Singapore continued to be dominated by institutional investors.”

Such sales included the acquisitions of Manulife Centre by ARA Asset Management and British group Chelsfield, Rivervale Mall by local private equity firm SC Capital Partners, and warehouse facilities on Jurong Island by SGRE Banyan.

“These deals, together with a bumper quarter for government land sales, helped to prop up investment sales in Q1 2019,” Ms Song said.