Singapore investment sales poised for robust recovery in 2021
Colliers expects return to pre-pandemic levels, with estimated growth of 20% to S$29.7b this year
Singapore
COLLIERS International said it expects the return of Singapore's property investment sales volumes to pre-pandemic levels, with an estimated growth of 20 per cent to S$29.7 billion in 2021.
In its quarterly research report on Wednesday, the real estate services and investment management company noted that S$18.6 billion of the investment sales booked in H2 2020 alone made up three-quarters of the full year's S$24.7 billion.
This signals a strong momentum going into 2021, said the firm.
In particular, it highlighted that real estate transaction volumes for 2020 were mainly driven by real estate investment trust (Reit) merger and acquisition (M&A) deals.
The largest transaction of this nature was booked in the fourth quarter of 2020, when CapitaLand Mall Trust acquired CapitaLand Commercial Trust's six offices and two mixed-use developments for S$10.8 billion in a merger of equals.
This deal has helped to boost growth in the commercial and mixed-use sector's investment sales by
8.8 per cent to S$18.8 billion, which made up the lion's share of 2020 transactions at 52 per cent.
Based on Colliers' observations, there were also increased institutional acquisitions of prime office buildings, which the firm attributes to more tech giants setting up bases in Singapore and the URA Incentive Scheme rejuvenation of older precincts.
Shophouse investment sales marked the only other segment after commercial and mixed-use to improve from 2019.
Prime shophouses are sought-after as they offer capital preservation and stable rental income, said Colliers.
In Q4 2020 alone, 18 shophouses - each over S$10 million and worth a total of S$288 million - were transacted.
This marks the best quarterly showing since the first quarter of 2018's S$401.7 million record, and brings shophouse investment sales for the full year to S$467 million.
Based on the report, it represents a 16.1 per cent increase from 2019 figures, even as overall 2020 property investment sales declined 16.7 per cent year on year.
Residential and industrial investment sales volumes in 2020 fell
23.6 per cent and 43.3 per cent from 2019 levels, respectively, on a weak H1 2020 showing and the absence of Reit transactions.
Colliers is expecting private land sales via en bloc and collective sales to recover in the current year, driven by stronger developer sales and a depleting pipeline.
The firm also sees positive long-term growth in the industrial segment as investors seek warehouses, data centres and hi-specs space to leverage growing e-commerce and technology trends.
Colliers adds that catalysts for overall property investment sales in this year include more tech companies setting up hubs in Singapore and a global economic recovery.
"We recommend investors focus on assets with long-term growth drivers, such as central business district office buildings with income or redevelopment potential, high-specs business space, logistics assets and shophouses," said the firm.
