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Singapore property investment sales down 45% in H1: Cushman & Wakefield

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Deals in the commercial sector accounted for 66 per cent of Q2's investment volume as big-ticket commercial deals make their return.

SINGAPORE'S property investment volume fell 45 per cent to S$6.13 billion in the first half of the year, according to preliminary data from Cushman & Wakefield on Thursday.

In the second quarter, preliminary investment volume stood at S$3.06 million, remaining stable from the first quarter's volume of S$3.07 billion.

Deals in the commercial sector accounted for 66 per cent of Q2's investment volume as big-ticket commercial deals make their return. Commercial volume surged to S$2.02 billion in Q2, 11 times that of S$183.4 million in Q1. 

The largest deal in Q2 was Alibaba Group buying a half stake in AXA Tower in a deal which values the property at S$1.68 billion. Perennial Real Estate also divested its 30 per cent stake in TripleOne Somerset to Shun Tak Holdings for S$155.1 million.

Another major commercial deal according to Cushman & Wakefield was one that involved Olayan Group purchasing the retail and banking units of 30 Raffles Place, formerly known as Chevron House, for S$315 million.

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In H1 2020, preliminary investment volume for the commercial sector stood at S$2.2 billion, 35.9 per cent of total investment volume.

Meanwhile, the hospitality sector remained quiet with no deals, as buyers wait on the sidelines for prices to be revised further downwards, the report said.

A "significant" portion of hospitality asset owners could be seeking to exit the sector in favour of more stable asset classes, due to uncertainty over the duration of the Covid-19 crisis and when tourism will return to pre-pandemic levels. This could lead to some deals in future quarters, Cushman & Wakefield noted.

Shaun Poh, Cushman & Wakefield executive director of capital markets, said some owners are expected to put up their assets for sale to free up liquidity during this post "circuit-breaker" period with the resulting recession. Funds with a fixed fund life will also be planning their exits.

"As past recessions have shown, there are gains to be reaped when investors enter during the period when the market is going through a repricing to find its balance," he said.

Cushman & Wakefield is starting to see some market activity around investors sniffing out these opportunities and these might potentially be inked in the later part of the year, Mr Poh added.

In the industrial sector, Q2 volume remained stable at S$701.3 million, up 6 per cent from S$661.4 million in Q1. In the first half of the year, industrial investment volume was at S$1.36 billion.

Activity in the residential sector was muted in Q2 at S$305.4 million, down 84.9 per cent from S$2.02 billion in Q1, due to the absence of government land sales sites in the quarter. Preliminary investment volume for the residential sector in H1 2020 stood at S$2.33 billion.

Christine Li, Cushman & Wakefield head of research in Singapore and South-east Asia, expects the sluggish market sentiment to continue in the absence of a catalyst. Volume in the second half of the year is unlikely to increase significantly.

She expects the full-year property investment volume to be in the range of S$12 billion to S$15 billion. The approval of the CapitaLand Commercial Trust and CapitaLand Mall Trust mergers by unitholders would add an additional S$10 billion to the investment tally, bringing the full-year volume to be between S$22 billion and S$25 billion.

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