S'pore properties draw $4b foreign investments: DTZ

FOREIGN investors increased their presence in Singapore real estate last year, ramping up their investment in properties here to $4.1 billion from a year ago, a report from property consultancy DTZ shows.

This was more than 30 per cent higher than the year before, DTZ said in its report released yesterday.

Nearly 90 per cent of these foreign investments came from Asia. China investors were particularly active, nearly tripling their investment year-on-year to $2.9 billion.

Among the notable deals involving China players last year were Bright Ruby Resources' purchase of Grand Park Orchard for $1.2 billion, Kingsford Development winning two adjacent private residential sites at Upper Serangoon View, and Qingjian Realty (South Pacific) Group winning two executive condominium sites at Woodlands Avenue 5/Avenue 6 and Anchorvale Crescent.

DTZ noted that Japanese developers had also contributed to the increase in foreign investments in 2013, with prominent deals such as when Japan-based Daisho Group bought The Westin Singapore hotel for $468 million.

That said, the bulk of investments continued to be driven by domestic investors, with total investment activity for the whole of 2013 at $28.5 billion, 0.7 per cent lower than the $28.7 billion in the previous year, DTZ said.

A separate CBRE report released yesterday put total investment sales for 2013 at $29.72 billion, 3.7 per cent down year-on-year.

For the first year since 2009, DTZ said residential properties did not make up the largest share of investment sales last year, having been overtaken by mixed- use developments.

Integrated projects saw more than twice the investment from the previous year at $6.9 billion, or 24.3 per cent of market share. Major integrated properties transacted include The Paragon and PoMo.

Comparatively, residential developments declined 37 per cent from 2012 to $6.4 billion, or 22.5 per cent of total market share.

As for office investments, they slid for the third straight year, accounting for 17.5 per cent, or $5 billion, of investment activity in 2013.

Jeremy Lake, executive director for investment properties at CBRE, said the investment market has been energised by three big deals done at the end of last year and the start of 2014 - the sale of 111 Somerset, The Westin Singapore and Westgate. Also helping is a positive outlook for office rents.

"Investors are back to work after the holidays and are keen to look at deals again and we expect to see more activity in Q1 2014 particularly office deals," he said.

Lee Lay Keng, head of Singapore research at DTZ, expects more office investments this year with rentals set to rise in 2014 and an improving economic sentiment.

However, Swee Shou Fern, director of investment services advisory at DTZ, cautioned that transactions would be "limited by the amount of stock available for sale and a gap in pricing expectations between sellers and buyers".

Overall activity is likely to be weaker on the year, DTZ said.

Ms Lee said deals could take longer to close as investors seek higher returns in light of the tapering of bond purchases by the US Federal Reserve, or investors could divert funds to other countries where they can get a higher return.

"Residential developments are also likely to fall further given that collective sales continue to be difficult and there are fewer residential sites on the H1 2014 GLS (Government Land Sales) programme."

There were no collective sales in the last quarter of 2013, CBRE's report noted.