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Singapore’s investment sales market rebounded in Q3 2014 following a surge in institutional investors, according to the latest report from Colliers International.
In total, investment sales climbed by 12.9 percent to S$6.03 billion on a quarterly basis, after dipping 4.1 percent to S$5.34 billion in Q2 2014.
The private sector contributed majority of the volume or about S$4.51 billion, up 40.5 percent from the S$3.21 billion seen in the previous quarter. The significant increase is attributed to an acquisition spree by institutional investors, which snapped up 10 investment properties collectively worth S$2.93 billion, an increase from the S$496.2 million worth of properties transacted in the preceding quarter.
Of these, two are commercial assets. The most sizeable is the sale of a 33 percent stake in the Marina Bay Financial Centre (MBFC) Tower 3 Keppel Land Limited to K-REIT for S$1.25 billion (S$2,790 per sq ft), plus a rental income support of up to S$49.20 million for a period of five years – makes it the largest investment deal so far this year.
“The next commercial deal clinched by an institutional investor was the acquisition of the 13-storey office development in the central business district (CBD), Anson House, by European fund manager SEB for S$172 million (S$2,252 per sq ft),” said the report.
Apart from the two commercial properties purchased by institutional investors, the 999-year leasehold Straits Trading Building in the CBD was also sold to Sun Venture for S$450 million (S$2,830 per sq ft).
Despite these deals, total investment sales of commercial properties fell by 11.8 percent to S$2.02 billion from S$2.29 billion in Q2 2014.
Meanwhile, two hospitality assets were bought by institutional investors during the third quarter.
The 406-room InterContinental Singapore changed hands for S$497.10 million or S$1.22 million per room, while the 255-unit serviced apartment Fraser Suites Singapore was sold for S$327 million or S$1.28 million per room. These two are part of the 12 properties injected into Frasers Hospitality Trust, a stapled trust consisting of Frasers Hospitality REIT and Frasers Hospitality Business Trust.
Finally, five of the 10 big-ticket deals sealed by institutional investors in Q3 2014 came from the industrial sector. “While the five industrial properties were all priced below S$100 million each, the S$223.7 million chalked up was an improvement from the S$30 million and S$191.2 million concluded by institutional investors in the first and second quarters of 2014, respectively.”
Meanwhile, in a report by DTZ, the firm said that while institutional investors – such as REITs – were in a buying frenzy, property companies (both listed and non-listed) became net sellers in Q3 2014.
“They divested about S$2.9 billion worth of properties in the quarter, which outnumbered their S$2 billion worth of acquisitions. A large proportion of these divestments stemmed from the injection of properties into REITs,” said DTZ.
The lower amount of acquisitions by Singapore-based property firms is partly attributed to their increased activity in other countries. In fact, these companies made nearly US$4.1 billion of acquisitions overseas, given the cooling local property market, explained Lee Lay Keng, DTZ’s Regional Head (SEA), Research.
Moving forward, Colliers International believes that the total investment sale for the entire year is expected to fall within S$20 billion to S$25 billion, given the S$16.94 billion sales accrued in the first nine months of 2014, while DTZ’s forecast stands at about S$20 billion.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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