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Thanks to a big ticket deal valued at US$1 billion (S$1.25 billion), direct commercial property investment in Singapore increased to US$3.3 (S$4.2 billion) billion in Q3 2014 compared to the previous quarter, according to a JLL report.
However, the figure represents a 21 percent drop from the same period last year. Excluding the pricey transaction, market activity remained slow due to a dearth in available properties for sale.
Nevertheless, market activity in the city-state is expected to pick up next year as investors try to sell assets that have benefitted from the recent price growth.
As for the Asia Pacific (APAC) region, direct commercial property investment for the first nine months of the year declined by five percent to US$85.2 billion (S$108.37 billion) compared to the same period in 2013. In particular, transaction volume in Q3 2014 climbed by merely one percent to US$30.3 billion (S$ 38.54 billion) on an annual basis.
However, market activity is forecasted to pick up in the remaining three months, with the year-end total hitting about US$120 billion (S$152.64 billion). Additionally, transaction volume is expected to improve significantly in 2015, as JLL has identified more than US$200 billion (S$254.40 billion) worth of capital available for property investment in the region by next year.
Stuart Crow, JLL’s Head of Capital Markets in APAC, said: “Private equity groups alone have over US$30 billion (S$38.16 billion) in uncalled capital ready to be deployed across Asia Pacific so we expect these groups to be active as both buyers and sellers. REITs also continue to sit below their target gearing levels, and teamed with fresh IPOs and POs, these listed groups will also be actively seeking assets.”
However, he noted that demand continues to surpass the amount of assets available, making supply shortage of investable products the market’s biggest concern right now.
“We estimate that the potential level of capital coming from sources such as private equity funds, pension funds, REITs, insurers, HNWs and developers in 2015 accumulates to around US$200 billion (S$254.40 billion) to US$250 billion (S$318 billion). That’s almost twice as much as the estimated US$130 billion (S$165.36 billion) total transaction prediction for the year,” added Megan Walters, JLL’s Research Head for Capital Markets in APAC.
Image source: Wikimedia Commons (User: merlion444)
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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