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Singapore saw quarter-on-quarter preliminary investment sales drop by 29.5 percent to S$5.057 billion in the third quarter of 2016, according to a CBRE report.
However, year-to-date investment volume surpassed that seen during the same period last year by 30.7 percent. CBRE attributed this to the S$3.4 billion sale of Asia Square Tower 1 in Q2 2016.
The report noted that low interest rates served as a double-edged sword for Singapore’s investment market performance.
“It has facilitated a favourable financing environment that potentially offers higher cash- on-cash returns. However, capital values remain sticky as owners retain strong holding power,” it said.
CBRE revealed that Q3 2016 registered the biggest single-asset industrial deal, which was the related party acquisition of Mapletree Business City (Phase 1) by Mapletree Commercial Trust.
“The Business Park component (S$1.208 billion) boosted industrial sales by 381.0 percent quarter-on-quarter to S$1.276 billion. Given the lack of yield-accretive assets, there were only two industrial REITs’ purchases in 2016, where both were acquired from sponsors.”
Despite weaker sentiments within the occupier market, CBRE expects investment activity to pick up pace, given the narrowing price gap between buyers and sellers.
With a pipeline of commercial deals expected to conclude in Q4 2016, “investment sales for 2016 are likely to remain, or exceed the S$17.6 billion (observed) in 2015”, it said.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg
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