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Property investment sales in the republic declined by 9 percent in 2015, down to S$16 billion—the lowest sales volume since 2009—a DTZ press release revealed Tuesday (2 February).
According to DTZ, the fall in property investment sales—or property sales worth S$5 million and above, enbloc residential property sales, sales of sites for redevelopment and sites that can be further subdivided—was largely due to the mismatch of price expectation between buyers and sellers, as well as the slowdown in launches of new land sites from the GLS programmes.
Sales were also affected by the uncertainty in global markets, as local investors seek to diversify their portfolio by growing their asset pool overseas, said the property consultancy. It noted, however, that there was still much interest for properties here last year, given the republic’s good governance and dynamic economic environment.
In 2015, the biggest transaction completed was the sale of the Paya Lebar land parcel for $1.67bn to Abu Dhabi Investment Authority and Lend Lease. The developers have obtained the provisional permission to build a project that will have 91,340 sq m gross floor area of office space, and 43,740 sqm of retail space in addition to the 429 apartments.
DTZ also said investors are willing to bid for leasehold projects that are priced reasonably and have the potential to be value added through redevelopment or additions and alteration works.
For instance, The Verge was transacted at $317 million in the fourth quarter of 2015. The retail mall can be redeveloped to a mixed use development. More recently, Harper Kitchen, a freehold industrial building near Tai Seng MRT station, was sold for $51.1 million to Nanshan Group Singapore. The building’s existing gross floor area (GFA) is estimated at 54,250 sq ft and can be redeveloped to yield 83,624 sq ft of GFA.
Going forward, DTZ expects the real estate investment market in Singapore to present investors interesting opportunities.
“2016 is expected to be a rocky year for the commodities and stock market, so real estate will become an attractive asset class for investors,” said Swee Shou Fern, DTZ’s Senior Director of Investment Advisory Services. “Additionally, in a populous, land-scarce Singapore, the economic conditions are favourable for long-term property appreciation, so real estate with good specifications and location will still be in demand.”
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories emailnikki@propertyguru.com.sg
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