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This comes as commercial volume surged more than 10 times to $2.02 billion from $183.4 million in Q1 2020. As such, the commercial sector accounted for 66% of total volume in Q2.
Singapore saw real estate investment volume fall 45% year-on-year to $6.13 billion during the first half of 2020, showed preliminary data from Cushman & Wakefield.
Investment volume for the second quarter of 2020 remained stable at $3.06 billion, from the previous quarter’s $3.07 billion.
This comes as commercial volume surged more than 10 times to $2.02 billion from $183.4 million in Q1 2020. As such, the commercial sector accounted for 66% of total volume in Q2.
Alibaba Group’s acquisition of a 50% stake in AXA Tower for $1.68 billion emerged as the largest deal in Q2. Other notable deals include Perennial’s $155.1 million divestment of its 30% stake in TripleOne Somerset and Olayan Group’s $315 million purchase of the banking and retail units of 30 Raffles Place (former Chevron House).
A significant portion of investment sales in Q2 was attributed to the merger of Frasers Logistics Trust and Frasers Commercial Trust, accounting for 41% of Q2 total volume at $1.25 billion.
The hospitality sector, on the other hand, remained quiet with no deals as buyers wait on the sidelines for further downward revision in prices.
Given the uncertainty on the duration of the crisis and when tourism would revert to pre-pandemic levels, a significant portion of hospitality asset owners may be looking to exit the sector in favour of more stable asset classes. This could lead to some deals in future quarters, said Cushman & Wakefield.
Shaun Poh, Executive Director for Capital Markets at Cushman & Wakefield, expects some owners to put up their assets on sale to free up liquidity in this post circuit breaker period with the resulting recession.
He also sees funds with fixed fund life planning their exits.
“As past recessions have shown, there are gains to be reaped when investors enter during the period when the market is going through a repricing to find its balance. We are starting to see some market activity around investors sniffing out these opportunities and these might potentially be inked in the later part of the year.”
Over at the industrial market, investment volume remained stable at $701.3 million in Q2, compared to $661.4 million in Q1.
Christine Li, Head of Research for Singapore and Southeast Asia at Cushman & Wakefield, forecast the full-year investment volume to hover between $12 billion and $15 billion.
She also expects it to increase to $22 billion to $25 billion, should the merger between CapitaLand Mall Trust and CapitaLand Commercial Trust be approved by unit holders.
“In the absence of a catalyst, the sluggish market sentiment is expected to continue, with volume in the second half of the year unlikely to increase significantly,” she said.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg