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While general activity within the real estate market was muted, several big-ticket commercial deals, totalling $1.4 billion, bolstered investment sales during the quarter.
Singapore saw property investment sales drop 73.4% year-on-year to $1.7 billion in the second quarter of 2020 from $6.4 billion over the same period in 2019.
On a quarterly basis, investment sales fell 41.4% from $2.9 billion in Q1 2020, reported Singapore Business Review citing a Knight Frank report.
Related article: Read about Singaporeans’ attitudes towards the current real estate climate in PropertyGuru’s Singapore Consumer Sentiment Study H2 2020.
While general activity within the real estate market was muted, several big-ticket commercial deals, totalling $1.4 billion, bolstered investment sales during the quarter.
The biggest deals for Q2 involve Perennial Real Estate Holdings’ $155.1 million divestment of 30% stake in TripleOne Somerset and $840 million divestment of 50% stake in AXA Tower to Shun Tak Holdings and Alibaba Group’s Singapore subsidiary, respectively. These deals formed a substantial proportion of deals inked during the quarter.
Oxley Holding and Oxley Beryl – the owners of the former Chevron House – are recently in the midst of divesting the commercial and retail units of the development for $315 million to Siriti R and Siriti C.
The industrial sector, on the other hand, posted $84.1 million in investment sales as many manufacturers delayed expansion or relocation plans.
Considering, however, the upward change in direction within the Purchasing Managers’ Index (PMI) in May, driven by output growth within the biomedical manufacturing clusters, particularly pharmaceutical goods, production may increase as manufacturers prepare for the hike in demand as the government ease the stringent restrictions.
With travel restrictions imposed in Q2, the hospitality sector was seen struggling during the first six months of the year, mostly relying on government fiscal support.
Meanwhile, available data from Real Capital Analytics (RCA) showed that Singapore outbound investment sales reached $3 billion in Q2, down 30.2% year-on-year from Q2 2019’s $4.3 billion.
Key deals in Q2 included the $880 million acquisition by City Developments Limited (CDL) of 51.01% stake in Sincere Property Group, a Chongqing-based developer, and Mapletree Investments’s $56.3 million acquisition of KSH Infra’s upcoming logistics park in Pune, India.
Ian Loh, Head of Capital Markets (Land, Building, Collective Sales) at Knight Frank, believes the onset of Phase 2 reopening of the economy, pent-up demand for properties across various sectors may result to an increase in investment sales in the coming months.
Despite the global economic downturn brought about by the Covid-19 pandemic, Knight Frank also noted that there is little evidence of distress sales, even as investment sales volume declined in Q2 2020.
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Eugenia Liew, Senior Digital Content Specialist at PropertyGuru, edited this story. To reach her with feedback on this or other stories, email eugenialiew@propertyguru.com.sg.
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