Property investments jumped 45.6% to $10.67b in Q3

The commercial sector boosted the figure thanks to strong liquidity and a low interest rate environment.

Real estate investments surged 45.6% QoQ to $10.67b from the $7.33b seen in Q2, mostly occupied by the commercial sector which grabbed $4.17b or 39.1% of the total quarterly figure, according to Savills.

Transactions in the commercial sector rose 8.6% QoQ, marking the highest for a single quarter since Q2 2016. This was driven by strong liquidity and a low interest rate environment, buying interest from institutional investors, private equity funds and investment managers that were all concentrated on the commercial sector, particularly office properties in the CBD. In addition, recent political turmoil in Hong Kong has possibly diverted capital flows to other gateway cities in Asia like Singapore.

The residential sector clocked in a total of $2.77b in investment sales in Q3, making up 25.9% of the total market and showing an increase of 34.1% QoQ. Buying momentum for luxury and super luxury condos (each worth at least $10m) continued, seeing 32 units transacted in the quarter. Sales of landed houses (each worth at least $10m) also remained healthy with 18 such transactions over the same period.

Investment sales in the industrial sector skyrocketed 536.1% QoQ to $2.49b, accounting for 23.3% of Q3’s total investment sales. Many of these deals came about through the active acquisitions by S-REITs, with the largest deal being the sale of Mapletree Business City (Phase 2) and the common premises on Pasir Panjong Road. Other deals included Keppel DC REIT’s purchase of two data centres, Keppel DC Singapore 4 (99% interest) and 1-Net North Data Centre at $585.1m and ESR REIT’s $225m acquisition of a newly redeveloped six-storey ramp-up warehouse located at 48 Pandan Road.

Lastly, investments in the hospitality sector amounted to $852.8m or 8% of the total investment sales with five deals, which is said to have almost doubled the transaction volume as compared to Q2.

So far, the first three quarters of 2019 have logged about $22.87b. Savills stated that the full-year figure would hit between $28-30b and may be dominated by the private sector as the number of GLS sites which are to be in Q4 will be very limited.