Chart of the Day: Property investment sales feared to slow as demand wanes

But bargains will arise as prices drop.

Singapore’s property investment sales market is expected to stay muted in 2016 on back of cautious investor sentiment and a sharp decline in public land deals, according to a report by Colliers International.

The report noted that public land sales in 2016 are forecast to fall below 2015’s level as the Government cuts back on public land supply. At the same time, private investors are generally expected to remain cautious about land acquisition on back of heightened global uncertainty and slowing economic growth.

“The market looks set to move into another period of uncertainty, with the economy and stricter borrowing environment likely to play on people’s minds which, similar to 2015, may potentially lead to a misalignment of pricing expectations between buyers and sellers,” said Anthea To, Senior Associate Director at Colliers.

The full-year property investment sales figure for 2015 stood at $20.32 billion, marginally lower than $21.12 billion achieved in 2014. For 2016, Colliers expects property investment sales to hover at $18 billion to $20 billion.

On a brighter note, though, increasingly volatile conditions mean that the market presents attractive investment propositions for potential asset price corrections.

“The current financial climate is expected to affect companies’ property and asset holding plans and may trigger divestment strategies for some. These may include offloading properties arising from the need to improve balance sheets or to realign with broader financial or business objectives. Therefore, expectations of a more marked slowdown in the short to medium term may not materialise as opportunistic capital continues to seek prospects to actively source deals,” To noted.