Commercial property investment sales double two-fold

S$2.3 billion of commercial property were sold in 2Q12.

Savills noted that investment sales in the commercial property market amounted to S$2.3 billion in Q2/2012, accounting for 31.2% of the total investment sales, a two-fold increase from the S$1.0 billion in the previous quarter.

A plethora of government measures introduced to keep residential prices at bay continued to edge investors towards non-residential investments such as strata-titled ofi ces and shophouses. In the ofi ce property sector, there were eight transactions of strata-titled ofi ces above S$10 million each in Q2/2012. Owing to a slew of new launches in recent months and limited supply in the market, the strong take-up in new projects such as EON Shenton and Oxley Tower had a spill-over effect on older buildings, like The Adelphi, Tung Centre and The Arcade. In the meantime, the sales of shophouses also remained healthy. A total of six transactions worth S$119.9 million were recorded in Q2/2012, 73.0% higher than the S$69.3 million in the previous quarter.

Block sales also picked-up. Keypoint on Beach Road was sold for S$360.0 million in April, while May saw 66 strata ofi ce units in Burlington Square on Bencoolen Street sold en bloc for S$89.3 million and Tower 15 on Hoe Chiang Road changing hands for S$360 million. Most recently, in June, K-Reit bought another 12.39% interest in Ocean Financial Centre for S$285.7 million, increasing its stake to 99.9%. In the retail market, three properties were sold in the reviewed quarter – McDonald’s Place for S$150.0 million, Hougang Plaza for S$119.1 million and Compass Point for S$519.0 million.

It was noted that several properties were acquired with a redevelopment intention, such as Keypoint, Tower 15, McDonald’s Place and Hougang Plaza. Their redevelopment plans have been reported to include both residential and commercial components to capitalise on the current buoyancy in these two property sectors.