Property investment sales crash to six-year low in 2015

The escalating price mismatch is to blame.

Property investment sales in Singapore dropped 15% to $16 billion in 2015, according to a report by DTZ.

This marks the lowest sales volume since 2009, largely due to the mismatch of price expectations between buyers and sellers, and the slowdown in launches of new land parcels from the GLS programme.

DTZ noted that property sales by government agencies fell by 13% to $5.8bn last year, while private investment sales fell by 8%% to $10.3bn. 

The biggest property investment transaction of the year was the $1.67bn sale of a land parcel in Paya Lebar to Abu Dhabi Investment Authority and Lend Lease. 

Among the residential land parcels sold via the GLS programme, the biggest was the $483m sale of a land parcel at Dundee Road, which was awarded to Hao Yuan Investment.

This deal also saw the highest price per plot ratio among the residential sites awarded in 2015 at $871 per sq ft per plot ratio. The breakeven price for the proposed development is expected to be at least $1,240 per sq ft. 

Over in the private property investment space, sales were affected by the uncertainty in global markets, as local investors seek to diversify their portfolio by growing their asset pool overseas.

Among the largest private property investment deals was the $37m sale of The Verge, as well as the $51.1m sale of Harper Kitchen, a freehold industrial building near Tai Seng MRT station.

DTZ said that despite headwinds, there was still much interest for Singaporean properties in 2015 given the country’s good governance and dynamic economic environment. 

Additionally, investors are willing to bid for leasehold projects that are priced reasonably and have the potential to be value added through redevelopment or additions and alteration works.