Public sector investment sales jump 38.2% to $4.67b

Robust land-banking activities by developers in the public sector through the Government Land Sales Programme in 2Q 2011 enabled the Singapore property investment sales market to keep pace with the preceding quarter in spite of slower activity in the private sector.

Total investment sales value amounted to $9.82 billion in 2Q 2011, just 1.6% down from 1Q 2011. Sales continued to be dominated by the private sector, which contributed to 52.4% of all investment sales, while the public sector accounted for the remaining 47.6%. However, private sector deals fell by 22.0% on a QoQ basis to around $5.15 billion in 2Q 2011.

The slack in private sector activity was picked up by the public sector. Public sector investment sales value surged 38.2% QoQ to $4.67 billion this quarter, the highest quarterly level of state land sales achieved since 3Q 2007.

Developers’ bids were, however, more aggressive at the start than at the end of the quarter.
Developers’ quest for fresh State land parcels for residential development became more measured and selective in June.

Prospects of thinning profit margins from residential developments in light of the huge quantum of pipeline supply had prompted developers and investors to channel more of their funds into alternative asset classes, one of which is the industrial sector.

In the next half year, supported by Singapore’s strong economic fundamentals, her reputation as a global business hub and a safe investment haven, the continued favourable low interest rate environment, as well as ample liquidity in the market, property investment sales momentum is forecast to keep pace with the first six months of the year, which saw sales value totalling $19.80 billion, or 56.9% of the total $34.79 billion worth of investment sales amassed in the whole of 2010.

Overall, on a sectoral basis, the residential sector raked in a total of $5.29 billion worth of sales, accounting for the majority or 53.8% of the $9.82 billion closed in the quarter.

Total investment sales value could approach a region of $35.00 billion for the whole of 2011.