Singapore private office investment sales hit 9-year high of $2.12b

It's almost half of the $4.99b worth of real estate investment deals in Q1.

A total of $4.99b worth of real estate investment deals were transacted in the first quarter of 2017 according to JLL. Although this is 40.9% lower than the $8.44b accumulated three months ago, it is 67.4% higher than the $2.98b from 2016.

Market activity was primarily dominated by the private sector, with $4.47b in private sector sales accounting for 90% of 1Q17’s total sales value.

“The engine of growth for Singapore’s private investment sales market in 1Q17 was the office sector which took the lion’s share at 47.5%. In all, investors injected about $2.12b worth of capital into the sector in 1Q17. This not only represented a 60.6% quarter-on-quarter (q-o-q) jump from the preceding quarter’s $1.32b, it was also the highest first quarter private sector office investment sales value amassed since 2008,” said Tay Huey Ying, head of research & consultancy at JLL.

The top two office deals in 1Q17 were entity sales. The entire interest in the holding company of PwC Building was sold to an indirect subsidiary of Manulife Financial Corporation for $760.60m, and the entire interest in Plaza Ventures Pte Ltd, the registered owner and developer of GSH Plaza, was sold to Hong Kong-listed Fullshare Holdings for $725.21m.

JLL added that the office sector was the star performer of the private sector investment sales in the commencing quarter of 2017. Whilst all sectors posted year-on-year (y-o-y) growth in sales value, it is the only sector that posted q-o-q growth in 1Q17. Private sales of residential properties worth $5m and above apiece fell 35.3% q-o-q to $1.69b although this still placed the sector on the second spot on the quarter’s private sector investment sales chart with a 37.7% market share. Private sales of $5m and above retail and industrial properties slipped more than 50% q-o-q and each accounted for less than 10% of the quarter’s private sector investment sales. Sales of hotel and mixed-use properties remained muted, with no known major transactions in 1Q17.

“Investors’ confidence in Singapore’s office property market continues to be on the rise, underpinned by the city state’s sound economic fundamentals. They are acutely aware that the window of opportunity to acquire available assets at an attractive point in the cycle is fast closing as the office leasing market is already showing signs of stability at the prime CBD end,” said Greg Hyland, head of capital markets for JLL.

Reports predict that sales in residential and retail are expected to follow a similar positive trend along with office property sales. The combination of upbeat buyer sentiment and attractive incentives offered by developers for high-end properties are expected to uplift the strata sales market.