Singapore sealed 15 large investment market deals

Overall Q2 2010 investment sales posted a 64.1% increase over Q1 2010 to $4.71bln.

The investment sales market is slowly finding its feet as increasing confidence and improved funding conditions is leading to larger values sealed per transaction. According to DTZ Research, 15 deals over $100m each, totalling $3.52bn, accounted for nearly three-quarters of total investment value in Q2 2010, which is considerably higher than the 55.5% that 9 transactions of over $100m each contributed to total investment in Q1 2010.

The figures compiled by DTZ Research comprise transactions that are more than $5m each and excludes $2.34bn of transactions in single residential units, lots that cannot be redeveloped/subdivided into more than one plot as well as deals that are deemed to be interested person/party transactions, accoring to a DTZ Research report.

The bulk of investments were noticeably geared towards government sale of sites. 11 of the 15 deals above $100m were for sites released under the Government Land Sales (GLS) program. The highest was for a white site in Jurong Gateway which was sold for $748.89m.

Overall investment sales for Q2 2010 posted a 64.1% increase over Q1 2010 to hit $4.71bn. $2.75bn, or 58.3% were from residential transactions. This was powered by a record breaking quarter in sales of government sites earmarked for residential use, which totalled $1.85bn in Q2 2010 – surpassing the $1.51bn record set in the last quarter of 2007.

Lend Lease’s successful bid for Jurong Gateway’s white site propelled investments in mixed used properties to second position in Q2 2010. Investment in this sector is expected to be prominent in the second half of the year as two mixed-use GLS sites at Stamford/North Bridge Road and New Upper Changi Road/Bedok North Drive have already been launched.

There are another four mixed-used GLS sites on offer in 2H 2010, including two white sites.

Investments in industrial properties shrank in Q2 2010, making up only 9.3% or $438.50m of total transactions. This was in contrast to Q1 2010 when transactions in industrial properties stole the limelight. The absence of any large scale acquisitions by REITs in Q2 2010 was the major factor contributing to a 59.4% quarter-on-quarter drop in transacted values in the sector.

Also down were transactions in office properties, as investment value fell 39.5% from the preceding quarter to $266.10m. The notable transaction negotiated in Q2 2010 was a deal brokered by DTZ for Marina House, which changed hands for $148m.

However, investments in non-residential properties are expected to gather pace in the coming quarters. “Some industrial properties are in the process of being acquired for injection into new REITs, while tenders for a number of private commercial properties, such as Chow House, have been launched”, observed Ms Chua Chor Hoon, Head of DTZ South-east Asia Research.

While investments in the property sector continued to be dominated by local companies and institutions, the growing presence of some Asian firms from China and Malaysia in recent GLS tenders was noted. “With the revaluation of the yuan and a number of Asian pension funds looking to increase returns through alternative investments in real estate, we expect the main source of foreign investments to be from within Asia”, said Shaun Poh, Senior Director (Investment Advisory Services and Auction).