Property investment sales down 10.6% YoY to $30b in 2019

Fewer collective sales during the year drove the decline in sales value.

Total property investment sales declined by 10.6% YoY to $30b in 2019, no thanks to fewer collective sales, reported Knight Frank. In Q4 2019 alone, investment deals totalled $7.3b, a 27.1% QoQ crash.

However, the report noted that this follows the trend of the market slowing down towards the end of the year.

Commercial properties continued to lead investment sales as investors were encouraged by a more positive outlook for the office and hotel sectors. Commercial property investment sales grew by 2.06 times from $6.1b in 2018 to $12.5b in 2019. In Q4, the commercial investment sales eased to $2.6b from $3.9b in the previous quarter, although this was due to a higher base in Q3 as well as a seasonal effect.

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Despite the decline in investment sales, there were several sizable commercial properties transacted, noted Ian Loh, head of investment & capital markets at Knight Frank. The most notable one was the sale of the Bugis Junction Towers at a price of $547.7m ($2,200 psf NLA) by Keppel REIT to Village Prop.

In light of the Central Business District (CBD) incentive scheme, Knight Frank believes that investors’ appetite for commercial developments will remain keen in 2020 as they look for prime sites or developments for wealth preservation purposes or areas earmarked for increased plot ratios with the potential for redevelopment.

Hotel deals also boomed during the past year, encouraged by increasing tourist arrivals and a limited hotel supply. Q3 2019 witnessed the highest number of international visitors for a quarter at 5 million visitors, a 3.5% YoY rise from 4.8 million in Q3 2018, data from the Singapore Tourism Board showed.

The hotel sector recorded a total sale amount of $4.4b for the whole year, closing the year with $1.1b worth of transactions in the fourth quarter. Notable hotel deals in the final quarter alone include the sale of the Andaz Singapore Hotel by M+S Pte Ltd to Hoi Hup Realty for $475m, ot $1.4m per key). Another notable deal is the divestment of the Novotel Clarke Quay hotel by CDL Hospitality Trusts for $375.9m, or at $900,000 per key.

In contrast, residential investment sales declined to $7.7b in 2019 from $18b in 2018. There were fewer land bids for Government Land Sales (GLS) sites in 2019, with each land parcel received 6 bids on average, lower than the average of 7.5 bids in 2018, noted Knight Frank.

Also read: Real estate investment sales leapt 53.7% to $11.2b in Q3

About $800m worth of residential investment deals were registered in Q4 2019, about 75.5% QoQ lower than the $3.1b transacted in Q3. Knight Frank noted that this was due to the volume of residential investment sales were largely dependent on when the GLS sites were awarded.

Notable deals during the final quarter include the sale of good class bungalows (GCB) at 80 Belmont Road ($34.5m), 5E Tanglin Hill ($31.5m) and 7 Maryland Drive ($30m).

Meanwhile, investment sales of industrial properties in 2019 posted 31.5% YoY growth to $4.4b with some $2.6 billion recorded in Q4 alone. Whilst industrial properties with high-specifications are the ones in demand, the manufacturing sector and especially the electronics cluster has also showed signs of recovery, the report said.

Amongst industrial property transactions, the sale of the business park in Pasir Panjang by Mapletree Commercial Trust (MCT) from Heliconia Realty at S$1.6 billion (S$1,308 psf NLA) posed as the largest deal in Q4 2019.

Another key industrial development deal includes the acquisition of the seven-storey Nucleos biomedical research facility within the one-north business park by Ascendas REIT from CapitaLand for $289m.