Hotel, suburban retail are the investment hotspots in real estate this year, says Colliers

Bright spots seen in the industrial market as well.

Real estate investments are projected to increase this year and hover around $22b to $24b as Singapore’s safe-haven appeal continues to attract long-term foreign capital, according to Colliers.

In their 2024 Investor Insights report for the city-state, Colliers said the forecasted total investment volume would translate to a 5% to 15% increase from 2023’s tally of $20.8b, representing a rebound from the 30.6% year-on-year decline last year.

Tang Wei Leng, head of capital markets and investment services at the property agency, sees more hotel deals closing this year, especially for properties offering value-added opportunities given the bright outlook ahead for the hospitality sector. 

She said investors are also likely to be drawn to suburban malls, which could offer mid-4% returns, while private capital will favour small to mid-sized transactions in the shophouse and strata office markets. 

Tang noted that Singapore’s office market is another sector to watch out for this year as it continues to enjoy steady valuations, healthy occupancy rates, and stable rents, despite the broader gloomy outlook for offices globally.

“Singapore continues to attract investor attention, particularly with the anticipation of lower interest rates… Blessed with political stability and a resilient economy, Singapore offers stable returns and potential for long-term capital growth, making real estate a prized asset with few motivated sellers,” she said.

Meanwhile, Colliers sees end-users and investors on the lookout for attractive yields driving investments in the industrial real estate space. Portfolio sales as well as sale and leaseback transactions will be the trend for the year, it said.

In the private residential market, it expects luxury home sales to stay muted following the hike in ABSD for foreigners, while government land sales will account for the majority of residential investments this year.