Local property investment sales tumble as developers turn to overseas deals

Investment sales hit a 7-year low in Q1.

The property investment market in Singapore started the year on a weak footing as global economic uncertainties took a toll on investor confidence, revealed a report from DTZ.

Real estate investment sales fell to $1.75bn in the first three months of the year, a far cry from $6.7bn in Q4 2015. The investment sale volume in Q1 2016 is the lowest since Q3 2009. During the Global Financial Crisis, investment sales amounted to $192m in Q1 2009.

The decline in investment sales is partially attributed to the uncertainty in the global economy. Weaker local real estate markets also contributed to the fall in sales. The cooling measures continue to discourage investment sales of residential properties in private market, while the huge supply of office space slated to come onboard in 2016 and 2017 further slowed down sales in the commercial market.
While investment sales in the private market fell from $5.1bn to $521.90m in the first quarter of 2016, the total amount invested in overseas real estate amounted to at least $2.05bn. One the largest deals reported was Mapletree’s investment in student housing[3]. They bought a portfolio of 25 student accommodation assets, comprising 5,500 beds, in the United Kingdom.

“Although there were fewer transactions concluded in Q1, both local and foreign investors remain keen in Singapore properties and are on a constant lookout for interesting propositions. However, the negotiation process is longer due to the mismatch of expectations,” noted Ms Swee Shou Fern, DTZ’s Senior Director for Investment Advisory Services.

Looking forward, GLS is expected to continue to drive investment sales.