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Property investment sales robust

Monday 28 March 2011

SINGAPORE - After last year's robust performance, Singapore property investment sales continued to remain active in the first quarter of this year.

According to property consultant CBRE, this quarter's total investment sales have amounted to S$7.23 billion so far - 66.6 per cent higher than the S$4.34 billion registered in the first quarter last year.

The private investment sales market has accounted for S$4.36 billion or 60.3 per cent of the quarter's total investment sales to date. Meanwhile, investment sales in the public sector contributed the remaining 39.7 per cent or S$2.87 billion.

With effect from this year, CBRE said it has revised upwards the minimum price criteria for an investment sale transaction from S$5 million to S$10 million to reflect the new market worth of investment properties.

Investment sale transactions include landed and non-landed residential property, as well as government and private sales of land and buildings, both strata titled and en bloc. It also includes change of ownership of real estate via share sales.

Despite the residential property cooling measures introduced in January, prices have remained firm, while a development site in Bishan in the Government Land Sales (GLS) programme even achieved a record price, CBRE said.

The GLS residential site at Bishan Street 14 was awarded to CapitaLand for a record-breaking bid of S$869 per square foot per plot ratio or S$550.10 million.

Total residential investment sales, including sales of Good Class Bungalows, accounted for 43 per cent of the quarter's total investment sales or S$3.11 billion in transacted value. This was 21.5 per cent lower than the S$3.96 billion in residential investment sales recorded in the previous quarter but 51.7 per cent higher than the S$2.05 billion chalked up in the first quarter last year.

Residential en bloc sales were active in the first quarter, with seven sites sold so far, generating S$603.70 million.

CBRE's executive director for investment properties, Mr Jeremy Lake, said the impact from Japan's recent earthquake and unfolding geopolitical events is likely to affect Singapore's growth to some extent. He predicted that total investment sales could exceed between S$20 billion and S$25 billion this year but is unlikely to match last year's S$29.38 billion.

Mr Steven Ming, executive director and head of investment sales at property consultant Savills Singapore, said: "Developers and funds are still flushed with capital and are motivated to continue investing in the real estate markets. The big challenge is buying into a right opportunity at a sensible pricing."

He said: "Investors buying today tend to be longer-term investors with a three- to five-year investment horizon. Singapore's robust economic growth in 2010 and anticipated strong growth this year gives investors the confidence for the longer-term prospects in real estate.

"However, bid-ask gaps are widening as more vendors are forward pricing their assets and this could lead to slower sales in the next quarter, but a longer-term investor might do well to take advantage of any momentary pullback to secure their purchases."

Source: Today