Property investment volume in Singapore is expected to return to pre-Covid-19 levels this year as the vaccination programme is gradually rolled out amid optimism for overall economic growth, Cushman & Wakefield said in a report last Friday.
The commercial real estate services firm projected total sales for this year to be in the range of $18 billion to $20 billion as investors “stand ready” to put out more capital in anticipation of growth and better returns, which will aid the recovery of the investment sales market.
Total investment volume in the fourth quarter of last year came to $3.33 billion and for the full year, it stood at $12.4 billion, excluding real estate investment trusts (Reits) mergers, said the firm. The full-year figure, including Reits mergers, stood at $23.7 billion.
The pre-Covid-19 sales tally ranged from $17.6 billion to $36.8 billion, based on data between 2015 to 2019, it added.
Spurred by the low interest rate environment, investors with ample liquidity will likely look to acquire assets that provide higher returns, with more buzz expected in the residential investment segment as residential sales continue to keep pace.
This comes as new private home sales in December climbed to their highest level for the month in eight years, as buyers jumped in on expectations of further price increases with a post-pandemic economic recovery.
To increase exposure to this market segment, older Central Business District (CBD) office assets could consider taking advantage of the CBD Incentive Scheme, said Cushman & Wakefield. The scheme, announced in March 2019, incentivises developers to convert ageing developments in the CBD for other purposes, such as hotels and residential use.
Mr Wong Xian Yang, associate director of research for Singapore and South-east Asia at Cushman & Wakefield, said investors are now making up for time lost during the two-month circuit breaker last year and the subsequent phases of Singapore’s reopening when sales activities faced a number of restrictions. “Big-ticket transactions are still challenging, but the market could see the return of these in the second half of this year. Residential collective sales and older CBD office assets could see renewed interest, given the resilient residential market segment,” he said.
The positive sentiments were echoed by Mr Michael Tay, head of capital markets for Singapore at real estate services and investment firm CBRE.
He said Singapore’s investment market has always been resilient and has demonstrated its ability to recover from crisis situations in the past.
“This was apparent post-global financial crisis when real estate investment sales volume improved by a strong 265.4 per cent in 2010,” he said.
CBRE said real estate investment sales are likely to get “a shot in the arm” amid vaccination optimism, with business sentiments picking up and border restrictions gradually eased this year.
Mr Tay said that while investors are likely to remain discerning at the beginning of this year, they will likely be on the prowl for investments with higher returns, stability and value.
“As an investment destination, Singapore fits this bill perfectly, given its proven ability to handle the pandemic, macroeconomic stability and political-neutral stance,” he added.
Last year, residential investment sales saw a jump, with sites such as one between Guillemard Road and Jalan Molek going for $93 million, as well as Sophia Ville and Fair Haven in Sophia Road together going for $62 million.
Good class bungalows (GCBs) also saw healthy sales and higher transaction values despite the Covid-19 pandemic last year, noted the Cushman & Wakefield report.
In the last quarter of 2020, noteworthy transactions included a Tanglin Hill GCB at $31.5 million and a Chatsworth Park GCB at $44 million.
In the same quarter, the largest non-landed transaction was a $62 million super penthouse at the Wallich Residence in Tanjong Pagar, the unit bought by British billionaire James Dyson in 2019 for a reported $73.8 million.
“Source: [Investment property sales set to return to pre-Covid-19 levels] © Singapore Press Holdings Limited. Permission required for reproduction”
