S’pore property investment sales nearly double to $20.2b in first half of 2022: Knight Frank

SINGAPORE (THE BUSINESS TIMES) – The local property investment market recorded some $8.2 billion worth of transactions in the second quarter of 2022, bringing the half year’s total to $20.2 billion – an 88.7 per cent improvement or almost double the $10.7 billion in transactions registered for the same period last year.

According to figures from Knight Frank Research released on Tuesday (July 5), private deals accounted for 76.1 per cent of transactions in the second quarter, with the commercial sector taking the lead with a series of big-ticket transactions. These include the sale of Westgate Tower at $677.5 million and Twenty Anson ($600 million), as well as a freehold luxury commercial development at 28 and 30 Bideford Road ($515 million).

Ms Chia Mein Mein, head of capital markets (land and collective sale) at Knight Frank Singapore, attributes the rise of investor interest in commercial assets to an economic climate of rising inflation, interest rates and raw materials and construction costs, as well as a prolonged war between Russia and Ukraine.

“Key factors that could influence such investment decisions are the likelihood of capital appreciation and organic growth through recurring rental income, as well as the lack of additional buyer’s stamp duty rates incurred for commercial developments – a defensible asset class against looming economic uncertainty,” said Ms Chia.

She also foresees further growth in transactions for larger plots of land, noting the recent interest from developers in exploring larger land sizes, such as the sale of Lakeside Apartments for $273.9 million to Wing Tai Holdings and an offer for Chuan Park by a developer for $860 million in the second quarter.

Sites that possess attractive attributes such as close proximity to amenities like MRT stations and good views, Ms Chia noted, could generate more interest, especially so for those that can potentially yield up to 300 units.

Recent bids under the Government Land Sales programme closed as high as $1.3 billion for the site in Dunman Road, while the plot in Pine Grove (Parcel A) settled at $671.5 million, bringing the price per square foot per plot ratio to approximately $1,350 and $1,318 respectively.

For overseas investment opportunities, Singaporean investors appear most inclined towards office and industrial developments. The largest deals for the second quarter of 2022 comprised the sale of a commercial asset in London by Sinarmas Land for about $334 million and a logistics development in Britain by Frasers Logistics & Commercial Trust at some $171.7 million.

The total outbound investment sales from Singapore summed up to $13.5 billion in the quarter, according to data from Real Capital Analytics.

“With the encouraging pace of sales and keen interest from both local and foreign stakeholders, total investment sales for the whole of the year could surpass expectations to hover within the range of $32 billion to $35 billion, barring any other major external headwinds,” said Ms Chia, who is further upbeat on growth in the real estate sector for the next half of the year in spite of a looming recession.

Hospitality asset owners and existing collective sale owners have reason to be hopeful as long as price expectations remain realistic, Ms Chia added.