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En bloc deals drive Q1 property investment sales up 89% year on year to $11b: Colliers

This article first appeared in The Business Times on 7 May 2018

 

SINGAPORE – The property investment sales market here grew 89 per cent year on year to hit $11 billion in the first quarter of 2018, said a Colliers International quarterly report released on Monday (May 7).

This was driven mainly by sales in the residential segment which soared 233 per cent year on year and 10 per cent quarter on quarter to S$9.1 billion, the highest since the second quarter of 2007.

Such deals also took up 83 per cent of all investment sales in the first quarter.

Notably, the five largest investment deals in the first quarter were all residential collective sales: Pacific Mansion, which went for $980 million; Park West at $840.9 million; Pearlbank Apartments at $728 million; Goodluck Garden at $610 million; and Brookvale Park at $530 million.

Total property investment sales for the quarter were 12 per cent lower than for the fourth quarter of 2017, thanks to softer activity in the commercial segment.

“Following the revival of collective sales from mid-2017, developers continued to search aggressively for suitable sites to replenish their depleting land banks, leading to an active collective sales market and keen bidding for sites offered through state land tenders in Q1 2018,” said Colliers’ director and head of research Tricia Song and assistant manager for research Nathan Nguyen in the research note.

Developers snapped up 17 residential collective sales sites worth $5.83 billion in the quarter, helping to bring the value of private residential investment sales up 16 per cent quarter on quarter to $7.9 billion.

Colliers also noted that there were 24 collective sale deals amounting to $8.12 billion in the first five months of 2018, close to the $8.13 billion for the whole of last year from 27 deals.

However, the quarter also saw the commercial segment sag 86 per cent quarter on quarter to $437.4 million worth of transactions, or just 4 per cent of the total investment sales in the first quarter, compared with 30 per cent for the whole of 2017.

Colliers said the only major transaction in the first quarter was Perennial Real Estate Holdings’ acquisition of Pontiac Land affiliate Chesham Properties’ 50 per cent stake in Capitol Singapore for $528 million, of which Colliers attributed the retail component to be worth $349.5 million.

In comparison, the fourth quarter saw commercial deals like the public tender of the old Beach Road Police Station site which went to a GuocoLand and Guoco Group tie-up for $1.62 billion.

Year on year, commercial investment sales were down 78 per cent as the first quarter of 2017 saw major private deals such as the PwC Building, GSH Plaza and a 70 per cent stake in TripleOne Somerset.

Industrial site sales rose 62.6 per cent year on year to $641.1 million, or 6 per cent of total investment sales for the quarter, much of it thanks to the government tender of a white site at Rochester Park for $365 million.

Meanwhile, shophouse transactions with a value of $5 million and above reached a record peak of $478.6 million, or 4 per cent of all investment sales in the quarter, thanks to strong interest from high net worth individuals, property funds and investment companies.

Hospitality transactions in the quarter stood at about $283 million, or 3 per cent of the total for the quarter. Colliers noted “improved interest” thanks to better local hotel occupancy and daily rates.

“We expect the overall investment sales momentum to pick up further over the rest of 2018, as Singapore remains a safe haven in uncertain times,” said Ms Song and Mr Nguyen in the report, citing concerns earlier this year over a global trade war and increased equity market volatility.

Colliers said it believes that most property sectors have bottomed, and that residential and office segments would be the most attractive for investors thanks to “an expected multi-year upcycle in the underlying residential sales and office leasing markets, and an increased availability of choice properties”.