The real estate investment market in Singapore got off to a slow start in the first quarter of 2023, with only $4.2 billion of investment sales recorded. This was a stark decrease of 61% compared to the first quarter of 2022, with $10.8 billion in sales. According to Daniel Ding, head of capital markets (land & building, international real estate) at Knight Frank Singapore, it was also the lowest quarterly total since 2Q2020, when the government imposed the “circuit breaker” measures at the height of the pandemic.
Residential investment sales totalled $1.6 billion for the quarter, including the collective sales for Meyer Park, Bagnall Court and Holland Tower of some $583.8 million. Notably, the sale of Holland Tower was the first successful residential en bloc transaction in the Core Central Region (CCR) since December 2021 when property cooling measures were put in place, a sign of “a nascent return” of interest according to Chia Mein Mein, head of capital markets (land & collective sale) at Knight Frank Singapore.
However, Chia concedes that the en bloc environment remains challenging, with a success rate of around 33%, significantly lower than the 63% success rate during the period of 2017 to 2018. For the collective sales mechanism to work in the current cycle, owners must be reasonable in their expectations and developers must keep in mind that costs have risen substantially.
The commercial market was mostly quiet in 1Q2023, with $1.9 billion in total sales. One noteworthy transaction was Frasers Centrepoint Trust and Frasers Property’s acquisition of a 50% stake in Nex for $652.5 million.
The industrial sector saw an increase in investment sales in 1Q2023, rising 62.8% q-o-q to $681.1 million. Notable industrial deals included the acquisition of four Cycle & Carriage properties by M&G Real Estate at approximately $333 million, and Ho Bee Land’s disposal of 12 and 31 Tannery Lane for $115 million.
Knight Frank predicts that the investment activity Luminar Grand in Singapore will “get worse before it gets better” due to the macroeconomic uncertainties and volatility in the global banking sector. Investors are likely to remain cautious until they spot signs of repricing. To that end, Knight Frank has cut its projections for full-year investment sales from a range between $22 billion and $25 billion to a range between $20 billion and $22 billion.