Property investment sales lowest since 2009

Photo: William Cho/Wikimedia Commons

Property investment sales in Singapore plunged 15 percent year-on-year to $16 billion in 2015, the lowest sales volume in six years, according to a DTZ Research report.

Property sales by government agencies fell 13 percent to $5.8 billion while private investment sales dropped eight percent to $10.3 billion.

The report stated that the decline in investment sales was largely due to the mismatch of price expectations between buyers and sellers, and the slowdown in launches of new sites from the Government Land Sales (GLS) programme.

Sales were also affected by the uncertainty in global markets, as local investors seek to diversify their portfolio by growing their asset pool overseas.

Notwithstanding, there was still much interest for Singaporean properties in 2015 given the countrys good governance and dynamic economic environment, said DTZ.

The biggest deal completed last year was the sale of a site in Paya Lebar for $1.67 billion to Abu Dhabi Investment Authority and Lend Lease. The developers plan to build a mixed development that will have 91,340 sqm gross floor area of office space, 43,740 sqm of retail space and 429 apartments.

Meanwhile, the sale of a land parcel at Dundee Road in Queenstown was the most expensive residential site sold in 2015 via the GLS programme, fetching the highest price of $483 million. Awarded to Hao Yuan Investment, the site also saw the highest residential price per square foot per plot ratio (psf ppr) in the year at $871 psf ppr. The breakeven price for the proposed development is expected to be at least $1,240 psf, noted DTZ.

The consultancy added that investors are willing to bid for leasehold projects that are priced reasonably and have redevelopment potential.

For instance, The Verge, which was sold for $317 million in Q4 2015, can be redeveloped into a mixed-use development.

Going forward, DTZ expects the real estate investment market in Singapore to present interesting opportunities to investors.

2016 is expected to be a rocky year for the commodities and stock market, so real estate will become an attractive asset class for investors. Additionally, in a populous, land-scarce Singapore, the economic conditions are favourable for long-term property appreciation, so real estate with good specifications and location will still be in demand, said Swee Shou Fern, DTZs Senior Director of Investment Advisory Services.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg

More from PropertyGuru:
Asia Pacific office supply to surge in 2016
Keppel REIT sells Sydney office tower for $160mil
TDSR doing its job, stats show
Singapore developers more pessimistic: survey