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Residential sector dominates property investment sales in Q3
Landed home sales, especially large bungalow transactions, contributed significantly to property investment deals last quarter, research shows.
Real estate investment sales in Singapore jumped 16 percent year-on-year to $4.61 billion in the third quarter of 2016 from $3.99 billion a year before, according to preliminary estimates from JLL.
The total sales value in the first nine months of this year amounted to $15.14 billion, surpassing the $14.49 billion registered over the same period last year.
On a quarterly basis, however, total investment sales value fell 41.2 percent from the $7.84 billion posted in Q2 2016.
The residential sector accounted for the bulk of investment sales in Q3 at $2.07 billion, or 45 percent of the total investment sales value.
Residential investment sales were dominated by landed home purchases (32 percent) and developers’ landbanking activities (31 percent).
The good class bungalow (GCB) segment contributed 36 percent of total landed home sales for the third quarter, as high-net-worth individuals capitalised on the current soft pricing environment and bought $242 million worth of GCBs. This is a significant increase from the $90 million transacted three months ago for GCBs, said the consultancy.
Including the Nassim Road land parcels that property developer OUE Limited acquired for $56.6 million, the total sales value of GCBs that changed hands in Q3 would increase to $298 million.
Meanwhile, land-thirsty developers purchased about $649 million of development land. While this is 50 percent lower than the $1.3 billion recorded in Q2 2016, it is 28 percent higher than the $508 million amassed in Q3 last year.
Aside from the two Government Land Sales (GLS) sites at Anchorvale Lane ($240.95 million) for executive condominium development and Fernvale Road ($287.10 million) for non-landed residential development, another significant deal was the conclusion of the second collective sale of the year involving a Roxy-Pacific Holdings unit, which signed a conditional agreement to acquire the freehold Harbour View Gardens site at Pasir Panjang Road for $33.25 million.
“Developers are seeing a gradual depletion of their land stock given the recent pick up in home sales. They are thus actively seeking to replenish their land bank,” said Karamjit Singh, Head of Residential at JLL Singapore
“The scaling back of land supply by the government for residential development had also led to developers turning to the private sector for opportunities. This has lent support to the private sector land sales market, including the collective sales market.”
Looking ahead, Tay Huey Ying, Head of Research for JLL Singapore, noted that while 2016 started on a low, it is expected to end on a high.
“Given that the sales tally to-date already amounted to some $15.41 billion, barring unforeseen circumstances, there is a high likelihood that full-year property investment sales value could stage a rebound and hit the highest in three years, surpassing 2014 and 2015’s $20.62 billion and $20.35 billion, respectively,” she added.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
