Co-sale of Shenton House was Singapore’s largest private property transaction in the fourth quarter
Investment in Singapore real estate is expected to jump 10% to S$23 billion ($17.1 billion) this year, driven by residential and retail transactions, Savills said.
The bullish outlook takes into account increased state-owned land sales activity and the prospect of lower interest rates in the second half of 2024, the consultancy said in a release on Thursday.
Alan Chong, head of research and consultancy at Savills Singapore, said: “The residential co-sale market is expected to continue this year as developers become more cautious and tend to replenish land from GLS sites.” .
Meanwhile, Savills said in the city-state’s latest sales and investment report that retail assets, which are yielding 4%, could attract more attention. There is even a possibility that one or two of the landmark malls in the famous Orchard Road shopping district may be sold due to a lack of new sites for retail development, officials said.
Big deals ease the slowdown in the fourth quarter
Investment sales tracked by Savills in the fourth quarter fell to S$7.3 billion from S$5.4 billion in the previous three months. Factors contributing to the economic slowdown include high interest rates, price discrepancies between buyers and sellers, and strict due diligence checks stemming from concerns about money laundering.
Jeremy Lake, Managing Director, Investment Sales and Capital Markets, Savills Singapore
The public sector made the largest contribution to investment in the fourth quarter, with six government land parcels totaling S$2.9 billion being awarded, led by a residential site in District 12 Lorong 1 Toa Payoh. City Developments Ltd, Frasers Property Ltd and Japanese real estate company consortium Sekisui House have won the rights to redevelop the site, currently occupied by the Singapore Police Force Security Command, in a S$968 million bid. .
Commercial market trading volume reached S$1.6 billion in the fourth quarter, down 0.9% compared to the July-September reading, as three large deals played an outsized role.
In November, Shenton House was sold en bloc to a private company controlled by the vice chairman of Malaysia’s IOI Property Group, which transferred the commercial tower in the Marina Bay area for S$538 million. In the same month, TE Capital Partners partnered with LaSalle to acquire the Vision Crest commercial building in the Orchard Road area for S$441 million, while Keppel Capital acquired the Willkie Edge complex near Little India for S$348 million. I bought it for 10,000 Singapore dollars.
hibernation is coming to an end
The report said that while the recovery of the office building capital market will depend on the trajectory of interest rates, private equity’s all-in borrowing costs to acquire income-producing properties currently range from 5.2% to 5.7%. Range and not a starter at this point. The asking price for the top-of-the-line office building gives him a yield of 3.5%.
Despite the imperfections, Jeremy Lake, Savills Singapore’s managing director of investment sales and capital markets, said 2024 volumes are expected to be higher than last year’s total as investors “come out of hibernation”. I expect it to exceed that.
“Inflation is falling, interest rates have peaked, and for some investors, the glass is ‘half full,'” Lake said.
He expects deals to close across all different asset classes in 2024, with developers, funds and ultra-high-net-worth individual clients informing agents of their intent to buy.