Property investment sales drop in Q3

November 14th, 2011 at 11:14 pm

A TOTAL of $21.3 billion of property investments were recorded for the first three quarters of this year, an increase of 5.6 per cent from the figure in the same period last year, according to a report by Savills Singapore.

This despite slower investment transaction activity in the third quarter of this year brought on by growing fears about economic uncertainties.

But the momentum has slowed markedly. 

Deals in the third quarter amounted to $4.51 billion, a dip of almost 50 per cent from the $8.51 billion recorded in the second quarter.

Industrial sales emerged as the star performer for the quarter, with an overall growth of 94.4 per cent.

This was due mainly to the surge in the values of private sector deals and an increase in acquisitions by industrial real estate investment trusts.

Mr Steven Ming, Savills’ executive director for investment sales, said the tighter restrictions on residential properties have driven investors to consider other non-residential segments such as industrial properties.

Hotel investment deals for the third quarter also saw a pick-up on the back of market confidence in Singapore’s tourism industry. Sales for that segment were at $194.1 million.

Residential sales accounted for $2.2 billion. The segment made up the lion’s share of the investment sale deals for the third quarter, despite values falling more than 50 per cent from the previous quarter.

The Savills report said that while choice sites in good locations continue to receive overwhelming responses from developers, the bids have been at a more reasonable level.

This, it said, points to developers holding a more cautious outlook, due to the twin factors of an ample supply of land from the Government Land Sales programme and price resistance from private residential properties.

One example raised in the report was the non-landed site nestled between Upper Serangoon Road and Pheng Geck Avenue.

This plot of land attracted 15 bids in August, but the

$185 million winning bid from Tuan Sing Holdings was 6.6 per cent lower than the price of an adjacent site that was awarded in June last year.

Commercial deals also shrank 53.1 per cent, accounting for $848.3 million or 18.8 per cent of the third quarter’s sales.

The final three months of this year should see a better performance, said Mr Ming.

He said several big transactions, including Ocean Financial Centre, One Phillip Street, Commerce Point and Chijmes, were closed last month. This is on top of seven state parcels that have been sold for a total of almost $1 billion.

Fourth-quarter investment sales would therefore be expected to range between $5.7 billion and $6.7 billion.

While this would bring the total year’s investment deals to between $27 billion and $28 billion, it would still fall short of the almost $32 billion worth of investment sales last year.