Investment sales rise 30.7% in 2Q2019 on major office deals

By
/ EdgeProp
|
July 2, 2019 3:28 PM SGT
Major office deals led the way to a stronger showing in the property investment sales market last quarter. The segment saw transactions worth $5.85 billion, and rose 30.7% q-o-q. This comes on the heels of a relatively lacklustre performance in 1Q2019, which recorded transactions of $4.47 billion.
Office investments
Office deals, which accounted for 47.1% of overall investment sales, surged 9.6 times to $2.75 billion. The largest deal was Chevron House, which was sold by Oxley Holdings to AEW Asia for $1.03 billion in April. Another major deal was the sale of the newly completed Frasers Tower, when Frasers Property divested its 50% stake to an unnamed investor in June. The proposed transaction is expected to raise approximately $442.7 million.
Other deals included the sale of 7/9 Tampines Grande for $395 million as well as the collective sale of Realty Centre for $148 million, which both occurred in April.
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“Investors continue to be keen to invest in the Singapore office market in anticipation of further rental growth and capital appreciation,” says Jeremy Lake, managing director of capital markets at CBRE. He says that sentiment has been buoyed lately, as most investors feel that interest rates are likely to go down.
He has seen a pick-up in enquiries for strata offices and even entire office buildings. “With a few more deals in the pipeline, office investment volumes are likely to be very strong for 2019,” he says.
Land sales
Investment sales for 2Q2019 were also propped up by government land tenders, which helped make the residential property sector the second highest contributor. Sales volume rose 30.5% q-o-q to $1.60 billion.
Government land sales at Middle Road and Sims Drive were awarded for a total for $875.5 million in April. A subsidiary of Wing Tai Holdings won the Middle Road site with a winning bid of $492 million ($1,458 psf ppr), while members of Hong Leong Group won the site at Sims Drive with the winning bid of $383.5 million ($732 psf ppr). Two other vacant sites at Jervois Road and King Albert Park were sold for $40.8 million in private sales.
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In the luxury residential market, Good Class Bungalow transaction volumes increased by 27.9% to $143.3 million, and 16 units at Boulevard 88 were sold for more than $10 million.
Foreign investments
Foreign investment volume also rose 5.4 times q-o-q to $2.94 billion and accounted for 50.2% of the overall investment sales volume. Singapore’s property market continues to attract new entrants, like Chinatown Point which was sold to a special purpose vehicle of Pan Asia Realty Advisors, a joint venture between Mitsubishi Estate and CLSA.
Desmond Sim, CBRE’s head of research for Southeast Asia, says: “Singapore continues to attract global capital allocations due to its stability and security. This is especially so for the residential market where the government monitors closely with measures in place to safeguard against excessive speculation from foreign capital.” He says more deals are in the pipeline, and that momentum in the commercial markets will gain further traction and boost investment sales volume over the next six months.
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