Prospects for investment property remain bright in 2019

By Shaun Poh / Cushman & Wakefield | November 10, 2018 2:00 PM SGT
The investment property market continues to reel from the latest round of property measures announced in July 2018. Residential collective sales have taken the hardest hit as buyers and sellers take stock of the impact, redoing their sums to assess the risks in this current climate. Nevertheless, developers are still motivated to hunt for good value buys to shore up their landbank, looking at either the Government Land Sales (GLS) programme or the collective sales market. It explains why some collective sales committees have put their projects on the market again, three months after the property cooling measures were implemented.
Transaction volumes for District 1 shophouses in the first three quarters of 2018 have already exceeded 2017’s full-year volume (Photo Credit: Samuel Isaac Chua/EdgeProp Singapore)
Sellers of these collective sale projects have relaunched at somewhat lower reserve prices, in tune with new market conditions, but it appears that developers are still not biting. The cooling measures will set new levels in land acquisition costs and we expect bids for residential plots to moderate in 2019.
In the short to medium term, the opportunities for residential real estate appear to be narrowing, but this should not stop deep-pocketed investors with their eye on brick and mortar to explore other sectors including commercial assets.
For one, we are beginning to see increased appetite for residential plots with approval for change of use, particularly for hotel development. The hospitality sector is poised to grow further on the back of healthy visitor arrivals. Room rates may rise as the stock of hotel rooms tightens. It is timely that URA released a Club Street site for hotel use in its 2H2018 GLS programme, the first time in five years. Similarly, the recent collective sale launch of Waterloo Apartments with approval to redevelop into a hotel has met with resounding response. We expect appetite for these sites to continue in 2019.
This year has been an active one for investors in...