Real estate investment sales volume drops 56.8% y-o-y: CBRE

SINGAPORE (EDGEPROP) - According to CBRE, preliminary real estate investment sales volume in Singapore this year amounts to $10.03 billion to date, which is 56.8% lower than the previous year and the lowest since the financial crisis in 2009 when it had slumped to $7.7 billion. In 4Q2020, investment sales volume eased by 23.9% to $2.14 billion.

Desmond Sim, head of research, Singapore and Southeast Asia at CBRE, says: “This year, the low volume was also attributed to zero sizeable deals, which we define as transactions of more than $1 billion. Due to the widening gap between buyer-seller expectations, some deals were unable to materialise. In fact, 68.9% of the total deals in 2020 year-to-date were less than $25 million.”

Foreign capital inflows this year add up to $3.18 billion, which is half of the previous year’s given the global travel restrictions, which is 53% lower y-o-y.

Of the total investment sales volume of $10.03 billion in 2020, residential sales made up 42.5% ($4.26 billion), of which $1.52 billion is from government land sales (GLS) sites. The strong bidding activity for the recent GLS tender exercises such as for Yishun Avenue 9 and Tanah Merah Kechil sites, and increased en-bloc activity show that developers are encouraged by strong sales in project launches.

The office sector contributed 22.4%, which shows that prime office assets remain attractive to investors for their stability and yield. Older buildings in the CBD will also benefit from the CBD Incentive Scheme, which adds to their appeal.

The industrial sector contributed 14.5% as assets saw a surge in demand this year due to stockpiling and increase in e-commerce.

With business sentiments picking up, the deployment of vaccines and border restrictions, CBRE is optimistic that investors will be encouraged by the low interest rate environment and ample liquidity. In the retail and hospitality sectors, there will also be bargain hunters seeking to purchase assets at lower prices.