Singapore investment deals pick up in early 2023 but bite-sized deals prevail
By Cecilia Chow
/ EdgeProp Singapore |
Tang: Fully-funded family offices could position themselves for opportunistic buys, or move up the risk curve to look at core plus or value-add assets (Photo: Samuel Isaac Chua/EdgeProp Singapore]
SINGAPORE (EDGEPROP) - The first half of 2023 is expected to be “in price discovery mode” as investors adjust to a new normal of higher interest rates and slower growth, according to Colliers in its Jan 18 report.
“Prices will have to recalibrate to a new equilibrium before sales momentum starts to pick up,” says Tang Wei Leng, Colliers managing director and head of capital markets in Singapore.
Several deals have been transacted in January. The biggest so far is the acquisition of a 50% stake in Nex suburban retail mall in Serangoon. The buyers are Frasers Centrepoint Trust and Frasers Property, who jointly announced on Jan 26 that they were paying $652.5 million for a 50% interest in Gold Ridge, the unit that holds the mall. The seller of the 50% stake is Mercatus Co-Operative, a unit of NTUC Enterprise.
A month earlier, Mercatus sold two other suburban projects in Singapore — Jurong Point mall and shop unit Swing By @ Thomson Plaza — for $2.161 billion. The buyer then was Hong Kong-listed Link REIT, which purchased the two properties at 6.1% below the properties’ aggregate valuation of $2.3 billion as at Dec 28, 2022.
Several bite-sized deals took place in January as well. On Jan 30, J’Forte Building, an eight-storey industrial building at Tai Seng Street, changed hands for $98.8 million in an off-market deal brokered by Knight Frank. The buyers were Singapore-listed Metro Holdings and Boustead Projects, together with an independent institutional third party.
Before that, a portfolio of six adjoining freehold shophouses on Serangoon Road was sold for $62.5 million on Jan 26, according to PropNex, which brokered the deal.
On Jan 18, commercial strata-titled office units across 10,893 sq ft at Southpoint on Cantonment Road in the CBD was sold for $32.68 million. At $3,000 psf, it is a record high for the 16-storey office building with a 99-year lease from 1985. Savills Singapore brokered the deal. (Find Singapore commercial properties with our commercial directory)
Tang is also handling the tender exercise for the 32-unit Charming Garden, along King’s Road, which has entered into a 10-week private treaty period (Photo: Colliers)
The first residential collective sale of 2023 is the freehold 43-unit Bagnall Court on Upper East Coast. It was sold to a consortium for $115.28 million on Jan 12. The price reflects a land rate of $1,106 psf per plot ratio (ppr), including an 8% bonus gross floor area (GFA). The price is lower than its guide price of $125 million last year. The deal was brokered by JLL, with Dentons Rodyk as an adviser for the vendors.
Colliers is working on the collective sales of several prime condominiums in District 10: the 45-unit One Chatsworth, at the junction of Chatsworth Road and Nathan Road/Bishopsgate; and the 120-unit Grange Heights at St Thomas Walk.
Tang is also handling the tender exercise for the 32-unit Charming Garden, along King’s Road, which has entered into a 10-week private treaty period. Charming Garden was launched for sale by tender on Dec 5 at a guide price of $175 million. This works out to $2,096 psf or $2,074 psf based on land area.
Colliers is also re-launching the tender for the 44-unit Sutton Place. It was launched for sale by tender last August at a price tag of $285 million.
“The key thing for a collective sale is to get the 80% consensus,” says Tang. “But there is a mismatch in price expectations. Owners are worried about replacement costs while developers are concerned with uncertainties in construction and interest costs, timelines and the burden of additional buyer’s stamp duty.”
Colliers is working on the collective sale of the 45-unit One Chatsworth, at the junction of Chatsworth Road and Nathan Road/Bishopsgate (Photo: Samuel Isaac Chua/EdgProp/Singapore)
The dilemma faced by most capital markets specialists today is whether to set the reserve price to secure the 80% consensus or to ensure a sale. “That’s going to be a challenge,” adds Tang. “That’s why I expect collective sales to be a lot more muted this year.”
However, with Singapore being a safe haven for foreign wealth, it has also become a hub for investing elsewhere in the Asian region, Tang notes. For instance, in December, she brokered two offshore deals. One was the sale of a portfolio of 16 residential assets for $150 million on behalf of Japanese developer Shin Nihon Tatemono to a Singapore-based family office. The other was the sale of two logistics sites owned by Germany’s BMW to a Japanese developer for an undisclosed sum.
As institutional investors take a back seat in the current environment of high debt costs, private wealth will become increasingly prominent. Tang sees “fully-funded family offices being in a sweet spot”, with less competition for assets. “Such buyers could position themselves for opportunistic buys, or move up the risk curve to look at core plus or value-add assets,” she says.
However, they are also likely to be more cautious, focusing on bite-sized investments, such as smaller office buildings, strata offices, freehold or 999-year leasehold shophouses and luxury residences, according to Tang. The “sweet spot” in terms of deal size is in the $200 million to $300 million range, she adds.
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