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Singapore investment sales forecast to grow 5% per year in 2019–2024

By Charlene Chin

/ EdgeProp Singapore |

April 14, 2020 5:18 PM SGT

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SINGAPORE (EDGEPROP) - Singapore investment sales is forecast to grow 5% per year on average over 2019 to 2024, despite an expected 24% y-o-y decline in 2020, says Colliers Research.

Based on advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s Q1 GDP contracted by 2.2% y-o-y, experiencing the worst decline since the global financial crisis.

Commercial investment sales slumped by 46.9% q-o-q and 35.4% yo-y to $758 million, possibly due to fewer assets that can be invested and price mismatch, Colliers says. This is boosted also by the slowdown in office rental growth and the impact of the Covid-19 outbreak.

However, “a significant rebound in H2 in Singapore is possible given Singapore’s strong policy response to Covid-19, reinforcing its safe-haven status”, says Jerome Wright, senior director of Capital Markets at Colliers International.

Meanwhile, residential transactions more than doubled, surging by 68.5% q-o-q to $2 billion in Q1 on strong government land sales (GLS). While developers had bid cautiously for these sites given the market uncertainties ahead, demand remained sustained for new condominium launches as well as landed housing and Good Class Bungalow sales, Colliers notes.

In the industrial sector, investment sales fell 50.8% q-o-q, but more than doubled y-o-y to $1.1 billion, anchored by Frasers Logistics and Industrial Trust’s (FLT) acquisition of Alexandra Technopark and Ho Bee Land’s tender for Biopolis Phase 6 site.

However, merger and acquisitions in the industrial property sector is expected to pick up in the second half of the year, says Steven Tan, senior director of Capital Markets at Colliers International.

“Industrial assets remain attractive to qualifying investors due to their higher yields,” he says.

Some of the largest deals that happened in 1Q2020 include five residential GLS land sales totaling $1.4 billion and two properties transferred during the FLT–Frasers Commercial Trust (FCOT) merger: China Square Central for $648 million, and Alexandra Technopark for $606 million.

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