Singapore real estate investment sales to stay in high gear in 2022, led by commercial deals: Colliers
Colliers is projecting investment volume in Singapore to grow at a rate between 3% and 5% this year (Photo: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Colliers expects the strong performance in Singapore real estate investment sales to continue this year, driven by corporate mergers and acquisitions as well as the conclusion of a few large commercial deals and land tenders.
“As Singapore transitions to an endemic stage and with the gradual reopening of borders, we expect investment volume to continue its strong run,” says John Bin, director, capital markets & investment services, Singapore at Colliers.
Although borrowing costs are set to climb with the US Federal Reserve potentially hiking interest rates starting this year, Colliers believes this is unlikely to deter investors in their search for compelling assets to park their capital.
“As yields compress, we are seeing greater investor interest for assets with potential for value-add and flexible usage,” Bin remarks. These include assets such as CBD offices with redevelopment potential, warehouses and shophouses.
Last year, investment sales in Singapore real estate grew 3.8% q-o-q to $7.8 billion in 4Q2021, according to data compiled by Colliers in its Investment Market Outlook 2022 report. This brings total investment sales to $26.1 billion for 2021, up 5.4% y-o-y.
Residential sales made up the bulk of investment sales last year (43%), followed by office sales (17%) and industrial sales (16%).
Residential sales clocked in at $11.5 billion last year, more than double 2020’s volume. Colliers attributes the surge to healthy luxury sales, the resurgent collective sales market, as well as government land sales.
Commercial sales increased 62.9% q-o-q to end the year at $5.6 billion, up 10.4% y-o-y. Sales were supported by One George Street which was transacted for $1.3 billion. (Find Singapore commercial properties with our commercial directory)
Industrial investment sales increased almost five times q-o-q to reach $1.1 billion in 4Q2021. This brings last year’s investment sales to $4.2 billion, an 83.9% increase y-o-y.
Shophouse transaction volume increased by 118.3.% q-o-q to $355.9 million in 4Q2021. This brings last year’s shophouse sales volume to $962.6 million, reflecting a strong growth of 105.9% y-o-y.
Meanwhile, the hospitality segment remained muted, with Porcelain Hotel, transacted in 4Q2021 for $90 million, being the only significant hospitality transaction for 2021.
Looking ahead, residential sales are expected to moderate in 2022 following the implementation of new cooling measures last December and the introduction of higher property taxes introduced in the 2022 budget.
Colliers expects the policies to reduce the appeal of larger residential sites, high-end residential, and residential assets as an investment. The measures are also likely to dampen the resurgent collective sale market, as developers become more wary about committing to larger land sites.
However, the measures may lead to spillover demand for commercial houses, especially shophouses and strata assets, which come at palatable prices to family offices and high net worth individuals.
Colliers also anticipates continued demand for suburban retail assets, which have remained resilient during the pandemic, as well as some opportunistic buying.
Industrial sales momentum is expected to continue this year, as demand for business parks and data centres shows no signs of abating. Colliers predicts industrial assets with high specifications will remain sought after, driven by e-commerce and technology.
Colliers is projecting investment volume in Singapore to grow at a rate between 3% and 5% this year.
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