Property investment sales sees growth in 2018

11 May 2018 – Real estate investment sales in Singapore is expected to grow 15 percent year-on-year to $46 billion in 2018, and climb a further 5.0 to 10 percent in 2019, according to a Colliers International report. In the first quarter of 2018, total property investment sales surged 89 percent to $11 billion from Q1 last year, driven mainly by the residential sector.

Residential land sales, including several large collective sale transactions, accounted for about $9.15 billion or 83 percent of total investment sales in the quarter. This comes as developers continue to replenish their land banks.

The five largest deals in Q1 were all residential collective sales led by Pacific Mansion which went for $980 million, Park West at $840.9 million, Pearlbank Apartments at $728 million, Goodluck Garden at $610 million, and Brookvale Park at $530 million. The purchase price of Pacific Mansion works out to a land rate of $1,987 psf per plot ratio (psf ppr). It was sold to a consortium comprising GuocoLand, Intrepid Investments and Hong Realty, and is currently the largest collective sale transaction since the $1.34 billion Farrer Court deal in 2007.

As at 3 May, there were 24 collective sale deals amounting to $8.12 billion, close to the $8.13 billion from 27 deals last year, noted Colliers.

“Interestingly, barely five months into 2018, the transaction value of residential collective sale deals has caught up with that of 2017,” said Tang Wei Leng, managing director at Colliers International.

“The collective sale market is likely to remain buoyant this year, barring any unforeseen events. That said, to get a deal across the line, it is also key that owners set realistic asking price. Owners’ expectations have risen in tandem with the rising property market – particularly so of late, as the cost of buying a replacement home has increased,” she added.

Meanwhile, public investment sales fell 18 percent in Q1 from the previous quarter, but rose 166 percent to $1.24 billion from a year ago.

The tender for the executive condominium site at Sumang Walk in Punggol drew the strongest interest from developers, attracting 17 bids in total. The site was awarded to City Developments Limited (CDL) and TID Residential for $509.3 million or $583 psf ppr, a record psf price for an EC site.

CDL also beat nine other bidders for the Handy Road tender with $212.2 million ($1,722 psf ppr). The psf price was a record for the location and 12.3 percent above the next highest bidder.

“These reflect the developers’ hunger for land as well as their confidence in the residential market across mass market to the high-end segments,” said Colliers.