Singapore’s preliminary real estate investment volume in 1H2020 falls 45% y-o-y
Preliminary real estate investment volume in Singapore in 1H2020 clocked $ 6.13 billion, a 45% y- o- y fall from 1H2019’s $11.24 billion, according to real estate consultancy Cushman & Wakefield (C&W).
Preliminary property investment volume in 2Q2020 amounted to $3.06 billion, compared to 1Q2020’s $ 3.07 billion.
Big- ticket real estate commercial deals started to return in 2Q2020, resulting in commercial investment volume surging to $ 2.02 billion from $ 183.4 million in 1Q2020, notes the firm. Commercial real estate deals therefore accounted for 66% of property investment volume in 2Q2020.
The largest deal in 2Q2020 happened when Chinese e-commerce giant Alibaba Group acquired a 50% stake in AXA Tower for $1.68 billion. Meanwhile, a significant chunk of 2Q2020 investment sales — 41% of total investment volume in 2Q2020 — was attributed to the merger between Frasers Logistics Trust and Frasers Commercial Trust, where the former acquired the latter for $ 1.25 billion.
Other notable deals included Perennial divesting its 30% stake in TripleOne Somerset to Shun Tak Holdings for $155.1 million, and Olayan Group purchasing the retail and banking units of 30 Raffles Place — the former Chevron House — for $315 million.
Meanwhile, industrial investment volume in 2Q2020 remained stable at $701.3 million, compared to 1Q2020’s volume of $ 661.4 million.
Due to the absence of government land sales sites in the quarter, activity in the residential sector was muted with a volume of $ 305.4 million, significantly down from $2.02 billion in the preceding quarter.
Unsurprisingly, the hospitality sector remained quiet with no deals, as buyers waited on the sidelines for prices to be revised further downwards.
In the near future, there could be some hospitality investment deals, says C& W. “As there is uncertainty over the duration of the crisis and when tourism will return to pre- pandemic levels, a significant proportion of hospitality asset owners could be seeking to exit the sector in favour of more stable asset classes.”
Christine Li, head of research at C&W, Singapore and Southeast Asia, expects the full- year property investment volume to range between $12 billion and $15 billion. “The sluggish market sentiment is expected to continue, with volume in the second half of the year unlikely to increase significantly,” she notes.
“If the merger between CapitaLand Commercial Trust and CapitaLand Mall Trust is approved by unitholders, this would add an additional $10 billion to the investment tally, raising the full-year volume to a range of $ 22 billion to $ 25 billion,” Li adds.
Shaun Poh, executive director, capital markets, at C& W, says: “In this post- circuit breaker period with the resulting recession, some owners are expected to put up their assets for sale to free up liquidity. Funds with a fixed fund life will also be planning their exits.”
“As past recessions have shown, there are gains to be reaped when investors enter during the period when the market is going through a repricing to find its balance,” he notes. “We are starting to see some market activity around investors sniffing out these opportunities and these might potentially be inked in the later part of the year.”