2015 property investment sales lowest since 2009

Property investment sales last year hit their lowest level since the global financial crisis in 2009, according to a report out yesterday.

It noted that the value of transactions dropped 9 per cent to $16 billion, mainly due to the mismatch of price expectations between buyers and sellers and the slowdown in launches of new sites in the Government Land Sales (GLS) programme.

Property consultancy DTZ defined investment sales as those $5 million and above. The only residential transactions included were en bloc deals, redevelopment sites and plots that can be further subdivided.

Property sales by government agencies fell 13 per cent to $5.8 billion last year while private investment sales declined 8 per cent to $10.3 billion. The biggest transaction was the $1.67 billion sale of the Paya Lebar Central site to Abu Dhabi Investment Authority and Lend Lease in April. The developers are planning a project with 983,175 sq ft of office space, 470,813 sq ft of retail space and 429 apartments.

The sale of the Dundee Road parcel to Hao Yuan Investment in June was the priciest GLS residential site sold with a price of $483 million or $871 per sq ft per plot ratio (psf ppr) the highest price on a headline and psf ppr basis.

The break-even price for the proposed development is expected to be at least $1,240 per sq ft, DTZ said.

Separately, private investment property sales last year were affected by the uncertainty in global markets. "Investors were willing to bid for leasehold projects that are priced reasonably and have the potential to be value-added through redevelopment or additions and alteration works," DTZ said.

These deals included The Verge, sold for $317 million in the fourth quarter, and Harper Kitchen, a freehold industrial building that went for $51.1 million. Both buildings will be redeveloped.

A version of this article appeared in the print edition of The Straits Times on February 03, 2016, with the headline '2015 property investment sales lowest since 2009'. Print Edition | Subscribe