Property firms became net sellers of investment properties as cooling measures bite: DTZ

Singapore - With cooling measures continuing to affect the Singapore residential market, property firms became net sellers of local investment properties in the third quarter of this year.

However, purchases by real estate investment trusts (reits) helped to prop up investment sales during the period, DTZ said in a report on Wednesday.

Overall, property investment activity rose about 15.4 per cent from the second quarter to $5.5 billion, bringing the total investment volume in the first three quarters of the year to $15.3 billion.

This rise came despite a fall in residential investments, down 1.3 per cent from the second quarter to $1.5 billion, as fewer government land sales sites were placed on the confirmed list and the market continued to weaken.

Investment sales comprise transactions that are $5 million and above. They exclude $439.5 million worth of transactions in single residential units and lots that cannot be redeveloped or subdivided into more than one plot.

Reits were the largest purchasers of properties between July and September and were active across the commercial, industrial and hospitality sectors, DTZ said.

They acquired a total of $2.9 billion worth of properties, accounting for more than half of activity in the quarter.

In contrast, property companies, both listed and non-listed, became net sellers in the third quarter. They divested about $2.9 billion worth of properties in the period, which outnumbered their $2 billion worth of acquisitions.

A large proportion of these divestments stemmed from the injection of properties into reits, such as Keppel Land's sale of its 33.33 per cent stake in Marina Bay Financial Centre Tower 3 to Keppel Reit, as well as TCC Group and Frasers Centrepoint Limited injecting Intercontinental Singapore and Fraser Suites Singapore respectively into Frasers Hospitality Trust.

But Ms Lee Lay Keng, DTZ's regional head of research, added: "The lower amount of acquisitions by property companies in Singapore is partly attributable to their increased activity overseas."

"As at the end of the third quarter, Singapore-based property companies are estimated to have made close to US$4.1 billion of acquisitions overseas. With the overall residential market in Singapore remaining slow and a limited stock of assets available for sale at the right price, Singapore-based property companies are expected to continue to make strategic investments overseas."