2019 property investment volume in S'pore 'respectable' despite 31.8% fall: CBRE

Transactions such as those for Mapletree Business City II (above, left) and 30 Raffles Place (artist's impression) buffered a total real estate investment volume drop this year.
Transactions such as those for Mapletree Business City II (above) and 30 Raffles Place (artist's impression) buffered a total real estate investment volume drop this year.PHOTOS: JLL, CUSHMAN & WAKEFIELD, LIANHE ZAOBAO FILE

Total real estate investment volume in Singapore fell 31.8 per cent to $22.83 billion as at Dec 13, the lowest volume since 2016, figures from CBRE showed yesterday.

This was due to a slower collective sales market this year compared with a year ago.

The previous year saw a few large collective sale sites transacted, and the awarding of two Government Land Sale (GLS) sites worth more than a billion dollars each, CBRE told The Business Times.

Despite the drop, CBRE said this year's performance was still considered "respectable" due to sizeable asset transactions. These include Duo, Mapletree Business City II and 30 Raffles Place (formerly known as Chevron House).

This year, the residential sector drove investment volume, taking up 32.1 per cent. This was due mainly to public sales where nine GLS sites with residential components were sold.

However, CBRE said the trend is unlikely to continue, given the build-up of unsold residential stock. Land for residential development has also been reduced in the first half of next year's GLS programme.

Following closely was the office sector, which took up 31.1 per cent of investment volume this year.

Notably, investors were found to have turned their focus to the hospitality sector - which saw hotel-related transactions almost quadrupling in volume to $2.15 billion, from $544.7 million a year ago.

This was driven by rising tourist arrivals from new attractions, and major events, conferences and exhibitions held in Singapore.

Transactions such as those for Mapletree Business City II (above, left) and 30 Raffles Place (artist's impression) buffered a total real estate investment volume drop this year.
Transactions such as those for Mapletree Business City II and 30 Raffles Place (artist's impression, above) buffered a total real estate investment volume drop this year. PHOTOS: JLL, CUSHMAN & WAKEFIELD, LIANHE ZAOBAO FILE

CBRE senior executive director of capital markets Michael Tay said investment volume next year is likely to remain resilient, as there is anecdotal evidence of investors showing interest in Singapore assets, which is likely to provide a boost to foreign capital inflows. This is evidenced by a higher proportion of foreign capital this year at 31.1 per cent, compared with 24.3 per cent a year ago.

Lower interest rates are likely to support robust capital flows into real estate, with cheap debt and active fund raising in the capital markets, Mr Tay said. This is despite the "shrinking universe" of investable assets, creating challenges in deploying capital which may result in fewer mega transactions crossing the billion-dollar mark, he added.

This year, the residential sector drove investment volume, taking up 32.1 per cent. This was due mainly to public sales where nine Government Land Sale sites with residential components were sold. However, CBRE said the trend is unlikely to continue, given the build-up of unsold residential stock.

A JLL report on Tuesday said Asia-Pacific real estate investment reached US$125 billion (S$169 billion) in the first three quarters of this year, up 10 per cent year-on-year.

The real estate services firm said foreign investments in the Asia-Pacific are at a decade high, making up 35 per cent of total volume this year and mostly driven by private equity funds and large-scale transactions.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on December 20, 2019, with the headline '2019 property investment volume in S'pore 'respectable' despite 31.8% fall: CBRE'. Print Edition | Subscribe