Property investment sales could hit $31.3b: Colliers

Commercial sector expected to drive sales again this year, given healthy rentals in office market

Private property investment sales will rebound this year after they plunged last year in the wake of cooling measures that hit the residential segment, a report said yesterday.

It noted that total investment sales could hit $31.3 billion, 6 per cent up on the $29.5 billion recorded last year.

That was down 12.7 per cent from 2018 as cooling measures continued to bite residential property, said Colliers International.

Ms Tricia Song, its head of research for Singapore, said some major real estate investment trust (Reit) acquisitions and mergers are expected this year, potentially boosting industrial, commercial and hospitality deal volumes.

At least five mergers have been reported between local Reits in the past 12 months, mainly to consolidate management expertise and build a bigger war chest for acquisitions at home and abroad.

Ms Song said Singapore's status as a key gateway city, favourable interest rates and rejuvenation efforts such as the CBD Incentive Scheme should boost the redevelopment of older buildings in the central and city fringe areas.

The commercial property sector, which last year accounted for 40 per cent of total transactions, could drive sales again this year, the report said. Commercial property sales of $11.7 billion were recorded last year, the highest investment sales level since 2007.

Colliers expects commercial sales to rise 5 per cent this year, given healthy rentals in the office market.

Three of the five largest deals last year were office and retail properties: Duo Tower and Duo Galleria, Chevron House, and 313@Somerset.

Residential investment sales are expected to pick up by 3 per cent this year on the stable supply of public land and demand for luxury homes. Developers will also acquire sites - via public tenders or collective sales - to shore up their pipeline towards the end of the year.

Residential sales slumped 63 per cent last year to just $6.8 billion. Sentiment should improve in the longer term, underpinning an average annual growth of 12 per cent in the 2019 to 2024 period, the report noted.

Three of the five largest deals last year were office and retail properties: Duo Tower and Duo Galleria, Chevron House, and 313@Somerset.

Demand for hospitality assets will be sustained by a muted supply pipeline and steady visitor arrivals owing to new attractions and more Mice (meetings, incentives, conferences and exhibitions) events.

Ms Song said: "While the Wuhan coronavirus presents a near-term downside risk, Colliers Research believes the long-term growth drivers for the tourism sector largely remain intact."

Industrial sales will accelerate this year on big-ticket investments by industrialists, Reits and institutional investors into yield-accretive assets such as business parks and data centres, said Ms Song.

Industrial deals should rise by an annual average of 15 per cent from last year to 2024. Total industrial deals fell 3.1 per cent to $4 billion last year.

A version of this article appeared in the print edition of The Straits Times on January 30, 2020, with the headline 'Property investment sales could hit $31.3b: Colliers'. Subscribe