Singapore-based investors still keen on overseas real estate: DTZ

SINGAPORE - Despite a weaker global economy in the third quarter, Singapore-based investors put at least S$3.8 billion into overseas real estate, according to a new report.

More than $1.8 billion was invested in Australia and $1.2 billion in the United Kingdom, according to data compiled by DTZ (SEA) Research.

Notable deals concluded in the third quarter include Frasers Commercial Trust's purchase of 357 Collins Street office building in Melbourne for about $232 million, Sinarmas Land's acquisition of Alpha Beta Building in London for $551.3 million, Ho Bee Land's acquisition of 39 Victoria Street in London for about $300 million, and Mapletree Logistics Trust purchase of a premium freehold cold store warehouse in Sydney for about $261.5 million.

"Most of these Singapore-based investors have sufficient exposure to Singapore's real estate market, and most are seeking higher returns and diversification opportunities in other countries," said DTZ.

In line with this view, real estate investments in Singapore slied 31.4 per cent quater-on-quarter to $2.6 billion in the third quarter from $4.05 billion in the second quarter, largely due to cutback in Government Land Sale (GLS) sites offered, said DTZ.

GLS sales contracted to $490 million in the third quarter from $2.76 billion in the second quarter.

The bulk of investment sales volume stemmed from the sale of a 99- year leasehold private housing site along West Coast Value for $314.1 million, or $551 per sq ft per plot ratio.

Another parcel that was awarded in the third quarter was the executive condominium site in Choa Chu Kang Ave 5 at S$156.2 million or S$295 per sq ft per plot ratio.

According to DTZ, office buildings in the Singapore CBD continued to attract much interest due to limited supply and favorable middle to long term projections (more than three years). Private investment for office space here rose to $828 million in the third quarter from $465 million in the second quarter.

Offices accounted for about 30 per cent of total real estate investment in Singapore, including the sale of three strata floors at Prudential Tower for $100.6 million, or an average price of $2,750 per sq ft, to China Shipping; and the collective sale of Thong Sia building to Sin Capital Group for $380 million.

Looking ahead, Dr Lee Nai Jia, DTZ (SEA) Research's regional head, said: "While investment sales tend to be slower in the fourth quarter than in the third quarter historically, I anticipate that this may not be so for 2015."

He cited the pending sale of Asia Square Tower 1, which could boost investment sales in 2015 by around $3.5 billion.

Additionally, there are several major real estate deals in the pipeline that include CPF building along Robinson Road and Robinson 77 which will boost investment sales above $12 billion if the deals go through, he said.

There will also be more sales originating from state tenders with four residential sites yet to be awarded in the GLS Confirmed List for the second half, with the exception of a residential site at Lorong Lew Lian in the Reserve List.

"On the whole, we expect total investment sales to hover around the range of $14 billion to $17 billion," said Dr Lee.