Singapore overseas property investments reached $5.2b in Q3: Knight Frank

Singapore, as a "key exporter of capital", made significant outbound deals such as the acquisition of One Town Center in Florida by Prime US Reit in July.
Singapore, as a "key exporter of capital", made significant outbound deals such as the acquisition of One Town Center in Florida by Prime US Reit in July.PHOTO: ONETOWNCENTER.COM

SINGAPORE (THE BUSINESS TIMES) - Singapore recorded $5.2 billion in outbound real estate investment deals in the third quarter of this year, representing a 53.9 per cent growth from the $3.4 billion transacted in the same period last year, according to Real Capital Analytics data.

This was highlighted in a report by Knight Frank analysts on Tuesday (Oct 5). The analysts said that Singapore as a "key exporter of capital" made significant outbound deals such as the acquisition of One Town Centre, an office building in Florida, United States, for around $133.9 million by Prime US Reit in July this year, as well as the purchase of an office building in Barcelona, Spain, by IReit Global for about $43.1 million last month.

The report also noted an upbeat pace of deals in the Singapore real estate market, as a total of $7.5 billion in investment deals were made in the third quarter of this year, increasing 58.1 per cent from the $4.8 billion in the third quarter of last year.

This is also a 38.7 per cent increase from the $5.4 billion achieved in the previous quarter.

Despite the increasing Covid-19 infection rates in the past few months, Knight Frank believes that the investment market still remains en route to a projected transaction volume of $30 billion for the whole of this year, given the encouraging pace of investment deals in the first nine months of the year.

"Keeping up with the pace of activity in the investment market, we expect investment sales for the fourth quarter of 2021 to exceed $12.5 billion and the whole of 2021 to breach $30 billion," said Mr Ian Loh, Knight Frank's head of capital markets (land and building, collective and strata sales).

The report added that the bulk of the investment volume was driven by the sale of four Government Land Sales (GLS) sites, with the award of the Marina View reserve site at $1.5 billion being the top land sale, followed by the Jalan Anak Bukit parcel at $1 billion.

The analysts said: "With frenzied bidding at certain recent GLS tenders, other land-hungry developers may shift their focus towards the greater diversity offered by smaller-sized plots in a variety of locations, such as sites with more palatable quantums where owners are attempting a collective sale."

Projects in the range of $600 million and below with about 600 units "might just find willing buyers", in the analysts' view. This comes after the seal of the Flynn Park collective sale deal at $371 million, or $1,355 per sq ft per plot ratio, which the analysts said could cause a ripple effect in the collective sale market given that many owners are keen to collectively sell their ageing units.

"Much of the investment activity in the coming months would comprise of the limited supply of new GLS parcels available for tender in the confirmed list of the second half of 2021. It is also possible that well-located smaller sites on the reserve list could also be triggered as the unsold stock of private residential units runs down," said the analysts.

The good class bungalow (GCB) market also followed the positive trend to register a healthy sum of $452 million in deals in the third quarter of this year. Although it is a lower transaction volume compared with the previous quarter, the analysts note that more GCB deals are currently being negotiated and expect those to complete by the end of the year.

The analysts observed that the increased investor activity is not only seen in the residential sector, but also in strata offices and shophouses, both of which remain top choices for acquisition.

"With interest running high and activity moving at an encouraging pace, continued activity is expected in the commercial and shophouse markets, with more spaces being launched for sale in the coming fourth quarter," they said.