SINGAPORE - Real estate investment sales fell 74 per cent to S$1.75 billion in the first three months of the year from S$6.7 billion in the final quarter of 2015, said consultancy DTZ.
In terms of volume, or number of investment deals in Q1 2016 was the lowest since the third quarter of 2009, which was during the global financial crisis. Investment sales hit a low of S$192 million in Q1 2009, said DTZ in its report released on Monday (April 25).
DTZ defines investment sales as the sale of land, building and multiple units with value above S$5 million. It excludes single strata or residential units, except for landed sites large enough to be redeveloped into two or more residential units.
The firm blames the current decline in investment sales partly to the uncertainty in the global economy stemming from mixed signals on China's economic growth, Britain's potential exit from the European Union and volatile oil prices.
"The release of a series of disappointing economic data in Singapore since Jan 2016 further weakened investors' sentiments, widening the price gap between cautious buyers and forward-looking sellers," DTZ added.
"The cooling measures continue to discourage investment sales of residential properties in private market, while the huge supply of office space slated to come onboard in 2016 and 2017 further slowed down sales in the commercial market," said the firm.
Government Land Sales (GLS) dominated real estate investment sales in Q1 2016, accounting for about 70 per cent of total sales or S$1.2 billion.
The largest sale recorded in the quarter was for a land parcel near East Coast Park. The 19,309.6 square metre site was awarded to a joint venture by Frasers Centrepoint, Sekisui House and KH Capital (a unit of Keong Hong Holdings), which placed a top bid of $624.2m ($858 per sq ft per plot ratio).
DTZ data showed Singapore investors going for overseas real estate. While investment sales in the private market fell from S$5.1 billion to S$521.90 million in the first quarter of 2016, the total amount invested in overseas real estate amounted to at least S$2.05 billion. One of the largest deals reported was Mapletree's investment in student housing. It bought a portfolio of 25 student accommodation assets, comprising 5,500 beds, in the United Kingdom.
Noted Ms Swee Shou Fern, DTZ's senior director for investment advisory services: "Although there were fewer transactions concluded in Q1, both local and foreign investors remain keen in Singapore properties and are on a constant lookout for interesting propositions. However, the negotiation process is longer due to the mismatch of expectations."
Looking forward, DTZ said it expects GLS to continue to drive investment sales.
Said Dr Lee Nai Jia, its regional head of research: "Besides the land parcels in the H1 2016 GLS confirmed lists, the Holland Village and the Beach Road sites in the Reserve List offer interesting propositions to potential developers and investors.
"The Holland Village site is attractive because of its cultural identity and its proximity to the growing research and development and technology cluster at onenorth. The proposed commercial development at Beach Road is also expected to do well as it is able to leverage on the rejuvenation of the Bugis/ Beach Road area, which is becoming a hip place for firms to attract talent."