Singapore property investment sales up 24.8% in Q3 on US rate cut anticipation

SINGAPORE – Real estate investment activity in Singapore picked up in the third quarter of 2024 in anticipation of the first US interest rate cut in four years, according to a Knight Frank Singapore report released on Oct 8.

Figures compiled by the property consultancy showed total property investment sales amounted to $8.3 billion in the third quarter of 2024, up 24.8 per cent from $6.7 billion in the preceding quarter and 30.5 per cent higher than $6.4 billion a year ago.

Out of the total sales in the third quarter, public sector sales totalled $2.3 billion, while private sector sales totalled $6 billion.

The biggest surge in sales activity was in the industrial sector.

In the residential sector, however, sales fell 24.7 per cent quarter on quarter to $3.2 billion. Of these, 74.2 per cent of the deals were for government land sales (GLS) sites, said Knight Frank.

In August, two state plots in Zion Road (Parcel B) and Jalan Loyang Besar were awarded at $730.1 million and $557 million, respectively.

In addition, the sale of several good class bungalows (GCBs) during the quarter also contributed to residential investment sales value.

In July, a GCB in Tanglin Hill was sold for $93.9 million and two other GCBs in Belmont Road went for $73.7 million and $57.7 million, said Knight Frank.

While the collective sales market saw five launches in the third quarter, no successful collective sale deals were closed. Knight Frank noted that “collective sales for larger sites continued to be challenging, especially for residential developments”.

The real estate consultancy said GLS sites present better opportunities for developers, given “easing land prices” of such sites.

Ms Chia Mein Mein, Knight Frank’s head of capital markets (land and collective sale), said: “With developers reticent towards the larger collective sale plots, landed houses with sizeable land areas or ‘mini landed en blocs’ of several adjoining houses continue to be sought after by boutique developers, especially in prime areas, where the land size has the flexibility to be subdivided and redeveloped into multiple homes.”

In the commercial property segment, the acquisition of a 50 per cent interest in ION Orchard (including ION Orchard, ION Orchard Link, ION Art Gallery and ION Sky) by CapitaLand Integrated Commercial Trust from CapitaLand Investment for $1.8 billion in September raised the total sales value in this segment to $2.7 billion, up 37.2 per cent from the second quarter.

Meanwhile, industrial property sales soared 567.6 per cent quarter on quarter and 426.6 per cent year on year to $2.5 billion.

“This was due to the acquisition of a $1.6 billion portfolio consisting of seven industrial properties by Lendlease and Warburg Pincus from a real estate investment trust owned by Blackstone and Soilbuild in August,” said Knight Frank.

The outbound sector recorded about $3.2 billion in sales in the third quarter, down 29.3 per cent quarter on quarter and 39.1 per cent year on year. This was due to the ongoing global tensions and high interest rates.

The overall market sentiment looks set to improve after the US Federal Reserve cut its benchmark rate by half a percentage point on Sept 18, said Knight Frank.

“Deals that have been brewing prior to the interest rate cut announcement are now likely to surface, especially industrial properties and living sector assets,” said Mr Daniel Ding, Knight Frank Singapore’s head of capital markets (land and building, international real estate).

“As the bid-ask gap narrows, and the prospect of positive carry returns, the brave will increasingly pull the trigger on deals.”

Knight Frank noted that while collective sales remain challenging, commercial and mixed-use developments will have a higher chance of success in the prevailing market conditions.

The consultancy expects investment sales momentum to improve in the coming months and projects total property investment sales to fall between $23 billion and $25 billion in 2024.

THE BUSINESS TIMES