SINGAPORE - Real estate investments continued to head south in the fourth quarter of last year, plummeting more than half to $2.38 billion, according to property consultancy DTZ.
The quarter-on-quarter decline in investments was likely due to a 52 per cent fall in Government Land Sales and the slowdown in investments in office space, which plunged by 92 per cent to $152 million.
"Although investors were attracted by the expected rental appreciation, investment activity was constrained by limited stock and yield gap in pricing expectations between sellers and buyers," said DTZ.
On the other hand, investments for residential, retail and industrial properties in the private market grew.
The residential sector saw the largest quarter-on-quarter increase at 102 per cent. One of the notable deals during the quarter was developer Hiap Hoe's sale of 48 units in Treasure on Balmoral to its controlling shareholder Hiap Hoe Holdings for $185 million in the face of a cooling market for luxury homes.
Chinese developers also continued to support investment activities via the Government Land Sales programme.
Nanshan Group Singapore was awarded the private residential site near Upper Thomson Road for $173.6 million, while Qingjian (Realty) Residential was awarded Sembawang executive condominium site for $229.4 million - a sum that was $21 million more than the next bid.
On the whole, real estate investments for 2014 dropped 38 per cent to $17.7 billion.
DTZ expects the office market to continue garnering interest among investors and space users due to the expected rent appreciation for office space this year.
"Firms with expiring leasing contract may consider purchasing space for their own occupation to hedge rising rents," said DTZ regional head (South-east Asia) of consulting and research Ong Choon Fah.