How Singapore’s property investment market fared in Q3

Investment sales dropped 38.5% to S$4.8b.

Singapore property investment sales declined 48.9% q-o-q and 38.5% y-o-y to S$4.8 billion in Q3 2022. A Knight Frank report says this brought the cumulative transaction value for the first nine months of the year to S$26.2 billion. 

“A deterioration of economic conditions globally and rising interest rates exacerbated concerns over persisting headwinds, as business sentiments worldwide dialled down in the third quarter,” the report added.

Here’s more from Knight Frank:

Nevertheless, developers continued to acquire land during the quarter as three Government Land Sales (GLS) sites were awarded. This comprised two non-landed residential parcels (Lentor Central, Lentor Hills (Parcel B)), and an executive condominium plot at Bukit Batok West Avenue 5, totalling S$1.1 billion in investment volume, representing the largest deals transacted from July to September in sharp contrast to the more buoyant first half of the year. 

Unlike the previous quarter where commercial sales were at the forefront of real estate investment activity, the sector was muted in Q3 2022, particularly with the saleable stock of quality office space and buildings being limited. And while the shophouse investment market continued to draw interest, a decline of 37.7% q-o-q in sales totalling S$228.7 million may suggest that elevated prices have met resistance by prospective buyers. 

While most owners are under no pressure to sell, the increasingly clouded economic outlook pushed buyers to adopt a cautious stance as fears of a recession spread across the globe. With a widening gap in price expectations, sellers should be cognisant of the shifting sentiment due to increasingly uncertain economic conditions. 

Despite this, investors’ appetite for industrial properties remained strong in Q3. Some of the notable deals in the quarter included the acquisitions of a logistics property at 1 Buroh Lane (S$191.9 million) and Phillips APAC Centre (S$104.8 million) by Ascendas REIT, followed by the enbloc sale of BHL Factories (S$130.5 million). Given the resilience of the industrial sector, investors remained interested in non-JTC buildings with longer tenures, where the extended investment holding period can possibly mitigate prevailing risks. 

As investors weigh available investment options in a world fraught by uncertainty, hotels and serviced residences have risen in prominence as key opportunities. Enquiries for this asset class increased in the third quarter, on the back of businesses regaining traction and a revival of tourist activity pushing up demand for short- and medium-stay accommodations. As recovery in the tourism industry becomes more certain, interest in the hospitality market could yet translate into sales before the end of 2022.