Singapore real estate investment finally recovers after five consecutive quarters of decline

Total investment grew 19% to S$6.9b in Q3.

According to a recent report from Knight Frank, Singapore real estate investment activity finally recorded an increase in total transacted value in Q3 2023. After five consecutive quarters of decrease since Q1 2022, A total transacted value of S$6.9 billion was recorded, an increase of 74.8% q-o-q with an improvement of 19.4% y-o-y (Exhibit 1). 

“However, more than 60% comprised Government Land Sale (GLS) sites that were awarded. These amounted to almost S$4.1 billion. Some of the largest parcels awarded included sites at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu showing that developers still have appetite for development in the local market despite the tepid economy,” the report said.

Here’s more from Knight Frank:

As a result, the total amount of residential deals added up to S$3.3 billion this quarter, due to the five awarded residential GLS tenders. This represented an increase of 93.5% q-o-q, but a decrease of 12.0% y-o-y for this asset type. At the same time, there was also a decrease in sales activity for private residential properties, which can likely be attributed to the increase in Additional Buyer’s Stamp Duty (ABSD) rates in April 2023 for local buyers, but more so for foreigners with a doubling from 30% to 60%.

In Q3 2023, commercial property deals totalled S$1.5 billion, an increase of 27.4% q-o-q and 23.3% y-o-y. The higher transaction value mainly comprised the sale of Changi City Point by Frasers Centrepoint Trust, reportedly to the Zhao family from mainland China at S$338.0 million in August, and the collective sale of Far East Shopping Centre for S$908.0 million to Glory Property Developments at end-September. The first mixed development sale was also awarded in Q3 2023 after six quarters since Q4 2021, with the sale of the GLS site at Tampines Avenue 11 for S$1.2 billion for commercial and residential use.

However, the transaction value of industrial properties went south, registering the second lowest amount of S$252.2 million since the S$174.0 million recorded during the circuit breaker of Q2 2020.

Parkroyal on Kitchener Road was sold in July for S$525.0 million to Worldwide Hotels. This was the first hotel deal to be completed since Q4 2022, and the largest hotel in terms of transaction value since Q4 2020. This may be a sign of things to come, with more investor interest directed towards the recovering hospitality and retail sectors.

Overall, while investment activity showed improvement in Q3 2023, the majority of the quarter’s transaction value was due to public investment sales from the GLS programme.