Singapore real estate investments grow 8.5% to SGD7b in Q3

Thanks to a few Government Land Sales deals.

According to a recent release from Colliers, around SGD7.0 billion of investments were recorded in Q3 2023, marking an 84.5% increase QOQ and a 8.5% increase YOY, as a few large Government Land Sales (GLS) tenders were awarded. 

GLS transactions accounted for SGD 4.1 billion (59.2%) of the total; without the GLS deals, investment volume would come in at just SGD2.9 billion, a decline of 8.5% QOQ.

Here’s more from Colliers:

Excluding the GLS deals, investment volume this quarter was supported by the Mixed-use (31.8%), Hospitality (18.4%) and Commercial (15.5%) sectors; or Residential (48.1%), followed by Mixed-use (30.2%) and Hospitality (7.5%) when including GLS transactions.

Quality assets are more likely to find buyers as their resilient rents and capital values remain attractive, with retail and hospitality assets continuing to draw attention on the back of the tourism recovery. Higher yielding assets, such as high specification industrial properties and assets with enhancement potential are also likely to find buyers.

Buying was supported mainly by end-users and private wealth, with investors keen to catch the upswing in retail and hospitality assets. This trend will likely continue as investors steer away from the residential sector following cooling measures earlier this year. Investment volume in the next few quarters will continue to be driven by private wealth, as well as buyers with adequate dry powder.

Despite the less conducive investment climate, some significant deals have come to fruition, such as the sale of Far East Shopping Centre and Parkroyal on Kitchener. Asset owners will continue to look out for such opportunities to redeploy capital and manage their debt. However, with insufficient property yield expansion to maintain spreads over the rising cost of capital, investment volume is likely to remain sluggish.

Ms Tang Wei Leng, Head of Capital Markets & Investment Services, Singapore  at Colliers says, "More assets will come up for sale as the need to reduce gearing grows more imminent. However, completed transactions may remain scant due to the high interest rate environment.”

Ms Catherine He, Head of Research, Singapore at Colliers adds, “Going forward, price expectation gaps from buyers and sellers might continue to inhibit deals, as sellers hang on to their asking prices while buyers stay by the side lines. Nevertheless, with interest rates peaking, and more GLS tenders upcoming towards the end of the year, investment volume may surprise on the upside.”