Real estate sector shows significant bounce-back in investment sales in 1Q2023: Savills

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Real estate investment sales in Singapore experienced a significant bounce-back in 1Q2023, according to Savills Research. The sector saw a near-doubling of investment activity, with a q-o-q growth of 100.4% to $5.63 billion. This was underpinned by big-ticket transactions such as Link REIT’s $2.16 billion acquisition of Jurong Point and Swing By @ Thomson Plaza, along with the collective sale of Meyer Park in District 15 for $392.2 million.

The commercial property sector saw a significant 229.6% q-o-q growth in investment sales value in 1Q2023. Transactions in this sector were largely driven by two major retail deals: Link REIT’s purchase of Jurong Point and Swing By @ Thomson Plaza, along with Frasers Centrepoint Trust and Frasers Property’s joint acquisition of Nex. The total value of these transactions was around $2.81 billion, or 83.3%, of the total commercial transaction value.

In the strata office sector, there was a 5.4% q-o-q decrease in transactions, down to $290 million in 1Q2023. However, buying momentum remains, as demonstrated by the recent sale of three floors at The Solitaire on Cecil for $162.8 million.

The shophouse sector also saw an uptick in investment sales, with a 11.2% q-o-q increase from $172.7 million in 4Q2022 to $193.2 million in 1Q2023. Notable transactions include the union-affiliated purchase of six freehold shophouses along Serangoon Road for $62.5 million, and the sale of a six-storey shophouse at 52 Boat Quay for $37 million.

Investment value for residential sites and properties in 1Q2023 amounted to $1.58 billion. Despite the lack of Government Land Sale sites, the sector recorded a 12.5% q-o-q growth from $1.4 billion in 4Q2022, with three private residential sites being transacted at a total of around $583.8 million.

Although the figures of 1Q2023 suggest a relatively stable real estate market, ultra-high net worth individuals (UHNWIs) have filled the gap left by institutional investors and corporate buyers. With bank fallouts in the US and Switzerland, many UHNWIs may be turning towards real estate as safe havens, choosing to invest in luxury apartments, strata offices, and shophouses.

Marcus Loo, CEO of Savills Singapore, notes that UHNWIs are resilient and have different investment aspirations from more impacted institutional clients. For collective sales to be successful, realistic pricing is a key factor. Although publicly available data suggests investment sales in line with 2022’s $24.7 billion, UHNWIs’ lower propensity to lodge caveats suggests that the number could actually be higher.