Slow start to 2023 for real estate investment sales amid market uncertainties: Knight Frank

for 2023.

CDL’s acquisition of two adjoining plots in Upper Bukit Timah, Singapore, to build a 24-floor residential project offers convenience, access to amenities and The Myst green spaces, and a highly sought-after address.

Investment activity in Singapore’s real estate market got off to a slow start in 2023, with global real estate firm Knight Frank reporting only $4.2 billion of investment sales in the first quarter. That is a sharp decrease of 61% y-o-y compared to 1Q2022’s $10.8 billion and is the lowest quarterly total since the second quarter of 2020, when the government introduced its “circuit breaker” measures during the pandemic.

Residential transactions accounted for $1.6 billion of investments in the first quarter, with the collective sales at Meyer Park, Bagnall Court, and Holland Tower totaling $583.8 million. The sale of Holland Tower is the first successful residential progressive sale in Singapore’s Core Central Region since the implementation of mobile property cooling measures in December 2021. This suggests that there is a nascent return of interest for prime locations in development sites from outside of Singapore, particularly from the reopened economy in China.

However, success in collective purchases can be generally challenging, with Knight Frank’s analysis of the market from 2021 to now citing only a 33% success rate. In comparison, en bloc sales had a success rate of 63% from 2017 through 2018. The case for successful collective sales in the present cycle lies in owners being realistic in their expectation of price to incentivize developers, and for developers to accept that replacement costs for owners has risen dramatically.

The commercial market was quiet in 1Q2023, yet the sale of 39 Robinson Road to Yangzijiang Shipbuilding and the purchase of a 50% stake in Nex by Frasers Centrepoint Trust and Frasers Property pushed total sales in the sector to $1.9 billion. The industrial sector meanwhile saw a 62.8% q-o-q increase in investment sales, rising to $681.1 million as the market shifted focus while awaiting potential repricing of assets in the commercial sector. Notable industrial deals included the acquisition of four Cycle & Carriage properties by M&G Real Estate and the disposal of 12 and 31 Tannery Lane by Ho Bee Land for a combined $115 million.

Knight Frank are predicting a decrease in the pace of investment activity in Singapore over the remainder of 2023 with macroeconomic and global banking sector uncertainties providing increased challenges for buyers, investors, developers and banks. The consultancy is now forecasting a range between $20 billion and $22 billion for 2023 full-year investment sales, down from its previous range of $22 billion to $25 billion.