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Singapore’s real estate investment scene got off to a slow start of $4.2 billion in quarter one of 2023, according to global real estate firm Knight Frank. This marked a decrease of 61% year over year compared to 1Q2022’s $10.8 billion and is the lowest quarterly total since 2Q2020, when the government enforced “circuit breaker” measures.
Residential deals amounted to $1.6 billion in the first quarter, including the collective sales of Meyer Park, Bagnall Court and Holland Tower which totalled some $583.8 million. The sale of Holland Tower is the first successful residential en bloc transaction in the Core Central Region (CCR) since property cooling measures were imposed in December 2021, indicating a return of interest for prime location development sites.
However, Chia Mein Mein, Head of Capital Markets (Land & Collective Sale) at Knight Frank Singapore, notes that the en bloc environment remains challenging due to the gulf in price expectations between sellers and developers. From 2021 until now, collective sales have had a success rate of around 33%, compared to the en bloc sales success rate of 63%, during the period of 2017 to 2018.
The commercial market saw minimal action in 1Q2023, with the sale of 39 Robinson Road to Yangzijiang Shipbuilding amounting to $399 million, while Frasers Centrepoint Trust and Frasers Property acquired a 50% stake in Nex for $652.5 million.
Industrial sector investment sales rose 62.8% quarter to quarter to $681.1 million, due to the market turning away from commercial properties and awaiting a repricing of assets. Notable deals in this sector include the acquisition of four Cycle & Carriage properties by M&G Real Estate at approximately $333 million,
and the disposal of 12 and 31 Tannery Lane by Ho Bee Land for $115 million.
Knight Frank predicts the pace of investment activity in Singapore to worsen before improving due to macroeconomic uncertainties and volatility in the global banking sector. Financing is becoming more difficult for buyers, investors, developers, and banks, and will remain so until signs of stabilisation appear in the global economy and financial conditions.
With this in consideration, Knight Frank has amended its projections for full-year investment sales from a range between $22 billion and $25 billion to a range between $20 billion and $22 billion. Investors are likely to remain cautious while they wait for early signs of repricing before making decisions.