Real estate investment sales jump 67%
Surging investors' confidence in office property market makes big impact
Private sector property investment sales are set for a strong run after a spectacular start to the year. The rosy outlook is being driven by the office, and possibly the retail and residential sectors, consultancy JLL said in a new report.
The overall value of real estate investment deals soared 67.4 per cent in the first three months to $4.99 billion - of which $4.47 billion was from the private sector.
Private investment sales of office property accounted for the lion's share at $2.12 billion - the sector's strongest first-quarter showing since 2008. The $2.12 billion figure was a 60.6 per cent rise from the fourth quarter and more than treble that of a year ago.
"Investors' confidence in Singapore's office property market continues to be on the rise, underpinned by the city state's sound economic fundamentals," said Mr Greg Hyland, head of capital markets for JLL Singapore.
He noted that investors are aware the "window of opportunity to acquire available assets at an attractive point in the cycle is fast closing", as the prime office leasing market in the central business district is stabilising.
JLL said the top two office deals in the first quarter were entity sales, involving the sale of interest in firms holding the property. One was the sale of the entire interest in the holding company of PwC Building in Cross Street to an indirect unit of Manulife Financial Corporation for $760.60 million.
The other was the divestment of the entire interest in Plaza Ventures, the owner and developer of GSH Plaza in Cecil Street, to Fullshare Holdings for $725.21 million.
JLL noted the potential for the full-year sales of private office assets to surpass the $6.49 billion recorded last year, considering the recent deal for One George Street and sizeable assets available in the market including Asia Square Tower 2 in Marina Bay.
The residential segment, meanwhile, booked $1.69 billion in private investment sales for properties valued at $5 million and above in the first quarter. This was a fall of 35.3 per cent from the fourth quarter, but double the value of the first quarter last year.
Two other segments - retail and industrial - also saw private investment sales more than doubling from the previous year in the first quarter: $280 million for retail and $390 million for industrial.
JLL has forecast a bright investment sale outlook for the year, driven by the recent sale of the $2.2 billion Jurong Point mall and upbeat sentiment in the private residential market.
A growing appetite for collective sale sites by developers facing depleting land banks and limited supply of sites from the Government could also lend support to investment sales.
"Barring unforeseen circumstances, private sector investment sales stand a good chance to outshine last year," said JLL Singapore head of research and consultancy Tay Huey Ying.
Last year's private sector investment sales stood at $19.06 billion, JLL noted.