Property investment sales could hit $46b in 2018: Report
Collective sale fever among reasons for market growth
Fuelled by the collective sales fever and a possible upturn in other segments, the property investment sales market here could grow 15 per cent year on year to $46 billion this year.
This would beat 2007's $40.187 billion, according to Colliers International in a report released yesterday, and the market could grow a further 5 per cent to 10 per cent next year.
The first quarter of this year alone has already recorded an 89 per cent year-on-year increase in total investment sales to $11 billion.
The residential segment was the main driver, increasing 233 per cent year on year to $9.1 billion, the highest since the $9.5 billion recorded in the second quarter of 2007. It also comprised 83 per cent of the total investment sales in the first quarter of this year.
"Following the revival of collective sales from mid-2017, developers continued to search aggressively for suitable sites to replenish their depleting land banks, leading to an active collective sales market and keen bidding for sites offered through state land tenders in Q1 2018," wrote Colliers' director and head of research Tricia Song and assistant manager for research Nathan Nguyen.
Notably, the five largest transactions in the quarter were all residential collective sales deals - Pacific Mansion ($980 million), Park West ($840.9 million), Pearl Bank Apartments ($728 million), Goodluck Garden ($610 million) and Brookvale Park ($530 million).
In all, 17 residential collective sales sites with a value of $5.83 billion were transacted in the first quarter. This helped the private residential segment grow 16 per cent quarter on quarter to $7.9 billion.
Colliers noted two trends in the residential collective sale market - developers' interest is shifting to the prime region from suburban locations, and premiums may have weakened, from 10.5 per cent last year to an average of 4.9 per cent in the first quarter of the year.
The latter, however, is not a sign that the collective sales market is starting to cool as attractive sites with realistic asking prices still find ample bidding interest, the analysts said.
The quarter also saw the public residential segment record $1.24 billion in investment sales, from Government Land Sales sites including Sumang Walk in Punggol and Handy Road.
The commercial segment saw fewer deals, with total sales sagging 86 per cent quarter on quarter to $437.4 million, or just 4 per cent of the total pie in the quarter.
Colliers said the only major transaction in the first quarter was Perennial Real Estate Holdings' acquisition of Pontiac Land affiliate Chesham Properties' 50 per cent stake in Capitol Singapore for $528 million, of which Colliers attributed the retail component to be worth $349.5 million.
But Colliers said more deals could be in store given rising office rents.- THE STRAITS TIMES
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