Real estate investments up 75% q-o-q in 3Q2023, bolstered by GLS tenders: Knight Frank

Some $4.1 billion (over 60%) of the transacted value originated from Government Land Sale (GLS) locations that were awarded in the pas quarter, consisting of areas at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu.

Singapore property investment event saw an improvement in 3Q2023, signing up an increase of 74.8% q-o-q to reach at $6.9 billion, according to an October research record by Knight Frank. The amount also stands for a 19.4% improvement y-o-y. This marks the very first quarterly growth after 5 successive quarters of reduction since 1Q2022.

Commercial real estate deals raised in 3Q2023, climbing 27.4% q-o-q and 23.3% y-o-y to arrive at $1.5 billion. The greater worth adheres to the sale of Changi City Point by Frasers Centrepoint Trust for $338 million in August, with the mall supposedly acquired by the Zhao family from mainland China. Additionally, the combined sale of Far East Shopping Centre for $908 million to Glory Property Developments last month likewise bolstered commercial financial investment market value, along with the sale of the mixed-use, retail and housing GLS site at Tampines Avenue 11 for $1.2 billion.

Residential deals composed $3.3 billion of assets worth in 3Q2023, mostly pushed by the award of five non commercial GLS tenders. This stands for a rise of 93.5% q-o-q, but a decrease of 12% y-o-y. Additionally, private residential properties signed up a decline in sales event, which Knight Frank credits to the surge in Additional Buyer’s Stamp Duty (ABSD) rates that happened in April.

“Because of the present high rate of interest price, purchasers find themselves needing to move up the risk turn by incorporating worth to their investments to get greater ecological returns, and this includes procurements for enhancement and redevelopment,” comments Daniel Ding, head of capital markets (land and building, international property) at Knight Frank Singapore.

Chia Mein Mein, head of resources markets (land and collective sale) at Knight Frank Singapore, adds that increasing expenses have prompted property developers to change towards GLS spots. Nevertheless, regardless of plots in prime places, she mentions that developers’ hungers have actually shrunk, with a lot fewer participants and even more conservative bids submitted in latest GLS tender activities.

Looking ahead, Knight Frank anticipates slower financial investment event for the remainder of the year given the prevailing sentiment and challenges in the property market. “In the coming months, the capital markets room will be qualified by capitalists on the look for assets being mostly concentrated on adding significance to the estates to attain greater profits. This is to warrant the higher borrowing expenses involved with the purchase of the property,” the record adds.

Midtown Bay condominium

The company has solidified its full-year estimates for investment sales, cutting estimates from in between $20 billion to $22 billion to between $18 billion to $20 billion.

On the other hand, commercial transaction value plummeted to $252.2 million in 3Q2023, in which Knight Frank notes is the lowest quarterly amount recorded as the $174 million registered in 2Q2020 during the circuit breaker duration.

The combined sales market additionally continued to deal with headwinds in the middle of the unclear market expectation. “The increasing gulf in expectations between proprietors and builders continued to be the greatest obstacle, aggravated by improving expenses, rate of interest and the prohibitive surges in ABSD prices, all in a climate of economic depression,” Knight Frank mentions in its record. In July, Wing Tai introduced its withdrawal from the sale of Holland Tower, after the deal was made at $76.3 million in March this year.

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