Residential investment sales expected to slow down in second half of 2018

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Fewer en bloc transactions expected for the rest of 2018

With the en bloc fever driving real estate activity in the first half of the year, the government’s surprise property cooling measures...

Overall real estate investment sales in Singapore rose 11 percent quarter-on-quarter and 19 percent year-on-year to $12.2 billion in Q2 2018, driven mainly by the residential sector, which accounted for 67 percent of the overall transactions, according to a new report from Colliers International.

The largest transaction was the $906.9 million en bloc sale of Tulip Garden, followed by CapitaLand Commercial Trust’s $516 million divestment of the Twenty Anson office building.Completing the top five are the collective sales of Dunearn Gardens ($468 million), Chancery Court ($401.8 million) and Park House ($375.5 million).

In fact, four out of the five biggest deals here during the period comprised collective sales of residential developments, while one involved an office building. Property investment sales are deals worth at least $5 million.

Colliers noted that residential investment sales jumped 60.7 percent to $8.2 billion on an annual basis thanks to strong en bloc activity, with collective sales contributing almost half of the investment sale volume in the second quarter. Consequently, residential investment sales in 1H 2018 reached $17.3 billion, or the highest half-year figure on record.

In Q2, there were 16 residential en bloc sales collectively worth $3.9 billion, pushing the half-year tally to 33 transactions with a combined worth of $9.7 billion, which surpasses the total collective sales for the whole of 2017 by 19 percent.

However, Colliers International’s research head for Singapore Tricia Song expects a slowdown in the residential en bloc market in the near-term due to the new property curbs, which has raised taxes for investors and property developers in the private residential segment.

“Commercial and industrial real estate could pick up the slack in the second half of the year, on the back of healthy commercial properties deal pipelines and rising interest from real estate investment trusts (REITs) and institutional investors for industrial assets,” she explained.

Despite the forecasted slowdown in the private residential market, including the en bloc segment, the consultancy thinks that overall property investment sales for the whole of 2018 would match last year’s record $40 billion.

But this forecast is a downgrade from a prior projection that had anticipated a 15 percent annual increase in investment sale to $46 billion before the implementation of the new property cooling measures.

Eugenia Rosaline Shlaen edited this story. To contact her about this or other stories, email eugenia@propertyguru.com.sg