Singapore real estate performance investment expected to recover in coming quarters

Ravi Philemon
·5-min read

Singapore real estate performance investment in Q1 2021 and its prospects ahead expected to recover to pre-Covid levels in the coming quarters

  • Total Singapore real estate performance investment sales grew 25.8% QOQ and 47.9% YOY (ex-mergers and GLS) in Q1 2021.

  • Q1 2021 commercial volumes grew 43.8% YOY, and 377% QOQ as investor confidence returns.

  • Residential investment sales grew 12.9% QOQ and 154% YOY excluding GLS, with no GLS sales recorded in Q1 2021.

  • Industrial investment sales jumped 141% QOQ in Q1 2021, boosted by a new 14-property fund and several light industrial transactions.

  • Shophouse continued to see a buoyant investment volume in Q1 2021 of SGD134 million, reflecting a 93.0% YOY increase and a 53.6% QOQ decline.

Colliers International, on 15 April published its latest market research report that examines Singapore real estate performance investment in Q1 2021 and its prospects ahead.

Singapore real estate performance investment report suggests improving investor sentiments and expects stronger sales in the coming quarters recovering to pre-Covid levels, supported by Singapore’ safe-haven status, pro-business environment and economic growth.

Tricia Song, Head of Research, reported: “Mobility and economic activities going forward should further increase due to the more easing measures introduced to allow 75% of employees at the workplace at any one time from 5 April onwards.”

Singapore real estate performance investment sales rose 25.8% QOQ and 47.9% YOY (ex-mergers and Government Land Sales) in Q1 2021 to SGD3.8 billion led by the commercial and industrial segments due to a few major deals, including a half-stake in OUE Bayfront for SGD 634 million, sale of YewTee Point, and Boustead injecting 14 properties into the newly established Boustead Industrial Fund at SGD469 million.

Singapore real estate performance
Image: Colliers International

Colliers Research also pointed out that the Residential sector also recorded more activity sequentially (ex-GLS) with continued strong Good Class Bungalows (GCBs) sales and almost doubling of landed housing sales.

COMMERCIAL PROPERTIES

Jerome Wright, Senior Director, Capital Markets, commented: “Q1 2021 commercial volumes excluding REIT mergers grew 43.8% YOY and 377% QOQ, as investor confidence returns with the reopening of Singapore’s economy. Commercial assets especially Grade A office buildings remain attractive as more tech giants set up bases in Singapore, and potentially leveraging on the URA Incentive Scheme.”

RESIDENTIAL PROPERTIES

Colliers Research noted the absence of GLS in Q1 2021, resulting in lower residential investment sales. However, excluding GLS, residential investment sales grew 12.9% QOQ and 154% YOY in Q1 2021 to SGD1.6 billion.

Steven Tan, Senior Director of Investment Services at Colliers International, said: “Foreign investors’ confidence in Singapore’s real estate market is very strong, the sale of all 20 units at the completed freehold luxe condominium, Eden, for SGD293 million to the Tsai family of Taiwan is a great testimonial.”

INDUSTRIAL PROPERTIES

Industrial investment sales in Q1 2021 jumped 141% QOQ to SGD976 million, boosted by the setting up of a 14-property SGD469million Boustead Industrial Fund and the sale of Admirax, a high-specification light industrial building for SGD142 million.

Pearl Lok, Associate Director, Investment Services, added, ” We see positive long-term growth as investors seek warehouses, data centres and hi-specs space to leverage growing e-commerce and technology trends.”

SHOPHOUSES

Mr Tan commented, “Shophouses are sought after as they offer flexible property usage, a stable rental income and capital appreciation potential at a palatable investment quantum. It is no surprise to see that Q1 2021 continued to see a buoyant investment volume of SGD134 million, reflecting a 93.0% YOY increase and a 53.6% QOQ decline.”

Mr Paul Ho, chief officer at iCompareLoan, said, “it is understandable why Singapore real estate performance investment will be on the upswing in the next few quarters. There is ample liquidity in Singapore and amid a low-interest environment we are likely to see more positive sentiment in the private property market. In such a climate, the ultra high net worth investors may be viewing Singapore more favourably.”

He added, “with political stability, it is understandable why Singapore looks attractive to ultra high net worth investors. Singapore’s business-friendly environment also attracts many ultra high net worth investors to park their assets here.”

The optimism in Singapore real estate performance investment is not surprising considering that property investors were confident even during the height of the Covid-19 pandemic that transaction volumes in Asia Pacific will rebound meaningfully by early 2021.

Optimism was being further buoyed by signs of a sustained recovery in China. Select investors remained more bullish and confident that the market hit its trough in the first half of 2020. Such confidence isn’t unique to real estate. Stock markets have raced higher despite the pandemic, with analysts citing a confidence that the worst of the pandemic may be over, and hefty central bank stimulus.

The optimism around the vaccine roll-out is giving a push for the overall economic growth for 2021. The risk-on mode bodes well for the recovery in the investment sales market in 2021 as investors stand ready to deploy more capital in anticipation of growth and better returns in the new year. Given the prolonged low interest rate environment, investors who are flushed with liquidity will continue to look out for opportunities to acquire assets in search of higher returns.

There especially was a strong pick-up in the shophouse investment sales. The wealth preservation theme to protect capital amidst heightened geopolitical uncertainties has continued to support the shophouse sector despite the rental weaknesses given social distancing measures and economic woes.

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