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

Singapore real estate investment activity viewed a boost in 3Q2023, signing up a boost of 74.8% q-o-q to appear at $6.9 billion, according to an October study record by Knight Frank. The amount likewise stands for a 19.4% development y-o-y. This notes the initial quarterly growth after 5 continuous quarters of reduction since 1Q2022.

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

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

The cumulative sales market likewise remained to encounter headwinds amidst the unsure market overview. “The broadening gulf in forecasts between owners and developers stayed the largest obstacle, aggravated by growing prices, rate of interest and the excessive increases in ABSD prices, all in a condition of financial cynicism,” Knight Frank mentions in its record. In July, Wing Tai announced its retirement from the sale of Holland Tower, after the deal was made at $76.3 million in March this year.

On the other hand, commercial transaction value plummeted to $252.2 million in 3Q2023, in which Knight Frank notes is the lowest quarterly amount logged since the $174 million signed up in 2Q2020 during the circuit breaker time period.

Business estate deals enhanced in 3Q2023, climbing 27.4% q-o-q and 23.3% y-o-y to hit $1.5 billion. The greater price adheres to the sale of Changi City Point by Frasers Centrepoint Trust for $338 million in August, with the shopping mall apparently bought by the Zhao family group from mainland China. Furthermore, the combined sale of Far East Shopping Center for $908 million to Glory Property Developments last month additionally reinforced industrial financial investment worth, in addition to the sale of the mixed-use, retail and housing GLS area at Tampines Avenue 11 for $1.2 billion.

Looking in advance, Knight Frank anticipates slower investment event for the remainder of the year offered the dominating sentiment and challenges in the real estate market. “In the coming months, the capital markets area will certainly be qualified by capitalists on the hunt for assets being mostly concentrated on incorporating significance to the real estates to attain higher returns. This is to justify the higher borrowing costs included with the procurement of the property,” the report includes.

Chia Mein Mein, head of capital markets (land and collective sale) at Knight Frank Singapore, adds that climbing costs have prompted developers to turn towards GLS areas. Nonetheless, regardless of plots in prime sites, she mentions that builders’ hungers have actually diminished, with less individuals and even more conventional bids submitted in recent GLS tender exercises.

“As a result of the current high interest cost, customers end up having to go up the threat turn by including worth to their investments to get greater safe earnings, and this features acquisitions for growth and redevelopment,” remarks Daniel Ding, head of capital markets (land and building, foreign realty) at Knight Frank Singapore.

Residential packages comprised $3.3 billion of assets value in 3Q2023, primarily steered by the honor of 5 residential GLS tenders. This represents a boost of 93.5% q-o-q, nevertheless a reduction of 12% y-o-y. Additionally, private residential properties signed up a decrease in sales activity, which Knight Frank credits to the surge in Additional Buyer’s Stamp Duty (ABSD) rates that happened in April.

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