New Reporter
11-10-23, 17:49
Far East Shopping Centre mega deal, state land sales prop up Q3 investment sales
Gloomy outlook expected for rest of 2023 due to high borrowing costs, ABSD
Oct 09, 2023
REAL estate investment sales were up 19.4 per cent year on year in Q3 to S$6.9 billion, supported by Government Land Sales (GLS) transactions and the S$908 million collective sale of Far East Shopping Centre.
State land sales accounted for more than 60 per cent of total investment sales value in Q3, according to Knight Frank Singapore’s investment update for the third quarter, issued on Oct 9.
Chia Mein Mein, head of capital markets (land and collective sales) said: “As a result of increasing costs, the attention of developers has generally turned towards the GLS confirmed list, even though the number of participants has fallen and the bid rates on a psf per plot ratio basis have turned conservative during recent tender exercises.”
The largest investment transaction between July and September 2023 was the sale of a commercial and residential site in Tampines Avenue 11 to a joint venture by a UOL-Singapore Land consortium and CapitaLand Development. The site was awarded for S$1.21 billion, or S$885 per square foot (psf) per plot ratio.
The second-largest deal in Q3 was the GLS site at Marina Gardens Lane, which was awarded to Chinese developer Kingsford Huray Development and two other partners for S$1.03 billion, or S$1,402 psf per plot ratio.
“Notwithstanding that appetites of developers have shrunk due to rising costs, plots in prime locations continue to generate interest given the possibility for subdivision or redevelopment,” said Chia.
While residential sales which totalled S$3.3 billion in Q3 were up 93.5 per cent on a quarterly basis, they were still down 12 per cent year on year.
Commercial property deals in Q3 rose 23.3 per cent to S$1.5 billion, largely due to the sale of Changi City Point by Frasers Centrepoint Trust for S$338 million allegedly to a mainland Chinese family and the S$908 million collective sale of Far East Shopping Centre to a company linked to Chinese businessman Du Shuanghua.
Knight Frank said: “The sole collective sale of Far East Shopping Centre at the end of Q3 extended a precious lifeline into what has been a rather gloomy en bloc environment.”
It noted that the collective sales market was affected by the increase in the Additional Buyer’s Stamp Duty for foreigners to 60 per cent for residential properties in April.
“Foreigners residing in properties undergoing the en bloc process are not likely to sell due to replacement costs that have exponentially increased for them,” said Knight Frank.
“The expanding gulf in expectations between owners and developers remained the biggest obstacle, exacerbated by increasing costs, interest rates… all in a climate of economic pessimism.”
Knight Frank noted how a subsidiary of Wing Tai Holdings withdrew from the S$76.3 million Holland Tower en bloc deal, further dampening collective sale sentiment.
Industrial investment values in Q3 shrank to S$252.2 million, the second-lowest amount since the S$174 million recorded during the circuit breaker in Q2 2020.
Meanwhile, the hotel segment sprang back to life with the sale of Parkroyal on Kitchener Road in July for S$525 million to Worldwide Hotels, the first hotel deal to be completed since Q4 2022.
Knight Frank said: “This may be a sign of things to come, with more investor interest directed towards the recovering hospitality and retail sectors.”
However, the property consultancy maintained its view that a continued slowdown will likely feature for the remainder of 2023.
Total investment sales for 2023 are expected to add up to a more conservative S$18 billion to S$20 billion, compared to its previous forecast of S$20 billion to S$22 billion.
“In the coming months, the capital markets space will be characterised by investors on the search for assets being primarily focused on adding value to the properties to achieve higher returns.
“Investors currently in the process of discovery are increasingly observed to be prepared to move up the risk curve for commercial properties to obtain higher returns and this can include taking the enhancement and redevelopment route,” said Knight Frank.
https://www.businesstimes.com.sg/property/far-east-shopping-centre-mega-deal-state-land-sales-prop-q3-investment-sales
Gloomy outlook expected for rest of 2023 due to high borrowing costs, ABSD
Oct 09, 2023
REAL estate investment sales were up 19.4 per cent year on year in Q3 to S$6.9 billion, supported by Government Land Sales (GLS) transactions and the S$908 million collective sale of Far East Shopping Centre.
State land sales accounted for more than 60 per cent of total investment sales value in Q3, according to Knight Frank Singapore’s investment update for the third quarter, issued on Oct 9.
Chia Mein Mein, head of capital markets (land and collective sales) said: “As a result of increasing costs, the attention of developers has generally turned towards the GLS confirmed list, even though the number of participants has fallen and the bid rates on a psf per plot ratio basis have turned conservative during recent tender exercises.”
The largest investment transaction between July and September 2023 was the sale of a commercial and residential site in Tampines Avenue 11 to a joint venture by a UOL-Singapore Land consortium and CapitaLand Development. The site was awarded for S$1.21 billion, or S$885 per square foot (psf) per plot ratio.
The second-largest deal in Q3 was the GLS site at Marina Gardens Lane, which was awarded to Chinese developer Kingsford Huray Development and two other partners for S$1.03 billion, or S$1,402 psf per plot ratio.
“Notwithstanding that appetites of developers have shrunk due to rising costs, plots in prime locations continue to generate interest given the possibility for subdivision or redevelopment,” said Chia.
While residential sales which totalled S$3.3 billion in Q3 were up 93.5 per cent on a quarterly basis, they were still down 12 per cent year on year.
Commercial property deals in Q3 rose 23.3 per cent to S$1.5 billion, largely due to the sale of Changi City Point by Frasers Centrepoint Trust for S$338 million allegedly to a mainland Chinese family and the S$908 million collective sale of Far East Shopping Centre to a company linked to Chinese businessman Du Shuanghua.
Knight Frank said: “The sole collective sale of Far East Shopping Centre at the end of Q3 extended a precious lifeline into what has been a rather gloomy en bloc environment.”
It noted that the collective sales market was affected by the increase in the Additional Buyer’s Stamp Duty for foreigners to 60 per cent for residential properties in April.
“Foreigners residing in properties undergoing the en bloc process are not likely to sell due to replacement costs that have exponentially increased for them,” said Knight Frank.
“The expanding gulf in expectations between owners and developers remained the biggest obstacle, exacerbated by increasing costs, interest rates… all in a climate of economic pessimism.”
Knight Frank noted how a subsidiary of Wing Tai Holdings withdrew from the S$76.3 million Holland Tower en bloc deal, further dampening collective sale sentiment.
Industrial investment values in Q3 shrank to S$252.2 million, the second-lowest amount since the S$174 million recorded during the circuit breaker in Q2 2020.
Meanwhile, the hotel segment sprang back to life with the sale of Parkroyal on Kitchener Road in July for S$525 million to Worldwide Hotels, the first hotel deal to be completed since Q4 2022.
Knight Frank said: “This may be a sign of things to come, with more investor interest directed towards the recovering hospitality and retail sectors.”
However, the property consultancy maintained its view that a continued slowdown will likely feature for the remainder of 2023.
Total investment sales for 2023 are expected to add up to a more conservative S$18 billion to S$20 billion, compared to its previous forecast of S$20 billion to S$22 billion.
“In the coming months, the capital markets space will be characterised by investors on the search for assets being primarily focused on adding value to the properties to achieve higher returns.
“Investors currently in the process of discovery are increasingly observed to be prepared to move up the risk curve for commercial properties to obtain higher returns and this can include taking the enhancement and redevelopment route,” said Knight Frank.
https://www.businesstimes.com.sg/property/far-east-shopping-centre-mega-deal-state-land-sales-prop-q3-investment-sales