Investment sales of property may hit $35b

Published June 22, 2007

Investment sales of property may hit $35b

Total chalked up so far is $21.4b, says CBRE

By KALPANA RASHIWALA


(SINGAPORE) CB Richard Ellis is predicting that the level of investment sales of property may hit $35 billion for the whole of this year, after chalking up a figure of $21.4 billion so far this year. The figure for the whole of 2006 was $30.5 billion.

The value of $21.4 billion from Jan 1 to June 20 this year is about 48 per cent higher than that for the first-half of last year.

The strong level of investment sales reflects major property players' continued confidence in the mid-to-long-term prospects for the Singapore real estate sector.

CBRE's investment sales tally includes land deals, collective sales, transactions of entire office and other buildings, as well as strata-titled units above $5 million.

The residential sector accounted for the lion's share, with around $14.6 billion or 68 per cent of total investment sales in the first half of this year.

Residential land sales remained the focus of investment activity in the first half as developers have sought to replenish their landbanks for future development in the face of strong demand at their residential launches, despite higher selling prices, market watchers say.

CBRE executive director (investment properties) Jeremy Lake said: 'As long as response to new launches remains very positive, one can expect developers to continue to compete aggressively for sites. The question now is whether with a larger choice of suburban sites offered by the Government Land Sales (GLS) programme announced last week, developers now have an alternative source of residential land supply other than collective sales, which has been generating prime district residential sites for developers.'

Asked about the implication that the latest GLS programme may have on en bloc sales, Mr Lake said that while choice sites in the prime districts will continue to be sought after through en bloc sales, 'the market may overlook those sites that have overshot pricing expectations or are less appealing for whatever reasons'.

He said: 'Developers will become more choosy when picking sites through collective sales in the prime areas.'

Around $8 billion worth of collective sale deals have been struck so far this year. Big transactions include Leedon Heights ($835 million), Char Yong Gardens ($420 million) and The Ardmore ($262 million, reflecting a record unit land price of $2,337 psf per plot ratio).

Office properties contributed around $4.8 billion, or 23 per cent of the investment sales pie in the first half. Activity in this market segment is expected to remain buoyant on the back of robust rental growth due to a near-term shortage of office space.

For the second quarter of this year (up to June 20), the total investment sales tally was $9.67 billion, up 16 per cent from the figure of $8.34 billion in Q2 2006, after hitting $11.7 billion in Q1 2007.

'At this half-way point, there is every reason to expect that investment sales for the whole of 2007 will surpass the $30.51 billion set in 2006 and may hit $35 billion,' Mr Lake said.

While the private sector accounted for 86 per cent of total investment sales in H1 2007, with the rest contributed by GLS, the public sector is expected to make a strong showing in the second half.

There is much speculation about two forthcoming GLS sites, at Beach Road and in the Marina Bay area, up for tender in Q3 and which are likely to yield over $2 billion of investment sales.

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June 22, 2007

Investment property deals for first half reach $21.4b


MAJOR investment deals in Singapore's property sector since January have totalled $21.4 billion, thanks to a roaring collective sale market.

The figure is 48 per cent higher than that a year ago, and investment sales are on track to hit a record this year, according to a report by property consultancy CB Richard Ellis (CBRE).

'At this halfway point, there is every reason to expect that investment sales for the whole of 2007 will surpass the $30.5 billion set last year and may hit $35 billion,' said Mr Jeremy Lake, CBRE's executive director for investment properties.

But the value of deals done in the April to June period dipped slightly from that recorded in the preceding three months. The figure came to $9.7 billion, down from $11.7 billion in January to March.

Investment deals tracked by CBRE are sales of properties done at a value exceeding $5 million. They include land sales, collective sales and sales of strata-titled properties.

Of the sales so far this year, the private sector accounted for 86 per cent, or $18.5 billion, said CBRE. Government land deals, including the recent sale of a Dakota Crescent site for $229 million, made up the rest.

The lion's share of the deals this year remained with the residential sector, which made up 68 per cent of all investment sales. A total of 67 collective sales have been recorded since January, to the tune of $7.9 billion, said CBRE.

Office deals took second place, accounting for 23 per cent, or $4.8 billion, of the pie.

For the second half of the year, Mr Lake predicts that sales from the public sector will 'contribute significantly', given the release of sites in the government land sales programme.

FIONA CHAN