Property investment picks up in third quarter

Transactions totalling $8.7b involve several hotels and collective sale sites

Published on Oct 04, 2012

By Amanda Tan

MAJOR property investors were far more active in the third quarter than in the second quarter, leading to a jump in hotel and residential property deals.

Property investment activity surged 15.6 per cent quarter on quarter to $8.7 billion in the three months ended Sept 30, consultancy DTZ reported yesterday.

This brings the total investment volume for the first nine months of the year to nearly $21 billion, just shy of last year's $21.4 billion for the corresponding period.

Investment sales included deals of at least $5 million, but excluded some $1.3 billion worth of transactions in single residential units as well as lots that cannot be redeveloped or subdivided into more than one plot.

Last quarter, deals involving hotels jumped fourfold, and those involving residential property leapt threefold. The deals, mostly in the private sector, made up almost 40 per cent of total investment value in the third quarter.

Major deals included the sale of seven hotels and four serviced residences worth $2.1 billion by Far East Organization to its Far East Hospitality Trust.

Nine collective sales worth about $1 billion were also made last quarter, compared to 15 deals worth $960 million in the first half of the year.

For instance, Thomson View Condominium was sold for $590 million last month, partly due to the announcement of a nearby station on the upcoming Thomson Line. DTZ also noted that Green Lodge on Toh Tuck Road was sold for $191.9 million last month.

Mr Shaun Poh, DTZ's head of investment advisory services and auction, said the two en bloc sales "could provide an impetus for the collective sales market and trigger more interest for the larger sites".

"More collective sale sites could be launched over the next few quarters, in particular those that are located near the upcoming MRT lines," he added.

DTZ said the average investment deal grew 23 per cent from the second quarter to $69.8 million, reflecting a pick-up in investor sentiment. It was the first rise after two quarters of decline.

Real estate investment trusts and corporates were net buyers in the third quarter, with the former accounting for 28 per cent of total investment volume. Funds were net sellers, selling about $1.4 billion of assets. Funds managed by Pramerica, AEW Capital Management and Commerzbank sold their stakes in shopping mall nex, and office buildings Robinson Point and 78 Shenton Way, respectively.

Ms Chua Chor Hoon, DTZ's head of Asia-Pacific research, said investment activity for the full year could come close to last year's $28.6 billion. "With the expected increase in liquidity due to QE3 and large collective sales that took place recently, investor sentiment has picked up," she said, referring to a major US money printing exercise.

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