Published October 5, 2006

Q3 property investment sales up 39% at $7.46b

Result of site acquisition by developers and Reit purchases


PROPERTY investment sales in Singapore continued to grow in the third quarter of this year, climbing 39 per cent to hit $7.46 billion, up from the $5.37 billion in the same three months last year, according to a report by property consultancy CB Richard Ellis (CBRE) released yesterday.

CBRE attributes the stellar performance of investment sales to developers' acquisitions of both collective sale and government land sale sites, as well as large purchases by real estate investment trusts (Reits).

The residential sector accounted for the largest proportion of sales during the third quarter, contributing 51 per cent - or $3.83 billion - of total investment sales. These included 18 collective sales worth $1.99 billion in total.

'Land prices have been driven by developers looking for choice residential development sites, particularly for high-end and lifestyle projects in the prime districts,' says the CBRE report.

'We are seeing a wider cross section of developers entering the collective sale market,' said Jeremy Lake, executive director for investment properties at CBRE. 'The volume of sites being launched is still high and owners continue to be optimistic but developers are now more selective in their purchases as most of them have bought at least one or two sites.'

Commercial investment sales also continued to perform well in the third quarter, contributing 24 per cent - $1.77 billion - to total investment sales. Frasers Centrepoint Trust accounted for the bulk of this figure when it bought three shopping malls for a total of $915.2 million for its Singapore Exchange (SGX) debut. Next in line was Singapore's hotel sector, which accounted for 13 per cent - or $998.3 million - of total investment sales. Once again, the numbers were led by a Reit - in this case, CDL Hospitality Trusts, which bought four hotels and a shopping arcade for $846.3 million.

Finally, the industrial sector accounted for 11 per cent - or $845 million - of total investment sales in the third quarter. The two most significant transactions were Cambridge Industrial Trust's purchase of 27 properties for $519 million for its SGX debut and Mapletree Logistics Trust's acquisition of an industrial property on Jurong Port Road for $168 million.

Looking forward, investment activity for all sectors will continue to be robust.

'Developers will remain enthusiastic in the acquisition of residential development sites from the private and public land sources,' says CBRE. 'As the appetite for quality yield-accretive commercial properties among property funds and Reits continue to be strong, we expect the total volume of investment sales for the full year of 2006 to be above $25 billion.'

In addition to this, Singapore's well-developed regulatory framework should continue to attract more offshore Reits to be listed here, adds CBRE.