Investment sales reviving for Singapore commercial property, GCBs: Knight Frank

Significant commercial transactions prevalent in Q3 as the economy reopened after Covid-19 restrictions were lifted

Sat, Oct 10, 2020

Fiona Lam

THE buzz may be returning to Singapore's real estate investment sales market after several muted quarters, with interest and activity recovering during July to September, particularly for commercial assets and Good Class Bungalows (GCBs).

But overall, investment sales - defined as transactions totalling S$10 million and more - were still down 55.1 per cent year-on-year to S$4.4 billion.

This is according to Knight Frank's Q3 market report on Friday, which also noted there were no transactions in the public sector for the three months as no sites were sold under the government land sales programme. No major hotel deals were recorded either, based on the data.

Significant commercial transactions were "prevalent" during the quarter as the economy reopened after Covid-19 restrictions were lifted. Such deals were led by the sale of a 50 per cent interest in Northpoint City (South Wing), with the half stake valued at S$550 million, to TCC Group, and the S$500 million sale of Tuan Sing Holdings' Robinson Point.

Also among the biggest deals announced in Q3 are Tiong Bahru Plaza, Tampines 1 and Century Square - held by AsiaRetail Fund (ARF). The malls are set to change hands when Frasers Centrepoint Trust buys the rest of ARF from Frasers Property.

Total investment sales of commercial assets nearly doubled (96.4 per cent) quarter on quarter to S$3.3 billion in Q3, although this is still 15.1 per cent lower than a year ago.

"There remains substantial interest for commercial properties, especially in the central business district (CBD) with the potential of existing buildings tapping into the CBD Incentive Scheme," the analysts wrote.

However, there is limited saleable stock available on the market for such properties, they noted. This is also considering that foreign investors are still keen on expanding their operations from Singapore.

"The likes of Alibaba acquiring a 50 per cent stake in AXA Tower earlier in May and ByteDance looking to set up in Singapore, are just the beginning of the potential demand coming from China-based technology companies," Knight Frank said.

In the year ahead, technology firms are likely to show more interest in buying and occupying commercial properties here to set up regional bases, it noted.

In the residential sector, demand was found to be "particularly resilient" in the GCB segment. Investment sales of homes in general climbed by 143.6 per cent quarter on quarter to S$636.2 million, but sank 77.8 per cent year on year.

The sector was propped up by a string of GCB deals totalling some S$128.3 million in Q3, coming close to the S$166.4 million recorded in the first half of this year. This, said Knight Frank, demonstrated "a strong recovery in demand" for GCBs.

Key transactions in the past three months included the sale of GCBs along Garlick Avenue.

The family of Singaporean billionaire Goh Cheng Liang was said to have bought a bungalow sitting on 101,550 square feet of freehold land on Garlick Avenue at about S$93 million, BT reported in September.

As for industrial properties, deal value surged by 133.3 per cent on the quarter to S$406.6 million for Q3. However, year on year, they contracted by 45 per cent.

A warehouse was sold to AIMS Apac Reit for S$129.6 million, while a business park development at 26A Ayer Rajah Crescent owned by Mapletree Industrial Trust was purchased by Equinix Singapore for S$125 million.

Despite the Covid-19 outbreak, Singapore remains an attractive destination for foreign investors due to its comparatively stable economic and political environment, Knight Frank said.

It expects demand for Singapore's investment properties to increase in the coming months, as investors continue leveraging available opportunities and low interest rates.

In August, Cushman & Wakefield's head of business development services for Singapore and South-east Asia, Christine Li, noted that opportunities in the investment sales market could emerge with 10-20 per cent discounts from pre-Covid levels a couple of quarters down the road.