Singapore real estate transactions double quarter-on-quarter in Q3: JLL

Signs of recovery seen as sales in Asia-Pacific climb 35 per cent, driven by China, South Korea and Japan

Thu, Nov 05, 2020

NISHA RAMCHANDANI


SIGNS of recovery were seen in the third quarter with real estate transactions in the Asia-Pacific gaining 35 per cent quarter-on-quarter, while volumes about doubled in Singapore.

However, according to a report by real estate consultancy JLL, transaction volumes in the region were still down 19 per cent year-on-year at US$35 billion. Similarly, at US$2.89 billion, volumes in Singapore were 57 per cent lower vis-a-vis a year ago.

Still, JLL expects the recovery to continue to gather momentum in the fourth quarter, with transactional activity already having bottomed out.

The pick-up in Q3 in the Asia-Pacific was driven by transactions in North Asia, specifically China, South Korea and Japan. South Korea was down 2 per cent year-on-year for the quarter under review, while China and Japan were down 10 per cent and 18 per cent respectively.

Major transactions in Singapore in Q3 included the sale of freehold office building ABI Plaza by MYP Group to a private fund managed by CapitaLand Fund Management for S$200 million, and the divestment of freehold Robinson Point by Tuan Sing for S$500 million. Frasers Centrepoint Trust also announced plans to acquire the remaining 63.1 per cent of AsiaRetail Fund, which owns suburban retail malls in Singapore, for S$1.06 billion.

Regina Lim, head of capital markets research at JLL Asia Pacific, said: "The rebound in investment activities in Singapore underscore investors' confidence in the medium-term outlook for Singapore's office market and the resilience of suburban retail malls."

Year-to-date, Tokyo and Seoul lead the list of cities when it comes to global investments. JLL singled out its top picks as multi-family assets in Japan, as well as logistics assets in Shanghai and Seoul.

The report also highlighted that investors showed an interest in real estate assets linked to logistics and data centres, with transactions in the industrial market spiking 76 per cent year-on-year. On the other hand, office transactions in the Asia-Pacific dropped 35 per cent year-on-year, while retail and hotel transactions in the region fell sharply, slumping 51 per cent and 87 per cent respectively.

More institutional investment managers returned in the third quarter after sitting on the sidelines on H1 2020, with activity in the first six months of the year driven largely by private investors. One reason could be the cheaper cost of capital after financing costs fell 50 to 100 basis points year-to-date, JLL noted.

Where the Singapore market is concerned, JLL expects more rarely traded, tightly held assets could be made available to buyers keen to go shopping. Factors such as a recovering economy, abundant liquidity and Singapore's reputation as a safe investment haven are seen as buttressing property investment sales in the quarters ahead.

Tay Huey Ying, head of research & consultancy at JLL Singapore, said: "We expect Singapore's office assets to stay in the radar of investors as its demand and supply fundamentals are supportive of medium-term growth in rents and capital values."

The central business district (CBD) incentive scheme could also encourage more redevelopment projects, she reckoned. This could "provide opportunities for investors moving up the risk curve to access higher returns via partnerships with developers".