Real estate investments up 75% q-o-q in 3Q2023, bolstered by GLS tenders: Knight Frank

Commercial estate offers boosted in 3Q2023, climbing 27.4% q-o-q and 23.3% y-o-y to reach $1.5 billion. The greater value follows the sale of Changi City Point by Frasers Centrepoint Trust for $338 million during August, with the shopping center reportedly bought by the Zhao family group from mainland China. Additionally, the cumulative sale of Far East Shopping Center for $908 million to Glory Property Developments last month also strengthened business financial investment market value, along with the sale of the mixed-use, retail and housing GLS area at Tampines Avenue 11 for $1.2 billion.

Some $4.1 billion (over 60%) of the transacted value originated from Government Land Sale (GLS) spots that were granted in the pas quarter, including locations at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu.

Singapore real estate investment event observed an improvement in 3Q2023, registering a boost of 74.8% q-o-q to appear at $6.9 billion, according to an October research report by Knight Frank. The amount also represents a 19.4% enhancement y-o-y. This marks the initial quarterly development after 5 consecutive quarters of decline from 1Q2022.

On the other hand, commercial transaction worth dropped to $252.2 million in 3Q2023, in which Knight Frank observes is the lowest quarterly amount recorded since the $174 million signed up in 2Q2020 throughout the circuit breaker duration.

“Because of the present high interest cost, buyers find themselves having to move up the threat curve by adding value to their financial investments to get higher sustainable earnings, and this includes purchases for growth and redevelopment,” comments Daniel Ding, head of capital markets (land and structure, foreign realty) at Knight Frank Singapore.

Chia Mein Mein, head of capital markets (land and collective sale) at Knight Frank Singapore, includes that climbing prices have motivated property developers to turn in the direction of GLS areas. Nevertheless, regardless of plots in prime sites, she mentions that builders’ desires have reduced, with a lot fewer participants and more conservative bids sent in latest GLS tender activities.

Residential deals comprised $3.3 billion of assets value in 3Q2023, mainly pushed by the award of five household GLS tenders. This stands for an increase of 93.5% q-o-q, nevertheless a decline of 12% y-o-y. Additionally, private properties registered a decrease in sales event, which Knight Frank credits to the increase in Additional Buyer’s Stamp Duty (ABSD) rates that took effect in April.

The firm has actually tempered its full-year approximations for investment sales, cutting forecasts from in between $20 billion to $22 billion down to between $18 billion to $20 billion.

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The cumulative sales market also continued to face headwinds in the middle of the uncertain market overview. “The increasing gulf in forecasts in between proprietors and developers remained the greatest obstacle, aggravated by improving expenses, rate of interest and the excessive surges in ABSD rates, all in a condition of economic pessimism,” Knight Frank states in its record. In July, Wing Tai introduced its drawback from the sale of Holland Tower, after the offer was made at $76.3 million in March this year.

Looking ahead, Knight Frank anticipates slower investment activity for the rest of the year provided the reigning belief and challenges in the property market. “In the coming months, the capital markets space will be characterised by financiers on the look for assets being largely focused on adding worth to the real estates to accomplish higher yields. This is to warrant the higher borrowing costs involved with the procurement of the property,” the report includes.

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