After the first nine months of 2020, Singapore’s commercial and residential sectors see strong rebounds, with investment sales volume trebling quarter-on-quarter. Singapore is expected to see continued increase in industrial investments as e-commerce and technology growth accelerates.
Singapore saw investment sales volume jump 78% quarter-on-quarter to $3.99 billion during the third quarter of 2020, revealed Colliers International.
“They are indeed showing signs of recovery in the second half of the year, with daily COVID-19 cases trending down steadily and the easing of restrictions on workplaces, business travel, religious services and entertainment venues as the economy reopens,” it said.
On an annual basis, investment sales is still down by 64.8%.
Colliers Research noted that while commercial volumes fell 60% year-on-year in the first nine months of 2020, Q3 still registered a significant increase due to a few notable deals, indicating investors’ confidence in Singapore real estate.
In fact, the commercial and residential sectors registered strong rebounds, with investment sales volume trebling quarter-on-quarter.
Commercial investment sales trebled quarter-on-quarter to $2.65 billion in Q3, bringing the figure for the first nine months of 2020 to $4.15 billion, which is “down 60% from a bumper 9M 2019 which included Duo and 71 Robinson in Q3 2019”.
The largest commercial deals during the period under review include Frasers Centrepoint Trust’s $1.93 billion purchase of the remaining 63.11% stake in the Asia Retail Fund portfolio of one office and five retail assets; Tuan Sing Holdings’ $500 million sale of Robinson Point to One South Bay Group Limited; and MYP’s $200 million sale of ABI Plaza in Tanjong Pagar to a fund linked to CapitaLand.
Residential transactions also trebled quarter-on-quarter to $844.4 million in Q3, as transactions in landed housing and in Good Class Bungalows (GCBs) quadrupled. Total sales, however, remained 72.5% lower year-on-year due to the “absence of government land sales and fewer luxury condominiums”.
“These commercial and residential transactions represent 87% of the Q3 tally. Transactions at below-market cap rates for freehold CBD office assets reflect investors’ long-term focus and their confidence in the Singapore economy,” said Tricia Song, Head of Research for Singapore at Colliers International.
Meanwhile, industrial investment sales grew 28.3% quarter-on-quarter to $313.1 million on data centre and logistic warehouse transactions.
“This brings 9M 2020 industrial investment sales to grow 4.8% year-on-year to $1.87 billion – the only sector to have seen an increase year-to-date, reflecting investors’ shift in preference for the sector during the pandemic,” said Steven Tan, Senior Director of Investment Services at Colliers International.
The quarter saw three large transactions – namely, AIMS APAC REIT’s $129.6 million acquisition of a warehouse at 7 Bulim Street; the $125 million acquisition of Equinix of the SG3 data centre at 26A Ayer Raja Crescent; and the $112.5 million sale of freehold light industrial building, Thye Hong Centre.
Looking ahead, Tan expects “increased investments in warehouses, and hi-specs spaces, including data centres as e-commerce and technology growth accelerates”.