Increase in Singapore’s real estate investment

Activity in Singapore’s real estate investment increased by 48 per cent, in the second half of 2012.

Investment increased to S$6.9 billion (US$5.5 billion), reported DTZ Research.

In the first half of 2012, investment deals totaled S$11.6 billion (US$9.2 billion), a decrease of 32 per cent, y-o-y.

Government purchases of land also witnessed a decrease: accounting for 43 per cent of overall investment value – lower than the historical average of 48 per cent throughout the previous four quarters, reported Channel News Asia.

REITS moved from net sellers in Q2 from net buyers in the first quarter.

Acquisitions made by REITS fell by 61 per cent on-quarter to S$290.1 million (US$230 million).

According to DTZ Research, this was due to divestments made to achieve greater value for REITS’ unit holders, which would otherwise have required greater capital to hit higher rentals and occupancy rates.

There were two REIT investment acquisitions made in Q2, with Cache Logistics Trust acquiring Pandan Logistics Hub and K-REIT expanding its stake in Ocean Financial Centre.

An improvement in cross-border activity was reported with values of cross-border transactions increasing by 43 per cent on the previous quarter. This was largely due to purchases made by inter-regional funds, which accounted for 57 per cent of total cross-border investment.

In both quarters, cross-border investment continues to equate for 16 per cent of real estate activity.

Chua Chor Hoon, DTZ’s head of Asia Pacific research, said: ” Although we see an increase in enquiries from foreign investors, they are also looking to other countries, such as China, Japan and Australia, for growth opportunities and higher yields. Against this backdrop, 2012 investment sales activity is likely to be less than 2011′s S$28.6 billion.” (US$22.7 billion).

Investment activity in the second half of 2012 is expected to be dominated by developers purchasing GLS sites and REIT activity.

Source : PropertyReport – 2012 Jul 17

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