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Real estate investment activity up 48% in Q2

Posted on 16 Jul 2012 | Comments Off

Real estate investment activity in Singapore has picked up in the second quarter of 2012.

According to DTZ Research, investment activity for the second quarter increased 48 per cent on-quarter to S$6.9 billion.

Meanwhile, investment deals for the first half of 2012 totalled at S$11.6 billion, dropping 32 per cent from S$17.1 billion on-year.

Land sales made by the government declined too, accounting for 43 per cent of overall investment value — lower than the historical average of 48 per cent over the previous four quarters.

REITS became net sellers in the second quarter from being net buyers in the first quarter.

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.

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

There were only two REIT investment acqusitions made in the second quarter, with Cache Logistics Trust acquiring Pandan Logistics Hub and K-REIT expanding its stake in Ocean Financial Centre.

Cross-border activity also saw improvement, with values of cross-border transactions jumping 43 per cent compared to the previous quarter.

This was chiefly a result of purchases made by inter-regional funds, which accounted for 57 per cent of cross border investment in the second quarter.

Cross-border investment, however, continues to account for 16 per cent of real estate activity during the second quarter — similar to the first quarter.

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.”

DTZ analysts expect investment activity in the second half of 2012 to be dominated by developers purchasing GLS sites and REIT activity. This includes the divestment of Somerset Grand Cairnhill by Ascott Resident Trust and expected listings of Far East Hospitality Trust and Ascendas Hospitality Trust.

Shaun Poh, head of DTZ Investment Advisory Services and Auction, said: “Deals are taking longer to complete as there are more sellers than buyers in the market and there is still a pricing gap between sellers’ and buyers’ expectations.”

Source : Channel NewsAsia – 16 Jul 2012

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Tagged Investment Sales, Property Investment Sales, Singapore Investment Sales, Singapore Property, Singapore Property Market

Investment land sales up 16 times in Q1

Posted on 25 Mar 2010 | Comments Off

77% of total sales of $4.4b came from private market

THE investment sales market strengthened further in the first quarter of 2010, as robust sales of residential government land sale (GLS) sites showed developers’ hunger for land.

Total investment sales came up to $4.41 billion in the first quarter, 16 times more than the paltry $273.83 million in Q1 last year, a CB Richard Ellis report said yesterday.

Of these, 77 per cent or $3.4 billion came from the private investment sales market, while investment sales in the public sector contributed the remainder.

CBRE’s Q1 tally includes land deals, collective sales, transactions of entire office and other buildings as well as strata-titled units above $5 million, which have taken place since the start of the year.

Residential investment sales – including good class bungalow (GCB) sales – chalked up $2.11 billion in transacted value, accounting for 48 per cent of the quarter’s total investment sales. This was 27 per cent below the $2.88 billion in residential investment sales recorded for Q409, but is significantly higher than the $149.91 million registered in Q109.

GLS sites sold in the quarter include the Sengkang West Avenue site awarded to City Developments for $200.5 million. A Tampines site sold to Sim Lian Land for $302 million while Far East Organisation was awarded the mixed residential Ten Mile Junction. Two executive condominium sites were also sold during the quarter.

To date, 18 GCBs have been sold for a combined total of $283.61 million. With the GCB market’s current momentum, CBRE says a possible 80 to 90 GCBs could be sold in 2010, which translates into $1.2 to $1.4 billion in value.

The commercial investment market was also active in Q1, with $1.08 billion in sales recorded to date, making up 24.5 per cent of total investment sales.

As for the industrial sector, 26 known transactions so far in the quarter made up 26.3 per cent of $1.16 billion of total investment sales.

The CBRE report noted that while many transactions in the industrial sector last year were from end-users, 2010 has seen the return of selective purchases by the real estate investment trusts (Reits) such as A-Reit and MapletreeLog. Cache Logistics Trust, also purchased the six properties which will make up its portfolio when it soon lists.

Jeremy Lake, executive director of investment properties at CBRE said: ‘While most of the major investment sales transactions in 2009 were dominated by Asian investors, there is now a diverse pool of buyers. Among these would include local as well as foreign developers competing for GLS sites for residential development. Investment funds are also looking for opportunities.’

Source : Business Times – 25 Mar 2010