As buyer interest returns to the market, we can expect to see increased activity from institutional investors drive up transactions next year
INVESTMENT sales have been rising steadily throughout the year. From $304 million in the first quarter, transactions have jumped more than tenfold to $3.1 billion by Q3 of 2009. While we expect total transactions this year to be far below the 2008 total of $17.9 billion, coming in the wake of the global financial crisis, it will still be a credible result. Nearly half of the transactions have come from the residential sector while the commercial real estate sector makes up the remainder.
Recovering? As the MAS’ monthly banking survey shows, lending to businesses in the building and construction industry has remained stable with $50 billion in lending in January dropping slightly to $48 billion in July
Unlike the red hot residential segment, transaction volume in the commercial segment has occurred at a more measured pace. There was a 10-month lull in the office market before it stirred with the sale of Parakou Building and Anson House in April this year. Parakou was sold for $81.38 million, or $1,287 per square foot (psf) while Anson House transacted at $85 million with a psf price of $1,100.
VTB Building, Cecil House and Aviva Building were later sold for between $710 and $1,061 psf at transaction sizes between $36 million and $71 million, all to the same buyer. The buyer, a joint venture between Yi Kai Group and Fission Group, plans to redevelop the offices into a residential project, subject to approval. In the hospitality sector, the 50-room Hotel Nostalgia was sold for $22 million, or $440,000 per room – which represents a new high for boutique hotels. Continue reading
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