2Q2024 Investment Sales 536 Q O Q Bolstered Government Land Sales Savills
Singapore’s real estate investment sales increased by 52.6% to $6.48 billion in the second quarter of 2024, according to Savills Research’s sales and investments quarterly report. The growth is mainly attributed to an increase in proceeds from government land sales (GLS), with four residential sites and one industrial site being awarded for $3.16 billion during the period. This is more than double the amount recorded in the previous quarter and marks the highest proceeds from state residential land sales in a single quarter.
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The biggest GLS private residential site transaction was for the Zion Road (Parcel A) site, which was awarded to a joint venture between CDL and Mitsui Fudosan for $1.107 billion in April, or $1,202 per square foot per plot ratio.
The private sector also saw an increase in investment sales value by 14% to $3.32 billion in the second quarter of 2024. The number of transactions grew by 30.8% from 65 deals in the first quarter of 2024 to 85 in the second quarter of 2024. The report credits this growth to a revival in the luxury residential market, with a total of 52 homes – including 40 landed properties and 12 luxury condos – priced at $10 million and above being sold. This is up 30% from the 40 luxury homes sold in the first quarter of 2024, and on par with the 53 transactions seen in the same period last year.
According to Jeremy Lake, Savills’ managing director of investment sales and capital markets, the figures suggest that the buying sentiment in the luxury housing market has gradually returned to the level before the impact of the increase in additional buyer’s stamp duty and the money-laundering case last year. The biggest landed home transaction by absolute value this quarter was the sale of a new bungalow in the Bin Tong Park Good Class Bungalow Area for $84 million, or $2,988 per square foot based on a land area of 28,111 square feet. The most expensive condo transaction in the non-landed residential property segment was for a 7,761 square foot penthouse on the 57th floor of the 190-unit Skywater Residences. The unit was reportedly purchased by a US citizen for $47.3 million, or $6,100 per square foot.
Overall, including the GLS sites sold, the residential sector accounted for $4.06 billion of investment sales in the second quarter of 2024, surging 115.8% from the previous quarter and making up 62.6% of total investment value for the quarter.
The commercial property sector also saw an increase in sales in the second quarter of 2024, rising by 16.7% to $1.52 billion. This made up 23.5% of the quarter’s total transaction value. The expansion was driven by four office block transactions, with the largest being Mapletree Pan Asia Commercial Trust’s divestment of Mapletree Anson in Tanjong Pagar for $775 million. There were also three smaller office building transactions outside the core CBD. Meanwhile, retail malls saw a significant slowdown in investment activity, with only one deal in the second quarter of 2024 – Paragon Reit’s divestment of The Rail Mall for $78.5 million. The report attributes this slowdown to the limited stock of properties for sale.
Investment sales in the industrial sector also saw a decline of 32.1% to $272 million in the second quarter of 2024, from 11 deals involving one industrial GLS site at Plot 8 Jalan Papan in Jurong, and 10 properties in the private sector. The industrial sector accounted for only 4.2% of investment sales value in the second quarter of 2024. Meanwhile, the mixed-use property sector generated $628.9 million in investment sales in the same period, driven by the sales of Delfi Orchard for $439 million, Fraser Residence River Promenade for $140.9 million, and Sin Ming Centre for $49 million. The deals contributed 9.7% of total investment sales.
Alan Cheong, executive director of research and consultancy at Savills Singapore, opines that while borrowing costs remain high, the prospect of a rate cut this year may lift sentiments. If the sale of large ticket commercial properties continues, the investment market will see a return of momentum. He maintains his total investment sales forecast range of $22 billion to $23 billion for 2024, up from the $19.7 billion recorded last year.