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SG Property investment market still upbeat despite 33 percent drop

Property Here - Tuesday, April 16, 2013

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By Shabnam Muzammil:

Investment sales for property in Singapore fell to S$5.4 billion in Q1 2013, down 33 percent from the previous quarter due to a decline in private and public sector real estate activity. However, the figure was still 15.6 percent higher than investment deals recorded in Q1 2012, according to a DTZ report.

Investment sales refer to transactions valued at S$5 million and higher, but exclude S$1.2 billion transactions in single residential units as well as lots that cannot be redeveloped or subdivided into more than one plot.

Last quarter, private sector investment deals fell 40 percent from Q4 2012 to S$2.7 billion. Investments in office properties declined the most by 72 percent. On the other hand, mixed-use property investments almost doubled in Q1.

“Besides the increase in mixed-use property investments, we also noticed an increase in investment activity in shophouses. There were 46 shophouses transacted in Q1 2013, which is already more than half the 79 shophouses that changed hands in the whole of 2012,” noted Shaun Poh, Head of Investment Services Advisory and Auction at DTZ Singapore.

Ho Tian Lam, DTZ South East Asia's CEO, attributed the popularity of shophouses to limited supply and zero purchase restrictions, aside from those meant for residential use. 

“Shophouses therefore provide an alternative investment option to residential properties which have seen seven rounds of cooling measures.”

Meanwhile, public sector investment sales fell a lesser 21.5 percent to S$2.7 billion in Q1, mainly due to a 30 percent drop in sales of residential government land sites. Despite this, land sales will likely increase going forward when more sites from the H12013 GLS Programme are sold in the next few quarters.

The consultancy also noted that local investors remained the biggest players, accounting for 95 percent or S$5.1 billion worth of investments in Q1. 

Despite a lower first quarter result, this year's property investment market will likely remain on par with levels seen in 2012. “Besides continued government land sales, investment activity in the subsequent quarters will be supported by more REIT activity, as some developers have already indicated their intentions to spin off their assets,” noted Lee Lay Keng, Research Head for Singapore at DTZ.

 

Shabnam Muzammil, Senior Journalist at PropertyGuru, wrote this story. To contact her about this or other stories email shabnam@allproperty.com.sg