Real estate investment activity hit a new quarterly record in Q3 2013 reaching S$13.3 billion, exceeding the previous high set in Q3 2007 of S$12.4 billion, according to DTZ.
Notably, investment sales included transactions that were S$5 million and above while excluding the S$734 million of transactions in single residential plots and units, which cannot be subdivided/redeveloped into more than one unit.
The robust Q3 activity was boosted by three REIT listings – Soilbuild REIT (with an initial asset portfolio of S$905.3 million), SPH REIT (S$3.1 billion) and OUE Hospitality Trust (S$1.7 billion). This saw average deal size grow by almost four-fold quarter-on –quarter to S$166.9 million.
Excluding REIT listings, investment activity stood at a lower S$7.7 billion, but was still up 31 percent from the previous quarter's S$5.9 billion while average deal size was S$109.7 million, which was also more than double the S$48.1 million in Q2.
Meanwhile, private sector investments accounted for about 70 percent of total activity in the third quarter, or S$9.4 billion. It was primarily driven by S$2.8 billion and S$3.1 billion worth of hotel and mixed-use investment respectively. Major hotel deals in Q3 included the sale of Mandarin Orchard, The Gallery Hotel, The Grand Park Orchard, The Sentosa Resort and Spa and Hotel 1929. Mixed developments sold during the quarter included The Paragon at S$2.5 billion and UE BizHub for S$518.0 million.
Despite the introduction of the Total Debt Servicing Ratio (TDSR) framework, public sector investment sales soared by over 80 percent quarter-on-quarter to S$4.0 billion in Q3, with sales of government sites for residential development accounting for 37 percent of total public sector investment activity.
“Going forward, investment activity is likely to slow in the last quarter of 2013. Notwithstanding, the S$13.3 billion invested in Q3 has brought overall investment activity for the first nine months of 2013 to S$24.6 billion, which is 15.4 percent higher than the same period last year. Investment volume for the whole of 2013 is now expected to come in on par with or slightly higher than the S$29.3 billion invested in 2012,” said Lee Lay Keng, DTZ’s Research Head for Singapore.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email firstname.lastname@example.org