Allgreen’s acquisition of the Seletar Mall was Singapore’s biggest deal of the quarter (Image: Cuscaden Peak)
Total investment sales in Singapore’s real estate market could surpass S$25 billion ($18.5 billion) this year, up from S$19.2 billion in 2023, amid brighter economic prospects and growing confidence that interest rates have peaked, according to Cushman & Wakefield.
Investment volume jumped 20.9 percent year-on-year in the first quarter of 2024, the consultancy said this week in a release. Activity was led by the residential sector with S$1.7 billion, followed by commercial (S$1.3 billion) and hospitality (S$600 million).
Investors remain keen on acquiring quality commercial properties as they continue to look for safe-haven assets, said Shaun Poh, executive director and head of capital markets at Cushman & Wakefield in Singapore.
“We anticipate healthy investor interest for small commercial buildings or CBD strata offices, CBD conservation shophouses, small freehold industrial sites, and hotels,” Poh said.
Retail, Hospitality Shine
Due to rising investor confidence on the back of strong travel recovery, the retail and hospitality sectors registered higher transaction volumes during the first three months of the year, according to Cushman’s latest MarketBeat report for Singapore capital markets.
Shaun Poh of Cushman & Wakefield in Singapore
The largest retail and overall transaction during the quarter was Allgreen Properties’ S$550 million ($410 million) purchase of the Seletar Mall in the Fernvale area from a joint venture of Cuscaden Peak and United Engineers Ltd.
Allgreen, the Singapore development arm of Kuok Group, paid the equivalent of S$2,900 per square foot of net lettable area to secure its fifth retail asset in the city-state as a likely value-add play.
Hospitality investment volume was driven by the trades of Hotel G in the Bugis area (S$238 million) and Capri by Fraser, Changi City (S$170 million). Island-wide revenue per available room has been increasing steadily, from S$191.96 in 2019 to S$224.27 in 2023, according to Cushman & Wakefield.
Upbeat Industrial
Interest in Singapore industrial properties remains healthy, with such assets offering relatively higher yields and favourable long-term prospects, Cushman & Wakefield said.
A notable industrial transaction in the first quarter was BDx’s S$140 million acquisition of a building housing the firm’s own data centre at OneTen Paya Lebar from Hwa Hong Corp, at an estimated net yield of 3.4 percent.
The office sector, meanwhile, saw smaller transactions as the 21st floor at Vision Exchange in Jurong changed hands for S$59 million and four eighth-floor units at the GB Building in Shenton Way/Tanjong Pagar traded for S$10.8 million.
A slew of available Grade A office supply from the primary and secondary markets is due to come on stream in the second quarter, while IOI Central Boulevard Towers in the downtown core is expected to achieve its temporary occupation permit this month for 1.3 million square feet of office space.
Cost discipline in the tech sector could lead to more secondary office stock being returned to the market in the second half of the year, according to Cushman & Wakefield.
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