Singapore Real Estate Investment Jumped 35% in 2024 Despite Q4 Slump: Savills

Investment in Singapore real estate surged 35.4 percent in 2024 to S$26.6 billion ($19.7 billion) despite a pullback in volume during the fourth quarter, according to Savills.

Private investment sales jumped 50 percent to S$17.9 billion, the consultancy said Wednesday in a release. Public sector investment, which includes government land sales, saw a milder 13 percent increase to S$8.8 billion.

A persistent price gap ensured that the city-state’s private investment volume was lower than expected last year, said Jeremy Lake, managing director for investment sales and capital markets at Savills Singapore.

“We expect this to narrow in 2025 and the investment volume should pick up across the various asset classes in Singapore as sellers lower their prices a little and buyers increase their prices a little,” Lake said.

Commercial Collapse

The Lion City’s commercial sector contributed just S$966.3 million in investment sales during the fourth quarter of 2024, plunging 62.7 percent from a high base of S$2.59 billion recorded in the preceding three months.

The third-quarter reading had been padded by Singapore’s biggest transaction of the year, CapitaLand Investment’s disposal of a 50 percent stake in the ION Orchard luxury mall to the Temasek-controlled firm’s CapitaLand Integrated Commercial Trust for S$1.85 billion.

The residential sector saw investment sales fall for a second straight quarter in the October-December period, sliding 24.3 percent to S$2.41 billion. The drop came despite the November closing of the year’s biggest residential deal, the S$810 million collective purchase of Thomson View Condominium by a joint venture of UOL and CapitaLand.

The mixed-use segment was led by Hotel Properties Ltd’s November buy of the Concorde hotel and mall complex for S$821 million, marking the year’s biggest collective purchase.

“Owing to the sporadic closure of large deals, investment sales in Singapore have been volatile on a year-on-year basis, but should continue rising at a steady pace in the longer term,” said Alan Cheong, an executive director heading the research and consultancy team at Savills Singapore.

Interest Rates Immaterial

In a market shaped by strict planning regulations, government cooling measures and limited availability of properties, Savills has found no significant correlation between interest rates and investment sales.

Although the interest rate argument has been prevalent among market watchers, investment sales numbers from 2008 to 2024 show a tenuous link at best, Cheong said.

“We believe it’s the human factor that is driving this divergence in opinion,” the analyst said. “Many times, buyers who asked the question on the net yield spread may end up not buying the property, leaving it exposed to the market longer than usual or the sales process terminated. The drone of having a non-existent net yield spread may thus have built into the market’s belief that interest rates have been a significant driving force on whether deals get done or not.”

Savills forecasts 2025 investment sales value of S$23 billion, irrespective of interest rates.