Singapore Investment Volume More Than Doubles in Q1 as Mall Deals Lend Weight

First-quarter deal volume in Singapore’s real estate market more than doubled to S$5.63 billion (now $4.2 billion) compared with the previous three months, boosted by a trio of retail disposals by Mercatus Co-operative, according to Savills.

Mercatus, the property arm of NTUC Enterprise Co-operative, sold its Jurong Point and Swing By @ Thomson Plaza shopping centres to Hong Kong-based Link REIT for a combined S$2.16 billion and a 50 percent stake in the suburban NEX mall to a joint venture of Frasers Property and Frasers Centrepoint Trust for S$652.5 million in a pair of deals that closed during the quarter.

The transactions accounted for 83 percent of first-quarter deal value in Singapore’s commercial sector, Savills said in its sales and investment report for the city-state. Total commercial volume soared 229.6 percent from the fourth quarter of 2022 to reach S$3.38 billion.

“Despite high interest rates, prime assets such as suburban malls with close proximity to residential areas and transportation hubs continue to attract investors due to steady footfall and demand for essential retail goods and services,” the consultancy said.

Resilient Residential

In the absence of GLS site sales, the residential sector still squeezed out 12.5 percent quarterly growth to S$1.58 billion in the January through March period, making up 28 percent of overall investment sales, Savills said.

The collective sale market gathered steam with three private residential sites selling for S$583.8 million in total. In the biggest of these, a UOL-Singland joint venture acquired the Meyer Park condo complex on the East Coast for S$392.2 million in Singapore’s top residential deal of the year so far.

The two smaller sites were Bagnall Court in District 16, which sold to a consortium led by Roxy-Pacific Holdings for S$115.3 million, and Holland Tower in District 10, which was picked up by Wing Tai Holdings for S$76.3 million.

Savills said that with all three residential projects selling near or even below tender reserve requirements, developers appeared to remain cautious after sales last year had commanded pricing premiums amid competitive bidding.

“For example, Bagnall Court’s final price was 7.8 percent lower than its guide price of S$125 million,” the report noted. “Meyer Park’s highest bid price was just a notch higher than its guide price of S$390 million, however, it was 6.6 percent down from the S$420 million in its first attempt at sale in July last year.”

The first quarter’s other big splash was M&G Real Estate’s acquisition of four car showrooms from auto distributor Jardine Cycle & Carriage for a combined S$333 million, accounting for close to half of the period’s S$676.4 million in industrial deal value.

Office Snooze Continues

The first three months of 2023 delivered just a single office block deal: the collective sale of the GSM Building in Rochor district to LHN’s Coliwoo co-living division for S$80 million. Coliwoo plans to convert the asset into a mixed-use building with serviced apartments on the upper floors and commercial units on the first two levels.

In the strata-titled office market, TE Capital and LaSalle Investment Management sold the sixth and 12th floors of Solitaire on Cecil for S$48.2 million (S$3,867 per square foot) and S$52.3 million (S$4,196 per square foot). Buying interest continued at the 20-storey building in the second quarter as the 17th, 18th and top floors sold for a total of S$162.8 million, with the 20th floor trading for S$4,325 per square foot to beat the prior all-time high price mark for a Singapore office property set in the same building.

With most institutional investors and corporate buyers on the sidelines, ultra-high-net-worth individuals are filling the vacuum in the local property market, according to Savills.

“Investment market activity is being hampered by a price gap,” said Jeremy Lake, managing director of investment sales and capital markets at Savills Singapore. “Sellers are looking in the rear-view mirror when the environment was more favourable, while most buyers are looking down the road ahead and pricing in the uncertainty. This is especially true for institutional buyers who are highly interest rate sensitive.”