Singapore Deal Volume Fell 32% in 2023 as Government Land Sales Dominated

Singapore’s property market felt the pressure of rising interest rates in 2023 with investment plunging 31.8 percent to S$21.1 billion ($15.9 billion), according to Knight Frank.

Residential deals, comprising mostly government land sales, amounted to S$10.3 billion or 47.7 percent of investment sales activity last year, the consultancy said in its Singapore Investment Market Update. The residential total was down from S$11.9 billion the previous year, partly due to high borrowing costs and the government’s cooling measures enacted last April.

Commercial property investment fell 61.4 percent to S$6.1 billion, as private capital pulled back and public transactions rose in both value and number amid more launches of government-held sites.

“More investors are preparing to move higher up the risk curve and undertake value-adding schemes after positive returns were eroded by elevated interest rates in 2023,” said Daniel Ding, head of the land and building division of Knight Frank’s Singapore capital markets team. “In the meantime, private wealth remains patient, waiting to deploy when conditions are favourable.”

GLS Bonanza

Fourteen sites were awarded in government land sales totalling S$7.7 billion last year, up from 11 sites and S$5.5 billion in 2022 and the most since 51 sites and S$10.6 billion in 2012.

Key GLS deals included CapitaLand teaming with UOL and Singapore Land to win the Tampines Avenue 11 plot with a winning bid of S$1.2 billion and Chinese builder Kingsford leading a consortium to bag a Marina Gardens Lane plot for S$1 billion. The two mixed-use sites can yield 1,190 and 790 homes, respectively.

The year’s notable commercial deals were led by the January acquisition of a half-stake in the suburban Nex mall by Frasers Centrepoint Trust and Frasers Property for S$1 billion and the September collective sale of Far East Shopping Centre to Bright Ruby Resources for S$908 million.

The largest residential collective sale was the Meyer Park condo complex on Singapore’s East Coast, with a UOL-SingLand joint venture acquiring the property for S$392.2 million in February. After the imposition of cooling measures, collective sale activity was relegated to smaller deals like Aurum Land’s acquisition of Kew Lodge for S$66.8 million in May, Knight Frank said.

Bite-Sized Bargains

In the face of geopolitical and economic headwinds, property sellers are being challenged to maintain reasonable sale prices, said Chia Mein Mein, head of the land and collective sale division of Knight Frank’s Singapore capital markets team.

“Small and bite-sized residential plots remain attractive to developers who are facing obstacles such as bullish asking prices for larger plots of land,” Chia said. “Landed home plots for redevelopment are also sought after by boutique developers, given the longstanding stable domestic demand for this limited prestige property type in land-scarce Singapore.”

Examples of such plays in 2023 included Sin Thai Hin’s acquisition of 132 Sophia Road for S$33.6 million with a view to developing a boutique residential project and Pinnacle Assets’ purchase of 43 and 45 Gentle Road for S$30.8 million to build new landed homes.