2023 to be ‘underwhelming’ year for real estate investment market: Savills Singapore

Singapore’s real estate investment market recorded $7.13 billion in deals in 3Q2023, according to a research report by Savills Singapore. This is double the amount from the previous quarter and growth was fuelled by seven sites awarded under the Government Land Sales (GLS) Programme.

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However, the firm has tempered its outlook for the rest of the year, projecting a $4-$5 billion decrease in investment sales due to headwinds, including political purges and the contagion effect arising from the recent terrorist attacks within Israel.

Jeremy Lake, managing director, investment sales and capital markets, at Savills Singapore, said, “While 2023 will be an underwhelming year for the real estate investment market, it being a low point in terms of sales value may help 2024 see a strong rebound, barring unforeseen events. Interest rates are likely to start falling in 2024 and global economic growth will pick up, leading to investors to conclude that the bottle is half full rather than half empty.”

The GLS Programme saw seven land parcels sold for a total value of $4.16 billion, making up 58% of total real estate investments in 3Q2023. These included the residential site at Marina Gardens Lane for $1.03 billion, the residential site at Jalan Tembusu at $828.8 million, and the commercial and residential site at Tampines Avenue 11, which was awarded for $1.21 billion.

The private sector also recorded $2.97 billion in investment deals in 3Q2023, although there was a 31.6% drop in the number of transactions. This was due to the Lunar Seventh Month, as well as the increase in Additional Buyer’s Stamp Duty rates for residential properties and the high interest rate environment.

In terms of investment sales value, residential properties made up 48.1% ($3.43 billion) of the total and commercial investments contributed 23.7% ($1.69 billion). The collective sale of Far East Shopping Centre for $908 million and the divestment of Changi City Point by Frasers Centrepoint Trust for $338 million both boosted commercial transactions in 3Q2023.

Alan Cheong, managing director, investment sales and capital markets at Savills Singapore, said, “While the global real estate industry may suffer from a host of problems, Singapore has that unique selling point that being a safe haven, there will still be a base level of transactions coming from those, especially the ultrahigh net worth families, seeking to diversify from riskier assets and countries.”

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