Savills: Real estate investment volume totals $24.7 bil in 2022, down 1% y-o-y

Investment sales value in Singapore dropped by 1% year-on-year in 2022 to reach a total of $24.7 billion according to the investment report released by Savills Singapore. The market recorded a value of $2.81 billion in investment sales during the fourth quarter of last year, a decrease of 36.1% compared to the previous quarter – marking the third consecutive quarter of decline due to slowing market conditions.

Residential sales was the most significant in terms of sales value, accounting for 49.9% of all investment sales value in 4Q2022. However, this segment saw an almost 50% decline in that quarter, to $1.4 billion. This is the second consecutive quarter of decline experienced by this segment in the previous year.

The commercial sector made a rebound, with a 28.4% quarter-on-quarter growth to $1.02 billion in 4Q2022. This growth was largely attributable to the 166.1% quarter-on-quarter growth in office investment sales, from $251.4 million in 3Q2022 to $668.9 million in 4Q2022 as noted by Savills.

On the other hand, retail and industrial investment sales dropped by 34.9% and 48.1% quarter-on-quarter, respectively. Retail sales came off a relatively high base in 3Q2022 and lower transaction values of shophouses and a decline in retail strata sales were recorded in the last quarter of the year.

Executuve head of Savills Research, Alan Cheong, states that despite the unfavourable economic and interest rate climate, Singapore’s positive perception and open economy should ensure that total investment sales value stays afloat in 2023. While higher borrowing costs may be a hurdle for institutions, there is still the possibility of significant deals or series of mid-sized transactions taking place during the year. Additionally, Savills expects an increase in the number of Government Land Sales sites, the $2.16 billion sale of Jurong Point, and the sale of strata units at Thomson Plaza to further uplift the baseline average investment sales volume for 2023.

Savills anticipates total investment Champions Way Condo sales value for 2023 to range between $24 billion and $25 billion, with activity set to be dampened by economic and interest rate headwinds.