Real estate investments up 75% q-o-q in 3Q2023, bolstered by GLS tenders: Knight Frank
Commercial property deals raised in 3Q2023, climbing up 27.4% q-o-q and 23.3% y-o-y to reach $1.5 billion. The greater value adheres to the sale of Changi City Point by Frasers Centrepoint Trust for $338 million in August, with the mall supposedly purchased by the Zhao family from mainland China. In addition, the collective sale of Far East Shopping Centre for $908 million to Glory Property Developments last month likewise reinforced commercial investment value, together with the sale of the mixed-use, business and housing GLS place at Tampines Avenue 11 for $1.2 billion.
The collective sales market also remained to encounter headwinds amidst the uncertain market overview. “The expanding gulf in expectations in between proprietors and builders continued to be the biggest challenge, intensified by growing costs, rate of interest and the excessive increases in ABSD rates, done in a condition of financial depression,” Knight Frank states in its record. In July, Wing Tai revealed its drawback from the sale of Holland Tower, after the offer was made at $76.3 million in March this year.
Looking in advance, Knight Frank expects slower investment activity for the rest of the year offered the prevailing sentiment and challenges in the property market. “In the upcoming months, the capital markets space will certainly be qualified by investors on the search for assets being largely focused on bring in value to the real estates to accomplish higher profits. This is to warrant the greater borrowing prices entailed with the acquisition of the real estate,” the record includes.
Moreover, commercial deal value plummeted to $252.2 million in 3Q2023, which Knight Frank notes is the lowest quarterly amount reported since the $174 million registered in 2Q2020 during the circuit breaker period.
Residential deals composed $3.3 billion of assets worth in 3Q2023, mainly steered by the honor of 5 residential GLS tenders. This represents a boost of 93.5% q-o-q, but a reduction of 12% y-o-y. At the same time, private properties signed up a decrease in sales event, which Knight Frank attributes to the rise in Additional Buyer’s Stamp Duty (ABSD) rates that worked in April.
The company has solidified its full-year assessments for financial investment sales, reducing estimates from in between $20 billion to $22 billion down to between $18 billion to $20 billion.
Singapore real estate financial investment activity observed an improvement in 3Q2023, registering an increase of 74.8% q-o-q to clock in at $6.9 billion, according to an October research study report by Knight Frank. The amount also stands for a 19.4% enhancement y-o-y. This marks the first quarterly development after 5 consecutive quarters of decline from 1Q2022.
Chia Mein Mein, head of resources markets (land and collective sale) at Knight Frank Singapore, includes that increasing expenses have motivated property developers to turn in the direction of GLS areas. However, notwithstanding plots in prime locations, she mentions that builders’ appetites have shrunk, with a lot fewer individuals and more conservative bids sent in recent GLS tender exercises.
Some $4.1 billion (over 60%) of the transacted value came from Government Land Sale (GLS) sites that were awarded in the pas quarter, consisting of locations at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu.
“Due to the present high interest expense, customers find themselves having to go up the danger curve by including worth to their financial investments to acquire greater safe earnings, and this features purchases for improvement and redevelopment,” comments Daniel Ding, head of capital markets (land and structure, foreign realty) at Knight Frank Singapore.