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Investment Marketbeat Report

13/01/2021

Commercial sector saw an overall decline of 93% in transaction volume in Q4 to 0.92 billion in the absence of REITs mergers, although there is still optimism in the office market against the backdrop of the imminent recovery. For instance, Keppel REIT is acquiring a 100% stake in Keppel Bay Tower from Keppel Land for $657.2 million (approximately $1,700 psf), as the prevalence of work-from-home trend post-COVID-19 is incentivising companies to look outside the CBD for regular employee touchpoints. This is the largest transaction in 2020 if REITs mergers are excluded.

Singapore’s Recovery Expected to be Long and Uneven
Singapore’s GDP contracted by 5.8% in 2020 amid disruptions from the pandemic, according to the advanced estimates released by Ministry of Trade and Industry (MTI). This is an improvement from the 6-6.5% contraction previously expected, signalling the recovery is on the horizon. However, the recovery could still be long and uneven, given the strong reliance on the vaccine roll-out and the discovery of the new variant of Covid-19. MTI data also showed that manufacturing in Q4 2020 grew 9.5% y-o-y, slightly less than the 10.8% growth in the previous quarter.

Residential Investment Volume Doubled in Q4
The total investment volume in Q4 came up to $3.33 billion, a 76% decline from the previous quarter due largely to the absence of the REITs merger. The residential investment volume doubled to $1.57 billion, up from Q3 2020’s volume of $0.82 billion. According to the URA’s advanced estimates, private property prices accelerated in the fourth quarter to end the full year with a price increase of 2.2%, the highest since the recent peak in Q3 2013.

The uptick in the residential market has resulted in the sale of the Guillemard-Jalan Molek site at $93 million, as well as the sale of Sophia Ville and Fair Haven at $62 million. The success of these transactions has sparked a wave of interest by residential developers, particularly mid-sized ones, to look at sites that will help them ride the current cycle.

Good Class Bungalows (GCBs) have also ended the year with healthy sales and higher transaction values despite the Covid-19 challenges. Transactions in the final quarter of 2020 included Tanglin Hill GCB at $31.5 million and Chatsworth Park GCB at $44.0 million.

The largest non-landed transaction during the quarter was the Wallich Residence superpenthouse, which was sold for $62 million. This was the unit bought by British billionaire James Dyson slightly over a year ago at $73.8 million.

During the quarter, the former Caldecott Broadcast Centre in Andrew Road, currently zoned for civic and community institution use under the URA’s masterplan 2019, was also sold for $280.9 million. Mediacorp had been granted an outline approval by the URA to redevelop the site into two-storey bungalows with a minimum land area of 800 sqm per house. The site will have to be re-zoned to residential use.

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