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Sale of Government Land Sale Residential Sites Dominated Investment Sales in 1Q 2020

13/04/2020

Investment volume remained muted in 1Q2020 with a transaction volume of $3.02 billion, a 37 per cent reduction in volume from the fourth quarter of 2019. The 1Q 2020 investment sales tally was dominated by the residential sector with a volume of $2.02 billion, double the previous quarter's volume. The surge in volume was mainly attributed to the award of numerous residential GLS sites during the quarter, resulting in the public sector accounting for 68 per cent of the total residential volume. 

The industrial sector recorded the second highest transaction volume of $606.8 million, a moderate decline of 22 per cent quarter-on-quarter. The commercial sector followed at $183.4 million, a significant reduction of 81 per cent quarter-on-quarter. Visibly absent was the hospitality sector which clocked no deals during the quarter as the travel bans and lockdowns resulting from the COVID-19 pandemic led to a significant drop in investor enthusiasm for hospitality assets. 

Christine Li, Head of Research for Singapore and Southeast Asia said “Big ticket commercial transactions were absent in the first three months of 2020, a direct result of the COVID-19 pandemic and the rapid sell-off in stock markets across the globe. Sellers were unwilling to lower prices significantly, hoping that the impact on the economy would be temporary and that market confidence would recover rapidly after the pandemic was contained. Meanwhile, buyers were waiting on the sidelines to enter at more attractive prices as it is appearing increasingly likely that the reduction in economic activity from lockdowns will trigger a global recession.” 

Instead, the commercial investment sales market was dominated by several strata deals of palatable quantum. In the largest office deal of the quarter, a South Korean high net worth individual acquired the 11th floor of Samsung Hub from Sun Venture for $49.8 million. This $3,800 psf achieved was a record price for the 999-year leasehold property, exceeding the previous high of $3,550 psf in 2018. Another notable strata deal was Hong Realty’s divestment of the 10th floor in Suntec Tower One to the Rosa family for $37.1 million or $2,580 psf. This represented a 26 per cent gain from Hong Realty’s purchase price of $29.5 million back in 2018.

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