Wednesday, 4 April 2012

Real estate investment activity down 50% on-quarter in Q1

SINGAPORE: Real estate investment activity in Singapore declined by 50 per cent in the first quarter of this year to S$3.7 billion.

This compared to the previous quarter where investment sales hit S$7.4 billion.

Among the reasons are investors remain mindful of rising business costs, global economic uncertainties and a weaker property market.

This is according to the latest DTZ Research report which highlights real estate investment activity in the first three months of this year.

The report added that the decline was due to a fall in both public and private sector investment sales.

In the public sector, DTZ said the lack of industrial sites launched for sale contributed to a fall in government sales from S$3.0 billion in fourth quarter 2011 to S$2.2 billion in first quarter 2012.

Meanwhile, sales of government land sites for residential development in first quarter 2012 was similar to that in fourth quarter 2011.

Within the private sector, investment deals in all major real estate segments fell, reflecting an anticipated softening of the market, said the report.

DTZ said despite the Additional Buyer's Stamp Duty (ABSD) cooling measures, collective sale sites continue to hit the market.

Six collective sales were concluded in the quarter at below S$200 million each.

The largest en bloc deal was the S$161.1 million sale of Tai Keng Court, transacted at 24 per cent higher than its asking price of S$130 million.

Meanwhile, local investors continue to dominate the investment market, accounting for about 80 per cent of investment deals in first quarter 2012.

The research added that foreign investors, mostly those within Asia, were drawn mainly to the residential sector.

While foreign investors are expected to wait for the right timing and opportunity to enter the market, the low interest-rate environment in Singapore will continue to encourage investment from local investors.

Real estate investment trusts (REITs) continued to be active in the quarter, especially the industrial REITs.

Ascendas REIT acquired four industrial buildings (CINTECH I, II, III, IV) at Science Park which are expected to generate a net property income yield of about 7.3 per cent.

Meanwhile, Cambridge Industrial Trust and Cache Logistics Trust made an acquisition each in first quarter 2012.

- CNA/fa


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