Register now and get the best possible deals from the developers. If you are affected by the new cooling measures and want to take advantage on them to stay invested, or lock in your profits, let us know your concern and we are glad to assist you.

Click Here To Minimize / Maximize

Property Launches & Investments

This is some blog description about this site

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that has been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Team Blogs
    Team Blogs Find your favorite team blogs here.
  • Login

Institutional investors seen on the hunt for CBD deals but mind the price gap

Posted by on in Property News
  • Font size: Larger Smaller
  • Hits: 124
  • Subscribe to this entry
  • Print
SINGAPORE (EDGEPROP) - Investors swooped in on Singapore’s office and hospitality assets this year as residential investment deals came off a high following the government’s property cooling measures in July last year.
According to Colliers International, investment deals above $10 million were led by the commercial sector this year, pulling in close to $11.34 billion worth of deals based on preliminary figures as of end November. This also represents 39% of the total volume of investment transactions recorded in the 11 months of the year.
According to Tricia Song, head of research for Singapore at Colliers International, Singapore’s total investment sales figure this year until November stood at $28.7 billion. The overall tally for the entire year is expected to fall short of the $38 billion recorded in 2018, when residential collective sales hit a record high, she says.
Coming in second was residential investment sales totalling $6.64 billion, while hospitality sales ranked third at $5.66 billion over the 11-month period. These two sectors accounted for 23% and 20% of the total investment pie in 2019.

Hottest deals of the year

Big-ticket commercial deals by Reits and institutional investors dominated real estate investment deals this year. The largest transaction was the acquisition of Duo Tower and Duo Galleria by Munich-based asset manager Allianz Real Estate and Hong Kong-based real estate private equity firm Gaw Capital Partners.
Duo Tower is a 20-storey Grade A office asset, while Duo Galleria is a 59,873 sq ft retail mall. They make up the office and retail components of the mixed-use development Duo which also features a hotel and a residential component. The transaction occurred in July and the sale consideration amounted to $1.58 billion.
The acquisition also marked Gaw Capital’s second office deal in Singapore this year. In January, the firm acquired 77 Robinson Road for $710 million. Other notable commercial transactions included the sale of Chevron House for $1.03 billion in April, Frasers Property’s divestment of a 50% stake in Frasers Tower in June, and the sale of 313 @ Somerset for $1 billion in September.
Significant hospitality assets also changed hands and the sector clocked in a record transaction volume that was backed by improved investor confidence, limited hotel room pipeline supply, and the expected increase in visitor arrivals over the next few years, says Song.
The largest hotel deal in terms of transacted price was the purchase of Mandarin Orchard for $1.2 billion following the merger of OUE Commercial Reit and OUE Hospitality Trust in September. The enlarged Reit also bought Crowne Plaza hotel at Changi Airport for $486 million.
Duo’s five-star luxury hotel Andaz Singapore was also acquired by Hoi Hup Realty in a sale worth $475 million in October. According to JLL, the appointed advisor for the transaction, the price is the highest ever achieved for a standalone hotel deal in Singapore.
On the residential front, government land tenders dominated residential investment sales. One of the biggest land tenders in terms of land price was a residential site at Tan Quee Lan Street that was awarded to GuocoLand and Hong Leong Holdings in September. The joint venture partners submitted a top bid of $800.2 million.
Meanwhile, a 3.8ha white site next to Pasir Ris MRT station was awarded to subsidiaries of Allgreen Properties and Kerry Properties in March. Both companies are part of Malaysian tycoon Robert Kuok’s group of companies. The companies jointly submitted the winning bid of $700 million.

Cross-border transactions

According to Tay Huey Ying, head of Singapore research at JLL, investors see Singapore as a safe haven amid the global economic uncertainty, and private equity and institutional investors were drawn to the recovery in the city state’s property markets.

Colliers’ Song agrees, adding that cross- border investment sales into Singapore have been gradually increasing since 2014, and totalled $10.71 billion in the first nine months of this year. Yet this falls short of domestic capital which accounted for $18 billion, or 63% of Singapore’s total investment volume for the year, she says.
Meanwhile, the expected wave of institutional investors from Hong Kong did not materialise, says Jeremy Lake, managing director, investment sales and capital markets, Savills Singapore.
“There is an expectation that some of the capital invested in Hong Kong may drift into overseas real estate markets such as Singapore. Many Hong Kong-based investors judge Singapore to be an attractive market with appealing attributes. But while some of them have moved cash into banks here, this does not mean that they are looking to immediately invest,” he says.
According to data from Real Capital Analytics, cross-border investments into Singapore from Hong Kong increased to $3.84 billion in the first three quarters of 2019 from $2.13 billion in 2018, and more than half of the capital injections occurred in 3Q2019.
“However, we believe this is not due to the situation in Hong Kong which happened in June, as fund-raising, mandates, and investment assessments could take more than a year. Singapore stands out as an investor favourite on its merits, with the office and hotel sectors benefitting from a cyclical upturn,” says Song.
She adds that the bulk of Hong Kong-based investments in the first nine months of 2019 went into the commercial sector. This includes Arch Capital Management’s purchase of Anson House for $210 million in August, as well as Gaw Capital’s joint acquisition of Duo Tower and Duo Galleria with Allianz Real Estate, says Song.
According to Shaun Poh, executive director of capital markets at Cushman & Wakefield, “Hong Kong-based investors are definitely exploring opportunities in Singapore, given the unstable situation in Hong Kong. But no one has put down any money yet. They are still trying to get a better feel and understanding of the market here.” He adds that most of these investors are eyeing core CBD commercial properties priced from $150 million to $300 million.

Commercial and hotel sector

Foreign investors had reason to feel buoyant about Singapore’s office market in 2019, especially when average monthly gross effective rents of CBD Grade A offices are expected to strengthen by 15% to 20% over the next four years, says Tay.
Investments in office assets also surged to a three-year high in 3Q2019 in spite of stalling office rent growth.
“This underscores investors’ confidence in the mid-term prospects of Singapore’s office property market as demand and supply dynamics support rents returning to growth,” she adds.
Lake of Savills says that “it is likely the economic situation will clear up by the end of 2020 which will encourage office rents to resume further rental growth. Leasing activity on hold in 2020 would create some pent up demand that will be released in 2021”.

Another focus for investors in 2020 will be the hospitality sector, says Lake. “Since the end of the residential collective sales peak in July 2018, collective sale interest in private development sites have been geared toward sites that are suitable for redevelopment into hotel or mixed commercial developments,” he says.

A recent case is the sale of Min Yuan Apartments and Waterloo Apartments to Singapore-listed Fragrance Group. The hotel developer has received approval from URA to convert the residential sites into hotel use, and Fragrance has announced that it will amalgamate the sites and build a 14-storey hotel comprising more than 500 rooms.

Wilkie Edge, which was bought over by Lian Beng Group and Apricot Capital, has also received approval for hotel conversion, while Peak Tower Corporation, which purchased Selegie Centre in March, is seeking approval to redevelop the site into a hotel.

According to Song, the spike in interest in hospitality assets is driven by a perceived shortage of hotel room supply, as well as the continued strong growth in international visitor arrivals.
She adds that “accounting for all the known supply so far, the total new hotel room completions over 2020-2024 would average around 1,400 units per annum, still well below the last 10year average of circa 2,800 rooms per annum.”
Some landlords of older CBD commercial buildings may have been encouraged to explore redevelopment opportunities under the CBD Incentive Scheme, says Song.
Announced as part of the 2019 Draft Master Plan, the scheme aims to entice owners to redevelop their ageing commercial assets into mixeduse projects, offering 25% to 30% additional gross floor area for the redeveloped building.
But development charge rates for hospitality use increased 45.6% in February this year, following an 11.8% increase during the September 2018 DC rate revision exercise.
According to Lake, the incentives are insufficient to encourage a wave of redevelopments to take place in the CBD. The higher DC rates also erases most of the premiums owners could benefit under the incentive scheme.

Interest in shophouses

Based on data compiled by JLL as of Dec 11, there have been fewer shophouse transactions worth $5 million and above this year, with 52 deals valued at $590 million year to date, compared to 90 deals worth $1.18 billion for the whole of 2018.
“The lower transaction volume can be attributed largely to the limited shophouse stock for sale in 2019 and a wider price expectation gap between sellers and buyers as owners are now asking for higher prices,” says JLL’s Tay.
She expects this trend will continue into 2020 as interest in shophouses from family offices, high net worth individuals and boutique funds remains robust.
Most buyers are foreigners who prefer to avoid paying the higher ABSD for residential properties. But there are some local buyers who are snapping up these assets for wealth preservation. For these buyers, the net yields on shophouses, which are about 2% to 3% today, are still attractive enough, says Lake.
He adds that as the supply of available CBD shophouses dwindles, most investors are looking further outfield at city fringe areas such as Kampong Glam and Jalan Besar to find shophouses available on the market.

Outlook next year

Looking ahead, interest in real estate investing from institutional investors is expected to continue into 2020, especially in light of the expected low interest rate environment that will drive down their lending costs, says Song, adding that real estate investments offer decent yields and provide institutional investors a good means to preserve capital.
Investors could still gravitate towards older assets with the potential for redevelopment or enhancements in light of the CBD Incentive Scheme, while scouting for city fringe assets in light of the government’s drive to decentralise the CBD, says Song.
Based on JLL data as of Dec 11, 2019, strata- titled office deals worth $5 million and above surged to $739.3 million from $397.6 million in 2018. Thus, investment demand is also likely to remain keen on strata-titled offices in 2020, particularly those located in the CBD as the demand and supply dynamics are supportive of continued rental growth and capital appreciation, says Tay. But she cautions the widening price expectation gap between buyers and sellers amid heightened economic uncertainty could still hamper deals in this asset class in 2020.
Reits will likely contribute to more big-ticket investment deals in 2020, says Colliers which anticipates a number of major Reit mergers and acquisitions, or the injection of assets into Reits’ portfolios.

Source: The Edge
Rate this blog entry:


  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Wednesday, 05 August 2020
District 1
Marina Bay Condo | Shenton Way Commercial | Marina Bayfront Condo | Central Boulevard Condo | Central Boulevard Towers | Marina View | V on Shenton | Marina South Pier Condo | Marina One Residences | Shenton Way Condo |
District 2
Pearl Bank En Bloc | Outram Park MRT Condo | Silat Residences | Avenue South Residence | Sky Everton | Sky Everton Freehold Condo Prices | Outram Road Condo | One Pearl Bank | Excellent Connectivity from One Pearl Bank | One Pearl Bank Design and Layouts | Pearl Bank Apartments | Asia Gardens | Anson Road Condo | Tanjong Pagar Condo | Tanjong Pagar Commercial | Greater Southern Waterfront | Wallich Residence | Tanjong Pagar Centre |
District 3
Queenstown Condo | Queens Peak Condo | Dundee Road Condo | Margaret Ville | Margaret Drive Condo | Alexandra View Condo | Prince Charles Crescent Condo | Rest of Central Region Condo | Principal Garden | Silat Avenue Condo | Jalan Bukit Merah Condo | Kampong Bahru Road Condo | Stirling Road Condo | Stirling Residences | Commonwealth Avenue Condo | The Crest @ Prince Charles Crescent | Commonwealth Towers | Highline Residences | Alex Residences |
District 4
Corals at Keppel Bay | Skyline Residences | Reflections at Keppel Bay |
District 5
Park West Condominium En-Bloc | West Coast Vale Condo | Park West Condominium | Parc Clematis | Parc Riviera | The Trilinq | Bijou | West Coast Way Condo | One Normanton Park | Normanton Park Condo | Clementi Avenue 1 Condo | Jalan Lempeng Condo |
District 7
CityGate Condo | Selegie Road Condo | Sophia Road Condo | Tan Quee Lan Street Condo | The M | Middle Road Condo | South Beach Residences | Duo Residences | Beach Road Bugis Rochor Condo | Midtown Suite | Midtown Bay | Midtown Bay Floor Plans and Facilities | Beach Road Commercial | Golden Mile Complex | Textile Centre | Golden Mile Complex En Bloc | Textile Centre En Bloc | The Oasis |
District 8
Peace Centre Mansions En Bloc | Perumal Road Condo | Northumberland Road Condo | Uptown at Farrer | 1953 Condo | LYF | Tessensohn Residence |
District 9
Cairnhill Mansions En Bloc | Orchard Bel-Air En-Bloc | Pacific Mansions En Bloc | Robertson Quay Condo | Paterson Road Condo | Cavenagh Gardens En-Bloc | Cavenagh Gardens | Cavenagh Road Condo | Orchard Boulevard Road Condo | Orchard Road Condo | Scotts Road Condo | Cairnhill Road Condo | Riviera Point | The Iveria | The Iveria Condo Floor Plans | Cairnhill Mansions | One Tree Hill | River Valley Road Condo | Martin Place Condo | Martin Modern | Kim Seng Road Condo | Handy Road Condo | Haus on Handy | Jiak Kim Street Condo | Riviere Condo | Fraser Residence Promenade | Avenir Condo | Pacific Mansions | Great World MRT Station Condo | Martin Place Residences | The Rise at Oxley Residences | Orchard Paterson Cairnhill Road Condo | Core Central Region Condo | Robertson Quay Condo | Paterson Collection | St Thomas Walk | Leonie Hill Road Condo | Horizon Towers | Leonie Gardens | New Futura | Cairnhill Nine | 3 Orchard by the Park | Twin Peaks |
District 10
Grange Road Condo | Farrer Road Condo | Tulip Gardens En Bloc | Tulip Garden Residences | Leedon Green | Leedon Green Floor Plans | Tulip Garden Residences Floor Plans | Tulip Garden | Tanglin Road Condo | Jervois Gardens | Crystal Towers | Juniper Hill Condo by AllGreen Properties | Juniper Hill | The Hyde at Balmoral | The Hyde | Balmoral Road Condo | Jervois Road Condo | Petit Jervois | Jervois Prive Exclusive Condo | Jervois Prive | Jervois Treasures Condo Floor Plans | Jervois Treasures | Tanglin Shopping Centre En Bloc | Tanglin Shopping Centre | Jervois Gardens En Bloc | Spring Grove En Bloc | Spring Grove | Hallmark Residences | Wilshire Residences | Sloane Residences | Ewe Boon Road Condo | Bukit Timah Road Condo | Bukit Timah Collection | Cluny Park Residence | Cuscaden Road Condo | Petit Cuscaden | Cuscaden Reserve | Cuscaden Reserve Condo Floor Plans | Boulevard 88 | Pollen and Bleu | Leedon Residence | Gramercy Park | Ardmore Three 3 | Sculptura Ardmore | RV Residences | Robin Residences | 18 Nouvel@ Anderson Road | Holland Road Condo | The Estoril | The Estoril En Bloc | Hollandia En Bloc | Hyll at Holland | Hollandia | TwentyOne Angullia Park | D'Leedon | Mon Jervois | Holland Village Residences | One Holland Village | One Holland Village A Mixed Development Design | Holland Village Condo | Van Holland | Van Holland Floor Plans | 15 Holland Hill | 15 Holland Hill Floor Plans |
District 11
Chancery Court En Bloc | Chancery Court Condo | Thomson Road Condo | Novena Condo | Newton Road Condo | Pullman Residences | Pullman Residences Floor Plans | Dunearn Road Condo | 386 Dunearn | Dunearn Court Condo | Derby Court | Fyve Derbyshire | Derbyshire Road Condo | Kampong Java Road |
District 12
Balestier Road Condo | Toa Payoh Condo | Neem Tree | Riverbay | Boon Teck Towers | Eight Riversuites | Boon Teck Towers En Bloc | Gem Residences | Kallang Riverside Condo |
District 13
Woodleigh Residences | Upper Serangoon Road Condo | Park Colonial | Woodleigh Lane Condo | Mattar Residences | Woodleigh MRT Condo | Woodleigh Condo | Woodleigh Link Condo | Bidadari New Estate Condo | Upper Aljunied Road Condo | Tre Ver | Raintree Gardens | Potong Pasir Avenue 1 Condo | Potong Pasir Condo | The Maisons | The Quinn | Mattar Road Condo | The Poiz Residences | The Venue Residences | Sant Ritz |
District 14
Eunos Condo | Eunos MRT Condo | Sims Avenue Condo | Changi Road Condo | Parc Esta | Eunosville | Eunosville En Bloc | City Plaza | City Plaza En Bloc | Paya Lebar Road Condo | Sims Drive Condo | Park Place Residences | Paya Lebar Quarters | Sims Avenue Condo | Paya Lebar Central |
District 15
Dunman Road Condo | Coastline Residences | Amber Sea | One Meyer | Albracca | Siglap MRT Station Condo | Marine Parade Road Condo | Casa Meyfort Condo | Meyer Mansion Floor Plans | Meyer Mansion | Meyer Modern | Nanak Mansions | Meyerhouse Exclusive Condominium | Meyerhouse | Meyerbank | Nyon | Rebirth of Amber Park Condo | Amber Park Condo Seafront Living | Amber Park | The Opus | Parkway Mansion | Amber Park En Bloc | Hawaii Tower En Bloc | Parkway Mansion En Bloc | Albracca En Bloc | Laguna Park | Laguna Park En Bloc | Tanjong Katong MRT Station Condo | Meyer Road Condo | Hawaii Tower | Katong Park MRT Condo | Katong Park Residences | Katong Park Towers | Amber Gardens Condo | Amber Road Condo | Neptune Court | Neptune Court En Bloc | Lagoon View | Lagoon View En Bloc | East Coast Marine Parade Condo | Katong Shopping Centre | Katong Shopping Centre En Bloc | Mountbatten Road Condo |
District 16
Siglap Road Condo | Mandarin Gardens | Mandarin Gardens En Bloc | New Upper Changi Road Condo | The Glades | Bedok South Condo |
District 17
The Inflora |
District 18
Tampines Court | Treasure at Tampines | Tampines Court En Bloc | Tampines Street 11 Condo | Tampines Avenue 10 Condo | Coco Palms |
District 19
Florence Regency En-Bloc | Florence Residences Condo Club | Florence Regency | Rio Casa | Kensington Park En-Bloc | Kensington Park | Serangoon Ville | Serangoon Ville En Bloc | Forestwood Residences | Hougang Avenue 2 Condo | Hougang Condo | Riverfront Residences | Hougang Avenue 7 Condo | Affinity | Serangoon North Avenue 1 Condo | The Garden Residences | New Condo | Serangoon Gardens Condo | Serangoon Central Condo | Lorong Lew Lian Condo | Riverbank Sengkang West Way Condominium | Yio Chu Kang Road Condo | Toho Green | Rivertrees Residences | Parc Botannia | Fernvale Road Condo | High Park Residences | Sengkang West Condo | New Tampines Road Condo | Kingsford Waterbay | Botanique at Bartley | Buangkok Condo | Buangkok MRT Station Condo | Sengkang Central Condo | Sengkang Grand Residences | Sengkang Central Residences | Sengkang Central Residences Floor Plans | Sengkang Grand Residences Floor Plans | Sengkang Central Residences Prices | Sengkang Grand Residences Prices |
District 20
Marymount Road Condo | Braddell View En Bloc | Braddell View | Shunfu Road Condo | Jade Scape | Far Horizon Gardens | Far Horizon Gardens En Bloc | Ang Mo Kio Avenue 9 Condo | Faber Gardens | New Lorong Puntong Condo | Thomson Impressions Condo | Adana | Panorama | Upper Thomson Road Condo | Yio Chu Kang Road Condo | Lentor Road Condo | Lentor Drive Condo |
District 21
Jalan Anak Bukit Condo | Beauty World Condo | Goh & Goh Building En Bloc | Pine Grove | Pandan Valley Condo | Ridgewood Condo | Ridgewood Condo En Bloc | Mayfair Collection | Mayfair Gardens Condo | Mayfair Modern | King Albert Park MRT Station Condo | Mount Sinai Condo | Ulu Pandan Road Condo | Pine Grove En Bloc |
District 22
Jurong Condo | Lake Grande Condo | Lakeville | J Gateway |
District 23
Goodluck Garden | Toh Tuck Road Condo | Goodluck Gardens | Kismis View | Dairy Farm Road Condo | Dairy Farm Residences | Dairy Farm Residences Floor Plans | Foresque Residences | The Lanai | Hillion Residences | Bukit Batok Condo | Hillview Rise Condo | Dairy Farm Residences Prices |
District 25
Woodlands Square Condo | Woodlands Square Commercial | Woodlands Central Condo |
District 26
Springside Road Condo |
District 27
NorthPark Residences | Watercove Ville @ Sembawang | Canberra Drive Condo Sembawang | Canberra Link Condo Sembawang | New Yishun Ave 4 Condo | The Wisteria | Condominium Yishun Central | Symphony Suites | Yishun Avenue 9 Condo | Sembawang Road Condo |
District 28
Jalan Kandis Condo | Kandis Residence |
Executive Condo
Parc Life EC | Choa Chu Kang Drive EC | Sol Acres EC | The Vales EC | Tampines Avenue 10 EC | Tampines Street 62 EC | Fernvale Lane EC | Tampines EC | Signature at Yishun | Choa Chu Kang Grove EC | Tengah EC | Choa Chu Kang Avenue 5 EC | Woodlands Avenue 12 EC | Sembawang Avenue EC | The Visionaire | New EC at Canberra Link | Canberra Link EC Sembawang | Parc Canberra | Yishun Avenue 9 EC | Yishun Street 51 EC | The Criterion EC Yishun | Yio Chu Kang Road EC | New EC | Serangoon North EC | Yishun Avenue 1 EC | The Terrace EC Punggol | The Amore EC Punggol | Westwood Residences EC | Anchorvale Lane EC Sengkang | Sungei Punggol Reservoir EC Sengkang | Anchorvale Street EC Sengkang | Ola EC | Ola EC Prices and Floor Plans | Westwood Avenue EC | Choa Chu Kang Way EC | Canberra Drive EC Sembawang | BrownStone EC | Choa Chu Kang EC | LakeLife EC Jurong | Jurong EC Jurong | Punggol Drive EC Punggol | Woodlands Avenue 5 EC Woodlands | Parc Canberra Floor Plans | Sumang Walk EC Punggol | Piermont Grand | Piermont Grand EC Prices | Punggol Central EC Punggol |