Commercial Property Sales Dominate Singapore's Property Investment Market

Commercial Property Sales Dominate Singapore’s Property Investment Market In H1

SINGAPORE – Data from Knight Frank showed that property investment transactions in the city-state surged by 88.7 percent year-on-year to S$20.2 billion in the first half of the year compared to S$10.7 billion in H1 2021, reported The Business Times on Tuesday noon (5 July, SGT).

“With the encouraging pace of sales and keen interest from both local and foreign stakeholders, total investment sales for the whole of the year could surpass expectations to hover within the range of S$32 billion to S$35 billion, barring any other major external headwinds,” said Chia Mein Mein, Head of capital markets at Knight Frank.

For Q2 2022, S$8.2 billion worth of real estate investment deals were recorded. Private transactions made up 76.1 percent of the quarter’s volume.

In particular, the commercial property sector dominated the market, with series of major sales – the S$515 million sale of a freehold luxury commercial project at 28 and 30 Bideford Road, the S$600 million acquisition of Twenty Anson, and the S$677.5 million sale of Westgate Tower.

Chia explained that the increase in investor interest in commercial properties is due to the prevailing economic climate of inflation, rising interest rates, and the increasing costs of raw materials and construction costs, as well as Russia’s invasion of Ukraine.

“Key factors that could influence such investment decisions are the likelihood of capital appreciation and organic growth through recurring rental income, as well as the lack of Additional Buyer’s Stamp Duty (ABSD) rates incurred for commercial developments – a defensible asset class against looming economic uncertainty,” she said.

For offshore investments, Singaporean investors appear to favour office and industrial properties. In fact, the biggest outbound transaction during the second quarter was the S$334 million acquisition of a London office building, while Frasers Logistics & Commercial Trust picked up a logistics property in the UK for around S$171.7 million.

Based on data from Real Capital Analytics (RCA), overall offshore property investment by Singaporean entities reached S$13.5 billion in Q2 2022.

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