Singapore Commercial Property Investment Sales

Singapore Commercial Property Investment Sales Down 77.9% In Q2

SINGAPORE – Data from Savills showed that commercial real estate investment transactions in the city-state fell sharply by 77.9 percent quarter-on-quarter to S$940.7 million in Q2 2023, reported The Edge on Wednesday evening (19 July, SGT).

The property consultancy noted that sales of strata office units remained resilient, with eight sales collectively worth S$298.5 million registered during the period under review.

These included the divestment of the 10th and 14th floor at Solitaire on Cecil to organisations affiliated with the Thye Hua Kwan (THK) Group of Charities. Both office floors were sold for a total of S$103.2 million, which works out to S$4,140 psf based on their combined strata area.

Savills disclosed that strata office transactions during the second quarter of the year were predominantly driven by buyers in the form of family offices and ultra-high-net-worth individuals (UHNWI), or people with a net worth of at least US$30 million.

The real estate consultancy reckons that overseas investors may have partly shifted their gaze towards commercial properties after the recent hike in additional buyer’s stamp duty (ABSD) imposed on foreigners acquiring residential assets.

Strata office units could continue to see robust transaction volume thanks to the healthy demand from UHNWIs and family offices, forecasted Savills Research and Consultancy’s Executive Director Alan Cheong. However, he disclosed that such buyers usually avoid lodging caveats, making it difficult to assess the actual size of the market.

Meanwhile, Savills Singapore’s Chief Executive Marcus Loo noted that although rising interest rates have negatively affected the investment sales market for big-ticket properties, activity remains solid for assets with a more palatable price.

“The current high interest rate environment continues to discourage institutional demand and investors have naturally turned more cautious when evaluating larger sites. Until there is clarity that interest rates have peaked, we expect investment sales to be confined mostly to shophouses, strata-titled offices and government land sales,” he added.

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