Colliers anticipates a good performance in Singapore property investment sales this year, driven by acquisitions and corporate mergers, as well as the completion of a few significant commercial transactions and land tenders.
"We anticipate investment volume to continue its robust run as Singapore moves to an endemic stage and with the progressive reopening of borders," says Colliers' John Bin, director, capital markets & investment services, Singapore.
Rise in Interest Rate
Despite the fact that borrowing costs are expected to rise as the US Federal Reserve considers raising interest rates later this year, Colliers thinks this will not prevent investors in their hunt for appealing properties to invest in.
"As rates tighten, we're seeing more investor interest in properties with value-add potential and flexible use," Bin says. Assets such as CBD buildings with redevelopment possibilities, warehouses, and shophouses are among them. Grade A Offices for rental is also highly sought after due to shortage of supply. Upcoming Grade A Office at Labrador Tower and Central Boulevard Tower set to benefit from this shortage of suppy.
According to statistics provided by Colliers in its Investment Market Outlook 2022 report, investment sales in Singapore real estate increased 3.8 percent year on year to $7.8 billion in 4Q2021. This increases total investment sales for 2021 to $26.1 billion, up 5.4 percent year over year.
Last year, residential sales accounted for 43% of all investment sales, followed by office sales (17%) and industrial sales (13%). (16 percent ).
Last year's residential sales totaled $11.5 billion, more than double the amount expected in 2020. The increase is attributed to solid luxury sales, a revived collective sales market, and government land purchases, according to Colliers.
Commercial sales climbed 62.9 percent quarter over quarter to $5.6 billion, a rise of 10.4 percent year over year. One George Street, which was sold for $1.3 billion, helped to boost sales.
Industrial investment sales surged almost fivefold year over year in 4Q2021, reaching $1.1 billion. Last year's investment sales totaled $4.2 billion, an increase of 83.9 percent year over year.
In 4Q2021, Shophouse transaction volume climbed by 118.3% year over year to $355.9 million. Last year's shophouse sales were $962.6 million, representing a significant 105.9% year-over-year increase.
Meanwhile, the hospitality sector remained quiet, with Porcelain Hotel, which sold for $90 million in 4Q2021, being the only big deal for the year.
Following the installation of new cooling measures in December and the introduction of increased property taxes in the 2022 budget, home sales are likely to decline in 2022.
High End Residential Market expect to slow
Colliers predicts that the restrictions will make bigger residential sites, high-end residential, and residential assets less appealing as an investment. As developers grow increasingly hesitant to commit to bigger land sites, the restrictions are expected to undermine the burgeoning collective sale market.
The measures, on the other hand, may result in a surge in demand for commercial properties, particularly shophouses and strata assets, which are available at affordable costs to family offices and high-net-worth people.
Colliers expects sustained demand for suburban retail properties, which have held up well throughout the epidemic, as well as some opportunistic purchasing.
This year's industrial sales growth is projected to continue, as demand for business parks and data centers shows no signs of slowing. E-commerce and technology, according to Colliers, will continue to fuel demand for industrial properties with high standards.
Singapore's investment volume is expected to expand between 3% and 5% this year, according to Colliers.