Real estate investments up 75% q-o-q in 3Q2023, bolstered by GLS tenders: Knight Frank
Some $4.1 billion (over 60%) of the transacted market value originated from Government Land Sale (GLS) locations that were awarded in the pas quarter, consisting of areas at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu.
Chia Mein Mein, head of resources markets (land and cumulative sale) at Knight Frank Singapore, adds that rising costs have prompted builders to change towards GLS areas. However, regardless of plots in prime locations, she notes that property developers’ appetites have actually diminished, with less participants and more steady bids submitted in latest GLS tender exercises.
The firm has solidified its full-year approximations for investment sales, cutting estimates from between $20 billion to $22 billion down to between $18 billion to $20 billion.
Commercial property offers enhanced in 3Q2023, climbing up 27.4% q-o-q and 23.3% y-o-y to reach $1.5 billion. The greater price complies with the sale of Changi City Point by Frasers Centrepoint Trust for $338 million in August, with the shopping mall supposedly bought by the Zhao family group from mainland China. In addition, the collective sale of Far East Shopping Center for $908 million to Glory Property Developments last month additionally boosted commercial investment worth, in addition to the sale of the mixed-use, retail and housing GLS place at Tampines Avenue 11 for $1.2 billion.
“Due to the present high interest cost, buyers end up having to move up the danger turn by including value to their investments to obtain greater sustainable returns, and this features purchases for growth and redevelopment,” comments Daniel Ding, head of funding markets (land and structure, global real estate) at Knight Frank Singapore.
The collective sales market also continued to deal with headwinds amid the uncertain market overview. “The broadening gulf in forecasts between owners and developers continued to be the greatest barrier, intensified by increasing prices, rate of interest and the prohibitive boosts in ABSD prices, all in a condition of economic depression,” Knight Frank mentions in its record. In July, Wing Tai introduced its withdrawal from the sale of Holland Tower, after the offer was made at $76.3 million in March this year.
Looking ahead, Knight Frank expects slower financial investment activity for the rest of the year offered the reigning view and obstacles in the real estate market. “In the coming months, the capital markets space will be qualified by capitalists on the look for assets being mostly concentrated on bring in value to the real estates to attain higher returns. This is to validate the greater borrowing expenses entailed with the procurement of the property,” the record includes.
Singapore realty investment event viewed an increase in 3Q2023, registering a rise of 74.8% q-o-q to appear at $6.9 billion, according to an October study credit report by Knight Frank. The amount also stands for a 19.4% improvement y-o-y. This views the first quarterly growth after 5 consecutive quarters of reduction since 1Q2022.
Moreover, commercial transaction value dropped to $252.2 million in 3Q2023, which Knight Frank observes is the lowest quarterly amount reported since the $174 million registered in 2Q2020 in the course of the circuit breaker period.
Residential packages comprised $3.3 billion of investment value in 3Q2023, mainly driven by the honor of 5 non commercial GLS tenders. This stands for an increase of 93.5% q-o-q, but a reduction of 12% y-o-y. At the same time, private properties signed up a reduction in sales activity, which Knight Frank credits to the surge in Additional Buyer’s Stamp Duty (ABSD) rates that worked in April.