Investment Sales in Singapore Expected to Reach
$45 - $50 Billion by Year-End
2 Oct 2007, I-Newswire
A total of $12.73 billion worth of investment transactions has been
recorded in the third quarter of 2007 to date, placing Singapore in a
good position to end the year on a strong footing. At this current pace,
CBRE expects sales to peak at an all-time high of $50 billion by the
end of 2007, a substantial increase from the $35 billion reported in the
previous quarter.
CBRE's investment sales tally includes land deals, collective sales,
transactions of entire office and other buildings as well as strata-titled units
including Good Class Bungalows and condominiums above $5 million.
Investment sales in the private sector have accounted for 74.5 per cent or
$9.49 billion of the third quarter's total investment sales so far. The public
sector has also recorded robust land sales, contributing to the remaining
25.5% or $3.24 billion. Total investment sales of $37.91 billion for the first
nine months of 2007 have already exceeded the 2006 full-year by 24.1 per
cent.
Public sector sales in the third quarter to date:
- On 10 September, a 3.5-ha commercial site at Beach Road was awarded
to a consortium comprising City Developments Ltd, the Istithmar Group
and the El-Ad Group for $1.69 billion ( $1,069 psf/plot ratio ). The tender
was conducted through a two-envelope system.
- A 15-year leasehold office site at Scotts Road was sold to a joint venture
between Hwa Hong Corporation and KOP Capital for $37 million ( $219
psf/plot ratio ). The tender drew strong interest from developers, attracting
11 bids.
- Two residential sites at Woodsville Close and Ang Mo Kio Avenue 8 which
was awarded to Frasers Centrepoint for $50.68 million ( $434 psf/plot ratio
) and Far East Organization for $202.88 million ( $601 psf/plot ratio )
respectively.
- The government also sold a hotel site at Tanjong Pagar Road/Tras Street
to Chng Gim Huat for $97.07 million ( $562 psf/plot ratio ) as well as the
sale of two office sites at Anson Road/Enggor Street to Mapletree
Investments for $391.93 million ( $1,021 psf/plot ratio ) and Anson Road to
Lasalle Investment Management for $237.2 million ( $941 psf/plot ratio )
respectively.
- In addition, a condominium site at Sentosa Cove was sold to SC Global
for $268.3 million ( $1,800 psf/plot ratio ).
To date, the residential sector has recorded $23.79 billion in transacted
value ( including sales of Good Class Bungalows and condominiums above
$5 million each ) or 63 per cent of the year's total investment sales. The
collective sales market was fairly active in the third quarter of 2007, with a
total of 16 sites recorded, generating $1.74 billion of investment sales.
Notable en bloc transactions include The Grangeford which was sold to
Overseas Union Enterprise for $625 million ( $1,810 psf/plot ratio ), Tulip
Garden which was sold to Bravo Building Construction for $516 million (
$1,018 psf/plot ratio ) and Margate Mansion which was sold to Soilbuild for
$58 million ( $822 psf/plot ratio ). Apart from landbanking activity, the
quarter has also seen bulk purchases of residential units, including 56 units
at The Reflections at Keppel Bay and 180 units at Costa Del Sol for $286
million and $200.77 million respectively. In addition, all of 61 units at M21
were reported to be sold to a fund representing US and UK investors for a
total of $100 million. It is likely that these buyers are looking for rental
returns and capital appreciation.
On the back of the upbeat Singapore office market, investment activity in
the office investment market remains robust. Prime office properties
continue to be highly sought-after by investors, with some notable
acquisitions made by REITs and foreign funds.
Total office investment sales account for 24 per cent of the year's total
investment sales or $9.23 billion so far, 93 per cent higher than the $4.79
billion recorded in the whole of 2006. The sale of Chevron House ( former
Caltex House ) sets a new benchmark for the office investment market in
the third quarter of 2007 when it was sold to Goldman Sachs for $730
million ( $2,783 psf ). CapitaLand divested its interest in Wilkie Edge, a
mixed development with offices, to CapitaCommercial Trust for a total of
$182.7 million. Separately, CapitaLand raised its interest in One George
Street and The Adelphi by acquiring the remaining 50 per cent stake from
its partner in Eureka Office Fund Pte Ltd ( EOF ), for a total of $715.75
million. In addition, both K-REIT and Suntec REIT have each acquired a
one-third stake in One Raffles Quay for a total of $1.88 billion. In view of the
current positive conditions in the office leasing market, investment activity is
expected to remain strong for the rest of the year.
The industrial sector has enjoyed good sales momentum, contributing $1.51
billion or 4 per cent to the year's total investment sales, largely driven by
REIT-related purchases. MacarthurCook Industrial REIT contributed the
bulk of industrial investment sales in the third quarter of 2007 by acquiring
two properties for a total of $109.3 million. Both Cambridge Industrial Trust
and MapletreeLog expanded their portfolio size and value in the quarter by
acquiring properties for a total of $108.5 million and $47.2 million
respectively.
Ascendas India Trust and Parkway Life REIT were listed on the SGX in
August 2007. Ascendas India Trust is a business trust structured with REIT
characteristics and its initial portfolio comprises four IT parks located in
India worth a total of $932.51 million. The second healthcare S-REIT,
Parkway Life REIT, has an initial portfolio of three local hospitals, namely
Gleneagles Hospital, Mount Elizabeth Medical Centre and East Shore
Hospital, valued at $774.6 million.
The investment sales market is likely to remain active for the rest of the
year, with significant contributions likely from public sector sales.
