Singapore real estate investment in 2021 totals $25.8 billion, up 5.3% y-o-y

Singapore (Edgeprop)

SINGAPORE (EDGEPROP) – According to the latest quarterly investment report by Knight Frank Singapore, the last quarter of 2021 raked in $7.3 billion worth of real estate investment volume. This brought the total investment volume for the entire year to $25.8 billion and is a 5.3% y-o-y increase from the $24.5 billion that was recorded in 2020.

The bulk of investment transactions in 4Q2021 came from the residential segment which closed about $2.8 billion worth of transactions.

The Knight Frank report highlights that some notable residential deals last year include the sale of a penthouse at Les Maison Nassim from $75 million ($6,201 psf) in October, and the sale of a Good Class Bungalow (GCB) in the Kilburn Estate GCB area that was reportedly sold to crypto billionaire Zhu Su for $48.8 million.

On the back of a dwindling supply of unsold new private residential units in the market, the collective sales market started to gain some momentum in 4Q2021. Five enbloc deals were successfully closed during these three months.

This includes the sale of Peace Centre and Peace Mansion for $650 million to a joint venture (JV) led by Chip Eng Seng, SingHaiyi, and KSH. Watten Estate Condominium was also sold for $550.8 million to a JV comprising UOL and Singapore Land.

However, the government imposed new property cooling measures at the 11th hour on Dec 15, 2021. “Despite the encouraging en bloc activity with homeowners of ageing projects growing increasingly hopeful, the imposition of cooling measures on 15 December 2021 has given pause to the market,” says Knight Frank.

But the lack of a substantial increase in the potential number of new residential units in the 1H2022 Government Land Sales (GLS) list may prompt developers to continue down the collective sale market, says Knight Frank.

“Developers are likely to adopt a more cautious approach, preferring modestly-sized sites with a potential of about 200 units or less, in order to mitigate the risk of not qualifying for the 35% ABSD remission within five years,” says Knight Frank.

On the other hand, the commercial market remains relatively buoyant throughout 2021 as pipeline supply of office space remains limited.

A significant transaction in this segment was the divestment of One George Street by CapitaLand Integrated Commercial Trust and FWD Group. The development was sold to a JV comprising Nuveen Real Estate and JP Morgan Asset Management for $1.3 billion in November last year.

“With cooling measures casting a pall of uncertainty in the residential market, there might be some spill-over investor demand into the commercial arena that is exempted from ABSD. This could possibly translate into interest in the CBD Incentive Scheme,” says Knight Frank.

The CBD Incentive Scheme was introduced by URA in 2019 to rejuvenate and enliven the Central Business District with more mixed-use developments.

According to data from Real Capital Analytics, outbound investment deals from Singapore-based investors totalled $20.2 billion in 4Q2021, an increase of 231.7% y-o-y. Most offshore seeking investors sought out logistics and office properties, and many entered the Australian property market to geographically diversify their portfolio.

Knight Frank expects that more commercial properties could be acquired in Singapore this year as institutional investors search for core and core-plus assets to reinforce portfolios.

The implementation of a fresh round of property cooling measures is also expected to give pause to the luxury residential segment, as buyers adopt a more conservative, wait-and-see approach.

“With the recently announced cooling measures shaking up the en bloc market, homeowners looking to collectively sell their homes will now have to recalibrate their price expectations to align with the increased risks developers face if a sale is to be successful,” says Knight Frank.

It expects real estate investment volume for the whole of 2022 to range between $20-$22 billion.

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