welcome to

Developers send Q1 property investment sales to new high

Developers send Q1 property investment sales to new high.

Land-banking pushes deals this year to S$10.84 billion as of March 28, with en bloc sales accounting for S$5.83 billion.

A FLURRY of land-banking activities by developers propelled Singapore's property investment sales market to its strongest quarter in the first three months this year.

Preliminary estimates by property consultancy JLL show that some S$10.84 billion worth of investment deals were sewn up in the first quarter as of March 28 - the highest first-quarter sales on record since JLL started tracking such deals in 1994.

This surpassed the preceding quarter's high of S$8.34 billion.

The residential sector was the star performer in the first quarter with S$8.93 billion, accounting for more than four-fifths of the quarter's total investment sales value.

Investors snagged some 26 residential land parcels (excluding sites yielding more than 20 per cent of gross floor area in other uses) worth S$7.27 billion in the first three months of this year.

Of these, S$5.83 billion came from 17 collective sale deals, while the sale of four government land sites (including one executive condominium plot) contributed a further S$1.24 billion, JLL said.

The top residential deals in the first quarter include Pacific Mansion, which was acquired by GuocoLand, Intrepid Investments and Hong Realty for S$980 million; and Park West, which SingHaiyi Group and Haiyi Wealth snagged for S$840.89 million.

JLL Singapore's regional director for capital markets Tan Hong Boon noted that the first three months of 2018 already chalked up S$5.83 billion worth of residential collective sales deals, equivalent to over 70 per cent of such deals worth S$8.19 billion for the entire 2017. It is also about half of the S$11.51 billion historical peak in 2007.

"I will not be surprised if 2018 turns out to be another stellar year for the collective sales market," he said.

This is because developers are not yet done restocking their land inventory given the positive medium outlook for the residential property market, while there is a firm pipeline of potential collective sale sites to whet their appetite given that many owners are keen to ride the current wave.

But since developers have ample choices, collective sale owners need to set realistic reserve prices to stay in the competition, Mr Tan said.

The commercial sales segment, on the other hand, was relatively quiet in the first quarter. But JLL Singapore head of capital markets Greg Hyland reckoned the upbeat outlook for commercial leasing would lend support to investors' interest.

"A number of commercial investment deals are in the pipeline and could be concluded over the coming quarters pending agreement on commercial terms," he said.

Continued land-banking by developers and a potential pick-up in sales of commercial and industrial investment assets in the coming months could see property investment sales activity staying elevated this year, said Tay Huey Ying, JLL Singapore head of research and consultancy.

"Singapore remains an attractive destination for investors given its short- and long-term dynamism," she added.

"First, the property market is still at an early stage of recovery and the steady economic growth forecasts for the next few years will provide it with more legs to run.

"Second, Singapore is future-proofing its economy well to manage and benefit from the rapid technological transformation."

Adapted from: The Business Times, 31 March 2018