2023 to be ‘underwhelming’ year for real estate investment market: Savills Singapore

GLS areas sold feature the residential site at Marina Gardens Lane that was granted for $1.03 billion, the residential spot at Jalan Tembusu awarded for $828.8 million, and the commercial and residential site at Tampines Avenue 11 awarded for $1.21 billion. “This is the highest possible quarterly value documented under the GLS Programme since 3Q2011,” Savills says.

The private sector recorded $2.97 billion in investment offers in 3Q2023, up 2.8% q-o-q. Nonetheless, there was a 31.6% drop in the variety of deals, which Savills attributes to the Lunar Seventh Month as well the boost in Additional Buyer’s Stamp Duty prices for residential properties, along with the high rates of interest setting. “The current investigation of a high-profile money-laundering incident may have also dampened market sentiment,” the company adds.

Residential investment sales amounted to $3.43 billion in 3Q2023, composing 48.1% of the quarter’s overall investment sales. At the same time, retail financial investment sales amounted to $1.69 billion last quarter, or 23.7% of overall sales. Savills notes business sales obtained a boost from 2 big-ticket deals during the quarter, specifically the cumulative sale of Far East Mall for $908 million; and the divestment of Changi City Point by Frasers Centrepoint Trust for $338 million.

Pinetree Hill floor plan

“Even though the international property market may deal with a lot of troubles, Singapore has that special marketing factor that being a safe haven, there will still be a base level of transactions coming from those, especially the ultrahigh worth family groups, seeking to branch out from riskier possessions and countries,” claims Alan Cheong, head of research and executive supervisor of Savills Singapore.

” While 2023 can be an underwhelming year for the property investment option market, it being a low point in regards to sales price may assist 2024 view a solid rebound, barring unpredicted events,” remarks Jeremy Lake, managing executive, assets sales and capital markets, at Savills Singapore. “Interest rates are most likely to start dropping in 2024 and international financial growth will elevate, bring about investors to achieve that the bottle is half full rather than half empty.”

In regards to 3Q2023 numbers, financial investment agreements were strengthened by seven land parcels under the Government Land Sales (GLS) Programme that were awarded for an overall price of approximately $4.16 billion. This composes some 58% of complete realty investments in the previous quarter.

The Singapore realty financial investment market logged $7.13 billion in transactions in 3Q2023, twice the $3.57 billion accomplished in the last quarter, according to an October research report by Savills Singapore.

” Whilst there is a likelihood that large ticket items might still be transacted for the remainder of 2023 to possibly 1H2024, the possibility of such is less than the prepandemic years and institutional investors will likely see a retrenchment in deal results,” Savills proceeds. The company is predicting 2023 financial investment sales in Singapore to drop from its previous forecast range of $24 billion to $25 billion, to in between $19 billion and $21 billion.

However, a gloomier forecast is found ahead offered headwinds that include “the probability of new problems emerging, the rewiring of supply chains, political purges and the contagion effect arising from the current rebel strikes inside Israel.”

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