_Investment Market Update Q1 2024

Investment sales environment continues to be challenging

April 23, 2024

In Q1 2024, residential deals constituted the largest proportion of investment sales activity at 47.1% with a total sales value of S$2.0 billion. A large proportion consisted of awarded government land sales (GLS) sites for residential uses located at Orchard Boulevard, Plantation Close, and Media Circle, totalling S$1.2 billion. Compared to the previous quarter, residential investment sales activity declined 41.9% from S$3.5 billion as foreign buyers stayed away due to the prohibitive ABSD rate that was implemented in April 2023.

In the first quarter of 2024, there was a total of five collective sale launches, with four in the Central Region and one in the West Region. This is a substantial decline compared to the same quarter in the previous year, where 12 developments were launched for collective sale. The doubling of Additional Buyer’s Stamp Duty (ABSD) in late April 2023 deterred homeowners, especially foreigners, from selling, as replacement costs have increased greatly.

In the first quarter of 2024, MSCI Real Assets reported an estimated S$911.0 million of outbound investment from Singapore, reflecting a decline of 54.3% q-o-q and 94.9% y-o-y (Exhibit 3). With market sentiment remaining tentative and cautious, global investors are likely waiting for a reduction in interest rates or for global tensions to ease before making their next move. At the same time, many are in the process of discovery, evaluating potential acquisitions in order to pursue a deal when the time is right.

With the pandemic all but relegated to history, there is expectation that the hospitality and retail sectors will do better as tourism numbers pick up. Commercial shophouses that are not liable for ABSD will continue to be in demand due to its rarity. Investors will also be on the lookout for core and core-plus assets in the industrial sector, with the nascent return of positive business sentiment in manufacturing.

Full report here