_Investment Market Update Q3 2023
Subdued private investment sales
October 10, 2023
Highlights
- After five consecutive quarters of decrease since Q1 2022, real estate investment activity in Q3 2023 clocked an increase in total transacted value. A total transacted value of S$6.9 billion was recorded, an increase of 74.8% q-o-q with an improvement of 19.4% y-o-y. However, more than 60% comprised Government Land Sale (GLS) sites that were awarded. These amounted to almost S$4.1 billion.
- In Q3 2023, commercial property deals totalled S$1.5 billion, an increase of 27.4% q-o-q and 23.3% y-o-y.
- However, the transaction value of industrial properties went south, registering the second lowest amount of S$252.2 million since the S$174.0 million recorded during the circuit breaker of Q2 2020.
- While investment activity showed improvement in Q3 2023, the majority of the quarter’s transaction value was due to public investment sales from the GLS programme.
- The collective sales market in Q3 2023 continues to be challenging as activity slowed, dragged down by the tentative and uncertain market outlook. The expanding gulf in expectations between owners and developers remained the biggest obstacle, exacerbated by increasing costs, interest rates and the prohibitive increases in ABSD rates, all in a climate of economic pessimism. In July, it was announced that Wincove Investment (a subsidiary of Wing Tai) withdrew from the sale of Holland Tower, after the deal was made at S$76.3 million in March this year, further dampening collective sale sentiments.
- According to Real Capital Analytics (RCA), outbound investment from Singapore amounted to a total of S$2.7 billion, a decrease of 36.4% q-o-q and 62.0% y-o-y (Exhibit 3), as sentiment turned muted due to escalating borrowing costs negating positive carry from property income streams, ongoing geopolitical tensions, and market uncertainties.
Read the full report here.