Singapore Property Investment Sales Rise in Q3, Up 24.8% to S$8.3 Billion, Despite Drop in Residential Deals
Real estate investment in Singapore saw a notable boost in the third quarter of 2024, following a 0.5% rate cut by the US Federal Reserve in September. This change has sparked some optimism in the property market, according to a report by Knight Frank Singapore released on October 8.
Property investment sales in Q3 reached S$8.3 billion, marking a 24.8% increase from the previous quarter’s S$6.7 billion and a 30.5% rise compared to the same period last year, when sales totaled S$6.4 billion.
Of the total Q3 sales, the private sector accounted for S$6 billion, while the public sector contributed S$2.3 billion.
Residential Sales Dip, Government Land Sales Dominate
While overall investment sales grew, the residential sector saw a drop. The value of residential deals fell 24.7% quarter-on-quarter to S$3.2 billion. Notably, 74.2% of these deals were for Government Land Sales (GLS) sites. Two key sites—one on Zion Road (Parcel B) and another at Jalan Loyang Besar—were awarded in August for S$730.1 million and S$557 million, respectively.
A few notable Good Class Bungalow (GCB) transactions also contributed to the quarter’s residential sales. In July, a GCB on Tanglin Hill sold for S$93.9 million, while two others on Belmont Road fetched S$73.7 million and S$57.7 million, respectively.
However, the collective sale market remained slow, with no successful deals in Q3 despite five launches. Knight Frank highlighted the ongoing challenges in securing collective sales, especially for larger residential plots.
GLS sites are currently presenting more attractive opportunities for developers due to “easing land prices,” the report added.
Boutique Developers Eyeing Smaller Landed Projects
According to Chia Mein Mein, Knight Frank’s head of capital markets (land and collective sales), developers are showing caution towards larger collective sale sites. Instead, smaller landed properties and “mini landed en blocs” are gaining interest, particularly in prime locations. These smaller plots allow boutique developers to subdivide and redevelop land into multiple homes, making them more flexible and attractive.
Commercial and Industrial Segments Surge
Commercial property investments also saw significant activity in Q3. A major highlight was the acquisition of a 50% stake in Ion Orchard (including Ion Orchard Link, Ion Art Gallery, and Ion Sky) by CapitaLand Integrated Commercial Trust from CapitaLand Investment for S$1.8 billion. This pushed the total sales value in the commercial segment to S$2.7 billion, a 37.2% jump from the previous quarter.
The industrial property sector experienced an even more dramatic increase. Sales soared 567.6% quarter-on-quarter and 426.6% year-on-year, reaching S$2.5 billion. This surge was largely driven by Lendlease and Warburg Pincus’s acquisition of a S$1.6 billion portfolio of seven industrial properties from a real estate investment trust owned by Blackstone and Soilbuild in August.
Outbound Sales Decline, but Outlook Positive
Outbound investment from Singapore saw a decline, with sales dropping 29.3% quarter-on-quarter and 39.1% year-on-year to S$3.2 billion. This downturn was attributed to ongoing global tensions and high interest rates.
However, with the recent interest rate cuts, Knight Frank expects outbound investment activity to pick up before the end of the year.
Looking Ahead: Positive Market Sentiment
The interest rate cut has lifted market sentiment, and Knight Frank expects the momentum in property investment sales to continue building. Deals that were in the works before the rate cut are now expected to come through, particularly in the industrial and living sectors, said Daniel Ding, Knight Frank Singapore’s head of capital markets (land and building, international real estate).
As the gap between buyer and seller expectations narrows, more investors may be encouraged to close deals, Ding added.
Although the collective sale market remains tough, Knight Frank believes that commercial and mixed-use developments are better positioned for success in the current climate.
Looking ahead, Knight Frank forecasts that total property investment sales in Singapore will land between S$23 billion and S$25 billion in 2024.
