Real estate investment sales reach S$28.6m in 2011

Singapore’s real estate investment sales hit S$28.6 billion in 2011. This is slightly more than the S$27.9 billion worth of deals concluded in 2010.

This is based on data compiled by property consultancy firm DTZ Research on transactions that are above S$5 million in value. It excludes the S$1.1 billion worth of transactions in single residential units and lots that cannot be redeveloped or subdivided into more than one plot.

DTZ said the increase in real estate investment sales in 2011 was largely due to an increase in sales of land sites and properties by the government.

Total investment sales in the fourth quarter of last year grew 67.5 per cent on-quarter to S$7.2 billion. This was lower than the S$8.1 billion posted in Q1 2011 and S$9.0 billion in Q2.

The decline was attributed to the slowing economy which impacted investor sentiment in the Q3 and continued to affect investors in Q4.

Investment activity in the residential sector was the highest in 2011, accounting for 37.5 per cent of investment sales. Residential investment sales amounted to S$10.7 billion in 2011 – a record since 2007.

The Government Land Sales (GLS) programme accounted for almost 70 per cent of all residential investment sales. This was largely due to the ramp-up in the supply of GLS sites since the second half of 2010.

Meanwhile, the contribution of collective sales towards residential investment sales declined in 2011.

Last year, collective sales accounted for about 26.9 per cent of residential investment sales. In comparison, such en bloc sales contributed to 65.6 per cent in 2007.

DTZ said in a statement that investors were more cautious in 2011, with no takers for collective sales sites with asking prices above S$200 million.

The collective sales market is expected to be slower in 2012, especially after the introduction of the Additional Buyer’s Stamp Duty (ABSD) measures. This requires developers to develop and sell all the units within five years to avoid paying the ABSD of 10 per cent.

Head of Asia Pacific Research at DTZ, Chua Chor Hoon, said: “Real estate investments are expected to be more subdued in 2012, due to the uncertain global economic outlook. Investments in offices are expected to fall due to the slowdown in occupier demand and projected fall in rents.

“Residential investments will be shored up by the sale of GLS sites, as long as there is still healthy response to launches.”

Source : Channel NewsAsia – 4 Jan 2012

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