Hospitality deals in Singapore reached the highest level recorded on a quarterly basis, hitting S$2.8 billion in the third quarter, according to real estate firm Colliers International’s report on Thursday.
This was six times that of the previous quarter and 19 times that of the previous year, and comes on the back of significant transactions such as Bay Hotel, Mandarin Orchard and Crowne Plaza Changi Airport. Hotel deals also took up 25 per cent of deal volume in Q3.
Mandarin Orchard and Crowne Plaza Changi Airport were recently added to the enlarged portfolio resulting from the OUE C-Reit and OUE H-Trust merger.
With sales recorded from the first half of 2019 factored in, hospitality deals in the first nine months of the year totalled S$4.2 billion – higher than all full-year figures in Colliers database which started in 2006, the report added.
Tricia Song, Colliers International head of research, said the hospitality segment presents good prospects amid robust international visitor arrivals and a generally healthy tourism outlook.
“Singapore continues to be an attractive destination and additional investments in the MICE and leisure sectors should attract both corporate and leisure travellers in the next three to five years,” Ms Song added.
Overall, Singapore’s real estate investment sales “remained resilient” in the third quarter, totalling S$11.2 billion, despite macroeconomic headwinds and rising uncertainties.
This was a 53.7 per cent increase quarter on quarter (q-o-q) and 74.4 per cent year on year (y-o-y), on the back of stronger sales across of property segments.
The commercial sector, which led and comprised 41 per cent of Q3’s total sales volume, stood at S$4.6 billion, up 3.2 per cent q-o-q and more than doubled y-o-y from deals for Duo, 313@somerset and 71 Robinson Road.
Colliers is projecting commercial real estate sales to hit a “record high” for the whole of 2019, the last peak being recorded in 2007 at S$12.5 billion.
Colliers International director of capital markets Jerome Wright observed increasing foreign interest amid the strong demand for commercial properties – office and retail – in the quarter.
“Given Singapore’s strong market fundamentals and the favourable interest rate environment, we should expect investors’ interest to remain elevated,” he said.
Incentives to redevelop older office buildings in the central business district, together with tight vacancies and a light new supply pipeline would also encourage more investments in this segment.
Residential investment sales accounted for 27 per cent of total transactions. It brought in S$3.1 billion, up 90.1 per cent q-o-q and 4.7 per cent y-o-y, mainly from public land sales. Sites sold include Clementi Avenue 1, Tan Quee Lan Street, Bernam Street and one-north Gateway.
Residential sales volume was also boosted by luxury home sales including good class bungalows (GCBs), which saw a 62.4 per cent q-o-q and 53.8 per cent y-o-y rise to S$1.1 billion in the quarter. Standout deals include Dyson founder James Dyson’s purchase of a GCB and super-penthouse.
That being said, in view of the weaker collective sale market, Colliers Research is expecting residential investment sales in the year to fall 55 per cent from a year ago, before recovering from 2020.
Industrial investment sales, meanwhile, were up 12 per cent q-o-q to S$681 million on Keppel DC Reit’s acquisition of two data centres. On a y-o-y basis, however, sales volume was down 41.2 per cent.
Colliers is expecting more industrial assets deals from Reits, and is projecting a 30 per cent y-o-y increase in industrial sales for the full year of 2019 on big-ticket transactions.