In Focus

Residential sector's share in Q3 total investment volume crashed 32 ppt to 43%

The commercial sector continued to gain traction as it made up 27% or $2.1b of total investment sales.

The cooling measures continued to weigh in as the residential sector’s share in the total investment volume fell to just 43% in Q3 from 75% in Q1, Colliers International revealed. In total, property investment sales in the quarter plummeted 30% YoY to $8b, with residential sectors still its main driver despite its share falling.

For the quarter, total investment sales in the residential sector hit $3.46b. This was followed by the commercial sector where total transactions hit $2.1b, making up 27% or $1.2b of the total investment sales in Q3. $778m, $199m, and $145m, respectively.

Colliers International noted that the largest transaction in Q3 belonged to the commercial sector which was buoyed by the $908m sale of OUE Downtown's office component. Coming in next is the Westgate (70%, retail component) which was sold for $789.6m.

Also read: Price hikes of prime properties in Singapore rally to world's highest in Q3

Also making it to the list are the Sengkang Central GLS site and the 5 warehouses in the West region sold for $777.8m and $730m, respectively.

Amongst residential transactions, only the Hillview Rise GLS site made it to the top five biggest transactions in Q3 as it was sold for $460m, Colliers International noted.

On a YTD basis, total investment sales in September jumped 14% YoY to $31.4b.

“Through H1 2019, we anticipate residential property purchases will remain subdued as developers focus on monetising their inventory and recalibrating their strategies,” Colliers International commented. “Sentiment may well pick up by H2 2019. In the meanwhile, investors will continue to channel their interest to the recovering commercial and industrial assets which have less policy risks.”

Collective sales dragged private residential segment sales

In the residential sector, the private residential segment sales crashed 72.2% QoQ and 58.8% YoY dragged by subdued collective sales which saw its shares of transaction in the sector down to 10.7% in Q3 from having 47.1% back in Q2.

The firm noted that residential collective sales plunged to $370m over three transactions in Q3 which is significantly down from the $3.9b worth of transactions from over 16 collective sales recorded in Q2. On a YTD basis, collective sales of 36 deals hit $10b, with Casa Meyfort recording the most notable deal in Q3 as it was bought by Guocoland for $320m or about $1,580 psf ppr.

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“We expect residential private investment sales to remain soft in the rest of 2018 and into H1 2019 as developers focus on launching and selling the inventory they have accumulated over the past two years of active land banking,” Colliers International said, adding that the recent announcement on the minimum average unit size guidelines could further temper confidence and land bids.

Also read: Revised shoebox unit policy may spur buying frenzy: analyst

Meanwhile, the firm also noted that the good class bungalow (GCB) investments significantly skyrocketed 188% YoY to $354m in Q3 through the match of strong demand and sellers’ asking prices.

Volume of GCB transactions also rose to 13, which is the highest since Q2 2012 when 18 GCB sales were transacted. In Q2 and Q3, only 8 and 7 GCB transactions were recorded.

The firm noted that the estate of the late Lim Kim San along Dalvey Road was the largest GCB transacted priced at $93.9m or about $1,804 psf.

“Despite the new cooling measures, GCBs with good quality and strong attributes still command high value and strong demand.”

Meanwhile, public residential investment sales segment in Q3 also dipped 2.1% QoQ to $1.63b despite the fact that more Government Land Sales (GLS) sites were sold due to more executive condominium (EC) sites and the absence of a super-large site, the firm said. Compared to Q3 2017 where only two GLS sites were sold, public land sales grew 42.4% YoY.

According to Colliers International, the largest value in Q3 was recorded at the Hillview Rise site where Hong Leong Group submitted the top bid of $460m or $1,068 psf ppr. In total, the site saw nine concept proposals from eight bidders under a dual-envelope system.

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