Commercial investment sales drop 24.1% to $1.8b

A contraction in investment activity was seen in the office property sector in 3Q12.

According to Savills,commercial investment sales in Q3/2012 amounted to S$1.8 billion, contributing 19.5% of the total investment sales. As with the previous quarter, all the deals were in the private sector. However, the values recorded a 24.1% drop QoQ.

A contraction in investment activity was seen in the office property sector. Softening rents and increasing vacancy rates have weighed on the outlook for the office market, creating a more cautious sentiment in this sector.

In addition, the soaring prices of stratatitled units have deterred many buyers, resulting in an absence of transactions of strata-titled ofi ces exceeding S$10 million in the reviewed quarter.

Only two block transactions were recorded in the CBD. The first is Robinson Point, located on Robinson Road, which was sold for S$284 million or S$2,132 per sq ft based on NLA, to a small group of Asian investors.

The other is the sale of a 50% stake in 78 Shenton Way to Alpha Investment for S$304 million, which rel ected S$1,682 per sq ft NLA.

Outside the CBD in the Kallang area, the freehold Sam Leong Mansion was acquired by listed company KSH Holdings in a collective sale for S$40.3 million or S$1,087 per sq ft per plot ratio.

On the other hand, buying activity for retail malls, especially those located in suburban areas remained resilient.

In July, NTUC Income increased its stake in Parkway Parade Partnership Limited which owns a portion of Parkway Parade, paying S$255.0 million which rel ects S$1,888 per sq ft NLA.

In the same month, Mercatus Co-operative Ltd, a consortium of the Singapore Labour Foundation, NTUC Income and NTUC FairPrice bought 50% of nex for S$825 million or S$2,679 per sq ft NLA from Pramerica Asia.

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