Commercial investment sales take a 73.8% nosedive in 3Q

But here's one reason to stay positive about the sector.

The investment sales market in Singapore performed better than expected in the third quarter of 2016 with all sectors, except commercial properties, registering growth despite a lackluster economy.

Total Investment sales amounted to S$4.91b in 3Q. The biggest deal was Mapletree Commercial Trust’s S$1.78b acquisition of Mapletree Business City (Phase 1), comprising an office tower and three business park blocks.

The residential property segment led the investment sales market, with S$2.20b of sales, making up 44.8% of the overall transaction value.

Investment sales in the commercial sector amounted to S$1.37b, contributing 28.0% of total investment sales. All the deals were in the private sector. Although this was a 73.8% drop QoQ, Savills noted that the level of investment interest remain 'stable'.

The research firm said that in the last few quarters, some significant deals by ultra HNWIs and HNWIs in the region, such as those from China and Indonesia, confirm that Singapore is still one of the attractive cities for their asset allocation and wealth diversification.

In the commercial sector, three office buildings changed hands in Q3.

The first was MBC 10, the office tower at Mapletree Busines City (Phase 1) at Pasir Panjang. As part of MCT’s acquisition in July, the price of MBC 10 was S$571.9m, translating to S$1,360 psf based on the 420,544 sq ft NLA.

In the CBD, a joint venture of Vibrant Group Ltd and DB2 Group disposed of a 60% stake in Ececil Pte Ltd, which owns the DB2Land Building located at 139 Cecil Street. The buyer was reported to be the Zhou Family from Shanghai China. Based on the agreed market value of S$140 million, the 60% share of the building works out to be about S$84m.

After the purchase of Straits Trading Building in June 2016, Indonesian tycoon Mr Tahir bought another freehold offi ce building at 110 Robinson Road after putting in a top bid of S$45.1m. The unit price is S$3,169 psf based on the building’s 14,233 sq ft NLA.

Moving forward, Savills expect the whole-year number for the investment sales market to reach the high end of its forecast of S$17-19b with the tenders of other GLS sites and sales of individual assets.

The tender of the white site at Central Boulevard will close on 8th Nov. The site was triggered for release from the reserve list after a developer had committed to bidding at least S$1.536b at the tender.

In addition, the office building at 77 Robinson Road was reportedly under due diligence with a price tag of no less than S$530m, and ARA Asset Management won the bid for a 50% stake in Capital Square for around S$480m.

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