Property investment transactions to hit a plateau

The 52.4% rise in 2Q12 may moderate due to cash-strapped investors.

According to Savills, there was about S$7.4 billion worth of investment transactions in Q2/2012, representing a 52.4% increase over Q1’s S$4.9 billion, and bringing the total volume in the first half of 2012 to S$12.3 billion. But looking ahead, investment volume may hit a plateau in the near term, given that macro conditions have worsened in recent months.

Here's more from Savills:

A squeeze on buyers’ financing cannot be ruled out, which in turn will affect transaction volume. The government has continued to release a substantial amount of residential sites under the 2H/2012 GLS Programme to stabilise the prices. Therefore, the market in 2H/2012 may still be dominated by the public sector, and we expect investment sales to reach a full-year total of S$21 billion to S$25 billion in 2012.

The private sector accounted for S$4.3 billion or 58.3% in Q2/2012. Undeterred by red flags fluttering in the eurozone and renewed concerns about a slowing global economy, the investment sales market, especially in the private sector was reinvigorated by a spate of acquisitions on the back of low interest rates and the still optimistic outlook for the property market.

The public sector contributed S$3.1 billion or 41.7% of the total investment sales in Q2/2012. Fifteen state land parcels, comprising 11 residential sites, three industrial sites and one hotel site, were sold for a total of about S$2.9 billion. In addition, JTC’s Fusionopolis Phase 5 was sold for S$172.8 million through a concept and price tender.

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