Residential investment activity to boom in early 2021: Cushman & Wakefield

Private residential prices rose by 0.8% in Q3, 2020.

A great buzz is expected in residential investment activity from early 2021 as residential property sales keep pace, according to Cushman & Wakefield’s market outlook 2021 video series.

In the real estate services firm’s latest tally, “private residential prices registered a gain of 0.8% in Q3 2020 compared with Q2 2020, bringing prices to its peak since Q3 2013.” In 2020, sales had been expected to log at least 20,000 units.

According to head of research services Christine Li: “The residential collective sales market is back in focus after a three-year hiatus. Signs are pointing to a possible re-activation of collective sale tenders but the long gestation period makes government land sales and private plots a preferred choice at the moment.”

The unsold inventory continues to decline and currently stands at 26,600 units. That said, Cushman & Wakefield had expected developers to sell about 9,800 to 10,000 in 2020, potentially exceeding the 9,912 units that were transacted in 2019.

“Excluding related party transactions including REIT mergers, residential sales make up the bulk of investment sales activity for the whole of 2020 at 43%,” Cushman & Wakefield reported. “Commercial, industrial and mixed or others make up 29%, 19% and 9%, respectively.”

Meanwhile, single-owner sites were also in the spotlight, according to executive director of capital markets Shaun Poh. “ The sale of the Guillemard-Jalan Molek site recently at $93m has sparked a wave of interest by residential developers, particularly, mid-sized ones, to look at sites that will help them ride the current cycle—these include single-owner plots and older CBD offices that can take advantage of the CBD Incentive scheme.”

In addition, office assets would remain a favoured asset class in 2021. According to Li: “The office market is poised for more transactions in 2021, given that investors have slowly adjusted to the new normal, together with positive sentiments around the Phase 3 reopening of the economy, spurred by the arrival of the vaccine. There is growing interest in office properties by institutional players, opportunistic private-equity investors, wealthy individuals and family offices that continue to provide support for demand once the price gap between buyers and sellers narrows.”

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