SINGAPORE - Investment funds were big sellers of property here last year, with the value of sales more than double that of purchases amid weaker economic conditions.
The funds mainly sold off office buildings and industrial properties and invested in hotels and retail malls.
Analysts estimate that funds sold properties here worth a total of up to $3.36 billion last year.
This was well above the value of purchases, of between $1.17 billion and $1.31 billion, the data from CBRE showed.
Fund acquisitions were lower last year compared with 2011 due to weaker economic conditions, said Ms Lee Lay Keng, associate director of research at DTZ, who calculated that funds bought $1.48 billion worth of property in 2011.
"With rents stagnating or falling while prices continue to hold firm, yields have been compressed which could have reduced the attractiveness of property investments to funds," she added.
One of the biggest fund purchases last year was of Compass Point by Prudential's Asia Property Fund in a joint venture with Frasers Centrepoint for $519 million.
Fund divestments last year were mainly of office buildings, analysts said, likely because office yields have fallen as a result of rental declines while prices continued to hold firm. Average monthly gross rents for Grade A office space in the Central Business District fell by 6.9 per cent for last year overall, according to a Colliers International report released earlier this week.
Ms Lee also said that since many of the office properties sold were acquired between 2007 and 2010 and their prices have risen, funds could be selling them off to realise capital gains and channel their money to other countries that have the potential for higher returns.
Office buildings sold by funds last year include 16 Collyer Quay, formerly known as Hitachi Tower, 78 Shenton Way and 79 Anson.
NTUC Income, which already owned 49 per cent of 16 Collyer Quay, said on Wednesday it had inked a deal to buy up the remaining 51 per cent from Goldman Sachs. The building, which Goldman bought for $811 million in early 2008, is valued at $660 million for a net lettable space of 278,356 sq ft, translating to $2,371 psf.
As for 78 Shenton Way, a property fund managed by Alpha Investment Partners bought a 50 per cent stake in the building from a global fund managed by CommerzReal, a unit of German bank Commerzbank. The deal in September valued the building at $608 million, or $1,686 psf based on net lettable area of about 360,500 sq ft. CommerzReal paid $650.78 million for 78 Shenton Way in late 2007.
Last month, United Engineers bought 79 Anson for $410 million from its two owners - Singapore's Central Provident Fund Board and German fund manager SEB. The acquisition price works out to $2,029 psf based on the building's net lettable area of 202,092 sq ft.
Analysts said the trend of a net divestment of property by funds could continue this year.
"It is probably fair to say that fund-raising is more difficult these days and raising fresh funds is taking longer. In 2013, we expect more selling activity by the fund managers but we also expect to see some selective buying activity," said Mr Jeremy Lake, executive director of investment properties at CBRE.
Analysts estimate funds sold properties here worth up to this amount in total last year
$1.17b to $1.31b
The value of property purchases by funds last year, according to data from CBRE
RENTS LOSING LUSTRE
With rents stagnating or falling while prices continue to hold firm, yields have been compressed which could have reduced the attractiveness of property investments to funds.
- Ms Lee Lay Keng, associate director of research at DTZ