Real estate investment plunges 33 per cent in Q1

Real estate investment plunges 33 per cent in Q1

Investment activity in the real estate sector slowed down considerably in the first quarter but it is still raking up some robust numbers.

The sector recorded transactions of $5.4 billion in the three months to March 31 - a 33 per cent plunge from the $8 billion recorded in the last quarter of last year.

But it was still 15.6 per cent up on the same period a year earlier, according to DTZ Research on Monday.

Property investment sales refer to transactions of $5 million or more in the private and public sectors.

So, the $1.2 billion of sales of single residential units that were recorded in the three months to March 31 were excluded, as were sales of lots that could not be redeveloped or subdivided into more than one plot.

Investment in office properties declined the most in the first quarter, coming in at $772.9 million, down 72 per cent over the previous three months.

This was partly because office sales were particularly robust at the end of last year, with blocks such as the NOL Building, Mapletree Anson, 79 Anson and a 30 per cent stake in Marina Bay Financial Centre Tower 3 changing hands.

Some of the bigger deals in the first quarter included the sale of The Pines Club in Stevens Road for $318 million and the freehold AIA building in Changi Road for $68 million. Both will be redeveloped.

Yet activity by property firms still accounted for 71.1 per cent, or $3.8 billion - in the first quarter, largely driven by their participation in Government Land Sales tenders.

The rest are mostly made up of deals involving real estate investment trusts (Reits) and private property funds.

Industrial Reits were the only investment trusts active in the first quarter, with two acquisitions - The Galen, a six-storey multi-tenanted building by Ascendas Reit, and Cache Logistics Trust's purchase of Precise Two, a warehouse.

DTZ said investment activity this year is expected to match last year's, which was a flat 12 months.

Two major deals announced this month - the sale of Park Hotel Clarke Quay for $300 million and a Pasir Panjang freehold warehouse for $39.8 million - have kept activity up.

DTZ's Head of Singapore Research, Ms Lee Lay Keng, said: "Besides continued Government Land Sales, investment activity in the subsequent quarters will be supported by more Reit activity, as some developers have already indicated their intentions to spin off their assets."

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