Investment Activity in Q3 2021 Led by Government Land Sales

October 6, 2021

Keeping with the general upbeat pace of deals in the real estate market, the third quarter recorded some S$7.5 billion of investment deals, with 49.7% contributed by transactions in the public sector. This transaction volume represents a 38.7% quarter-on-quarter (q-o-q) increase from the S$5.4 billion in the previous quarter, and a 58.1% year-on-year (y-o-y) growth from the S$4.8 billion in the same period last year.

The bulk of investment volume in Q3 was driven by the sale of four Government Land Sales (GLS) sites, with the award of the Marina View reserve site at S$1.5 billion being the top land sale, followed by the Jalan Anak Bukit parcel at S$1.0 billion. With frenzied bidding at certain recent GLS tenders, other land-hungry developers may shift their focus towards the greater diversity offered by smaller-sized plots in a variety of locations, such as sites with more palatable quantums where owners are attempting a collective sale. With the seal of the Flynn Park collective sale deal at S$371 million or S$1,355 psf ppr, this could cause a ripple effect in the en bloc market given that many owners are keen to collectively sell their ageing units. As such, projects in the range of S$600 million and below with about 600 units might just find willing buyers.

Total investment sales, by property sector

Correspondingly, the Good Class Bungalow (GCB) market reported a healthy level of sales in Q3, registering a total of S$452 million in deals, albeit at a slower pace and lower transaction volume when compared to the previous quarter. Some of the significant GCB deals within the months of July to September included the sale of detached homes at 11 Queen Astrid Park to TikTok CEO Chew Shou Zi for S$86 million (S$2,704 psf on land) and at 3 Bishopsgate for S$65 million (S$2,208 psf on land). More GCB deals are currently being negotiated and should complete before the end of the year. 

The increased investor activity is not only evidenced in the residential sector as strata offices and shophouses also remained top choices for acquisition. The third quarter recorded a spate of deals including the purchase of 61 Robinson by Rivulets Investments for S$422 million as well as a portfolio of six office floors in Suntec City Towers that was sold to Silk Road Property for a total of some S$197 million. With interest running high and activity moving at an encouraging pace, continued activity is expected in the commercial and shophouse markets with more spaces being launched for sale in the coming fourth quarter. 

As the manufacturing sector leads economic recovery, the industrial market was characterised with a stable flow of transactions. Key deals in the quarter included the sale of a warehouse at 28 Quality Road for S$50.0 million and a single-user factory at 45 Tuas View Circuit for S$27.7 million. The industrial sector will continue to feature steady investment activity and this trend will likely spill over into 2022.

Top 5 transactions in Singapore, Q3 2021

Outbound Investment from Singapore

As a key exporter of capital, Singapore recorded some S$5.2 billion of outbound investment deals in Q3 2021 based on Real Capital Analytics (RCA) data, representing an expansion of 53.9% from S$3.4 billion transacted in the same period last year (Exhibit 3). Notable deals included the acquisition of One Town Center, an office building in Florida, United States, for some S$133.9 million by Prime US REIT in July 2021, as well as the purchase of an office building in Barcelona, Spain, by IREIT Global for about S$43.1 million in September 2021. 

Market Outlook

Despite the looming uncertainties that prevail amid the spike in infection rates in the recent months, the encouraging pace of investment deals in the first nine months of the year represents an improving business sentiment that will continue into the last quarter of the year and next year. Knight Frank envisages that the investment market is still enroute to the projected transaction volume of S$30 billion for the whole of 2021. 

Much of the investment activity in the coming months would comprise the limited supply of new GLS parcels available for tender in the H2 2021 Confirmed List. It is also possible that well-located smaller sites on the Reserve List could also be triggered as the unsold stock of private residential units runs down.

Cross-border investments by Singapore-based entities

Credit to: Knight Frank

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