Property investment sales crashed 73.4% to $1.7b in Q2

The presence of several big-ticket commercial deals bolstered investment sales.

Property investment sales fell 73.4% YoY in Q2 to $1.7b from $6.4b in Q2 2019, according to Knight Frank’s research. This is equivalent to a 41.4% QoQ crash from $2.9b in Q1, with no transactions recorded in the public sector.

The presence of several big-ticket commercial deals bolstered investment sales in the second quarter totalling $1.4b, whilst the general activity in the real estate market was muted.

The biggest deals during this period are the divestments of Perennial Real Estate Holdings’ 30% stake in TripleOne Somerset to Shun Tak Holdings for $155.1m and the 50% stake in AXA Tower to Alibaba Group's Singapore subsidiary worth $840m. These two deals are noted to have formed a substantial proportion of the deals inked.

More recently, Oxley Holding and Oxley Beryl, owners of the former Chevron House, are in the midst of selling the retail and commercial units of the development to Siriti R and Siriti C for $315m.

In the residential sector, $245.4m worth of deals were sealed as strict measures during the circuit breaker period hindered both buyers and sellers from carrying out viewings. Nonetheless, five bungalows in Good Class Bungalow Areas (GCBA) changed hands in Q2 as viewings were held before the onset of the circuit breaker on 7 April.

Meanwhile, the industrial sector registered $84.1m in investment sales as many manufacturers delayed or put on the backburner expansion or relocation plans. Given the upward change in direction in the Purchasing Managers’ Index (PMI) in May at 46.8, driven by output growth in the biomedical manufacturing cluster, specifically pharmaceutical goods, production could increase as manufacturers prepare for the rise in demand as the stringent restrictions ease.

With the travel restrictions enforced in Q2, the hospitality sector struggled in the first six months of the year relying mostly on government fiscal support.

Furthermore, Singapore outbound investment sales in the second quarter amounted to $3b based on available data from Real Capital Analytics (RCA), narrowing by 30.2% YoY from $4.3b in Q2 2019.

Key deals included City Developments Limited’s (CDL) acquisition of 51.01% stake in the Chongqing-based developer, Sincere Property Group, for some $880m (RMB4.39b) earlier in April as well as the purchase of KSH Infra’s upcoming logistics park in Pune, India, by Mapletree Investments Pte Ltd for about $56.3m (Rs 300 crore) in June.

Knight Frank’s head of capital markets (land, building, collective sales) Ian Loh notes that tith the onset of Phase 2, pent-up demand for properties across the various sectors could result in increased investment sales in the coming months upon the resumption of business activities in Singapore, especially in an environment of low interest rates and ample liquidity.

Further, Knight Frank notes that despite the global economic downturn caused by the spread of the pandemic, there is little evidence of distress sales, even though there is a distinct decrease in investment sales volume in Q2.