Property investment sales plummet 98%

Buyers and sellers are far apart in price expectations, says CBRE

PROPERTY investment sales in Singapore have fallen off the cliff since the start of the year and could slip to levels not seen since the Asian financial crisis.

According to the latest figures from CB Richard Ellis (CBRE), sales so far this year total $184.6 million, down 98 per cent on the same period a year ago and 56.4 per cent lower than the last quarter of 2008.

For the full year, total investment sales could plummet to levels not seen for over 10 years, with buyers and sellers locked in a stalemate and far apart in terms of price expectations, the consultancy warned yesterday.

The only quarters that saw lower investment sales were the first quarter of 1998 - when they were just $49.28 million - and the third quarter of that same year - when they hit $110.62 million. So far this year, the market has witnessed isolated individual deals but there have been no public sales or collective sales.

Residential sector sales accounted for 51.5 per cent of total sales during the period in question.
Apart from $18.2 million worth of deals for three good-class bungalows, Fragrance Properties bought a freehold Pasir Panjang site for $25 million, with plans to develop it into a residential apartment building. CBRE forecasts that such development site sales will be rare this year because most developers are concentrating on their existing projects and are not looking for new sites.

There have been no minimum bid applications from developers for any of the Government land sale sites, it added.

In the commercial market, sales total $77.3 million so far this quarter, with the only major sale being the $35.8 million, or about $900 psf, deal for Le Mercier House in Mohamed Sultan Road.

There was only one transaction in the industrial sector - a Loyang Crescent site that sold for $6.2 million, or $74 psf.

The report suggests that total investment sales for this year might revisit 1998 levels when the total annual quantum was $1.35 billion.

'The lack of volume will continue to feature until such time when price expectations between buyers and sellers meet,' CBRE stated.

Real estate investment trusts are unlikely to make many new acquisitions this year as dividend yields have increased significantly and it would be extremely challenging to make purchases that are yield accretive.

Source: Straits Times, 25 Mar 2009