PROPERTY investment sales more than tripled in Q2 this year as sentiment improved on the back of easing credit and the stockmarket rally, says DTZ.
The firm says in its Q2 Singapore property market report that total investment value during the quarter jumped 254 per cent to $662 million – the first increase after two quarters of decline.
Other property firms, including Jones Lang LaSalle and CB Richard Ellis, have reported the same trend in recent weeks. However, DTZ’s data shows that for the first half of 2009, total investment sales were $849 million.
This was still the lowest level in a decade, since $703 million in H2 1998.
Small-quantum deals continued to dominate, with all deals below $100 million apiece in Q2.
Most investments were by locals. Foreign investors remained cautious.
Investments by foreign companies or private investors, excluding buyers of unknown nationality, contributed only 13 per cent of total investments in H1 – much lower than the 41 per cent in 2008.
Participation by institutions and property vehicles also remained inactive.
Just one transaction, the built-to-suit development deal of a high-tech industrial building for SingTel, was made by a property trust – Ascendas Real Estate Investment Trust or A-Reit.
Although office rents are falling and not expected to recover until 2011, buying interest in the sector picked up in the latest Q2.
Office investment value was up 310 per cent, mainly due to two major sales – Anson House and Parakou Building.
The Anson House transaction in May was the biggest deal in the quarter.
It changed hands at 34 per cent below the price that it fetched two years ago.
Residential transactions also increased significantly – by 190 per cent to a total of $203 million.
But the collective sale market remained quiet, with no sale since Q4 2008.
DTZ expects that transactions in H2 2009 will be mostly involve local corporations and high net worth individuals who have a longer investment horizon.
The picture will start changing next year as the Singapore property market reaches fair value, the firm reckons.
Source: Business Times, 8 July 2009