Wednesday, April 7, 2010

Value of property investment deals down 8.5% in Q1

AFTER three consecutive quarters of growth, the value of property investment transactions in Q1 2010 fell 8.5 per cent quarter-on-quarter to $2.64 billion.

The figures, compiled by DTZ Research, also showed that in contrast to last year when residential sales dominated the investment market, investments in the industrial segment stood out in Q1 2010.

Industrial property investments accounted for $1.02 billion or 38.5 per cent of the total value of transactions. The bulk of this was due to the sale and leaseback deals that were made by soon-to-be-listed Cache Logistics Trust with the owners of six industrial properties. These deals totalled some $713.2 million in all.

Residential investments came in second at $879.2 million. The majority of it (94 per cent) was from the sale of sites in the government land sales (GLS) programme. Private investment sales of residential property were noticeably crowded out. DTZ said that trend is likely to continue into Q2 2010 with the GLS programme expected to be the main source of land supply for residential development.

Investment by local companies continued to dominate the scene due to purchases by local developers and real estate investment trusts (Reits). However, there could be more foreign purchasers in the coming quarters, DTZ said.

Ongoing economic recovery is also expected to lead to increased investment activity in 2010.

‘Besides the purchase of land for residential development, acquisitions by Reits are resuming. More office buildings are also expected to be transacted for redevelopment into residential use for owner occupation or rental yield,’ said Shaun Poh, senior director for investment advisory services and auction.

DTZ’s figures comprise transactions that are more than $5 million each. They exclude $1.75 billion of transactions in single residential units, or lots that cannot be redeveloped or subdivided into more than one plot, as well as deals that are deemed to be interested person party transactions.

Source: Business Times, 7 Apr 2010

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