Real estate investments up 75% q-o-q in 3Q2023, bolstered by GLS tenders: Knight Frank

Chia Mein Mein, head of funding markets (land and cumulative sale) at Knight Frank Singapore, adds that climbing expenses have triggered property developers to switch towards GLS areas. Nevertheless, regardless of plots in prime sites, she indicates that developers’ appetites have shrunk, with a lot fewer participants and even more conservative bids sent in current GLS tender exercises.

The cumulative sales market additionally remained to face headwinds amid the unsure market overview. “The broadening gulf in forecasts in between owners and property developers continued to be the most significant obstacle, intensified by increasing expenses, rate of interest and the excessive increases in ABSD rates, done in a climate of economical cynicism,” Knight Frank states in its report. In July, Wing Tai announced its withdrawal from the sale of Holland Tower, after the deal was made at $76.3 million in March this year.

“As a result of the existing high rate of interest cost, customers find themselves needing to go up the threat curve by adding value to their financial investments to get greater ecological revenues, and this includes acquisitions for enhancement and redevelopment,” comments Daniel Ding, head of capital markets (land and structure, international realty) at Knight Frank Singapore.

The firm has solidified its full-year estimates for investment sales, reducing forecasts from in between $20 billion to $22 billion to in between $18 billion to $20 billion.

Looking in advance, Knight Frank anticipates slower financial investment event for the rest of the year provided the reigning view and difficulties in the estate market. “In the upcoming months, the capital markets area will certainly be characterised by financiers on the search for assets being mainly focused on incorporating significance to the estates to achieve higher gains. This is to justify the greater borrowing prices involved with the purchase of the real estate,” the report includes.

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Residential offers made up $3.3 billion of assets price in 3Q2023, predominantly steered by the award of 5 household GLS tenders. This stands for a boost of 93.5% q-o-q, nevertheless a reduction of 12% y-o-y. At the same time, private homes registered a decline in sales event, which Knight Frank attributes to the surge in Additional Buyer’s Stamp Duty (ABSD) rates that took effect in April.

Commercial estate deals increased in 3Q2023, climbing up 27.4% q-o-q and 23.3% y-o-y to arrive at $1.5 billion. The higher value adheres to the sale of Changi City Point by Frasers Centrepoint Trust for $338 million in August, with the mall supposedly purchased by the Zhao family from mainland China. In addition, the combined sale of Far East Mall for $908 million to Glory Property Developments last month also strengthened commercial financial investment worth, along with the sale of the mixed-use, commercial and non commercial GLS area at Tampines Avenue 11 for $1.2 billion.

Singapore property investment event viewed an improvement in 3Q2023, signing up an increase of 74.8% q-o-q to reach at $6.9 billion, according to an October study report by Knight Frank. The amount likewise represents a 19.4% enhancement y-o-y. This marks the very first quarterly development after five consecutive quarters of reduction ever since 1Q2022.

Some $4.1 billion (over 60%) of the settled market value originated from Government Land Sale (GLS) locations that were awarded in the pas quarter, including locations at Tampines Avenue 11, Marina Gardens Lane and Jalan Tembusu.

Alternatively, commercial deal value plummeted to $252.2 million in 3Q2023, which Knight Frank observes is the lowest quarterly amount reported since the $174 million listed in 2Q2020 throughout the circuit breaker duration.

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