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Property investments on the rise; outlook for Q4 2021 remains sanguine

  • Investment sales continued to improve in Q3 2021, growing 6.9% QOQ and 79% YOY to SGD7.5 billion, driven by higher Government Land Sales. Colliers continues to expect a strong showing in Q4 2021.
  • Residential sales grew 11.6% QOQ, while commercial sales declined 12.1% QOQ, despite strong retail transactions.
  • Industrial and shophouse sales declined 91% QOQ and 47% QOQ, respectively, after a strong performance in Q2 2021.
  • Investors should focus on assets with long-term growth drivers, such as CBD offices with redevelopment potential, high-spec space, logistics assets, and shophouses.
     

SINGAPORE, OCTOBER 19, 2021 - Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) has today released its Investment Q3 2021 Report, a quarterly report on investment sales in Singapore’s real estate market, with an outlook for the market and expert recommendations.


A thriving market for investment sales in Singapore 

Investment sales continued to improve in Q3 2021, rising 6.9% quarter-on-quarter (QOQ), driven by Government Land Sales (GLS). Looking ahead, Q4 2021 could see stronger commercial sales, driven by the likely shareholders’ approval for the privatisation of Singapore Press Holdings and the potential conclusion of a few major deals.

Mixed-use transactions surged 816% QOQ, while residential sales rose 11.6% QOQ. In the quarter, total commercial sales fell 12.1% QOQ, despite strong retail transactions, which surged 100% QOQ.

 

Snapshot of total investment sales

Industrial sales declined by 91.3% QOQ in the absence of major deals, but Colliers remains positive on this segment, particularly in the B1 space, given the limited supply over 2021 to 2024. Meanwhile, shophouse sales declined 47.4% QOQ after a strong rebound in the previous quarter.

Steven Tan, Executive Director, Investment Services | Singapore, commented: “We believe that the investment deals will likely continue to be robust at least until H1 2022. Given the strong residential demand and depleting developers’ landbank, we expect collective sales to continue to grow. Separately, we are also seeing more investor interest in the suburban malls.”

Residential property performed well

Residential asset sales rose 11.6% QOQ to SGD3.4 billion (USD2.5 billion) in Q3 2021, owing to the collective sale of Flynn Park and awarding of three GLS sites. Year-to-date residential volumes in the quarter rose to SGD8.1 billion (USD6.0 billion), which reflects a 148% year-on-year (YOY) increase from a low base, as property viewings were prohibited for most of Q2 2021.


Commercial property still attractive despite lower sales in Q3 

In the commercial space, asset sales declined 12.1% QOQ to SGD1.2 billion (USD0.8 billion), despite strong retail transactions. Year-to-date, sales volume declined 12.6% YOY to SGD361 billion (USD2.7 billion). Several commercial deals remain in the pipeline, which reflects the attractiveness of office properties with redevelopment and Gross Floor Area upgrade potential.


Industrial assets saw a decline in sales

In the absence of big-ticket industrial property sales, industrial assets declined 91.1% QOQ to SGD178 million (USD131 million) in Q3 2021. However, the two previous quarters have seen strong sales driven by a REIT privatisation and the establishment of an industrial fund. Colliers believes that investor interest should remain on the back of the accelerated growth in e-commerce and the technology companies.


Hospitality saw no movement in asset sales

The needle did not move for asset sales in the hospitality sector in the quarter and no deal has been recorded year-to-date. However, in the longer term, Colliers expects that the sector’s fundamentals should remain supported by a relatively limited supply pipeline and a series of new attractions and infrastructure projects planned through 2030.


Shophouse sales took a breather

After a strong showing in Q2 2021, shophouse sales came down by 47.4% QOQ to SGD163 million (USD120 million). Year-to-date shophouse sales volume at the end of Q3 2021 amounted to SGD607 million (USD446 million), which is a whopping increase of 238% YOY. Shophouses continue to be an attractive asset class, as they offer a stable rental income and capital appreciation potential at a palatable investment quantum, as well as the flexible use of property.

 

Download our quarterly investment sales report for Q3 2021 here.

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Media Contact:

Wallace Goh