Despite the market becoming cautious, last year's biggest annual sale came on the closing date in December 2022 - when Hong Kong-listed Link REIT agreed to acquire Jurong Point and Swing By@ from Mercatus Co-Operative for a total of $2.16 billion. Thomson Plaza.
Given the rise in interest rates, institutional funds are more likely to take a wait-and-see approach. This opens the door for private capital, which is less dependent on debt financing, to become more active in commercial property investment in the coming months.
Singapore continues to represent a stable and safe investment mecca in a volatile global climate.
As a result, investor demand for split-level office space remained healthy in the fourth quarter of 2022.
Two floors at Springleaf Tower were sold to Esteel Enterprise in November for approximately $53.9 million ($2,510 psf), while the fourth floor at 15 Scotts was sold to Cortina Holdings in October for $49 million. given the more substantial size and volume, it is expected that in the coming months investment in investment in the strata office market will continue to boom.
Overall, commercial sales account for the major part of investment sales throughout 2022, followed by residential sales. Knight Frank highlighted that residential sales were driven by the award of two government land sale sites in the fourth quarter of 2022, contributing approximately $520.8 million in sales.
In terms of collective sales, Knight Frank said the market remains active, with many of the lots sold already embarking on the building process. Provided that sellers' price expectations remain realistic and are measured at a level that is within the risk that developers can take.
With more new developments expected to be launched in 2023, the success rate of collective sales will likely will be higher, as the lack of supply of new homes is also likely to support developer demand for collective sale plots.
Meanwhile, Singapore recorded $13.7 billion in outbound investment sales in the fourth quarter of 2022, according to research data. This was a 22.4% decline from the previous quarter. Acquisitions consisted mainly of office and logistics buildings, with Japan's gateway city being the preferred investment destination for Singapore investors.
Significant outbound transactions in the fourth quarter of 2022 included M&G Real Estate's purchase of prime office space at Minato Mirai Center in Yokohama for over $997 million and Gaw Capital Partners' purchase of a portfolio of logistics assets in Tokyo for approximately $732 million.
Overall, Knight Frank believes that the slowdown in investment activity is likely to continue through the first half of 2023 until more concrete signs of economic stability and an improving business environment emerge. The firm expects full-year 2023 real estate investment sales to be in the range of $22 billion to $25 billion.