Investment Property Sales In Q1 Remain Steady

Source : The Business Times, April 18, 2008

INVESTMENT property sales level in first quarter 2008 was unchanged from a year ago despite deepening concerns regarding the US economy.

A total of $8.4 billion worth of transactions was concluded, up one per cent quarter-on-quarter (QOQ), according to the Q1, 2008 Singapore Property Market Report by Debenham Tie Leung (DTZ).

The office sector was the best performer with $3.4 billion in sales, reflecting a significant 134 per cent increase QOQ.

Government state land saw strong response from developers to several sites released for tenders. The transactions showed that developers were willing to pay for sites in good locations, despite the cautious market, DTZ said.

Investments in industrial properties rose 31 per cent QOQ to $690.5 million, mainly in en-bloc deals purchased by real estate investment trusts.

However, residential sales fell 45 per cent QOQ to $2.2 billion. DTZ attributed the slowdown in sales activity to weak market sentiments, adding that developers and buyers are adopting a wait-and-see attitude.

Preliminary figures showed that only about 2,000 private residential transactions were recorded through caveats in the first two months of 2008, down from 5,200 a year ago.

Developer sales in Q1 reflected a 46 per cent QOQ decline, falling to 795. This was the second lowest quarter of developer sales since the Sars-stricken quarter of Q1, 2003.

Said DTZ's senior director for investment advisory services and auction, Shaun Poh, 'With current record high prices, investments by opportunistic investors with short-term approaches are likely to decline. More long-term investors have entered the market and are looking at core assets in good locations.'

The rental market remained stable, with consumer spending remaining stable amid a high employment rate. Retail sales for January 2008 rose 15.5 per cent year-on-year (YOY).

Removing the price effect, retail sales rose 1.5 per cent YOY. DTZ said occupancy of retail space is expected to remain high, at above 90 per cent.

'The outlook for retail rents remains positive on a selective basis. Rents in well-positioned malls are expected to continue to increase, particularly for prime units in Orchard Road,' said Anna Lee, DTZ's retail associate director.