Singapore office investment volume hits 6-year high in 2022

Investments surged 54% to $7.3b for the whole year.

According to a CBRE report, preliminary real estate investment volumes in Singapore for Q4 2022 declined 55.6% q-o-q to $3.194 bn, mainly on sharp falls in retail and residential asset sales. 

“Investor sentiment remained cautious amid sustained rate hikes and the deteriorating global macroeconomic backdrop. Despite softening investor sentiments over H2 2022, full year 2022 investment volumes came in at $30.293 bn, equivalent to a 9.8% increase y-o-y, on very strong volumes in H1 2022,” the report added.

Here’s more from CBRE:

Office investment volumes declined 32.2% q-o-q and 63.8% y-o-y in Q4 2022 on a lack of big-ticket sales, as fast-rising financing costs diminished yield spreads for institutional investors. Apart from the sale of a 50% stake in Lazada One, transactions mainly consisted of smaller strata office units purchased by non-real estate companies or private individuals for own use or investment. 

Despite the slowdown in H2 2022, full year office investment volumes tallied $7.302 bn, an increase of 53.6% from 2021, and the highest since 2016. 

Hotel and retail investments rose in 2022 in anticipation of tourism recovery 

Industrial investment volumes increased 28.7% q-o-q in Q4 2022 mainly on a portfolio sale, but full year volumes declined in the absence of large REIT M&As. On the other hand, despite a weak H2, a strong H1 brought full year hotel and retail volumes to rise three-fold and five-fold respectively from 2021’s levels. The residential investment sales declined in 2022 as the increase in GLS volumes was more than offset by declines in sales in GCBs and luxury apartments. 

Capital values and yields firm in Q4 2022, investment volumes to hold firm in 2023 

Capital values and yields mostly held firm in Q4 2022. Looking ahead, 2023 could be a year of two halves as interest rates could peak and stabilise. While investors are adopting a wait-and see approach, Singapore’s strong fundamentals and strength of ownership, coupled with the expected continuation of rental growth, will reignite investors’ interest to acquire assets when interest rates stabilise. As such, CBRE Research expects investment volumes to pick up in H2 2023, and full year volumes to be comparable with 2022’s.