Singapore real estate investments up 5.3% to S$24.5b for full-year 2021

The residential market dominated the investments especially in Q4.

A report by Knight Frank reveals that Singapore’s real estate market raked in a total of S$25.8 billion in investments for the whole year 2021, marking a 5.3% increase from last year. Investment deals in Q4 alone were worth S$7.3 billion, S$2.8 billion of which were from the residential sector.

According to Knight Frank, this included the sale of a penthouse unit at Les Maisons Nassim for S$75 million (S$6,201 psf) in late October, as well as a Good Class Bungalow (GCB) within the Kilburn Estate GCB Area (GCBA) where it was reported that crypto billionaire Zhu Su was in the process of acquiring the detached house at S$48.8 million (S$1,532 psf on land). 

Here’s more from Knight Frank:

The collective sale market also started to gain momentum in Q4 2021, comprising five en bloc deals that were sealed from October to December. This included the sale of Peace Centre and Peace Mansion topping the list at S$650 million, acquired by a joint venture (JV) of CEL Development, Sing-Haiyi Crystal and Ultra Infinity. Watten Estate Condominium was sold for S$550.8 million to a UOL-SingLand JV. 

Despite the encouraging en bloc activity with homeowners of ageing projects growing increasingly hopeful, the imposition of cooling measures on 15 December 2021 has given pause to the market. In addition to the risks of escalating construction costs, developers also have to contend with pressure stemming from the increased Additional Buyers’ Stamp Duty (ABSD) rate for entities from 25% to 35%.

Nevertheless, the lack of a substantial increase in the potential number of residential units in the H1 2022 Government Land Sales (GLS) lists may prompt land-starved developers to continue to consider acquiring private parcels going the collective sales route. Even so, developers are likely to adopt a more cautious approach, preferring modestly-sized sites with a potential of about 200 units or less, in order to mitigate the risk of not qualifying for the 35% ABSD remission within five years. 

The commercial market segment stayed relatively buoyant in 2021, as the upcoming supply of such space remains limited. A key commercial deal in Q4 included the divestment of CapitaLand Integrated Commercial Trust (CICT) and FWD Group’s JV stakes in One George Street for a total consideration of S$1.3 billion (S$2,875 psf) to a JV between Nuveen Real Estate and JP Morgan Asset Management. 

Strata offices together with shophouses continued to retain its lustre, with these assets regarded as safe havens for investment. With cooling measures casting a pall of uncertainty in the residential market, there might be some spill-over investor demand into the commercial arena that is exempted from ABSD. 

This could possibly translate into interest in the CBD Incentive Scheme sometime in 2022 where older commercial buildings are acquired in anticipation of a possible long-term global rebound from 2023 when air travel worldwide is expected to return to pre-pandemic levels. 

Riding on the stable growth momentum in 2021, the sale of 71 Tagore Lane and 351 On Braddell in Q4 for S$272.8 million and S$121 million respectively formed the bulk of the total investment value in the industrial sector, amounting to some S$752.2 million.