Singapore’s 2023 property investment volumes to fall short of last year’s totals

Investments totalled $32.1b in 2022.

As interest rates approach their peak, investment volumes in Singapore could start to pick up in H2 2023 though this year’s overall tally will likely end lower as compared to 2022’s $32.1b figure, according to a report by Cushman and Wakefield.

The private residential sector is likely to lead volumes in 2023, as developers have continued to show site acquisition interest amidst still-low levels of unsold inventory and resilient underlying buyer demand. Recent tender closings of Marina Gardens Lane and Tampines Avenue 11, both of which are large sites, drew four and three bids respectively.

Here’s more from Cushman and Wakefield:

The upcoming tender closing of several GLS sites at Champions Way, Jalan Tembusu and Lentor Central in H2 2023 will likely garner moderate number of bids from developers. However, the enbloc market remains challenging due to a gap in buyer-seller expectations. Developers face heightened development risks and are more price sensitive. New floor area definitions, which have taken effect as of June 2023, would temper developer bids as developers look to maintain their profit margins. On the other hand, sellers face higher replacement costs as home prices have gone up significantly since 2020.

Recent cooling measures which have largely targeted the private residential market are expected to funnel developers’ acquisition interest towards the mid-tier and mass market segments where demand is largely dominated by local demand and prices are more affordable. Given that cooling measures are expected to remain in place for an extended period, the non-residential sectors such as commercial, industrial and hospitality would attract higher levels of interest from foreign investors.

Even though interest rates have shown signs of stabilization, it is expected to remain elevated. Given tight financing conditions, investment opportunities of palatable quantum (< $200 million) will continue to be in favour. We anticipate healthy investor interest for small commercial buildings or CBD strata offices, CBD conservation shophouses, small freehold industrial sites and hotels.

Leveraging Singapore’s status as a neutral safe haven, cross-border investments should continue to flow into Singapore amidst a multi-power world order. This dynamic could continue to lead to record-breaking transactions in certain markets despite a poor investment climate.