Singapore real estate investments drop 36.9% to USD4.9b in Q2

Find out why Colliers says this was still an ‘admirable’ performance.

Investment volumes for Q2 2022, driven mainly by government land sales, collective sales and office sales, stood at SGD6.835 billion (USD4.953 billion), a 36.9% QOQ decline following a strong quarterly performance in Q1, according to preliminary data from Colliers.

“The performance in Q2, despite the QOQ drop, was admirable in that it retained the momentum from previous quarters and helped bring the year-to-date total to SGD17.662 billion (USD12.798 billion), or 62.4% of the SGD28.324 billion (USD20.826 billion) recorded in all of 2021,” the analyst said.

Here’s more from Colliers:

Investment activity was centred around a mix of government land sales (e.g. Dunman Road site for SGD1.284 billion), office deals (e.g. a 49% stake in Comcentre for SGD798.7 million) and collective sales (e.g. Golden Mile Complex for SGD700 million). The robust market activity also underlined the positive outlook for the rest of the year despite the presence of macroeconomic uncertainties and geopolitical headwinds.

Forecast 

The search for higher returns and efforts to hedge against uncertainty will drive demand for recession-proof assets, such as prime office space, logistics assets and suburban retail. 

Furthermore, with ample funds targeting a limited supply of stock, assets in prime locations will continue to see capital growth. In the industrial space, cap-rate compression could result in greater allocations to development or redevelopment projects. 

Finally, we expect continued interest in prime retail and hospitality assets - beneficiaries of the government’s decision to ease travel restrictions. However, as borrowing costs increase, the pace of deals may slow down as investors turn more cautious and selective