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Singapore's meagre real-estate quarter

The upheaval in global financial markets and the deflating world economy continued to weigh on Singapore's real-estate investment market in the first quarter, says global real-estate services firm Colliers International.

The unprecedented crisis has eroded market confidence, resulting in declining property prices and slow investment activity, and this has been exacerbated by a cautious lending policy adopted by banks, the company said in a report.

The total value of investment sales in the first quarter fell 58.8 per cent quarter on quarter to 242 million Singaporean dollars (Bt5.7 billion). This was a mere 1.9 per cent of the $12.69-billion investment sales amassed during the height of the market in the third quarter of 2007.

Private investment sales accounted for all of the transactions in the first quarter. There were no land-banking activities in the public sector following the Singapore government's suspension of the Confirm List 1 under its Government Land Sale programme for the first half of 2009 in response to the uncertain market outlook.

In the private sector, institutional investors steered clear of the investment sales market in the first quarter, after picking up properties totalling $63 million in last year's fourth quarter.

The residential sector accounted for $177.72 million, or 73.4 per cent of all investment sales in the first quarter of this year - a 40.3-per-cent increase over total residential property transactions in the fourth quarter of 2008.

One of the major transactions was the sale of Le Mercier House on Mohamed Sultan Road to Ka$h International for $35.8 million, or about $9,687 per square metre. The site can be redeveloped into a 15-storey apartment block.

In the commercial sector, Courts Singapore sold a freehold property on Upper Bukit Timah Road in the first quarter to Sim Lian Holdings for $25 million, or about $5,154 per square metre. An entire floor on the 32nd storey of Suntec City One was also bought by a Hong Kong investment company from an entity linked to a German company for $16.53 million, or about $13,988 per square metre. The industrial sector recorded only two investment sale transactions, for a total of $17 million, in the first quarter.

Given expectations of a prolonged downturn in global economies as well as a more stringent borrowing environment, investment sales volume in Singapore is expected to remain thin over coming quarters, Colliers International said.


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