Singapore’s capital market property deals estimated to reach $25.8 billion cash in 11 months
According to Wong Xian Yang, head of research for Singapore & Southeast Asia at C&W, the total value of capital market property deals in Singapore is expected to reach $25.8 billion between January and November this year. This represents a significant 40.2% year-on-year increase from the $18.4 billion recorded in 2023. C&W defines capital market transactions as deals with values exceeding $10 million.
Wong states that nearly 60% of the capital market deals were transacted in the second half of 2024, driven by growing investor appetite and increased confidence in interest rate cuts by the US Treasury. Three deals exceeding $1 billion were made in 2024, all of which were transacted in the second half of the year.
The highest-value transaction by absolute price was the sale of a 50% stake in ION Orchard mall for $1.85 billion to CapitaLand Integrated Commercial Trust (CICT) on September 3. The seller, CapitaLand Investment (CLI), was acquired by Hong Kong-listed property developer Sun Hung Kai Properties.
ION Orchard, a popular eight-storey retail mall located in the heart of the shopping district and directly linked to Orchard MRT Station, has a net lettable area of about 623,000 sq ft and features over 300 international and local brands. On top of the mall is the luxurious condo tower, The Orchard Residences, which boasts 54 storeys and 175 residential units.
Mapletree Anson, sold for $775 million in the second quarter of 2024, was the highest-valued office deal of the year.
The surge in investment value this year was driven by heightened investor interest in the industrial sector. In just 11 months, investments in this segment reached $5.6 billion, reflecting a 174% increase in transaction value from the previous year.
The largest deal in the industrial sector was the $1.6 billion sale of a portfolio consisting of seven industrial properties in Soilbuild Business Space REIT to a joint venture (JV) platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. The portfolio comprises 4.5 million sq ft of business parks and specialist facilities in various industries such as life sciences, technology, advanced manufacturing, and logistics.
The divestment of this portfolio was the second-largest capital market deal in 2024. The third-highest valued transaction of the year was the sale of two data centres to Singapore-listed Keppel DC REIT for $1.38 billion. The seller was a 60:40 JV between Keppel and Cuscaden Peak Investments. These two data centres, Keppel DC Singapore 7 and Keppel DC Singapore 8, have the capacity for large-scale data processing and are fully contracted to cloud services, internet enterprises, and telecommunications providers.
Wong expects transaction volumes in the industrial sector to reach a five-year high, reflecting high liquidity in the sector and investor preference for new economy assets such as prime logistics and life science properties.
Despite several unsuccessful sales of Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders continued to dominate 42% of total investment sales for the year.
In 2024, four GLS sites on the Confirmed List remained unawarded: a 6.5ha master developer white site in the Jurong Lake District (JLD), a 1.73ha white site at Marina Gardens Crescent, a 62,046 sq ft site at Media Circle fully zoned for long-stay serviced apartments (SA2), and a 262,875 sq ft site at Upper Thomson Road (Parcel A) that included an SA2 component.
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The top bids for three of these sites, JLD ($640 psf per plot ratio (ppr)), Marina Gardens Crescent ($984 psf ppr) and Media Circle ($461 psf ppr), were rejected by URA for being too low. The Upper Thomson Road site closed in June without receiving any bids.
Wong attributes the unawarded sites to the tenders’ low bid prices, driven by site-specific concerns such as large land quantum or untested markets. Interest rate concerns and development risk further exacerbated these factors.
However, CBRE’s Song predicts that this trend of unawarded GLS sites will not continue in 2025, as the new sites on the Confirmed List are well distributed across Singapore and located within walking distance of MRT stations and amenities.
Wong remains optimistic about an increase in high-value deals next year, as the US Fed is expected to continue cutting interest rates. He believes that investment sales volumes will continue to increase in 2025 as investors prepare for a rebound in capital values, driven by lower interest rates.
CBRE’s Song states that investors have been targeting attractively priced assets, resulting in a narrowing price gap between buyers and sellers and supporting the recovery of office deals. However, she foresees a slowdown in office rent growth in 2025, which could also impact yields.
On the other hand, the shophouse market saw a 49.7% year-on-year drop in investment value to $584 million. This is likely due to investors feeling less confident following the money laundering investigations in August 2023.
Looking forward, CBRE Research predicts a 10% increase in investment volumes in 2025, barring any major macroeconomic shocks. Wong expects developers to step up their land acquisition activities with caution and selectivity, as overall borrowing costs remain higher than pre-pandemic levels. He also predicts that institutional investors will return to the market, while CBRE’s Song believes that the capital markets could face a slower-than-expected recovery if interest rate cuts are lower and slower than market expectations.