According to Wong Xian Yang, head of research for Singapore & Southeast Asia at C&W, the total value of property deals in Singapore’s capital market is estimated to have reached $25.8 billion between January and November of this year. This marks a 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 reports that almost 60% of the capital market deals were made 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 took place in the second half of the year.
The highest-value transaction by absolute price in 2024 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 was CapitaLand Investment (CLI). Hong Kong-listed property developer Sun Hung Kai Properties holds the remaining 50% stake.
ION Orchard is an eight-storey retail mall located in the heart of the shopping belt and directly linked to the Orchard MRT Station, serving as an interchange for the North-South and Thomson-East Coast Lines. It boasts a net lettable area of approximately 623,000 sq ft and is home to over 300 international and local brands. The mall also features a 54-storey, 175-unit luxury condominium tower, The Orchard Residences.
Investing in a Singapore Condo has numerous advantages, one of which is the opportunity to utilize the property’s value for future investments. With a condo as collateral, investors can secure additional funding for new ventures and expand their real estate portfolio. While this strategy can boost returns, it also carries certain risks. It is important to have a solid financial plan in place and carefully consider the potential impact of market fluctuations before leveraging your condo for further investments.
In the industrial sector, there was a surge of investor interest this year, with investments reaching $5.6 billion in the first 11 months of 2024, reflecting a 174% increase in transaction value from the previous year. The largest deal in this sector was the $1.6 billion divestment of a portfolio of seven industrial properties from Soilbuild Business Space REIT to a joint venture platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. The portfolio, totaling 4.5 million sq ft, comprises business parks and specialist facilities in areas such as life sciences, technology, advanced manufacturing, and logistics.
Another significant deal in 2024 was the sale of two data centers to Singapore-listed Keppel DC REIT for $1.38 billion. The seller was a 60:40 joint venture between Keppel and Cuscaden Peak Investments. These data centers, Keppel DC Singapore 7 and Keppel DC Singapore 8, are capable of large-scale data processing and are fully contracted to cloud services, internet enterprises, and telecommunications providers.
Despite some unsuccessful sales of Government Land Sales (GLS) sites this year, residential development sites sold through GLS tenders continued to make up the bulk (42%) of total investment sales for the year. However, four GLS sites on the Confirmed List for 2024 failed to be awarded, including 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 zoned for long-stay serviced apartments (SA2), and a 262,875 sq ft site at Upper Thomson Road which included an SA2 component.
Wong explains that the main reason for the unawarded sites was low bid prices, driven by concerns about large land quantum or untested markets, as well as interest rate and development risks.
In November, a 50:50 joint venture between UOL Group and CapitaLand Development agreed to purchase the 255-unit Thomson View condominium for $810 million. The price translates to $1,178 psf per plot ratio (ppr) after factoring in the land betterment charges and lease upgrading premium for a fresh 99 years. The deal was made after the reserve price was reduced from $918 million to $808 million in October. Thomson View sits on a plot of land spanning 504,314 sq ft with a 99-year lease from April 1975 and a plot ratio of 2.1. The developers intend to build a 1,240-unit residential project on the 5ha site.
The retail sector in Singapore also showed significant year-on-year growth in investment value, with deals totaling $3.3 billion between January and November, a 149% increase from the previous year. According to Wong, investor interest in this sector has been rising due to steady operating fundamentals.
The office segment also showed signs of recovery, with CBRE reporting $2.37 billion in investment value this year, a 15.7% increase from the previous year, driven by the normalization of return-to-office trends.
On the other hand, the shophouse market saw a 49.7% year-on-year decline in investment value to $584 million. This is attributed to dampened investor sentiment following money laundering investigations in August 2023.
Wong remains optimistic about an increase in high-value deals next year, as the US Federal Reserve is expected to cut interest rates further. He also expects developers to step up their land acquisition activities, but with caution and selectivity.
CBRE’s Head of Research for Singapore and Southeast Asia, Tricia Song, notes that investors have been deploying capital to the industrial sector due to its positive carry in a high interest rate environment. However, she expects industrial rent growth to moderate in 2025, which could impact yields.
CBRE Research expects investment volumes to grow 10% in 2025, barring any macroeconomic shocks. Wong adds that, should the trend of unawarded GLS sites continue, it could be due to low bidding prices and site-specific concerns such as large land quantum or untested markets.