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 estimated to have reached $25.8 billion between January and November of this year, representing a significant increase of 40.2% 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. In fact, 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 was CapitaLand Investment (CLI), with Hong Kong-listed property developer Sun Hung Kai Properties holding the remaining 50% stake.
ION Orchard is an eight-storey retail mall in the heart of the shopping belt and is directly linked to the Orchard MRT Station, a major 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. Located on top of the mall is The Orchard Residences, a 54-storey, 175-unit luxury condo tower.
In addition to this, Mapletree Anson was the highest-valued office deal of the year, selling for $775 million in the second quarter of 2024.
Industrial sector sees surge in investment
One of the major factors contributing to the bump in investment value this year was a surge of investor interest in the industrial sector. In the first 11 months of 2024 alone, investments in this segment reached $5.6 billion, marking a 174% increase in transaction value from the previous year.
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The biggest deal in the industrial sector was the $1.6 billion divestment of a portfolio 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. This portfolio comprised of 4.5 million sq ft of business parks and specialist facilities across various industries such as life sciences, technology, advanced manufacturing, and logistics.
The portfolio was sold by a 50:50 JV between global asset manager Blackstone and Lim Chap Huat, executive chairman of Soilbuild Group. This deal was also the second-largest capital market deal in 2024.
The third-largest deal of the year was the sale of two data centres to Singapore-listed Keppel DC REIT for $1.38 billion. These two data centres, known as Keppel DC Singapore 7 and Keppel DC Singapore 8, are fully equipped for large-scale data processing and are currently fully contracted to cloud services, internet enterprises, and telecommunications providers.
Investment volumes in the industrial sector are expected to hit a five-year high according to Wong, driven by high liquidity and investors’ preference for new economy assets like prime logistics and life science assets.
Unsuccessful sale of GLS sites in 2024
Despite the successful sale of several Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders continued to make up the bulk (42%) of total investment sales for the year. However, some GLS sites were not awarded in 2024, including the 6.5ha master developer white site in the Jurong Lake District (JLD), the 1.73ha white site at Marina Gardens Crescent, the 62,046 sq ft site at Media Circle, and a 262,875 sq ft site at Upper Thomson Road (Parcel A).
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 the Urban Redevelopment Authority (URA) as they were deemed too low. Meanwhile, the Upper Thomson Road site closed in June without any bids.
Wong attributes the reason for these unawarded sites to low bid prices and site-specific concerns such as large land quantum or untested markets. Interest rate concerns and development risks also played a role in the lack of bids.
Retail and office sectors show signs of recovery
Investment in Singapore’s retail sector saw notable year-on-year growth, with deals involving retail assets reaching $3.3 billion between January and November of this year, marking a 149% increase from the previous year. According to Wong, this increase can be attributed to rising investor interest in the retail sector due to steady operating fundamentals.
The office sector also showed signs of recovery, recording $2.37 billion in investment value this year, marking a 15.7% year-on-year increase. This was driven by the normalization of return-to-office trends and a narrowing price gap between buyers and sellers, which has supported the recovery of office deals.
On the other hand, the shophouse market saw a 49.7% year-on-year decrease in investment value, with only $584 million recorded this year. This could be attributed to dampened investor sentiments following money laundering investigations in August of 2023.
More capital market deals expected in 2025
Despite the challenges faced in 2024, Wong remains optimistic about an increase in high-value deals next year. He believes that with the US Federal Reserve expected to make further interest rate cuts, investment sales volumes will continue to increase in 2025.
However, Wong also points out that while borrowing costs are falling, they still remain higher compared to pre-pandemic levels. This could lead to more asset owners bringing their assets to the market in an attempt to rebalance their portfolios before facing higher financing costs in the future.
CBRE’s Song also expects institutional investors to return to the market next year, but cautions that a slower-than-expected recovery could occur if interest rate cuts are slower and lower than market expectations. However, barring any macroeconomic shocks, CBRE Research predicts a 10% increase in investment volumes from this year for 2025.