The capital market property deals in Singapore have experienced a significant boost with an estimated value of $25.8 billion between January and November this year, according to Wong Xian Yang, head of research for Singapore & Southeast Asia at C&W. 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 a growing investor appetite and increased confidence in interest rate cuts by the US Treasury. In 2024, there were three deals worth over $1 billion, all made in the second half of the year. The highest-value transaction was the sale of a 50% stake in ION Orchard mall for $1.85 billion to CapitaLand Integrated Commercial Trust (CICT) on September 3, with the remaining 50% stake held by Hong Kong-listed property developer Sun Hung Kai Properties.
ION Orchard is an eight-storey retail mall located in the middle of the shopping belt and directly linked to the Orchard MRT Station. It spans approximately 623,000 square feet and houses over 300 international and local brands. On top of the mall is The Orchard Residences, a 54-storey, 175-unit luxury condo tower.
The surge in investment value this year was largely driven by the industrial sector, which saw a 174% increase in transaction value from the previous year, reaching $5.6 billion in the first 11 months of 2024. The biggest deal in this sector was the $1.6 billion sale of a portfolio of seven industrial properties in Soilbuild Business Space REIT to a joint venture (JV) owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. This portfolio includes 4.5 million square feet of business parks and specialist facilities across various industries.
Despite the unsuccessful sale of several Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders formed 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 master developer white site in the Jurong Lake District, a white site at Marina Gardens Crescent, a site at Media Circle fully zoned for long-stay serviced apartments, and a site at Upper Thomson Road that included an SA2 component.
According to Wong, the main reason for the unawarded sites was their low bid prices, driven by site-specific concerns and development risk, exacerbated by interest rate concerns. However, this trend is not expected to continue in 2025, with the new sites on the Confirmed List being well distributed across Singapore and near amenities and MRT stations.
Wong predicts that developers will increase their land acquisition activities in the coming year, although they will do so with caution and selectivity. In November, a 50:50 JV between UOL Group and CapitaLand Development purchased the 255-unit Thomson View condo for $810 million. The site, which spans 504,314 square feet, will be redeveloped into a 1,240-unit residential project.
With Condo investment, there is the added advantage of leveraging the property’s value to make further investments. As a popular choice of collateral, investors often use their condos to secure additional financing for new ventures, allowing them to expand their real estate portfolio. This approach may lead to higher returns, but it also carries risks that must be carefully considered. It is essential to have a solid financial plan and factor in the potential impact of market fluctuations before pursuing this strategy.
The retail sector also showed signs of further recovery, with a 149% year-on-year increase in investment value, reaching $3.3 billion between January and November. Meanwhile, the office segment recorded $2.37 billion in investment value, marking a 15.7% year-on-year increase. On the other hand, the shophouse market saw a 49.7% decline in investment value, falling to $584 million, potentially due to investor sentiments following money laundering investigations in August 2023.
Despite the uncertainties of the market, Wong remains optimistic about an increase in high-value deals in 2025, citing an expected cut in interest rates by the US Fed. CBRE Research expects investment volumes to grow by 10% in 2025, barring any macroeconomic shocks.