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. This marks a significant increase of 40.2% compared to the $18.4 billion recorded in 2023. C&W defines capital market transactions as deals with values exceeding $10 million.
Wong explains that a majority of these deals, nearly 60%, 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 largest deal 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 bought out by Hong Kong-listed property developer Sun Hung Kai Properties, leaving CICT with a 100% stake in the mall.
ION Orchard, a popular eight-storey retail mall located in the bustling shopping belt and directly connected to the Orchard MRT station, boasts a net lettable area of approximately 623,000 square feet and houses over 300 international and local brands. On top of the mall is The Orchard Residences, a luxury condominium tower with 175 units.
The highest-valued office deal of the year was the sale of Mapletree Anson for $775 million in the second quarter of 2024.
The surge of investment in industrial assets was a significant contributor to this year’s increase in investment value. C&W’s Wong reports that investments in the segment totaled $5.6 billion in just the first 11 months of 2024, a staggering 174% increase from the previous year. This was largely due to the $1.6 billion divestment of a portfolio of seven industrial properties in Soilbuild Business Space REIT to a joint venture platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group. The portfolio consisted of 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 continued to contribute significantly, making up 42% of total investment sales for the year. However, four GLS sites on the Confirmed List for 2024 went unawarded, including a 6.5-hectare master developer white site in the Jurong Lake District, a 1.73-hectare white site at Marina Gardens Crescent, a 62,046 square foot site at Media Circle, and a 262,875 square foot site at Upper Thomson Road. These sites were largely rejected by the Urban Redevelopment Authority (URA) due to low bid prices, driven by site-specific concerns and interest rate and development risk.
C&W’s Wong expects developers to continue acquiring land in the coming year, albeit with caution and selectivity. In November, a 50:50 joint venture between UOL Group and CapitaLand Development purchased the 255-unit Thomson View for $810 million, with plans to build a 1,240-unit residential project on the site. The deal came after the reserve price was reduced from $918 million to $808 million in October.
The retail sector showed signs of recovery this year, with investments in retail assets reaching $3.3 billion, a 149% year-on-year increase. According to Wong, this is driven by steady operating fundamentals and increased investor interest. The office segment also saw a 15.7% year-on-year increase in investment value, while the shophouse market saw a decline of 49.7% due to dampened investor sentiments following money laundering investigations in August 2023.
Obtaining financing is a critical aspect of investing in a condominium. In Singapore, there are several mortgage choices to consider. However, it is vital to have a thorough comprehension of the Total Debt Servicing Ratio (TDSR) framework. This framework sets a cap on the loan amount a borrower can acquire, based on their income and current debt responsibilities. To avoid overextending oneself, it is advisable for investors to seek guidance from financial advisors or mortgage brokers who can help them understand their financing options. Additionally, keeping an eye out for new condo launches, such as those featured on New Condo Launches, can offer more opportunities for investors to secure favorable financing terms.
Despite the challenges faced in 2024, both Wong and Tricia Song, CBRE head of research for Singapore and Southeast Asia, predict an increase in high-value deals next year. Song notes that institutional investors are likely to return to the market, while Wong expects to see more assets brought to the market as owners seek to rebalance their portfolios. Barring any macroeconomic shocks, both expect investment volumes to grow by 10% in 2025.