The total value of capital market property transactions in Singapore is estimated to have reached $25.8 billion between January and November this year, representing a 40.2% year-on-year increase from the $18.4 billion recorded in 2023, according to Wong Xian Yang, head of research for Singapore and Southeast Asia at Cushman & Wakefield (C&W).
C&W defines capital market transactions as deals with values exceeding $10 million. Wong notes that almost 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.
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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 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), while Hong Kong-listed property developer Sun Hung Kai Properties holds the remaining 50% stake.
ION Orchard is an eight-storey retail mall in the middle of the shopping belt and is directly linked to the Orchard MRT Station, now an interchange for the North-South and Thomson-East Coast Lines. It has a net lettable area of about 623,000 sq ft and is home to over 300 international and local brands. The mall also includes a 54-storey, 175-unit luxury condominium tower, The Orchard Residences.
One of the highest-valued office deals of the year was the sale of Mapletree Anson for $775 million in the second quarter of 2024. This surge in investment value was supported by a surge of investor interest in the industrial sector. In the first 11 months of 2024, investments in the segment reached $5.6 billion, a 174% increase from the previous year.
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 platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. The portfolio consisted of 4.5 million sq ft of business parks and specialist facilities in various industries such as life sciences, technology, advanced manufacturing, and logistics.
Soilbuild Business Space REIT is controlled by global asset manager Blackstone and Lim Chap Huat, executive chairman of Soilbuild Group. The divestment of the portfolio was also 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 joint venture between Keppel and Cuscaden Peak Investments. These data centres, 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.
According to C&W’s Wong, transaction volumes in the industrial sector are expected to hit a five-year high, driven by high liquidity in the sector and investors’ preference for new economy assets such as prime logistics and life science assets. However, CBRE’s Tricia Song expects industrial rent growth to slow down in 2025, which could impact yields.
Despite the unsuccessful sale of several Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders continued to make up the majority (42%) of total investment sales for the year.
Four GLS sites on the Confirmed List for 2024 failed to be awarded: 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 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.
According to Wong, the main reason for the unawarded sites was the tenders’ low bid prices, driven by site-specific concerns, such as large land quantum or untested markets. Interest rate concerns and development risks exacerbated these factors.
CBRE’s Song does not anticipate the trend of unawarded GLS sites to continue in 2025, as the new sites on the Confirmed List are generally well distributed across Singapore to cater to a variety of demand and needs. She also notes that most of these sites are within walking distance of MRT stations and amenities.
Wong expects developers to increase their land acquisition activities cautiously and selectively next year. In November, a 50:50 joint venture between UOL Group and CapitaLand Development agreed to purchase the 255-unit Thomson View condo for $810 million. The deal was done after the reserve price was reduced from $918 million to $808 million in October. The 5ha site, which sits on a land plot spanning 504,314 sq ft with a 99-year lease from April 1975 and a plot ratio of 2.1, will be developed into a 1,240-unit residential project.
The retail sector in Singapore also showed promising signs of recovery, with a notable year-on-year growth of 149% in investment value, reaching $3.3 billion. According to Wong, this is due to growing investor interest and steady operating fundamentals.
The office segment also showed signs of recovery, with a 15.7% year-on-year increase in investment value, reaching $2.37 billion. This was driven by a return-to-office trend normalisation.
On the other hand, the shophouse market saw a 49.7% year-on-year fall in investment value, reaching $584 million. This was likely due to dampened investor sentiments following the money laundering investigations in August 2023.
C&W’s Wong remains optimistic about seeing an increase in high-value deals next year, especially with the expected interest rate cuts by the US Fed. He also points out that while overall borrowing costs are falling, they remain higher than pre-pandemic levels. Wong believes that asset owners will seek to divest to rebalance their portfolios, resulting in more assets brought to the market next year.
CBRE’s Song also expects institutional investors to return to the market after sitting on the sidelines, although she notes that a slower-than-expected recovery may occur if the US Fed’s interest rate cuts are slower and lower than market expectations.
Barring any macroeconomic shocks, CBRE Research predicts a 10% increase in investment volumes in 2025 from 2024.