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Slow start to 2023 for real estate investment sales amid market uncertainties: Knight Frank

. Singapore’s real estate investment sales got off to a slow start in 2023, let down by the country recording just $4.2 billion of investment sales during the first quarter. This was a marked decrease of 61% compared to the same period in 2022.

The residential market had its own share of challenges, with only $1.6 billion of deals made during the first three months of the year. However, the sale of Holland Tower is the first successful residential en bloc transaction in the Core Central Region since property cooling measures were imposed in December 2021. This suggests that there is a developing interest for prime locations for development sites, as the nation waits for signs of recovery from the pandemic.

Frasers Centrepoint Trust and Frasers Property paid $652.5 million for a 50% stake in Nex, one of the notable transactions that took place in the commercial sector. The industrial market followed suit, recording a 62.8% q-o-q increase in investment sales to amount to $681.1 million. Knight Frank attributes this to the market shifting focus while it waits on the possibility of repricing of assets in the commercial sector.

However, it is still proving to be a difficult environment for en bloc sales, with a success rate of around 33% since 2021 until present. Owners are expected to adopt reasonable expectations on price in order to pique the interest of developers and complete successful sales.

Knight Frank has revised its forecast for full-year investment sales, expecting a range between $20 billion and $22 billion. The consultancy predicts that the pace of investment activity in Singapore “to get worse before it gets better”, given the current macroeconomic uncertainties and volatility in the global banking sector. Investors are anticipated to remain cautious as they monitor for signs of repricing before deciding on their next move.

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