Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) today releases its Q2 2024 Singapore Investment Market Report and Outlook. Key highlights include:   

• Around SGD 6.5 billion of investments were recorded in Q2 2024, boosted by a handful of large Government Land Sales (GLS) tenders, which accounted for SGD 3.2 billion (48.6%) of the total in the quarter. As a result, investment volume increased by 64.1%/71.1% QOQ/YOY.  
• Excluding the GLS deals, investment volume this quarter would show a more modest increase of 23.2%/7.0% QOQ/YOY. This was supported by the Office (37.0%), Residential (27.0%), and Mixed (14.6%) sectors.  
• The pickup in transaction volumes during the quarter signals the confidence investors have in the Singapore real estate market and its assets, though significant gaps in price expectations between buyer and seller are still inhibiting some deals.   

As demonstrated by some of the transactions this quarter, investors are looking to redevelopment opportunities to provide higher returns in this low yield environment. It helps that this strategy does not add on too much risk in a stable market like Singapore. Consequently, there appears to be a ready pool of buyers and investors for assets with redevelopment potential. 

In the second half of 2024, the pace of divestments is expected to pick up, especially for REITs to free up debt headroom, and that divestments in Singapore are likely to be accretive to shareholders, given that exit yields are still likely to be below the borrowing costs for floating rate debt.  
As such, more REITs and institutional funds will look to recycle, redevelop and optimise their portfolios with higher yielding assets.  

In the meantime, despite the government’s efforts to ramp up housing supply in the latest 2H 2024 government land sales program, bidding enthusiasm for GLS sites has tapered as a result of slower sales, higher construction costs, changes in regulations reducing saleable GFA efficiency and more cautious developer appetite for high end properties post the imposition of the 60% ABSD for foreign buyers. 

Nevertheless, there are still some plum sites which could attract competitive bids from developers closing in the second half of 2024.  

Against a backdrop where there are more sellers than buyers, there will be more downward pressure on prices. In addition, with the impending interest rate cuts, the price expectation gulf between buyer and seller will narrow which could lead to more deals coming to fruition.   

Total Investment Sales  

Source: Colliers 

Investment Sales Value by Sector 

Investment sales by sector: Q2 2024 (S$ million, %) 

Source: Colliers 

Mr Melvin Chay, Director of Capital Markets & Investment Services, Singapore at Colliers says, “Recent transactions show that more companies and institutions are willing to sell their stabilised and performing assets to lower leverage or free up capital, and to recycle the proceeds to acquire higher-yielding assets with more upside potential.”  

Ms Catherine He, Head of Research, Singapore at Colliers adds, “Limited yield expansion in Singapore might make assets here of less relative value compared to other markets; this could also compel asset owners to sell their assets here to avoid losses overseas, thereby putting more pressure on capital values.” 

Download Q2 2024 Singapore Investment Market Report and Outlook here.

For further information, please contact Melvin Chay, Director of Capital Markets & Investment Services Colliers Singapore and Catherine He, Head of Research Colliers Singapore as the details below.