BT : Investment land sales up 16 times in Q1

Business Times - 25 Mar 2010

Investment land sales up 16 times in Q1

77% of total sales of $4.4b came from private market

By TEH SHI NING

THE investment sales market strengthened further in the first quarter of 2010, as robust sales of residential government land sale (GLS) sites showed developers' hunger for land.

Total investment sales came up to $4.41 billion in the first quarter, 16 times more than the paltry $273.83 million in Q1 last year, a CB Richard Ellis report said yesterday.

Of these, 77 per cent or $3.4 billion came from the private investment sales market, while investment sales in the public sector contributed the remainder.

CBRE's Q1 tally includes land deals, collective sales, transactions of entire office and other buildings as well as strata-titled units above $5 million, which have taken place since the start of the year.

Residential investment sales - including good class bungalow (GCB) sales - chalked up $2.11 billion in transacted value, accounting for 48 per cent of the quarter's total investment sales. This was 27 per cent below the $2.88 billion in residential investment sales recorded for Q409, but is significantly higher than the $149.91 million registered in Q109.

GLS sites sold in the quarter include the Sengkang West Avenue site awarded to City Developments for $200.5 million. A Tampines site sold to Sim Lian Land for $302 million while Far East Organisation was awarded the mixed residential Ten Mile Junction. Two executive condominium sites were also sold during the quarter.

To date, 18 GCBs have been sold for a combined total of $283.61 million. With the GCB market's current momentum, CBRE says a possible 80 to 90 GCBs could be sold in 2010, which translates into $1.2 to $1.4 billion in value.

The commercial investment market was also active in Q1, with $1.08 billion in sales recorded to date, making up 24.5 per cent of total investment sales.

As for the industrial sector, 26 known transactions so far in the quarter made up 26.3 per cent of $1.16 billion of total investment sales.

The CBRE report noted that while many transactions in the industrial sector last year were from end-users, 2010 has seen the return of selective purchases by the real estate investment trusts (Reits) such as A-Reit and MapletreeLog. Cache Logistics Trust, also purchased the six properties which will make up its portfolio when it soon lists.

Jeremy Lake, executive director of investment properties at CBRE said: 'While most of the major investment sales transactions in 2009 were dominated by Asian investors, there is now a diverse pool of buyers. Among these would include local as well as foreign developers competing for GLS sites for residential development. Investment funds are also looking for opportunities.'

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