BT : Office investment deals surge in Q3

Business Times - 01 Oct 2010

PROPERTY
Office investment deals surge in Q3

Retail property deals jump from $6.8m in Q2 to $250m in Q3

By UMA SHANKARI

THE property investment market gained further momentum in the third quarter of this year, as transactions in the rebounding office sector crossed $1 billion - a level not breached since Q2 2008.

And the tally does not include deals for Chow House, Samsung Hub and Chevron House, which are pending legal completion.

Figures compiled by DTZ Research show office investment deals more than quadrupled quarter on quarter in Q3 to $1.7 billion, driven by the sale of DBS Towers 1 & 2. The $870.5 million that Overseas Union Enterprises paid for the two buildings accounted for half of all office sales.

Deals involving retail properties also jumped significantly, from just $6.8 million in Q2 to $250 million in Q3, partly due to the sale of 287 strata-titled units in Chinatown Point to a consortium led by Perennial Real Estate Group.

'The upturn in the commercial property market is creating opportunities for buyers and sellers,' said Shaun Poh, senior director for investment advisory services and auction at DTZ. 'More sales are envisaged in the next few months as a few deals are being finalised.'

Growing demand is likely to be hampered by a lack of supply, he said. Total investment sales in Q3 rose to $6.1 billion, up 23 per cent from $5 billion in Q2 2010.

Residential property investments hit $1.9 billion in Q3, accounting for the largest share - about 30 per cent - of all investment purchases.

Unlike in Q2 2010, when investments were mainly geared towards government land sales of residential sites, the private sector had a 59 per cent share of all residential transactions in Q3.

More than half of the private residential investment amount came from the collective sale market. Bulk purchases of luxury condominium units by institutions and funds accounted for the rest.

Collective sale deals totalled $634.8 million in Q3 2010, up from $329.9 million in Q2.

In contrast, government land sales of residential sites were less buoyant. After 15 sites were sold in the first half of the year, and with plenty of parcels yet to be released, government sales of residential sites fell 59 per cent quarter on quarter to $760.9 million in Q3.

The industrial segment gained ground during the quarter, with transactions rising 65 per cent quarter on quarter to $758.3 million.

Investment figures compiled by DTZ Research comprise transactions of more than $5 million. They exclude about $1.4 billion of transactions involving single residential units, lots that cannot be redeveloped or subdivided and deals deemed to be interested person or party transactions.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.