The collective selling market gained momentum in the fourth quarter, says Knight Frank.
Real estate investment jumped 5.3% year-on-year (YoY) in 2021, reaching $25.8 billion from $24.5 billion in 2020, according to Knight Frank.
Investments in the fourth quarter (Q4) of 2021 reached $7.3 billion, down from the $14.5 billion recorded in the same period last year. This was driven by residential sales investment volume which came in at $2.8 billion “as demand remains healthy for prime residences.”
He also added that the collective sales market also started gaining momentum in the last three months of the year, consisting of five sealed block deals.
“Despite the encouraging block activity with owners of aging projects becoming increasingly optimistic, the imposition of chilling measures on December 15, 2021 gave the market pause,” he said.
The government raised the buyer’s supplementary stamp duty (ABSD) and tightened the threshold for the total debt service ratio from 16 December. It also tightened the loan-to-value limit for Housing and Development Board loans from 90% to 85%.
Knight Frank also said that the lack of a substantial increase in the possible number of residential units in the first half of 2022 from government land sales listings “could encourage private land developers to continue to consider acquiring private plots through the collective channel,” he said. .
The commercial market remained “relatively buoyant” last year as the supply space ahead remains limited, he said.
“With cooling measures casting a shadow of uncertainty over the residential market, there could be investor demand spilling over into the commercial area which is exempt from [ABSD],” It said.
“This could eventually translate into interest in the CBD incentive program sometime in 2022, where older commercial buildings are acquired in anticipation of a potential long-term global market. rebound from 2023, when global air travel is expected to return to pre-pandemic levels,” he added.
The industrial sector, meanwhile, maintained its steady growth momentum, reaching $752.2 million.
Outbound investment transactions by Singaporean investors amounted to S$20.2 billion in the fourth quarter, up 231.7% year-on-year due to the acquisition of overseas logistics and office assets.
For 2022, Knight Frank said more commercial properties are expected to be acquired as institutional investors seek assets to bolster their portfolios. However, some investors in the luxury residential market may become conservative due to higher ABSD rates for overseas buyers.
“With recently announced cooling measures rocking the block market, owners who are looking to collectively sell their homes will now have to recalibrate their price expectations
to align with the heightened risks developers face if a sale is to be successful,” he said, noting that demand for luxury private homes could also turn conservative as buyers expect price increases are slowing.
“Thus, the investment market over the coming year is expected to show a more subdued performance, with total deal value for the whole of 2022 expected to hover between around S$20 billion to S$22 billion.” , he added.