According to Wong Xian Yang, the head of research for Singapore & Southeast Asia at C&W, the estimated value of capital market property deals in Singapore for January to November this year has reached $25.8 billion. This represents a significant 40.2% increase from last year’s $18.4 billion. C&W defines capital market transactions as deals with a value exceeding $10 million.
Wong further adds that almost 60% of the capital market deals were made in the second half of 2024, driven by growing investor interest and confidence in potential interest rate cuts by the US Treasury. This year saw three deals exceeding $1 billion, all of which were made in the second half of the year.
The highest-value transaction in terms of absolute price was the sale of a 50% stake in ION Orchard mall for $1.85 billion to CapitaLand Integrated Commercial Trust (CICT) on September 3. The seller was CapitaLand Investment (CLI). The remaining 50% stake is held by Hong Kong-listed property developer Sun Hung Kai Properties.
ION Orchard is an eight-storey retail mall situated in the heart of the shopping district, with direct access to the Orchard MRT Station. It boasts a net lettable area of about 623,000 sq ft and is home to over 300 international and local brands. On top of the mall is a luxurious 54-storey, 175-unit condo tower, The Orchard Residences.
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The highest-valued office deal of the year was the sale of Mapletree Anson for $775 million in the second quarter of 2024. This surge in investment value can be attributed to a significant increase in investor interest in the industrial sector, which saw investments of up to $5.6 billion in just the first 11 months of 2024. This represents a 174% increase from the previous year.
One of the key industrial deals this year was the $1.6 billion sale of a portfolio of seven industrial properties in Soilbuild Business Space REIT to a joint venture platform owned by private equity firm Warburg Pincus and Australia-listed Lendlease Group in August. This portfolio includes 4.5 million sq ft of business parks and specialist facilities in industries such as life sciences, technology, advanced manufacturing, and logistics.
The second-largest capital market deal of the year was the sale of two data centres to Singapore-listed Keppel DC REIT for $1.38 billion. The two data centres, Keppel DC Singapore 7 and Keppel DC Singapore 8, are fully contracted to cloud services, internet enterprises, and telecommunications providers.
According to Tricia Song, the head of research for Singapore and Southeast Asia at CBRE, investors have been directing their capital towards the industrial sector due to its positive carry amid a high-interest rate environment. However, she expects a moderation in industrial rent growth in 2025, which could impact yields.
Despite the unsuccessful sale of several Government Land Sales (GLS) sites this year, residential development sites sold via GLS tenders continued to form the bulk of total investment sales, making up 42% of the total value. This year, four GLS sites on the Confirmed List for 2024 failed to be awarded due to low bids, driven by site-specific concerns and development risks.
Looking ahead to 2025, both C&W and CBRE expect to see an increase in high-value capital market deals. The US Federal Reserve is expected to cut interest rates further next year, which will likely drive the rebound of capital values. Wong is optimistic that investment sales volumes will continue to increase in 2025 as investors prepare for this potential rebound. However, CBRE cautions that a slower-than-expected recovery is possible if interest rate cuts are lower and slower than market expectations. Barring any macroeconomic shocks, CBRE Research predicts a 10% growth in investment volumes from 2024.