2024 set to be a better year for real estate investment values
Image: Supplied.
  • Residential and retail investments are expected to lead.
  • A potential rate cut later in the year could help the market.
  • Retail assets currently have high yields.

This year is set for a 10% improvement on 2023’s results for total investment sales values in Singapore, according to the latest from Savills Research.

Investment sales values for this year are forecasted to come in between S$22 billion to S$23 billion, a circa 10% improvement on last year’s S$20.5 billion.

“I expect to see more investment activity in 2024 than in 2023 as investors come out of hibernation,” said Savills Singapore’s managing director of investment sales and capital markets, Jeremy Lake.

“Inflation is falling, interest rates have peaked and “the glass is half full” for some investors.”

Jeremy Lake, Savills Singapore

Lake said he foresees deals across all the various asset classes, with: “… developers, ultra-high-net-worth private buyers, and funds telling us they intend to buy in 2024.”

“We just launched the very prime Scotts Square retail mall for sale, and the interest we have received from potential buyers in Singapore and the region has been very strong, reaffirming our positive outlook for the investment market in 2024.”

While economic headwinds remain this year, residential and retail investments are expected to pull from the front, particularly with more activity in the Government Land Sale (GLS) market and the prospect of interest rates falling in the second half of this year.

“The collective sales market for residential is likely to see another year where developers exercise caution and be more inclined to replenish their landbank from the GLS sites,” said Savills Singapore’s executive director of research and consultancy, Alan Cheong.

“Retail assets may see better transaction prospects this year, with yields hovering at a high of 4%.”

Alan Cheong, Savills Singapore

“Risks are lower for prime suburban malls and buyers may be motivated to commit to sales, especially when prime stock available is scarce.

“Even Orchard Road, the lack of new sites for retail development may bring about a sale or two of certain landmark malls in 2024.”

Q4 2023 results

Sales figures dropped between the third and final quarter of 2023, down to S$5.4 billion from S$7.3 billion.

Aside from the year-end holiday season, Savills Research noted factors that led to the decline included:

  • Weaker investor sentiment amid ongoing economic uncertainty,
  • High interest rate environment,
  • Mismatch of price expectations between buyers and sellers, and
  • Rigorous due diligence checks to prevent money laundering.

The majority of the Q4 total investment value came from the public sector, at 54.5%. This included six land parcels under the GLS programme awarded for a total value of circa S$2.9 billion. The remaining 45.5% came from the private sector, recording S$2.4 billion in transactions for the quarter.

Residential investment sales were in line with the previous quarter, recording a transactional value of S$3.5 billion for the fourth quarter. The residential sector achieved S$10.3 billion in 2023.

The vast majority (82%) of Q4 sales value was from the award of four GLS sites, totalling $2.8 billion. The sites comprised three private non-landed residential parcels, and one executive condominium site.

The commercial sector saw Q4 investment sales come in at S$1.6 billion, all from 13 transactions in the private sector. While transaction volumes declined 35% quarter on quarter, values only slipped 0.9%. Savills Research said this was largely attributed to a few block transactions, with the largest deal being the collective sale of Shenton House, at a reported land rate of about S$1,885 per square foot per plot ratio.

In 2024, the total number of GLS sites awarded is likely to see a higher number than 2023, with spillover tenders closing from the 2023 GLS Programme and those from the first half of the 2024 GLS Programme that are expected to close in the second half of the year.

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