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Singapore posts 78% fall in property investment volume in Q1: report
SINGAPORE experienced a steep decline in real estate investment volume in the first quarter this year, with transactions tumbling 78 per cent year on year (y-o-y) to US$432 million, according to Real Capital Analytics’ (RCA) Asia-Pacific (Apac) Capital Trends report.
The steep drop was partly due to the comparison with a record year in 2019, though the number of deals also fell significantly to just 13 deals for the quarter, representing a 32 per cent decline from the previous year.
Like the rest of the region, the volume of deals above the US$250 million mark fell the hardest, with only Hong Kong faring worse than Singapore, RCA noted in a press statement on Thursday.
David Green-Morgan, RCA’s managing director of analytics for Apac, said: “Singapore saw high investment volumes in 2019 and despite the slowdown this quarter, it remains a global destination. It will see a further dip, but once yields cross a certain threshold, deal volumes should come back.”
Across the Asia-Pacific region, real estate investment volumes nosedived by 50 per cent y-o-y to US$21.3 billion in Q1 2020, as the Covid-19 outbreak spread from China to other key markets in the region, the report stated.
Amid the slump in transaction activity to levels last seen during the global financial crisis, South Korea has been Asia-Pacific’s standout market so far this year, bucking the trend with a double-digit or 12 per cent growth in investment volumes to US$4.53 billion for the first three months this year.
“On the whole, activity in 2020 looks on track to be significantly below last year’s near record of US$170.3 billion, but the headline figures may overstate the extent of the investment weakness,” RCA said.
It added that many transactions under contract that were expected to be completed in the first quarter have been delayed, leading to a “bulging pipeline” of pending deals which were US$8 billion over the average level for the last two years.
Mr Green-Morgan noted that there have been few indications of deals being terminated so far, suggesting that investors are adopting a wait-and-see approach rather than entering panic mode.
He added that the wave of the pandemic is further along in Asia-Pacific than other regions and most signs suggest that Asia-Pacific may already be at, or near, the bottom of the investment slump.
“China already started to relax restrictions on its population as early as March and if other countries are able to follow suit, without unleashing a second major outbreak, the economic downturn may be shorter,” said Mr Green-Morgan.
Elsewhere in the US and Europe, there were 11 real estate investment deals of over US$1 billion in the first quarter, compared to none in the Asia-Pacific.
Going by sectors, the weakness in investment sentiment for the first quarter affected all property sectors, though industrial properties held up the best, RCA said. Investment volumes for the industrial sector fell by a relatively modest 10 per cent, in contrast to declines of more than a third for the other property sectors.
“Investors have already been retreating from office and retail properties over the past 12 months, and the Covid-19 pandemic exacerbated this slide,” RCA noted.
Source: https://www.businesstimes.com.sg/real-estate/singapore-posts-78-fall-in-property-investment-volume-in-q1-report