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UOL Venture Investments to acquire Suntec REIT ManagerInvestment sales value in real estate sector rebounds in 1Q2023Ultra-high net worth individuals (UHNWIs) continue to drive up Singapore’s real estate investment sales value despite global economic challenges.

In 1Q2023, the real estate sector experienced a significant bounce-back in investment sales value, according to the April 21 press release from Savills Research. The q-o-q increase was 100.4% – from $2.81 billion in 4Q2022 to $5.63 billion in 1Q2023. This substantial growth was largely propelled by two major transactions: Link REIT’s purchase of Jurong Point and Swing By @ Thomson Plaza.

The commercial property space saw the most dramatic growth, rising 229.6% q-o-q to $3.38 billion. This was mainly fuelled by retail sales, which accounted for the majority of total commercial transaction value (83.3%). Of those transactions, Link REIT’s Jurong Point and Swing By @ Thomson Plaza acquisitions comprised of $2.81 billion.

Meanwhile, the strata office sector suffered a slight decline (5.4% q-o-q) from $306 million in 4Q2022 to $290 million in 1Q2023. Despite this, there was still buying activity in the sector – for instance, the recent sale of The Solitaire on Cecil’s 17th, 18th, and 20th floor. The deal, brokered by Savills, saw the office project sold for $162.8 million, marking one of the largest strata office transactions recorded since January 2022.

The shophouse market also saw positive growth, albeit conservative. Investment sales rose 11.2% q-o-q, from $172.7 million to $193.2 million. A notable example being the purchase of freehold shophouses along Serangoon Road, acquired by a union affiliated with Singapore’s National Trade Union Congress for $62.5 million.

Investment value for residential sites and properties amounted to $1.58 billion in 1Q2023. This was despite there being no Government Land Sale sites awarded; yet, the residential sector still recorded a growth of 12.5% q-o-q – from $1.4 billion in 4Q2022 to $1.58 billion in 1Q2023.

The collective sales sector witnessed a surge in 1Q2023 following a relatively quiet 4Q2022. Three private residential sites transacted for a total of around $583.8 million: the largest of which being Meyer Park in District 15, which was acquired by a joint venture between UOL Group and Singapore Land Group for $392.2 million.

In spite of global economic challenges, there is good news in the real estate market. Ultra-high net worth individuals (UHNWIs) have been filling the investment gap left by institutional investors and corporate buyers. According to Savills, UHNWIs are uniquely resilient to global economic instability and are helping to drive up Singapore’s real estate value.

However, UHNWIs do not always lodge a caveat, so while publicly available data may indicate a figure of $24.7 billion resembling 2022’s investment sales, the possibility of it being larger is a rising risk. Marcus Loo, CEO of Savills Singapore believes that Singapore’s safe haven status, as well as its position as the “Switzerland of Asia,” has been encouraging UHNWIs to invest in luxury apartments, strata offices, and shophouses.

Overall, the figures for 1Q2023 suggest that the real estate market is stable and, although caution is still key for developers, investing in safe havens, such as Singapore, may be the solution for UHNWIs who are wary of the US and Swiss bank fallout.