While the Lion City’s residential property market is seeing a drop in demand and prices, its industrial property sector is showing signs of stabilisation signalling an opportune time for institutional investors to buy up industrial REITs.
Singapore’s red-hot residential property
market appears to have fizzled out while
its industrial property sector is now
picking up steam, according to the third
quarter data from the Urban Redevelopment
Authority (URA) and analysts.
URA’s statistics showed that prices of private
residential properties increased by 0.5 per
cent in the third quarter of 2018 to reach
149.7 points, compared with the 3.4 per cent
increase in the previous quarter.
Indeed, prior to the Singapore government’s
announcements that it was increasing the
Additional Buyer’s Stamp Duty (ABSD) rates
and tightening loan-to-value (LTV) limits on
residential property purchases in July this year,
the Lion City’s residential property market
was going through an en bloc fever with many
deals going under the hammer.
Some notable collective sales concluded in the
first half of 2018 were Pearl Bank Apartments
and Park West which was sold for S$728
million to CapitaLand and S$840.89 million
to SingHaiyi Gold Pte Ltd respectively.
The en bloc fever had, therefore, prompted the
Singapore government to step in to cool its
residential property market.
Additionally, data from Cushman &
Wakefield Inc showed that post the new
cooling measures, collective sales market
plummetted from S$3.8 billion of en bloc
transactions in the second quarter to S$353
million in the third quarter.
“The collective sales market was decimated
after the recent cooling measures,” Christine
Li, Cushman & Wakefield’s head of research
for Singapore told Bloomberg.
INDUSTRIAL MARKET PICKING UP
On the other hand, while Singapore’s residential property sector has taken quite a hit, its industrial and commercial property sectors are seeing an uptrend in investment sales.
According to data from Cushman & Wakefield
Inc, industrial property deals soared 73 per cent
to S$1.2 billion in the third quarter while office
sales increased by 54 per cent to S$2.1 billion.
“Clearly these two sectors emerged as winners
from the recent fallout in the residential
sector,” Li told Bloomberg.
The former has seen regional players like
e-Shang Redwood buying up industrial
REITs like Cambridge and Viva Industrial
Trust in Singapore.
Jones Lang Lasalle Singapore said this is because “Singapore’s industrial property market is showing signs of stabilisation following four years of decline.”
Citing data from JTC statistics, Tay Huey Ying,
Head of Research and Consulting, Jones Lang
Lasalle Singapore said islandwide all-industrial
rental correction stayed modest at 0.1 per
cent quarter-on-quarter for three consecutive
quarters since the fourth quarter of 2017, while
the second quarter of 2018 all-industrial price
index flat-lined for the first time since trending
down in the third quarter of 2014.
As such, this signals an opportune time for
investors like e-Shang Redwood to enter
A merger between e-Shang Cayman Ltd and the Redwood Group Asia Pte Ltd in January 2016, e-Shang Redwood now owns 56 industrial property portfolios in Singapore via ESR-REIT.
Formerly known as Cambridge Industrial Trust, the firm’s entry in the Singapore industrial market since June 2017 means it now owns 56 industrial property portfolios in Singapore via ESR-REIT and is now one of the largest logistics real estate platforms in Asia.
According to a statement from the firm, it
now has “over 3.5 million square meters of
projects owned and under development across
China, Japan and South Korea, and capital and
funds management offices in Hong Kong and
Meanwhile, another industrial property player,
Mapletree Industrial Trust (MIT), said it has
delivered a total return of 192.2 per cent since
its listing on 21 October 2010, comprising a
capital appreciation of 107.5 per cent and a
distribution yield of 84.7 per cent.
“We continue to reshape and build a
portfolio of assets for higher value uses
through acquisitions, build-to-suit (BTS)
projects and asset enhancement initiatives,”
said a spokesperson from Mapletree
Industrial Trust Management.
According to MIT, its BTS projects in Singapore such as at Depot Close and Sunview Drive and its asset enhancement initiatives at 30A Kallang Place “are representative of our strategic focus on growing the Hi-Tech Buildings segment, which will cater to changing needs of tenants and attract users From new growth segments.”