Q3 investment sales jump 71%: report

Source : Business Times – 29 Sep 2009

CBRE raises total sales forecast for 2009 to $7.5b from $2b 3 months ago

THE investment sales market continued to improve in Q3, boosted by a large number of good class bungalow (GCB) transactions, according to a new report.

Total investment sales in the current quarter have so far amounted to $3.28 billion, an increase of 71 per cent from the previous quarter, said CB Richard Ellis (CBRE) in its report yesterday.

With the strong showing, CBRE is bumping up its forecast for total investment sales for the whole of 2009 to as much as $7.5 billion. Three months ago, the property firm estimated that total sales would exceed $2 billion by end of the year.

In Q3, residential investment sales made up the bulk of the transaction volume. Residential investment sales – including GCB sales – accounted for $2.2 billion in transacted value, or 67 per cent, of the quarter’s total investment sales. This is 92 per cent higher than the $1.2 billion residential investment sales recorded in Q2.

And to date, GCB sales have made up a quarter of total residential investment sales in Q3, with 35 GCB sales between July and September totalling some $535 million. Several of these GCBs were sold for above $1,000 per square foot of land and these included the sale of 6 Leedon Park for $19.4 million, and 42 Dalvey Road and 12 Bishopsgate for $19.0 million apiece.

The government land sales (GLS) programme also contributed to property investment sales volume in Q3. Two industrial sites, a hotel site and three residential sites were awarded from the GLS programme during the quarter.

The current quarter saw the re-emergence of investors buying units in bulk in residential projects. An undisclosed buyer bought 21 units at Sui Generis for $65 million, while 18 apartments at Hilltops condominium were reported to be purchased by a group led by former Parkway Holdings’ Tony Tan for $48.2 million.

In the office investment market, a total of $261.4 million were logged in transactions, representing 8 per cent of total investment sales.

‘Although buyers are still cautious on big deals above $200 million, buyers are much more optimistic than in the first quarter of the year when sentiment was poor and economic difficulties loomed large. The credit market has improved and financing is available,’ said Jeremy Lake, CBRE’s executive director for investment properties.

The robust volume of transactions in the residential market also means that developers are on the look-out for new sites. In light of these positive signs, it is expected that total investment sales for this year could hit $7.5 billion. ‘Though this total is lower than the $18 billion recorded in 2008, it is significantly higher than what was originally anticipated,’ added Mr Lake.