Fed Rate Cut Bolster Investment Sales Especially Industrial And Living Sector Assets Knight Frank
The much-anticipated rate reduction by the US Federal Reserve is having a positive impact on the real estate market, with early signs of recovery already observed in investment activity, according to a recent report by Knight Frank Singapore. Data analyzed by the consultancy shows that $8.3 billion worth of real estate investment deals were completed in the third quarter of 2024, marking a 24.8% increase from the previous quarter. This has been largely attributed to a rise in investor activity in anticipation of the rate cut, which was announced on Sept 18. It was the first cut in over four years, bringing the targeted interest rate range to 4.75% to 5%.
The majority of the investment deals in the third quarter were private sales totaling $6 billion, while public sales accounted for the remaining $2.3 billion. The industrial sector saw the most significant increase in activity, with investment sales rising by 427% quarterly, reaching a value of $2.5 billion. This spike was largely driven by the sale of a portfolio of seven Singapore industrial properties to a joint venture by Warburg Pincus and Lendlease Group. Other notable industrial transactions in the third quarter included the purchase of a 51% stake in an industrial site by ESR-Logos REIT for $444.6 million and the sale of a 49% stake in a biomedical sciences development by Ho Bee Land for $272 million.
Residential investment deals totaled $3.2 billion in the third quarter, a 24.7% decrease from the previous quarter. Government land sales (GLS) accounted for over two-thirds of this figure, with notable sales including Zion Road (Parcel B) to Allgreen Properties for $730.09 million and an executive condominium site on Jalan Loyang Besar to a consortium of developers for $557 million. A number of good class bungalow (GCB) deals also contributed to the residential investment sales, including the sale of a GCB at Tanglin Hill for $93.9 million and two GCBs on Belmont Road for $73.7 million and $57.7 million respectively.
Commercial deals made up $2.7 billion of total investment sales in the third quarter, a 37.2% increase from the previous quarter. This was largely driven by the sale of Ion Orchard by CapitaLand Investment (CLI) to CapitaLand Integrated Commercial Trust for $1.85 billion, subject to approval by CICT unitholders. Other notable commercial deals included the sale of Stamford Court by Singapore Land Group for $132 million to Spark61, a joint venture between Elevate Capital and a capital partner.
Rewritten:
Aurelle of Tampines, also referred to as Aurelle of Tampines EC, is a high-end executive condominium located on Tampines Street 62. This prestigious development offers an outstanding living experience, particularly for families with children attending school. One of its standout features is its prime location, which is in close proximity to several renowned educational institutions. With easy access to top-quality education options from primary to college level, residents of Aurelle of Tampines can enjoy a convenient and enriching lifestyle. Visit Aurelle of Tampines for more information.
Collective sales remained relatively subdued in the third quarter, with a decrease in the number of launches and no successful deals completed. However, Knight Frank Singapore’s head of capital markets for land and collective sale, Chia Mein Mein, notes that demand for smaller sites remains strong. The consultancy also expects the commercial and mixed-used development sector to see a higher chance of success in the current market conditions.
Looking ahead, Knight Frank predicts that investment sales momentum will continue to improve in the coming months, with total sales for 2024 falling within the estimated range of $23 billion to $25 billion. This is due to the narrowing of the bid-ask gap and prospects of positive returns. Daniel Ding, Knight Frank Singapore’s head of capital markets for land and building and international real estate, also anticipates an increase in deals in the serviced and co-living residence sectors, as well as in commercial and mixed-use development.
