SINGAPORE - Real estate investments surged 18 per cent to $3.6 billion in the first quarter of the year from the previous three months, according to a DTZ Research report released on Wednesday.
More notably, the strong interest in office and mixed-use properties was what drove the market in the recent quarter. One transaction - the sale of the AXA tower by Blackrock to the consortium led by Perennial Real Estate Holdings for about $1.17 billion - accounted for 32 per cent, or about one-third, of total investment sales in the first quarter.
Total investment in mixed use properties grew from $241 million in the fourth quarter of last year to $324 million in the first quarter of the year. Shophouses continued to attract interest among investors, reigning in some $358 million worth of investments over the last two quarters.
In contrast, residential investment sales continued to regress, falling by 14.5 per cent quarter-on-quarter to $856 million as investors remained cautious due to cooling measures. While residential investments from Government Land Sales (GLS) Programme rose 15 per cent quarter-on-quarter to $781 million in the first quarter, the amount transacted was less than half of what had been sold over the same period last year.
Meanwhile, real estate investment trusts (Reits) actively tried to complete deals before stamp duty concessions lapsed on March 31. Their total investments rose by 2 per cent quarter-on-quarter to $607 million.
The net purchases of property companies rose to $721 million in the first quarter from $539 million in the previous quarter. They also led consortiums in some large investments such as the deal involving AXA Tower.
Private funds meanwhile looked beyond traditional asset classes, with property fund manager Pamfleet purchasing Homestay Lodge, a workers' dormitory, for $127 million.
At the other end of spectrum, there were more real estate investment activities overseas, undertaken by units like Hotel Properties, Keppel Land, Ascendas Hospitality Trust and Cache Logistics Trust.
Dr Lee Nai Jia, DTZ's Associate Director of Research observed that Singapore is deemed slightly overpriced as compared to UK, Australia and Tokyo real estate markets. However, Singapore continues to appeal to investors interested in portfolio diversification and long term growth opportunities.