Research shows industrial sector dominates investment in Q1 2010

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A report released by DTZ Research stated that investment transactions in Singapore in the industrial sector has overtaken the residential sector, which amounted to S$1.02 billion or 38.5 percent of total transacted value in the first quarter of the year.

The report showed that after three consecutive quarters of increases in investment sales, the value of investment transactions in Q1 2010 fell 8.5 percent quarter-on-quarter to $2.64 billion.

However, the bulk of the increased transactions in industrial investments were due to the sale and leaseback deals that were made by soon-to-be-listed Cache Logistics Trust with the owners of six industrial properties totalling $713.20 million.

Residential investments amounted up to $879.20 million. The majority of it (93.7 percent) was from the sale of sites in the Government Land Sales (GLS) program whereas 6.3 percent share came about from residential transactions.

The report also pointed out that that the trend is likely to continue into Q2 2010 with the GLS program expected be the main source of land supply for residential development due to the variety of GLS sites available and the speed at which they could be tendered for and put on the drawing block for sale in less than a year.

Although most of the investments were made by local developers as well as REITS, there could be more foreign purchasers in the coming quarters. “Renewed interest from foreign funds is evident as the major purchases of two office buildings – Robinson Point and One Finlayson Green – are made by overseas investors,” said Chua Chor Hoon, head of DTZ South-east Asia Research.
 
An ongoing economic recovery is also expected to lead to increased investment activity in 2010. “Besides the purchase of land for residential development, acquisitions by REITs are resuming. More office buildings are also expected to be transacted for redevelopment into residential use for owner occupation or rental yield,” Shaun Poh, senior director (Investment Advisory Services and Auction) noted.

Source: DTZ Research