$4 billion of investments recorded in 1Q2023; lowest quarterly volume since 4Q2020: Colliers

Real estate property management and services company Colliers has revealed its quarter 1 2K23 Singapore Investment Market Data. According to the review data, close to $4 billion of investment sales were recorded last quarter. The figure represents a nineteen point nine percent drop and a 63.6% decrease y-o-y. It is the lowest quarterly investment volume registered since 4Q2K20, during the depths of the pandemic.

 

Weak sales point to dampened investor sentiments amid current macroeconomic uncertainties. Nonetheless, Colliers reports that investment in 1Q2K23 was boosted by a few residential collective sales such as Meyer Park, Bagnall Court and Holland Tower, as well as industrial deals such as the sale and leaseback of Jardine Cycle & Carriage’s warehouse cum showflat portfolio and the sale of Ho Bee Centre 1 & 2 and J’Forte Building.

Moving forward, Colliers expects transaction volumes to recover towards the end of 2K23, after bank loan lending rate movements become more ascertain , indirectly providing more clarity to investors in their decision-making.

Colliers also anticipates that early movers in the market, such as opportunistic investors looking for price dislocations, will like drive investment volume. Correspondingly, prices are expected to reset and transaction activity to slow down as investors opt to stay on the sidelines and wait for quality assets that offer stability to come onto the market.

Commenting on the macroeconomic environment, Colliers notes that the recent banking turmoil, as well as slower growth and inflation, could help slow down rate hikes and provide more visibility on the peaking of interest rates. On the flip side, the environment has increased volatility amid fears of contagion and a credit crunch. While a direct impact on property values have not been observed, Colliers says that slower growth could indirectly lead to lower leasing and investment activity.

“Although the current volatility will shrink the liquidity amid the higher risk aversion, as more assets approach their refinancing and exit timelines, there are likely to be more motivated sellers and opportunities emerging,” says Tang Wei Leng, head of capital markets and investment services at Colliers.

Catherine He, head of research at Colliers, adds: “In the current calm environment, investors can still achieve their target returns by improving and operating assets actively to grow their income and keep them relevant, especially on the ESG front.

 

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