Published March 25, 2009

Property investment sales fall to 10-year low

Q1 2009 sales drop 56.4% from previous quarter and plunge 98% year-on-year

By ARTHUR SIM

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PROPERTY investment sales have fallen to levels last seen in 1998, registering a 10-year low.

'As the market corrects and price expectations close, transaction volumes will pick up again.' - Jeremy Lake, CBRE executive director (investment properties)

CB Richard Ellis says that total investment sales have so far amounted to $184.6 million in the first quarter of 2009. The last time quarterly investment sales were lower, was in Q1 1998 at $49.28 million, and in Q3 1998 at $110.62 million.

The Q1 2009 sales figures also represent a decline of 56.4 per cent from the previous quarter and a fall of 98 per cent compared to a year ago.

Sales from the residential sector accounted for the most number of transactions.

Total residential investment sales including Good Class Bungalow (GCB) sales have so far accounted for 51.5 per cent of the quarter's total investment sales or $95.1 million in transacted value. This was 60.7 per cent lower than the $241.79 million residential investment sales recorded in the last three months of 2008.

Interestingly, the sale of just three GCBs accounted for almost 20 per cent of total residential sales.

The GCBs, at 28A Olive Road, 39 Cornwall Gardens and 8 Queen Astrid Gardens, were sold for a combined total of $18.2 million with 8 Queen Astrid Garden sold for $11.4 million in February, some 12.3 per cent lower than the $13 million previously transacted some 19 months ago in July 2007.

Noting that prices have fallen at a relatively slower pace compared to the luxury non-landed segment, Douglas Wong, CBRE director, luxury homes residential services, said: 'Owners are still holding on despite the financial situation. And there are a lot of buyers waiting on the sidelines.'

CBRE does expect average GCB prices to fall 10 per cent in 2009.

While there were no collective sales in Q1 2009, Fragrance Properties bought a 49,969 square foot site in Pasir Panjang together with two units of strata-titled town houses of 2,680 sq ft each for a total acquisition cost of $25 million.

The commercial investment market accounted for 41.9 per cent of total investment sales in the quarter, or $77.3 million. The only major sale was for Le Mercier House at 65 Mohamed Sultan Road for $35.8 million or about $900 psf on 39,000 sq ft of gross floor area.

There was only one sale in the industrial sector - 29 Loyang Crescent, with a site area of 83,367 sq ft, which was sold in February for $6.2 million or $74 per square foot on land. This contributed to 3.4 per cent of total investment sales.

CBRE believes that the total investment sales for 2009 might eventually be a revisit of 1998 levels where the total annual quantum came to $1.35 billion.

CBRE executive director (investment properties) Jeremy Lake added: 'As the market corrects and price expectations close, transaction volumes will pick up again.'