What is Singapore’s largest real estate investment deal in 2022?

The transaction was worth S$2.16 billion.

The year 2022 can be described as a roller coaster. According to a Knight Frank report, this began with the euphoria stemming from the reopening of economies and borders across the globe in the first half of the year holding the promise of a market rebound, before the tempering of business optimism in the latter half as fears of an economic downturn returned. 

“The readjustment from the pandemic led to heightened inflation, increased interest rates as well as imbalances in demand and supply. Political tensions and the military conflict in Russia-Ukraine also disrupted the supply of goods and energy resources, adding to economic worries,” the report said.

Here’s more from Knight Frank:

In this climate, commercial deals characterised a large proportion of the total sales value throughout 2022, followed by residential. Overall real estate investment sales improved in 2022 grossing S$31.9 billion, within the revised projection of S$30 million to S$32 million. 

This represented an increase of 20.4% from the S$26.5 billion a year ago. However, the stream of deals slowed in the fourth quarter as transactions totalled S$4.5 billion, falling 22.0% q-o-q as caution overtook the earlier optimism (Exhibit 1). 

Despite this increasingly conservative approach, the largest sale of the year was reported in the closing days of December 2022 as Hong Kong-listed Link REIT agreed to purchase Jurong Point and Swing By @ Thomson Plaza for a combined S$2.16 billion (Exhibit 2). Retail mall assets are generally tightly held in Singapore, and the divestment by Mercatus Co-Operative represented an opportunity for a new-to-Singapore entrant to make inroads into the local retail real estate scene. 

Other asset classes – particularly office and hospitality – continued to generate interest, owing to the possibility of positive carry. Nevertheless, with increasing interest rates, institutional funds are more likely to adopt a watch-and-wait approach. 

This leaves the door open for private capital, who are not as reliant on debt-financing, to become more active in commercial real estate investments in the months ahead, with Singapore continuing to represent a destination of stability amid the rocky global climate. 

As such, investors’ appetite for strata office space remained healthy, and demand for this asset class did not appear to waiver in the fourth quarter. In November, two high floors at Springleaf Tower were sold for about S$53.9 million (S$2,510 psf) to Esteel Enterprise, as well as the fourth floor at 15 Scotts for S$49.0 million by Cortina Holdings earlier in October. Given the more palatable size and quantum, investments in the strata office market are expected to continue in the coming months. 

In a similar fashion to Q3, the award of two Government Land Sales (GLS) sites also formed a significant share of the total sales value in Q4, contributing some S$520.8 million (Exhibit 2). The award of these parcels indicated that developers are still keen to acquire land, but the lower-than-expected number of bids (five for Bukit Timah Link, and four for Hillview Rise) during the tender exercise hinted at developers’ shift towards tentativeness.