Residential land sales, boosted by several large collective sale transactions, accounted for about SGD9.15 billion or 83% of the total investment sales in the quarter. Notably, the five largest deals in Q1 2018 were all residential collective sales: Pacific Mansion which went for SGD980 million; Park West at SGD840.9 million; Pearlbank Apartments at SGD728 million; Goodluck Garden at SGD610 million; and Brookvale Park at SGD530 million.


Interestingly, barely five months into 2018, the transaction value of residential collective sale deals has caught up with that of 2017. Colliers noted that there were 24 transactions amounting to SGD8.12 billion as at May 03, close to the SGD8.13 billion from 27 deals last year

Developers are expected to continue to replenish their land banks via Government land tenders as well as the collective sale market, which experienced a revival from mid-2017. Colliers Research observed that developers’ interest in collective sale sites has shifted from suburban to prime locations. In Q1 2018, eight sites valued at SGD2.32 billion were sold in the Core Central Region, compared with eight prime sites worth SGD1.05 billion sold in the entire 2017.

The collective sale market is likely to remain buoyant this year, barring any unforeseen events. That said, to get a deal across the line, it is also key that owners set realistic asking price. Owners’ expectations have risen in tandem with the rising property market – particularly so of late, as the cost of buying a replacement home has increased. Private residential property prices rose by 3.9% in Q1 2018 - the strongest quarterly price growth since the 5.2% quarter-on-quarter rise in Q2 2010.


The collective sale market appears to have evolved again with many owners of mega residential developments – valued at over SGD1 billion each - putting their property up for sale.
Faber Gardens was recently launched for tender, while others such as The Dairy Farm, Braddell View and Mandarin Gardens are in varying stages of the collective sale process.

While we believe large plots will appeal to developers, only those that are centrally-located, competitively priced, and have excellent attributes will sell. Mega developments will likely face stiff competition for buyers – potentially a consortium of developers with financial muscle - owing to the massive land size and quantum. 

In acquiring a mega-site that could yield more than 1,500 new homes, the developer would have to make provision for the Additional Buyer's Stamp Duty – at the current rate of 15% on the land cost – as it is unlikely that all units at the new development will be sold within the stipulated five-year time frame. Prospective buyers will also take note of the incoming supply of new units in the area, favouring sites with fewer competing projects in the vicinity. For a large site, the lease could be shorter on TOP (temporary occupation permit) given the lengthier construction period.


Investment sales from other sectors – industrial, commercial, shophouse and hospitality – made up the remaining 17% (or SGD1.85 billion) of the total transaction value in Q1 2018. While they are unlikely to overtake residential investment sales any time soon, Colliers believe there are some upside ahead as most of these sectors have bottomed.

Investment activity could pick up in the commercial sector given rising office rents, while interest in industrial properties may increase as rents bottom out. Shophouses, which are scarce in supply, could also continue to appeal to boutique investors, high net worth individuals and property funds. Colliers’ research showed that shophouse transactions (valued at SGD5 million and above) hit record high in Q1 2018 at SGD478.6 million, trumping the previous peak of SGD363.4 million achieved in Q1 2013.


After growing 54% in 2017, we expect the investment sales market to maintain its positive momentum and grow by 15% YOY to SGD46 billion in 2018, and grow a further 5-10% YOY in 2019. 

Read here our Colliers Quarterly - Investment sales in Singapore remain robust in Q1 2018.