The investment sales market continued to improve during the current quarter, building on the momentum that started in the second quarter. Positive sentiment in the residential market as well as more favourable economic reports led to an increase in investment transactions. Total investment sales in the current quarter have so far amounted to $3.279 billion, an increase of 70.5 per cent from the previous quarter. During the same period, two industrial sites, a hotel site and three residential sites were awarded from the GLS (Government Land Sale) programme.

The total residential investment sales including Good Class Bungalow (GCB) sales have so far accounted for $2,205.06 million in transacted value or 67.26 per cent of the quarter’s total investment sales. This is 91.5 per cent higher than the $1,151.43 million residential investment sales recorded in the previous quarter. To date, GCB sales have made up a quarter of total residential investment sales, with 35 GCB sales between July and September, totalling some $535.04 million. Several of these GCBs were above $1,000 psf on land and these included the sale of 6 Leedon Park for $19.4 million, and 42 Dalvey Road and 12 Bishopsgate for $19.0 million each.

Fragrance Properties and World Class Land, a subsidiary of Aspial, continued to acquire small- sized land parcels during the quarter. Fragrance Properties bought sites at Pasir Panjang Road, Changi Road, Telok Kurau Road and Eastwwod Road, while World Class Land purchased sites as well as shophouses at Cavan Road, Joo Chiat Road and Onan Road. In addition, an impressive 13 bids were received for the HDB Bukit Panjang S10a site at Chestnut Avenue. The site was awarded to the joint venture of City Development’s Sunny Vista Developments and Hong Leong’s Group’s Hong Realty, who put in a top bid of $143.68 million. This reflects $280 psf/plot ratio. In other GLS tenders, a land parcel at Dakota Crescent was awarded to UOL Development (Novena) Pte Ltd who put in the highest bid of $329 million ($508 psf/plot ratio), while Far East Organization placed a top bid of $119 million ($376 psf/plot ratio) for a mixed commercial/residential land parcel at Yio Chu Kang Road/Seletar Road.

The current quarter has also seen the reemergence of investors buying units in bulk in residential projects. An undisclosed buyer bought 21 units at Sui Generis for $65 million, while 18 apartments at Hilltops condominium were reported to be purchased by a group led by former Parkway Holdings’ Tony Tan for $48.2 million.

In the office investment market, six storeys of Prudential Tower were sold. A total of $261.40 million has so far been logged in office transactions, representing 7.97 percent of total investment sales. K- REIT Asia’s acquisition of the six storeys at Prudential Tower was the largest office sale at $106.29 million or $1,579 psf on net lettable area. The deal includes income support from the seller that would guarantee a 5.2 per cent yield.

ARA Asset Management purchased the Suntec International Convention & Exhibition Centre for $235.0 million, adding it to its portfolio of Suntec properties. Although ARA will own the convention centre, most of the office and mall space in Suntec City with this acquisition, the convention centre, will be owned under the ARA Harmony Fund which was created by ARA for this purpose. This is separate from Suntec REIT.

The biggest private sector deal of the quarter so far has been from the hotel sector. The sale of Swissotel Merchant Court for $260.0 million to TA Enterprise from Malaysia, reflects a price of $546,200 per room. The sale comes with an Ebitda (earnings before interest, taxes, depreciation and amortisation) guarantee of $19 million per year for four years reflecting a 7.3 per cent yield on the sale price. In the current quarter, the total investment sales in the hotel sector has so far amounted to $349.7 million or 10.67 per cent of total investment sales.

In the industrial sector, most of the buyers continue to be end- users. There have been 12 private and two public (GLS) investment transactions accounting for $164.94 million or 5.03 per cent of total investment sales for the quarter so far. Jeremy Lake, Executive Director, Investment Properties, said “Although buyers are still cautious on big deals above $200 million, buyers are much more optimistic than in the first quarter of the year when sentiment was poor and economic difficulties loomed large. The credit market has improved and financing is available.”

Furthermore, the robust volume of transactions in the residential market has developers on the look- out for new sites. In light of these positive signs, it is expected that total investment sales for the entire year 2009 could reach $7.5 billion. “Though this total is lower than the $17.98 billion recorded in 2008, it is significantly higher than what was originally anticipated,” added Mr Lake.