Capital Market Deals Jump 40 2024 Bolstered Interest Rate Cuts
In the first eleven months of this year, the capital market property transactions in Singapore have recorded a total value of $25.8 billion, as reported by Wong Xian Yang, head of research for Singapore and Southeast Asia at C&W. This marks a significant increase of 40.2% compared to the $18.4 billion recorded in 2023. C&W defines capital market deals as transactions with a value exceeding $10 million.
According to Wong, the majority of the capital market deals, about 60%, were transacted in the second half of 2024. This surge in activity was driven by a growing appetite from investors and a sense of confidence in the US Treasury’s potential interest rate cuts. In 2024, three deals worth over $1 billion each were made, all of which were completed in the second half of the year.
The largest transaction this year, in terms of absolute price, was the sale of a 50% stake in ION Orchard mall for $1.85 billion to CapitaLand Integrated Commercial Trust (CICT) on September 3. The seller was CapitaLand Investment (CLI). The remaining 50% stake is owned by Hong Kong-listed property developer Sun Hung Kai Properties.
ION Orchard, a popular eight-storey retail mall, is located in the bustling shopping district and is directly linked to the Orchard MRT Station. It offers a net lettable area of approximately 623,000 square feet and houses over 300 international and local brands. Above the mall is The Orchard Residences, a luxurious 54-storey condominium tower with 175 units.
Another significant deal this year was the sale of Mapletree Anson, a high-value office property, for $775 million in the second quarter. The surge in investment value this year was largely driven by a strong interest in the industrial sector, with investments in the segment reaching $5.6 billion in the first eleven months of 2024. This reflects a staggering 174% increase compared to the previous year. The largest deal in the industrial sector was the $1.6 billion sale of a portfolio of seven industrial properties to a joint venture platform owned by Warburg Pincus and Australia-listed Lendlease Group.
Following the trend of high-value deals, the sale of two data centres to Singapore-listed Keppel DC REIT for $1.38 billion also made it to the list of top three highest-valued transactions this year. These data centres, Keppel DC Singapore 7 and Keppel DC Singapore 8, are fully contracted to cloud services, internet enterprises, and telecommunications providers and are capable of large-scale data processing.
Wong expects the transaction volume in the industrial sector to hit a five-year high this year. With high liquidity in the sector, investors are increasingly interested in new economy assets such as prime logistics and life science properties. However, Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, predicts that industrial rent growth may slow down in 2025, which could impact yields.
Despite the unsuccessful sale of several Government Land Sales (GLS) sites this year, residential development sites sold through GLS tenders continued to dominate the investment sales market, accounting for 42% of the total investment sales this year. However, four GLS sites on the Confirmed List for 2024 failed to be awarded, largely due to low bid prices driven by site-specific concerns and interest rate concerns.
CBRE’s Song does not anticipate a continuation of this trend in 2025 as the new sites on the Confirmed List are well-distributed and in prime locations. Wong expects developers to actively acquire land next year, albeit with caution and selectivity.
In November, a 50:50 joint venture between UOL Group and CapitaLand Development purchased the 255-unit Thomson View condo for $810 million. The developer intends to build a residential project with 1,240 units on the 5-hectare site. Wong remains optimistic that there will be an increase in high-value deals next year, as the US Fed is expected to cut interest rates further.
CBRE’s Song also expects institutional investors to return to the market, but a slow and lower-than-expected rate cut may affect the speed of the market’s recovery. Barring any macroeconomic shocks, CBRE predicts a 10% increase in investment volumes in 2025 compared to this year’s volumes.
The Master Plan has placed emphasis on the expansion of housing options and the revamp of existing estates in order to keep up with the rising demand and improve the overall living environment. This means that The Orie will be part of a continually improving estate, with increasing value and appeal. Moreover, the implementation of new communal amenities such as libraries, community clubs, and health centers will further enhance the quality of life for residents, making essential public services more easily accessible. To learn more about The Orie, you can visit the The Orie Showflat.