WITH positive news from Covid-19 distributions, controlled easing of travel restrictions and workers' returns to their workplaces, investment sales activity picked up in the first quarter of the year, with the residential sector leading the string of deals.

Overall investment sales amounted to some S$3.8 billion, up 26.7 per cent year-on-year (yoy) from Q1 2020's S$3 billion.

This is according to Knight Frank's Q1 market update, which defined investment sales as transactions totalling S$10 million and more, and institutional transfers that represent a change of legal ownership.

"With the current low interest rate environment, improving sentiment and a return to business normalcy, investors are looking at a variety of assets in Singapore. The encouraging investment sales volume at the beginning of the year can only pick up pace in the course of the year, so long as recovery is on track," said Ian Loh, head of investment and capital markets at Knight Frank.

The Tuesday report noted that the residential sales "retained momentum" with some S$1.7 billion deals since the start of the year. The sector was led by the record-breaking sale of a Good Class Bungalow (GCB) at Nassim Road for S$128.8 million in late March. GCBs continue to draw strong interest due to its "ratified and coveted status" as well as the entry of more family offices setting up in Singapore, said Knight Frank.

Developers were also beginning to replenish their land banks through partnerships, such as the collective sale of Surrey Point for S$47.8 million by an Amara Holdings joint venture as well as the purchase of two residential plots at Institution Hill for S$33.6 million through a consortium comprising Macly Group, RoxyPacific Holdings and LWH Holdings.

That being said, this year's Q1 residential sales were shy of Q1 2020's volume. The difference was offset by commercial and mixed development sales, which were a close second and third respectively, as the recent quarter saw more broad-based transactions.

Commercial and shophouse sectors made up a combined S$1.2 billion. The commercial acquisition of a 50 per cent interest in OUE Bayfront by Allianz Real Estate for S$633.8 million topped the list of biggest property investment transactions in Singapore for the quarter. Other notable deals included the transaction of shophouses at Teck Lim Road for S$22.3 million and Mosque Street for S$21.5 million, as well as strata office units on the 22nd floor of The Central for S$41.7 million.

Meanwhile, industrial sales registered more than double growth in the three months, amounting to about S$906.1 million. This was led by the transactions of the Breadtalk IHQ for S$118.0 million by Lian Beng Group and Sime Darby Business Centre for S$102.0 million by Aims Apac Reit.

As e-commerce is set to continue growing, Knight Frank expects demand for logistic spaces to consequently increase.

"While economic recovery is on track, industrial space owners who are more cautious might restrategise and consider sale and leaseback options to generate liquidity," said Knight Frank.

Beyond the city-state, outbound investment sales grew 45.6 per cent yoy from the same period last year, reaching some S$9.9 billion.

Major outbound investments include Ascendas Reit's S$904.6 million acquisition of 11 data centres in Europe and Mapletree Investments' S$139.3 million tender win of a data centre development in Hong Kong.

"The data centre industry is envisaged to receive increased demand as digitalisation continues to be adopted and enhanced across industries," noted Knight Frank.

In the year ahead, Knight Frank expects capital outflow to expand due to the availability of more opportunities overseas.

As for local real estate, the consultancy firm believes that while sales activity has picked up, supply will still be limited as most sellers hold on to their assets in anticipation of higher prices in the near future.

"As such, the investment market is projected to see more partnerships, particularly in the purchase of land," it added.

By LISA KRIWANGKO