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(SINGAPORE) Property consultancies CB Richard Ellis and Knight Frank yesterday separately predicted that total investment sales of property in Singapore for the whole of this year will hit a record $20 billion after the market clocked up about $13 billion in the first six months.

SIA Building: Its sale for $348.88 million to a CLSA Capital Partners fund is among the latest Q2 deals

CBRE observed that the $12.9 billion first-half tally is just $600 million shy of the $13.5 billion reported for the whole of last year, which was a record figure that surpassed the previous peak of $12.72 billion in 1996 at the height of the property market boom.

Knight Frank, which released similar figures, cited JTC Corp's upcoming divestment of its industrial properties, the sale of the Sentosa integrated resort land parcel as well as new real estate investment trust (Reit) listings as among the factors that will continue to create investment sales momentum in the second half.

CBRE also expects developers to continue selective buying of residential development sites. 'Appetite for income-producing office and retail assets will remain strong, although the number of commercial transactions will be limited by the lack of properties for sale,' said CBRE executive director Jeremy Lake.

Investment sales of property - seen as a barometer of developers' and big investors' mid-to-long-term confidence in the real estate market - refer to large investment transactions like office buildings and shopping centres, as well as sites bought for development including collective sale deals. They do not cover purchases of single property units by individuals.

Giving a breakdown of the first-half performance, CBRE said that investment sales of property in Q2 reached $7.2 billion, up 25.1 per cent from the first quarter level of $5.7 billion.

The two latest deals this quarter were both handled by CBRE. One was the $348.88 million sale of SIA Building in Robinson Road to a fund managed by CLSA Capital Partners.

The other was LC Development's and Singapore Pools's $138 million sale of Paradiz Centre in Selegie Road to Lend Lease Real Estate Investments, Lehman Brothers Real Estate Partners II, and Eden Property Mauritius Investments.

Another major investment sales transaction for this quarter is the government's award of the Marina Bay integrated resort site to Las Vegas Sands for a pre-fixed land premium of $1.2 billion.

Collective sales were a major source of investment sales deals in the first-half, with a total of 30 transactions involving nearly $4 billion - double the $2 billion for the whole of last year.

Knight Frank observed that the prices developers are willing to pay for collective sales sites are often based on future home prices.

'Assuming unchanged costs and profit margins, mid-to-high-end home prices and overall developers' sales will need to exceed at least 10 per cent growth and 8,000 homes respectively per year to sustain the collective sale fever,' Knight Frank director Nicholas Mak said.

However, several factors could cool the fever, including sellers' ever-rising price expectations, developers' diminishing hunger for land, plus rising development charge rates and interest rates, he added.

Knight Frank also said that total residential investment sales (which includes private-sector originated deals like collective sales as well as sales of housing sites by the state) swelled to about $6 billion for the first half, accounting for 46 per cent of total investment sales in the period.

The first-half figure was also 62.6 per cent higher than that for the whole of 2005, Knight Frank observed.

While the $20 billion projection for investment sales property deals for full-year 2006 is significantly higher than levels seen during the previous market peak, the emergence of Reits since 2002 and their sizeable contribution to investment sales in recent years means comparisons with historical figures may not be entirely accurate, argued Mr Lake.

Reits often buy properties from their sponsors or related parties either at the time that the trusts are floated or post-listing.

For example, K-Reit Asia acquired $630.7 million in four office buildings from its sponsor Keppel Land at the time of its listing in April.