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Direct commercial real estate investment in Singapore plunged by 66 percent to nearly US$700 million during the first quarter, according to the latest report from property consultancy JLL.
The sharp decline is attributed to the lack of big-ticket deals during the quarter as rising vacancies and the record number of new completions dampen investor sentiment.
In particular, the city-state’ prime office sector is forecasted to see a rental drop of 10 to 20 percent this year, likewise for capital values.
The office market is also expected to favour tenants in 2016 and 2017, before shifting to a neutral stance by 2018, noted JLL.
Meanwhile, direct commercial property investment in the Asia Pacific (APAC) declined by 5 percent year-on-year to US$24 billion in Q1 2016, but this translates to a higher drop of 34 percent from US$36 billion in Q4 2015.
“Activity was quite divergent across the region. Australia, China and Hong Kong were higher than a year ago, while Japan was 26 percent lower. Activity in South Korea bounced back from Q1 2015, whereas Singapore had one of its weakest quarters on record at just short of US$700 million.”
The consultancy also pointed out that most emerging markets in APAC registered lower volumes in commercial property investments.
Elsewhere in the globe, direct commercial property investment in the Americas fell to US$ 61 billion, down 28 percent on a quarterly basis and 6 percent year-on-year.
Similarly, that for Europe, the Middle East and Africa (EMEA) fell to US$48 billion, representing a decline of 47 percent quarter-on-quarter and 15 percent on year.
Consequently, the total direct commercial property in the world dived to US$133 billion, down from US$154 billion in Q1 2015 and S$211billion during Q1 2014.
Moving forward, the world’s overall investment volume by value is projected to dip by 5 percent in 2016, with the figure for the Asia Pacific likely falling within 5 to 10 percent.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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