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With supply declining, the office property market in Singapore has passed its toughest period and is on the rebound, according to BlackRock, a New York-based investment management firm, reported Reuters.
“You get short supply and demand holds up, then all of a sudden rents start going up. We are already past that inflection point in Singapore,” said John Saunders, Head of BlackRock Real Estate for Asia Pacific.
In the last two years, the city-state was among the worst-performing major office markets in Asia as rents of prime office space in the financial district fell by over 10 percent due to excessive supply. But prospects are getting brighter with experts predicting fewer new office projects until 2021 after some constructions in 2017.
“We are starting to see it become more of a landlord’s market and we are starting to see rents move again and that makes it very attractive,” noted Saunders, adding that BlackRock is considering to invest in Singapore malls and industrial properties.
In 2016, the company sold the 43-storey Asia Square Tower 1 to Qatar Investment Authority for US$2.5 billion. As it set the record for being the most expensive office deal in Singapore, BlackRock touted the transaction as a sign that pessimism over the city-state’s office market was likely exaggerated.
Moreover, Saunders underscored the robust investment interest in Singapore from corporations and funds. “There’s competition from all around – funds, domestic capital and there’s also non-domestic Asian capital.”
He added that BlackRock’s remaining office building in Singapore, Asia Square Tower 2, is a “very sought-after asset” with occupancy at nearly 95 percent.
However, others have been less upbeat on Singapore’s office market. For instance, recent research by PwC and the Urban Land Institute ranked the city-state 21st out of 22 Asia Pacific markets for property investment prospects.
Meanwhile, Saunders believes that Beijing’s capital outflow restrictions are unlikely to have a significant impact on property investments in Singapore, as most acquisitions by investors from mainland China were outside Asia.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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