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Government incentives have helped the commercial market despite a slowing economy.
Despite a slowing economy, investment in Singapore’s commercial property market remains buoyant, on the back of government incentives to reinvigorate parts of the island and rising office rents, reported Nikkei Asian Review.
Real Capital Analytics data showed that value of commercial property investments in the city-state grew 72 percent year-on-year to $1.9 billion in the first quarter of 2019, a stark contrast to the 36 percent decline suffered by the Asia Pacific region.
Looking at pending deals, investment volumes for the rest of the year is expected to be robust, said RCA senior director for Asia-Pacific analytics Petra Blazkova.
The city-state is a popular real estate market among institutional investors, thanks to the presence of various multinational companies and banks. Commercial transactions in Singapore stood at about $9.5 billion last year, said JLL.
In fact, the city-state emerged as a much sought-after Asian destination for technology firms, second to Bangalore, India, according to a Colliers report.
The Singapore government recently rolled-out initiatives that are expected to spur activity in the commercial property market. These include incentives for developers that redevelop old office buildings within the central business districts (CBD) into hotels, residences and mixed-use projects in the hopes of bringing more life to the areas at night and during weekends.
The city-state is also allowing its two casino-resorts to expand, which could lead to about $9 billion worth of new investments.
“Investor interest in Singapore remains high, bolstered by the upbeat outlook for its commercial leasing market,” said JLL’s Asia Pacific capital markets CEO Stuart Crow.
A consortium comprising real estate private equity firm Gaw Capital Partners and Allianz Real Estate is reportedly in talks to acquire the retail and office components of DUO, an integrated development located on the outskirts of the CBD, for about $1.6 billion.
Meanwhile, Oxley agreed to sell its 32-storey office building, Chevron House, for $1.05 billion to US investment firm AEW in April.
Office rents in Singapore have significantly increased over the last two years due to limited supply and strong demand.
CBRE estimates that Grade A office rents grew to $11.15 per sq ft during the first three months of 2019 compared to $10.80 in the preceding quarter and $9.70 in Q1 2018.
Singapore’s economy, however, has slowed down, mostly due to the manufacturing sector’s weakness. With this, the city-state slashed its 2019 growth forecast to 1.5 percent to 2.5 percent, from its the initial forecast of 1.5 percent to 3.5 percent.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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