Singapore commercial property investment jumps 72%

Singapore escaped the downtrend that caught out every other major commercial property market in the region in the first quarter.
Singapore escaped the downtrend that caught out every other major commercial property market in the region in the first quarter.ST FILE PHOTO

Singapore's commercial property sector escaped the downturn that caught out every other major market in the region in the first quarter.

Investment in commercial real estate jumped 72 per cent to US$1.9 billion (S$2.6 billion) in the three months to March 31, Real Capital Analytics (RCA) noted yesterday.

"While the last three months of 2018 were dominated by a handful of major deals in the industrial sector, the start of this year was characterised by a more diverse range of transactions in the retail and office, as well as industrial sectors," said Ms Petra Blazkova, RCA's senior director of analytics for Asia-Pacific.

"Solid occupier demand in Singapore is also allowing investors to lock in higher rents."

Conversely, the regional commercial property market got off to a slow start this year as worries about the economic outlook took a toll on activity. Overall investment volume tumbled 36 per cent to US$30.5 billion in the first quarter with Asia-Pacific markets struggling to match last year's pace.

This was compounded by concerns such as China's slowdown, the United States-China trade war and the global downturn in consumer goods demand, RCA said.

China and Japan suffered amid a more downbeat economic picture, with investment volumes in both countries posting double-digit declines compared with a year earlier.

Nonetheless, Beijing was lifted to pole position in the first quarter from seventh spot last year after two mega-deals of over US$1.3 billion accounted for more than half of its total investments of US$4.5 billion.

Hong Kong was nudged into second place among Asia-Pacific metropolitan markets with an investment volume of US$4.4 billion, with Tokyo third on US$3.9 billion.

  • $2.6b

  • Investment in commercial real estate in Singapore in the first quarter, a rise of 72 per cent.

Singapore placed sixth, the same as last year.

While office assets were the mainstay of transaction volumes, retail space broadly proved to be the flavour for the first three months this year, increasing by 8 per cent to US$9.4 billion from last year as investors bought assets in Hong Kong, Tianjin and Singapore, RCA noted.

But offices still head investor wish lists due to the recovery in the market across most major centres.

Separately, cross-border investors from within the Asia-Pacific were also a more important source of capital in the quarter.

Intra-regional cross-border capital hit US$8.6 billion, driven by Hong Kong-based investors who spent US$4.7 billion in markets such as China, Japan and Singapore.

RCA said the outlook for investment markets for the rest of the year may be more upbeat.

"The count of pending deals is high in markets such as Hong Kong, India and China. Moreover, reports indicate there is a record level of capital to be deployed in the region," it said.

A version of this article appeared in the print edition of The Straits Times on May 22, 2019, with the headline 'Singapore commercial property investment jumps 72%'. Subscribe