Singapore is top overseas property investment destination: Report

Activity in real estate market almost doubles in first half of 2021 to $6.4b of acquisitions

Investment activity in Singapore's real estate market almost doubled in the first half of this year to US$4.7 billion (S$6.4 billion) worth of acquisitions, up 97 per cent from a year ago.

This is according to the latest, second-quarter Asia-Pacific Capital Trends report released by Real Capital Analytics (RCA) yesterday that highlights the figure as the third-highest for Singapore, despite it being "still some distance from 2019's unusually high watermark".

More than half of the total capital inflows came from cross-border investors.

The figure puts Singapore at the top of the list of overseas investment destinations for the first time, said RCA.

While most of the capital was directed towards the office and industrial sectors, RCA described Swire Properties' recent sale of its freehold residential development Eden for US$220.2 million as a "rare apartment deal" which contributed to the first-half inflow.

Singapore's strong first-half real estate investment market performance is in line with a continued recovery in the Asia-Pacific region, which posted steady sales growth in almost all major markets in the second quarter.

Investment activity across the region climbed to US$77.6 billion in the first half of this year, up 8 per cent from the same period a year ago, after it hit US$40.3 billion in the second quarter.

Over the first half-year period, RCA noted a widening gap between top-and bottom-quartile Central Business District office pricing in the region that it said was reflective of a divergence in investor preferences.

The data provider said this trend was apparent for the region's gateway cities, including Seoul, Sydney and Tokyo, where top-quartile pricing far outpaced bottom-quartile pricing levels by the middle of this year.

Singapore was the sole exception with its top-quartile office pricing, the traditional proxy for movements in Grade A office pricing, growing by 3 per cent in the second quarter from end-2019. Bottom-quartile pricing, deemed by RCA as "a closer indicator of the health of the broader office market", increased by 9 per cent over the quarter to reach a new high.

This comes as new office pricing records were set in Singapore over this year, including a floor at Samsung Hub that surpassed the $4,000 per sq ft (psf) mark to best the previous record set before the Covid-19 pandemic.

The sale of Grade B office building Robinson Point at $3,800 psf also set a new standard for an entire office block, said RCA managing director for Asia-Pacific David Green-Morgan.

Highlighting Singapore's office sector market as one of the most volatile in the region, he observed how the city state's office volumes have picked up this year with price increases across the board.

"But Singapore's office price growth stands out from the rest of the region for another reason - it's not just prime offices that are benefiting from this boom.

"Strong cross-border interest has spilled over into the secondary office market as well, with record levels achieved in the second quarter," added Mr Green-Morgan.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on August 12, 2021, with the headline 'Singapore is top overseas property investment destination: Report'. Subscribe