A commercial site in Singapore’s Marina Bay financial district brought a record bid of S$2.6 billion ($1.9 billion) today as enthusiasm for office projects revives in the southeast Asian financial hub. And Blackrock may be counting on the interest that drove seven bids for the land parcel at Central Boulevard to spread next door to Asia Square 2, as the US asset management heavyweight reportedly puts that landmark project on the market.
Malaysian Developer Leads Marina Bay Bids
After a nine year break from land sales in the Marina Bay area, a subsidiary of Malaysia’s IOI Properties Group led all bidding with its S$2.6 billion offer for the 10,869 square metre site which will yield a maximum GFA of 141,294 square metres. The S$1,689 per square foot bid is a record for a Singapore government land sale, although the government will not announce a winner to the contest until it has considered all proposals in detail.
Also among the contestants for the commercial project, which will also include a small hotel or residential component, were Mapletree Trustee Pte Ltd, Shanghai’s Yanlord Group, and a consortium of Singapore’s OUE Ltd and Tang City Properties, with China’s Guangzhou R&F Properties.
BlackRock Puts Asia Square 2 on the Block
With the high level of interest in the latest Marina Bay site, this could an opportune time for BlackRock to say goodbye to Asia Square 2. According to a Bloomberg report, the world’s largest asset manager has already put out feelers to potential buyers to see if they would be interested in acquiring the 72,845 square meter office tower located in Singapore’s financial district.
It’s unlikely BlackRock will fetch the record setting $2.45 billion it pocketed from the Qatar Investment Authority when it sold Asia Square 1 in June, but it won’t sell the 46-storey tower on the cheap. Sources told Bloomberg that the development, which includes a Westin Hotel as well as grade A office space, could bring in S$2 billion ($1.4 billion).
Coincidentally, MGPA, which was acquired by BlackRock in 2013, had set the previous record price for a Singapore site, when it paid S$1,409 per square foot for Asia Square 1 in 2007, just before the financial crisis undermined the office market.
Demand for Trophy Assets Rebounds as Market Bottoms Out
The return of interest in the major properties such as Asia Square and its potential new neighbor is seen by market analysts as a sign that a recent slide in Singapore’s office market may be due for a reversal.
“While investment funds with expiring lifespans will be selling their assets, prime large-scale and trophy buildings are rare opportunities to come by,” Tang Wei Leng, Managing Director of Colliers International’s Singapore office, said. “We expect the weight of local and foreign capital in chasing these types of opportunities to intensify.”
That optimism is driven in part by rising occupancy levels at grade A office buildings in Singapore, rising to 92 percent in the Raffles Place/New Downtown area, which includes Marina Bay. That occupancy increase is expected to counter a decline in rents, which have 11.8 percent in Singapore’s central business district this year. Colliers projects that by year end, prime office rents in the central business district will have dropped by no more than 12 percent compared to the same time last year.