Despite the drop-off in Singapore office investment this year after a record-breaking 2021, panellists at a Mingtiandi forum on Tuesday were optimistic that the Southeast Asian powerhouse would remain attractive to those keen on the sector.
Peng Wei Tan, a Singapore-based managing director in the real estate group at Blackstone, drew attention to the Lion City’s strong employment numbers and resilient economic growth as factors bolstering the case for owning office assets.
“I think the fundamentals for Singapore office are some of the best in the region,” Tan told the audience at the ParkRoyal Collection Marina Bay. “Singapore and Seoul are very interesting markets. Singapore obviously has really established itself as a regional hub and is here to stay. Its handling of COVID has been exemplary. I think there’s a lot of confidence in Singapore in general.”
With Grade A office supply in the market at historic lows, the current sub-4 percent vacancy rates are likely to tighten in the next few years, he said.
Terence Teo, managing director of Singapore-based TE Capital Partners, highlighted the growing number of finance companies and family offices basing themselves in the city-state as a possible driver of office rent growth.
“If you look at it from that point of view, it’s not just these companies that are setting up, but I think companies in non-banking sectors, non-finance-related sectors, MNCs are looking to set up in Singapore,” Teo said. “The long-term prospects for Singapore, especially in the office market, I think will do very well.”
After Cushman & Wakefield reported this month that investment volume in commercial assets plunged 95 percent in the third quarter from the prior three-month total, the report’s author and a panellist, Singapore research head Xian Yang Wong, hastened to reassure the assembled crowd.
“Actually, if you’re an asset owner I think this is the best time of your life,” Wong deadpanned. “Because rents are shooting through the roof for office landlords.”
Chen Kien Kah, who leads commercial strategy for digital assets exchange SDAX, said that despite the market’s appealing qualities, the newly hawkish interest rate climate had made Singapore office deals more difficult to structure in recent months.
Drawing on his experience at Singapore-based SDAX, Chen pointed to another potential headwind: job candidates’ insistence on working at least some of the time from home in the post-pandemic era.
“For us, actually we prefer to have everybody in the office,” he said. “It makes it so much easier. Then again, I guess you can attribute that to the fact that I’m old school, right? I still like to hop over to your desk and have a conversation with you instead of — I shouldn’t be saying this, but … instead of using Teams.”