An office floor in Singapore’s Suntec City has sold for S$41.14 million ($28.77 million), according to a social media post by Savills on Monday, with an industry source identifying the buyer as a mainland Chinese individual.
Floor 31 in the 44-storey Tower 2 of the commercial complex changed hands for S$3,350 per square foot, setting a record cost per unit for a full floor in the 2.3 million square foot office element of the complex, with the industry source, who was not involved in the deal, identifying the buyer as coming from Fujian, China.
The sale of the of the 12,280 square foot (1,141 square metre) space breaks the record of S$3,300 per square foot set by a different mainland buyer in June in a S$38.8 million purchase of the 30th floor in the same tower, an industry source told Mingtiandi. Analysts see the pair of deals as an indicator that that overseas investors and business owners are willing to pay a premium to secure a prime location in Singapore’s downtown core.
“The high floors at Suntec City are arguably the only strata floors in Singapore that offer unobstructed views of the city skyline, waterfront, Marina Bay Financial District, Kallang River and Singapore Sports Hub,” Savills, which brokered the sale, said in a post on LinkedIn.
Businesses Buy Unblocked Bay Views
The office floor was previously occupied by Singapore-based shared workspace provider Arcc Spaces, which has 16 other locations in the Lion City, Beijing, Shanghai, Hong Kong and Kuala Lumpur.
Representing one of the largest pools of strata office assets in the Southeast Asian financial hub, the five-tower Suntec complex has been a centre for asset trades with another floor in the development put up for sale in July – directly following the earlier record deal – for S$36 million, as marketed by Knight Frank Singapore.
Located at 9 Temasek Boulevard in Marina Centre, Suntec City, which has 66 years left on its leasehold, also houses Singapore’s second largest shopping mall and a convention centre.
59 percent of the space in the 1995-vintage project’s office towers is held by ESR-sponsored Suntec REIT, which also owns the entire Suntec City Mall alongside its two-thirds interest in the convention centre.
Suntec City offices will now “receive strong renewed interest” according to Savills Singapore associate director for investment sales and capital markets Sophia Lim.
Lim said family offices and owner-occupiers are particularly interested in the development which completed a S$410 million facelift in 2015. The renovations improved and expanded the leasable retail space in the mall and convention centre to almost 1 million square feet.
Strata Deals Losing Momentum
The sequence of record deals comes as rising prices and soaring inflation have contributed to a slowdown in strata office transactions in mainland Southeast Asia’s southernmost city.
A report by Knight Frank showed the volume of strata office deals in Singapore slid by 16 percent to 145 units worth S$365 million in the first half, compared to the 172 transactions worth S$461.9 million seen in the second half of last year. Year on year, the first-half tally was well below the 169 units which changed hands in the same period last year for a combined S$703.5 million.
“With the recent successful collective sale of a few strata commercial buildings, existing owners of other strata buildings may be holding on to their units in hopes of also embarking on the en bloc route,” Knight Frank said.
While the strata market is slowing down, Singapore’s office leasing segment is continuing to show signs of a strong rebound post-pandemic.
Prime office rents in the Marina Bay-Raffles Place area inched up by 1.4 percent in the third quarter from the preceding three months and were up by 5.3 percent compared to the same period last year, based on separate data released by Knight Frank last week.
JLL reported last week that monthly rents for grade A office space in Singapore stood at S$11.06 per square foot last quarter, already exceeding the pre-pandemic level of S$10.81 per square foot monthly rate seen in the fourth quarter of 2019. Rents in the third quarter reached their highest level since the fourth quarter of 2008, the agency said, when monthly rates averaged S$10.81 per square foot before the financial crisis.