Singapore’s commercial real estate market rebounded sharply in 2021 with $9.6 billion in deals recorded across all property types as of mid-December, up from $3.2 billion in pandemic-struck 2020, according to Real Capital Analytics.
Including deals pending closure by year-end, the city-state’s 2021 investment haul marks the second-best annual total on record, surpassed only by 2019’s record level, RCA said in a research note.
The real estate information provider attributed the recovery in Southeast Asia’s financial capital to a torrent of cross-border capital, which made up more than half of this year’s transaction outlay.
“The $5.3 billion of overseas investment garnered so far in 2021 puts Singapore above the likes of New York and Tokyo, a remarkable feat considering how much smaller its investment market is,” said Benjamin Chow, RCA’s head of analytics for Asia.
Commercial Still King
Apart from the outsized role of foreign investors, Singapore also stands out among developed markets this year for the ongoing dominance of commercial transactions, as the rental residential and industrial sectors have played a larger role in the US and Europe during the pandemic.
Two-thirds of Singapore’s 2021 investment came from the office and retail sectors, led by CBD office towers and neighbourhood shopping centres.
Trading of rental apartment complexes has historically been thin in Singapore because of high transaction costs and sluggish rental growth, RCA said, while the industrial sector in the highly urbanised city-state has paled in comparison with the boom in logistics appetite across Asia Pacific’s bigger markets.
Back to the Office
A jumbo office deal opened 2021 in the Lion City as a joint venture of Allianz Real Estate and South Korea’s National Pension Service in January purchased a 50 percent stake in the OUE Bayfront tower from OUE Commercial REIT for close to $477 million.
The OUE Bayfront deal stood as Singapore’s top office transaction of 2021 until December, when JP Morgan Asset Management and Nuveen Real Estate completed the acquisition of their respective half-stakes in One George Street in Raffles Place from CapitaLand Integrated Commercial Trust and FWD Insurance for a combined $944 million.
The year’s other large office deals included Ascendas REIT’s purchase of a 75 percent stake in Galaxis from CapitaLand for $400 million to take full ownership of the building in the One North business park; Rivulets Investments’ acquisition of 61 Robinson Road from ARA Asset Management for $314.5 million; and Haiyi Holdings paying $220 million for a 30 percent stake in the UBS headquarters building at 9 Penang Road, a move that put the property in control of parties linked to acquisitive mainland-born businessman Gordon Tang.
Big-ticket retail deals in the last 12 months included Arch Capital buying YewTee Point mall from Frasers Centrepoint Trust for $164 million and Firmus Capital picking up Le Quest Mall from Qingjian Realty for $148 million.
RCA’s Chow noted that while global institutional players showed a stronger appetite for Singaporean commercial real estate in the latter half of the last decade, Singaporean players have also been increasingly looking abroad for deals.
“This confluence of strong inbound and outbound flows to and from Singapore, is what makes Singapore’s commercial real estate market so liquid and so volatile at the same time,” the analyst said.
Sovereign wealth fund GIC and Temasek Holdings-backed Mapletree Investments led the outbound charge with an emphasis on industrial assets.
In November, an investor group spearheaded by GIC reportedly acquired a $6.8 billion portfolio of 328 industrial properties across the US. The sovereign fund also paid $822 million for 27 US hotels.
Mapletree aggressively added overseas industrial properties over the course of the year, paying $3 billion for 141 US logistics assets while the firm’s sponsored Mapletree Logistics Trust spent $1 billion for 17 warehouses across China, Vietnam and Japan. Mapletree Industrial Trust acquired 29 data centres across 18 US states for $1.3 billion.
Also in the digital infrastructure space, SGX-listed Ascendas REIT announced its acquisition of 11 European data centres from Digital Realty for $671.7 million in March, aligning with one of the prevalent investment themes of mid-2021.