Back in the game: Singapore office investment sales rebound in Q2

Investment in the sector rose significantly by 75.7% to S$1.7 billion. 

According to Savills, investment sales in the commercial sector maintained a positive momentum in the quarter, increasing for a second consecutive quarter by 57.5% to S$2.24 billion. While growth in investment sales volume was observed in both the office and retail sectors, there was a significant expansion in office investment sales, rising 75.7% QoQ from S$992.6 million to S$1.7 billion. 

This was mainly attributed to more block transactions, with five concluded in Q2/2021 compared to only three in Q1/2021. The largest office deal, which was also the largest deal in the quarter, was the acquisition of an effective indirect interest of up to 28.05% in Jem for nearly S$582.6 million. This was based on the agreed property value of S$2,077 million. 

Here’s more from Savills:

Separately, the collective sales momentum continued in the quarter, with the first commercial collective sale of 2021, that of Maxwell House, being done. This was its second collective sale attempt with the asking price reduced to S$268 million from its initial reserve price of S$295 million in September 2020. The 13-storey commercial development was eventually sold to subsidiaries of Chip Eng Seng Corporation, SingHaiyi Holdings and Chuan Holdings for S$276.8 million, 3.3% higher than the reserve price.

The joint tenderers are expected to seek approval from URA for redevelopment into a commercial and residential development with a gross plot ratio of at least 5.6 and a gross floor area (GFA) of at least 234,072 sq ft, of which up to 20% of the total GFA is zoned for commercial use. 

Similarly, investment sales in the retail sector rose 15.4% QoQ to S$492.2 million in Q2/2021. This was largely attributed to an increase in shophouse transaction volumes from 12 in Q1/2021 to 20, leading to a QoQ growth of 65.7% in shophouse investment quantum to S$308.0 million. For the past three quarters, there has been a hike in investors venturing into the shophouse market, given its limited supply and absence of Additional Buyer’s Stamp Duty. 

Demand for shophouses came from a mix of foreign and local investors (in terms of high-net-worth individuals). Some of the foreign investors were motivated to buy because they were setting up family offices here. Apart from shophouse transactions and a strata transaction, there was a block transaction for a 45% stake in Paya Lebar Square totalling S$162.0 million based on the agreed property value of S$360 million to Low Keng Huat.