Investors from Hong Kong and China dominated commercial transactions in Singapore during the first half of 2017, injecting over S$3 billion in Singapore office assets, revealed a JLL report.
Office investment for 1H 2017 include FWD Group’s acquisition of a 50 percent stake in One George Street, Hong Kong Land’s purchase of a 33 percent stake in the Central Boulevard site and the acquisition of other Hong Kong and China investors of Tripleone Somerset and GSH Building.
“Singapore remains a key market for many investors due to its long-term positive fundamentals. Real estate transaction volumes in Singapore rose by six percent year-on-year in the first half of the year, as investor sentiment is turning positive after CBD office rents bottomed earlier than expected,” said Regina Lim, JLL’s head of capital markets research for Southeast Asia.
Marina Bay saw prime office rent drop 27 percent over eight quarters until the first quarter of 2017. In Q2 2017, office rents increased for the first time, boosting investor confidence as tenant demand also picked-up.
“Due to stronger than expected rental growth, we upgraded our Singapore office rental forecasts for 2018 by about 10 percent. We now expect Singapore prime office rents to rise 20 percent over the next four years,” said Lim.
Meanwhile, the Southeast Asia region saw occupied office space increase by 4.6 percent in 1H 2017, up from 2016’s four percent, on the back of increased leasing demand from e-commerce firms as well as business services and financial firms.
The report revealed that online gaming operators contributed to the “strong office take-up in Manila while technology, fintech and coworking operators are expanding in Jakarta”. For the last two years, office rents in the Indonesian capital fell 16 percent and are expected “to continue to slide over the next 18 months due to the high supply in the pipeline”.
“While investors are looking on the bright side, consumer sentiment across the region is still weak,” noted the report.
Retail sales in Indonesia rose 4.7 percent year-on-year in Q1 2017, slower than the 10.5 percent in 2016, while Philippines saw retail sales increase by 6.5 percent in Q1 2017, down from 7.2 percent last year.
“In Singapore, retail sales have declined for three years but saw a marginal improvement, growing by 0.6 percent in January to May 2017,” said JLL.
This article was edited by Denise Djong.