Singapore’s office market has a bright future with supply expected to improve the outlook for overall rent and capital value in the next two years.
“German insurer Allianz paid above valuation for its first-ever investment in an office property in Singapore,” according to Nikkei Asian Review. “Late last week, Allianz bought a 20% stake in Ocean Financial Centre in the heart of the financial district for 537.3 million Singapore dollars ($392 million). The seller was Keppel REIT, which is managed by the property arm of Keppel Corp.”
Stuart Crow, head of capital markets for Asia Pacific at JLL, said that these dealings show a confidence in Singapore’s market. Krishna Guha, an equity analyst with Jeffries Singapore, expects an increase by next year and again in 2020 thanks to continued economic growth in the area.
While the office space market is looking good for Singapore, other sectors of the property market are taking a tumble. Retail continues to suffer as online stores reign king.
Savills, a real estate services provider, said that although Singapore is reaping benefits from increased tourism numbers and higher retail sales, but well-known brands such as Gap and Banana Republic have left the area. Additionally, retail chain Giant is on the way to closing some outlets, and U.K. coffee chain Costa Coffee has since closed all its doors in the area.
The residency market has also fallen, due to a new government-implemented cooling measure. The National University of Singapore reported that October saw a 0.6% dip in apartment and condos.
Meanwhile, JLL reports that prime office rentals have grown 18% over six consecutive quarters to September 2018 and estimate continued growth in 2020 once two new office buildings are complete. Coworking spaces and flexible office spaces are major contributors in increased office leasings.
Singapore is a hub for 37,400 other international companies who do business in Asia, including Google and Facebook. The city-state was also described as the second best real-estate investment market in the Asia Pacific, after Melbourne.