Singapore’s commercial property investment jumped 72 per cent, to $2.62 billion in Q1 2019. This comes despite the regional downtrend across APAC real estate markets.
- Singapore saw a more diverse range of transactions in the retail, office and industrial sectors. High demand for commercial property enabled investors to lock in higher rents.
- APAC markets got off to a slow start this year due to economic concerns. These include China’s slowdown, the US-China trade war, and the global downturn in consumer goods demand.
- Offices remain at the top of investors’ wishlists.
Q4 2018 was dominated by several major deals in the industrial sector, whereas the previous quarter saw a wider range of commercial property transactions (retail and office). Steady occupier demand for retail, office and industrial spaces in Singapore has enabled investors to secure higher rents.
On the other hand, the commercial property market in the region was sluggish at the start of this year as concerns about the region’s economic outlook affected activity. This was further aggravated by concerns regarding China’s slowdown, the US-China trade war, and the global downturn in consumer goods demand. The overall investment volume dropped 36 per cent to $42.04 billion in Q1, with Asia-Pacific markets struggling to match 2018’s pace.
Though office assets were the cornerstone of transaction volumes, retail assets were popular for Q1 this year. There was an eight per cent increase to $12.96 billion as investors bought assets in Hong Kong, Tianjin and Singapore. However, offices still remain at the top of investors’ wishlists due to market recovery across most major centres.
With a large number of interested investors in the region ($11.85 billion in intra-regional cross-border capital), many of them are likely to set up offices in Singapore.
No ABSD for commercial properties
As there is no ABSD for commercial properties, more investors will consider it as an alternative to the residential market. ABSD is upward of 12 per cent whereas commercial properties only have seven per cent GST. This may also be contributing to a rise in commercial property investment.
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About Madeline Foo
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