Offices are expected to lure more investments thanks to recovering rents.
Commercial property in Singapore is expected to remain highly attractive to investors and developers in Q2 2019, with office rental growth continuing, according to a report by Colliers International. Rising visitor numbers combined with tight supply is also projected to raise revenue forecasts in the hotel sector.
In Q1 2019, Singapore’s hospitality sector continued to grow driven by keen interest from investors and developers who shifted focus to non-residential sectors.
The commercial sector also enjoyed some deals after months of negotiations and due diligence thanks to a recovery in the office rental market and firming up of retail market fundamentals. Meanwhile, the residential sector saw a slight pick-up in transaction value as a number of residential sites offered under the Government Land Sale (GLS) Programme were awarded successfully in Q1.
The report, which highlighted notable deals inked during the quarter, noted how a white site at Pasir Ris Central was awarded at about $700m (US$519m), or $684 psf ppr to a tie-up between Allgreen Properties and Kerry Properties through a Concept and Price Tender. “There are plans to develop about 480 residential units atop a 3-storey retail podium,” Colliers International revealed.
Likewise, Midtown Development tendered successfully for a premium hotel site at Club Street, within the Central Business District (CBD) for $562.2m (US$415.3m) or $2,148 psf ppr. This is said to be the first hotel site made available through the Confirmed List of the Government Land Sales Programme since 2008. A joint venture between ARA Asset Management and Chelsfield also acquired Bras Basah Road office building Manulife Centre for $555.5m or $2,305 psf based on net lettable area.
Additionally, an executive condominium (EC) development site at Tampines Avenue 10, offered through the GLS tender, was awarded to the top bidder Hoi Hup and Sunway Development at a price of $434.45m (US$320.9m), or $578 psf ppr. The achieved land price is the second highest on record for EC land since Sumang Walk’s $583 psf ppr in March 2018, Colliers International noted.
“The keen interest in commercial assets is expected to continue amongst investors and developers in Q2, driven by steady office rental growth and Singapore’s status as a global business hub,” the report’s authors said. “We also expect the hotel sector to be attractive to investors and developers, with Singapore hotels’ revenue per average room (RevPAR) expected to grow at about 3.5% YoY in 2019 as tourism arrivals reach record highs amidst tightening hotel supply.”
The residential market could also remain relatively subdued in Q2 2019 as developers focus on new property launches and take-ups.
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