SINGAPORE’S commercial real estate investment volume saw a turnaround in 2021 to US$9 billion in total for the year, a triple-digit increase from 2020’s muted activity, according to Real Capital Analytics’ (RCA) Asia Pacific Capital Trends report.
Market recovery was driven by overseas capital sources, who splashed out on offices in contrast with the rest of the region, noted the report.
The sale of office property One George Street to JPMorgan Global Alternatives and Nuveen Real Estate in Q4 2021 marked the first billion-dollar sale since the onset of the Covid-19 pandemic, while German investor AM alpha inked an office deal in the Central Business District for nearly S$269.7 million.
Overall, investment across the property types almost tripled year on year to US$9 billion, bringing Singapore’s activity back in line with the pre-pandemic average, the report said.
Singapore investors also notably spent a record amount outside their home market in 2021. Almost US$16 billion was spent on the rest of Asia-Pacific (Apac), making Singapore investors the leading source of cross-border capital ahead of US firms.
David Green-Morgan, RCA’s head of real estate research, Apac, said that Singapore continues to be a top target for the world’s biggest global investors.
Overseas capital accounted for over half of the investment into Singapore’s commercial property market in 2021, with more than S$5 billion spent – the second highest on record just behind 2019’s peak.
Commercial real estate investment in Apac surpassed the US$200 billion mark for the first time in 2021, RCA said. Volume grew by a fifth year on year, and the “strength” of the rebound was broad-based across most major markets and all major property types, it observed.
According to the report, acquisitions of income-producing property reached US$205.4 billion in 2021 – 22 per cent higher than 2020 and 23 per cent greater than the 5-year average prior to the pandemic. Sales of individual buildings – the bedrock of the investment market – surpassed all previous highs to reach US$152.8 billion.
China, Taiwan and South Korea were at the forefront of growth, the report revealed.
Benjamin Chow, RCA’s head of real estate research, Asia, noted that almost all the key markets and sectors have recovered to or above their historical levels, which suggests that investors have an eye on the region’s longer-term growth prospects.
“The dominant narrative for Asia-Pacific was no longer about the strong rebound from 2020, but a resumption of its pre-Covid growth trajectory,” he said.
2021 also saw office, retail and hotel sectors gaining ground in Apac amid sector-specific challenges posed by the Covid-19 pandemic.
Offices remained the dominant property type traded in 2021, with pricing held up despite concerns over occupancy in certain markets, according to the report. Both retail and hotel segments grew more than 40 per cent year over year, reversing the decline seen in 2020.
Meanwhile, the industrial sector continued to “power” much of the growth in Apac’s investment market, with volume more than tripling over the past 5 years, the report said.
Investment in new economy assets such as logistics warehouses, business parks and data centres reached US$36 billion in 2021.
Green-Morgan added: “While the industrial sector has followed global trends by attracting more capital, it is the whole ‘new economy’ ecosystem that has proven to be irresistible for some investors. In addition, the retail sector across the region has seen renewed interest as the evolution of the sector continues.”
Source: https://www.businesstimes.com.sg/global-enterprise/singapore-commercial-real-estate-investment-volume-bounces-back-in-2021-report
