Singapore defies real estate investment decline as Q2 transactions hit $4.02b

Standout deals include the purchase of Fraser Tower for $990.63m and Marina Square Shopping Mall for $487.4m.

Real estate investments in Singapore bucked the downward trend among its Asian neighbours in Q2 as transactions volume rose up 69% YoY to $4.02b (US$2.9b), buoyed by cross-border capital flows and domestic investor support, according to a report by Real Capital Analytics (RCA).

Standout deals included United Industrial Corporation’s partial acquisition of Marina Square Shopping Mall for $497.4m (US$359m) and the 50% purchase of the Fraser Tower office asset for $990.63m (US$715m) by the National Pension Service of Korea.

“The positive divergence in investment trends between Singapore and other larger Asian real estate investment markets that was evident in the latter half of last year has continued through 2019. Singapore is at present showing resilience to the wider economic and political risks affecting the region, with domestic and cross-border investors alike particularly focusing on the office and retail sectors in the city state,” said David Green-Morgan, RCA’s managing director for Asia Pacific (APAC).

Also read: Property investment sales jumped 34% to $6.3b in Q1

Total Asia Pacific real estate investment transactions were down 19% YoY to $269.8b (US$34.4 b) in what RCA noted as a “lackluster” second quarter, dragged down by the trade war and general economic slowdown. However, RCA noted that it has already recorded $78.43b (US$10b) in completed transactions for the third quarter with a further $156.86b (US$20b) in the pipeline, which could indicate a recovery in the remaining months of the year.

Of all the capital deployed in the region in the second quarter, 69% was allocated to the eight largest markets – the highest proportion since 2011-- suggesting that investors are choosing to avert risk by capital investing to the largest, most transparent, and liquid real estate markets, rather than to regional or smaller cities.

Australia topped the second quarter rankings for commercial real estate investment transactions in APAC, bolstered by renewed domestic investor confidence in the wake of the national election and foreign capital inflows. In contrast, investment volumes for the quarter in China and Japan investment volumes fell to the lowest levels in a decade as both domestic and cross-border investment flows dried up.