Chart of the Day: Office and mixed-used property sales crashed 28.3% to $3.83b in Q3

Average deal sizes were lower compared to Asia Square Tower 2 sold in Q3 2017.

This chart from Colliers International shows that the volume of office and mixed-used commercial sales dropped 28% QoQ to $3.83b mainly due to the smaller average size of deals transacted during the quarter compared to Q3 2017 when Asia Square Tower 2 was sold.

The quarter also saw the average imputed capital value of CBD Grade A office
properties rose 2.2% QoQ to $2,401psf. For CBD Grade A, implied yields remained flat from around between 3.2% and 3.8% on average.

Also read: Office sector weathers slumping stock markets better than Hong Kong

“We expect cap rates to remain largely stable over 2019-2021,” Colliers International said. “This is mainly due to the hefty weight of global capital directed towards gateway cities.”

The firm also thinks that Singapore’s office market will approach favourable fundamentals, given the impending supply shortfall over 2019-2021. Said factors should offset the expansionary effect of potential interest rate hikes on cap rates, they added.

“In Colliers’ view, the Additional Buyer’s Stamp Duty hike on residential properties should continue to fuel a rise in investor interest towards the
commercial sector,” the firm said.

Amongst notable deals for the quarter include the office component of OUE Downtown which was sold for $908m or $1,713 psf NLA. Also included in the list of the biggest deals were the 55 Market Street and the 7 strata units of Prudential Tower sold for $216.8m and $130m, respectively.