Will Singapore’s investment activities sink due to the weak rental environment?

Yields remain tight as investors prefer high-quality assets.

The weakening rental environment of the city-state has cast doubts on the performance of its investment activities.

However, according to a report by Deutsche Asset Management, investment activities has held its own despite the lacklustre rentals.

“Interest in prime office has been revitalized by flagship transactions led by Qatar Investment Authority’s acquisition of Asia Square Tower 1 for SGD 3.4 billion in the first half of 2016, spurring more assets to be placed on sale in the market,” the report noted.

Meanwhile, yields remained tight as investors continue to favour high quality core assets for long-term holding over older assets with redevelopment potential in view of high replacement costs and weak buyer sentiment in the strata-titled sales market, the report added.