Singapore’s Economy Well-positioned to Navigate Turbulent Environment
Singapore’s economy expanded by 3.7% y-o-y during Q1 2022, fueled by growth from the manufacturing, finance and insurance, and professional services. Singapore’s economy is poised to grow steadily, with GDP growth in 2022 to be range-bound between 3% to 5%. Rising interest rates and heightened inflation is driving up uncertainty in the global economy. Nonetheless, Singapore’s economy is on stable footing and well positioned to navigate the future uncertain environment.
Commercial Investment Market Set Abuzz
Total investment volume in Q2 2022 surged to $13.03 billion (b), more than doubled Q1 2022’s volume of $6.10b. This was due to rising investment activities across different sectors with the commercial property market overtaking residential sector to account for the largest share of almost 55% of total investment volumes in Q2 2022. Q2 2022’s commercial volumes surged to $7.2b – more than 2.5 times that of Q1 2022 given the conclusion of several big-ticket deals.
High-quality commercial assets which can deliver stable cashflows, remain well-sought after by investors, with robust activities in both CBD and decentralised markets. Capital appears to be embarking on a flight to safety as investors look to protect and grow their wealth in safe-haven assets.
Recent significant deals include the sale of Income At Raffles - a 37-storey, 999-year leasehold office asset located at 16 Collyer Quay for around $1.0b or slightly over $3,600 psf to Bright Ruby Resources, an investment firm backed by the Du family from China. Over in Tanjong Pagar submarket, US-based private equity group KKR acquired Twenty Anson – a 20-storey office building which is on a site with a balance leasehold tenure of about 84.5 years for close to $600 million (m) from AEW.
AEW acquired Westgate Tower, a 20-storey office block in Jurong East from Sun Venture Group for about $680m. This followed the purchase of the remaining 68.2% stake in Jem mall, a mall at Jurong East at an agreed value of $2.079b by Lendlease Global Commercial REIT. Investors’ interests are extending beyond the city centre as they are in the hunt for high-quality commercial assets with longer remaining lease. Also, decentralised office markets could see higher leasing demand as some tenants get priced out of the CBD as CBD rents continue to increase. The commercial collective sales markets also witnessed robust activities with the sale of Golden Mile Complex and Verdun House for $700m and $55.1m, respectively.