Commercial Property Investments

Commercial Property Investments Could Rebound To US$5.6b In 2021

SINGAPORE – While commercial real estate investments in the city-state declined sharply this year, investment volume is expected to improve next year as commercial properties in the republic remain appealing to investors across the globe, reported The Business Times on Tuesday morning (1 December, SGT).

Based on Savills Investment Management’s data, commercial property investments in Singapore during the first three quarters of the year only totalled US$2.7 billion, a far cry from the US$8 billion recorded during the same period in 2019.

As some transactions are still being finalised, the overall tally this year could hit US$3.2 billion. But this is still significantly lower than the 10-year average investment volume of US$7.7 billion and the US$10 billion seen for the entirety of last year.

Savills’ definition of commercial properties includes office, retail, hospitality, and industrial assets.

Still, commercial real estate investments in the city-state could rebound within the region of US$5.6 billion by 2021. This is because Singapore commercial assets are still sought-after by investors worldwide, according to a recent study conducted by Savills.

“Savills’ survey showed that Singapore ranked fifth in terms of geographical markets expected to attract the most real estate investments in 2021, after the United States, the UK, Canada and pan-Asia,” it stated.

“Singapore stands out as one of the key markets that we expect will attract stronger real estate investment inflows as borders reopen and as an effective vaccine rolls out. Over the next five years, our long-term view is that most Asia Pacific markets will likely outperform the global average from an average returns perspective,” noted Savills Investment Management’s Research Manager Benedict Lai.

The republic is also among the region’s markets that could outperform over the long-term, Lai added. He explained that Singapore is on the radar of global investors thanks to its relative neutrality, stable policy regime, sustainability initiatives, and plans to become a digital hub in Asia.

Despite the COVID-19 pandemic, Savills’ top property picks here include central business district (CBD) offices, which could see higher investor interest due to the incentives programmes launched by the authorities, as well as their long-term rejuvenation plans for the CBD.

“Offices in CBD locations with good transport links are here to stay,” noted Savills, explaining that office assets elsewhere in Asia Pacific would emerge as attractive investment opportunities in 2021 as investors regain their bullishness after the COVID-19 pandemic is fully under control.

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