Q4 2021 Office Deal Volume

Q4 2021 Office Deal Volume Jumps By Over 2-fold

SINGAPORE – Commercial property investment sales in the city-state surged by 62.9 percent quarter-on-quarter to end 2021’s tally at S$5.6 billion, a 10.4 percent year-on-year increase, according to Colliers’ Investment Market Outlook 2022 that was published on Monday (7 March, SGT).

The volume was primarily propelled by office deals, which soared by 2.6 times thanks to the S$1.28 billion (S$2,875 psf) sale of the One George Street office building, which is regarded as the largest commercial real estate (CRE) transaction during the quarter.

Other top commercial property deals during the quarter included the S$650 million (S$1,443 psf) sale of Peace Centre / Peace Mansion, as well as the S$315 million (S$1,639 psf) divestment of Central Square. Both are mixed-use developments.

By property category, residential sales dominated the property investment market in Q4 2021, accounting for 43 percent of the overall deal volume. This is followed by commercial (25 percent), industrial (14 percent), and mixed-use (12 percent).

For the whole of 2021, residential sales still made up the lion’s share (44 percent). This is followed by commercial (21 percent), industrial (16 percent), and mixed-use (15 percent).

“Going forward, the strong performance in investment sales is likely to continue in 2022 from corporate mergers and acquisitions, as well as the conclusion of a few large commercial deals and land tenders,” stated Colliers in its report.

“Investment is likely to continue its strong run in 2022, with a few major deals in the pipeline. As yields compress, we recommend investors focus on assets with potential for value-add and flexible usage. These include assets such as CBD offices with redevelopment potential, warehouses, and shophouses.”

Meanwhile, the higher stamp duties imposed on residential property deals may lead to more spillover demand into commercial assets, particularly shophouses and strata commercial units, which come with palatable prices to family offices and high-net-worth individuals (HNWI).

“With abundant capital chasing limited assets and structural changes from COVID-19, there is a greater imperative for investors to look at assets with the potential for redevelopment or asset enhancement, especially with the current emphasis on environmental, social, and corporate governance (ESG),” added Colliers.

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