Singapore Commercial Property Investments Plunge 66.8% In Q1

SINGAPORE – Data from Jones Lang LaSalle (JLL) shows that commercial real estate (CRE) investment in the city-state fell sharply by 66.8 percent year-on-year to US$1.9 billion during the first quarter of the year, reported The Edge on Monday evening (8 May, SGT).

In comparison, commercial property investment in the rival business hub of Hong Kong declined by 17.4 percent on an annual basis.

But among the Asia Pacific markets tracked by JLL, South Korea recorded the highest contraction in commercial real estate investments to the tune of 69.5 percent to US$2.5 billion, while that in Japan surged by 42.7 percent to US$8.9 billion.

“The [Japanese] office sector experienced a considerable volume uptick, propped up by headquarter building disposals from Japanese corporates and a flurry of acquisitions by J-REITs,” noted JLL.

Overall, commercial property investment across the region fell by 30 percent year-on-year to US$27 billion in Q1 2023.

The drop in Asia Pacific commercial real estate investment during the first three months of the year was reflected across all asset classes. In particular, office market investments declined by 26.6 percent on an annual basis to US$12.7 billion, which is one of the sector’s softest quarters on JLL’s record.

Likewise, investment volumes in the logistics and industrial segments decreased by 24 percent year-on-year, as the number of US$100 million-plus deals dwindled due to a new cycle of price discovery and funding challenges.

JLL’s Head of investor intelligence for Asia Pacific Pamela Ambler said she does not expect the price levels in the region to materially correct, despite the ongoing price adjustment cycle happening globally.

“We expect the level of repricing to peak in the second quarter of 2023 and then moderate in the latter half of this year as borrowing costs are expected to come off, with potential rate cuts going forward,” she added.