Singapore Commercial Real Estate

Singapore Commercial Real Estate Deals Down 65%

SINGAPORE – The latest capital trends report published by MSCI Real Assets showed that commercial property transactions in the city-state fell sharply by 65 percent to US$1.8 billion during the second quarter of the year compared to the same period in 2022, reported The Edge on Friday afternoon (11 August, SGT).

MSCI said that commercial real estate investment volumes in Singapore could have contracted further if it wasn’t for the higher volume of deals involving smaller strata offices and shops in Q2 2023.

For the first six months of 2023, commercial property sales in the city-state declined by 21 percent year-on-year to US$5.8 billion. Nonetheless, Singapore was named as the 2nd most active metropolitan area for commercial property investments during the period. Tokyo bagged the number one spot, while Seoul landed on the 3rd place. Shanghai took the 4th spot, while Hong Kong completed the top five.

Meanwhile, commercial real estate deals in rival financial hub Hong Kong plunged by 46 percent to US$1.3 billion during the 2nd quarter compared to the same period in 2022. For H1 2023, the Chinese territory only recorded US$3.9 billion worth of commercial property sales, which marks a 17 percent drop from the same period during the preceding year.

MSCI disclosed that the real commercial property markets of major Asia Pacific economies like Japan (-22 percent), South Korea (-37 percent) and China (-44 percent) failed to pick up in the 2nd quarter.

“In China, the signs of recovery seen in previous quarters were absent in the second quarter. Cross-border investors from elsewhere in Asia had helped sustain activity previously, but these firms were quieter in the past quarter,” noted MSCI’s Head of Asia real assets research Benjamin Chow.

The decline in overall commercial real estate deals across Asia Pacific was led by a 56 percent annual fall in office acquisitions during the 2nd quarter. Notably, the slump in office sales negatively impacted Australia particularly hard, with total deal activity in the country plummeting 59 percent year-on-year during the quarter. For H1 2023, Australia registered a 65 percent year-on-year plunge in trading volume, the biggest drop among the countries in Asia Pacific.

“Given the tentativeness in the office market and the significant gap between buyer and seller price expectations, however, it could still be some time before the region as a whole reaches a sustained recovery,” Chow added.

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