US, Chinese Tech Firms Still Driving Demand For Singapore Suburban Offices
SINGAPORE – Even though the city-state’s commercial real estate (CRE) market is slowing down, executives from leading fund managers Allianz Real Estate, Oxford Properties, and Ivanhoe Cambridge continue to witness US and Chinese tech firms driving demand for suburban office space in the city-state, reported Mingtiandi on Tuesday evening (18 October, SGT).
Alessandro Fiascaris, Head of investments for Asia Pacific at Oxford Properties, said tech companies’ interest in Singapore means suburban office properties are becoming more attractive versus office buildings in prime areas, where the capitalization rate of such commercial properties are at about 3 percent.
Fiascaris stated this as a panelist at the Mingtiandi Singapore Forum held on Tuesday.
Moreover, Jones Lang LaSalle’s (JLL) CEO for Southeast Asia Chris Fossick expects the amount of office assets outside Singapore’s prime areas or central business district (CBD) would continue to increase as regional centers like Paya Lebar and Jurong Lake District are developed.
“Is the market going to be oversupplied? The general consensus is it’s not. We don’t think there will be any let up in office demand other than what is relative to just economic variations,” he added.
However, Allianz Real Estate’s Head of acquisitions for Asia Pacific Danny Phuan noted that there are fewer commercial property deals presently happening in the city-state. Still, he is optimistic on the outlook of Singapore’s suburban office market.
He also revealed that landlords are holding on to their prime office properties as they wait for market conditions to recover. This makes it difficult for core real estate investors to carry out quality acquisitions.
“Most of the prime offices are all held by well capitalized asset owners and there’s no need for them to sell if the price is just not what they expected,” he explained. “For us, we are still on the lookout to do good deals in Singapore.”
Despite the slowdown in Singapore’s commercial property transactions, Phuan remains upbeat on the local office sector due to the city-state’s status as global financial hub as well as launch pad for firms going global.