Singapore office investment volumes drop 59.7% to US$381m in Q3

But Colliers says transactions may pick up in Q4.

Investment transactions in Singapore’s office or mixed-use office sector dropped 59.7% QOQ to SGD519 million (USD381 million) in the third quarter of 2021.

According to Colliers, as COVID-19 cases continue to increase in the country, the sector only recorded one major transaction during the quarter: ARA Asset Management sold 61 Robinson to Rivulets Investments for SGD422 million (USD310 million). Several other office strata acquisitions were also made for The Octagon, GB Building Suntec City, and PLUS.

Going forward, Colliers expects investment transactions to pick up in Q4 2021, as it believes that the long-term attractiveness of Singapore to investors and the appetite for high-quality freehold or premium and Grade A office buildings are intact.

Long-term average capital value to see healthy growth ahead

The average imputed capital value of CBD Grade A office properties remained flat QOQ in Q3 2021 at SGD2,438 (USD1,791) per square foot. Cap rates for Grade A office properties remained between 3.15% and 3.50% in Q3 2021 but could potentially tighten by 25bps in Q4 2021.

Looking ahead, we expect long-term growth in capital values to be at 2.5% per annum, in line with long-term rental growth, on the back of low interest rates and the increasing weighting of capital allocated to the gateway cities in Asia.