What was the largest office investment deal in Singapore in Q2?

The deal was worth approximately S$2.48 billion.

Singapore's office market is increasingly showing a two-tier performance, with premium buildings benefiting from strong occupier demand and investor interest while lower-quality assets face greater challenges in attracting tenants, according to Savills.

In its latest Singapore office market review, Savills said robust demand for premium office space, combined with limited new supply of high-quality developments, has reinforced the divergence between top-tier and lower-grade buildings. Premium offices continue to record high occupancy levels and command stronger rents, while older or less competitive assets face greater difficulty in backfilling vacancies.

Savills noted that leasing activity in Q2 2026 was supported by expansion demand from sectors including technology, financial services and hedge funds. The consultancy also observed an increase in new serviced office operators entering the market, alongside smaller corporate services firms expanding their footprints.

At the same time, the pace of office space surrender appears to have moderated, according to Savills. The consultancy attributed this partly to the growing adoption of five-day return-to-office policies, which has helped maintain occupier space requirements despite ongoing workforce rationalisation efforts. Companies are increasingly retaining office capacity to accommodate employees returning to the workplace.

On the investment side, Savills reported a significant increase in office sales activity during the quarter. Excluding the S$8.3 billion portfolio of assets incorporated into Hongkong Land's Singapore Central Private Real Estate Fund launch in Q1 2026, office investment sales volume rose from S$852.3 million in the first quarter to S$2.81 billion in Q2 2026.

Savills said the increase was driven primarily by larger block transactions linked to REIT portfolio restructuring and capital recycling strategies.

The largest transaction of the quarter was CapitaLand Integrated Commercial Trust's (CICT) divestment of its 100% interest in Asia Square Tower 2 to IOI Marina View, a subsidiary of Bursa Malaysia-listed IOI Properties Group, for an agreed property value of approximately S$2.48 billion.

The 46-storey Marina Bay integrated development comprises premium Grade A office space, ancillary retail areas and a third-party hotel. Savills noted that the transaction price represented a 9.9% premium to the property's market valuation as at 31 December 2025 and reflected an implied exit yield of 3.0%.

The deal formed part of CICT's portfolio restructuring exercise in April, as REITs continue to recycle capital and reposition portfolios towards longer-term growth opportunities.

The other major block transaction during the quarter was Singapore Land (SingLand) Group's acquisition of UOB's interests in two joint venture companies linked to Novena Square for S$299 million. Located above Novena MRT Station, Novena Square comprises two office blocks of 18 and 25 floors, alongside a three-storey retail mall.

Meanwhile, strata office investment activity remained relatively stable in terms of transaction numbers, with three deals completed in Q2 compared with four in Q1. However, lower-value transactions resulted in strata office sales declining from S$62.3 million to S$36.6 million.

The largest strata transaction was the sale of the third storey at 108 Robinson Road for S$16.1 million, translating to S$3,702 per sq ft based on a 4,349 sq ft strata area. Savills noted that the sale completed the divestment of the 12-storey freehold office building following its acquisition by PGIM in 2021 and subsequent asset enhancement works completed in 2023.

Savills said the quarter's activity reflected continued investor preference for high-quality assets with strong fundamentals, while highlighting the growing importance of asset quality and tenant demand in Singapore's office market.