Singapore is top destination for overseas real estate investments in H1: report

INVESTMENT activity in Singapore's real estate market almost doubled in the first half of 2021 to US$4.7 billion worth of acquisitions, up 97 per cent from a year ago.

This is according to the latest Q2 Asia Pacific Capital Trends report released by Real Capital Analytics (RCA) on Wednesday, which highlights the figure as the third highest-ever despite it being "still some distance from 2019's unusually high watermark".

More than half of the total capital inflows came from cross-border investors. This has put Singapore at the top of the list of overseas investment destinations for the first time ever, said RCA.

While most of the capital was directed towards the office and industrial sectors, RCA described Swire Properties' recent sale of its freehold residential development Eden for US$220.2 million as a "rare apartment deal" which contributed to the H1 inflow.

Singapore's strong first-half real estate investment market performance is in line with a continued recovery in the Asia-Pacific (Apac) region, which posted steady sales growth in almost all major markets in Q2.

Investment activity across Apac climbed to US$77.6 billion in H1 of 2021, up 8 per cent from the same period a year ago, after the region's investment activity hit US$40.3 billion in Q2.

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Over the first half-year period, RCA noted a widening gap between top and bottom quartile central business district (CBD) office pricing in the region which it said was reflective of a divergence in investor preferences.

The data provider said this trend was apparent for the region's gateway cities including Seoul, Sydney and Tokyo, where top quartile pricing far outpaced bottom quartile pricing levels by mid-2021.

Singapore was the sole exception with its top quartile office pricing, the traditional proxy for movements in Grade A office pricing, growing by 3 per cent in Q2 from end-2019. Bottom quartile pricing, deemed by RCA "a closer indicator of the health of the broader office market", increased by 9 per cent over the quarter to reach a new high.

This comes as new office pricing records were set in Singapore over 2021, including a floor at Samsung Hub which surpassed the S$4,000 per square foot (psf) mark to best the previous record set before the Covid-19 pandemic.

The sale of Grade B office building Robinson Point at S$3,800 psf had also set a new standard for an entire office block, said RCA's managing director for Asia-Pacific, David Green-Morgan.

Highlighting Singapore's office sector market as one of the most volatile in the region, he observed how the city-state's office volumes have picked up this year with price increases across the board.

"But Singapore's office price growth stands out from the rest of the region for another reason - it's not just prime offices that are benefiting from this boom. Strong cross-border interest has spilled over into the secondary office market as well, with record levels achieved in the second quarter," added Mr Green-Morgan.