Singapore's commercial real estate market contract the fastest in Q3

Much like the city-state, the Asia Pacific saw commercial property sales drop 38% in Q3 as the global health crisis dampened cross-border deals.

Singapore’s commercial real estate market saw sales contract the fastest across all major Asia Pacific markets in the third quarter of 2020, with the number of deals falling 74% year-on-year in Q3, reported Singapore Business Review citing a Real Capital Analytics (RCA) study.

RCA noted that the value of deals also plunged 84% year-on-year to just over $544 million. 

“Commercial real estate investment has slowed across the board in Singapore this year. Pricing remains elevated, particularly for CBD offices where a couple of deals were struck at record levels on a per square foot basis this year,” said Benjamin Chow, Senior Analyst for Asia Pacific at RCA as quoted by Singapore Business Review. 

He added that the industrial sector emerged as the only bright spot during the quarter.

Much like the city-state, the Asia Pacific saw commercial property sales drop 38% in Q3 as the global health crisis dampened cross-border deals.

Sales for major income-producing property types fell to around $34.9 billion from Q2’s $44.32 billion and $56.7 billion in Q3 2019. 

“The global pandemic continues to hamper deal-making for a swathe of cross-border investors, and the clouded economic outlook in many markets still presents uncertainty that puts many investors on hold,” said David Green-Morgan, RCA’s Managing Director for Asia Pacific as quoted by Singapore Business Review. 

Domestic players, however, seem to have the advantage at the moment, while major markets with strong domestic investor bases like Japan, China and South Korea are holding up better under the present environment.

Activity levels in the industrial sector matched that posted in Q3 2019, while all other key property types saw activity levels decline, with retail and hotel sales registering the biggest drop.

RCA revealed that deals involving individual properties increased to around $30.88 billion in Q3 from the previous quarter, on the back of a smattering of high-value deals.

Meanwhile, sales of development sites – which mainly take place in China – saw its deal volume increase 18% year-on-year to $217 billion in Q3.

Portfolio sales, on the other hand, plunged to levels seen during the global financial crisis. Deal volume of this type fell 48% year-on-year in the first 10 months of 2020.

Source: CommercialGuru, 19 Nov 2020