Commercial real estate deals roaring back to life

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A series of commercial real estate deals amounting to $1.06 billion was inked in the past week, surpassing the total investment volume for the commercial sector in the first quarter of this year.

Evia Real Estate and Metro Holdings bought 7 and 9 Tampines Grande, a pair of premium Grade A office blocks from City Developments Limited (CDL) and Alpha Investment Partners for $395 million.

Mitsubishi Estate and CLSA entered into a share purchase agreement with a Perennial-led consortium to buy Chinatown Point mall for $520 million, while Realty Centre, an office building in Tanjong Pagar, has sold for $148 million in the year's first commercial collective sale deal.

The investment sales market took a breather in the first three months of this year, with total sales staying muted at $4.6 billion, a 21 per cent decline quarter on quarter, and only about 13 per cent of the total annual investment volume last year.

The residential sector chalked up sales of $1.2 billion, with the commercial and hospitality sectors next at $900 million apiece, followed by the industrial sector at $600 million. Mixed-use and others posted $1 billion of sales.

The office sector was quiet in the first quarter, with only a few strata deals. Alpha Investment Partners acquired five floors in Suntec Tower 1 and one floor in Suntec Tower 2 for $160 million.

The retail sector saw several shopping mall transactions. In the largest private transaction of the quarter, CapitaLand and CDL acquired Liang Court mall for $400 million, and SC Capital Partners bought Rivervale Mall for $230 million.

There were a few significant transactions in the industrial and hospitality sector. SGRE Banyan entered into a $227.5 million sale-and-leaseback deal for Vibrant Group's 121 Banyan Drive warehouse. Cheong Sim Lam acquired Ascott Raffles Place Singapore for $353.3 million.

The office sector is the hottest one here after Grade A Central Business District rents extended their gains by 12.7 per cent last year and potentially another 9 per cent this year. Limited supply completions and decade-low vacancy rates have raised investor interest in the sector.

Activity in the office sector is expected to pick up further in the coming quarters, with Chevron House, Anson House and 139 Cecil Street going on the market. In addition, Frasers Property is in talks with interested parties for a potential sale of Frasers Tower.

DUO Tower and its retail component are also on the market with potential suitors such as CapitaLand Commercial Trust, Singapore's biggest office landlord, according to Bloomberg.

There could also be some deals inked in the hospitality sector. RB Capital is said to be in exclusive due diligence on Andaz hotel at DUO. Oxley has put its Mercure and Novotel hotels back onto the market, while Global Premium Hotels has placed its portfolio of 23 hotels for sale at $1.4 billion.

The writer is the head of research for Singapore and South-east Asia at global property consultancy Cushman & Wakefield.

Source: Straits Times, 28 Apr 2019