Ravi Chandran
Real estate transaction volumes in the region continues to outperform globally by drawing new sources of outbound capital
Real estate transaction volumes in Asia Pacific has hit US$86 billion in the first half of 2019, according to JLL’s latest Global Capital Flows.
With Asia Pacific being the only region to record a year-on-year increase of six per cent globally, the report reveals that the region’s momentum is likely to moderate over the rest of the year, while investment levels are projected to reach a new full-year high in 2019.
“Due to the tightening of yields in core markets across the globe, particularly in Europe and U.S., investors are made to look beyond their domestic markets in search of higher returns,” explains Stuart Crow, CEO of Capital Markets Asia Pacific, JLL. “Joint venture and consortium structures continue to increase in popularity for large deals across the region as investors seek to go more direct and see the benefit in partnering with long-term like-minded groups.”
In the latest US$1.17 billion sale of DUO Tower and DUO Galleria, JLL acted as exclusive advisor on behalf of the seller M+S Pte. Ltd. Allianz Real Estate and Gaw Capital partnered to acquire this iconic Grade-A office and retail asset which is located in the downtown Bugis area.
Mr Crow adds: “This deal reflects the strength of the region in attracting international insurance capital. In the next six to nine months, we’re confident that demand from insurance funds will continue to rise and lift market sentiment.”
Singapore sees first-half real estate transaction volumes rebound
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According to JLL, property investment in Singapore nearly doubled in H1 2019 after a relatively subdued 2018. Driven in part by large-scale transactions, the office sector continues to account for the largest share of investment with nearly US$4.6 billion in acquisitions so far this year, and are likely to reach a new decade high in 2019. This is compared to US$3 billion transacted in 2018 and US$4.7 billion in 2017 respectively.
“Singapore’s office sector has become a favoured investment destination over the last 12 months, largely supported by the market’s very favourable demand-supply dynamics and a benign interest rate outlook,” says Chris Fossick, Head of Southeast Asia, JLL. “A big draw for investors is also its rising office rents. Singapore’s prime office rents are expected to continue growing over the next few years, backed by robust demand for the technology, professional services and financial services sectors.”
Another example of the spike in interest can be seen with the US$478 million sale by JLL of 71 Robinson Road, a 15-storey office block in Singapore’s CBD, to SV Robinson investment company. Other core funds that have recently sought to take advantage of the city’s long term growth prospects by investing in partial stakes in prime Grade-A buildings include Ocean Financial Centre — Allianz took a 20% stake — and Frasers Tower, in which NPS took a 50 per cent stake.
Real estate transaction volumes rebound signified by Chevron House sale
In June, Chevron House – a 32-storey office and retail building in the heart of the central business district – was sold to U.S. real estate fund AEW for US$0.75 billion, a 35 per cent increase on capital value from when it was purchased in 2017.
Chevron House, formerly called Caltex House, is a high-rise skyscraper located in the central business district of Singapore. It is located on 30 Raffles Place, in the financial district of Raffles Place. The building is near several buildings and landmarks, such as Singapore Land Tower, Hitachi Tower, Change Alley and The Arcade, all of which are less than 100 metres (110 yd) away. The development has direct underground access to Raffles Place MRT Station. Hitachi Tower, a nearby neighbour of Chevron House, shares a four-level retail podium with the building.
Chevron House has a total of 33 floors, excluding 3 basement levels, and it rises 152.0 metres (498.7 ft) above ground. The international headquarters of Caltex is situated in the building. Chevron House was designed by Murphy/Jahn, Inc. Architects and Architects 61, and was completed in 1993, just one year after its next-door neighbour, Hitachi Tower.
The other firms involved in the development are CapitaLand Commercial Limited, Savu Investments Private Limited, CapitaLand, Obayashi Gumi Corporation, Sendai Eversendai Engineering Group, Steen Consultants Private Limited, PCR Engineers Private Limited, Chevalier Group, PCR Engineers Private Limited, Rider Hunt Levett & Bailey, and Toshiba Elevator and Building Systems Corporation.
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