For many years, not just in Singapore, also in Hong Kong, big commercial players, invest in a few floors of offices, rent them and resell them eventually for a much bigger profit.
Office investment is very different from other segments of real estate.
The bigger floor plates in offices, the greater the demand, so much so, that many developers and landlords choose to build office buildings and keep them for rental for long period of time.
This is fuelled by strong demand from banks, institutions, fund houses, renowned lawyers, finance consultants, listed companies who will lease a few floors and recently UBS lease the whole office building previously known as Park Mall from Singhaiyi.
Not forgetting the popularity of co-work space that keeps expanding not just in Singapore but throughout the world.
Co Work Space is Popular and Are in High Demand
Co-work space give many entrepreneurs the flexibility to expand easily within without worrying about massive renovation costs and the precious networking programs that are organized by co-work operators prove to be of great added value to tenants.
It was estimated that co-work space will grow to 2 million sq ft by year 2020 in Singapore.
For this reason, individual commercial players who are not able to buy the whole office building will invest in a few floors of offices.
The demand from tenants is strong as it provides great corporate image for tenants who take the whole floor.
Rental has increased by 9.4% from the second quarter of 2018 to the second quarter of 2019.
And it looks set to increase further as Singapore has aggressively attracted fintech, technology and other growing economy sectors to Singapore with great infrastructure, highly skilled labour and transparent policies.
The recent Hong Kong turmoil has seen an outflow of funds of $1.94 billion to Singapore investment sales in the first half of 2019 from Hong Kong alone and Gaw Capital invested another $1.58 billion into 40% share of Duo Office and Duo shopping centre in August 2019.
在最近的香港市场动荡中，仅在2019年上半年，就有19.4亿新币的资金从香港流向新加坡投资销售，而广汇资本在2019年8月又向Duo Office和Duo shopping centre 40%的股份投资15.8亿新币。
This will come to a surprise to many who expect the almost zero growth to affect Singapore real estate.
Not only did it not dampen real estate sales but investment sales had already surpassed last year investment sales by more than 50%.
Like Southpoint smart investor, they can foresee that Singapore is resilient and can transform herself further to be a smart nation and to attract important industries and businesses to Singapore.
Southpoint Office Sale Made Headlines as 2 of its Office Floor SOLD at Crazy Price at $2,444 psf
The recent move by James Dyson is another proof that Singapore is attractive to many businesses to move their headquarters here.
Hence, our leaders in Singapore has guided Singapore to remain relevant to businesses and business entrepreneurs appreciate the safe environment for their families, the political stability, the corrupt free and efficient government, the adequate infrastructure, the bilingual abilities of the work force and highly skilled labour.
In a land scarce Singapore, with affluent Singaporeans and business tycoons living in our midst, it is no wonder that our real estate prices will continue to appreciate in the years to come, especially so with our population still increasing year to year to reach our white paper target of 6.9 million people.
Realty Centre is the Latest En Bloc SOLD Within CBD
The recent en bloc fever from May 2017 to June 2018 which lasted for 14 months saw real estate land prices reaching another level.
New developments are selling at record prices unseen since 2007 or 2013/2014 peak prices and they are still selling well.
新楼盘的售价创下了自2007年或2013 – 2014年的峰值价格以来的最高纪录，而且仍然保持在畅销期。
Singapore government introduced the new CBD incentive to rejuvenate Singapore CBD in 2019.
This new initiative adds 25% gross floor area to current plot ratio to selected CBD buildings to encourage building owners to rebuild in the years to come.
In the years to come, strata office buildings will attempt to collectively sell and there will be less strata offices for investors to invest in CBD.
The most compelling factor in office investment is the absence of additional buyer’s stamp duty (ABSD) and seller’s stamp duty (SSD).
Since Dec 2011, Singapore government has steadily increased ABSD to 20% stamp duty for foreigners for the residential properties on top of the buyer’s stamp duty of 4%.
As a result, hot money flows into commercial investments which buyer’s stamp duty is only 3%.
Commercial properties are also not subjected to 3 years of seller’s stamp duty and sellers have no restriction in holding period.
Amidst limited strata office supply, rising land cost, absence of ABSD and SSD, strong and stable Singapore currency and decent rental yields will give wings and sustainability to Singapore office investments.
Investment is visionary.
We have a number of office buildings to show you to make better informed decision.
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丹尼尔·李 Daniel Lee +65 9222 8888
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