Commercial property in Singapore is proving to be a hot favourite among local investors, going by both sales figures and loans recorded in the first quarter of this year.
According to data from commercial brokerage firm Colliers International, mixed-use and commercial property accounted for S$2.26 billion (US$1.8 billion) or over 20 percent of the total property investment sales in the first quarter.
Global banking company HSBC estimated a 10 percent increase in loan applications, while OCBC said it saw a double-digit growth in commercial property loan applications since March last year.
“While the interest stems primarily from business owners looking to purchase for their own business use, we have also seen an increase in applications by SPVs, which are acquiring such properties for investment purposes,” said Willie Tham, Head of Commercial Banking at HSBC Singapore.
Some property watchers said this might indicate that even sectors other than businesses and non-traditional buyers are entering into the commercial property market.
Chris Marriott, Chief Executive of Savills for Southeast Asia, noted that commercial property is a good shield against inflation.
“The 20-year inflation average is 1.7 percent per annum, compared to commercial property growth of 4.3 percent per annum. At present, rental growth is supporting higher values so short-term gains can outweigh inflation.”
He said that strong economic fundamentals on all key economic sub-sectors are creating healthy demand.
The office market in Singapore is also expected to benefit from this trend, as the country is becoming a regional business hub in Southeast Asia and the Asia Pacific regions, said Ashish Manchharam, Southeast Asia Head of Investments at Jones Lang LaSalle (JLL).
He added that Grade A office rents will likely climb between 10 and 15 percent this year.
Many analysts believe the recent property cooling measures may have attracted investors to commercial property, which has stable property assets that are less susceptible to policy changes.
