Big-Ticket Commercial Real Estate Deals Surge as Financing Costs Fall

Savills’ Lake noted that two to three years ago, when interest rates were high, the market was plagued by a price gap where sellers may have wanted S$100 while buyers were willing to pay S$80, leaving a gap of S$20 that was too wide to negotiate a deal.

Now, the price gap has narrowed significantly, small enough to find a negotiated middle ground, as sellers moderate their expectations and buyers become more competitive on pricing. Real estate investment trusts (REITs), including CICT and Lendlease Global Commercial Reit (LReit), have become more active.

LReit acquired the remaining 30 per cent stake in PLQ Mall for about S$116.4 million in February, following its initial purchase of a 70 per cent interest in the mall last November for S$619.5 million.

The reduced cost of debt has strengthened REIT balance sheets and distribution metrics, enabling acquisitions to be DPU-accretive, which encourages more active portfolio rebalancing for REITs.

In February, Hongkong Land launched a S$8.2 billion Singapore private fund focused on prime commercial assets in the city. The fund was seeded with the group’s one-third stakes in Marina Bay Financial Centre Towers 1 and 2, Marina Bay Link Mall, One Raffles Quay and One Raffles Link, as well as Asia Square Tower 1, which is wholly owned by Qatar Investment Authority.

According to a Mingtiandi report, Hongkong Land is now looking to grow its fund management business with similar private funds in Apac gateway cities. Chief executive officer Michael Smith told a forum on 12 May that the fund has investor backing to grow from S$8 billion to as much as S$15 billion over time, and is eyeing Marina Bay opportunities.

C&W’s Poh believes deal activity could pick up in the second half of the year, with several assets now being shopped. Marina One, held by Khazanah Nasional and Temasek, is said to be seeking between S$5 billion and S$6 billion for the office and retail components of the complex. One Raffles Place is reportedly being marketed at around S$2.5 billion, while Bugis Junction Towers is also up for sale with a guide price of S$685 million.

Suburban retail continues to attract domestic and regional capital, driven by its non-discretionary income profile and hidden value propositions, according to JLL’s Chua. Among properties on the market are Woodleigh Mall and White Sands.

CBRE’s Song said the Singapore office story is supported by strong tenant demand and accelerating rents in the next five years. New office supply for this year and next is expected to come in significantly below the historical average. Supply is projected to edge up to around 300,000 square feet in 2027, before surging by about 2.4 million sq ft in 2028.

Investor appetite for industrial assets has been robust in recent years and is expected to stay supported, said Loh Lee Fen, CBRE Singapore executive director of industrial and logistics capital markets. The improved financing environment has meaningfully enhanced yield-on-cost metrics, allowing investors to capture a larger share of returns through income.

JLL’s Chua said the primary constraint today is the limited availability of investment-grade assets with sustainable rental growth. Many institutional owners, including developers, family offices and sovereign vehicles, are not under pressure to sell and can afford to wait. As a result, the next leg of transaction growth is more likely to be driven by the seller side, particularly private funds reaching redemption cycles.

Still, JLL’s Chua cautioned that risks remain as interest rates could rise again. A key structural risk is the widening bid-ask gap, as sellers with no urgency anchor to rising forward rents. A durable recovery will ultimately require more motivated sellers, most likely through private-fund redemption cycles.

The Business Times, 18 May 2026