Source: CBRE Singapore, 4Q 2023 GRADE A CBD CORE OFFICE CAPITAL VALUE AND NET YIELD 3,000 2,950 Grade A (CBD Core) Capital Value (LHS) Grade A (CBD Core) Net Yield (RHS) 3,100 3,050 3,000 2,950 2,900 2,850 2,800 2,750 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 Capital Value (S$/sq ft) Net Yield (%) 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 2,950 3,050 2,850 Office Investment Market and Capital Values The office investment market saw muted activity in 2023 with investment volume amounting to S$2.0 billion, a significant decline of 72.4% YoY from 2022’s S$7.4 billion on the back of rising interest rate environment and economic uncertainty, causing institutional investors to remain on the side lines. The largest transaction in 1Q 2023 was the sale of Robinson Point by Viva Land Investment & Development Holdings for S$399.0 million (S$2,970 per sq ft) to an 81:10:9 consortium between Yangzijiang Shipbuilding (Holdings) Ltd, 9Co Parker Pte Ltd and ICH Singapore Holdings Pte Ltd. For the rest of 2023, transactions comprised smaller strata office units purchased by non-real estate companies, private individuals and family offices for own use, investment or wealth preservation. The more significant transactions in 4Q 2023 were Union Investment’s sale of Visioncrest Commercial for S$441.0 million (S$2,963 per sq ft on NLA) to a consortium comprising Metro Holdings, TE Capital Partners and LaSalle Investment as well as Wilkie Edge, sold by Lian Beng Group and Apricot Capital for S$350.0 million (S$2,265 per sq ft) to Keppel Capital. Capital Values and Net Yields – Grade A CBD Core Grade A CBD Core office capital value decreased by 3.3% YoY to S$2,950 per sq ft in 4Q 2023. The decline in capital values was from S$3,050 per sq ft in 1Q 2023 to S$2,950 per sq ft in 2Q 2023, remaining consistent for the rest of 2023. Grade A CBD Core office net yield also expanded by 0.2 percentage points YoY to 3.79% in 4Q 2023. Moving forward, capital values are expected to remain resilient even as investor sentiment turned cautious. Investors are adopting a wait-and-see approach amid the uncertain global economic climate. In turn, yields may witness slight decompression in the short term. CBRE expects investor interest to return more strongly in 2024, supported by solid market fundamentals and expected continuation of rental growth. Strata office units are also expected to continue to attract market interests. 104 CAPITALAND INTEGRATED COMMERCIAL TRUST INDEPENDENT MARKET REVIEW
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