Marina One Deal Stalls, Singapore Property Cools
Higher borrowing costs are lengthening negotiations and creating pricing gaps, with a S$5.7 billion Marina One deal reportedly stalled.
Record Year, Moderated Outlook
Singapore's real estate investment sales are on track for a record year in 2026, projected to reach approximately S$55 billion. However, Savills Singapore forecasts a moderation in 2027, with total investment sales expected to fall between S$35 billion and S$45 billion.
This anticipated slowdown is primarily due to rising borrowing costs, which are prompting buyers to reassess pricing assumptions, according to Jeremy Lake, Savills Singapore's managing director of investment sales and capital markets.
Major Deals Face Hurdles
A significant S$5.7 billion acquisition of the Marina One complex's commercial component, reportedly by Hongkong Land's private fund, has stalled. This potential transaction, which would have been Singapore's largest single-asset deal, was expected to close in August.
In contrast, 2026 saw major closures including CapitaLand Integrated Commercial Trust's S$3.9 billion purchase of Paragon and Hongkong Land's S$1.1 billion acquisition of Wheelock Place.
Rising Financing Costs
The US Federal Reserve raised its benchmark interest rate by 25 basis points in September, setting a target range of 3.75 to 4 per cent. This marked its first increase since 2023, though rates were held steady in October. Jeremy Lake noted that the spread between net yields and borrowing costs has narrowed, particularly affecting office assets with lower yields.
While Singapore's three-month compounded Singapore Overnight Rate Average (SORA) stood at 1.3157 per cent as of November 5, broadly unchanged from a year earlier, the prospect of further rate hikes influences buyer behaviour.
The market is now seeing a pricing gap, with sellers referencing strong 2026 conditions while buyers factor in increased financing costs and required returns, explains Terry Wong, head of capital markets and investment services at Colliers Singapore. This suggests longer negotiation periods and a more selective approach to transactions in 2027.
Despite some caution, most investors continue to evaluate opportunities with clear income visibility or long-term growth prospects, according to Wong Xian Yang, head of research for Singapore and South-east Asia at Cushman & Wakefield.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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