Singapore real estate deal wave set to subside after record 2026 on higher borrowing costs

Résumé détaillé

Major transactions face longer negotiations and pricing gaps, even as investor appetite remains healthy

Major transactions face longer negotiations and pricing gaps, even as investor appetite remains healthy

[SINGAPORE] Three months ago, real estate circles swirled with anticipation of a deal for prime downtown complex Marina One's commercial component, said to be destined for Hongkong Land’s new private fund.

The S$5.7 billion price tag would have made it the biggest single-asset transaction done in Singapore. It was widely expected to close in August, after Hongkong Land was shortlisted in the months after Marina One was first marketed in January.

The mega-deal could have stalled simply because of the sheer size of the ticket, or specific terms tied to the acquisition, or issues raising fresh capital for funding.

But the backdown comes against a backdrop of growing caution and expectations of higher financing costs as interest rates move into a fresh cycle of rate hikes.

Jeremy Lake, Savills Singapore managing director of investment sales and capital markets, said: “The spread between net yields and borrowing costs has narrowed again and resulted in buyers re-evaluating their pricing assumptions for some deals, particularly for offices which have the lowest net yields and thinnest positive carry margin.”

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Investors are also weighing geopolitical uncertainty, the impact of artificial intelligence and US politics following the midterm elections, he added.

The US Federal Reserve raised its benchmark interest rate by 25 basis points in September to a target range of 3.75 to 4 per cent, its first increase since 2023, before holding rates steady in October.

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