Allianz and Gaw Capital buy iconic office, shopping complex in Singapore for US$1.2 billion amid ‘flurry’ of investment in city state

Cheryl Arcibal

Hong Kong-based Gaw Capital and Allianz Real Estate have bought part of an iconic mixed-use development in Singapore for S$1.6 billion (US$1.17 billion), in the city state’s largest private sector office sale in almost two years.

They acquired Duo Tower, a high-rise office building and Duo Galleria, the neighbouring shopping mall, from M+S Pte, a partnership between state-owned entities of Malaysia and Singapore.

The eye-catching hexagonal plated towers form a distinctive part of Singapore’s famous skyline.

Gaw is a private equity fund while Allianz Real Estate is the property investment arm of German insurance giant Allianz Group.

“Singapore is an established 24/7 city and has one of the most institutionalised commercial real estate markets in the world given its position as a key headquarters location for corporations in Asia. This will be an excellent addition to our global 24/7 cities office portfolio,” said Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate.

Kenneth Gaw, president and managing principal of Gaw Capital, said: “This deal marks our second major office transaction in Singapore in 2019 and signifies our continued optimism towards the office market here.”

It is Gaw’s biggest acquisition in Singapore to date, and one of Allianz Real Estate’s largest deals in the city state. Allianz Real Estate’s portfolio in Singapore includes three office buildings and one retail complex, while Gaw Capital will now have four assets in Singapore.

Their new property comprises just over half a million square feet of office space and about 60,000 square feet of retail area and has almost full occupancy.

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The acquisition is the latest in a string of high-profile investments in Singapore property recently.

British tycoon James Dyson, the inventor of the bagless vacuum cleaner, bought a three-storey penthouse for US$73.4 million recently, and seems set to buy another residence for US$33 million.

Data from consultancy Colliers International showed investments in Singapore real estate recovered in the second quarter of the year following three straight quarters of decline, with total investment sales hitting S$8.2 billion. It was a 56 per cent rise from the previous three months, and the first quarterly growth following property cooling measures implemented in July 2018.

“We expect the flurry of commercial investment activity to continue for the rest of the year and into 2020,” said Tricia Song, head of research for Singapore at Colliers. “We think the Singapore real estate sector has growth potential and remains an investment magnet for investors owing to its strong fundamentals, such as transparent regulatory framework, good infrastructure, and stable political environment.”

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Jeremy Lake, managing director, capital markets, CBRE Singapore, said investors are flocking to the city state given healthy demand from tenants and a limited new supply in the pipeline. Prime office rents in the central business district have risen 26.3 per cent since starting to recover about two years.

“The office market fundamentals have looked appealing for a couple of years and many investors have been actively looking for deals during this period,” Lake said.

JLL, which worked on the Duo sale, expects prime office rents to grow by a third between 2019 and 2022, the highest among cities that it covers.

“Demand for office space by technology companies in particular continues to grow strongly, due to Singapore’s intellectual property rights laws, innovation ecosystem and quality of life,” said Chris Fossick, CEO of JLL Singapore and Southeast Asia.

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