Private Chinese wealth fuels Singapore office market as vacancies drop: JLL

[SINGAPORE] The prime office sector in Singapore is a “top pick” for real estate investors in 2026 as tightening vacancies and a shift towards a favourable environment for landlords drive renewed investor conviction, said JLL.

Investment volumes in the city-state jumped 28 per cent year on year to US$4.2 billion in the fourth quarter of 2025 – the fourth-highest in Asia-Pacific (Apac), ahead of mainland China, India and Hong Kong – according to JLL’s latest Asia Pacific Capital Tracker report, released on Tuesday (Jan 20).

At the same time, the composition of foreign capital inflows is shifting. While institutional Chinese capital’s outbound investment has receded, private Chinese capital is still actively pursuing opportunities in Singapore.

Conversely, Singaporean institutional capital has turned its sights outward, emerging as the “most active” foreign capital source in Australia during the quarter.

In Apac as a whole, investment volumes totalled US$40.3 billion in the fourth quarter of 2025, climbing 15 per cent year on year. The strong fourth quarter capped a year of steady recovery against a turbulent backdrop, as full-year investments rose 12 per cent to US$147.6 billion.

Office fundamentals strengthen

Declining vacancy rates are expected to support rental growth and encourage more aggressive pricing strategies, said the report. This fundamental strength has placed the Singapore prime office market, alongside Tokyo and Sydney prime office markets, as the real estate consultancy’s highest-conviction bets for the year ahead.

The robust sentiment for Singapore was underscored by the quarter’s largest transaction, in which Keppel Reit acquired a one-third stake in Marina Bay Financial Centre Tower 3 from Hongkong Land for US$1.1 billion.

JLL added that co-living and education assets also remain popular as alternatives to the office market.

While escalations in “global geo-economic headwinds” could derail investment mandates, Singapore remains a “safe haven”, added the report.

Shifting capital trends

Meanwhile, as institutional Chinese funds pull back from Singapore, private wealth is stepping in to fill the gap. In a key deal for the quarter, the Elegant Group, a private investment firm backed by the Zhao family, acquired Clementi Mall from Cuscaden Peak Investments for US$627 million.

JLL noted that private wealth accounted for US$5.8 billion in volumes across Apac in the fourth quarter, with office deals seeing a resurgence.

At the same time, while private capital flowed into Singapore, local institutional giants looked outward. Singaporean investors were the most active source of foreign capital in Australia during the quarter.

Notable outbound deals included Keppel Reit’s expansion into Sydney retail with a 75 per cent stake in Top Ryde City Shopping Centre and TrustCapital Advisors’ acquisition of the office block at 750 Collins Street in Melbourne.

Overall, Singapore’s full-year investment volumes reached US$14 billion, a 21 per cent increase from the previous year. With liquidity remaining available due to significant capital recycling by Reits and institutional funds, the market is well-positioned for 2026, said JLL.

Looking ahead, monetary policy is likely to diverge from the US in 2026, said the report, with some Apac markets facing potential rate hikes while others maintain accommodative policies, contingent on local inflation and growth dynamics.

“With most major Apac markets facing stable or rising rates, debt costs may have reached the bottom of this cycle,” said JLL.

In Singapore, expectations are that the benchmark interest rate, the Singapore Overnight Rate Average, will rise from 2026, reflecting cautious investor sentiment amid ongoing near-term economic uncertainties.

Mature Apac markets also present a compelling investment opportunity as ageing office inventory “collides with growing sustainability demands”. More than two-thirds of office stock are over 10 years old – a figure that stands at 82 per cent in Singapore – while around 78 per cent of future tenant demand is tied to carbon reduction targets, said JLL.

“Ultimately, sustainability features must demonstrate clear financial viability through measurable improvements in net operating income, asset values and returns to justify capital allocation,” said the report.