Singapore's record property deal year is losing steam: the S$5.7 billion Marina One sale stalled and higher rates have buyers walking away

Is Singapore's property deal boom ending? It is slowing, though the year will still set a record. A planned 5.7 billion Singapore dollar sale of Marina One's commercial component, which would have been the biggest single asset transaction in Singapore's history, stalled in October, and higher borrowing costs are making buyers rethink prices, The Business Times reported. Savills expects investment sales to fall to between 35 and 45 billion Singapore dollars in 2027, from about 55 billion this year.

The change reflects the global interest rate cycle. The US Federal Reserve raised its benchmark rate in September for the first time since 2023, and markets now expect another hike in December. For Singapore's office market in particular, where yields are thin, even modest increases in borrowing costs can turn a profitable deal into a marginal one.

What happened to the Marina One deal

Marina One, the large mixed use complex in the downtown core, was put up for sale in January. Hongkong Land was shortlisted for the commercial component, reportedly for its new private fund, at a price of about 5.7 billion Singapore dollars, and the deal was widely expected to close in August. In early October, talk began circulating that it was off.

The reasons are not fully known. The Business Times said the deal could have stalled because of its sheer size, specific terms of the acquisition or difficulties raising fresh capital. But it fell apart against a backdrop of growing caution as interest rates began a new cycle of increases, and its fate has become a symbol of the market's changing mood.

Marina One is not alone on the market. Other major office assets for sale include Lazada One, 30 Raffles Place, Bugis Junction Towers, Paya Lebar Green and One Raffles Place. Savills' Jeremy Lake said some deals have been delayed as buyers reassess pricing, while others have attracted "no bids or low bids".

Why higher rates matter so much for offices

The key number is the gap between what a property earns and what it costs to finance. "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," Lake said.

Grade A offices in Singapore's central business district yield about 3 to 4 percent, according to Cushman and Wakefield's Wong Xian Yang. That leaves little room if borrowing costs rise significantly. By comparison, Savills said 99 year leasehold retail assets typically offer net yields of 4 to 5 percent, and industrial properties with 20 to 25 years remaining on their leases can yield 6 to 6.5 percent.

The Fed raised its benchmark rate by 25 basis points in September to a range of 3.75 to 4 percent and held in October. After hotter than expected US inflation data this week, a December hike is now widely expected, as we reported in our analysis of the October US inflation figures and the Fed. Global property buyers price deals against those rising benchmarks.

Singapore's deal boom was built on cheap local money meeting global capital. As global rates climb, the arithmetic gets harder, and offices feel it first.

The record year so far

Despite the slowdown, 2026 has been exceptional. Excluding government land sales, investment sales totalled between 28.8 billion and 34 billion Singapore dollars in the first nine months, based on various consultancies' estimates. "Relatively generous yield spreads have made the city state a magnet for core capital," MSCI said in a report on 10 November.

Major deals included CapitaLand Integrated Commercial Trust's 3.9 billion dollar purchase of Paragon and Hongkong Land's 1.1 billion dollar acquisition of Wheelock Place. We tracked the boom earlier in our report on Singapore's record 50 billion dollar property year.

But the third quarter was much quieter, with investment sales of between 3.8 billion and 6.9 billion dollars. Lake said the slowdown was partly due to higher borrowing costs and partly because sales were falling from a very high first half. Cushman and Wakefield's Wong said it did not signal a sharp deterioration in sentiment, as most investors are still evaluating opportunities with clear income visibility.

Singapore money is still cheap

There is an important difference between Singapore and the US. Singapore's own borrowing costs remain low. As of 5 November, the three month compounded Singapore Overnight Rate Average stood at 1.3157 percent, broadly unchanged from a year earlier and well below the roughly 3.3 percent recorded in November 2024, Wong said.

"At the moment, borrowing costs in Singapore remain competitive compared with other markets in the region and around the world. There is still positive carry in many of the investible assets," said Knight Frank's Leonard Tay. But he expects a quieter 2027, because much of the available capital has already been deployed this year.

Wong warned that if borrowing costs continue to rise and the outlook becomes uncertain, similar to 2023 and 2024, "financing costs could become a more significant concern for investors in 2027". Colliers' Terry Wong said a pricing gap has emerged, with sellers referencing strong 2026 conditions while buyers factor in higher financing costs.

What to expect in 2027

Savills' Alan Cheong said the prospect of further rate hikes makes a repeat of 2026's record unlikely, but volumes should come close to the upper end of the 2022 to 2024 range, supported by deals started this year that close in 2027. Investors' preferences are shifting toward:

• industrial, logistics and data centre assets with higher yields
• retail and living sectors, including co living and serviced residences
• life sciences and redevelopment opportunities
• assets with clear rental growth rather than yield compression

Lake said private investment could pick up in the first half of 2027 if major office deals involving Marina One, One Raffles Place and Frasers Tower are completed, and government land sales are expected to stay strong as developers replenish land banks.

"We see 2027 as a transition from a record volume market to one in which asset selection, entry price and the ability to create income growth will matter considerably more," Colliers' Wong said. For investors and REIT holders, that means returns will depend more on rents and occupancy than on rising valuations.

Singapore's property market is ending a record year on a cooler note. Cheap local money still supports deals, but rising global rates are squeezing office valuations and stalling the biggest transactions. 2027 should still be busy by historical standards, but buyers will be choosier and sellers will have to meet them on price.