AXA Tower deal reaffirms tech expansion
E-commerce giant Alibaba recently agreed to acquire a 50 percent stake in Singapore’s AXA Tower, a sign that technology and e-commerce companies are well positioned to weather the COVID-19 pandemic.
Alibaba Singapore announced on Wednesday that it would buy half of the S$1.7 billion landmark from a Perennial-led consortium of investors. Once completed, the two companies will form a new joint venture to redevelop the Grade-A office building having already received approval under the CBD Incentive Scheme, which Singapore launched last year.
Amid ongoing market uncertainty related to the coronavirus pandemic, technology and e-commerce companies have become essential providers of goods and services across Asia Pacific.
“As a result of increased demand for their services and strong capital positions, tech and ecommerce giants have remained active in their expansion and investment plans, with global gateway cities like Singapore proving an attractive destination for deployment,” says Regina Lim, Head of Asia Pacific Capital Markets Research, JLL.
The acquisition is the first office deal that Alibaba has made outside of China and a further example of tech expansion into south-east Asia.
Singapore is home to some 80 of the top 100 global tech companies and more than 4,000 home-grown and international start-ups from around the world, making the city the Asian capital of technology and entrepreneurship.
In November last year, Dyson became the latest high profile entrant to the country with the announcement of a new site at the historic St James Power Station, near Sentosa, for its new global headquarters.
The acquisition serves as a confidence boost for the Singapore market as investment in real estate markets around the world dips in response to the ongoing COVID-19 pandemic.
Commercial real estate investment volumes across Asia Pacific in the first quarter was down by 26 percent year-on-year, though this is relative to a record level in Q1 2019, while investment in Singapore itself was down 60 percent over the same period.
“Investors have remained optimistic throughout this uncertain environment and stayed active in their pursuit of core assets in Singapore. This transaction will reaffirm investor appetite for CBD assets,” says Ting Lim, Head of Capital Markets, Singapore, JLL.
Singapore’s globally renowned stable policy regime, innovation eco-system and sustainability initiatives have served to solidify the city state’s status as a gateway hub in the region.
Demand is set to continue as the government maintains its commitment to developing the tech sector, rolling out recent initiatives such as Singapore’s National AI Strategy and the appointment of Digital Industry Singapore, to help grow the sector.