PETALING JAYA: IOI Properties Group Bhd
(IOIPG) has scaled up its interest in Singapore’s central business district (CDB) in the Marina Bay precinct with the purchase of 100% interest in Asia Square Tower 2 (AST2) from CapitaLand Integrated Commercial Trust (CICT) for S$2.476bil (RM7.7bil).
The agreed property value represents a discount of S$50mil to the market value appraised by Savills on April 12. The deal works out to roughly S$3,200 per sq ft.
Datuk Lee Yeow Seng, group chief executive officer (CEO) of IOIPG, said the acquisition reflects IOIPG’s continued conviction in prime Singapore assets, which offer stable recurring income streams supported by strong market fundamentals.
“Assets located within the Marina Bay precinct are well-positioned to benefit from sustained demand, limited supply, and ongoing urban transformation,” he said in a statement touching on the corporate exercise.
AST2 is a landmark development offering 773,460 sq ft of premium Grade A net lettable area (NLA). As of March 31, the asset had an average occupancy rate of 95.8%.
The acquisition takes IOIPG’s Singapore property portfolio total NLA to 2.57 million sq ft and will strengthen the group’s recurring income base.
The property group added the resilient office demand from global occupiers in the island republic as well as a constrained future pipeline of new premium office space in the CBD puts AST2 in a good position to deliver positive rental reversions and sustainable performance over time.
Olive Tree Property Consultants founder and CEO Samuel Tan noted the sale showed the trend of massive acquisition moves in the Singapore CBD landscape.
“This transaction is not just about a building. It is a strategic land grab for dominance in the Marina Bay precinct. Grade A office assets in Marina Bay rarely trade. Comparable transactions for AAA assets in 2025/2026 have trended between S$3,100 and S$3,400 per sq ft,” he told StarBiz.
CICT is booking a 9.9% premium over its 2025 year-end valuation. While a 10% premium seems steep on paper, context is everything, Tan added.
The inclusion of The Westin Singapore and ancillary retail adds a defensive layer to the deal. High-end hospitality in Singapore has seen a post-2024 surge in revenue per available room.
In a flight-to-quality market, Tan added owning a 95.8% occupied asset (AST2) with blue-chip tenants like KPMG and Mizuho justifies a premium for the immediate, stable cash flow. “The premium is justified, not necessarily on current yield alone (likely sub-3.5% NPI yield), but on the strategic synergy and the difficulty of acquiring such a massive NLA block in one go,” he explained.
The deal could be the final foundational stone for IOIPG’s upcoming Singapore real estate investment trust (REIT). By adding AST2, IOIPG’s Singapore portfolio (including IOI Central Boulevard and South Beach) hits a S$10bil valuation.
“A REIT needs heft to attract global institutional investors; S$10bil puts them in the mega-REIT league alongside CICT and Mapletree. AST2 has large floor plates (30,000 sq ft). Central Boulevard has a medium plate (22,000 sq ft) while South Beach has a smaller/boutique (15,000 sq ft).
“This allows the REIT to retain tenants as they scale up or down, creating a walled garden for occupiers within the IOI ecosystem,” he noted.
The AST2 high occupancy rate will also help balance out the lease-up risk of newer projects like Central Boulevard, which makes the 2027 REIT prospectus much more attractive.
Tan said Singapore is currently the primary beneficiary of the safe haven trade.
Ongoing volatility in North Asia and Western markets has cemented Singapore as the regional headquarters of choice. And IOIPG is betting that multinationals will continue to pay a premium for the Singapore certainty.
For IOIPG, owning S$10bil of hard currency assets acts as a massive hedge against ringgit volatility. Tan warned that since IOIPG is now heavily “all-in” on one specific micro-market (Marina Bay), any infrastructure issue or localised downturn in the financial services sector would hit the group’s entire Singapore portfolio simultaneously.
IOIPG’s net gearing is roughly 0.78 times following this recent acquisition. While the group’s Malaysia REIT listing in 2026 will help pay down debt, the “carry cost” of a S$2.5bil acquisition is high if interest rates do not continue their downward trend, Tan said.
“Lee’s personal ownership of Shenton House and the IOIPG’s Marina View residential project means it is highly exposed to the luxury residential market, which is more sensitive to government cooling measures (ABSD) than the office sector.
“This is a measured, calculated move with a long-term horizon,” Tan concluded.
