Alibaba acquires 50 per cent stake in Singapore’s AXA Tower, home to its Lazada e-commerce unit

Chinese technology giant Alibaba Group Holding has acquired a 50 per cent stake in a 50-storey prime office tower in Singapore, in a deal that values the property at S$1.68 billion (US$1.2 billion).

The stake in AXA Tower is being viewed as solidifying Alibaba’s commitment to the city state. “Singapore is an important market for Alibaba Group,” a spokesman said. “This investment will help fulfil our projected business needs across the Alibaba digital economy, as we continue to strengthen operations in Singapore.”

Lazada, Alibaba’s Southeast Asia e-commerce platform, is the building’s anchor tenant. “Lazada … [takes] up over 15 per cent of the space,” said Tricia Song, head of research for Singapore at Colliers. “This stake purchase could be a sign of Alibaba’s long-term commitment to Singapore, solidifying Singapore as its capital in Southeast Asia.”

Alibaba Singapore, a unit of Alibaba, which also owns the South China Morning Post, acquired the stake from a consortium of investors led by Perennial Real Estate Holdings. Alibaba Singapore and Perennial Newco, a newly formed unit of the consortium, will redevelop the property upon the expected completion of sale in June.

While it is unlikely that premium office spaces in Singapore will see a major upswing this year, given that the global economy is reeling from its worst recession since the Great Depression, its office market is regarded to be in a better position than many when it comes to weathering the crisis.

In the first quarter of the year, premium office rents in Singapore’s central business district were unchanged from the fourth quarter of 2019, according to property consultancy Colliers. The consultancy also forecast that office rents in the city state would remain flat this year, defying a general downturn in office markets across the Asia-Pacific region. Vacancy rates in Singapore dropped to 3.1 per cent in the first quarter from 3.4 per cent in the fourth quarter of 2019, and are likely to remain below the 10-year average of 6.2 per cent this year and the next, according to forecasts.