The QIA is to acquire Asia Square Tower 1 for around S$3.4 billion ($2.45 billion), QIA and BlackRock said in a joint statement.

The 43-storey building has more than 1.25 million square feet of net lettable area. Citibank has been the anchor tenant since the building was completed in 2011. 

JLL and CBRE are joint sole advisors for this transaction for BlackRock.

The building has been on the market since 2015 after bids by a consortium of Norway’s sovereign wealth fund and CapitaLand, Singapore’s largest developer, and rival bids by ARA Asset Management failed to clinch the deal (source: Bloomberg).

QIA will add the building to a property portfolio that includes four Los Angeles office buildings acquired earlier this year with real estate investment trust Douglas Emmett for $1.34 billion, London’s Canary Wharf Group and parent Songbird Estates (source: Bloomberg). 

The Singapore office market has hit headwinds. According to a recent report by Colliers International, this sector “faces a critical juncture in the next few quarters as softer occupier demand and peaking supply exert downward pressure on the sector.” 

Rental levels across the board fell by at least 2 per cent in the first quarter of 2016. Meanwhile, average occupancy of "grade A" office buildings, excluding Beach Road, Shenton Way and Tanjong Pagar, also fell over the same period due to competition from new buildings in the CBD and non-CBD locations. "We forecast up to 15.0 per cent of decline in gross office rents by the end of the year,” the report said. The firm added that such a market creates an opportunity to lock in leases at attractive valuations.