Munich-based Allianz Real Estate and Hong Kong’s Gaw Capital have bought part of a large mixed-use development in central Singapore for S$1.58bn (€1.03bn) from the sovereign wealth funds of Singapore and Malaysia.

Allianz and Gaw Capital have acquired the office block, DUO Tower, and retail space, DUO Galleria, in a Singapore complex that includes 660 apartments and a hotel from M+S.

Allianz will own 60% of Duo Tower and DUO Galleria. Gaw Capital will hold the remaining 40% stake in the two assets on behalf of clients, including a sovereign wealth fund on a separate account.

The developer, M+S, a national joint venture between Singapore and Malaysia, retains ownership of the hotel, operated by Hyatt Group, which occupies the top 15 floors of Duo Tower.

M+S, a 60-40 joint venture between Malaysia’s sovereign wealth fund, Khazanah Nasional, and Singapore’s Temasek, began work on the project, which has an end-value of S$4bn, in 2013.

Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, told IPE Real Assets that the asset was located in an up-and-coming business hub in Singapore.

“Bugis is starting to establish itself as one of the business hubs outside the CBD, and, from that perspective, we see the potential of that location,” he said.

“The office tower leased quickly to a roster of good tenants and is now 97% occupied.”

Desai said: “Singapore is trying to promote a live-work-and-play environment and the DUO mixed-use development is a marque asset from that perspective.”

With this latest acquisition, Allanz now has a “well diversified” exposure in Singapore, including a central business district asset, Ocean Financial Centre, an office building at 77 Robinson Road, and a shopping mall.

Allianz paid S$573.6m for 20% of Ocean Financial Centre last year, and is a co-investor with Gaw Capital in its S$710m purchase of 77 Robinson Road in February this year.

The Allianz portfolio in Singapore, Desai said, was a good fit to Allianz’ strategy of owning a portfolio of offices in 24/7 global cities.

Christina Gaw, managing principal and head of capital markets at Gaw Capital, said her firm looked forward to working with Allianz to add strategic value to the property.

The partners will jointly manage the DUO assets.