Qatar Investment Authority (QIA) has bought a Singapore office tower from BlackRock in a deal touted as the largest single-tower transaction in Asia and the second largest globally.

The sovereign wealth fund will pay $2.45bn (€2.1bn) for the 43-storey Asia Square Tower 1.

The asset’s main tenant is Citibank.

Bank Julius Baer and insurance firm Marsh & McLennan also occupy space in the building, which has more than 1.2m sqft of grade-A office space and 40,000 sqft of retail space.

The deal comes after a period of weakening rents, due to a combination of weak demand and increasing supply.

John Saunders, head of Asia Pacific operations at BlackRock Real Estate, said the deal was a significant vote of confidence in Singapore’s property market.

Saunders told IPE Real Estate the sale reaffirmed the city state’s role as a premier investment destination.

Singapore’s rental values are seen as bottoming out within the next 12 months.

Major global investors – from private equity, pension funds and sovereign wealth funds – are looking at the city state, said Stuart Crow, head of Asia Pacific capital markets at JLL, which, along with CBRE, advised BlackRock.

The market is, he said, at “that stage of cycle that provides a very good entry point” for those seeking to increase both rental and capital value.

Crow said prices historically rose before rental values in Singapore.

The city continues to be an attractive destination for international investors, thanks to its stable political outlook, superior infrastructure and strong economic fundamentals, he said.

Although investors are looking for high-quality investments as they aim to increase their yield in a low-interest-rate environment, not many properties are available for sale.

The nature of Singapore’s market is that most properties are held by large listed real estate companies, according to analysts.

“It is very rare for such investment property to come into the market, and it is very rare for such property in a gateway city to be transacted,” Saunders said.

He said Singapore was a good place for long-term investors to invest in Asian real estate, considering the city’s growing role as a business hub, especially for companies in the wealth management industry.

Jeremy Lake, executive director at CBRE Singapore, said the company had courted “some of the world’s largest funds and leading investors for this exercise”, and that, without exception, all of them believed Asia Square was “a premium office asset”.