The Lavender-Kallang area is gentrifying with a blend of the old and new: shophouses under conservation alongside new commercial developments, including City Square and Kallang Leisure Park.
The mixed-use developments ARC 380 and City Gate will add to the eclectic mix. Rents and prices of commercial and industrial properties have also been given a lift by the two projects and the completion of mixed-use Aperia.
Aperia has two towers zoned for Business 1 (B1) use – meaning it is suitable for light and clean industrial use – with a gross floor area of 72,290sqm, and a three-storey retail podium of gross floor area 14,406sqm. The project is available only for lease and it has already secured commitment for over 50 per cent of its space. It will be home to tenants including Intel, Audi, McDonald’s, Cold Storage and Tim Ho Wan, said a spokesman for Ascendas Reit, which bought Aperia in August.
Another recent entrant is mixed-use CT Hub 2, set for completion next year. It offers about 310 strata B1 units and 41 retail units, with about 186 units sold overall. A further 77 office units have not yet been released.
“Those who bought strata units at CT Hub and CT Hub 2 during 2011 and 2012 are likely to be investors that switched over from the residential sector, when it was slapped with several rounds of cooling measures,” said Ms Elaine Chow, executive director and head of research at Chestertons Singapore.
But given patchy manufacturing growth, end-users and small and medium-sized enterprises are not likely to fork out high rentals for a smallish industrial unit, she said. “Investors may need to review their rental and yield expectations for these newly completed strata industrial units,” she added.
Still, demand has been healthy enough in the Kallang planning area for rents to rise from $5.50 to $6.50 per sq ft per month for new B1 industrial spaces, said Mr Nicholas Mak, executive director at SLP International.
Demand for CT Hub 2 could also have contributed to the profitable subsale deals at the project in 2012 and 2013, which had about 18 to 22 per cent per annum annualised profit margin, he added.
“Industrial real-estate prices are likely to remain steady in the area, with no new supply of industrial land site for sale here in the second-half 2014 industrial government land sales programme.”
Over the past year, the median price of shop units in the Kallang planning area had declined steadily until City Gate, launched in the third quarter this year, pushed the quarterly median price up from $1,084 in the second quarter to $3,824 in the third, he said.
“Prices of retail space are likely to remain healthy due to limited supply and steady demand.”
Ms Chow added that investor interest in commercial properties in the area is strong, evident when all strata office units at ARC 380 were sold out earlier this year.