Category Archives: Marina Bay, Raffles Place, Tanjong Pagar and Singapore River

Districts 1&2

Raffles Place among the latest to be affected from retail slump

One Raffles Place are hit harder by the retail slump than those in Orchard Road because of office workers’ limited shopping hours and minimal tourist traffic.

Travel products store Tumi, watch brand Swatch, jeweller Pandora and shoe brand Melissa have decided not to renew their leases and will shut soon.

The bigger tenants, which take up prime space on the ground floor, are leaving, upsetting smaller tenants, which claimed they were not told of the moves prior to them renewing their leases.

The Body Shop outlet on level three, which is moving out on Thursday next week, has not been making a profit. Other tenants moving out include Evergreen Stationery, Yami Yogurt and Blow + Bar hair salon.

3 years after its opening in 2014, most of these crowd-pullers have shut or will move out by next month, as the retail slump claims yet another casualty. Lingerie brand Victoria’s Secret, fashion retailer Uniqlo and cafe Paris Baguette have already closed their stores at the six-storey mall next to Raffles Place MRT station.

Its anchor tenant, Swedish clothing retailer H&M, has not confirmed if it will be moving out when its lease ends, providing some respite for the mall.

Samsung Hub Office sold at S$3280 psf

The 20th floor of the 999-year-leasehold Samsung Hub office tower is sold at S$43.07 million or S$3,280 psf based on the strata area of 13,132 sq ft. Standard Commodity Trade Centre Pte Ltd is selling the space on a vacant possession basis to Lei Shing Hong Properties (Singapore). The buyer plans to occupy the space for its own use.

The company is part of Hong Kong-based Lei Shing Hong group, which is involved in businesses ranging from retailing premium cars, trading and securities brokerage, to property development and investment. The S$3,280 psf fetched for the 20th floor is identical to that for the 21st level back in 2014.

Six Tg Pagar conservation shophouses up for sale

A row of six adjoining conservation shophouses in Tanjong Pagar has been put up for sale at an indicative price of $57.8 million.

The guide price for the units – 48 to 56 Peck Seah Street – works out to about $2,900 per sq ft, based on the existing gross floor area of 19,938 sq ft. The shophouses sit on three separate land lots and have a combined land area of 8,213 sq ft. The site is zoned commercial under the Chinatown (Tanjong Pagar) Historic District Conservation Area in the 2014 Master Plan.

The units, which are owned by a fund managed by Phoenix Property Investors, have a 33m-wide road frontage and are near the Tanjong Pagar MRT station.

The private equity property fund acquired the shophouses in January 2015 for $42.8 million from shipping firm K Line (Singapore).

New projects in the area include Tanjong Pagar Centre, the upcoming Frasers Tower and the redevelopment of CPF Building.

Closing up the Circle Line starting in 2018

Advance preparatory works to make the Circle Line a complete loop, by joining HarbourFront station to Marina Bay station, have begun. Tenders for the civil works are expected to be awarded by the year end, and construction will begin in 2018Q1

The 4-km CCL6 line will close the loop for the CCL by connecting HarbourFront Station to Marina Bay Station. When the three CCL6 stations of Keppel, Cantonment and Prince Edward are completed in 2025, the CCL will have a total of 33 stations, including 12 interchange stations with other MRT lines.

Expanding the rail network to more areas such as the southern edge of the existing CBD, CCL6 will support direct east-west travel. Besides reaching new commuters, the extension will allow those travelling between the south-western and south-eastern ends of the line – such as from Pasir Panjang to Nicoll Highway – to have more direct and quicker access.

The stage is being set to build the three new stations that will complete the Circle Line. Keppel station will serve commuters at Keppel Distripark, while Cantonment station will be near Tanjong Pagar Railway Station and offer access to Spottiswoode Park Estate. The Prince Edward station will be near Palmer Road, where heritage landmarks are.

The extension will also serve part of the Greater Southern Waterfront, a massive mixed-used development that will commence once the Tanjong Pagar, Keppel and Brani port terminals are relocated to Tuas after their leases expire in 2027.

Preparatory works include relocating affected facilities at PSA Keppel Terminal for the construction of Keppel station, dismantling the platform canopy structures of Tanjong Pagar Railway Station and the relocation of Shenton Way Bus Terminal for the construction of Prince Edward station.

Investment property sales drop in Q1

FROM a high base in the fourth quarter of last year, big-ticket property transactions of at least S$10 million declined substantially in the first quarter.

However, the mood in the market is decidedly positive – with much anticipation of the imminent mega transactions of Jurong Point mall, and Asia Square Tower 2 in the CBD.

“Investment market sentiment is positive and the price gap has mostly disappeared except for hotels,” said CBRE executive director, capital markets, Jeremy Lake.

In particular, the tone of investors towards the office sector seems to have reversed dramatically. “The oversupply in the Singapore office market is yesterday’s story, and today’s story is all about the recovery and rental growth,” said Mr Lake.

Figures compiled by Savills Singapore showed that S$5.2 billion of investment sales of property, as these big deals are known, were sealed in Q1, down 34.8 per cent from S$8 billion in Q4 last year. However, the Q1 number is double the S$2.5 billion in the same year-ago period.
Photo: The Business Times
Photo: The Business Times

Both Savills and Cushman & Wakefield (C&W) estimate that some S$2.7-2.8 billion of deals in the commercial property segment were transacted in January to March this year – giving it a share of slightly over 50 per cent of total investment sales.

Major transactions include the S$881 million sale of a 70 per cent stake in TripleOne Somerset by a consortium led by Perennial Real Estate Holdings to Stanley Ho’s Hong Kong-listed Shun Tak Holdings, and Manulife’s S$747 million purchase of PwC Building at 8, Cross Street, from DBS.

Savills said the S$2.8 billion of commercial property investment sales in Q1 was a 41.9 per cent increase from the nearly S$2 billion in the previous quarter.

The residential sector saw S$2.1 billion of big-ticket sales in the first quarter, giving it a 40.2 per cent share. On a quarter-on-quarter basis, however, the Q1 tally was down almost 12 per cent, according to Savills.

C&W Singapore research head Christine Li highlighted the flurry of bulk residential sales in Q1 as some foreign housing developers sought to offload their remaining unsold units ahead of regulatory sales deadlines imposed on them under the government’s Qualifying Certificate rules – to avoid paying hefty penalties.

A string of last-minute deals were also inked on the night of March 10 – including TwentyOne Angullia Park, The Line @ Tanjong Rhu, Robin Residences and The Lumos – before the new Additional Conveyance Duties (ACD) took effect the next day.

The ACD plugged a loophole that some bulk buyers in Singapore residential projects had been using to enjoy significant savings in stamp duties.

Savills Singapore managing director Steven Ming said: “Unless annual residential prices are expected to rise significantly in the coming years, it is unlikely that institutions will return to the bulk residential sales market as the hefty 18 per cent stamp duty cuts deep into their required rates of return.”

The effect of this would be the shift of interest by institutional investors to other sectors of the real estate market here, he added.

Industrial properties posted S$344.2 million of investment sales in the first quarter, down 67.8 per cent quarter-on-quarter.

CBRE and Savills expect the total investment sales for 2017 to be in the S$18-20 billion region – down from around S$23 billion last year. C&W expects the number to remain in the S$20 billion range.

Mr Ming of Savills commented that with institutional investor interest expected to be diverted from residential towards the office, retail and hospitality sectors here, investment sales are expected to continue despite yield compression.

“As both private equity funds and ultra high net worth individuals have either raised new money or have a need to diversify to reduce concentration risk, yields have potential to remain low and go lower as prices will either hold firm or even edge up,” he reasoned.

Ms Li of C&W noted office asset prices are already starting to trend upwards, with rents expected to bottom this year.

In similar vein, CBRE Research’s head of Singapore and South-East Asia, Desmond Sim, argued that as the office recovery story gets more real in terms of rising commitment rates for new projects such as Marina One, this will push more institutional investors to be ready to commit.

CBRE predicts that by the end of the year, seven out of 10 institutional investors who are looking at the Singapore office sector will be ready to buy – up from five out of 10 investors now, which in turn is a higher ratio than just one out of 10 investors a year ago.

Regina Lim, JLL’s head of capital markets research, South-east Asia, observed that in the past four years, Singapore has seen a gradual decline in office demand, retail sales, food and beverage receipts, and gross domestic product growth.

As a result, the republic’s attractiveness to overseas institutional investors has waned, and they have gravitated to Australia, Japan and China commercial property, which have stronger growth stories.

“However, capitalisation rates in these markets have compressed and now Singapore looks less expensive in comparison to these markets.”

Mr Sim of CBRE said that on the residential sector front, while bulk purchases of units from developers have now become harder to do, there may be a bright spot in collective sales. “We should see more interest in en bloc sales from land-hungry developers, especially in the face of limited supply through the Government Land Sales Programme.”
– See more at: http://news.asiaone.com/news/business/investment-property-sales-drop-q1#sthash.8H86fsyp.dpuf

Shophouses in the vogue again among investors

Investment in Singapore shophouses has stabilised and shows signs of picking up after taking a hit following the introduction of a loan curb in 2013. Total transaction value has been rising in the past two years even though the number of caveats lodged remained fairly steady at just over 100 a year.

Transaction value rose by about 7.6 per cent to $707.07 million last year, from $657.3 million in 2015. Demand for shophouses fell off a cliff in 2014, after the imposition of the total debt servicing ratio (TDSR) framework at the end of June 2013.

Three adjoining 999-year tenure shophouses in Amoy Street in Tanjong Pagar were recently acquired by an institutional fund for $59.6 million, or about $2,500 per sq ft, based on the floor area. In another deal, a family office bought a shophouse at 54 Boat Quay for $12.9 million or about $2,985 psf on the floor area.

Office properties, seen as a proxy for shophouses, have faced challenging leasing environment as a deluge of new office buildings weighed on rents in recent years. The average rental yield for shophouses ranges from 2.5 to 3.5 per cent, depending on the tenure of the asset.

Asia Square Tower 2 in Capitaland Acquisition plans

Capitaland is said to be in exclusive negotiations to acquire Asia Square Tower 2 from Blackrock. Based on sources, the price under negotiations is above S$2,700 psf. The recent sales of Asia Square Tower 1 in June 2016, and the GLS in November 2016 won by IOI Properties @ S$1689 psf,  demonstrate strong confidence in the office market in Marina Bay area. Tower 2 comprises of offices and the Westin Hotel. It was over 90% occupied as in end 2016.