Tag Archives: rentals

Government support for business costs

THE government will continue to keep a close eye on business costs, even as it took the stance of letting market forces set the price of rentals. But where there are possible market failures, such as when it is not commercially-viable to provide space for startups, the government will step in – and has indeed done so.

In the retail and the F&B (food and beverage) sectors, rental costs as a share of business costs is around 30 per cent. Rental costs make up between 0.7 and 4.8 per cent of total business costs in the manufacturing sector, and constitute about 5 per cent of business costs in most services sector.

Rentals across all sectors – industrial, commercial, retail and office spaces – have been declining for the past 3 years– thus the rental problem has not been so severe.

JTC has set up LaunchPad@one-north 2 years ago and future plans include building a network of LaunchPads around Singapore — the next one to be completed in the Jurong Innovation District in 2017.

The government has ways to support businesses, such as the Capability Development Grant (CDG), the SME Working Capital Loan and Automation Support Package (ASP). CPG defrays up to 70 per cent of qualifying project costs and thus encourages businesses to build business capabilities. SME Working Capital Loan has catalysed over S$700 million and 4,800 loans as of Dec 31, 2016, to the benefit of about 4,300 SMEs. Under the initiative, SMEs can access unsecured working capital of up to S$300,000 to help them address cash flow concerns and growth financing needs. The CDG and ASP schemes, which help companies achieve productivity improvements through automation, collectively supported 226 automation projects in 2016.

The government also introduced Bridging Loan for Marine & Offshore Engineering (M&OE) companies in November 2016 and enhanced the Internationalisation Finance Scheme for M&OE.

Both schemes aim to facilitate the access of these M&OE companies to working capital and financing to stabilise the sector as it copes with prolonged weaknesses in oil prices. Applications for loans amounting to over S$90 million have been approved as of February 2017. These support measures are expected to catalyse about S$1.6 billion in loans over one year.

The government continues to monitor the sector closely by tracking indicators such as order books and output levels, and evaluating feedback from industry players.

FCT DPU 6% rise on higher rentals


BT 20140723 LKFCT233138 1190060

FRASERS Centrepoint Trust (FCT) reported a 6 per cent rise in distribution per unit (DPU) to 3.022 Singapore cents in the third quarter ended June 30, thanks to higher retail rentals and occupancies.

The suburban mall operator enjoyed 7.8 per cent of positive rental reversions in the third quarter over the preceding leases contracted three years ago. Its portfolio occupancy also grew to 98.5 per cent from 96.8 per cent in the preceding quarter.

“We expect FCT’s portfolio occupancy and rental rates to remain sustainable,” said the trust manager’s chief executive, Chew Tuan Chiong. “The outlook for the retail market is expected to remain stable, given the trends in the growing median household income and sustained low unemployment rate.”

Gross revenue for the quarter rose 3.1 per cent from a year before to S$41.2 million and net property income (NPI) improved 2.4 per cent to S$29.1 million.

FCT said that the growth in revenue and NPI was supported by rental step-up of current leases, better rents achieved for new and renewed leases and the maiden contribution from Changi City Point that was acquired on June 16.

FCT’s property portfolio spanning Singapore now comprises Causeway Point, Northpoint, Anchorpoint, YewTee Point, Bedok Point and Changi City Point.

During the third quarter, 41 leases making up 33,623 sq ft or 3.1 per cent of FCT’s total net lettable area were renewed. Causeway Point achieved positive rental reversion of 8.1 per cent; Northpoint, YewTee Point and Anchorpoint achieved positive average rental reversion of 7-8 per cent; while Bedok Point marked a 3 per cent negative rental reversion.

The biggest improvement in occupancies was seen in Bedok Point, where occupancy rose to 99.3 per cent from 77 per cent in March, after several new tenants, including anchor tenant Harvey Norman, opened in fiscal third quarter.

FCT’s gearing ratio rose to 30.2 per cent as at June 30 from 27.7 per cent as at March 31, after it drew down on an unsecured term loan of $150 million on June 16 to part-finance the acquisition of Changi City Point.

Units of FCT rose one cent to close at S$1.965 yesterday. The ex-date for the declared distribution is July 29 and it will be paid on Aug 29.