Tag Archives: South Beach

Upcoming Office space may not be enough

Fears are emerging of a possible office space crunch despite the soaring skyscrapers framing the ever-changing central business district (CBD) skyline.

No commercial sites were on the confirmed list of the Government Land Sales (GLS) programme for the first half of 2015 released last week. These sites go on sale regardless of interest.

This has fuelled concerns in some quarters that despite a slew of new commercial buildings slated for completion in the next three years, space could still be in short supply down the line.

Industry players say the new buildings should meet demand for office space in the Downtown Core – which covers the CBD, City Hall, Bugis and Marina Centre areas – in the short term.

But some fear a possible crunch, amid an increasingly diversified profile of tenants looking to set up shop in the core business district.

The Straits Times understands that developers are keen to see more commercial sites go on sale.

The GLS programme for the first half-year has only a 0.78ha plot in Marina View and Union Street and a 2.1ha commercial site on the reserve list – requiring bidders to first submit an acceptable opening offer to trigger a tender.

The two sites could yield 1.89 million sq ft of commercial space.

“As office developments tend to be large, we do not always need to supply an office site on the confirmed list every half-yearly,” the Urban Redevelopment Authority (URA) said in response to queries from The Straits Times.

“New office supply from the GLS programme is intended to meet demand in the medium term, after factoring in a construction period of about five years.

“Our supply of office space in the Downtown Core will also need to be balanced against our efforts to build up new commercial centres outside the city centre to bring jobs closer to homes.”

About two-thirds of 11.8 million sq ft of commercial space are in the central areas, which will be enough to meet demand “in the next few years”, said URA.

But experts believe supply will be patchy up to 2018. Beyond that, the lack of new supply is “becoming starkly obvious”.

CapitaCommercial Trust’s 702,000 sq ft CapitaGreen will be completed by the end of the year. The 500,000 sq ft office component of the South Beach integrated project is set to be ready too.

After a dearth of fresh supply next year, about 3.2 million sq ft of office space – the size of Marina Bay Financial Centre – from four projects is expected to flood the market in 2016: M+S’ DUO in Beach Road and Marina One in Marina Bay, GuocoLand’s Guoco Tower in Tanjong Pagar and UOL Group’s 5 Shenton Way.

The supply will be trimmed yet again in 2017, with just 805,100 sq ft coming on stream from Frasers Centrepoint’s commercial site in Cecil Street and Tuan Sing’s redevelopment of Robinson Towers.

“Historically, it’s always been a feast or famine in Singapore’s office space if you look at the supply chart. Landlords and occupiers will have to time their renewals and leasing plans according to that,” noted Mr Desmond Sim, research head at CBRE, Singapore and Asia Pacific.

The result is that rents of Grade A space – in top-quality buildings – could pick up at a faster clip in 2018, said Mr Sim.

Already, monthly rents have picked up 17 per cent, from $9.66 per sq ft (psf) since the trough in the third quarter of last year, to $11.20 psf now.

However, Ms Tan Li Kim, head of research at Cushman and Wakefield, estimated demand for office space would be 4.4 million sq ft by 2018, against the 5.3 million sq ft of space that could be available by then, if the upcoming projects are developed on time.

This supply would be from different office micro markets within, so any rental fluctuations are expected to even out, she said.

One micro market that has stood out would be the offices in the Marina Bay precinct, for instance, said Mr Moray Armstrong, executive director of office services at CBRE.

The URA has made plans for 10.8 million sq ft of new office space under its Master Plan 2014.

But, as Mr Armstrong put it: “The million sq ft question is where and when the next landmark Marina Bay development will arise.”

http://business.asiaone.com/news/after-the-feast-the-famine-may-be-lurking

Beach Road to bask under swamky new developments

The once sleepy Beach Road area is undergoing a dramatic makeover as property giants roll in with ambitious plans for a series of mixed developments.

Three new integrated projects are already on the go, with at least one more to come following the release of a new site in the Government Land Sales programme last week.

The commercial and residential plot, which came from the reserve list, can accommodate a 45-storey complex of 947,223 sq ft.

The 2ha plot will go to tender only if a developer first submits a bid price acceptable to the Urban Redevelopment Authority (URA).

It is estimated to cost from $1.1 billion to $1.4 billion – or $1,300 to $1,400 per sq ft (psf) per plot ratio.

The historic site between Beach and Rochor roads – it was the home of Beach Road Police Station – will bring more office space to an area that has long had a shortage of such space, said experts.

The developer that clinches the site must conserve and restore the former police station building and set aside at least 70 per cent of the new complex for offices.

The development can have a residential portion as well.

“The development of the new site, if it happens, will help complete the development along that strip, offering a more contiguous streetscape,” said Dr Chua Yang Liang, head of South-east Asia research at JLL.

Meanwhile, developers are forging ahead with plans for other mixed-use projects.

South Beach, Singapore’s largest mixed development, will be fully completed by the end of next year, said City Developments this week.

It will feature a luxury hotel and 190 residential units, ranging from 950 sq ft two-bedders to 6,500 sq ft five-bedroom penthouses.

Tenants like Rabobank have already committed to lease 30,000 sq ft of office space.

South Bank plus the DUO by developer M&S and World Class Land’s City Gate, both launched in the past year, will add at least 1.25 million sq ft of commercial space to Beach Road.

“The rejuvenation of this area into a vibrant commercial hub is very important, because of its central location,” said Mr Ong Kah Seng, director of R’ST Research.

“It would be an opportunity cost to the Government and stakeholders in the area to allow the area to remain at status quo and underdeveloped.”

Mr Ong expects the new developments to lift property prices by about 2 per cent.

However, investors will find it hard to get their hands on commercial units.

The few available tend to be in older properties such as Golden Mile Tower and The Plaza, as developers are keen to keep hold of any new space they build.

So far, only City Gate has new strata-titled commercial units. It has sold 62 of its 188 new shop units for an average of $4,202 psf since July, according to caveats lodged with the URA.

But there is certainly money to be made by investors.

A 431 sq ft office at The Plaza, a strata-titled project at the corner of Beach and Ophir roads, changed hands at $1,881 psf in April for a profit of $76,112 in over just 15 months.

Over at Golden Mile Complex, a 441 sq ft commercial unit sold at $1,869 psf last month, for a profit of $273,550. It was bought in July 2007.

Monthly rents at these older developments are estimated at $5.50 psf, while “Grade A” offices in the area could fetch $7.50 psf.

However, commercial rents at upcoming projects could be up to 20 per cent higher once they are completed in the next two to three years, said Mr Ong.

http://business.asiaone.com/news/beach-road-bask-under-swanky-new-developments

South Beach to open after 7 years

SINGAPORE’S largest mixed development will soon be ready for business after seven years of work and frustrating delays.

The 1.65 million sq ft South Beach project in Beach Road, opposite Raffles Hotel, will open in phases over the next 12 months.

Its first corporate tenant arrives early next year.

South Beach is an ambitious project with two towers – of 34 and 45 storeys – comprising an office block, luxury homes and a Philippe Starck-designed hotel.

The development will also have 37,000 sq ft of retail space.

The South Beach, as the hotel is called, will have 654 luxury rooms and direct links to the Suntec City Convention Centre and Esplanade MRT station. It opens its doors in April.

Despite a sluggish property market, the project’s office component has done well.

A third of the 500,000 sq ft of office space has been leased, while a further 50 per cent of leases are being firmed up now, said Mr Aloysius Lee, chief executive of the South Beach Consortium.

TMF Group, a multinational professional services firm, will take up 16,000 sq ft, while Rabobank will occupy about 30,000 sq ft at the North Tower office building.

“The South Beach team is currently in advanced negotiation with parties to take up another 10 per cent, and is confident of hitting 90 per cent occupancy by early 2015,” said Mr Lee.

There will be 190 residential units, ranging from 950 sq ft two-bedders to 6,500 sq ft five-bedroom penthouses with their own swimming pools.

The Non-Commissioned Officers Club building and three former army blocks, the site of Singapore’s first national service enlistment exercise in 1967, will be incorporated into the project to house a 29,000 sq ft private club and hotel facilities.

South Beach is being developed by City Developments (CDL) and Malaysia’s IOI Group.

The project was initially slated for completion in 2012, but was hit by delays.

The consortium that secured the 376,296 sq ft plot in 2007 had originally comprised Dubai World unit Istithmar, United States-based Elad Group and CDL, each holding a one-third stake. But the financial crisis in November 2008 led CDL to defer building plans, after which Elad and Istithmar both dropped out.

Preparations to market the project picked up after IOI Group entered the consortium in 2011. The project’s residential unit prices are still under wraps.