Retail rents in Singapore stabilizing

Retail rents in Singapore stabilizing

 

SINGAPORE : Positive consumer sentiment and the Great Singapore Sale have provided some support for the retail property market in Singapore.

 

But given the general uncertain global outlook, tenants have resisted committing to higher rents.

 

And according to property consultants DTZ, that has kept the retail sector stable during the second quarter.

 

Going forward, analysts said they see at most a marginal increase of 2 to 3 per cent in rents for the rest of this year.

 

313@Somerset is part of the new wave of malls making a splash in Orchard Road.

 

Altogether, some 5.4 million square feet of new retail space will be available by 2012.

 

Analysts said these new malls will lead the retail property rental market, while older ones see rents stabilise at the current level, with little upside.

 

Donald Han, Managing Director, Cushman & Wakefield, said, “The new malls are looking at rentals higher than existing malls at Orchard Road. They’re looking at anything from 20-30 per cent higher. Prime retail space is always in demand.”

 

Cushman & Wakefield notes that there is little risk of oversupply as international retailers clamour for a piece of the Singapore market.

 

And although inflation may dampen domestic consumer spending, analysts said external demand from strong tourist arrivals is likely to offset that.

 

Mr Han said, “Into the next six months with the F1 arriving in September, we’ll only see a higher number of tourists on shore which will effectively see higher tourism receipts, (a) positive spillover in spite of high inflation numbers over next six months or so.”

 

And with more malls fighting over the same tourism dollar, analysts note that malls are starting to work harder to attract customers.

 

Turner Canning, Associate Director, Retail Consulting, Cushman & Wakefield, said, “(There is) a lot of criticism (that)…a lot of malls are cookie cutter. (There are) similar shops, just in different configurations. You’re going to see that changing. It’s a global trend that malls are becoming more themed.”

 

Bringing in new retail choices is also another trend.

 

Chua Chor Hoon, Senior Director, Research, DTZ, said, “We notice that there are more new second-line brands coming, like Just Cavalli, which is a second line to Robert Cavalli. Emporio Armani is also coming. There are also more luxury brands from Europe coming here.”

 

This is in line with efforts by the Singapore Tourism Board to rejuvenate Orchard Road, turning it into one of the world’s premier shopping belts.

 

Analysts also said there is no fear that the Orchard belt will cannibalise suburban malls, as they serve different markets.

 

Ms Chua said, “The suburban malls…are in the heartlands, near residents. (They are) easily accessible. They serve residents’ daily needs like groceries, daily wear necessities, personal services. These are complementary. In fact, the rentals in suburban malls can be as high as those in Orchard.” – CNA/ms

 

 

 

Source: Channel NewsAsia

Retail property market remains stable in Q2: DTZ

Retail property market remains stable in Q2: DTZ

Turnover rents rise; limited growth for fixed gross rents

 

BUOYED by positive consumer sentiment and the Great Singapore Sale period, the retail property market remained stable in the second quarter of this year, according to a market report by real estate consultancy DTZ.

 

Turnover rents in Q2 rose, but there was limited growth for fixed gross rents. DTZ noted that tenants were ‘resisting committing at higher rents for both new retail space and lease renewals’.

 

First-storey monthly fixed gross rents remained largely unchanged quarter on quarter, hovering at an average of $42.40 per square foot (psf) for prime areas such as Orchard/Scotts Road, $33.70 psf in suburban areas and $27.10 psf in other city areas.

 

The retail market is expected to remain stable, despite competition from additional supply that will come on stream over the next few years. Malls such as ION Orchard, Orchard Central and 313 @ Somerset are slated for completion by 2009.

 

As much as 5.4 million square feet of retail space will be added to the mix between the second half of this year and 2012. Marina Bay Shoppes by developer Marina Bay Sands will account for the biggest chunk of that space, with 15 per cent or 800,000 sq ft, closely followed by CapitaLand and Sun Hung Kai Properties’ ION Orchard at 663,000 sq ft.

 

The suburban retail scene will also be bolstered by upcoming developments, mainly in the west and north-west regions, such as the Big Box project at Jurong Regional Centre and the Civic Cultural and Retail Complex at Vista Xchange. Fifty per cent of the potential supply in suburban areas is in the west.

 

DTZ’s retail associate director Anna Lee says: ‘The increase in future supply will put a cap on price and rental increases, while offering opportunities for the retail market to reinvent itself with new concepts and offerings.’

 

Singapore‘s retail sales for April – excluding vehicles – rose 7.7 per cent year on year. But total retail sales value dipped about 4 per cent to $2.77 billion, from March’s $2.89 billion, with almost all sectors reporting less activity in April.

 

Source: Business Times

Mapletree full-year earnings dip 3%

Mapletree full-year earnings dip 3%

But operating profit rises 35%; revenue jumps 69% to $365.6m

 

MAPLETREE Investments posted a 3 per cent dip in net earnings for the year ended March 31, 2008 to $1.04 billion because of lower net revaluation gain and higher net finance cost.

 

Operating profit, however, rose 35 per cent to $146.9 million on the back of first full-year contributions from VivoCity and St James Power Station (SJPS) and maiden contribution from The Beacon, a residential project at Cantonment Road.

 

The fully owned subsidiary of Temasek Holdings also achieved much higher occupancy and rental rates from all its investment properties across the board.

 

Revenue jumped 69 per cent to $365.6 million with VivoCity and SJPS contributing a total $99.5 million and The Beacon contributing $47.5 million.

 

The Temasek unit booked a net revaluation gain of $879 million (after deferred tax provision) for the latest financial year, lower than the $971.2 million in the preceding year.

 

Mapletree chairman Edmund Cheng said the group is exploring several mixed-use commercial projects in Vietnam (in Ho Chi Minh City, Hanoi and the provinces abutting them). ‘In line with our business model, we will seed these projects with our own balance sheet, and will consider the possibility of starting a Vietnam-focused fund once we have achieved a significant asset size,’ he said in his message in Mapletree’s latest annual report.

 

Elsewhere in the report, the group revealed it is ‘in the advanced stage of evaluating several projects comprising a wide spectrum of property types, from office, retail, residential, to industrial and service residential properties, with a view to seed a new Vietnam fund with these assets over the next few months’.

 

When asked, Mapletree’s spokeswoman said the Vietnam fund will be started within the next 12 months but this will depend on market conditions in Vietnam. The fund size will be at least US$500 million.

 

Mapletree’s real estate assets, both owned and managed, stood at $8.9 billion as at March 31, 2008, up 59 per cent from $5.6 billion a year earlier. Of these, its third-party assets under management (AUM) amounted to $3.1 billion, an increase of 94 per cent, while the group’s owned assets grew nearly 45 per cent from $4 billion to $5.7 billion.

 

Fee income, excluding fee income from associates, grew 40 per cent last year. The group’s AUM and fee income will be boosted significantly in the current financial year from the Mapletree India-China Fund launched in April this year and a new Mapletree-Arcapita Bank fund formed to hold the $1.7 billion portfolio of properties acquired from JTC Corp.

 

In an interview with BT in April this year, Mapletree CEO Hiew Yoon Khong projected the group’s total assets could hit $15 billion to $20 billion in a year.

 

The India-China fund has secured a US$600 million commitment at the initial closing and is currently marketing its second closing with a target to secure a total commitment of US$1.5 billion.

 

In Singapore, the group is developing Mapletree Business City, an office and business park with 1.7 million sq ft of total net lettable area and slated for completion in second-half 2010.

 

It is also developing a 19-storey Grade A office building at Anson Road called Mapletree Anson, which is expected to be ready in mid-2009. These two assets could be potentially sold at some point to the proposed Mapletree Commercial Trust.

 

This trust was to have been listed here earlier this year holding about $3 billion of the group’s assets in the HarbourFront and Alexandra Precincts with VivoCity as the anchor asset. However, the launch has been deferred due to unfavourable stock market conditions.

 

Source: Business Times

Retail property market becoming more competitive: DTZ

Retail property market becoming more competitive: DTZ

 

Property consultant DTZ Research says the retail sub-sector is becoming an increasingly competitive market.

 

Issuing a report today, DTZ said Singapore’s retail market was relatively stable in the second quarter this year due to positive consumer sentiments.

 

Turnover rents over that period had increased due to the Great Singapore Sale.

 

But there was limited growth for fixed gross rents as tenants are increasingly resisting committing to higher rents for both new retail space and lease renewals.

 

First-storey monthly fixed gross rents remained unchanged, averaging about 42 dollars per square foot in Orchard and around 27 dollars per square foot in other city areas.

 

Looking ahead, DTZ says the retail market should remain fairly stable despite increasing competition from the surge in forthcoming completions in the next few years.

 

About 5.4 million square feet of retail space will be completed by 2012 with three strategic malls in Orchard.

 

DTZ’s Retail Associate Director Anna Lee said the increase in future new supply will put a cap on price and rental increases.

 

She added that the new malls will offer opportunities for the retail market to re-invent itself with new concepts and offerings

  

Source: 938Live

Exciting vision for mega site

Exciting vision for mega site

 

URA seeks to bring ‘24/7’ life to cluster near Bugis

 

AN EXCITING cluster of shops, homes, entertainment centres, hotel and office space — all set within an attractive garden-like environment in the heart of Singapore’s city centre.

 

This is the Urban Redevelopment Authority’s (URA) vision for the 2.7-hectare green field development site, :bordering Ophir and Rochor roads, it is putting out for tender.

 

With analysts forecasting a possible land sales price of over $1 billion, this could be the second most expensive plot of government land sold this year, after the $1.2 billion paid by Parkway for a rare hospital site near Novena.

 

“Every major developer in town will be looking at it,” said Mr Nicholas Mak, director of consultancy and research at Knight Frank.

 

“But while they may be paying attention, they may not all bid, because in today’s market, getting the necessary financing is difficult. As this is a big one, some might bid in consortiums instead.”

 

The URA wants to bring some “exciting 24/7” life to the area.

 

The site, located behind Parkview Square, is seen as a natural extension from the established convention, office and hotel hub at Marina Centre.

 

“New developments in the Beach Road/Ophir-Rochor Corridor will inject vibrancy and activities to this part of the city and form a new office cluster for financial and business institutions that will complement the existing financial district at Raffles Place and Marina Bay,” said the URA’s statement.

 

The site can potentially accommodate at least 570,000 sq ft of mixed-use space.

 

At least 40 per cent of the area is zoned for office use and at least 15 per cent must be for hotel and hotel-related uses.

 

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, said: “If awarded, the office development is likely to be ready in 2013 and could offer city-fringe office occupiers an option to upgrade or expand into a higher grade quality building without moving into the central business district.

 

“There would also be the added benefit of proximity to the Circle Line, which would have been completed a few years earlier, as well as the Downtown Rail Transit System (RTS) line that will be completed around the same time,” said Mr Li.

 

“Thus, an office development on this site should be attractive to occupiers.”

 

The site is flanked by the historical district of Kampong Glam. Bras Basah and Bugis are also nearby.

 

In fact, the future development will have direct basement-level connections to the new Bugis Interchange MRT station, with immediate access to the existing East-West RTS line and the recently-announced Downtown RTS line.

 

The new development can tower up 40 storeys high, providing panoramic views across the city to Marina Bay and the new Sports Hub at Kallang.

 

Source: Today Newspaper

Ophir/Rochor Rd white site for sale

Ophir/Rochor Rd white site for sale

But developers are not expected to bid bullishly

 

A 2.7 hectare prime white site at Ophir/Rochor Road has been offered for sale by the Urban Redevelopment Authority (URA) – but developers are not expected to bid bullishly.

 

The site, in the new Beach Road/Ophir-Rochor Corridor, has been put on the confirmed list of the first-half 2008 Government Land Sales (GLS) programme.

 

And according to URA, it is a ‘natural extension from the established convention, office, hotel hub at Marina Centre’.

 

But given current quiet market conditions and rising construction costs, property analysts say that developers are unlikely to bid strongly. Bids are expected to range between $600 and $900 per square foot per plot ratio (psf ppr).

 

Cushman and Wakefield managing director Donald Han believes the site does not compare with a ‘super prime’ Beach Road site awarded in September 2007 for $1,068.6 psf ppr.

 

He also said that with a North Bridge Road site already identified as part of the second-half GLS programme, ‘developer and investor interest in the Ophir/Rochor Road site could be diverted’.

 

The new ‘corridor’ will be a 24/7 mixed-use area comprising integrated office, hotel, retail, entertainment and residential projects, according to URA.

 

‘New developments in the Beach Road/Ophir-Rochor Corridor will inject vibrancy and activities into this part of the city and form a new office cluster for financial and business institutions that will complement the existing financial district at Raffles Place and Marina Bay,’ it says.

 

The first development site for sale in the ‘corridor’ will have a maximum permissible gross floor area (GFA) of about 160,000 sq m, (1,722,224 sq ft). At least 40 per cent of the total GFA is for office use, with at least 15 per cent for hotel and hotel-related uses. The remaining GFA can be for office, hotel or other complementary commercial and residential use.

 

CBRE Research executive director Li Hiaw Ho said that if awarded, the office development is likely to be ready in 2013 and could offer city-fringe office occupiers an option to ‘upgrade or expand into a higher-grade quality building without moving into the CBD’.

 

Mr Li said that occupancy rates in the Beach Road/City Hall area remain strong at 93.3 per cent.

 

Although the market is subdued, sites on the confirmed list are generally expected to sell faster compared to those on the reserve list.

 

DTZ Debenham Tie Leung executive director Ong Choon Fah reckons the Ophir/Rochor Road site could appeal to developers who want to position a project ‘differently’.

 

‘Not everybody wants to be in Marina Bay,’ she said.

 

Source: Business Times

Tuan Sing buys Katong Mall for $219m

Tuan Sing buys Katong Mall for $219m

 

TUAN Sing has clinched the collective sale of Katong Mall for $219 million, which works out to a land price of $865 per sq ft of potential gross floor area including an estimated $24.5 million payable to the state to top up the site’s lease to 99 years from a remaining 71 years.

 

In June, Tuan Sing did an asset swap with entities linked to its controlling shareholders – the Nursalim family – under which Tuan Sing got the Nursalims’ 72 per cent of share values in Katong Mall and the Nursalims took over a loan Tuan Sing had extended to Gul Technologies Singapore, which is now its associate company.

 

Jones Lang LaSalle, which handled the collective sale of Katong Mall, said Tuan Sing was the highest bidder. ‘There were a few other interested parties, some of whom placed bids and others submitted letters of interest,’ said JLL director (investments) Stella Hoh.

 

The collective sale, announced yesterday, is subject to approval from the Strata Titles Board. So far, owners controlling more than 80 per cent of share values in the property have agreed to a sale.

 

JLL launched the tender on May 27.

 

Tuan Sing is expected to either redevelop Katong Mall into a full retail project or to refurbish the existing property. The property has a 78,158 sq ft land area and is zoned for commercial use with a 3.6 plot ratio – the ratio of maximum potential gross floor area to land area. No development charge is payable for a full commercial development.

 

Tuan Sing, once an active player in the Singapore residential sector, owns three adjoining office blocks in the Central Business District – Robinson Towers, the annexe to that property, and International Factors Building.

 

Overseas, it is developing a condominium in Pudong, Shanghai, which is slated for launch by year-end.

 

Source: Business Times

Tuan Sing buys Katong Mall for $219m

Tuan Sing buys Katong Mall for $219m

 

PROPERTY group Tuan Sing Holdings bought Katong Mall for $219 million yesterday, in the first major collective sale of the year.

The four-storey complex of strata-titled shops and other businesses is the first fully retail site to be sold collectively, said marketing agent Jones Lang LaSalle (JLL).

 

The 78,158 sq ft site with a gross plot ratio of 3.6 went on sale at an indicative price of $220 million to $250 million.

 

Tuan Sing’s price values the land for the 99-year leasehold mall at about $865 per sq ft, including a lease top-up of $24.5 million.

 

It bought the mall through its unit Golden Cape Investments.

 

JLL investments director Stella Hoh told The Straits Times that ‘a few parties’ – including large and small property groups – entered bids and expressions of interest but she declined to reveal names.

 

Savills Singapore director for business development Ku Swee Yong said the sale was likely to be one-off and not indicative of a broader market trend, while Knight Frank director for research and consultancy Nicholas Mak said the deal was fairly priced given market conditions.

 

The mall went on sale in May amid some controversy.

 

Its public tender followed a contentious process from last September, when 35 minority owners claimed that they were not consulted in drawing up the collective sale deal.

 

They also took issue with the low reserve price – believed to be $180 million – and the fact that the sale was being conducted under the old rules and not the stricter new ones that took effect in October.

 

The owners also complained that two majority owners – Nustavino and Habitat Properties – had a potential conflict of interest as they were developers that could bid for the property. There were even questions raised during the tender launch over whether the consent of owners representing 80 per cent of the share value needed for the sale had been obtained.

 

Minority owner Robert Ong said the price was ‘above what we had expected’ but added that the minority owners could appeal against the sale to the Strata Titles Board.

 

Meanwhile, Tuan Sing already has a stake in the mall, obtained via an asset swop approved by its shareholders last month.

 

The mainboard-listed firm disposed of $107 million in loans owed by its associate Gul Technologies Singapore through an asset swop with the controlling shareholders of Tuan Sing for certain strata units in Katong Mall.

 

This involved 129 strata shop units with an aggregate purchase consideration of $63.1 million.

 

Tuan Sing said the deal allowed for a ‘realistic and tangible recovery of the loans, although it would have to recognise a partial write-down’ of about $44 million.

 

Source: Straits Times

Govt puts up Bugis plot for sale in quiet market

Govt puts up Bugis plot for sale in quiet market 

Appeal of 2.7ha site, near new Bugis MRT station, expected to draw bids over $1b

 

THE vacant U-shaped plot in Bugis used by art circus troupe Cirque du Soleil three years ago was put up for sale yesterday with a price expected in excess of $1 billion.

The prime 2.7ha site in front of Parkview Square could house a 40-storey office building, about 500 hotel rooms, as well as shops and homes.

 

There will also be direct basement level connections to the new Bugis MRT station that is being built to accommodate the upcoming Downtown Line.

 

The plot is designated a white site, meaning it can be used for different functions, such as residential or commercial.

 

Property consultants believe the white site’s size, location and transport links will make it particularly appealing.

 

‘Some developers will find it attractive as it is very big, which allows for various development and architectural options,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

 

But the cautious mood in the property market is likely to affect demand and bids, the consultants said.

 

They expect the 99-year leasehold white site to fetch anything from $1 billion to $1.4 billion, or between $600 and $813 per sq ft (psf) of potential gross floor area.

 

A white site in nearby Beach Road was awarded to a City Developments-led consortium for $1.689 billion, or $1,068.6 psf of potential gross floor area, last September when the property market was buzzing.

 

‘The Beach Road site is pricier as it is closer to the financial hub, and thus more attractive,’ said a market watcher. ‘Besides, the market is so much quieter now, compared with last year.’

 

Mr Mak said the Bugis plot could have fetched a similar price if it was launched during last year’s property boom.

 

This is the first land parcel offered for sale in the Ophir-Rochor corridor, a new growth area that the Government hopes to turn into a commercial hub.

 

The Ophir-Rochor corridor, which is seen as a natural extension of the established convention, office, hotel hub at Marina Centre, is expected to become a busy mixed-use cluster, said the Urban Redevelopment Authority (URA) yesterday.

 

Flanked by Kampong Glam and Beach Road, the area will also complement the financial district at Raffles Place and Marina Bay, URA said.

 

This planning vision dictates that at least 40 per cent of the total gross floor area of the U-shaped plot must be set aside for office use, while hotel and hotel-related uses should occupy at least 15 per cent.

 

The rest of the total gross floor area of about 160,000 sq m or 1.72 million sq ft can be used for more offices, hotel space, or shops and homes.

 

The URA, which unveiled plans for the Ophir-Rochor area last year, marketed the area’s first available sale site at an annual global property event at Cannes in March this year.

 

CBRE Research executive director Li Hiaw Ho said an office development on the site should be built by 2013 and could offer city fringe office occupiers an option to upgrade or expand into a higher-grade building without moving into the Central Business District.

 

The tender closes on Dec 3.

Buyers wanted

 

The prime 2.7ha site in front of Parkview Square can house a 40-storey office building, about 500 hotel rooms, as well as shops and homes.

 

It is the first land parcel offered for sale in the Ophir-Rochor corridor, a new growth area that the Government hopes to turn into a commercial hub.

 

The site can be used for different functions, such as residential or commercial.

 

Source: Straits Times

Allco REIT gets go-ahead to build hotel at China Square Central

Allco REIT gets go-ahead to build hotel at China Square Central

 

SINGAPORE : Allco Commercial REIT has been given the green light to build a 10-storey hotel with about 350 rooms at China Square Central.

 

The Urban Redevelopment Authority (URA) has granted Allco REIT permission to add 16,000 square metres of gross floor area to the development in the central business district.

 

The development currently consists of a 15-storey office block and 38 conservation shop house units.

 

Allco REIT has also been granted permission to convert some existing car parks into office space.

 

The URA approval is valid for six months starting from the end of June. – CNA/ms

 

Source: Channel NewsAsia