Orchard Road ground-floor rents stayed flat year-on-year (YOY) at SGD40.39 per square foot per month (psf pm) in H1 2018, while the Regional Centres saw a marginal uptick (+0.3% YOY) to SGD33.50 psf pm. This marked some stabilisation in ground-floor rents. Colliers expects ground-floor rents to lead the gradual recovery, but overall retail rents should continue to flatten out and stabilise over 2018-2022 as sector headwinds precipitated by e-commerce have not materially subsided.
Island-wide vacancy decreased by 0.2 percentage points quarter-on-quarter (QOQ) to 7.3% in Q2 2018. On a YOY basis, vacancy has fallen by 0.8ppt since Q2 2017. The fall in retail vacancy combined with a sustained rental decline is evidence of the sector’s re-balancing act as retail landlords trade off historically high rents for more stable occupancy amidst challenging market conditions.
Of note, activity-based tenants made a comeback in the retail scene in H1 2018, as landlords sought to inject more lifestyle components and entice patrons back to malls. This trend was observed in both Orchard Road and suburban districts. In eastern Singapore, the newly-opened Bedok Djitsun Mall welcomed amusement centre Fat Cat Arcade, while the Korean carom billiards bar Thirsty4Balls opened its first outlet in Singapore at The Cathay. Meanwhile, gym operators Fitness First and GymmBoxx opened new centres at SingPost Centre and JCube respectively. Click here to view report.
The Business Times - Aug 28
A white site at Pasir Ris Central, spanning 3.8 hectares, was launched for sale off the government land sales (GLS) confirmed list in a dual-envelope public tender on Monday.
The 99-year leasehold site went on the market with the Housing & Development Board (HDB) calling for a mixed-use commercial and residential development, as part of its "Remaking Our Heartland" plan to rejuvenate Pasir Ris Town.
The land parcel next to Pasir Ris MRT station must be integrated with a bus interchange, a polyclinic and a town plaza, and can yield up to 600 private homes, said HDB. The maximum permissible gross floor area is 95,010 sq m (1.02 million sq ft), with a proposed gross plot ratio of 2.5.
Tricia Song, Head of Research:
The white site in Pasir Ris Central is part of the Government’s plans to rejuvenate the Pasir Ris district. Its proximity to the Pasir Ris MRT station and large population catchment should appeal to developers. It would also be the first mixed-use development – commercial and residential – in the Pasir Ris town centre.
However, given the substantial size of the plot and various tender conditions, we think this site could likely attract larger developers or a consortium of them working together. Tender conditions include integrating the mixed-use development with a bus interchange, a polyclinic and a town plaza as well as constructing a link bridge and underground linkway. Click here
for the full analysis.
The Business Times - Aug 22
Singapore property is likely to retain its lustre as a preferred choice for long-term wealth creation due to the city-state's regional hub status, solid growth prospects and Asians' deep-seated desire to own property.
Analysts gave this affirmation as the dust starts to settle on the latest cooling measures which took effect on July 6. The amended rules saw higher Additional Buyer's Stamp Duty (ABSD) and lowering Loan-to-Value (LTV) limits in a pre-emptive strike to prevent prices running "ahead of economic fundamentals" and "the risk of a destabilising correction later".
While the residential property market is expected to be resilient, still there are those who see more excitement in other property asset classes in the Republic. Reits are likely to "fare better amid heightened risk aversion", while property developers' share prices are likely to "trade range-bound" due to heightened policy risk.
Tricia Song, Head of Research:
Historically, residential property has yielded returns higher than inflation and probably shares, although this depends on the timing and investment horizon. The residential price index increased a compounded 5.1% per annum over the last 30 years (second quarter of 1988 to first quarter of 2018). But these annual capital returns narrowed to 2.4% the past 20 years and to just 1.3% over the past decade, excluding any rental yield. With the cooling measures in place, the higher costs of actually buying an apartment and the lower rental yields mean that residential property is admittedly not as attractive as an investment. Nonetheless, it could still be a viable asset class for Singaporeans with a portfolio of investments. As such, residential property could still form part of the asset allocation strategy. Savvy investors may look towards other physical assets such as shophouses and strata offices but they typically require larger quantum and are scarce in availability for sale. Yields have also compressed to very low levels. Residential property may remain the most transparent and accessible to the man on the street