Prime time for Shophouse Shopping

In the commercial property sector, shophouses have always been a rare commodity, and recently 3 adjoining units from 77 to 80 Amoy Street, have been put up for sale by York Management. Prices stand at around a total of $64.3 million or approximately $2,700 psf.

kretaayershophouseSome of the more popular and highly-priced shophouse units are in Chinatown and the surrounding streets up to Tanjong Pagar such as Ann Siang Hill, Pagoda Street, Neil road, Erskine Road and Boat Quay; as well as the Bugis and Beach road areas. Many of these are in the URA Masterplan‘s conservation areas and thus understandably scarce and priced as such. Joo Chiat, Tiong Bahru and Katong shophouses area also rare and in demand while more available and accessible are units in the Little India, Geylang, Bukit Merah and Jalan Besar. There are also more affordable shophouses in other districts which are not in conservation areas such as in Bedok or Upper Paya Lebar, suitable for office and business use.

jalanbesarshophouseConsidering that recent transactions in the shophouse market hovered around $3,000 to $3,350 psf, these three 3-storey adjoining units coming at $2,700 psf are highly attractive, though if the requirements are for a en-block purchase, the investor will have to think about the overall cost. However, the latter at $64.3 million is still lower than the $66.8 million which the sellers were asking for about a year and a half back.

 

 

Prime Marina Bay site expected to lure aggressive bids

The Urban Redevelopment Authority (URA) has recently released a 1.1 ha prime site at Marina Bay in Central Boulevard. Coupled with news that Asian banks are expected to strengthen their presence in Singapore, this could be an office development site developers hanker after.

Asia Square

Photo credit: www.thehumanbuilding.com

The last time a site at Marina Bay was put up for tender was in 2007 – Asia Square now stands on this site. With the Central Business District location and size of the site taken into consideration, it will no doubt yield a number of plum Grade A offices. Bids are expected to come from mid- to large-sized developers as well as real estate investment funds, at aggressively too, as the site holds the potential for an impressive building with a huge number of units.

Despite the softening commercial sales and rental market, the successful bidder will be likely to have the project completed by 2020, which allows sufficient time for a market upturn. The bid closes on 8 November and investment entities from China and the Middle East may show particular interest. In fact, China’s Nanshan Group is said to be the ones triggering the release of the site as it was originally on the Government’s reserve list and was said to have been released after a developer committed to bidding at least $1.536 billion. But as more buildings are seeing increased levels of commitment from companies looking to stake a presence in Southeast-Asia, developers may have more confidence taking on commercial projects.

Banking on Shophouses

Who would have knew half a century back that the humble shophouse would be worth millions today. As their numbers decreased and rarity grew, so did their value. If a few millions would have gotten you baulking a few years back, the most recent $10.8 million, approximately $3,750 psf, for an Ann Siang road shophouse would have you out of your seats by now.

AmoyStreet ShophouseForeigners and wealth funds are increasingly looking into investment opportunities in these rare commodities, especially those in the central business district (CBD). Shophouses’ popularity amongst the rich and affluent have leapfrogged in the past couple of decades despite rental prices having stayed stagnant. As some of these wealth funds are under pressure to utilise capital and expand portfolios, foreign purchases of shophouses in District 1 and 2 have picked up over the past couple of years. 99-year leasehold shophouses are now going for close to $3,000 psf.

Though the commercial leasing market has been on the downhill slide, tenants are still more willing to fork out say $18,000 for a renovated shophouse unit as compared to the higher rents in Grade A offices or shopping malls. It comes as no surprise then, that 2 shophouses in Pagoda street wold for $24.2 million at around $2,800 psf; and another 6 units in Amoy street went for $20.25 million or $2,411 psf to a Chinese and a Spanish investor respectively. The continued interest in this market segment will continue well into the year and next, as prices have risen by 10% despite a fall in transaction volume last year.

 

Re-zoning Geylang – Fewer residential properties

At first instance, this proposal may not sound promising, but it may actually bring good news for owners of existing condominiums in Geylang. The Urban Redevelopment Authority (URA) has recently announced a re-zoning of residential areas in Geylang for commercial use.

Rezi3TwoWhile this means that there may not be as many private residential properties in the area, the value of those which have already been built may appreciate as offices and businesses eventually move into the area. This proposal by the URA could be seen as mainly to facilitate the balancing of residential and commercial activities in the district. The over-building of residential properties in the red-light district could have a reverse effect and introducing more commercial properties and maintaining a suitable amount of residential properties in the area may in turn increase the rental yields and value of properties in its proximity.

With Geylang’s prime location putting it close to the city centre, Aljunied MRT station and the Singapore Sports Hub, rental yields here are already 1.5 per cent higher than those in other districts. With the area mostly made up of smaller land parcels, the likely tenants would be boutique developers and small businesses, with the possibilities of niche eateries and shops.

Some residents have however raised concerns over this re-zoning move as more commercial spaces here may mean an increase in the illegal and disruptive activities normally associated with this infamous district. What are the pros and cons of purchasing property in Geylang and does one outweigh the other?

2015 – Outlook for Asia’s property market?

2015 is nearly here, and there has been talk that come next year, the property scene in Asia might experience some changes.  Investment interest in Asia property looks to be on the rise as portfolios which have yet to establish a presence in this continent consider it time to do just that.

ScottsSkyParkIt is probable that some governments might ease up on property cooling measures, thus making it easier for foreign investors. China-based investors have already been buying properties within and out of Asia. And as sellers lower their expectations and prices, they look set to continue doing so, if not more voraciously.

In Singapore alone, the outlook for office space looks extremely positive as supply remains low. With many more developmental and redevelopment opportunities arising within the next few years, the demand for office space is likely to rise, thus supporting commercial property prices and rents.

On the residential front, property prices are expected to see a drop of up to 10 per cent as the full impact of the large and fast increase of new properties finally hit the market. However, the luxury home market may see an influx of new investment money, especially properties will good long-term value.

A whole new Sims

No, not the computer game. But Sims Drive. No longer will it be an address for offices, industrial buildings and warehouses. Come 2020, a new 1, 042 private residential project will bring a whole lot of life in the area.

Sims Drive GuocoLAndPhoto credit: GuocoLand.

The Urban Oasis private residential property development hopes to bring with it not only new residents, but hopefully more businesses and amenities. Some experts have likened the area to Tiong Bahru in its early days, and perhaps that might bring some “hip” factor into play. Currently, there are a couple of popular hangouts in the vicinity, Loysel’s Toy and Cafe Melba.

The project will be developed by GuocoLand and property analysts are expecting prices of units to be approximately $1, 200 to $1, 300 psf. The proximity of this plot of land to the Aljunied MRT station could draw potential home buyers and even investors are the units may cater to expatriates looking to live slightly out of the town centre or city fringe areas but with relative quiet and convenience.

Clermont ResidencesThinking ahead and differently from its previous projects such as Clermont Residence, Leedon Residence and Goodwood Residence, the developers are hoping to cater to different residential groups including singles, small families, upgraders and even those looking for a home office. Buyers can look forward to a variety of cluster homes, studio suites and even home office units.

Focus shift to Mixed-use commercial developments?

As the private residential property market takes a slight hit, it may be time to shift the focus onto other property types such as commercial properties and possibly mixed-use developments which have been quite the new kid on the block for these couple of years.

And perhaps buyers who have purchased a unit in the residential part of a mixed-use development could look into investing in a commercial unit in the connecting mall or office. The proximity makes it easier to keep an eye on the property and living near a shopping mall could also have its perks, including saving on time and transport costs. With most mixed-use developments situated near other public facilities such as bus interchanges, MRT stations, town centres and supermarkets,  accessibility and connectivity are prime calling cards.

Le RegalThere are some cons however. Some home owners may find their home surroundings a little less quiet and exclusive because of the connectivity to the malls, and the costs of these units are usually much higher than the next private condominium just down the road. However, tenants may prefer these units and be willing to pay higher rents.

Some of the more popular mixed-use developments in the market include Nine Residences which is above Junction 9, The Centris which is connected to Jurong Point, The Hillier, Watertown and even older ones such as Thomson Imperial Court, Sunshine Plaza and Burlington Square. There are a few newer ones in the works such as Le Regal in Geylang and NEWest at West Coast Drive.

Glimmer of hope for Private resale homes?

Although the total number of private resale homes sold were lower in October than September, prices have begun to rise slightly. According to latest data, non-landed private home prices rose 0.4 per cent in last month. In suburban districts often popular with buyers such as Bishan, Toa Payoh, Little India, Geylang and Queenstown, prices rose 0.6 per cent. Transactions and prices of prime district properties however remained quiet, falling in fact by 0.3 per cent.

Okio Residences in Balestier.

Okio Residences in Balestier.

Have overall property prices fallen sufficiently? And have they reached the lowest point of the property cycle? If so, how long will this low point last? Private property prices have been low for quite some time now, maintaining a steady level in terms of pricing and transaction volume for almost half a year. The government has said that they will not relax the cooling measures anytime soon, perhaps in fear of a huge and quick rebound which may bring prices up even higher than before the curbs were put in place. They could also be giving the measures a bit more time to sink in, to further bring down home prices and getting the industry and public used to these measures.

Property experts are expecting prices to decline even further in the short term. Would this be the best time to invest? And how would you go about investing? Is it best to move away from residential property into commercial property? Or are there certain property types with hidden long term value?