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?

Commercial properties – Promising future?

As the noose tightens around the residential property market, investors may consider shifting their focus onto commercial properties, in particular office spaces. Q3 figures have shown that selling prices and rental of office spaces have been growing at a record pace.

In land-scarce Singapore, the growing number of businesses means the demand for office space will continue to rise. And as space decreases, prices increase. In Q3 alone, office space rental prices rose by 1.6 per cent. Part of the reason could be that major buildings such as the NOL Building and Havelock II have been undergoing renovation and thus the office space crunch has led to businesses having to look for alternative spaces within a short time period.

Havelock 2 OfficeDespite luxury properties in the downtown and CBD areas faring poorly of late, Grade A office rents in these areas have been travelling the opposite direction – upwards. Office spaces in the central region have been more in demand than rentals in other regions despite the higher rental prices. Central districts office rentals have risen 2.8 per cent while those at the fringe of the city have risen 1.9 per cent.

Retail space however, is another creature altogether. As most retail space income comes also from the tenant’s sales and margins have been narrow due to higher operating and labour costs. And with the introduction of many more mixed-use developments come 2016, supply may overtake demand and reduce the rarity of these spaces. Especially as online shopping takes off in a big way locally, retail spaces, unless in high traffic areas or exclusive trendy enclaves, may find themselves fighting for the same audience.

City Fringe wins once more

From Marine Parade to Novena to Kampong Glam, areas surrounding the busy city centre and central business districts are some of the best spots for property investments and this has hardly changed over the years.

The mixed-use development DUO at Ophir road was one of the latest offerings late last year. This year, another similar residential-cum-commercial project join their ranks – the City Gate on Beach road. But before these giant developments came into play, the Concourse Skyline condominium apartments were already in place. This 360-unit property was priced at $1, 590 psf at its 2008 launch. Despite 101 of its units remaining unsold, existing units have gone for as much as $2, 075 psf in the last quarter of 2013.

CIty GateWith the large number of incoming units from City Gate, which is targeting a price range of $1,900 to $2, 000 psf, these remaining units at the Concourse Skyline may be up for some fierce competition. Developers, Hong Fok Land, may experience some pressure to lower prices in order to meet the “All sold” status.

City Gate will sit on the site of the former Keypoint and will feature 188 commercial units and 311 apartment units ranging from one- and two-bedders to the increasingly popular dual-key units. Penthouses will vary in size, from 484 sq ft one-bedders to 1, 819 sq ft four-bedders. The wide variety of units will draw buyers with different intentions in mind, but with such a prime location, the only thing that might stop consumers in their tracks is the strict loan limits.

Jurong private properties in demand

For those who are not used to living in the west, the lure may not be strong. Not yet perhaps. But as it changes from the industrial, remote ‘wild west’ into a well-greased regional commercial and education hub, many have seemed to change their minds.

LakevilleThe 695-unit Lakeville at Jurong West Street 41 has sold so well last weekend that the developers, MCL Land had to release 50 additional units to its original release of 150 units. Most buyers were Singaporeans, and they purchased mainly two- and three-bedders. A total of 180 units were sold thus far, at an average of $1, 300 psf. J Gateway, which was the last westside property launched since Lakeville, sold at an average of $1, 480 psf.

Despite constant reminders that the property market may be on a downturn, the response has buoyed the mood of the real estate market. This could however be due to the lack of private properties, especially new ones, in this neck of the woods. New amenities such as the Ng Teng Fong General Hospital and Jurong Community Hospital, and new commercial properties promises of more jobs, and better services, which could drive up rents of both HDB and private properties in the area.

Commonwealth TowersSlightly more inland, Commonwealth Towers, which will be linked to Queenstown MRT station, could be the next property to watch. This 99-year leasehold property will likely be launched in May, with mostly one- and two-bedders in its massive 895-unit development. If nearby condominium prices are anything to go by, buyers could be looking at prices of between $1, 300 to $1, 700 psf.

Investment money take overseas trips

Overseas properties are looking particularly attractive to investors from within Asia. Higher yields are one of the draw factors.

Areas which are pulling in crowds are the US and Europe. Commercial buildings such as offices, development sites as well as hotels are hot on the property investors’ lists. As Asia, the Americas and Europe go through different stages of the property cycle, higher returns are evident outside of Asia especially with the currency within Asia strengthening and low interest rates. The number of overseas investment opportunities are also on the increase, making the overseas market more competitive.

Oxley Royal Wharf

Photo credit: Oxley Holdings Limited.

In terms of residential developments, Oxley Holding‘s first London project is garnering a great deal of investor interest. Most of the studio apartments going at £235, 000 (S$495,000) have been sold at the 811-unit development, Royal WharfThe Royal Wharf project, situated near the Thames Barrier Park, will consist of 3, 385 homes, 10,000 residents who will be serviced by schools, shops, offices and leisure amenities. It is also near a future transport line, the Crossrail line, which will provide timely links to Heathrow airport and Bond Street.

Both the London and Singapore launches welcomed a big response. Mr Richard Oakes, the sales and marketing director of the project manager Ballymore says that despite Londoners’ usual lack of enthusiasm for property launches, a long line of 300 had queued for this particular project.

Paint the town red

Marina Downtown to be specific. The plans to invigorate the upcoming Marina Downtown district are in the pipelines, and it sounds exciting indeed. The aim is to shape the area in a such a way it compliments the nearby Central Business District. Akin to the infamous Canary Wharf in London, this new area will have its own transport line, and a good mix of residential homes, commercial offices, entertainment, retail and recreational facilities.

Marina DowntownAmassing 70 hectares, it will extend all the way to Harbour Front, connecting from Marina Bay, to form a new CBD area and as an extension to the existing financial districts in the city centre. With the government’s recent announcement about the Marina Coastal Expressway, properties along this stretch looks set to command higher prices, starting possibly from now. And when everything is complete, one can only wonder how much these properties will appreciate in value.

Mixed developments in this new district could be what investors are looking at eagerly. Marina One and Asia Square Towers are just two of the possibly many integrated residential and commercial projects which may also mean more skyscrapers joining the ranks of those in the city. Despite the existence (and possibly more in the future) of residential private properties in the area, industry consultants are expecting the area to be mainly dominated by commercial buildings. Existing properties have already taken up much of the market slice of residential homes in the area. Properties such as The Sail, Marina Bay Residences and Marina Bay Suites. Thus one of the main challenges the authorities will have could how best to inject vibrancy and life into the area during the weekend.

The Sail MarinaYet unclear how long the development process may be, its a delicate balance between supply and demand. And demand could be dependent on global situations. Will there be more office space than required? Or is it the government’s plan to bring in more businesses and thus tipping the scale in favour of property investors?

Tipping Point for New Property Launches?

1,600 new homes will be out in the market this week. But will those pricing above the $1,400 psf mark hit the sweet spot for home buyers?

Property analysts are predicting September might be the month where telltale signs of the market’s true response to recent home loan restrictions will show. Since the first two months after implementation of new rulings are usually a little uncertain as adjustments are made and buyers hold back in wait of what may come, the third month is a good test of the actual market sentiments.

Onze Tanjong PagarSome delectable offerings are already available, and more will be launched in the upcoming weeks:

Launched last Thursday, the 56-unit Onze@Tanjong Pagar  is a mixed-use development with 13 other commercial units for sale. Apartments are going for $2, 200 to $2, 500 psf. The Glades in Tanah Merah sold at $1, 400 to $1, 600 psf with 726 units of one to four-bedders ranging from 500 to 1,450 sq ft.

GladesThe Skywoods at Dairy Farm were the most affordably priced of the lot, at $1, 250 psf. Will buyers head straight for this development since it is within a price range which most home loans can cover, just like what the experts predict? Or will location still take priority? Originally slated to sell at $1, 300 psf, The Skywoods is an example of recent private condominium launches where prices were dropped to help interested buyers qualify for a home loan. What does this ultimately mean for Singapore’s home prices and property market? Is it a cure or merely a stop-gap?