Strata offices available for sale in centre of town

Rarely do office spaces right in the middle of town come up for sale. Retail spaces possibly. Though mostly for rent. But 15 units on the 7th floor of TripleOne Somerset have just become available for sale in the premium Orchard Road area and response is expected to be keen.

111SomersetPhoto credit: 111Somerset.com.sg

Situated near the Somerset MRT station, the development consists of 2 towers of premium office spaces and a retail podium. It is currently undergoing a $120 million renovation to boost the development’s retail offerings, including future medical suites. Recently put up for sale at $41.56 million as an expression of interest, the indicative price for the 15,683 sq ft space stands at $2,650 psf. The floor on sale is also undergoing refurbishment and will be ready by May this year.

Property analysts are expecting investors to jump on this rare opportunity as properties such as these in a prime location are hard to come by. This could be the first time a space with such calibre in terms of potential is made available in the last 30 years. The space can be used as strata office units or medical suites. Most resale units with similar characteristics are in older, ageing buildings, and even then cost a fortune due to its scarcity.

111SomersetOfficePhoto credit: 111Somerset.com.sg

TripleOne Somerset is a 99-year leasehold building with its lease beginning from Feb 19, 1975, and it calls Gucci, Bottega Venetta, Samsonite and Bell & Ross as some of its many tenants. The rental potential of the space is also tremendous, with monthly office rents at around $8 to $8.50 psf and a gross rental yield of 4 per cent.

Positive 2017 outlook for retail and office property sector

Despite falling rents for retail and office spaces, analysts are hopeful for a positive performance from this market segment in 2017.

MarinaOneOfficePhoto credit: www.marinaone.com.sg

The last quarter of 2016 saw office rents falling 1.8 per cent, bringing last year’s decline of rental prices to 8.2 per cent. Rents for retail spaces fell 1.2 per cent in Q4, bringing the total year’s decline to 8.3 per cent. Surprisingly, despite a weakening economy and competition from e-commerce, the demand for retail spaces have picked up. Analysts put the easing of pressure on the retail property market to the development of many flagship stores, large food and beverage clusters and gyms. New retail brands and concepts entering the market meant there were tenants willing to take up larger floor areas in prime spots. That said, almost 169,000 sq metres of retail space will become available this year, and there may still be challenges ahead for this sector.

DuoTower

Photo credit: www.duosingapore.com

In the office property front, following announcements of major tenancy deals such as Facebook taking up prime office spaces in Marina One and similarly Distrii, a co-working operator, at Republic Plaza, the market is beginning to stabilise. New and massive working spaces will however add to the inventory soon, taking Duo Tower in Bugis as an example. It was completed last month and has pushed office vacancy rates to 11.1 per cent. Moving ahead,  property players are expecting office rents to continue softening at least for the first half of the year, though newer buildings such as Guoco Tower and Marina One have enjoyed positive take-up rates last year.

Sparks of hope in property market

Despite the prolonged property lull, analysts are hopeful that a few sparks of recovery will begin to rejuvenate the market this year. The office sector may boost the commercial market while high-end luxury homes will hold up the residential property segment.

dleedonAs far as regions go, the core central region is heating up in terms of foreign interest in both residential and commercial properties. The sliding private home prices, by 11 per cent since 2013, have brought investors back into the luxury homes market. Currency valuation will however continue to play a part in the movement of investment money, and Singapore will still have to compete with other cities such as Melbourne, Sydney and Shanghai for investors’ attention.

Compared to other major cities such as Hong Kong, New York and London however, apartment prices here have fallen and will become more appealing to foreign buyers as the potential for yields in the medium term is considerable, especially as these specific market segment is expected to perform well this year.

skylineorchardboulevardThe collective sales market is another to watch in 2017, as developers are expected to collaborate to build up their store of land sites for long term yields. There might also be acquisitions of smaller developers by larger ones in order to participate in the government land sales programme. Property prices are expected to remain stable but depending on a property’s rental yields as a means of investment or profit could become less attractive as investors find it more difficult to find tenants in an increasingly competitive market.

Will current property bright spots continue to shine in 2017?

Private home prices have continued to fall in 2016, and while that may have coloured the market atmosphere somewhat grey, bright spots are beginning to shine through the gloom, with 3 sectors performing particularly well this year.

Miro condo on Lincoln Road, just off Novena at the City Fringe districts.

Miro condo on Lincoln Road, just off Novena in the city fringe.

The luxury residential property, commercial office and collective sales segments have all shone this year. And industry players are no doubt hoping that the positive streak will continue in 2017. In this year alone, 3 en bloc sales were closed. Only 1 such transaction was recorded for 2015 and none in 2014. Even for the private home market, sales volume has risen 9.8 per cent this year despite 10.8 and 10.7 per cent fall respectively in sale prices and rents in 12 consecutive quarters.

Some property analysts however consider the fall in property prices a good thing, as this has enticed more buyers back into the market. Buyers who may have previously stayed away from the market due to the increased stamp duties and fees implemented by the authorities in the past few years to attempt to cool the market, have now returned and are now swiftly closing transactions.

2 RVG condo apartment in River Valley

2 RVG condo apartment in River Valley

In the prime districts of 9, 10 and 11, private home transactions were already 42.6 per cent higher than the total in 2015. 2,601 deals were sealed in the Orchard, River Valley, Bukit Timah and Novena areas as of mid-December. With more land allocated under the Government Land Sales (GLS) scheme and developers on the lookout for smaller prime location sites, the market may see a lot more activity quite soon.

Foreign investors like Singapore property market for its stability

http://www.thehumanbuilding.comThe recent en bloc sale of Shunfu Ville to Qingjian realty plus a $145-million dollar sale of a Cuscaden road bungalow to a Hong Kong Tycoon may have boosted foreign-investment sentiments, especially in the property market. It shows that many high net-worth individuals and funds are finding long term potential in Singapore’s property market.

AsiaSqaure

Photo credit: http://www.thehumanbuilding.com

They often have the financial holding power and are looking beyond short-term cyclical trends, setting their sights instead on mid- to long-term goals of 5 to 10 years. Asean is just beginning to boom, as many of the nations and economies become interwoven and thus provide more opportunities for growth and a general sense of vibrancy and promise. Aside from residential properties, commercial properties are also faring well, with offers of up to $560 million being made for the Straits Trading Building on Battery Road and $3.5 million for Asia Square Tower 1. Many regional and global companies are setting up headquarters in Singapore and will be looking at picking up office, commercial and retail spaces.

The recent dealings though hardly representative of Singapore’s weakening local market, may be a positive sign that companies, funds and high net-worth individuals are still happy to put their monies in Singapore properties. And though a market turnaround may not be quick, the time will come.

 

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.

 

Paya Lebar thriving area for properties

A largely commercial and industrial area, one would not have thought Paya Lebar would bring much cheer to anyone but the landlords of commercial properties. But the large number of foreign workforce these businesses will bring to the surrounding districts may be something to look forward to.

Katong Regency - Mixed-used development on Tanjong Katong Road.

Katong Regency – Mixed-used development on Tanjong Katong Road.

Slated for sale in the next half of 2014, Paya Lebar Central will see a 132, 000 sq m new building with offices, retails businesses and even a hotel. What now stands on the spot is the Singapore Post Centre amongst other industrial properties. Its proximity to the city centre and its competitive rental rates will no doubt make it one of the more popular commercial districts in the country and residential properties nearby could be looking at positive rental possibilities.

There are a variety of both landed homes and high-rise apartments in Paya Lebar, Joo Chiat, Katong and Marine Parade. Urban Villas is a cluster of private terraces and semi-detached houses which are freehold. In the Katong area, there are Katong Regency, The Lush and Aura 83 condominiums, an area which has been a hive of activity since the opening of many new eateries and shops and also the 112 Katong shopping mall.

The East has never looked so exciting. And we can expect it to be the next big thing in a few years’ time.