A Malaysian goes shopping in Singapore
WITH the ringgit at nearly 3.5 to the Singapore dollar, crossing the Causeway to shop for bargains can be hard to resist for many Singaporeans.
However, one Malaysian appears to find shopping in Singapore irresistible. Lee Yeow Seng, group chief executive officer and substantial shareholder of Bursa-listed property group IOI Properties Group, is fast emerging as the king of Marina Bay in Singapore. Lee’s private company is buying Shenton House, located along Shenton Way in Singapore’s Central Business District, for S$538 million.
Through IOI Properties, Lee has extensive interest in downtown Singapore. IOI Properties is the developer of IOI Central Boulevard Towers, W Marina Bay and Marina View Residences in the Marina Bay area. IOI Properties also owns a stake in the South Beach mixed-use development, located along Beach Road.
Lee plans to redevelop Shenton House into Grade A office space and luxury branded serviced residences. He told my colleague Samuel Oh that the purchase shows his continued confidence in Singapore’s prime office sector and residential rental market.
Lee is not alone in being bullish on Singapore property. Various plans are being worked on for major new property developments and redevelopments.
My colleague Kalpana Rashiwala reported that an indirect wholly owned subsidiary of Genting Singapore has received provisional permission from the Urban Redevelopment Authority (URA) to develop 21,243 sq m gross floor area of retail space, and 700 hotel rooms at Resorts World Sentosa. More information has also surfaced on the proposed redevelopment of the Voco Orchard Singapore hotel, Forum The Shopping Mall and HPL House in the Orchard Road-Cuscaden Road area as well as the proposed partial redevelopment of the Marina Square complex.
Green features will likely be incorporated in many upcoming property developments. Still, while space users may appreciate being in buildings that are built with sustainability in mind, Samuel reports that valuers could struggle to explicitly ascribe a green premium to the valuation of buildings.
On the housing front, the URA unveiled plans for about 6,000 new homes to be progressively developed in Pearl’s Hill, including new Housing and Development Board (HDB) flats. Residents of the new Pearl’s Hill estate can enjoy easy access to Outram MRT interchange.
New HDB flats as well as private homes are also planned for the former Bukit Timah Turf City. These homes could draw parents who are eyeing sending their children to popular schools in the vicinity.
The HDB is busy building homes, including in central locations, to meet housing needs amid growth in household formation. Should the HDB build many more new five-rooms flats as these large flats are popular with home buyers? I dive into this question in The Level Ground.
I don’t think there is a need to build many more new HDB five-room flats, which are sized at around 1,200 sq ft each. However, policies could be calibrated to steer ownership of such homes towards larger-sized households.
The building of new subsidised HDB flats is a costly process and there are many calls on the fiscal purse. For its last financial year, the HDB reported a record net deficit of S$5.4 billion, which was largely due to a shortfall from the public housing programme.
While Singapore’s property market across various asset classes is generally in rude health, the picture for office property in many major overseas markets is pretty ugly.
Reeling from weaker demand for office space, the once high-flying co-working space provider WeWork filed for bankruptcy in the US. Locations outside of the US and Canada are not part of the bankruptcy process. A rescue package for the group that was announced earlier this year proved to be inadequate.
WeWork’s troubles are darkening the outlook for the world’s largest business hubs, where rising office vacancies are already heaping pressure on investors set to refinance big-ticket mortgages next year. In New York, USA, where one-fifth of office space is vacant or being offered for sublet, the highest amount in decades, the fallout from WeWork’s troubles may most adversely impact older office buildings in midtown and downtown Manhattan.
However, in Singapore, where demand for office space has been resilient, it appears to be business as usual for WeWork across its various locations.
A victim of a weak US office market is Singapore-listed Manulife US Reit. The trust’s manager said it is on track to conclude by year-end its negotiations with banks, following the trust’s breaching of the lenders’ unencumbered gearing ratio, The beleaguered trust received a boost from DBS Group Research upgrading its call to “buy” on the back of a trading opportunity for investors.
Prices of many listed property trusts have plummeted amid rising interest rates. Opportunistic investors may find the current lows in prices of listed trusts could provide an attractive entry point, if their view is that interest rates will return to more palatable levels before long, notes my colleague Raphael Lim.
Among listed property trusts, hospitality focused ones have been notching up strong operating performance. Frasers Hospitality Trust’s distribution per stapled security rose by 26.4 per cent year-on-year for its second half ended Sep 30.
Investor appetite for hospitality assets also appears to be healthy. CapitaLand Ascott Trust said it is divesting two hotels in Sydney, Australia, for A$109 million (S$95.6 million). The trust is selling Courtyard by Marriott Sydney-North Ryde and Novotel Sydney Parramatta at an exit yield of 4.4 per cent and a premium to book value of 5 per cent.
Separately, Digital Core Reit said last week that it had reached a definitive agreement to sell several Silicon Valley facilities for US$160 million to Brookfield Infrastructure Partners, under a series of agreements to resolve the bankruptcy of its second-largest customer.
Back home, Cuscaden Peak Investments is seeing positive momentum for Singapore retail property. The group said that the newly-opened The Woodleigh Mall in Bidadari estate, which was jointly developed with Kajima Development, had achieved full occupancy.
Attention will focus on how well J’den by CapitaLand Development does when it opens for sales booking this weekend. Might the 368 apartments, ranging from one-bedroom to four-bedroom units, with prices starting from S$2,100 per sq ft, draw a healthy take-up rate?
