Watching the lay of the land

THE government continues to roll out more housing supply to meet demand and keep the market stable. Land sales scheduled for the first half of 2024 will provide for 5,450 residential units, 5.6 per cent more than in the current half-year. The increase, which will take supply to its highest level since 2013, is noticeably smaller than the 26 per cent jump in supply that the state released for H2 2023. 

Analysts give Kalpana Rashiwala their take on the land sales programme, which will include housing sites where developers are required to build in a new category of long-stay serviced apartments, as well as one site in Buona Vista designated for serviced apartments only. 

Ry-Anne Lim sifts out the top draws among the sites on offer. Three parcels in areas well known to developers and homebuyers alike - River Valley, Queenstown and Pasir Ris - should see strong interest. And two sites in upcoming new estates - Tengah and Bayshore - will pique attention.     

There were no hotel or office plots offered for the first half, ahead of the close of a tender for a massive white site in the Jurong Lake District in March.

The government has put a lid on the supply of office space that can be sold to multiple owners. In 2022, curbs on strata subdivision of commercial space came into effect for developments in prime areas. The restriction also applies to redevelopment proposals under incentive schemes. 

The fragmented ownership in strata-titled commercial buildings, so the argument went, tended to result in poor upkeep of the building and a hodge podge of occupiers (or “undesirable” tenants). In The Level Ground, Leslie Yee argues that there are sound reasons, from both demand and supply perspectives, to support good-grade, well-located office buildings held by multiple owners. The authorities should consider having more multi-owned strata office spaces islandwide.

Maintenance, to be sure, is an expensive cost item that needs to be covered by a property’s shared owners. Condo maintenance fees have been creeping up over the past decade and are set to rise further. 

Property management firms that Ry-Anne Lim spoke to pointed to elevated manpower and material costs, as well as higher-priced contracts for security, cleaning and landscape services. Higher utilities tariffs contributed to bills, too. And costs are expected to escalate in the coming year with the progressive wage model (PWM) in place for workers in sectors such as cleaning, security, landscaping and waste management. 

Business updates

CapitaLand Investment flagged that it would post a “significant” drop in net profit for FY2023. The property giant expects fair value losses on its portfolio of investment properties, primarily those in China, Australia, Europe, the UK and the US. In an earlier business updated posted in November, CLI had pointed out challenges for deal making, fundraising and operational pressures, along with potential significant valuation risks.

Banyan Tree parted ways with its China joint venture partners - subsidiaries of China’s second-largest developer by sales, China Vanke. Both parties bought out each other’s stakes in their joint ventures. 

Perennial Holdings unveiled eldercare, medical and hotel brands in a S$1 billion, “one-stop” healthcare-centric transit-oriented development in Tianjin. The project, Perennial International Healthcare and Business City Tianjin, spans 3.5 million square feet. Apart from an eldercare home, assisted living apartments and a nursing hospital, there will also be three branded and co-branded hospitals with a total of 1,000 beds and four hotels with 960 rooms as well as event space. 

Wing Tai Holdings bought a Melbourne property for A$28 million, a substation site located in the city’s Central Business District.

In other markets

Blackstone, the world’s largest alternative-asset manager, added another hotel to its Japan portfolio. It bought a Kyoto property from Goldman Sachs Group in a deal worth 8 billion yen, betting on a rebound in tourism that has fired hospitality deals in Japan. Blackstone has scooped up at least 12 hotels in Japan in the past two years. According to MSCI Real Assets, foreign investors have spent US$2 billion on hotel deals in Japan in the year to August, more than any other sector in Asian commercial property and surpassing 2022’s annual investment tally. 

Japanese investors, meanwhile, are deploying their dry powder overseas. Cash-flush Japanese companies and pension funds with access to ultra-low interest rates are buying up assets including a Manhattan skyscraper, data centres in Toronto and office buildings in London. Japan became the fifth-largest source of outbound capital deployed into real estate this year, up from 16th in 2022, according to MSCI.

The spurt also reflects something of a plot twist in capital flows. Chinese money that had flooded real estate markets before has now dried up. 

Hong Kong rolled back property cooling measures put in place since 2010, in a bid to coax mainland money back into the depressed Hong Kong residential market. Will its tax tweaks ends its real estate slump? 

Australia, meanwhile, will raise fees for foreign buyers of existing homes and introduce penalties for those who leave properties vacant, in its attempt to boost rental supply and ease a housing crunch.