Singapore Property
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Singapore Real Estate Singapore Property Refer to important disclosures at the end of this report DBS Group Research . Equity 28 Mar 2019 STI : 3,198.39 Remake, Reposition & Refurbish Analyst • Draft 2019 Masterplan gives a lift to commercial Rachel TAN +65 6682 3713 Mervin SONG, CFA +65 6682 3715 landlords with enhanced plot ratios in CBD and [email protected] [email protected] Orchard; key beneficiary is SGREIT Carmen Tay +65 6682 3719 Derek TAN +65 6682 3716 [email protected] [email protected] • New regional economic centers with focus on Greater Southern Waterfront and remaking of Paya Lebar Air Base • New residential supply planned in Downtown, Marina Bay, and fringe areas to promote living closer to work Potential Stock beneficiaries to the master-plan places 12-mth Price Mkt Cap Target Price Performance (%) Commercial landlords to gain from a lift in plot ratios. S$ US$m S$ 3 mth 12 mth Rating The Urban Redevelopment Authority (URA) unveiled the Draft Master Plan 2019 (DMP19) yesterday. The highlights are higher CapitaLand 3.52 10,842 3.62 14.3 (2.0) BUY CapitaLand 1.97 5,449 2.00 11.9 10.1 BUY plot ratios in the Central Business District (CBD) and a new Commercial Trust scheme to promote development and rejuvenation of the CBD City Developments 8.91 5,961 9.50 11.9 (31.3) HOLD from a commercial district to one with vibrancy from an Keppel REIT 1.28 3,215 1.31 10.3 6.7 BUY increase in live-in population in the Central Region. The Frasers Property 1.77 3,813 1.98 7.3 (10.2) BUY Mapletree increased plot ratio in the CBD will be positive for commercial 1.91 4,072 2.00 13.0 23.2 BUY Commercial Trust (retail and office) property owners like office REITs (CCT, KREIT, OUE Commercial 0.51 1,076 0.60 12.1 (19.0) BUY SUN, FCOT and OUECT). The key beneficiary is SGREIT, with a Starhill Global REIT 0.73 1,175 0.75 9.0 0.7 BUY 29% jump in plot ratios for its properties in Orchard – Wisma SPH REIT 1.05 2,002 1.05 5.0 6.1 BUY Atria and Ngee Ann City. Other developers with exposure in Suntec REIT 1.98 3,916 2.12 8.8 5.3 BUY UOL Group 6.78 4,217 7.15 14.3 (19.8) HOLD the CBD include the likes of Capitaland, CDL, FPL and UOL. Source: DBS Bank, Bloomberg Finance L.P. Closing price as of 27 Mar 2019 Greater Southern Waterfront development to benefit MCT’s VivoCity. The government has plans to begin Key focus areas developing the Greater Southern Waterfront which spans across the southern coastline from Pasir Panjang to Marina East in the next 5 to 10 years. This development opens ample opportunities for developers. With an expected increase in residential developments in the Greater Southern Waterfront area in the longer term, MCT’s VivoCity, the closest large retail mall, would be a key beneficiary. New housing opportunities in CDB and long-term residential pipeline bodes well for developers. As part of the Downtown rejuvenation, URA plans to increase housing sites in Downtown, Marina South, Rochor and Bayshore areas so that people can live closer to their work places. While these offer interesting opportunities for developers to land-bank, we believe that investors’ attention is on the supply overhang in 2019-2020 for now. While we remain positive on longer term trends in property prices, we believe a steady growth in supply Source: DBS Bank of homes will likely be accompanied by more conducive policies to ensure stable growth in the property market in the longer term. ed: JS/ sa: YM, CW, CS Real Estate Singapore Property URA Draft Master Plan 2019: Higher plot ratio is the talk New Key Development Plans: of the town! The Urban Redevelopment Authority (URA) unveiled the Draft 1) Remaking the Central Business District (CBD): Rethink, Master Plan 2019 (DMP19) yesterday. The DMP19 is focusing on Refresh, Redevelop. the development of 3 major economic gateways; in the West • Based on the 2019 draft masterplan, the Singapore (Jurong Lake District, Jurong Innovation District and Tuas government has intentions to convert Downtown Terminal), in the North (Woodlands Regional Centre and Singapore from a commercial center dominated by Punggol Digital District) and in the East (Changi Region). The offices into one which is more mixed-use and has basis and overall focus is on planning for sustainable, green, more vibrancy after office hours. This is to facilitate a inclusive neighbourhoods, and creating capacity for the future. work, live and play environment. The government highlighted areas such as Downtown, Marina South In summary, the highlights from the DMP19 are higher plot and Rochor. ratios for selected sites in the Central Business District (CBD) • To expedite the change in use in the Downtown which include Orchard/ Somerset/Dhoby Ghaut, Tanjong area, we understand the government will offer an Pagar/Shenton Way and Raffles Place. The key aim is to drive increase in gross plot ratio (CBD Incentive Scheme) downtown rejuvenation and to have higher live-in population in for certain areas to encourage the conversion of the Central Region to facilitate a work, live and play existing office developments, especially the older environment. Over time, a larger live-in population coupled with grade B properties that are >20 years old into hotel more amenities within the CBD will also bring more vibrancy and residential uses. and allow retail to trade well across the week rather than only • In addition, large parcels of land at Marina Bay may on weekdays currently. We believe the increased plot ratio will be made available on shorter leases to act as a “test- see positive benefits for select commercial property owners bed” for innovative ideas which offer lifestyle while plans for the Greater Southern Waterfront bodes well for concepts and generous public spaces. Mapletree Commercial Trust (MCT). • Furthermore, Robinson Road which is a key bus corridor connecting the two Downtown hubs of We highlight below the major new development plans in the Raffles Place and Tanjong Pagar, may be masterplan, as well as our views on the impact on Singapore transformed into a transit-priority corridor by giving Property. more space to buses, cycling paths and pedestrian walkways. Figure 1: Downtown rejuvenation – shift towards greater mixed-use developments Source: URA, DBS Bank Page 2 Real Estate Singapore Property 2) Rejuvenating Orchard Road – selected sites receive • Plot ratios were revised higher for selected sites up to 29% boost in plot ratios! under the new master plan, especially along the • To recap, the government recently unveiled plans to prime Orchard Road belt above MRT stations. invigorate Orchard Road which seeks to address Notable beneficiaries are Starhill Global REIT’s fundamental issues threatening the long-term (SGREIT) Ngee Ann City and Wisma Atria properties competitiveness of Orchard as a retail hub. which saw their plot ratio rising from 4.9-5.6+ to • The incorporation of innovative and non-retail 6.3. CapitaLand’s ION Orchard also saw a slight offerings appears positive for incumbents as it uptick in plot ratio. should help to inject vibrancy across the different precincts. Figure 2: Higher plot ratios in Orchard 2014 Master Plan Shaw House Mount Elizabeth Tangs Hospital Wheelock Place Lucky Plaza Paragon ION Orchard Wisma Atria Legend: No impact Ngee Ann City Uplift 2019 Master Plan Shaw House Mount Elizabeth Hospital Tangs Wheelock Place Lucky Plaza Paragon ION Orchard Legend: Wisma Atria No impact Ngee Ann City Uplift Source: URA, DBS Bank Page 3 Real Estate Singapore Property 3) Return of transitional office sites along Newton. • With a combined GFA of close to 286,000 square • We also note that the two transitional office sites in feet (sqft), which is estimated to be c.30% of annual Newton awarded back in 2008 have been rezoned absorption for CBD office, the displacement of these as “residential with 1st storey commercial” compared office spaces will match the ongoing office to the previous master plan. developments along the CBD and Beach Road areas. • Awarded back in 2008, the sites currently house WPP and UOB Kay Hian and with a 15-year tenure, the sites will most likely be returned to the government in 2023. Figure 3: Selected transitional office sites along Newton rezoned 2014 Master Plan 2019 Draft Master Plan UOB Kay Hian WPP Singapore UOB Kay Hian WPP Singapore Source: URA, DBS Bank Page 4 Real Estate Singapore Property 4) Greater Southern Waterfront: to begin developments at Pasir Panjang Power District and development within the next 5 to 10 years the Keppel Club site. • The Greater Southern Waterfront spans across the • The Pasir Panjang Power District will house southern coastline from Pasir Panjang to Marina Singapore’s first 230kV underground substation, East. The total area is estimated to be c.2k hectares and will be redeveloped next to the Labrador Park (ha), post the relocation of City Terminal and Pasir MRT station, and could be given a new lease of life Panjang Terminal that will free up some 1k ha of as a lifestyle and heritage destination. land. • The Keppel Club site will be redeveloped for • The government expects to start the development waterfront housing after the current lease expires in within the next 5 to 10 years with new 2021. The site is close to Telok Blangah and Labrador MRT stations. Figure 4: Greater Southern Waterfront Development Source: URA, DBS Bank Figure 5: Greater Southern Waterfront: Keppel Club to be redeveloped into residential when lease expires in 2021 Source: URA, DBS Bank Page 5 Real Estate Singapore Property 5) Eastern Economic Gateway: Transforming Paya • Based on a longer-term plan for Changi Region and Lebar Air Base; a future Changi East Urban District leveraging on the successful development of Changi • The government expects to relocate Paya Lebar Air Business Park, Singapore University of Technology Base in the longer term, freeing up 800ha of land.