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SINGAPORE VIEW NOV 2016 - FEB 2017 A COLLECTION OF THE FINEST PROPERTIES & DEVELOPMENTS NOVEMBER 2016 - FEBRUARY 2017 • 1 CONTENTS WELCOME 22 04 INVESTMENT & CAPITAL MARKETS MARKET STARS OF KOVAN 06 RESEARCH 10 ADVISORY SERVICES 12 18 12 AUCTION AUCTION INDUSTRIAL NASSIM PARK 11 TUAS SOUTH RESIDENCES STREET 11 16 INDUSTRIAL OFFICE RESIDENTIAL 30 FRAGRANCE 34 (LOCAL) 51 INVESTMENT & EMPIRE QUEENS PEAK RESIDENTIAL (INTERNATIONAL) 22 BUILDING WINDSOR TERRACE CAPITAL MARKETS 30 OFFICE 32 PROPERTY ASSET MANAGEMENT 34 RESIDENTIAL LOCAL PROJECTS 48 RESIDENTIAL 64 INTERNATIONAL RETAIL PROJECTS HILLION MALL 60 RESIDENTIAL LEASING 62 RESIDENTIAL SALES 61 62 64 RETAIL RESIDENTIAL (LEASING) RESIDENTIAL (SALES) TAN CHIN TUAN MANSION TOH CRESCENT SINGAPORE VIEW • 2 NOVEMBER 2016 - FEBRUARY 2017 • 3 WELCOME Uncertainties in the global economy, coupled with a highly politicised US election and news of Brexit has caused a strain on the Singapore property market. The office market continues to see rentals decline, prompting several established tenants to relocate from Grade A buildings to Grade A+ quality over the upcoming quarters. This has placed pressure on rents and exacerbated the pursuit by upcoming and newer buildings to secure tenants, as buildings vie to backfill vacancies. Knight Frank projects that average office rents will continue on its path of decline, before bottoming out in 2018. Amid a toughening retail climate, average Orchard Road prime rents have been weakening with rents in the Central Region and more resilient prime rents expected to moderate further by end 2016, to take a hit on island-wide occupancy. Escalating competition from e-commerce markets and increasingly discerning consumers are also challenging landlords to review their mall repositioning and the way retail business is being conducted, to provide engaging, quality services to preserve customer loyalty. Gross yields in the private residential property market have weakened, with average rents dipping at a faster rate relative to their respective average prices. Projected to further impact leasing demand is the reduced inflow of expatriates, in conjunction with shrinking accommodation stipends. By the second half of 2016, some 10,262 private homes will be released into the market, and landlords can expect stiffer competition as the tenant pool dwindles. Demand for industrial spaces continues to soften, with overall rents declining and tenants approaching rental expectations cautiously. Coupled with the strong supply of industrial space concurrently in the pipeline, the double-whammy situation is expected to weigh down on industrial rents further. This may be in exception to freehold industrial units, where demand and rents are likely to remain resilient given the limited supply. Nevertheless, good specification quality assets with lease tenures of 60 years and above are set to be more highly sought after by industrialists, as long-term investments. As part of efforts towards environmental friendliness, we will SINGAPORE VIEW be going digital from the next issue of Singapore View. Thank nov 2016 - feb 2017 you for your continued support and we hope you will help play a part in advancing the green movement. EDITOR Margaret Ang RESEARCH CONTENT Alice Tan MARKETING Phyllis Goh DESIGNER Regina Ang Danny Yeo Group Managing Director COVER IMAGE QUEENS PEAK Knight Frank Pte Ltd READ MORE ON PAGE 34 SINGAPORE VIEW • 4 NOVEMBER 2016 - FEBRUARY 2017 • 5 RESIDENTIAL OFFICE MARKET Amid heightened uncertainty in the global economy, the office market continued to see rentals decline. Grade A office space in the Raffles Place / Marina Bay district saw the largest quarter-on-quarter (q-o-q) rental decline of 2.9% of the various locations in Q3 RESEARCH RETAIL 2016, while Grade A+ office space in the same area saw rental decline moderate slightly, falling 2.1% q-o-q. The pursuit by upcoming and newer buildings to secure tenants gained momentum in the past two quarters. Several established tenants from Grade A buildings will take flight to Grade A+ quality in the coming quarters. Upcoming vacancies in Grade A buildings OFFICE will increase in the next two years as these tenants relocate, and put pressure on rents as a result. SYNOPSIS OFFICE RESEARCH Competition for tenants will be rife, particularly among buildings vying to backfill vacancies from tenants relocating to quality over RESIDENTIAL RESEARCH INDUSTRIAL the upcoming quarters. Singapore’s prime office rents for upper floors in skyscrapers, ranked eighth regionally, will stand more favourably with businesses looking to locate or increase their footprint in Singapore, as compared to major global cities in the region, Hong Kong and Tokyo, which were ranked first and third respectively, in Knight Frank’s latest Global Cities Report 2017. AVERAGE RESALE PRICES, RENTS AND GROSS YIELDS OF Knight Frank projects that average office rents will continue on its path of decline, before bottoming out in 2018. RESIDENTIAL PRIVATE RESIDENTIAL PROPERTY, BY MARKET SEGMENT Based on Knight Frank’s analysis Source: REALIS, (based on data as at 29 Sep 2016), URA (based on rental contract data as at 29 Sep 2016), of a basket of private residential Knight Frank Research properties, the average resale prices of high-end homes stayed firm in AVERAGE OFFICE RENTALS, BY KEY PRECINCTS IN Q3 2016 Q3 2016, on a year-on-year (y-o-y) AVERAGE RESALE PRICES Q3 2015 Q3 2016 Y-O-Y basis. This comes on the back of a (S$ PER SQ FT STRATA AREA) CHANGE Q-O-Q CHANGE positive y-o-y change in prices in the preceding quarter, signalling the HIGH-END $2,028 $2,027 -0.1% CBD (GRADE A+, GRADE A) CENTRAL AREA OTHERS continued return of interest in the MID-TIER $1,587 $1,458 -8.7% S$9.30 (OUTSIDE CBD) - high-end market. S$9.80 S$8.20 MASS-MARKET $1,037 $ 980 -5.5% - S$8.70 S$8.10 S$8.10 Gross rental yields weakened across all - - S$7.90 S$8.60 S$8.60 - market segments, with average rents S$7.40 S$8.40 having declined at a faster rate relative AVERAGE RENTS - (S$ PER SQ FT STRATA AREA PER MONTH) S$7.90 S$4.80 to their respective average prices. - Amid global economic uncertainties, S$7.00 S$4.20 - the reduced inflow of expatriates and HIGH-END $5.28 $ 5.03 -4.8% S$5.40 shrinking accommodation stipends MID-TIER $4.33 $ 4.12 -4.7% are likely to further impact leasing demand. MASS-MARKET $2.98 $ 2.77 -7.2% 10,262 private homes are expected MARINA CENTRE/ SUNTEC GRADE A RAFFLES PLACE/ MARINA BAY GRADE A SHENTON WAY/ ROBINSON ROAD/ TANJONG PAGAR GRADE A AREAS ORCHARD GRADE A SUBURBAN RAFFLES PLACE/ MARINA BAY GRADE A+ for completion in H2 2016, according GROSS YIELDS (%) CITY HALL GRADE A FRINGE AREAS to latest available statistics from URA -2.1% -2.9% -1.5% -2.7% -2.1% -1.8% -1.9% -2.1% as at the date of this publication. HIGH-END 3.13% 2.98% The Outside Central Region (OCR) Source: Knight Frank Research MID-TIER 3.27% 3.39% (1) Rents are based on transacted leases (2) Rents are based on a lease term of at least three years (3) Rents are expressed as values rounded to nearest 10 cent will contribute 44% of this upcoming (4) Rents are estimated based on leases of a whole-floor office space on the mid-floor levels of office properties, and taking into account rent free period and other concessions supply, and the region is likely to see MASS-MARKET 3.45% 3.39% continued falls in home rentals. UPCOMING PRIVATE RESIDENTIAL SUPPLY, BY MARKET SEGMENT, AS AT Q2 2016 UPCOMING OFFICE SUPPLY, AS AT Q2 2016 Source: URA, Knight Frank Research CCR RCR OCR Source: URA, Knight Frank Research SUBURBAN FRINGE (WEST) FRINGE (EAST) SUNTEC/MARINA/CITY HALL & REST OF CENTRAL AREA ORCHARD SHENTON WAY/ROBINSON ROAD/TANJONG PAGAR MARINA BAY/RAFFLES PLACE >2020 BEYOND 2020/NA 2020 2020 2019 2019 2018 2018 2017 2017 H2 2016 NO.OF UNITS H2 2016 GROSS FLOOR AREA (’000 SQ FT) 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 0 1,000 2,000 3,000 4,000 SINGAPORE VIEW • 6 NOVEMBER 2016 - FEBRUARY 2017 • 7 INDUSTRIAL SPACE SUPPLY IN THE PIPELINE, AS AT Q2 2016 Source: JTC, Knight Frank Research MULTIPLE-USER FACTORY SINGLE-USER FACTORY BUSINESS PARK WAREHOUSE 2020 2019 RETAIL RESEARCH RETAIL AVERAGE GROSS RENTS OF 2018 PRIME RETAIL SPACES FOR Q3 2016 2017 INDUSTRIAL RESEARCH H2 2016 GROSS FLOOR AREA (’000 SQ FT) LOCATION $ PER SQ FT Y-O-Y CHANGE PER MONTH Q-O-Q CHANGE 0 5,000 10,000 15,000 20,000 25,000 ISLAND- S$31.20 -2.2% WIDE -0.2% AVERAGE MONTHLY GROSS RENTALS FOR CONVENTIONAL INDUSTRIAL SPACE, BY KEY CLUSTERS ORCHARD S$35.10 -0.1% Source: Knight Frank Research Q2 2016 Q3 2016 Q-ON-Q % CHANGE ROAD * Range of rentals are estimated based on the average -0.5% of minimum and maximum transacted rentals derived * Only rents of units on upper floors are included RETAIL MARINA S$31.40 -4.7% Average island-wide prime retail rents moderated downwards slightly by CENTRE, S$1.38 0.2% in Q3 2016 to reach S$31.20 psf. Prime Orchard Road rents fell CITY HALL, NO CHANGE S$1.37 on a quarter-on-quarter (q-o-q) basis for the first time since Q2 2015, BUGIS -0.9% on the back of a tougher retail climate. Suburban prime rents improved marginally, largely supported by the stable demand from the surrounding S$1.90 residential catchment. Prime rents within Marina Centre, City Hall, Bugis CITY S$24.70 -2.1% and City Fringe areas held steady compared to the previous quarter.