SINGAPORE VIEW A COLLECTION OF THE FINEST PROPERTIES & DEVELOPMENTS MAR - JUN 2019 MARCH 2019 - JUNE 2019 • 1 Contents 05 24 WELCOME 06 MARKET RESEARCH 10 ADVISORY SERVICES 12 AUCTION & SALES 27 20 INDUSTRIAL 23 INVESTMENT & CAPITAL MARKETS 31 OFFICE ADVISORY 32 PROPERTY ASSET MANAGEMENT SINGAPORE VIEW • 2 39 45 34 RESIDENTIAL LOCAL DEVELOPMENTS 42 RESIDENTIAL INTERNATIONAL DEVELOPMENTS 49 63 RESIDENTIAL PRIME SALES 64 RETAIL MARCH 2019 - JUNE 2019 • 3 SINGAPORE VIEW MAR - JUN 2019 EDITOR Liew Lixia RESEARCH CONTENT Lee Nai Jia COVER IMAGE Fourth Avenue Residences MARKETING Phyllis Goh READ MORE ON PAGE 38 DESIGNER Regina Ang SINGAPORE VIEW • 4 Welcome The economic environment today is ever more operation and Development, Southeast Asia is uncertain, as geopolitical tensions continue expected to continue to grow by 5.2% from 2019 to mount unabated. According to the World to 2023, faster than the 4.8% posted from 2012 to Economic Forum’s Global Risk Report 2019, 2016. The growth of emerging economies such as rising geopolitical tensions were identified as Vietnam and Indonesia will be driven by its growing the most urgent risk anticipated by business middle class, and e-commerce in the region is leaders, politicians and academics in the year expected to further expand as well. ahead. Building on the openness and strength of the Singapore economy, the government has Tensions on trade between US and China have continued to forge new trade agreements with also led firms to reconfigure their supply chains major economies, strengthening existing pacts, to and relocate production facilities from China to attract direct investments and provide businesses Southeast Asia, with Vietnam emerging as a top more opportunities for international expansion. destination. Over the long term, such relocations This includes an upgrade to the China-Singapore are also likely to yield positive spill overs to Free Trade Agreement, which will be ratified later Singapore. in 2019. With the growth of the Southeast Asian economy, According to the Singapore Business Federation’s greater demand will be created for technological National Business Survey 2018/2019, 7 in 10 solutions. More companies in the Information Singaporean businesses carry out outbound Technology sector are setting up their regional activities in at least one country other than their headquarters in Singapore, rendering Singapore home nation. Even as companies increasingly with a deeply skilled labour pool and well- embrace innovation and seek collaboration to tap established infrastructure. on and expand their arena of knowledge in this domain, more cross-country partnerships can be Looking ahead, there is still much optimism for expected to form in time to come. Singapore’s real estate market, with the office and hospitality markets expected to perform well in Despite tides of external uncertainties, there is 2019. The retail sector is also expected to receive a still much growth potential in Southeast Asia. boost in the future, as plans to revamp the Orchard According to the Organisation for Economic Co- Road precinct get kickstarted. Danny Yeo Chairman & Group Managing Director Knight Frank Singapore MARCH 2019 - JUNE 2019 • 5 Market Research Synopsis Residential Prices of private residential properties increased by 7.9% year-on-year (y-o-y) in 2018 according to URA All Private Residential Property Price Index. However, the prices showed signs of cooling, decreasing by 0.1% q-o-q in Q4 “ 2018. Slower sales due to the latest cooling measures The decline in sales will likely exerted downward pressure on prices of older properties persist in 2019, although buyers with expiring leases. may progressively return to the With buyers increasingly discerning and cautious, market for choice properties. sales volume fell especially in H2 2018 as the price gap between buyers and sellers widened. Non-Landed Residential Property sales volume (excluding Executive Condominiums) in Q4 2018 marked a decline of 34.9% q-o-q, or 43.4% y-o-y. The decline in sales will likely persist in 2019, although buyers may progressively return to the OUTLOOK FOR PRIVATE HOME PRICES market for choice properties. Source: URA, Knight Frank Research The decline in private residential sales post-cooling MARKET ACTUAL PROJECTED measures has dragged overall transaction volume in 2018 SEGMENT (AS AT Q4 2018) to 23,211 units, fewer than the 28,385 units in 2017. With the en-bloc market cooling off and the heightened caution Q-O-Q Y-O-Y BY END 2019 CHANGE CHANGE (Y-O-Y CHANGE) in the market, the price gap between buyers and sellers widened. Most of the buyers who entered the market were purchasing homes for owner-occupation, and the ISLAND-WIDE -0.1% 7. 9 % -1.0% TO 3.0% investors were mainly sitting on the side lines. NON-LANDED -1.0% 6.7% -1.0% TO 1.0% Prices for private residential homes are expected to CCR remain stable in 2019, although the price movement NON-LANDED 1.8% 7. 4 % -1.0% TO 4.0% within market segments is likely to vary. Prices of older RCR homes with expiring leases could come under pressure, as buyers were drawn to the new launch projects. The key NON-LANDED 9.4% OCR 0.7% -1.0% TO 3.0% downside risks in 2019 will be the uncertain economic outlook, interest rate hikes, and geopolitical tension. LANDED -2.0% 6.3% TO 1.0% Notwithstanding these factors, these systematic risks are HOMES -1.0% likely to impact across all asset classes and the general economy. Private residential properties in Singapore may still appeal to investors and buyers for wealth preservation. TOTAL SUPPLY OF PRIVATE HOMES, TOTAL SALES, AND URA PRIVATE RESIDENTIAL PROPERTY PRICE INDEX Source: URA, REALIS, Knight Frank Research Note: Transaction volume based on caveats lodged as at 3 Feb PRIVATE RESIDENTIAL & EC LAUNCHED BUT UNSOLD PLANNED & UNDER CONSTRUCTION WITHOUT PRE-REQ BUT UNLAUNCHED PLANNED & UNDER CONSTRUCTION WITHOUT PRE-REQ TRANSACTION VOLUME PROPERTY PRICE INDEX OF RESIDENTIAL PROPERTIES 60,000 160 155 50,000 URA Price Index 150 40,000 145 30,000 140 20,000 135 Number of Units Transacted 10,000 130 125 0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 SINGAPORE VIEW • 6 Retail In 2018, landlords and retailers were exploring new concepts to improve shoppers’ experience amid headwinds in the market. To create personalised shopping experiences for the shoppers, more malls introduced experiential spaces and offered lifestyle concepts and amenities within the mall to increase footfall. Likewise, retailers collaborated with technology companies to better understand their consumers through data analytics, thereby offering enhanced shopping environments and experiences. Despite such efforts, falling tourism spending and subdued Singapore consumer confidence, together with higher labour costs, capped any improvement in rents in Q4 2018. Based on Nielson’s Singapore Consumer Confidence Index released in December 2018, consumer confidence remained in the pessimistic territory. Given the challenging retail landscape, intensified regional and global competition, and from online retailers coming offline, Knight Frank projects that average rents in the Central Region will decrease up to 3.0% in 2019. UPCOMING RETAIL SUPPLY FROM MAJOR DEVELOPMENTS IN KEY PRECINCTS (2019 – 2023) Source: URA, Knight Frank Research FRINGE AREA DOWNTOWN CORE ORCHARD REST OF CENTRAL AREA SUBURBAN 2019 2020 2021 2022 2023 NETT LETTABLE RETAIL SPACE (’000 SQ FT) 0 200 400 600 800 1000 1200 1400 AVERAGE GROSS RENTS OF PRIME RETAIL SPACES*, Q4 2018 Source: Knight Frank Research * Prime spaces refer to rental-yielding units between 350 and 1,500 sq ft with the best frontage, connectivity, footfall and accessibility in a mall which are typically ground level of a retail mall and/ or the basement level of a retail mall that is linked to a MRT or bus station LOCATION ISLAND-WIDE ORCHARD ROAD MARINA CENTRE, CITY FRINGE SUBURBAN CITY HALL, BUGIS $ PER SQ FT PER MONTH S$30.50 S$34.50 S$29.40 S$25.60 S$28.40 Q-O-Q CHANGE NO CHANGE NO CHANGE NO CHANGE NO CHANGE 0.5% Y-O-Y CHANGE 0.5% 2.1% 0.5% 3.5% 0.8% MARCH 2019 - JUNE 2019 • 7 MARKET RESEARCH SYNOPSIS Office Prime Grade office rents in Raffles Place/Marina Bay precinct cybersecurity for corporations and institutions, following rose by 22.2% in 2018 to $10.95 per sq ft per month, after going several high-profile leaks of personal data. There will also be up by 3.3% quarter-on-quarter (q-o-q) in Q4. The increase in funding for financial companies to develop cybersecurity as rents was supported by limited supply of Grade A+ and Grade the Monetary Authority of Singapore launched a S$30 million A offices in the CBD and demand of some 999,000 sq ft by Cybersecurity Capabilities Grant to raise the cybersecurity Co-working, Banking, Finance and Insurance sectors. The high level of the financial sector. A road map to identify and deal with occupancy of Grade A+ and Grade A office space in the Raffles “next-generation cyberthreats” in the Telecommunications Place/ Marina Bay precinct resulted in increased demand for sector over the next 5 years will also start in 2019, and likely Grade A office space in the Shenton Way/ Robinson Road/ drive growth. Tanjong Pagar precinct, driving rents up by 4.5% q-o-q. Rents in the City Fringe and Suburban precincts stayed stable, Prime office rents in the CBD are expected to go up in 2019 resulting in a widening rental gap with prime office space.