JUL 2018 - OCT 2018 SINGAPORE A COLLECTION OF THE FINEST PROPERTIES & VIEW DEVELOPMENTS JULY 2018 - OCTOBER 2018 • 1 CONTENTS 15 05 WELCOME 06 MARKET RESEARCH 12 ADVISORY SERVICES 14 AUCTION & SALES 27 20 INDUSTRIAL 26 INVESTMENT & CAPITAL MARKETS 37 OFFICE SINGAPORE VIEW • 2 51 37 38 PROPERTY ASSET MANAGEMENT 61 40 RESIDENTIAL LOCAL PROJECTS 48 RESIDENTIAL INTERNATIONAL PROJECTS 67 RETAIL JULY 2018 - OCTOBER 2018 • 3 SINGAPORE VIEW jul 2018 - oct 2018 EDITOR Liew Lixia RESEARCH CONTENT Alice Tan COVER IMAGE AFFINTY AT SERANGOON MARKETING Phyllis Goh READ MORE ON PAGE 40 DESIGNER Regina Ang SINGAPORE VIEW • 4 WELCOME Despite the uncertain external environment, Singapore needs from both the construction, and offshore and continues to be a desirable location for investors and marine sectors. multinational companies to locate in. The hosting of the historic Trump-Kim summit further highlighted Separately, the retail sector remains subdued despite Singapore’s attraction. While the Malaysian government modest improvements in retail sales growth. Retailers announcement to drop plans for Kuala Lumpur- remained cautious, leading island-wide prime retail Singapore High Speed Rail raised concerns, it did rents to fall by 0.8% y-o-y. However, there are signs not dampen the optimism in the Singapore real estate that the retail market is bottoming. Prime retail rents in market. the City Fringe precinct bucked the trend, rebounding 3.5% y-o-y after 11 quarters of decline. Island- The stronger economic outlook further catalysed the wide occupancy is likely to hold firm through 2018, recovery of the office market, with Grade A office supported by steady performances in established rents rising across all precincts to register overall malls and anticipated stronger tourism numbers. increases in occupancy. With significant office space leasing movements in Q1 2018 across industries amid On the private homes front, the Property Price Index tightening supply, prime office rents are expected to of all residential market segments climbed 3.9% y-o-y continue its upward trajectory to rise from 8.0% to in Q1 2018, the highest growth seen since Q2 2010. 12.0% year-on-year (y-o-y), by end-2018. Lifted in part by Singapore’s robust GDP expansion in Q1 2018, total transaction volumes for the New Sale, The growth outlook for the manufacturing sector Sub-sale and Resale sectors grew 2.4% y-o-y. Barring continues to be upbeat, buoyed by optimism from the any government intervention and external shocks, precision engineering cluster. With Singapore exports prices and sales momentums are likely to forge ahead, anticipated to grow further, demand for industrial on the back of rising land prices, growing optimism, spaces is set to increase, in parallel to expected and higher unit price expectations. increases in industrial production and warehousing Danny Yeo Chairman & Group Managing Director Knight Frank Singapore JULY 2018 - OCTOBER 2018 • 5 MARKET RESEARCH SYNOPSIS RESIDENTIAL OUTLOOK FOR PRIVATE HOME PRICES Source: URA, Knight Frank Research The Property Price Index of all market segments climbed MARKET ACTUAL PROJECTED 3.9% year-on-year (y-o-y) in Q1 2018, the highest growth SEGMENT (AS AT Q1 2018) seen since Q2 2010. Fuelled in part by the robust Singapore Q-O-Q % Y-O-Y% BY END 2018 economic performance of 4.3% GDP expansion on a y-o-y (Y-O-Y%) basis in Q1 2018, the total New Sale, Sub-sale and Resale residential transaction volume hit 5,328 units in the first ISLAND-WIDE 3.9% 5.4% 8.0% TO 11.0% quarter, a 2.4% y-o-y increase. The higher transaction numbers were largely attributed to the resale performance, NON-LANDED 5.5% which constituted 68.8% of the total transaction volume. CCR 6.6% 8.0% TO 12.0% This is in contrast to the resale market contributing only 41.7% to the total transaction volume a year ago. NON-LANDED 1.2% 2.8% 6.0% TO 8.0% RCR A key factor to the strong resale performance could be NON-LANDED 5.6% 6.7% 9.0% TO 11.0% due to the release of pent-up demand from prospective OCR homebuyers and also market expectations that private home prices will continue its rise in the next few quarters LANDED 1.9% 3.3% 6.0% TO 8.0% HOMES amid higher land bid prices and costs. However, cost of borrowing continues to climb in early 2018, as the three-month Singapore Interbank offered URA PRIVATE RESIDENTIAL PROPERTY PRICE rate (Sibor) rose to 1.507% in April 2018, the highest INDICES since September 2008. Home loan rates are expected to increase further with upward pressure from anticipated Source: URA, Knight Frank Research Fed rate hikes later this year, which would adversely URA ALL RESIDENTIAL PPI (INCLUDE EC) NON-LANDED CCR impact home affordability coupled with prospect of rising NON-LANDED RCR NON-LANDED OCR LANDED home prices. 190.0 Rental yields saw a steep fall in the Mid-tier segment in the first quarter of 2018, with average gross rental yields 180.0 for the Mid-tier segment slipping to 2.99% in Q1 2018, its lowest since Q3 2011. The decline was largely due to the accelerating resale home prices, which resulted in yields 170.0 to be compressed. Yields of High-end and Mass-market segments both declined in Q1 2018 to 3.17% and 2.73% 160.0 respectively. 150.0 With the total transaction volume in Q1 2018 hitting 5,328 units, 2.4% higher than the 5,202 units in Q1 2017, total 140.0 transaction volume for 2018 is expected to hit above 25,000 units, barring any unforeseen circumstances. Displaced residents from the various collective sales sites 130.0 closed in 2017 and early 2018 are likely to provide a further uplift in transactions this year, as it is envisaged that many 120.0 owners will find replacement homes once the Order of Property Price Index (Q1 09 = 100) Sale is received. 110.0 Unless the government intervenes again, the price and 100.0 sales momentum is likely to continue unabated for the rest of the year in a virtuous cycle of rising land prices, growing 90.0 optimism and higher unit price expectations. Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1 2018 SINGAPORE VIEW • 6 RETAIL MAJOR UPCOMING RETAIL SUPPLY IN KEY PRECINCTS (ABOVE 50,000 SQ FT NLA) Source: Knight Frank Research “ FRINGE AREA DOWNTOWN CORE ORCHARD Retailers step up to REST OF CENTRAL AREA SUBURBAN develop differentiated concepts and landlords 1,400 adopt various strategies to distinguish themselves 1,200 Consumers are set to benefit from the dynamic shift in the retail market, as retailers step up to develop differentiated concepts and landlords 1,000 adopt various strategies to distinguish themselves. With prime retail rents declining at a slower pace in Q1 2018, island-wide occupancy is expected to remain fairly healthy through 2018. NETT LETTABLE RETAIL SPACE (’000 SQ FT) Prime retail rents in the City Fringe precinct reported strong recovery 800 after 11 quarters of negative to flat growth. Impacted by cautious retailer sentiments despite a modest improvement in retail sales growth, island- wide prime retail rents fell by 0.8% y-o-y to average $30.50 per square feet per month (psf pm) in Q1 2018. This is the 15th consecutive quarter 600 of decline for island-wide prime retail rents. The city fringe precinct rebounded with a strong recovery (3.5% y-o-y) in prime rents for the first time after 11 quarters of decline. Average rents in the Central Region are envisaged to fall by up to 2.0% y-o-y by Q4 2018, while prime rents are 400 likely to moderate downwards by up to 2.0% y-o-y. Island-wide occupancy performance is expected to hover between 91.0% and 93.0% by Q4 2018. Overall, most retailers are still seen to be taking a prudent approach towards their physical store expansion 200 plans, amid uncertain consumer sentiment trends and persistently high business costs. Island-wide occupancy will likely be supported mainly by the steady occupancy performances in established malls. Malls in the Central Area could gain from stronger tourism performance and 0 positive economic sentiments in 2018. 2018 2019 2020 2021 AVERAGE GROSS RENTS OF PRIME RETAIL SPACE FOR Q1 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$28.70 Q-O-Q CHANGE -0.4% -2.1% 0.5% 3.5% -0.3% Y-O-Y CHANGE -0.8% -1.3% -3.4% 3.5% -0.3% JULY 2018 - OCTOBER 2018 • 7 OFFICE Prime grade“ office rents on the rise for four consecutive quarters The Singapore office market continues its recovery on the back of an average occupancy rate of 92.5% for Grade A+ office space positive economic outlook and hiring sentiments across sectors, and tapering supply of new prime office stock coming on-stream with many companies increasingly adopting flexible workplace until 2020, landlords are adjusting rents upwards. arrangements and enterprise co-working arrangements. While Grade A office space rents rose across all precincts, the Office space leasing movements in Q1 2018 were broad-based Suntec / Marina Centre precinct saw the highest rent growth across industries.