Thought Leadership

• Keeping with the general upbeat pace of deals in the real estate market, the third quarter recorded some S$7.5 billion of investment deals, with 49.7% contributed by transactions in the public sector. This transaction volume represents a 38.7% quarter-on-quarter (q-o-q) increase from the S$5.4 billion in the previous quarter, and a 58.1% year-on-year (y-o-y) growth from the S$4.8 billion in the same period last year.
• The bulk of investment volume in Q3 was driven by the sale of four Government Land Sales (GLS) sites, with the award of the Marina View reserve site at S$1.5 billion being the top land sale, followed by the Jalan Anak Bukit parcel at S$1.0 billion. With frenzied bidding at certain recent GLS tenders, other land-hungry developers may shift their focus towards the greater diversity offered by smallersized plots in a variety of locations, such as sites with more palatable quantums where owners are attempting a collective sale. With the seal of the Flynn Park collective sale deal at S$371 million or S$1,355 psf ppr, this could cause a ripple effect in the en bloc market given that many owners are keen to collectively sell their ageing units. As such, projects in the range of S$600 million and below with about 600 units might just find willing buyers.

This article was originally published in https://www.knightfrank.com/

CBRE Research recently analysed the land and buildings held on balance sheets across 40 ASX200/NZX50 listed companies. What we discovered was that well over $AU24 billion of capital could be unlocked and reinvested into higher returning opportunities in the Materials, Healthcare, Telecommunications, Transport and Industrial sectors in Australia and New Zealand.

There is strong demand from listed and unlisted property funds for long-term leased properties. The ability to capitalise on improving market values, dispose of under-utilised assets and acquire capital to fund other business strategies are just some of the reasons why listed corporates are targeting owner-occupier sales. In the Pacific region alone, there has been a well-worn path of owner-occupier real with c.AU$11 billion already realised over the past five years.

With significant yield compression evident across all commercial asset types since 2015, particularly in the industrial property sector, the opportunity could be even higher than our initial AU$24 billion estimate as corporates in Australia and New Zealand revisit their property occupancy strategies to unlock value.

This article was originally published in https://www.cbre.com/

Australia’s residential pricing has reached record highs, with continued strong growth across almost all markets. The national median house price had risen 18.4% over the year to June with the national median unit price up 8.6%. There are signs, however, that price and lending growth is attracting the attention of regulators, with some forms of macro-prudential intervention looming. Initial curbs are likely to target highly leverage borrowers. APRA has already increased the minimum interest rate buffer ADI’s use in assessing loan serviceability from 2.5ppts to 3ppts above the actual loan rate, while Australia’s major banks have begun to take a more cautionary approach to some of their lending criteria.

This article was originally published in https://www.cbre.com/

• Compared to Q1 2021, investors are displaying a higher risk appetite amid the tight yield environment
• Asset enhancement, repositioning and taking on leasing risk are among the strategies utilised by investors to achieve higher returns
• Logistics assets remain keenly sought after while Grade A office in prime locations are attracting enquiries as investors look to capture flight-to-quality demand
• Further logistics cap rate compression has been observed. Cap rates for office and retail remain largely unchanged
• Investors are placing a strong emphasis on income-related factors such as tenant quality, rent roll stability and potential rental growth
• Amid uncertainty about the duration of the pandemic, the economic outlook is investors’ primary concern in 2022. Concerns over interest rate hikes and high inflation are limited

This article was originally published in https://www.cbre.com/

Sectoral performance in real estate is always under the microscope, but it has never been so acutely examined and reported as it has in the past 12 months. As COVID-19 first spread across the Asia Pacific region and then the globe, bringing with it a global recession, investors and occupiers alike sought not only to limit their exposures but also identify opportunities for growth.

Just as we have seen differing performance between commercial real estate sectors, so too have we seen differing performances within the retail sector. In this report, we focus on the upper echelons of retail – the (super) prime retail streets in cities across the region – as well as discuss other relevant aspects within the sector.

This article was originally published in https://www.cushmanwakefield.com/

Capital Markets

With economic recovery gaining traction, preliminary real estate investment volume in Singapore increased 3.3% q-o-q to $7.317 bn for Q3 2021.

Office

In Q3 2021, the Delta variant outbreak prompted a re-tightening of safe management measures. Despite the precarious situation, some positive signs were observed in Q3 2021.

Business Parks

The leasing performance of the business park market is divided into two tiers; leasing demand is concentrated within the City Fringe submarket while demand for space in the Rest of Island submarket remains subdued.

Retail

Recovery momentum for the retail market continued to be halted by retightened measures. There was recurring pressure on the submarkets that were affected by work-from-home measures and weak travel demand.

Residential

Despite heightened restrictions from end-Jul to mid-Aug 2021, market sentiment was not dampened. New home sales from Jan to Aug 2021 came to 9,265 units, 92.8% of 2020’s volume.

Industrial

On the back of improving occupancies and strong leasing activity, landlords’ rental expectations increased. Occupier activity comprised of third-party logistics, food storage and electronics.

This article was originally published in https://www.cbre.com/

Hong Kong Chief Executive Carrie Lam today (6 October 2021) delivered the final Policy Address of her current term. Her speech included details of a blueprint designed to solve Hong Kong’s long-term housing and land shortage problems along with plans to promote future economic integration with Shenzhen and the Greater Bay Area. No direct initiatives related to commercial real estate were included in this year’s address.

Download the report for the key highlights and implication to real estate market.

This article was originally published in https://www.cbre.com/

‒ Asia Pacific governments and industry players continue to implement policies and partnerships to revive the travel and tourism industries. 

‒ While the rollout of COVID-19 vaccines is restoring some confidence in travelling and contributing to the gradual easing of travel restrictions in some markets, the situation remains highly uncertain. 

‒ Following a hugely challenging 12 months after the onset of the pandemic, investor sentiment towards hotels has improved in recent months on the back of the vaccine rollout and expectations of economic recovery. 

‒ Regional hotel transaction volume reached US$2.3 billion in Q2 2021, representing a decline of 5.1% q-o-q. Japan, mainland China, Korea and Australia accounted for the bulk of sales volume during the quarter.

This article was originally published in https://www.cbre.com/

Investment 

Major office deals closer to fruition (27 Sep – BT)
According to The Business Times, Hong Kong-based private equity property fund management company Gaw Capital Partners is doing diligence for Twenty Anson at around $2,900 psf on the existing NLA of about 206,200 sq ft; based on this, the deal will be nearly S$600 million. It was reported that JP Morgan has teamed up with Nuveen Real Estate to do exclusive due diligence on One George Street. Assuming the price is S$2,900 psf, the absolute quantum would amount to S$1.29 billion. Meanwhile, a transaction is also said to be brewing for ABI Plaza at 11 Keppel Road. 

Two sites at one-north’s Slim Barracks Rise beat forecasts with 10 bids each (29 Sep – BT, ZB, 30 Sep – ST)
The Urban Redevelopment Authority (URA) closed the tender for two residential with commercial at first storey land sites at Slim Barracks Rise on September 28. Land parcel A, which spans 85,648 sq ft fetched a top bid of S$320.1 million or about S$1245.7 per sq ft per plot ratio (psf ppr). The top bid came from EL Development. Meanwhile, the 63,901-sq ft land parcel B, fetched a top bid of S$162.4 million or S$1,210.1 psf ppr from Gao Xiuhua.

Marina View white site awarded to IOI Properties for S$1,508b (30 Sep – ST)
The site at Marina View is awarded to its sole bidder, a unit of IOI Properties Group, for S$1.508 billion. That works out to a land rate of $1,379 psf per plot ratio (psf ppr). The white site can yield 905 private homes, 21,528 sq ft in gross floor area of commercial space and 540 hotel rooms.

URA launches residential sites at Lentor Hills Road, Jalan Tembusu for tender (1 Oct – BT, ST)
The Urban Redevelopment Authority (URA) has released for sale three residential sites at Lentor Hills Road (Parcels A & B) and Jalan Tembusu under the 2H/2021 government land sales (GLS) programme. The sites at Lentor Hills Road (Parcel A) and Jalan Tembusu are launched for sale under the confirmed list, while the site at Lentor Hills Road (Parcel B) is available for application under the reserve list.The sites at Lentor Hills Road (Parcel A) and Jalan Tembusu can potentially yield 595 and 640 units respectively, while the site at Lentor Hills Road (Parcel B) can yield 265 units.

Retail

Turf City tenants granted final 18-month extension until end-2023 (1 Oct – ST)
A final 18-month extension has been granted to tenants at Turf City until December 31, 2023, said the authorities on September 30. According to the Singapore Land Authority (SLA) and URA, development plans for the Turf City site are being studied, with land preparation works scheduled to start after December 31, 2023.

The site currently has 15 tenancies, including retail, food and beverage, and sports and recreation businesses, as well as childcare centres and motor vehicle showrooms. The original tenancies were for periods up till December 31 last year.

Industrial

WarnerMedia opens regional hub in Singapore (25 Sep – ST)
Major media company WarnerMedia has opened a regional hub in Singapore and will be launching its premium HBO Max platform in Asia. The new 40,000-sq ft office takes up two floors at Solaris.

Savills in the Press

URA launches residential sites at Lentor Hills Road, Jalan Tembusu for tender (1 Oct – ZB)
Zaobao featured an article on the three residential sites at Lentor Hills Road and Jalan Tembusu released under the 2H/2021 GLS programme.

Savills Singapore executive director Alan Cheong commented that the site at Lentor Hills Road (Parcel A) is likely to attract around eight bids, while the larger site at Jalan Tembusu could receive six bids. If Lentor Hills Road (Parcel B) is triggered, he expects to see around 15 bids with more smaller developers bidding for the site.

This article was originally published in https://www.savills.com/

The latest Asia-Pacific Property Value Movement Report Autumn 2021 is out now! This report aims to provide asset owners and investors the latest perspectives and insights on the performance of property asset values across Asia Pacific.

Some Key Takeaways from the report:

• Among the 22 markets in Asia-Pacific, 69% of sectors expect values to rise / remain stable in H2 2021.
• The high-tiered Industrial market expected an increase in H2 2021.
• Australia and New Zealand are of the highest proportion of sectors with increasing or stable values in H1 2021.

With capital remained abundant while financing costs across most of the region maintained at or near record lows, we expect asset values to continue holding up, which could firm further as the gathering pace of vaccinations shore up occupier markets in the region.

We hope you find the report of interest and as always, we welcome any enquiries you may have.

This article was originally published in https://www.knightfrank.com/