Freehold corner residential shophouse at Everton Road for sale by Expression of Interest

A freehold conservation shophouse at 9 Everton Road (the “Property”), has been put up for sale via an Expression of Interest exercise by Cushman & Wakefield, the appointed exclusive marketing agent.

Image: Cushman & Wakefield

The freehold corner residential shophouse is a charming two-storey corner shophouse with an attic, in the Blair Plain Conservation Area which sits on a land area of 2,023 sq ft and has a built-up area of approximately 4,000 sq ft.

The site of the freehold corner residential shophouse is zoned residential under the 2019 Master Plan and it is within the prime District 2. The Outram Park MRT Station and the upcoming Cantonment MRT Station are located less than 600m away from the freehold corner residential shophouse. The area was historically a residential area for wealthy businessmen and has retained the same profile and identity over the decades.

Mr. Shaun Poh, Executive Director of Capital Markets at Cushman & Wakefield, says “This is a rare opportunity for discerning home seekers or investors looking to own shophouse assets within the Blair Plain Conservation Area as the supply is extremely limited; only four units have transacted in the last two years. A corner unit is even more scarce in supply.”

Mr Poh also added that, “Freehold landed homes in prime central districts are always highly sought after by investors for their excellent capital appreciation potential and their great appeal to expatriate tenants as such properties offer a spacious and unique living space while being conveniently located near the Central Business District.”

The indicative price for the freehold corner residential shophouse is $7.5 million. The Tender exercise closes on 20 October 2020 (Tuesday), at 3.00pm.

Everton Park is a subzone within the planning area of Bukit Merah, Singapore, as defined by the Urban Redevelopment Authority (URA). Its boundary is made up of New Bridge Road and Eu Tong Sen Street in the north; Kampong Bahru Road in the west; the Ayer Rajah Expressway (AYE) in the south; and Cantonment Road in the east. “Everton Park” also refers to a minor road within the subzone. The subzone took its name from this road.

Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “shophouses on Everton Road is like the cross-point of Singapore’s signature old-meets-new living.”

“Just the location is the biggest selling point for property,” he added. “Despite the uncertainties surrounding Covid-19 pandemic, the US presidential election in November and the international trade tensions, Singapore is still an attractive residential market for investors.”

Although the property market exuberance has been curbed to some extent with the property cooling measures introduced last year, Singapore as a property market investment destination still remains among the top – shoulder to shoulder with other cities in the world like London, New York, Shanghai and Sydney.

“We have to be mindful that there is a lot of excess capital fluidity here and at 1.9 – 2 percent, Singapore has one of the lowest interest rates for home loans in the region,” Mr Ho added.

Everton Road has a view of the Everton Park HDB, the towering Pinnacle@Duxton, and is surrounded by other Chinatown shophouses.

The Blair Plain conservation area is a compact cluster of two-and three- storey shophouses and terrace houses of various architectural styles. Apart from some commercial uses along Kampong Road and Neil Road, the area is largely a quiet residential neighbourhood, which hugs the narrow inner streets of Blair Road, Spottiswoode Park Road and Everton Road. The area was gazetted on 25 October 1991 for conservation.

During the early years of the twentieth century, many ornately decorated buildings were constructed along Blair, Neil and Everton Roads. This was possibly due to increasing demand from well-to-do Chinese merchant families for new homes. They desired and could afford to move away from the increasingly overcrowded, unsanitary and disreputable urban areas east of Cantonment Road.

There were also other residents. A Boyanese Pondok (or communal lodging house) was located at 37-41 Everton Road. This same building was also in part, the garage for Mr Choa Kim Keat. Nearby, a Tamil language school – the Vinayaganada Tamil School was located at no. 51 Blair Road. The building and rebuilding of urban residential terraces in what has become the Blair Plain conservation area continued until the 1960s, as individual property owners chose to ‘upgrade’ their homes according to the latest in technology and fashion. There is a range of different styles of facades and building forms in the area.

The shophouses that are found mainly along Kampong Bahru Road have very simple architectural designs and single-window openings on the second-storey front facade. The terrace houses of the Transitional and Late styles along Blair Road and Neil Road have an eclectic mixture of Chinese, Malay and European design elements. Along Everton Road, there are some shophouses in the Art Deco and Modern styles.

The Chinese influence on the architectural styles is seen in the following elements:
–      a courtyard plan inside the house
–      a round gable at the end of the pitched roofs
–      bat wing-shaped air vents above the first-storey windows
–      friezes of coloured ceramic chips featuring dragon, phoenix and flower motifs

The Malay influence is visible in the timber fretwork of the roof eaves, fascia boards and balustrades design.

The European influence is evident in the fanlights, French windows, Portuguese jalousie (shuttered windows), plasterworks, panelled pintu besar or main doors) and pintu pagar  ordoor gate.

British colonial influence is represented by the Corinthian pilasters on the upper storeys.

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The bank ups Intelligent Banking capabilities as it sees continued high adoption and usage of its digital banking services since onset of Covid-19, clocking records on multiple fronts

DBS announced on Sep 21 that it is doubling down on its Intelligent Banking capabilities across the bank’s digital banking services, at a time when Singaporeans are not only shifting to, but also sticking with, their mobile phones and online platforms for everyday banking and wealth management needs.

With features being progressively introduced since early this year, DBS’ Intelligent Banking capabilities combine predictive analytics and customer-centric design to transform data into hyper-personalised, intuitive – and unintrusive – insights that simplify the way customers manage their finances and investments.

Since then, the bank’s Intelligent Banking engine has generated up to 13 million insights a month across its digital banking services that have helped customers to improve their financial planning, uncover blind spots in their monthly expenditures, and even make timely investment decisions.

By the first quarter of 2021, DBS will have rolled out to customers a slew of Intelligent Banking features, many of which are industry-firsts. These include suggestions on equity stocks tailored to a wealth customer’s investment pattern, and prompts that speed up everyday banking functions so customers can perform their transactions with a single tap or swipe on their mobile phones, such as paying their monthly bills in one go.

Image: DBS

The introduction of features that provide even easier and more effortless banking will benefit more customers amid the soaring adoption and usage of digital banking services since the onset of the Covid-19 pandemic. Between January and May this year, transactions on retail digital platform DBS digibank surged by 220% compared to the same period last year. Likewise, transactions on DBS’ wealth digital platform DBS iWealth, also jumped by 198% year-on-year (YoY).

Even after Singapore’s Circuit Breaker measures eased in June, DBS customers’ digital banking activity continued to hold up – particularly via the bank’s mobile banking channels. Between June and August 2020, customer sign-ups for the DBS digibank mobile app rose by 216% YoY, with the bank’s digital banking customers hitting a record high of 3.5 million. Between March to July 2020 alone, DBS saw a 200,000 increase in digital banking users

The number of investment transactions made via DBS iWealth’s mobile banking app tripled. Customers are also going digital when transacting. From 2017 to 2019, the bank saw an average of 5% YoY decrease in cash volumes being handled, a reduction of some SGD 5 billion a year. Yet for the period of June to August 2020 alone, cash volumes plunged by an unprecedented 34% compared to the same period last year – a reduction of around SGD 7 billion in three months.

Sim S Lim, Group Head of Consumer Banking and Wealth Management at DBS Bank, said, “DBS’ digitalisation journey, which began more than six years ago, has always been centred around our customers. As Singapore’s largest digital bank, it’s important that we stay ahead of the curve and continue to innovate – to ensure that our digital solutions not only meet our customers’ needs, but also anticipate them and actively offer solutions, so banking becomes a seamless part of their lives. Through our Intelligent Banking capabilities, we have been laser-focused on delivering helpful and actionable insights that guide customers to make more informed financial and investment decisions – decisions that are even more crucial amid today’s uncertainties. Our aim is to not only improve our customers’ finances, but also to ultimately be of tangible value to their lives.”

DBS digibank: Delivering meaningful insights so customers can make better financial decisions

Good financial management is key in ensuring long-term financial security, yet this sometimes takes a backseat when life gets busy. DBS digibank has a range of features aimed at informing, guiding and enabling customers to better navigate their everyday finances in a convenient and intuitive manner.

• Personalised financial planning insights: NAV Planner, an industry-first financial planning solution embedded within DBS’ digital services, enables customers to plan and monitor their financial goals by providing insights and recommendations, tailored to their life stages and financial circumstances. Since its launch in April, NAV Planner has helped over 1.1 million customers in Singapore with their financial planning needs and converted over 33,000 customers to net savers.

• Uncover potential blind-spots: To ensure customers don’t accidentally overpay on their discretionary expenses or automated payments, customers will be automatically notified in the event of any unusual or higher-than-normal bill payments. Between June and August 2020, an average of 48,000 customers per month benefitted from these alerts.

DBS iWealth: Smart triggers to anticipate customers’ investment needs, a first in Singapore’s wealth space

Staying abreast of market movements and developments is imperative when it comes to investing, but this can be time-consuming and challenging for most. To this end, DBS iWealth will roll out a range of industry-first smart triggers that bring together the bank’s market insights, research expertise, and data-driven understanding of customers’ individual investments and preferences, to empower customers to act on opportunities in a timely, informed manner.

• Smart triggers for relevant equity & foreign currency (FX) price movements: By analysing customers’ portfolio holdings and past investment activities, DBS iWealth will automatically alert customers to relevant equity and FX pricing movements, thus enabling them to take action to seize opportunities quickly. This is especially vital in today’s volatile times.

• Similar stock suggestions: For customers keen to discover new investments, DBS iWealth seeks to broaden their horizon whilst also saving time and effort spent self-sourcing by providing them with suitable stock recommendations, curated based on their preferences and the stock’s performance, amongst other factors.

The announcement of DBS’ Intelligent Banking features roll-out is part of the bank’s ongoing journey to help both consumers and businesses go digital easily and effectively. Last week, the bank held its first virtual DBS Digital Day which brought together leaders from both the public and private sectors, subject matter experts, corporate clients and employees to share about their experiences and insights in harnessing the latest strategies and solutions to navigate the next normal.

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Property investors in Asia Pacific are increasingly looking to industrial assets to satisfy more defensive strategies during the COVID-19 pandemic.

Image by InvestmentZen

In the last six months, property investors have raised over US$7 billion targeting Asia Pacific logistics assets, according to JLL. Major transactions and partnerships have included ESR partnering with GIC to form an AUD1 billion build-to-hold fund in Australia, the establishment of a joint-venture between CPPIB and APG with ESR to invest over US$1 billion in Korea, and GLP raising US$2.1 billion for its China Income Fund I.

“Throughout the pandemic, the industrial sector has maintained its defensive investment position and been more resilient to the impact than other sectors thanks to its operation criticality. But, really, COVID has just accelerated many of the longer-term secular trends that are supporting investment into the sector,” says Stuart Ross, Head of Industrial and Logistics, Southeast Asia, JLL. “The inflow of capital has resulted in more complex transactions and greater participation by both established and new investors into the sector.”

In line with the economy, real estate investment volumes in Asia Pacific are down this year, falling 32 percent in the first half of the year from a year earlier, according to JLL data. However, industrial transactions were just 6 percent lower than the same period in 2019, which was a bumper year for the sector.

Given the high demand, property investors are pivoting towards platform deals rather than individual assets, says Ross.

“By acquiring a platform, investors are more likely to secure tenant networks and can achieve scale quickly,” he says.

Online shopping makes an impact

During the pandemic, the surge in online shopping – already a major driver for warehouse investment in recent years – has only accelerated rising demand.

“The pandemic will accelerate trends already in play across the sector, such as increased internet penetration rates, expansion of online grocery, omnichannel retailing, and the integration of technology into logistics and warehousing,” says Peter Guevarra.

As cities continue to grow across Asia Pacific, so too will the need for warehouses near city centers that provide that last push in getting the goods to consumers.

“Last mile logistics requires sizable upgrades for many investors and is likely to need more investment dollars to meet demand from the region,” he says.

As a result, both property investors and occupiers are increasingly shifting focus to delivery optimisation, cross-docking centres, and the use of autonomous vehicles.

“Successful last mile strategies will look to implement innovative solutions, modern processes, digital transformation, and the latest technological developments to meet demands,” says Guevarra. “Urbanization-driven concepts like multi-storey logistics developments will need to be considered more by both investors and occupiers looking to gain a larger footing in the rapidly changing region.”

Traditionally a staple of densely, populated cities with limited logistics land availability and relatively high land prices, multi-storey logistics developments are now emerging in Australia and India, complementing land highly urbanized cities like Tokyo and Hong Kong.

“Logistics is increasingly a longer-term stability story which investors do crave in times of uncertainty,” Ross says. “Capital values are forecast to stay relatively firm, with modest yield compression expected in some markets across the region.”

A recent Knight Franck research seem to concur with JLL’s findings that property investors may be increasingly looking to industrial assets to satisfy more defensive strategies.

Knight Frank on 18 September 2020, released its Asia-Pacific Warehouse Review which tracked prime Asia-Pacific warehouse rents across 17 key cities, registering an average change of -0.02% half-on-half despite COVID-19. Going forward, Knight Frank expects average rental growth between 3% to 5% by the end of 2020.

Highlights of Asia-Pacific Warehouse Rents:

• Asia-Pacific warehouse rents market conditions for 16 of the 17 cities tracked are expected to remain stable or improve over the next 12 months. The positive outlook for growth in the second half of 2020 is due to higher space appetite from e-commerce players and essential commodities.
• Tokyo recorded the highest half-on half rental growth at 4.2%, due to healthy take up rates and the lack of available prime assets within the city.
• Shanghai warehouse markets recorded the healthiest rental growth compared to Beijing and Guangzhou, at 3% half-on-half, led in part by a pickup in storage demand from cold chain operators.

Tim Armstrong, Head of Occupier Services & Commercial Agency, Asia Pacific at Knight Frank says, “The outlook for industrial markets remains resilient due to robust demand from the e-commerce and essential goods sectors, as well as additional requirements for inventory storage to mitigate supply chain disconnects.”

Daniel Ding, Head of Capital Markets for Land & Building, International Real Estate & Industrial, Knight Frank Singapore, shares, “It has become clear that the winner coming out of this health crisis is very much some specialist sub-sectors within the industrial asset class, including institutional-grade warehouses. We expect rents to stabilise and gradually trend upwards in the coming months.”

Industrial property market emerged one of the most resilient across the property sectors says a recent analysis of JTC Q2 2020 Industrial property statistics.

Ms Tricia Song, Colliers International’s Head of Research for Singapore, commenting analysing that industrial property market emerged among most resilient sectors from the JTC Q2 2020 Industrial property statistics said:

“The Singapore industrial property market emerged one of the most resilient across the property sectors (retail, office, hotel, residential), amid the global coronavirus (COVID-19) pandemic, as seen by continued warehouse demand supported by the accelerated adoption of e-commerce and government’s stockpiling of essential goods.”.

Ms Song added: “Overall, we are cautious about Singapore industrial market’s outlook for this year, and forecast the general industrial market to remain weak in 2020.”

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JLL finds 93% of corporate real estate leaders believe their recovery plans to mitigate the impact of the pandemic will be successful

Corporate real estate (CRE) leaders in the Asia Pacific are optimistic about their business and recovery plans despite impact from the ongoing pandemic. At least nine in ten believe that these plans to mitigate the impact of COVID-19 will be successful and have faith in their workforce to cope with the current crisis. A majority of leaders also expect total footprint and number of sites that they maintain to remain the same or even increase.

JLL reimagines real estate and explains how workplace strategy, portfolio optimization and other critical dimensions must evolve to ensure organizations ares future fit. (Image credit: JLL)

According to JLL , corporate real estate leaders are now moving forward confidently in reimagining the new modern office, with a huge focus placed on prioritizing the health and wellness of employees, as well as leveraging technology in their investments plans.

In the report titled “Optimism in the Face of Crisis”, corporate real estate leaders are highly positive about the future state of their business. Nearly 80% are confident they have the right CRE service partner to advise on next steps, and 70% are assured in their governments’ ability to advise and take the right measures to mitigate future risk. Looking back at the effectiveness of their business continuity plans, CRE leaders expressed high levels of satisfaction, and 88% judged their plans to be effective, very effective or extremely effective.

“Despite the challenges, the outlook remains positive with a healthy 68% of those surveyed remaining optimistic about the future state of their businesses. In addition, when asked about their plans on space requirements, 94% were expecting to either retain or increase the amount of higher quality spaces in their portfolios.” JLL

While the majority (76%) of corporate real estate leaders across the region expect only moderate impact or steady rationalization (i.e. expansion or contraction) of their real estate portfolios in response to changes arising from COVID-19, not all of them in Asia Pacific view this the same way. Those in Australia and Hong Kong are more focused on steady rationalization whereas leaders in India anticipate massive and accelerated rationalization. Despite the differences, half of all corporate real estate leaders expect their total portfolio to stay the same in the medium to long term. Two thirds of CRE leaders (63%) also expect their total number of locations or sites to stay the same.

“As the corporate sector prepares for normalcy amidst the pandemic, the high confidence from CRE leaders suggests immense opportunities as we redefine the future of the office. It is becoming apparent that this future must be one that considers the new reality occupiers exist in and the evolution of the office as a place for work. We anticipate CRE leaders to take these into the next phase of their decision making,” says Anthony Couse, CEO, Asia Pacific, JLL.

Moving into the post-pandemic era, JLL expects four implications for commercial real estate as corporate real estate leaders look towards enabling success in this era of evolving change:

• Priorities for health and wellness will transform real estate portfolio mix to accommodate a more distributed and liquid workforce. Close to two thirds (58%) of CRE leaders highlight the health and wellness of employees as a top investment priority. To support safe-distancing goals in the office and provide flexible support for remote working teams, demand for higher quality spaces or assets may increase, and portfolio mix may see the addition of medium/ smaller offices or flex/ co-working spaces.
• A mix of CRE strategies will be needed to achieve the de-densification of office space. To fulfil demands for added health and wellness requirements, the new office will see a moderately reduced average number of seats per 100 staff, a redesign and reconfiguration of space to accommodate physical distancing, split team and multiple shift arrangements, and expansion of remote working policy.
• Technology will be critical in enabling the success of new working models. Employees feel more productive when they are tech-ready. Those who are equipped with sophisticated tech tools also felt more productive. Ways to enable remote working and collaboration in the office were flagged by CRE leaders as key investments more than twice as much as any other technologies. Investments in technologies must continue to be taken seriously by CRE leaders in the future office.
• Higher acceptance of remote working will impact future CRE investment. Employees enjoy the flexibility and control that remote working has provided in their personal and professional lives. Employers have realized that many roles can be done remotely. CRE leaders will need to consider active investment in technologies that optimizes productivity and collaboration among onsite and remote workforces.

“COVID-19 has transformed the workplace overnight and how employers and employees both approach work. In response, CRE leaders have adopted various strategies to overcome these challenges. The future of the office is bright in the Asia Pacific, and we can expect that CRE leaders will be placing an even greater focus to ensure the safety and sustainability of the new modern office for all occupiers,” commented Roddy Allan, Chief Research Officer, Asia Pacific, JLL. 

JLL surveyed 200 corporate real estate (CRE) leaders from the Asia Pacific, including Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Taiwan, Thailand, Singapore and New Zealand. Respondents were interviewed by JLL in June 2020. CRE leaders are defined as executives with strategic oversight and responsibility for their respective corporation’s real estate footprint and management.

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Maxwell House at No. 20 Maxwell Road is up for sale via a public tender. Cushman & Wakefield, the appointed property consultants for the collective sale has confirmed that owners holding not less than 80 per cent by strata area and share values have agreed to put the property to market at a reserve price of $295 million

Image : Cushman & Wakefield

Maxwell House is built on a trapezoidal island plot with views from all 4 sides of the building.

It is currently a 13-storey commercial building and has a site area* of 3,883.45 sq m (41,801 sq ft approximately). Under the Master Plan 2019, the site is zoned “Commercial” of plot ratio 4.3.

According to Cushman & Wakefield, the URA had, in an advice given in January 2019, stated that they will support a mixed-use “Commercial & Residential” development of plot ratio of 5.6 with a gross floor area of 21,747.32 sq m (234,086 sq ft approximately). This results in an uplift of the plot ratio of Maxwell House by some 30 per cent, subject to a successful rezoning. The commercial quantum shall not exceed 20 per cent of the total Gross Floor Area (GFA). The allowable building height has been increased to 75 Above Mean Sea Level or approximately 21 storeys high for the tower block.

Assuming 80 per cent of the total GFA is for residential use and the remaining 20 per cent GFA for commercial use, the blended land rate works out to approximately $1,691 psf per plot ratio, after factoring the seven per cent bonus balcony plot ratio for the residential component plus the differential premium and an estimated lease upgrading premium for the site.

Another possible development alternative for Maxwell House is ‘Hotel’ which also has a plot ratio 5.6, subject to approval from the relevant authorities. The ‘Hotel’ option would increase the land rate to $1,998 psf per plot ratio, also inclusive of the differential premium and an estimated lease upgrading premium.

Maxwell House will be one of the rare exceptional residential plots to be on the market, especially in a location where there are mostly retail, F&B outlets and office users. Located at the fringe of the CBD juxtaposed the charming enclave of Tanjong Pagar and Chinatown, it has the advantage of enjoying diversity in the old world charm of the conservation shophouses as well as taking in the new gleaming skyscrapers of Guoco Tower and several hotels in the vicinity. The expected completion of the Maxwell MRT Station which is part of the Thomson East Coast line will add the connectivity dimension to this site, the expected completion date being 2022.

According to Ms Christina Sim, Director of Capital Markets at Cushman & Wakefield, ‘Maxwell House is expected to be well received as there is a dearth of residential development land in this part of the business and heritage district. With the surrounding neighborhood filled with a plethora of entertainment and retail outlets plus a smorgasbord offering of much-loved Singaporean food, it will be one of the best ‘work-live-play’ sites to be made available. Added to this is the advantage of being in the Central Area where it is not constrained by the guideline on the maximum allowable number of units calculated based on an average size of 85 sqm per dwelling unit. Potential Developers have the creative flexibility of building studio units or dual key units, subject to the approval of the competent authority.’

The tender for Maxwell House at 20 Maxwell Road will close on Tuesday 12 November 2020 at 3.00pm.

With the winding down of the success of residential en bloc sales, commercial properties are now trying to join in the bandwagon but the Covid-19 pandemic makes such deals even more difficult. Many commercial en bloc sale attempts fail because the asking prices are often too high. Two critical factors affecting the success of commercial sites going en bloc are pricing and location. Older commercial buildings especially, may see a need to catch the current wave as an exit strategy as their rental yields come under pressure due to competition from newer commercial buildings.

One report said investors looking for alternatives to park their money in the wake of property cooling measures, would divert their attention to the strata office and shophouse markets as they are not subjected to this round of purchase or sales restrictions/encumbrances.

Mr Paul Ho, chief mortgage officer at iCompareLoan, said: “Maxwell House is a very prominent location in the very heart of District 1. As such, it will appeal to a lot of savvy investors.”

He added, “Even with the global economic uncertainties, Singapore remains an attractive location for investments to flow into, and properties like The Arcade are prime real estates worthy of investment.”

Commercial properties may be bought under personal name, but total debt servicing Total Debt Servicing Ratio (TDSR) will apply on the individual’s income on such purchases. To buy a commercial or industrial property under company name, total debt servicing ratio TDSR also applies on the individual director’s income if the company is an investment holding company or an operating company that is loss-making or does not have sufficient cash flow to servicing the repayment.

To buy a commercial or Industrial property under company name where the company is well established with an existing operating business with strong financials, TDSR may be waived on the individual. However director is usually required to become personal guarantors of the loan the company undertakes. Hence this may affect the director’s other purchases, such as for buying a residential property, due to the loading from the TDSR for guaranteeing a loan.

Some banks even advertise 100 to 120% loan. This is due to a combination of working capital as well as commercial/industrial property loan, but this only applies to company with strong cash flow position. Commercial property is different from residential property and the considerations are more complex and varied, though the payoff may be worthwhile for discerning investors.

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Asia-Pacific warehouse rents growth expected to average between 3% to 5% by the end of 2020

Knight Frank on 18 September 2020, released its Asia-Pacific Warehouse Review which tracked prime Asia-Pacific warehouse rents across 17 key cities, registering an average change of -0.02% half-on-half despite COVID-19. Going forward, Knight Frank expects average rental growth between 3% to 5% by the end of 2020.

Asia-Pacific warehouse rents hold firm amidst COVID-19 (Image credit: Knight Frank)

Highlights of Asia-Pacific Warehouse Rents:

• Asia-Pacific warehouse rents market conditions for 16 of the 17 cities tracked are expected to remain stable or improve over the next 12 months. The positive outlook for growth in the second half of 2020 is due to higher space appetite from e-commerce players and essential commodities.
• Tokyo recorded the highest half-on half rental growth at 4.2%, due to healthy take up rates and the lack of available prime assets within the city.
• Shanghai warehouse markets recorded the healthiest rental growth compared to Beijing and Guangzhou, at 3% half-on-half, led in part by a pickup in storage demand from cold chain operators.

Tim Armstrong, Head of Occupier Services & Commercial Agency, Asia Pacific at Knight Frank says, “The outlook for industrial markets remains resilient due to robust demand from the e-commerce and essential goods sectors, as well as additional requirements for inventory storage to mitigate supply chain disconnects.”

Daniel Ding, Head of Capital Markets for Land & Building, International Real Estate & Industrial, Knight Frank Singapore, shares, “It has become clear that the winner coming out of this health crisis is very much some specialist sub-sectors within the industrial asset class, including institutional-grade warehouses. We expect rents to stabilise and gradually trend upwards in the coming months.”

Asia-Pacific Prime Warehouse Rents

 Source: Knight Frank Research / *Sanko Estate

Industrial property market emerged one of the most resilient across the property sectors says a recent analysis of JTC Q2 2020 Industrial property statistics.

Ms Tricia Song, Colliers International’s Head of Research for Singapore, commenting analysing that industrial property market emerged among most resilient sectors from the JTC Q2 2020 Industrial property statistics said:

“The Singapore industrial property market emerged one of the most resilient across the property sectors (retail, office, hotel, residential), amid the global coronavirus (COVID-19) pandemic, as seen by continued warehouse demand supported by the accelerated adoption of e-commerce and government’s stockpiling of essential goods.

“That said, overall industrial rental and price declines were more pronounced in Q2 2020 than in Q1 2020, capturing the ground sentiments and impact of COVID-19 Circuit Breaker measures which started on 7 April 2020. With the rapidly evolving COVID-19 situation, the industrial sector is likely to experience continued pressures on rents and prices, as with other sectors.

“Singapore all-Industrial property market rents declined 0.7% quarter-on-quarter (QOQ) in Q2, dragged by single-user factory. Business parks held up best but still declined 0.2% QOQ. Despite the weakness in rents, overall occupancy rate, however, rose marginally to 89.4% from 89.2%. Meanwhile, prices of industrial properties saw a decline of 1.1% QOQ, attributing largely to the 1.5% QOQ decline seen in multi-user factories.

“Overall, we are cautious about Singapore industrial market’s outlook for this year, and forecast the general industrial market to remain weak in 2020.

“The business park and high-specs segments could be more resilient, benefiting from Technology sector. Warehouses could see support from the rise in e-commerce driving demand for logistics services, and are also well-positioned for any economic rebound.”

Rents and Occupancy Rate
The All-Industrial rental index declined at an increasing rate, registering a -0.7% QOQ growth, dragged largely by single-user factory (-1.0%) and warehouse (-0.7%). This came after a 0.1% decline in Q1 2020. This also marks the highest quarterly decline since Q3 2017, and brings the All-Industrial rental index to a level at 14.2% below the peak in Q2 2014.

However, overall occupancy rates improved 0.2 percentage point (ppt) to 89.4% in Q2 2020 from 89.2% in Q1 2020, mainly due to an 0.8 ppt increase in warehouse space; more space was leased due to stockpiling and storage during the quarter. Other segments saw a decline in occupancy levels, with business parks falling the most.

Factory

The single-user factory segment saw rents declining 1.0% QOQ which helped pushed up occupancy by 0.4 ppt  to 91.1% (+0.4 ppt). While rents of multi-user factories held up slightly better at -0.5% QOQ, occupancy declined by 0.4 ppt to 87.5%. All planning regions saw a decline in rents, with the worst decline seen in the East at -2.1% QOQ.

Business Park

Business Park rents held up best among all segments, with only a marginal decline of 0.2% QOQ in Q2 2020. That said, this is the first rental decline seen for business parks since Q4 2018, as the global COVID-19 pandemic dampened business sentiment and leasing activities in business parks and high-spec spaces. Occupancy rate also declined by 0.7 ppt QOQ to 85.2% as businesses paused expansion activities and net new demand remained negative for the second consecutive quarter.

Warehouse

Warehouses saw a surge in net new demand to 1.3 million sq ft from -125,000 sq ft in Q1 2020, as the pandemic resulted in national stockpiling of essential goods and accelerated e-commerce growth. Lower rents (-0.7% QOQ) in Q2 2020 drove occupancy up by 0.9 ppt to 88.3%.

Prices

The All-Industrial price index fell 1.1% QOQ in Q2 2020, dragged by the multi-user factory segment which saw a -1.5% QOQ decline, while single-user factory also witnessed a -0.6% QOQ decline.

Colliers notes that the price index for multiple-user factory has not seen an improvement for seven consecutive quarters. Prices in all planning regions fell in Q2 2020, with the West and North region seeing the largest drop at -4.0% QOQ and -3.5% QOQ respectively.

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Maximum flexibility in space without long-term obligations and high costs in design and fit-outs are some of the best benefits of hybrid hospitality

While many office workers will continue to work from home more frequently and more regularly, the function of the workplace is fundamentally changing. This means that occupiers must rethink their real estate strategy and rationalise their portfolio.

The benefits of flexible workplace are undeniable, and there are many different models available to tailor to the varying needs of a business. Could hotels also be part of the solution and meet some of those business needs? We see some great opportunities for hotels providing ‘hybrid hospitality’.

“If you want to be part of the success in the next evolution of the office, you should heed lessons learned in hotels the world over.”

Lessons learned from the hotel sector for hybrid hospitality

The creation of a pleasant working environment is an integral element of the guest experience for workers in hotels. By listening to guest demands, staff become better equipped at meeting changing consumer needs.

In our view, if you want to be part of the success in the next evolution of the office, you should heed lessons learned in hotels the world over. Those lessons are plentiful – from accelerated shifts in workplace strategies which have led to more dynamic and hospitality-led spaces such as “meet and greet” areas, to espresso or cocktail bars within office spaces.

Image credit: Bay Hotel Singapore-Facebook

Specifically, there are plenty of unique opportunities for workplace providers who can swiftly respond to the changing demands of multi-cultural and multi-functional employees across Asia. Following the lead of sophisticated hoteliers aligning with the expertise of workplace strategists, the collaboration between flexible workplace and hotel operators is no doubt inviting – and also offers an interesting insight to the future of the office.

“This symbiotic relationship between offices and hotels has been developing for years, but the final push, as a result of work from home, has accelerated this trend.”

Flexible workspaces are doing an increasingly better job of rivalling the concept of the traditional office space, and hotel lobbies are increasingly serving as workspaces.

Walking into either the elaborate lounge of the Kerry Hotel in Hong Kong or the spacious Artyzen Habitat lobby in Hongqiao, Shanghai, you will find yourself wondering whether you are in a hotel or a cleverly designed office.

This symbiotic relationship between offices and hotels has been developing for years, but the final push as a result of work from home has accelerated this trend. At times when the scale tips in the direction of office working, flexible workspaces benefit. For many companies who are transitioning to a flexible working culture that mainly consists of working remotely – and there will be many – hotels can offer an interesting alternative.

The business model of flexible workspaces mainly consists of offering contracts based on a five-day working week. Providing subscriptions for one or two days a week is possible but financially unappealing, which is why it barely occurs in practice.

Hotels can fill this gap if they have enough room. For them, renting out workspaces contributes to the existing business model and maximises the use of their real estate with low risk. They are already specialised in reception, hospitality and additional guest services and often provide quality dining and drinks facilities.

Indeed, they are in most, already the meeting point with our clients and colleagues. Why not expand on this?

‘Hybrid Hospitality’ is the future

There are countless opportunities for hotels that provide ‘hybrid hospitality – in other words, workspaces (be it under-utilised meeting rooms or lobbies) with good services in an inspiring environment by day, and hotel rooms by night. This is a supplementary business model that aligns with the peak and off-peak rhythm of hotels.

The principle is to generate more by investing less. Those same spaces are used more intensively for various guests. However, hotels must be willing to adapt their spaces and their policy, because at this time many traditional hotels are still not suitable for this purpose.

“The added value of hybrid hospitality… Is that maximum flexibility in the organisation of workspaces and meeting spaces can be arranged, whilst ensuring the avoidance of high initial investments concerning the design and fit-out.”

Core qualities of a ‘hybrid hospitality’ hotel are:

• Pleasant workspaces such as closed-off focus rooms, meeting and event rooms, and dedicated co-working spaces (the old business centre)
• A general lounge room suitable for networking and socialising (socially distanced of course)
• Hotel rooms with the option of workspaces – not just a small desk in a dark corner of the room
• Excellent facilities such as accessible and on-site meeting rooms, restaurants and bars which are also suitable for small-scale events
• Providing daily flexibility for work and meetings
• A ‘hospitality-first’ experience with the personal touch and on-demand service that’s already trusted
• An inspiring and dynamic environment with local and international allure

The added value of hybrid hospitality for businesses and employees is that maximum flexibility in the organisation of workspaces and meeting spaces can be arranged without the need for long-term obligations and guarantees, whilst ensuring the avoidance of high initial investments concerning the design and fit-out. It also reduces business accommodation costs if only used for two to three working days a week, in addition to working from home.

Hybrid hospitality can also add value to the local community. The hotel has a mixed purpose, resulting in an improved connection between the city centre and the neighbourhood, rather than limiting services to tourists and business travellers from out of town.

Hotels, owners, the community and the environment can therefore benefit from hybrid hospitality – resulting in a win-win situation.

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