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Freehold corner residential shophouse at Everton Road for sale

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Author: Ravi Philemon

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.

freehold corner residential shophouse

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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DBS doubles down on intelligent banking amid still-surging digital adoption

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Author: Ravi Philemon

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.

Intelligent Banking

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 are looking to industrial for resilience

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Author: Ravi Philemon

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

property investors

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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Corporate real estate leaders confident about COVID-19 recovery

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Author: Ravi Philemon

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.

corporate real estate leaders

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 up for collective sale at reserve price of $295 million

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Author: Ravi Philemon

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

Maxwell House

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 hold firm amidst COVID-19

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for the source.
Author: Ravi Philemon

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

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

City

USD/sq m/month

6-month % change (H2 2019 – H1 2020)

Forecast next 12 months

Brisbane

                    6.5

-0.4%

 Stable

Melbourne

                    5.8

0.0%

 Stable

Sydney

                    7.0

0.0%

 Stable

Tokyo*

                  12.8

4.2%

 Stable

Beijing

                    8.3

-2.5%

 Stable

Guangzhou

                    5.4

-1.8%

 Stable

Shanghai

                    6.8

3.0%

 Increase

Hong Kong

                  26.2

-3.4%

 Decrease

Taipei

                  11.8

0.9%

 Increase

Bengaluru

                    2.8

0.0%

 Increase

Mumbai

                    3.4

0.0%

 Increase

NCR

                    3.4

0.0%

 Increase

Jakarta

                    4.5

0.0%

 Stable

Kuala Lumpur

                    4.8

0.0%

 Stable

Singapore

                  13.8

-0.6%

 Stable

Bangkok

                    5.1

0.2%

 Stable

Manila

                    4.7

0.0%

 Stable

 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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Hybrid hospitality – new win-win strategy to benefit owners and community

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Author: Ravi Philemon

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.

hybrid hospitality

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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Great Eastern’s UPGREAT provides Virtual Vacay and ability to travel world

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Author: Ravi Philemon

If you are wistfully scrolling through your past Instagram travel photos and wondering when you can book your next holiday – UPGREAT Virtual Vacay by Great Eastern, promises to bring your holiday to you!

upgreatGreat Eastern’s new virtual travel and booking platform offers the comfort and safety of travelling from your own home, and if #FOMO is too much to bear, you can even start booking your next holiday right now. UPGREAT Virtual Vacay is launched in collaboration with lifestyle and travel website The Travel Intern and popular shopping platform RebateMango.

UPGREAT rewards users with exclusive lifestyle dining and shopping privileges. It is a single mobile platform where users can enjoy their loyalty benefits and rewards digitally, transfer and share with their friends and family members. Users can accumulate reward points as there is no expiry date for these points.

Vacay from the Comfort of Your Couch

Teleport yourself to five exciting and well-loved destinations of interest – Japan, New Zealand, Korea, Taiwan and Vietnam – through a series of immersive curated virtual tours with virtual guide Sam. Customise your travel experience and decide where to go, what to do, and even what to eat, in a snap!

Missing Japan? Now you can virtually Go-Kart through Shibuya, visit Tokyo’s craziest bar and train like a ninja at the Oshino Ninja Village. Then, pop over to New Zealand and see nature at its most beautiful. Wander around the Hobbiton movie set, hike at Marokopa Falls and for the brave-hearted, conquer New Zealand’s tallest bungee or swing upside-down across the Nevis River! Feeling hungry after all that adventure? Check out Taiwan’s famous night markets or take a food tour at Jiufen Old Street.

The virtual tours for Japan, New Zealand and Taiwan are now available on the platform, and travellers can look forward to the Korea and Vietnam tours in the coming weeks.

Go Local

Need a break from the WFH arrangements? Check out the customised staycation itineraries designed to help you uncover new sights and sounds in Singapore. Explore iconic areas such as Chinatown, Kampong Glam and Downtown Core – simply book your accommodation, walking tours, restaurant reservations, and start exploring our fair isle on foot, and support Local!

UPGREAT Your Bookings for More Convenience & Rewards

The platform also offers attractive promotions, rewards, and bundles with travel partners such as Booking.com, Hotels Combined and Agoda. Book your trips now conveniently through UPGREAT, Great Eastern’s lifestyle and rewards app, without worrying about cancellation fees.

What’s more, to celebrate the launch of UPGREAT Virtual Vacay, earn Double UPGREAT points through the app’s “Shop & Earn” feature when making travel bookings through Agoda, Klook, Expedia and many more. With an extensive retailer access powered by RebateMango, the app offers users a seamless and rewarding online shopping experience. The UPGREAT app is free for anyone to join and is not restricted to Great Eastern customers.

CHOPE Your Insurance Now!

To provide you with greater peace of mind, simply register on the platform and receive a complimentary one-year GREAT Value Protect plan, which provides a daily hospital cash benefit (up to 14 days) if one is hospitalised due to COVID-19, Dengue Fever, food poisoning, accidents, Yellow Fever or Zika, as well as death benefits due to accidents or COVID-19. UPGREAT also brings to consumers Travel E@sy, which allows you to “chope” (or reserve) your travel insurance plan for any future travel from 2021 at 60% off regular prices.

Why Vacay Virtually with UPGREAT

Ryan Cheong, Managing Director of Digital for Business, Great Eastern, said: “The love for travel is such a big part of our Singaporean DNA. With UPGREAT Virtual Vacay, we aim to bring customised experiences and travel benefits to our hundreds of thousands of UPGREAT members and all who can’t wait to get out and about. As the Life company, we aim to delight our followers on our digital channels in the areas most exciting to them, and UPGREAT Virtual Vacay is a great way to do this. Like most Singaporeans, we believe in planning ahead for later.”

Hendric Tay, co-founder of The Travel Intern said: “With limited opportunities for physical travel, all we wanted was to be transported to our favourite destinations. Collaborating with Great Eastern to design virtual travel journeys was immensely fun for the team. We hope this can bring delight to anyone who has had to cancel their travel adventures this year, regardless of their travel styles.”

In July, Great Eastern announced that it was collaborating with RebateMango to launch a new dimension of rewards on UPGREAT, Great Eastern’s all-in-one rewards platform with an exciting and comprehensive range of dining, lifestyle and shopping rewards, as part of the leading insurer’s regional consumer strategy to engage its customers online.

Through this direct integration, Great Eastern’s UPGREAT members will experience a new seamless journey and the opportunity to receive more UPGREAT points when they shop at over 500 localised retailers such as Shopee, Agoda, AliExpress, Booking.com, Lazada and more. This smooth and easy shopping access allows users to earn UPGREAT points, which can then be exchanged for KrisFlyer miles, Shell Select vouchers, GrabFood vouchers, dining vouchers from various food establishments and other attractive rewards, bringing greater value to users as they earn more by shopping. UPGREAT presently has 168,000 members in Singapore and the app is free for anyone to join and is not restricted to Great Eastern policyholders.

RebateMango, which powers the retailer access within the UPGREAT app, has been available as a rewards shopping platform for over three years, providing users with a choice of rewards such as cashback, air miles and loyalty points whenever they shop online. Currently available in four markets, RebateMango was previously available strictly on the RebateMango platform, and has now moved into Business-to-Business solutions as well with UPGREAT by Great Eastern as the first partner to launch.

The partnership provides UPGREAT members with a seamless and rewarding online shopping experience. By using RebateMango to power the merchant offerings, UPGREAT members simply need to open the app, select the retailer and start shopping to earn UPGREAT Points. At the same time, it allows UPGREAT to enjoy easy scalability in their offering to users.

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PRUcare Package sees nearly S$3.5 million being given out in cash and benfits

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Author: Ravi Philemon

Prudential gives out nearly S$3.5 million in Prucare Package cash benefits and donations as part of COVID-19 relief measures

  • Amount is more than double the S$1.5 million committed under its PRUcare package to help individuals, businesses and the community affected by the pandemic

prucare packageAs part of its COVID-19 relief measures, Prudential Singapore (“Prudential”) has given out about S$3.5 million in cash benefits and donations to more than 3,400 individuals and the community. This is more than double the S$1.5 million committed under its PRUcare package launched on 19 February at the onset of the COVID-19 pandemic.

Of the S$3.5 million, more than half was paid to almost 500 customers and their immediate family members2 hospitalised for COVID-19, while over 40 per cent was given as a one-time payment to over 2,900 individuals placed under quarantine orders3. The life insurer also pledged $210,000 to The Courage Fund and The Invictus Fund to support vulnerable individuals and groups affected by the coronavirus outbreak.

Prudential Singapore’s CEO, Mr Dennis Tan, said the prolonged COVID-19 outbreak has taken a toll on the Singapore economy, businesses and individuals on all fronts.

“The COVID-19 pandemic continues to create anxiety among Singaporeans. People are not only worried about their health, they are also concerned about their jobs and financial security. We are facing an unprecedented global crisis and to emerge stronger from this, we must come together and support one another in whatever ways that we can.

“Through Prudential’s PRUcare package, we hope to offer some financial relief and comfort to our customers and vulnerable groups in the community who have been financially and mentally impacted by COVID-19,” said Mr Tan.

Prudential’s PRUCare package

Prudential’s PRUcare package was launched on 19 February 2020 to provide support to various groups amid the COVID-19 outbreak:

Financial relief for individual customers and their immediate family members

  1. Individual customers and their immediate family members served with quarantine orders received S$500 cash benefit each for the period of 23 January to 30 June 2020;
  2. Individual customers and their immediate family members hospitalised for COVID-19 received S$200 daily hospitalisation allowance each for the period of 23 January to 30 June 2020;

    Individuals who were covered under these PRUcare package measures included:

    • Prudential customers;
    • Employees of Prudential’s corporate and SME customers;
    • Prudential’s 1,200 employees; and
    • Prudential’s 5,000 financial consultants.

      The immediate family members of the above groups were entitled to these benefits as well.

  3. $210,000 pledged to The Courage Fund and The Invictus Fund to provide support to vulnerable individuals and groups during this COVID-19 pandemic.
  4. Pulse by Prudential users were entitled to daily hospitalisation allowanceUsers of Prudential’s digital health app, Pulse by Prudential4, would receive the daily hospitalisation allowance if they were hospitalised for COVID-19. Users who are Prudential customers would receive a S$200 daily allowance (for up to 3 months of hospitalisation) if they were hospitalised any time between 1 July and 31 July 2020. This includes employees of its corporate and SME customers who are also covered by its Group Insurance. For non-customers, they would get a S$100 daily allowance (for up to 3 months of hospitalisation) if they were hospitalised between the date of their Pulse app registration and 31 May 2020. Pulse was launched on 23 April 2020.
  5. FinTech employees were supported with cash benefits if placed on quarantine orders
    FinTechs on the API Exchange (APIX5) platform affected by COVID-19 were also offered the same PRUcare package cash benefits. For FinTech employees who are policyholders of the complimentary PRUAffinity Personal Accident Plan offered by Prudential, they would receive S$500 cash benefit if they were served with quarantine orders between 6 April and 30 June 2020. If they were hospitalised for the same period, they would get a $200 daily hospitalisation allowance cash benefit6.

    This is one of Prudential’s initiatives launched on 18 May 2020 to support the more than 1,100 Singapore-based FinTechs with additional measures including complimentary coverage against accidental death and injury, and hospitalisation income payout for dengue haemorrhagic fever.

Prudential continues to provide support to individuals, businesses and the community with COVID-19 measures ranging from deferment of premium payments for individuals and SMEs to virtual sessions to engage vulnerable seniors.

The inaugural cohort of over 400 financial consultants commenced the programme in early July 2020. A further 1,300 financial consultants will be undergoing the programme in July and August 2020. All financial consultants are slated to complete the programme by June 2021.

  • Prudential customer: Mr Kelvin Chua, in his 40s, Sales Manager

Mr Kelvin Chua, a Prudential customer for almost 10 years, was diagnosed with COVID-19 earlier this year. He was hospitalised for 14 days, while his wife and son were quarantined.

“As I have a PRUShield policy, I knew I had the necessary protection and coverage. I was more worried about my wife – who was 7 months pregnant with our second child – and my son, as they had to be placed on quarantine orders. I felt guilty and worried that they were at risk of being infected with COVID-19 because of me. It was a very stressful time for us, but I am glad I have recovered and our family is well. The hospitalisation allowance and cash benefits offered by Prudential was very much welcomed, and came in useful as we have a newborn now.”

  • Prudential’s corporate customer: Mr Liew Eng Leng, 55, Managing Director, CJP International Pte Ltd

Mr Liew Eng Leng was hospitalised for COVID-19 for about a month in April 2020, while his wife and three children were served quarantine orders. All of them are not Prudential customers, but they benefitted from the PRUcare package as CJP International Pte Ltd is a corporate customer.

“Having to deal with COVID-19 was unexpected for us, and it was pretty tough for my wife and children who had to be quarantined at home. With my recovery, I’m glad we could put this episode behind us. And I was pleasantly surprised when I received the hospitalisation allowance and cash benefits from Prudential. It was definitely a bonus for us, and a good gesture on the part of the insurer during these challenging times.”

Supporting the SMEs

As part of the PRUcare package, employees of SMEs covered by Prudential’s Group Insurance continue to receive medical coverage should their employers run into cashflow difficulties. Existing SME customers have the option of deferring their premium payments for up to 3 months. The premium deferment scheme was introduced on 19 February 2020, and originally made available till end June 2020. During this period, we have enabled a number of SMEs to postpone their premium payments. Recognising the prolonged impact of the pandemic, Prudential extended this premium deferment scheme for another 6 months till 31 December 2020.

Supporting our Community

In April 2020, Prudential rallied its employees to donate to The Invictus Fund, which is set up by the National Council of Social Service (NCSS) and targets to provide support to social service agencies providing critical services to vulnerable groups during this COVID-19 pandemic. Prudential matched staff donations dollar-for-dollar, raising a total of S$110,000.

In February 2020, Prudential donated S$100,000 to The Courage Fund, which is facilitated by the NCSS and the Community Chest. The Fund is set up to support vulnerable individuals and groups such as patients, healthcare workers and members of the community affected by serious infectious diseases. During the same month, close to 300 employees and financial consultants volunteered to put together over 1,000 care kits for vulnerable seniors, and taxi and private hire drivers.

Prudential’s on-going Virtual Senior Engagement sessions allow volunteers to reach out to vulnerable seniors, ensuring they remain mentally, socially and physically engaged. Using video conferencing technology, volunteers chat with seniors and bring them through light exercises and activities to ensure they stay active.

During the circuit breaker period, Prudential donated over 150 digital devices suitable for online learning activities to help low-income families that might not have access to the tools needed to carry out online learning.

Other COVID-19 support measures:

Apart from the PRUcare package, Prudential also has a range of measures aimed at helping customers:

  • Six-month grace period for insurance premium payments: available for policyholders who are unable to pay their premiums between 1 April and 30 September (inclusive) this year.
  • Coverage for COVID-19-related hospitalisation: for individuals, our PRUShield Plan covers hospital admissions, and pre- and post-hospitalisation medical costs related to COVID-19, subject to the terms and conditions of the policyholder’s plan. For businesses, our Group Medical Plan covers medical costs related to COVID-19, subject to the terms and conditions of the company’s plan.a

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Suburban office in Sydney acquired by Ascendas Reit

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Author: Ravi Philemon

Ascendas Reit to acquire a suburban office in Sydney’s Macquarie Park for A$167.2 million

suburban office

image: CapitaLand

Ascendas Funds Management (S) Limited (the Manager), the Manager of Ascendas Real Estate Investment Trust (Ascendas Reit) on September 18, announced that it has proposed acquisition of a suburban office building, to be developed at 1 Giffnock Avenue, Macquarie Park, in Sydney, Australia (MQX4), for A$167.2 million (S$161.0 million) (the Base Purchase Consideration) (the Proposed Acquisition) from Frasers Property Industrial and Winten Property Group (together the Developers). The Developers will design and build MQX4.

The Base Purchase Consideration of A$167.2 million includes the rental guarantee provided by the Developers for the vacant spaces. The purchase consideration is subject to adjustments to be made depending on the final building specifications (e.g. green specifications, net lettable area etc.) as well as actual rental and term of the leases entered into for the vacant spaces during the rental guarantee period.

Mr William Tay, Executive Director and Chief Executive Officer of the Manager said, “We are delighted to secure our first suburban office property in Macquarie Park, Sydney’s premier innovation location, and Ascendas Reit’s fifth suburban office asset in Australia. We believe that decentralisation trends will continue to benefit Macquarie Park which has already attracted many leading companies who have set up their headquarters in the precinct. This DPU accretive investment will enhance the quality and resilience of Ascendas Reit’s Australian portfolio further given its excellent location and sustainable building design.”

Key Attributes of the suburban office at MQX4

1. High quality and sustainable building design

MQX4 sits on freehold land of 3,308 square metres and on completion will comprise a total net lettable area of 19,384 square metres made up of office (17,753 square metres) and retail (1,631 square metres) space. Designed as a nine-storey building comprising eight levels of office space, ground floor retail and 204 car spaces, it is targeted to achieve a 6 Star Green Star Design & As Built rating and 5.5 Star NABERS Energy rating.

2. Well-connected and accessible

MQX4 is well-located in the heart of Macquarie Park, with direct access to the Macquarie Park Metro station, within 100 metres. The opening of the Sydney Metro City Line in 2024, will further reduce travel time to the CBD to 20 minutes.

3. Located in a well-established business precinct that is home to corporate headquarters across resilient industries

MQX4 is located in Macquarie Park, the largest metropolitan market in Australia with a c.860,000 square metres of commercial office accommodation. It is a well-established business precinct occupied by national and international corporate headquarters across the pharmaceutical, technology, electronics and telecommunications industries. It houses the Macquarie University and the Macquarie University Hospital, a digitally integrated hospital undertaking ground-breaking medical research. Other amenities within the vicinity include Macquarie Centre, the largest suburban shopping centre in New South Wales, which comprises of 360 Australian and international retailers plus a multiplex cinema.

Details of the Proposed Acquisition

The Trust Company (Australia) Limited as trustee of Ascendas Business Park Trust No. 3 has today entered into agreements with Australand Industrial No. 122 Pty Limited (wholly-owned by Frasers Property) and Winten (No 35) Pty Limited (wholly-owned by Winten Property Group) for the purchase of MQX4. Includes a contract of sale for the land and development agreement for MQX4, as well as an income support and leasing deed in respect of inter alia the rental guarantee for a period of three years following practical completion and adjustments to be made to the purchase price.

The Base Purchase Consideration of A$167.2 million, which is subject to adjustments, is in line with the “as if complete” market valuation of MQX4 (A$167.2 million as at 1 July 2020). The valuation was commissioned by the Manager and The Trust Company (Australia) Limited (in its capacity as trustee of Ascendas Business Park Trust No. 3) and was carried out by Jones Lang LaSalle Advisory Services Pty Limited using the capitalisation and discounted cash flow methods.

The total investment cost is expected to be A$166.0 million (S$159.8 million) after taking into account coupon received from the Developers, stamp duty, professional advisory fees, and acquisition fee payable to the Manager in cash (being 1% of the Purchase Consideration, which amounts to approximately A$1.672 million (S$1.610 million)). The acquisition fee of A$1.672 million is currently estimated based on the Base Purchase Consideration, which is subject to adjustment upwards or downwards, if applicable, to take into account the various adjustments to the purchase price as well as exchange rates.

The Manager will revise the acquisition fee upon the practical completion and reflect any adjustment to the acquisition fee received or rebated by it in Ascendas Reit’s annual report. Ascendas Reit will fund the construction cost and is entitled to receive monthly coupons from the Developer at a rate of 5.75% per annum on the progressive payments made over the construction period.

Net property income (“NPI”) yield for the first year is approximately 6.1% post-transaction costs. The pro forma impact on distribution per Unit (“DPU”) for the 12 months ended 31 December 2019 would be an estimated improvement of 0.046 Singapore cents assuming MQX4 was acquired and completed on 1 January 2019. The NPI yield is derived from the estimated NPI expected in the first year of acquisition (equivalent to one year of rental guarantee provided by the Developers for the vacant space).

The pro forma DPU for the 12 months ended 31 December 2019 is calculated based on following assumptions (a) Ascendas Reit had acquired the completed MQX4 on 1 January 2019, held and operated MQX4 for the whole of the financial year ended 31 December 2019, (b) the acquisition was funded based on a funding structure of 40% debt and 60% equity, (c) the distribution includes the rental guarantee for the first year provided by the Developers, and (d) the Manager elects to receive its base fee 80% in cash and 20% in units.

The completion of the land sale is expected to occur in 4Q 2020, and MQX4 is expected to be completed around mid-2022. The Developers will provide a three-year rental guarantee from completion of the Property for any vacant spaces.

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