Office market rental hike faces resistance as tenants seek ‘flight to value’

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Author: Ravi Philemon

Office market rental hike to face resistance as flexible workspace sector continue to drive space take-up in Q3 2019

  • Office market rental hike faces resistance as CBD Grade A office rents grew at a slower pace, rising 1.5% in Q3 from Q2 2019
  • ‘Flight to value’ observed as tenants resist office market rental hike
  • Flexible workspace sector continued to drive space takeup in Q3 2019
  • Rental growth expected to slow amid weaker economic outlook; shadow space could potentially emerge

Colliers International today published its latest research report which tracks the performance of the office property market in Singapore in Q3 2019 and its outlook ahead.

Office market rental hike

Office market rental hike faces resistance (Image credit: Colliers International)

Office market rental hike faces resistance

Colliers Research noted that there are signs that tenants are resisting further hikes in rents following nine consecutive quarters of increase in Grade A office rents in the central business district (CBD). Cumulatively, CBD Grade A office rent has risen by 27% since Q2 2017, driven in part by tightening supply.

Given the weaker economic outlook, Colliers Research expects occupiers to exercise more caution with regards to their space needs and real estate cost. This could potentially curtail any further sharp increases in office rents in the coming quarters.

Tricia Song, Head of Research for Singapore, Colliers International, said, “We are starting to see ‘flight to value’ in the market where some tenants eschewed higher lease renewal rate and opted to relocate to another building with a lower rent. Whether this trend would become more widespread will depend on market dynamics and the state of the economy. Broadly, we expect rental growth to continue to slow in line with a slower economic growth. Some trade sectors may have already felt some pressure. We may see some shadow space emerge from large occupiers, such as financial institutions.”

Based on data tracked by Colliers Research, average Grade A office rents in the CBD rose by 1.5% quarter-on-quarter (QOQ) to SGD10.08 per square foot per month (psf pm) in Q3 2019, slower than the 3.0% increase achieved in the previous quarter. On a year-on-year (YOY) basis, average CBD Grade A office rents in Singapore grew by 9.6% in Q3 2019.

In Q3 2019, Grade A office rental growth was the strongest in the Shenton Way/ Tanjong Pagar and Raffles Place/New Downtown Premium micro-markets, driven by tight vacancies and new builds. Meanwhile, office rents at Raffles Place/New Downtown Grade A micro-market – which comprises of older buildings – were flat QOQ, narrowing the gap between rents for this sub-segment and that of Shenton Way.

For the full year 2019, Colliers Research projects that overall CBD Grade A office rents should grow by 8%, moderating from the strong 15% rise in 2018. It forecasts rents to continue to growth at a slower pace of 5% in 2020.

“We expect new CBD Grade A supply to remain limited in 2019-2021, averaging 678,000 sq feet (63,000 sq metres) p.a. This should keep CBD Grade A vacancy tight, below the 10-year average of 6.3%. We expect CBD Grade A office rents to grow 8% in 2019 and 5% in 2020, moderating from a strong 15% in 2018.”

Demand, supply and vacancies
The flexible workspace sector continues to drive takeup with WeWork reportedly due to lease the entire building at 21 Collyer Quay (formerly HSBC Building) in Q2 2021 after HSBC moves out. Meanwhile, East Japan Railway Company (JR East) opened a coworking space at Twenty Anson taking 13,000 sq feet (1,200 sq metres).

“In 2019, we expect CBD Grade A net absorption to be driven mainly by expansion in the technology and flexible workspace sectors. In 2020, we expect demand to be more broad-based.”

Rick Thomas, Head of Occupier Services in Singapore, Colliers International, said, “The flexible workspace sector remains a key driver of demand for office space and it now accounts for about 5% of CBD Grade A space in Singapore. We are positive on the sector’s prospects as it provides more flexibility to occupiers and offers an alternative real estate solution amid rising uncertainty in the business environment. While we believe the flexible workspace sector will continue to grow, the tight availability of space may limit its growth to some extent.”

Colliers Research observed that the supply of new CBD Grade A office space will remain limited in 2019-2021, averaging 678,000 sq feet (63,000 sq metres) per annum. This should keep CBD Grade A vacancy tight, below the 10-year average of 6.3%. The next major supply hike (about 7% of stock) is due to come onstream in 2022.

” In 2020, we forecast a slower rental growth of 5%, in line with slower economic growth.”

Investment market
In Q3 2019, transactions remained robust and rose 11.9% QOQ even with a strong Q2 2019. The transaction volume of SGD2.91 billion in the quarter brought rolling 12-month volumes of office and mixed-use commercial transactions to SGD8.71 billion (+23% QOQ).

The notable transactions in the quarter included: DUO Tower and DUO Galleria; 71 Robinson Road; and Anson House. Colliers Research noted that the unveiling of development plans for Greater Southern Waterfront – during the National Day Rally on 18 August – likely boosted investor sentiment in the Shenton Way/Tanjong Pagar micro-market where 71 Robinson Road and Anson House are located.

With optimistic valuations achieved in major transactions in Q3 2019, the average imputed capital value of CBD Grade A office properties rose 0.7% QOQ to SGD2,512 psf. Meanwhile, the cap rates remained unchanged in the quarter at between 3.15% and 3.5% on average.

“We expect yields to compress in 2019 on a favorable interest rate outlook and the large capital allocation to Singapore. We recommend occupiers, particularly those requiring large contiguous space, to review and explore lease options early.”

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Podcast Ep#36: Finding Gems In The Property Market (Part I)

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Episode 36 is a recording of the first part of my presentation “Finding Gems In The Property Market” at the SMART Expo on 5 October 2019 at Suntec Singapore Convention & Exhibition Centre. I will touch on the following in Part I of my presentation: 1. Why are there so many gems in a soft… [read more]

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Millennial property consumers will define real estate landscape in 2030

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Author: Ravi Philemon

Millennial property consumers will play a major role in influencing investors and occupiers’ real estate decisions

Launched today at CBRE Symposium: The Singapore Journey, CBRE’s flagship thought leadership offering, Real Estate 2030 – Singapore, examines how our living and work spaces will transform over the next 10 years, driven by five major structural changes – demographics, infrastructure, occupier trends, sustainability and technology. The report explores how these changes will impact real estate investors and occupiers who will have to stay nimble and start preparing for these fundamental shifts.

Mr Moray Armstrong, Managing Director of CBRE Singapore, said, “The Singapore government continues to demonstrate vision and creativity in its approach to urban planning. This is fundamental to supporting long term economic growth, developing new growth areas and sectors, while helping to transform existing industries. Real estate investors and occupiers will face rapid changes in the market over the next decade. Changing demographics, infrastructure investment and technology advancements will present both challenges and opportunities for real estate players.”

Millennial property consumers are defined loosely as those born between the early 1980s to the mid 1990s, are projected to form the largest consumer group in Singapore by 2030, as they reach their prime working and spending years.

Mr Desmond Sim, Head of Research, Southeast Asia, CBRE, commented, “While technological innovations have continuously redefined the real estate landscape, by 2030, millennials will also play a major role influencing investors and occupiers’ real estate decisions. They will be the driving force behind the sharing economy where co-living and co-working are expected to be prevalent. Meanwhile, there will be more decentralized office stock; and in 10 years’ time, occupiers will have to adopt workplace strategies to cater to a five-generation workforce.”

Report highlights:

1. Demographics shifts to affect the fundamental demand for real estate

Millennial property consumers possess a particular set of values which are unique from other generations; one of these is the ability to be highly adaptive and more willing to share facilities and services.

  • Home sizes for private housing have been declining – from 103 square meters in 2008 to 70 square meters in 2018. This is partly due to rising land costs which have induced developers to reduce unit sizes in a bid to keep overall prices affordable.
  • Nonetheless, this may not necessarily translate to smaller living space per person due to shrinking household sizes, lifestyle changes, digitization and better space optimization. Living space per person has remained at about 28 square meters based on an average five-room HDB flat for the past two decades.
  • Given that Singapore’s population is greying at a faster pace than a decade ago, there are schemes to help the elderly plan for retirement. This, in turn, could result in more residential sites of shorter tenures which would provide buyers and developers with more options.
  • Millennial property consumers, who will form the largest consumer group by 2030, are highly adaptative, more willing to share facilities and services, and place more importance in seeking experiences.  They will help drive the sharing economy and influence how developers and landlords make decisions.

Millennial property consumers also place more importance in seeking experiences, influencing how retailers and landlords shape the shopping experience.

millennial property consumers

Millennial property consumers are projected to form the largest consumer group by 2030, as they reach their prime working and spending years.

2. Infrastructure to pave the way for growth

  • Satellite strategic gateways (Jurong Innovation District, Punggol Digital District, Agri-Food Innovation Park, Changi Aviation Park and Tuas Mega Port) which possess their own unique propositions will encourage commercial growth outside the city and help to support innovation in various niche industries such as high-tech manufacturing.
  • Infrastructure, such as storage facilities, if moved underground, can free up extensive tracts of land. Singapore has made good progress in tapping underground spaces and such space exploration will continue in the future to ensure that as more areas are freed up, land plots of higher value are preserved.
  • Two current major challenges pertaining to the last mile in Singapore are unconsolidated deliveries and high delivery failure rates. The future of retail could see fulfilment centres moving closer to homes, increasing the overall efficacy of last-mile delivery. One viable option is for fulfilment centres to be located in residential precincts (for example, Marsiling, Aljunied and Ang Mo Kio), given the availability of industrial land parcels in these areas.
  • Guided by the 20-minute town and 45-minute city vision, the expansion of the MRT network will result in increased connectivity, resulting in the narrowing of real estate premiums between the central and fringe areas.

Millennial property consumers will help to drive the sharing economy and influence how developers and landlords make decisions.

3. Occupier trends that will shape Singapore real estate in 2030

  • Decentralization efforts are set to continue on a larger and wider scale, supported by improvement in infrastructure and accessibility. The portion of decentralised offices has grown from 17% in 1998 to 24% of total islandwide stock as of end 2018. This is expected to increase to 30% by 2030.
  • There will be a wider acceptance of the sharing economy which will result in an asset light society. Each car sharing could reduce the number of vehicles by an estimated four cars, which could also reduce up to 15%-20% of building space previously used for roads and parking. The rise of co-living will also reduce the demand for three additional housing units for every home share.
  • As at June 2019, approximately two in five of all office buildings tracked by CBRE Research has some flexible office component. By 2030, at least three out of five such buildings will have a flexible office component.
  • Technology will be more widely used to create a convenient and seamless in-store retail experience. By 2030, stores will likely be equipped with artificial intelligence, sensors, self check-out stations, cameras and mobile devices. All items will have a RFID tag which can provide real-time inventory information to retailers who can then better manage inventory and reduce the amount of space needed for in-store warehousing.
  • Co-retailing, which offers shareable spaces and community-based experiences between retailers and customers, will be on the rise. This will benefit entrepreneurs and start-ups who have smaller size requirements and may not be able to afford prime retail spaces.
  • By 2030, Singapore will see a five-generation or 5G workforce comprising baby boomers, Generation X, Millennials, Generation Z and Post-Generation Z. Occupiers will have to strike a balance in their workplace strategies to meet the differing needs of these generations.

4. Sustainability continues to be a growing part of corporate agendas

  • According to the Building and Construction Authority, it is expected that at least 80% of buildings (gross floor area) will be certified green. Some developers have pushed out green leases where landlords share energy consumption data with tenants, with the aim of achieving a lower energy consumption rate collectively. While such green leases are not yet prevalent today, CBRE expects such leases to be more common by 2030.
  • Property developers are increasingly looking towards green financing as an additional source of capital. This includes any form of financing linked to environmental, social and corporate governance metrics such as green bonds, green loans and sustainability-linked loans.
  • Driven by the state’s ’30-by-30’ vision to produce 30% of our food locally by 2030, developers will realise the value of converting under-used or alternative spaces for food gardening; urban farming will eventually be integrated into real estate.

5. Technology will be integral to the built environment

  • On the back of widespread adoption and pervasiveness of cloud technologies, companies no longer need space for servers nor maintenance staff onsite. This reduces the need for commercial spaces, while increasing the demand for data centres as cloud storage.
  • The rollout of 5G in Singapore will provide economic growth drivers by enhancing what industries can do with mobile connectivity, as well as give significant competitive advantages for applications with high bandwidth requirements. Specific to real estate, improved connectivity will help facilitate
    communication between teams and promote flexible or remote working.
  • As the amount of big data increases, data storage and computing power facilities will have to keep up. However, with the introduction of stronger networks like 5G, data will increasingly be propagated from data centres and the cloud into mobile or edge devices. This trend, known as edge AI, will enable real-time decision making for applications such as autonomous logistics and predictive maintenance.

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Boost home value and valuation with the right kind of renovations

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Author: Ravi Philemon

Improve is the mantra of our times, but not all home improvements will boost home value.

By: Hitesh Khan/

We are constantly assailed with advice about what to do to boost home value, but what changes push prices down and make a property less attractive to a future would-be buyer?

The answer? According to some leading property agents, it’s bad news for you if you have just turned your home into an open-plan space with a flash kitchen and a converted your toilet to have a gaudy jacuzzi.

Professional appraisers surveyed agree that kitchen remodeling is the best kind of home improvement which will boost home value.

Remodeling the kitchen provides an average payback of 72 per cent. What if you don’t want to spend tens of thousands of dollars to remodel? Try some lower-cost quick fixes such as updating the lighting, replacing the cabinet doorknobs, or installing new counter tops. The payback will be lower, of course, but it might just tide your kitchen over until you’re ready for a major overhaul.

Your kitchen is probably the most used room in your house. Poor layout, inadequate lighting, cramped spaces, outdated fixtures and old cabinetry are common complaints of homeowners. Before you decide to go ahead with a kitchen renovation, it is important to clearly identify the features you want in your new kitchen. Just as important is a thorough pre-renovation inspection to identify any existing problems.

If you are trying to make a quick profit from the sale of your home, remember that dodgy decorations do very little to boost home value.

Decorations that reflect the eccentricities of the owner can be a turn-off for buyers, which is why estate agents and house doctors say “de-cluttering” and a large tin of neutral-coloured paint tend to maximise the appeal of a property going on the market.

Purchasers look for quality – not necessarily gimmicky improvements, but high-quality finishes. Neutral ivory or white in a classic modern or period style is always the safest bet. Owners preparing to sell should remember most buyers make near-instant decisions about a home.

boost home value

Image: Megapixel

So, another good way to boost home value is to be selective about your painting.

Painting – Sprucing up the walls and ceilings with a coat of fresh paint can be one of the best uses of your renovation dollars with an average potential payback of 73 per cent. A new paint job leaves a good overall impression. And it’s one of the easier do-it-yourself jobs that can save or eliminate labor costs. Experts advise selecting colors that are neutral or in keeping with today’s styles.

Interior Painting and Decorating – One of the best ways to make your home more comfortable, healthier and less expensive to operate is to upgrade the cooling and ventilation systems. Energy-efficient equipment upgrades can be expensive, but can be offset by lower operating costs.

Mechanical upgrades – Before you decide to upgrade mechanical equipment, it’s also critical to understand how the overall performance of the house will be affected. Keep in mind that your lifestyle, the number of occupants and their age all have an impact on the performance of mechanical systems. This type of upgrade will require professionals to do it right and to avoid causing other problems in the house. It’s important to weigh the benefits against the costs.

When planning your home renovation, remember that the house is much more than just four walls and a roof – it’s an interactive system made up of many components including the basic structure, ventilating and air conditioning equipment, the external environment and the occupants. Each component influences the performance of the entire system. A renovation provides an opportunity to improve how your house performs.

The Bathroom. This is right up there in the value-for-money area with a payback of 68 percent for a full renovation. Experts suggest updating the look, but keeping the fixtures neutral. Quick fixes for a lower payback: install an updated mirror, medicine cabinet, or vanity. New lighting can also work wonders.

Flooring Upgrades. Attractive floors add value, with an average potential payback of 62 percent according to the survey of professional appraisers. But experts caution that this payback could be reduced if potential buyers prefer carpeting, rather than hardwood floors, for example. If you’ve got wood floors, refinishing them could bring new life.

Knowing how to calculate the property valuation is of paramount importance to any owner wanting to boost home value. It can help you determine whether you are overpaying for a home, or whether you have gotten yourself a real bargain. Paying the right price is just one way you can avoid overspending on your property.

If you are considering a home renovation, make sure you research your project carefully to ensure you are making a wise financial decision and getting the biggest bang for the buck. Not all home renovation is what they are cracked up to be. When deciding what type of renovation to undertake and how much to spend, consider the payback on your investment.

If you are thinking of selling your property, you don’t need to splash out on expensive renovations. At most times, you just have to stay practical and functional to boost home value. It’s the fundamental question facing anyone who has ever embarked on a home renovation – “how likely am I to get the money back when I sell my house?” There’s no easy answer if you can get your money back, because what a buyer might be willing to pay depends on many factors — everything from the choice of project to the materials you use to the value of other homes in your neighborhood.

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Mortgage default rises in Singapore as economy slows

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Author: Ravi Philemon

In what is perhaps another sign of a slowing economy, the number of mortgage default cases in the Singapore has seen a significant uptick, according to a report by the South China Morning Post (SCMP)According to the Credit Bureau Singapore, there have been 79 cases of mortgage default cases from January to July of this year.

mortgage default

Mortgage default cases on the rise (Image credit: Wikimedia Commons)

In 2015 mortgage default cases were lower in that there were only 65 cases for the whole year. In 2017, there were 112, and last year, 156.

Moreover, according to Colliers International Singapore, mortgagee sales were up to 213 for the first six months of 2019. In all of 2018, there were only 258 such cases in total, while five years ago, the number of mortgagee sales was only at 123 cases, although data from Colliers includes homes that have been re-listed.

Experts are saying that the number of mortgagee sales could be a sign that the economy is stagnant. The SCMP quotes Chua Hak Bin, an economist with Maybank, as saying, “Bankruptcies are also rising, in line with the mortgagee sales, as the economy grinds to a standstill.”

This year there have been 1,847 applications for bankruptcy in the first six months alone. In 2017 there were 2,932, and in 2018, 3,079. Two months ago, the GDP growth forecast for 2019 was downgraded to 0.0-1.0 percent.

Additionally, houses offered in auctions are not moving quickly, with numbers of houses sold declining from 6.4 percent in the first quarter of 2018, to 1.4 percent in the same time frame this year, according to Knight Frank, a real-estate consultancy.

Director of research and consultancy at Suntec Real Estate Consultants Colin Tan calls the mortgage default cases “a slow death,” and points our that foreclosure on properties is usually a bank’s last resort, as most financial institutions choose to restructure loans or give clients leeway in paying only interest for a short time period.

Mr Tan said,“If you can pay the interest, you’re not in default. But these people can’t even service the interest. It’s a reflection that the economy is not so good that you’re seeing more and more defaults.”

According to industry experts, the rise in number of mortgage defaulters can be attributed to higher unemployment, a slower economy, a smaller number of buyers, as well as a shortage of tenants for properties bought by investors.

For this year, the sector that saw the highest number of retrenchments are the professionals, managers, executives and technicians (PMETs), who make up over three quarters of those retrenched in the second quarter of the year.

However, in spite of signs of a declining economy, there seems to be continued growth in the number of private homes being constructed, with 24,000 vacant units and another 44,000 planned to be built.

A report in early June said that there are 24,000 private housing units that are empty. Additionally there are 44,000 private housing units in the pipeline, made up of 39,000 unsold units from GLS plus another 5,000 units from sites pending planning approval.

The Ministry of National Development (MND) made an announcement on June 6, Thursday, that five confirmed list sites and eight reserve list sites yielding around 6,430 private homes, 92,000 sq m gross floor area (GFA) of commercial space and 1,100 hotel rooms had been released.

While the first half of the year’s GLS programme had 2,025 units of private homes from confirmed list sites, for the second half there were only 1,715 units, which is a reduction of 15 percent. To address the problem of mortgage defaulting, the Credit Bureau urged would-be homeowners to plan their finances well.

A spokesperson from the Bureau said, “Singapore is a country that is constantly growing, and so is her population. Therefore, housing is constantly in demand and on the rise, which means that more and more people will take real-estate loans.

We strongly advise all consumers to plan their finances in advance, in order to prevent defaulting on their repayments to lenders later on.”

CBS said earlier in January that seven months after the Monetary Authority of Singapore (MAS) announced the latest housing curbs on property purchases, buyers are taking up lesser mortgage loans. The CBS study follows the recent guidelines by MAS in July last year, with the raise in Additional Buyer’s Stamp Duty (ABSD) rates and tightening of Loan-ToValue (LTV) limits on residential property purchases.

The ABSD rates for Singapore Citizens and Singapore Permanent Residents (SPR) purchasing their second and subsequent residential property were raised by 5 per cent for all individuals and 10 per cent for entities. LTV limits were tightened by 5 per cent for all housing loans granted by financial institutions.

Statistics based on new mortgage loan applications show that in December 2018, there were 4,423 new applications. This represents a 64.9 per cent decline from 12,619 applications in July 2018 and a 54.0 per cent decline from 9,611 applications in December 2017.

CBS is Singapore’s consumer credit bureau which provides objective and accurate information to credit providers in the financial services industry to strengthen their risk assessment capabilities. By enabling clients such as banks, credit card companies and institutions to make better lending decisions, CBS aims to enhance Singapore’s risk management capability.

As the leader in managing consumer credit information, CBS also seeks to enlighten, empower and engage consumers to manage and protect their financial health. CBS maintains data accuracy and integrity by using advanced technology to update millions of consumer information.

Throughout its operations, CBS observes a strict Code of Conduct that its members comply with. This ensures the highest moral and ethical standards in data handling in all business activities. Established in 2002, it is a joint venture between The Association of Banks in Singapore (ABS) and Infocredit Holdings Pte Ltd.

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Real estate investment report places Singapore among top cities

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Author: Ravi Philemon

Cushman & Wakefiled’s real estate investment report places Singapore firmly at the 6th spot. The real estate investment report said that Asia Pacific is the biggest source of cross border capital for the fourth year running, led by Singapore and South Korea. The region also claims seven of the top 25 cities.

Tokyo has claimed the top spot as the highest-ranked market for real estate investment in Asia Pacific, according to Cushman & Wakefield’s ‘Winning in Growth Cities’ real estate investment report. Tokyo replaced Hong Kong, which saw a notable fall of 38% y-o-y.

Winning in Growth Cities’ is an annual real estate investment report examining global commercial real estate investment activity, assessing cities by their success at attracting capital. The report includes indexes showing the top cities for real estate investment; cross border investment; most attractive sectors; sources of international capital; and regional versus global allocation of capital.

The real estate investment report also features a section examining the impact of climate change on the real estate investment market, and the top cities for investment excludes development.

Asia Pacific claimed seven of the top 25 cities compared to five in Europe. As with North America, a number of these destinations were in growth mode and the top 25 overall again outperformed, with volumes rising 5% and their market share increasing from 53% to 56% as investors focused on the biggest and most liquid markets.

Beijing was the fastest growing major Asian city, with volumes doubling, resulting in the city moving up 11 places in the ranking to number 25.

Globally, New York strengthened its position as the number one global city for real estate investment, growing 20% year-on-year to take the top spot in the index for the eighth year running. Los Angeles took second spot, while San Francisco climbed three places to third – in the process overtaking London in fourth and Paris in fifth.

Francis Li, International Director, Head of Capital Markets, Greater China at Cushman & Wakefield, commented: “Asia Pacific remains a global growth leader and investors will continue to channel funds here to ride the region’s long-term structural dynamics. While investors will turn more selective in a late cycle environment, gateway cities with stable fundamentals will continue to lead investments. We believe the region’s diverse economic backdrop and demographically driven growth markets in India and Southeast Asia to remain compelling prospects across cycles; the current round of deleveraging in China have also unlocked opportunities across its cities.

“Tokyo’s rise up the rankings ahead of Hong Kong comes as no surprise due to its strong fundamentals, fed by a tourism boom and investment momentum in the run up to the Olympics. The city’s real estate is in an investment sweet spot: strong pre-leasing commitments and robust demand have whittled office vacancies to record lows and the lower-for-longer environment continues to fuel investments by J-REITs and foreign funds.”

real estate investment report

Source: Cushman & Wakefield, RCA

Cross Border Investment
The sources of capital crossing borders into real estate grew more diverse in the past 12 months. For the fourth year running Asia Pacific – led by Singapore and South Korea – remained the biggest source region overall despite outbound volumes dropping nearly 13% and its market share easing to 38% overall. Singapore investors were the most prolific, ranking 4th globally, followed by South Korea, ranking 7th after a 50% increase in cross-border spending over the year. Japanese capital also continued to stir, rising 61%, ranking as the 13th largest source of international capital. Last year’s regional leaders, China and Hong Kong, both fell back into 11th and 8th place respectively

Investment Outlook
In Asia Pacific, growth may be set to slow further next year whether looking at consumption or employment figures, but overall will remain attractive on a global basis and more foreign capital is likely to flow towards the region. Occupier markets are mixed, with some seeing increased supply and others slowing demand, but the market offers a wide range of cities as investment options and sector-by-sector there are attractive areas for short- and medium-term returns. These may be in still demand-driven parts of the CBD office market, the largely under supplied logistics sector, or demographically driven residential markets.

 Carlo Barel di Sant’Albano, Head of Global Capital Markets at Cushman & Wakefield, stated:
“Ongoing headwinds, such as geopolitical unrest, means economic growth will remain in doubt in the months ahead, but it also means quantitative easing and negative interest rates are back on the agenda. As a result, property yields will be seen to offer better value and could fall into 2020 once investors have more faith that the cycle still has some life in it. However, buyers will have to find additional opportunities if they are to allocate capital, with a particular focus on alternatives and residential/multifamily likely to be seen.”

David Hutchings, Head of Investment Strategy, EMEA Capital Markets at Cushman & Wakefield and author of the report, added: “What differentiates markets going forward will be less about growth – that will be down – but more about relative financing costs, the timing and direction of structural market shifts and, as ever, finding stock in a global market with relatively limited distress.

“We expect more M&A activity as a result but also more pressure on investors to diversity to both gain exposure to the right cities and to reduce risk. Residential will be the asset class to watch and will continue to rise as the professionally managed rental sector continues to grow and mature.

“The winning markets of 2020 will be the biggest and best across gateway and challenger cities, but increasingly those with the right mix of strong innovative governance on the one hand and appeal to talent on the other.”

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Renovation trends to inspire homeowners – what are they?

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Author: Ravi Philemon

Not everything seen and pinned in your renovation trends browsing can work well for a home in Singapore

By: Hitesh Khan/

Everything you do to make your dream house come true; flicking pages of interior design magazines, looking at homes around you, browsing home renovation websites for design inspirations and consolidating numerous virtual mood boards. But not everything seen and pinned in your browsing can work well for a home in Singapore. Apart from style, functionality and ease are equally important. There are two important factors to think about when doing renovation, i.e. our hot and humid climate, and lack of space.

These are 5 simple renovation trends that could inspire homeowners.

1. Hardwood flooring
It may be appealing to place hardwood flooring to add a touch of elegance and a sense of warmth to your homes. However, the high humidity level in Singapore can cause the flooring to warp or swell in the long run. It is not possible for you to switch on your air conditioner 24/7 to reduce the humidity level in your home in order to maintain your hardwood floor as the temperature inside and outside of your home are different and could cause condensation. Different climatic conditions will cause little gaps in hardwood flooring that would attract termites.

Alternative: Choose a wood-like tile & laminate it with wood-grain pattern or vinyl wood-like flooring which are more cost-efficient. If you still want real wood, choose teak. It is commonly used for outdoor flooring which is more durable for expansion & contraction.

2. Small Tiles
Small tiles as an accent for your room will help to make your room look stylish and more spacious. But while they may look great, they are not the best choice for a home in Singapore. The high humidity level will cause bacteria, moss and fungus to grow faster and you will find them more difficult to be cleaned.

Alternative: Keep small tiles to accent walls, rather than the entire surface. You can also play around withthe patterns using small tiles in the wall. Remember…just use it as accent!

renovation trends

Renovation trends that ill work in a kitchen (Image credit: Grant McLean/Flickr)

3. Kitchen Island & Freestanding Bathtub
Kitchen islands and freestanding bathtubs are the epitome of luxury and opulence, but because they are positioned in the middle of the room, they tend to take up a lot of square footage.

Alternative: If you insist on having a kitchen island, choose hybrid islands that do double duty; where they can also serve as a dining table or storage space for instance.
Instead of going for a freestanding bathtub, consider a glass-encased shower with a rainfall showerhead instead to achieve the luxury feel without taking up too much space.

4. Walk-In Wardrobe
You love it for the luxurious feel it gives your home, but it’s a luxury that should be reserved for those with a sprawling mansion—or an extra room to spare.

Alternative: Rather than convert a part of your already small bedroom into a walk-in wardrobe, a built-in wardrobe would hold your clothes just fine. As it is flushed to the wall, it takes up minimal room while giving a clutter-free appearance. Wish to parade your fashion accessories? Go for see-through panels or open shelves.

5. Wallpaper
Choose a bold print, and you can create instant panache. Choose a calming motif and your home becomes a soothing sanctuary. But While wallpapers are one of the easiest style changers, they do not do so well in our humid climate. The humidity will cause the wallpaper glue to come off in the long run and causing the wallpaper to curl and peel.

Alternative: If you wish to incorporate wallpaper, stick to feature walls that are away from wind.

What every first time homebuyer should know

In implementing any renovation trends, it is usually best to leave the work to professionals, including, often, an architect or interior designer. A do-it-yourself job that is poorly done detracts from, rather than adds to, the value of the home.

The rule of thumb in home improvements: Stick to the basics. Equal home improvements aren’t necessarily of equal value at resale time. And don’t expect to recoup your entire investment for each improvement. Some can bring a 100 percent return, while others will net no more than 50 cents of the dollar, or less, in the best of times.

There is no rule of thumb on how many improvements you should make to up the home resale value. But even if your pocketbook can handle a big job, you probably shouldn’t do more than one improvement at a time.

And you should always keep in mind that the changes must not only be compatible with the rest of the house, but they should fit in with the neighborhood too.

Cleaning up, finding the right real estate agent, and updating small things like light fixtures will help your home sell fast without expensive staging. The best, smartest thing a homeowner can do is find the right real estate agent for them. Step back and try to look at your home the way someone else would for the very first time.

Whatever renovation trends you choose, knowing how it will affect the property valuation is of paramount importance to a home owner. It can help you determine whether you are overpaying for a home, or whether you have gotten yourself a real bargain. Paying the right price is just one way you can avoid overspending on your property.

Another smart way to avoid overspending on your property is to get the right loan. Getting the right loan can be a much simpler task, but only if you get the right person to it for you.

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Yarwood Ave GCB up for sale again at same $23m guide price

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Author: Ravi Philemon

A Yarwood Ave GCB is being put on the market again at an unchanged guide price of $23 million

A landed, two-storey Good Class Bungalow (GCB) at 18A Yarwood Avenue is set to go up for auction soon. Located in Kilburn Estate, the 999-year leasehold Balinese-styled GCB is an owner’s sale with a guide price of S$23 million.

The resort-like, Yarwood Ave GCB has a land area of 18,911 sq ft and floor area of approximately 8,956 sq ft, including a car porch and cosy, sheltered terraces totalling a size of 678 sq ft. The guide price works out to about $1,216 per square foot, based on a land area of 18,911 sq ft. It is an owner’s sale. A public auction for the bungalow will be held on Oct 16 at 2.30pm at Amara Hotel, Level 3.

Yarwood Ave GCB

Image credit: Knight Frank Singapore

The tastefully designed Yarwood Ave GCB also has a basement, swimming pool, beautiful landscaped garden and koi pond.

The earlier sale attempt by Yarwood Ave GCB owners took place less than a month ago at a Sept 18 auction. “It was not successful because we had less than a week of marketing due to late instruction,” Sharon Lee, director and head of auction at Knight Frank Singapore, told The Business Times.

“The property has an accessible price point for a GCB of its calibre and is within reach for those looking to live in a home that is limited in supply,” Ms Lee said.

The Yarwood Ave GCB has an accessible price point for a GCB of its calibre and is within reach for those looking to live a home that is limited in supply. It is also located within walking distance to King Albert Park MRT station, with amenities such as a movie theatre, dining options and a supermarket conveniently situated at KAP Shopping Mall and Bukit Timah Plaza.

Successful sales of properties along the same stretch include the home at 19 Yarwood Avenue, which sold for S$22.15 million February this year and 21B Yarwood Avenue, which transacted for S$19.4 million in March 2018. The properties sat on land areas of 19,030 sq ft and 16,156 sq ft respectively.

GCBs have been in the spotlight since news broke recently that Sir Dyson had forked out $41 million for a hilltop GCB located along Cluny Road with views of the Botanic Gardens, Singapore’s first and only UNESCO Heritage Site.

List Sotheby’s International Realty (List SIR) which reported on the purchase of Sir Dyson, noted that what makes this GCB deal an even greater surprise is that landed properties in Singapore, including the 2,800 plots located in the 39 GCB areas gazetted by the Urban Redevelopment Authority (URA), are classified as restricted properties and are limited for purchase and ownership by Singapore Citizens only. Besides their rarity, GCBs also come with strict planning conditions stipulated by the URA to preserve their exclusivity and low-rise character.

Even ultra high net worth investors, such as the Dysons, need to get special approval from the government to purchase and own GCBs because they are permanent residents. Criteria include making exceptional economic contributions in Singapore and the buyer can only use the GCB for owner occupation.

According to the Singapore Residential Property Act, foreigners are not allowed to own landed properties, which include bungalows. However, foreigners are allowed to own the bungalows at Sentosa Cove, a planned resort island to attract high-net-worth (HNW) foreign investors. Foreigners are allowed to own apartments in Singapore.

More recently, a GCB plot in the prestigious Nassim Road area was bought by SG Casa Pte Ltd for a record $230 million. The price for the sprawling land of 84,543 sq ft land works out to be S$2,721 psf. The plot of lands comes with a two-storey bungalow, a tennis court and swimming pool. The site has a road frontage that is nearly 100m, and can be redeveloped into four or five bungalows.

Only six super penthouse transactions took place in Singapore in last 13 years

List SIR in referring to media report suggested that the party behind SG Casa could be Eduardo Saverin. Mr Saverin became a Singapore citizen in 2012.

Sir Dyson, who is chief executive of Dyson Ltd, had earlier bought the most expensive 99-year-leasehold penthouse situated on a 62nd to 64th floor in Wallich Residence. The three-storey penthouse comes complete with a private infinity pool, jacuzzi, barbecue pit, and private lift lobby.

Besides Dyson and Saverin, another famous name that has been making rounds in Singapore’s media landscape was Jack Ma, who is said to have purchased a 30,000 sq ft site at Victoria Park Close. The Alibaba co-founder is supposedly building a two-storey bungalow with a basement and swimming pool.

The report by List SIR said, ” in light of the geopolitical tensions in Hong Kong and United Kingdom, there could be increased interest from more foreign ultra high net worth investors, the likes of Sir Dyson. Singapore’s solid economic fundamentals, sound financial framework, ease of doing business, quality education and racial harmony continue to make it one of the choice locations for potential foreign investors.”

Mr Paul Ho, chief mortgage consultant at iCompareLoan, said, “with political stability, it is understandable why Singapore looks attractive to ultra high net worth investors. Due to its limited supply and the prestige associated with these large bungalow plots, GCBs – such as the Bukit Pang GCB – are often sought after by well-heeled individuals.”

He added, “Singapore’s business-friendly environment also attracts many ultra high net worth investors to park their assets here. Prices of GCBs have been on a steady increase since 2016 and so it is viewed as a good investment.”

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Prime retail rents pushed higher by tight supply, Research

Click on Prime retail rents pushed higher by tight supply, Research
for the source.
Author: Ravi Philemon

Despite structural shifts in spending habits towards online and more experiences, prime retail rents bucked the trend

Market confidence might have dented due to weaker economic growth and the escalation of the US-China trade war but landlords have been able to hold their rents steady due to tight vacancies and limited upcoming supply. In fact, Grade A CBD rent increased marginally by 0.4 per cent to S$10.65 psf/month in 3Q2019 after remaining flat in the preceding quarter, due partly to landlords of less premium spaces playing catch up with better quality buildings.

Singapore’s economic growth fell to 0.1 per cent year-on-year in 2Q2019. On a quarter-on-quarter basis, the economy contracted by 3.3 per cent, stoking fears of a technical recession if anaemic growth continues into the fourth quarter. Based on Ministry of Manpower’s figures, the net addition of workers in the financial and insurance, infocomm and business services remained healthy at 6,200 in the second quarter of this year, although lower than the 8,500 employed in the first quarter.

Overall office demand has slowed, but emerging sectors within the technology space such as artificial intelligence (AI) and data analytics are increasingly starting to fuel the demand for office space. For instance, an AI start-up SenseTime, backed by Temasek, which took about 10,000 sf (square feet) in Frasers Tower, is planning to triple its Singapore staff to 300 in three years.

Are Singapore Banks transferring Interest volatility risks to consumers?

Demand for office space continued to be anchored by coworking and technology in the third quarter of 2019. In July, WeWork leased the entire 200,000 sf in 21 Collyer Quay, with plans to open in 2021 after current tenant HSBC vacates the building. Although there is currently some concern over the longer-term sustainability of the sector, companies cutting costs may actually find coworking spaces more attractive as they would not need to spend capital expenditure upfront to fit-out a traditional office.

The flexibility to increase or decrease the number of members on a monthly basis is also a big draw to companies who are facing an uncertain outlook. New coworking operator One&Co by JR East Singapore just opened a 13,000 sf coworking centre in Twenty Anson to help connect the Japanese and Singapore companies. Demand from the financial sector held steady. For instance, American Express leased three floors at One Marina Boulevard and helped to back fill the space left behind by Microsoft, which had earlier made the move to Frasers Tower.

June Chua, Head of Leasing, Cushman & Wakefield said “Locating in a coworking centre is still a viable option for corporates especially for capex management, and office landlords are recognising that capex remains a challenge for tenants. Should the economy start to weaken, we may reasonably expect some landlords to start offering subsidies for fitting out work in order to secure tenants.”

Christine Li, Head of Research, Singapore and Southeast at Cushman & Wakefield said, “Event risks such as US-China trade war and Brexit have increased uncertainties for corporate occupiers, who could put expansion plans on hold and wait for greater clarity in the near term. Should the global economy continue to run in low gear, office demand from corporates may slow down and spur more right-sizing amongst corporate occupiers going into 2020.”

“Rents are still holding up at the current level at for many buildings due to the lack of CBD supply through 2021, but competition for potential tenants is likely to intensify, especially with more flexible office operators joining the fray. Occupiers could also expand their search to city fringe or even suburban locations with good infrastructural connections and local amenities. This would increase their range of leasing options.”

prime retail rents

Despite structural shifts in spending habits, prime retail rents bucked the trend and continued to rise in Q3 2019 (Image: Capitaland)

Low Supply Pushes Prime Retail Rents Higher

Despite structural shifts in spending habits towards online and more experiences, Orchard prime retail rents bucked the trend and continued to rise in Q3 2019, driven by low supply of prime space and higher footfalls due to rising tourist arrivals.

Orchard prime retail rents reached S$35.64 psf, rising 1.2 per cent quarter-on-quarter in the third quarter of 2019, based on a basket of prime retail malls tracked by Cushman & Wakefield Research. Other City Area rents also rose 0.3 per cent quarter-on-quarter to reach $21.69 psf while suburban rents remained flat at S$31.71 psf.

Although the macro challenges for brick-and-mortar retail scene remain, Singapore continues to be the destination for international brands to maintain a physical presence given its pre-eminent financial and business hub. Singapore Grand Prix, the annual Formula One night race held in September this year attracted a total of 268,000 fans, the second highest attendance since the inaugural race in 2008. This could possibly give the retail sales figure a boost in Q3 2019.

Athleisure retailers have been expanding steadily in Singapore. For example, Foot Locker, an athleisure footwear retailer took up more than 5,000 sf of space at the newly opened PLQ Mall, their fifth store since opening their first outlet in 2018. JD Sports also recently opened their third store at Funan, taking up 2,788 sf of space. The expansion of athleisure retailers is expected to continue as the athleisure wear market is poised to expand by nine per cent worldwide in 2019. This market is set to outperform the global clothing and footwear market beyond 2023, according to analytics firm GlobalData.

Moving forward, although the appreciable deterioration in the economy and the threat of a recession on the horizon have not resulted a collapse in retail demand to date, many retailers are grappling with high operating environment and declining revenue. Retail landlords should offer greater flexibility to prospective tenants in terms of effective rental rates and shorter-lease terms to minimise vacancy risks.

The underlying demand for retail is still weak in view of the potential downsize risks in the near term. The pace of retail leasing could not be sustained if the expectations between landlords and retailers widen further. Interestingly, large department stores above ground floors in shopping centres are making way for flexible office operators who have the appetite to absorb much space to gain market share.

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Borrowing cash sensibly may be key to your business success

Click on Borrowing cash sensibly may be key to your business success
for the source.
Author: Ravi Philemon

Borrowing cash sensibly requires you to balance borrowing enough to help your business soar with your ability to pay the money back. 

By: Hitesh Khan/

As you know, a loan is based on a simple idea: someone gives you money and you promise to pay it back, usually with interest. Loans are so common that you probably are familiar with the mechanics, but nevertheless it makes sense to review the basics.

The success or failure of your business can hinge on borrowing cash sensibly: you want to borrow enough that your company can reach its potential but not so much that you have severe difficulty paying it back.

Start on a shoestring. It can be a mistake to pour too much money into your business at the beginning. A fair number of small businesses fail in the first year, so raising and spending a pile of money for an untested business idea can lead to much grief — especially if you’re personally on the hook for borrowed funds. Consider starting as small and cheaply as possible.

You have many options when you are looking at borrowing money sensibly for your business. For small ventures, friends and family members are sometimes willing to help. For sophisticated or mid-sized businesses, banks, and financial institutions may be willing to lend you money.

While a friend or relative may be willing to lend you money on a handshake, this is a bad idea for both of you. It’s always a better business practice to put the loan in writing, and to state a specific interest rate and repayment plan. Otherwise, you open the door to unfortunate misunderstandings that can chill your relationship.

borrowing cash sensibly

Image credit: Pixabay

When borrowing cash sensibly, you must be aware that some lenders will require you to put up  a collateral which they can sell to collect their money if you don’t make your loan payments.

A lender may also require that someone cosign or guarantee the loan. That means the lender will have two people rather than one to collect from if you don’t make your payments. When asking friends or relatives to cosign or guarantee a promissory note, be sure they understand that they’re risking their personal assets if you don’t repay the loan.

If you have organised your business as a limited liability entity, such as a private limited company, the lender will probably ask you – the business owner – to personally guarantee the loan and/or pledge your personal assets to guarantee repayment.

Business loans are useful but consider alternatives before taking one

This is because small businesses have high failure rates and lenders feel more comfortable if business owners have a personal stake in repaying the money. Before borrowing cash sensibly, be aware that guaranteeing or personally cosigning your business’s loan circumvents your limited liability status. All of your separate property, and either half or all of any property you jointly own with a spouse, could eventually be seized if you default on the loan.

Finally, if you are married, the lender may insist that your spouse cosign the promissory note. If your spouse cosigns the loan, not only is your jointly owned property completely at risk for this joint debt, but also any assets that your spouse owns separately – a condo, for example, or a joint-bank account. What’s more, if your spouse has a job, his or her earnings will be subject to garnishment if the lender sues and gets a judgment against the two of you.

Personal guarantee is a must for most small business loans but should be made with caution

So there are many factors to consider when borrowing cash sensibly. Especially if you do not want your personal loans to turn into a noose around your neck to strangle you sometime in the near future.

Licensed Money lenders are anther option for borrowing money sensibly, especially if you do not qualify for personal loans offered by banks.  You should only borrow from moneylenders if you have the capability to repay the loan and should not drag out the repayment period.

Be careful to check if the money lender is a licensed money lender. Licensed Money lender have to work strictly within the rules and regulations set up by the Ministry of Law. They also cannot charge higher fees and/or interest rates than mandated. Borrowing money sensibly means you never respond to those sms about giving you a loan,  as many such lenders are unlicensed loan sharks.

Businesses owners ought to remember that you need to borrow when you do not need moneyWhen your business is struggling and you need additional funding to tide over a tough patch, then you will find that your access to funding is completely cut off and end up with very expensive funding.

How to Secure Personal Loans Quickly

If you have limited capital and are searching for personal loans to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

Contact us for home loan or refinancing advice.

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