Bigger homes, co-working spaces in public libraries among ideas for new urban normal
The Business Times, 21 Jun 2021, Mon
By Fiona Lam
THERE is room to explore whether current residential unit configurations and sizes are suitable for the home to be a refuge in times of crisis, or conducive for new living and working patterns, the Centre for Liveable Cities (CLC) said.
Housing towns and neighbourhoods could also be made even more self-sufficient, with improved connectivity especially for the ageing population.
"Homes need to accommodate new roles of being a place for refuge and for work", in light of the shift towards hybrid modes of study and working due to the Covid-19 pandemic, wrote CLC, a division of Singapore's Ministry of National Development (MND), in a commentary published on Monday.
Homes and their immediate vicinities are likely to continue taking centre stage in urban living, as they have doubled up as spaces of work and learning amid lockdowns across cities. This has put pressure on the well-being and cohesion within and between households, CLC noted.
Its commentary posited ideas on how towns, buildings and living spaces in general can be planned and designed for better health outcomes and encourage healthy lifestyles in the new urban normal, from a built environment and infrastructure perspective.
In Singapore, over the years, the Housing and Development Board (HDB) has changed the structure of residential units, moving structural components to the sides and allowing internal walls to be removable. "This gives greater flexibility for residents to create new spaces, such as a study area in the home," CLC said.
Providing larger units may also be an immediate idea to increase space in homes. However, this needs to be balanced with higher building costs that may then affect housing affordability, the centre added.
Other ways to reduce stresses in the near term and boost well-being include lower-cost, flexible solutions that work with existing resources in the neighbourhood, CLC suggested.
For example, pay-per-use work booths have been introduced, by property technology company REinvent, in selected malls and are equipped with a desk, Wi-Fi, power sockets and other amenities.
There is also potential to tap on or retrofit existing neighbourhood spaces, such as public libraries and residents committee centres, to serve as co-working spaces, CLC said. Commercial co-working spaces have become more popular, but most are located within or near the central business district and regional centres.
Singapore's public housing towns are already designed to be self-sufficient, with easy access to shops, schools, and social and recreational facilities, with an abundance of greenery.
That said, there is still an opportunity to "explore what other kinds of decentralised facilities we need and to start providing for them", noted Richard Hoo, chief infrastructure planning officer at MND and deputy CEO at the Urban Redevelopment Authority.
This may include providing conducive workspaces, more public spaces, and appropriately sized commercial nodes even in private residential neighbourhoods, CLC suggested.
Within towns, connectivity can also be improved to provide the growing senior population with important incidental physical activity, mental stimulation and social connection. Existing parameters for connectivity, such as a 10-minute walk, should be planned with an older demographic in mind, serving seniors living in both public and private housing neighbourhoods, CLC said.
When it comes to decentralisation, approaches to planning will need to be flexible, as it is difficult to predict the exact shifts in lifestyles and economic activity that will be sustained after the pandemic.
Therefore, more optionality and flexibility should be incorporated into plans as cities pursue polycentric development, the centre noted.
One way to do this is by introducing more mixed-use planning and developments in suitable areas. Flexibility can be adopted in plans for polycentres, even for generally mono-use land zoned for industry and business parks, it added.
Post-pandemic, will heartland malls stay resilient?
The Business Times, 22 Jun 2021, Tue
By Leslie Yee
TAMPINES Mall in Tampines and Junction 8 in Bishan are among Singapore's most prominent heartland malls. The duo were part of the portfolio of Singapore's first real estate investment trust (Reit) CapitaMall Trust, when it listed in 2002.
Valuation reports dated June 1, 2002, put Tampines Mall and Junction 8 at S$438 million and S$301 million respectively.
While there has been capital expenditure, driven by strong patronage and active management, asset values have grown. Tampines Mall and Junction 8 are worth S$1.074 billion and S$794 million respectively as at end 2020, with value per square foot per net lettable area of S$3,015 and S$3,125 respectively. The values of the two malls eased by around 1per cent in 2020 from a year ago.
Values of Tampines Mall and Junction 8, which are now part of CapitaLand Integrated Commercial Trust, are up 145 per cent and 164 per cent respectively or a simple annual average of 7.8 per cent and 8.8 per cent respectively over 18.6 years.
Going forward, can the value of heartland malls continue to grow steadily?
By serving catchment populations in dense residential areas, heartland malls are well placed to draw footfall and sales. These malls do not need to rely on serving international visitors or substantially differentiate to lure patrons from all over Singapore.
Still, heartland malls have had to adapt. Disrupted by online shopping, fashion has become a much smaller part of the trade mix.
The fall in contribution to rental income from categories such as fashion and department stores has been compensated by the increase in contribution from categories such as food and beverage and education services.
In April 2002, the rental contribution excluding turnover rent from fashion was 27.7 per cent at Tampines Mall and 23.8 per cent at Junction 8 while that of food and beverage was 17.9 per cent at Tampines Mall and 22.2 per cent at Junction 8.
In December 2020, the contribution from fashion fell to 5.7 per cent at Tampines Mall and 6 per cent at Junction 8, while contribution by food and beverage grew to 30.8 per cent at Tampines Mall and 36.3 per cent at Junction 8.
The pain inflicted on food and beverage outlets by the ban on dining in from May 16 to June 20 has been acutely felt by heartland mall owners. Without the dine in crowd, footfall at malls dropped and other retail tenants suffered too. Landlords had to help provide rental and operating assistance where warranted.
Mall owners would be glad that dining-in at food and beverage outlets albeit limited to group size of two and operations at fitness studios, gyms and enrichment centres could resume from Monday.
Precedent suggests that foot traffic and sales can rebound as was the case after dining-in resumed on June 19, 2020, post the circuit breaker.
Frasers Centrepoint Trust, which owns a portfolio of mainly heartland malls in Singapore, saw tenant sales up 0.4 per cent and 11.7 per cent year-on-year respectively in January and February after Singapore's entry into Phase 3 of its re-opening on Dec 28, 2020.
As larger segments of the population get vaccinated, contact tracing efforts improve and more and quicker testing is carried out, life may get back to some sort of pre-pandemic norm in the near future.
Doubtless, retail landlords need stamina and flexibility to cope with the long fight against Covid-19 as occasional outbreaks can lead to stores or entire malls being shut for a certain duration.
However, the great challenge for heartland malls is changing consumer behaviour due to the continued march of digitalisation, which has been accelerated by the pandemic.
Enrichment centres catering to school children have emerged at HDB retail shops and heartland malls amid the arms race in education. While parents spending on their kids to get an edge will likely continue, more enrichment activities may move into the online space.
Various habits could change post-pandemic. Instead of going to watch movies at cinemas, people may be happy with streaming offerings from Netflix and Disney+.
Some people may stop going to salons for facials.
Visits to indoor fitness studios may be replaced by online classes or exercising in outdoor spaces. The growth in people cycling or jogging outdoors could continue especially with more park connectors being built.
In banking, digital-only banks do not need physical space when they start operations, while full service banks may gradually trim their physical branch networks. Younger customers are generally fine with mainly banking digitally while the pandemic has moved older customers to do more banking transactions online.
As customer experience improves, online grocery shopping could grow at the expense of visits to the supermarket.
Dining out with family or meeting friends over drinks in a safe manner will continue to draw people out of their homes into the malls.
But the post-pandemic consumer may dine out less and rely more on takeaways and food delivery services.
With safe distancing measures, profitability of food and beverage outlets could be affected as the number of diners they serve is reduced.
Amid investments in digitalisation by businesses and adoption of digital channels by consumers, many trades including food and beverage may over time transact less through physical shops and hence cut down on physical space needs.
Thus far, heartland malls have been a resilient asset class. They largely cater to buying of necessities and use of essential services by nearby residents.
Investors' faith in strong heartland malls looks unshaken for now. Earlier this month, Lendlease Global Commercial Reit proposed to raise its stake in Jem up to 31.8 per cent for a purchase consideration of up to S$337.3 million. Located in Jurong, Jem is one of the largest heartland malls with six levels of retail space. It also has 12 levels of office space.
Many retailers are having a tough time and uncertain about their prospects. An improving economy, a stronger job market and the ensuing rise in household income may bring some respite.
In the near term, landlords would do well to partner retailers by sharing the risk and reward of retailers via entering turnover only rental arrangements.
As digitalisation continues, the resilience of heartland malls will be sorely tested. When fashion outlets and department stores such as Isetan and Metro shut up shop in heartland malls, eateries expanded to whet appetites with a diverse range of culinary delights.
Spending to fill bellies can grow but with cloud kitchens and food delivery services expanding, eateries may operate with smaller physical footprints.
By leveraging good design, good ventilation, high standards of maintenance, strong understanding of customer needs and engaging activities, can heartland malls lure those living at their doorstep? Will efforts of groups like CapitaLand to grow a digital ecosystem to help retail tenants at its malls succeed?
People may be happy with new habits of staying home more, aided by the convenience of shopping for just about anything at any time with the click of a mouse.
Heartland malls have to fight hard to be relevant in the daily lives of the residents they serve.
Grade A CBD office rents up in Q2 after five quarters of decline: JLL
The Business Times, 22 Jun 2021, Tue
By Kalpana Rashiwala
AMID an improvement in business confidence, Singapore's Grade A CBD office rentals posted their first uptick after five consecutive quarter-on-quarter drops since the Covid-19 outbreak began, going by preliminary data from JLL.
The property consulting group estimates that the average monthly gross effective rental value of its Grade A CBD office basket has risen 1.2 per cent quarter on quarter to S$9.90 psf in the second quarter of this year from S$9.79 psf in Q1 2021.
The increase follows two consecutive quarters of slowing rent correction. JLL's rental value fell 0.2 per cent in Q1 this year and 2.7 per cent in Q4 last year. Prior to that, rents had slipped 3.8 per cent in Q3 2020 and 3.0 per cent in Q2 2020.
JLL sees the maiden uptick this quarter as a positive sign that office rents have begun to recover.
With the 0.9 per cent rise in its average Grade A CBD office rent in first-half 2021, JLL expects rents to continue to firm up in the second half, potentially culminating in a full-year gain of 2 to 3 per cent. This is amid expected healthy demand underpinned by economic recovery.
Andrew Tangye, head of office leasing and advisory at JLL Singapore, noted that 70 per cent or more of the 0.8 million sq ft of office space completing this year from new buildings such as Afro-Asia and CapitaSpring has already been taken up as of Q2 2021.
JLL Singapore's head of research and consultancy, Tay Huey Ying, said the recent reversal in relaxation of some Covid-19 safe management measures has neither unduly rattled market confidence nor dampened occupier sentiment. Demand for office space is expected to grow on the back of global economic recovery and Singapore's attractive offerings - including good governance, a conducive business environment and talent availability.
"While the trend towards hybrid work could see occupiers continuing to rationalise their real estate requirements, space reduction from these exercises will be disproportionate to the number of employees switching to remote working," she predicts.
"This is because corporates will need to provide a greater variety of work points such as collaboration, socialising and focus workspaces to cater to the new role of offices. There is also a pressing need to de-densify offices in response to rising employees' expectations for a less dense workplace of the future."
Savills Singapore's executive director of research and consultancy Alan Cheong noted that while right-sizing arising from the remote-work culture is a known risk for the office leasing market, mega-tech companies are still expanding. "The question is: Will occupiers in growth sectors be able to offset the shrinkage in office demand from those that are right-sizing?"
From the recent peak of S$10.81 psf in Q4 2019, JLL's average Grade A CBD office rent eased 9.5 per cent over five quarters to Q1 2021. This is a much smaller drop compared with the 56.5 per cent slide in rent over six quarters during the Global Financial Crisis (GFC), from the all-time peak of S$15.27 psf in Q2 2008 to a trough of S$6.64 psf in Q4 2009.
On the investment sales front too, the office segment has fared relatively well this time around.
According to JLL's figures, which cover transactions of S$5 million and above, some S$2.3 billion worth of office assets changed hands last year - 270 per cent more than the S$610.87 million during the GFC low in 2009.
Year to date, the tally stands at S$1.71 billion. In 2019, prior to the Covid outbreak, the figure was S$7.6 billion.
Ting Lim, head of capital markets for Singapore at JLL, predicts: "The affirmation that Singapore's office rents have bottomed will likely intensify competition for asset acquisitions and drive a fresh wave of price appreciation."
Cushman & Wakefield's head of investor services for APAC, Dennis Yeo, said: "There are a lot of positives for investing in Singapore offices right now. There is very limited supply available for sale, whether enbloc, (buying a whole building), or quality strata space.
"Money from family offices set up here is starting to flow into the office market, fuelling demand. Yes, yields are low but so are interest rates; and these people have the cash to invest."
JLL's Ms Lim highlights that a key factor fuelling investor appetite in Singapore office assets is that leasing demand has become "more robust, diverse and tenacious compared to a decade ago".
Commenting on the pick-up in leasing activity since the start of the year, Mr Tangye said interest has emanated largely from growth sectors such as technology, wealth management, family businesses and healthcare.
"The growing emphasis on sustainable workplaces and employees' wellness and health is driving demand to the better-quality, newer and greener office assets. These are the ones leading the current rental uptrend."
Ms Tay attributes the improvement in market sentiment and occupier confidence leading to the uptick in office rents this quarter to the "successful containment of the Covid 19 virus" which allowed the Phase 3 re-opening of Singapore's economy in late-December, coupled with the roll-out of the vaccination programme
"This has slowed down business downsizing and emboldened some corporates to consider expansions or set up offices in Singapore."
S'pore to relook long-term approach to land use, planning; engagement for review to start in July, says Desmond Lee
The Straits Times, 22 Jun 2021, Tue
By Michelle Ng
As Singapore moves towards more remote working arrangements, issues such as how much office space is needed and the design of workplaces and homes have to be relooked, said National Development Minister Desmond Lee.
More broadly, the country has to review its approach to land use and city planning as the Covid-19 pandemic has impacted many aspects of the way people live, work and play, he added on Monday (June 21).
Public engagement for Singapore’s long-term plan will start next month, Mr Lee said in a speech at the opening of the World Cities Summit.
Read more at: https://www.straitstimes.com/singapore/spore-to-relook-long-term-approach-to-land-use-planning-engagement-for-review-to-start
Covid-19 pandemic presents rare opportunity to reinvent cities, says Heng Swee Keat
The Straits Times, 22 Jun 2021, Tue
By Tham Yuen-C
Cities may have taken a hit because of Covid-19, but they will continue to remain relevant and attract people, and the pandemic presents a once-in-a-generation opportunity to reimagine the cities of tomorrow, said Deputy Prime Minister Heng Swee Keat on Monday (June 21).
He added that the pandemic has reinforced the value of building liveable cities, which are also resilient and not just efficient.
"I believe cities will remain powerful magnets, bringing people together to explore, learn, create, and interact with one another. Urbanisation will remain a powerful force driving growth post-Covid-19," Mr Heng said at the World Cities Summit.
Around the world, cities emptied out and became quieter during the pandemic, with people leaving for the countryside to escape the high population densities and concentration of activities that increased the risk of coronavirus infection.
But Mr Heng, in his keynote speech at the summit, said the reality is far more complex and nuanced, and different cities were affected to different degrees.
Read more at: https://www.straitstimes.com/singapore/politics/covid-19-pandemic-presents-rare-opportunity-to-reinvent-cities-says-heng-swee
Resilient and sustainable infrastructure is also about reducing inequality: Indranee Rajah
The Straits Times, 22 Jun 2021, Tue
By Grace Ho
Cities need to build infrastructure not only to withstand climate change and pandemics, but also to reduce inequality and strengthen society's resilience, said Minister in the Prime Minister's Office Indranee Rajah.
This is because it is the more vulnerable who often bear the brunt of disruptions and shocks, she said. Infrastructure investments are also critical to providing basic needs, and are a key driver of economic recovery and long-term growth.
She was speaking at the World Cities Summit on Monday (June 21) on the topic, "Investing in a sustainable and equitable recovery".
The biennial summit, held virtually this year because of Covid-19, brings together government leaders and industry to address urban challenges and share solutions. It ends on Wednesday.
Read more at: https://www.straitstimes.com/singapore/politics/resilient-and-sustainable-infrastructure-is-also-about-reducing-inequality