Nearly 1 in 3 HDB blocks hit ethnic quota limits, shows relevance of EIP today: Desmond Lee
The Straits Times, 5 July 2021, Mon 7:48pm
By Michelle Ng
Nearly one in three Housing Board blocks and 14 per cent of neighbourhoods today have reached ethnic quota limits, underscoring the importance of having the Ethnic Integration Policy (EIP) in place to ensure social mixing, said National Development Minister Desmond Lee.
The maxing out of racial quotas for flat ownership happens across all ethnic groups and in both mature and non-mature estates, he told the House on Monday (July 5), adding that the limits have persistently been reached in some areas such as Bukit Merah, Pasir Ris and Woodlands.
Read more at: https://www.straitstimes.com/singapore/housing/nearly-1-in-3-hdb-blocks-hit-ethnic-quota-limits-eip-remains-relevant-necessary
Sea Ltd expected to lease majority of office space in Rochester Commons
The Business Times, 6 July 2021, Tue 5:50 am
By Kalpana Rashiwala
SEA Limited - the parent company of e-commerce player Shopee, games developer Garena and digital financial services provider SeaMoney - is expanding its physical footprint in Singapore, in tandem with its business growth.
The Singapore-based, New York-listed group is expected to lease most of the office space at CapitaLand's upcoming Rochester Commons development in the one-north area, The Business Times understands.
Rochester Commons has about 200,000 sq ft of office space in the upper part of a 17-storey tower in the development; the typical floor plate size is about 22,500 sq ft.
Market watchers suggest that Sea may be paying a gross effective monthly rental in the high-S$7-per-square-foot range for the office space at Rochester Commons.
The space is likely to be for Shopee as well as some of the group's other businesses.
In December, Sea bagged a digital full-bank licence from the Monetary Authority of Singapore and is expected to begin operations next year.
Shopee's business has been growing. The e-commerce platform operates in Singapore, Indonesia, Vietnam, Thailand, the Philippines, Malaysia and Taiwan, and has a small footprint in Brazil, Mexico, Chile and Colombia.
Sea declined to comment when contacted by BT.
A CapitaLand spokesperson said the group will provide an update of Rochester Commons' leasing status "at an appropriate time".
For the quarter ended March 31, 2021, the revenue of Sea's e-commerce segment, that is, the Shopee business, more than tripled year on year to US$922.3 million from US$263.2 million in the corresponding period of the preceding year.
In the digital entertainment segment, which is Sea's gaming arm Garena, revenue rose 111.4 per cent year on year to US$781.3 million in Q1 FY2021. Garena's bookings, which represent GAAP (generally accepted accounting principles) revenue plus change in deferred revenue, totalled US$1.1 billion, up 117.4 per cent.
Sea's total group revenue more than doubled to US$1.76 billion in Q1 2021, from US$714.9 million in Q1 2020. However, net loss rose 50.3 per cent to US$422.1 million on the back of an increase in operating expenses.
On a more positive note, total adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) was US$88.1 million in Q1 FY2021, contrasting with a loss of US$69.9 million a year ago.
The group has a sizeable presence at Galaxis in one-north, where Sea's headquarters as well as Garena's operations are housed. Galaxis is owned by Ascendas Reit, which is sponsored by CapitaLand.
Shopee occupies the whole of 5 Science Park Drive, also owned by CapitaLand.
While Sea has staff in overseas markets, it is also expanding its headcount in Singapore, where it is headquartered, to drive the expansions.
Rochester Commons is slated for completion in the first half of next year. Besides offices, the tower will include a shared executive learning centre named Catapult, and a 135-room hotel to be operated by CapitaLand's lodging arm, The Ascott Limited under the Citadines Connect brand.
The campus-style development coming up on a 2.4-hectare site will also incorporate 12 heritage black-and-white bungalows, seven of which will house offices, and the other five, F&B/retail spaces.
When contacted, Andrew Tangye, head of office leasing advisory at JLL Singapore, said: "It comes as no surprise to us that Rochester Commons has serious interest because right now, there are limited large contiguous office space opportunities available in the decentralised area until SP Group's building in Pasir Panjang comes up in first-half 2024."
He noted that the Central Business District (CBD) is a traditional favourite choice for many tech firms due to its accessibility and connectivity, the abundance of amenities, modern and good-quality office space options, as well as their ease of attracting and retaining talent.
However, among the tech clusters that have formed outside the CBD, the south-western corridor has emerged as most popular, he added. This corridor comprises:
- Singapore Science Parks 1 and 2, where the Shopee building at 5 Science Park Drive is located;
- one-north (examples include the Razer and Grab headquarters); and
- the Alexandra area/Mapletree Business City (MBC) precinct, which is home to Google and Cisco.
Calvin Yeo, head of corporate real estate at Knight Frank Singapore, said: "Despite the work-from-home (WFH) trend, tech companies are constantly improving their user experience, so they need to bring their talents back to the office, to work together to innovate and white-board."
He added: "All corporates will have an element of WFH because they want to be prepared for the pandemic. Moreover, flexible work arrangements are also what staff want. Without this element, tech firms would be taking even more space."
It has been reported that the pandemic and WFH practice have accelerated the rationalisation of office footprints, especially by banks and other financial institutions.
On a brighter note, the more-than-200,000-sq-ft space vacated by UBS in One Raffles Quay's North Tower has been backfilled.
Mr Yeo said: "We have companies expanding in Singapore, partly due to relocation from elsewhere arising from geopolitical shifts and to better tap markets in Asean with a growing middle class."
Future of student hostel market in Singapore has no textbook answer
The Business Times, 6 July 2021, Tue 5:50 am
By Annabeth Leow
WHEN marketing agents tout shop-houses or mixed-use buildings, a few have advertised that these private properties could convert the approved use to student hostels.
But whether that bait works is debatable. The investor demand for such student hostels in Singapore, which typically house students not yet in university, may not be as robust as that in Western markets yet.
The attraction for investing in this specific asset class is less clear as rental income from co-living spaces as well as HDB flats or condos can be relatively stronger, while current licensing rules add another deterrent.
Approvals for conversion of use are no guarantees either - a possible turn-off for investors too.
While Singapore hosted more than 68,000 foreign students - including those attending university - last year, fewer than 20 private properties are approved for use as student hostels, according to the Urban Redevelopment Authority (URA).
This is on top of purpose-built facilities on school grounds, as well as 11 state properties leased out for student hostel use by the Singapore Land Authority.
Industry observations were in line with a URA statement that "generally, there are few applications for student hostel use within private properties, and we have not observed any discernible trend in the application numbers over the past few years".
Figures from the Ministry of Education, as disclosed in a Parliament reply in May this year, showed that the proportion of international students that enrolled in Singapore stands at less than 5 per cent in primary schools, secondary schools and junior colleges in both 2019 and 2020.
In 2019, a total of 424,402 students were enrolled in primary schools, secondary schools, junior colleges and centralised institutes, which would bring the total number of foreign students at these institutions to about 20,000. These exclude foreign students in private schools.
Lee Nai Jia, deputy director of the National University of Singapore's (NUS) Institute of Real Estate and Urban Studies, noted "lack of interest in Singapore student accommodation, compared to United Kingdom, Australia and United States markets".
He cited factors such as lower demand from domestic students, as well as a reliable public transport system that lets renters live in cheaper districts farther from campus.
Yet, recent months saw a couple of such properties advertised for sale.
Singapore Realtors Inc marketed 16 and 18, Kim Keat Road in May with "potential for co-living and student hostel usage, subject to relevant authorities' approval".
Meanwhile, PropNex dangled 449 and 451, Balestier Road in February, saying that "the upper storeys can be converted as residential co-living or student's accommodation".
Other properties touted as potential hostels include a set of shophouses in Desker Road that went on the market in January; a four-storey mixed-use building in River Valley Road last August; and a shophouse in Cavan Road in May last year.
Karamjit Singh, chief executive of Showsuite Consultancy, said city fringe areas, such as Balestier, Jalan Besar, Geylang and Aljunied, are popular with students because of their central locations and affordable prices. PropNex senior associate division director Loyalle Chin highlighted the appeal of East Coast Road shophouses.
Under URA rules, student hostels may be located in the residential part of mixed-use buildings, as well as in shophouses, subject to approval.
Such facilities house more than six unrelated full-time students, enrolled in primary or secondary schools, junior colleges or tertiary institutions.
Alan Cheong, head of research and consultancy at real estate firm Savills, told BT that there is a demand for student accommodation, but it falls through the gaps due to the planning and stamp duty regime in Singapore.
Indeed, Mr Singh acknowledged that the pool of such tradable assets and the transactions are not large. Additional Buyer's Stamp Duty liability and foreign ownership restrictions on residential properties "tend to add friction to such deals", he said.
And checks by BT showed that applications and approvals to change a building's planning use to student hostels remain rare as well.
Buyers should be aware that many of the properties recently marketed as potential student hostels had not yet actually received official permission to change their use.
The most recent planning approval for student hostel use on a private property was granted by the URA in early 2020, the agency said in response to BT queries, though a full list of addresses was not made available to the public or to the press.
"Proposals for student hostels are assessed contextually, taking into account factors such as the planning intention for the site, compatibility of the use with surrounding developments, potential impact on nearby residents, etc," the spokesperson added.
In any case, Savills' Mr Cheong said that more lucrative business models may quash interest in converting the space into student housing.
"Although there is a need for student housing, the market is not working smoothly because any private site that is available for sale has a higher use than for student accommodation... Returns are sub-optimal then."
Dr Lee from NUS added that student hostel operators also face greater competition from HDB flats and private condominiums.
"I would think their margins are comparatively lower," he said.
Indeed, a Balestier property with student housing approval was recently sold to a buyer that did not even initially intend to run a student hostel business on the site.
Property management group LHN last year paid S$18.1 million for the four-storey property at 320, Balestier Road. The second floor is licensed for student hostel use until 2023, while the third and fourth storeys are zoned for residential use.
"It is the intention of the company that these floors will be renovated into a co-living space," Singapore-listed LHN said in a bourse filing at the time. It cited how "co-living has a different revenue model" from the "traditional rental model" seen in student hostels and apartments.
Co-living spaces can be on residential premises, with a minimum three-month stay; in serviced apartments, with a minimum one-week stay; and at hotels, with no minimum stay.
To be sure, LHN is now retaining the use of the second floor for student lodging - since the URA has turned down applications to convert the space to serviced apartment use.
The second floor will house "a co-living space concept but designated for student housing", while the third and fourth floors will be "co-living spaces for all other residents", according to Kelvin Lim, executive chairman and managing director of LHN Group.
When asked, Mr Lim told BT that details will be announced closer to launch, though "rental rates will definitely be very competitive and benchmarked against market offerings".
Still, Savills' Mr Cheong stressed that, "from our sensing, the latent demand for student housing is strong".
"However, given the dearth of such properties that fall within the buyers' feasible range of pricing, hardly any such properties get transacted," he added.
The state of the market thus leaves sellers to hope that student hostel offerings may still pique the interest of individual investors "with an investment horizon beyond the Covid-19 pandemic", as NUS's Dr Lee put it - as long as their pockets are deep.
CBD Grade A offices' net demand turns positive, but vacancies rise again
The Business Times, 6 July 2021, Tue 8:09 am
By Fiona Lam
THE full-year net demand for Grade A office space in Singapore's central business district (CBD) for 2021 is likely to be up to six times that of 2020, Cushman & Wakefield forecast.
This comes as net demand in the first half of this year turned positive, at 68,000 square feet (sq ft), going by data from the real estate consultancy.
However, vacancy rates of CBD Grade A offices continued to increase as net supply again outpaced net demand, which remained "relatively weak", said Wong Xian Yang, Cushman & Wakefield head of research, Singapore.
Net supply amounted to nearly 359,000 sq ft in H1 2021, from zero in H2 2020. The greater net supply was attributed to Afro-Asia Building and the addition of Lazada One, formerly known as 5One Central, to the CBD Grade A basket, Mr Wong noted.
Vacancies climbed for the fifth consecutive quarter, reaching 4.6 per cent in Q2 2021, up from 4.2 per cent in Q1 2021. The latest figure is the highest vacancy rate for the CBD Grade A office market since Q1 2018, when it was 4.9 per cent, Cushman & Wakefield said on Monday.
The bulk of new leases signed in H1 2021 for CBD Grade A offices were with technology and finance tenants. Demand from the latter mostly came from existing financial institutions and investment funds that are relocating or expanding, the consultancy told The Business Times (BT).
Tech and finance occupiers, looking to lock in the lower rents during the Covid-19 pandemic to expand and position for the economic recovery, have taken up or pre-committed to many of the spaces vacated by banks, which continue to right-size their offices, Cushman & Wakefield said.
Even with these lower rents, the typical lease period has not changed significantly and still depends on the type and size of space, it added. "For most cases, it is still 3+3 (three-year lease with a three-year option to extend). But for larger new leases of 10,000 sq ft and above for bare units, they are looking at 5+5 to amortise the fit-out costs," Cushman & Wakefield told BT.
Meanwhile, overall rents of CBD Grade A office space posted their first uptick in Q2 2021, after five straight quarters of declines, as market sentiment and occupier confidence improved, JLL said last month.
In Cushman & Wakefield's basket of CBD Grade A office properties, monthly rents rose 0.5 per cent quarter on quarter to S$9.60 per square foot in Q2 2021.
This rental growth was driven by prime office buildings as tenants embarked on a flight to quality. Prime Grade A rents jumped by 1 per cent quarter on quarter in Q2 2021 while non-prime Grade A rents inched up by 0.1 per cent, based on Cushman & Wakefield's basket.
"Market recovery will be two-tier, with prime office buildings recovering the fastest, while older buildings lag behind," said Mark Lampard, the real estate services firm's head of commercial leasing for Singapore.
"Nonetheless, as prime office buildings fill up, demand will spill over to the other buildings in the CBD," he added.
Cushman & Wakefield expects rents to increase by 1-3 per cent in the second half of this year, fuelled by a strong economic rebound, the city-state's ambitious vaccination roll-out, and steady demand from fast-growing tech companies as well as financial and investment firms.
In addition, the limited new Grade A supply in the CBD may support rental rates. "CapitaSpring, which will contribute the bulk of new supply in H2 2021, has seen strong pre-commitments. Only Guoco Midtown in Bugis will be completed in 2022, and is undertaking pre-lease marketing with active negotiations underway," the consulting group noted.
Mr Lampard pointed out that historically, the rebound in CBD Grade A office rents tended to be V-shaped, with available spaces quickly snapped up as economic activity expanded.
"However, the current K-shaped recovery will result in a gradual rebound in rents," he said. For one thing, hybrid work arrangements have caused a structural decline in demand for office space, and some tenants are taking a watch-and-wait approach given the uncertainty around the pandemic situation.
Tenants also have more options now, given the increase in quality workplaces such as offices and business parks in decentralised locations, including one-north, Alexandra or Harbourfront, Mr Lampard said.
Metropolitan YMCA Residences at Stevens Road up for sale with S$57m guide price
The Business Times, 5 July 2021, Mon 12:46 pm
By Lisa Kriwangko
METROPOLITAN YMCA Residences at 58 Stevens Road has been put up for sale via tender with a guide price of S$57 million, announced sole marketing agent JLL on Monday.
Spanning 21,480 square feet (sq ft), the site is zoned residential with a gross plot ratio of 1.4 and an allowable height of up to five storeys. This amounts to about S$1,942 per square foot per plot ratio.
It is run as a serviced apartment with a total of 27 units, a swimming pool and a 24-lot basement carpark. This gives a total gross floor area of some 27,216 sq ft or a price of S$2,094 per square foot.
The successful buyer could redevelop the site to a boutique low-rise residential development for sale or retain its serviced apartments use, noted JLL.
"The property could also be very appealing to investors and family offices who are looking hard for real assets with recurring income potential - a very competitive market seeking yields for their abundant liquidity," said Tan Hong Boon, executive director of capital markets at JLL.
The sale would be on a fresh leasehold tenure of 103 years and will not be subject to Strata Titles Board application for a sale order.
"No. 58 Stevens Road will be a very appealing proposition to small and medium-sized developers due to the manageable quantum and the prime location as compared to the much larger GLS (Government Land Sales) sites which may be too big for their appetite," Mr Tan added.
Located in a low-density residential estate off the main road, the apartment is a 380-metre walk from Stevens MRT station or a short distance away from the nearest bus stop.
In the vicinity are Bukit Timah Food Centre, Cluny Court and Newton Food Centre. The property is also less than one kilometre away from the Singapore Chinese Girls' Primary School and Anglo-Chinese School (Primary).
The tender will close on Aug 11 at 3pm.