Category Archives: Property Retail Market

Drop in prices for office retail spaces

Singapore office space prices fell by 1.5 per cent in the second quarter. Rentals of office space also fell by 3.5 per cent in this quarter, compared to the 2.1 per cent dip in the first quarter of the year, URA figures showed.

Meanwhile, prices for retail space fell by 3.1 per cent in the second quarter, following a 1.9 per cent dip in the previous quarter. Rentals of retail space also fell by 3.9 per cent in the second quarter, compared to the 1.9 per cent drop in the first quarter, it added.

In terms of the amount of retail space available, URA said the island-wide vacancy rate rose to 7.8 per cent at the end of the second quarter, from 7.3 per cent at the end of the previous quarter.

Source : Channel NewsAsia – 22 Jul 2016

Funan retailers branch out virtually, but still believe in brick-and-mortar stores

Funan DigitaLife Mall closes for renovations this month, and while some retailers at the IT and electronics hub have indicated they are moving operations online, at least two players said they are sticking with brick-and-mortar stores.

One of them is AddOn Systems, which has been at Funan for as long as the mall has existed. This connection will come to an end when AddOn moves to Bugis Junction after the mall closes.

The company sells laptops of various brands such as ASUS and Dell, and also provides IT services to consumer and corporate clients. While acknowledging the growth of e-commerce and the fading relevance of IT hubs such as Funan, AddOn’s sales and marketing director Constantia Ang said she believes physical stores offer an experience to customers that cannot be replicated.

“E-commerce is only a part of the whole buying cycle,” said Ms Ang. “I think human beings still need a human touch … A human-to-machine touch is too cold.”

She added: “We do feel that a warm body interaction with customers is still important, and having the customer experience and feel what they are buying is also an important factor.”

Ms Ang said some of the challenges facing her company include manpower issues and changing customer dynamics, which she said have evolved from customers having to negotiate in-person when the business first started, to the availability of information online today. And these challenges come amid a soft retail market, she added.

A recent retail report by PricewaterhouseCoopers found that 60 per cent of Singaporeans surveyed shop online at least once a month.

The report also showed that categories such as music, computer games, software and some categories of consumer electronics are popular items people buy online, with a common reason cited for shopping online being cheaper prices.

Given the explosion of e-commerce, Mr Charles Loh, who is PwC’s Southeast Asia Consumer and Industrial Products Consulting Lead, said the role of brick-and-mortar stores will change.

“For the traditional retailers today, they need to engage and to be always on, and to reach out to the consumers on the e-commerce, as well as providing the experience – the physical experience when the consumer comes to the store.

“The role of the store will change into more like an experience centre, where consumers can come in and experience the goods and the services, and feel the differentiation that they are trying to sell.”

Mr Loh added that retailers think about how to challenge their current business models. “I think rather than looking at disruption, perhaps they should embrace e-commerce and digital into their business strategies and models. And that will help them move along as consumer consumption behaviours changes.”

Funan’s anchor tenant Challenger waded into the e-commerce scene by launching Hachi.Tech in April this year. In one month, its revenue grew by 70 per cent. But Challenger said that despite offering free delivery for orders above S$88, around half of its customers chose to collect their orders from its stores.

Challenger’s chief marketing officer Loo Pei Fen said this reflects the importance of maintaining a physical presence to complement its online operations.

“For us it’s more important to disrupt ourselves,” said Ms Loo. “Yes, we have a very comfortable brick-and-mortar business model, but our operating model needs to evolve to what our consumers want.

“If our consumers want to shop online, there is no reason (we should) just stick to our old business model. We have to change and evolve, plus we have to be able to encourage our customers to come to shop with us online again.”

Source : Channel NewsAsia – 6 Jun 2016

BlackRock eyes more opportunities in Singapore after Asia Square sale

FRESH from selling Asia Square Tower 1 for S$3.4 billion, or around S$2,700 per square foot (psf) on net lettable area (NLA), to Qatar Investment Authority, BlackRock says it is looking at Singapore for other potential property investment opportunities.

“We are looking predominantly at office and retail at the moment. Residential probably has a little bit further to fall because of the taxes (such as the additional buyer’s stamp duty) and the supply implications,” said John Saunders, head of Asia Pacific for BlackRock Real Estate, in an interview with The Business Times on Monday.

BlackRock, the world’s largest money manager, is keen on prime office space in the island’s central business district (CBD).

“In terms of retail, we would consider suburban as well,” Mr Saunders added. In the near term, BlackRock is more likely to buy existing office buildings or retail malls here rather than to embark on a greenfield development.

BlackRock still owns the office and retail space in Asia Square Tower 2, but there is no immediate timeline for its divestment. Tower 2′s occupancy rate is in the mid-70s per cent and BlackRock is close to a couple of big leases which when inked would take the figure close to 90 per cent. The goal would then be to finish leasing the remaining space in Tower 2 during the course of this year, after which the group could possibly look at a sale.

Tower 1, which is being sold, is already 90 per cent leased. However, Google, which reportedly occupies 130,000 sq ft in the building, will exit later this year, to move to Mapletree Business City II.

“There has been quite a lot of interest in the Google space in large part because it is one of the very few new completed buildings where someone can get contiguous multiple floors,” Mr Saunders highlighted.

Besides Singapore, BlackRock is focused on four other major markets in the region – Hong Kong, Australia, China and Japan.

Mr Saunders said: “We are quite active in four of the five. The only one we are waiting because we think it has a bit more downside is the Hong Kong market and that is a function of that you’ve got a slowing China, with the potential for rising rates in the US feeding through a peg currency.”

Property consultants noted that the Singapore office market is reeling from a glut arising from several big completions taking place within the next 12 months – Guoco Tower, Marina One, DUO Tower and 5 Shenton Way.

Cushman & Wakefield Singapore research director Christine Li said the office leasing market faces challenges in the short term due to weak business conditions, with leasing demand impacted by headwinds in the banking, oil and commodities sectors. “The supply overhang of 3.6 million sq ft will likely lead to the Grade A CBD vacancy rate exceeding double digits by the end of the year. Accordingly, Grade A CBD rents are projected to moderate by a further 10-12 per cent in 2016 (after easing 10 per cent in 2015) but stabilise in subsequent years given the significantly reduced supply pipeline in 2017 and 2018.”

Mr Saunders feels the negative press on the Singapore office market is overdone. “. . . if you’ve got a prime, CBD high-quality asset, we are still seeing good demand from both new and existing tenants. We are not really seeing a huge amount of pressure on rents”.

News of BlackRock’s sale of Asia Square Tower 1 to Qatar’s sovereign wealth fund (SWF) confirms reports in The Business Times over the past two weeks.

Asia Square Tower 1, an award-winning landmark office building, offers 43 storeys of space totalling over 1.25 million square feet of NLA. This property has received the US Green Building Council’s Leadership in Energy & Environment Core & Shell Platinum certification. Current tenants in Tower 1 include Citibank, Julius Baer and Marsh & McLennan.

This marks the largest single-tower property transaction in the Asia-Pacific to date, and the second largest single-tower property deal globally, according to data compiled by JLL.

Qatar Investment Authority was set up in 2005 to strengthen the country’s economy by diversifying into new asset classes. The group also owns the landmark Raffles Hotel here through its unit Katara Hospitality.

JLL and CBRE are joint sole advisers for this transaction for BlackRock.

Greg Hyland, head of capital markets, Singapore, at JLL said: “Singapore continues to be an attractive destination for international investors, thanks to its stable political outlook, superior infrastructure and strong economic fundamentals. Following this flagship transaction, we expect there will be increasing investor interest in Singapore prime office stock in the coming months.”

“Looking beyond Singapore, we are seeing a growing demand from global investors looking for major single-asset opportunities in the region such as Asia Square,” he added.

Market watchers highlighted that the announcement of a deal for Asia Square Tower 1 makes it the third big-ticket Singapore office transaction in the past few weeks.

The first was CapitaLand Commercial Trust’s proposed acquisition of the remaining 60 per cent of CapitaGreen. Then came Indonesian tycoon Tahir’s proposed purchase, through listed MYP Ltd, of the 28-storey Straits Trading Building on Battery Road at S$560 million; brokered by Michelle Lek of Quillion Global, the deal translates to a record price of slightly above S$3,520 psf on NLA for the 999-year-leasehold tower.

CBRE Singapore’s executive director of investment properties Jeremy Lake said: “Many investors had concluded that they should leave the Singapore office market alone and only come back next year.

“However, with three significant office investment transactions – especially the Asia Square deal, simply due to its sheer size – institutional investors such as SWFs and insurance companies from around the region and the world may reassess the market. CEOs will ask their organisations: ‘Is this a one-off transaction or are we missing something?’ The pace of leasing activity in new office developments is likely to pick up and embolden people that things are not as bad as they thought.”

Largest Uniqlo store in Singapore to be located at Orchard Central

Japanese cheap-chic fashion brand Uniqlo will open its first global flagship store in Singapore and in the South-east Asia region “this autumn”, according to a press release on Tuesday (Mar 29).

The new store, which will be the largest in Singapore and the region, will be located in Orchard Central, and will have a sales area of about 2,700 square metres across three levels in the mall, the company said.

The store will also create more than 300 jobs in Singapore, Uniqlo added.

“We are very honoured, and excited, to open our first Uniqlo Global Flagship Store in Singapore. Having been a member of the local retail scene since 2009, we remain committed toward contributing to the local community and being an integral part of Singapore’s growth and future,” said Mr Taku Morikawa, Uniqlo Southeast Asia CEO.

The Singapore global flagship store will add to existing such stores, including those in New York’s Fifth Avenue, London’s Oxford Street, and Ginza in Tokyo.

Source : Channel NewsAsia – 29 Mar 2016

HDB, private apartment rents down in February: Property index

Rental prices for Housing and Development Board (HDB) flats and non-landed private properties continued their downward trend in February, led by five-room HDB flats and homes in the city fringes.

Rental prices for Housing and Development Board (HDB) flats dipped 0.9 per cent from the previous month in February, according to a local property index.

Year-on-year, rental prices for HDB flats in February fell 3.7 per cent, and were down 9.1 per cent compared to its peak in August 2013, flash estimates from SRX Property showed.

Rents for three-room flats fell 0.6 per cent, while five-room and executive flats saw a decline of 1.8 per cent and 0.9 per cent, respectively. Rents for four-room flats saw a 0.1 per cent increase.

The number of HDB flats rented dropped 20.1 per cent in February, with an estimated 1,371 flats rented, down from 1,715 units the previous month.


Rental prices for dipped 0.7 per cent from the previous month. Year-on-year, rents were down 5 per cent, according to SRX Property.

Private apartments in the Rest of Central Region and Outside Central Region saw decreases in rents of 1.8 per cent and 1.3 per cent, respectively, while units in Core Central Region increased in rents by 1.3 per cent.

Rental volume declined 17.5 per cent, with an estimated 2,797 units rented, down from 3,389 the previous month.

Property agency ERA said the fall in rents was not surprising. According to ERA, landlords are finding it increasingly difficult to secure tenants, as leasing demand has not kept up with supply of new private homes. The lower private rents have, in turn, spilled into the HDB rental market.

Source : Channel NewsAsia – 9 Mar 2016

Furniture retailer iwannagohome to close Singapore outlets

Home furnishing and accessories shop iwannagohome will close its outlets in Singapore, its parent company confirmed on Friday (Feb 26).

Both its branches at Tanglin Mall and Great World City will be closed, said a spokesperson for the brand, which debuted in Singapore in 2007. Clearance sales have begun at both outlets.

A retail employee told Channel NewsAsia that he was told the shop would close “around May or June” this year.

No employees will be affected, the spokesperson added. “As we have other businesses, all employees will be transferred to other outlets.”

Among the other brands managed by parent company, Gill Capital, are fashion store H&M and candy store Candylicious.

No details were provided in response to queries about whether iwannagohome’s other outlets in Malaysia and Australia would be affected.

Source : Channel NewsAsia – 26 Feb 2016

Two Dempsey Road blocks to be developed for retail, F&B use

A tender to develop Blocks 17 and 18 Dempsey Road was conducted by the Singapore Tourism Board (STB) and Singapore Land Authority (SLA) on Thursday (Aug 13).

The two blocks, within the Dempsey cluster of Tanglin Village, will be developed for retail and food and beverage (F&B) use, and the joint effort between both agencies aims to “strengthen the Tanglin Village’s position as a unique lifestyle enclave and encourage the development of interesting lifestyle concepts”. the joint press release said.

Currently, Block 18 houses retail and F&B outlets and its tenancy expires on Feb 29, 2016, while Block 17 is vacant, said SLA.

SLA will adopt the Price and Quality evaluation format to conduct the tender, with 40 per cent of the overall score for the bid price and 60 per cent for the quality of the concept. This means the site may not be awarded to the operator that submits the highest bid price. Rather, the quality of the proposed concept will be a key consideration in determining the winning bid, the press release said. The tender closes on Sep 15.

Mr Lee Seng Lai, Director of Land Operations (Private) Division at SLA, said: “The introduction of the Price and Quality tender will help bolster Tanglin Village’s unique character and charm as a popular lifestyle enclave for all Singaporeans.”

This is the first time the Price and Quality evaluation format is being used for commercial and F&B use, SLA told Channel NewsAsia. This follows the 2013 announcement when such a tender evaluation format was used to assess bids put in by child care and kindergarten operators for state-owned properties.

Mr Desmond Sim, head of research at CBRE, said: “Traditionally, if you look at these two blocks, it is the gateway to Dempsey, because it is the first two blocks you will encounter when you move into Peirce Road. So, definitely a good dining concept would definitely be accepted. And of course, any new concept on retail will never be shown the door. It will definitely be accepted as well.”

Source : Channel NewsAsia – 14 Aug 2015

Perennial gets go-ahead to enhance TripleOne Somerset, AXA Tower

Local property group Perennial Real Estate Holdings said on Tuesday (Aug 4) it has received planning permits for proposed enhancement works at TripleOne Somerset and AXA Tower.

The plans for TripleOne Somerset, a predominantly-office cum retail development off Orchard Road, include increasing the retail area and converting up to 32,000 square feet of gross floor area into medical suites. Perennial also intends sell office space by dividing the area into smaller strata units, commencing with one office tower.

As for AXA Tower in the Shenton Way area, the enhancement involves increasing total net lettable area by 85,000 square feet to about 760,000 sq ft.

The retail area at level 1 and basement 1 will be enlarged, and a new two-storey annex block will be built to house medical suites. The firm also intends to strata sale the office spaces to maximise the value of the prime asset.

Perennial focuses primarily on large scale mixed-use developments in China and Singapore. Besides TripleOne Somerset and AXA Tower, its other Singapore properties include CHIJMES and Capitol Singapore. The group also holds stakes in and manages 112 Katong mall and Chinatown Point mall.

Source : Channel NewsAsia – 4 Aug 2015