Vacancy rate for retail space islandwide rises to 8.4% at end-Q3

DATA released by the Urban Redevelopment Authority (URA) shows that its retail property rental index fell 1.5 per cent in the third quarter of this year over the preceding quarter – a smaller decline compared with the 3.9 per cent quarter-on-quarter drop in Q2 2016.

URA’s retail property price index eased 0.6 per cent q-o-q in Q3 2016, after sliding 3.1 per cent in Q2 2016.

The islandwide vacancy rate of retail space rose to 8.4 per cent as at end-Q3 2016 from 7.8 per cent as at end-Q2 2016.

The amount of occupied retail space shrank 26,000 square metres (net) in the third quarter, contrasting with an increase of 1,000 sq m in the previous quarter. The stock of retail space increased by 17,000 sq m (net) in the third quarter, after rising 29,000 sq m in the previous quarter.

There was a total supply of 652,000 sq m gross floor area of retail space from projects in the pipeline as at end-Q3 2016.

A human centric approach to designing the future workplace

THE concept of the workplace is evolving. Historically, the quest was to design the perfect workplace focused on the infrastructure and physical design, taking into account technological transformations, with business cost efficiency being a major driver. This approach, however, often neglected the human aspects and how the talent interacted in and around the space and how productivity was maximised.

This “single serving” mentality – buildings to house workers and workstations for employees – ignores the potential to transform urban spaces in cities worldwide into more holistic and human-centric precincts. As a result, commercial areas, especially central business districts (CBDs) around the world, turn into dead areas after dark and on the weekends. But it need not be this way.

A number of designers and developers are taking the lead with a more holistic, and more importantly, a more human-centric approach to designing the workplace and the ecosystem around it. The benefits are multi-fold – not only can employee talent be served better by increasing their productivity and well-being, the surrounding community may benefit as well.

Where the future works

This is what urban regeneration is about – as cities house more people than ever before, buildings need to be designed and constructed with people foremost in mind.

Many urban regeneration projects around the world are doing exactly that. From the vast Barangaroo South precinct in Sydney to International Quarter London, the centre of Europe’s largest urban development, these large-scale projects are transforming not just the skyline but also creating environments that are fit for the future way of working.

The common thread among each of these industry-leading developments is the fact that they are not just one-dimensional workplaces. Each is designed to be mixed-use projects from the very start, integrating a variety of asset classes – including shops, hotels, offices, parks, residences and leisure and entertainment offerings, providing a broad spectrum of amenities and experiences for the working population.

The workplace of the future will be part of a greater eco-system of amenities and complementary businesses, bringing together large public spaces, vibrant round-the-clock retail, leisure and entertainment options and seamless transport connectivity.

These future workplaces will also have a strong community focus, building in broad-ranging cultural, living, and working spaces, catering not just for the wellness of inhabitants, but for their well-being.

Closer to home, the ambitious Jurong Lake District and other up-and-coming business hubs in Buona Vista, Woodlands Central and Paya Lebar Central represent a similar take on the future of workplaces – which are not just for business but also offer inclusive community spaces for the broader population.

Connected and inclusive

With progressive cities such as Singapore moving towards being more car-lite, future workplaces will not just be easily accessible via public transportation networks, but also have dedicated amenities to support the needs of other active mobility methods.

End-of-trip facilities with bicycle parking, lockers, changing rooms and showers will be ubiquitous in future workplaces, supporting cyclists’ and joggers’ commutes to work.

Workplaces of the future will be sustainable hubs that seamlessly integrate social, leisure and work spaces. With this hub model, amenities and services do not just serve workers during working hours, but also the catchment of residents within the development and in the vicinity, acting as a gathering place where residents and visitors are able to connect with one another.

To transform the face of the workplace, there will also be curated retail and entertainment options that reinvent the entire development into a destination in and of itself.

For example, instead of the usual shopping complex serving the lunchtime crowd, future workplaces will feature alfresco dining streets, lush green spaces and multi-purpose plazas for community events or pop-up concepts.

Collaboration and concentration

The recent trend in workspace concepts is undeniably more human-centric compared to the past, with employers embracing the productivity benefits that open-plan spaces and hot-desking provide. The future of work is seen as much more collaborative and flexible, responding to the behaviours and working culture of the millennial generation.

A CBRE paper on workspace preferences by different generations revealed that while millennials do value spaces meant for socialising more than other generations, the most important spaces to them are those that allow them to think and concentrate.

In addition, the paper also found that millennials actually spend slightly more time doing individually focused work compared to their older colleagues. What this means is that workplaces of the future should allow for flexible designs and account for a broad variety of needs, such as private nooks where employees can focus their thoughts, providing a holistic rather than a homogenous environment for all.

Healthy and happy

Apart from having progressive fit-outs, the future workplace should promote the overall well-being of occupants. Beyond taking care of the physical wellness of inhabitants, ensuring well-being actually goes one step further, to a state where employees are both healthy and happy.

Developers globally are recognising that there should be metrics to account for the shift towards assessing the well-being of workplaces. In Singapore, the Building and Construction Authority’s Green Mark 2015 parameters include human-centric assessments on indoor air quality, lighting and acoustics, among others.

The improvements to productivity brought by a focus on employees’ well-being are not intangible – a JLL research found that both improved acoustics and privacy boost productivity by 6 per cent each, while improved views, lighting and daylighting increase productivity by 5.5 per cent. Improved air quality also mitigates problems caused by the “sick building syndrome”, cutting down short-term sick leave by 35 per cent according to one study.

In short, beyond function-driven approaches of providing fittings and layouts, a holistic approach to well-being ensures that every company’s most valuable resource – its employees – are well looked after.

Designing the future workplace involves looking beyond a functional office, to also creating a civic central for talent to flourish.

By RICHARD PAINE – managing director, Paya Lebar Quarter by Lendlease

Narrowing gap between Grade A and B office buildings

ACCORDING to the Ministry of Trade and Industry, Singapore’s economy grew 2.1 per cent year on year (y-o-y) in Q2 2016, the same rate of growth as the previous quarter.

With looming concerns over the weaker global outlook and the impact of Britain’s vote to leave the European Union, its economic growth forecast for 2016 also narrowed to 1 per cent to 2 per cent instead of the 1 per cent to 3 per cent projected earlier.

Concerns over the global economic climate continued to dampen Singapore’s business outlook which in turn negatively impacted the performance of the office market.

Net new demand remained muted with few expansion plans and more modest space requirements from fewer new market entrants.


All these come at the same time as an upcoming wave of new development completions.

As a result, the rental premium between Grade A and Grade B buildings has narrowed, spurring occupiers to make a “flight to quality” move to premises at more competitive rentals.

As at Q2 2016, the average Grade A CBD Core rents tracked by CBRE Research have declined for the fifth consecutive quarter, contracting 4 per cent quarter on quarter (q-o-q) to S$9.50 per square foot per month (psf/month). The average Grade B CBD Core rents also corrected by 3.8 per cent to S$7.65 psf/month.

Generally, CBRE Research defines a Grade A building as a landmark building with modern flexible layout and floor plates above 18,000 square feet (sq ft). The building size is above 300,000 sq ft and offers underground parking and good lift services zoned for passengers and goods delivery.

It offers high technical specifications (such as raised floors, 24-hour cooling system) and good quality building services (for example, security, CCTV), and is professionally managed. The building should also be located close to public transport.

Out of a CBD Core office stock of about 27.6 million sq ft, approximately 43 per cent of this stock is classified Grade A CBD Core. The rest of the office stock is classified Grade B CBD Core.

Highly sought after

Grade A buildings are highly sought-after especially by multinational institutional occupiers as they offer modern office features with large contiguous, often column-free space, with modern specifications as well as prestige.

Rents for such office buildings therefore are transacted at a premium over other buildings that do not necessarily meet all the Grade A features and specifications. The latter is generally classified Grade B.

This rental premium can be seen in the chart where the rental premium of the average Grade A CBD Core over Grade B CBD Core office rents is shown.

The chart shows that the rental premium is currently 24 per cent. This is the lowest for a 10-year period from Q1 2006 to Q2 2016 in light of current weak office demand and rental conditions.

Nonetheless, while the 10-year average rental premium is 36 per cent, it should be noted that this is propped up by the high rental premium achieved during the period from 2007 to 2009 when the average Grade A CBD Core rents rose at a faster pace than the average Grade B CBD Core rents.

Being more representative of recent market conditions, the five-year average rental premium is slightly lower at 30 per cent. This is also a reflection of a less volatile Grade A market in the recent cycles.

With the current rental premium 6 per cent lower than the five-year average, occupiers are enticed by the opportunity to locate their operations in Grade A buildings. “Flight to quality” has been driving leasing commitments to Grade A office developments.

Developers of upcoming Grade A office buildings especially have found it necessary to offer very competitive pre-lease terms in order to secure leasing commitments.

Faced with increased competition, existing landlords have also sought to retain occupation through the structuring of new renewal deals. They have found it necessary to adjust to market conditions with more competitive pricing and flexibility in leasing terms.

Unsurprisingly, Grade A rents continue to correct faster than their Grade B counterparts.

With limited net new office demand, office leasing deals are mainly driven by a “musical chairs” movement from one building to another. Grade B buildings that have hitherto enjoyed relatively high occupancy levels will thus face greater challenges to retain their existing tenants or attract new tenants.

In the past six to 12 months, a marked increase in leasing activity in the Grade A market was observed, bolstered by this “flight to quality” movement and occupiers taking advantage of attractive terms on offer. It should be noted that these opportunistic leasing deals were primarily focused on new Grade A projects and a few large deal negotiations have been reported.

Vacancy rate

With no new completions this quarter, the vacancy rate for the Grade A CBD Core office market remains relatively stable, registering only a marginal increase from 5 per cent to 5.2 per cent. The vacancy rate for Grade B CBD Core remains at 4.6 per cent q-o-q.

However, it should be mentioned that the CBD Core office market will not be able to enjoy such low vacancy levels for long.

Vacancy levels are expected to rise sharply over the next six to nine months with the physical completions of a number of new developments which collectively offer a significant amount of space available for lease.

Despite the Grade A market benefitting more from the “flight to quality” moves, it should be noted that all is not lost for the Grade B office market.

Not all potential office occupiers require Grade A specifications for their occupation needs. Some occupiers, especially smaller-scale businesses, do not require large floor plates or high specifications. They prefer low occupancy cost and low price volatility.

Hence, landlords of Grade B buildings should find ways to cater to SMEs and include them as another source of demand alongside traditional large occupiers.

While it is clear that the smaller space requirement of SMEs limits their potential leasing demand and they are unlikely to ever match the role large companies play in office space take-up, CBRE Research believes there is still a role for them alongside large corporations as a supplementary office demand driver.

What they lack in scale, they make up for in numbers. This is predicated on a strong SME and startup growth trend, that SMEs will be a distinct focus for the government as well as the rise of the sharing economy. Thus stability in the Grade B market is expected in the mid to long term.

This is an opportune time for landlords to relook the way the office leasing format has traditionally been run. This is not to say a revamp should be on the cards but there is definitely room on the part of landlords to incorporate greater flexibility in office space use to target SMEs.

The potential benefits far outweigh the costs involved. With a little effort, landlords will be able to capitalise on a relatively untapped pool of demand that is expected to grow from strength to strength.

Looking ahead, while the market is affected by the weak global economic outlook and caution has surfaced around the large future stock due for completion over the next six to nine months, the narrowed premium for Grade A rents has seen some encouraging leasing activity among the new developments over the past couple of quarters and may in due course help to build some momentum for the office sector.

Return to growth

While the short-term outlook remains weak, CBRE Research believes that the market may return to growth beyond end 2017 once the supply wave passes and assuming prospects for the underlying economy improve.

The rental premium between the Grade A and Grade B office market may widen slightly back to five-year historical levels of about 30 per cent.

However, because of decentralisation options, a constantly improving quality of office stock as well as a pro-actively managed future supply, this rental premium is not expected to surpass levels last seen from 2007 to 2009.

Reinventing Orchard Road amid the subdued retail climate

ONE has to concede that Orchard Road is not the shopping belt it once was during its halcyon days. No longer do you see throngs lining the 2.2-kilometre boulevard, not even on weekends. Once regarded as the shopping and entertainment destination for Singaporeans and tourists alike, are Orchard Road’s glory days dwindling?

To better understand the wane of such a key shopping destination, it is worth looking at what has changed in the retail environment over the past few years.

Primarily, consumer purchasing patterns have changed. There is an increasing dependence on the convenience that e-commerce offers, and a rise in the popularity of suburban malls. The Great Singapore Sale, once a much lauded event, has lost its appeal due to thrifty shoppers seeking out favourable promotions online.

From a tourism point of view, there is now a higher focus on budget and culture travelling; shopping is no longer a focal point. Coupled with international brands having a higher global penetration (their brands are readily available back home and potentially cheaper), Singapore’s appeal as a key tourism destination for shopping seems to have waned.



However, all is not lost. Orchard Road still possesses many factors which makes it desirable. The strip is lined by iconic shopping malls, hotels and medical centres. These malls and hotels are home to a spectrum of fashion brands – from high street to luxury, and signature homegrown and international restaurants.

While it faces keen competition from Marina Bay Sands, Orchard Road still has the magnetic appeal for new market entrants to set up shop and generate brand awareness in South-east Asia. It is also worth remembering that it remains the longest retail strip in Singapore, which is a point of differentiation in terms of consumer experience.

There have been several initiatives introduced in an attempt to reinvent Orchard Road. These include the annual Fashion Steps Out, the monthly Pedestrian Night, and Rev-Up@Orchard to coincide with the Formula 1 Grand Prix, to name a few. Developers have also introduced redevelopment and asset enhancement works at buildings such as 268 Orchard Road and Centrepoint, as a means of reinventing the strip.

A more collaborative approach by the various stakeholders on Orchard Road is perhaps needed to regain its lustre.

Tourist destination

The fastest way for Orchard Road to raise its game as a tourist destination may be to consider increasing tourist-friendly initiatives that cater to the needs of not only leisure shoppers, but also transient ones.

Very often, tourists have a few hours to spare between their hotel check-out and flight. If facilities such as centralised baggage storage and direct buses to the airport are made available, Orchard Road could be the choice destination to fill up the last day of their travel.

In addition, mall landlords can also offer centralised concierge services for shoppers to have a shopping-bag-free experience, with their purchases collected on the way to the airport, prior to boarding the buses. From the local shoppers’ point of view, the concierge services can also include home delivery services.

Product differentiation

We need to remind ourselves that local shoppers remain the consistent pool of consumers. A rebranding and repositioning exercise is necessary for Orchard Road to appeal to local shoppers again.

In the current retail climate, the recipe for success for malls tends to be product differentiation and unique shopper experience. Mall landlords can leverage the pool of budding local designers by integrating them seamlessly with the existing premium brands in the malls. Instead of constantly looking outwards for new brands, landlords can also now look within and play a part in nurturing these designers, who can potentially be the next wave of household names.

Leveraging the wide tree-lined pedestrian boulevard, landlords can consider introducing more pop-up stores outdoors instead of containing them within the mall, with the aim of merely filling up empty spaces. These store formats will help create awareness for the brands and allow shoppers to be more familiar with them. This can also be a good way to attract overseas brands that want to test the level of brand acceptance in the Singapore market, without making a long-term commitment.


Adapting to the evolving market sentiments and the needs of consumers is critical to the success of these shopping belts. Increasingly, there is a demand for a differentiated retail experience. It is now a necessity for shopping locations to have an overarching place-making strategy which includes activities planning and community engagement. This takes into account events and spaces which cater to the target demographic of both locals and tourists, encompassing both daytime and night-time activities.

Through active place-making, shoppers can expect events to be brought into the strip to create a more holistic shopping and recreational experience. For instance, on days when major sporting events are held, outdoor screenings of these happenings can take place in the open areas along Orchard Road.

In the past, marketing events such as Coca-Cola Happiness Creator Machine and the MediaCorp Subaru Car Challenge have successfully created some hype. Apart from centralised efforts by the Orchard Road Business Association (ORBA), more can be done by involving existing retailers operating along Orchard Road. For example, music festivals such as H&M Loves Music Festival can be held, combining people’s love for music with fashion.

Integrating offline and online retailing

While retailers on Orchard Road have been pampered with guaranteed footfall in the past decade, it is now time for them to step out of their comfort zones and be more proactive. There is always a limit to how far brick-and-mortar retailers can engage in price wars, and fighting head-on with online retailers by aggressively cutting prices is definitely detrimental to their business in the long run. What these retailers should do is work around the barrier that e-commerce has – the unique social interaction between the brand and the consumer.

While brands have increasingly gone online, we have also seen online retailers going in the opposite direction by setting up new-format physical retail stores. Such stores exist often not with the aim of producing sales numbers, but to act as a platform to bridge the offline and online retail experience.

For example, Zalora has had a pop-up tour in some malls to showcase its products to offline shoppers. Stylenanda, which has gained popularity over the years as one of the best Korean fashion websites together with its sister brand 3 Concept Eyes, has started setting up stores in the high streets of the main retail areas in Korea, Hong Kong, China and Thailand.

In the years to come, experiential retail will be the next wave of change we expect for the retail environment. Lines between offline and online retail will be blurred, and brick-and-mortar shops will double up as an avenue where shoppers can touch, feel and experiment with the latest products – sometimes even before the products are launched officially.

We will see technology increasingly integrated into traditional retail to offer shoppers a unique and interactive shopping experience. Some examples include augmented reality shopping catalogues and product descriptions, 3D scanning of body sizes, and virtual changing rooms. Being Singapore’s key shopping belt, Orchard Road landlords and retailers can spearhead this trend, and at the same time rebrand the whole shopping experience of the district.

Singapore’s prime office rents to bottom in 2018: Knight Frank

A FLIGHT-TO-QUALITY among office occupiers is weighing down on rents and occupancies at older Grade A office buildings, where more space will be freed up as these tenants move into new prime offices.

This is giving rise to a “two-tiered performance” in the prime office market, with Grade A offices seeing steeper declines in rents than the so-called “Grade A-plus” offices in the coming quarters. Average office rents will continue to fall before bottoming out in 2018, property consultancy Knight Frank projects.

These Grade A-plus offices refer to newer buildings with better specifications in the prime office market.

With the downside risk in office rents already well-documented ahead of looming completions of massive projects, market observers have started speculating when the bottom will be reached.

But some analysts are expecting the bottom to arrive sooner. DBS Group Research and Religare are tipping a bottom in the second half of 2017; Maybank Kim Eng has projected a bottoming-out of office rents over the next five to six quarters, which suggests Q4 2017 to be the earliest for that to happen.

Knight Frank head of office Calvin Yeo said: “Competition for tenants will be rife, particularly among buildings vying to backfill vacancies from tenants relocating to quality (spaces) over the upcoming quarters.

“Buildings with significant net lettable area (NLA) due for lease renewal from now till 2018 will continue to be under threat of losing tenants to quality buildings,” he added.

During the third quarter, Grade-A office space in the Raffles Place/Marina Bay district saw the largest quarterly decline of 2.9 per cent in monthly gross effective rents (which exclude fit-out period but include rent holidays and service charges) to S$8.20-8.70 per square foot (psf). This is followed by a 2.7 per cent fall for Grade A office spaces in the Marina Centre and Suntec City areas to S$8.10-8.60 psf.

The pursuit of tenants by upcoming office projects in recent quarters has been at the expense of older Grade A buildngs, which will see some tenants moving out soon when those swanky new buildings are completed.

The Business Times had earlier reported a slew of pre-lease commitments inked in new projects. ING, which now occupies 70,000 sq ft at Republic Plaza, is close to securing a similar amount of space at Guoco Tower in Tanjong Pagar Centre. Itochu Singapore, also currently at Republic Plaza, is also taking up 28,000 sq ft at Guoco Tower.

Communications agency Dentsu Aegis Network, which now operates from 77 Robinson Road and has member firms in several other locations, is said to be finalising a lease for about 90,000 sq ft at Guoco Tower.

Cybersecurity company Palo Alto Networks is moving out of its 20,000 sq ft of space at Millennia Towers to take up some 36,000 sq ft at Guoco Tower.

Amadeus, a global IT solutions provider for the travel industry, now occupies over 20,000 sq ft at Parkview Square in North Bridge Road and is said to be taking up a lease for 36,000 sq ft at Guoco Tower.

Swiss private bank Julius Baer, which has inked a lease at close to double-digit rent for a “high density floor” spanning 100,000 sq ft at Marina One, is slated to give up its 72,000 sq ft of space spread over two floors at Asia Square Tower 1.

“Upcoming vacancies in Grade A buildings will increase in the next two years as these tenants relocate, and put pressure on rents as a result,” Mr Yeo said.

A skyscraper index released by Knight Frank this month, which tracks rental performance of commercial buildings over 30 storeys high, showed that prime office rents on the upper floors of Singapore skyscrapers are the eighth most expensive globally.

Asia-Pacific cities saw the highest rental growth, with towers in Shanghai recording the strongest growth in the world of 7.6 per cent in the first half, followed by Sydney, Hong Kong and Taipei. Singapore bucked that trend with a 7 per cent drop.

CLSA unit said to be doing due diligence on 77 Robinson Rd

CLSA Capital Partners is said to have been selected to do exclusive due diligence for the purchase of 77 Robinson Road.

The pricing is believed to be above S$530 million, or slightly above S$1,800 per square foot based on the net lettable area (NLA) of nearly 293,270 sq ft.

Formerly known as Singapore Airlines (SIA) Building, the 35-storey office tower is on a site with 99-year leasehold tenure that started on Feb 18, 1994; the balance lease tenure is about 76.5 years.

What is interesting about CLSA being picked for exclusive due diligence is that it was an earlier CLSA-managed fund that had sold the office tower to the current owner – SEB ImmoInvest fund, which used to be managed by the former SEB Asset Management, which was acquired by Savills Investment Management in September last year. The earlier CLSA fund had sold 77 Robinson Road in April 2007 for S$526 million or S$1,783 psf based on a slightly larger NLA of around 295,000 sq ft for the property at the time.

Word on the street is that in a recent expression of interest exercise for 77 Robinson Road, at least one other party – tipped to be either CapitaLand or its unit CapitaLand Commercial Trust (CCT) – offered a higher price than CLSA, apparently around S$1,850 psf. However, it seems CLSA was the only party agreeable to the vendor’s preference for an outright asset sale instead of a sale of shares in the special purpose vehicle (SPV) that owns 77 Robinson Road.

An outright purchase of the building would attract the usual buyer’s stamp duty of up to 3 per cent – much higher than the stamp duty rate payable on share purchases, of 0.2 per cent of the net asset value or the market value of the company, whichever is higher. Hence a potential buyer looking at an asset purchase rather than a share purchase in an SPV would typically adjust its price downwards to factor in the higher stamp duty expense.

Moreover, CLSA Capital Partners’ thorough knowledge of the asset, positions it well to conclude a swift deal, which is probably what the vendor is also eyeing, say market watchers.

The earlier CLSA-linked fund that sold the building in April 2007 had acquired it 10 months earlier, in June 2006, for S$343.88 million or about S$1,165 psf, from Singapore Airlines.

CBRE is said to have conducted the recent expression of interest on behalf of Savills Investment Management on the property which closed last month. It declined to comment when contacted by The Business Times.

77 Robinson Road’s maximum development potential has been tapped. Under the Urban Redevelopment Authority’s Master Plan 2014, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to site area).

Nevertheless, there may be scope to do some asset enhancement work on the property, presenting potential upside for a new owner, say observers. Among other things, some of the car parking space may be converted to commercial use: the building currently has 180 car parking lots. In addition, some of the air handling units could be decanted to free up spare GFA. There is also scope to spruce up and reconfigure the entrance lobby and upgrade common area.

One negative factor for 77 Robinson Road is that Dentsu, a major tenant, is expected to exit the building; its parent Dentsu Aegis Network is said to be finalising a lease for about 100,000 sq ft at the nearby Guoco Tower. The group will move out of several locations on the island, according to market talk.

Tech and sporting features headline Funan mall revamp

The upcoming Funan integrated development will include a Golden Village cinema, indoor climbing gym as well as a click-and-collect shopping experience, announced developers CapitaLand at the site’s groundbreaking on Wednesday (Sep 7).

The redeveloped Funan DigitaLife Mall, which is expected to be completed in 2019, will retain its digital roots by selling IT products. Additionally, the mall will incorporate the tech experience throughout the whole development, CapitaLand said.

The retail component, consisting a net floor area of 324,000 square feet, will be divided into three broad themes: Tech, Fit and Taste.

Under the tech cluster, Golden Village will operate a cinema with the latest in cinematic experiences while Kopitiam will operate a high-tech food court featuring tray and crockery return robots.

As part of the offline-to-online shopping experience, Funan will offer a drive-through click-and-collect shopping service where shoppers may pick up purchases at Funan’s concierge. They can also have their purchases delivered to the home.

Sports will play a big part in the new look Funan as there will be an indoor 50-lane climbing facility. Other sports facilities like basketball courts and futsal courts will also be incorporated, while it is looking to become Singapore’s first commercial building to allow cycling throughout the building.

Mr Lim Ming Yan, President and Group CEO of CapitaLand, said: “We are entering an exciting phase of real estate development driven by technology breakthroughs that are altering the fabric of our lives and the coming of age of a whole generation of consumers who grew up with the Internet. Funan is our response to these trends.”

Source : Channel NewsAsia – 7 Sep 2016

110 Robinson Rd sold at S$45.1m to Indonesian tycoon Tahir

A STRING of commercial property transactions has taken place recently.

These include a 12-storey freehold office block at 110 Robinson Road, owned by OCBC, which has sold it to Indonesian tycoon Tahir. The sale will be completed in three months, a spokeswoman for the bank said when contacted by The Business Times.

The price is understood to be S$45.1 million or nearly S$3,169 per square foot based on the net lettable area of 14,233 sq ft. The property is between Finexis Building at 108 Robinson Road and Robinson 112.

BT reported earlier that Mr Tahir was the highest bidder.

Cushman & Wakefield conducted the tender for OCBC. “The tender, which closed on July 26, drew a handful of bids,” said Shaun Poh, executive director of capital markets at C&W.

While most observers would consider the S$3,169 psf that Mr Tahir is paying for 110 Robinson Road to be bullish, Michelle Lek of Quillion Global, who acted for Mr Tahir in the transaction, said the property presented a “rare opportunity to acquire a freehold office building with a Robinson Road address for under S$50 million”.

Also changing hands are six of the nine strata retail units on the second level of Holland Road Shopping Centre – along with an industrial unit at 211 Henderson – offered at a tender conducted by CBRE and which closed last month.

Four adjoining strata office units at The Adelphi, a 999-year leasehold property near City Hall MRT station, are being sold for S$20.7 million or about S$2,365 psf on the total strata area of 8,751 sq ft. The buyer is believed to be the Singapore Academy of Law (SAL).

A body established by Statute, SAL is the promotion and development agency for Singapore’s legal industry, tasked with the vision of making Singapore the legal hub of Asia.

SAL is currently located in the Supreme Court Building next to The Adelphi. When contacted, the Academy said last Friday that it is looking at the purchase of office space close to the Supreme Court. “The move will enable SAL to house its operational units at its own premises instead of paying rent to the Supreme Court. The SAL secretariat will also share our plans and ideas with our committee members in the coming months. More details will be announced by Chief Justice Sundaresh Menon in his Opening of Legal Year Speech in January 2017.”

The four units are being sold by a party who had bought them in 2011, partly for own use and partly for investment.

CBRE confirmed it brokered the deal but declined to comment further.

Over at the freehold Holland Road Shopping Centre, various members of the Lim family behind Lim’s Arts and Living have picked up five retail units. The units are part of nine units on the second level of the four-storey mall that were put up for tender by CBRE on behalf of their owners, two companies controlled by the Lim family. A sixth unit has been sold to an unrelated party.

The six units, with sizes between 237 sq ft and 732 sq ft, were transacted at S$4,346 psf to S$5,403 psf. Absolute prices ranged from S$1.12 million to S$3.95 million. The balance three retail units will be put on the auction block jointly by CBRE and Colliers at the latter’s auction on Sept 21 at Amara Singapore in Tanjong Pagar.

When contacted, Sammi Lim, director of investment properties at CBRE, said the tender, which closed on Aug 23, was “open to participation by anybody including the (Lim) family members”. All six units that have been sold went to their respective highest bidders.

Ms Lim added that the three unsold units to be auctioned drew some bidders but they had packaged their offers together with some of the other six units that were sold. “As a result, the owners decided to offer them at a separate auction,” she added.

The August tender also included a 4,962 sq ft strata freehold industrial unit on the second level of 211 Henderson, which has also been sold for S$2.98 million or S$600.56 psf, Ms Lim revealed. The buyer is not linked to the Lims.

ARA said to clinch deal to purchase Capital Square office tower stake

ARA Asset Management Ltd has won the bid for a stake in Singapore’s Capital Square office tower in the city’s central business district, according to people familiar with the matter.

ARA, which is listed in Singapore, is buying the 50 per cent stake in the building that was put up for sale last year by Alpha Investment Partners, said the people, who asked not to be identified because the process is private.

The purchase will be concluded by month-end, one of the people said, without disclosing the price of the deal.

The 16-story prime office building in the Raffles Place financial district was expected to fetch about S$2,500 per square foot, valuing the 50 per cent stake at roughly S$415 million, according to an estimate from Donald Han, a Singapore-based managing director at real estate broker Chestertons.

The transaction will add to a recent spate of deals in Singapore’s business district as falling rents and a large supply of prime space have pushed valuations lower.

The tower, whose tenants include Morgan Stanley, Bloomberg LP and Citigroup Inc, was bought by Alpha and insurer NTUC Income in 2011 from Munich Re for S$889 million, or about S$2,300 per square foot.

ARA declined to comment in an e-mailed statement.

Capital Square, which is spread out over 388,215 square feet, was built by developer Keppel Land and completed in 1998.

CBRE Group Inc and Jones Lang LaSalle were appointed to market Capital Square, they said in a joint statement in April 2015.

Singapore high-rise office rents decline by 7% as demand slows

Singapore landlords are paying the penalty for a slowing economy. Alone among the world’s major cities, the cost of renting an office with panoramic views is falling as supply outstrips demand.

Annual rents on the upper floors of Singapore’s skyscrapers fell 7 per cent to about US$775 a square metre in the first six months, according to a 23-city index compiled by Knight Frank LLP.

The biggest increase was in Shanghai, where rents climbed 7.6 per cent to US$774. In Hong Kong, the most expensive market, rents rose by 5.9 per cent to US$2,996 a square metre, the broker said.

“There’s a classic imbalance in the Singapore market,” said Will Beardmore-Gray, head of Knight Frank’s tenant representation and agency business.

“They had relatively high supply and this has been exacerbated by a poor-performing economy and over development.”

Vacancy rates in Singapore were 9 per cent in the second quarter, compared with 3.3 per cent in Shanghai, Knight Frank data show. The city-state’s economy will shrink 0.1 per cent in the third quarter, according to a survey of 26 economists conducted by Bloomberg News in the week through Sept 13.

Demand for Shanghai office space has been lifted by the technology and creative industries, Mr Beardmore-Gray said. The city has created 300,000 jobs in those sectors since 2009 and is expected to add 100,000 more by 2020, he said.

Manhattan skyscraper rents increased 1.9 per cent to US$1,701 per square metre during the first half, the second-highest in the index, while those in Tokyo and the City of London district were unchanged at US$1,610 and US$1,226 respectively.