Tag Archives: Singapore Retail

Serangoon Plaza to be demolished to make way for 19-storey commercial complex

The five-storey Serangoon Plaza will soon be torn down to make way for a new commercial development, said property group Tong Eng on Tuesday (Jan 10).

Tenants have been told to move out by the end of this month, Tong Eng said, adding that all tenants have said they will be able to meet the deadline.

Mustafa, Singapore’s biggest 24-hour mall, has a branch at Serangoon Plaza and is the largest tenant there, taking up three storeys and about 70,000 sq ft. The store will be shut on Feb 1 and its merchandise transferred to the main outlet, Mustafa Centre, on Syed Alwi Road, a spokesperson said.

When asked if the company expects its revenue to be hit by the closure of the Serangoon Plaza branch, the spokesperson said sales would be “slightly affected”. Mustafa also has no plans to expand elsewhere, he added.

Built in the 1960s as President Shopping Centre, Serangoon Plaza was bought over in 1984 by Feature Development, an associate firm of Tong Eng, which then sold 10 per cent of the units. In 2013, Feature Development bought back the units it had sold for about S$40 million so that it would have the option of redeveloping the site.

The land will now be redeveloped into a 19-storey commercial development called Centrium Square, Tong Eng said. The new development will have a five-storey podium with retail space on the first and second storeys and a 14-storey tower with medical suites and offices. The retail space has been fully sold to shipping company Canali Logistics, it added.

Source : Channel NewsAsia – 11 Jan 2017

Three parties shortlisted for Jurong Point

Macquarie, Blackstone and Frasers Centrepoint have been shortlisted for the purchase of Guthrie and Lee Kim Tah’s space in Jurong Point mall.

The Business Times understands that Macquarie and Blackstone have each offered about S$2.2 billion – crossing S$3,350 per square foot (psf) on the 658,000 square foot commercial net lettable area owned by the equal joint-venture between Lee Kim Tah Holdings and Guthrie GTS in Jurong Point. The net yield is about 4 per cent.

Frasers Centrepoint’s offer is said to be below S$2 billion. The trio are now doing due diligence on the asset before they finalise their bids.

The three are said to be among nine parties that made submissions during an expressions of interest (EOI) exercise that closed on Nov 18.

Singapore’s biggest suburban shopping centre, Jurong Point, is connected seamlessly to the Boon Lay MRT Station and Bus Interchange.

The asset was put on the market in the fourth quarter of 2016 with a price tag exceeding S$2 billion, translating to more than S$3,000 psf.

Macquarie, Blackstone and Frasers Centrepoint all declined to comment when contacted by BT, as did Array Realty, the sole marketing agent for Jurong Point, and JLL, with whom Array worked exclusively to conduct the EOI exercise.

Other bidders who are understood to have participated in the EOI exercise include Link Reit of Hong Kong, PGIM (formerly Pramerica Investment Management) as well as some of Singapore’s big mall owners.

Private equity giant Blackstone is familiar with the Singapore property market.

Last year, it acquired a 75 per cent interest in three Singapore properties at 896 Dunearn Road, 315 Alexandra Road (next to Ikea) and 10 Jalan Kilang (off Jalan Bukit Merah) from Sime Darby; the deal valued the properties at around S$300 million. Blackstone also owns 21 Anderson Road, a 10-storey building of 34 units.

Blackstone’s Tactical Opportunities Fund was a partner in City Developments Ltd’s (CDL) S$1.5 billion profit participation securities exercise in 2014 to invest in the cashflows of CDL’s Quayside Collection asset on Sentosa Cove.

Macquarie does not own any real estate in Singapore, but has a presence elsewhere in Asia, including a big China retail portfolio.

Frasers Centrepoint Ltd group – including its sponsored shopping centre Reit, Frasers Centrepoint Trust – owns 12 malls on the island with more than two million sq ft net lettable area.

Guthrie and Lee Kim Tah are divesting a total net lettable area (NLA) of 702,000 sq ft – including 44,000 sq ft of space under the government’s Community/Sports Facilities Scheme (CSFS), which is being used by occupiers such as NTUC First Campus Co-operative’s My First Skool and voluntary welfare organisations.

There is a further space of about 59,000 sq ft under three strata retail units divested by Lee Kim Tah and Guthrie about two decades ago to Golden Village, NTUC FairPrice and POSB – taking the total net lettable area in Jurong Point to 761,000 sq ft.

The mall is nearly fully let.

Guthrie and Lee Kim Tah are offering their 702,000 sq ft in the mall through the sale of shares in companies that own this space.

BT reported earlier that the partners, having owned the property for many years, were keen to pursue new interests and opportunities. Lee Kim Tah was delisted in early 2015 and Guthrie in November 2013.

Jurong Point draws an average monthly visitorship of six million and has a catchment of 150,000 households within a five-kilometre radius, with potential for growth as the new town planned in Tengah is progressively developed.

Major tenants for the space at Jurong Point owned by Guthrie and Lee Kim Tah include FairPrice Xtra, Courts, Harvey Norman, BHG, Uniqlo and Kiddy Palace, in addition to three foodcourts.

Jurong Point stands on two sites; one has a balance lease term of about 76 years and the other, 88.5 years. Their combined land area is 557,288 sq ft.

The original Jurong Point was completed in 1995 and spans four levels of retail space (Basement 1 to Level 3). The CSFS space is on Levels 4, 5 and 6. The extension, which was completed in 2008, has three retail floors – Basement 1 and Levels 1 and 3.

About 1,000 carpark lots in Jurong Point are available for use by shoppers.

The mall’s total gross floor area (GFA) is 1.07 million sq ft; there is no unutilised GFA, but potential buyers would no doubt be looking at the possibility of raising the mall’s income by increasing the retail area and subdividing some of the anchor tenant spaces into smaller units to extract higher per square foot rentals.

Retail property investment sales surge in Q4

The total value of big-ticket retail properties that have changed hands so far this quarter has surged to S$731.3 million, up 22.4 per cent from S$597.4 million in the preceding quarter and more than double the S$320.3 million in Q4 last year.

This tally as at Dec 8, compiled by Savills Singapore, was based on deals of at least S$10 million originating from the private sector.

Perennial Real Estate Holdings and Singapore Press Holdings’ S$265.5 million acquisition of an additional 60 per cent stake in a partnership holding Chinatown Point mall and four strata office units above it has been the biggest deal so far this quarter.

Also boosting the Q4 number was Master Contract Services’ S$250 million acquisition of the lower three levels of the four-storey Heartland Mall-Kovan and two strata retail units in Havelock II near Chinatown from a fund managed by Alpha Investment Partners.

Cityvibe, near Clementi MRT Station, also changed hands recently for S$71 million.

Despite the strong investment sales numbers for retail property since October, Savills said the year to date figure of S$1.837 billion is just 3.3 per cent higher than the S$1.778 billion for last year. This was due to the lower numbers in the second and third quarters of this year against their respective year-ago periods.

Market watchers are keenly awaiting a major retail property transaction in the first quarter of next year: Jurong Point. Singapore’s biggest suburban mall, with a price tag of over S$2 billion or more than S$3,000 psf on commercial net lettable area, is understood to have garnered strong interest during an expressions of interest exercise that closed on Nov 18.

Commenting on 2016′s performance, Savills Singapore’s managing director and head of investment and residential services, Steven Ming, said: “Investors, because they are faced with a limited supply of investible assets, are progressively willing to accept lower and lower yields. In Q3 2015, the appraised net yield for prime Orchard Road retail malls used to be 3.9 per cent; by Q3 2016, this had fallen to 3.6 per cent.

“The same trend is expected for suburban malls and HDB retail properties.”

Savills brokered the recent sale of the three levels of Heartland Mall-Kovan and the two units at Havelock II. It also brokered Alpha’s S$151 million sales of four HDB shop units in Ang Mo Kio, Bukit Merah Central, Clementi and Toa Payoh to Lian Beng Group; the deal was entered into in Q3 and completed last month.

Colliers International managing director of Asia capital markets and investment services Terence Tang noted that retail property in Singapore offers higher yields than offices, residential property and hotels. “Industrial properties offer higher yields but investing in land leased by JTC is highly regulated,” he noted.

Mr Tang also observed that rentals in suburban malls are more resilient as these malls cater to the daily needs of the masses living in the neighbourhood.

Mr Ming said that investors in the Singapore retail property segment have thus far not been entirely perturbed by the headwinds facing retailers here. “Even if tenants are facing a litany of issues including higher labour costs and online competition, well-located shops are still reporting low vacancies.

“There is ready demand from potential tenants if rents are tweaked to reflect market conditions. Investors therefore have relatively certain cash flow, which helps them to manage their loan repayment risks,” said Mr Ming.

Savills Singapore research head Alan Cheong acknowledged that passing yields for retail malls are higher than those for the office, hotel and residential sectors; moreover, residential property investors are saddled with the additional buyer’s stamp duty and seller’s stamp duty.

“The disadvantages of retail real estate is that it requires greater amount of asset management in keeping the malls or space well positioned to remain relevant to tenants and patrons. Therefore the degree of care in managing a mall is much greater than for the other real estate asset classes.”

90% of retail space at upcoming Bukit Panjang mall taken up

Retail space is filling up at Bukit Panjang’s upcoming shopping centre called Hillion Mall, announced Sim Lian Group on Friday (Nov 25).

It said in a press release that 90 percent of the approximately 174,730 sq ft of lettable area has been taken up by about 100 retail as well as food and beverage (F&B) tenants.

There are five anchor tenants – NTUC FairPrice, PCF Sparkletots Preschool, Amore Fitness and Boutique Spa, Kopitiam and Best Denki.

The mall along Petir Road, which is slated to open in the first quarter of 2017, is part of Bukit Panjang’s upcoming integrated transport hub. The Land Transport Authority (LTA) had announced that the hub will seamlessly connect the existing Bukit Panjang LRT station and the future Bukit Panjang MRT station with retail, F&B and residential developments at the same site.

Basement 2 of Hillion Mall will be directly linked to the MRT station via an underpass, said Sim Lian Group.

Above the mall is the 546-unit Hillion Residences. It is expected to receive its Temporary Occupation Permit (TOP) by September 2018.

This is Sim Lian Group’s first mixed-use development in Singapore. When complete, the mall will serve more than 220,000 residents and 760,000 commuters, it said.

Source: Channel NewsAsia – 25 Nov 2016

Toys “R” Us plans to open 2 more stores in Singapore

Unfazed by the sluggish local retail conditions, Toys “R” Us is expanding its foothold in Singapore, with plans to unveil two more stores in the coming months.

One will be slated for opening before Christmas and another by early-2017, country manager Raymond Burt told Channel NewsAsia on Wednesday (Nov 2) at the launch of its newly-refurbished flagship store at VivoCity. That will bring the number of stores the American toy retailer has in Singapore to 11.

With the new stores, there will be around 60 positions to be filled, including full-time and part-time sales positions, as well as management-level posts, added Mr Burt who oversees Toys “R” Us operations in Singapore and Brunei.

However, he declined to reveal further details about the location and size of the new stores, as well as the amount which Toys “R” Us is investing. Channel NewsAsia understands that the VivoCity store, which is 30,000 square feet, will remain the retailer’s biggest store in Singapore.

According to APAC president Andre Javes, the company, which first ventured into Singapore in 1984, has “no issues” in putting in further investments in the local market despite a deteriorating retail outlook and growing concerns over the economy.

“We will continue to grow here as we still see Singapore as a growth market,” Mr Javes, who is usually based in Hong Kong, said. “We don’t want to make decisions just based on the current economic situation which is tough… but this market has been a good one for the past 32 years and we have no issues investing more.”

In fact, Mr Javes said he is “quite optimistic” about sales over the coming years, citing the release of new Hollywood blockbuster movies that will likely add additional push in toy sales.

In addition, the toy market is usually “recession-proof” with demand for certain categories such as educational toys holding up, especially during festive seasons like Christmas, he added.

STAYING IN THE GAME

In its home market, the conventional retail chain has come under pressure from other retailers, such as Wal-Mart, that sell toys, as well as the rise of online platforms including Amazon. A sign of its struggles, Toys “R” Us shuttered its iconic 110,000 square feet flagship store at Times Square in New York last year.

In Singapore where e-commerce has rapidly taken off and given other retailers a run for their money, Mr Burt told Channel NewsAsia that Toys “R” Us has seen less of an impact thus far. Nonetheless, it is stepping up its game by rejuvenating its store experiences with interactive setups and attention-grabbing displays.

Its stores at VivoCity and Paragon have an interactive wall which allows customers to browse through product catalogues or take a photo with. At the revamped VivoCity store, an experiential area comes with three digital screens showing videos about the latest toys. The LEGO section, which is the largest across all Toys “R” Us stores in Southeast Asia, has multiple tables for children to play around.

Meanwhile, it also has an e-shopping platform and offers delivery services for online purchases.

“While we haven’t noticed much (impact), it’s something that has made us challenge our own model… we have to evolve to this new environment,” Mr Burt said. “Over the years, we have stepped up on the activities for interaction in our stores so this is one of our key recipes to success in this omni-channel world. Meanwhile, (online) is part of our business, rather than a new competitor.”

Beyond Singapore, Mr Javes told Channel NewsAsia that there is no slowing down in expansion plans either, with China, Australia and Japan as the company’s key focus.

“In the Greater China region and Southeast Asia, we will be opening around 43 stores this year and we will continue on this path in 2017,” he said.

But Toys “R” Us is taking on a different strategy in this part of the world. Instead of sprawling stores, the trick to success in Asia lies more in the store’s location given the differences in consumer activities.

“In our traditional Western markets, we usually have standalone stores that are double the size of this one in VivoCity where people can drive to on the weekends. But in Asia, we are looking at smaller stores at more convenient locations such as malls where people usually visit on the weekends,” Mr Javes said.

Source : Channel NewsAsia – 2 Nov 2016

John Little to close its last outlet by end December

Department store John Little will close its last remaining outlet at Plaza Singapura by the end of December this year, the Robinsons Group announced in a statement on Saturday (Nov 5).

The decision was made after evaluating the relevancy and sustainability of its brick-and-mortar business, said the Robinsons Group, adding that John Little will instead evolve as a brand into a pop-up format, which it will unveil next year.

“This closure is part of the consolidation efforts to focus on businesses that are growing within the Robinsons Group, while rechannelling our resources to bring in new brands and shopping concepts to excite the retail industry,” the group said.

Affected staff members have been briefed and they will be deployed to “other suitable businesses” within the organisation, it added.

The group, which is owned by the Dubai-headquartered Al-Futtaim Group, also manages Robinsons and Marks and Spencer.

Source : Channel NewsAsia – 5 Nov 2016

FCT buys Yishun 10 cinema complex retail units for S$37.7m

SHOPPING-MALL owner Frasers Centrepoint Trust (FCT) has inked deals to buy all 10 strata-titled retail units at the Yishun 10 cinema complex from Bonvests Holdings for S$37.75 million, the trust said in a Singapore Exchange (SGX) filing on Friday evening.

The trust manager’s chief executive officer, Chew Tuan Chiong, said in a statement Yishun 10 was next to FCT’s Northpoint shopping centre and acquiring its retail podium was in line with the trust’s strategy for Northpoint.

FCT added that an independent aggregate valuation of the 10 retail units done by Jones Lang LaSalle Property Consultants was S$40 million as at Sept 30, 2016. The tenure of the retail units was 99 years starting from April 1, 1990, it noted.

Both FCT and Bonvests are listed on SGX’s mainboard.

Site where iconic Queenstown cinema once stood sold for S$78m

A PRIME commercial-zoned piece of vacant land – where the former Queenstown cinema and bowling centre once stood – has been sold for S$78 million. The price for the site, which has a balance lease term of 57 years, is understood to work out to about S$756 per square foot of potential gross floor area.

Located a stone’s throw from Queenstown MRT Station, the site is at the corner of Commonwealth Avenue and Margaret Drive; it comprises two lots of land adding up to 32,305 sq ft, net of some land to be set aside for road widening.

A unit of Crescendas Group, headed by Lawrence Leow, is selling the property to a company controlled by property developer and investor Cheong Sim Lam, a member of the family that developed International Plaza in Anson Road in the 1970s.

Crescendas was previously granted written permission to redevelop the site into a seven-storey commercial building with basement car parking lots; Urban Redevelopment Authority had stipulated a maximum gross floor area of 103,112 sq ft, of which up to 40 per cent could be for retail use.

That approval has since lapsed and the new owner will have to make a fresh application for the site’s redevelopment. Under the Urban Redevelompment Authority’s Master Plan 2014, the site is zoned for commercial use.

The Housing & Development Board granted a 99-year lease for the site starting Jan 1, 1975. Crescendas is understood to have bought the property in 2006 and in 2013 pulled down what was by then described as the dilapidated former Queenstown cinema and bowling alley.

Built in 1977 and shut in 1999, the iconic light blue and white building was once popular with dating couples, families and students from nearby schools.

Queues would form at the 1,715-seat cinema as movie-goers lined up for tickets. In addition to the 18-lane bowling centre, there were also fast-food restaurants and karaoke lounges in the building.

The property was demolished three years ago as it was purported to be structurally unstable, according to an earlier article in The Straits Times.

Today, the Queenstown Public Library – which opened 46 years ago and was granted conservation status in 2013- still stands near the site.

But the area is also undergoing a rejuvenation – with new private condos coming up including Commonwealth Towers and Queens Peak (the latter is being launched later this week) as well as new public housing developments (SkyOasis @ Dawson and SkyResidence @ Dawson). Cushman & Wakefield brokered the sale through private treaty.

Based on the land price of around S$756 per square foot per plot ratio, a new commercial development on the site could breakeven at about S$1,800-1,900 psf, say market watchers. The buyer, Mr Cheong, has been in the news in recent years for his property investments in the Central Business District. He bought two adjacent office buildings at 137 and 139 Cecil Street around 2009 but sold them in 2015 and 2014 respectively.

Along Marine Parade Central, he is developing a four-storey commercial building named IMall, on the former Republic Theatre site.

Tanjong Pagar Centre game-changer for GuocoLand

GUOCOLAND, controlled by Malaysian tycoon Quek Leng Chan, recently completed Guoco Tower – the office component of its integrated mixed-development project, Tanjong Pagar Centre, on a 99-year leasehold site above Tanjong Pagar MRT Station.

The mainboard-listed property group has announced that 80 per cent of the 890,000 sq ft net lettable area of office space has been committed, that is either leased or subject of advanced leasing discussions. Guoco Tower obtained Temporary Occupation Permit (TOP) in September.

At the same time, part of Tanjong Pagar Centre’s 100,000 sq ft retail component also received TOP. The rest of the retail space as well as the 222-room Sofitel Singapore City Centre and a 181-unit residential component are slated to receive TOP in stages from late this year to early next year. The retail component is more than 80 per cent committed.

Office and retail tenants have started to move in.

The mixed-development project has an estimated gross development value of S$3.2 billion. GuocoLand paid S$1.708 billion or S$1,006 per square foot of potential gross floor area for the Tanjong Pagar Centre site, which it clinched at an Urban Redevelopment Authority tender in 2010.

Now, Tanjong Pagar Centre is set to transform GuocoLand, significantly boosting its recurring income base. The Business Times’ back-of- the-envelope calculation shows that when the asset is fully operational and has stabilised, it could generate Ebitda (earnings before interest, tax depreciation and amortisation) of around S$93 million per year.

This assumes that the office and retail components have been fully leased at average gross effective monthly rentals of S$9 per square foot for the offices and S$15 psf for the retail space; it also assumes that the hotel commands an average room rate of S$400 per night with 80 per cent average occupancy.

GuocoLand owns 80 per cent of Tanjong Pagar Centre – the Employees Provident Fund of Malaysia holds the balance 20 per cent stake – so GuocoLand would stand to receive an annual Ebitda boost of about S$75 million for its attributable share of Tanjong Pagar Centre.

This will help augment GuocoLand’s pool of recurring income, which currently is pretty small – from sources such as the 20 Collyer Quay office block in Singapore, a few hotels in Shanghai and Malaysia, and a small mall within the Guoson Centre mixed-development in Shanghai.

Once Tanjong Pagar Centre is stabilised, this huge leap in recurring income from the office, retail and hotel components will not only provide ballast to GuocoLand’s earnings, but will also smoothen the volatility in income from property development. As well, the stable cashflow will enhance the group’s resilience and enable it to seize growth opportunities.

Besides anchoring the group’s ambitions of building a strong base of recurring income, Tanjong Pagar Centre will generate property development income from the sale of apartments in the 181-unit Wallich Residence, sitting atop the offices in a 64-storey tower.

Apartments start from level 40, at a height of about 190 metres. So far 16 have been sold – all at above S$3,000 psf. The group will likely launch a fresh marketing campaign when the residential component has been completed around early 2017, to give potential buyers a sense of the views they will enjoy from the height.

Wallich Residence’s 21,108 sq ft super penthouse on the top three levels of the 64-storey tower reaches a height of 290 metres – making it Singapore’s tallest residence.

Through these upmarket residences in the CBD, Tanjong Pagar Centre will reinforce another strategy GuocoLand has been building on in recent years – that of focusing on the high-end residential market.

In Bukit Timah, the group is left with just a three-bedroom penthouse at the 210-unit Goodwood Residence.

At another freehold completed project, the 381-unit Leedon Residence, GuocoLand is left with 109 units. The average price achieved so far is just below S$2,000 psf and the group could be mulling over a bulk sale. The group’s next high-end residential project here will be a 450-unit condo in Martin Place on a site clinched a few months ago.

GuocoLand could tap a modest revival in investment interest in Singapore’s high-end housing market, which took a more severe beating compared to other segments in the initial stages of the current residential downcycle.

In addition to Tanjong Pagar Centre, other drivers of recurring income could be in the offing for GuocoLand. Its Bursa Malaysia-listed subsidiary, GuocoLand Malaysia, is developing Damansara City in Kuala Lumpur. The project is expected to be operational in 2017 and GuocoLand Malaysia has retained within the development an office tower, a hotel and retail mall for recurring income. In the medium term, Singapore-listed GuocoLand itself could develop future phases of its Guoson Centre commercial site in Shanghai and retain them for rental income.

GuocoLand does seem to have some good things going for it. That said, it does not receive much coverage from stockbroking houses, principally because the stock is relatively illiquid. With Mr Quek controlling about 70 per cent of the company, the group has a small free float of about 21 per cent. The average daily volume for the counter over the past one year is 231,000 shares. This may be small for institutional following but could still be comfortable for some smaller funds and retail investors.

GuocoLand’s market cap is S$2.3 billion. As at Sept 30, 2016, its gearing was 0.9 times.

Rumours periodically surface that Mr Quek could take the company private to take advantage of the discount at which it is trading.

Based on Tuesday’s closing price of S$1.915, GuocoLand is trading at 44.5 per cent discount to CIMB analysts Lock Mun Yee and Yeo Zhi Bin’s S$3.45 estimated revalued net asset value per share for the counter.

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.