Singapore’s GIC partners Australia REIT Dexus to set up $1.45b trust and other property news

GIC Dexus

GuocoLand’s Beach Road integrated project adds to area’s revamp Business Times, 26 November 2018

GuocoLand announced on Sun the groundbreaking of its integrated project on Beach Road – a project which, when completed in mid-2022, will add to the rejuvenation of the nearly 2 km stretch of road.

Guoco Midtown will comprise 770,000 sqft of premium Grade A office space designed for new economy companies; 30,000 sqft of retail and entertainment to draw “novel concepts”; more than 200 residential units; and the former Beach Road Police Station, a conserved building.

Last year, GuocoLand and its parent Guoco Group won the 99-year white site with a bid of S$1.622b, which works out to S$1,706 psf ppr – setting a new benchmark for a Government Land Sale site in Singapore.

Why Singapore’s office sector continues to draw investors Business Times, 24 November 2018

Commentary by JLL. Singapore’s CBD Grade A office capital values have recovered by more than 20% since bottoming in Q1 2017.

And yet, investors continue to pick them up at record pricings and compressed yields in 2018.

For instance, in Jun and Jul this year, Twenty Anson was transacted at a net property yield of 2.7%, while 55 Market Street and MYP Plaza are believed to have changed hands at sub-2% yields.

What is driving investors’ optimism? We believe it is the sector’s promising prospects for steady and sustainable growth on the back of an expected low pipeline supply both in the medium and long term.

Keppel Data Centres and Alpha Data Centre Fund to jointly develop and operate maiden greenfield data centre in Johor, Malaysia. The data centre, situated in an industrial park in Johor Malaysia, is on 261,000 sqf of land and will feature Tier III specifications over 100,495 sqf of GFA. Upon completion in 2020, the data centre will be fully committed by the customer. The customer also has a call option to buy back the data centre, which can be exercised within an agreed period. (Keppel Telecommunications & Transportation)

Singapore Malls Try Big Gambit Before Online Shopping Catches On Bloomberg, 23 November 2018

Online shopping in Singapore is lackluster even after Amazon debuted its Prime service in mid-2017.

The island’s malls are trying hard to keep it that way. With some of the nation’s biggest mall operators reporting falling rents and rising vacancies, landlords, just like those elsewhere in Asia and the US, are being forced to reposition. Centers around the world have tried similar stunts in recent years – often to no avail – but in tiny Singapore, where it’s often joked that shopping is the national sport, they do have an advantage.

Online shopping penetration ranks behind Slovakia and Greece in the city-state, putting it relatively low down for developed economies, and the government is weighing a tax on e-commerce imports from 2020.

MAS cautions homebuyers to be mindful of rising interest rates and upcoming supply The Edge Property, 23 November 2018

In its annual Financial Stability Review, the Monetary Authority of Singapore says that Singapore households should “carefully consider the impact of interest rate increases and the upcoming supply of new units in the medium term” when considering property purchases.

The central bank notes that that this year, housing loans – the main contributor to household debt – have increased, in tandem with the pick-up in housing demand. Household debt grew 3% y-o-y in the last quarter.

Outstanding housing loans increased 3.3% y-o-y in Sep this year, and accounted for about 16% of total non-bank loans that month.

Banks have been targeting residents who have sold homes through an en bloc sale. For example, bankers descended on the residents of Dunearn Gardens as they got their cheques for the sale of the 114-unit freehold residential development located off Newton Road. The bankers offered a preferential 1.75% interest rate for those who deposited at least S$350,000 in a savings account for 4 months. (The Business Times )

Singapore’s GIC partners Australia REIT Dexus to set up $1.45b trust Deal Street Asia, 26 November 2018

Singapore’s sovereign wealth fund GIC has partnered Dexus to establish a A$2b (US$1.45 billion) unlisted trust that will invest in Australian logistics properties.

The JV, named Dexus Australian Logistics Trust (DALT), will be seeded with assets from Dexus’ existing industrial portfolio.

The said portfolio comprises A$1.4b of core logistics properties and a A$138m development landbank, which will be valued A$500m on completion. The new unlisted vehicle is open-ended with an indefinite term and an active acquisition and development mandate, Dexus said.

GIC will be DALT’s foundation investor, taking an initial 25% investment in the core portfolio, with put and call rights to acquire an additional 24% by Jun 2020.

GIC will also take a 49% interest in the development land bank and fund its share of development spend. In 2017, GIC, through an Australian affiliate, acquired a pair of Sydney student blocks from Frasers Property Australia and Sekisui House Australia in a deal worth A$400m.

Less office space, high rents will ‘prompt companies to move staff out of Sydney’ Australian Financial Review, 25 November 2018

Sydney’s “big space problem”, a perfect storm of low vacancy rates, high rents and a lack of suitable offices, will prompt companies to move their staff from the harbour city to Melbourne or Brisbane.

Some companies have recently experimented with decentralised offices, moving employees out of the CBD to Parramatta or Macquarie Park, but businesses were also starting to weigh up their options outside of Sydney as a lack of space put further pressure on rents, tenant advocate Independent Corporate Property, said.

Office vacancy rates in the CBD are expected to fall to just 3 per cent by the end of 2019, according to BIS Oxford Economics, and there is not much in the way of new supply expected until at least 2021.

Contagion fears from Lippo probe impacting Singapore bonds with SGD-denominated notes issued by First REIT (FIRT) and OUE Ltd falling as a liquidity crunch prompts concerns that the group is using other entities to help shore up its finances. (Bloomberg, Edge Singapore)

Suntec REIT’s (SUN) subsidiary, Harmony Convention, has entered into a loan agreement for S$408m for the purpose of refinancing an existing loan facility . The facility contains covenants in the event of a default, including 1) SUN’s ownership in the subsidiary falls below 60%, 2) A change in fund manager of the subsidiary, 3) a change in manager/operator of Suntec International Convention & Exhibition Centre. (Suntec REIT)

With some of Singapore’s biggest mall operators reporting falling rents and rising vacancies, landlords are being forced to reposition their malls. For example, some mall operators are making room for yoga studios, boxing gyms and climbing walls and are also expanding their food and beverage options. Centres around the world have tried similar stunts in recent years – often to no avail. However, in Singapore, mall operators do have an advantage as online shopping penetration is low (ranking below Slovakia and Greece) and the government is weighing a tax on e-commerce imports from 2020. (The Edge Singapore)

Lendlease’s giant timber office tower in Brisbane is open for business The Fifth Estate, 23 November 2018

The doors of what’s believed to be Australia’s tallest engineered timber office building in Brisbane’s Fortitude Valley are now officially open.

The 9-storey (plus ground floor), 45 m-high timber commercial tower at 25 King Street is now ready for tenants to move in, including anchor tenant Aurecon.

Designed and manufactured by Lendlease and sold to Impact Investment Group (IIG), the building is targeting a 6 Star Green Star rating, a 5 Star NABERS Energy rating and a WELL Core & Shell rating.

This will complement the Brisbane Showground precinct’s 6 Star Green Star – Communities rating.

Singapore’s office sector continues to draw investors despite a >20% recovery in capital values since 1Q17. A lower pipeline supply of 0.8m sqf p.a. between 2019-2022 in the CBD is estimated to be below the historical net absorption of 0.9m sqf in the CBD, while the continued withdrawal of assets for redevelopment, such as Chevron House and possibly 78 Shenton Way, could further tip the balance in favour of demand. (The Business Times, JLL)

The launch of Woodleigh Residences (S$2,037 psf) drawing potential interest back to Woodleigh/Potong Pasir, benefiting other new launches including The Tre Ver (S$1,555 psf, 32% sold) and Park Colonial (S$1,700-1,750 psf, 69% sold). (EdgeProp)

Black Friday has been gaining traction in Singapore as shoppers seek out year-end deals and do their early Christmas shopping . For example, a spokesman for furniture and electronics retailer Courts, said its pre-Black Friday sales held earlier in the week were nearly double that of last year’s. (The Straits Times)

Robots Are Coming to One of Southeast Asia’s Largest Malls Bloomberg, 23 November 2018

The Philippines’ richest man Henry Sy will start rolling out robots next year to help customers navigate his massive shopping malls.

Initially 3 androids will be deployed in the first quarter of 2019 in SM Megamall, the nation’s second-biggest shopping center, said SM Prime Holdings. The talking bots will provide mall directions and information on promotions and events.

Megamall, among the biggest in Southeast Asia, spans 477,000 sqm (5.1m sqft), and serves about 277,000 people every day, according to data from SM. If the pilot is successful, the group will bring the robots to its biggest shopping center SM North Edsa and other major malls.

Bangkok condo sales slow, trend likely to continue The Nation, 23 November 2018

Uncertainty is looming in the Bangkok residential property market, according to CBRE.

Despite developers increasing condo launches in the capital, Thai buyers had slowed in some locations and were likely to slow further with the coming imposition of tighter mortgage lending criteria.

Some developers are trying to find locations where there is real demand from Thai end-users, whilst others have increased their reliance on foreign sales as the downtown expatriate rental market is stable.

CBRE added that the market in the midtown/suburban areas is quite flat, hence buy-to-rent investors may not achieve the yields they were expecting.

WeWork opens Singapore innovation centre. WeWork Labs at the co-working operator’s City House location in Robinson Road can accommodate 50 members. The labs are the company’s innovation platform for early-stage start-ups. (The Straits Times)

Shophouses still seeing good demand as residential cooling measures have shifted investor focus to commercial-zoned shophouses. Total transaction values are projected to rise to S$1.4b this year, up from S$1b in 2017 and S$709m in 2016. (The Straits Times)

Startups in JLL and Lendlease’s proptech accelerator in talks to put solutions to use Business Times, 23 November 2018

Regional proptech accelerator programme Propell Asia has concluded, with 5 startups now working with industry players to implement their products and solutions.

Both GorillaSpace, a marketplace for workspaces, and Talox, a cloud-based leasing and asset management platform, are in talks with Lendlease to use their products for the developer’s upcoming mixed-use development Paya Lebar Quarter.

GorillaSpace is also in discussions with JLL to market small office spaces. The startup is finalising seed investment and will use this fresh capital to roll out new features and expand regionally.