Outlook for Singapore’s commercial property market upbeat

By Shaun Poh / Cushman & Wakefield | May 24, 2019 2:00 PM SGT
Singapore’s commercial property investment market perked up at the start of the second quarter, at a time when the cumulative tally for the earlier quarter had shown a drop with a few strata deals. Office development Tampines Grande 7 and 9 transacted in early April at $395 million, and Realty Centre closed a few days later at $148 million. Realty Centre was the first commercial collective sales inked in the year, fuelling hopes that the commercial collective sales market is chugging along despite the muted sentiments in the overall economy.
Oxley Holdings has entered into a deal to sell Chevron House for $1.03 billion, testing the capital value threshold of commercial properties. Anson House, 139 Cecil Street and possibly Frasers Tower are next in line.
Oxley Holdings has entered into a deal to sell Chevron House for $1.03 billion (Pictures: Samuel Isaac Chua/EdgeProp Singapore)
Whatever the reasons for selling commercial properties, the market is in agreement that the momentum of commercial development sales will remain steady. The Draft Master Plan 2019’s recommendation to rejuvenate the CBD has certainly created some buzz in the commercial market.
CBD Incentive Scheme to benefit office developments
The CBD Incentive Scheme will offer an increase in gross plot ratio to encourage the conversion of existing office developments to hotel and residential uses. This could be beneficial for many office developments which face challenges when it comes to land use zoning.
As residential and hotel uses typically have a lower capital value, it does not make sense for land owners to downgrade to those development options without the increase in the plot ratio. If the CBD Incentive Scheme is approved, it will make commercial sense for developers to look at various development options.
The lure of hospitality continues, and property owners continue to weigh hotel conversions against higher development charges (DC) for hotel use. In the period just before DC for hotel conversions increased, Cheong Sim Lam acquired Ascott Raffles Place Singapore for $353.3 million. Waterloo Apartments was sold to a subsidiary of Fragrance Group through a collective sale of $131.1 million and the owners of Hotel 81 bought Golden Wall Centre for $276.2 million.
Cheong Sim Lam acquired Ascott Raffles Place Singapore for $353.3 million