Author: PropInvestSG

Singapore property intelligence 8 Apr

OUE Commercial REIT (OUECT) and OUE Hospitality Trust (OUEHT) in proposed merger to create one of the largest diversified S-REITs with total assets of S$6.8b, according to company announcements. OUECT will offer to buy OUEHT in a cash and stock deal , offering S$0.04075 in cash and 1.3583 new OUECT units or at a consideration of S$0.747066 (1.6% above OUEHT’s last traded price, or 0.4% discount to OUEHT’s NAV of S$0.75/unit), based on last closing price of S$0.52/0.735 for OUECT/OUEHT, to create a single entity that will remain listed on SGX. The proposed merger is expected to be DPU accretive...

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E-commerce: threat to physical retail?

In this series Ecommerce is a double-edged sword in Vietnam. Brands are engaging directlywith consumers in a way not possible 10-15 years ago and the transition from physical to online shopping is inevitable. But poor infrastructure, slow deliveries and limited avenues to access goods are impeding online growth. Instead, better information is driving consumers to shopping malls for their retail fix. The e-tailing market is poised to double to US$2bn by 2022. Against a US$143bn retail industry that is growing 10-12% YoY, UBS thinks the market can support the growth ambitions of both ecommerce and physical retail formats. The...

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Trade war: Where will China production move to?

82% of companies already have or plan to relocate away from China UBS Evidence Lab surveyed 450 C-suite executives in Taiwan, Korea and Japan. 82% of firms in the survey said they had already or intend to move some of their production from China. “Going home” more likely for Taiwan and Japan, than Korea More than 55% of respondents in Taiwan and Japan said they intend to relocate back home, but only 36% of Korean companies plan to do so. UBS thinks this reflects the relatively smaller run-up in wage costs in Taiwan and Japan in recent years. While...

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Home prices up 7.9% in 2018

Quoting the Urban Redevelopment Authority’s (URA) fourth quarter 2018 housing statistics, Morgan Stanley reports that unsold inventory rose, but they think it is temporary. While vacancies fell faster than they expected, it did not translate into higher rents. Home prices fell 0.1% QoQ in 4Q18. The fall in home prices on a quarterly basis is unchanged following an earlier release on 2 Jan 2019. Non-landed suburb and city fringe prices grew 1% and 2% respectively, in the quarter. Full year 2018 home prices growth was 7.9% and Morgan Stanley thinks it can grow another 5% in 2019 Unsold inventory rose. Unsold...

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Capitaland investor day takeaways

Morgan Stanley hosted CEO Mr Lee Chee Koon and senior managers for an investor meeting. Key takeaways CapitaLand is working towards double-digit ROE from current 8% Leveraging on technology to improve productivity and tenant connectivity across mall, office and serviced residence properties Optimistic on Vietnam with contributions rising to S$100m by 2020 Pearl Bank Apartment and Sengkang Central launching in 2019 Steady growth in Ascott ROE targets CapitaLand exceeded their 8% ROE target in 2017 and aims to do so again this year. ROE therefore remains the primary focus of the group, with a double-digit target over the long...

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

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...

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Property market company and economic news update

Singapore’s 3Q18 GDP grew at a slower 2.2% pace, below economists’ expectations of 2.4%, as the manufacturing and services sectors disappointed. The growth figure was also revised downwards from advance estimates of 2.6% and was lower than the 4.1% growth in 2Q18. Manufacturing grew 3.5% in 3Q18, moderating from 10.7% in 2Q18, while services expanded by 2.4% (2Q18: 2.8%). Construction continued its contraction, falling by 2.3% (2Q18:-4.2%). The Ministry of Trade and Industry (MTI) is projecting that the economy will grow by 1.5 – 3.5% in 2019 (2018: 3.0 – 3.5%), with the main growth driver to shift from...

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Co-working no longer a new, niche sub-sector

Co-working is not just a new, niche sub-sector. Its rise is a reflection of a changing world of employment, writes Christopher O’Dea “The nature of work is changing. Recruitment, retention, innovation, and productivity now require not just coffee, but also yoga, not just printers, but also art installations.” The above is taken from the homepage of WeWork’s website. The core appeal of co-working is simple: let us handle that for you – front-office reception, utilities, and all the chores related to maintaining office space – so you can focus on your business. The popularity of flexible office concepts in...

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JPMorgan to open world’s largest RE fund

According to PERE, JPMorgan Asset Management will be welcoming foreign investors for the first time in its flagship real estate fund, the JP Morgan Strategic Property Fund (SPF). SPF currently has a net asset value of approximately $33b and gross asset value of approximately $43b. The fund is the largest commingled real estate fund, beating rivals in the NCREIF Fund Index – Open-end Diversified Core Equity Index. For example, PGIM Real estate’s PRISA I had a NAV of $19.7b and GAV of $24.5b as of Dec 31, according to an April presentation to the Bay County Employee’s Retirement System....

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Asia Pacific hotel transactions declining as activity becomes constrained

In a report by CBRE on third quarter 2018 hotel activity, investment transaction volume was observed to decline as activity was constrained by lack of stock for sale. In summary Korea investment activity recovered as several mid-range hotels change hands amid heightened interest from local and foreign investors Both local and foreign investors see Thailand as an interesting investment destination Shortage of assets for sale in Japan resulted in few small and medium related party deals Quality assets remain tightly held in Hong Kong, resulting in few transactions Sentiment is strengthening in Singapore as hotel performance came in solidly...

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Real interest rates and property yields [CBRE report]

Long term interest rates are a key driver of property prices, and a recent report by CBRE in Sept 2018 show a close relationship between real interest rates and property yields. In the report, the authors claim that concerns about rising real and nominal long-term interest rates are overblown. Increase in rates will likely be below the consensus of economic forecasters and they will level off well below pre-GFC levels. Noting a downward trend in property yields for the US since the mid-1990’s, the fall has been closely liked to the fall in real interest rates. CBRE makes a...

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Increasing allocations to real estate by institutional investors

In the 2018 institutional real estate allocations monitor by Hodes Weill Associates, target allocations to real estate in institutional portfolios continue climbing in 2018. Rising from 8.9% of a weighted allocation in investors’ portfolio, the 2018 figure is now 10.4%, suggesting an increasing attractiveness of the real estate asset class to investors. In the survey, 208 institutions from 209 countries representing US$11 trillion of assets are asked about their target and projected allocations. The survey provides an estimation of the quantum and directional trend of investable capital. Also read: Twenty Anson purchase by Capitaland In the same vein as...

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Blog: How to upgrade from your HDB to a executive condominium (EC)?

Rivercove Residences balloting day In this blog series, we invite real estate industry professionals to share their personal experiences. Names and identifying details have been changed to protect the privacy of individuals. In December 2017, I received an enquiry from a client by the name of Claire. She and her husband had just met their 5 year minimum occupancy (HDB) at their HDB in Fernvale and wanted to upgrade from their HDB to a condo. Eventually after much deliberation, they decided to try for Rivercove Residences. In the context of Singapore public housing, an executive condominium caters to a...

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5 reasons why the upcoming 2019 Punggol EC on Sumang Link will be another sell-out

Sumang Link EC is near the Punggol Waterway Sumang Link EC Land Parcel details The top bid of S$509.37 million for the Sumang Link EC site was won by City Development (CDL) and TID Residential. This works out to a record S$583 per square foot per plot ratio, which translates to a selling price of above S$1,000 per square foot. Launching in 2019, it is likely to be the only executive condominium (EC) to be launching in 2019. We explain the 5 reasons why it will be another sell-out like Rivercove Residences, which was fully sold out in a...

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Blog: Can divorcees purchase BTO/executive condominium (EC)?

Can divorcess get an EC/BTO? In this blog series, we invite real estate industry professionals to share their personal experiences. Names and identifying details have been changed to protect the privacy of individuals. As a real estate agent, I face different client scenarios daily. I had a client by the name of Ms C, who approached me in January 2017. She was initially rather secretive at first but after much follow up, she revealed that she is going through a divorce and has intention to sell her share of her current HDB flat to her ex-spouse. At that point...

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