Boston, MA -- (ReleaseWire) -- 03/12/2014 -- We believe that the Singaporean commercial real estate sector will continue to show solid growth in the long term, boosted by the country's strong fundamentals, including its stable business environment, status as a global financial hub and mature REITs market. However, in the short term we highlight increased investor caution in the sector in light both of the government's attempts to curb growth in the residential market and fears of interest rate rises.
- Frasers Centrepoint Ltd, the spun-off property division of Fraser and Neave, listed on the Singapore Stock Exchange. According to the stock exchange, Frasers Centrepoint is 'focused on residential, commercial and hospitality property spanning 19 countries across Asia, Australiasia, Europe and the Middle East'.
- In January 2014 it was reported that CapitaLand, together with CapitaMalls Asia and CapitalMall Trust, were to sell the Westgate Tower. The buyers are Sun Venture Homes Pte Ltd and Lowe Keng Huat (Singapore) Ltd.
- Asia Real Estate Income Fund is selling its TripleOne Somerset mixed-use office and retail tower to a consortium led by Perennial Real Estate Holdings. TripleOne is near Orchard Road, a major shopping area.
- In an overseas development, it was announced in November 2013 that CapitaMalls Asia planned to buy a shopping mall in the major city of Guangzhou, China.
- Viva Industrial Trust listed in Singapore. It has a portfolio of business parks and other industrial property. It reportedly raised around SGD463mn in gross proceeds, according to Reuters, which will, among other things, be used to expand Viva's portfolio.
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BMI Key Forecasts
- Our forecasts are unchanged, as we continue to see long-term strength in the market. We are awaiting more concrete near-term data before revisiting our own figures, which hold good for the short term.
- We are forecasting an increase in office rents of 5% in the short term, ranging between SGD73 and SGD132 per square metre per month, with yields rising to 6% by 2015 and remaining stable for the rest of our forecast period, to 2017.
- We forecast flat growth in retail real estate in the short term, ranging from SGD212.50 to SGD323.50 per square metre per month. Likewise, yields will remain stable, around 5% over our forecast period to 2017.
- We see industrial rents ranging from SGD21 to SGD42.40 per square metre per month at the top and bottom of the market in the short term. However, we see yields rising to 5% by 2015, and then remaining stable over the rest of the forecast period.
- Singapore is in seventh place in BMI's Asia Real Estate Risk/Reward Ratings (RRRs), with a score of 64.5 out of 100, a small drop from 65.2 last quarter. The country's status as a regional hub, low-tax regime and regulatory framework mean it offers significant opportunities.
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