Office and retail sector seen as better bet

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http://www.businesstimes.com.sg/sub/...72740,00.html?

Published June 22, 2011

Office and retail sector seen as better bet


WITH rapid economic growth, office and retail development is the next sector to watch, said Justin Chiu, executive director of Cheung Kong Holdings Limited, Hong Kong.

Speaking during a panel discussion at the Real Estate Investment World Asia conference on repositioning for the next wave of development and acquisition opportunities, Mr Chiu also pointed out that the office and retail market is less likely to be subject to political intervention, compared to the housing market which governments are trying to stabilise.

High liquidity levels coupled with low interest rates have increased property prices, prompting governments to introduce cooling measures before prices rise beyond sustainable levels.

The changing regulatory environment limits the property choices of investors and makes it more expensive. In addition, higher interest rates and stamp duties discourage investors by wiping out their gains.

In the retail and office space sector, however, the outlook is a little different. 'In Asia, where the economy is improving, demand for commercial space will also increase,' said Chong Siak Ching, president and chief executive officer of Ascendas Pte Ltd.

As companies expand in Singapore's business and services sector, local Grade A office supply should keep pace with the anticipated take up of offices, reported Savills.

Pointing out the omission of India in Savills' Asia Pacific Real Estate Investment Country Guides for the second half of 2011, Ms Chong highlighted the potential of India's young population, and added that Ascendas has made more money in India than in China.

According to Savills, China is a vast property market, accounting for 43 per cent of all global property transactions in the first quarter of this year. Companies are also looking to take up more space for expansion purposes in Beijing, which will induce a strong demand in coming years.

However, group chief executive officer of MGPA, Simon Treacy, warns of the dying down of the boom in China and India.

Mr Treacy also said that liquidity will tighten with the market becoming more like Europe, where it is less opportunistic and more domestic.

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http://www.straitstimes.com/Money/St...ry_682839.html

Jun 23, 2011

Commercial property gaining favour

Investors deterred by Asian govts' moves to cool housing markets

By Esther Teo, Property Reporter


Cheung Kong's newest project, Thomson Grand in Upper Thomson, will have 339 apartments and 22 strata-titled terraced units. -- PHOTO: CHEUNG KONG HOLDINGS

THE heavy hand of the government in some Asian housing markets has made commercial property look more attractive, Cheung Kong Holdings executive director Justin Chiu said yesterday.

Governments in countries like Malaysia, Singapore and China have already introduced measures to cool the housing market, which they are 'bound to do' when it gets too heated, he said.

'So of course if you're talking about short-term investment, then the commercial sector should perform better because it is more or less policy-free to a certain extent,' Mr Chiu added.

Even if the office market gets too hot, the Government intervenes by releasing more land, rather than putting a cap on land prices or rents, he said. While he expects housing markets to cool, however, he does not foresee a collapse.

The senior executive added that home prices here might also fall by up to 6 per cent should interest rates rise.

'In Singapore, because the Government has always been paying attention to the housing market, I would say the fluctuations would be much smaller, in the single-digit range,' he said, adding that sale volumes have already fallen.

If the 'market gets very hot, or if prices run again', then additional measures here will not be surprising, Mr Chiu said.

He was speaking at the unveiling of Cheung Kong's newest project, Thomson Grand in Upper Thomson, which will have 339 apartments and 22 strata-titled terraced units. The apartments will be priced at an average of $1,400 per sq ft for the initial launch of about 50 units next month. The prices of the terraced homes have not been finalised.

Mr Chiu stressed, however, that Hong Kong-based Cheung Kong will continue looking across all property sectors here - apart from the industrial sector - for good opportunities.

Cheung Kong Real Estate director Francis Wong added that good-quality residential sites and larger commercial projects in prime locations are preferred, as the company's relatively small size here compels it to be selective.

But as a foreign developer, smaller projects are unsuitable as they would mean higher overheads, making the project economically unsound.

Instead, commercial sites of about 1 million sq ft of gross floor area - such as the Tanjong Pagar mixed-use site recently won by Guocoland - and niche residential projects are more ideal.

Commercial sites near the Marina Bay Financial Centre - which Cheung Kong jointly developed with Keppel Land and Hong Kong Land - are also preferred, as they are in an area the company is already familiar with, Mr Chiu said.

But mass-market homes are not on the cards despite the Government's recent bumper release of suburban sites. 'We don't want to compete in the mass market with the local developers who have been doing a very good job in supplying such homes on a steady basis. We don't want to, and I think we cannot, compete with them,' he added.

Thomson Grand will feature larger-size apartments of from 904 sq ft to 2,314 sq ft, while its landed terraces will be up to 6,566 sq ft in size.

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