http://www.businesstimes.com.sg/arch...stors-20140813

Published August 13, 2014

NATIONAL REAL ESTATE CONGRESS

Office, retail segments to lure investors

Affordable capital values among many pull factors for commercial property

By Lynette Khoo

[email protected] @LynetteKhooBT


LED by rising rents and limited supply in the near-term, investment activities are expected to hold up for office and retail space. The absence of additional buyer's stamp duty (ABSD) and seller's stamp duty (SSD) in the commercial space is also making this segment more appealing to investors.

Knight Frank executive director Mary Sai noted that the Singapore retail and office markets are among top picks in Asia for foreign investors, who face heftier ABSD than locals in the residential market.

"Robust economic growth, stable government, low unemployment, strength of Singapore dollars, are some compelling pull factors for foreign investors in our commercial properties," she said at the National Real Estate Congress yesterday.

"Another reason why people move over to commercial property is because the absolute sum of capital to be paid is affordable," Ms Sai added, citing the example of Alexandra Central, which had 43 per cent of transactions below S$1 million. The project that was launched in January last year had 98.3 per cent of strata-titled retail space sold out within one day.

Developers are also increasingly moving into mixed-developments and making strata-titled units small enough to be affordable to retail investors, Ms Sai said.

Strata-titled office transactions have started recovering in the first half of this year, with transactions rising to 248 from 204 in the second half of 2013, according to data from Knight Frank. But new sales saw average pricing slip further to S$2,331 psf from S$2,957 psf.

Meanwhile, strata-titled retail transactions fell to 196 in the first half from 416 transactions in H2 2013, with average price for new sales dipping to S$4,248 per sq ft from S$4,345 psf.

Also speaking at yesterday's event, JLL regional director for investments Tan Hong Boon noted that limited supply will continue to drive investment activities of more than S$5 million in the retail and office segments in the near-term. But the rise in capital values will be limited due to price resistance from buyers.

Last year, funds/Reits made up 80 per cent of investment sales in the retail space, while private investors accounted for 16 per cent. As for the office segment, developers made up 45 per cent of investment sales while funds/Reits made up 33 per cent.

The annual real estate forum was co-organised by SAEA, The Singapore Institute of Surveyors and Valuers (SISV), and FIABCI Singapore, and, this time, in collaboration with STProperty.sg.