The recent huge Singapore workplace sales – Asia Sq . Tower you for S$3. 38 billion and Straits Trading Building for S$560 million – have sparked much-needed news in the property or home investment product sales circuit. More than just big money, what excited the marketplace was that the buyers will be high-profile traders with long lasting investment course.
Several workplace owners have experienced a surge in curiosity from audience and have utilized the opportunity to introduce their complexes for sale — such as seventy seven Robinson Highway and 110 Robinson Road. A fund managed by Alpha Investment Partners is said to be on the verge of granting exclusivity to ARA Asset Management for doing due diligence for the purchase of its half-stake in Capital Square.
Asia Square Tower 1 was bought by sovereign wealth fund (SWF) Qatar Investment Authority. Indonesian tycoon and philanthropist Tahir (through listed MYP) is buying Straits Trading Building along Battery Road. The profiles of these two buyers typify the type of big money said to be making its way to the Singapore office market: investors taking a strategic long-term view on the island-state.
Unlike traditional institutional investors such as property funds and insurance companies, some SWFs and ultra high networth individuals or their family offices from around the world may not be fettered by pressures to meet short-term investment hurdle rates.
In an uncertain world, what these big, long-term investors are seeking is capital safety. Private wealth may be eager to diversify from the traditional playgrounds, where there may be an underlying nervousness on the political and economic fronts.
Investors have traditionally seen Singapore as a relatively safe place to park funds with very little currency risk.
Such buyers may be willing to accept very much thinner property or home yields inside the Singapore workplace market — especially during a period when a large number of developed financial systems are seeing destructive interest rates for the purpose of benchmark govt bonds.
“Brexit” could take circumstances to a new level. High networth individuals’ funds parked working in london are seen to get in search for the new house and Singapore is said to be a favoured area.
The Asia Square and Straits Trading Building bargains already mirror a compression of Singapore office property or home yields — and another compression could possibly be possible if perhaps this trend of huge investors go to Singapore. These types of players can be looking at offer sizes of over S$100 million or above S$500 million, regarding to some marketplace watchers.
Although not any-ol’ workplace will get the purchase price its owner dreams of attractive.
Although spouse and children offices and SWFs currently have a longer-term horizon, they can still want to park their very own monies in good-quality properties in the CENTRAL BUSINESS DISTRICT with eco friendly rental profits streams — properties the values which are likely to enjoy in due course.
Certainly, Google is going to move out soon after this year from Asia Square Tower 1 when its lease for about 130, 000 sq ft expires. However , the Grade A spec building in Marina View, completed in 2011, still has a strong attraction for top-notch companies – at the right rental level of course. It has the US Green Building Council’s Management in Strength & Environment Core & Shell Platinum eagle certification.
Concerning Straits Trading Building, the present 28-storey tower system was designed in 2009, being a redevelopment of this original 21-storey block on the website that was built in 72. It has a sound anchor renter in Rajah & Nadelwald; its lease contract still has whilst more going.
What prospective would a wave of massive money present for some of Singapore’s significant office property owners?
Well, a decrease in cap prices for workplace properties thus an increase in workplace prices will make it difficult for the purpose of office Reits (real real estate investment trusts) to make yield-accretive acquisitions on the island of st. kitts.
On a great note, it will be a great time for the Reits to sell off any office blocks they may be thinking of disposing of.
To their credit, Reits do a good job of doing asset enhancement works and keeping their property portfolios in tip-top shape – all done with the goal of maximising rental income and distributions to unitholders of course.
However , owners of older office blocks – including City Developments and United Industrial Corporation (which contains Singapore Land) – may need to upgrade some of their ageing buildings to keep up-to-date with the latest Grade A office specifications and green building standards – notwithstanding the fact that many of these buildings are in ultra-prime locations in the old Raffles Place financial district.
Even trusty old tenants in these properties will potentially be attracted to some of the modern office trends in a journey to top quality. A case in point is the Bank of Tokyo-Mitsubishi UFJ (BTMU), the anchor renter of Republic Plaza; they have made an organized decision to never renew their lease for approximately 150, 500 sq feet that it takes up at Republic Plaza, which can be due in mid-2017.
What some of these “grande dames” can do can be described as makeover — to ensure they will even have a go at holding onto tenants with leases on with renewal, among the competition via a substantial completing new work place in the next a year.
Sprucing up and achieving a new rental of life is what CapitaLand Commercial Trust (CCT) did for Six Battery Road from 2010 to 2013. CCT tied in the upgrading of interior office spaces with the organic lease expiry profile. The stage-by-stage spruce-up of the 42-storey building resulted in, among other things, the ceiling height for the building’s office floors raised by 20 cm to 2 . 8 metres. And for its several environmentally-friendly features, the building clinched the Building and Construction Authority’s Green Tag Platinum award, the first time an operating office building here received the top Green Mark accolade.
In some cases, it might make sense to get landlords to tear down an obsolescent building and build a modern office tower on the site.
Given the interest sparked by the two recent large office transactions, the picture looks arranged for more mega sales.