The commercial real estate investment market in Singapore was being perked up in the second quarter 2019 which coincide with a drop of few strata deals in the cumulative tally for the earlier quarter. Commercial office building Tampines Grande 7 and 9 was transacted in early April at $395 million and thereafter Realty Centre deal was closed a few days later at $148 million. When Realty Centre collective sales was successfully closed, it was the first commercial collective sales inked in the year and because of the successful deal of this commercial real estate, it fuels hopes that the commercial collective sales market is chugging along despite the muted sentiments in the overall economy.
Another commercial office building transaction occurred when Oxley Holdings has entered into a deal to sell Chevron House for $1.03 billion, testing the capital value threshold of commercial properties. Another few office real estate to watch out for are Anson House, 139 Cecil Street and possibly Frasers Tower which will possibly next in line. The market has deemed that the momentum of commercial development sales will remain steady for whatever the reasons for selling commercial properties. 2019 draft Master Plan has indeed put forth a recommendation to rejuvenate the CBD which has certainly created some buzz in the commercial market.
In addition the Government has recently announce a Central Business District Incentive Scheme to benefit office developments. Such incentive schemes offer an increase in gross plot ratio to encourage the conversion of existing office developments to hotel and residential uses which could be beneficial for many office developments facing challenges when it comes to land use zoning. Without the increase in the plot ratio, it does not make sense for land owners to downgrade to those development options as residential and hotel uses typically have a lower capital value. For developers to look at various development options, it will make more commercial sense if the CBD Incentive Scheme is approved.
The lure of hospitality prevails as property owners continue to weigh hotel conversions against higher development charges (DC) for hotel use. Ascott Raffles Place Singapore was sold for $353.3 million while Waterloo Apartments was sold to a subsidiary of Fragrance Group through a collective sale of $131.1 million. Also Golden Wall Centre for was sold at $276.2 million to the owners of Hotel 81 bought.
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