Benefitting from business relocations and investment diversion amid heightened uncertainties and the global slowdown, Singapore appears to be more appealing as an investment safe haven. This has resulted in commercial asset prices staying elevated. As such, for the period of September 2019 to February 2020, DC rates for Use Group A (Commercial) increased, while those for Use Group B2 (Residential, non-landed) decreased. The DC rates for other use groups remained unchanged.
The Commercial DC rates for Sector 100 (Tampines Road / Hougang / Punggol / Sengkang area) and Sector 105 (Ang Mo Ang Mo Kio / Yio Chu Kang / Seletar area) increased the most at 7%. This was attributed to the sales of Rivervale Mall and Waterway Point in Sector 100, which led to a spillover effect in the adjacent Sector 105.
In March 2019, SC Capital Partners purchased Rivervale Mall in Sengkang from AEW for $230.0 million or $2,833 psf. This marked an increase in capital value of almost $40 million within 3 years, after AEW bought the mall from CapitaLand Mall Trust in 2015 for $190.5 million. In May 2019, Frasers Centrepoint Trust acquired a 33% stake in Waterway Point in Punggol from its sponsor Frasers Property for $440.6 million or $3,502 psf. Suburban malls are projected to continue posting robust growth in capital values as the strong performance of well-managed retail spaces in choice locations continue to attract demand from retailers.
The non-landed Residential DC rate for Sector 112 (Pan-Island Expressway / Bukit Batok East Avenue 6 / Upper Bukit Timah Road / Clementi Road / West Coast Highway / Penjuru Road / Jalan Buroh / Jurong East Area) decreased the most at 7%. The reduction was due to the Clementi Avenue 1 GLS site sale which was awarded in July 2019 to UOL and UIC at $491.3 million or $788 psf ppr. The decrease in the DC rate could spur some interest in the private land en bloc in the west, as developer sales are holding up well, although the overall economic environment remains cautious.
Head of Research, SEA
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