Tag Archives: Marina Bay

Marina Bay taking on residential tone

Experts say restrained prices mean deals there will pay off in the long term.

THE appeal of living near the Central Business District (CBD) will get a major test next weekend with the launch of the 1,042-unit Marina One Residences.

The area, best known as a fast-growing office centre, is shaping up as a significant residential precinct as well.

And while rents in the vicinity have fallen over the past year, investors may find the area a good buy now that cooling measures have restrained overly high prices, consultants say.

Marina One Residences – with one-, two-, three- and four-bedders – is part of the larger Marina One development, also including Marina One offices and The Heart, a retail podium set around a 65,000 sq ft park.

Developer M+S said it is looking to price Marina One at an average of $2,600 per sq ft (psf).

“We believe that there will always be discerning buyers who will seize a good investment opportunity as long as a development offers quality attributes – even through the peaks and troughs of the market,” said M+S chief operating officer Kemmy Tan.

Marina One Residences is one of the rare CBD residential developments with a freehold title, said OrangeTee senior research analyst Wong Xian Yang.

“Given current market conditions, its initial selling price may crowd out a considerable group of potential buyers… (But) in the longer term, Marina One will likely see more active deals due to its advantageous location and good designs, which are highly valued by busy owners and tenants.”

Nearby project V on Shenton, launched in August 2012, sold 354 of 510 units as at the end of July.

In the past year, average resale prices in the area ranged from $1,945 psf at three-year-old One Shenton to $2,694 psf at one-year-old Marina Bay Suites.

On average, resale prices fell by about 8 per cent in the past year, said R’ST Research director Ong Kah Seng. A major reason for the fall is weakening leasing demand by expatriates, he said. “(They) have more or less decentralised to the city fringes to save on accommodation costs, as most companies have been strict in their housing allowances.”

However, he said, investors, especially those owning small units in the area, can expect keen leasing interest from mid- to senior-level expats who may still want a conveniently located property.

With cooling measures such as the total debt servicing ratio (TDSR) framework, buyers may now find properties here at attractive prices, which could “allow them to have a share of future price appreciation or recovery”, Mr Ong added.

“Prior to the TDSR, however, most locality upsides and rejuvenation plans were quickly priced in by owners and developers.”

In the past year, average rents in the area ranged from $4.40 psf a month at Marina Bay Suites to $8.10 psf a month at three-year-old The Clift.

While rents have fallen by an average of 6 per cent over the past year, this is in line with weakening leasing conditions islandwide, especially rents of high-end residential properties, said Mr Ong.

But the investment outlook is promising beyond the short term, said Mr Wong.

Better infrastructure is expected in the next few years, such as the Thomson-East Coast Line which will be linked to Marina Bay MRT station.

“The precinct’s unique setting and high accessibility will appeal to people working in the CBD who have tight daily schedules. Barring any major deterioration in the global economy, the rental market should also see good support in tandem with the maturation of adjacent office properties,” said Mr Wong.

Singapore’s office rental market expected to go up

Singapore’s office rental market is on the rebound after bottoming out in the last quarter of 2012, according to Cushman & Wakefield.

In its quarterly office market report, the real estate firm said rents are on the rise and vacancies are drying up, though not all office buildings are sharing the comeback.

Cushman & Wakefield’s latest office market report showed that the average rent in prime Grade A locations was up 4.2 per cent in the second quarter, from a quarter earlier, hitting S$9.03 a square foot per month.

That was up from S$8.99 per square foot per month in the first quarter of this year.

Sigrid Zialcita, managing director of research for the Asia Pacific at Cushman & Wakefield, said: “We are expecting rents to go up across the board on the back of very solid demand.

“We’re not going to see the spikes we’ve seen in the 2007-2008 time frame, where rents went as high as S$18-S$19 a foot.”

The report showed that all the CBD submarkets saw average rents appreciate, with Marina Bay and Shenton Way seeing a 9 per cent rise in rents. In the fringe area, Orchard Road’s average rents moved up by around 4.6 per cent quarter-on-quarter.

The average rent in the suburban submarket rose slightly — by 1.3 per cent quarter-on-quarter — to S$5.64 psf per month.

Vacancy rates for Grade A office space is also improving — dropping to 3.7 per cent in the second quarter from 5.0 per cent in the first quarter.

Vacancies at Marina Bay shrank to 3.6 per cent in Q2, from 5.6 per cent a quarter ago and 12.1 per cent a year ago. Raffles Place had an overall vacancy rate of 5.5 per cent, while Shenton Way’s vacancy rate stood at 4.9 per cent.

Experts said diversity in the tenant pool has helped fill the office space.

“Long gone are purely financial institutions,” said Desmond Sim, associate director of CBRE Research. “You have complimentary services like insurance, you’ve got legal all coming in to take up Grade A stock within Marina Bay and Raffles Place.”

Also helping the office rental market is the limited new supply coming to the market.

Mr Sim said: “This year, we have the Asia Square Tower II coming on stream. Next year, we have CapitaGreen that will come on stream. Then we actually have a break of no Grade A product coming in 2015.

“So if someone is trying to take advantage of the current low Grade A rents, they might realize the Grade A stock coming online is quite limited.”

One place where vacancies are not falling is in the suburbs, where vacancies are expected to rise to over 8 per cent through 2014.

The suburban vacancy rate was 2.7 per cent in 2012, and is expected to rise to 6.0 per cent this year and hit 8.2 per cent in 2014.

Sigrid Zialcita said: “In the suburbs, we’re going to see some massive projects delivered and add space, but again we don’t think it’s a huge concern for the market because the take up we’ve seen has been brisk, and going forward we see very healthy leasing occurring in this properties.”

There will be more options, but not necessarily better prices, as experts said despite rising vacancies, rental rates in the suburbs will remain stable at around S$5.50 per square foot this year to 2014.

Source – CNA – 26 Jun 2013