Retail Rents are Expected to Fall Sharply with Rising Vacancies in the Malls

Not all businesses could sustain the tough phase of a pandemic. Many of them closed the door and moved to some other world by leaving the business industry. You can now see so many vacancies in the big malls where shop owners left their work due to extensive loss during the extended lockdown.


As people around the world are keen about following social distancing protocols, people have stopped to explore the malls anymore. It was a big business cycle breaker incident for the small businesses, and they are now failing to work at full capacity.

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The government restricts private housing supply that belongs to confirmed land sale sites because of COVID-19 fallout

The Ministry of National Development (MND) stated that the supply of residential housing that belonged to the government land sales (GLS) program for the last 6 months of 2020 has been curbed because of the fallout from the global COVID-19 pandemic.

A total of 1,370 units of private home supply from the three confirmed units is around 23% lesser (405 units) than the 1,775 units that were allotted from such sites during the first half of this year.

If statistics are to be believed, this is the lowest number that has been ever recorded since the second half of the global financial crisis of 2009 when no confirmed lists for the sites were released. The current confirmed list comprises of an executive condominium site that alone is capable of yielding 615 units.

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Lower investment property sales in first 6 months of 2020

Yesterday’s report showed that during the pandemic, investment property sales declined in the first half, although the market showed signs of stabilization in the second quarter.


According to preliminary data compiled by Cushman & Wakefield, total investment sales for the six months to Tuesday were $ 6.13 billion, down 45% from $ 11.24 billion in the year-ago period.


The investment in the first three months of this year was US $ 3.07 billion, more than a third lower than in the fourth quarter of last year, but Q2 sales volume remained stable, with total sales of US $ 3 .06 billion.


Christine Li, head of research in Singapore and Southeast Asia at Cushman & Wakefield, said, “With a lack of catalysts, market sentiment is expected to remain sluggish and sales are unlikely to increase significantly in the next 6 months of the year.”


Ms. Li predicts that investment turnover will be between $ 12-15 billion this year. However, if the participant supports the merger between CapitaLand Commercial Trust and CapitaLand Mall Trust, he will increase the total treasury for the year by $ 10 billion to $ 22 billion to $ 25 billion. By comparison, last year it was $ 32.87 billion.


Cushman & Wakefield said the second-quarter investment market was driven by large-scale commercial transactions, and the total value of transactions increased to $ 2.02 billion, more than ten times than the first quarter. The transaction sales was at $183.4 million then. The commercial sector accounts for 66% of total investment sales. The biggest transaction this quarter was the 50% purchase of AXA Tower by leading e-commerce company, Alibaba Group, which valued the property at $ 1.68 billion.


Perennial sold its 30% stake in TripleOne Somerset to Sind Group for $ 155.1 million, while Olaya Group acquired the retail and banking division of 30 Raffles Place, the former Chevron Building, for $ 315 million. Much of the investment for the quarter came from the merger of Frasers Logistics Trust and Frasers Commercial Trust,. In tital, they are accounted for about 41% of the total sales which is equivalent to $ 1.25 billion.


The $ 1.25 billion transaction includes the $ 648 million (commercial) China Plaza Central transaction and the Alexandra Technology Park (industrial) transaction $ 606 million. This resulted in industrial sales of $ 701.3 million in the second quarter, slightly higher than the $ 661.4 million in the first quarter.


Without Alexandra Technology Park, industrial revenue would drop to $ 95.3 million. In the second quarter, land sales by the government were not closed, meaning home sales fell 85% from $ 2.02 billion in the previous three months to $ 305.4 million. While buyers waited to see prices drop further, there was no deal in the hotel industry.


Kushman said that uncertainties about how long the Covid-19 crisis will last and when the tourism industry returns to pre-pandemic levels may have led to a large number of hoteliers looking to leave the field, concluding in the coming quarters can trigger some transactions.


The Executive Director of Capital Markets Mr. Shaun Poh, added: “In the ensuing power outage period and economic recession, some owners might have to sell their assets to free up liquidity”.




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Mortgage refinancing increases as interest rates fall

The interest rates for floating home loans have reached the lowest this year and as a result of which, more and more homeowners are considering the recourse of refinancing their mortgage.

Several banks in Singapore have decided to slash down their interest rates on loans that correspond to the Singapore interbank offered rate thereby, furnishing homeowners with a chance to subscribe to more advantageous rates. For the uninitiated, the rate at which all banks borrow from one another is known as Sibor rates and presently, they are declining; courtesy, the disruption caused by the coronavirus pandemic.

In May 2019, the Sibor rates stood at its highest (2%) since the 2008 global financial crisis. However, the three-month Sibor which happens to be the most reliable benchmark for pricing most home loans is around 0.56% this month.

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New private home sales witness an increase regardless of the limitations posed by the virus

Although Singapore was going through its COVID-19 circuit breaker during April and May, interestingly, the sales of new private homes went up last month.


As per the figures put forward by sales caveats, Knight Frank Singapore, the developers sold 484 new private homes in May. This is about 74.7% more than the 277 private homes that were marketed in April. Knight Frank also clarified that around 967 caveats for private homes were registered during the period of April 7 to June 1. Out of these, 380 units were categorized under resale transactions and 577 for new sales, whereas only 10 were assigned for sub-sales.

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