Living in the City is Catching On

29 August 2012
City living is taking off, with thousands of new apartments downtown and thousands more in the pipeline. One key factor is the exponential growth of office space in the Central Business District (CBD) – specifically the Marina Bay, Shenton Way, Cecil Street and Robinson Road areas.
CBRE said office space in these areas has jumped 38 per cent to 17 million sq ft over the last five years and that demand for homes is likely to spike in tandem.

Moreover, another 1.425 million sq ft of office space is expected to be completed by 2015, which will likely bring another 16,000 professionals to work there. This increase will fuel demand for more homes, especially after the Government's push to cultivate an area where professionals can "live, work and play".

Housing stock is set to grow sharply from the 3,000 to 3,500 completed apartments now, with an estimated 17,000 people already living in the area. Already, a further 3,400 homes are expected to be built in the city from now to 2018, CBRE noted. Ever since the 646-unit Icon and mega 1,111-unit The Sail @ Marina Bay were completed about four years ago, new residential projects such as One Shenton and Marina Bay Residences have mushroomed in the district.

Newer projects such as Eon Shenton, V on Shenton and Marina One, which are all still under construction, have followed. And both investors and tenants seem to have remained keen on the area, with recently launched projects seeing positive interest. The 510-unit V on Shenton, for example, moved 144 units at a median price of $2,061 per sq ft (psf) when launched last month.

Median rents at the existing projects in Marina Bay and Shenton Way have risen from $5.50 psf in the third quarter of 2010 to $6 psf in the first three months of the year. For instance, rents at The Sail are $6.09 psf, up from $5.99 psf in the fourth quarter of last year. They are also 43 per cent higher since the project's completion, CBRE noted. Rental yields are holding their own despite the plentiful supply of high-end projects – both in the prime districts of 9, 10 and 11 and the CBD. Square Foot Research's data found that yields at the Icon near Tanjong Pagar MRT station were about 4.6 per cent in the second quarter, The Clift in McCallum Street pulled in 4 per cent and The Sail @ Marina Bay, 3.5 per cent.

Yields at Marina Bay Residences, however, were lower at 2.7 per cent while those at One Shenton were 2.95 per cent. Mr Joseph Tan, CBRE's executive director of residential, sees plenty of opportunity for the substantial uptake of Grade A office space to support city living and the many retail, hotel and food and beverage (F&B) outlets sprouting up in the area. "The buzz of leasing activity in Marina Bay has filtered to the fringes along Shenton Way/ Cecil Street/ Robinson Road, rejuvenating the area beyond the traditional office hours," he added.

"F&B outlets and retail and hotel establishments being planned will ensure that life in the CBD carries on well into the night." But CBRE noted that there are still 786 unsold apartments in the CBD in total, in both completed and uncompleted projects such as Skysuites @ Anson, Marina Bay Suites and Altez.

HSR Property Group special adviser Donald Han said that this is not of concern as developers could be deliberately holding back units as they expect demand, and hence prices, to continue rising. "Developers could be waiting for an uptick in the luxury end of the market and might consider holding them to completion or even leasing them out after. "Rental demand is still quite strong, especially for the one- and two-bedder units for expats who work in the area," he added.

Mr Neo H. H., 26, who works in the financial industry, is one of the tenants at a three-bedder unit at The Sail. The apartment has a monthly rent of about $6,500. Its proximity to his office at One Raffles Quay is the main reason for his choice to live in the CBD, although the rent has been raised by about $100 this year.


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Source: The Straits Times © Singapore Press Holdings Ltd.