New curbs could benefit office, retail space

20130115-bt-new-curb-benefit-office-retail-pic [SINGAPORE] The commercial property sector could benefit from the latest cooling measures, analysts believe, as investors look for alternative places to park their money.

The residential market bore the brunt of the latest moves by the Government to curb buoyant prices and demand, with measures that affect all residential properties as well as those specific to public housing and the hybrid executive condominium (EC) market that mostly took effect from Saturday.

As for the industrial sector, a Seller's Stamp Duty has been put in place for the first time.

Said Chua Chor Hoon, head of APAC research at DTZ: "The money is flowing around looking for assets to park in."

That means potential investments meant for these two sectors may spill over to the commercial sector, in the form of demand for strata-titled office and retail units.

"It is likely that some buyers will postpone buying industrial properties and watch and wait or switch to alternative investments such as strata office and strata retail," said Jeremy Lake, executive director of investment properties at CBRE.

A similar story should apply to investments originally meant for a second or third residential property, noted Donald Han, special adviser at HSR Property Group.

Chia Siew Chuin, director of research and advisory at Colliers International, said that with a limited supply of strata office and retail space, "the increased demand and liquidity flowing into these sectors could result in an uptrend in prices of such properties."

But DTZ's Ms Chua believes it is unlikely that the authorities will come down on the office and retail sector just yet.

"I think the government will not intervene in the commercial sector unless prices are moving up too fast and developers are carving up very small units to cater to investment demand rather than occupier demand," she said.

Investors could also start to look beyond Singapore for growth opportunities as their options become more limited, analysts said.

The Iskandar region in Johor, Malaysia; London; Melbourne and Sydney were some of their picks to see an influx of hot money.

HSR's Mr Han said interest for overseas properties will hinge on factors such as low barriers to entry, transparency levels on par with Singapore and healthy yield levels.

Source: Business Times, 15 Jan 2013