Office Buildings

Oxley's Chevron House sale a better deal for buyer than seller: DBS analysts

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ANALYSTS at DBS Group Research are of the view that the "buyer is the bigger beneficiary" in Oxley Holdings' deal to sell Chevron House for S$1.025 billion, although Oxley and some industry sources disagree.

The sale comes just 16 months after the debt-laden property developer acquired the 32-storey office tower in Raffles Place for S$660 million in December 2017. Oxley has agreed to sell the property to Golden Compass, a wholly-owned unit of US-based real estate fund AEW.

"Based on the available information and our ballpark estimates, we believe the buyer is the bigger beneficiary of this transaction by acquiring the office component of Chevron House at below 4 per cent cap rates, with reversionary potential close to 5 per cent cap rates.

"This has yet to factor in any potential plot ratio upside from the government schemes to incentivise the redevelopment of the Central Business District," DBS analysts Rachel Tan and Derek Tan wrote in a research note on Thursday morning.

The cap rate is the rate of return on an investment property based on the income it is expected to generate.

In response to the analysts' comments, an external spokesman for Oxley said it would not be fair to compare this sale to that of a completed building, seeing as Chevron House still has ongoing alterations, additions and asset enhancement works.

"Also, the building was sold with no tenancy agreements, so it will be up to the buyer to source for tenants," the spokesman told The Business Times on Thursday evening.

"Many developers in the market are saying that Oxley got a great deal by selling a building just based on drawings."

Under the sale-and-purchase agreement, after Oxley receives an initial S$210 million, it is to complete the works and also divest the retail and banking units before the buyer will pay the balance of the consideration and discharge the bank loans.

An industry source who declined to be named said: "Oxley managed to sell it for a handsome profit to shareholders in such a short time, despite the incomplete construction and zero tenancy agreement.

"This could potentially go down as the deal of the year."

The DBS analysts said the initial cash proceeds of S$210 million will facilitate Oxley's repayment of its first tranche of retail bonds of S$300 million expiring on Nov 5, though certain deal terms have not been revealed.

"The devil is in the details, but the terms attached between Oxley and the buyer with regard to the divestment of the retail and banking units, and any other terms and conditions are not made known," they said.

"If we assume that the first tranche of payment is potentially the maximum gain or cash proceeds to be received by Oxley for the sale, we believe the cash received will alleviate some of Oxley's urgent cash requirements, though not completely."

BT understands that the initial S$210 million payment will be the maximum cash proceeds Oxley will receive under the deal.

"There will be further deleveraging when the buyer assumes Chevron House's bank loans upon completion of the transaction when conditions are met," the analysts added.

BT reported on May 1 that the buyer will take over the S$450 million in borrowings which Oxley had taken out to finance its 2017 acquisition of Chevron House. The sale will thus reduce Oxley's debt by that amount.

Oxley has two tranches of retail bonds maturing soon: S$300 million due on Nov 5, 2019, and S$150 million due on May 18, 2020.

It also has S$238 million of corporate borrowings expiring in fiscal 2020/2021, and S$631 million of euro medium-term notes expiring in fiscal 2021/2022.

Oxley shares closed at S$0.32 on Thursday, down 0.5 Singapore cent.

Source: Business Times, 3 May 2019

Commercial real estate deals roaring back to life

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A series of commercial real estate deals amounting to $1.06 billion was inked in the past week, surpassing the total investment volume for the commercial sector in the first quarter of this year.

Evia Real Estate and Metro Holdings bought 7 and 9 Tampines Grande, a pair of premium Grade A office blocks from City Developments Limited (CDL) and Alpha Investment Partners for $395 million.

Mitsubishi Estate and CLSA entered into a share purchase agreement with a Perennial-led consortium to buy Chinatown Point mall for $520 million, while Realty Centre, an office building in Tanjong Pagar, has sold for $148 million in the year's first commercial collective sale deal.

The investment sales market took a breather in the first three months of this year, with total sales staying muted at $4.6 billion, a 21 per cent decline quarter on quarter, and only about 13 per cent of the total annual investment volume last year.

The residential sector chalked up sales of $1.2 billion, with the commercial and hospitality sectors next at $900 million apiece, followed by the industrial sector at $600 million. Mixed-use and others posted $1 billion of sales.

The office sector was quiet in the first quarter, with only a few strata deals. Alpha Investment Partners acquired five floors in Suntec Tower 1 and one floor in Suntec Tower 2 for $160 million.

The retail sector saw several shopping mall transactions. In the largest private transaction of the quarter, CapitaLand and CDL acquired Liang Court mall for $400 million, and SC Capital Partners bought Rivervale Mall for $230 million.

There were a few significant transactions in the industrial and hospitality sector. SGRE Banyan entered into a $227.5 million sale-and-leaseback deal for Vibrant Group's 121 Banyan Drive warehouse. Cheong Sim Lam acquired Ascott Raffles Place Singapore for $353.3 million.

The office sector is the hottest one here after Grade A Central Business District rents extended their gains by 12.7 per cent last year and potentially another 9 per cent this year. Limited supply completions and decade-low vacancy rates have raised investor interest in the sector.

Activity in the office sector is expected to pick up further in the coming quarters, with Chevron House, Anson House and 139 Cecil Street going on the market. In addition, Frasers Property is in talks with interested parties for a potential sale of Frasers Tower.

DUO Tower and its retail component are also on the market with potential suitors such as CapitaLand Commercial Trust, Singapore's biggest office landlord, according to Bloomberg.

There could also be some deals inked in the hospitality sector. RB Capital is said to be in exclusive due diligence on Andaz hotel at DUO. Oxley has put its Mercure and Novotel hotels back onto the market, while Global Premium Hotels has placed its portfolio of 23 hotels for sale at $1.4 billion.

The writer is the head of research for Singapore and South-east Asia at global property consultancy Cushman & Wakefield.

Source: Straits Times, 28 Apr 2019

Central region's office rents dip 0.6% in Q1, first decline since mid-2017

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Office rents in the central region dipped in the first three months of the year, the first quarter-on-quarter decline since the April-June period in 2017.

Rents slipped 0.6 per cent from the last three months of last year, Urban Redevelopment Authority (URA) data showed yesterday.

This was in contrast with the 0.5 per cent rise from the third to fourth quarters last year.

The price index rose 3 per cent for the first quarter, a faster pace of gain compared with the 2.4 per cent increase with the previous quarter.

Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, said this is not surprising as investor interest in commercial assets has grown.

"The divergent performance of the office price and rental indices could be a sign that tenants are showing some resistance to higher rents, in view of the uncertainties in business outlook," she added.

A fall in the amount of available office space helped send the islandwide vacancy rate from 12.1 per cent at Dec 31 to 11.8 per cent at March 31.

Ms Tay Huey Ying, JLL's head of research and consultancy for Singapore, said the supply squeeze will continue to give landlords the upper hand in lease negotiations.

That suggests that this year could outperform 2018 in terms of rent growth in this zone, she added.

Cushman's Ms Li said the slowdown in the economy has been felt most keenly in manufacturing, "nevertheless, office rental growth in 2019 can be sustained due to the limited supply and healthy pre-leasing activities in the market".

There was about 733,000 sq m in gross floor area of office space in the pipeline as at March 31 against 732,000 sq m as at Dec 31.

Retail rents in the central region fell 0.2 per cent in the first quarter, after rising 1.2 per cent in the previous quarter.

Ms Tay said the dip was likely due to changing tenant profiles, such as the increasing take-up of prime-level space by rent-sensitive occupiers requiring large spaces.

The URA price index of retail space in the central region slumped 1.9 per cent in the quarter against an increase of 1.5 per cent in the last three months of last year.

The amount of occupied retail space fell by 14,000 sq m in the first quarter compared with a rise of 24,000 sq m in the previous quarter.

Ms Li said: "Retailers are still cautious about taking up spaces."

The islandwide retail vacancy rate grew to 8.7 per cent at the end of the first quarter this year, from 8.5 per cent at the end of last year.

There was about 364,000 sq m of retail space in the pipeline as at March 31, down from 387,000 sq m as at Dec 31.

Ms Tay said: "On a more upbeat note, the Orchard Road revamp and the $9 billion expansion plans by Marina Bay Sands and Resorts World Sentosa should inject confidence in the tourism and retail industries.

"Nonetheless, the restructuring in the retail space will likely see the URA retail rental index flip-flopping between marginal upticks and downticks in the short term."

Source: Straits Times, 27 Apr 2019

Office and retail rentals reverse direction, head south in Q1

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Observers say office outlook still fairly positive for now, though retail segment still weak

RENTALS of office and retail space reversed direction to dip in the first three months of 2019, owing to uncertainties in the business outlook and continued woes in the retail sector.

Going by official figures from the Urban Redevelopment Authority (URA) on Friday, rentals in the central region of Singapore slipped by 0.6 per cent in the first quarter of 2019, in contrast with the increase of 0.5 per cent in the fourth quarter of 2018. This was the first quarterly drop since Q2 2017.

CBRE South-east Asia's head of research Desmond Sim said the correction in rentals could be due to the contrasting performances of good-quality office buildings in the core Central Business District (CBD) versus the older and less well-located offices.

Island-wide vacancy fell to 11.8 per cent, from 12.1 per cent at the end of the previous quarter, supported by net absorption of 19,000 sq m mainly taken up by technology firms and co-working operators.

Mr Sim said: "The office outlook remains fairly positive for now. With very decent pre-lease commitments already in place and a tapering supply pipeline, landlords' strong leverage is likely to be maintained."

Retail rentals in the central region, on the other hand, weakened by 0.2 per cent in the first quarter of this year, against the growth of 1.2 per cent in the previous quarter.

This essentially erased all the gains since the recent bottom in Q2 2018, noted Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield. She said retail woes in the market do not seem to have blown over.

"The absorption of the island-wide retail space continues to lag supply. In Q1 2019, the amount of occupied retail space decreased by 14,000 sq m, although more space was also taken off the market with net supply reducing by 2,000 sq m during the quarter.

"The American diner chain Chili's closes all its branches in Singapore, while Crabtree & Evelyn is also shutting all but one store in a move to go online."

She added that retailers appear to be cautious about taking up spaces. "It does not help when the government announced in Budget 2019 that the dependency ratio ceiling for the services sector will be further tightened.

The move may cause some short-term pain and result in retailers holding back expansion plans in light of the anticipated labour crunch."

Island-wide vacancy rates have risen from 8.5 per cent in Q4 2018 to 8.7 per cent in Q1 2019.

On the price front, the official office price index rose 3 per cent for the first quarter - faster than the 2.4 per cent increase in the previous quarter, on the back of improved investment appetite for prime office assets, noted Tricia Song, head of research for Singapore at Colliers International.

En bloc transactions in the quarter included the sale of Manulife Centre, acquired by ARA Asset Management and British property group Chelsfield for S$555.5 million, and six levels at Suntec City reportedly sold to Alpha Investment Partners and another floor at the same property that was sold to an unnamed party.

"The punitive additional buyer's stamp duty measures on the residential sector since July 2018 should continue to fuel a shift in investor interest towards the commercial sector," she said.

The price index for retail space in the central region slumped 1.9 per cent in Q1, contrasting with the increase of 1.5 per cent in the previous quarter.

Source: Business Times, 8 May 2019

Guoco Midtown's flexible leases may help draw tenants

Developer GuocoLand is going all out to woo tenants for the $2.4 billion mixed-use Guoco Midtown project in Beach Road, which will be completed in 2022.

The attractions include a 40m swimming pool and a circuit track, but its tweak to the traditional leasing concept is what may just tip the office market battle in its favour.

Tenants are usually locked into a certain square footage of office space over a period of five years, for example.

But at Midtown, 15 per cent of the office net lettable area has been set aside for adaptable spaces.

Businesses can choose to expand or contract their teams without moving or renovating their main offices during the lease.

"In one aspect, it's a bold move, but it's also an offensive move," said GuocoLand Singapore group managing director Cheng Hsing Yao.

He told The Straits Times on Monday: "We are not just competing among landlords but with operators that offer flexibility."

Mr Cheng was referring to co-working companies, which have seen tremendous growth recently.

A Colliers International study last month found that the flexible workspace sector made up 45 per cent of prime-grade office net absorption last year.

Much of the growth is a reaction to the rigidity of leasing terms as landlords aim to secure rental stability, added Mr Cheng.

This will not be developers' first attempt to meet the challenge posed by co-working spaces.

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Mapletree, Keppel Land and Lendlease have their own co-working brands. A CapitaLand joint venture has acquired a stake in a co-working business, while City Developments runs a flexible workspace with a co-working operator.

Real estate professor Sing Tien Foo from the National University of Singapore thinks more flexible space in the market is a big plus, as it allows tenants to better plan resources in line with market cycles.

He also expects GuocoLand's move to create competition for co-working space providers.

Co-working giants WeWork and JustCo, which each have at least 10 locations here, declined to comment.

Prof Sing believes more developers will follow suit to offer more flexibility in their leasing terms, which is good news for tenants.

"In the past, firms expanding their businesses may have to take up new office space in some other buildings to accommodate new operations and staff.

"This will increase the fixed costs for the firms, having multiple sets of overheads in different locations."

He said landlords may have more to lose in such a case, as the landlord-tenant relationship becomes "a more collaborative and risk-sharing partnership arrangement".

Ms Jenny Ling, director of office services at Colliers International, warned of "white elephant" space: "One potential drawback could be that the landlord runs the risk of having vacant space within its development if there is no actual demand for the flexible space."

Mr Cheng said GuocoLand is guarding against rental volatility by ensuring tenants are from different sectors. He added that 15 per cent of net lettable area for flexible contracts is still manageable.

CBRE Singapore managing director Moray Armstrong said there will likely be similar lease models in the market in future, where core space will be offered at a lower cost, while a premium will be charged for flexibility, similar to how airline customers pay higher prices for a ticket that can be changed.

The office rental market's outlook is positive. Mr Armstrong said grade-A space has seen "strong occupier interest in quality buildings".

"From now through 2022, Singapore's office supply pipeline appears commensurate with the expected level of demand."

Source: Straits Times, 25 May 2019

GuocoLand to redefine office leasing at Guoco Midtown

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MORE companies, finding that they may need to scale up and down following business imperatives, are realising that the traditional long-term lease for their office space may hamper this.

Or they may want a long-term lease on the space for most of their core operations, but also the flexibility of taking on more space to start a new project.

GuocoLand, taking this into consideration, wants to be more flexible with its office tenants at its S$2.4 billion, mixed-use Guoco Midtown in Beach Road.

In this development to be completed in 2022, GuocoLand will set aside 15 per cent of the 650,000 sq ft of net lettable area (NLA) of office space as flexible, adaptable space. This will include two floors for tenants to use to establish "innovation labs" or start-ups.

GuocoLand has not decided whether it will run this space or team up with flexible working operators.

The developer said the floor plates of the offices are built to be flexible and can be sub-divided, and that it will work with tenants to design and sub-divide the floor space according to their needs. The squarish floor plates range from 27,000 sq ft to 30,000 sq ft in size.

The office block has 30 storeys, and a total gross floor area of 770,000 sq ft.

Cheng Hsing Yao, the group managing director of GuocoLand Singapore, told reporters on Monday: "A lot of Grade A office buildings are managed in very contractual ways. You sign a contract for five years, and that's it. We will be working with different tenants here to structure contracts in keeping with business plans.

"The co-working business has been able to grow to a large extent because landlords have been rigid."

He acknowledged that setting aside 15 per cent of the NLA for flexible contracts may mean more volatility, but considers the 15 per cent "manageable".

Attracting tenants from different industries would help, and the flexibility would retain tenants who might otherwise move out.

The idea of becoming a flexible landlord came from feedback from tenants at the developer's Guoco Tower in Tanjong Pagar. Mr Cheng said some tenants reported running out of space; others stopped needing as much as they signed up for.

When GuocoLand bid for the Beach Road site in 2017, the company already knew it wanted to change up its leasing model, he said.

The company also recognised companies' drive to attract and keep talent with amenities, and the changing ways of working and living.

In response to this, Guoco Midtown will have networking lounges, collaborative workspaces, seminar and training rooms as well as facilities for townhall meetings.

This can help tenants "save on absolute rents" as well, because they do not have to build such facilities for themselves, Mr Cheng said.

The development will also be equipped with a sky garden, a 40-metre swimming pool and a jogging circuit to help keep workers engaged.

These amenities will also be open to residents of Midtown Bay, which is part of the development. The 32-storey residential tower with more than 200 units is targeted at "trendsetters who enjoy luxurious living in a vibrant community".

The former Beach Road Police Station, which will be conserved, is also part of the development. It will house F&B and boutique office spaces, suitable for tenants such as hedge funds. There will also be a retail area of 32,290 sq ft.

Taking a leaf from the developer's Guoco Tower in Tanjong Pagar, Guoco Midtown will include more than 170,000 sq ft of landscape and public spaces, and more than 34,000 sq ft of vertical greenery.

GuocoLand and Guoco Group had bid S$1.6 billion, or S$1,706 per square foot per plot ratio (psf ppr) in September 2017 for the plot for Guoco Midtown - a sum perceived as bullish, Mr Cheng acknowledged.

But he said the bid had factored in the "very balanced" pipeline in the supply of office space in the next four to five years, and also the government's move to decentralise business space.

He added that the Guoco Tower project had given the group confidence. The development is now fully let, though it had opened between 2016 and 2017 - a challenging time in the office market.

CBRE's managing director for Singapore Moray Armstrong said about 1.4 million sq ft a year of supply is under construction, including about 22 per cent that is already pre-let. (The average absorption of office space is about 1.5 million square feet a year.)

"From now through to 2022, Singapore's office supply pipeline appears commensurate with the expected level of demand," he added.

JLL said that by 2030, flexible work spaces could make up 30 per cent of corporate commercial property portfolios worldwide.

Source: Business Times, 23 Apr 2019

Realty Centre in Tanjong Pagar sold for S$148m, below reserve price

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REALTY Centre, an office building in Tanjong Pagar, has been sold for S$148 million in 2019's first commercial en bloc sale, although the figure falls short of the reserve price. 

Marketing agent Cushman & Wakefield had put the freehold 12-storey building up for collective sale with a reserve price of S$165 million in January. 

The buyer is Singapore-listed The Place Holdings, which intends to redevelop the property into a mixed-use commercial andresidential tower, subject to regulatory approvals. The building will also serve as the company's headquarters, according to SGX filings on Monday night.

The Place Holdings deals in branding, events organising and tourism-related business development, and is backed by China's The Place Investment Group.

Realty Centre has a land area of about 11,000 sq ft and is zoned for commercial use under the Urban Redevelopment Authority's 2014 Master Plan with a plot ratio of 5.6 times and a maximum storey height of 35 storeys.

Cushman & Wakefield noted that under the recently announced CBD Incentive Scheme, Realty Centre falls under the Anson precinct. This means that the property is expected to enjoy bonus plot ratios of between 25 per cent and 30 per cent if there were to be a change ofuse to either residential and commercial (+25 per cent) or residential with commercial on first storey (+30 per cent). 

Its director of capital markets, Christina Sim, called Realty Centre a "versatile site" sitting on the fringe of a location which will be undergoing "massive urban rejuvenation and transformation".

Source: Business Times, 22 Apr 2019

UBS Singapore to take up all 8 floors of office space at redeveloped Park Mall building

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Developer SingHaiyi Group and its joint venture (JV) partners - Suntec Reit and Haiyi Holdings - announced on Wednesday (April 17) that UBS Singapore has signed on to take up all the office space at the redeveloped Park Mall building.

The move confirms an earlier report by The Business Times report on April 1 that UBS was mulling over a consolidation of its Singapore office footprint.

Located at 9 Penang Road, the property is now undergoing redevelopment, which is on track to be completed in the fourth quarter this year, SingHaiyi said in an exchange filing.

UBS Singapore will take up 381,000 sq ft of net lettable area, spanning eight levels across two towers, and plans to move to the 10-storey Grade A office building in the second half of 2020.

Besides UBS Singapore, the new building has also garnered "strong interest" from potential retail tenants including food and beverage outlets, and ancillary services, SingHaiyi added.

Haiyi Holdings is a wholly owned entity of the group's major shareholders, SingHaiyi's group managing director Celine Tang, and her husband, Gordon Tang.

SingHaiyi Group and Haiyi Holdings each hold a 35 per cent stake in the JV, while Suntec Reit owns the remaining 30 per cent.

The new building is located near Singapore's prime shopping belt Orchard Road and Dhoby Ghaut MRT station. It also has 15,000 sq ft of retail space, and an extended 99-year leasehold which will expire on Dec 7, 2115.

Said Mrs Tang: "9 Penang Road marks SingHaiyi's first foray into commercial property redevelopment, and a strategic springboard to expand our brand and track record in commercial and retail property development."

Separately, UBS Singapore's country head, August Hatecke, noted that the move will allow UBS Singapore to bring its employees working at One Raffles Quay and Suntec City under one roof to enhance collaboration, as well as offer new capacity for future growth in the Asia-Pacific region.

UBS has close to 4,000 employees in Singapore across its businesses, and the new premises will also be home to UBS University, which will lead training and development programmes for its staff across the region.

In a circular sent out to its employees on Wednesday and seen by BT, UBS noted that Singapore is a "strategic priority" of the group, and that the future-ready workplace with the latest connectivity and health facilities will offer an "ideal environment" to enhance the way its staff work and collaborate.

"As sole tenant, UBS Singapore will have full control of building security, which will feature a single-entry system including facial recognition technology."

It added that the new building's energy-efficient construction will also help the group operate in line with the highest environmental standards.

At 4.21pm, SingHaiyi shares were trading flat at 9.5 cents, while units in Suntec Reit were trading unchanged at $1.90.

Source: Straits Times, 17 April 2019

Rejuvenating CBD with new integrated buildings 'visionary': JLL

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The CBD Incentive Scheme could see the introduction of state-of-the-art buildings, including new homes and hotel rooms in the area.

MORE than 20 ageing office buildings in Singapore's CBD, currently housing some 6 to 6.5 million sq ft of office space, could be redeveloped to make way for state-of-the-art buildings under the CBD Incentive Scheme as part of the recently released draft Master Plan 2019. This is the number of buildings JLL Research estimates could satisfy the criteria set under the scheme, which offers higher plot ratios for owners who convert older office buildings to other complementary uses.

In their place, we can expect brand new buildings potentially yielding some four to five million sq ft net floor area of office space and injecting over 3,000 new homes and over 3,000 hotel rooms in the heart of CBD.

In our view, the benefits of this visionary initiative are multifold.

Firstly, we believe the scheme will transform Singapore's downtown CBD to meet modern demands. From our work with global corporate clients, we know that employees of today prioritise hospitality, health and lifestyle amenities in their choice of office locations. The scheme can reinvigorate the CBD to meet these needs by encouraging new mixed developments, bringing together new residents, tourists and digital nomads of all ages into the district, and allow for more 24/7 social activities and events.

Secondly, we foresee that the CBD Incentive Scheme could accelerate the decentralisation strategy to enhance sustainability and reduce commuting. As older office stock is withdrawn and redeveloped, office occupiers displaced by the withdrawal of older stock in the CBD will need new premises, giving the government scope to release more land parcels in decentralised gateways, such as Jurong East, Woodlands and Tampines to expedite the development of these hubs.

Thirdly, with limited new supply of office space in the CBD and potential initiation of redevelopment projects over the next five years, we expect office rents to continue to rise, barring any demand shocks. This would likely widen the rental gap between CBD and suburban hubs, and motivate more businesses to consider moving some operations out of the CBD.

Granted, not all owners who qualify for the scheme will immediately jump on the incentives and redevelop their properties. After all, we recognise that time is needed to evaluate the financial feasibility of the conversion, especially at a time when the office market is enjoying an upcycle amid healthy demand and tight supply, while the residential market is facing a challenging environment weighed down by July's cooling measures, as well as a long pipeline supply. Besides, hotel and residential properties do not fit the investment profile of some of the existing landlords, and redevelopment could likely take place only when the assets change hands.

Nonetheless, the CBD Incentive Scheme could kickstart urban renewal momentum and could be extended beyond the initial five-year implementation period, giving owners and investors more time to take advantage of it.

To help foster a vibrant city centre, the planning authority is also studying the possibility of transforming Robinson Road into a transit-priority corridor for public transport and active mobility, providing more scope for wider sidewalks and for ground-level activities such as al-fresco dining to spill into the streets.

Singapore is already the location of choice for most regional headquarters. We believe the CBD Incentive Scheme proactively catalyses the reshaping of our CBD to address transport concerns and plants the seeds for more integrated live-work-play developments. This will likely uplift Singapore's downtown CBD and further widen our lead as a top global city for talent, companies and capital.

Source: Business Times, 13 Apr 2019

String of public agencies lease offices at Funan

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A STRING of government bodies have leased office space at the revamped Funan in the North Bridge Road/Hill Street location.

These include the Department of Statistics (DOS) , organ of state Attorney-General's Chambers (AGC) and the Smart Nation and Digital Government Office (SNDGO), which are leasing a total of about 8,590 sq m (or 92,462 sq ft) of net lettable office space in the South Tower office block of Funan.

The Ministry of Culture, Community and Youth (MCCY) will be taking 360 sq m.

The Government Technology Agency (GovTech) will occupy 170 sq m there - but this will be within the co-working facility to be operated by WeWork in the building's North Tower office block.

The Business Times understands that WeWork has increased the space it is leasing at Funan from 40,000 sq ft to 70,000 sq ft.

DOS, which will move to Funan later this year, now operates out of The Treasury next door.

"DOS works closely with many of the agencies in The Treasury, and being in Funan will facilitate these work interactions. DOS will be occupying about 5,000 sq m in Funan's South Tower office block, similar to its current office space at The Treasury," a Ministry of Finance (MOF) spokesman told BT.

MOF owns The Treasury and is also housed there. Also in the building are the Trade and Industry and Law ministries, the Prime Minister's Office Strategy Group, the Public Service Division and Accountant-General's Department.

The roughly 20-year-old Treasury has about 24,000 sq m (about 258,334 sq ft) net lettable area (NLA).

The space now occupied by DOS at The Treasury will be taken up by other government units, said the MOF spokesman.

An AGC spokesman told BT that by early next year, part of the AGC will be relocated to Funan, where it will occupy about 1,790 sq m in the South Tower.

"This is in line with AGC's need for more office space in order to accommodate the increased headcount to manage the government-wide increase in demand for legal services," she added.

The organ of state operates out of One Upper Pickering in Chinatown near the State Courts. It has a long lease for the whole of the 15-storey office building, which has about 87,070 sq ft NLA.

The AGC began operating from there in March 2013.

Market watchers note that a presence at Funan will place the AGC near the Supreme Court Building, which houses the High Court and Court of Appeal. It also marks the AGC's return to where it once was - in leased premises at The Adelphi - before its move to One Upper Pickering.

That move was triggered by a lease expiry; the landlord had said then that it had plans for the premises, it was reported.

SNDGO's spokesman told BT that it will move to Funan's South Tower by year's end, taking up about 1,800 sq m. "The relocation would better meet SNDGO's needs," he added.

The agency is now in Raffles City Tower.

GovTech's spokesman told BT that it will be taking co-working space at Funan to work more closely with SNDGO to "build digital solutions for citizens and businesses".

The two agencies make up the Smart Nation and Digital Government Group (SNDGG). Funan, redeveloped from the former Funan DigitaLife Mall, has about 887,000 sq ft gross floor area. It comprises a retail component (held through CapitaLand Mall Trust or CMT), two office towers (held by trusts fully owned by CMT), and the lyf co-living serviced residences. The serviced residence component is owned by a fully-owned subsidiary of Ascott Serviced Residence (Global) Fund.

Retail tenants in the development include Golden Village, FairPrice Finest and theatre company Wild Rice. The mall will use experiential retail concepts with the integration of online, offline, data and logistics offerings.

Source: Business Times, 9 Apr 2019