General S-REITs Discussion Thread
- Thread starter Dividends Warrior
- Start date
Only down 3% want to sell? Please check the charts and first see whether it's normal for it to fluctuate like this. What etf anyway?
highsulphur
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Cfa....
This has been on down trend for past 6 months. Not sure when will bottom, probably contains reits with exposure to China that's why keep dropping.
According to AK, OCBC, DBS, and UOB should form 40% of your portfolio.
Everyone has his own strategy. I would say from diverstification point of view, not to invest more in one sector, geography, industry.... etc more than 35%.
DYDD.
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I am eyeing CICT cos I already have FCT (though in red). The question is to buy now or later.
Some sudden retreat late afternoon... Thought my cict was doing great hitting 1.99... now fell back to 1.96
It's range bound now so won't be rising anything out of range.
Bought some FLCT today at $0.940. Taking into account that $0.035 div was paid recently, I think this is a good starting point to restart buying and averaging down
Close to 90 cents should be a good price to buy. Hope won't break below 90.
Front page news today:
Grim outlook for Singapore's older business parks puts pressure on newer properties
by Samuel Oh, The Business Times, July 1, 2024
Once concern is whether new space in the pipeline can be absorbed, given a coming spike in supply and a widening lag in take-up.
Another question arising is whether better uses can be found for ageing, half-empty buildings of industries that had previously supported occupancy are not growing.
Overall vacancy across biz parks hit 22% at end-March this year, indicated latest JTC figures. Vacancy crept up from 18.7% in the year-ago period, and 14.4% in Q1 2022.
Older properties in the outer regions of the island - including Changi Business Park in the east and International Business Park in Jurong - are markedly worse off.
"Suburban business park vacancy is about 34.4% in Q1, said Wong Xian Yang, Cushman & Wakefield's head of research for SG and SEA. In contrast, "overall city fringe business parks enjoy significantly lower vacancy rates of about 6.8%", he added.
Occupancy at CBP, which opened in 1997, has been trending down since end-2017, said Lee Sze Teck, Huttons Asia's senior director of data analytics. As at Q1 2024, the occupancy rate stood at 69.6%, 21.6% lower than its peak in 2017, noted Lee.
High profile tech companies and banks that had housed hubs in the estate have exited, after cost cuts and layoffs in recent years. "Both banking and tech sectors, historically the backbone of high-quality business parks like CBP, are currently not in expansionary phase," said Tricia Song, CBRE's head of research for SG and SEA.
Many IT companies operating at CBP moved to less costly locations outside Singapore, Lee added. Tightened criteria for foreigners' employment pass pulled up hiring costs for software engineers.
Structural and Cyclical Challenges
"The challenges facing CBP are both structural and cyclical. The offshoring trend is a structural change affecting the technology industry, thus there may be a need to reconsider the positioning of CBP," he said.
IBP, which opened earlier - in 1988 - as part of a new "innovation district" in Jurong, is now seeing even higher vacancy than CBP. Some buildings in the "advanced manufacturing hub" are down to 40-something % occupancy, even as tech-heavy manufacturer Hyundai moved in with its new electric vehicle assembly plant.
Capitaland Ascendas REIT (CLAR), which a recent UOB Kay Hian report pinned as having the largest exposure to local business parks among SG REITS, is not sitting on its hands. CLAR holds 28 biz parks assets in SG - 5 in IBP and 7 in CBP. These account for 10.3% of its portfolio valuation. In total, biz parks account for 21.4% of its valuation, said UOB Kay Hian. Its IBP properties in Jurong showed 57.4% occupancy as at Dec 2023, while the Changi buildings "also have below-par occupancy of 76.1%", the Jun 25 report said.
The REIT started redevelopment work on one of its IBP assets - 27 IBP - in 2020, after occupancy fell to a low of 29.9% in 2019. It is expected to be completed by Q1 2026, and will add 50% more gross floor area to the building. CLAR Is also said to be in negotiations with prospective tenants to backfill vacant space at CBP and IBP.
Prospects may be diminishing
While the diminishing appeal of older properties can be put down to age and location, prospects for biz parks as a whole may be dimming.
"Business park properties, being pseudo-offices, have been the most disrupted by work-from-home and hybrid work arrangements," wrote UOB Kay Hian analyst Jonathan Koh.
Mapletree Industrial Trust holds 3 biz park properties at IBP and CBP accounting for 6.1% of portfolio valuation. The REIT is mulling divesting its biz park assets.
Current leasing activity in biz parks is focused on retaining tenants as occupiers turn cautions, said CBRE's Song. Rental growth in the short-term is expected to be muted.
Supply is piling up. Data from Colliers showed that islandwide average annual net supply for the last 10 years (2014-2023) was 0.98M sq ft, some 30% more than net absorption at 0.67M sq ft.
CBRE estimated that there is about 3.17M sq ft of new biz park supply coming from Q2 2024-2027. Average annual new supply over 2024-2027 is some 16% higher than the 5-yr historical average during 2019-2023 period.
Older properties are losing out because they did not manage to attract new tenants fast enough while newer and better biz parks are being built, said Alan Cheong, Savill's SG's executive director of research and consultancy.
Newer estates in locations such as One-North, Alexandra, and Labrador offer better accessibility. The sprawling Science Park campus in Buona Vista, for instance, is in the process of renewal, with CLAR leading a major redevelopment in a cluster called Geneo targeted at the cutting-edge life-sciences sector.
As Cheong pointed out, the average period for a major tech cycle runs about 10yrs, but the economic life cycle of a building is about 30 to 40 years. "Because of this mismatch, and the constant promotion of newer digital districts, the problem for the older and even the latest business parks get compounded," he said.
Newly completed projects are also "throwing in incentives such as fit-out capex, and/or longer rent-free periods to entice tenants to relocate," said Catherine He, head of research for Colliers SG.
Dishing out the deals
Indeed, landlords such as CapitaLand are dishing out "3-for-2" deals, offering 3 years' rent for the price of 2, at some of its buildings in Science Park.
The pullback by tech giants has also extended to newer buildings. In Feb 2024, Google gave up 344k sq ft of space at Fraser Logistics and Commercial Trust's Alexandra Technopark, representing about 1/3 of the property's total net lettable area.
Meanwhile, a massive new biz campus is being built in the North-East. Part of the govt's decentralisation push to draw activity outside the CBD, the Punggol Digital District (PDD) is pitched at companies in what are seen as new high-growth areas. PDD will contribute more than 2M sq ft of biz park space, of which 1.3M sq ft will materialise in 2024. Of this, 2/3 of the space has been precommitted to tenants in cybersec, AI, robotics, fintech, govt entities, and a bank. PDD will also house the new campus of the Singapore Institute of Technology, as well as a mall and a hotel.
Asking rents at PDD average around $5 psf/month, said Colliers' He. These rates position PDD higher than suburban biz parks asking $3.64 psf/month. City fringe biz parks command slightly over $6 psf/month, while city fringe office spaces goes for just under $8 psf/month, said C&W.
A solution in sight?
Could a solution lie in repurposing older biz parks or rezoning land reserved for biz parks use? In June, the URA approved the change of land use for some plots in the One-North area, previously zoned for business parks, to "residential with commercial at first storey" use. These sites will be put up for tender under the govt land sales program.
Asked if more biz park-zoned land could be similarly repurposed, JTC told the Business Times that changes are made to land use plans to address the needs of the various sectors as well as to support changing social demands and biz conditions.
"For One-North, it has been planned as a mixed-use estate since its inception. Therefore, the recent rezoning of biz park land to residential use was not due to a lack of biz park demand in One-North, but to bring workplaces closer to homes and further enhance One-North as a vibrant mixed-use biz park," said JTC.
"For Changi Business Park, JTC will continue to work with URA to review its master plan to ensure it remains relevant in meeting the needs of our industrialists," the agency said.
While 2024 will see a spike in new space, supply is expected to fall off sharply thereafter, said Savills' Cheong. "It is not a situation from oversupply coming from future projects, but a question of what will happen to the buildings from the 1st generation of biz parks here. In 10yrs time, what is presently the top-of-the-line biz parks may find it challenging to maintain its status as the premier campus to locate in. Gentrification doesn't seem to be a word in the biz park space."
Grim outlook for Singapore's older business parks puts pressure on newer properties
by Samuel Oh, The Business Times, July 1, 2024
Once concern is whether new space in the pipeline can be absorbed, given a coming spike in supply and a widening lag in take-up.
Another question arising is whether better uses can be found for ageing, half-empty buildings of industries that had previously supported occupancy are not growing.
Overall vacancy across biz parks hit 22% at end-March this year, indicated latest JTC figures. Vacancy crept up from 18.7% in the year-ago period, and 14.4% in Q1 2022.
Older properties in the outer regions of the island - including Changi Business Park in the east and International Business Park in Jurong - are markedly worse off.
"Suburban business park vacancy is about 34.4% in Q1, said Wong Xian Yang, Cushman & Wakefield's head of research for SG and SEA. In contrast, "overall city fringe business parks enjoy significantly lower vacancy rates of about 6.8%", he added.
Occupancy at CBP, which opened in 1997, has been trending down since end-2017, said Lee Sze Teck, Huttons Asia's senior director of data analytics. As at Q1 2024, the occupancy rate stood at 69.6%, 21.6% lower than its peak in 2017, noted Lee.
High profile tech companies and banks that had housed hubs in the estate have exited, after cost cuts and layoffs in recent years. "Both banking and tech sectors, historically the backbone of high-quality business parks like CBP, are currently not in expansionary phase," said Tricia Song, CBRE's head of research for SG and SEA.
Many IT companies operating at CBP moved to less costly locations outside Singapore, Lee added. Tightened criteria for foreigners' employment pass pulled up hiring costs for software engineers.
Structural and Cyclical Challenges
"The challenges facing CBP are both structural and cyclical. The offshoring trend is a structural change affecting the technology industry, thus there may be a need to reconsider the positioning of CBP," he said.
IBP, which opened earlier - in 1988 - as part of a new "innovation district" in Jurong, is now seeing even higher vacancy than CBP. Some buildings in the "advanced manufacturing hub" are down to 40-something % occupancy, even as tech-heavy manufacturer Hyundai moved in with its new electric vehicle assembly plant.
Capitaland Ascendas REIT (CLAR), which a recent UOB Kay Hian report pinned as having the largest exposure to local business parks among SG REITS, is not sitting on its hands. CLAR holds 28 biz parks assets in SG - 5 in IBP and 7 in CBP. These account for 10.3% of its portfolio valuation. In total, biz parks account for 21.4% of its valuation, said UOB Kay Hian. Its IBP properties in Jurong showed 57.4% occupancy as at Dec 2023, while the Changi buildings "also have below-par occupancy of 76.1%", the Jun 25 report said.
The REIT started redevelopment work on one of its IBP assets - 27 IBP - in 2020, after occupancy fell to a low of 29.9% in 2019. It is expected to be completed by Q1 2026, and will add 50% more gross floor area to the building. CLAR Is also said to be in negotiations with prospective tenants to backfill vacant space at CBP and IBP.
Prospects may be diminishing
While the diminishing appeal of older properties can be put down to age and location, prospects for biz parks as a whole may be dimming.
"Business park properties, being pseudo-offices, have been the most disrupted by work-from-home and hybrid work arrangements," wrote UOB Kay Hian analyst Jonathan Koh.
Mapletree Industrial Trust holds 3 biz park properties at IBP and CBP accounting for 6.1% of portfolio valuation. The REIT is mulling divesting its biz park assets.
Current leasing activity in biz parks is focused on retaining tenants as occupiers turn cautions, said CBRE's Song. Rental growth in the short-term is expected to be muted.
Supply is piling up. Data from Colliers showed that islandwide average annual net supply for the last 10 years (2014-2023) was 0.98M sq ft, some 30% more than net absorption at 0.67M sq ft.
CBRE estimated that there is about 3.17M sq ft of new biz park supply coming from Q2 2024-2027. Average annual new supply over 2024-2027 is some 16% higher than the 5-yr historical average during 2019-2023 period.
Older properties are losing out because they did not manage to attract new tenants fast enough while newer and better biz parks are being built, said Alan Cheong, Savill's SG's executive director of research and consultancy.
Newer estates in locations such as One-North, Alexandra, and Labrador offer better accessibility. The sprawling Science Park campus in Buona Vista, for instance, is in the process of renewal, with CLAR leading a major redevelopment in a cluster called Geneo targeted at the cutting-edge life-sciences sector.
As Cheong pointed out, the average period for a major tech cycle runs about 10yrs, but the economic life cycle of a building is about 30 to 40 years. "Because of this mismatch, and the constant promotion of newer digital districts, the problem for the older and even the latest business parks get compounded," he said.
Newly completed projects are also "throwing in incentives such as fit-out capex, and/or longer rent-free periods to entice tenants to relocate," said Catherine He, head of research for Colliers SG.
Dishing out the deals
Indeed, landlords such as CapitaLand are dishing out "3-for-2" deals, offering 3 years' rent for the price of 2, at some of its buildings in Science Park.
The pullback by tech giants has also extended to newer buildings. In Feb 2024, Google gave up 344k sq ft of space at Fraser Logistics and Commercial Trust's Alexandra Technopark, representing about 1/3 of the property's total net lettable area.
Meanwhile, a massive new biz campus is being built in the North-East. Part of the govt's decentralisation push to draw activity outside the CBD, the Punggol Digital District (PDD) is pitched at companies in what are seen as new high-growth areas. PDD will contribute more than 2M sq ft of biz park space, of which 1.3M sq ft will materialise in 2024. Of this, 2/3 of the space has been precommitted to tenants in cybersec, AI, robotics, fintech, govt entities, and a bank. PDD will also house the new campus of the Singapore Institute of Technology, as well as a mall and a hotel.
Asking rents at PDD average around $5 psf/month, said Colliers' He. These rates position PDD higher than suburban biz parks asking $3.64 psf/month. City fringe biz parks command slightly over $6 psf/month, while city fringe office spaces goes for just under $8 psf/month, said C&W.
A solution in sight?
Could a solution lie in repurposing older biz parks or rezoning land reserved for biz parks use? In June, the URA approved the change of land use for some plots in the One-North area, previously zoned for business parks, to "residential with commercial at first storey" use. These sites will be put up for tender under the govt land sales program.
Asked if more biz park-zoned land could be similarly repurposed, JTC told the Business Times that changes are made to land use plans to address the needs of the various sectors as well as to support changing social demands and biz conditions.
"For One-North, it has been planned as a mixed-use estate since its inception. Therefore, the recent rezoning of biz park land to residential use was not due to a lack of biz park demand in One-North, but to bring workplaces closer to homes and further enhance One-North as a vibrant mixed-use biz park," said JTC.
"For Changi Business Park, JTC will continue to work with URA to review its master plan to ensure it remains relevant in meeting the needs of our industrialists," the agency said.
While 2024 will see a spike in new space, supply is expected to fall off sharply thereafter, said Savills' Cheong. "It is not a situation from oversupply coming from future projects, but a question of what will happen to the buildings from the 1st generation of biz parks here. In 10yrs time, what is presently the top-of-the-line biz parks may find it challenging to maintain its status as the premier campus to locate in. Gentrification doesn't seem to be a word in the biz park space."
CNA reports HK residents are going to Shenzhen to shop. Implications are HK retail/commercial property rentals to remain depressed.
1 July holiday figures:
Is there a growing trend compared to the COVID period, when no one could go to China, or a growing trend compared to pre-COVID days?
As per the slides below (page 30), Hong Kong residents were already making 80 million trips annually to China in 2018.
https://www.wta-web.org/wp-content/...Analysis-Report-of-Chinas-Inbound-Tourism.pdf
The retail sales speaks for itself. The stats is consistent with the big picture of HK residents spending more in Shenzhen instead of in HK.
So the question is how much of it is priced in? Is the discount on the future of HK properties large enough? Link REIT share price continues to go down to new lows in past 3 days.
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2023 retail sales were distorted by their consumption vouchers; anyone doing a YOY comparison will be comparing against an abnormal base. The value of those vouchers is not small; they are equivalent to one month of HK spending at HKD 30bil. Hongkongers were already big spenders in China even during the pre-COVID days. As for the increased purchasing power, their rate now, as compared to the 2017/18 days, was probably 5% better when Hongkongers made 80mil annual trips to China back then. If Hong Kongers ' spending more in China is a problem, that problem already started back in 2018.
https://www.scmp.com/news/hong-kong...ut-hong-kongs-2023-round-consumption-vouchers
Their problem seems to be that not enough Chinese tourists. Peak arrivals in 2019 were about 56mil, now, they are still 40% short, which means 20mil+++ fewer tourists as compared to the old days. Locals' spending is unlikely to cover that shortfall.
https://hongkongfp.com/2024/05/14/h...391,381 visitors,which were from the mainland.
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