Saturday, July 14, 2012

Strong interest in mixed-use projects


Straits Times: Sat, Jul 14

MIXED-USE projects where flats run up against shops and other commercial outlets are the property industry's latest big thing - but they can also turn out to be a mixed blessing for buyers.

Noise, crowds, lack of privacy and faster wear and tear are among issues that can affect the lifestyle in such developments and hit the resale potential.

But whatever the pitfalls, the mixed-use tag on a site is proving irresistible for developers, as some recent en bloc sales testify. Novena Ville went for $131.52 million in May to a subsidiary of the Fragrance Group. The sale generated profit of about 30 to 40 per cent above current market prices for both apartment and shop owners.

In March, the freehold mixed-use Seletar Garden was sold en bloc for $96.2 million, well above expectations, to a consortium led by Oxley Holdings.

Both sites can be redeveloped into new mixed-use projects.

On Wednesday, the Urban Redevelopment Authority (URA) announced that a mixed-use site has been triggered for sale by a developer who offered to bid at least $154.5 million.

There is a similar level of interest from home buyers, property insiders said.

Interest in such projects was revived as developers try to be more creative amid a substantial housing supply, noted R'ST Research director Ong Kah Seng.

Punggol's Watertown was about 95 per cent sold as of May while Bedok Residences was over 88 per cent taken.

The condos averaged $1,454 psf in May and $1,297 psf in April respectively.

Mr Alan Cheong, Savills Singapore's research head, noted that mixed-use projects make it easier for people to shop for necessities and can be a more attractive option than a secluded condo. But property agents said buyers have raised concerns, including congestion, noise and security.

'Security, privacy, noise control and separate private entrances for residents are taken into consideration when we design such developments,' said Mr Chia Boon Kuah, chief operating officer for property sales at Far East Organization. The developer is behind mixed-use projects Watertown and Hillier.

Mr Chia added that the concept has 'caught the imagination and interest of home buyers, investors and retailers in Singapore who are increasingly well-travelled and have seen and experienced different lifestyles'.

However, buyers should not assume that there will be buoyant resale interest.

'It really depends on the state of the mall then, and there will be buyers who value exclusivity and quieter living options,' said R'ST's Mr Ong.

Generally, projects with single-owner malls who can control the tenant mix may fare better than strata-titled ones.

Some upcoming mixed-use projects, such as The Hillier and Bedok Residences, are classified as 'apartments', which means they may not come with full condo facilities, Mr Ong noted.

Mr Cheong added that well-maintained, well-located projects, or those with a bigger residential component, may do better because of stronger branding and identity.

For instance, the 40-year-old People's Park Complex has been quite successful recently given its good location. A 1,173 sq ft unit was sold for over $1 million last month while a similar-sized unit went for just $322,575 in 2007. The project is a 99-year leasehold development.

'It has excellent rental yield from high-intensity tenancy... but it is peculiar and will most likely not work in a new suburban mixed development,' Mr Cheong said.

The 16-year-old Crescendo Building, in Siglap, a freehold development, is also fairly sought after because it is well-maintained. A 1,302 sq ft unit was sold for over $1 million in March while a similar-sized one sold for $750,000 back in 2007.

Residents in mixed-use projects said they like the concept for its convenience and vibrancy. A home owner at King's Arcade in Bukit Timah said: 'It's actually not very noisy and I have no real security concerns. I've been living here for about five years. It's a good location... near my kids' schools.'

  
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