Monday, January 28, 2013

Hot interest in Alexandra sparks talk of boom


Rising demand for retail space,swingin interest to commercial units: Analysts

The Straits Times
January 26, 2013

THE popularity of retail units at Alexandra Central has pushed the neighbourhood into the limelight, with growing talk that it could become the new hotbed of commercial property investment.

Earlier this week, buyers thronged the project's showroom, snapping up almost all 116 shops, with some units commanding a staggering $8,000 per sq ft price tag.

Agents The Straits Times spoke to say a 161 sq ft unit at the upcoming project could fetch $5,000 a month in rental, which translates to $31 psf a month.

This has sparked talk among shop owners and investors that commercial property in the area could be poised for rapid growth.

The mixed-use development is at the junction of Alexandra Road and Jalan Bukit Merah, and is next to Ikea and opposite Queensway Shopping Centre. Anchorpoint mall and a row of shops at the Alexis condominium are both nearby.

A unit at the Alexis was recently rented out for slightly above $10 psf per month for the 1,100 sq ft space but agents said buyers who purchase a unit could expect rents of up to $20 psf per month for a 400 sq ft unit.

Mr Steven Tan, managing director of OrangeTee, said prices in the vicinity have risen significantly in the last few years.

"For example, a ground-floor unit in Queensway Shopping Centre with a size of 376 sq ft was sold at $1.8 million which is $4,787 psf in March 2011.

"The same unit was sold again in October 2012 at $2.39 million which is $6,353 psf. Hence the gross profit is about 32 per cent within 11/2 years."

Data from SLP International also pointed to a rise in such sales with transactions limited mainly to Queensway Shopping Centre.

Last year, 13 strata-titled units were sold at the centre, a jump from the four units sold in 2009, with prices over the years averaging $2,770 to $4,040 psf.

Some analysts said this could be the result of higher demand for retail space in the neighbourhood to cater to the growing resident population.

But other analysts are convinced it stems largely from the swing in investor interest towards commercial property.

Mr Nicholas Mak, head of research at SLP International, believes it is the result of the stiffer measures put in place to limit the froth in residential property sales.

"Redhill as a neighbourhood has more commercial property potential because there is more available land for future developments.

"While there might be some trickle-down effect from Redhill, Queenstown and Alexandra are fairly built up and the MRT station isn't that close by. So any retail spending will have to come from the existing residents."

But OrangeTee's Mr Tan said the limited supply of retail shops could lead to higher rents and sale prices in the future.

While that may be good news for investors, it is a growing concern for shopkeepers.

Mr Ken Lim, 51, who runs a 27-year-old shoe retail business at Queensway Shopping Centre, has seen rents in the building double in the last one to two years.

"Some of the new owners have been convinced by agents that they can charge higher rents. But what does this mean for shoppers? The higher the rents, the more (retailers) will have to charge. It might mean people will start shopping elsewhere."


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