Real Estate Asia 2021

Page 1

Issue No. 01

Display to December 31, 2021




Real Estate Asia




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eal Estate Asia highlights the increasing trend among residential buyers to move into integrated developments with spaces that can serve as their home, office, and a place to entertain guests all in one.

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Real Estate Asia is the industry portal serving Asia’s dynamic real estate industry. Each section carries a balance mix of articles which appeal to the C-level executives of large real estate developers, investors, brokers and property services institutions in Asia. Do reach out to us if you would like us to tell your story to our readers via print & online advertising or events.

PUBLISHER & EDITOR-IN-CHIEF Tim Charlton PRODUCTION EDITOR Janine Ballesteros PRODUCTION TEAM Vann Villegas Charmaine A. Tadalan Tessa Distor Jeline Acabo GRAPHIC ARTIST Mark Simon Engracial ADVERTISING CONTACT Aileen Cruz Karisse Coderes Reiniela Hernandez ADMINISTRATION ACCOUNTS DEPARTMENT ADVERTISING EDITORIAL

Employers are increasingly keen for their staff to return to the office, but many offices will need to go through some remodelling as workers look to more flexible and collaborative workspaces. Workers returning to the office with better comfort and security will be a focus point for office designs. In an exclusive interview, RSP Director Sonny Chionh shared that he would like to see more building owners and developers “reusing” their developments to keep infrastructures relevant without having to demolish and build new ones. See the full story on page 12. In another exclusive interview, CapitaLand Group’s Chief Sustainability Officer Lynette Leong discusses the company’s sustainability innovations, devising a new “Return on Sustainability” metric, the introduction of green leases at its developments, and pushing ahead with its ambitious 2030 Sustainability Master Plan. Read the full story on page 18. This issue also bears the coverage of the most recent awards programme that we’ve held, the Real Estate Asia Awards 2021. Check out the list of winners on page 28. Read on and enjoy!

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Sold on newstands in Singapore, Malaysia, Hong Kong, London, and New York. Also out in with online readership of 215,000 monthly unique visitors*. *Source: Google Analytics **If you’re reading the small print you may be missing the big picture   






FIRST 06 It’s back to work in 2021: CBRE 07 Designers need to keep ‘head space’ in mind when designing new office spaces

08 OrangeTee founder new venture specialises in cross border real estate

10 Core and flex leases, the new normal for residential projects: GuocoLand

SECTOR REPORT 20 Singapore residential market on track to break last year’s figures

22 Office property market to recover despite high vacancy rates


16 18 24 26 36 38 40

Published Quarterly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building 2 SINGAPORE REAL ESTATEBUSINESS ASIA | Q1 REVIEW 2021 | MARCH 2018 Singapore 069533




12 Greener ways to repurpose 14



developments Office space demand to grow to 1.35b sq ft: C&W SM Supermalls looking to create ‘smart cities’ CapitaLand pushes for global drive for sustainability Emerging markets lead REIT in Asia Pacific: APREA Sinar Mas Land project a hit among millennials Flexibility to drive a doubling in leasing activity: Colliers Not everybody can win in Thai real estate: Savills Philippine retailers struggling to rightsize: JLL

28 Here are the winners at the Real Estate Asia Awards 2021

32 Real estate leaders weigh in on the future of office

ANALYSIS 42 Architects design greener spaces for SG landscape

PROPTECH 44 Pave sees rising demand for overseas property investments

For the latest real estate news from Asia visit the website



News from Daily news from Real Estate MOST READ



How Singapore luxury home sales reached record highs in over a decade

Why senior living assets are lucrative property investments in Hong Kong

APAC data centre investment to reach another record this year

The massive jump in Asian wealth and the overall increase in wealth creation globally drove Singapore’s property sector to flourish in recent years. A recent report by OrangeTee said the industry benefited from a healthy inflow of foreign funds amidst the pandemic.

Real estate investors would do well to take a closer look at the senior living sector as it proves to have significant money-making potential. Ageing populations are forcing countries around the world to scramble to provide sufficient accommodation.

Data centre investment in APAC is set for a record year, with US$1.8 billion in direct data centre investments transacted in the first half of 2021, according to the latest research from CBRE.






Hong Kong, Singapore top list of most expensive rents globally

Seoul’s Grade A office market unfazed by COVID-19

Tokyo to see a number of new luxury hotels post-pandemic

A recent research by reveals the average cost of rent for three-bed properties in over 50 countries globally. Three countries from Asia Pacific made it to the list of top 10 most expensive places to rent a three-bed property.

The city’s CBD saw the strongest net absorption on the back of robust leasing activities. Overall net absorption in Seoul was 23,300 pyung in 4Q20. The CBD and Yeouido submarkets saw positive net absorption, while Gangnam’s figure turned negative.

Most hotel operators have taken a long-term approach and will open new sites in the coming years. Tokyo did not see any new luxury hotels open in 2Q21. According to JLL, the EDITION Hotel Ginza was scheduled for the spring but it has been delayed to 2022.




FIRST contractions this year. “We expect to see the rebound from 2022 onwards particularly for markets in Sydney, Melbourne, and Shanghai. Unfortunately, if you are in Singapore, you are probably already missing the boat because we will see huge rental contractions by this year and we will also see the swing back. So, the rent is going to continue to grow,” he said. “Based on our latest leasing sentiment survey, we have seen a wider recovery in terms of leasing sentiment in all the major markets, with an increase in leasing inquiries and office site visits. Office-based industries remain relatively healthy in terms of financial status. However, we are expecting to see a wider recovery in the first half of this year. Most occupiers will probably be looking at expansion plans for the second half of 2021,” he said.

Henry Chin, Head of Research at CBRE APAC

It’s back to work in 2021: CBRE


osses are increasingly keen for their staff to return to the office, but many offices will need to go through some remodelling as workers look to more collaborative workspaces, says Henry Chin, head of research at CBRE APAC. Whilst the trend is that companies are now adapting to having more flexible working options post-COVID, CBRE APAC’s conversations with occupiers have shown that a clear majority would like their workforce back in the office. “We do believe, after talking with Asia Pacific occupiers, that 70% of senior managers in APAC prefer people to be back in the office. As a result, companies will need to rethink their workplace design, and how they plan their workforces,” he said. When it comes to designing the workplace, Chin said that a more collaborative layout will be more in demand. Referring to solo cubicles as “me” spaces, he said that this old design will have to shift to “we” or shared space. “In the old days, we all had quite a lot of space for individual cubicles or concentration areas. Going forward, the future of the office is for people to meet, collaborate, brainstorm, and meet your clients,” he said. “Previously, 50% of our offices were ‘me’ spaces- in other words, cubicles. We 6


are going to see less of ‘me’, and more of ‘we’, so this is something that will cause a huge transformation for the future of office design,” he added. Lock in now “If we look at the markets across Asia Pacific, 2021 is still going to be a tenant favored market,” he said. CBRE APAC said that they advise their tenants to take advantage of the current market condition to expand or make plans before rentals begin to have an uptake and as the market recovers. “The good news in Asia Pacific is that we are leading global growth and we are better in terms of recovery according to economic projections for 2021,” he said. “We advise tenants to take advantage of the current market condition to renew, to expand, or to consolidate as 2021 will be a good year. I think that it’s going to outperform because of domestic consumption and recovery in global trade,” he added. Rebound is expected for Sydney, Melbourne, and Shanghai by 2022, whilst Singapore is already seeing rental

Revenge consumption For hotels and other properties fueled by tourism, he said that improvement may be seen through promoting staycations. Whilst tourism continues to be at a standstill, the short-term outlook will remain the same. He also noted that outbound investments for Asia are recovering and investors were observed to prefer investing in the Asia Pacific region. “When we talk about the tourism sector, we have to realize that travel restrictions and social distancing measures will continue to weigh down the short-term outlook. But we are seeing revenge staycations in some major markets in the region, so I’m not so bearish,” he said. “We are starting to see a recovery for Asian outbound investments in the next 12 months. Most Asian investors tell us they want to deploy more capital in the Asia Pacific region,” he added. As for retail, revenues are projected to be recovered by the second half of the year. The shift to e-commerce is reviving the industry but in the same way it must be ensured that the shopping experience is kept intact. “We do believe retail, particularly in Asia Pacific, is also here to stay because most Asians love shopping. The shift to e-commerce is fundamentally changing shopping behaviors. As a result, when we talk to retailers, they tell us they are going to redefine their online offerings,” he said. “In the study we conducted towards the

“In the old days, we had quite a lot of space for individual cubicles or ‘me’ spaces. Going forward, the future of the office is ‘we’ or shared spaces”

FIRST end of last year, 50% of retailers in the region said they want to resume their expansionary plans in 2021. They are predicting the assessed revenue to be back to pre-COVID levels in the second half as well,” he added. He shared that one retailer said that they are creating a concept of integrating experience in retail even if the shopping is now done online. Customers may adapt to the new trend in shopping by browsing through products online, but they can still go to the physical store to check the items out. This is good for the clothing sector, as some shoppers prefer to fit the items before purchasing them. “Some landlords are talking about the importance of experience in retail. So, for example, how can I capture the rent based on social impressions? Using technology to capture social impressions, and then translating this into online sales, is still very conceptual as of now. But we will increasingly see retailers embrace new performance metrics and lease formats in the post pandemic era, ” he said. Flight to quality Dr. Chin observed that the demand for logistics has now trumped the demand for commercial office spaces. “This is the first time in seven years that we have seen logistics overtake offices as the most preferred asset class. As of now our forecast is a 10% increase in terms of value in 2021.” For this to work, he said that facilities must be upgraded in logistics space. Technology advancement may also be integrated to meet the needs of companies, especially for those in the tech industry. “Developers need to start thinking about how to upgrade the supporting facilities in their logistics spaces such as cold rooms and server rooms to cater to the increasing occupier demand on the back of e-commerce surges,” he said. They also need to think about how they can use technology enhancements to improve efficiencies.Technology and consumer engagement will be more important than ever,” he added. Dr. Chin also noted that the future of office spaces looks positive, as opposed to what has been reported elsewhere. Based on studies conducted by CBRE APAC, a significant number of companies are looking into expanding their office spaces instead of closing their doors. The real test will be the flight to quality adaptation of the companies, developers, and lessors in offering these spaces.


Designers need to keep ‘head space’ in mind when designing new office spaces


ffering workers returning to the office better comfort and security will be a focus point for office designs, Ronald Lu and Partners’ Vice Chairman Bryant Lu believes. “I think COVID-19 changed how we behave, how we live, how we work. We need to start with your physical space. Right now, when we enter an office building, we expect to have our temperatures taken. From an immediate security standpoint, this is how a building can feel safer and healthier,” Lu said. Aside from physical aspects of the building, having a well-designed personal workspace can also help improve a person’s mental health. If a person feels safe at their desk, this will benefit their overall mental state and ultimately benefit their work as well. “It’s going to be in a very macro sense. But on the individual level, we are really talking about the mind space, how one feels better and more secure,” Lu said. ”Peace of mind is something we need to consider, beyond just the technology or the physical aspects of any spaces,” he added. Lu’s firm still sees a need for physical offices despite the conversion of many businesses to digital. Offices remain especially important for instances when there is a need to resolve a problem, or a project requires collaboration among specialists to flesh out the creative process. “There’s still a special magic that occurs when you meet face to face, particularly when you need to solve a problem or create something. Things become more dynamic in a workshop-type environment,” he said. “Recently, there is a trend towards more offices having a higher proportion of meeting rooms, or spaces where people come in and meet and discuss and be creative. This is compared to the traditional workplace, which used to be 70% workstations and 30% meeting space. I definitely think that ratio is bound to switch in some industries,” he added. Modern and sustainable elements Lu said that most of the firm’s recent and upcoming projects are focused on sustainability. In a new factory in China, for example, the firm has adapted a design to make the factory future-ready. It was made with the modern factory worker in mind, and includes sustainable features such as technologies that will reduce the consumption of water. “In China, that factory is super sustainable. The whole design of the infrastructure is very modern. The intent is to bring dignity back to the factory worker,” Lu commented. “We imagine that in future workplace, particularly in industrial plants, most of the

Ronald Lu and Partners’ Vice Chairman Bryant Lu

work will be done by machines. So the average worker, instead of being a traditional blue collar labourer, will actually be a computer programmer. Our industrial plans focus on designs for the new era of factory workers,” he added. Another project is a five-million-square-foot , mixed-use and transport-oriented development project in Shanghai. The firm has completed two phases of the project, with the last phase about to commence.The development has a retail shopping mall connected to the metro, with office, hotel, residential, and transport elements that are all fully and seamlessly integrated. “The project has seven live train tracks running underneath, with two of these already running. The idea is to create, through this transport-oriented development, a seamless community environment in a town which is slightly outside the centre of Shanghai,” Lu said. Research-backed designs Lu’s firm takes pride in painstakingly researching all its projects. With the pandemic rapidly changing trends and needs in the real estate industry, worldwide knowing what changes are necessary from an architectural angle is more important now than ever before. The firm is currently researching how to integrate and improve the retail shopping experience so that customers will feel an incentive to go back to physical stores. Lu feels that they are looking to create more interesting and modern spaces that people will be compelled to visit after the pandemic. REAL ESTATE ASIA | Q1 2021


FIRST to the details of the properties through the portal from the start. “We want to increase the transparency in any property transactions. That is why when you get into the portal, you get to see the daily international property news update, then you get to see legal advice free of charge in our portal here,” he said. “When I said I want to increase the transparency, what we’re doing is actually we are reversing the whole buying process by allowing the investor to see what happened to the market first,” he added.

Dave Loo, founder and CEO of OrangeTee

OrangeTee founder new venture specialises in cross border real estate


ave Loo is well-known in Singapore real estate circles as the founder of OrangeTee. Now he is back with his new venture, whyborder, which is a specialised real estate portal for buyers of international property. Buying property nowadays has shifted from having traditional physical walk-in appointments and oculars to having virtual 3D tours. Whilst technology is opening more doors for developers to reach out to a wider base of customers, online portals with various real estate services have likewise been in demand worldwide. Founder and CEO Dave Loo told Real Estate Asia that whyborder aims to sell any property listed on its portal within 45 days. “The aim that we try to achieve is actually no listing will stay in my portal for more than 45 days, that means we want to make sure that when you list a property with us, we can help you to sell the property globally, within 45 days,” he said. “Our existing network globally, direct contact with investors, and agency network in all these cities, are also key reasons why we think we can sell properties within 45 days,” he added. Loo has been in the real estate industry for multiple decades. From starting 8


OrangeTee in 2000 and selling properties overseas in various regions, he now brings his expertise into launching whyborder which opened in February 2021. “In the past, what we do is we go to various locations, mainly in Asia, to do weekend events on Saturday and Sunday. We book a hotel, and then we bring overseas property into this hotel and do an exhibition over the two days,” he said. “Over the last about 20 years, we actually developed ourselves or we actually made ourselves known among developers in these 24 countries and 54 cities. Now we are putting everything into the portal. We can make the whole marketing cost a lot cheaper and the buyer can buy at the quickest speed. So, this is actually a new model right now.” he added. When the company conceptualized how they were going to build the portal, Loo said that their main goal was to increase transparency with the customers. Instead of the buyer first being contacted by an agent, prospective clients are given access

Key markets Loo said that whyborder has observed that Asian investors have 10 to 12 key cities where they seek to buy properties. Among these are Singapore, London, Bangkok, Kuala Lumpur, Vancouver, Toronto, Manila, Sydney, and Melbourne and Perth. Whilst some buy for personal homes, such those who send their children to study abroad, there are also some who buy properties to use as ‘weekend homes’. So where are these people buying? “It depends on the country. Let us say in the case of the UK, I think what you see quite a big percentage of is buying for kids to study there for personal use. Then places like Bangkok, Thailand, you will get to see a new segment that people are buying there for weekend homes,” he said. According to Loo, the Thailand real estate market is currently facing quite a severe oversupply situation. It has resulted in more buyers becoming interested to invest as property prices take a dip. “A lot of investors enter this market because they’re getting a very substantial discount. There have been those who are actually eyeing this market,” he said. “One of the key reasons why we want to develop this portal is to make sure that developers can maintain the low marketing costs. Then, they can make sure that they sell the price locally and overseas at the same level,” he said. “When you come to this portal, we assure you that you’re buying at the same price as the local, so you will not suffer despite buying from overseas. The key objective is to make sure that both locals and overseas buyers can buy the property at the same value,” he added.

“The existing network globally, direct contact with investors, and agency network in cities, are key reasons why OrangeTee can sell properties within 45 days”




Driving Growth Through Education AWARD WINNING EDUCATION









GuocoLand Group President and CEO Raymond Choong

Core and flex leases, the new normal for residential projects: GuocoLand


or GuocoLand Group President and CEO Raymond Choong, it meant quickly pivoting to digital sales channels for its residential projects and pioneering the concept of core and flex space in its office leases. In today’s “new normal”, the trend among residential buyers is to move into integrated developments with spaces which can serve both as their home, office and a place to entertain guests. And for companies, they are looking for full amenities in and surrounding the development such as gymnasiums and quality restaurants. In an exclusive interview with Real Estate Asia, Choong shared that GuocoLand had the opportunity to showcase itself as a responsible and trustworthy developer. “I think this experience last year gave us the opportunity to demonstrate that we are a responsible and trustworthy developer. During the pandemic, we took a lot of steps to help our customers and tenants. We were also reminded of the importance of differentiating ourselves in this market. We showcased our thought leadership through our residential projects in terms of coming up with new innovations and ideas to promote our developments,” he said. GuocoLand faced challenges such as 10


delays in constructions and restriction of entry of their overseas workers. These were quickly remedied with the help of contractors and the company’s decision to build separate dormitories for their workers. “In the initial stage there was a major lockdown of foreign workers, but that has been resolved now. So we’ve got back a lot of foreign workers on site. We were quite fortunate that our contractors were able to get their workers back on site and we also built our own dormitory within some development sites,” Choong said. With possible tenants and buyers from abroad not being able to physically visit the different sites available for lease or purchase, GuocoLand developed and offered its own virtual tools to enable continued purchases from international buyers. Potential buyers were able to virtually visit their spaces, engage in webinars or online seminars, and communicate with the sales team wherever they were. Choong said this new system has been integrated into the sales process moving forward.

“With the closure of borders and inability to reach out to buyers face-to-face, especially those outside the country, all our businesses in Singapore, Malaysia and China have developed their own virtual sales capabilities including virtual tools,” he added. “You can visit sales galleries or see the actual units virtually, and engage potential buyers via webinars. This has, in a way, become quite an important part of our sales process now.” When asked if GuocoLand might face challenges in the coming months, Choong said it would be the changing attitude of buyers and tenants as consumers are more careful now with what they invest in. “We expect construction costs to continue to go up given the shortage of labor and disruption in the supply chain. We also think that consumer sentiments are impacted with this experience, and people are more careful with the way they invest,” he said. “On the positive side, interest rates today are very low. Consumers are looking at ways to protect their wealth. With very low interest rates, real estate is one asset class that is on their radar and we see that happening in Singapore as well as in some parts of Malaysia and China,” he explained. Maintaining the lead with open and modern commercial spaces Choong also said that GuocoLand will maintain its position as a top developer, and he mentioned Guoco Tower as reference. Guoco Tower is a mixed-use development located in Tanjong Pagar in Singapore. It is one of the company’s most known developments, and shot to fame when British vacuum cleaner designer James Dyson reportedly paid $70m for the penthouse apartment. Choong shared that this property’s popularity is mainly rooted in the building’s character. It does not appear to be boxed up, has open spaces, many green features, and is a mix of both commercial and residential in a heritage area. “In Guoco Tower, the F&B outlets are not confined within four walls. You’ll find that it is popular because it’s open,” he said. Choong added that the main consideration of most buyers is how the space is efficiently utilised by developers.

“To be able to visit galleries, see actual units virtually, and engage potential buyers via webinars is now an important part of the sales process”





Greener ways to repurpose developments

“Reusing” rejuvenates and keeps infrastructures relevant: RSP


n an exclusive interview with Real Estate Asia, RSP Director, Sonny Chionh, shared that he would like to see more building owners and developers “reusing” their developments. “The goal is to keep the infrastructure relevant without having to demolish it and build a new one. We do a lot of what we call Asset Enhancement Initiative (AEI) or rejuvenation projects to give buildings a new lease of life. It can include updating of fixtures to stay contemporary in keeping with times to being as major as changing its exterior or reconfiguring the entire layout,” he said. “Because you are not demolishing a building, less waste is generated. On top of that, you are reusing different existing elements, which means less material is used,” he said. “Such enhancement or rejuvenation would hence be generally more viable. AEI can be done while the building remains operational. This can be an important factor for the developers and building operators,” he added. RSP had been a forerunner in AEIs in Singapore, having worked on projects such as Republic Plaza, 6 Battery Road, Chevron House, Raffles City Shopping Centre, Plaza Singapura, Grand Park City Hall Hotel as well as the recently completed Great World City. The 20-year-old Great World City went through a refresh and saw an enhanced and renewed tenant and shopper experience unlocking new value for the old building. It was given a new façade, enlarged voids for greater visual connectivity, and reconfiguration of walkways and escalators for better flow and navigation. “Another opportunity to tap for rejuvenation projects is to use as much of the existing structures as possible. Give it a new lease by having the new look on it. That also means less carbon emissions or footprints that usually comes from energy required from concrete and steel products,” he added. “One of our works that is very close to many people’s hearts is the new Coastal PlayGrove at East Coast Park. The design retained part of the former water theme park, Big Splash’s iconic multi-coloured slide structure and reimagine it as a vertical playground with a lookout tower. It becomes a new but familiar landmark,” he said. Vernacular architecture In the same manner, RSP also aims to create designs that use resources or materials that can be found within the region or in neighbouring countries. This is having that appreciation of vernacular architecture, with its pragmatism in the use of materials and not just stylistic 12


RSP Director, Sonny Chionh

Rejuvenation projects will use as much of the existing structures as possible. That means less carbon emissions that usually come from energy required from concrete and steel products

approaches. “The concept of vernacular architecture is that we try to use resources from where the building is located. We don’t want to be transporting somewhere far away when we could transport from our neighbouring countries in the region. In the same spirit, what the industry should focus more on is the ‘embodied energy’ which is the sum of the energy directly or indirectly associated with the entire lifecycle of the material including its production, maintenance when applied in buildings and eventual demolition. If we are conscious of these concepts, the amount of carbon emission reduction can be very substantial. So, we would like to maybe see more of that happening,” he said. Saving energy In line with these projects, RSP has also developed energysaving buildings. One of these is Holiday Inn in Clarke Quay where the company applied the design of having the hotel facade slanted in order to control the sunlight and heat that will be coming into the rooms. The overall energy savings for this hotel have recorded annual savings is about 33%. “The windows are designed in a way that they are tilted. Rigorous sunshade studies and detailed models

INTERVIEW helped to determine this intricate geometry so that we reduce the amount of sunlight coming into the guest room. In addition, this type of design gives the hotel an architecturally interesting and distinctive façade” he said. “This contributed to reducing the overall energy consumption,” he added. Apart from building a structure in this manner, RSP also introduced energy-saving feature by removing airconditioning from the room corridors. “We were really realizing that if we can cut down on the kind of air con spaces that we have in a building, it tremendously reduces the energy consumption to the building and it actually worked out. One of the big things that we have to do was to try to make naturally ventilated spaces,” he said. “When you come into a hotel, the expectation is that you come into the corridor and then impose a controlled aircon environment on it. We took the aircon component out from there, so that saved a lot. The corridor space adds up to almost 1/3 of the entire building, so now we see so much electricity and energy consumption saved,” he added. Whilst this was an exciting endeavour, Chionh admitted that they had trouble dealing with condensation at the initial stages. The firm was able to sort it out later on. “At the very beginning, we had quite a fair bit of issue with condensation. We went to look at some paint coating to reduce the condensation and put in a bit more layering within the affected rooms,” he said.

Looking forward: Renewable energy as well as for productivity and sustainability to go hand-in-hand Chionh is hopeful that the reception towards saving energy, specifically by using solar panels, will be more embraced in the coming years. “Solar panels are gaining a lot more momentum. We have been talking about solar panels for many years but it just doesn’t seem to gain sufficient traction. But with the government push to put solar panels on HDB flats, industrial buildings, there is a lot of market interest and more manufacturers popping up,” he said. “Another key trend to look out for is the use of more productive and green construction method. An example is Prefabricated Prefinished Volumetric Construction (PPVC). It is a building method wherein a structure where 3-dimensional modules completed with fixtures are manufactured off-site. Compared to the traditional way of construction, PPVC method takes a shorter time to complete, and has a better site environment,” he added. Debris coming from masonry construction continues to be a problem both in terms of the waste it creates and the emissions it brings compared to PPVCs where there is more construction control in a factory environment. “We have used PPVC for a school we have completed recently, and we are even using it now for a new hotel project. As the industry becomes more conscious of creating a sustainably built environment and the government’s push with the Green Plan, there is indeed a lot to be excited about and look forward to,” Sonny added.




Office space demand to grow to 1.35b sq ft: C&W India is next to China in becoming a powerhouse in the Asia Pacific region.


ore office space will be required in Asia Pacific over the next ten years than the previous decade, despite the challenge from work from home arrangements, forecasts Cushman & Wakefield CEO for Asia Pacific, Matthew Bouw. A total of 1.35 billion square feet of office space is projected to be required in the next decade across the Asia Pacific region, a 66% increase from the 800 million absorbed by corporate occupiers over the last decade. It’s a phenomenal figure especially when you consider just how busy the region’s skylines have been with construction cranes over the past decade. And they’re bound to be busier in the next. “55% of the office construction worldwide is in APAC and construction is already underway. From now till end 2024, we are anticipating an average of 120 million square feet of office space to be built each year,” Bouw said. Demographics, economics and other factors which are impacting the office sector will also drive activity across all real estate asset classes this decade. Across the world, 1.94 billion square feet of Grade A offices were added between 2010 and 2020. From that figure, APAC had the largest share at 42%. Bouw said that this is larger than the Americas and Europe. “All of those trends in our Asia on the Rise report population growth, GDP growth, middle class consumers, working age population, growth in knowledge workers will have an impact on office demand. The world is forecast to require 2.1 billion square feet of office this decade and of that, 65% will be in APAC.” Bouw said that the growth of the real estate sector in APAC until 2030 will generally be driven by the projected growth of the country economies within the region. “If you think about the world economy between now and the end of the decade, it is going to grow from US$87 trillion to about US$114 trillion. Asia Pacific is going to lead the growth,” he said. “It will lead not only as the largest regional economy in the world, but also as the fastest growing regional economy in the world. By the end of the decade, the Asia Pacific economy as a region will make up 40% of the world’s overall GDP output,” he added. Leading this growth are three primary areas in APAC: China, India, and the Association of South East Asian Nations or ASEAN. “The Chinese economy is forecast to grow by about US$8 trillion by the end of this decade. That equates to 59% growth in the Chinese economy, growing from about US$14 trillion to US$22 trillion. That is the equivalent of adding the econo14


Cushman & Wakefield CEO for Asia Pacific, Matthew Bouw

If you think about the world economy between now and the end of the decade, it is going to grow from US$87t to US$114t. APAC is going to lead the growth

my of France three times over,” he said. “Contrasting it to the US, the US economy is estimated to grow 25% in that time. As a result, the Chinese economy is quickly catching up to the US as the world’s largest economy,” he added. India is seen to improve in the next decade, alongside ASEAN countries such as Indonesia, Vietnam and the Philippines. “India is currently ranked the seventh largest economy in the world. By the end of the decade, it will ascend to be the fourth largest economy, forecast to grow by an astonishing 67%,” Bouw noted. “The third powerhouse economy is ASEAN that is made up of a bloc of 10 countries with fast-growing South East Asia economies like Indonesia, Vietnam, and the Philippines. This bloc has a total population of 667 million and its GDP is forecast to grow at around 4.6% per annum over the course of the decade,” he added. “This is impressive when you compare the forecast annual GDP growth for EMEA is 1.6% and the Americas at 2.1% for the same period.” India as the next big powerhouse Bouw highlighted India as one of the more promising countries that is likely to grow rapidly in the next decade. Whilst China will still lead by a large mile, India is projected to become the third biggest contributor to growth in the APAC

INTERVIEW region, after China and Japan. Using commercial real estate giant Blackstone as an example, India’s real estate market is expected to grow rapidly, backed by strong potential demand and a large and relatively young population. “Blackstone is one of the largest owners of Grace A office space in India, with an estimated 125 million square feet. This is a good leading indicator of what is happening in the Indian economy,” he said. “One of the areas that gives investors a greater level of confidence is around the regulatory reforms in India. They put in place bankruptcy laws and the Real Estate Regulation Act (RERA) to help regulate real estate,” he added. Just in the last two years, Bouw said that large global institutional investors such as Blackstone and Brookfield have kicked off the first ever real estate investment trusts (REITs) in the Indian market. This shows India becoming a more mature real estate market. “An important stat for investors is the ease of doing business index and India’s position has improved by 79 places over the last 5 years,” he said. “On the corporate side, companies like IBM and Microsoft have big footprints in India which includes global capability centers - BPOs, R&D and innovation,” he added. Middle class to drive growth Real estate activity will be driven by the growth in middle class in Asia Pacific.

There are currently 7.8 billion people in the world, 3.7 billion of those are classified as middle class and of that, 2 billion or 54% are based in Asia the region. Based on the forecast growth in the middle class, 89% is going to come from this region. This decade, 2020 to 2030, the world will add around 1.67 billion middle class consumers, of which about 1.5 billion will be in APAC. “So, what does that mean? Fundamentally, across all real estate asset classes, whether it is office, retail, industrial, logistics, hotels, residential, you are likely to see significant growth in demand over the course of this decade.” Bouw noted.

More office space will be required in APAC over the next decade

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SM Supermalls looking to create 'smart cities' SM CEO shares plans for integrating shopping malls into more communities.


hen the Philippine government ordered the shutdown of malls and asked workers to stay home in March 2020, SM Supermalls president Steven T. Tan knew he had a problem. The easy solution was to do nothing, but for Tan there were opportunities in this crisis. Perhaps nowhere else in Asia are shopping malls as important to the people as the Philippines, and with SM’s Mall of Asia being the largest, they are certainly super scaled. In this interview, Tan shares how he and his team sprung into action: by repurposing laid off jeepney drivers to do deliveries, by establishing a 1 million Viber social community channel, by allowing customers to pick-up their orders curbside—all whilst working with tenants to keep commerce flowing and keeping all employees on the payroll even if they were ordered to stay at home. From the start of the lockdown, SM already knew that the changes it had to take would not stop on corporate and tenant needs alone. Customers had to be up the priority list, whether they be from commercialized cities or in far-flung areas. SM focused on developing its omni channel retail efforts in order to meet the new demands and needs of its customers. Curb-side pick-up, home delivery, and personal shopper services were immediately made available in its shopping malls. SM also tapped into third-party applications like GrabFood and LalaFood to make their tenants reach a wider market amidst the pandemic. “[We] fast-tracked our omni channel retail efforts so that whether you want to buy anything from the malls or have it delivered to your home or you just want to pick it up on curbside, [you] can actually call a personal shopper to do your errands for you or you order from the countless third-party application apps that we partner with,” Tan shared. Displaced drivers as delivery service In far-flung areas where these third-party applications are not available, SM partnered with displaced jeepney and tricycle drivers to deliver orders. Aside from the corporate working class who lost their jobs during the height of the pandemic, public transport drivers were also out of business as most public transport operations in the Philippines were halted by the government whilst the lockdown was in full swing. “There are a lot of places where third-party apps are not yet available…we used displaced jeepney drivers or tricycle drivers that were not allowed to take passengers to facilitate delivery of orders for the mall, for the shopping centre,” Tan explained. He shared that by doing so, many jeepney drivers were able to learn and adapt in providing a more sustainable transport 16


SM president Steven T. Tan discusses how they adapted mobile channels to reach their customers amid the pandemic (Photo by

service through deliveries. “They cannot even ply the road or take any passenger, so what they did was they also pivoted. They also transformed their business from a jeepney driver taking on passengers to a delivery service for the shopping centre, to deliver goods for the people,” he said.

SM focused on developing its omni channel retail efforts to meet the pandemic-era demands and needs of its customers

Adapting to the ‘new normal’ SM Supermalls also had to adapt and turn to mobile channels in order to reach their customers. During the lockdown, movement was restricted for everyone who were not considered essential workers. This resulted in the majority of Filipinos switching to now-giants in e-commerce Shopee and Lazada in order to fulfill their shopping needs. Other online sellers outside these two platforms would also opt to deliver their goods via Grab, Lalamove, or other delivery or courier service. This spike in online retail shopping introduced a new change to local buying and selling trends in the Philippines. Tan said the very next day the first lockdown was imposed, SM set up its own Viber community. From having 100,000 followers overnight, it now has millions. “[Our] Viber community is the biggest Viber community created. We created that Viber community the following

INTERVIEW day the mall was on lockdown. The mall was locked down on March 16 [2020]. On March 17, the Viber chat group is already up and overnight we had over 100,000 followers,” he added. From exploring fresh ideas to reach their customers, Tan shared that SM Supermalls also provided rental relief for tenant partners and assisted in the reopening of their businesses. The same benefits were provided for micro, small and medium enterprises (MSMEs) which first opened or fought to survive during the pandemic. “Our tenant partners were very much affected negatively of course but we didn’t stay still. First, SM [gave] rental relief. Then, we used the time to prepare them for the reopening of the malls,” Tan said. “We promoted our safe malling procedures heavily, help the so-called MSMEs or micro and small and medium entrepreneur tenants to open and survive. We also invested heavily in technology to keep the malls clean and COVID-free.” Mall expansion plans post-pandemic With shoppers going back to the malls in the recent months, Tan is positive that the SM shopping mall experience will continue to be a hit among Filipinos. “We are bullish about the Philippines and I think as soon as the vaccine is here, we foresee that there will be a return to a high growth to our economic status as we have had in the previous years prior to the pandemic,” he said. New malls will open in the Philippines by the third quarter of this year. Included in the list of newly opened and soonto-be-launched malls are SM Butuan and another SM in Zamboanga in Mindanao, SM City Roxas in Visayas, and SM City Grand Central in Monumento in Luzon. “We do not intend to slow down on our commitments to grow especially in underserved regions such as Mindanao… SM Butuan and SM [in] Zamboanga have opened to high volumes of foot traffic all eager to have the branded SM experience,” Tan shared. “These are all happening within the year… the tenants are already constructing. We are opening these malls by third quarter this year. But aside from new malls, we also have many malls which are expanding and renovating in the next five years,” Tan said, adding that renovations will also be done to existing malls. Compared to the situation experienced by the company in the Philippines, however, Tan said construction activities in China progressed fast last year. “Last year, China was a revelation. At the beginning of last year, the pandemic did have a certain impact in SM’s new project in China but with the efforts and support [by] their government pushing for the economy to move forward, [they] recovered very quickly,” he recalled. “[Once] the pandemic lockdown was lifted, we were able to start construction by the second quarter of 2020 last year as there was not really so much restriction in terms of construction as compared to operational malls,” he added. SM Supermalls is poised to open SM Xiamen Phase 3 and SM Yangzhou soon, adding to the retail giant’s already stellar portfolio in China. Tan shared that business recovery was faster in China. The country closed its borders in February 2020, resulting in an

Curb-side pick-up, home delivery, and personal shopper services were immediately made available in SM shopping malls

earlier reopening date. By May 2020, the malls reached 80% of its previous year’s sales. “We closed malls here in the Philippines mid-March but in China, as early as [the] first or second week of February they already closed… In late March they were already back to normal, and as early as May last year, they were almost at 80% of the previous year’s sales,” Tan revealed. Future SM projects to include ‘smart cities’ Tan compares shopping malls in the Philippines as modernday plazas. This, partnered with Filipinos’ preference of shopping in person, makes SM’s projects a hit in the country. “Filipinos are more tactile…I think it’s [in] the Filipino culture that they really want to meet up with friends, go out and dine together, and to go out to the mall, unlike in China where you have other areas where you could enjoy—like go to parks, go to museums, etcetera,” he said. The retail and real estate giant owns and operates residential condominiums, office buildings, several e-commerce centres, resorts, convention centres, concert venues, and a university, apart from its numerous shopping malls and stand-alone supermarket branches. Tan shared that in the future, SM is looking into creating more “smart cities”, similar to that of the Mall of Asia complex located in Pasay City in Metro Manila. The Mall of Asia complex covers 67 ha, in which the shopping centre alone occupies 19 ha of footprint. “I think SM still is very committed to [developing] sustainable, resilient and smart communities through its real estate portfolio, whether it is shopping malls that are integrated with schools,” he said. “We have a lot of assets [that] are part of a community where everything is within easy reach and transportation is not going to be a problem, so [in] the future there would be smart cities that would be put up all over the country,” he emphasized. When asked if SM is positioning itself alongside international giants such as Alibaba, Tan said the company would prefer to work with them rather than compete. “We’re not here to compete with any online or e-commerce platform. As a matter of fact, we embrace them. We welcome them to our malls,” he said. “Customer is king. You have to give whatever they are looking for and make it available to their doorstep,” Tan said. “A brand has to be both shoppable and shippable. It cannot just be either or.”

Tan compares shopping malls in the Philippines to modern-day plazas




CapitaLand pushes for global drive for sustainability Devising a new metric to measure sustainability outcomes.


n an exclusive interview with Real Estate Asia, CapitaLand Group’s Chief Sustainability Officer Lynette Leong who is responsible for elevating the company’s sustainability strategy and policies, discussed CapitaLand’s 2030 Sustainability Master Plan, its sustainability initiatives, and how the company is teaming up with various agencies in Singapore to drive long-term changes. From sustainability innovations, devising a new “Return on Sustainability” metric, to the introduction of green leases at its developments, one of Asia’s largest diversified real estate groups CapitaLand is pushing ahead with its ambitious 2030 Sustainability Master Plan. Globally, CapitaLand owns and operates a wide array of assets such as offices, retail malls, business parks, logistics, data centres, integrated developments, and lodging and residential spaces. Leong said this brings about a challenge as to how the company can fully execute its sustainability efforts across all areas. For this, CapitaLand has crafted a Sustainability Master Plan for the next 10 years. The company is hopeful that it will elevate its sustainability efforts in the over 30 countries where they are present. “We have a huge global footprint. Our footprint cuts across more than 230 cities in over 30 countries. And at the same time, we have a diverse portfolio of different asset classes. With this complexity in our business model and each different asset class having different specifications, it makes sustainability a lot more challenging to execute,” Leong said. “Which is why CapitaLand’s Sustainability Master Plan is supposed to be more effective in doing that. We set ourselves ambitious goals for the next 10 years. With this complexity, it’s necessary to continually innovate and bring new ideas into the way we run operations,” she added. CapitaLand Sustainability X Challenge In its efforts to explore more ways to apply sustainable practices to its global portfolio across different types of assets, the group launched the CapitaLand Sustainability X Challenge to crowdsource globally from public innovators. “This is the first time that any Singapore real estate company is crowdsourcing sustainable solutions globally for the built environment. In this challenge, we are tackling the challenges that our properties face in energy, water and waste management, as well as the improvement of the indoor air quality of our buildings in order to safeguard against health and safety issues, especially with COVID-19,” Leong said. 18


CapitaLand Group’s Chief Sustainability Officer Lynette Leong

CapitaLand has a huge global footprint and a diverse portfolio of different asset classes. With this complexity in its business model, it makes sustainability a lot more challenging to execute

“One of the objectives of the CapitaLand Sustainability X Challenge is also to bring participating innovators to the next level,” she added. Leong said finalists in the CapitaLand Sustainability X Challenge may have a chance to pilot their solutions at CapitaLand’s properties worldwide. Winners will also receive S$50,000 in funding. They may also be brought to the Smart Urban Co-Innovation Lab, in Singapore Science Park, where they will be able to collaborate with partners to enhance innovative solutions and technology. “We have also launched a Smart Urban Co-Innovation Lab at the Singapore Science Park to catalyse development and deployment of smart city solutions. Together with the Infocomm Media Development Authority as well as the Enterprise Singapore, this private-public partnership aims to galvanise and encourage the built industry to be more innovative,” she added. CapitaLand has received more than 270 entries from over 25 different countries in its inaugural challenge. The challenge finale is set to be held in June this year. CapitaLand’s Green Lease Programme According to Leong, CapitaLand’s retail lessors in its integrated development, Funan in Singapore have agreed to be part of its green lease programme. These leases guide

INTERVIEW and encourage tenants to adopt more sustainable practices, from their power consumption to the use of sustainable materials in their interior fixtures and furnishings. “We encourage our tenants to adopt sustainable practices in the design of their spaces as well as embrace energy saving practices. This green lease is attached to our main, typical lease. The typical lease is more of a commercial lease, while a green lease helps the tenants understand what it means to occupy the space in a sustainable manner. We encourage them to make use of sustainable materials, either by using more recycled materials or those that are certified sustainable,” she explained. “We also encourage them to use energy saving LED lights and if possible, to deploy motion sensors in areas that they do not use frequently. We think that sustainability need not be expensive, because there are savings that they can achieve from adopting such sustainable practices,” she added. By incorporating sustainable efforts in their business, the tenants are also able to capture consumers who are environmentally conscious and who share the same values. “The green lease programme is more than helping our tenants to incorporate greenery in their premises. It also helps them, if they are in the retail area, to think of new products and services that they can roll out to their 13/07/2021 ownDPC-REA-Award-PressAd-FA-ol.pdf customers as consumers are also1 moving towards5:01 PM embracing sustainable practices,” Leong said.

By incorporating sustainable efforts in their business, tenants can capture consumers who are

Return on Sustainability To track and holistically measure its profitability and long-term success alongside its sustainability efforts and sustainability key performance indicators that executives have to meet, CapitaLand is developing what they refer to as “Return on Sustainability”. “We have analysed our data from the past 12 years where we have continually reduced utilities consumption, and the cost that has been avoided is equivalent to about 11% of our operating expenses. That’s a very significant figure. This will contribute to our new metric called ‘Return on Sustainability’,” Leong shared. “Additionally, people or companies will look at investments from just a commercial aspect. But with sustainability, we are bringing in the idea of also looking at resource efficiency, and health and safety as well, because we believe that all these and more, will contribute to the future proofing of our assets and also to mitigate early obsolescence,” she added. Return on Sustainability also aims to capture CapitaLand’s efforts in dovetailing its sustainability efforts with its cost of funding. CapitaLand is sourcing financing for its projects through sustainable financing tools such as green loans or sustainability-linked loans, which typically come with a lower interest rate than a regular loan. “Another area of savings that we have derived is from sustainable finance. For our sustainability-linked loans, we are able to receive interest savings from our sustainable performance. With that, these savings also contribute to our ‘Return on Sustainability’ metric,” Leong said.








Demand for residential properties has been resilient this year

Singapore residential market on track to break last year’s figures The overall private residential properties index saw its fifth consecutive quarterly increase in Q2 2021.


t has been a “two steps forward, one step back” game in Singapore’s residential property market as property players experience a hopeful recovery during the first quarter of the year before another round of economic uncertainty as new outbreaks of COVID-19 were reported and the city had to undergo weeks of another circuit breaker. Property analysts all agreed that despite tightened measures in the second quarter (Q2) due to several circuit breaker implementations, private sale volumes and prices have largely withstood it all. According to OrangeTee, the overall price index for private residential properties increased by 0.8% in Q2 2021, the fifth consecutive quarterly increase. Notably, however, this is a slower rate compared to 3.3% growth last year. “Demand for residential properties has been resilient this year despite the heightened alert measures. A total 20


of 16,549 private homes (excluding executive condominiums) have been sold. The full-year sales for 2021 are poised to surpass the 20,909 inked in 2020,” Senior Vice President of Research & Analytics at OrangeTee Christine Sun said. In OrangeTee’s Private Residential Market Report, the price increase in Q2 was driven mainly by nonlanded homes in Outside Central Region (OCR) which rose by 1.9% quarter-on-quarter (QoQ). Prices rose the fastest for the OCR where supply is the leanest. In contrast, however, the price increment was less significant for the Core Central Region (CCR) at 1.1% and 0.1% in the Rest of Central Region (RCR). Circuit breaker Re-tightening of measures did only little to quench market appetite. According to CBRE Southeast Asia’s Head of Research Tricia Song,

Demand for residential properties has been resilient this year despite the heightened alert measures. Re-tightening of measures did little to quench market appetite

despite the re-tightening of measures in late July and only one major launch of Pasir Ris 8, July’s developer sales surged 82.2% month-on-month to 1,589 units, demonstrating continued strength in demand for homes, particularly in the suburbs. The circuit breaker actually helped the market as Phase 2 (Heightened Alert) measures cooled the market down without the need for government interference. New sale vs resale market The resale market dominated most of the first half of 2021. Sun said that new home sales dipped 15.1% from 3,493 units in the first quarter (Q1) of 2021 to 2,966 units in Q2. The slower market was due to movement restrictions during Singapore’s heightened alert period back in May. In contrast, the number of resale transactions rose by 18% QoQ from 4,519 units in Q1 2021 to 5,333 units

PROPERTY SECTOR REPORT: RESIDENTIAL Sales exceede3d the pre -pandemic 2019

Buyers looking for affordable homes may continue to turn to the resale market in the suburban regions or selected city fringe areas

Source: OrangeTee

in Q2 2021. “This is the highest quarterly resale volume since Q3 2009 (5,809 units). More buyers have turned to the resale market as there are fewer new launches in the suburban region,” Sun added. Meanwhile, CBRE’s Song added that the price gap between resale and new sale market may have been widening because of the decaying lease of older projects (if they are leasehold), age, and depreciation of the older buildings, facilities, and designs. “Older projects may also tend to be larger in floor plan, and less efficient in today’s context, hence commanding a lower price per square foot,” Song pointed out. Luxury homes Despite circuit breaker cooling down the market, luxury home sales still achieved 11-year sales high. 1,795 were sold during Q2, the highest quarterly sales recorded since the all-time high of 1,876 units sold in Q4 of 2010. OrangeTee attributed the stellar sales to a few luxury projects being launched in the CCR in Q2, including Irwell Hill Residences, One Bernam, and Park Nova. Moreover, some developers conducted sales promotions to drive sales for selected units. The best-selling luxury projects were Irwell Hill Residences (332 units), Hyll on Holland (85 units), One Bernam (81 units), Leedon Green (54 units), Fourth Avenue Residences (46 units), D’Leedon (24 units), Pullman Residence Newton

(22 units), 8 Saint Thomas (22 units), Midtown Modern (22 units), Royalgreen (21 units) and The Avenir (21 units). According to data from OrangeTee the Q2 overall average price of nonlanded luxury homes in CCR dipped by 1.4% from $2,347 per square foot (psf) in Q1 2021 to $2,314 psf in Q2 2021. The average price of new nonlanded homes slipped marginally by 2.2% from $2,719 psf in Q1 2021 to $2,660 psf in Q2 2021. Over the same period, the average price of resale nonlanded homes declined 0.9% from $1,988 psf to $1,971 psf. Another trend in prime landed and non-landed residential properties is the demand for larger spaces grew. According to Knight Frank’s data, many are leaning towards larger floorplates to accommodate both living and working in the comfort of their homes. Additionally, demand for larger non-landed homes in the prime districts increased. In the first half (H1) of 2021 alone, the prime non-landed residential segment recorded a flurry of deals amounting to $2b, the highest since H2 2010 where sales within the luxury market segment totalled some $2.4b. Rebounding from the pandemic-led recession last year, the sales activity in H1 2021 was double the amount of $1.0b registered in the latter half of 2020 and surpassed the S$1.7b transacted in the whole year 2020. Prediction The market may have experienced a slow down in Q2, but analysts agree that barring unforeseen circumstances, the market will likely

recover by end of 2021. “With YTD tally at over 80% of 2020’s full-year take-up, we expect 2021 new developer sales to come in at around 11,000 units, exceeding 2020’s 9,982 units. With prices up 4.1% year-to-June, CBRE Research expects private home prices to rise by 6.0% to 8.0% for the full year, barring any unforeseen circumstances,” CBRE’s Song said. Meanwhile, KF Singapore’s Tay said that the market will continue to be bolstered by genuine demand from buyers working in sectors that benefitted economically from the pandemic, such as technology and pharmaceuticals, as well as some HDB upgraders. “Given the volume of genuine buyers and the current opportune moment where these buyers can benefit from low-interest rates before these are raised, demand for private homes is expected to remain strong. Therefore, overall private residential prices are projected to increase within the range of around 7% to 9%, whilst rents could rise 5% to 8% for the whole of 2021,” he added. OrangeTee’s Sun added total resale volume will surpass the volume from 2019 and 2020. “Buyers looking for affordable homes may continue to turn to the resale market in the suburban regions or selected city fringe areas. Therefore, this year’s resale volume is estimated to hit 17,000 to 18,000 units, which will surpass the total resale volume in 2019 and 2020,” Sun added.

New Sale vs Resale

Source: URA




Office property market to recover despite high vacancy rates Analysts expect it to enter the last phase of its down-cycle.


ong Kong’s office property market is in a state of recovery although vacancy is still high as corporate downsizing continues. Because of this, overall net absorption remains in the negatives. According to JLL’s Hong Kong Property Market Monitor, the overall net absorption in July was -89,000 square feet. Compared to figures last year, gross leasing volume has improved as tenants resumed making real estate decisions after postponing them last year due to the pandemic. “However, most leasing transactions involved only relocation or upgrading, with limited expansion cases. Net absorption was still negative as many corporates opted to downsize in challenging times. Rents continued to fall but at moderate magnitude compared with 2020, Nelson Wong, head of research at JLL in Greater China said.

In August, vacancy rate was at 9.6% with Kowloon East having the highest vacancy rates amongst Hong Kong’s regions at 13.1%. Central’s vacancy rate rose to 7.7% at the end of August. According to JLL, some tenants have opted to relocate to more cost-effective locations; however, demand for premium office spaces in the submarket remained healthy. Rental declines continue Hong Kong continued to experience rental declines for eight consecutive quarters. In the first quarter of 2021, rental decline moderated to 3.5% compared to 5.1% in the fourth quarter of 2020. Savills reported that Wanchai/ Causeway Bay registered the largest rental fall amongst all sub-markets at -4.3%, partly because of its exposure to co-working operators and financial services firms. The first quarter (Q1) also saw

Hong Kong office property market is in a state of recovery despite high vacancy rates



Whilst there is broad agreement in the business community that the worst times are behind us, questions linger over when the best times will return

Hong Kong Island rents fall by -4.0% whilst Kowloon rents were relatively stable, registering a 2.8% fall. Rents in Tsim Sha Tsui, Kowloon East, and Kowloon West fell by 5.2%, 2.2%, and 1.4%, respectively. Meanwhile, Kowloon West rents have proved relatively resilient since the third quarter of 2019 because downsizing has been less common for corporates situated in the area, where rents are said to be relatively cheap. When the second quarter (Q2) arrived, however, Grade A rents still fell but were lower than last quarter at 2.6%. PRC corporates remained active in the leasing market and has proven to be resilient over the quarter and is largely driven by the financial services industry. The proportion of Central Grade A offices occupied by PRC firms increased from 20.5% in July 2017 to 23.5% in June 2021 despite the challenging market conditions In Q2 2021, rents in Central,

PROPERTY SECTOR REPORT: COMMERCIAL Tenants upgrade or reconfigure their real estate requirements in the wake of the pandemic. Flexibility and amenities are seen as more essential office features

Savills Grade A Office Rental Indices By District, Q1 2010 to Q2 2021

Source: Savills Research & Consultancy

Wanchai/ Causeway Bay, and Island East fell by 2.8%, 3%, and 2.6%, respectively, whilst overall Hong Kong Island rents recorded their lowest rate of decline since Q1 2020, registering a fall of 2.8%. Kowloon rents dipped slightly and remained relatively affordable to tenants, falling by 2.4% over the quarter. Rents in Tsim Sha Tsui, Kowloon East, and Kowloon West fell by 1.8%, 4.2%, and 2.9%, respectively. “Whilst there is broad agreement in the business community that the worst times are behind us, questions linger over when the best times will return, and tenants remain cautious,” Savills said Rising trends and demand drivers In its Hong Kong Offices, H1 2021 report, Savills said that as vacancy continues to rise, landlords must compete more aggressively to fill space and rents must inevitably fall which is exactly what they have done. “Office rents are around 20% below peak levels of early 2019 and could slip further. When looking ahead, we face the obvious uncertainty of how long entry at borders will remain restricted and social distancing in place,” Savills said. The report said that Mainland businesses are likely to become a major driver of office demand over the next few years and this could rapidly be unlocked by easier travel to the Special Administrative Region. Another demand driver it mentioned is the initial public offering market, which could well post a record year this year driving demand for financial, professional, and business services. Potentially tech businesses could also extend their reach from elsewhere in the Greater Bay Area into Hong Kong.

Meanwhile, new trends have started to emerge such as the growing importance of amenities and flexibility in the office space. According to JLL’s Wong, tenants have started to reconfigure their real estate requirements. “Many tenants decide to upgrade or reconfigure their real estate requirements in the wake of the pandemic. Flexibility and amenities are seen as more essential office features. Demand for flex space remains healthy and a number of business centre operators are expanding,” Wong commented. Is new technology a drag on office property? Savills noted in its report that new technology is also an anchor that put a drag on the office property market. The report that even before the pandemic, some executives have started the practice of working from home. Additionally, offices were being given a new sense of amenity and hot-desking was becoming more widely accepted. Some were even experimenting with new communications apps. “There is a well-worn cliché in real estate that ‘form follows function’ and with technology rapidly changing the way we work, accelerated by a pervasive virus, form has had to follow. Work from home (WFH) has become a mandated way of working in many countries and given roomier residential accommodation, lengthy, expensive, and sometimes unreliable commutes, may well become an established practice, at least for a few days a week for office workers,” Savills said However in Hong Kong, Savills noted that they may not see this

level of adoption in the country as transport infrastructure is modern, efficient, and reasonably priced whilst housing is notoriously cramped. “With a greater availability of offices over the next few years at more competitive rents, employers may find that they can afford lower worker densities and more genuine amenity, luring many of us back to mingle once again with colleagues,” Savills added. Predictions The extremely limited supply in 2020 and 2021 has been more than offset by shrinking demand which resulted in several quarters of rental declines. Savills expect that demand will recover later in the year, however, substantial new supply in 2022 and 2023 should see rents come under further downward pressure. Meanwhile, JLL’s Wong observed that flexible working spaces have become more popular. Offices are now considered as the social hub for employees, who may look for options to work from home or at the office after the pandemic. Wong also expected some corporates may switch to “work-from-anywhere” mode with a mixture of head office, flex space, and WFH in the future. For his prediction, Wong expects the office market to enter the last phase of the current down down cycle and to bottom out in the next 12 months. “Rents are expected to grow moderately since 2022 due to the large amount of new supply coming to the market,” Wong said.

Grade A Office Supply, 2020 to 2023F

Source: Savills Research & Consultancy




Emerging markets lead REIT in Asia Pacific: APREA The Philippines is set to become the REIT IPO hotspot in the region this 2021.


eal estate investment trust (REITs) in the AsiaPacific is projected to grow in both emerging and developed markets. As more investors grow to become acquainted with REITs, a number of new REIT classes have opened up, a promising move for REITs to improve in the coming years. The majority of the REIT listings seen this year and over the past year have taken place in the emerging markets of India, Philippines, Thailand, said APREA CEO Sigrid Zialcita. This is in addition to China having announced that they have approved their pilot REIT regime. “What we’ve seen in China is that they have actually been inducing a lot of the players to submit their assets for a REIT listing. In May 2021, the China Securities Regulatory Commission or CSRC, approved the registration of nine REITs, and this will essentially channel investors’ money into projects,” she said. Zialcita said that in China, the focus of the REITs is on infrastructure projects. However, they are also seeing positive developments in fast growing markets. The next phase for REIT APREA anticipates that the next phase of growth, when it comes to the asset class, is that it will be driven by the expansion and adoption of the REIT framework in the region’s fast-growing markets – not only this year, but also into the decade. “In the developed markets, there is also continued expansion of the REIT sector in some of places such as Hong Kong. We worked with the Securities and Futures Commission to go through the REIT code that they have and made some enhancements. There are a few companies that have lined up plans for a REIT listing in Hong Kong,” she said. “Compared to Singapore, Japan, and Australia, there are only a few sectors in Hong Kong to get into REITs,” she added. In emerging markets such as the Philippines, interest in REITs have picked up pace among top developers the past year. In the February 2021 GPR APREA Indices, it was reported that the Philippines is set to become the REIT IPO hotspot in the Asia-Pacific region this year. Led by the debut of Ayala Land REIT, upcoming property listings include SM Prime, Robinsons Land, and Megaworld Corporation. “A change in regulations in the Philippines has necessitated or fast-tracked the implementation of the 24


APREA CEO Sigrid Zialcita

In the Philippines, the BPO sector remains the primary support or pillar of economic activity, which fast-tracked the implementation of REIT

REIT framework leading it to become a listing hotspot. By having this REIT vehicle, developers can free up some of the investments locked in assets and recycle the capital into something else,” she said. Mainly led by the office sector, interest in REITs in the Philippines is being stabilized by one of its largest occupiers of commercial space: the business process outsourcing (BPO) sector. “Looking at the Philippines today, the BPO sector remains the primary support or pillar of economic activity. If we look at companies that have sponsored REITs and those planning to put their assets into REITs, these are on the office side. The Philippines is lucky and fortunate to have many of these players own these assets that allow the BPO sector to thrive in the country,” she added. A call to invest in REITs In terms of having to educate players about REITs and having it as an investment option, Zialcita said that there is still a lack of information in terms of how REITs are performing. Investors tend to invest directly into real estate, but only those deeply interested in the industry can tell the difference between this and REITs.


If people are waiting for prices to crash, it is not likely to happen

“They like to invest directly into real estate. Whenever I explain to our members, some become interested in this industry. We look at the prices versus what you can invest in REITs. In Asia Pacific, all the office, residential, and some other assets’ prices held even during COVID time,” she said. “If people are waiting for prices to crash, don’t hold your breath – this is not likely to happen. This is where REITs come in. REITs are an attractive proposition, because by buying REITs, essentially, you will have a slice of the real estate although it is indirect. Even in COVID times, returns on REITs remains to be attractive,” she added. Zialcita said that the market cap for REITs is still increasing. Now, it is set at over US$300b but this is being skewed by Japan. Compared to the US’ one trillion-dollar REIT market, the APAC region’s REIT performance is steady and shows promising returns in the coming years. “The breakdown of the market cap is a sizable one with Japan being the largest REIT market, followed by Australia and Singapore. There is also Hong Kong, with the rest spread across the emerging markets. In terms of liquidity, this is where I believe there’s still room to grow,” she said. “We’re just seeing the tip of the iceberg. When REITs started in this part of the world, it was a very low number and compared to now where it has since skyrocketed. We reckon that once China is able to include real estate in its REIT regime, the potential will be immense. Some of the fast-growing locations, even the Philippines, have the ability to hit over a trillion in no time,” she added. APREA’s Rebranding The organization found the right time for APREA to rebrand through bringing new members, new partnerships, and pushing into growth markets as well as new sectors across Asia Pacific. APREA was founded in 2005, marking 2021 as its 16th year in existence. Zialcita said that they started with a vision to create an organization where real estate

leaders and influencers across Asia can get together to network and discuss some of the relevant matters that are happening within the industry. Zialcita said that among the changes introduced there will be more focus on other markets to serve as growth areas for the organization. To add, their new logo is now multi-colored, to clearly represent APREA’s values: the red stands for connections, blue for transparency, green for sustainability, and amber for diversity. “This year, we also created something different, which is the ‘other markets’ chapter. This serves as an incubator for new chapters in the future and is essentially a growth plan for us. We are doing this through our four service fillers, including advocacy, education and research, professional development and advancement, and our company’s investor outreach program,” she said. “Our membership consists of investors-- these are your REITs, asset managers, pension funds, sovereign wealth funds, family offices, and all the other institutional investors. There really can be many kinds of asset classes today,” she added. Today, the organization has evolved into something bigger and more comprehensive, supporting the changing real estate and infrastructure sector. “The terminology that we use today is ‘real assets,’” Zialcita said, referring to their rebranding to focus on the various sectors they now study and cater to. “We now have a presence in several strategic regions across Asia Pacific, and this include Australia, China, Hong Kong, India, Japan, and of course, in Singapore where we are headquartered.” “The dominant form of real estate property investment has always been the office. Today, we’ve seen a number of our members venture into infrastructure. We consider this a natural progression like what we have done in the past,” she concluded.

The dominant form of property investment is the office




Sinar Mas Land project a hit among millennials The company also saw a spike in interest for high-end projects Nava Park and The Zora.


ndonesian developer Sinar Mas Land has seen a spike in interest in landed housing, as demand has grown relative to condos in Indonesia’s housing market, says managing director Alim Gunadi. “The type of properties experiencing an increase in the property sector in Indonesia is the landed housing. At the end of 2020, the supply for the newly- launched landed houses increased as compared to those in 2019 or 2018,” he said. “Now, everybody is concerned about the living space, those what we call daily houses where they can stay, work, and play in the same place. I think that is the condition for the landed house and currently the landed house is the only sector that can be rising in 2021,” he added. Alim Gunadi said that there is currently an oversupply of apartments in Jakarta as many expatriates have yet to come back to the country. Whilst this has impacted spaces allotted as rentals, the apartments also saw a decline in pricing. “First, there is the oversupply of apartments in Jakarta. The second one is that many renters come from the expatriate group who are still in their countries. So, the behavior of these renters also impacts the supply and demand of the economy,” he said. “If we see the property market in Indonesia overall and based on the research from the central bank, especially for the property pricing, the trend is increase in price after COVID-19 came into Indonesia in March or April of last year, ” he added. ‘Moving Quickly’ Gunadi told Real Estate Asia that they launched ‘Moving Quickly’ after observing that the market looking for residential properties are mostly millennials where buyers may immediately move in upon purchasing the property. The innovation with the “moving quickly” properties was to help millennials move into ready-made landed properties quickly. An extensive ad campaign on social media offered sweeteners such as a discount of up to 25% for residential properties, and free BPHTB, which is a land transfer tax usually paid by the purchaser. Costing only around US$100,000 (Rp 1.5b) for every landed house, Sinar Mas Land was able to sell 350 units in the beginning of 2020 alone. “One of the key successful launches from Sinar Mas Land is Moving Quickly. We offer the landed houses which are ready to live in as these are available stock. We operate also through many social media channels and digital channels like YouTube and Instagram, and we have been on Facebook, etcetera. That is why for the first period in 2020 26


One of the key successful launches from Sinar Mas Land is ‘Moving Quickly’

‘Mov­ing Quickly’ was launched for millennials that tend to immediately move in upon purchasing property. The innovation was to help them move into readymade landed prop­erties quickly

we sold 350 units,” he said. “The behavior and the interest of the market is changing, mostly with the market of millennials. That is why we must be adaptive and do some innovations with the design and offering to the market. Ready houses covered 89% in 2020, especially in the city. The pricing that we offer is mostly under 1.5 billion rupiah, and that is an affordable price there. The market can be absorbed, and it is fit for the millennial condition and income,” he added. Partnerships on high-end properties Gunadi said that not whilst the demand for budget housing is increasing, the same can be said for high-end properties. Sinar Mas Land partnered with the likes of Hong Kong Land and Mitsubishi Corporation to bring new innovative options to the market. Sinar Mas entered a joint venture with Hong Kong Land to create the 68-hectare Nava Park. This luxury property project is priced at $2m for every 600 square meter unit. “The high-end models that we have is a joint venture with Hong Kong Land that has approximately 68 hectares. We launched this last year and the size is around 600 sqm per unit. It’s very expensive for the Indonesian market as it costs at least US$2m but I think the demand is there,” he said. A JV with Mitsubishi Corporation to create The Zora,


Ready houses are priced under 1.5b rupiah, which is affordable and fit for the millennial condition and income

a 20-hectare development located in the Bumi Serpong Damai (BSD) City, was also launched with a price tag of $300,000 for each unit. “The Zora is what we call high technology with all the basic needs for the house equipped with a certain technology. The price is mostly around 4.5 billion IDR. In US dollars, around US$300,000 and above. It’s a very unique development,” he added. Gunadi said that recent policies enacted by the Indonesian government helped them in growing in terms of selling more residential properties despite an ongoing pandemic. With low interest rates and reasonable mortgage terms have become attractive to the different income brackets that comprise the market. “In 2021, the Indonesian government released some policies about the down payment and rates enforced in the property market. We can see that the market now has a very low interest rate, compared to the last 10 years,” he said. “I think this helps us as a developer to have more customers because about 60-70% choose mortgage loan as a term of payment. I think it is very good for us. Our market itself is, based on the income breakup, is mostly the millennial and Gen X. Hopefully, our products can be a fit with the market,” he added. Another project the company is investing in is in the Transit-Oriented Development (TOD) in BSD City. “As you know, the Mitbana is the joint venture company between Mitsubishi Corporation and Surbana Jurong and they have a partnership with us to develop the TOD in the BSD city. They will develop 100 hectares. In the near future we will also cooperate with some foreign partners from Japan like Sumitomo for an office building in the CBD area,” he said. Entering PropTech Sinar Mas Land has been working with property technology (PropTech) companies to promote their properties during the past year. As movement became limited, the company decided to shift to newer ways of reaching their intended market. Having their properties available through property listings and tech aggregators helped them target their

properties to a wider market, not only to those physically in Indonesia. Options made available through financial technology (FinTech) financing options also made it easier for their customers to invest in these properties. “In terms of technology, property technology or prop tech has been around for a few years now and is quite maturing. Then in terms of the way we interact with our customers, tech aggregators or property listing technologies will play a bigger role. They already have a very big role in the way we interact with our customers,” said Djemi Lim, Head of Business Development and Research. “To reach out to our customers, we collaborate with them and then I think they’re already in a mature state where they will bring more convenience to the customer to find the real estate property, either as primary or secondary property,” he added. Lim said that they have integrated more technologybased tools and changes to their properties, so as to make them more modern and adaptive to the changing times. Automation and improvements in managing townships have been set in place by Sinar Mas Land in its many property developments. “As a township operator and building operators, we have been using a lot of technology as well. Because we are managing townships, we also manage the traffic lights, we manage the water, and some supplies of utilities. We use a lot of technology here to make sure it’s more automated, even using AI to control some of them. Then, in terms of building automations, we use these to operate offices and malls,” he said. In order to make the experience more holistic, Sinar Mas recently launched the “One Smile” app which will make payments and other services readily available to their customers. Alongside is the e-Catalog which is a marketplace where customers may browse through their offerings from their own gadget. “We also developed the e-Catalog which is a marketplace like 99 dotcom but only for our products. Restriction of the movement of the people is still applied in Indonesia and it’s how we try to reach our customers. They can look for houses that we offer from all around Indonesia, look for promos, programs, prices, and discounts. The market is becoming more borderless because of the technology behavior,” Gudani said.

Sinar Mas Land has been working with PropTech companies to promote their properties




Here are the winners at the Real Estate Asia Awards 2021


espite the COVID-19 pandemic presenting significant challenges in the real estate industry, it’s about time we use a different lens and see how shifting consumer behaviour, new work patterns and lifestyle changes have created new opportunities for growth and innovation within the sector. Businesses who rise to this challenge are opting for more uncharted roads, yet understand that the rewards waiting for them far outweigh the hindrances that are blocking their path. In recognition of companies that have made compelling detours to carve new pathways in real estate, the Real Estate Asia Awards 2021 will honour these enterprises by introducing the winners through a virtual awards presentation on 2-9 July. The winning companies will also be accompanied by virtual

Real Estate Asia congratulates the following winners: Abdullah Al-Othaim Investment Company Mixed-Use Development of the Year - Saudi Arabia Retail Development of the Year - Saudi Arabia Abraj Dahab for Development and Real Estate Investments Residential Development of the Year - Saudi Arabia The Sheikh Zayed Private Academy for Boys L.L.C Special-Purpose Development of the Year - United Arab Emirates Al Tahaluf Real Estate Customer Service Innovation of the Year - Saudi Arabia Bria Homes, Inc. Open Space Development of the Year - Philippines Affordable Housing Developer of the Year - Philippines BSA Land Residential Development of the Year - Indonesia Excellence Award of the Year - Indonesia

interviews as they share their thoughts about winning the prestigious awards programme. This year’s nominations were chosen by an elite panel of judges consisting of Teh Seng Leong, EY Global Real Estate Hospitality & Construction M&A Leader at Ernst & Young Solutions LLP; James Xu, Real Estate Leader at Deloitte Southeast Asia; Kwok Kay So, Partner, Tax Services, Asia Pacific Real Estate Tax Leader at PwC Hong Kong; Hong Beng Tay, Partner, Head of Real Estate Sector at KPMG Advisory LLP; James Allan, Regional Director and Country Head at JLL Indonesia; Norman Ho, Senior Partner and Deputy Head, Corporate Real Estate at Rajah & Tann Singapore LLP; and Lau Sok Hiang, CoHead at Real Estate and Corporate Real Estate at Drew & Napier LLC. Congratulations to all the winners! Investa Office Management Pty Ltd Developer of the Year - Australia Investa Property Group Office Development of the Year - Australia Smart Technology of the Year - Australia LOGOS Group Industrial Development of the Year - Indonesia NASEEJ BSC Residential Development of the Year - Bahrain New San Jose Builders Inc. Residential Development of the Year - Philippines Desa ParkCity - ParkCity Group Masterplan Development of the Year - Malaysia PT PP Properti Suramadu Development of the Year - Indonesia PT PP Properti Tbk Grand Kamala Lagoon Sustainable Development of the Year - Indonesia

Park Regent Residences - Cloudvest Sdn Bhd Residential Development of the Year - Malaysia

PT PP Properti Tbk Grand Sungkono Lagoon Mixed-Use Development of the Year - Indonesia

Ellington Properties Development LLC Residential Development of the Year - United Arab Emirates

Pueblo de Oro Development Corporation Special-Purpose Development of the Year - Philippines


Raimon Land Public Company Limited and Mitsubishi Estate Asia Pte. Ltd. Office Development of the Year - Thailand

Frasers Property Vietnam Mixed-Use Development of the Year - Vietnam Office Development of the Year - Vietnam Grand Land Marketing & Brand Initiative of the Year - Philippines Gulshan Homz Private Limited Luxury Residential Development of the Year - India GuocoLand Luxury Residential Development of the Year - Singapore Mixed-Use Development of the Year - Singapore Developer of the Year - Singapore Henderson Land Development Company Limited Office Development of the Year - Hong Kong Residential Development of the Year - Hong Kong Sustainable Development of the Year - Hong Kong Redevelopment of the Year - Hong Kong 28


Retal Urban Development Company Developer of the Year - Saudi Arabia Shui On Land Limited Sustainable Development of the Year - China Developer of the Year - China SIWA Group Ltd. Resort Development of the Year - Indonesia Strategic Partnership of the Year - Indonesia The Gate Development Marketing & Brand Initiative of the Year - Lebanon Zedem International Mid-sized Developer of the Year - Pakistan Vikas Oberoi, Oberoi Realty Ltd. CEO of the Year


Abdullah Al-Othaim Investment Company

Bria Homes, Inc.

Al Ain Educational Investments LLC




Cloudvest Sdn Bhd

Henderson Land Development Company Limited

LOGOS Group 30


ParkCity Group


PT PP Properti Tbk

Pueblo de Oro Development Corporation

Raimon Land Public Company Limited

Retal Urban Development Company REAL ESTATE ASIA | Q1 2021



Real estate leaders weigh in on the future of office Around 100 attendees took part in the first-ever Commercial Real Estate Digital Conference.


he future of the office will have more flexible arrangements as businesses worldwide continue to adjust to changes in working conditions. Primarily, the office will function as a magnet for people to interact, said EY Partner Seng Leong Teh in Realestate Asia’s “Commercial Real Estate Digital Conference” held last 8 June 2021. “Work from home is not a fad, we think it is here to stay. There is productivity gain and there’s value in work from home. Whilst we acknowledge the flaws associated with this, we believe that there is a need to change our way of thinking to make hybrid work effective,” he said. Teh said that with the hybrid model, office will not just be a place to come to. Employees will come regularly either to socialize or to network. “The future office requires a significant amount of investment, especially in technology. The office space is primarily used to collaborate and network with



Work from home is not a fad; it is here to stay. There is a need to change our way of thinking to make hybrid work effective

colleagues. As such, there needs to be a rethink about how officers are being organized,” he added. Opening flexible arrangements for work will offer ways to ensure productivity from employees. CBRE Singapore Co-head of Office Services David McKellar said that this will benefit those who prefer to have separate office spaces when doing work. “Dwelling sizes in Asia are small and Singapore homes are smaller than the Asia Pacific median. Inadequate workspace, distraction from family members and ambiguity of who bears the cost,” he said, are some of the challenges faced by those in work-from-home arrangements. As commercial spaces adjust to changing needs of lessees, such as downsizing or having preference over shared amenities in buildings, the industry is seen to thrive in the coming years. “The new supply pipeline is forecast to be 25% less for the next four years in comparison to the 10-year historical annual average.

So long as Singapore remains an attractive place for companies to locate, we do not expect to see a glut of availability and rents will likely remain firm for the foreseeable future,” McKellar said, citing Singapore as an example. “Towards the end of 2020, office demand was ramping up. Given Singapore’s highly educated workforce, favorable business environment with low corporate and personal tax rates, and easy access to most major cities within a single flight, Singapore will continue to attract firms from all over the world that engage in business activities within Asia Pacific,” he added. Constantly evolving commercial and public spaces Real estate developers in the Asia Pacific region are gradually adapting to the changing needs of business when it comes to office spaces. GuocoLand is one of the companies that have adapted to this change early on, as can be seen from their recent projects in revamping GuocoTower and in the upcoming Guoco Midtown. Valerie Wong, Asset Management General Manager for GuocoLand Limited, said that they adapted an integrated development connectivity for GuocoLand to F&B, amenities, and public spaces. “The MRT stands over the

EVENT COVERAGE: REAL ESTATE DIGITAL CONFERENCE Integrating lifestyle, leisure, and avenues for communitybased spaces will help employees enjoy going back to the office

Developers must be mindful and learn how to build functional small rooms that can offer a place to live, work and play

basement concourse and it connects directly to GuocoTower. For the integrated development, there are public transport nodes and a way to connect them to the rest of the neighborhood. An employee could take the lift up to go to the hotel at level five, or through the urban park to reach various components of the retail and office tower,” she said. GuocoMidtown’s highlight, which has a total of 770,000 sq ft of office space, is its Network Hub. The hub houses communal facilities and is directly connected to the main office tower. “There are three main components: the office, the residential tower, and the retail, but we’ve also created a new concept that’s called the Network Hub. It will house 40,000 square feet of spaces and communal minds facilities, and will connect directly into the main office tower,” Wong said. “It’s around 30,000 square feet per floor. An individual may go down to level two and cut across directly to the Network Hub. We have facilities for over 200 persons and spaces for meeting rooms. The rooftop also has a 40-metre swimming pool and houses private dining facilities,” she added. Adapting to changing needs By integrating lifestyle, leisure, and avenues for community-based spaces, these will help employees enjoy going back to the office and

enjoy the flexibility of having to work within the area. The changes in consumer demand for commercial and residential real estate will be key for developers to succeed in the next few years, according to Huttons Asia CEO Mark Yip. As consumers prioritize budget concerns alongside how much space they need rather than want, developers will have to review their projects. “The developer has taken that into consideration where they allow community spaces that are outside your units to enjoy. This presents a very good proposition from the developer point of view to the consumer like us taking this opportunity when prices are still in

the affordable range,” he said. “What do you need? From your current working condition and with current members staying within a home. Big or small, it is based on your own unique needs. That is the current condition in Singapore,” he added. In order to properly assess what kind of developments should be offered, a closer study of the various segments is needed. These may include those who are staying with families, relocating to smaller homes, or even those who prefer to live nearer to their workplaces. “We have to look at the various segments. Who are these buyers? We have the HDB upgraders in which we are aware that 80% of the population stays in HDB. Then we have another group of the buyers who have been staying in large homes and their children are grown up, so they would like to do what we call a downsize,” he said. “It all boils down to affordability. In most key cities and central locations, residential prices have gone up. Small apartments here in Singapore, because of the limited scarcity of land and the development and labor costs, have risen in price. Real estate developers will need to be mindful and must take this into consideration. Developers must learn how to build functional small rooms where you will have a decent corner, or places within your compound that can offer you a place to live, work and play,” he concluded.

Developers must adapt to changing needs for commercial and residential real estate




Smart homes with Japanese-inspired minimalist designs are on trend in Manila Mixing elements of Japanese functionality and simplicity, Tokyo Grand Renovation is becoming famous for making homes into office-ready spaces.

Smart tech is now in demand when it comes to interior design and construction -TGR lead interior designer Ken Ferolino


any homebuyers are seeking hybrid living spaces now that residences are now serving as places for both work and leisure. Another side of this are those who opt to go into renovating homes and apartments, either to adapt to safer ways of living or simply just to give a new look to their spaces. Among the many interior design firms in Manila is Tokyo Grand Renovation (TGR), a subsidiary of Japan-led company Hikarinobe. Not only has client briefs shifted from having more space to rest, but specific requests also such as having smart homes or offices is now becoming a top priority for many. “We noticed some changes when it comes to our clients, mostly about precautionary measures such as less touch and less contamination, so you cannot contract the COVID,” Tokyo Grand Renovation lead interior 34


designer Ken Ferolino told Real Estate Asia in an exclusive interview. “Our clients usually would request smart home devices, smart home designs, or ask if we can integrate smart technology to the interior spaces. We can, and we did that already. Smart technology is really in demand right now when it comes to interior design and construction,” he added. One of their luxury projects is designing a penthouse in the Grand Hyatt Residences in Bonifacio Global City in Manila. Their client’s request was to integrate European details into the design while still keeping it simple. TGR integrated a neoclassical theme by importing chandeliers and focusing on every corner with every possible detail they could from the ceilings to the cabinets. “For our first Grand Hyatt project, it is a penthouse apartment located

Homebuyers now request smart home devices, smart home designs, or ask to integrate smart technology to the interior spaces

in BGC where the client’s brief indicated that he wanted European ambience while maintaining simplicity. So the question for us was how can we maintain simplicity with this European design style?” he said. “Neoclassical was brought to the table. Then, we imported chandeliers and installed it in every room to provide warm lighting textures, creating depth and ambience to the interior space. Basically, the penthouse interior design project in Grand Hyatt is an example that though TGR embodies the Japanese philosophy of simplicity, we can delve into other design styles as well,” he added. A more recent project, also in Grand Hyatt Residences, TGR created a Home Studio where they installed soundproof walls and designed a more cozy room to fit their client. They turned this 80 sqm unit into

DESIGN BRIEFING: SMART HOMES There is luxury in minimalism if you choose the right material and put the right thing in the right place

TGR is riding through the current trend of having minimalistic but functional spaces

a functional studio and bedroom that is maximized to enable their music producer client to be able to work from home in style. In another project, they were asked to design a minimalist Zenstyled room. Ferolino said that they incorporated different design philosophies for this space in Kroma Tower to keep elements of luxury embedded with the simplicity wanted by the client. To do this, they focused on picking the materials used in the furnishings and carefully planned their placements in the room. “We were commissioned to create a space where traditional meets modern and contemporary styles. Another challenge for us in this Kroma tower project is to have a modern Japanese design entangled with Japanese design philosophy and the Zen style,” he said. “There is luxury in minimalism if you choose the right material and put the right thing in the right place. The highlight of this project is the bedroom. Here, there is an elevated bed area adjacent to the working station. This area is liked by our client the most,” he added. With a team of young interior designers, TGR is riding through the current trend of having minimalistic but functional spaces. Not only do they use Japanese tools and materials during construction, but their employees are likewise trained in Japan to bring the best of traditional practices to the designs of homes in Manila. Japanese roots TGR was primarily opened as a

store that offered the tourist-favorite Happy Wash-U: toilets with sensors, a built-in bidet, and other functions. After garnering high sales and upon realizing that there is a gap in home construction in the Philippines, TGR decided to open in 2012 as a fullservice interior design company. “When we came to the Philippines around 2012 or 2013, the first activity we had as TGR was selling Happy Wash-U which is a toilet bidet. We focused on selling, then came 2015 when we returned to start the business for interior design build which our Japanese company counterparts originally did in Japan,” TGR’s Marketing Manager Masahiro Kato said. “We noticed that there’s opportunity and there’s a possibility to provide our interior design and build services in the Philippines. We also found that in the Philippines, it’s common that interior designers and the constructors are separate. So, we thought, what if we provide an all-inone operation, starting from interior design to construction managed by us?” he added. Being a subsidiary of Hikarinobe, TGR also applies the same practices done by their Japanese counterparts. They can arrange temporary housings to clients, provide a onestop service for all construction needs, and they also use materials sourced from Japan to make their spaces more authentic and true to clients’ briefs. “Our mother company Hikarinobe operates as a one stop service in Japan. From purchasing, renovating, providing temporary housing while your property is under

construction, to setting arrangements for your items to move back and forth from your property, this could be the most convenient housing process you could think of,” Media Representative Celina Guinoo said. “We also use Japanese products in our projects. When it comes to constructions, we use Japanese power tools which deliver much faster and higher quality finishes for home and design. We also deeply promote the use of Sangetsu wallpapers, a well-known Japanese wallpaper company, even though it is not popular here in the Philippines,” she added. ‘New Normal’ Dining Also known for designing restaurants and cafes, TGR was able to adapt to the ‘new normal’ through its experience of having done al fresco or open-spaced area before the pandemic. One of their more known projects is designing the UCC Clockwork branches, part of the famous coffee chain of the same name from Japan. Ferolino said that in their most recent UCC Clockwork project located in Nuvali, they focused on catering to the younger generation. With this came open areas which turned out to be for the better as Manila currently requires all restaurants and cafes who want to operate to have open-air dining areas to abide by safety protocols. “UCC Clockwork is a bit different from ordinary UCCs. It reflects the constantly evolving generation. It was designed to accommodate the younger generation, and it was intended to be more friendly and to have a younger vibe. Located in Nuvali, it is in the mixed-use development that caters to indoor and outdoor activities,” Ferolino said. “The highlight of this project is the al fresco dining. So, we can say that we are prepared for this pandemic. The protocols require that all indoor establishments shall be closed, and only outdoor dining can accommodate customers,” he added. TGR said that apart from having upcoming UCC branches in Davao, Bacolod, and Iloilo, expansion plans are also on the plate for Mega Manila. The company is looking forward to continuing all these when restrictions ease. REAL ESTATE ASIA | Q1 2021



Flexibility to drive a doubling in leasing activity: Colliers These are necessary to understand the changes needed in the workplace.


he past year saw many landlords left with an oversupply of available space, with COVID-19 in full swing and many businesses switching to remote work to continue operations. It was only in the latter half of 2020 that companies adopted the idea of hybrid workplaces to accommodate employees who prefer working from the office and those that are unable to, or prefer not to, for various reasons. This trend of having flexible working arrangements and hybrid workspaces is seen to continue from 2021 onwards, with many employees seeing the benefits of having flexibility of their own time. On the other end of the sphere, however, are employers who are seeking ways to maintain high productivity without forcing their entire workforce to return to the workplace as though COVID-19 had not happened. Sam Harvey-Jones, Managing Director of Occupiers Services Asia at Colliers, said that this year is looking to be more promising as many employers are shifting to flexible workspaces, which includes offering employees the option of working back in a physical office. “In Q2 and the rest of this year, we see a 96% uptick in leasing activity. That 96% increase would take us back to 2018 or 2019 levels, so there is definitely some light at the end of the tunnel,” he said. “In 2020 leasing was down 50% across the region and supply outstripped demand by about 2.2 times. We saw the majority of people adapt to a work- from- home set-up. But there were also a series of continual breakouts throughout the year due to COVID-19, which meant the year was very stop start” he added. Whilst this may be the case for many markets, it will not be the case for all of Asia. “Some of those countries have dealt with the uncertainty caused by COVID-19 quite well. But as we saw with India in the last couple of weeks, some countries are still experiencing lockdowns. It is a very uncertain situation in general in terms of what we’re seeing, but there is definitely some positivity as we come out of Q1,” he said. Office of the future Colliers released a study called “The Next Work Experience” earlier this year, which showed that the majority of employees from different age groups and industries in APAC prefer to go back into the office. For employees aged 20 to 30 years old, 65% said that they prefer to have flexible workspaces. Meanwhile, 50% of those aged 40 and above said that they do not prefer this option. Harvey-Jones said that it is important for senior management to understand the needs of their staff and the 36


Many employers are shifting to flexible workspaces -Sam Harvey-Jones, Managing Director of Occupiers Services Asia, Colliers

Technology is the biggest driver of demand in flexible workspaces. As employees stay in workfrom-home set-ups, cloud technology is needed more than ever

younger workforce to know how to navigate and plan their flexible working arrangements. This shift to the “office of the future” will need a more open mindset to keep the company’s performance in top shape. “Traditionally managers like to see their staff in front of them. So, there’s a real mind shift here, around staff not being in the office day to day and how to manage this new remote working environment,” he said. “Rather than having to check in with the team every day and have daily meetings, how do we get to a place whereby we trust people and really empower our staff to thrive in this new environment and help change the way of working in the future?” he added. Tech driving demand The movements in the technology sector are playing an important role in ramping up the demand in these office spaces. It was projected to have contributed about 25% of the increase in demand, as more businesses open data centres and offices. “Technology is trending as the biggest driver of demand. In most of the major markets in this region in India, Singapore, and China, we’re seeing that upwards of 20% to 25% of all demand is coming from the technology sector,” he said. As employees stay in work-from-home set-ups, cloud

INTERVIEW: FLEXIBLE WORKSPACES technology is being needed more than ever. Harvey-Jones projects that there will be a 30% growth in that sector YoY. “We’re seeing a huge amount of activity from data centers across the region, including Singapore, Hong Kong, India, and China. More people are online. With more technology there is more need for cloud, and I think it’s just going to continue,” he said. Another aspect of why there will be an increase in leased office space this year is to attract top talent, especially in the technology sector. Here, companies will need to offer flexible options to make these younger employees more productive at work. The option, once available, must then be offered across the board to all age groups and different types of employees. “I think the number one takeaway for occupiers is how to create an environment whereby you can attract and retain talent. Particularly in the technology sector, there’s a lot of competition to attract talent. This still hasn’t gone away even though there’s been a recession,” he said. “The demographic consisting of ages 20-30 years old may want remote working and flexibility. The management should be able to provide that same privilege to individuals over 40,” he added. ‘Culture Clash’ Whilst businesses can adjust to going back to full operations in many parts of the world, despite most of them having to shift to flexible working arrangements, the same may not be the case in Asia. Harvey-Jones cited that office space continues to be in high demand in Asia, primarily because of the culture present in a number of countries in this region. Whilst counterparts in the West may adjust to having desks and good working conditions at home, the scenario differs in many parts of Asia. “In Asia, people don’t necessarily have the infrastructure behind them that allows them to be as productive in a home environment as they would be in the US or Europe, where the average person or the average family probably lives in a much bigger space,” he said. “Urbanization has been a huge part of the Asian population growth and, therefore, people are living in smaller, flat-like environments, sometimes with up to two or three generations. You’re not seeing that elsewhere, so it is important to be careful that we don’t confuse what is happening in the mature Western markets and what is happening in Asia,” he added. Currently, what he is seeing as an ideal scenario is for employers to offer the option of where to work to their employees. This will enable workers from Asia to work in the office many days of the week, but with the choice of working in other hubs or satellite options where possible. “We saw that despite 83% of people wanting some sort of work-from-home option or flexibility, they still want to go into an office three or four times a week, or they want to go into a flexible workspace,” he said. “What we’re seeing occupiers looking at are a number of hybrid options. Do you go to a decentralized hub-and-spoke model where you have a headquarters in a CBD, or do you go into the suburbs or elsewhere where there is some sort of satellite office closer to residential areas?” he added. As companies reduce their physical offices to adapt to the

changing times, he sees this trend continuing to maintain healthy overall operations, especially for companies operating in different countries. “What we are seeing now is that there are companies that are introducing global initiatives whereby you can buy global co-working space, which can be utilized in multiple markets across the world by your staff” he said. He also shared the “Five Es” – Experience, Experiment, Educate, Embrace, Empower – which Colliers sees as the necessary steps for offices and occupiers to undertake in the future of work. In Experience, the employer must think ‘employee first’. Business performance and employee needs must be balanced across physical and virtual work places and environments. This will lead to Experiment, where there will be a testing of new office designs and models. This will lead to Educate wherein the priority placed for wellness must be communicated, in order to enable multiple ways of working through Embrace. Lastly, Empower culminates the 5 E’s through providing clarity and certainty so that offices may continue to operate in the “new normal”. “What we’re looking at here is how to help people and businesses through the evolution of the workplace. From an Experience perspective, how do you marry the virtual with the physical experience? In Experiment, this can be both from a technical and technology perspective, it is a matter of studying different markets, different cultures, different nuances, and how they will need experimentation to work out what is the best fit,” he said. “To Educate is particularly key because you have people who shifted to working remotely telling us that they’re super productive. We need to get hold of that feedback and assess how we can Embrace the two different needs of what the employee wants and what the business needs. Lastly, how do you empower employers to manage that process of making sure that people are on top of their business, measuring it, and holding people accountable, and giving them some autonomy to be successful,” he added. Whilst Harvey-Jones believes that 80% to 85% of the office will remain as is, 15% or 20% will be based on more flexible workspaces or will include an increase in decentralized work locations. He concluded that there are a number of different operators who are all looking at this space to cater to different types of clients moving forward.

Employees are looking at hybrid workspace options like decentralized hub-and-spoke model or satellite office close to residential areas




Not everybody can win in Thai real estate: Savills Discounts and promos played a major part in keeping the market steady.


ike its neighboring countries in Southeast Asia, Thailand has not completely lifted some of its pandemic-related restrictions, and many of its expat occupiers have yet to make a return to their properties. Overall, however, Thailand has been faring better as landlords were reported to have given remarkable discounts to tenants. For residential offerings, promos have been offered and it was observed that landed housing has been on the rise in the past few months. Speaking with Savills Bangkok Thailand Head of Professional Services Jeremy O’Sullivan, he said that the country has an abundance of space in almost all sectors of the real estate market. This helped the industry maintain its prices throughout the past year and is continuing to offer similar packages this 2021. The challenge for landlords in the commercial sector, however, is how to compete with newly launched spaces that are offered at the same price point as older listings. “It can be very sensitive in Bangkok because we do have so much choice, not everybody can win,” he said. “There’s going to be a huge amount of competition in the office market. We think that rates will continue trending downward, because older office buildings are going to have to offer benefits for tenants looking to remain or to attract new tenants,” he added. ‘Wait and see’ O’Sullivan said that Savills saw an average of 4% drop in occupier prices in the past year. With new cases of COVID-19 hitting Bangkok which may continue to worry businesses in the coming months, he said that a return to office scenario may be possible by Q4 of 2021. “We saw approximately 5 percentage point fall off during the pandemic in 2020, and we do expect occupancy rates to continue trending downwards over the next few years,” he said. “Some organizations found that it’s preferable for them to remain in office and to keep working on a Team A and Team B basis. Overall, the market has been very mixed, but it’s possible that we may see a bigger return to office in Q4,” he added. It was observed that there has been a drop in leasing activity in Bangkok. Although space remains available in the office market, occupiers and tenants are taking a more cautious approach as to when they will make their move to new office spaces. “Most occupiers are taking a ‘wait and see’ approach at the moment. We’ve seen a very sharp drop in general leasing activity where we had been expecting tenants to be 38


In Bangkok we do have so much choice, not everybody can win -Savills Bangkok Thailand Head of Professional Services Jeremy O’Sullivan

lining up or move into a new office space. In general, we’ve seen this greatly paused across the Bangkok market,” he said.

Thai people have a strong culture of retail. In provincial areas and major cities, retail malls are utilised as a social gathering place. Retail stores will remain important

Retail keeps its stronghold Bangkok is widely known as a fashion city in Asia. According to O’Sullivan, this appeal has not ceased during the pandemic, which has helped to maintain leasing activity and demand for retail space. International brands have continued to plan for their market entry strategies and remain confident on the success of Thailand’s long-term outlook.Whilst retail did drop in activity, e-commerce, in particular, helped stabilize this sector by contributing an increase of 35% in sales last year. “Thai people have a very strong culture of retail. In provincial areas, Bangkok, and in every major city, retail malls are utilised as a social gathering place. They are really critical in cities. We do expect that retail stores ‘bricks and mortar’ will remain important to anybody entering this market. Investing in bricks and mortar for newcomers into the market or those expanding will continue to be important.” he said. “Like every other developing country and those more developed markets, e-commerce is entering and it’s


Retail is a key social location for Thais. Big malls will continue to maintain their rates of occupancy

growing. It is going to take up a bigger share of total retail transactions year by year. We saw a 35% jump in 2020 directly because of the pandemic, which really accelerated that trend,” he added. Whilst Bangkok is seen as generally fairing well in the retail sector, he said that there are also retailers which are not doing well. In big shopping centers such as the Siam Paragon, businesses are surviving, but the same is not the case for those situated in other areas. “Bangkok is a hub for fashion, it’s a hub for all types of retail. Though, on the flip side, it does mean that there are some malls that will continue to suffer which may not hit the market,” he said. “Much like how I reported for the office sector, if we’re talking particularly for Bangkok market, there are really winners and losers when it comes to locations. Very big malls like Central World and Siam Paragon will continue to maintain their rates of occupancy,” he added. To alleviate this, Savills said that they received reports that discounts were given to tenants, from as low as 20% to as much as 100%, the latter being the case when a total lockdown was set in place in the city. In addition to these retail stores, he also said that the food and beverage industry helped improve the occupancy rate in Bangkok. Savills sees this trend to remain as both international and local food and beverage groups continue to take up space within Bangkok. “One of the main drivers of that slight growth in occupancy that we’ve seen was food and beverage. Retail is a key social location for Thais. These continue to expand because Thai people love to spend time in the shopping malls, and we do expect this trend to remain,” he said. Uptick in the residential market The residential market in Thailand also improved as

Bangkok is a hub for fashion and all types of retail. This does mean that there are winners and losers when it comes to locations

discounts and promos were offered to home buyers. According to O’Sullivan, they saw as high as 50% discounts on some units, whilst some offered cars as a bonus for the purchase. This, however, was not the main selling point of these residential properties. Savills observed that there has been an increase in interest in landed housing, townhouses, and second-hand properties. “We saw huge discounts that reached up to 50% on some units. They were giving away cars or ‘buy one get one free’ promos were up. These were the types of sales and discounts that were available and it worked very well,” he said. “We saw that houses, landed houses, and townhouses increased in popularity. We have seen developers entering that space a lot recently as well. In terms of the secondhand units for resale, there is a lot on the market. This has been partly because of expats leaving the country or those re-looking at their portfolio and trying to reduce their total amount of property they have,” he added. This interest in various types of residences can be partly attributed to commuters who are looking further out from the city center where they are able to afford larger property. Whilst Savills is foreseeing that development in the residential sector will slow down, current projects have been specifically catered to the changing market in Bangkok. “What we’ve seen now is that those developers have slowed down their pipelines. So, we are not going to see as much residential development year on year in Bangkok for quite some time, but we also observe where they are developing. They’re being much more careful with their targeting,” he said. “They’re really going for the real demand. Young commuters want to be on a main street or on a train line to give them easy access into the city center. So, overall, we’ve seen that the performance of the developments has been particularly good. Once the economy picks up, we are probably looking at a healthier residential market here in Bangkok,” he added.

The food and beverage industry helps improve the occupancy rate in Bangkok




Philippine retailers struggling to rightsize: JLL

This is following the rise of e-commerce-use amidst long lockdowns.


hilippine retailers are actively looking to rightsize their store portfolios as they ramp up online offerings, according to JLL Philippines Head of Research and Consulting Janlo de los Reyes. Metro Manila shopping malls have typical store sizes ranging from 70 to 150 square meters. But as shopping shifted online over the last year, retailers are looking to the right size their stores which may impact how malls are structured, said de los Reyes. “Malls may need to reevaluate unit cuts which may translate to allocation of smaller spaces moving forward,” he said. Local F&B, fashion, and footwear brands led the profile of store closures. Brands such as M&S, Uniqlo, and Bata closed retail spaces. Large exits include M&S at Estancia Mall, Penshoppe and Bata at Shangri-La Plaza, Uniqlo at Century City Mall, and Pancake House at Ayala Malls The 30th. Pull-outs were observed from international brands Topshop/Topman, Dorothy Perkins, and Burton (distributed by Robinsons Retail Holdings, Inc. in the Philippines), following the global pull-out announcement of parent company Arcadia Group in February 2021. Some store openings were noted in Q1 of 2021. Majority of which were delayed F&B openings from 2020. Notable openings include Panda Express in SM North Edsa, Quezon City; Elephant Grounds in The Podium, Mandaluyong City; and Café Mary Grace in Ayala Malls The 30th, Pasig City. Rationalising spaces During the course of the pandemic, retailers are observed to continue rationalising spaces as they employ different strategies like retaining physical spaces in key areas and closing less performing branches, or downsizing other branches while keeping store sizes of key branches, and increasing their digital presence. Altogether, these factors may contribute to elevated vacancy levels in the short- and medium-terms. Furthermore, the anticipated supply expansion may contribute to the swelling vacancy level. The greater prominence of the online space has led to the growth of e-commerce which has boosted demand for logistics space. “One of the current darlings of the real estate industry is the logistics. These are quality-grade warehouse spaces catering to the operational requirements of Shopee, Lazada, and Zalora, among others,” he said. “The logistics sector something that we’re seeing as a resilient sector not only in the Philippines but across the globe. We expect an even recovery across sectors and it’s going to be led by logistics,” he added. 40


The prevalence of online shopping may impact how malls are structured -JLL Ph Head of Research and Consulting Janlo de los Reyes

“Metro Manila vacancy is now at 14.7% in the first quarter of the year, and that’s higher than the 11% that we saw in the previous quarter. We saw a lot of move outs and downsizing by occupiers,” he said.

One of the current darlings of the real estate industry is the logistics. These quality-grade warehouse spaces cater to the operational requirements of Shopee, Lazada, Zalora

Vacancies doubled in residential In the residential sector, current records show that vacancy rates are at 7.3% as of Q1 of 2021. This is a sharp increase, doubling that of the same quarter in the previous year. “The vacancy rates increased to 7.3% in the first quarter of the year, compared to around 7% in the previous quarter, and higher than the 3.5% that we saw in the first quarter of 2020,” he added. De los Reyes said that there was an improvement in Q4 of 2020 in terms of sales activity, it being the holiday season. They also observed positive pick-up in the first two months of Q1 of 2021, but the lockdown in March saw another decline in terms of sales take-up in the market across segments. A lot of companies are putting their expansion plans on hold, which affected the leasing activity for residential products. There is slower demand for groups like young professionals who used to occupy residential housing near their places of work,” he said. At the same time there is a drop in demand for halfway homes, such as families who have children who are studying and used to live nearby universities,” he concluded.

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Architects design greener spaces for SG landscape Industry experts outline how the architecture landscape will change in the next year.

Singapore will see more mediating spaces that give access to greenery and healthier buildings


early two years have gone by since the COVID-19 hit Singapore, yet it seems going back to the pre-pandemic normal will likely come later rather than sooner. The Singapore government acknowledged this as it recalibrated its strategy towards “living with COVID” even as it succeeded in vaccinating a large portion of its population. But, what would a “Singapore designed to co-exist with the pandemic” look like? “The pandemic has heightened awareness to numerous needs and priorities that will shape design in the new normal,” AR Seah Chee Huang, CEO of DP Architects, told Real Estate Asia. “We have seen this shift in mindset from wealth to health, where I believe the current national push for digitisation will be met with an equally intentional investment in urban environments designed for wellness.” Redesigning a ‘healthier’ Lion City Chee Huang said Singapore will likely see more mediating spaces that can be readapted and reused, as well as areas that give access to public domains, greenery, and healthier buildings. The shift is also expected to bring us more 42


“Healthier, more responsive and breathable buildings” will emerge as the industry adopts biophilic design strategies that connect people to greener spaces

automation and artificial intelligence incorporated in the design to protect the people. Amongst the approaches seen to emerge in the next 12 months is the M³ urbanism as architects attempt to design areas meant to hold a healthy density. “The idea is to create selfsustainability within a single site with synergistic programming, facilities that are flexibly designed, and network of shared domains, spaces of respites and landscape terraces for enjoyment,” Chee Huang said. “This also fortifies our notion of ‘sharing’ and ‘commons’ that have proven to be critical for the community’s well-being, especially during modes of emergency and crisis like the pandemic.” Designs geared towards this approach reinforces concepts such as 10-minute walkability, and generally, 10-minute communities and economies. This is also in line with the government’s 2030 plans for residential areas to be within a 10-minute distance of a park. Moreover, Chee Huang said architects will be designing on account of physical and mental health, as well

as the current trend towards a hybrid work setup. “Healthier, more responsive and breathable buildings” will emerge as the industry adopts biophilic design strategies that connect people to greener spaces. Features that will provide for contactless interactions, sanitation and sewerage amongst others will also be integrated. As for the home and workplace, Chee Huang said the home has to be redesigned to feature “swing spaces” such as a balcony or sky-gardens; whilst the office will have to feature higher flexibility as it is seen to cater to a meet and exchange function in the post-pandemic norm. “The future of architecture no longer only represents a physical space but more importantly, its purpose, the planet, and its people,” Chee Huang said. “This means that design is going beyond just an aesthetic form; it is about how it affects the environment, its people, and vice versa.” Designing for the new normal For the Surbana Jurong Group, design in the new normal will likewise lean towards sustainability and spaces that provide multiple functions that are also useful in emergencies. The group noted a growing demand for planning and designing for the new normal. For one, the government has tapped Surbana Jurong to retrofit buildings for care and recovery facilities and redesign spaces for safety, as the government anticipates the return of activities in the workplace. “One of the biggest gaps in the built environment that COVID-19 has surfaced is the siloed thinking around design and usage of spaces,” Ivy Koh, director of SJ architecture at Surbana Jurong, said. “In the ‘next normal,’ we will need to build more urban spaces with the potential to serve multiple functions and be useful in emergencies.” Prevention and crisis readiness are some of the major considerations for urban planning seeing that a large portion of the population lives in cities. She noted that the key to addressing this is a collaborative design that involves not just urban planners, but also healthcare architects, interior designers, and engineers, amongst others. Koh expects demand for sustainable

ANALYSIS: ARCHITECTURE buildings with well-ventilated and open green spaces to grow as people seek reconnection with nature. After all, their capacity to move and engage in recreational activities have been limited for far too long. In line with this, she said Singapore will likely see interlocking pockets of gardens with mass public spaces. Homes must also be designed to provide in a way that allows occupants to find a balance to live, work, and play, as well as study. “Flexible designs with considerations for sanitation need to be included in a pandemic-ready apartment, where occupants may need to be quarantined,” she said. Building a pandemic-ready Singapore, however, does not end here as Koh raises the need to optimise urban spaces for agriculture and farming, considering the current health crisis poses threats to supply chains. Surbana Jurong has developed the “Floating Ponds,” a high-intensity vertical farming concept for the production of fish and agricultural products. Koh said this allows farms to be commercially productive despite limited land. “We plan to leverage our expertise in designing vertical farms to help Singapore achieve its ‘30 by 30’ goal of producing 30% of Singapore’s food locally by 2030,” she said. Likewise, Swan & Maclaren expects developers to incorporate greener and more sustainable designs. Swan & Maclaren Director Matthew Hon said greater importance will be given towards “well-tempered environment, leading to more Biophilic design solutions.” “The revisiting of existing commercial real-estate stock to better increase [environment, social, and governance] value, and lastly adjust design and fit-out works for the changes in work-live solutions of companies after COVID,” he said. Additionally, medical and clinical wellness as key sectors will receive more focus, particularly in terms of creating better care facilities for the ageing population. How architecture firms thrive through the pandemic Beyond the restrictions, a major hurdle in grappling through the pandemic for architecture firms

areas,” she said. “The world has embraced virtual business and education, and we see smaller physical meeting spaces and hotdesks. The service industries have also accelerated the use of Artificial Intelligence and remote monitoring of building services to reduce reliance on labour.”

Demand for sustainable buildings with open green spaces will grow as people seek reconnection with nature

is dealing with the uncertainty, a sentiment shared by Swan & Maclaren and RSP Architects Planners & Engineers (Pte) Ltd. Director Hon said the industry is reliant on investment positive feedback loops which do not go well with uncertainty, which could likely lead to new development projects being put on hold. “There is a sense that newer investment hesitates to be mobilized, even for early design stages, or are set on the back burner until that market certainty can be viewed on the horizon,” he said. He shared that when the pandemic hit, Swan & Maclaren zeroed in on projects that could take advantage of periods of slowdowns, such as medical-related developments and infrastructure growth. The firm also upgraded its standard of project delivery by training its staff, as well as strengthening its corporate system. RSP, for its part, took initiatives towards digitalisation, enabling its stronger business collaboration with overseas offices. Executive Director Law Yoke Foong of RSP said the dynamic nature of the pandemic brings uncertainty in the sense that the information we have now may be irrelevant as it continues to unfold. “As a first approach to infection control, we are looking at wider circulation and de-centralised waiting

Seah Chee Huang

The service industries have accelerated the use of Artificial Intelligence and remote monitoring of building services to reduce reliance on labour

Unpredictable challenges For Surbana Jurong, the impact of the health crisis, on top of the climate crisis, heightens the challenge for architecture firms. The unpredictability of the weather, SJ architecture’s Koh said, may affect the design of buildings. In response to this, the firm utilized technology to enhance Building Information Modelling and Digital Twins that allow simulation of scenarios, climate change risks, and structural defects. Technology does not always bring good news, however, despite the digital transformation seen across industries, accelerated by the global outbreak. DP Architects also thrived through the crisis through digitalisation, but it flagged that it is possible that the current rate of digitalisation could lead to structural issues in the architecture industry, as well as the larger built environment value chain. “Whilst this techceleration is appreciated as a strategic and important juncture for the industry in driving higher productivity and integrated digital delivery in design and across the value chain, the challenge lies with firms coping with the rate of change, upskilling in the midst of managing the disruption from the pandemic in work and operations,” DP Architects CEO Chee Huang said. He added that the longer the pandemic persists the longer its impact on the health of companies in the construction value chain will last. Since the pandemic struck Singapore, the DP Architects consolidated and recalibrated their plans, looking at the viability of business across markets. The firm also remapped the group’s multidisciplinary approach to design and internationalisation. Internally, the firm’s in-house training department, DP Academy conducted seminars on design innovation. REAL ESTATE ASIA | Q1 2021



Pave sees rising demand for overseas property investments

The firm helps buyers purchase cross-border and handles administration for clients.


n the new normal, the dream of many is to not just work from home, but to work from a second home, preferably in a beautiful location in Asia. This is the market that Pave, a startup focused on helping investors find and acquire their dream property overseas, believes is set to boom as more seek to buy properties to invest in. In an exclusive interview with Real Estate Asia, Pave Founder and CEO Alan Schmoll said that whilst real estate investors have long been attracted to buying in emerging markets, the demand significantly grew when the pandemic hit. Pave is an online portal which offers cross-border real estate property assistance in purchasing new homes or apartments. Apart from offering homes available for sale, they also provide legal, tax, and financial consultations. Investing in overseas property Amongst the most significant trends they have noticed is that many buyers are seeking to invest in properties overseas. While these are mainly done for capital appreciation, some invest in properties prior to immigrating to another country. “What we do is use a lot more data around properties around buyers intentions to match properties that are more relevant to the end buyer. They may want to have a condo in Bangkok, or they want to own a ski lodge in Niseko,” he said. “It could be for investment reasons, maximizing rental yields or capital appreciation. It could be for immigration. A lot of buyers look to buy a property overseas as a step before they immigrate to a new country,” he added. Another trend is that investors buy properties overseas to lease out. Earning rentals from overseas spaces is considered to be one of the more stable options in investing in real estate space. “Our platform is entirely focused on 44


Pave Founder and CEO Alan Schmoll

The notion of ‘work from paradise’ shows that more employees move to places with lower living costs now that remote work is more feasible

buyers of property overseas. In terms of what they end up doing with them, some of them are looking to occupier use of the property, and we also have buyers that are purely looking for investment returns, leasing it out to other buyers,” he said. “We do work with them, to connect them with agents on the ground in those countries to ensure that they are able to lease their properties out at a satisfactory yield. So those are the two main uses of the property: both owner occupier as well as buying for investment and then and then leasing out,” he added. In terms of the more developed markets such as the UK and Australia, there is a need to be a bit more selective in buying property or investing in one. “Buyers tend to have a variety of risk profiles to solve for and we work with them to understand that before we recommend properties for them, be it an emerging market

like Thailand, Vietnam, or more developed markets like the UK and Australia,” he added. ‘Work from Paradise’ The notion of ‘work from paradise’ shows that more employees are opting to move to places with lower living costs now that remote work is more feasible. No longer will they need to stay in the same country where their employer operates, as businesses become more flexible in having their talents perform work remotely elsewhere. “What we’ve seen change with the pandemic is really a couple of trends. One is this term of ‘work from paradise’ that is becoming a real consideration for people,” he said. “If they’re employers or if they’re entrepreneurs, given the flexibility to live elsewhere, a lot of them are thinking about buying a second or third home in a place that is more of a paradise. It may be Bali, Phuket, or in

PROPTECH: PAVE Bangkok,” he added. Correlated with this is the ‘repatriation move.’ Whilst some may choose to work elsewhere, a number of employees have opted to return back to their home country. Schmoll said that a number of Australians who moved to Singapore or Hong Kong for work are now considering moving back to Melbourne or Sydney as remote work is now possible with a lot of employers. “Second is the ‘repatriation move’ as we call it, with expats that have been living in places like Hong Kong or Singapore for 5, 10, 15 years. Given what’s going on with COVID and the difficulty of traveling across borders, as well as also being able to conduct their jobs remotely, you’re now seeing quite a few foreigners thinking for themselves,” he said. “Do I need to be based in Hong Kong and Singapore to do my job or should come back to Australia? That is something that we’ve seen quite a bit of inquiry on particularly coming back into Melbourne and Sydney for expats that live in Hong Kong for a fair period of time,” he added. Emerging markets like Thailand and Vietnam are currently the top picks in these queries. For Schmoll, these countries are promising as they project that properties here will still appreciate in the coming years. “Places like Thailand and Vietnam, we term as emerging markets. These are when there is still a lot of scope for appreciation in the underlying property prices. As those countries become wealthier, the middle income earners earn more, and more urbanization will move from the countryside to the city. So, the long term trends in Thailand, Vietnam are always going to be very supportive to property prices appreciating,” he said. Pave Bespoke Whilst the main platform serves as an easily accessible way for buyers to reach their consultants, Schmoll said that they also have the Pave Bespoke to cater to buyers with more niche preferences. Here, clients may request for properties that are not included in Pave’s platform. Apart from removing the legwork, the Bespoke options will aid buyers from finding their highly coveted homes to closing in the deal.

Clients will receive a shortlist of choices that Pave consultants will search for them personally. From there, Pave will assist in legal and accounting matters, including arrangements needed with banks and even in furnishing the place with interior designers. “The way that works is there is a small down payment that is paid to us. Then, we go out there and represent them from search and discovery and finding a list of shortlisted properties that we feel meet the requirements, to negotiation with the vendor. In this case, the vendor could be a developer or could be a secondary home seller,” he said. “Engaging and helping them with lawyers and legal work, working with accountants and all the way through to settlement, working with a bank and as well as even furnishing and decorating the property are steps similar to the end to end service we provide through our platform but in this case, it’s just again a little bit more bespoke in terms of what they’re looking for,” he added.

The Issara Sathorn in Bangkok, Thailand is one of the featured projects by Pave on its portal.

Buyers are becoming more comfortable buying properties online. The pandemic brought about this new trend of online 3D tours of properties

Adapting to lifestyles Looking forward, Schmoll said that Pave aims to be able to provide options to their buyers depending on their individual lifestyles. As online real estate portals grow in number, Pave wants to set itself apart by offering information about the surrounding area of the properties they have on sale. “I think it’s important for us to also be a lifestyle platform to give insights to people around the areas that they’re buying. If they’re looking at buying an investment property in Manchester, we’re providing details about the supply and demand and the real estate market. This includes what people are looking at rents, what people are buying, what’s going on infrastructure, price per square meter or trends and yields,” he said. “But I think just as important to that is we’ll be providing a lot of information around lifestyle. What are some of the reasons why aside from work people want to actually live in a place like Birmingham. What’s the restaurant scene like? What’s the nightlife scene like? What’s the sporting scene like? What can people do on the weekend for their hobbies?” he added. Schmoll said that they observed that buyers are becoming more comfortable buying properties online. The pandemic brought about this new trend of online tours of properties, which efficiently removed the necessity of being at the exact location of the property. Pave offered 3D tours of their properties and had their consultants available online for possible questions for their prospective buyers. “People are becoming more and more comfortable buying things online. It’s not to say that people don’t want to go and view a property themselves anymore, we don’t have an issue with that,” he said. “We provide our buyers the information, videos, floor plans, information about the areas, 3D walkthroughs, using drone technology to provide views from the actual level that somebody’s apartment may be on. These are things that make people more comfortable again, doing things in an online environment and we feel that trends are going to accelerate and continue,” he added. REAL ESTATE ASIA | Q1 2021




‘Two-envelope approach’ tender: Central Harbourfront site sale based on price


ccording to the Government’s Land Sale Programme, the commercial plot New Central Harbourfront Site 3 will go to tender in the third quarter of this year. Instead of the usual highest bidder wins approach, the tender of this site will adopt a “twoenvelope approach”. Developers will be required to submit separately a design proposal and a price proposal. The Development Bureau earlier further explained its scoring methodology to the Harbourfront Commission and the Land and Development Advisory Committee, in which the weightings for design and price will be 50-50. The tenderer with the highest combined score will be awarded the tender. During previous tenders for the Kai Tak Cruise Terminal, the Wong Chuk Hang private hospital site (now Gleneagles Hospital Hong Kong) and the former Marine Police Headquarters (now 1881 Heritage), the government also adopted the “two-envelope approach”. As the Kai Tak Cruise Terminal concentrated on future terminal operation, the hospital emphasised quality of medical services and the former Marine Police Headquarters focused on cultural and heritage conservation, the weighting for price was not set high, at only 30%, 30%, and 25% respectively. In contrast, for the large commercial development site on top of the High Speed Rail West Kowloon Station, the scale of which compares favourably with Site 3 Central Harbourfront, the site was instead sold on the traditional highest bidder wins approach. As Site 3 is the only remaining large commercial site in Central and on account of its strategic location, the government believes a twoenvelope approach will take into consideration the financial benefits from the sale and at the same time ensure the development plan and other illustrative materials for the site delivers social benefits. Based on the tender scoring methodology used on previous tenders that used the two-envelope approach as well as the government’s “Tender Procedures for Government Procurement”, the tenderer with the highest score for the design proposal and the tenderer with the highest price offered will be awarded full scores. The scores for the design proposals and price proposals of the other tenderers will be given in proportion by using the highest score as the basis. Finally, the scores for both parts are multiplied with the corresponding weightings to arrive at a weighted score for each part. The two weighted scores are then added together for a combined score. The tenderer with the highest combined score will be the successful bidder. Scoring large-scale projects Although the government has yet to announce the detailed land use restrictions and design intentions for Site 3, it has expressed its design perspective for the site on several occasions in the past. The scoring criteria will be likely based on the main areas detailed by the Planning Department in the “Urban Design Study for the New Central Harbourfront” (2011), “Comprehensive Development Area” Zone at Site 3” (2016), as well as criteria by The Secretary for Development and the Development Bureau. Although scoring for the design schemes would involve elements of subjectivity, for some large-scale public sector building projects, such 46


ALEX LEUNG Chief Surveyor, CHFT Advisory and Appraisal Limited

as High Speed Rail West Kowloon Station, Kai Tak Cruise Terminal, Science Park, etc., these projects were undertaken by a number of wellknown architects or consultancy firms. It can be seen then that they all have similar ability on designing projects that require many special features and in relevant project experience. For example, in 2010, the West Kowloon Cultural District Authority commissioned three well-known consultants to carry out the overall design for the cultural district. Of the three schemes submitted, one was selected as the main scheme. However, the average total scores of the three consultants were similar, with an average score of more than 3 points (5 points being the full marks). In addition, when Planning Department was first undertaking planning studies for Central Harbourfront, it offered four design concepts to which there was public consultation and a vote. Finally, the votes for the first three designs ranged between 180 and 217, which were considered quite close. Investment projections As a huge amount of investment is involved for Site 3, those developers who have the capability will definitely partner with the firstrate architects, planners and landscape designers to work on the project. It is believed that the final scores of the three highest ranked designs for Site 3 will not vary significantly from each other, with the score of the third ranked scheme will not be more than 15% behind the score of the first ranked scheme. On the other hand, Site 3 will involve an investment that is huge in sum and long-term in time scale. It is expected that only four to five developers and consortia have the capability and interest in bidding for the site. At present, prospects in the commercial real estate market are still uncertain. With vacancy rates very likely to continue to increase, developers’ investment projections on commercial land varying greatly and coupled with the number of participating developers expected to be small, it is expected that there will be significant differences in final bids received. For example, at the end of 2019, the budget for the deck development on top of the High Speed Rail West Kowloon Station was budgeted at HK$70b including land premium. In the end, only three developers participated in bidding. The winning bid was HK$42.23b, with the second placed bid 23.5% lower than the winning bid, while the third placed bid was 31.4% lower than the second placed bid. We estimate that the highest price bid for Site 3 will be about HK$52b, which converts into as much as HK$1.04b per weighted point given for the score for design. With the bidders offering lavish fees, the design scheme would surely be a contest among the largest and best architectural design firms. The expected quality of the subsequent designs is such that it is difficult for anyone to race ahead of the other opponents in terms of the design scheme score. It is therefore expected that the sale of the commercial land on Central Harbourfront Site 3 will ultimately depend on the developer’s price bid.






Think ‘cash is king’ for valuation and new real estate business models

STELLA LAW Chief Operating Officer, Fonto Holdings limited


s new operating models emerge, property valuers may need to be mindful of the way real estate is run when making valuations. Travel restrictions and other control policies have been put in place around the world to contain the pandemic, but the flow of capital has not stopped. Investors keep searching for emerging business models in various sectors in an attempt to benefit from the next windfall. As an important alternative asset in investment portfolios, real estate has been producing new business models over the past few years and receiving attention from the capital market. But when the market’s attention began to shift during the pandemic, many seemingly good business models gradually exposed their hidden flaws. For example, before the leading coworking operator WeWork prepared its initial public offering (IPO) in 2019, its concept of techled, flexible office space had been well received by many investors and successfully attracted significant capital. However, after it filed its IPO application the market gradually realised that its business model would be difficult to sustain in the long run. WeWork’s valuation plummeted, and the offering failed. Another example concerns Danke Apartment in mainland China. The operator took long leases on apartments from owners to sublet at affordable rents, and the market had been expecting to see it become the first Chinese stock to be listed on the NYSE. However 2020 saw news spread that Danke were not paying suppliers, nor passing on rent to owners as they were supposed to. Since the beginning of the spread of pandemic in 2020, its market value has shrunk from $274m to less than $200m. By analysing the business models of WeWork and Danke Apartment, we can see that the most important risk factor for both is the same: namely, unstable cash flow. WeWork’s business model is to rent or purchase office space, redesign it and sublet it to businesses to earn the rent directly, or to profit from the premium it can charge tenants above the amount they (WeWork) pay to landlords. WeWork adds technology ingredients, such as room booking system for users to access WeWork facilities anywhere in the world, enhances community attributes with events, activities and provision of promotional platforms for businesses and enables more efficient space use. But ultimately rent is essential to sustainable operation; when vacancy increases, WeWork’s revenue will shrink and cash will stop flowing. The rental loan model Similarly, Danke Apartment operates on the basis that tenants sign a contract and pay rent in advance on an annual or quarterly basis, and the company then pays monthly rent to the landlord. Since many of the tenants are young and at early stages of their careers, it would be difficult for them to raise a large amount of money in advance. The company thus created the rental loan model, cooperating with financial institutions to provide loans to tenants to pay rent in advance. 48


For emerging real-estate business models, cash is king

As a result, Danke’s cash flow is highly dependent on tenants’ prepayments. With the massive shutdown of production in China at the beginning of last year and fierce competition in the real-estate market, occupancy rates have deteriorated, leading to a significant contraction in rental income and a serious cash-flow shortage. For emerging real-estate business models, cash is king. Real-estate investments require more capital than equities and bonds but are less liquid. If an emerging real-estate business model is to succeed, it must show the market how it can be relied on to realise cash and provide a stable cash flow to ameliorate the risks of illiquidity. In the process of valuation, the following points should be noted. 1. The future market size of the targeted field determines the revenue level for the business model, so we need to understand niche market’s growth rate and market size to determine the business model’s expected cash flow correctly and the point at which it will reach stability. 2. Protect the key business driver is a critical factor to keep a sustainable business model. So we need to thoroughly analyse the competitive advantage of the business model of the neweconomy in real estate sector and assess the risk factors. 3. Real-estate operation and investment is a highly specialised field, so the experience and management style of those in charge will have a major impact on the revenue and operational risk for a business. The emergence of each new business model means that capital is enabling pioneering approaches in real estate – successful or otherwise. The business may appear exciting, but it will always face the fundamental question of how to realise cash. Only a business model that is brave enough to address this question can forge a new path in real estate. As a property valuer, one can no longer solely rely on traditional methodology. While owners, operators and developers are working on new business models to make best use of spaces and create value from assets, valuers should keep an eye not only on the value of the property but also the way the real estate business is run. In the long term, business valuation and property valuation may merge as new business models enter the market.



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Articles from Real Estate Asia 2021