Types of property investments

Straits Times: Sun, Dec 25

RETAIL Strata-titled retail spaces are not as common and are mostly found in older shopping centres such as Far East Plaza, Lucky Plaza, Sim Lim Square, Peninsula Plaza and Centrepoint. A 344 sq ft unit at Sim Lim Square, a 99-year leasehold block, sold recently for $1.25 million - or $3,629 per sq ft (psf) - while a 355 sq ft freehold unit at Katong Plaza was snapped up at $497,000, or $1,399 psf. A good retail space is one that is easily accessible with heavy foot traffic, experts say. Savills' Mr Cheong says factors like frontage to the main road, traffic flow, availability of carparks and accessibility to public transport should also be considered. Investors also must look into a mall's tenant profile to understand how it is positioned and the type of business it is likely to attract. Shophouses are another investment option. The supply is limited and yields can reach about 5 per cent, R'ST's Mr Ong noted. OFFICES Experts note that strata-titled offices are less common, with many in ageing buildings, as prime office buildings tend to be held by developers, funds, or Reits. International Plaza, The Central and Suntec City are some of the strata-titled offices in the city. Two sales last month give an idea of value. A 3,498 sq ft unit at Suntec City sold for $8.92 million - or $2,550 per sq ft (psf) - and a 1,270 sq ft unit at The Central brought in $2.75 million, or $2,165 psf. A new project, Paya Lebar Square, next to Paya Lebar MRT station, is likely to start selling next month. The office component will comprise 570 strata units, about half of which will be about 480 sq ft each, with indicative prices ranging from $1,650 to $2,000 psf, according to earlier reports. In absolute terms, the cheapest will be $800,000 for a 480 sq ft office on the fourth level. Occupiers or investors may combine various units into larger offices. INDUSTRIAL Industrial property is generally more affordable - with prices ranging from $300 to $500 psf, valuing many units below $1 million. But investors must know the type of trade allowed for the industrial unit they purchase as this can vary according to how the space is zoned. DTZ's Ms Chua noted that industrial properties are mostly on a 30- or 60-year lease. Like homes, an investor will have to consider the ease of leasing and rental income. The size, location - such as the proximity to an MRT station - and quality are important considerations, she added. The options available include strata-titled multiple user factories and warehouses, which are much cheaper than offices and shops. An investor can also consider landed factories and warehouses. With limited supply and stronger demand for such properties, these are more expensive than strata- units, said Ms Chua. Some strata-titled industrial projects include Oxley Bizhub, TradeHub 21 and Midview City. But R'ST's Mr Ong cautioned that the manufacturing and technological-related service sectors - which qualify as users of industrial space - are set to slow. 'The property may find some difficulties in getting suitable tenants unless rents are priced competitively in the economic slowdown,' he said. Savills' Mr Cheong added that the strict enforcement or rule changes to ensure that industrial properties are occupied solely for designated users is also a risk. SOHO Experts caution that investors need to be careful, in particular with properties marketed as Soho in the light of the new curbs. Soho is a marketing term used by developers and their property agents, and does not refer to a specific development type granted approval by the URA. These developments can be classified either as commercial or residential depending on the land's original zoning, SLP's Mr Mak said, and research should be done before any purchase. Soho units at The Central are marked as commercial while those at Far East's Woodhaven in Woodlands are considered homes and will be subject to the cooling measures. So as in every property deal, residential, commercial or industrial, tread carefully. Source: The Straits Times