insight
工程技術，地產投資，信仰家園，時尚生活
Retail units' popularity led to higher average prices for some projects
RETAIL units have become so popular with investors that some were sold at higher average selling prices than high-end private homes last year.
The sector has the double appeal of being in the right place to take advantage of population shifts towards the suburbs, while being spared any hit from property cooling measures.
Take, for example, the freehold One Dusun Residences in Novena, where average shop prices reached $5,600 per sq ft (psf) last year.
Shops at the freehold East Village in Bedok did not fare quite so well, but still reaped average sale prices of of $5,229 psf last year. Units in both complexes are about 220 sq ft each.
In comparison, units at projects like the Scotts Tower condominium in the city centre transacted at around $3,900 psf in January.
Maybank Kim Eng analyst Alison Fok said in a new report that prices have nearly tripled in areas such as Bedok, while transacted unit sizes shrank significantly between 2009 and last year.
While prices in the downtown core and Geylang seem to have stabilised, they "seem to be on a steady increase" in Novena and Kallang.
The report focused on new or refurbished neighbourhood malls with units that ordinary investors can buy, and covered Bedok, Bishan, the downtown core, Geylang, Kallang and Novena.
It excluded whole shopping malls and large retail spaces that developers usually keep in real estate investment trust vehicles to generate recurring income.
Nearly all the districts covered in the report showed a general increase in average selling prices for retail units from 2010 to last year.
The only exception was the downtown core, where average selling prices of shops fell from $5,046 psf in 2010 to $4,637 psf last year.
Ms Fok said demand for retail units will inevitably increase as the suburban population grows.
Retail units in suburban areas are expected to account for more than half the supply of retail net lettable area this year.
She also noted that demand for retail properties in general was strong, as it had yet to see strong government intervention.
The commercial segment was untouched by the cooling measures - the seventh round - announced in January.
But this does not mean that retail investors should leap into commercial property.
The Maybank report noted that "current yields may not be an accurate reflection of the actual yield return on new retail units offered in the market".
This is because rental yields are likely to head downwards since rents are not rising as fast as capital values, Ms Fok told The Straits Times yesterday.
