180 new serviced residences at Furniture Mall site
The Straits Times | MAY 7, 2013
They will boost recurring income stream and provide higher yield than mall: UOL
THE former Furniture Mall at Beach Road has been turned into 180 serviced residences by owner UOL Group at a construction cost of $65 million.
The 20-storey Pan Pacific Serviced Suites Beach Road, which opens today, will boost recurring income stream and provide a higher yield than the mall, UOL Group president of property Liam Wee Sin told The Straits Times.
Noting that Furniture Mall yields were below 4 per cent, Mr Liam added that serviced residences, which typically have more stable occupancy rates than hotels, were also cheaper to operate than hotels.
He said UOL had considered turning the site into additional hotel rooms or a budget hotel but eventually chose serviced apartments because the serviced residence market here was still unsaturated.
An OCBC Investment Research report last December estimated that serviced residences account for about 9.6 per cent of the Singapore lodging market in terms of nights stayed. In comparison, serviced residences account for about 20 per cent of Hong Kong's lodging market.
"Comparing city to city, there's still room for growth," Mr Liam said in an interview last month.
Other developers also appear to be looking at building serviced residences.
For instance, a Maybank Kim Eng report in early March said OUE intends to turn its hospitality assets into a real estate investment trust (Reit) and was "in talks with the authorities to convert one tower of Twin Peaks and DBS Tower One into serviced apartments, which can then be combined into the hospitality Reit". Twin Peaks is a 99-year leasehold luxury condominium at Leonie Hill in District 9.
Far East Organization also incorporated serviced residences into its Seahill condominium project in the West Coast, which was launched last year. Its executive director and chief operating officer for property sales, Mr Chia Boon Kuah, said the company built the units to serve the needs of expatriates and visitors working on Jurong Island and in nearby areas.
DTZ senior director Tay Hock Soon, who is also general manager of the 220-unit Treetops Executive Residences in Orchard, said serviced residence yields were about 5 per cent.
The opening of the Pan Pacific Serviced Suites Beach Road will bring UOL's stock of serviced apartments to 396 units, including 126 units at Pan Pacific Serviced Suites Orchard and 90 units at Parkroyal Serviced Suites at Beach Road.
This is slightly less than 10 per cent of the total number of serviced residences in Singapore, estimated at around 4,000 units.
The biggest players in the market are Far East Organization, The Ascott Group and Frasers Hospitality, according to a CBRE report last July. Others include United Engineers with its Park Avenue brand, Allgreen Properties, the Singapore property development arm of Malaysian tycoon Robert Kuok and the Tan Chong Realty Group.
Mr Liam said he expects occupancy for Pan Pacific Serviced Suites Beach Road to stabilise at above 80 per cent, supported by demand from professionals working in the financial, maritime, energy and pharmaceutical sectors.
However, Mr Tay noted that many private residences are being leased out by developers for short terms, which will increase competition within the segment. At the same time, demand for serviced residences from foreign professionals could decline due to global economic uncertainty, Mr Tay said.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)
Email: marshe_inc@yahoo.com.sg
