Experts in the property industry are divided on how much interest Jurong Point — which has been put up for sale with a price tag of more than S$2 billion — will garner, given the current retail climate and hefty price tag.
The mixed views come after reports that the mall has been put up for sale at more than S$3,000 per sqf based on the commercial net lettable area of about 658,000sqf that is being offered for sale by its owners Guthrie GTS Limited and Lee Kim Tah Holdings.
Several experts told that the price is too high for the 21-year-old mall, particularly in the current weak economic and retail climate. Others say that market conditions are cyclical and that the strong attributes of the mall, including its size and location, will help it attract healthy interest.
According to the mall’s website, Jurong Point — located between Boon Lay MRT Station and Boon Lay Bus Interchange — is the largest suburban mall in Singapore, housing about 450 retailers. The mall, which opened in December 1995, was expanded twice: Once in December 2000 when it expanded to 450,000sqf and again in December 2008 to 750,000sqf.
Mr Ku Swee Yong, chief executive of International Property Advisor, said that the asking price is high for a mall that is more than two decades old, and that interest from buyers “will be limited”.
“Looking at the recent Paya Lebar Quarter, even though it is priced at S$3.2 billion, it is a mixed development which includes commercial, retail and residential spaces. Jurong Point is not a new mall and to ask for that value is steep,” said Mr Ku.
“There may be a few interested parties from institutional funds (insurance or pension-related), but they would probably require some sweeteners in the deal such as rental guarantees.”
Other deals that have been transacted in recent years include Bedok Mall, which was divested by CapitaLand to CapitaLand Mall Trust for S$783.1 million last year. Bedok Mall has a net lettable area of 222,500sqf.
Meanwhile, Mr Alan Cheong, research head at Savills Singapore, said that he expects interest in the mall to be healthy.
Including the 44,000sqf of space under the Government’s Community/Sports Facilities Scheme, Guthrie and Lee Kim Tah are divesting a total net lettable area of 702,000sqf in the mall through the sale of shares in companies that own this space, the Business Times reported yesterday. At more than S$2 billion, the price tag translates to a sub-4 per cent net yield.
“We believe that this is a fair price given that the availability of a prime mall for sale is a rarity here.
“Also, it seems surprising that with office yields trending towards the sub-3 per cent levels, we still can have retail mall yields at around the 4 per cent levels. Although over the past five years, yields have fallen from the high 4 per cent levels to about 4 per cent, interest rates have also been trending down.”
Mr Desmond Sim, head of CBRE Research in Singapore and South-east Asia, also said that although the retail industry is under pressure currently, malls with strong characteristics still be popular.
“Malls with strong retail attributes (residential catchment, transport node location) still instil confidence from retailers. Investors will look beyond the current market which is largely cyclical and look at the longer term,” Mr Sim said.
