Space Market Analysis of Serviced Apartments in Singapore: Case Study

This report provides a space market analysis of the serviced apartment sector in Singapore, focusing on the integrated development at 88 Market Street. It examines the joint venture between CapitaLand Limited, CapitaLand Commercial Trust (CCT), and Mitsubishi Estate Co. Ltd (MEC) for the redevelopment of Golden Shoe Car Park. The analysis covers financial aspects, including investment proportions, differential premiums, and market valuations. The report details the redevelopment plans, which include office spaces, serviced residences managed by The Ascott Ltd., and ancillary retail components. The conclusion highlights the benefits of the redevelopment for office tenants and the success potential for joint venture partners, supported by governmental authorities. References include academic journals and books on urban land rent and property investment in Singapore.

Space Market analysis of Serviced
Apartment in Singapore

Table of Contents
INTRODUCTION...........................................................................................................................1
Case Study...................................................................................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4
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INTRODUCTION
Space market analysis refers to a consultative and cooperative approach to provide the
best accommodation for redeveloping or relocating a place. In context with Apartment Service, it
has led the way to openly promote awareness of a sector (Haila, 2015). It works as an agent who
realise needs of customers for smart data, dynamic pricing and cost control. Present report is
going to reveal space market analysis of service apartment. It is based upon a case study on
integrated development at 88 Market Street in Singapore.
Case Study
As per present scenario, in Singapore three main companies have formed a joint venture
for redeveloping Golden Shoe Park (GSCP) into a landmark integrated development in Raffles
Place. It includes CapitaLand Limited, CapitaLand Commercial Trust (CCT) and Mitsubishi
Estate Co. Ltd (MEC). In order to form joint venture, these companies have made an agreement
where CapitaLand and CCT both will hold a 45% interest, whereas MEC will get 10% only. For
this purpose, they have also set up their office and service residence components, named by
Glory Office Trust and Glory SR Trust respectively (Hin David Ho, Rengarajan and Glascock,
2014). It is estimated that for total development, near about S$1.82 billion is required, under
which each business partners will make investment as per proportion of their respective interests.
Further, for taking approval from governmental authorities to redevelop GSCP into mix-use
development, CCT have also submitted plans. After receiving approvals from regulatory bodies
and notifications from authorities of Singapore Land Authorities, CCT has assessed the financial
feasibility of redevelopment and decided to carry out project by a joint venture.
As per this project, after redevelopment, this 51-storey GSCP will rise to a height of
280m. This will raise to 29 features of premium Grade A where approx. 635,000 square feet an
office space is available on top floor. Further, an 8-storey i.e. 299 unit serviced residence is
managed by The Ascott Ltd. where, five floors of car park having 350 lots, 165 bicycle parking
lots, 10 motorcycle lots and 12000 square feet for ancillary retail space. This development will
boast of a Green Oasis with a height of near about 30 m, it connects four contiguous and
connected floors of landscaped, open-air and technology enabled areas. Here tenants can enjoy
environment of shared space for meetings, conversation, wellness programmes and other
activities. While, on other levels of podium of development, there will be a food centre which is
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owned by Ministry of Environment and Water Resources. From 1 August 2017 to 2021, it has
estimated that first half of project related to integrated development, will be completed.
(Source:Integrated Development at 88 Market Street, 2017)
According to this figure, it has examined that deposited property as on 31 Dec 2017,
which include the valuation of investment properties is S$10,761.0 million. After issue of
temporary occupation permit (TOP), within five years, purchasing rate may be higher than base
price. In this regard, from the estimated total development cost i.e. near about S$1.82 billion,
approx. 52% of it is required for DP (Differential Premium) and land related cost which is to be
funded by joint venture partners. Along with this, they will also acquire S$161.1 million from
CCT which is assumed as 10% above from average valuation of this product with redevelopment
potential of S$146.5 million. Further, at market valuation, for acquire CapitalLand's and MEC's
interest in Glory Office Trust, is subjected to a minimum price (Khoo-Lattimore and Prayag,
2015). This is based on total development cost excluding financial cost to the office. With this
assistance, ancillary retail components less net property income attributable to Glory Office
Trust is compounded at 6% per annum. Over a period of five years, after obtaining the temporary
occupation permit of redevelopment, CCT may exercise the call option. In addition to this, there
is a drag-along right granted to CCT and CapitaLand over units of MEC in Glory SR Trust, in
the same period of five years.
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Illustration 1: Integrated Development at 88 Market Street

CONCLUSION
From this assignment, it has summarised that redevelopment of Golden Shoe Car Park
will raise its height on par with the tallest building in Raffles Place. It will provide extremely
beneficial accommodation for office and tenants who can share spaces for business meetings,
conversations and other activities. With the support of governmental authorities and ministry,
joint venture partners can gain success to implement their project more successfully.
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REFERENCES
Books and Journals
Khoo-Lattimore, C. and Prayag, G., 2015. The girlfriend getaway market: Segmenting
accommodation and service preferences. International Journal of Hospitality
Management. 45. pp.99-108.
Hin David Ho, K., Rengarajan, S. and Glascock, J., 2014. An examination of the structure and
dynamics of Singapore's maturing Central Area office market. Journal of Property
Investment & Finance. 32(5). pp.485-504.
Haila, A., 2015. Urban land rent: Singapore as a property state. John Wiley & Sons.
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