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Mercatus Co-operative Limited, one of the NTUC social enterprises, is set to purchase Jurong Point mall (pictured) from its owners Guthrie GTS Limited and Lee Kim Tah Holdings, reported Singapore Business Review.
According to DBS Group Research, the anticipated record price of approximately $2.2 billion works out to $3,343 psf and a net yield of 4.2 percent.
“Based on our analysis of comparative valuations of similar-sized suburban malls across Singapore, at the transacted price, the returns for Jurong Point will be one of the tightest yields achieved for a sizeable suburban mall.”
Aside from the rare opportunity to acquire a mall of such size in Singapore, DBS thinks that the significant price tag reflects the buyer’s confidence that the property would generate good returns in the medium term.
“We believe that its entrenched position within Jurong West with a sizeable population catchment also gave Mercatus further confidence in the ability of the mall to continue attracting tenants amidst strong footfalls and sales.”
DBS reckons that while the final selling price could be unique to Jurong Point, it shows that buyers are willing to pay a premium for malls with excellent scalability and quality.
Furthermore, the deal is expected to have a positive spill-over effect to retail real estate investment trusts (Reits), buoying their current premiums relative to net asset values (NAVs).
DBS added that shopping centres with sizeable scale and specifications like VivoCity, Northpoint, Tampines Mall and Causeway Point could even register tighter cap rates in the future.
Photo: Yongjianrong, Wikimedia Commons
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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