Mixed-use developments looking good to investors

Statistics show that mixed developments have been attracting a wide range of investors over the past few years. Heres a look at some of the factors that make these developments popular among homeowners and investors alike.

In recent years, mixed developments, which encompass both commercial and residential units in a single complex, have become increasingly popular. This comes as no surprise, as the fast growing population in land-scarce Singapore has resulted in a surge in demand for homes and amenities alike.

To address the concerns over land scarcity and urban liveability, more developers are starting to roll out mixed developments across the island.

Commenting on the increased interest in mixed-use developments, Cheng Hsing Yao, Chief Operating Officer at GuocoLand (Singapore) said, Mixed developments are a rational answer to higher-density living.

Greater convenience

Among the advantages of living in a mixed-use development, convenience ranks high on the list.

By seating residential, office and retail components in a single development, it reduces the need to travel, as people will live nearer where they work, shop or find recreation. And with other amenities also nearby, people will rely more on public transport networks that are the hallmark of well-planned cities, Cheng shared.

Lim Ming Yan, Group CEO for CapitaLand, also agrees that the convenience of living in a mixed-use development is a great pull factor for home buyers.

With an ever-increasingly busy lifestyle, there is a preference towards the convenience of having everything under one roof. Based on the experience of our Raffles City mixed developments in Singapore and in key cities in China such as Shanghai and Beijing, having a well designed mix of shopping mall, offices, serviced residences and/or hotels under one roof is a very attractive proposition to our customers.

It definitely helps that such developments offer the work, live and play opportunity all within one location, he was quoted saying in an interview.

Great investment option

Mixed-use developments offer jobs and amenities closer to where people live. A well-designed mix of retail, offices and residences or hotels within a development makes it an attractive proposition for investors, as the commercial and residential catchment is integrated and intrinsic. Some examples of such developments are the Tanjong Pagar Centre (city centre) and Bedok Mall (Bedok town) in regional centres, noted Nelson Lim, Division Director of C&H Group.

Sharing his thoughts on what makes mixed-use developments a good investment option, Wong Xiang Yang, Research and Consultancy Manager at OrangeTee said, From the residential buyer perspective, staying in a mixed development would mean that a range of amenities are right at your doorstep. For example, having a supermarket at the ground floor of the project is a convenience that many people value and would certainly pay for. However, buyers should also be mindful that for such developments, the tenant mix of the commercial shops may not be controlled, which might lead to a non-optimal mix of tenants in the commercial component of the project.

From the commercial perspective, buyers of retail units would have a ready catchment of customers available, from the residents of the project. This ensures that the shops below would receive a stable amount of foot traffic.

Additionally, the number of mixed development sites released from the GLS programme is relatively low only eight such sites (commercial and residential) have been sold since 2010, compared to 83 residential sites sold in the same time period. The scarcity of such mixed development sites should help sustain demand over the next few years.

However, some analysts argue that a residential unit in a mixed-use development may not necessarily command higher rental yields as compared to a pure residential project in the same locality.

There is no distinct advantage in the rental potential of residential units in mixed developments. Generally, homes that are located in proximity to public transport nodes such as MRT stations are able to command relatively higher rentals compared to less accessible homes in the same area. The presence of immediate retail facilities of an ancillary nature does not necessarily lead to better residential rents and prices. Therefore for the most part, yields for residential units located in a mixed residential-retail development and a pure residential project in the same locality are likely to be similar.

More often than not, many of these mixed developments have an ancillary retail component that serves the immediate residences, where such a retail customer base is typically localised. However, if there are substantially more retail units (say above 25 retail units), the location would then be critical. The project would have to be in a heavily trafficked location, preferably near a transport node in order for the retail element to be bustling with shopper traffic, said Chia Siew Chuin, Director of Research and Advisory at Colliers International.

More mixed-use developments in pipeline

With the increasing demand for convenience as well as the shortage of land supply in Singapore, it seems like there will be more mixed developments arising in future. In fact the Urban Redevelopment Authoritys (URA) Draft Master Plan 2013 reveals that a new extension adjacent to Holland Village has been earmarked for private housing development. The 6ha new extension at Holland Village, which will be completed within the next two years, will add another 1,500 private residential units within mixed developments.

Developments to look at

Developed by World Class Land, City Gate mixed used development is conveniently located along Beach Road. Featuring 311 residential units and 188 retail spaces, F&B outlets including a supermarket and a food court. City Gate benefits froma its close proximity to Suntec City, Marina Bay and Central Business District CBD with its good connecitivity utilising the Circle Line CRL.

Another mixed use development that investors can consider is North Park Residences by Frasers Centrepoint. Located along Yishun Central 1, standing next to Yishun MRT Station, North Park Residences residents are able to enjoy utmost convenience thanks to a slew of amenities offered in the development. Residents will be able to enjoy not only great aplenty of amenities but good accessibility as North Park Residences is a fully integrated development with public buses and it connects the MRT Station with an underground link.

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Mixed-use developments looking good to investors

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