Stock Prices Of Property Players Fall As WFH Persists

SINGAPORE – Stock prices of real estate investment trusts (REITs) and commercial property developers have declined since the Ministry of Manpower (MOM) delayed the easing of workplace restrictions in January, and instead decided that working from home will remain as the default arrangement, reported Bloomberg on Wednesday morning (3 February, SGT).

The move adds to the woes of REITs and property developers, as they could struggle to lease vacant commercial premises, particularly office space. The continued work-from-home (WFH) arrangement could also exert downward pressure on rents, said Phillip Securities Research’s analyst Terence Chua.

United First Partners’ Head of Asian research, Justin Tang, concurs. “The new default will cast a pall over occupancies going forward.”

Since MOM’s announcement on 22 January, Frasers Hospitality Trust’s share prices fell 5.7 percent, while that of Far East Hospitality Trust slid 2.5 percent. Mapletree Commercial Trust, which owns Singapore’s biggest mall VivoCity and a nearby office tower, also dipped 2.3 percent.

Market sentiment was also depressed when the city-state’ largest listed property developers City — City Developments Limited (CDL) and CapitaLand — said they expect full-year losses. Share prices of both companies declined by over 3 percent last week.

A spokesperson for Far East Hospitality Trust said WFH will have a greater effect on the office and retail leasing markets than the hotel industry, as the last one is “more dependent on the recovery in inbound travel.”

According to Knight Frank, prime grade office rents in Marina Bay and Raffles Place have contracted by around 10 percent last year. For 2021, office rents across Singapore is forecasted to fall by about 5 percent before hitting rock-bottom and rebounding in 2022, stated the property consultancy in its latest quarterly report.

Under prevailing workplace safe management measures (SMM), only up to 50 percent of a company’s workforce are allowed to be in the office at any point. Businesses must also ensure that their employees continue to work from home for 50 percent of their working hours.

When asked if whether there’s an impact on demand for commercial office spaces given that work-from-home remains the norm and offices are downsizing, Trade and Industry Minister Chan Chun Sing said in a written parliamentary response on Monday that WFH’s long-term impact on office demand “remains to be seen as the pandemic evolves.”

“Occupied office space increased in Q4 2020 compared with the previous quarter. The vacancy rate also decreased slightly compared with Q3 2020, and was comparable with the vacancy rates in previous years.”

Still, the authorities will “continue to monitor the market, and calibrate the supply of commercial properties if needed,” Chan added.