The market for condominiums in Singapore continues to thrive, and a key factor behind this trend is the limited supply of land for construction. Due to its small size and rapidly growing population, Singapore faces significant land scarcity, leading to strict land use regulations and a fiercely competitive real estate market. As a result, property prices are driven up, making real estate investment, particularly in condos, a lucrative opportunity with the potential for significant returns. As such, Singapore Condo remains a highly sought-after choice for investors in the market.
CapitaLand Ascott Trust (CLAS) has recently announced its agreement with Ascott Serviced Residence Global Fund (ASRGF) to acquire lyf Funan Singapore for a property value of $263 million. ASRGF holds Victory SR, which has 100% ownership of lyf Funan Singapore. CLAS’s sponsor, The Ascott Limited, holds a 50% stake in ASRGF.
In a press release on October 1, CLAS stated that the purchase price for the deal will be $146.4 million, which will primarily be funded through the proceeds from the divestment of Citadines Mount Sophia Singapore in March 2024. A joint venture between Weave Living, a Hong Kong-based accommodation company, and global asset manager Blackrock has acquired the service residence on Wilkie Road for $148 million.
Upon completion of the acquisition, CLAS will enter into a master lease agreement with Ascott for lyf Funan Singapore, subject to approval at an extraordinary general meeting in November. This lease will have an initial term of 20 years and can be renewed for an additional five-year period. The master lessee will pay rent based on 93.56% of the property’s gross operating profit.
According to CLAS, the proposed acquisition is expected to increase its total distribution by $3.5 million or 1.5% on a FY2023 pro forma basis, which will also result in a 4.7% ebitda yield for FY2023. lyf Funan Singapore has achieved an average occupancy rate of over 80% in the first half of 2024. Once the acquisition is completed in the fourth quarter of 2024, CLAS will have five properties in Singapore, making up 19% of its total assets worldwide.
lyf Funan Singapore, boasting 329 rooms, opened in 2019 to cater to both short-stay and extended-stay guests. It is part of the Funan integrated development, which also includes retail and office components. The property is directly linked to the City Hall MRT interchange station.