According to a 2021 research report by global real estate consultancy JLL, the living sector which covers a gamut of accommodation segments such as the Private Rented Sector (PRS), senior housing, workers’ dormitories, and student accommodation, is expected to take up one-third of global real estate investments by 2030.

City Developments Limited (CDL) which has investments in this high growth sector, said it will continue to build scale as part of its focus to strengthen income streams and sustain fund management efforts. The global property giant explains why during its recent half-year results briefing on 11 August 2022.

The CDL Group’s diversification into the living sector was a natural extension within the spectrum of investment property assets, complementing its core expertise in property development, asset management and hospitality.

In 2019, CDL expanded into the PRS asset class to strengthen its recurring income streams and capitalise on the rising demand for rental accommodation. Its first PRS project in Leeds, the United Kingdom (UK), The Junction, is currently under construction with phased completion expected from 2H 2022. In December 2021, it acquired another PRS project in the UK named The Octagon. Comprising 370 units, the project in Birmingham is under construction, with estimated completion in 2025.

Mr Sherman Kwek, CDL Group Chief Executive Officer, said, “Our expansion into the living sector over the past few years has started to bear fruit as we gradually build up scale and diversification. We now have apartment rental sites across the UK, Japan, Australia and the US, and have recently completed our first purpose-built student accommodation deal located in the UK. Throughout the pandemic, these recurring income assets have shown strong resilience and the outlook for them continues to remain bright.”

Today, the Group’s living sector portfolio in the UK comprises 1,540 units / beds in Leeds, Birmingham and Coventry. In Japan, its portfolio consists of 513 operational PRS units in Osaka and Yokohama with a total investment of JPY 14.5 billion (S$148.3 million).

In the United States (US), the Group – through its hotel arm Millennium & Copthorne Hotels Limited (M&C) – has an operational 250-unit PRS project in Sunnyvale, California. Strategically located within Silicon Valley, the apartments have achieved occupancy of 95% within a year of operations. It also recently marked its foray into the Australian PRS market segment with the acquisition of a freehold PRS site in Melbourne.

Other than PRS projects, the Group has also entered the senior housing market in Australia through a collaboration with Waterbrook Lifestyle Resorts on a luxury retirement village project.

“Investing in the living sector will open up more avenues for us and bolster our fund-management efforts,” said Mr Kwek, at CDL’s 1H 2022 results briefing.

He also explained the importance of having a sizeable portfolio to provide potential to inject assets into a REIT or a private fund.

For example, the Group’s REIT associate, CDL Hospitality Trusts (CDLHT) broadened its investment mandate in July 2021 to include a full spectrum of accommodation and/or lodging assets such as Purpose-Built Student Accommodation (PBSA) and PRS. The Castings was subsequently acquired as a PRS development project in Manchester, in August 2021.

RECENT ACQUISITIONS IN 2022

The Group continues to broaden its living sector portfolio by growing its footprint overseas, in key markets such as Australia, Japan and the UK.

• Australia: The Group acquired a freehold PRS site in Southbank, Melbourne in March 2022. Subject to planning approval, it intends to develop around 240 units, marking its first PRS project in Australia. The acquisition of the site is expected to complete by Q4 2022.
• Japan: In 1H 2022, the Group acquired three newly-built PRS projects – two properties in Yokohama (City Lux Tobe and LOC’s Yokohama Bayside) and one in Osaka (Gioia Namba) – totalling 271 units. This brings the Group’s Japan PRS portfolio to eight projects, all of which are completed and in operation.
• UK: The Group made its foray into the PBSA segment with the acquisition of Infinity, an operational PBSA located in Coventry with 505 beds in June 2022. The 19-storey, 152-metre building is the tallest in Coventry and offers panoramic views of the city.