Rajah & Tann’s Benjamin ST Tay emphasises proactive asset upgrading, broader sustainability approach to future-proof assets

Proactive strategies are crucial for mitigating market uncertainties, whilst sustainability goals require alignment with regulatory changes and climate mitigation strategies.

The real estate sector in Asia stands at a crossroads, positioned between challenges and opportunities that will shape its trajectory in the coming years. Rapid urbanisation, technological advancements, and evolving market dynamics present both hurdles and avenues for innovation. 

In this ever-evolving landscape, industry leaders like Benjamin ST Tay, Deputy Head of Corporate Real Estate at Rajah & Tann Singapore LLP, offer invaluable insights into the trends and transformations reshaping the Asian real estate market.

Benjamin brings over 16 years of expertise in navigating complex real estate transactions, with a focus on Singapore's bustling commercial and industrial sectors. His impressive track record includes involvement in key transactions for prominent commercial and retail properties like Duo Tower, Jurong Point, and So Sofitel.

He also represents a diverse clientele in the industrial space, consisting of funds investing in Singapore's industrial properties and end users seeking properties for data centres and built to suit properties, amongst others. Additionally, he has developed insights into clients’ commercial needs and an appreciation of Jurong Town Corporation’s industrial policy.

Benjamin, as a judge in the Real Estate Asia Awards 2024, sheds light on the significance of technology in revolutionising real estate transactions, emphasising the transformative potential of innovations like Generative AI and IoT sensors.

What recent trends or emerging themes in real estate do you find particularly exciting or transformative, and how might they impact the industry in the coming years?

Apple's Vision Pro, a new Virtual Reality (VR) and Augmented Reality (AR) headset, has been described by Apple as a spatial computing device. The concept of replacing physical workspaces with virtual work environments is not only innovative but may also lead to a substantial shift in the way office work is approached. Apple's release of this device reflects its history of revolutionising and dominating new tech markets, much like it did with the music player and the smartphone. 

If Apple succeeds once again, the successful integration of spatial computing into mainstream technology could dramatically transform how we use office spaces. As Apple paves the way, major players in the VR/AR industry that have already introduced VR and AR headsets, including Meta and Microsoft, are likely to follow suit, enhancing their products to support spatial computing. This is in addition to Apple’s usual competitors, such as Samsung, who may offer similar solutions.

This evolution to spatial computing could result in heightened demand to support computing resources, leading to a further increase in infrastructure needs such as data centres, sophisticated chip manufacturing plants, and power generation facilities. 

Another factor that could affect the real estate market in Singapore is the increased use and solutions offered by generative AI. Generative AI refers to the branch of artificial intelligence that can create content such as images, text, audio, or video based on data inputs and user specifications. This technology has many applications across various industries, such as entertainment, education, marketing, healthcare, and more. However, generative AI also requires a lot of computing power and data storage, which leads to a higher demand for data centres. 

Singapore, as a regional hub for digital innovation and data exchange, needs to accommodate the growing needs of generative AI and other emerging technologies, whilst also balancing the environmental and social impacts of data centre development. 

This poses a challenge for the real estate sector, as it has to find ways to optimise the use of land and resources whilst also ensuring the reliability and security of data centres. Some possible solutions include exploring alternative locations, such as underground or offshore data centres.

With the dynamic nature of the real estate market, what challenges do you anticipate in the coming years for businesses operating in Singapore, and how can they proactively address or mitigate these challenges?

The real estate market in Singapore, bolstered by Singapore's reputation as a financial safe haven, has attracted substantial investment from ultra-high-net-worth individuals and family offices, resulting in sustained real estate prices and record-level rents across various sectors.

Despite the demand brought about in part by geopolitical tensions occurring elsewhere, there are underlying challenges. Factors such as changes in investor sentiment regarding safe-haven assets, the limits of an economy's capacity to absorb rising costs, and the potential reduced effectiveness of continual rent increases to offset higher expenses pose challenges. 

Additionally, government policies to meet societal demands, including increased land supply, could significantly alter market dynamics.

In addition, the pandemic has fundamentally disrupted the demand and supply dynamics of various sectors, such as hospitality, retail, and office, as well as the preferences and behaviours of customers and tenants. For instance, the rise of remote work and e-commerce has reduced the need for physical space and increased the demand for flexible and adaptive solutions.

In response, property owners and investors should engage in proactive and adaptive strategies, such as upgrading and repositioning their assets, to add value for both buyers and tenants. This approach includes possibly seeking longer-term tenancies in the mix and viewing real estate investment more as an active, value-driven endeavour than as merely a passive income stream. Singapore businesses may also wish to consider alternative real estate markets in developing, lower-cost, regions.

Real estate is increasingly recognised for its impact on sustainability. From your perspective, how can industry players align their projects with sustainability goals?

In the realm of sustainability, Singapore's real estate industry has primarily concentrated on meeting local green certification standards, focussing on reducing buildings' carbon footprints and operational energy consumption. However, with Singapore's ambitious goal to achieve net zero emissions by 2050, it's imperative for industry players to broaden their approach. This involves exploring additional sustainability measures like carbon offsets and proactively adapting to anticipated regulatory changes that would require more stringent sustainability practices.

Property owners should also consider implementing climate mitigation strategies for their portfolios, recognising that significant climatic impacts are inevitable even if current goals are met. These measures are not just about compliance but are integral to future-proofing real estate assets in a rapidly evolving regulatory landscape in this area.

In your opinion, what role does technology play in shaping the future of real estate transactions? How can organisations leverage digital transformation initiatives to create long-term value for their portfolios?

The role of technology in real estate transactions is increasingly pivotal, particularly with the advent of Generative AI. This technology has drastically simplified and enhanced the capabilities of programming, database creation, and real estate data analysis. Such advancements are unprecedented and continue to evolve, offering new avenues for facilitating and streamlining real estate transactions.

In addition, the widespread availability and reduced cost of IoT sensors represent another technological milestone. These sensors enable property owners to gather extensive data regarding their properties, businesses, and tenants. This data, when effectively analysed, can lead to enhanced asset value, operational cost reductions, and improved sustainability metric tracking. Further, advancements in robotic technology suggest a future where property maintenance, security, and management could become significantly more efficient and automated.

In your opinion as a judge in the Real Estate Asia Awards, what are some key attributes or practices that set apart award-worthy real estate projects, and how do these align with broader industry trends?

In my role as a judge for the Real Estate Asia Awards, I prioritise distinctiveness and future readiness in evaluating real estate projects. A key criterion is how well these projects align with net zero targets, reflecting a commitment to environmental sustainability. However, it's not just about meeting these targets; award-worthy real estate development should also excel in meeting the immediate and evolving needs of its users. This involves a balanced approach that integrates state-of-the-art sustainability features with innovative designs and functionalities that cater to current market demands.