News Update - 29 June 2012

RESIDENTIAL MARKET

Prices of suburban condos above 506 sq ft most resilient

Prices of completed apartments above 506 sq ft in the Non-Central Region or suburban areas have been the most resilient year to date (up to May) followed by small units islandwide. Big apartments in the Central Region have fared the worst, show data from NUS.

Based on NUS's Singapore Residential Price Index (SRPI) series, which tracks prices of completed apartments and condos, the sub-index for the Non-Central Region (excluding small units) rose 1.9 per cent between December last year and May this year.

Over the same period, the sub-index for small units (up to 506 sq ft) islandwide dipped 0.1 per cent, while the sub-index for the Central Region (excluding small units) slipped an even bigger 2 per cent. Central Region is defined as Districts 1-4 (which include the financial district and Sentosa Cove) and the traditional prime residential districts of 9, 10 and 11.

The pattern is similar to trends in the past two years. In 2011, the Non-Central Region sub-index (excluding small units) rose 11.3 per cent, higher than a 10.6 per cent increase for small units islandwide and 5.1 per cent hike for Central Region (excluding small units)

In 2010, the three indices posted gains of 14.9 per cent, 13.8 per cent and 7.7 per cent respectively.

In suburban locations, because developers have been launching new projects at prices higher than those of existing, completed projects in the vicinity, it has an effect on prices of the completed properties as well.

In addition to owner occupiers, there is demand for completed suburban apartments from investors. Many younger expats on smaller housing budgets are opting to lease suburban condos and even HDB flats.

Source: Business Times – 29 June 2012

Pheng Geck site draws 13 bids, led by $114.8m offer

HOME-GROWN construction group Santarli yesterday emerged as top bidder for a 99-year private condo site at Pheng Geck Avenue.

The site near Potong Pasir MRT Station drew a whopping 13 bids. Analysts say this reflects developers' confidence in a choice city-fringe site near an MRT station.

The top bid from Santarli Corporation - at $114.8 million or $628.22 per square foot per plot ratio (psf ppr) - was at the upper end of expectations. Santarli's bid came in $1.05 million or 0.9 per cent above the next highest offer of $622.47 psf ppr by Overseas Union Enterprise (OUE) unit OUE Reef Development.

Santarli executive director Chan Thiam Seng told BT yesterday that the group's breakeven cost will be slightly above $1,000 psf and it is looking at an average selling price of about $1,300 psf for its proposed project, which it hopes to launch in about nine months. Santarli's scheme involves an 18-storey development with about 240 units, comprising mostly two and three-bedroom apartments, although there will also be some one and four-bedders.

The first was sold in June 2010 for about $607 psf ppr to Qingdao Construction, which is developing the plot into Nin Residence. The condo was launched last year and based on caveats data, achieved an average price of about $1,225 psf, although smaller units generally sold at $1,300-1,500 psf.

In August last year, Tuan Sing clinched the site next to the one tendered yesterday for $567 psf ppr.

The higher unit land price achieved at the latest tender will give Tuan Sing greater flexibility in pricing strategy when it launches its project.

Also, there is a fair bit of supply in the area from other projects near MRT stations including unsold units at Eight Riversuites and Bartley Residences as well as a yet to be launched project at Mount Vernon Road.

ERA Realty Network's key executive officer Eugene Lim highlighted that the land opposite the site tendered yesterday is zoned for commercial development, and a shopping centre the size of Nex may be built on it in future.

Source: Business Times – 29 June 2012

Faber Drive bungalow up for sale, guide price set at $12.5m

A BUNGALOW at Faber Drive has been put up for sale by expression of interest, with a guide price of $12.5 million. The guide price translates into nearly $1,067 per square foot (psf), based on land area of about 11,719 square feet.

A two-storey bungalow with a build-up of 4,400 sq ft stands on the site. It also has a swimming pool.

One sector of the residential market which is quite resilient is the landed properties such as small bungalows, semi-detached, and terrace houses, as they are the dream homes of many Singaporeans.

The site is within close proximity of The Clementi Mall, Clementi Bus Interchange/ MRT Station, and the National University of Singapore. Its land size is capable of being subdivided into two plots for smaller houses which require a minimum size of 4,305 sq ft.

Source: Business Times – 29 June 2012

 

News Update - 28 June 2012

COMMERCIAL MARKET

Little action at property auctions

AUCTION activity in the property market was muted in the first six months of the year, with just 198 properties put up for sale and only 10 sold, a report has found.

Most were put under the hammer by owners rather than mortgagees such as banks.

The 10 that found buyers had a total value of $34.3 million. This marks the second-lowest sales value since the onset of the global financial crisis in 2008.

Only the 13 sales from July to December last year were worth less, at a paltry $26.4 million.

The report noted that the declining level of mortgagee listings - just seven in the first half of this year compared with 389 in the same period in 2007 - is due to the improved financial position of those taking mortgages. This comes on the back of low interest rates, a high liquidity environment and a healthy rental market.

Auction volumes have also steadily fallen from the high of 810 properties placed under the hammer in the first six months of 2007. Of these, however, only 131 properties were snapped up, worth a total of $263 million.

But it was the industrial sector that led the pack in the first half of the year. Factory space enjoyed strong demand, securing 27 per cent of the market's sales value.

In the absence of stringent regulatory curbs, commercial properties - such as strata-titled shop units and shophouses - also continued to attract investors, owing to higher yields of 4 to 6 per cent. This is well above the 2 to 3 per cent yields from residential properties, the report noted.

The property auction market in the second half of this year may see a pick-up in residential sales - the result of a spillover in the buoyant buying interest. Astute buyers are expected to look for value buys in the resale market, amid new residential projects in suburban areas achieving record-breaking prices.

Source: The Straits Times – 28 June 2012

Shadow office space increasing in Singapore

Shadow office space in Singapore is expected to rise amid global economic uncertainty that continues to plague occupier sentiment.

The stock of shadow office space islandwide was 285,000 square feet in Q2, up 32 per cent from Q1. It is expected to grow by 73,000 sq ft to nearly 360,000 sq ft by year-end.

Of the 285,000 sq ft of shadow space in the second quarter, 48 per cent was in Raffles Place.

Shadow space refers to excess space that occupiers have leased but are looking to assign or sublet to ease the rental burden.

The increase in shadow space comes at a time of declining average gross face rents for prime office space in the CBD for the second quarter. This, despite the pockets of demand from occupiers who view the current climate as opportune for upgrading to a better- quality space.

In Raffles Place, the average gross face rent for prime office space experienced a 3.1 per cent quarter-on-quarter decline to $9.50 per square foot (psf) per month. Similarly, rents on Shenton Way, Robinson Road and Cecil Street fell 2.6 per cent quarter-on- quarter to $7.55 psf per month.

Rents in the CBD are expected to continue being pressured, despite a lower- than-average net increase in supply of 1.1 million sq ft of office space in 2012, after taking into account existing buildings that have been or will be removed from the stock.

The average occupancy rate for office space at Raffles Place fell 0.7 percentage point in Q2 to about 92 per cent. However, on Shenton Way, Robinson Road and Cecil Street, the removal of Chow House from the stock in the quarter resulted in the occupancy rate rising 1.3 percentage points to about 95 per cent in Q2.

Source: Business Times – 28 June 2012

INDUSTRIAL MARKET

For sale: Two 30-year industrial sites

TWO 30-year industrial sites were launched for sale by public tender yesterday - the first batch following a recent government move to slash the leases for such sites.

Leases have been capped at 30 years for all Government Land Sales (GLS) plots that remain unsold and industrial sites to be put up for sale in the second half of the year.

Yesterday's two sites - at Bukit Batok and Yishun - had carried 60-year leases when put on the GLS confirmed list for the first half of this year.

Property consultants expect cautious response to the two relatively small sites, with three to six bidders for the Bukit Batok site and up to seven bids for Yishun.

Demand won't be so strong because there's already a lot of supply at the two established industrial areas.

Bids are tipped to range from $40 million to $53 million for the 15,011 sq m land parcel at Bukit Batok Street 23. That works out to about $100 to $130 per sq ft per plot ratio (psf ppr).

The site at Yishun Avenue 9 is 20,075 sq m, with bids expected to be between $54 million and $76 million, or $100 and $140 psf ppr.

Both sites are zoned for Business 1 uses, which include light and clean industry, and utilities or telecommunications.

Rules imposed last year, strata-titled units and those in multi-user industrial developments will have to be at least 150 sq m. This could cost more and detract investors.

The tenure reduction is intended to give the Government more flexibility for land redevelopment and to help make industrial property more affordable.

The industrial sector is looking at a possible downturn, given the 'huge oversupply'.

Source: The Straits Times – 28 June 2012

News Update - 27 June 2012

COMMERCIAL MARKET

Former police station to be part of hotel development

THE former Joo Chiat Police Station is set for a new lease of life as part of a hotel development, with developers needing to conserve the 1920s colonial building.

The Urban Redevelopment Authority (URA) described the East Coast Road station as 'historically and architecturally significant' as it released detailed sales conditions of the site yesterday.

URA said the building is 'well-proportioned with key facades sensitively composed'.

'The inclusion of this stately building within the site will add a unique charm to the future hotel development,' it read.

The building, which is in an area dotted with historic conservation shophouses, is now occupied by a restaurant and is part of Katong Village, a collection of food and entertainment outlets. Tenants have until Oct31 to move out. It is understood that five out of 11 tenants will have done so by the end of the month.

The site is on URA's reserve list of the Government Land Sales (GLS) programme. Sites on the reserve list may not get triggered for sale, unlike confirmed list sites, which go on sale on a particular date. This means that the 8,239 sq m land parcel, on which the station sits, will be put up for tender only if a developer agrees to pay an acceptable minimum sum to the Government.

Any bidder will have to contend with competition from several hotels in the area.

The newly-opened Santa Grand Hotel East Coast, with more than 70 rooms, is nearby. Far East Organization's East Village Hotel and the Grand Mercure Roxy Hotel - with more than 780 rooms in total - are also a stone's throw away.

The 99-year leasehold plot has a maximum permissible gross floor area of 24,716 sq m. It can be built up to a height of 20 storeys, a consultant has estimated. An earlier estimate had said that the site could yield some 600 rooms.

Source: The Straits Times – 27 June 2012

OFFICE MARKET

Office capital values seen easing 5% this year

OFFICE capital values could fall 5 per cent for the whole of 2012 according to an analyst report.

The average capital values of Grade A office space in the Raffles Place/New Downtown micro-market softened by a marginal 0.5 per cent - from $2,459 psf in Q1 to $2,447 psf by end June - following pressure from the third consecutive quarter (since Q4 2011) of easing office rents.

There was sustained interest, however, in the sales market, which was buoyed by low interest rates and continued availability of new strata supply.

Oxley Tower saw 60 per cent of the 56 office units released snapped up within the first few days of its launch at prices ranging from $2,800 psf to $3,490 psf. EON Shenton also saw more than 30 office units sold out of the 50 units released during its preview, at between $2,150 psf and $3,000 psf.

Equally brisk were en bloc sales of strata office units. In April, 51 strata office units in Parkway Centre were collectively sold for $53.4 million ($1,043 psf). In May, 66 strata office units in Burlington Square were sold at $89.3 million ($1,318 psf).

On the rental front, rents of islandwide Grade A office space slipped by 1.2 per cent in Q2 compared with the 4.2 per cent fall in Q1.

In the Raffles Place/New Downtown micro-market, the average monthly gross rents for Grade A office space fell 3 per cent quarter on quarter to $9.47 psf. This segment experienced a 5.3 per cent quarter-on-quarter drop in Q1.

Similarly, rents in other micro-markets moved by between zero per cent and -2.4 per cent in Q2, versus the -2.3 per cent to -8.8 per cent plunge seen in Q1.

The threat of an impending supply overhang remains. This stems from the substantial amount of space that could be returned to the market upon lease expiry, as existing tenants moved to newer premises. It is estimated that some 150,000 sq ft of space could be relinquished in H2 2012.

The erosion of office rents in the Raffles Place/ New Downtown micro-market is expected to continue into the next six months, but the pace of decline could decelerate from the 8.1 per cent fall registered in the first half.

Rental decline is expected to keep within 15 per cent for the entire year.

Source: Business Times – 27 June 2012

Six floors in AA Centre for sale

THE office space used by the Automobile Association of Singapore (AA Singapore) is up for sale.

The first six levels, or 55,774 sq ft, of the 14-storey AA Centre on River Valley Road at an indicative price of $90 million to $100 million was put up for sale.

The first four levels are owned by AA Singapore. There is a reception area, a multi-purpose hall and a cafeteria on the first level, and offices and clubhouse space, including a jackpot room and swimming pool, on levels two to four.

On levels five and six are 32 serviced apartments, all vacant. It is unclear if AA Singapore owns these apartments.

The residential units on the remaining eight storeys are owned by individuals. There are 90 parking spaces in the basement level for common use.

The building, which is on a freehold site, was developed by AA Singapore in 1984. Nearby transport links include the Central Expressway, the Ayer Rajah Expressway and Somerset MRT station.

The property could appeal to a variety of users, such as serviced apartment operators, corporate office users or groups dealing in education or medical tourism.

Source: The Straits Times – 27 June 2012

 

News Update - 26 June 2012

RESIDENTIAL MARKET

Home hunters still in buying mood

HOME hunters have been snapping up units over recent weeks and propping up developer sales amid a market slump, but some consultants expect the June tally to be weaker than last month's.

Buyers have been especially keen on suburban and city fringe projects such as the newly launched Cradels, where 65 units have been sold since its launch last Saturday.

The freehold condominium near Novena MRT station has a total of 125 units costing about $1,500 per sq ft.

A one-bedroom unit of nearly 500 sq ft starts from about $600,000.

Tong Eng Group's Tropika East, which launched on June 9, has sold 59 of its 105 units, with 14 moved in the past two weeks.

Three-bedroom units are priced from about $1.3 million.

The 376-unit Sea Esta in Pasir Ris has sold about 250 units since its preview on June 10.

One-bedroom units of 517 sq ft or more are available from $488,000. Three-bedroom units of at least 904 sq ft start from $760,000.

Qingjian Realty has sold more than 250 units out of the 410 released at its River Isles in Punggol. The 610-unit condominium, launched on June 2, is priced from $830 psf to $850 psf.

Far East Organization has sold 27 units over the past week across its projects, with Seahill and Seastrand the top performers.

Sales also held up in the luxury sector. Aurum Land's 1919 at Mount Sophia has sold out its 75 units since the June 9 launch.

Units cost at least $1.12 million, and were sold for $2,000 psf to $2,200 psf.

Mass market sales have been quite good because the pricing is in line with neighbouring launches in those areas, a factor for good sales. June sales are expected to dip 5 per cent to 10 per cent from last month, due to the lack of big launches.

Weak sentiment stemming from Europe's debt crisis and faltering stock markets have also affected buyers.

Source: The Straits Times – 26 June 2012

Six Woodlands blocks to be replaced under Sers

MORE than 400 households, businesses and hawker stalls will be affected by the latest relocation exercise to be carried out by the Housing Board.

The six blocks on Woodlands Centre Road is the 78th site to be picked under the Selective En Bloc Redevelopment Scheme, which offers new flats with fresh 99-year leases to affected residents.

HDB said the move will affect 147 households, a majority of which occupy three-room flats.

The six blocks - 1A to 6A - were completed between 1980 and 1986. The 190 replacement flats on Woodlands Drive 70 - a 10-minute drive away - will offer two-, three-, four- and five-room options, and be ready by 2016.

HDB said these flats will be opposite the Admiralty MRT station and a shopping complex.

There will also be a wide range of amenities such as shops and eateries, as well as a wet market and schools.

Under the scheme, residents will get compensation for their flats pegged to prevailing market value. They are also assured of a replacement unit at a 20 per cent price discount.

They will be given priority if they choose to go for Build-to-Order launches.

Eligible shop tenants will be given $60,000 and a 10 per cent rental discount if they bid successfully for other HDB rental shops.

Smaller businesses will be given a relocation grant of $30,000 if they are able to find another location and move out by 2016.

Some 78 hawker stalls in the estate will also have to make way. Those who wish to continue their trade will be allocated new stalls at the replacement site.

To ensure there are enough cooked food stalls in the area, the National Environment Agency will build a replacement hawker centre in Woodlands town.

Source: The Straits Times – 26 June 2012

COMMERCIAL MARKET

85% of units launched at Bugis Cube sold

THE official launch of Bugis Cube, a 999-year-leasehold development, attracted brisk sales over the weekend, with 77 of the 91 units launched sold.

The project drew interest from both retailers and investors, with units sold averaging 33 square metres (355.2 sq ft.

The 14 remaining units are spread across the second and third storeys, and average 27 sq m to 33 sq m.

Located opposite Bugis Junction and a short walk from Bugis MRT Station, Bugis Cube will span six floors of retail and F&B space.

Unit sizes range from 129 to 635 sq ft, with prices ranging from $2,900 per square foot (psf) to $7,500 psf, depending on the exact size and siting of the unit.

Every shop will be fitted with a water point and F&B outlets will be provided with a grease trap.

The development is 92 per cent owned by ERC Holdings subsidiary Griffin Real Estate Investment Holdings.

Investors have been lured to commercial properties following the raft of cooling measures imposed on residential properties.

There were 611 transactions of strata retail units totalling $656 million last year, up from 543 deals worth $608.l2 million in 2010.

In the first three months of this year, there were 208 transactions totalling $156.7 million.

Source: Business Times – 26 June 2012

 

News Update - 25 June 2012

RESIDENTIAL MARKET

Several big bungalow deals done of late

SEVERAL big-ticket bungalow deals have been transacted recently - both in the Good Class Bungalow (GCB) market on mainland Singapore and at Sentosa Cove.

An old two-storey freehold bungalow at White House Park changed hands recently at $24.8 million, which translates to nearly $1,650 per square foot (psf) on freehold land area of about 15,036 sq ft.

At Jervois Hill, two vacant plots have been transacted in the past few months.

The more recent deal, at $21 million, is for a plot of 15,095 sq ft. Word in the market is that the unit land price of $1,391 psf is low for the area because there is an electrical substation on the site.

The sellers bought the property for $19 million in 2010 from Vincent Tan Kim Yong, group chairman and chief executive officer of Advanced Integrated Manufacturing Corp, which is listed on Singapore Exchange.

In February this year, Dr Tan was also granted an option for the sale of one of his other plots on the street for $32 million or $2,118 psf.

If that transaction is completed, it will set a new record for a Good Class Bungalow Area, surpassing the $2,081 psf achieved in July last year for 6 Chatsworth Road, diagonally opposite the Indonesian Embassy.

Over in the upscale waterfront housing locale of Sentosa Cove, an ocean-fronting bungalow along Cove Drive changed hands last month for nearly $22.2 million, which works out to around $2,787 psf on land of 7,963 sq ft.

It is understood that a few bungalow deals are brewing on Treasure Island, and at higher prices than the $1,766 psf fetched for a transaction about two months ago.

That deal, which involved a bungalow sitting on land of 8,496 sq ft, sold for $15 million.

As for Sentosa Cove, while there have been a lot of viewings including by Chinese investors, there have not been many transactions.

The 10 per cent ABSD payable by foreigners who are not Singapore permanent residents (PRs) on any residential property purchase in Singapore is probably the main deterrent.

Source: Business Times – 23 June 2012

Westvale Condo sold en bloc for $77.5m to Roxy Pacific unit

FREEHOLD residential property Westvale Condominium has been sold to RL West Pte Ltd, a subsidiary of Roxy Pacific Holdings Ltd, for $77.5 million, or about $883 per square foot per plot ratio (psf ppr).

The 62,710 sq ft site, located along Pasir Panjang Road, comprises 32 apartments located in a four-storey walk-up block.

The plot is zoned for residential use under Master Plan 2008, with a gross plot ratio of 1.4, a maximum building height of five storeys, and a potential gross floor area of up to 87,798 sq ft.

With the collective sale, each individual owner will receive gross sale proceeds ranging from approximately $2.2 million to $3.1 million, a more than 50 per cent premium over the current market price.

A development charge for the plot is expected to be incurred should the new developer decide to utilise the additional balcony space, which constitutes another 10 per cent of gross floor area. This charge would amount to $625,000.

The development could yield 115 new homes with an average size of 800 sq ft.

Source: Business Times – 23 June 2012

Fewer tenants + Sky-high prices = Lower rental yields

SKY-HIGH prices and a plentiful supply of stock have driven rental yields of private homes down to levels not seen for almost 12 years.

Overall gross yields were just 3.8 per cent in March, unchanged from December, according to property research firm.

Apart from a one-off dip last September, when yields hit 3.7 per cent, rental returns have not been this low since December 2000.

Levels vary across the island. While some mass-market projects are enjoying higher than average yields of 5 per cent or more, there are some inner-city apartment blocks with returns of only 1.9 per cent.

Especially in view of the expected slowdown in bringing in foreigners, a higher supply of completed units leads to a higher level of competition over a limited pool of tenants. This might result in a fall in rental rates if rental demand stays the same or dips.

But other experts say that while gross yields have been falling, net yields have remained fairly stable as interest rates are at record lows.

They add that while rental demand is expected to remain healthy this year, yields might come under pressure in 2014 and 2015 when a record number of homes are due for completion.

High-end flat market also faces competition from older landed homes.

Citing the increasing number of HDB flats meeting minimum occupation periods and the surge of private completions, there is a possibility of an oversupply.

The higher-yielding properties are mostly 99-year leasehold projects in mass market districts where capital values are lower.

For instance, there are still a handful of mass market properties that yield 5 per cent and above, such as The Madeira in Bukit Batok, and Lakeholmz and Lakepoint Condominium, both in Jurong West.

City centre projects posted the poorest yields, likely because larger firms have imposed cost-cutting measures that have included putting expatriates on local packages, which has dampened demand for expensive rental homes.

Source: The Straits Times – 23 June 2012

Condo buzz shifts to Jurong and Lakeside

THE wait for new condominiums in Jurong and Lakeside will soon be over, with several new projects on the cards.

It has been a long time coming. The area has not had a condominium launch in more than a year, while suburbs across the island have been abuzz with construction.

That will change in the coming months, as the whole Jurong Lake District is primed to be the biggest commercial hub outside the city centre.

Last month, the tender closed for a residential site in Boon Lay Way that can yield about 600 units.

The 99-year-leasehold site is a short walk from the Jurong East MRT station.

Another site, which can host over 820 units, is due to be launched for sale later this year.

The plot is near Lakeside MRT station, one stop from Jurong East on the East-West line.

In all, over 2,000 new private homes are expected to be built in the Jurong and Lakeside areas by 2017, consultants estimated.

Despite Jurong being an established town, newer centres like Punggol, Sengkang and Pasir Ris have stolen a march on it when it comes to new executive and private condominium launches, noted Mr Alan Cheong, Savills Singapore research head.

But higher prices have been achieved in Jurong. Upcoming condos there command nearly $1,000 to $1,200 per square foot (psf), while those in the north-east and Pasir Ris are between $850 and $1,000 psf.

The Jurong Lake District is being engineered into a regional hub. Human density is expected to rise, with increasing population of foreigners probably wanting to rent there as more commercial developments take root.

Source: The Straits Times – 23 June 2012

INDUSTRIAL MARKET

Rogue agents get warning letters

A CRACKDOWN is under way on property agents who lodge misleading advertisements for industrial sites.

Businesses such as shops and tuition centres have been using industrial sites, which have lower rents than commercial premises, but they have been accused of pushing up costs as they compete for space with genuine industrialists.

The CEA has investigated 32 property agents this year who allegedly marketed industrial units wrongfully.

On Wednesday, the agencies issued a joint circular to remind agents and landlords that it is their responsibility to give accurate information to potential buyers. It stated that properties slated for industrial use should not be marketed for 'business' - which can be misinterpreted as offices - or 'offices', which are not allowed in such buildings.

The onus is also on developers to ensure accurate information on marketing materials and that appointed agents do not mislead buyers.

Misleading marketing of units will breach the CEA's Code of Ethics and Professional Client Care, which can lead to fines of up to $75,000 and/or suspension or licence revocation.

The URA said that if the unauthorised use does not cease within a stipulated timeframe, the penalty for these users could be a fine of up to $200,000 or a one-year jail term or both.

URA rules stipulate that at least 60 per cent of the total floor area of an industrial site has to be used for core industrial activities like warehousing and production. The remaining space can be taken up by some non-industrial uses like ancillary offices and staff canteens.

Source: The Straits Times – 23 June 2012

 

News Update - 22 June 2012

RESIDENTIAL MARKET

Only 6 bids for Farrer Drive reserve list site

A smallish private housing plot at Farrer Drive has attracted just six bids, though the top bid of $1,048.52 per square foot per plot ratio (psf ppr) from a Singapore Land unit marks a new high for 99-year private housing land offered at a state tender in recent years.

When the Urban Redevelopment Authority announced on May 11 that the reserve list site had been triggered for release following a successful application from an unnamed party with a commitment to bid at least $823.33 psf ppr, analysts forecast 10-20 bids, given the site's proximity to Farrer Road MRT Station and the relatively manageable investment quantum.

One of the property consultants then polled by BT predicted a top bid of up to $1,100 psf ppr. Three others forecast winning bids of $850-950 psf ppr, $930 psf ppr and $1,000 psf ppr.

Despite the site's District 10 address, most developers who carefully examined the site and its terrain decided to give it a miss. One of them told BT: "The configuration is awkward; it has an irregular, elongated shape with a narrow road frontage. There's also an electrical substation next door and an eight-storey height control; it tends to be inward-looking.

SingLand's proposed scheme for the Farrer project will comprise some 100 units, mostly two-bedders of about 1,000 sq ft, with some smaller units (primarily one-bedders with a study). The project will have basement carparking and "good quality" specifications.

"Units on the sixth, seventh and eighth floors will have beautiful views of the Botanic Gardens. And the development will be close to Farrer Road MRT Station and amenities like HDB shops," he added.

The project could be launched in the first half of 2013. "We'll target singles, couples as well as investors; the development should appeal to expat tenants," he added. Older freehold condos with mostly larger apartments in the Holland-Farrer Road vicinity are selling at about $1,500-2,000 psf, he notes.

BT understands that SingLand's breakeven cost could be around $1,600 psf and it could be looking at an average selling price of about $1,800 psf.

However, analysts also point to substantial unsold stock in CapitaLand's nearby 99-year project, d'Leedon, which will pose competition and be a pricing constraint on any new development in the area. As at end-May, 503 of the d'Leedon's 1,715 units had been sold. The condo will rise to 36 storeys. Its developers sold 30 units in May at a median price of $1,484 psf, or at a range of $1,432-1,765 psf.

Source: Business Times – 22 June 2012

Far East dangles 'club with condo' deal

BUY an apartment and get a free country club term membership worth more than $16,000.

Developer Far East Organization recently dangled this offer to tempt home hunters to buy a unit at the upcoming Seastrand condo.

Property consultants said developers may be using promotional moves like this to clear unsold stock before more homes hit the market, posing more competition.

Far East is offering a nine-year term membership at Seletar Country Club, as well as five-year condo maintenance fee absorption, for those who buy three- or four-bedroom units - the only sizes left.

The membership plus the maintenance fee absorption - worth about $15,000 for five years - translates into a discount of about 3per cent on a $1 million unit.

Earlier, it was reported that Far East is giving a 2 per cent 'celebratory discount' this month for various projects, to mark a sales record. But that cannot be used together with this promotion.

Holding onto unsold stock could be risky, as developers face market changes and competition from new projects, they said.

In this case, Far East might be trying to raise more awareness of Seastrand.

The project may have been overshadowed by other pending condos like Sea Esta and Ripple Bay, launched after Seastrand.

But it is unlikely developers would cut prices if plenty of units have been sold, as this could upset earlier buyers.

Still, 'nothing comes for free', and that developers could have factored the discounts into the pricing.

Such offers could trigger a freebie war among developers, which could end up as a disservice to buyers who might have no use for some of the freebies.

Source: The Straits Times – 22 June 2012

COMMERCIAL MARKET

Bugis Cube to tap strata commercial fever

THE strata commercial property space continues to be abuzz with activity with yet another development coming onto the market this weekend.

Notably, 91 out of 119 units in Bugis Cube - a 999-year leasehold development in the Bugis district - is expected to be launched tomorrow.

Located opposite Bugis Junction and a short walk from Bugis MRT Station, the development (which is 92 per cent owned by ERC Holdings subsidiary Griffin Real Estate Investment Holdings) will comprise over six floors of prime retail and food-and-beverage space. It will offer a mix of shop sizes ranging from 129 to 635 square feet, with prices starting from as low as $2,900 psf to as high as $7,500 psf.

Industry watchers say strata commercial properties have become increasingly popular with investors especially after the introduction of cooling measures last December, with well-located properties quickly snapped up by eager investors.

For instance, a tie-up between Guthrie and Sun Venture bought up all 66 strata units at Burlington Square on Bencoolen Street from a Wing Tai-City Developments venture back in May for $89.3 million, or $1,318 psf of strata area.

Also quick to go off the shelf were seven freehold strata commercial units at McDonald's Place in King Albert Park, which were purchased by one of Oxley Holdings' units from Valewood Investments at a price of $150 million earlier this year.

Source: Business Times – 22 June 2012

News Update - 21 June 2012

RESIDENTIAL MARKET

Tanah Merah, Bright Hill sites launched to yield 820 homes

TWO residential sites, expected to yield up to 820 housing units, were launched for sale by public tender by the Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB) yesterday.

The first site, a 99-year leasehold plot located on Tanah Merah Kechil Road, has a site area of about 150,678.5 square feet and a maximum gross floor area (GFA) of 421,901.8 sq ft. It can house around 415 homes.

ERA Realty's key executive officer, Eugene Lim, expects the site to fetch an estimated bid price of $500-$600 psf ppr, assuming a selling price of $1,000-$1,300 psf, based on current subsales in the locality.

Given its proximity to Tanah Merah MRT station, he expects six to eight bidders for the site.

Tender for the site will close at 12 noon, on July 31.

The second site, a 99-year leasehold plot located at Bright Hill Drive, has a site area of about 144,635.6 sq ft and a maximum GFA of 404,979.7 sq ft. It is expected to yield about 405 homes.

The site could attract three to five bidders, with the winning bid between $580 and $620 psf ppr, which translates to an average selling price of $1,250-$1,300 psf.

With the right orientation, the future condominium development can enjoy the unblocked view of the MacRitchie Reservoir and the neighbouring landed housing estates, such as Adelphi Park Estate, Windsor Estate and Soo Chow Garden.

Said ERA's Mr Lim: "We expect a moderate number of bidders (four to six) for this site, due to the fact that the site is irregular and may pose challenges in terms of design. Bid price may be $550-$600 psf ppr, assuming an eventual selling price of between $1,100 and $1,250 psf."

There could be pent-up demand in the area as there have not been new project launches for many years. Thomson Grand, which is nearer to Bishan, is 100 per cent sold as of April 2012 at a median price of $1,300 psf.

The tender for the site will close at 12 noon on Aug 7.

Source: Business Times – 21 June 2012

Big-ticket property deals are bouncing back, and the trend is likely to continue

Investment sales of property - which cover big-ticket transactions - have rebounded to about $6.4 billion in the second quarter as at June 19. Such deals had taken a hit in the first quarter, when the figure dived to $4.8 billion (from $7.9 billion in Q4 2011).

Q2's surge has been fuelled by the residential and office markets, including sales of Tower 15 on Hoe Chiang Road, KeyPoint on Beach Road and strata office units at Burlington Square, Tung Centre and The Adelphi.

Taking into account outstanding state tenders - such as for the private housing sites at Farrer Drive and at Pheng Geck Avenue scheduled to close on June 21 and June 28 respectively - as well as other caveats for various sectors of the property market, the final Q2 investment sales tally could reach about $7 billion. This would take the figure for first-half 2012 to almost $12 billion.

Investment sales are expected to continue apace in the second half, possibly resulting in a full-year total of $21-25 billion. This assumes macro economic conditions improve and that financing continues to be available. Availability of debt is one of the main lifelines to the real estate investment market. Absence of debt will lead to falling investment volumes.

Last year, total investment sales hit $29.6 billion, down slightly from 2010's $31.4 billion.

Investment sales reflect the confidence of major property players in the sector's mid to long-term prospects.

Investment sales in the residential sector so far this quarter have reached $3.6 billion - about $1.1 billion or 46 per cent higher than Q1 2012. A big chunk of this came from GLS sites, amounting to $2.5 billion, up 38 per cent from Q1.

The commercial segment too posted a $914 million or 91 per cent quarter-on-quarter jump to $1.9 billion. However, investment sales of industrial properties fell 32 per cent quarter on quarter to about $766 million.

In the collective sales market, five deals totalling $328.8 million have been inked this quarter as at June 20, down from the six deals at $456.6 million in Q1.

Source: Business Times – 21 June 2012

SINGAPORE

S'pore rich list is longer than Hong Kong's

There is a changing of guard atop the wealth pole: Singapore now has more rich people than Hong Kong while Asia Pacific has more fat cats than North America.

In fact, the Asia Pacific region is now home to the world's largest population of high net worth individuals (HNWIs), according to a report by RBC Wealth Management and Capgemini.

Despite growth in the number of HNWIs, the amount of investable wealth they possessed actually fell in 2011 as global markets came under pressure, according to the report. The drop in overall wealth compounded problems for wealth managers, who continue to suffer from climbing costs.

A tough year for the stock market and a slowdown in exports led the number of HNWIs - defined as people with at least US$1 million of investable wealth - in Singapore to fall 7.8 per cent to 91,200 in 2011 from 98,900 in 2010.

But Hong Kong's stock market also had its share of troubles, and the HNWI group there tumbled even more sharply - down 17.4 per cent to 83,600 in 2011. This is the first time since 2008 that Singapore has had more HNWIs than HK.

Strong domestic economies helped to boost the number of HNWIs in Asia Pacific by 1.6 per cent in 2011 to 3.37 million, nudging the region past North America for the first time.

Barend Janssens, emerging markets head of wealth management at RBC, said he expects Asia to strengthen its hold at the top in terms of population size.

Most of the growth came in the US$1 million to US$5 million band, and banks in the region could pick up their high-end consumer banking services to cater to that segment of the market, Mr Janssens said.

The drop in investable assets underscored a tough year for wealth management firms, especially in the face of rising costs.

The cost-to-income ratio has been rising steadily to 79.8 per cent in 2010 from 63.7 per cent in 2007, and is expected to also show an increase in 2011 and 2012, said Capgemini senior account executive Claire Sauvanaud.

Those costs are climbing because of a host of factors such as legacy business models that are not suitable to current market conditions as well as growing compliance burdens.

Source: Business Times – 21 June 2012

News Update - 20 June 2012

RESIDENTIAL MARKET

Buyers return 150 private homes in May

PRIVATE home buyers returned 150 units to developers last month at projects such as Sky Habitat, The Tampines Trilliant and Hillsta - the highest number in at least five years.

These units, bought in April, made up 5.7 per cent of the more than 2,600 non-landed homes, including executive condominiums (ECs), sold that month.

Despite the high absolute figure for returns, experts say that in percentage terms, the rate is in line with last year's.

They add that the spike in absolute numbers is largely due to April's robust sales which had buyers snapping up the most number of units in almost three years.

Return rates are defined as returned units as a percentage of total non-landed sales in the previous month.

These rates have remained largely below 6 per cent.

While the 150 returned units represent a five-year high in terms of absolute numbers, the percentage return rate was higher in the earlier part of the year.

For instance, while 52 units were returned in January, that translated to a return rate of 9 per cent. This may have been caused by the tough round of cooling measures unveiled last December.

However, the record is still that set in February 2008; the rate was a staggering 41 per cent, with 127 units returned out of about 310 non-landed units sold, as concerns over the United States economy and choppy stock markets hit sentiment.

Last month, 15 units were returned at Hillsta in Choa Chu Kang's Phoenix Road, 11 units at EC project The Tampines Trilliant and 10 at Sky Habitat in Bishan.

In April, buyers returned 17 units at Riversound Residence in Punggol and nine each at Ripple Bay in Pasir Ris and at EC project Twin Waterfalls in Punggol.

Source: The Straits Times – 20 June 2012

OFFICE MARKET

Three conservation shophouses on Amoy Street for sale

THREE prime conservation shophouses along Amoy Street have been put up for sale by expression of interest.

The three shophouses - 77, 78, and 79/80 Amoy Street - sit on a combined site area of 8,182 sq ft, with an estimated floor area of 23,820 sq ft.

They have a leasehold of 999 years, with a balance of 814 years left on the lease. Interested parties have the option to purchase either two shophouses (ie 78 and 79/80 Amoy Street), or all three units.

The units could fetch some $1,600 psf of gross floor area.

Based on recent transactions, 73/73A/73B Amoy Street transacted at $8.5 million in May. In April, 71/71A Amoy Street transacted at $8.5 million.

Companies with a $50 million investment budget and wants to own an office property in CBD, their only alternative will be to purchase strata office floors. However, the companies are not entitled to naming rights with strata properties' ownership whereas that would be possible with this opportunity.

77 Amoy Street occupies some 2,773 sq ft, and has an estimated floor area of 7,610 sq ft. 78 Amoy Street has a site area of 2,597 sq ft, and an estimated floor area of 7,793 sq ft. 79/80 Amoy Street has a site area of 2,812 sq ft, and an estimated floor area of 8,417 sq ft.

Source: Business Times – 20 June 2012

SINGAPORE

S'pore 'resilient to global shocks'

SINGAPORE has a high degree of resilience to global financial shocks, despite its open economy and dependence on global finance and trade, said ratings agency Moody's Investors Service.

But the economy is facing structural challenges with slower growth and changes in the political landscape.

Still, Moody's is keeping a stable outlook on its triple-A rating on Singapore's sovereign credit, citing strengths in its economy, institutions and the Government's financial position.

In its annual credit report on the country released yesterday, Moody's said Singapore excels in four areas: its strong economy, institutions, government finances and low vulnerability to external shocks.

It noted that the economy had rebounded from its recession in 2009 to 14.8 per cent growth in 2010, largely due to a competitive trade sector and flexible labour market.

But Singapore faces a key challenge in raising productivity and innovation as global competition heats up.

The report also noted that liberal immigration policies had helped boost growth in the past 10 years.

But 'rising popular anxiety over the significant increase in the number of foreign workers has prompted the Government' to change its immigration policies.

This will in turn lead to a tighter labour market and contribute to upward pressure on costs, unless productivity measures can help offset the rise.

One area of concern was the country's ability to use monetary policy to keep prices stable, with inflation having moved above 5 per cent recently.

Moody's noted the exchange rate policy did not prevent interbank interest rates from dropping to historic lows, while the high costs of cars is outside the exchange rate's influence.

Demand for housing also remains high even though cooling measures have helped slow price increases.

Moody's has also rated the Government's financial position as being 'very high', despite the move to channel more resources to help lower-income earners.

It said the country's strong balance sheet was backed up by investments made by the Government of Singapore Investment Corp (GIC), which manages more than US$100 billion (S$127 billion) of Singapore's reserves.

The report added that Singapore's financial system remains resilient to shocks, largely due to local banks' healthy balance sheets.

On the domestic front, Moody's said political risks remain low, even though the recent general election, presidential election and Hougang by-election had indicated 'an erosion in support' for the ruling People's Action Party.

Source: The Straits Times – 20 June 2012

News Update - 19 June 2012

RESIDENTIAL MARKET

Kemaman View sold en bloc for $45.5m

FREEHOLD residential development Kemaman View has been sold to private developer Aylesbury Pte Ltd for $45.5 million, or some $935 per square foot per plot ratio (psf ppr).

The 17,388 sq ft site, located off Balestier Road, comprises 30 apartment units, each 1,324 sq ft in size. Located in District 12, the plot is zoned for Residential Use under Master Plan 2008, with a gross plot ratio of 2.8 and a maximum height of 36 stories subject to approval.

With the collective sale, each individual apartment unit owner will receive gross sale proceeds of about $1.5 million, a 30 per cent premium over the resale price if the unit were sold individually.

The site was launched in the collective sales market in April, with an indicative asking price of $46-48 million.

Development charges for the plot are not expected to be payable, unless the developer obtains approval for an additional 10 per cent gross floor area (GFA) for balconies in addition to a potential GFA of 53,813 sq ft. In this scenario, development charges are estimated to amount to $2.8 million, resulting in a unit land price of $816 psf ppr.

Source: Business Times – 19 June 2012

Suburban private home values outpace city prices

PRICES of non-landed suburban private homes have outperformed those in the city over the last five years, a new report has found.

Across the board, private home prices have soared more than 50 per cent over the five years.

However, city centre homes have fared the worst, with many posh homes struggling to match robust gains posted by homes on the city fringe and in suburban areas.

The change in prices was taken between the first quarter of 2007 and the first quarter of this year.

The results showed that prices of non-landed homes in suburban areas enjoyed price rises of 68 per cent on average. This was a startling 30 percentage points more than city centre home price rises of 38 per cent, on average.

Driving the point home, the top five price performers in the period were all suburban projects.

And the bottom five were high-end homes, mostly in the prime districts of 9, 10 and 11.

St Regis Residences in Tanglin Road even registered a sharp 16 per cent drop in value and was the worst performer in the period.

While average selling prices were $2,671 per sq ft (psf) in the first three months of 2007, St Regis Residences units were languishing at an average of $2,237 psf five years later.

At the other end of the spectrum, Sherwood Tower within Bukit Timah Plaza led the pack in terms of gains, posting a staggering 175 per cent jump in average prices from $258 psf to $709 psf.

Supply in the high-end segment is limited. The subdued en-bloc market helps limit the supply to just what it is today. The mass market, on the other hand, is being inflated with new supply from the Government Land Sales programme.

But other experts pointed out that if a different period had been selected, the trend would have been reversed with non-landed city centre homes posting some of the strongest price rises instead.

For instance, they enjoyed solid price gains of about 69 per cent in the three-year period from the first quarter of 2005 to the first quarter of 2008.

Prices of city fringe homes jumped 39 per cent while suburban homes trailed with a 38 per cent rise in the same period.

The collective sale market for high-end developments boomed in 2007, lifting city centre prices then while the suburban market was still quiet.

This led to a high-base effect, he added, which when coupled with the lacklustre performance of the market over the past two years, leaves the high-end segment trailing far behind.

Source: The Straits Times – 19 June 2012

'More property cooling steps unlikely'

A FRAGILE economic outlook and the soft property market have lessened the risk of new cooling measures, some experts say.

Bank of America Merrill Lynch economist Chua Hak Bin noted last week that despite increased speculation of a sixth round of cooling measures, they are likely to be unwarranted at this point.

But Mr Chua pointed out that the December round of cooling measures has dealt a severe blow to sentiment, with a resulting hit to transactions.

Prices of private homes dipped 0.1 per cent in the first three months of the year compared with a 0.2 per cent gain in the previous quarter, while total value of flats sold plunged 26 per cent in the same period.

Foreign buyers have also retreated. They accounted for 23 per cent of transactions in the first five months of the year - well down from 35 per cent in the same period last year.

'The luxury property market, defined as sales at more than $5 million, has practically collapsed, with the number of transactions falling by some 61 per cent (in the same period),' Mr Chua added.

‘Maintaining the threat of additional property measures is a sensible policy to cool the market, but current conditions probably do not warrant another round.'

Some experts even suggest that some existing measures might be scaled back.

Further measures, if any, could involve capping the percentage of shoebox homes - usually apartments under 500 sq ft - in a development to safeguard the interest of family units, but nothing specifically to dampen buying demand.

Source: The Straits Times – 19 June 2012