RESIDENTIAL MARKET
Sembawang EC site draws top bid of $211.9m
A 99-YEAR leasehold executive condominium (EC) site at the junction of Sembawang Crescent and Sembawang Drive has received a top bid of $211.9 million, or $323.76 per square foot per plot ratio (psf ppr).
The top bid came from boutique property developer JBE Holdings, which beat seven other bidders.
It reflected the developer's confidence in the attractiveness of ECs in far-flung Sembawang, where another EC, 1 Canberra is located.
"Luxury" EC units in the news lately for the prices they commanded, such as the $1.77 million penthouse unit in Heron Bay in Upper Serangoon and the $1.61 million double-storey penthouse in 1 Canberra.
Last month, National Development Minister Khaw Boon Wan took to his blog "Housing Matters" to remind developers to stay within the spirit of the concept of this class of housing.
The developer could aim to launch the project at between $720 and $730 psf.
There are only two other new EC projects in the Yishun-Sembawang area - The Canopy (406 units) is fully sold; 1 Canberra (665 units) is half sold.
Up to October this year, some 3,500 EC units in the seven projects launched in the year had been sold. The total volume of EC units sold is expected to hit a record 4,000 by the end of the year.
The second highest bid for the site came from Frasers Centrepoint unit FCL Place and Hytech Builders; it was for $210.1 million, or $321.00 psf ppr.
Chip Eng Seng's CEL Property put up a bid of $201.4 million, or $307.66 psf ppr; Bellevue Properties, a subsidiary of City Developments Limited, offered $193 million, or $294.85 psf ppr.
The lowest bid was from Mezzo Development, at $184.0 million, or $281.10 psf ppr.
The 233,775 sq ft site has maximum gross floor area of 654,569 sq ft and can yield about 650 units.
Source: Business Times –14 December 2012
COMMERCIAL MARKET
Asia Square clinches year's biggest CBD office lease
In the biggest CBD office leasing deal so far this year, German financial services provider Allianz Group is leasing around 90,000 square feet at Asia Square Tower 2.
The space is on levels 13, 14 and 15 of the 46-storey building, but it is possible that Allianz may also take up the 12th floor, which would expand its footprint in the building to 120,000 sq ft.
Allianz is expected to finalise the size of its space at Asia Square by the end of January next year.
Industry watchers say that the transaction is the biggest office leasing deal in the CBD since Marsh & McLennan leased 97,000 sq ft at Asia Square Tower 1 last year.
The latest leasing transaction is also the first for Asia Square Tower 2, which is slated to receive Temporary Occupation Permit (TOP) in Q3 next year. The tower will have 790,000 sq ft net lettable area of Grade A offices on levels 6-31.
A 305-room Westin hotel will occupy levels 32-46. Retail space will fill the first two levels.
Allianz will move into Asia Square at end-2013. This will be a consolidation for the group, which will exit two existing locations - Centennial Tower and Prudential Tower. Its space at Asia Square will also allow for some expansion.
The tower's large floor plates of about 30,000 sq ft means Allianz can house more than 500 employees on just three levels - allowing greater efficiency and collaboration across teams.
"We will benefit from having all our different lines of business housed under the same roof. This move underscores Allianz's commitment to this market and recognises Singapore's importance as a major financial hub and international business centre," said Gesa Walter, regional general manager, corporate communications, for Allianz SE.
One of Singapore's most sustainable commercial developments, Asia Square has clinched Leadership in Energy & Environment Core & Shell (LEED-CS) Platinum certification from the US Green Building Council, in addition to a Green Mark Platinum award from Singapore's Building and Construction Authority.
Said Ms Walter of Allianz: "Finding office space with built-in energy-efficient features supports our commitment to contribute to a low-carbon future."
The developer, MGPA, a private equity real estate investment advisory group focused on Asia-Pacific and Europe.
MGPA declined to comment on the rent Allianz will be paying or the duration of its lease. Making an educated guess, a seasoned office agent reckons that Allianz's per square foot (psf) monthly rent would be in the "high single digit" - considering that it is the maiden tenant in the tower and the quantum of space it is leasing.
Mark Rada, project director at Asia Square, told The Business Times that rents in Tower 2 are still on a case-by-case basis as completion is not due till Q3 2013. However, in the development's 43-storey first tower, which received TOP in June last year, MGPA is now asking for monthly rents of $12-15 psf, he revealed.
"We have four whole floors (levels 36 to 39) available, plus a few smaller pockets of space throughout the building which are all currently under offer," said Mr Rada.
Currently, 82 per cent of Tower 1's 1.25 million sq ft net lettable area of offices has been leased. Tower 1 also includes a Food Garden, which is patronised by more than 6,000 people daily on weekdays - "well above our expectations", said Mr Rada.
Tower 2 will have 40,000 sq ft of retail space of Levels 1 and 2 - of which one-third has been pre-committed, he said.
"We're trying to select the best tenants to meet the needs of the office population within the two towers and neighbouring buildings."
Source: Business Times –14 December 2012
INDUSTRIAL MARKET
Industrialists groan as rents grow heavier
The hefty wage bill is now unavoidable. And the surging industrial property market has made it a perfect storm of high operational costs for industrialists here, market watchers say.
Prices for industrial property have risen 27 per cent in the first nine months of the year, latest data from the Urban Redevelopment Authority showed, as investors seek alternatives to residential properties.
And rents, while not quite keeping pace, have still gained a significant 6 per cent in the same period.
Rental costs were highlighted as one of the three most important factors of business costs, along with labour and energy expenses, in a study by Leong Kaiwen, assistant professor of economics at Nanyang Technological University.
"This is a fundamental problem, this will be a huge problem for our companies . . . because just imagine if I stay in Singapore, instead of upgrading my products, I have to spend so much on rental, I become much less competitive than my competitors out there," he said, referring to neighbouring countries, such as Malaysia and Indonesia, where operating costs are lower.
His research, presented at the Singapore Business Federation Small and Medium Enterprise Convention, also showed that profits for 66 per cent of the 90 respondents surveyed had fallen "significantly" between 2008 and 2011.
This figure shot up to 80 per cent when limited to manufacturing, wholesale and retail trade, and transportation companies.
With the economy slowing and labour costs expected to go up further, the squeeze on companies could worsen.
One end-user has been hit by a 30 per cent jump in fixed costs over the last few months.
Wong Ghan, managing director at Speedy Industrial Supplies, said his company pays a rent of around $1.80 per square foot per month (psf pm) since it renewed its lease in September, up from $1.20 psf pm previously.
The rents have eroded his profit margins and are hampering expansion of operations here, he said.
Trade bodies said they are watching the situation.
Chan Chong Beng, president of the Association of Small and Medium Enterprises, said members have given feedback on the rising prices and rents for industrial property.
Lam Joon Khoi, secretary-general of the Singapore Manufacturing Federation, said the impact from rising business costs and declining global demand was very challenging for local manufacturers.
Asst Prof Leong's study showed that occupancy rates remained stable despite two notable hikes in rental in recent years. But this did not mean that manufacturers were doing well, he said. "A lot of them were actually making net losses, they were not actually profitable."
Minister for Trade and Industry Lim Hng Kiang told Parliament last month that the government will release sufficient land through the Industrial Government Land Sales programme to meet the need of industrialists and moderate prices and rentals.
The ministry has also started to release smaller land parcels with shorter tenures for small and medium enterprises that require facilities at more affordable prices, he said.
"In addition, we will continue with our enforcement efforts to ensure that industrial space is not misused by non-industrial users, which may also have contributed to the increase in industrial prices and rentals," he had said.
The minister also explained why the ministry will not bar foreign investors from the industrial property sector. He said their participation gives industrialists options, reduces their capital costs upfront and keeps rents competitive.
It may be inevitable that some companies will have to shift out.
Source: Business Times –14 December 2012
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