RESIDENTIAL MARKET
Strong demand seen for Queenstown condo site
The last two 99-year-leasehold private housing sites on the second half 2012 Government Land Sales (GLS) programme have been released. One is a plum site next to Queenstown MRT Station being offered on the confirmed list and tipped by some analysts to fetch a top bid of $1,000 per square foot per plot ratio (psf ppr) or more.
The other site, next to Tanah Merah MRT Station, is being made available for application on the reserve list. The Urban Redevelopment Authority (URA), acting as land sales agent for the government, will launch this site for tender only if it receives an application from a developer accompanied by an undertaking of a minimum bid price acceptable to the state.
Along Commonwealth Avenue, next to Queenstown MRT Station, the Housing & Development Board, as a state land sales agent, is offering a 1.2-hectare plot that can potentially yield about 700 homes. The site has a 4.9 plot ratio (ratio of maximum gross floor area to land area), which means it can accommodate a high-rise condo of over 40 storeys, say property consultants.
Predictions of the top bid for this site range widely - from $700 psf ppr to $1,100 psf ppr. Five to 10 bids are expected for the land parcel.
$970 psf ppr was fetched earlier this month for a 99-year condo site in Alexandra Road/Alexandra View near Redhill MRT Station - one stop closer to the city. That was the fourth private housing site the government has sold in the Redhill/Alexandra area over the past year.
ERA Realty Network key executive officer Eugene Lim pointed out that the latest site has about twice the land area of the Redhill plot sold earlier this month, though both have the same plot ratio of 4.9. "We can therefore expect five to eight bids (with the winning bid) at around $900-980 psf ppr."
The site is likely to be heavily contested given its location in a mature estate. "HDB resale flats in Queenstown have been commanding high prices, with executive flats hitting the $1 million mark," he adds.
The tender for the site closes on Feb 5 next year.
In New Upper Changi Road, next to Tanah Merah MRT Station, the URA is marketing a 2.6-ha reserve list site that is expected to yield about 600 units. Three private housing sites in the location have been sold by the government this year.
The latest plot is next to the 748-unit eCO condo, which has been 75 per cent sold since it was launched in September.
Both the Tanah Merah and Queenstown plots are located Outside the Central Area, which means there will be a cap on the maximum number of housing units based on an average unit size of 70 square metres gross floor area.
Anytime now, the URA is expected to release the final two commercial sites in the H2 2012 GLS programme - a 1.2-ha confirmed list site near Jurong East MRT Station and a site along Cecil and Telok Ayer streets. The latter will be made available on the reserve list. Both sites are expected to have minimum office component stipulations.
Source: Business Times –19 December 2012
COMMERCIAL MARKET
Rents on Orchard Road fringes turning soft
Rentals on the fringes of Orchard Road and the city are showing signs of softening, after recording their first dip in five quarters.
Rents of shops in the City Hall and Marina Centre areas recorded a 3 per cent drop from $21.90 per square foot (psf) per month in the previous quarter to $21.30 psf/month in Q4 2012.
Rents in the other city fringe areas fell to $14.25 psf/month from $14.60 psf/month in Q3 2012.
But prime Orchard Road rents held up better, with rentals remaining stable over the past five quarters at $31.60 psf/month.
According to a report by CRBE released yesterday, rents have remained firm as demand continues to be healthy with new-to-market entrants, particularly fast-fashion retailers, taking up space in Orchard Road.
Moreover, with three Asset Enhancement Initiatives (AEI) projects - The Heeren, Orchard Gateway and 268 Orchard Road - expected to be completed next year, demand for prime Orchard Road space is likely to remain healthy.
Already, The Heeren has received full tenant occupancy by Robinsons and Orchard Gateway is more than half pre-committed with tenants, such as Crate & Barrel, Religion, Swatch Megastore and Nike's new concept store called Amplify Women's.
Apart from the Orchard Road area, another area of focus is suburban and downtown core sub-markets that no longer cater purely to low-end type stores but attract new international stores.
By 2013, suburban malls, such as Jem, Westgate, Bedok Mall and Chinatown Point, are expected to be fully operational and will be able to widen their tenant base as the size and spending power of residential catchments increase, underlining the fact that these suburban malls are benefiting from their successful decentralisation across the island, the report added.
With two more suburban malls expected in 2014 - One KM and Seletar Mall - as well as other retail developments, such as Waterway Point, Park Hotel Alexandra and South Beach, slated for completion in 2015, prospects for the suburban market look bright.
While prime suburban rents are expected to remain steady, market analysts sounded a note of caution.
Source: Business Times –19 December 2012
Sports Hub retail space to be run by SMRT, FairPrice
Transport operator SMRT and NTUC FairPrice jointly won a bid yesterday to manage more than 40,000 sq m of retail space in the new Singapore Sports Hub.
SMRT Alpha - a joint venture between subsidiaries of SMRT and FairPrice - was appointed to lease and operate the space, with SMRT owning a majority stake of 70 per cent. SMRT Alpha will have the lease of the space in Kallang - which is roughly equivalent to the net lettable retail space of Raffles City - for 12 years.
The retail mall and waterfront area will have a range of indoor and outdoor dining outlets, stores, entertainment options and a FairPrice Xtra hypermarket.
In a statement yesterday, SMRT chief executive Desmond Kuek said the company remains committed to its primary role as a safe and reliable transport operator, but is proud to be involved in promoting a sports and lifestyle destination for Singapore.
"Leveraging our transport network and retail management strengths, we are able to offer Sports Hub unique support to enhance its success and vibrancy.
"With the Circle Line Stadium station on the doorstep of the Singapore Sports Hub, the public can enjoy convenient, quick and easy travel to this highly iconic venue," he said.
His comments come less than three months after he took the helm of SMRT and vowed that strengthening its operations, engineering and maintenance capabilities would be his main priority.
He said then: "What is certain is that we are first and foremost a public transport operator. This is the core business that we are responsible for and must excel in."
He assumed his role as president and CEO after a turbulent time for the firm, in the aftermath of two major MRT disruptions last December that triggered a six-week Committee of Inquiry.
Singapore Sports Hub CEO Philippe Collin Delavaud said the bid was awarded to the joint venture because both SMRT and FairPrice "have a proven track record in reaching out to and bringing the community together".
"They are the best partners one can ask for," he said. "SMRT will be instrumental in transporting the community to the country's newest attraction and the combined experience of both SMRT and NTUC FairPrice in the retail space will be invaluable for the Singapore Sports Hub."
NTUC FairPrice group chief executive Tan Kian Chew said FairPrice was committed to serving the community and recognises sports are "an excellent platform to strengthen community bonds".
"We strive to make our stores easily accessible to our customers, and are happy to be able to serve the community in the Kallang area and beyond," he said.
The Singapore Sports Hub, to open in April 2014, will include the Singapore Indoor Stadium, a new National Stadium, an aquatic centre, a multi-purpose arena and a water sports centre, as well as the new mall and waterfront area that SMRT Alpha will manage.
Source: The Straits Times –19 December 2012
Office occupancy costs down 17.7%
The cost of taking up office space in Singapore fell 17.7 per cent as of Sept 30 from a year earlier, a new survey has found.
At US$104.66 (S$127.44) per sq ft on average, office occupancy costs here are the 19th-highest in the world, according to the twice-yearly Prime Office Occupancy Costs survey by consultancy CBRE.
Hong Kong's Central Business District is the most expensive worldwide, at US$246.30 psf on average, despite experiencing the largest decline in the world, of 17.8 per cent, from a year ago.
While the high prices are driven by limited new supply and tight market conditions, the fall came about as cost-cutting among large financial institutions dramatically lowered prime office occupancy costs in Hong Kong.
Six of the top 10 most expensive office markets are in Asian cities.
They include: New Delhi, Tokyo and a second Hong Kong district - West Kowloon. The other two are Beijing's Central Business District and its Finance Street.
The report tracks occupancy costs for prime office space in 133 markets worldwide. Costs increased in 74 markets, decreased in 37 and remained unchanged in 22.
Office occupancy costs in San Francisco accelerated the most this year, taking two spots out of the top five increases.
Source: The Straits Times –19 December 2012
INDUSTRIAL MARKET
Industrial space rents hold steady this year
Rents for industrial space held firm this year while resale capital values surged despite a weak global economy which dampened the growth of the manufacturing sector in Singapore, a report said.
Average monthly gross rents for first-storey industrial space were unchanged at $2.15 per sq ft (psf) per month, while upper-storey rents held firm at $1.75psf in the fourth quarter of this year.
They remained constant when compared with the same period last year and with the third quarter of this year.
Business park rents also remained steady at $4.35 psf per month in the fourth quarter and were only 3per cent below their previous peak in 2008, after a marginal dip of 0.7per cent in the first half of this year.
The average occupancy rate for business park space hovered around 80per cent this year. This was lower than for other types of industrial space, which achieved occupancy rates of about 90per cent or more.
Aided by improved demand from the biomedical, engineering, information technology and pharmaceutical sectors, business park rents declined only marginally this year. Sustained leasing activity in existing space also held up the market.
In contrast, capital values of resale industrial space surged, largely driven by investor demand in the current low-interest rate environment and ample liquidity.
Resale prices of first-storey industrial space rose 12per cent to $622 psf in the fourth quarter compared with a year ago. Purchases by firms also grew strongly, as industrialists bought units for their own use to achieve better control over costs and to escape rent fluctuations.
Tighter labour policies and the productivity drive to increase wages could see more firms relocating their businesses out of Singapore.
In addition, next year will see a higher-than-average supply of industrial space in the pipeline. However, against a backdrop of slow but still positive economic growth, industrial rents are expected to hold firm or ease slightly next year.
But price growth is expected to decelerate as prices have already risen 28 to 45 per cent since the last trough in 2009.
A yearly average of 9.5 million sq ft of industrial space is expected to be completed between next year and 2016, in line with the yearly average supply of 10 million sq ft over the past 10 years.
However, the pipeline supply is uneven, with about 16 million sq ft of space expected to be completed next year.
Source: The Straits Times –19 December 2012
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