News Update - 7 Jan 2013

RESIDENTIAL MARKET

Q4 private home prices up the most in 6 quarters

Despite the curbs on housing loan tenure introduced in October, the Urban Redevelopment Authority's private-home price index flash estimate in Q4 2012 galloped at its fastest clip in six quarters, driven by rising prices of mass-market condos.

The latter were, in turn, buoyed by strong public housing resale flat prices.

URA's overall private-home price index in Q4 rose 1.8 per cent from the previous quarter, after a 0.6 per cent gain in Q3. This is the biggest increase since the 2 per cent rise in the index in Q2 2011. For the whole of 2012, the index climbed 2.8 per cent, about half the 5.9 per cent rise recorded in 2011.

Giving a geographical split of prices of non-landed private homes, URA said that the index for the Outside Central Region (OCR) rose 3.4 per cent quarter-on-quarter in Q4, against a one per cent gain in Q3. This is the strongest showing in 10 quarters, since a 5.7 per cent jump registered in Q2 2010.

Some property consultants attribute the OCR's good performance to developers achieving higher price points for projects near MRT stations. Other market watchers, however, reckon that this could have been due to older completed condos in the suburbs slowly catching up with the higher property prices set by new housing projects. More light on what drove up OCR prices in Q4 will be shed on Jan 25, when URA releases more detailed price indices for completed versus uncompleted properties.

For the Rest of Central Region (covering city-fringe locations), the Q4 index was up 0.9 per cent, on a par with the 0.8 per cent rise in Q3. In the Core Central Region - where Singapore's choicest homes are located - the price index rose 0.8 per cent in Q4, compared with a 0.1 per cent rise the previous quarter.

Analysts note that the government's cooling measures, such as the additional buyer's stamp duty introduced in December 2011 and the mortgage tenure curbs in October 2012, have helped put on lid on private-home price growth. Even so, high liquidity and low interest rates continued to draw investors to the property market last year.

These factors should remain in play this year, while rising land bids at recent state tenders would create upward price pressure at new launches. However, the combination of a weaker economy, more completed private homes coming onstream and affordability issues will help rein in price increases, analysts say.

Source: Business Times –3 January  2013

 

HDB resale flat prices climb to historical high in 2012

Resale flat prices grew at their strongest pace in five quarters to reach a historical high, as the Government plans even more Built-to-Order (BTO) flats this year.

The latest flash estimate of the Resale Price Index (RPI) from the Housing and Development Board (HDB) yesterday showed that prices rose 2.5 per cent to 202.9 in the fourth quarter of 2012 from the previous quarter.

This was the fastest rate since a 3.8 per cent increase in Q3 of 2011.

For 2012 on a whole, prices for resale homes were 6.6 per cent higher than the year before. This was down from 10.7 per cent in 2011 and 14.1 per cent in 2010.

Also on Wednesday, the HDB said it will increase its offering of BTO flats this year to at least 23,000, up from at least 20,000 announced earlier.

The first batch of 3,346 homes will be put up for sale this month and will be in Choa Chu Kang, Yishun, Hougang, Tampines, Kallang Whampoa and Ang Mo Kio.

Analysts said both demand and supply factors continued to be at work in the resale market last year.

Eugene Lim, key executive officer at ERA Realty, noted that resale prices rose despite a record 34,237 new flats being offered last year, comprising 27,084 BTO units and 7,153 flats under the Sales of Balance Flats exercise.

"This is because the HDB's new flat programme is heavily skewed in favour of first-time home buyers," he said.

This means first-timers with immediate housing needs, singles, permanent residents and second-timers continued to drive demand for resale flats. Under current rules, between 85 and 95 per cent of BTO flats are set aside for first-timers.

Buyers are bringing forward purchases for fear of higher prices in the future. There is a "stubbornly high" cash- over-valuation (COV). This cash premium stood at a median of $34,000 in Q4 of 2012, figures from the Singapore Real Estate Exchange showed, $2,000 shy of the record set in 2011.

To address this, ERA's Mr Lim suggested that transaction procedures for resale flats fall in line with private practices.

Currently, the practice for resale flats is for buyers to first get a valuation for the unit and then negotiate the COV to get the final price.

Mr Lim feels this puts the focus on the COV and not the market value of the flat, and thinks transactions should look at just one single price which incorporates the COV.

"The practice of negotiating prices for HDB flats should not differ from that of private properties," he said, noting that "COVs" from private sales are not made public.

That said, market watchers acknowledged the moderation in resale prices last year and predicted prices to go up between 4 and 8 per cent for 2013.

Still, it will take a rude shock before prices drop.

Said ERA's Mr Lim: "In the absence of a recession, property prices are unlikely to dip."

Source: Business Times –3 January  2013

 

Forestville developer upbeat on reopening

The showroom for the Forestville Executive Condominium (EC) will be closed until further notice for maintenance, but the developer for the project said this is not linked to it being stopped from selling the units by the Urban Redevelopment Authority (URA).

A spokesman for Hao Yuan Investment said yesterday that once the showroom reopens, interested homeowners can still view the units but they will be unable to purchase them.

The showroom has been closed since Friday.

The Business Times understands that there were concerns over the size of the penthouses at the 653-unit project, which will have 29 penthouses ranging from 1,550 sq ft to 2,756 sq ft.

The spokesman said the showroom was closed for "general maintenance work", but declined to give more details.

While showrooms generally stay open even during holidays, analysts said their closure does happen.

Hao Yuan was stopped from selling the units at Forestville on Friday, following an investigation by the URA.

"Based on our preliminary investigation, we found that the developer has launched the project with some proposed changes to the development plans, which had not been approved yet. This is not allowed," a spokesman for URA said on Monday.

Having an approved development plan is one of the requirements to get a sales licence from the URA, which allows the construction of a project to start and subsequently for the units to be sold.

Hao Yuan went ahead with the launch on Friday by not booking sales, but getting potential buyers to sign a non-binding Expression of Interest instead. It said it had told agents not to collect any cheques and that those who did so were told to return them.

In a separate statement issued yesterday, Hao Yuan said it "acknowledges that there were some technical issues with regard to Forestville Executive Condominium. The architects are working closely with the relevant authorities to resolve the said technical issues as expeditiously as possible".

"We regret and apologise unreservedly for any inconvenience caused to all concerned parties," it added.

Work has not started for Forestville.

Source: Business Times –3 January  2013

 

Kismis Lodge up for en bloc sale again

Kismis Lodge is being put up for collective sale for the second time.

Located off Toh Tuck Road, Kismis Lodge occupies a land area of 70,283 square feet (sq ft). The plot, comprising 64 walk-up apartments, was first put up for tender on July 16 last year.

In the July 2012 tender, the owners asked for between $90 million and $95 million, which translates to about $1,281 to $1,352 per square foot (psf).

While there was interest from buyers, their offers did not meet the owners' expectations.

This time, the owners are expecting at least $90 million, which translates to some $1.4 million per owner.

Out of 12 private residential GLS sites on the confirmed list in the first half of 2013, only one is slated for landed housing.

The Kismis Lodge site is zoned for "three-storey mixed landed housing" and can be redeveloped to yield around 43 strata terraces, or other combinations of landed housing subject to approval.

Because there is a high development baseline for the site, developers do need not pay a development charge.

The tender for Kismis Lodge closes on Jan 24 at 2.30pm.

Source: Business Times –3 January  2013

 

Keen interest in Pasir Panjang freehold units

A new residential project in Pasir Panjang by boutique developer Link (THM) has received strong interest from buyers even before its formal launch.

About 100 cheques have been collected for the freehold 52-unit development, SeaSuites, which will be launched this Saturday.

Average prices are expected to be about $1,650 per sq ft. Most of the units are one- and two-bedders ranging from 517 sq ft to 1,410 sq ft. The three-bedroom units are 1,066 sq ft to 1,615 sq ft.

Link (THM) Group started out in the fashion business before diversifying into property in 2004, its founder and group chief executive Kenny Tan told The Straits Times.

His love for design made property development a good fit, he said. Mr Tan, 45, started out by developing small-scale landed developments before moving on to larger-scale non-landed projects.

Link also has light industrial and commercial developments under its belt, including office development Sultan Link in Mohamed Sultan Road.

It has two other developments in the pipeline, including a landed housing site in Holland Road - where the homes are expected to fetch between $10.5 million and $11 million each - and another light industrial project off Bukit Merah Road.

"We are very focused on location, especially in a small country like Singapore. For landed homes, for instance, we'll look at the Holland and Bukit Timah areas," Mr Tan said.

"For non-landed homes, we can consider any site that is less than 300m away from an MRT station... Any site that is not more than $100 million, we have the cash flow to take it up ourselves," he added.

The design of the firm's properties differentiates Link from other developers, Mr Tan said. For instance, he once built a basement swimming pool in a bungalow.

Apart from expanding the business here, Mr Tan is also setting his sights further afield.

He revealed that the firm is working on a mega residential and commercial project in Medini, a region in Iskandar, with an expected gross development value of RM2.5 billion (S$1 billion). The total gross floor area of the site is 2.7 million sq ft.

Source: The Straits Times –3 January2012

 

Roxy-Pac buys $24.5m Wilkie Terrace site

A unit of listed property developer Roxy-Pacific Holdings has purchased a freehold residential site off Dhoby Ghaut/Selegie Road for $24.5 million.

This is Roxy-Pacific's third purchase in the vicinity in six months; the other two are Sophia Mansions at Adis Road and 7/9/11 Wilkie Terrace, which adjoins the newly bought land parcel.

The latest site at 13/15 Wilkie Terrace has an estimated total land area of 9,324 square feet and an existing gross plot ratio of 2.1.

The deal was sealed through RH Rochor, an indirect subsidiary of Roxy-Pacific through Roxy Homes.

The site currently houses a bungalow owned by a family. The sale price of $24.5 million reflects a land rate of $1,259 psf per plot ratio, after factoring in a marginal development charge.

In a statement yesterday, Roxy-Pacific said RH Rochor intended to amalgamate the site with the freehold site at 7/9/11 Wilkie Terrace that it had acquired in November 2012.

RH Rochor had acquired the land parcel at 7-11 Wilkie Terrace for $33 million. The site has an estimated total land area of 13,209 sq ft and an existing gross plot ratio of 2.1.

The cost of the latest acquisition will be financed by internal funds and bank borrowings.

It is not expected to have a material impact on the group's consolidated earnings and net tangible assets per share for the financial year ended Dec 31, 2012.

Shares of Roxy-Pacific closed 1.5 cents higher at 58 cents yesterday.

Source: Business Times –4 January 2013

 

Alexandra becoming hot spot for new homes

Better known for its industrial and office buildings, the sleepy neighbourhood of Alexandra has slowly been gaining favour among home buyers in recent years.

More private property projects - such as the Metropolitan, Alexis and Echelon - have been or will be built on sites previously occupied by public housing.

Flanked by neighbouring towns Tanglin and Queenstown, Alexandra is on the fringes of the District 10 prime residential area.

The mature estate's proximity to the Central Business District, Orchard Road and public transport has made it a favourite locale for expats looking for rental properties.

This demand for rental housing has led to an increase in investor interest, pushing up the prices of private homes in the area.

About a fortnight ago, 200 units at the Echelon project in Alexandra View were snapped up, at prices averaging $1,700 psf.

The project consists of 508 units, spread over the condominium's two 43-storey towers.

The heightened interest has also trickled down to land prices, with winning bids for government land tenders moving up 15 per cent to 27 per cent in the last year.

Last December, a 99-year Alexandra Road condo site near Redhill MRT station fetched a price of $332.7 million, which translates to $970 psf per plot ratio.

Source: The Straits Times –5 January2012

 

Big incentive to build large EC units

Large executive condominium (EC) units have been making headlines recently with their record high prices.

The move by developers to build these spacious, often lavishly appointed units has proved controversial, especially given the public policy objectives of increasingly popular ECs.

ECs - a public-private housing hybrid - come with government subsidies and are intended to help households with a monthly income ceiling of $12,000 move into private housing.

Why, some ask, should the Government be subsidising large, swanky homes?

But there are many incentives for EC developers to build these larger units, so long as they are permitted to do so.

And if you take a closer look at some of these apparently enormous EC units, the liveable indoor space can prove to be significantly smaller than it first appears to be. A few of these penthouses come with a large roof terrace - a concept that is hardly new in private housing.

This feature is becoming increasingly common in ECs as developers build bigger homes to differentiate their projects.

Uncovered roof terraces are not part of a project's allowable gross floor area, but buyers pay for them even though they cost developers relatively little to build.

Building large penthouses is thus the easiest and most efficient way for developers to up the ante in the competitive EC landscape.

Sometimes, it is simply a marketing tool, allowing them to package a project as luxurious and higher-end while having to fork out minimal extra cost.

Take for instance the more than 4,300 sq ft "presidential" penthouse suite in EC project CityLife @ Tampines, which has a roof terrace of about 1,600 sq ft. Its $2.05 million price tag works out to about $470 per sq ft (psf) - which seems like a discount - but rises to $744 psf if only liveable space is counted. This is in line with the project's average price of $770 psf that the developer charged.

But throwing in a roof terrace creates buzz and helps a developer differentiate a project in the jostle for middle-income buyers.

And this formula seems to have worked well.

About 30 per cent of sales hotline enquiries about CityLife, for instance, were about the presidential suite or the six skysuites, even though they make up only about one per cent of the 514-unit project.

The 394-unit Heron Bay in Upper Serangoon - the first EC to introduce five-bedroom apartments - also saw healthy sales when it was launched in September last year. It was more than four times oversubscribed - one of the best responses to an EC project in a number of years.

The figures clearly show that large, fancy units get buyers interested in an EC project and into the showflat. Even if they do not buy the large unit, they might decide on another unit at the project.

Boutique developer EL Development's managing director Lim Yew Soon said there is no general rule on whether larger units are more profitable.

Many variables, such as the number of bathrooms - which have a high construction cost - or the size of roof terraces in the penthouses, come into play.

Law firm Rodyk & Davidson's real estate partner Norman Ho added that it is also genuine demand that is driving developers to build units with bigger sizes for Housing Board upgraders.

This is because large units allow more than one generation to be housed under one roof.

Buyers are prepared to pay a premium for space: The first HDB resale flat to be sold for $1 million recently was a 1,615 sq ft executive flat in Queenstown that was already 17 years old.

The HDB used to meet niche demand for large flats through its executive apartments and maisonettes, which average 1,600 sq ft. But it stopped building them in 1995 when ECs were launched.

As a result, there is a scarcity of big flats in the mass market. Most large units these days are ultra- luxe homes in prime districts selling for more than $3 million.

It is no surprise then that large EC units, marketed under the guise of dual-key units, skysuites or penthouses, are often the first to be snapped up.

And it is this strong demand for such homes and the success of EC projects with large and luxurious units that prompt other developers to do the same.

Source: The Straits Times –5 January2012

 

COMMERCIAL MARKET

'Healthy demand' for office space in Q4

Demand for office space remained healthy in the fourth quarter last year, which helped cushion rental declines.

Occupancy rates for suburban Grade A offices - which include those in places such as Tampines and Jurong East - climbed to 95.6 per cent, a striking 4.3 percentage points higher than in the third quarter.

The bulk of the increase was driven by tenants taking up space in Tampines, particularly at the NTUC Income Tampines Junction block and the Abacus Plaza complex.

Tenants at these buildings include Raffles Medical Group and Standard Chartered Bank.

Still, occupancy rates in suburban districts have not caught up with those in areas closer to the city centre.

City fringe Grade A office space retained the highest occupancy rate at 98.3 per cent in the three months to Dec 31. This area includes districts such as HarbourFront and Novena.

That was a decline from the sector's 98.7 per cent occupancy rate in the July-September quarter.

Overall, the average occupancy rate of Grade A offices in the CBD grew from 93.1 per cent in the third quarter to 94.1 per cent in the fourth quarter last year.

This was the highest occupancy level in almost two years.

The higher overall occupancy rates in the fourth quarter helped to offset rental declines for yet another quarter.

Average monthly gross rents for Grade A office space in the CBD fell a smaller-than-expected 6.9 per cent for last year overall.

Source: The Straits Times –3 January2012

 

Joo Chiat hotel put up for tender

A hotel in Joo Chiat is up for sale by tender with a guide price of $75 million to $80 million.

The 99-year leasehold four- storey hotel, owned by Classic Holdings, is part of the Hotel 81 chain. It is bounded by Onan, Joo Chiat and Changi roads, and has 115 hotel rooms.

Some significant transactions in the area over the past two years include the former Lion City Hotel being sold for $313 million, 55 Changi Road sold for $44.9 million and New Changi Hotel sold for $53.2 million.

Another Government Land Sales commercial site at the junction of Paya Lebar Road and Eunos Road 8 was tendered for $585 million. It has been redeveloped into Paya Lebar Square.

The area is promising and will be a major commercial hub in the coming years, added Mr Loh.

The tender closes on Feb 5.

Source: The Straits Times –3 January2012

 

Investment funds big sellers of property

Investment funds were big sellers of property here last year; with the value of sales more than double that of purchases amid weaker economic conditions.

The funds mainly sold off office buildings and industrial properties and invested in hotels and retail malls.

Analysts estimate that funds sold properties here worth a total of up to $3.36 billion last year.

This was well above the value of purchases, of between $1.17 billion and $1.31 billion.

Fund acquisitions were lower last year compared with 2011; funds bought $1.48 billion worth of property in 2011.

One of the biggest fund purchases last year was of Compass Point by Prudential's Asia Property Fund in a joint venture with Frasers Centrepoint for $519 million.

Fund divestments last year were mainly of office buildings, analysts said, likely because office yields have fallen as a result of rental declines while prices continued to hold firm. Average monthly gross rents for Grade A office space in the Central Business District fell by 6.9 per cent for last year overall.

Office buildings sold by funds last year include 16 Collyer Quay, formerly known as Hitachi Tower, 78 Shenton Way and 79 Anson.

NTUC Income, which already owned 49 per cent of 16 Collyer Quay, said on Wednesday it had inked a deal to buy up the remaining 51 per cent from Goldman Sachs. The building, which Goldman bought for $811 million in early 2008, is valued at $660 million for a net lettable space of 278,356 sq ft, translating to $2,371 psf.

As for 78 Shenton Way, a property fund managed by Alpha Investment Partners bought a 50 per cent stake in the building from a global fund managed by CommerzReal, a unit of German bank Commerzbank. The deal in September valued the building at $608 million, or $1,686 psf based on net lettable area of about 360,500 sq ft. CommerzReal paid $650.78 million for 78 Shenton Way in late 2007.

Last month, United Engineers bought 79 Anson for $410 million from its two owners - Singapore's Central Provident Fund Board and German fund manager SEB. The acquisition price works out to $2,029 psf based on the building's net lettable area of 202,092 sq ft.

Analysts said the trend of a net divestment of property by funds could continue this year.

Source: The Straits Times –5 January2012

 

INDUSTRIAL MARKET

Paya Lebar industrial site up for en bloc sale

A freehold industrial "white site" in Paya Lebar has been launched for collective sale, with an expected price in excess of $58 million, or $837 per square feet per plot ratio (psf ppr)

Guang Ming Industrial Building now stands on the 19,789 sq ft site in Tai Seng Industrial Estate; the 20 units within it are separately occupied by various businesses such as Seaward Chemicals and Horizon Auto Services.

The owners of the units, ranging from 1,200 sq ft to 2,800 sq ft, can expect to receive between $1.8 million and $3.9 million from the collective sale, depending on the size of their units.

The plot's status as a "white site" means it can be developed for commercial, residential, retail or hotel purposes. Based on a maximum allowable plot ratio of 3.5, developers can build a property with gross floor area of up to 70,000 sq ft, including 20,000 sq ft of retail and commercial space.

The Tai Seng vicinity is now home to the headquarters of homegrown brands such as Charles & Keith, Sakae Sushi and BreadTalk.

The tender exercise closes on Feb 5.

Source: Business Times –3 January 2013

 

Robust bidding for Tuas industrial plots

Demand for industrial property remains robust, going by the bidding activity for three plots of land in the Tuas area that closed on Wednesday, even though the offers were largely within market expectations.

JTC Corporation launched a plot of land at Buroh Street and two others at Tuas South Street 6 under the Industrial Government Land Sales programme in November last year.

The 2.74-hectare Buroh Street site (the equivalent of about four to five football fields) has a 30-year tenure and drew a total of seven bids, JTC data showed.

The top bid of $82.1 million, or about $111.35 per square foot per plot ratio (psf ppr), came from Capital Development and ZACD Investments.

This narrowly pipped the $81.9 million or $111.05 psf ppr offer from Soon Hock Investment Group.

The award of tenders does not have to go to the highest bidder, and will be announced at a later date by JTC.

Analysts BT spoke to when the tender was launched had expected around five to nine bids of between $40 to $105 psf ppr.

With land zoned as Business 2 meant for heavier industrial use, and with the lease shorter than before, industrialists will be very particular that their premises meet their work requirements, he noted. End-users are further aided by technical conditions introduced by the government last year to ensure that their needs are met.

The two plots at Tuas South Street 6, known as plot 30 and plot 32, drew 14 and 18 bids, respectively. Both are 0.86-ha sites with a lease of 22.5 years. Earlier predictions had ranged from five to 13 bids for the two sites.

The highest bid for plot 30 came from Koh Brothers Building & Civil Engineering Contractor, at $6.6 million or $70.99 psf ppr.

This was slightly above the second-highest bid from Yee Lee Development of $70.97 psf ppr.

For plot 32, the top bid came from contractor SH Design & Build at $6.7 million, or $70.75 psf ppr.

Again, bidding was competitive, with the second-highest bid of $70.63 psf ppr coming from Tiong Seng Contractors.

Source: Business Times –4 January 2013