COMMERCIAL MARKET
Six prime office units at Samsung Hub up for sale
Six strata office units have been put up for sale on the 17th floor of Samsung Hub, a 999-year-leasehold, Grade A office block on Church Street, near Raffles Place.
The units have strata areas ranging from 883 sq ft to 3,595 sq ft, adding up to 13,132 sq ft. Their absolute price quantums range from $3 million to $12 million.
Their owner, Church Street Holdings, has put the units up for sale.
"We've had agents calling us, giving offers of $3,300-3,500 psf, so we decided to conduct the tender in a fair and transparent manner. If we get offers around those price levels for all or most of the six units, we will consider selling. Otherwise, we're happy to hold on to our investment," said Kishore Buxani, managing director of Buxani Group, one of the shareholders of Church Street Holdings.
The highest price achieved for an entire floor in Samsung Hub is $3,000 per square foot for level 16, which spans 13,132 sq ft. It changed hands for $39.396 million last December.
The tender for the six units will close on March 15.
Samsung Hub, which was completed in 2005, has a total strata area of 299,753 sq ft in a 30-storey office block, with a six-storey podium for 178 carpark lots.
Source: Business Times –19 February 2013
INDUSTRIAL MARKET
Two JTC industrial sites put up for tender
JTC Corporation has launched two plots of industrial land at Buroh Crescent and Tuas Bay Walk for sale by public tender.
The two plots are the first to be launched out of the 13 sites in the confirmed list under the Industrial Government Land Sales (IGLS) programme for the first half of 2013, JTC said yesterday.
The land parcel at Buroh Crescent has an area of 1.77 hectares (ha) and is zoned for Business 2 use. It has a 30-year lease and a maximum permissible gross plot ratio of 2.5.
The 0.58-ha site at Tuas Bay Walk is also zoned for Business 2 food development. It has a 30-year lease and a maximum permissible gross plot ratio of 1.7.
Earlier this month, JTC awarded a nearby site on Buroh street to a joint venture between Capital Development and ZACD Investments for $82.1 million, or $111.35 psf ppr. This site is bigger at 2.74 hectares.
Tenders for two other nearby sites at Tuas South, also launched by JTC, will close earlier this month, which may put another dampener on bids for this new Tuas Bay Walk site, he added.
Both tenders will close on March 14 at 11am.
Source: Business Times –1 February 2013
COMMERCIAL MARKET
Feb launch for units at Tg Pagar medical centre
Far East Organization is banking on upcoming commercial developments and residences in the CBD area to fuel demand for medical services as it readies to launch 48 units in its Mediplex@SBFCenter for sale next month.
Located near Tanjong Pagar MRT station, the Mediplex@SBFCenter on Robinson Road will occupy the third to fifth levels, with units ranging from 667 sq ft to 1,292 sq ft in size.
Marketing efforts are expected to commence from the middle of next month while the medical centre is slated for TOP by end-2016.
Aside from the medical centre, the SBF Center will feature 197 offices consisting of 192 smaller strata units ranging from 592 to 1,442 sq ft and 10,549 sq ft for five floor plate offices. The Singapore Business Federation (SBF) will relocate its offices as a major tenant and partner.
The medical units in the private healthcare centre are reportedly being marketed at between $3,800 and $4,000 per sq ft (psf) under a 99-year lease.
Medical suites at centres such as Novena Specialist Centre are selling at $4,100 to $4,200 psf, while Mount Elizabeth Medical Centre went at $7,300 psf last October.
"Coupled with the vibrant working population of about 200,000 professionals in the CBD and limited available supply, we see the potential for a dedicated medical suite development to fill the growing demand for medical and healthcare services from both the working and residential population in the heart of the CBD," said Chia Boon Kuah, chief operating officer (property sales) for Far East.
He noted that the Tanjong Pagar area is expected to undergo a transformation in the long term as more residences, hotels, offices and other commercial and lifestyle amenities come onstream.
Far East is targeting specialties such as dentistry, diet & nutrition, licensed traditional Chinese medicine, physiotherapy and others.
"Based on our interactions with doctors, medical practitioners, and medical specialists, we believe there will be demand to own purpose-built medical suites in a dedicated facility within the CBD where there is limited supply of strata-titled units available for sale," added Mr Chia.
Far East, which has a healthcare portfolio that includes Novena Medical Center and Novena Specialist Center, is also setting up another medical centre this year at Pacific Plaza called Scotts Medical Center.
Source: Business Times –29 January 2013
Rentals in suburban malls expected to dip
With the bulk of retail space due to come onto the market located in the suburbs, expect to see slight downward pressure on rents for space in some of these areas.
Prime retail space in the Orchard area, however, is expected to see stable yields due to a more limited supply coming onstream, although some uncertainty over how the area will perform exists, given the global economic climate.
This is the general prognosis experts have of the retail property sector in Singapore.
They also expect investors to show higher interest in strata retail space given the latest cooling measures that hit the residential and industrial property sectors, but note that the bulk of retail space available are owned by single landlords.
Consultants say that an estimated 1.9 million square feet of retail space is set to come onstream this year. The majority of this space is held under a single ownership structure by a commercial developer or reit (real estate investment trust) and is for rental income. As much as 80 per cent of this space is expected to be located in the suburbs.
Orchard Road
2013 is the only year with proposed completion of retail projects along Orchard Road up till 2016. This could help rents to stay stable.
The space has also been well-received. Three projects are expected to be completed in 2013 and they include the AEIs (asset enhancement initiatives) of The Heeren, Orchard Gateway and the redevelopment of 268 Orchard Road.
It was reported that The Heeren will be fully occupied by department store Robinsons, and that Orchard Gateway is already more than half pre-committed, with tenants like Crate & Barrel, Religion, Swatch Megastore and Nike's new concept store called Amplify Women's. The library@orchard will also be situated at Orchard Gateway.
In total, the three projects are likely to result in a 5 per cent increase in retail space along Orchard Road, less hefty than the 15 per cent increase in retail space seen in 2009, which saw the addition of malls like Orchard Ion, Orchard Central and 313@Somerset.
But there are other factors that impact rents of retail space, such as foot traffic and retailers' ability to generate sales.
And while retail sales this year are generally expected to be augmented by fairly healthy tourist arrivals on the back of new and reinvented visitor attractions in Singapore, there are risks surfacing for the Orchard shopping belt.
Jurong Gateway
Much of new shop space that will come onto the market this year will be located in the Jurong Gateway area, which will see two new malls spring up. Jem, by Lend Lease, has an estimated shop gross floor area (GFA) of 573,000 square feet. Westgate, a retail cum office development by CapitaLand, will offer an estimated shop GFA of 426,000 sq ft.
The malls are reportedly over 80 and 50 per cent leased, respectively, ahead of their expected opening.
The new malls may lead tenants of existing malls in the west to take flight from their current place of residence
Over the longer term, however, these existing malls that are differentiated from the typical mass market malls, such as JCube - which positions itself as an entertainment mall - and IMM - an outlet mall - could help them to retain their niche audience.
Suburban malls are generally able to widen their tenant base as the size and spending power of residential catchments increase. Suburban malls no longer cater purely to retailing low-end daily necessities but have evidently attracted new international retailers. Coupled with strength of management from Reit/funds landlords, prime suburban rents are expected to remain steadfast with an optimistic horizon.
Strata retail
Strata-titled retail space is expected to see heightened interest among investors this year, as a result of the cooling measures introduced by the government to the residential and industrial property markets.
Investors flush with liquidity are likely to support prices of commercial properties, especially in light of the freshly implemented cooling measures which will filter out some investment dollars from the residential and strata industrial markets.
Some new strata retail space is expected to come onto the market, but they do not make up a significant proportion.
Of the 1.9 million sq ft of retail space due to come on stream this year, just 46,630 sq ft, or about 2 per cent, is strata space.
Investors also need to understand the product and consider factors such as the location of the space.
The long term
But while take-up rates at malls, both suburban malls and those located in the Orchard area, appear to be holding up, there exists some longer term challenges that could potentially hit the market.
Discretionary spending by local residents may continue to slide given the uncertain and bearish economic outlook.
The prevailing problems of manpower shortages and the increasing resistance against further rental increases from tenants will all have a bearing on demand, and consequently retail rents.
Some malls are expected to be able to weather these challenges better than others.
New malls that are well-positioned with good accessibility and high foot falls are better considered.
Existing malls that are successful - tried and tested - have a good following, are more likely to have a long list of retailers who are 'waitlisted' to get in. But such strong demand may not be the same across all malls.
Source: Business Times –29 January 2013
COMMERCIAL MARKET
Alexandra Central units put up for quick resale
Some investors are already trying to flip the shop units they bought just days ago at the yet-to-be-completed Alexandra Central, a sign that they had invested in the project hoping to make a quick buck.
A Business Times check showed that at least 19 of the 114 retail units that were sold by the developer last Monday, appeared to be on the market again by Saturday. Only one unit of each size was included in this tally.
On website Commercialguru, agents had, on Saturday, put up listings to sell more than 15 shop units that buyers had previously snapped up. Some of these agents re-posted the listings yesterday.
Property agents have also been sending text messages marketing these units, while at least two advertisements appeared in the Classifieds section of The Straits Times on Saturday.
Prices listed ranged from about $3,720.93 per square foot for a 24 square metre (258 sq ft) unit, to as high as $8,600 psf for a 10 sq m (107.6 sq ft) unit.
Said one property agent: "There are many units at Alexandra Central now on the market, you just have to let me know your budget and my guys will find one for you."
One 15 sq m (161.5 sq ft) retail unit on the third floor, which was bought on Monday at $710,000, was being marketed for sale at $850,000 on Saturday.
Another 18 sq m shop (193.8 sq ft), which was purchased from the developer at $833,000, had agents trying to sell it for $1.02 million.
Late last week, the Urban Redevelopment Authority (URA) indicated that it may extend cooling measures to the commercial property sector if transactions rise above what it deems to be the comfort level.
It said in response to queries from The Business Times: "We are monitoring the various segments of the property market closely, including the commercial sector. We will introduce measures if required to moderate investment demand and prevent over-heating in the property market."
The launch of 99-year leasehold Alexandra Central last Monday featured a packed showroom. All but two of the 116 strata shop units available were sold.
It was estimated that at least 20 buyers on average were competing for each unit, while a shop space on the third storey had as many as 155 interested buyers.
The project's popularity came amid expectations among market watchers that commercial properties are likely to see higher interest following the recent round of cooling measures that hit the residential and industrial markets about two weeks ago.
Shop space went for $4,000 psf to over $7,000 psf at the launch. Alexandra Central consists largely of small shops, with units ranging in size from 10 sq m (107.6 sq ft) to 667 sq m (7179.5 sq ft).
What remained unsold by the developer last Monday was a 102 sq m (1,097 sq ft) food and beverage unit on the second floor of the project, and the largest, 667 sq m unit on the third floor that was not launched for sale - though agents were trying to gather interest in the unit.
Agents were still trying to sell both units yesterday.
When completed, Alexandra Central will be located next to Ikea and on the site of the former Safra building in Alexandra Road. The overall development includes a 450-room hotel managed by Park Hotel Group. Construction is expected to be completed by June 2016. It is developed by Chip Eng Seng.
Source: Business Times –26 January 2013
Commercial property in Changi up for tender
A freehold commercial property at the corner of Changi Road and Lorong 105 Changi has been put up for sale by tender.
No 160 Changi is offered for sale on a vacant possession basis. This came after its owner, AIA Singapore, shifted operations that used to be housed there up until late last year to its other properties in Singapore.
No 160 Changi is currently a 4-storey building with two basement levels that include 23 carpark lots. It sits on a site area of about 18,000 square feet (sq ft) about 300 metres away from Eunos MRT station and has a permissible gross plot ratio of 3.0.
No development charge is payable on the property.
A hotel could also be considered for the site, subject to approval by the relevant authorities, due to its commercial zoning.
This is the first significant freehold commercial property with potential for redevelopment to be launched this year, and the buyer will benefit from recent property cooling measures, which have largely spared commercial properties.
Furthermore, the buyer can gain from the upcoming Paya Lebar commercial hub nearby, which has 12 hectares of space available for development.
Recent projects in the vicinity prior to that, including the Icon@Changi, Wis@Changi and Centropod@Changi, were able to fetch prices from about $2,300 per square foot (psf) to $4,300 psf.
The tender will close on March 8 at 4pm.
Source: Business Times –28 January 2013
INDUSTRIAL MARKET
First drop in industrial property prices in three years
Industrial property prices fell unexpectedly in the last quarter of 2012 - the first decline in three years and a sign that caution is taking hold among investors.
Prices dipped 0.7 per cent in the period compared with the previous three months after climbing for 12 straight quarters, according to the Urban Redevelopment Authority (URA) yesterday.
Overall, the URA industrial property price index rose 25.8 per cent last year from the preceding year, lower than the 27.2 per cent year-on-year increase in 2011.
The index is now 14per cent above its previous historic peak in the first quarter of 1997.
Analysts said industrial prices could moderate this year due to the seller's stamp duty imposed on the sector two weeks ago.
The overall price decline in the fourth quarter surprised experts, as values for multi-user warehouses shot up 9.4 per cent over the same period from the preceding three months.
The rise in warehouse values was outweighed by a surprise 2.7 per cent sequential decline in prices of multi-user factories after they rose a sharp 10.1 per cent from the second quarter to the third.
Analysts said factory demand could have softened due to a weaker economic outlook.
Manufacturing output has fallen sequentially for the past three quarters and anticipated factory orders have shrunk every month since July.
Stiffer competition due to a spate of new industrial launches also led developers and sellers to lower their price expectations.
But while industrial prices fell, rents rose 3.9 per cent in the fourth quarter from the preceding quarter, outstripping the 1.2 per cent quarter-on-quarter rise in July through September.
Analysts said they expect industrial prices to moderate or flatten in the short term, due partly to the seller's stamp duty.
Analysts also flagged a possible oversupply this year and in 2014.
They pointed to the URA's quarterly report yesterday which said that 31.2 million sq ft of new supply will come onstream this year and 15.6 million sq ft next year.
Source: The Straits Times –26 January 2013
COMMERCIAL MARKET
Drop seen in office space leasing, majority looking for smaller units
Office leasing activity should slow in the coming six months, with demand to be dominated by tenants with smaller space requirements.
Gone are the days where you have major space takers that look at 15,000, 20,000 square feet (sq ft) and above in terms of their take-up.
This can be attributed to two key trends in finance over recent quarters: some of the banks moving their back office operations to suburban regions, and caution about bottom lines given the slowdown in the economy.
Prime rents in Central Business District (CBD) areas are expected to fall 0.5 per cent in the first quarter of this year compared with the previous quarter amid this continued softness. This follows a 0.4 per cent decline in the fourth quarter of 2012.
Demand for serviced offices will stay strong as tenants try to lock in rents at current rates. Serviced offices come fully fitted out and offer flexibility in the form of monthly renewals instead of a usual minimum tenure of two years.
Tenants are keen to explore options with fitted out space which will provide significant cost savings.
The opening up of the legal sector means more foreign law firms will be looking to set up shop here.
Both these groups of potential users are expected to be in for smaller offices of between 1,000 and 5,000 sq ft.
Source: Business Times –24 January 2013
COMMERCIAL MARKET
SBF Center office units see keen interest
Far East Organisation's SBF Center has been receiving keen interest in the weeks leading up to its official launch, as investors continue to flock to the commercial sector in search of better deals.
BT understands that the office space is being marketed from about $3,300 psf of which those within the $3,300-$3,500 psf range have met with keen expression of interest; the medical suites are being marketed at between $3,800 and $4,000.
Specifically, some interest has been garnered for the whole floor plates (office), which are located around the middle floors.
The 99-year leasehold development features 197 offices - 192 smaller strata units ranging from 592-1,442 sq ft and 10,549 sq ft for five floor plate offices - and 48 medical suites of between 614 and 1,345 sq ft up for sale.
Source: Business Times –23 January 2013
Ho Bee gets ready to reap fruits of Metropolis project
Property developer Ho Bee Investment's efforts to build a strong base of recurring income will start to bear fruit later this year, with the completion of The Metropolis, its one million sq ft Grade A-specification office project directly linked to Buona Vista MRT Station on the Circle Line.
The development's 23-storey Tower 1 is expected to receive Temporary Occupation Permit around July, to be followed a couple of months later by the 21-storey Tower 2.
Talk in the market is that the first few office leases have been inked. Neptune Orient Lines is believed to have signed up for just over 100,000 sq ft. BT understands that the Singapore Exchange (SGX) too has signed a lease for 85,000 sq ft. The bourse operator is believed to be planning a front/back-end split and is expected to keep its front office operations at SGX Centre in Shenton Way.
Next in line at The Metropolis could be oil giant Shell, believed to be for a 120,000 sq ft lease. Also thought to be seriously looking at becoming a tenant in the development is Procter & Gamble, which may take around 200,000 sq ft or more.
For sure, gym operator Fitness First has signed a lease at The Metropolis. Ho Bee itself will move its offices from Tannery Road to its new Buona Vista development.
In all, about 60 per cent of The Metropolis' net lettable space of 1.05 million sq ft is thought to be currently under negotiations.
Pre-leasing activity for new office developments in Singapore is generally slow at the moment - not surprising given that occupiers such as international banks and financial institutions are more careful about relocating to new buildings to avoid incurring major expenditure amid the uncertain business environment. There is also ample supply of office space in the island, and with rents not predicted to shoot up anytime soon, this tends to be a drag on pre-leasing. So it remains to be seen just when The Metropolis will be fully tenanted.
However, while the supply-demand dynamics of the Singapore office leasing market may be out of Ho Bee's control, one factor clearly in the group's favour is its low development cost for The Metropolis. The group clinched the site at a state tender in 2010 for $410.99 million (or about $342 per square foot per plot ratio). Because Ho Bee managed to lock in a relatively low construction cost for the project, its breakeven could be as low as $750-800 psf.
Big occupiers in The Metropolis can probably expect to pay close to $6 psf in monthly rents - cheaper than around $9 psf in the financial district. Based on the breakeven cost of about $800 psf, Ho Bee's net yield (when the building is fully leased) would be around 7 per cent.
Each year, the development should generate about $75-80 million in rental and carpark revenue (The Metropolis will have some 490 car park lots), going by a back-of-the-envelope calculation. That will result in a regular stream of recurring income which should help the group smooth the ups and downs in its residential property development business.
No doubt Ho Bee will also benefit from a one-time revaluation gain at the end of this year from The Metropolis, assuming office values remain resilient. Right now, a new Grade A-specification office development in that location could be valued at around $1,600-1,800 psf on a whole-building basis, by some estimates. Based on Ho Bee's breakeven cost of around $800 psf for The Metropolitan, the group stands to book a revaluation gain of some $800 million to $1 billion.
Between financial years ended Dec 31, 2007, and Dec 31, 2011, Ho Bee's net earnings have gyrated from $93.1 million to $333 million.
It is this sort of income volatility that the completion of The Metropolis will help to reduce.
On the stockmarket the counter has appreciated about 80 per cent over the past one year, double the gain of about about 40 per cent in the FTSE ST Real Estate index over the same period. The stock is now hovering around $1.90, compared with about $1.06 a year ago.
Source: Business Times –23 January 2013
COMMERCIAL MARKET
Buyers snap up units at Alexandra Central
Almost every unit of a mixed development launched in Alexandra yesterday has been snapped up - a stark sign that buyers are turning to commercial property in the wake of new cooling measures.
Only one of the 115 strata retail units released remained unsold as at 9pm yesterday after a dramatic day of sales that caught even the developer by surprise.
It was estimated that at least 20 buyers on average were competing for each unit at the 99-year leasehold Alexandra Central, while a shop space on the third storey had as many as 155 interested buyers submitting blank cheques for a ballot.
"I had strong confidence in the project but didn't expect it to do so well," said Chip Eng Seng group chief executive Raymond Chia.
The units were sold at between $4,000 and $8,000 per sq ft, said a spokesman from CEL Development, Chip Eng Seng's property arm.
Alexandra Central is next to Ikea and on the site of the former Safra building in Alexandra Road. CEL Development paid $189 million, or $789 psf per plot ratio, for the 85,517 sq ft site in 2011.
The project includes 31 food and beverage retail units and 85 shop units. The largest shop unit in the project was not launched for sale yesterday.
Mr Chia said Alexandra Central received an unexpectedly high level of interest when it was opened for preview over the weekend.
"We initially planned a soft launch on Wednesday but because the response was so overwhelming we decided to bring it forward to Monday," Mr Chia added.
When The Straits Times visited the showflat yesterday afternoon, it was packed with agents and buyers, some of whom had been there as early as 9am.
Some were genuine end-users hoping to secure shop space before prices rose further, while others said they were interested in investing in commercial property.
Investors were drawn to the project because of the recent cooling measures imposed on the residential and industrial sectors.
Alexandra Central will include a 450-room hotel managed by Park Hotel Group. Construction is expected to be completed by June 2016.
Source: The Straits Times –22 January 2013
COMMERCIAL MARKET
Four shophouses up for auction in Kampong Glam
Four conservation shophouses in North Bridge Road will go under the hammer next week.
The shophouses, which are in a commercial zone within the historic Kampong Glam district, are among the few freehold commercial properties in the area.
The owners, a group of private investors, are selling the four shophouses as a single entity by auction on Wednesday.
This is because the four properties sit on two titles, making it difficult to sell separately.
He said: "The owners want to divest these properties to re-invest capital."
Sitting on a 5,765 sq ft site, the properties have a total floor area of about 9,600 sq ft and are surrounded by mixed-use developments like Bugis Junction, Bugis Plus and Key Point.
They are also near the upcoming Downtown Line and the site of the upcoming five-star hotel at the DUO project in Ophir Road.
The five-star hotel, which is expected to be completed in the second quarter of 2017, is being built by M+S, a 60-40 joint venture between Malaysia's Khazanah Nasional and Singapore's Temasek Holdings.
Source: The Straits Times –19 January 2013
Speculators may turn to commercial property
Buyer interest in commercial property is growing in the wake of last week's cooling measures, which included curbs on red-hot industrial property.
Experts said commercial property, as yet untouched by any of the seven rounds of cooling measures, could become the new target segment of speculators.
All eyes are now on upcoming launches of office and retail space, which analysts said could be oversubscribed.
The industrial cooling measures consist of a seller's stamp duty, imposed for the first time on the sector.
It ranges from 5 to 15 per cent and applies to industrial property or land sold within three years of purchase.
This is meant to dampen speculative activity in the industrial segment, where prices have doubled over the past three years.
But analysts suggested this was like plugging a leak only to have another spring up.
This time round, the seller's stamp duty for industrial property could drive speculative activity into other sectors, notably commercial and retail, analysts said.
Consultants said the level of buyer interest in the launch of SBF Center as well as that of upcoming Alexandra Central will be a good indicator of whether demand has shifted towards the commercial segment.
SBF Center, developed by Far East Organization, is next to Capital Tower and is expected to launch early next month.
Alexandra Central is a 99-year leasehold mixed development by Chip Eng Seng, located next to Ikea on Alexandra Road. It is expected to launch within the next few weeks.
Chip Eng Seng's property development and investment arm CEL Development paid $189 million for the 85,517 sq ft site in December 2011. This works out to $789 psf per plot ratio.
The strata shop units at Alexandra Central are likely to be $5,000 to $7,000 psf while strata office units at SBF Center are likely to go for $2,400 psf or above, according to The Edge magazine.
Source: The Straits Times –19 January 2013
Chinatown grows in commercial appeal
There is a buzz in Chinatown and not just because it is the festive season.
Property has become the new talk of the town in the past few months, particularly commercial real estate.
The heritage-filled district has just received a major boost with the opening on Wednesday of the 16-storey Parkroyal on Pickering hotel and launch of the revamped Chinatown Point mall.
The 367-room hotel, which was built for $350 million, is owned and managed by Pan Pacific Hotels Group, a unit of UOL, a firm controlled by billionaire banker Wee Cho Yaw.
Right next door is Chinatown Point, which officially opened its doors barely a week ago after a $90 million facelift to revitalise the complex's 20-year-old interior and facade.
It houses 170 shops, luxury watch retailer Cortina, and anchor tenants Daiso and FairPrice across five floors.
Chinatown Point is owned by a consortium which includes Perennial Real Estate Holdings, German fund manager SEB, NTUC FairPrice and Singapore Press Holdings.
But these two big openings are just the icing on the cake.
Interest in Chinatown's commercial segment has been growing, say property analysts, especially with the shift in investor focus towards non-residential property seen last year.
Source: The Straits Times –19 January 2013
INDUSTRIAL MARKET
Industrial property prices tipped to slide
Industrial firms planning to expand will benefit most from the property cooling measures imposed last week, according to market experts.
They predict that prices of industrial property will slide in the wake of the new seller's stamp duty, which is expected to curb speculation.
That in turn will help lower business expenses as occupancy costs decrease, alleviating some of the impact from the slowing economy.
Industrial property sold within a year of its purchase will be levied 15 per cent; 10 per cent if sold in the second year and 5 per cent in the third year.
Bloomberg reported yesterday that industrial building sales are likely to drop by 10 per cent this year as speculators are driven out of the market.
Deputy Prime Minister Tharman Shanmugaratnam said last week that evidence of flipping compelled the Government to intervene in the industrial segment.
Analysts welcomed the measures as Singapore needs to retain its cost advantages to remain attractive as a business hub, the Bloomberg report said.
Source: The Straits Times –18January 2013
COMMERCIAL MARKET
21% stake in Orchard Towers up for sale
A 21 PER CENT strata interest in Orchard Towers comprising prime freehold retail and office space is up for grabs by tender, with an asking price of about $190 million.
Selling the stake is a subsidiary of Sinarmas Land Ltd (previously known as Asia Food & Properties) called Golden Bay Realty, which is looking to part with the stake as a whole, or split it into three components: the retail space, offices in the front tower, and offices in the rear tower.
If purchased in whole, the stake would represent the single largest interest in Orchard Towers, which is made up of two towers and also has residential spaces.
The stake offered here comprises 21 retail units and 37 office units with a strata area of 7,449 square feet and 70,536 sq ft, respectively, which are located at the front tower along Orchard Road.
A single strata title of 50,084 sq ft of office space is located at the rear tower, along Claymore Road.
For parties interested in just the retail space, Sinarmas is hoping to sell it at about $3,000 per square foot (psf). For the office space, it hopes for a price just under $2,000 psf.
Orchard Towers was completed in 1973. The property has an existing strata area of 595,066 sq ft over 25 floors and 361 carpark lots.
The tender exercise will close on Feb 27 at 3pm.
Source: Business Times –17 January 2013
Office space likely to draw investor interest: Report
Office space is likely to attract interest from investors in an uncertain year for property here, a new report said.
The overall outlook is cautious given the uncertain global economy and last week's tough new property cooling measures.
It said investors may look to office space given the "compelling low interest rate environment" and high policy risks in the residential sector.
The sound financial structure, business-friendly policies and Singapore's status as a financial hub are also likely to spur investor demand for office space here, it added.
On the industrial front, the market is expected to take a step back to assess the impact of the new seller's stamp duty imposed by the Government on industrial properties sold within three years of purchase.
The duty, ranging from 5per cent to 15 per cent, was introduced last week to rein in industrial property prices and discourage short-term speculation.
Sales in the retail space market are expected to be uncertain, as a tighter labour force and weaker discretionary spending by locals amid the bearish economic outlook would put a lid on retailers' expansion - softening demand for retail space.
Rents of prime retail space in the shopping district of Orchard Road are also expected to decline by 3 per cent to 5 per cent this year, as 340,000 sq ft is set to be added to the supply of retail space there.
The report added that investment activity would be led by the sale of government land sites, as 54 land parcels were earmarked for the first half of the year under the Government Land Sales programme.
Source: The Straits Times –17 January 2013
COMMERCIAL MARKET
4 North Bridge Rd shophouses to be auctioned
Four freehold shophouses along North Bridge Road have been launched for sale by public auction.
The shophouses, bounded by Kandahar Street and Aliwal Street and within the Kampong Glam conservation area, will be sold together; they have been tagged with an indicative asking price of $15.5 million.
The units, at 762, 764, 766 and 768 North Bridge Road, will be sold with existing tenancies, which expire between March this year and July next year.
The four units now house an Internet cafe, a wellness centre, a travel agency, an apparel store and a photography studio - five businesses because one of the units is sub-divided.
The shophouses sit on a site of approximately 5,765 square feet (sq ft) and have a total floor area of approximately 9,600 sq ft.
The shophouses sit amid mostly two-storey conservation commercial shophouses, near mixed-use developments such as Bugis Junction, Bugis Plus, Golden Landmark, Sultan Plaza and Key Point.
The sale of the shophouses will not be affected by Seller's Stamp Duty (SSD), Additional Buyer's Stamp Duty (ABSD) and the loan-quantum restrictions recently announced in the government's slew of measures aimed at cooling the property market, because the shophouses have been zoned as commercial units.
The ABSD kicks in only with properties with a residential component; the SSD, which used to apply to residential properties, now also applies to industrial properties.
The site has received interest from three potential Singaporean buyers.
The public auction has been slated for Jan 23.
Source: Business Times –16 January 2013
COMMERCIAL MARKET
Commercial hub shaping up in Jurong Gateway
Jurong Gateway, the area around Jurong East MRT station, is well on the way to becoming a major commercial hub in the western part of Singapore.
Upcoming launches of more shopping malls, a hospital, a hotel and office space will add buzz to the district, which used to be hilly jungle land dotted with prawn ponds and crocodile- infested rivers.
But analysts note that the area has few private residential projects, with most condominiums being nearer to the Lakeside district, west of Jurong Gateway. The only private condo homes are the 280-unit Westmere, an executive condominium launched in 1996, and Ivory Heights, a former HUDC project.
But a new condo is on the cards. A residential site at Boon Lay Way, launched last April, attracted 12 bids, with the top bid at $705 per sq ft. Analysts said this reflected positive sentiment from developers. The site is estimated to yield 590 homes.
Based on the Government's Master Plan 2008, the 70ha Jurong Gateway is expected to provide 500,000 sq m of office space, 250,000 sq m of retail, F&B and entertainment space and about 2,800 hotel rooms.
But office space is limited, analysts said. The main office buildings in the area are JTC Summit and the CPF Jurong Building.
There is about 1.1 million sq ft of office space, said CBRE Research associate director Desmond Sim.
But this will grow because a 1.1ha site with a potential gross floor area of nearly 700,000 sq ft along Venture Avenue to be developed predominantly for office use is listed on the Government Land Sales confirmed list.
Business parks, retail malls and institutional facilities form most of the existing developments in Jurong Gateway.
Business parks completed in the past five years include 1A International Business Park, Icon@IBP and 29A International Business Park.
Among retail malls, Jurong Entertainment Centre was recently refurbished and renamed JCube. It features an Olympic-size ice skating rink, and is the latest commercial development in the area. The IMM mall is also undergoing a $30 million revamp to become an outlet centre, set for completion in the middle of this year.
New malls being built include Jem by Lend Lease, Westgate by CapitaLand and the Big Box Retail development by TT International.
Jem and Westgate will offer new office supply. Jurong Gateway will also get a new hospital and hotel. The 700-bed Ng Teng Fong General Hospital is slated for completion next year. Also, the first hotel site in Jurong was awarded last November to Tamerton, a unit of Genting Singapore. This site has a potential gross floor area of about 204,500 sq ft.
Analysts are positive on the outlook for the area, though they warn that congestion could become a problem.
Source: The Straits Times –12 January 2013
INDUSTRIAL MARKET
Stamp duty for industrial property sold within 3 years
A seller's stamp duty (SSD) is being introduced on industrial properties for the first time, as the government tries to rein in market speculation that has caused a doubling in prices over the past three years, outpacing rental increases.
Specifically, a respective SSD of 15 per cent, 10 per cent, and 5 per cent will be imposed on industrial properties sold within the first, second, and third year of purchase.
The SSD will apply for industrial properties and land bought on or after Jan 12, 2013.
Speculation was cited as the key reason for the introduction of the cooling measure.
In 2011 and the first 11 months of 2012, about 15 per cent and 18 per cent respectively of all transactions of multiple-user factory space were resale transactions carried out within three years of purchase. This compares with the average of about 10 per cent from 2006 to 2010.
The spillover of speculative demand has largely been from the residential market, which saw a range of cooling measures including SSD, more stringent loan-to-value ratios, and an additional buyers stamp duty.
Source: Business Times –12 January 2013
INDUSTRIAL MARKET
Investors make a bundle from trading in strata factories
About 60 per cent of the 618 units of 60-year strata factories sold in the secondary market last year and for which previous sale records could be traced, had been last sold in 2010 or 2011.
5.8 per cent of the 618 units (36 units) changed hands faster: they were bought last year and resold or subsold before the year was out.
By going through the Realis' caveats database of the Urban Redevelopment Authority (URA), 1,136 caveats involving secondary-market transactions last year that were resales and subsales of 60-year strata factory units.
Nearly all those who bought and then sold the 618 units - 99.7 per cent - made money. Only two transactions (0.3 per cent) incurred a loss.
The two loss cases involved units that had been bought in 2011.
The profit or loss was calculated as the difference between the sale and purchase price, without taking into account transaction costs and other expenses.
Among the 616 profitable deals, the average profit was 47 per cent, or $262,636.
The biggest gains were made by investors who waited the longest before selling their units last year: The owners of the 73 units bought in 2007 gained, on average, 85 per cent or $406,160.
This group was followed by those who bought their units during the 2009 economic downturn and divested their properties last year, reaping an average gain of 64 per cent or $366,208.
The elevated prices paid for the 177 units bought in 2011 and offloaded last year at a gain trimmed profits for their sellers to 27 per cent or $166,795 on average.
Finally, investors who bought the 36 strata factory units last year and flipped them in the same year all managed to make a gain, but their profit margin thinned to 15 per cent or $86,797 on average.
The industry makes a distinction between subsales and resales in secondary-market deals. Subsales are sale transactions for projects which have yet to receive a Certificate of Statutory Completion (CSC) and where property titles for units sold have yet to be transferred to the buyers; resales refer to transactions involving projects for which CSCs and titles have been issued.
The most popularly traded project in the secondary market last year - at least among those for which caveats of previous transactions could be traced - was Harvest @ Woodlands in Woodlands Industrial Park E5, with 58 units.
Rounding off the top four developments were Midview City in Sin Ming Lane, Tradehub 21 in Boon Lay Way and Northstar@AMK, with 43 deals each.
The most profitable secondary-market deal among the 618 was for a unit in Woodlands Bizhub. This was bought in July 2009 for $1.01 million and transacted again last February for $2.47 million, yielding a gain of $1.46 million.
With fourth-quarter deals still to be fully counted, 4,392 caveats had been lodged for 2012; the final quarter could bring the final tally to around 4,700, still shy of the 5,183 in 2011.
Data from the URA indicates that around 27 million sq ft gross floor area of industrial space is expected to be completed this year.
The major projects expected to be completed this year include North Spring Bizhub (1.25 million sq ft) and Woodlands 11 (869,000 sq ft).
Source: Business Times –10 January 2013
COMMERCIAL MARKET
Mohd Sultan shophouse up for sale
A 999-YEAR leasehold conservation shophouse at 15 Mohamed Sultan Road has been put up for sale by its owner with an asking price of $15.5 million.
This works out to about $2,259 per square foot based on the property's existing's gross floor area (GFA) of 6,862 sq ft spread across three storeys and an attic.
Under Master Plan 2008, the property, which has land area of 2,606 sq ft, is zoned for residential use with commercial on the first storey and has a 3.8 plot ratio.
Based on this, there is potential to build a further GFA of about 3,000 sq ft at the rear, which would take the property up to five storeys. Based on the maximum 9,903 sq ft GFA and assuming it costs about $2 million to build this (development charge is not payable), the $15.5 million asking price translates to $1,767 psf on GFA.
Located about 300 metres from the upcoming Fort Canning MRT Station on the Downtown Line, 15 Mohamed Sultan is just off River Valley Road and close to the Singapore River.
The tender closes on Feb 20.
Source: Business Times –8 January 2013
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
COMMERCIAL MARKET
Rents for top-grade offices fall
Average rents of Grade A offices in the Central Business District (CBD) declined a modest 0.9 per cent in the fourth quarter, propped up by steady demand amid limited supply.
The creme de la creme office space, also known as Grade AAA, in the Marina Bay precinct once again showed the highest quarterly drop of 3.4 per cent to $10 per sq ft (psf) per month. This takes the fall for top-grade office space in Marina Bay to 14.9 per cent for the whole year.
On the other hand, other Grade A building rents softened by 3.3 per cent year-on-year on the back of healthy occupancy rates.
Overall, the monthly rents of all Grade A offices averaged $8.31 psf during the quarter, representing a dip of about 5 per cent from $8.72 psf a year ago.
Meanwhile, vacancy rates for CBD Grade A offices improved to 7.8 per cent from 8.1 per cent in the previous quarter.
Better occupancies were recorded in most areas, except for those around Beach Road and Middle Road as well as in the vicinity of City Hall. Beach Road offices saw vacancy rates edge up 0.5 per cent to 4.2 per cent by the end of this month, while City Hall suffered a sharp deterioration due to the more than doubling of vacant stock after Citibank vacated its premises in Millenia Tower.
Demand for CBD Grade A office space for the full year has been healthy, with a net take-up of almost 1.3 million sq ft.
This is equivalent to all the space at Marina Bay Financial Centre Tower 3 or half of the space at Suntec City office towers.
A total of about 2.5 million sq ft of office space, mainly from The Metropolis and Asia Square Tower 2, is expected to enter the market next year. So far, these new developments have a pre-commitment level of only about 20 per cent. As a result, the office leasing market is expected to face some challenges when these two developments are completed in the second half of 2013.
Demand for space may also come from tenants relocating from old buildings scheduled for redevelopment in the Robinson Road, Shenton Way and Tanjong Pagar areas in the coming years, like Keppel Towers, GE Tower, Robinson Towers and International Factors Building.
Source: The Straits Times –29 December 2012
INDUSTRIAL MARKET
Woodlands industrial plot on reserve list
A 3.9-HECTARE industrial plot at Woodlands Ave 12 has been made available for application on the reserve list of the Government Industrial Land Sales Programme.
Located next to OKH Holding's Woodlands Horizon, the site, which is zoned Business 1, can be developed for various uses, such as light industry, clean industry, utilities or telecommunications.
The 30-year leasehold site has a maximum gross floor area (GFA) of about 1,055,645.3 square feet (sq ft) and a maximum building height of 61 metres above mean sea level.
Under the government's reserve list system, the land parcel will be released for sale only if the criteria for triggering of the site are met. However, consultants say that it is unlikely the site will get triggered.
Located along Woodlands Ave 12 are three sites - Woodlands 11, which was sold to Boon Keng Developments in April 2010 (GFA 868,628 sq ft, abutting sites Woodlands Horizon and Primz Bizhub, which were sold to OKH Holdings in 2011 (combined GFA of about 1.06 million sq ft). All three sites have a 60-year leasehold tenure and are zoned Business 1.
Earlier this month, a site off Woodlands Ave 10 (GFA 288,069 sq ft) received a top bid of $31.7 million from Bohai Investments (Sengkang) and Punggol Drive Investments.
Source: Business Times –29 December 2012
New supply may dampen prices next year
Industrial property has enjoyed a red-hot year but whether this can continue next year remains a question mark.
Analysts point to an increase of new supply next year that could cool the sector that has logged one of its best years in recent times.
Take prices. Industrial property values easily overtook residential prices in terms of growth rate.
They shot up a startling 26.7 per cent from the start of the year to the end of the third quarter, based on the Urban Redevelopment Authority's (URA) industrial property price index.
Prices in the July to September quarter were 31.7 per cent higher compared with the corresponding period a year earlier.
Multi-user factory prices shot up 32.7 per cent in the third quarter compared to the same period last year and they are up by at least 27.9 per cent since the start of the year.
Prices for multi-user warehouses followed closely, climbing 27.9 per cent in the three months to Sept 30 over the preceding period last year. Prices in this segment rose 20.9 per cent in the first nine months of this year.
The contrast with the private residential market could not be starker with prices for new housing units up a minuscule 0.6 per cent year-on-year in the third quarter.
Office sector prices rose 1.9 per cent in the third quarter year-on-year while shop values were up 1.1 per cent.
The story for industrial rents was more subdued. They rose 6.4 per cent in the third quarter from the preceding year, and have climbed 6 per cent over the first three quarters of this year.
Sky-high industrial property prices mean rental yields have been severely compressed.
Despite industrial property's apparent popularity, the number of strata industrial transactions in the first 10 months of this year was lower than that in the corresponding period last year.
Notable industrial developments across the island include the 15ha Paya Lebar iPark, a pilot project by JTC that incorporates green spaces and specially designed buildings. There are also Alexandra Technopark and Mapletree Business City in the west, and projects such as UE Bizhub at Changi Business Park in the east.
Who is buying
Based on caveats lodged with the URA, around a quarter of the purchases made this year were by individual Singaporeans.
Companies accounted for 70.6 per cent of industrial property purchases as of October this year.
The URA caveats do not include transactions with incomplete information.
Some individuals use a goods and services tax-registered company to acquire strata industrial units so as to claim tax relief, he said.
Why prices are rising
The steep price rises for industrial property occurred as several rounds of cooling measures in the residential property market directed investors to look at alternatives.
But analysts say there were other reasons why investor demand for industrial properties has soared.
It is not just investors who are buying. Industrialists also want to purchase their own premises to gain more control and certainty over their real estate costs in the face of rising rentals when their leases expire.
The surge of interest from both investors and genuine industrialists has allowed sellers and developers to demand higher prices.
Outlook
The pace of price increases may slow next year if the Government acts further to rein in the runaway market, analysts noted.
The Government said in June this year that units must be at least 150 sq m in multi-user developments released under state tenders.
Another factor to watch out for is the upcoming supply, said Mr Lee, noting that more than 10 million sq ft of multi-user industrial space is expected to go on the market in the next few years and most of that will be completed next year.
The weak global economy could also weigh down manufacturing and exports, and make industrialists more cautious in buying up more factory space.
Source: The Straits Times –31 December 2012
INDUSTRIAL MARKET
JTC releases 3 industrial sites for public tender
JTC Corporation has put up for public tender the final batch of sites in the Confirmed List under the Industrial Government Land Sales programme for the second half of this year.
The latest three plots, among 16 released over that period, are in Ubi Avenue 4, Tuas South Avenue 10 and Tuas South Street 8.
The Ubi site is zoned for Business 1 development, usually intended for light and clean industrial use, while the Tuas sites are zoned for Business 2 development, which allows for heavier industrial use.
The plot in Ubi Avenue 4 is 0.35 ha in size with a lease of 30 years and a maximum permissible gross plot ratio of 2.5.
Analysts say this site is of note because of its favourable location and fair proximity to the Tai Seng and MacPherson MRT stations.
They expect offers ranging from $110 to $160 per square foot per plot ratio (psf ppr) from between five and 10 bidders.
The land parcel in Tuas South Avenue 10 is a 3.96-ha plot with a tenure of 30 years and a maximum permissible gross plot ratio of 1.4.
Top bids could come in at $50 to $95 psf ppr, market watchers noted, with three to eight offers.
The analysts mostly expect interest from developers.
(The plot is roughly the size of five to six football fields.)
The final plot, a 0.3-ha parcel in Tuas South Street 8 referred to as Plot 10, will have a lease of 22 years five months and a maximum permissible gross plot ratio of 1.0.
Analysts expect bids of between $55 and $70 psf ppr with keen interest, going by the recent bidding activity for land in the area. Predictions ranged from five to 18 bidders.
The last two plots in Tuas South Street 8, awarded last week, drew 24 bids in all, JTC figures showed.
More than 70 offers were put in for eight other parcels of land in the vicinity in two tenders launched in June. Among them were the plots on either side of Plot 10, with winning bids of $34.58 psf ppr and $44.35 psf ppr.
The latest tender will close on Feb 7 at 11am.
Source: Business Times –28 December 2012
COMMERCIAL MARKET
Two commercial sites in Jurong, Cecil St released
The government has released the final two commercial sites for the second half 2012 Government Land Sales (GLS) programme.
One is a confirmed list site near Jurong East MRT Station that has been launched for sale by public tender, while the other is a plot at Cecil Street/Telok Ayer Street that is available for application for sale under the reserve list.
The Urban Redevelopment Authority (URA) said yesterday that the bulk of the space developed on both sites has to be set aside for office use. In addition, it is allowing strata sub-division of offices for the Jurong plot but not for the Cecil Street site.
On Venture Avenue in Jurong East, URA's 1.1-hectare confirmed list plot will be the site of the third major office development in the Jurong Gateway location to be released since 2010. This is part of URA's plan to create the biggest commercial hub outside the CBD.
The latest site can yield a 25-storey project with a maximum gross floor area of 694,939 square feet, of which at least 90 per cent must be for office use.
Property consultants expect the site to draw five to eight bids.
In June 2010, LendLease clinched a nearby white site for $650 psf ppr on which it is now developing Jem. In May 2011, CapitaMalls Asia (CMA), CapitaMalls Trust and CapitaLand teamed up to bag another white site nearby for $1,012 psf ppr, on which it is developing the Westgate project. Both projects are mixed office and retail developments.
For the Westgate and Jem sites, URA specified minimum office components of 40 per cent and 30 per cent, respectively.
URA said the latest site will contribute to the development of more affordable office spaces in Jurong to cater to users who do not need a central business district location.
However, market watchers expect moderate demand for the subject site owing to its less-than-optimum location and high quantum for commercial space.
A URA spokesman said the planning authority is allowing the flexibility to strata sub-divide for sale the future development on the Venture Avenue site to ensure there is a variety of office space available outside the CBD to meet different business needs.
"This will provide SMEs the opportunity to purchase their own office space to better manage operating costs," URA said.
It said that while there is no minimum office unit size control for the Venture Avenue site, the proposed office layout will be evaluated to ensure that it is in line with the typical quality office layout that meets the needs of genuine office end users at the development application stage.
URA also noted that the two earlier developments in the Jurong Gateway area, Jem and Westgate, will provide office space that will cater mainly to tenants with large space requirements.
However, URA is not allowing strata sub-division of individual units within the future project at the Cecil Street site.
Noting that the site is zoned for commercial and open space use, URA said a single owner can better integrate and manage the future commercial building with the public open space fronting the prominent Cecil Street/Telok Ayer Street junction.
The 0.8-ha plot, which can generate a 50-storey development with a maximum GFA of 830,510 sq ft, is situated just across the road from SBF Center (formerly known as The Index), which was sold in September 2011 for $882 psf ppr.
Within the CBD, an estimated 7.6 million sq ft of office space is expected to be completed from 2013 to 2017, she pointed out. M+S Pte Ltd, a consortium of Khazanah Nasional and Temasek Holdings, has committed to developing some 2.9 million sq ft of office space in Marina One (situated in Marina Way/Straits View) and Duo 2 (located in Ophir Road/Rochor Road), which are envisaged to be ready by H1 2017.
Source: Business Times –20 December 2012
INDUSTRIAL MARKET
Tighter building rules on sites for industrial use
Tighter development measures are being introduced for certain industrial sites, even as the government rolls out more land in an attempt to moderate industrial land prices.
Specifically, successful bidders of selected sites will be required to build a minimum number of large factory units to cater to the needs of SMEs who need larger industrial spaces, said the Ministry of Trade and Industry (MTI).
This announcement came on the back of MTI announcing that a total of 22 sites - comprising 13 sites on the confirmed list and nine sites on the reserve list - with total site area of 24.84 hectares has been set aside for industrialists.
This is comparable to the 19 sites - 16 sites on the confirmed list and three on the reserve list which totalled 23.72 ha - released in the second half of this year. In 2012, a total of 47.69 ha of industrial land was released; this is about 1.4 times than that released last year.
Of the 13 plots on the confirmed list, eight are less than 1.0 ha; six small sites (each less than 0.5 ha with a plot ratio of 1.0 and land tenure of 22 years) in Tuas South have also been released.
Tenders for this type of land plot in the last six months have attracted five-19 bids per site. Specifically, plots 9 and 11 in Tuas South Street 8 were sold between $35 and $44 psf ppr in September. The top bid rose to $68-78 psf ppr for Plots 8 and 18 on the same street by December.
There are nine sites on the reserve list. Notably, five small sites (on Tuas South Street 6 and Street 8) have debut on the reserve list.
Source: Business Times –20 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
COMMERCIAL MARKET
UEL buys Anson Road block for $410m
Infrastructure firm United Engineers (UEL) is buying a commercial block in Anson Road for $410 million.
The company has acquired the 23-storey property from the Central Provident Fund Board and fellow owner 79 Anson.
The block, known as 79 Anson Road, is linked to Tanjong Pagar MRT station and was valued by Colliers International at $430 million.
It is 99 per cent occupied, with technical consultants Kellogg Brown & Root Asia Pacific the anchor tenant.
UEL said in a statement yesterday that the Anson Road acquisition, which will be its first commercial property within the central business district, will provide a stable rental income with potential to increase rates.
It added that there is potential for capital growth given the property's location near the port land - at Tanjong Pagar, Keppel and Pulau Brani - which has been earmarked to become a waterfront city.
This deal also helps UEL build up a more stable base of rental income to smoothen its fluctuating development profits.
UEL, which formed the wholly owned unit UE Development (Anson) to make the transaction, said the purchase is not expected to have a material impact on the earnings per share and net tangible assets per share for this financial year.
Source: The Straits Times –18 December 2012
COMMERCIAL MARKET
79 Anson Rd on verge of being sold for over $400m
At least one major office block transaction could be sealed before the year ends, BT understands. A deal is close to being stitched for 79 Anson Road, with both owners - German fund manager SEB and Central Provident Fund Board - selling their space.
Expectations are running high that the price will cross $1,400 per square foot based on the freehold building's existing gross floor area (GFA) of 289,185 square feet (sq ft). On a lumpsum basis, this would translate to $405 million or more. Assuming the price is in the $400-410 million range, this represents $2,000-2,050 psf based on the building's current net lettable area (NLA) of around 200,000 sq ft, say market watchers.
Industry watchers tipped United Engineers group as a possible buyer of the 23-storey tower. Others which had been in the running earlier are said to include Sun Venture.
Market watchers compare the pricing for 79 Anson Road to that for Tower 15 in Cantonment Road, which Fragrance Group bought in May this year for $1,420 per square foot per plot ratio (psf ppr) based on the building's existing GFA. Tower 15 is also freehold.
Fragrance is said to be exploring the possibility of redeveloping Tower 15 into strata office and shop units for sale. Some residences may also be included.
The buyer of 79 Anson Road could potentially redevelop the site in the mid to long term, depending on market conditions closer to when the last of the building's existing leases run out in 2016, say analysts.
Its 289,185 sq ft existing GFA is higher than the 236,566 sq ft based on the 8.4 plot ratio designated for the site under Urban Redevelopment Authority's Master Plan 2008. The site, with a land area of 28,163 sq ft, is zoned for commercial use and can be built up to 35 storeys. Most property market watchers reckon the building can potentially be rebuilt up to its existing GFA without any development charge payable to the state.
However, 79 Anson Road's new owner may also be keen on keeping the office block as a long-term investment property generating steady rental income. Located some 250 metres from Tanjong Pagar MRT Station, the building was completed 20 years ago. A major draw is its generous carpark provision, with 145 lots on levels 2-4.
SEB's space, on Levels 1 and 5-15, adds up to 117,423 sq ft in strata area. CPF Board owns 100,007 sq ft comprising eight office floors (levels 16-23) along with a ground-floor retail unit fronting Anson Road.
The most recent transaction of an office building in the vicinity is Mapletree Commercial Trust's (MCT) proposed purchase announced earlier this month of Mapletree Anson from a unit of its sponsor, Mapletree Investments. MCT will be paying $680 million or $2,049 psf based on its NLA of 331,854 square feet. Some market watchers have hailed it as the first acquisition of an office asset in Singapore undertaken by a real estate investment trust without income support or yield stabilisation structure.
Mapletree Anson's pricing is slightly lower than the $2,121 psf (without yield stabilisation support) that CapitaCommercial Trust paid earlier this year for the next-door Twenty Anson.
It acquired the property from LaSalle Investment Management's Asia Opportunity III fund.
Both buildings are on sites with remaining leases of about 94-95 years.
In late September, a property fund managed by Alpha Investment Partners acquired a half stake in 78 Shenton Way from a global fund managed by Germany's Commerz Real.
That deal valued 78 Shenton Way at $608 million, or $1,686 psf on NLA. The property is on a site with a remaining lease of about 70 years.
In July, Sun Venture clinched Robinson Point, a freehold 21-storey office block, from a fund of US-based AEW. The deal valued the asset at $284 million or $2,132 psf on NLA.
Source: Business Times –12 December 2012
COMMERCIAL MARKET
COMMERCIAL MARKET
Six prime office units at Samsung Hub up for sale
Six strata office units have been put up for sale on the 17th floor of Samsung Hub, a 999-year-leasehold, Grade A office block on Church Street, near Raffles Place.
The units have strata areas ranging from 883 sq ft to 3,595 sq ft, adding up to 13,132 sq ft. Their absolute price quantums range from $3 million to $12 million.
Their owner, Church Street Holdings, has put the units up for sale.
"We've had agents calling us, giving offers of $3,300-3,500 psf, so we decided to conduct the tender in a fair and transparent manner. If we get offers around those price levels for all or most of the six units, we will consider selling. Otherwise, we're happy to hold on to our investment," said Kishore Buxani, managing director of Buxani Group, one of the shareholders of Church Street Holdings.
The highest price achieved for an entire floor in Samsung Hub is $3,000 per square foot for level 16, which spans 13,132 sq ft. It changed hands for $39.396 million last December.
The tender for the six units will close on March 15.
Samsung Hub, which was completed in 2005, has a total strata area of 299,753 sq ft in a 30-storey office block, with a six-storey podium for 178 carpark lots.
Source: Business Times –19 February 2013
INDUSTRIAL MARKET
Two JTC industrial sites put up for tender
JTC Corporation has launched two plots of industrial land at Buroh Crescent and Tuas Bay Walk for sale by public tender.
The two plots are the first to be launched out of the 13 sites in the confirmed list under the Industrial Government Land Sales (IGLS) programme for the first half of 2013, JTC said yesterday.
The land parcel at Buroh Crescent has an area of 1.77 hectares (ha) and is zoned for Business 2 use. It has a 30-year lease and a maximum permissible gross plot ratio of 2.5.
The 0.58-ha site at Tuas Bay Walk is also zoned for Business 2 food development. It has a 30-year lease and a maximum permissible gross plot ratio of 1.7.
Earlier this month, JTC awarded a nearby site on Buroh street to a joint venture between Capital Development and ZACD Investments for $82.1 million, or $111.35 psf ppr. This site is bigger at 2.74 hectares.
Tenders for two other nearby sites at Tuas South, also launched by JTC, will close earlier this month, which may put another dampener on bids for this new Tuas Bay Walk site, he added.
Both tenders will close on March 14 at 11am.
Source: Business Times –1 February 2013
COMMERCIAL MARKET
Feb launch for units at Tg Pagar medical centre
Far East Organization is banking on upcoming commercial developments and residences in the CBD area to fuel demand for medical services as it readies to launch 48 units in its Mediplex@SBFCenter for sale next month.
Located near Tanjong Pagar MRT station, the Mediplex@SBFCenter on Robinson Road will occupy the third to fifth levels, with units ranging from 667 sq ft to 1,292 sq ft in size.
Marketing efforts are expected to commence from the middle of next month while the medical centre is slated for TOP by end-2016.
Aside from the medical centre, the SBF Center will feature 197 offices consisting of 192 smaller strata units ranging from 592 to 1,442 sq ft and 10,549 sq ft for five floor plate offices. The Singapore Business Federation (SBF) will relocate its offices as a major tenant and partner.
The medical units in the private healthcare centre are reportedly being marketed at between $3,800 and $4,000 per sq ft (psf) under a 99-year lease.
Medical suites at centres such as Novena Specialist Centre are selling at $4,100 to $4,200 psf, while Mount Elizabeth Medical Centre went at $7,300 psf last October.
"Coupled with the vibrant working population of about 200,000 professionals in the CBD and limited available supply, we see the potential for a dedicated medical suite development to fill the growing demand for medical and healthcare services from both the working and residential population in the heart of the CBD," said Chia Boon Kuah, chief operating officer (property sales) for Far East.
He noted that the Tanjong Pagar area is expected to undergo a transformation in the long term as more residences, hotels, offices and other commercial and lifestyle amenities come onstream.
Far East is targeting specialties such as dentistry, diet & nutrition, licensed traditional Chinese medicine, physiotherapy and others.
"Based on our interactions with doctors, medical practitioners, and medical specialists, we believe there will be demand to own purpose-built medical suites in a dedicated facility within the CBD where there is limited supply of strata-titled units available for sale," added Mr Chia.
Far East, which has a healthcare portfolio that includes Novena Medical Center and Novena Specialist Center, is also setting up another medical centre this year at Pacific Plaza called Scotts Medical Center.
Source: Business Times –29 January 2013
Rentals in suburban malls expected to dip
With the bulk of retail space due to come onto the market located in the suburbs, expect to see slight downward pressure on rents for space in some of these areas.
Prime retail space in the Orchard area, however, is expected to see stable yields due to a more limited supply coming onstream, although some uncertainty over how the area will perform exists, given the global economic climate.
This is the general prognosis experts have of the retail property sector in Singapore.
They also expect investors to show higher interest in strata retail space given the latest cooling measures that hit the residential and industrial property sectors, but note that the bulk of retail space available are owned by single landlords.
Consultants say that an estimated 1.9 million square feet of retail space is set to come onstream this year. The majority of this space is held under a single ownership structure by a commercial developer or reit (real estate investment trust) and is for rental income. As much as 80 per cent of this space is expected to be located in the suburbs.
Orchard Road
2013 is the only year with proposed completion of retail projects along Orchard Road up till 2016. This could help rents to stay stable.
The space has also been well-received. Three projects are expected to be completed in 2013 and they include the AEIs (asset enhancement initiatives) of The Heeren, Orchard Gateway and the redevelopment of 268 Orchard Road.
It was reported that The Heeren will be fully occupied by department store Robinsons, and that Orchard Gateway is already more than half pre-committed, with tenants like Crate & Barrel, Religion, Swatch Megastore and Nike's new concept store called Amplify Women's. The library@orchard will also be situated at Orchard Gateway.
In total, the three projects are likely to result in a 5 per cent increase in retail space along Orchard Road, less hefty than the 15 per cent increase in retail space seen in 2009, which saw the addition of malls like Orchard Ion, Orchard Central and 313@Somerset.
But there are other factors that impact rents of retail space, such as foot traffic and retailers' ability to generate sales.
And while retail sales this year are generally expected to be augmented by fairly healthy tourist arrivals on the back of new and reinvented visitor attractions in Singapore, there are risks surfacing for the Orchard shopping belt.
Jurong Gateway
Much of new shop space that will come onto the market this year will be located in the Jurong Gateway area, which will see two new malls spring up. Jem, by Lend Lease, has an estimated shop gross floor area (GFA) of 573,000 square feet. Westgate, a retail cum office development by CapitaLand, will offer an estimated shop GFA of 426,000 sq ft.
The malls are reportedly over 80 and 50 per cent leased, respectively, ahead of their expected opening.
The new malls may lead tenants of existing malls in the west to take flight from their current place of residence
Over the longer term, however, these existing malls that are differentiated from the typical mass market malls, such as JCube - which positions itself as an entertainment mall - and IMM - an outlet mall - could help them to retain their niche audience.
Suburban malls are generally able to widen their tenant base as the size and spending power of residential catchments increase. Suburban malls no longer cater purely to retailing low-end daily necessities but have evidently attracted new international retailers. Coupled with strength of management from Reit/funds landlords, prime suburban rents are expected to remain steadfast with an optimistic horizon.
Strata retail
Strata-titled retail space is expected to see heightened interest among investors this year, as a result of the cooling measures introduced by the government to the residential and industrial property markets.
Investors flush with liquidity are likely to support prices of commercial properties, especially in light of the freshly implemented cooling measures which will filter out some investment dollars from the residential and strata industrial markets.
Some new strata retail space is expected to come onto the market, but they do not make up a significant proportion.
Of the 1.9 million sq ft of retail space due to come on stream this year, just 46,630 sq ft, or about 2 per cent, is strata space.
Investors also need to understand the product and consider factors such as the location of the space.
The long term
But while take-up rates at malls, both suburban malls and those located in the Orchard area, appear to be holding up, there exists some longer term challenges that could potentially hit the market.
Discretionary spending by local residents may continue to slide given the uncertain and bearish economic outlook.
The prevailing problems of manpower shortages and the increasing resistance against further rental increases from tenants will all have a bearing on demand, and consequently retail rents.
Some malls are expected to be able to weather these challenges better than others.
New malls that are well-positioned with good accessibility and high foot falls are better considered.
Existing malls that are successful - tried and tested - have a good following, are more likely to have a long list of retailers who are 'waitlisted' to get in. But such strong demand may not be the same across all malls.
Source: Business Times –29 January 2013
COMMERCIAL MARKET
Alexandra Central units put up for quick resale
Some investors are already trying to flip the shop units they bought just days ago at the yet-to-be-completed Alexandra Central, a sign that they had invested in the project hoping to make a quick buck.
A Business Times check showed that at least 19 of the 114 retail units that were sold by the developer last Monday, appeared to be on the market again by Saturday. Only one unit of each size was included in this tally.
On website Commercialguru, agents had, on Saturday, put up listings to sell more than 15 shop units that buyers had previously snapped up. Some of these agents re-posted the listings yesterday.
Property agents have also been sending text messages marketing these units, while at least two advertisements appeared in the Classifieds section of The Straits Times on Saturday.
Prices listed ranged from about $3,720.93 per square foot for a 24 square metre (258 sq ft) unit, to as high as $8,600 psf for a 10 sq m (107.6 sq ft) unit.
Said one property agent: "There are many units at Alexandra Central now on the market, you just have to let me know your budget and my guys will find one for you."
One 15 sq m (161.5 sq ft) retail unit on the third floor, which was bought on Monday at $710,000, was being marketed for sale at $850,000 on Saturday.
Another 18 sq m shop (193.8 sq ft), which was purchased from the developer at $833,000, had agents trying to sell it for $1.02 million.
Late last week, the Urban Redevelopment Authority (URA) indicated that it may extend cooling measures to the commercial property sector if transactions rise above what it deems to be the comfort level.
It said in response to queries from The Business Times: "We are monitoring the various segments of the property market closely, including the commercial sector. We will introduce measures if required to moderate investment demand and prevent over-heating in the property market."
The launch of 99-year leasehold Alexandra Central last Monday featured a packed showroom. All but two of the 116 strata shop units available were sold.
It was estimated that at least 20 buyers on average were competing for each unit, while a shop space on the third storey had as many as 155 interested buyers.
The project's popularity came amid expectations among market watchers that commercial properties are likely to see higher interest following the recent round of cooling measures that hit the residential and industrial markets about two weeks ago.
Shop space went for $4,000 psf to over $7,000 psf at the launch. Alexandra Central consists largely of small shops, with units ranging in size from 10 sq m (107.6 sq ft) to 667 sq m (7179.5 sq ft).
What remained unsold by the developer last Monday was a 102 sq m (1,097 sq ft) food and beverage unit on the second floor of the project, and the largest, 667 sq m unit on the third floor that was not launched for sale - though agents were trying to gather interest in the unit.
Agents were still trying to sell both units yesterday.
When completed, Alexandra Central will be located next to Ikea and on the site of the former Safra building in Alexandra Road. The overall development includes a 450-room hotel managed by Park Hotel Group. Construction is expected to be completed by June 2016. It is developed by Chip Eng Seng.
Source: Business Times –26 January 2013
Commercial property in Changi up for tender
A freehold commercial property at the corner of Changi Road and Lorong 105 Changi has been put up for sale by tender.
No 160 Changi is offered for sale on a vacant possession basis. This came after its owner, AIA Singapore, shifted operations that used to be housed there up until late last year to its other properties in Singapore.
No 160 Changi is currently a 4-storey building with two basement levels that include 23 carpark lots. It sits on a site area of about 18,000 square feet (sq ft) about 300 metres away from Eunos MRT station and has a permissible gross plot ratio of 3.0.
No development charge is payable on the property.
A hotel could also be considered for the site, subject to approval by the relevant authorities, due to its commercial zoning.
This is the first significant freehold commercial property with potential for redevelopment to be launched this year, and the buyer will benefit from recent property cooling measures, which have largely spared commercial properties.
Furthermore, the buyer can gain from the upcoming Paya Lebar commercial hub nearby, which has 12 hectares of space available for development.
Recent projects in the vicinity prior to that, including the Icon@Changi, Wis@Changi and Centropod@Changi, were able to fetch prices from about $2,300 per square foot (psf) to $4,300 psf.
The tender will close on March 8 at 4pm.
Source: Business Times –28 January 2013
INDUSTRIAL MARKET
First drop in industrial property prices in three years
Industrial property prices fell unexpectedly in the last quarter of 2012 - the first decline in three years and a sign that caution is taking hold among investors.
Prices dipped 0.7 per cent in the period compared with the previous three months after climbing for 12 straight quarters, according to the Urban Redevelopment Authority (URA) yesterday.
Overall, the URA industrial property price index rose 25.8 per cent last year from the preceding year, lower than the 27.2 per cent year-on-year increase in 2011.
The index is now 14per cent above its previous historic peak in the first quarter of 1997.
Analysts said industrial prices could moderate this year due to the seller's stamp duty imposed on the sector two weeks ago.
The overall price decline in the fourth quarter surprised experts, as values for multi-user warehouses shot up 9.4 per cent over the same period from the preceding three months.
The rise in warehouse values was outweighed by a surprise 2.7 per cent sequential decline in prices of multi-user factories after they rose a sharp 10.1 per cent from the second quarter to the third.
Analysts said factory demand could have softened due to a weaker economic outlook.
Manufacturing output has fallen sequentially for the past three quarters and anticipated factory orders have shrunk every month since July.
Stiffer competition due to a spate of new industrial launches also led developers and sellers to lower their price expectations.
But while industrial prices fell, rents rose 3.9 per cent in the fourth quarter from the preceding quarter, outstripping the 1.2 per cent quarter-on-quarter rise in July through September.
Analysts said they expect industrial prices to moderate or flatten in the short term, due partly to the seller's stamp duty.
Analysts also flagged a possible oversupply this year and in 2014.
They pointed to the URA's quarterly report yesterday which said that 31.2 million sq ft of new supply will come onstream this year and 15.6 million sq ft next year.
Source: The Straits Times –26 January 2013
COMMERCIAL MARKET
Drop seen in office space leasing, majority looking for smaller units
Office leasing activity should slow in the coming six months, with demand to be dominated by tenants with smaller space requirements.
Gone are the days where you have major space takers that look at 15,000, 20,000 square feet (sq ft) and above in terms of their take-up.
This can be attributed to two key trends in finance over recent quarters: some of the banks moving their back office operations to suburban regions, and caution about bottom lines given the slowdown in the economy.
Prime rents in Central Business District (CBD) areas are expected to fall 0.5 per cent in the first quarter of this year compared with the previous quarter amid this continued softness. This follows a 0.4 per cent decline in the fourth quarter of 2012.
Demand for serviced offices will stay strong as tenants try to lock in rents at current rates. Serviced offices come fully fitted out and offer flexibility in the form of monthly renewals instead of a usual minimum tenure of two years.
Tenants are keen to explore options with fitted out space which will provide significant cost savings.
The opening up of the legal sector means more foreign law firms will be looking to set up shop here.
Both these groups of potential users are expected to be in for smaller offices of between 1,000 and 5,000 sq ft.
Source: Business Times –24 January 2013
Source: Business Times –24 January 2013
COMMERCIAL MARKET
SBF Center office units see keen interest
SBF Center office units see keen interest
Far East Organisation's SBF Center has been receiving keen interest in the weeks leading up to its official launch, as investors continue to flock to the commercial sector in search of better deals.
BT understands that the office space is being marketed from about $3,300 psf of which those within the $3,300-$3,500 psf range have met with keen expression of interest; the medical suites are being marketed at between $3,800 and $4,000.
Specifically, some interest has been garnered for the whole floor plates (office), which are located around the middle floors.
The 99-year leasehold development features 197 offices - 192 smaller strata units ranging from 592-1,442 sq ft and 10,549 sq ft for five floor plate offices - and 48 medical suites of between 614 and 1,345 sq ft up for sale.
Source: Business Times –23 January 2013
Ho Bee gets ready to reap fruits of Metropolis project
Property developer Ho Bee Investment's efforts to build a strong base of recurring income will start to bear fruit later this year, with the completion of The Metropolis, its one million sq ft Grade A-specification office project directly linked to Buona Vista MRT Station on the Circle Line.
The development's 23-storey Tower 1 is expected to receive Temporary Occupation Permit around July, to be followed a couple of months later by the 21-storey Tower 2.
Talk in the market is that the first few office leases have been inked. Neptune Orient Lines is believed to have signed up for just over 100,000 sq ft. BT understands that the Singapore Exchange (SGX) too has signed a lease for 85,000 sq ft. The bourse operator is believed to be planning a front/back-end split and is expected to keep its front office operations at SGX Centre in Shenton Way.
Next in line at The Metropolis could be oil giant Shell, believed to be for a 120,000 sq ft lease. Also thought to be seriously looking at becoming a tenant in the development is Procter & Gamble, which may take around 200,000 sq ft or more.
For sure, gym operator Fitness First has signed a lease at The Metropolis. Ho Bee itself will move its offices from Tannery Road to its new Buona Vista development.
In all, about 60 per cent of The Metropolis' net lettable space of 1.05 million sq ft is thought to be currently under negotiations.
Pre-leasing activity for new office developments in Singapore is generally slow at the moment - not surprising given that occupiers such as international banks and financial institutions are more careful about relocating to new buildings to avoid incurring major expenditure amid the uncertain business environment. There is also ample supply of office space in the island, and with rents not predicted to shoot up anytime soon, this tends to be a drag on pre-leasing. So it remains to be seen just when The Metropolis will be fully tenanted.
However, while the supply-demand dynamics of the Singapore office leasing market may be out of Ho Bee's control, one factor clearly in the group's favour is its low development cost for The Metropolis. The group clinched the site at a state tender in 2010 for $410.99 million (or about $342 per square foot per plot ratio). Because Ho Bee managed to lock in a relatively low construction cost for the project, its breakeven could be as low as $750-800 psf.
Big occupiers in The Metropolis can probably expect to pay close to $6 psf in monthly rents - cheaper than around $9 psf in the financial district. Based on the breakeven cost of about $800 psf, Ho Bee's net yield (when the building is fully leased) would be around 7 per cent.
Each year, the development should generate about $75-80 million in rental and carpark revenue (The Metropolis will have some 490 car park lots), going by a back-of-the-envelope calculation. That will result in a regular stream of recurring income which should help the group smooth the ups and downs in its residential property development business.
No doubt Ho Bee will also benefit from a one-time revaluation gain at the end of this year from The Metropolis, assuming office values remain resilient. Right now, a new Grade A-specification office development in that location could be valued at around $1,600-1,800 psf on a whole-building basis, by some estimates. Based on Ho Bee's breakeven cost of around $800 psf for The Metropolitan, the group stands to book a revaluation gain of some $800 million to $1 billion.
Between financial years ended Dec 31, 2007, and Dec 31, 2011, Ho Bee's net earnings have gyrated from $93.1 million to $333 million.
It is this sort of income volatility that the completion of The Metropolis will help to reduce.
On the stockmarket the counter has appreciated about 80 per cent over the past one year, double the gain of about about 40 per cent in the FTSE ST Real Estate index over the same period. The stock is now hovering around $1.90, compared with about $1.06 a year ago.
Source: Business Times –23 January 2013
COMMERCIAL MARKET
Buyers snap up units at Alexandra Central
Almost every unit of a mixed development launched in Alexandra yesterday has been snapped up - a stark sign that buyers are turning to commercial property in the wake of new cooling measures.
Only one of the 115 strata retail units released remained unsold as at 9pm yesterday after a dramatic day of sales that caught even the developer by surprise.
It was estimated that at least 20 buyers on average were competing for each unit at the 99-year leasehold Alexandra Central, while a shop space on the third storey had as many as 155 interested buyers submitting blank cheques for a ballot.
"I had strong confidence in the project but didn't expect it to do so well," said Chip Eng Seng group chief executive Raymond Chia.
The units were sold at between $4,000 and $8,000 per sq ft, said a spokesman from CEL Development, Chip Eng Seng's property arm.
Alexandra Central is next to Ikea and on the site of the former Safra building in Alexandra Road. CEL Development paid $189 million, or $789 psf per plot ratio, for the 85,517 sq ft site in 2011.
The project includes 31 food and beverage retail units and 85 shop units. The largest shop unit in the project was not launched for sale yesterday.
Mr Chia said Alexandra Central received an unexpectedly high level of interest when it was opened for preview over the weekend.
"We initially planned a soft launch on Wednesday but because the response was so overwhelming we decided to bring it forward to Monday," Mr Chia added.
When The Straits Times visited the showflat yesterday afternoon, it was packed with agents and buyers, some of whom had been there as early as 9am.
Some were genuine end-users hoping to secure shop space before prices rose further, while others said they were interested in investing in commercial property.
Investors were drawn to the project because of the recent cooling measures imposed on the residential and industrial sectors.
Alexandra Central will include a 450-room hotel managed by Park Hotel Group. Construction is expected to be completed by June 2016.
Source: The Straits Times –22 January 2013COMMERCIAL MARKET
Four shophouses up for auction in Kampong Glam
Four conservation shophouses in North Bridge Road will go under the hammer next week.
The shophouses, which are in a commercial zone within the historic Kampong Glam district, are among the few freehold commercial properties in the area.
The owners, a group of private investors, are selling the four shophouses as a single entity by auction on Wednesday.
This is because the four properties sit on two titles, making it difficult to sell separately.
He said: "The owners want to divest these properties to re-invest capital."
Sitting on a 5,765 sq ft site, the properties have a total floor area of about 9,600 sq ft and are surrounded by mixed-use developments like Bugis Junction, Bugis Plus and Key Point.
They are also near the upcoming Downtown Line and the site of the upcoming five-star hotel at the DUO project in Ophir Road.
The five-star hotel, which is expected to be completed in the second quarter of 2017, is being built by M+S, a 60-40 joint venture between Malaysia's Khazanah Nasional and Singapore's Temasek Holdings.
Source: The Straits Times –19 January 2013
Speculators may turn to commercial property
Buyer interest in commercial property is growing in the wake of last week's cooling measures, which included curbs on red-hot industrial property.
Experts said commercial property, as yet untouched by any of the seven rounds of cooling measures, could become the new target segment of speculators.
All eyes are now on upcoming launches of office and retail space, which analysts said could be oversubscribed.
The industrial cooling measures consist of a seller's stamp duty, imposed for the first time on the sector.
It ranges from 5 to 15 per cent and applies to industrial property or land sold within three years of purchase.
This is meant to dampen speculative activity in the industrial segment, where prices have doubled over the past three years.
But analysts suggested this was like plugging a leak only to have another spring up.
This time round, the seller's stamp duty for industrial property could drive speculative activity into other sectors, notably commercial and retail, analysts said.
Consultants said the level of buyer interest in the launch of SBF Center as well as that of upcoming Alexandra Central will be a good indicator of whether demand has shifted towards the commercial segment.
SBF Center, developed by Far East Organization, is next to Capital Tower and is expected to launch early next month.
Alexandra Central is a 99-year leasehold mixed development by Chip Eng Seng, located next to Ikea on Alexandra Road. It is expected to launch within the next few weeks.
Chip Eng Seng's property development and investment arm CEL Development paid $189 million for the 85,517 sq ft site in December 2011. This works out to $789 psf per plot ratio.
The strata shop units at Alexandra Central are likely to be $5,000 to $7,000 psf while strata office units at SBF Center are likely to go for $2,400 psf or above, according to The Edge magazine.
Source: The Straits Times –19 January 2013
Chinatown grows in commercial appeal
There is a buzz in Chinatown and not just because it is the festive season.
Property has become the new talk of the town in the past few months, particularly commercial real estate.
The heritage-filled district has just received a major boost with the opening on Wednesday of the 16-storey Parkroyal on Pickering hotel and launch of the revamped Chinatown Point mall.
The 367-room hotel, which was built for $350 million, is owned and managed by Pan Pacific Hotels Group, a unit of UOL, a firm controlled by billionaire banker Wee Cho Yaw.
Right next door is Chinatown Point, which officially opened its doors barely a week ago after a $90 million facelift to revitalise the complex's 20-year-old interior and facade.
It houses 170 shops, luxury watch retailer Cortina, and anchor tenants Daiso and FairPrice across five floors.
Chinatown Point is owned by a consortium which includes Perennial Real Estate Holdings, German fund manager SEB, NTUC FairPrice and Singapore Press Holdings.
But these two big openings are just the icing on the cake.
Interest in Chinatown's commercial segment has been growing, say property analysts, especially with the shift in investor focus towards non-residential property seen last year.
Source: The Straits Times –19 January 2013INDUSTRIAL MARKET
Industrial property prices tipped to slide
Industrial firms planning to expand will benefit most from the property cooling measures imposed last week, according to market experts.
They predict that prices of industrial property will slide in the wake of the new seller's stamp duty, which is expected to curb speculation.
That in turn will help lower business expenses as occupancy costs decrease, alleviating some of the impact from the slowing economy.
Industrial property sold within a year of its purchase will be levied 15 per cent; 10 per cent if sold in the second year and 5 per cent in the third year.
Bloomberg reported yesterday that industrial building sales are likely to drop by 10 per cent this year as speculators are driven out of the market.
Deputy Prime Minister Tharman Shanmugaratnam said last week that evidence of flipping compelled the Government to intervene in the industrial segment.
Analysts welcomed the measures as Singapore needs to retain its cost advantages to remain attractive as a business hub, the Bloomberg report said.
Source: The Straits Times –18January 2013COMMERCIAL MARKET
21% stake in Orchard Towers up for sale
A 21 PER CENT strata interest in Orchard Towers comprising prime freehold retail and office space is up for grabs by tender, with an asking price of about $190 million.
Selling the stake is a subsidiary of Sinarmas Land Ltd (previously known as Asia Food & Properties) called Golden Bay Realty, which is looking to part with the stake as a whole, or split it into three components: the retail space, offices in the front tower, and offices in the rear tower.
If purchased in whole, the stake would represent the single largest interest in Orchard Towers, which is made up of two towers and also has residential spaces.
The stake offered here comprises 21 retail units and 37 office units with a strata area of 7,449 square feet and 70,536 sq ft, respectively, which are located at the front tower along Orchard Road.
A single strata title of 50,084 sq ft of office space is located at the rear tower, along Claymore Road.
For parties interested in just the retail space, Sinarmas is hoping to sell it at about $3,000 per square foot (psf). For the office space, it hopes for a price just under $2,000 psf.
Orchard Towers was completed in 1973. The property has an existing strata area of 595,066 sq ft over 25 floors and 361 carpark lots.
The tender exercise will close on Feb 27 at 3pm.
Source: Business Times –17 January 2013
Office space likely to draw investor interest: Report
Office space is likely to attract interest from investors in an uncertain year for property here, a new report said.
The overall outlook is cautious given the uncertain global economy and last week's tough new property cooling measures.
It said investors may look to office space given the "compelling low interest rate environment" and high policy risks in the residential sector.
The sound financial structure, business-friendly policies and Singapore's status as a financial hub are also likely to spur investor demand for office space here, it added.
On the industrial front, the market is expected to take a step back to assess the impact of the new seller's stamp duty imposed by the Government on industrial properties sold within three years of purchase.
The duty, ranging from 5per cent to 15 per cent, was introduced last week to rein in industrial property prices and discourage short-term speculation.
Sales in the retail space market are expected to be uncertain, as a tighter labour force and weaker discretionary spending by locals amid the bearish economic outlook would put a lid on retailers' expansion - softening demand for retail space.
Rents of prime retail space in the shopping district of Orchard Road are also expected to decline by 3 per cent to 5 per cent this year, as 340,000 sq ft is set to be added to the supply of retail space there.
The report added that investment activity would be led by the sale of government land sites, as 54 land parcels were earmarked for the first half of the year under the Government Land Sales programme.
Source: The Straits Times –17 January 2013
COMMERCIAL MARKET
4 North Bridge Rd shophouses to be auctioned
Four freehold shophouses along North Bridge Road have been launched for sale by public auction.
The shophouses, bounded by Kandahar Street and Aliwal Street and within the Kampong Glam conservation area, will be sold together; they have been tagged with an indicative asking price of $15.5 million.
The units, at 762, 764, 766 and 768 North Bridge Road, will be sold with existing tenancies, which expire between March this year and July next year.
The four units now house an Internet cafe, a wellness centre, a travel agency, an apparel store and a photography studio - five businesses because one of the units is sub-divided.
The shophouses sit on a site of approximately 5,765 square feet (sq ft) and have a total floor area of approximately 9,600 sq ft.
The shophouses sit amid mostly two-storey conservation commercial shophouses, near mixed-use developments such as Bugis Junction, Bugis Plus, Golden Landmark, Sultan Plaza and Key Point.
The sale of the shophouses will not be affected by Seller's Stamp Duty (SSD), Additional Buyer's Stamp Duty (ABSD) and the loan-quantum restrictions recently announced in the government's slew of measures aimed at cooling the property market, because the shophouses have been zoned as commercial units.
The ABSD kicks in only with properties with a residential component; the SSD, which used to apply to residential properties, now also applies to industrial properties.
The site has received interest from three potential Singaporean buyers.
The public auction has been slated for Jan 23.
Source: Business Times –16 January 2013
COMMERCIAL MARKET
Commercial hub shaping up in Jurong Gateway
Jurong Gateway, the area around Jurong East MRT station, is well on the way to becoming a major commercial hub in the western part of Singapore.
Upcoming launches of more shopping malls, a hospital, a hotel and office space will add buzz to the district, which used to be hilly jungle land dotted with prawn ponds and crocodile- infested rivers.
But analysts note that the area has few private residential projects, with most condominiums being nearer to the Lakeside district, west of Jurong Gateway. The only private condo homes are the 280-unit Westmere, an executive condominium launched in 1996, and Ivory Heights, a former HUDC project.
But a new condo is on the cards. A residential site at Boon Lay Way, launched last April, attracted 12 bids, with the top bid at $705 per sq ft. Analysts said this reflected positive sentiment from developers. The site is estimated to yield 590 homes.
Based on the Government's Master Plan 2008, the 70ha Jurong Gateway is expected to provide 500,000 sq m of office space, 250,000 sq m of retail, F&B and entertainment space and about 2,800 hotel rooms.
But office space is limited, analysts said. The main office buildings in the area are JTC Summit and the CPF Jurong Building.
There is about 1.1 million sq ft of office space, said CBRE Research associate director Desmond Sim.
But this will grow because a 1.1ha site with a potential gross floor area of nearly 700,000 sq ft along Venture Avenue to be developed predominantly for office use is listed on the Government Land Sales confirmed list.
Business parks, retail malls and institutional facilities form most of the existing developments in Jurong Gateway.
Business parks completed in the past five years include 1A International Business Park, Icon@IBP and 29A International Business Park.
Among retail malls, Jurong Entertainment Centre was recently refurbished and renamed JCube. It features an Olympic-size ice skating rink, and is the latest commercial development in the area. The IMM mall is also undergoing a $30 million revamp to become an outlet centre, set for completion in the middle of this year.
New malls being built include Jem by Lend Lease, Westgate by CapitaLand and the Big Box Retail development by TT International.
Jem and Westgate will offer new office supply. Jurong Gateway will also get a new hospital and hotel. The 700-bed Ng Teng Fong General Hospital is slated for completion next year. Also, the first hotel site in Jurong was awarded last November to Tamerton, a unit of Genting Singapore. This site has a potential gross floor area of about 204,500 sq ft.
Analysts are positive on the outlook for the area, though they warn that congestion could become a problem.
Source: The Straits Times –12 January 2013
INDUSTRIAL MARKET
Stamp duty for industrial property sold within 3 years
A seller's stamp duty (SSD) is being introduced on industrial properties for the first time, as the government tries to rein in market speculation that has caused a doubling in prices over the past three years, outpacing rental increases.
Specifically, a respective SSD of 15 per cent, 10 per cent, and 5 per cent will be imposed on industrial properties sold within the first, second, and third year of purchase.
The SSD will apply for industrial properties and land bought on or after Jan 12, 2013.
Speculation was cited as the key reason for the introduction of the cooling measure.
In 2011 and the first 11 months of 2012, about 15 per cent and 18 per cent respectively of all transactions of multiple-user factory space were resale transactions carried out within three years of purchase. This compares with the average of about 10 per cent from 2006 to 2010.
The spillover of speculative demand has largely been from the residential market, which saw a range of cooling measures including SSD, more stringent loan-to-value ratios, and an additional buyers stamp duty.
Source: Business Times –12 January 2013INDUSTRIAL MARKET
Investors make a bundle from trading in strata factories
About 60 per cent of the 618 units of 60-year strata factories sold in the secondary market last year and for which previous sale records could be traced, had been last sold in 2010 or 2011.
5.8 per cent of the 618 units (36 units) changed hands faster: they were bought last year and resold or subsold before the year was out.
By going through the Realis' caveats database of the Urban Redevelopment Authority (URA), 1,136 caveats involving secondary-market transactions last year that were resales and subsales of 60-year strata factory units.
Nearly all those who bought and then sold the 618 units - 99.7 per cent - made money. Only two transactions (0.3 per cent) incurred a loss.
The two loss cases involved units that had been bought in 2011.
The profit or loss was calculated as the difference between the sale and purchase price, without taking into account transaction costs and other expenses.
Among the 616 profitable deals, the average profit was 47 per cent, or $262,636.
The biggest gains were made by investors who waited the longest before selling their units last year: The owners of the 73 units bought in 2007 gained, on average, 85 per cent or $406,160.
This group was followed by those who bought their units during the 2009 economic downturn and divested their properties last year, reaping an average gain of 64 per cent or $366,208.
The elevated prices paid for the 177 units bought in 2011 and offloaded last year at a gain trimmed profits for their sellers to 27 per cent or $166,795 on average.
Finally, investors who bought the 36 strata factory units last year and flipped them in the same year all managed to make a gain, but their profit margin thinned to 15 per cent or $86,797 on average.
The industry makes a distinction between subsales and resales in secondary-market deals. Subsales are sale transactions for projects which have yet to receive a Certificate of Statutory Completion (CSC) and where property titles for units sold have yet to be transferred to the buyers; resales refer to transactions involving projects for which CSCs and titles have been issued.
The most popularly traded project in the secondary market last year - at least among those for which caveats of previous transactions could be traced - was Harvest @ Woodlands in Woodlands Industrial Park E5, with 58 units.
Rounding off the top four developments were Midview City in Sin Ming Lane, Tradehub 21 in Boon Lay Way and Northstar@AMK, with 43 deals each.
The most profitable secondary-market deal among the 618 was for a unit in Woodlands Bizhub. This was bought in July 2009 for $1.01 million and transacted again last February for $2.47 million, yielding a gain of $1.46 million.
With fourth-quarter deals still to be fully counted, 4,392 caveats had been lodged for 2012; the final quarter could bring the final tally to around 4,700, still shy of the 5,183 in 2011.
Data from the URA indicates that around 27 million sq ft gross floor area of industrial space is expected to be completed this year.
The major projects expected to be completed this year include North Spring Bizhub (1.25 million sq ft) and Woodlands 11 (869,000 sq ft).
Source: Business Times –10 January 2013
COMMERCIAL MARKET
Mohd Sultan shophouse up for sale
A 999-YEAR leasehold conservation shophouse at 15 Mohamed Sultan Road has been put up for sale by its owner with an asking price of $15.5 million.
This works out to about $2,259 per square foot based on the property's existing's gross floor area (GFA) of 6,862 sq ft spread across three storeys and an attic.
Under Master Plan 2008, the property, which has land area of 2,606 sq ft, is zoned for residential use with commercial on the first storey and has a 3.8 plot ratio.
Based on this, there is potential to build a further GFA of about 3,000 sq ft at the rear, which would take the property up to five storeys. Based on the maximum 9,903 sq ft GFA and assuming it costs about $2 million to build this (development charge is not payable), the $15.5 million asking price translates to $1,767 psf on GFA.
Located about 300 metres from the upcoming Fort Canning MRT Station on the Downtown Line, 15 Mohamed Sultan is just off River Valley Road and close to the Singapore River.
The tender closes on Feb 20.
Source: Business Times –8 January 2013
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
COMMERCIAL MARKET
Rents for top-grade offices fall
Average rents of Grade A offices in the Central Business District (CBD) declined a modest 0.9 per cent in the fourth quarter, propped up by steady demand amid limited supply.
The creme de la creme office space, also known as Grade AAA, in the Marina Bay precinct once again showed the highest quarterly drop of 3.4 per cent to $10 per sq ft (psf) per month. This takes the fall for top-grade office space in Marina Bay to 14.9 per cent for the whole year.
On the other hand, other Grade A building rents softened by 3.3 per cent year-on-year on the back of healthy occupancy rates.
Overall, the monthly rents of all Grade A offices averaged $8.31 psf during the quarter, representing a dip of about 5 per cent from $8.72 psf a year ago.
Meanwhile, vacancy rates for CBD Grade A offices improved to 7.8 per cent from 8.1 per cent in the previous quarter.
Better occupancies were recorded in most areas, except for those around Beach Road and Middle Road as well as in the vicinity of City Hall. Beach Road offices saw vacancy rates edge up 0.5 per cent to 4.2 per cent by the end of this month, while City Hall suffered a sharp deterioration due to the more than doubling of vacant stock after Citibank vacated its premises in Millenia Tower.
Demand for CBD Grade A office space for the full year has been healthy, with a net take-up of almost 1.3 million sq ft.
This is equivalent to all the space at Marina Bay Financial Centre Tower 3 or half of the space at Suntec City office towers.
A total of about 2.5 million sq ft of office space, mainly from The Metropolis and Asia Square Tower 2, is expected to enter the market next year. So far, these new developments have a pre-commitment level of only about 20 per cent. As a result, the office leasing market is expected to face some challenges when these two developments are completed in the second half of 2013.
Demand for space may also come from tenants relocating from old buildings scheduled for redevelopment in the Robinson Road, Shenton Way and Tanjong Pagar areas in the coming years, like Keppel Towers, GE Tower, Robinson Towers and International Factors Building.
Source: The Straits Times –29 December 2012
INDUSTRIAL MARKET
Woodlands industrial plot on reserve list
A 3.9-HECTARE industrial plot at Woodlands Ave 12 has been made available for application on the reserve list of the Government Industrial Land Sales Programme.
Located next to OKH Holding's Woodlands Horizon, the site, which is zoned Business 1, can be developed for various uses, such as light industry, clean industry, utilities or telecommunications.
The 30-year leasehold site has a maximum gross floor area (GFA) of about 1,055,645.3 square feet (sq ft) and a maximum building height of 61 metres above mean sea level.
Under the government's reserve list system, the land parcel will be released for sale only if the criteria for triggering of the site are met. However, consultants say that it is unlikely the site will get triggered.
Located along Woodlands Ave 12 are three sites - Woodlands 11, which was sold to Boon Keng Developments in April 2010 (GFA 868,628 sq ft, abutting sites Woodlands Horizon and Primz Bizhub, which were sold to OKH Holdings in 2011 (combined GFA of about 1.06 million sq ft). All three sites have a 60-year leasehold tenure and are zoned Business 1.
Earlier this month, a site off Woodlands Ave 10 (GFA 288,069 sq ft) received a top bid of $31.7 million from Bohai Investments (Sengkang) and Punggol Drive Investments.
Source: Business Times –29 December 2012
New supply may dampen prices next year
Industrial property has enjoyed a red-hot year but whether this can continue next year remains a question mark.
Analysts point to an increase of new supply next year that could cool the sector that has logged one of its best years in recent times.
Take prices. Industrial property values easily overtook residential prices in terms of growth rate.
They shot up a startling 26.7 per cent from the start of the year to the end of the third quarter, based on the Urban Redevelopment Authority's (URA) industrial property price index.
Prices in the July to September quarter were 31.7 per cent higher compared with the corresponding period a year earlier.
Multi-user factory prices shot up 32.7 per cent in the third quarter compared to the same period last year and they are up by at least 27.9 per cent since the start of the year.
Prices for multi-user warehouses followed closely, climbing 27.9 per cent in the three months to Sept 30 over the preceding period last year. Prices in this segment rose 20.9 per cent in the first nine months of this year.
The contrast with the private residential market could not be starker with prices for new housing units up a minuscule 0.6 per cent year-on-year in the third quarter.
Office sector prices rose 1.9 per cent in the third quarter year-on-year while shop values were up 1.1 per cent.
The story for industrial rents was more subdued. They rose 6.4 per cent in the third quarter from the preceding year, and have climbed 6 per cent over the first three quarters of this year.
Sky-high industrial property prices mean rental yields have been severely compressed.
Despite industrial property's apparent popularity, the number of strata industrial transactions in the first 10 months of this year was lower than that in the corresponding period last year.
Notable industrial developments across the island include the 15ha Paya Lebar iPark, a pilot project by JTC that incorporates green spaces and specially designed buildings. There are also Alexandra Technopark and Mapletree Business City in the west, and projects such as UE Bizhub at Changi Business Park in the east.
Who is buying
Based on caveats lodged with the URA, around a quarter of the purchases made this year were by individual Singaporeans.
Companies accounted for 70.6 per cent of industrial property purchases as of October this year.
The URA caveats do not include transactions with incomplete information.
Some individuals use a goods and services tax-registered company to acquire strata industrial units so as to claim tax relief, he said.
Why prices are rising
The steep price rises for industrial property occurred as several rounds of cooling measures in the residential property market directed investors to look at alternatives.
But analysts say there were other reasons why investor demand for industrial properties has soared.
It is not just investors who are buying. Industrialists also want to purchase their own premises to gain more control and certainty over their real estate costs in the face of rising rentals when their leases expire.
The surge of interest from both investors and genuine industrialists has allowed sellers and developers to demand higher prices.
Outlook
The pace of price increases may slow next year if the Government acts further to rein in the runaway market, analysts noted.
The Government said in June this year that units must be at least 150 sq m in multi-user developments released under state tenders.
Another factor to watch out for is the upcoming supply, said Mr Lee, noting that more than 10 million sq ft of multi-user industrial space is expected to go on the market in the next few years and most of that will be completed next year.
The weak global economy could also weigh down manufacturing and exports, and make industrialists more cautious in buying up more factory space.
Source: The Straits Times –31 December 2012INDUSTRIAL MARKET
JTC releases 3 industrial sites for public tender
JTC Corporation has put up for public tender the final batch of sites in the Confirmed List under the Industrial Government Land Sales programme for the second half of this year.
The latest three plots, among 16 released over that period, are in Ubi Avenue 4, Tuas South Avenue 10 and Tuas South Street 8.
The Ubi site is zoned for Business 1 development, usually intended for light and clean industrial use, while the Tuas sites are zoned for Business 2 development, which allows for heavier industrial use.
The plot in Ubi Avenue 4 is 0.35 ha in size with a lease of 30 years and a maximum permissible gross plot ratio of 2.5.
Analysts say this site is of note because of its favourable location and fair proximity to the Tai Seng and MacPherson MRT stations.
They expect offers ranging from $110 to $160 per square foot per plot ratio (psf ppr) from between five and 10 bidders.
The land parcel in Tuas South Avenue 10 is a 3.96-ha plot with a tenure of 30 years and a maximum permissible gross plot ratio of 1.4.
Top bids could come in at $50 to $95 psf ppr, market watchers noted, with three to eight offers.
The analysts mostly expect interest from developers.
(The plot is roughly the size of five to six football fields.)
The final plot, a 0.3-ha parcel in Tuas South Street 8 referred to as Plot 10, will have a lease of 22 years five months and a maximum permissible gross plot ratio of 1.0.
Analysts expect bids of between $55 and $70 psf ppr with keen interest, going by the recent bidding activity for land in the area. Predictions ranged from five to 18 bidders.
The last two plots in Tuas South Street 8, awarded last week, drew 24 bids in all, JTC figures showed.
More than 70 offers were put in for eight other parcels of land in the vicinity in two tenders launched in June. Among them were the plots on either side of Plot 10, with winning bids of $34.58 psf ppr and $44.35 psf ppr.
The latest tender will close on Feb 7 at 11am.
Source: Business Times –28 December 2012
COMMERCIAL MARKET
Two commercial sites in Jurong, Cecil St released
The government has released the final two commercial sites for the second half 2012 Government Land Sales (GLS) programme.
One is a confirmed list site near Jurong East MRT Station that has been launched for sale by public tender, while the other is a plot at Cecil Street/Telok Ayer Street that is available for application for sale under the reserve list.
The Urban Redevelopment Authority (URA) said yesterday that the bulk of the space developed on both sites has to be set aside for office use. In addition, it is allowing strata sub-division of offices for the Jurong plot but not for the Cecil Street site.
On Venture Avenue in Jurong East, URA's 1.1-hectare confirmed list plot will be the site of the third major office development in the Jurong Gateway location to be released since 2010. This is part of URA's plan to create the biggest commercial hub outside the CBD.
The latest site can yield a 25-storey project with a maximum gross floor area of 694,939 square feet, of which at least 90 per cent must be for office use.
Property consultants expect the site to draw five to eight bids.
In June 2010, LendLease clinched a nearby white site for $650 psf ppr on which it is now developing Jem. In May 2011, CapitaMalls Asia (CMA), CapitaMalls Trust and CapitaLand teamed up to bag another white site nearby for $1,012 psf ppr, on which it is developing the Westgate project. Both projects are mixed office and retail developments.
For the Westgate and Jem sites, URA specified minimum office components of 40 per cent and 30 per cent, respectively.
URA said the latest site will contribute to the development of more affordable office spaces in Jurong to cater to users who do not need a central business district location.
However, market watchers expect moderate demand for the subject site owing to its less-than-optimum location and high quantum for commercial space.
A URA spokesman said the planning authority is allowing the flexibility to strata sub-divide for sale the future development on the Venture Avenue site to ensure there is a variety of office space available outside the CBD to meet different business needs.
"This will provide SMEs the opportunity to purchase their own office space to better manage operating costs," URA said.
It said that while there is no minimum office unit size control for the Venture Avenue site, the proposed office layout will be evaluated to ensure that it is in line with the typical quality office layout that meets the needs of genuine office end users at the development application stage.
URA also noted that the two earlier developments in the Jurong Gateway area, Jem and Westgate, will provide office space that will cater mainly to tenants with large space requirements.
However, URA is not allowing strata sub-division of individual units within the future project at the Cecil Street site.
Noting that the site is zoned for commercial and open space use, URA said a single owner can better integrate and manage the future commercial building with the public open space fronting the prominent Cecil Street/Telok Ayer Street junction.
The 0.8-ha plot, which can generate a 50-storey development with a maximum GFA of 830,510 sq ft, is situated just across the road from SBF Center (formerly known as The Index), which was sold in September 2011 for $882 psf ppr.
Within the CBD, an estimated 7.6 million sq ft of office space is expected to be completed from 2013 to 2017, she pointed out. M+S Pte Ltd, a consortium of Khazanah Nasional and Temasek Holdings, has committed to developing some 2.9 million sq ft of office space in Marina One (situated in Marina Way/Straits View) and Duo 2 (located in Ophir Road/Rochor Road), which are envisaged to be ready by H1 2017.
Source: Business Times –20 December 2012
INDUSTRIAL MARKET
Tighter building rules on sites for industrial use
Tighter development measures are being introduced for certain industrial sites, even as the government rolls out more land in an attempt to moderate industrial land prices.
Specifically, successful bidders of selected sites will be required to build a minimum number of large factory units to cater to the needs of SMEs who need larger industrial spaces, said the Ministry of Trade and Industry (MTI).
This announcement came on the back of MTI announcing that a total of 22 sites - comprising 13 sites on the confirmed list and nine sites on the reserve list - with total site area of 24.84 hectares has been set aside for industrialists.
This is comparable to the 19 sites - 16 sites on the confirmed list and three on the reserve list which totalled 23.72 ha - released in the second half of this year. In 2012, a total of 47.69 ha of industrial land was released; this is about 1.4 times than that released last year.
Of the 13 plots on the confirmed list, eight are less than 1.0 ha; six small sites (each less than 0.5 ha with a plot ratio of 1.0 and land tenure of 22 years) in Tuas South have also been released.
Tenders for this type of land plot in the last six months have attracted five-19 bids per site. Specifically, plots 9 and 11 in Tuas South Street 8 were sold between $35 and $44 psf ppr in September. The top bid rose to $68-78 psf ppr for Plots 8 and 18 on the same street by December.
There are nine sites on the reserve list. Notably, five small sites (on Tuas South Street 6 and Street 8) have debut on the reserve list.
Source: Business Times –20 December 2012COMMERCIAL 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
COMMERCIAL MARKET
UEL buys Anson Road block for $410m
Infrastructure firm United Engineers (UEL) is buying a commercial block in Anson Road for $410 million.
The company has acquired the 23-storey property from the Central Provident Fund Board and fellow owner 79 Anson.
The block, known as 79 Anson Road, is linked to Tanjong Pagar MRT station and was valued by Colliers International at $430 million.
It is 99 per cent occupied, with technical consultants Kellogg Brown & Root Asia Pacific the anchor tenant.
UEL said in a statement yesterday that the Anson Road acquisition, which will be its first commercial property within the central business district, will provide a stable rental income with potential to increase rates.
It added that there is potential for capital growth given the property's location near the port land - at Tanjong Pagar, Keppel and Pulau Brani - which has been earmarked to become a waterfront city.
This deal also helps UEL build up a more stable base of rental income to smoothen its fluctuating development profits.
UEL, which formed the wholly owned unit UE Development (Anson) to make the transaction, said the purchase is not expected to have a material impact on the earnings per share and net tangible assets per share for this financial year.
Source: The Straits Times –18 December 2012
COMMERCIAL MARKET
79 Anson Rd on verge of being sold for over $400m
At least one major office block transaction could be sealed before the year ends, BT understands. A deal is close to being stitched for 79 Anson Road, with both owners - German fund manager SEB and Central Provident Fund Board - selling their space.
Expectations are running high that the price will cross $1,400 per square foot based on the freehold building's existing gross floor area (GFA) of 289,185 square feet (sq ft). On a lumpsum basis, this would translate to $405 million or more. Assuming the price is in the $400-410 million range, this represents $2,000-2,050 psf based on the building's current net lettable area (NLA) of around 200,000 sq ft, say market watchers.
Industry watchers tipped United Engineers group as a possible buyer of the 23-storey tower. Others which had been in the running earlier are said to include Sun Venture.
Market watchers compare the pricing for 79 Anson Road to that for Tower 15 in Cantonment Road, which Fragrance Group bought in May this year for $1,420 per square foot per plot ratio (psf ppr) based on the building's existing GFA. Tower 15 is also freehold.
Fragrance is said to be exploring the possibility of redeveloping Tower 15 into strata office and shop units for sale. Some residences may also be included.
The buyer of 79 Anson Road could potentially redevelop the site in the mid to long term, depending on market conditions closer to when the last of the building's existing leases run out in 2016, say analysts.
Its 289,185 sq ft existing GFA is higher than the 236,566 sq ft based on the 8.4 plot ratio designated for the site under Urban Redevelopment Authority's Master Plan 2008. The site, with a land area of 28,163 sq ft, is zoned for commercial use and can be built up to 35 storeys. Most property market watchers reckon the building can potentially be rebuilt up to its existing GFA without any development charge payable to the state.
However, 79 Anson Road's new owner may also be keen on keeping the office block as a long-term investment property generating steady rental income. Located some 250 metres from Tanjong Pagar MRT Station, the building was completed 20 years ago. A major draw is its generous carpark provision, with 145 lots on levels 2-4.
SEB's space, on Levels 1 and 5-15, adds up to 117,423 sq ft in strata area. CPF Board owns 100,007 sq ft comprising eight office floors (levels 16-23) along with a ground-floor retail unit fronting Anson Road.
The most recent transaction of an office building in the vicinity is Mapletree Commercial Trust's (MCT) proposed purchase announced earlier this month of Mapletree Anson from a unit of its sponsor, Mapletree Investments. MCT will be paying $680 million or $2,049 psf based on its NLA of 331,854 square feet. Some market watchers have hailed it as the first acquisition of an office asset in Singapore undertaken by a real estate investment trust without income support or yield stabilisation structure.
Mapletree Anson's pricing is slightly lower than the $2,121 psf (without yield stabilisation support) that CapitaCommercial Trust paid earlier this year for the next-door Twenty Anson.
It acquired the property from LaSalle Investment Management's Asia Opportunity III fund.
Both buildings are on sites with remaining leases of about 94-95 years.
In late September, a property fund managed by Alpha Investment Partners acquired a half stake in 78 Shenton Way from a global fund managed by Germany's Commerz Real.
That deal valued 78 Shenton Way at $608 million, or $1,686 psf on NLA. The property is on a site with a remaining lease of about 70 years.
In July, Sun Venture clinched Robinson Point, a freehold 21-storey office block, from a fund of US-based AEW. The deal valued the asset at $284 million or $2,132 psf on NLA.
Source: Business Times –12 December 2012
COMMERCIAL MARKET
Strata offices enjoy good demand
An office floor at Samsung Hub along Church Street has been sold for nearly $39.4 million or $3,000 per square foot based on its strata area of 13,132 sq ft. On psf basis, this marks a fresh high for the building, which is in the Raffles Place area.
An Asia-based investor is said to be buying the 16th floor of the 30-storey building. BT understands it plans to occupy the space.
Samsung Hub, which received Temporary Occupation Permit in November 2005, is on a 999-year leasehold site.
The floor just transacted was sold by a partnership between the Buxani Group and offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group.
Last year, the same partnership sold Samsung Hub's 20th floor - which is also 13,132 sq ft in area - for $2,800 psf. It was bought by a China investor.
The Buxani-Capital Management Group tie-up is now left with four of the six floors it clinched in the building from OCBC Properties in 2007 for $122.44 million or $1,560 psf. The six floors added up to 78,490 sq ft.
Market watchers say the record price just achieved at Samsung Hub reflects the still strong sentiment for strata offices.
$1.94 billion worth of such units have changed hands so far this year (the latest transaction captured was on Nov 22) - up from $1.33 billion for the whole of 2011.
Roughly half or $950 million of the 2012 deals are in four new projects under construction.
Leading the pack is Paya Lebar Square, with about $520 million worth of office units sold so far this year, followed by Eon Shenton ($160 million), Oxley Tower ($148 million) and PS100 ($123 million).
In addition, the momentum continues to be strong for resale transactions of strata offices in completed projects such as The Adelphi near City Hall MRT Station, The Central in the Clarke Quay area, Burlington Square along Bencoolen Street, GB Building in Cecil Street and International Plaza next to Tanjong Pagar MRT Station.
In psf terms, the most expensive office transaction so far this year was $5,379 psf - for a 614 sq ft third floor office unit in the 999-year leasehold Peninsula Plaza, amounting to $3.3 million. The deal took place in July.
In June, the Buxani-Capital Management partnership completed its purchase of 51 strata offices at Parkway Centre in Marine Parade Central - and it has since resold 11 units at an average price of above $1,600 psf. It paid nearly $53.4 million or $1,043 psf for the 51 units. Parkway Centre is on a site with a balance lease term of 68 years.
Over in Bencoolen Street, a Guthrie-Sun Venture tie-up which acquired 66 office units in Burlington Square from a partnership between Wing Tai and City Developments earlier this year has resold 30 of these units at $1,782-$1,893 psf.
All eyes now are on Far East Organization's upcoming launch of a new project with frontage on Robinson Road and Cecil Street. Located next to Capital Tower, the 99-year leasehold development will have offices and medical suites - primarily for sale. The project was originally named The Index but it will now be known as SBF Center, after the Singapore Business Federation, which will be a major occupier. However, it has yet to be decided whether SBF will buy the space or lease it from Far East.
Source: Business Times –8 December 2012
COMMERCIAL MARKET
Prime office rentals at basement prices, for now
The best office space in town currently commands just a shade more rental than the rest. But this won't last.
The rental gap between Grade A offices and Grade B office space islandwide has narrowed this year. Rents in older buildings at prime locations have held up as their occupancy levels remain stubbornly high. This is expected to change next year when tenants move into new developments and more space emerges in older buildings.
CBRE executive director (office services) Moray Armstrong highlights the "potential for a flight to quality as tenants realise just how attractively pitched rents are for Grade A office space".
Data from CBRE shows that the average monthly rental value in its Grade A basket - which covers the best-quality buildings in Raffles Place, Marina Bay and Marina Centre - is likely to end the year at about $9.51 per square foot (psf), from $11 psf in Q4 last year. This reflects a full-year drop of 13.5 per cent.
On the other hand, the rent decline for Grade B offices islandwide - which refer to older, smaller or lower-specification office blocks - will be much smaller, at about 2.3 per cent this year. The average monthly rent is expected to dip from $7.34 psf in Q4 2011 to $7.17 psf this quarter.
The resulting $2.34 psf rent difference between Grade A and Grade B offices currently is much smaller than a $3.66 psf gap a year ago.
"Rents for Grade B offices have fared better this year principally as they enjoyed high occupancy rates going into this office market pull-back phase, but also as they benefited from expansion by existing tenants in these buildings," said Mr Armstrong. In contrast, he said, Grade A rents came under pressure as vacancy rates went up after some major new developments were completed.
Looking ahead, things may change as Grade A space finds support while competition and second-hand space increase downward pressure on Grade B areas.
CBRE forecasts that over the next 12 months, Grade A rents will be flat, averaging $9.50 psf in Q4 2013, while Grade B rents could drop by 5-10 per cent to as low as $6.45 psf. This will result in the rent gap widening again to $3.05 psf. "The importance of tenant retention may feature more highly among landlords of older buildings," says Mr Armstrong.
Calvin Yeo, executive director at Colliers International, says: "A major question is the potential take-up of secondary space that will be thrown back into the market from occupiers which have moved or will be moving to newer developments."
Analysts say a crucial test will be how long Overseas Union Enterprise (OUE), the owner of 6 Shenton Way, takes to fill up the 440,000 sq ft which DBS vacated when it moved to Marina Bay Financial Centre (MBFC) Tower 3 between June and October this year.
BT understands that OUE has begun securing tenants for some of this space; rents are thought to be around $6-$7 psf. New buildings in the financial district such as Asia Square Tower 1, OUE Bayfront and MBFC Tower 3 are said to be currently fetching rents of $9-$12 psf per month.
On a positive note, industry watchers highlight that it took Pontiac Land Group just nine months to fill back all the 129,000 sq ft vacated by Citi in Centennial Tower in November last year when it moved to Asia Square Tower 1. Pontiac leased the space to major existing tenants such as Sumitomo Mitsui Banking Corporation and McKinsey while clinching new ones such as Frieslandcampina.
Citi also occupies about 143,000 sq ft at Millenia Tower next door. Of this space, the bank will be vacating 17,000 sq ft by this month - which will be immediately handed over to existing and new tenants whom Pontiac has pre-committed to, said a Pontiac Land spokeswoman. Citi will give up the rest of its space on lease expiry in December next year, she added. Current transacted rents in the two buildings are $9-$11.50 psf.
According to Jones Lang LaSalle's head of markets Chris Archibold, activity among smaller occupiers of 15,000 sq ft or less is still fairly robust, and a lot of it is within the CBD. However, leasing agents say that big occupiers have become increasingly cost conscious. This has led to a drying up of big leasing deals in the CBD this year.
To save costs, some large companies are splitting front and back offices, while others are completely relocating to suburban offices and business parks.
Agents tip out-of-town locations as the most likely beneficiaries of any major pick-up in leasing deals in the near future, most notably at Ho Bee's The Metropolis office development in Buona Vista, which will be completed next year.
Meanwhile, rents for Singapore's CBD Grade A offices look attractive and are believed to be nearing their bottom. As Cushman & Wakefield country manager (Singapore) Toby Dodd highlights: "Singapore is currently a tenant favourable market, and we recommend leveraging this to lease Grade A CBD office space at very competitive terms locked in for the medium to long term."
Mr Archibold advises landlords that while maximising shareholder value is always a key driver, "the right strategy is probably to also ensure that overall occupancy levels remain strong to mitigate any downturn in Europe".
Source: Business Times –7 December 2012
Plaza Singapura gets new wing and Cold Storage
PLAZA Singapura has taken on a new look and new tenants, now that it has expanded into the space between it and The Atrium@Orchard.
The $150 million, 21-month-long makeover fills up what used to be a gap between the two buildings, bringing Plaza Singapura's net lettable area to 629,000 square feet, up some 25 per cent.
Its owner CapitaMall Trust said the extension is projected to bring an additional net property income of $15.6 million when fully occupied.
A 10.4 per cent return on investment is expected, as well as an increase in capital value of $110.2 million.
More than 90 per cent of the space in the new wing has been leased out, and 80 per cent of these businesses are already in operation.
Retail and office rents are now $10 to $12 per square feet (psf) a month. Before the works, rent in the retail podium was $6 to $7 psf.
Among the changes to come in Plaza Singapura is the entry of Cold Storage in the first quarter of next year.
The supermarket, whose parent Dairy Farm owns Giant hypermarket and Market Place, will occupy 30,000 sq ft in Basement 2.
This is just 37 per cent of the 81,000 sq ft across two levels vacated by the mall's previous anchor tenant Carrefour.
The new wing will have about 80 outlets, bringing the mall's total number of shops to 320.
They offer fashion and lifestyle products or are food and beverage establishments.
Some of these businesses are new to Singapore, such as Japanese eatery Tsukada Nojo and apparel label Suit Select. Swiss watchmaker Oris has opened its first flagship store in the mall; another newcomer is buffet restaurant 1 Market by Chef Wan, in a maiden restaurant tie-up between the Malaysian celebrity chef and Food Junction.
Shares of CapitaMall Trust closed unchanged at $2.05 yesterday.
Source: Business Times –7 December 2012
COMMERCIAL MARKET
RB Capital buys 16 retail units at The Quayside for $69m
RB Capital is buying 16 ground-floor riverfronting retail units comprising The Quayside's retail podium for $69 million, BT understands.
The price for the property in the Robertson Quay area works out to around $2,110 per square foot (psf) based on the units' total leaseable area of about 33,000 sq ft.
The property is being sold by an entity controlled by SP Tao's Shing Kwan Pte Ltd. This is believed to be his last major Singapore property investment.
The 16 retail units are part of a mixed development which includes 79 apartments above. The 16 units will give RB Capital a 40 per cent share value in the development which would put it in a key position if there is a collective sale of the property in future.
The Quayside is on a site with a remaining lease of slightly over 80 years.
Mr Tao, who was formerly chairman of Singapore Land, built the development on two adjoining plots adding up to about 61,655 sq ft which he bagged in an Urban Redevelopment Authority tender in August 1993.
The 16 units are fully leased and understood to be generating an average monthly rent of about $6 psf - translating to a net yield of around 3 per cent. The average passing rent is about half the current signing rents for similar units, say market watchers.
Tenants include restaurants such as Red House Seafood, Boomarang, Foodbar DaDa and Aburiya.
In the short term, RB Capital would be looking to spruce up the asset as existing leases expire and reposition it as a food and beverage hub.
Analysts reckon such a strategy should be viable, given the high-spending residents living in the area as well as tourists from the surrounding hotels.
Retail units in The Quayside are allotted 80 car park lots in the basement. Residents from the apartments above have separate carparking facilities on the project's second and third levels.
The Quayside is opposite The Gallery and Studio M hotels. It will also be near RB Capital's 450-room Holiday Inn Express Clarke Quay, which is under construction.
RB Capital, set up by Kishin RK, has a portfolio of three hotels with about 1,000 rooms under construction. Besides the Clarke Quay property, the other two are the Holiday Inn Express Bukit Bintang in Kuala Lumpur and a 300-room property above Farrer Park MRT Station which will be managed by the Law family's Park Hotel Group.
The Farrer Park project - comprising the hotel, medical suites and some retail units - is said to have an on-completion value of about $450 million.
Among other properties in RB Capital's portfolio are EFG Bank Building in the High Street area, RB Capital Building in Raffles Place and a 26-storey KL office block, 33 Jalan Sultan Ismail, which houses HSBC.
The group plans to enter the medical suites arena, starting with the inclusion of such units as part of its development above Farrer Park MRT Station.
Source: Business Times –6 December 2012
Evans Road site to get $3m facelift
A popular spot along Evans Road will soon get a new lease of life.
The 14,508 sq m site at 26 Evans Road, which houses well- known eateries and the Evans Lodge student hostel, has a new landlord, Winsta Holding.
The hostel operator, which told The Straits Times two days ago of its $3 million makeover for the site, will take over the premises from Yess Le Green in early January. Renovations will start in the same month.
Winsta won the tender for the state-owned plot on Nov 16 with its offer of a $171,899 monthly rent, more than double the Singapore Land Authority's (SLA) guide rent of $77,000. The tenancy is for an initial term of three years, renewable for up to six years.
The refurbishment includes converting some of the hostel's 225 single rooms into two-room apartments with attached bathrooms, as well as adding kitchen facilities and new gym equipment.
This may be a necessary move. Reviews of the hostel on sites like TripAdvisor describe the rooms there as "vile" and "disgusting". One reviewer complained of a cockroach infestation and another of toilet cubicles reeking of urine.
The carpark there will be repaved and expanded. Units occupied by the site's three tenants - breakfast joint Hatched, The Wine Company restaurant and the 24-hour Mr Prata - will be repainted and fitted with brighter lighting.
Winsta is in talks with The Wine Company to build more accessible toilets. It has also asked Yess for the contact details of students who want to stay on.
"We will approach the students, look at their contracts, see what they are paying and work out a way forward," said Ms Lynn Sim, 34, director of Winsta Holdings, which operates six hostels here.
But rents will go up.
"It's necessary. The price we won the bid on is quite high," she said, adding that rents are likely to be $6 to $9 per sq m. They are now about $5 per sq m, according to tenants there.
Ms Sim said that Winsta will work with the three tenants and encourage them to stay.
"They have been here for so long and have built up a certain reputation. We would like them to continue, but we do have a bottom line to meet," she said, adding that a high bid was placed as such long-term leases for hostels are rare.
The site - comprising buildings that opened in 1958 as Eusoff College, the National University of Singapore's first university hall of residence for women - drew 23 bids in total. The next highest bid was Central Warehouse Service's $170,333 a month. Yess also placed a bid of $150,540 a month.
Yess, which has been leasing the site since 2003, could not be contacted for comment. It is not known how much it pays in rent, but The Straits Times understands that it is substantially lower than what Winsta will pay.
Ms Sim said existing tenants need not move out if they sign a new lease. The hostel will be renovated in stages and any displaced students will stay at Winsta's other hostels. Handover plans are being worked out, she said.
Ms Belinda Lim, co-owner of The Wine Company, said she has spoken to the new landlord. "I am glad a new landlord has come in and wants to keep us. We are definitely staying for sure," she said, adding that business has dropped recently as the place is run down.
"There is a lack of lighting at night and the carpark is too small," she said. She is writing to Winsta to see if it is possible to reduce the space she is renting, in light of the increase in rental.
Mr Prata co-owner Chandra Sehkar, 53, said: "I would like to stay. We have been here for seven years. Customers are familiar with the place. We will seriously consider staying even if the rental goes up."
Mr Gerald Tan, 30, who owns Hatched, said he needs to take a closer look at its accounts before making a decision. "We did expect an increase with a new landlord coming in. If the sums work out, we will continue," he said.
Source: The Straits Times –6 December 2012
INDUSTRIAL MARKET
Defu Industrial Estate poised for big makeover
The shabby and rambling Defu Industrial Estate is all set to be transformed into a gleaming, modern industrial park - with five times the current factory space and a city centre by its side.
The transformation will take place over the next 15-20 years, with existing factories progressively giving way to modern complexes. The estate itself will see landscaped greenery and environmentally sustainable features sprouting up. And while there could be tweaks along the way, the current plan is for six-storey buildings to rise in the new Defu Industrial Park.
The Defu City Centre, to be located beside Defu Industrial City in the new park, will provide the commercial buzz - including food-and-beverage outlets, convenience stores, medical clinics and childcare centres. This will be built after 2017, when the site is available for development.
Defu Industrial Estate is currently home to some 1,046 factories. It will be redeveloped in three phases from next year and the first phase is expected to be completed by mid-2017.
A total of 219 factories will be involved in Phase 1 of the redevelopment. These include 87 land- based factories which are on 30-year leases, along with 42 land-based factories and 90 terrace workshops on fixed-term tenancies.
As part of the redevelopment, two new complexes - Bedok Food City and Defu Industrial City - will be constructed to facilitate the relocation of the factories.
Factories in the food industry will be relocated to Bedok Food City while those in general industries will move to Defu Industrial City, a 13-hectare site adjacent to the Kallang-Paya Lebar Expressway.
According to Dominic Peters, director of industrial and business space at Savills, the development of a niche food factory space is timely considering the shortage of such premises. Productivity could also rise with new machinery and better designed facilities.
However, food factory industrialists that BT spoke to were less optimistic about the upcoming change.
"We are very concerned about the possible increase in rents as well as the impact it will have on our employees" said Desmond Goh, director of People Bee Hoon Factory, whose factory has been located in Defu Industrial Estate for over 30 years.
Mr Goh, who is in the business of producing rice vermicelli, said that workers living close to the current premises may quit if the factory were to relocate to Bedok Food City.
"And furthermore if we get hit by the rent increase it will be a double whammy," he said.
Construction of both the Bedok Food City and Defu Industrial City will begin in 2015 and is expected to be completed by mid-2017. Eligible industrialists will continue to operate in their existing premises until the new complexes are completed, upon which they will be given relocation benefits such as a rent concession, a rent-free fitting-up period, and an ex-gratia payment of $48,000 per relocated unit.
Also, upon completion of Defu Industrial City in 2017, HDB plans to develop the new Defu City Centre.
HDB wants to redevelop the 30-year-old Defu estate to optimise land use and to contain the pollution caused by the existing industries.
With the new industrial park, the total amount of factory floor space is expected to increase five-fold to 2.1 million square metres of industrial space.
Although market analysts welcomed the redevelopment plans to spruce up the dilapidated estate, they warned of the current lack of demand for such sites.
Defu Industrial Park will eventually house three key zones. The northern and central zones will be safeguarded for strategic industries such as logistics, precision engineering, infocommunications and media, electronics, clean energy and biomedical. The southern zone will be set aside for modern industrial complexes to house existing industrialists.
Source: Business Times –6 December 2012
INDUSTRIAL MARKET
Rising retail rents creeping into industrial sector
Far from the madding crowds of Singapore's glitzy shopping malls, Cynthia Neo runs a bridal boutique tucked away in a nondescript industrial building in an old housing estate, pushed off the high street by pricey retail rents.
The owner of J&C Bridal Collections pays one quarter of the rent she once shelled out for a shop in the heart of Chinatown, where a string of restaurants, hotels and retail shops meant a steady stream of shoppers.
But rising rents may be creeping into the industrial parks too. Industrial property prices have surged 27 per cent this year after a government crackdown on residential investment pushed speculators into factories and warehouses.
Residential property developers are starting to wade into the light industrial market too, trying out upscale "lifestyle" office parks that look like posh condominiums. Some established industrial players say that valuations are getting a bit too rich. "It's been our assessment that the market has started to get a little hot," said Nick McGrath, chief executive officer of Singapore-listed AIMS AMP Capital Industrial Reit.
"We've used the strength of the market in the last 12 months to sell properties rather than buy," Mr McGrath said, adding that the real estate investment trust has shifted its focus to upgrading existing assets instead of buying more.
Singapore's government has introduced six rounds of measures to cool rising home prices, including an additional stamp duty aimed at foreign buyers and a cap on tenures for all new residential property loans.
Those moves succeeded in capping property price increases this year - the residential market is up just 0.96 per cent through October - but they did not bring about the 10 per cent fall that some analysts had predicted.
Now the government is turning its attention to industrial property. To make land prices more affordable to businesses, in July, it capped lease terms for industrial sites sold under a government land sales programme at 30 years instead of 60.
Singapore's light industrial parks, typically simple mid-rise buildings with a few standard facilities such as cargo lifts and unloading bays, are home to small and mid-sized startups, wholesale businesses and back-end offices.
But rising shop rents have made them increasingly attractive to store owners who would normally prefer customer-friendly malls or pedestrian-filled shopping streets, and some have started converting part of the industrial space for retail.
The rising industrial property prices have not fully filtered through to rents in these buildings, which are up a relatively modest 6 per cent this year, but when long-term leases are renegotiated, tenants may be in for some nasty shocks.
Singapore Member of Parliament and entrepreneur Inderjit Singh asked the government last month what its plan was to keep industrial land affordable for small and medium-sized enterprises.
Local media reported that the response from Minister for Trade and Industry Lim Hng Kiang was that rising industrial rents have not dented Singapore's competitiveness.
Mr McGrath said that he has observed more investors speculating in the industrial market's strata subdivided space, where carved-up smaller units have commanded per square foot valuations some three to six times more than his warehouses.
The sharp rise in industrial property prices has rung alarm bells for some, but attracted interest from developers new to this space. Construction firm Hock Lian Seng Holdings Ltd won a bid in June to develop a site in an industrial area in Singapore's east.
Residential developers are also getting into the industrial game - and bringing some homey touches with them.
Oxley Holdings Ltd, which has built residential projects with units selling for $2 million apiece, started developing "lifestyle" industrial properties last year - complete with swimming pools, gyms and rooftop gardens.
It has launched four such projects, two of which have been fully sold, indicating strong demand for strata-title units despite high valuations.
Source: Business Times –4 December 2012COMMERCIAL MARKET
Robinson Towers' redevelopment begins
Tuan sing Holdings has formally begun the redevelopment of Robinson Towers, the annex and the International Factors Building into a single commerical and office development.
Tenants were served with termination of lease notices of six months yesterday.
The redevelopment is estimated to cost around $200 million, including development charges to tap additional gross floor area (GFA). The proposed project, comprising an office tower and a retail podium, will have a total GFA of about 257,300 square feet.
Designed by Kohn Pedersen Fox Associates and Architects 61, the building will be completed in 2016 and will be three times the height of the existing tower.
Robinson Towers' redevelopment is part of Tuan Sing's expansion strategy here. The group holds a 50 per cent stake in two Australian hotels and since late 2010, has been making bids at state tenders in Singapore. It has clinched two 99-year leasehold private housing sites, in Seletar and next to Potong Pasir MRT Station.
Tuan Sing is expected to launch a 332-unit condominium, Sennett Residence, on the Potong Pasir site in January.
The counter closed one cent higher at 31.5 cents yesterday.
Source: Business Times –1 December 2012
Victoria St/Ophir Rd hotel site released on GLS reserve list
A hotel site at the junction of Victoria Street and Ophir Road has been made available for application under the reserve list of the Government Land Sales (GLS) Programme.
The site (formerly Victoria Street Wholesale Centre), is a 99-year leasehold plot, and is about 82,057.5 square feet. It has a maximum permissible gross floor area of about 344,649.3 sq ft. The maximum building height for the development is 20 storeys.
Most consultants said they expected the site to be triggered when it was added to the H2 2012 GLS reserve list earlier this year.
The top bid for the recent Jurong Town Hall Road hotel site was $1,167 psf ppr, and another close by Victoria Street/Ja- lan Sultan site was $994 psf ppr.
The tender for the site on Jurong Town Hall Road closed earlier this month, and drew a record top bid on a per-square-foot basis for a hotel site here.
The bid was submitted by Tamerton, a subsidiary of Genting Singapore, which tendered $238.2 million for the 97,164.7 sq ft plot near Jurong Country Club.
The land parcel is located near the Ophir-Rochor Corridor, a new growth area envisioned to become a mixed-use cluster with office, hotel, retail, entertainment and residential uses. It is close to the main Bugis shopping area, the Kampong Glam Conservation Area, and the upcoming mixed development DUO by M+S Pte Ltd, which comprises hotel, Grade A office, residential and retail uses.
It is situated a short walking distance from the existing Bugis MRT Station and the upcoming Bugis Downtown Line that is slated to be ready next year.
Source: Business Times –1 December 2012INDUSTRIAL MARKET
Cathay unit buys Upper Paya Lebar industrial building
A unit of Cathay Group is understood to have bought an eight-storey freehold industrial building in Upper Paya Lebar for $31.8 million.
The price being paid for Tropical Industrial Building along Little Road, about 400m from Tai Seng MRT Station, works out to about $632 per square foot (psf) based on the building's total strata area of about 50,300 sq ft.
Going by the building's existing gross floor area of 62,375 sq ft, the price works out to $510 psf.
The buyer, Keris Investments, is said to be looking at using at least part of the premises for its own film operations and storage use.
Seven of the building's eight storeys are now leased. Leases for four floors run out in Q1 next year; the last lease expires in June 2014.
Tropical Industrial Building is being sold by an entity controlled by the Ng family that owns the Tat Hong group. The property, which received its Temporary Occupation Permit in September 1998, is on a site zoned for Business 1 use, which includes light industrial and warehouse use. It has a 2.5 plot ratio.
The property has eight strata titles, one per floor; its basement houses 20 parking lots.
Earlier this year, Tat Hong Investment sold One Howard, a five-storey freehold industrial building at the corner of MacPherson and Howard roads, for $30.3 million.
Separately, 700 Beach, sited between Golden Mile Complex and Golden Mile Tower and near Nicoll Highway MRT Station, is back on the market.
This time, its owners Fine Grain Property Consortium (Singapore) Pte Ltd and international interior design firm Hirsch Bedner Associates, are marketing the property themselves through a tender, which will close on Dec 10.
Fine Grain is an Irish private equity firm arranged by Colin MacDonald, who said: "The recent buzz in the Ophir-Rochor Corridor, along with ongoing developments at the Sports Hub and in the vicinity have generated some interest in the area in recent months."
The pricing expectation remains around $115 million or $1,759 psf based on its existing net lettable area (NLA) of 65,374 sq ft.
The property is on a site with a 99-year-leasehold tenure that started in April 2004. It was earlier marketed through an expression-of-interest exercise which closed in July. The exercise did generate interest, but some parties were concerned about not being able to obtain vacant possession because of ongoing lease terms, said Mr MacDonald.
But things have since changed. GroupM, part of the WPP Group and which occupies 34,500 sq ft, is set to move out when its lease runs out in March.
BT understands that GroupM will move to 18 Cross Street, where it will take up part of the space vacated by Marsh & McLennan Group, which is now in Asia Square Tower 1.
Hirsch Bedner, which occupies 12,000 sq ft at 700 Beach, is open to either leasing back this space from the building's new owner or moving out if that is the owner's preference.
Mr MacDonald said: "Effectively, what this means is that we'll be in a position to offer vacant possession for about 70 per cent of the building's NLA."
Outline planning permission for converting 700 Beach to hotel use was obtained from the Urban Redevelopment Authority last year. This has since lapsed, but there is an option to pursue full planning permission for a conversion to hotel use, said Mr MacDonald.
Fine Grain and Hirsh Bedner acquired the building - formerly a small office-home office development known as In-City Lofts - in 2008 for $70 million and pumped in a further $3.5 million to reposition it as a boutique office block.
Source: Business Times –22 November 2012
COMMERCIAL MARKET
Jurong plot for hotel project draws record bid
A record price has been set for hotel land in Singapore - $1,167.35 per square foot per plot ratio (psf ppr). This is for the first hotel development site in Jurong at Jurong Town Hall Road.
A state tender drew 11 bids from major players in the industry including Ascott Holdings, City Developments and United Engineers Developments but Tamerton Pte Ltd, a wholly owned subsidiary of Resorts World Singapore (RWS) topped them all with its $238.2 million bid.
Far East Organization unit Boo Han Holdings in partnership with the group's listed vehicle, Far East Orchard, submitted a bid of $204.8 million or $1,003.56 psf ppr, placing it in second position.
This was 16.3 per cent lower than the top bid by RWS, which is also a wholly owned subsidiary of Genting Singapore.
Other bidders for the site were United Engineers Development ($984.50 psf ppr), Legend Land which is linked to Hotel 81 ($950.74 psf ppr), and City Development's Redvale Investments and Redvale Developments ($784.12 psf ppr).
Though the record bid by Genting Singapore surprised most analysts BT spoke to, they are confident about demand for the upcoming hotel.
RWS currently owns six hotels with 1,500 rooms. This development is the group's first hotel away from Sentosa.
Source: Business Times –21 November 2012
INDUSTRIAL MARKET
JTC launches 3 sites zoned 'Business 2'
JTC Corporation has launched three sites for sale by public tender under the Industrial Government Land Sales programme.
One of the plots is at Buroh Street while the other two are at Tuas South Street 6. All three sites are zoned for Business 2 development, which allows for a wider range of uses in general.
The site at Buroh Street is 2.74 hectares (ha) in size, with a 30-year lease and a maximum permissible gross plot ratio of 2.5.
Top bids may come in at around $90 to $105 per square foot per plot ratio (psf ppr), with five to nine bidders. That would translate to a price of $66-78 million. A nearby industrial plot at Sunview Road transacted for $76.6 million late last month. The 2.81-ha plot drew seven bids.
The two other sites put up for tender yesterday (plot 30 and plot 32) at Tuas South Street 6 are 0.86-ha land parcels with shorter leases of 22.5 years and a maximum permissible gross plot ratio of 1.0.
"These smaller plots with shorter tenure are targeted at industrialists who need to custom-build their own facilities," JTC said in a statement.
Analysts agreed that demand will come from end users for the two plots.
Plot 30 lies in a better location at the intersection of three roads.
A land parcel on the same road (Tuas South Road 6) of the same size attracted a winning bid of $4.9 million last month.
The tender will close at 11am on Jan 2.
Source: Business Times –21 November 2012
COMMERCIAL MARKET
The Index strata offices seen going for at least $2,400 psf
Investor interest in the strata office market is expected to go up a few notches in coming weeks as Far East Organization gets ready to release The Index at Robinson Road/Cecil Street. Talk in the market is that strata offices in the 99-year-leasehold project next to Capital Tower will start from around $2,400 per square foot (psf).
The Index will also have some medical suites on the lower floors and these are expected to be priced from $3,500 psf.
Far East and its listed unit, Far East Orchard Limited, are developing the project on a 99-year-leasehold site, which they clinched at a state tender in September last year. They paid $311.777 million or $882 per square foot per plot ratio. The project's total development cost including land has been previously reported as around $520 million. The Index is about 200 metres from Tanjong Pagar MRT Station.
BT understands that the top eight levels of the 31-storey tower will offer larger whole-floor office units of 10,548 sq ft per floor. Levels 10 to 23 will house 136 smaller office units ranging from 592 sq ft to 1,442 sq ft.
Medical suites will be located on the third to fifth levels. In all, there will be 50 such units ranging from 613 sq ft to 1,345 sq ft. The medical suites will have a floor-to-floor height of 4.5 metres and the office units, five metres - higher than the three to 3.5 metres for typical offices.
Far East is also setting aside some space in The Index for civic and community institutional use, which will be exempted from the calculation of the building's maximum approved gross floor area.
At street level, there will be separate double-volume lobbies for the offices and medical suites, accessed through a fully sheltered plaza that will be landscaped. There will also be two food-and-beverage outlets with outdoor dining areas and a shop unit - which are expected to be made available for sale.
Far East group is dedicating three basement levels to car parking lots.
A Platinum Green Mark building, The Index will feature a roof garden and pool on the ninth floor.
During a weekend in March this year, Far East sold all 100 office units at PS100 at Peck Seah Street at an average price of $3,000 psf.
Office units in the 99-year-leasehold project have sizes of between 420 sq ft and 517 sq ft.
URA Realis caveats data shows that this year, office units at the 99-year Eon Shenton project have fetched an average price of $2,554 psf, while freehold offices at Oxley Tower in Robinson Road have sold for $3,197 psf on average.
SISV Realink caveats data shows that nine medical suites at the completed Novena Medical Centre, on a site with a remaining lease of about 89 years, have changed hands for an average $3,147 psf this year.
In Bencoolen Street, a Guthrie-Sun Venture tie-up which acquired 66 office units from a partnership between Wing Tai and City Developments earlier this year has resold 25 of these units over the past month at $1,782-$1,893 psf. The sold units are from a batch of 43 which Guthrie-Sun Venture released on the fifth to eighth levels of Burlington Square.
The 66 office units are between 549 sq ft and 1,066 sq ft. CBRE is the marketing agent.
Burlington Square is on a site with 82.5 years' remaining lease.
Source: Business Times –20 November 2012
More pressure seen on S'pore office rents
An estimated 7.2 million square feet of net lettable area (NLA) is expected to come onstream in Singapore's central business district (CBD) over the next five years amid softer economic conditions, exerting further pressure on rental rates.
Core projects include the Duo and Marina One, two mega mixed-used developments which will add nearly 2.5 million of prime commercial space when completed in 2017 by a joint venture involving Singapore's Temasek Holdings and Malaysia's Khazanah Nasional. Work on the Duo in Ophir and Marina One in Marina South is scheduled to start next year.
In the immediate term, recently completed or soon-to-be completed projects will add to price pressures given the additional supply in a climate of tepid economic growth. Following a slight 0.3 per cent year-on-year GDP expansion in the third quarter on stagnant global demand, full-year growth is projected at a modest 1.5 per cent and pegged at between one and 3 per cent in 2013.
There is increasingly keen competition in the commercial segment with the unveiling of Duo and Marina One.
Although completion for both is five years down the road, there are other prime Grade A buildings in the CBD area either under construction or to be finished over the next few years, with a combined offering of some 3.2 million sq ft.
These include the Marina Bay Financial Centre (MBFC) Tower 3 and One Raffles Place Tower 2 - providing some 1.6 million sq ft this year - and South Beach Development which is scheduled to be finished in 2016.
Then there are the new commercial buildings outside of the CBD which will add another 2.1 million sq ft of NLA.
Khazanah's involvement, however, could see more Malaysian-based companies signing on as tenants in the projects, adding that in the case of the Duo, its newness might be attractive to prospective tenants given that the existing schemes in the area tend to be older Grade B buildings.
The Singapore government's strong involvement is seen as signalling its intent to catalyse the development of the Marina Bay Downtown and the Ophir-Rochor Corridor, ensuring a steady supply of premium office space, which in turn would keep occupation costs reasonable.
But in the immediate and shorter term, rental rates are likely to come under further challenge.
Source: Business Times –20 November 2012
INDUSTRIAL MARKET
Foreign investors not impacting industrial rents much: Hng Kiang
Foreign investors in Singapore's industrial property probably do not exert a significant impact on the rentals of factory space here, Minister for Trade and Industry Lim Hng Kiang said yesterday.
He said that while Singapore does not collect data on whether owners of industrial space are foreigners, foreign buyers of industrial properties are most likely either large private developers or real estate investment trusts, and such entities own about 27 per cent of the industrial space here.
Foreign investors thus "do not form a very large percentage".
Mr Lim was responding to a question from MP Inderjit Singh (Ang Mo Kio GRC) on whether foreign buyers have driven up industrial land prices here.
The minister noted that industrial land prices had risen more sharply in the last three years than land rentals, which affects the performance of small- and medium-sized enterprises.
Industrial property rentals had been flat between 2002 and 2007, and rose only thereafter.
Mr Lim ruled out the possibility of the government restricting the purchase of industrial properties to users of the space, as this would have significant impact on businesses.
"Allowing investors to participate in the industrial property market provides options for industrialists, reduces the upfront capital costs for businesses and keeps rentals competitive."
He added that not all industrialists buy industrial space; some prefer to rent, an arrangement which gives them more business flexibility.
Source: Business Times –17 November 2012
JTC's prepared industrial land allocation down 25%
JTC Corporation's net allocation of prepared industrial land (PIL) fell 25 per cent to 23.1 hectares (ha) in the third quarter of 2012 from 30.8 ha in the previous quarter.
Gross allocation of PIL was higher at 57.4 ha, supported by healthy take-up of land by companies in the consumer healthcare and marine and offshore industries, the government industrial landlord said yesterday.
JTC said 19.2 ha (33 per cent) of the gross allocation of PIL came from the manufacturing sector while 38.3 ha (67 per cent) was contributed by the manufacturing-related and supporting industries sector.
Terminations rose to 34.4 ha in the third quarter from 21.7 ha in Q2.
Some 44 per cent (15.2 ha) of land terminations came from the manufacturing sector while manufacturing-related and supporting industries sector contributed the remaining 56 per cent (19.2 ha).
Occupancy level for ready-built facilities (RBF) remained healthy at 96.1 per cent.
Net allocation of RBF declined to -2,480 square metres (sq m) from 10,080 sq m in the previous quarter. This was mainly due to lower allocation of the Business Park Space, which experienced strong take-up last quarter.
Gross allocation of RBF rose 4 per cent quarter on quarter to 22,560 sq m.
JTC said construction of its small footprint standard factories is expected to be completed by the next quarter.
Development work for Surface Engineering Hub and MedTech1 are expected to be completed in the second half of next year.
Source: Business Times –17 November 2012
COMMERCIAL MARKET
Lego S'pore among latest tenants at MBFC's Tower 3
Marina Bay Financial Centre (MBFC) has secured new leases in its Tower 3 building, which brings the overall commitment level at the tower to 76 per cent, or nearly 960,000 square feet.
Raffles Quay Asset Management (RQAM), the manager for MBFC, said yesterday that the building, which offers 1.3 million sq ft of prime Grade A office space, had secured new tenants such as Lego Singapore, which supplies products of Denmark-based firm Lego, and New York-based international legal firm Milbank, Tweed, Hadley & McCloy LLP.
Earlier this month, BT reported that French banking group CIC, now located in Market Street, had signed a lease to take up 31,000 sq ft of space on the 37th floor of Tower 3.
The new tenants will join existing ones such as DBS Bank, Ashurst LLP, Clifford Chance, WongPartnership, Mead Johnson and McGraw-Hill in the 46-storey tower.
Said Warren Bishop, chief executive of RQAM: "We continue to see a healthy pipeline of interest from companies and prospects for Tower 3 who want to be part of this . . . development.
"With Singapore being positioned as the Asian financial gateway, we are confident that MBFC remains the choice location for multinational corporations."
RQAM also said yesterday that the 179,000-sq-ft Marina Bay Link Mall, the retail component of MBFC, is now 100 per cent leased.
Urban Redevelopment Authority data indicates that the net increase in demand for islandwide office space for the third quarter of this year was 764,237 sq ft, taking the figure for the first nine months to 1.69 million sq ft.
The figure for last year was 2.3 million sq ft.
On the supply side, CBRE estimates that this year, 1.4 million sq ft of office space would be built, down from last year's three million sq ft.
Next year, some 2.6 million sq ft of offices are slated for completion from projects such as Asia Square Tower 2 in the central business district, Jem next to Jurong East MRT station and The Metropolis in Buona Vista.
Source: Business Times –15 November 2012
RETAIL MARKET
19 retail units at Crown Centre for sale
Nineteen freehold strata retail units on the ground floor of Crown Centre in Bukit Timah have been put up for sale. The price tag is about $32 million, or $4,131 per square foot of the units' total strata area of 7,746 sq ft.
BT understands that based on the current average rent being achieved for the units - which are fully tenanted - the price tag reflects a net yield of just 1.8 per cent. However, there is significant rental upside for investors looking to spruce up the asset and reposition its tenant mix.
Talk in the market is that ground-floor food and beverage outlets in Coronation Shopping Plaza nearby are fetching monthly rents of about $15-19 psf. Assuming similar rents can be attained on an average basis for the 19 units on offer at Crown Centre, the net yield based on $4,131 psf and taking into account the cost of sprucing up the asset may be closer to 4 per cent.
Of the 19 units, 18 are held by a family investment company while the remaining unit is owned by an individual.
Crown Centre is a three-storey mixed use development with triple frontage - along Queen's, Bukit Timah and King's roads.
Besides the 19 retail units on the first floor which are for sale, Crown Centre has 21 retail units on its second level and six apartments on the third level. The building has 33 basement carpark lots.
Citing some price comparisons, third-floor units in the nearby freehold Coronation Shopping Plaza have achieved $3,376 psf while units on the second level of Bukit Timah Plaza (further away and on a site with a balance lease term of 63 years) have exceeded $3,400 psf on strata area recently.
There may also be potential for an en bloc sale at Crown Centre.
The 19 units on offer are equivalent to 39.7 per cent of the share value of the building.
Crown Centre, which was completed in the mid-1980s, is on a site with land area of 18,081 sq ft. Under Master Plan 2008, the site is zoned for commercial and residential use, with a plot ratio (ratio of maximum permissible GFA to land area) of three.
Market watchers say that there is strong demand for space for cafes, banks and supermarkets in that stretch of Bukit Timah Road.
Crown Centre is located in the affluent District 10 Bukit Timah neighbourhood and is about 350 metres from both the Botanic Gardens and the upcoming Tan Kah Kee (Downtown Line) MRT stations. In addition to Coronation Shopping Plaza, other nearby landmarks include King's Arcade and Serene Centre as well as schools such as Hwa Chong Institution, Nanyang Girls' High, National Junior College and St Margaret's Secondary.
Its expression of interest exercise closes on Nov 28.
Source: Business Times – 6 November 2012
INDUSTRIAL MARKET
Fusionopolis Phase 5 project kicks off
Ascendas Land Pte Ltd and its joint venture partner, Mitsui & Co Ltd, yesterday broke ground for Fusionopolis Phase 5, a $370 million project touted as the first development to introduce a "work office home office" (Woho) concept.
The new development in the heart of Fusionopolis in one-north is a 75:25 venture between Ascendas and Mitsui. The venture, Ascendas Fusion 5, was established as a special-purpose company (SPC) under Japanese law.
Fusionopolis Phase 5 comprises a 17-storey building with 59,300 square metres of business space, a separate five-storey office block featuring 2,690 sq m of "Woho concept" units, and 5,500 sq m of retail space. Its gross floor area totals 67,490 sq m.
"The Woho units range between 32 and 96 sq m, and provide a live-in component for two to six employees comfortably," said Ascendas.
It said that it "has not commenced marketing for the spaces, but (envisions) that the Woho concept will appeal greatly to the infocommunication technology and media start-up companies and SMEs (small and medium enterprises), in line with (its) overall marketing strategy to craft out a media infocomm enclave."
BT earlier reported that Ascendas would work closely with Mitsui on a pipeline of potential tenants for the new development, especially Japanese companies looking for business space in Asia.
Woho tenants have the flexibility to customise and configure these spaces for their work and living needs, and thus can enjoy a work environment that nurtures creativity and innovation, Ascendas said.
Ascendas has also taken care to incorporate optimal energy-efficiency and environmentally friendly features into the design of Fusionopolis Phase 5, and hopes that it will meet the criteria of the Building and Construction Authority (BCA) Green Mark Platinum certification.
Such features include water-efficient sanitary ware and fittings, efficient light fittings, an efficient chiller plant, good thermal performance of its building envelope, an efficient air distribution system, motion sensors for staircases and toilets, and equipment and materials.
In addition, Fusionopolis Phase 5 has wide open green spaces and an observation deck, both of which "seamlessly (integrate) quality business space with natural landscape and lifestyle conveniences", said Ascendas.
Said Ascendas president and CEO Chong Siak Ching: "Fusionopolis Phase 5 is the sixth project that the Ascendas Group will undertake in one-north, totalling our stable of quality business space here to close to 210,000 sq m. We will have three buildings in Biopolis, one in Mediapolis and two in Fusionopolis."
She added that with these spaces, Ascendas would be able to cater to customers across various industries, such as life sciences, information technology, and media.
The project is expected to be completed in the fourth quarter of 2014.
Ascendas wants to leverage on Mitsui's strong network, owing to the latter's diversified investments in various industries, including in the development of major international infrastructure.
Mitsui's pan-Asia footprint in 33 cities across 10 countries will also help Ascendas reach out to regional companies seeking to expand their business activities here, it said.
Source: Business Times – 6 November 2012
JTC releases three industrial plots for sale
JTC Corporation has launched three industrial plots for sale by public tender.
The first site, located off Woodlands Ave 10 and abutting Mapletree's Woodlands Spectrum I and II, has a lease term of 30 years.
The other two sites (Plots 8 and 18) are located at Tuas South Street 8, and are about 32,674.9 sq ft and 48,727.1 sq ft respectively. They have a gross plot ratio of 1.0.
The two sites have a lease term of 22 years and seven months.
A similar plot (Plot 12) at Tuas South Street 8 had received 17 bids, when the tender for the site closed in mid-October.
Source: Business Times – 1 November 2012
Industrial building near Sims Dr up for sale
A seven-storey building, meant for light industries, near Sims Drive has been launched for sale by public tender with an indicative asking price of between $33.8 million and $36 million, or $564 to $601 per square foot per plot ratio (psf ppr).
The building is mostly occupied by Hock Tong Bee Pte Ltd-Cornerstone Wines as its corporate headquarters. The company, one of the few suppliers of wines to supermarkets here, had received an unsolicited bid of more than $30 million for the property recently, but decided to conduct a sale by tender instead.
Hock Tong Bee-Cornerstone Wines' managing director Clinton Ang said: "We're open to selling the property if - and only if - offer bids meet our price expectations."
The rectangular freehold plot takes up approximately 23,936 square feet and has a gross plot ratio of 2.5. It is zoned for Business 1 use, which means it is for light and clean industrial use which will not require a "nuisance buffer" of more than 50 metres.
An industrial building in Sims Drive was recently sold for $43.18 million or $495 psf ppr. The property was a vacant two-storey factory earmarked for demolition and redevelopment.
The tender closes on Nov 28 at 3 pm.
Source: Business Times – 1 November 2012
INDUSTRIAL MARKET
Industrial property hot spots emerging
Woodlands, Bedok and Geylang have emerged as hot spots for industrial property investors this year, as the red-hot sector draws growing interest.
Developers sold a total of 435 new industrial units in the third quarter, with 37 per cent of sales in the Geylang and Kallang planning areas, an analysis of caveats lodged with the Urban Redevelopment Authority (URA) has found.
Projects in these areas include AZ @ Paya Lebar, Oxley Bizhub and CT Hub 2.
Industrial prices have now charged up by more than 60 per cent in under two years, new figures out earlier this week showed.
Sales volumes have also been climbing, with 2,894 transactions in the first 10 months of the year. This is up 14 per cent from the same period last year, and is 28 per cent more than in 2010.
This sharp increase has prompted a property expert to call for more detailed data to properly understand the phenomenon - especially as government cooling measures may in the offing.
URA data out on Monday showed that industrial property prices surged 8.8 per cent in the three months to Sept30.
This took price gains to a whopping 27 per cent in the first nine months of the year. Last year, they surged 27 per cent.
A growing number of older industrial units at projects like Eunos Techpark and Tan Boon Liat Building have eclipsed the $1,000 per sq ft (psf) mark, costing more than many homes in the suburban areas. Meanwhile, new projects like Apex @ Henderson in the Bukit Merah area, Oxley Bizhub in Ubi Road, and CT Hub 2 in Lavender Street have continued to enjoy keen third-quarter sales.
The highest psf price for a new unit sold in the three months to September was a 3,035 sq ft first-floor factory space that sold for $3.95 million in August at the freehold Apex @ Henderson. This works out to $1,300 psf.
For the year, freehold project AZ @ Paya Lebar topped the price table with a sale at $2,100 psf in June for a 1,098 sq ft unit.
Experts say while prices have generally climbed across the board, surging industrial prices are partly due to new high-priced launches, some of which are less common freehold developments. As benchmark prices are attained, this pulls up the values of nearby resale units, they add.
The Trade and Industry Minister reiterated in April that the Government will ensure there are sufficient measures to keep industrial space affordable.
Source: The Straits Times – 31 October 2012
COMMERCIAL MARKET
Shop and office rents continue decline in third quarter
While the prices of homes and industrial space continue to surge, shop and office rents are edging downwards.
Office rents dipped 0.1 per cent in the third quarter from the preceding three months while shop space rents were 0.3 per cent lower.
This was a slight improvement over the second quarter, where office rents fell 0.5 per cent while shop space dipped 0.3 per cent.
The smaller decline in office rents in the three months to Sept 30, from the preceding quarter, was largely due to increased demand and a 237,000 sq ft contraction in supply during the period.
Net new demand for offices more than doubled from the second quarter to 764,000 sq ft in the third, the highest take-up rate in 51/2 years.
The bulk of office clusters within the central area saw a slight decrease in rent of between 0.6 per cent and 0.9 per cent from the preceding quarter.
This central area includes Grade A and A+ offices in Raffles Place, the Suntec and Marina area and Orchard Road.
Grade A office buildings in Raffles Place are still recovering from the loss of major tenants who moved to newer buildings at Marina Bay, he said.
But office rents in suburban areas, Shenton Way and Tanjong Pagar remained flat from the second quarter.
Increased retail space supply in the central region due to completion of new malls, coupled with falling demand, helped send down shop rentals, which have now declined for two consecutive quarters..
Source: The Straits Times – 30 October 2012
Bt Timah Saddle Club site up for tender
A public tender for a site occupied by the Bukit Timah Saddle Club (BTSC) will be launched today.
The site, located at 51 Fairways Drive, occupies 104,567.2 square metres of land and the guide rent per month is $38,700 per month, said the Singapore Land Authority yesterday. The gross floor area of the site is 2,202.3 sq m.
Currently, BTSC is leasing just five hectares and pays about $18,000 a month for rental of the space.
BTSC has been leasing the site since 1999 through a short-term tenancy that has been extended several times. The club was informed by SLA in May last year that a final tenancy extension would be given in January this year and would expire on Dec 31.
In May 2011, the site was made available for interim use until the end of 2018, according to directions from the Urban Redevelopment Authority.
SLA decided to launch a public tender for the site to allow other interested parties, who wish to run a saddle club, to have an opportunity to bid for the use of the site.
BTSC board chairman Doug Harrison told BT that it was in the interest of members to participate in the tender, though a decision had not been finalised.
"We have to see all the terms and conditions, but we would definitely like to stay where we are," he said.
Besides the BTSC, there are two other parties who have expressed interest in the site.
Indicative use for the site will remain primarily for equestrian purposes, and public riding must be made available. Other ancillary uses, such as restaurants and shops, must be capped at GFA of 251 sq m.
To minimise disruption to BSTC's operations, SLA is providing the club the option of a back-to-back arrangement by giving a six-month extension until June 30, 2013.
"This will allow BTSC to continue its operations on the premises with minimal disruption if it decides to participate in the tender and is successful," said Lee Seng Lai, director, land operations (private) division, SLA.
The tender will close on Nov 20 at 11am.
Source: Business Times – 30 October 2012
Satinder Garcha buying Murray Terrace
Satinder Garcha's Elevation group is understood to have inked a deal to buy Murray Terrace for $75 million.
Talk in the market is that Mr Garcha plans to convert the conservation property into a hotel, subject to approval from the authorities.
US-based property fund group AEW is selling the property, which comprises a row of 14 conserved shophouses just off Maxwell Road and opposite URA Centre. Thirteen of these shophouses are three storeys high and the remaining one, four storeys high.
The premises, at Nos 2 to 28 Murray Street, are now leased as offices, with ad agency Leo Burnett being the anchor tenant.
Murray Terrace's net lettable area is about 50,000 sq ft, so assuming how the hotel rooms are carved out, the property could potentially yield about 150 rooms with an average size of 30 sq m (about 323 sq ft).
Market watchers reckon Murray Terrace could be transformed into a boutique upmarket hotel, given its unique location, near the financial district, Chinatown and the Club Street dining belt. It is also a short walk from Tanjong Pagar MRT Station.
Murray Terrace is on a site with land area of 25,151 sq ft and a remaining lease term of about 60 years. The site is currently zoned for commercial use under Master Plan 2008.
The pre-war conservation shophouses were restored in 2009, earning the project an Architectural Heritage Award from Urban Redevelopment Authority the following year.
In the Little India location, Mr Garcha is said to be planning an art-themed boutique hotel within six adjoining three-storey freehold conservation shophouses in Syed Alwi Road that he bought for $23 million earlier this year. Conversion of the shophouses into a hotel would again be subject to securing all approvals from the authorities.
The six shophouses have gross floor area of about 18,500 sq ft and stand on a site of around 8,100 sq ft.
In South America, the 41-year-old Singapore citizen and avid polo player is also restoring the historic City Hotel in downtown Santiago facing the Plaza de las Armas. The property is expected to be a full-fledged hotel with signature restaurants, ballrooms and conference facilities.
New Delhi-born Mr Garcha made his fortune in Silicon Valley during the dotcom boom before moving to Singapore and setting up Elevation group. The group has developed a string of bungalows in Singapore's Good Class Bungalow Areas as well as in the upscale waterfront housing district of Sentosa Cove.
Source: Business Times – 30 October 2012
INDUSTRIAL MARKET
Industrial property prices step on the gas
While cooling measures kept home prices in check, the industrial property market kept racing away and registered a hike for the 12th consecutive quarter.
According to data released by the Urban Redevelopment Authority (URA), the industrial property price index rose 8.8 per cent in Q3, to 183.3, comfortably surpassing the previous historic peak seen in Q1 1997.
This brings total price growth for the first nine months of the year to 26.7 per cent, which is only slightly below the full year price gain of 27.2 per cent recorded in 2011.
The unabated growth in prices comes as no surprise, given the spillover in demand from the residential market. In addition, industrialists continue to look to purchasing their own premises to have better control and certainty over their real estate costs in the face of rising rents.
Specifically, the price index for multiple-user factory space increased by 10.1 per cent in Q3, compared with a rise of 8.3 per cent the previous quarter.
The price index for multiple-user warehouses on the other hand increased by 2.3 per cent in Q3, from 8.6 per cent previously.
Rental growth also lost some momentum, rising by 1.2 per cent in Q3, from 2.8 per cent the previous quarter.
This brought the overall rental increase in the first nine months of 2012 to 6 per cent, substantially lower than the full year rental increase of 15.5 per cent recorded in 2011..
Also, the electronics clusters has been slowing down while the biomedical (pharmaceutical) cluster remains volatile - and both clusters are typically large space occupiers.
This was largely supported by prices in the landed housing segment increasing 1.1 per cent in Q3, after rising 0.4 per cent in Q2. Detached home prices rebounded the most, by 2 per cent quarter-on-quarter.
Prices of detached homes in the Serangoon area increased from $918 psf on average in Q2 to $1,080 psf on average in Q3.
Prices of non-landed homes in the Outside Central Region grew 1.0 per cent in Q3, versus 0.5 per cent in Q2.
In the Rest of Central Region the price index was up 0.8 per cent in Q3, versus 0.4 per cent in Q2. The index for Core Central Region edged up 0.1 per cent in Q3, compared to 0.6 per cent the previous quarter.
Source: Business Times – 30 October 2012
Source: Business Times – 30 October 2012
About 49,000 sq ft at Delta House up for sale
A total 49,053 sq ft of freehold strata industrial space at Delta House in the Alexandra /Delta Road vicinity has come on the market. The space comprises two strata units, one with about 36,308 sq ft occupying the entire fourth level of the eight-storey building and another unit of 12,745 sq ft on the third level.
The two units are owned b y a g r o u p o f h i g h net-worth investors.
Based on a price of $1,100 psf, the lumpsum price works out to nearly $54 million.
Delta House was completed as an industrial building about 30 years ago, but under Urban Redevelopment Authority's current Master Plan 2008, the site is zoned for residential use with 2.1 plot ratio (ratio of maximum gross floor area to land area).
Delta House is on a site with land area of 88,537 sq ft and just about 200 metres from the upmarket Jervois Road residential belt.
A back of the envelope calculation shows that the site can be potentially redeveloped into a new condominium project with about 170 units of an average size of 1,000 sq ft.
"The residential zoning adds considerable additional value to the property.
"That said, the fundamentals of the property based on its existing industrial use, its prestigious location and ample carparking make it an exciting income- producing investment opportunity or suitable for an owner occupier," said Mr Ward.
Delta House has 82 surface carpark lots.
The space being offered is equivalent to strata share value of 20.7 per cent in Delta House. The space is currently vacant.
Urban Redevelopment Authority's All Industrial property price index has rise n 3 1.7 percent year-on-year in Q3 2012.
The two units are owned b y a g r o u p o f h i g h net-worth investors.
Based on a price of $1,100 psf, the lumpsum price works out to nearly $54 million.
Delta House was completed as an industrial building about 30 years ago, but under Urban Redevelopment Authority's current Master Plan 2008, the site is zoned for residential use with 2.1 plot ratio (ratio of maximum gross floor area to land area).
Delta House is on a site with land area of 88,537 sq ft and just about 200 metres from the upmarket Jervois Road residential belt.
A back of the envelope calculation shows that the site can be potentially redeveloped into a new condominium project with about 170 units of an average size of 1,000 sq ft.
"The residential zoning adds considerable additional value to the property.
"That said, the fundamentals of the property based on its existing industrial use, its prestigious location and ample carparking make it an exciting income- producing investment opportunity or suitable for an owner occupier," said Mr Ward.
Delta House has 82 surface carpark lots.
The space being offered is equivalent to strata share value of 20.7 per cent in Delta House. The space is currently vacant.
Urban Redevelopment Authority's All Industrial property price index has rise n 3 1.7 percent year-on-year in Q3 2012.
Source: Business Times – 30 October 2012
INDUSTRIAL MARKET
INDUSTRIAL MARKET
Ascendas in Iskandar tech park venture
Ascendas Land International will partner UEM Land to develop an integrated technology park in Johor's Iskandar region for an estimated $1.5 billion. The proposed tech park will be located in Nusajaya and will be the nearest industrial site to the Second Link checkpoint, the companies said in a joint statement.
Ascendas will own 60 per cent of the joint venture, and UEM Land, which is backed by Khazanah Nasional, the rest.
"We are excited to be involved in one of the largest and most ambitious development projects in South-east Asia," said Ascendas CEO and president Chong Siak Ching. She added that the project would extend Ascendas's presence in Malaysia.
The development of the 210 hectare freehold site is expected to be completed in nine years, over three phases. The first phase is expected to be launched by the fourth quarter of 2013, the companies said.
When completed, the eco-friendly tech park can host up to 34,000 people, and will have the infrastructure to support a range of industries such as electronics, precision engineering and pharmaceutical and medical devices. There will also be amenities such as dormitories, retail outlets and sports facilities to cater to the business community.
Nusajaya is about 15 to 20 minutes away from both Singapore (via the Second Link) and Johor Baru city centre, according to the companies.
"We are excited to work with Ascendas on this project and are confident that this project will further cement Nusajaya's position as a desired destination for strategic investment as well as for leisure and recreation," said Abdullah Wan Ibrahim, CEO and managing director of UEM Land.
UEM Land, the master developer for Nusajaya, confirmed yesterday that the venture was its first with a Singapore company for a tech park.
Nusajaya is one of the five "flagship zones" in Iskandar and sits on some 9,700 hectares of land that can be developed. Each zone is meant to serve as a hub for different sectors and industries.
Source: Business Times – 24 October 2012
COMMERCIAL MARKET
Office rents hold steady despite new space
Office rents stagnated, overall, in the third quarter, as the effects of recent new space rippled across the market, but some clusters held up better than others.
Rents in the Central Business District (CBD) tended to record small falls, while CBD fringe and suburban areas mostly held firm.
Areas such as Raffles Place, Suntec/Marina Centre and Orchard Road saw a marginal dip in rents of less than 1 per cent from those of the quarter before, owing to the surge in space as existing tenants relocated to newer buildings.
For instance, rents in the Suntec/Marina cluster fell 0.6 per cent as, for instance, Citibank moved out of Centennial Tower to Asia Square, the report noted.
But the 129,000 sq ft of vacated space is gradually being leased, as existing tenants take on more space and new tenants arrive from the legal, engineering and energy sectors.
Grade A office buildings in Raffles Place (where rents slid 0.9 per cent) are also still recovering from their loss of major tenants who moved to the newer buildings at Marina Bay..
But it was Singapore's newest business district, Marina Bay that performed the worst.
Gross face rents in Marina Bay lodged the largest fall in the three months up to Sept 30, slipping 4.4 per cent to $10.75 per sq ft per month - 10 per cent lower than at the start of the year.
Rents for suburban offices, and the Shenton Way and Tanjong Pagar clusters, however, remained flat. These areas offer smaller units of 1,000 sq ft to 5,000 sq ft with lower rentals, which are currently in demand by businesses in the IT, recruitment and insurance sectors.
Experts say that while demand from banks and financial services companies has softened, the slack has been picked up by other sectors, such as the legal, social media, pharmaceutical and energy sectors.
For example, Facebook recently expanded its office at 158, Cecil Street, while CGCG, which deals in oil and gas, recently set up its office here. LinkedIn is also expanding its office.
But CBD rents are expected to face more pressure than CBD-fringe rents, thanks to supply in the pipeline.
New space was already added at major projects such as Asia Square Tower 1, Ocean Financial Centre and OUE Bayfront last year.
Another 2.2 million sq ft will be added to the total stock with the completion of Marina Bay Financial Centre Tower 3 and One Raffles Place Tower 2 this year, and Asia Square Tower 2 next year.
Further adding to this supply is an estimated 170,000 sq ft of "shadow space" - where, essentially, tenants with excess space look for subtenants to ease the rental burden - from occupiers in Marina Bay and Raffles Place.
Shadow space from this cluster made up about 70 per cent of the total shadow space available in the third quarter.
Source: The Straits Times – 23 October 2012INDUSTRIAL MARKET
Industrial property prices set for moderate growth
Prices of industrial properties are likely to moderate in the coming quarters as manufacturing activity loses steam.
Price growth for new sale and resale industrial properties could come off in the next two to three quarters as a result of cautious market sentiment and global economic uncertainties.
The average transacted prices for new strata industrial units recorded marginal decreases in Q3, compared with increased prices in the previous quarter.
The price decline was mainly registered in developments located in various industrial clusters, such as Paya Lebar, Woodlands-Sembawang-Admiralty, Macpherson and Kaki Bukit-Ubi.
Resale strata industrial properties with 30-year leases witnessed a quarterly increase of 3.8 per cent to $249 per square foot (psf). But the increase in prices has slowed significantly compared with the 28 per cent jump from Q1 to Q2.
Sixty-year and 99-year leasehold and freehold industrial properties have been transacted in line with market expectations, with strong quarterly price increases of 12 per cent, 3 per cent and 8 per cent in Q3 respectively.
The average capital values of ground and upper floor prime freehold factory space in Q3 hit $699 psf and $636 psf respectively. This was a 5.1 per cent and 6 per cent quarter-on-quarter increase, compared with a 5.1 per cent and 7.1 per cent quarterly gain in Q2.
Source: Business Times – 19 October 2012
COMMERCIAL MARKET
Sentiment improving for strata shops, offices
Close to $1.3 billion of strata retail units have changed hands so far this year, almost double last year's $685 million.
As for strata office deals, the figure has crossed the $1.6 billion mark since January, compared with $1.4 billion for the whole of last year, going by CBRE's analysis of caveats captured by the SISV Realink and URA Realis systems.
With more people who had invested earlier in strata commercial space now enjoying attractive gains in price, sentiment has improved, and demand for this type of property has picked up in the last six months.
Firstly, cooling measures in the residential property sector caused a diversion of interest to other sectors; secondly, the low interest rates on savings has meant that there was little point in leaving cash in the bank, and thirdly, the banks are charging low rates on commercial mortgages.
Caveats for strata commercial transactions this year are coming not only from new projects under construction such as Eon Shenton, Oxley Tower, Paya Lebar Square and PS 100, but also from resale deals in older developments such as The Adelphi, International Plaza, Lucky Plaza, Sim Lim Square and Parkway Centre.
While buyers of strata office or retail units in new projects under construction may be opportunistic and take a shorter-term view, those buying units in completed projects would generally have a medium- to long-term outlook, whether they are buying for own occupation or for investment reasons.
A Guthrie-Sun Venture tie-up which acquired 86 office and 77 shop units in The Adelphi from CapitaLand in late 2010 has nearly resold all the units. Only one is left - a 635 sq ft shop unit on the fourth level, which is being negotiated for sale at around $1.65 million.
The remaining 76 shops have been sold at between $1,914 psf and $3,100 psf. All 86 offices have found buyers at between $1,675 psf and $2,350 psf. Total sales value from selling these office and shop units is about $354 million, or 62 per cent more than the $218.1 milllion that Guthrie and Sun Venture paid for the units.
The shops are on Basement 1 to Level 4 and the office units, on Levels 5 and 7 to 10.
The Adelphi is a 999-year leasehold building near City Hall MRT station.
Buyers of the office and shop units include law firms, insurance companies, accounting firms and doctors, most of whom were previously not in the building but who have bought the space for their own occupation; high net-worth investors looking at rental income are also among the buyers.
It has been the reverse situation at Parkway Centre in Marine Parade, where a consortium that acquired 51 office units earlier this year with the original intention of investment, agreed to sell some units after receiving "reverse enquiries" from some existing tenants, mostly operators of education centres looking to buy over the units.
Ten units have been sold since late August at between $1,551 psf and $1,675 psf.
When the consortium, led by real estate investor Kishore Buxani, acquired the 51 units for $53.4 million or about $1,043 psf, it had intended to get involved with the building's management, spruce up the building and hold the units for longer-term yield.
The 51 make up about 43 per cent of Parkway Centre's share value.
An extraordinary general meeting was held in late August and an upgrading contract is expected to be awarded soon.
Refurbishment of the building is slated to begin next month and last four to six months.
Parkway Centre is on a site with a remaining lease of 68 years.
Over in Bencoolen Street, Guthrie-Sun Venture has another tie-up in Burlington Square, where marketing efforts of 66 office units acquired in May from Wing Tai-City Developments have begun.
Available are office units of between 549 sq ft and 1,066 sq ft. Each floor offers up to 8,061 sq ft of column-free space.
The offices are on the fifth to 12th floors of the mixed development. Their occupiers will share, with Burlington Square residents, facilities such as a swimming pool, tennis court and gym.
Guthrie-Sun Venture paid $89.3 million or $1,318 psf. Burlington Square is on a site with a remaining lease of 83 years.
Source: Business Times – 18 October 2012COMMERCIAL MARKET
URA tries to limit small shops in new complexes
The Urban Redevelopment Authority (URA) could be looking to discourage an over-concentration of small strata shops in new developments, BT understands. It is also trying to steer them towards a certain size mix.
No official guidelines have been spelt out but market-watchers believe that URA is sharing informal advice on shop sizes. They feel this could be a first step towards putting a lid on the proliferation of small shops in new developments. Small shops have been attracting property investors from the residential sector, which has been hit by six rounds of cooling measures.
BT understands that URA is recommending that at least 50 per cent of the retail portion in a development should comprise units of at least 60 sq metres (645.83 sq ft) each. A maximum 40 per cent may be allocated to 25-59 sq m units, and no more than 10 per cent to 15-24 sq m units. It seems URA is discouraging units below 15 sq m (161.46 sq ft).
"Probably informal guidelines on size requirements for retail units are slowly creeping in," said a developer. On the other hand, a clear guideline would create greater certainty for property developers buying sites with a view to incorporating strata shops in their project, he added.
When contacted, URA declined to confirm the recommended unit size mix.
But its spokeswoman, while acknowledging the need for flexibility to cater to diversity of business needs of different market segments, added: "A development consisting predominantly of small units may pose problems, for example, carpark shortage and traffic congestion, to the local area."
URA's thinking seems to be that the bigger the number of retail units in a development, the more the retail operators and staff, thus increasing the car population in the building. However, industry players say even malls that are under single ownership have been experiencing carpark shortage.
Some developers have taken to minting smallish shops to keep lump-sum prices affordable to potential buyers, but in the process, setting high per square foot (psf) prices. For example, earlier this year, eight street-level cafe units ranging from 398 sq ft to 807 sq ft at Oxley Tower at Robinson Road were sold at $6,200-$7,200 per square foot. At the nearby EON Shenton, all 23 street-level shops fetched $4,000-$4,980 psf. The shops are 129 sq ft to 377 sq ft.
Some of the shops in Oxley Tower have been flipped, based on caveats data.
"The authorities may want to set some controls as to where prices are heading," suggests a market watcher.
Agreeing, a developer said: "I suppose any recommended sizes on retail units would reflect continual concern by the authorities on over-speculation, ie hot money being attracted to smaller units which are more affordable on lump-sum price basis. This would be on a similar basis as the minimum 150 sq metre size introduced for industrial units."
A common perception in industry circles is that for office units, URA is leaning towards 100 sq m as either a minimum or average unit size.
URA's spokeswoman noted that businesses have very diverse needs and budgets. "Some small commercial and retail units exist in the market today to cater to businesses that do not require a big space... When evaluating commercial development proposals, we take into consideration the planning intention for the area and the potential impact on the surrounding environment and local traffic conditions.
"We work closely with developers and architects in the design and layout of commercial and shop spaces to ensure that the layout caters to the needs of different users, provides a conducive environment to the customers and at the same time, minimises any potential disamenity issues to the surrounding uses.".
Source: Business Times – 17 October 2012
No speculative signs in HDB shophouse prices
Figures released by the government yesterday showed that there is no speculative element in the prices of HDB shophouses given the low percentage of resale transactions.
In a written response to Member of Parliament Ong Teng Koon (Sembawang GRC), Minister for National Development (MND) Khaw Boon Wan highlighted the fact that resale transactions involving HDB-sold shops made up only 3 to 7 per cent of the total stock of HDB-sold shops.
From January to August 2012, there were 216 such transactions and of these, 14 shops, or 6 per cent, were resold within one year of purchase.
Given the fact that HDB- sold shops are transacted in the market on a willing- buyer-willing-seller basis, without restrictions and in accordance with demand, Mr Khaw said that MND will not be imposing new restrictions such as stricter citizenship eligibility on transactions.
There are currently 8,700 HDB-sold shops.
Singaporeans and Singapore-owned companies own about 95 per cent of the sold shops. The remaining 5 per cent are owned by permanent residents (PRs), foreigners and foreign- owned companies.
In a separate response to MP Gan Thiam Poh (Pasir Ris-Punggol GRC) on whether HDB will reconsider building executive maisonettes, Mr Khaw ruled out such a possibility, adding that executive condominiums (ECs) are better placed to meet the diverse needs of Singaporeans.
HDB stopped building executive maisonettes in 1996 when the EC Housing Scheme was implemented.
In another written reply to MP Ong Teng Koon about MND's development plans in Woodlands, Mr Khaw said: "There are plans to develop the land around Woodlands MRT station into a regional centre. These plans form part of our strategy to bring jobs closer to homes in our housing towns."
Mr Khaw added that URA has begun to review the development plans for Woodlands as part of the current Master Plan review exercise in conjunction with the finalisation of the Thomson Line MRT station at Woodlands.
Source: Business Times – 17 October 2012
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