News Update - 19 Dec 2012

RESIDENTIAL MARKET

Strong demand seen for Queenstown condo site

 The last two 99-year-leasehold private housing sites on the second half 2012 Government Land Sales (GLS) programme have been released. One is a plum site next to Queenstown MRT Station being offered on the confirmed list and tipped by some analysts to fetch a top bid of $1,000 per square foot per plot ratio (psf ppr) or more.

The other site, next to Tanah Merah MRT Station, is being made available for application on the reserve list. The Urban Redevelopment Authority (URA), acting as land sales agent for the government, will launch this site for tender only if it receives an application from a developer accompanied by an undertaking of a minimum bid price acceptable to the state.

Along Commonwealth Avenue, next to Queenstown MRT Station, the Housing & Development Board, as a state land sales agent, is offering a 1.2-hectare plot that can potentially yield about 700 homes. The site has a 4.9 plot ratio (ratio of maximum gross floor area to land area), which means it can accommodate a high-rise condo of over 40 storeys, say property consultants.

Predictions of the top bid for this site range widely - from $700 psf ppr to $1,100 psf ppr. Five to 10 bids are expected for the land parcel.

$970 psf ppr was fetched earlier this month for a 99-year condo site in Alexandra Road/Alexandra View near Redhill MRT Station - one stop closer to the city. That was the fourth private housing site the government has sold in the Redhill/Alexandra area over the past year.

ERA Realty Network key executive officer Eugene Lim pointed out that the latest site has about twice the land area of the Redhill plot sold earlier this month, though both have the same plot ratio of 4.9. "We can therefore expect five to eight bids (with the winning bid) at around $900-980 psf ppr."

The site is likely to be heavily contested given its location in a mature estate. "HDB resale flats in Queenstown have been commanding high prices, with executive flats hitting the $1 million mark," he adds.

The tender for the site closes on Feb 5 next year.

In New Upper Changi Road, next to Tanah Merah MRT Station, the URA is marketing a 2.6-ha reserve list site that is expected to yield about 600 units. Three private housing sites in the location have been sold by the government this year.

The latest plot is next to the 748-unit eCO condo, which has been 75 per cent sold since it was launched in September.

Both the Tanah Merah and Queenstown plots are located Outside the Central Area, which means there will be a cap on the maximum number of housing units based on an average unit size of 70 square metres gross floor area.

Anytime now, the URA is expected to release the final two commercial sites in the H2 2012 GLS programme - a 1.2-ha confirmed list site near Jurong East MRT Station and a site along Cecil and Telok Ayer streets. The latter will be made available on the reserve list. Both sites are expected to have minimum office component stipulations.

Source: Business Times –19 December 2012

 

COMMERCIAL MARKET

Rents on Orchard Road fringes turning soft

Rentals on the fringes of Orchard Road and the city are showing signs of softening, after recording their first dip in five quarters.

Rents of shops in the City Hall and Marina Centre areas recorded a 3 per cent drop from $21.90 per square foot (psf) per month in the previous quarter to $21.30 psf/month in Q4 2012.

Rents in the other city fringe areas fell to $14.25 psf/month from $14.60 psf/month in Q3 2012.

But prime Orchard Road rents held up better, with rentals remaining stable over the past five quarters at $31.60 psf/month.

According to a report by CRBE released yesterday, rents have remained firm as demand continues to be healthy with new-to-market entrants, particularly fast-fashion retailers, taking up space in Orchard Road.

Moreover, with three Asset Enhancement Initiatives (AEI) projects - The Heeren, Orchard Gateway and 268 Orchard Road - expected to be completed next year, demand for prime Orchard Road space is likely to remain healthy.

Already, The Heeren has received full tenant occupancy by Robinsons and Orchard Gateway is more than half pre-committed with tenants, such as Crate & Barrel, Religion, Swatch Megastore and Nike's new concept store called Amplify Women's.

Apart from the Orchard Road area, another area of focus is suburban and downtown core sub-markets that no longer cater purely to low-end type stores but attract new international stores.

By 2013, suburban malls, such as Jem, Westgate, Bedok Mall and Chinatown Point, are expected to be fully operational and will be able to widen their tenant base as the size and spending power of residential catchments increase, underlining the fact that these suburban malls are benefiting from their successful decentralisation across the island, the report added.

With two more suburban malls expected in 2014 - One KM and Seletar Mall - as well as other retail developments, such as Waterway Point, Park Hotel Alexandra and South Beach, slated for completion in 2015, prospects for the suburban market look bright.

While prime suburban rents are expected to remain steady, market analysts sounded a note of caution.

Source: Business Times –19 December 2012

 

Sports Hub retail space to be run by SMRT, FairPrice

Transport operator SMRT and NTUC FairPrice jointly won a bid yesterday to manage more than 40,000 sq m of retail space in the new Singapore Sports Hub.

SMRT Alpha - a joint venture between subsidiaries of SMRT and FairPrice - was appointed to lease and operate the space, with SMRT owning a majority stake of 70 per cent. SMRT Alpha will have the lease of the space in Kallang - which is roughly equivalent to the net lettable retail space of Raffles City - for 12 years.

The retail mall and waterfront area will have a range of indoor and outdoor dining outlets, stores, entertainment options and a FairPrice Xtra hypermarket.

In a statement yesterday, SMRT chief executive Desmond Kuek said the company remains committed to its primary role as a safe and reliable transport operator, but is proud to be involved in promoting a sports and lifestyle destination for Singapore.

"Leveraging our transport network and retail management strengths, we are able to offer Sports Hub unique support to enhance its success and vibrancy.

"With the Circle Line Stadium station on the doorstep of the Singapore Sports Hub, the public can enjoy convenient, quick and easy travel to this highly iconic venue," he said.

His comments come less than three months after he took the helm of SMRT and vowed that strengthening its operations, engineering and maintenance capabilities would be his main priority.

He said then: "What is certain is that we are first and foremost a public transport operator. This is the core business that we are responsible for and must excel in."

He assumed his role as president and CEO after a turbulent time for the firm, in the aftermath of two major MRT disruptions last December that triggered a six-week Committee of Inquiry.

Singapore Sports Hub CEO Philippe Collin Delavaud said the bid was awarded to the joint venture because both SMRT and FairPrice "have a proven track record in reaching out to and bringing the community together".

"They are the best partners one can ask for," he said. "SMRT will be instrumental in transporting the community to the country's newest attraction and the combined experience of both SMRT and NTUC FairPrice in the retail space will be invaluable for the Singapore Sports Hub."

NTUC FairPrice group chief executive Tan Kian Chew said FairPrice was committed to serving the community and recognises sports are "an excellent platform to strengthen community bonds".

"We strive to make our stores easily accessible to our customers, and are happy to be able to serve the community in the Kallang area and beyond," he said.

The Singapore Sports Hub, to open in April 2014, will include the Singapore Indoor Stadium, a new National Stadium, an aquatic centre, a multi-purpose arena and a water sports centre, as well as the new mall and waterfront area that SMRT Alpha will manage.

Source: The Straits Times –19 December 2012

 

Office occupancy costs down 17.7%

The cost of taking up office space in Singapore fell 17.7 per cent as of Sept 30 from a year earlier, a new survey has found.

At US$104.66 (S$127.44) per sq ft on average, office occupancy costs here are the 19th-highest in the world, according to the twice-yearly Prime Office Occupancy Costs survey by consultancy CBRE.

Hong Kong's Central Business District is the most expensive worldwide, at US$246.30 psf on average, despite experiencing the largest decline in the world, of 17.8 per cent, from a year ago.

While the high prices are driven by limited new supply and tight market conditions, the fall came about as cost-cutting among large financial institutions dramatically lowered prime office occupancy costs in Hong Kong.

Six of the top 10 most expensive office markets are in Asian cities.

They include: New Delhi, Tokyo and a second Hong Kong district - West Kowloon. The other two are Beijing's Central Business District and its Finance Street.

The report tracks occupancy costs for prime office space in 133 markets worldwide. Costs increased in 74 markets, decreased in 37 and remained unchanged in 22.

Office occupancy costs in San Francisco accelerated the most this year, taking two spots out of the top five increases.

Source: The Straits Times –19 December 2012

 

INDUSTRIAL MARKET

Industrial space rents hold steady this year

Rents for industrial space held firm this year while resale capital values surged despite a weak global economy which dampened the growth of the manufacturing sector in Singapore, a report said.

Average monthly gross rents for first-storey industrial space were unchanged at $2.15 per sq ft (psf) per month, while upper-storey rents held firm at $1.75psf in the fourth quarter of this year.

They remained constant when compared with the same period last year and with the third quarter of this year.

Business park rents also remained steady at $4.35 psf per month in the fourth quarter and were only 3per cent below their previous peak in 2008, after a marginal dip of 0.7per cent in the first half of this year.

The average occupancy rate for business park space hovered around 80per cent this year. This was lower than for other types of industrial space, which achieved occupancy rates of about 90per cent or more.

Aided by improved demand from the biomedical, engineering, information technology and pharmaceutical sectors, business park rents declined only marginally this year. Sustained leasing activity in existing space also held up the market.

In contrast, capital values of resale industrial space surged, largely driven by investor demand in the current low-interest rate environment and ample liquidity.

Resale prices of first-storey industrial space rose 12per cent to $622 psf in the fourth quarter compared with a year ago. Purchases by firms also grew strongly, as industrialists bought units for their own use to achieve better control over costs and to escape rent fluctuations.

Tighter labour policies and the productivity drive to increase wages could see more firms relocating their businesses out of Singapore.

In addition, next year will see a higher-than-average supply of industrial space in the pipeline. However, against a backdrop of slow but still positive economic growth, industrial rents are expected to hold firm or ease slightly next year.

But price growth is expected to decelerate as prices have already risen 28 to 45 per cent since the last trough in 2009.

A yearly average of 9.5 million sq ft of industrial space is expected to be completed between next year and 2016, in line with the yearly average supply of 10 million sq ft over the past 10 years.

However, the pipeline supply is uneven, with about 16 million sq ft of space expected to be completed next year.

Source: The Straits Times –19 December 2012

News Update - 18 Dec 2012

RESIDENTIAL MARKET

Private home sales in November down 44%

Developers here sold 44.2 per cent fewer private homes in November compared with the month before, as they held back launches during the holiday season.

Data from the Urban Redevelopment Authority (URA) showed that 1,087 private homes, excluding executive condominiums (ECs), were sold last month, compared with 1,948 in October.

November's sales figures were the lowest since December 2011. Compared with the same period last year, transactions fell 36.1 per cent. The slump was largely due to a lack of major launches, market watchers said.

Analysts said developers were holding back until after the festive season, noting that the end of the year is traditionally a low season.

The latest round of property cooling measures may have played a part, too.

A total of 773 units were launched last month, down 53 per cent from the 1,633 units in October.

No new ECs were launched in November, but 179 such homes were sold from earlier launches. Including these hybrid units, 1,266 homes changed hands, down from 2,624 the month before.

Still, demand showed resilience, with homes sold exceeding those launched, analysts said.

The top-selling development last month was the Eco Sanctuary in Upper Bukit Timah. It sold 140 units for a median price of $1,050 per square feet (psf); d'Leedon in Farrer Road sold 133 units at a median of $1,431 psf, while Riversails in Upper Serangoon transacted 81 units at a median of $858 psf. Bartley Residences also sold well, as did the Waterbay EC at Punggol.

The highest psf price in November was for a unit in Scotts Square, which sold for $4,244 psf.

Eugene Lim, ERA Realty's key executive officer, noted that new home sales continued to be "dominated by the mass market". Units from Outside Central Region made up 65 per cent of sales, excluding ECs, last month.

For the first 11 months of 2012, developers moved 20,879 private homes (excluding ECs), adding to a record year. The previous mark for full-year sales was 16,292 units, set in 2010.

Analysts expect 21,000-24,000 homes to be sold for the entire 2012.

For ECs, 3,672 units were sold up to November, and some consultants expect full-year sales to cross the 4,000 mark.

In December, sales figures could be supported by new launches. Analysts predict transaction volumes of 1,000-1,300 units.

Besides the Echelon, Sennett Residence and Spottiswoode Suites, the likes of the Kingsford@Hillview Peak, Village@Pasir Panjang and the Whitley Residences could be launched. Three EC launches are also expected: City Life@Tampines, Forestville and The Topiary.

There remains potential drag from an uncertain economic outlook and cautious employment prospects. Some analysts are expecting transactions to slow to 16,000-18,000 units next year.

Source: Business Times –18 December 2012

 

Collective sales players in no hurry to bid for sites

Prudence is the word that springs to mind when one talks about the outlook of the collective sales market in 2013.

Given the less-than-buoyant demand for collective sales sites this year, market analysts expect the same in the coming months, with developers favouring smaller sites, as they did throughout 2012.

Although the ABSD might have resulted in more cautious transactions in the en-bloc market this year, a couple of records were still broken and new highs set.

For example, the sale of Thomson View condominium) at $712 per square foot per plot ratio (psf ppr) or $590 million, was the largest residential collective deal since June 2007 when Farrer Court on King's Road made headlines for its staggering $1.34 billion price tag.

While Thomson View gave a boost to a market that had seen mostly smaller collective sales of under $100 million in recent years, it was a one-off deal and did not set off ripples in the market. It was successful in its third collective sales attempt partly because of the newly announced Upper Thomson MRT station nearby (part of the upcoming Thomson Line), said market analysts.

The year-to-date value of transactions is expected to be around $2 billion, about two-thirds of last year's $3.2 billion.

This is from the 24 sites sold to date this year, compared with the 51 transactions recorded in 2011. Only three out of the 24 sites sold were in the prime districts of 9,10 and 11, with the rest mainly from sites in the suburban areas and city fringe.

Tracking sales trends over the years, the report found that 14,811 private residential units were sold by developers in 2007, with the core central region, rest of central region and outside central region, accounting for 33 per cent, 30 per cent and 37 per cent, respectively.

By 2010, 75 per cent of the 16,292 units sold by developers were attributable to the rest of the central region and outside the central region, while the core central region's share had slipped to 25 per cent.

Demand for homes outside prime districts strengthened in 2011, when nearly 90 per cent of the 15,904 units sold by developers were in the rest of central region and outside central region.

Not surprisingly, similar robust demand was seen in 2012 in the rest of central region and outside central region, which accounted for 95 per cent of developer sales, with the rest coming from the core central region.

Several of the bigger collective sales this year, besides Thomson View, were successful only after having been on the market more than once, evidence of the anxiety among developers to take on such projects in these uncertain economic times.

For example, Chateau Eliza, which was transacted in September at $9.2 million or $1,743 psf ppr, had been on the market three times previously.

The property was first put up for collective sale in 2007 at an indicative price of about $115 million to $120 million. It was then launched for sale again in December 2011 with a guide price of $111 million to $115 million, and a third time in May this year at a reserve price of $108 million before it was successfully sold in September.

Source: Business Times –18 December 2012

 

Property option fee: Woman loses appeal

A housewife submitted a cheque to pay a 1 per cent option- to-purchase fee concerning a $27.6 million Swettenham Road bungalow.

But the cheque for $276,000 bounced and the seller sued Madam Leong Miew Fong for the fee payable. She did not file her defence in the case and the High Court ordered her to pay the $276,000 by default.

She applied to the High Court last month to set aside the judgment but did not succeed.

Yesterday, she failed in her appeal to avoid paying the fee even though the sale had been aborted.

In March, she had forwarded a cheque signed by her husband to the seller Swettenham19, a private firm dealing in real estate.

The option-to-purchase fee would give her the right to proceed with the acquisition of the 16,800 sq ft double-storey property near the Botanic Gardens.

But the cheque bounced as funds which her husband had expected to come into his bank account did not arrive, according to court documents filed.

In April, Swettenham19 sued Madam Leong for the fee and won.

Last month, Assistant Registrar Kevin Tan dismissed her move to set aside the outcome, pointing out that her failure to pay the fee did not prevent the seller from enforcing the option-to-purchase transaction, based on the terms of the valid contract.

She appealed yesterday before Justice Tay Yong Kwang and said in court documents that she did not file a defence to the suit earlier because she was keen to negotiate and seek an amicable settlement with the owner.

She further claimed she did not want to "antagonise" the owner and had hoped the property would not be sold to another party.

Her lawyer Derek Kang urged the court to set aside the default judgment and allow Madam Leong to file her defence for a full hearing.

He argued the deal as claimed by Swettenham19 was a one-way deal and did not become a contract between both parties as no money had been paid by her.

This was an issue for the court to rule on in a trial, he said.

But lawyer George Pereira, representing Swettenham19, countered that Madam Leong's claim to have sought to settle the dispute amicably and therefore not filing a defence was not borne out by the facts.

He argued she could not take advantage of her own wrong by asserting that there was no contract since no payment was made when the cheque bounced.

Justice Tay agreed and dismissed her appeal with costs.

Lawyers said the case underscores the need to make clear in any option-to-purchase contract whether the deal takes effect only after the option-fee money is paid, to avoid a similar incident.

Source: The Straits Times –18 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

News Update - 17 Dec 2012

RESIDENTIAL MARKET

MND opens up plum sites for private housing

The Ministry of National Development (MND) brought some joyous tidings with the announcement that it will release some plum sites for private housing in the first half of the coming year. Many are in locations that have been rarely touched of late as part of the Government Land Sales (GLS) programme.

MND is trying to pull off a balancing act. It will be releasing roughly the same quantum of land over the next six months as it did in the current half-year. It is seeking the right balance between developers' appetite for residential land and potential oversupply as a record number of homes come onstream in the next few years.

Still, market watchers were surprised by the choice sites up for grabs. These include a landed housing site in Coronation Road/Victoria Park Road that can generate about 140 landed homes. The plot is next to the Victoria Park and Rebecca Park Good Class Bungalow Areas. It used to be a Chinese cemetery, where graves were exhumed sometime ago. The Urban Redevelopment Authority (URA) will launch this site in March.

In June, the URA will roll out a site on Mount Sophia, a chunk of which comprises an area which most recently housed the arts enclave called "Old School" and formerly accommodated the Methodist Girls' School. The 2.4-ha site - which includes the former Trinity Theological College and Nan Hwa Girls' School - can be developed into a low-rise condo of about 505 units.

Yet another low-rise condo site is at Faber Walk in the Ulu Pandan area which can yield about 210 units, slated for launch in April. All three land parcels are on the confirmed list, where sites are launched according to a pre-stated schedule, regardless of demand.

In the reserve list, a 2-ha plot on Siglap Road - next to Victoria School, flanked by Mandarin Gardens and Laguna Park, and facing East Coast Park and beach - will be made available in May. As it is on the reserve list, it will be launched for tender only upon successful application by a developer.

Developers are also expected to be keen on two new commercial and residential sites introduced in the H1 2013 programme - a confirmed list plot in Yishun Central (next to the MRT station, bus interchange and Northpoint Shopping Centre) and a reserve list plot next to Potong Pasir MRT Station.

MND will be launching confirmed-list sites that can generate some 6,935 private homes (including 3,110 executive condos or ECs). Through the reserve list, it is offering land for a further 7,100 private homes. The quantum is similar to the current H2 2012 slate.

The URA's spokesman said: "Most of the private residential sites in the (H1 2013) confirmed list are in Outside Central Region or Rest of Central Region - where more affordable private housing is expected to be built".

The H1 2013 confirmed list will supply about 33,360 sq m gross floor area (GFA) of commercial space, with reserve list sites that can generate a further 281,320 sq m. Both figures are lower than the 80,280 sq m and 308,200 sq m respectively in the current half. Market watchers suggest MND's strategy reflects the current soft mood in the office leasing market.

MND noted that H1 2013's reserve list will have three sites for office developments - at Marina View/Union Street in the new Downtown, Cecil Street and Sims Avenue - which are being carried over from the H2 2012 reserve list. These can be triggered by the market, if there is demand. Currently, there is about 1.17 million sq m (12.6 million sq ft) GFA of office supply in the pipeline.

Hotel rooms supply from H1 2013's sites will halve to 1,740 rooms, from 3,655 in the current half. In both periods, the supply is solely through the reserve list.

Source: Business Times –15 December 2012

 

Plethora of residential sites for developers to choose from

Releasing sites in the Central Region will bring more live-in population nearer to the city centre and help cut commutes to work. At the same time, releasing sites near MRT stations will enable more residents to have better access to the public transport network.

So said the Urban Redevelopment Authority (URA) in response to BT's queries on the government's strategy to release several plum private residential sites including in the prime districts for the first-half 2013 Government Land Sales (GLS) programme.

These include a rare landed housing plot in Coronation Road, abutting the Victoria Park and Rebecca Park Good Class Bungalow Areas. The District 10 site, scheduled for launch in March next year, is expected to yield some 140 landed homes.

Said a URA spokesman: "When selecting sites for the GLS Programme, we want to ensure that there is a good distribution of sites across the island to provide more choices for home-buyers. Similarly the sites can yield a variety of housing types - ranging from landed houses to high-rise condos - to cater to different lifestyles and budgets.

"Some sites are also chosen to meet planning and development objectives."

Property consultants also point to an agglomeration of sites in the vicinity of city-fringe MRT stations on the Western line, such as Tiong Bahru, Redhill and Queenstown, in recent GLS programmes.

Five executive condo sites have been earmarked for launch on the confirmed list in the first half of next year, adding up to to 3,110 units. They comprise a site in Woodlands Avenue 5/Avenue 6, one in Sengkang, two in Punggol and site near Jurong Lake. The last site can generate about 610 units and is located at the corner of Tao Ching and Yuan Ching roads - opposite Fairway Country Club, Lakeside Fishing Village and overlooking the lake. It is due to be launched in June 2013.

 Source: Business Times –15 December 2012

 

Record $1.33m for HUDC flat at Shunfu Road

Another fresh record has been set for the most expensive HUDC apartment - again at the popular Shunfu Road enclave.

A 1,660 sq ft maisonette, located at the heart of the yet-to-be privatised estate, was sold for $1.33 million last month, according to data-crunching firm Singapore Real Estate Exchange. This tops the $1.28 million mark reported in September for the same type of flat at the same estate.

The news extends the trend of record-breaking prices for premium Housing and Urban Development Company (HUDC) and Housing Board resale apartments.

A new record was also set in September for the most expensive HDB flat when a buyer paid $1 million for an executive flat in Queenstown.

HUDC units were introduced in the 1970s for aspiring middle-income families, and were phased out about a decade later as interest in them dwindled. Out of 18 such projects, 12 have been legally privatised, while the rest are pending legal privatisation.

Analysts say records in the HUDC market will continue to tumble as long as sellers hold out for higher prices under the current exuberant market conditions, and buyers are lured by choice locations and hopes of a collective sale windfall after privatisation.

The Straits Times understands that the seller of the Shunfu flat is an engineer who had bought it 16 years ago at a "good price". Back then, such apartments sold for less than $400,000.

The mid-level unit at Block 316 has a view of the green lawn just in front of it. Nestled at the centre of the estate, it is insulated from traffic noise by the other blocks, yet still within walking distance of nearby amenities.

The 358-unit Shunfu Ville has been popular with home buyers because it is near a market, eateries, Marymount MRT station and brand-name schools like Raffles Institution, Marymount Convent School and Catholic High School.

Work has already begun on the privatisation of Shunfu Ville. A carpark entrance barrier and a guard house are being added, and the estate is being fenced up.

Unusually, no cash premium was paid above the flat's valuation, as the property was valued by a bank at $1.38 million.

Source: The Straits Times –15 December 2012

 

HUDC flats' median price crosses $1m mark

For the first time, the median resale price of yet-to-be privatised HUDC apartments has exceeded the $1 million mark - in the third quarter of this year.

It has even inched upwards slightly in the current quarter, according to data-crunching firm Singapore Real Estate Exchange, which has tracked official data and transactions from various property firms since 2006.

This comes on the back of a record-breaking unit in Shunfu Road, which was sold last month for $1.33 million.

The median resale price for HUDC apartments in the fourth quarter is now $1.04 million.

Property analysts said the results were to be expected, but warned buyers about over-extending themselves for property that may not bear profit.

The resale price data is gleaned from transactions in the five estates pending legal privatisation.

They are Bishan (Shunfu), Serangoon North, Hougang North N3, Hougang North N7 and Potong Pasir.

Braddell View is not on the list as units there were not sold under the Housing and Development Act and are considered private property.

This year, 13 units from the five estates were sold for more than $1 million, compared with only five last year.

While the Shunfu units typically command higher prices, some of the 13 were from Hougang and Serangoon North.

HUDC apartments were introduced in the 1970s for middle-income families who could afford bigger flats, but were phased out in 1987 after private property prices fell and drew interest away from them.

In total, the 18 HUDC projects comprised 7,731 units, and were all sold on 99-year leases.

Source: The Straits Times –17 December 2012

News Update - 14 Dec 2012

RESIDENTIAL MARKET

Sembawang EC site draws top bid of $211.9m

A 99-YEAR leasehold executive condominium (EC) site at the junction of Sembawang Crescent and Sembawang Drive has received a top bid of $211.9 million, or $323.76 per square foot per plot ratio (psf ppr).

The top bid came from boutique property developer JBE Holdings, which beat seven other bidders.

It reflected the developer's confidence in the attractiveness of ECs in far-flung Sembawang, where another EC, 1 Canberra is located.

"Luxury" EC units in the news lately for the prices they commanded, such as the $1.77 million penthouse unit in Heron Bay in Upper Serangoon and the $1.61 million double-storey penthouse in 1 Canberra.

Last month, National Development Minister Khaw Boon Wan took to his blog "Housing Matters" to remind developers to stay within the spirit of the concept of this class of housing.

The developer could aim to launch the project at between $720 and $730 psf.

There are only two other new EC projects in the Yishun-Sembawang area - The Canopy (406 units) is fully sold; 1 Canberra (665 units) is half sold.

Up to October this year, some 3,500 EC units in the seven projects launched in the year had been sold. The total volume of EC units sold is expected to hit a record 4,000 by the end of the year.

The second highest bid for the site came from Frasers Centrepoint unit FCL Place and Hytech Builders; it was for $210.1 million, or $321.00 psf ppr.

Chip Eng Seng's CEL Property put up a bid of $201.4 million, or $307.66 psf ppr; Bellevue Properties, a subsidiary of City Developments Limited, offered $193 million, or $294.85 psf ppr.

The lowest bid was from Mezzo Development, at $184.0 million, or $281.10 psf ppr.

The 233,775 sq ft site has maximum gross floor area of 654,569 sq ft and can yield about 650 units.

Source: Business Times –14 December 2012

 

COMMERCIAL MARKET

Asia Square clinches year's biggest CBD office lease

In the biggest CBD office leasing deal so far this year, German financial services provider Allianz Group is leasing around 90,000 square feet at Asia Square Tower 2.

The space is on levels 13, 14 and 15 of the 46-storey building, but it is possible that Allianz may also take up the 12th floor, which would expand its footprint in the building to 120,000 sq ft.

Allianz is expected to finalise the size of its space at Asia Square by the end of January next year.

Industry watchers say that the transaction is the biggest office leasing deal in the CBD since Marsh & McLennan leased 97,000 sq ft at Asia Square Tower 1 last year.

The latest leasing transaction is also the first for Asia Square Tower 2, which is slated to receive Temporary Occupation Permit (TOP) in Q3 next year. The tower will have 790,000 sq ft net lettable area of Grade A offices on levels 6-31.

A 305-room Westin hotel will occupy levels 32-46. Retail space will fill the first two levels.

Allianz will move into Asia Square at end-2013. This will be a consolidation for the group, which will exit two existing locations - Centennial Tower and Prudential Tower. Its space at Asia Square will also allow for some expansion.

The tower's large floor plates of about 30,000 sq ft means Allianz can house more than 500 employees on just three levels - allowing greater efficiency and collaboration across teams.

"We will benefit from having all our different lines of business housed under the same roof. This move underscores Allianz's commitment to this market and recognises Singapore's importance as a major financial hub and international business centre," said Gesa Walter, regional general manager, corporate communications, for Allianz SE.

One of Singapore's most sustainable commercial developments, Asia Square has clinched Leadership in Energy & Environment Core & Shell (LEED-CS) Platinum certification from the US Green Building Council, in addition to a Green Mark Platinum award from Singapore's Building and Construction Authority.

Said Ms Walter of Allianz: "Finding office space with built-in energy-efficient features supports our commitment to contribute to a low-carbon future."

The developer, MGPA, a private equity real estate investment advisory group focused on Asia-Pacific and Europe.

MGPA declined to comment on the rent Allianz will be paying or the duration of its lease. Making an educated guess, a seasoned office agent reckons that Allianz's per square foot (psf) monthly rent would be in the "high single digit" - considering that it is the maiden tenant in the tower and the quantum of space it is leasing.

Mark Rada, project director at Asia Square, told The Business Times that rents in Tower 2 are still on a case-by-case basis as completion is not due till Q3 2013. However, in the development's 43-storey first tower, which received TOP in June last year, MGPA is now asking for monthly rents of $12-15 psf, he revealed.

"We have four whole floors (levels 36 to 39) available, plus a few smaller pockets of space throughout the building which are all currently under offer," said Mr Rada.

Currently, 82 per cent of Tower 1's 1.25 million sq ft net lettable area of offices has been leased. Tower 1 also includes a Food Garden, which is patronised by more than 6,000 people daily on weekdays - "well above our expectations", said Mr Rada.

Tower 2 will have 40,000 sq ft of retail space of Levels 1 and 2 - of which one-third has been pre-committed, he said.

"We're trying to select the best tenants to meet the needs of the office population within the two towers and neighbouring buildings."

Source: Business Times –14 December 2012

 

INDUSTRIAL MARKET

Industrialists groan as rents grow heavier

The hefty wage bill is now unavoidable. And the surging industrial property market has made it a perfect storm of high operational costs for industrialists here, market watchers say.

Prices for industrial property have risen 27 per cent in the first nine months of the year, latest data from the Urban Redevelopment Authority showed, as investors seek alternatives to residential properties.

And rents, while not quite keeping pace, have still gained a significant 6 per cent in the same period.

Rental costs were highlighted as one of the three most important factors of business costs, along with labour and energy expenses, in a study by Leong Kaiwen, assistant professor of economics at Nanyang Technological University.

"This is a fundamental problem, this will be a huge problem for our companies . . . because just imagine if I stay in Singapore, instead of upgrading my products, I have to spend so much on rental, I become much less competitive than my competitors out there," he said, referring to neighbouring countries, such as Malaysia and Indonesia, where operating costs are lower.

His research, presented at the Singapore Business Federation Small and Medium Enterprise Convention, also showed that profits for 66 per cent of the 90 respondents surveyed had fallen "significantly" between 2008 and 2011.

This figure shot up to 80 per cent when limited to manufacturing, wholesale and retail trade, and transportation companies.

With the economy slowing and labour costs expected to go up further, the squeeze on companies could worsen.

One end-user has been hit by a 30 per cent jump in fixed costs over the last few months.

Wong Ghan, managing director at Speedy Industrial Supplies, said his company pays a rent of around $1.80 per square foot per month (psf pm) since it renewed its lease in September, up from $1.20 psf pm previously.

The rents have eroded his profit margins and are hampering expansion of operations here, he said.

Trade bodies said they are watching the situation.

Chan Chong Beng, president of the Association of Small and Medium Enterprises, said members have given feedback on the rising prices and rents for industrial property.

Lam Joon Khoi, secretary-general of the Singapore Manufacturing Federation, said the impact from rising business costs and declining global demand was very challenging for local manufacturers.

Asst Prof Leong's study showed that occupancy rates remained stable despite two notable hikes in rental in recent years. But this did not mean that manufacturers were doing well, he said. "A lot of them were actually making net losses, they were not actually profitable."

Minister for Trade and Industry Lim Hng Kiang told Parliament last month that the government will release sufficient land through the Industrial Government Land Sales programme to meet the need of industrialists and moderate prices and rentals.

The ministry has also started to release smaller land parcels with shorter tenures for small and medium enterprises that require facilities at more affordable prices, he said.

"In addition, we will continue with our enforcement efforts to ensure that industrial space is not misused by non-industrial users, which may also have contributed to the increase in industrial prices and rentals," he had said.

The minister also explained why the ministry will not bar foreign investors from the industrial property sector. He said their participation gives industrialists options, reduces their capital costs upfront and keeps rents competitive.

It may be inevitable that some companies will have to shift out.

Source: Business Times –14 December 2012

News Update - 13 Dec 2012

RESIDENTIAL MARKET

Going, going . . . but not totally gone

Singapore's property auction market had a quiet year, chalking up its lowest sales value in 15 years and selling barely one-tenth of the properties put up for auction, as a result of the government's property curbs.

24 out of a total of 377 properties - across various sectors such as residential, retail and industrial - that were put up for sale ultimately changed hands. The total sales value of these properties was $62.4 million, down 35 per cent from the $95.6 million recorded last year.

This year's sales value was 54 per cent lower than the $135.7 million achieved during the Asian financial crisis of 1998, and 25 per cent lower than the $83.7 million during the global financial crisis in 2008.

The market is expected to perform just slightly better next year, and the forecasted sales value at property auctions next year to reach about $70 million, as ample liquidity and low interest rates continue to fuel the sellers' market in the first half of 2013.

Buyers will continue to search for value buys in the auction market, as properties are still considered as a good hedge against the inflation rate, which was at a high of 5.2 per cent in 2011 and averaged at 4.7 per cent from January to October this year.

The auction sales this year had been hit by a series of cooling measures that were implemented by the government in the residential sector.

In particular, the high- end market has been badly hit by the introduction of the Additional Buyer's Stamp Duty (ABSD) last December, which was aimed at taking some steam out of the private residential property market here and targeted non-PR foreigners and corporations in particular. These two categories of buyers have to pay the highest ABSD rate of 10 per cent on any residential property purchase.

In the secondary residential market, a stalemate has been playing out between buyers and sellers.

Residential properties continued to account for the lion's share of auction sales, with $29.7 million or 48 per cent of total sales coming from this segment.

For retail properties, the total sales value at auctions this year was $8.1 million, down 79 per cent from last year, even though they are typically sought after by investors for their higher yields. Industrial space recorded total auction sales of $10.1 million.

Source: Business Times –13 December 2012

 

High-end rents seen easing further

High-end rental rates look set to continue their downward trend, with market watchers predicting a price correction of between five and 10 per cent next year stemming from tightened budgets and an increasing supply of completed luxury homes.

This would bring rents of luxury homes to below $5 per square feet (psf) per month.

Rents of top-tier condos showed a drop for a sixth consecutive quarter, bringing rents down 7.4 per cent to $4.88 psf per month in Q4, from $5.27 psf per month in the year-earlier period.

The Urban Redevelopment Authority (URA) said that 91,869 new homes will be released to the market over the next five years, more than half of which have been sold.

Some major completions over the past year include Caspian (712 units), Mi Casa (457 units), Reflections (1,129 units) and The Trizon (289 units).

The vacancy rate in the Central region was 7.9 per cent in the third quarter of 2012, above the five-year average of 7.5 per cent. Vacancy rates in the eastern and western regions of Singapore were 4.5 per cent and 4 per cent in Q3, higher than the 3.5 per cent and 3.6 per cent five-year averages, respectively.

But it's not all gloom and doom for the rental market in the coming year.

Demand for mass-market units is rising and is expected to remain buoyant throughout 2013, in line with the tighter rental budgets of the new entrants.

Data released by URA showed that island-wide median rents for condos and apartments (excluding executive condominiums) hit a record $3.75 psf per month in October, up 7 per cent over the previous year.

Median rates for houses, however, slipped 0.4 per cent month-on-month in October to $2.65 psf per month.

The total value of all leasing transactions for the first 10 months of this year hit $208 million, surpassing the yearly totals for the period from 2000 to 2010, and the figure is expected to surpass the $218 million record set in 2011 once contributions from November and December are included.

Source: Business Times –13 December 2012

 

Investment sales of property reach $28.7b this year

Investment sales of property - which refer to transactions of $10 million and above - have fallen to about $6.9 billion so far this quarter (up to Dec 11), from the $9.3 billion in Q3.

The slowdown came amid a halving in deals originating from the private sector to $3.7 billion so far in Q4 from $7.2 billion the previous quarter.

The weak global economy and a still-wide bid-ask gap remained key reasons for the tepid investment activities in the private sector.

Big-ticket deals originating from the public sector - predominantly Government Land Sales (GLS) - climbed to $3.2 billion in the Oct 1-Dec 11 period from $2.2 billion in Q3.

To replenish their land banks, local and even foreign developers contested aggressively at GLS tenders. In particular, riding on the current buoyant sales market for executive condos (ECs), strata offices, shops and medical suites, record prices were set for some sites slated for such use.

Including outstanding state tenders, caveats for other transactions which have yet to be lodged and the expected sale of 79 Anson Road, Q4's final tally could hit $7.6 billion.

Year-to-date (up to Dec 11), $28.7 billion of investment sales deals have been transacted, though 2012 could end at around $29.5 billion, it estimated. That would be slightly shy of the $30.1 billion last year and $32 billion in 2010.

The en bloc sale market has been anaemic this year, with 24 deals totalling just under $2 billion, down from 51 transactions at $3.2 billion last year.

Although Savills defines investment sales as deals of at least $10 million, it includes transactions below this threshold for GLS sites, residential en bloc sites and acquisitions by real estate investment trusts.

Of the $28.7 billion transacted year-to-date, the residential sector continued to make up the lion's share - of about 45 per cent amounting to $13.1 billion. Including today's tender closing of a Sembawang EC plot and caveats for other residential transactions that will be lodged by Dec 31, the full-year figure could be close to 2011's $13.5 billion.

Commercial (office and retail) property deals have reached $7.5 billion year-to-date, down from $8.2 billion in 2011.

Private-sector office transactions declined from $6.2 billion in 2011 to $4.9 billion so far this year. Savills attributes this to global economic uncertainty, a moderation in office leasing and the buyer-seller price gap. DBS' purchase of a 30 per cent stake in Marina Bay Financial Centre Tower 3 at $1.035 billion has been the biggest office deal this year.

Retail property deals in the private sector doubled from $1.1 billion in 2011 to $2.3 billion year-to-date, buoyed by the sale of several shopping centres, including a half stake in nex in Serangoon for $825 million and the $519 million sale of Compass Point.

Investment sales of hospitality assets in private and public (GLS) segments combined jumped from $1.6 billion in 2011 to $3.8 billion so far this year, thanks to the flotation of Far East Hospitality Trust. This involved the sale of seven hotels and four serviced residences worth $2.1 billion to the trust by its sponsors.

Industrial property deals slipped from $4 billion in 2011 to $3.4 billion year-to-date, amid a decline in the public sector's contribution. The fall is from a high base in 2011 which saw the second phase of JTC's divestment, along with shorter-tenure GLS sites.

Source: Business Times –13 December 2012

 

Cash premiums soar for Marine Parade resale flats

To Mrs Ng Siew Lay, 48, the $60,000 cash premium she paid to close the deal on her five-room Marine Parade flat a few weeks ago was "very reasonable".

This, despite the fact that the $825,000 flat is on a low floor and will require a $50,000 renovation job.

"It's near my son's school, near the city, near the good eateries, near the beach," said the stay-at-home mother of three.

"If only I had more cash, I would pay for a flat with a sea view."

House-hunters like Mrs Ng are why cash-over-valuation (COV) payments - what buyers pay above a flat's valuation to secure its purchase - have skyrocketed in Marine Parade in the last 12 months.

Data from the Singapore Real Estate Exchange (SRX) show that the median COV in the neighbourhood rose 47 per cent to $55,000 in the past year, the biggest jump islandwide.

Second place went to Bukit Merah, where median COV climbed 31 per cent to $42,000.

Agents said that Marine Parade has always been a top draw, thanks to nearby schools such as Tao Nan School, CHIJ Katong Convent and Ngee Ann Primary, and the scarcity of units for sale. It is a small estate of only 23,300 residents.

But in the past year, the high prices of private property in the area, which pushed buyers to the HDB resale market, and the news that the Eastern MRT line will run through Marine Parade, have stoked the COV fire, they said.

Among the top five Housing Board towns where COVs climbed the most, the stand-out to market-watchers was Punggol, in fourth place: Median COV there rose 27 per cent to $43,000.

Unlike the rest, Punggol is a new town with fewer amenities. Plus, there has been a deluge of new build-to-order flat launches there. An abundant supply of new flats in an area usually takes the wind from its resale market.

One factor the top-performing towns have in common is the high prices of executive condominium and private property launches in their vicinity.

These catapulting COVs have contributed to nationwide cash premiums reaching a median of $34,000 in the fourth quarter so far, just $2,000 shy of a five-year historic high, said SRX last week.

But, as its data revealed, COVs are not rising across the board: 11 towns out of 26 overall have seen drops in the past year.

Median COV in Bukit Panjang fell 12 per cent to $29,000, while in Jurong West, it dropped 9 per cent to $30,000.

Source: The Straits Times –13 December 2012

News Update - 12 Dec 2012

RESIDENTIAL MARKET

Whitley Residences, The Village previewed

At least two freehold residential projects were rolled out last week. Hoi Hup sold 19 freehold cluster homes at The Whitley Residences at about $5 million each during a preview on Sunday. The average price is about $850 per square foot (psf) on strata area - after a 12 per cent discount and absorption of the standard 3 per cent buyer's stamp duty.

Selangor Dredging is said to have moved 40-plus units at its five-storey condo, Village at Pasir Panjang.

A Hoi Hup spokeswoman said all buyers of the 19 units sold in The Whitley Residences were Singaporeans.

Non-Singapore citizens need permission from the Land Dealings (Approval) Unit to buy units in the development, as it is a form of landed housing.

The units sold comprise a corner terrace and 18 semi-detached houses. The semi-Ds fetched $4.9 million (for a unit with a strata area of 6,125 sq ft) to $5.12 million (for a 6,071 sq ft unit). The 6,620 sq ft corner terrace sold for $4.85 million.

Cluster housing developments are landed homes that have shared condo-like facilities. At The Whitley Residences, these will include a clubhouse, pool, gym, hot spa and playground.

The District 11 project is near the upcoming Mount Pleasant Station under the Thomson Line. All 61 units in the development span four levels, including a basement and attic, and each has its own lift.

The project comprises 58 semi-Ds and three terrace homes - all with five bedrooms.

Strata areas of the semi-Ds are 5,156 sq ft to 7,190 sq ft. Following the sale of a corner terrace unit, the remaining corner unit of 6,448 sq ft (priced at $4.8 million) and a 4,801 sq ft intermediate terrace house costing $4.3 million are available.

Strata area includes car parking area, private enclosed space lift, void areas and roof terrace.

For its preview, Hoi Hup released 27 semi-Ds and all three terrace units.

Selangor Dredging began previewing Village at Pasir Panjang condo on Friday, and is said to have found buyers for 40-plus of the 80 units it has released in the 148-unit project. The average price is understood to be around $1,650 psf for typical apartments, which do not have private enclosed space or roof terrace.

Village is a five-storey project - comprising two to four-bedroom apartments, and penthouses.

In the executive condo (EC) segment, Kheng Leong has sold 230 units at The Topiary in the Seletar location. The average price is said to be around $720 psf.

Sales bookings for the 700-unit project began on Friday.

All 16 penthouses in the development were snapped up in the first one- and-a-half hours. Priced at between $1.3 million and $1.5 million, the penthouses range from 1,970 sq ft to 2,476 sq ft.

Kheng Leong is developing The Topiary jointly with Qingjian Realty. The project is being marketed by ERA and CBRE.

From Dec 21 to 26, Hao Yuan Investment is expected to accept e-applications for Forestville EC at Woodlands Avenue 5 - next to the completed La Casa EC.

The average price is expected to be above $700 psf. MCC Land is Hao Yuan's development and marketing consultant, in addition to being its main contractor for the project's construction.

Forestville will have two to five-bedroom apartments. Dual-key units will make up 30 per cent of the 653 units.

In addition, there will be 29 penthouses - ranging from 1,550 sq ft to 2,756 sq ft. Hao Yuan is offering "a holiday bonanza" package to draw buyers.

It will absorb the first-year maintenance fees. It has also tied up with StarHub to offer fibre-optic broadband service, a basic cable TV package and a fixed-line service - all free for the first three years.

ERA and PropNex are marketing Forestville.

Source: Business Times –11 December 2012

 

Private home sales seen falling 25% next year

Sales in the private residential market could fall by more than 25 per cent next year, as a result of local buying fatigue from the many new launches over the past years and increasing home completions.

This would mean that from the record breaking 20,000 units sold in the past 10 months of this year, transaction numbers are likely to hover between 16,000 and 18,000 next year.

Prices, however, are expected to continue their upward trend, in line with rising land costs and demand from overseas investors.

The average unit price of luxury condos in Singapore posted a second quarterly rise of 2 per cent quarter on quarter (q-o-q) from $2,350 per square foot (psf) to $2,395 psf in the fourth quarter of 2012.

For the full year of 2012, luxury condo prices have risen 5 per cent from $2,286 psf in Q4 2011, but are still 4 per cent lower than the peak price of $2,495 psf in Q4 2007.

Given the rising trend, market analysts expect a price increase of about 10 to 15 per cent for mass-market non-landed properties, while luxury properties may rise by about 3-5 per cent.

The report also highlighted that quantitative easing in the United States could see liquidity flowing into Asian economies such as Singapore in search of a safe haven and currency appreciation. Coupled with rock-bottom interest rates that are likely to remain low next year, some fresh external demand can hence be anticipated.

Although an influx of new demand can be expected, the purchases made by overseas buyers are likely to be kept at modest levels, owing to the Additional Buyer's Stamp Duty (ABSD).

The percentage of purchases made by non-permanent residents remained low at 7 per cent in Q3 this year and 6 per cent in the first half of Q4.

This was significantly lower than the 20 per cent recorded in Q4 last year, before the implementation of the ABSD.

Additionally, the strong affinity towards executive condominium (EC) developments is likely to continue given the confident sentiments among EC buyers.

Close to 3,500 EC units were snapped up in the first 10 months of this year and this number is expected to reach 4,000 once three more EC developments - CityLife@Tampines, The Topiary and Forestville - are launched before the year ends.

This will surpass the 3,935 ECs sold in 2010 and 2011 combined.

The report also noted that demand for shoebox units declined in the fourth quarter of this year to a low of 7 per cent from its three-year peak of 21 per cent in the third quarter of 2011, a possible result of government curbs.

Although these new measures, which require developers to build homes with a prescribed average unit size of between 500 sq ft and 700 sq ft, will curb the growing number of shoebox units, it could in turn heighten the median prices of these small-format homes.

Prices of shoebox condos sized below 500 sq ft have already risen for three consecutive quarters to a high of $1,474 psf in Q4 this year. This translates to increases of 6 per cent q-o-q and 10 per cent y-o-y.

Source: Business Times –12 December 2012

 

Alexandra View site draws top bid of $332.7m

A closely watched tender for a residential site at Alexandra View drew a top bid of $332.7 million, or $970.18 per square foot per plot ratio (psf ppr), yesterday.

Singland Homes, which put up the top bid for the 99-year leasehold site, Alexandra View (Parcel B), beat five other bidders.

Singapore Land has in the nearby vicinity a low-rise condo with about 109 units on a plot that it clinched at a state tender in February.

The project, which has a Jervois Road address, is expected to be launched in late January.

"(For the Jervois Road site) we are looking at about $2,000 psf," said Michael Ng, group general manager of Singapore Land and its parent, UIC.

Assuming it is awarded the site, the developer plans to erect a 43-storey residential tower.

The break-even cost will be about $1,500 psf, which translates to a selling price of about $1,700 psf, said Mr Ng.

"(The project will be) geared towards younger executive couples looking to buy for owner-occupation, or investors looking to rent the units out to expatriates working in the central business district or Orchard Road vicinity."

The majority of the units will feature two bedrooms or two-plus-one and will be in the range of 800-1,000 square feet.

Joining the fray to protect its unlaunched project was a consortium comprising City Developments' unit Sunmaster Holdings, Hong Leong Group's Intrepid Investments and Hong Realty's Garden Estates, which put up a bid of $271 million, or $790.30 psf ppr.

The consortium's Echelon is a 43-storey condo with 508 units, and is located next to the subject site.

The second highest bid, which was put up by Far East Orchard and FCL Topaz, came in at $300.1 million, or $875.1 psf ppr.

The lowest offer for the land parcel was $268 million, or $781.56 psf ppr, which came from Mezzo Development.

Source: Business Times –12 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