One man’s panic is another’s bargain…

Business Times – 15 Aug 2008

CDL chief points to some good buys as panic-sellers offload, but he’s not alarmed

(SINGAPORE) City Developments Ltd (CDL) executive chairman Kwek Leng Beng yesterday acknowledged that there have been some cases of high-end property buyers resorting to panicselling in the secondary market. These are people who’d bought their units during the early stages of the property boom ‘It is not as alarming as what some people think. Just bear in mind, because of a couple of transactions, these few swallows do not make a summer,’ he told analysts and journalists at a briefing to announce CDL’s second quarter results.
In some cases, these desperate sellers are offloading their units at prices that may be 20-30 per cent
below current market values, providing attractive bargains for astute property investors, Mr Kwek
said.

‘There are what I call bargains because some buyers, towards Temporary Occupation Permit or even
before TOP, just want to get out as long as they make $100 psf profit. ‘As an example, there were some projects launched at $2,200 psf. Then (the price) went up to $3,400-3,500 psf. Today there are some people who have gotten so frightened, they will sell off at $1,700 psf. That is the time, if you are smart enough, you can pick up (a bargain)! Buying property is not short term. Buying property is medium to longer term.’
High-end home prices are in a period of consolidation after a sharp escalation. ‘What has gone up in
a straight line will also come down,’ as Mr Kwek put it.
‘My key advice to you is as long as you can service your instalment and with the (current) cost of
construction so high, how can you be worse off than during the bad times in ‘96 and ‘97? If you are
smart enough to pick up (a property) when some people want to commit suicide, you just pick (it) up
cheap – keep it, rent it, stay – there’s your chance.’

Saying he was not too worried about the current consolidation, he added: ‘This is the time you should
buy. This is not the time you should get out, unless of course circumstances dictate that you should
get out.’

Regaling his audience with an anecdote, Mr Kwek said: ‘For example, The Sail @ Marina Bay, we
started selling at $900 psf, and the price went up to $3,000 psf-plus. The other day, somebody told
me that his friend, a broker, said there’s one unit, ninth floor, $1,800 psf. He asked me: ‘Do you want
to buy?’ I said: ‘Which unit? I want to check. I am going for a meeting. When I come back, we’ll talk
about it.’ By the time I came back, the whole thing was gone.’

The high-end residential sector will recover ‘when the sub-prime crisis is over and the integrated
resorts are in operation’, Mr Kwek said. ‘You’ll have a lot of high rollers coming in. They come in, they
like Singapore – very clean, things get done. We have a lot of (positive) attributes but we’re always
taking them for granted.’

Mr Kwek, who is also chairman and managing director of Hong Leong Finance, said that although ‘we
don’t have Freddie Mac and Frannie Mae’ here, Asia will be hit to some extent by the sub-prime crisis.
‘However, our banks are well capitalised. Monetary Authority of Singapore is monitoring closely.’
He also recalled Minister for National Development Mah Bow Tan’s comments that ‘they don’t want to
see property prices going (up) in a straight line nor do they want to see it going down in a straight line.
So I am confident they are monitoring the whole situation’.

Much of CDL’s land bank, even in the high-end, was acquired at relatively cheap cost. ‘As an
example, for the Lucky Tower site (at Grange Road), if I were to launch my project tomorrow at
$2,500-$2,600 psf, I can still make very healthy profit compared to Cliveden (nearby) which we sold at
$3,750 psf. It’s a question of whether I want to let go at $2,500 psf or whether I should keep it.

‘Don’t forget if you go ahead and construct, you incur two sets of interest costs – on land and
construction. By the time the market improves, the (unit) sizes and the design may be outdated, so
you cannot maximise the profit from that. It’s better to keep the land and wait for a better opportunity
before you sell.

‘I’m sure some (other) developers feel the same way. I will guarantee you many of these people will
not go ahead with construction,’ Mr Kwek said.

CDL, in its results statement, also cited other reasons why a feared oversupply of new private home
completions may not materialise. Tight bank financing is making developers more cautious in their
land purchases. The sharp hike in construction costs means developers who delay their launches
may hold back their construction plans as well. Given tight construction resources, contractors may
continue to find it hard to complete projects on schedule.

Just one bid for Tampines condo site

Straits Times
Aug 13, 2008

THE property slowdown was clear for all to see yesterday when the tender for a condo site overlooking Bedok Reservoir closed with just one bid – and at a price well below expectations.

The Urban Redevelopment Authority (URA) will likely refuse to award the 3.2ha site, given the poor offer, consultants said.

Boon Keng Development bid $84.6 million, or $118 per sq ft (psf), for the 99-year leasehold site but consultants had expected anything from $150 to $230 psf.

Apartments on the site could sell for up to $700 psf, they said.

If Boon Keng does secure the site at the junction of Tampines Avenues 1 and 10, its break-even would be about $480 to $500 psf. It would then be able to sell the apartments for around $600 psf, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak. But he does not expect the URA to sell the land at such a low price.
The increasingly cautious mood among developers explains why the site drew only one bid.

‘If this site was not on the confirmed list, it may not be triggered for tender,’ said Mr Mak.

Confirmed list sites are tendered out at pre-determined dates regardless of whether developers have shown interest.

‘If confirmed list sites were launched for tender in an increasingly uncertain market, they would attract opportunistic bids, such as the one we witnessed today,’ said Mr Mak.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, who had tipped bids of $150 to $180 psf for the site, said: ‘Most developers have ample land, so unless a choice plot is available, they won’t bid.’

Rising building costs are forcing developers to look for cheaper land. In such a climate, the Government has to decide whether to lower reserve prices to ensure a steady supply of mass-market private housing, or maintain the value of plots on the sales list as they form part of the nation’s reserve, said Mr Mak.

He does not expect any residential site on the government sales list to be triggered for tender unless reserve prices are lowered. If not, there could be a sharp drop in the sale of residential land from the Government this year.
Singapore tenders out land on the reserve list if developers indicate interest by committing to a minimum bid acceptable to them.

All eyes on IRs now

Business Times – 09 Aug 2008

Apart from a surge in tourism, jobs and tax receipts, Singapore’s two integrated resorts could bring in new investors

WITH expectations of a big boost to the economy, more buzz and the promise of thousands of jobs, it
is no wonder we are all a little anxious to see Singapore’s two integrated resorts (IRs) completed.

Citi analyst Chua Hak Bin believes that the biggest challenge facing the IRs now is ‘probably to
contain costs given the run-up in building material prices and completing the resorts on schedule’.
‘Getting the resorts up and ready by late 2009 or early 2010 would be regarded as a big success,’
added Dr Chua. ‘The greenlight for the integrated resorts was an important turning point for the
economy and property market. Investors could see the potential upside given the stunning growth
seen in Macau and Las Vegas,’ notes Dr Chua.

Will the IRs deliver?
Dr Chua believes that the impact from the IRs will come in two phases. ‘The first phase comes from
construction spending and improved sentiment, particularly from enhanced property values,’ he says.
‘The gains in the second phase comes from the surge in tourism, jobs and tax receipts,’ he adds.
Many have already benefited from ‘enhanced property values’ especially those who bought property
around Marina Bay and Sentosa in 2005 and 2006. But as investors now know, this ’sentiment’ driven
boost has not really been sustainable.

Dr Chua also notes that recent tourism figures suggest that visitor arrivals are being hit by a global
slowdown, stronger Singapore dollar, and higher travel costs. ‘Annual visitor arrivals could rise
sharply from the current 10.4 million, but may fall short of the government’s target of 17 million by
2015,’ he adds.

In 2006, before the sub-prime crisis set in, it was estimated that Marina Bay Sands (MBS) and
Resorts World at Sentosa (RWS) could each generate about $2.7 billion of value-add – about 0.8 per
cent of Singapore’s GDP – by 2015.

Dr Chua believes the IRs will still be a stimulus and expects GDP growth of about 0.3-0.5 percentage
points in 2010-2015. In this light, the casinos will have to perform.

The casino licence was very much the sweetener for both IR operators to pump in over $10 billion to
build the resorts. But now, even the outlook for gaming is not so certain with gaming revenues in Las
Vegas expected to fall this year.

Jonathan Galaviz of Globalysis, a Las Vegas-based boutique travel and leisure sector strategy
consultancy, says that while the casino gaming industry has been traditionally recession resistant, ‘it
is not recession proof’.

‘This is especially the case when an industry, such as airlines, indirectly inhibits the ability of tourists
to visit a destination like Las Vegas due to higher airfares,’ he adds.

And this does not bode well for other gaming capitals. ‘If East Asia were to experience a significant
economic downturn, then Macau would surely be affected, the question would only be by how much,’
says Mr Galaviz.

Singapore’s IRs are also very much modelled after the mega resorts of Las Vegas and the new
developments in Cotai, Macau. And the success of this model is still pending. ‘It will take a long period
of at least 5-10 more years to see whether the integrated resort model of entertainment in Macau has
been a successful strategic endeavour,’ Mr Galaviz says.

In the mean time, work on the IRs here continues. With barely a year to go, MBS says that, ‘a great
majority of construction works have been awarded’.

RWS said it has given out more than $2 billion worth of contracts. It added that rides and attractions
for Universal Studios Singapore are currently being designed and pre-fabricated off-site in places
such as the US and Europe.

When the IRs are up, the much anticipated ’second phase’ economic euphoria can begin. Savills
Singapore has analysed the impact of new gaming resorts on property markets and concluded that
while Singapore has undergone major structural changes, with new concepts such as waterfront
housing, integrated hotels and new retail formats, some of the impact has already been priced in.
Still, Savills director (marketing and business development) Ku Swee Yong says: ‘The publicity and
attention from tourists and high rollers could bring in new investors and many more jobs. With
Singaporeans almost fully employed, the foreign talents needed to fill these jobs add to demand for
residential units and office space.’

But Mr Ku adds: ‘The period and degree of sustainability will depend on the money spent by the
tourists, MICE groups and the spin-off they create for the economy and the financial services and
tourism sectors.’

The good news is that both are scheduled to open on time. MBS maintains that it will be completed by
December 2009 and RWS confirms it will open in early 2010. ‘As our resort is massive at 49 ha with
varied offerings, we are indeed opening in progression, starting with Universal Studios Singapore,
Hotel Michael, Maxims Residences, Hard Rock Hotel, Festive Hotel, FestiveWalk, as well as the
casino in early 2010. The rest will open progressively,’ adds RWS assistant vice president,
(communications) Robin Goh.

One of the bigger challenges at the IRs is labour. Mr Goh says: ‘Finding talent, training them, and
then retaining them – is no walk in the park.’

MBS managing director George Tanasijevich adds: ‘We are working closely with the Singapore
government and relevant government agencies to ensure there is a proper balance in the labour pool
in order to maintain a stable and competitive labour market overall. Priority will be given to
Singaporeans for all roles.’

That the IRs are projects on a national scale is not lost on the operators either.
RWS’s CEO says: ‘Singapore’s founding fathers built this country into what it is today, with very little
and within a very short time. Resorts World at Sentosa strives to replicate her success, and make
Singapore proud with a destination that will rank as Asia’s No 1 leisure spot when it opens in 2010.’

Challenges for property sector

New engines drive Singapore’s property market but pitfalls remain

THE Singapore property market has weathered the storm from the US sub-prime crisis, soaring oil
prices and overall inflation, pretty well.

Runaway increases in property values in the high-end residential and prime office sectors seen in the
past couple of years, for instance, have started to ease. But they have not dived, and panic has not
set in, at least not so far.

Knight Frank managing director Tan Tiong Cheng says: ‘To some, this is a welcome breather from the
breakneck pace of increases recorded in the last 24 months.’

CB Richard Ellis chairman (Asia) Willy Shee too observes: ‘The overall market has displayed some
resilience. In the office market, there’s still demand for office space with occupiers still looking to precommit office space in yet-to-be completed buildings.’ While the private housing market is not as
buoyant as last year, transaction volumes have picked up in second quarter this year with
encouraging sales from mid and mass-market projects, he adds.

Market watchers feel that in the short-term, property values could head south, driven by near-term
fundamentals. However, the mid-term prospects for Singapore’s real estate sector are generally
considered sound. As a major developer puts it: ‘Population growth, global and regional wealth
creation, sustained government investment in infrastructure, the perennial sharpening of Singapore’s
competitive edge, limited land, security and political stability, internationalisation of the property
market – all these must be good for Singapore real estate prices in the long run.’

The Remaking of Singapore has helped create sound fundamentals for the local property market. The
government’s decision to break from the past and go ahead with developing two integrated resorts
with casinos as well as its efforts to position Singapore as a leading contender in the race among
global cities to attract wealth and talent have boosted the island’s prominence on the radars of
international property investors.

New engines for growing the Singapore economy have also been put in place and this to some extent
may also help shield the island and its property market from the full impact of what’s happening in the
US.

Investments and job creation from the IRs, Sports Hub, expansion plans for rail network and other
infrastructure projects, Singapore’s policy of welcoming foreign talent to its shores, and the strategy of
positioning Singapore as a hub for various industries – financial industry/wealth management, tourism,
education and healthcare – are expected to provide momentum for Singapore’s economy.

‘The IRs, F1, Sports Hub and Youth Olympic Games surprised observers who think that Singapore is
only a clean and safe place to do business but never a place where you can let your hair down,’
observes Knight Frank’s Mr Tan.

‘What do these initiatives mean to savvy investors? They mean that we are perceptive in discerning
changes in the global world, have the will to question old assumptions and have the courage to move
a population to accept initiatives that can be potentially divisive.

‘That the government and its people can move together to tackle challenges ahead demonstrates the
inherent strength of the country as a global city to do business and a place to live,’ Mr Tan added.
DTZ executive director Ong Choon Fah said: ‘Wealth management industry is still a very big thing
here. Wealth from high networths in Asia – China, India – is flowing into Singapore. With IRs and the

F1 race, Singapore is being marketed as a playground for the rich and famous. Family offices and
philanthropy are fast being added to the suite of services offered by private bankers.
‘The removal of estate duty has been a major boost to Singapore’s ambitions to be a wealth
management hub.’

New challenges
But the road ahead for the local property market is paved with challenges. Colliers International
director of research and advisory Tay Huey Ying argues that the ‘mid-term optimism for the Singapore
property market is underpinned by the IRs and the Marina Bay Financial Centre (MBFC). ‘If these
projects do not deliver, confidence may be shaken,’ she warns.

To be considered successful, the IRs will have to be able to continuously attract visitors year after
year and not fizzle out after the initial novelty wears off. Similarly, the MBFC can be truly considered
an achievement for Singapore’s aspirations to be a leading financial centre if the movement of tenants
into MBFC does not create a vacuum in existing office buildings that can’t be filled within a short span
of time; otherwise, it may just show there’s not that much depth in Singapore’s financial industry, Ms
Tay reckons.

In the residential property market, a short-term challenge that could materialise is if substantial
numbers of home buyers who’ve purchased private homes on deferred payment schemes in the past
few years begin to panic and dump their properties as the projects’ completion dates loom closer.
That would be the time when these buyers have to pay the bulk of the purchase price to developers,
and if some of them think they may have difficulty finding home loans, especially if they are still
holding on to several such units, they may panic and dump their properties at lower than current
market prices.

Such a scenario would be a house hunter’s dream, but could destroy wealth for the majority of
Singaporeans who already own their own homes.

‘Instead of subjecting themselves to panic selling, these property owners may wish to bear in mind
Singapore’s mid-term prospects and should try to hold their properties by securing a financing
package or a tenancy for their property,’ Ms Tay suggests.

Escalating construction costs
Escalating construction costs are another big concern going ahead. ‘The high construction costs
could translate into high purchase cost for buyers and investors of private property assets as well as
contribute to inflationary pressure for end-users of public infrastructure,’ says CBRE’s Mr Shee.
‘The high construction costs would also eat into developers’ profit margins and hence reduce the
incentive for developers to undertake new projects or acquire sites from the Government Land Sales
programme,’ he adds.

On the macro political front, Knight Frank’s Mr Tan says an immediate challenge is the confluence of
unstable political situations in three neighbouring countries – Malaysia, Thailand and Indonesia (which
will have a election next year). ‘Put simply, we’re a good property in a bad neighbourhood,’ he said.
CBRE predicts that office rentals are approaching a peak. The average monthly Grade A rental value
rose to $18.80 per square foot in Q2 this year, an increase of 43.5 per cent from the same period last
year. With completions of major office projects from 2010, including MBFC Phase 1 and 50 Collyer
Quay, the property consultancy group predicts the average Grade A office rental will ease to $12-15
psf post-2010.

On a more optimistic note, it highlights that with all the new office developments coming up, a
significant amount of future office stock will constitute world-class modern Grade A buildings. ‘Around
64 per cent of the office completions in the next five years will be Grade A quality,’ Mr Shee says.
For the private residential sector, CBRE has said a correction of residential prices to the tune of 5 to
10 per cent in the second half of this year is likely as the global economy suffers the continued
onslaught from the sub-prime mortgage meltdown and inflation.

Riding the turbulence
Colliers’ Ms Tay highlights the importance of a sound government land supply policy – ‘not just shortterm reactions’ – will help the local property market to ride out the challenges ahead.

‘For individual home buyers and sellers, they should arm themselves with the right information instead
of succumbing to herd instinct or following their emotions,’ she adds.

Knight Frank’s Mr Tan says: ‘Demand for real estate is dependent on economic prospects. With
strong economic fundamentals, I have no doubt that interest in real estate in Singapore by local and
foreign institutional investors will return once the current market turmoil blows over.

In similar vein, CBRE’s Mr Shee says: ‘Fundamentally, the long-term development of the office, retail,
residential and hospitality sectors will not change in spite of the present global financial worries.

‘It was all these government initiatives that attracted a fresh wave of foreign investment into
Singapore in the last 24 months, and it will be these developmental drivers that will continue to attract
investment from various parts of the world to Singapore.’

From exuberance to caution

In just 12 months, Singapore has swung from Boom Town to seeing its slowest quarter in five
years.

ONE year ago, economic and business sentiment in Singapore was probably at an all-time high: The
property market was on a roll, banks and finance houses went on a hiring spree, and the economy,
flush with liquidity, looked headed for a fourth year of 7-9 per cent growth.

The signs spelt Boom Town everywhere you looked, and economists predicted that Singapore, restructured and reinvented, would trail only China and India among Asia’s fastest-growing economies for years to come. Whiffs of (near-irrational) exuberance were much in the air. Then, bang! Just days before National Day 2007, a global financial market meltdown threatened the party mood. The balloons popped, but as it turned out, the Singapore economy’s strong first-half momentum was enough to see it through the year. Gross domestic product (GDP) growth for 2007 still turned in at a robust 7.7 per cent.

Twelve months on, the mood is decidedly more sombre. Overnight, it seems, the property bubble (of
‘exuberance’, not so much ‘excess’ this time) burst, the buzz in the finance sector has all but fizzled,
hot hiring has cooled (with even talk of selective retrenchment in some segments), and the economy
has now seen its slowest quarter in five years.

Has there been a crack in the domestic underpinnings somewhere, or is – as is widely assumed – the
small open economy just taking hits from external headwinds?
The much-heralded US economic slowdown has finally come to pass, compounded by a sub-prime
mortgage crisis that continues to wreak havoc through not only the American economy but pretty
much globally, in second or third-round hits.
Slower growth has also set in elsewhere in the developed world, following several years of robust
performance. Not least, a surge in global energy and food prices has pushed inflation to the fore of
policy concerns in just about every part of the world.

And latest analyses by economists list more than several major economies ‘navigating towards (or
through) recession’ – including the US, Canada, Spain, Ireland, Italy, the UK and New Zealand.
Germany, France and Japan are also seen to be teetering on the brink of recession. In other words,
as RGE Monitor notes, a full-fledged G-7 recession in the making.

With this outlook, coupled with ever-present risks of yet another bout of global financial turbulence, it
is interesting to see some fairly upbeat forecasts of East Asian resilience, like the Asia Development
Bank’s (ADB) that expects the region to weather the global economic turmoil ‘relatively well’ and grow
7.6 per cent this year and next.

ADB has the Singapore economy growing 4.9 per cent in 2008 and 5.8 per cent in 2009 – probably a
little more bullish than the consensus here at this point – on the back of strong domestic demand
(driven by business investment) and buoyant exports. It’s not apparent that Singapore’s exports will
be too ‘buoyant’ this year – the official forecasts of 2008 export growth were pared a few months ago,
and still the May and June trade figures proved unexpectedly bad. Economists also generally see
Singapore – given its size, structure and exposure – as the region’s most vulnerable to a global
downturn.

Has the slowdown exposed, or widened, Singapore’s fault lines? Sure, inflation surged through the
economy, price pressures piled up. But apart from ever greater external uncertainties and a fall in
sentiment, fundamentally what has changed in the six months or so between Boom Town exuberance
in 2007 and sombre caution in 2008? Problems such as structural joblessness in older Singaporeans
and a growing income disparity have not and cannot be swept away overnight.

That said, none other than Minister Mentor Lee Kuan Yew has declared that the next five to 10 years
will be Singapore’s most promising yet as it stakes its place among the world’s top cosmopolitan
global cities.

‘We are moving to a new plateau, a new platform. You can see it visibly before your eyes,’ Mr Lee
said last month.

It’s surely a vision to inspire all Singaporeans. But, for all the spin around Singapore’s restructuring
and transformation, enhanced by a huge influx of foreign skills, some believe that its fortunes – and
Asia’s – will, for the foreseeable future, still largely be tied to the global economy. Which also means
that Singapore can and will ride on the next upturn, when – or if – it comes.

Business Times – 09 Aug 2008

Growth in office occupancy costs tapers off in Q2

Prime Raffles Place space up only 1.1% quarter on quarter: DTZ report

GROWTH in office occupancy costs in Singapore has started to taper off after the meteoric rise last year, reflecting the increased resistance to higher occupancy costs, according to a new report.

‘Apart from Raffles Place, Shenton Way/ Robinson Road/Cecil Street and decentralised areas, growth in occupancy costs in other areas like Marina Centre and Orchard Road was flat in 2Q 2008,’ said DTZ in its second-quarter office market brief.

Average occupancy cost of prime office space in Raffles Place grew only 1.1 per cent quarter on quarter to $19 per square foot per month (psf pm) in the second quarter of 2008. In the Shenton Way/Robinson Road/Cecil Street area, the average office occupancy cost rose by 2.6 per cent quarter on quarter to $11.80 psf pm, while office buildings in HarbourFront enjoyed a higher growth of 5.3 per cent to $10 psf pm.

By contrast, in the first quarter of 2008, occupancy costs continued to rise amid a dearth of supply. Prime occupancy cost in Raffles Place gained 13.9 per cent quarter on quarter to $18.80 psf pm in the first quarter of 2008, for example.

‘As more new supply come on stream, office occupancy is likely to ease and limit growth in occupancy costs in the CBD for the rest of 2008,’ said DTZ, referring to the Central Business District.

However, the report also said that the cautious business outlook and companies gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused state properties are putting a downward pressure on office occupancies.

Islandwide, average occupancy eased by 0.2 percentage point quarter on quarter to 96.9 per cent in Q2 2008. As a result of occupiers moving out to cheaper locations after lease expiration, office occupancies in
Raffles Place and Marina Centre dropped by 0.3 percentage point to 97.4 per cent and 1.2 percentage points to 98.6 per cent respectively.

But over in decentralised areas like Novena and HarbourFront, occupancy levels rose by 0.4 percentage point to 99.0 per cent and 1.1 percentage points to 98.7 per cent respectively, supported by lower occupancy costs.

DTZ also released its Q2 2008 office report for Kuala Lumpur yesterday. Gross occupancy costs for prime buildings in the Malaysian city rose 3.9 per cent quarter on quarter to RM6.32 (S$2.65) psf pm in the second quarter of this year, the property firm said.

But despite this, financial institutions with presence in Singapore are considering locating call centres
in Kuala Lumpur because of cost differential and special tax breaks, DTZ said in response to a query
from BT.

Source: Business Times 5 Aug 08

HDB imposes checklists on resale flats

Business Times – 25 Mar 2008

THE Housing and Development Board will introduce mandatory checklists for housing agents handling resale flat transactions from May 1 – a move welcomed by industry players.

The checklists cover key policies and procedures that housing agents will need to advise resale flat buyers and sellers on before they commit to a transaction, HDB said yesterday.

‘This is part of HDB’s ongoing efforts to ensure that buyers and sellers are aware of the relevant HDB purchase and financing policies when buying/selling an HDB flat,’ it said.

The move comes after a new scam involving HDB flats surfaced recently. Under the scam, a seller and buyer together report a falsely low sale price to HDB.

The buyer then pays the difference between the actual and declared price to the seller in cash, which means the seller has more cash in hand – rather than having any leftover money go back into his CPF account. To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.

Under HDB’s new initiative, housing agents will have to submit a completed resale checklist to HDB with a resale application. Resale applications that do not comply with this requirement will be rejected and there will be ’serious penalties’ for false declarations.

Housing agents engaged by both sellers and buyers will have to go through a resale checklist with clients before an option to purchase (OTP) is granted or exercised.

Buyers and sellers who do not engage the services of housing agents need not submit a checklist. PropNex, which says it has more than 40 per cent of the public housing resale market, welcomed HDB’s move.

Public housing has many policies and financing requirements that many may not be familiar with, said PropNex chief executive Mohamed Ismail.

Most buyers tend not to read the important notes attached to OTP, he said.

The new resale checklist for housing agents engaged by buyers, for example, will ensure that buyers are aware of their rights as well as of financing matters. It will also highlight to them the fact that any form of cashback arrangement, such as over or under declaration, is punishable by law.

Similarly, the checklist for sellers’ housing agents will ensure prospective sellers understand the various eligibility rules.

Mr Ismail said that while many agents already educate potential buyers and sellers, some may not, leaving them in the dark.

‘This initiative should lead to greater transparency for buyers and sellers, and ensure a consistently high level of professionalism amongst the agents,’ he said.

Home, retail, office rental growth to ease

Business Times – 25 Mar 2008

Housing rentals to rise 5-15% year-on-year in 2008: Knight Frank

PRIVATE housing rents are expected to grow at a slower pace this year than last year, Knight Frank said in a report yesterday.

The property consultancy firm expects a year-on-year rise of 5-15 per cent in 2008 – after a massive 40 per cent year-on-year increase in 2007.

Knight Frank’s estimates are based on the resistance of tenants and companies to even higher rents, and the limited availability of places at foreign schools for children of expatriates.

‘Due to the fact that foreign schools are full and there are long waiting lists faced by children of foreign families who relocated here, housing demand from new foreign family tenants is projected to decrease,’ Knight Frank said.

‘On top of this, foreign tenants as well as corporate HR (departments) have readjusted housing allowances this year, which constricts rental demand according to their budgets.’

Despite this, a demand-supply imbalance could still result in rental rises until a supply of new units is felt significantly from 2009.

About 8,400 new private homes will be completed this year. But the number will expand dramatically in the three years from 2009 to 2011, with an estimated 16,000 to 17,000 units completed each year.

This could put downward pressure on rents, Knight Frank said.

The same holds true for the retail sector. Knight Frank predicts that landlords could face stronger resistance from retailers to rising rents in the later part of 2008 as more space comes on stream.

‘Rents are forecast to maintain at their current level only until early 2008,’ it said. ‘Faced with a larger supply in the pipeline in the second half of 2008, island-wide prime retail rents are projected to appreciate by a relatively modest 5-10 per cent for entire 2008, compared to 22.1 per cent growth in 2007.’

Knight Frank also said growth in office rents and capital values in 2008 and 2009 will likely to be more moderate than in 2007. Office rents are forecast to rise 10-20 per cent year on year, while capital values are expected to increase 10-15 per cent year on year.

Don’t know what to do during the current property lull?

Business Times – 25 Mar 2008

PROPERTY EXPERTS GIVE SOME TIPS

Seven tips for buying a second home

Did you know, for example, that an HDB flat near an MRT station will give you a higher rental yield than most private properties?

The importance of being earnest when going en bloc

A major en bloc sales agent discusses the impact of the new legislation on collective sales introduced last year on warring owners.

Are you overpaying for your home loan?

Is the deferred payment period on the condo unit you bought a little while ago expiring soon? Read an independent mortgage broker’s advice before you go shopping for that home loan.

Aim for a landed home

So you’ve missed out buying a condo last year? Not to worry. Landed homes may become more appealing this year as they have yet to see the sharp price appreciation experienced by their non-landed counterparts.

3,500 vied for 714 condo-like flats in Boon Keng, but only 460 sold

The Straits Times March 25, 2008

THOUSANDS of applications poured in for a condo-like Housing Board project in January – but as of last week, less than two-thirds of the flats had been taken up.

About a third of the 714 units – or about 250 units – in City View @ Boon Keng remained unsold, said HSR Property Group, which is marketing the project.

These flats will be offered to the public, probably via walk-in selection.

The number of leftover units came as a surprise to market watchers, given that 3,500 applicants had vied for them.

This works out to five would-be buyers for each flat at City View, the second public housing project to be built by a private developer.

It boasts condo-like features such as timber floors, built-in wardrobes and air-conditioning.

All the applicants were given a chance to book the flats they wanted, said HSR project director Kellie Liew.

The selection process stretched over 20 days and ended last Thursday, with more than 3,000 potential deals falling through.

Developer Hoi Hup Sunway sold about 460 units, including six of the top-priced five-room units at $727,000 each, said Ms Liew.

But she added that some buyers backed out of their purchases due to the weakening property market, while others did not meet the required criteria to buy the flats.

‘We’ve been having a series of not-too-positive news about the market, so that could have affected the sentiment of the buyers,’ she said.

‘Also, some applicants were over-qualified, with combined monthly incomes of more than $8,000, so they were not eligible for the flats.’

Hoi Hup declined to comment.

Market watchers suggested that the relatively high prices for the City View units could also have proved a deterrent at crunch time.

The three-room flats were priced between $349,000 and $394,000, double the price tag of similar flats in the vicinity.

Five-room flats went for up to $727,000, which experts said was close to condominium prices.

‘Some people may have jumped on the bandwagon because of the hype, but when it was time to pick up a unit, they felt it was actually too expensive,’ said Mr Mohamed Ismail, chief executive of property agency PropNex.

‘In today’s market, there are many 99-year leasehold properties with full condo facilities that are going for less than $600 per sq ft, so some buyers may have thought twice.’

But Mr Chris Koh, director of Dennis Wee Properties, believes the remaining units could be snapped up quickly.

‘Fundamentals are still strong,’ he said. ‘We don’t see property prices sliding at all.’

He added that the situation could mirror that of The Premiere @ Tampines, the first developer-built public housing project.

The Premiere drew almost 6,000 applications for its 616 units when it was launched in 2006, but fewer than 500 units were sold when the booking process was over.

When the remaining flats were released to the public, long queues formed and would not disperse despite a downpour.

Realising the Marina Bay vision

Business Times – 22 Mar 2008

CHING TUAN YEE and BENJAMIN NG reflect on the planning of Singapore’s most ambitious urban project and highlight the exciting developments in store for Singaporeans and visitors alike

THE vision for Marina Bay is that of a high-quality, 24/7 live-work-play environment, one that encapsulates the essence of the global city Singapore is envisaged to be.

Waterfront business districts such as Canary Wharf in London and Pudong in Shanghai have come, in recent years, to signify urban progress and prosperity. They have raised the international profile of their respective cities while spurring growth and investment.

The Singapore example is in Marina Bay. A seamless extension of Singapore’s flourishing central business district spanning 360 hectares of prime land for development, Marina Bay is our city’s most exciting and ambitious urban project that will support our continuing growth as a major business  and financial hub in Asia.

Set by the water’s edge and with our signature city skyline as a backdrop, Marina Bay is envisioned to be a Garden City by the Bay, a 24/7 destination presenting an exciting array of opportunities for people to explore new living and lifestyle options, exchange new ideas and information for business, and be entertained by rich leisure and cultural experiences in a distinctive environment.

The groundwork for the expansion of the existing CBD (Central Business District) and its transformation into a waterfront business district focused around Marina Bay had been laid as early as the late 1960s. Land adjacent to the CBD was reclaimed in phases between 1969 and 1992.

The Master Plan for Marina Bay focuses on encouraging a mix of uses (commercial, residential, hotel and entertainment) to ensure that the area remains vibrant around the clock.

The concept of ‘white’ site zoning also gives developers more flexibility to decide on the mix of uses for each site, including housing, offices, shops, hotels, recreational facilities and public spaces.

To cater for good connectivity and seamless extension, the development parcels at Marina Bay were planned based on a grid urban pattern which extends from the existing road network within the  CBD.

This grid creates a flexible framework with a series of land parcels that can be amalgamated or subdivided to meet different requirements as well as changing demands and allow the phasing of developments.

Creating signature districts

In the planning of Marina Bay, specific attention was paid to creating value. The land parcels are located within a series of distinctive districts, each focusing around attractive public open spaces and tree-lined boulevards which will provide signature address locations for developments.

Along the waterfront and fronting key open spaces, building heights are kept low. This maximises views to and from individual developments further away from the waterfront, enhancing their attractiveness and creating a dynamic ’stepped-up’ skyline profile as well as more pedestrian scaled areas.

The successful development of Marina Bay is supported by state-of-the-art infrastructure. To date, the government has pumped in more than $4.5 billion to facilitate development of the area.

A Common Services Tunnel housing electrical and telecommunication cables and other utility services underground is being built, making repeated road diggings a thing of the past. An extensive road and rail network has also been planned, with three MRT stations to be built in the area as part  of the new Downtown rail line.

A new vehicular and pedestrian bridge will link Bayfront to Marina Centre. The 280m pedestrian linkway – the longest in Singapore – will sport a dynamic double helix structure. Together with a new waterfront promenade, this will create a continuous walking loop connecting up the necklace of attractions and open spaces around the Bay.

Another key infrastructural project is the Marina Barrage. When officially opened in 2009, it will turn the existing water body into Singapore’s first reservoir in the city. This will serve as a new source of fresh water for Singapore and a new lifestyle attraction allowing for a variety of water-based  activities and events to take place. It will also house Singapore’s tallest fountain project.

The softer touch

Having provided for much of the ‘hardware’ for the new business district, it became clear that URA had to go beyond its traditional roles of urban planning and land sales management. To this end, the Marina Bay Development Agency was set up within URA to focus on the ’software’ for developing  the area. Since then, URA has embarked on a full spectrum of marketing, promotion and place management activities to showcase the uniqueness of this new destination.

To generate more buzz, a calendar of events and activities for public spaces and water bodies has been put in place in partnership with various agencies and the private sector. Signature events, like the Marina Bay Singapore New Year’s Eve Countdown, have become a new urban tradition. Marina Bay has also become the definitive venue for a host of sporting events like the F1 Powerboat Race, the Oakley City Duathlon and the Great Eastern Women’s 10km run.

The shape of things to come

While it will take more than a decade for the entire area at Marina Bay to be fully developed, a host of projects that will offer people from all walks of life exciting and attractive options to live, work and play are already taking shape. These upcoming developments have contributed significantly towards enhancing the area’s reputation as a location that offers something for everyone: a tropical living environment among lush greenery; a bustling global business hub and a lifestyle locale presenting a kaleidoscope of entertainment and leisure choices.

LIVE – by the Bay. Marina Bay has fast become one of the city’s most popular and prestigious residential addresses, with a number of outstanding projects already under construction.

The Sail @ Marina Bay will be the tallest residential development in Singapore at 245 metres when it is completed in 2009. It boasts two towers – one at 70 storeys and the other at 63 storeys.  Meanwhile, the Marina Bay Financial Centre incorporates the 55-storey Marina Bay Residences, comprising 428 luxury apartments, and the Marina Bay Suites, a 66-storey development offering 221 exclusive bayside units.

WORK – by the Bay. With its prime location in the heart of Singapore’s future downtown, Marina Bay continues to be a magnet to global investors and tenants seeking premium office space in a prime location.

The development of Marina Bay will help to further position Singapore as one of Asia’s leading financial centres, doubling the size of the existing financial district. The new growth area set aside for the seamless extension of the existing financial district is more than twice the size of London’s Canary Wharf and will provide some 2.82 million square metres of office space, equivalent to the office space within Hong Kong’s main business district, Central.

Already, a nucleus of office developments is forming with the development of One Raffles Quay, the soon-to-be-completed Marina Bay Financial Centre, and the two recently sold sites at Marina View.

Several global banks and multinational corporations, including UBS, Deutsche Bank, DBS and Standard Chartered, are already located or will be locating in these developments.

PLAY – by the Bay. The ‘fun’ factor at Marina Bay is expected to be raised to a new high when the Marina Bay Sands Integrated Resort opens its doors in 2009. With its impressive design featuring a sky park and three soaring 50-storey hotel blocks with landscaped balconies, the area’s most anticipated project will add a new dimension to our city skyline.

The integrated resort is poised to be a world-class development that will house a casino, two theatres, 110,000 sq metres of meeting and convention facilities, as well as about 2,500 hotel rooms. Other attractions at the integrated resort include restaurants in the form of two floating crystal pavilions and an ArtScience Museum, the rooftop of which becomes an amphitheatre with tiered seating.

Building on Singapore’s green legacy, three world-class waterfront gardens of about 100 hectares have been planned for the area. With the first phase of the project slated for completion in 2010, the Gardens at Marina Bay will be another unique destination attraction for those visiting Singapore and a green sanctuary for people living and working in the city.

Each garden will feature a distinctive design and character. All three gardens will also be interconnected via a series of pedestrian bridges to form a larger loop along the whole waterfront and linked to surrounding developments, open public spaces, transport nodes and attractions.

Focal point for the community

Marina Bay is a prime example of a visionary masterplan that is not only well on its way to becoming a new focal point for the local community, but it has also drawn worldwide attention and interest.

Testament to this is its achievement in attracting close to $16.5 billion worth of private investments to date from international investors and developers from the US, Hong Kong, Australia, Europe as well as the Middle East.

Moving forward, Marina Bay will continue to be the centrepiece of Singapore’s urban transformation, providing the city with the opportunity to attract new investments, visitors and talents.

The URA, as the Development Agency for Marina Bay, is committed to our long-term and strategic plans to meet the area’s future development needs. We will continue to adopt a holistic and integrated approach in designing the area with people in mind, work with partners and communities to implement key infrastructure, and carry out active promotion and place management activities. We will also engage investors to garner more interesting business concepts and ideas. This will take us closer to our vision of making Marina Bay a choice destination for all, one that promises

Singaporeans and visitors alike a brand-new, live-work-play experience.

Ching Tuan Yee is Executive Architect, Urban Planning Section, Urban Redevelopment Authority, while Benjamin Ng is Place Manager, Marina Bay Development Agency, Urban Redevelopment Authority

Singapore interest rates likely to fall further

The Straits Times March 24, 2008

Fed cut and robust Sing$ could push interbank lending rate below 1%

SINGAPOREANS can expect cheaper mortgages but lower savings and fixed deposit rates in the months to come.

This is after a move by the United States Federal Reserve to slash a key US interest rate last week.

The Fed had cut three-quarters of a point off its federal funds rate, bringing it to 2.25 per cent, to fight a mushrooming credit crisis and a slowing US economy.

Economists in Singapore said the lowering of the Fed funds rate will have a knock- on effect in the Republic.

The Singapore Interbank Offered Rate (Sibor), or the rate at which banks lend to one another, tends to track the Fed rate.

Citigroup economist Kit Wei Zheng said: ‘For Singapore rates, the trend is downwards. We expect the Fed to cut its rate to 1 per cent and Singapore should follow with a lag.’

He lowered his forecast for the Sibor, estimating it would fall to as low as 0.75 per cent by the end of the third quarter, down from an earlier estimate of 1 per cent.

A recent report by DBS Group Research also forecast the Sibor would fall, to 0.83 per cent in the second quarter, and remain at that rate through the second half before rising next year.

The three-month Sibor fell to a 12-month low of 1.25 per cent last Monday, before recovering to 1.425 per cent on Thursday, ahead of the Good Friday public holiday.

Mr Kit said Singapore rates were also affected by the Singapore dollar’s appreciation against the US currency. He said the Singdollar is most probably at the top end of the secret trade-weighted band within which the Monetary Authority of Singapore (MAS) guides the currency.

‘With the Singdollar expected to continue appreciating, MAS will aim to moderate it by flooding the market with liquidity, which will in turn pressure interest rates downwards,’ he said.

OCBC economist Selena Ling said another consequence of the strong Singdollar would be a high inflow of foreign capital into the Republic. ‘This can also contribute to lower interest rates.’

For consumers, the net result is both good and bad.

Banks recently embarked on a mortgage loan war, with Maybank firing the first salvo last month with an aggressive three-year, fixedrate package offered at 1.68 per cent for the first year.

DBS Bank and United Overseas Bank (UOB) have also unveiled attractive packages. UOB has one that offers a zero rate in the first year.

And with Sibor-linked home loan package rates likely to head south too, it could be a good time to refinance mortgage loans, experts said.

A DBS spokesman said: ‘DBS offers transparent mortgage rates pegged to the Sibor and the CPF Ordinary Account rate, so our rates will move in tandem with market forces.’

But there is also the possibility that savings and fixed deposit rates could slump as interest rates go down.

OCBC’s vice-president for group wealth management, Mr Fabian Lum, said the bank would review its deposit rates to keep them in line with prevailing market conditions.

And while the bank has not changed its savings rate recently, it lowered its 12-month fixed deposit rate for amounts between $50,000 and $1 million to 1.2 per cent a year from 1.4 per cent earlier this month.

DBS said that its savings deposit rates had not been adjusted since 2005, but added that its fixed deposit rates are always pegged to the interbank rate and would thus be adjusted accordingly.

CIMB-GK economist Song Seng Wun said that the low interest rates did not reflect a lack of liquidity on the part of banks. ‘The loansdeposit ratio is still very strong, so banks definitely have the money to lend,’ he said.

‘But I think there is greater caution now, after what has happened in the US with the sub-prime crisis, and people are much more cautious nowadays when it comes to borrowing and lending money.’

PROPERTY: Muted market gives buyers more bargaining power

The Straits Times March 23, 2008

Prices aren’t tumbling but it’s a good time to get a unit at a reasonable price, say experts

IT IS no secret that the residential property market is in a lacklustre mood.

With many buyers and sellers having scurried to the sidelines as the United States sub-prime woes brought about an uncertain stock market, new home sales slipped to a nine-month low last month.

For those looking to buy a home, the question is whether to buy now or later.

As fire sales have yet to hit the market and prices largely appear to be holding steady, it may not yet be a time when bargains abound everywhere.

But property experts say this may be the best time to bargain for a reasonable deal if you have something in mind.

It is a time when sellers – be it developers selling their new developments or individuals selling their properties in the resale market – are more flexible and buyers have more bargaining power, they say.

Generally, developers are still loath to lower their prices. So a good bet now is likely to be the resale market, where sellers can be more flexible, depending on their reasons for wishing to sell their property.

Completed properties also have the advantage of generating an immediate rental yield, or allowing buyers to move in any time they like, consultants say.

‘Right now, bargain-hunting may take place in the secondary market,’ says Mr Donald Han, Cushman & Wakefield’s managing director.

Some sellers may be looking to get out of the property market because they either cannot or do not wish to hold on to the asset on hand, he adds.

There are certainly desperate sellers out there, but it is not as though they are all ready to sell at a major discount or take a significant loss, says a property investor who declined to be named.

Last month, only 185 new homes were sold, down from 328 in January.

If the current standstill in the market continues, some small developers may start to lower their prices, say property consultants.

And if this happens, it will affect the entire market.

Home prices could fall, but by then, other buyers may beat potential buyers to the properties that they like.

This is why some property consultants say it is really an individual’s reading of the market on when to buy.

This is particularly so for those with a specific unit or a small project in mind, or those seeking unusual products such as suburban condominium units with pools.

The freehold 39-unit Ambrosia in Telok Kurau, for example, offers units with swimming pools, which is not common in small projects.

Its nine penthouses and two ground-floor units come with private pools and these have attracted fairly strong interest.

About 30 per cent of the five-storey development has been sold at an average price of $950 per sq ft (psf), says property consultancy Knight Frank, which is marketing the project.

‘Last year, valuation was trying to keep up with transacted prices,’ says Mr Han. ‘Now, transacted prices are keeping up with valuations.’ Mr Eric Cheng, executive director of HSR property group, says: ‘In today’s market, you can find cheap buys.’

But not all units are cheap, even if the sellers are willing to offload their homes without any profit, he adds.

For instance, some sellers at the 99-year leasehold The Rochester in Buona Vista may be keen to sell at around $1,200 psf, which could be the price they bought at last year.

But the project was launched at 2007 prices, at a time when the market was booming, he said, so they are not a real bargain.

Cheung Kong pips Far East in URA tender

Business Times – 20 Mar 2008

It offers $305psf ppr for West Coast condo plot next to Blue Horizon

 (SINGAPORE) Cheung Kong Holdings-linked Billion Rise yesterday pipped Far East Organization to emerge as top bidder for a 99-year leasehold condo site facing West Coast Park and overlooking the sea.

Billion Rise’s bid of $110.44 million or $305 per square foot per plot ratio (psf ppr) was just 1.4 per cent higher than the next highest offer of $301 psf ppr by Far East unit Tian Hock Properties.

The tender for the choice plot, next to Blue Horizon condo developed by Far East, attracted 12 bids. City Developments and TID, Allgreen Properties, Frasers Centrepoint, MCL Land, Sim Lian, a Kheng Leong unit and Hoi Hup Realty were among the other bidders. Entities linked to Alpha Investment Partners and Teambuild Construction also took part in the tender.

Yesterday’s outcome was in a sharp contrast to that at a state tender last week for a landed housing plot at Jurong West when there were just two bids – both way below market expectations. The Housing & Development Board, which conducted that tender, decided not to award the site.

On offer at yesterday’s tender, conducted by Urban Redevelopment Authority, was a more appealing site near the sea and a short drive from the VivoCity shopping and entertainment complex.

‘The plot attracted an overwhelming response of 12 bids from major and mid-size developers and contractors,’ said CB Richard Ellis executive director Li Hiaw Ho. ‘It signals developers’ confidence in the suburban segment despite the current lukewarm response to new projects.’

Notwithstanding the wide participation in yesterday’s tender, the top bid of $305 psf ppr was towards the lower end of the $260-400 psf ppr range of bids indicated by property consultants when the site was launched in January.

Industry sources suggested that Cheung Kong’s breakeven cost for the condo could be about $600- 630 psf. ‘It is likely that units in the proposed development will be sold at an average price of around $750-800 psf,’ said Knight Frank director Nicholas Mak.

Units at Blue Horizon next door were transacted at an average price of $740 psf in Q4 last year.

Market watchers had expected Cheung Kong, controlled by Hong Kong tycoon Li Ka-shing, to be awarded the latest site. The last time that a company in Mr Li’s stable was awarded a 99-year condo site in a state tender here was 11 years ago in early 1997, when Japura Pte Ltd placed the top bid of $456.51 psf ppr for a site in Bayshore Road, which it later developed into the Costa Del Sol condo that boasted sweeping views of Singapore’s eastern shoreline.

Costa Del Sol is in front of The Bayshore condo, which was developed by Far East. This time, the heavyweights took the competition to the West Coast.

Foreigners snap up homes as rents start to bite

Business Times – 12 Mar 2008Their purchases could account for half of 2007 transactions on the secondary market

 (SINGAPORE) A record number of foreigners here have opted to purchase homes instead of renting them at ever-climbing rates.

According to an analysis of transactions of private residential properties by DTZ Debenham Tie Leung, foreigners bought 6,536 non-landed homes from the secondary market in 2007 – the largest number since 1995.

They could account for more than 50 per cent of the secondary market transactions last year. That is because while more than 20,000 non-landed homes were sold on the secondary market last year, this number includes the units from more than 100 collective sales. DTZ’s analysis does not include en bloc units – though earlier reports had put this figure at around 6,000 for the first half of 2007 alone.

Purchases by foreigners on the secondary market represent a 105 per cent increase in volume compared to 2006.

DTZ research senior director Chua Chor Hoon said that while some buyers were investors, there were also those who ‘are not on company budget and find it more worthwhile to buy rather than face escalating rentals, especially if they are going to be in Singapore for more than a couple of years’.

DTZ’s figures for 2007 reveal that rents of prime apartments and condominiums increased 45 per cent year-on-year in 2007 to average $4.80 per square foot (psf). This was attributed to the influx of expatriates and a tight supply of prime apartments, as numerous prime developments were demolished or slated for redevelopment after being collectively sold.

The percentage of foreigners buying non-landed property from the primary market (developer sales) was lower at 25.4 per cent, or 2,314 transactions out of a total of 9,089, reinforcing the assertion that foreigners are more inclined to buy a home for immediate occupation.

Indonesians and Malaysians remain the biggest foreign buyers here, accounting for 23 and 17 per cent of all foreigners in 2007 respectively, but Indians (12 per cent), Britishers (8 per cent), Chinese (7 per cent) and Koreans (7 per cent) are also well represented.

While foreigners bought non-landed homes in record numbers last year, boosting demand in the process, their absence in the landed homes sector (because of restrictions imposed by the government) did not stop a record number of landed homes being sold in the secondary market.

DTZ’s analysis reveals that of the total 5,211 landed homes sold in 2007, 4,823 were from the secondary market.

Apart from the bullish sentiment which ’spilled over’ from the non-landed sector last year, the landed sector also saw demand rise as it was still considered comparatively good value.

DTZ’s figures show that average capital values for non-landed freehold homes in the prime districts increased by 55 per cent

year-on-year to $1,480 psf.

For freehold landed homes in the prime districts, average capital values of detached homes increased 31 per cent year- onyear, while average capital values of semi-detached and terrace homes rose 29 and 27 per cent respectively.

The situation was also exacerbated by the tight supply of new launches of landed homes in the year, estimated at around 650 units.

DTZ’s Ms Chua also believes that with speculation less rampant in the landed housing sector – ‘most buyers are owneroccupiers’ – prices are expected to be more stable and could even prove ‘more resilient’ if the downturn in the global economy is protracted.

However, DTZ expects future supply of landed homes to be relatively low at just 3,100 units over the next few years, so this could push up demand and prices for both primary and secondary market landed homes.

Speculation, defined by the number of subsales, was rampant among developer sales of non-landed homes last year, hitting an all-time high of 4,631 transactions – a 312 per cent year-on-year increase over 2006.

Interestingly, while subsale transaction volume in 2007 was just 27 per cent higher than during the previous peak of 1996, the value of subsales was almost twice as high, hitting $7.9 billion.

The fourth quarter, however, marked a shift in sentiment in the property market. Only 3,947 non-landed homes were transacted in the quarter, of which just 846 were sold by developers, reflecting a 64 per cent quarter-on-quarter drop. This was one of the worst performing quarters in the last three years.

Guocoland dives on options lapse

Business Times – 12 Mar 2008

Shares hit as Kuwaiti-linked fund pulls out of $815m property purchase

SHARES of Guocoland fell victim yesterday to news that a fund company managed by Kuwait Finance House (Malaysia) Berhad (KFHMB) did not exercise options to buy $814.8 million worth of  apartments in Guocoland’s upmarket project here.

Following analysts’ downgrade, the stock dived as much as 19 cents or 5 per cent to an intra-day low of $3.64 before closing at $3.70, down 13 cents or 3.4 per cent. More than 420,000 shares changed hands.

But the reaction from property counters was mixed, with Ho Bee falling two cents to 95 cents and SC Global dipping four cents to $1.50. Keppel Land edged up five cents to $5.35 and CapitaLand gained 18 cents to $5.89.

The fund company managed by KFHMB had purchased options in December last year to buy 97 units at the premier freehold development Goodwood Residence. There are only 210 exclusive units on this 24,845-sq-m estate fronting the expansive Goodwood Hill. KFHMB is the Malaysian unit of Kuwait Finance House (KFH).

Guocoland said on Monday that although the options have lapsed, the parties are still in discussions, with a view to granting fresh options for units in the development.

It is not known why the fund did not exercise the options, but Guocoland said in its Monday announcement that ‘the current private residential property market appears to be cautious in Singapore’. This could have prompted its decision to market Goodwood Residence units selectively at a later date.

But in the stock market yesterday, speculation was rife over reasons for the lapse. Some cited the cautious market sentiment while others cited over-pricing of the units. There was even talk of an unsuccessful marketing campaign for these units by KFH in Dubai. The median price of $3,200 per square feet that the KFHMB fund agreed was earlier seen by some as a possible benchmark pricing for the area.

DBS Vickers yesterday cut its rating on Guocoland to ‘hold’ from ‘buy’ and lowered its target price to $4.14 from $5.60 after revising downwards its average selling price estimates for Guocoland’s high-end and mid-tier projects and ascribing a 15 per cent discount to Guocoland’s revalued net asset value.

‘We believe that the decision by KFHMB to allow these options to lapse is a sign of the weak sentiment in the physical property market currently, particularly in the high-end segment,’ the brokerage said.

But Westcomb Financial Group said it believes that this lapse of options ’should not be taken as a signal that the Singapore private residential property market has fallen drastically.

‘In fact, the buyer has overpaid their purchases in December 2007, maybe with the view that the market would continue its uptrend in 2008.’

 

Landed housing plot draws top bid of just $77.80 psf

Business Times – 12 Mar 2008

Only one other offer made; poor show seen as sign of uncertain market

IN what is seen as a sign of an uncertain property market, a landed housing parcel in Jurong West drew only two bids, and a low top bid of $11.8 million – or just $77.80 per square foot (psf) – at the close of a government land tender yesterday.

The higher bid, put in by Boon Keng Development, was significantly below what analysts had said the site could fetch.

Cushman & Wakefield managing director Donald Han, for example, reckoned that the plot would fetch $200-$250 psf of land area.

‘The price is really below expectation,’ said Mr Han yesterday. ‘But with the market sentiment being so weak, you can expect wild swings in prices. Developers will be sitting on the sidelines or might not want to bid their best prices.’

The other bid was put in by Sunway Concrete Products, a unit of Malaysian- listed Sunway Holdings. It offered $10.3 million, or $68.1 psf of land area.

Li Hiaw Ho, executive director for research at CB Richard Ellis, said that both bids were ‘relatively conservative’ and reflected the current cautious sentiment in the market.

The 99-year leasehold site on Westwood Avenue has a land area of 151,759 sq ft. Property analysts estimate that some 50-60 landed homes can be built on the site.

‘Nevertheless, based on the highest bid of $78 psf, terrace houses on this site could still be sold for $900,000 to $1 million each,’ Mr Li said. This is slightly higher than recent transactions of intermediate terrace houses in nearby Westwood Park and Westville, which were between $820,000 and $990,000 each.

Potential buyers, Mr Li added, could comprise locals working in the manufacturing firms in Jurong and Tuas, as well as academics at nearby Nanyang Technological University.

Market watchers, however, said that it is possible that the government might not award the site because of the low price.

The price looks especially low when considering other recent government sales of landed housing plots, Mr Han pointed out.

In October, the Urban Redevelopment Authority (URA) auctioned off 12 sub-divided landed housing plots near Sembawang Beach which can be developed into a total of 57 landed homes. The auction fetched a total of $37.09 million, which worked out to about $285 psf of land area on average.

And in January, the government decided not to sell a short-term office site in Aljunied because the sole bid offered too low a price. The decision followed a recent string of lower-than-expected offers for state land.

Space crunch in Orchard pushes docs to Novena

March 12, 2008

The area could turn into medical hub as more private doctors set up clinics there

PRIVATE doctors are flocking to the Novena area as the squeeze on clinic space in the Orchard Road belt tightens.

The migration could turn the area into Singapore’s newest centre for private health services, some believe.

In the space of two years, developer Far East Organization has already sold or leased 92 per cent of the 145 medical suites at its new Novena Medical Centre (NMC).

Private doctors at the centre, which opened last October, are allowed to use some X-ray machines and labs in Tan Tock Seng Hospital (TTSH), which is just across the street.

Developers in the area are also setting space aside for private doctors, as well as accommodation for patients and their families.

The spill-over of demand has prompted Far East to house another 64 clinics in its 28-storey hotel in nearby Sinaran Drive. The group plans to either sell or lease the suites when ready, which is likely to be by 2010.

In Newton Road, SC Global Developments will also save space for medical suites in its upcoming office building, Newton 200.

Private specialists can also look to the Parkway Group’s new hospital in Irrawaddy Road, which is scheduled to open in July 2011. The group is setting aside 30 per cent of its space for them.

Medical suites in Novena occupy about one-third of the space that clinics in Orchard do. At about 24,154 sq m in total, they cover about the same area as Clarke Quay.

This spate of activity is fuelled by the Government’s plan to attract one million foreign patients a year by 2012.

Mr G.L. Yap, executive director for Far East Organization’s property services, said: ‘The infrastructure has to keep pace with expectations of growth.’

Foreign patients number more than 400,000 a year and come mainly from Indonesia and Malaysia, with increasing numbers from China, the Middle East and developed countries. They come for a range of treatments, including day surgery and routine health checks.

Spending on so-called medical tourism averaged about $1.3 billion in 2006 and is expected to double by 2012, according to Dr Jason Yap, director of health-care services at the Singapore Tourism Board.

The space crunch is already being felt by medical centres at Mount Elizabeth, Gleneagles, Paragon and Camden.

Company officials say that, save for three units, the buildings have been totally sold or leased out. While Paragon declined to say how many units it has, the three other centres have more than 540 suites.

The demand for medical suites has been pushing rents up, said property analysts. In the Mount Elizabeth Medical Centre, a suite was last sold for $5,000 psf, up from $4,017 last March.

Colorectal surgeon Francis Seow-Choen bought a unit at Novena two years ago because of high rents. For the past four years, he has also been renting a unit at the Mount Elizabeth Medical Centre, where rents have risen to about $18 psf, from about $8 psf four years ago.

‘The rents here have risen astronomically,’ said Dr Seow-Choen. ‘Instead of being subjected to market forces, I’ve decided to buy a unit in Novena, which as an area has a lot of potential.’

The Singapore Medical Group moved its Sports Medicine Centre from Paragon to the NMC this year, because of the space crunch and the area’s attraction as a sports and medical hub.

Dr Jimmy Lim, a cardiologist who crossed over from TTSH to set up his own clinic at the NMC, said the new clinic allows his previous patients to visit him.

‘Having a restructured hospital and now a private hospital nearby is basically going to give my  patients a wider choice when they use the in-patient facility,’ he said.

Source: The Straits Times

All eyes on govt land tenders this month

Business Times – 11 Mar 2008

$500m site above Serangoon MRT, 3 suburban housing plots on offer

AMID the current quiet market, all eyes will be on four 99-year leasehold suburban Government Land Sale site tenders that close this month.

They comprise three private residential sites including one for landed housing, and a ‘white’ site above the Serangoon Circle Line MRT station that could potentially be worth more than $500 million.

The action kicks off today, with the closing of a tender for a landed housing parcel in Westwood Avenue, Jurong West, big enough for about 50-60 landed homes.

Cushman & Wakefield managing director Donald Han reckons the 151,759 sq ft plot could fetch about $200-250 psf of land area. The plot is next to the landed housing area at Westville. Those looking for clues on how developers read the suburban mass-market residential sector will have to train their eyes on tender closings for two plots this month, both boasting scenic locations.

One is at West Coast Crescent next to Blue Horizon condo and faces West Coast Park and overlooks the sea. The other is in Yishun, fronting Lower Seletar Reservoir and close to Singapore Orchid Country Club/Golf Course. It is also near Khatib MRT station.

Property consultants polled by BT in January, when the tenders for the two sites were launched, indicated bids of about $200-300 psf per plot ratio (ppr) for the Yishun plot.

Mr Han reckons the winning bid will be closer to $300 psf ppr, reflecting a breakeven cost of about $550-600 psf and a possible average selling price of $700-800 psf for the new condo.

As for the West Coast plot, consultants earlier indicated a wide range of bids – $260-400 psf ppr. Mr Han estimates the plot’s value at the higher end of that range, around $380-400 psf ppr as ‘it is near parks, recreational facilities and the sea’, translating to selling prices of about $850-950 psf for a new condo on the site, on a project-average basis.

He expects the Yishun and West Coast condo sites to attract at least five bids each, while the landed housing plot at Westwood Avenue could draw more bids, about five to eight.

‘Developers may be willing to look at smaller profit margins because these are sure-sell markets, given pent-up demand in the mass market. However, buyers are still price-sensitive,’ he said.

While some analysts and consultants still feel the mass-market will be relatively resilient this year, City Developments executive chairman Kwek Leng Beng recently offered a different perspective.

‘The mass market will do well, but selectively. It’s not going to be what you’ve seen before. . . people queuing up,’ he said, noting that the Housing & Development Board provides a credible alternative to mass- market private housing.

The Serangoon Central site was quietly launched in December by the Land Transport Authority. The 269,180 sq ft plot can be developed into an estimated maximum potential gross floor area (GFA) of about 850,000 sq ft excluding a bus interchange that the successful bidder will have to build. The developer will be reimbursed the cost of building the interchange.

The site can be developed into any combination of commercial, hotel, residential, and sports and recreational use.

Cushman’s Mr Han said that assuming 30-40 per cent of the GFA is for retail use and the rest for residential, the plot could be worth about $400-450 psf ppr, or a total of around $340-380 million.

‘So the breakeven cost would be about $700 psf for the residential component and the developer might be able to achieve selling prices of say $900-1,000 psf on average. The retail component will break even at about $1,200-1,400 psf,’ he reckons.

However, other property insiders say that assuming an all-retail development, which would be the ‘highest and best use’ of the site, land bids could come in closer to the $600-700 psf ppr mark (about $500 million to $600 million in total).

Suburban malls are generally valued at about $1,800-2,000 psf of net lettable area currently,’ one player pointed out.

However, another major player countered that sentiment today is subdued, and said the challenge of securing bank finance for such a big project with a likely total investment of about $1 billion or more will put a dampener on bullish bidding for this site.

The action and market watching continues next month, with at least two interesting offerings at state land tenders – a private condo site at Toa Payoh Lorong2/3, and a 1.56-hectare site in Choa Chu Kang for residential development that comes with the existing Ten Mile Junction mall.

Investors eye real estate after tough 2007

Business Times – 11 Mar 2008

Asian property and niche sectors are attracting assets

(LONDON) Many investors in alternative assets plan to invest more in real estate after poor returns from the sector in 2007, a PricewaterhouseCoopers (PwC) survey showed yesterday.

John Forbes, UK real estate leader at PwC, said some investors had been lured back to UK property after prices fell sharply.

Growth areas such as Asian property and niche sectors such as student housing were also attracting assets, he said.

PwC’s global survey, which polled 226 institutional investors and alternative investment providers in the fourth quarter of 2007, showed a gross 41 per cent of investors plan to increase real estate allocations over the next three years.

That compares with 40 per cent for private equity, 35 per cent for commodities and 33 per cent for hedge funds.

However, 21 per cent of investors planned to reduce their allocations to real estate, compared with  6 per cent for hedge funds, 15 per cent for commodities and 11 per cent for private equity.

Forbes said: ‘UK real estate capital values are down perhaps 20 to 25 per cent from the top of the market. For some types of investors that will discourage them.

‘But for opportunistic investors, who have been out of the UK market for the past two to three years, the UK is starting to look cheap so they are coming back.’

UK commercial property delivered a total return, which combines rental income and capital growth, of -3.4 per cent in 2007, as the credit crisis bit and investor sentiment soured.

The survey also showed less than half of respondents were satisfied with the performance of hedge funds, while nearly a fifth were dissatisfied.

That compares with private equity, where two- thirds were satisfied and only 7 per cent dissatisfied, or real estate, where 57 per cent were happy with performance and 11 per cent unhappy.

The survey follows a strong year for hedge funds. According to Credit Suisse/Tremont they returned 12.56 per cent in 2007.

Rob Mellor, UK financial services tax leader at PwC, said hedge funds had to become better at managing investor expectations and explaining how they achieved returns, especially when conditions turn.

Some may have feared the credit crisis would hit hedge fund returns harder than it eventually did, he said\. \– Reuters

Ophir-Rochor corridor site to be marketed in France

Business Times – 11 Mar 2008

THE Urban Redevelopment Authority (URA) will market the first site in the new Ophir-Rochor corridor at the ‘Marche International des Professionals de L’Immobilier’ (MIPIM), a premier international property event in Cannes, France.

The site will be launched for sale under the Confirmed List of the Government Land Sales Programme in June.

In a statement yesterday, URA said the 2.74-hectare parcel is at Rochor Road/Ophir Road, adjacent to Parkview Square.

It also said the developer will have to include a minimum amount of office and hotel space to cater to the growth of Singapore’s financial and business services sector and tourism.

Depending on market demand, URA will release more redevelopment sites in the Ophir-Rochor area over the next five to 10 years. URA will be exhibiting plans for development of the Ophir-Rochor corridor at MIPIM Cannes.

A team led by URA, and comprising public sector agencies and private companies, will showcase investment opportunities, including key recent and upcoming developments, at the Singapore Pavilion.

‘With some of the most prominent upcoming developments and strategic sale sites that Singapore has to offer in Marina Bay and Ophir-Rochor, I am confident we will continue to attract international investors,’ said URA’s director of land administration Choy Chan Pong.

Besides plans for the Ophir-Rochor corridor, URA will exhibit plans for the extension of the existing financial district at Marina Bay.

As part of the plan to rejuvenate and grow the existing Central Business District, URA has released more plans for the Ophir-Rochor corridor to complement the Marina Bay area, featuring mixed-use developments with offices, hotels, residential and other complementary facilities in a park-like environment.

It is expected to be developed over the next 10 to 15 years.

URA sets aside more land for offices

Business Times – 11 Mar 2008

(SINGAPORE) Singapore will provide more land for offices as part of a strategy to strengthen its position as an Asian financial centre, the government’s real estate planning agency said yesterday.

‘The new growth area set aside for the seamless extension of the existing financial district … will be more than twice the size of London’s Canary Wharf,’ the city-state’s Urban Redevelopment Authority (URA) said in a statement.

‘Over a span of more than 15 years, the development of the 85-hectare site identified for extension of the existing financial district will see the addition of around 2.82 million square metres of office space,’ it added.

Demand for office space in Singapore has grown strongly in the past three years, spurred by the growth in financial services, in particular private banking.

According to URA data, office rents soared 56 per cent last year as demand for office space rose by an average of 260,000 square metres per annum over the last three years – a 60 per cent increase from the historical average of 160,000 square metres a year.

Foreign direct investment in Singapore’s real estate was S$14.4 billion in 2007, compared to S$6.7 billion in 2006, the agency said.

Singapore is currently developing the Marina Bay Financial Centre on reclaimed land south of the existing central business district. It has also offered sites to the east and west of the business district.

The city-state, with a population of 4.6 million, has expanded its land area by more than 10 per cent since independence in 1965 through reclamation from the sea.

Developers involved in the Marina Bay project include Hong Kong developers Cheung Kong and Hongkong Land, as well as Singapore-based Keppel Land.-Reuters

Source: Business Times

Kuwait fund pulls out of bulk purchase of high-end homes

March 11, 2008

It allows options for 97 condo units at Goodwood Residence to lapse

A KUWAIT bank fund that agreed in December to buy 97 units at posh Goodwood Residence for $818.4 million has let the purchase option lapse.

Kuwait Finance House has given no reason for the move, which could result in the firm having to pay developer GuocoLand multimillion-dollar penalties.

It could also be the first time a foreign institutional investor in Singapore has pulled out of such a deal, raising concerns that the property market, already hit by weaker sentiment, may be heading into a downturn.

‘While the current market is cautiously optimistic, news of such a pullout might cause it to turn more cautious,’ said Cushman and Wakefield managing director Donald Han.

GuocoLand did not provide a direct reason for the lapse but said in a statement yesterday that the private residential market in Singapore appears cautious.

The developer also said it is in talks with Kuwait Finance House, an Islamic investment bank, with ‘a view to a grant of fresh options for units in the development’.

The firm declined to comment further, citing ongoing talks. Kuwait Finance House also declined comment for the same reason.

Kuwait Finance House’s huge deal was for 97 four-bedders ranging from 2,500 sq ft to 3,900 sq ft at the former Casa Rosita site in Bukit Timah Road, near Newton Circus.

The condo has 210 freehold units on a large 24,845 sq m site fronting Goodwood Hill. The Kuwait fund’s purchase would have been the single-largest purchase of residential units under construction in Singapore.

Kuwait Finance House had agreed to buy the units at a median price of $3,200 per sq ft (psf), which would have set price benchmarks for the area. Industry sources said the price was way too high, considering that bulk purchases typically come with a discount.

‘If it were to have bought at an average of, say, $2,700 psf last December, it would still be a record for the Newton Circus area,’ said an industry source who declined to be named.

‘If it had held on for 15 to 20 years and leased the units for up to a 5 per cent yield, it may have been able to justify the deal. But if it had wanted to buy and sell, why didn’t it bargain for a rock-bottom price as the property had not been launched?’

It is believed that Kuwait Finance House was keen on flipping the units as they were marketed in Dubai recently, but the sale campaign was unsuccessful.

Another industry source, who declined to be named, said: ‘The pullout may be due to the terms of the deal. The buyer could have realised that it had bought at a higher-than-expected price, had problems flipping the units and wanted to cut its losses. ‘It could also reflect the current market and the possibility that the property market may stagnate in the next two to three years.’

The stale market appeared to have led GuocoLand to put off the launch of Goodwood Residence, scheduled initially for the first quarter.

Many developers are following suit, delaying launches until keen interest returns to the sector, which is in the doldrums with buyers and sellers staying on the sidelines.

A GuocoLand spokesman said: ‘We would be tapping selected overseas markets when we decide to launch Goodwood Residence at a later date.’

It added in its statement that the expiry of the options will not have any material financial effect on its net tangible assets per share or earnings per share for the financial year ending June 30.

Source: The Straits Times

Punggol River set for big change

Work starts on $7.13m project to create reservoir park with man-made island by 2010

WORK to transform the Punggol River into a scenic reservoir park, complete with a man-made island, got off the ground yesterday.

Prime Minister Lee Hsien Loong, who was at the official opening of the adjoining Anchorvale Community Club in Sengkang, symbolically released the first piece of the floating island – a clump of soil and grass – into the water.

For its design, the $7.13 million project will draw inspiration from a nearby fruit park being developed by the National Parks Board. Its pavilions will be shaped like mangosteens and its benches, like limes.

Work will be completed by 2010.

Punggol River is the first of five sites to be improved this year under the Active, Beautiful, Clean (ABC) Waters programme.

Launched by national water agency PUB in 2006, the $200 million programme is an ambitious island-wide revamp of 28 waterways.

The aim is to rejuvenate Singapore’s drainage and water-supply infrastructure, including the canals and reservoirs, and turn it into a scenic network of streams, rivers and lakes where people can enjoy water activities and even commute.

Giving a preview of the projects during the Budget debate a fortnight ago, Minister for the Environment and Water Resources Yaacob Ibrahim said, for example, that the Lower Seletar Reservoir would sport a heritage bridge, featuring story panels which will tell of the area’s kampung history.

Work on the pilot projects of Kolam Ayer and the Bedok and MacRitchie reservoirs is in its final phases and will be unveiled this year.

‘With these projects, we hope to bring waterfront living to the heartland, improve the quality of our living environment and enhance property values,’ said Dr Yaacob.

Source: The Straits Times 10 Mar 08

PROPERTY: Demand for single office units still going strong in quiet market

Investors turn more cautious, but small firms still interested in strata-titled officesALL has turned quiet on the housing front, but some other segments of the property market appear to have escaped that fate.

Still going strong in particular are sales of single office units in larger commercial buildings. Known as strata-titled offices, these properties recorded active demand in the fourth quarter last year, even as home sales were taking a breather.

A healthy 13 transactions of strata offices occurred between October and December, up from only five in the previous quarter, according to data from CB Richard Ellis (CBRE).

Most of the properties were in the city area – Suntec City, Tong Building in Orchard Road, Springleaf Tower in Anson Road – and changed hands at well above $2,000 per sq ft (psf), CBRE said.

Altogether, $750.8 million worth of strata offices were sold in the fourth quarter, bringing the total for last year to $1.7 billion – more than four times the figure for 2006.

Prices also rose solidly throughout the year. At Suntec City Tower 1, a favourite strata-office location, unit prices climbed about 50 per cent from just above $1,500 psf in January to almost $2,400 psf in December – the highest level in two years.

The steady take-up of single units is due largely to the wider boom in Singapore’s office market. A shortage of offices, even as expanding businesses push up demand for space, has boosted prices and rents across the board, drawing much interest from investors, said CBRE’s executive director of investment properties, Mr Jeremy Lake.

But in recent months, even investor demand for offices has slowed as the United States sub-prime mortgage problems spread and sentiment in the market grew more cautious.

This has hit sales of entire office buildings, but strata offices have been less affected, said Mr Shaun Poh, a senior director of investment advisory services and auctions at DTZ Debenham Tie Leung.

He attributes this to the smaller businesses that are the other main source of demand for single office units. These businesses plan to occupy the space themselves rather than lease it out for rental income.

‘Smaller units, of the $1 million to $3 million variety, are more digestible for some buyers,’ he said. ‘They appeal to end-users who are moving from renting to buying now that rents have risen so fast.’

DTZ is marketing a floor of offices at Peninsula Plaza near the City Hall area, consisting of six strata units with a total floor area of about 8,500 sq ft. The units are tenanted at about $4 psf, but rents in the building have moved up to between $7 and $8 psf, said Mr Poh.

The indicative price for the floor is $17.5 million, or about $2,050 psf. At this price, with a projected $7.50 psf rental, the net yield works out to about 4 per cent, he added.

Since the property went on the market earlier this week, DTZ has received ‘more than 10 enquiries’, Mr Poh said.

‘Some are investors looking to buy the whole floor, but we’ve also seen interest from end-users in electronics or shipping firms who are interested in buying just one or two units.’

In general, however, experts feel that strata-office sales might not be as strong in the first quarter of this year as last year.

Colliers International has not yet sold any strata offices at auction this year, after selling one a month between October and December. In December, a 3,003 sq ft unit was sold at United House, for a healthy $2,497 psf.

But Mr Poh said that, while sales might slow, prices are unlikely to fall any time soon.

‘Prices have not gone up, but neither have they come down,’ he said.

‘If they can be maintained in such an environment, and if things get a bit more optimistic, prices could even go up 10 to 20 per cent over the next year.’

Source: The Straits Times 9 Mar 08

PROPERTY: Demand for single office units still going strong in quiet market

Investors turn more cautious, but small firms still interested in strata-titled offices

ALL has turned quiet on the housing front, but some other segments of the property market appear to have escaped that fate.

Still going strong in particular are sales of single office units in larger commercial buildings. Known as strata-titled offices, these properties recorded active demand in the fourth quarter last year, even as home sales were taking a breather.

A healthy 13 transactions of strata offices occurred between October and December, up from only five in the previous quarter, according to data from CB Richard Ellis (CBRE).

Most of the properties were in the city area – Suntec City, Tong Building in Orchard Road, Springleaf Tower in Anson Road – and changed hands at well above $2,000 per sq ft (psf), CBRE said.

Altogether, $750.8 million worth of strata offices were sold in the fourth quarter, bringing the total for last year to $1.7 billion – more than four times the figure for 2006.

Prices also rose solidly throughout the year. At Suntec City Tower 1, a favourite strata-office location, unit prices climbed about 50 per cent from just above $1,500 psf in January to almost $2,400 psf in December – the highest level in two years.

The steady take-up of single units is due largely to the wider boom in Singapore’s office market. A shortage of offices, even as expanding businesses push up demand for space, has boosted prices and rents across the board, drawing much interest from investors, said CBRE’s executive director of investment properties, Mr Jeremy Lake.

But in recent months, even investor demand for offices has slowed as the United States sub-prime mortgage problems spread and sentiment in the market grew more cautious.

This has hit sales of entire office buildings, but strata offices have been less affected, said Mr Shaun Poh, a senior director of investment advisory services and auctions at DTZ Debenham Tie Leung.

He attributes this to the smaller businesses that are the other main source of demand for single office units. These businesses plan to occupy the space themselves rather than lease it out for rental income.

‘Smaller units, of the $1 million to $3 million variety, are more digestible for some buyers,’ he said. ‘They appeal to end-users who are moving from renting to buying now that rents have risen so fast.’

DTZ is marketing a floor of offices at Peninsula Plaza near the City Hall area, consisting of six strata units with a total floor area of about 8,500 sq ft. The units are tenanted at about $4 psf, but rents in the building have moved up to between $7 and $8 psf, said Mr Poh.

The indicative price for the floor is $17.5 million, or about $2,050 psf. At this price, with a projected $7.50 psf rental, the net yield works out to about 4 per cent, he added.

Since the property went on the market earlier this week, DTZ has received ‘more than 10 enquiries’, Mr Poh said.

‘Some are investors looking to buy the whole floor, but we’ve also seen interest from end-users in electronics or shipping firms who are interested in buying just one or two units.’

In general, however, experts feel that strata-office sales might not be as strong in the first quarter of this year as last year.

Colliers International has not yet sold any strata offices at auction this year, after selling one a month between October and December. In December, a 3,003 sq ft unit was sold at United House, for a healthy $2,497 psf.

But Mr Poh said that, while sales might slow, prices are unlikely to fall any time soon.

‘Prices have not gone up, but neither have they come down,’ he said.

‘If they can be maintained in such an environment, and if things get a bit more optimistic, prices could even go up 10 to 20 per cent over the next year.’

Source: The Straits Times 9 Mar 08

Mortgage war breaks out as DBS and UOB offer new rates

Banks focusing on specific targets, waging battles without fanfare

THE mortgage war finally erupted, as Singapore banks responded to a dramatic rate cut by Maybank three weeks ago – with one even offering a zero per cent package.

That attractive deal comes from United Overseas Bank (UOB), which has relaunched a package with a teaser first-year rate at rockbottom.

DBS Group Holdings has also rolled out new rates on several packages, including a fixed-rate deal that claims to be the lowest of its type here in Singapore.

Unlike the fanfare that marked the rate war in 2003, though, the battle now is focused on specific targets and is being kept under the radar.

Banks are quietly offering promotional rates on a case-by-case basis and tend to target clients with loans of well over $300,000. While the market for new mortgages has softened, banks are still busy.

‘A lot of customers are looking to refinance their loans taken less than a year ago, when interest rates were much higher,’ Mr Bryan Ong of mortgage consultancy bcgroup.com.sg said.

Maybank sparked the war with an aggressive three-year, fixed-rate package at 1.68 per cent for the first year. This promo, which ends on Monday, has sent customers ‘rushing to submit loan applications’, said Maybank consumer banking head Helen Neo.

About 80 per cent of the applications were for buying private properties with an average loan size of about $675,000. Maybank is now ‘reviewing the rates’.

Other banks have not taken the move lying down. Most have tacitly matched – or undercut – Maybank’s rates.

DBS has a new three-year, fixed-rate package with an aggregate rate of 7.64 per cent – lower than Maybank’s 7.74 per cent. It offers a 1 per cent cash rebate in the first year.

UOB has revived its FirstZero Home Loan – a three-year, fixed-rate package available ‘only for a limited period’. The bank launched this in 2003, but it was quietly taken off the market last year amid interest rate volatility.

FirstZero is now back with a zero per cent rate on the first year, 3.6 per cent on the second and 4.5 per cent on the third, making a three-year aggregate rate of 8.1 per cent.

It has hefty penalty charges and a three-year lock-in period.

Standard Chartered Bank (Stanchart) actually moved before Maybank, cutting its three-year, fixed-rate package from 3.58 per cent to 2.98 per cent in January. It also cut its two-year package by 0.55 of a percentage point to 2.88 per cent.

DBS countered this week with a 2.88 per cent average annual rate for a three-year package and a 1 per cent cash rebate on the first year.

This three-week promotion is only for customers with loan quantums of at least $300,000.

OCBC Bank had not joined the fray, with chief executive David Conner saying last month that a mortgage rate war was unlikely.

OCBC said ‘from time to time, it offers loan packages with promotional rates that are highly competitive compared to other players’.

The most popular packages now are those linked to transparent rates, like the Singapore Interbank Offered Rate (Sibor) or swap offered rate (SOR), comprising the Sibor plus a bank’s lending costs.

These are official, regularly published industry rates customers can check to see how their packages are structured.

Riding on this interest, DBS has just cut by half its rate for its 12-month, two-year, Sibor-linked loans to 0.5 per cent for the first year.

Nearly 80 per cent of Stanchart’s new customers in recent months have taken up its package offering SOR plus 0.5 per cent for the first year.

The SOR has dropped from about 3 per cent last year to about 1.5 per cent currently.

Stanchart’s head of consumer banking, Mr Ajay Kanwal, said: ‘With the interest rate environment expected to soften further, customers of SOR-linked packages will benefit even more.’

Source: The Straits Times 8 Mar 08

Casinos, other large projects push up cost of loans: OCBC

Casinos, other large projects push up cost of loans: OCBC

SINGAPORE’S two casinos and other large projects will add S$30 billion to loan demand this year, pushing up the cost of corporate loans in the city-state, said Oversea-Chinese Banking Corp on Wednesday.

Las Vegas Sands and Genting International have each borrowed about S$5 billion to build casinos, while developers will need billions to pay for residential sites purchased for redevelopment, OCBC’s head of group investment banking George Lee told Reuters.

‘The supply of Singapore dollars is going to get tighter while demand is exceptionally high… Credit spreads are going to rise and those used to borrowing at X must get used to borrowing at X plus something,’ said Mr Lee in an interview.

According to Monetary Authority of Singapore data, loans to businesses rose 27 per cent to S$130.5 billion in January from a year ago, spurred by a 46 per cent increase in building and construction loans to S$39.3 billion.

Other projects that require funding this year include an estimated S$2-2.5 billion to finance the purchase of electricity generator Tuas Power from government fund Temasek Holdings, and the refinancing of a loan to buy the building housing Singapore’s biggest bank DBS Group .

Turning to neighbouring Malaysia, which companies are looking to for lower-cost borrowings, Mr Lee said firms planning to tap the corporate bond market will see this as viable only if they have projects in Malaysia.

For companies hoping to take the borrowings overseas, any savings would be offset by the sharp rise in the cost of swapping ringgit into dollars or other foreign currencies.

While the cost of borrowing in ringgit remains extremely attractive, the swap premium has widened from 20-30 basis points late last year to about 100 basis points now, he said.

Malaysia opened its ringgit bond market to foreign corporate issuers in October, coinciding with the outbreak of the global credit crisis that has raised the cost of dollar-denominated debt.

On Monday, Export-Import Bank of Korea (KEXIM) became the first foreign firm to take advantage of the new rules by selling a total of RM1 billion (S$437.8 million) in five- and 10-year bonds.

The deal, which KEXIM said shaved 20-30 basis points off its borrowing cost, was handled by OCBC along with Malaysia’s RHB and CIMB.

OCBC, Singapore’s third largest bank, is also in the process of selling up to RM2.5 billion in lower Tier 2 bonds to augment its capital base.

Mr Lee said it made sense for OCBC to borrow in ringgit as it had operations in Malaysia and did not intend to exchange the proceeds from the bond issue to Singapore dollars .

‘For those with natural ringgit assets without the need to swap, it still makes sense,’ he said.

Source: Reuters (Business Times 7 Mar 08)

Speculators holding out for higher prices

Subsale activity slows but transacted prices remain resilient

(SINGAPORE) Property prices have been bolstered by speculators in the last year. But now that speculation is on the decline, could prices follow suit?

An analysis by Savills Singapore of properties subsold last year after being bought from developers in the same year has revealed that while subsale activity dropped significantly in the last quarter, subsale prices did not, suggesting that speculators are not ready to offload their investments yet.

The number of subsales fell by 66.7, 69.1 and 39.1 per cent in the high, mid and mass-market segments respectively in the fourth quarter of last year from a quarter earlier.

However, average gains made from subsales over the developers’ sale price remained relatively stable. They came to 34.2 per cent in the high-end segment in Q4, 14 percentage points higher than the full-year average gains. In the mid-tier segment, average gains fell marginally by 2.4 points to 21.1 per cent, while in the mass-market segment, they rose 1.6 points to 17.2 per cent.

Savills director (marketing and business development) Ku Swee Yong adds: ‘Speculators appear to be holding out for better prices.’

Interestingly, Savills’s analysis also shows that there have been several speculators that have subsold on very thin profit margins of 5 per cent or less, adding credence to market talk that some speculators may be looking to offload properties at bargain prices soon.

However, while Mr Ku believes that speculators that cannot manage the mortgage payments – especially after holding for a year or more on the deferred payment scheme – might be letting go at lower profits, he does not think they represent a majority.

By his estimation, there are about 6,000 residential units that will receive TOP (temporary occupation permit) this year. ‘While there may be some dumping from those who cannot afford to pay up at the point of TOP, we do not think that it will constitute more than one per cent of the 6,000 units,’ he adds.

The situation could change next year.

‘We expect around 10,000 units to receive TOP in 2009. Those who bought using the deferred payment scheme in the last couple of years might let go if they are really speculators and cannot afford to pay,’ says Mr Ku.

But he is optimistic that the low mortgage rates may mitigate the need to sell. ‘The buyers might go for rental yield instead.’

Subsales of major new launches in the high-end sector, which include developments such as Marina Bay Residences, Scotts Square and The Orchard Residences, fell to just four transactions in Q4, compared to 32 for the full year.

Two subsales were done at less than 10 per cent above the developer’s sale price.

The average gains from subsales over the developer’s sale price were highest in the high-end market, substantiating Mr Ku’s belief that this segment could prove more resilient if the global economic downturn is prolonged. ‘There is a large proportion of buyers in the high-end market that are so rich, they buy properties with cash.’

This segment is also largely supported by foreign buyers and Mr Ku says: ‘Foreigners are not speculators.’

Last year, the mid-tier segment saw 140 subsales of newly launched developments like Sky @ Eleven, The Rochester and One North Residences.

In Q4, one subsale was transacted at just 2.3 per cent above the developer’s sale price. In the mass market, there were 49 subsales of newly launched projects such as The Parc Condominium, Casa Merah and Clementiwoods for the year.

In Q4, there were 14 subsale transactions. Three were done at less than 10 per cent above the developer’s sale price.

The number of Sky @ Eleven subsales – over 60 – was among the highest in 2007. In July and August, four units were subsold for over 50 per cent of the developer’s sale price.

But the days of huge capital gains could be over.

Mr Ku says that, based on data for January so far, subsale gains could trend downwards slightly. But he adds that there is no evidence that speculators will find themselves in negative territory yet.

Source: Business Times 7 Mar 08

Mixed landed housing site for sale

CHESTNUT VILLE (I and II), a mixed landed site at Dairy Farm Crescent, has been put up for collective sale and the indicative price for the combined plot is $90 million.

This represents a land price of $741 psf over the land area, inclusive of an estimated $1 million development charge.

The development currently comprises 11 townhouses and 34 walk-up maisonette units with a combined land area of about 122,677 sq ft.

Credo Real Estate, which is marketing the site, says that the site is zoned for three-storey mixed landed housing.

This means the site may yield a combination of conventional terrace houses, semi-detached and detached houses; or cluster landed housing with strata terrace houses, strata semi-detached houses and strata bungalows with communal facilities. Credo executive director Tan Hong Boon added that it commissioned a study by an architect and one of the possible schemes allows the site to be developed into 10 strata detached, 22 strata semi-detached and 27 strata terrace houses, together with another four conventional semi-detached houses and two bungalows.

Based on the indicative price of $90 million, the potential developer’s breakeven price for an intermediate strata terrace house and a conventional bungalow should be about $2.1 million and $3.8 million respectively, added Mr Tan.

Credo also pointed out that according to the Land Transport Authority, the planned Bukit Timah MRT Line is slated to include a Chestnut Station and a Hillview Station, both of which could be expected to be close to the site.

Mr Tan also expects good response for the mixed landed housing site as ‘they are not easily available in the market’.

Source: Business Times 6 Mar 08

Punj Lloyd Singapore unit sees orders triple

(SINGAPORE) Sembawang Engineers & Constructors, a unit of India’s Punj Lloyd, said yesterday its orderbook has tripled from a year ago on a construction boom in Singapore.

The strong demand helped Singapore’s largest construction firm by sales raise its orderbook to $2.1 billion and boosted gross profit margins to 7-8 per cent from 1-1.5 per cent in 2006, said chief executive Alwyn Bowden.

‘We’re concentrating on infrastructure projects because these are bigger and more challenging, and are higher profile,’ Mr Bowden told Reuters in an interview.

He said that while demand for building homes and offices is expected to slow amidst an easing property market here, the impact is ‘negligible’, offset by major infrastructure investments in its key target markets of Singapore, India, and the Middle East.

These projects will not be derailed by fears of a global slowdown sparked by an ongoing credit crisis, due to strong economic growth in India and a spike in oil prices that are boosting Middle East coffers, he said.

Currently Singapore makes up 80 per cent of the firm’s orderbook. But the company aims to reduce that share and split its sales three ways between South- east Asia, India, and the Middle East.

‘We only need to grab a relatively small share of that market, to already be headed towards the same sort of levels of revenues that we achieve here and in South-east Asia,’ he said.

Shares in Punj Lloyd, India’s fifth-biggest builder, slid 6 per cent yesterday to take losses for the year to 41 per cent, underperforming an 18 per cent fall since December in the broader Bombay market.

Sembawang is currently involved in a number of high-profile projects here, including casino resorts – the Marina Bay Sands and Resorts World at Sentosa – as well as a contract to build part of a new subway line.

Source: Reuters (Business Times 6 Mar 08)

S’pore ranked top Reit market in Asia-Pacific

Survey cites support from regulators to the industry as advantageous

SINGAPORE has been rated as the best location in Asia-Pacific for overall real estate investment trust (Reit) potential – for a second year.

According to the second annual Asia-Pacific Reit Survey – undertaken for financial services provider Trust Company and law firm Allens Arthur Robinson – one of Singapore’s significant advantages is the support that the industry receives from regulators such as the Monetary Authority of Singapore and the Singapore Exchange.

Senior property, finance and business experts across the Asia-Pacific are confident that the region’s Reit markets will remain strong, the survey said.

However, the findings also showed that low yields, poor regulatory processes, the effects of financial engineering and adverse taxation developments will continue to be the greatest threats to Reits in Asia-Pacific.

The experts believe that most of these threats will diminish significantly in the longer term.

The survey suggests that over the next one or two years, companies will increase the size of their existing Reits rather than launch new ones, but this trend will be reversed in the longer term of three to five years.

According to the survey’s findings, retail, commercial/office and industrial and retail property will continue to be the main focus for market growth, even though the retail, commercial and office markets have cooled in the last 12 months.

The hotel and hospital sectors are expected to heat up while industrial and infrastructure property is expected to experience slight growth. Residential property, however, will remain cold, the survey said.

The findings also showed that China, India and Vietnam are ranked as the top three hot property growth markets in Asia-Pacific for the next five years. Singapore, which ranked fourth, was the highest placed established Reit market. Good growth is also expected in Malaysia.

Vicki Allen, executive general manager of institutional services at Trust, acknowledged that since the survey was conducted, some caution has surfaced in global Reit markets. But she said that Asia-Pacific Reit markets have fared reasonably well compared with their North American and European counterparts.

Robert Clarke, a partner at Allens Arthur Robinson, suggested that regulatory flexibility is key to staying ahead. He cited Singapore as an example.

Source: Business Times 6 Mar 08

UOL betting big on hospitality business

(SINGAPORE) The UOL Group has earmarked some $500 million – or a third of its available funds – to expand its hospitality business in Asia-Pacific over the next three years, the group’s president and chief executive Gwee Lian Kheng told BT in an interview.

The property company plans to add some 15-20 hotels and service apartment properties over the next three years, Mr Gwee said. ‘(Right now), if you ask me to put down money, I will put it into hospitality,’ he said.

For Singapore especially, the hospitality sector looks to be the brightest going forward – even as the overall property market takes a breather – Mr Gwee said.

Yesterday, UOL launched its new 126-unit service residence development called Pan Pacific Serviced Suites, which the company hopes will be the first of many service residences under the Pan Pacific brand name.

Five such properties could open in the next three years, Mr Gwee said. Next up is Pan Pacific-branded service residences in Bangkok, which will open in about a year.

In Singapore, Pan Pacific Serviced Suites is likely to be the only one of its kind, as rising property prices mean that such an offering will be ‘hard to replicate’, the company said.

‘Moving forward, our strategy is to look at high growth markets such as China, Vietnam, Thailand and Malaysia,’ Mr Gwee said.

The Singapore property, which is located right next to Somerset MRT station, cost the group $38.5 million to build. Guests can check in from early April, and pre-opening interest has been strong, UOL said.

The company explored building a small office, home office (Soho) development on the site, but decided to go with service residences in order to ride on the current international business expansion into Singapore and the corresponding growth in expatriates looking for short-term housing, as well as the chance to grow the Pan Pacific brand.

UOL bought the hotel brand last year in a bid to become a key player in hotel management in the Asia-Pacific region.

The deal brought the Pan Pacific group’s 12 hotels in the US, Canada and Asia into the UOL portfolio, adding some 3,800 rooms.

Now, UOL is looking to take the brand further with its first foray into service residences.

‘Moving into the extended serviced accommodation business is a logical extension of the brand as it is complementary to our current hotel accommodation offering,’ Mr Gwee said.

UOL itself, however, is not a newcomer to the service residences scene. It owns such a property under its Parkroyal brand, which it will maintain as a four-star property.

Pan Pacific Serviced Suites, on the other hand, is slated to be a five-star offering.

UOL also bought a hotel plot at Upper Pickering Street in a government tender in October last year. This ‘may, or may not’ be branded as a Pan Pacific hotel when it is completed by early-2011, Mr Gwee said.

For the overall property market, Mr Gwee said that UOL is ‘cautiously optimistic’ on the back of the sub- prime lending crisis in the US and the resultant credit crunch.

The developer plans to launch its ‘mid-range’ condo Breeze by the East on Upper East Coast Road as soon as it can.

Mr Gwee expects mid- level home prices to climb at least 10 per cent this year, pushed up by en-bloc sellers looking for replacement homes.

UOL shares closed four cents down at $3.65 yesterday.

Source: Business Times 6 Mar 08

UOL unit unveils luxury serviced suites in Somerset

IT HAS been 28 years since Singapore’s listed UOL Group launched its last serviced apartment property, the Parkroyal Residences at Beach Road.

Now, it is entering the luxury extended-stay business with the launch of its new property, Pan Pacific Serviced Suites, at 96 Somerset Road.

The new property is similar to serviced apartments but has additional luxury features such as round-the-clock personal assistants who can provide guests with local connections to business and social events.

The property is the first of five planned serviced suites that UOL is also planning in China, Vietnam, Malaysia and Thailand over the next three years, said Mr Gwee Lian Kheng, group president and chief executive of UOL yesterday.

UOL’s wholly-owned unit Pan Pacific Hospitality, which owns the Pan Pacific Hotels and Resorts group of hotels, yesterday unveiled the luxury serviced suites.

The 16-storey building next to the Somerset MRT Station houses 120 one- or two-bedroom suites and six penthouses, ranging from 527 sq ft to 1,689 sq ft in size.

UOL believes demand for luxury serviced suites will rise as the number of international visitors to the region increases.

According to the Pacific Asia Travel Association, the Asia-Pacific region saw 361.7 million visitors last year, a jump of 7.9 per cent from the year before.

Mr Gwee expects another 6 to 7 per cent rise this year.

He also said some demand should be generated from a spillover effect of the current shortage of hotel rooms in Singapore.

There are at least 26 serviced residences in Singapore with about 3,500 units in all, compared with more than 37,000 hotel rooms.

According to CB Richard Ellis, the occupancy rate for serviced apartments in Singapore was 91.2 per cent in the fourth quarter of last year, an increase of 7.5 per cent from the same period in 2006.

Mr Gwee hopes the suites, constructed at a cost of $150 million, will see an occupancy rate of at least 90 per cent after the first six months.

The suites will launch early next month, and rates will range from $10,000 to $25,000 per month, or from $420 to $1,070 per day for a minimum stay of one week.

This is at a premium of 20 to 25 per cent over the market rate, said Mr Kam Tin Seah, UOL’s senior general manager of investment and strategic development.

Pan Pacific Hospitality plans to launch its second serviced suite in Bangkok a year from now. As a group, UOL also plans to roll out between 15 and 20 new hotels and serviced suites over the next three years.

Source: The Straits Times 6 Mar 08

For sale: 18th floor of Peninsula Plaza at $17.5m

NOVELTY Department Store Pte Ltd, part of the Novelty Group, has put the entire 18^th floor of Peninsula Plaza up for sale, with a price tag of about $17.5 million or about $2,050 per square foot (psf) of strata area.

Peninsula Plaza is a 999-year leasehold building near Raffles City. DTZ is marketing the property.

The 18th floor comprises six strata units adding up to 8,514 sq ft – all of which are leased. Tenancies for five units are up for renewal/expiry later this year, while the lease on the sixth unit runs out in mid-2009.

The $17.5 million price tag reflects a passing net yield – that is based on existing contracted rents – of about 2 per cent.

However, DTZ notes that current monthly asking rents for offices in the building range from $7 psf to $8 psf.

Assuming an average rental of $7.50 psf, the $2,050 psf asking price reflects a net yield of about 3.5 per cent.

‘The potential buyer may also further capitalise on this investment opportunity and subsequently offer to resell the six strata units individually to take advantage of rising capital values of smaller strata office space,’ said DTZ senior director (investment advisory services and auction) Shaun Poh.

The property provides an opportunity to invest in ‘good quality and well maintained office space’, he said. ‘Strong demand and rising rental rates for office space in the Central business

District are expected to continue, providing income growth from the asset.’

DTZ is marketing the property through an expression of interest exercise that closes on April 1.

In December, a first-storey freehold office unit at United House, behind Le Meridien Singapore Hotel at Orchard Road, fetched $2,497 psf of strata area at an auction.

Far East Organization is said to have sold an entire office floor last year at The Central, a 99-year leasehold development above Clarke Quay MRT Station, for $3,050 psf.

Novelty Group is involved in the property and department store businesses. Its upcoming residential developments include i Residences, a freehold development with 70 apartments in the Irrawaddy Road area, and the 35-unit Evania at Upper Paya Lebar Road.

Source: Business Times 5 Mar 08

Singapore tops among Asian expats: survey

The Republic is the best place for them to live worldwide; Baghdad ranks last

(SINGAPORE) The Republic ranks as the best place for Asian expatriates to live worldwide, according to the latest survey by human resources consultancy firm ECA International.

Singapore surpasses cosmopolitan cities such as Sydney, Melbourne and Copenhagen in Asian expatriates’ view, the survey showed. These cities are ranked second, third and fifth respectively in the top 15 locations for Asian expatriate living.

Meanwhile, Kobe (joint third with Melbourne), Yokohama (eighth), Tokyo and Hong Kong (both 15th) are the only other Asian destinations that made it to the top 15 list.

Conducted annually, the Location Ranking Survey compares living standards in 254 locations globally, taking into account climate, air quality, health services, housing and utilities, isolation, social network and leisure facilities, infrastructure, personal safety and political tensions.

‘High quality infrastructure and health facilities, combined with low health risks, air pollution, crime rates and a cosmopolitan population, make Singapore a very appealing location for Asians to live in,’ said Lee Quane, general manager of ECA International.

‘Although we did see a small deterioration in some factors, such as air quality and accommodation in 2007, it still retains its status as being the location with the best quality of living for assignees in this region.’

He explained that Singapore ‘was much more affected by haze in 2007′ compared with the preceding year, causing it to lose points in the air quality category. Meanwhile, ‘recent market developments in en bloc (property sales) had an impact on the supply of standard accommodation’.

Nevertheless, Singapore has consistently been ranked the best location for Asian expats to live for a decade, said Mr Quane, who believes that it will retain that spot despite ‘Hong Kong moving up our rankings’ this year after sliding for several years, due to improved personal security scores and the movements of locations around it.

‘We now see the narrowing in quality of living between Singapore and Hong Kong, but it is unlikely that Hong Kong will match Singapore. The main reason is (Hong Kong’s) air pollution, which is unlikely to go away any time soon,’ he explained.

At the other extreme, Baghdad is the least favourable place for Asian expats to live in, followed by Kabul (Afghanistan), Karachi (Pakistan) and Port-au-Prince (Haiti), due to the locations’ risk to personal security and their lack of suitable facilities, according to the survey.

Source: Business Times 5 Mar 08

‘Magic dollars’ scam lets HDB flat sellers pocket cash

They declare a lower price, thus keeping the difference instead of returning funds to CPF

A NEW scam involving HDB flats has surfaced, this time allowing flat sellers to pocket extra cash by craftily getting around the rules.

The so-called ‘magic dollars’ scam involves reporting a falsely low sale price to the HDB – an offence which is punishable by a jail term and/or a fine.

Agents say they are seeing these cases pop up on a more regular basis, but it is not rampant yet.

This is how it works.

The seller is typically a flat owner who bought his HDB flat at the peak of the last property boom, so he has made significant paper losses despite the recent run-up in prices.

If he sells the flat, the proceeds may be barely enough to cover the balance of his mortgage and any leftover will probably have to go back into his CPF account. So he ends up not getting his hands on any ready cash at all.

To pocket some cash or what is sometimes known as ‘magic dollars’, he strikes a deal with the buyer of his flat.

He gets the buyer to agree to declare to the HDB that the flat was sold for a much lower price. The buyer then pays the difference between the actual and declared price to the seller in cash.

To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.

The scam is crafty because, on paper, these transactions can look flawless and are hard to detect.

Privately, the agent drafts a ‘letter of undertaking’, binding the buyer to pay the seller cash – sometimes under the pretext of paying for furniture and fixtures.

When the buyer pays up and the deal is done, the agent destroys the document and any paper trail. Neither the HDB, property agencies or lawyers will ever see it.

Everyone is a winner. The buyer gets a good deal and the seller gets some cash. But the catch is: The scam carries a jail term and/or a fine.

The deal is illegal because the seller is indirectly siphoning off money in advance from his CPF.

The HDB told The Straits Times that it was a ’serious offence’ to declare false resale prices, adding that if there was sufficient evidence, the case would be referred to the police.

Conviction could bring fines of up to $5,000 or jail of up to three years.

Such scams are not new to the market and HDB flat owners sometimes resort to them when they want to unlock cash.

In 2001, a ‘cash-back’ scheme was exposed, which involved over-declaring the agreed selling price.

It allowed the buyer to get a higher loan either from a bank or the HDB, with the ‘extra’ cash divided out among those involved.

Agency bosses told The Straits Times that they strictly discourage agents from handling these sales.

But despite the risk of getting caught, agents say such deals are popular in estates such as Simei, Pasir Ris and Bishan, which commanded high prices in the previous boom.

Some say the deals started surfacing as early as last April, when the HDB market started to pick up.

Resale prices rose 17.5 per cent last year after years in the doldrums, prompting more flat owners to think about selling their flats.

An agency boss, who declined to be named, has heard of up to 30 such cases.

PropNex chief executive Mohamed Ismail said it was hard to determine exactly how many such deals are being done, but he estimated that about 80,000 – or 10 per cent – of HDB homes are still in negative equity.

Negative equity means a flat owner’s mortgage is worth more than the home’s value now. Owners of these flats are more likely to take part in such deals.

Another agent said he is approached at least once a month to take part in such deals but he turns them down. ‘This is my rice bowl.

Why would I want to risk going to jail for just a sale?’ he said.

Source: The Straits Times 5 Mar 08

JTC will still provide affordable industrial space: Hng Kiang

THE JTC Corp is not deviating from its role to provide affordable factory space, said Minister for Trade and Industry Lim Hng Kiang yesterday in response to a question on whether JTC is shifting its focus with its recent plans to divest its industrial properties into a real estate investment trust (Reit).

This concern was triggered by the recent appointment of Mapletree Investments Pte Ltd (Mapletree) to establish and manage a proposed Reit which will acquire some $1.4-1.6 billion worth of JTC’s high-rise ready-built properties.

Member of Parliament Inderjit Singh raised the concern that this move will further raise the costs of industrial space here. He questioned the role of JTC, saying the earlier spinning off of Ascendas Reit has led to an increase in prices for industrial space. A-Reit, Singapore’s second Reit, was set up by JTC unit Ascendas five years ago and has since expanded by acquiring industrial buildings.

‘If we allow market forces to determine our industrial land prices, then businesses engaged in certain strategic sectors may no longer be able to compete with companies in competing economies which may not be at our stage of development and may offer companies more attractive land costs,’ Mr Singh said. He gave the example of China, where industrial land is more attractively priced.

In response, Mr Lim said: ‘JTC’s role remains the same. You must look at JTC’s role in two key areas – land and prepared industrial estates like flatted factories.’

For the flatted factories space, JTC is a small player in the market with a market share of around 20 per cent and hence takes its pricing cue from the market.

‘It is this sector that we are divesting because we believe that industrial space in Singapore is fairly competitive market,’ Mr Lim added. ‘So JTC need not stay in this area. JTC will concentrate on land.’

While the pricing of JTC’s industrial factory space is determined by the market, the pricing for land is benchmarked against competitive locations.

Mr Lim said the JTC is very careful ‘to make sure that we do not price ourselves out of the market.’

Source: Business Times 4 Mar 08

More landed housing sites up for auction

THE Urban Redevelopment Authority (URA) has launched the second phase of Sembawang Greenvale after auctioning all parcels in Phase One last October.

In the first phase, 12 sub-divided landed housing plots near Sembawang Beach were auctioned for a total of $37.09 million, which works out to about $285 per square foot (psf) of land on average.

Phase Two comprises 11 land parcels for a total of 90 dwellings. Most of these will be terrace houses.

Knight Frank director (research and consultancy) Nicholas Mak says new terrace houses in the area are now selling for $1.7 million to $2 million.

The median unit price for landed housing in District 27, where Sembawang is located, increased 12 per cent quarter-onquarter in Q4 2007, he said. ‘Therefore, in terms of bidding price, we expect the average land price of Greenvale Phase Two will be higher than that of Phase One.’

Mr Mak expects that terrace plots will fetch about $320-380 psf of land, and semi-detached plots about $300-350 psf of land.

Cushman and Wakefield managing director Donald Han believes demand for landed property will stay sound this year. But he also reckons current sentiment – hurt by the US sub-prime crisis – could see potential bidders for Sembawang Greenvale Phase Two discount their offers in the light of rising risks.

As such, he thinks bids could be 5-10 per cent below those received for Phase One.

Mr Han still believes there will be interest in the parcels, especially those that can yield more units, as developers will be able to ‘average down’ construction costs and increase profit margins.

Separately, URA said yesterday it has launched an industrial land parcel at Ubi Avenue 4/Ubi Road 2 for sale by public tender, after a developer committed to bid at least $14 million in early February.

Colliers International managing director Dennis Yeo estimated earlier that bids for the site could come in at $70-80 psf per plot ratio, translating to a breakeven cost of about $230-250 psf.

Source: Business Times 1 Mar 08

DC rate hike lower than expected

Average industrial rates up 16.8%, muted increases for most other uses

THE government yesterday announced modest, lower-than-expected increases in development charge (DC) rates for most use groups, except industrial.

‘Limited transactions in the past six months, amidst cautionary sentiment set about the US sub-prime debacle, were probably an important factor for the moderate gains this round,’ said Jones Lang LaSalle regional director and head of investments Lui Seng Fatt.

Knight Frank director Nicholas Mak said: ‘The government may feel that there has been no significant appreciation in land prices in the last few months.

‘And DC rates for most use groups – such as commercial, non-landed residential and hotel/hospital – were already at a higher base because of substantial hikes in the last revision.

‘Industrial DC rates, on the other hand, had seen only a marginal rise the previous round and hence saw the sharpest increase this time.’

DC rates, which are payable for enhancing the use of some sites or putting bigger developments on them, are revised twice yearly, on March 1 and Sept 1, and are listed according to use groups and 118 locations across Singapore.

From today, the average DC rate for commercial use has gone up 1.5 per cent – after the 42 per cent increase in the last round on Sept 1, 2007. The average rate for non-landed residential use has been raised 2.6 per cent, again much smaller than the 58 per cent hike previously, while the average rate for landed residential use has been left unchanged.

For hotel and hospital use, the latest DC rates are up 3.3 per cent on average, compared with a 23 per cent hike previously.

Industrial DC rates have jumped 16.8 per cent on average, against a 2 per cent rise previously.

JLL’s Mr Lui said that the big hike in industrial DC rates is in tandem with growing demand for backoffice space as more firms relocate out of the CBD due to high rents.

For industrial DC rates, the biggest hike of 33.3 per cent was in the Jurong/Lim Chu Kang/Kranji location, which analysts attributed to JTC Corp’s sale of two industrial sites at Jalan Tepong and Pioneer Road/Tuas Avenue 11 at about double the land values implied by the previous September 2007 industrial DC rate for the area.

Similarly, the sale of an industrial plot at Commonwealth Drive/Lane at about four times the September 2007 DC rate-implied land value was probably behind a 32 per cent hike yesterday in the industrial DC rate for the area.

Industrial DC rates were raised by 22.2 per cent each in the Kallang  Way /MacPherson /Aljunied, and Braddell/ Potong Pasir/ Woodleigh areas, based on JLL’s analysis. The rate for West Coast Road/ Jurong East was upped 20.7 per cent.

Increases of 20 per cent were seen in locations such as Havelock Road, Telok Blangah, Tiong Bahru, Bukit Merah, Redhill, Alexandra and Henderson.

Commercial DC rates stayed put in Raffles Place, Marina Bay, Cecil Street and Robinson Road. Instead, the hikes were mostly outside the central business district, ‘reflecting the trend of office demand being pushed out of the CBD’, Savills Singapore director Ku Swee Yong said.

The biggest increases, of 25 and 23.3 per cent, were in the Toa Payoh/Potong Pasir and Paya Lebar/Eunos areas respectively.

The sale price of a 99-year commercial plot next to the HDB Hub in Toa Payoh in October and rising rents at SingPost Centre in Paya Lebar were likely reasons for the increases.

The Marine Parade and Tampines locations each saw a 19 per cent appreciation in commercial DC rates, apparently supported by the sale price of an office unit at Parkway Parade, and rental evidence at Tampines Mall and buildings in the Tampines Finance Park.

For non-landed residential DC rates, the biggest gain of 28.6 per cent was in Ang Mo Kio/Yio Chu Kang as well as an adjoining sector that covers Upper Thomson and Sembawang Hills. Far East Organization’s $601 psf per plot ratio top bid for a condo site next to Ang Mo Kio Hub in September last year – a record for 99-year suburban condo land – was the likely reason for the rate hikes.

The Telok Blangah and Tiong Bahru/Ayer Rajah locations each saw hikes of 22.2 per cent in non-landed residential DC rate.

CB Richard Ellis executive director Li Hiaw Ho said that the increases were probably supported by the $639 psf ppr fetched for a 99-year condo site on Alexandra Road last year. Mr Li also pointed to the sale of a freehold site on Margate Road as the likely reason for a 21.4 per cent rate hike in the Mountbatten/Meyer/Broadrick area.

For hotel use, gains of around 9-10 per cent were seen in DC rates for the traditional hotel belts in the Orchard Road, Marina Centre and Singapore River locations, as well as places like Marina Bay, Bayfront and Fullerton Road.

‘The tourism boom is expected to continue as the Singapore government drives towards the 17 million visitors goal by 2015.

Orchard Road remains Singapore’s main shopping belt, while upcoming developments in the Marina area such as the Marina Bay Sands integrated resort and the F1 race will further generate demand for hotels in the area,’ Mr Lui said.

The DC use group for hotels also includes hospitals and interestingly, the government did not raise the DC rate for the Irrawaddy Road location where a hospital site last month fetched a record price of $1,600 psf ppr from Parkway group.

A spokeswoman for the Chief Valuer said: ‘Parkway’s record bid was an isolated case. In general, there’s no compelling evidence that market values for hotel/hospital use in the area have moved up so much.’

Source: Business Times 1 Mar 08

DC rate hike lower than expected

Average industrial rates up 16.8%, muted increases for most other uses

THE government yesterday announced modest, lower-than-expected increases in development charge (DC) rates for most use groups, except industrial.

‘Limited transactions in the past six months, amidst cautionary sentiment set about the US sub-prime debacle, were probably an important factor for the moderate gains this round,’ said Jones Lang LaSalle regional director and head of investments Lui Seng Fatt.

Knight Frank director Nicholas Mak said: ‘The government may feel that there has been no significant appreciation in land prices in the last few months.

‘And DC rates for most use groups – such as commercial, non-landed residential and hotel/hospital – were already at a higher base because of substantial hikes in the last revision.

‘Industrial DC rates, on the other hand, had seen only a marginal rise the previous round and hence saw the sharpest increase this time.’

DC rates, which are payable for enhancing the use of some sites or putting bigger developments on them, are revised twice yearly, on March 1 and Sept 1, and are listed according to use groups and 118 locations across Singapore.

From today, the average DC rate for commercial use has gone up 1.5 per cent – after the 42 per cent increase in the last round on Sept 1, 2007. The average rate for non-landed residential use has been raised 2.6 per cent, again much smaller than the 58 per cent hike previously, while the average rate for landed residential use has been left unchanged.

For hotel and hospital use, the latest DC rates are up 3.3 per cent on average, compared with a 23 per cent hike previously.

Industrial DC rates have jumped 16.8 per cent on average, against a 2 per cent rise previously.

JLL’s Mr Lui said that the big hike in industrial DC rates is in tandem with growing demand for backoffice space as more firms relocate out of the CBD due to high rents.

For industrial DC rates, the biggest hike of 33.3 per cent was in the Jurong/Lim Chu Kang/Kranji location, which analysts attributed to JTC Corp’s sale of two industrial sites at Jalan Tepong and Pioneer Road/Tuas Avenue 11 at about double the land values implied by the previous September 2007 industrial DC rate for the area.

Similarly, the sale of an industrial plot at Commonwealth Drive/Lane at about four times the September 2007 DC rate-implied land value was probably behind a 32 per cent hike yesterday in the industrial DC rate for the area.

Industrial DC rates were raised by 22.2 per cent each in the Kallang  Way /MacPherson /Aljunied, and Braddell/ Potong Pasir/ Woodleigh areas, based on JLL’s analysis. The rate for West Coast Road/ Jurong East was upped 20.7 per cent.

Increases of 20 per cent were seen in locations such as Havelock Road, Telok Blangah, Tiong Bahru, Bukit Merah, Redhill, Alexandra and Henderson.

Commercial DC rates stayed put in Raffles Place, Marina Bay, Cecil Street and Robinson Road. Instead, the hikes were mostly outside the central business district, ‘reflecting the trend of office demand being pushed out of the CBD’, Savills Singapore director Ku Swee Yong said.

The biggest increases, of 25 and 23.3 per cent, were in the Toa Payoh/Potong Pasir and Paya Lebar/Eunos areas respectively.

The sale price of a 99-year commercial plot next to the HDB Hub in Toa Payoh in October and rising rents at SingPost Centre in Paya Lebar were likely reasons for the increases.

The Marine Parade and Tampines locations each saw a 19 per cent appreciation in commercial DC rates, apparently supported by the sale price of an office unit at Parkway Parade, and rental evidence at Tampines Mall and buildings in the Tampines Finance Park.

For non-landed residential DC rates, the biggest gain of 28.6 per cent was in Ang Mo Kio/Yio Chu Kang as well as an adjoining sector that covers Upper Thomson and Sembawang Hills. Far East Organization’s $601 psf per plot ratio top bid for a condo site next to Ang Mo Kio Hub in September last year – a record for 99-year suburban condo land – was the likely reason for the rate hikes.

The Telok Blangah and Tiong Bahru/Ayer Rajah locations each saw hikes of 22.2 per cent in non-landed residential DC rate.

CB Richard Ellis executive director Li Hiaw Ho said that the increases were probably supported by the $639 psf ppr fetched for a 99-year condo site on Alexandra Road last year. Mr Li also pointed to the sale of a freehold site on Margate Road as the likely reason for a 21.4 per cent rate hike in the Mountbatten/Meyer/Broadrick area.

For hotel use, gains of around 9-10 per cent were seen in DC rates for the traditional hotel belts in the Orchard Road, Marina Centre and Singapore River locations, as well as places like Marina Bay, Bayfront and Fullerton Road.

‘The tourism boom is expected to continue as the Singapore government drives towards the 17 million visitors goal by 2015.

Orchard Road remains Singapore’s main shopping belt, while upcoming developments in the Marina area such as the Marina Bay Sands integrated resort and the F1 race will further generate demand for hotels in the area,’ Mr Lui said.

The DC use group for hotels also includes hospitals and interestingly, the government did not raise the DC rate for the Irrawaddy Road location where a hospital site last month fetched a record price of $1,600 psf ppr from Parkway group.

A spokeswoman for the Chief Valuer said: ‘Parkway’s record bid was an isolated case. In general, there’s no compelling evidence that market values for hotel/hospital use in the area have moved up so much.’

Source: Business Times 1 Mar 08

Property development charges barely budge

Small revision of fees points to dwindling deals, slow price growth

IT’S official: the property market has gone deathly quiet.

The Government barely tweaked development charges in its semi-annual revision of fees yesterday, reflecting the property sector’s subdued state over the last six months.

Development charges, which can run in the millions of dollars, are what a developer has to pay to buy and redevelop an existing site.

Average islandwide charges for office, hospital, hotel and non-landed housing sites merely inched up, while landed residential sites saw no change in the fee at all.

This marks a big reversal from last year, when the frantic pace of land acquisition led to record hikes in development charges for many sectors.

In super-hot locations, the fees were even doubled.

This time, the only major change was in the industrial sector, where charges jumped 16.8 per cent – compared to 2 per cent in the last round.

This was due to a previous low base, as well as rising demand for back-office space, which led to recent land sales at benchmark prices in areas such as Commonwealth and Ubi, said experts.

Development charges are set by the chief valuer based on recent land and property values, and are adjusted every six months, so their growth rate can be used to indicate market activity.

Property watchers said yesterday’s small rises show what the market has known for some time: Property deals are dwindling and the pace of price growth has slowed.

‘The rates have been moderated as a result of the limited transactions over the last six months, attributed in part to the more cautionary sentiment,’ said Mr Lui Seng Fatt, the regional director and head of investments at Jones Lang LaSalle.

But fees rose for areas on the city fringe, showing that activity is spilling out from prime spots, said Savills Singapore’s Mr Ku Swee Yong.

Development charges rose for non-landed residential sites in Upper Thomson, Tiong Bahru, Balestier and Chancery, among others.

This was probably due to some collective sales late last year, said Mr Nicholas Mak of Knight Frank.

These include the sale of Toho Gardens in Yio Chu Kang and 15 terrace houses in Balestier.

Mr Mak said the fee rises in these areas could further affect the already cautious sentiment in the market.

The overall impact, however, is ‘not as major’ as that from the last round of hikes in charges, he added.

Still, developers looking for new land will probably start relying more on government sales – which do not involve development charges – than on collective sales, said Mr Li Hiaw Ho, the executive director of CB Richard Ellis Research.

In the office and shops sector, the recent sales of transitional office land helped boost development charges in Tampines and Scotts Road.

Thomson and Paya Lebar also saw bigger hikes than the rest.

Hotel sites had increases mainly in central areas, while the fees for industrial sites rose across the board.

Source: The Straits Times 1 Mar 08

CDL able to weather uncertainty for next 3 yrs

It posts full-year profit of $725m; bottom line would be $2.8b if fair value gains included

THE top brass at City Developments Ltd (CDL) yesterday said the property group has ‘the financial muscle to weather the current period of uncertainty even for the next three years’, after announcing a record full-year net profit of $725 million.

The group sold about $6.2 billion of residential projects in 2006 and 2007, which means it has locked in, to a very large extent, handsome profits which have yet to be booked.

These substantial and better-than-expected profits will continue to be recognised progressively based on construction progress.

‘Some will come in 2008, 2009, perhaps also into 2010,’ CDL managing director Kwek Leng Joo said at the group’s results briefing yesterday.

‘Even if the market recovery should take place a little bit later than expected, I think we’ll be OK,’ he added.

In short, the group can afford to delay launches of new residential projects if necessary to ride out the current weak sentiment.

As a major office landlord, CDL will also benefit from the office crunch as many of its key tenant leases are up for renewal between now and 2011 – a period when office supply is expected to be limited.

In the hospitality sector, CDL’s hotel arm Millennium & Copthorne Hotels has a string of hotels with a wide geographical spread – which should act as ‘an insurance against a downturn in any particular geographical area’, CDL executive chairman Kwek Leng Beng said.

The group also has many other attractive assets such as City Square Mall and St Regis Hotel in Singapore which it could potentially sell, boosting its bottom line.

As well, CDL has a healthy balance sheet, with relatively low net gearing of 48 per cent.

CDL posted a 106 per cent jump in group net profit for the year ended Dec 31, to a record $725 million. However, had it adopted the revaluation policy of its peers, its bottom line would have surged to $2.84 billion after factoring in about $2.1 billion of fair value gains on investment properties.

The $2.84 billion net earnings for the year ended Dec 31 would pip the $2.76 billion net profit posted by fellow property giant CapitaLand for the same period.

CDL’s fourth-quarter net profit rose about 71 per cent year-on-year to $235 million, with revenue inching up 3.7 per cent to $765.7 million.

The group has also yet to recognise any profits for One Shenton, The Solitaire, Cliveden at Grange and Wilkie Studio, as these residential projects are still in the initial stage of construction. These projects alone account for $1.7 billion in sales value.

Even if the group defers or paces its launches, it will proceed with the construction of its projects where construction cost had been favourably secured earlier, CDL said.

It may also consider building selected projects when the construction cost stabilises at a reasonable level. It expects that when sentiment improves and the market begins to recover, there will be pent-up demand which the group will be in a position to meet.

The group is planning to launch in the first half of this year some 427 private homes in four Singapore projects – Shelford Suites, a condo on the former Lock Cho Apartments site at Thomson Road, The Quayside Isle @ Sentosa Cove and a condo at Pasir Ris.

In its results statement, CDL also said that it has an investment commitment in the private fund Real Estate Capital Asia Partners, which acquired Jungceylon complex at Phuket’s Patong Beach. This is a 1.5 million sq ft mall which opened for business recently and is next to the Millennium Resort Patong Phuket.

CDL also reckons it has ‘ample time’ to review its strategy for its office portfolio, given improving office rental yields.

Its options include retaining its office properties at a low cost base, monetising the portfolio and/or extracting maximum value by selling its assets wholesale or individually. Another option would be to spin off an office real estate investment trust.

The group has all along been following its conservative policy of stating investment properties at cost less accumulated depreciation and impairment losses. On adoption of Financial Reporting Standard FRS 40, the group continues to state these assets at cost less accumulated depreciation and impairment losses.

Most other Singapore- listed property groups state investment properties at fair value, as permitted by FRS 40.

CDL’s full-year revenue for the year ended Dec 31, 2007, rose 22 per cent to $3.1 billion, also a record for the group.

The group also gave a segmental breakdown of profit before tax, including share of after-tax profit of associates and jointly controlled entities, which showed that pre-tax from property development more than doubled from $225.8 million in 2006 to $506.3 million in 2007.

Pre-tax profit from hotel operations fell from $396.6 million in 2006 to $285.4 million in 2007, mainly because the 2006 figure had included a $150.9 million one-off gain from the sale of long leasehold interests in four Singapore hotels to CDL Hospitality Trusts.

Profit before tax from rental properties more than quadrupled from $30 million in 2006 to $133.6 million in 2007.

CDL is proposing a final dividend of 7.5 cents per share as well as a special final dividend of 12.5 cents per share. Both payouts are tax exempt.

Source: Business Times 29 Feb 08

CDL boss punctures popular wisdom

Mid-market may not shine and high-end is unlikely to collapse, he says

(SINGAPORE) City Developments Ltd (CDL) executive chairman Kwek Leng Beng yesterday turned a popular market view of the Singapore residential sector on its head.

Many have whispered that the high-end residential segment is in danger of being hardest hit by the sub-prime crisis while the mid-tier and mass-market segments will be better shielded. Not true, says Mr Kwek.

‘The high-end is not going to collapse like what some (in the market) are saying. The mid-end is not going to be fantastic, like what is commonly believed, because of the subprime situation and Singaporeans’ wait-and-see attitude.

‘The mass market will do well, but selectively. It’s not going to be what you’ve seen before…people queuing up,’ Mr Kwek said.

The Housing & Development Board also provides a credible alternative to mass-market private housing, Mr Kwek said at a media and analysts’ briefing to announce CDL’s results for the year ended Dec 31, 2007. The group’s full-year net profit doubled to $725 million – a record.

Mr Kwek also acknowledged that the current market environment was not conducive to setting up real estate investment trusts (Reits). He would look into opportunities to buy into existing Reits, but only if they were being offered for sale together with their respective Reit management companies, which earn handsome fees.

On the high-end residential sector, Mr Kwek noted that it is supported not only by wealthy local investors with holding power, but also by well-heeled foreigners. ‘Super-rich investors from Russia, Middle East and even hedge-fund managers have yet to come into Singapore in a big way.

‘With Singapore developing into a global city and placed into the limelight, it can be a very attractive place to invest for these well-heeled clienteles, as seen in London,’ CDL said in its results statement.

The next big wave for the Singapore property market will come when the two integrated resorts are operating successfully. ‘It will be a different Singapore altogether. Singapore is a hub. I’ve been harping on this. Nobody believed me until last year,’ said Mr Kwek.

He also sought to debunk another popular view, that the deferred payment scheme which was removed by the authorities in October last year, had only served to fuel property speculation. ‘Deferred payment is not only an instrument for speculation. It is an instrument to enable buyers of new (residential) units to dispose of their existing units at a gradual pace, instead of being forced to sell their existing homes,’ he said.

Noting that sentiment in the local property market has become subdued because of the sub-prime issue, Mr Kwek said: ‘Sentiment is more important than supply and demand. The higher the prices, the more people buy.’

He also recommended buying real estate as a hedge against inflation, especially given the current low housing loan rate environment, adding in the same breath that he was not trying to talk up the market – drawing laughter from the audience.

But Mr Kwek also had some advice on affordability. ‘You must be able to pay your instalment, that is most important. If you can’t pay the instalment, and you hope (the property value) will go up tomorrow, then you are speculating.’

Referring to the squabbles among owners in estates with en bloc sales, Mr Kwek said: ‘People are fighting, because they are jealous somebody sold higher. Who can say this is the peak? You should be happy if you have a good gain, don’t fight. That’s my advice.’

He estimates that about 50 per cent of those who’ve sold their homes through en bloc sales have not yet bought replacement homes, even if they may want to downgrade.

Source: Business Times 29 Feb 08

HDB will cater to buyers with different income levels: Mah

THE Housing & Development Board (HDB) will continue to provide a range of housing options to cater to buyers of differing income levels and aspirations, Minister for National Development Mah Bow Tan told Parliament yesterday.

He was responding to concerns that the price gain in the HDB market is putting flats out of the reach of many. HDB resale prices rose by about 17 per cent last year. In addition, reports said that buyers forked out up to $727,000 for a five-room flat in a private-developer built, condo-style project offered under the Design, Build and Sell Scheme (DBSS).

The price gain for resale homes should slow this year. Mr Mah said: ‘The HDB resale price index grew by only one per cent in January, and I expect prices to grow at a more moderate pace in 2008.’

The HDB plans to release three more DBSS sites to build up a ‘reasonable stock’ of DBSS flats, Mr Mah said. Together with the four sites already released, the new sites will yield about 4,000 flats.

He said HDB will continue to cater to buyers with different aspirations and means by providing a range of housing options.

However, Mr Mah said that flats built by HDB will continue to be the mainstay of new supply.

‘Similar to executive condominiums, DBSS flats serve a small niche market of buyers that can afford to pay higher prices for public housing with different designs and features,’ he said.

Mr Mah also unveiled details of HDB’s new Lease Buyback Scheme, which aims to help low-income and elderly households.

Under the scheme, which will be implemented next year, the HDB will purchase the tail-end of the flat lease from an elderly household. The occupants will continue to stay in the flat, which will be left with a 30-year lease. On top of the housing equity unlocked, it will provide an additional $10,000 subsidy.

Of the total amount, $5,000 will be given to the household as an upfront lump sum, while the remainder will be used to purchase a CPF Life Plan to provide the owner with a monthly stream of income for life. If the flat is jointly owned by an elderly couple, they will get individual CPF Life Plans.

Source: Business Times 29 Feb 08

Marina Bay to provide 1.1m sq m of office space

It will become a seamless extension of Raffles Place, says Mah

THE upcoming financial district at Marina Bay will be twice the size of London’s Canary Wharf and will provide as much Grade A office space as Hong Kong’s Central.

Revealing more plans for Singapore’s new financial hub, National Development Minister Mah Bow Tan told Parliament yesterday that Marina Bay remains the centrepiece of the government’s efforts to provide more office space.

‘URA (the Urban Redevelopment Authority) will make available more sites for development in this area over the next five to six years, in line with market demand,’ he said. ‘When completed, these new developments will provide more than 1.1 million sqm of office space, to match the total amount of office space at Raffles Place today.’

The area will become a seamless extension of Raffles Place, Mr Mah said. It is expected to take more than 15 years to materialise, depending on market demand.

The existing central business district will not be neglected, he said. URA will release land around the Tanjong Pagar precinct as well as redevelop the Ophir/Rochor corridor into an office cluster.

Mr Mah also touched on plans for Orchard Road, saying that URA plans to work with the private sector to build a pedestrian network with underground links, walkways at street level and second-storey links between buildings.

The Ministry of National Development will set out its land use plans for the next 10-15 years in the next few months in its Master Plan 2008. The plans have been developed with three key objectives in mind – to ensure that Singapore has sufficient land to support economic growth; to reduce commuting by bringing jobs closer to home; and to provide greater greenery and leisure options.

Addressing a now-hot topic, Mr Mah said that sustainable development will continue to be a priority.

To encourage environmentally friendly practices, the government will look at a range of measures including public education, research and development, and possibly legislation, he said.

Source: Business Times 29 Feb 08

Newton area growing as a hub for hybrid offices

NEWTON is shaping up as a centre for hybrid offices, with another company, The Ascott Group, moving to the neighbourhood.

The Urban Redevelopment Authority (URA) also said yesterday that it would release not one, but two, transitional office sites between Scotts Road and Anthony Road for sale.

Ascott, which is officed at the former Temasek Tower, could not say how much space has been decanted in the move but did say that its new offices in Newton will accommodate some 50 to 80 employees, including trainers, trainees and staff who will support the training activities at its Ascott Centre for Excellence there.

A spokesman for Ascott said that it leased the former Anthony Road Girls’ School in mid-2007 on a 3+3+3 year lease from the Singapore Land Authority, and started moving in from the end of last year after refurbishing it.

URA offered its first transitional office site in Newton in August 2007 too. This was sold to Hwa Hong Corporation and KOP Capital for $37 million – $219 per square foot per plot ratio (psf ppr).

While the two new sites now being offered are equally well located, Knight Frank director (research and consultancy) Nicholas Mak believes bidding ‘will be more cautious this time’.

Both parcels are to be sold on short-term leases of 15 years, and Knight Frank estimates the first of the new sites, Parcel A,

which can yield a maximum gross floor area (GFA) of 140,189 sq ft, could see bids of between $14 million and $18.2 million, or a unit land price of $100-$130 psf ppr.

Parcel B, which can yield a maximum GFA of 145,915.4 sq ft, could see bids of between $14.6 million and $19 million, representing the same unit price range of $100-$130 psf ppr.

Mr Mak noted that current monthly gross rents for the Scotts Road area are comparatively low at between $6 and $8 psf.

He also highlighted that the proposed transitional office developments are expected to be completed by the middle of next year – and about 2.6 million sq ft of new office space is expected to be supplied to the market in 2009.

Savills Singapore director of commercial services June Chua believes that there could still be an attractive profit margin for any developer, but adds that the developer, or possibly even contractor, would have to secure a tenant first, so that there is a minimal ‘void period’, during which the landlord has to secure a tenant.

She also said that the target rental would have to be around $7 psf per month.

Source: Business Times 29 Feb 08

Property players sweat over lending squeeze

Banks batten down hatches amid global turmoil and as big deals suck liquidity

(SINGAPORE) The squeeze is on. Banks have tightened financing for property investment deals, which include big transactions like sales of office blocks and development sites. This, in turn, may keep some buyers from participating in the market, industry players have told BT.

It’s also taking longer to wrap up property sales deals these days as securing funding becomes more of an issue – and this could be a drag on investment sales.

Bankers cite two main causes for the tightening. The turmoil in the global financial market has led to increased awareness of risks all round, and several mega transactions in the past 12 months here have left less liquidity available for others.

Says Tan Teck Long, DBS Bank managing director, corporate and investment banking: ‘There are a couple of large deals such as the integrated resorts (IRs) which have soaked up a fair bit of liquidity.’

Yesterday, Las Vegas Sands Corp announced the completion of its $5.25 billion loan syndication for the Marina Bay Sands IR, the largest deal of its kind here.

Brad Nelson, global head of commercial real estate, Standard Chartered Bank, agrees that the big deals had been sucking liquidity out of the market. ‘Banks only have a certain amount of capital base,’ he points out.

Banks’ exposure to property-related loans is capped by law at 35 per cent of their total loans, to keep risks from the industry in check. This does not include mortgages for owner-occupied properties.

Meanwhile, banks have become more cautious and are giving smaller loans relative to a property’s valuation than, say, 12 months ago. This serves to provide them with a greater buffer in the event of a fall in property values given the weaker sentiment in the Singapore property market today.

Jones Lang LaSalle regional director and head of investments Lui Seng Fatt says that about a year ago, banks may have given loans of up to 75 per cent of valuation for income-producing assets like office blocks. Today, the figure may be closer to 60-65 per cent.

Things are even harder for relatively unseasoned, smaller players buying residential development sites. They face greater scrutiny these days before banks give them loans, BT understands.

‘Financing for real estate projects has definitely tightened, especially since last quarter. This is essentially because of tighter liquidity brought about by limited appetite in the capital markets, due to current market developments,’ says Paul Kwee,

Citigroup Singapore corporate bank director and head of real estate.

Lending amounts are more conservative now and covenants tighter, he says.

And despite the decline in Singapore dollar interest rates, the margins that are added to the floating interest rate reference are wider today, observes Mr Kwee. Margins are wider by 50-100 basis points now compared to last year, say bankers. Property sources say that while big established developers can still secure financing for purchases of development sites with relative ease, things are less rosy for smaller players.

Maybank head of business banking Lee Hong Khim acknowledges that his bank hesitates to finance new players whose core business is not in property development.

Mr Lee adds that Maybank is ‘more selective in the projects we finance; the location of the project is an important consideration as well’.

Giving his take, Citi’s Mr Kwee says: ‘Smaller players may find it harder because they have fewer financing options available to them as compared to the big boys who may also be able to tap the convertible bond or Sing-dollar bond market, for instance.’

But Mr Nelson of Stanchart says that ‘when liquidity is tight, lenders will normally take the position of supporting their existing relationships . . . regardless of whether they are SME (small and medium enterprise) or wholesale customers’.

Another outcome of banks becoming more cautious in evaluating loan applications is that it’s taking longer to complete property investment sales deals, says JLL’s Mr Lui.

The investment head of another major property consultancy group feels that the tighter financing environment could change the profile of institutional property buyers. ‘We may see greater participation from core funds, which assume lower risk, lower returns, and lower debt, and less participation from opportunity funds, which assume higher risks, higher returns and higher debt.’

Market watchers point to an extreme recent example, when UK-based New Star International Property Fund made a pure-cash (zero debt) acquisition of One Phillip Street, an office block in the Raffles Place area, for $99.02 million.

Funds that need to assume higher leverage to achieve their investment returns may find it difficult to buy property assets in Singapore – and their numbers may dwindle.

Source: Business Times 29 Feb 08

CDL boss prepared to delay launches in subdued market

Some projects can be held off till 2009, he says, as full-year gain swells to $725m

THE property market may have stalled for now, but City Developments (CDL) executive chairman Kwek Leng Beng is not too worried.

He said that if necessary, he can hold off launches of new developments until next year.

‘Rather than launch today when the market is subdued, I would rather start construction on some projects first’ and launch them when demand picks up, Mr Kwek said yesterday.

‘If today there are not many buyers, this means that pent-up demand is building up, which can be very powerful.’

CDL plans to launch more than 400 units in four projects by June, assuming market conditions do not worsen.

It will release the 77 units at Shelford Suites in Bukit Timah, which is said to have been ready for launch for some time.

The group also intends to launch 100 units of the 228-unit Quayside Isle @ Sentosa Cove, and another 100 at a new development on the former Lock Cho Apartments in Thomson Road, which will have 336 units.

The fourth project is a joint venture at Pasir Ris Drive 1. About 150 of its 724 units are targeted for release by June.

Even if the launches end up delayed, CDL may first start construction on Shelford Suites and the Thomson Road project, said Mr Kwek.

This could also bring in more upfront cash for the group when it does sell the homes. Buyers have to pay 30 per cent in cash after foundation work is done, compared with only 20 per cent if no construction has started.

Mr Kwek’s comments yesterday came on the back of a sterling year for CDL last year.

The developer, Singapore’s second-largest, said full-year net profit more than doubled to a record $725 million. Revenue rose 22 per cent to $3.11 billion.

Earnings per share more than doubled to 78.3 cents for the year. Net asset value per share rose to $5.72 as at Dec 31, from $5.21 a year ago.

Last year, CDL booked profits from projects such as St Regis Residences, Tribeca and The Sail @ Marina Bay.

But it has yet to recognise any profits from One Shenton, The Solitaire, Cliveden at Grange and Wilkie Studio – which account for about $1.7 billion of sales. In all, the group sold 1,655 homes last year for a record $3.4 billion.

CDL’s hotel and office properties are also enjoying high occupancy rates in the buoyant market. Its offices are almost 96 per cent occupied, compared with a market average of 92 per cent.

The group has also not adopted the same approach to revaluing its properties as some of its competitors, which have reported huge revaluation gains. With these gains, its profit would have surged to $2.8 billion, it said.

The group is recommending a final cash dividend, tax-exempt, of 20 cents a share in total.

Source: The Straits Times 29 Feb 08

HDB unveils ‘income for life’ scheme for the elderly

It will buy back tail-end of flat lease at market rate, with money going to CPF Life

FOR 68-year-old retiree Teng Kiat Hwa, who owns a three-room HDB flat in Toa Payoh, his home is his only asset.

Since he fell ill and stopped driving a taxi, he has had no income and his CPF money has been dried up by medical bills.

But come next year, Mr Teng will be able to sell part of his flat’s remaining lease to HDB, and receive a cash payment of $5,000 and an annuity payout of about $500 monthly from CPF Life.

Details of the long-awaited ‘Lease Buyback Scheme’, which helps the elderly sell their HDB flats to the Government for cash – while still being able to stay in them – were unveiled yesterday by National Development Minister Mah Bow Tan.

This is how it works: HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household. So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner’s name.

According to Mr Mah, the cash is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat’s ownership is then transferred to HDB.

If the flat owner dies before the 30 years is up, his family gets a pro-rated refund from the HDB. If he outlives the 30-year lease, HDB may extend the lease or relocate the flat owner to rental housing.

To encourage people to opt for the scheme, HDB is also providing a $10,000 ‘bonus’ for anyone eligible for the scheme who signs up.

Half of this – $5,000 – will be paid immediately in cash. The other $5,000 goes into the CPF Life annuity.

One catch: the scheme will be available only to 25,000 low-income households in Singapore. That’s because the eligibility criteria restricts the scheme to those aged 62 and above and who own two- or three-room HDB flats.

Among other things, they must also have fully paid up for their flats, or else have a loan amount outstanding of less than $5,000.

Mr Mah said in Parliament yesterday that this is consistent with the objectives of the scheme, which was first announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally.

He said the scheme is meant to supplement the recently announced CPF Life annuity by providing a stream of retirement income for poor households who may not have the minimum sum needed to sign up for CPF Life, but still need steady income in old age.

He added that the 25,000 households that qualify for the scheme represent about 70 per cent of elderly households in two- and threeroom flats.

Asked for his reaction, Mr Teng said in Mandarin that it was ‘an interesting option’.

‘But we must consider it thoroughly before taking it up. My wife and I wanted to leave this flat to our kids,’ he added.

Meanwhile, industry players yesterday welcomed the scheme, but expressed concern that the criteria were too strict.

This was also brought up in Parliament by Madam Ho Geok Choo (West Coast GRC), who asked if owners of larger HDB flat can qualify for the scheme.

Mr Mah replied that this can be examined after the scheme was implemented and feedback given.

Mr Eugene Lim, the assistant vice-president of ERA Realty Network said renting out the flat may give better yield or payouts than the annuity.

Source: The Straits Times 29 Feb 08

URA launches 2 more temp office sites in Newton

Analysts see good demand just like for a nearby plot launched earlier

TWO more transitional office sites have been launched by the Urban Redevelopment Authority (URA) in a move to help ease some of the pressure on space.

The adjacent sites – parcel A is 8,682.8 sq m in size and parcel B is 9,037.9 sq m – are near the Newton MRT station, between Scotts Road and Anthony Road.

The sites can accommodate developments of up to four storeys that can be built within a year.

Transitional office sites, a relatively new concept, were introduced as a quick fix to the lack of space in the Central Business District (CBD).

They have 15-year leases, significantly less than the usual 99-year leases for commercial buildings.

The response has been mixed. A plot launched by the URA in Aljunied recently flopped, with all bids rejected as being too low.

The URA believes the Newton sites will fare better.

‘Based on market feedback, there is still demand for transitional office sites in the city centre,’ it said.

Property experts also expect a more enthusiastic response.

Mr Nicholas Mak, Knight Frank’s head of research and consultancy, said the prime location near the CBD and Newton MRT would draw bidders.

And the sites being adjacent means a developer could combine the land.

‘There is a potential for amalgamation to create bigger floor space,’ added Mr Mak, who estimated that the sites could sell for around $100 to $130 per sq ft (psf).

This values the parcels from $14 million to $19 million each.

Mr Mak felt the Aljunied site was ‘too close to the red-light district of Geylang’.

For the two latest plots, the industry experts interviewed expect a level of response similar to the Scotts Spazio site, which is across the road and was eagerly received by developers.

KOP Capital is developing the site, which cost $37 million, with partners Hwa Hong Group and Dubai Investment Group.

Insurer Prudential will lease the four-storey building for 14 years, paying $6.50 psf a month. The company should move in by September.

However, some experts believe that transitional office sites will not be commercially viable given their brief tenure. Tenders for the two Newton sites close on April 24 for parcel A and April 30 for parcel B.

Source: The Straits Times 29 Feb 08

Two more hotel sites put up for tender

TWO more hotel sites have been put on the market – a 99-year leasehold plot in Race Course Road, offered by the Urban Redevelopment Authority, and a freehold plot in Bencoolen Street now occupied by Peony Mansion.

Peony Mansion’s owners want $50 million, which works out to about $850 per square foot of potential gross floor area including an estimated $2.65 million payable to the state for two smallish plots – one is a road ingress and the other houses an electrical substation – behind Peony Mansion.

The two plots total 2,760 square feet, while Peony Mansion runs to 11,964 sq ft. Peony Mansion comprises 33 apartments and two shop units.

Approval for a collective sale has been secured from owners controlling at least 80 per cent of share values – under the old en bloc rules.

Under Master Plan 2003, Peony Mansion is zoned for hotel use with a 4.2 plot ratio – the ratio of maximum potential gross floor area to land area.

Peony Mansion and the adjoining state sites can be redeveloped into a boutique hotel with about 200 rooms, assuming there are no food and beverage outlets. Peony Mansion will be marketed through a tender that closes on April 4.

Over in the Little India area, URA has launched the tender for a 0.9 hectare plot above Little India MRT station.

Jones Lang LaSalle regional director and head of investments Lui Seng Fatt says that assuming the plot is developed into a hotel of up to four-star standard and with about 500 rooms, the completed property would be worth about $600,000 a room or a total of $300 million.

Assuming construction costs of about $500 psf of gross floor area, the site’s land value works out to about $135 million or $400 psf per plot ratio (psf ppr).

However, CB Richard Ellis executive director Li Hiaw Ho reckons that top bids for the site will come in higher – around $600-700 psf ppr – given the plot’s location above an MRT station.

‘The plot can be developed into a four-star property. Bidders are also likely to include some retail/food & beverage facilities.’

The plot has a 3.5 plot ratio, resulting in a maximum gross floor area of 338,417 sq ft.

The tender for the confirmed list site closes on May 21.

Source: Business Times 28 Feb 08

CapitaLand plans US$300m Vietnam fund

It has also formed a partnership with a Vietnamese investment company

CAPITALAND, South-east Asia’s largest property developer, plans to set up a US$300 million property fund in Vietnam.

The company also said yesterday it has forged a partnership with Vietnamese firm Nam Thang Long Investment Joint-Stock Company to seek investment opportunities in Vietnam.

With the new business initiatives, the developer aims to strengthen its presence in Vietnam, which it has identified as one of its key Asian markets.

The news sent CapitaLand’s shares up as much as 27 cents – or 4.2 per cent – yesterday. The stock closed the day 16 cents up at $6.56.

In its filing to the Singapore Exchange, CapitaLand said it will leverage on its real estate and fund management capabilities to set up its first property fund to invest in Vietnam. It intends to take a 30 per cent stake in the fund, which has a target size of US$300 million.

To secure other investors in the fund, CapitaLand has signed a memorandum of understanding with Citi Private Bank, one of the world’s largest wealth managers which serves high net worth individuals with more than US$10 million in net worth each.

The partnership with Nam Thang Long Investment Joint-Stock Company, on the other hand, will allow CapitaLand to seek further business opportunities in Vietnam with a real estate focus. The two companies hope to develop residential properties and commercial and residential mixed developments together.

CapitaLand already has a significant presence in Vietnam, mainly in the residential and service residences sectors in Hanoi and Ho Chi Minh City.

‘Our aim is to deepen CapitaLand’s presence in Vietnam to become a significant long term real estate player here,’ said CapitaLand chief executive Liew Mun Leong.

‘We’re confident of doubling our residential pipeline in Vietnam from the present 2,800 homes to about 6,000 in the next three years and we’re also looking for opportunities in the office, retail, and integrated leisure, entertainment and conventions sectors.’

Source: Business Times 28 Feb 08

HDB launches 494-unit Punggol project

Four-room flats in BTO project meant to meet high demand; 278 applications so far

THE Housing Board has released another new build-to-order (BTO) project in Punggol to meet surging demand from house hunters.

It is offering 494 flats, all four-room units, at Punggol Spring – the first batch of 4,500 BTO flats planned for the first half of this year.

Already, 278 applications have come in for the flats, following their launch yesterday. They are priced at between $204,000 and $259,000 – about two-thirds the current price of resale flats in Punggol.

Industry players expect demand to continue to be strong, given the overwhelming response to recent HDB flat releases. Earlier this month, almost 10,000 hopeful buyers applied for just 278 surplus flats in Toa Payoh and Tampines.

By the time the BTO exercise for Punggol Spring closes on March 17, the flats could be four times oversubscribed, predicted Mr Mohamed Ismail, chief executive of property agency PropNex.

To address the shortage of flats – estimates show only 2,000 surplus units in stock – the HDB has recommended that would-be buyers consider resale flats and BTO projects.

It will release another 4,000 BTO flats between now and June, mainly in Punggol and Sengkang. The HDB also said it still has 711 flats available from recent BTO launches in Punggol and Sengkang, including more than 200 each in Punggol Vista, Fernvale Vista and Coral Spring.

But the HDB’s last four BTO projects have all seen at least twice the number of applicants than flats available.

The most recent were Damai Grove in Punggol and Jade Spring @ Yishun, which were released late last year. There were 1,888 applications for the 738 flats in Damai Grove and 1,908 applications for Jade Spring’s 384 flats.

PropNex’s Mr Ismail said that for many first-time buyers with relatively low income, BTO flats have become their only housing option as home prices soar.

But Mr Eugene Lim, the assistant vice-president of ERA Realty Network, pointed out that more BTO projects will not address the immediate housing shortage, as they take a few years to be constructed.

‘BTO is a longer-term solution,’ he said. ‘The segment of buyers that go through BTO may not be the same as the 10,000 applicants looking for leftover flats that are available sooner.’

Punggol Spring is expected to be completed by 2011. It is located within walking distance of the Damai LRT station, next to Punggol Secondary School and near the future town centre where the MRT station and bus interchange are located.

Source: The Straits Times 27 Feb 08

Wheelock may not launch Orchard View this year

WHEELOCK Properties (Singapore) is likely to hold off launching Orchard View at Angullia Park for sale until next year, when the project is slated for completion. The company had earlier indicated that the development would be launched some time this year.

The group, which yesterday posted a six-fold jump in group net profit for the quarter ended Dec 31, 2007, to $217.5 million, also said it expects to launch Ardmore 3 next year. Piling work for the project is in progress and the development is slated for completion in 2012.

For Orchard View, the main construction work is already in progress and the development is scheduled for completion next year.

For the quarter ended Dec 31, 2007, Wheelock’s revenue from continuing operations rose 43.8 per cent to $189.3 million. Wheelock’s strong topline and bottomline were mainly due to the start of revenue and profit recognition for units sold in Ardmore II condo. The bottomline also received a boost from a $200 million revaluation surplus on Wheelock Place, the group’s retail-and-office investment property on Orchard Road.

Wheelock, which has changed its financial year-end from March 31 to Dec 31, said that for the current year it will book the remaining profits from The Sea View condo in the Amber Road area and The Cosmopolitan at the River Valley/Kim Seng Road corner, which are slated for completion in first-half 2008 and mid-2008 respectively.

It will also continue to book profits from Ardmore II based on the progress of construction work and expects to book maiden profits on Scotts Square, a 338-unit apartment development which is already 67 per cent sold at an average price of $3,988 psf. ‘Sales of the remaining units are ongoing and we expect to sell progressively over the next two years,’ the group said.

Wheelock Place is also expected to continue maintaining full occupancy in the current strong market conditions and ‘prospects for improved rental rates are good for both office and retail space’.

‘The group remains in a strong financial position to take advantage of opportunities which may arise,’ Wheelock said.

As at Dec 31, 2007, the group had total liabilities of $749.5 million and total equity of $2.18 billion. It had cash and cash equivalents of $557.7 million as at the same date. Shareholders will receive a 6-cent per share (one-tier) first and final dividend for the period ended Dec 31, 2007.

With the change in its financial year, the group reported net earnings of $273.5 million for the nine months ended Dec 31, 2007, against net profit of $297.9 million for the 12 months ended March 31, 2007.

Wheelock’s net asset value per share stood at $1.82 as at Dec 31, up from $1.69 as at March 31, 2007.

Earlier this month, the group boosted its investment in fellow upscale residential developer SC Global Developments from 12.01 per cent to 13.09 per cent.

Source: Business Times 23 Feb 07

Property sector braces for tougher times in 2008

Players feel squeeze from more credit woes and soaring construction costs

THE property market in Singapore is set to face a challenging year ahead as it continues to take hits from the sub-prime crisis in the United States and rising construction costs, industry body Real Estate Developers’ Association of Singapore (Redas) said.

‘Unfortunately, the sub-prime woe continues to hog the headlines,’ saidRedas president Simon Cheong, during Redas’ annual Chinese New Year celebration yesterday. ‘Six months’ ago, we were concerned with the market exuberance. This coming six months, we are wondering when the market will turn around.’

Construction cost is also spiralling upwards at an unprecedented rate, Mr Cheong said.

The property market’s expected slowdown comes on the back of an exceptionally good 2007. Last year, a record-breaking 14,800-plus residential units were sold, the office occupancy rate hit 93 per cent and the hotel sector saw a occupancy rate of 87 per cent.

But this year, with more write-downs for sub-prime exposure expected from major financial institutions – which could affect home prices and demand here – and high construction costs affecting margins, developers are bracing themselves for tougher times ahead.

‘We are concerned that construction costs have gone up so sharply and squeezed (developers’) profit margins so much that a small decline in the the final selling price will affect developers severely,’ said CB Richard Ellis’ chairman for Asia, Willy Shee. ‘A small increase in construction cost and a small decline in selling price will put developers in a very difficult situation.’

Minister of State for National Development Grace Fu, who was guest-of-honour at Redas’ event yesterday, similarly said that the property market’s prospects are dependent on how the sub-prime crisis is going to affect sentiment in the region.

Mr Cheong believes that the market will ‘get some traction back’ in the second half of this year. Interest rates in Singapore are at a record low, which will encourage home ownership, he said. And the influx of expatriates at all levels coming to Singapore – on the back of an anticipated office supply of 15 million sq ft over the next three to four years – will also provide a boost to the property market, Mr Cheong said.

‘Removal of estate duty also helps,’ said Chia Ngiang Hong, Redas’ first vice-president and group general manager of City Developments. ‘The super-rich will focus on Singapore again.’

Analysts, worried about developers’ prospects for this year, are already starting to recommend that investors put their money into the more diversified property companies and/or switch to real estate investment trusts (Reits).

‘In the current volatile market environment, we recommend stocks of listed property companies with strong balance sheets offering multiple-sector presence and geographical diversification,’ said UOB Kay Hian analyst Vikrant Pandey. Citigroup analyst Wendy Koh said: ‘In the light of the current uncertainties, we retain our preference for Reits over the developers.’

 

Source: Business Times 22 Feb 08

Parkway justifies record land bid with vision for a ‘hospital of the future’

Focus will be on cardiology, oncology and orthopaedics

(SINGAPORE) Parkway Holdings will be building on its newly-acquired Novena site what it calls a ‘hospital of the future’, that will incorporate a hub of top medical professionals, with the latest technology, organised along a high level of thoughtfulness for the patient.

Speaking to the press and analysts for the first time since winning the Novena hospital site at a record bid of $1,600 per square foot per plot ratio (psf ppr), Parkway’s management yesterday justified the price – more than double the second-highest bid of $694.50 psf ppr.

‘We are already operating with capacity constraints at our present facilities, and with the ageing population and changing demographics, we would not be able to contribute as much as a leading private healthcare provider,’ said group president and CEO Lim Cheok Peng.

‘Administratively, we have begun to move non-clinical functions off-site to free up more space for the hospitals. This would not be enough as the shortfall for private patient beds by 2012 could be as many as 2,000.’

Parkway – which houses 767 beds at the Mt Elizabeth, Gleneagles and East Shore hospitals – is already operating at about 70 per cent capacity.

For a long-term solution to better manage patient turnover and expand its catchment of international patients, ‘it had to secure the land’, said chairman Richard Seow.

Development cost for the new hospital is estimated to be $300-500 million. To be completed by July 2011, it will have a 15-storey tower, linked to a five-storey podium block that will house mainly medical suites, retail and lobby areas.

The development will have a maximium gross floor area of 72,350 sq m, of which 30 per cent will be set aside for medical suites and 5 per cent for retail space. A large part will be taken up by the 324 patient rooms planned, and the rest for diagnostics and ancillary services, and a 255-lot basement carpark.

The new private hospital will focus on cardiology, orthopaedics and oncology specialties. It will also feature 100 per cent single rooms, patient floor balconies, gardens and rooftop landscape to enhance the inclusion of light and nature in a healing environment. The architect for the project is Hellmuth, Obata + Kassabaum (HOK).

Parkway was unable to discuss financial details ahead of the announcement of its full-year results, scheduled for release next Wednesday. But it had earlier indicated that the acquisition of the land, amounting to more than $1.2 billion, and the development cost will be financed through a mix of internal resources and bank borrowings.

Parkway shares have taken a beating this week since the award of the tender for the Novena site on Monday.

On the same day, its shares fell 8.3 per cent to $3.30 on concerns that the group may have overpaid for the land.

But COO Daniel Snyder yesterday expressed confidence in the project, saying that his strategy and business development team has been receiving calls from parties with investment offers.

The group has also received ‘unanimous support from our accredited doctors and partners’.

Parkway shares ended 4 cents lower to close at $3 yesterday.

Source: Business Times 22 Feb 08

Office rents in Singapore on upward climb: property firms

THE occupancy cost for office space in Singapore is now higher than in Hong Kong, according to a new report.

Data from property firm CB Richard Ellis (CBRE) show that total occupancy cost here hit US$10.42 per square foot per month (psf pm) at the end of 2007.

By comparison, total occupancy cost for Hong Kong was US$9.74 psf pm at the end of last year.

Total occupancy cost reflects base rents as well as other property-related expenses such as management fees and property tax, according to CBRE.

Prime office rents in Singapore rose 19.1 per cent in just the fourth quarter of 2007, CBRE’s report said. For the entire year, office rents rose a staggering 92.3 per cent.

‘Competition for pockets of vacant space in the central business district (CBD) remained intense, and several expansion transactions towards the end of the (fourth) quarter suggested that demand may be sustained,’ CBRE said.

In response to the report, the Urban Redevelopment Authority (URA) pointed out that CBRE represents just one viewpoint.

A recent Cushman & Wakefield (C&W) report, for example, said that office occupancy cost for prime office space in Singapore was US$10.80 psf pm in end-2007, much lower than the US$19.90 psf pm in Hong Kong.

The discrepancy between the two sets of data was due to the fact that CBRE considers office space in Hong Kong’s CBD as well as other areas outside the city centre when compiling office occupancy cost data for Hong Kong – while C&W only considers Hong Kong’s CBD.

Both firms look only at Singapore’s CBD when calculating occupancy cost here.

Separately, property firm Savills – which said that office rents in Singapore are close to Hong Kong’s at present – predicted that rents here could increase by another 15-20 per cent this year.

Office rents in Hong Kong, on the other hand, are expected to rise by a slower 5 per cent in 2008, said Simon Smith, Savills’ head of research and consultancy. He expected rents in Singapore to overtake rents in Hong Kong sometime this year.

Mr Smith also said that luxury home prices in Singapore will climb 8-12 per cent this year, after jumping about 50 per cent in 2007.

 

Source: Business Times 22 Feb 08

Tanjong Pagar hotel site may fetch $750 psf ppr

CONTINUING its rollout of hotel sites amid the current shortage of hotel rooms, the Urban Redevelopment Authority yesterday made available for application a reserve-list site in the Tanjong Pagar area.

The 99-year leasehold site, at the corner of Gopeng Street and Peck Seah Street, can be developed into a 30-storey hotel with about 330 hotel rooms.

The site will only be launched for tender upon successful application by a developer with an undertaking to bid at a minimum price which is acceptable to the state.

CB Richard Ellis executive director Li Hiaw Ho estimates that the plot could be worth about $700-750 per square foot of potential gross floor area.

Around the middle of last year, URA sold nearby hotel sites at Tanjong Pagar Road for $573 psf per plot ratio and $562 psf ppr.

The planning authority also awarded a hotel plot at Upper Pickering Street at $805 psf ppr and another plot at New Market Street/Merchant Road for $762 psf ppr in October 2007.

The latest plot, with a 2,311.3 square metre land area, has an 8.4 plot ratio (ratio of maximum potential gross floor area to land area) and a 30-storey height limit.

‘The plot will be ideal for a four-star business hotel serving the needs of businesses in the Central Business District,’ Mr Li said.

URA said that the Tanjong Pagar area was a ‘prominent gateway leading directly into the main financial and business areas of Shenton Way, Raffles Place and Marina Bay’.

‘It is also home to several hotels which have been established to serve the business community and tourist visitors. These include business hotels like the Amara and M Hotel, as well as award-winning hotels like Berjaya Hotel and The Scarlet.’

The planning authority, which is due to release Master Plan 2008 later this year, also noted that ‘the successful sale and on-going development of several new office, high-rise residential and hotel sites in the area will further enhance the vibrancy and activities of the Tanjong Pagar commercial district’.

 

Source: Business Times 22 Feb 08

2 good class bungalows on Leedon Road up for sale

A PAIR of recently completed Good Class Bungalows at 37 and 39 Leedon Road are being launched by their developer George Lim. His asking price is about $35 million for each bungalow. The plots’ land areas are 22,000 square feet and 21,000 sq ft respectively.

Each five-bedroom, two-storey freehold house has a basement garage for up to five vehicles.

The exteriors are clad in natural sandstone, while inside there is AMX movie-on-demand hardware.

Mr Lim launched his maiden project in 2005 with three Good Class Bungalows built on a 50,000 sq ft site in the Belmont area.

 

Source: Business Times 22 Feb 08

Maybank’s home loan promotion creates a buzz

Other banks won’t get into price war, says OCBC’s chief executive

(SINGAPORE) Maybank’s promotional home loan package has apparently drawn massive interest from new home buyers and home owners looking to refinance.

But at least one bank here has come out to say that this is unlikely to spark a mortgage price war in Singapore.

Maybank told BT that since the launch on Tuesday till end of Wednesday, the bank had received more than 1,500 inquiries at its call centre and branches. ‘We have received close to 200 applications just for one and a half days,’ said Helen Neo, head, consumer banking, Maybank Singapore.

She added that there is an equal split of applications for refinancing and new purchases and most of the applications are for private property home loans.

However, she said the promotion is not likely to be extended.

The low rates apply to those taking a loan amount of $300,000 and above and for owner-occupied properties.

On Tuesday, the Qualifying Full Bank slashed its three-year fixed home loan rates from 3.58 per cent for all three years to 1.68 per cent for the first year, 2.68 per cent for the second and 3.38 per cent for the third year. Maybank’s new first-year interest rate is about 40 per cent lower than similar packages being offered in the market.

‘We expect this promotional package to bring in new home loan customers. With this very attractive package, we do expect to meet the target we set,’ said Ms Neo.

In response to Maybank’s mortgage rate cut – which he referred to as a ‘fire sale’ – David Conner, OCBC Bank’s chief executive, said banks are unlikely to be dragged into undercutting each other on rates.

‘We’re not likely to see a big price war with the mortgage portfolio,’ said Mr Conner at yesterday’s OCBC results briefing. ‘We should see pricing firming and not deteriorating.’

He noted that most big multinational banks are strapped for capital and that credit spreads are rapidly rising. ‘We have to be more careful with our pricing,’ he said, adding that Singapore still remains one of the cheapest places to get a mortgage.

He noted that Singapore’s interest rates are low today because the strengthening of the Singapore dollar – designed to stave off inflationary pressure – has attracted liquidity into the market.

He said the strengthening of the currency should slow down in the second half of the year, and liquidity will ebb as people move to other foreign currencies. This will bring down interest rates.

He added: ‘Banks do better if interest rates are in the 3, 4 or 5 per cent range.’

DBS Bank had earlier said it has ‘no plans to adjust rates’ for now, while United Overseas Bank and HSBC both said they would monitor the situation before making a decision.

Citibank and Standard Chartered shied away from saying if they will review rates, but pointed to their Sibor packages, which they say give customers control in repricing loan packages.

Meanwhile, banking industry insiders said that fundamentals of the property market are still there, and that even with talk of the industry demand softening there was no panic selling.

They added that valuations for home prices have not come down and that there is still buying activity among the middle markets.

 

Source: Business Times 22 Feb 08

Singapore’s Olympic dream comes true

It wins right to host YOG 2010; SMEs poised to ride branding boom

(SINGAPORE) Shortly after 7pm yesterday, the Padang erupted. The two-horse, Moscow-versus-Singapore race to host the very first Youth Olympic Games (YOG) in 2010 had just seen Singapore breast the tape first, and everyone – from the Prime Minister to the other VIPs present to the business community and the thousands of school children – let their emotions show.

‘We dared to dream, we worked hard to pursue our dream despite the odds. Now that dream will become a reality,’ said Prime Minister Lee Hsien Loong to the cheering crowds who had seen the announcement broadcast ‘live’ on a giant screen.

‘It will be the first time that the Olympic flame will be in South-east Asia and in Singapore. We will be the focus of a new era for sporting development for South-east Asia and Singapore,’ PM Lee added.

Small and medium-sized enterprises (SMEs), in particular, can stand to benefit from the hosting of the YOG.

Parliamentary Secretary for the Ministry of Community Development, Youth, and Sports, Teo Ser Luck, emphasised that the YOG would be a platform to help local companies, possibly through second-tier sponsorship.

‘Olympics is a big brand name. The main sponsors of the Olympics are global brands. What I hope to do is to have the YOG to bring up the brand awareness of our local companies, especially the SMEs,’ he said.

The win comes after seven months of stiff competition. The initial list of 11 cities was whittled down to two before Singapore pipped Moscow thanks to its top-notch infrastructure, strong governance and security.

The next step for Singapore is to set up an organising committee, which is expected to include people from both the government and private sector. Ng Ser Miang, the International Olympic Committee member from Singapore, is expected to chair the committee.

Elim Chew, president and founder of 77th Street, who has been rallying business associates to show their support, told BT that she had been confident that Singapore would win. ‘We reflect what Olympism is about – youth, spirit and community. The whole nation played a part. In the last one month, the atmosphere really built up,’ she said, adding that the economy would reap rewards. ‘It is important to build up Singapore businesses as it goes back to the economy.’

In recent months, over 700 companies have come forward to back Singapore with whole-hearted support and raise awareness through banners, videos, websites and car decals.

The YOG, which will be held in August 2010, is expected to welcome some 5,000 athletes and officials and will offer contests in 26 different sports.

 

Source: Business Times 22 Feb 08

Quieter property market but outlook favourable in long run

THE real estate roller coaster that developers have ridden in recent years has taken a sharp turn, thanks to United States sub-prime woes, and left the industry wondering what is coming next.

‘Six months ago, we were concerned about the market exuberance,’ said Mr Simon Cheong, the president of the Real Estate Developers’ Association of Singapore (Redas), yesterday. ‘These coming six months, we will be wondering when the market will turn around.’

After an exceptional year of strong prices and sales, the sector has slipped into the doldrums, with buyers and sellers taking cover from the onslaught of a global economic uncertainty, America’s sub-prime mortgage crisis, stock market turmoil and escalating building costs.

Mr Cheong told a Redas Chinese New Year lunch: ‘Though Asia’s economy has a strong buttress – China – the temporary effect of weak sentiment from sub-primes will affect buying for at least the first half of this year.’

Sellers are also lying low, with developers delaying launches and pushing back project completion dates amid the construction squeeze.

Building costs have climbed at an ‘unprecedented rate’, added Mr Cheong, who is also chairman and chief executive of SC Global Developments. ‘What is clear is that developers are bearing the brunt of higher construction costs. Something’s got to give eventually.’

Developers will have to factor in high construction costs when they replenish their land bank, he said.

However, in the longer run, the market outlook is favourable, considering the Singapore economy’s sound fundamentals.

‘Rental yields will eventually dictate and underpin what capital values will be for property,’ said Mr Cheong.

The expected slowdown in supply will support the rental market.

Minister of State for National Development Grace Fu told the media during the lunch that the market may be quiet, but prices are firm while demand for commercial property is still resilient.

Those sentiments were echoed by consultancy Savills Singapore, which expects the office sector to stay buoyant.

Deputy managing director Simon Smith told a press conference that average prime rents should match Hong Kong’s by the second quarter and surpass them by year-end.

This is because Hong Kong will see a lot of new supply coming onstream this year while Singapore’s supply will remain tight in the short term, he said.

But higher rents in Singapore may not be enough to push businesses to Hong Kong. ‘Many clients we see switching between the cities tend to do so because of strategic reasons rather than cost reasons,’ said Mr Smith.

 

Source: The Straits Times 22 Feb 08

Development fees may jump for non-residential sites

For residential areas where strong land sales have lifted values, charges could surge

DEVELOPERS may soon have to pay more to redevelop non-residential sites such as land for hotels or hospitals.

A key government fee for redeveloping sites will be revised again next month, and property consultants expect it to be raised for land used for purposes other than to build homes.

The good news is: Development charges should not jump much for residential plots this time, after already having been jacked up a few times last year.

Selected areas, however, could still see bigger fee hikes, said consultants. These include Novena, Geylang, Ang Mo Kio and Orchard Boulevard, where recent strong land sales have pushed up values.

Development charges, which can amount to millions of dollars, are based on recent land and property values. They are calculated based on sectors and 118 locations, and adjusted in March and September every year to keep them up to date.

A rise in these charges for residential sites in some areas means that, for instance, it would be more expensive for developers to buy and redevelop collective sale estates in these parts of Singapore.

Overall, however, the current slowdown in the housing market means that the upcoming round of revisions should result in only very moderate rises for most residential sites.

Development charges for non-landed residential sites are likely to go up by only 10 per cent on average, compared to 58 per cent last September, said Ms Tay Huey Ying, the director of research and consultancy at Colliers International.

She said the soaring land prices that sent development charges surging last year have ’screeched almost to a halt’ since last September.

In particular, the collective sale market – previously the main driver of spikes in development charges – has quietened to near-silence in the last few months.

Consultancy CB Richard Ellis also said it expects only ‘moderate increases’ in selected locations. These include Sixth Avenue and Sentosa for landed sites and Ardmore and Orchard Boulevard for non-landed sites.

It suggested that the Government may also slow the rate of rises in development fees after taking into consideration the ’subdued state’ of the residential market. The once-frenzied response to both development sites and new home launches has waned significantly.

On the other hand, non-residential sites – including hospital, hotel, office and industrial land – are still seeing buoyant activity and could be subject to heftier fee hikes.

Hospital land could see the biggest overall hike in charges, boosted by the recent record bid for a stateowned site at Novena, said Colliers’ Ms Tay. She is projecting a rise of between 15 per cent and 20 per cent on average for hospital sites.

DTZ Debenham Tie Leung added that funds have been moving their investments into hospital assets in Singapore, which could also prompt a rise in the development fees for this sector.

Also, industrial land – which saw a rise in development fees of just 2 per cent in the last round – should experience a much bigger jump, said consultants.

Office and hotel plots are also expected to have their development charges raised, by at least 30 per cent, said Jones Lang LaSalle.

Its director for South Asia research, Mr Chua Yang Liang, said the fees could be pushed up by recent office land sales at Jalan Sultan and Toa Payoh, and hotel plot sales at Upper Pickering Street and New Market Road.

 

Source: The Straits Times 22 Feb 08

Mass-market safe, high-end may take a hit

Property players sketch the best and worst-case scenarios for private homes in 2008

(SINGAPORE) Luxury-home prices could fall by up to 20 per cent in 2008, assuming sub-prime woes don’t end this year. But the mass market may hold its own or ease 5-10 per cent at most. This was the worst-case scenario according to most property players polled by BT.

In a best-case scenario with sub-prime woes clearing by mid-year, high-end prices could rise up to 10 per cent and mass-market homes as much as 15-20 per cent, the majority of respondents said.

The most optimistic is Jones Lang LaSalle Research, which forecasts an 18-22 per cent increase in luxury/prime prices and a 20-25 per cent gain in mass-market prices in a best-case scenario.

Sales activity is generally expected to be quiet in the first half, before picking up in the second half. ‘Interest is still very much there, but investors see no strong push factor to get into the market just yet,’ says DTZ executive director Ong Choon Fah.

Most developers and property consultants are hoping the sub-prime-related gloom will vanish in the second half. Voicing a common view in the industry, City Developments group general manager Chia Ngiang Hong said: ‘We expect the situation to improve after mid-year. Most of the high-profile sub-prime-related writedowns by major international financial institutions are already out. Hopefully, the rest of the write-downs, if any, should be out by March/April. This current period is good for consolidation.’

UOL Group chief operating officer Liam Wee Sin said: ‘If the sub-prime episode is short-lived, it can be seen as a welcome breather for the Singapore property market.

Both home and land prices in the high-end segment escalated too quickly, especially in Q2 and Q3 last year.’

But Wing Tai deputy chairman Edmund Cheng feels it may not be realistic to expect sub-prime problems to fade away by mid-year. ‘They are likely to linger beyond this year, as the exposure has extended to many other areas, and it may still take some time for the full extent of exposure to be discovered,’ he said.

But on a more positive note, he believes mid/ upper-mid projects near Orchard Road will be more resilient ‘as they should benefit from demand for replacement properties by those who have sold prime district homes through en bloc sales, as well as demand from expats who find prime district housing too expensive’.

Agreeing, Credo Real Estate managing director Karamjit Singh thinks mid-tier private home prices will appreciate 10-15 per cent this year in a best-case scenario, outpacing his estimate of gains of 10 per cent for the suburban/mass market and 5-10 per cent for upmarket homes.

In the high-end category, many property analysts with stockbroking firms see an oversupply of potential launches as sites sold through en bloc sales are redeveloped.

In a worst-case scenario, a major factor that could hurt high-end prices is if demand dries up and ’specu-vestors’ who bought luxury homes in the past few years offload them below current prices, as they still stand to reap huge gains given their low entry cost, reckons Knight Frank executive director Peter Ow.

In the primary market too, some smaller developers may drop prices to generate sales. But Mr Ow acknowledges that the bulk of the unlaunched high-end housing stock is in the hands of a few major players who have the financial capacity to delay launching projects. Instead, they could focus on selling their mid-tier and massmarket homes this year to generate cash flow.

Giving his take, a major developer said: ‘High-end depends on the appetite of foreign buyers and their perception of liquidity and value in the Singapore market. The strong Sing dollar will help persuade these investors that the property market here will be a good store of value.’

Observers also believe overseas funds are likely to turn increasingly to parking money in Asia, instead of the United States and Europe. Other demand drivers for the Singapore residential sector, especially in the mid and mass segments, include falling mortgage rates, the continued influx of expats from China and India setting up home here, and wage growth arising from the tight labour market.

Most market watchers say the upside for high-end residential prices will be limited even if the sub-prime problem clears around mid-2008.

‘Price increases would not so much apply to luxury-class homes as these have already increased significantly since 2005,’ CB Richard Ellis managing director Pauline Goh argues.

However, mid-tier homes could appreciate 5-10 per cent and mass-market prices 10-15 per cent this year, assuming things become more positive after June, Ms Goh added.

Frasers Centrepoint CEO Lim Ee Seng said: ‘Even in a worst-case scenario, I don’t really see mass-market home prices coming down much because construction costs are still going up and that raises the breakeven cost of such projects.’

Knight Frank’s Mr Ow says the mass-market will benefit from strong demand from HDB upgraders, given the shortage of HDB homes.

 

Source: Business Times 21 Feb 08

Plan to defer public works will have little impact: report

Delaying $3b worth of projects won’t help relieve building demand, says RLB

CONSTRUCTION industry experts are seeking to play down the significance of the government’s moves to ease the pressure on the industry’s costs.

The government is intending to defer an additional $1 billion worth of public-sector projects to help the industry – a move that follows the decision last November to postpone $2 billion worth of projects.

A report by construction cost consultancy Rider Levett Bucknall (RLB) said that the deferring of public-sector projects ‘is expected to have a limited impact on relieving construction demand as it will represent around 10 per cent of annual demand’.

Latest estimates by the Building and Construction Authority value construction contracts awarded this year at up to $27 billion.

RLB’s latest figures for its tender price index shows that it also increased by 23 per cent as at the end of the third quarter last year. It said that rising construction costs are attributed to increased costs of foreign construction labour and professional expertise, materials and equipment costs, as well as on- and off-site overheads.

Indicative construction costs of an office building in the CBD of up to 41-55 storeys is between $353- $438.5 psf of gross floor area (GFA).

The construction costs of a luxury condominium is between $325.2 and $441.3 psf of GFA, while a five-star hotel will cost between $464.5 and $627 psf of GFA to build.

Good quality retail space costs $311-$367 psf of GFA to build.

In terms of key construction materials, concreting sand has shown the highest year on-year increase, jumping 160.3 per cent as at November 2007. The price of granite aggregate increased by 32.1 per cent in the same period while the price of ready mix concrete increased by 71.4 per cent.

However, RLB noted that prices did generally ‘moderate to a downward trend’ for the second half of 2007, the period that coincides with the start of the US sub-prime loans crisis and the global credit crunch.

Indeed, RLB added: ‘Whilst the Singapore construction market will be somewhat buffered in the short term by existing development commitments within the domestic market, it will be difficult to predict the impact of the global financial crisis in the medium run.’

RLB does believe that on the back of rising crude oil prices and growing building activity particularly in the Middle East, China and India, price gains are anticipated for the first half of 2008.

Citing other industry sources, RLB said that world steel demand is forecast to reach over 1.45 million tonnes in 2011, which represents an 88 per cent growth in the ten years from 2001.

‘However, a slowdown in the rate of demand growth is anticipated towards the end of the current decade,’ it added.

 

Source:

Plan to defer public works will have little

impact: report

Delaying $3b worth of projects won’t help relieve building demand, says RLB

By ARTHUR SIM

CONSTRUCTION industry experts are seeking to play down the significance of the

government’s moves to ease the pressure on the industry’s costs.

The government is intending to defer an additional $1 billion worth of public-sector

projects to help the industry – a move that follows the decision last November to

postpone $2 billion worth of projects.

A report by construction cost consultancy Rider Levett Bucknall (RLB) said that the

deferring of public-sector projects ‘is expected to have a limited impact on relieving

construction demand as it will represent around 10 per cent of annual demand’.

Latest estimates by the Building and Construction Authority value construction

contracts awarded this year at up to $27 billion.

RLB’s latest figures for its tender price index shows that it also increased by 23 per

cent as at the end of the third quarter last year. It said that rising construction costs

are attributed to increased costs of foreign construction labour and professional

expertise, materials and equipment costs, as well as on- and off-site overheads.

Indicative construction costs of an office building in the CBD of up to 41-55 storeys is

between $353- $438.5 psf of gross floor area (GFA).

The construction costs of a luxury condominium is between $325.2 and $441.3 psf of

GFA, while a five-star hotel will cost between $464.5 and $627 psf of GFA to build.

Good quality retail space costs $311-$367 psf of GFA to build.

In terms of key construction materials, concreting sand has shown the highest yearon-

year increase, jumping 160.3 per cent as at November 2007. The price of granite

aggregate increased by 32.1 per cent in the same period while the price of ready mix

concrete increased by 71.4 per cent.

However, RLB noted that prices did generally ‘moderate to a downward trend’ for the

second half of 2007, the period that coincides with the start of the US sub-prime

loans crisis and the global credit crunch.

Indeed, RLB added: ‘Whilst the Singapore construction market will be somewhat

buffered in the short term by existing development commitments within the domestic

market, it will be difficult to predict the impact of the global financial crisis in the

medium run.’

Story Print Friendly Page Page 1 of 2

http://www.businesstimes.com.sg/sub/storyprintfriendly/0,4582,268492,00.html? 21/2/2008

RLB does believe that on the back of rising crude oil prices and growing building

activity particularly in the Middle East, China and India, price gains are anticipated

for the first half of 2008.

Citing other industry sources, RLB said that world steel demand is forecast to reach

over 1.45 million tonnes in 2011, which represents an 88 per cent growth in the ten

years from 2001.

‘However, a slowdown in the rate of demand growth is anticipated towards the end of

the current decade,’ it added.

STRONG FULL-YEAR GAINS: UOL still bullish on office rentals

OFFICE rents have been skyrocketing over the past 12 months but property group UOL Group reckons there will still be further rises to come.

The firm reported stellar full-year results yesterday. It said rents for retail space should benefit from high levels of employment, as well as strong tourist arrivals, although the pace of increase will moderate.

UOL is cautiously optimistic about the residential market and will launch three projects this year – Nassim Park Residences, Breeze by the East in the East Coast area and Green Meadows opposite Peirce Reservoir.

Its plans came with news yesterday of a 124 per cent jump in net profits to $758.9 million, on the back of a hefty revaluation gain.

The gain of $590.5 million on UOL’s investment properties boosted profit to such an extent that they exceeded revenue, which came in 18 per cent higher at $709.1 million for the 12 months to Dec 31.

Revenue from hotels was higher, due to improved numbers from hotels in Singapore, Australia and Vietnam. The inclusion of revenues from the former Negara on Claymore, now known as Pan Pacific Orchard, and subsidiary Pan Pacific Hotels & Resorts, also helped.

Full-year earnings per share rose from 42.72 cents to 95.38 cents, while net asset value per share rose to $4.96 per share as at Dec 31 last year from $3.97 previously. A final dividend of 10 cents a share and a special dividend of five cents apiece were declared.

 

Source: The Straits Times 21 Feb 08

CapitaLand, HPL sue eight owners of Gillman Heights

Developers claim contract breach as owners seek ruling over validity of sale

A GROUP of home owners in Gillman Heights Condominium are being sued by the estate’s buyers for alleged breach of contract.

They face legal action by CapitaLand and Hotel Properties (HPL), which have agreed to buy the sprawling 607-unit estate in Alexandra Road.

The eight owners, who together own four units, had filed an application to the High Court last Monday. They want to know if a supplementary deal to the original collective sale agreement is valid.

The developers responded yesterday, claiming the action breached the owners’ contractual obligations, which includes an undertaking not to do anything detrimental to the sale process.

However, the owners argue that they need their question about the sale deal answered by the High Court before they can be said to have assumed such contractual obligations.

Their question stems from Gillman Heights’ unusually complex sale process, which involved two collective sale agreements. The original expired on June 22 last year, and a supplementary agreement was tacked on to extend it. Most majority sellers signed both; minority owners did not sign either one.

The eight owners being sued said they, and some others, signed the first deal but not the supplementary one.

They say they are caught in a unique position between the majority and minority owners. The group also claims that some of the signatures on the supplementary agreement came in after the deadline. If these tardy signings were excluded, the second agreement may not reach the required 80 per cent owners’ consent.

‘All they want is a judge to decide whether there was a valid extension or not, and if not, what are the consequences,’ said lawyer N.Sreenivasan of Straits Law, which is representing the eight owners.

‘Collective sales are in fact a form of compulsory acquisition, and even those who have signed the collective sale agreement have only agreed to tie themselves up for a fixed period of time.’

Mr Pang Tee Lian and his wife are among the eight owners facing legal action. Mr Pang, 59, said yesterday: ‘We know we’re fighting someone with very deep pockets, so we’re scared. But we’re also frustrated.’

‘In my mind, a collective sale is a win-win situation, with a happy seller and happy buyer. We’re not out to make an extra buck for the fun of it,’ added Mr Pang, a general manager at an architectural firm. ‘We just don’t know where we stand: Are we the majority or minority?’

In fact, groups representing both majority and minority owners have also clashed with CapitaLand and HPL, which last year agreed to pay $548 million for Gillman Heights.

At least one unhappy majority seller circulated letters among his neighbours earlier this year calling for a concerted action to invalidate the sale. CapitaLand

responded with a series of legal letters threatening to sue for breach of contract.

In the meantime, the condo’s minority owners want the High Court to overturn the sale, which got the go-ahead in December from the Strata Titles Board, the body that governs collective sales.

Their appeal hearing will take place next Monday.

This series of legal clashes is fast becoming an eerie echo of the prolonged tussle over the collective sale of Horizon Towers in Leonie Hill.

That struggle started last May after some majority owners tried to back out of the deal. They were subsequently sued by the buyers – which incidentally include HPL – while minority owners are now appealing against the sale.

Property row

‘We know we’re fighting someone with very deep pockets, so we’re scared. But we’re also frustrated…We just don’t know where we stand: Are we the majority or minority?’

MR PANG, explaining why he and seven other home owners filed the application to the High Court

‘Any extension must be very carefully scrutinised.’

MR N.SREENIVASAN of Straits Law, which is representing the home owners

Source: The Straits Times 21 Feb 08

Jurong Lake area: Big changes planned

URA in talks with stakeholders about plans for tourism, retail and entertainment centre

A WAVE of changes has been planned for Jurong Lake.

Government officials and industry captains have met and discussed the area’s potential as a commercial, retail and entertainment centre.

Preliminary discussions centred on developing office space, a commercial centre with retail shops, four to five hotels and a resort or theme park for Singaporeans and tourists alike – all clustered around the Chinese and Japanese gardens on the shores of Jurong Lake.

The site will also take in the 12ha area occupied by the now-defunct Tang Dynasty City theme park. Built at a cost of $100 million in 1991, it was forced to shut down in 1999 when it failed to pull in enough visitors.

When news broke last year that Tang Dynasty City was to be demolished, landlord Jurong Town Council and the Singapore Tourism Board said then that they were ‘evaluating the area for redevelopment’ into an attraction.

Multiple sources confirmed – on condition of anonymity – that a feedback session with more than 100 stakeholders was held last month on developing the area. At the session, the Urban Redevelopment Authority (URA) shared its proposed plans and sought reactions to it.

One source said: ‘The plan is to try and do something similar to what was done in Tampines – to have a commercial centre, but also to add leisure elements.’

Another source said Jurong Lake was at the heart of the proposed development, and the viability of a water theme park was discussed.

The Singapore Science Centre, in Jurong Town Hall Road since 1977, will also be moving, but it is unclear when this will happen or where it will move to.

Also unclear is the fate of Snow City. The Straits Times understands that Singapore’s first permanent indoor snow centre has a three-year lease and recently started turning in profits.

URA declined comment, but industry players who have heard about it are excited. A lakeside site, served by the East-West MRT line and near industrial parks and residential areas, is suitable for a mixed development, some said.

Source: The Straits Times 20 Feb 08

Parkway dives 8.3% on record bid for site

Winning bid of $1,600 psf ppr for Novena hospital site is over twice the second highest offer

 

SHARES of Parkway Holdings took a beating yesterday as concerns emerged that the healthcare provider might have overpaid for a hospital site at Novena.

Parkway’s stock slipped as much as 9.7 per cent yesterday following Friday’s news that the company had put in the top bid of $1.25 billion for a 1.7 ha site at Novena Terrace/Irrawaddy Road.

The stock ended the day down 30 cents, or 8.3 per cent, at $3.30. The Urban Redevelopment Authority (URA) officially awarded the site to Parkway yesterday.

Parkway’s bid, which works out to be about $1,600 per square foot per plot ratio (psf ppr) is a record price for land, and tops the previous record set by Australia’s Lend Lease, which paid $1,455 psf ppr for a commercial site above Somerset MRT station in August 2006.

The bullish bid was also more than twice the $540.9 million offered by second highest bidder, Napier Medical.

Analysts, who estimate that Parkway’s total development cost could be about $1.6 billion-$1.8 billion, said that Parkway had overpaid for the site.

‘We believe capacity constraints at Mount Elizabeth Hospital and Gleneagles Hospital have pressured Parkway Holdings to be overly aggressive to secure the site,’ said UOB-Kay Hian analyst Jonathan Koh. ‘Parkway also does not want a competitor to secure the hospital site.’

Mr Koh’s recommendation on Parkway is under review due to the massive bid. He previously had a ‘buy’ call on the stock.

Citigroup analyst Lim Jit Soon reiterated his ’sell’ call on the stock, pointing out that the project will stretch Parkway’s balance sheet.

‘Gearing could rise to 171 per cent even before development costs are factored in,’ Mr Lim said. ‘In a credit crunch environment, securing financing might be an issue.’

Mr Lim added that Parkway’s strategy could be to finance the development of the hospital by selling the medical suites to doctors at between $4,000 and $5,000 psf. But while this strategy could work, ‘the company will have to convince investors that it did not overpay for the site’, he said.

CIMB Research agreed that Parkway has overpaid, especially when looking at prices in the Novena area.

‘Compared to bids for land sites in the Novena area, (Parkway’s) bid is more than three times that of Far East Organization’s bid of $501.2 psf ppr for a hotel site at Sinaran Drive in January 2007 and Frasers Centrepoint’s bid of $506.9 psf ppr for a residential site at Sinaran Drive in July 2006,’ said analyst Tan Wei Ling.

Ms Tan cut Parkway’s target price to $4.19 from $4.53 due to rising risk aversion.

But she is maintaining Parkway’s ‘outperform’ rating for now due to the company’s growing regional franchise, good earnings prospects and relatively attractive dividend yields, she said.

 

Source: Business Times 19 Feb 08

Modest weekend sales at Waterfront Waves

IN A bellwether post-Budget property launch, Frasers Centrepoint and Far East Organization sold 20 units at the weekend at their Waterfront Waves condo fronting Bedok Reservoir. The project was officially launched at the weekend with the start of an advertising campaign.

The sales brought the total sold so far at the 99-year leasehold project to 100 units, including 80 sold earlier after the condo was soft launched around mid-January. So far, 180 units at the 405-unit development have been released.

The average price currently for the entire development is $750 per square foot after discounts, with the spread ranging from around $650 psf to $930 psf. However, for the 100 units sold so far, the average achieved is $801 psf, as they are among the better-facing units. About 85 per cent of buyers of the 100 units are Singaporeans and 35 per cent have existing HDB addresses.

Property industry watchers were keeping an eye on Waterfront Waves for an indication of buying sentiment after Friday’s Budget.

Some developers hoped the Budget would boost buyer confidence, paving the way for them to go ahead with launches they had held back because of sentiment dented by the stock market plunge and sub-prime woes.

While the 20 sales at the weekend seem modest, Frasers Centrepoint assistant general manager (sales & marketing) Elson Poon said the result was ‘within our expectations in view of current market sentiment’.

‘People are still cautious when it comes to making big-ticket purchases,’ he added.

The project’s pricing may have been a factor, market watchers reckon.

Mr Poon confirmed that the $801 psf average price achieved for the 100 units is a new high for a condo launch in the Bedok Reservoir area. Three-bedroom units at Waterfront Waves cost between $880,000 and just over $1 million.

Giving his take on the outcome for the maiden launch post-Budget, CB Richard Ellis executive director (residential) Joseph Tan said: ‘The buying mood is still cautious. But if you’re expecting a price correction, it may not happen for a while. The bulk of unlaunched projects are held by mainstream developers. They have the capacity to hold and control prices.’

Another property consultant said: ‘If there’s any price drop it may be started by smaller developers, who usually try not to hold. As long as they can make money, they’ll let go.’

 

Source: Business Times 19 Feb 08

Merchant Square and Waldorf Mansions up for sale

MERCHANT Square, a four-storey office building off Merchant Road, is up for sale with a guide price of $73 million.

With a total net lettable area (NLA) of about 50,262 square feet, the unit price works out to $1,450 psf of NLA.

The property, which was developed by carpet manufacturer Jackson Carpet and completed in 1996, sits on a land area of approximately 28,083 sq ft and has two levels of basement carparking for 76 vehicles.

CB Richard Ellis is marketing the 99-year leasehold building and its director (Investment Properties) Charles Hoon said the entry yield is about 2 per cent.

He added that while the average rental is $3.80 psf per month, new leases are being contracted at $6.50 – $7 psf per month.

The lease profile also shows that close to 50 per cent of the current leases will be expiring over the next two years.

‘Smallish mid-sized office buildings similar to Merchant Square present a good acquisition opportunity and remain sought-after amongst end-users in view of tight office space supply,’ Mr Hoon said.

The property is currently 96 per cent occupied and has as its anchor tenant cosmetics company Estee Lauder.

Waldorf Mansions at Balestier Road has also been put up for sale. The asking price is $21 million, or $659 per sq ft per plot ratio (psf ppr).

The freehold 11-storey block comprising 16 apartments has a site area of 11,384 sq ft, a plot ratio of 2.8, and maximum gross floor area of 31,876 sq ft.

The site is marketed by Realtorhub Real Estate (RH), whose executive director Daniel Ng said it can be redeveloped into a high-rise condominium with 26 units of about 1,200 sq ft each.

He added that the site is capable of being amalgamated with the two adjoining sites, Balestier Towers and Scenic Heights, to form a larger development.

Based on the asking price, Mr Ng said that the en bloc sellers will make a premium of about 33 per cent over the current market price for Waldorf Mansions.

In July last year, RH brokered the deal for nearby Ruby Plaza which was sold to Soilbuild Group for $69 million, or $582 psf ppr.

 

Source: Business Times 19 Feb 08

Maybank’s home loan rate cut sets cat among pigeons

Analysts divided on whether this will signal undercutting among the banks

(SINGAPORE) Maybank has fired a salvo that could shake up the home loan market here by slashing its rates.

This has led to speculation that banks might start to undercut each other to drum up business. Meanwhile, the banks themselves are adopting a cautious stance in a falling interest rate environment that could change direction.

For a three-week period, Maybank is launching a promotional three-year fixed rate home loan package which is the lowest of all the banks surveyed.

Home-owners pay 1.68 per cent per annum for the first year, 2.68 per cent pa for second year and 3.38 per cent pa for the third year. The rates apply to both HDB and private home loans. Homeowners are subject to a three-year lock-in period and fees will apply in case of early redemption, prepayment and cancellation during that time.

Before this promotion, the Qualifying Full Bank’s rates stood at 3.58 per cent pa for all three years. Maybank’s new first-year interest rate is about 40 per cent lower than similar packages being offered in the market (see table). But it has a lock-in period of three years while other banks generally have a two-year lock-in.

Helen Neo, head, consumer banking, Maybank Singapore, explained that interbank rates have softened over the past few months. ‘However, we expect interest rates to rebound in view of rising inflation in Singapore,’ she said.

‘Against a backdrop of potential rising interest rates, home loan customers who take up this fixed rate package will enjoy the prevailing low rates and are protected from future interest rate increases for the next three years.’

Mortgage rates are affected by the Singapore interbank offer rate (Sibor) – the rate at which banks lend to one another. Sibor has been on a downward trajectory since late last year, after hovering around 2.5 per cent.

Yesterday, the three-month Sibor fell to 1.44 per cent, its lowest level since December 2004. Economists say it is expected to go even lower by mid-year, partly due to the US steadily cutting its key interest rate. Sibor takes its cue from interest rates in the US, and last month the US Federal Reserve slashed its key interest rate from 4.25 per cent to 3.5 per cent, and then to 3 per cent.

Maybank’s move to reduce rates is prompting speculation among mortgage consultants that banks could follow suit with foreign banks leading the way. ‘I’m not surprised that this round of interest rate reductions is led by foreign banks again,’ said Dennis Ng, spokesman for Mortgage Consultancy Portal www.HousingLoanSG. com. ‘From past experience, local banks have typically lagged behind foreign banks in adjusting interest rates down.’ This is because the three local banks have the lion’s share of the housing loan market. ‘If they reduce interest rates, they have more to lose,’ said Mr Ng. While cutting rates would let them gain some more business, the advantage would be neutralised if their existing clients start paying lower rates.

But with Sibor falling, other banks could follow suit in lowering their interest rates, Mr Ng said. The last time banks were seen aggressively undercutting each other on rates was in 2003-2004, where foreign banks actively led the charge in introducing lower rates.

Leong Sze Hian, president of the Society of Financial Service Professionals, agreed that banks would be nudged into lowering their rates. ‘Sibor rates are dropping and once Maybank lowers its rates, everyone will follow, otherwise customers will move,’ he said.

However, consultants like Tang Yin Fong, a mortgage advisor at wealth and investment outfit Providend, said local banks already have Sibor-linked packages which track the movement of Sibor, and do not need to lower rates to be competitive.

‘Such packages have been relatively attractive in the current lowered Sibor environment and have since been the main packages that the banks recommend to homeowners,’ she explained.

She also added that in the current situation where the Singapore property market still seems to be on the rise and more homeowners are seeking mortgage loans, banks may be less willing to lower their interest rates.

Meanwhile, DBS Bank said it has ‘no plans to adjust rates’ for now, while OCBC and United Overseas Bank both said they would monitor the situation before making a decision.

Foreign banks Citibank and Standard Chartered shied away from saying if they will review rates but pointed to their Sibor packages, which they say give customers control in repricing loan packages. Stuart Kamp, head of mortgages, Standard Chartered Bank, added, ‘We expect interest rates to trend down over the coming months.’

 

Source: Business Times 19 Feb 08

278 HDB flats swamped by 9,900 applications

Unsuccessful buyers urged to consider build-to-order flats

THE Housing and Development Board received 9,900 applications for 278 flats offered in its February bi-monthly sale.

Most of the units offered are four-room flats, plus 64 five-room units and 20 executive flats in 13 estates.

There are 119 units in Toa Payoh and 39 in Tampines.

HDB said the strong demand was ‘because the flats offered are in established HDB towns which are popular with buyers, but the supply of new flats is tight as there is limited land available’.

HDB advised unsuccessful applicants to consider booking a flat under its build-to-order (BTO) scheme. About 4,500 flats will be launched under this scheme in the first half of the year.

More than 500 are still available from recent BTO launches at Punggol and Sengkang, such as Treelodge@Punggol, Fernvale Vista, Punggol Vista and Coral Spring.

HDB also suggested that buyers also consider resale flats, which it said still remain largely affordable. It said that in January, 25 per cent of resale transactions were completed at prices no more than $10,000 above valuation.

The recently closed sale is HDB’s fifth bi-monthly sale exercise for four-room and larger flats in the combined balloting/walk-in system. HDB is currently reviewing the scheme.

 

Source: Business Times 19 Feb 08

Amex signs up for Marina Bay Financial Centre

It is said to be taking 50,000 sq ft in Tower 2, in the project’s 1st phase

AMERICAN Express International is the latest new tenant at Marina Bay Financial Centre (MBFC), which means that slightly more than half of the total 2.9 million square feet of offices in the entire development has been taken up.

BT understands it will take about 50,000 sq ft or two floors in the 50-storey Tower 2, which is under MBFC’s first phase and slated for completion by early 2010. Amex will join British bank Barclays, Swiss private bank Pictet and UK-based stockbroking firm Icap as tenants in Tower 2.

Barclays is said to have agreed to lease about 100,000 sq ft or four floors in the tower, Icap is taking 35,000 sq ft and Pictet around 25,000 sq ft.

MBFC’s Tower 2 will have nearly one million sq ft of net lettable area (NLA).

The 33-storey Tower 1, also in the development’s first phase, has about 600,000 sq ft of NLA and is fully leased, mostly to Standard Chartered, which is taking 508,298 sq ft.

Smaller tenants in that tower include French corporate and investment bank Natixis, which is taking 65,000 sq ft, and Wellington International Management Co (21,000 sq ft).

DBS has leased about 700,000 sq ft in MBFC’s Tower 3 – which will be in the project’s second phase and slated for completion by early 2012.

Office leasing interest in Singapore since the start of the year does not seem to have been dented by sub-prime writedowns that have struck international banks. ‘Most banks still see Asia as a bright spot and will continue to invest in Asia,’ an executive with a major office landlord told BT.

CB Richard Ellis executive director (office services) Moray Armstrong, whose firm is the leasing agent for MBFC’s office space, declined to be drawn into speculating about the latest tenants at MBFC, when contacted by BT.

However, he said, there is a ‘healthy level of active leasing negotiations going on and further announcements are expected within the next three months’.

‘Generally, too, leasing momentum in the Singapore office market has carried forward from 2007. There has been relatively minor impact arising out of the external sub-prime crisis. There’s still plenty of activity and leasing negotiations in motion,’ he said.

CBRE data show that Grade A office rents in Singapore rose 96.5 per cent last year to hit $17.15 psf a month.

‘We expect a more modest rate of rental growth in the order of 15 to 20 per cent this year. Upside remains because of the severe shortage of available office space. But because rents have moved up so sharply, a more modest pace of growth is likely, combined with greater caution among occupiers, which is understandable. These twin factors will contribute to more moderate rental growth.’

American Express International Inc currently has operations at The Concourse while American Express Bank has operations at Hitachi Tower.

 

Source:

Amex signs up for Marina Bay Financial Centre

It is said to be taking 50,000 sq ft in Tower 2, in the project’s 1st phase

By KALPANA RASHIWALA

AMERICAN Express International is the latest new tenant at Marina Bay Financial Centre (MBFC), which means

that slightly more than half of the total 2.9 million square feet of offices in the entire development has been taken

up.

BT understands it will take about 50,000 sq ft or two floors in the 50-storey Tower 2, which is under MBFC’s first

phase and slated for completion by early 2010. Amex will join British bank Barclays, Swiss private bank Pictet and

UK-based stockbroking firm Icap as tenants in Tower 2.

Barclays is said to have agreed to lease about 100,000 sq ft or four floors in the tower, Icap is taking 35,000 sq ft

and Pictet around 25,000 sq ft.

MBFC’s Tower 2 will have nearly one million sq ft of net lettable area (NLA).

The 33-storey Tower 1, also in the development’s first phase, has about 600,000 sq ft of NLA and is fully leased,

mostly to Standard Chartered, which is taking 508,298 sq ft.

Smaller tenants in that tower include French corporate and investment bank Natixis, which is taking 65,000 sq ft,

and Wellington International Management Co (21,000 sq ft).

DBS has leased about 700,000 sq ft in MBFC’s Tower 3 – which will be in the project’s second phase and slated for

completion by early 2012.

Office leasing interest in Singapore since the start of the year does not seem to have been dented by sub-prime

writedowns that have struck international banks. ‘Most banks still see Asia as a bright spot and will continue to

invest in Asia,’ an executive with a major office landlord told BT.

CB Richard Ellis executive director (office services) Moray Armstrong, whose firm is the leasing agent for

MBFC’s office space, declined to be drawn into speculating about the latest tenants at MBFC, when contacted by

BT.

However, he said, there is a ‘healthy level of active leasing negotiations going on and further announcements are

expected within the next three months’.

‘Generally, too, leasing momentum in the Singapore office market has carried forward from 2007. There has been

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relatively minor impact arising out of the external sub-prime crisis. There’s still plenty of activity and leasing

negotiations in motion,’ he said.

CBRE data show that Grade A office rents in Singapore rose 96.5 per cent last year to hit $17.15 psf a month.

‘We expect a more modest rate of rental growth in the order of 15 to 20 per cent this year. Upside remains because

of the severe shortage of available office space. But because rents have moved up so sharply, a more modest pace

of growth is likely, combined with greater caution among occupiers, which is understandable. These twin factors

will contribute to more moderate rental growth.’

American Express International Inc currently has operations at The Concourse while American Express Bank has

operations at Hitachi Tower.

Two more govt agencies to vacate downtown offices

IDA, SLA making room for private businesses to ease office shortage

MORE help is on the way to ease Singapore’s office shortage, which has led to soaring rents.

At least two government agencies will give up their downtown offices to make room for private businesses that need more space.

The Infocomm Development Authority (IDA) will relinquish about a third of its 11,300 sq m office in Suntec City by moving some divisions to the Mica building in Hill Street by the end of the year.

Although it will still be close to town, IDA plans to move again in a few years to a ‘more appropriate location outside the central business area’ that can accommodate all its headquarters staff.

The Singapore Land Authority (SLA) is also planning to give up its seven floors at 8 Shenton Way, formerly Temasek Tower, although it has yet to find a new home. This is a considerably larger office space than the one IDA is vacating this year.

Other state departments may follow suit.

Finance Minister Tharman Shanmugaratnam said on Friday that the Government would move several agencies out of the central area by the first quarter of next year.

This will free up 20,000 sq m of precious prime office space for the private sector – equivalent to about 20 floors of a Suntec City office tower, Mr Tharman said in his Budget speech.

Although office space in the Republic is still cheaper on average than in Hong Kong or Tokyo, he said, the rate at which rents have risen has been ‘rapid and unsettling for businesses’.

Prime office rents shot up by 78 per cent on average last year, catapulting Singapore into the world’s top 10 most expensive office markets for the first time. The Republic jumped 10 spots to seventh place in the latest rankings, according to a report last week.

The Government has taken several steps to address the situation, including releasing temporary office sites and state properties, but these have had little noticeable effect so far.

Meanwhile, surging rents are also acting as a push factor for agencies that are relocating, especially those whose leases will expire soon.

The Economic Development Board (EDB), for example, is said to be firming up plans to move to Fusionopolis when its lease at Raffles City Tower is up next year.

Asking rents at Raffles City, where the EDB has been since 1985, have doubled in the last 15 months to about $17 per sq ft per month.

But other statutory boards that have ongoing leases – such as IE Singapore in Bugis Junction, whose lease extends to 2011 – will stay put.

Experts said this latest move would help relieve some of the immediate supply crunch, ahead of a slew of building completions expected in 2010 and beyond.

In particular, it will make things easier for firms already located in Suntec City or 8 Shenton Way that are looking to expand, said Ms Tay Huey Ying, director of research and consultancy at property firm Colliers International.

She added more agencies could jump onto the bandwagon.

‘Even those who own their own buildings could move out and lease out the offices, thereby releasing some space for the market and, at the same time, earning rental returns,’ she said.

Government offices still located downtown include the Ministries of Finance, Law, and Trade and Industry, all within the Treasury building in Hill Street next to Funan DigitaLife Mall.

There is ‘no real need’ for some of these departments to be in the central business district, and they could free up space for other occupiers who need the location more, said Mr Chua Yang Liang, head of research (South Asia) at Jones Lang LaSalle.

Merchant Square on sale for $73m

A MODEST office development with well-known cosmetics company Estee Lauder as its anchor tenant is up for sale at an indicative price of $73 million.

The price for the 99-year leasehold Merchant Square – located in Merchant Road, opposite Riverside Point – works out to $1,450 per sq ft (psf) of net lettable area.

The latest office property transaction in the vicinity involved the Apollo Centre, sold last December for $1,378 psf.

Merchant Square, completed in 1996, comprises a four-storey office tower integrated with two blocks of conserved shophouses.

CB Richard Ellis, which is marketing the property, said potential buyers can expect substantial rental appreciation in the short to medium term.

Nearly 50 per cent of the property’s leases will expire over the next two years.

Some of the leases were signed at rates as low as $3 to $4 psf, while others are at the current rates of $5 to $5.50 psf.

The Merchant Square vicinity is quiet – a far cry from the other side of the road where Riverside Point and Clarke Quay are located. It is currently 96 per cent occupied.

Estee Lauder takes up 1-1/2 floors, or about 15 per cent, of the space.

Merchant Square has a net lettable area of 50,262 sq ft and sits on a 28,083 sq ft plot. There are two basement carpark levels with 76 lots.

It was originally intended to be a retail project.

Back in 1995, however, owner Jackson International reportedly took advantage of the narrowing gap between office and retail rents to convert three of four shop floors in the development into offices.

Jackson owns one industrial building, but its main business is as a carpet and rugs distributor and manufacturer.

The tender for the property closes on March 12.

Source: The Straits Times 19 Feb 08

HDB flat still very affordable for average S’porean

Some get up to $88k in subsidies, says Mah Bow Tan; also flats still cheap enough for families to use CPF for full mortgage payments

PROPERTY prices may be on the rise but HDB flats still remain very affordable for the average Singaporean, National Development Minister Mah Bow Tan emphasised yesterday.

That is because families have access to subsidies which can go as high as $88,000 for some households, he noted.

And flats are still cheap enough for families to be able to fund their mortgage instalments entirely from Central Provident Fund (CPF) contributions – without the need to stump up cash.

Mr Mah made these points at a Chinese New Year dinner at the Tampines East Community Club yesterday.

With HDB resale prices rising about 17.5 per cent last year, he said he is well aware that younger Singaporeans are becoming increasingly concerned about the affordability of HDB flats.

He reiterated the Government’s commitment to providing affordable public housing and said there were two ways to achieve this.

One was to give big housing subsidies to help newly-weds buy their first HDB flat. The other was to provide mortgages at a concessionary interest rate.

In terms of subsidies, an Additional CPF Housing Grant (AHG) introduced in March 2006, provided lower income families with an additional grant of between $5,000 and $20,000 to buy their first HDB flat.

The income ceiling for this grant was raised from $3,000 to $4,000 to allow more families to benefit. And the grant limit was also increased by $10,000 so that the highest tier grant is now $30,000.

Mr Mah said: ‘A recent Ministry of Finance simulation estimated that the typical young low-income household could enjoy housing subsidies worth about $88,000.’

He also revealed that HDB’s records show that recent buyers of new HDB flats use only about 20 per cent of their monthly household income to service their housing loans.

‘This means that families can service their housing loan entirely from their CPF Ordinary Account contribution, without any cash outlay,’ he noted.

In any case, rising resale prices seem also to have stabilised for now so there is no need for buyers to rush in at this point, said Mr Mah.

‘The HDB Resale Price Index grew by only 1 per cent last month, and we expect prices to grow at a more moderate pace in 2008,’ he added.

Mr Mah also noted that the proportion of resale transactions with a positive cash over valuation, as well as the median cash over valuation also dipped marginally last month.

He said HDB will continue to monitor the situation closely.

 

Source: The Straits Times 18 Feb 08

PROPERTY: Where to find homes at or below $600,000

They include executive condos as well as older private apartments in suburban locations

THE property market has quietened considerably this year, but prices have yet to fall.

Nevertheless, if you have a modest budget of about $600,000 for a home, your choices are not just confined to HDB flats.

Some fairly new executive condominiums as well as older private condos or apartments are within reach, if you look hard enough.

These are typically 99-year leasehold properties in suburban locations such as Woodlands, Choa Chu Kang and Jurong.

Some city-fringe locations such as Geylang, where the red-light district is nestled, or small apartments in places such as Upper East Coast Road, may also offer some bargains. Landed homes, however, will require a bigger budget. So will new condo launches, unless you do not mind tiny studio apartments.

New versus Old

BUYERS tend to prefer buying new properties directly from developers, rather than old ones. They are drawn by the slick marketing promotions put out by developers and pay a premium for their new homes. But new properties may not be worth buying when you have a tight budget.

‘In 2006, all the record prices were achieved by new launches,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

‘Units at Ardmore Park, an older development which is in a very good location and is well-maintained, were transacted at much lower prices than those in new high-end condos in not-so-good locations.’

It is the same in suburban locations, as buyers pay more for what is new, he said.

The 99-year leasehold apartments at the 636-unit Maysprings in the Bukit Panjang area are mostly going for $650,000 and below. A year ago, they went for $500,000 and below.

The 17-year-old, 616-unit Orchid Park Condominium in Yishun, which faces Lower Seletar Reservoir, also had some units that went for around $600,000.

At the West Bay Condominium, a 936 sq ft unit was sold for $585,000 in January, while a bigger 1,216 sq ft unit went for $650,000.

Studio apartments, which can range from around 500 sq ft to 600 sq ft, can be bought for $600,000 or less.

The only problem is that there are not many of them in suburban projects, Mr Mak pointed out.

Private versus HDB

NOW that HDB prices have risen and there is overwhelming demand for new HDB flats, buyers may do well to consider private homes if they can afford them.

‘There will be growing demand for mass market properties as Singapore continues to create jobs,’ said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong. The opening of the two integrated resorts alone will create a significant number of entry-level jobs, he said.

‘Our unemployment rate is at a 10-year low, which means that we will need foreigners for some of these jobs,’ he said. ‘As long as rental values remain strong, capital values should also trend up.’

For those buyers who may one day want to rent out their homes, a private property could be a better choice than an HDB flat.

First of all, not everybody can buy an HDB flat. Also, there are leasing restrictions.

Yields may be higher for some HDB flats than private homes, but a private condo unit may be easier to rent out as condos usually come with amenities and security, property consultants said.

On average, net rental yields for private homes across Singapore are at 3.6 per cent, said Mr Mak.

Government data shows that the median rental rate in the fourth quarter of last year for Maysprings was $2.38 per sq ft a month. For a 904 sq ft unit at Maysprings, the rent would work out to $2,151 a month, or a 5.2 per cent gross yield.

The median rate was $2.09 psf for Orchid Park Condominium and $2.98 psf for West Bay Condominium.

Using this rate, the rent at West Bay Condominium would work out to $2,789 a month for a 936 sq ft unit.

Whether you are buying a property to live in or to rent out, know that you have a fair number of choices even if your budget is only $600,000.

 

Source: The Sunday Times 17 Feb 08

9 in 10 find S’pore an expensive place to live in

Respondents in Sunday Times poll blame higher cost of housing, transport, food and utilities

HOUSEWIFE Goh Lay Leng has seen her monthly grocery bills go up by 10 per cent, and that has prompted the mother of four to look for cheaper alternatives.

‘Everything is increasing and we’re spending more. My husband says there’s hardly any money left at the end of the month,’ said Madam Goh, 44.

Her engineer husband brings home about $5,000 a month and the family lives in a four-room flat in Pasir Ris.

A total of 91 per cent of the 353 respondents in a Sunday Times survey agreed with Madam Goh, saying that Singapore had become an expensive place to live in.

The survey had been conducted in late December to understand Singaporeans’ attitude to money.

Nine in 10 also felt that Singapore was an expensive place to raise a family. Less than half were confident that their living standard would improve in the next two years.

They blamed the higher cost of housing, transport and basic necessities such as food, water and power.

Almost half said that they felt the financial strain of servicing mortgages or rents, although 36 per cent were contented.

Nearly half felt that a family of four needed between $50,000 and $70,000 a year – or $4,167 to $5,833 a month – to live comfortably.

The latest figures from the Department of Statistics show that the average household’s income went up by 9.6 per cent last year, the biggest increase in at least a decade.

It rose to $6,280, up from $5,730 the year before. Families with higher incomes also had bigger pay hikes than those in lower-income households, widening the rich-poor gap.

Prime Minister Lee Hsien Loong said recently that he expected inflation this year to be 5 per cent or more. It was about 2 per cent last year.

MP Halimah Yacob said that the public’s mood may have been dampened by the continuing prospect of high inflation. But she was also heartened that Singaporeans were practical and prudent.

‘They think of investing in their children’s education and old age and that reflects that they do recognise the need to plan for the long term,’ she said.

Take 41-year-old Madam Zaina Mohammad. The part-time cashier and her Cisco officer husband’s combined monthly income is just $2,000, but the couple make sure they deposit $50 every month into each of their three children’s bank accounts for their education fund.

Like her, the priority for most Singaporeans is their children’s future. If they had a million dollars, 27 per cent said that they would spend most of the money on education.

One possible indication as to why their children’s education reigned supreme: More than half of those surveyed said that they were either not sure, or did not think that their children would be able to improve upon or afford their present lifestyle as adults.

Another indication of Singaporeans’ prudent and practical traits: More than four in five chose to save their surplus income every month.

Despite rising prices, nearly all the people polled had no plans to pack up for greener pastures.

Ninety per cent agreed that Singapore was still a place worth living in. Also, two in five were glad that Singapore had become one of the richest countries in the world, because it meant better public amenities, a more cosmopolitan society and a vibrant nightlife and cultural scene.

Despite having to scrimp and save, Madam Zaina isn’t going anywhere. ‘It’s peaceful here and it is our home after all,’ she said.

 

Source: The Sunday Times 17 Feb 08

BUDGET 2008: STRATEGY – Some govt units moving out to free up city space

20,000 sq m or more will be available to private sector

THE government has decided to relocate several agencies out of the Central Area to free up space of 20,000 square metres or more by first quarter next year for use by the private sector.

The space being released, which will help to address the office space shortage in the near term, is equivalent to 20 floors or more of an office tower block in Suntec City.

Finance Minister Tharman Shanmugaratnam did not identify the government agencies that will be moving out of the city but market watchers suggest that they may include Singapore Land Authority, which currently occupies several floors at Temasek Tower near Tanjong Pagar MRT Station; the Energy Market Authority, which is housed in Singapore Power Building on Somerset Road; Intellectual Property Office of Singapore, located at Plaza by The Park on Bras Basah Road; and Info-Communications Development Authority of Singapore, now at Suntec City.

The Workforce Development Agency, housed at One Marina Boulevard, has also been highlighted by market watchers as being a possible candidate for relocation out of its prime CBD offices.

The Economic Development Board is expected to vacate its offices at Raffles City when its lease expires next year and move into Fusionopolis at one-north in Buona Vista.

Market watchers suggest that some of these government agencies with public counters are likely to move to city fringe locations, rather than to outlying areas to minimise inconvenience to the public. ‘Vacant state properties could be their new homes,’ an industry observer reckons.

In his Budget speech, Mr Tharman noted that in the short term, Singapore faces tight office space capacity, caused by the surge in business growth, especially in the business and financial sector.

‘Office rentals have risen sharply. Although office space still costs 30 to 50 per cent less in Singapore on average, compared to Hong Kong and Tokyo, the pace of cost increases has been rapid and unsettling for businesses,’ he added.

‘The tightness in office space should ease over the medium term, with the completion of major projects currently under construction, such as phases one and two of the Marina Bay Financial Centre, the Marina View sites and South Beach. By 2012, we will have an additional 1.4 million sq m of office space.’

To address the problem in the short term, the government has released a total of 15 transitional office sites and vacant state properties, which will yield 150,000 sq m of additional office space. Companies are already relocating to some of these sites, and to new regional centres, Mr Tharman noted.

Source: Business Times 16 Feb 08

Parkway’s Novena bid poised to set govt land sales record

(SINGAPORE) Hospital operator Parkway Holdings looks set to shatter all records for government land sales (GLS) with its $1.25 billion bid for a hospital site at Novena.

Parkway’s bid, which works out to be about $1,600 per square foot per plot ratio (psf ppr), topped the previous record set by Australia’s Lend Lease, which paid $1,455 psf ppr (or $617.2 million) for a commercial site just above Somerset MRT Station in August 2006.

The Urban Redevelopment Authority (URA) will assess all bids and award the site in a few weeks’ time, but it is unlikely that Parkway’s bid will lose out to the two other bidders, Napier Medical and Raffles Medical Management, which put in bids of $694.5 psf ppr and $344.1 psf ppr respectively.

On its likely win, a spokesman for Parkway Holdings said: ‘We believe that the value we have placed in this tender reflects ParkwayHealth’s desire to enhance Singapore’s position as a global medical hub with leadership in specialist services.’

He added that the hospitals that it operates – East Shore, Gleneagles and Mount Elizabeth Hospitals – are operating at capacity and the new hospital will add beds and critical space needed.

The Novena site, which has a permissible gross floor area of 778,768 sq ft, is the first hospital site to have been launched in about 30 years. URA said that the last hospital site launched was at Mount Elizabeth in 1976.

Knight Frank director (research and consultancy) Nicholas Mak, who had earlier estimated that the Novena site could fetch bids of $770-860 psf ppr, said that it is difficult to price the site. However, he believes the broad range of bids received suggests that his estimated price would be closer to market expectations.

Mr Mak also noted that Parkway’s bid could boost the value of neighbouring properties, especially Novena Medical Centre, where medical suites sold for around $2,500-3,000 psf last year.

Parkway has not indicated that there could be medical suites for sale if it builds a hospital, but Mr Mak estimates these would have to sell for around $4,000 psf. He added that a unit at Mount Elizabeth Hospital recently sold for around $5,000 psf.

Still, Mr Mak does not believe Parkway’s record bid price will be used as a benchmark for future land sales, and may be considered more of an anomaly.

The possibility of injecting the new hospital into Parkway’s healthcare real estate investment trust, Parkway Life Reit, also seems unclear. ‘To put it in the Reit, the land price should be lower to make the deal yield accretive,’ he added.

Napier Medical director Mark Wee also ‘cannot fathom’ Parkway’s bid except to suggest that it could have been a defensive play against competition.

Based on Napier’s own projections, a new hospital would probably not make money for the first six years either.

 

Source: Business Times 16 Feb 08

Demand for mass market projects shifts into higher gear

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Developers not keen to release high-end projects in shaky market, say analysts

DEVELOPERS’ housing sales figures for January reflect a change in strategy to focus more on mass market projects.

Despite the still lacklustre figures for overall developer launches and sales last month, an analysis by Knight Frank shows the number of private homes (excluding executive condominiums) launched and sold in January in the Outside Central Region (covering traditional mass-market/suburban locations) rose 190 per cent and 123 per cent respectively from December 2007.

In contrast, launches and sales in the Core Central Region and Rest of Central Region fell in January, compared to December.

Given the dearth of activity in high-end locations, the Core Central Region suffered the biggest drop in median prices for units transacted during the month, with the figure halving to $1,623 per square foot in January, from $3,200 psf the previous month.

Elsewhere, median prices held steady, edging up 1.6 per cent to $1,053 psf in the Rest of Central Region and $811 psf in the Outside Central Region. The median prices include private homes as well as ECs.

Property consultants expect developers to continue to push out mass market projects, since demand fundamentals are stronger in this segment than the high-end sector, where buying traditionally emanates more from speculators.

‘Despite the more dismal global economic outlook, the employment rate in Singapore is still high and this will continue to support demand for mass market homes,’ says Colliers International director of research and consultancy Tay Huey Ying.

‘As for high- end/luxurious projects, developers are quite cautious and not so prepared to release them amid the current, uncertain market conditions. They will want to wait for better conditions before they launch these projects,’ she said.

Monthly data from the Urban Redevelopment Authority (URA) show developers sold a total 316 private homes (excluding ECs) in January, up slightly from 305 units in December, which was the lowest figure since URA began publishing developers’ monthly sales figures and prices in June 2007.

However, Colliers’ Ms Tay says that stripping out the bulk sale of 97 units at Goodwood Residence in December, the January sales figure was roughly a 52 per cent improvement from December.

January volume was boosted by the launch of new projects like Waterfront Waves at Bedok, which sold 79 units during the month, and Wilkie 80, which saw 50 units sold.

‘We observed that luxury prices remained firm despite a decline in sales volume. In the prime districts, units in Grange Infinite, Helios Residences, Hilltops and Scotts Square were sold at median prices between nearly $3,300 psf and $3,700 psf.

‘At Sentosa Cove, units in Marina Collection and Turquoise were sold at above $2,650 psf,’ says CB Richard Ellis executive director Li Hiaw Ho.

However, Knight Frank director (consultancy & research) Nicholas Mak points out that the number of homes priced above $4,000 psf sold by developers has fallen from 72 units last July to five units in December.

In January, there was not a single primary market transaction in this price range.

Colliers’ analysis shows the highest priced home sold in January was a $3,671 psf unit at Scotts Square, compared with $5,146 psf in December achieved at The Ritz-Carlton Residences, and the record $5,600 psf achieved for a unit at The Orchard Residences last October.

The number of new private homes (excluding ECs) developers launched in January sank to a low of 410 units, about 8 per cent less than the 446 units in December and about a fifth of the high of 1,885 units in August last year.

Property consultants suggest developer sales in February may be lower than those in January because of the Chinese New Year.

‘However, developers are likely to maintain prices at current levels as they monitor the market situation,’ CBRE’s Mr Li says.

 

Source: Business Times 16 Feb 08

BUDGET 2008: More office sites in the offing to ease space crunch

AT LEAST 20,000 sq m of office space – equivalent to 20 floors or more of an Suntec City block – will be freed up to help the private sector deal with the space crunch.

The initiative will kick in by early next year.

Finance Minister Tharman Shanmugaratnam said the tight supply of office space, a short-term problem, stemmed from the surge in business growth, which has brought higher rents in its wake.

‘Although office space on average still costs 30 per cent to 50 per cent less in Singapore than in Hong Kong and Tokyo, the pace of cost increases has been rapid and unsettling for businesses,’ said Mr Tharman.

The Government is even planning to relocate several agencies out of the pricey and congested central business district (CBD). A Jones Lang LaSalle report said these could include the Economic Development Board at Raffles City, the Singapore Land Authority at Temasek Tower, and the Ministry of Law and Ministry of Finance at The Treasury.

Mr Donald Han, the Singapore managing director of property consultant Cushman & Wakefield, said the move was a practical one: ‘It’ll create some breathing space for the private sector. Government agencies will be better off, as they won’t need to incur the opportunity cost of prime CBD rental.’

Mr Tharman said the Government has released 15 transitional office sites and vacant state properties, which will yield 150,000 sq m of additional office space.

‘Companies are already relocating to some of these sites and to our new regional centres,’ he said.

He noted that the shortage should ease over the medium term, given the completion of big projects now under construction. These include Phases 1 and 2 of the Marina Bay Financial Centre, the Marina View sites and South Beach.

‘By 2012, we will have an additional 1.4 million sq m of office space,’ said Mr Tharman.

The Government will also defer projects worth about $1 billion to ease the pressure on construction costs. This follows a decision last November to postpone public-sector building projects worth at least $2 billion.

But the latest deferment will not affect key projects such as the expressways, the Downtown Line or NUS University Town.

 

Source: The Straits Times 16 Feb 08

New home sales remain low with cautious property market

Developers launching fewer units as fears over US slowdown, stock volatility linger

CAUTION remains the watchword in the property market, with buyers still kept on the sidelines by concerns over the United States economy and choppy stock markets.

Developers sold just 316 new homes last month – a tad up on the 305 sold in December – and launched only 410 units, compared with December’s 445.

Prices also reflected the uncertain mood and remained largely flat, with overall median prices showing a slight dip.

The removal of the deferred payment scheme has brought transactions to a more sustainable level, according to property services firm Jones Lang LaSalle.

There were some bright spots. Wilkie 80 in Wilkie Road was sold out, while Waterfront Waves in Bedok Reservoir Road reported favourable sales. They made up 41 per cent of all new units sold last month, according to the sales figures out yesterday.

The pinch was felt most in the high-end sector, with few homes sold and none above $4,000 per sq ft (psf).

This is a sign that the high-end segment may be experiencing a ‘challenging period’, said Knight Frank director of research and consultancy Nicholas Mak.

The new figures, which came from developers but were released by the Urban Redevelopment Authority, show that some of the heat may have come out of the market.

Median prices for new private homes, excluding executive condos and landed homes, fell 3.2 per cent from $1,124 psf in December to $1,088 psf last month.

The lowest transacted price was $737 psf for a unit at Coastal View Residences in Jalan Loyang Besar, while Scotts Square in Scotts Road achieved the highest at $3,671.

Projects outside the central region performed best. There were more sales, and the 220 units launched marked the highest since last August.

Buyers at the leasehold Waterfront Waves picked up 79 units and pushed prices up to $909 psf.

In the mid-end segment, Wilkie 80 was sold out at a median price of $1,544 psf. Zenith in Zion Road, launched in December, sold 22 units, while 12 out of 50 units at Mount Sophia Suites went for a median price of $1,719 psf. At the landed project Pavilion Park, 24 terrace houses sold at between $1.8 million and $2 million.

Consultants project lower sales this month, as the Chinese New Year festival will deter buyers from venturing into the market.

‘However, developers are likely to maintain prices at current levels as they monitor the market situation,’ said Mr Li Hiaw Ho, the executive director of CBRE Research.

Mr Mak expects sales volume for the first quarter to remain thin due to uncertainties over the US economy and stock market turbulence. More developers are delaying or reviewing launches, particularly high-end ones.

‘The challenging period experienced in the high-end segment is expected to continue, but the fall in the volume could be compensated by the steady volume in the other segments,’ he added.

Colliers International director for research and consultancy Tay Huey Ying said: ‘We see the mass and mid-end segments supported by en bloc sellers looking for replacement homes.’

Developers could end up launching and selling up to 9,000 new private homes this year, compared with 14,811 last year, she said.

 

Source: The Straits Times 16 Feb 08

Robust economy, property market lead to $6.4b surplus

THE Government racked up a Budget surplus of $6.45 billion last year, the highest since 1994, outdoing even the most bullish of market forecasts.

Unexpectedly strong economic growth and a runaway property market sent tax revenues surging, putting paid to an initial projection of a $700 million deficit.

But such a sizzling performance is not expected in the next financial year, with an $800 million deficit pencilled once handouts and changes announced in the Budget are accounted for.

Economists, who were predicting a surplus of between $4 billion and $5 billion, said they were caught out by higher-than-expected consumption and real estate-related tax collections.

They were also surprised by the size of ‘budget hongbaos’ that will be given out next year. ‘It’s a very generous Budget, with much more special transfers than last year,’ said United Overseas Bank (UOB) economist Ho Woei Chen.

Finance Minister Tharman Shanmugaratnam yesterday told Parliament the unexpected surplus came on the back of exceptionally strong economic growth.

‘We started the year expecting a growth rate of 4.5 to 6.5 per cent, which was also in line with market forecasts. With actual growth at 7.7 per cent, corporate and personal income taxes came in some $1 billion higher than projected.’

As anticipated, strong company profits sent income tax collections from businesses up 6.2 per cent to $9 billion despite a cut in the corporate tax rate from 20 per cent to 18 per cent.

Bigger wages and a tight job market sent personal income tax revenues up 18.1 per cent to $5.56 billion.

The strong economy also boosted goods and services tax (GST) revenues.

While a rise was factored in, given last July’s GST hike from 5 per cent to 7 per cent, the final figure was $1.2 billion higher than initial estimates. This, said Mr Tharman, was due mostly to higher consumption.

He added that the rate hike raised $1.4 billion in revenues, matching the size of benefits paid out in the year through the GST Offset Package and Workfare.

Economists said a buoyant economy enabled retailers to raise prices to pass on the GST hike. The higher prices, in turn, translated into more GST paid.

But the biggest surprise came from the red-hot property market, said Mr Tharman. Stamp duty rose to a record $3.8 billion, $2.3 billion higher than expected. Other property-related revenues also clocked in $1.1 billion above projections.

‘These were large gains, out of the ordinary, and which we cannot expect to see very often,’ he said.

UOB’s Ms Ho noted that net investment income contributions seemed low at $2.3 billion, given buoyant markets last year. ‘It’s the lowest since Sars-hit 2003.’

Mr Tharman said the Government is amending the Constitutional framework to let it draw on more investment income from its reserves. This would allow it to further enhance tax competitiveness.

A Bill will go before Parliament later this year.

In the year ahead, operating revenues are predicted to inch up 0.5 per cent. Spending will rise 12.5 per cent and special transfers will more than double.

Citigroup economist Chua Hak Bin said the estimates are very conservative as in previous years. ‘We could see another surplus next year.’

 

Source: The Straits Times 16 Feb 08

Playfair Rd site gets bullish top bid of $142 psf ppr

Sim Lian unit’s offer is whopping 63% above second highest bid

A 60-YEAR leasehold industrial site at Playfair Road has attracted a top bid of $142 per square foot per plot ratio (psf ppr) from Sim Lian Development unit Trio Link Development – a record price for such a site in the Ubi/Paya Lebar/Eunos area.

The tender for the 92,870 sq ft reserve-list plot attracted 12 bids, reflecting growing interest in industrial property as it comes into play amid the breather in residential and office values, says Colliers International director (industrial) Tan Boon Leong.

Sim Lian’s top bid of $33 million, or $142.13 psf ppr, was a huge 63 per cent above the next highest bid of $20.23 million, or $87.13 psf ppr, by Orion-Three Development.

Orion group, which is linked to Indonesian interests, has also been active in state tenders for industrial sites. It clinched plots at Serangoon North Ave 4 and Changi North St 1 in 2006.

Asked about Sim Lian’s aggressive bidding in yesterday’s tender, executive director Ken Kuik said the company had been encouraged by recent demand for strata-titled flatted and ramp-up factories at its Vertex project at Ubi Ave 4/Ubi Link.

‘We’ve sold about 160 of the 200 units released since September last year, achieving an average price of about $330 psf,’ he said.

The eight-storey property has 552 strata-titled units. Sim Lian is developing it on a 60-year leasehold site it won at a state tender in 2006.

Like the Playfair Road site contested yesterday, the Ubi plot is zoned for Business 1, allowing clean and light industrial and warehouse uses.

Mr Kuik said Sim Lian plans to develop the Playfair Road plot into a 13-storey project with strata-titled units for sale.

He noted that the site is just a few minutes’ walk from Upper Paya Lebar MRT Station on the Circle Line.

Colliers’ Mr Tan estimates Sim Lian’s breakeven cost could be around $260 psf, considering the saleable area for such industrial developments can exceed the maximum permitted gross floor area by 15-20 per cent after factoring in features like terraced areas and air-con ledges.

‘This is the first time a 60-year leasehold industrial site is being sold in the area, which traditionally has freehold industrial properties. That may have added to the plot’s attraction,’ he suggested.

Property consultants say the $142 psf ppr that Sim Lian offered for the Playfair plot surpasses the last high achieved in the Ubi/Paya Lebar/Eunos area – $85.50 psf ppr for a 60-year plot at Eunos Link/Kaki Bukit Avenue 1 in 1996.

However, yesterday’s top bid is still shy of the island-wide high of $170 psf ppr achieved late last year for a 30-year leasehold site near Commonwealth MRT Station.

The other bidders in yesterday’s tender were KNG Development, Soilbuild Group, Prosperity Realty (linked to Hotel Royal’s Lee family), HLH Development & Brothers (Holdings), Superbowl Land, See Young Investments, Lian Beng Group unit LB Property, Boustead Projects, Boon Keng Development and  Lim Huay Ren, which placed the lowest bid of $12 million or $51.68 psf ppr.

 

Source: Business Times 15 Feb 08

Revision of DC rates expected to be ‘moderate’

Consultants project smaller DC rate rise for residential and commercial use

THE coming March 1 revision of development charge (DC) rates – payable to enhance the use of sites or build bigger projects on them – is generally expected to be more moderate than the past couple of revisions, which imposed steep rises.

That’s because on the whole, land price increases have slowed considerably in the the past few months. And collective sales, which traditionally account for the lion’s share of private-sector land sales, have virtually ground to a halt, property consultants have told BT.

‘We believe collective sale brokers are unlikely to feel inspired by the upcoming DC rate revisions,’ says Jones Lang LaSalle’s regional director and head of investments Lui Seng Fatt.

Most consultants project smaller average DC rate increases for residential and commercial use this time. However, JLL is predicting bigger hikes for industrial and hotel use, as hotel and industrial sites sold at government land sale (GLS) tenders in recent months have fetched top bids significantly higher than the land values implied by current DC rates.

This can be attributed to the shortage of hotel rooms and strong demand for industrial space by office tenants looking for cheaper backroom space, says JLL’s head of research (South-east Asia) Chua Yang Liang.

For non-landed residential use, JLL reckons the average DC rate will go up just about 5 per cent come March 1, compared with the 58 per cent hike that took effect on Sept 1, 2007.

CB Richard Ellis executive director (investment sales) Jeremy Lake also reckons that on the whole, non-landed residential DC rates are unlikely to rise significantly, although there may be hikes in locations where land sales have taken place at prices significantly above values implied by the prevailing Sept 1, 2007 DC rates.

Market watchers point to examples such as Westwood Apartments in Orchard Boulevard, Toho Garden in Yio Chu Kang Road and 15 terrace houses at Jalan Bunga Raya in the Balestier/Novena area.

Agreeing, Credo Real Estate executive director Yong Choon Fah says the increases for such locations could be in the order of 30-40 per cent, while the average islandwide hike will be much smaller at 5-20 per cent.

DC rates – revised every six months, on March 1 and Sept 1 – are listed according to use (for example, non-landed residential, commercial, and industrial) and 118 locations across Singapore.

Savills Singapore director Steven Ming, who predicts a 0-10 per cent rise in the average non-landed residential DC rate, reckons both prime and suburban/mass-market areas will see only moderate increases.

However, bigger rises may be seen in mid-tier locations like Pasir Panjang, Balestier, Upper Bukit Timah, Hillview and Upper Thomson, where condo prices have risen 20-40 per cent in the past six months.

For landed residential use, JLL projects the average increase this time could be 8-15 per cent – again lower than the 11.3 per cent rise in Sept 2007.

Jones Lang LaSalle expects the rates for places like Dunsfold Drive and Binchang Rise in the Bishan/Ang Mo Kio area, Sentosa and Chestnut Drive to increase about 20-25 per cent, as market values of landed properties in these locations are significantly above the values implied by prevailing DC rates.

JLL reckons that after a 42 per cent spike in the average commercial-use DC rate on Sept 1 last year, the rate could still rise a further 30-35 per cent come March 1. However, it believes rates may generally stay put in the central business district (CBD), and expects increases mostly in suburban locations, particularly in the Jalan Sultan and Toa Payoh areas. In the past few months in these areas, commercial GLS sites have been sold at prices more than double the land values implied by prevailing DC rates.

Agreeing, Credo’s Ms Yong sees the islandwide increase in commercial DC rates around 5-15 per cent, with increases mostly outside the CBD.

Market watchers highlight the sharply different top bids for two white sites – with stipulated minimum office components – at Marina View in the CBD sold just three months apart late last year, reflecting how swiftly investor sentiment in the office market turned cautious.

JLL estimates industrial DC rates will appreciate around 30 per cent on average, compared with a 2.2 per cent increase last round. It also expects the average hotel DC rate to go up 30-35 per cent, after a 23 per cent hike last round, pointing out that hotel sites offered under the GLS programme at Upper Pickering Street and New Market Road/Merchant Road have been sold at premiums of 80 and 64 per cent respectively above prevailing DC rate based land values.

The coming round of DC rate revisions will have ‘minimum impact on the already slowing collective sales market’, according to Savills’ Mr Ming.

But for en bloc sites with a significant DC component, and where the reserve price has been fixed by owners, a substantial DC increase will make it even harder to find takers, says Credo’s Ms Yong.

JLL’s Dr Chua reckons owners of properties in fast-changing neighbourhoods like Buona Vista and Telok Blangah – and possibly Paya Lebar and Jurong East, which are earmarked by the government for development into business hubs – will be watching the coming DC rate changes as they may set the tone for potential change-of-use applications.

Potential bidders for reserve list sites under the GLS programme will also be watching the revisions to get a sense of the Chief Valuer’s sentiment before making any applications for these sites to be released, says Dr Chua.

 Source: Business Times 14 Feb 08

S’pore world’s 7th most expensive office location

Prime office rents rose 78% last year to US$130.48 psf per annum: report

SINGAPORE has jumped 10 places to become the world’s seventh-most expensive office location.

According to Cushman & Wakefield’s (C&W) report on office occupancy costs, prime office rents rose 78 per cent in Singapore last year. Occupancy costs are now at US$130.48 psf per annum, up from US$954 psf per annum in 2006.

Rental increases here were the fifth highest globally last year, after locations in Turkey and Norway. However, Singapore still ranks below London, Hong Kong, Tokyo, Mumbai, Moscow and Paris in terms of occupancy costs.

London remains on the top of the list, with occupancy costs rising 30 per cent to US$312 psf per annum followed by Hong Kong, with an increase in occupancy costs of 40 per cent to US$238.58 psf per annum.

Paris, which was put in sixth place, registered occupational costs of US$141.57 psf per annum.

C&W executive managing director (South-east Asia) Arsh Chaudhury said that rental growth in Singapore was led by strong demand from the banking and services sectors coupled with limited supply of quality office space.

He said: ‘Whilst the effect of a US slowdown on Asia will be muted, the uncertainty of growth plans of US institutions, especially banks, may possibly result in an easing of demand.’

But he said that C&W expects the upward trend in rents to continue, albeit at a slower pace.

The C&W report compares office occupancy costs in 203 locations in 58 countries. New entries include Kyiv in Ukraine at 16th place with occupancy costs at US$78.22 psf per annum, and Ho Chi Minh City in Vietnam at 17th place with occupancy costs at $75.81 psf per annum.

Of these 203 locations, 79 per cent registered rental growth, 20 per cent showed stable growth and only one per cent experienced a fall in rentals compared to 6 per cent in 2006.

Perhaps also interesting to note is that of the bottom 10 locations in C&W’s list of 58 countries, neighbouring South-east Asian cities took up four spots.

Bangkok took the 58th position, with office occupancy costs at US$26.52 psf per annum, preceded by Jakarta, at 57th position with occupancy costs at US$26.54 psf per annum, Manila in 50th place with occupancy costs at US $33.75, and Kuala Lumpur 49th, with occupancy costs at US$34.39 psf per annum.

Source: Business Times 14 Feb 08

S’pore is world’s seventh most expensive office market

It jumps 10 spots in global ranking of occupancy costs by property consultancy

SINGAPORE has moved into the global top 10 most expensive office markets for the first time due to a severe office shortage.

A survey of office costs in 203 locations in 58 countries by global real estate consultancy Cushman & Wakefield saw the Republic jump 10 places to seventh spot.

This came after prime rents shot up by 78 per cent, on average, due to the tight supply.

The consultancy found that occupancy costs in Singapore – which include rents and other costs of running an office – hit an annual average of about US$130 per sq ft (psf).

Office rents, the largest component of occupancy costs, rose 40 per cent on average in the world’s top 10 office locations, it said.

Office rental rises in Singapore were also led by strong demand from the banking and services sectors, said Cushman & Wakefield’s annual Office Space Across The World report.

Worldwide, rents climbed by 14 per cent on average, compared with 10 per cent in 2006, it said.

London’s West End – where rents rose 30 per cent last year – remains the most expensive office location in the world, followed by Hong Kong, then Tokyo. Mumbai, Moscow and Paris were next on the ranking.

Another fast-rising Asian centre, Ho Chi Minh City, is now at 17th spot, with occupancy costs at US$75.81 psf a year, ahead of Sydney, Seoul and Shanghai.

The strong performances in India and Vietnam helped the Asia-Pacific region to achieve the strongest regional growth, with rents up 23 per cent over the course of last year.

Of the 203 locations Cushman & Wakefield surveyed last year, 79 per cent showed rental growth.

Singapore registered the fifth-highest increase in office rents in the world. Istanbul’s Levent district registered a 95 per cent rise in office rents, which was the highest annual growth in all locations.

‘Last year saw the fastest level of growth in office occupancy costs in many of the world’s top locations since the turn of the property cycle in 2001, with the strongest demand coming from the financial sector,’ said the firm’s head of business space research and consultancy, Ms Elaine Rossall.

‘We are unlikely to know the full effects of the current credit squeeze on the world’s main office locations until further into 2008.’

But last year’s strong rental growth is expected to ease this year, she said.

In Singapore, the United States sub-prime crisis has affected the expansion plans of some firms.

Last year, up to nine out of 10 companies had expansion plans. ‘But now, we could perhaps see five out of 10 companies looking to expand,’ said Mr Donald Han, Singapore managing director of Cushman & Wakefield.

‘We are still seeing new firms being set up, and these firms in the financial services sector must have a Raffles Place address.’

Office rental increases will be more moderate this year and next year, he added.

Instead of a 78 per cent rise in occupancy costs to US$130.48 psf a year – or about $15.44 psf a month on average – a 20 per cent increase is likely this year, he said.

But recent rental deals done at coveted buildings in Singapore, such as Republic Plaza and Millenia Tower, have already surpassed average levels.

For instance, the asking rents at Centennial Tower are now hovering at around $18.50 psf or more.

In Raffles Place, the asking rents for some prime Grade A office space have crossed the $20 psf mark.

Some tenants have complained that their office rents rose by as much as three times or even more when their leases came up for renewal.

The majority of Raffles Place office buildings are operating at 98 per cent to 99 per cent occupancy, so rents will not come down before a major chunk of supply comes onstream in 2010, said Mr Han.

That is when phase 1 of the huge Marina Bay Financial Centre will be ready.

Because of the steep increases, some bigger space occupiers are moving their non-frontline operations to suburban locations.

Some are reconfiguring their work space to make better use of it, property consultants said.

Others are looking to relocate to fringe areas or industrial locations.

These include the Beach Road corridor, conservation shophouses, business parks and transitional sites, where rentals are generally going at single digits – which is hard to find in Raffles Place.

 

Source: The Straits Times 14 Feb 08

Construction on MRT Downtown Line starts, ready by 2013

A GROUNDBREAKING ceremony in Chinatown yesterday marked the start of construction of the $12billion, 40-kilometre Downtown MRT line.

The ceremony, conducted by the Land Transport Authority (LTA), took place at the Chinatown station on Downtown Line (DTL) Stage 1. Chinatown is one of six stations on the 4.3km fully underground line, which is scheduled to be completed by 2013. The other stations are Cross Street, Landmark, Bayfront, Promenade and Bugis.

‘The DTL will enable commuters on all existing MRT lines to transfer to the DTL with ease at designated interchanges,’ said LTA chairman Michael Lim.

‘By 2013, the completed DTL1 will link commuters to the exciting developments in Marina Bay, such as the Business Financial Centre and (Marina Bay) Sands Resort, as well as the Central Business District.’

The LTA says DTL1 will run through some of the busiest corridors in the city, easing congestion at major interchanges like Dhoby Ghaut and Raffles Place interchanges.

Five contracts, worth a total of $1.18 billion, have been awarded for DTL1. Two others, for Bugis and Promenade stations, will be awarded by the end of this year.

The DTL will be built in three stages, with Stage 2 to be completed in 2015 and Stage 3 in 2016. When fully completed, the DTL will strengthen the connectivity of the Rapid Transit System network and facilitate direct travel from the north-western and eastern areas of the island to the CBD and Marina Bay.

The DTL is expected to cater to over 500,000 passengers each day when fully operational.

‘The DTL is one of several extensive new rail and road projects that will be a significant boon to Singapore’s transport network, and to the economy,’ Mr Lim said.

The government has committed $20 billion for the DTL, as well as the in-progress Boon Lay Extension and Circle Line. Other plans include the Thomson Line, and extensions to the North-South line and East-West line.

By 2020, Singapore’s rail line will have doubled in length to 278km, said Mr Lim.

 

Source: Business Times 13 Feb 08

Some small property launches but most still hold back

Developers selling projects abroad first before launching them in Singapore

PROPERTY developers are starting to gingerly test the volatile market with a few launches now that the festive season is behind them.

Those dipping their toes into the choppy waters, however, are mostly offering smaller projects away from the prime areas, said property agents.

Home seekers may have to wait a bit longer for major launches, with the earliest set for next month or April.

Meanwhile, developers waiting for the market to regain momentum are selling Singapore projects overseas before launching them locally, said Mr Ku

Swee Yong, director of business development and marketing at Savills Singapore.

‘Developers are still waiting for the stock market here to settle down,’ said Mr Ku.

Savills is dispatching a large sales team to Dubai next week to market Skypark at St Thomas Walk, CapitaLand’s condo on the Silver Tower site in Cairnhill, and the units Kuwait Finance House bought in Reflections at Keppel Bay and Goodwood Residences last year.

For local buyers, one project likely to be launched within weeks is the 47-unit Cosmo at Guillemard Lane.

Prices could be $1,100 to $1,200 per sq ft (psf), said Mr Patrick Oei, associate group director for Huttons Real Estate, which is marketing the project.

Another upcoming launch is that of the 108-unit Verve Residences near Jalan Rajah, with prices likely to range from $900 to $1,100 psf.

These prices are similar to recent transactions in each area, showing that levels are still holding steady.

Homebuyers also picked up a few units in three freehold boutique projects launched in Telok Kurau recently.

One is the 28-unit Costa Este, which is selling at $663 to $980 psf. The others are Palm Galleria and Espira Spring, launched during the Chinese New Year weekend with average prices of $850 to $870 psf.

Generally, smaller projects have done well, even in shaky market conditions, said Mr Oei, citing Casa Fortuna in Balestier and Wilkie 80 in Wilkie Road. Both were sold out within three days of their launches late last year.

The 106-unit Casa Fortuna sold at about $1,000 psf, while Wilkie 80’s 50 units were taken up at $1,500 to almost $1,800 psf, Mr Oei said.

As for bigger projects, the first phase of Waterfront Waves at Bedok Reservoir will be officially launched this weekend. Prices for the 60-odd units still unsold will rise marginally from the current average of $750 psf, said Ms Kellie Liew, a project director at HSR Property Group.

The next brand-new launch may be Frasers Centrepoint’s Martin Place Residences in Kim Yam Road, due next month. Staff previews for the 302-unit condo started last month, at $1,800 to $2,300 psf.

Other launches to look out for include the delayed Marina Bay Suites and Ho Bee’s project at Dakota Crescent.

Not all industry players, though, have high hopes for upcoming launches. ‘The market is really quiet,’ said one agent. ‘Showflat crowds have thinned out to five or 10 people at a time. We’re still placing advertisements, but no telephone calls are coming in.’

 

Source: The Straits Times 13 Feb 08

Stanchart joining quest for space in Changi

Bank seeks to build complex of up to 400,000 sq ft to house backroom operations: sources

STANDARD Chartered looks set to be the next financial institution to head out east to Changi Business Park (CBP), which is fast becoming a hub for financial backroom operations.

Already, Citibank, Credit Suisse, DBS and OCBC have either staked their claims on space there, or are in the process of doing so.

As for Standard Chartered, sources say that it is looking to build a complex of between 300,000 and 400,000 sq ft to consolidate its backroom operations currently spread out in locations like Tampines, Bukit Merah and Bras Basah.

It is also understood that the bank expects to increase its headcount when it expands its offices to CBP.

It has already committed to take up over 500,000 sq ft of space at the upcoming Marina Bay Financial Centre.

Industrial and business parks developer Ascendas, which is a subsidiary of JTC Corporation, is said to be the developer of Standard Chartered’s CBP offices.

It will be a built-to-suit building which will be leased to Standard Chartered in a similar way that Ascendas Real Estate Investment Trust (in which Ascendas holds a 60 per cent stake) is developing and leasing to Citibank its new backroom office space at CBP.

Earlier, Citigroup said it would invest $220 million to cover the capital, relocation, rental and operating costs of the new CBP office and will lease the space until 2016 and has an option to extend its lease for another six years.

CBP is a 66.54 ha business park which currently comprises around 60 development plots. JTC revealed earlier that about 50 per cent of these have already been allocated. While it is not clear which plot will be the site for Standard Chartered’s new backroom office, a JTC map of the area reveals that Ascendas has been allocated plots near The Signature, which is also near Expo MRT Station.

Other plans afoot at CBP include a hotel.

While the idea of a hotel was first mooted several years ago, there was little interest from industry players then.

It is understood that interest for a hotel has now been revived with CBP growing to become more than just a business park.

Cushman & Wakefield managing director Donald Han believes that while CBP may not have the critical mass to become a sub-regional town centre, it could become a fringe commercial centre along the lines of Harbourfront or Alexandra Road which Mr Han believes came about through ‘organic growth’.

With more businesses moving to CBP, Mr Han says that the authorities may have to, ‘over time, transform CBP into a fringe centre too’.

Mr Han also believes that in the process, Singapore Expo could be amalgamated to create the critical mass that will sustain support functions like the hotel as well as retail facilities.

For now, however, Mr Han reckons CBP is still ‘a bit disconnected’.

 

Source: Business Times 12 Feb 08

HDB offers 278 flats for sale

By end of yesterday, there were 2,224 online applications

THE Housing and Development Board launched the sale of 278 flats in various towns and estates yesterday. And by the end of the day the units were many times subscribed, with 2,224 online applications received.

Most of the units are four-room flats, plus 64 five-room units and 20 executive flats. They are spread over 13 estates.

Toa Payoh had the largest number of flats available at 119, followed by Tampines with 39 and Bukit Merah with 30.

Cushman & Wakefield managing director Donald Han said: ‘Obviously we’re seeing a better response for mature estates in fairly central locations. These are the first to experience demand and price increases.’

This is HDB’s fifth bi-monthly sales exercise for four-room and bigger flats under the combined balloting/walk-in system. Some 3,350 units have been offered so far.

In the first four exercises, 2,917 of the 3,034 units offered were selected, representing a take-up rate of 96 per cent.

There is also healthy demand for HDB’s build-to-order (BTO) flats. The 698-unit Coral Spring @ Sengkang, launched in September 2007, is about 70 per cent taken up, with just 200 units remaining. ERA Singapore assistant vice-president Eugene Lim said this is ‘not bad’ considering the location.

The strong economy has helped boost BTO and bi-monthly sales. But Mr Lim said increasingly higher asking prices for resale HDB flats are pricing some people out of the resale market. ‘There appears to be a stand-off between buyers and sellers in the resale market at the moment,’ he said, though there is still demand for resale flats.

HDB, which has stepped up its building programme since 2007, will offer 4,500 new BTO flats in the first half of 2008.

Whether this will help cool the resale market – where at the top end a 21st-storey executive flat in Queenstown went for a record $890,000 last month – is uncertain.

PropNex CEO Mohamed Ismail reckons the resale market will remain strong for now.

‘Supply (of flats) through walk-in selection is drying up and BTO flats will take time to build,’ he said. ‘I also believe the first half of 2008 will see people who sold their private flats en bloc earlier start to receive their collective sale proceeds, and some will downgrade to HDB resale flats.’

As such, Mr Ismail believes the resale market could see more than 30,000 transactions this year.

 

Source: Business Times 12 Feb 08

Developer stocks may rise above flat property prices

Goldman says that physical market correction already priced in

(SINGAPORE) Goldman Sachs predicts that private home prices will remain flat this year, but is sticking to its view that Singapore’s strong structural story is driving a sustainable multi-year residential upswing.

The US bank does not expect a repeat of the mid-1996 (anti-speculation) regulatory measures that caused Singapore’s residential market downturn or an economic environment like in 1998, when property prices fell sharply amid negative economic growth and job creation, and an interest rate spike. Goldman Sachs has also upgraded CapitaLand from Neutral to Buy.

‘We argue that the share prices of developer stocks have priced in a severe physical market correction, which we believe is unwarranted.

‘Notwithstanding near- term headwinds, we recommend investors start accumulating Singapore property developer stocks. We believe developer stocks will start trending up to their RNAVs (Revalued Net Asset Values) once investors get comfortable that property markets in Singapore and China are not heading for a severe correction,’ Goldman Sachs said in a report dated Feb 8 and authored by its analyst Leslie Yee.

Even after lowering its RNAVs for Singapore developers, Goldman’s 12-month target prices (set at parity to 2008 Estimated RNAV) offer potential upside of around 28-37 per cent.

Goldman Sachs attributed its lowering of 12-month target prices and valuations to Singapore private home prices staying flat, lower values of listed investments and a lower multiple of 15x (from 20x) for asset management fees.

Although Goldman Sachs assumes zero growth in overall private home prices this year, it acknowledges that prices may increase in the second half of the year.

The property market is currently caught between the negatives of macro concerns over the fallout from a US-led recession on the Singapore economy and equity market weakness, and the positives of strong Singapore domestic growth drivers such as robust job creation and wage growth, Goldman’s report said.

‘We have greatest confidence in the private mid- to mass-market segment, based on our analysis of different key drivers, such as affordability, income growth, population growth, and HDB resale market trends, among others. We believe strong Singapore fundamentals support this segment, which is likely to benefit most from any reduction in mortgage rates.

‘In the prime residential segment, we see a dampener from a fall in speculative activity but would not underestimate the appetite of bulk buyers such as the Middle Eastern funds. We note affordability for the mass market remains strong, while the prime segment should benefit from the rise in the number of people with high incomes,’ it added. Besides the Singapore residential market, other key drivers for developer stocks are the performance of the Singapore office market, the Chinese residential and commercial markets, and real estate investment trusts, the US bank said.

It argues that new office supply here in 2011/2012 can be absorbed without significant negative impact on rental and occupancy rates, and expects capitalisation rates across various property asset classes in Singapore to remain stable.

Goldman Sachs also sees little downside for residential prices in the China market, and has a positive bias on the outlook for Beijing, Shanghai and selected second-tier cities.

As for Singapore Reits, Goldman sees their unit prices rising from current levels over the next six months – given firm property rentals and the possibility of the overhang from primary and secondary equity raisings being removed.

Goldman has lowered its 2008 estimated RNAV for City Developments from $15.80 to $14.70 and for CapitaLand from $8.30 to $7.70.

‘Amidst a more uncertain environment, our top pick is CapitaLand, which we upgrade to Buy from Neutral. With its multiple growth engines, highly regarded management team and low gearing, our Buy rating on CapitaLand is premised on its attractive and resilient valuation which performs well in various stress tests,’ Goldman said.

The US bank is maintaining its neutral rating for CityDev.

 

Source: Business Times 12 Feb 08

2,224 in HDB line and it’s only Day 1

A BATCH of 278 surplus Housing Board flats in established towns like Bedok, Geylang and Toa Payoh drew more than 2,200 buyers within hours of going on sale yesterday.

Buyers have until Feb 18 to submit online applications for a computer ballot that will fix their position in the queue to pick a flat. The results will be out on Feb 21.

Yesterday’s ‘apply to buy’ rush will not have come as a surprise given the past response to the HDB’s year-old sales scheme.

A batch of 316 flats offered in outlying towns drew 5,147 applications in December, while about 840 others offered in two prior sales exercises were fully taken up.

The latest batch comprises mainly four-room units, with some five-room and executive flats – all in mature locations with amenities.

‘There will an overwhelming response,’ predicted Mr Albert Lu, the managing director of C&H Realty.

By 5pm yesterday, 2,224 people were in the queue.

The biggest group of units is in Toa Payoh, with 105 four-room and 14 five-room flats on offer. Flats are also available in Jalan Membina in Bukit Merah town and Geylang Serai.

The four-room flats cost $141,000 to $398,000, the five-roomers cost $218,000 to $532,000 and the executive flats, $333,000 to $470,000, depending on location and features of the units.

Demand is expected to come from buyers who want flats urgently but cannot stomach the prices that owners in choice areas are demanding.

Administration assistant Ellis Ang, 26, who plans to get married this year, has struck out in three ballots for a new flat so far.

‘There are a lot of couples like us out there,’ she said.

Unlike build-to-order flats, where construction starts only after most of the units are booked, most of the 278 flats on offer are ready and the rest are expected to be completed by 2011.

The HDB said: ‘Given the overwhelming popularity of new flats in established towns and the limited number of new flats available here, HDB would like to encourage flat buyers to consider flats in non-mature estates as well.’

Increased demand has shrunk the HDB’s surplus stock from more than 10,000 four years ago to about 2,200 at the end of last year.

But it is ramping up the number of build-to-order flats, with about 4,500 new flats offered this way in the first half of this year.

There is ‘ample supply’ of such new flats, it said, pointing out that 200 flats in the 698-unit Coral Spring estate in Sengkang were not taken up when booking ended last month.

 

Source: The Straits Times 12 Feb 08

Stock of surplus flats vanishing fast

Buyers on tight budgets looking for finished flats will be vying for fewer units

THE Housing Board’s offer of 278 surplus flats in mature towns yesterday will be likely to slash its stock of readily available units to less than 2,000, down from 17,500 in 2002.

Surging demand and a shortage of affordable completed property has dramatically cut the surplus supply.

At the end of last year, HDB was estimated to have just 2,200 surplus flats left. The almost 100 per cent takeup rate in previous sales exercises will push this figure down further.

It means that buyers on tight budgets hoping to purchase a completed flat will find themselves vying for fewer and fewer units, with the only alternative being coughing up more cash to buy a resale flat.

Those who were unlucky in ballots or who lack the cash will just have to wait.

Most new HDB flats come under the build-to-order (BTO) scheme. These flats are constructed only when most units are taken up. A person booking a BTO unit today could still have to wait three years or more for his home to be ready.

In the meantime, newly married couples will just have to rent or live with their parents until their new flat is ready, said PropNex chief executive Mohamed Ismail.

The resale prices of HDB flats jumped 17.5 per cent last year, prompting hordes of buyers to try their luck in the queue for surplus new flats, which come at highly subsidised prices.

A batch of 316 flats in Hougang, Punggol and Sengkang drew 5,147 applications, while 840 units offered in other parts of Singapore were all snapped up.

While the Government has committed to offering more flats under the BTO system – 4,500 in the first half of this year – it cannot guarantee that these new flats will be available on the spot.

It learnt a hard lesson in the 1990s when it built too many flats in anticipation of demand that fizzled out fast in the Asian financial crisis.

The subsequent overhang, which numbered 17,500 in 2002, meant that families wanting a flat could simply walk into an HDB branch and pick a ready-built flat on the spot.

In 2005, the HDB even sold about 100 of its older surplus flats on the resale market. This had HDB flat owners fearful that the move could depress the value of their homes.

Those days look set to be over, say property experts.

C&H Realty managing director Albert Lu said that buyers will simply have to choose between waiting for a new flat or paying more for a resale one in move-in condition.

 

Source: The Straits Times 12 Feb 08

A touch of glass for Moulmein HDB flats

RESIDENTS of HDB flats in Cambridge and Owen Roads will be the first in Singapore to get see-through, bubble lifts like those found in hotels and shopping malls.

They will be up and running by next year, said Minister of State (Education) Lui Tuck Yew yesterday at a Chinese New Year dinner for Tanjong Pagar GRC.

These lifts are cheaper to install because they are not enclosed in a concrete shaft. They cost about 25 to 35 per cent less than that of the lifts now found in HDB blocks.

Residents in Buffalo Road in Serangoon will also have such lifts by 2010, said Rear-Admiral (NS) Lui.

The authorities had previously said that by installing shaftless lifts, they could quicken the pace of upgrading so that HDB blocks would have lifts that stop on every floor.

In all, 1,200 HDB homes in the MP’s Moulmein division will gain from lift upgrading in the next two years.

Residents strongly support the programme to improve their lifts, with 85 per cent to 100 per cent of them giving the green light in polls, RADM Lui said at the dinner attended by the GRC’s six MPs, including Minister Mentor Lee Kuan Yew.

Meanwhile, efforts to upgrade private estates have been less successful.

Three submissions last year to the National Development Ministry’s Estate Upgrading Programme were not selected. RADM Lui did not identify the estates.

He plans to approach the ministry’s Community Improvement Programme for funds to do minor improvements to the private estates.

He also disclosed that ‘after much deliberation and some persuasion’, the Government gave more money for the renovation of the iconic Tekka Market, at the corner of Serangoon Road and Bukit Timah Road.

The sum has been raised from $5 million to $12 million for a more thorough make- over, he added.

Beyond the physical improvements, RADM Lui also highlighted the need for more community awareness. He urged the residents to play their part in helping the needy and be more neighbourly.

One resident who is looking forward to the bubble lift is deliveryman Tan Soy Tee.

The 61-year-old lives in a three-room flat on the sixth floor of Block 46 in Owen Road. The lift does not stop on his floor but on the seventh floor.

Daily, he would have to take the flight of steps to and from his home.

He expects to pay about $760 for the lift upgrading, a sum he finds affordable: ‘I earn $1,200 a month and cannot afford it if I have to pay much more than that,’ he said in Mandarin.

 

Source: The Straits Times 12 Feb 08

New HDB upgrading scheme won’t add much more to resale prices

The Home Improvement Programme will not boost prices of resale flats as much because upgrading is on a smaller scale, say property experts

THE Home Improvement Programme (HIP) is the newest kid on the block in the Housing Board’s two-decade long upgrading scheme.

Property experts, however, say that it will have a far smaller impact on the value of flats compared to previous upgrading plans. This is because upgrading under HIP will be smaller in scale.

HIP and another scheme, the Neighbourhood Renewal Programme (NRP), are devised to stretch the government dollar over many more households and to pay closer attention to residents’ views. They will be rolled out soon in up to 12 locations islandwide, including Yishun and Tampines.

The outgoing Main Upgrading Programme (MUP) involved more extensive work as it overhauled the insides of flats with new toilets, extra rooms and doors, as well as the common areas of the blocks and precincts.

The MUP proved a gold mine for people like Mrs N. L. Chan, who bought her four-room flat in Holland Close for $290,000 in September 2006, when her estate was in the last throes of the upgrading programme.

Just eight months later, she sold it for $330,000 as she had to move closer to her daughter in Dover Crescent.

Such jumps in value may be harder to come by under HIP, say property agents.

The new programme focuses on the essential improvements in the flat, such as the repair of spalling concrete and replacement of waste pipes.

Once at least 75 per cent of flat owners vote for such upgrading, this essential work is compulsory, although it is fully paid for by the Government. The flat owners, however, have the option of having their doors and toilets replaced at a subsidised rate.

Meanwhile, the NRP promises to spruce up a few adjoining sites together, unlike the previous Interim Upgrading Programme Plus scheme which was conducted in one precinct at a time.

Apart from the economies of scale, the bigger budget under the amended programme would make it possible for items such as tennis courts and skating parks to be considered.

About 300,000 flats will be eligible for the HIP, while 200,000 units can undergo work for the NRP.

A third programme – lift upgrading – will run concurrently with the new schemes. This aims to give almost every HDB flat resident direct lift access to his floor by 2014.

The director of Dennis Wee Properties, Mr Chris Koh, estimates that while the MUP usually boosts a flat’s value by $20,000 to $30,000 over and above what the flat owner pays for the upgrading work, the equivalent expected for flats which undergo HIP is only about $10,000.

This is because the work done will be smaller in scale.

While flats which undergo the MUP make a big impression with their additional rooms, new doors and windows, and spanking new precinct facilities around them, the improvements under the HIP may not be that noticeable.

More people, for example, are now likely to opt out of having new doors and windows to reduce their bills under the HIP.

It may not produce the ‘entire fresh look’ needed to raise the value of the home by much, said Mr Koh.

Similarly, the executive director of Roof Real Estate Group, Mr Dave Lau, does not expect the value of a home under the HIP programme to rise by more than 2 to 3 per cent, compared to 10 to 20 per cent under the MUP before.

But he reckoned that ‘the HIP would probably make property easier to sell’.

Both programmes were devised from the feedback received during a series of forums held last year to find out what it takes to strengthen bonding within HDB estates.

During these discussions, participants wanted a greater say in how their estate turned out.

No matter the smaller increase in value, the executive director for HSR property group, Mr Eric Cheng, said that buyers can usually wrangle a better price from sellers if they buy a flat that is undergoing upgrading, compared to after it is done.

Most of the time, sellers try to hold off putting their flat on the market until after upgrading, when the new look of their estate will bolster their position at the negotiating table.

 

Source: The Straits Times 10 Feb 08

Fragrance Group buys $4m Pasir Panjang Road site

DEVELOPER Fragrance Group said on Thursday that it has bought a freehold property at Pasir Panjang Road for $4 million.

Fragrance said the property has a land area of 3,450 sq ft, which means that the land cost was $1,159 per square foot (psf).

The company intends to redevelop the property for commercial uses subject to the necessary conditions and approvals from the relevant authorities, it said. The acquisition is funded by internal funds.

Fragrance said that the transaction is not expected to have any material impact on the earnings and net tangible assets of the company in its 2008 financial year.

Earlier this month, Fragrance reported that net profit for its 2007 financial year more than doubled from $14.8 million to $30.4 million as turnover rose 39.2 per cent to $136.1 million.

The company attributed the increase to its property development business which contributed $112.5 million to revenue. Its hotel business contributed the other $23.6 million.

Fragrance’s shares closed half a cent up on Wednesday at $0.40, the last day of trading before the Chinese New Year break. The stock has climbed 10.5 per cent so far this year.

 

Source: Business Times 9 Feb 08

Rising cost of going en bloc adds to cooler market

New rules bump up lawyers’ fees, draw out collective sale process by months

GOING en bloc is now a more costly and time-consuming business for home owners because of a new set of stricter rules implemented last October.

The rules – aimed at making the process more regulated and transparent – have bumped up the price of organising a collective sale by about 20 per cent to 30 per cent and drawn out the process by a few months, say property consultants.

Most of the higher cost comes from rising lawyers’ fees, which have doubled or trebled to reflect a similar increase in workload.

According to one industry source, lawyers ‘previously charged maybe $2,000 per household, but now they can charge anything from $3,000 to $6,000′.

Among other things, the new rules now require a lawyer to be present whenever a resident signs a collective sale agreement and to explain the terms of the agreement to each resident during the signing process.

Lawyers may also have to assist the owners in vetting the minutes of sale committee meetings, as well as draft motions for the general meetings, said Ms Tng Peck Chin, the partner in charge of collective sales at law firm WongPartnership.

Another law firm, Rodyk & Davidson, said it has mostly tried to double its fees, although the actual increase varies from estate to estate.

Rodyk partner Lee Liat Yeang said the new rules now double or treble the amount of time lawyers need to put in to get a collective sale going.

‘Also, looking at market conditions, prices are already quite high,’ he said. ‘Lawyers worry that a buyer cannot be found and nothing will materialise from all the effort they had to put in at the initial part.’

In addition to higher lawyers’ fees, owners now need to bear the cost of a valuation report for the estate, previously not a requirement, said Mr Karamjit Singh, the executive director of Credo Real Estate, which specialises in collective sales.

The report can cost between $100 and $300 per owner, depending on the size of the project, he said.

Some marketing agents have also raised their fees. Savills Singapore’s investment director, Mr Steven Ming, said the firm now charges about 15 per cent to 20 per cent more to make up for ‘the extra effort and time’.

Mr Shaun Poh, a senior director of investment advisory services at DTZ Debenham Tie Leung, said while there has been no ‘great jump’ in the fees his firm quotes, there is no longer any room for bargaining.

‘Previously, it was very competitive. We used to make our fee more negotiable,’ he said. ‘Now, if we quote a fee, we will stick to it.’

A big reason is that it takes much longer to get a collective sale going under the new rules.

One rule, for instance, provides for a five-day cooling-off period during which a home owner may still change his mind after he signs a collective sale agreement.

‘Last time, consultants would meet an owner, persuade him of the benefits of going en bloc, and he could just sign the agreement,’ said Savills’ Mr Ming.

‘Now, we have to meet them. After they agree to sign, we have to schedule another time for the lawyer to come down to witness the signing.

‘If it all goes well, that’s good, but if they change their mind later, we may have to go through the whole process a few times.’

In the four months since the rules were changed, not a single estate has gone up for sale under the new system.

And while the property boom last year owed much to an unprecedented collective sale frenzy, the almost silent collective sale market now is similarly contributing to the cooling property sector.

Marketing agents say plans for a sale are under way at several developments, although most are still in the preliminary stages.

 

Source: The Straits Times 9 Feb 08

More colonial bungalows up for rent

Demand for these state-owned buildings is strong due to relatively low rentals

ANYONE with a hankering for a home with lots of nature and space, and does not mind living some distance from town might want to take note.

The Singapore Land Authority (SLA) will be leasing out four of these colonial bungalows this month, along with two semi-detached houses.

The properties are in Maida Vale and Brompton Road in Seletar, Gibraltar Crescent in Sembawang and Lornie Road near Bukit Timah.

This comes on the heels of a sizzling response to five similar properties the SLA put on the bidding block last month. They drew 75 bids in all and were rented out for about double the guide rents.

All these form part of the SLA’s stock of 2,360 black-and-white homes – properties ranging from apartments to bungalows dating back to the 1930s and are inherited from British colonial days.

Demand for these state-owned buildings has traditionally been very strong, partly because of relatively low asking rentals.

Monthly guide rents for the latest batch of homes, for example, start at $1,800 for a 1,367 sq ft semidetached house in Brompton Road. They go up to $6,600 for a Gibraltar Crescent bungalow with 7,212 sq ft of built-up area and 16,145 sq ft of land.

Mr Ku Swee Yong, director of business development and marketing at Savills Singapore, thinks the homes can fetch even more.

‘These guide rents are extremely attractive. Normally, you would be able to get at least double the price, if the properties are in good condition,’ he said.

Last month, the SLA rented out three apartments in Clemenceau Avenue North at between $1,856 and $2,500 – double their guide rents of $960 to $1,110. Two more bungalows in Alexandra Road and Dover were let for $20,258 and $15,100, also about twice the guidance.

The guide rents are decided by the SLA’s valuers, who take into account the property’s last rental, location, condition and whether it comes with a swimming pool, air conditioning and furnishings.

All the properties are in move-in condition and are regularly maintained by SLA-appointed managing agents.

The homes, which come either unfurnished or partially furnished, are located in areas such as Sembawang, Alexandra Park, Adams Park, Telok Blangah, Bukit Timah and Woodleigh Park.

The SLA will put another eight properties up for rent next month, including in Bukit Timah and Newton.

Another 11 are in the pipeline between April and June.

Monthly rents range from $400 for a small apartment to more than $20,000 for a black-and-white bungalow.

About 91 per cent of the homes are currently occupied, a rise of about 6 per cent over a few months ago.

Most are let for two years, although tenants are normally allowed to renew their leases when they lapse.

Deirdre Dempster, for instance, is planning to extend her lease at a black-and-white bungalow at Goodwood Hill when it runs out in August. The 40-year-old, who is in marketing, has been living there for four years with her banker husband and two kids.

‘I love it. I wouldn’t trade this house for anything,’ she said. ‘What attracted me was the area and the grounds, and there’s a lot of character and history attached to these properties. I hope they don’t tear them down.’

Interested tenants can bid for this month’s properties via the SLA’s new open bidding system. An open house will be held for the homes, and bids will be accepted for a week after the date of the viewing.

 

Source: The Straits Times 6 Feb 08

Prime properties in for 5% fall in ‘08: UBS

Bank expects modest 0-5% growth in mass and mid-tier segments

ANALYSTS from Swiss bank UBS believe Singapore’s property market will ‘remain intact’, but they are nonetheless projecting a drop of 5 per cent in prime property prices for the year.

In the more affordable mass and mid-tier segments, where prices increased at a slower pace, UBS expects a modest growth of between 0-5 per cent in prices this year.

In its report on the Singapore property market, UBS says that in light of the uncertainty over the global economic outlook, buyers are likely to defer purchases of new property for at least six months. UBS said that demand ‘is highly dependent on the market’s outlook for the next three or four years, when the projects are completed’.

It added that with supply of new homes on the rise, there could be pressure on developers to reduce launch prices to ’stimulate demand’ – and some developers may start cutting prices as early as the second quarter of this year.

While the larger developers are expected to have more holding power, smaller ones could feel the strain of holding costs sooner. UBS estimates that of the units to be launched between this year and 2010, around 9 per cent are held by small, unlisted developers. Still, it said that there is little evidence to suggest that the market will be affected if small developers ‘capitulate and cut prices aggressively when holding costs build up’.

In its report on the current property market conditions, UBS made comparisons with the previous property slump of 1998. ‘Markets appear to be pricing a 70 per cent fall in Singapore residential prices, similar to 1998,’ it noted.

But UBS said: ‘We think the residential market in 2008 will not replicate the 1998 scenario where launch prices fell by 50 per cent in a year, and stock prices fell by 75 per cent.’

It added that expected GDP growth of 3.5 per cent should keep population inflow positive, which combined with negative real interest rates and low unemployment should underpin resale prices.

‘Even if job growth were to halve in 2008 to 90,000-100,000, this could still mean housing demand for at least around 15,000-18,000 units, assuming half the newly- weds (23,000 per annum) want to move out, and around 6,000 new households – of new permanent residents and expatriates – relocate to Singapore,’ UBS added. It pointed out that the figure is much higher than the expected number of home completions – 8,700 in 2008 and 16,000 in 2009.

As such UBS believes that current share prices for listed property developers have been ‘over-corrected’.

‘Allgreen’s price ($1.17 per share currently) attributes no value to its residential (portfolio), while City Development’s price ($12 per share currently) implies a 70 per cent writedown in unsold land,’ said UBS.

UBS said that it has adjusted the revalued net asset value and earnings per share for Allgreen, City Developments, CapitaLand and Keppel Land, and given current price levels ‘we have retained our Buy ratings on all these developers’.

 

Source: Business Times 5 Feb 08

S’pore population hits 4.6 million

Number of foreigners increasing faster than citizens, PRs

SINGAPORE’S economic planners think the country can hold 6.5 million people, a size they feel will be ideal to keep the economy humming.

Minister Mentor Lee Kuan Yew, however, feels the optimum population size for tiny Singapore might be smaller, between 5 and 5.5 million.

The latest numbers released yesterday by the Singapore Department of Statistics – after some refinements that exclude persons who were away for at least 12 months continuously, in line with United Nations guidelines – show that Singapore is just less than one million people away from hitting that figure recently suggested by Mr Lee.

Singapore’s total population has swelled to 4.6 million – and that was seven months ago.

The drive to attract foreign talent to make up the local shortage is apparently bearing fruit. The number of foreigners who work and live here has crossed the one-million mark.

In the past five years, the figure grew three times as fast as the number of Singaporeans and permanent residents.

The result: foreigners made up 22 per cent of Singapore’s total population as at June 2007, up from 18 per cent in 2003. From 2006 to 2007, the number of foreigners jumped nearly 15 per cent to 1,005,500.

Locals and permanent residents rose by less than 2 per cent to 3,583,100.

 

Source: Business Times 5 Feb 08

Growth in S-E Asia property market sustainable: DTZ

THE property markets of South-east Asia are expected to sustain the buoyant growth seen in 2007, says DTZ Debenham Tie Leung.

DTZ said that residential markets in the region are expected to continue to grow, ‘driven by steady economic expansion, increasing affluence and increasingly attractive projects as developers strive to refine concepts’.

In Vietnam, DTZ noted that demand for residential properties, which was already growing fast, was bolstered by the recent relaxation in rules for housing ownership, allowing foreign land ownership terms to increase from 50 to 70 years. DTZ said this also encouraged foreign developers to build residential properties there.

In Malaysia, DTZ said take-up was encouraging for high-end condominiums in Kuala Lumpur, with a complete sell-out for several luxury projects. This was supported by the relaxation of rules for foreigners to buy residential properties and the waiver of real property gains tax last April. While monthly average gross rents remained unchanged at RM4 (S$1.25) per square foot, average capital values increased 3 per cent year-on-year to an average RM500 (US$152) psf.

The residential market in Thailand is also expected to recover, as the political situation improves and developers are encouraged to launch projects which have been withheld.

In the office sector, DTZ says demand for office space in Vietnam is expected to continue to be underpinned by limited potential supply. It said that in Vietnam, most potential supply comprises nonprime office buildings, ‘which will lead to greater competition for prime office space’. Occupancy remains high, at above 95 per cent, while Grade A rents average US$3.70 psf per month in Hanoi and US$4.37 psf per month in Ho Chi Minh City.

The office market in Kuala Lumpur was also active, with increasing demand by the services, oil and gas, information technology and financial sectors. Together with limited new supply, prime office rents rose 7.8 per cent year-on-year to RM62.65 (US$18.16) psm.

Jakarta also saw office occupancy rates of over 90 per cent. Rents did, however, remain at about US$0.76 psf per month amid fluctuations in exchange rates.

The Bangkok office market was the only one that was subdued, with a negative net absorption for H1 2007. DTZ said this was due to a less favourable operating environment which affected investors’ confidence.

 

Source: Business Times 5 Feb 08

Subsales may spike again as projects near completion

NEWS ANALYSIS

Prices could soften if ’specuvestors’ are forced to offload properties

(SINGAPORE) Speculative activity took a breather in Q4 last year as the number of subsales as well as their share of total private home deals were down sharply from the preceding two quarters of 2007. However, many in the industry are wondering whether subsales will again spike closer to the physical completion dates for some highprofile projects sold substantially on deferred payment (DP) schemes.

Among the projects that will be keenly watched are The Sail @ Marina Bay, The Coast (at Sentosa Cove), The Grange, and The Suites at Central in the Devonshire Road area, all of which were sold amidst much hype. The first two projects are scheduled to receive Temporary Occupation Permit (TOP) next year and the latter two, this year.

The coming wave of subsales – if there’s one – may not be so much a reflection of speculative froth in the market but rather of buyers seeking to offload their units before the DP expires.

Those who bought their properties on DP schemes would typically have paid 10 or 20 per cent of their purchase price to the developer with the next payment (of 75 per cent or 65 per cent, respectively) deferred till the project receives TOP. By TOP, the developer would collect 85 per cent of the sale price.

Such buyers can shop for a bank loan until closer to the project’s TOP date.

However, buyers who picked up multiple units in some of these developments on DP schemes and are still sitting on them may not be able to secure sufficient housing loans to foot the bills when the projects obtain TOP.

Banks may turn cautious over advancing loans for multiple property purchases. Some, for example, may only be prepared to lend up to 70 per cent – based on their credit assessment and servicing ability of the borrower – instead of 80-90 per cent, of the purchase price of the property or its current value, whichever is lower.

These ’specuvestors’ may find that it makes more sense to sell their units in the subsale market before they receive a big bill from developers.

Such subsales, while apparently ‘forced’ by the difficulty of finding enough housing loans, could still yield handsome gains for such investors – given the huge rise in upmarket home prices.

However, if a sizeable number of such properties come on the subsale market, some sellers may be willing to accept below-market values. This will clip developers’ pricing power when they sell new projects in nearby locations.

Already, BT understands that some individual investors, anticipating ‘dumping’ from speculators, are teaming up to snap up some of these units at below-market prices.

Jones Lang LaSalle’s head of research (South-east Asia) Chua Yang Liang reckoned that some buyers who purchased units on DP during the initial launches may begin to review their options around five to six months ahead of TOP. ‘Supply of such properties in the subsale market could potentially increase from the latter half of this year, which could potentially see prices easing,’ Dr Chua said.

Of course, it may be a different story altogether if sentiment in the high-end market picks up again.

A lot will also depend on the holding power of those who still have units they’ve bought from developers. Some may not face problems getting housing loans, because they have the ability to service them. Such buyers may just go ahead and pay that big instalment when the project receives TOP.

Another factor that will bear on the extent of ‘forced’ subsales is the profile of buyers in each project – the mix of those who bought units with a view to living in them, and those who purchased with an eye on flipping before the project’s completion.

A seasoned property agent told BT that a condo in the East Coast area receiving TOP soon recently saw several buyers offering their units at prices considerably below what was being achieved just a few weeks ago – before the stock market plunge.

Then there’s another theory. While we may see a flurry of subsales for projects sold in the past on DP, it will be a different story going ahead.

With no new projects approved by the authorities for DP schemes since DP was scrapped in late October 2007, new launches going ahead will attract fewer potential speculators. This is because those who buy into projects without DP schemes know they will have to make regular progress payments to the developer and in all likelihood have to obtain housing loans.

‘You’ll see more genuine buyers in the market,’ as ERA Realty Network divisional director Andrew Soh said.

‘Developers may still be able to maintain current prices, or even achieve higher prices. But instead of weeks, it may take them months, or even years, to sell out projects.’

‘As new project launches attract fewer speculators, I may have to sell physical homes and not just paper (options),’ he quipped.

 

Source: Business Times 5 Feb 08

590 HDB blocks picked for upgrading

58 locations selected for improvement under revised schemes

ABOUT 590 Housing Board blocks in 58 locations islandwide have been picked for the next batch of improvement works under the HDB’s recently revised upgrading schemes. Areas set to benefit include Yishun, Tampines and Hougang.

These schemes include the new Home Improvement Programme (HIP) and Neighbourhood Renewal Programme (NRP) – unveiled last year – as well as the ongoing lift upgrading programme.

The HIP focuses on essential improvements within a flat, such as repairing spalling concrete. It also gives residents the choice of opting out of certain items to cut costs.

This scheme replaces the more extensive Main Upgrading Programme, which had been more expensive because work was done both inside and outside the flat.

Under the other new programme, the NRP, a few adjoining estates will be spruced up together, with the cost fully borne by the Government. The bigger budget involved makes it possible for larger items such as tennis courts and skating parks to be considered as part of the works.

Residents will also be consulted on how they want their estate improved.

The HDB, which said earlier that the HIP would be first done in two precincts in Yishun and Tampines, announced yesterday that it will double that number to four and include other towns in view of strong public support shown in recent surveys.

Meanwhile, eight estates have been selected for the NRP and another 52 for lift upgrading – where housing blocks are renovated to give residents lift access at every level.

The lift upgrading programme is still the mainstay of improvement works as the Government has pledged to give direct lift access to almost every block by 2014. In 2006, for example, the Government said it was selecting 70 precincts comprising 600 to 700 blocks for the programme. In 2005, it was 480 blocks in 64 precincts.

The Minister of State for National Development, Ms Grace Fu, said yesterday the Government was on track to meet the 2014 deadline.

Tampines GRC MP Irene Ng said that 16 blocks in Tampines Street 11 under her charge have been picked for lift upgrading in the latest list.

She added: ‘Many of the elderly fear becoming isolated in their flats as they find it increasingly hard to climb stairs. Over the years, some in wheelchairs had to move out of the estate, even though they loved the place, because they could not negotiate the stairs without help…’

Residents in about 70 per cent, or 3,600, of the eligible blocks have been offered lift upgrading so far.

Some estates in the latest list will have more than one type of upgrading work done at the same time to reduce inconvenience.

Six precincts comprising about 30 blocks previously picked for the Main Upgrading Programme under the old regime will also be switching to the new programmes, at the request of their MPs.

About 300,000 flats out of almost 900,000 islandwide will be eligible for the HIP, while 200,000 units can undergo work for the NRP.

Details of the specific locations of these selected precincts will be announced by their respective MPs later.

Work on this batch is expected to be completed within five years.

 

Source: The Straits Times 5 Feb 08

ROAD IMPROVEMENTS: Better traffic access for Sentosa, VivoCity and HarbourFront

Volume likely to rise due to IR, new condos; works to start in June

THE roads leading to Sentosa, VivoCity and HarbourFront will be widened to cater to an anticipated increase in traffic into the area.

With one of Singapore’s two integrated resorts opening on Sentosa and new condominiums to be built in the area by 2010, traffic is likely to go up by 30 per cent, said the Land Transport Authority (LTA) yesterday.

The Sentosa Gateway junction at Telok Blangah Road now sees about 6,000 cars during the evening peak period.

By 2010, the number will likely be between 8,000 and 9,000.

LTA director of transport planning Lina Lim told reporters yesterday: ‘Without the improvement works, I think we would expect very long queues and not being able to clear junctions…’

The road widening works, expected to begin in June and be completed in 11/2 years, will span a 2km stretch from the junction of Keppel and Kampong Bahru roads to the junction of Telok Blangah and Henderson roads.

These are the improvements to be made:

• An extra lane will be added to both sides of Telok Blangah Road, to give each side four lanes;
• Another lane will be kept specially for cars turning left into Sentosa Gateway from west-bound Telok Blangah Road, to make two left-turn lanes;
• Another lane will be added for vehicles turning right into Sentosa Gateway from east-bound Telok Blangah Road, making three lanes there;
• Adding an extra left-turn lane for vehicles going from Sentosa Gateway to Telok Blangah Road, to make three lanes there.

  Other changes: Kampong Bahru Road will be widened, and improvements will be made to the Henderson Road/Telok Blangah Road junction and the HarbourFront Walk/Telok Blangah Road junction.

  The viaduct which takes cars overhead, in front of VivoCity mall, will have an extra exit built from it.

  An exit will be created near Morse Road, just before Henderson Road, which will enable motorists to bypass the HarbourFront area and at least four traffic lights.

Miss Hwang E-wan, a 25-year-old investment banking analyst who lives along Wishart Road off Telok Blangah Road, is glad for this.

To get home, she usually goes through the jam outside VivoCity.

‘The alternative is to use the Alexandra Road exit and then make a U-turn back to my house. This will help me escape all that.’

A VivoCity spokesman said that traffic in the area was generally fine on weekdays but can build up on Fridays, weekends and public holidays.

Sentosa said its plans to increase the number of arrival lanes and to move its admission booths inland would complement LTA’s plans.

An electronic parking guidance system will also be introduced in the HarbourFront area.

Large signboards will alert motorists where carpark lots are available, which will cut down congestion by reducing the number of cars circling the area looking for lots.

 

Source: The Straits Times 5 Feb 08

ACCREDITATION SCHEME: Plans for new group to lift standards of housing agents

A GROUP of property agencies plans to form a new association to raise standards in response to growing complaints about estate agents.

The group, which will be separate from the Institute of Estate Agents (IEA), will work closely with an ongoing accreditation scheme to lift the industry’s game.

Complaints about agents have shot up in the past two years amid a property boom, prompting disquiet among some about the sector, which remains largely self-regulated.

Unlike the IEA, which has individual agents as members, the new body will involve estate agencies, said the chairman of its interim committee, property consultant David Ong.

The new body is likely to be linked to the Singapore Accredited Estate Agencies Scheme (SAEA), which last year was reported to have vetted more than 7,000 agents out of the 30,000 or so working in the industry.

It is understood that more than 10 agencies – including HSR Property Group and KF Property Network – will be joining the group. KF Property is the agency division of Knight Frank.

More details are expected soon, but the director of KF Property, Dr Tan Tee Khoon, told The Straits Times that the new body would allow the agency heads to share information about rogue agents as well as host seminars and conferences to raise standards.

A register of agents from member agencies could also be set up.

The group could rival the efforts of the IEA, which introduced a registry in 2006. That registry lists about 350 agencies with almost 21,000 agents.

Dr Tan denied that the new group would rival IEA, saying rather that it would help curb the problem of errant agents. ‘We are really trying to cover more ground. Members of the public are free to choose whether they want to use an IEA agent or an agent with the new association,’ he said.

His firm was among a group of agencies that raised concerns about IEA’s practising certificate scheme when it was launched last year.

The certificate was given to IEA members – which number about 1,400 now – who pledged to abide by its code of conduct. The dissenting group, which included HSR, DTZ Debenham Tie Leung and Global Real Estate, felt the certificate could confuse the public and called instead for the industry to support the SAEA.

One agency chief, Mr Chris Koh from Dennis Wee Properties, said the new group could work if it united all the industry’s head honchos. But IEA’s first vice-president and the chief executive of Propnex, Mr Mohamed Ismail, felt it would divide the industry instead and spread resources too thinly.

There were 1,717 housing agencies in Singapore as at the end of last year. The largely unregulated property sector has had a bad reputation over the years. The Consumers Association of Singapore (Case) received 1,113 complaints last year, up from 991 in 2006.

Case said the complaints involved agents misrepresenting facts, failing to honour promised terms and providing unsatisfactory services, among other things.

Industry veterans say the problem lies in the fact that only agencies are licensed, so agents sacked for unethical conduct can simply practise in another firm.

The Government, however, has consistently shied away from regulating agents.

Case is working with IEA to look into setting up another accreditation system for housing agencies.

 

Source: The Straits Times 4 Feb 08

HDB resale deals at a new low in 2007

Rising resale prices and higher COVs result in last year’s total of 29,436

THE number of resale HDB flats which changed hands fell to a new low in 2007 – with just 29,436 transactions recorded – as buyer resistance set in, in the face of escalating resale prices and more sellers asking for large amounts of cash-over-valuation (COV), fresh HDB data shows.

The number was lower than the 29,723 resale transactions seen in 2006, which was itself a new low. Stock-market jitters in the fourth quarter also caused resale transactions in the last three months of 2007 to fall 13 per cent to 6,700.

The fall in transaction volume came despite a 17.5 per cent increase in HDB resale prices last year. In the fourth quarter, HDB resale prices rose 5.7 per cent, lower than the increase of 6.6 per cent seen in the third quarter.

‘With escalating resale prices and more and more COV transactions, we saw the resale market hitting resistance level in the fourth quarter as HDB flat buyers do not have or are not willing to part with so much cash,’ said Eugene Lim, assistant vice-president of property agency ERA.

The COV is the amount that is paid above the valuation of a flat and cannot be paid with a home loan or monies from the Central Provident Fund (CPF). With high COVs demanded by sellers, buyers are required to fork out more cash.

In the fourth quarter, cases requiring COV constituted 86 per cent of all resale transactions, up from 80 per cent in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.

However, a closer look at some of the traditionally popular estates show that median COVs have actually decreased as buyers resisted forking out large sums of cash. For example, in the third quarter, the median COV for a five-room flat in Queenstown was $110,000. In the fourth quarter, it had fallen to $79,000.

But despite the lower total resale volume, the number of five-room and executive flat transactions actually increased in 2007 over 2006, ERA’s Mr Lim pointed out.

The number of five-room resale transactions rose 13.3 per cent to 7,275 in 2007. Similarly, for executive flats, there were 2,627 transactions in 2007 – a jump of 17.9 per cent compared with 2006.

The robust numbers are mainly due to cash-rich buyers from enbloc sales or private property sales downgrading to larger HDB flats in choice locations, experts said. These buyers also account for the robust COVs fetched by larger flats.

‘Based on our data, more than 50 per cent of the high COVs of $80,000 or more seen in 2007 are from private property downgraders,’ said Mohamed Ismail, chief executive of property firm PropNex.

Sellers of these larger HDB flats are either upgrading to private properties or downgrading to smaller HDB flats, Mr Ismail said. He added that there was little upgrading from smaller to bigger HDB flats.

ERA’s Mr Lim said the fact that sellers of larger HDB flats are upgrading is good news for developers of mass market condos as traditionally, the support for their projects comes from buyers living in these HDB flats.

 

Source: Business Times 26 Jan 08

Private homes losing speculative froth

Subsale activity slowed in Q4; rising rents defined 2007

(SINGAPORE) The level of speculative activity in the private property market, as measured by the extent of subsales, slowed considerably in Q4 last year, especially in the Core Central Region (CCR), according to the latest official data.

Islandwide, subsales as a percentage of total private housing sales fell from 14.4 per cent in Q3 last year to 10.7 per cent in Q4, while in the CCR, the hotbed of speculation, the subsale percentage fell from 24.8 per cent to 18.6 per cent over the same period. Property consultants attributed the drop to uncertainty about the financial markets as well as the withdrawal of the deferred payment scheme in October 2007.

Reflecting the current housing shortage, the stock of completed private homes increased by just 1,448 units last year – the smallest rise in at least 12 years. The stock had increased by 4,008 units in 2006, 7,453 units in 2005, and 10,969 units in 2004.

Rents of condos and apartments rose significantly last year – by 42.3 per cent in CCR (comprising the prime districts 9, 10, 11, Downtown Core and Sentosa), an even higher 47 per cent in the Rest of Central Region (RCR), and 41.9 per cent in Outside Central Region (OCR).

‘Looking back at 2003/2004, developers were cautious and there were not many housing starts. So three or four years down the road, we’re seeing a fall in terms of new home completions,’ DTZ executive director Ong Choon Fah explains. ‘Of course there have also been a lot of en-bloc sales in the past two years and some of these properties have been demolished,’ she adds.

‘The situation is even more severe in the prime areas, and we’ve been seeing a lot of expats fanning out from the prime districts to RCR, to rent private homes, which probably explains why the increase in non-landed rents was steeper in RCR compared to the CCR,’ Mrs Ong explains.

With many private residential projects likely to be completed only in late 2008 and 2009, property consultants including Knight Frank managing director Tan Tiong Cheng expect rentals for non-landed properties to increase further this year. The rise could be less steep – perhaps 20 per cent, or around half the rate of increase for last year.

Yesterday’s data on the private property market by Urban Redevelopment Authority showed that the overall price index for private homes rose 6.8 per cent in Q4 over the preceding quarter, slower than the 8.3 per cent hike in Q3.

For the full year, the index was up 31.2 per cent, three times the 10.2 per cent rise in 2006.

In terms of regions, the price index for non-landed private homes in CCR rose 7.5 per cent in Q4, more measured than the 8.3 per cent gain in Q3.

Price indices for RCR and OCR advanced 7.7 per cent and 7 per cent respectively in Q4, slightly more modestly than in Q3.

For the whole of last year, the non-landed home price index for CCR rose 32.7 per cent, while RCR and OCR indices were up 30.4 per cent and 26.4 per cent respectively.

Developers sold a record 14,811 private homes last year, surpassing the previous high in 2006 by 32.9 per cent.

They launched a total of 14,016 units in 2007, 26.6 per cent above the 2006 figure and also a new high.

Knight Frank director (research and consultancy) Nicholas Mak predicts that URA’s overall private residential property price index will rise at a more sluggish pace – around 10-15 per cent – this year, as buyers become more prudent.

Colliers International director (research and consultancy) Tay Huey Ying reckons that subsales as a percentage of total private homes sales islandwide will continue trending down in the coming months, to average about 8 per cent for the whole year, as the market moves to a ‘healthier and more sustainable set of fundamentals’.

Less speculation could also slow the hike in home prices, she says. ‘As a result, developers are less likely to bid aggressively for development sites and this will affect the success rates of collective sales,’ she adds.

Some seasoned market players are predicting that home prices in CCR could take a hit of up to 10 per cent this year; those in RCR will be flat, perhaps rising slightly; while OCR will post the biggest gains of about 10-15 per cent.

‘There’s significant supply of projects for launch in CCR, and that will weigh down on prices. Foreign buying will thin because of the financial market turmoil which is hitting high-net-worth bankers and others,’ a veteran industry observer suggests.

BT learnt yesterday that the release of the high-profile Marina Bay Suites, which was initially slated for the end of this month, has been delayed till after the Chinese New Year festivities – by which time the Budget should also be announced and hopefully lift sentiment.

 

Source: Business Times 26 Jan 08

Property market shows signs of cooling

AFTER months of relentless price rises, the property market finally took a breather at the end of last year.

Almost all sectors – including private and public homes, offices and shops – applied the brakes in the fourth quarter, ending almost two years of acceleration, official figures showed yesterday.

They confirmed initial estimates earlier this month that suggested, in particular, that housing demand is cooling.

Experts say this was due partly to the global fallout from the sub-prime mortgage crisis in the United States and partly to local government measures, such as the withdrawal of the deferred payment scheme in October.

The slowdown is set to continue this year. Growth will still be healthy, but considerably lower than last year’s one-record-after-another spiral, experts say.

Most predict a rise in private home prices of 10 to 20 per cent this year – a far cry from the robust 31.2 per cent growth last year.

Private home rental, which caused tenants no end of headaches by shooting up 41.2 per cent last year, are also expected to moderate to between 5 and 15 per cent.

HDB resale prices are projected to increase by not more than 10 per cent, down from last year’s 17.5 per cent. Offices and shops will also fall in line. Price rises are forecast to be less than last year’s increases of 32.6 per cent and 13.2 per cent, respectively.

Volatility in stock markets and the stream of bad economic news coming out of the US have made for a quiet start to the year, particularly in the housing market.

Developers have delayed planned launches of new projects or scheduled upcoming launches well after Chinese New Year, according to industry sources.

Plans to start sales for Marina Bay Suites yesterday, for example, are said to have been shelved until after the festive holiday.

‘We expect the residential market to remain cautious, at least in the first quarter of 2008, until the global situation becomes clearer,’ said Mr Li Hiaw Ho, executive director at CBRE Research.

Demand for homes also appears to have eased.

Although a record 14,811 new homes were sold last year, sales in the last three months contributed only 1,449 of those units – the fewest transactions in a quarter since 2005.

But homeowners can take heart: The boom has enough steam to run for some time before reaching its peak, said property consultants.

‘I would say we could be nearing a peak, but we’re not there yet,’ said Dr Chua Yang Liang, head of Singapore research at consultancy Jones Lang LaSalle.

‘Typically, we will see growth of around only 1 per cent in a quarter before we hit a peak,’ added Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Private home prices rose 6.8 per cent in the fourth quarter of last year, down from 8.3 per cent growth in the third quarter.

HDB resale prices grew 5.7 per cent, compared with 6.6 per cent in the previous three months.

Consultants said while the rises in home prices will slow, prices will not actually fall until at least 2010, when a slew of new homes is expected to be completed.

In the meantime, much of this year’s residential market growth is likely to come from HDB flats and suburban mass market condominiums, which are signs of more genuine home-buying demand.

Speculative demand has already dropped dramatically. A measure of speculation is sub-sales, which are when uncompleted homes change hands. These fell to 513 in the fourth quarter – a third of their level in the previous quarter.

Source: The Straits Times 26 Jan 08

Increases in cost of offices, shops starting to slow down

RESPITE may be in sight for those who have been griping about the surging cost of doing business in Singapore.

Latest figures show that the increases in the cost of shops and offices eased in the fourth quarter of last year, in line with a general slowdown in the property market.

Prices and rentals for these commercial properties soared for most of last year, especially for office space, which reached an all-time high amid an acute short supply.

This prompted complaints from businesses and sparked off worries about Singapore’s competitiveness.

But official data released by the Urban Redevelopment Authority yesterday may finally calm these jitters.

Rentals for offices rose by 10.9 per cent between October and last month, down from 14.8 per cent in the previous three months – which was a decade-high jump, said Mr Li Hiaw Ho, the executive director of CBRE Research.

The slowing could be ‘the initial sign that the numerous efforts by the Government to cool the sector are taking effect’, said Ms Tay Huey Ying, the director of research and consultancy at Colliers International.

These moves include releasing more land for offices as well as immediate steps such as short-term leases in existing buildings and temporary office plots.

Colliers’ own data shows that office tenants are becoming increasingly resistant to further rent rises. Rents for office space in several areas, including Grade A buildings in Raffles Place, have seen declining growth rates for the past two to three quarters, said Ms Tay.

She said this is because firms are more willing to explore alternative business space locations, including business parks and high-tech industrial space.

For the whole year, rentals for office space jumped by 56.1 per cent. The rental index is now at an all-time record of 175.1 points, said Mr Li.

Ms Tay expects growth to moderate next year as tenants hold out for the expected large new supply in 2010.

She is forecasting a rise of up to 20 per cent for Grade A office space.

As for shops, the rise in rentals has all but peaked. Overall rentals rose by 0.6 per cent in the fourth quarter, compared with 8.1 per cent in the previous quarter.

In Orchard Road, rental growth was almost flat at 0.3 per cent in the quarter. Shops on the fringes saw slightly higher growth, but suburban retail space did the best with a 1.3 per cent rise.

For the whole year, shop rents rose by 18.2 per cent.

But landlords wanting to raise rents this year are likely to face strong resistance from retailers, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

‘With the projected large supply coming on stream next year, retailers would have more space choices and would resist large increments in retail rents.’

He expects rents to increase by 5 to 10 per cent for this year.

 

Source: The Straits Times 26 Jan 08

Home prices on city fringe, suburbs still rising strongly

PRICE increases for high-end homes in the central areas may be easing, but not so for homes on the city fringe and suburban apartments – where prices are still rising strongly.

Urban Redeveloment Authority figures showed growth in the prices of uncompleted apartments in the central areas slid from 7.8 per cent to 7.6 per cent from October to December. Price increases for city fringe units, on the other hand, rose from 7.6 per cent to 8.3 per cent.

Growth in the prices of uncompleted apartments in suburban areas also crept up to 9.2 per cent from 9.1 per cent.

Dr Chua Yang Liang, head of research, South-east Asia, at Jones Lang LaSalle, said home prices in the suburbs would keep growing by 24 per cent to 26 per cent this year. This would be supported by home owners looking for new homes after being disloged by collective sales.

Last year, 14,811 new homes were sold.

Mr Li Hiaw Ho, executive director of research at CB Richard Ellis, meanwhile, expects price rises and sales volume to moderate this year.

‘Luxury prices are likely to stabilise at current levels, while mid-tier and mass market prices may have the potential to rise by 10 per cent to 15 per cent,’ he said.

 

Source: The Straits Times 26 Jan 08

Growth in rents of private homes beginning to ease up

Jan 26, 2008

EXPATRIATES and other tenants in private apartments can finally start to breathe easier. Data from the Urban Redevelopment Authority released yesterday showed a subsiding of the sharp rise in rentals for condos in key areas.

Rentals for non-landed property in the coveted core central region, which covers Tanglin and Bukit Timah, for instance, grew just 5.3 per cent, less than half the rate of 12.2 per cent achieved in the third quarter.

The drop in rental growth was not as dramatic for the rest of the central region, though, which slid from 11.9 per cent to 8.8 per cent, and outside the central region – from 11.8 per cent to 8.5 per cent. Overall rents of private homes grew 6.8 per cent from October to December, slowing from an 11.4 per cent rise in the previous period. For the whole of last year, private home rentals surged 41.2 per cent.

Mr Nicholas Mak, the head of research and consultancy at Knight Frank, expects private homes rentals to rise in a more ‘tamed manner’ of 10 per cent to 15 per cent this year.

Still, Ms Tay Huey Ying, director for research and consultancy at Colliers International, reckons rentals of luxury homes will rise by 25 per cent to 30 per cent this year.

Meanwhile, rentals for the HDB market continued to grow strongly.

The median rent for a four-room flat rose from $1,400 to $1,500 in the fourth quarter, while that for a fiveroom unit also grew $100 to hit $1,700.

From October to December, 3,300 flat owners were given approval to rent out their flats. The total number of flats being rented out rose 7 per cent to 17,400 in that period.

The chief executive of property agency PropNex, Mr Mohamed Ismail, expects rentals to rise by 15 per cent to 20 per cent for the whole of this year, as expats pushed out by high rentals for condo units look for cheaper options.

Buyers paying $22k over valuation for resale flats

Median cash over valuation amount up a third; trend filters to outlying areas

BUYERS of resale Housing Board (HDB) flats paid a median amount of $22,000 in cash over the property’s valuation for their new homes from October to last month, a whopping 30 per cent rise from the previous quarter.

The good news for HDB flat owners in outlying areas is that this trend is filtering outwards towards them from the most popular districts downtown.

HDB data released yesterday showed that 86 per cent of all resale transactions in the fourth quarter of last year required cash payments over valuation, up from 80 per cent in the previous quarter.

However, greater resistance from buyers to the surging prices of resale flats last year resulted in a 13 per cent drop in the number of flats sold, to 6,700. For the whole of last year, 29,436 flats changed hands.

In fact, despite the overall rise, the median cash over valuation (COV) of some units in traditionally more popular estates such as Queenstown actually dropped. The median COV for a five-room flat in that area, which hit $110,000 in the July to September period, actually shrank to $79,000 in the period after that – albeit off a high base.

This, said the assistant vice-president of ERA Singapore, Mr Eugene Lim, showed the extent of the current market resistance towards high COVs.

‘Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV transactions,’ he said.

The chief executive of PropNex, Mr Mohamed Ismail, said another reason for this phenomenon is that the number of flat buyers with thick wads of cash in hand – mostly due to the collective sales of their private homes – is shrinking.

Most people buying HDB flats rely heavily on home loans to finance their purchase.

Resale prices of HDB flats rose 5.7 per cent during the quarter to bring the year’s growth to 17.5 per cent.

Last year’s growth is the biggest in a decade but property agents are not expecting a repeat for now as the HDB is offering at least 4,500 new flats for the first half of this year to calm buyers worried that housing is growing out of their reach.

These flats, which are highly subsidised, have an advantage over resale flats because they do not require buyers to fork out cash over valuation.

While ERA’s Mr Lim expects the price of resale flats to grow by 5 to 8 per cent this year, Mr Ismail reckons it would move by about 10 per cent.

Mr Ismail pointed out: ‘The economy is still doing well. And the labour market is tight.’ 

Source:  The Straits Times 26 Jan 08

Two new MRT lines by 2020

They will run through estates in north and east; North-South and East-West lines will also be extended by 2015

TWO new underground MRT lines will be built by 2020 – one from Woodlands to Marina Bay via Thomson, and the other from Changi to Marina Bay via Marine Parade.

The 27km Thomson line will run through Sin Ming and Kim Seng, while the Eastern Region Line (ERL) will slice through Siglap and Tanjong Rhu. All are neighbourhoods not served by the MRT now.

The two new lines add 48km of rail and possibly 30 new stations.

In addition, extensions will be made to the East-West and North-South lines by 2015.

The East-West line will stretch 14km out to Tuas with an above-ground track, while the North-South line will be extended underground to Marina South.

These four additions, together with the lines now being built, will extend the rail network from the current 138km of track to 278km.

The tab: $20 billion. This is over and above the $20 billion already committed for the Circle Line, the Downtown Line and the Boon Lay extension.

When completed, cross-city trips will be faster; commuters will have a train stop within 400m, or five minutes’ walking distance, said Transport Minister Raymond Lim yesterday.

He was delivering Part Two of his three-part policy speech on improvements to Singapore’s land transport system.

He first unveiled a slew of changes to the bus system last week, and will wrap it up next week with what is in store for other road users.

With the Thomson Line in operation, commuters in Sin Ming, for example, will shave 20 minutes off their current 45-minute trip to the city; those in Marine Parade will get to Marina Bay on the ERL in 20 minutes – almost as fast as by car, said Mr Lim.

The extensions to the existing East-West and North-South lines will also shorten commuting time.

Take, for example, a commuter who lives in Clementi and works in Tuas. To get to work now, he will have to take a train from Clementi to Boon Lay, from where it will take him another 35 minutes by bus to his destination. With the extension of the East-West line to Tuas, he will save 20 minutes.

Mr Lim, who toured the Kim Chuan train depot yesterday, said: ‘Commuters can look forward to new extensions or stages of new lines opening almost every other year until 2020.’

The next milestone will be marked in the middle of next year, when Stage 3 of the Circle Line opens – a year ahead of schedule – to connect areas such as Lorong Chuan and Bartley.

But commuters will experience improvements from next month, when 93 train trips will be added every week during the rush hours to ease crowding and cut waiting times.

Down the road, new trains will be bought and work done on the two oldest tracks so they can carry 15 per cent more passengers.

As with bus routes, the Government will also open up the rail market to competition. Contracts to run rail services will be 10 to 15 years long, down from 30.

To enhance the commuter’s experience, more covered linkways and overhead bridges will be built in the next two years; the elderly and disabled will have full access to buses and improved access to MRT stations. A sixmonth trial to allow foldable bicycles on trains will also be carried out.

As for taxi commuters, a centralised call booking centre will be set up by July.

Mr Lim gave the assurance that fares will continue to be regulated by the Public Transport Council, and help will be given to those who cannot afford to pay.

 

Source: The Straits Times 26 Jan 08

Bumper prices fetched by HDB flats fuel condo demand

High cash over valuation provides ‘filter-up’ demand for private homes

(SINGAPORE) More Housing Development Board flats in prime locations are now being sold for more than halfa-million dollars each, and the trend is pushing up the asking prices for mass market condominiums and adding to demand for entry-level private homes.

Data compiled by property firm ERA showed that 269 HDB flats were sold for $500,000 or more in the fourth quarter of 2007 – a 69 per cent increase over the 159 flats sold for more than $500,000 each in the previous quarter.

While most of such flats in the fourth quarter of 2007 went for between $500,000 and $599,999, 50 were sold at $600,000 to $699,999.

And 12 changed hands at $700,000 or higher.

Anecdotal evidence also suggests that larger HDB flats in Singapore’s central locations are fetching more money than before.

For instance, a 21st-storey executive flat along Mei Ling Street in Queenstown sold for a record $890,000 earlier this month.

Last November, another executive flat along the same street went for a then-record $780,000.

The sellers of such flats will now have the capacity to buy entry-level private homes, said ERA assistant vice president Eugene Lim.

New homeowners could also look at private homes for their first property purchases, rather than at resale HDB flats in the more central parts of Singapore.

‘HDB flats provide the support for entry-level types of private housing,’ said Mr Lim. ‘If HDB prices keep moving up, people will begin to look at private properties.’

CB Richard Ellis executive director Joseph Tan pointed out that the recent surge in HDB prices has narrowed the price gap between public housing and private homes.

Many of the pricier flats are being sold for high amounts of cash-over-valuation (COV), which means that sellers will have cash on hand to make the downpayment when they purchase private properties.

‘The HDB sellers now have greater purchasing power, especially with the high COVs, which can be used for downpayments on private properties,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

HDB statistics show that the median COV for executive flats in Bukit Timah rose to $137,500 in the third quarter of 2007.

In Marine Parade, the COV for five-room flats hit $84,000 in the same quarter.

The massive growth in COV for larger flats in central districts can largely be attributed to homeowners that have sold their properties through en bloc sales and are now moving into HDB flats.

But the reverse also applies now, analysts said. Sellers of these flats are starting to upgrade to mass market private homes with spare money fetched from the high COVs of their old flats.

Property agents told BT that sellers of HDB flats with cash on hand are looking mostly at mass market condominiums in the resale market as they need replacement properties to move into.

New mass market homes, by contrast, are not as popular.

But eventually, this ‘filter-up’ demand will cause mass market property prices to climb, analysts said, which could once again put private homes out of reach of HDB upgraders.

Property agents also report that sellers of mass market private homes are upping their asking prices as they see HDB prices in prime locations head skywards.

‘Sellers are seeing five-room and executive HDB flats fetching $700,000,’ said one property agent. ‘So they think, I can ask for $1 million for my four-room private home.’

The agent said that at least two sellers of mass market homes that he is representing have recently upped their asking prices, even though the new prices are not ‘realistic’, in his opinion.

Knight Frank’s Mr Mak agreed. ‘Word gets around that HDB prices are going up, and quite quickly, sellers (of mass market private homes) start upping their asking prices.’

 

Source: Business Times 25 Jan 08

79 Anson Rd stake sold for 3rd time in 2 years

SEB Asian Property Fund pays $215m for 55% stake

TRADING office buildings continues to be flavour of the month in the real estate market. A 55 per cent stake in the freehold 79 Anson Road has changed hands for the third time in about two years. The latest deal involves a fund managed by Ferrell Asset Management selling the space to an SEB Asset Management fund for $215 million.

Ferrell’s fund, FAM Maximilian Real Estate Investment Fund, last year bought the space – spread over 12 floors of the 23-storey building, for $149 million from two parties, at least one of which is linked to the Lippo group.

Pramerica Asia had sold the property to Lippo entities for over $90 million in early 2006.

The latest acquisition, by SEB Asian Property Fund SICAV-FIS, for $215 million works out to about $1,937 per square foot based on a lettable area of 110,976 sq ft.

The fund, which was launched in late-August last year, invests in Asia only. The plan is to develop a broad-based portfolio, primarily in China, Japan, South Korea and Singapore, over the coming months.

This is not the German group’s first acquisition in the Singapore office sector. It made at least two purchases last year.

In September, SEB bought 12 floors at Springleaf Tower nearby for $2,088 psf of net lettable area. And a few months before that, in April, the group bought SIA Building for about $526 million or $1,783 psf from TSO Investment, a fully owned subsidiary of a property fund managed by CLSA Capital Partners.

TSO had purchased the office block from Singapore Airlines in June 2006 for $343.88 million, or about $1,165 psf.

A Ferrell-SEB joint release yesterday said the space transacted at 79 Anson Road is currently about 98 per cent occupied. Major tenants include Kellogg Brown & Root, Mitsubishi Chemicals, interTouch and Infor Global Solutions.

Ferrell Group managing director David Lee said the group will keep searching for development and investment opportunities in the commercial property sector.

SEB Immobilien-Investment managing director Choy-Soon Chua said the group expects to capitalise on the ‘extremely positive growth prospects’ in the Singapore office sector due to rising demand and limited supply.

The remaining 45 per cent of 79 Anson Road is owned by the Central Provident Fund Board.

 

Source: Business Times 25 Jan 08

HDB may offer 6,000 flats in H1

SOME 6,000 housing board flats are expected to be offered for sale in the first half of this year, Parliament was told yesterday.

Minister of State for National Development Grace Fu said this matches the sales pace seen in the same period last year.

For the whole of 2007, HDB sales programme offered 13,000 flats – more than double the 5,700 flats sold in 2006.

Ms Fu was responding to questions about HDB’s planning parameters and had cited those figures to illustrate the flexibility in the government’s building plans.

For instance, if the HDB sees high subscription rates in a certain area, it would also increase the supply of flats in that area.

Ms Fu also stressed that it is ‘difficult to predict with precision what the actual demand is in a three-year time frame’. For this reason, the build-to-order (BTO) scheme helps prevent an excess supply of flats.

Under BTO, construction will proceed only if booking for a sizeable number of the flats has been confirmed.

Yesterday, Ms Fu also urged first-time flat buyers to check out information on flats supply in different locations, and to consider factors like the chances of success in the balloting exercise, the waiting time, and their budget before deciding on a location.

 

Source: Business Times 23 Jan 08

Why it’s difficult for HDB to predict demand

THE Housing Board cannot accurately predict demand for HDB flats years down the road.

However, it will be flexible and boost the supply of flats when needed, Minister of State for National Development Grace Fu said yesterday.

She gave this assurance in response to a question from Madam Cynthia Phua (Aljunied GRC), who wanted to know how long newly married couples can expect to wait for a new flat.

With rising property prices and surging demand for HDB flats, some young couples have reportedly had to postpone their customary wedding ceremonies because they could not get a flat in time.

Madam Phua also noted that the HDB seems to face a problem of ‘excesses’: Three years ago, it had 10,000 excess flats. Now, it has 27,000 applicants for more than 4,000 flats.

She asked if the ministry would consider providing data on the potential supply of flats over the next three years, to help young couples plan.

In response, Ms Fu said it would be difficult to ‘predict with precision’ demand for HDB flats over a three-year time frame.

‘There are certain market forces that affect supply, demand of public housing vis-a-vis private housing, for example, that are not possible to predict with accuracy,’ she said.

Ms Fu pointed out that while demand far outstrips supply in popular projects like Telok Blangah Towers, that is not the case in others.

For example, first-time flat owners have a one in two chance of getting a flat in upcoming projects in Sengkang and Punggol.

She advised buyers to carefully consider their budget and how long they are prepared to wait before making a decision on which project to apply for.

She also assured MPs that the supply of flats will be adjusted when necessary.

Last year, for instance, the HDB offered 13,000 flats for sale, more than double the number in 2006.

This year, it expects to offer about 6,000 flats in the first half of the year.

‘Our building plan has flexibility and where we see there’s a high subscription rate, we will increase the supply of HDB flats,’ said Ms Fu.

 

Source: The Straits Times 23 Jan 08

Govt rejects Aljunied site bid; offers flood Jalan Sultan plot

THE Government has decided not to sell a short-term office site in Aljunied because the sole bid that came in last week offered too low a price.

This decision follows a recent string of lower-than-expected offers for state land and is the first time since 2001 that the Urban Redevelopment Authority (URA) has rejected bids for a government-owned site.

Demand for some commercial land, however, appears to still be going strong. A state parcel at Jalan Sultan, reserved for office or hotel use, received 20 offers when its tender closed yesterday, the URA announced.

The top bid came from Chiu Teng Estates. It offered $14.8 million, or $973.60 per sq ft (psf) of gross floor area, almost double the lowest bid, from NYP Holdings, of $8 million.

The Jalan Sultan site, comprising 17 two-storey conservation shophouses that have to be restored, also got offers from Fragrance Group, Hotel Royal and Hind Lifestyle.

This compares to the single bid for the Aljunied office site, submitted by Mezzo Development, at $7.8 million – just $38.37 psf of gross floor area.

Property consultants say the market may have reached a saturation point for transitional office sites, introduced last year as a quick relief to the office space crunch.

Any development built on these short-term sites is likely to be completed only next year or in 2010, when they will have to compete with a slew of new office space set to come onstream, they added.

One such building is the new $60 million Straits Trading block in Battery Road. The 28-storey building is expected to be completed late next year and could fetch high rents of $18 psf, analysts estimate.

Average rents of Grade A blocks in Raffles Place are now $16.64 psf, said Colliers International. The old Straits Trading building fetched rents of $7 psf.

Mainboard-listed Straits Trading, which owns the building, brushed aside worries that it would be affected by a possible office oversupply that could emerge after 2010.

‘If there’s an oversupply, our building will be out before that,’ said president and chief executive Norman Ka Cheung Ip.

 

Source: The Straits Times 23 Jan 08

State land sales in demand as en bloc fever cools

Developers find pricing of GLS sites more in tune with market realities

(SINGAPORE) Developers seem to be turning increasingly to state tenders instead of en bloc sales to restock their residential landbanks. This is because land pricing at state tenders is more responsive to the current bearish market conditions.

Also, the Government Land Sales (GLS) programme, with its staple of mass-market, suburban residential sites, is currently just what developers want, as this market segment is expected to shine after the steep run-up in high-end home prices last year.

Figures compiled by Credo Real Estate show that while collective sales languished in the last two quarters of 2007, sales of GLS residential sites spiked in Q4. Developers picked up slightly more than $1 billion worth of 99-year leasehold residential sites sold through the GLS programme in Q4 of last year alone, surpassing the $865 million of such sites they had bought in the first nine months of the year.

In contrast, only $1.28 billion of residential collective sale sites changed hands in Q4 last year, down drastically from $11.2 billion in the first nine months.

Credo Real Estate managing director Karamjit Singh says: ‘En bloc sales have rigidity in their pricing mechanism; once the reserve price has been set in the collective sales agreement (CSA), it is difficult to lower it, as you’ll have to go through all the majority owners who agreed to the sale to sign a supplemental CSA.’

‘In contrast, the pricing for a state site offered through the GLS programme can be more reactive to the mood of the day, presenting an opportunity that developers are seizing today,’ he added.

Knight Frank executive director Nicholas Wong says: ‘Collective sales have a higher chance of success when the market is trending up as the reserve price in the CSA is always pegged to the last done transaction of a similar property. But when the market is flat or on a downturn, en bloc sales become more difficult to transact – unless the site boasts some unique propositions such as a landmark location, proximity to MRT stations, etc. Owners will have to price their sites reasonably to find buyers.’

Putting things in perspective, a seasoned market observer said: ‘Because the market has slowed, the spread between what developers are willing to pay and en bloc owners’ expectations has widened. En bloc sales involve many owners and it takes time for them to realise they have to lower their expectations.

‘Whereas for state land tenders, the minimum pricing is decided by the Chief Valuer, who is on top of the market and is more nimble to changes in market moods and values.’

The usual government policy is to sell a site if at least 85 per cent of the Chief Valuer’s price has been met.

For sites sold through the confirmed list, Chief Valuer’s assessment is made on the tender closing date. For sites sold through the reserve list (which are triggered for release only upon successful application by a developer), the Chief Valuer’s assessment is made before the government opens any application by a developer seeking the release of the site.

DTZ executive director Ong Choon Fah also says developers find it ‘more straightforward’ to pick up a site at a state tender, unlike the hassle of going through the Strata Titles Board and potential court hearings in the case of collective sales. ‘Developers are also balancing their portfolios. After the run-up in high-end home prices, the mass market is expected to shine this year,’ Mrs Ong added. Residential sites in the GLS programme are largely in suburban locations, suitable for development into mass-market condos catering to upgrader demand.

Mrs Ong expects developers to continue preferring GLS sites to restock their landbanks in the months ahead – especially if the government offers more 99-year private condo sites in mature Housing & Development Board estates near MRT stations.

Credo’s Mr Singh expects the volume of residential collective sales deals to ease from last year’s record $12.5 billion to about $4-6 billion this year. With weaker market sentiment, owners will have to be more realistic about their pricing, especially in the suburban market where the GLS is a formidable source of alternative land supply for developers, albeit on 99-year leasehold tenure.

‘But there will still be en bloc sales because they are the only credible source of prime sites right now. Previously, Sentosa Cove used to be an alternative source of supply of high-end residential sites. But land sales there have come to an end. En bloc deals involving prime sites will take place – if prices are realistic,’ he added.

 

Source: Business Times 22 Jan 08

Chip Eng Seng wins $188m HDB contract

CHIP Eng Seng Corporation has been awarded a contract worth $188 million by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown.

The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities.

Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng’s first construction contract won this year.

With construction demand on the rise, Chip Eng Seng said it expects its construction division to be busy with tenders and construction work this year.

‘After many lacklustre years, an upturn in the construction industry is in view. We are very positive about our prospects for 2008,’ said Lim Tiam Seng, executive chairman of the group.

As at June 2007, Chip Eng Seng had a construction order book of about $590 million that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.

When completed, Pinnacle @ Duxton will be the tallest public housing in Singapore.

Chip Eng Seng, which is into property as well as construction, has undertaken a broad spectrum of construction projects in both the private and public sectors. It has also been actively acquiring and developing properties in Singapore, spanning residential, commercial and industrial properties.

 

Source: Business Times 22 Jan 08

Service apartments seek shorter stays to ease hotel room crunch

Industry association proposes rule on stay of 7 nights or more be lifted

FOR 20 years, there has been a little-known rule governing service apartments: Guests have to stay seven nights or more.

Now, with an eye on the current hotel room crunch, the Serviced Apartments Association proposes that this condition be lifted.

There are at least 3,500 service apartment units here, compared to more than 37,000 hotel rooms.

If the association gets the go-ahead, this will have an impact on the shortstay accommodation market. Association president Alfred Ong told The Straits Times it is high time the rule was lifted – a rule he said is unique to Singapore.

He added: ‘If Singapore wants to be a first-class city, then it should give customers the choice, whether it be service apartments, hotel rooms or budget accommodation.’

Although the association said it began preliminary discussions with the Singapore Tourism Board (STB) and the Urban Redevelopment Authority (URA) in 2006 and stepped them up last year, the two agencies said they have yet to receive a formal proposal to lift the rule.

Travel industry players said such a move will help ease the room crunch in Singapore where hotels have registered high average occupancy of more than 80 per cent.

This has led to higher room rates, which in turn have led to concerns over Singapore’s competitive edge in the mass tourism sweepstakes.

The latest American Express market forecast on hotels in the Asia-Pacific, released last week, predicts that corporate rates in Singapore will go up by some 29 per cent this year.

This is higher than its projections on Hong Kong at 17 per cent, Beijing at 21 per cent and Kuala Lumpur at 20 per cent.

This is despite the 8,850 rooms added last year and this year.

Mr Prashant Aggarwal, head of American Express Consulting for Japan, the Asia-Pacific and Australia, cited increased demand with higher visitor arrivals as part of the reasons driving its projection.

However, Plaza Royal on Scotts hotel general manager Patrick Fiat said the industry should not be too concerned about the rates hike.

He told The Straits Times: ‘For the past 10 years, hotel rates have been low. So, the current spike is just hotel rates catching up with rates elsewhere.’ He expects levelling out by next year.

However, he is opposed to allowing service apartments to accept shorter stays.

But the service apartment industry sees the proposed move as complementary rather than competitive.

Ms Tonya Khong, general manager of Fraser Suites and Fraser Place, said: ‘There may not be much impact on the industry’s occupancy if the minimum duration of stay requirement is lifted.

‘We foresee that this move can help bridge the gaps for medical and family tourism, as cooking and children-friendly facilities as well as spacious living space will mean a great deal to these visitors.’

Mr Ong said in other Asian cities, most service apartment guests are middle- to long-term guests. Only about 30 per cent are short-stay guests.

But he added that allowing shorter stays will mean more efficient use of service apartments, which always have some spare days between long-term guests.

 

Source: The Straits Times 22 Jan 08

Poor will not be neglected in HDB upgrading

Revised schemes allow for more flexibility and govt subsidies

THE Housing Board will not neglect the needs of the poor, or be rigid, as it upgrades flats under schemes which have recently been revamped.

The Minister of State for National Development, Ms Grace Fu, gave this assurance as the Housing and Development (Amendment) Bill, which paves the way for one of the new programmes, was passed in Parliament yesterday.

During the debate on the Bill, various MPs had put forward wish-lists.

Madam Cynthia Phua (Aljunied GRC) wanted the Government to absorb the co-payment that will be required for lower-income households to get their homes upgraded.

Under the new Home Improvement Programme (HIP), which focuses on essential improvements within a flat such as repairing spalling concrete, residents will have to pay between 5 and 12.5 per cent of the total bill.

They can opt out of some items.

The other new scheme recently introduced – the Neighbourhood Renewal Programme, where improvements are made across several precincts – will be fully paid for by the Government.

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) asked for items such as aluminium window frames or accessibility features for the elderly and disabled to be added to the list of essential improvements under the HIP programme.

He also wanted the Government to consider extending its upgrading schemes to private estates.

Ms Fu rejected Mr Liang’s suggestion that government-subsidised upgrading be offered to private estates, pointing out that private homes could be owned by foreigners as well as permanent residents. Unlike owners of HDB flats, private home owners also have the option of selling their homes collectively.

On the question of lower-income households, Ms Fu said flat owners can cut their bills by opting out of various improvements.

Ms Fu assured members that the HDB has in place ’sufficient financial help’ for struggling flat owners, who are given the option to pay their share of the upgrading bill through instalments over a long time. To date, it has not taken any flat owner to court over unpaid upgrading bills.

Meanwhile, the HDB will consider elderly-friendly features like grab bars as part of the optional improvement items under the HIP if they prove popular. Current options are limited to upgrading toilets, new entrance doors, grille gates and refuse hoppers.

However, flat owners are free to make separate requests to HDB contractors to install such items in their flats at the same time as their flats are upgraded.

Ms Fu stressed that the upgrading programmes are ‘not a substitute for outine maintenance, cyclical repair the home owner and town councils will have to undertake’.

Meanwhile, opposition MP Chiam See Tong (Potong Pasir) asked why the flats in his ageing ward have not been upgraded over the two decades in which upgrading has been available.

Ms Fu replied that while his ward is eligible for the upgrades, the Government prioritises districts based on their support of government policies.

 

Source: The Straits Times 22 Jan 08

Condo-style flats only a small part of public housing, says Mah

PARLIAMENT

PRICEY condo-style flats will remain a small proportion of the total public housing supply with the Government pledging yesterday to continue providing affordable homes.

Its assurance came as high-end flats in Boon Keng offered by private developers were launched recently for up to $727,000 for a five-room flat.

The flats come with interior layouts and fittings more commonly seen in private condominiums, such as bay windows in bathrooms, large balconies and built-in wardrobes.

Buyers are also concerned that prices of resale Housing Board flats shot up 17.4 per cent last year – the highest in a decade – and that sellers in coveted districts are demanding as much as $100,000 in cash over the valuation of their flats.

National Development Minister Mah Bow Tan told Parliament that high-end flats – built under the Design, Build and Sell Scheme (DBSS) – ’serve to fulfil the needs of a niche segment of the HDB market – those with higher aspirations and who can afford a higher price’.

Under the programme, developers are free to design and price the flats as long as they work within the rules of public housing. This means they have to sell flats to families earning no more than $8,000 a month – the limit for households buying public housing.

The first such project, the 616-unit Premiere@ Tampines by Sim Lian Land, drew almost 6,000 applications for its two-, four- and five-room flats with prices from $138,000 to $450,000.

The second, the 714-unit City View@Boon Keng by Hoi Hup Sunway Development, drew about 3,500 applications for three- to five-room flats. Prices ranged from $349,000 to $727,000.

The City View prices had prompted some to wonder if they were affordable to those earning $8,000 a month.

Nominated MP Eunice Olsen asked if the income ceiling could be raised for such flats.

Mr Mah said no, because it could result in developers pricing their flats even higher.

The minister added that private companies taking part in the DBSS scheme develop the projects knowing there is an income cap on buyers.

He told Dr Ong Seh Hong (Marine Parade GRC), who asked why the HDB had ’shifted’ from its original mission of providing affordable housing, that the board was, in fact, staying the course.

In recent years it had re-introduced new two- and three-room flats, while additional housing grants are also being offered to low- income earners, he said.

Besides, recent buyers of new HDB flats actually spend just 20 per cent of their monthly household income on housing. This is about half of the debt servicing limit typically used by financial institutions.

Mr Mah added that the HDB was monitoring resale prices, but urged buyers who cannot afford the cash-overvaluation sums demanded by sellers to postpone their purchases or apply for new – and cheaper – HDB flats instead.

Demand for such homes has been rising as well. Last month, 316 surplus flats in the outlying towns of Hougang, Sengkang and Punggol drew 5,147 applications.

 

Source: The Straits Times 22 Jan 08

Real estate market quiet as uncertainty looms in US

Buyers might want to delay their property purchases till a clearer picture emerges, say experts

THE Singapore property market has turned somewhat jittery in the face of growing fears about a recession in the United States.

Analysts suggest that unless buyers need a home to live in, they might want to delay any purchases until a clearer picture emerges.

The days when speculators could make quick, easy profits are almost certainly over, they say.

Thus, consultants do not expect much sales activity in the lead-up to Chinese New Year, especially since few launches have been scheduled.

Indeed, market players might hold off till the Budget is released later next month, so they can gauge the Government’s stance, said one consultant, who added: ‘If I were a buyer, I’d wait before committing myself to a property investment.’

Apart from worries that a US recession might hurt growth in Singapore, some also believe last year’s price spurt in high-end homes was overdone.

‘If your goal is to flip the property before completion, you should stay out of the market,’ said Savills Residential director Ku Swee Yong. Such buyers could end up having to finance their purchases long term, he warned.

He noted that Singapore’s property market is stable but said there is a risk that prices could fall. If US subprime woes force mortgage insurers to write off bad insurance, this could trigger construction industry layoffs, as well as defaults on consumer credit-card rollover debt and car loans, said Mr Ku.

Some sellers appear to have lowered their expectations, particularly for high-end homes. But their asking levels are likely to remain above the purchase prices, analysts note.

In a recent classified advertisement in The Straits Times, high-floor units at Sky@eleven, a condominium off Thomson Road, were going for $1,250 per sq ft (psf). That falls short of earlier asking prices of $1,300 psf to $1,400 psf, but tops prices achieved at the launch early last year. Then, the highest price garnered was $1,200 psf, with the average at $975 psf.

‘The opportunities are there, but it is all a matter of timing,’ said a consultant. ‘In the short term, people who don’t have a lot of money to play with should think twice.’

‘Buyers should take a longer-term view and buy when they come across properties priced at acceptable levels,’ said Mr Nicholas Mak, Knight Frank’s director of research and consultancy. ‘Developers are unlikely to cut prices, which should provide support for the market.’

Buyers who plan to live in their new homes, especially if they’re using collective sale gains, have less to worry about, though choices in the primary market might be limited. ‘Developers are waiting for the tempest in the stock market to pass before launching their properties,’ said Mr Mak.

There are favourable deals in the sub-sale and resale market, and the mass and landed markets remain laggards, consultants say. Recent caveats lodged show there are favourable landed buys in suburban spots.

One seasoned property investor said he would continue to scout for bargains but would be more selective.

‘The market is nervous but it’s not doomsday. There are still good buying opportunities,’ he said, adding that he scooped up a few cheap buys just after Sars. ‘Do your homework and narrow your search to, for example, areas with a growth story.’

Where new launches are concerned, two condos have started their staff previews. Martin Place Residences in Kim Yam Road is priced at $1,800 psf to $2,300 psf. Over in Bedok Reservoir, Waterfront Waves is priced at $750 psf to $800 psf.

 

Source: The Straits Times 20 Jan 08

Regent Garden en bloc sale contested

(SINGAPORE) Allgreen Properties’ purchase of Regent Garden via a collective sale is now being contested by the majority sellers of the property, the company said in a filing to the Singapore Exchange yesterday.

BT understands that the majority owners, who together own 25 of the 31 units and over 80 per cent of the share value in Regent Garden, are saying that the sale price of $34 million was agreed to as a result of a mistake regarding the development charge.

Based on subsequent valuation reports – they claim that the true market value of Regent Garden should be between $39.7 million and $42 million.

BT understands that Regent Garden’s sales committee did not officially ascertain the development charge before entering into the agreement with Allgreen.

There is also some unhappiness at the higher prices the minority owners walked away with.

The majority owners now want the High Court to declare that the collective sale is no longer binding.

Alternatively, they are asking that they be paid an additional sum of $5.7-$6.7 million, ‘be placed in the same position’ as the minority owners of the property’, or be paid damages, according to Allgreen’s statement.

Allgreen said that it intends to ‘vigorously’ contest the claims. ‘The company’s position is that the agreement is and remains valid and binding at the original sale price of $34 million,’ it said.

Regent Garden’s sales committee filed the originating summons in the High Court on Jan 10. Allgreen was served with the summons on Jan 14.

Allgreen had previously obtained unanimous consent to the sale of Regent Garden, it said.

Allgreen also said that it commenced legal proceedings in the High Court yesterday for an order that the majority sellers complete the transaction in accordance with the terms of the agreement. The minority owners, who have agreed to complete the transaction, have joined these proceedings ‘because they have an interest in the matter’, Allgreen said.

Allgreen is being represented by Davinder Singh of Drew & Napier, while the minority sellers are represented by Ang Cheng Hock of Allen & Gledhill.

The majority owners are being represented by Molly Lim of Wong Tan & Molly Lim LLC.

 

Source: Business Times 19 Jan 08

Hotel rooms during F1 race period going fast

RATES of $1,000 a night and higher have not deterred Formula 1 fans from snapping up trackside hotel rooms for the inaugural Singapore Grand Prix.

Hotels ranging from the glitzy Ritz-Carlton Millennia Singapore to the Peninsula-Excelsior Hotel are already fully booked for the Sept 26 to 28 race. This is despite significantly higher than normal room rates of over $1,000 per night for the Ritz (about a 100 per cent increase) and $300 for the Peninsula (about a 50 per cent increase).

Two other hotels – Swissotel The Stamford and Pan Pacific Singapore – anticipate a 100 per cent occupancy rate.

One reason for the higher rates is that the Government will be imposing a special hotel tax on total room revenue from Sept 24 to 28 – the week of the race.

The tax will range from 30 per cent – for the 11 trackside hotels – to 20 per cent for all other hotels.

Trackside hotels such as Marina Mandarin ($1,500 per night) and Fairmont Singapore ($1,830) are still entertaining bookings.

The Fullerton has yet to confirm rates, but will place those interested on a wait-list.

The high take-up rate is not confined to trackside hotels.

The Four Seasons, along Orchard Boulevard, also managed to sell out all of its rooms from Sept 20 to 28.

The race will be held on Sept 28. Qualifying sessions begin on Sept 27.

Tourists are expected to form a significant portion of the 100,000 fans expected for the grand prix, and they are expected to spend around $100 million on hotels, and at food and beverage outlets, nightspots and the like.

Corporate hospitality packages ranging from $3,500 to $7,500 per head have also been selling well. These were put on the market by race organisers Singapore GP in November.

A Singapore GP spokesman declined comment, but it is believed that suites in areas such as the pit area and exclusive Paddock Club are close to being sold out.

 

Source: The Straits Times 19 Jan 08

1,098 HDB flats now open for balloting

THE Housing Board yesterday launched a ballot for the sale of 1,098 flats in Bedok, Clementi, Queenstown and Jurong West with demand for public housing staying on the boil.

The flats are surplus units from the board’s Selective En bloc Redevelopment Scheme, which relocates residents from ageing blocks to new ones nearby.

Such flats are usually highly coveted as they are located in mature estates near transport nodes and amenities.

Adding to the demand is the fact that recent hikes in private property prices have pushed more buyers to these government-subsidised flats.

Last month, an HDB ballot for 316 surplus flats in the outlying towns of  Hougang, Sengkang and Punggol drew an overwhelming 5,147 applications.

The Government responded by committing to putting out about 6,000 new flats between last month and June.

Its latest sale exercise includes 234 studio apartments for the elderly in Queenstown and Jurong West, at a cost of $54,000 to $89,000 each.

There are also 164 three-room flats priced from $180,000 to $266,000, 516 four-room flats going for $282,000 to $400,000 and 184 five-room flats between $400,000 and $520,000.

Five unfurnished sample units in Clementi and Queenstown will be open for viewing.

While some of the flats are immediately available, others will be ready by 2012.

Online applications from potential buyers must be submitted by Feb 6.

A computer ballot will determine the queue position of eligible applicants and those shortlisted will be informed in April.

 

Source: The Straits Times 18 Jan 08

Home prices stay firm even as property stocks retreat

Amid weak sentiment in a quiet market, many players are adopting a wait-and-see attitude

SINGAPORE’S property stocks have been taking a hammering lately but the property market has so far remained unscathed.

After riding the boom to dizzy heights, property counters have now dropped by up to 60 per cent or so from their high points over the past 12 months. Home prices, on the other hand, have not softened noticeably, if at all, although the number of transactions has shrunk significantly.

The share price of Wheelock Properties, for instance, closed at $1.87 yesterday, down 48.9 per cent from its one-year high on Nov 4.

But caveats lodged with the Urban Redevelopment Authority and anecdotes of more recent transactions showed no evidence of property sellers lowering their prices.

‘The stock market must fall convincingly before property prices will be hit,’ said DMG & Partners Securities head of research (retail) Terence Wong, explaining the apparent disconnect between physical properties and stock prices.

Stock investors’ worries stem from serious trouble in another housing market – the United States, which is currently embroiled in a sub-prime mortgage crisis. Fears are growing that the US is headed for recession.

In Singapore, while property buying sentiment is weakening as liquidity dries up, prices are not likely to head south any time soon, analysts said.

They say that is because most potential buyers are believed to be taking a breather for now and watching to see what comes next.

If and when these would-be buyers believe the worst of the current financial worries are over, they are set to jump back into the market, they said.

Mr Ku Swee Yong, director of Savills Residential, said: ‘Asia is still very strong and so is the Singdollar.’

‘The problem is not bad enough that expatriates have to be repatriated. Our finance industry is still growing and the expats are still renting.’

But things could get worse in the US and that would hit the general investment mood. ‘Sub-prime is but the tip of the iceberg,’ said Mr Ku.

Knight Frank managing director Tan Tiong Cheng said: ‘A prolonged US recession could contain any price increases in the property market this year. But the property market is fundamentally sound and there are buyers on the sidelines.’

Prices of upcoming launches are expected to remain firm, analysts say.

‘I believe the major developers will hold as their pockets are deep enough,’ said DMG’s Mr Wong.

Favourable interest rates will enable them to hold for a longer period, analysts say.

While launch prices are not likely to be hit, resale prices could fall, one analyst said.

Still, analysts believe many people bought properties at high prices in the past year or so and are unlikely to dump them now. Many of them are believed to have strong holding power.

Mr Ku said buyers who made use of the deferred payment scheme before it was scrapped will not be worrying about their buys for several years.

But analysts think some speculators who bought high, hoping to make a quick buck from high-end properties in Sentosa Cove, Marina Bay and the Orchard Road area, are now panicking.

High-end homes have crossed the $5,000 per sq ft mark – more than double the record price in the last peak in 1996.

The days of making quick money from the high-end property market are likely over. ‘The clock is running and there would be some speculators out there who cannot service the loans on their property,’ said one analyst.

Even so, speculators do not form a large part of the market, analysts say.

With buyers adopting a wait-and- see attitude given the current uncertainty, the market is expected to remain quiet for a while.

 

Source: The Straits Times 18 Jan 08

Marina Bay Suites priced around $3,000 psf

Over 600 potential buyers, half foreigners, have registered interest to buy units in 221-unit project

 

AT around $3,000 psf, the next luxury development to go on sale – Marina Bay Suites – looks like it could actually be quite reasonably priced, especially as luxury home prices have trended towards the $4,000 psf range.

Revealing the estimated selling price at a press conference for the upcoming sales preview of Marina Bay Suites, slated to be before Chinese New Year, Marina Bay Financial Centre (MBFC) head of residential marketing Kan Kum Wah said: ‘As a developer, we believe in leaving something behind for capital appreciation.’

Asked if this meant giving speculators more incentive to buy, Mr Kan said he doubts there will be speculative activity, but added that several investors have already expressed their interest in the development.

Marina Bay Suites is part of Marina Bay Financial Centre, being developed by joint venture (JV) partners Cheung Kong Holdings/Hutchinson Whampoa, Hongkong Land and Keppel Land.

So far, over 600 potential buyers (of whom half are foreigners) have registered their interest to buy into the 221- unit Marina Bay Suites. Mr Kan added that over 100 of these potential buyers already own a unit at the JV’s earlier launched development, Marina Bay Residences.

On the projected pricing, Mr Kan cited some sub-sale transactions for Marina Bay Residences at above $3,000.

Mr Kan also said that Marina Bay Suites will have only 218 three- and four-bedroom units ranging between 1,600 and 2,700 sq ft in size. This means units could cost in the range of $5 million to $8 million, putting them out of reach of the average property speculator. DTZ Debenham Tie Leung (DTZ) executive director Ong Choon Fah added: ‘At this price range, it will attract the investors.’

These investors will be looking for capital appreciation.

Joseph Tan, executive director (residential) at CB Richard Ellis (CBRE), which is marketing the development together with DTZ, said that capital appreciation for developments in the vicinity has been between 35 and 75 per cent in the previous two years. ‘Some have even seen 100 per cent gains,’ he added.

But news of a possible US recession does seem to have affected market confidence.

According to caveats lodged, a unit at Marina Bay Residences (excluding penthouses) did cross the $3,000-level last August. However, sub-sale caveats lodged in December show transactions at between $2,400 and $2,700 psf.

Marina Bay Suites will be initially sold through private previews.

 

Source: Business Times 17 Jan 08

Another bid to stop sale of Gillman Heights

A GROUP of minority owners at the Gillman Heights condominium is making another bid to stop the $548 million collective sale of the huge estate in Alexandra Road.

They filed a High Court appeal yesterday against last month’s decision by the Strata Titles Board (STB) to approve the sale to CapitaLand and other parties.

Among other things, the 22 disgruntled owners are appealing on the grounds that the sale of Gillman Heights should require consent from 90 per cent of owners, rather than the usual 80 per cent.

The rules say consent from 90 per cent of owners is required for estates less than 10 years old to be sold enbloc. For older estates, 80 per cent is needed.

The conflict over the required consent for Gillman Heights comes because it is a former Housing and Urban Development Company estate, said the minority owners’ lawyer, Mr Richard Tan, from legal firm Tan Chin Hoe & Co. It has engaged Senior Counsel Michael Hwang to act for the minority owners.

The minority owners point out that although the estate was completed in 1984, it was privatised only after a seven-year process that ended in 2002. They argue that this should be the date from which the age of Gillman Heights is calculated.

Majority owners say that 87.5 per cent of owners at the condominium signed the collective sale agreement, which places it outside a 90 per cent consent mark, Mr Tan said.

However, the minority owners are also contesting this figure. They say the original sale agreement expired before the STB heard the sale application while the subsequent supplementary agreement had signatures from less than 80 per cent of owners.

Another bone of contention is the estate’s price, Mr Tan said.

He said the majority owners’ valuation report valued the condominium at $530 million as of last February, when the estate was sold. But a separate report commissioned by the minority owners valued it at $660 million.

The Gillman Heights appeal follows similar legal battles over other collective sales.

The most high-profile case is that of Horizon Towers in Leonie Hill, where minority owners earlier this month filed a High Court appeal against STB’s go-ahead.

Other estates embroiled in legal collective sale tussles include Finland Gardens in Siglap, Regent Court in Serangoon Road and Airview Towers in St Thomas Walk.

 

Source: The Straits Times 17 Jan 08

Marina Bay Suites to go on sale this month

PREVIEW sales of the posh Marina Bay Suites will start before the end of the month, even though sentiment in the property market remains weak and the stock market is very rocky.

About a year ago, apartments like this – in the new downtown and preferably with a bay view – were setting new price benchmarks.

For instance, Marina Bay Residences attracted large crowds and achieved a record price of $3,450 per sq ft (psf) in December 2006.

But since then, Orchard Road properties have emerged as some of Singapore’s hottest properties, crossing $5,000 per sq ft (psf).

Also, the market has now slowed significantly, weighed down in part by fears of a United States recession.

Market sources said Marina Bay Suites could sell for $3,000 psf and above, so the units could go for $4 million to possibly more than $20 million for the penthouses. The condominium is being marketed around the globe.

‘Marina Bay is a growth area,’ said marketing agent DTZ’s regional head (consulting and research), Mrs Ong Choon Fah. ‘This is the next big thing.’

A series of previews for the 221-unit, 99-year leasehold Marina Bay Suites will be held late this month. To the project’s head of residential marketing, Mr Kan Kum Wah, the time is right. ‘As a joint venture, we believe that the market currently is strong enough,’ he said.

The 66-storey condo, which together with two office blocks form phase two of the Marina Bay Financial Centre, is being developed by Cheung Kong (Holdings)/Hutchison Whampoa, Hongkong Land and Keppel Land.

Every unit comes with its own private lift lobby and there are just four units of 1,600 to 2,700 sq ft per floor.

Apart from three penthouses – which range from 4,700 sq ft to more than 8,100 sq ft, each with its own swimming pool – the rest are three- and four-bedders.

‘It is one of the last sites in the bay area with bay views,’ said Mr Joseph Tan, executive director (residential) at CB Richard Ellis, which is also marketing the project.

Elsewhere, Frasers Centrepoint will start staff previews for its freehold Martin Place Residences in Kim Yam Road today and its Waterfront Waves in Bedok Reservoir tomorrow.

But most other launches are expected to take place only after the Chinese New Year celebrations next month.

 

Source: The Straits Times 17 Jan 08

Transitional office site fetches just one bid

Mezzo’s $7.8m offer for Aljunied site also below expectations

INTRODUCED as a quick fix to address the shortage of office space, the new transitional office sites may just as quickly become redundant.

The Urban Redevelopment Authority (URA) closed the tender for the fourth transitional office site at Aljunied Road and Geylang East Avenue 1 yesterday with only one bid received.

The bid price was also below earlier market expectations at $7.8 million or a unit land price of $38.35 per square foot per plot ratio (psf ppr).

The bidder was Mezzo Development, which also put in the top bid for the third transitional office site at Mountbatten earlier this month. Only three bids were received then with the top bid coming in at $69.17 psf ppr.

In November 2007, the second transitional site in Tampines also received a single bid of $80.65 psf ppr.

The recent tenders are a stark comparison to the first one, which saw 11 bids received in August 2007 and a top bid of $219 psf ppr.

That the site was next to Newton MRT Station may have had something to do with it.

Cushman & Wakefield managing director Donald Han said that demand (and prices) could increase if the transitional office sites are more attractive. But at the going rate, these sites could well be phased out. Mr Han said:

‘At some stage if demand (and prices) drops even further, the government will have to decide if these sites are relevant.’

As at December 2007, the URA had said in its H1 2008 land sales press release that, ‘more sites in a number of locations will be made available for the development of transitional offices’.

But as Mr Han notes, the closer in time these sites are released to 2010, when projected new office supply comes onstream, the higher the risks involved in developing them. ‘The window of opportunity for whoever buys these sites is getting narrower,’ he added.

While Savills Singapore director (marketing and business development) Ku Swee Yong does not believe that there would be an oversupply of office space in 2010, he does feel that transitional offices are not entirely feasible either.

‘Especially when you consider construction time and rising construction costs,’ he said.

Mr Ku, who estimated that construction time alone could take between 9 and 12 months, added: ‘I don’t think we need to keep launching these (transitional) sites.’

 

Source: Business Times 17 Jan 08

Las Vegas Sands draws down $2b for S’pore IR

LAS Vegas Sands Corp, the world’s largest casino operator by market value, has drawn down $2 billion from its credit facility for the building of a Singapore casino, it said in a statement yesterday.

The company is paying an interest margin of 3.6 percentage points more than the 30-day Singapore dollar swap offer rate, it said in the statement.

Las Vegas Sands got its initial funding for the integrated resort in Singapore at a time when the credit markets are roiled by rising borrowing costs due to concern about losses in US sub-prime mortgages. The Singapore dollar one- month rate is at 1.5 per cent, 2.5 percentage points lower than the one-month London interbank offered rate (Libor), a benchmark for US dollar borrowings.

‘The credit facility, which is the largest private Singapore dollar-denominated financing ever completed, will provide flexible and cost effective financing’ for the gaming resort, Sheldon Adelson, chairman of the casino company, said in the statement. ‘We are quite gratified that the Singapore interest rate is significantly below the rates which we would have to incur in the US or other international markets in today’s market.’

About 42 per cent of the US$24.8 billion that loans companies received in Singapore in 2007 are in the local currency, compared with 25 per cent of US$26.1 billion of debt for 2006, according to data compiled by Bloomberg.

‘Bank liquidity is extremely strong in Singapore,’ said James Chua, who helps manage US$450 million at Phillip Capital Management Ltd in Singapore. ‘This is a low-risk project due to the duopolistic nature of the casinos and the high execution skill of Las Vegas Sands.’

Singapore Prime Minister Lee Hsien Loong’s government has pledged to allow only two casinos in country in the next 10 years. The nation ended a four-decade ban on casinos in a bid to triple tourism revenue to $30 billion by 2015.

The other casino licence was awarded to Malaysia’s Genting International plc, owned by Kuala Lumpur based Genting Bhd. Genting is building a casino resort on Sentosa island.

The Singapore resorts will capture a slice of the regulated gambling market in the Asia-Pacific region, expected to expand 15.7 per cent a year to US$30.3 billion in 2011, according to PricewaterhouseCoopers LLP. The loan will also test the city-state’s debt market, where more loans are being issued in the local currency.

Las Vegas Sands hired eight banks, including Goldman Sachs Group Inc and Singapore-based companies DBS Group Holdings Ltd, Oversea-Chinese Banking Corp and United Overseas Bank Ltd, to arrange the $5 billion borrowing, according to three people, who declined to be identified because the information is private, on Sept 20.

The other four arranging banks are Morgan Stanley, Merrill Lynch & Co, Lehman Brothers Holdings Inc and Citigroup Inc.

The casino company’s debt is rated three steps below investment grade at ‘Ba3′ by Moody’s Investors Service and an equivalent ‘BB-’ by Standard & Poor’s.

Las Vegas Sands’ downtown Marina Bay resort, next to Singapore’s business district, will feature three hotel towers linked by a sky garden, a convention centre, restaurants run by celebrity chefs Charlie Trotter and Thomas Keller, and an art-and-science museum.

 

Source: Bloomberg Business Times 17 Jan 08

2008 construction deals seen hitting record $27b

BCA forecast based on strong demand from private sector

(SINGAPORE) The value of construction contracts awarded this year will reach $23-27 billion on the back of strong demand from the private sector, according to official estimates released yesterday.

Last year, the total value of construction contracts awarded hit $24.5 billion – also mainly due to strong private sector demand – according to the Building and Construction Authority (BCA).

The figure came in slightly above analysts’ estimates of around $24 billion as well as BCA’s previous estimate of $19-22 billion.

In terms of nominal value, last year’s figure is higher than the peak demand of $24.4 billion seen in 1997. But if inflation is taken into account, last year’s demand still fell about 9 per cent short of the total value of contracts awarded in 1997, BCA said.

Analysts said that the pace of contracts awarded in 2007 shows that growth is still to come.

‘The $24.5 billion number is certainly impressive,’ said Citigroup economist Kit Wei Zheng. ‘Consider this. In the first 10 months of the year, we had $18.5 billion of construction contracts. This implies that $6 billion of contracts were awarded in November and December alone – roughly $3 billion a month. This is far higher than the $1.85 billion monthly average in the January to October period.’

Mr Kit said that the trend indicates that the pipeline of future contracts is likely to support construction GDP growth well into the second half of 2008 and 2009.

For this year, the private sector is again expected to account for the bulk of construction demand, mostly from residential and commercial developments. In 2007, some $18.8 billion worth of contracts came from the private sector.

However, the high construction demand is expected to continue to exert pressure on the construction industry’s resources by driving costs up and leading to a capacity crunch.

In 2007, the price of ready-mixed concrete climbed 75 per cent to $130 per cubic metre, while the price of steel bars rose 34 per cent to $1,000 per tonne, BCA’s data showed. Labour costs are also on the way up. Overall construction costs increased as much as 40 per cent last year, analysts said.

Many developers are also reporting that most contractors are fully booked for 2008.

Addressing this, the government said that it is ‘taking proactive measures’ to ease the pressure on construction resources.

Last November, it identified more than $2 billion worth of public sector projects that could be rescheduled to 2010 or beyond. ‘All ministries are currently combing through their list of projects to identify more projects for rescheduling,’ Parliamentary Secretary for the Ministry of National Development Mohamad Maliki bin Osman said yesterday.

BCA will also increase the number of overseas testing centres to 25 by mid-2009, up from 19 at present. This would allow more foreign workers to be employed.

The government is also encouraging the industry to use more recycled and alternative construction materials. A proposed licensing scheme for importers of materials like sand and granite is being finalised, said Dr Maliki.

He said that the assistance scheme that BCA implemented last year to share the risk of bringing in sand from distant sources will be ended, since it has been a year since Indonesia banned the export of concreting sand to Singapore. ‘The move is based on feedback from the industry that the scheme is no longer necessary,’ Dr Maliki said.

BCA also intends to continue to encourage the development of environmentally sustainable buildings. New guidelines on concrete usage will be introduced later this month, it said.

 

Source: Business Times 16 Jan 08

Sleepy December takes the shine off sparkling year

Record 14,826 private home sales in 2007, but only 305 in its last month

(SINGAPORE) A year that started with a bang ended with a whimper. Developers sold a record 14,826 private homes last year – a third more than the year before. But sales slowed to a trickle in December at only 305, or half the 593 in November. This reflected slower launches amid a cautious buying mood. Private home purchases by individuals in December were actually much weaker, as almost 32 per cent of developers’ sales that month were accounted for by GuocoLand’s bulk sale of 97 units at Goodwood Residence to Kuwait Finance House.

CB Richard Ellis’s analysis of the Urban Redevelopment Authority’s data on developers’ December private home sales in 2007 shows 90 per cent were in the first nine months, before the market turned wary on factors such as global stockmarket volatility, US sub-prime mortgage problems, escalating oil prices and inflation.

Analysts say other factors that dented the home-buying mood in December were the withdrawal of the deferred payment scheme in October, triggering fears of more cooling measures, as well as a general holiday mood. Knight Frank’s analysis shows the median price of private homes and executive condos (ECs), a hybrid of public and private housing, sold by developers fell 4.2 per cent to $1,063 psf in December from $1,110 psf in November.

Again, market watchers point out that the median price for December would have been much weaker if not for GuocoLand’s sale of the 97 Goodwood Residence units at a median price of $3,200 psf.

Another reflection of the ‘dwindling value’ of units transacted was that developers sold only five in December at more than $4,000 psf, down from 17 in November, said Knight Frank’s director (consultancy and research) Nicholas Mak.

The highest-priced transaction in the primary market in December was $5,146 psf, achieved for The Ritz-Carlton Residences at Cairnhill Road. A check with developer Royce Properties, part of Hayden Properties, showed the price was for a four-bedroom unit on the 31st floor. December’s highest unit price was still shy of the record $5,600 psf set in October at The Orchard Residences.

The lowest transaction in the primary market last month was $571 psf for an apartment at D’Lotus in Lorong Ampas.

Jones Lang LaSalle said the average gap between the highest and lowest transacted prices has been narrowing across all three regions used by URA – the Core Central Region, Rest of Central Region and Outside Central Region – in the past few months. In December, the gap was narrowest in Outside Central Region at just 5 per cent, compared with 12 per cent in November. The gap was 8.2 per cent in Core Central Region and 9.8 per cent in Rest of Central Region last month, again smaller than November’s 11.4 and 25.7 per cent.

‘The more bullish and speculative buyers are, the bigger the gap tends to be, reflecting their willingness to pay higher prices and leading to a bigger disparity between lowest and highest prices in a development,’ said JLL’s head of research (South-east Asia) Chua Yang Liang. ‘When buyers turn cautious, the disparity reduces – which is what we are seeing now.’

Colliers International director Tay Huey Ying said that of the 492 private homes and ECs launched by developers in December, only 47 per cent were sold that same month. This was lower than November’s figure of 70 per cent.

‘With all the uncertainty on the direction of home prices, many potential buyers chose to stay on the sidelines, especially since it was also the holiday period,’ Ms Tay noted. ‘Hopefully, there will be clearer signs on the direction of the market after Chinese New Year.’

The official index for private home prices rose 31 per cent last year, going by an earlier flash estimate. CBRE, which is predicting 10-15 per cent appreciation in the index this year, expects most of this gain to come from the mass-market and mid-tier sectors. It expects developers to launch 12,000-15,000 private homes and to sell some 9,000-11,000.

‘Although the mood seen in Q4 2007 has persisted in January, it is likely that sales momentum will pick up as developers launch more projects to give more choice to potential buyers,’ CBRE said.

Yesterday’s data shows developers launched 492 private homes in December, down 17.7 per cent from November.

However, the full-year tally of 14,049 private homes launched in 2007 was up 27 per cent from 2006.

 

Source: Business Times 16 Jan 08

CapitaLand, NUS sell Hitachi Tower

CAPITALAND has sold its 50 per cent stake in Hitachi Tower for $403.5 million, the property giant said yesterday.

Upon the deal’s completion, CapitaLand will recognise a gain of $110.1 million, it said.

The National University of Singapore, which owns the remaining 50 per cent of the Collyer Quay office building, also sold its stake.

The deal took into consideration the agreed value of the 999-year leasehold Hitachi Tower at $811 million, or about $2,900 per square foot (psf) of net lettable area. The consideration was arrived at on a willing-buyer willing-seller basis, CapitaLand said.

The developer did not name the buyer in its filing to the Singapore Exchange, but sources said that the building was bought by a fund linked to Goldman Sachs.

Goldman Sachs bought the next-door Chevron House, formerly known as Caltex House, for $2,780 psf in August last year. Chevron House is on a site that had a remaining lease of 81 years at the time of the transaction.

The 37-storey Hitachi Tower has a net lettable area of around 279,600 square feet. The building had close to 100 per cent occupancy as at Dec 31, 2007, and key tenants include Hitachi Asia and American Express.

Market watchers have said that it makes sense for Goldman to own two adjoining office blocks as it can take advantage of managing them together, as well as look into the possibility of redeveloping both properties collectively.

A Goldman Sachs real estate fund also bought DBS Towers 1 and 2 on Shenton Way in November 2005 for $690 million, or around $800 psf of net lettable area.

Based on CapitaLand’s unaudited financial statements for the nine months ended Sept 30, 2007, the group’s earnings per share would have increased from 74.4 cents to 78.3 cents assuming that the sale was effected on Jan 1, 2007, the company said.

CapitaLand’s shares shed 13 cents to close at a one-year low of $5.62 yesterday amid a broad fall in the Singapore stock market. The company’s stock price has dropped some 10.4 per cent since the start of the year.

Source: Business Times 16 Jan 08

Welcome them home at Keppel Bay on Saturday

A GRAND homecoming is planned for the Uniquely Singapore Clipper at Keppel’s new Marina at Keppel Bay on Saturday. The home boat crossed the finish line off Batam, Indonesia in seventh place around 1pm Singapore time yesterday.

There are another two Clipper yachts which have yet to finish and they are expected in some time tomorrow. All the ten boats are mustering at Batam’s Nongsa Point Marina before making a ceremonial entrance as a fleet on Saturday.

The arrival of the Clipper fleet will lend colour and excitement to the opening of Singapore’s newest marina on Keppel Island, which faces Keppel Land’s Caribbean @ Keppel Bay and Reflections @ Keppel Bay condo developments. Senior Minister Goh Chok Tong will be present.

‘Keppel is delighted to contribute to the vision and vibrancy of this southern waterfront with Marina at Keppel Bay, where premium berths and facilities stand ready to host yachts up to 200 feet and international events such as the Clipper 07/08 Round the World Yacht Race,’ said Keppel Corp group corporate communications general manager Wang Look Fung.

Keppel Corp is a main sponsor of the Uniquely Singapore Clipper and has also sponsored six Keppel ambassadors as crew onboard the boat. The Singapore Tourism Board (STB) is a race partner.

‘The dramatic transformations in this southern precinct, of which Keppel Bay is an integral part, will promote Singapore as a leading sailing and boating destination in Asia and we believe that with the slew of exciting waterfront developments and activities at Keppel Bay, Sentosa and the surroundings, more international yachts and boaters will be attracted to visit Singapore,’ Ms Wang said.

Winnie Pua, STB’s director for brand management, said: ‘The international following and goodwill that the race brings will help promote Singapore’s attractiveness as a leading sailing and boating destination in Asia and an ideal place in which to live, work and play.’

The boats are making a stopover in Singapore from Jan 19 to 27 as part of leg four of the 35,000-mile Clipper 07/08 Round the World Yacht Race. From Singapore, the boats will head up north to the Olympic sailing city of Qingdao in China.

The public is invited to watch the boats arriving in Singapore and also to visit the boats while they are in the marina, where they will have an opportunity to chat with the crews. The boats are due to start coming into the marina from around noon on Saturday and there are public access areas all around the promenade on Keppel Island where people can get good views.

It’s a wrap.

 

Source: Business Times 16 Jan 08

Record sales of new private homes in 2007

Total of 14,826 sold, mostly in first nine months, before sales slid sharply at year-end

HOMEBUYERS picked up a record number of new private homes last year – before demand dipped sharply at year-end.

They bought 14,826 new homes in the year, up from 11,147 the year before, according to the latest figures from the Urban Redevelopment Authority (URA).

This all-time high figure was boosted by sales in the first nine months, when 90 per cent of last year’s deals were done, said property consultancy CB Richard Ellis (CBRE).

Demand then went into a freefall in the last months of the year amid a slew of worries, including concerns over the United States sub-prime mortgage crisis.

New home sales, which had averaged 1,480 a month between January and September, fell to below 600 per month in October and November.

Last month, a mere 305 deals were done, the lowest number since the URA started tracking monthly new home sales in June. All the figures exclude executive condominiums.

December also saw a dip in the median price of new homes. Price gaps within each category of new homes also narrowed, said consultancy Jones Lang LaSalle (JLL). It noted that the gap between the highest and lowest prices for city-centre and mid-tier homes narrowed to its smallest in recent months.

But the year-end decline was ‘expected’, said JLL’s head of Singapore research, Mr Chua Yang Liang. He said the ‘looming uncertainty from the US sub-prime issue’, coupled with the usual ‘lull period’ in December led to fewer launches of new projects and fewer home sales.

Developers tend to launch fewer projects at the end of the year because of the holidays. They launched only 1,673 units in the fourth quarter last year, about a third of that in each of the first three quarters.

But a bigger reason for the slowdown could be the fact that recent asking prices have soared so much, said Mr Ku Swee Yong, director of business development and marketing at Savills Singapore. ‘A lot of recent new home transactions are at record-high prices,’ he said.

Last year, developers sold almost 200 new homes at more than $4,000 per sq ft (psf), Savills said – a level never reached in previous years.

Even in December, three units at the Ritz-Carlton Residences in Cairnhill went for more than $5,000 psf.

Units at the Marina Collection also fetched record prices for Sentosa Cove last month at a median price of $2,734 psf, said CBRE.

‘There is now a 15 to 20 per cent gap between what developers are asking for and what buyers seem willing to pay,’ Mr Ku said.

This has led to a ’stand-off’ and a more cautious mood among buyers which may persist well into this year, he added.

Already, the median prices of new uncompleted units have started to slide, said Knight Frank. They eased from $1,110 psf in November to $1,063 psf last month.

New home sales last month dropped off most in the mid-tier and suburban regions, consultants said.

Only 56 mid-tier units were sold in December, 80 per cent less than in November. For suburban projects, the number of units sold fell 35 per cent to 60.

In the prime city centre, new home sales jumped 36 per cent to 175, boosted by a bulk purchase of 97 units in Goodwood Residences at a median price of $3,200 psf.

New launch Zenith in Zion Road also helped city-centre sales, with 37 units sold at a median price of $1,665 psf.

 

Source: The Straits Times 16 Jan 08

Building boom may lift deals to new high

Record $24.5b in contracts last year, with private sector leading the way

ROCKETING demand propelled the construction industry to record levels last year, eclipsing even the glory days of 1997, with even more to come this year.

Contracts totalling $24.5 billion were awarded last year, up 46 per cent from the $16.8 billion in 2006 and just above the $24 billion in the boom year of 1997.

The figures cover private projects and public works, such as new MRT lines, but private sector demand was the key driver behind the record numbers.

Mega projects like the Marina Bay Sands integrated resort (IR), Marina Bay Financial Centre and Somerset Central lifted private commercial contracts to a record $5.1 billion, according to official figures announced at an industry seminar yesterday.

Demand shows no sign of slowing, with contracts for this year forecast at between $23 billion and $27 billion, depending on whether some large projects get held back.

The bulk of the demand this year and next will come from developments such as the IRs and the Downtown MRT line.

Construction stocks also prospered. Chip Eng Seng closed at 55 cents yesterday, below its high last year but up from a low of 31 cents last March. Lian Beng Group has risen from a low of 22 cents in March to 63.5 cents yesterday.

But there are concerns amid the bright outlook, including rising costs.

Dr Mohamad Maliki Osman, Parliamentary Secretary for National Development, told the Construction and Property Prospects 2008 seminar that high demand will keep exerting pressure on resources.

This demand has already placed ‘a tremendous strain’ on resources and has led to a ‘chaotic price escalation’, said Mr Seah Choo Meng, executive chairman of Davis Langdon & Seah Singapore, one of the seminar speakers.

He warned that if prices are not reined in, they will hurt the industry and even the overall Singapore economy.

‘There will be some negative impact this year, but we have built up a momentum which can be maintained for the next two years,’ he said.

The Government has reduced some pressure by putting more than $2 billion worth of projects on the backburner until 2010 at least, with more to come.

‘All ministries are currently combing through their list of projects to identify more projects for rescheduling,’ said Dr Maliki.

He urged the industry to move towards sustainable construction, which is environmentally friendly and can enhance Singapore’s resilience against supply fluctuations in basic construction materials.

He also said the Building and Construction Authority (BCA) will release information on demand to enable the industry to get a better feel of the market and plan more efficiently.

It has all been a stark turnaround for a sector that was in the doldrums just three years ago. Now that things are rosier, contractors are facing new challenges.

The industry continues to grapple with the uncertainty of material prices, said Singapore Contractors Association president Desmond Hill.

Ready-mixed concrete is around $130 a cu m, compared with about $190 during the Indonesian sand ban last year and $74.40 at the end of 2006. Prices could rise to $150 per cu m in the next few years.

Steel bars cost about $1,000 a tonne, up from $744 a year ago, said the BCA.

There is also a lack of middle management staff as many bailed out of the sector in the last downturn, Mr Hill said.

 

Source: The Straits Times 16 Jan 08

Hedge fund gets into property development

HEDGE funds do not usually get into property development, but a home-grown firm is venturing into the real estate game despite signs the roaring high-end market is slowing.

Ferrell Asset Management will develop Ferrell Residence, a project consisting of luxury flats and penthouses on a 31,371 sq ft site opposite Anglo-Chinese School (Barker Road), next to City Tower.

The freehold estate in Bukit Timah will have about 30 units worth at least $2,300 per sq ft.

Ms Jeanna Chan, executive director of Ferrell Asset Management, which manages more than US$700 million (S $1 billion) worth of assets, said the project would be launched around the middle of the year.

It signals a major shift for Ferrell. It has been a big investor in existing properties and counts real estate players such as Indonesia’s Lippo Group as investors, but developing has not been in its game plan.

Ms Chan, however, sees it as a logical move.

‘Development is a natural and strategic extension of our experience in managing properties,’ she explained. ‘I feel this is an opportunistic move in light of our outlook for local and regional properties.’

Ferrell’s property portfolio includes The Trillium, 100 condominium units at RiverGate and 52 per cent of strata units in 79 Anson.

Ferrell is one of the few funds that have spent big money on single residential projects.

One play involved outlaying more than $182 million to buy units at RiverGate three years ago.

While non-property firms have ventured into real estate development – publisher Eastern Holdings is one – it is unusual for hedge funds.

Most funds typically invest in properties directly or via other property funds or team up with developers to take stakes in projects.

‘When we have a property boom, it is not surprising that we have more players going into property development than the traditional developers,’ said Daiwa Institute of Research analyst David Lum.

While industry watchers do not doubt Ferrell’s ability to profit by buying and selling properties, they say developing is a different ball game altogether.

‘You have to market the building. You need coordinators with real estate experience to manage the building. It’s a case of specialising in what you do best,’ Knight Frank director of research and consultancy Nicholas Mak said.

‘Ferrell has always been deemed to be different compared to our peers in this market. Our principals are business-oriented in outlook other than being hedge fund managers,’ Ms Chan said.

Ferrell’s move may encourage other funds with the financial muscle to develop their own properties.

With assets so pricey, spotting an undervalued real estate deal becomes more difficult, so hedge funds would rather develop their own to sell.

‘Now that interest rates have gone down, liquidity will be improved, and that will be an excellent time for the likes of private equity firms and funds to come back again,’ said Jones Lang LaSalle Asia Pacific head of investments Lui Seng Fatt.

With interest rates being driven down further, sources of funding are becoming more attractive for hedge funds, he added.

 

Source: The Straits Times 16 Jan 08

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Telok Blangah, HarbourFront set to get more waterfront homes

But areas closest to Mt Faber unlikely to achieve much higher plot ratios: JLL

(SINGAPORE) More waterfront homes, some tucked into the lower part of Mount Faber, could spring up in the Telok Blangah and HarbourFront precincts under Master Plan 2008, according to a recent study by Jones Lang LaSalle.

The impetus for more intensive use of residential land in these locations – which include a few sites currently occupied by Housing and Development Board flats – is the improved accessibility these precincts will enjoy because of the new Circle Line.

Another factor is a spillover of the hype from nearby developments like VivoCity, the nightspot at the restored St James Power Station, Reflections at Keppel Bay condo and Resorts World at Sentosa.

However, the areas closest to Mount Faber are unlikely to see much intensification in land use as they are part of a proposal to connect the ridges from Mount Faber to West Coast Park under the Urban Redevelopment Authority’s 2002 Identity Plan study, JLL reckons.

‘The recent market interest and demand for waterfront housing is likely to give planners the confidence to embark on more bold plans to capitalise on these features – hills overlooking the waters – around these two precincts but careful not to impinge on the natural landscape,’ says JLL’s head of research (South-east Asia) Chua Yang Liang.

‘Hence we can expect higher plot ratios but with urban control, that is, height limit. The likes of Mediterraneanstyle waterfront housing tucked into the hills is not difficult to imagine.’

Generally, JLL expects sites closer to the sea or near Mount Faber to be accorded low plot ratios – of 1.4 and 1.6 respectively – with accompanying height limits of five storeys and 12 storeys respectively. This is to ensure that residential developments further inland will be able to enjoy the water views, and that similarly, the view of Mount Faber from Sentosa will not be obstructed.

Most of these seafronting and foothills sites identified in JLL’s study are owned by the state and are either vacant or being used for car parks, a bus terminus and a food centre. They are all zoned for residential use under the existing Master Plan 2003 but without any plot ratios specified as they are subject to detailed planning.

However, JLL also highlighted four sites further away from Mount Faber and the waterways which it said stood a chance of being accorded higher plot ratios, ranging from 2.8 to 3.5, because of their proximity to the new Telok Blangah Station on the Circle Line. Two of these sites are now occupied by HDB flats while the other two are vacant state sites which could be suitable for sale to developers for residential projects, JLL suggests.

However, another plot flanked by Morse and Wishart roads and comprising vacant state land and private shophouses – currently zoned for residential use, without any plot ratio specified – is likely to be accorded a plot ratio of only 1.4 and a five-storey height limit, JLL reckons. This is to ensure that any new developments there will not block the views of colonial black-and-white houses and other buildings along and on the apex of Mount Faber, JLL argues.

The government last year ruled out major across-the-board plot ratio increases in the upcoming Master Plan 2008 – a pronouncement that some property market watchers say may have been aimed at avoiding fanning the en bloc fever at the time. But JLL has argued for selective plot ratio increases under MP 2008, mostly for vacant state land near Circle Line stations, especially at intersections with other MRT lines.

It even suggests that a site close to the new Telok Blangah MRT Station currently occupied by two private condos – Fairways and Harbour View Towers – could see its plot ratio raised from the present 2.1 to 2.8, because the site is close to the new station.

‘However, bearing in mind that these two developments are on private land, the plot ratio is not likely to be increased to as high as the 3.5 designated for some surrounding residential sites (occupied by HDB flats) to ensure that windfall gains from intensifying land use are socially equitable and not excessively accorded to a few private individuals/landowners,’ JLL added.

‘Historically, the districts along Singapore’s western coastline were dotted with exclusive homes – sitting on a hill and overlooking the sea – until port activities were extended to Pasir Panjang,’ Dr Chua notes. ‘Nevertheless, the intrinsic attractions of this location remain; and the transformation of the area has already begun with the new developments in the HarbourFront location and Sentosa. It may take more time before gentrification spreads to the Pasir Panjang area, but Telok Blangah and HarbourFront are definitely two precincts that are ripe for this transformation.’

 

Source: Business Times 15 Jan 08

New Orchard MRT passageway set to dazzle

Opening today, the entrance-exit will link station to ION Orchard

BE ready to be greeted by friendly ushers and, if you are early enough, the aroma of a free cup of coffee will make your day too as you exit from the ticket counter at Orchard MRT station today.

Also, take time to admire the largest LED walls in Singapore when you ride the escalator to get out onto Orchard Road.

All these and more are what await commuters when a new 90-metre entrance-exit, boasting stylish design finishes and creative ceiling lighting, opens this morning at Orchard MRT station.

It replaces the existing Exit C of the station, which was sealed off for ongoing construction of ION Orchard above the station.

The new shopping mall boasting several global fashion brands is slated to open in early-2009.

Commuters should have no problem finding their way.

Other than ION Orchard’s suave male ‘butlers’ serving gourmet coffee and fruit juice to early commuters and MRT staff ushers, Wisma Atria has engaged a dancing ‘traffic cop’, believed to be the first in Singapore, to guide commuters who want to go to Wisma Atria and Ngee Ann City.

Traffic policemen who dance while directing traffic were popularised when videos of them were first posted on YouTube.

Disoriented commuters can also look to homegrown dance group Sugar N Spice for directions at the station this weekend.

‘The new entrance gives commuters a sense of anticipation for ION Orchard,’ said Soon Su Lin, chief executive officer of Orchard Turn Developments.

‘Aesthetics, comfort and convenience guide us in the design of our mall, as has been the case for this new MRT entrance-cum-exit.

‘When ION Orchard is completed, shoppers can expect a seamless and convenient access to the mall by train, car and public road transport and direct connectivity to adjacent and nearby buildings,’ Ms Soon said.

The new entrance-exit at the station brings commuters closer to Wheelock Place, Tangs and the upper side of Orchard Road.

The passageway also leads pedestrians to a new 117-metre walkway that stretches from the traffic light junction to Wisma Atria and Ngee Ann City.

The walkway will be fully covered in two weeks.

 

Source: Business Times 15 Jan 08

Retail space turns competitive

Concerns over new supply, rising costs even though occupancy is high

DTZ Debenham Tie Leung has raised some concerns about the market for retail space turning competitive as more developments are completed in the next few years.

It said that while occupancy in the retail market remained high at 90 per cent, there were some concerns about the effect of rising costs and the surge in new retail developments since 2006, as more than three million square feet of retail space, about 7 per cent of existing stock, was completed in the past two years.

According to its report, a further 15 per cent of new space can be expected to be added to the existing stock of 28.5 million sq ft of retail space by 2010.

As such, DTZ expects the retail market to be increasingly competitive, with substantial retail space that will be completed in the next three years.

These include projects like ION Orchard (663,000 sq ft) and Orchard Central (270,000 sq ft) which will be completed in 2008 and will house a significant number of retailers new to the Singapore market.

The rate of increase for first-storey monthly fixed gross rents in the Orchard/Scotts Road area slowed marginally in 2007, registering a 6.6 per cent increase year-on-year (YOY) compared with a 7.4 per cent increase in 2006 YOY.

For Other City Areas (OCA), first-storey monthly fixed gross rents rose by 5.9 per cent in 2007 YOY, up from 5.4 per cent for 2006.

First-storey monthly fixed gross rents in Suburban Areas (SA), rose 5.7 per cent in 2007 YOY, up from 4 per cent for the same period in 2006.

DTZ executive director Ong Choon Fah said that she expected new malls to continue to set new benchmark rents this year, but added: ‘Run-of-the mill malls could suffer.’

Noting that there has been ‘more resistance from retailers’ in terms of rental increases, Mrs Ong also highlighted that while there was limited growth in average monthly fixed gross rents, there was greater increase in turnover rents, or the component of the rent determined by the retailer’s revenue.

And active management of malls, as demonstrated by some of the Reit-owned malls, remains a key factor in staying competitive.

Saying that ‘not all malls work’, Mrs Ong added that mall managers will have to work to ‘tease out shoppers’ dollars’.

On some of these new strategies, DTZ associate director for retail Anna Lee added: ‘New niche retail space continues to energise the retail market as mall managers actively raise additional retail space through refurbishments, asset enhancement and redevelopment.’

Competition is also coming from abroad.

Mrs Ong said that there is anecdotal evidence that many Singaporeans have been travelling to Kuala Lumpur over the current festive season to shop. She also noted that as development costs are lower there, mall owners can afford larger malls that offer more innovative retail concepts. ‘It is not uncommon for new malls to be one million sq ft in size and there are even two million sq ft malls.’

DTZ also noted that young shoppers especially are valuing individuality more than before and prefer to shop through less popular channels, such as virtual retail, for exotic brands.

So besides having to grapple with significant supply, the retail market will also have to respond to structural changes in retailing and emerging consumer preferences, DTZ said.

 

Source: Business Times 15 Jan 08

Converting hotels into condos just got harder

Rules to ensure that sites zoned as hotels are not switched to other uses

(SINGAPORE) Redevelopment plans involving the likes of Four Seasons Hotel along Orchard Boulevard and Negara on Claymore may have to go back to the drawing board after the government tightened hotel conversion rules yesterday. If the owners of these properties had visions of converting them to other uses – including residential – they may have to think again.

The tightened rules will put a dampener over possible conversion plans. At the same time they will ensure that there is sufficient supply of hotel rooms in key tourist districts like Orchard Road, amidst the tourism boom.

As a general rule, hotels located on sites zoned for hotel use under the Master Plan will not be allowed to convert to other uses. The same goes for hotels that are located within zones for other uses but where there is a specific planning or sales requirement for a minimum hotel quantum to be provided, Urban Redevelopment Authority and Singapore Tourism Board said in a joint release yesterday evening.

‘The revised approach to evaluating hotel conversion applications will ensure that the location and number of hotel rooms safeguarded are in line with planning intentions and strategic planning objectives,’ the two government bodies said.

This supersedes a policy revision announced in 2002 when 19 hotels which had been previously safeguarded for hotel use under an earlier 1997 ruling were removed from the safeguard list. This meant that their owners could apply to convert the properties to other uses.

However, owners of 18 of these 19 hotels will now not be allowed to convert their sites to other uses such as residential, since these sites are zoned for hotel use under the current Master Plan 2003.

Apart from Four Seasons and Negara on Claymore, the affected hotels include York Hotel along Mount Elizabeth, Hotel Grand Central, Hotel Supreme and Holiday Inn Parkview – all in the Kramat/Cavenagh roads vicinity.

These are all prime district locations and their owners could have had aspirations to convert them to other uses, especially residential, to optimise their land values.

Hotel Properties Ltd has long-standing plans to redevelop Four Seasons Hotel, along with its other three neighbouring properties – Hilton Hotel, Forum and HPL House – into a mega project along Orchard Road.

In 2006, UOL Group gained control of Hotel Negara Ltd, eyeing its key asset, the hotel that it has since renamed Negara on Claymore.

Market watchers had expected UOL to redevelop the property into a residential project or a small office, home office (Soho) development in the longer term.

The list of 19 hotels removed from the hotel safeguard list in 2002 and which are zoned for hotel use under Master Plan 2003 also include a string of hotels in the Bencoolen/ Waterloo/Victoria streets area such as Allson, City Bayview and Strand hotels.

Yesterday’s changes also affect non-hotel developments currently on sites that are zoned for hotel use: these properties will only be allowed to be redeveloped into hotel uses, in line with the Master Plan intention.

URA said it will take a case-by-case approach to any applications for exceptions to these latest rules, factoring in the land use and planning intention for the area, as well as ensuring sufficient supply of hotel rooms to meet Singapore’s tourism needs.

Elaborating on the rationale for the changes, a URA spokeswoman pointed to record visitor arrivals and tourism receipts as well as high hotel occupancies and revenues. Demand is high for hotels, especially in the key tourist belts like Orchard Road and Singapore River.

However, these areas are already largely built up, leaving limited state land that can be made available for new hotel developments.

‘Hence, the loss of hotels within the key tourist districts is irreversible and even the conversion of just a few of the existing hotels would significantly impact the critical mass of hotel rooms within these areas,’ the URA spokeswoman added.

The presence of hotels in major tourist areas contributes to the mix of uses that is critical to the vibrancy and character of these areas as Singapore shapes up as a global city, she added.

With a decision on whether a hotel site can be converted to other uses now based on the plot’s Master Plan zoning, ‘the change puts the land use regulatory framework for hotels in line with other uses’, URA said.

 

Source: Business Times 15 Jan 08

Freehold GCB site off Holland Road on sale for $41m

A FREEHOLD good class bungalow (GCB) development site at 11 Ford Avenue has been put up for sale and the indicative price is $41 million.

This works out to about $893 per square foot for the 45,894 square feet site which is off Holland Road.

A single-storey bungalow currently sits on the site, which is being marketed by Colliers International.

Ho Eng Joo, executive director of investment sales at Colliers, says that the buyer of the site is likely to redevelop it, as up to three GCBs of around 15,000 sq ft can be built there. ‘Good class bungalows are in high demand in land scarce Singapore,’ he added.

Mr Ho estimates that at the indicative price of $41 million, and construction cost of between $1.5 million and $2 million for a bungalow, the breakeven price for a single bungalow is about $16 million.

Prices of prime landed property has been increasing.

Recent benchmark transactions include $25.5 million or $1,899 psf for a house in Nassim Road in October 2007.

In August 2007, a conservation bungalow at White House Park sold for $28.8 million or $1,308 psf.

Closer to Ford Avenue, Mr Ho said, recent transactions of GCB land include sites at Ridley Park for around $1,000 and Chatsworth for around $950 psf.

He said that given the strategic location of the site, which is within walking distance of Holland Village and not far from the Orchard/Scotts Road shopping belt, he expects to see keen interest from developers and high net worth individuals.

 

Source: Business Times 15 Jan 08

Limitless launches US$1.2b loan

(LONDON) Government-owned Dubai property company Limitless has launched syndication of a US $1.2 billion, two-year Islamic loan, which will be used to finance international projects, the borrower announced.

A bank meeting was held on Sunday in Dubai and further roadshows will be held in Singapore, Kuala Lumpur and London, the company said, adding that Emirates Bank and Emirates Islamic Bank are initial lead arrangers.

A banking source told Reuters Loan Pricing Corp (RLPC) that Arab National Bank and National Bank of Abu Dhabi joined the deal as mandated lead arrangers prior to the syndication launch.

The banker added that the deal pays a margin of 125 basis points (bps) over the London Interbank Offered Rate (Libor).

 

Source: Reuters (Business Times 15 Jan 08)

Space surge may slow Orchard Rd rent rises

Almost 2m sq ft to be added between now and 2011

AN IMPENDING surge of new shop space in Orchard Road may put the brakes on the growth of retail rents along the shopping stretch.

Almost two million sq ft of new retail gross floor area is set to open in the area between now and 2011, said property firm Knight Frank.

That is about one-third the current retail space on Orchard Road and double the size of Ngee Ann City.

Most of it will come from new malls, with two – Ion Orchard and Orchard Central – due to be completed this year. They are the first new malls to open in Orchard Road in a decade.

Some consultants say the huge increase in retail space in the next few years may make it hard for mall landlords along the prime shopping belt to keep raising rents at the current pace.

But they add that more outlets may not lead to oversupply as long as shopper demand and tourist numbers keep growing.

Knight Frank’s deputy managing director Danny Yeo said the new malls could achieve benchmark rentals, but some older properties may feel the heat.

Monthly rents along Orchard Road grew at a slower 2.6 per cent to hit $45.50 per sq ft at the end of last year, said Knight Frank.

It expects islandwide prime retail rentals to rise a smaller 10 per cent to 15 per cent for this year, down from last year’s 22.1 per cent.

This is mainly due to the influx of new space. This year alone, 930,000 sq ft of new shops could come up in Orchard and Scotts Roads, said consultancy DTZ Debenham Tie Leung. Besides the new malls, the additional space includes extensions to existing buildings.

The latest to jump on the bandwagon are Paragon Shopping Centre, as well as Specialists’ Shopping Centre and the adjacent Hotel Phoenix. They revealed upgrading plans last week.

Experts lauded these plans. ‘This is a chance for older malls to revamp, or introduce new retailers, or change their concepts,’ said Jones Lang LaSalle retail director Daisy Loo.

Wisma Atria, for one, added several new stores last year. Some are from first-time retailers in Singapore, such as Australia’s Cotton On, French footwear label Schu and Brazilian fashion store Beijaflor.

Mall owners say that they welcome the new shopping centres, and do not view them as competition.

‘Our belief is that the number of shoppers to Orchard Road will increase significantly with the new supply,’ said Ms Amy Lim, general manager of pro- perty management at Macquarie Pacific Star.

CapitaLand Retail, which is building Ion Orchard, also sees minimal conflict between the new and old malls.

Chief executive Pua Seck Guan said most of the retailers that Ion Orchard is drawing in are not moving from existing Orchard Road locations. Sixty per cent will be new to Singapore, trying new concepts or opening a flagship store.

 

Source: The Straits Times 15 Jan 08

Govt to check hotel conversions islandwide

THE Government has made a key policy change regarding land set aside for hotels at a time of heightened concern over the supply of rooms during the tourism boom.

It has discontinued the hotel safeguarding policy, so developers with land designated for hotels may find it harder to convert the site for other uses, such as apartments.

Applications will now be considered based on the need to ensure sufficient hotel facilities and must be in line with the Master Plan, a broad blueprint outlining Singapore’s development. The plan is up for review this year.

The new guidelines represent a key shift from the existing policy. Hotel safeguarding allowed the Government to stop hotel sites from being converted for other uses but was restricted to core areas like the Orchard Road corridor.

But now hotel sites across the country will be under the spotlight. And all conversion applications will be assessed the same way, said the Singapore Tourism Board and the Urban Redevelopment Authority (URA) yesterday.

Hotel conversion applications will generally not be allowed if the area is zoned for hotel use or needs of a certain level of rooms.

‘Instead of just safeguarding the hotels in core areas, they are now effectively safeguarding all hotels – on land with hotel zoning – across Singapore,’ said Knight Frank director of research and consultancy Nicholas Mak.

‘It gives the Government more flexibility to regulate hotel supply in the future.’

The change reflects how the Singapore market has altered, particularly for hotels. The hotel safeguarding policy was introduced in 1997 to check the trend of hotels being converted to condominiums. The Seaview and ANA hotels were turned into residential sites in recent years.

Having sufficient hotel rooms is critical given the aim to attract 17 million visitors to Singapore and $30 billion in tourism receipts by 2015. The 10-millionth visitor landed on Dec 22 last year and in November the average hotel room rate in Singapore reached a record $226.

Demand for hotels within key tourist districts such as Orchard Road and Singapore River is high, but these areas are already largely built up.

The URA said: ‘Hence, the loss of hotels within the key tourist districts is irreversible and even the conversion of just a few of the existing hotels within the key tourist districts would significantly impact the critical mass of hotel rooms within these areas.’

Last year, a few hotels opened, bringing the total number to 227. Typically, it takes about three years to build one. If an existing hotel is converted to other uses, it will take that long for a new one to replace it.

‘Such lead time can affect the available room supply to meet the growing demand as well as the landscape and the attractiveness of the district as a whole,’ said the URA.

 

Source: The Straits Times 15 Jan 08

Construction demand could set new record

Analysts estimate $24 billion worth of contracts were inked in 2007

(SINGAPORE) Construction demand in 2007 exceeded official estimates and is likely to have hit $24 billion, analysts said.

At present, the official forecast for last year’s construction demand is $19-$22 billion. But in just the first ten months of 2007, construction demand hit $18.5 billion. In addition, several major contracts were also awarded in the last two months of the year.

‘A ballpark estimate suggests that contracts awarded could have reached $23 billion for the whole of 2007,’ said Citigroup economist Kit Wei Zheng. CIMB-GK economist Song Seng Wun is slightly more bullish – he expects construction demand for last year to come in at $24 billion.

Singapore’s construction sector has once again emerged as a major growth driver, after being in the doldrums for about eight years following the Asian Financial Crisis of 1997/98.

Last August, industry regulator Building and Construction Authority upped its construction demand forecast for 2007 from its earlier estimate of $17-$19 billion.

There is also a sense that this year, construction demand will exceed the previous peak of $24.4 billion seen in 1997.

‘The construction sector is expected to remain a key driver to GDP growth in 2008,’ said Kim Eng’s research team.

‘The combined construction budget of the two Integrated Resorts amounts to over $12 billion and there is burgeoning demand from the residential property segment.’

Citigroup, for one, predicts that the pipeline of future contracts will likely remain large, supporting construction growth well into the second half of 2008 and 2009. ‘Given the synchronised supports from the integrated resorts, residential and commercial property boom and infrastructure projects, construction demand could well exceed the previous 1997 peak this year,’ said Citigroup’s Mr Kit.

Apart from the two IRs and infrastructure projects, the large pipeline of residential projects could yield between $12-15 billion of contracts awarded over the next two years, he said.

OCBC Investment Research analyst Serene Lim also pointed out that the government intends to raise the value added of Singapore’s energy industry to $34 billion in 2015 – an increase of about 70 per cent from current levels.

The initiatives include probable plans to build an oil refinery with a capacity of 150,000 barrels per day, a liquefied natural gas terminal and biodiesel production plants, she said.

A recent report by construction cost consultancy Rider Levett Bucknall says that Singapore is on the upturn of the construction activity cycle, having recently emerged from a trough.

Analysts are also bullish on the prospects of construction firms in 2008.

‘The going will continue to be good for local builders as they enjoy strong order books and margins expansion,’ said Kim Eng Research.

 

Source: Business Times 14 Jan 08

Industry players feel pinch of rising hotel rates

They are a concern for leisure travel sector; the going may get tougher for Mice operators also

(SINGAPORE) The average daily hotel room rate for 2007 is expected to have hit a record $200. And although 2,000 new rooms will be added this year, there will be no let-up in rising rates.

For 2008, consultancy firm HVS International tips a 15 per cent year-on-year rise in the average room rate (ARR) to $230, then a further 13 per cent rise to $260 in 2009.

But these increases are lower than that last year. According to the Singapore Tourism Board (STB), the ARR rose 23 per cent year on year between January and November 2007. For the month of November, it hit a record $226.

In comparison, the ARR for the same period in Hong Kong was $221.80. And the estimated ARR for Shanghai (which HVS notes was comprised of mostly high-end hotels), was $277.

Pressure on room rates will likely ease with new supply. For 2008, HVS reckons government land-sale sites could yield more than 4,600 rooms. But the actual number will depend on the take-up of such sites – and their cost.

HVS managing director David Ling said: ‘As demand for the economy and mid-tier segments is expected to surge, the land-sales programme for hotel projects should be tailored to locations that encourage developments of this type. Such sites are likely to be outside the prime area due to land costs.’

STB has been encouraging the industry to develop a range of options to add to the hotel mix to cater to different markets.

STB director (travel and hospitality business) Caroline Leong said: ‘In terms of hotel room rates, while we are seeing a record in Singapore, we are actually just keeping up with market rates in Asia. Also, prices are determined by demand.’

Industry players will be monitoring room rates closely.

Chan Brothers Travel executive (marketing, communications) Jane Chang said: ‘Rising rates are a concern for the leisure travel sector as it becomes increasingly difficult to source rooms at competitive prices.’

Chan Brothers also has a meetings, incentives, conference and exhibitions (Mice) arm, and on the upside, Ms Chang said: ‘Despite the increase in rates, bookings remain high as demand for corporate travel continues to grow.’

A tour operator who spoke on condition of anonymity bemoaned the skew towards the Mice sector. Many Singapore hotels now prefer to take corporate bookings, he said.

‘I believe top-notch hotels earn up to 60 per cent of their revenue from corporate travellers. Five years ago it was the reverse.’

Also in Singapore, accommodation can eat up as much as 26 per cent of a package-tour budget, the operator pointed out. ‘Spending one night in Singapore is equivalent to spending two to three in Bangkok or Denpasar.’

While he expects more hotel rooms and budget airlines to bring costs down, he said: ‘At the moment the number of packages we book has been decreasing and our margins are slimmer.’

Even for Mice operators, the going may get tougher.

Dilys Yong, immediate past-president of the Singapore Association of Convention and Exhibition Organisers and Suppliers, and president of Mice organiser HQ Link, said: ‘The quoted average room rate for 2007 is bearable for exhibitors and average trade visitors, but not budget trade visitors. However, the fact is that during the run-up to big events, room rates are even higher than the quoted average rate due to a shortage of rooms.’

As such, Ms Yong says that while the forecast 2008 average room rate is still ‘bearable’, actual rates will be higher.

Budget Mice visitors will find it virtually impossible to get a room, as Ms Yong reckons affordability in this segment is limited to $120 per night.

Inbound travel depends partly on the strength of the economy in the traveller’s home country, and SA Tours marketing and communications manager Ruth Lim noted: ‘There is an influx of leisure tourists to Singapore at this point as generally, these economies are rather robust.’

Until six months ago, SA Tours did not have an inbound leisure travel arm, but Ms Lim said: ‘Our inbound tourism clientele base has been steadily increasing.’

 

Source: Business Times 14 Jan 08

PROPERTY: Demand for bungalow sites expected to rise

Landed home prices likely to continue last year’s surge and jump by up to 15% this year, say analysts

PROPERTY analysts believe this will be the year for mid- and mass-market properties to shine – but they say demand for landed homes should also remain favourable.

They expect prices of landed homes to climb by 10 per cent or even as much as 15 per cent this year.

That sort of rise may not be spectacular but is still substantial as it comes off a high base last year, when prices of such homes are estimated to have risen 25 per cent to 27 per cent, according to property consultancy Knight Frank.

A year earlier, in 2006, the price climb was just 6.7 per cent.

‘The landed home sector was a laggard compared with non-landed homes,’ says Knight Frank director of research and consultancy Nicholas Mak. ‘It started to pick up last year when people noticed that it was slightly undervalued.’

Good-class bungalows, in particular, attracted strong demand as wealthy homebuyers zeroed in on these large and exclusive houses in prime districts.

But demand for smaller bungalows remains fairly strong too as such properties are limited in supply, says Ms Grace Ng, the deputy managing director of agency and business services at Colliers International.

And what supply there was has dwindled. Many have been redeveloped into semi-detached and terrace houses as a result of the favourable property market conditions of the past two years, she said.

Bungalow sites do not come along often, but there are a few available at this month’s auctions.

Ms Ng said Colliers has a distinctive bungalow that will be put up for sale this month. Located in the Siglap area, the two-storey bungalow has an ‘English cottage’ architectural design and is one of the few bungalows in the area.

The design was inspired by the houses the owner and her late husband saw during their postgraduate years in Britain.

The 4,695 sq ft property – in its original condition – was built in the 1950s and has an indicative price of $3.6 million or $766 per sq ft (psf).

Recent transactions in the same area – district 15 – ranged between $650 psf and $780 psf for two-storey detached houses.

Two large bungalow sites aimed at small developers or investors are also up for auction, at other houses.

One is in Branksome Road, off Tanjong Katong Road. It has a land area of 12,847 sq ft and an indicative value of $900 psf to $950 psf.

Ms Mok Sze Sze, the head of auctions at Jones Lang LaSalle, said this site has the potential to be redeveloped into a conventional landed project or a cluster housing project with six to eight units.

Cluster bungalows in the area are going for about $3.6 million to $4 million each, she said.

Knight Frank too will be auctioning a landed property, at the end of the month: a 14,170 sq ft site in Clacton Road off Meyer Road. It has an indicative value of $1,000 psf to $1,200 psf and can be redeveloped into three bungalows, said the firm’s executive director (auctions), Ms Mary Sai.

Recently, demand for landed homes has also come from those who pocketed lump sums in cash from collective sales, said Mr Mak.

‘Landed homes have always been a different class because foreigners can’t buy them,’ he said.

The market is much smaller than that for condominiums and apartments, which also means it will not be as liquid, said Mr Mak.

In addition, buyers nowadays are not prepared to pay too high a price above valuation, said Ms Ng of Colliers International.

This is due to high construction costs, cautious market sentiment, and the steep price increase over the past two years, she said.

 

Source: The Sunday Times 13 Jan 08

4-room Jalan Membina flat sells for a record $609 psf

It is believed to be the first time an HDB flat has crossed the $600 psf mark

A FOUR-ROOM flat at Jalan Membina has smashed the record for the most expensive Housing Board (HDB) flat ever to change hands in terms of price per sq ft (psf).

The 969 sq ft flat sold for $590,000 two weeks ago, which works out to $609 psf – believed to be the first time an HDB flat has ever crossed the $600 psf threshold.

A fabulous view towards Sentosa, and a superb location near Tiong Bahru MRT station and Tiong Bahru Plaza, are being cited as key factors for the very high price.

The last record, reported only days ago, was set by an executive flat in Mei Ling Street with a much larger floor area of 1,614 sq ft, which sold for an eye-popping $890,000, or $552 psf.

Smaller flats usually command higher psf prices – if the Mei Ling flat had been sold at the same $609 psf price as the Jalan Membina flat, it would have fetched $983,000.

Ms Mylene Kwan, 33, a PropNex housing agent who brokered the latest deal, told The Straits Times yesterday that the buyers were a middle-aged couple who recently sold a Queenstown executive flat and needed a new home.

The flat, in Block 21, had a valuation of $475,000. It is a five-year-old unit on a high floor of the 30-storey block, said Ms Kwan.

‘The flat was quite attractive, well-maintained, relatively new, and quiet.’ The sellers, a couple aged over 50, declined to be interviewed.

The latest record stunned some industry players.

Knight Frank director of research and consultancy Nicholas Mak said the price was ‘unusual’ – even ‘irrational’ – given that buyers spending more than $600 psf were typically looking at mass market suburban condos.

‘With this price now, you could buy a 99-year condo at outlying estates,’ said Mr Mak.

HDB’s latest data show four-room units in the same area sold for $415,00 to $495,000 late last year.

Mr Mohamed Ismail, head of property agency PropNex, said the flat’s location was likely to be the main factor.

‘If bigger five-room, executive units at prime locations sell at this price, HDB prices will push towards the $1 million mark,’ he said.

Mr Eugene Lim, assistant vice-president of ERA Singapore, said this was very unlikely. He was not surprised at the price as smaller units usually get higher psf prices.

Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, said the sale was likely to be a ‘one-off’ event. It was likely the result of a ‘ripple effect’ from the private sector, where recent en bloc sales have flooded the market with cash-rich homebuyers looking to downgrade to an HDB home.

 

Source: The Straits Times 12 Jan 08

CityVibe put up for sale at $140m

CITYVIBE, a new three-storey retail and entertainment complex opposite Clementi station and next to the future Clementi Central Hub, is for sale through an expression of interest exercise at an asking price said to be $140 million.

This could work out to a 5-5.25 per cent net yield for the property, which will have a net lettable area of 26,581 sq ft, sources say.

Developer Grandview has obtained official approval to redevelop the existing property on the site – a two storey building that used to house a theatre – into the new complex.

Using construction methods that involve more steel and less concrete, CityVibe will be built between February and November this year, according to Jones Lang LaSalle, which is handling the sale of the property on a completed basis.

JLL is also the marketing agent for leasing of the units in the new building.

Grandview’s shareholders are Victor Boh See Fook, Eric Cheng Kwee Kiang and Woon Yong Thai.

CityVibe will be developed on a site with a remaining lease of about 70 years. Grandview is believed to have bought the asset a few years ago.

Asked about potential competition that retailers at CityVibe will face from the adjacent Clementi Central Hub when it is completed in 2010, JLL’s regional director and head of investments Lui Seng Fatt said: ‘Clementi Central Hub will be a magnet for the whole area and benefit CityVibe as well.

‘In any case, the location has a very strong catchment not only from the surrounding HDB estate but also from nearby tertiary institutions such as National University of Singapore, Singapore Polytechnic, Ngee Ann Polytechnic and Singapore Institute of Management.’

JLL expects the expression of interest exercise for CityVibe, which closes on Feb 1, to attract local and foreign investors because it offers an investment-grade retail property in the HDB heartland.

The site is zoned for commercial use with a 40:60 split between retail/F&B and entertainment/office use.

CityVibe has been exempted from providing carpark lots because there is sufficient parking nearby, JLL said.

Source: Business Times 11 Jan 08

Phoenix site to rise again as hotel-retail complex

Straits Trading in talks to redevelop site; new complex to roll out in 2011

(SINGAPORE) A new 580-room hotel and a retail complex with a net lettable area of about 150,800 square feet is slated to come up on the Specialists’ Shopping Centre and Hotel Phoenix site in 2011.

OCBC Bank, which owns the land parcel, told BT yesterday that work on the site is likely to start in the second half of 2008 and will take about three years to complete.

The upcoming hotel will occupy about 60 per cent of the complex’s gross floor area and the remaining 40 per cent will be taken up by retail shops. The complex will have about 262 parking lots, OCBC said. Right now, the complex has a gross floor area of about 539,000 sq ft.

OCBC was responding to queries from BT after Straits Trading Company said in a filing to the Singapore Exchange that it is in ‘advanced negotiations’ with the bank to be appointed to develop a hotel and retail complex at the Specialists’ Shopping Centre and Hotel Phoenix site.

Under the deal, a wholly owned special-purpose vehicle (SPV) of Straits Trading will fund and build the complex based on a maximum development cost, which will be agreed on between Straits Trading and OCBC.

Once the complex is completed, Straits Trading will then sell the SPV to OCBC and at the same time lease the complex for a period of three years – with an option to renew for a further three years at an agreed fixed annual rent. The terms of the arrangement are currently being discussed and negotiated, Straits Trading said.

Structuring the deal this way minimises development risk for OCBC. ‘As a bank, we believe that it is inappropriate for us to assume development risk,’ said Koh Ching Ching, head of group corporate communications for OCBC Bank.

OCBC appears to be going ahead with its plans to develop its Specialists’ Shopping Centre and Hotel Phoenix complex – rather than working with its insurance subsidiary Great Eastern Holdings, which owns shopping mall Orchard Emerald just across the road.

OCBC and Great Eastern seemed poised to redevelop the Specialists’ Shopping Centre and Hotel Phoenix complex together with Orchard Emerald just a few months ago, judging by the two companies’ submissions to the Urban Redevelopment Authority (URA).

Data released by URA last October showed that provisional permission for the development of the two properties was given in August 2007.

But yesterday, OCBC said: ‘Orchard Emerald is held by the Great Eastern Group and we believe that Great Eastern is at a very preliminary stage with regard to this potential redevelopment.’

Straits Trading, one of Singapore’s oldest companies, is now seeing a buyout offer from Tecity Group, an investment firm owned by several members of the family that have stakes in OCBC.

Tecity offered on Sunday to buy all Straits Trading shares it did not already own for $5.70 a share – valuing the company at some $1.86 billion.

OCBC, which has direct and indirect interests totalling 26 per cent of the shares in Straits Trading, said on Monday that it has not decided whether to accept the buyout offer. About 20 per cent of the shares are held by Great Eastern.

Analysts said that OCBC’s plan to launch a new hotel in place of the ageing Hotel Phoenix is timely as Singapore will continue to see a shortage of hotel rooms over the next few years due to increasing visitor numbers.

OCBC’s shares shed 14 cents to close at $8.10 yesterday, while shares of Straits Trading rose one cent to close at a one-year high of $5.67.

 

Source: Business Times 11 Jan 08

Office redevelopment worsens space crunch; rents soar

CBD supply fell 3.7% y-o-y in Q4 2007 to 19.98m sq ft

ONLY 341,180 sq ft of new office supply became available for the whole of last year. At the same time, 1.02 million sq ft of office space was taken away, as a result of buildings undergoing redevelopment or addition and alteration work.

A report by DTZ Debenham Tie Leung shows that existing stock in the central business district (CBD) was 19.98 million sq ft in the final quarter of the year, a decline of 3.7 per cent year-on-year.

Island-wide, the decline of existing stock was marginally less at 1.2 per cent to 56.04 million sq ft.

For non-central areas, existing stock increased by 0.6 per cent to 15.16 million sq ft.

Tight supply has pushed up occupancy levels to 97.5 per cent island-wide, an increase of 2.5 percentage points from the comparable quarter in 2006.

DTZ says that office rents have consequently risen to record levels, with prime office rents in Raffles Place for the quarter 94.1 per cent higher than 12 months previously, at $16.50 psf per month.

High rents prompted companies to consider relocating to lower-cost premises in the CBD fringe, non-central areas and several business parks.

Average monthly gross rents for office buildings in areas like Marina Centre, Alexandra Belt and Tampines Finance Park jumped 81.3 per cent to $14.50 psf per month, 85 per cent to $7.40 psf per month and 62.2 per cent to $7.30 psf per month respectively year-on-year.

While the short-term situation remains challenging, DTZ believes the mid and long-term situation could prove better for office tenants.

DTZ executive director Cheng Siow Ying said: ‘The pace of rental growth is expected to moderate as tenants become more rent-sensitive and more choices of office supply such as transitional offices, disused state properties and business park space are made available to occupiers.’

DTZ is forecasting that about 7 million sq ft of net lettable area could come on stream in the next four years.

In 2007 alone, it estimates that 1.9 million sq ft of gross floor area of office space was generated through the conversion of disused state properties for office space and transitional office sites.

Supply of business park space in the industrial sector also increased in 2007.

Island-wide, existing stock of industrial space increased 4.1 per cent to 297.36 million sq ft.

Of the 7.6 million sq ft of private industrial space that was completed in the first three quarters of 2007, DTZ said that 5 per cent was business park space. DTZ also estimates that 7 per cent of the 20.4 million sq ft potential supply of private industrial space over the next three years could be business park space.

DTZ executive director Chua Wei Lin said: ‘An increased number of business park developments, built-to-suit and high-tech facilities are expected to come on stream, partly due to heightened demand from qualifying office users as the office market tightens.’

Average monthly gross rents for business park/science park/high- tech industrial space recorded increases of 50 per cent year-on-year to hit $3.90 psf per month.

 

Source: Business Times 11 Jan 08

NEWS OF ASSET SALE: Eng Wah shares soar to record high

CINEMA group Eng Wah Organisation’s share price shot up by 16.5 cents to 85 cents – an all-time high – on news that its portfolio of properties was up for sale.

The counter went as high as 91 cents during the day.

Eng Wah’s properties could be worth as much as $190 million so, based on the 150 million shares in the market, shareholders could get as much as $1.20 in cash per share if all the cash proceeds were distributed.

The group announced in May that it would buy the business of Japanese pharmaceutical firm Transcutaneous Technologies (TTI) by issuing new shares to TTI shareholders. Existing assets of Eng Wah would be sold off, with practically all of the proceeds going back to the shareholders.

Yesterday, Ms Goh Min Yen, Eng Wah’s managing director, reiterated that the asset disposal had always been part of the deal.

Still, a report unveiling details of the sale of the properties by marketing agent Jones Lang LaSalle breathed life into the counter.

Kim Eng Research calculated that each share’s fair value is $1.70. That means even after the jump to 85 cents, the shares look undervalued.

The assets up for sale are the Toa Payoh Entertainment Centre, Jubilee Theatre at Ang Mo Kio, the former Mandarin Theatre at Kallang Bahru, Empress Theatre at Clementi and the 16th floor of Orchard Towers.

 

Source: The Straits Times 11 Jan 08

JLL sees more intensive land use near Buona Vista Station

Area undergoing development to turn it into commercial and R&D hub

LAND use around Buona Vista Station is likely to be intensified to maintain the buzz from the development of one north and optimise the area’s improved accessibility when the new Circle Line intersects with the existing East-West Line.

Making the point in a study on likely changes in Master Plan 2008, Jones Lang LaSalle’s head of research (Southeast Asia) Chua Yang Liang says: ‘Buona Vista is fast becoming the next sub-regional centre for the western region’.

The area is undergoing intensive development to turn it into ‘a commercial and R&D hub’ with social and recreational amenities, as envisaged by official planners.

Property consultants expect more intense land use to be confined largely to the areas close to the existing and adjacent new (Circle Line) MRT stations and to sensitively integrated with lush greenery and colonial-type buildings in places like Rochester Park and Wessex Estate to create a blend of the old and new.

‘In other words, this is not going to be a sterile environment,’ says DTZ executive director Ong Choon Fah. ‘The whole place will be very vibrant, like university towns in the US and UK. MNCs tend to be attracted to where the talent is, where universities are.’

JLL identified several sites in the immediate vicinity of the existing and new Buona Vista MRT stations for its study on anticipated plot ratio changes in Master Plan 2008.

Two vacant state sites flanking the MRT stations, which are currently zoned for commercial use but without plot ratios specified in Master Plan 2003, could see plot ratios of 4.8-5.6 in Master Plan 2008, Dr Chua suggests, comparing them to the URA and MND buildings near Tanjong Pagar MRT Station and Revenue House near Novena MRT Station.

A reserve site – part of which is now used as a bus interchange – could be rezoned for commercial use integrated with a new bus interchange, JLL suggests in its study.

This would be akin to similar commercial buildings with bus interchanges near Ang Mo Kio and Toa Payoh MRT stations.

Two sites now zoned for Business 1 use (clean and light industrial/warehouse use) could have plot ratios raised from 2.5 to 2.8 to maximise their potential, JLL reckons.

New developments at one-north include Biopolis (the first two phases of which are already up) and Fusionopolis (phase 1 will be ready by the end of this quarter); a mixed use development by United Engineers that will include The Rochester condo, retail podium and business hotel; One North Residences by UOL, Low Keng Huat and Kheng Leong; and right next to the new Circle Line MRT Station, a civic, cultural and retail complex with a 5,000-seat theatre and a mall with mostly food and beverage and entertainment outlets, developed jointly by CapitaLand and Rock Productions. All of these are part of one north, which is positioned as an icon of a knowledge-based economy.

As well, Buona Vista is close to trendy areas like Holland Village and Rochester Park and several academic institutions including National University of Singapore, Insead, Anglo Chinese Junior College and Anglo Chinese School (Independent), and United World College, plus the emerging high-tech area of Tanglin Halt Industrial Estate.

 

Source: Business Times 10 Jan 08

Pearlbank Apartments up for collective sale at $750m

THE 38-year-old Pearlbank Apartments development at Pearl’s Hill has been put up for collective sale at an indicative price of $750 million.

Marketing agent Knight Frank says that with a lease upgrading premium estimated at $143.3 million, the unit rate works out to be $1,456 per square foot per plot ratio (psf ppr), assuming the buyer can fully develop the site to baseline gross floor area of 56,998.8 square metres.

Knight Frank executive director Nicholas Wong said the site was put on the market last August. There were four expressions of interest but negotiations fizzled out in the wake of the US sub-prime crisis.

Pearlbank Apartments, which comprises 280 apartments and eight commercial units, was the first allhousing project constructed on a URA site. Some architects reckon the building has merit worth preserving, but it is not gazetted for conservation.

Mr Wong said more than 80 per cent of the owners have already agreed to go down the en bloc route.

Based on the indicative asking price, he estimates most of them stand to collect 60-70 per cent more through a collective sale than they would individually.

Under the 2003 Master Plan, the site is designated for residential development at a plot ratio of 7.2.

However, according to URA, the baseline gross floor area is 56,998.8 sq m. This is equivalent to a plot ratio of 7.447 on the land area of 7,653 sq m.

Based on an average unit size of 1,200 sq ft, 500 new apartments can be built on the site. There is also opportunity for the developer to integrate Pearl’s Hill City Park into the redevelopment, Mr Wong said.

 

Source: Business Times 10 Jan 08

Ho Bee-IOI tie-up wins Sentosa’s Pinnacle site

Bid of $1.1b seen as relatively low as US sub-prime crisis dampens market

IT was the last chance for a bite of the sweet Sentosa Cove pie, but only three developers tendered for The Pinnacle Collection site with Ho Bee Investment and Malaysia’s IOI Properties partnering to put in the winning bid of $1.1 billion.

In a joint statement released yesterday, the joint venture partners said its bid for the largest and last condominium development site works out to $1,822 per sq ft (psf) per plot ratio (ppr).

In July 2007, SC Global won the tender for The Beachfront Collection condominium site with a bid that works out to $1,800 psf ppr. Not only were five bids received, but SC Global’s winning bid also set a new benchmark price for Sentosa Cove, topping the highest bid of $1,361 psf ppr for The Seaview Collection tender held in March 2007 – also won by Ho Bee/IOI – by over 30 per cent.

The Pinnacle Collection was, however, awarded based on price and design concept.

Ho Bee has a 35 per cent stake in the project and news of the win, with what appears to be a relatively low bid, was greeted by investors positively yesterday. Its share price rose 3 per cent to end the trading day four cents higher at $1.39.

Ho Bee Investment executive director Ong Chong Hua said: ‘The US sub-prime crisis has in our view helped us to secure what we believe to be the best site, not only in Sentosa but also in Singapore, at a price level which would otherwise be much higher for such an iconic site under normal circumstances’.

Factoring in higher construction cost for a luxury development, Ho Bee expects the breakeven cost to be about $2,600 psf.

The 231,676 sq ft site has a 2.6 plot ratio and a total permissible gross floor area of about 602,360 sq ft. Mr Ong said it will build 280 units comprising a mix of three- and four-bedroom units as well as penthouses.

The development is targeted for launch in the first quarter of 2009.

Upbeat about the high-end market, Mr Ong said that while the sub-prime crisis has created some market uncertainty, the Singapore real estate market is fundamentally ‘very healthy’, backed by solid demand and robust economic growth.

‘We think the sub-prime crisis provided a very healthy consolidation to the market. It is a good reality check on the ‘irrational exuberance’ which we had experienced especially in mid-2007,’ he added.

He also believes the high-end market will consolidate in the next three to six months after which he expects a steady growth of 5-10 per cent.

This will be Ho Bee’s eighth project at Sentosa Cove and IOI Properties’ third foray into the Singapore property market.

On the tender price, CB Richard Ellis (Research) executive director Li Hiaw Ho noted that the winning bid was only 14 per cent above the reserve price of $1,600 psf ppr. ‘When the site was opened for tender in September 2007, market sentiment was more upbeat and it was widely expected that the winning bid would be in the region of $2,000 psf ppr,’ he added.

He noted that the latest launches in Sentosa Cove, the Turquoise and Marina Collections, were priced at an average of $2,600 psf and $2,700-$3,000 psf, respectively. He also expects The Pinnacle Collection to sell at around $3,000 psf.

 

Source: Business Times 10 Jan 08

Bids for transitional office site fall short of expectations

THE Urban Redevelopment Authority (URA) has named the bidders for a 15-year leasehold transitional office site at Mountbatten Road. The top bid came in at $14.9 million or $69.17 per square foot per plot ratio (psf ppr) – 14 per cent less than the last site awarded, in Tampines.

Of the three bids received, the top price was offered by Mezzo Properties Pte Ltd. The bidder is understood to be associated with MV Land, which was awarded an industrial site at Sin Ming Lane in a public tender with a bid of $68.9 million or about $50 psf ppr in October 2007.

Superbowl Land put in the second highest bid of $14.8 million (or $68.70 psf ppr) while Soilbuild Group bid $10.93 million (or $50.77 psf ppr).

The URA said that the decision on the award of the tender will be made after the bids have been evaluated.

While the top bid falls short of market expectations, Cushman & Wakefield managing director Donald Han believed that the URA is likely to award the site as transitional offices have a mandate as a ‘quick fix’ to address the critical office supply crunch.

Based on recent tenders, prices for transitional office sites appear to be falling.

In November 2007, a tender for a transitional office site in Tampines drew just one bid of $10 million, which works out to $80.65 psf ppr, lower than the $100 psf ppr region that most property consultants had estimated.

The Mountbatten site being closer to the city and opposite the future sports hub, Mr Han had expected bids to be around $140 psf ppr. He said that based on the top bid, the potential developer of the Mountbatten site could stand to reap double digit yields if the space can be leased at $4-5 psf per month.’

 

Source: Business Times 10 Jan 08

Eng Wah properties put up for sale

Portfolio worth around $190m; bulk of proceeds may go to shareholders

(SINGAPORE) Eng Wah Organisation, the subject of a reverse takeover, has put a portfolio of five cinema, retail and office properties up for sale, which sources suggest could be worth about $190 million.

The five are Toa Payoh Entertainment Centre and Jubilee Theatre at Ang Mo Kio – both of which are shopping/ entertainment complexes anchored by Eng Wah cineplexes – as well as the former Mandarin Theatre in Kallang Bahru and Empress Theatre in Clementi (which have been shut down) and the 16th floor of Orchard Towers.

The space in Orchard Towers comprises offices spread across three units – one occupied by Eng Wah and the other two leased out. There are plans for a collective sale of Orchard Towers, which stands on a freehold site in the prime Claymore area.

The other four properties are on sites with remaining leases ranging from 61 to 70 years.

Of the four cinema/retail assets, the ones in Ang Mo Kio and Toa Payoh (both close to MRT stations) can be refurbished and repositioned for a higher yield, while the other two properties at Clementi and Kallang Bahru, which are currently vacant, are candidates for redevelopment, said Jones Lang LaSalle’s regional director and head of investments Lui Seng Fatt. JLL is marketing the portfolio through an expressions of interest exercise that closes on Feb 14.

‘Eng Wah is open to selling the entire portfolio of five properties or any one or more of these properties individually,’ he added.

Eng Wah is prepared to lease back the cinema space in Toa Payoh and at Jubilee Theatre in Ang Mo Kio if the buyer offers it at a mutually agreeable rental rate. However, leaseback is not a condition for the sale, Mr Lui added.

The cinema-cum-entertainment group is in the midst of a reverse takeover by Japanese pharmaceutical firm Transcutaneous Technologies (TTI).

Eng Wah has said that upon completion of the deal, the group’s operations would be discontinued and substantially all its assets would be disposed of.

An earlier BT commentary pointed out that except for $10 million which will go to TTI, Eng Wah will distribute all proceeds from the sale of assets, together with cash in hand, to its shareholders.

At the time that the RTO was announced in May last year, Eng Wah managing director Goh Min Yen said the group was studying various options, including selling the entertainment businesses to the Goh family.

On the stock market yesterday, Eng Wah closed unchanged at 68.5 cents. It stood at 40.5 cents just before it made its RTO plans public.

 

Source: Business Times 10 Jan 08

Last Sentosa Cove condo plot sold for $1.1b

THE last condominium plot in Sentosa Cove has been awarded to Ho Bee Investment and Malaysia-listed IOI Properties for a whopping $1.097 billion.

They put in a land price of $1,822 per sq ft per plot ratio (psf ppr) – slightly above the previous benchmark of $1,799.78 psf.

The bid, at just 14 per cent above the reserve, came in below earlier market expectations as the site, with a gross floor area of 602,360 sq ft, is said to be iconic.

Called The Pinnacle Collection, it can accommodate a 357-unit condo of up to 20 storeys, which would make it the tallest and largest condo in the enclave.

In September – when the 99-year leasehold site was launched for sale – property analysts projected bids of about $2,000 psf. But market sentiment had weakened by the time the tender closed on December 12.

Price was not the only factor at play though as the award was also based on the design concept.

Said CBRE Research executive director Li Hiaw Ho: ‘The breakeven cost is estimated at $2,500 psf, which suggests a future selling price of around $3,000 psf.’ The latest launch in Sentosa Cove, The Marina Collection, was priced at $2,700 psf to $3,000 psf.

Ho Bee and IOI have set up a special-purpose company for the project, with Ho Bee holding 35 per cent and IOI the remainder. The project is IOI’s third foray into Singapore’s property market and Ho Bee’s eighth in the cove.

‘If the sub-prime problem blows over, as it should, they would have landed a good deal,’ said Mr Ku Swee Yong from Savills Singapore.

With this sale, there are just three unsold bungalow plots left at Sentosa Cove.

 

Source: The Straits Times 10 Jan 08

Plunge in key interest rate may lead to cheaper home loans

Interbank lending rate drops to lowest in three years and is expected to fall further by mid-year

HOMEBUYERS could be in for some cheer in the coming months after a recent plunge in a crucial interest rate that indirectly determines how banks set mortgages.

The three-month Singapore interbank offered rate (Sibor), as it is called, has hit its lowest level since February 2005 and is expected to sink further by the middle of the year.

It is significant as the Sibor is the rate at which banks lend cash to each other and thus influences what consumers pay on loans such as mortgages.

It hit 1.7625 per cent yesterday, down about 0.8 percentage point in a fortnight, and the lowest since the 1.75 per cent level nearly three years ago.

With banks getting cheaper money, it is expected that homebuyers could benefit in turn from cheaper mortgages, although there is usually a lag between Sibor and consumer loan rate movements.

Citigroup economist Chua Hak Bin said: ‘Mortgage rates could head lower in two months.’

But a Sibor fall is bad news for savers as fixed deposit rates could drop too.

Economists say the Sibor’s sharp dip is due to recent interest rate cuts in the United States – with more likely to come later this month, huge capital inflows into Singapore and poor stock market sentiment, which have prompted investors to leave more money in the bank.

CIMB-GK economist Song Seng Wun said: ‘The Sibor’s plunge corresponds with the recent sharp decline in US interest rates and the expectation of more cuts.

‘People have started 2008 with plenty of uncertainty, and are holding on to more cash and being more riskaverse.’

OCBC economist Selena Ling added: ‘It’s due to foreign funds coming in, seeking refuge from the weakening US dollar, and the recent plunges in the equity market.’

The US Federal Reserve has cut key interest rates from 5.25 per cent to 4.25 per cent in recent months.

Market experts predict a further 50-basis point cut later this month as part of moves to avert a possible recession.

Economists expect the Sibor to remain soft, due to the likelihood of further rate cuts and the cautious equity market sentiment.

Dr Chua said: ‘We expect the Sibor to fall by a further 30 to 50 basis points by mid-year, especially if the Fed cuts rates by 75 basis points by the end of the second quarter.’

While home owners welcome a Sibor fall, banks dread it.

It affects their net interest margins because most of their Singdollar corporate and small business loans are linked to the Sibor.

A Deutsche Bank analyst report noted: ‘This plunge is of concern, as we estimate that a 25 basis point fall in the Sibor will eventually lead to a fall in earnings per share of 4 per cent for DBS Group Holdings, 2 per cent for United Overseas Bank and 1 per cent for OCBC Bank.’

And savers will get belted too. Low interest rates combined with the high inflation now building up in Singapore spell ‘negative real interest rates’ – the interest earned on savings will not be able to offset the rise in prices.

Mr Song said: ‘It’s a sign for people not to keep money in the bank, as savers lose out.

‘It’s a good period to borrow, as there is more incentive for people to take money out rather than put it in.’

Thus, Dr Chua advocates that ’some diversification away might be prudent’.

He suggested alternative instruments such as real estate investment trusts, utility stocks and foreign currency fixed deposits, which offer higher rates, to hedge against inflation risk.

 

Source: The Straits Times 10 Jan 08

9 tenants, developer in legal dispute over Square2 mall

Retailers sue over empty pledges; Novena Point counter-sues for unpaid rent

SLUGGISH business in the shopping mall sitting above the Novena MRT station has led to a legal tussle between a group of disgruntled tenants and the developer.

The nine tenants of Square2 have sued the developer for misrepresentation, claiming that they were made several promises, such as the scale of advertising and promotion campaigns, which have remained unfulfilled.

Novena Point, which is under the Far East Organization umbrella, has denied making misrepresentations and is counter-suing the tenants for rent and other charges.

The mall, conceptualised as a Korean-themed one, has 150,000 sq ft of retail space on five levels. It has more than 200 retail tenants.

The nine tenants, including a gift shop, a hair salon, a fashion retailer and an eatery, opened for business in the first two months of last year.

Depending on shop size, they pay rents ranging from about $1,900 to over $12,000 a month.

Last month, the nine, represented by lawyer Leonard Loo, filed a lawsuit in the Subordinate Courts against Novena Point.

The claim did not specify the quantum of damages, as the plaintiffs are asking the court to assess the amount they deserve if they win the case.

Alternatively, the plaintiffs are asking that their tenancy agreements be rescinded and for the rents they have paid to be refunded. In their statement of claim, they say they took up their shop spaces based on oral representations made to them by the developer’s representatives and its brochures.

The promises, the tenants claim, include:

• That there would be specific shopping zones such as a ‘digital world’ selling electronic gadgets in the basement and Korean-themed shops on Level 3, where shop staff would wear traditional Korean costumes;
• That Korean artistes like K-pop star Rain would be brought in monthly to promote the mall;
• That $6 million would be spent on advertising and promotion.

  But the defendant failed to deliver on these, the tenants said.

  The shops have not been zoned, but are scattered, and no ‘digital world’ has been created. They added that

Korean artistes did not grace the mall every month, and that the defendant had not spent $6 million on promotions.

Some tenants claimed they have been locked out of their shops and that their rent cheques have been rejected without reason.

The defendant, represented by Allen & Gledhill, is denying these claims. In its defence filed last week, it said that while it had approached electronics retailers to take up shop units, it never set out to pitch Square2 as an IT mall like Sim Lim Square or Funan.

It added that while Level 3 has a Korean theme, it never said operators would wear Korean costumes. Korean artistes have come to the mall, but it was never promised that such appearances would happen every month.

As for Rain, it said that all that was said was that it would try to bring him in.

The developer also claimed to have put in considerable effort into promoting the mall, but never committed to spending $6 million on this. It has so far spent $2.9 million.

It asserted that six of the tenants were in rental arrears despite reminders, so their leases were terminated.

Their cheques were returned because partial payments were not accepted.

It is contending that the tenants each owe between $1,800 and $51,000 in rent.

 

Source: The Straits Times 10 Jan 08

Sunway keen on more projects in Singapore

Malaysian firm eyes more HDB design-and-build developments

THE recently launched condominium-like public housing project in Boon Keng was a first in many respects, wowing home seekers with city views from extended balconies at new benchmark prices.

What is less well-known, however, is the fact that it also marks the first time a foreign company is developing public housing in Singapore.

Sunway Concrete Products, a unit of Malaysian-listed Sunway Holdings, owns a 30 per cent stake in City View @ Boon Keng, the second development to be launched under HDB’s Design, Build and Sell Scheme (DBSS).

The rest is owned by home-grown developer Hoi Hup Realty – which is owned by Straits Construction – and a Straits Construction-linked investment firm, Oriental Worldwide Investments.

Sunway Holdings is one of three listed companies under Malaysia’s giant Sunway Group, whose activities range from construction to property development to quarrying and entertainment.

Often, it is confused with Sunway City – its more illustrious, and also Malaysian- listed, sister company – which boasts among its projects the popular Sunway Lagoon Resort and landed homes in the exclusive Kuala Lumpur enclave Kiara Hills.

Sunway Holdings has completed the development of a 49ha township in Shah Alam in Selangor state, and is now working on 113ha in Rawang, also in Selangor.

The group managing director of Sunway Group, Datuk Tan Kia Loke, told The Straits Times recently that the group aims to make inroads into the Singapore property market through Sunway Concrete Products, which has supplied pre-cast concrete and other building materials to Singapore’s market for a decade.

Being new in Singapore, it decided to play safe and team up with Hoi Hup for the DBSS project, which gives private developers a free rein over the design, building and pricing of the homes they build – but within public housing guidelines.

Datuk Tan said: ‘Being a new player in properties in Singapore, we do believe in planning our growth in a calculated way…Obviously, the best thing to do is to learn from our big brother.’

The caution has paid off – at 3pm yesterday, the project received almost 2,500 applications for its 714 units.

Although Sunway Holdings’ expertise lies in landed houses, developing such homes may not be on its immediate horizon because land is relatively more expensive to acquire in Singapore.

Still, said Datuk Tan, the firm would not hesitate to look for joint venture partners if it chances on ‘very very prime land’ where it can showcase its strength.

Sunway, he said, was eyeing several government land sale sites for further development.

It wants more of the DBSS action. A total of 2,500 other such homes are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok in the coming months. The tender for a 1.5ha Bishan plot will close on Feb 19.

Asked why Sunway was keen on the Singapore market, Datuk Tan said: ‘Singapore being a small island, the value of property assets over time can only go up.’

He acknowledged, however, that Sunway still had some way to go in establishing its reputation in the Republic.

‘Most Singaporeans, when you talk about Sunway, relate it to Sunway Lagoon. And I think we are conscious of that, and are making a continuous effort to really promote ourselves,’ he said.

 

SUNWAY Group’s managing director, Datuk Tan Kia Loke, says the group aims to make inroads into Singapore through Sunway Concrete Products, which has been supplying pre-cast concrete and other building materials to Singapore’s market for a decade.

Sunway Holdings, he says, is eyeing several government land sale sites for further development.

Having clinched the Boon Keng Design, Build and Sell Scheme project, the company now wants more of such contracts.

A total of 2,500 other such homes are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok in the coming months.

 

Source: The Straits Times 10 Jan 08

UOB launches home loan with an overdraft feature

AMID the current negative interest rate environment, where inflation is rising faster than interest rates, United Overseas Bank (UOB) has launched a housing loan with an overdraft (OD) feature.

The OD facility gives customers the flexibility to invest, to reap potentially higher returns.

Kevin Lam, head of UOB’s loans division, said he expects interest rates to remain stagnant for 2008. ‘This year, I think interest rate will remain flat, with the general trend of softening, as we see some correlation with US interest rates,’ he said.

The key three-month interbank rate stood at 1.81 per cent yesterday, after hovering between 2.4 and 3.4 per cent last year.

Inflation rate – as measured by the Consumer Price Index (CPI) – surged 4.2 per cent in November, compared with a year ago.

In this environment where asset prices are rising quickly and interest rates are low, consumers can capitalise on it by putting their money into other instruments or other uses, said Mr Lam. He added that asset inflation will probably remain for some time, and that asset prices will appreciate at a more modest level now, after having surged in the past few years.

The FlexiMortgage loan, launched recently, combines a conventional housing loan and an overdraft facility. Customers can decide on how much will go to paying the housing loan, and how much the OD will be.

For the housing loan component, the customer pays a normal monthly instalment, but for the OD component, customers service only the interest. The principal is not paid down in this component, and customers can decide when they want to pay the full sum of the principal.

The interest rate for this loan comes up higher than an average home loan interest rate, but Mr Lam said the bank is not competing on the basis of rates.

‘We don’t want to compete on interest rates since whatever rate you can come up with, a competitor will go lower,’ he explained. ‘We are moving away from that to redefine and create a new competitive advantage with this loan.’

In a typical home loan, wealth is locked in. ‘If you want to take out your money, you must sell your place and downgrade your house for the extra cash,’ said Mr Lam.

Another alternative is to go to the bank and take out an OD facility on the home. All that takes time and the legal processes can drag on for months, he explained.

However, with this loan, he said, the OD facility that comes with it can be used to tap business or investment opportunities quickly.

The OD facility currently has a floating rate of 4.25 per cent and follows UOB’s prime rate of 5 per cent.

If the prime rate moves up or down, the OD follows accordingly. The interest rate on the OD facility is comparable with those of other banks.

Mr Lam said he expects this loan to contribute 10-20 per cent to the bank’s loan business this year. He said UOB did well last year in terms of market share and growth for loans.

UOB ‘does not depend on deferred payment loans to grow its loan book’, he said, dismissing perceptions that the bank has a large pipeline of deferred payment loans. ‘Our business growth is in secondary market transactions,’ said Mr Lam.

 

Source: Business Times 9 Jan 08

Queenstown flat sold for record $890k

21st-storey executive flat in Mei Ling Street was bought for $300,000 in 1992

THE brief for the property agent was simple: Find an HDB flat with great views and near an MRT station. Top floors only – and, it appears, never mind the price.

Two intense days of door-knocking and a record $890,000 later, the buyer has his dream home – and the most expensive Housing Board flat in the country.

For his money, he gets a spacious 21st-storey executive flat in Queenstown, with expansive views towards Sentosa and leafy Mount Faber on one side and Queenstown Stadium on the other.

The 13-year-old flat in Block 150, Mei Ling Street, is just a few minutes away from Queenstown MRT via a sheltered walkway, and a swimming complex is just around the corner.

The owners, Mr David Ho Khoi Seng, 72, and wife Judy, 64, had paid just over $300,000 for the 1,614 sq ft flat, which has four bedrooms, a living room and a study, in 1992.

Mr Ho, who runs a stationery shop, said he had no intention of selling when PropNex agent David See and his son came knocking last Thursday.

The couple tried to deter the buyers – believed to be an elderly couple who own private property – by asking for what they felt was a ridiculous $900,000.

‘We thought $900,000 was too high a price for anyone, but the buyers seemed pretty desperate to find a suitable flat,’ said Mr Ho.

Mr See, 47, said he roped in his 20-year-old son Wilson for the quest to give him some work experience before he starts university later this year.

But knocking on doors, he said, is something he would only do for ‘genuine buyers’.

‘It was a challenge. It’s not easy to get people to sell high-floor units at this time,’ he added.

Demand had sent HDB resale prices up 17.4 per cent last year, the highest in a decade, but executive flats in coveted districts near the central city like Queenstown and Bukit Merah have been extra hot.

The old record for an HDB flat was $780,000 – also for an executive flat in Mei Ling Street – achieved last November.

Five other such flats in Mei Ling Street changed hands between November and December, ranging in price from $728,000 to $765,000.

Median resale prices of executive flats in Queenstown hit $719,000 between July and September last year, a jump from $609,000 in the previous quarter. This type of flat in Queenstown commanded $120,000 in cash over their valuation in the same period.

A five-roomer in Kim Tian Place in nearby Bukit Merah changed hands for $720,000 last June.

With prices of resale HDB flats expected to climb further, the latest deal has prompted some people to ask when a public housing unit will cross the $1 million mark.

Agents reckon that is a way off yet.

Mr See thinks his record deal was more a reflection of the buyers’ eagerness, rather than market sentiment.

Meanwhile, Mr Ho and his wife will live with their 35-year-old son in his Siglap terrace house until they find a suitable home.

When they move, Mr Ho will have to give up a pastime of his: Watching S-League football matches at Queenstown Stadium from the balcony of his Mei Ling Street flat’s master bedroom.

$1m flat? Not yet

THE latest deal has some people asking when a public housing unit will cross the $1 million mark.

Mr Eric Cheng, executive director of HSR Property group, said it was unlikely to happen in the next two years.

PropNex agent David See, the agent for the Mei Ling Street deal, thinks the record sale was more a reflection of the buyers’ eagerness, rather than market sentiment.

Source: The Straits Times 9 Jan 08

Middle Road office block up for sale

A FIVE-storey office building in the Beach Road district has been launched for sale amid a severe shortage of office space in Singapore.

The freehold building is the former P H building at 33 Middle Road and has an indicative price of $23 million, said marketing agent Colliers International.

‘We forsee strong interest from investors who are attracted by the opportunity posed by the current tight office supply in the market,’ said the firm’s executive director of investment sales, Mr Ho Eng Joo.

The property is owned by a trading company, added Mr Ho.

The site is near the upcoming mega mixed-development South Beach, developed by a City Developments-led consortium, and within a short stroll to the City Hall and Bugis MRT stations.

It sits on an area of 3,749 sq ft and has a gross floor area of 16,954 sq ft. The site is zoned for commercial use with a gross plot ratio of 4.2 and can be built up to six storeys.

The property has showroom space on the ground floor and offices from the second to fifth storeys. It also has carpark facilities.

Mr Ho said rents of similar grade office space along Middle Road are priced from $7 per sq ft (psf) to $7.50 psf.

The building is fully tenanted, but all the tenancies are due to expire by the third quarter of this year, said Mr Ho.

 

Source: The Straits Times 9 Jan 08

CapitaLand shares fall after news of offer for Ascott

IT WAS a tale of two share prices yesterday, after Monday night’s surprise announcement that CapitaLand wanted to take The Ascott Group private.

The property giant’s stock dropped by 5.3 per cent to $5.92, while Ascott shares rocketed 41.3 per cent to $1.71.

That price almost matched CapitaLand’s offer of $1.73 a share for the 33.5 per cent of Ascott it does not already own. When the offer was announced, the price was 43 per cent ahead of Ascott’s closing level on Monday of $1.21.

The move comes as property stocks in Singapore are being hit by fears of a possible United States recession.

Mr Vikrant Pandey, an investment analyst at UOB Kay Hian Research, believes those jitters were the main reason behind yesterday’s selldown on CapitaLand.

Bears were in the market on Monday but they did not have a chance to trade CapitaLand shares due to a trading halt, he said.

Other analysts, though, maintain the Ascott acquisition is partly to blame for CapitaLand’s fall.

OCBC Investment Research analyst Winston Liew said the market ‘could be looking for a more conservative growth strategy’.

‘Some players think CapitaLand is overpaying but Ascott is in a sector that will continue to grow,’ another analyst added.

A UBS report said Ascott shareholders were likely to accept the offer.

JPMorgan said the benefit to CapitaLand of the Ascott move lies in a tidying-up of its group structure.

CapitaLand will be acquiring a subsidiary that pursues a similar asset-light, real estate funds model and strategy at a time when the market is undervaluing the stock, JPMorgan said.

In a note yesterday, Mr Liew said CapitaLand’s acquisition price was not cheap, as it represented a 145 per cent premium over Ascott’s book value of 70.6 cents and about 17 times Ascott’s earnings in the 2007 financial year. He asked: The key question is why?

One possibility is that it allows CapitaLand to use Ascott as a vehicle to park all its residential assets, including recent ones in China.

Mr Liew said Ascott would then eventually divest itself of its developments to Ascott Residence Trust, an investment trust holding service apartments and other real estate across Asia.

As for Ascott itself, the general offer is expected to strengthen further its market leadership in the service apartment business, said a Macquarie Securities report.

 

Source: The Straits Times 9 Jan 08

S’pore occupancy costs up 106%

This makes it 13th most expensive place to work in: DTZ report

OCCUPANCY costs in Singapore have soared 106.4 per cent over the past year – among the highest increase across the 137 locations surveyed – according to a new report.

This means that Singapore is now the 13th most expensive place to work in globally, according to the report by property firm DTZ Debenham Tie Leung.

In 2007, Singapore was ranked 55th.

London’s West End continued to be the most expensive location globally, while Hong Kong retained its second position.

DTZ defines occupancy cost as the average total cost of leasing net usable space of 10,000 square feet within a prime CBD location.

It includes rent and outgoings, such as maintenance costs and property tax, if these are normally payable by the occupier. Each city is then ranked on a ‘per workstation’ basis.

Occupancy cost in Singapore came to US$16,220 per workstation per year – more than double the occupancy cost recorded a year ago.

By comparison, occupancy cost in London’s West End is US$31,160 per workstation a year, while Hong Kong’s stands at US$27,540.

DTZ’s survey showed strong occupier demand across all key global regions – with Asia, central and eastern Europe and the Middle East leading the way despite fallout from the US sub-prime crisis.

In particular, cities in the Asia-Pacific region enjoyed a buoyant office market in 2007 – a trend that was especially evident in Singapore.

The uptrend, DTZ said, can be expected to continue going forward.

‘With no significant new supply till 2010 and the depletion of office stock in the CBD as several office buildings undergo redevelopment and/or upgrading, office occupancy cost is expected to rise further,’ said Angela Tan, DTZ South- East Asia’s executive director.

However, while occupancy costs here are expected to continue climbing this year, the rate of increase will be slower than in 2007, experts said. This is because office rentals are expected to climb at a slower rate in 2008.

‘Overall demand numbers for 2008 are not likely to match those for 2007 given the lower expectations for the economy, particularly as companies in the financial and business services (the major consumers of office space) could test their vulnerability against a potential global credit crunch situation in 2008,’ said DBS Group Research in a recent report.

 

Source: Business Times 8 Jan 08

Sers residents approve consultancy exercises

EFFORTS to build more cohesive public housing communities seem to have paid off. Most of the 500-plus households involved in two recent consultation exercises deemed them effective, encouraging similar exercises in the future.

The consultations, announced in July last year by the Forum on HDB Heartware, were with selective enbloc redevelopment scheme (Sers) residents on providing common facilities and enhancement of the joint selection scheme under Sers.

Ninety-four per cent of respondents felt the exercise was a useful and effective way to promote a closerknit community and a greater sense of ownership of the new precinct.

In the first initiative, residents of selected blocks at Silat and Henderson roads were surveyed on a replacement site in Kim Tian Road to re-house them. HDB also organised a mini-exhibition and two briefing and feedback sessions.

Residents were given the opportunity to choose the name for the new precinct – Kim Tian Green – and discuss locations for facilities such as a family playground and an activity court.

The second initiative enables joint selection of replacement flats for neighbours on the same floor or related families for up to six Sers households instead of the current four.

The lessees of Blocks 9 to 12, 9A and 12A Ghim Moh Road will be the first to benefit from this.

Minister of State for National Development Grace Fu said the results of the consultation exercises were encouraging.

‘Consultation on the provision of common facilities will be carried out in future Sers replacement sites to enable residents to develop a precinct they can call their own,’ she said.

 

Source: Business Times 8 Jan 08

Paragon in $82m facelift, expansion

SPH investment to yield contemporary facade, more retail, commercial space

THERE will be a new look for Paragon shopping centre come October. The Orchard Road mall will get a $45 million makeover – to update its building facade and increase retail space.

The facelift will begin this month, and is expected to be completed in October.

In addition, the commercial space above its retail podium will be expanded – at a cost of $37 million, including the payment of land premium. This is scheduled to be completed by end-2008.

The total cost of the facade makeover and the addition of commercial space is $82 million.

Singapore Press Holdings, which owns and manages the prime retail and office complex, says that the makeover is part of Paragon’s continuous efforts to enhance its retail environment and shopping experience for customers.

And shoppers need not fret: Paragon will remain open and operate as it normally does during the renovation period. The shopping centre’s current glass and granite facade cladding will make way for a ‘contemporary yet elegant’ look with the installation of pop-out glass boxes.

They will be made of multi-faceted layers of aluminium panels and fritted glass with in-built energy-saving LED lights.

The new three-dimensional facade will comprise multiple transparent, glazed and volumetric external shop-fronts installed above the walkway level.

Five duplexes of designer stores facing Orchard Road will front the mall and each will see its shop front increase by three times the current height. ‘At the busy intersection of Orchard Road and Bideford Road, a luxury brand’s flagship store will enjoy a looming five storeys of shopfront starting from ground floor, providing a dramatic visual interest at this significant landmark junction,’ said SPH.

Paragon’s renovation and higher concentration of sophisticated designer stores are in line with the transformation of Orchard Road into a shopper’s paradise for the increasing number of well-heeled international visitors coming to Singapore.

‘The design is also prompted by luxury brand retailers looking for more space to expand and build their signature flagship stores and an opportunity to do something different,’ said Linda Kwan, general manager of Paragon.

‘Paragon’s facade, when expanded forward by four metres towards the Orchard Road pedestrian walkway and spanning 115 metres in total length, will provide these tenants with significant visibility and brand expression.’

The facade project is undertaken by DP Architects, which also oversaw the integration of Paragon and the former Promenade into a single shopping mall in 2003.

There will be minor upgrading works within Paragon, including the addition of new balustrades for a contemporary look.

Upon completion of the enhancement works, the nett lettable area at the retail podium will increase by about 11,600 square feet.

The commercial space above the Paragon retail podium will be expanded by another 29,000 square feet – with the construction of two more floors for medical and office use.

 

Source: Business Times 8 Jan 08

High-density homes may complement Paya Lebar hub

Study says they may come up on sites that are currently industrial estates

(SINGAPORE) The development of vacant state sites already zoned for commercial use immediately around Paya Lebar MRT Station will spearhead the transformation of the area into a commercial hub.

More interestingly, however, high-density homes may also come up slightly further away on sites currently occupied by industrial estates to support an expected influx of population as Paya Lebar shapes up as a subregional centre.

Jones Lang LaSalle (JLL), in a recent study of likely changes in the upcoming Master Plan 2008, identified three sites – two currently part of Eunos industrial estate owned by the Housing and Development Board (HDB) and the third also in an industrial estate but privately owned – that could be developed into high-rise homes, whether public or private. Despite the fact that the three plots are currently being used as industrial facilities, two of these sites are actually zoned for residential use under the existing Master Plan 2003, while the third is slated for reserve use.

The need to inject a bigger live-in population to complement the development of Paya Lebar as a sub-regional centre may see HDB offering the three sites for development into housing, especially if the plots are accorded relatively high plot ratios of 3.5 to 4.0 to optimise their proximity to Paya Lebar MRT Station, which will be an interchange station, at the cross section of the new Circle Line and existing East-West Line.

JLL argued these plot ratios – which reflect the ratio of maximum potential gross floor area to land area – are similar to the plot ratios granted for housing projects in the Tiong Bahru vicinity. ‘Injecting more homes in the Paya Lebar area will help maintain a balance between residential and commercial uses in the location,’ JLL said.

And with the increased live-in population will arise the need for having more schools, which can be developed on a plot already zoned for education under the current master plan, JLL’s study suggests.

The property consultancy also suggests that two sites currently zoned for Business 1 (suitable for clean and light industrial/ warehouse use) – one each in Aljunied and Eunos industrial estates – are likely to be rezoned to Business Park or Logistics Park to better complement the proposed commercial developments that will be built closer to Paya Lebar MRT Station.

The plot ratios of these two sites are also likely to be raised from 2.5 currently to 2.5 to 2.8, JLL said.

‘The improved accessibility of the Paya Lebar location that will result from the area serving as an interchange between two MRT lines will boost the location’s image and attractiveness as an alternative office location in the longer term,’ JLL said.

The property consultancy does not envisage a plot ratio increase for the vacant state sites currently zoned for commercial use immediately around Paya Lebar MRT Station, as their existing 4.2 plot ratios are in sync with the Tampines Finance Park.

Last year, the government said Paya Lebar will be developed into a business hub to provide space for Singapore’s continued growth as a global business centre. Plans for its transformation are expected to be fleshed out in Master Plan 2008, which will be ready later this year.

National Development Minister Mah Bow Tan in June last year ruled out massive, across-the-board hikes in plot ratios islandwide in Master Plan 2008.

 

Source: Business Times 8 Jan 08

Two residential sites off Mandai Rd up for auction

PROPERTY firm Colliers International yesterday announced the auction of two residential sites off Mandai Road. Both plots have 999-year leases from Oct 16, 1884. The sites are being sold on a nonvacant basis. This means the buyers will be responsible for vacating the tenants.

The two sites are at 20-28 and 43-56 Meng Suan Road. Each is expected to go for about $250 per sq ft (psf), said Colliers auctioneer Grace Ng.

This means the smaller plot at 20-28 Meng Suan Road, which is 21,066 sq ft, will cost about $5.3 million including a development charge (DC). The site is now occupied by a row of nine single-storey terrace houses.

The larger plot at numbers 43-56, which is 31,043 sq ft, will cost about $7.8 million, also including a DC.

The land is occupied by a row of 14 single-storey terrace houses.

‘The successful buyer can consider developing a row of 10 terrace houses on the smaller plot of land of about 1,938 sq ft each for the inter-terrace units and about 2,583 sq ft each for the corner units,’ said Ms Ng. ‘The larger plot of land can accommodate up to nine similar terrace houses, as well as four other semidetached houses of about 2,583 sq ft each. Given the limited supply of land, freehold and 999-year leasehold, this is a rare opportunity for developers and investors to acquire two huge plots.’ And with the government about to release a 30-hectare site at Mandai for nature-themed attractions, the area will become more vibrant, she said.

The auction will be held on Jan 30 at Amara Hotel.

 

Source: Business Times 8 Jan 08

Two landed sites to go on sale with tenancies

Prices should be less than market rate as house owners need to be compensated

TWO sizeable landed residential plots off Mandai Road will be sold via auction later this month – with prices expected to be below the market rate for comparable plots.

The catch: The 23 houses that sit on the land are owned by different owners rather than the two brothers who own the two respective plots.

That means the buyers of the plots will have to negotiate with the owner-tenants of each house separately and compensate them individually.

After that, the buyer can build three-storey landed homes on the 999-year leasehold sites, both sited on Meng Suan Road.

Colliers International, which is conducting the auction on Jan 30, said fairly large landed plots are relatively rare. For instance, the Government will release only two landed sites for sale in the first half of this year, said its deputy managing director for agency and business services and auctioneer, Ms Grace Ng.

The first Meng Suan Road plot has an area of 21,066 sq ft and is occupied by a row of nine single-storey terrace houses. The second is 31,043 sq ft and with a row of 14 single-storey terrace houses.

The father of the two brothers who own the sites sold the houses to individual owners 40 to 50 years ago for less than $5,000 each.

This may sound unusual, but sales with tenancies were quite common in the past, said Ms Ng. The owners of the Meng Suan Road houses have enjoyed a great deal as they pay the land owners ‘ground rent’ of just $20 a month.

Negotiating with these owners may take time, but the buyer will be able to take heart that he is likely to get a good price. ‘We have applied some discount because they are encumbered with existing tenancies,’ said Ms Ng.

The indicative price of the sites is between $250 and $260 per sq ft, inclusive of the development charge. This puts the smaller plot at about $5.3 million and the bigger one at around $7.8 million.

Negotiating with the house owners will be somewhat simplified by the fact that owners of six of the 23 houses are related to one another, said Ms Ng.

Dealing with multiple owners may not be easy, but it is something that boutique development firm Link (THM) Holdings has proven it can handle.

The firm, which began as a fashion business, said yesterday that it had acquired a freehold site in Ban Guan Park, off Holland Road, comprising nine apartments and nine shops, after negotiating with the individual owners since late 2005. It paid $31.1 million for the site of 32,900 sq ft and plans to build 20 semi-detached houses.

The firm said there were several failed collective sale attempts in the past decade.

Its director, Mr Kenny Tan, said the firm then decided to talk to individual owners to address their concerns and to get them to sell individually.

 

Source: The Straits Times 8 Jan 08

NEW LOOK, MORE SPACE: Paragon to get $82m makeover

PARAGON Shopping Centre will soon sport a new look.

The icon along Singapore’s Orchard Road shopping strip is embarking on an $82-million makeover that will give it a new facade and more retail and office space by the end of the year.

Its new front will include pop-out glass boxes that will lift shopfronts above the ground level.

Stores at the front of the building will sport windows three times taller than the current ones.

And a yet-to-be-disclosed flagship store will make its mark with a five-storey high shopfront.

The makeover ‘will provide these tenants with significant visibility and brand expression,’ said Mrs Linda Kwan, Paragon’s general manager.

The new look for the mall at the junction of Orchard and Bideford roads is the work of DP Architects, which oversaw the integration of Paragon and the former Promenade into a single mall in 2003.

DP aims to create a modern and upmarket look for Paragon, to reflect its status as a leading mall for international luxury goods.

The latest renovation will also add 11,600 sq ft to Paragon’s nett lettable area, which now stands at 650,000 sq ft. Besides the extra retail space, two more floors, or 29,000 sq ft, will also be added for use as offices and medical clinics.

The mall will remain open during the renovation.

 

Source: The Straits Times 8 Jan 08

Uphill trek ahead as building costs keep rising

Study suggests strain on resources, no let-up this year

(SINGAPORE) The construction boom here is stretching resources, as costs of building materials look set to keep climbing through 2008.

Already, building costs are almost on par with Hong Kong, double that of Beijing, and just 30 per cent below New York.

And according to a report by construction cost consultancy Rider Levett Bucknall (RLB), Singapore prices jumped 12 percentage points to 15 per cent in 2007.

RLB sees the global tender price index (TPI) going up a further 15 per cent this year.

RLB managing partner Winston Hauw said: ‘It will be a very challenging year for the construction market in 2008, given the high demand on construction resources from existing and new development commitments this year.’

RLB’s international tender price matrix is based on the pricing of standard commercial and residential building models for the various cities.

For Hong Kong, Beijing and London, the TPI rose by one percentage point, while in New York and Dubai, it fell 4.5 and 5 percentage points in 2007 respectively.

In its analysis of building costs worldwide – which is based on similar construction-related costs – Singapore ranks below these cities, except for Beijing.

Building costs for premium office buildings in London and New York start at $5,916 and $2,857 per square metre respectively. In Asia, the costs for premium office buildings in Dubai, Hong Kong and Singapore start at $2,810, $2,368 and $2,150 psm respectively.

While some factors contributing to building costs are universal, Mr Hauw said construction demand in Singapore has doubled from about $11 billion two years ago, putting a strain not just on material costs, but on labour, equipment and management staff costs as well.

Although the building costs in Singapore are just a fraction below Hong Kong’s, rental returns for landlords are higher.

According to the latest data by DTZ Debenham Tie Leung, Grade A office base rents in Hong Kong are $20.67 psf per month, compared to $12.15 psf per month here.

In both cities, vacancy for Grade A office space is 2.8-2.9 per cent.

DTZ executive director Ong Choon Fah said building costs and rental returns alone do not determine the investment potential of a city. ‘It also has to do with how these investors choose to allocate their funds,’ Ms Ong said. And with regard to Hong Kong, she added: ‘It is still very much a China play.’

In a recent report by CB Richard Ellis (CBRE), estimated initial yields (gross) for the prime office sector in Beijing, Hong Kong and Singapore were 7-9 per cent, 4.5 per cent and 4.3 per cent respectively.

For the luxury residential sector, yields were 6-8 per cent, 3.5 per cent and 2.6 per cent respectively.

CBRE executive director for research Li Hiaw Ho said building costs may have some impact when calculating overall yields, but he believes this is minimal.

Instead, in Singapore, as well as Hong Kong, land costs are a much bigger factor. He also noted that while Singapore’s land costs are high, Hong Kong’s are higher.

On the lower yields here, Mr Li said: ‘Lower yields can also mean that there are lower risks appttached to investing here.’

Knight Frank director of research and consultancy Nicholas Mak believes that for potential developers, building cost ranks below land cost, financing cost, and investor rate of return.

‘When advising clients during the feasibility study stage, we find they are more concerned with pinning down land costs,’ he said.

With respect to building costs, Mr Mak said: ‘In a buoyant market, developers are more likely to pass on higher building costs to the buyer, while in a quiet market, the developers may have to absorb this.’

 

Source: Business Times 7 Jan 08

Several MRT station ‘hot spots’ likely in the future

Interest in these areas rises as Govt readies review of land use masterplan

A MAJOR review of the town plan governing the development of land across Singapore is due this year – and keen interest centres on the use of land near MRT stations.

Property analysts have identified several MRT station ‘hot spots’, but they are playing down the possibility that the Government may allow more intensive development in these areas for now.

The five-yearly review of Singapore’s Master Plan, due around the middle of this year, will examine plot ratios – the level of intensity of development on a given site.

MRT stations hold interest for planners and industry watchers for the obvious reason that vast numbers of people use them every day. A new Jones Lang LaSalle report on higher plot ratios near Circle Line stations picked Paya Lebar, Buona Vista, Telok Blangah and Harbourfront as new hot spots.

The Master Plan shows the permissible land use and density for every parcel of land in Singapore. Property analysts say over time, plot ratios will have to increase in selected areas to cater to a growing population.

What is uncertain is the timing.

For the purpose of planning land use and transportation in the next 40 to 50 years, the Government is using a projected population of 6.5 million, as opposed to the current population of 4.5 million.

Maximising the use of land around MRT stations is an obvious choice.

‘You can then minimise car usage, and the masses get the best accessibility,’ said Dr Chua Yang Liang, the head of research for South-east Asia at Jones Lang LaSalle. ‘From the planning perspective, it is about maximising your investment dollars and social benefits.’

‘Yes, the plot ratios may rise, but people should not count too much on that,’ said Knight Frank director of research and consultancy Nicholas Mak. ‘I don’t think the Government will be creating a lot of windfalls for private property owners, as there is no compelling reason to do so.’

Besides, some of the areas along the Circle line are fairly built-up, he said.

National Development Minister Mah Bow Tan said in June there was no need for an across-the-board change in plot ratios, as the land available today would be sufficient to meet needs over the next 10 to 15 years.

That, however, has not deterred some property owners from dreaming of a windfall.

Some recalled that certain sites above or near key MRT stations had their plot ratios raised after plans for the North East Line (NEL) were finalised more than 10 years ago. A prime example was the land around the Dhoby Ghaut MRT station, when it was also made the NEL interchange.

There is no need for significant increases in plot ratios along the Circle Line in the upcoming Master Plan because the line will not be ready until 2012, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

Generally, the areas likely to see a significant revision in development density will be vacant state land around the Circle Line stations. Paya Lebar certainly has some. It is slated to be a regional commercial centre, so it is possible that the Government will allow a higher land density around the station, said Mr Ku.

It may happen at the Buona Vista stations, he said, as the area is a biotech hub.

Places such as Bishan and Dhoby Ghaut have been ruled out because there is little empty state land there.

Also, plot ratios in Dhoby Ghaut are already very high, said Dr Chua.

‘So you can’t raise them further. Otherwise, you will upset the urban streetscape.’

 

Source: The Straits Times 7 Jan 08

PROPERTY: Are condo-like HDB flats good value?

They might come with fancy trappings but can’t be bought and sold freely like private condos

THE high-end HDB flats launched yesterday at Boon Keng are the talk of the town.

Styled to look like private condominiums, the flats in City View @ Boon Keng will boast timber flooring and large bay windows, as well as built-in wardrobes and kitchen cabinets.

These more luxurious HDB flats, built under the Design, Build and Sell Scheme, are being snapped up by homebuyers. Even before the project’s launch, more than 1,000 inquiries had been made. But these trappings come at a price: The 714 flats in the project will be offered for an average price of $520 per sq ft (psf).

While this makes them significantly cheaper than actual condos in the area, the prices are a cut above those for regular HDB flats. City View’s three-room flats will go for between $349,000 and $394,000 – about double what similar flats in the vicinity cost.

The five-room flats will range from $536,000 to $727,000, which also makes them far pricier than nearby flats. The average price of a five-room flat in Boon Keng is about $450,000, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

As a result, even as would-be buyers form long queues for City View, property experts are divided as to whether the project is really worth its heftier price tag.

The main point of contention is what City View, and projects like it, should be compared to as a baseline: HDB flats, executive condos or private condos.

City View is only the second public housing project to be built by a private developer – in this case, Hoi Hup Sunway. The first, The Premiere @ Tampines, is being built by Sim Lian Land.

Property agents believe City View should be compared to condos. They highlight the premium finishings and central location, and the fact that the flats are much cheaper than condos in the area. ‘The furnishings, design and layout are comparable to those of private properties,’ said Mr Mohamed Ismail, the chief executive of property agency PropNex.

‘I think the price is worth it, especially if you’re talking about a three- or four-room flat for $300,000-plus in such a location.’

He noted that a three-room flat in the Rochor area that is over 30 years old can command $80,000 to $100,000 over valuation.

He added: ‘In eight years, City View will still be half the cost of private property and I’m very sure it will be able to find buyers. It will be a golden investment then.’

HSR Property Group, which is marketing City View, pointed to the strong demand for the project even before its launch.

‘The resale value will be there because consumers will pay for the convenience and rarity,’ said Ms Kellie Liew, a project director at HSR. ‘When you look at private condos, you can’t get this price.’

In contrast, property consultants said City View flats were more readily comparable to other types of HDB flats than to condos. They lack the security and amenities provided in condos and cannot be resold to foreigners, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

‘The project is more expensive than HDB, but you still have HDB rules and HDB guidelines for ownership,’ said one consultant who asked not to be named. ‘The better location doesn’t justify the higher price tag – it’s supposed to be public housing!’ City View flats are sold under the same rules that apply to new HDB flats. Buyers qualify only if they fall under an approved family nucleus scheme, among other things. Mr Mak noted that the flats cannot be resold for the first five years. ‘This sort of thing tends to be a consumer item – you buy, you use, and if you make money from it, you’re lucky,’ he said.

‘If you buy direct from HDB at a subsidised rate, it’s a better investment as there’s more room for capital appreciation. But if you buy the flat at a high price to begin with, the upside is limited.’

Even owners of executive condos – which have condo facilities and can be resold to foreigners after 10 years – are finding it difficult to make a profit on their homes, added Mr Mak.

 

Source: The Sunday Times 6 Jan 08

HORIZON TOWERS COURT CASE: Minority owners want High Court to overturn STB decision

This again throws successful completion of en bloc sale in doubt

(SINGAPORE) The Horizon Towers saga is far from over. In fact, it’s starting anew. Disgruntled minority owners have banded together to appeal against a decision by the Strata Titles Board (STB) last month to approve the enbloc sale of the development.

All nine of the minority owners who originally opposed the collective sale have appealed to the High Court to overturn STB’s decision – doing so yesterday, on the last possible day.

What this means is, the successful completion of the collective sale of Horizon Towers is again in doubt, pending the outcome of the appeal.

The High Court is scheduled to hear the minorities’ objections on Feb 1.

STB’s approval of the en bloc sale was delivered on Dec 7, just days before a Dec 11 deadline for which the sale had to be finalised. The entire sale process is expected to be completed in March.

Lawyers for the minority owners have told BT they will consider applying for a stay of conveyancing proceedings – that is, delaying the completion of the sale – if the outcome of their appeal is not known by then.

The grounds of the appeal filed by the minority owners yesterday are similar to their original objections, heard by STB last year.

The minority owners are appealing against STB’s decision on the grounds that the board erred in law by approving the sale and ordering minority owners to be bound by a sale and purchase agreement signed by the majority owners.

The minorities contend that the en bloc sale was conducted in bad faith and prejudiced their interests. They say the then-sales committee had failed to do its duty to ensure the best price was obtained – by failing to ensure the property was properly marketed and failing to ensure the best offer was procured.

The Horizon Towers sales committee agreed to sell the Leonie Hill development to a consortium led by Hotel Properties Ltd (HPL) for $500 million in February last year. The minorities argue that this price is too low, saying property prices had already begun to climb significantly at the time the deal was inked and there had been other offers, above $500 million, for the development.

They said this was a breach of duty, a result of conflicts of interest on the part of some of the sales committee members, lawyers and sales agents who handled the deal.

The minorities also argue that STB prevented them from fully presenting their case when it refused to subpoena former sales committee chairman, Arjun Samtani. The minorities say Mr Samtani acted in bad faith and influenced the sales committee’s decisions. They say he was motivated by self-interest because he bought an additional unit in Horizon Towers during the initial stages of the collective sale talks.

Six of the nine minority owners objecting to the en bloc sale are represented by Senior Counsel Michael Hwang and SK Phang. The remaining three are represented by Harry Elias Partnership (HEP).

HEP is appealing on grounds similar to those put by Mr Hwang and Dr Phang – but it is also arguing that there was no fair hearing by the STB, in that the board rushed the hearing and failed to give adequate reasons for its decision on Dec 7.

STB only said then that it had been guided by recent case law and parliamentary debates on rules governing collective sales, and that the minorities had failed to prove their claim that the transaction was carried out in bad faith. The board will release the detailed grounds of its decision later.

HEP partner Philip Fong told BT: ‘It’s an unfortunate situation the minorities have found themselves in – in which one is deprived of one’s rights to one’s home, having been told to give up one’s home without being told exactly what the reasons are for such a decision.’

The Horizon Towers case has dragged on for almost a year – and is the most closely watched collective sale transaction ever in Singapore, given its dramatic twists and turns.

The majority owners – some of whom were said to have aligned themselves with the minorities when property prices started climbing – have been accused of trying to renege on their agreement with HPL and its partners, and face a potential $1 billion lawsuit from the buyers.

 

Source: Business Times 5 Jan 08

Circle Line key to higher plot ratios: JLL

Study looks at how Master Plan 2008 could change landscape, usher in new initiatives

(SINGAPORE) When Master Plan 2008 is unveiled sometime this year, certain areas are likely to see an increase in plot ratios. A study by Jones Lang LaSalle has tried to zero in on which areas could be allowed more intensive use of land.

Its conclusion: Look out for undeveloped state sites within walking distance of Circle Line MRT stations, particularly those that intersect with existing MRT lines. They are the top candidates for higher plot ratios.

The property consulting group specifically highlighted the areas near Paya Lebar MRT Station, Buona Vista MRT Station (which will see the Circle Line intersecting with the existing East-West Line) and HarbourFront MRT Station (Circle Line crosses North-East Line). Also, while Buona Vista is shaping into an R&D/commercial hub, the HarbourFront district’s redevelopment potential is increasing because of projects in Sentosa and Keppel Bay nearby.

Another promising area is in the vicinity of the Circle Line Station at Telok Blangah. Although it does not intersect with an existing MRT line, it will benefit from a spillover  from the ongoing redevelopment in Sentosa and HarbourFront.

JLL does not see major, across-the-board increases in plot ratios in MP 2008. But it argues that intensifying land use for undeveloped state plots along these stations will spread social benefits from the government’s investment in the Circle Line to more people and also improve accessibility.

Raising plot ratios (ratio of maximum potential gross floor area to land area) will also address the issue of rising demand for Singapore’s properties and prevent overcrowding in specific areas such as the central and CBD regions.

Although the Circle Line also touches locations near Dhoby Ghaut and Bishan MRT stations, JLL excludes them as these areas already have high plot ratios.

The study also suggests that white sites – with a range of uses and change in use mix allowed – will be more readily available islandwide instead of being confined largely to the CBD. ‘It further promotes creativity in future projects,’ says JLL’s head of research (South-east Asia) Chua Yang Liang.

He also sees the Urban Redevelopment Authority introducing more mixed use, rather than traditional single-use zones, to ‘further provide the flexibility needed to accommodate changing demand patterns as a result of shifting demographics’. MP 2008 could also be more tolerant of non-traditional types of residences. For instance, obsolete industrial buildings could be re-modelled along the lines of New York’s Manhattan lofts. ‘This will accommodate shifting market forces and tastes,’ Dr Chua argues.

JLL also suggests that URA may realign traditional industrial estates to support demand needs of the knowledgebased economy or rezone them for other uses. ‘For example, industrial areas within housing estates such as those found in Jalan Pemimpin could potentially be rezoned to residential or possibly an education hub,’ it said. After all, the area is near Raffles Institution and Raffles Junior College.

MP 2008 could also extend the ‘work, live and play’ concept beyond Marina Bay into the suburbs as Singapore cannot live by its business image alone, JLL predicts. ‘We can expect to see more areas designed for cultural developments, for example, the civic, cultural and retail complex in Buona Vista, and new conservation areas that serve to retain the fabric of the collective memory,’ Dr Chua said.

JLL also expects to see many more recreational zones across Singapore. ‘The likes of the recent Punggol announcement will be more common,’ the study said.

On the back of Sentosa Cove’s success, JLL expects other islets around Singapore like Southern Islands and Pulau Ubin to be put for waterfront residential use.

In the existing CBD, JLL suggests that Shenton Way will see a further shift towards a mixed-use (including residential) district, once the current office supply crunch eases. In May last year, URA announced a temporary ban on conversion of office use in the central area, including the CBD, to other uses until end-2009.

Last year, the government identified Jurong East and Paya Lebar for development into business hubs. Dr Chua says land around Paya Lebar MRT Station will be intensified in line with government plans to transform it into a subregional centre and that the location will be ideal for cost-conscious office tenants.

However, Dr Chua suggests that the area around Jurong East MRT Station is more suited for research and development because of its proximity to universities, the Science Park and one-north rather than as an alternative backoffice hub along the lines of Tampines.

National Development Minister Mah Bow Tan last year also ruled out massive, across-the-board islandwide increases in plot ratios for MP 2008 to cope with a higher population target of 6.5 million. The Master Plan, a detailed land use plan that guides Singapore’s medium-term physical development, is reviewed every five years.

 

Source: Business Times 4 Jan 08

Keppel Bay Bridge: a new waterfront icon

SINGAPORE’S newest bridge was officially opened by President SR Nathan yesterday evening to the accompaniment of a spectacular pyrotechnics show. It is the first public bridge to be built by a private developer and will be handed over to the Land Transport Authority.

Spanning 250 metres, Keppel Bay Bridge is the longest cable-stayed bridge locally.

About 300 guests attended the grand lighting-up ceremony. The bridge links Marina at Keppel Bay and future homes on the private Keppel Island to the mainland.

Designed by DCA Architects and TY Lin International, the bridge cost $30 million to build and forms part of the 32-hectare waterfront living precinct of Keppel Bay.

Programmable special effects lighting allow the pylon and stay cables to be spotlit, and the dynamic LED lights along the span of the bridge can be changed for different occasions.

To commemorate the historical significance of Keppel Harbour, informative plaques are placed along both sides of the bridge.

These plaques feature images and nuggets of information on places of historical significance such as Sentosa, Labrador Park, Mount Faber and the former Keppel Shipyard.

 

Source: Business Times 4 Jan 08

Market St Car Park may be redeveloped into offices

The total project cost could range from $1 billion to $1.5 billion

CAPITACOMMERCIAL Trust (CCT) has been granted outline planning permission by the Urban Redevelopment Authority (URA) to redevelop Market Street Car Park into an office tower that could cost up to $1.5 billion.

Lynette Leong, chief executive of CCT’s manager CapitaCommercial Trust Management Ltd, said the viability of the project would depend on the development premium to be paid for changing the use of the 58,964 sq ft site from a car park to an office tower.

The premium will depend on the enhancement in land value as assessed by the chief valuer, which CCT expects to be made known by May.

Ms Leong said the outline permission is subject to the payment of 100 per cent of the enhancement in land value, instead of the standard 70 per cent, as well as there being no extension of the present lease, which runs to 2073.

Assuming a land value for 99-year commercial land of $900 psf per gross floor area, and adjusting for the shorter leasehold of the site, CCT estimates the land and development premium to be $800 psf.

Including construction and other costs, the project cost would be $1.25 billion.

But CCT said that depending on the development premium, the total project cost could range from $1 billion to $1.5 billion.

Assuming that necessary approvals are granted, a new office tower with an estimated gross floor area of 850,000 sq ft could be built within 36 or 40 months. Ms Leong said that existing tenants, who only moved into

Market Street Car Park in end-2006 after a $14 million renovation, will be given notice soon.

Currently, there are 704 car parking spaces, 28 tenants, and 21,205 sq ft of net lettable area. As at June 1, it was valued at $59 million.

Saying that CCT has no plans to divest the office tower if built, Ms Leong added: ‘When completed, the property would augment the core assets in CCT’s portfolio which currently includes landmark office buildings such as Capital Tower and 6 Battery Road.’

She said she was bullish on the office sector. While she did not reveal estimated yields for the development, she said that it was looking at projected rents of $12-$14 psf per month.

The outline planning consent comes years after CCT parent CapitaLand first mooted plans to redevelop both Market Street Car Park and Golden Shoe Car Park.

It was reported that the URA first rejected redevelopment plans for the car parks as earlier as in the mid-1990s when the properties belonged to the now defunct Pidemco.

Ms Leong said there are currently no plans to redevelop Golden Shoe Car Park, although it has also applied for a change of use for the site.

 

Source: Business Times 4 Jan 08

Condo-like flats in Boon Keng going on sale

Hot demand expected for second lot of public housing offered by private developers

A FLURRY of applications is expected for the latest batch of flats that look like condominiums but sell for just about two-thirds the price of condo units in the same area.

The second batch of public housing being offered by private developers goes on sale tomorrow, one year after the first lot was launched to overwhelming demand.

Like the first project in Tampines, the latest 714-unit project in Boon Keng, to be ready in September 2011, offers condo-like trappings such as timber flooring, built-in wardrobes and kitchen cabinets, and airconditioning.

In fact, some boast features condo owners would love.

Some flats will have wall-to-wall balconies in living rooms and master bedrooms that look out onto the Kallang River and beyond.

Large bay windows will extend to all bedrooms – and even the shower stalls in the bathrooms. And lift lobbies will come equipped with a card access system.

Giving a sneak peak of showflats at the development called City View @ Boon Keng yesterday, developer Hoi Hup Sunway Development said it is offering 72 three-room flats, 168 four-room flats, and 474 five-room flats – housed in three 40-storey blocks.

Under this programme, private developers are given a free rein over the design, pricing and sale of the homes, as long as they adhere to the general rules of public housing.

For the Boon Keng development, three-room flats units are priced at $349,000 to $394,000; four-room units at $523,000 to $597,000; five-room units at $536,000 to $727,000. On average, they are going for $520 psf.

Their prices are wedged between those of resale Housing Board flats and private 99-year leasehold condos in the same area.

A five-room, 11-year-old HDB flat near the project site changed hands for $545,000 in November, for example, while units at private condo Kerrisdale in Sturdee Road sold for $731 psf to $786 psf late last year.

Property agency chief Chris Koh, from Dennis Wee Properties, expects demand to be good. He said that the prices are ‘very reasonable’, considering the flats are near central Singapore and owners of HDB flats in the area are asking for $50,000 to $70,000 above the valuation of their properties, even if they are more than 10 years old.

Potential buyers are also watching closely. Hoi Hup Sunway has received about 1,000 inquiries in the past month. Those who sign up for a unit face a computer ballot to decide who books a unit.

The 616-unit project in Tampines attracted nearly 6,000 applications – just before the property market recorded a huge upswing. Last month, 316 surplus flats offered by the HDB in the outlying towns of Hougang, Sengkang and Punggol attracted a staggering 5,147 applications.

Competition for these Boon Keng flats is expected to be intense. Businesswoman Serene Sia, 38, wants a unit ‘badly’ as she thinks private property is out of her reach. Asked what she thought her chances would be, she said: ‘I seriously don’t know.’

Those interested can apply online at www.hoihup.com from 9am tomorrow. Applications close on Jan 16.

Other similar developments – which could house about 2,500 more units – are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok.

But Hoi Hup Sunway spokesman Wong Chee Herng does not think it will dent the response to his project. ‘The demand is still very much greater than supply,’ he said.

 

Source: The Straits Times 4 Jan 08

Home prices feel pull of gravity after 31% rise

Q4 tempers spectacular growth of 2007; mass market may shine this year

(SINGAPORE) Private home prices rose 31.0 per cent in 2007 – the biggest year-on-year jump since 1999 – despite a slowdown in the fourth quarter caused by the withdrawal of the Deferred Payment Scheme (DPS) and sub-prime woes, flash estimates show.

HDB resale prices also climbed some 17.4 per cent last year – the fastest growth seen since 1996 – as private home price gains filtered down. But HDB resale prices also saw a slowdown in growth in the fourth quarter.

At a doorstop yesterday, Minister for National Development Mah Bow Tan said that over the last few months, the government had taken several steps to try and cool down speculative activity in the property market. However, the market is also being affected by external factors beyond the authorities’ control, he said.

‘For Singapore, we are optimistic that we will continue to do well but there are many things beyond our control,’ Mr Mah said. ‘It is up to us to keep a close eye on the market and be able to tweak those policy levers that we can in order to keep property prices stable.’

Private home prices rose 6.6 per cent in the fourth quarter – down from the 8.3 per cent growth seen in the third quarter.

Similarly, HDB resale prices grew 5.6 per cent in the fourth quarter of 2007 – down from the 6.6 per cent rise for the previous quarter.

Experts said that the slowdown was brought on by both poor global market conditions as well as the removal of the DPS scheme.

Knight Frank managing director Tan Tiong Cheng said that the fourth-quarter slowdown was not surprising considering the sub-prime crisis in the United States.

‘People are still waiting for signs as to how bad the sub-prime situation will turn out,’ Mr Tan said. ‘It affects the whole outlook; people are uncertain.’

Demand could also be muted as lending by banks in the US, UK and Europe has been tremendously curtailed since the crisis, he said.

On the other hand, OCBC Investment Research analyst Winston Liew believes that the bigger culprit is the withdrawal of the DPS. ‘After the DPS was withdrawn, the whole market went down – the resale market, new launches and the stock market,’ he said. He has a ‘neutral’ rating on the Singapore property sector.

For the HDB resale market, the slowdown could also be attributed to buyers holding back in the face of rapidly increasing asking prices, said ERA assistant vice-president Eugene Lim.

‘The slowdown in price increase was largely expected as the market hit resistance level in the light of unrealistic sellers demanding for high cash-over-valuation (COV) transactions – particularly for the five-room and executive flat-types,’ said Mr Lim.

The slowdown in price growth, experts said, will continue in the first quarter of this year.

‘It is unlikely that there will be much activity in January or February,’ said Knight Frank’s Mr Tan. Agreed OCBC’s Mr Liew: ‘I would expect the rate of growth to slow down.’

CB Richard Ellis (CBRE), for example, expects the take-up of new homes to be between 9,000 and 11,000 units for 2008. By comparison, the property firm estimated that a record 15,000 new homes were sold in 2007, 34.5 per cent more than the 11,147 new homes sold in 2006.

This year, the property market will be driven by mid-end and mass-market homes, experts said. Prices and take-up of luxury homes are expected to moderate.

In the fourth quarter of 2007, the price increase was led by non-landed homes in outside central region (OCR) where the index showed an increase of 7.5 per cent.

The strong showing, CBRE said, could be attributed to new project launches during the quarter, such as Park Natura and Hillvista. Prices in the core central region and rest of central region rose by 7.0 per cent and 7.3 per cent respectively.

For 2008, ‘we expect a moderate rise in overall prices as luxury prices are likely to firm up at current levels while mid-tier and mass-market prices have the potential to rise by about 10-15 per cent’, said Li Hiaw Ho, executive director for research at CBRE.

Others were more bullish about the mass market. Ku Swee Yong, director of marketing and business development at Savills Singapore, predicts that mass-market prices will climb by 30-50 per cent this year.

In response to a question about the rapidly climbing prices in the mass market, Mr Mah told reporters that the government is watching the segment closely and will take action if necessary.

‘People who can’t afford the central region to buy or to rent are starting to look outside, which I think is the sensible thing to do,’ he said. ‘We will continue to keep an eye. We’re watching it every day. If necessary, we’ll do something, if not necessary we’ll just let it be.’

The overall price index for private homes could climb by anywhere between 10 per cent and 25 per cent this year, depending on how quickly the market recovers, experts said.

And for the HDB resale market, prices could climb by between 10 and 15 per cent, they said.

‘With the buoyant economy and expected positive market sentiment in 2008, the HDB property market in Singapore is likely to enjoy a double-digit growth in the 10-11 per cent range,’ said Mohamed Ismail, chief executive of property agency PropNex.

 

Source: Business Times 3 Jan 08

Rental flats for needy to be allocated from this month

A TOTAL of 2,194 rental flats will be added to the public housing supply by early 2010 to help the needy, in a move first announced in November 2006.

The first batch of newly converted flats – consisting of 180 one and two-room units at Block 852, Woodlands Street 83 – will be allocated from this month. One-room flats generally go for about $30 a month and two-room flats for $50-60.

In March, 748 units will be made available when the Housing and Development Board (HDB) completes the conversion of vacant blocks at Boon Lay. In addition, 290 converted units at Redhill will be added to the supply early next year. HDB is also building 976 new rental flats at Choa Chu Kang, Sembawang and Yishun. This last batch will be ready by early 2010.

National Development Minister Mah Bow Tan said the flats will help ease the burden of those who are really needy. ‘This additional supply will help meet demand from lower-income Singaporeans who cannot afford or are not yet ready to buy their own flats,’ he said.

While demand seems to be increasing, Mr Mah attributed this to rental flats being an attractive option, rather than more people suffering financial hardship.

‘There is always strong demand for rental flats as they are heavily subsidised,’ he said. ‘Those who are financially capable of owning a flat or renting accommodation from the open market, and those who have family who can support them, should not deprive the more needy of subsidised rental housing.’

From this month, HDB will suspend the allocation of rental flats under the Daily Selection Scheme.

Rental flats will continue to be allocated through monthly selection exercises.

 

Source: Business Times 3 Jan 08

High rentals don’t worry some MNCs

They are still expanding their premises: C&W report

RISING office rents may have forced some businesses to adopt a wait-and-see approach on expansion here but others are expanding anyway.

A report by Cushman & Wakefield (C&W) reveals that key leasing transactions in December 2007 include Swiss wealth manager Julius Baer taking up 26,000 sq ft of office space at HarbourFront Tower 1, US-based global engineering, construction and diversified services company Flour Daniel leasing 15,000 sq ft at 80 Robinson Road, and US-based drug development services company PharmaNet relocating to 5,000 sq ft premises at Springleaf Tower.

Bank Julius Baer was the fastest growing company in the finance and banking services sector in 2007 and its spokeswoman Lim Li Koon said that leasing the HarbourFront premises is part of its ‘business continuity plan’ strategy. Ms Lim also said that it would continue to operate out of its office at One George Street.

C&W managing director Donald Han said that the office market is experiencing a ‘flight to availability of space for expansion’ with tenants also hoping to take advantage of lower rents in the office sub-markets.

According to C&W, latest data showed that prime office net effective rents were at an average of $14.30 psf per month in November 2007, an increase of 3.5 per cent over October 2007.

Similarly net effective rents for the Top 25 Grade A office buildings rents rose to an average of $16.02 psf per month in November 2007 from $15.54 psf per month in October 2007.

Mr Han said many businesses in Grade A areas like Raffles Place, where occupancy is close to 100 per cent, are currently negotiating to renew their leases. ‘Companies that need to be located close to their clients cannot move far from this comfort zone,’ he said.

Those that can are looking outside the CBD. Average rents for the office sub-market in areas like Beach Road and HarbourFront are around $10-$11 psf per month.

‘The secondary (sub) market is becoming the primary target for tenants looking to relocate at the moment,’ Mr Han said.

 

Source: Business Times 3 Jan 08

Back lane in Balestier up for sale

Other properties up for auction include Changi bungalow, studio apartment

THE Official Receiver is auctioning off a back lane at Jalan Bunga Raya in the Balestier Road/Irrawaddy Road area.

The freehold strip of land, with a land area of 3,331 sq ft, is behind a row of seven terrace houses which are part of a set of 15 terrace homes at Jalan Bunga Raya which have been bought by a consortium involving a Chinese developer and some local partners.

Knight Frank is auctioning the back lane on Jan 10 on behalf of the Official Receiver. The plot is understood to have been owned by a now-defunct company, Bag Transpack Investment Co Pte Ltd.

Market watchers reckon the consortium that bought the 15 homes at Jalan Bunga Raya will be the most natural contender for the back lane, although BT understands that a party who owns a pair of semi-detached houses on the other side of the backlane is also a potential buyer.

Knight Frank has indicated a price of about $750,000 to $800,000 for the back lane, which works out to $80 to $86 per square foot of potential gross floor area.

The 15 neighbouring terrace houses were sold recently for $61 million or an all-in unit land price of $739 psf per plot ratio.

Knight Frank’s auction, which will be held at Amara Hotel, will also see several other properties going under the hammer.

These include two bungalows – one a Good Class Bungalow at 10 Swiss Club Lane with an indicative price of $18 million or $1,025 psf based on its 17,557 sq ft land area, while the other, at 18 Toh Close in the Changi area, has a $2.8 million to $3 million indicative price range, which works out to $420-450 psf.

The Toh Close bungalow has a 6,669 sq ft land area. Both bungalows are freehold and are being sold by their respective Singaporean owners.

Other properties in the auction include a 23rd level studio apartment at The Metz at Devonshire Road, a semidetached house at Jalan Ishak in the Eunos area, a three-storey shophouse at Craig Road in the Tanjong Pagar area and a two-bedroom apartment on the 26th level of High Street Centre.

 

Source: Business Times 3 Jan 08

Rental flats: Review to weed out less needy

As demand rises, 2,200 more HDB rental flats to be made available over next three years

PEOPLE who have sold a property could find themselves barred or placed at the back of the queue for subsidised rental housing as part of a policy review to weed out the less needy.

National Development Minister Mah Bow Tan said yesterday that the Housing Board was getting an increasing number of applications from the elderly, as well as divorcees with kids in tow.

Some of these applicants already own homes but were looking to sell them and move into subsidised rental housing to save money.

Existing rules state that those who sell a property have to wait 30 months before being eligible to rent.

Mr Mah, who was visiting a batch of 180 newly converted rental flats in Woodlands, said these applicants may not be as needy as others in the queue.

‘If you owned a bungalow, you sold it, you wait for 30 months; to be fair to others, you shouldn’t be joining the queue.’

The rental homes are for Singaporeans who ‘really have no other options’.

The minister said that the number of applicants facing such hardship has gone up, but not significantly.

‘For them, we will have rental flats available,’ he said.

The HDB is also assessing cases of couples who have to sell their flats following a divorce and then seek rental housing after they find alternative accommodation too costly.

Rising property prices and rentals islandwide have swelled the ranks of those seeking subsidised rental housing.

There are about 3,000 applicants in the queue and they have to wait for five to 11 months to get a flat – twice as long as a year ago.

Demand is so high that the HDB yesterday scrapped its Daily Selection Scheme. This let applicants pick leftover rental flats for immediate occupation after monthly flat allocation exercises.

It said the ‘high take-up’ of rental flats in the monthly exercises made the daily scheme unnecessary. The HDB, which allocates subsidised flats to families earning no more than $1,500 a month, charges $26 to $205 a month for a one-room rental flat and $44 to $275 a month for two-room flats.

The first batch of 180 flats in Woodlands, which were converted from three- and four-room flats, will be ready for allocation this month.

Another 748 rental flats in Boon Lay will be added to the pool in March, while 290 in Redhill will be ready early next year. Meanwhile, 976 rental flats will be built from scratch in Choa Chu Kang, Sembawang and Yishun and will be ready in 2010.

The new projects will add a total of 2,194 homes to the stock of 42,000 rental one- and two-room flats.

On another note, Mr Mah downplayed talk that many couples were delaying marriage because of rising property prices and the long wait for new subsidised HDB flats.

‘(Getting a flat is) not the reason why people get married, right?’ he asked, pointing out that they could still rent a flat or live with their parents while they wait for their new homes to be built.

 

Source: The Straits Times 3 Jan 08

Private home prices up 31% last year

But fourth-quarter figures show signs of slower growth; HDB resale prices up 17.4%

 

HOME hunters can ring in the new year with some cheer – the roaring property market is finally showing signs of slowing.

Prices of all categories of homes grew at a lower rate at the end of last year, after months of climbing at a breakneck pace.

Growth braked the most at the highest end of the market, allowing cheaper suburban homes to lead the price rises for the first time in years.

Even with the slowdown, private home prices still beat most forecasts by shooting up 31 per cent for the whole year – triple that of 2006 and the most since 1999.

HDB resale prices climbed 17.4 per cent – the highest rise in a decade – up from only 2 per cent the year before.

‘It’s a spectacular rise,’ declared Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Mr Li Hiaw Ho of property consultancy CB Richard Ellis (CBRE) estimated that developers sold a record 15,000 new homes last year, up from 11,147 in 2006.

Most property experts are unfazed by the smaller price rises in the last quarter, saying that the deceleration was ‘expected’ and ‘healthier’.

Growth in home prices slowed across the board from October to December, according to estimates released by the Government yesterday. The official figures will be out on Jan 25.

Overall, private home prices rose 6.6 per cent in the period, less than the 8.3 per cent in the previous three months.

At the top end, prices of homes in central areas such as Orchard, Cairnhill and Tanglin rose 7 per cent, down from 8.3 per cent growth in the July to September period.

City-fringe homes, such as in Marine Parade and Bishan, rose in price by 7.3 per cent, from 7.9 per cent earlier.

Suburban properties were the quarter’s star, thanks to new projects launched at benchmark prices, said Mr Li.

Homes in areas such as Bukit Batok and Choa Chu Kang saw prices rise 7.5 per cent, just below the 7.9 per cent previously.

As for HDB resale flats, prices grew 5.6 per cent, a tad lower than the 6.6 per cent in the previous three months.

The lower price rises ‘may indicate that buyers are turning cautious in view of events in the fourth quarter,’ said Mr Eugene Lim, assistant vice-president of property firm ERA Singapore.

These include the global fallout from the United States sub-prime mortgage crisis and concerns over a possible US recession, which could have hurt investor confidence.

Yesterday, Minister for National Development Mah Bow Tan told reporters that while such ‘external factors’ are beyond the Government’s control, it will ‘keep a very close eye’ on the property market.

‘It’s really up to us…to tweak those policy levers’ to keep property prices stable or let them move in tandem with economic fundamentals, he said.

Already, the Government’s scrapping of the deferred payment plan in October may have cooled sentiment, especially for luxury homes.

But despite these pressures on demand, developers are not cutting prices, said Mr Lim. ‘We are seeing a situation where prices are not coming down, but neither are they going up.’

For this year, some buyers expect a market correction, as more homes come on stream.

But experts said home demand is set to stay strong this year on the back of a growing economy and population.

CBRE’s Mr Li expects luxury home prices to stay at current levels and cheaper homes to grow in price by 10 to 15 per cent. More bullishly, Mr Ku Swee Yong of Savills Singapore predicts suburban home prices will rise by 30 to 50 per cent.

 

Source: The Straits Times 3 Jan 08

HDB price gains expected to ease after 17.4% rise

IT’S official: HDB flat prices enjoyed a spectacular bull run with a 17.4 per cent gain last year – the strongest growth in a decade – but market watchers say a repeat this year is unlikely.

Industry experts estimate that this year’s total growth figure will be less than 10 per cent, due to general resistance in the HDB mass market to higher prices.

Flash estimates released by the Housing Board (HDB) yesterday for the fourth quarter ended Dec 31 showed home prices grew 5.6 per cent from the previous quarter. This is a dip from the strong 6.6 per cent rise in the third quarter and brings the total growth for last year to 17.4 per cent.

The fourth quarter slowdown was expected, due to the recent onset of a more cautious mood among home buyers, said housing analysts.

‘The high resistance level in the resale market is also due to unrealistic sellers demanding high COVs,’ said ERA Realty’s assistant vice-president Eugene Lim.

COV, or cash over valuation, is the cash buyers need to pay upfront over and above a flat’s market valuation.

HDB’s third-quarter data, for example, showed median COVs pushing $100,000 for five-room flats in the Marine Parade, Queenstown and Central areas.

Most HDB buyers cannot afford such money upfront, and this led to a drop in transactions in the fourth quarter, said Mr Lim.

The hiatus in property launches in the private sector also contributed to a general slowdown in resale activity, said HSR Property Group executive director Eric Cheng.

He has put this year’s forecast for HDB flat price growth at a modest 5 per cent to 8 per cent.

‘HDB resale prices also have limited growth, as the government tries to keep homes affordable by offering more supply,’ he added.

PropNex chief executive Mohamed Ismail, however, is more bullish, saying growth could hit 10 per cent or 11 per cent, if Singapore’s economy continues to perform well.

‘There are still many cash-rich buyers from en bloc sales looking in the resale market,’ he said.

Prices in the resale market will still be fuelled by high demand this year, he added.

To address the current housing shortage, HDB recently announced plans for about 4,800 new flats in the first half of this year under its build-to-order scheme, in which flats are built only when a certain level of demand is reached.

It also recently launched a plum site in Bishan for condo-style HDB homes to be built, with more such sites in Simei, Toa Payoh and Bedok to come.

The full data for the fourth-quarter of last year will be released at the end of the month, said HDB.

 

Source: The Straits Times 3 Jan 08

Strong showing in some suburban areas and projects

Bukit Batok home prices soar 43% but other districts drop as much as 20%

PRIVATE homes in some suburban areas proved the most resilient amid a general slowing in price rises across the board, the latest government figures show.

Some suburban areas performed very strongly, but others showed uneven price growth.

Data from Savills Singapore showed that prices in districts 23 and 24 – which include areas such as Bukit Batok, Choa Chu Kang and Hillview – rose 21 per cent to $694 per sq ft (psf) in the fourth quarter.

Within that overall region, average prices in Bukit Batok soared 43 per cent in the fourth quarter to reach $795 psf. But other districts, such as 16, 17, 18 and 19, paled in comparison.

In fact, some districts saw significant price dips. For instance, prices in districts 21 and 22, which include Clementi and Jurong, fell about 20 per cent to $737 psf in the fourth quarter.

Overall, fourth-quarter prices of non-landed homes outside the central region rose 7.5 per cent, according to initial estimates released yesterday by the Urban Redevelopment Authority.

Although that figure is below the 7.9 per cent rise in the third quarter, it is nonetheless higher than the 7.3 per cent fourth quarter rise in the rest of the central region and the 7 per cent rise in the core central region covering Orchard Road and Sentosa Cove.

While these are preliminary estimates, they lend support to a theory put forward by some property analysts – that mass market home prices will rise more than those of high-end and, possibly, mid-end homes.

The fourth-quarter price rise of homes outside the central region was largely supported by resale deals, considering there were few launches, said Savills Singapore director of marketing and business development Ku Swee Yong.

Existing projects, such as the 99-year leasehold Sun Plaza in Sembawang Drive, saw a 39 per cent rise in average price to $595 psf in the fourth quarter.

The only notable launch was the freehold 192-unit Park Natura across the road from Bukit Batok Nature Park.

Buyers picked up 152 units in October and November at a median price of $945 psf.

Mr Ku is sticking to his earlier forecast for a rise of between 30 per cent and 50 per cent for mass market homes this year, which could send the current average mass market price of $730 psf to as much as $950 psf.

However, growth in the private mass market sector – which has the closest correlation to the HDB market – may be weighed down by the public housing resale market, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Initial estimates showed that fourth-quarter HDB resale prices rose 5.6 per cent, which placed the full-year rise at 17.4 per cent.

‘I don’t think HDB resale flat prices can keep growing at this rate for a year or so, because this group of buyers has a natural resistance to too much of an increase,’ said Mr Mak.

Besides, the Government will step in if HDB prices are growing too fast, he said.

Mass market launches expected this year include four projects on the former Waterfront View estate in Bedok Reservoir Road. Of the four, the 405-unit Waterfront Waves is expected to be launched in the first quarter.

 

Source: The Straits Times 3 Jan 08

Second batch of condo-like flats to go on sale

A FLURRY of applications is expected for the latest batch of flats that look like condominiums but sell for just about two-thirds the price of condo units in the same area.

The second batch of public housing being offered by private developers goes on sale on Saturday, one year after the first lot was launched to overwhelming demand.

Like the first project in Tampines, the latest 714-unit project in Boon Keng offers condo-like trappings such as timber flooring, built-in wardrobes and kitchen cabinets, and air-conditioning.

In fact, some boast features condo owners would love.

Some flats will have wall-to-wall balconies in living rooms and master bedrooms that look out onto the Kallang River and beyond.

Large bay windows will extend to all bedrooms – and even the shower stalls in the bathrooms.

And lift lobbies will come equipped with a card access system to keep out intruders.

Giving a sneak peak of showflats at the development called City View @ Boon Keng on Thursday, developer Hoi Hup Sunway Development said it was offering 72 three-room flats, 168 four-room flats, and 474 fiveroom flats – housed in three 40 storey blocks.

Under this programme, private developers are given a free rein over the design, pricing and sale of the homes, as long as they adhere to the general rules of public housing.

For the Boon Keng development, three-room flats units are priced at $349,000 to $394,000; four-room units at $523,000 to $597,000. Five-room flats will be offered at $536,000 to $727,000. On average, they are going for $520psf.

Their prices are wedged between those of resale Housing Board flats and those of private 99-year leasehold condos in the same area.

A five-room, 11-year-old HDB flat near the project site changed hands for $545,000 in November, for example, while units at private condo Kerrisdale in Sturdee Road sold for $731 psf to $786 psf late last year.

Potential buyers are also watching closely. Hoi Hup Sunway has received about 1,000 inquiries in the past month. Those who sign up for a unit face a computer ballot to decide who books a unit.

Those interested can apply online at www.hoihup.com from 9am on Jan 5. Applications close Jan 16.

Other similar developments – which could house about 2,500 more units – are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok.

 

Source: The Straits Times 3 Jan 08

Chip Eng Seng to co-build condos in Vietnam

CONSTRUCTION and property group Chip Eng Seng will build two condominium projects in Ho Chi Minh City in league with some Vietnamese partners.

The condos will cost ‘about US$120 million ($172.6 million)’ to build in total, with Chip Eng Seng putting in about US$41.4 million, said the company yesterday.

Both projects – one in District 8 and the other in District 2 – are expected to be launched in the second half of this year.

Chip Eng Seng group chief executive officer Raymond Chia said that Vietnam ‘is roaring with potential’.

The firm’s investment, he added, was ‘taken with a long-term view… I see Chip Eng Seng becoming a key foreign investor in Vietnam’.

The District 8 project, in which Chip Eng Seng will have a 20 per cent stake via wholly owned unit CES-VH Holdings, is a 782-unit estate.

It is expected to cost US$60 million and will comprise three 18-storey blocks with full facilities on about 23,000 sq m.

Chip Eng Seng has a 25 per cent stake in the District 2 project through another subsidiary, CES-Vietnam Holdings.

The firm said it intends to raise its stake in this venture to 49 per cent within the year.

This project – three 21-storey blocks with more than 450 units on 7,000 sq m – is expected to cost US$60 million.

Chip Eng Seng made its first foray into Vietnam last July, when it took a 5 per cent stake in Vietnamese firm Hoa Binh Construction and Real Estate.

The deal has ‘brought about good equity returns and excellent business opportunities’, said the company.

Chip Eng Seng is now ’seeking opportunities in Bangkok, Kuala Lumpur and China’, said Mr Chia. He expects that 30 per cent of revenue and profit will come from overseas projects within three years.

The projects announced yesterday will ‘contribute positively to its net tangible assets and earnings per share for the financial year’ ending Dec 31, the company said.

Chip Eng Seng shares closed at 68 cents yesterday, up five cents.

 

Source: The Straits Times 3 Jan 08

Ruling on rental income cheers serviced apartment operators

But IRAS files appeal with High Court against tax review board’s ruling

(SINGAPORE) In a landmark decision, the Income Tax Board of Review has ruled that a serviced apartment operator’s rental income should be treated as normal recurrent business income, and not as income from property investments.

This means that serviced apartment operators can claim deductions on expenses and capital allowances beyond the actual income for the year.

The Dec 14 ruling came after the company, believed to be part of the Frasers Centrepoint group, appealed against an earlier ruling of the Inland Revenue Authority of Singapore (IRAS). The latest ruling will have significant implications for not just serviced apartment operators, but also for the operators of the future integrated resorts.

Earlier, IRAS had contended that serviced apartment owners and operators were merely in a business of letting property, and in a ‘business of making investment’ under Section 10E of the Income Tax Act.

Section 10E says that a business which makes investments, including the ‘letting of immovable property’, cannot claim deductions on expenses and capital allowances beyond the actual income for the year.

The tax implication is that any losses sustained for one year will not be allowed to be carried into the following year, as is the case for an ordinary trade or business where losses are generally allowed to be carried forward.

The Board rejected IRAS’ contention that the serviced apartments and the retail mall businesses are businesses of making investments under Section 10E.

Unlike serviced apartment, hotels in Singapore are allowed to carry forward losses.

Industry insiders say the ‘Section 10E’ treatment has troubled the industry for a long time.

As the range and sophistication of services have increased over the years with top-end serviced apartments offering a myriad of products and services, this unequal treatment has become increasingly untenable, they say.

Not surprisingly, many see this as a test case for the industry.

The Board of Review’s decision will also no doubt be welcomed by serviced apartment operators, who argue that it is the correct approach in looking at serviced apartments as a ‘multi-factorial’ one.

The appellants’ counsel, tax lawyer Ong Sim Ho, successfully argued that whether a business was one of making investment had to be determined in the light of all the surrounding facts, including evidence of the intention of the enterprise in embarking on the venture.

He said that where the letting of property was a mere but necessary platform from which business operations are carried out, Section 10E should not be applicable if those business operations constituted the real business of the taxpayer. He urged the Board to consider the wide range of hospitality services provided to the apartment guests.

The Board agreed that the serviced apartment- cum-shopping mall business should be looked at as an integrated whole.

The decision is likely to cause a re-examination of the approach to taxation of serviced apartments generally.

The IRAS has filed an appeal against the decision to the High Court.

 

Source: Busines Times 2 Jan 08

Private home sales inch up; prices remain firm

URA data shows 4,000 units in 70 developments with pre-requisites for sale as at end-Nov

(SINGAPORE) The number of private homes sold by developers inched up 4.7 per cent to 593 units in November, up from 566 units in October.

The Urban Redevelopment Authority (URA) also revealed monthly property market data of transacted benchmark prices as well as median prices. During the month, a significant number of transactions were seen at Amber Residences, which sold 85 units at the median price of $1,392 psf, and Casa Fortuna which sold 103 units at $1,009 psf.

CBRE Research executive director Li Hiaw Ho also noted that 20 units at 8 Napier were sold at a median price of $3,557 psf and pointed out that these were likely to have been made by a single buyer.

On the performance in November, Mr Li said: ‘Overall, prices are firming. Sales volume and prices in December should remain at the same levels as October and November.’

Indeed, developers told BT that launch prices are being maintained even though buyers are now a bit more ‘cautious’.

UIC Ltd’s 192-unit Park Natura, across from Bukit Batok Nature Park, saw 56 units sold in the month at a median price of $945 psf. The price was slightly lower than the October median price of $1,022 but UIC group general manager Vito Koh explained that this was because units sold in November included those with private enclosed spaces like roof terraces.

Mr Koh said that the withdrawal of the Deferred Payment Scheme (DPS) have made buyers more cautious but added that he believes developers are not lowering prices to move units. ‘Prices are not coming down, but they are not going up either,’ he said.

A comparison of the median price of Amber Residence ($1,392 psf) and the reported average selling price ($1,650 psf) does appear to show that prices may have softened a little.

According to the URA data, 68 units were sold in the $1,000-$1,500 psf bracket with 16 units sold in the $1,500-$2,000 psf bracket. One unit was sold at between $2,000-$2,500 psf.

Jones Lang LaSalle head of research and consultancy Chua Yang Liang noted that launches declined significantly in the Core Central Region (CCR) by 43 per cent from the 166 in October to only 95 in November. ‘The take-up or demand further reflects this softer market with 130 units absorbed – a marginal drop of 4 per cent month-on-month (MoM),’ he said.

Similarly, demand in the Outside Central Region (OCR) also weakened with a 33 per cent MoM decline or only 173 units absorbed compared to 259 in October. Dr Chua pointed out that this was on the back of a larger supply of 221 units or a 28 per cent increase in the number of units launched.

‘The decline in demand in OCR is a likely result of the removal of the DPS,’ he explained.

In contrast, the demand in Rest of Central Region (RCR) remained strong. In November, the take-up increased by 57 per cent MoM.

Most of the transactions in the RCR were in District 15. ‘Take-up in this segment is largely driven by foreign occupiers that has spilled over from the CCR,’ Dr Chua added.

According to the URA data, there are over 4,000 units in 70 developments with pre-requisites for sale as at end-November. This includes mass-market offerings at Bedok Resevoir as well as high-end developments at Cairnhill.

While developers are not ‘panicking’ at the possibility of a slowdown in the economy, Cushman & Wakefield managing director Donald Han believes more will be ‘repositioning’ their launches and going directly to foreign buyers in the Middle East and North Asia.

Mr Han, who expects the total volume of transactions in Q4 2007 to be below 2,000 units, added: ‘Some developers were already marketing their high-end products at the recent Mipim exhibition in Hong Kong to reach an international market.’

It is a strategy that appears to be working.

Savills Singapore director of marketing and business development Ku Swee Yong said he was pleasantly surprised at some of the benchmark prices reached in the high-end sector, with the highest price for the 40-unit Sui Generis at Balmoral Crescent increasing from $2,578 in October to $2,713 psf in November. Six units were transacted in November and the median price rose from $2,406 to $2,474 psf.

Saying that he believes that this end of the market would continue to be driven by international high net worth individuals, he revealed: ‘We had a client who insisted on being first in queue for The Ritz Carlton Residence.’ The client later set a new benchmark price of $4,515 psf for the Cairnhill area.

 

Source: Business Times 18 Dec 07

URA awards Boon Lay site to Frasers Centrepoint

THE Urban Redevelopment Authority (URA) yesterday awarded a residential site at Boon Lay to Frasers Centrepoint, which put in the higher bid of $205.6 million – or $248 per sq ft per plot ratio (psf ppr) – after the tender closed last week with just two bids.

The weak response to the 99-year leasehold site caught industry watchers by surprise as mass market homes are expected to see good demand next year. Property analysts say that prices of mass market private homes could climb by about 15 per cent next year.

The site, which is bounded by Boon Lay Way and Lakeside Drive, had attracted only two bids – Frasers Centrepoint’s $205.6 million ($248 psf ppr) and GuocoLand’s $191 million ($230 psf ppr).

Both bids are below earlier market expectations of about $300 to $375 psf ppr, which were indicated in October when the tender for the site was first launched.

Despite this, market watchers predicted that URA will award the site as the government is committed to its aim of increasing housing supply.

The site, which has a gross floor area of 828,600 sq ft, is just five minutes from Lakeside MRT station.

Frasers Centrepoint plans to build an 18-storey development comprising three blocks, with a total of 600-plus apartments based on an average size of 1,300 sq ft each.

When the tender closed last week, a spokeswoman for Frasers Centrepoint described the group’s bid price as ‘conservative’. She said that the price reflects a breakeven cost of about $550 psf. ‘We would be looking at an average selling price of at least $700 psf,’ she added.

 

Source: Business Times 18 Dec 07

No takers for many collective sale sites as market cools

Quiet end to record year where $12.5b worth of estates were sold en bloc

MOST collective sale sites put up for tender in recent weeks have closed without any bids.

About 40 estates have been launched for sale since October, but just eight deals were sealed between October and last month, said property firm CB Richard Ellis (CBRE).

‘The end of the year has come early,’ said CBRE executive director Jeremy Lake.

This market cooling comes after a record of about $12.5 billion of collective sales was notched up this year.

That was more than 50 per cent up on last year’s $8.2 billion, CBRE said yesterday.

But developers have become more cautious about buying new sites, amid slowing home sales in Singapore and worries over the United States sub-prime mortgage crisis, property analysts say.

While there is no shortage of home owners keen to go en bloc for the sort of record prices seen for most of this year, the number of sites that have successfully been sold has dropped off significantly in recent weeks – coinciding with slower private home sales.

Figures released yesterday by the Urban Redevelopment Authority showed that 611 new units were sold last month, just a tad more than the 590 new units in October.

That compares with a much higher 1,731 units sold in August, for instance.

Said CBRE Research executive director Li Hiaw Ho: ‘Clearly, buyers have become more cautious in view of the volatility in global stock markets resulting from the sub-prime problems in the US, the smaller number of new launches…and tightened en bloc sales rules.’

A new set of collective sale rules kicked in on Oct 4.

In the weeks before that, a wave of potential sellers rushed to go en bloc to avoid the more time-consuming rules. But even some who managed to launch sales under the old rules have not succeeded in closing deals.

Big sites such as Spanish Village in Farrer Road, Villa delle Rose off Holland Road and Elizabeth Towers in Mount Elizabeth all had no takers at the close of their tenders recently. Their indicative prices were $878 million, $700 million and $673 million respectively.

The tender for former Housing and Urban Development Company estate Chancery Court on Dunearn Road also closed earlier this month without any bids. It had an indicative price of $468 million.

The freehold Royalville off Sixth Avenue – with a guidance price of up to $350 million – also failed to attract bidders. Others with unsuccessful tenders include Dunearn Gardens, Cavenagh Gardens, The Village, Amber Glades, Grange Heights and Thomson View Condominium.

‘There are developers who still want to buy but the problem is that some owners are expecting obscene, skyhigh prices,’ said an industry observer.

‘The lull may continue for a while into the first quarter,’ said Credo Real Estate managing director Karamjit Singh.

He said developers have already acquired quite a lot of sites. ‘They don’t need to take extra risks by buying at today’s level unless they believe that there is further upside at current levels.’

Knight Frank’s managing director Tan Tiong Cheng said: ‘Singapore definitely looks very positive… But this external sub-prime problem will affect local and foreign buying so everyone will exercise caution.’

‘Long-term fundamentals still look good… Buying interest should return from mid-January when people return from their holidays,’ said Mr Ku Swee Yong of Savills Singapore.

Others, such as Mr Tan and Mr Lake, believe activity will pick up after Chinese New Year in February.

 

Source: The Straits Times 18 Dec 07

POPULAR DESPITE RENTAL HIKES: Queensway still best place for sports retailers

QUEENSWAY Shopping Centre is rundown and fairly inaccessible, it has none of the frills its rivals have, such as a cinema, and rents have been rising. However, tenants at the well-known sporting goods haunt appear willing to stick with it.

Queensway, said Jeans Arcade proprietor Mohamed Yahya, who was echoing what five other retailers in the mall said, is ’still the best place for a sports retailer’. It has managed to maintain its reputation for being the place to go for one’s sporting needs over the years.

He has been at the mall for more than 30 years now, and is currently paying about $14 per sq ft (psf) for his 330-sq ft, second-floor unit. Last year, when his two-year tenancy agreement ran out, his landlord raised his $3,500 rental to $4,500, a whopping 29 per cent increase. The net effect, he said, is that he is just breaking even now.

Three other tenants that renewed leases within the last year reported rental hikes of between 3 and 20 per cent.

Another factor behind Queensway’s continued popularity is that rents at other locations have moved up too.

The mall, which sits at the junction of Alexandra Road and Queensway, opened in 1976. Individual owners own the freehold units. A check with tenants there found rental rates ranging from about $13 psf to over $18 psf, depending on the location.

The Straits Times saw only one shop unoccupied.

New tenants such as Kobe 2000 proprietor Chan Chan Seng, 66, have been attracted to Queensway because rents there are lower than in other locations in the Katong and National Stadium area. His shop specialises in triathlon equipment. He is paying about $16 psf for the 135-sq ft unit – not as low as he would like, but still less than what landlords in other locations were asking, he said.

The mall is even attracting new, non-sports retailers such as Games Factory, which specialises in Sony gaming products. Its owner, 23-year-old Fred Yeo, signed the tenancy agreement two weeks ago, paying $14 psf for his 248-sq ft unit. He was considering a tiny $25 psf, 160-sq ft unit at the popular Far East Plaza near Orchard Road earlier, but decided to rent the cheaper Queensway unit just in case his business failed.

 

Source: The Straits Times 17 Dec 07

Asking rents at specialist malls rise by up to 30%

Some retailers pay willingly for locale’s reputation, others prefer mix of shops

 

RETAILERS in specialist malls such as Sim Lim Square, Queensway Shopping Centre and United Square have not escaped the tide of rising rentals seen at other malls here.

Some tenants have reported demands for rent hikes of up to 30 per cent when the time came to renew their shop leases.

For some, it makes sense to pay the higher rent and stay put and enjoy the advantages of being in a specialist-themed mall. Others say that more variety in the tenant mix might draw even more shoppers.

A check with tenants at the three malls – well-known for electronic products, sporting goods and children’s products respectively – found that rentals went from a low of about $11 per sq ft (psf) to a high of more than $30 psf.

This is still lower than the $44 psf commanded by retail space in Singapore’s prime shopping belt – Orchard Road.

Knight Frank director of research and consultancy Nicholas Mak said that, despite these rental hikes and the limited walk-in appeal of such malls, setting up shop in specialist malls can make sense.

This, he said, is because a concentration of specialist shops can create a useful ‘cluster effect’ for a retailer.

A grouping of specialist retailers can give a locale a reputation as the ‘place to go’ for such products or services. This attracts customers looking for particular products, and in turn attracts more of such retailers to the mall.

For example, Sim Lim Square is known to both locals and tourists as the place to get electronic products. This means that a visitor to Sim Lim Square is much more likely to buy something than someone visiting a ‘generic, cookie-cutter’ mall, he said.

The owner of computer retailer IT Harvest, who wanted to be known only as Mr Sajan, said he has no intention of moving out of Sim Lim Square, even though his monthly rent is more than $30 psf.

‘Sim Lim…is the IT hub. You can’t do business in electronics elsewhere.’

Likewise, Queensway Shopping Centre is known as the place to go for sporting goods, which is why retailers continue to set up shop there.

In 2002, United Overseas Land (UOL) relaunched United Square, located next to the Novena MRT station, and themed it a ‘Kids Learning Mall’, targeting middle- to upper-income shoppers ‘who want to provide the best for their children’, said UOL spokesman Ruth Yong.

One tenant, who declined to be named, said sales at her children’s apparel outlet are on a par with those at her branch in Suntec City, where she pays a higher rental. The latter mall does not have any specific theme.

The tenant, who has had her United Square outlet for about a year now, said that while ‘traffic is lower than I had expected…it’s not a bad choice’.

But things can also be more competitive in a specialist mall.

For example, while the number of potential buyers of electronic gadgets at Sim Lim is likely to be higher than that at Suntec City, the presence of so many competitors will also make it hard for a new computer parts retailer to stand out and secure a sale, Mr Mak said.

Mall specialisation does not always guarantee hordes of shoppers and, in fact, may deter those who are not looking for those particular products.

This is the concern of one tenant at United Square, where rents have risen by an average of 30 per cent this year, according to industry watchers.

Unlike Sim Lim Square or Queensway, where shop units are owned and rented out by individual owners, United Square is owned and managed by property giant UOL.

One tenant, Ms Cordelia Ling, has approached UOL to ask that she be allowed to break her two-year-contract.

She started her four- month-old children’s furniture shop at the basement in United Square ‘because I thought it was central and the crowd was a good fit, but I can’t even cover my rent’, she lamented.

She pays $13 psf in rent, plus 10 per cent of profits made, for her 468-sq ft, basement-level unit.

Ms Ling puts it down to over-specialisation. ‘There are no walk-in customers, and when the schools do not have classes, the place is practically dead,’ she said.

• A concentration of specialist shops can create a useful ‘cluster effect’ for retailers.

• It can give a locale a reputation as the ‘place to go’ for such products or services.

• This attracts customers looking for particular products, and in turn attracts more of such retailers to the mall.

Source: The Straits Times 17 Dec 07

New launches to slow till next year

With a still uncertain market, quiet times in property sector may continue till after Chinese New Year

THE frantic property market is taking a breather, as buyers adopt a wait-and-see approach.

Property launches have been scarce in the past month, and that will continue now that the holiday season is here.

If you are one of the few home hunters still keen on checking out show-flats, you may have to wait till the new year – or even later. ‘Most show-flats are expected to close during this festive season until early January 2008,’ said a DTZ spokesman.

Traditionally, December is a relatively quiet month, but not so in the past three years.

Last December, buyers jostling to buy a unit at Marina Bay Residences formed long queues and crowded into its show-flat.

A year earlier, the launch of the second tower of The Sail @ Marina Bay sparked strong interest. Back in 2004, the launch of the very first condominiums in both Marina Bay and Sentosa Cove caused excitement.

Things are different this year, though. There is the added pressure of an uncertain market, largely caused by the United States sub-prime mortgage crisis. Private home sales in the fourth quarter could add up to just $4.5 billion, well down from about $15 billion in the third quarter, according to an industry observer.

‘Most buyers are adopting a wait-and-see attitude to see which way the market is heading,’ said the DTZ spokesman.

While some developers may want to launch their properties in the short January window, consultants say the quiet times are likely to continue until the Chinese New Year celebrations in early February are over.

Developers have a pipeline of new properties set for launch. But, given the weak market sentiment now, most developers will still postpone the official launch of their properties, said Knight Frank executive director Peter Ow.

‘If the stock market improves, they are likely to launch after the Chinese New Year.’

Possible launches in the first quarter include the 77-unit Shelford Suites off Dunearn Road, the 428-unit Marina Bay Suites in the Marina Bay area, the 405-unit Waterfront Waves on part of the former Waterfront View site in Bedok Reservoir and the 302-unit Martin Place Residences in Kim Yam Road.

Industry sources say Far East Organization could soon launch Silversea on the site of the former Amberville on Amber Road.

The developer, they say, is hoping for prices of at least $1,700 to more than $2,000 per sq ft (psf), relatively high for the Amber Road area.

If you can’t wait, projects that have started sales in the past two to three weeks ago include Allgeen Properties’ D’Lotus project and Hayden Properties’ ritzy 58-unit Ritz Carlton Residences.

Asking prices for the top floors of the 36-storey Ritz Carlton Residences are said to have crossed $5,500 psf, nearly a record property price in Singapore. Sales at Far East Organization’s 99-year leasehold, 140-unit Jardine in Dunearn Road were also said to have started.

Allgreen Properties has also sold 186 out of 536 units at The Cascadia in Bukit Timah Road at a median price of $1,618 psf. The bulk of the freehold property, which has been launched in Hong Kong, or 162 units, were sold to an overseas fund at a median price of $1,527 psf.

If a spectacular view of the sea is what you are after, there is one newly-available, high-end project – Lippo Group’s 124-unit Marina Collection – in the high-profile Sentosa Cove residential enclave.

It was opened to invited guests earlier this month, and Lippo off-loaded about 40 units of the 64 units it released for the preview.

Sale prices were at an average of around $2,800 psf, according to the group.

 

Source: The Sunday Times 16 Dec 07

Office sector to finish 2007 as property’s star performer

Prime office rents grew 92% this year; premium office rents have done even better – up 96%

RESIDENTIAL property may have been red hot, but office rents – with their phenomenal growth amid a severe supply crunch – will finish up as the year’s star performer.

Latest figures from property consultancy CB Richard Ellis (CBRE) confirm the trend.

CBRE executive director of office services Moray Armstrong told The Straits Times yesterday prime office rents grew 92 per cent this year from last year. Premium, or grade A, office rents did even better – up 96 per cent.

He said, however, this growth ‘won’t be sustainable next year’.

‘We’re likely to see it moderating at 15 per cent to 20 per cent’.

One trend seen this year, which is likely to accelerate next year, is the number of companies moving out of the Central Business District into non-prime areas, he said.

‘The costs are too high in prime areas. In the short term, there’s still a critical shortage of office space, and this will remain a favourable market for landlords and investors.’

Singapore’s monthly prime office rents shot up 82.6 per cent to $12.60 per sq ft (psf) in the year ended Sept 30, CBRE said previously.

Current levels have already exceeded the historical high reached in the early 1990s of $11.50 psf.

At a separate event yesterday, LaSalle Investment Management also predicted a 15 per cent to 20 per cent growth in office rents next year.

LaSalle, a unit of real estate broker Jones Lang LaSalle, placed the growth rate for grade A office rents at 70 per cent this year. ‘This is the fastest growth rate in the region,’ said the firm’s regional investment strategist for Asia-Pacific, Mr David Edwards.

‘In comparison, rents in the private residential market rose at a healthy, but milder, 25 per cent,’ he said.

The Urban Redevelopment Authority said office space rentals rose an overall 40.7 per cent for the nine months ended Sept 30 based on its official office rental index. Its figures for the year are due next month.

The Government has released transitional office sites – where buildings can be constructed quickly – to relieve the short-term supply crunch.

Two of these – at Scotts Road and Tampines – have been awarded, while two more at Mountbatten and Aljunied Road are now being tendered.

A more permanent supply is expected by 2010, and Mr Armstrong believes this will ‘deliver a great balance between supply and demand’.

Some analysts, such as Citigroup, however, recently warned of a supply glut to come. ‘We see no reason to conclude it will be an oversupply situation,’ countered Mr Armstrong.

‘With Singapore’s diversified economy boom, mass market residential and retail properties will also perform well,’ said Mr Edwards.

LaSalle plans to invest $20 billion in Asia-Pacific properties over the next three to four years, half of which will be in Japan. Demand is rising for modern logistics offices and shopping malls, said Mr Edwards.

The firm also recommends South Korea, for moderate-risk investors, and emerging markets such as China, India and Southeast Asia, for investors with a bigger appetite for risks.

LaSalle said it would also integrate sustainability concerns into its investment strategies.

‘Where environmental concerns was previously ‘interesting’, it is now necessary,’ said Mr Edwards. Given the soaring prices of crude oil, energy- efficient buildings have become very attractive investments.

‘Tenants are also increasingly demanding green buildings. In the long term, if investors don’t take this sustainable approach, it will have a negative impact on their portfolio,’ added Mr Edwards.

 

Source: The Straits Times 15 Dec 07

High-end home launches to take a breather

The frenzy of 2007 is expected to give way to a more sedate pace, slower price rises

(SINGAPORE) Launches of high-end homes are set to shrink in the coming year – even though developers will push more units across Singapore.

The Core Central Region (CCR) – which comprises prime districts 9, 10 and 11, Sentosa and the Downtown Core (which includes the existing financial district and Marina Bay locale) – could see only 4,600 private homes being launched next year.

This is just 26 per cent of the total 17,800 private homes expected to hit the market islandwide.

In contrast, this year saw 5,700 private homes being launched in the CCR, according to CB Richard Ellis (CBRE).

This works out to 38 per cent of the total 15,000 homes launched by developers in 2007.

Market watchers like Knight Frank managing director Tan Tiong Cheng feel that the dwindling new supply in the CCR could provide price support to the high-end market, which has soared steeply but is expected to hit a blip next year.

Developers and property consultants polled by BT earlier this month had expected high-end home prices to appreciate by less than 10 per cent in 2008 compared to mass-market homes – which they thought could climb between 10 and 20 per cent.

In contrast, CBRE estimated that high-end home prices have risen nearly 50 per cent in 2007, while the massmarket segment appreciated only by around 25 per cent.

Among the high-end projects expected to be launched next year are Marina Bay Suites, Sentosa Quayside, Goodwood Residence in Bukit Timah and The Hamilton at Scotts Road.

Still, DTZ Debenham Tie Leung executive director Ong Choon Fah did not expect developers to be in any hurry to push out high-end launches in 2008, given the substantial price rise in this segment this year.

‘The high-end market is very exclusive. Very often, sales take place by invitation and viewings by appointment.

Developers will not flood the market with upmarket projects. They will want to manage their supply pipeline for the high-end very carefully,’ she said.

‘I suppose also that for developers, their view is that with the opening of the integrated resorts in 2009/2010, there is perhaps an opportunity for them to sell their projects at that stage.’

Market watchers said that the supply of prime district residential sites emanating from collective sales may slow down next year as recent changes to en bloc rules could lengthen the time it takes to launch a sale.

Developers, too, are in no hurry. Riding on the high-end boom of the last couple of years, many of them have built up enough financial muscle to be able to hold back launches.

Even if they do go ahead with their launches, some developers have taken to holding back some units from sale for longer-term investment. This is what City Developments announced last month, when it partnered US-based Wachovia Development Corporation to buy two blocks at CityDev’s Cliveden at Grange.

The slowdown in the high-end market could touch not just launches but also actual sales. This year, CBRE estimated that 29 per cent, or 4,458 of the 15,500-odd private homes sold came from the high-end segment.

Next year, not only are developers’ islandwide sales expected to shrink to between just 10,000 and 13,000 private homes, but the CCR could account for an even smaller slice of the primary market sales, market watchers reckoned.

‘Going forward, with a lower economic growth forecast of 4.5 per cent to 6.5 per cent in 2008 and a likely credit crunch arising from the sub-prime mortgage problems in the US, we expect the pace of sales and price hike in the residential market to slow down in 2008,’ CBRE’s executive director Li Hiaw Ho said.

Analysts said that some potential buyers may also find themselves being priced out of the market.

The sales volume of high-end homes will depend partly on whether those who have sold their homes in en bloc deals buy their replacement property in the high-end market, said Knight Frank’s Mr Tan.

For foreign buyers, ‘if they see nervousness in key markets like London and New York, they may pick Singapore instead,’ he added.

CBRE expected the official Urban Redevelopment Authority’s price index for private homes to rise 8-10 per cent next year, after jumping by an estimated 25-29 per cent for full-year 2007.

Soaring rentals, too, could moderate. CBRE estimated that URA’s overall private residential rental index will appreciate 40 per cent this year but the pace could slow to 8-10 per cent next year.

 

Source: Business Times 14 Dec 07

Shop rents rising faster in city fringe, suburbs than in Orchard

Landlords enjoy good takings as demand spills over from prime belt

ORCHARD Road may be the epicentre of shopping buzz, but malls in quieter areas are coming into their own.

Rents of shops on the city fringe and in suburban areas rose faster than those in the prime shopping belt in the October to December period, according to Knight Frank.

The property consultancy said the biggest increase in rents came from shopping malls on the fringe of Orchard Road, such as Tanglin Mall and Park Mall. Retail rents in this area climbed by 8.9 per cent in the quarter, thanks to a spillover from Orchard Road and a better tenant mix, said Knight Frank.

In contrast, rents of malls in Orchard Road proper – including Wisma Atria and Ngee Ann City – rose only 2.6 per cent. Suburban malls such as Tampines Mall and Jurong Point fell in between, with rents rising 5.8 per cent.

The main reason for this is rents in Orchard Road have already risen so much that any further increases will be quite small, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

On the other hand, retail rents in suburban and fringe areas are starting from a lower base, so they will rise by more, he added.

Indeed, Knight Frank’s data shows that despite having the smallest rent increases, the central areas still have the highest rents, and vice versa.

In the heart of Orchard Road, average gross monthly rents have soared to double those of malls on the fringes. This is because over this year, rents in Orchard Road central have gone up the most. They rose by 17.2 per cent this year, almost double the 9.9 per cent rise in Orchard Road fringe malls. In suburban malls, retail rents rose just 7.5 per cent for the year.

But overall, it has been a good year for landlords of shopping malls islandwide.

They have raised rents by more than market experts had forecast, thanks to higher wages, a strong economy and a booming property market.

Islandwide, shop rents in well-located malls jumped by a better-than-expected 22.1 per cent for the whole year, said Knight Frank. Its report on retail rents analysed prime shop space of between 400 and 800 sq ft, typically located on the ground floor of malls, with good frontages.

But rent growth is expected to moderate next year to 10 to 15 per cent, it said. While retail sales and demand for shop space are likely to stay strong, new malls will open with 2.3 million sq ft of space. These include West

Coast Plaza, Iluma at Bugis, Ion Orchard, Orchard Central and Jurong Point’s new wing.

‘Landlords who try to raise rentals in the later part of next year are likely to face stronger resistance from retailers,’ said Mr Mak.

This may come as a relief to retailers. One retailer, who asked not to be named, said she had to move a boutique out of Paragon last year when rents nearly doubled. Another outlet at Suntec City has had rents rise by 30 to 40 per cent.

‘We used to be making money at most of our shops, but now because of the rental increases we are only breaking even at some,’ she said.

‘We can handle rents rising to a certain point, but after that it is untenable.’

 

Source: The Straits Times 14 Dec 07

Ten Mile Junction site up for sale

THE Urban Redevelopment Authority (URA) yesterday launched for sale by tender a site with a twist at Choa Chu Kang.

The URA is selling a 1.56ha site with a three-storey commercial development – the existing Ten Mile Junction Mall. The sale excludes the third-storey Light Rapid Transit (LRT) station, now in operation.

This is the first time the URA is selling a residential site for homes above an LRT station. A similar site sold previously was the Ion Orchard site above the Orchard MRT station.

The latest 99-year leasehold site, at the junction of Choa Chu Kang Road and Woodlands Road, has a gross floor area of 254,394 sq ft for residential use, either for flats or service apartments. The mall has a fixed gross floor area of 121,191 sq ft.

The site could cost $75 million to $90 million at a market price of about $200 to $250 per sq ft, which allows smaller developers to also bid, said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong.

Occupancy levels and property values are rising in that area, and the new project may add some buzz to the district, said Mr Ku.

In the past, the area has struggled to take off. Ten Mile Junction was reported as a ‘ghost town’ for some years after it first opened 1999.

After a series of tenants failed to create a buzz, supermarket chain Sheng Siong took over as master tenant in 2003 and drew in crowds.

Sheng Siong managing director Lim Hock Chee says his business is doing good as the mall is ‘reasonably busy’. He, however, has expressed concern about the change in owners.

The URA said the tender would close at noon on April 3 next year.

 

Source: The Straits Times 14 Dec 07

Sentosa Cove condo plot draws 3 bids

Tender for Boon Lay condo site attracts just 2 bids that are below expectations

A TENDER for the last condo plot at Sentosa Cove – named The Pinnacle Collection – is said to have attracted three bids when it closed yesterday, including a joint bid by Ho Bee Investment and Malaysia’s IOI Group. The other two bidders are said to include foreign players/funds.

Sentosa Cove Pte Ltd (SCPL) declined to reveal the names of the bidders or their bid prices ahead of an evaluation process that will be based on both design concept and price. ‘We expect the site to be awarded by early January,’ an SCPL spokeswoman said.

The plum 99-year leasehold condo site, gracing the entrance to Sentosa Cove’s marina basin, has a reserve price of $963.8 million or $1,600 psf per plot ratio, although top bids were expected to be above $2,000 psf, which would suggest an absolute amount of at least $1.2 billion. However, the deal clincher for the winning bidder may be its design concept, rather than how much it bid, market watchers observed.

The 99-year leasehold site can be developed into a 20-storey condo (this will make it the tallest project in the upscale waterfront housing precinct) with up to 357 apartments.

Over in the Jurong/Boon Lay area, an Urban Redevelopment Authority tender for a condo site next to Lakeside MRT Station drew just two bids – $205.56 million or $248 psf per plot ratio from Frasers Centrepoint and $191 million or $230.44 psf ppr from GuocoLand.

Both bids are below earlier market expectations of about $300 to $375 psf ppr indicated in October. Nonetheless, market watchers expect the site to be awarded. CB Richard Ellis observed that the higher bid yesterday of $248 psf ppr is 26 per cent above the $197 psf ppr achieved for The Lakeshore condo plot back in August 2002.

A spokeswoman for Frasers Centrepoint described the group’s bid price as ‘conservative’, adding that it would reflect a breakeven cost of about $550 psf. ‘We would be looking at an average selling price of at least $700 psf,’ she added.

The group’s scheme is for an 18-storey development comprising three blocks, with a total of 600-plus apartments based on an average size of 1,300 sq ft. ‘We’re bullish about the mid-market and upgrader segment in 2008,’ she added.

CBRE said that units at The Lakeshore near the latest site are being marketed at around $800 psf by its developer.

In the subsale market, Lakeshore units have changed hands in recent months at $650-750 psf, while units at The Centris, one MRT station away, have been changing hands lately at $600-650 psf.

 

Source: Business Times 13 Dec 07

SLA rents out 3 properties for office use, offers 2 more

Successful bid for former police HQ in Pearl’s Hill Terrace is 40% above guide

THE Singapore Land Authority (SLA) has awarded three state-owned properties for rental through a public tender.

And the successful bids were 17-40 per cent above the guide rents it had set.

The former Police Headquarters at 195 Pearl’s Hill Terrace, the former Haig Boy’s School in Mountbatten Road and a former office and showroom at 169 Sims Avenue went for monthly rents of $53,501, $139,003, and $7,700 respectively.

All three sites are for office use.

The top bid of $53,501 for the Pearl’s Hill Terrace property works out to almost 40 per cent more than the guide rent.

The property, which has a gross floor area (GFA) of 145,431.2 square feet cost roughly $2.70 per square foot per month (psf pm).

Businessman Tan Yong Boon, who won the tender, said: ‘We plan to sub-let units to new start-up companies and those who have been forced out of their existing offices.’

The Mountbatten Road property, which has an estimated GFA of 96,039.9 sq ft, fetched a top bid of $116,000 or 20 per cent above the guide rent. This works out to $0.70 psf pm.

Ritzland Investment, which won the tender, plans to pump in $2 million to refurbish the property.

The winning bid of $7,700 psf pm for the Sims Avenue property, with a GFA of 4,151.6 sq ft, was 17 per cent above SLA’s guide rent and works out to $0.54 psf pm.

It was awarded to businessman Koh Teck Lee who plans to sub-let the units within three months after a $300,000 refurbishment.

A fourth property, the former Queenstown Neighbourhood Police Station, with a GFA of 12,780 sq ft, drew a top bid of $55,888 – more than double the guide rent. The bids for this property are still being evaluated.

SLA also said that two more sites have been put up for public tender.

The first, the former Upper Aljunied Technical School at 102 Upper Aljunied Road, was first put up for tender in October for short-term office use. There were no takers.

The site, with GFA of 83,118.9 sq ft, has now been re-designated for office and mixed use.

The second site is the former Alexandra fire station at 55 Queensway. Also for office and mixed use, the property has a GFA of 34,548.9 sq ft.

 

Source: Business Times 13 Dec 07

Corporate abodes with style

Big names in professional services believe an address in the Marina Bay area will boost accessibility and branding

It’s not only banks that want to be located in a financial centre. The big professional services – law, auditing, management consultancy – are all hustling to Marina Bay, the new downtown.

The suits hobnobbing there will not only be pin-striped bankers, but also legal advisers and accountants. The spanking new One Raffles Quay, for instance, which houses banks UBS, Credit Suisse and Societe Generale, is also home to auditor Ernst & Young and law firm Norton Rose.

‘Being located in the centre of the business district puts us where we can have our finger on the pulse of business activity,’ said Ong Yew Huat, country managing partner of Ernst & Young. The firm occupies eight levels of the 50 in the North Tower of One Raffles Quay.

He pointed out that the heart of Singapore’s business district was shifting southward, towards the bay area from Raffles Place, as the Marina Bay district develops. ‘We welcome and look forward to more offices, shops and other developments being set up nearby, which will inject colour and life to the area,’ he said.

One Raffles Quay was built by the same developers now constructing another massive project called the Marina Bay Financial Centre. Together, the two projects will double the supply of premium office space in the central business district.

Many are expecting the new buildings, which will stand alongside other coming attractions such as the Sands casino and the Singapore Flyer, to further energise Singapore’s business district, which has traditionally referred only to the area around Raffles Place.

‘One of the benefits to Allen & Gledhill is the accessibility to clients located in the area,’ said the law firm, which is located at One Marina Boulevard. ‘It is also convenient for employees, as there is easy access to various modes of transportation, shops and food outlets.’

As it is, some firms in and around Marina Bay are expanding.

Legal firm Drew & Napier, for instance, said it will require more space within Ocean Towers, its current abode right next to Raffles Place MRT station.

‘We will remain in Ocean Towers till 2010. Accordingly, our priority over the next couple of years is to secure more office space, if possible, in Ocean Towers,’ it said. The firm added that it intends to remain in the city area should it relocate. Even in the age of the internet and mobile technology, the firms say that geographical location is still of the utmost importance.

‘There is no substitute for meeting face-to-face with our clients,’ said Ernst & Young’s Mr Ong.

Said Allen & Gledhill: ‘Even with the availability of various lines of communication, it is important to us to meet our clients. Accessibility and convenience for our clients are therefore important considerations.’

There’s another reason why companies are choosing the new downtown – image.

Besides the posh offices and their plush interiors, the larger Marina Bay area is also home to the historic Fullerton Hotel, the old Supreme Court and several national theatres and museums. These lend the area a certain highmindedness and sense of the serieux. Simply put, for a top law firm, being located next to a fast-food joint on Orchard Road just wouldn’t have the same gravitas.

Norton Rose’s chief operating officer in Asia, Bob Ikin, said the legal firm’s location ‘enhances brand visibility, as One Raffles Quay is a very new and prestigious building’.

But it is not just the law and auditing firms that are gravitating to Marina Bay, but also Sophis, a software developer and service provider to the treasury, capital and commodity markets. As such, it’s natural that it would be in the financial centre. But besides the obvious need to be close to its business partners, the company also had to think about its brand, said Nigel John Ford, business development director in Asia.

‘Sophis takes particular care in choosing the right office address for its operations around the world,’ he said. ‘In New York we are on Broadway, in London we are in Gracechurch Street, and in Hong Kong we are in International Finance Centre 2. Marina Bay Financial Centre just has to be the address for our business in Singapore.’

For prospective customers, ‘it shows we have discerning standards and reveals something of our corporate culture and brand,’ he said. The company officially opened its Singapore office – on the 25th floor of One Raffles Quay’s North Tower – in February.

For Ernst & Young’s Mr Ong, ‘the choice of a top-notch building and state-of-the-art work facilities reflects our attitude towards our people’.

Besides accessibility and image, some firms said they chose the Marina Bay area precisely because they could be somewhere else, quickly.

Management consultant McKinsey & Company, which is located at Centennial Tower, wanted to be near the city’s main road arteries.

‘Being a consultant often means being on the road travelling to and from client meetings,’ said Chinta Bhagat, head of McKinsey in Singapore. ‘We also fly in experts and consultants from our other global offices. Marina Bay is an excellent location with doorstep access to top hotels, restaurants and other facilities, and particularly rapid access to Changi airport.

‘The people you see running up the boarding ramp just before they close the gate, they’re unfortunately usually us,’ he said.

 

Source: Business Times 13 Dec 07

Apollo Centre sold for $205m

Buyer AEW intending to refurbish it

US PROPERTY fund manager AEW Capital Management has bought Apollo Centre for $205 million, or $1,378 per sq ft (psf) of lettable floor area, the property firm that brokered the deal said yesterday.

Apollo Centre, in Havelock Road, is a seven-storey commercial building with shops on the basement, first and second storeys and offices on the upper floors.

It sits on 54,600 sq ft of land and has a gross floor area of around 217,500 sq ft. The lettable floor area is 148,700 sq ft. It is on a 99-year lease, with 75 years left.

Knight Frank, which marketed the building, said the purchase shows continued investor confidence in the Singapore commercial market since the US sub-prime crisis.

Apollo Centre was sold by Singapore Exchange-listed Apollo Enterprises. The company also owns and manages Furama City Centre Singapore and Furama RiverFront Singapore.

Knight Frank put up the property for sale in September and the tender closed on Oct 16. Several parties were interested and negotiations went on for several weeks after, said Knight Frank executive director Foo Suan Peng.

AEW and its affiliates manage more than US$41 billion of real estate assets and securities in North America, Europe and Asia. The group set up an office in Singapore in April as a base from which to expand in the region. AEW intends to refurbish Apollo Centre, BT understands.

Right now, office rents in the area are about $8.00 psf per month (psf pm) while retail rents range from $8.00- $8.50 psf pm.

 

Source: Business Times 13 Dec 07

RESIDENTIAL PLOT: Boon Lay site draws lukewarm response

A WEAK response to a residential site tender at Lakeside has caught the industry by surprise – given that suburban centres have been touted as the next property hot zones.

The 99-year leasehold site bounded by Boon Lay Way and Lakeside Drive had attracted only two bids by the time of the tender’s close yesterday, said the Urban Redevelopment Authority (URA).

The top bid was put in by Frasers Centrepoint at $205.6 million – or $248 per sq ft per plot ratio (psf ppr) – for the 236,731 sq ft site. First Capital Holdings put in the other bid at $191 million or $230 psf ppr.

The site, with a gross floor area of 828,552 sq ft, is just five minutes from the Lakeside MRT station, with views of the Chinese Gardens and Japanese Gardens next door.

With its convenient location and future URA plans for Jurong East to become a regional hub for the west of Singapore, ‘it is surprising that there were so few bids’, said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong.

A possible reason for the lukewarm response could be rising building costs, he said. ‘For mass market homes, if construction costs escalate, the profit margin shrinks and the project becomes very unattractive.’

CBRE Research executive director Li Hiaw Ho said the new site is likely to break even at about $600 psf, and may sell for between $700 psf and $800 psf.

 

Source: The Straits Times 13 Dec 07

US real estate fund pays $205m for Apollo Centre

Deal reaffirms confidence in Singapore’s office market

APOLLO Centre on Havelock Road has been sold to a United States fund manager for $205 million.

This higher-than-expected price comes as a relief to property watchers, who say it is a strong sign that foreign investors remain confident in the Singapore office market despite the US sub-prime mortgage crisis.

Marketing agent Knight Frank launched the seven-storey office building near Chinatown for sale in September, hoping to get at least $200 million.

The final sale price, paid by US real estate fund manager AEW Capital Management, works out to $1,378 per sq ft (psf) of net lettable area.

This is a ‘fair price’, considering that ‘in today’s market, prime offices about 10 minutes’ walk from this building are going at close to $3,000 psf’, said Mr Donald Han, the managing director of property consultancy Cushman & Wakefield.

At nearby Chinatown Point, office prices are already hovering around $1,300 psf, he added.

The sale of Apollo Centre is significant as it shows that foreign buyers are starting to look outside the prime Central Business District (CBD) for good deals, said Knight Frank’s executive director, Mr Foo Suan Peng.

Most high-profile office sales in recent months have been of gleaming ‘trophy’ office buildings in the heart of the CBD.

As office prices skyrocket amid the space crunch, however, older properties on the CBD fringe are starting to look more attractive, even to foreigners who might not be familiar with Singapore’s office market.

‘Local buyers usually don’t mind properties that are a bit out of the CBD, but a lot of overseas investors concentrate on prime Grade A buildings in the CBD,’ said Mr Foo.

The 99-year leasehold Apollo Centre, which has 75 years left on its lease, is not a prime Grade A office building. It returns rents of about $8 psf, compared with about $18 psf for spanking new One George Street across the road, according to Mr Han.

Apollo Centre, however, has ‘tremendous’ potential in terms of increasing its lettable area, he said. When refurbished, it could command rents of at least $10 psf, he added.

The sale is ‘certainly very good news now, when just one or two months ago, the market was trying to find its footing after the backlash from the US sub-prime crisis’, he said.

‘It’s refreshing to know that foreigners, such as AEW, YTL and even Jackie Chan, have started to buy portfolios in Singapore.’

Mr Han was referring to Malaysia’s YTL Corp, which last month bought Westwood Apartments on Orchard Boulevard for a record price, and Chan’s recent purchase of 1 Neil Road.

AEW, which set up an office in Singapore in April, is also believed to have bought a row of conservation shophouses at Murray Terrace, off Maxwell Road. It is understood that the fund manager is looking to buy properties in Bangkok, Kuala Lumpur and Hong Kong.

Most of the tenants at Apollo Centre, within walking distance of the Subordinate Courts, are law firms.

 

Source: The Straits Times 13 Dec 07

DBS Bank to move headquarters to Marina Bay Financial Centre

AFTER months of speculation, DBS Bank has finally announced that it will move its headquarters from Shenton Way to Singapore’s next financial hot spot – the Marina Bay Financial Centre.

DBS will take 700,000 sq ft of office space spread across 22 storeys, the largest lease deal ever in the Republic after the 508,298 sq ft of office space also at the Marina Bay Financial Centre leased to Standard Chartered Bank.

By moving to Marina Bay, DBS joins French corporate and investment bank Natixis, Swiss private bank Pictet and other financial heavyweights that will park themselves within the new development being built at the edge of the Central Business District facing the sea.

Outgoing DBS chief executive Jackson Tai said at a press conference that the 12-year lease would start in 2012.

‘In the 1970s, the DBS Building at Shenton Way was the tallest in Singapore. Today, with the signing of this lease, we are pleased to anchor the new financial business district at Marina Bay,’ Mr Tai said.

The new DBS headquarters will allow the bank to consolidate its various customer-facing units, trading operations, treasury and capital markets business in one building.

The bank’s key support functions and ‘various units’, meanwhile, will relocate to a nine-storey building at Changi Business Park, near the Expo MRT station in 2010.

Goldman Sachs, which owns the development that now houses DBS’ two office towers, is seeking buyers for the property, according to The Business Times, citing unnamed sources. The US investment bank bought DBS’ offices two years ago.

The financial centre, according to Jones Lang LaSalle Asia Pacific head of investments Lui Seng Fatt, used to be the area surrounding OCBC Building, UOB Plaza and OUB Centre.

DBS’ move to the ‘new downtown’, with attractions such as Las Vegas Sands’ upcoming casino-resort, merely highlights the fact that the business hub is moving down south.

‘I do not pre-empt after this round. We see a lot of those buildings that will start upgrading themselves, including some of the older buildings such as OUB Centre,’ Mr Lui said.

Marina Bay Financial Centre general manager David Martin said DBS’ move cemented Marina Bay Financial Centre’s reputation and would significantly add to the centre of banking and financial excellence and vibrant urban setting his group was creating at Marina Bay.

 

Source: The Straits Times 13 Dec 07

LETTER TO THE EDITOR: New HDB flat prices based on market prices of resale flats

I REFER to the letter, ‘Since when did resale prices decide cost of HDB flat?’ (BT, Nov 30) by Lu Keehong.

The prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction. In order to provide affordable housing to Singaporean families, new HDB flats are priced below their equivalent market values. In this way, new flat buyers can enjoy a substantial subsidy. This point has been explained in Parliament and reported in the media on many occasions.

As resale prices move up, so do new flat prices. Similarly, when resale prices move down, as happened during the property market downturn in recent years, the prices of new HDB flats were also reduced significantly.

By selling new flats with a market subsidy, HDB has been unable to recover the development cost of new flats. HDB has incurred an average deficit of $457 million a year in its home ownership programme in the last five years. These figures are reported in HDB’s audited financial statements, which are available to the public.

HDB periodically reviews its building programme, and makes adjustments to respond to and anticipate changing market conditions. With the increased demand for new HDB flats, HDB is gradually stepping up its building programme to ensure a steady flow of public housing supply to meet the needs of present and future generations of Singaporean families.

Kee Lay Cheng (Ms)

Deputy Director (Marketing & Projects)

For Director (Estate Administration & Property)

Housing & Development Board

Property firm UOA seeks secondary listing on SGX

IPO proceeds of $19.1m to be used for Asian expansion

MALAYSIAN-based, Australian-listed property company United Overseas Australia (UOA) is seeking a secondary listing in Singapore to help it grow in the region.

UOA now focuses on mid to high-end residential and commercial projects in Kuala Lumpur. ‘But we are looking to go into other countries such as China, Vietnam and India,’ director Alan Winduss said yesterday. A Singapore listing will ’spread the word about UOA faster’, he said. ‘We need a base in Asia for faster expansion in the region.’

UOA yesterday launched a $20.9 million initial public offering (IPO) for a Singapore Exchange mainboard listing.

The 55 million shares on offer at 38 cents apiece represent 6.7 per cent of the company’s enlarged share capital and value UOA at $311.9 million.

Of the shares offered, 53 million are for placement and the remaining two million for public subscription.

UOA estimates the net proceeds from the IPO at $19.1 million. More than half or $10.1 million will be set aside for general working capital. The remainder will be used to acquire new development sites.

The shares are being offered at a 17 per cent discount to the closing price of the company’s Australian-listed shares on Monday – the last day of trading before UOA registered its prospectus with the Monetary Authority of Singapore yesterday.

UOA is open to converting its Singapore listing to the primary one, Mr Winduss said. It believes a listing in Singapore will allow it to raise funds more effectively to expand into Asia. Investors here are more likely to be familiar with the Vietnamese market than Australian investors.

Besides stakes in residential and commercial properties, UOA owns 45 per cent of Bursa Malaysia-listed UOA Reit, which holds stakes in four prime office buildings. UOA intends to sell more commercial properties to the trust.

The share offer opens today and closes on Dec 17. Trading is expected to begin on Dec 19. HL Bank is the manager for this secondary listing.

 

Source: Business Times 12 Dec 07

Banyan Tree’s Vietnam project grows in size

Bigger-scale resort project estimated to cost less than US$900m

BANYAN Tree’s plans in Vietnam just got bigger, with the company confirming reports yesterday that investments at its massive resort project in central Thua Thien-Hue province will increase from an earlier reported US$270 million to just under US$900 million.

The first phase of construction for what will become an integrated resort project will begin with an Angsana Resort and a Banyan Tree Resort in the first half of next year and is expected to be completed by 2010. The whole project will eventually include seven four and five-star hotels; about 1,000 resort residences for sale; a championship 18-hole golf course; meetings, incentive travel, conventions and exhibitions (MICE) facilities and a retail and spa village featuring the group’s award-winning spas, said Banyan Tree Holdings group managing director Ariel Vera.

‘The initial estimated total project cost for all components of the integrated resort, including the resort residences for sale, is less than US$900 million,’ said Mr Vera. The increase in investment was due to the initial estimates factoring in only five hotels compared to seven now. The hotels were also of a smaller scale and the earlier plan did not include MICE facilities and the golf course. The number of resort residences for sale was also significantly less than the 1,000 being built under the new plans, a spokesman told BT.

Work on phase two of the Laguna Vietnam resort in the Chang May-Lang Co Economic Zone will begin in the second half and all three phases are expected to completed by early 2014.

The about 300 ha site located in Co Du, Danang, 30 minutes from Danang airport, has a three km stretch of beach backed by mountains, Mr Vera said.

He confirmed that funding for the project will come from various sources including bank debts, proceeds from property sales and equity to be injected from a new private equity fund to be set up and managed by Banyan Tree.

The project is not expected to have a material financial impact on the group’s earnings and net tangible assets for the year.

Banyan Tree will be handling the facilities management of the integrated resort development but will not be managing all the hotels and resorts in the property, said Mr Vera. He declined to name the other five participating hotels as the group is still in discussion with other international hotel chains.

 

Source: Business Times 12 Dec 07

Celebrity plans to open piano bar, reflexology business, offices

Jackie Chan pays $11m for Jinriksha Station at 1 Neil Road

HONG KONG movie superstar Jackie Chan’s love affair with Singapore property continues with his latest purchase – the former Jinriksha Station at 1 Neil Road.

He fell in love with the historic building – once the central depot for rickshaw drivers in Singapore – and bought it for $11 million.

The three-storey corner building in Tanjong Pagar now houses a music lounge called EZ50 on the ground floor. Its sale price works out to $818 per sq ft (psf).

‘It’s a good price because the individual shophouses there are about $1,000 over psf on average,’ said Mr Simon Kwan, who helped broker the deal about a fortnight back. ‘As long as he purchases it at or below the market price, he will be comfortable,’ he said, of Chan.

Mr Kwan, who is the star’s property agent, also runs EZ50 and The 50s pubs, as well as the recently opened Jackie Chan’s Cafe Coffee and Tea at 1 Nassim Road.

The star purchased 1 Neil Road from a firm owned by Mr S. L. Cheong, which also owns the 1 Nassim Road property leased to Chan.

Mr Cheong, the uncle of SC Global chief Simon Cheong, also sold Chan The 50s entertainment complex on Tanjong Pagar Road for $8.8 million in 1996.

Both the Tanjong Pagar buildings are in the Neil Road conservation area.

‘You can’t find buildings like this anywhere else,’ said Mr Kwan. ‘These are the two most outstanding buildings in Tanjong Pagar.’

The former Jinriksha station was built in 1903.

It is a commercial building with space for rent. The One Family KTV karaoke lounge used to occupy the second and third floors, but it had since closed down, according to Mr Kwan, who is managing the building on behalf of Chan.

Mr Kwan has plans for a piano bar, a foot reflexology business or offices for the 8,500 sq ft of space on the second and third floors.

‘The highest possibility is to have offices,’ he said, explaining that this plan would leave him time to concentrate on running Chan’s new restaurant business in Singapore.

Also, office rents are currently strong, supported by tight supply.

Rents at the nearby Red Dot Traffic Building are at $6 psf a month, while those at International Plaza next to the Tanjong Pagar MRT station are going for $7.50 to $8 psf.

Mr Kwan said they could have seven to eight office units.

A decision will be made after a trip to Hong Kong to meet up with Chan and firm up plans, he said.

Apart from commercial buildings, the movie star also owns a few condominium units in the Orchard Road area, including a three-bedroom unit in The Grangeford condo on Leonie Hill Road.

The 99-year leasehold Grangeford is by now known for the property that sold en bloc for more than half of Horizon Towers’ price on a psf basis.

Chan bought his Grangeford apartment, which is being rented out, for only $1.3 million back in 1996.

He will stand to reap about $3.4 million from the collective sale, which he was originally not keen on joining.

Another Hong Kong superstar, Andy Lau, also used to own an apartment at Grangeford, as well as a unit at the UE Square condo.

Mr Kwan said he had since sold these off for Andy Lau. He also used to manage the Singapore properties of the late Teresa Teng and Anita Mui.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, said there would be more celebrities entering Singapore’s property market.

‘For one, the Formula One event will bring in a lot of celebrities.’

 

Source: The Straits Times 12 Dec 07

Dubai World’s Limitless sets up office here

S’pore base will look for investments in the region

DUBAI World’s real estate arm, Limitless LLC, officially started operations at it new regional office here at UOB Plaza yesterday. It will use Singapore as a base to look for new investment opportunities here and in the region.

On route to Hanoi for the ground-breaking ceremony of its US$220 million Halong Star mixed development project in Vietnam, Limitless CEO Saeed Ahmed Saeed said yesterday: ‘Without doubt, South-east Asia is one of the most exciting and dynamic regions for Limitless. Its fast-growing economy presents us with endless opportunities to demonstrate our core skills of master planning large-scale, balanced projects and waterfront development.’

To date, Limitless, which was established in July 2005, has a portfolio of five real estate projects worth about US $100 billion. Three are in the Middle East, with the others in India and Vietnam.

Limitless has considered development sites in Singapore, including the first parcel at Marina View, although it decided not to put in a bid eventually.

‘We took strategic position on Marina View and decided it was not the right time to tender for it,’ said Philip Atkinson, regional director (South-east Asia) at Limitless.

Mr Atkinson added: ‘The Singapore market now is buoyant and fast paced, and we would take a cautionary view.’

Dubai World, through its subsidiary Istithmar, has however, recently acquired a one-third stake in the government land sales development site now known as South Beach, which is estimated to cost a total of $2.5 billion.

Mr Saeed would not say what its expected target rate of returns would be for its projects but added: ‘Different countries have different hurdle rates.’

Like its parent company, Limitless will mostly fund its investment with equity but Mr Saeed said that it could also raise debt from the capital markets.

Limitless is also likely to be looking at emerging markets around the world as this is where large-scale projects that can leverage on its town-planning skills will be.

Particularly bullish on the two huge markets, Mr Saeed said: ‘India and China will probably need new homes for the next 100 years.’

 

Source: Business Times 11 Dec 07

Ascott signs India serviced residence JV

(SINGAPORE) The Ascott Group said yesterday that it has signed a joint venture agreement with the Rattha Group to acquire its fifth serviced residence in India.

The 218-unit property, to be named Citadines Hyderabad Hitec City, is Ascott’s first serviced residence in Hyderabad. the group will pay about S$15 million for a 49 per cent stake in the property. Indian partner Rattha will hold the remaining majority stake.

Ascott said that the deal is part of a master development agreement it signed with Rattha in August 2006.

The aim of the agreement is to acquire and develop seven serviced residences with a total of at least 1,000 units in India by 2010.

Ascott president and chief executive Jennie Chua said: ‘The addition of Citadines Hyderabad Hitec City puts the group ahead of the target set out under the agreement with Rattha. Ascott now has five properties with more than 1,100 units under development in Bangalore, Chennai and Hyderabad.’

The group will continue to seek business opportunities in other cities including New Delhi and Mumbai, she said.

The proposed Citadines Hyderabad Hitec City is in the heart of Hitec City, a major high-tech township where the Hyderabad International Convention Centre is located.

When completed, the serviced residence will cater to the business traveller market, particularly people from the IT and biotechnology industries. The opening is scheduled for the first half of 2010.

With this latest addition, Ascott now has 1,178 serviced residence units in five properties under development in India. The other four properties are in Bangalore and Chennai, and are slated to open between 2008 and 2009.

 

Source: Business Times 11 Dec 07

78 Shenton Way sold for $650m to German group

$1,857 psf deal shows foreign players still prize S’pore office market

FOREIGN institutional investors continue to be drawn to the Singapore office market.

The latest investor to come in is Germany’s Commerz Grundbesitz Investmentgesellschaft (CGI) group, which has bought 78 Shenton Way for $650 million, BT understands. The price works out to $1,857 per square foot based on a total net lettable area of about 350,000 sq ft. This comprises about 275,000 sq ft in the existing 34-storey office tower and a further 75,000 sq ft that is being built in an extension that will be spread across six levels of offices above the carpark podium.

The extension is expected to be completed in the second half of 2009.

78 Shenton Way is on a site with a remaining lease of about 75 years. The property was sold by a joint-venture between Credit Suisse and CLSA funds which bought the 34-storey tower this January for $348.5 million.

Sources say that the vendors are expected to pump in about $80 million to build the extension and spruce up the existing property.

Jones Lang LaSalle is said to have advised 78 Shenton Way’s sellers, while buyer CGI – which is making its maiden entry into the Singapore real estate market – is understood to have been advised by CB Richard Ellis. CGI is the capital investment company for the open-ended fund Haus-Invest.

The $1,857 psf of net lettable area achieved for the deal is in line with current office values in the area, industry observers say. In April this year, TSO Investment, a unit of a CLSA Capital Partners-managed property fund, sold SIA Building at Robinson Road to European pension fund manager SEB for about $1,780 psf of net lettable area.

In September, SEB also bought 12 floors at Springleaf Tower in the Anson Road area at $2,088 psf of net lettable area.

In October, Allco Commercial Real Estate Investment Trust picked up KeyPoint in the Jalan Sultan/Beach Road area for $370 million or $1,186 psf of net lettable area. The deal includes income support of up to $10.5 million for two years to be provided by the seller.

In August, a Goldman Sachs-linked fund bought Chevron House (formerly Caltex House) along Raffles Place for $2,780 psf, a record for an office block here. Chevron House stands on a site with a remaining lease of about 81 years.

The Goldman Sachs group is also expected to stitch a deal early next year to buy the nextdoor Hitachi Tower, which faces Collyer Quay, for about $3,000 psf, industry observers say. A higher price can be justified for Hitachi Tower due partly to its superior tenure (999-year leasehold) and orientation. As well, Hitachi Tower is not weighed down by rental caps for a major tenant, as in the case of Chevron’s lease at Chevron House, which limits the near term rental upside of the property, according to an earlier media report.

 

Source: Business Times 11 Dec 07

Buyers snap up new flats from HDB

• HDB’S LATEST LAUNCH IN NORTH-EAST

• NO. OF FLATS: 316

• APPLICANTS: 1,700

  DEMAND for Housing Board flats has hit an all-time high.

  More than 1,700 applications were made for 316 new flats in the north-east zone released yesterday – just hours after the homes went on sale.

  In terms of sales, almost every unit of the HDB’s unsold stock, released once every two months, has been snapped up immediately.

  In the August and October sale of flats in established towns and in the north and west zones, the take-up rate was 100 per cent for the first time, said HDB.

  All 843 units offered