Thursday, 14 November, 2013 PROPERTY NEWS & VIEWS RESIDENTIAL MARKET Oct resale home prices dip on supply, curbs The residential resale property market softened in October, with prices falling for both private and public homes, according to a report. The flash report released yesterday by the Singapore Real Estate Exchange (SRX) showed the resale price index for non-landed residential private homes dipping 0.1 per cent to 176.2 from September. As for Housing and Development Board (HDB) homes, the resale price index fell 1.6 per cent to 148. Analysts cited an increasing or upcoming supply of homes and government measures that tempered demand as the main reasons for the price fall. For private homes, an estimated 486 units changed hands last month, a 13.6 per cent improvement from Septembers 428 units but still more than a 50 per cent drop from a year ago. Two of the three market sectors registered declines in resale prices. In the Core Central Region (CCR), prices fell 0.5 per cent in October to 162.9 on the resale price index, reversing from a 4.1 per cent gain the month before. Outside Central Region (OCR), or mass-market homes, fell for the second straight month, with the index losing 1.4 per cent to 177.3. Eugene Lim, key executive officer at ERA Realty, said OCR prices fell the most as more and more homes in the region are becoming completed, which increases competition. Prices for the Rest of Central Region (RCR) edged up 0.4 per cent to 175.6 on the index, reversing from a 4 per cent loss the month before. A total debt servicing ratio framework (TDSR) implemented in June has hit demand for RCR homes, as most potential buyers will need a home loan because of their high prices. Further, developers are offering notable price cuts for new projects that will draw demand away. The private rental market was also hit in October, with transactions down 4 per cent from September to an estimated 2,575 units, while the rental price index fell 1.5 per cent to 128.8 - the lowest level since June last year. ERAs Mr Lim said this was related to the increase in OCR homes, as more landlords vie for a limited pool of tenants. Tenants can afford to be more picky, he said. Consultants expect resale volume to remain low in the coming months as property and financial measures, and an increasing supply, continue to curb interest. But Mr Lim said there is unlikely to be big price drops as interest rates are still low, and that sellers need to buffer for an additional buyers stamp duty (ABSD) and TDSR that curb their buying power when looking for another property. Over in the resale HDB market, the prices fell despite improved volumes. An estimated 1,318 HDB flats were sold in October, 26.5 per cent higher than September but still a 20 per cent drop from a year ago. Cash over valuation (COV) continued its descent, with the median at $12,000 in October, a 20 per cent drop from the month before. The lowest median for this cash premium was from Punggol, at $5,000. The highest median of $38,000 was from Bukit Merah. These compare with median COVs of $35,000 in January. COVs could stabilise at around $10,000 by the end of the year, Mr Lim believes. With lower COVs, lower resale transaction prices are expected. As we see more lower priced transactions, flat valuations will also come down, said Mr Lim, who expects prices to moderate up to the first quarter of 2014. The HDB rental market was more stable, with median rents staying at $2,400 per month in October. This was despite the number of HDB flats rented last month increasing 7.7 per cent from September to an estimated 1,506 units. Source: Business Times –9 November 2013 Alex Residences latest to cut prices The Alex Residences condominium is the latest to cut prices as developers struggle to move units in a weak property market. The 429-unit project near Redhill MRT station will launch at an average $1,650 per sq ft (psf) when sales begin next Saturday, SingLand said. This is cheaper than the deve- lopments next-door neighbour Echelon, which launched last December and is fully sold. Units there went for an average $1,795psf, Urban Redevelopment Authority (URA) data shows. Under normal circumstances, Alex Residences should have been priced above Echelon, said Mr Michael Ng, group general manager of UIC, SingLands parent company. But a debt-to-income cap introduced in late June under a total debt servicing ratio framework has made it difficult for would-be buyers to get financing, noted Mr Ng, who was speaking at the projects showflat yesterday. He said about 150 units at the 99-year leasehold development would be released in the first phase and nearly 90 per cent of them will cost less than $2 million each. Prices start at $760,000 for a 474 sq ft one-bedder and go up to slightly above $2 million for a 1,044 sq ft three-bedroom unit. The project is expected to be completed in February 2019. SingLand paid $970 psf per plot ratio (ppr) for the Redhill site last December, which translates to a breakeven price of about $1,450 psf ppr. The land cost was much higher than the $754 psf ppr a City Developments consortium paid for the Echelon site in December 2011. The price cut at Alex Residences follows a similar reduction in September at CapitaLands 694-unit Sky Vue project in Bishan. Sky Vue moved 410 units on its first day of sales at an average $1,500 psf - cheaper than the average $1,589 psf at the neighbouring Sky Habitat. Prices could also be lowered slightly at the launch of the 660-unit Duo Residences in Bugis, though developer M+S is keeping mum. Consultants had expected the 99-year leasehold project near Kampong Glam to be priced above $2,000 psf on average, given its location and the fact that it is part of an integrated development. However, agents told The Straits Times yesterday that average launch prices could be in the region of $1,700 psf to $2,000 psf instead. Priority sales will be on Thursday, with public balloting on Friday. M+S declined to comment. Market watchers noted that it was difficult to assess launch prices in the Bugis area as there were few comparable projects nearby. One of the nearest is the 360-unit Concourse Skyline in Beach Road, which was launched in September 2008 and is only around 67 per cent sold, according to URA data. The average price of new sales at the 99-year leasehold Concourse Skyline since 2008 is $1,596 psf. Buyer interest has been high at both Alex Residences and Duo Residences, though it remains to be seen whether that will translate into actual sales. The Duo showflat was also packed when The Straits Times visited last Saturday. Source: The Straits Times –9 November 2013 Waterfront living draws buyers to District 4 The lure of waterfront living and sweeping views of the Strait of Singapore have made District 4 a coveted residential enclave. The area, which encompasses Keppel Bay, Mount Faber, Sentosa and Telok Blangah, is also popular with buyers due to its central location and accessibility to entertainment offerings such as Resorts World Sentosa and the VivoCity mall. There are about 6,300 units in the vicinity, with prime homes on Sentosa Island and HarbourFront comprising 60 per cent of the total. The proximity of projects in Sentosa and HarbourFront to the sea means they command a price premium over other developments in the vicinity. For example, average prices of homes at the Marina Collection on Sentosa are about $2,900 per sq ft (psf), while units at Corals at Keppel Bay go for about $2,000 psf. However, property cooling measures and the Total Debt Servicing Ratio framework introduced in late June have whittled down demand for homes on Sentosa. Developers IOI and Ho Bee have decided to rent out units at the recently completed Cape Royale on Sentosa instead of selling them. Based on the number of page views on property portal STProperty from April to September, The Interlace emerged as the most popular project, while Reflections at Keppel Bay and Caribbean at Keppel Bay came close. Source: The Straits Times –9 November 2013 Ageing Singapore to get first retirement village After more than two decades of debate and deliberation, Singapores first retirement living community will finally be built at Jalan Jurong Kechil. Property developer World Class Land (WCL), a subsidiary of jewellery group Aspial Corp, told The Sunday Times last week that it plans to build the facility on a 10,170 sq m plot of land, roughly the size of 11/2 football fields. It won a tender last November by offering close to $75 million for the 60-year leasehold land earmarked for residential use. The tender documents said the developer is free to build private flats, condominium units or a retirement living community. At the time, WCL did not reveal which option it would take up. Contacted last week, a spokesman said the company is excited about the project, but is not ready to reveal what will come up. The details are still in the planning stage and subject to approval from the authorities, she said. The project has to be completed within five years of the tender being awarded, which means by November in 2017. A spokesman for the Urban Redevelopment Authority (URA) said the site was released with special conditions to facilitate the development of a private retirement housing product by the market. These include: A choice of 30-year, 45-year or 60-year lease options, all shorter than the usual 99 years. The developer tendered for the 60-year option. Special provision of elder-friendly services. The developer, for instance, can use the 10 per cent bonus gross floor area to build services such as medical clinics and communal living facilities like activity rooms and a cafeteria or restaurant. Removal of restrictions on the maximum number of units that can be built - popularly known as the anti-shoebox rule. This will allow the developer to build smaller studio apartments popular in retirement communities overseas. Singapore is among the fastest ageing countries in the world. The number of those aged 65 and above will nearly double over the next few years, from 352,000 in 2011 to 600,000 by 2020. Said the URA spokesman: We are monitoring the response and outcome of this pilot site before deciding whether more such sites will be released in future. Source: The Straits Times –10 November 2013 Market may correct in 2015/6: forum The property market here could correct significantly in 2015 or 2016, when higher interest rates are expected to coincide with a large increase in housing supply, economists said yesterday. Making presentations at the 20th Singapore Economic Roundtable, they indentified this as one of several medium-term challenges and risks confronting the Singapore economy, the others being over-leveraging in certain household segments, lower cost-competitiveness and obstacles to productivity growth. The forum, jointly organised by the Institute of Policy Studies and The Business Times, is held twice a year under the Chatham House Rule - under which participants agree to keep each others views anonymous to promote frank debate. The event attracted more than 30 academics, private-sector economists and policymakers. Citi economist Kit Wei Zheng said that property prices are likely to fall 10 to 15 per cent over the cycle in the next few years, which could materially reduce households net worth. The discussant for his presentation, Barclays economist Joey Chew, said she expected an even larger correction - 20 to 30 per cent in 2015 and 2016, which is when the US Federal Reserve is expected to raise its interest rate after tapering off quantitative easing. But Mr Kit said that the housing supply in the pipeline should not be under-estimated, noting that the potential private housing supply till 2017 has risen to 32 per cent of the existing stock of private residential units. This will push vacancy rates up, especially since population growth is slowing. Ms Chew estimated that vacancy rates could surge to more than 10 per cent in 2015 and 2016 amid curbs on foreign demand, given that the secondary market has weakened following the governments multiple rounds of macro-prudential measures to cool the property market. On the demand side, overall home ownership levels have risen to 90 per cent from the 10-year low of 87 per cent at the end of 2010. This suggests that pent-up demand for housing to live in has already been met, Mr Kit added. Both economists noted that the risks of rapidly rising household debt in Singapore are ameliorated by the fact that households are not just asset-rich but also cash-rich, but Mr Kit noted that property has accounted for almost 80 per cent of the growth in household net worth since 2006. It follows that a fall in property prices in the next few years would also erode household net worth significantly, said Mr Kit. Also, the distribution of debts and assets may be important: Recent figures from the Monetary Authority of Singapore (MAS) and the Credit Bureau show that rising debt burdens among those in their 30s to 50s and debt levels rising past the peak income age of 50 may signal that individuals are borrowing on their assets. If such loans are being used for investment properties, that could amplify the downward pressure on prices, said Mr Kit. One participant pointed out that MAS has said that it is prepared to unwind some of the measures introduced when the property market cools, although others, such as the total debt servicing ratio, are longer-term ones to ensure prudent lending. But others said that reversing such demand measures, while necessary, may be insufficient. One participant said: Once a condo is built, the supply is there. Its not clear to me that investor demand will come back; immigration policies are being tightened. Another said: Im not sure how much the government can do to support the market. Its already reached a bubble situation. Im not sure how much can be unwound. Source: Business Times –13 November 2013 Good interest in 2 residential projects Two residential projects are seeing good interest in the run-up to their launch this week. Talk in the market is that more than 1,000 cheques have been submitted in the first phase of sales at the 660-unit Duo Residences, a project developed by Temasek Holdings and Khazanah Nasional. Apartments at the 99-year leasehold development at Ophir-Rochor start from $2,214 per square foot (psf) for a studio apartment of about 420 square feet (sq ft) in size, while one-bedders (at least 538 sq ft) start at $2,045 psf. Two-bedroom units (from 807 sq ft) are priced upwards of $1,983 psf. Sales are expected to start tomorrow. Meanwhile, a price cut may have aided Singapore Lands (SingLands) Alex Residences condominium, which will be launching preview sales today - three days ahead of its planned Saturday main public launch - after 550 cheques that have been verified by the developer were received for the 150 units being released in the first phase of sales. Michael Ng, group general manager of UIC, SingLands parent company, said that balloting for units will start today based on the cheques it has received over the two preview weekends. Public sales will start from Thursday onwards. SingLand had earlier said that units at the 99-year leasehold development near Redhill MRT, which has a total of 429 units, will launch at an average $1,650 psf. This is cheaper than next-door neighbour Echelon, where units were sold for an average $1,795 psf, according to data from the Urban Redevelopment Authority (URA). Echelon was launched last December. Mr Ng said that units launched in phase two are likely to be slightly higher, in excess of $1,700 psf. Phase ones average price of $1,650 psf means that about 95 per cent of the 150 units released will cost below $2 million. The development has one to three-bedroom apartments. Said Mr Ng: Alex Residences appears to be quite well received. This could be due to the attractiveness of the location, with Tanglin/Jervois just across the road, the convenience of being located near Redhill MRT and the nearby amenities. The property is a few minutes drive from Tiong Bahru, VivoCity, Orchard Road, MBS, CBD and Sentosa, according to a fact sheet on the development. Under the first phase, the smallest unit at Alex Residences, at 474 sq ft, will cost $760,000, while prices for two-bedroom apartments (657 and 678 sq ft) start at just over $1 million. Three-bedders (at least 883 sq ft) will cost upwards of $1.3 million. Source: Business Times –13 November 2013 Khaw sees light at end of property market tunnel National Development Minister Khaw Boon Wan says that he is seeing more light at the end of the tunnel in the quest to achieve a sustainable property market in Singapore. But we are still in a tunnel, he added. So we continue to have to watch very carefully over the market and at the same time, wish for better luck too, he said in Parliament yesterday. He was responding to a question from Member of Parliament Christopher de Souza, who had asked among other things, what can be done to ensure a predictable regulatory regime, beyond ad hoc cooling measures, to regulate foreign ownership in Singapores property market in order to create sustainable property prices. Replying, Mr Khaw said that ad hoc measures are part and parcel of managing Singapores property market. You have to be nimble and try to anticipate somewhat, to make certain projections. But you can never be sure. And therefore some measures when you do it, then you have to calibrate the quantum. But . . . so far, so good . . . As you can see, Im now more relaxed, my hair has even turned black, he added, drawing laughter from the House. He also said he shared Mr De Souzas wish to try and achieve a sustainable, perhaps even boring, property market. But for a small Singapore market that is plugged into the global system, you know that there are many factors which are quite completely outside, beyond our control. Mr Khaw also cited data to show that the cooling measures have had their intended effect of dampening foreign demand and reducing speculation. Since 2011, foreign buying in Singapores private housing market has shrunk, both in proportion and in absolute numbers. The proportion of purchases by foreigners (who are not Singapore permanent residents) has fallen from 17 per cent in 2011 to 7 per cent in the third quarter of this year. Over the same period, the number of purchases by such foreigners has also declined from about 1,400 per quarter to 330 in Q3 this year. Mr Khaw also gave figures on subsales, which are often seen as a gauge of the level of speculative activity in the property market. Subsales as a proportion of all private housing transactions dropped from 7.6 per cent in 2011 to 4.6 per cent in the third quarter of 2013. In absolute numbers, subsale transactions have fallen from about 670 per quarter in 2011 to 181 in Q3 2013. Highlighting policies reflecting the priority to support home ownership for Singaporeans, Mr Khaw said: Only citizens are allowed to buy new HDB flats and provided grants to purchase resale HDB flats. Almost all landed housing can only be purchased by Singaporeans. The private condominium market allows foreigner buying and the cooling measures have moderated their impact. The resultant trend is encouraging but we continue to closely monitor the market and we will not hesitate to act further when necessary. Source: Business Times –13 November 2013 150 units sold at Alex Residences Singapore Land sold 150 units yesterday at the 99-year Alex Residences condominium near Redhill MRT Station, out of 200 units the group released in the 429-unit project. The average price is $1,650 per square foot. Said Michael Ng, group general manager of Singapore Land and its parent, United Industrial Corporation: Weve sold a good spread of one, two and three-bedroom units. The project has drawn owner-occupiers as well as potential investors, given the appeal of the location. Residents will enjoy the prestige of living a short distance from the Chatsworth Park Good Class Bungalow Area and yet enjoy the convenience of amenities in the Redhill area ranging from a wet market and food centre to restaurants and cafes. The $1,650 psf average pricing for Alex Residences is a tad lower than the $1,700 psf early-bird average pricing for City Developments launch of the next-door condo Echelon last December. However, the overall project-average achieved for Echelon was $1,795 psf. Also, Singapore Land has not minted large units, with the project comprising entirely one, two and three-bedroom units - unlike Echelon which also has four-bedders and penthouses. Three-bedders in Echelon are also generally larger than those in Alex Residences. This has allowed about 95 per cent of the 429 units in Alex Residences to be priced below $2 million. Yes, the TDSR (total debt servicing ratio) framework has restricted access to funding for some potential buyers. But for those who can get financing, they find a strong value proposition in our product, which is near the city, reasoned Mr Ng. In early September, Keppel Land released The Glades next to Tanah Merah MRT Station at an average price of around $1,500 psf. In late June, on the same evening that the TDSR framework was rolled out, MCL Land sold its J Gateway condo near Jurong East MRT Station like hotcakes at $1,480 psf on average. Mr Ng said that buyers of Alex Residences yesterday were predominantly Singaporeans and permanent residents although some foreigners, mostly mainland Chinese, were also spotted buying units. Source: Business Times –14 November 2013 En bloc sale: 80% of owners must give nod first For properties to be sold en bloc, the consent of at least 80 per cent of the owners must be obtained before a sale tender can be called. To call for a tender first would be a breach of the process implied in the law, the Court of Appeal has ruled. It made this clear in grounds issued yesterday on its refusal in August to approve the en bloc sale of the $33 million Harbour View Gardens in Pasir Panjang Road. In interpreting the issue for the first time, the court said although the relevant section of the Land Titles (Strata) Act does not explicitly state that the 80 per cent must be reached before a public tender is launched, it is, in our view, implicit in the opening words of the (same section) that the requisite threshold should be met. It is understood that the ruling will preclude sales committees from putting their properties on the market in anticipation of getting a majority after a potential price has been secured. Real estate lawyer Lee Liat Yeang said the courts decision clarified the legal position, which is that any tender sale and calls for offers to buy the development should be done after the 80 per cent threshold has been achieved. Otherwise it would be to put the cart before the horse, he said. Harbour View Gardens, consisting of 14 three-storey walk-up apartments, was to have been sold to RH West Coast last year for $33 million. But the High Court dismissed its application in April, prompting an appeal by the majority owners to the apex court of Chief Justice Sundaresh Menon and Judges of Appeal Chao Hick Tin and V.K. Rajah. Justice Rajah said the public tender was launched even before the 80 per cent threshold was achieved and this irregularity is consistent with our finding that the (sales committee) acted with undue haste and inadequate regard for the propriety of the process leading to the collective sale application. The court stressed it was undeniably important to follow the procedural requirements as laid down by Parliament, and a breach would lead to a rejection of a collective sale bid. In the failed sale, a $200,000 inducement had been offered by the collective sales committee and marketing agent to a dissenting owner, Mr Han Min Juan, and his wife as an incentive to sell. He was also on the sales committee. The couples consent enabled the property to reach the requisite 80 per cent threshold. But the other two minority owners objected, charging the committee with not acting even-handedly by offering an inducement to only one opposing owner and not to others. The court agreed and held this amounted to an unacceptable inequality of treatment of the dissenting proprietors. It said: In the circumstances, the process by which the 80 per cent threshold was achieved had been seriously tainted, and the respondents suffered prejudice as a result. The court pointed out that majority owners pressing for a collective sale are not precluded from selling their units but are merely denied the possible financial upside that come with a collective sale. Source: The Straits Times –14 November 2013 Three-generation flats popular: Khaw The latest three-generation living approach by the Housing Board (HDB) looks set to continue, given the number of young families with elderly members who applied for Septembers offerings. Noting the positive response on his blog, National Development Minister Khaw Boon Wan said: The launch of 3Gen flats has clearly encouraged more to consider multi-generation living. This is a good sign. We should continue to facilitate multi-generation living for Singaporeans who wish to do so. The HDB had offered only 84 three-generation units in Yishun, as it was not sure of demand then. But a third of the 1,152 applications for three-generation units and five-room flats were from multi-generation households. This is in stark contrast to last year, when only 3 per cent of five-room flat applicants applied to live with their parents under the Married Child Priority Scheme, wrote Mr Khaw. The three-generation units are a new type of flat offered by the HDB. They have four bedrooms and three bathrooms, and are about 5 sq m larger than current five-room units. The Housing Board bundled the three-generation flats and five-room units so that applicants would have an alternative housing option if one type ran out, Mr Khaw said. Second-time applicants signalled strong interest in these larger flats, forming two-thirds of the applicants. Among first-timer multi-generation families, six in 10 are either expecting or have young children below age 16. Their median age is 39, higher than the previous median of 30 among first-time applicants for five-room flats. One in 10 first-timer households has no children, and their median age is understandably lower at 32. Mr Khaw said: I am happy they are planning ahead to move into a larger flat to better take care of their ageing parents and future children. Singapore is projected to have one in five people aged 65 or older by 2030. As our population ages, family support will become increasingly important for the well-being of our seniors, said Mr Khaw. They also help to enrich family relations by sharing their experiences, and lending an extra hand in caring for their grandchildren. Another 100 three-generation flats in Jurong West will be available in the next HDB exercise later this month. Source: The Straits Times –14 November 2013 COMMERCIAL MARKET MND delays move of headquarters to Jem The Ministry of National Development (MND) is holding off its move to Jurong East for now, but its statutory boards, the Agri-Food & Veterinary Authority of Singapore (AVA) and the Building and Construction Authority (BCA), will proceed as planned to relocate next year to the office tower of the Jem project. The 11 levels of office space, with net lettable area (NLA) of around 310,000 sq ft, is expected to receive Temporary Occupation Permit by years end. All three entities are currently housed in the MND Building in Maxwell Road. As there are no immediate plans to re-develop the existing MND Complex at Maxwell, MNDs plans to re-locate to Jem will be organised in phases. In the first phase, AVA and BCA will relocate to Jem in 2014, said an MND spokesman. MND HQ would move in due course, taking into account the market conditions and the pace of developments to relocate other ministries to Jurong Lake District. This will create eventually a strategic cluster of associated ministries at Jurong Lake District. In 2010, the government said that, besides MND, AVA and BCA, there were also plans for the Ministry of the Environment and Water Resources to move to Jurong East. The following year, MND revealed that it had inked a 30-year lease for the office tower of Lend Leases mixed development next to the Jurong East MRT Station, where it, along with BCA and AVA, would move to. Now, the ministry is seeking to appoint a panel of leasing agents to sublet around 70,000 sq ft comprising three of the 11 levels of office space in Jem, BT understands. The asking monthly rent is said to be around $6.50 per square foot (psf). MNDs spokesman said: The Jurong Lake District is one of the key regional growth areas identified by the Singapore government. To help catalyse the development of this new growth region, MND signed a 30-year lease at Jem with the developer, Lend Lease, in 2011. MND also worked to help Lend Lease to design an award-winning green office building. Flexibility was provided for in the lease arrangement so that MND can better manage the stages and timing of its use of the office spaces. This included sub-leasing to other interested tenants. Following AVA and BCAs move to Jurong, the vacated space at Maxwell Road will be made available to interested tenants for their short-term lease. Jems retail component opened in June this year. The buzz quotient around Jurong East MRT Station is set to increase next month, when CapitaLand group opens the mall at its Westgate project. Located next to Jem, Westgate also has an office tower, which is slated for completion late next year. Talk in the market is that leasing efforts for the 20-storey Westgate Tower, comprising 320,000 sq ft net lettable area of offices, have been put on hold. CapitaLand is said to have initially planned to find a bulk buyer for an enbloc sale of a huge chunk, if not all, of the office space at a target price of around $2,200 psf. However, it is now open to selling strata units, probably on a whole-floor basis, suggest sources. A price of $2,200 psf is more likely to be achieved on a strata basis rather than for en-bloc basis, said a seasoned investment sales agent. In the past six months, office units at Paya Lebar Square were sold at prices ranging from $1,732 psf (for a 484-sq ft space on the eighth floor) to $2,427 psf (for a 506 sq ft unit on the 13th floor), based on caveats data. Paya Lebar is closer to the city, compared with Jurong East. But Jurong East is much more advanced in terms of shaping up as a regional centre than Paya Lebar, said the agent. Last month, 10,097 sq ft on the 41st level of Suntec Tower Three was transacted at $3,000 psf. The building is on a site with balance lease term of about 75 years. From an investment angle, buying a strata office in Jurong East may also appeal to those who want to invest in the Jurong regional centre story without being affected by the cooling measures that have been slapped on the residential and industrial property sectors, say market watchers. Another source of office supply in the Jurong East locale will emanate from Sim Lians project on Venture Avenue. In September, Sim Lian bagged the Urban Redevelopment Authoritys provisional permission to develop about 625,500 sq ft gross floor area of offices and 69,500 sq ft of retail space on its site. Word on the street is that Sim Lian is looking to strata-title the office component for sale, with a launch expected in the first half next year. Source: Business Times –11 November 2013 En bloc sale for The Arcade in the offing A prime albeit small commercial site in Raffles Place, The Arcade, on a site of about 21,900 sq ft, could be put up for collective sale soon. Word on the street is that the price tag for the 20-storey office-and-retail building is around $3,000 per square foot per plot ratio (psf ppr), inclusive of development charges of $100 million-plus. This would suggest The Arcades owners stand to pocket around $800 million. Property group City Developments owns nearly 47,500 sq ft of space in the building, according to its annual report. This translates to slightly more than 30 per cent of the buildings total strata area of about 157,300 sq ft and 30-plus per cent of share value, making it the biggest owner. BT understands that owners controlling at least 80 per cent of share value and strata area in the property have consented to The Arcades collective sale, but verification of one or two signatures is pending. Once this is settled, a tender for the collective sale can be launched. The Arcade is on a site with land tenure of 999 years starting April 1826, but some owners have only 99-year leasehold interest (starting October 1979) on their units. CDL, which holds the reversionary interest on the 99-year leasehold title of such units, has agreed to sign off for The Arcade to be sold on 999-year tenure for the 99-year units whose owners agree to the collective sale. Completed 32 years ago, The Arcade has significant redevelopment potential. Its existing gross floor area is said to reflect a plot ratio of about 8.0 - significantly lower than the maximum 13.86 allowed for the site under Master Plan 2008, inclusive of bonus plot ratio for the sites proximity to Raffles Place MRT Station. The site is zoned for commercial use. While The Arcade is a rare 999 year-leasehold commercial site in the Raffles Place financial district available for sale, one drawback is the sites small area and narrow configuration. However, if Singapore Land, the owner of Clifford Centre next door, were to buy The Arcade, it could potentially amalgamate the two sites to form a more substantial site for redevelopment. The Arcades collective sale may also draw potential investors who may not be looking at immediate redevelopment of the property. There is potential to trade the existing strata retail units, which are mostly tiny and can hence fetch high prices of several thousand dollars per square foot. The first three levels of the 20-storey building house retail units and offices start from the fifth level. The Arcade has 51 basement car park lots. Source: Business Times –12 November 2013 Serangoon Plazas future not certain yet The future of recently sold Serangoon Plaza - home to part of the well-known retail giant Mustafa - is undecided. But the authorities have already ruled out three high-rise plans proposed by the firm that now owns the building. The site of the five-storey mall cannot be used for a hotel, for instance, or any development that would worsen the areas traffic woes. The commercial complex was sold en bloc earlier this month to its majority owner Feature Development in a deal that values the property at $400 million. The buildings Management Corporation Strata Title had floated three options in a proposed outline application submitted to the Urban Redevelopment Authority (URA) in July last year. All were rejected a month later. Two ideas nixed were 20-storey developments made up of an office tower or residential block, with a three-storey podium of shops and a carpark. These were refused as they would worsen the heavy traffic on Serangoon Road, said the URA in an official document. The third option was a 24-storey tower with medical suites and hotel rooms. This, too, was rejected, owing to concerns it would aggravate the areas social and vice-related problems, about which nearby residents had complained to URA. It would not be in the publics interest to allow new hotels, boarding houses, serviced apartments or backpackers hostels in this area in order not to worsen the current problem, said URA in its written refusal. The site could also not support developments that tall, it added. Buildings surrounding Serangoon Plaza are six to eight storeys high. For Feature, an associate of property developer Tong Eng, netting the 128-unit Serangoon Plaza gives it a chance to redevelop the mall. Its investment manager Terence Teo said: By buying 100 per cent of the building, we have the option of redeveloping it. Whereas if we only had 90 per cent, our options would only be addition and alteration. Built in the 1960s as President Shopping Centre, the mall was bought in 1984 by Feature, which then sold 10 per cent of the units. This month, nearly 30 years later, Feature bought back this remaining one-tenth of the building for about $40 million. The decision was made because the commercial market is quite a good (property) sector now. The area is quite up and coming, so we thought its quite a good time, said Mr Teo. Also, the building is underdeveloped, as its floor area of 104,765 sq ft is only about half the maximum floor space possible. But its future is up in the air. Were exploring all design options for redevelopment but subject to the authorities approval, said Mr Teo. Tenants get to stay put for at least another 10 months, said investment sales director Suzie Mok from Savills Singapore, which brokered the deal. Anchor tenant Mustafa, which owns Mustafa Centre next door, first moved into Serangoon Plaza in 1985 and now rents three storeys there for an undisclosed sum. Managing director Mustaq Ahmad said he was unable to comment on whether it would move to other premises. Source: The Straits Times –12 November 2013 Havelock hotel site gets top bid of $30.1m The top bid for a plum hotel site at Havelock Road has blown analysts expectations out of the water, despite a comparatively shorter tenure and the need for parts of the original building to be conserved. I Hotel put in the highest bid among nine valid offers of $30.09 million, or $1,303.24 per square foot per plot ratio (psf ppr) for the site, Urban Redevelopment Authority (URA) data showed yesterday as the tender closed. This was 6.6 per cent more than the next highest offer of $28.09 million, or $1,216.62 psf ppr, from Ooi Teck Hin. Analysts had earlier pegged the winning bid at between $920 and $980 psf ppr. The number of bidders was also at the higher end of their expected range of five to 11. The Havelock Road land parcel has a tenure of 60 years, compared with the common 99 years for other GLS hotel sites. The three conserved warehouse buildings at the site are also to be restored for hotel use, URA has stipulated. One other reason cited by analysts for the strong demand was the location of the Havelock site, which sits along the Singapore River and is expected to generate about 35 rooms. It also lies in an established hotel area, with the likes of Copthornes King Hotel Singapore, Hotel Miramar and The Gallery Hotel in the vicinity. The lowest bid for the Havelock Road site came from Republic Hotels & Resorts, which offered $18.3 million, or $792.60 psf ppr. Besides the nine valid bids, there was also one disqualified tender, belonging to International Singapore Asset Management. Source: Business Times –13 November 2013 Vacated Citi space at Millenia Tower taken up Reflecting resilient demand for secondary office space vacated in older but choice office buildings, all of the 143,000 square feet under Citis lease at Millenia Tower expiring next month has found new takers. Citi began to vacate the space earlier this year, completing its exit from the building in July. This marked the final leg of the groups four-phase departure from Millenia Tower and the next-door Centennial Tower that began in 2011. Prior to that, Citi had occupied a total of about 440,000 sq ft in the two buildings, which are part of the Millenia Singapore development owned by Pontiac Land Group. In 2011, Citibank began its move to Asia Square Tower 1. Among those who have leased the 143,000 sq ft at Millenia Tower that Citi is giving up are four tenants who have each leased a floor of 17,000 sq ft - PayPal, Barry Callebaut, Bank of New York Mellon and Dymon Asia Capital. PayPal has been operating from its new premises on Millenia Towers 14th floor since the second quarter of this year. This represents an expansion of business for the group, which continues to have a presence in Suntec City. In September, Dymon Asia Capital, a Singapore-headquartered investment management company, moved into the fourth level of Millenia Tower from Suntec City. Barry Callebaut Cocoa Asia Pacific Pte Ltd is another new tenant. It is expected to move in later this month to the 12th floor, where it will set up its regional headquarters, which is being relocated from Malaysia. The Zurich-based group is the worlds leading manufacturer of high-quality chocolate and cocoa products. Bank of New York Mellon, which now occupies three floors (Levels 2, 3 and 4) of Millenia Tower, will occupy the seventh floor as well from next month. The rest of the space Citi vacated in the building this year has been leased to tenants involved in the financial and commodities businesses as well as a designer eyewear tenant from Italy believed to be Luxottica, whose brands include Ray-Ban and Oakley. Pontiac Land said tenants that have inked leases for the 143,000 sq ft ex-Citi space in Millenia Tower have agreed to pay monthly rents ranging from the high-$8s to $10-plus per square foot. Last year, BT reported that Pontiac Land took just nine months to fill back all the 129,000 sq ft in the next door Centennial Tower vacated by Citi in November 2011. Pontiac leased the space to existing tenants such as Sumitomo Mitsui Banking Corporation and McKinsey while clinching a few new names as well. All eyes now are on the 55,000 sq ft that Allianz vacated earlier this month on Centennial Towers Levels 3, 7, 8 and 9 though its lease runs until July 2015. Agents are busy finding replacement tenants who can sign up fresh leases with Pontiac Land even before the July 2015 expiry of Allianz lease. The German financial services provider has moved to Asia Square Tower 2. Pontiac Land is asking for $13 psf a month, for smaller units below 3,000 sq ft at Centennial Tower, although lower psf rents can be negotiated for bigger spaces. According to Pontiac Land spokeswoman, tenants have been drawn to the two office towers by several factors, including ample carpark space with a total 1,500 parking lots for the Millenia Singapore development, which includes the two office towers, two hotels and Millenia Walk mall. In addition, Millenia Tower boasts a concierge facility provided by Conrad Centennial Hotel. Our tenants also enjoy the prestige of being located in a mixed development with museum-quality art pieces, added the spokeswoman. Source: Business Times –14 November 2013 Two sets of properties on the market Two clusters of properties were put up for sale by tender yesterday. In Balestier, six shophouses and an adjacent land parcel are on offer. A single seller owns the freehold properties. The shophouses, made up of one three-storey and five two-storey units, have a total land area of 12,038 sq ft and floor area of about 16,000 sq ft. Next door, a 4,973 sq ft plot facing Tessensohn Road can be redeveloped up to a maximum permissible gross floor area of 14,919 sq ft. It has a gross plot ratio of 3.0, and is zoned for residential and commercial use. The seller expects offers above $21 million for all the shophouses, and above $12 million - or $800 per sq ft (psf) per plot ratio (ppr) - for the land. Separately, a site on Jalan Haji Salam, off Upper East Coast Road, was put on the market. The 13,514 sq ft freehold site has a pair of two-storey semi-detached houses with a land area of 6,501 sq ft and 7,013 sq ft. The owners have agreed to sell both properties collectively for an offer above $15 million - about $1,110 psf ppr. Buyers have the option of acquiring the smaller property for over $7.1 million or above $7.9 million for the bigger unit. The tender for the Balestier properties will close on Dec10, while bids for the the Upper East Coast Road properties must be submitted by Dec12. Source: The Straits Times –14 November 2013 INDUSTRIAL MARKET JTC doubles net allocation of prepared land in Q3 Industrial landlord and developer JTC Corporation said that the net allocation of prepared industrial land (PIL) doubled in the third quarter of the year, but the net allocation for ready-built facilities (RBF) remained in the negative. It said in its quarterly facilities report released yesterday that net allocation, which refers to the amount of land or space leased or rented to companies in a specified period minus returns or terminations, for PIL in Q3 was 9.6 hectares. This is more than double the 4.2 ha from the previous quarter. PIL is land offered by JTC that is ready for lessees to develop their own industrial facilities that usually comes with some amenities, such as road access, storm drains and frontage. Gross allocation for PIL jumped 50 per cent quarter-on-quarter to 52.5 ha. This was mainly due to a higher take-up in the manufacturing-related and supporting industries sectors, including 10 ha of land allocated to a company in Tuas for warehousing purposes. Returns for PIL also increased in the quarter, with the bulk coming from the manufacturing-related and supporting industries sectors, by about 40 per cent from Q2 to 43 ha. As for RBF, which are various types of JTC factories built in anticipation of demand, net allocation in Q3 stayed in the red at minus 800 square metres, the same as it was in Q2. The average occupancy rate of RBF remained at 95.2 per cent. The gross allocation of these JTC factories had more than doubled to 1.86 ha in Q3, from 0.77 ha in Q2. But returns in the quarter increased 67 per cent to 1.95 ha, affecting net allocation numbers. About a third of the returns was attributed to the consolidation of company operations. JTC also said yesterday that more RBF can be expected fairly soon. The Surface Engineering Hub at Tanjong Kling is expected to be completed this quarter. MedTech 1, the first development in MedTech Hub at Tukang Innovation Park, is expected to be ready in the first quarter next year. Also expected to be ready from the latter half of next year and 2015 are CleanTech Two, the second building at CleanTech Park, as well as Towers A, B and C for Phase 2A at Fusionopolis. Source: Business Times –9 November 2013
Posted on: Thu, 14 Nov 2013 11:32:53 +0000
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