Complete Property Market Updates of Singapore

June 30, 2007

Orchard rentals near pre-Asian crisis levels

Filed under: Rental News — Propertymarketupdates @ 2:16 am

Rents of malls along Orchard Road are almost back to their pre-Asian financial crisis levels, according to a new study by CB Richard Ellis (CBRE).

It showed that retail rents in Singapore’s prime shopping district hit an average of $34.40 per sq ft (psf) per month in the April-to-June period.

This is just 2 per cent shy of the property market peak in 1996, when retail rents in Orchard Road reached a monthly average of $35.10 psf, said Ms Mavis Seow, executive director of retail services at CBRE.

Rents in Orchard Road have been rising because of a renewed focus on the area.

A state-initiated rejuvenation has led to a flurry of building development and refurbishment activities along the shopping corridor.

Interest in the Singapore retail scene has also grown, as the economy strengthens and retailers bring in new foreign brands, said Ms Seow.

‘The second quarter of this year saw more new brands from Europe, the United States and Australia setting up shop here,’ she said.

‘Home-grown retailers are also rebranding, with department stores such as Robinsons expanding their fashion range.’

For the whole of this year, Ms Seow expects Orchard Road mall rents to rise between 4 per cent and 7 per cent. This would take them to a 10-year high, surpassing 1996 levels, she added.

The City Hall and Marina Centre belt, another major shopping area, is also benefiting from the upturn.

With several malls in the area being revamped, such as Raffles City and Suntec City, higher rentals for these spaces have pushed up average prime rents.

They rose to $25.90 psf per month - 4.4 per cent higher than a year ago, said CBRE.

Source: The Straits Times, 29 June 2007

SLA awards two more sites at Tanglin Village

Filed under: Regulators — Propertymarketupdates @ 2:15 am

An art gallery and recreational outlets including an indoor children’s entertainment centre are adding to the buzz at Tanglin Village.

The Singapore Land Authority (SLA) announced yesterday it has awarded two more sites with an area of 40,135 sq m, consisting of 11 blocks, to construction company Country City Investment.

Both sites are on a three-year lease, with an option to renew up to 2015.

Some of the new additions of fine-dining restaurants, recreational and retail outlets are already open for business on one of the sites at 8 Dempsey Hill, which has seven blocks.

The 16 new outlets on the site include cafe Dome, ice-cream parlour Ben & Jerry’s, and Harry’s Bar.

Other outlets on the site, like art gallery Red Sea Gallery and Go-Go Bambini, a children’s entertainment playground, opened recently.

Country City will seek sub-tenants to open outlets on its second site at 25 Dempsey Road, formerly occupied by the Civil Service Club (CSC).

The SLA said it received a good response from bidders with nine bids ranging from $38,000 to $94,000 for the 16,300 sq m site, which has four blocks.

Country City’s first sub-tenant at Tanglin Village is established food haunt Samy’s Curry Restaurant. It had remained on site on a temporary licence when the CSC moved out last year.

General manager of Country City, Mr Nicholas Ng, said he hopes the new outlets and fine-dining restaurants will ‘be a new lifestyle destination’ for Singaporeans, expatriates and tourists.

The SLA said another property at 45 Minden Road will be put up for public tender in August.

Source: The Straits Times, 29 June 2007

Farrer Court sold for record $1.3b

Filed under: Collective Sale — Propertymarketupdates @ 2:15 am

Property giant CapitaLand is paying $1.3388 billion for the sprawling Farrer Court estate - the biggest lump sum ever shelled out for a residential site in Singapore.

Owners at the 618-unit estate will get about $2.15 million each, depending on the size of their flats, which range from 1,453 sq ft to 1,615 sq ft.

The bumper price for the former HUDC estate beat the reserve price of $1.2 billion but fell short of the owners’ asking price of $1.5 billion.

It also signals how high and how fast prices have risen this year. Farrer Court owners had revised their reserve price from $700 million to $840 million at the start of the year, only to push it up to $1.2 billion in March.

Credo Real Estate, which brokered the deal, said the sale is also the largest one in terms of land area, number of units and buildable gross floor area.

Farrer Court, which is 30 years into a 99-year lease, sits on 838,488 sq ft of land near the junction of Farrer Road and Holland Road. It is also close to the upcoming Farrer MRT Station.

It is the only site on Farrer Road with the potential to be built up to 36 storeys.

CapitaLand said it plans to build a ‘luxurious’ 36-storey condominium with about 1,500 ‘generously-sized’ flats on the site, which will be ready for launch in early 2009.

Existing Farrer Court owners will have the first right of refusal to buy units at the new development, it said.

CapitaLand president and chief executive Liew Mun Leong said the deal would further boost its residential land bank, allowing it to benefit from Singapore’s ‘growth story’.

The site also gives the developer the chance to work with world-renowned architects to create a unique landmark project, he added.

The Farrer Court tender closed on Wednesday and attracted two bids, both above the reserve price.

Credo Real Estate declined to comment on the second bid, but sources said it came from GuocoLand, which had paid a then-

record $835 million for the freehold Leedon Heights site in Holland Road in April.

CapitaLand’s price for Farrer Court works out to about $762 to $783 per sq ft (psf) of potential gross floor area.

This psf price includes about $450 million to $500 million to maximise the use of the land and to top up the lease to a fresh 99-year tenure.

The deal is subject to the approval of the Strata Titles Board and should be completed by the second quarter of next year.

CapitaLand intends to share its risks with partners but will be the lead development manager for the project.

It said yesterday that Hotel Properties (HPL), US-based Wachovia Development Corp and possibly a foreign fund will join it in the venture.

CapitaLand is likely to hold 35 to 40 per cent of the joint venture while HPL expects to take a 20 to 30 per cent interest.

HPL took a stake in an earlier CapitaLand purchase of another former HUDC estate, Gillman Heights, in Alexandra Road, which cost $548 million, or $363 psf of potential gross floor area.

The sale of Farrer Court leaves the 290-unit Pacific Mansions in River Valley Close as the only estate up for sale at more than $1 billion.

Owners of Pacific Mansions are asking for $1.18 billion or about $2,400 psf of potential gross floor area.

Source: The Straits Times, 29 June 2007

One unit at The Marq sold for record $5,100 psf

Filed under: Gems of the Month — Propertymarketupdates @ 2:15 am

The price of a condominium unit in Singapore has crossed the $5,000 per sq ft (psf) mark for the first time.

The all-time high was set by at least one apartment in The Marq on Paterson Hill, the latest project by luxury developer SC Global.

This 6,195 sq ft unit fetched $5,100 psf, or a total of about $31 million - also believed to be the highest price ever paid for a single condominium unit, said SC Global.

All the 21 units released at The Marq been taken up, just a week after SC Global said it would offer them at an invitation-only preview.

The apartments sold at the 66-unit development achieved an average price of $4,137 psf, SC Global said in a statement.

Each unit was priced at between $11 million and $31 million.

Prices of luxury condominiums have soared to new heights since the beginning of the year.

In March, they crossed the $4,000 psf mark at CapitaLand’s The Orchard in Orchard Turn and two weeks ago, an apartment in St Regis Residences in Cuscaden Road, developed by City Developments, fetched a record $4,635.50 psf.

Even The Marq’s record may not last for long, say property experts.

As Singapore’s property developers start catering more to ‘ultra-high net worth individuals’ from around the world, condominiums are likely to get more expensive, said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.

‘We will continue seeing more and more opulent types of developments coming into the market, which will support continued growth in capital values,’ he added.

Despite the roaring market, average prices of Singapore’s most luxurious condominiums are still below those in major cities.

In Tokyo and Hong Kong, for instance, the average price of the most prime apartments is more than $3,000 psf, Mr Ku said.

In New York, it is $4,000 psf, and in London, it can go up to $9,000 psf. The average price of luxury condominiums in Singapore is about $2,000 psf.

The record-setting apartment at The Marq was one of eight sold in the development’s Signature Tower, which boasts a 15m private lap pool in every unit. Each unit takes up an entire floor.

Although SC Global would not disclose the nationality of the buyer who forked out $31 million, it said that 65 per cent of The Marq’s buyers so far have been foreigners.

They hail from Indonesia, Malaysia, Britain, China and India, the developer added.

SC Global also said it has not yet finalised a date for the release of the other units at The Marq.

Source: The Straits Times, 29 June 2007

Landed property: Ministry says no plans to lift curbs on foreigners

Filed under: Community Voices, Regulators — Propertymarketupdates @ 2:14 am

There are no plans to liberalise the existing restrictions on foreigners buying landed properties in Singapore, the Law Ministry said yesterday.

‘In land scarce Singapore, landed properties have to be treated as a special category where purchases by foreigners are subject to special approval,’ a MinLaw spokesman said.

Earlier this week, BT reported on a paper by Goldman Sachs (Singapore), which argued a case for lifting restrictions on foreigners buying landed homes in Singapore. The Goldman Sachs paper said such a change would serve as a catalyst for further foreign buying of private homes and boost the current residential property upcycle.

Removing the restrictions would result in some positive spinoffs, and residential developers could gain from even greater foreign buying interest given the positive message such a move would send.

‘We think relaxing restrictions on foreigners buying landed property would accelerate Singapore’s efforts to attract foreign talent,’ the Goldman Sachs paper had said.

However, some BT readers take a different view. One, Singaporean Patrick Chia, managing director of Hospitality Associates, who is a landed property owner, said: ‘If foreigners are allowed to freely buy landed property, all the non-government owned landed property could theoretically and practically be bought up, because in this 21st Century, the world is flush with liquidity.‘

‘The current abundance of petro-dollars from the oil-rich Middle-East countries and Russia can easily buy up Singapore. So can the current American and European funds with their billions. Bankers and real estate agents can confirm that foreign funds are looking for Singapore property assets to buy.’

Mr Chia, who has nearly 30 years’ experience in the Singapore property business, also recapped the historical circumstances in the early 1970s that led to the government introducing the Residential Property Act in 1973. That law bars foreigners, including permanent residents, from buying landed property here without prior government approval.

‘Way back in 1973, with the first oil shock when oil prices sky-rocketed, then-rich neighbours, Indonesians and Malaysians, were able to freely buy Singapore landed property and much of the prime landed real estate were bought by them.

‘The government, realising the future implications of such a scenario if left unchecked, wisely instituted the current curbs to foreigner purchase of landed property,’ Mr Chia added.

And over the past 30 years, the government has continuously relaxed the curbs as needed, and pointed out that the Singapore government has been very accommodating in this regard compared with many other countries. In Singapore, foreigners have to be PRs before they can receive permission to buy landed homes on mainland Singapore, and Sentosa Cove is the only location where foreigners who are not PRs are allowed to purchase landed property. Even then, foreign would-be buyers must seek permission from the Land Dealings (Approval) Unit under the Singapore Land Authority.

Foreigners, including PRs, can at any one time own only one landed home in Singapore and must occupy it themselves rather than renting it out.

Among the criteria that the Minister for Law will consider when asked to approve foreigners/PRs buying a landed home in Singapore are the applicant’s qualifications and whether the applicant has made, or will be able to make, adequate economic contribution to Singapore.

Typically, it takes about four weeks for approval to be granted, but on Sentosa Cove, the time has been cut to less than 48 hours under a special fast-track approval scheme.

The landed properties that foreigners and PRs may be permitted to buy must have a land area of no more than 15,000 sq ft, although exceptions have been made, with some PRs buying Good Class Bungalows, which have a plot size of at least 1,400 square metres (about 15,070 sq ft).

Foreign buyers may acquire an unlimited number of non-landed private homes, that is, condominiums and apartments. The only foreigners who may buy HDB flats on the resale market are PRs.

Source: The Business Times, 28 June 2007

Mapletree full-year profit soars to $1.07b on revaluation gain

Filed under: REIT — Propertymarketupdates @ 2:14 am

Temasek Holdings’ Mapletree Investments has topped the billion-dollar mark in earnings for the year ended March 31, 2007, thanks to a huge $971.2 million net revaluation gain.

The Singapore investment company’s subsidiary also revealed in its latest annual report plans to launch more real estate investment trusts (Reits) on the Singapore Exchange (SGX) this year.

Mapletree - a Singapore real estate company with an Asian focus - reported a profit after tax and minority interests of $1.07 billion, up from the previous year’s net profit of $144.54 million. But without the $971.2 million net revaluation gain, operating profit was still up $31.8 million or 41 per cent at $109 million, with the boost coming from the positive market outlook in Singapore.

The group’s $971.2 million net revaluation gain was a quantum leap from the previous year’s $1.04 million. This increase was mainly contributed by VivoCity, which was completed in October 2006, as well as the increase in value of Mapletree’s other commercial properties, mostly offices.

The Reits that Mapletree plans to launch on SGX include Mapletree Commercial Trust with the VivoCity mall as the anchor asset and with revenue streams from office, retail and entertainment properties in Singapore. The group, which aims to be a leading real estate capital management company, is also in discussion with Indonesia’s Lippo Group to co-manage an Indonesia-focused shopping mall Reit, Mapletree Investments’ chairman Edmund Cheng said, without elaborating, in his annual report message.

Market watchers reckon that VivoCity itself, with about one million square feet net lettable area, could be worth more than $1.6 billion and that the group could also inject into the proposed Mapletree Commercial Trust its other nearby properties such as St James Power Station, HarbourFront Centre (formerly World Trade Centre), Mapletree’s stakes in HarbourFront Towers One and Two office blocks, PSA Building and PSA Vista. The combined value of the entire portfolio, including VivoCity, could be around $3 billion, say industry observers.

As for the Indonesia-focused mall Reit venture with Lippo, market watchers note Lippo controls 40 malls through its various units. An industry player says it makes sense for Lippo to partner a proven name in the Singapore Reit business if it wants to list a shopping centre Reit in Singapore.

The group’s commercial property portfolio includes HarbourFront Centre, HarbourFront Towers One and Two (Mapletree owns 61 per cent of the two buildings), Keppel Bay Tower (30 per cent), SPI Building, St James Power Station, PSA Building and PSA Vista. Mapletree’s industrial property portfolio includes Tanjong Pagar and Pasir Panjang distriparks and Alexandra Distripark (including The Comtech, a high-tech industrial building).

In all, the group’s investment’s properties were valued at $3.72 billion as at March 31, 2007, up from $1.83 billion a year earlier. However, properties under development fell from $569.7 million to $157.7 million due to the re-classification of VivoCity property from ‘properties under development’ to ‘investment properties’ at market valuation upon its completion late last year.

Mapletree’s operating profit rose from $77.2 million for financial year ended March 2006 to almost $109 million in FY March 2007 on the back of a 34.7 per cent jump in revenue to $216.6 million. The higher revenue was due mainly to the opening of VivoCity, as well as improved occupancy and rental rates achieved by the group’s other properties. This was partly offset by loss of revenue from properties that were injected into Mapletree Logistics Trust (MLT). The group’s revenue was also boosted from higher fee income, contributed mainly by the SGX-listed MLT. The group also received a new fee income stream from one of its new funds - the privately held Mapletree Industrial Fund. Fee income accounted for 9 per cent of the group’s revenue for FY March 2007, up from a 5 per cent share for FY March 2006, reflecting Mapletree Investments’ expansion into the capital management business.

In line with the improved performance, Mapletree Investments’ return on equity rose from 6 per cent in FY March 2006 to 37 per cent in FY March 2007. Return on total assets also increased from 6 per cent to 30 per cent over the same period.

Source: The Business Times, 28 June 2007

Banks, property lead another fall

Filed under: Facts & Figures, Investment Tips — Propertymarketupdates @ 2:14 am

ST Index gives up 11-point gain to end 19.6 points down in volatile session

By R SIVANITHY

SENIOR CORRESPONDENT

BANKING and property stocks were sold off yesterday as the Straits Times Index continued to come under pressure, dropping for the fourth consecutive session - this time by 19.6 points to 3,505.5 - in a shaky session that saw it actually rise 11 points at one stage.

The eventual loss was in line with falls elsewhere in the region, namely in Hong Kong and Japan, and also came ahead of the Wednesday/ Thursday US Federal Open Markets Committee meeting.

Although no US interest rate hike is expected, there was nervousness that the US central bank’s accompanying statement may make reference to inflationary pressures.

The latest fall brought the ST Index’s four-day loss to 135 points or 3.7 per cent, after it had risen to three consecutive all-time highs last week.

Brokers said there was some concern over recent reports regarding bank exposure to the buoyant property market.

Specifically, the concern was over the likelihood of government intervention to curb excesses in real estate, where prices have risen astronomically because of a sudden influx of foreign labour.

‘There’ve been a lot of stories recently about property prices, how people are taking dddt several mortgages to play the market and how reliant the banks are on home loans,’ said a dealer. ‘So maybe it’s not so surprising that these are the stocks which are being sold off now.’

Adding to these worries was the circulation of a Citigroup Emerging Markets Daily report dated Tuesday which said the chances of the government introducing curbs to cool property speculation or to limit bank exposure to the sector are increasing.

‘Recent measures, including bringing forward stamp duty and releasing more land, have had limited impact,’ said Citigroup analyst Chua Hak Bin. ‘Any measures will, however, likely to be calibrated and not as draconian as those in 1996.’

A further incentive to sell came via the circulation of a Dow Jones technical comment on the ST Index which said that if the 3,500 support level breaks, it might be time to short-sell the market because the index could fall as far down as 3,325.

Separately, UOB Kay Hian’s chart view is that the recent selldown signals a trend reversal. The local house estimates that there is potential for a drop to 3,370-3,380 before stabilising.

‘Several key stocks have also broken below key moving averages. At this stage, we think it is better to sell into strength instead of bottom-pick,’ said UOB Kay Hian.

Whatever the case, the property sector had to withstand heavy selling - CapitaLand for example lost 25 cents at $7.55 on hefty volume of 43 million, while Keppel Land’s 25-cent loss at $8.60 came with 17 million done.

Meanwhile the second line, widely rumoured to be where syndicates and manipulators are having a field day, sagged. Excluding warrants there were 225 rises versus 273 falls.

Source: The Business Times, 28 June 2007

CapitaLand front runner for Farrer Court?

Filed under: Collective Sale, Property Deal — Propertymarketupdates @ 2:13 am

The tender for Farrer Court, Singapore’s first billion-dollar collective sale, closed yesterday with strong bids, industry players reckon.

Speculation was that CapitaLand was the front runner and was engaged in negotiations late last night. Credo Real Estate, which is handling Farrer Court’s collective sale, declined to comment.

GuocoLand is also believed to have taken part in the tender. It clinched the freehold Leedon Heights earlier this year at $835 million or $1,062 psf of potential gross floor area.

Farrer Court, however, has an even higher absolute reserve price, of $1.2 billion, which works out to slightly over $700 psf per plot ratio (psf ppr) for the 99-year leasehold site. Bids for Farrer Court are believed to have clearly surpassed that.

The official expected price when Farrer Court’s tender was launched last month was $1.5 billion, or around $850 psf ppr.

The District 10 site, a privatised HUDC estate, is unique in being the only private residential site in the Farrer Road and Holland Road vicinity that is accorded a high plot ratio of 2.8 and a maximum height of 36 storeys.

Most of the surrounding sites are designated for either landed housing or low or medium-rise developments of up to five or 12 storeys.

Farrer Court boasts not only the highest asking price in terms of the absolute dollar quantum for a collective sale, it also has the biggest land area at 838,488 sq ft, for an en bloc sale site.

The maximum potential gross floor area of almost 2.35 million sq ft for the site - or about 1,800 apartments averaging 1,250 sq ft - means that a new development on the site would be the biggest condo development yet to be undertaken in Singapore, based on comments when thesite was launched last month.

Source: The Business Times, 28 June 2007

Alexandra emerging as new alternative to CBD

Filed under: Market Watch — Propertymarketupdates @ 2:13 am

Alexandra is emerging as a strong alternative to the central business district (CBD) as banks continue to be attracted to the business hub there.

Real estate company Mapletree, which developed Alexandra Business Hub, says that it is in ’serious negotiations’ to sign on up to five more banks, chief operating officer Tan Boon Leong told BT yesterday.

One of the banks is asking for 550,000 sq ft and another for 350,000 sq ft.

It recently signed up DBS, HSBC and an American bank looking to move some of their operations there. Mapletree says the average space banks are seeking is 100,000 to 150,000 sq ft.

Mr Tan says that while banks had earlier shifted operations to various neighbourhoods, Alexandra is a ‘true alternative’ to the CBD because of its location - 10 minutes from the CBD and its links to major roads leading to expressways.

Prime office rents in Raffles Place have hit record levels, forcing companies to reconsider their space requirements and manage costs, Mr Tan says. According to a CB Richard Ellis report last month, office rents in Singapore are the fifth fastest growing globally.

Office rent at its Alexandra hub is about ‘40 per cent lower’ than going rates in the CBD. While prime office space is said to be going for about $12 per sq ft, Mapletree is asking $7 psf for office space and $4-$4.50 psf for back room operations space.

While financial institutions have earlier shifted some operations to neighbourhoods such as Tampines and Changi, Mr Tan says that Alexandra is preferred because of its proximity to town.

Also, even though Alexandra used to be an industrial area, Mr Tan says there is no ‘image’ problem. ‘When banks see that other banks are coming, they take a second look,’ he said.

Based on demand so far, Mr Tan says he expects 50 to 60 per cent of the new leasable area of 1.6 million sq ft to be taken up by financial institutions. Oil and gas, telecoms and chemical companies may take up another 20 to 30 per cent, while the remaining space may be taken up by companies which offer support services such as IT.

Mapletree expects to have pre-commitment of 40 per cent of the new space by the first quarter next year.

Mr Tan says multinational companies need more space in Singapore to expand and consolidate their regional presence affordably, which is what Alexandra Hub offers. The complex, which cost Mapletree $405 million to build, includes amenities catering for expatriates such as childcare facilities, a gym with a swimming pool, coffee outlets, laundry and garden landscape.

Source: The Business Times, 28 June 2007

Government releases 9 industrial sites for second half of 2007

Filed under: Regulators — Propertymarketupdates @ 2:13 am

The government yesterday said that nine sites are on offer under its industrial land sales programme for the second half of this year - three more than the sites it put on the market for the first half of 2007.

The nine sites will together give about 3.74 million square feet of industrial space, up from the 2.79 million sq ft offered in the first half of the year.

However, the increase in the space offered under the industrial land sales programme is not as great as that seen for residential space, market observers said. The number of residential sites on offer through the confirmed list increased from two to eight from the first half of 2007 to the second half.

‘This could indicate that the government may see that the industrial property market is fairly stable with sufficient supply in the short and medium term,’ said Nicholas Mak, Knight Frank’s head of consultancy and research.

As with the first half of the year, just two industrial sites - this time, a 5.1 ha site in Sin Ming Lane and a 2.1 ha site in Jalan Tepong - will be offered under the confirmed list. Both sites are expected to see strong interest.

The Sin Ming Lane plot has the potential to yield a large gross floor area of about 1.37 million sq ft. Potential bidders include car companies and/or workshops because of nearby vehicle inspection centres, said Li Hiaw Ho, executive director for research at CB Richard Ellis (CBRE). ‘The unit price for this plot might be lower as a result of the large land area,’ Mr Li said.

The Jalan Tepong site, on the other hand, is interesting because it has a lease of about 23 years, shorter than the usual tenure of 30 or 60 years. The tenure for the site is only until 2030 to dovetail with future developments in that area. The plot might also fetch a lower price because of the unusual tenure, Mr Li said. ‘Some fresh food companies might bid for the site as food manufacturing is permitted and the site is near to Jurong Port.’

The new reserve list has seven sites, three more than the previous reserve list. The seven sites can yield a total maximum gross floor area of 2.05 million sq ft, less than the 2.40 million sq ft that the four sites on the previous reserve list could yield.

Despite the smaller floor area, the reserve list for the second half seems to be offering a variety of locations, Mr Mak said.

The take-up for factory space was 7.64 million sq ft in 2006 and 1.39 million sq ft in the first quarter of 2007. The market should therefore be able to absorb the gross floor area that can potentially come from the sites on the current reserve list, observers said.

CBRE said average rents for all industrial space increased in the second quarter of 2007, with high-tech space rising the fastest.

Average rents for high-tech space rose 11.9 per cent from $2.10 per square foot (psf) in the first quarter to $2.35 psf in Q2 - the highest quarterly increase in the past five years.

‘The limited supply of office space coupled with rising rents encouraged many qualifying companies to look to high-tech properties to meet their needs,’ CBRE said. ‘Further rent increases for high-tech space during the second half of the year is expected as demand for offices is unlikely to let up while supply of office space will still remain tight.’

Source: The Business Times, 28 June 2007

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