Saturday, July 10, 2010

More than just laksa at Katong

The landlord of the former Katong Mall, due to re-open in the third quarter next year, unveiled key tenants like Golden Village Multiplex, Market Place by Cold Storage and the BreadTalk Group on Friday.

After a $60-million facelift, landlord Perennial Katong Retail Trust said the tenants will take up 32 per cent of retail space at Katong Mall.

The revamped mall will have a net lettable area of about 207,000 square feet, a 20 per cent increase in space from the existing site. The six-storey mall will fetch a rent of $12 per square foot on average. Food and beverage outlets are expected to make up more than 30 per cent of its tenants. The mall will also increase its car park lots by more than 70 per cent.

Katong Mall was sold in November for $247.55 million to Perennial Katong Retail Trust – headed by Mr Pua Seck Guan, former head of CapitaLand’s retail unit.

Golden Cape Investments, a wholly-owned subsidiary of Mainboard-listed Tuan Sing Holdings, secured 100-per-cent ownership of Katong Mall through a successful bidding of $219 million in an en-bloc sale in June 2008. Prior to that, Golden Cape already owned 72 per cent of the total strata floor area of Katong Mall.

Source : Today – 10 Jul 2010

Friday, July 9, 2010

Residential units post higher rentals

 Rates have followed the dizzying rise in private property prices but ‘will stabilise or even correct’

Rental rates for residential units have tracked the dizzying rise in private property prices, with rents for condominiums posting a significant increase of 5.8 per cent over the first five months of this year.

Based on data from the Urban Redevelopment Authority (URA), median rentals of non-landed residential properties in January amount to $30.54 per square metre (psm) but were propelled higher to $32.41 psm in May.

Rentals for units in the central region are even higher at $36.89 psm in May.

The maximum rental per month for non-landed residential properties in the central region amounts to $114.58 psm, while minimum rental amounts to $11.64 psm.

Condominiums in the east and west recorded median rents of $27.68 psm and $27 psm, respectively, for the same period.

Meanwhile, rentals in the north-east region hit $26.39 psm, while north region rentals stand at $24.47 psm.

As for the rest of the country, maximum rentals range from $33.65 psm to $60.87 psm, while minimum rentals range from $10.18 psm to $14.36 psm.

Market watchers said the significant increase in residential rents is due to an improving economy and a robust property market.

Donald Han, managing director of Cushman and Wakefield, attributed the rise to landlords looking to pocket higher returns from the bullish growth by increasing rents.

“Businesses have started to relocate to Singapore and are bringing in a lot of foreign workers, which have increased demand for residential housing, as compared to the first half of last year, when companies were shedding staff,” said Mr Han.

However, Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said the rental increase is due to a sharp drop in housing supply.

In the fourth quarter of last year, the number of demolitions jumped to 1,441 – more than the 1,400 units available.

Mr Tan attributes this to an increased number of collective sales, which resulted in more units being demolished during that period.

Unable to make up for the drastic loss, the first quarter of this year, only saw 1,407 units available for occupancy.

“The higher number of demolitions is probably a one-off effect. The numbers of demolished units returned to about 400 units-odd in the first quarter of this year,” added Mr Tan.

With a lot fewer units available and the ongoing high demand for residential properties, rentals hence saw a considerable increase.

Barring drastic changes, he expects rentals to stabilise in the coming months.

“Once the effect of the sharp reduction in housing stock wears off, the rise in rentals will stabilise and may even correct in the coming quarters unless demand is ramped up suddenly but that does not seem to be the case,” he said.

Mr Han expects rentals to increase to about 5 per cent to 8 per cent by the end of this year, in line with the bright outlook for Singapore’s growth.

With growing yields, it is also an ideal time for home owners looking to lease out their properties to hedge against inflation and volatile markets.

“Yields have risen slightly to 3 per cent to 3.8 per cent and are likely to go up over 4 per cent at end of the year. With the low interest rate of 1 per cent to 1.2 per cent, this is a good time for residential yields,” said Mr Han.

Source : Today – 9 Jul 2010

New tenants sign up as Katong Mall starts $60m revamp

The former Katong Mall, due to re-open in the third quarter next year, is heading up market.

Its landlord unveiled key tenants like Golden Village Multiplex, Market Place by Cold Storage and the BreadTalk Group on Friday.

After a S$60 million facelift, its landlord Perennial Katong Retail Trust says visitors can find gourmet products and high end brands here, watch a movie in a private lounge complete with plush seats.

Pubs and bars will also stay open late into the night.

Together, these tenants will take up 32 per cent of retail space at Katong Mall.

The revamped mall will have a net-lettable area of about 207,000 square feet. This is a 20 per cent increase in space from the existing site.

Its owner says the new six-storey mall will also house a mix of retail and lifestyle shops, fetching a rent of $12 per square foot on average.

It expects F&B outlets to make up more than 30 per cent of its total tenant mix.

The mall will also increase its car park lots by over 70 per cent, with 310 lots to be built.

The landlord adds that shareholders of the mall are taking a long term view in extracting value from their investment and they are not rushing to monetise the asset.

Pua Seck Guan, CEO, Perennial Real Estate, says: “A project of this nature in Singapore, generally investors are looking at return of between 12 and 18 per cent, I would say that this is still the targeted returns that we’re trying to achieve for our investors and we’re quite confident that we can achieve within this region.”

Source : Channel NewsAsia – 9 Jul 2010

80% of units launched at 368 Thomson snapped up

City Developments Limited (CDL) has sold about 80 per cent of the launched units at 368 Thomson, its latest freehold residential development at the former Concorde Mansions site along Thomson Road.

Private previews for former owners of Concorde Residences, Balestier Court, Bright Building, and directors and staff of CDL, started on Thursday, while the public preview began on Friday.

CDL said 120 units of the 36-storey freehold development comprising 157 units were released in Phase 1.

Going at an average price of S$1,350 per square foot, the apartments range from S$918,000 for the 689 square foot one+study units to S$4.4 million for the 3,391 square foot 5-bedroom penthouses.

Singaporeans made up the majority of buyers, with Permanent Residents and foreigners mainly from Malaysia, Indonesia, China and Hong Kong accounting for 25 per cent.

“With its prime District 11 location, freehold status and attractive pricing, 368 Thomson represents an excellent investment opportunity and also good rental potential,” said CDL’s group general manager, Mr Chia Ngiang Hong.

368 Thomson has a sky terrace on Level 3, with therm jet pools, a 25-metre main pool and a gymnasium. It also has a Club House, family barbeque and Children’s Aqua Treat areas.

CDL said it will release more units progressively to cater to the demand.

Source : Channel NewsAsia – 9 Jul 2010

Thursday, July 8, 2010

New concept store ALT to heat up competition along Orchard Road

Orchard Road is about to see more retail competition. A new concept store ALT is aiming to target young female shoppers who love fashion from the current staple of malls on the prime shopping strip.

ALT will be spread over three levels at the Heeren shopping mall on Orchard Road. It is hoping to attract shoppers with its slate of Asian brands.

Its merchandise mix includes fashion, beauty and lifestyle products from Japan, Korea, Taiwan, Hong Kong, China and Thailand.

The store, managed by retailer BHG, said it is optimistic it can break even quite soon, given its prime location.

Sosuke Nishiwaki, executive director, BHG Singapore, said: “A lot of competition around will make people come to Orchard more, so we are quite confident that this area will generate a lot of profit.”

However, observers say it may be a challenge to sustain interest from shoppers, who are already spoilt for choice in the shopping strip.

They also cite the relatively small space occupied by ALT – at 23,000 square feet.

Charles Ng, director, Retail, Colliers International, said: “You can’t put that much products, range of products that can offer strong competition to the neighbouring malls.

“So if you ask me whether there is any impact, I’d say no – not really – but they offer a change, a new concept, something to look at. Who knows, it may take off.”

ALT is due to open this Saturday.

Source : Channel NewsAsia – 7 Jul 2010

CMMT lowers final IPO retail price

CapitaMalls Malaysia Trust, CMMT, a unit of Singapore-listed CapitaMalls Asia, is raising some 852 million ringgit (267 million US dollars) in its initial public offering, IPO.

It has fixed its final price for institutional and cornerstone investors at one ringgit per share, while the final retail price is set at 98 sen per unit.

The final price is lower than its previous indicative price of 1.08 ringgit per unit for the retail offer.

CMMT says institutional and retail investors bought some 786 and a half million units in the IPO.

CEO of CapitaMalls Asia, Lim Beng Chee says the firm is heartened by the strong interest for its institutional and retail offerings.

Despite the challenging market conditions, he notes that the IPO is priced at one of the tightest yields for a Malaysian Reit IPO.

This, he says, reflects the quality of the portfolio and the management team.

The Employees Provident Fund Board of Malaysia and Great Eastern Life Assurance Malaysia Berhad had signed up as cornerstone investors.

CMMT will be listed on the main market of Bursa Malaysia on July 16.

Source : Channel NewsAsia – 8 Jul 2010

HDB extends deadline for Bukit Merah SERS site shopowners

Some 20 shopowners in a Selective En bloc Redevelopment Scheme (SERS) are unhappy with the compensation offered by the Housing and Development Board to move to new premises.

HDB has now extended the deadline for the shopowners in Bukit Merah View to accept replacement units. The affected shops are at Block 113 and 114 Bukit Merah View.

HDB had offered them between S$486,000 and S$780,000 in compensation. But shopowners said it is not enough.

They said replacement shops offered are one third the size of existing ones, and only have a 30-year lease, compared to their current remaining 60-year lease.

However, HDB said the price is based on market value. It added that the 30-year lease was meant to ease the financial burden on lessees.

It added that the new shops beside the Tiong Bahru MRT station would attract more crowds.

HDB will also request for an independent licensed valuer to review its valuations.

Meanwhile, shopowners will have an extra month to indicate if they would like to take up the replacement shops. So far, only 7 out of 31 owners have agreed to take up the new premises.

Tanjong Pagar MP Indranee Rajah said she hopes for a win-win situation between HDB and the Bukit Merah View residents.

Source : Channel NewsAsia – 8 Jul 2010

Underground retail space Esplanade Xchange opens

Singapore’s latest underground retail space – Esplanade Xchange – was officially opened on Thursday.

It is sited above the Esplanade MRT Station, and is the first Xchange along the new, partially-opened Circle Line.

The Esplanade Xchange is also a short walk away from Marina Square and Suntec City. Fourteen of the 26 tenants at the Xchange operate F&B outlets.

That’s the highest proportion of F&B outlets amongst SMRT’s seven Xchanges, a result of learning points from previous Xchanges.

Teo Chew Hoon, SMRT’s vice-president (Commercial and Taxi Divisions), said: “From our study, we realised that our commuters like to use our F&B outlets. It’s a very convenient place where they can buy breakfast, buy some knick-knacks. So F&B is a very popular trait in our Xchanges.”

The next Xchange to open will be the Orchard Xchange. Spanning 1,500 square metres, the retail space is sited a level above Orchard MRT station. It previously housed the Popular Bookstore and other shops and is currently under construction.

Source : Channel NewsAsia – 8 Jul 2010

Wednesday, July 7, 2010

S’porean investors are increasingly moving to safe asset classes: analysts

Analysts said more Singaporean investors are increasingly moving to conservative asset classes. Among them, properties Down Under.

Westpac Private Bank has seen 18 per cent of its Australia and New Zealand multi-currency home loans coming from Singapore in the past nine months, up by six percentage points over the same period last year.

They attribute the increase to poorer risk appetite after the recent global financial crisis.

Prices of private residential properties in Singapore have moved up significantly in the past few quarters.

Analysts said that has prompted investors to look elsewhere more specifically – Australia.

And cities like Melbourne, Perth and Sydney are popular among Singaporeans.

With some 8,000 Singaporeans studying in Australia currently, Westpac Private Bank said many parents are also considering buying real estate Down Under.

Sean Straton, head Premium Client Group, Westpac Banking, said: “Singaporeans have been looking for assistance in financing properties in Australia and New Zealand. And I think it just comes down to the heart of an asset class that Singaporeans feel comfortable with. And certainly after the crisis they feel that there’s some level of security.”

Market watcher Mortgage Choice said the median price for a property in Melbourne, is the highest, at almost S$530,000 while industry figures show that the median price of a private home in Singapore’s central region is S$1.66 million.

Islandwide, the median price of a private residential unit in the city state is S$1.12 million.

Although properties Down Under may seem more affordable, analysts warn that the Australia property market might be overheating.

A concern fuelled by potential influx of immigrants and investors, and a limited supply of homes.

Wong Sui Jau, GM, Fundsupermart, said: “Now there’re concerns that local Australians are being priced out of the property market. So because of that, there might be certain measures taken by the Australia government to at least make sure that at least the local Australians are not actually priced out of the property market by foreigners coming in.”

However, analysts noted that the recent interest rate hikes to some 4.5 per cent in Australia could help to soften demand.

Source : Channel NewsAsia – 7 Jul 2010

OUE unit Clifford Development obtains pre-committed leases of 88,000 sq ft

Mainboard listed Overseas Union Enterprise or OUE says its subsidiary, Clifford Development, has obtained pre-committed leases totaling some 88,000 square feet for its latest development 50 Collyer Quay.

This is equivalent to 22 per cent of the net lettable area of the project.

The initial lineup of tenants include global business consulting firm Bain & Company and international law firm Allen & Overy.

OUE will redevelop the former Overseas Union House into a new Grade A 18-storey office tower.

It will also conserve the Change Alley Aerial Plaza Tower and retrofit the Change Alley Pedestrian Overhead Bridge to provide quick and sheltered link to the Raffles Place MRT station.

Upon completion, the entire development will comprise a total gross floor area of some 500,000 square feet and a net lettable area of 412,000 square feet.

The office tower floor plates will range up to some 30,000 square feet, with two of the floors designated as trading floors.

The Change Alley Aerial Plaza Tower and Pedestrian Overhead Bridge are targeted to complete simultaneously with the office tower in the first quarter of 2011.

OUE Executive Chairman Stephen Riady says 50 Collyer Quay complements the firm’s strategy of focusing on high-end properties in prime locations and building up a stable rental income stream from such properties.

Source : Channel NewsAsia – 7 Jul 2010

Ascott secures contracts to manage 2 more serviced residences in China

CapitaLand’s wholly-owned serviced residence business unit, The Ascott, has secured contracts to manage two more serviced residence properties in Xi’an and Shenzhen, China.

This follows Ascott’s recent expansion into Chengdu with the opening of Somerset Riverview, Chengdu in April.

The latest additions – Somerset Gaoxin, Xi’an and Somerset Grandview, Shenzhen – are scheduled to open in 2012 and 2013 respectively.

Somerset Gaoxin is Ascott’s first Somerset-branded serviced residence in Xi’an. It is located within the new commercial centre of the Xi’an Hi-tech Development Zone.

Somerset Grandview is centrally located close to the Futian Central Business District.

When completed, the 233-unit Somerset Gaoxin and 128-unit Somerset Grandview will offer a range of apartment types from studios to 3-bedroom units, catering to the different lifestyle needs of both short- and long-stay travellers.

“China is an important market for Ascott. Besides growing in cities such as Beijing and Shanghai, we have been expanding rapidly in other cities like Xi’an and Shenzhen where there is high demand for serviced residences,” Ascott’s Managing Director for North Asia, Lee Chee Koon, said:

He added that Ascott’s Citadines Xi’an Central and Somerset Garden City, Shenzhen have achieved strong occupancy of above 80 per cent.

Ascott plans to open Ascott Maillen Shenzhen later this year and two more Citadines-branded serviced residences in Xi’an by 2012.

Mr Lee said: “Our two latest Somerset-branded properties will reinforce Ascott’s leadership position as the largest international serviced residence owner-operator in China.

“They will increase our China portfolio to more than 5,500 apartment units in 29 properties across 13 cities.”

Source : Channel NewsAsia – 7 Jul 2010

Carrefour says not closing any stores in Singapore, Malaysia

Carrefour said it is not closing any of its stores in Singapore and Malaysia. In a statement, the company said it is “business as usual” for every store in the two countries.

It also said it had recently opened four hypermarkets in Malaysia this year and plans another four by year end.

Earlier this week, there was speculation that the French supermarket giant was in the early stages of selling its outlets in Singapore, Thailand and Malaysia.

Reports had said Carrefour could be offloading its Southeast Asian assets for up to US$1 billion.

In May, Carrefour’s CEO Lars Olofsson said he was open to offers for the company’s operations in markets where it isn’t in the top two spots.

Analysts cited Thailand, Malaysia and Singapore as likely candidates.

They added that the sale of assets in these countries would make sense as the company has other priorities for investment.

Under Mr Olofsson’s direction, Carrefour has focused efforts on its key European markets — France, Spain, Italy and Belgium.

France alone accounts for nearly half of the company’s annual revenues.

The fast-growing China and Brazil markets have also been priorities for the company.

Reports also said that the British supermarket chain Tesco was interested in Carrefour’s stores in Singapore, Thailand and Malaysia.

Other firms in the running for Carrefour’s shops in Thailand and Malaysia are said to be Big C Supercenter PCL, Dairy Farm International and Japanese supermarkets.

Analysts said if a single buyer emerges for all three countries, the deal will probably be wrapped up this year.

Source : Channel NewsAsia – 7 Jul 2010

2 foreign banks lease office space at Keppel Land’s Ocean Financial Centre

Keppel Land says two foreign banks, Australia and New Zealand Banking Group, and BNP Paribas Singapore, plan to lease prime office space at its Ocean Financial Centre.

Keppel Corporation Chairman Choo Chiau Beng announced this at the topping out of the Centre Wednesday.

He says ANZ plans to lease about 209 thousand square feet of office space, while BNP Paribas Singapore plans to lease some 58 thousand square feet of space.

Keppel Land says with the new tenants, Ocean Financial Centre is now about 63 per cent pre-committed, ahead of its completion in the second quarter of 2011.

Mr Choo says the strong pre-commitment levels reinforce the positive sentiments in the office market on the back of a brighter economic outlook.

He adds that Keppel land is well-poised to benefit from this upturn.

Together with its joint venture partners, Keppel Land develops and owns about 7.4 million square feet of office space, predominantly located in the Raffles Place and Marina Bay precincts.

When completed, Ocean Financial Centre will be one of the largest office developments in Raffles Place, providing about 850 thousand square feet of Grade A office space with environmentally responsible features.

Source : Channel NewsAsia – 7 Jul 2010

Hot for deals Down Under

Investors here are increasingly moving to conservative asset classes, such as overseas properties in Australia, because of poorer risk appetite after the recent global financial crisis.

According to Westpac Private Bank, it has seen 18 percent of its Australia and New Zealand multi-currency home loans coming from Singapore in the past nine months, up 6 percentage points over the same period last year.

Online investment solutions provider Fundsupermart.com said prices of private residential properties in Singapore have moved up significantly in the past few months.

Market observers said this has prompted investors to look elsewhere, more specifically – Australia. Cities popular among Singaporeans include Melbourne, Perth and Sydney.

With an estimated 8,000 Singaporeans studying in Australia currently, Westpac Private Bank said many parents are also considering buying real estate Down Under.

Mr Sean Straton, Premium Client Group head at Westpac Banking, said: “Singaporeans have been looking for assistance in financing properties in Australia and New Zealand. And I think it just comes down to the heart of an asset class that Singaporeans feel comfortable with. And certainly after the crisis, they feel that there’s some level of security.”

Mortgage and home loan broker Mortgage Choice said across Australia, Melbourne properties are the most expensive.

Source : Today – 7 Jul 2010

Rents at suburban malls catching up with Orchard Rd

 Rents at suburban malls in Singapore are fast catching up with those for prime Orchard Road retail space as neighbourhood malls draw increasing shopper numbers and more interest from tenants.

The difference between prime Orchard Road rents and suburban rents narrowed to just 9 per cent in Q2 2010 – from as much as 24 per cent at the start of 2009 and 21 per cent in Q1 2005 – according to CB Richard Ellis (CBRE).

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In fact, upper-storey space at these suburban malls is already more expensive than upper-storey space in the Orchard Road and Scotts Road area, according to data from DTZ.

The rental gap tightened as Orchard Road rents fell for the seventh consecutive quarter while suburban rents continued to edge up in the second quarter of 2010, CBRE’s data shows.

Prime Orchard Road rents fell to $31.10 per square foot per month (psf pm), reflecting a 3.4 per cent decrease from $32.20 psf pm in Q1 2010.

Suburban malls, on the other hand, saw a 1.4 per cent quarter-on-quarter increase in prime rentals to $28.50 psf pm.

And when it comes to retail space on the upper floors, suburban malls are in fact fetching more than their Orchard Road and Scotts Road counterparts.

According to DTZ, upper-storey rents at suburban malls inched up 0.4 per cent quarter-on-quarter to $22.90 psf pm in Q2 2010, while upper-storey rents in the Orchard Road/Scotts Road area stayed flat at $20.50 psf pm.

Analysts said that rents in the Orchard Road area are depressed after a large amount of new supply – from malls such as Ion Orchard, 313@somerset and Orchard Central – came onstream over the past year.

‘Competition in the Orchard Road and Scotts Road and other city areas has intensified and the increased range of retail choices has rendered consumers to be more selective in their purchases,’ said Anna Lee, DTZ’s associate director for retail.

‘Retailers, particularly in the newer malls, are adjusting to the vagaries of consumer preferences and resulting in early termination of leases in some cases,’ she added.

In contrast, rents in the suburban areas continued to edge up in the second quarter of 2010. Suburban malls, with their built-in catchment of shoppers and mass market offerings, largely performed better than malls in the city during the financial crisis.

These malls, which draw more and more shoppers every year, are now able to command higher rents from tenants.

‘Generally, 2009 shopper traffic at our suburban malls is higher than that in 2008,’ said a spokesman for CapitaMall Trust (CMT). CMT has eight suburban malls in its portfolio.

Frasers Centrepoint Trust (FCT), which owns four suburban malls, also said that footfall across its portfolio rose 6 per cent from the 2008 financial year (October 2007 to September 2008) to the 2009 financial year (October 2008 to September 2009). The figures exclude Anchorpoint, where traffic counters were removed for asset enhancement works.

The increased visitor numbers have translated into higher rents for both retail trusts.

FCT said that in the first six months of its 2010 financial year (October 2009 to March 2010), its portfolio achieved average rental reversions of 4.5 per cent. And for the suburban malls in CMT’s portfolio, the rate of average rental growth per year ranged from 1.1 per cent to 2.3 per cent in Q1 2010.

Developers are extremely bullish on the potential of suburban retail space here.

Australian developer Lend Lease, which paid $749 million for a mixed-use land parcel in the Jurong Lake district, intends to build a suburban shopping mall on most of the site.

Lend Lease, which owns the 313@somerset and Parkway Parade shopping malls here, is required to set aside a mandatory 30 per cent of the gross floor area for office use. But the remaining 70 per cent will be used solely for retail space, said Ooi Eng Peng, executive officer for retail and investment management in Asia for Lend Lease.

‘The mall will be the Parkway Parade of the west,’ Mr Ooi said. Suburban malls offer good prospects for developers who can come up with the right tenant and product mix for the surrounding catchment population, he added.

Looking ahead, the gap between prime Orchard Road rents and prime suburban rents will narrow even more over the rest of this year as Orchard Road rents dip further.

‘We expect prime Orchard Road rents to dip 5 per cent to 10 per cent in 2010 due to the settling of business and trading patterns,’ said Letty Lee, CBRE’s director for retail services. ‘But prime suburban rents are likely to see a 3-5 per cent upside in the same period, underpinned by catchment demand.’

But it is not all doom and gloom for malls on Singapore’s best-known street; analysts expect that over the next two to three years, rents in the Orchard Road will rebound.

Source : AsiaOne – 7 Jul 2010

Punggol “Waterway Terraces” oversubscribed by up to 12 times

The “Waterway Terraces” at Punggol have been making waves in the property circle, with 5-room units oversubscribed by 12 times.

The Build-to-Order project, which houses 1,072 units, opened for applications on June 30.

As of Tuesday evening, the 5-room units saw 12 times the number of applicants.

The smaller units are also favoured, with 4-room units in demand at a ratio of 9 applicants to 1 unit.

With the closing deadline looming next Tuesday, analysts said applications for the bigger flats will keep streaming in.

They are expecting a hundred per cent increase for the 4- and 5-room units.

Source : Channel NewsAsia – 6 Jul 2010

Tuesday, July 6, 2010

AIMS AMP Capital Industrial Reit wins Architecture Award

Mainboard-listed AIMS AMP Capital Industrial Reit says one of its assets has won an award at the Asia Pacific Property Awards.

It says its 13 storey, high-tech business park building at 1A International Business Park won the Architecture Award under the Singapore commercial property category.

The building won for its strategic, modern architecture and landmark positioning.

It also features eco-friendly architectural design, which encourages energy conservation, the reduction of cardon dioxide emissions and the preservation of water

The net lettable area of the property is some 17,000 square metres.

It incorporates office and warehouse areas, in addition to ancillary showroom areas.

The International Business Park is a business and technology hub for companies involved in high-technology industries.

Such industries include software development, research and ancillary services.

Source : Channel NewsAsia – 6 Jul 2010

Esplanade Xchange officially opens on July 8

The opening of the Esplanade Xchange underpass shopping area will result in more shopping choices and a shorter walking distance between City Hall MRT Station and Suntec City.

SMRT, which runs Esplanade Xchange, said it will only take five minutes to walk from the MRT to Suntec City, which is much shorter than the current route by CityLink Mall.

The Esplanade Xchange will officially open on July 8.

One exit leads to Marina Square and Suntec City and is already open. Another leads to Raffles City and will open on the 15th of this month.

Since the end of May, 80 per cent of shops at the Esplanade Xchange have opened for business. Fourteen of the 26 shops are food and beverage outlets.

Esplanade Xchange is expected to draw human traffic away from CityLink Mall and hurt businesses there.

But some retailers have established outlets at both underpass shopping areas as they are confident that they will attract different types of shoppers.

Source : Channel NewsAsia – 5 Jul 2010

Property auction sales up

Auction sales in Singapore grew for the first half this year, totalling about $87 million. Property consultant Jones Lang LaSalle’s Auction House reported more than 80 per cent of all listings were put up for sale by owners.

The increase in the number of properties for sale by auction is due to a change in mindset – many now see it as an effective mode of sale, the firm said.

Auction attendances have also increased on-quarter, with June seeing attendance rates of more than 120 punters.

Jones Lang LaSalle expects the third quarter to see maintained levels of owner-sale listings as people return from holiday.

Source : Today – 6 Jul 2010

Hot money flowing into Chinese property, stocks

Most of the speculative and arbitrage capital from overseas that has entered China in recent months has ended up in the property and equity markets, an official at the country’s foreign-exchange regulator said in rare comments as the agency usually plays down the effect of hot money inflows into China.

An investigation that began in February has uncovered 190 cases of hot money inflows involving US$7.35 billion ($10.23 billion), Mr Deng Xianhong, a vice-director at the State Administration of Foreign Exchange (Safe), said in an interview published yesterday in the state-run People’s Daily.

“A situation of continuous foreign exchange fund inflows forms easily,” Mr Deng said.

“Higher interest rates for the yuan compared to foreign currencies and expectations of yuan appreciation create very strong attractions for overseas capital … The resulting higher domestic stock and property prices and strengthened expectations of a stronger yuan lead to further foreign exchange fund inflows,” he said.

Rather than attracting hot money, the yuan exchange rate should be a means of getting rid of inflows of such funds, Mr Deng said.

The comments come after the People’s Bank of China (PBOC) loosened the yuan’s exchange-rate mechanism on June 19 in a surprise move.

The PBOC set the US dollar-yuan central parity rate at 6.7733 yesterday, compared to 6.7720 on Friday.

China’s property prices have risen steadily over the past year, leading Beijing to introduce a series of measures to cool the sector, including higher minimum downpayments and other requirements.

Home prices were up for the 12th straight month in May from a year earlier, though the rate of increase slowed slightly from the previous month.

The benchmark Shanghai Composite Index has fallen 28 per cent this year as Beijing withdraws the stimulus measures introduced to cushion the effects of the financial crisis.

China yesterday also revised up its first-quarter current account surplus to US$53.6 billion from US$40.9 billion, according to a statement on the Safe website.

Source : Today – 6 Jul 2010

Monday, July 5, 2010

Private residential market continues to rise in Q2

Property consultancy Jones Lang LaSalle said residential capital values in the resale market for the private condominiums continued to rise on the back of encouraging sales volume in the second quarter of this year.

The firm said estimates showed that the prime and central capital values led the way in the quarter’s growth by registering 8 per cent and 7.6 per cent on average.

The prime market saw average capital value for typical prime properties reaching $1,350 per square foot, surpassing the last peak for the first time.

Average capital value for luxury prime properties reached $2,500 per square foot, which is some 8.4 per cent below the last peak.

The growth has also been supported by an improvement in rental income.

Prime rentals have grown by 10.8 per cent on average, over the first half of this year.

Jones Lang LaSalle said this is supported by increased leasing demand from expatriates in the financial and petrochemical sectors.

In terms of sales volume, 3,127 caveats were lodged in the resale market in Q2 based on preliminary figures from the Urban Redevelopment Authority.

Jones Lang LaSalle noted that Chinese buyers are the most resilient amidst softening foreign demand due to uncertainties arising from the eurozone debt crisis.

It said Chinese buyers accounted for 18.5 per cent of caveats lodged by foreigners in the secondary market in the second quarter of 2010, up from 6.2 per cent in the first quarter of 2007.

It added that high net worth individuals from China may turn to Singapore as luxurious home prices are around 24 per cent below that of Hong Kong and 10 per cent below the last peak.

This makes Singapore properties comparatively more attractive.

But Jones Lang LaSalle’s head of Research for Southeast Asia, Dr Chua Yang Liang said the resale market is expected to see a further slowdown in both transactional volume and price growth in the next half of the year, following cues from the primary market, which has seen fewer project launches and lower sales volume in recent months.

Source : Channel NewsAsia – 5 Jul 2010

Villa D’Este at Dalvey Road launched for collective sale

 Real estate consultancy firm CB Richard Ellis (CBRE) has launched Villa D’Este at Dalvey Road for collective sale.

Villa D’Este is a 12-unit apartment project which sits on an area approved by the urban planners for ‘Good Class Bungalows’.

‘Good Class Bungalows’ are the most exclusive housing form.

The freehold site has an area of 55,480 square feet and a gross floor area of 49,071 square feet.

CBRE said the guide price is S$115 million which equates to about $2,343 per plot ratio.

It added that there is no development charge payable.

Based on existing guidelines, CBRE said the land may be re-developed as apartments, provided there is no intensification of the existing approved gross floor area and storey height.

The developer can choose to build 13 to 14 exclusive apartments, assuming an average size of 3,500 square feet each.

CBRE added that the new development is expected to draw interest from foreign buyers, especially the Chinese and Indians, who would like to live within the most prestigious ‘Good Class Bungalow’ areas but are unable to own landed properties.

10 of the 12 owners have signed the Collective Sale Agreement.

The tender closes on August 4 at 3 pm.

Source : Channel NewsAsia – 5 Jul 2010

CapitaLand Residential S’pore gets new CEO

Developer CapitaLand said on Monday that Mr Wong Heang Fine has assumed the chief executive officer position at CapitaLand Residential Singapore.

Mr Wong’s appointment follows the departure of Ms Patricia Chia, who is leaving the company to spend time with her family.

In a statement, CapitaLand said Mr Wong will concurrently continue in his present role of developing CapitaLand’s business in the Gulf Cooperation Council region.

Mr Wong joined the CapitaLand Group in 2006. Prior to that, he last held the post of president and CEO of SembCorp Engineers and Constructors.

President and CEO of CapitaLand Group Liew Mun Leong said Mr Wong’s track record in the areas of engineering and construction globally will bring a new perspective to the Singapore residential business as the group enters the next phase of growth.

Source : Channel NewsAsia – 5 Jul 2010

Proposed divestment of Gurney Plaza Extension to CapitaMalls Asia

CapitaMalls Asia (CMA) is buying a Malaysian mall from an associate firm of Metro for S$91.5 million after the Metro unit exercised a put option.

The move by Metro’s Gurney Plaza requires CMA’s CapitaRetail Gurney to buy the property called Gurney Plaza Extension.

Located in Penang, Gurney Plaza Extension is a nine storey retail block.

It is part of the Gurney Park development and has about 12,500 square metres of net lettable area.

As at March 31, the mall enjoyed some 98.7 per cent occupancy.

Metro said it is divesting the property as Gurney Plaza Extension has since matured and now has a stable rental income.

Metro said net proceeds of the divestment will be added to the working capital of the group.

It will also be used to build on the Metro Group’s presence and investment in the region.

Under the terms of the deal, CMA is required to complete the acquisition by 15 April 2011.

CMA said it has designated CapitaMalls Malaysia Trust or CMMT as its listed vehicle to hold its stabilised Malaysian retail assets.

It will be granting CMMT a right of first refusal to acquire Gurney Plaza Extension after the finalisation of all the terms and conditions of the acquisition.

Source : Channel NewsAsia – 5 Jul 2010

Take it with a pinch of salt

 Given the current market conditions, how can analysts be so sure?

Analysts this week from a renowned rating agency assured us that local banks’ real estate exposure – while hefty – is not posing any risks as prices are rising in tandem with economic growth.

I may be wrong but are they not from the same elite group of rating firms which failed miserably to warn investors of the United States sub-prime crisis?

How confident are they? Did they commission a study?

I hope they did not just rely on quarterly market reports and face-to-face interviews with property consultants. As they say, talk is cheap. Which expert would give real advice if they are not paid for it?

As for market updates, they contain mainly general data intended for marketing purposes. While not inaccurate, they do not go into in-depth analysis which may show up a different picture and outcome.

Ditto for paid research subscription. They provide more detailed information but are still lacking in analyses of the type you can lay a wager on. It is still general in nature.

You will be surprised to know how many professionals from other industries use such reports as “irrefutable evidence”.

Property consultants will be the first to admit that these reports are written with marketing in mind, not for use in court or otherwise.

My point?

I am treating the analysts’ assurance with more than a pinch of salt because I do not know how anyone can be so certain while they are still so many unknowns floating in the market.

Under present conditions, I can stitch up data at the general level to present you any outcome you desire.

The market is giving out so many mixed signals right now. For sure, it is not clearly one way or the other.

Even the chief executives of the banks themselves warn of property bubbles.

It was reported that while DBS Group chief executive Piyush Gupta believes asset bubbles have already formed in Asia, he did not think a price correction would precipitate a crisis.

But really, could anyone have said otherwise if they thought differently?

Severe pronouncements such as a crash are reserved for the Marc Fabers or Dr Dooms of this world.

In Singapore, the relevant authorities have enacted and will consider more measures to prevent a bubble from forming i.e. no bubble yet.

There are no concrete evidences that the market will crash but neither is there conclusive data to show that it will not. We work on the balance of probabilities but it is better to be safe than sorry.

On another note, the story of the $36 million Sentosa Cove property purchase and the trend of China nationals paying over the top prices for local properties continue to fascinate the market.

As valuers will find it impossible to match these transacted prices, it is no wonder then that these purchases were paid fully in cash.

Some commentators have compared prime Singapore properties to luxury products like Prada and Louis Vuitton.

There is one big difference. They cannot take it home to China with them.

Others say that behind all the creature comforts are also the hard calculations made for a good investment.

Let us not kid ourselves. Such purchases are for owner occupation or for other reasons. Definitely not for capital appreciation or monetary yields.

What is the upside for a $36 million property? Another $36 milllion?

Paying it all in cash is also not what an investment manager would recommend.

What is it about Singapore property that is so attractive to China buyers? Political stability? Good schools? No, just that it is half-priced.

Same reason why Singaporeans continue to buy property in Malaysia even though they have been bitten many times over. It is cheap.

By Colin Tan, Head of Research and Consultancy at Chesterton Suntec International

Sharp drop in private home prices unlikely in H2

Do not expect the private residential property market to cool abruptly in the second half of this year. While property sales and home prices in some segments may soften in coming months, industry experts say the market is not likely to see a steep correction.

Observers believe buyers still have excess funds to chase more units here, with many considering property investing to be a safe haven compared to the volatile stock market. Market watchers expect 600 to 1,000 units to be sold each month, for the rest of the year.

While this is slower than the more than 1,000 units sold monthly from January to May, property analysts nonetheless say this level of demand suggests the market remains buoyant.

For the whole year, analysts expect total sales to hit between 12,000 and 15,000 units, thanks to the strong sales in the first half of the year. Sales of 7,666 private homes were recorded from January to May, more than the 7,073 sold in the same period last year.

Analysts believe the European debt crisis will lead to slower sales in the months ahead, compounded by the mismatch between buyers’ and sellers’ expectations, and the Government’s cooling measures taking effect.

“Buyers may factor in the risks in the global market but sellers are not prepared to give that kind of discount, thinking the market will eventually improve,” said Mr Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic.

Private property prices may rise by between 10 and 15 per cent for the whole year.

Mr Mak said: “Developers are not likely to cut prices because they have the financial resources (from earlier strong sales) to hold on to. They also face low holding costs due to the low interest rates.”

As for high-end homes specifically, prices in this segment still “have upside potential since they are still 15- to 20-per-cent lower than the peak levels in 2008,” said Mr Donald Han, managing director of property consultancy Cushman and Wakefield.

Meanwhile, the large supply of land to be made available by the Government in the next six months – 27 residential sites and four mixed-use sites potentially yielding 13,905 residential units – should temper the aggressive bidding among developers, and this could have an effect on the en bloc market.

“Developers will be spoilt for choice in the Government Land Sales programme, which has a faster process. There is also no complexity arising from litigations as seen in en bloc sales,” said Mr Mak.

Source : Today – 28 Jun 2010

Analysts cautious as property prices peak

Property prices continue skywards in Singapore and on Sentosa. On Jul 1, the Urban Redevelopment Authority (URA) released the flash estimates of the property price index (PPI) for 2Q10 which indicated that property prices are above their 1996 peaks.

But before you pop the champagne, analysts are sounding words of caution. Donald Chua, property analyst at CIMB says in a report dated Jul 2: “We view this set of data cautiously. Year to date, prices have grown by more than 10%. This has affected overall affordability, which we estimate is now inching closer to the banks’ 35% threshold of mortgage-to-income ratio even with the unprecedented low mortgage rates. We also believe the government will be watching this set of data with much interest, which will increase risks of further policy noise.” CIMB has an underweight on the property sector, with City Developments its key underperform. The report says Wing Tai offers better valuations.

In a June 28 report, Citigroup analysts are also wary of rising prices. “The much anticipated high-end volume has yet to materialise despite the completion of both integrated resorts. Take-up remains relatively weak for the few high-end properties launched. With one-third of the district nine units scheduled for completion in the next 12–15 months unsold, the risk is in developers with weaker holding power and owners who have acquired multiple units at the peak in 2007/08 on deferred payment,” the report states. “We think the risk of high-end properties surprising on the downside outweighs the risk of them surprising on the upside,” it adds.

According the URA flash figures, 2Q10 saw a broad-based increase in prices for all segments of the market. Overall PPI is up 5.2% q-o-q to 184.1pts, compared with a growth of 5.6% previously. The index is now above the previous peak level of 181pts seen in 3Q96. The largest price increase in the quarter was recorded in the mass-market regions while the core central region saw a 5.1% q-o-q growth.

Citi is expecting rental and resale prices in in the mass-market segment to rise by another 5–10%, but warns that policy risk remains in this segment. The biggest positive factor is liquidity and the record-low mortgage rates, Citi says. “With mortgage rates at below 2% and unlikely to rise significantly in the next 6 to 12 months, this would help mitigate any significant downward price pressures in the high-end segment.”

Preferring to err on the side of caution, Citi is recommending the low-risk S-REITs over developers “given the increasingly unfavourable risk/reward ratio”. Among the developers, its top pick for the sector is CapitaLand for its attractive valuation and diversified portfolio followed by hold recommendations for CapitaMalls Asia and Keppel Land because of their limited exposure to Singapore residential property. Citi has sells on City Developments and Allgreen Properties which are skewed towards residential segment. It likes the REITs most, and its favourites are Ascendas REIT, CapitaCommercial Trust, Suntec REIT and Mapletree Logistics Trust.

CIMB favours the office segment and its top pick is Keppel Land. According DTZ estimates, office rents bottomed in 2Q10 after having fallen 50–60% from the peak in 3Q08. Prime offices in Raffles Place led the turnaround in rents with a 1.3% increase quarter-on-quarter to $7.90 per sq ft per month. Cheng Siow Ying, DTZ’s Executive Director (Business Space) says in a report dated June 29: “Due to the strong economic recovery, a large number of new leases signed in the first half of the year involved companies taking up expansion space. We see broad based recovery in demand from all business sectors led by banks and financial institutions.”

Sunday, July 4, 2010

Increasing interest in small office space

 Hopes of recovery in commercial unit sector turning it into alternative investment

Investing in a condominium unit may be popular here, but some buyers are opting for a very different part of the property market.

They have turned to the office sector to pick up strata-titled office units as an alternative form of investment, as hopes of a recovery in the office market grow this year.

These strata offices are units in an office building that have been sold piecemeal unlike most office blocks, which are wholly owned by an investor or developer.

Indeed, the strata office sector was the only commercial unit sector that staged an improvement in sales activity in the first half of this year, compared with the second half of last year, said Knight Frank.

Its latest data showed that 163 strata offices changed hands in the first six months of this year, which was 16 per cent more than in the previous six-month period.

The value of these deals reached $368 million, up 73 per cent from the second half of last year.

Strata offices priced from $1 million to less than $2 million attracted the largest group of buyers at 59 deals in the first half, it said.

Buyers also like strata offices priced from $500,000 to less than $1 million. There were 44 deals in this price band in the first half.

For instance, caveats show that a 441 sq ft unit at the 999-year leasehold Peninsula Plaza went for $663,000 or $1,502 per sq ft in late April.

Knight Frank’s executive director, auctions (commercial), Ms Mary Sai, said the volume improved from the low numbers registered last year when sales slowed substantially owing to a lacklustre office market.

Said DTZ’s senior director for investment advisory services & auction, Mr Shaun Poh: ‘We see more people looking at strata offices for investment. The commercial market has gone down quite substantially so people are looking at a recovery.’

Stronger signs of a sustained economic recovery this year, including an improved business climate, are supporting the office market, said Ms Sai.

Experts said prices of strata offices have generally risen and moved ahead of rents.

‘Yields are low now at 3 per cent, but investors are buying now in anticipation of higher yields of 4, 5 per cent,’ said Mr Poh.

Source : Sunday Times – 4 Jul 2010