Source : Business Times – 4 Aug 2009
Other big-ticket transactions could rev up investment sales in second half
IN one of the first bulk sales of apartments since the economic crisis unfolded last year, a property fund is understood to have purchased the remaining 21 units at Sui Generis condo at Balmoral Crescent for $65 million.
The price works out to about $1,260 per square foot on average. The units are said to be located throughout the freehold project, which is slated for completion around the second quarter of next year. The condo comprises three blocks – seven, nine and 12 storeys high. It is being developed by a joint venture involving United Engineers and Kajima.
CB Richard Ellis is understood to have brokered the latest sale, but it declined to comment on the transaction.
Market watchers commented, however, that $1,260 psf average price for the latest deal is about half the average price of about $2,460 psf achieved for the earlier 19 units in the 40-unit development that were sold in 2007 and 2008 at prices ranging from $1,991 psf to $2,717 psf.
About $2.2 billion of investment sales deals were struck in the first six months of this year, against $17.9 billion for the whole of last year and the record $53.7 billion in 2007.
However, activity is expected to pick up in the current half. For one, sites on the Government’s reserve list have been triggered for launch, including residential sites at Dakota Crescent and Chestnut Avenue.
Recently, the 50-room Hotel Nostalgia in the Tiong Bahru area was sold for about $22 million. The Indonesian buyer was represented by Rodyk & Davidson. Hotel Nostalgia, a freehold property, is expected to receive Temporary Occupation Permit soon. The seller was Lion Properties Group.
Some big ticket items are also on the market. One is a portfolio of four malls and an office tower owned by Asian Retail Mall Ltd (ARML) 1 fund with a price tag said to be about $1.5 billion – which industry players described as ‘bullish’. An expression of interest closed last week for the portfolio, which comprises White Sands in Pasir Ris, Century Square in Tampines, Hougang Mall, Tiong Bahru Plaza and the next door Central Plaza office block.
The fund’s life actually ended late last year – around the time of the Lehman Brothers collapse – and the investors decided to continue the fund until they could find the right mode of disposal or seek a formal extension to the fund’s lifespan.
ARML 1’s investors include a few Dutch pension funds that are said to favour selling the fund’s malls to realise their investment. However, market watchers say the other investors, which include entities linked to Pramerica Real Estate Investors Asia, Guthrie and NTUC FairPrice, want to wait for a better time to maximise their profit.
The fund bought the five assets for a total of about $943 million and may have invested a further sum of over $80 million enhancing the properties. ‘This leaves less scope for further improvements,’ a market watcher said.
Property consultants generally expect retail rents in suburban malls to dip slightly this year and if yields demanded by investors rise, this will create downward pressure on capital values of suburban malls.
However, on a more positive note, a property consultant said: ‘Shopping centres as an asset class don’t suffer the same weakness as the office market, where there’s too much supply in the horizon and demand is still weak. Institutional investors have a fairly negative view on the Singapore office market.’
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