Time may run out for Keppel Club

Source : Business Times – 13 Jun 2009

ONE of Singapore’s best-known golf clubs could be forced to give up its prime location – close to the upcoming Sentosa integrated resort – and seek a new home.

BT understands from industry sources that the lease on Keppel Club’s site near Telok Blangah, across from Sentosa Island, might not be renewed when it expires in just over 11 years as the land has been earmarked for redevelopment.

A senior club official declined to comment when reached and members said they had not been told of any potential changes. When contacted, the Singapore Land Authority, which is the lessor of the land, issued a one-line statement which read: ‘10 Bukit Chermin Road is on a 30-year lease to Keppel Club. The lease expires end-2021.’

Land-scarce Singapore already has 11 golf clubs with transferable memberships, including a combination of proprietary outfits like Laguna and members’ clubs like Singapore Island & Country Club. There are also several public and quasi-public courses like Marina Bay and NSR Country Club.

All sit on land which are leased on 30-year terms from landlords who include the Public Utilities Board, Jurong Town Corporation and other government agencies. Most have had no problems getting their leases renewed.

But the development of the Sentosa Island, with its Integrated Resorts, has increased the value of the land around the vicinity. The area has seen massive redevelopment with prime waterfront commercial and residential properties like VivoCity, Keppel Corp’s Reflections and Caribbean.

‘This is prime property,’ said an informed industry insider. ‘Most golf clubs in Singapore sit on water catchment areas, land adjacent airports or other real estate which cannot house infrastructure. Having a golf club on this Bukit Chermin site is the least productive use of prime land in land-scarce Singapore.’

Going by past practises, this means Keppel Club could be offered a new location. But given that the construction of an 18-hole golf course and full club facilities could easily take five years or more (after several years to source a suitable location), Keppel will have to work quickly.

And with the cost of development likely to be around $100 million, there is also the question of funding.

According to the club’s annual report, it had just over $20 million in cash. This means members could be asked to cough up cash for part of the new redevelopment. But the Port of Singapore Authority, which became patron of the club in 1973, could also help finance part of the redevelopment.

The last time that a golf club relocated was about a decade ago, when Warren moved from Kent Ridge to Choa Chu Kang and members had to pay a tidy sum each.

Keppel Golf Club, as it was originally known, was founded on November 1904 on a piece of land first owned by the New Dock Co Ltd. The land and club were later transferred to the Tanjong Pagar Dock Board. The Singapore Harbour Board subsequently took over that piece of land.

By 1973, when PSA took over its operation, Keppel Club occupied approximately 43 acres of PSA-owned land. Four years later, in 1977, PSA leased more land to Keppel Club for the extension of the golf course. By 1980, ambitious plans were fast underway to remodel and upgrade the 18-hole to a new 6,000 metre Ronald Fream-designed golf competition course.

Some $14 million was spent refurbishing the golf course and clubhouse. More upgrading works were carried out in 1994. $22 million bought members a bowling centre, gymnasium, outdoor and indoor tennis courts, movie house and the Olympic-sized swimming pool.

In 2005, a Master Plan was presented to the members to further expand the facilities to take advantage of the sea view, with a sea fronting gymnasium and dancing/aerobic studio, a boardwalk offering alfresco dining, children’s play area, video games arcade and roof top dining area. A new multi-storey carpark was also built.

49 stay on despite higher rates

Source : Today – 13 Jun 2009

THE past week has been, in a word, “stressful” for the 27-year-old advertising agency executive who has been busy juggling work with “running around looking at apartments”.

“Even my lunch breaks are spent meeting agents to check out places to rent,” Jenny (not her real name) told Today.

Making things even more difficult, rental rates, she claims, have “shot up”, leading her to conclude that “some agents are taking advantage of our situation by jacking up prices”.

Jenny is one of more than 200 sub-tenants at The Grangeford at Leonie Hill who have till the end of the month to move out or sign a new and costlier lease – all because their former landlord Ideal Accommodation did not seek approval to turn the original apartments into rooms for sub-letting.

Building owner Cove Development has since terminated the landlord’s contract, and been given until July 27 by the authorities to restore the apartments’ layout – turning the lives of tenants like Jenny topsy-turvy.

It had taken her three months of searching for an apartment before she got a unit at The Grangeford, a “gem” thanks to its Orchard belt location and proximity to her office. “It was hard securing a place like this, I paid my agent $450,” she said.

But two weeks after moving in, she received a move-out notice on May 31. “The news broke just after I finally finished unpacking my stuff,” she sighed.

Cove Development had given tenants three choices then. In an update on Friday, the company said 49 former tenants had indicated interest in signing new leases, at rates ranging from $2,600 to $3,500. Three more chose to leave the condo for discounted lodgings at the Copthorne Hotel and Meritus Mandarin.

Sixteen have indicated they will be moving out. Cove will meanwhile not charge rent from June 3 to June 30.

Mr Jaison James opted to pay $3,500 a month for a three-room apartment. The 26-year-old researcher said it is “more” than what he originally signed up for, “but I decided to stay because I didn’t want the hassle of moving and I was wanted to live near my office in the Orchard area”.

Issue of advance deposits

Jenny, however, has decided to move out this weekend – even before she has inked a deal for a new apartment. “Given the amount of problems we’ve had since this episode started, I might as well leave,” she said.

There was a fair share of drama during negotiations with Cove, for instance. On June 5, some tenants went to Ideal’s office demanding a staff accompany them back to The Grangeford to ensure the presence of a spokesperson, reported Channel NewsAsia.

One issue some tenants still have got no closure on, is their security deposit. Today understands some residents have put down amounts ranging from $1,200 to $1,800 for leases of between three months and a year.

Some are reportedly considering action to get the money from former landlords Ideal Accommodation. Said Mr James: “There are people who paid six months deposit in advance, so they are really in trouble.”

In its statement on Friday, Cove Development said it is not in a position to comment on the issue of deposits and advance payments because it is not privy to the tenancy agreements.

For now, Jenny said she finds comfort in the company of her neighbours – all of whom have become closer as a result of the unexpected eviction.

“Everyone is really stressed out, some just paid the rent and haven’t moved in and now, find they cannot stay here.

“But we help each other out, and meet to go and look at places together. That kind of support definitely helps at a time like this,” she said.

3,000 HDB retailers to get help with upgrading

Source : Straits Times – 13 Jun 2009

HEARTLAND retailers will be able to spruce up their shops for less money thanks to an expanded HDB scheme.

The $12 million Revitalisation of Shops (ROS) programme, entering its second phase, will cover 33 HDB estates comprising 3,000 shops.

Owners must be represented by merchant associations to ensure the upgrades benefit all shops in the area.

The funds will go towards subsidising upgrades of common areas, promotional events and rent-free periods for tenants to renovate their shops.

Shop owners have to put their heads together to decide what kind of upgrades they want. for example, to replace their awnings with colour-coordinated ones.

The HDB and town councils will bear 50 per cent, or up to $10,000, of upgrading costs for each shop owner.

They will pay 100 per cent, or up to $20,000, of upgrading costs for rental shops.

Senior Minister of State for National Development and Education Grace Fu announced the scheme’s new scope yesterday during a visit to Bukit Batok Neighbourhood Centre 3, one of the sites to be covered. She said:

‘Since 2007, we have launched the ROS scheme where we primarily help groups of shops to increase their appeal to residents… and to help them in their marketing activities.

‘This year, given the poorer economic sentiments, we thought it’s good that we extend it to more shops and that more estates will benefit from this.’

The ROS scheme began in 2007 and covered 1,500 shops spread out among 14 selected sites in HDB estates. Shop owners were given funding to upgrade and enhance their shops.

Feedback from shop owners involved in the scheme has been positive.

‘As you can imagine, for many of them this is the first time they’ve got together as a group – as a very informal alliance – and they have to work out the budget, the design, and all that,’ Ms Fu said. ‘It’s taking them some time but they are progressing well.’

In 2007, Spring Singapore launched its Heartland Retail Programme in conjunction with the ROS scheme. The programme provided funding for revitalisation projects such as engaging business consultants for local firms.

Spring is extending the scheme to more sites in view of its success.

A panel comprising grassroots leaders, town council officers and representatives from the HDB, Spring and the various merchant associations will be formed to help implement the two programmes.

Don’t tarnish image

Source : Straits Times – 13 Jun 2009

WE WRITE in response to recent reports regarding the declining quality of life in the conserved Tiong Bahru estate.

Since the gazetting of Tiong Bahru as a conservation site in 2003, committed residents have consistently collaborated with grassroots leaders and the town council to improve its heritage value. We are deeply distressed that current developments will reverse much of this work, and are dismayed that government agencies have shown a lack of regard for the concerns of the community.

We are extremely concerned that the Singapore Tourism Board (STB) has allowed Hotel 81 to operate in close proximity to the Tiong Bahru residential area. Without prejudice to the hotel, we naturally fear the exposure of our families to potentially negative activities, which may be linked to the availability of hourly- stay rates. We also do not want the image of our estate tarnished.

We are disappointed with the lack of response from STB when queried by the media, and call on STB to explain immediately. We similarly call on Hotel 81 to clarify its intentions – to many of us, having this hotel adjacent to residential property is simply not acceptable.

A second concern relates to landlords and agents in the estate who operate illegal workers’ dormitories without any thought of the noise, litter and fire hazards. We request that the Housing Board, Urban Redevelopment Authority, National Environment Agency and Singapore Civil Defence Force respond urgently to enforce the law to eradicate what is a persistent and festering problem.

These issues continue to adversely affect the heritage value of this gazetted conservation estate which should, in fact, receive special attention from policy- makers and enforcement agencies. The estate has already suffered a loss of heritage – the treasured and historic Bird Corner now relocated to the Link Hotel – due to poorly regulated commercial development and conservation efforts.

As a community, we hope to continue collaborating with both the private and public sectors to maintain the quality of Tiong Bahru estate as a national heritage. We do not want to see a heritage site – Singapore’s first public housing project – irreversibly destroyed.

We welcome urgent engagement by the organisations concerned and are eager to contribute constructively to reach a resolution acceptable to all.

Margaret Chung (Ms)

(This letter carries 33 other names)

Dempsey: White hot or too hot?

Source : Straits Times – 13 Jun 2009

TANGLIN Village, already home to the hip, hungry and thirsty, is getting a third lifestyle cluster.

Five furniture shops now occupying the seven blocks slated for this new cluster along Dempsey Road will move out by the end of this month.

In their place come September: A $2 million lifestyle complex called 6ix and 7even @ Dempsey, comprising restaurants, bars and retailers taking up 11 units.

The master tenant for this part of Tanglin Village is Forward Alliance, a logistics and warehousing company making its first foray into the food and beverage (F&B) industry. It is now sourcing for tenants to rival the two other nearby clusters of restaurants and bars in Dempsey Hill and Dempsey Hill Green.

Forward Alliance has a few tricks up its sleeve. It plans to bring in restaurants that will serve food that is new in the neighbourhood such as fusion cuisine; ‘live’ music joints are also on the cards.

It is planning to have a bicycle boutique housed in a 300 sq m space as well – a one-stop store for bicycle enthusiasts with a cafe, bicycle racks and services like showers and limousine transport home for tired cyclists and their wheels.

Another novel idea: A caravan park-turned-restaurant. Forward Alliance plans to import about five caravans of between 30 sq m and 50 sq m in size, and then kit them out as private dining rooms for up to 12 people.

The debut of 6ix and 7even @ Dempsey will mark the latest chapter in the area’s transformation from sleepy furniture town to hip dining and drinking destination.

Nearly half of the 72 businesses there now are restaurants or bars, each paying rents of between $8 and $15 per sq ft.

Tanglin Village started out in the 1860s as army barracks. In the 1990s, it became known for its furniture shops. Then in 2004, the Singapore Land Authority (SLA) stepped up its search for tenants who would put the pre-war blocks to other uses.

In came upmarket restaurants and wine bars such as Oosh and PS Cafe. Schools, shops, art galleries and offices also moved in.

In 2007, when Country City Investment (CCI) opened the Dempsey Hill and Dempsey Hill Green F&B clusters, the buzz in the area went up several notches.

CCI is now taking over several more Dempsey Road blocks to expand these two clusters. Several furniture shop tenants in this area moved out in February, complaining of rocketing rents.

So the entrance of yet another F&B cluster poses the question: Is the hot spot getting too hot for its own good?

After all, there are signs that the Government is getting wary of overkill. The Straits Times understands that for the upcoming Dempsey Hill expansion, the SLA has capped the amount of space occupied by F&B outlets to 20 per cent of the area.

The SLA has also stipulated that some space should be used by furniture shops, in an apparent bid to preserve the original feel of the place.

But real estate experts – and Dempsey F&B owners themselves – say the area still has room to grow. They also say its unique charm, thanks to the greenery and old buildings, will continue to attract diners.

Mr Michel Lu, who owns the Hacienda bar, said: ‘The nice thing is that the buildings are quite spread out. It is very green, not compact, and does not feel like Singapore.’ He is so upbeat about the growth prospects of the place that he is building a cafe extension to Hacienda. It will open in a month.

Mr Danny Yeo, managing director of property consultancy Knight Frank, said the success of the place depends on its variety of offerings. So as long as the new operator creates new concepts, then it should still do well, he said.

Mr Eric Cheng, executive director of property consultancy HSR, said master tenants will also need to choose their sub-tenants carefully to protect the area’s upmarket atmosphere.

‘Look at Pasir Panjang Village. It used to have that ‘niche restaurant’ feel. But now, it is just not really there,’ he said.

Foodie Michelle Quah, who has been to Tanglin Village only thrice since its redevelopment, said the offerings will have to be more than just ‘pleasant but predictable’ to draw her back there.

Referring to the upcoming outlets, the 29-year-old legal counsel said: ‘The food, decor and experience must set them apart from any of your usual yuppie haunts.’

Optimism in property market won’t last

Source : Straits Times – 13 Jun 2009

THE optimism in Singapore’s property market is unsustainable, given an impending over-supply of new flats, weak rental demand and the fact that the country remains in a recession.

That is the pessimistic view of two research houses, which concluded that the price recovery is highly fragile.

Citigroup said the market is not at the start of a cyclical upswing and that the spike in home prices cannot last. ‘We caution against over-optimism, because fundamentally the market is not ready for a sustained price recovery,’ analyst Wendy Koh wrote in a report on Thursday.

In the same report, she downgraded Allgreen to ’sell’, putting the developer in the same ’sell’ basket as City Developments, CapitaLand and Keppel Land. Citi also downgraded Wing Tai to ‘hold’.

While there has been strong resale demand, the call for new homes is patchy and rental demand remains weak, Ms Koh said.

Resale prices of some projects have risen and some developers are reducing discounts for new projects but Nomura Singapore believes these seemingly positive factors are misleading.

It maintained that the demand for new homes was boosted by price discounting and the interest absorption scheme.

‘A rapid deterioration in rents amid higher supply and weaker demand has undermined yield expectations,’ it said.

Nomura also pointed to the damaging effect of rising unsold inventory and forced sales by defaulting or distressed buyers who bought on deferred payment.

These properties form a source of ‘hidden’ inventory that will place further pressure on asking prices.

Also, as competition among new launches increases, there will be further risks of price declines.

The Citigroup report said a short-term price spike is possible, even in the luxury segment, given strong liquidity and the widening gap between Singapore and Hong Kong property prices.

But it cited the same over-supply risk highlighted by Nomura in its June 10 report, pointing out that supply scheduled for completion will reach a five-year high of 10,300 units this year and exceed 10,000 units a year through to 2011.

Knight Frank consultancy and research director Nicholas Mak is equally sceptical: ‘The stock market fuelled much of the recent exuberance in the property market. People tend to think the recovery of one market is the recovery of another.’

If there was a time lag of six to 12 months, the property price rise would have been more sustainable, he added.

The private housing market has seen unexpectedly strong new home sales, at a rate of over 1,000 units a month.

‘While this is good as it helps clear the backlog of over-supply, I am very concerned as rentals are still falling – by my estimate – at 3 per cent every month for some time now,’ said Chesterton Suntec International’s head of research and consultancy, Mr Colin Tan.

There is a clear disconnect if prices are improving while rents are falling, he said.

What is worrying is that most purchases now are made by investors, not owner-occupiers. These buyers will need to find tenants for their investment homes.

Around two-thirds of the completed supply coming through this year and next is in the central region, said Citigroup.

Couple this with the absence of a strong inflow of expatriates with large housing budgets, and rents in the upper-middle and luxury segments are likely to fall by another 20 to 30 per cent in the next two years. This would make a price spike unsustainable, said Citigroup.

It is more upbeat on the mass market sector as supply is limited, but rents there are also sliding, so any price rise is likely to be capped at 5 to 10 per cent.

The upside for the Housing Board resale market is limited as there is no wage rise in sight.

Nomura expects a shallow decline in mass market prices from now.

It tips the likelihood of a W-shaped recovery in asset prices, rather than the previously expected U-shaped recovery.

Firm has partitioned units at several sites

Source : Straits Times – 12 Jun 2009

IDEAL Accommodation, which was behind the unauthorised refurbishment of The Grangeford condominium, is renting out partitioned apartments in at least five other developments, checks by The Straits Times found.

One is Holland Crest, a development which was sold in a collective sale in 2007 to BBR Group.

Residents moved out last year, and Ideal moved in to lease the empty apartments to tenants.

At least two blocks on the grounds – blocks 19 and 21 – have partitioned units on every floor.

Residents, who are expatriates, students and long-term tourists, say they pay about $1,800 per partitioned unit per month.

At Dalvey Court, off Stevens Road, a walk-up apartment complex which had nine units originally, each apartment has been partitioned into three or four units.

One studio unit – with a master bedroom and balcony – was going for $1,300.

Some partitioned units were also found at Moonstone Apartments near Serangoon Road, No. 8 Kim Keat Road and No. 144 Race Course Road.

Ideal was the master tenant of The Grangeford condominium in Leonie Hill Road but was booted out by the owner of the property after it failed to comply with an order by the Urban Redevelopment Authority (URA) to remove and restore its 600 partitioned rooms.

Tenants were told of the URA order very late, leaving them little time to clear out.

A check on the company under the Accounting and Corporate Regulatory Authority shows that the two directors in charge are Mr Tang Yong, a Singapore PR, and Ms Tang Xuemei, a Chinese national.

The company, started in 2004, has $170,000 in capital.

Mr Tang Yong was uncontactable for a response.

URA would say only that it is ‘already following up on the feedback received on residential properties managed by Ideal Accommodation’.

Divide & prosper?

Source : Straits Times – 12 Jun 2009

THE practice of illegally partitioning apartments to create more units for rent is widespread, said real estate agents.

Checks by The Straits Times at 20 developments found 11 had apartments or houses that had been subdivided into smaller rental units or broken into many rooms, in areas such as Orchard, Chinatown, Little India and Bukit Timah.

Last year, the Urban Redevelopment Authority (URA) acted on 400 such cases, most of which involved illegal refurbishment of dwellings for unauthorised use as workers’ dormitories. This year, there were 90 cases from January to April.

The practice was highlighted recently when tenants at The Grangeford in Leonie Hill were asked to move out of their illegally subdivided units.

The Grangeford case was unusual because so many units in the condominium had been subdivided.

But up to 10 per cent of developments in areas popular with renters – such as Geylang, Joo Chiat or near Chinatown – might have partitioned or subdivided apartments, said Dennis Wee Group vice-president Alex Leow.

Checks by The Straits Times at 20 developments islandwide found that such units had attracted not only foreigners working in the service industry, but also visitors needing short-term accommodation such as medical tourists, students and office workers who wanted cheap rental accommodation near town.

Some apartments were divided into two, with the kitchen on one side. Other apartments were partitioned to create more bedrooms; the toilets and kitchen were shared. Some did away with the kitchen to allow for an additional room.

Another agent said subdivisions were more common in older apartments, especially those up for collective sale. Such apartmentsare unpopular with expatriate families, who are put off by the ageing facilities and uncertain leases. Subdividing them makes them attractive shorter-term accommodation.

Claiming that subdivisions were the norm in popular rental districts, real estate agent Benny Teo, 37, said: ‘Don’t talk about poor foreign workers. Even office workers earning up to $5,000 are looking to save a lot on rent by sharing a large partitioned unit with a friend as it might cost them only about $1,400.’

Another property agent, Mr Tan Weixiong, 36, said demand for such units is so great that a day after a subdivided or partitioned apartment is advertised, all the units are snapped up.

This practice of converting individual homes into boarding houses is not condoned by URA, which says it poses safety issues for other residents. URA has said it will step up enforcement measures to stamp out the practice.

At Kimsia Court, located in the Orchard area, the management has dealt with such cases before, taking action by informing the authorities about the subdivided units, said resident and management corporation treasurer Tony Thong.

He said that at one of the apartments there, two of the bedrooms and the maid’s room had been divided into six rooms last year. Each subdivision had its own lock and key.

Agents said such housing ’solutions’ had sprung up because of the increasing number of foreign workers in Singapore who need cheaper accommodation. Last year, the island’s foreign population surged past the one million mark for the first time.

Many tenants are attracted by what they see as a good deal – affordable rates, convenient locations, more exclusive accommodation and condo facilities.

Thai postgraduate student May Eddison, who has lived in a partitioned unit in Holland Crest since December, said the $1,800 she pays in rent is worth it because the condo has a swimming pool and is located near Holland Village and the National University of Singapore.

‘We also get a fairly big unit, with a bedroom, a kitchen and a small living room. But I feel rather trapped sometimes as there is no window, and it’s inconvenient having to leave my unit to go to the toilet, which we share with the other tenants,’ said Mrs Eddison, who lives there with her husband.

At Moonstone Apartments in Bendemeer, a 40-year-old IT professional from the Philippines who rents a subdivided unit there said he liked the quiet environment, which he said he would not find in an HDB estate.

Property agent A.L. Tay, 41, noted: ‘If you clamp down on these places, where are these people going to go?’

However, URA said there was enough accommodation to go around, including affordable rental homes. ‘There are currently about 240,000 private residential units in the market for owner occupation or for rental.

‘As rentals of private properties have been moderating since peaking in the second quarter of 2008, a wider range of private housing has become more affordable, meeting the different budget needs of foreign residents.’

But where there is demand, there will be supply, it seems. Dennis Wee Group’s Mr Leow estimated that a 2,000 sq ft apartment in Katong or Chinatown could rake in $3,000 if rented out whole, but could fetch $5,000 altogether if broken up into five subdivisions asking $1,000 each.

‘Of course, if you have more rooms, you get more money,’ said one landlord, who wanted to remain anonymous.

Foreigners eye S’pore homes again

Source : Straits Times – 12 Jun 2009

FOREIGN buyers are back to snap up homes here after bolting for the exits during the financial turmoil late last year.

The number of foreign private home purchases in April and May is already up on the first quarter but no one is claiming a significant turnaround is under way, although sales numbers hint at ‘green shoots’.

The mix of buyers has also changed from the boom of 2007 and early last year. Then, Koreans, Americans, Russians, and people from the Middle East and elsewhere joined regional buyers to invest at the high end of the market, often with the aim of flipping the property to other investors.

Now buyers from Malaysia, Indonesia and China are dominating, and they are mostly picking up bargain-price units under $1 million for their own use or investment, according to property consultant Jones Lang LaSalle. Its analysis of non-landed private home caveats lodged in April and May found that foreigners bought 202 properties, up 15 per cent from the 175 bought in the first quarter and the 156 deals done in the last three months of last year.

They are taking advantage of bargains in the weak market and low interest rates, said Jones Lang LaSalle associate director of research Desmond Sim.

In the first five months this year, about 57 per cent of the foreign buyer caveats were in the $500,000 to $1 million price category. This is slightly more than for the same periods in 2004 and 2005.

Unlike the rising market in 2004 and 2005 when foreigners bought mostly new launches, buyers now are largely going for resale homes.

‘During that period (2004-2005), Singapore prime residential prices were in the region of US$7,745 (S$11,200) per sq m compared to our ‘cousin’ Hong Kong at US$20,500 per sq m,’ said Mr Sim.

Most foreign buyers then came from within Asia and saw cheaper homes here as good investments, he said. Many at the time made use of the deferred payment scheme to earn quick capital gains through flipping the units in the sub-sale market, he added.

Resale homes became popular in 2006 and 2007 as more foreigners – who came mainly as the banking and financial industries grew – chose to buy instead of paying sky-high rents.

The resale interest is back. Several resale caveats lodged this year came from districts 10 and 22, with The Tessarina in Bukit Timah and The Lakeshore in Jurong among the popular projects. The significant first-quarter price correction which made homes cheaper than before, ‘and thus perceived as having more upside potential’, may be a key reason why foreigners buy here instead of elsewhere, said Mr Sim.

Still, he said in-house research showed that luxury prime homes are still about 51 per cent above their last trough in the first quarter of 2005. Mass market prices are about 36 per cent above the 2005 level. This suggests more price falls may be on the way, said Mr Sim.

The impact foreigners can have in the property market cannot be underestimated. After all, they helped push up private home prices, particularly in prime areas, during the boom. ‘We do not deny the potential these buyers bring to our market but, given the larger global uncertainty, we reckon it is too early to predict if this is a turn,’ said Mr Sim.

Foreigners accounted for 10.6 per cent to nearly 17 per cent of total sales in the four quarters last year. But they made up less than 10 per cent of total sales this year, Jones Lang LaSalle data shows.

‘The foreigners are not coming back in a strong way. During boom times, we saw less traditional foreign buyers such as foreign funds and foreigners from places like Europe,’ said Mr Sim.

The buyers now are from the region, and mostly keen on mass to mid-end properties, he said.

These are the ‘very localised’ foreigners already familiar with the Singapore market and have kept track of what is going on, said Savills Residential director Phylicia Ang.

Cash-rich foreigners from farther afield who target prime property have not yet returned, she said.

Still, more foreign buyers are likely to return in the next three to six months, said Knight Frank executive director Peter Ow. ‘Once news spread that the market is recovering, they won’t want to miss out.’

High-end properties feel the buzz too

Source : Business Times – 12 Jun 2009

The high-end property market is starting to soak up the sunshine again.

Developers of some luxury residential projects have reported a slight pick-up in sales since May. The Orchard Residences, The Hamilton Scotts and Boulevard Vue have seen units sold at above $2,500 psf; in the case of The Orchard Residences, there have been a few units transacted at more than $3,000 psf.

In the secondary market, a unit at Ardmore Park is said to have changed hands for around $2,500 psf recently.

Prices have also breached the $2,000 psf mark again for The Sail @ Marina Bay, where transacted prices are said to have appreciated by $100 psf a week in the past three weeks.

The speculators are back, too. ‘We hear of people trading options again in some secondary market projects like The Sail and Rivergate. That is, someone buys a unit and before the two-week option exercise period is over, sells it to another person,’ a market watcher said.

In the primary market, five units have been sold at The Orchard Residences in the past few weeks. A spokeswoman for Orchard Turn Developments, which is building the 99-year leasehold condo, confirmed this when contacted by BT. ‘We’ve recently sold units at prices ranging from $2,700 psf for a 10th floor unit to $3,300 psf for an apartment on level 33. We’ve seen interest from both locals and foreigners at prices similar to what we sold when we first began to sell around March/April 2007,’ she said.

A stone’s throw away at Cuscaden Walk, Far East Organization sold an apartment last month at Boulevard Vue for $2,600 psf or nearly $12 million. The eighth-floor unit was acquired by a Singapore permanent resident on normal progress payment scheme. Far East’s chief operating officer of property sales Chia Boon Kuah told BT the unit would have been priced around $3,800 psf in first-half last year when the group first started selling the posh 33-storey freehold project.

Added Mr Chia: ‘We’re seeing more inquiries across the full range of our products, including landed homes, over the past few weeks. In terms of volume of transactions, we’re now seeing 3-5 times the level in the December/January period. So in a typical week – without new launches – we’re now selling about 40 units compared with 10 in December/January,’ he added.

This weekend, Far East is launching its ad campaign for Miro, comprising freehold loft units at Lincoln Road. Prices range from $1,400 to $1,600 psf. The group has also been selling Dalla Vale, a freehold cluster semi-detached and bungalow project at Springleaf Avenue priced from $650 psf.

At Scotts Road, Hayden Properties this week sold a 2,756 sq ft apartment at Hamilton Scotts for $2,600 psf or about $7 million to a Singaporean buyer on normal progress payment terms. The price is about 20 per cent lower than the $3,200 psf the unit would have cost in August last year, when Hayden sold the initial five units in the project, says the company’s director Leny Suparman.

‘We started getting more inquiries from April and therefore we were more inclined to revise our prices. Buyers have become more confident about the market lately because of the stockmarket rally and positive news from all fronts. People don’t want to miss out on good opportunities,’ she added.

In the secondary market too, a couple of two-bedroom units at The Sail @ Marina Bay were transacted recently at above $2,000 psf. A bay-facing unit above the 50th level fetched $2,400 psf while another unit slightly above the 15th level sold for $2,200 psf. Also, a one-bedder on the 20th floor changed hands at $1,700 psf.

Knight Frank director Nicholas Mak pointed out that the last time the market saw transactions above $3,000 psf was late last year. ‘Across Asia, the stockmarket rally has improved investors’ confidence and this has spilled over to the property market. However, there are factors that could potentially cut away the legs of this rally. Falling rents is one of them.’

DTZ executive director Ong Choon Fah noted that the latest price gains come after substantial declines. By Q1 this year, luxury home prices had fallen about 30-40 per cent from the 2007 peak levels.

‘Many perceive the worst is over and the downside risk is manageable. There’s also been a subtle change in attitude towards real estate. People now realise that property is more lasting. At least you can live in it, hold it out for the long term and pass it to your children; it won’t vanish, unlike some financial products,’ Mrs Ong said.

‘However, we would rather the market exercise some restraint. At the end of the day, any sustainable recovery will have to be supported by fundamentals. The leasing market is still going through a challenging period. Given the recession, can we support such a sharp V-shaped recovery in property prices?’ she asked.

HDB spends S$12m to renovate some 3,000 shops

Source : Channel NewsAsia – 12 Jun 2009

The poor economic climate has affected many neighbourhood retailers but there’ll be some relief through the housing board’s scheme to bring shoppers back into the heartlands.

It’s spending S$12 million to renovate 33 sites islandwide, covering some 3,000 shops, more than double the amount spent in its pilot scheme in 2007.

The owner of a fish stall in Bukit Batok estate said his business saw a 10 to 20 per cent drop in recent months.

Citing thinner wallets as one reason, he added that he also lost out to bigger supermarkets nearby.

Goh Thiam Chwee, fish wholesaler, said: “If they renovate the area, it’ll be neater and more hygienic and customers will return.”

Mr Goh won’t have to wait long. Under HDB’s Revitalisation of Shops scheme, 33 neighbourhood retail sites across Singapore will get spruced up.

Measures include help in upgrading common areas and rental rebates for tenants who choose to renovate their shops.

HDB and the local Town Councils will also co-fund the cost of carrying out marketing and promotional events.

About 3,000 retailers are expected to benefit.

They are located in areas such as Bedok, Clementi, Hougang and Tampines.

The scheme was first announced in November 2007 and the pilot batch saw S$5 million given to 14 sites.

Senior Minister of State for National Development Grace Fu said: “This year, given the poorer economic sentiments, we thought it would be good to expand the scheme to more shops and more estates will benefit from it. That’s the reason we have doubled the number of shops and primarily whoever has applied was accepted for the scheme.”

When the economy worsens, small businesses are usually the first to suffer and this programme will go some way in boosting their long-term revenue.

Under the scheme, those who pay rent will have most or all their upgrading costs subsidised. But shop owners will have to foot half the bill.

But some owners hope they can be given more help.

Lee Lye Huat, shop owner, said: “Times are bad and some may not be able to afford it. It’ll be good if the cost could go down another 10 or 20 per cent.”

Some retailers are also working with government agency SPRING Singapore on training courses for their service staff.

Cove Development says 49 tenants to remain at Grangeford

Source : Channel NewsAsia – 12 Jun 2009

Cove Development says that 49 former tenants of Ideal Accommodation have decided to stay on at The Grangeford after the June 30 deadline.

They are being offered rental rates of between S$2,600 and S$3,500 for a whole apartment.

Until the deadline, residents can continue to stay at The Grangeford rent-free, while they seek other accommodation.

Cove recently took control of The Grangeford, after terminating the contract of Ideal Accommodation, which had illegally installed partitions in the condominium complex.

Cove is a subsidiary of building owner Overseas Union Enterprise.

Grangeford tenants can stay till June 30

Source : Sunday Times – 7 Jun 2009

Some 200 tenants of an illegally refurbished condominium in Grange Road now have more time – they have until the end of this month to vacate the building.

Also, they will stay rent-free till then.

The 140 apartments at The Grangeford in Leonie Hill, sold en bloc in 2007, had been illegally partitioned into 600 smaller units by the master tenant, Ideal Accommodation, so as to fetch more rent.

But the Urban Redevelopment Authority (URA) discovered what was happening in April and ordered the partitions to be torn down.

But Ideal did not inform the tenants, many of whom are foreigners, of the URA order until three days before the June 3 eviction date.

It is not known how many tenants have left. But the rest, about 200, have stayed put, with nowhere to go at such short notice.

Yesterday, the property’s owner, Cove Development, told The Sunday Times it has extended the deadline from next Sunday to June 30 so that the remaining tenants have more time to arrange alternative accommodation.

Last Wednesday, Cove Development terminated Ideal’s two-year lease after just five months, and gained a deadline extension from the URA. It now has till July 27 to tear down the partitions and restore the apartments.

Cove Development, a unit of Overseas Union Enterprise (OUE), is already helping some tenants get discounted lodgings at two hotels here, the Copthorne Orchid and Meritus Mandarin.

Tenants said they were offered hotel rates ranging from $75 to $100-plus per day for a room.

Said Mr Steven Ngai, company secretary for OUE: ‘We met some of the residents yesterday. They were very happy with the new deadline. They also don’t have to pay any rent for this month.’

When contacted by The Sunday Times yesterday, some tenants were still confused about what to do next.

Said one tenant, IT officer Nelson Ku, 25, an expatriate from Macau: ‘I know that sooner or later all of us will have to move out. But what happens to our contract with Ideal? Some of us have paid half a year’s rent. Will that be forfeited? It’s so confusing.’

S’pore’s private property resale market offer discounts of up to 50%

Source : Channel NewsAsia – 12 Jun 2009

If you’re looking to buy a private high-end property, market watchers said the resale market appears to be offering better deals right now.

They said discounts of up to 50 per cent can be found in the resale market for Singapore private properties compared to developer launches where prices may only be lowered by about 20 per cent.

Property market sentiment appears to be recovering with developers launching new units to test the market.

Some have even dangled incentives like discounts and other perks which effectively amount to deferred payment schemes.

But analysts said buyers may find better deals elsewhere.

Karamjit Singh, managing director, Credo Real Estate, said: “At this stage, buyers are probably much better off scouring the resale market especially among those projects originally sold well before the peak of the market, sometime in 2006 or early 2007.

“This would still give the sellers who bought originally from developers some margin to make. And there’s probably something left behind on the table for the new buyer to make from the upside.”

For example, a unit at Ardmore 2 in the Orchard area was transacted for as low as S$1,600 per square foot in the past month.

This same unit would have fetched more than S$3,000 per square foot during the market’s peak in 2007.

And about five units at Tate Residences were sold below S$2,000 per square foot. At the market’s peak, prices hit as much as S$3,500 per square foot.

Credo Real Estate said prices for high end properties have settled to around S$2,000 per square foot today.

Such deals in the high end segment are attracting foreign investors back into the market. They had left earlier due to the credit crunch and poor market sentiment.

But developers are not likely to drop prices by more than 20 per cent for new properties due to concerns for valuations.

Donald Han, managing director, Cushman & Wakefield, said: “Valuations tend to take note of last transacted. If you sold some project for S$3,000, S$4,000 per square foot, let’s say, at end 2007, and now you sell at S$2,500 per square foot, it creates a fair amount of disruption in market valuations. So the tendency is to hold back and wait for better market timing before launching.”

Overall, market watchers project that some 6,000 units will be sold in the primary market this year if the economic conditions stabilise.

Singapore now ranks among top 10 most expensive cities in Asia for expatriates

Source : Straits Times – 11 Jun 2009

SINGAPORE has become one of the 10 most expensive cities in Asia for expatriates to live, according to a new cost-of-living survey.

The Republic’s promotion from 13th spot last year to 10th in the ECA International survey, is largely down to price increases not slowing as quickly as elsewhere in Asia.

This is despite a weakening Singapore dollar making goods and services that much cheaper here for foreigners.

The strengthening of the yen saw the region’s top four spots taken up by Japanese cities.

Tokyo reclaimed its position as Asia’s most expensive city, followed by Nagoya, Yokohama and Kobe.

Explaining Singapore’s move up the ranks, Mr Lee Quane, regional director of ECA Asia, said: ‘Prices have not slowed down as much in Singapore as in other parts of Asia.’

The pace of increase in prices of goods and services in countries such as China and Malaysia, for instance, has slowed down by half. Prices are down by just one quarter in Singapore, said Mr Quane.

Still, Singapore remains a more affordable place than long-time rival Hong Kong, where the cost of living is being driven up by the strength of the Hong Kong dollar, which is pegged to the US dollar.

Hong Kong jumped from 98th spot to 29th in the global ranking, and is the seventh most costly city in Asia.

Globally, Singapore came in 72nd, up from being 114th last year.

Seoul, Kuala Lumpur, Jakarta, Manila and New Delhi are among the Asian cities which have become relatively cheaper for expatriates.

The survey found that the cost of living in Asia has increased relative to the United States and Europe, given that the West has been hit hardest by the global financial crisis.

So, while inflation has slowed in many Asian cities compared to a year ago, it has fallen more dramatically in many Western countries where growth has been slower.

Singapore International Chamber of Commerce (SICC) chief executive Phillip Overmyer says global companies with operations in Singapore are feeling the pinch.

‘We’re seeing demand coming down, yet costs remain very high,’ making Singapore and some other Asian cities very expensive places to operate, he warned.

‘What I see going on right now are serious evaluations (by companies). Where do we go if we need to move? What do we do if recession is going to last for a few years?’

Ms Jane Fraser, 38, an advertising executive, said the cost of living in Singapore is still ‘reasonably bearable’. However, housing rents, which have been steadily declining of late, are still a bugbear, she said.

ECA carries out its survey twice a year to help multinational companies calculate remuneration packages and living costs for expatriates. The study compares a basket of 125 consumer goods and services commonly bought by expats in over 370 locations and measures these items against inflation, availability of goods and exchange rates.

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Most expensive cities in Asia

1. Tokyo (1)

2. Nagoya (4)

3. Yokohama (2)

4. Kobe (5)

5. Beijing (10)

6. Shanghai (12)

7. Hong Kong (9)

8. Shenzhen (16)

9. Guangzhou (15)

10. Singapore (13)

Bracket indicates March 2008 ranking

Tough measures taken on window safety

Source : Straits Times – 11 Jun 2009

I WOULD like to thank Mr Andrew Seow for his views on window safety last Saturday (’Pedestrians at risk’). We agree with him that the onus is on property owners and tenants to carry out preventive maintenance to ensure that exterior features such as wall tiles and glass panels are secure.

The Building and Construction Authority (BCA) takes a serious stance on the safety of exterior features and windows, and I would like to assure Mr Seow and the public that we adopt tough measures against building owners or tenants who fail to maintain their windows regularly to ensure safety.

Owners or tenants may face a fine of up to $10,000 and/or a prison term of up to 12 months should their windows or other facade elements fall due to a lack of maintenance.

In addition, newly installed windows must comply with minimum design and performance standards, and these installations must be undertaken by approved window contractors and trained window installers. This helps to address possible issues at the design and installation stages to prevent potential problems later.

The BCA views public safety as its utmost priority and will not hesitate to prosecute building owners or tenants for failing to ensure the safety of their exterior features, including windows. We will continue to carry out audit inspections of buildings to ensure that the windows have been retrofitted with stainless steel rivets.

The BCA also reaches out to property owners, tenants and home owners with public awareness programmes to educate and remind them of the need to check and maintain their windows regularly for public safety reasons.

Our recent window safety campaign, ‘6/6, 12/12′, designates June 6 and Dec 12 each year as Window Safety Day, to remind property owners and tenants to check their windows at least once every six months. Posters of simple do-it-yourself tips on how to check windows are also distributed to town councils for HDB blocks and to management corporations for private estates. In addition, the BCA will send advisories on window safety to all property owners and tenants.

Lastly, we would like to remind all property owners and tenants of their duty to maintain their windows regularly. For more information on window safety and maintenance tips, home owners can refer to our website, www.bca.gov.sg/windows_safety or call our hotline on 6325-8677.

Chin Chi Leong
Director
Building Plan Management Division
Building and Construction Authority of Singapore

Don’t allow Tiong Bahru to turn into a red-light district

Source : Straits Times – 11 Jun 2009

I READ with concern Monday’s report, ‘Planned budget hotel causes a stir’, on the Hotel 81 being developed at 1-9 Eng Hoon Street in Tiong Bahru, and how some residents worry it will give a sleazy image to the neighbourhood.

I have lived in Tiong Bahru for the past four decades. This is a clean and green estate with a tranquil environment and unique buildings, such as the pre-war flats that have been conserved. Singaporeans who appreciate the charm and identity of these buildings have even suggested that the estate be a nominee for Singapore’s first Unesco World Heritage Site.

People from all walks of life and different locations come to Tiong Bahru for its good food. The wet market has also been featured in The Straits Times’ Life! section.

The estate draws tourists and even celebrities. In fact, not too long ago, former Thai prime minister Samak Sundarajev visited the Tiong Bahru wet market.

We cannot allow the estate to be turned into a red-light district, as this would destroy its heritage and historic charm.

Florence Chua (Ms)

Short Street hotel site attracts strong bids

Source : Straits Times – 11 Jun 2009

A SMALL hotel site in Short Street has received 15 bids, with the winning tender coming in at more than double the trigger price.

Budget hotel chain Fragrance Group’s bid of $15.5 million, or $353 per sq ft (psf) per plot ratio, is about 76 per cent higher than the trigger of $201 psf per plot ratio, or $8.8 million.

The price is more in line with analysts’ projections last August, when the site was first made available on the Government’s land sales list, than recent ones.

The second highest bid – from Hotel 81’s Regal Land – was at $14.01 million, or $319 psf per plot ratio.

Centurion Properties, largely owned by UOB-Kay Hian stockbroker pair Han Seng Juan and David Loh, put in the third-highest bid of $12.89 million, or $291.70 psf per plot ratio.

Other bidders included Sim Lian Land, Hotel Royal Investment, Wah Khiaw Developments, Mayhew, Heeton Commercial and Orchard Parade Holdings’ First Choice Properties. The first nine bids all came in above $10 million.

Singapore’s largest bar chain operator, Harry’s Holdings, which recently said it was keen to buy a small hotel, also put down a bid – at $9.5 million or $217 psf per plot ratio.

‘The strong response to the tender of the Short Street site signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract tourists,’ said CBRE Research director Leonard Tay.

The Urban Redevelopment Authority put the 99-year leasehold Short Street hotel site up for tender when an unnamed developer triggered it for sale after committing to a minimum bid of $8.8 million. It is a reserve list site, which is put up for sale only if developers indicate their interest.

The 14 valid bids received – the 15th undercut the trigger bid – reflect a return of interest for development sites with good attributes, Mr Tay said.

Given that the site area is relatively small and construction costs are expected to decline this year, the overall investment should not prove costly, making this an attractive opportunity for developers and hoteliers, he added.

The site, which has a maximum gross floor area of 43,885 sq ft, can accommodate around 90 rooms.

Apart from the affordable investment sum, the site’s location within the Bras Basah/Bugis district was another key factor, said Colliers International’s director for research and advisory Tay Huey Ying.

Mr Leonard Tay said its location near the upcoming Rochor MRT station and the Bugis area meant that a themed or design-oriented boutique hotel would be most likely.

A new boutique hotel could capitalise on the growing arts scene in the Bugis area and cater to tourists looking to stay in a hotel offering something more than a typical hotel chain, he said.

For now, the hotel industry is faced with rising supply, shrinking revenue per available room and falling visitor numbers.

No new hotel sites were added to the Government’s land sales programme for the second half of the year. It already has nine hotel sites available for tender.

Idle office space casts shadow on rents

Source : Straits Times – 11 Jun 2009

SOMEWHERE in the Central Business District lies a skyscraper with floors of idle office space on offer, and it is not even officially on the rental market.

This is called ’shadow space’ – office space that technically has been leased out to a tenant, except that that tenant now wants to sublet it to someone else because he has too much of it.

More and more companies, particularly financial institutions, are looking to sublet ’shadow space’, according to a new Colliers International study.

Many have shelved expansion plans or scaled down operations in light of the current economic crisis, and do not want to keep paying rent for space that they no longer need.

Colliers estimated that ’shadow space’ rose another 48 per cent from an estimated 250,000 sq ft in March to 370,000 sq ft last month. That is equivalent to the size of the 30-storey MAS Building in Shenton Way.

While it may represent only 0.5 per cent of Singapore’s islandwide office stock, it is about 15 per cent of the 2.5 million sq ft of new office space expected to come onstream this year.

And the number is still growing.

This unexpected overhang of excess space could delay an anticipated recovery in office rents, said Colliers.

Some 42 per cent of the space is in the Raffles Place and Marina Bay area, with 24 per cent in the Marina and City Hall area and the remainder in the Shenton Way and Tanjong Pagar areas.

Nearly half of all the ’shadow space’ currently being marketed is offered by financial institutions, which went through an explosive growth period earlier but were among the first to downsize their operations in the downturn. Citibank is among those with idle space – at buildings such as Millenia Tower, Centennial Tower and Capital Square.

The information technology and marine/offshore industries are the next two largest contributors of ’shadow space’. So far, the fast-growing ’shadow space’ in the market has added to the competition for tenants and exacerbated downward pressure on rents.

‘Corporates are looking at offloading such space as soon as possible so they need to be more attractive rental-wise,’ said Cushman and Wakefield managing director Donald Han. Rents for ’shadow space’ can be as much as 20 per cent lower than the committed rental deals for usual office space, he noted.

That is because there are typically more restrictions associated with ’shadow space’, even though the pros include a fitted-out space. For example, the remaining lease of such space may be two years, shorter than the typical three-year lease.

‘The tenant’s agenda is to mitigate their loss by subletting the idle space,’ said Knight Frank director of business space (office) Agnes Tay. ‘Depending on how much they are willing to cut their losses and when they signed the lease, the discounts can be as low as 10 per cent or as high as 50 per cent,’ she added.

As a result, traditional landlords are offering incentives such as rent holidays on top of very competitive closing rents, sometimes 25 per cent to 30 per cent below what they asked for, said Colliers.

Going forward, financial institutions who had pre-committed to large amounts of space in yet-to-be completed offices or business park buildings in the past two years may no longer need so much room.

As the bulk of these buildings – including Marina Bay Financial Centre Phase 1 – will be completed next year, the amount of ’shadow space’ could peak then, said Colliers.

And should the global business environment remained challenged, these financial institutions alone will make available an estimated 400,000 to 600,000 sq ft of additional ’shadow space’, it said.

The office rental market is already trying to digest a potential supply of 9.6 million sq ft of office space available from this year till 2012.

Grade A office rents are projected to decline by up to 60 per cent this year and 20 per cent next year.

By the end of next year, the average monthly gross rents of Grade A office space in the Raffles Place micro-market could return to the mid-2005 level of just $5 per sq ft (psf) per month, from $10 psf in the first quarter, said Ms Tay Huey Ying, Colliers’ director of research and advisory. This, though, would still be above the $3.95 psf seen at the bottom of the market in 2004.

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‘Shadow space’ in numbers

‘Shadow space’ rose by 48 per cent between March and May

There is a total of about 370,000 sq ft of ’shadow space’ today – about the size of MAS Building

‘Shadow space’ usually costs 10 per cent to 50 per cent less than regular space

Bids galore for hotel site on Short St

Source : Business Times – 11 Jun 2009

A government tender for a small hotel site on Short Street closed yesterday with a whopping 14 valid bids received – which analysts said reflects market interest in development sites with good attributes.

The highest bid came from Fragrance Group. It offered $15.5 million – or $353 per square foot per plot ratio (psf ppr) – some 76 per cent higher than the trigger price of $8.8 million, or $201 psf ppr.

The top bid was also 74 per cent higher than the lowest valid bid of $8.9 million, or $203 psf ppr, submitted by SCM (Overseas).

Various other companies also bid for the 99-year leasehold site – including property groups such as Sim Lian Land, Orchard Parade Holdings, Heeton Holdings, Wah Khiaw Developments and Regal Land, the company behind the Hotel 81 chain, as well as the Harry’s chain of pubs.

Analysts said the small size of the site is one of its main selling points. The number of bids – 15 in all, including one bid judged invalid because it was below the minimum bid price – is one of the highest received for a Government Land Sales (GLS) tender.

‘As the site area is relatively small and construction costs are expected to decline this year, the overall investment should not be very costly, making this an attractive opportunity for developers and hoteliers,’ said Leonard Tay, director of CBRE Research.

The strong response to the tender also signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract visitors, he added.

The site has a maximum gross floor area of 43,885 sq ft. Given its location near the upcoming Rochor MRT station and the Bugis area, a boutique hotel would be most likely, analysts said.

The site was launched for public tender on April 15. It was originally on the Reserve List of the GLS programme.

Last week, the Ministry of National Development said it would continue its suspension of the Confirmed List for the July-December period. It also made little increase to the reserve list.

To let: 400,000 sq ft shadow office space

Source : Business Times – 11 Jun 2009

Financial institutions in search of tenants for space that they pre-committed to

CLOSE to 400,000 square feet of shadow office space is now available as financial institutions scramble to find replacement tenants for the space that they pre-committed to in the boom years.

A white paper on the subject by Colliers International says that the amount of shadow office space in Singapore rose by a steep 48 per cent over the last two months to hit 370,000 sq ft in May 2009 – up from 250,000 sq ft in March.

This is equivalent to 0.5 per cent of the islandwide office stock, or about the size of MAS Building at Shenton Way.

Likewise, Jones Lang LaSalle (JLL) estimates that some 400,000 sq ft of shadow office space is now available. The bulk of this came onstream from February to May this year, said JLL’s regional director and head of markets, Chris Archibold.

Shadow space is loosely defined as excess office space that companies have leased but are looking to sublet to a third party for reasons such as reduction in headcount.

Colliers’ white paper, which was released yesterday, identified the financial industry as the largest contributor of shadow space. It accounts for 46 per cent of all shadow space currently being marketed.

‘This is hardly surprising,’ said Colliers. After all, the financial services sector experienced explosive growth of 11.7 per cent in 2006 and 15.7 per cent in 2007. During this period, many financial institutions – including Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, Prudential Assurance and UBS – embarked on aggressive expansion plans.

‘With the current economic downturn being fuelled by the collapse of the global financial markets, the reverse is now true,’ Colliers observed.

The white paper also gave a breakdown of where the available shadow space is located.

Of the 370,000 sq ft of shadow space available as at May 2009, some 42 per cent is located in the Raffles Place/New Downtown micro-market.

A further 24 per cent is located in the Marina/City Hall area, while the Shenton Way/Tanjong Pagar micro-market accounted for some 14 per cent.

Even more shadow space is likely to become available over the rest of the year and in 2010, analysts said.

Colliers projects that some 400,000 to 600,000 sq ft of additional shadow space could become available by 2010 from just financial institutions.

The problem will be worsened when construction of new major office buildings, in which financial companies have pre-committed to large amount of spaces, is expected to be completed.

‘This will add to the downward pressure on rents exerted by the potential supply of 9.6 million sq ft from Q1 2009 to Q4 2012, and could keep rents depressed for a prolonged period of time and delay market recovery until after 2010,’ said Colliers.

It projects that Grade A office rents will decline by up to 60 per cent in 2009 and 20 per cent in 2010.

JLL’s Mr Archibold, who similarly estimates that another 400,000 sq ft of shadow office space could be added up to 2010, also expects rents to take a hit from the increase in shadow space.

Colliers’ data shows that as at March 2009, grade A office rents in the Raffles Place area have plummeted by some 41 per cent since peaking in Q3 2008.

The intense race for tenants has even resulted in landlords offering incentives such as rent holidays in addition to closing rents that are sometimes 25-30 per cent below asking rents in order to retain or secure new tenants, the firm observed.

Property auctions rise as hammer falls

Source : Business Times – 11 Jun 2009

May deals outstrip all of Q1; some banks allowing owners to hock their own properties

Property auctions are in vogue again, with deals touching $18.5 million in May alone. This is higher than the $17.9 million for the whole of Q1 this year, show Colliers International figures.

Banks are playing their part by occasionally stepping aside and letting owners hock their own properties. This is because prices tend to slide when financial institutions repossess a property and offer it as mortgagee sale.

After a slow start to the year, a total of $47.7 million worth of properties have been sold at auction in the first five months. Colliers deputy managing director and auctioneer Grace Ng is now predicting that the year would see about $150 million of auction deals – compared to $83.7 million for 2008, which was an 11-year low.

The May figure is the highest since August last year, when auction sales touched about $22.7 million. But last August’s number was bumped up by state auctions that raised $13.81 million, while no such special factor was at play in May.

Owner sales accounted for 44 of the 59 properties that went under the hammer last month. Fifteen properties actually got sold, of which just over half – eight – were mortgagee sales. They fetched a combined $8.7 million.

Said Ms Ng: ‘We’re not seeing a surge in the number of repossessed properties in the market yet as financial institutions are making an effort to manage the situation by helping owners to ride through this difficult period and giving them the opportunity to sell the properties in the open market instead of repossessing the property immediately.’

Knight Frank executive director and auctioneer Mary Sai added: ‘Banks know that once they take over a property and it is offered as a mortgagee sale at an auction, some buyers will offer lower prices thinking it’s a fire sale or cheap sale. So it’s to the bank’s advantage to talk things over with the borrower, restructure the mortgage if necessary or at least give him a chance to try selling the property himself first.’

The stockmarket rally and strong homes sales by developers improved the overall sentiment and contributed to the strong auction sales in May.

Attendance at property auctions perked up last month, said Ms Sai. ‘Success rates also rose. For instance, in Q1, one or two properties, or even none in some cases, were sold at auctions. However, in May, most of the big auction houses achieved sales of at least two properties per auction.’

Jones Lang LaSalle head of auctions Mok Sze Sze noted that the price gap between buyers and sellers narrowed in May, resulting in more deals being sealed at auctions. Even though 96 properties were offered for auction in April and only 59 in May, last month saw more sealed deals.

Looking ahead, Ms Mok expects total auction sales for this year to surpass last year’s tally.

Colliers’ Ms Ng expects buoyant sales to continue in the next few months but whether the trend can be sustained depends on the economic recovery, the stockmarket performance and the selling price.

Agreeing, Knight Frank’s Ms Sai said: ‘There are buyers at auctions if prices are right. But if the reserve price is too high, they will not participate.’

Several landed homes were auctioned off in May, which accounted for its strong showing. They included a semi-detached house at 69 Namly Garden which was sold for $3.7 million or $716 per square foot of land area; the $4.1 million ($442 psf) sale of a bungalow at 20 Bright Hill Crescent off Upper Thomson Road; and 2 Pasir Ris Way (a semi-D) that fetched $2.3 million ($459 psf). The Pasir Ris and Namly Garden properties were mortgagee sales.

Colliers’ Ms Ng does not foresee an immediate rise in the number of mortgagee sale properties hitting the auction block.

‘A pick-up is likely to happen only in Q3 or Q4 this year. Currently, there’s an average of 18 distressed properties being put up for auction per month and the number could go up to about 22 properties per month in Q3 or Q4 this year.’

Knight Frank’s Ms Sai expects owner sales to continue buoying auctions in coming months, given the advantage this mode has over private treaty. ‘Once the sale is done, the seller collects 10 per cent payment immediately at the auction – instead of having a two-week option period. Prices and terms are pre-determined, avoiding protracted negotiation.

‘The advantage to the buyer is that the seller has to sell once the reserve price is reached at the auction, unlike private treaty where the seller can change his mind even if you meet his price before he grants an option.’

New malls opening at Orchard Road to rejuvenate area

Source : Channel NewsAsia – 11 Jun 2009

Singapore’s prime shopping belt Orchard Road is set for a revival, with three new malls to be launched by the end of the year and two refurbished fronts. The malls include Orchard Central and 313@Somerset, and the new fronts are at Mandarin Gallery and Park Hotel Orchard.

That amounts to about 1.8 million square feet of new retail space, bringing the total space available at Orchard Road to eight million square feet.

Beyond the malls, plans are underway for large-scale themed events for the street throughout the year.

Chairman of Orchard Road Business Association, Sng Ngoi May, said: “Orchard Road Business Association sees 2009 as a year that we will remember as a milestone in the modern Orchard Road. After a lapse of 15 years, we are going to see three completely new malls coming on stream.

“The plan started earlier, with the makeover of the street by the government, (who) spent about S$40 million. (The makeover resulted) in wider pedestrian walkway, a retiled pedestrian walkway, urban green rooms and state-of-the-art lighting, plus something not so obvious – they have also provided the infrastructure where we can tap electricity on the street.”

The walk down Orchard Road is set to get even more exciting, going by the government’s development plans. Shoppers will have choices galore when it comes to large-scale themed events that take place throughout the year.

Group director of urban planning and design at Urban Redevelopment Authority, Fun Siew Leng, said: “The next stage really is not to put in more hardware, but to put in more software aspects. How can we make Orchard Road full of activities that are exciting and to continue to attract new visitors?

“The Singapore Tourism Board will be taking the lead. The agency will champion to promote, market, and have a coordinated calendar of events to continue to keep Orchard Road exciting for people. So you can look forward to more coordinated themed events.

“They will have four main themes, for example (there will be) one based on lifestyle, (one on) fashion, one on the Singapore Grand Prix, and another on the Christmas light-up. Then they will build along these themes and have other side events to pull together to make all these events bigger.”

The Orchard Road Business Association said the first event may be rolled out as early as next year.

Sng said: “With all these developments, we see Orchard Road as offering more than just shopping. On the street, we want to continue to offer something that is visually pleasing to the eye, like art installations, and the urban green rooms – you can have performances in the urban green rooms, and retailers can also use the urban green rooms for display of merchandise. And (there will also be) other street activities like buskers, good quality buskers.”

While most of the key changes will be found in the core region of Orchard Road, the fringes will undergo some development too.

Fun said: “There is also a park which we are developing at the open space on top of Dhoby Gaut MRT. This is a project we initiated to create more public space for people to use.

“The land on top of the MRT station is not being sold for some time to come. And instead of just leaving it vacant, we thought it will be good if we can make it into an open space for the time being and allow people to enjoy it, to use it.”

Orchard Road has not seen a new mall in more than a decade, so there is clearly much anticipation about the new additions to the street. The first to open its doors will be Orchard Central in July.

Prices to go down post-2010: Merrill

Source : Today – 10 Jun 2009

WITH sentiment in the mid- to mass-property market improving, the focus is now shifting to mid- and high-end projects, said Merrill Lynch in a report.

Developers, riding on the renewed interest, “will be looking to move up the market and start launching their mid- to high-end projects which have been previously held off”, the report said.

For the potential upcoming launches, Merrill estimated that more than half, or about 3,900 units, will be in the core central region, which includes areas such as River Valley, Newton and Holland district.

While property prices will trend upwards in the near term because of healthy transaction volumes, it cautioned that prices will peak and head south after next year due to excessive supply of properties.

Merrill is forecasting a sharp 20-per-cent recovery in the residential market and it could occur in the third and fourth quarter of this year.

“Given the aggressive new launches by developers hoping to catch the rebound in the market, we believe that the issue of excess supply will limit further pricing upside post-2010,” it said.

“Currently, we are expecting more than 12,000 and 14,000 units due for completion in 2011 and 2012 respectively.”

However, some analysts say that while the scenario is possible, it is too premature to say that prices will be on a downward trend after next year.

Mrs Ong Choon Fah, head of consulting at DTZ Debenham Tie Leung, said: “The market is very dynamic and based on our past research, developers will adjust and schedule their projects according to market conditions. If the pricing is not right, they will be less likely to push out their launches.” She added that demand for housing will also adjust accordingly to how the economy is faring.

If the economy picks up, the leasing market, which is mainly driven by expatriates and permanent residents, will also improve and that could increase the demand for property from investors, said Mrs Ong.

While saying that the scenario of a supply pressure is plausible, Knight Frank’s director of research and consultancy, Mr Nicholas Mak, feels that there are other issues that could cause a downtrend in prices.

He explained that because the economy moves in a cycle, even when it is on an upswing, there will come a point when the pace of improvement in the economy will slow down. When this happens, demand for property will also be affected, thus bringing down prices of residential units, Mr Mak said.

S’pore among top 10 most expensive locations in Asia: survey

Source : Channel NewsAsia – 10 Jun 2009

Cost of living in Singapore continues to be high, propelling it into the top ten most expensive locations within the region.

A report by human resources consultancy, ECA International, found that Singapore is the 10th most expensive city in Asia and 72nd worldwide.

The firm said price rises have not slowed down as much in Singapore as in other parts of Asia in spite of its weakened currency.

In addition, currencies of locations which were previously more expensive than Singapore – like London and Stockholm – have depreciated at a faster rate than the Singapore dollar.

This has led to Singapore becoming more expensive for visitors than many other locations in the survey.

Topping the list for the most expensive city in Asia is Japan’s Tokyo, while Angola’s Luanda is the most expensive city in the world.

In all, four Japanese cities, Tokyo, Nagoya, Yokohama and Kobe, made it to the top five most expensive places globally.

ECA International said the cost of living in Asia has become more expensive as Europe and the US are bearing the brunt of the recession.

Amount of shadow office space up sharply over 2 months, says Colliers

Source : Channel NewsAsia – 10 Jun 2009

Property consultancy Colliers said the amount of shadow space in Singapore has increased by almost half in a short span of two months.

In a research report, the firm said the shadow space increased by 48 per cent from an estimated 250,000 square feet in March this year to 370,000 square feet in May.

The amount of shadow space or excess office space that companies have leased but are looking to sublet is equivalent to 0.5 per cent of the islandwide office stock here.

Financial institutions are the largest contributor of shadow space accounting for 46 per cent of all shadow space currently being marketed.

Amid the global financial crisis and weak business environment, Colliers expects the availability of shadow space to reach a peak in 2010.

An estimated 400,000 to 600,000 square feet of additional shadow space could become available by 2010 from financial institutions alone.

Colliers added that the increased supply of office space will add to the competition for tenants and put more pressure on rents.

Analysts say residential property prices will take W-shaped recovery

Source : Channel NewsAsia – 10 Jun 2009

Brokerage Nomura said prices of residential assets in Singapore will take a W-shaped recovery, instead of its previous forecast for a U-shaped upturn.

In a research report, Nomura predicts that there will be a positive quarter-on-quarter rise in property prices in the third quarter this year.

This could occur because developers have seized on the recent positive market sentiment to clear their inventory.

But it expects the recovery to be short-lived due to possible rising unemployment and falling rents.

Nomura said significant increases in unemployment due to a weaker economy will temper the current property demand among those looking to upgrade.

It is also maintaining its view that asset prices will bottom next year.

Fragrance Group puts in top bid of S$15.5m for hotel site at Short Street

Source : Channel NewsAsia – 10 Jun 2009

Fragrance Assets, a unit of mainboard-listed Fragrance Group, has put in the top bid of S$15.5 million for a hotel site at Short Street.

The Urban Redevelopment Authority said it received a total of 15 bids, ranging from S$8 to S$15.5 million.

Other companies that had tendered for the site include Regal Land, Centurion Properties and Sim Lian Land.

Property consultancy CBRE said the strong response signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract tourists.

The 99-year land parcel covers about 1,200 square metres and borders Albert Court near Little India.

That’s big enough for a 12-storey hotel.

This was the first site launched for tender from the government’s reserve list since it suspended confirmed list sales last October.

URA said it’ll evaluate the bids and announce the tender award at a later date.

Developer’s big desert dreams suffer a setback

Source : Business Times – 11 Jun 2009

Sheik Sulaiman al-Fahim is at the centre of a storm over persistent delays involving Hydra Village

The Middle East property boom has produced more than its share of dream-spinners and dealmakers, whose brash attitudes eventually dwarfed the villas and towers that they promised to build.

Few, however, have made as much of a splash as Sheikh Sulaiman al-Fahim, a television personality from Abu Dhabi whose flashy lifestyle and acquisitive strikes into Britain’s premier soccer league have overshadowed his work as a real estate developer.

Now, as he is about to complete his biggest deal ever – the purchase of the Portsmouth soccer team in Britain – Sheikh Fahim finds himself at the centre of a controversy over persistent delays involving one of his development projects, Hydra Village.

Started in 2007, when property prices were at their peak, Hydra Village promised to transform a desert tract outside Abu Dhabi into a lush ‘eco-village’ of lakes, pools and 2,500 villas. It was to be completed by the end of this year; Sheikh Fahim now says that the project will be finished by 2011.

But with the development hardly begun, Hydra Village investors, most of whom are foreigners living in this oil-rich emirate, are in no mood for promises. Instead, they have started demanding that Sheikh Fahim prove that he has adequate funds to follow through on this project. The protest has become a public embarrassment for the publicity-shy Nahyan family, which rules the United Arab Emirates.

Whether he’s squiring Pamela Anderson around or bragging about his Lamborghini Versace sports car, Sheikh Fahim comes across as an anomaly in this cautious, slightly plodding city-state, where even the country’s most powerful sheikhs prefer to operate behind a cloak of anonymity.

And while Sheikh Fahim, who is 32, has deep ties to the ruling family, some experts wonder how much longer his flamboyant ways will be tolerated.

‘The ruling family needs to project an image of caution and conservatism – al-Fahim is more a symbol of an earlier era of excess,’ said Christopher Davidson, a professor at Durham University and author of the coming book Abu Dhabi: Oil and Beyond. ‘He has been a flashy front man for their money, but I am not sure for how much longer.’

Sheikh Fahim declined to be interviewed and would not comment on any aspect of this article. An executive at Hydra, Ahmed Khalil, said: ‘Hydra is on the right track under the leadership of Dr Sulaiman al-Fahim.’

Sheikh Fahim was little known before the founding of Hydra Properties in 2006. Since then he has cultivated his image, writing a book called Brand Builder and travelling as a goodwill ambassador for the United Nations.

According to Prof Davidson, Sheikh Fahim’s business has benefited from close connections to the ruling family in Abu Dhabi. Hydra is owned by the Royal Group, an investment conglomerate headed by Sheikh Tahnoon al-Nahyan, whom Sheikh Fahim has described as a mentor and who is a son of the former ruler Sheikh Zayed al- Nahyan, who ruled Abu Dhabi until his death in 2004.

On the Hydra website, Sheikh Fahim describes a vision that includes grand projects in Libya; Mexico; and Lahore, Pakistan – none of which are near completion – in addition to proposed developments in Abu Dhabi and Dubai.

‘At Hydra Properties, we believe that real property should go beyond the physical requirements of brick and mortar, of concrete and steel,’ his statement declares. ‘It must capture the essence of the human element and radiate the beautiful glow of life itself.’ But underneath the flowery prose, all may not be as advertised – whether that be Sheikh Fahim’s resume or the more pressing question of how he intends to complete his projects. For example, he has made it clear that he prefers the honorific Dr – or Doc, to his friends – in deference to the PhD in real estate investment that he says he received from the Kogod School of Business at American University in Washington.

Records at American University show that Sheikh Fahim was awarded an MBA, but there is no record of him receiving a doctorate there – the university does not even offer an advanced degree in real estate.

A lawyer for Hydra, responding in writing to questions, said that Sheikh Fahim received two MBAs from Kogod, one in finance and one in real estate.

The questions are particularly pointed about the Hydra Village project.

The construction area, on a stretch of desert on the outskirts of Abu Dhabi, is protected by a high wall. A colourful billboard with an alluring panorama of a woman meditating and children frolicking in green fields bears the Hydra slogan: Building beyond possibilities.

But a peek inside reveals the rough beginnings of about 50 of the planned 2,500 villas and beyond that, nothing but desert.

The Abu Dhabi property market has not suffered the sharp drop that has afflicted Dubai. In contrast to its sister emirate, Abu Dhabi sits on about 8 per cent of the world’s oil reserves; and while real estate prices have come down, tight government controls have prevented a steep decline.

While other big projects in Abu Dhabi have been delayed, they are in a much more advanced state than Hydra Village and other Fahim projects.

According to an internal Hydra spreadsheet viewed by The New York Times, the company is having difficulty collecting payments on its slow-moving projects. The document lists more than 1,000 investors who are late paying what they owe – a total sum of more than US$65 million.

In part, this may be because of the inability of Sheikh Fahim’s small office to keep pace with his frantic deal-making.

Jeffrey Craig Hoskins, who went from a stint on Sheikh Fahim’s television show to a brief job in Hydra’s accounts department, describes a chaotic work environment. ‘I was shocked how disorganised everything was – there is no way that they meet their deadlines,’ said Mr Hoskins, who is now a student in Cincinnati.

Prepaid real estate investments are high risk by nature, and some here hold the view that investors – who in many cases plunked down money without even signing a contract – are getting their due.

‘You are buying something that has not been built and then relying on the good offices of the developer to build it,’ said Matthew Hooton, a real estate lawyer in Abu Dhabi. ‘People need to take responsibility for their own decisions.’

In recent weeks, Sheikh Fahim has met with disgruntled investors. This month, he promised them financial concessions and better customer service.

Such promises are small comfort for Anne Birks, an English language teacher who, like many others, was so swept away by Sheikh Fahim’s vision that she sent him US$45,000 – without signing a contract – as a deposit to secure a lakeside villa in Hydra Village for her retirement.

Now, in addition to the delay, Ms Birks said that she had been told that there would be no lake.

‘I just wanted to end my years here,’ said Ms Birks, who insisted on being identified by her maiden name because she did want not to jeopardise her job in a government-owned university. ‘I had good faith – it just didn’t occur to me that an enterprise sponsored by the royal family could end up like this.’