BT : MCL Land top bidder for Hougang residential site

Business Times - 21 May 2010

MCL Land top bidder for Hougang residential site

By UMA SHANKARI

MCL Land trumped six other developers with its top bid of $207.5 million for a 99-year leasehold residential site at Hougang Avenue 2.

The price works out to $456 per square foot per plot ratio (psf ppr) - higher than analysts' estimates of $310-350 psf ppr when the site was first triggered more than a month ago. In fact, all seven bids came in above that estimated range at the close of the state tender yesterday.

'While the number of bids, at seven, are within expectations, the bid prices are fairly bullish,' noted CBRE Research's executive director Li Hiaw Ho.

'The top bid of $207.5 million, or $456 psf ppr, will translate to a breakeven cost of about $780 to $800 psf for a low-rise condominium project. The new project could probably fetch around $900-$950 psf when launched in 2011.'

MCL Land said that if it is awarded the site, it will build a project with around 450-500 units. Most of the units will be one and two-bedroom apartments as well as smaller three-bedders, the company said. The project will be launched in 9-12 months' time.

MCL Land's bid was 10 per cent higher than the second highest bid of $189.3 million, or $416 psf ppr, from Frasers Centrepoint. The top bid was also 21 per cent higher than the lowest bid of $171 million, or $376 psf ppr, put in by Sim Lian Land. Analysts said that MCL Land might have been especially bullish as it is the developer's sixth attempt in a government land sale tender since last year.

'It has been unsuccessful in the previous five land tenders, which may explain why it is more aggressive in this tender, bidding 10 per cent higher than the second highest bidder,' said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

The plot was launched for sale after it was triggered by an unnamed developer who agreed to bid at least $109.9 million ($241 psf ppr) for it in April.

The site is located at the junction of Hougang Avenue 2 and Yio Chu Kang Road and surrounded by mostly landed homes.

CBRE's data showed that units in recently launched new freehold apartment projects in the vicinity such as the 50-unit D'Pavilion, 81-unit Residences Botanique and 33-unit Wembly Residences were sold at average prices of $930 psf, $1,000 psf and $870 psf respectively between January and April 2010. And units in the 99-year leasehold Kovan Residences went for an average of $900 over the same period

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

TODAY ONLINE : All-time low rates 'may overheat property sector'

All-time low rates 'may overheat property sector'

05:55 AM May 21, 2010

by Julie Quek



SINGAPORE - Interbank lending rates have fallen to all-time lows here and market watchers have raised concerns that cheap lending may lead to over-heating in the property sector.

Responding to media queries at a Ministry of Trade and Industry briefing yesterday, Monetary Authority of Singapore (MAS) deputy managing director Ong Chong Tee said the fall in Sibor rates partly reflects market expectations of a stronger Singapore dollar, following a move by the MAS to a policy of currency appreciation from a neutral policy last month.

The Singapore Inter-Bank Offered Rate (Sibor) refers to the rate at which banks in Asia lend money to each other and is a key component used by banks in setting their home loan rates. The three-month Sibor dropped to 0.52 per cent at end-April and is expected to remain low, said DBS in its latest research report.

DBS economist Irvin Seah said the low interest rate environment may encourage speculation in the asset market especially for the property sector, unless "administrative controls are put in place to keep the lid on asset inflation".

Cheap home loans, as well as commodity and fuel prices, are among the factors that could affect inflation.

The Singapore Government had earlier introduced measures to cool the property market but risks remain and more such cooling measures may likely be introduced, Mr Seah said.

The Sibor rate is expected to fall to near-zero levels at about 0.40 per cent by the third quarter - a drop of about 12 to 14 basis points, said DBS head of economic and currency research David Carbon.

But some watchers do not see the rates coming down any lower.

Forecast regional economist Vishnu Varathan pointed out that the Sibor will usually follow the US Federal funds rate, which are already at the bottom-levels. The US Federal funds rate refers to the rate that banks charge each other on overnight loans.

With deposit rates at a low, Fundsupermart.com general manager Wong Sui Jau sees bank savings account interest rates falling to 0.1 per cent or even lower. This may be an opportunity for consumers to consider alternative ways to park their monies, as Mr Wong said they could consider investing in short-duration bond funds and money-market funds.

These funds are low-risk and yet provide a yield that is slightly higher than fixed deposits and bank savings accounts, he said. "Ultimately, investors have to accept that the higher the potential return they wish to get, the higher the risk they must take," he added.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Beware the liquidity beast

Beware the liquidity beast

If left unchecked, it can lead to the ruin of many in the market

05:55 AM May 21, 2010

by Colin Tan



While the announcement on Monday that developers sold 2,207 housing units last month did not shock, it certainly caused a huge surprise.

The total was the second-highest number achieved since records began being kept from June 2007 onwards.

A closer analysis of the figures has shown that prices have continued to inch up.

The highest monthly sales figure of 2,772 was achieved in July last year. The Government introduced its first set of cooling measures soon after that, in mid September, and it did so again in February, after another spike in sales in January.

Will we be seeing a third set soon?

The usual comments were made following the disclosure of the sales figure: That demand at this rate was not sustainable and should ease for the rest of the year. I recall that this warning was given about six months ago and that we have been saying the same almost every month since.

Before the release of the recent figures on Monday, two tenders for private housing sites closed within a week of each other.

The results were notable for the good participation rate from developers - 14 bidders for the Boon Lay site and 18 for the Simei Street 3 site - and the high prices achieved. The estimated selling prices of both projects add to the spectre of continued price rises for the foreseeable future.

Will the authorities redouble their efforts to ensure that there is enough supply to meet the high demand for sites as indicated earlier? Can we expect another slate of sites to be offered soon?

What these two events showed is that there is still ample liquidity in the market. If we assume that developers take a 50 per cent loan for their sites, there is still a huge pile of about $1.5 billion left over from the 13 unsuccessful bidders for the Boon Lay site and another $1.1 billion from the 17 unsuccessful bidders for the Simei site.

While there were a few repeat bidders, these were for the sites alone. We have not considered construction and other development costs or even tenders for public housing sites yet.

How can this liquidity beast be tamed? I termed it a beast because, if left unchecked, it can lead to the ruin of many in the market.

Let's consider the situation in China. It has raised mortgage rates, property taxes, restricted households to a single purchase, requested banks not to finance purchases beyond the second property and introduced a host of other measures.

Despite the controls, property prices in 70 cities rose last month by an average 12.8 per cent from a year earlier, higher than the annual 11.7 per cent increase in March and the fastest pace since the Statistics Bureau began to put out monthly figures in July 2005. However, there were news reports towards the end of last month that Chinese property prices had stopped rising and that transaction volumes had dwindled.

The question is: Was it because of the measures? Or was it because of the economic storm clouds over Europe stemming from the Greek crisis and the subsequent plunge in the share markets?

I would say it is the latter. As such, once the Greek crisis passes, expect the buying to continue. If not, touch wood, the worldwide economic repercussions will ensure that the day of reckoning for the property markets throughout Asia come sooner rather than later.

In Singapore, the authorities may continue with their recent accelerated pace of releasing sites but up to a point enough becomes too much, even if developers continue to splurge on sites. Excessive liquidity distorts rational decision-making.

The policy focus has to shift back to the demand side but if China has so much difficulty taming its own property market, how much more will it take to tame our own liquidity beast considering that we have not really started?

Colin Tan is Head, Research and Consultancy, Chesterton Suntec International

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

ST : Buona Vista site triggered

May 21, 2010

Buona Vista site triggered

ON THE commercial property front, JTC said yesterday that a 1.8ha site next to the Buona Vista MRT station will be launched for sale soon.

Located in the one-north biomedical hub, it was made available for sale on the reserve list in April 2008 but has only just been triggered by a developer which pledged to bid no less than $320 million.

The 99-year leasehold site has a potential yield of 111,565 sq m, with 2,000 sq m to be set aside for retail use. It is to be developed into a high-rise commercial building.

Cushman & Wakefield managing director Donald Han is expecting bids to come in between $300 to $320 per sq ft per plot ratio (psf ppr). The trigger bid works out to $266.50 psf ppr.

His expectations are a lot lower than the numbers of $350 to even $500 psf ppr that analysts had forecast in April 2008.

'There may not be many bidders as the quantum is large for a suburban commercial site,' he said.

'It could be triggered by a developer which has been tasked by a client to build-to-suit for an occupier or someone who wants to use it for himself.'

But Ngee Ann Polytechnic real estate lecturer Nicholas Mak is looking at possible bids of $500 to $600 psf ppr.

DTZ head of South-east Asia research Chua Chor Hoon said: 'The office sector is showing signs of bottoming out, hence there is increasing interest to buy or develop office buildings before the market rebounds.'

She said the attractive site will offer a cheaper alternative for companies that do not need to have a Central Business District presence.

JOYCE TEO

ST : Top bid for this Hougang site: $207.5m

May 21, 2010

Top bid for this Hougang site: $207.5m

MCL Land's offer about twice the minimum trigger bid; site attracts six other bids

By Joyce Teo

DEVELOPERS have again lodged bids above market expectations for a suburban residential site, this time at Hougang, with a top bid of $207.5 million.

This works out to a bullish $456 per sq ft per plot ratio (psf ppr).

However, the seven bidders competing for the 3.02ha plot in Hougang Avenue 2 were fewer in number than for some recent hotly contested sites.

One recent tender in Simei attracted a sizzling 18 bids.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that developers appear to be rather selective in their choice of sites.

'Only those development sites that are near to MRT stations attract more than 10 bidders,' he said.

The site is about 10 minutes' drive from Hougang and Kovan MRT stations.

When the tender closed yesterday, the top bid for the site was from MCL Land (Serangoon), the Urban Redevelopment Authority (URA) said.

MCL Land's bid is about twice the minimum trigger bid and nearly 10 per cent above Frasers Centrepoint's bid of $189.29 million or $416 psf ppr.

A bid from Far East Organization's units came in third, offering $181.33 million or $398.5 psf ppr, while a CapitaLand unit offered $177 million or $388.98 psf ppr, putting it in the fourth spot.

Sim Lian Land made the lowest bid of $171 million or $375.8 psf ppr - but still above some analysts' expectations. Property experts had predicted bids of as low as $310 psf ppr to as high as $440 psf ppr.

The plot is slated for development into an estimated 385 units in apartment blocks of up to five storeys in height, or landed homes of up to three storeys.

It has a 99-year lease, is located adjacent to Hougang HDB town and is surrounded mostly by landed homes such as Princeton Vale.

The apartment developments in the neighbourhood include Nouvelle Park, Toho Green and the soon-to- be completed Fontaine Parry.

Said CBRE Research executive director Li Hiaw Ho: 'While the number of bids, at seven, was within expectations, the bid prices are fairly bullish.'

He said the top bid will translate to a break-even cost of about $780 to $800 psf for a low-rise condominium project.

The new project could probably fetch about $900 to $950 psf when it is launched next year, he added.

Other experts estimate the break-even cost at up to $820 psf.

Recent launches of freehold apartment projects in the vicinity, like the 50-unit D'Pavilion, the 81-unit Residences Botanique and 33-unit Wembly Residences, were sold at average prices of $930 psf, $1,000 psf and $870 psf respectively from January to April this year, he noted.

A 99-year leasehold project in the area, Kovan Residences, was sold at $900 psf on average in the same period.

Mr Li said the successful bidder could also choose to develop a cluster project of about 200 units on the site.

Mr Mak said the developer is likely to develop mostly non-landed homes, with possibly 15 to 20 strata-landed houses.

joyceteo@sph.com.sg

BT : Developer sets off sale of commercial site

Business Times - 21 May 2010

Developer sets off sale of commercial site

one-north plot seen attracting bids of $320-350 psf ppr

By EMILYN YAP

A DEVELOPER has taken a fancy to a large commercial site at North Buona Vista Drive and is ready to pay at least $320 million for it.

The 99-year leasehold parcel is located within one-north, a research centre for the biomedical, infocommunication and media industries. It is near Buona Vista MRT station, Biopolis and the Ministry of Education.

The site spans 1.8 hectares and has a maximum allowable gross floor area (GFA) of 1.2 million sq ft. Of this, some 1.18 million sq ft can go towards commercial uses, while the remainder can be turned into retail space.

The trigger price of $320 million works out to around $266 per sq ft per plot ratio (psf ppr). JTC Corporation will put the site up for tender later.

Cushman & Wakefield managing director Donald Han expects to see less than five bids for the site, with the highest offer coming in at $320-350 psf ppr.

The parcel is a 'very big ticket item' located on the outskirts of town, so speculative players are unlikely to take part in the tender, he said.

The developer which triggered the sale of the site could be building a property for its own occupation, or a build-to-suit facility for a tenant, he suggested.

DTZ head of South-east Asia research Chua Chor Hoon added that with the commercial market showing signs of bottoming, 'there is increasing interest to buy or develop office buildings before the market rebounds.'

The government made the site available for sale on the Reserve List in April 2008. JTC noted that it can accommodate a high-rise building, providing office space for companies supporting research institutes at one-north.

Consultants note that the plot's location is fairly attractive. It is not too far from the city and will offer cheaper space for firms which do not need to be in the central business district (CBD), said Ms Chua.

According to Mr Han, monthly office rents in the Buona Vista area are around $3.50-$4.20 psf. In contrast, there are reports of asking rents at new Grade A buildings in the CBD going up to $9 psf.

Buona Vista is also turning into an interesting work-live-play area, he said. Rochester Park provides entertainment options, and there are also service apartments nearby.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Two real estate groups join hands to develop profession

Business Times - 21 May 2010

Two real estate groups join hands to develop profession

By UMA SHANKARI

TWO of the biggest real estate industry groups here - the Singapore Accredited Estate Agencies (SAEA) and Singapore Institute of Surveyors and Valuers (SISV) - will collaborate on professional development initiatives.

SAEA and SISV unveiled an enhanced accreditation programme yesterday under which they will co-organise courses and other programmes. Among other things, these will provide a pathway for SAEA members to attain some form of SISV membership.

SAEA and SISV also hope to develop the leadership competencies of estate agency bosses and improve the ability of agents to compete internationally.

And in line with the government's move to regulate the estate agency industry, SAEA will now use SISV's dispute resolution mechanism, the SISV Mediation Centre.

The centre, set up in 1997, aims to provide dispute resolution services for agencies that do not have an in-house mechanism to handle consumer complaints. This is expected to be useful for smaller agencies that may not have the manpower needed to set up a dedicated internal dispute resolution process.

The centre will also offer mediation services in disputes between agencies and between agents - an area not addressed under the new regime.

'We believe that through this affiliation framework, SISV and SAEA will elevate industry practice standards by a few notches with the ultimate aim of serving the public better,' said Reymond Fernandez, chairman of SISV's real estate committee. 'Maintaining high standards of professionalism will continue to rank top on the list of our priorities for a dynamic real estate landscape in Singapore.'

The collaboration between SISV and SAEA has already resulted in an inaugural global real estate specialist programme, launched last week. This aims to give agents an understanding of real estate fundamentals from a global standpoint to help them take advantage of rising international real estate investment by conglomerates and high net worth individuals. The programme will be conducted once a quarter.

SAEA represents about 400 agencies and close to 9,000 agents in Singapore, while SISV has more than 1,300 individual members.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Private home market stays firm in Q1

Business Times - 21 May 2010

Private home market stays firm in Q1

Volumes and prices rise; bigger appetite for properties costing above $3m

By EMILYN YAP

THE private home market stayed firm in the first quarter of the year, with transaction volumes on the rise and more expensive units changing hands.

According to property consultant DTZ's analysis of caveats lodged, 8,159 private residences were sold in Q1, up 22 per cent from the previous quarter and more than double the number a year ago.

More homes were bought by those with private addresses. HDB upgraders accounted for 34 per cent of all transactions in Q1, taking the same share as they did in Q4 last year.

When the property market was just reviving in Q1 2009, buyers with HDB addresses were involved in as much as 56 per cent of all deals. 'HDB upgraders are gradually taking a backseat' as home prices climb, DTZ said in its report.

And climb they did. The median price of non-landed private homes in subsales went up to $1,190 in Q1, just a shade lower than the previous peak of $1,246 in Q3 2007.

The Q1 price level is 9 per cent higher than the $1,090 in Q4, and 46 per cent more than the $815 a year ago.

While prices of subsales rose, such deals continued to make up just 13 per cent of all non-landed home transactions - a level unchanged from that in Q4.

There was also greater appetite for properties costing at least $3 million. In Q1, 737, or 9 per cent, of all caveats were lodged for these homes. Just 525, or 8.4 per cent, of all deals took place at this price level in Q4. The figures in Q1 last year were even lower, at 66, or 2 per cent, of transactions.

'The proportion of higher-priced homes that changed hands in (Q1) increased as interest in the higher-end tiers grew,' DTZ said.

The prime sector may be drawing more buyers, but some industry watchers note that it has yet to perform as well as anticipated. Response to some recent launches at Sentosa Cove, for instance, has been lukewarm.

Savills residential director Phylicia Ang suggested that the sovereign debt problems in Greece and other European countries, coupled with stock market volatility, may have led some potential buyers to stand on the sidelines. But 'we are still seeing deals happening in the high-end market', she said. 'For the year, I think we will still get stable demand.'

Large amounts of 'foreign money do not seem to have come in yet', said Ngee Ann Polytechnic real estate lecturer Nicholas Mak. High-end home sales are highly dependent on market sentiments, but 'financial markets are not totally in the pink of health'.

According to DTZ, foreigners accounted for 11 per cent of all private home purchases in Q1, down slightly from 12 per cent quarter-on-quarter. Their share of the market hit 14-15 per cent during the boom time in Q4 2007.

Malaysians were still the largest group among foreign buyers, although their presence has shrunk, to 22 per cent of foreign transactions in Q1 from 25 per cent in Q4. Indonesians were involved in 18 per cent of deals in Q1, and the Chinese in 17 per cent.

Most Indonesians in particular, favoured homes in Districts 9-11, the central business district, Sentosa and Keppel Bay. Some 59 per cent of them bought units in these areas, whereas just 18-36 per cent of Malaysians, Chinese and Indians did so. This reflects 'the higher budgets of the Indonesian buyers and their preference for units in prime locations', DTZ said.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : MGPA offloads 162 Cascadia units to Alpha fund

Business Times - 21 May 2010

MGPA offloads 162 Cascadia units to Alpha fund

By KALPANA RASHIWALA

(SINGAPORE) Private equity property group MGPA is understood to have sold its stake in the 162 apartments it bought at The Cascadia in 2007 to a fund managed by Keppel Land's Alpha Investment Partners.

BT understands the latest sale priced the freehold apartments on Bukit Timah Road at about $1,280- 1,300 per square foot on average. This is about 10-12 per cent below the $1,450 psf average price or $280.36 million that MGPA paid for the units more than three years ago.

The latest pricing of $1,280-1,300 psf reflects a deal size of $247.5-251.4 million. However, the transaction does not involve a direct sale; instead, the Alpha fund is believed to have bought the companies that MGPA used to make the acquisition in 2007.

BT understands that under a deferred payment scheme offered by the project's developer Allgreen Properties, MGPA has so far paid 30 per cent of its 2007 acquisition price.

The rest of the payments will begin to kick in when the project receives its TOP (temporary occupation permit) towards year-end.

Allgreen, the Singapore- listed property vehicle of Malaysian tycoon Robert Kuok, did another bulk sale in late 2007, involving about 20 units, to a Spanish fund for about $1,600 psf.

According to latest government data, at end- April, 349 units were still available for sale in the 536-unit condo. Allgreen began a preview of the project this week.

The development, which will have 13 blocks, comprises one, two, three and four-bedroom apartments as well as penthouses.

Unit sizes range from 570 sq ft for a one-bedder to 1,506 sq ft for a four-bedroom apartment with a study room. Penthouses are 3,700-5,200 sq ft. Knight Frank is marketing the 10-storey project, which is beside Tan Chong Motor Centre.

MGPA also owns 19 apartments at 8 Napier, which it is also said to be looking to sell.

In addition, it owns 8 Shenton Way and is developing the Asia Square project at Marina View comprising offices, shops and a hotel.

MGPA, headquartered in Bermuda and with offices in Europe and Asia, manages over US$10 billion in assets in these two regions.

Alpha Investment Partners has been stepping up its investments in Singapore. One of its funds has taken a majority stake in the consortium which bought Katong Mall late last year for $247.6 million. Another of its funds controls at least 90 per cent of a company that owns The Spazio on Cecil Street.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



It's a deal: The latest transaction prices the Cascadia units at $1,280-$1,300 psf on average, below the $1,450 psf that MGPA paid three years ago

CNA : Real estate industry bodies collaborate to plug gaps in industry

Real estate industry bodies collaborate to plug gaps in industry
By Jonathan Peeris | Posted: 20 May 2010 2037 hrs

SINGAPORE: The Singapore Accredited Estate Agencies has identified some gaps in the real estate sector and it hopes to plug them before new rules to regulate property agents kick in later this year.

It's partnering the Singapore Institute of Surveyors and Valuers to help property agencies improve productivity through the use of technology.

Part of that initiative will focus on rolling out more courses for Continuing Professional Development.

This is in line with the government's plans to raise professionalism and accountability in the real estate sector.

The two industry bodies also hope to train property agents in mediation methods.

Tay Kah Poh, chairman, Singapore Accredited Estate Agencies Limited, said: "What we felt was lacking was the mechanism to help agents resolve dispute between themselves or agencies resolving disputes between themselves before it goes to an open court or litigation.

“It's not that we're venturing into this new. We've always had this idea. It's just that we realise now that the current regime because of its focus on consumers is somewhat lacking."

The collaboration will also make it easier for SAEA members to join the ranks of the SISV.

Currently, there are only 750 members of SISV who are in the real estate industry, a far cry from the 9,000 accredited agents of the SAEA. - CNA/vm

BT : China property prices stop rising

Business Times - 20 May 2010

China property prices stop rising

(BEIJING) Chinese property prices have stopped rising and transaction volumes have dwindled since the middle of last month, the country's top economic planner said yesterday.

Prices will remain high, neither rising nor falling much, in coming months with the market entering a 'wait-and-see period', the National Development and Reform Commission (NRDC) said in a statement on its website. China has introduced a slew of measures, such as higher downpayment requirements and higher taxes, to rein in the red-hot property sector and control speculative buying.

The average price of newly built residential houses in 36 major cities rose 3.7 per cent in April from a month earlier, the NDRC said. April's figure was well above rises of 1.1 per cent in March and 2.6 per cent in February. But the NDRC said prices in the second half of the month had stopped rising, after an April 15 announcement by the government that it was raising downpayments and mortgage rates on some home purchases.

'The property transaction volume has shrunk and prices also stopped rising from the fast growth momentum in the first half of April, after the government launched the property tightening measures,' it said. The price of land used for residential houses in 70 major cities was down 3.4 per cent from a month earlier, according to China Index Academy, a unit of Soufun.com, a top real estate portal in China. -- Reuters

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : New office projects see space snapped up

Business Times - 20 May 2010

New office projects see space snapped up

Buzz focused on to be completed Ocean Financial Centre, 50 Collyer Quay

By KALPANA RASHIWALA

(SINGAPORE) The upswing in office leasing deals continues, helping to absorb more of the space in new office projects being built.

Much of the latest leasing buzz has focused on Ocean Financial Centre (OFC) and 50 Collyer Quay, which are completing next year, as well as 71 Robinson Road, which was completed last year.

Law firm Drew & Napier is believed to have inked a lease for 93,000 sq ft at OFC. ANZ is said to be finalising a lease for about 200,000 sq ft in the same building.

A stone's throw away at 50 Collyer Quay (where Overseas Union House used to stand), German fund manager SEB has been secured as the maiden tenant and market talk is that Bank of America could lease more than 100,000 sq ft in the office block.

While some of the new leasing deals in the market involve tenants playing a game of musical chairs as they move from older buildings to newer office towers, many are taking more space in their new premises than what they will be giving up to cater for a future rise in headcount amid a brightening economic outlook in Singapore.

'The musical chairs impact will be cushioned by an improvement in net demand as businesses are in expansion mode again,' says Savills Singapore's commercial leasing director Agnes Tay.

Asking rents at Grade A office buildings, particularly the newer properties, have also started to inch up, according to some agents.

At OFC, which is expected to be completed in two phases in the first half of next year, Drew and Napier will occupy five floors in the 43-storey office tower's low-rise zone. It will be moving out of Ocean Towers next door. Keppel Land is the landlord for both properties.

ANZ is expected to occupy 13 levels in OFC's mid-rise zone. This is nearly a quarter of the building's 850,000 sq ft net lettable area (NLA). BT understands that the space that ANZ will be leasing will be at least double what it currently occupies at OUB Centre, which it will be vacating.

Other tenancies clinched earlier at OFC include DMG & Partners Securities, Verizon Communications and Ifast - all of which will move out of Ocean Towers. Once the ANZ deal is finalised, about two-thirds of OFC would be pre-let.

KepLand will integrate its OFC development with Ocean Towers' podium block, which will be used as car parking, but tear down the office portion of Ocean Towers as this space has been calculated into the allowable gross floor area for OFC.

At 50 Collyer Quay, SEB has signed a lease for over 30,000 sq ft. Bank of America is also expected to head its way. It is currently at Republic Plaza. Over at 71 Robinson Road, IT software firm Sungard is committed to lease 30,000 sq ft. Says Jones Lang LaSalle's head of markets Chris Archibold: 'We expect to have 71 Robinson Road 50 per cent committed within Q2 this year.'

JLL is the marketing agent for the building, which has NLA of 238,000 sq ft.

Cushman & Wakefield managing director Donald Han says that strengthening office demand has led to owners of some buildings raising asking rents. The asking average monthly rents in new Grade A buildings are currently hovering at $8-$9 per square foot, up from $7-$7.50 psf at the start of this year, he added.

Colliers International executive director Calvin Yeo said that some of the incentives offered by landlords last year, such as paying for tenants' fit-out costs and giving them rental holidays, are being removed from the negotiating table.

Agreeing, CB Richard Ellis executive director of office services Moray Armstrong observes: 'There's a change in negotiation dynamics. From an occupier perspective, the window of opportunity was at its optimum level in H2 2009 to early 2010, but there's still plenty of good quality space available.'

Slightly over half of the five-million-odd sq ft of Grade A new office space completing in 2010-2012 has been pre-let, giving rise to concerns of a potential shortage of new completion in 2013-2014, assuming that the current upswing in demand continues.

Grade A office rents are expected to pick up 5 to 10 per cent this year, with more significant appreciation predicted in the next two years, say some agents.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



Completing next year: Drew & Napier has leased about 93,000 sq ft of Ocean Financial Centre (left) while ANZ is expected to ink a deal for about 200,000 sq ft

BT : HK tycoon pays US$233m for elite property

Business Times - 19 May 2010

HK tycoon pays US$233m for elite property

HONG KONG - One of Hong Kong's richest tycoons has paid about US$233 million for a property in the city's upmarket Peak area, confounding hopes of a cool-down in the real estate market.

Henderson Land Development chairman Lee Shau-kee paid HK$68,229 (US$8,750) per square foot for the site in the Peak's Barker Road at a public auction, said real-estate services firm Jones Lang LaSalle, which organised the sale on Tuesday.

The 82-year-old's son, Martin, made light of the whopping price tag for the site in one of Hong Kong's most exclusive neighbourhoods, high above the glittering financial district.

'The price is reasonable but it is not something bought for money,' he was quoted as saying by the South China Morning Post.

'Even if you are willing to spend a fortune, you may not be able to get something you fancy. We will build three or four two-to-three storey houses for our family to live in.'

In February, Forbes business magazine listed Lee Shau-kee as Hong Kong's second-richest person, with a net worth of US$19 billion, behind Cheung Kong Holdings chief Li Ka-shing.

Henderson Land set an Asian record last October when it sold a duplex in the former British colony for HK$71,280 per square foot.

Such deals have highlighted the massive gap in living conditions between the rich and poor in Hong Kong, where some residents live in wire mesh abodes known as 'cage homes' that measure around 15 square feet (1.4 square metres). The issue has prompted government moves to introduce the territory's first ever minimum wage.

The latest eye-popping sale comes a week after Hong Kong said efforts to cool the territory's property market showed signs of working, following a lacklustre response to a sale of land near the airport.

Government officials have taken a more high-profile stance on the issue of soaring residential property prices after they jumped nearly 30 per cent in 2009.

Apart from increasing land supply, Hong Kong has also hiked stamp duty for luxury flats to curb speculation and pledged to curb excessive mortgage lending. -- AFP

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Lacklustre sale signals cooling HK property market

Business Times - 12 May 2010

Lacklustre sale signals cooling HK property market

HONG KONG - Hong Kong said on Wednesday that its efforts to cool the property market in the crowded former British colony showed signs of working after its latest land sale met a lacklustre response.

A site for non-industrial use near the city's international airport went under the hammer for HK$3.42 billion (US$439.5 million) on Tuesday, far below a US$4.63 billion average forecast of analysts polled by Dow Jones Newswires.

The 282,017-square foot (26,200 square-metre) plot was sold to unlisted developer Nan Fung Group, one of only two bidders, after the auctioneer threatened to cancel the sale if the government's reserve price was not met.

In recent months, government officials have taken a high-profile stance in reining in soaring residential property prices after they jumped nearly 30 per cent in 2009.

Financial Secretary John Tsang said the lukewarm result was a sign the market was starting to stabilise, after luxury flat prices recently climbed to the boom levels of 1997 driven by deep-pocketed mainland buyers.

'The result of the auction has reflected the market situation. We have always hoped the property market will develop in a stable manner,' he told reporters.

He pledged to continue to increase land supply in the coming months, repeating a promise he made in his February budget speech aimed at preventing a bubble.

'We will have land sales in June and July. The sales will keep coming.'

Analysts said developers stayed on the sidelines at Tuesday's auction due to uncertainty about the full impact of the government's cooling measures.

'The impact can be especially strong on the small and medium residential flats, in light of the calls for the government to resume the construction of' subsidised housing, Charles Chan, managing director and valuation expert at Savills in Hong Kong, told AFP.

Macquarie said that the poor response would weaken sentiment in the residential market in the near term, but predicted more active bidding at future sales because of a general land shortage and the greater attractiveness of the sites in question.

'Developers will likely remain active to replenish land but they might be more picky in light of more choices available,' it said in a report.

Apart from increasing land supply, the government has also hiked stamp duty for luxury flats to try to curb speculation and pledged to avoid excessive mortgage lending. -- AFP

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.