Pushing price boundaries in private residential market
05:55 AM Aug 20, 2010
by Tan Kok Keong
In business strategy classes, we often learn that the most successful businesses are the ones that are early leaders in identifying a need or are able to create a market by convincing consumers to pay for something which they never knew they wanted.
In the last property boom, the race was to build the biggest and priciest apartment.
To achieve this, projects were co-branded by contracting renowned architects to produce distinctive products and stuffing the apartment with the best appliances.
CapitaLand and Sun Hung Kai engaged the services of renowned Benoy when developing The Orchard Residences. "Branded" apartments were introduced.
City Developments brought the St Regis brand to Singapore. Specialist luxury home developer SC Global took this to a new level by introducing 6,000-square-feet apartments at The Marq, which comes with your own 15m lap pool. These distinctive projects helped to inject life and interest into the luxury housing market and pushed the price boundaries in their respective segments.
Coming out of the economic recession last year, a turning point of sorts for the private residential market was the successful launch of The Alexis at Alexandra Road, jointly developed by Fission Group and Yi Kai Development.
Before its launch and rumoured sell out, my initial thoughts were that the site attributes were not fantastic. I could not imagine staying in a 400-sq-ft apartment and thought that occupants might get dizzy from facing the giant rotating Mercedes billboard across the road.
But as it turned out, the developer had astutely identified the need for affordable houses at the expense of size. The project was sold out at launch and at a price more than 20 per cent above that of "proper" apartments in the vicinity. The developer created a market for small apartments, which have since become a "must-have" in projects in order to maximise returns.
Then, early this year, Cheung Kong created another market via introducing "luxury housing in the suburbs".
Before its launch, sceptics lamented about the noise and congestion caused by the long container trucks plying the West Coast Highway, the bad air in West Coast and even the sea view.
But the aptly named The Vision, a 99-year leasehold project, managed to shatter the price ceiling, selling at more than 20 to 30 per cent above existing condominium prices. More significantly, its successful launch helped lift prices of existing homes in the area, which had lagged the market.
Adding $100 to $200 per square feet to a price may not be so much of a stretch during periods of economic boom and positive sentiment.
Still, taking a unit of 1,000 sq ft, each $100 psf rise in price implies that the buyer needs to fork out $20,000 more in downpayment and an additional $316 per month in mortgage payments (at 2.5 per cent interest per annum and 30-year loan term).
With overall private property prices at an all-time peak now and a wider variety of choices, it becomes even more important to differentiate the product offering.
Which projects can inject that new element that could compel home buyers to part with their cheques and pay premium "future" prices for their dream homes? Could we see 99-year leasehold projects command $2,000 psf in the Holland area or $1,500 psf in Thomson or $1,300 psf in Jurong Lakeside? Could new launches at Yishun, Woodlands or Tampines burst the $1,000 psf mark?
Existing home owners should keep watch as they could benefit from gains in value, even on paper, if and when developers manage to push pricing boundaries.
For those thinking of buying but are not too inclined to pay "future prices", they could consider taking up positions in localities where they feel developers have the gumption to push pricing boundaries.
The writer is Head of the Research and Consultancy Department at Orange Tee.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Friday, August 20, 2010
TODAY ONLINE : New kid on the block is good news
New kid on the block is good news
Launch prices of new condos often raise resale values of nearby developments
05:55 AM Aug 20, 2010
by Png Poh Soon property@mediacorp.com.sg
When the show flat of a new residential project is ready, the new kid on the block often creates a buzz among the residents living nearby. People are generally curious about what the project looks like, its launch and completion date, and most importantly, the launch price.
Homes in these new projects are often priced higher than the average transacted value of resale units in the neighbourhood because of several factors, such as newer designs and longer tenures.
Many homeowners have asked how these new launches affect the value of their homes. Does the pricing of these new properties affect the prices of nearby resale units and, if so, to what extent?
Knight Frank has carried out a study to examine the pricing effects of new projects on resale properties in their vicinity. Our study is adjusted against the benchmark Urban Redevelopment Authority (URA) price index in the respective regions to take into account the effects of broad general market movements.
The price effect is based on the change in transacted prices per square foot over time of selected new and resale properties over the period from 2004 to last year in the Core Central Region (CCR), the Rest of Central Region (RCR) and the Outside Central Region (OCR), according to the URA's geographical classification.
The average transacted prices of similar-sized units in developments adjacent to the new project were studied and compared over a three-month period before and after the new launch. Sizes were controlled to reduce price distortion where smaller units command higher prices on a psf basis and vice-versa.
Anecdotal comparisons showed that new projects were generally priced 20 to 40 per cent higher than the average transacted prices of nearby developments of similar sizes. This was especially so in the CCR and the RCR region and during property market upturns.
The new developments were found to have a positive effect on the transacted values of resale units after adjusting for broad market movements.
Resale prices moved up in tandem following the launch of higher-priced developments. The average resale unit price appreciation was 12.98 per cent in the CCR, 19.14 per cent in the RCR and 4.23 per cent in the OCR over and above the benchmark price index.
Prima facie, new launches do seem to have a positive effect on resale prices.
For example, when Marina Bay Residences was launched in December 2006 at a premium of 38 per cent to the average price of similar-sized units in the neighbouring development, transacted prices of the already-launched The Sail went up by some 21 per cent after adjusting for broad market movement. Likewise, the transacted prices of The Metropolitan went up by 12.2 per cent after The Ascentia Sky was launched at a premium of 36.3 per cent in July last year.
Arguably, the positive effect arises because resale units take reference from the transacted prices in the vicinity, including the higher priced new projects.
Higher priced launches raise the selling price expectations of the owners of resale units, particularly if they are located near the new project.
From the buyers' perspective, resale units may also appear to offer value for money if they cost lower than their new neighbours. Inadvertently, this results in price appreciation for these resale units.
The real estate adage of "location, location, location" also applies in this instance, where the price effects of new launches have greater impact in the CCR and the RCR rather than the OCR.
Apparently, older properties in better locations benefited more where buyers have deeper pockets vis-a-vis buyers in the suburban regions.
But before you decide to jump on the property bandwagon, we would like to add a caveat. We noticed in our study instances where new launches did not result in a positive effect on the prices of nearby resale units.
Broadly, these instances occur during periods where home buyers' sentiment was weak, such as when the broad market was awash with negative news or in the doldrums. There were also periods when buyers' sentiment turned cautious after the announcement of public policies aimed at cooling the property market.
For example, in September last year, the Government announced the withdrawal of the interest absorption scheme and interest-only loan as an attempt to pre-empt a speculative bubble from forming.
The property market turned quiet for a while as buyers adopted a cautious stance. Resale units near new launches during this period did not exhibit much price movement compared to the market before the announcement.
To sum up, while new projects are still popular with potential home buyers, resale properties may be worth a second look, whether it is for owner-occupation or for investment.
Gems can be uncovered, especially for properties near sites with potential for new developments.
Perhaps it may help to look at yet-to-be launched sites that had been tendered between last year and this year.
If your sums, market conditions and timing are right, a pot of gold may be waiting at the end of the rainbow.
The writer is senior manager at Knight Frank's consultancy and research department.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Launch prices of new condos often raise resale values of nearby developments
05:55 AM Aug 20, 2010
by Png Poh Soon property@mediacorp.com.sg
When the show flat of a new residential project is ready, the new kid on the block often creates a buzz among the residents living nearby. People are generally curious about what the project looks like, its launch and completion date, and most importantly, the launch price.
Homes in these new projects are often priced higher than the average transacted value of resale units in the neighbourhood because of several factors, such as newer designs and longer tenures.
Many homeowners have asked how these new launches affect the value of their homes. Does the pricing of these new properties affect the prices of nearby resale units and, if so, to what extent?
Knight Frank has carried out a study to examine the pricing effects of new projects on resale properties in their vicinity. Our study is adjusted against the benchmark Urban Redevelopment Authority (URA) price index in the respective regions to take into account the effects of broad general market movements.
The price effect is based on the change in transacted prices per square foot over time of selected new and resale properties over the period from 2004 to last year in the Core Central Region (CCR), the Rest of Central Region (RCR) and the Outside Central Region (OCR), according to the URA's geographical classification.
The average transacted prices of similar-sized units in developments adjacent to the new project were studied and compared over a three-month period before and after the new launch. Sizes were controlled to reduce price distortion where smaller units command higher prices on a psf basis and vice-versa.
Anecdotal comparisons showed that new projects were generally priced 20 to 40 per cent higher than the average transacted prices of nearby developments of similar sizes. This was especially so in the CCR and the RCR region and during property market upturns.
The new developments were found to have a positive effect on the transacted values of resale units after adjusting for broad market movements.
Resale prices moved up in tandem following the launch of higher-priced developments. The average resale unit price appreciation was 12.98 per cent in the CCR, 19.14 per cent in the RCR and 4.23 per cent in the OCR over and above the benchmark price index.
Prima facie, new launches do seem to have a positive effect on resale prices.
For example, when Marina Bay Residences was launched in December 2006 at a premium of 38 per cent to the average price of similar-sized units in the neighbouring development, transacted prices of the already-launched The Sail went up by some 21 per cent after adjusting for broad market movement. Likewise, the transacted prices of The Metropolitan went up by 12.2 per cent after The Ascentia Sky was launched at a premium of 36.3 per cent in July last year.
Arguably, the positive effect arises because resale units take reference from the transacted prices in the vicinity, including the higher priced new projects.
Higher priced launches raise the selling price expectations of the owners of resale units, particularly if they are located near the new project.
From the buyers' perspective, resale units may also appear to offer value for money if they cost lower than their new neighbours. Inadvertently, this results in price appreciation for these resale units.
The real estate adage of "location, location, location" also applies in this instance, where the price effects of new launches have greater impact in the CCR and the RCR rather than the OCR.
Apparently, older properties in better locations benefited more where buyers have deeper pockets vis-a-vis buyers in the suburban regions.
But before you decide to jump on the property bandwagon, we would like to add a caveat. We noticed in our study instances where new launches did not result in a positive effect on the prices of nearby resale units.
Broadly, these instances occur during periods where home buyers' sentiment was weak, such as when the broad market was awash with negative news or in the doldrums. There were also periods when buyers' sentiment turned cautious after the announcement of public policies aimed at cooling the property market.
For example, in September last year, the Government announced the withdrawal of the interest absorption scheme and interest-only loan as an attempt to pre-empt a speculative bubble from forming.
The property market turned quiet for a while as buyers adopted a cautious stance. Resale units near new launches during this period did not exhibit much price movement compared to the market before the announcement.
To sum up, while new projects are still popular with potential home buyers, resale properties may be worth a second look, whether it is for owner-occupation or for investment.
Gems can be uncovered, especially for properties near sites with potential for new developments.
Perhaps it may help to look at yet-to-be launched sites that had been tendered between last year and this year.
If your sums, market conditions and timing are right, a pot of gold may be waiting at the end of the rainbow.
The writer is senior manager at Knight Frank's consultancy and research department.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : Twin Peaks of luxury
Twin Peaks of luxury
05:55 AM Aug 20, 2010
SINGAPORE - Overseas Union Enterprise's latest residential offering, Twin Peaks, is poised to test the high-end luxury condominium market amid expectations of slower economic growth in the second half of the year.
This project is located in the District 9 Leonie Hill and River Valley area, and is expected to be launched next month.
Nearby, in Orchard Boulevard, two projects - The Orchard Residences and Boulevard Vue - have both recorded prices of up to $4,000 psf based on caveats lodged as at the end of last month.
One unique selling point of the Twin Peaks is that it has fully-furnished units retrofitted with iconic designer furnishings with the likes of Tom Dixon.
Made up of two 36-storey towers, Twin Peaks has 462 units ranging from one-bedroom to three-bedroom apartments.
Buyers will have the flexibility of combining a one-bedroom unit with two or three-bedroom units to make the space bigger.
This may appeal to extended multi-generation family living, as it retains privacy with separate entrances yet provides convenience for cross movement between the two apartments.
Other than a full-service concierge desk, residents at Twin Peaks will also be able to enjoy hotel services provided by the nearby Mandarin Orchard Singapore, such as laundry and housekeeping services.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Aug 20, 2010
SINGAPORE - Overseas Union Enterprise's latest residential offering, Twin Peaks, is poised to test the high-end luxury condominium market amid expectations of slower economic growth in the second half of the year.
This project is located in the District 9 Leonie Hill and River Valley area, and is expected to be launched next month.
Nearby, in Orchard Boulevard, two projects - The Orchard Residences and Boulevard Vue - have both recorded prices of up to $4,000 psf based on caveats lodged as at the end of last month.
One unique selling point of the Twin Peaks is that it has fully-furnished units retrofitted with iconic designer furnishings with the likes of Tom Dixon.
Made up of two 36-storey towers, Twin Peaks has 462 units ranging from one-bedroom to three-bedroom apartments.
Buyers will have the flexibility of combining a one-bedroom unit with two or three-bedroom units to make the space bigger.
This may appeal to extended multi-generation family living, as it retains privacy with separate entrances yet provides convenience for cross movement between the two apartments.
Other than a full-service concierge desk, residents at Twin Peaks will also be able to enjoy hotel services provided by the nearby Mandarin Orchard Singapore, such as laundry and housekeeping services.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
BT : Call for land tenders that go beyond price
Business Times - 20 Aug 2010
Call for land tenders that go beyond price
Extending dual-envelope tenders will encourage innovative design and architecture: focus group
By KALPANA RASHIWALA
(SINGAPORE) Singapore may have a greener tinge and a vastly more interesting skyline, if the suggestions contained in the final reports by two focus groups for Concept Plan 2011 see the light of day.
There is, for example, a call to review the land tender system to create an 'inspiring global and Asian city'.
'By setting land price as the main or only criteria in evaluating tender submissions, we are not putting sufficient value on good architecture, which can contribute significantly to building a distinctive, innovative and interesting city skyline,' said the report of the focus group on Quality of Life.
It proposes extending the government's dual-envelope tender system, currently used for selected major development sites like Capitol Theatre, to more state land tender projects to 'signal the government's support for more innovative design concepts and architecture'. Under this system, concept proposals are first evaluated against a specified set of criteria and only those meeting these conditions will be considered. The site will then be awarded to the party with the highest bid price among those with acceptable concept proposals.
Some market watchers reckon that most state sites will still be awarded on price, except for plots with unique value or other important considerations. Having a design-based competition adds costs to tenderers especially when there will be only one winning bid. 'The better solution for such unique sites is the government should establish what it considers the land price that it is prepared to sell the land for, and all bidders will then focus on design, concept or whatever other criteria are set - rather than have to second guess the land price,' says Knight Frank chairman Tan Tiong Cheng.
The focus group also suggests that to deepen the sense of community, the government should consider the social merits of proposals when evaluating tender submissions for selected state land and properties. 'These evaluation criteria could include whether the proposal takes into account community, elderly or youth-related amenities and needs or whether they are from VWOs and NGOs. Such a move would send a positive signal to the private sector on the priorities of our society and help inculcate a greater consciousness of the issues,' the report said.
Other suggestions made by the focus groups include tax rebates for owners of buildings achieving Green Mark Platinum or GoldPlus standards and setting up a 'neutral zone' around places of worship in heritage areas and historic districts where pubs and lounges are not allowed. There is also a suggestion for more affordable rental apartments for young adults.
The focus group also says towns should be designed to evolve with residents' changing needs and respond to lifecycles of HDB estates. 'Instead of redeveloping estates entirely, we should continue to retain some empty plots...for future development so that estates can evolve and be rejuvenated over time,' the report said. For now, these plots could be kept as open spaces for people to simply 'stretch out', and the community could be given more say on their best use.
DTZ executive director Ong Choon Fah says this approach will ensure such land is not left idle. 'Land can be used not just for commercial purpose, but there's also value when you use it for social purpose; it adds value to the quality of life if people have more places to go to to relax, to bond. Perhaps you'll have less crime and stress and so ultimately there'll be economic benefits - although you may not be able to measure the commercial benefits of such an approach,' she said.
Another proposal from the focus groups is a need to facilitate ageing in familiar surroundings. HDB flats could be built in a modular fashion so walls can be easily knocked down for two or three units to be joined to cater to changes to household sizes at different stages of a family lifecycle. For elders who prefer independent living options, retirement housing communities near existing residential estates are recommended.
The focus group on Sustainability and Identity recommends that the Green Mark Scheme be expanded to cover the entire lifecycle of a building - from design and planning, to construction, operation and maintenance. Developers and owners are required to document the materials and resources used throughout a building's lifespan.
At construction stage, the extraction, processing and transport of raw materials should be assessed carefully so that these are carried out in an environmentally sustainable manner that inflicts minimal damage to the physical and natural environments. 'We should use locally-obtained, recyled and renewable resources where possible to reduce the need for transportation of materials, thereby also reducing Singapore's carbon footprint,' says the report.
A City Developments spokeswoman said: 'Perhaps the government can consider introducing incentives to encourage the industry to reuse and recycle natural resources, which can also help minimise construction and demolition waste going into our landfills.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Call for land tenders that go beyond price
Extending dual-envelope tenders will encourage innovative design and architecture: focus group
By KALPANA RASHIWALA
(SINGAPORE) Singapore may have a greener tinge and a vastly more interesting skyline, if the suggestions contained in the final reports by two focus groups for Concept Plan 2011 see the light of day.
There is, for example, a call to review the land tender system to create an 'inspiring global and Asian city'.
'By setting land price as the main or only criteria in evaluating tender submissions, we are not putting sufficient value on good architecture, which can contribute significantly to building a distinctive, innovative and interesting city skyline,' said the report of the focus group on Quality of Life.
It proposes extending the government's dual-envelope tender system, currently used for selected major development sites like Capitol Theatre, to more state land tender projects to 'signal the government's support for more innovative design concepts and architecture'. Under this system, concept proposals are first evaluated against a specified set of criteria and only those meeting these conditions will be considered. The site will then be awarded to the party with the highest bid price among those with acceptable concept proposals.
Some market watchers reckon that most state sites will still be awarded on price, except for plots with unique value or other important considerations. Having a design-based competition adds costs to tenderers especially when there will be only one winning bid. 'The better solution for such unique sites is the government should establish what it considers the land price that it is prepared to sell the land for, and all bidders will then focus on design, concept or whatever other criteria are set - rather than have to second guess the land price,' says Knight Frank chairman Tan Tiong Cheng.
The focus group also suggests that to deepen the sense of community, the government should consider the social merits of proposals when evaluating tender submissions for selected state land and properties. 'These evaluation criteria could include whether the proposal takes into account community, elderly or youth-related amenities and needs or whether they are from VWOs and NGOs. Such a move would send a positive signal to the private sector on the priorities of our society and help inculcate a greater consciousness of the issues,' the report said.
Other suggestions made by the focus groups include tax rebates for owners of buildings achieving Green Mark Platinum or GoldPlus standards and setting up a 'neutral zone' around places of worship in heritage areas and historic districts where pubs and lounges are not allowed. There is also a suggestion for more affordable rental apartments for young adults.
The focus group also says towns should be designed to evolve with residents' changing needs and respond to lifecycles of HDB estates. 'Instead of redeveloping estates entirely, we should continue to retain some empty plots...for future development so that estates can evolve and be rejuvenated over time,' the report said. For now, these plots could be kept as open spaces for people to simply 'stretch out', and the community could be given more say on their best use.
DTZ executive director Ong Choon Fah says this approach will ensure such land is not left idle. 'Land can be used not just for commercial purpose, but there's also value when you use it for social purpose; it adds value to the quality of life if people have more places to go to to relax, to bond. Perhaps you'll have less crime and stress and so ultimately there'll be economic benefits - although you may not be able to measure the commercial benefits of such an approach,' she said.
Another proposal from the focus groups is a need to facilitate ageing in familiar surroundings. HDB flats could be built in a modular fashion so walls can be easily knocked down for two or three units to be joined to cater to changes to household sizes at different stages of a family lifecycle. For elders who prefer independent living options, retirement housing communities near existing residential estates are recommended.
The focus group on Sustainability and Identity recommends that the Green Mark Scheme be expanded to cover the entire lifecycle of a building - from design and planning, to construction, operation and maintenance. Developers and owners are required to document the materials and resources used throughout a building's lifespan.
At construction stage, the extraction, processing and transport of raw materials should be assessed carefully so that these are carried out in an environmentally sustainable manner that inflicts minimal damage to the physical and natural environments. 'We should use locally-obtained, recyled and renewable resources where possible to reduce the need for transportation of materials, thereby also reducing Singapore's carbon footprint,' says the report.
A City Developments spokeswoman said: 'Perhaps the government can consider introducing incentives to encourage the industry to reuse and recycle natural resources, which can also help minimise construction and demolition waste going into our landfills.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
ST : Asia-Pacific office markets 'offer value'
Aug 20, 2010
Asia-Pacific office markets 'offer value'
Index sees commercial real estate in region promising better returns than that in Europe
By Esther Teo
A NEWLY launched global property index covering commercial real estate sees Asia-Pacific markets as more attractive than those in Europe but less so than that in the United States.
The Fair Value Index, as it is called, is compiled by property consultancy DTZ and offers investors an insight into the relative attractiveness of global markets over a five-year investment period.
The Asia-Pacific region scored 67 on the index in the second quarter, outstripping the global score of 62 and beating Europe's 49, but lagging behind the US' score of 89. A score above 50 indicates a hot market as expected returns exceed risk-adjusted required returns. Anything below 50 means a market is cold.
Mr David Green-Morgan, DTZ's head of Asia-Pacific research, said that Hong Kong, Singapore and Tokyo offer some of the most attractive opportunities across office, retail and industrial properties.
'Hong Kong and Singapore, two traditionally volatile markets, are set to record strong rental growth, particularly in the office sector, over the next five years as they rebound from sharp falls in rents in 2009,' he said. 'This will result in strong capital growth, boosting returns for investors and placing both markets in the hot category across the board.'
While the office sector in the Asia-Pacific region is leading the way with a score of 70, all three sectors - office, retail and industrial - offer opportunities to investors with scores above 50. The Asia-Pacific's retail sector is performing in line with the regional average at 67, while industrial stands at 61, DTZ said.
It added that the second quarter is in complete contrast to the same period a year ago when the Asia-Pacific all-property score was half of what it is now.
The economic recovery since then has improved liquidity and demand.
'Despite a pause in investment activity in China and Japan recently, the attractive pricing in many markets is seeing an increased number of buyers who are encouraged by occupational resilience and the resumption of rental and capital value growth,' DTZ said.
Mainland China continues to offer good value, led by office markets in Shanghai, Beijing and Chengdu. But office space in Guangzhou and Shenzhen and retail space in Shanghai are overpriced, according to the index.
Shanghai saw a number of retail construction projects in the lead-up to this year's World Expo. While they will sustain the sector this year, the outlook for investor returns over the medium term is expected to be subdued, DTZ said.
Meanwhile, a CBRE report yesterday said that more than half of the office rental markets in the Asia-Pacific region have either stabilised or started growing during the second quarter. Dr Raymond Torto, CBRE's global chief economist, said the region was the driving force behind the sector's global recovery, with over half of the markets either at the bottom of the rental cycle or in growth mode.
'Hong Kong, Shanghai and Beijing led the region's markets due to a push for office space from the financial sector in central business locations... Singapore, Bangalore and Mumbai followed closely as employment levels improved and prime rents and incentives remained stable.'
esthert@sph.com.sg
Asia-Pacific office markets 'offer value'
Index sees commercial real estate in region promising better returns than that in Europe
By Esther Teo
A NEWLY launched global property index covering commercial real estate sees Asia-Pacific markets as more attractive than those in Europe but less so than that in the United States.
The Fair Value Index, as it is called, is compiled by property consultancy DTZ and offers investors an insight into the relative attractiveness of global markets over a five-year investment period.
The Asia-Pacific region scored 67 on the index in the second quarter, outstripping the global score of 62 and beating Europe's 49, but lagging behind the US' score of 89. A score above 50 indicates a hot market as expected returns exceed risk-adjusted required returns. Anything below 50 means a market is cold.
Mr David Green-Morgan, DTZ's head of Asia-Pacific research, said that Hong Kong, Singapore and Tokyo offer some of the most attractive opportunities across office, retail and industrial properties.
'Hong Kong and Singapore, two traditionally volatile markets, are set to record strong rental growth, particularly in the office sector, over the next five years as they rebound from sharp falls in rents in 2009,' he said. 'This will result in strong capital growth, boosting returns for investors and placing both markets in the hot category across the board.'
While the office sector in the Asia-Pacific region is leading the way with a score of 70, all three sectors - office, retail and industrial - offer opportunities to investors with scores above 50. The Asia-Pacific's retail sector is performing in line with the regional average at 67, while industrial stands at 61, DTZ said.
It added that the second quarter is in complete contrast to the same period a year ago when the Asia-Pacific all-property score was half of what it is now.
The economic recovery since then has improved liquidity and demand.
'Despite a pause in investment activity in China and Japan recently, the attractive pricing in many markets is seeing an increased number of buyers who are encouraged by occupational resilience and the resumption of rental and capital value growth,' DTZ said.
Mainland China continues to offer good value, led by office markets in Shanghai, Beijing and Chengdu. But office space in Guangzhou and Shenzhen and retail space in Shanghai are overpriced, according to the index.
Shanghai saw a number of retail construction projects in the lead-up to this year's World Expo. While they will sustain the sector this year, the outlook for investor returns over the medium term is expected to be subdued, DTZ said.
Meanwhile, a CBRE report yesterday said that more than half of the office rental markets in the Asia-Pacific region have either stabilised or started growing during the second quarter. Dr Raymond Torto, CBRE's global chief economist, said the region was the driving force behind the sector's global recovery, with over half of the markets either at the bottom of the rental cycle or in growth mode.
'Hong Kong, Shanghai and Beijing led the region's markets due to a push for office space from the financial sector in central business locations... Singapore, Bangalore and Mumbai followed closely as employment levels improved and prime rents and incentives remained stable.'
esthert@sph.com.sg
BT : Is there a property bubble in China?
Business Times - 20 Aug 2010
Is there a property bubble in China?
There may be a visible slowdown in housing starts and construction towards the end of this year, KELVIN TAY believes
THRUST centre stage as a result of the decline in the G-7 economies in a post-2008 credit crisis world, the Chinese economy has gained a new level of significance and scrutiny that often generates unwanted, alarmist racket.
Is there a property bubble in China? The answer bears more significance now than ever before. China's construction and real estate sectors are likely to contribute to an estimated 11 per cent of its GDP in 2010. The construction industry employs 14.3 per cent of all workers in urban areas and consumes 40 per cent of all steel and lumber produced in China.
The private residential sector currently accounts for almost 40 per cent of the buildings completed by the construction industry. Never before has the health of the Chinese construction and real estate sectors been more closely followed.
Analysing a large, diverse economy like China's is complex, to say the least. Her sheer size and diversity in terms of economic development makes nationwide average figures rather meaningless. For example, from April 2009 to April 2010, residential property prices in China rose by 15 per cent and when juxtaposed with the price declines in 2008, would hardly set alarm bells ringing.
However, a closer examination of tier 1 cities revealed that in the 12-month period to April 2010, property prices rose by 64 per cent in Beijing, 39 per cent in Shanghai and actually doubled in Shenzhen.
The tier 1 cities accounted for almost 22 per cent of urban residential property sales, rather disproportionate to their share of 8 per cent of total floor space. Prices in Beijing reached a stratospheric 28,000 yuan per square metre in the same period.
Although long documented trends of urbanisation, rural to urban migration and a shortfall in the supply of public housing have resulted in property prices in China rising steadily over the last five years, what actually fuelled the extraordinary climb in prices over the last 12 months has largely been attributed to the increasing participation of state-owned enterprises (SOEs) in the property market.
Higher price
A study conducted by researchers from the National University of Singapore and Tsinghai University found that the transaction price of land tends to be 27.4 per cent higher when it is successfully bid by an SOE.
In certain cities like Beijing, the local and central SOEs' share of developers' land purchases have reached an estimated 71 per cent in early 2010, up from about 37 per cent in 2003.
Leverage, another indication of whether an asset bubble is building, has also seen a steady increase. If we assume that only urban households have access to mortgage lending, then mortgage debt as a proportion of urban household income is near 50 per cent, which makes it a tad uncomfortable.
We also need to take into consideration that in the case of China, where a large share of household wealth exists in the form of bank deposits, it is vulnerable to various forms of asset bubbles as and when households decide to shift a certain proportion to other asset classes, including property.
Although property purchases require a larger amount of capital (initial down payment), it is clearly not a major obstacle, especially in a period when property prices are escalating and return expectations get artificially inflated.
In that sense, we view the property tightening measures announced by the Chinese government in May with measured relief.
The policies are largely aimed at stabilising the market by curbing speculative demand and at the same time, increasing the supply of housing, in particular public housing.
At this stage of its economic cycle, a slowdown in China's property market is very much welcome news. If the Chinese real estate sector continues to grow at breakneck speed with little breathing space, it would certainly magnify the risk of overheating followed by a systemic collapse. This would have serious ramifications for Asia, including Singapore.
A collapse in China's property market resulting in financial contagion might affect the Singapore property market both directly and indirectly. As of July this year, Chinese nationals are currently the second largest source of foreign buyers of property in Singapore. Any crash in China's property market and subsequent economic slowdown would probably change that equation.
Furthermore, over the past two decades, systemic crises have always negatively impacted Singapore's property market. The Asian financial crisis in July 1997, Nasdaq crash in March 2000 and the credit crisis in 2008 all resulted in double-digit declines in the local property market.
However, it is the indirect impact that is actually more worrying. Since 2007, almost all home loans in Singapore are based on floating rates. Mortgage rates are usually pegged to the three-month Singapore Interbank Offered Rate (Sibor) or three-month Singapore Offered Rate (SOR), plus a premium that ranges between 1.25 per cent and 1.75 per cent.
Spike
Therefore, if Sibor or SOR spikes up suddenly and remains at stubbornly elevated levels for a period of time, property owners tied to such loans might suddenly find their monthly mortgages taking up a disproportionate amount of their monthly income.
Have there been instances when Sibor suddenly behaved erratically? The Asian financial crisis was one such example. Sibor spiked up to a high of 7.75 per cent before finally sliding to 1.9 per cent in December 1998. The average rate of Sibor during that 18-month period hovered at 4.9 per cent. As Asia was fortunately not at the epicentre of the credit crisis in 2008, Sibor did not behave erratically but averaged around 1.3 per cent, more than twice the current rate of 0.56 per cent.
So what is the likelihood of the above scenario panning out? Fortunately, we believe the chances are slim. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact.
Although we do not expect China's property sector or economic growth to collapse, we believe that there may be a rather visible slowdown in housing starts and construction towards the end of this year, with any possibility of a reversal of the property tightening measures and/or loosening in monetary policy likely to be in early 2011. We believe this could potentially be the catalyst for the Shanghai A-Share Composite index, which is currently the worst performing stock market in Asia ex-Japan, to outperform.
The writer is chief investment strategist Singapore, at UBS Wealth Management.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Complex market: A pedestrian looking up at a billboard advertising luxury apartments under construction in central Beijing. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact
Is there a property bubble in China?
There may be a visible slowdown in housing starts and construction towards the end of this year, KELVIN TAY believes
THRUST centre stage as a result of the decline in the G-7 economies in a post-2008 credit crisis world, the Chinese economy has gained a new level of significance and scrutiny that often generates unwanted, alarmist racket.
Is there a property bubble in China? The answer bears more significance now than ever before. China's construction and real estate sectors are likely to contribute to an estimated 11 per cent of its GDP in 2010. The construction industry employs 14.3 per cent of all workers in urban areas and consumes 40 per cent of all steel and lumber produced in China.
The private residential sector currently accounts for almost 40 per cent of the buildings completed by the construction industry. Never before has the health of the Chinese construction and real estate sectors been more closely followed.
Analysing a large, diverse economy like China's is complex, to say the least. Her sheer size and diversity in terms of economic development makes nationwide average figures rather meaningless. For example, from April 2009 to April 2010, residential property prices in China rose by 15 per cent and when juxtaposed with the price declines in 2008, would hardly set alarm bells ringing.
However, a closer examination of tier 1 cities revealed that in the 12-month period to April 2010, property prices rose by 64 per cent in Beijing, 39 per cent in Shanghai and actually doubled in Shenzhen.
The tier 1 cities accounted for almost 22 per cent of urban residential property sales, rather disproportionate to their share of 8 per cent of total floor space. Prices in Beijing reached a stratospheric 28,000 yuan per square metre in the same period.
Although long documented trends of urbanisation, rural to urban migration and a shortfall in the supply of public housing have resulted in property prices in China rising steadily over the last five years, what actually fuelled the extraordinary climb in prices over the last 12 months has largely been attributed to the increasing participation of state-owned enterprises (SOEs) in the property market.
Higher price
A study conducted by researchers from the National University of Singapore and Tsinghai University found that the transaction price of land tends to be 27.4 per cent higher when it is successfully bid by an SOE.
In certain cities like Beijing, the local and central SOEs' share of developers' land purchases have reached an estimated 71 per cent in early 2010, up from about 37 per cent in 2003.
Leverage, another indication of whether an asset bubble is building, has also seen a steady increase. If we assume that only urban households have access to mortgage lending, then mortgage debt as a proportion of urban household income is near 50 per cent, which makes it a tad uncomfortable.
We also need to take into consideration that in the case of China, where a large share of household wealth exists in the form of bank deposits, it is vulnerable to various forms of asset bubbles as and when households decide to shift a certain proportion to other asset classes, including property.
Although property purchases require a larger amount of capital (initial down payment), it is clearly not a major obstacle, especially in a period when property prices are escalating and return expectations get artificially inflated.
In that sense, we view the property tightening measures announced by the Chinese government in May with measured relief.
The policies are largely aimed at stabilising the market by curbing speculative demand and at the same time, increasing the supply of housing, in particular public housing.
At this stage of its economic cycle, a slowdown in China's property market is very much welcome news. If the Chinese real estate sector continues to grow at breakneck speed with little breathing space, it would certainly magnify the risk of overheating followed by a systemic collapse. This would have serious ramifications for Asia, including Singapore.
A collapse in China's property market resulting in financial contagion might affect the Singapore property market both directly and indirectly. As of July this year, Chinese nationals are currently the second largest source of foreign buyers of property in Singapore. Any crash in China's property market and subsequent economic slowdown would probably change that equation.
Furthermore, over the past two decades, systemic crises have always negatively impacted Singapore's property market. The Asian financial crisis in July 1997, Nasdaq crash in March 2000 and the credit crisis in 2008 all resulted in double-digit declines in the local property market.
However, it is the indirect impact that is actually more worrying. Since 2007, almost all home loans in Singapore are based on floating rates. Mortgage rates are usually pegged to the three-month Singapore Interbank Offered Rate (Sibor) or three-month Singapore Offered Rate (SOR), plus a premium that ranges between 1.25 per cent and 1.75 per cent.
Spike
Therefore, if Sibor or SOR spikes up suddenly and remains at stubbornly elevated levels for a period of time, property owners tied to such loans might suddenly find their monthly mortgages taking up a disproportionate amount of their monthly income.
Have there been instances when Sibor suddenly behaved erratically? The Asian financial crisis was one such example. Sibor spiked up to a high of 7.75 per cent before finally sliding to 1.9 per cent in December 1998. The average rate of Sibor during that 18-month period hovered at 4.9 per cent. As Asia was fortunately not at the epicentre of the credit crisis in 2008, Sibor did not behave erratically but averaged around 1.3 per cent, more than twice the current rate of 0.56 per cent.
So what is the likelihood of the above scenario panning out? Fortunately, we believe the chances are slim. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact.
Although we do not expect China's property sector or economic growth to collapse, we believe that there may be a rather visible slowdown in housing starts and construction towards the end of this year, with any possibility of a reversal of the property tightening measures and/or loosening in monetary policy likely to be in early 2011. We believe this could potentially be the catalyst for the Shanghai A-Share Composite index, which is currently the worst performing stock market in Asia ex-Japan, to outperform.
The writer is chief investment strategist Singapore, at UBS Wealth Management.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Complex market: A pedestrian looking up at a billboard advertising luxury apartments under construction in central Beijing. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact
BT : S'pore commercial property sizzling: DTZ
Business Times - 20 Aug 2010
S'pore commercial property sizzling: DTZ
By EMILYN YAP
SINGAPORE'S prime industrial, retail and office properties offer some of the most attractive returns in the world, according to a new study by DTZ.
The property consultancy launched a set of fair value indices yesterday, derived by forecasting the returns commercial property investors can get above government bond yields, over five years across 180 markets.
Markets where expected returns exceed required returns would be labelled 'hot'. The larger the number of hot markets in a region, the higher its index score would be.
Results showed that Singapore was a hot market in the second quarter. The island's industrial property sector came in as the most attractive to invest in, ahead of Antwerp and Hong Kong in second and third places respectively. DTZ estimates that industrial assets here were underpriced by some 11 per cent.
Industrial rents are 'expected to return to growth this year in Hong Kong and Singapore after an extended period of weakness' that started in H2 2008, DTZ said in a release.
Singapore's retail property sector took third spot in terms of investment attractiveness, behind first-placed Los Angeles and second-placed Chicago. DTZ found that malls here were underpriced by 9 per cent.
Offices in Singapore were also underpriced by around 9 per cent, but the presence of even better returns in other cities meant that the country fell out of the top three spots. The office market in San Francisco offered the best value, followed by that in Hong Kong and Tokyo.
DTZ believes that office rents in Singapore will register strong growth in the next five years - they could rise 5-10 per cent in H2 this year - and this will lead to capital growth. Its global head of forecasting Tony McGough added that Singapore's office market is likely to stay hot in the next few quarters.
The reading for the global fair value index was 62 in Q2, surging from 24 a year ago, reflecting the increased number of investment opportunities brought about by the economic recovery.
The Asia-Pacific index had a score of 67, meaning that the region's commercial property market offered relatively better returns.
But pickings were richest in the US - its index clocked a reading of 89. According to DTZ's Asia-Pacific business development and client services head David Watt, many investment funds are focusing their attention on buying opportunities in the US now. The thinking is, 'we know Asia is a great story, but we'll get back to it', he said.
The index for Europe had a score of 49, the lowest among the three regions.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
S'pore commercial property sizzling: DTZ
By EMILYN YAP
SINGAPORE'S prime industrial, retail and office properties offer some of the most attractive returns in the world, according to a new study by DTZ.
The property consultancy launched a set of fair value indices yesterday, derived by forecasting the returns commercial property investors can get above government bond yields, over five years across 180 markets.
Markets where expected returns exceed required returns would be labelled 'hot'. The larger the number of hot markets in a region, the higher its index score would be.
Results showed that Singapore was a hot market in the second quarter. The island's industrial property sector came in as the most attractive to invest in, ahead of Antwerp and Hong Kong in second and third places respectively. DTZ estimates that industrial assets here were underpriced by some 11 per cent.
Industrial rents are 'expected to return to growth this year in Hong Kong and Singapore after an extended period of weakness' that started in H2 2008, DTZ said in a release.
Singapore's retail property sector took third spot in terms of investment attractiveness, behind first-placed Los Angeles and second-placed Chicago. DTZ found that malls here were underpriced by 9 per cent.
Offices in Singapore were also underpriced by around 9 per cent, but the presence of even better returns in other cities meant that the country fell out of the top three spots. The office market in San Francisco offered the best value, followed by that in Hong Kong and Tokyo.
DTZ believes that office rents in Singapore will register strong growth in the next five years - they could rise 5-10 per cent in H2 this year - and this will lead to capital growth. Its global head of forecasting Tony McGough added that Singapore's office market is likely to stay hot in the next few quarters.
The reading for the global fair value index was 62 in Q2, surging from 24 a year ago, reflecting the increased number of investment opportunities brought about by the economic recovery.
The Asia-Pacific index had a score of 67, meaning that the region's commercial property market offered relatively better returns.
But pickings were richest in the US - its index clocked a reading of 89. According to DTZ's Asia-Pacific business development and client services head David Watt, many investment funds are focusing their attention on buying opportunities in the US now. The thinking is, 'we know Asia is a great story, but we'll get back to it', he said.
The index for Europe had a score of 49, the lowest among the three regions.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
MND : INTRODUCES ESTATE AGENTS BILL
Press Releases
MND INTRODUCES ESTATE AGENTS BILL
IN PARLIAMENT ON 16 AUGUST 2010
1 The Ministry of National Development (MND) introduced the Estate Agents Bill for a First Reading at the Parliamentary Session on 16 August 2010. The proposed Estate Agents Bill seeks to establish the Council for Estate Agencies (CEA) as a new statutory board under MND to regulate the real estate agency industry.
Key Features of the Estate Agents Bill
Coverage of Framework and Establishment of CEA
2 The proposed Estate Agents Bill will apply to all estate agency work for Singapore and foreign properties marketed, sold or leased in Singapore. CEA will be established to administer the new regulatory framework.
Licensing of Estate Agencies and Registration of Salespersons
3 Estate agencies will continue to be licensed, but with enhanced conditions. Each agency will have to appoint a key executive officer (KEO) to be responsible for the proper administration and overall management of the business and supervision of all its salespersons. The KEO, all partners and directors in each agency will have to satisfy enhanced licensing conditions, such as fulfilling fit and proper criteria and prohibition to simultaneously hold a moneylender’s license, or be an employee, director or partner of a licensed moneylender.
4 Estate agencies will be required to exercise effective supervision of their salespersons and take responsibility for their actions. To enable agencies to do so, the Bill will require a salesperson to contract with only one agency and to operate under a written agreement with the agency. Salespersons will need to be registered with CEA through and with the support of their agencies, before they are allowed to do estate agency work.
5 Estate agencies will have to ensure that all their registered salespersons are professionally competent and meet the fit and proper criteria. Salespersons also need to have the necessary qualifications, pass the CEA’s salesperson examination and undertake continuing professional development relating to estate agency work. Information on all registered salespersons will be available on a public register, including the agency they are working for and any disciplinary action taken against them.
Duties and Liability of Estate Agencies and Salespersons
6 The Bill will empower CEA to prescribe codes of practice, ethics and professional conduct to regulate the practices of estate agencies and salespersons. Failure to comply with the codes may render the estate agency and/or salesperson liable to disciplinary action.
7 The CEA will also prescribe standard estate agency agreements between estate agencies and their clients, to ensure that the agreements do not contain unfair clauses. An estate agency that performs estate agency work without the required agreement will not be able to recover any fees or seek any remedy in legal proceedings.
Investigative and Disciplinary Powers
8 The Bill will provide CEA with powers of investigation to enable CEA to investigate breaches and enforce regulatory requirements. Under these provisions, CEA investigators will be able to summon agencies’ KEOs and salespersons, and seize relevant materials and documents.
9 The Bill will allow CEA to set up a Disciplinary Committee to hear and consider disciplinary cases. The Disciplinary Committee can mete out penalties including revocation, suspension, fines, admonishment and other conditions on estate agencies and salespersons if it finds the agencies and/or salespersons responsible.
10 The Bill will allow any person who is aggrieved by the decisions of CEA to lodge an appeal to an independent Appeals Boards. The decision of the Appeals Board shall be final.
Dispute Resolution
11 Estate agencies and salespersons will be required to participate in CEA’s prescribed dispute resolution process covering mediation and arbitration, once this has been initiated by the consumer.
Transition Arrangement
12 The Bill includes transition provisions for existing agencies to be deemed as licensed by CEA for the remainder of the duration of the licence previously issued by the Inland Revenue Authority of Singapore (IRAS) until 31 December 2010. Other transitional arrangements will be provided for in the regulations to be published in the Gazette after the Bill is passed.
Second Reading
13 The Bill will be tabled for a Second Reading at the following available Parliament sitting.
Issued by: Ministry of National Development
Date: 16 August 2010
MND INTRODUCES ESTATE AGENTS BILL
IN PARLIAMENT ON 16 AUGUST 2010
1 The Ministry of National Development (MND) introduced the Estate Agents Bill for a First Reading at the Parliamentary Session on 16 August 2010. The proposed Estate Agents Bill seeks to establish the Council for Estate Agencies (CEA) as a new statutory board under MND to regulate the real estate agency industry.
Key Features of the Estate Agents Bill
Coverage of Framework and Establishment of CEA
2 The proposed Estate Agents Bill will apply to all estate agency work for Singapore and foreign properties marketed, sold or leased in Singapore. CEA will be established to administer the new regulatory framework.
Licensing of Estate Agencies and Registration of Salespersons
3 Estate agencies will continue to be licensed, but with enhanced conditions. Each agency will have to appoint a key executive officer (KEO) to be responsible for the proper administration and overall management of the business and supervision of all its salespersons. The KEO, all partners and directors in each agency will have to satisfy enhanced licensing conditions, such as fulfilling fit and proper criteria and prohibition to simultaneously hold a moneylender’s license, or be an employee, director or partner of a licensed moneylender.
4 Estate agencies will be required to exercise effective supervision of their salespersons and take responsibility for their actions. To enable agencies to do so, the Bill will require a salesperson to contract with only one agency and to operate under a written agreement with the agency. Salespersons will need to be registered with CEA through and with the support of their agencies, before they are allowed to do estate agency work.
5 Estate agencies will have to ensure that all their registered salespersons are professionally competent and meet the fit and proper criteria. Salespersons also need to have the necessary qualifications, pass the CEA’s salesperson examination and undertake continuing professional development relating to estate agency work. Information on all registered salespersons will be available on a public register, including the agency they are working for and any disciplinary action taken against them.
Duties and Liability of Estate Agencies and Salespersons
6 The Bill will empower CEA to prescribe codes of practice, ethics and professional conduct to regulate the practices of estate agencies and salespersons. Failure to comply with the codes may render the estate agency and/or salesperson liable to disciplinary action.
7 The CEA will also prescribe standard estate agency agreements between estate agencies and their clients, to ensure that the agreements do not contain unfair clauses. An estate agency that performs estate agency work without the required agreement will not be able to recover any fees or seek any remedy in legal proceedings.
Investigative and Disciplinary Powers
8 The Bill will provide CEA with powers of investigation to enable CEA to investigate breaches and enforce regulatory requirements. Under these provisions, CEA investigators will be able to summon agencies’ KEOs and salespersons, and seize relevant materials and documents.
9 The Bill will allow CEA to set up a Disciplinary Committee to hear and consider disciplinary cases. The Disciplinary Committee can mete out penalties including revocation, suspension, fines, admonishment and other conditions on estate agencies and salespersons if it finds the agencies and/or salespersons responsible.
10 The Bill will allow any person who is aggrieved by the decisions of CEA to lodge an appeal to an independent Appeals Boards. The decision of the Appeals Board shall be final.
Dispute Resolution
11 Estate agencies and salespersons will be required to participate in CEA’s prescribed dispute resolution process covering mediation and arbitration, once this has been initiated by the consumer.
Transition Arrangement
12 The Bill includes transition provisions for existing agencies to be deemed as licensed by CEA for the remainder of the duration of the licence previously issued by the Inland Revenue Authority of Singapore (IRAS) until 31 December 2010. Other transitional arrangements will be provided for in the regulations to be published in the Gazette after the Bill is passed.
Second Reading
13 The Bill will be tabled for a Second Reading at the following available Parliament sitting.
Issued by: Ministry of National Development
Date: 16 August 2010
Thursday, August 19, 2010
ST : Global uncertainty slows sale of high-end homes
Aug 19, 2010
Global uncertainty slows sale of high-end homes
Outlook still favourable but mass market properties more popular
By Joyce Teo
BUYERS are still showing relatively muted interest in the most luxurious homes in the city centre, the latest set of new home sales data shows.
But they are making a beeline for very popular mass market homes, followed by mid-tier units, the figures show.
Property experts say the outlook for the luxury sector remains favourable, though growth has slowed and current global uncertainties mean these prime high-end homes are unlikely to rebound this year as some experts had hoped.
A few months back, it was expected that luxury projects such as Ardmore3 and those on the former Grangeford and Parisian condo sites in the Orchard area would be launched in the first half year.
No major luxury projects were launched last year.
Developers of these homes have been cautious again this year. Bukit Sembawang recently said it will be launching the marketing of Paterson Suites in its current financial year ending March31 - unusually late in the game for a project that has already received its temporary occupation permit.
Underscoring the point, City Developments chairman Kwek Leng Beng last week said luxury homes had not sold as well as the industry had expected.
He said this segment would perform well - perhaps next year - only if the wider global economy stabilises.
Said Cushman & Wakefield managing director Donald Han: 'Singapore may not be the place to make extraordinary gains but the good thing is the luxury market is still compelling.The market is just taking a breather. The earliest possible time for the return of interest in the luxury end market will be at the end of the year.'
While the prime segment (homes selling for $2.5million to $5million) saw some activity in the first half, transactions in the luxury ($5-$8million) and super-luxury (above $8million) segments have been rather scarce, said CBRE executive director, residential, Mr Joseph Tan.
'Most homebuyers were generally more cautious towards high-priced projects under the present uncertain conditions on the global front.'
Still, Colliers International's director of research and advisory, Ms Tay Huey Ying said the price rebound in high-end and luxury properties, which started in the second half of last year, had continued this year, though the pace of growth has moderated to more sustainable rates.
'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'
More investors are going for cheaper new properties - mostly those under $1,500 psf - as global uncertainties have put a lid on risk appetites, said Ms Tay.
The slight slowdown means that price growth in the high-end and luxury segments is likely to come in towards the low end of the firm's forecast range of 15-20per cent for this year, she said.
Experts note that in the first half year, the Urban Redevelopment Authority's price index for non-landed homes in prime districts was already up 10per cent, and is just 1.8per cent off the 2008 peak. This is just a tad slower than the 10.3per cent and 12.9per cent price gains seen for non-landed homes in the city fringes and suburban areas respectively.
CBRE expects high-end home prices - still about 5-10per cent below 2007 boom levels - to be stable till year-end.
While high-end prices are up this year, sales volume has not picked up significantly owing to fresh concerns on the global economic recovery's sustainability.
But the number of high-end home deals of $3,000 psf and above has risen from eight units in the fourth quarter to 29 units and 35 units in the first and second quarters respectively, noted Savills Prestige Homes director Steven Ming.
'This is an indication that pockets of luxury home buyers are still streaming into the local market,' he said.
However, as high-end homes are very dependent on foreign demand, sales could recover to previous peaks in the next 12 to 18 months after macro-economic concerns have been sorted out, he said.
CBRE's Mr Tan said developers have adopted a low-key strategy to marketing luxury projects, such as direct invitations for private previews and appointments.
For example, Far East Organization recently launched its luxury brand 'Inessence', and sold a handful of units in Boulevard Vue and Skyline @ Orchard Boulevard. Wheelock Properties and Hong Leong Group sold a few units at their respective new super-luxury projects, Orchard View and Sage.
Mr Tan said there is a 'strong likelihood' the high-end market will continue in this manner for the rest of the year.
However, the few possible high-end launches in September such as Twin Peaks and The Peak @ Cairnhill will test the market's receptivity. If these launches do well, it will motivate developers to launch more high-end projects, he said.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
DEVELOPERS HOLDING BACK
'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'
Colliers International's director of research and advisory, Ms Tay Huey Ying
Possible September launches, such as for Twin Peaks, will test the market's receptivity. -- ST PHOTO: ALPHONSUS CHERN
Global uncertainty slows sale of high-end homes
Outlook still favourable but mass market properties more popular
By Joyce Teo
BUYERS are still showing relatively muted interest in the most luxurious homes in the city centre, the latest set of new home sales data shows.
But they are making a beeline for very popular mass market homes, followed by mid-tier units, the figures show.
Property experts say the outlook for the luxury sector remains favourable, though growth has slowed and current global uncertainties mean these prime high-end homes are unlikely to rebound this year as some experts had hoped.
A few months back, it was expected that luxury projects such as Ardmore3 and those on the former Grangeford and Parisian condo sites in the Orchard area would be launched in the first half year.
No major luxury projects were launched last year.
Developers of these homes have been cautious again this year. Bukit Sembawang recently said it will be launching the marketing of Paterson Suites in its current financial year ending March31 - unusually late in the game for a project that has already received its temporary occupation permit.
Underscoring the point, City Developments chairman Kwek Leng Beng last week said luxury homes had not sold as well as the industry had expected.
He said this segment would perform well - perhaps next year - only if the wider global economy stabilises.
Said Cushman & Wakefield managing director Donald Han: 'Singapore may not be the place to make extraordinary gains but the good thing is the luxury market is still compelling.The market is just taking a breather. The earliest possible time for the return of interest in the luxury end market will be at the end of the year.'
While the prime segment (homes selling for $2.5million to $5million) saw some activity in the first half, transactions in the luxury ($5-$8million) and super-luxury (above $8million) segments have been rather scarce, said CBRE executive director, residential, Mr Joseph Tan.
'Most homebuyers were generally more cautious towards high-priced projects under the present uncertain conditions on the global front.'
Still, Colliers International's director of research and advisory, Ms Tay Huey Ying said the price rebound in high-end and luxury properties, which started in the second half of last year, had continued this year, though the pace of growth has moderated to more sustainable rates.
'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'
More investors are going for cheaper new properties - mostly those under $1,500 psf - as global uncertainties have put a lid on risk appetites, said Ms Tay.
The slight slowdown means that price growth in the high-end and luxury segments is likely to come in towards the low end of the firm's forecast range of 15-20per cent for this year, she said.
Experts note that in the first half year, the Urban Redevelopment Authority's price index for non-landed homes in prime districts was already up 10per cent, and is just 1.8per cent off the 2008 peak. This is just a tad slower than the 10.3per cent and 12.9per cent price gains seen for non-landed homes in the city fringes and suburban areas respectively.
CBRE expects high-end home prices - still about 5-10per cent below 2007 boom levels - to be stable till year-end.
While high-end prices are up this year, sales volume has not picked up significantly owing to fresh concerns on the global economic recovery's sustainability.
But the number of high-end home deals of $3,000 psf and above has risen from eight units in the fourth quarter to 29 units and 35 units in the first and second quarters respectively, noted Savills Prestige Homes director Steven Ming.
'This is an indication that pockets of luxury home buyers are still streaming into the local market,' he said.
However, as high-end homes are very dependent on foreign demand, sales could recover to previous peaks in the next 12 to 18 months after macro-economic concerns have been sorted out, he said.
CBRE's Mr Tan said developers have adopted a low-key strategy to marketing luxury projects, such as direct invitations for private previews and appointments.
For example, Far East Organization recently launched its luxury brand 'Inessence', and sold a handful of units in Boulevard Vue and Skyline @ Orchard Boulevard. Wheelock Properties and Hong Leong Group sold a few units at their respective new super-luxury projects, Orchard View and Sage.
Mr Tan said there is a 'strong likelihood' the high-end market will continue in this manner for the rest of the year.
However, the few possible high-end launches in September such as Twin Peaks and The Peak @ Cairnhill will test the market's receptivity. If these launches do well, it will motivate developers to launch more high-end projects, he said.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
DEVELOPERS HOLDING BACK
'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'
Colliers International's director of research and advisory, Ms Tay Huey Ying
Possible September launches, such as for Twin Peaks, will test the market's receptivity. -- ST PHOTO: ALPHONSUS CHERN
ST : Prime Capitol site tender draws 14 submissions
Aug 19, 2010
Prime Capitol site tender draws 14 submissions
By Joyce Teo
THE much anticipated tender for the stretch of colonial buildings along Stamford Road that includes the Capitol Theatre has drawn a strong response, with 14 submissions lodged by nine firms.
Big-gun developers here and overseas, including Far East Organization and CapitaLand, have lined up for the prime land, which could go for more than $300million.
The high number of tenders surprised experts, as the Government has placed some tough constraints on how the 1.43ha plot at the junction of Stamford and North Bridge roads can be used.
The 99-year leasehold site comprises Stamford House, Capitol Building, Capitol Theatre and Capitol Centre.
The dingy Capitol Centre can be demolished but the other three buildings must be conserved.
The winning developer must use Capitol Theatre as an arts or entertainment-related performance venue. It must also build an underground walkway lined with shops and restaurants to link the site to City Hall MRT station.
A quarter of the land parcel's total gross floor area of 50,389 sqm must also be used for hotel rooms, to add to the existing hotel cluster in the area.
'The challenges for the developers and designers will be quite intense because the buildings are in the civic precinct, which is the the original heart of Singapore and they have to be conserved,' said architect John Ting.
Stamford House was built in 1904 in a neo-classical style by Regent Alfred John Bidwell, the architect behind the Raffles Hotel.
Capitol Theatre, which housed Singapore's first cinema, was built in 1929, and Capitol Building, previously known as Shaw Building, was built in 1933.
The buildings also mark the time when the same neoclassical language was used in the civic precinct. They are private developments, but belong to the same era as government buildings such as City Hall and the Supreme Court, added Mr Ting. 'The designers have to be very creative to come up with something that is relevant to today's use,' he said.
Knight Frank group managing director Danny Yeo added: 'What you are putting into the site is key. I think the conserved buildings could house a unique, upmarket hotel, while the new development there could house a mall. Whoever can bring something new to the site will have an extra edge.'
Far East submitted three ideas for the land while Wing Tai Group lodged two. United Engineers, GuocoLand Group, CapitaLand, Hong Kong-based Park Hotel Group, Malaysia's YTL Corporation and private equity firm Gaw Capital Partners made submissions as well.
A proposal also came from a consortium formed by Mr Pua Seck Guan, former chief executive of CapitaMall Trust Management, comprising Perennial (Capitol), a subsidiary of his Perennial Real Estate Group, Mr Kwee Liong Seen's Chesham Properties and Top Global's Top Property Investment.
'The high number of bids reflects optimism in the commercial and hospitality sectors,' said DTZ's head of South-east Asia research, Ms Chua Chor Hoon.
Bids were not revealed yesterday as the tender is on a two-envelope system, in which developers submit their design proposals and tender prices in two separate envelopes.
The Urban Redevelopment Authority will first shortlist the designs and then choose the one with the highest bid. The South Beach and Clifford Pier plots were also sold this way.
CBRE Research expects bids to be in the range of $220million to $270million. This would work out to $400 to $500 per sq ft (psf) of total floor area.
Said Mr Yeo: 'We expect the bids to be high because of the conservation requirements and the underground link. The price could easily be about $550 to $600 psf per plot ratio.'
The 1.43ha plot comprises Capitol Theatre (above), Capitol Centre, Capitol Building and Stamford House. -- ST FILE PHOTO
Prime Capitol site tender draws 14 submissions
By Joyce Teo
THE much anticipated tender for the stretch of colonial buildings along Stamford Road that includes the Capitol Theatre has drawn a strong response, with 14 submissions lodged by nine firms.
Big-gun developers here and overseas, including Far East Organization and CapitaLand, have lined up for the prime land, which could go for more than $300million.
The high number of tenders surprised experts, as the Government has placed some tough constraints on how the 1.43ha plot at the junction of Stamford and North Bridge roads can be used.
The 99-year leasehold site comprises Stamford House, Capitol Building, Capitol Theatre and Capitol Centre.
The dingy Capitol Centre can be demolished but the other three buildings must be conserved.
The winning developer must use Capitol Theatre as an arts or entertainment-related performance venue. It must also build an underground walkway lined with shops and restaurants to link the site to City Hall MRT station.
A quarter of the land parcel's total gross floor area of 50,389 sqm must also be used for hotel rooms, to add to the existing hotel cluster in the area.
'The challenges for the developers and designers will be quite intense because the buildings are in the civic precinct, which is the the original heart of Singapore and they have to be conserved,' said architect John Ting.
Stamford House was built in 1904 in a neo-classical style by Regent Alfred John Bidwell, the architect behind the Raffles Hotel.
Capitol Theatre, which housed Singapore's first cinema, was built in 1929, and Capitol Building, previously known as Shaw Building, was built in 1933.
The buildings also mark the time when the same neoclassical language was used in the civic precinct. They are private developments, but belong to the same era as government buildings such as City Hall and the Supreme Court, added Mr Ting. 'The designers have to be very creative to come up with something that is relevant to today's use,' he said.
Knight Frank group managing director Danny Yeo added: 'What you are putting into the site is key. I think the conserved buildings could house a unique, upmarket hotel, while the new development there could house a mall. Whoever can bring something new to the site will have an extra edge.'
Far East submitted three ideas for the land while Wing Tai Group lodged two. United Engineers, GuocoLand Group, CapitaLand, Hong Kong-based Park Hotel Group, Malaysia's YTL Corporation and private equity firm Gaw Capital Partners made submissions as well.
A proposal also came from a consortium formed by Mr Pua Seck Guan, former chief executive of CapitaMall Trust Management, comprising Perennial (Capitol), a subsidiary of his Perennial Real Estate Group, Mr Kwee Liong Seen's Chesham Properties and Top Global's Top Property Investment.
'The high number of bids reflects optimism in the commercial and hospitality sectors,' said DTZ's head of South-east Asia research, Ms Chua Chor Hoon.
Bids were not revealed yesterday as the tender is on a two-envelope system, in which developers submit their design proposals and tender prices in two separate envelopes.
The Urban Redevelopment Authority will first shortlist the designs and then choose the one with the highest bid. The South Beach and Clifford Pier plots were also sold this way.
CBRE Research expects bids to be in the range of $220million to $270million. This would work out to $400 to $500 per sq ft (psf) of total floor area.
Said Mr Yeo: 'We expect the bids to be high because of the conservation requirements and the underground link. The price could easily be about $550 to $600 psf per plot ratio.'
The 1.43ha plot comprises Capitol Theatre (above), Capitol Centre, Capitol Building and Stamford House. -- ST FILE PHOTO
BT : Office market crackles as banks go hunting for space
Business Times - 19 Aug 2010
Office market crackles as banks go hunting for space
Existing players are expanding while new boys in town are sniffing around for lease deals
By KALPANA RASHIWALA
(SINGAPORE) The Singapore office market is buzzing with leasing interest as banks and other occupiers expand their operations and plan moves to new Grade A office buildings.
Citigroup is widely tipped to be considering taking more than 200,000 sq ft at Asia Square Tower 1. The 43-storey block will have 1.26 million sq ft net lettable area (NLA) of offices when it is completed in June 2011.
At 50 Collyer Quay, Bank of America (BOA) is said to be in talks to lease about 120,000 sq ft. If a deal materialises, the leasing level in the building will cross the 50 per cent mark. 50 Collyer Quay, which will have 412,0000 sq ft NLA, is expected to be ready in Q1 next year.
Russian oil, gas and resource group Gazprom, which currently uses serviced offices in Singapore, is believed to be negotiating to rent one of the top few floors of the 43-storey Ocean Financial Centre (OFC), which will be completing next year.
OFC's top few levels will have roof gardens.
Swiss bank Julius Baer, currently at One George Street and Harbourfront Tower 1, may also be considering taking space at a new location, possibly OFC, suggest sources.
In the Tanjong Pagar area, Goldman Sachs and Yahoo have each leased about 40,000 sq ft at Mapletree Anson, which was completed last year.
CB Richard Ellis is understood to be advising both anchor tenants that are expected to lease space at 50 Collyer Quay and Asia Square but its executive director (office services) Moray Armstrong declined to comment on specific clients the firm is representing.
Mr Armstrong was, however, willing to discuss the strength of the office leasing market in general terms.
When office demand began to pick up about a year ago, it was a game of musical chairs as occupiers cashed in on low office rents to move to new office developments.
'However, deals in the past three months or so have been underpinned by positive headcount growth among occupiers in various sectors - including finance, insurance and professsional services,' Mr Armstrong said.
Agreeing, Knight Frank director, business space (office) Robert MacDonald said: 'We're also seeing hedge funds, principally from New York, coming back to town. Law firms from the UK and US are also looking at Singapore.
'Serviced offices are seeing very high occupancy thanks largely to new players entering Singapore. These companies will lay the foundation for office demand and help to backfill some of the space being vacated in older Grade A buildings when tenants move out to newer properties.'
On a positive note, Savills Singapore's director (commercial) Agnes Tay points out that departures from older buildings create opportunities for remaining tenants to expand their premises within the same buildings.
Demand for office space in Singapore has recovered from a negative net take-up of about 236,000 sq ft last year to positive net demand of about 635,000 sq ft in first-half 2010. Standard Chartered Bank's head of Asean property research Regina Lim forecasts positive demand of 1.9 million sq ft for full-year 2010. She predicts that the average monthly Grade A office rental value will end the year at about $10.20 per square foot, up 26 per cent from end-2009.
An office leasing agent says preleasing rents for Grade A buildings under construction have risen about 25-35 per cent year to date. 'Monthly rents in new buildings are about $8.50 to $10 psf; they were $7-ish at end-2009.'
The islandwide office vacancy rate has fallen marginally from 12.5 per cent at end-Q1 2010 to 12.3 per cent at end-Q2.
DTZ executive director, business space, Cheng Siow Ying says a key challenge for office leasing agents is managing a mismatch of expectations as landlords have raised rent expectations in select buildings with high occupancies while tenants are still hoping to secure leases at competitive terms.
Citigroup, which is believed to be studying options including renting space at Asia Square Tower 1, currently operates at Millenia and Centennial towers (over 400,000 sq ft), Capital Square and Changi Business Park.
Leases on some space in Centennial Tower and Capital Square are understood to expire sometime next year. When asked if the bank was looking at new locations, its spokesman would say only that 'from time to time, we may look for real estate options based on the expiry of leases'.
Chris Archibold, head of markets at Jones Lang LaSalle - the exclusive marketing agent representing Asia Square's developer MGPA - said leasing interest in Tower 1 has accelerated in the past six months, with about 40 per cent of NLA under serious negotiation or let.
'Tenant profiles are predominantly from banking and finance, professional services and consultancy practices,' he added.
BOA, which is expected to vacate about 60,000 sq ft at Republic Plaza when its lease expires around mid-2011, is said to be considering a move to 50 Collyer Quay.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Asia Square: Citigroup is tipped to be considering taking more than 200,000 sq ft of office space at the Marina View complex which comprises offices, shops and a hotel
Office market crackles as banks go hunting for space
Existing players are expanding while new boys in town are sniffing around for lease deals
By KALPANA RASHIWALA
(SINGAPORE) The Singapore office market is buzzing with leasing interest as banks and other occupiers expand their operations and plan moves to new Grade A office buildings.
Citigroup is widely tipped to be considering taking more than 200,000 sq ft at Asia Square Tower 1. The 43-storey block will have 1.26 million sq ft net lettable area (NLA) of offices when it is completed in June 2011.
At 50 Collyer Quay, Bank of America (BOA) is said to be in talks to lease about 120,000 sq ft. If a deal materialises, the leasing level in the building will cross the 50 per cent mark. 50 Collyer Quay, which will have 412,0000 sq ft NLA, is expected to be ready in Q1 next year.
Russian oil, gas and resource group Gazprom, which currently uses serviced offices in Singapore, is believed to be negotiating to rent one of the top few floors of the 43-storey Ocean Financial Centre (OFC), which will be completing next year.
OFC's top few levels will have roof gardens.
Swiss bank Julius Baer, currently at One George Street and Harbourfront Tower 1, may also be considering taking space at a new location, possibly OFC, suggest sources.
In the Tanjong Pagar area, Goldman Sachs and Yahoo have each leased about 40,000 sq ft at Mapletree Anson, which was completed last year.
CB Richard Ellis is understood to be advising both anchor tenants that are expected to lease space at 50 Collyer Quay and Asia Square but its executive director (office services) Moray Armstrong declined to comment on specific clients the firm is representing.
Mr Armstrong was, however, willing to discuss the strength of the office leasing market in general terms.
When office demand began to pick up about a year ago, it was a game of musical chairs as occupiers cashed in on low office rents to move to new office developments.
'However, deals in the past three months or so have been underpinned by positive headcount growth among occupiers in various sectors - including finance, insurance and professsional services,' Mr Armstrong said.
Agreeing, Knight Frank director, business space (office) Robert MacDonald said: 'We're also seeing hedge funds, principally from New York, coming back to town. Law firms from the UK and US are also looking at Singapore.
'Serviced offices are seeing very high occupancy thanks largely to new players entering Singapore. These companies will lay the foundation for office demand and help to backfill some of the space being vacated in older Grade A buildings when tenants move out to newer properties.'
On a positive note, Savills Singapore's director (commercial) Agnes Tay points out that departures from older buildings create opportunities for remaining tenants to expand their premises within the same buildings.
Demand for office space in Singapore has recovered from a negative net take-up of about 236,000 sq ft last year to positive net demand of about 635,000 sq ft in first-half 2010. Standard Chartered Bank's head of Asean property research Regina Lim forecasts positive demand of 1.9 million sq ft for full-year 2010. She predicts that the average monthly Grade A office rental value will end the year at about $10.20 per square foot, up 26 per cent from end-2009.
An office leasing agent says preleasing rents for Grade A buildings under construction have risen about 25-35 per cent year to date. 'Monthly rents in new buildings are about $8.50 to $10 psf; they were $7-ish at end-2009.'
The islandwide office vacancy rate has fallen marginally from 12.5 per cent at end-Q1 2010 to 12.3 per cent at end-Q2.
DTZ executive director, business space, Cheng Siow Ying says a key challenge for office leasing agents is managing a mismatch of expectations as landlords have raised rent expectations in select buildings with high occupancies while tenants are still hoping to secure leases at competitive terms.
Citigroup, which is believed to be studying options including renting space at Asia Square Tower 1, currently operates at Millenia and Centennial towers (over 400,000 sq ft), Capital Square and Changi Business Park.
Leases on some space in Centennial Tower and Capital Square are understood to expire sometime next year. When asked if the bank was looking at new locations, its spokesman would say only that 'from time to time, we may look for real estate options based on the expiry of leases'.
Chris Archibold, head of markets at Jones Lang LaSalle - the exclusive marketing agent representing Asia Square's developer MGPA - said leasing interest in Tower 1 has accelerated in the past six months, with about 40 per cent of NLA under serious negotiation or let.
'Tenant profiles are predominantly from banking and finance, professional services and consultancy practices,' he added.
BOA, which is expected to vacate about 60,000 sq ft at Republic Plaza when its lease expires around mid-2011, is said to be considering a move to 50 Collyer Quay.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Asia Square: Citigroup is tipped to be considering taking more than 200,000 sq ft of office space at the Marina View complex which comprises offices, shops and a hotel
BT : Demand for JTC industrial space mixed in Q2
Business Times - 19 Aug 2010
Demand for JTC industrial space mixed in Q2
Net take-up of its ready-built facilities turns negative while prepared industrial land demand rises
By EMILYN YAP
(SINGAPORE) JTC Corporation has turned in a mixed report card for the second quarter in terms of demand for its industrial properties.
Net take-up of its ready-built facilities fell into negative territory from the previous quarter, while take-up of its prepared land rose.
Net allocation of ready-built facilities was a negative 2,700 square metres in Q2, down from a positive 9,400 sq m in Q1.
Higher lease terminations were the culprit. Businesses returned 27,200 sq m of space - more than double the 12,700 sq m in the previous quarter.
The manufacturing sector accounted for 80 per cent or 21,800 sq m of the terminations in Q2.
Also, close to half of the terminations, involving 13,400 sq m of space, happened as companies consolidated their operations.
Standard factories bore the brunt of this, as 14,700 sq m of space in such properties was returned.
Larger gross take-up could not make up for the higher terminations. Gross allocation of ready-built facilities was 24,500 sq m in Q2, up 11 per cent from 22,100 sq m in Q1.
Despite the negative net take-up, the occupancy rate for ready-built facilities remained relatively steady at 97.4 per cent in Q2, dropping 0.1 of a percentage point from Q1.
At end-Q2, JTC had four ready-built facilities under development. Two at Seletar Aerospace Park and one at CleanTech Park are due to be completed next year, and Fusionopolis Phase 2A should be ready by Q2 2013.
Separately, JTC's prepared industrial land enjoyed a 5 per cent increase in net take-up, to 24.4 ha in Q2 from 23.2 ha in Q1.
A drop in terminations contributed to the improvement. Businesses returned 21.4 ha of land, down 43 per cent from 37.8 ha a quarter earlier.
Manufacturing-related and supporting industries contributed the bulk of terminations. Lower terminations boosted net take-up even as gross take-up fell. Gross allocation was 45.8 ha in Q2, slipping 25 per cent from 61 ha in Q1.
Jurong Island saw a surge in demand. Gross take-up there was 37.1 ha in Q2, more than two times the 16.2 ha in the previous quarter.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Consolidation: The manufacturing sector accounted for 80 per cent or 21,800 squaremetres of the terminations in the second quarter, with nearly half of this by companies consolidating their operations
Demand for JTC industrial space mixed in Q2
Net take-up of its ready-built facilities turns negative while prepared industrial land demand rises
By EMILYN YAP
(SINGAPORE) JTC Corporation has turned in a mixed report card for the second quarter in terms of demand for its industrial properties.
Net take-up of its ready-built facilities fell into negative territory from the previous quarter, while take-up of its prepared land rose.
Net allocation of ready-built facilities was a negative 2,700 square metres in Q2, down from a positive 9,400 sq m in Q1.
Higher lease terminations were the culprit. Businesses returned 27,200 sq m of space - more than double the 12,700 sq m in the previous quarter.
The manufacturing sector accounted for 80 per cent or 21,800 sq m of the terminations in Q2.
Also, close to half of the terminations, involving 13,400 sq m of space, happened as companies consolidated their operations.
Standard factories bore the brunt of this, as 14,700 sq m of space in such properties was returned.
Larger gross take-up could not make up for the higher terminations. Gross allocation of ready-built facilities was 24,500 sq m in Q2, up 11 per cent from 22,100 sq m in Q1.
Despite the negative net take-up, the occupancy rate for ready-built facilities remained relatively steady at 97.4 per cent in Q2, dropping 0.1 of a percentage point from Q1.
At end-Q2, JTC had four ready-built facilities under development. Two at Seletar Aerospace Park and one at CleanTech Park are due to be completed next year, and Fusionopolis Phase 2A should be ready by Q2 2013.
Separately, JTC's prepared industrial land enjoyed a 5 per cent increase in net take-up, to 24.4 ha in Q2 from 23.2 ha in Q1.
A drop in terminations contributed to the improvement. Businesses returned 21.4 ha of land, down 43 per cent from 37.8 ha a quarter earlier.
Manufacturing-related and supporting industries contributed the bulk of terminations. Lower terminations boosted net take-up even as gross take-up fell. Gross allocation was 45.8 ha in Q2, slipping 25 per cent from 61 ha in Q1.
Jurong Island saw a surge in demand. Gross take-up there was 37.1 ha in Q2, more than two times the 16.2 ha in the previous quarter.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Consolidation: The manufacturing sector accounted for 80 per cent or 21,800 squaremetres of the terminations in the second quarter, with nearly half of this by companies consolidating their operations
BT : Soilbuild divests logistics warehouse for $60m
Business Times - 19 Aug 2010
Soilbuild divests logistics warehouse for $60m
By YEN PEI WEN
SOILBUILD Group Holdings is divesting Penjuru Logistics Hub, a five-storey purpose-built logistics warehouse, for $60 million.
The integrated boutique developer is expecting to recognise a gain of about $16.3 million from the sale of the property at 34 Penjuru Lane, which has a remaining lease of 22 years.
The warehouse, which has 0.4 million square feet of business space, will be leased back to Soilbuild for five years at about $5 million per year.
'As at end-June 2010, Penjuru Logistics Hub had been leased to a range of logistics support businesses, including those for petrochemical and maritime companies located at Jurong Island and Jurong Port respectively,' said Soilbuild.
Soilbuild executive director Low Soon Sim said: 'This divestment is part of our capital management strategy to enhance yields and returns for our growing business space portfolio held for lease.'
The proposed transaction, which needs the approval of the JTC, involved Soilbuild's subsidiary, SB (Lakeside) Investment, signing a put and call option agreement with Sabana Investment Partners.
Soilbuild said that the group's stronger balance sheet and lower gearing allow it to tap into new opportunities to optimise its portfolio mix for better yields.
It is expecting two ongoing developments to yield 1.6 million square feet of business space when they come onstream next year, bringing Soilbuild's total space of business properties for lease to 3.01 million square feet.
For the second quarter of this year, Soilbuild's net profit was $32.7 million, up 66 per cent from a year earlier, in spite of a 24 per cent fall in revenue to $73.6 million. This was helped by fair value gains of $16 million.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Soilbuild divests logistics warehouse for $60m
By YEN PEI WEN
SOILBUILD Group Holdings is divesting Penjuru Logistics Hub, a five-storey purpose-built logistics warehouse, for $60 million.
The integrated boutique developer is expecting to recognise a gain of about $16.3 million from the sale of the property at 34 Penjuru Lane, which has a remaining lease of 22 years.
The warehouse, which has 0.4 million square feet of business space, will be leased back to Soilbuild for five years at about $5 million per year.
'As at end-June 2010, Penjuru Logistics Hub had been leased to a range of logistics support businesses, including those for petrochemical and maritime companies located at Jurong Island and Jurong Port respectively,' said Soilbuild.
Soilbuild executive director Low Soon Sim said: 'This divestment is part of our capital management strategy to enhance yields and returns for our growing business space portfolio held for lease.'
The proposed transaction, which needs the approval of the JTC, involved Soilbuild's subsidiary, SB (Lakeside) Investment, signing a put and call option agreement with Sabana Investment Partners.
Soilbuild said that the group's stronger balance sheet and lower gearing allow it to tap into new opportunities to optimise its portfolio mix for better yields.
It is expecting two ongoing developments to yield 1.6 million square feet of business space when they come onstream next year, bringing Soilbuild's total space of business properties for lease to 3.01 million square feet.
For the second quarter of this year, Soilbuild's net profit was $32.7 million, up 66 per cent from a year earlier, in spite of a 24 per cent fall in revenue to $73.6 million. This was helped by fair value gains of $16 million.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Landmark site at City Hall draws 14 bids
Business Times - 19 Aug 2010
Landmark site at City Hall draws 14 bids
Far East submits 3 separate bids, Wing Tai and a consortium 2 each
By UMA SHANKARI
(SINGAPORE) Ten developers and consortiums handed in 14 different bids to buy and redevelop a landmark commercial site at City Hall - with the historic Capitol Theatre, Capitol Building and Stamford House on it - by the close of the state tender yesterday.
Far East Organization submitted three separate bids while two bids were put in each by Wing Tai Holdings and a consortium made up of Perennial Real Estate, Chesham Properties and TOP Property Investment.
And one bid each was submitted by: CapitaMalls Asia and parent company CapitaLand; GuocoLand; Park Hotel Group; United Engineers; YTL Corporation; private equity fund manager GAW Capital Partners; and a consortium made up of Sin Heng Chan Group, Kim Eng Group and Japan's Takenaka Group.
The amount of each bid was not revealed by the Urban Redevelopment Authority (URA) as the land parcel is being sold through a 'concept and price revenue' tender process.
Under this system, tenderers are required to submit their concept proposals and tender prices in two separate envelopes. The concept proposals will be first evaluated against a specified set of criteria and only those that meet the criteria will be considered. The site will then be awarded to the tender with the highest bid price among those with acceptable concept proposals.
Developers can therefore choose to submit multiple bids, as Far East Organization, Wing Tai Holdings and the consortium led by Perennial Real Estate have done. Perennial Real Estate is led by Pua Seck Guan, ex-CapitaLand head of retail.
The 99-year leasehold site, which is located at the junction of Stamford Road and North Bridge Road and which also comprises Capitol Centre and a subterranean parcel that will link directly to City Hall MRT station, was launched for sale in April this year.
The tender was triggered after an unnamed developer committed to bid at least $100 million - or $184 per square foot per plot ratio (psf ppr) - for it.
Analysts said then that the plot can fetch $400-$600 psf ppr.
The eventual developer of the site is required to retain and restore three 'historically and architecturally significant buildings' - Capitol Theatre, Capitol Building and Stamford House - for re-use. In particular, URA said that Capitol Theatre is required to be used as an arts or entertainment-related performance venue. Capitol Centre, on the other hand, can be torn down.
The winning bidder is also required to set aside 25 per cent of the total gross floor area for hotel use. This will help to strengthen the hotel cluster in the area, which now includes Swissotel The Stamford, The Fairmont and Grand Plaza Park Hotel.
The bidders will now present their concepts to a concept evaluation panel put together by URA.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Capitol Building: The eventual developer of the site must retain and restore three buildings' - Capitol Theatre, Capitol Building and Stamford House - for re-use. Bidders will now present their concept to an evaluation panel
Landmark site at City Hall draws 14 bids
Far East submits 3 separate bids, Wing Tai and a consortium 2 each
By UMA SHANKARI
(SINGAPORE) Ten developers and consortiums handed in 14 different bids to buy and redevelop a landmark commercial site at City Hall - with the historic Capitol Theatre, Capitol Building and Stamford House on it - by the close of the state tender yesterday.
Far East Organization submitted three separate bids while two bids were put in each by Wing Tai Holdings and a consortium made up of Perennial Real Estate, Chesham Properties and TOP Property Investment.
And one bid each was submitted by: CapitaMalls Asia and parent company CapitaLand; GuocoLand; Park Hotel Group; United Engineers; YTL Corporation; private equity fund manager GAW Capital Partners; and a consortium made up of Sin Heng Chan Group, Kim Eng Group and Japan's Takenaka Group.
The amount of each bid was not revealed by the Urban Redevelopment Authority (URA) as the land parcel is being sold through a 'concept and price revenue' tender process.
Under this system, tenderers are required to submit their concept proposals and tender prices in two separate envelopes. The concept proposals will be first evaluated against a specified set of criteria and only those that meet the criteria will be considered. The site will then be awarded to the tender with the highest bid price among those with acceptable concept proposals.
Developers can therefore choose to submit multiple bids, as Far East Organization, Wing Tai Holdings and the consortium led by Perennial Real Estate have done. Perennial Real Estate is led by Pua Seck Guan, ex-CapitaLand head of retail.
The 99-year leasehold site, which is located at the junction of Stamford Road and North Bridge Road and which also comprises Capitol Centre and a subterranean parcel that will link directly to City Hall MRT station, was launched for sale in April this year.
The tender was triggered after an unnamed developer committed to bid at least $100 million - or $184 per square foot per plot ratio (psf ppr) - for it.
Analysts said then that the plot can fetch $400-$600 psf ppr.
The eventual developer of the site is required to retain and restore three 'historically and architecturally significant buildings' - Capitol Theatre, Capitol Building and Stamford House - for re-use. In particular, URA said that Capitol Theatre is required to be used as an arts or entertainment-related performance venue. Capitol Centre, on the other hand, can be torn down.
The winning bidder is also required to set aside 25 per cent of the total gross floor area for hotel use. This will help to strengthen the hotel cluster in the area, which now includes Swissotel The Stamford, The Fairmont and Grand Plaza Park Hotel.
The bidders will now present their concepts to a concept evaluation panel put together by URA.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Capitol Building: The eventual developer of the site must retain and restore three buildings' - Capitol Theatre, Capitol Building and Stamford House - for re-use. Bidders will now present their concept to an evaluation panel
BT : Newton View for sale en bloc
Business Times - 19 Aug 2010
Newton View for sale en bloc
Freshly launched unit at The Scala in Serangoon also up for auction
By EMILYN YAP
OWNERS of Newton View have climbed aboard the collective-sale bandwagon, putting their estate up for tender with an indicative price of $153-155 million.
The freehold residential development at 26 Newton Road (between Newton and Novena MRT stations) sits on a 37,577 square foot site with a plot ratio of 2.8 and a permissible gross floor area (GFA) of 105,215 sq ft.
Including an extra 10 per cent of space for balconies, the GFA can go up to 115,737 sq ft. Savills Singapore is handling the tender and expects the winning developer to be able to build a condominium with about 80 units averaging 1,300 sq ft each.
The developer will have to pay an estimated development charge of some $582,000. At the indicative price, the overall cost of the site would work out to $1,460-$1,479 psf per plot ratio (psf ppr).
Savills' investment sales head Steven Ming reckons Newton View's location is a selling point. 'New developments in the area have been substantially sold, reflecting the location's desirability,' he said.
Separately, a two-bedroom unit at The Scala in Serangoon - fresh from a developer's launch last month - has been put up for auction.
Industry watchers say it is unusual for an owner to sell a residential property at auction so soon after a launch. Hong Leong Holdings rolled out the 99-year leasehold 468-unit project in the last week of July. According to official data, 68 units were left that month.
Jones Lang LaSalle is handling this owner's sale. Its head of auctions Mok Sze Sze said the seller is a regular client who has put other properties up for auction previously, and is confident of selling the unit this way.
DTZ's senior director for investment advisory and auction, Shaun Poh, said owners typically auction units some time after launch, when a project is close to obtaining its temporary occupation permit (TOP) or has been substantially constructed.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Newton View for sale en bloc
Freshly launched unit at The Scala in Serangoon also up for auction
By EMILYN YAP
OWNERS of Newton View have climbed aboard the collective-sale bandwagon, putting their estate up for tender with an indicative price of $153-155 million.
The freehold residential development at 26 Newton Road (between Newton and Novena MRT stations) sits on a 37,577 square foot site with a plot ratio of 2.8 and a permissible gross floor area (GFA) of 105,215 sq ft.
Including an extra 10 per cent of space for balconies, the GFA can go up to 115,737 sq ft. Savills Singapore is handling the tender and expects the winning developer to be able to build a condominium with about 80 units averaging 1,300 sq ft each.
The developer will have to pay an estimated development charge of some $582,000. At the indicative price, the overall cost of the site would work out to $1,460-$1,479 psf per plot ratio (psf ppr).
Savills' investment sales head Steven Ming reckons Newton View's location is a selling point. 'New developments in the area have been substantially sold, reflecting the location's desirability,' he said.
Separately, a two-bedroom unit at The Scala in Serangoon - fresh from a developer's launch last month - has been put up for auction.
Industry watchers say it is unusual for an owner to sell a residential property at auction so soon after a launch. Hong Leong Holdings rolled out the 99-year leasehold 468-unit project in the last week of July. According to official data, 68 units were left that month.
Jones Lang LaSalle is handling this owner's sale. Its head of auctions Mok Sze Sze said the seller is a regular client who has put other properties up for auction previously, and is confident of selling the unit this way.
DTZ's senior director for investment advisory and auction, Shaun Poh, said owners typically auction units some time after launch, when a project is close to obtaining its temporary occupation permit (TOP) or has been substantially constructed.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Katong apts put up for collective sale
Business Times - 18 Aug 2010
Katong apts put up for collective sale
Amber Glades and Robin Court hope to be third time lucky
By UMA SHANKARI
AMBER Glades, off Amber Road, and Robin Court, with an adjoining bungalow at Robin Drive, are being put up for collective sale - for the third time.
The 63-unit freehold Amber Glades was first offered for sale in October 2007 for $145 million or $1,345 per sq ft per plot ratio (psf ppr) including a development charge.
The project was re-launched in April 2008 at a lower price of $127 million, or $1,140 psf ppr including a development charge - 15 per cent cheaper than the first time around.
Now the sellers are hoping they will be third-time lucky. They are asking for $130 million. This translates to a land price of some $1,091 psf ppr - including a development charge of $7.5 million and assuming a developer will maximise the potential of the 10 per cent of extra gross floor area allowed for balcony space.
'With an evident pick-up in momentum for collective-sale sites, low interest rates and depleting land banks among developers, we are optimistic this corner plot will draw keen interest, particularly as it is in a part of Katong where many new projects have enjoyed good sales,' said Ho Eng Joo, executive director of investment sales at Colliers International, which is marketing the project.
The successful buyer can re-develop the site into a 22-storey residential project comprising some 150 units of 840 sq ft each, or 84 units of 1,500 sq ft each, Colliers said.
It is a similar story for the 15-unit Robin Court and the adjoining No 1 Robin Drive, which were put up for sale with a third property in late 2007 at a price of $1,500-$1,600 psf ppr.
After there were no takers, the two properties were re-launched in July 2008 for $58-$60 million, or $964-$996 psf ppr - a 40 per cent cut in the asking price. But there were still no takers then, in the midst of the global financial crisis.
Now, the majority owners of Robin Court and the sole owner of No 1 Robin Drive are asking for $66 million to $74 million, or $1,046-$1,172 psf ppr.
This pricing assumes the developer would maximise the potential of the 10 per cent of extra gross floor area allowable for balcony space, and the remnant state land may be purchased.
'We believe this offering will be hot,' said Karamjit Singh, managing director of Credo Real Estate, which is marketing the project. 'This is a District 10 site with a prestigious No 1 Robin Drive address. It enjoys the convenience of a train station a stone's throw away, and is within walking distance of the most popular primary schools. On top of that, the sellers' expectations are very reasonable.'
About 60 apartment units of an average size of 1,000 sq ft - depending on layout and configuration - can be built on the plot, Credo said. Mr Singh reckons a developer would break even around $1,600-$1,750 psf.
Separately, Jones Lang LaSalle (JLL) has put up for collective sale by tender a row of 13 freehold shophouses in Owen Road. The indicative price is around $43 million - or $930 psf ppr - subject to the tender process.
All the owners have agreed to the sale of the 15,388 sq ft site, which was zoned 'residential with commercial at first storey'. The plot could potentially yield 36 apartment units of an average size of 1,000 sq ft and 11 commercial units of an average size of 800 sq ft each, JLL said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
District 10 site: The majority owners of Robin Court and the sole owner of No 1 Robin Drive are asking for $66 million to $74 million, or $1,046-$1,172 psf ppr
Katong apts put up for collective sale
Amber Glades and Robin Court hope to be third time lucky
By UMA SHANKARI
AMBER Glades, off Amber Road, and Robin Court, with an adjoining bungalow at Robin Drive, are being put up for collective sale - for the third time.
The 63-unit freehold Amber Glades was first offered for sale in October 2007 for $145 million or $1,345 per sq ft per plot ratio (psf ppr) including a development charge.
The project was re-launched in April 2008 at a lower price of $127 million, or $1,140 psf ppr including a development charge - 15 per cent cheaper than the first time around.
Now the sellers are hoping they will be third-time lucky. They are asking for $130 million. This translates to a land price of some $1,091 psf ppr - including a development charge of $7.5 million and assuming a developer will maximise the potential of the 10 per cent of extra gross floor area allowed for balcony space.
'With an evident pick-up in momentum for collective-sale sites, low interest rates and depleting land banks among developers, we are optimistic this corner plot will draw keen interest, particularly as it is in a part of Katong where many new projects have enjoyed good sales,' said Ho Eng Joo, executive director of investment sales at Colliers International, which is marketing the project.
The successful buyer can re-develop the site into a 22-storey residential project comprising some 150 units of 840 sq ft each, or 84 units of 1,500 sq ft each, Colliers said.
It is a similar story for the 15-unit Robin Court and the adjoining No 1 Robin Drive, which were put up for sale with a third property in late 2007 at a price of $1,500-$1,600 psf ppr.
After there were no takers, the two properties were re-launched in July 2008 for $58-$60 million, or $964-$996 psf ppr - a 40 per cent cut in the asking price. But there were still no takers then, in the midst of the global financial crisis.
Now, the majority owners of Robin Court and the sole owner of No 1 Robin Drive are asking for $66 million to $74 million, or $1,046-$1,172 psf ppr.
This pricing assumes the developer would maximise the potential of the 10 per cent of extra gross floor area allowable for balcony space, and the remnant state land may be purchased.
'We believe this offering will be hot,' said Karamjit Singh, managing director of Credo Real Estate, which is marketing the project. 'This is a District 10 site with a prestigious No 1 Robin Drive address. It enjoys the convenience of a train station a stone's throw away, and is within walking distance of the most popular primary schools. On top of that, the sellers' expectations are very reasonable.'
About 60 apartment units of an average size of 1,000 sq ft - depending on layout and configuration - can be built on the plot, Credo said. Mr Singh reckons a developer would break even around $1,600-$1,750 psf.
Separately, Jones Lang LaSalle (JLL) has put up for collective sale by tender a row of 13 freehold shophouses in Owen Road. The indicative price is around $43 million - or $930 psf ppr - subject to the tender process.
All the owners have agreed to the sale of the 15,388 sq ft site, which was zoned 'residential with commercial at first storey'. The plot could potentially yield 36 apartment units of an average size of 1,000 sq ft and 11 commercial units of an average size of 800 sq ft each, JLL said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
District 10 site: The majority owners of Robin Court and the sole owner of No 1 Robin Drive are asking for $66 million to $74 million, or $1,046-$1,172 psf ppr
BT : Li Ka-shing pays top dollar for two sites
Business Times - 18 Aug 2010
Li Ka-shing pays top dollar for two sites
His company forked out a total of HK$7.6b for the land
(HONG KONG) Hong Kong's richest man, Li Ka-shing, snapped up two prime residential sites yesterday for prices well above market estimates, despite government measures to cool the overheating property market.
Mr Li's Cheung Kong (Holdings) bought a 7,551-square-metre waterfront plot in the city's Kowloon district for HK$3.51 billion (S$612 million), with around 150 bids placed in just over an hour.
The final price was nearly twice the opening bid of HK$1.77 billion, and translates into a per-square-foot price of HK$9,597, making it the most expensive land in the district.
The whopping price exceeded estimates of HK$2.3-2.82 billion from analysts polled by Dow Jones Newswires.
The blue-chip developer also bought another auctioned site, a 7,326-square- metre plot also in Kowloon, for HK$4.1 billion.
The price was 43.5 per cent higher than the opening bid and above the top end of market estimate of about HK$3.9 billion.
Developers remained upbeat despite a series of government measures announced last week to rein in Hong Kong's soaring residential market.
House prices in Hong Kong surged nearly 45 per cent from their trough at the end of 2008, while prices of some luxury flats have returned to, or surpassed, the peaks of the 1997 property boom.
'The new measures will not change the imbalance of supply and demand of residential buildings. The increase in land supply in recent months is not sufficient to satisfy the large appetite for residential flats,' Charles Chan, managing director for Savills Valuation and Professional Services, told AFP.
The government said last week it would increase land supply and tighten mortgage lending to avoid a property bubble.
John Tsang, the city's financial chief, said the government would auction three more sites before March 2011, regardless of whether developers tabled an offer equal to at least 80 per cent of the government's minimum price - a requirement under the city's land auction rules.
Two of the three sites will be auctioned in September, he said.
'A large amount of hot money has flown into Hong Kong's financial system. Flat prices of some popular housing developments are fast approaching historic highs,' Mr Tsang said last week.
'There is an increased risk of a property bubble forming because interest rates are expected to continue to be very low for some time to come.'
The Hong Kong Monetary Authority warned banks that the credit risks they faced in residential mortgages were rising and unveiled measures to help them cope.
These included lowering the loan-to-valuation ceiling to 60 per cent for properties worth HK$12 million or more.
The ceiling for all non- owner-occupied residential mortgages would also be lowered to 60 per cent\. \-- AFP
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Li Ka-shing pays top dollar for two sites
His company forked out a total of HK$7.6b for the land
(HONG KONG) Hong Kong's richest man, Li Ka-shing, snapped up two prime residential sites yesterday for prices well above market estimates, despite government measures to cool the overheating property market.
Mr Li's Cheung Kong (Holdings) bought a 7,551-square-metre waterfront plot in the city's Kowloon district for HK$3.51 billion (S$612 million), with around 150 bids placed in just over an hour.
The final price was nearly twice the opening bid of HK$1.77 billion, and translates into a per-square-foot price of HK$9,597, making it the most expensive land in the district.
The whopping price exceeded estimates of HK$2.3-2.82 billion from analysts polled by Dow Jones Newswires.
The blue-chip developer also bought another auctioned site, a 7,326-square- metre plot also in Kowloon, for HK$4.1 billion.
The price was 43.5 per cent higher than the opening bid and above the top end of market estimate of about HK$3.9 billion.
Developers remained upbeat despite a series of government measures announced last week to rein in Hong Kong's soaring residential market.
House prices in Hong Kong surged nearly 45 per cent from their trough at the end of 2008, while prices of some luxury flats have returned to, or surpassed, the peaks of the 1997 property boom.
'The new measures will not change the imbalance of supply and demand of residential buildings. The increase in land supply in recent months is not sufficient to satisfy the large appetite for residential flats,' Charles Chan, managing director for Savills Valuation and Professional Services, told AFP.
The government said last week it would increase land supply and tighten mortgage lending to avoid a property bubble.
John Tsang, the city's financial chief, said the government would auction three more sites before March 2011, regardless of whether developers tabled an offer equal to at least 80 per cent of the government's minimum price - a requirement under the city's land auction rules.
Two of the three sites will be auctioned in September, he said.
'A large amount of hot money has flown into Hong Kong's financial system. Flat prices of some popular housing developments are fast approaching historic highs,' Mr Tsang said last week.
'There is an increased risk of a property bubble forming because interest rates are expected to continue to be very low for some time to come.'
The Hong Kong Monetary Authority warned banks that the credit risks they faced in residential mortgages were rising and unveiled measures to help them cope.
These included lowering the loan-to-valuation ceiling to 60 per cent for properties worth HK$12 million or more.
The ceiling for all non- owner-occupied residential mortgages would also be lowered to 60 per cent\. \-- AFP
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Rich Londoners hire new breed of housing agents
Business Times - 18 Aug 2010
Rich Londoners hire new breed of housing agents
(LONDON) Beverley Kirby gave up trying to buy a house on her own in London's Chelsea area after twice getting burned by owners reneging on agreements to sell to her. The night before Ms Kirby was due to sign for one £4.5 million (S$9.5 million) house a year ago, she was trumped by an offer that was £500,000 higher. The aborted deal cost her £4,000 in fees and left her with a few months to vacate the apartment she had sold.
'I was getting desperate,' said Ms Kirby, who bought and sold seven other homes previously with her former husband. 'There was madness in the market. People had no ethics at all.'
That experience, along with the surge in prices for a dwindling number of top-end properties for sale, led Ms Kirby to hire Robert Bailey, a type of broker known as a buying agent. Mr Bailey is one of several hundred operators in a field that barely existed in the UK 15 years ago. He found her a home that wasn't advertised. Ms Kirby moved into it in early April after Mr Bailey helped her carry out refurbishments and get planning consent to use the top of the garage as a roof terrace.
The agents are a response to a flaw in the British real estate system that favours sellers, said Phil Spencer, who hosts property-search shows on UK television with fellow agent, Kirstie Allsopp. Typically, potential UK homebuyers register with 'estate agents', who show them properties but are ultimately paid by the sellers.
In the United States, both buyers and sellers usually hire brokers, though only the sellers pay commission. These fees are shared by both sets of brokers. 'A buyer has nobody to help them with the biggest financial decision of their life,' said Mr Spencer, 40.
The new breed of advisers charge the potential purchaser a retainer plus commissions of as much as 2.75 per cent of the sale price. It's a cottage industry largely used by the wealthy because it's too expensive for most people with budgets of less than about £500,000.
Buying agents have proliferated in the luxury markets of London and southern England as a weaker pound lured overseas investors. They do everything from locating the home and negotiating the price, to arranging legal and survey work and researching potential pitfalls such as noisy neighbours. They are prized largely for speeding up the process to reduce the chance of getting 'gazumped', a British term for being trumped by a higher bid before signing contracts.
'Over the past five years especially, there has been a quadrupling in the number of buying agents in the prime central London market and their numbers increase all the time,' said Noel de Keyzer, head of house sales at broker Savills plc's Sloane Street branch in the city.
There are fewer luxury properties for sale in prime London neighbourhoods even as demand is rising. Residential purchases in the Westminster and Kensington & Chelsea boroughs, where average house prices exceed £1.3 million, are down 23 per cent from the average since 1996, according to London Central Portfolio Ltd, which buys and manages prime rental property investments.
About 100 properties worth at least £20 million have been purchased since 2006 - a category that's less than 10 per cent of the prime central London market. Most deals of that size are now handled by buying agents, Mr de Keyzer said. The scarcity of prime homes for sale lifted prices in central London by 23 per cent since a year-long slump ended in March 2009, Knight Frank LLP estimates.
Agents have to court private banks or wealth managers to generate new leads to sustain the deal flow. Dozens of individuals, many former brokers, have set up on their own as overseas buyers flocked to London. 'All you have to do is two or three deals a year and you earn as much as you did before,' said Johnny Turnbull, who has worked independently since 2006 after heading the London arm of Prime Purchase, Savills's buying-agent arm.
Some independent buying agents say rivals owned by brokers have a conflict of interest because their companies represent both the buyer and the seller. 'They're trying to milk the fees at both ends,' said Francis Long, who set up buying agency Hanslips 12 years ago.
Savills and Knight Frank say there are 'Chinese walls' and enough transparency to avoid conflicts, and that few customers have problems with the arrangement. Buying agents rely on relationships with brokers, developers and owners to get their customers first in line for a home. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Rich Londoners hire new breed of housing agents
(LONDON) Beverley Kirby gave up trying to buy a house on her own in London's Chelsea area after twice getting burned by owners reneging on agreements to sell to her. The night before Ms Kirby was due to sign for one £4.5 million (S$9.5 million) house a year ago, she was trumped by an offer that was £500,000 higher. The aborted deal cost her £4,000 in fees and left her with a few months to vacate the apartment she had sold.
'I was getting desperate,' said Ms Kirby, who bought and sold seven other homes previously with her former husband. 'There was madness in the market. People had no ethics at all.'
That experience, along with the surge in prices for a dwindling number of top-end properties for sale, led Ms Kirby to hire Robert Bailey, a type of broker known as a buying agent. Mr Bailey is one of several hundred operators in a field that barely existed in the UK 15 years ago. He found her a home that wasn't advertised. Ms Kirby moved into it in early April after Mr Bailey helped her carry out refurbishments and get planning consent to use the top of the garage as a roof terrace.
The agents are a response to a flaw in the British real estate system that favours sellers, said Phil Spencer, who hosts property-search shows on UK television with fellow agent, Kirstie Allsopp. Typically, potential UK homebuyers register with 'estate agents', who show them properties but are ultimately paid by the sellers.
In the United States, both buyers and sellers usually hire brokers, though only the sellers pay commission. These fees are shared by both sets of brokers. 'A buyer has nobody to help them with the biggest financial decision of their life,' said Mr Spencer, 40.
The new breed of advisers charge the potential purchaser a retainer plus commissions of as much as 2.75 per cent of the sale price. It's a cottage industry largely used by the wealthy because it's too expensive for most people with budgets of less than about £500,000.
Buying agents have proliferated in the luxury markets of London and southern England as a weaker pound lured overseas investors. They do everything from locating the home and negotiating the price, to arranging legal and survey work and researching potential pitfalls such as noisy neighbours. They are prized largely for speeding up the process to reduce the chance of getting 'gazumped', a British term for being trumped by a higher bid before signing contracts.
'Over the past five years especially, there has been a quadrupling in the number of buying agents in the prime central London market and their numbers increase all the time,' said Noel de Keyzer, head of house sales at broker Savills plc's Sloane Street branch in the city.
There are fewer luxury properties for sale in prime London neighbourhoods even as demand is rising. Residential purchases in the Westminster and Kensington & Chelsea boroughs, where average house prices exceed £1.3 million, are down 23 per cent from the average since 1996, according to London Central Portfolio Ltd, which buys and manages prime rental property investments.
About 100 properties worth at least £20 million have been purchased since 2006 - a category that's less than 10 per cent of the prime central London market. Most deals of that size are now handled by buying agents, Mr de Keyzer said. The scarcity of prime homes for sale lifted prices in central London by 23 per cent since a year-long slump ended in March 2009, Knight Frank LLP estimates.
Agents have to court private banks or wealth managers to generate new leads to sustain the deal flow. Dozens of individuals, many former brokers, have set up on their own as overseas buyers flocked to London. 'All you have to do is two or three deals a year and you earn as much as you did before,' said Johnny Turnbull, who has worked independently since 2006 after heading the London arm of Prime Purchase, Savills's buying-agent arm.
Some independent buying agents say rivals owned by brokers have a conflict of interest because their companies represent both the buyer and the seller. 'They're trying to milk the fees at both ends,' said Francis Long, who set up buying agency Hanslips 12 years ago.
Savills and Knight Frank say there are 'Chinese walls' and enough transparency to avoid conflicts, and that few customers have problems with the arrangement. Buying agents rely on relationships with brokers, developers and owners to get their customers first in line for a home. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Chinese state firm sinks roots in S'pore, plans to take on the world
Business Times - 18 Aug 2010
Chinese state firm sinks roots in S'pore, plans to take on the world
MCC Land uses Bukit Batok base to tap the region
By EMILYN YAP
(SINGAPORE) A Chinese state-owned enterprise is quietly growing its global footprint out of a nondescript industrial building in the leafy suburbs of Bukit Batok.
The 19th floor has been taken up by China Metallurgical Group Corporation (MCC), which has businesses stretching across natural resource exploration, equipment fabrication, engineering, construction and property development around the world.
MCC has been in Singapore for almost 20 years, registering its construction unit China Jingye Engineering Corporation as early as 1996. But it was only with the recent incorporation of its property development unit MCC Land that the market sat up and took notice.
MCC Land is eyeing expansion - literally. Managing director Tan Zhiyong has hanging in his office a large map of Singapore dotted with stickers: two pink ones for the land parcels it has bagged, and more than 20 green ones for other plots that the government has to offer.
'We will pursue long- term development in Singapore,' says Mr Tan in Mandarin in an interview with The Business Times. 'We are not here to offer just one or two projects. We plan to offer long-term real estate services just like a local developer.'
In time to come, MCC Land may even go regional, partnering other developers to enter countries such as Malaysia and Indonesia.
Registered only in February, MCC Land stirred up the property market in March when it pipped big boys such as Far East Organization to win the state tender for an executive condominium site in Yishun. Its bid of $127.8 million or $281 per square foot per plot ratio (psf ppr) far exceeded analysts' expectations.
Just three months later, it took home another residential plot in Sembawang by offering $131.7 million or $387 psf ppr - a price that again surpassed market estimates.
There were rumblings among market watchers about the high bids but Mr Tan plays down these concerns. MCC Land made reasonable bids given that they were not too far off from the second and third-placed ones, he says.
Furthermore, China Jingye will be the contractor for both sites and construction costs will be lower, giving MCC Land a competitive edge, Mr Tan says. 'On the whole, we will not be charging high prices just because our bids were higher.'
MCC Land plans to launch The Canopy, an executive condominium project with about 400 units in Yishun in Q4. And in Sembawang, it could roll out a condominium with about 300 units in Q1 next year. Both projects will have lush landscaping and water features for a tropical resort feel.
Mr Tan acknowledges that consumers may not be familiar with MCC Land yet. 'We can't say we weren't worried. Some may know us as a contractor but we are quite new to the market as a developer,' he says.
To ensure that its projects will appeal to consumers here, the firm engaged local architects Surbana and SAA. It also sought feedback from local employees during the design process. 'I believe many people will like our products when they are launched,' Mr Tan says.
Some have wondered why MCC Land chose to enter the Singapore property market this year, amid fierce competition for sites and rising land prices. And there is a bigger question: why would a Chinese developer be interested in tiny Singapore when there are still so many business opportunities in vast China?
MCC has property projects in cities such as Beijing, Nanjing and Wuhan but it has to venture abroad, Mr Tan says. This is something that the Chinese government has been encouraging state-owned enterprises to do. 'To be an international corporation, we can't have operations only in China . . . To build our brand, we have to expand overseas,' he says.
MCC has gained a good understanding of the Singapore market, so becoming a developer here was the next logical step. 'We have handled so many construction projects and real estate is a major part of MCC's business. So it's quite a natural progression for us to go into property development,' Mr Tan says.
Singapore's property market is attractive because it carries lower risks, offers more stable returns, and provides opportunities for regional expansion, he adds. MCC Land has plans to use the experience it gains here to enter other markets such as Indonesia and Malaysia.
It also helps that Singapore's culture is not too different from China's, Mr Tan says. Perhaps as proof of how easy it is to live here, he has settled down with his wife and two children for the last 14 years.
MCC Land is taking competition with local developers in its stride. 'No company can monopolise a market. It's not good for consumers too,' Mr Tan says. 'Every market is the same - the Chinese come to Singapore, Singaporeans go to China. We are all competing in the same market.'
In fact, he believes more developers from the Chinese mainland could come for a slice of the property pie. There is evidence of this happening. Last year, China Sonangol Land bought 21 Angullia Park from OUE for $283 million. Qingdao Construction, which started taking on property development projects some years ago, also won the tender for a site in June.
'Singapore is a free market and there aren't many investment restrictions. Some private developers like Singapore and may even wish to immigrate here,' Mr Tan says. 'I think there will be more and more Chinese developers entering the Singapore market.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Tan: We will pursue long-term development here. We aren't here to offer just one or two projects. We will offer long-term real estate services just like a local developer
Chinese state firm sinks roots in S'pore, plans to take on the world
MCC Land uses Bukit Batok base to tap the region
By EMILYN YAP
(SINGAPORE) A Chinese state-owned enterprise is quietly growing its global footprint out of a nondescript industrial building in the leafy suburbs of Bukit Batok.
The 19th floor has been taken up by China Metallurgical Group Corporation (MCC), which has businesses stretching across natural resource exploration, equipment fabrication, engineering, construction and property development around the world.
MCC has been in Singapore for almost 20 years, registering its construction unit China Jingye Engineering Corporation as early as 1996. But it was only with the recent incorporation of its property development unit MCC Land that the market sat up and took notice.
MCC Land is eyeing expansion - literally. Managing director Tan Zhiyong has hanging in his office a large map of Singapore dotted with stickers: two pink ones for the land parcels it has bagged, and more than 20 green ones for other plots that the government has to offer.
'We will pursue long- term development in Singapore,' says Mr Tan in Mandarin in an interview with The Business Times. 'We are not here to offer just one or two projects. We plan to offer long-term real estate services just like a local developer.'
In time to come, MCC Land may even go regional, partnering other developers to enter countries such as Malaysia and Indonesia.
Registered only in February, MCC Land stirred up the property market in March when it pipped big boys such as Far East Organization to win the state tender for an executive condominium site in Yishun. Its bid of $127.8 million or $281 per square foot per plot ratio (psf ppr) far exceeded analysts' expectations.
Just three months later, it took home another residential plot in Sembawang by offering $131.7 million or $387 psf ppr - a price that again surpassed market estimates.
There were rumblings among market watchers about the high bids but Mr Tan plays down these concerns. MCC Land made reasonable bids given that they were not too far off from the second and third-placed ones, he says.
Furthermore, China Jingye will be the contractor for both sites and construction costs will be lower, giving MCC Land a competitive edge, Mr Tan says. 'On the whole, we will not be charging high prices just because our bids were higher.'
MCC Land plans to launch The Canopy, an executive condominium project with about 400 units in Yishun in Q4. And in Sembawang, it could roll out a condominium with about 300 units in Q1 next year. Both projects will have lush landscaping and water features for a tropical resort feel.
Mr Tan acknowledges that consumers may not be familiar with MCC Land yet. 'We can't say we weren't worried. Some may know us as a contractor but we are quite new to the market as a developer,' he says.
To ensure that its projects will appeal to consumers here, the firm engaged local architects Surbana and SAA. It also sought feedback from local employees during the design process. 'I believe many people will like our products when they are launched,' Mr Tan says.
Some have wondered why MCC Land chose to enter the Singapore property market this year, amid fierce competition for sites and rising land prices. And there is a bigger question: why would a Chinese developer be interested in tiny Singapore when there are still so many business opportunities in vast China?
MCC has property projects in cities such as Beijing, Nanjing and Wuhan but it has to venture abroad, Mr Tan says. This is something that the Chinese government has been encouraging state-owned enterprises to do. 'To be an international corporation, we can't have operations only in China . . . To build our brand, we have to expand overseas,' he says.
MCC has gained a good understanding of the Singapore market, so becoming a developer here was the next logical step. 'We have handled so many construction projects and real estate is a major part of MCC's business. So it's quite a natural progression for us to go into property development,' Mr Tan says.
Singapore's property market is attractive because it carries lower risks, offers more stable returns, and provides opportunities for regional expansion, he adds. MCC Land has plans to use the experience it gains here to enter other markets such as Indonesia and Malaysia.
It also helps that Singapore's culture is not too different from China's, Mr Tan says. Perhaps as proof of how easy it is to live here, he has settled down with his wife and two children for the last 14 years.
MCC Land is taking competition with local developers in its stride. 'No company can monopolise a market. It's not good for consumers too,' Mr Tan says. 'Every market is the same - the Chinese come to Singapore, Singaporeans go to China. We are all competing in the same market.'
In fact, he believes more developers from the Chinese mainland could come for a slice of the property pie. There is evidence of this happening. Last year, China Sonangol Land bought 21 Angullia Park from OUE for $283 million. Qingdao Construction, which started taking on property development projects some years ago, also won the tender for a site in June.
'Singapore is a free market and there aren't many investment restrictions. Some private developers like Singapore and may even wish to immigrate here,' Mr Tan says. 'I think there will be more and more Chinese developers entering the Singapore market.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Tan: We will pursue long-term development here. We aren't here to offer just one or two projects. We will offer long-term real estate services just like a local developer
ST : Council for Estate Agencies
Aug 17, 2010
Council for Estate Agencies
A NEW statutory board will be set up under the Ministry of National Development to serve as a regulator for the real estate industry here,under the Estate Agents Bill tabled in Parliament on Monday.
To be christened the Council for Estate Agencies (CEA), the regulator will take over the Inland Revenue Authority of Singapore's current role in licensing real estate agencies.
The CEA would be empowered to prescribe codes of practice for estate agencies and agents, and ensure that agreements between agencies and clients do not contain unfair clauses.
Estate agents will be required to register with the CEA, pass an examination and possess the necessary qualifications.
Each agency will also be required to appoint a key executive officer, who will be responsible for the overall management of the business and the supervision of all its agents.
The Bill also empowers the CEA to investigate complaints against agencies and agents, and to mete out suitable penalties, including suspensions and fines.
Information on all registered estate agents, including the name of the agency they work for and disciplinary actions taken against them, will be made available on a public register.
Council for Estate Agencies
A NEW statutory board will be set up under the Ministry of National Development to serve as a regulator for the real estate industry here,under the Estate Agents Bill tabled in Parliament on Monday.
To be christened the Council for Estate Agencies (CEA), the regulator will take over the Inland Revenue Authority of Singapore's current role in licensing real estate agencies.
The CEA would be empowered to prescribe codes of practice for estate agencies and agents, and ensure that agreements between agencies and clients do not contain unfair clauses.
Estate agents will be required to register with the CEA, pass an examination and possess the necessary qualifications.
Each agency will also be required to appoint a key executive officer, who will be responsible for the overall management of the business and the supervision of all its agents.
The Bill also empowers the CEA to investigate complaints against agencies and agents, and to mete out suitable penalties, including suspensions and fines.
Information on all registered estate agents, including the name of the agency they work for and disciplinary actions taken against them, will be made available on a public register.
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