Friday, December 30, 2011

All 338 units sold at Far East's The Tennery

Straits Times: Fri, Dec 30
ALL units of The Tennery, a home office or so-called Soho-style project in Bukit Panjang, have been sold, developer Far East Organization said yesterday.

It said all 338 of the 'small office, home office' (Soho) apartments were sold over the span of a year, at prices averaging $1,200 per sq ft. More than 80 per cent of the buyers were Singaporeans and permanent residents.

As of Dec 1, all but one of the units had been sold.

'Soho' is a marketing term used by developers and their property agents, and does not refer to a specific development type granted approval by the Urban Redevelopment Authority.

The units typically come with space that can be customised as offices, as well as connectivity technology.

The Soho apartments at The Tennery are one- and two-bedroom units with a floor-to-ceiling height of 3.4m. The one-bedroom flats range from 619 sq ft to 640 sq ft, while the two-bedroom flats range from 860 sq ft to 950 sq ft.

The 99-year leasehold development is estimated to be completed in 2014.

'The Soho lifestyle is a growing trend, and buyers are increasingly attracted to integrated developments that give them the flexibility to live, work and play within the same location,' said Mr Chia Boon Kuah, Far East's chief operating officer of property sales and executive director.

The Tennery is above the LRT-connected 121,000 sq ft Junction 10 mall, which recently got its temporary occupation permit and is 90 per cent occupied.

Junction 10 tenants 'are in the process of fitting out their units', Far East said, with the first tenants due to start operations next week.

Tenants include Giant, Watsons, Guardian, BreadTalk, ToastBox, BBQ Chicken and Kumon.

With the resumption of the Bukit Panjang LRT service to Junction 10 today, commuters will have access to the LRT station on the third storey of the mall, Far East said.

Mr Chia added that Far East was also getting 'strong interest' from buyers in its latest Soho project, The Hillier, located in Hillview Avenue.

Like The Tennery, The Hillier is also integrated with a mall, the hillV2, which will include stores like New York gourmet grocers Dean & Deluca.

Source: The Straits Times © Singapore Press Holdings Ltd

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Increase in industrial land supply expected to soften prices, rents

Business Times: Fri, Dec 30

THE planned increase in land supply under the Industrial Government Land Sales (GLS) Programme in H1 2012 will help soften industrial property prices and rents to a level within reach of genuine end users, say some property consultants.

Another change announced by the Ministry of Trade and Industry (MTI) yesterday that will be a boon to industrialists who have been priced out of the market will be the new conditions on strata subdivision of projects on sites sold through the MTI's Industrial GLS Programme from next year. This will put a lid on the proliferation of small industrial units that have been chased by property speculators and investors, driving up industrial property values in the process. Developers of such projects have also, in turn, pushed up the price of industrial land at state tenders.

Developers who have been building strata industrial projects will now take a step back and see what's happening, said Knight Frank senior director (industrial) Lim Kien Kim.

This is likely to tame tender prices for industrial land in the GLS Programme which, as DTZ South-east Asia chief operating officer Ong Choon Fah noted, have roughly doubled generally in the past year.

Another big plus for industrialists will be the 18 small plots located in the Tuas View Extension that are being offered on short tenure of 19 years. The plots are small (mostly up to a hectare each) and have a 1.0 plot ratio (ratio of maximum gross floor area to land area), which suggests that they will be turned into landed factories.

The short tenure is likely to push developers out of tenders for such sites as it may be difficult for them to develop factories on such sites and sell them for a profit. For one thing, it will not be easy for buyers to get a loan on such short-tenure property. 'This will mean less competition from developers bidding for sites and give end users a chance to build their own premises at a reasonable (cost),' said Mr Lim.

SLP International managing director Peter Ow noted: 'Such small sites of less than a hectare are not easy for industrialists to find and develop on their own.'

Giving his take, Colliers International director (industrial) Tan Boon Leong said: 'MTI's announcement is clearly aimed at providing more avenues for genuine industrial end-users to participate in the market.'

Mrs Ong noted that there has been concern that the recently introduced additional buyer's stamp duty on residential property purchases may divert investment interest to non-residential assets such as industrial. 'Introduction of the conditions on sale and minimum strata size are probably a pre-emptive (measure).'

The conditions will likely lead to a 'better reflection of industrial land prices, and ensure that there is sufficient supply to meet the needs of our industrialists, be they SMEs (looking to rent or purchase) or MNCs', she added.

Source: Business Times © Singapore Press Holdings Ltd

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Govt acts to rein in industrial space prices

Business Times: Fri, Dec 30
(SINGAPORE) Those hoping to make a quick buck by investing in small strata industrial units are in for a reality check.

The government has taken steps to make industrial land affordable for genuine industrialists. The move may also stop froth from spilling over to industrial property from the recently-cooled residential sector.

It will rein in investors who have been making industrial space too costly for genuine end-users.

The Ministry of Trade and Industry is stepping up land supply for the Industrial Government Land Sales Programme for the first half of 2012 to a total of nearly 24 hectares (through both confirmed and reserve lists) - up from 16 hectares in the current H2 2011 slate.

And for industrialists seeking to build their own customised premises at affordable prices, MTI is offering 18 smallish sites located off Tuas South Avenue 12 on 19-year tenure - shorter than the typical 30 and 60-year tenure for industrial plots on the GLS Programme.

More controls will ensure that strata industrial developments are built to industrial property specifications - and not snapped up by investors looking for small units. The conditions will apply for GLS parcels from Jan 1, 2012.

For selected sites near MRT stations, for example, strata subdivision of an industrial development will not be allowed for the first 10 years after the project is completed. For strata sub-divisions after that period, developers must adopt a minimum strata unit size of 150 square metres gross floor area (GFA). The thinking is that genuine industrialists will require units of at least this size, while smaller units might be snapped up by investors or touted for unauthorised office use.

This condition was already stipulated for a reserve-list plot near Aljunied MRT Station in the current H2 2011 slate when it was made available for application last month.

This plot will now be transferred to the confirmed list of the H1 2012 GLS slate. Three new plots will also fulfil the same condition. Two sites are near Tai Seng MRT Station (one each in the confirmed and reserve lists) while the third is a confirmed list plot at Bukit Batok St 23.

The minimum 150 sq m strata unit size shall also apply to multiple-user industrial developments on sites that don't have the initial 10-year bar on strata subdivision. Even if the developer holds the project for rental income, units cannot be under 150 sq m, so long as it's a multiple-user industrial project.

MTI's spokesman said: 'We have assessed that 150 sq m is the minimum working space that true industrialists require.'

Meanwhile, all multi-storey industrial developments will have to meet minimum requirements for goods lifts and loading bays.

Units in the industrial GLS project will also have to comply with minimum technical specs for an industrial project with regard to floor loading, floor-to-ceiling height and electrical provision. Industrial market watchers told BT that some recent strata industrial projects do not comply with such standard industrial specs. In at least one instance, a strata industrial project does not have a single cargo lift.

Marketing agents often tout strata industrial units to potential buyers for office use - even though such use is unauthorised. This has drawn investors to the strata industrial market and pushed up prices.

Many strata industrial projects on the market now have units mostly of 90-100 sq m. 'This is too small for industrial use. In the past few months, investors have found 100 sq m industrial units a good alternative (to residential investment) as the lump sum is affordable. So raising the minimum size for strata industrial units to 150 sq m will help take away this pool of investors, who are pushing up prices,' said Lim Kien Kim, senior director (industrial) at Knight Frank.

Said MTI's spokesman: 'All the conditions are to better meet the industrialists' requirements and will benefit genuine end-user industrialists looking for premises, whether to rent or to buy.'

MTI's H1 2012 confirmed list will have 16 sites. Besides the eight Tuas plots on short tenure and below one hectare each, the other confirmed list sites are located in Mandai Link (2.2 ha), Tampines Industrial Crescent (3.88 ha), Bukit Batok St 23 (1.5 ha), Serangoon North Ave 4 (0.8 ha), Aljunied Rd, Tai Seng Link, Kaki Bukit Rd 5/Ave 6, and Yishun Ave 9.

Welcoming MTI's announcement, Mr Lim said: 'I've heard enough cries from real users of industrial space that rents and prices have gone up to such a ridiculously high level that they find it difficult to do business here.

'Especially in the past 12 months, the industrial property market has become more speculative, like residential.'

Source: Business Times © Singapore Press Holdings Ltd

Team Marshe
Martin Koh/ Sherry Tang
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Wednesday, December 28, 2011

Danger of froth in strata industrial, office segment can be averted

Business Times: Wed, Dec 28
W ITH the additional buyer's stamp duty expected to cool the private home market, many have predicted that monies will continue to flow to other property segments, most notably strata industrial, office and shop units.

Possibly aware that this could lead to a spiral of rising prices in this sector, the authorities have already started putting certain restrictions in place.

Some developers have found a cosy niche selling small strata industrial and office units to cater to demand from those looking to park their monies in a place that's been shielded from the government's cooling measures that have been targeted at the private residential sector.

Strata industrial and commercial units are attractive to property speculators and investors with deep pockets; Central Provident Fund savings can't be used to purchase non-residential properties. The appeal of investing in strata commercial and industrial units is strong given low interest rates and volatility in financial markets.

However, excessive investment demand has potential dangers. For one, it drives up prices of such properties and genuine industrialists and other businesses that need such space for their use may find their occupation costs going up, whether they buy such premises or rent them. Investors who have paid a high price for strata industrial units, for instance, will have a high rental expectation. Alternatively, if they plan to flip their units, an end-user in the market may find the price too expensive.

Competition for land from developers keen on building strata industrial or office projects too will drive up bids for such sites at Government Land Sales (GLS) tenders - the primary source for such land. When developers pay steep amounts for sites, they will naturally try to sell their units at a high price, fuelling a cycle that will translate to higher occupation costs for end-user businesses.

Developers of strata industrial projects or their marketing agents may also tout such properties to potential buyers for office use - even though such use is unauthorised.

Market watchers reckon the authorities are probably keeping a close eye on sales of strata industrial and office units to gauge whether unhealthy demand including speculation has set in. They could come up with measures to cool demand in this segment just as they've done for the residential sector.

However, an easier solution for the authorities could be to tackle the problem at source - when they sell land through the GLS Programme. To some extent, the government has already started doing this. For instance, an industrial site near Aljunied MRT Station on the reserve list of the current H2 2011 Industrial GLS Programme that was made available for application last month, comes with the condition that strata subdivision of the development on the site is not allowed in the first 10 years after the project is completed.

Strata restrictions

Even when strata units are allowed in the development after the 10-year period, the minimum floor plate size per strata unit is set at 150 square metres. 'Based on feedback from industrialists, the typical floor plate requirement for Business 1 activities is around this size. Hence a minimum floor plate of 150 sq m for the strata units will ensure that the proposed industrial development will continue to cater to the needs of Business 1 activities,' reads the Questions and Answers section for this site listed by Urban Redevelopment Authority, land sales agent for the plot.

Business 1 use typically covers clean and light industrial and warehouse use.

On the initial 10-year bar on strata subdivision, URA says: 'Having a single owner for the first 10 years after the development is completed will ensure better management of the industrial space and provides greater flexibility in the customisation of floor plate sizes and development layouts to meet the needs of industrial users.

'The condition is not imposed for the full duration of the lease (60 years for most industrial sites) to provide the owner some business flexibility to respond to future market conditions such as requests from some industrialists to own the space they are operating in.'

The location profile, tenure and zoning for the Aljunied plot, at the corner of Aljunied Road and Sims Drive, are similar to the earlier GLS sites on which the Oxley BizHub 1 and 2 projects - with strata industrial units for sale - are being developed. The two plots, in a prime industrial location at Ubi Road 1, are between Tai Seng and MacPherson MRT stations. All three plots are zoned Business 1 and have 60-year leasehold tenure.

Such attractive industrial locations near MRT stations and close to the city are more appealing to strata industrial investors. So perhaps the government has started imposing restrictions on strata subdivisions on projects on such sites. This makes sense. It remains to be seen whether such conditions will appear on more sites in the upcoming H1 2012 Industrial GLS Programme.

Source: Business Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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Public housing policy undergoes rebuilding

Straits Times: Wed, Dec 28
PUBLIC housing underwent a sea change this year, with cornerstone policies up- ended in response to fresh challenges and the demands of an increasingly vocal population.

Red-hot demand and the resulting record high prices for homes made the affordability of public housing one of the hottest topics in May's general election.

When the dust settled, the Ministry of National Development (MND), which oversees the Housing Board (HDB), found itself being led by a new pair of hands.

Out went Mr Mah Bow Tan after 11 years at the helm, and in came Mr Khaw Boon Wan, who had volunteered for the ministerial hot seat.

Mr Khaw, who had kept a blog in his previous job as health minister, transplanted this practice to his new ministry. His 'Housing Matters' blog became the first to explain housing issues; he also used his Facebook page to respond personally to questions.

On his watch, the HDB saw a slew of policy shifts that slaughtered some sacred cows in public housing policy.

The most surprising one came in August, with the raising of the monthly income ceiling from $8,000 to $10,000 for build-to-order flats, and from $10,000 to $12,000 for executive condominiums.

The Government had defended the 17-year-old income ceilings as relevant as recently as five months before this.

A second policy change was in making the 'build-to-order' policy one of 'just build': Where the HDB used to launch a construction tender for such flats only when at least 70 per cent of the units had been sold, it now calls for tenders as soon as architectural drawings and tender documents are ready. This has enabled a record 25,200 build-to-order flats to be launched this year.

Third, the HDB signalled it will look into building more flats in mature estates, a departure from its previous policy of offering new flats only in new towns.

Fourth, the ministry announced a review of the formerly popular Design, Build and Sell Scheme (DBSS), following public outrage over a Centrale 8 DBSS unit in Tampines bearing an original price tag of $880,000.

DBSS projects were HDB's experiment in farming out the development of public housing to private developers.

Land sales for such projects have since been suspended, and the future of the scheme has yet to be decided.

Along with the policy changes, an unprecedented amount of information was made public, mostly through Mr Khaw's blog. He unveiled the profile of home buyers, application rates for first- and second-time buyers, and analysed supply numbers.

However, the HDB stopped issuing the quarterly median cash-over-valuation (COV) figure - which is the cash paid by buyers above a flat's valuation - saying it may not be representative of the market.

The changes prompted industry observers to dub 2011 an unprecedented year in public housing.

PropNex chief executive Mohamed Ismail called it an 'exceptional' year, given the new rules and restrictions which will affect the property sector.

Along with the policy changes, an unprecedented amount of information was made public, mostly through Mr Khaw's blog. He unveiled the profile of home buyers, application rates for first-time and second-time buyers, and analysed supply numbers. On the other hand, the HDB stopped issuing the quarterly median cash-over-valuation figure... saying it may not be representative of the market.

Housing: What to look out for in 2012

Another bumper crop of flats in 2012

THE Housing Board will offer another 25,000 BTO units next year, starting with a January launch of 3,890 flats offered for sale in Choa Chu Kang, Punggol, Sengkang and Tampines.

This year, the HDB launched a record 25,200 BTO flats.

In 2009 and last year, the HDB launched about 9,000 and 16,100 BTO flats respectively.

•Higher chance for second-timers

SECOND-TIMERS could see higher chances of getting a home, as Mr Khaw Boon Wan said the HDB will tweak the balloting rules to enhance the chances for second-timers when the backlog of demand from first-timers is cleared.

In the latest BTO launch in November, the day that applications closed for the units, the overall first-timer rate - revealed by the HDB for the first time - was 1.4.

This means 1.4 applications came in for every first-timer unit on offer.

Mr Khaw had said it was his wish the first-timers' application rate would come in below two.

•Fate of DBSS likely to be decided

COMPLAINTS of escalating prices may just see the scheme scrapped. DBSS projects were the HDB's experiment in farming out the development of public housing to private developers. But following public outrage at a Centrale 8 DBSS unit in Tampines bearing an original price tag of $880,000, land sales for such projects have since been suspended.

The scheme however continues to be popular with potential home owners, which seems to suggest that there is still a demand for such housing types.

Source: The Straits Times © Singapore Press Holdings Ltd

Team Marshe
Martin Koh/ Sherry Tang
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Tuesday, December 27, 2011

Prime office occupancy, rents sliding

Straits Times: Tue, Dec 27
AS THE year draws to a close, it looks as though occupancy levels of offices in Singapore's prime

areas are on the way down, along with rental levels.

Analysts said overall occupancy in the prime office sector for the full year is set for an 8 per cent slide, given that businesses have been putting expansion plans on hold amid the gathering economic gloom.

Prime office rents are likely to fall about 4 per cent in the final quarter of this year, according to Colliers International. But they performed strongly before that and are expected to have risen 14.6 per cent for the whole year.

Landlords of triple A grade buildings have taken the worst hit so far, say agents. Buildings like Asia Square have seen rents fall from about $14 per sq ft a month at the beginning of this year to the current rate of about $12 to $13. At another building, Ocean Financial Centre, rents have dipped from $12 psf a month at the start of the year to $11 now.

'While earlier deals at these triple A buildings have helped these landlords achieve higher rent rates, there are still some pockets of remaining space left and the lowering of rents could be seen as a defensive move to entice tenants to seal the deals in these uncertain times,' said Ms Agnes Tay, head of commercial leasing at Savills.

'Generally office-users are time-sensitive and driven by their lease expiry. Hence when approaching their lease expiry dates, they will take the opportunity to evaluate between renewal and relocation options,' she said.

When the economy is slowing, tenants typically become more sensitive about rental levels, said Mr Moray Armstrong, executive director of CBRE's office services department.

'There is some evidence that tenant decisions on new lease commitments are being rescheduled, which is partly down to expectations that rents will move favourably in their direction.'

Mr Calvin Yeo, executive director of Office Services at Collier International, said other factors are also at play in the shifting office rental market.

For instance, more companies, especially those looking to relocate their operations here, are being more conservative about their staff headcount, space requirements and overall leasing decisions.

Landlords too have reported a higher interest in smaller spaces.

A CapitaCommercial Trust (CCT) spokesman said the bulk of inquiries it has received in the last three months has been for small and mid-sized office space - from 1,000 sq ft to 15,000 sq ft, depending on the properties.

CCT is a real estate investment trust which owns office properties.

Ms Tay said: 'If the external factors remain uncertain, we would expect tenants to explore higher people density in terms of space usage - that is, to 'squeeze' the same amount of people within a smaller space, provided the space configuration allows for this.'

Market watchers also said that there is a growing trend of tenants giving up part of their leased space when contracts come up for renewal or subletting part of their space.

They say tenants are behaving this way because of the expected slowdown in business growth.

Smaller and medium-sized businesses are more active in the leasing market now, with many of the larger tenants shying away from leasing decisions, said CBRE's Mr Armstrong, adding that only a handful of large prospective deals by large tenants are in the works.

'We also see a 10 per cent to 15 per cent increase in the new start-up businesses which get into the serviced office first and buy short-lease terms before committing to a standard lease of two to three years,' said Savills' Ms Tay.

But some analyst are optimistic about the prospects of the office market.

They point to Singapore's quality of office stock and high delivery of new developments as key factors in why the city is well placed to attract new businesses.

Source: The Straits Times © Singapore Press Holdings Ltd

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Collective sales surge past $3b mark

Straits Times: Tue, Dec 27
THE value of collective sales this year has surged past the $3 billion mark, powered to a great extent by the sale of smaller sites.

Data from Credo Real Estate showed that 49 sites were sold this year for a total of $3.04 billion - well ahead of the 36 sites sold for $1.77 billion last year.

Most of the sites went for prices below $100 million, with only 12 sold above the $100 million threshold. But these 12 sites had a combined value of $1.71 billion, making up 56 per cent of total sales.

Credo Real Estate's head of research and consultancy, Mr Ong Teck Hui, said most of the 12 larger sites are in attractive locations in the prime to mid-prime districts.

'Some of the bigger developers have begun to look at such sites to avoid putting all their eggs in mass-market sites under the government land sales (GLS) programme,' he added.

'There are other developers who are frustrated with the often-intense competition over the GLS sites and decide to secure en bloc sites instead.'

But market conditions are expected to be more challenging next year due to the expected economic slowdown and the fresh round of cooling measures which took effect on Dec 8.

Credo, which says it has a 31 per cent share of the collective sale market this year, expects total sales to be lower at about $2 billion next year.

This is because developers will now be slapped with a 10 per cent stamp duty if they fail to build and sell all their units within five years. This applies only to land parcels bought on or after Dec 8.

'This is a one-size-fits-all requirement, which discriminates against big sites. As the five-year time frame will be rather onerous for large sites, developers will be wary of purchasing them. Hence this rule requires a review by the Government,' Mr Ong said.

Other experts also noted that the collective sales of prime sites, in particular, will struggle to get off the ground next year as the Government's curbs cast a shadow on the luxury market.

Kim Eng property analyst Ooi Yi Tung said in a research note last Wednesday that the additional buyer's stamp duty is more than just a tax on home buyers and will effectively put a ceiling on luxury home prices.

'In our view, this poses a hurdle for the high-end segment, which sources land mainly from the en bloc market and typically takes more than five years for redevelopment,' he noted.

He cited SC Global Developments' Hilltops in Cairnhill Circle and The Marq on Paterson Hill as examples of such projects.

With today's asking prices implying a slim margin of less than 20 per cent, the stamp duty will essentially place a cap on luxury prices, Mr Ooi said.

Mr Shaun Poh, DTZ's head of investment advisory services and auction, acknowledged that developers might now have to be more price-sensitive in their high-end launches if they want to meet the five-year deadline.

This will have a knock-on effect on the collective sales of prime sites, and it will be 'quite a challenging' time for such sales, he said, as foreign buyers, who make up a sizeable chunk of luxury home buyers, will now have to fork out an extra 10 per cent stamp duty on all home purchases.

'The high-end market is already seeing a slow market volume and these new rules are likely to make it even worse,' Mr Poh added.

The tender for Dunearn Gardens in Newton, for example, marketed by DTZ, closed last month without any bids.

But it received three indications of interest from developers and is now in the allocated 10-week period for the negotiation of private treaties.

Mr Poh said the District 11 project might be relaunched for sale next year.

He added that while the sale has been made 'harder' by the new rules, whether the reserve price will be lowered will depend on the decision by 80 per cent of the residents.

Source: The Straits Times © Singapore Press Holdings Ltd

Team Marshe
Martin Koh/ Sherry Tang
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Monday, December 26, 2011

A report card on the property market

Straits Times: Sat, Dec 24
NEW home sales have proved remarkably resilient this year, with buyers nonchalantly shrugging off a host of worries, though the tide may be turning.

Data from the Urban Redevelopment Authority (URA) showed that in the first 11 months of this year, developers sold 15,393 new homes.

Once this month's figures are in, this year could come close to beating the record-breaking 16,292 homes sold last year, but an apparent slowing in the sector could stymie that.

Analysts attribute these remarkably buoyant figures to strong demand for mass market homes, which often seemed impervious to external factors.

But others have cautioned that the recent strong demand for homes may have been induced by the number of new developer launches.

The strong demand for homes prompted two rounds of property cooling measures this year.

The first batch came in January, marking a rocky start to the year. Those rules slapped residential properties with a seller's stamp duty if they were sold within the first four years of purchase and lowered the amount banks can loan to home buyers to 60 per cent.

Another even tougher round of cooling measures was rolled out earlier this month. The new rules mean that foreigners and corporate entities will have to fork out an additional buyer's stamp duty of 10 per cent.

This is on top of the existing stamp duty of about 3 per cent. Permanent residents buying their second and subsequent homes and Singaporeans buying their third and subsequent homes will have to shell out an additional buyer's stamp duty of 3 per cent.

While the tough measures are keeping buyers at bay for now, industry watchers do not expect this to last long.

The latest round of measures is largely targeted at foreign buyers, said Mr Joseph Tan, CBRE's head of residential services, a group that is not prominent in the mass market property segment.

A recent report issued by CBRE outlined how Singaporeans make up 69.9 per cent of caveats lodged for homes outside the central region, and it is this local demand which will help prop up sales of mass market homes next year.

Homes in this segment have long been dominated by first-time home owners and HDB upgraders. Now such homes are also a huge draw for investors and foreign buyers like the Chinese and Indonesians who have increasingly been muscling in on the scene.

Buyer sentiment is expected to moderate next year, with some analysts predicting a price correction of up to 30 per cent. But places with good fundamentals like a strategic location, access to public transport hubs and an established network of shops and amenities are slated to do well.

Several districts have remained tops among buyers while other neighbourhoods have fallen out of favour.

What's hot


The District 16 town of Bedok is the most popular pick this year, said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

So far this year, Bedok has recorded 3,848 caveats for both new and resale transactions. More than 100 units were sold at the 577-unit Archipelago project during its preview weekend earlier this month, at an average of $1,000 per sq ft.

Bedok Residences stirred up controversy over its queuing system last month, ultimately selling more than 470 units out of the project's 583 homes at a $1,359 psf median price.

'Bedok benefits from a big pool of people who live in the east. This means the pool of potential buyers and sellers is also bigger than in other areas. Most of these people also tend to be reluctant to move outside the east and tend to seek out homes within the eastern neighbourhoods,' said Mr Mak.


The rapid redevelopment of the Punggol area has boosted the popularity of this fledgling waterfront new town.

According to SLP International, this has helped boost the ranking of District 19, which includes Hougang, Punggol and Sengkang, to the No.1 spot for new home sales, with a total of 3,102 deals so far this year.

The neighbourhood recently entered a new stage of development, with more than 5,000 new private homes slated for completion over the next few years. Many buyers will be drawn by an attractive new waterway and plans for a new mall near the MRT station.

Still, some buyers have tended to dismiss this neighbourhood, saying it does not measure up to the amenities and infrastructure boasted by mature towns like Toa Payoh and Tampines.

But others have been more open to the area's development potential, encouraged by the Government's plan to establish Punggol as a waterfront town. In the first nine months of this year, close to 1,900 uncompleted units were launched for sale in District 19.

Projects such as A Treasure Trove and The Luxurie proved a hit, with each development achieving take-up rates of more than 70 per cent.

These projects have helped to boost overall sales activity in Punggol by 9 per cent year-on-year, and lifted new home sales in the area by 40 per cent, according to data compiled by Jones Lang LaSalle (JLL).

Yishun and Sembawang

Yishun and Sembawang have also done well, riding on healthy demand for private homes with innovative designs, said Mr Ong Kah Seng, director of property research firm R'ST Research.

So far this year, 1,184 new homes have been sold in District 27, which encompasses the Admiralty, Sembawang and Yishun areas. Several notable projects such as Miltonia Residences and Canberra Residences have contributed to the boost in new home sales.

Still, Mr Ong added that such far- flung areas face some hurdles as they are not so well-located and do not have significant development potential.

This means some buyers may sideline these areas in favour of neighbourhoods like Jurong East and Paya Lebar which have better fundamentals like strategic location and long-term development goals.

District 15

Coming in third in the new home sales ranking is District 15, with nearly 1,149 deals closed this year. Made up of neighbourhoods such as Katong, Joo Chiat and Marine Parade, this location has once again proved to be popular among home buyers.

The area has also done well in overall home sales. According to data compiled by Savills, District 15 chalked up 11 per cent of the total caveats lodged this year, second to the 12 per cent garnered by District 19.

Ms Chia Siew Chuin, Colliers International's head of research, said the location's popularity stems from its proximity to the city, airport and recreational and leisure facilities such as East Coast Park.

'(Districts 15 and 14) also host a wide array of supporting amenities... as well as a large selection of food and beverage haunts,' said Ms Chia.

What's not

Districts 9 and 11

Despite being among Singapore's most prestigious postal codes, Districts 9 and 11 have achieved less than stellar sales this year.

The two areas include high-end luxury homes in the Chancery, Bukit Timah, Orchard, Oxley and Cairnhill neighbourhoods.

It has been a lacklustre year for the high-end and luxury home segment. The poor transaction volumes in these two particular districts have dragged them to the bottom five postal districts for this year, said Dr Chua Yang Liang, head of research at JLL. Year-on-year sales in District 11 slumped 53 per cent while those in District 9 tumbled 47 per cent.

Dr Chua said limited new supply in the prime markets is to blame: 'People looked for better value options with a smaller overall quantum as the economy stuttered and buyers became more budget conscious.

'(This benefited) the mass market as the more affordable properties on offer drew in the buyers,' he said, adding that foreign buyers have also been switching their location preference.


Marymount and Thomson

Interest in this District 20 neighbourhood has been building throughout the year, partly due to the opening of the remaining sections of the MRT network's Circle Line, which now links the area to Holland Village and Buona Vista.

'(The neighbourhood) is one of the few low-rise estates available which is centrally located, and perhaps still considered affordable for the average to above-average income buyer,' said Mr Ong.

A 603-sq-ft unit at Tresalveo, a condominium located opposite Marymount MRT station, sold last month for $748,000 or $1,241 psf.

Mr Ong added that the smaller but more strategically located neighbourhood gives off an exclusive, quaint vibe, which could differentiate the area from the rest of the housing supply that will come onstream in the next few months.

Set to underperform

Districts 9, 10, 11

Prime areas popular among foreign buyers are likely to be the worst performers next year, said JLL's Dr Chua. He explained that these areas will experience a drop in transaction volumes involving foreign buyers as they feel the pinch from the new 10 per cent stamp duty.

Other analysts said the market for high-end properties had been slow even before the measures and this trend is set to continue, with prices and sales volumes remaining in the doldrums.

The changing profile of foreign buyers is partially to blame, said Mr Mak.

'More of them are from China and are turning to suburban residential projects, this compared to earlier batches of buyers like Europeans, Indonesians and Australians who tend to favour snapping up homes in the prime districts.'

Next year will no doubt be a challenging one for the private residential market as it adapts to the new cooling measures and the economic slowdown.

Segments within the residential market will become more distinct, say analysts, with landed property to be a more resilient sector due to its limited supply and lower foreign participation.

For now, both buyers and developers are playing a waiting game, said property consultants, and a clearer picture of what tone the market will take will probably emerge only later next year.

Additional reporting by Esther Teo

Source: The Straits Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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Investors look to commercial property

Straits Times: Sun, Dec 25
The latest rule changes to cool the property market are again prompting investors to turn away from the residential segment and to look at prospects in the commercial and industrial sectors.

Strata-titled shops, offices and factory space are appearing attractive in the light of the Dec 8 measures that some experts say are the harshest out of five rounds of policy moves since September 2009.

They target largely foreign buyers and local investors and include an extra stamp duty of 10 per cent on a home bought by a foreigner.

Property experts predict sales volumes will be much reduced, while prices could crash by up to 30 per cent next year.

So the residential sector looks to be in for a tough time but, experts say the industrial and commercial sectors, which have escaped unscathed from policy changes, might benefit.

Indeed, it is already happening. Prices of industrial space rose 22 per cent in the first nine months of the year, while those for commercial climbed 13 per cent, according to data from the Urban Redevelopment Authority (URA).

Both sectors have also proven their financial mettle, achieving yields of 4 to 8 per cent against residential yields of 2 to 3 per cent.

But the recent run-up that has driven prices close to, or above, their previous peaks has trimmed the potential returns, experts note.

R'ST Research director Ong Kah Seng said price gains in these alternative segments are now limited.

'Also, many investors are already aware that such properties are more flexible alternatives compared to residential property,' he added.

'The competition is on for buying such properties. Asking prices in the subsale and resale market for non-residential properties are still fairly high in the light of economic fundamentals.'

Mr Alan Cheong, associate director of Savills research and consultancy, said that while he expects prices for industrial space to rise moderately, office prices have peaked and are expected to dip 10 per cent next year.

Experts add that because commercial and industrial properties are often more specialised and bring greater risks, investors need to take more time on research and to secure a reliable agent.

There are other differences to note as well.

Residential property can rack up significant capital gains over a short time, whereas industrial and commercial properties are often rental yield plays. They are less easy to flip and require a medium- to long-term perspective.

Risks such as market volatility, higher borrowing costs and thin trading volumes for these kinds of properties can also make it hard for an investor to sell up if he wants out.

The Sunday Times looks at some of the various differences that mum-and-dad investors should note:

Financing restrictions

Financing is one of the key differences between buying a house and buying a strata-titled office or shop.

Investors will not be able to use cash from their Central Provident Fund to purchase industrial and commercial properties.

Mortgage rates also tend to be higher than for residential with the loan-to-value (LTV) ratio typically lower at 70 to 80 per cent, said SLP International research head Nicholas Mak, depending on whether the unit is for a buyer's own use or not.

Investors who are more heavily leveraged might have an LTV of just 60 per cent, so that is a lot to be paid upfront in cash.

Residential properties are exempt from goods and services tax but the levy applies to purchases of commercial and industrial property from a GST-registered company.

Experts say investors could set up a company to buy units, paying GST at purchase and then claiming it back from the tax authorities, subject to certain requirements.

Exempt from cooling measures

One advantage of non-residential investments is that they are exempt from the five rounds of cooling measures.

While a home buyer is hit with a seller's stamp duty of 16per cent if the property is sold within a year, commercial and industrial properties are not subject to these rules.

Investors can also buy such units without having to sell any existing property, unlike buyers of resale HDB flats, who must now sell their private home within six months of the HDB purchase.

Commercial and industrial investors are also not subject to tighter financing rules which impose an LTV cap of 60 per cent on all home buyers who already have a mortgage.

Furthermore, a buyer of commercial and industrial property will not have to pay the additional buyer's stamp duty regardless of how many other properties he has bought.

Higher yields

Experts say that the commercial and industrial segments typically post higher yields than residential because homes can be owner-occupied and so pose a reduced risk.

R'ST's Mr Ong said strata- shops have yields of 5 to 6 per cent, strata-offices are at 4 to 5 per cent and industrial units range from 6.5 to 7.5 per cent.

However, DTZ's head of Asia-Pacific research, Ms Chua Chor Hoon, noted that yields vary according to tenure and market conditions.

When the market is buoyant, for example, sellers will demand higher prices, which will then reduce the rental yield, she said.

Other differences and risks

There is a far smaller pool of potential buyers for commercial and industrial space than for residential so they can be far harder to offload.

Investors must be prepared to hold on to a property for longer, as demand is considerably weaker. This can be a real problem if you need to free up the cash urgently.

The market dynamics are also different.

There is a higher risk in non-residential assets as they are more exposed to the dynamics of the region's economies, experts say.

They are business spaces, so tend to be more sensitive to economic cycles and are more volatile, particularly in a down market.

If recession hits, the tenants could pull out or go under, leaving the investor with a mortgage to pay.

SLP's Mr Mak notes that investors should buy a unit in a trade they are familiar with, or one that can be owner-occupied. This will allow them to use the units for themselves even if the economy tanks.

Leasing practices also vary.

Commercial and industrial lease terms are typically three years, with the option to renew for another three years, while residential leases are on shorter terms of one plus one or two plus two years.

If mortgage rates rise, costs can shoot up while rents stay the same, as non-residential tenancies can be signed for up to five years at a go.

Returns trimmed

'The competition is on for buying such properties. Asking prices in the subsale and resale market for non-residential properties are still fairly high in light of economic fundamentals.'

R'ST Research director Ong Kah Seng, on the non-residential property market which has recently seen a run-up in prices

More volatile

There is a higher risk in non-residential assets... They are business spaces so tend to be more sensitive to economic cycles and are more volatile, particularly in a down market. If recession hits, the tenants could pull out or go under, leaving the investor with a mortgage to pay.

Source: The Straits Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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Tuesday, December 20, 2011

Fifth phase of Fusionopolis up for tender

Business Times: Tue, Dec 20
JTC Corporation has launched a concept and price tender (CPT) for the fifth phase of Fusionopolis.

'The Fusionopolis Phase 5 tender is based on a two-envelope system,' JTC said yesterday. 'Both price and non-price criteria, such as development concept, design intention and business proposal, will be evaluated in two separate stages.'

The 207,560 square feet (sq ft) land parcel at Fusionopolis Way, located right above the one-north MRT station, has a lease of 60 years and is to be a multi-tenanted facility.

Space-wise, the site has a plot ratio of 3.5, which translates to a maximum gross floor area (GFA) of 726,456 sq ft and is zoned 'Business Park White - 15', implying a maximum of 15 per cent of GFA can be used for 'white' or commercial type activities.

As the tender for Fusionopolis Phase 5 is based on a 'two-envelope system', consultants have highlighted that the top bid may not necessarily garner the site.

Director of industrial at Colliers International, Tan Boon Leong highlighted: 'Under the two-envelope system, the owner (JTC) must agree on the proposed design first before opening the price envelope. As such, whoever gives the highest price may not be the winner.'

However, Mr Tan was quick to point out that he expects a good response for the mixed-use site, noting that the one-north region is an 'up and coming area', likening it to the 'Orchard Road of industrials'.

Analysts concur that the land parcel is likely to draw keen interest due to its good location and easy accessibility to major transport nodes such as the MRT and major expressways. Furthermore, being a cross between an industrial and commercial space, the completed property is expected to draw a higher yield as compared to pure-type spaces.

One name that was highlighted by two consultants as a potential bidder is Ascendas, which already has a stake in the earlier phases of Fusionopolis.

Mr Tan said: 'Singapore-listed real estate investment trusts of a certain size that are able to go into greenfield developments are also likely candidates to bid for the site.'

The tender for the parcel will close on Mar 9.

Fusionopolis is JTC's prime development within the one-north research cluster, which has been expanding since the completion of the first phase back in 2008. The development continues to support research and development activities as well as infocomm technology and media industries.

Source: Business Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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Thursday, December 15, 2011

Sing Hldgs buys another Robin Rd site

Business Times: Thu, Dec 15
SING Holdings will be acquiring another freehold residential site along Robin Road at an en bloc price of $52 million.

The property developer has since entered into a sale and purchase agreement to buy the 16-unit apartment development located at 2 to 8 Robin Road.

Giving more details, Yong Choon Fah, executive director of Credo Real Estate, said: 'More than 80 per cent of the owners at 2 to 8 Robin Road have consented to Sing Holdings' offer of $52 million, which translates to $1,462 per square foot per plot ratio (psf ppr) based on an allowable plot ratio of 1.54, including balconies. Development charge, (which) is not payable for the 10 per cent balconies gross floor, are space allowed.'

Under the 2008 Master Plan, the land parcel has a maximum allowable height of five storeys.

Factoring in the 10 per cent balcony area allocation, the completed site could yield a gross floor area of around 135,462.4 square feet.

The latest acquisition brings the developer's total tally of properties along Robin Road to four. The other properties are 1 Robin Drive, Robin Court, and Robin Star.

Collectively, the adjoining sites have a cumulative purchase price of $176.3 million and a total land area of about 87,962.6 sq ft.

Convinced that the amply sized plot will enhance the value of the completed development, Sing Holdings CEO Lee Sze Hao said: 'Despite the recent cooling measures, the latest acquisition of this Robin site is a strategic one.

'The site, when amalgamated with our existing land parcels, will form an island site with a regular shape. The bigger land area will allow more flexibility in design and layout.'

The District 10 residential site - flanked by roads such as Bukit Timah Road, Robin Road, Robin Drive, and Robin Close - is located within a stone's throw from the upcoming Stevens MRT station, which is slated to be completed by 2015, as well as popular schools, such as Singapore Chinese Girls' Primary School and Anglo-Chinese School (Barker Road).

Source: Business Times © Singapore Press Holdings Ltd

En bloc U-turn ends in court

Straits Times: Thu, Dec 15
A HOUSING agency, which handled a collective sale in Sophia Road but was later told to drop it, is suing the owners of all nine units for alleged defamation.

The two sides are embroiled in a dispute after Isabel Redrup Agency claimed it was entitled to a sales commission, because it helped broker a $30.8 million deal for the units.

The owners are disputing this, saying they clinched the sale on their own and later filed complaints about the agency to the Council for Estate Agencies (CEA) and the police.

The agency and its director, Ms Susan Prior, said defamatory words were used in the complaints and have named 13 parties as defendants in a High Court suit.

A pre-trial conference was held yesterday and the case has been adjourned to next February.

Isabel Redrup Agency, located in Sunset Way, specialises in high-end properties, conservation homes and offices.

It was hired by the owners of the nine units of double-storey landed properties in 2009 to handle a collective sale. The properties include the premises of the Sikh Business Association (SBA).

The agency found a prospective buyer in developer Aurum Land in December the same year and negotiations progressed till September last year, according to court papers filed.

It was then that Mr Simon Loh, who represented the other owners in the deal, told the agency not to proceed.

But more than one year later, Aurum sealed the deal directly with the owners in October this year.

The agency, in a separate High Court suit, is seeking $723,320 in commissions, claiming the transaction was due to its efforts.

Ms Prior claimed that Mr Loh sent her several text and e-mail messages this year threatening to file complaints against the agency with the CEA, the police and The Straits Times about her alleged conduct of the matter.

Besides Mr Loh, the agency is also suing the other owners because it understood that Mr Loh had been authorised by them to file charges and complaints with the CEA, the police and any public authority or public media as deemed appropriate.

By doing so, they had authorised him to use the alleged defamatory words, the agency claimed.

The owners include two who are trustees of the SBA which owned the premises at 124 Sophia Road.

The agency also alleged that Mr Loh had used defamatory words in conversations which came to its notice in the course of two interviews that Ms Prior had with a Straits Times journalist in April.

The report was not published.

The plaintiffs, represented by lawyer Roy Yeo in the defamation suit, are seeking damages, including aggravated damages for Ms Prior for the alleged distress suffered and the injury to personal and professional reputations.

The defendants, in denying the claims, argue that even if the words were defamatory, they were merely stating the facts as alleged.

Furthermore, any complaints filed with the CEA, the police or public authorities are a matter of qualified privilege, said their lawyer Suresh Damodara in defence papers filed.

This means that the informed party had an interest to know about the matter and it was made without malice.

Mr Loh, in his defence, acknowledged that he had told Ms Prior that there would be a complaint to the CEA and police.

Mr R.S. Bajwa, representing the two defendants from the SBA, said his clients had nothing to do with the dispute as Mr Loh dealt mainly with the SBA's management committee.

They were merely trustees and could not give any authority to Mr Loh.

Any dealings by Mr Loh were with the management committee and not the trustees, he added.

The other defendants denied they had authorised Mr Loh to say anything defamatory.

Source: The Straits Times © Singapore Press Holdings Ltd

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Martin Koh/ Sherry Tang
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