Singapore Property News Upfront 6

Marina Area sets the pace for price surge!
Average monthly rent for offices in the Suntec, Marina Centre and City Hall area surged 37 per cent quarter on quarter in Q1 to $10.90 per sq ft, outstripping a 28 per cent gain in the Raffles Place area, says Knight Frank. The Suntec, Marina Centre and City Hall micro-market - which includes the office towers of Suntec City, Millenia Singapore and Raffles City - was ‘relatively under-priced compared with the Raffles Place area during the run-up in office rents last year’, according to Knight Frank director (business space - office) Agnes Tay. ‘So it’s a case of catching up now.’

Q1 2007 average rent in Raffles Place was $10.90 psf, with Republic Plaza achieving $13 psf, says Knight Frank. ‘The rental performance of Grade A office buildings in other micro-markets was similarly upbeat,’ it says. ‘Average monthly rent in the Shenton Way and Robinson Road area rose 19 per cent quarter on quarter to $7.90 psf, while that in the Orchard Road area increased 9 per cent quarter on quarter to $8 psf. Average Grade A office rents maintained a chronically strong upward trend, charging ahead another 21 per cent quarter on quarter to $9.80 psf.’ As supply of vacant Grade A space dried up, demand filtered down to Grade B blocks in the CBD. As a result, average rent for Grade B space jumped 24 per cent quarter on quarter to $8.30 psf in Q1. In the suburbs, the picture was mixed.

Office rents in the west, including Alexandra Rd area, remained largely unchanged after showing the biggest rise among suburban locations in Q4 last year. But the north such as Novena and Toa Payoh, and the east such as Tampines, posted quarter on quarter gains of 16 and 25 per cent to $6.10 psf and $5.30 psf respectively. Knight Frank predicts a full-year 2007 increase of 50-60 per cent in average prime Grade A office rents to $14 psf.

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The Q1 increase was 20 per cent. Island-wide, the average office rent increase will come in around 20-30 per cent, Knight Frank reckons.

Source: The Business Times, 20 April 2007
Posted by Property Bingoer

Elmira Heights at Newton goes for $279m
Ho Bee Investment’s latest $279 million or $990 psf per plot ratio acquisition of Elmira Heights at Newton Road has boosted the developer’s residential land bank to about 730,000 sq ft. This land bank can be developed into about 1.4 million sq ft gross floor area, or nearly 700 high-end homes, on five sites.

The price for the five sites adds up to $960 million, although Ho Bee owns only 50 per cent of two of these sites - the Seaview Collection condo plot on Sentosa Cove and Holland Hill Mansions - and 90 per cent of The Waterfront Collection plot at Sentosa Cove. Elmira Heights is ‘probably at the highest point in the Newton area’, reckoned Ho Bee chairman Chua Thian Poh.

Market watchers note that Ho Bee’s $990 psf ppr unit land price, which is inclusive of an estimated $22 million development charge (DC), is 50 per cent higher than the last benchmark in the area - $666 psf ppr including DC that Wing Tai paid about a year ago for Newton Meadows. Elmira Heights’ collective sale was brokered by DTZ Debenham Tie Leung. Its director Tang Wei Leng said owners of Elmira Heights’ existing 126 units will receive either $2 million or $2.4 million per unit, depending on the size of their unit. Industry observers reckoned Ho Bee’s break even cost for a new condo on the site could be around $1,400 to $1,500 psf.

DTZ executive director Margaret Thean said: ‘With its prime freehold location in District 11 and riding on Ho Bee’s signature of top-quality developments, the new development is likely to command an average of $1,800 psf under the current market conditions.’ Ho Bee said it plans to redevelop the 108,550 sq ft freehold site into a 30 storey twin tower condo with a total of about 170 apartments of about 1,800 sq ft and larger. The project will come with full-condo facilities.

‘The plan is to develop three and four-bedroom apartments and penthouses to cater to the growing demand for large units,’ the group said in a release yesterday. The project is slated for release next year. Separately, Ho Bee announced it had sold 28 of the total 29 villas on Paradise Island, Sentosa Cove, since last month. Over 50 per cent of buyers were foreigners. Prices ranged from $7 million to $18 million for each villa. On average, the price works out to about $1,100 psf of land area, nearly 40 per cent higher than the $790 psf average the group achieved earlier for its villas on the nearby Coral Island in late 2005/early 2006. Ho Bee has sold 20 of the 21 villas at Coral Island.

Ho Bee’s latest 99-year villas at Paradise Island have land areas of about 7,000 sq ft to 15,000 sq ft.

Source: The Business Times, 20 April 2007
Posted by Property Bingoer

A new Hotel site at New Bridge Rd
A prominent site for hotel development at the junction of New Bridge and Cantonment roads has been put on the reserve list of the Government Land Sales programme. It is the first of three new hotel sites to be released by the Urban Redevelopment Authority for the first half of 2007.

The site is 0.45 ha, has a plot ratio of 3.5, and maximum gross floor area of 15,687 square metres. CBRE Research executive director Li Hiaw Ho reckons a 315-room hotel can be built on it. Highlighting the proximity to Outram MRT station, and niche hotels like New Majestic Hotel and Hotel 1929, Mr Li believes potential hoteliers will likely develop a mid-tier outlet catering to business travellers who want a reasonably-priced hotel on the fringe of the CBD and tourists who want to be close to Chinatown.

In view of this, and the recent upswing in the hospitality sector, Mr Li believes the site could fetch between $450 and $480 per square feet per plot ratio or between $21.7 million and $23.2 million. Noting the increasing interest from foreign hoteliers, he pointed out that LaSalle Investment Management and the Park Hotel group have been actively acquiring sites here.

So far this year, LaSalle has bought the Swissotel Merchant Court and a 50 per cent stake in LC Development’s Changi Airport hotel project at Terminal 3.

Source: The Business Times, 20 April 2007
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Houseboat - a new waterfront lifestyle?
The desire to be part of the coveted waterfront lifestyle on Sentosa Cove is the inspiration behind entrepreneur Masood Mohajer setting up a custom houseboat provider called Bespoke Marine. ‘I don’t want to pay through the nose for one of those waterfront units,’ says Mr Mohajer. So one solution for him was to build a boat to live on at the marina on Sentosa Cove which would enable him to be part of the lifestyle at a fraction of the cost.

His made-to-measure 64-foot boat will have three decks of living quarters with 2,250 sq ft of living space. Mr Mohajer’s beautiful new wooden home-to-be (which he will move into when it arrives next January) will cost him $850,000, inclusive of luxury interior furnishings and fittings. The idea to do this came from something which he knew well from his days working in Hong Kong. ‘My passion has always been boats, and crafting them was my hobby when I lived in Hong Kong,’ he says. Among the clients he built boats for then was the chairman of a top bank there.

It naturally followed that in the process of building a boat for himself, he saw a market for these so-called liveaboards. ‘By just talking to people and telling them what I’m doing with my houseboat plans, it seems like there are actually people thinking like there might be an alternative way of living and I thought if I could make a business out of it, why not do it?’

Mr Mohajer cites the example of the mid-1990s housing situation in Hong Kong when rentals started to go up and many expats were putting their housing allowances into liveaboards. He sees the same situation emerging in Singapore and thus has confidence that more people may be convinced to move into houseboats.

Bespoke Marine, which has a stand at Boat Asia, expects the main market to be Singapore and region-based expatriates initially but notes there has been more interest from younger Singaporeans seeking an alternative lifestyle. The boats are built at Hong Kong’s only remaining builder of customised houseboats, Sun Hing Shing, which has been building them since the 1960s and has built over 400 boats so far. The boats are so highly customised that they can do just two wooden boats a year at their yard in Hong Kong while a sister yard in China can make about 10 of the easier-to-make fibreglass boats annually.

Prices are expected to average around $1 million and will include a full range of furniture and fixtures as well as household amenities like a fridge and washing machine.

Source: The Business Times, 20 April 2007
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The avalanche begins for some resale projects
New property launches are raising the asking prices of existing developments around them by as much as 10 to 50 per cent within weeks. The most recent example is neighbouring developments Reflections at Keppel Bay and Caribbean at Keppel Bay. Units at Caribbean - which received its Temporary Occupation Permit in 2004 and is now fully sold - were selling for around $1,000 per sq ft in the secondary market in the first quarter of this year.

But since Reflections was launched this month at an average price of about $1,900 psf, asking prices for Caribbean have surged to $1,200-$1,500 psf. Property agent Andrew Tan of DTZ Debenham Tie Leung says most of the buyers he has seen are investors who expect prices to keep rising for the next few years. ‘They plan to sell it in two years and even if the price goes up by $100 psf they will make money.’

Another agent, Kenny Tan of ERA, who is also marketing units at Caribbean, says prices have been edging up for a few months. ‘The prices for Reflections have supported the increase,’ he said. Savills Singapore director of marketing and business development Ku Swee Yong says the same spillover effect is happening elsewhere. In traditional prime areas, transacted prices for new developments like Orchard Residences, Suites @ Cairnhill and Trillium have hoisted prices of surrounding developments. And in some areas outside the prime districts, new launches appear to have an even bigger impact.

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Mr Ku says that on the East Coast, the launches of The View @ Meyer and more recently Seafront on Meyer - at prices averaging $1,500-$1,600 psf - have boosted prices of existing developments like the 10-year-old The Makena.

According to Savills’ analysis of available data, the average price for The Makena over three months from December 2006 to February 2007 was about $834 psf. Mr Ku says prices have since passed $1,000 psf. Indeed, a check of advertisements in The Straits Times Classifieds recently revealed that some owners are now asking for $1,300 psf.

Asking prices are not the same as transacted prices, but Mr Ku says valuations that factor in prices of recent transactions in the same area - for old or new property - appear to support higher asking prices. ‘The valuation of an older development is dragged up by association,’ he said. Jones Lang LaSalle national director (head of valuation advisory services, capital markets) Tan Keng Chiam said: ‘Empirical evidence has proved that sale prices of new units will influence the value of the neighbouring old developments, be it up or down.’

There are several methods of calculating valuations, such as direct comparison and income. Mr Tan says that with direct comparison, a valuer has to understand the dynamics of the market and judge the appropriate discount for an older development against a newer one. Factors include age, condition, location, amenities and even design. The income is based on rental return under current market conditions. ‘For older developments, with the current rental being known, one can work out the net yield based on the transacted prices,’ Mr Tan said.

‘Such yield, when applied to the new development, will present a level of rental which one has to decide is realistic and achievable when the development is completed.’ Saying that valuations sometimes require a ‘reality check’, Mr Tan said the income approach can be seen as the ‘rational approach’. Ideally, of course, the market finds its own level and it is supported by fundamentals. Colliers International associate director (residential) Vincent Chong believes the spike in some prices is not a matter of under or over-valuation, but more of demand and supply.

‘Asking prices for residential developments are based on how the market is performing at the time of the launch,’ he said. ‘If there is no demand, a project will not sell even if the asking price is very low. Conversely, when demand is high, chances are, benchmark price records are then set - for example, Sentosa Cove and Reflections. ‘When such new launches do well, more often than not the demand will then spill over to the neighbouring properties, and as such, prices for older developments will be re-adjusted upward to reflect the market demand.’

Source: The Business Times, 20 April 2007
Posted by Property Bingoer

What happens when residents refuse to move in an Enbloc Sale?
A family whose four members are refusing to move out of their home after it was sold en bloc more than a year ago will face crunch time on Monday. That is when the property developer that bought their estate, Lincolnsvale in Surrey Road, will start legal action against Madam Ching Siew Yin and her husband, who is known only as Mr Gan.

Media reports this week said Madam Ching and her family had not been officially consulted or notified of the collective sale and that she had not known the transaction had gone through. The family - one of six households that did not agree to the proposal to sell en bloc - were quoted as saying they found out about the sale only when their neighbours started moving out last month.

Sim Lian Land, which bought the condominium in November 2005 and is ready to start demolishing the estate, said attempts to contact Madam Ching, a housewife in her 40s, and her husband were not successful yesterday. Said Sim Lian executive director Diana Kuik: ‘We’ll try again (today) and on Saturday. But if they still refuse to discuss this with us, we’ll start legal proceedings on Monday.’ The Straits Times understands that this could include an eviction order. Sim Lian paid $50.3 million for the 23-year-old estate, which works out to between $1.24 million and $1.87 million for each owner of the condo’s 39 units.

The deadline for Lincolnsvale residents to vacate was last Tuesday, but Madam Ching, her husband and their two sons are staying put. The Straits Times understands that Madam Ching believes her family are still the rightful owners of the apartment as they have not signed any transfer document. The law firm that handled the Lincolnsvale sale, Phang & Co, said a special visit was made to the couple’s unit to persuade them to sign title transfer documents.

They did not sign but the Strata Titles Board authorised representatives to sign on their behalf, which it has the power to do. Madam Ching told The Straits Times last night that she had known there was a collective sale taking place, but not until early last year, when the sale had already gone through.

The family has owned the unit for 10 years but only moved in last March. The couple said that they are prepared to talk to Sim Lian. ‘If they want to talk to us, let’s sit down and talk,’ said Madam Ching’s husband, Mr Gan. ‘If they want to talk to us on amicable terms, we’ll have some kind of dialogue and we can try to reach a solution.’ As to what kind of solution would be satisfactory, Mr Gan said it was too early to tell. But for now, the family is staying put.

Source: The Straits Times, 20 April 2007
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Ho Bee still in bullish buying spirit
Ho Bee Investment made two big splashes yesterday - it paid $279 million for a freehold site near Newton Road and announced that one of its Sentosa Cove projects has almost sold out.

Its purchase, via a private treaty, was the 126-unit Elmira Heights, where owners will each get $2 million or $2.4 million, depending on the size of their units. Ho Bee paid about $990 per sq ft (psf) of gross floor area, a new high for the Newton area, according to DTZ Debenham Tie Leung which brokered the sale.

The last collective sale deal in the area was in May last year when Wing Tai Holdings bought Newton Meadows for $660 psf per plot ratio. The Newton area’s prices have since shot up as new developments such as Newton One set new benchmarks. Ho Bee plans to build two 30-storey towers with 170 apartments of about 1,800 sq ft each, on the Elmira Heights site. It could sell them for $1,800 psf on average, said DTZ Debenham Tie Leung.

In another announcement, the developer, known for its Sentosa Cove projects, said it has sold 28 of the 29 villas on Paradise Island in the gated enclave. Buyers - more than half of whom were foreigners - forked out an average of about $1,100 psf during a three-week preview that started last month. The price is about 40 per cent higher than that of its first Sentosa development, Coral Island, early last year. The villas ranged from $7 million to $18 million each.

Source: The Straits Times, 20 April 2007
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Ascendas dive into India's business parks
Ascendas, one of Asia’s largest suppliers of business space, yesterday said it will develop two IT business parks in India that will cost some US$375 million in all. Ascendas will develop the IT parks - one in Nagpur and the other in Pune - over the next 5-7 years through joint ventures (JVs) with two government agencies. The IT park in Nagpur, which is estimated to cost about US$235 million, will be developed together with with the Maharashtra Airport Development Company (MADC).

Ascendas will take a 89 per cent stake in the project and MADC the remainder. The IT park in Pune, on the other hand, is pegged at about US$140 million. Ascendas will take a 76 per cent stake in the park, while its JV partner Maharashtra Industrial Development Corporation (MIDC) will take the rest. The two parks will bring Ascendas’ India asset size to over US$850 million.

The company already had assets of about US$500 million in the country before the latest two deals, said a spokeswoman. And the amount could grow as Ascendas eyes more cities in India for expansion. Ascendas chief executive Chong Siak Ching said that the company will continue to explore more destinations, including Chandigarh, Delhi, Jaipur and Kolkata.

The two projects will be developed in phases depending on market needs, Ascendas said. The parks are expected to create a total of 7 million sq ft of top-end IT space with employment opportunities for over 70,000 people when fully completed. Both parks are located within government-promoted and approved special economic zone (SEZ) areas, Ascendas said. In Pune, the 2.5 million sq ft park will be developed in five phases. Construction of the first phase - comprising 500,000 sq ft - will start in the second quarter of 2007 and is expected to be completed by mid-2008.

This phase is expected to employ about 5,000 IT professionals. In Nagpur, the 4.5 million sq ft IT park will be built in six phases. Construction of the first phase of 500,000 sq ft is also expected to start in the second quarter of 2007, and be completed in 18 months. Phase 1 can accommodate some 5,000 professionals. ‘Ascendas will have an even larger footprint across India to offer customers more options for business operations and expansion,’ said Ms Chong.

Source: The Business Times, 19 April 2007
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Leonie Hill begins its ascend
Property developers Koh Brothers and Heeton Holdings yesterday announced their new high-end project in the Leonie Hill area, saying that they will continue to look for more land sites in the prime districts, both individually and as a team. The 53-unit The Lumos could be launched at between $2,500 and $3,000 per square foot (psf), in line with prices that apartments in other projects in the area are fetching, the two companies said.

The tentative launch date is set for around the end of next month. Twelve out of 44 units in Soilbuild’s Leonie Parc View have been sold before the project’s launch, through private placements to buyers from Hong Kong and Indonesia, sources told BT. The units fetched an average price of $2,700 psf.

Apartment sizes range from 2,013 sq ft to about 6,600 sq ft for the largest penthouse. Leonie Parc View will now be marketed in Indonesia and Hong Kong through roadshows over the next two weekends, BT understands. For The Lumos, Koh Brothers and Heeton, who each hold a 50 per cent stake, bought the site in April last year for $79.2 million, or about $880 psf per plot ratio including a development charge of about $3.9 million.

‘I think now is a good time and we are ready, so we want to launch it,’ said Koh Brothers chief executive Francis Koh. ‘The property market is quite buoyant and the demand is there,’ he added. However, with the large number of upmarket projects launched lately, there is a need to distinguish The Lumos, Mr Koh said.

He aims to do this through the project’s ‘unique’ design and facilities such as a sky garden for each unit. The 36-storey project will feature iconic architecture evolved from the idea of a chandelier. Units will be equipped with state-of-the art interior fittings to cater to the project’s target market. The designer fittings, as well as the increased price of sand, has pushed the project’s breakeven cost to $1,200-$1,300 psf, said Mr Koh. Units in the project will range from from one-bedders of 635 sq ft to two penthouses of 6,000 sq ft each.

The majority of units will be three and four-bedders of 1,700 sq ft and 3,300 sq ft. The Lumos is the second time that Koh Brothers has joined hands with Heeton. The two companies jointly developed the Sun Plaza shopping mall next to Sembawang MRT station. And more projects could follow as they could bid for further sites together, said Danny Low, executive director of Heeton Holdings.

Both developers still intend to focus on the prime districts of 9, 10 and 11 for land acquisitions, although they are also interested in mass market sites in suburban areas because of recent signs that the mass market is picking up. For Koh Brothers, Mr Koh said that with land cost in the Orchard Road area increasingly expensive, the company will look to build up its land bank through sites in the Bukit Timah and Holland Road areas, where there is still a potential upside for prices. Koh Brothers’ stock closed unchanged at 43 cents yesterday, while Heeton’s shares fell one cent to close at 71 cents.

Source: The Business Times, 19 April 2007
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