Singapore Property News Upfront 10

$160m for Trendale Tower enbloc?
Savills Singapore has announced the commencement of an expressions of interest exercise for the collective sale of Trendale Tower. The 25-year-old freehold development sits on a 21,709-sq-ft plot at 79 Cairnhill Road. “Subject to approval from the relevant authorities, the redevelopment site will have a permissible gross floor area of 6,753.2 sq m, exceeding the permissible plot ratio of 2.8 as indicated in the 2003 Master Plan. Therefore, no development charges are payable,” said Savills in a statement.

A new development comprising 36 apartment units averaging 2,000 sq ft each can be built on this site. The project will also be subjected to a height restriction of 36 storeys. “The aggressive bidding for prime residential sites reinforces bullish views developers have of the residential market going forward,” said Mr Steven Ming, director of investment sales at Savills Singapore.
Trendale Tower, he added, provides boutique and mid-sized developers with an opportunity to develop it into an ultra-luxurious apartment block.

Trendale Tower is situated in the Scotts and Cairnhill area and is within walking distance of both the Newton and Orchard MRT stations. Trendale Tower has an indicative price guide of $160 million, and Savills estimates that a new luxury development on the site could fetch about $3,400 psf to $3,500 psf. The expressions of interest exercise closes on June 20 at 3pm.

Across town, Colliers International successfully sold Fairways Condominium collectively for $244.3 million to Bukit Sembawang View. The figure works out to $785psf per plot ratio, and that includes the development charge and state land alienation cost. Owners of the 108 apartments and townhouses will get between $1.35 million and $4.3 million each, reflecting a collective sale premium of more than 60 per cent.

Source: Weekend Today, 19 May 2007
Posted by Property Wizkid

Pasir Panjang Village up for sale
Real estate services firm C B Richard Ellis has announced the public tender sale of Pasir Panjang Village.Located at the junction of South Buona Vista Road and Pasir Panjang Road, the freehold Pasir Panjang Village consists of a row of 14 conserved two-and-a-half-storey shophouses that are adjacent to the Village Centre.

The 22,000-sq-ft site is zoned for both commercial and residential use. With a gross plot ratio of 3.0 in the 2003 Master Plan, there is a possibility of maximising the plot ratio to convert it into a boutique hotel, given its proximity to Sentosa. Pasir Panjang Village is surrounded by residential developments and is across the road from Pasir Panjang Distripark. It is also a short drive from the Pasir Panjang Wholesale Centre, West Coast Car Mart, the Science Park and the National University of Singapore.

“The asking price of Pasir Panjang Village is $30 million. At this price, the potential buyer can expect a return of above 3-per-cent yield, which is quite attractive, compared to the banks’ fixed deposit rates and current yield payouts by some listed Reits,” said Mr Charles Hoon, director of investment properties at C B Richard Ellis.

The company has also announced the public tender sale of 18 Howard Road. The freehold industrial 42,800-sq-ft site is located at the corner of Howard Road and MacTaggart Road, off MacPherson Road. Zoned for Business 1 in the 2003 Master Plan, it lies within a well-established industrial estate near the future site of the Tai Seng MRT station.

The asking price for 18 Howard Road is $18 million, or $164 per square foot (psf) per plot ratio. Potential developers can expect a breakeven price of slightly above $300psf. “The industrial sector is currently laggard and has great potential for future growth, compared to the office, retail and industrial sectors where prices are close to the previous peak of 1996/1997.
“Optimism in the industrial sector is also fuelled by expectations that the economy is set to grow by five per cent for the next five years,” said Mr Hoon.

C B Richard Ellis is the sole marketing agent for both properties. The tender exercises for 18 Howard Road closes on June 12 at 3pm. The tender for Pasir Panjang Village closes on June 13 at 3pm.

Source: Weekend Today, 19 May 2007
Posted by Property Wizkid

Montebleu sold out, hitting $1000psf
Soilbuild Group Holding’s latest condominium project, Montebleu, is sold out, with an overseas institutional investor acquiring 37 out of the 151 units of the project in Novena.
The freehold, 34-storey development at Minbu Road attracted local buyers as well as overseas buyers and investors.

“Considering the many developments available in the Novena district, the take-up rate has been excellent. We achieved average prices of nearly $1,000 per square foot (psf), with some units reaching a high of $1,250,” said Mrs Kellie Liew, executive vice-president of projects at HSR International.

The 37 apartments acquired by the overseas institutional investor were sold at an average price of $1,050 psf. “We are pleased that our latest and largest project, Montebleu, has received such strong response from overseas and local investors seeking exclusive projects in choice locations,” said Mr Low Soon Sim, executive director, Soilbuild.

Sitting on a 58,673-sq-ft plot, Montebleu is set to be one of Novena’s tallest landmarks.
It has one- to five-bedroom apartments, including executive suites and three penthouses.
These units range in size from 570 sq ft to 2,896 sq ft.

The apartments come with balconies, bay windows, dry and wet kitchens, designer wardrobes, en suite baths and quality sanitary ware. This is the second development Soilbuild has fully sold this year. The high-end One Tree Hill Residence on Grange Road, was sold out at the beginning of this year.

Source: Weekend Today, 19 May 2007
Posted by Property Wizkid

How should we value each property in a collective sale - is it possible to be fair to all?
I am all in favour of collective property sales in land-scarce Singapore, but measures should be put in place to check the frenzy we are witnessing now. This, in my opinion, is not healthy for the economy and not healthy for the fabric of Singapore. When we buy an apartment, the price we negotiate reflects the view, layout, floor level and prestige factors such as in the case of a penthouse. But we are not able to negotiate the share value allocated to the apartment, which is set by the developer and approved by the Commissioner of the Buildings Management Unit.

Share values were established purely for the apportionment of running costs in a development. They may be fair for the apportionment of running costs, but it in no way follows that they are a fair reflection of the respective stake owners have made in a development. Therefore, they should not be taken into consideration in the calculation of price or in important collective-sale decisions.

When it comes to valuing apartments, marketing agents do not take into consideration floor levels or prestige factors. This means the apartment on the second level will get the same price as one on the 20th level. This is not the practice in the real world. Is this fair?
Hopefully, amendments to legislation will incorporate the following: Valuations must give due recognition to different floors; Voting rights in collective-sale decisions should be weighted according to the size of the flat, not the share value allocated to it as is currently the case. This is because we have no say in the allocation of share value but we have a say in the size of our apartment.

A bigger say must be given to owner-occupiers as they will need to acquire a replacement property and may suffer a loss; and the bar should be raised from the current 80 to 85 per cent. This will still allow steady growth in prices - which we all desire - but will moderate the current feverish pace of collective sales. Collective sales can be a useful engine of growth in the key property sector of our economy. But now that they have become so important and so frequent, it is vital that the upcoming review of legislation corrects certain imbalances which have become apparent. - Magdeline Goei (Ms)

Source: The Straits Times, 19 May 2007
Posted by Property Wizkid

Can Sibor fluctuations affect your mortgage?
A plunge in a key interest rate has triggered a rush of enquiries from local borrowers about mortgages that let them cash in on cheaper money. The rate - called the Singapore Interbank Offered Rate (Sibor) - hit a 20-month low of 2.3758 per cent yesterday and has fallen almost one percentage point since Feb 28.

This is starting to add up to cheap interest rates for home owners who took out mortgages tied to Sibor, which reflects the cost at which banks borrow money from each other. As the Sibor falls, so do their rates. But it’s a gamble: if the Sibor rises, so does your mortgage rate.

Most are still paying slightly more than the rates offered for more standard loans. But if the Sibor keeps falling, the differential may go the other way, particularly as standard loan rates are stubbornly refusing to fall despite the banks’ access to cheaper money.

The Sibor-linked loan packages have become a hot ticket in recent months. Borrowers like the increased transparency over how their rates are set and the chance to enjoy lower payments when the Sibor falls. United Overseas Bank has seen ‘a healthy level’ of interest, while DBS Bank has received ‘thousands of enquiries’ over the past four months, although more traditional loans are still preferred.

The take-up rate for its Sibor-linked product ‘has increased by about seven times since January’, said Mr Koh Kar Siong, DBS’ head of secured loans for consumer banking. Standard Chartered Bank is the latest to meet the demand with the launch yesterday of a Sibor-linked loan.

DBS charges a premium of an annual 1 per cent over the Sibor rate, while UOB and OCBC Bank add an annual 1 per cent over the three-month, six-month or nine-month Swap Offer Rates (SOR). The SOR comprise the Sibor plus a bank’s lending costs.

Stanchart adds an annual 0.5 per cent premium over the three-month SOR - now at 2.4503 per cent - for the first year. It also guarantees that the SOR will not exceed the 2.95 per cent annual rate for the first two years - a market first. UOB’s head of loans, Mr Kevin Lam, said the ‘vast majority’ of customers taking up its package chose the three-month SOR as this rate moves faster with Sibor. DBS and UOB said loans for Sibor-linked products are larger than the average home loans in their portfolio.

DBS’ average Sibor-loan size is about $700,000, reflecting the ‘more financially savvy investors’ who take out loans for larger properties, said Mr Koh. They are betting that Sibor-linked rates will eventually dip below fixed and floating board rates, which range from 3.25 to 4 per cent. These rates are not likely to be lowered for now, as banks said the drop in the Sibor is ‘a recent phenomenon’ and there is uncertainty if its decline will be sustained.

‘The general view is that mortgage rates are unlikely to be lowered this year, as they tend to lag behind deposit rates and interbank rates,’ said Mr Tan Chia Seng, Citibank’s business director.
But at least they are unlikely to rise. Any upside in rates ‘appears to be very much limited at this point in time’, Mr Koh said. OCBC, which some mortgage brokers say has ‘not been pushing its SOR loans as aggressively as DBS and UOB’, said it has not had a big take-up of its Sibor-linked loans, despite more enquiries.

Even if Sibor fell further to make such packages more attractive, many people might remain wary as the Sibor can go up as well as down. It was this concern that prompted Stanchart to offer a guaranteed maximum interest rate to give clients security. That preference for predictability has seen DBS’ Home Ideal package, which is pegged to the stable CPF rate, experience a higher take-up than Sibor-linked packages. Its take-up has shot up 13 times since last November, said Mr Koh.

Source: The Straits Times, 19 May 2007
Posted by Property Wizkid

How can our luxury homes rental surpass HongKong in just a short span of 4 months when Singapore's economy and GDP still lacks behind?
Rental rates for luxury homes in Singapore have outstripped those in Hong Kong for the first time. This is according to corporate leasing agents Savills. And it says this is due largely to the short supply of rental units in the prime residential districts amid the recent spate of en bloc sales in Singapore.

The price spike in Singapore goes beyond logic: Singapore property prices still low compared to others? http://www.propertybingo.com/News.aspx?newsid=45

Savills also notes that this is pricing some expatriates out of the prime areas. It is now more expensive to rent a luxury apartment in Singapore than in Hong Kong. According to corporate leasing agents Savill, a unit in the prime districts of 9, 10 and 11 could cost up to 10 percent more than a similar unit in Hong Kong’s most prestigious locations.

For example, a 3,000 square feet unit at Regency Park can fetch $18,000 per month in rental, more than the $16,500 being asked for a same-size unit in Mid-Levels. Simon Hill, Regional Director, Corporate Real Estate, Savills, said: “The expats certainly have an obsession in particular with districts 9, 10, and 11. Their social structure is there, their friends, work colleagues, they are close to all the facilities. And there is, if you like, a snob value of being there too.

“We are now urging prospective tenants to consider other areas because the stock is in such short supply. As I often say, particularly to the English expats that are coming out here - ‘you have to consider that 9, 10, 11 is like living in Chelsea or Knightsbridge in London, and would you expect to live in Chelsea or Knightsbridge in London?’. And normally the answer is, ‘no of course not’.”

But increasingly these expatriates - who are mainly mid- to high-level executives of multi-national companies - are looking at units in other areas such as the East Coast and Buona Vista.
And some have even deemed it more economically-prudent to buy the unit, rather than rent.
Savills says the difficulty of finding affordable housing has prompted some MNCs to reconsider locating staff in Singapore.

Simon Hill, Regional Director, Corporate Real Estate, Savills, said: “We’ve had at least three corporates say they are putting on hold the number of people coming into the country until they can work out what’s happening with the housing packages.

“Companies and employees are much, much more portable now, and I think that if the situation continues there will be pressure. For everything that Singapore has to offer, if we can’t find places for people to live, then they will have to go elsewhere, it’s fairly fundamental.”

Overall rental rates for apartments and condominiums in Singapore jumped 8 percent in the first three months of this year.

Source: Channel NewsAsia, 18 May 2007
Posted by Property Wizkid

Novotel Clarke Quay sold at $219.8m
CDL Hospitality Real Estate Investment Trust (CDL H-Reit) has purchased the Novotel Clarke Quay in a deal that prices the 398-room hotel at $219.8 million or about $552,000 per room.
The amount comprises a purchase amount of $201 million and assumption of potential liability of about $18.8 million. The hotel site has a remaining lease of about 70 years.

For the seller, a Lehman Brothers entity, the divestment represents a doubling of its investment. Lehman bought the hotel, then known as Hotel New Otani, in 2004 for $82 million from a Wuthelam Group-controlled entity and spent a further $19 million renovating it, resulting in an all-in investment of around $101 million. It later appointed French hotel chain Accor to manage the hotel under the four-star Novotel brand. Jones Lang LaSalle Hotels brokered the latest sale.

CDL H-Reit is part of a stapled group, CDL Hospitality Trusts, which is listed on the Singapore Exchange. Singapore-listed City Developments Ltd’s London-listed hotel arm, Millennium & Copthorne Hotels (M&C), has a 39 per cent stake in CDL Hospitality Trusts. The yield-accretive acquisition of Novotel Clarke Quay will boost CDL Hospitality Trusts’ Singapore hotel room count by around 20 per cent to 2,324, making it Singapore’s biggest hotel owner, in terms of number of rooms. The acquisition will also see the value of the trusts’ properties grow from about $1.1 billion to $1.3 billion.

CDL H-Reit will enter a lease agreement appointing the hotel’s incumbent manager Accor SA to manage and operate the hotel under the Novotel flag until end-2020, for a fee that works out to a tad below 10 per cent of the hotel’s gross operating profit. The projected annualised property yield of the hotel for this year is about 5.5 per cent, higher than the 3.9 per cent implied property yield for CDL H-Reit’s current portfolio for the current year.

The acquisition is forecast to boost annualised 2007 distribution per unit (based on Q1 2007 results) by 8.9 per cent, from 7.10 cents to 7.73 cents. Vincent Yeo, CEO of M&C Reit Management Ltd, the manager of CDL H-Reit, said that assuming the acquisition of Novotel Clarke Quay is fully funded by debt, the trusts’ gearing ratio will increase from 35 per cent to 46 per cent. He said that while the trust is on the lookout for more hotel acquisitions in the Asia-Pacific - in countries like China, India, Philippines and Vietnam - Singapore still remains one of his favourite markets because of its growth potential and risk profile.

For Q1 2007, CDL Hospitality Trusts’ Singapore hotels achieved a 25.4 per cent year-on-year increase in revenue per available room (RevPar). ‘Based on the strong performance so far in the second quarter, the industry players expect a much higher year-on-year RevPar growth in Q2. And we expect that to be the same for the hotels in the CDL Hospitality Trusts.’ The acquisition of Novotel Clarke Quay will increase CDL Hospitality Trusts’ exposure to the strong Singapore hotel market, which is expected to benefit from continuing strong growth in visitor arrivals and minimal new hotel room supply this year and next.

Source: The Business Times, 18 May 2007
Posted by Property Wizkid

Is this a good time to invest in real estate?
On average, private home prices have risen nearly 20 per cent in the past two years, and the trajectory appears stable. Property purchases become more compelling with each passing week. Who can argue against people building equity through the homes they live in? But as everyone knows, rising prices also have sparked a new wave of feverish speculation. And newly released data from Credit Bureau Singapore give a hint of the level of activity: As of March, the number of people with two or more mortgages had risen to around 41,000, up 58 per cent from a year ago and 106 per cent from two years back.

Caveat Emptor(buyers beware): Have cash will invest.
http://www.propertybingo.com/News.aspx?newsid=46

Is there reason to worry? Not at the moment. A certain level of speculation is normal for any market; it keeps prices buoyant, generating wealth. Without speculation, markets would stagnate. Indeed, so long as price trends remain comfortable, there is little danger. In fact, other figures from CBS show that even as the total number of mortgages has risen, the number of delinquent accounts has actually fallen; in percentage terms, it dipped to 2.23 per cent in February from 2.80 per cent in March last year.

The market is in a sweet spot. That, however, is no reason to be incautious. The economy is completely exposed to external factors. Although the internal attributes of the economy remain strong and are gaining vigour, buyers must understand that global macroeconomics plays a role in Singapore’s fortunes. They need only think back to the late 1990s for a cautionary tale. Because of this, there is no argument for suspending normal prudential calculations despite the bullish tone of the market. Of course, owner-occupied real estate, a favoured form of investment, is one thing; whatever happens, people have to live somewhere and a mortgage payment is not unlike rent.

But speculative investments can be a burden if things turn sour for any number of reasons. And property ownership involves maintenance costs, so investors must be reasonably certain of their future cash flow. But the key issue is to be wary of the point at which reasonable speculation tips over into the unhealthy zone, when the bulls become too exuberant. When markets self-correct, they can be punishing. And as properties are illiquid investments, it is harder to get out than to get in. Hence, although times now are good for a punt on properties, nothing comes without risk. It is best to think twice about one’s appetite for risk before signing for a second mortgage loan.

Source: The Straits Times, 18 May 2007
Posted by Property Wizkid

Fairway Condo go for $244m
In the Telok Blangah area, Bukit Sembawang bagged Fairways Condo for $244.3 million or about $785 psf ppr inclusive of estimated development charges of $8.45 million and $2.43 million for buying an adjoining piece of state land. Both collective sale sites are freehold. Colliers International brokered the Fairways Condo deal while Jones Lang LaSalle handled Gilstead View’s tender.

JLL is said to have received more than five bids when the tender closed yesterday. Market watchers suggested that a party linked to Tiong Aik group may have put in the top bid for Gilstead View, but they added that it remains to be seen who bags the property, depending on factors including the negotiations on conditions accompanying the various bids.

The tender for Gilstead View in the Newton area closed yesterday with a top bid of $96 million, which works out to $1,036-1,056 psf per plot ratio inclusive of development charges (DC) estimated to range from $7 million to $9 million, sources say. This is higher than the $990 psf ppr achieved for the nearby Elmira Heights last month.

Sources say the range in the estimated DC quantum ($7 million to $9 million) for Gilstead View is because the site’s development baseline has yet to be confirmed. Gilstead View has a 35,510 sq ft land area and is zoned for residential use with a 2.8 plot ratio (ratio of maximum potential gross floor area to land area) and 30-storey building height. The site can be redeveloped into a new condo with about 65 units averaging 1,500 sq ft. Assuming Gilstead View is sold for about $1,056 psf ppr, the break-even cost for a new condo project on the plot could be around $1,500 psf, according to industry observers.

Fairways Condominium has a freehold land area of 146,532 sq ft, and together with the adjoining state land of about 8,288 sq ft the total area adds up to 154,820 sq ft. The Fairways site is zoned for residential use with 2.1 plot ratio. Based on the $785 psf ppr that Bukit Sembawang paid for the site, analysts estimate a break-even cost of around $1,200 psf for a new condo on the site.

Bukit Sembawang can build a 24-storey condo with about 250 units averaging 1,300 sq ft on the Fairways and adjoining state site. Market watchers expect the group to take around a year to launch the new project. Inclusive of the latest acquisition of Fairways Condo, Bukit Sembawang has a residential landbank of about 4.2 million sq ft which can be developed into about 2,050 homes. The bulk of this land (around 3.8 million sq ft) is in Seletar Hills.

Source: The Business Times, 18 May 2007
Posted by Property Wizkid