Singapore Property News This Week #112

Residential

Condo rental yields decrease

Rental yields for condominium apartments have fallen below the psychological 4 percent support level. Overall gross median rental yield for the first half of 2013 stood at 3.9 percent, compared to 4.2 percent in 2012 and 4.4 percent in 2011, according to the Singapore Real Estate Exchange. Areas which experienced the sharpest fall include Southern Islands (28.4 percent), Orchard (28 percent) and Jurong East (17.4 percent). The Southern Islands have the lowest rental yields of 1.7 percent, followed by Newton with 2.2 percent and Orchard with 2.6 percent. Rentals could be under continued pressure as a record 16,000 completions are expected this year.

(Source: Business Times)

Singapore is second priciest in the world for foreigners to buy homes

According to property consultancy Knight Frank’s Global Development Insights second-quarter report, Singapore is second priciest place for foreign home buyers to buy newly built prime residential property, only after Hong Kong. The escalated costs are due to increase in associated fees and taxes, while actual property prices have dropped 3.3 percent since a year ago. Regulatory measures to cool the property market in January are also another factor to cause the rise.

(Source: Business Times)

Commercial

S-Reits may pick up

According to UOB Kay Hian, interest in S-Reits could increase when investors realize they are growth plays, not traditional yield plays. This is thanks to potential improvements in rents, asset enhancements and acquisitions in a broader global economic recovery. Recently Reits have suffered a broad sell-down in the markets with the sharpest correction among all the yield stocks. Ten-year yields for Singapore government securities have risen from 1.4 percent to 2.7 percent from May to June, while the average yield for Reits has risen by 90 basis points.

(Source: Business Times)

JP Morgan to boost its real estate footprint

Among financial institutions with slow pace of office leasing in Singapore, JP Morgan was reported to boost its real estate footprint by 40 percent. Under a front end-back end split, it is to lease 130,000 sq ft of business park space at One@Changi City. The bank is operating out of two locations – Capital Tower and One@Changi City. JP Morgan’s chief administrative officer for Singapore, Mr. Paul Echart said the bank’s long term real estate strategy needs efficient management to provide desirable work environment.

(Source: Business Times)

AusGroup sold fabrication facilities for $39.4m

AusGroup has sold its Singapore fabrication facilities at 36 Tuas Road for $39.4 million to Boustead Trustees Pte Ltd in a sale-and-leaseback deal. The deal allowed AusGroup to leaseback the property with no impact on its operations of providing clients with high quality fabrication and machining services in timely delivery. The property has an area of 30,000 sq meters, with large enclosed fabrication facility, machine shop and staging areas. It has a JTC lease for 30 years starting in May 6, 1995.

(Source: Business Times)