Singapore Property News This Week #171

Residential

Development charge rates for private residential land lowered

The development charge rates for non-landed residential use fell by an average of 1.6 per cent from 25 August to 30 August. According to an analysis by JLL, this is the first time since March 2012, that there is a drop in the average development charge rates for non-landed residential use. According to Ministry of National Development, development charge rates for non-landed residential use have fallen between 2.8 per cent to 5 per cent in 55 sectors. On the other hand, development charges for industrial use rose by 1.9 per cent in the same period of time. Development charges which are imposed on sites that are undergoing enhancements have been revised on 1 March and 1 September across 118 sectors. The revision will be effective from 1 September this year to 28 February next year. Changes in the rates were made by the Ministry of National Development, based on current market values. According to Business Times, the development charge rates on hotels, hospital, places of worship and civic and community institutions are expected to increase by an average of 9 per cent. As hotel values remain inflated, it is no surprise that there the government will be increasing development charges, said Donald Han from Chestertons. Chia Siew Chuin from Colliers International said that development charge on industrial land has not changed this year most likely because bid prices for industrial land tenures have been unpredictable. Chia believes the government might still be monitoring the industrial market before any making changes.

(Source: Business Times)

Fall in home equity reduces credit for consumption

According to Citi economist Kit Wei Zheng, the amount of credit for consumption may have decreased because there is a drop in home equity prices. Data from the Department of Statistics showed that the total value in housing assets fell to $820.6 billion due to corrections in home prices. On the other hand, mortgages went up by 5.6 per cent year-on-year to $210.8 billion in Q2 this year. While Kit is concerned about the effect of falling home equity on consumption, other experts argue that there is no cause of concern as employment rates have been high. Nonetheless, Song Seng Wun from CIMB Research believes that the Total Debt Servicing Ratio has moderated private consumption. Selena Ling from OCBC Bank said that the falling prices may negatively affect property owners who already have difficulties financing their properties.

(Source: Business Times)

Commercial

Straits Trading Building predicted to sell for record prices

The Straits Trading Building, which is located at Battery Road, is expected to sell for at least $2,800 per square foot or $450 million, the highest offer made for any office block in the past six years. The 999-year leasehold office tower has a net lettable area of about 159,000 square feet. If the transaction pulls through, the Straits Trading Building will generate a net yield of about 3 per cent. Its long leasehold tenure and its prime location justified the high pricing, said market experts. According to market experts, other nearby office blocks sold for similar prices this year. For example, a strata office floor at the 999-year leasehold Samsung Hub, at Church Street, was sold for $3,030 per square feet. Nonetheless, the Straits Trading Building has been priced higher than office blocks at Equity Plaza, which sold for $2,181 per square feet, because it had a longer lease remaining. Furthermore, Straits Trading Building is almost fully let. While it was built in 1972, it has undergone renovations and was redeveloped in 2009.

(Source: Business Times)

Land bids for industrial sites fall

Land bids for a site at Gambas Crescent and another at Tuas South Avenue 7 have fallen. Both sites have a 30-year leasehold and were released for tender as part of the H1 2014 Industrial Government Land Sales list. The winning bid for the Gambas Crescent site was sold for $83.03 per square foot per plot ratio to NSS Realty. This was 19 per cent lower than Parcel 3, a neighbouring site that was sold last December for $102.20 per square foot per plot ratio. Parcel 2 and 1 were sold in October last year for about $127 per square foot per plot ratio and $138 per square foot per plot ratio respectively. The four sites have been zoned for B1 use and have a maximum gross floor to land area of 2.5 plot ratio. Parcel 1 has since been converted into 130 factory units. 44 out of its 55 released units have been sold for an average of $325 per square feet. On the other hand, the Tuas site was sold for $56 per square foot per plot ratio. This was about half the value of the winning bids for earlier sites such as The Index, at Tuas South Avenue 3. Ong Kah Seng from R’ST Research said that the site at Tuas South Avenue 7, which was released this year, may have been less appealing to investors because it was zoned for B2 use. According to Ong, industrial land zoned for B1 zone are more popular because it typically attracts tenants that require modern strata factories.

(Source: Business Times)

Tender launched for 7 sites at Bukit Merah

Seven industrial units at Kewalram House in Bukit Merah Industrial Estate have been launched for tender on Aug 25. The total land area of all seven units is 18,800 square feet. All units are 99-year leasehold units and still have 45 years remaining on their tenures. They have been zoned for B1 use and have a maximum gross plot ratio of 2.5. Of the seven units, two units are sized 3,100 square feet and 4,300 square feet respectively. They are located on the ground floor and can be converted into a warehouse or factory space. The other five units are located on the third floor and are between 2,100 square feet to 2,400 square feet. The units are priced between $480 per square foot and $620 per square foot. Its marketing agent, JLL believes that there are en bloc opportunities for the building, because its gross floor area is within the maximum gross floor area permitted under the Master Plan 2014.

(Source: Business Times)

Jln Besar commercial sites on sale

A three-storey freehold commercial site that has about 2,726 square feet and a gross floor area of about 7,887 square feet is on sale. The commercial building has a mechanised car park and an internal lift. Another four-storey residential building with commercial land space on its ground floor is also on sale. The four-storey building has about 1,335 square feet of land and has a gross floor area of about 4,324 square feet. Both properties are located at Sam Leong Road, at Jalan Besar, but are not zoned for conservation. As such, they may be redeveloped. Both buildings are being marketed by Chestertons Singapore. Their indicative price is about $17.5 million or $1,433 per square feet.

(Souce: Business Times)