Singapore Property News This Week #71

Residential

Heron Bay attracts 1,664 applicants for 394 units

The Heron Bay EC project in Upper Serangoon View attracted a total 1,664 applications for its 394 units leading to a subscription rate of 4.2 applicants for each unit. Its appeal lies in its luxury features such as a six-metre jaccuzzi pool or a garden pond, e European household appliances, free fibre broadband service for a year, a basement carpark and a swimming pool with hydroactivated water. The average price of a unit is $715-720 psf with smallest 775 sq ft at $560,000 and a 2,841 sq ft five-bedroom penthouse at $1.5-1.6 million. Balloting will be conducted in about two weeks with successful applicants being able to book their units from Oct 26.

(Source: Business Times)

Number of local purchase of luxury homes increase in 2012

Singaporeans have bought a total of 46 luxury homes in 2012 so far, compared to 40 homes in 2011, with a total of 31 bought in Q2 2012 compared to 11 bought in Q2 2011. The proportion of Singaporean buyers also increased from 19% in 2011 to 35% in 2012; the foreign buyers bought 49 such homes, making up around 37% of the sales. The remaining 27% are from Singapore permanent residents and companies who purchased 32 and four luxury homes respectively. The prices have also stabilised in Q3 2012 at the average of $2,621 psf, compared to the 2.0% decline over the past three quarters, reflecting an underlying demand from buyers waiting for more attractive prices. The increase in price is driven by landed homes, which saw a 1.2% increase in average resale price in prime districts and a 2.4% increase in average resale price in the suburbs. Prices of freehold non-landed homes in both the prime districts and the suburban areas also increased by 1.0% in Q3.

(Source: Business Times)

Sengkang, Pasir Ris EC sites to attract moderate bids

The 99-year leasehold 151,779.6 sq ft EC site at Sengkang West Way/Fernvale Link has a 455,338.8 sq ft maximum GFA and can potentially yield 420 units. It could potentially draw four to eight bidders; with a $270-$330 psf ppr top bid since there HDB estates, H20 Residences and other facilities, including the Aerospace Park and The Seletar Mall at Fernvale LRT Station in the vicinity will be completed in the next two years. The site is likely to face competition from new launches which boasts improved amenities and facilities in the Punggol and Sengkang areas.

The Pasir Ris Drive 3/Pasir Ris Rise 297,729.5 sq ft EC site with a 625,231.9 sq ft maximum GFA that can potentially support 590 units is expected to face competition from neighbouring condominium projects that have a total of 385 unsold units as well as the increase in EC land supply. It is expected to attract five to seven bidders with a top bid of $250-$336 psf ppr.

Some believed that the EC market may be reaching saturation point, thereby leading to more moderate bids for the newly launched sites while others believe that there are still interest in ECs given the results in launches in H1 2012. Possible other reasons for cautious biddings are the increment of the minimum occupation period (MOP) for HDB flats which limits the number of HDB upgraders and the BTO and DBSS flats.

Also available on the reserve list is a 99-year leasehold 69,981.5 sq ft site at Alexandra View which has a 342,916.3 sq ft maximum GFA which can yield some 375 homes. It can potentially draw four to six bidders, with a $900-$930 psf ppr top bid since it is located near central downtown.

Tender for the EC sites at Sengkang and Pasir Ris will close at 12 noon on Nov 8 and Nov 22, respectively.

(Source: Business Times)

HDB to increase BTO supply to 27,000

HDB is planning to increase the supply of BTO flats in 2012 from 25,000 to 27,000 to control the price increase and meet the demand. In the most recent launch, there will be a total of 7,055 flats will be launched under the joint BTO and Sale of Balance Flats (SBF) exercises, with another 6,400 to be launched in November. The current launch includes seven BTO projects offering 3,727 flats in two non-mature towns (Choa Chu Kang and Woodlands) and three mature towns (Ang Mo Kio, Kallang Whampoa, and Tampines). A five-room flat in Keat Hong Quad in Choa Chu Kang, a non-mature estate, will start from $313,000 (excluding grants) and $303,000 (inclusive of grants) whereas a five-room flat at Tampines GreenLace in Tampines, a mature town, will start from $384,000 (excluding grants), and $374,000 (including grants). 95% and 85% of the BTO flat supply excluding Studio Apartments (SA) in mature towns and in non-mature towns respectively will be reserved for first-timers. The demand for flats in Choa Chu Kang is likely to be lower than that of flats in mature towns.

3,328 balance flats in 11 non-mature and 13 mature towns are also offered under the SBF exercise, including 818 SAs, 697 two-room flats, 302 three-room flats, and 1,016 four-room flats 471 five-room flats, and 24 executive flats. As with the BTO launch, 95% of the supply (excluding SAs) is reserved for first-timers. 23% of these have been completed while the remaining 77% are still under construction, with some being BTOs to be completed in 2014 or 2015, which reflects the government’s intention to meet demands. However, selling BTO flats under SBF launches also suggests that some flats in BTO launches in certain towns were not sold.

Applications for flats launched under both exercises close on Oct 3, 2012.

(Source: Business Times)

Commercial

Property investment sales hit $8.5b in Q3

Investment sales of property hit $8.5 billion in Q3 so far, a 13% increase from $7.5 billion in Q2. Almost $6.3 billion of the sales in Q3 were from the private sector though the sales of commercial and industrial properties have decreased by 38% and 15% respectively from Q2 as a result of the eurozone crisis, the slowing Chinese economy and the bid-ask gap. Most buyers were also local since the current global economy is not conducive for investments from foreign companies and funds. While sales in the residential sector accounted for $3.52 billion in Q3, a 13% fall from Q2’s $4.04 billion, the value of residential collective sales doubled from $500 million in Q2 to $1.02 billion in Q3. The sales of hospitality sector assets hit almost $2.7 billion, the reason for the 13% increase. The investment sales of property are expected to hit $27-28 billion in 2012 compared to the $30 billion in 2011, and fall further to $25-27 billion in 2013 as the Western economies may not have recovered and the Chinese economy is slowing down. Another factor could be the bid-ask gap. However, with the QE3, this situation may improve.

(Source: Business Times)

Office rents in CBD falls but rents in fringe stable

In Q3 2012, the gross average monthly rentals in CBD decreased by around 4% in Q3 from Q2 but the rentals in the CBD fringe remained fairly stable, a trend likely to continue for the next six to 12 months. The more diversified tenant profile in the fringe areas probably accounted for its relative stability unlike the tenant profile in CBD where over 50% are in banking and finance which is the most affected by the eurozone crisis. One other reason is that the relative fewer supply of new offices in the fringe areas compared to supply in the CBD, which accounted 70% of the available 240,000 sq ft of shadow space. A total of 1.5 million sq ft net increase in office demand is estimated for the whole of 2012, compared to 2.3 million sq ft in 2011, with 570,487 sq ft for Q1 2012, and 355,209 sq ft for Q2 and an estimated 323,000 sq ft for Q3 and 258,000 sq ft in Q4. Supply is also expected to increase from 1.7 million sq ft in 2012 to 2.4 million sq ft in 2013.

(Source: Business Times)

Four industrial properties in the market

The first is a terrace building with a 30,570 sq ft built-in area at 1 Kaki Bukit Place. It sits on a 11,950 sq ft land which 60-year lease began on Nov 20, 1995. It is asking for $11.95 million or $390 psf on the built-up area and $1,000 psf on the land area with vacant possession.

The second is the Global Innovation Centre industrial building at 152 Ubi Avenue 4 which sits on a 49,187 sq ft land with a gross floor area of 98,246 sq ft. The tenure of the property is 30 years, with an option to renew it for another 30 with effect from Feb 1, 1997. It is asking for $60 million or $611 psf ppr with vacant possession.

Both 1 Kaki Bukit Place and Global Innovation Centre are available via private treaty.

The third is a standard single-storey factory with a mezzanine level along 42 Changi South Street 1, which has a 51,204 sq ft GFA and 30-year tenure with an option to renew it for another 30 with effect from July 1, 1996. It is asking for $11 million or $215 psf ppr. The current lessee is exploring a sale and leaseback of the building.

The fourth is the Pak Chong Building at 78 Playfair Road which sits on a 25,782 sq ft freehold land. It is asking for $36 million or $559 psf ppr. The building comprises seven units with sizes ranging from 4,768.4 sq ft to 6,835 sq ft. This property is expected to be popular given its proximity to the Tai Seng MRT station on the Circle Line (250m away) and the limited supply of freehold industrial sites.

The expression of interest for 42 Changi South Street 1 and the tender for Pak Chong Building will close on Oct 2 and 3pm on Oct 24 respectively.

(Source: Business Times)

Retail rents in Orchard Road in decline

The prime retail rents in Orchard Road continued their decline in Q3 2012 to $37.66 psf per month in Q3 2012 as a result of declining retail sales and visitor arrivals. This decline might have been worse had there not been healthy leasing activity among food and beverage operators and the entry of new retail players. However, suburban prime rents remained stable at $28.20 psf per month since Q3 2011. To compete with suburban malls, some malls in Orchard Road such as The Heeren, Shaw Centre and Pacific Plaza are being revamped. Retail rents are expected to be on the rebound by H2 2013 when the global economy improves.

(Source: Business Times)

Yishun industrial site attracts $31.69m top bid

The 30-year leasehold 11,719.9 sq m (126,152 sq ft) industrial site at Yishun Avenue 9 attracted a top bid of $31.69 million or $100.48 psf ppr from Soilbuild Group Holdings, slightly above market expectations of $50-70 psf ppr. It has a maximum permissible gross plot ratio of 2.5 and an expected breakeven price of $265-290 psf ppr. The high bids are not very surprising since despite the reduction of land leases to 30 years, there is much liquidity in the market.

(Source: Business Times)

3 industrial sites launched for sale by tender

The first is a 30-year-leasehold 0.75ha site in Serangoon North. It has a 2.5 plot ratio and is zoned for Business 1 development. It is expected to draw five to eight bids with the top bid at $100-$150 psf ppr given its location within a cluster of established industrial and housing estates.

The remaining two plots of land are in Tuas South Street 8. They are zoned for Business 2. Each of has a tenure of 22 years and eight months, a 0.3ha site area and a 1.0 plot ratio. They will likely attract fewer than 10 bids with a top bid of $45-$70 psf ppr.

The tender for all three sites will close on Nov 23 at 11am.

(Source: Business Times)