Residential

Resale HDB flat COV hits zero for the first time in almost a decade

The overall median cash-over-valuation (COV) for resale HDB flats hit zero in February, the first time since 2006, as demand for resale public homes dropped. The overall median COV for January was $3,000. According to the transaction records from agencies registered with the Singapore Real Estate Exchange (SRX), 37.3 percent of HDB resale deals last month closed below valuation compared with 29.4 percent in January. HDB resale prices also fell 1.8 percent month-on-month, the hardest since April 2013. Resale volume stood at 734 deals, down 20 percent from a month ago. 12 out of 26 HDB towns had zero or negative median COV, compared with 8 HDB towns previously.

(Source: Business Times)

Property players divided on COVs for HDB resale flats

As the latest COV fell to zero from $32,000 a year ago and might even decrease further, property analysts and agencies are divided on having cash over valuation (COV) in HDB resale transactions. COV is the cash premium paid by buyers in excess of the valuation of an HDB flat. ERA Realty key executive officer Eugene Lim said that COV figures and cash under valuation figures should be scrapped as negative COVs will trigger a downward spiral of HDB resale prices, and that only the market price should be released. Mr. Lim said when HDB started to publish COVs for different estates and flat types to educate the public and deal with the perception of COVs being too high, people then used these as a benchmark to mark up their prices above it, thus making the next valuation higher. However, Ong Kah Seng, director of R’ST Research, said that COVs are relevant as they are a brake to over-buying during average and thriving market conditions.

(Source: Business Times)

Cluny Park Residence receives strong interest

Although up-market freehold condominium Cluny Park Residence was not launched for sale until March 8, 40 percent of its 52 units had received purchase commitments from professionals and businessmen at private previews. 70 percent of the buyers are Singaporeans. The strong interest was believed to be due to the condo’s excellent location and long-term investment potential, despite the current uncertain residential property market affected by cooling measures.

(Source: Business Times)

Commercial

Macpherson Mall confirms inclusion of FairPrice and ibis Styles

Macpherson Mall (M2) has announced that it will feature NTUC FairPrice as its anchor tenant and ibis Styles as its hotel operator upon its opening in the second half of 2015. The mall is 53,000 square foot in size and is a freehold mixed development at the junction of Aljunied Road and Macpherson Road, where the Windsor Hotel previously stood. The mall has one basement level, three shopping levels above ground with NTUC Fairprice supermarket on the second floor, and a nine-storey economy hotel on top of the shopping levels.

(Source: Business Times)

Borneo Motors’ Pandan site to receive makeover

Borneo Motors Singapore (BMS) will be giving its Pandan Crescent property a makeover which will turn the site into an eight-storey complex to house motor vehicle businesses. The makeover is estimated by property analysts to cost $40 million. BMS is part of the spreading Inchcape Group (UK) and is located at 33 Leng Kee Road in Singapore. It distributes Toyota, Lexus, Suzuki, and Hino.

(Source: Business Times)

More benefits for property market from Reits

According to an independent report commissioned by the non-profit Asia Pacific Real Estate Association (APREA), Reits are now considered a positive force to help with the development of property markets. Reits are thought to offer predictable income, low cost of exposure to property, and will improve the operation of real estate market by attracting capital, in particular foreign capital, and allowing institutional and retail investors to invest in commercial real estate. Reits fundamentally break large pieces of property into smaller, tradable pieces, guarantees income, and improves liquidity.

(Source: Business Times)

Developers encounter more difficulties from cooling property market

As property valuations drop, developers are reported to encounter more difficulties in a tougher operating environment, such that some are pushed to make provisions for their projects. For instance, Wheelock Properties made an accounting provision of $110 million for 99-year leasehold condominium The Panorama in Ang Mo Kio, while also posting a loss of $91.3 million for its fiscal fourth quarter compared with the $30.8 million profit the year before. Wheelock had a net profit of $40 million as of the full year ended December, which was a 36.7 percent decrease from the previous year. OUE also posted a net fair value loss of $76.8 million on its investment properties, and a net attributable loss of $36.6 million for the full year ended December. One year ago, it had a net profit of $90.1 million.

(Source: Business Times)

Mixed responses over Reit impact

Although there are calls in Parliament for the government to control industrial and commercial rents to stop them from increasing, as well as for the reversal of JTC’s land divestment programme, economists are divided on this issue. JTC divested most of its industrial property a decade ago to create a more open and vibrant market, and give the private sector more freedom. However, Member of Parliament Inderjit Singh (Ang Mo Kio) now said the divestment was a mistaken policy during the Budget debate, since the government failed to influence rental prices, allowing developers and investors to make more passive income instead of productive income. However, other economists said Mr. Singh had too quickly used Reits as the reason behind business rents, and suggested that it could be due to supply lagging demand.

(Source: Business Times)

Government to take action on unfair Reit practices

At the Committee of Supply debate on the Ministry of Trade and Industry (MTI), Minister of State for Trade and Industry Teo Ser Luck said that the government will take action upon seeing collusion or abuse of market dominance by any landlord including Reits. This statement came along the louder calls for help with increasing business costs, especially that Reits were blamed for shorter lease renewals and larger increases in rentals. Some of those Reits were formed after JTC and HDB divested space to private owners. Minister Teo said that Reits accounted for only 13 and 16 percent of retail and industrial rental spaces respectively, and they are not the leading players in the rental market. He also believed that rents for space will moderate in the medium term after the government has released a large amount of land.

(Source: Business Times)

3 industrial sites up for sale

Three industrial sites were up for sale. One of them is a four-storey property in the JTC Food Zone and has a corporate office, a research laboratory, a factory floor and cold rooms located in Pandan Loop. It has an asking price of $17 million, a gross floor area (GFA) of 90,762.6 sq ft on a 100,070.90 sq ft site. The site is zoned for Business 2 use with a plot ratio of 2.5 and has 18 years left on its tenure, and is marketed by Jones Lang LaSalle (JLL). An expression-of-interest exercise is held from now until April 16.

(Source: Business Times)

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