Singapore Property News This Week #3

Here’s our summary of the important residential, commercial and industrial news this week. We hope this helps you to save time catching up on the news!

RESIDENTIAL

Average holding period for subsales increased to 2.31 years in Q1 2011

Savills’ study revealed that the average holding period for subsales in Q1 2011 was 2.31 years, an increase from the 2.07 to 2.23 years in the previous quarters of last year and the longest since Q1 2008. 97.4% of the subsales in Q1 2011 were profitable, and there was an increase in the average gain per profitable subsale deal to $315,043 from $283,498 to $289,004 in the previous quarters. The most profitable subsale deal in Q1 2011, which consisted of a ground-floor unit at Nassim Park Residence, made a profit of $3.44 million. A deal for an apartment at Orchard Residences was the biggest subsale loss at $723,200. Analyzing the URA Realis caveat data, Savills found that Livia in Pasir Ris (with 24 deals) and Double Bay Residences in Simei (with 22 deals) were the projects with the most subsale caveat matches in Q1 2011.

Most profitable subsale deal in Q1 2011 generated $3.44 million returns; exceeded last year’s $3.3 million

Last year, a minimum of 20 units were purchased and flipped within days, generating a profit of $5,000 to $188,000 (returns of 0.6% to 27.6%). 111 subsales of private apartments and condos in 2010 generated returns that ranged from $5,000 to $2.08 million per transaction. The government policies in January 2011 has affected property speculation as no subsale in Q1 2011 involved a unit bought in that period. The units in the 22 subsale deals in Q1 2011, which earned a profit of more than $1 million each, were transacted in 2006 to 2009. The 16% SSD might make it difficult for speculators to purchase private property and flip it profitably within a year. The most profitable subsale deal (in absolute terms) in Q1 2011 made a profit of $3.44 million, a return of 167.4%, and exceeded the $3.3 million achieved by last year’s most profitable subsale deal.

Clydesbuilt Group’s Eleven@Holland starts selling from $1,050 psf

Clydesbuilt Group will launch its cluster-landed housing project Eleven@Holland soon. Consisting of only four- and five-bedroom houses between 3,681 sq ft to 4,348 sq ft, the price for the 82 strata-titled semi-detached units will begin from $1,050 psf. The project, which is marketed by Knight Frank and will be modeled after a lavish resort villa, is expected to generate higher rental gains than other landed houses and condos, because of its spaciousness and the condo-like facilities such as security. TOP for Eleven@Holland is expected to be issued at the end of 2014.

Prices for luxury houses increased 0.9% quarter-on-quarter: CBRE study

Although there was an increase of 5.5% in the capital values of luxury houses in Asia over the quarter to Q1, prices of luxury houses in Singapore’s core central area increased by only 0.9% quarter-on-quarter while sales volume decreased by 20.4%. CBRE mentioned that rents remained rather stable but showed signs of softening towards the end of the quarter. As the number of foreigners and permanent residents purchasing new properties in prime areas also decreased in 2009-2010 as compared to 2006-2007, CBRE said that volume of luxury transactions will only see a 5% to 10% increase in 2011, or approximately 150-200 units with prices at an average of $3,000 psf for resale and $3,500 psf for new projects.

Analysts predict that DBSS site in Sengkang can have top bid of around $200-230 psf ppr

HDB’s DBSS site in Sengkang has a land area of approximately 244,405 sq ft and can hold around 790 flats.  Analysts are positive about the response towards the 99-year leasehold site and estimated that the top bid will be around $200-$230 psf ppr. Also, HDB plans to increase the number of DBSS flats launched from 3,000 units in 2010 to 4,000 this year. The DBSS land parcels in Clementi and Pasir Ris, which can hold 1,230 units, have been sold. HDB will launch another DBSS site at Bendemeer Road that holds 700 units in the later part of June.

Olina Lodge at Holland Hill up for collective sale with stated price of $225 million

The freehold 84,288 sq ft Olina Lodge at Holland Hill, which is zoned out for residential purpose with a 1.6 plot ratio, is up for collective sale with an asking price of $225 million ($1,666 psf ppr). DTZ mentioned that no DC needs to be paid if the site does not redevelop beyond the 1.6 plot ratio. A DC of $8.33 million is payable if the successful bidder taps the balcony allowance of 10% additional gross floor area; this will mean a unit land price of $1,575 psf ppr. If the asking price is achieved, the amount the owners will obtain from this collective sale will be 65% more than if they were to sell their units individually; this equates to $3 million to $9 million per unit.

Strong demand increased launch prices by 8-35% for new 99-year condos: DTZ

DTZ revealed that median prices of new 99-year condos at GLS sites introduced in 2010 and 2011 increased by 8%-35% as compared to nearby developments introduced earlier. For instance, the $1,219 psf median price for My Manhattan that was launched by Chip Eng Seng was 42% higher than the $856 psf ppr median price of the nearby Double Bay Residences. The reasons behind the higher prices may be: i) Higher psf prices due to smaller units developed by developers as compared to earlier projects; ii) Buyers are willing to pay higher psf price for new units under a progressive payment scheme; and iii) Higher demand for new projects. Developers are continuing to bid for 99-year sites due to strong demand on the buyers’ part brought about by good economic growth and low interest rates.

14,195 homes to be supplied under GLS programme to curb high prices: Minister Khaw

A total of 14,195 houses, 2.88 million sq ft commercial space and 3,750 hotel rooms will be introduced in the H2 2011 GLS programme, including sites on confirmed and reserve list. 43 residential, commercial and EC units are to be released for H2 2011. However, in order to prevent oversupply, only 19 out of 43 sites will be confirmed while the remaining will be placed on the Reserve List. 17 out of the 19 confirmed land parcels will supply 8,115 new private houses and EC units. A supply of 6,100 houses is expected if any of the 13 residential sites on the Reserve List are sold. Merrill Lynch said that the GLS programme for H2 2011 will prevent a housing bubble. Prices for private houses increased 2.2% in Q1 2011 after hitting 17.6% the previous year.

Property shares dropped 0.9% due to new supply by MND

The FTSE ST Real Estate Index, which had dropped 6.4% in the beginning of 2011, dropped 0.9% after MND announced its decision to increase its sale of new lands for private houses and EC units from 13,945 in 2010 to a minimum of 17,510 in 2011. The 17 residential sites on the Confirmed List for H2 2011 GLS can generate 8,115 new private houses and EC units. Citigroup mentioned that the uncertainty towards the possibility of the rise in the income ceiling may be one of the reasons for the decrease in property shares.

Far East Organization paid $103.8 million for site at Marine Parade Road

Far East Organization paid $103.8 million for a 47,400 sq ft freehold site, which came with a 113-year-old conservation bungalow, at Marine Parade Road. Including an $18.8 million DC, the price per potential gross floor area is $1,195 psf. The site can house around 100 units that have 1,000 sq ft on average, and can be built to a total GFA of 109,494 sq ft (inclusive of bonus GFA for balconies). The other 5 properties owned by Far East Organization in the area include condo projects SilverSea, The Cape and The Shore Residences, Paramount Hotel along East Coast Road, and the Amber Glades site.

COMMERCIAL

Industrial site will get a minimum bid of $23.8 million by an unknown developer in a tender 2 weeks later

URA will be putting an industrial site between Pioneer Road North and Soon Lee Street for sale through a public tender 2 weeks later. The site, with an area of 1.7 hectares and a maximum permissible gross plot ratio of 2, was placed on the reserve list system on 25th Feb. The 30-year lease site, which has a maximum gross floor area of 366,836 sq ft, will be bid by an unknown developer at a price of at least $23.8 million ($65 psf ppr) at the tender. However, analysts believed that the site can obtain a minimum of $80-$100 psf ppr.

Unenthusiastic response for site at Woodlands – highest bid at $151.5 million

A joint venture between Fragrance Group and Aspial Corporation won the bid for a site at Woodlands Avenue 2/Rosewood Drive with a bid of $151.5 million ($367 psf ppr). The tender received an unenthusiastic response as only 3 parties were bidding and only the top bid was within market expectations. The top bid for the 99-year leasehold site exceeded the second highest ($149.8 million or $363 psf ppr) by merely 1.2%. Colliers International believed that such a weak response might be due to the site’s mediocre traits and competition from ongoing and upcoming projects in the vicinity. Although the site has a maximum permissible gross floor area of approximately 412,600 sq ft and can hold up to 390 units, its development is limited to a 5-storey height.

A-Reit awarded site at Fusionopolis

The business park site at Fusionopolis was officially awarded to A-Reit by JTC Corporation, who submitted a top bid of $110 million. The 67,300 sq ft site, which has a 60-year leasehold, has a maximum gross floor area of 269,200 sq ft. Although A-Reit is a wholly-owned subsidiary of JTC, the usual constraints set out for “interested persons transaction” is waived because the site was awarded through a public tender.

0.78-hectare site at Marina View can fetch about $1.3-1.5 billion

A ‘white site’ at Marina View is one of the plum sites that the government will be releasing for its GLS programme. The 0.78-hectare Marina View site, which can produce an approximate GFA of 1.09 million sq ft and net lettable area of 920,000 sq ft in a full-office project, can get a price of about $1.3-$1.5 billion. Savills mentioned that the site can fetch around $1,200-1,400 psf ppr in full-office use and the completed building can be traded at around $2,700-2,800 psf ppr.

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