Residential

First-timers have high chances of getting BTO flats

The first-time application rates for Build To Order (BTO) flats launched in January this year is 1.5, close to 1.6 in the November BTO, meaning that most will likely get to choose a flat from the 4,000 units available in this January launch. For second-timers, the application rate is 23.9, compared to 25.9 in the previous launch. The BTO balloting rules may be changed to offer second timers more chances in the March BTO launch.

99-year leasehold residential site at Kovan draws 11 bids with top bid of $194.6m

A 99-year 1.7 hectares leasehold residential site located at Kovan Road/Simon Road has attracted 11 bids, with the highest of $194.6 million or $507 psf ppr from a consortium of Hoi Hup Realty, Investment Focus, and Oriental Worldwide Investments. The consortium has plans to develop the site into a condominium project with below 400 Soho-style and townhouse units, which will be launched this year. The site, which is located near Kovan MRT station and a landed housing estate, has access to retail shops located in the Heartland Mall and Hougang HDB estate. This, added to the fact that there had not been any major condominium development near the MRT station, will likely draw buyers, which may explain the interest in the site. The number of bidders and the top bid comparable to that of other attractive suburban residential sites shows that developers are still confident enough to bid for attractive sites despite the ABSD.

The site has a GFA of 384,142 sq ft and is estimated to have a breakeven cost between $900 and $1,000 psf with a selling price of $1,100 to $1,200 psf, given the attractiveness of the site.

Former private home owners, not PRs, are the cause of high COVs

According to National Development Minister Khaw Boon Wan, the highest median cash over valuations (COV) of $45,000 were made by former private home owners in Q4 2011. The next highest is $34,000 paid by second-timers, followed by $33,000 paid by first-timers, $32,000 by PRs and the lowest of $31,000 by singles. He also stated that the figures for HDB resale prices are monitored and published for potential buyers and sellers.

However, analysts said that the data was not sufficient in explaining the cause of high COVs. Looking at the number and types of flats made by each group of buyers would provide a clearer picture. The higher COVs paid by private property owners may be because they tend to purchase bigger flats and the lower COVs paid by singles may be because the flats they purchase are smaller. The data also fails to consider other causes for the higher COVs since the data is fairly recent and does not take into account the past years when the COV started to rise. Nonetheless, the higher COVs paid by private home owners might also be explained by the high private property prices which they might have benefited from when they sold their private property and possibly higher profits made from en-bloc sales.

Two 99-year leasehold residential sites released under the GLS

The residential site located at Hillview Avenue has a 136,000 sq ft site area and a 2.8 plot ratio, resulting in a maximum GFA of more than 380,000 sq ft which can yield 370 units. Being located near the upcoming Cashew and Hillview MRT stations and amenities in The Rail Mall and The HillV2, the site is expected to be highly popular, drawing eight to 13 bidders and achieving a top bid of $500 – $550 psf ppr.

The other site located at Upper Serangoon Road comes with a higher maximum GFA of over 466,000 sq ft, a result of its 3.5 plot ratio and 133,000 sq ft site area.  The site can yield 435 executive condominiums (ECs) units.  Despite offering views of the Serangoon river, it is expected to be less popular than the Hillview site since the nearest MRT station is a good 1.5 km away. Furthermore, with a total of 14 residential sites in the 2012 H1 confirmed list, five of which being EC sites, some developers may choose to wait and bid for other sites. Hence, the expected number of bids is between five and 10, with a range of $220 to $300 psf ppr.

While the general belief is that demand for ECs will remain strong, it depends on the situation in the private residential market. Should the prices for private homes fall, buyers may purchase a private condominium unit or the price of ECs will also have to fall as well to continue attracting buyers,.

The tenders for the former and the latter will close on March 6 and March 1 respectively.

Commercial

First tenant of UE Bizhub East likely to be Cisco Systems

The first tenant of UE Bizhub East at Changi Business Park is likely to be CISCO Systems, which will move into a space of around 110,000 sq ft after moving out of its current space at Capital Tower at Robinson Road when its lease ends in 2013. The move is likely due to the savings it will gain since a renewal of the lease at Capital Tower would cost 9-10 psf compared to the $4 psf it is likely to pay at UE Bizhub East. This is a part of a growing trend of MNCs shifting their operations to the suburbs because of the lower costs and the relative stability of rental rates.

UE Bizhub East, which will receive its Temporary Occupation Permit in a couple of months, is located near Expo MRT Station. The development includes a 423,216 sq ft nine-storey business park component consisting of two linked blocks, 251 hotel rooms and serviced suites, 100,000 sq ft of retail space and convention/exhibition and auditorium space.

Other developments in Changi Business Park have also drawn much interest in recent years, with financial institutions like Standard Chartered, DBS, CitiBank and Credit Suisse taking up over one million sq ft of space.

With a larger supply of office space, rents for Grade A office space falls

Both the average monthly gross rental rate and the occupancy rate for Grade A office space in the Raffles Place and New Downtown micro-market fell in Q4 2011, with the former decreasing by 4.3% to $10.31 psf per month, and the latter falling from 90.9% to 88%. Rents in the Marina and City Hall micro-market and the Beach road micro-market has also decreased by 2.3% and 0.8% respectively. The average overall Grade A office rents decreased by 1.6% to $8.93 psf pm. The expected slow take-up of office space may be due to firms holding back on expansions as a result of the uncertain economic outlook and relocating part of their operations to the suburbs, which now offers more office and business park developments with amenities comparable to those in Grade A office buildings.

Nonetheless, the average capital value in the Raffles Place and New Downtown micro-market remained fairly stable, with $2,459 psf in Q4 2011 and $2,460 psf in Q3. The average capital value for the whole year was up by 17.8% from 2010 but this may change as rents may fall as there is an upcoming 11 million sq ft supply of office space over the next four years.

Join Our Weekly Newsletter

“What you must know before buying Singapore property…”

Sign up to get our free weekly newsletter with the best ideas and market updates from Singapore property experts, property transaction data and deals. Enter your email below to get our FREE Beginner's Guide and Property Buyer’s Checklist as a bonus. Save yourself thousands of dollars and lots of heartache!

Thanks for signing up! Please check your email to download your reports.