Decline in property investment sales
There has been a decline in property investment sales in Q1 2012 to $3.4 billion as of March 12, though the final figure could potentially reach $3.8 billion. The figure thus far is a 57% fall from Q4 2011’s $7.7 billion and a 60% fall from Q1 2011’s $8.4 billion. This decline might be explained by the uncertain global economic situation and the new government policies such as the ABSD and new conditions on the industrial Government Land Sales. While the market is not expected to pick up in the next quarter with mainly GLS transactions, H2 2012 may pick up and see more private transactions if the global economy stabilises. The overall property investment sales may reach $20 – 23 billion of investment sales.
The current figure is made up by $2.3 billion from the residential sector. In the residential sector, private investment transactions decreased by 71% from the last quarter to $429 million, while those from the public sector fell by 0.4% to $1.84 billion. Despite the initial knee-jerk reaction to the ABSD, the picking-up in the mass market meant the GLS are still seeing decent activity. For the luxury market and collective land sales, however, there was a sharp decline as a result of the ABSD. In the collective sales market especially, the total transactions amounted to a mere $145 million, compared to $745 million for Q1 2011 and $789 million in Q4 2011. The total sales may reach $1.5 – $2 billion compared to $3.2 billion last year though smaller sites or sites that have a mixed-use component may continue to see buyers.
For the commercial sector, the total investment sales came to a total of $822 million so far in Q1, 68% below the last quarter, probably a result of lower rental rates although the situation is expected to improve in H2 as capital values and the number of transactions increase. The industrial sector similarly reflects dismal figures, with a total of $260 million worth of investment sales, 70% down from Q4 2011, though this may be attributed to the lack of GLS industrial sites in this period.
Four residential plots released, top plot in Tampines
Four residential plots that can yield up to 2,415 units have been released under the GLS, out of which three are in the confirmed list. Of these, there are two EC sites that can generate a total of 1,300 units. One is located at Tampines Central 7 next to Tampines Trilliant and the future Downtown line Tampines MRT station, while another is located at Woodlands Ave 5/Drive 16, next to the LaCasa EC development. The third on the confirmed list is a private condo plot located at Tampines Avenue 10/1, next to the Arc at Tampines development and opposite the Waterview condo project. The reserve list plot is also a private condo plot, which is located next to the confirmed list private condo plot. Consultants voted the EC plot in Tampines to be the most popular, with expectations for the top bid to be $280-420 psf ppr from 10-13 bids. Meanwhile, the Woodlands EC site is expected to draw three to five bids, with a top bid of $250-330 psf ppr and the Tampines confirmed list site is expected to draw a top bid of $350-465 psf ppr.
JTC’s net allocation of ready-built facilities fell in Q4 2011
JTC Corp’s net allocation of ready-built facilities (RBF) fell to minus 11,400 in Q4 2011, bringing the total in 2011 to minus 20,000 sq m, compared to 5,500 sq m in 2011. This is a result of a 37% decrease in gross allocation to 59,600 sq m from 94,100 sq m in 2010 and a 9% decrease in RBF supply to 3,175,100 sq m. Termination has also decreased by 10% from 79,600 sq m from 88,600 sq m while occupancy levels also registered a fall from 97.4% in 2010 to 96.5% in 2011.
In the case of prepared industrial land (PIL), however, the net allocation in 2011 was a record 202.7 ha compared, four times the 47.2 ha in 2010.
20% increase in hotel room supply by 2016
By 2013, there will be an increase of 4,028 hotel rooms with the opening of 19 new hotels and another 5,200 rooms by 2016, bringing the total increase between now and 2016 to 9,228 rooms. In 2011, the room supply has increased by 1,944 or 4.9% with the number of gazetted hotels increasing by 10 to 149. According to the Singapore Tourism Board, the total number of rooms here reached 49,719 in 2011. As demand for hotel rooms increases, hotels will be able to increase the room rates, with the average room rates (ARR) and occupancy levels increasing by 5-10% and to 83-86% respectively in 2012. The revenue per available room is also expected to increase 5-8% in 2012 from $212 in 2011.
Leasehold Shenton House up for collective sale
Shenton House located along Shenton Way, is asking for $530 million or $1,720 psf ppr inclusive of developmental charges of $73 million for the use of the 11.76 plot ratio and $132 million to extend the lease from 56 to 99 years. The plot ratio meant that the 36,350 sq ft land area can be redeveloped up to a maximum GFA of about 427,476 sq ft. Zoned for commercial use, it can be redeveloped into a building with a maximum of 35 storeys. This site could potentially be redeveloped into a mixed use development. Given its location and its regular layout, which allows for building efficiency, and its redevelopment potential, the site is likely to be popular among developers. The tender will close on April 19.
Also on sale in the collective sale market is the 66 strata-titled office units at Burlington Square. These units located from the fifth to the 12th floor of the building are asking for about $101 million, or $1,500 psf, and have about 83 years of lease remaining. The total size of the units comes up to 67,738 sq ft, with unit sizes ranging from 549 to 5,221 sq ft. Since the average gross rental yield is an attractive 4-6%, and such units are rather limited, the units are expected to be popular, and all the more so due to the low interest rates. Tender closes on April 18.