Singapore Property News This Week #5

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

Q2 property investment sales likely to drop to $7.3 billion: Savills

Total property investment sales decreased from approximately $8.3 billion in Q1 to possibly $7.3 billion in Q2. Deals that involved GLS sites, however, increased by 38% to $4.2 billion in Q2. The top 3 investment sales transactions in Q2 to date are a $969 million sale of a Jurong Gateway site, $585.6 million sale of a Paya Lebar commercial plot, and $543 million sale of a private housing site at Bendemeer Road. Savills is positive that investment sales will improve in Q3 due to fresh capital from investors.

Top Global unit bought Braddell Park at $85 million; Brookvale Park up for collective sale with asking price of $550 million

A Top Global unit purchased Braddell Park, a freehold 45-unit apartment with 91,360 sq ft land area, at $665 psf ppr ($85 million). The site can  achieve a GFA of up to 137,060 sq ft. Over at Sunset Way, the 373,000 sq ft Brookvale Park is up for collective sale with a stated price (inclusive of an estimated $16.77 million DC) of $550 million or $950 psf ppr. According to CB Richard Ellis, the unit land price (inclusive of an estimated $35.4 million DC) is only $892 psf ppr if the developer utilizes the 10% bonus balcony allowance completely.

Centrale 8 will cost up to $778,000: Sim Lian Group

Flats at Centrale 8, a public housing project developed by Sim Lian Group under DBSS, will cost up to $778,000; this amount is lower than the initial stated top price of $880,000. Three-room flats will start from $389,000 to $445,000, four-room flats will start from $511,000 to $592,000, and five-room flats will start from $685,000 to $778,000. The developer has taken into account the resale prices of nearby HDB flats, nearby amenities and current economic progress before coming up with the prices.

77 Robinson Road up for sale; tenders for plot in Potong Pasir and Serangoon Garden Way launched

Given a NLA of 294,859 sq ft, 77 Robinson Road can fetch up to $678 million if it is sold at $2,300 psf of NLA. The site has a remaining 82-year lease and sits on a 32,435 sq ft site. Also, URA launched tenders for a condo site beside Potong Pasir MRT station and a 305,711 sq ft landed housing plot at Serangoon Garden Way. Credo Real Estate predicted that top bids for the Potong Pasir site, which can house 330 residential units, will fall between $500 to $600 psf ppr. SLP International predicts that top bids for the Serangoon Garden Way site will be approximately $480 to $520 psf of land area and a total land price that exceeds $100 million (or $320 psf of gross site area).

Cheung Kong (Holdings) Ltd will launch its 361-unit Thomson Grand in July at starting price of $1,400 psf

Cheung Kong (Holdings) Ltd will launch its 99-year leasehold Thomson Grand, which occupies a 224,402 sq ft site, in July. Thomson Grand is made up of nine high-rise towers that house 339 apartments and 22 strata terrace units; 30% of the total units are two-bedroom units of 904 to 1,044 sq ft, 47% are three-bedroom units of 1,346 to 1,421 sq ft, and 23% are four-bedroom units, garden units, penthouses and strata terrace houses. In the first phrase, around 50 units priced at least $1,400 psf will be allotted.

Tulip Garden up for en bloc sale again; Balmoral Condo sold for $141 million in en bloc sale

At Farrer Road, Tulip Garden is up for en bloc sale again after its previous failed attempt. Credo Real Estate advised the owners to reduce the reserve price from $650 million previously to $600 million. This will then decrease the effective land cost to $1,118 psf ppr, given that a $23 million DC is paid and the 10% space allowed for balconies is maximized. Over at Balmoral Road, Balmoral Condo fetched $141 million ($1,546 psf ppr) in its en bloc sale. Owners will receive around $2.85 million to $3.26 million each.

$461 psf ppr top bid for West Coast site falls below market expectations

The top bid of $461 psf ppr ($175.78 million) for a residential site in West Coast was below market expectations of $495 to $580 psf ppr. The top bid, which was submitted by Far East Organisation, was only 1.1% higher than Centurion RE’s bid of $456 psf ppr. Despite that, there were 12 developers bidding for the site. Collier International estimated a breakeven cost between $800 to $840 psf ppr and an average selling price between $900 to $940 psf, while Credo Real Estate estimated a breakeven cost of $850 psf and an estimated average selling price of $1,000 psf. Savills believes that developer can breakeven by selling only 73% of the NLA.

Minister Khaw urged people to understand what “shoebox units” are before buying them

Apart from asking analysts to analyse each category of housing products separately, Minister Khaw also urged people to weigh the pros and cons of “shoebox units” (apartments below 500 sq ft) carefully and understand what they are getting into before purchasing. He noticed the annual take-up for “shoebox units” increased from 300 to 1,900 units (or 6% to 12% of developers’ sales) from 2008 to 2010. Khaw assumed that Singaporeans usually buy these units for investment purposes and to rent them out. However analysts are uncertain if “shoebox units” can still draw high rentals since supply for such units will rise from 1,100 to 3,800 units by 2014.

Sales for private homes increased significantly from 4,264 units in 2008 to 14,688 units in 2009

Market is expecting the                sales for private houses in 2011 to be 14,000 to 16,000 units after observing a significant increase in sales since 2008. Sales of private houses increased from 4,264 units in 2008 to 14,688 units in 2009 and 16,292 units in 2010. Till end of May 2011, 7,000 private homes were already sold. Despite government cooling measures, land prices continued to rise due to low interest rate, strong confidence in the property market, and Singaporeans’ desire to upgrade their properties.

COMMERCIAL

Office and retail sectors are better choices than housing market

Cheung Kong Holdings mentioned that office and retail sectors are better choices for investment as compared to the housing market. Unlike the housing market, office and retail sectors are less likely to be affected by government policies. Also, demand for commercial space is likely to rise due to strong economic growth.

Oxley Holding has top offer of $43.4 million for Irving Place site

The top offer of $43.4 million ($343 psf ppr) by Oxley Holdings for a 0.34 ha industrial site at Irving Place was much higher than the market expectation of $200 to $270 psf ppr. The top bid exceeded the second highest bid of $41.3 million ($327 psf ppr) by only 5%, while the lowest bid was $21 million ($166 psf ppr). Colliers International mentioned that the developers’ confidence in Singapore economy and industrial market can be seen from the 15 bids that the Irving Place site attracted. Oxley plans to develop the site into something similar to Oxley Bizhub, which consists of industrial and commercial strata-titled units.

Strong growth for prime retail rentals

Due to high demand and low supply, retail rentals in the Orchard Road belt increased 0.5% quarter-on-quarter to a monthly $40 psf in Q2 2011, while retail rentals in other city areas increased 0.6% quarter-on-quarter to a monthly $24.05 psf. In contrast, prime suburban retail space rentals remained unchanged quarter-on-quarter at $33.70 psf per month. Overall, DTZ mentioned that rentals are expected to increase moderately in 2011 with an approximate 2% increase for rents in Orchard Road and Scott Road and below 1% in the suburban areas.

URA sales condition for site at Gambas Ave: site must be developed for ‘Business 1’ use

The successful bidder for the 2.1 hectare industrial site between Gambas Avenue and Gambas Crescent must develop the site for ‘Business 1’ use, according to the sales conditions URA announced yesterday. The 60-year leasehold site has a gross plot ratio of 2.5 and a maximum GFA of 576,600 sq ft. Analysts anticipate keen interest in the site due to rising rents. CB Richard Ellis also mentioned that some investors prefer industrial properties over residential because capital values for industrial properties increase faster than rental values.

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