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
Slower GCB sales due to gap between offer and asking price
Widening gap between offer and asking prices has decreased GCB sales. For example, asking price for a GCB in areas like Tanglin ranges from $2,300 to $2,500 psf while buyers are only willing to pay $1,800 to $2,000 psf. However, GCB sales this year have reached at least $750 million to date. Till now, the largest GCB transaction in 2011 is a 69,546 sq ft sprawling land sale on Yarwood Avenue at $59.5 million ($856 psf). The slower GCB sales this year might be due to investor’s withdrawal of speculative activity with the implementation of SSD. However, seller’s expectation remains high due to limited supply of GCBs. Newsman Realty believes that GCB prices will increase by approximately 10% for 2011.
Royalville and St Patrick’s Garden up for en bloc sale with asking price of $370-400 million and $188 million respectively
174,176 sq ft Royalville in Bukit Timah is up for sale with asking price between $370 million to $400 million. If developer constructs an extra 10% GPR for balconies, the asking price equals a land rate of $1,383 to $1,495 psf ppr with an approximate DC of $1.06 million. The project breakeven cost approximates to $1,900 psf of potential saleable area and the site can possibly redevelop into 255 apartments of 1,000 sq ft on average. In East Coast, 137,559 sq ft freehold St Patrick’s Garden is up for sale with asking price of $188 million ($888 psf ppr). The project breakeven cost approximates to $1,440 psf and the site can redevelop to a five-storey residential project that houses 176 units of 1,200 sq ft each. Both tenders end on July 28, 2011.
En bloc sale for River Valley walk-up apartment fetches $70.5 million
In River Valley Road, a 40-unit walk-up apartment development is sold for $70.5 million ($1,139 psf ppr). The site, which has a land area of 22,107 sq ft, is set for residential purpose with a 2.8 plot ratio under the 2008 Master Plan. The total GFA permissible is about 68,089 sq ft and no DC is payable for a planned new development constructed at a gross plot ratio of 3.08. Each owner will receive around $1.75 million to $1.77 million from the deal. This deal also brings the total value of 2011 en bloc sale to $1.73 billion.
Increased HDB supply will not cause housing glut in years to come: Citigroup
Contrary to most analysts’ viewpoints, Citigroup thinks that an increase in HDB supply will improve the estimated 50,000 deficit figure in housing units, and thus moderate mass-market price and demand in time to come. Future HDB resale transactions will likely decrease by only 7% to 15%, while the decrease for private property market will be lesser. Due to strong rental competition and uncertain economic condition, demand for high-end houses will remain dull. Rental rates are predicted to stabilize over the years with the current rental yielding at an average of 2.4%.
A Robinson Road commercial site and a Punggol condo housing plot up for sale via public tender
A Robinson Road commercial site, which covers an area of 31,560 sq ft and has a GPR of 11.2, is up for sale via public tender. The asking price for the site, which has an allowable GFA of 353,472 sq ft, is around $1,100 to $1,200 psf ppr plus a total quantum of $390 to $410 million. At least 80% of the site maximum GFA must be used for office purpose. Similarly, a leasehold condo housing plot at Punggol is up for sale. The site has an area of 154,397 sq ft and a maximum GFA of 524,952 sq ft. SLP International predicted that the site, which can house about 550 housing units, can obtain a top bid between $194 million and $220 million ($370 to $420 psf ppr).
Resale prices of private houses increased faster in Q2 than Q1
DTZ mentioned that the average resale price of leasehold condo in suburban areas increased 3.9% quarter-on-quarter in Q2 (up from 0.8% in Q1), while average resale price for condo in upmarket prime districts 9, 10 and 11, increased 3.3% in Q2 (up from 0.4% in Q1). NUS’s monthly Singapore Residential Price Index revealed a 2.5% increase in prices of non-landed private houses in May, up from 1.1% and 0.2% in April and March respectively. Prices of non-landed private houses in central region increased 3.5% (up from 1% in April), while prices in non-central region increased 1.7% (up from 1.2% in April). According to CBRE, the price increase in Q2 could be due to sellers quoting a higher asking price.
Total value of properties sold via auction increased by 49% in Q2
As compared to the mild response in Q1 2011, the total value of properties sold via auction increased by 49% quarter-on-quarter to $41.38 million in Q2 2011. Unlike residential sales that normally dominate in auction sales, the improvement in sales values in Q2 2011 was actually brought about by several high-value non-residential deals. Colliers International mentioned that buyer’s confidence may have shifted from residential to commercial and industrial properties as auction property market observed an overall decrease in residential sales value and zero high-value residential transaction made in Q2.
Top bid of $142.8 million for Choa Chu Kang site falls below market expectation
A tender for 99-year leasehold residential site at Choa Chu Kang attracted only five bidders. The top bid of $142.8 million, which translates to $411 psf ppr, fell below market’s expected top bid of $425 to $640 psf ppr. However, the highest bid has surpassed the second-highest offer of $122 million ($351 psf ppr) by a high 17%. Colliers International predicted that a project on the residential site can obtain an average selling price from $900 psf to $1,000 psf, while SLP International predicted an average price from $900 psf to $950 psf. Based on the bidding outcome, CBRE mentioned that developers are more selective and cautious in bidding for GLS sites due to upcoming supply of sites for H2 2011.
Prices for private and public housing affected differently by anti-speculation
Price growth for private houses slowed down in Q2 as interested buyers are cautious about making their purchase. The private residential property price index increased 1.9% to 202.8 points in Q2, down from the 2.2% increase in Q1. The price increase slowdown in Q2 is most prominent in the suburban districts outside the central region as non-landed private homes prices increased by only 1.6%, down from 3.1% in Q1. However, prices in the core central region increased 1.6%, up from 1.1% in Q1. In contrast, resale HDB flats prices are increasing at a faster rate due to strong demand. The resale price index saw a 2.9% hike to 179.9 points in Q2, up from the 1.6% hike in Q1.
Malaysia to receive six prime Singapore land parcels with gross development value of $11 billion
The six prime Singapore land parcels (four in Marina South and two in Ophir-Rochor area) that Malaysia will receive in its historic land deal with Singapore have gross development value of $11 billion and a total permitted GFA of 501,020-sq-m. The sites will be commercialized for office, residences, hotel, and retail purposes. At least 60% of the 341,000-sq-m Marina South land will be for office use: Cushman & Wakefield mentioned that this amount mirrors about 90% of 2011 total office space supply. Cushman & Wakefield also predicted that majority of the Ophir-Rochor parcel will be for residential use. Residential prices in the 6 sites are around $3,000 psf on potential GFA while office space fetches $2,500 or $2,600 psf.
COMMERCIAL
URA sales term for 99-year leasehold hotel site at Kallang Riverside: minimum total GFA cannot fall below 20,563-sq-m
The 8,195 sq-m site at Kallang Riverside with a maximum permissible GFA of 22,948-sq-m must have a minimum total GFA of at least 20,563-sq-m, according to sales condition by URA. Also, hotel rooms and hotel-related uses must occupy minimum 60% of the site total GFA. SLP International predicted that the site can only obtain a price between $155 million and $168 million, or $630 psf ppr to $680 psf ppr if triggered. However, SLP also mentioned that the probability of the site being triggered is low due to its not-yet-fully-developed location and abundant supply of hotel sites from GLS programme.
Grade A office space rents increased 6% despite lower occupancy rate in Q2
Grade A office space average monthly gross rents saw a strong 6% quarter-on-quarter increase in Q2. The largest rent increase came from office space in Raffles Place/New Downtown and Marina/City Hall areas, which increased 7% to $10.4 psf per month and 7.2% to $9.50 psf per month respectively. In contrast, occupancy rates for Grade A office space decreased from 94.2% in Q1 to 93.5% in Q2. The greatest decrease in occupancy rates came from Raffles Place and Beach Road micro-markets, whose occupancy rate dropped 1.5% and 3.2% respectively; however, Orchard Road micro-market saw a 0.9% increase in occupancy rate.
Woodlands site draws top bid of $84.24 million, beyond market’s expectation and more than twice the amount of a winning bid for a site in the vicinity
Located in Woodlands, a 60-year leasehold commercial site with a maximum GFA of 554,231 sq ft drew a top bid of $84.24 million (or $152 psf ppr), way beyond market’s expectation. Analysts had previously predicted that the plot will mainly draw bids between $60 and $90 psf ppr and the top bid will be around $100 psf ppr; however, most bids submitted for the site were above $100 psf ppr. Also, the top bid is more than twice the amount of a winning bid for a nearby industrial site. Judging from the bidding result, investor’s confidence may have shifted from the residential to the industrial sector.
Highest bid for industrial site in Tuas View Square: $7.33 million
A 45-year leasehold industrial site in Tuas View Square, which has a site area of 46,850 sq ft and maximum GFA of 42,163 sq ft, was sold for $7.33 million ($174 psf ppr) to SCB Terraform Pte Ltd in a URA tender. The highest bid from SCB Terraform was 13% more than the $6.51 million ($154 psf ppr) second highest bid made by Soon Hock Property Development Pte Ltd. CBRE mentioned that the bidding result revealed a strong growing demand for industrial space and land.
Monthly rent for prime Orchard Road retail space remained stagnant in Q2, prime suburban rents decreased: CBRE
According to CBRE, monthly average rent for prime Orchard Road retail space decreased 0.5% over H1 2011 and remained stagnant at $30.10 psf pm in Q2, while prime suburban rents decreased by 0.7% for H1 2011 and a quarter-on-quarter decrease from $29.10 psf pm to $28.90 psf pm in Q2 2011. Over the next four years, 13.2% (566,000 sq ft) of the approximate 4.3 million sq ft retail supply will be located in Orchard Road while 55.2% will be in the suburbs.
9 sites with total land area of 15.99 ha offered under 2H GLS program
9 sites, which have a total land area of 15.99 ha, will be offered by the government under 2H land sales program. 3 out of the 9 are placed on the confirmed list: a 1.95 ha site at Soon Lee Street, 2.83 ha site at Lavender Street-Kallang Avenue, and a 2.6 ha site at Kaki Bukit. Analyst’s’ favourite is the Lavender site because of its Business 1-White zoning and its proximity to Lavender MRT station. The other 6 sites on the reserve list include a site at Aljunied Road-Sims Drive, Gambas Avenue-Gambas Crescent, Serangoon North Avenue 4, Woodlands Avenue 12 and two sites at Yishun Avenue 9.