Singapore Property News This Week #73

Residential

Good turnout at show flats

Potential buyers are undeterred by new cooling measures as evident by the good traffic at show flats of newly launched projects such as Riversails at Upper Serangoon View and Skies Miltonia at Yishun. Over 300 units at Allgreen Properties’ 920-unit Riversails have been sold, with at least 20 units sold over the weekend. 67% of units at the 420-unit Skies Miltonia have also been sold. This reflects the positive sentiment in the market.

(Source: Business Times)

Good Class Bungalow transaction volumes fall in Q3

Transactions volume in GCBAs fell from 18 transactions at $358.8 million in Q2 to 14 transactions at $285.1 million in Q3. The recent cooling measures (cap on housing loan tenure, lower LTV ratio) are unlikely to have an impact on GCB buyers who tends to be high-net worth individuals. The slowdown in Q3 could be due to the pent-up demand being fulfilled in Q2, or a residual effect of the SSD introduced early in 2011.The current transaction volume year-to-date stands at 41 transactions at $868 million and may hit 50 to 55 transactions totalling $1 billion to $1.1 billion by end-2012 if there are three to four GCBs deals each month. Prices are expected to remain stable.

(Source: Business Times)

Adjacent Chee Hoon freehold GCB parcels up for sale

The two adjacent land parcels (18,989 sq ft and 26,166 sq ft) located at Jalan Asuhan, off University Road in the Chee Hoon Avenue Good Class Bungalow Area are asking for $1,600-$1,800 psf or $72.2 million to $81.3 million by private treaty. Buyers have the option of purchasing one or both parcels, which offers a panoramic view since it is one of the highest points in the area. It is accessible via Dunearn, Bukit Timah and Adam roads.

(Source: Business Times)

99-year leasehold Woodlands EC site attract $150.2m top bid

The site at Woodlands Avenue 6 and Woodlands Drive 16 drew a top bid of $150.18 million, or $302 psf ppr from a 70-30 Opal Star – Binjai Holdings joint venture, beating out four other bidders. The plan is to build eight 12-storey residential blocks with a total of 447 units consisting of mainly three- and four-bedroom units. The estimated breakeven cost and selling price are $600-650 psf and $680-730 psf respectively.

(Source: Business Times)

HSR: residential prices to slow in Q4, but unlikely to fall in next 12 months

Before the announcement of the 35-year cap on loan tenures and lower LTV ratios, HDB resale prices and private non-landed homes prices are expected to increase by 2-2.5% and 0.8% next quarter respectively. However, with the introduction of the new cooling measures, these will fall to a 0.5% and 0-0.5% increase respectively. While prices are unlikely to fall given the low interest rate and market liquidity, sales may slow as some buyers (though a negligible umber) are priced out by the higher monthly instalments from the lower loan tenure, and other buyers postpone buying until the market corrects itself.

(Source: Business Times)

Commercial

Prime office rents slip further even as vacancies fall

Despite the fall in Grade A vacancies from 7.9% in Q2 to 6.8% in Q3 (11.8% to 9.8% in Marina Bay sub-market; 1.5% to 2% in Orchard Road), the overall Grade A rent declined by 3.6% to $9.13 psf in Q3, with the biggest fall of 2.5% and 3.9% in Marina Bay and Raffles Place respectively. Rents in the City Hall and Marina Centre vicinity declined 1.8%. The fall in vacancies is encouraging given the slower economic growth and uncertain global economy and despite the falling rental rates, the decline is slower than in the first half of the year. While a further fall in vacancies that would help to stabilise rents in the CBD is expected, the upcoming 1.2 million sq ft of vacant space over the next 6 months would prevent short-term recovery.

(Source: Business Times)

Increasing resale prices of industrial space points to speculation

Resale industrial prices for first-storey conventional industrial space and upper-storey industrial space climbed 4% to $600 psf and 3.5% to $445 psf in Q3 from Q2 respectively while rents for the former and the latter remained stable at $2.15 psf per month and $1.75 psf per month respectively. Hi-tech industrial rents increased slightly by 0.07% from Q2 to $3 psf per month in Q3. The increasing resale prices points to an increase in speculation in the industrial property sector, which may be due to the lack of a seller’s stamp duty for commercial properties that imposes a penalty on buyers who sell their units within a short period of time, and the lower overall quantum of such properties. Furthermore, there are more investors shifting from residential to industrial properties since they have the highest yields and interest remains low, thus offering high returns. While some believes that the market is not overheated yet and does not need more cooling measures, citing increased demand and better locations as alternative reasons for rising prices, others suggests that speculation crowding out genuine industrialists may lead to the government introducing measures such as seller’s stamp duty or limits to the LTV ratio.

(Source: Business Times)

Business park sector to remain stable

The average rents for business and science parks in Q3 2012 are $3.70 psf per month, the same as Q2 while the vacancy rates slipped from 7.5% in Q2 to 6.9% in Q3. This is due to the companies’ high pre-commitment to the upcoming space, the relocation of MNCs from the CBD to business parks seeking lower rental rates. This sector is expected remain stable for the next three to six months with lease renewals, tenant upgrades from old to newer buildings, despite an upcoming 1.04 million sq ft NLA in Q4 since 71% of the upcoming space are pre-committed.

(Source: Business Times)

Jalan Sultan mixed-use site draws $331.34m top bid

The 0.84 hectare site zoned for hotel development or commercial and residential development and located at the corner of Jalan Sultan and Victoria Street attracted a top bid of $331.34 million, or $993.71 psf ppr from Forward Land, beating out eight other bids. The top bid is 8.3% higher than the next highest bid. 60% of the 333,433 sq ft maximum allowable GFA which can generate around 650 hotel rooms will be for hotel use with the rest for commercial purpose, in line with URA’s guidelines for hotel development. Some thought the bid aggressive but estimates the 5% net yield based on a $460,000 breakeven cost per hotel room and current room rates at V Hotel Lavender, a hotel under Forward Land. Furthermore, hotel room rates for this segment are expected to improve, and demand to come from benefit from sports tourism with the completion of Sports Hub in the future. Others however thought the bid reasonable for its location and permitted uses, being located near Lavender MRT station and a few stops from the city centre with nearby amenities.

(Source: Business Times)

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