Category Archives: Property Retail Market

Property investment picks up in third quarter

Major property investors were far more active in the third quarter than in the second quarter, leading to a jump in hotel and residential property deals.
Property investment activity surged 15.6 per cent quarter on quarter to $8.7 billion in the three months ended Sept 30.
This brings the total investment volume for the first nine months of the year to nearly $21 billion, just shy of last year’s $21.4 billion for the corresponding period.
Investment sales included deals of at least $5 million, but excluded some $1.3 billion worth of transactions in single residential units as well as lots that cannot be redeveloped or subdivided into more than one plot.
Last quarter, deals involving hotels jumped fourfold, and those involving residential property leapt threefold. The deals, mostly in the private sector, made up almost 40 per cent of total investment value in the third quarter.
Major deals included the sale of seven hotels and four serviced residences worth $2.1 billion by Far East Organization to its Far East Hospitality Trust.
Nine collective sales worth about $1 billion were also made last quarter, compared to 15 deals worth $960 million in the first half of the year.
For instance, Thomson View Condominium was sold for $590 million last month, partly due to the announcement of a nearby station on the upcoming Thomson Line. Green Lodge on Toh Tuck Road was sold for $191.9 million last month.
Real estate investment trusts and corporates were net buyers in the third quarter, with the former accounting for 28 per cent of total investment volume. Funds were net sellers, selling about $1.4 billion of assets. Funds managed by Pramerica, AEW Capital Management and Commerzbank sold their stakes in shopping mall nex, and office buildings Robinson Point and 78 Shenton Way, respectively.

Source: The Straits Times – 4 October 2012

Prices of resale strata offices surge

Prices of resale strata offices surged in the third quarter, as a shortage of new space led buyers to look at older developments.
There was a similar trend in the number of transactions, with new-office sales falling as a share of completed deals.
There was much hype in the first half of the year over new strata-titled office developments such as PS100, Oxley Tower and Eon Shenton, but their market share retreated in the third quarter, according to a Knight Frank report.
New strata-titled offices made up 72 per cent of the 686 transactions in the first six months of the year, but that fell to just 21 per cent in the three months to Sept 30, when total sales of 97 offices were recorded.
International Plaza and The Central had the highest number of recorded transactions in the resale market, with both notching up healthy price gains in the third quarter.
There were 11 sales at International Plaza in the second quarter and eight in the third quarter.
The average unit price in the building increased by 11 per cent from the second quarter to $1,866 per sq ft (psf) in the third quarter.
The rise was a more modest 6.5 per cent when the sale prices of similarly sized offices were compared.
The Central recorded around 15 transactions in both the second and third quarters.
Average prices rose by 12.4 per cent to $2,440 psf from the second to the third quarter, and again, when the sales of similarly sized units were compared, the average price increase moderated to 4.2 per cent.
Source: The Straits Times – 3 October 2012

Cautious bidding likely for Sengkang, Pasir Ris EC sites

The executive condominium (EC) market may be approaching saturation point, even as the government puts up two more 99-year leasehold EC sites at Sengkang EastWay/Fernvale Link, and Pasir Ris Drive 3/Pasir Ris Rise for sale.
The first site at Sengkang West Way/Fernvale Link (Parcel B) sits on a 151,779.6 sq ft plot, and has a maximum gross floor area (GFA) of about 455,338.8 sq ft. It is expected to yield 420 homes.
The second site at Pasir Ris Drive 3/Pasir Ris Rise has a site area of about 297,729.5 sq ft, and a maximum GFA of 625,231.9 sq ft. It is envisaged to yield about 590 homes.
A possible reason for cautious bidding could be that while HDB has raised the income ceiling and allocation for second-timers, it has also increased the minimum occupation period (MOP) for HDB flats which limits the number of HDB upgraders. First-timers, however, have a plethora of options like BTO and DBSS which might divert demand.
However, Eugene Lim, key executive officer at ERA Realty Network, reckons that the interest developers have shown for EC sites in the first half of the year suggests that they believe the EC market is still robust.
“Interest in EC sites has been keen since the income ceiling for ECs was raised in August last year, replicating developers’ confidence of continual demand from a larger group of eligible buyers,” he said.
Mr Lim cited the examples of an EC site next to the Tampines Trilliant project, which was awarded to Singxpress Property Development, Creative Investments and Kay Lim Realty for $233.5 million ($373.40 psf ppr), and the site at Woodlands Ave 5, which was awarded to Hao Yuan Investment for $247 million ($317.65 psf ppr) in May this year.
Of the two sites, Mr Lim expects the Pasir Ris site to garner more interest, given its “seaside town appeal”.
In addition to the two EC sites, a 99-year leasehold site at Alexandra View (Parcel B), has been made available on the Reserve List system. The 69,981.5 sq ft site has a maximum GFA of 342,916.3 sq ft. It is expected to yield some 375 homes.
All told, the three sites are expected to yield about 1,385 units.
Tender for the EC sites at Sengkang and Pasir Ris will close at 12 noon on Nov 8 and Nov 22, respectively
Source: Business Times – 27 September 2012

Star Vista set to dazzle Buona Vista

THE one-north area is fast taking shape with the new Star Vista mall.
The CapitaMalls Asia outfit – the first major mall in Buona Vista – has about 100 shops, including some that are new to Singapore, like eatery Morganfield’s.
The Star Performing Arts Centre, owned and managed by New Creation Church’s Rock Productions, is above the mall.
Star Vista is within Vista Xchange, a cluster next to Buona Vista MRT station that houses Rochester Mall, Park Avenue Rochester Hotel and the upcoming Metropolis, which will have two office towers and retail space.
Lifestyle hub Rochester Park, with its trendy eateries, has been open for several years. Rochester Mall and the hotel are already operating, while the Metropolis is expected to be ready next year.
The one-north area – on the boundary of Buona Vista and Dover – is near the Buona Vista and one-north MRT stations. It is known for the science and research clusters Biopolis and Fusionopolis. Some phases of these two spots are completed, but more buildings will be added in future.
Mediapolis, which will house MediaCorp and other firms, is another cluster nearby that expects its first tenants soon.
Besides those, the Ministry of Education is headquartered in the area, as is Nanyang Technological University’s Alumni Club.
The one-north development in its entirety will be finished in about 15 years, but the changes are already boosting condominiums in the area while rents are being sustained by the many enterprises, private and public, there.
Property consultants say there is “great investment potential”, given the area’s accessibility, limited new supply of units, capital appreciation and leasing demands.
There is a dearth of private projects, with the fully sold The Rochester, which was completed last year, being the newest. The 405-unit One North Residences was completed in 2009, while Dover Parkview and Heritage View are more than a decade old.
As far as experts know, there are no more projects to be launched in the one-north area. There are also no government land sales there this year.
Dover Parkview’s resale prices have risen 3 per cent to about $949 per sq ft (psf) this year, while Heritage View next door posted an uptick of 6.8 per cent to around $1,093 psf.
The newer One North Residences saw resale prices inch up 3.6 per cent, averaging $1,436 psf.
Based on five-year trends, private home prices there have increased 2.9 per cent annually since 2007, beating the 2.2 per cent rise at condos in the neighbouring Holland and Farrer areas.
There have been at least 50 leases signed in the first two quarters this year at One North Residences, with monthly rents from $3.90 to $4.50 psf.
Source: The Straits Times – 22 September 2012

Sale in the offing for Mandarin hotel and gallery?

A sale could be in the offing for the landmark Mandarin Orchard Singapore and the adjoining Mandarin Gallery which were valued at $1.18 billion and $520 million at the end of last year.
Owner Overseas Union Enterprise (OUE) is said to have been receiving interest from potential buyers particularly for the hotel for some time now and has maintained that it will sell the property if it receives a price too good to refuse.
Now, market talk is that OUE has given exclusivity to a potential buyer to perform due diligence. Some sources point to a US property fund manager – possibly Pramerica – teaming up with a Middle Eastern player, which some suggest could be Abu Dhabi Investment Authority.
In July, a fund linked to Pramerica Real Estate Investors (Asia) sold a half stake in nex mall here next to Serangoon MRT Station for $825 million. Pramerica Asia is the real estate investment management arm of Prudential Financial. The deal valued the mall at $1.65 billion, or about $2,679 per square foot (psf) based on the current net lettable area.
However, there have also been suggestions that Saudi Prince Alwaleed’s Kingdom Holdings has looked at the Mandarin Orchard hotel. Earlier this year, Toronto-based hotel chain Fairmont Raffles Hotels International, in which Kingdom has a stake, completed the sale of the historic Raffles Hotel on Singapore’s Beach Road to the Qatar National Hotels Company.
Mandarin Orchard’s $1.18 billion valuation in OUE’s books works out to around $1.12 million per key for the 1,051-room property. If a transaction materialises at this price or higher, it would be a record for the Singapore hotel market.
While the hotel has been achieving strong cash flow aided by Singapore’s tourism boom, analysts note that both the hotel and Mandarin Gallery are on a site with a remaining lease term of about 44 years. The reversionary interest in the land is held by Ngee Ann Kongsi.
The hotel comprises two towers of 37 and 39 storeys. Last year, it achieved an average room rate of about $277.
Mandarin Gallery – completed in late 2009 and boasting a 152-metre long frontage on Orchard Road – has a gross floor area of 196,337 sq ft.
OUE is controlled by Indonesia’s Riady family, which owns the Lippo Group. The Riadys are not averse to selling their investments. In 2008, Lippo sold its 29.99 per cent stake in homegrown retail group Robinson to Al-Futtaim Group.
OUE also owns DBS Building Towers One and Two along Shenton Way, which have around 900,000 sq ft let nettable area. It plans to convert the podium into a retail mall that will boast a 262-metre-long pedestrian frontage along Shenton Way.
The group also owns the Crowne Plaza Changi Airport Hotel, which it acquired in July last year for $299.5 million.
For the second quarter ended June 30, 2012, OUE posted a 13.3 per cent rise in net profit to $22.8 million, on the back of a stronger topline. Revenue for the April-June quarter came in at $96.7 million, up 33.8 per cent, mainly driven by increased contributions from the group’s hospitality and property investment divisions.
Source: Business Times – 19 September 2012