Bullish bidding for Upp Bt Timah site

An overwhelming 24 bids were submitted for the tender of a residential plot in Toh Tuck Road. This was the second highest number of bids submitted in a residential government land sales (GLS) tender since 2009, when the tender for a parcel in Westwood Avenue attracted 32 bids.

More recently, in November 2012, a tender for an Upper Bukit Timah plot also came close, garnering 23 bids; it was won by World Class Developments, a unit of Aspial Corporation, which developed it into the 60-year leasehold “retirement resort”, The Hillford.

In the latest tender results, Malaysian property developer SP Setia International put in the highest bid at S$265 million, which translates to about S$939 per square foot per plot ratio (psf ppr). The results completely exceeded property consultants’ earlier expectations of up to 16 bidders, with the highest bid at no more than S$750 psf ppr.

The subject site is located along Upper Bukit Timah, nestled within an established residential estate of both public and low-rise private housing surrounded by amenities including local and international schools, tertiary institutions, shopping centres and transport nodes.

Bungalow market in Sentosa is gaining pace

So far there are around 7 deals have been in various stages of completion in the bungalow market in Sentosa. The market expectations for these high-end homes are improving with the recent developments of the real estate market in Singapore.

A house along Cove Drive has been sold for $2016 psf, or S$16.25M on land area of 8060 sqft. Another one along Lakeshore View, fronting the golf course, was brokered at S$21.25M or $1886 psf. The buyers was reported to be Japanese discount retail group Don Quijote’s founder Takao Yasuda.

Recently a sale was entered into for the Cove Grove House owned by Ezra Chairman. The price is believed to be between S$14.5-15M for the land-sized -11,515-sqft villa.

Panasonic moves compressor HQ business to Singapore

Minister for Manpower Lim Swee Say announced the company’s first such relocation outside of Japan in recent decades yesterday at the official opening of Panasonic’s refrigeration compressor business unit (RCBU) in Singapore.

It is a first for Japanese electronics giant Panasonic to moved the global headquarters for its refrigeration compressor business to Singapore.

The manufacturing plant here, which makes refrigeration compressors, will also be transformed from a traditional manufacturing plant into a “smart factory”, which will make use of big data and make processes more automated.

At a press conference yesterday, the company’s top management pledged to keep the jobs of its 650-strong Singapore workforce, even as it turns its operations in Bedok South into a smart factory.

The transfer of the headquarters to Singapore from Kusatsu city, Shiga Prefecture, will result in an increase in staff numbers in the RCBU unit. It could double the size of its research and development team to about 120 engineers in five years. The company’s phasing out of manual jobs will mainly affect its foreign workforce of about 350 workers, mostly from China.

Panasonic wants to cut this workforce by 200 workers in the next three to five years.

Queenstown site bid signals positive market sentiment

A large residential site in Queenstown able to yield about 1,110 units has been triggered for sale, in a sign of improving market sentiment. A developer committed to bid at least $685.25 million for a 2.11ha Stirling Road site. The site has been on the Government Land Sales reserve list since March 2010, which was made up of two adjacent sites once offered separately but merged into one site in 2012.

The 99-year leasehold site is next to Tiong Ghee Temple and near Anchorpoint shopping centre. As it is one of the larger sites on offer, analysts said the bid reflected better market sentiment, and developers’ growing appetite for residential land.

Many developers are running low on land and have to demonstrate that they have longer- term corporate growth strategies.Being a prime city-fringe site, it is also likely to generate much interest and attract buyers easily. Competitive bidding are expected.

Based on a maximum permissible gross floor area of 954,328 sq ft, the bid translates to a price of $718 per sq ft (psf) per plot ratio. Bids are expected to climb further, to between $830 psf and $950 psf.

It is noted though of unsold supply in Commonwealth Towers, Queens Peak and an upcoming project in Margaret Drive. The pricing will likely take a cue from Queens Peak, with an average of $1,640 psf, and Commonwealth Towers, at an average of $1,654 psf.

Investment property sales drop in Q1

FROM a high base in the fourth quarter of last year, big-ticket property transactions of at least S$10 million declined substantially in the first quarter.

However, the mood in the market is decidedly positive – with much anticipation of the imminent mega transactions of Jurong Point mall, and Asia Square Tower 2 in the CBD.

“Investment market sentiment is positive and the price gap has mostly disappeared except for hotels,” said CBRE executive director, capital markets, Jeremy Lake.

In particular, the tone of investors towards the office sector seems to have reversed dramatically. “The oversupply in the Singapore office market is yesterday’s story, and today’s story is all about the recovery and rental growth,” said Mr Lake.

Figures compiled by Savills Singapore showed that S$5.2 billion of investment sales of property, as these big deals are known, were sealed in Q1, down 34.8 per cent from S$8 billion in Q4 last year. However, the Q1 number is double the S$2.5 billion in the same year-ago period.
Photo: The Business Times
Photo: The Business Times

Both Savills and Cushman & Wakefield (C&W) estimate that some S$2.7-2.8 billion of deals in the commercial property segment were transacted in January to March this year – giving it a share of slightly over 50 per cent of total investment sales.

Major transactions include the S$881 million sale of a 70 per cent stake in TripleOne Somerset by a consortium led by Perennial Real Estate Holdings to Stanley Ho’s Hong Kong-listed Shun Tak Holdings, and Manulife’s S$747 million purchase of PwC Building at 8, Cross Street, from DBS.

Savills said the S$2.8 billion of commercial property investment sales in Q1 was a 41.9 per cent increase from the nearly S$2 billion in the previous quarter.

The residential sector saw S$2.1 billion of big-ticket sales in the first quarter, giving it a 40.2 per cent share. On a quarter-on-quarter basis, however, the Q1 tally was down almost 12 per cent, according to Savills.

C&W Singapore research head Christine Li highlighted the flurry of bulk residential sales in Q1 as some foreign housing developers sought to offload their remaining unsold units ahead of regulatory sales deadlines imposed on them under the government’s Qualifying Certificate rules – to avoid paying hefty penalties.

A string of last-minute deals were also inked on the night of March 10 – including TwentyOne Angullia Park, The Line @ Tanjong Rhu, Robin Residences and The Lumos – before the new Additional Conveyance Duties (ACD) took effect the next day.

The ACD plugged a loophole that some bulk buyers in Singapore residential projects had been using to enjoy significant savings in stamp duties.

Savills Singapore managing director Steven Ming said: “Unless annual residential prices are expected to rise significantly in the coming years, it is unlikely that institutions will return to the bulk residential sales market as the hefty 18 per cent stamp duty cuts deep into their required rates of return.”

The effect of this would be the shift of interest by institutional investors to other sectors of the real estate market here, he added.

Industrial properties posted S$344.2 million of investment sales in the first quarter, down 67.8 per cent quarter-on-quarter.

CBRE and Savills expect the total investment sales for 2017 to be in the S$18-20 billion region – down from around S$23 billion last year. C&W expects the number to remain in the S$20 billion range.

Mr Ming of Savills commented that with institutional investor interest expected to be diverted from residential towards the office, retail and hospitality sectors here, investment sales are expected to continue despite yield compression.

“As both private equity funds and ultra high net worth individuals have either raised new money or have a need to diversify to reduce concentration risk, yields have potential to remain low and go lower as prices will either hold firm or even edge up,” he reasoned.

Ms Li of C&W noted office asset prices are already starting to trend upwards, with rents expected to bottom this year.

In similar vein, CBRE Research’s head of Singapore and South-East Asia, Desmond Sim, argued that as the office recovery story gets more real in terms of rising commitment rates for new projects such as Marina One, this will push more institutional investors to be ready to commit.

CBRE predicts that by the end of the year, seven out of 10 institutional investors who are looking at the Singapore office sector will be ready to buy – up from five out of 10 investors now, which in turn is a higher ratio than just one out of 10 investors a year ago.

Regina Lim, JLL’s head of capital markets research, South-east Asia, observed that in the past four years, Singapore has seen a gradual decline in office demand, retail sales, food and beverage receipts, and gross domestic product growth.

As a result, the republic’s attractiveness to overseas institutional investors has waned, and they have gravitated to Australia, Japan and China commercial property, which have stronger growth stories.

“However, capitalisation rates in these markets have compressed and now Singapore looks less expensive in comparison to these markets.”

Mr Sim of CBRE said that on the residential sector front, while bulk purchases of units from developers have now become harder to do, there may be a bright spot in collective sales. “We should see more interest in en bloc sales from land-hungry developers, especially in the face of limited supply through the Government Land Sales Programme.”
– See more at: http://news.asiaone.com/news/business/investment-property-sales-drop-q1#sthash.8H86fsyp.dpuf

Sime Darby Centre for sale

Blackstone Group plans to sell Sime Darby Centre in Bukit Timah, one of the office and retail assets it acquired last year from Malaysian palm-oil producer Sime Darby Berhad, according to people familiar with the matter.

Located in an ageing commercial block along Dunearn Road and directly in front of King Albert Park MRT station, Sime Darby Centre houses tenants like kitchenware retailer ToTT, Scanteak, Cold Storage and ChildFirst pre-school. The block consists of builtup area of 250,000 sq ft — 80 per cent is office space and the rest is retail. The development sits on freehold and 999-year leasehold land parcels zoned for commercial use and with 1.8 plot ratio.

Blackstone owns a 70 per cent stake in the Sime Darby Centre and Sime owns the rest. The conglomerate, Malaysia’s biggest listed palm-oil producer, sold some property assets in Australia and Singapore to help pare debt.

The site could attract bids from large and mid-sized Singapore developers including Far East Organization, City Developments, Frasers Centrepoint and United Industrial Corp.

The New York-based private equity firm expects to fetch about S$300 million for Sime Darby Centre, which it bought for just under S$200 million last year. Blackstone in May acquired a majority stake in three Singapore property assets, including the Sime Darby Centre, in a deal that valued them at about S$300 million.

Blackstone, which manages more than US$100 billion (S$140 billion) in real estate assets worldwide, in the past has bought residential apartment blocks in Singapore’s prime area.

Condo rents pick up in Feb

Rents for non-landed homes picked up 1.1% in February, compared to January’s figures. This trend was seen across the CCR (core central), RCR (city-fringe) and OCR (suburban) regions. The improvements was likely due to expatriates coming to Singapore in the first half of the year, who were unlikely to be aggressive in negotiating down rents. Rents could dip or stagnate in the second half of the year as fewer expats arrive.Leasing volumes were seen flat though: 3757 (Feb) vs 3796 (Jan).

For the HDB market, leasing volumes improved slightly to 1477 units compared to 1459 in the previous month. Rents slid 0.8% in Feb from Jan.

Prime Waterfront Homes and Living in Singapore

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