Marina One to be launched in a cautious tone

M+S Pte Ltd, the developer behind the mega mixed-use project Marina One, is taking a calibrated tack with its upcoming launch of the residential units in the development, and is dangling early-bird discounts of 10 per cent on selected units.

On the expected launch date of Oct 11, it will release only 150 to 200 units in the first block, instead of all 521 at a go.

It will also hold back the release of the 521 units in the second residential block until after the project’s temporary occupation permit (TOP) is issued, said Kemmy Tan, the chief operating officer of M+S.

Prices at Marina One Residences will range from S$1,960 to S$3,100 per square foot (psf), which is on par with transacted prices in the area, she added.

Market watchers believe that holding back half the residential units until TOP is a move to avoid flooding the market with too many units upon the project’s completion in 2017, which could weigh on the rental market in that area.

Nicholas Mak, the executive director at SLP International, said: “This is to reassure buyers that they are not going to flood the market, but it does not change the fact that there are 1,042 units in the project.”

But Ms Tan explained that the rationale for holding back the second residential block was to allow the developer to “ride on the future growth of Singapore”.

M+S is not required to finish selling the units within a stipulated time because it does not come under qualifying certificate (QC) rules, under which a developer has to finish building a residential project in five years and sell the units within two years of its completion.

M+S, a joint venture between Temasek Holdings and Malaysian sovereign wealth fund Khazanah Nasional, was set up after a historic land swop between the two countries.

Its other project in Singapore, the 660-unit Duo Residences in the Ophir-Rochor area, is already 94 per cent sold.

Ms Tan said she expects the profile of buyers for Marina One Residences to be similar to that of Duo Residences, where 70 per cent of buyers are Singaporeans and 14 per cent, Malaysians; some of these buyers were bulk purchasers.

While the window for expression of interest will close only this Sunday, the first 150 to 200 units to be released are already over-subscribed, she said.

The pricing list from agents indicates that a one-bedroom unit of 700 sq ft starts at S$1.4 million; a two-bedder of 1,001 sq ft starts at S$2 million, and a three-bedder of 1,539 sq ft, at S$3.46 million.

Some consultants note that such price levels could still prove challenging, given similar price quantums for some freehold units in prime districts. In addition, there are more developments coming up in the Marina Bay area.

Ms Tan said, however, that Marina One is expected to draw empty nesters looking for city apartments, investors looking to rent to expatriates and seasoned buyers scouting for “trophy assets” here.

Potential buyers can be looking at a rental yield of 2 to 3 per cent in the area and capital appreciation, given URA’s masterplan for Marina South, she said.

One major draw of the project is “the Green Heart” – a biodiversity garden of lush greenery covering 65,000 sq ft and featuring a 13.2 m high waterfall, she added.

The project is also seamlessly connected to four MRT lines via three stations – the Marina Bay station, Downtown station and the future Shenton Way station.

Ms Tan said: “We are ready (to launch) and there is demand, especially since Duo is substantially sold at 94 per cent. I have buyers who come to me to ask when we are going to launch this.”

Hotel style condo in Farrer Park

The project, Forte Suites, with homes ranging from one-bedroom units to penthouses, has seen about 20 per cent of its units sold since its soft launch three weeks ago.

Prices started from $1,600 per sq ft (psf).

JForte Holdings, whose subsidiary Forte Development is building the freehold project, said it has designed it as a hotel-style condominium.

It has extra touches, including a day concierge service, high ceilings and en suite jacuzzis in some units.

The project near Farrer Park lies within the so-called “golden triangle” of three upcoming and existing major medical hubs.

They are Connexion’s medical suites in Farrer Park, Health City Novena and the Orchard Road and Tanglin medical belt, said JForte Holdings chairman Jason Lee.

Nearly half the units sold during the soft launch went to foreign buyers, with some to frequent medical tourists, he added.

Property consultants said they are expecting sales to be brisk, given the launch performances of Highline Residences and Seventy St Patrick’s earlier this month.

“The market has been given an improved boost from these projects. I expect this project to echo a similar response,” said Mr Donald Han, managing director of Chesterton Singapore.

Resale prices in the area have fallen by about 7 per cent over the past year – from the third quarter of last year to the second quarter of this year.

This decline was in line with the fall in resale prices islandwide, said R’ST Research director Ong Kah Seng.

Resale prices over the past year ranged from $946 psf at the 99-year leasehold Kentish Green to $1,466 psf at the freehold Urban Lofts.

The smaller size of projects here means most do not see more than 10 leases signed each quarter, said Mr Ong.

But there is “definitely ongoing interest from expatriates to rent apartments here”, he added.

This is because the area is not too far from Novena, where foreign health-care professionals may be working.

In July, a two-bedder at Oxford Suites of 1,000 to 1,100 sq ft commanded a monthly gross rent of $3,850. A one-bedder in R66 Apartments in Rangoon Road of about 400 to 500 sq ft fetched monthly gross rent of $2,800 last month.

The gross yield in the area is about 3.9 per cent, slightly higher than the islandwide average gross yield of 3.8 per cent in the first half of this year.

Newer projects in the area include Cityscape at Farrer Park in Mergui Road, 8 Farrer Suites and Jool Suites in Sing Joo Walk and Rangoon 88 in Rangoon Road.

Overall, the investment outlook for the area is positive, given its long-established positioning as an upmarket residential area for upper-middle income families and tenant-expatriates who prefer a quieter yet conveniently located living environment, said Mr Ong.

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High life at low cost

ARCHITECT Tan Cheng Siong has come up with a grand scheme that he says could triple Singapore’s land space by creating a vast network of elevated decks.

This vision, which he calls “Skyland”, involves elevated decks of about 20m wide or more, built to link MRT stations above the rails and available for use by cyclists and pedestrians.

Affordable homes could also be built on the decks, said Mr Tan, who designed Singapore’s first condominium (Pandan Valley) and its first super high-rise (Pearl Bank Apartments).

This vast project would free up enough space to ensure there is no need to increase plot ratios or even have people living underground to cope with the rising population, Mr Tan told The Straits Times on Tuesday.

“We have all this space in the sky, which can provide Singapore with low-cost land for the next 50, 100 years.”

He has been displaying his vision at the inaugural architecture exhibition ArchXpo at Marina Bay Sands over the past three days.

He said the authorities are aware of his plans but will, of course, require time to consider the massive proposal.

Under his plan, the Government would repossess HDB land in more mature estates where old flats would need replacing.

Above these areas, the Government would build elevated decks to link MRT stations, or community malls. The cost, he believes, would be at about $100 million for every 1km, or $60 per sq ft (psf).

This is money that a central authority – likely the Housing Board – may recoup by tendering the newly created space to developers, at about $100 psf.

Citizens may buy a 1,000 sq ft plot to build their home at about $150 psf, with a renovation budget of $50 psf. This would bring the total cost to $200 psf, or $200,000 per 1,000 sq ft unit.

The land below the decks may be re-zoned for enterprise use or communal, low-rise facilities for sports, schools or other amenities.

In this way, business space could be more affordable for small and medium-sized enterprises as well, Mr Tan said.

He added that with the safe separation of cyclists and pedestrians from cars, Singaporeans could also save on travel costs.

So instead of having super high-rises, Mr Tan hopes these homes will be a maximum of 50m to 80m high, or 15 to 20 storeys.

He said a good place to start would be older HDB towns such as Serangoon, Ang Mo Kio or Toa Payoh.

However, he envisions linking up the largely residential north as a “north constellation of hubs”.

Under his proposed master plan, the green spaces in central Singapore could be preserved, as there would no longer be any need to eat into them.

Mr Tan also has plans for some of the major trade and communications infrastructure.

He proposes what he calls the “south world corridor” – which includes the airport and ports and will take time to evolve – “built to engage the world and present the best with tourist icons”.

Additions he is suggesting include V-shaped office towers, which would allow more open space below, and a Marina South extension to Gardens by the Bay which will again leave ground space for public use.

“We built a city with low- cost housing. I’m sure we can build a future with low-cost land,” said Mr Tan.

 

Investment sales up in Q3

Investment sales of property – big-ticket transactions of at least S$10 million – have risen this quarter, on the back of a more than tripling in the value of hospitality assets sold, mainly in connection with the listing of Frasers Hospitality Trust.

Moreover, office transactions have continued to post stellar performance with rental recovery firmly in place and expected to continue amid tight supply.

According to figures from Savills Singapore, nearly S$5.4 billion of investment sales were transacted this quarter up to Sept 23. This is 13.6 per cent higher than the Q2 figure of S$4.7 billion and the best showing in four quarters. However, the Q3 number is 61.2 per cent down from a year ago.

CBRE too has a similar figure so far this quarter, reflecting 10.7 per cent expansion from its Q2 number. This takes the year-to-date number to S$15.3 billion and the group’s executive director, Jeremy Lake, predicts that the year would end with S$18-20 billion.

Savills’ figure for the first nine months is slightly over S$14 billion and its managing director, Steven Ming, expects S$17-19 billion for the full year.

Both houses’ forecasts would be significantly lower than the annual figures hovering around S$30 billion for each of the past four years. Investment sales are often seen as a gauge of developer and property investor confidence in the medium to long term. Overall sentiment in the property market has been dented by the total debt servicing ratio framework announced in late June 2013.

That said, the office market continues to shine. About S$1.94 billion of office deals have been sealed this quarter, up from S$1.25 billion in Q2, going by Savills’s analysis. This quarter’s number marks the best performance since Q4 2012, when the figure was S$2.75 billion. Major transactions in Q3 include Straits Trading’s divestment of its namesake building in Raffles Place, and Keppel Land’s sale of its one-third stake in Marina Bay Financial Centre Tower 3 to Keppel Reit.

CBRE’s Mr Lake noted that office buildings have continued to be sold this quarter at higher prices, reflecting the optimism that the market has for offices due to the recovery in rents, which is well in place – driven predominantly by shrinking vacancy and tight supply. “There are only two major office projects to be completed from now till late 2016,” observed CBRE research head Desmond Sim.

Mr Lake expects additional demand to be generated by the impending displacement of tenants at Equity Plaza, which has around 250,000 square feet of net lettable area, as the building’s new owners have served notice to tenants to vacate the building by March 2015 ahead of an extensive renovation.

Despite the quarter-on-quarter rise in office investment sales, transactions of commercial properties as a whole (including retail) have slipped 14.6 per cent to S$1.97 billion, said Savills. “The fall is due to no commercial sites released under the Government Land Sales Programme as well as lack of retail block transactions for the quarter.”

Commercial property made up the largest share, 36.7 per cent, of this quarter’s total investment sales.

Meanwhile, the residential sector saw a 31.7 per cent drop in transaction value to S$1.14 billion. It accounted for 21.3 per cent of total investment sales.

Savills Singapore research head Alan Cheong said: “As long as the residential cooling measures are in place, home sales will suffer from inertia, which in turn will restrain developers in land bids at state tenders.”

Transactions of hospitality real estate jumped to S$834 million this quarter, from S$248 million in Q2. The bulk is due to the InterContinental Singapore in Bugis and Frasers Suites Singapore arising from the listing of Frasers Hospitality Trust in July.

Looking ahead, Mr Ming said: “We anticipate continued interest in the Singapore investment market as there are some signs of bid-ask gaps closing in the private sector. This is the result of investors who need to deploy their capital and sellers who are seeking to divest for various reasons – whether fund-maturity concerns or to recycle their capital into other opportunities.”

Besides continuing interest in the office sector, Mr Ming highlighted interest in bulk purchases of residential units, especially in the high-end segment. “Although the near-term outlook remains hazy, the thesis for a strong capital value recovery over the mid-to-long term is gaining credibility.”

Both Mr Ming and Mr Lake said that a key challenge to Singapore real estate deals these days is competition from overseas property.

Grade A office rents to hit six year high

Singapore Grade A office rents are expected to rise to their highest levels since 2008 by year’s end, commercial real-estate services firm Cushman & Wakefield predicted on Wednesday.

This comes as average Grade A overall rents have already risen to their highest in three years to S$10.20 per square foot per month – 2 per cent higher than a quarter ago, and 9.9 per cent stronger than a year ago.

The third quarter became the sixth consecutive quarter of rental increases, a result of the increasing scarcity of Grade A space in areas such as Marina Bay and Raffles Place.

New leases taken up during the quarter included advertising and marketing firm Publicis taking up 33,000 square feet (sq ft) of space at Income@Raffles.

Over at 6 Battery Road, insurance broker Willis signed a lease for about 22,000 sq ft of space; management consultancy firm Bain & Company took up an 18,000 sq ft unit in South Beach.

Cushman & Wakefield expects strong leasing activity in the fourth quarter, with the expected completion of CapitaGreen and South Beach, with net absorption on track to reach 800,000 to 900,000 sq ft this year.

A firmer take-up in Marina Bay Financial Centre lowered the vacancy rate for Marina Bay from 6.6 per cent to 6.1 per cent, said Cushman & Wakefield.

The average effective monthly rent for Marina Bay rose to S$13 per square foot (psf) per month, a 0.4 per cent increase from a quarter ago.

Rents at Raffles Place in the third quarter held stable at S$10.25 psf per month.

The average rent in Shenton Way crept up 0.6 per cent from the previous quarter to S$8.40 psf per month, while Orchard Road rents rose one per cent to S$9.80 psf per month.

Rents in the City Hall and Marina Centre areas increased 5.5 per cent to S$9.50 psf per month.

“With prime rents expected to continue to rise, those tenants for which a Grade A location is not essential are likely to look further afield to the suburbs, which may lead to further decline in vacancy rates there.”

Office vacancy in the suburbs declined from 2.5 per cent to 1.8 per cent, with financial institutions managing occupancy costs by consolidating space and relocating back-office functions to the suburbs.

http://www.btinvest.com.sg/property/commercial-industrial/grade-office-rents-hit-six-year-high-20140925/

Prime office rents to rise 25% over next 5 years

Prime office rents here are expected to soar by 25 per cent over the next five years, global property consultancy Knight Frank Asia Pacific said in a report yesterday.

In terms of rental forecasts, Singapore took the lead with the highest level of growth in office rents among six Asia-Pacific cities, beating Tokyo and Hong Kong, ranked ninth and 12th respectively.

The Republic also climbed 10 places to take fourth spot among 15 leading cities globally, despite sitting at the bottom of the list from 2008 to the end of last year.

According to the inaugural Global Cities Report 2015, which assesses the impact on the office markets of these 15 cities, the world’s top cities will see prime office rents reach “record highs” by the end of the decade.

Its Global Cities Index, which tracks the prime office rents of the 15 cities, is forecast to grow by 19.9 per cent over the next five years, rising even above its pre-global financial crisis level in 2008 around mid-2015.

“Looking ahead, prospects for the office market (in Singapore) are positive, in light of anticipated healthy demand from companies looking to set up business or expand in Singapore,” said market analyst.

“Singapore is increasingly viewed as a strategic launch pad for more global companies to expand into South-east Asian markets, with our robust business, legal framework and physical infrastructure.”

The “fairly modest” supply of new prime-grade office space over the next few years would sustain prime office rental growth.

“This would fuel interest in Singapore office space investments with stable capital values.”

By 2019, office vacancy rates will drop in the top 10 cities globally, including Singapore, reaching an average vacancy rate of 6.3 per cent. This is down from the 7.8 per cent average vacancy rate logged this year.

This is being caused by the “restricted supply of new office stock in conjunction with (a) heightened demand for commercial space”, said the report.

Market expert said the technology sector has become a key driver of office space demand in Asia, while the financial services and banking sectors have stepped back.

Low bids in Tuas site reflects cooling market

A TUAS Bay Close industrial plot for which the highest bid was shy of the consultants’ forecasts points to further signs of a cooling industrial property market, as the effects of the government’s anti-speculation measures kick in.

Mezzo Development beat two other bidders, Wee Hur Development and Soilbuild Group Holdings, to submit the top bid of S$25.5 million, JTC announced on Tuesday. This works out to S$51.28 per sq ft per plot ratio (psf ppr).

This land price is the lowest since a Yishun Street 23 plot sold in Oct 2010 for S$64 million (S$51.10 psf ppr), SLP International executive director Nicholas Mak noted.

Another B2-zoned plot in nearby Tuas South Avenue 7 – dubbed Plot 12 and which has about the same size and tenure – sold for S$31 million (S$56.01 psf ppr) in August. Already considered a low price then, it was still higher than that of this latest winning bid.

Last April, another Tuas Bay Close site, where the West Star building now stands, went at S$37.1 million (S$81.19 psf ppr).

Mr Mak said yesterday’s lower-than-expected bid could have been the result of the large supply of and potential competition from B2-zoned sites for sale in the Tuas Bay Close area.

B2-zoned sites are meant for heavier and more pollutive industrial use.

That said, the three bids were within the range of two to five bids which consultants expected.

The 2.7ha site is one that can be strata-subdivided for sale and is expected to be developed into a multi-user ramp-up factory. Mr Mak expects the breakeven price to range from S$220 to S$250 psf.

It comes with a 30-year tenure with a maximum gross plot ratio of 1.7, which means it can be developed into a project with a gross floor area of up to 4.6 ha.

R’ST Research director Ong Kah Seng noted that the winning bid was 22 per cent higher than the second highest bid of S$20.9 million (S$41.99 psf ppr) submitted by Wee Hur Development.

“That the winning developer bid is much higher than the rest shows that it has a stronger confidence in the site, but it also shows that the rest of the bidders at large were not very aggressive, which suggests developers’ dwindling interest for the conventional factory development,” he said.

Only two large land parcels – along Tampines North Drive 2 and Penjuru Road – are left for sale in the “confirmed list” of the industrial government land sales programme until the end of the year. When their turns come, their bids may take a cue from yesterday’s tender results, Mr Mak said.

 

Singapore number 6 costliest to locate workers

Singapore is the sixth most expensive city for companies to locate employees, according to a new survey.

The survey compiled by property firm Savills measures the total yearly costs per employee of renting living and working space in US dollars in 12 cities, as well as additional costs such as local taxes. The ranking in the form of an index was launched in 2008, with Singapore also coming in sixth that year.

London topped this year’s list, overtaking Hong Kong, which had previously led the pack for an unbroken five-year period.

Changes in total living and working costs reflect not only the strength of a city’s residential and office markets and occupier taxes and costs, but also the impact of fluctuating exchange rates, Savills said.

The sterling’s appreciation against the greenback up until June, coupled with significant increases in office rents, pushed up London’s total costs in US dollar terms. Real estate costs in the British capital grew in US dollar terms by an annualised rate of 10.6 per cent in the first six months of the year.

Despite climbing from fifth to first place since 2008, London is still off the record set by Hong Kong in 2011 at US$128,000 per employee per year. Hong Kong’s position relative to the emerging markets of mainland China means that it is likely to remain an attractive location for companies, despite property-market cooling measures.

It remains by far the most expensive city in which to buy a home, with prices 40 per cent higher than London’s, said Savills.

At the other end of the table, costs in comparatively affordable Rio de Janeiro have risen 85 per cent since 2008, while they are up 58 per cent in Sydney.

Mumbai retains its position as the cheapest city, at about US$30,000 per person per year, down 21 per cent in US dollar terms since 2008.

“This year has seen much more modest real estate price growth in nearly all our world cities and some have shown small falls,” said Ms Yolande Barnes, director of Savills World Research.

“We expect this subdued trend to continue as investor interest and market activity shift to second-tier cities.

“This lower level of price growth means that currency fluctuations have produced some of the biggest changes in our rankings, which are expressed in dollar terms.”

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Developer Hiap Hoe selling 39 strata-titled shops

Local property group Hiap Hoe is selling 39 strata-titled shops for about $85 million, as part of moves to divest non-core assets.

The units are in three commercial buildings across the island.

The biggest tranche is in the basement of Parklane Shopping Mall in Selegie Road where a suite of 33 shops is on offer for about $55.6 million.

Hiap Hoe wants to sell the units, which have 59 years left on their lease, to a single buyer, said Mr Karamjit Singh, head of investments and residential at Jones Lang LaSalle, yesterday.

The selling price works out to about $2,200 per sq ft (psf), based on the units’ strata floor area of 25,317 sq ft.

They represent 17 per cent of the entire building’s share value.

“This offering poses an attractive play to investors as it offers an almost exclusive use of the basement level, which would allow scope for repositioning and improving the tenant eco-system, such as introducing a new crowd-pulling anchor,” said Mr Singh.

“Some investors may also find it attractive to acquire the units in bulk, with a view to selling down the units individually at a later stage.”

Hiap Hoe is also selling two units on the fourth floor of Parklane with a total price of about $4.75 million – or $1,300 per sq ft – expected.

The units, which house a karaoke lounge, have a combined floor area of about 3,660 sq ft.

Parklane tried unsuccessfully for a collective sale in 2007.

Owners at the neighbouring Peace Centre and Peace Mansion shopping centres tried to sell en bloc in 2011 for $700 million but that also fell through.

Mr Singh thinks buying interest in the units would still be strong as investors are increasingly looking at commercial property – especially retail units.

He noted that as well as the rental income, investors will not have to stump up the additional buyers’ stamp duty levied on residential property.

“There’s an upside because once the tenants do well and develop goodwill, they can afford to pay higher rentals,” he said.

Last year, a basement unit at Parklane changed hands for $2,192 psf.

Based on the indicative price of $55.6 million, annual yields at the units are estimated to be 3.5 per cent, said Mr Singh.

Three shops at Bukit Timah Plaza with 61 years left on their leases are also up for sale.

Two of the units on the basement level have a combined floor area of 1,206 sq ft and a price tag of $3.86 million, said Jones Lang LaSalle.

A larger unit of 4,930 sq ft is on the ground floor, with a selling price of $1.83 million.

At Balestier Point, a freehold unit of 5,608 sq ft being used as a nightclub is going on the market for $8.4 million.

The expression of interest for the shops will close at 2.30pm on Oct 29.

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Marina One attracting investor interest

In the slow property market, the developer of the expansive Marina One Residences is dangling a 10 per cent early bird discount as it releases about 200 units.

The units, at one of two residential towers, with 1,042 units in all, will be launched only after the project gets its temporary occupation permit.

But developer M+S said it is “very pleased” with the interest in the preview period, which started on Sept 13.

“Over 800 people came to our showflat in the first weekend,” said M+S chief operating officer.

The project’s location and connectivity – near four MRT lines – and its backing by Khazanah Nasional and Temasek Holdings make it an attractive investment.

The project will be officially launched for sale on Oct 11. Bulk sales of at least three units will begin today.

Already, more than 200 prospective buyers have put in expressions of interest.

M+S will likely release 150 to 200 units at $1,960 to $3,100 per sq ft (psf) at the launch – more, subject to response.

This translates into starting prices of $1.4 million for one-bedders of 657 to 775 sq ft, and more than $2 million for two-bedders, which range from 969 to 1,130 sq ft.

The project also has three- and four-bedders and penthouses, with penthouse prices on application, but at least above $20 million for the 6,469 to 8,568 sq ft units.

Of the prospective buyers, about 70 per cent are investors and the other 30 per cent are owner-occupiers.

About 20 per cent of prospective buyers are foreigners so far with strong Malaysian interest. M+S has a sales gallery in Kuala Lumpur as well.

While rental yields are expected to be 2 to 3 per cent, it could improve significantly in years to come.

“We are looking to be the continued location of choice in the long term…We have a critical mass in retail offerings and are not just a standalone residence, compared with other developments.”

Overall, Marina One, scheduled for 2017 completion, comprises a gross area of about 3.67 million sq ft – two 34-storey residential towers, two 30-storey Grade A office towers with about 1.88 million sq ft of net lettable area, a 140,000 sq ft retail area for about 110 shops, and a 65,000 sq ft garden.

The company is still negotiating the leases, but has already found an anchor gym operator as well as foodcourt operator.