Tag Archives: Prices

Prices, rents of industrial space taper off

Prices and rentals of industrial space kept moderating in tandem with occupancy rates in the third quarter after a rise in supply of industrial land and space by the Government in recent years.

Tender prices for industrial government land sale sites targeting multiple-user developments have also declined, said state industrial landlord JTC yesterday.

Indicies for industrial space and multiple-user rental fell by 1.8 per cent and 2.2 per cent respectively, quarter on quarter.

Year on year, those two indices declined by 1.3 per cent and 2.3 per cent respectively.

This is the first year-on-year drop in rentals since early 2010, in contrast to the average increase of about 8 per cent a year over the past four years, said JTC.

Prices of industrial space also kept stabilising, with the industrial space and multiple-user factory space price indices falling by 0.9 per cent and 1.8 per cent respectively, quarter on quarter.

These falls reverse their respective gains of 0.7 per cent and 2.5 per cent in the previous quarter.

Colliers International director of research and advisory Chia Siew Chuin said the fall in multiple-user factory prices is not surprising, given the subdued state of strata-titled industrial property sales amid a price standoff between buyers and sellers.

Year on year, the industrial space and multiple-user factory space price indices rose by 0.2 per cent and 3.4 per cent respectively, significantly slower than their average rises of about 16 per cent per year over the past four years.

After a 0.9 percentage point decline in the second quarter, the occupancy rate of the overall industrial property market edged up by 0.2 percentage point quarter on quarter to 90.9 per cent in the third quarter.

This was on the back of a 1 per cent rise in demand, outstripping a 0.8 per cent increase in supply.

The better occupancy rate was driven by the warehouse segment, mainly due to the take-up of a few new single-user warehouses.

For multiple-user factory space, the occupancy rate fell by 0.5 percentage point to 86.8 per cent, the lowest level since late 2007, as a 1.5 per cent increase in supply outstripped the 1 per cent increase in demand.

Year on year, the occupancy rate of the overall industrial property market slid 1.8 percentage points to 90.9 per cent.

For multiple-user factories, the occupancy rate fell by 3.3 percentage points to 86.8 per cent.

Looking ahead, about 1.2 million sq m of industrial space, including 167,000 sq m of multiple- user factory space, is set to come onstream this quarter, bringing the full year supply of industrial space to 3.1 million sq m.

A further 2.6 million sq m and 1.9 million sq m of industrial space is tipped to come onstream in 2015 and 2016 respectively.

This is significantly higher than the average annual supply and demand of about 1.4 million sq m and 900,000 sq m respectively in the past three years, and is likely to exert further downward pressure on occupancy rates, JTC noted.

The Government will keep monitoring the industrial property market closely to ensure that the diverse needs of industrialists are met, it added.

“Appropriate measures will also be introduced where necessary to promote a stable and sustainable industrial property market.

“JTC will also continue to develop more specialised and innovative facilities with productivity- enabling features such as shared facilities and services, to support the growth of key industry clusters and catalyse new ones in the coming years.”

Ms Chia reckons sentiment is expected to remain mixed in the final quarter, given the uncertainties surrounding the global economic recovery.

– See more at: http://business.asiaone.com/news/prices-rents-industrial-space-taper#sthash.hzcNEEzf.dpuf

Interactive Chart on Property market impacts

http://www.straitstimes.com/news/business/more-business-stories/story/interactive-charts-impact-singapores-property-cooling-meas

Recent cooling measures have clipped the wings of the once-soaring private property market in Singapore.

Tough measures such as a total debt servicing framework, which restricts a borrower’s monthly debt repayments to at most 60 per cent of his gross monthly income, has driven some buyers to aim for smaller homes with cheaper total prices.

This interactive Chart by Straits Times gives a macro view at how private home sales and prices have changed with each round of curbs

Resale Strata Offices set to increase in demand and price

Straits TImes 2 Aug
Singapore’s property market is having a slower year but one market segment might be in for significant growth – resale strata-titled offices in the central business district (CBD).

Prices of these properties are poised to climb this year owing to healthy demand, particularly from Chinese buyers, according to property consultancy CBRE.

Chinese buyers are the most active, having invested heavily in office buildings such as Samsung Hub and Springleaf Tower, it said.

CBRE said prices of such office units could rise by 5 per cent to 10 per cent this year, citing limited supply and rising office rents.

The average price for strata office resales was $1,677 per sq ft (psf) in the second quarter, going by caveats lodged with the Urban Redevelopment Authority. For new sales, the average was $2,073 psf in the period.

Strata offices can appeal to Chinese companies from industries such as insurance and commodities. “These buyers likely have a big base in China where their business is booming, and they want to venture out of China and expand to Singapore.”

As a result of their thriving business back home, such firms may also have pockets deep enough for them to buy an entire office floor in Singapore rather than subdivided units.

One recent resale transaction of strata office space was the sale of the 14th floor of Samsung Hub in Church Street for $39.7 million about two months ago.

This works out to around $3,030 psf for 13,110 sq ft at the 999-year leasehold office tower, which has 30 storeys.

The buyer was a Chinese company believed to be in the trading industry.

The seller is believed to be Arch Capital Management, a Hong Kong-based private equity real estate firm with links to Ayala Group of the Philippines, according to a Business Times report.

Chinese firms also snapped up eight out of 12 floors of office space in Springleaf Tower, put up for sale in the second half of last year. Springleaf Tower is a 37-storey building in Anson Road. The firms were in insurance, shipping and commodities.

The seller of all 12 floors was SEB Asset Management, part of German pension fund manager SEB. Prices ranged from $2,200 psf to $2,400 psf, reports said.

Some companies may prefer to buy completed offices rather than units that are still under construction, so that they can move in immediately.

Buyers of office space also “don’t want to be held ransom to landlords, so they become landlords themselves”.

One main reason is a widely expected spike in office rents in the CBD over the next two years due to a supply shortage.

Analysts predict that prime office rents in the CBD could climb by as much as 15 per cent to 16 per cent this year from last year.

This pace of office rental growth could even be faster than that in major global cities such as London, New York and San Francisco, property consultancy JLL noted in May this year.

The office components of mixed developments such as South Beach near Raffles Hotel, DUO in Bugis and Marina One in Marina Bay could be completed within the next few years.

A similar article on strata office in Business Times (in the first quarter) was found and attached here for reference.

Click to access pg28-29.pdf

Continued dismay for private housing market

The number of units sold in June fell by 68 per cent from the previous month to 482 units, according to data by the Urban Redevelopment Authority.

Sales of private homes by developers in Singapore fell by about two-thirds in June from May, hurt by ongoing Government measures to cool the housing market.

Data compiled by the Urban Redevelopment Authority (URA) on Tuesday (July 15) showed developers sold 482 units in June, down 68 per cent from May when sales of 1,488 units were booked.

The bulk of the sales involved homes located outside the central region, with 269 units changing hands. Another 46 sales were made in the central region, while the rest of central region accounted for 167 units, the URA data revealed.

http://www.channelnewsasia.com/news/business/singapore/singapore-private-home/1264624.html DSC06973

HDB prices fall

http://www.channelnewsasia.com/news/singapore/hdb-resale-prices-fall-to/1251928.html?cid=FBSG

The resale prices for Housing and Development Board (HDB) flats fell to a two-year low after it slipped 0.6 per cent month-on-month in June – the fifth consecutive months of declines, according to the Singapore Real Estate Exchange.

According to the SRX HDB flash report released on Thursday (July 10), the price drop affected 3-, 4- and 5-room flats, which saw a price decline of 0.6, 0.8 and 0.3 per cent, respectively, compared to May. Executive flats, however, saw a rise in price by 1.3 per cent.

June’s HDB resale prices marked a new two-year low since April 2012. Compared to the peak in April 2013, prices for resale flats have declined by 6.8 per cent, SRX said.

In June, 1,315 HDB flats were sold, five less than the 1,320 transacted units in May, SRX added.

Rental volume and prices also fell for June. An estimated 1,590 HDB flats were rented out in June, and this was a 2 per cent decrease from May’s 1,622 units. Rental prices fell 1.1 per cent on-month, reaching a new low since January 2012, the report stated.

TOX STILL NEGATIVE

The overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX estimated market value, remained at a negative S$4,000 for June.

The majority of HDB towns – 18 out of 26 estates – saw negative median TOX in June. Among HDB towns with more than 10 transactions, the lowest median TOX are in Hougang, Punggol and Sembawang, at negative S$9,000, negative S$8,100 and negative S$8,000, respectively.

Bucking the trend is Geylang, which was the only town with a positive median TOX of S$1,500, SRX said.

Is it time to review the cooling measures?

According to an article in BT this month, property developers have collectively paid up to $55.1 million in extension fees for unsold units in their private condo projects since 2012. They could potentially fork out another $80.7 million to extend the sales period for another year if they do not sell their inventory by year-end,

24 condo projects, consisting primarily high-end ones, are still not fully sold two years after receiving their temporary occupation permits (TOPs) between 2010 and 2012, the study showed.

“Foreign developers” under the Residential Property Act (RPA) —  developers with non-Singaporean shareholders or directors — need to obtain QCs to buy private land for new projects. Thus the QC rules apply to all listed developers. Few developers exempted from the rules include privately owned Far East Organization and Hoi Hup.

As QCs allow developers up to five years to finish building a project and two more years to sell all the units, the heat is on developers to clear their stock by the deadline.

To extend the sales period, developers pay 8 per cent of the land purchase price for the first year of extension, 16 per cent for the second year and 24 per cent from the third year onwards. The charges are pro-rated based on unsold units over the total units in the project.

Such fees drove luxury residential player SC Global to delist from the Singapore Exchange last year after sales slowed significantly due to the government’s property cooling measures.

Analysts warn that more extension charges will kick in. The charges paid up so far are just the tip of the iceberg as projects built from land acquired during the 2006-2007 en bloc fever have just crossed a seven-year mark, they say.

“More developers are caught between a rock and a hard place” as they have to decide whether to pay the extension charges or cut prices to move the units, said SLP International executive director Nicholas Mak.

If they pay for extension charges, there is also the question of whether they can recover these costs later on, he said. This is why some developers of luxury projects are resorting to selling the units in bulk to mega investors.

OrangeTee’s study of the 24 projects excluded three projects whose land costs could not be determined. It tracked sales of projects through caveats lodged, which it conceded could be lower than actual sales.

At the end of the first quarter of this year, there were 10,295 unsold units in the Core Central Region (CCR), 8,089 in the Rest of Central Region (RCR) and 12,433 in the Outside Central Region (OCR).

Based on URA caveats, there are 71 unsold units in Wheelock Properties’ Scotts Square that TOP-ed in 2011 and 16 unsold units in Wing Tai’s Helios Residences, which also TOP-ed in the same year.

“As unsold inventory builds up, there will likely be more bargains in the market if developers want to avoid paying penalties to extend the sales period, especially high-end developers who have already paid premium prices for their lands,” Ms Li said.

The study excluded the fees that developers need to pay to extend the completion of projects beyond five years, as they can typically extend without paying the charges “based on technicalities”.

Even in a more optimistic scenario where developers manage to sell 20 per cent of the remaining units for the rest of this year, further extension charges to be paid by developers by end-2014 will amount to around $68.3 million.

Some market watchers noted that the QC rules should mark a distinction between larger and smaller projects, given that it takes a longer time to move all the units in large projects in a difficult market as the current one.

Century21 chief executive officer Ku Swee Yong said that demand for high-end projects had been hit hardest by higher additional buyers’ stamp duty (ABSD) since January 2013 and a borrowing cap under the total debt servicing ratio (TDSR) since June last year.

Even if a developer decides to set up an investment company to buy the units and rent them out, the company could be hit by a 15 per cent ABSD and is restricted by a loan-to-value limit of 20 per cent.

While there is good reason for having QC rules to regulate foreign participation in the housing market, these rules were in place before the ABSD and TDSR. “It is about time we review these measures,” Mr Ku said.

http://www.btinvest.com.sg/dailyfree/unsold-homes-big-drag-developers-coffers-20140607/