By MICHELLE TAN

(SINGAPORE) A commercial site boasting corner frontage along Sengkang West Avenue and Fernvale Road, has been launched for tender yesterday by the Housing & Development Board (HDB) and is slated to close on Jan 17, 2012.

The 99-year leasehold plot in Sengkang has a site area of 94,618 square feet (sq ft) and a maximum plot ratio of 3.0, which translates to a maximum allowable gross floor area (GFA) of 283,854 sq ft.

Expected to be developed into a landmark commercial development catering to the lifestyle needs of those residing in the north-eastern parts of Singapore, the land plot is also easily accessible via the Fernvale LRT Station as well as expressways such as Tampines Expressway (TPE) and Central Expressway (CTE).

Sharing his insights on prospective demand, Donald Han, vice-chairman at Cushman & Wakefield, noted that the site should be ‘well-received’ and is of a good-size to develop a ‘sizeable’ retail mall.

Head of research at Savills, Alan Cheong, also expects the tender to draw a fair number of bidders as sub-urban malls remain in short-supply. He expects likely buyers to comprise either unlisted real estate funds or developers with the aim of selling the completed project back to real estate investment trusts (Reits).

Bid-wise, both property veterans expect a relatively varied bid-profile for the site.

Predicting bids to be around $800 per square foot per plot ratio (psf ppr) for the Sengkang site, Mr Han said that the final numbers are ultimately dependent on the land parcel’s composition of use. Notably, a mixed retail-cum-residential project would likely garner higher prices than a pure retail one.

Competition from surrounding malls was also a common theme cited by both experts that could potentially dampen bidding sentiment for the tender site, as nearby mall, Compass Point, is better located because of its proximity to Sengkang MRT Station, which is along the major North-East Line.

Meanwhile, in the residential tenders scene, T G Development Pte Ltd and Master Contract Services Pte Ltd have jointly clinched the Miltonia Close condo site in Yishun at a price of $138.9 million which translates to about $364 psf ppr.

Property analysts note that the bid for the 99-year leasehold site, is lower than that achieved in recent residential developments in the vicinity, reflecting a more cautious stance amongst developers.

Source: Business Times 22 Nov 2011

The tender for the industrial site at Gambas Avenue and Gambas Cresent closed on Thursday with five bids, the Urban Redevelopment Authority announced.

The top bid of S$78.17 million from HLS Development Pte Ltd, translates to $1,459.26 per sqm per plot ratio of 2.5 for the 21,426.7 sqm site.

Originally on the Reserve List of the Government Industrial Land Sales Programme, the site, which was put up for sale by the government in October, carries a 60-year lease.

Source: Business Times 17 Nov 2011

By UMA SHANKARI

(SINGAPORE) Singapore dropped three rungs to take 19th spot in a quarterly ranking of the world’s most expensive retail destinations.

Crowd-less shops: CBRE noted that as the eurozone crisis continues to affect consumer confidence, rents have levelled off in all global regions in the third quarter of 2011

According to new research from property firm CBRE, the city-state fell to its third-quarter position from 16th spot in Q2.

New York City remains the world’s most expensive shopping destination as retailers focus on the major fashion capitals.

CBRE noted that as the eurozone crisis continues to affect consumer confidence, rents have levelled off in all global regions in the third quarter of 2011.

Total retail rents at a global level were broadly flat quarter on quarter in Q3 2011. Rents in the Americas fell 2 per cent while rents were unchanged in the Asia-Pacific and Europe, Middle East, and Africa regions. This represents a significant slowdown from earlier in the year as retailers take a more cautious approach to expansion, CBRE said.

New York’s Fifth Avenue remains the world’s most expensive shopping street, with rents holding steady at US$1,900 per square foot (psf) per annum. Hong Kong (US$1,695 psf per annum) remained in second position with annual rents in 2011 rising by 53 per cent as the number of high-profile leasing deals completed at key locations on Pedder Street continued apace.

Rents in Singapore stood at US$455 psf per year.

Ray Torto, CBRE’s global chief economist, noted that in spite of the uncertain economic outlook, retailers continue to expand their store networks.

‘The emerging markets, particularly Asia, provide attractive opportunities for growth, although prime locations in Europe’s biggest cities are also attracting a high level of occupier demand, as consumers increasingly target major destinations with the widest choice of retailers,’ he said.

‘Overall, however, retailers have been taking a more cautious approach to expansion, resulting in flat rental growth across the globe in the third quarter – a considerable slowdown from earlier in the year.’

Source: Business Times 17 Nov 2011

By KALPANA RASHIWALA

(SINGAPORE) Mapletree Business City (MBC) at Pasir Panjang Road is said to have bagged two more tenants for its business park towers. Toshiba will be taking nearly 52,000 square feet and Samsung Asia, 80,000 sq ft.

Getting full: With Toshiba and Samsung Asia getting on board, MBC’s total net lettable area of about 1.73 million sq ft is about 90 per cent let

This means that MBC’s total net lettable area of about 1.73 million sq ft is about 90 per cent let. The development was completed in April 2010.

Samsung Asia is expected to lease the top two floors of the 17-storey Block 30 at MBC. It will move out of 50,000 sq ft of leased premises at Samsung Hub on Church Street.

Toshiba’s move to MBC will be a consolidation out of two existing locations – Alexandra Technopark and Gateway, say industry sources. At MBC, it will occupy one and a half floors in Block 20 West. Colliers International is understood to have brokered the Samsung leasing deal and CBRE the Toshiba deal.

Jones Lang LaSalle’s head of markets, Chris Archibold, notes that the majority of large leasing deals this year have been outside the CBD as occupiers have become more cost-sensitive given the current economic climate.

Occupiers looking for a single floor at MBC, for instance, can expect to pay an effective gross monthly rental of around $6-plus per square foot – compared with $11-13 psf for a new office development in the Raffles Place/Marina Bay area.

‘So far this year, there’s been only one deal of at least 100,000 sq ft in the CBD – Marsh & McLennan at Asia Square Tower 1. The other five deals of this size were outside the CBD – Credit Suisse at Changi Business Park, Deutsche Bank and Nike each at MBC, Ministry of National Development (and two of its statutory boards) at Jurong Gateway and DNV at Science Park 1,’ said Mr Archibold. JLL has brokered the majority of the large deals so far this year.

In contrast, last year saw 10 office leasing deals of at least 100,000 sq ft in the CBD. ‘But that was an exceptional year and driven by new supply – such as Asia Square, OUE Bayfront, Marina Bay Financial Centre and Ocean Financial Centre. Between 2000 and 2011, there were a total of 23 office leasing deals of 100,000 sq ft or more in the CBD, and of these, all but one involved tenants moving to new buildings,’ added Mr Archibold.

MBC comprises an 18-storey office block which is fully leased, and three business park towers, of which two (20 East and 20 West) are connected at the upper levels. 20 East is fully leased to HSBC and Unilever.

As for 20 West, following the lease signed with Toshiba, only one floor (33,000 sq ft) is available. Novartis, American Express, Ricoh and Credit Agricole are some of the other tenants in the block.

Block 30, where Samsung is headed, is left with three floors or 120,000 sq ft. SAP, Nike and Deutsche Bank are among the other tenants in the tower.

MBC’s owner, Mapletree Investments, is said to be looking at plans to redevelop MBC’s second phase on the adjacent land currently occupied by The Comtech.

The Comtech and MBC are on an over one million sq ft site which has a single title and which formerly housed Alexandra Distripark, comprising five blocks. In 2003, Mapletree upgraded two blocks to The Comtech, which houses data centres of banks and technology companies, and later tore down the other three blocks and redeveloped that portion of the site into MBC.

Source: Business Times 17 Nov 2011

By EMILYN YAP

LOCAL investors’ share of commercial property deals in Singapore rose in the first nine months of the year as interest from the West remained muted.

According to fresh data from CB Richard Ellis (CBRE), Singapore companies and investors accounted for 89.3 per cent of the $9.55 billion investment turnover in the period.

This proportion exceeds the 83 per cent for the whole of last year, when commercial property investment sales came up to $17.21 billion.

It is also far higher than 2007′s 55 per cent, when $20 billion of commercial property changed hands.

Foreign investors have taken a back seat in the local commercial real estate scene following the global financial crisis.

In the boom year of 2007, capital from America, Europe, Australia, and other areas outside of Asia made up 41.4 per cent of cross-border inflows while the rest came from within Asia.

But funds from the US and Europe have diminished significantly, CBRE said. Since the beginning of 2009, Asian investors have risen in prominence, contributing to 90.4 per cent of cross-border inflows.

‘The US and European players who have sold off in the last two years have shifted their focus back to their own domestic markets,’ said CBRE head of research for Singapore and South- east Asia Petra Blazkova.

‘Conversely, Hong Kongers and Malaysians who divested heavily are likely to be back in the Singapore market in the long term.’

Between the third quarter of 2009 and Q3 2011, the top five cross-border purchasers were from Germany, Australia, Indonesia, Malaysia, and Hong Kong.

German pension funds, Australian developers, and Indonesian private investors were particularly active in acquisitions.

Mainland Chinese investors and developers, which have been active buyers in the residential property sector, were ‘noticeably absent’ in the commercial sector, CBRE said.

Singapore investors have also been making their mark overseas, acquiring commercial properties in China, Hong Kong, Australia, and Korea.

In fact, CBRE said they were the largest exporter of capital in Asia-Pacific’s commercial real estate sector in the last four quarters, partly due to the strong Singapore dollar.

It is not just the nationality of investors which has changed. While institutional investors such as unlisted property funds, banks, insurance companies, and syndicates were the most active buyers in 2007, they have been overshadowed by real estate investment trusts (Reits), publicly listed developers, and real estate companies.

Source: Business Times 14 Nov 2011

It has a site area of about 0.63 hectares and is to be developed for Business 1 uses, such as light industry, clean industry, utilities or telecommunication uses, as permitted under the Planning Act. It has a maximum permissible gross plot ratio of 2.5 and a lease period of 60 years.

Under the government’s Reserve List system, the land parcel at Sims Drive/Aljunied Road will be released for sale if the criteria for the triggering of the site are met. When the site is put up for tender, a tender period of about four to five weeks will be allowed before the tender closes.

Source: Business Times 11 Nov 2011

By KALPANA RASHIWALA

(SINGAPORE) A consortium comprising Low Keng Huat, Guthrie and Sun Venture group plans to begin selling next month strata office units in its $900 million office and retail development, Paya Lebar Square.

Paya Lebar Square: The office component comprises 550 strata units, about half of which will be about 480 sq ft each. Indicative prices range from $1,650 to $2,000 psf

The 13-storey development, which will be built next to Paya Lebar MRT Station on the East-West Line, is expected to be ready by mid-2014.

The office component will comprise 550 strata units, about half of which will be about 480 square feet each. Indicative prices will range from $1,650 to $2,000 per square foot.

In absolute terms, the cheapest will be $800,000 for a 480 sq ft office on the fourth level. Occupiers or investors may buy contiguous units to combine them into larger offices.

There are also larger units such as 800 sq ft and 1,500 sq ft. If a party buys up all the office units on a single floor, it would add up to 43,000 sq ft.

In all, there will be about 430,000 sq ft of offices – all of which are for strata sale – and a retail podium with about 95,000 sq ft net lettable area.

The retail podium will stretch from Basement 1 to Level 2. Carpark lots are on levels 2 and 3. The offices will rise from levels 4 to 13.

The developer is weighing several options for the retail podium – including selling it to a single buyer, disposing of individual strata units, or retaining the mall and leasing it out.

The podium is designed to accommodate a supermarket, food court, banking hall, and food and beverage outlets. Including the food court, up to half of the total retail net lettable area will be for F&B.

Operators in the supermarket, food court and restaurant trades are among those that have indicated interest in leasing and buying space in the mall.

Low Keng Huat, Guthrie and Sun Venture group hold 80, 10 and 10 per cent respectively in Paya Lebar Development Pte Ltd, the joint venture vehicle that is developing Paya Lebar Square.

The development will be integrated with the Paya Lebar MRT Interchange Station. Level 1 will be linked through a sheltered walkway to the East-West Line station while Basement 1 will be linked to the Circle Line Station.

Paya Lebar Square has been designed by DP Architects. The design will aim for an eco-friendly building qualifying for Greenmark Gold Plus certification or better.

The development will feature a central landscaped roof terrace on the fourth storey, which will tier down to another landscaped roof terrace at the second storey.

A high-volume trellis structure covering the second-storey roof terrace will create a grand entrance for the retail podium

Guthrie will oversee the project management and marketing of Paya Lebar Square. For the upcoming release of strata office units, Paya Lebar Development will do the marketing jointly with two agents, SLP International and Black Diamond.

Guthrie and Sun Venture have a separate 50:50 joint venture that picked up 163 units at The Adelphi near City Hall MRT Station in January this year.

The 86 office and 77 retail units held by the tie-up – Guthrie-SV Pte Ltd – together represent 55.13 per cent of the 999-year leasehold building’s total share value.

Since March, selected units have been put up for sale in phases. So far, 39 office units have been sold at an average $1,935 psf, with the highest being $2,349 psf for a unit on Level 9. Guthrie-SV has also found buyers for eight retail units (on levels 1 to 3) at an average price of $2,856 psf, with Level 1 units achieving $3,400-4,039 psf.

The Attorney-General Chambers has a lease for 52 units totalling 75,541 sq ft at The Adelphi from Guthrie-SV, of which 10 units have been sold with options waiting to be exercised for two more units. Leases on the space occupied by AGC for the entire 52 units will expire within one to one-and-a-half years. AGC will move to new premises at Upper Pickering Street next year.

Source: Business Times 10 Nov 2011

A TRANSITIONAL office site on Mountbatten Road, which was put up for sale by the government last month, drew 11 bidders at the close of the tender yesterday.

The top bid of $15.01 million or $119 per square foot per plot ratio (psf ppr) came from an individual, Chen Chew Yen. If the site is awarded, it will be the first time in more that 18 months that a transitional office site – that is, office sites that are launched for sale with 15-year leases – will be sold.

Mr Chen’s bid was 12.6 per cent higher than the second highest bid from Heeton Holdings. Heeton bid $13.3 million or $106 psf ppr.

Analysts expected a top bid of $100-120 psf ppr when the site was launched for sale.

The Mountbatten Road land parcel has a site area of about 1.17 hectares and a maximum permissible gross floor area of about 126,000 sq ft. The site was first made available for sale through the reserve list in October 2008.

The Urban Redevelopment Authority (URA) first launched transitional office sites in 2007 as a creative solution to tackle immediate shortages in office space. Six sites have been sold since.

Analysts said that the site could be popular with office users who have budgetary constraints.

Some of these users may now be operating in industrial buildings, with questionable legality of use, paying rentals of $3.50-4.50 psf per month, said Alan Cheong, Savills Singapore’s associate director for research & consultancy. Attractively priced office space would appeal to these users who could then operate openly without fear of enforcement checks, he added.

Source: Business Times 2 Nov 2011

By KALPANA RASHIWALA

(SINGAPORE) An entity controlled by Fission Group’s Melvin Poh is said to have bought the freehold Henderson Industrial Building for about $99.3 million.

Prominent location : Yi Kai Group and other parties are expected to partner Mr Poh for the purchase of Henderson Industrial Building (foreground), which is located at the Henderson Road-Jalan Bukit Merah junction

Sources say Tan Koo Chuan’s Yi Kai Group and other parties are expected to partner Mr Poh for the purchase of the property, which has a prominent location at the junction of Henderson Road and Jalan Bukit Merah. Mr Tan and Mr Poh teamed up to develop The Alexis condo at Alexandra Road as well as Robinson Suites along Robinson Road.

The $99.3 million being paid for Henderson Industrial Building works out to around $476 per square foot (psf) of potential gross floor area. No development charge is payable as the 83,454-sq-ft freehold plot has a high development baseline.

The breakeven cost for a new industrial project could be around $880 psf, estimate analysts.

Outline planning permission has been obtained from the Urban Redevelopment Authority (URA) to redevelop the site into a 20-storey light industrial project with a plot ratio of 2.5. This would result in a project with a maximum gross floor area of 208,635 sq ft.

Henderson Industrial Building is being sold by its two owners – NTUC Income, which owns about 80 per cent, and Overseas Motors. The four-storey building was developed by Hong Fok more than two decades ago.

CB Richard Ellis brokered the sale through a tender exercise that closed on Oct 25.

Henderson Industrial Building’s existing strata area is about 120,287 sq ft. The proposed redevelopment scheme could yield net saleable area of about 177,340 sq ft. The new project is expected to have strata units for sale. Most units could be around 1,200-1,500 sq ft with some showrooms on the ground floor to take advantage of the site’s significant frontage of about 140 metres along Henderson Road and Jalan Bukit Merah.

Under Master Plan 2008, the site is zoned for Business 1 use with a 2.5 plot ratio (ratio of maximum gross floor area to land area).

Henderson Industrial Building’s occupancy rate is currently at about 75 per cent and the property is being sold with existing leases that are said to be running out over the next two years.

The strata industrial property market has been appealing to investors diversifying out of the private residential segment, which has been affected by cooling measures such as seller’s stamp duty to deter short-term trading and a lower loan-to-value limit.

Industrial property was the hottest segment of the Singapore private real estate market, based on third-quarter 2011 property market stats released last Friday by the URA.

The All Industrial price index rose 6.9 per cent quarter on quarter in Q3 2011, while the All Industrial rental index appreciated 2.4 per cent over the same period. Both price and rental gains for the sector surpassed those for private residential, office and shop space.

Source: Business Times 1 Nov 2011

By UMA SHANKARI

SEVERAL major commercial projects across Singapore bagged provisional permission from the Urban Redevelopment Authority (URA) in Q3 2011.

The consortium which is building a $750 million mixed-use project on the site of the historic Capitol Theatre, Capitol Building and Stamford House has received permission to build 38 apartments, 182 hotel rooms and some 156,000 sq ft of retail space.

The project is being developed by Perennial Real Estate, Chesham Properties and TOP Property Investment.

Elsewhere, Far East Organization received permission to build a hotel and office project at Peck Seah Street in Tanjong Pagar. The site, which the developer won in a state land tender in January 2011, is likely to have around 71,600 sq ft of office space and 340 hotel rooms when it is completed.

Far East will also team up with Frasers Centrepoint to build a 391,000-sq-ft mall with some 930 apartments at Punggol Central.

Ascott Residence Trust, which had previously said it is evaluating the redevelopment options for Somerset Grand Cairnhill Singapore, obtained permission to redevelop the project into a 205-room hotel and 224 apartments.

Other major upcoming projects that received provisional permission in Q3 2011 include City Developments’ hotel and residential project at Robertson Quay (with 310 hotel rooms and 70 apartments); and a commercial land parcel in Paya Lebar Central which is being developed by a consortium led by Low Keng Huat (Singapore). That site will have about 539,000 sq ft of office space and 87,600 sq ft of retail space.

In addition to commercial developments, a significant number of residential projects – mainly in the suburbs – also received provisional permission.

Notably, Hong Leong Group unit Tripartite Developers said it intends to build two condominium projects at Flora Drive in the Upper Changi area – one with 423 units and the other with 404 units.

Analysts noted that going forward, the ramped-up supply of residential state land will cap price growth.

‘The cloudy global economic outlook will generally put home buyers on a cautious stance and limit home purchasers’ propensity to commit to prices above the last done,’ said Colliers International’s director of research & advisory Chia Siew Chuin.

‘Moreover, the continued injection of housing supply through the government land sales programme and increased public housing supply could shave some exuberance off the market, as home buyers now have more options and are less likely to rush into the market.’

Source: Business Times 29 Oct 2011

By KALPANA RASHIWALA

(SINGAPORE) Property investors with a budget of below $1.5 million are diversifying from the residential sector to other sectors, most notably industrial, in bigger numbers since the government began introducing measures to cool the residential sector in September 2009.

This is borne out by Jones Lang LaSalle’s study of URA Realis caveats data for private homes (excluding executive condos), as well as strata private industrial (factory) space, offices and retail properties (excluding shophouses) – all below $1.5 million.

The private residential sector’s share of this pool of total caveats has fallen from a high of 96.6 per cent in Q2 2009 (before the first of four rounds of property cooling measures were rolled out) to 87.2 per cent in Q3 2011 (based on caveats data as of Oct 12). Over the same period, the percentage share of strata private industrial (factory) units has risen from 2.2 per cent to 8.8 per cent, while that for strata offices has gone up from 0.4 per cent to 1.4 per cent and strata retail, from 0.8 per cent to 2.6 per cent.

The actual rise in percentage share of industrial units may be even more pronounced as the URA Realis database that JLL used for its analysis does not include transactions where information on the size of the units is missing in caveats lodged.

For instance, JLL traced from the SISV Realink database at least 11 industrial projects with a total 1,306 caveats since the start of this year that were not included in the URA Realis caveats database. These include popular projects like Oxley Bizhub, with 320 caveats.

Analysts attribute the contraction in residential property’s share to government measures to cool the housing market, such as a lower loan-to-value (LTV) limit for housing loans for property investors and seller’s stamp duty to deter short-term trading of private homes.

Stella Hoh, head of investments at JLL, said: ‘Due to the punitive policies, investors have been seeking non-residential properties. The LTV an investor can obtain for commercial and industrial properties can be as high as 70 per cent, compared to only 60 per cent for a second residential property. Naturally, investors are driven towards the non-residential segment – especially industrial, which has a much larger stock of strata units than retail and office. Nonetheless, investor interest for strata retail and office space is still strong.’

The most significant hike in industrial strata units’ share was seen in Q4 2009, after the first set of cooling measures was announced in September that year most notably the removal of the interest absorption scheme, which had been offered to buyers of uncompleted private homes and had been blamed for fuelling speculation in the sector.

The ensuing diversification into the industrial segment led to a 3.06-percentage point q-on-q increase in the sector’s share of total number of caveats to 6.44 per cent in Q4 2009. Going by caveat value, too, the industrial segment’s share rose 2.1 percentage points q on q to 4.27 per cent in Q4 2009.

Subsequent rounds of cooling measures also targeted the private residential segment and led to investors shifting their attention to other sectors of the property market with industrial being the most attractive, although there has sometimes been a time lag.

Another incentive for property investors to venture beyond the residential sector is yields. Net yields of 6.5 to 7 per cent for industrial property, 5 to 6.5 per cent for retail, and 3.5 to 4 per cent for office properties – are higher than the 2 to 3.5 per cent yield for private homes, notes JLL’s head of SE Asia research Chua Yang Liang.

Analysts also highlight that property buyers have increasingly taken to smaller units in projects launched by developers on sites zoned for industrial use. Says DTZ’s SE Asia chief operating officer Ong Choon Fah: ‘Buyers are drawn by the affordable lumpsum price and prospects of high yields.’

Industry observers say some marketing agents tout such premises for office use even though such use is unauthorised.

Says Mrs Ong: ‘Generally, people who buy smallish industrial units are unlikely to be industrialists. Buyers have to beware of the consequences of unauthorised use of industrial premises if they’re found out.’

The volume of caveats for strata industrial units has risen from 164 in Q2 2009 to 495 in Q2 2011, while the figures for office units has risen from 30 to 88 and retail units, from 63 to 183, over the same period. In contrast, the number of caveats for private homes has declined 14.4 per cent from 7,227 deals in Q2 2009 to 6,183 deals in Q2 2011.

Despite the rise in transaction volumes for strata units in the non-residential segments, Dr Chua says: ‘Volumes are not exceedingly large to warrant any policy intervention at this point.

‘So far, residential volume is still a dominant force of about 80-odd per cent of total number of transactions. However, if the volume of non-residential transactions continues to rise, and speculation becomes rampant and affects the normal operations of businesses, the state may need to relook its policy. Until then, it’s better to just keep watch.’

JLL’s figures also show that the total number of caveats (for all property segments) rose about 33 per cent q on q to 6,949 in Q2 2011, reversing three consecutive quarters of contraction.

‘This rebound, however, may be shortlived. As of Oct 12, caveats were lodged for 4,268 deals in Q3 across all sectors, or 61.4 per cent of the Q2 volume – suggesting that market confidence has weakened on the back of global uncertainty,’ says Dr Chua.

The lowest volumes since the start of 2009 were 3,125 caveats in Q1 2009 and 5,201 in Q4 2009. ‘The weakened buying trend seen in Q3 is likely to continue as investors adopt a wait-and-see attitude.’

Source: Business Times 24 Oct 2011

It is zoned for Business 1 use, which means it can be developed for various uses such as clean and light industry – including computer software development, printing and publishing, assembly and repair of computer hardware and electronic equipment.

The land parcel had been made available for sale through the government’s reserve list on June 24, 2011. On Oct 4, URA announced that it had received a successful application for the site’s release from a developer committing a bid of at least $57 million. This works out to $98.86 per square foot per plot ratio.

Tender for the site will close at noon on Nov 17.

Source: Business Times 19 Oct 2011

By KALPANA RASHIWALA

(SINGAPORE) In a surprise outcome, the widely watched state tender for the second commercial site at Paya Lebar drew just one bid and that, too, was 35 per cent lower than the nearby first site awarded in April this year.

The sole bid at yesterday’s tender, from a UOL Group-Singapore Land equal joint venture, was for $529.3 million or $565.74 per square foot of potential gross floor area. They plan to pump in a total $1 billion including land price for a retail, office and hotel project.

The first site, also on 99-year leasehold tenure, drew 10 bids and was sold to a consortium comprising Low Keng Huat, Guthrie and Sun Venture Commercial for $872.16 psf per plot ratio. The group is planning an 80:20 office:retail project.

As market watchers broke into a discussion yesterday evening on whether Chief Valuer will award the latest plot to UOL-Sing- Land, analysts highlighted some key differences between the two plots. Developing the latest plot will be technically more challenging as the site is split into two triangular portions by a section of Geylang River. While Urban Redevelopment Authority stipulated that at least 80 per cent of gross floor area (GFA) for the earlier plot has to be set aside for office use, the latest plot has a minimum 15 per cent hotel component in addition to a minimum 40 per cent of GFA for offices.

In addition, all the retail space and activity-generating uses in the project on the latest plot must be held under a single strata lot to ensure it continues to be well managed. Hence, the avenue of subdividing the retail area into smaller strata units for individual sale to make a quicker return on investment will not be open to the developer. There is no such restriction for the first plot.

For the office component in the latest plot, URA has specified that it encourages a minimum strata unit size of 100 sq metres (1,076.39 sq ft), which may reduce the appeal to some smaller investors. The outlook for the office market today is also weaker than in April, note analysts.

Credo Real Estate executive director Ong Teck Hui said: ‘The development of the second site will be challenging due to technical requirements, which will separate the development into two triangular portions that make it difficult to achieve a good design and layout. The inefficiency will ultimately impact on leasing and rental returns. Consequently not many parties would be keen on such a site and any bidder would adjust its offer to reflect these factors.’

Alternatively, the developer could realign the canal. UOL’s scheme envisages pushing the canal closer to the perimeter of the site, parallel to Tanjong Katong and Geylang roads, in reverse L-shape. This will chalk up costs.

‘We can deck the realigned canal with a pedestrian mall which will be landscaped and lined with eateries – though we’re not allowed to build any structure over the canal,’ said UOL president Liam Wee Sin.

The basement of the mall will be linked to the adjacent Paya Lebar MRT Station on the Circle Line and possibly to the group’s proposed retail and residential project on the freehold Lion City Hotel site diagonally opposite which UOL clinched earlier this year.

If it wins the latest plot from URA, UOL will be able to enlarge its foothold in the location, similar to what it has done near Novena MRT Station, where it has a 60 per cent stake in Novena Square and fully owns United Square.

Giving details of UOL’s proposal if it is awarded the Paya Lebar plot, Mr Liam said: ‘Our scheme is for a 14-storey development, comprising a retail podium and two towers above it – one for a hotel and the other, offices. The offices are likely to have a large floor plate of over 20,000 sq ft. The office, hotel and retail mix will be 40, 15 and 45 per cent of GFA.’

Some property consultants polled yesterday evening predict the site will be awarded. ‘The land price is still within the fair-value range, although on the lower side of the scale,’ says Cushman & Wakefield Singapore vice-chairman Donald Han.

Knight Frank group managing director Danny Yeo said UOL and SingLand offered ‘a reasonable price’ taking into account the site’s technical constraint, substantial office pipeline in Singapore and turmoil in the global economy which will be a dampener on office demand. ‘UOL is not known to strata title its commercial properties into individual units for sale. It’s a long-term holder of office buildings, and if it is awarded this plot, this will augur well for the development of the Paya Lebar area into a commercial hub outside the CBD catering to MNCs.

‘UOL is also likely to provide a stronger differentiation in positioning of the retail components on this site and the Lion City Hotel site.’

Usually the state will award a site if at least 85 per cent of its estimated market value determined by Chief Valuer is met. However, bids below this level may also be accepted if there is ample evidence from recent property transactions of a market downturn. The government also looks at the number of bids.

Source: Business Times 19 Oct 2011

A COMPANY linked to travel agency CTC Travel has inked a deal to buy the owner of Park Regis Singapore hotel at New Market Street/Mer- chant Road in a transaction that values the property at $270 million.

Park Regis: If the offices are valued at $2,000 psf, the hotel rooms would amount to $916,000 each. A $1,900 psf valuation for the offices would reflect $937,000 per hotel room

The property was previously transacted for $218 million last year.

The property comprises the 203-room hotel and the adjacent seven-storey office block with about 42,000 sq ft net lettable area. It stands on a site with a remaining lease term of about 95 years.

Market watchers say that in the latest $270 million transaction, assuming the offices are valued at $2,000 per square foot, the valuation for the hotel rooms would amount to $916,000 each. A lower $1,900 psf valuation for the offices would reflect a valuation of $937,000 per hotel room.

Colliers International brokered the transaction, which was signed on October 7 and first reported by TTG Asia. Colliers conducted an expression of interest exercise which closed on September 23. The exercise is said to have drawn several bids from overseas and local parties. BT understands the transaction is due for completion by month-end.

TTG reported the buyer as CTC Tourism Holdings, owner of CTC Travel.

An Accounting and Corporate Regulatory Authority search listed CTC Tourism Holdings’ sole owner as South Korean citizen Chung Sunmook.

BT understands that CTC Tourism Holdings group will buy the entire equity of Park Regis Investments Pte Ltd, whose shareholders include the late Jusuf Merukh of Indonesia and BVI-registered Great Fortune Capital Ltd, said to be controlled by another Indonesian investor. Park Regis Investments owns the hotel and office tower.

Australia-based StayWell Hospitality Group, whose shareholders include Asok Kumar Hiranandani, will continue to manage the hotel. Mr Hiranandani sold the hotel to Mr Merukh last year for $218 million.

BT understands the new owner of Park Regis is likely to take over the existing loan on the property, which is said to reflect a high percentage of the previous $218 million transaction price.

Source: Business Times 13 Oct 2011

THE Urban Redevelopment Authority (URA) yesterday launched a commercial and residential site at the junction of Jelebu Road and Petir Road for sale by public tender.

The 99-year leasehold land parcel, which is adjacent to the existing Bukit Panjang LRT station and the upcoming Bukit Panjang MRT Station, is well positioned to be an attractive mixed-use development, with retail, F&B and residential uses, the government agency said.

The land parcel has a site area of 1.89 ha and a maximum permissible gross floor area (GFA) of about 612,000 sq ft. To provide more commercial facilities within Bukit Panjang, around 214,000 sq ft of the GFA has to be set aside for commercial uses, URA said.

The tender for the site will close at noon on Nov 30.

Analysts expect to see good interest in the site.

‘Market response in previous tenders for commercial and residential sites which are centrally located in HDB heartlands, and in close proximity to transportation nodes, has usually been favourable,’ said said Credo Real Estate executive director Ong Teck Hui.

‘We may expect six to 10 bidders with a top bid of between $600 to $700 per square foot per plot ratio (psf ppr).’

But one analyst, who declined to be named, said that interest may be ‘modest’. ‘Although there are recent cases of encouraging response for state land tenders, I reckon that those bids are opportunistic – likely from developers who observed that general buying interest for land has softened and thought it might be a good chance to try for land at realistic prices,’ he said.

A commercial and residential site in Punggol Central was sold for $1.02 billion – or $753 psf ppr – to Frasers Centrepoint, Far East Organization and Japan’s Sekisui House in Feb 2011.

And before that, in in September 2010, another mixed use site in New Upper Changi Road and Bedok North Drive went for $788.9 million or $841 psf ppr. That site was won by a joint venture between CapitaLand and CapitaMalls Asia.

Source: Business Times 12 Oct 2011

The collective sale was handled by marketing agent Credo Real Estate. The shareholders of 122 Middle Investment include Millennium Land, an associate company of the Lian Beng Group. The new owners are understood to be studying the potential for the site to be redeveloped into a hotel.

Midlink Plaza currently comprises 79 strata-titled retail and office units, with a total gross floor area of 128,076 sq ft. The 99-year leasehold site has a remaining lease term of about 68 years. Previous reports pegged the premium for topping up the lease to the full 99 years at between $16.8 million and $18.3 million.

Credo said yesterday that the multiple subsidiary proprietors of Midlink Plaza unanimously consented to the collective sale of their development.

‘This is the first fully commercial strata-titled development to be sold in a collective sale exercise in three years. The last fully commercial development to be sold en bloc was Katong Mall in June 2008. Most of the other successful en bloc sales were purely residential developments, or those with shops within the condominium,’ says Karamjit Singh, Credo’s managing director.

Under the 2008 Master Plan, the site is zoned ‘commercial’ with an allowable building height of up to 16 storeys.

Source: Business Times online 7 Oct 2011

Designated for Business 2 use, it can be developed for light industry, general industry, warehousing, utilities or telecommunications. It is the last industrial site to be released under the confirmed list of the government’s land sales programme for the second half 2011.

Analysts told BT that while interest remains high for sites in the area, the number of available land plots in the market may drive prices down. Two industrial sites, at Kaki Bukit Road 4 and Lavender Street/Kallang Avenue, had been launched for sale by public tender in August. Their tenders close on Oct 20 and Oct 27 respectively.

‘Previously, we could easily expect about eight bidders, but for these sites, we expect maybe four to five,’ said one analyst.

The tender for the site at Soon Lee Street will close at 12 noon on Nov 29.

Source: Business Times online 7 Oct 2011

The average gross rent for office space in Raffles Place in downtown Singapore was US$9.80 per square foot per month July-September.

Along the central business district, rents at Marina Bay and Marina Centre were unchanged quarter-on-quarter while those at the Shenton Way area rose 2.0 per cent from the previous quarter to US$7.75 per square foot per month.

‘Leasing activity remains subdued as occupiers become increasingly wary of the uncertain global economic outlook,’said Cheng Siow Ying, DTZ’s executive director of business space said in a statement.

She added that although some occupiers were holding back their expansion plans, there were space expansion needs from selective business sectors such as financial and professional services, IT-related companies and energy companies. — REUTERS

Source: Business Times online 5 Oct 2011

This marks the first quarterly increase since Q3 2008. Average rents in Orchard Road were $30.11 psf pm in Q2 2011.

‘We are witnessing almost full occupancy at Orchard Road malls,’ said Letty Lee, CBRE’s director for retail services.

‘New-to-market brands continue to actively explore taking up Orchard Road space, encouraged by fresh opportunities offered by newly available large prime space – including with the recent exit of Borders at Wheelock Place.’

Rentals should hold steady for the fourth quarter, she added.

DTZ Research last week said that the average gross fixed rent of prime first-storey space in the Orchard/Scotts Road area increased by 0.5 per cent on quarter to $40.20 psf pm in Q3 2011. The two property firms use different baskets of retail space to track rents.

CBRE’s report also said that prime suburban rents rose 2.9 per cent quarter on quarter to $29.75 psf pm in Q3 2011, from $28.90 psf pm in Q2.

CBRE estimates that some 657,000 sq ft and 1.57 million sq ft of retail space will be completed in 2012 and 2013, respectively.

Source: Business Times online 5 Oct 2011

A 60-YEAR leasehold industrial plot at the corner of Gambas Avenue and Woodlands Avenue 10 will be launched for tender in about a fortnight after an unnamed party made a successful application for the site’s release from the government’s reserve list.

Urban Redevelopment Authority said yesterday that the developer which made the successful application has committed to bid at least $57 million. This works out to $98.86 per square foot per plot ratio (psf ppr).

The 230,636 sq ft plot is zoned for Business 1 use, which means that light and clean industry and warehouse uses are allowed. It has a 2.5 plot ratio, which means it can be built into a project with a maximum gross floor area of 576,590 sq ft.

Colliers International director (industrial) Tan Boon Leong estimates the top bid could be in the $130-140 psf ppr range and the tender could draw a handful of bids. Savills Singapore’s director of industrial and business space, Dominic Peters, too predicts ‘fewer than five bids’ with the top bid coming in at about $135 psf ppr – or about 5 per cent lower than the $142 psf ppr at which a 60-year Business 1 plot at Woodlands Avenue 12 was sold at a state tender last month.

Developers are becoming more cautious; besides the turmoil in financial markets and the economic woes in Europe, there is concern about the substantial supply of industrial space in the northern part of Singapore that will be generated from the sale of land by the state in places like Woodlands and Yishun. The latest site being offered at Gambas Avenue would be more attractive if it had Business 2 zoning, which allows for a wider range of uses, including workers’ dormitory for part of the gross floor area, said Mr Peters.

Mr Tan too said that industrial developers are more cautious these days as it may be difficult for them to achieve the end-product prices they have in mind for strata industrial units.

The $142 psf ppr that OKH Development paid for the plot at Woodlands Avenue 12 last month is about 6.6 per cent lower than the $152 psf ppr that OKH had paid for the next-door plot at a tender in June this year.

Source: Business Times online 5 Oct 2011

By UMA SHANKARI

(SINGAPORE) The Urban Redevelopment Authority (URA) launched a transitional office site at Mountbatten Road for sale by tender yesterday.

This marks the first time in more that 18 months that a transitional office site – that is, office sites that are launched for sale with 15-year leases – will be sold.

The last transitional office site, at Mohamed Sultan Road, was sold in March 2010.

The Mountbatten Road site is being launched two weeks after URA first said it has received an application from an unnamed developer to put up the site for tender.

The developer committed to bid at least $8.2 million or $65 per square foot per plot ratio (psf ppr). But analysts said that the top bid could be higher than $100 psf ppr.

‘Transitional offices could be used by office users who have budgetary constraints,’ said Alan Cheong, Savills Singapore’s associate director for research & consultancy.

‘At the moment, some of these users may be operating in industrial buildings, with questionable legality of use, paying rentals of between $3.50-4.50 psf per month. Attractively priced office space would appeal to these users who can then operate openly without fear of enforcement checks.’

Nicholas Mak, research head of property consultancy SLP International, said that the site could attract some SMEs.

‘It is fairly attractive as it is within walking distance to the Mountbatten MRT station. But it may turn away the bigger corporations which are concerned about the reputation of the location of their offices,’ Mr Mak said.

The Mountbatten Road land parcel has a site area of about 1.17 ha and a maximum permissible gross floor area of about 126,000 sq ft.

The site was first made available for sale through the reserve list in October 2008. The tender will close at noon on November 1.

URA first launched transitional office sites in 2007 as a creative solution to tackle immediate shortages in office space. Six sites have been sold since.

Source: Business Times online 4 Oct 2011

Jones Lang LaSalle (JLL) and Jones Lang LaSalle Hotels (JLLH) announced on Tuesday the completion of the sale of the Paramount Hotel & Shopping Centre for S$214 million to Orchard Mall Pte Ltd, a member of Far East Organization.

The ex-owner, YTC Hotels Ltd, will continue to operate the hotel for six months after the completion

The ex-owner, YTC Hotels Ltd, will continue to operate the hotel for six months after the completion.

Date of handover has yet to be decided but is expected to be around early February 2012.

The 102,685 sq ft site, zoned for ‘Hotel’ use under the 2008 Master plan, has a gross plot ratio of up to 3.0.

In future, subject to planning approval from the authorities, the freehold site with a potential gross floor area of up to 308,056 sq ft has varied redevelopment options such as hotel, commercial, residential or a combination of these.

Source: Business Times online 4 Oct 2011

THE proposed collective sale of Tanglin Shopping Centre has fallen through, as the sale committee managing the en bloc sale process has not been able to secure a buyer, Millennium and Copthorne Hotels (M&C) said yesterday.

M&C, the London-listed hotel arm of City Developments Ltd (CDL), has – through a unit – a more than 30 per cent interest in the total strata title area, according to an earlier report.

This was the second time that the freehold site, which is about 68,512 sq ft, was put up for en bloc sale, after a failed tender earlier this year failed to draw a buyer.

With a reserve price said to be $1.25 billion, this translated into about $4,000 psf of potential gross floor area, assuming the site is redeveloped.

Comprising a retail podium, a 12-storey office tower, and carpark facilities, the Tanglin Shopping Centre has an existing strata area of about 380,000 sq ft. Based on this, the $1.25 billion reserve price would have worked out to about $3,300 psf.

Under the Master Plan 2008, the site is zoned for commercial use, with a 4.2 plot ratio and a maximum height of 20 storeys.

Source: Business Times online 29 Sept 2011

RAFFLES Quay Asset Management is in active discussions with a few prospective tenants to fill the third office tower at Marina Bay Financial Centre (MBFC), chief executive Wilson Kwong said yesterday.

The development’s Tower 3, which will offer some 1.3 million sq ft of prime Grade A office space once it is completed in Q1 2012, is currently around 60 per cent leased.

‘We do have strong interest in our space, for the remaining 40 per cent of the building. We are in active discussions,’ said Mr Kwong, who was speaking on the sidelines of a ceremony to mark the topping out of the tower.

BT understands that mining giant Rio Tinto is set to take up about 70,000 square feet of space at Tower 3.

Lead tenant DBS Bank will take up over 600,000 sq ft, or 18 floors, of the 46-storey tower.

Over 4,800 DBS employees currently housed in four locations across Singapore – mainly from the bank’s customer-facing units including consumer banking, institutional banking, treasury and markets and wealth management – will move to MBFC in the second half of 2012.

Other tenants include Ashurst LLP, Clifford Chance, McGraw-Hill and WongPartnership.

MBFC is jointly developed by Singapore’s Keppel Land and Hong Kong’s Cheung Kong Holdings and Hongkong Land. The three partners first set up Raffles Quay Asset Management in 2001 to build, lease and run the neighbouring One Raffles Quay.

The entire MBFC development comprises three office towers offering three million sq ft of prime Grade A office space, 649 high-end apartments and some 176,000 sq ft of retail space.

About 90 per cent of the retail space at MBFC’s Tower 3 is pre-committed, and will house F&B operators new to Singapore, such as South Beauty from China, popular cuisines like Bibigo from Korea, and Osvaldo from Italy, Veganburg.

DBS’ flagship retail bank and an auditorium will also be located there.

There will also be a foodcourt operated by NTUC Foodfare Co-operative, which will add to the range of dining options for the MBFC office crowd.

Deputy Prime Minister Teo Chee Hean, who was guest of honour at the topping out ceremony, reiterated the government’s position that it will ensure a steady supply of office space to support the growth of the financial and business services sector.

Singapore’s business infrastructure must continue to evolve with the financial sector, he added.

‘Our planners must continue to make available top-notch business infrastructure that accommodates the latest technologies, facilitates the easy build-up of large trading floors, as well as provides the flexibility to offer customised purpose-built facilities,’ Mr Teo said.

Source: Business Times online 29 Sept 2011

Of the 364 units released, 60 percent was sold by Oxley Holdings during the soft launch of the project, at an average price of S$677 psf of strata area. Most of the Singaporean buyers purchased multiple units.

The prices at Oxley Bizhub are believed to be higher than those at other 60-year leasehold properties in the area, which go up to just slightly more than S$400 psf.

Located near the Tai Seng and MacPherson MRT stations, the leasehold development will comprise four tower blocks and three podium blocks. It will also feature a total of 728 strata-titled factory and warehouse units, ranging between 915 and 3,423 sq ft in size.

Oxley Bizhub will offer recreational facilities, such as a swimming pool and gymnasium, differentiating it from most strata-titled industrial properties.

“The market’s positive response to our first industrial project testifies to the good market demand for such uniquely-designed, lifestyle-oriented industrial property,” said Ching Chiat Kwong, CEO and Executive Chairman of Oxley Holdings.

Industrial real estate market watchers have been observing Oxley Bizhub, to get a sense of how buyers respond to the higher prices.

“I think it’s quite a healthy take-up rate, considering that they are breaking (price) records,” said Tan Boon Leong, Industrial Director at Colliers International.

As a result, prices of industrial properties in the Ubi area will increase by “a notch or two”, according to Mr. Tan. However, he does not anticipate that they will match levels at Oxley Bizhub, since the project is new and offers a different concept.

Source: Sg Yahoo News