Singapore Property Group 新加坡房地产集团

The Business Times

Some analysts attribute higher than expected development charge rate rises to recent lull

(SINGAPORE) Upward revisions in development charges (DC) effective today are generally above market expectations.

Under the latest revision, the average DC rate for commercial use has been increased by 21.7 per cent – much higher than the 12.7 per cent hike in the previous round effective March 1, 2011.

For industrial use, the average DC rate hike this time is 30.9 per cent, compared with 8.3 per cent previously.

In the residential segment, the latest increases in average DC rates are 16.5 per cent for landed use and 12.2 per cent for non-landed use.

They were previously revised upwards by 18.4 per cent and 10.6 per cent respectively.

However, the 7 per cent average hike for hotel use was lower than the 26.7 per cent jump six months earlier.

Property consultants had generally expected the latest DC rate increases to be smaller than the March 1 revisions, amid early signs that pricing for condo land is starting to come off due to the deterioration in global economic sentiment.

At a state tender in August, a 99-year condo plot near Potong Pasir MRT Station was sold at 6.6 per cent lower than a neighbouring plot in June last year.

When queried on this, a spokesman for Chief Valuer said: ‘Chief Valuer took into consideration all the sales evidence during the past six months, and not just a single land bid.’

Some property consultants reckon the relatively quieter land sales market lately did not provide Chief Valuer with sufficient evidence of a slowdown in land prices.

Credo Real Estate executive director Ong Teck Hui said: ‘There was a flurry of residential Government Land Sales tender closings until June, followed by a lull in July and just two tenders in August. This was also the case for the collective sales market.

‘If there had been ample land transactions following the recent market turmoil, their bids would have been lower than those before and such evidence would have probably contributed to a more balanced DC revision.’

He predicts that if the external environment continues to deteriorate and land bids continue to fall, DC rates may have to be revised downwards in the next round effective March 1, 2012.

Development charges are payable to the state in exchange for the right to enhance the use of certain sites or to build bigger projects on them.

Ministry of National Development, in consultation with Chief Valuer, reviews DC rates twice a year, on March 1 and Sept 1. DC rates are stated according to use groups across 118 geographical sectors.

The steepest escalations in the latest announcement were for industrial and commercial use.

Jones Lang LaSalle (JLL) noted that the policies to cool the private residential market have sent seasoned investors to the strata industrial and commercial property markets, creating inflationary pressure in those segments.

While the percentage increases in DC rates were higher than general market expectations, the geographical sectors or locations that chalked up the biggest gains were not.

These were generally areas which had seen strong land bids, at prices significantly above the land values implied by March 1, 2011 DC rates.

JLL’s analysis shows that in the latest round, the biggest hike for commercial-use DC rate of 31.7 per cent is for the geographical sector that includes Paya Lebar Way, followed by the sector that covers Jurong East (up 30.4 per cent).

A commercial site was sold in each location at state tenders in April and May this year at premiums of 139 per cent and 147 per cent respectively to their March 1 DC rate-implied land value, notes JLL’s SE Asia research head Chua Yang Liang.

Leading the increase in industrial DC rates were Sectors 114 (which includes Tuas and Kranji) and 115 (including Woodlands, Sembawang and Mandai).

Colliers International director Chia Siew Chuin said the increases were probably prompted by high prices at state tenders.

A 45-year-leasehold plot at Tuas View Square fetched $174 per square foot per plot ratio (psf ppr) in June, reflecting a whopping 374 per cent premium to the March 1 DC rate-implied land value for the sector.

Likewise, a 60-year plot at Woodlands Avenue 12 was awarded in June at $152 psf ppr, some 272 per cent above the then DC rate-implied land value for the sector.

In the non-landed residential segment, the strongest growth of 38.9 per cent in DC rates was in the Bendemeer/Whampoa area, where a 99-year condo plot was sold at a state tender for $774 psf ppr, or 141 per cent above the then DC rate-implied land value.

Sector 94 (which covers Marine Parade and Amber Road) saw a 25 per cent rate hike – probably supported by the collective sales of Amber Glades and Amber Towers at 43 per cent and 50 per cent respectively above the March 1 DC rate-implied land value, based on Colliers’ analysis.

Sector 50 (which includes Tanjong Rhu) posted a 22.9 per cent DC rate rise, supported by pricing for the Foretredale and Austral View en bloc sales.

For landed residential use, the biggest hikes were at 20 per cent in 22 sectors – including the Orchard/ Somerset area, Mount-batten/Kallang, Braddell/ Potong Pasir, and Seletar.

The smallest increases were in Sentosa (7.7 per cent), Anderson Road vicinity (also 7.7 per cent) and Orange Grove area (7.1 per cent), noted DTZ’s SE Asia research head Chua Chor Hoon.

There was just one hotel site sold at a state tender in the past six months – at Robertson Quay – and that probably provided the impetus for a 9.4 per cent upward revision in rates around the Singapore River.

Under the Master Plan 2008, the squarish plot is zoned for residential use with a gross plot ratio of 2.1 and a height limit of 24 storeys.

Subject to the necessary approvals, a new development can potentially build up to a gross floor area of 23,176 sq ft, including 10 per cent balconies.

The indicative asking price works out to $982-1,003 per square foot per plot ratio (psf ppr) inclusive of estimated development charge and premium for the adjoining state land of $2.26 million.

Future development can yield 38 units of apartments averaging 600 sq ft per unit, said marketing agent HSR Property Consultants, estimating that a brand new freehold development on the site can fetch around $1,600-1,650 psf.

Neighbouring development, Harbour Suites, was launched early this year and commanded a median price of $1,640 psf.

The tender closes at 3pm on Sept 8.

Separately, Midlink Plaza, a nine-storey commercial building located at the junction of Middle Road and Queen Street, is up for sale by tender, and expects offers in the region of $120-130 million.

From a redevelopment perspective, this translates to a land rate of approximately $1,068-1,158 psf ppr, after factoring in approximately $16.8-18.3 million for the top-up of the lease to a fresh 99 years, says marketing agent Credo Real Estate.

Expressed over the building’s existing total strata area of 92,861 sq ft, the indicative price works out to an average of $1,292-1,399 psf.

The development, which has 68 years left on its 99-year leasehold tenure, comprises 79 strata-titled retail and office units, and has a total gross floor area of 128,076 sq ft.

Under the Master Plan 2008, the site is zoned ‘commercial’, with a height limit of 16 storeys. The Urban Redevelopment Authority is prepared to support the redevelopment of the site into a 16-storey hotel or commercial development.

The tender closes at noon on Sept 23.

Overall rise in URA private home price, rental indices slows even as supply pipeline swells

(SINGAPORE) The number of private homes in the pipeline has never been higher.

And it is poised to climb even further with the Government Land Sales Programme recently rolling out a large supply.

As at the end of the first quarter, there were 68,887 private homes in the pipeline from projects with planning approvals (comprising projects under construction and those where construction has yet to begin), up 4.9 per cent from a quarter earlier. These figures are based on developers’ declarations and the actual completion schedule may change as developers adjust their plans and schedules.

The Urban Redevelopment Authority (URA) said that the latest supply number was the highest since such data was first made available in 1999. Of this, 34,266 units were unsold – reflecting about three years’ supply based on the annual average take-up of about 11,400 units.

DTZ’s South-east Asia research head, Chua Chor Hoon, attributes the increase in the supply pipeline ‘mainly to an increase in the Government Land Sales Programme since last year and the fact that developers are bidding enthusiastically for the sites and pushing out launches of new projects; and people are buying these units’.

‘In a way, demand is supply-led. New project launches are attracting people to come to the market,’ Ms Chua added.

‘There’s also a certain element of investment demand among private home buyers as not everyone is buying for owner occupation. The potential risk is that a few years down the road, when all these units are physically completed and if interest rates go up and the economy doesn’t do well, demand for private homes may come off.’

And as the owners of these properties try to rent them out or sell them, this will put pressure on rents and prices, she added.

As it is, URA’s overall price and rental indices for private homes posted smaller quarter-on-quarter gains in Q1 this year than in Q4 last year.

The numbers also point to a rising stream of private homes being completed in the years to come – save for a projected dip in 2012.

Some 10,256 units are slated to be rolled out this year followed by 9,475 in 2012. They are then expected to gather pace, with 12,990 units slated for completion in 2013, 18,341 units in 2014 and 19,495 units in 2015.

Jones Lang LaSalle’s SE Asia research head Chua Yang Liang warns of excess supply of completed units in 2013 and 2014 but added: ‘The big question is how much more immigrants and expats will be allowed to enter into Singapore over the next five years.’

International Property Advisor chief executive Ku Swee Yong said that some of the supply projected for completion in 2015 may be brought forward to 2012 and 2013 – ‘in which case those who may already be carrying quite a lot of property assets may consider divesting some of their investments sooner rather than later’.

URA’s private home price index rose 2.2 per cent quarter on quarter (q-o-q) in Q1, a slower increase than the 2.7 per cent q-on-q gain in Q4 2010.

Bungalow prices gained only 4.1 per cent in Q1, about half the 8.5 per cent increase in Q4 2010. However, the terrace home price index climbed 3.9 per cent in Q1, slightly faster than Q4′s 3.7 per cent rise.

It was also a mixed bag in the non-landed segment. The apartment price index increased 0.8 per cent in Q1, compared with a 2.4 per cent hike in Q4; however, the condo price index picked up 2.1 per cent in Q1 after rising 1.6 per cent in Q4.

The hike in rental indices for non-landed homes in all three geographical regions slowed considerably, with the sharpest slowdown in Rest of Central Region which posted a 0.4 per cent q-on-q hike in Q1, compared with a 3.8 per cent increase in Q4. Nomura Singapore property analyst Sai Min Chow observed a significant slowdown in rental growth for non-landed homes in RCR and Outside Central Region as well as for HDB subletting flats. ‘This should temper price expectations for shoebox apartments in RCR and OCR, taking into account a four-year holding period (to avoid) the seller’s stamp duty.’

He estimates as much as 32 per cent of completions in RCR and 9 per cent in OCR in 2013 are units below 50 sq metres each. ‘Hence for those purchasing these units for investment purpose, there’s a lot of competition for either rental or secondary sales,’ he added.

URA office price index climbed 4.9 per cent in Q1 2011, slightly less than the 5.1 per cent hike in Q4 2010. However, URA’s All Industrial property price index gained momentum, rising 8.3 per cent in Q1, compared with 6.5 per cent growth in Q4.

Colliers International noted the faster growth for industrial prices came on the back of sustained interest and sales activity in strata-titled industrial space, which was fuelled by high liquidity, low interest rates and diversion of investors’ attention to other property sectors following the latest round of cooling measures for the residential sector in January.

The property types include residential, commercial, industrial and hotel

(SINGAPORE) The Urban Redevelopment Authority has granted, in the first quarter of the year, provisional permission for a string of projects across property types – residential, commercial, industrial and hotel.

 A Hong Fok Corporation unit has clinched approval to develop an office block on the surface carpark site behind the group’s International Building at Orchard Road. The proposed project can yield about 161,100 square feet in gross floor area. The approval is understood to be for a 23-storey development that will incorporate car park lots on the lower floors.

Keppel Land unit Mansfield Developments has got the URA’s nod to redevelop Keppel Towers and GE Tower in the Hoe Chiang Road/Tanjong Pagar area into a project with 590 apartments and about 16,800 sq ft of retail space.

Lend Lease’s project at Jurong Gateway Road is approved for about 345,800 sq ft of offices and 416,800 sq ft of retail space.

Chee Swee Cheng group has clinched URA’s nod for a 221-room hotel at Bideford Road (on the Wellington Building site).

Hotel Grand Central group has approval to redevelop its existing namesake hotel at Cavenagh Road into two hotels of 472 rooms and 256 rooms.

In the industrial property segment, Procter & Gamble International Operations Pte Ltd has clinched provisional permission to develop a factory with about 334,760 sq ft in GFA at Biopolis Phase 4.

Ascendas-Citramas has approval for a business park development at Portsdown Road and Ascendas Land has URA’s nod for another business park development at Science Park Drive of about 850,000 sq ft.

Jurong Shipyard bagged approval for a 981,129 sq ft facility at Tuas South Boulevard. Bayshore Green Pte Ltd, a Far East Organization unit, has approval to build a 183-unit condominium and 23 strata terrace houses on Telok Kurau Road.

Macly Equity Pte Ltd won approval for a 274-unit condo on Lorong 28 Geylang. Developers of several sites sold at Government Land Sale tenders last year won the URA’s provisional permission to develop these sites – at Hougang Avenue 7, Woodgrove Avenue, Punggol Central, Pasir Ris Drive 3/4.

Ho Bee and IOI also clinched provisional permission in Q1 for its 302-unit condo on the Pinnacle Collection site at Sentosa Cove.

Wing Tai unit Wincheer Investment bagged approval for its 496-unit Foresque Residences condo at Petir Road which is expected to launch soon.

Irving Place site near MRT station seen drawing bids of up to $270 psf ppr

(SINGAPORE) The Urban Redevelopment Authority (URA) yesterday launched a 0.34 ha industrial site at Irving Place for sale by public tender.

The site, which has a lease of 60 years, is the third of four industrial sites to be released for sale under the confirmed list of the government’s land sales programme for the first half 2011. The last site, at at Woodlands Avenue 12, will be released for sale in May 2011.

The land parcel released yesterday has a maximum gross floor area of about 126,300 sq ft. It is zoned for ‘Business 1 – White’ use, which means that shops and offices can be integrated with the industrial space.

The site is expected to be popular and could draw a top bid in the range of $200 to $270 per square foot per plot ratio (psf ppr), analysts said.

‘The site is expected to draw strong interest from developers, due to its strategic location and the current and expected strength of industrial properties, in terms of leasing and sales interest,’ said Ong Kah Seng, Cushman & Wakefield senior manager for Asia-Pacific research.

The Tai Seng MRT station, which is near the site, will also be a key factor in raising developers’ interest, Mr Ong added. Another point in its favour is the small size, which makes it an affordable investment for many companies.

Analysts noted that demand for industrial properties is now very strong, and is likely to remain healthy, supported by an improvement in the manufacturing sector.

The price index for factories grew by 8.6 per cent quarter-on-quarter in Q1 2011, reflecting an increase from the 6.3 per cent gain in Q4 2010. The rental index for factories also showed a faster pace of growth for the quarter. The rental index climbed 8.3 per cent over Q1 2011 up from an increase of 3.4 per cent in Q4 2010.

‘The active investment market for industrial properties in the first quarter is a good indicator of strong demand for such properties,’ said Li Hiaw Ho, executive director for CBRE Research.

The tender for the site will close at noon on June 22.

AFTER achieving a 25 per cent pick-up in home sales last month, developers are continuing to push out new launches in April. Analysts say, however, that in some cases, sales have been somewhat slower than what the market is accustomed to as price resistance sets in.

Waterfront living: The average price at the 501-unit Hedges Park is $850 psf; prices start from $466,000 for a one-bedder of 484 sq ft

Tripartite Developers sold 130 of 200 units that it has released at the 501-unit Hedges Park, a 99-year leasehold condo at Upper Changi Road. The average price is $850 psf.

In Yishun, Frasers Centrepoint and Far East Organization have sold 202 of the 280 apartments released at Eight Courtyards, a 99-year condo priced at $795 psf on average. Eight Courtyards comprises 654 apartments and two shop units. Previews for both projects began last Friday.

In addition to Eight Courtyards, Far East has sold another 87 units so far this month (including joint venture projects). Last month, it found buyers for a total 205 homes including JV developments such as Waterfront Isle at Bedok Reservoir, which was the group’s top seller for March.

According to Urban Redevelopment Authority’s data on March 2011 developer sales, Far East sold a unit at Boulevard Vue at Cuscaden Walk for $4,308 psf. Apartments in the 33-storey freehold department are about 4,500 sq ft each.

City Developments has sold 35 units at H2O Residences in Sengkang so far this month, after selling 255 units in March. This takes total sales to 290 units. The developer has so far released 350 of the 521 units in the project. The average price is $920-940 psf.

Wing Tai is expected to release soon Foresque Residences, a 99-year condo at Petir Road, next to City Developments’ Tree House, which sold like hot cakes when it was released in April last year at an average price of about $800 psf. Wing Tai clinched its site in October last year for $345 per square foot per plot ratio (psf ppr).

Also on the radar of condo hunters would be Cheung Kong’s 361-unit condo project along Upper Thomson Road, which will include 22 strata terrace houses. Foreigners do not require permission from Land Dealings (Approval) Unit to buy such landed homes, which are within a development with condominium status. Cheung Kong clinched the site at a state tender in late 2009 for $533 psf ppr.

While that would mark a fairly long gap of about 18 months or more from the time Cheung Kong clinched the site to when it launches the project on it, most other developers have been turning around sites much faster over the past year or so, launching projects in about five to eight months of buying 99-year leasehold residential sites at state tenders.

Analysts say that it makes sense to roll out launches as soon as possible given the strong pace of Government Land Sales as well as continual reminders from the authorities that there is plentiful supply. ‘The message seems to be clearer to developers than to consumers,’ quipped a property consultant.

‘The rate of increase has moderated for six consecutive quarters since Q4 2009,’ URA said in its release.

Similarly, the Housing & Development Board’s resale flat price index registered a 1.6 per cent q-on-q gain in the first quarter, the slowest increase in seven quarters.

URA’s sub-index for prices of non-landed private homes posted a q-on-q gain in Q1 2011 of 0.9 per cent for Core Central Region (which includes the prime districts 9, 10 and 11, as well as the financial district and Sentosa Cove) – a smaller hike than the 2.2 per cent q-on-q rise for Q4 2010.

However, the index for Rest of Central Region (which covers places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) increased 2.2 per cent in Q1 over the preceding quarter – a bigger gain than the 1.9 per cent q-on-q gain in Q4 2010. The index for Outside Central Region (covering suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok) posted a 3.1 per cent q-on-q rise in the first three months of 2011, after rising 2.1 per cent q-on-q in Q4 2010.

The combination of more completions (tempering rental expectation), government measures that cap home buying capability, and supply that could be launched from sites (both GLS and en-bloc) sold will continue to weigh on home prices. We expect this to translate into a flattish outlook for mass prices and up to 8 per cent correction for luxury prices this year. – Nomura Singapore analyst Sai Min Chow

Credo Real Estate executive director Ong Teck Hui said: ‘The cooling measures did not affect genuine home buyers as much as they did investors and speculators. And demand for OCR is sustained by genuine buyers.’ Some market watchers suggest there may be some diversion of investment demand from high-end property to lower-priced segments as the cooling measures stretched budgets.

However, some analysts point out that the rate of q-on-q price increases for OCR had moderated in Q3 and Q4 last year before rising again in Q1. And the Q1 flash estimate for the region reflected a year-on-year appreciation of 13.6 per cent; this figure has been easing since peaking at 36.1 per cent in Q2 last year.

CB Richard Ellis executive director Li Hiaw Ho attributes the 3.1 per cent rise in the Q1 flash estimate for OCR to projects like Waterfront Isle along Bedok Reservoir, The Lakefront Residences near Jurong Lake, and The Tennery in Bukit Panjang which registered strong take-up at median prices (in the first two months of this year) of about $990 psf, $1,050 psf and $1,200 psf respectively. ‘These projects attracted home buyers mainly because of their proximity to an MRT station,’ Mr Li said.

He attributes the 2.2 per cent appreciation in the RCR’s price index to Spottiswoode 18 and The Cape – both transacting at a median price of about $2,000 psf – as well as projects with small-format units like Palmera East ($1,225 psf).

URA said that as at end-2010, there were about 33,000 yet-to-be-sold private homes in uncompleted projects with planning approval – of which 40 per cent is in OCR. In addition, there were 1,500 executive condominium units (a hybrid of public and private housing) that were still unsold.

The above supply figures do not take into account new sites that were recently sold (which can generate about 8,100 units) or which will be made available for development through the confirmed list of the Government Land Sales (GLS) Programme in H1 2011 (which can generate about 5,360 units). Additional supply may also come from private land sources, such as en bloc sales.

Nomura Singapore analyst Sai Min Chow said: ‘The combination of more completions (tempering rental expectation), government measures that cap home buying capability, and supply that could be launched from sites (both GLS and en-bloc) sold will continue to weigh on home prices. We expect this to translate into a flattish outlook for mass prices and up to 8 per cent correction for luxury prices this year.

Colliers International, however, predicts that overall private home prices will rise by up to 8 per cent for the whole of this year.

Knight Frank chairman Tan Tiong Cheng said: ‘Certainly the cooling measures are working. If developers’ sales continue to come off, prices may ease. But any price drop may be mitigated in a scenario of rising construction costs amid the increase in oil prices and expected reconstruction efforts in Japan.

‘Interest rates are likely to remain low for the foreseeable future and the fact that HDB resale prices are still strong will continue to create a push for upgrading to the private market.’

HDB yesterday said it will launch about 17,800 build-to-order flats in the first nine months of this year – close to the 17,700 new flats offered for the whole of 2010.

ERA Realty Network and Propnex said cash-over-valuation amounts have stabilised at about $20,000 in Q1 based on transactions handled by their firms.

ERA’s key executive officer Eugene Lim said: ‘We estimate the total HDB resale volume for Q1 to be just below 7,000 deals.’ The figure for Q4 was 6,454.

For the whole of 2011, he predicts HDB’s resale price index to increase about 6-9 per cent with total resale applications of about 28,000-30,000. The index rose 14.1 per cent last year, when there were 32,257 resale applications.

PropNex CEO Mohamed Ismail predicts a 6-8 per cent hike in HDB’s resale price index this year.

As a result, the gap now stands at exactly $1 per square foot (psf) per month.

Figures from CB Richard Ellis (CBRE) show that the average monthly prime suburban rent remained at $29.10 psf in Q1 while that for prime Orchard Road shop space eased 10 cents to $30.10 psf in Q1.

‘It is likely that prime retail rents along Orchard Road would continue to soften in the near to medium term as recent completions along Orchard Road have not been digested and rental re-negotiations at some of these malls are imminent.

‘Prime suburban rents are likely to stabilise, primarily because such malls are defensive assets retailing goods and services for which consumption is relatively inelastic,’ said CBRE’s director of retail services Letty Lee.

CBRE also pointed to mixed signals in the retail leasing market in Q1, alluding to the exit of fashion and accessories store ALT from The Heeren Shops while Knightsbridge announced that it is fully let after securing American casual wear brand Abercrombie & Fitch for a 21,000 sq ft multi-level space.

Knight Frank managing director Danny Yeo highlighted that while food and beverage outlets are doing well generally across Singapore’s malls reflecting a changing lifestyle, it is a somewhat different picture for some fashion outlets.

‘Some mid and upper-priced clothing brands have opened multiple stores along Orchard Road and this has led to some cannibalisation. On the other hand, these brands are unwilling to set up shop in suburban malls – except for a few strategically located shopping centres – as they still feel their shoppers would be more inclined to buy their fashion apparel in the Orchard Road area.

‘It remains to be seen whether these brands will be willing to go into the new suburban malls that will open in about three years on sites sold at Government Land Sale tenders such as in Jurong East, Bedok and Punggol Central/Walk.’

CBRE’s analysis showed that the number of caveats lodged for the purchase of retail space fell from 156 in Q4 last year to 80 in Q1 2011 (up to the first week of March), although more caveats for the first quarter would be lodged in coming weeks.

Nonetheless, the tally so far for Q1 has surpassed the 75 for Q1 last year.