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07 December 2012

7th December, Friday




Top bid for Punggol EC site beats expectations

Source: Business Times

Punggol’s latest executive condominium (EC) site drew a record bid of $350.87 per sq ft per plot ratio (psf ppr) or $162.1 million for EC developments in the area.

Submitted by Sing Holdings Ltd, the top bid exceeded market expectations and it was also about $13.18 million or 8 per cent higher than the second highest offer of $322.34 psf ppr from JBE Holdings.

The site, located at the junction of Punggol Field Walk and Punggol East, received a total of seven bids from seasoned developers including Frasers Centrepoint unit FCL Place Pte Ltd ($311.14 psf ppr) and Chip Eng Seng's CEL Property ($300.44 psf ppr).

Property consultants Business Times spoke to were surprised at the high bids offered for the site considering it is located away from Punggol MRT station and the town centre.

According to an analyst, this better than expected results could be due to a general upbeat sentiment among developers. "Optimism in the EC sales market has led to increased interest in EC sites among developers and a willingness to bid more enthusiastically for them."

The 99-year leasehold site, which sits on 153,999 sq ft of land and had a maximum gross floor area of about 461,997 sq ft, is expected to yield 435 units. According to Sing Holdings, they plan to develop six blocks of 17-storey buildings, complete with full condominium facilities.


Links to the story:$162,1m-top-bid-for-Punggol-EC-site



Big fall in property prices unlikely: report

Source: Business Times

It would take an interest rate shock, poor GDP growth, or both, to bring down private property prices here noticeably over the next five years, a study said.

The report forecast that prices will rise by about 8 per cent by the end of 2017, based on the central scenario from its modelling. The report also said that not all of the government's cooling measures have been effective in bringing down prices, even if they have dampened transactions temporarily.

Prices will only correct marginally by 2017, if the government pushes out the supply of property as aggressively as it has over the last three years through its Government Land Sales programme.

"However, if this scenario coincides with a meaningful GDP or interest rate shock, prices would obviously fall much more," the report said.

The report defines a GDP shock as a scenario where output expands by a total of 5 per cent over the next five years, and assuming that loans and the Straits Times Index grow at the same pace. Property prices will drop 16 per cent under this scenario.

Describing such a development as "unlikely" but "not impossible", the report predicted that GDP will shrink by more than 9 per cent in the scenario of a full-blown eurozone break-up.

But if nominal output can grow by 7 per cent each year, with the same assumptions, prices will surge 23 per cent by 2017.

As for interest rates, the report expects prices to fall a cumulative 14 per cent between 2013 and 2017 if the Singapore Interbank Offered Rate rises to 7 per cent in that time.


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Prime office rentals at basement prices, for now

Source: Business Times

The best office space in town currently commands just a shade more rental than the rest. But this won't last.

The rental gap between Grade A offices and Grade B office space islandwide has narrowed this year. Rents in older buildings at prime locations have held up as their occupancy levels remain stubbornly high. This is expected to change next year when tenants move into new developments and more space emerges in older buildings.

The average monthly rental value in its Grade A basket - which covers the best-quality buildings in Raffles Place, Marina Bay and Marina Centre - is likely to end the year at about $9.51 per sq ft (psf), from $11 psf in 4Q last year. This reflects a full-year drop of 13.5 per cent.

On the other hand, the rent decline for Grade B offices islandwide - which refer to older, smaller or lower-specification office blocks - will be much smaller, at about 2.3 per cent this year. The average monthly rent is expected to dip from $7.34 psf in 4Q 2011 to $7.17 psf this quarter.

The resulting $2.34 psf rent difference between Grade A and Grade B offices currently is much smaller than a $3.66 psf gap a year ago.

Looking ahead, things may change as Grade A space finds support while competition and second-hand space increase downward pressure on Grade B areas.

Analysts say a crucial test will be how long Overseas Union Enterprise (OUE), the owner of 6 Shenton Way, takes to fill up the 440,000 sq ft which DBS vacated when it moved to Marina Bay Financial Centre (MBFC) Tower 3 between June and October this year.

Meanwhile, rents for Singapore's CBD Grade A offices look attractive and are believed to be nearing their bottom. Over the next 12 months, it is estimated that Grade A rents will be flat, averaging $9.50 psf in 4Q 2013, while Grade B rents could drop by 5-10 per cent to as low as $6.45 psf.


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The Index at Robinson Rd renamed SBF Center

Source: Business Times

The Index at Robinson Road has been renamed the SBF Center, after the Singapore Business Federation (SBF) was announced as a major occupier at the development Thursday.

The partnership between SBF and Far East Organization will see the SBF's staff of around 60 move into the building when it is ready in 2016.

SBF currently takes up about 20,000 sq ft of space at Keppel Towers, also in Tanjong Pagar, and is "likely" to take up the same or more at the SBF Center, which has a gross floor area of about 353,000 sq ft.

The specific space that SBF will take in the building, as well as whether it will buy or lease its premises, are still being discussed.

The SBF Center will have 197 offices available for sale. They range in size from 592 sq ft to 1,442 sq ft for the 192 smaller strata units, to 10,549 sq ft for five floor plate offices. There are also 48 medical suites of between 614 and 1,345 sq ft up for sale.

Prices start from $2,400 per sq ft (psf) for the offices and $3,500 psf for the medical suites at the 99-year-leasehold site.


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Plaza Singapura gets new wing and Cold Storage

Source: Business Times

Plaza Singapura has taken on a new look and new tenants, now that it has expanded into the space between it and The Atrium@Orchard.

The $150 million, 21-month-long makeover fills up what used to be a gap between the two buildings, bringing Plaza Singapura's net lettable area to 629,000 sq ft, up some 25 per cent.

More than 90 per cent of the space in the new wing has been leased out, and 80 per cent of these businesses are already in operation.

The new wing will have about 80 outlets, bringing the mall's total number of shops to 320.

Some of these businesses are new to Singapore, such as Japanese eatery Tsukada Nojo and apparel label Suit Select. Swiss watchmaker Oris has opened its first flagship store in the mall; another newcomer is buffet restaurant 1 Market by Chef Wan, in a maiden restaurant tie-up between the Malaysian celebrity chef and Food Junction.


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Industrial rents may fall 7% to 10%: DBS Vickers

Source: Today

The Republic's industrial sector is near a tipping point, and rents are expected to decline 7 to 10 per cent over the next two years on rising vacancy rates, DBS Vickers said in a research report Thursday.

Lower completion of new industrial space over the last few years had resulted in record low vacancy levels and a strong surge in industrial capital values and rents since the start of this year.

However, close to 49.7 million sq ft of industrial space under construction now will be completed over next year to 2015, which represents more than twice the annual supply over the last decade.

"As operating conditions get progressively tougher in the coming quarters, we believe that industrial landlords will likely see lower retention rates," it said, forecasting vacancy rates to rise by 4 to 5 percentage points over the two years.


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