Real News‎ > ‎2012‎ > ‎December 2012‎ > ‎

14 December 2012

14th December, Friday




Sembawang EC site draws top bid of $211.9m

Source: Business Times

A 99-year leasehold executive condominium (EC) site at the junction of Sembawang Crescent and Sembawang Drive has received a top bid of $211.9 million, or $323.76 per sq ft per plot ratio (psf ppr).

The top bid came from boutique property developer JBE Holdings, which beat seven other bidders.

An analyst, commenting on the bid, said it reflected the developer's confidence in the attractiveness of ECs in far-flung Sembawang, where another EC, 1 Canberra is located.

"EC sites that are bought at higher prices are expected to be well conceptualised and designed, with special themes to garner buyers' interest," he said. He added: "ECs are, in part, subsidised housing products, so developers are likely to err on the side of caution to reduce controversy by focusing on overall special project themes instead of providing selected luxury units."

Another analyst said the number of bidders could be due to recent robust EC sales. Furthermore, some developers are interested in this site because of a lack of new EC launches in Sembawang, resulting in potential pent-up demand," he said.

He added that the developer could aim to launch the project at between $720 and $730 psf.

The 233,775 sq ft site has maximum gross floor area of 654,569 sq ft and can yield about 650 units.


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Asia Square clinches year's biggest CBD office lease

Source: Business Times

In the biggest CBD office leasing deal so far this year, German financial services provider Allianz Group is leasing around 90,000 sq ft at Asia Square Tower 2.

The space is on levels 13, 14 and 15 of the 46-storey building, but it is possible that Allianz may also take up the 12th floor, which would expand its footprint in the building to 120,000 sq ft.

Allianz is expected to finalise the size of its space at Asia Square by the end of January next year.

The latest leasing transaction is also the first for Asia Square Tower 2, which is slated to receive Temporary Occupation Permit (TOP) in 3Q next year. The tower will have 790,000 sq ft net lettable area of Grade A offices on levels 6-31. A 305-room Westin hotel will occupy levels 32-46. Retail space will fill the first two levels.

Allianz will move into Asia Square at end-2013. This will be a consolidation for the group, which will exit two existing locations - Centennial Tower and Prudential Tower. Its space at Asia Square will also allow for some expansion.


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Industrialists groan as rents grow heavier

Source: Business Times

The hefty wage bill is now unavoidable. And the surging industrial property market has made it a perfect storm of high operational costs for industrialists here, market watchers say.

Prices for industrial property have risen 27 per cent in the first nine months of the year, latest data from the Urban Redevelopment Authority showed, as investors seek alternatives to residential properties.

And rents, while not quite keeping pace, have still gained a significant 6 per cent in the same period.

Rental costs were highlighted as one of the three most important factors of business costs, along with labour and energy expenses, in a study by Leong Kaiwen, assistant professor of economics at Nanyang Technological University.

His research, presented at the Singapore Business Federation Small and Medium Enterprise Convention, also showed that profits for 66 per cent of the 90 respondents surveyed had fallen "significantly" between 2008 and 2011. This figure shot up to 80 per cent when limited to manufacturing, wholesale and retail trade, and transportation companies.

With the economy slowing and labour costs expected to go up further, the squeeze on companies could worsen.

Asst Prof Leong's study showed that occupancy rates remained stable despite two notable hikes in rental in recent years. But this did not mean that manufacturers were doing well, he said. "A lot of them were actually making net losses, they were not actually profitable."

Minister for Trade and Industry Lim Hng Kiang told Parliament last month that the government will release sufficient land through the Industrial Government Land Sales programme to meet the need of industrialists and moderate prices and rentals.

The ministry has also started to release smaller land parcels with shorter tenures for small and medium enterprises that require facilities at more affordable prices, he said.


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Benefiting by better use of industrial space

Source: Business Times

Various options have been tossed on the table to combat rising industrial property prices.

Companies, for example, could make better use of their land space.

For example, Soon Hock Container & Warehousing is building a container depot on the rooftop of its new hub in Tuas instead of taking up the entire ground level just to store the containers; this leaves space available for warehousing purposes.

The government's introduction of shorter, 30-year leases has indeed helped to ease some cost pressures, some analysts said.

A review of what constitutes correct usage under current zoning requirements has also been suggested by some analysts. A lot of manufacturing services, such as trading or administrative support, do not qualify as authorised users of industrial property under current regulations.

Some companies have called for a reversal of industrial property divestments by JTC Corporation to private developers.

MTI said JTC made the decision to exit the generic multi-storey, multiple-user factory space segment in 2005 as its tenants were paying lower rents in a competitive market, "which was inequitable to non-JTC tenants".

The spokesman added that the government understands there may be concern about industrial real estate investment trusts' influence on rentals.

"Industrial Reits form part of the competitive rental market where no single player should have the market power to influence rentals significantly. The government will not hesitate to intervene if we see evidence of collusion or abuse of market dominance by the Reits."

NTU's Assistant Professor Leong Kaiwen said: "From 100 per cent of focus groups I have conducted, everybody has said that JTC is the best landlord compared with the real estate investment trusts. "So they really want the government to consider this and, if possible, go back to the old model."


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