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19 December 2012

19th December, Wednesday




Choice Queenstown site and Upper Changi plot for sale

Source: The Straits Times

Two sites that could yield 1,300 homes were released by the Government Tuesday. One is a choice site next to Queenstown MRT station in Commonwealth Avenue that is tipped to fetch more than $500 million. The other is a plot near Tanah Merah MRT station that was made available on the reserve list.

The 12,100 sq m Queenstown plot can accommodate 700 homes and is expected to attract keen interest from developers due to its central location. Queenstown homes are in demand. Earlier this year, a Housing Board (HDB) resale flat there became the first unit to breach the $1 million mark, while new private launches in and around the area can go for about $1,500 per sq ft (psf).

Experts say the 99-year leasehold site is likely to be "heavily contested".

Mr Lee Sze Teck, senior manager of training, research and consultancy at Dennis Wee Group, expects up to 10 bidders with a top offer of between $850 and $900 psf per plot ratio (ppr). That prices the site at between $543 million and $574 million. Demand could come from home-seekers who find private flats in the Alexandra area beyond their budget, he added.

Recent tenders for nearby sites in Alexandra Road and Prince Charles Crescent reflect optimism in the market, indicating that developers will keep chasing well-located sites in the central region, noted another analyst. He expects between five and eight bidders, with a top bid of up to $980 psf ppr - or $625 million.

The other sale site announced Tuesday is a 25,800 sq m plot in New Upper Changi Road that can yield about 600 homes. It was made available for sale on the reserve list by the HDB.

One analyst said that even with the range of plots on the recently announced GLS programme for the first half of next year, the new site will still be triggered as developers want well-located mass-market land.

But developers might temper their bids as they look at better land under the newly announced GLS instead, another analyst said.


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Rents on Orchard Road fringes turning soft

Source: Business Times

Rentals on the fringes of Orchard Road and the city are showing signs of softening, after recording their first dip in five quarters, figures from a consultancy show.

Rents of shops in the City Hall and Marina Centre areas recorded a 3 per cent drop from $21.90 per sq ft (psf) per month in the previous quarter to $21.30 psf/month in 4Q 2012. Rents in the other city fringe areas fell to $14.25 psf/month from $14.60 psf/month in 3Q 2012.

But prime Orchard Road rents held up better, with rentals remaining stable over the past five quarters at $31.60 psf/month. Rents have remained firm as demand continues to be healthy with new-to-market entrants, particularly fast-fashion retailers, taking up space in Orchard Road.

Apart from the Orchard Road area, another area of focus is suburban and downtown core sub-markets that no longer cater purely to low-end type stores but attract new international stores.

By 2013, suburban malls, such as Jem, Westgate, Bedok Mall and Chinatown Point, are expected to be fully operational and will be able to widen their tenant base as the size and spending power of residential catchments increase, underlining the fact that these suburban malls are benefiting from their successful decentralisation across the island, the report added.

With two more suburban malls expected in 2014 - One KM and Seletar Mall - as well as other retail developments, such as Waterway Point, Park Hotel Alexandra and South Beach, slated for completion in 2015, prospects for the suburban market look bright.

While prime suburban rents are expected to remain steady, market analysts sounded a note of caution. "It should be noted that retailers, especially local retailers, still remain cautious. We should not ignore the potential pockets of other retail space being completed in various mixed developments and strata-titled shops as well as 'phantom' retail space (such as those in industrial parks, business parks and warehouses) that are starting to emerge island-wide," an analyst said.


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Office occupancy costs down 17.7%

Source: The Straits Times

The annual cost of taking up office space in Singapore fell 17.7 per cent as of 30 September from a year earlier, a new survey has found. At US$104.66 (S$127.44) per sq ft on average, office occupancy costs here are the 19th-highest in the world.

Hong Kong's Central Business District is the most expensive worldwide, at US$246.30 psf on average, despite experiencing the largest decline in the world, of 17.8 per cent, from a year ago.

While the high prices are driven by limited new supply and tight market conditions, the fall came about as cost-cutting among large financial institutions dramatically lowered prime office occupancy costs in Hong Kong.

Six of the top 10 most expensive office markets are in Asian cities, the survey showed. They include: New Delhi, Tokyo and a second Hong Kong district - West Kowloon. The other two are Beijing's Central Business District and its Finance Street.

The survey tracks occupancy costs for prime office space in 133 markets worldwide. Costs increased in 74 markets, decreased in 37 and remained unchanged in 22.


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Industrial space rents hold steady this year

Source: The Straits Times

Rents for industrial space held firm this year while resale capital values surged despite a weak global economy which dampened the growth of the manufacturing sector in Singapore, a report said.

Average monthly gross rents for first-storey industrial space were unchanged at $2.15 per sq ft (psf) per month, while upper-storey rents held firm at $1.75psf in the fourth quarter of this year.

Business park rents also remained steady at $4.35 psf per month in the fourth quarter and were only 3 per cent below their previous peak in 2008, after a marginal dip of 0.7 per cent in the first half of this year.

Aided by improved demand from the biomedical, engineering, information technology and pharmaceutical sectors, business park rents declined only marginally this year. Sustained leasing activity in existing space also held up the market.

In contrast, capital values of resale industrial space surged, largely driven by investor demand in the current low-interest rate environment and ample liquidity.

Resale prices of first-storey industrial space rose 12 per cent to $622 psf in the fourth quarter compared with a year ago. Purchases by firms also grew strongly, as industrialists bought units for their own use to achieve better control over costs and to escape rent fluctuations.

Next year will see a higher-than-average supply of industrial space in the pipeline. However, against a backdrop of slow but still positive economic growth, industrial rents are expected to hold firm or ease slightly next year.

But price growth is expected to decelerate as prices have already risen 28 to 45 per cent since the last trough in 2009. A yearly average of 9.5 million sq ft of industrial space is expected to be completed between next year and 2016, in line with the yearly average supply of 10 million sq ft over the past 10 years.


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