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20 December 2012

20th December, Thursday




Expected to still sell: ECs benefit from bigger buyer pool

Source: The Straits Times

The many executive condominiums (ECs) heading to the market can be absorbed thanks to the expanded pool of buyers generated by changes to the income ceiling, a report said.

The Government increased the monthly household income ceiling from $10,000 to $12,000 in August last year so it is unlikely an oversupply will arise.

Figures from the 2010 Census show how this policy change has expanded the buying pool. There were 72,065 households in Housing Board (HDB) four-room flats or larger earning between $8,000 and $10,000 in 2010. There were around 46,000 households in HDB four-room flats or larger that earned between $10,000 and $12,000.

The increased income ceiling means these 46,000 households are also eligible for ECs. This enlarged pool of buyers can soak up the supply from the string of new launches since the EC segment was reintroduced in 2010, say experts.

The report also noted that there is no price difference between an EC and condo in the resale market if both have similar location and quality attributes. That makes economic sense for buyers to get a new EC as the price gap will close when the initial restrictions are lifted five years after completion.

But competition for EC sites has become more aggressive recently.

If land costs keep rising, units in new EC projects will be more expensive, although mortgages will remain affordable.

"Even if prices were to rise 20 per cent from the current median of $850,000, the cash top-up per month is $480 for a family with monthly household income of $11,000, assuming the rest of the mortgage repayment comes from CPF contribution," the report said.

The mortgage repayment only becomes more taxing for units priced above $1.45 million if interest rates rise to 4 per cent eventually.


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Two commercial sites in Jurong, Cecil St released

Source: Business Times

The government has released the final two commercial sites for the second half 2012 Government Land Sales (GLS) programme.

One is a confirmed list site near Jurong East MRT Station that has been launched for sale by public tender, while the other is a plot at Cecil Street/Telok Ayer Street that is available for application for sale under the reserve list.

The Urban Redevelopment Authority (URA) said Wednesday that the bulk of the space developed on both sites has to be set aside for office use. In addition, it is allowing strata sub-division of offices for the Jurong plot but not for the Cecil Street site.

On Venture Avenue in Jurong East, URA's 1.1-hectare confirmed list plot will be the site of the third major office development in the Jurong Gateway location to be released since 2010. This is part of URA's plan to create the biggest commercial hub outside the CBD.

The latest site can yield a 25-storey project with a maximum gross floor area of 694,939 sq ft, of which at least 90 per cent must be for office use.

Property consultants expect the site to draw five to eight bids and the winning bid to be $700-$800 per sq ft per plot ratio (psf ppr).

However, market watchers expect moderate demand for the subject site owing to its less-than-optimum location and high quantum for commercial space.

URA is not allowing strata sub-division of individual units within the future project at the Cecil Street site.

Noting that the site is zoned for commercial and open space use, URA said a single owner can better integrate and manage the future commercial building with the public open space fronting the prominent Cecil Street/Telok Ayer Street junction.

The 0.8-ha plot, which can generate a 50-storey development with a maximum GFA of 830,510 sq ft, is situated just across the road from SBF Center (formerly known as The Index), which was sold in September 2011 for $882 psf ppr.

Given that the SBF Center tender attracted three bidders, one analyst expects three to six parties to vie for the subject site, with the top bid of between $800 and $1,000 psf ppr, if the site gets triggered for sale.


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Tighter building rules on sites for industrial use

Source: Business Times

Tighter development measures are being introduced for certain industrial sites, even as the government rolls out more land in an attempt to moderate industrial land prices.

Specifically, successful bidders of selected sites will be required to build a minimum number of large factory units to cater to the needs of SMEs who need larger industrial spaces, said the Ministry of Trade and Industry (MTI).

This announcement came on the back of MTI announcing that a total of 22 sites - comprising 13 sites on the confirmed list and nine sites on the reserve list - with total site area of 24.84 hectares has been set aside for industrialists.

This is comparable to the 19 sites - 16 sites on the confirmed list and three on the reserve list which totalled 23.72 ha - released in the second half of this year. In 2012, a total of 47.69 ha of industrial land was released; this is about 1.4 times higher than that released last year.

The conditions encourage the development of industrial spaces that are more useful for genuine industrial space users, said an analyst. "Interestingly, all the 13 sites on the confirmed list are zoned B2. This further shows the government's intention to offer more supply for manufacturers and the heavier users of industrial space," he said.

The driving reason for this could lie in the fact that the Tuas West Extension and the Thomson Line station locations are confirmed, making it the opportune time to encourage further development of the outlying areas (in which all the sites on the confirmed list are located), said another analyst.

Of the 13 plots on the confirmed list, eight are less than 1.0 ha; six small sites (each less than 0.5 ha with a plot ratio of 1.0 and land tenure of 22 years) in Tuas South have also been released.

Lee Sze Teck, senior manager, training, research and consultancy, at DWG pointed out that the fall in supply of small plots on the confirmed list from 10 in 2H 2012 to six in 1H 2013 might suggest that the government is scaling back on supply of small sites which are especially targeted at small and medium-sized enterprises.

"The strong Singapore dollar and higher business costs have resulted in some industrialists moving their manufacturing operations to (Malaysia's) Iskandar region. Weighing all these factors, the government probably decided that there is lesser need to sell industrial land to SMEs. But should there be a need, SMEs can apply to trigger the sites on the reserve list for development," he said.


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Cambridge Trust in joint venture to buy building in biomed park

Source: The Straits Times

Cambridge Industrial Trust (CIT) has teamed up with Oxley Global to acquire an industrial building in the JTC Tuas Biomedical Park for $15 million.

CIT's share is $9 million or a 60 per cent stake in the joint venture, with the other 40 per cent from Oxley Global, a unit of a private investment company.

The building is at Tuas South Avenue 4, in an area designated for the biomedical industry.

It will be CIT's maiden property within the designated biomedical cluster. The building is a purpose-built three-story warehouse, manufacturing and distribution facility, with a gross floor area of 316,000 sq ft and a land area of 643,000 sq ft.

After the deal is completed, the building will be leased out for 25 years to Agila Specialties Global, a division of global pharmaceutical company Strides Arcolab.


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