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19 July 2012

19th July, Thursday




URA to launch tender for reserve list site at Farrer Road

Source: Business Times

A 99-year leasehold private housing site at Farrer Road, near Botanic Garden MRT Station, has been triggered for release from the government's reserve list at $28.888 million, or $699 per sq ft per plot ratio (psf ppr).

According to the Urban Redevelopment Authority (URA), the 0.27-hectare site can be developed into about 41,323 sq ft of gross floor area, which is sufficient for about 40 new homes.

At a URA tender that closed last month, a 99-year private housing site at Farrer Drive near Farrer Road MRT Station drew six bids. The top bid of $1,048.52 psf ppr from a unit of mainboard-listed Singapore Land marked a new high for 99-year private housing land offered at a state tender in recent years.

Said Lee Sze Teck, senior manager of research and consultancy at DWG: "The lower trigger price is probably influenced by lacklustre sales at some centrally located projects recently, renewed concerns in Europe and the prospect of more sites being released in the second half of the year.

"Furthermore, there remains unsold units in the nearby projects. With more buyers looking to buy from older project launches, the developer who triggered the site for sale knows that they have to be competitive in their pricing to win over buyers in this current market."

That said, the relatively lower quantum will allow smaller developers to enter the market, noted Mr Lee, who estimated that there could be up to 10 bidders for the site, with an estimated top bid in the range of $950-$1,000 psf ppr.

Another analyst expects the winning bid to be in the range of $990 to $1,000 psf ppr, with units expected to sell in the range of $1,800 to $1,900 psf. He expects strong competition with about 10 to 15 bidders for the site due to the premium location and low land price quantum of around $40 million.

URA will launch the public tender for the site in about two weeks. The launch date will be announced later. The tender period for the land parcel will be about five weeks.


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More homebuyers returning to private residential resale market

Source: Channelnewsasia

More homebuyers are returning to the private residential resale market as it is seen to offer better value compared to new projects launched by developers.

In fact, the gap in median prices of new and resale transactions has also narrowed.

That's according to real estate agency Dennis Wee Group (DWG).

In a report, DWG said the caveats lodged in the secondary market climbed about 33 per cent in the second quarter in 2012, against the previous quarter.

In particular, the central region saw the largest increase in resale transactions at 37.4 per cent, followed by the North Region at 32.7 per cent and the West Region at 30.9 per cent.

The real estate agency said the revival in interest in the resale market has boosted prices of private homes in the second quarter.

DWG's report showed that the gap in median prices of new and resale transactions has narrowed from 17 per cent in 1Q 2012 to 13 per cent in 2Q 2012.

The median prices of private residential units in the resale market rose 4.6 per cent to S$1,026 psf in 2Q 2012 from S$981 psf in 1Q 2012.

Meanwhile, the median prices of new projects on an islandwide basis were flat in 2Q 2012 at S$1,160 psf.

DWG said the number of transactions by foreigners rose in 2Q 2012 as the buyers have accepted the Additional Buyer's Stamp Duty as a tax and are selectively picking up properties in Singapore.

445 private residential units were sold to foreigners in 2Q, up 26.8 per cent on-quarter.

Moving forward, DWG said developers are likely to launch more projects before the lunar seventh month which runs from 17 August to 15 September.


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Strata commercial properties see record sales

Source: Business Times

Transaction sales of strata commercial properties reached record highs for the first six months of this year and may remain at such levels, according to a property consultancy.

It noted in a report that 669 strata shops and 632 strata offices were transacted in the first half of the year, representing an all-time high since 1995. Such strong sales came from the primary market, which accounted for 66 and 72 per cent of all transactions for strata shops and office respectively.

Strata shop sales this year were concentrated at the central region. Accordingly, the average unit price in the primary market in the first half of this year was 24 per cent higher than that last year, at $3,273 per sq ft (psf), due to higher rates in the central region. In the secondary market, average unit price rose 23 per cent in the first half of this year compared to the last, to reach $2,825 psf.

Over at the strata office market, primary market sales transactions saw a nineteen-fold increase from last year to $814.9 million and a 56 per cent increase in the average unit price to $2,129 psf, due to an increased number of new strata office projects in the central business district (CBD) and the availability of smaller-sized office units with lower price quantums.

However, weakening office rentals and increasing shadow space in the office sector led to a 24 per cent decrease in sales activity in the strata office secondary market and lower average unit prices of $1,706 psf compared to last year. Companies seeking to lock in favourable prices comprise the bulk of buyers (56 per cent) in the office space market.

While transaction volumes of shophouses fell 25 per cent from last year to 132 units, the overall value of total shophouse sales rose 4 per cent to $674.6 million, with unit prices increasing by 34 per cent to $2,804 psf, another record high since 1995. The report noted that the decrease in transaction volume was due to the steep increase in prices. Nonetheless, strata shophouses are viewed as attractive investment assets, with cash-rich investors purchasing multiple units in single transactions.

The report noted that commercial sales are expected to remain fairly active for the rest of the year as alternatives to the residential sector. Transaction activity and prices are thus expected to increase, especially for the strata shop and shophouse segments, with higher yields offered by commercial properties appealing to buyers looking for higher returns. In particular, well-located strata shops and shophouses will remain popular as they offer regular income and are limited in supply.

However, investors are expected to be cautious given the receding rents in the office sector despite increased transaction sales of strata offices in the first half. Nevertheless, the 7.68 million sq ft of new space expected in the next five years will offer opportunities for owner occupiers to transact at favourable rates.


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Investment Sales


Chang Charn Rd sites for sale with $45m tag

Source: Business Times

Two adjacent plots along Chang Charn Road in the Leng Kee area have been put up for sale, with an asking price of about $45 million.

The first, at 8 Chang Charn Road, a quality six-storey building, has a built-up area of 34,907 sq ft and sits on a 12,519 sq ft site. It comprises a showroom, warehouse, and conference room on the first storey and mezzanine; reception, offices, pantry, and warehouse space on the second to fifth storeys; and a multiple purpose hall and offices on the sixth storey.

The adjoining redevelopment site at 10 Chang Charn Road consists of a single-storey detached factory and a two-storey office block in front. The 8,762 sq ft site has a plot ratio of 2.5, and the existing built-up area is 5,274 sq ft.

The tenure for the property, which is currently the corporate headquarters for the owners and is fully occupied, is 99 years, of which there is 45 years remaining. Both plots are zoned Business 1.


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Robinson Point said to be changing hands

Source: Business Times

Robinson Point is said to be changing hands in a deal that values the 21-storey freehold CBD office block at $284 million or about $2,132 per sq ft based on its existing net lettable area.

The transaction is being effected through a sale of shares in the company which owns Robinson Point; a real estate fund managed by US-based AEW is understood to be selling all the shares in the company to a small group of Asian investors.

Robinson Point, which is about 15 years old, has a gross floor area which reflects an 11.2 plot ratio, which means the property has been developed to its maximum potential under Urban Redevelopment Authority's Master Plan 2008.

Robinson Point's net lettable area is 133,214 sq ft, a substantial chunk of which is leased to various units of CapitaLand Group.


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International Markets


China home prices back up on interest rate cuts

Source: Business Times

China's new home prices last month rose in the most number of cities tracked by the government in 11 months as buyer sentiment improved after the central bank cut interest rates.

Prices climbed in 25 cities out of the 70 that the government looks at, the most since July last year. Prices fell in 21 from a month earlier, according to data released by the statistics bureau Wednesday. The eastern city of Hangzhou led the gain with a 0.6 per cent jump from May, while major cities Beijing and Shanghai recorded gains of as much as 0.3 per cent. Home prices were unchanged from May in 24 cities.

China's home sales rose the most this year in June, increasing 41 per cent from May to 531.3 billion yuan (S$105 billion), according to the statistics bureau data.


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