Real News‎ > ‎2012‎ > ‎June 2012‎ > ‎

23 June 2012

23rd June, Saturday




Fewer tenants + Sky-high prices = Lower rental yields

Source: The Straits Times

Sky-high prices and a plentiful supply of stock have driven rental yields of private homes down to levels not seen for almost 12 years.

Overall gross yields were just 3.8 per cent in March, unchanged from December, according to a property research firm.

Apart from a one-off dip last September, when yields hit 3.7 per cent, rental returns have not been this low since December 2000.

Levels vary across the island. While some mass-market projects are enjoying higher than average yields of 5 per cent or more, there are some inner-city apartment blocks with returns of only 1.9 per cent.

The firm said the huge supply of completed homes expected in the next few years could push yields down even further if demand does not increase in tandem.

But other experts say that while gross yields have been falling, net yields have remained fairly stable as interest rates are at record lows. They add that while rental demand is expected to remain healthy this year, yields might come under pressure in 2014 and 2015 when a record number of homes are due for completion.


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Condo buzz shifts to Jurong and Lakeside

Source: The Straits Times

The wait for new condominiums in Jurong and Lakeside will soon be over, with several new projects on the cards.

It has been a long time coming. The area has not had a condominium launch in more than a year, while suburbs across the island have been abuzz with construction.

That will change in the coming months, as the whole Jurong Lake District is primed to be the biggest commercial hub outside the city centre.

Last month, the tender closed for a residential site in Boon Lay Way that can yield about 600 units. The 99-year-leasehold site is a short walk from the Jurong East MRT station.

Another site, which can host over 820 units, is due to be launched for sale later this year. The plot is near Lakeside MRT station, one stop from Jurong East on the East-West line.

In all, over 2,000 new private homes are expected to be built in the Jurong and Lakeside areas by 2017, consultants estimated.

Higher prices have been achieved in Jurong. Upcoming condos there command nearly $1,000 to $1,200 per sq ft (psf), while 99-year-leasehold condos in Jurong East, Chinese Garden and Lakeside sold for an average of $883 psf.


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Investment Sales


Westvale Condo sold en bloc for $77.5m to Roxy Pacific unit

Source: Business Times

Freehold residential property Westvale Condominium has been sold to RL West Pte Ltd, a subsidiary of Roxy Pacific Holdings Ltd, for $77.5 million, or about $883 per sq ft per plot ratio (psf ppr).

The 62,710 sq ft site, located along Pasir Panjang Road, comprises 32 apartments located in a four-storey walk-up block.

The plot is zoned for residential use under Master Plan 2008, with a gross plot ratio of 1.4, a maximum building height of five storeys, and a potential gross floor area of up to 87,798 sq ft.

A development charge for the plot is expected to be incurred should the new developer decide to utilise the additional balcony space, which constitutes another 10 per cent of gross floor area. This charge would amount to $625,000.


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Several big bungalow deals done of late

Source: Business Times

Several big-ticket bungalow deals have been transacted recently - both in the Good Class Bungalow (GCB) market on mainland Singapore and at Sentosa Cove.

An old two-storey freehold bungalow at White House Park changed hands recently at $24.8 million, which translates to nearly $1,650 per sq ft (psf) on freehold land area of about 15,036 sq ft.

At Jervois Hill, two vacant plots have been transacted in the past few months.

The more recent deal, at $21 million, is for a plot of 15,095 sq ft. Word in the market is that the unit land price of $1,391 psf is low for the area because there is an electrical substation on the site.

The option for the sale of another plot on the street is for $32 million or $2,118 psf but this transaction is said to have a long completion period. If this transaction is completed, it will set a new record for a Good Class Bungalow Area, surpassing the $2,081 psf achieved in July last year for 6 Chatsworth Road, diagonally opposite the Indonesian Embassy.

Over in the upscale waterfront housing locale of Sentosa Cove, an ocean-fronting bungalow along Cove Drive changed hands last month for nearly $22.2 million, which works out to around $2,787 psf on land of 7,963 sq ft.

It is understood that a few bungalow deals are brewing on Treasure Island, and at higher prices than the $1,766 psf fetched for a transaction about two months ago.

That deal, which involved a bungalow sitting on land of 8,496 sq ft, sold for $15 million.


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Rogue agents get warning letters

Source: The Straits Times

A crackdown is under way on property agents who lodge misleading advertisements for industrial sites.

More than 20 warning letters have been issued to agents this year and some unauthorised uses are being investigated.

The move - a joint effort between the Council for Estate Agencies (CEA) and the Urban Redevelopment Authority (URA) - is in line with the Government's push to weed out rogue tenants and landlords in industrial areas.

Businesses such as shops and tuition centres have been using industrial sites, which have lower rents than commercial premises, but they have been accused of pushing up costs as they compete for space with genuine industrialists.

The CEA has investigated 32 property agents this year who allegedly marketed industrial units wrongfully.

Some cases are pending, but letters of advice have been handed to 23 agents who 'did not check the classification of the premise use and wrongly advertised industrial units at various developments such as Oxley Bizhub, One Commonwealth and One Pemimpin', CEA's deputy director for licensing Yeap Soon Teck told The Straits Times.

Similarly, the URA said it has investigated some users at places like The Alexcier in Alexandra Road, First Centre in Serangoon North and Midview City in Sin Ming Lane and given them time to stop the unauthorised use.

On Wednesday, the agencies issued a joint circular to remind agents and landlords that it is their responsibility to give accurate information to potential buyers. It stated that properties slated for industrial use should not be marketed for 'business' - which can be misinterpreted as offices - or 'offices', which are not allowed in such buildings.

The onus is also on developers to ensure accurate information on marketing materials and that appointed agents do not mislead buyers.

Misleading marketing of units will breach the CEA's Code of Ethics and Professional Client Care, which can lead to fines of up to $75,000 and/or suspension or licence revocation.

The URA said that if the unauthorised use does not cease within a stipulated timeframe, the penalty for these users could be a fine of up to $200,000 or a one-year jail term or both.

URA rules stipulate that at least 60 per cent of the total floor area of an industrial site has to be used for core industrial activities like warehousing and production. The remaining space can be taken up by some non-industrial uses like ancillary offices and staff canteens.


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