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25 September 2012

25th September, Tuesday




1,664 applications for 394 Heron Bay EC units

Source: The Straits Times

The Heron Bay executive condominium (EC) development has attracted 1,664 applications for its 394 units - one of the best responses for a number of years. The interest in the project in Upper Serangoon View meant it was 4.2 times oversubscribed by the time applications closed on Sunday.

A ballot in about two weeks will sort out the lucky ones, who can start selecting their units to buy from 26 October.

It has attracted attention for its lavish facilities with some ground floor units being able to accommodate a jacuzzi-cum-pool of up to 6m in length or a garden pond. Pricier household appliances and a year's worth of free fibre broadband service are also included and there will be a sea sports recreational centre with kayaks and tandem bicycles. Dual-key units that allow for multi-generational living are also being built.

The project is also the first EC development to have five-room units, including for penthouses.

Being pitched as a luxury EC could have drawn the strong interest, said Mr Lee Sze Teck, Dennis Wee Group's senior manager of training, research and consultancy. "The developer chose a niche that separates them from other ECs... The units are also larger," he added.

Another property consultant who declined to be named pointed out that the high subscription rate could be due to the relatively small size of the project; ECs launched since 2010 have had 528 units on average.


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Central office rents down, fringe areas holding firm

Source: Business Times

A two-speed movement in office rentals in Singapore's Central Business District and in the CBD-fringe areas has emerged, going by the third quarter office rental figures from a consultancy.

In CBD locations such as Marina Bay and Shenton Way, gross average monthly rentals fell roughly 4 per cent or more in 3Q over the preceding quarter.

Further out, in addresses such as Marina Centre (including Suntec City and Millennia and Centennial towers), North Bridge Road/Beach Road, Bras Basah and Orchard Road, rents held pretty firm.

This dual-speed trend is likely to continue for the next six to 12 months, predicts the consultancy.

One reason is that the fringe locations have a more diversified tenant profile; this is unlike the tenant profile in Raffles Place and Marina Bay, where more than half the occupiers are in banking and finance, the sector feeling the most heat from the ongoing debt crisis in Europe.

Another reason is that the supply of new offices is much tighter in the fringe areas than in the CBD.

An analyst reckons the net increase in office take-up for the second-half of the year will be lower than in the first half.

Based on Urban Redevelopment Authority's figures, the net increase in islandwide office space demand was 570,487 sq ft for 1Q 2012, and 355,209 sq ft for 2Q. The analyst projects around 323,000 sq ft for 3Q and 258,000 sq ft in 4Q - totalling around 1.5 million sq ft for the full year.

This would be a drop from last year's 2.3 million sq ft net increase in office take-up.

New office completion is projected to rise from around 1.7 million sq ft this year to 2.4 million sq ft next year. One analyst says: "Assuming the global economy keeps going in the direction it has been going - that is, more quantitative easing to try and fix economic issues - we can expect rental levels to be fairly flat and demand to be average next year. A lot will depend on what happens in Europe."


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Speculation rising in commercial property

Source: The Straits Times

Speculation seems rife in the strata- titled commercial and industrial property sectors with many new units being held for barely three months before they are flipped.

Commercial units launched this year are being held for only an average of 60 days before being sold - a huge drop from 2010 when owners kept them for about 440 days.

Similarly, new strata-titled industrial units have been held for just 78 days this year, down from 461 days in 2010, according to an analysis of new sale caveats by Dennis Wee Group (DWG).

The shortest time for which a strata unit was held before being sold was just four days - with the buyer likely to have assigned his option to another investor.

Mr Lee Sze Teck, DWG's senior manager of training, research and consultancy, noted that individual investors prefer buying uncompleted commercial or industrial units because the upfront cash amount is lower, since the units are paid for progressively as construction is carried out. This lets them flip the unit more easily, he added.

DWG also found that 198 profitable transactions and 13 unprofitable ones have been made in the industrial property sector from launches since 2010.

Six of the units that ended in the red were from Harvest @ Woodlands in Woodlands Industrial Park. One unit in the development lost $42,700. But the 60-year leasehold project also lodged 44 profitable transactions, with one gaining $376,000 in capital value.

Net profits for the overall strata-titled industrial market ranged from $2,700 to $689,000 while losses came in at between $8,600 and $322,000 from 2010 till now, DWG said.

Projects launched in 2010 also seem to have attained the best returns, the report added.

"This is probably because they enjoy the first mover advantage and profited from spillover demand because of regulations in the residential market in 2011 and 2012," Mr Lee said. He was referring to the slew of cooling measures that have diverted residential investors to alternative segments.

Mr Lee also noted that developers have shrunk the size of some strata-titled commercial units to keep the investment quantum affordable.

"This is particularly striking in the strata shop units where the smallest unit is only 5 sq m or 54 sq ft," Mr Lee added. "One cannot help but think which trade is suited to operating in a 5 sq m retail unit and yet able to generate enough profits to service the loan."

The upcoming supply of office, retail and industrial space is likely to affect selling prices and rents, which is another concern investors should note, said DWG.

Around 7.1 million sq ft of office space, 5.1 million sq ft of shop space and more than 10 million sq ft of industrial space will be completed in the next few years.

"This supply excludes any potential new launches in the future. This will put a cap on any upside on prices and rents," Mr Lee said.

"Furthermore, the Urban Redevelopment Authority (URA) is clamping down on unauthorised users of industrial space. These users will have to move if they receive a notice from URA. This will increase the supply of industrial space for sale or lease and put downward pressure on prices and rents."


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Investment Sales


Four industrial property parcels up for sale

Source: Business Times

Four buildings - a seven-storey corner terrace building, a five-storey industrial building, a single storey factory and an industrial redevelopment site - go on sale today.

The terrace building at 1 Kaki Bukit Place, with a built-in area of 30,570 sq ft, sits on approximately 11,950 sq ft of land. Its 60-year lease began on Nov 20, 1995, a property consultancy said Monday. The guide price for 1 Kaki Bukit Place is $11.95 million, which works out to approximately $390 psf on the built-up area and $1,000 psf on the land area. It will be sold with vacant possession.

The second building to be sold is the Global Innovation Centre industrial building at 152 Ubi Avenue 4. It sits on 49,187 sq ft of land and has a gross floor area of 98,246 sq ft. The tenure of the property is 30 years, with an option to renew it for another 30 from 1 February 1997. The guide price for the building is $60 million, which works out to $611 psf per plot ratio (ppr). It will also be sold with vacant possession.

The third building, a standard single-storey factory with a mezzanine level along 42 Changi South Street 1, is being sold for a guide price of $11 million, which works out to $215 psf ppr. The building has a gross floor area of 51,204 sq ft and a tenure of 30 years, with an option to renew it for another 30 with effect from 1 July 1996. The current lessee, independent worldwide supplier and manufacturer of high-quality printers Printronix Schweiz GmbH, is exploring a sale and leaseback of the building.

Pak Chong Building at 78 Playfair Road, the fourth building on sale, occupies a freehold site and has a land area of 25,782 sq ft. At a guide price of $36 million, this translates to a land price of $559 psf ppr. The existing development, primarily used for light industrial, is made up of seven units with sizes ranging from 4,768.4 sq ft to 6,835 sq ft.

The tender for Pak Chong Building will close at 3pm on 24 October; 1 Kaki Bukit Place and Global Innovation Centre are available via private treaty, while the deadline for expression of interest in 42 Changi South Street 1 is 2 October.


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International Markets


London luxury home prices up 0.7% in Sept

Source: Business Times

Luxury home prices in central London rose at their fastest rate in three months in September, powered by demand for properties that escape a new higher rate of sales tax, a consultancy said.

The average value of a house or apartment in the UK capital's most expensive neighbourhoods climbed 0.7 per cent from August, according to an index compiled by the London-based broker.

The Government raised sales tax for properties valued at more than £2 million (S$4 million) to 7 per cent from 5 per cent starting in April. The number of homes sold that weren't subject to the higher levy rose by 23 per cent in the third quarter from a year earlier. That lifted prices in the bracket by about 12 per cent.

"London's market performance continues to be aided by overseas buyers, who account for more than 50 per cent of buyers in the £2 million-plus market," the consultancy said.

Russian, Indian, Italian, US and French nationals were the biggest buyers from overseas, the broker said. Foreign buyers accounted for 41 per cent of prime London homes purchased for £1 million or more.

The consultancy compiles the index from its own appraisal values of a sample of properties in the 13 most expensive central London neighbourhoods, such as Belgravia, Mayfair, Kensington and Knightsbridge.


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