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24 January 2013

24th January, Thursday




No U-turn as clock ticks for developers

Source: Business Times

The authorities are standing firm on the rule that all units in projects with any foreign ownership must be sold within two years of the project receiving its temporary occupation permit (TOP), even as developers lobby the government to extend the timeframe.

The ministry has received 17 applications to extend the disposal period since 2011, of which six developers have paid extension charges.

Projects with less than a year to move their units include Wheelock Properties' Scotts Square which has 71 units unsold, Lafe Development's Residences at Emerald Hill which has 21 units unsold, and Keppel Land's Reflections at Keppel Bay, which has 243 units unsold as at December last year.

SC Global Development's 66-unit The Marq on Paterson Hill, 241-unit Hilltops, and 88-unit Martin No 38 too feature on the list.

That being said, the developer - the first to announce that it would have to pay $5.5 million in extension charges for The Marq - may potentially sidestep some of these charges, following a successful privatisation bid by chairman and chief executive Simon Cheong.

That Mr Cheong is now able to privatise the company means he can potentially apply to the Singapore Land Authority (SLA) for an exemption.

If units are not sold within the stipulated two-year period, foreign developers have to fork out pro-rated extension charges based on the proportion of unsold units, of 8 per cent, 16 per cent, and 24 per cent of the property purchase price for the first, second and third extra years respectively.

While most projects will still have to comply with the QC terms, some projects could potentially be granted a one-time extension on the project completion period. Developers, specifically those who responded to the government's call in 2008 and deferred the redevelopment of property purchased through a collective sale and rented out the property to alleviate the rental housing supply crunch, could be be granted a one-time extension, commensurate with the period of tenancy.

According to the Ministry of Law, about 20 properties under qualifying certificate holders could benefit from the extension. Projects which qualify include City Developments' project on the former Lucky Tower site in Grange Road, and GuocoLand's Leedon Residence.

No charge will apply to extensions granted under the new rule which was announced by SLA in December last year.


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KepLand mulls over cutting home prices if market falls

Source: The Straits Times

The boss of property developer Keppel Land has flagged a possible cut to its home prices if the market falls away in response to the Government's recent cooling measures.

"We will monitor the market... If the market comes down and we can't sell our projects, then we'll have to cut prices," said recently installed chief executive Ang Wee Gee.

Mr Ang, who took the reins at the start of this year, said at the briefing that a 622-unit condominium it is developing in Sengkang, The Luxurie, has only eight unsold units left.

Mr Ang also disclosed that Keppel Land was in the midst of designing a residential site at New Upper Changi Road next to Tanah Merah MRT and design work for another site at Keppel Bay was "at an advanced stage".

It would "monitor the market closely for a suitable time" to launch those two projects, Mr Ang said.


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Drop seen in office space leasing, majority looking for smaller units

Source: Business Times

Office leasing activity should slow in the coming six months, with demand to be dominated by tenants with smaller space requirements.

A property consultancy said this in a research note dated Tuesday that also summed up the sector's performance for 2012.

"Gone are the days where you have major space takers that look at 15,000, 20,000 square feet (sq ft) and above in terms of their take-up," the report said.

This can be attributed to two key trends in finance over recent quarters: some of the banks moving their back office operations to suburban regions, and caution about bottom lines given the slowdown in the economy.

Prime rents in Central Business District (CBD) areas are expected to fall 0.5 per cent in the first quarter of this year compared with the previous quarter amid this continued softness. This follows a 0.4 per cent decline in the fourth quarter of 2012.

That said, "it's not all gloom and doom", and that the market has likely bottomed out after a rough 2012 which saw prime rents in the CBD drop 11 per cent from the year before.


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Investment Sales


21 Anderson put up for sale for $250-260m

Source: Business Times

21 Anderson, Royal Oak Residence, a freehold residential property within the Ardmore Park vicinity is up for sale, with an indicative pricing of $250-260 million.

The 10-storey freehold residential development comprises 34 units with a strata area of 85,552 sq ft and land area of 49,048 sq ft. Currently, close to 100 per cent of the units are leased out.

"While the vendor is selling the asset, potential investors may also consider acquiring shares in the company that owns the property, thereby realising Additional Buyers' Stamp Duty (ABSD) savings," said the marketing agent.

Situated at the fringe of the Ardmore Park residential enclave, 21 Anderson is located within a short distance of the Orchard Road shopping belt, and close to a number of schools including Raffles Girls' School, Anglo-Chinese School and the Chinese International School.

The expression of interest exercise is scheduled to close at 3pm on 28 February.


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ABSD hike may see more investing in property SPVs

Source: Business Times

The significant jump in the additional buyers' stamp duty (ABSD) for corporate entities has made it more compelling for them to buy shares in special purpose vehicles (SPVs) that own properties, rather than purchase apartments directly.

At least two such potential deals – 36 units at Goodwood Residence and 21 Anderson have been advertised in the last two days.

Transaction of real estate through SPVs is not a new phenomenon. But the government's latest move to raise the ABSD to a hefty 15 per cent from 10 per cent for corporate entities has made it more compelling for companies to consider this route.

This is because the ABSD applies only when investors buy the units of a development directly. But it does not apply when the transaction is through the sale of shares in companies, even if they own real estate.

But such deals are not without risks, said Lee Liat Yeang, real estate partner at Rodyk & Davidson LLP.

"Sometimes, some companies don't want to do deals like that because they are afraid that the SPV has liabilities. The danger is that the company may have exposure, because it may have developed the land but didn't pay off the contractor, or may have a mega dispute with a contractor.

"That is one of the risks of buying a company. But the benefit is that if you buy the company, you immediately avoid the ABSD."


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