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25 January 2013

25th January, Friday




Chip Eng Seng offers top bid of $794 psf ppr for Yishun site

Source: Business Times

A unit of Chip Eng Seng Corporation has placed the top bid for a mixed commercial and residential development site at the corner of Yishun Ring Road and Yishun Avenue 9.

The property and construction group's bid of $212.1 million, translating to $794.44 per sq ft per plot ratio (psf ppr), was the highest of 13 bids received at the state tender yesterday.

This was 9.5 per cent more than the second highest offer of $193.777 million, or $725.81 psf ppr, from a joint venture between Far East Organization and its listed vehicle, Far East Orchard Limited.

However, market watchers looking for a gauge of the impact of the Jan 12 property-cooling measures on residential land bids may not have had a clear answer from yesterday's tender closing. This is because bids would be masked by the project's commercial component, which would be valued higher and thus form the bulk of the development value for the project on site, as one analyst pointed out.

In contrast, the development's residential component would yield a relatively modest project of about 160 homes, going by the government's estimate.

Said Chip Eng Seng's spokesman: "Hopefully, we will be able to sell the residential units at below $1,000 psf on average, assuming current market conditions prevail." The group has yet to decide whether it will keep the entire commercial (retail) component or sell some or all of the retail space, he added.

DWG's senior manager Lee Sze Teck reckons the top bid could have been even higher if not for the latest property cooling measures.

All eyes in the market are now on next Tuesday's tender closing for a 99-year private condo site in Jurong West for a clearer indication of developers' reading of the private housing market.


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Private home prices expected to be relatively stable: analyst

Source: Channelnewsasia

A property consultancy said private home prices are expected to remain relatively stable with marginal downside this year, thanks to the government's latest cooling measures imposed in January 2013.

In the face of mounting supply, rents are also expected to weaken this year.

Average monthly gross rents of luxury/super-luxury homes are expected to decline by up to a maximum of 10 per cent in 2013.

Singapore's residential property market saw a record breaking year in 2012. This was despite noticeably subdued market activity in the fourth quarter of 2012, following recent property cooling measures. 4,283 new units were sold in the fourth quarter of last year, raising the primary sales volume to 22,127 units for the whole of 2012.

This breaks the previous record of 16,292 new units sold in 2010 by 35.8 per cent.


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Govt casts a cold eye on shops, office space

Source: Business Times

The sudden burst of activity in the commercial property sector has caught the government's eye, and indications are that it may extend cooling measures to this sector if transactions rise above what it deems to be the comfort level.

The Urban Redevelopment Authority (URA), responding to queries from The Business Times (BT), said: "We are monitoring the various segments of the property market closely, including the commercial sector. We will introduce measures, if required, to moderate investment demand and prevent overheating in the property market."

The agency added that it would work to ensure that developments do not comprise predominantly small units.

Commenting on unit sizes, URA told BT: "We would be concerned if a development comprises predominantly small units, as this may pose problems such as a shortage of parking lots and traffic congestion in the local area.

"For such cases, URA will work with the developer and architect to improve the design and layout, to provide a more diverse range of unit sizes to meet the needs of different users and minimise potential disamenity issues to the surrounding uses."


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Commercial property fervour spreads to auctions

Source: Business Times

The recent revival of interest in commercial properties has extended to the auctions market. An auction on Tuesday drew a packed house, and four adjoining freehold shophouses on North Bridge Road in the Kampong Glam Conservation Area found a new owner for $15 million.

The shophouses are on 5,765 sq ft of land and have a total floor area of about 9,600 sq ft. The units are leased at a total monthly rental of $28,500 (the last tenancy runs out in late July 2014). The new owner is believed to be a property investor who is familiar with shophouses.

However, another prominent commercial property at the auction, a 2,411 sq ft office unit on the 22nd floor of Shenton House, did not find takers at the opening bid (which was also the owner's asking price) of $1,888 psf. A bidder made a counter offer of $1,500 psf but this was not accepted. The unit, which is subdivided into two units, is currently leased at a total monthly rental of about $9,300. Shenton House is on a site with a remaining lease of 55 years. .

At another auction, an HDB shophouse in Bedok North Street 3 changed hands for $1.6 million. The 1,453 sq ft unit is on a site with a lease of 84 years starting 1995.

Another auction will be held at 2.30 pm on 30 January at Amara Hotel that will feature, among others, three adjoining strata shops at Parklane Shopping Mall in Selegie Road. The indicative price for the ground-floor units, which add up to 1,398 sq ft, is $3.3 million. The units are leased at a total monthly rental of $11,000. Parklane Shopping Mall is on a site with a 99-year leasehold tenure starting 1974.

Also going under the hammer will be one shop lot (partitioned into 23 smaller units) on the first level of Bukit Timah Plaza, which is on a 99-year site (from 1976). The strata area is 17,351 sq ft and the indicative price is $26 million. The 23 partitioned shops are leased to operators in a variety of trades including furniture, audio equipment, a minimarket and Singapore Pools - for a total monthly rental of about $76,000.


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Rents soar for basement shops in Orchard Road

Source: Business Times

Building basement linkways to connect malls in Orchard Road has pushed up rents of shops there, by more than those on the ground floor in some cases.

This should be a fillip for the push to have more underground linkways connecting malls across the premier shopping district.

A report showed average rents of prime mall space - in basement one and ground level - in Orchard Road stood at approximately $35.95 per sq ft (psf), 5.5 per cent higher than the average rent of prime spaces only on the ground level.

The study also found that growth in basement rents was higher for Orchard Road malls directly connected to the MRT station, and where there were underground links between malls.

Retail experts said there are two factors for this: high footfall from underground connections and smaller "shoebox" units in basement levels.

Market watchers estimate that a typical ground-level store in an Orchard Road mall which is direct street-facing can cost about $50 to $60 psf a month. For a store of about 600 sq ft, monthly rent could add up to about $33,000, say analysts. Rent for a basement unit with high connectivity of the same size can be up to 10 per cent higher.

All this points to the value of underground connectivity, said retail experts. But Orchard Road developers are resistant to building linkways between malls. Despite government subsidies of as high as $28,700 per sq m, developers say the benefits do not justify the high costs of tunnelling.


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