Singapore still 3rd priciest office location in Asia-Pacific

SINGAPORE remains the third most expensive office location in the Asia-Pacific region after top-placed Tokyo and second-placed Hong Kong, says Colliers International.

Sydney, Mumbai, Perth, Brisbane, Ho Chi Minh City, Delhi and Shanghai round out the list of the 10 most expensive office locations in the region in the second quarter of 2010.

In the latest Colliers International Asia-Pacific office market overview, the real estate firm says overall office leasing demand in the region showed no sign of abating in Q2, despite the shadow of a sovereign debt crisis in Europe.

Led by financial services firms, leasing demand during the quarter was particularly strong in cities with high financial services components, such as Hong Kong and Singapore.

In Singapore, official statistics show the net absorption of island-wide office space was 398,000 square feet in Q2 - a 68 per cent quarter-on-quarter increase from 237,000 sq ft in Q1.

On the back of this, office rents here rebounded 6.1 per cent quarter-on- quarter in Q2 - the third fastest rate of growth in the region. Hong Kong registered the fastest quarter-on-quarter rebound of 8.4 per cent, followed by Wellington at 6.8 per cent.

At end-June, Grade A office space in Singapore's central business district was estimated to command an average monthly gross rent of $6.77 per sq ft.

Besides a flight to quality, the increase in office rents here can be attributed to companies taking advantage of competitive rates and adding space to meet an anticipated rise in headcount, Colliers says.

It expects Singapore's office rents to strengthen a further 10 per cent in the current second half.

Financial institutions looking to hire, companies expanding their operations and new set-ups are expected to back-fill vacant space from tenants relocating to newer buildings.

Source: Business Times, 5 Aug 2010

Time to finish project on state land shortened

Project completion period cut to 5 years to make supply keep up with demand

THE government is cutting the amount of time that developers have to build private residential projects on state land by a year, to ensure that there would be enough homes to meet demand.

It announced this yesterday evening, as it put up three more sites from the confirmed list for tender. They can potentially yield 1,260 units.

All government land sale sites come with a project completion period (PCP) to make sure that developers finish work within a reasonable period of time. The PCP is measured from the date the site is awarded to the date the project obtains Temporary Occupation Permit.

The authorities are reducing the PCP for private residential sale sites to five years from six years, 'to further ensure more timely supply of private housing to meet demand'. The shorter PCP will apply to sites released for sale from today.

The PCP for executive condominium (EC) sale sites will remain at four years. The Urban Redevelopment Authority (URA) told BT that projects might meet unexpected delays in construction and there will not be sufficient buffer if the PCP for EC sites is cut further.

Market watchers supported the move, although they did not think there would be a significant impact on the market.

DTZ executive director (consulting) Ong Choon Fah said that most developers do want to build their projects as soon as possible to avoid holding costs and unknown market risks ahead. It would also be disadvantageous for them to hold on to 99-year leasehold sites for too long.

Nevertheless, the shorter PCP 'will give developers an additional impetus' to complete their projects, she said.

Cushman & Wakefield managing director Donald Han felt that the government made a prudent move. It is sending a signal to developers, that they should make their projects available quickly to help maintain stability in the property market, he said.

Going by information from URA, the shorter PCP is unlikely to affect most developers. URA said that based on development trends in the last eight years, the completion period for private residential sale sites was about four years on average. Also, none of the private residential projects on sale sites exceeded their stipulated PCP last year.

The shorter PCP will apply to two of the three latest sites up for sale starting today. One is a land parcel at Hougang Avenue 7. The 1.56 hectare site has a maximum permissable gross floor area (GFA) of 471,083 sq ft and can be developed into a 395-unit condominium project. Its tender will close on Sept 17.

The second is a 2-ha plot at the junction of Pasir Ris Drive 3 and 4. It has a maximum permissable GFA of 452,086 sq ft and can yield about 380 condominium units. Its tender will close on Sept 30.

The new PCP rule will not apply to an EC site at Punggol Drive/Punggol East up for sale. It is near the Kadaloor LRT station, and has a site area of 1.57 ha and a maximum allowable GFA of 574,577 sq ft. The site can accommodate about 485 units, and its tender will close on Sept 23.

More sites will be rolled out this month. URA will launch another plot from the confirmed list at Petir Road for sale; four sites from the reserve list will be made available for application.

Source: Business Times, 5 Aug 2010

CityDev's KL site may set new price benchmark

Land for high-end condo project could top RM3,000 psf

(KUALA LUMPUR) Singapore property tycoon Kwek Leng Beng is in talks to sell a parcel of land in Jalan Bukit Bintang, Kuala Lumpur, which could possibly fetch a record price for a land deal, says a report in Malaysia's Business Times.

It is understood that the selling price for the land, owned by Mr Kwek's City Developments Ltd (CDL), is being negotiated for more than RM3,000 (S$1,282) per sq ft.

To date, the most expensive land deal reported has been Sunrise Bhd's acquisition of Wisma Angkasa Raya in Jalan Ampang, Kuala Lumpur, for RM2,588 per sq ft. In May this year, FFM Bhd and Kuok Brothers Sdn Bhd sold a piece of land in Jalan Perak, Kuala Lumpur, for RM2,200 per sq ft.

CDL's land in Jalan Bukit Bintang is about 32,000 sq ft. At RM3,000 per sq ft, the deal could fetch RM96 million.

The land sits between the Grand Millennium Kuala Lumpur hotel and the Pavilion Kuala Lumpur shopping centre. CDL, which is part of Singapore's Hong Leong Group, also owns the Grand Millennium hotel.

Contenders for the land are believed to be the owner of Pavilion Kuala Lumpur and the YTL group, both of which have sizeable assets along Jalan Bukit Bintang.

Sources told Malaysia's Business Times that the RM500 million Millennium Residences project originally planned for the site and launched in 2007 had been aborted and that the land was being negotiated for sale.

A quick check at the site revealed that the project signage and hoarding had been removed. Some work on the 42-storey high-end condominium with an additional 15-storey crown started in 2008, but has since stalled.

In late March, a spokesperson for Singapore's Hong Leong said that the Millennium Residences would be launched later this year.

However, replying to a follow-up question from MBT last week, the spokesperson said: 'There are no details on the Millennium Residences available at this point.'

When asked if the project had been scrapped and the land was being negotiated for sale, the spokesperson said: 'We have no comment at this stage.'

Pavilion Kuala Lumpur is wholly owned by Urusharta Cemerlang Sdn Bhd, which in turn is 51 per cent owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by the Qatar Investment Authority (QIA).

Pavilion Kuala Lumpur will be managing the new Fahrenheit 88 shopping centre, previously known as KL Plaza. It belongs to Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd, of which the principal is the QIA.

YTL owns the Starhill Gallery and Lot 10 shopping centres and the JW Marriott hotel in the vicinity.

Source: Business Times, 5 Aug 2010

S'pore office rents still region's third most costly

SINGAPORE has recorded the third fastest office rental growth in the Asia-Pacific region, with rents up 6.1 per cent in the second quarter, said the latest report from Colliers International.

The Republic is still the region's third most expensive office location, after Tokyo and Hong Kong, the property consultancy said.

Across the region, office rentals posted 1.4 per cent growth on average in the second quarter from the first.

Office leasing demand showed no signs of abating despite the looming sovereign debt crisis in Europe, Colliers said in a statement.

'Led by occupiers engaged in the financial service sector, leasing demand was particularly strong in certain cities with a high financial service component, such as Hong Kong and Singapore,' it said.

Indeed, Hong Kong saw the fastest growth in office rentals at 8.4 per cent quarter-on-quarter, followed by Wellington, New Zealand, which registered a 6.8 per cent rise in office rents.

Singapore's No. 3 spot came despite concerns over the impact of plenty of new office space coming on stream.

At the end of June, average Grade A gross office rents in Singapore's Central Business District were up 6.1 per cent to $6.77 per sq ft a month from the first quarter. Colliers expects office rentals in Singapore to increase by another 10 per cent in the second half.

It said that some companies are taking the chance to flock to better quality offices, while others are taking advantage of competitive rental rates to take up more space in anticipation of hiring extra staff as the economy rebounds.

The office market recovery here has been stronger than expected, though rents for old buildings lacking modern infrastructure will lag behind those for newer ones, said Collier's director of research and advisory Tay Huey Ying.

Source: Straits Times, 5 Aug 2010

Govt launches 3 sites, cuts time for project completion

THE Government yesterday launched three mass market residential sites for sale and cut from six to five years the time developers have to complete a housing project.

The sites - in Hougang Avenue 7, at the corner of Punggol Drive and Punggol East, and the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 - are expected to yield about 1,260 units. Their tenders close separately next month.

The three 99-year leasehold plots are the first to have the new five-year project completion period for private residential sale sites applied to them.

From today, all such sites released for sale will have to conform to the new rule, which is to 'further ensure more timely supply of private housing to meet demand', said the Housing Board in a statement yesterday.

Experts believe the change - it does not apply to executive condominium (EC) sites which have to be built in four years - will not have a major impact on the market.

Cushman & Wakefield managing director Donald Han said: 'In a peak market like now, it's not a problem at all. Developers usually take three to four years to build a mass market condo.

'It's just a precautionary measure. The Government just wants to ensure that what has been tendered out will be completed in five years, so that supply can meet demand.'

Experts note that few developers want to take too long to build on leasehold sites.

'Based on development trends in the last eight years, we found that the actual completion period for sale sites for private residential developments was generally about four years on average,' said the Urban Redevelopment Authority (URA). Only about 13 per cent of these projects took longer than five years to complete, it said.

Prior to 1997, the project completion period for government residential sites was four to five years. It was extended to eight years in late 1997 due to the then economic crisis, said the URA.

This was cut to six years in 1999 and has remained so, although the Government in last year's Budget allowed developers to apply to extend completion periods by up to one year with applications having to be made by Jan 21 this year.

Of the sites launched yesterday, the Hougang plot is 15,630 sq m in size with a maximum gross floor area of 43,765 sq m.

The Punggol site is 15,700 sq m in size with an allowable gross floor area of 53,380 sq m. It is earmarked for executive condos and is near Kadaloor LRT station.

The Pasir Ris plot is a short distance from NTUC Downtown East, has a site area of some 20,000 sq m and an allowable gross floor area of 42,000 sq m.

Ngee Ann Polytechnic lecturer Nicholas Mak predicted that the sites would attract less aggressive bids given that they are not near MRT stations.

The Hougang site may attract bids of $320-$370 per sq ft per plot ratio (psf ppr), while the one at Pasir Ris may garner bids of $350-$390 psf ppr, he said. The Punggol EC plot, being in a new estate, may draw bids of $250-$290 psf ppr, added Mr Mak.

Source: Straits Times, 5 Aug 2010

Double-dip recession unlikely

DESPITE the global economic recovery since the second half of 2009, a minority of observers continue to forecast a double-dip recession, at least in the United States. These include respected economists such as Paul Krugman of Princeton and Robert Shiller of Yale. Theirs is, however, not the mainstream view - which holds that while a slowdown in the second half of 2010 is likely, a recession is not on the cards.

What does the evidence suggest so far? Certainly, there are grounds for concern. US unemployment is stubbornly stuck at close to 10 per cent. The effects of the 2009 economic stimulus programme are now waning. The housing market - a key forward-looking indicator - has yet to turn around.

In a recent speech to a banking conference, US Federal Reserve chairman Ben Bernanke served a sobering reminder. Despite the fact that the economy is expanding, 'we have a considerable way to go to achieve a full recovery', he said. The most recent estimates of retail sales and consumer confidence have also not been good. Tellingly, the pace of the recovery has slowed from an annualised rate of 3.7 per cent in the first quarter to 2.4 per cent in the second quarter.

Over in Europe, there has been much bad news this year, particularly relating to the sovereign debt crisis in the eurozone. This has led to austerity programmes being put in place in several countries, the effects of which we have yet to see.

However, the picture is not all dire. Some of the latest data out of the US, from the Institute of Supply Management, suggests that manufacturing activity expanded for the 12th consecutive month in July. Second-quarter GDP rose 2.4 per cent quarter-on-quarter, beating many analysts' expectations. And on the corporate front, more than 75 per cent of the over 300 companies in the S&P 500 have reported results that have also beaten the average estimates of analysts.

Even Europe has shown some upside surprises. Thanks partly to the weaker euro, the German economy is enjoying an export-led revival. The country's central bank, the Bundesbank, expects 1.9 per cent growth this year, which again is better than earlier anticipated. Germany's growth will vitally help at least cushion the downturn in the eurozone.

The brightest spot of the global economy is Asia, particularly China and India, where growth forecasts remain rosy for this year: close to 10 per cent for China and 8.5 per cent for India.

For the global economy as a whole, last month the International Monetary Fund (IMF) revised up its growth forecast to 4.6 per cent in 2010 from 4.2 per cent in April - although it did note that 'downside risks have risen sharply amid renewed financial turbulence'.

Given what we have witnessed over the last two years, it would be imprudent to rule out unpleasant surprises, including a double-dip recession. But on the weight of the evidence, and with loose monetary policies still in place, this looks unlikely - at least for now.

Source: Business Times, 4 Aug 2010

Sim Lian tops bids for DBSS site in Tampines

It plans 680-unit project: 60% 4-room flats; 25% 3-room; the rest 5-room

SIM Lian Land, which emerged as the highest bidder for a site in Tampines designated for public housing under the Design, Build and Sell Scheme (DBSS), plans to build about 680 flats on the plot if awarded the site.

'About 60 per cent of the units will be four-room flats, another 25 per cent will be three-room flats and the remaining 15 per cent will comprise five-room flats,' Sim Lian Group executive director Diana Kuik told BT yesterday.

Sim Lian's top bid of about $178.2 million works out to about $261 per square foot of potential gross floor area. The tender drew five bids.

Sim Lian's price was about 22 per cent higher than the next highest offer of $213.62 per square foot per plot ratio (psf ppr) by Qingdao Construction (Singapore). A joint venture between Hoi Hup Realty and Sunway Developments offered about $205 psf ppr. Realty Consortium (a unit of Koh Brothers) bid $200.91 psf ppr.

The lowest offer of $110 million or $161.20 psf ppr was from Ho Lee Group.

The site will be sold on 103-year leasehold tenure inclusive of a four-year construction period.

DBSS gives developers an opportunity to design, develop, price and sell HDB flats to buyers who have to meet criteria set by the Housing & Development Board, including a monthly household income ceiling of $8,000.

The plot is next to Singapore's first DBSS project, The Premiere@Tampines, which was also developed by Sim Lian. That is fully sold.

As for the latest DBSS plot, Sim Lian hopes to launch the project around the third quarter of next year, says Ms Kuik.

In March this year, the group clinched a 99-year leasehold condo site at Tampines Ave 1/Ave 10, facing Bedok Reservoir, at a state tender.

It plans to build a 696-unit project to be named Waterview on this plot, with the majority of units being two and three-bedroom apartments. 'We'll probably launch the project around Q4 this year,' said Ms Kuik. Sim Lian paid $302 million or $421 psf ppr for the site.

Sim Lian also has available 62 units at its Clover By the Park condo in Bishan, which is still under construction. Most of these units are three and four-bedders and are priced in the high-$900 to $1,000 psf range. The 39-storey, 99-year leasehold project has a total of 616 units. It was released in June 2008.

Source: Business Times, 4 Aug 2010