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Bright Chambers sold en bloc for $45m

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Bright Chambers (pictured), a nine-storey commercial building at the junction of Victoria Street and Middle Road has been sold en bloc for S$45 million to Arjuno Holdings, a special purpose vehicle of Pamfleet Asset Management (Singapore), according to marketing agent Jones Lang LaSalle.

The Bright Chambers en bloc deal translates to a psf price of about S$1,076 over the existing gross floor area or $1,287 psf over total strata area. This is Jones Lang LaSalle’s second commercial en bloc sale, following last month’s sale of San Centre along Chin Swee Road.

Bright Chambers has a land area of 5,263 sq ft and a remaining leasehold term of around 60.5 years. Zoned commercial under the 2008 Master Plan, the property has an existing plot ratio of 7.943 and comprises eight strata-titled units including offices from the third to ninth floors and retail spaces on the ground and mezzanine level.

“Prospects recognise the positive attributes of the Bright Chambers’ building, being situated at a busy major intersection with prominent street frontages and close to MRT stations, and as a result the tender exercise attracted good interest from both investors and end users,” said Karamjit Singh, Head of Investments & Residential at Jones Lang LaSalle.

“In 2011, we sold Midlink Plaza in a collective sale; last month San Centre and now Bright Chambers en bloc. These are all strata-titled leasehold commercial projects located in or around the CBD for which buying interest has been strong for their redevelopment or repositioning value. We anticipate more of such commercial en bloc sales to take place. In fact, we are actively looking out for more commercial en bloc sellers.”

New private home sales hit record high

First-time buyers, discounts push figure to 2,793 units last month

16 April 2013: NEW private home sales surged to an all-time high last month, boosted by discounts dangled by developers and first-timers entering the market.

A total of 2,793 units were sold last month, nearly four times February’s number, as a string of new launches debuted strongly.

This is the highest monthly new sales volume since the Urban Redevelopment Authority (URA) began publishing monthly data in 2007. It narrowly beats the previous record of 2,772 in July 2009.

new private homes sales

But analysts said the momentum may not continue into this month as the effects of a seventh round of cooling measures, which took effect in January, continue to filter through the market.

DWG senior manager Lee Sze Teck said the strong sales from new private home last month suggested strong demand from first-time buyers given that the cooling measures had curbed some investment demand.

Including executive condominiums, a hybrid of public and private housing, the number of private homes sold last month was 3,072. This is the second-highest on record, close behind the 3,142 units sold in February last year.

The 3,489 units launched for sale last month was also a record. A whopping 17 new residential projects launched last month.

Almost three-quarters of March’s new sales were from new launches that month. Nearly 65 per cent were in suburban areas.

Buyers purchased units at projects near MRT stations such as D’Nest, Bartley Ridge, Urban Vista and Sennett Residence, the URA data showed. The top-seller was 912-unit D’Nest in Pasir Ris, with 699 units sold at a median price of $963 per sq ft out of 800 units launched. Property agent Regine Ang said her clients who bought units at D’Nest last month cited its attractive price and proximity to the MRT station.

Overall, 5,533 units of new private homes were sold from January to March, which was about 20 per cent higher than in the fourth quarter of last year. There were 5,564 units launched.

The strong March numbers made up for February’s muted sales volume of 712 new sales owing to the Chinese New Year lull.

“By keeping new supply off the market in February, developers have benefited from a strong demand rebound in March as well as the resultant positive impact on the market,” said Jones Lang LaSalle research director Ong Teck Hui. “Notwithstanding the latest measures, underlying demand remains healthy.”

Still, analysts said this month was unlikely to see a similar surge in new sales. Most pent-up demand would have been “satisfied by the bumper crop of new launches in March”, said Colliers International research and advisory director Chia Siew Chuin.

Developers’ landbanks depleted by robust sales

ROBUST sales of new private homes have depleted the landbanks of most developers, amid a period of intense competition for new sites. This is the result of a open economy unknowingly benefiting from the wall of rescue monies meant for woes in their home countries. HK and London and presumably other countries/cities with stable political and economic environment are probably victims of the post GFC environment.

A survey shows that 16 of the 27 major builders have a smaller store of development land now, compared with January last year. The fall in developers’ landbanks comes despite the bumper supply of sites released by the Government over the past year.

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Moreover, 19 developers had fewer than 1,000 apartments left in their landbanks as of the end of last month, according to the survey by DTZ Research. A further seven developers had between 1,000 and 2,000 units.

The developers’ landbank numbers do not take into account strong home sales this month, which should deplete landbanks even more.

A developer’s landbank comprises unsold units – including executive condominiums – from projects with planning approval and estimated number of units from sites yet to obtain approval.

Units in projects that have obtained their certificate of statutory completion, and redevelopment projects without planning permission, are excluded.

Developers’ landbank competition

City Developments and its parent company Hong Leong Group have the biggest stock, with 6,383 homes – made up of land parcels in Sengkang and projects like D’nest and Bartley Ridge that are being built.

Most other have fewer than 2,000 units in their developers’ landbanks.

Second-placed CapitaLand has 1,699 units, and Hongkong Land and its subsidiary MCL Land have 1,605 units.

IOI Corporation, Allgreen Properties, Wheelock Properties and Frasers Centrepoint all have fewer than 1,000 units each.

Experts note that many developers’ landbanks have been eroded by roaring home sales over the past year.

Privately held Far East Organization fell from second to fifth spot within a year, with its landbank down from 2,592 units to 1,498.

Frasers’ landbank fell from 1,951 units and third position in January last year to just 632 and 12th spot in the rankings.

CapitaLand, Keppel Land and Wheelock have moved up the league table after securing Government Land Sales (GLS) sites in the past 12 months.

At least two foreign players have also bucked the trend, gaining a larger market share by acquiring GLS parcels.

Chinese company MCC Land and Hao Yuan Investment have 1,484 units in total in their landbanks. This puts them in sixth position, up from 13th place last time.

While they are unrelated parties, their developers’ landbanks have been seen as one as they often work together on projects, DTZ noted.

MCL Land and Hongkong Land climbed from 13th spot to third this year.

DTZ’s head of Singapore research Lee Lay Keng noted that the GLS programme was the main source of growth for developers that expanded their landbanks, while those that missed out on many sites went down the rankings.

Developers’ landbank and future property price trends

As a result, most units in developers’ landbanks are in suburban areas, where most GLS sites are.

“In general, a developer should have a few projects on hand, but the number of units that constitute a ‘healthy landbank’ depends on the scale of these projects and the size of the developers, their business models and risk appetites,” noted Ms Lee.

Experts add that listed developers often face pressures to replenish their landbanks to bring in returns for shareholders, but high land prices and an increase in the number of bidders for GLS sites have thrown up challenges.

Tuan Sing Holdings chief financial officer Chong Chou Yuen noted that smaller contractors and groups of investors making their foray into development have made it more difficult to secure a site.

“Apart from GLS sites, one other area we might consider could be en bloc sites instead,” he added.

Commercial site in Jurong East draws strong interest

Lakeside Jurong East

A TENDER for a commercial site in Jurong East, at Venture Avenue that drew nine bids outstripped market expectations.

Experts said the keen response to the Jurong East commercial site could signal that developers are responding to potential demand from investors looking for alternatives to residential property.

Colliers International director of research and advisory Chia Siew Chuin added: “The commercial sector has not yet been affected by the Government’s property measures, although the planning authority is likely to be monitoring the unit sizes of planned commercial developments.

“As a result, interest from both investors and end-users is expected to be robust.”

Sim Lian JV (Vision) lodged the top bid of $701.1 million – or $1,009 per square foot – which was nine per cent above the $643 million offered by Capitaland unit Victory One for the commercial site in Jurong East.

Sim Lian’s $1,009 psf bid for the commercial site in Jurong East easily exceeded market expectations of $800 psf ppr, said CBRE research associate director Desmond Sim.

The Sim Lian offer makes the expected breakeven price of the commercial property in Jurong East to be about $1,700 to $1,750 psf, said Mr Nicholas Mak, head of research at SLP International.

Jones Lang LaSalle national director of research and consultancy Ong Teck Hui also noted that the highest bid exceeded the top offer for Paya Lebar Square at $872 psf ppr in April, 2011.

“Since the Paya Lebar Square tender, demand for strata offices has surged tremendously resulting in optimistic bidding in today’s tender,” he said.

Jurong East is seen as a key commercial hub in the west, and includes existing and upcoming retail and lifestyle offerings like JCube, JEM and Westgate, said Mr Sim.

Ms Chia added: “With the prospects of growth for the entire Jurong East area as a regional commercial hub, a new project on the subject site would enjoy steady demand for its office units when completed.”

Resale suburban prices rise

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AVERAGE resale prices for suburban condominiums exceeded $1,000 psf last month, the first time they have passed what for many buyers is a daunting level.

Prices rose 5.1 per cent to a record $1,046 psf in February compared with January, said the Singapore Real Estate Exchange (SRX) yesterday.

Average condo resale prices in the city fringe were also up last month, adding 3.1 per cent from January to a record $1,272 psf.

OrangeTee research and consultancy head Christine Li said prices in these areas probably rose because buyers were going for smaller homes with lower total quantums, likely in response to lower borrowing limits and higher cash down payments imposed in January’s cooling measures.

“As small units typically have higher per square foot prices than larger units, we expect resale prices in psf compiled by SRX to go up in the coming months,” she added.

In contrast, average resale prices in the city centre declined 4.7 per cent month-on-month to $1,788 psf in February.

R’ST Research director Ong Kah Seng said the dip reflected significant unsold new homes and weaker leasing demand due to firms cutting expatriate allowances amid global economic uncertainty.

The SRX also reported that the Chinese New Year break resulted in February resales dropping by more than half from January.

Only 325 resales were carried out last month, according to flash figures, but that was still higher than the 309 transactions reported in January last year, the month in which Chinese New Year fell.

The continued growth in property values combined with softer rents also squeezed rental yields.

Yields dipped 0.2 per cent in the city fringe and suburban regions last month from January, although they inched up 0.1 per cent in the city centre.

Rents fell islandwide, with the sharpest decline in the city fringe, down 1.9 per cent in February from January.

Suburban home rents fell 1.6 per cent and city centre rents decreased 0.4 per cent.

However, rents for shoebox units – flats up to 500 sq feet – went the other way, rising 1.8 per cent in psf terms overall.

Shoebox apartments rented for $6.17 psf per month on average in suburban areas last month, twice the $3.07 psf for larger units in the same region, according to SRX flash figures.

That was almost as high as city-fringe shoebox rentals, which were $6.34 psf per month on average. Their larger counterparts had monthly average rentals of $3.80 psf.

Rentals for city centre shoebox units were $7.40 psf per month on average, 63 per cent higher than the $4.54 psf for larger units in that area.

Singapore Budget 2013: More progressive property tax rates for Singaporean households

To make the tax system more progressive, the Government is raising property tax rates for high-end residential properties in Singapore Budget 2013, with the largest increases applying to investment properties that are not occupied by their owners.

The majority of owner-occupied homes will have lower tax rates in Singapore Budget 2013.

“This is fair,” said Minister of Finance Tharman Shanmugaratnam in his Singapore Budget 2013 speech on Monday.

“The property tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property taxes than others.”

Owner-occupied residential properties
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Source: Ministry of Finance

The new property tax schedule for owner-occupied homes will ensure that most retirees will end up paying lower property taxes, he added.

The number of households that do not have to pay property tax will rise. Currently, only those whose houses have an annual value of $6,000 or less do not have to pay property tax. This will now include those whose properties have an annual value of $8,000 or less, which will enable 950,000 owner-occupied homes to enjoy tax savings.

After this Singapore Budget 2013, all one- and two-room HDB flats will continue to pay no property tax. Homes with annual values of $12,000, such as a five-room flat, will experience tax savings of $80 or 33 per cent of their current property tax bill.

The top 1 per cent of owner-occupied homes, which includes 12,000 homes here, will face increased taxes.

However, the increase will be small, Mr Tharman said, except for those at the very top end. A landed property in the central area with an annual value of $150,000 will have to pay 15 per cent tax in 2014, or an increase of $5,120 per year, up from 10 per cent now.

There will be more significant hikes to the tax rates for high-end investment properties. Currently before Singapore budget 2013, residential properties that are not occupied by their owners have a flat tax rate of 10 per cent. There will be new marginal tax rates of 12 to 20 per cent for these investment properties.

This will mean an increase in property taxes paid for non-owner-occupied homes with annual values of above $30,000. These properties belong to the top one-third of all non-owner-occupied homes.

Non-owner-occupied residential properties
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Source: Ministry of Finance

Again, the increase will only be significant for investment properties at the high end. Most suburban condominiums will see a small increase in property tax of about $100 to $300 a year.

With Singapore Budget 2013, a high-end property, such as a landed home in the central area with an annual value of $150,000, will see an increase in property tax of $9,000 a year.

This revised property tax structure will be phased in over two years, from Jan 1, 2014.

The revised rates will take full effect from Jan 1, 2015.

Property tax rates for non-residential properties remain unchanged at a flat 10 per cent for Singapore Budget 2013.

Seventeen new condos primed for launch

AROUND seventeen new condominiums comprising almost 7,500 private homes in all are being prepared over the next few months.

The bumper supply stems largely from the significant release of land from the Government Land Sales (GLS) programme over the past year, although private sites are also in the mix.

Amongst these seventeen new condos primed for launch, market experts are keenly watching to see how some of the more high-profile projects fare, given that the tough cooling measures imposed last month have added an air of uncertainty to the market.

There will be plenty of choice for buyers, with projects in estates across the island from Tanah Merah, Pasir Ris and Hillview to upmarket areas like Marina Bay being primed for launch.

The larger projects lining up for release include the 912-unit D’nest in Pasir Ris Grove, Bartley Ridge in Mount Vernon Road, which has 868 units, and the 755-unit Trilinq in Jalan Lempeng. Other projects include mixed development in D19 – Spazio@Kovan and Bentley Residences – and also new launches in Katong – Leville iSuites.

The Trilinq showflat will be open today, with preview sales expected early next month. Indicative average prices are about $1,500 per sq ft.

Seventeen new condos primed for launch

While Q Bay Residences in Tampines enjoyed strong sales despite being launched after the curbs, market watchers are waiting for a second successful launch to set a positive market trend.

Savills Singapore research head Alan Cheong said the healthy take-up of units at d’Leedon after a price cut showed buying sentiment was still positive, and that there is still underlying demand.

“But the take-up rates are unlikely to be as fast as last year. It might take six months for 50 to 70 per cent of a mass market project to be sold now. Previously, 80 to 90 per cent of a smaller-sized project could be sold in three months,” he noted.

International Property Advisor chief executive Ku Swee Yong said high-end homes might still face a uphill battle in lifting sales.

“The overall quantum for prime homes in districts 9, 10 and 11 is generally more than $3 million and is not within reach of the first-timer and upgrader segments,” he added.

A test might come in October when the mega Marina One project, developed by Malaysia’s Khazanah Nasional and Singapore’s Temasek Holdings as part of a land swop agreement, is launched. The project has a whopping 1,042 units.

Out of these seventeen new condos primed for launch, developers might also delay some of their launches to assess the full impact of the measures, e.g. Tuan Sing’s Sennett Residence @ Potong Pasir, although 99-year leasehold projects from GLS sites will face more urgency to be pushed out compared with freehold ones.

Colliers International’s director of research and advisory services, Ms Chia Siew Chuin, said if the results of the next few launches are encouraging, more developers are likely to push out their projects. “There is no need for projects to sell out within a couple of weeks for developers to gauge that buying interest is still evident, so long as showflat visitor numbers and buying volume remain and hold steady,” she added.

“This would be especially so for projects in the suburban areas, where Singaporeans make up the bulk of buyers.”

Colliers noted that from 2003 to last year, the total number of uncompleted residential homes launched for sale averaged 12,036 units a year.

Buyer sentiment significantly turned for the better from 2005, when the Government announced the development of the integrated resorts.

Developers responded by launching more than 10,000 units each year from 2006 to last year, culminating in a record 21,478 units released last year. The only exception was in 2008, when the financial crisis hit.

The brisk sales of GLS sites last year means 17,000 to 18,000 units could be launched this year.

“This could be the new norm, as the Government continues to inject a strong pipeline supply of housing units into the market until such time when demand falls to more moderate levels,” said Colliers’ Ms Chia.

Govt unveils plans for population growth

Singapore’s total population is projected to hit six million by 2020 from the current 5.3 million. By 2030, the number of people living in the city-state could be between 6.5 million and 6.9 million, according to a government white paper released Tuesday.

The National Population and Talent Division’s (NPTD) report sets out Singapore’s population policies to address future demographic challenges amid increasing complaints from Singaporeans over the large presence of foreigners in the country.

Currently, two out of around five people in Singapore are foreigners.

According to the paper, Singapore’s resident population comprising of citizens and permanent residents will reach somewhere between 4 million to 4.1 million by 2020. Of that number, Singaporeans are seen to make up 3.5 million to 3.6 million.

The projections depend on fertility trends, life expectancy, as well as social and economic needs, NPTD said in the paper.

Without immigration, the citizen population will start to shrink from 2025 onwards, it added, noting that to stop the population from shrinking, Singapore will need  15,000 and 25,000 new citizens each year, based on the current total fertility rate (TFR) of 1.2.

Citizen population size under various immigration scenarios. (NPTD image)

NPTD pointed out that the number of PRs granted have also been significantly reduced from 79,000 in 2008 to 30,000 in the last three years. The current rate will keep the total PR population stable at 500,000  to 600,000, it said.

The rate of total population growth per year is expected to decrease. (NPTD image)

The White Paper outlines the Government’s policies to maintain a strong “Singaporean core” in the population, create good jobs and opportunities for citizens and build a high quality living environment.

With the Government taking in between 15,000 and 25,000 new citizens and 30,000 Permanent Residents each year — to prevent the citizen population from shrinking — it is estimated that the resident population could reach up to 4.1 million in 2020, with citizens making up 3.5 million to 3.6 million.

In 2030, the resident population, which includes PRs, is projected to be between 4.2 million to 4.4 million. Citizens will make up 3.6 million to 3.8 million.

The White Paper also projected that come 2030, two thirds of Singaporeans are expected to be working in Professionals, Managers, Executives and Technicians jobs, compared to just half of the population today.

Hence foreign workers are needed to “supplement” the workforce, and ensure the workforce structure has a full range of skills, backgrounds and experiences to serve economic, social and infrastructure needs.

To alleviate the strains Singaporeans face today and support the projected population of about 6 million, efforts to ramp up infrastructure developments, such as transport networks, housing and access to healthcare, are underway and will be completed by 2020.

By 2016, there will be 110,000 new public housing units and 90,000 new private units. Some 4,100 new hospital beds will also be available then.

The Government is also planning and investing in infrastructure ahead of demand.

This includes setting aside land for 700,000 more homes, and planning for more jobs, green spaces, recreational and sports facilities to be located nearer to residential areas like Jurong Lake District, Paya Lebar Central and One North.

The Singapore MRT network will also double to 360 km, which will put eight in 10 homes within a 10-minute walk from a train station.

To read the white paper, click here.