Wednesday, June 4, 2008

Developers Turn Landlords As Property Market Stays Quiet

Source : The Straits Times, June 4, 2008

With projects held back, firms lease out units bought in collective sales

PROPERTY developers such as Koh Brothers and GuocoLand, which bought collective sale sites during boom times, are now becoming landlords as they wait out the market slowdown.

STAYING ON: The consortium that bought Lincoln Lodge has allowed occupants to keep renting homes for six months from the sale completion date of July 8. -- PHOTO: NEWMAN & GOH

They are leasing out apartments they bought to existing occupants as a way to generate some income instead of simply leaving them vacant.

If the property upswing had continued, these developers might well have moved quickly to tear down the older homes to put up new developments.

But the sharp slowdown in home sales has put paid to such thoughts for now.

Market observers say renting is a nimble move given present market conditions.

For sellers of units in collective deals who have yet to buy a new home, it is a win- win situation as they would have collected their sale proceeds.

Take, for example, the consortium that bought freehold Lincoln Lodge for $243 million in June last year.

It has decided to allow occupants to keep renting homes for six months from the sale completion date of July 8, and thereafter on a monthly extension basis.

'Upon requests by some of the sellers to stay on, and while waiting for approvals, we have decided to grant them this request by extending a lease,' said Mr Francis Koh, Koh Brothers' managing director and chief executive.

Rents at Lincoln Lodge range from $2,700 to about $4,500 for larger units.

In the middle of last year, at the height of the collective sale frenzy, Koh Brothers bought the Newton site with Heeton Holdings, KSH Holdings and Lian Beng Group for a record $1,449.30 per sq ft (psf) per plot ratio.

A Lincoln Lodge seller, who wished to be known only as Mr Tan, welcomed the rental move as sellers had collected sale proceeds in January, and those who had not bought a home could take their time.

'It's an option...I know someone who negotiated the rent down to $2,500,' he said.

GuocoLand seems to be the early rental front runner.

It offered residents short-term leases at Sophia Court in Adis Road last year, followed by Leedon Heights off Holland Road earlier this year. The leases started in March at Sophia Court and yesterday at Leedon Heights. Both last till Jan 31 next year.

A three-bedroom unit at Leedon Heights costs $2,850 a month, while rents at Sophia Court range from $800 to more than $4,000 a month.

GuocoLand bought Leedon Heights in April last year for $835 million and Sophia Court in late 2006 for $230 million.

Renting out units is a way to 'wait out the current quiet in the market', said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

'If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.'

Frasers Centrepoint said it may offer short-term leases to the former owners of the 185-unit Flamingo Valley, a freehold site in Siglap Road that it bought for $194 million in February last year.

'We had 50 owners who wrote to ask us to extend their lease...They haven't found anything suitable,' said the firm's general manager of development and property, Mr Cheang Kok Kheong.

He said the firm was likely to extend a lease of six months to a year. This would 'give us more time to think about our plans'.

City Developments (CDL) has said it is still exploring the renting option.

Renting out apartments bought in collective sales is not new. CDL did so a few years back, when it rented out all 124 apartments in Kim Lin Mansion in Grange Road.

It had bought it in late 1999 for $251 million, or $996 psf of potential built-up area, but pushed it out for sale only at the height of the property boom last year. It fetched prices of $3,600 psf.

Win-win deal

# Developers lease out units to generate income instead of leaving them empty as they sit out the market slowdown.

# Sellers of collective sale projects who have yet to buy new homes can stay on in their existing units as tenants.


'If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.'

MR MAK of Knight Frank, on companies holding out for better prices

The Incredible Shrinking Condo

Source : The Straits Times, June 4, 2008

Compact city studios under 500 sq ft an emerging trend

A TINY studio under construction near Farrer Park may well be the smallest private apartment to be built in Singapore.

It squeezes a bay window, a teeny kitchenette, a bathroom and space for a bed into just 312 sq ft - about half the size of a squash court.

The unit - part of the new Kent Residences in Kent Road - is the most extreme example of an emerging trend in private housing: compact, capsule condos within the city.

Targeted at young singles and property investors, some new studios have shrunk in size to as little as 300 to 400 sq ft, as developers try to make their homes more affordable amid rising costs.

At least 20 new projects launched within the past year have had units smaller than 500 sq ft, which was almost unheard of before last year.

Half of these projects went even further, cutting their smallest units to under 400 sq ft, making them on a par with those in famously space-squeezed cities such as New York and Hong Kong.

Shoebox-sized studios are not entirely new here. A few older condos like Mountbatten Lodge have units less than 400 sq ft in size.

What's new is the recent proliferation of such projects, especially in Farrer Park, Balestier and Dhoby Ghaut. Most are built by boutique developers and have under 100 units.

Thanks to the property boom last year, home prices in these areas start at just below $1,000 per sq ft (psf) and go up to $1,600 psf. For a 400 sq ft condo, this translates to well below $700,000.


'Construction costs are going up and space is becoming very expensive, so developers have to offer something that is affordable for the majority of home-buyers,' said Ms Peggy Ngiam, project director of Huttons Real Estate Group.

Her firm has marketed several projects with unusually small units, including Thomson V Two in Upper Thomson Road, where half the 74 units were under 500 sq ft, with the smallest just 355 sq ft.

With a typical unit priced at a mere $377,000, the project sold out within a day.

In fact, most of these boutique projects are fully sold, and the most recent launches have seen good take-up rates.

Ms Ngiam said buyers are a mix of locals and foreigners. Some are single professionals while others are investors looking for good rental yields.

At Citigate in Rangoon Road, which was launched on Monday, 22 of its 32 units were sold within a day. The smallest unit, a 441 sq ft studio, is expected to fetch rentals of $3,000 to $3,500 a month, she said.

Small units also reflect growing demand from singles who want to live in the city on a tight budget, said DTZ Debenham Tie Leung senior research director Chua Chor Hoon. She said developers focused on building large apartments last year and may now see a shortage of small ones.

But other experts warned that buyers may not realise how small these units really are.

'In the last market run-up in 1996, when prices got higher and higher, the units got smaller and smaller,' said Mr Colin Tan, head of research and consultancy at Colliers International. Even then, those units were rarely under 500 sq ft, and came without today's bay windows and air-con ledges, which eat into liveable space, he added.

While most projects offer showflats, the smallest units are often sold on the basis of their floor plans. At Kent Residences, which has just 13 units, buyers were shown only a model of the project and its floor plans.

'In most cases, when people see the finished flat they have bought off the plan, they say it's smaller than they expected. Can you imagine what that would be like for a 300 sq ft unit?' said Mr Tan.

A 300 sq ft apartment is roughly the size of...

# Two of the Old Chang Kee kiosks in front of Ngee Ann City
# Seven ping-pong tables
# Ten standard-size office workstations
# Half an average three-room flat, and about a quarter of an average five-room flat
# Half the size of a squash court

Sim Lian Land Puts In Top Bid Of S$52m For Simei Road Site

Source : Channel NewsAsia, 03 June 2008

Only two bids were received in the tender for a residential site at Simei Road, which is being launched under HDB's Design, Build and Sell Scheme.

Property developer Sim Lian Land put in the top bid of S$52 million. The price works out to S$1,472 per square metre of gross floor area.

AMK Development put in the lower bid of S$37.2 million or S$1,055 per square metre of gross floor area.

The parcel spans 16,825 square metres and is slated for public housing. It has a lease of 103 years and a maximum allowable gross floor area of 35,333 square metres.

HDB will announce the winning bid within the next two weeks. - CNA /ls

Sim Lian Land Is Top Bidder For DBSS Site At Simei

Source : The Business Times, June 4, 2008

SIM Lian Land Pte Ltd yesterday emerged as the top bidder in a Housing & Development Board (HDB) tender for a Design, Build and Sell Scheme (DBSS) site at Simei Road.

The $52 million bid, or $137 per square foot per plot ratio (psf ppr), was at the lower range of earlier market expectations. Industry observers projected in April that the site could fetch between $49 million and $76 million, or $130 to $200 psf ppr.

The fifth DBSS site, with a lease term of 103 years and a maximum allowable gross floor area of 380,300 sq ft, attracted another bid from AMK Development Pte Ltd. Its bid of $37.3 million, or $98 psf ppr, was 28 per cent lower than Sim Lian Land's.

Managing director of Sim Lian Land Kuik Sing Beng told BT that the site is expected to yield about 340 units. Five-room flats would make up 60 to 70 per cent of the units, and the rest would be a mix of four- and three-room flats. Sim Lian Land plans to launch the units for sale next May.

Mr Kuik also said that the breakeven cost would be about $350 psf of sellable area. He noted that the selling price for resale flats in the Simei area is about $380 psf of sellable area.

Cushman & Wakefield managing director Donald Han believes that HDB is likely to award the site. He observed that in spite of the gap between the two bids, Sim Lian Land's bid is in line with current market expectations.

According to Mr Han, the small number of bids reflects the cautious attitude that developers have adopted. Rising construction costs are also posing a challenge for developers, Mr Han pointed out. Echoing this, Mr Kuik said that construction costs have increased substantially in the past one year.

HDB is expected to make a decision in the next two weeks.

Reality Check For 99-Year Lease Top-Up Assumption

Source : The Business Times, June 4, 2008

Recent decisions show such extensions not a given as govt retains planning flexibility

The market used to assume that the government would top up leases for sites to 99 years as they came up for redevelopment. A series of recent decisions - in which the authorities either declined lease top-ups or allowed them, but for shorter tenures - have put a big question mark over that assumption.

Property players say these decisions could have an impact on investment sales of 99-year leasehold properties or at least the way such deals are structured.

In January, when the proposal for Market Street Car Park's redevelopment into an office tower was made public, owner CapitaCommercial Trust revealed that the authorities declined to top up the lease for the site, which has another 65 years to run.

More recently, the market learnt that the former Crosby House site at 71 Robinson Road - which is being built into a new office block - had its lease topped up in April last year, not to the usual 99 years but 85 years and 10 months instead. This was apparently to match the remaining lease term of SIA Building next door.

BT understands that no lease top-up was granted for Marina House last year, which is proposed to be redeveloped, although HMC Building nearby (being developed into Lumiere condo) got a lease top-up to 99 years earlier. Sources say another building at Cecil Street has also had its lease top-up application rejected. Again, the Urban Redevelopment Authority (URA) may have plans for the streetblock where it is located.

In recent years, the government has topped up leases of nearby sites to the original 99-year term, including 1 Shenton Way (being redeveloped into One Shenton), NatWest Centre (being redeveloped into The Clift) and HMC Building.

The recent decisions appear to run contrary to the perception that the government would generally agree to top up leases of such sites to the original 99 years, so long as the planned redevelopment scheme is in sync with URA's long-term vision for the area.

Instead, Singapore Land Authority (SLA) said: 'The government will generally allow leases to expire, without extension.' It noted that 'the state generally sells land on leasehold to allow it the flexibility to reallocate land to meet socio-economic needs.'

'However, the government has considered and allowed lease extensions based on whether the proposed redevelopment is in line with the government's planning intention and long-term development plans, and factors such as whether there would be significant intensification, or greater optimisation in land use. That remains the government's policy,' SLA said.

SLA evaluates each application on its merits and in consultation with the relevant agencies. The specific circumstances of each development dictate whether it should be given a lease extension - and for how long.

Market Street Car Park's lease was not topped up 'as there is a need to retain planning flexibility over the future development of the site', SLA said.

URA said it evaluates requests for topping up leases based on 'a range of planning considerations in relation to the specific location and context of the area'. This approach gives 'the state flexibility to review the longer-term plan for the area, as and when the existing leases expire or come in for extension in future, and to reconfigure the parcels, if required, to provide for better land utilisation', it added.

In the Central Business District, for instance, the considerations may vary from streetblock to streetblock, URA said, when queried about the unusual lease top-up to 85 years and 10 months for 71 Robinson Road. 'This lease period is sufficient to allow for the owner to redevelop the site to a new modern office building,' URA added.

DTZ executive director Ong Choon Fah said: 'In the past, the government may have been pretty liberal in topping up leases. Now, they've to think of Concept Plan 2011 and how to accommodate a long-term population of 6.5 million people.

'So they have to be more creative and safeguard land for the future, by having a common lease expiry period.'

The head of a property consulting group said: 'URA's probably doing a housekeeping exercise of trying to coordinate lease expiries of buildings in the same streetblock, to give themselves some flexibility. So they may ask: 'What's the longest remaining lease in this block? Let's now try, going forward, to have leases in this streetblock expire at the same time, so that in future, if we want to do anything, we'll be able to do that.'

DTZ's Mrs Ong observes: 'There are many pencil buildings on tiny plots in the CBD. It would be more efficient if the government has common lease expiry periods for adjacent plots so that they may amalgamate them into bigger land parcels and resell them in future.

'It's more efficient to intensify land use for bigger land parcels. Globally too there's a trend of mixed developments, with a live, work, play environment. It's more environmentally friendly and reduces commuting time. For that too you need bigger sites.'

四美私人组屋地段 仅两发展商出手 投标价趋软

《联合早报》Jun 4 , 2008


建屋发展局在4月8日为第五块私人组屋地段招标,招标工作昨天中午截止。当局只收到两份竞标书,森联集团以5200万元居首,AMK Development以3728万元次之。



莱坊(Knight Frank)研究部主管麦俊荣受访时说,这个投标价已降低至比较现实的价位,因为上一个地段的投标价有点过高了。







林东荣相信,最近文庆路的City View@Boon Keng销售过程面对挑战,也令发展商却步。



《联合早报》Jun 4, 2008

















为避免过剩 受访房地产界人士吁政府 下半年以“备售名单”售地

《联合早报》Jun 4, 2008

对于即将出炉的2008年下半年政府售地(GLS)名单,房地产界人士认为,为了避免过剩,政府不应通过“正选名单(Confirmed List)”,把更多土地硬塞到市场上来。

由于市场情绪已经转弱、买卖活动显著减少,最好还是通过备售名单(Reserve List),让市场决定自己的“消化能力”。“正选名单”只适合用来发售少数几幅“具战略意义”的地段。

世邦魏理仕(CB Richard Ellis)执行董事李晓和回答本报的询问时说:“暂时来讲,政府最好不要再发售任何正选地段。”











除了裕廊湖新区,加冷河畔、巴耶利峇,以及梧槽路(Rochor Road)/奥菲亚路(Ophir Road)都是政府可能因为规划上的需要,而推出正选地段的地区。