Rise In S'pore Office Rent World's Fastest: CBRE Survey

Source : The Business Times, November 22, 2007

Singapore's office rents leapt 83 per cent in the past 12 months - the fastest rate in the world - as it shrugged off turmoil in global financial markets, commercial property consultancy CB Richard Ellis Research said.

Office rents in Singapore rose to US$102.37 per square foot, making it the 11th most expensive business centre in the world, up from the 24th position in the August survey.

The survey of office occupation costs in 171 cities worldwide showed that Singapore was followed by Russian capital Moscow, India's financial capital Mumbai, the Philippines' capital Manila and Norway's capital Oslo.

'The recent uncertainty in global financial markets has had no discernible impact on Singapore demand for office space,' CB Richard Ellis Research (CBRE) said in its semi-annual Global Market Rents survey.

Office rents in Singapore rose to US$102.37 per square foot, making it the 11th most expensive business centre in the world, up from the 24th position in the August survey, CBRE said.

The survey showed London's West End, Mumbai, the City of London and Moscow as the top four most expensive office markets in the world.

'With (Singapore) rents at record levels, there is increasing tenant resistance to rental hikes, and occupiers are more prepared to explore lower cost locations and consider relocating to business parks or high-tech space,' the survey said. -- REUTERS

Hot Market Smokes Out Solo Land Sites

Source : The Business Times, November 22, 2007

19 single-owner plots worth $1.05b sold this year

With the property market running hot, it is not just collective sales that have ballooned. Over the past two years, more residential land sites owned by single owners were sold as well.
















So far this year, 19 residential sites owned by single owners and worth some $1.05 billion in all were sold to developers, data provided by property firm CB Richard Ellis (CBRE) shows.

And in 2006, there were 15 single-owner land sales worth a total of $865 million. By comparison, just four single-owner land sales worth $303 million were done in 2005.

Market watchers say a property market that is strong and active will bring out more sellers - both of the en-bloc variety as well as single owners.

'Collective sales have hogged the limelight of late, but the single-owner sales have also been very active,' says CBRE executive director Jeremy Lake. 'If you look at overall residential sales, you will see that they have gone up too. So single owners are just mirroring the overall market.'

Ku Swee Yong, director of marketing and business development at Savills Singapore, says that in the case of those sites owned by associations or clubs, members who were looking to sell might have been able to convince those who were previously not in favour of selling to change their minds, considering the prices that the properties can now fetch.

'When the price is better, they (those looking to sell) manage to clear the hurdle,' Mr Ku says.

The 19 sites sold by single owners this year include a few owned by associations, including one sold by Chui Hui Lim Club. The club sold a Keng Lee Road site to Sim Lian Group for some $115.8 million.

CBRE's data also shows that this year, while there were a few large single-owner sites that were sold, the bulk of the 19 properties were small - with 10 of them going for less than $30 million each.

Market watchers attributed the increased interest in smaller sites to new players in the property market. These smaller developers generally do not have the resources to bid for en-bloc sites that go for hundreds of millions dollars - the province of the likes of CapitaLand, City Developments and foreign property funds.

'When the market is good, it will attract new entrants,' says CBRE's Mr Lake. 'And you will find some people who will want to get into the market, but might not be able to afford the big sites.'

Sesdaq-listed Tee International is an example of one new entrant which has been snapping up smaller sites. The company, which has a market capitalisation of $41.5 million, has been in the electrical and mechanical engineering business since 1980. But since the start of the year, Tee has been buying a string of freehold terrace houses and apartments with plans to develop them into luxury 'boutique' homes.

Among its purchases are three single-owner sites, CBRE's data shows. Tee acquired two single-owner plots in Cairnhill Circle in July - one for $7.7 million and the other for $5.5 million. It also bought a single-owner property in Thomson Road for $6.9 million in January this year.

Similarly, Eastern Holdings, which publishes magazines, also picked up two small single-owner sites in Grove Drive this year - one for $12.5 million and the other for $10.3 million. The company is also relatively small, having a market capitalisation of about $70 million.

Savills's Mr Ku says that there are also some high net worth individuals who are buying smaller sites, redeveloping them and then selling them - all within a short span of time - to capitalise on the property market.

These wealthy individuals were also adding to the demand for smaller sites, he says.

Pool Doubles As Skylight For Bras Basah Station

Source : The Straits Times, Nov 22, 2007

A NEW reflection pool sited between the Singapore Art Museum and Singapore Management University (SMU) is more than a water feature providing cool relief to passers-by.

The tennis court-sized pool is also a skylight for the Bras Basah MRT station, a five-level structure that goes 35m below ground - deeper than any MRT station here.

The skylight idea from local firm WoHa Architects allows the station to be used without artificial lighting in the day. At night, the lit station gives the open area in front of the SMU a surreal glow.

When sunlight streams through the glass roof, slanting side walls reflect it to deeper levels of the station.

Giving The Straits Times a tour of the station, the Land Transport Authority's Circle Line director Sim Wee Meng said the skylight will help make the commuting experience better.
'As soon as commuters come out of the train, they'd feel like they're already at the surface,' Mr Sim said.

The walls are clad in acoustic panels to minimise echoes, making the deep station less noisy.

The 70,000 litres of running water on the roof have more than an aesthetic role. The pool also helps to dissipate heat.

'If it was just plain glass without the water, it would get quite hot,' explained Mr Sim.

Being so deep, the station is served by 41.3m-long escalators - the longest in Singapore's rail network. Currently, the longest in operation are at Changi Airport MRT station, measuring 37.9m.

The Bras Basah station's expansive walls look bare now, but there are plans to project slide shows onto them.

There is still some work to be done before the station is completed. Electrical and signalling systems required to run the trains are being installed and testing of the systems is expected to commence in 2009.

The $6.7 billion 33.3km Circle Line is expected to open in stages from 2010. The first phase is likely to be a 5km stretch between Bartley and Marymount.

Although the city and eastern portions of the line are largely in advanced stages of completion, some stations - including the new Nicoll Highway and Dakota stations - are lagging behind.

S'pore Has Fastest-Growing Prime Office Rents In The World: Report

Source : The Straits Times, Nov 22, 2007

It outpaces Mumbai as rents, occupancy costs rise 83% to $12.60 psf a month

PRIME office rents have grown faster in Singapore than anywhere else in the world over the past year, a new report has found.

The rate of increase beat even that in Mumbai, now the world's second most expensive office market, after London's West End, according to CB Richard Ellis (CBRE).

But overall, Singapore ranks 11th on the list of worldwide office rentals, which are generally rising quickly.

Rental levels plus other associated costs for Singapore prime office space shot up 82.6 per cent in the 12 months ended Sept 30 to $12.60 per sq ft (psf) a month, said the CBRE's Global Market Rents report. Apart from lease rates, occupancy costs include expenses for management and basic building maintenance.

In terms of occupancy costs, Moscow posted the second-fastest growth, of 65.4 per cent. Third in line was Mumbai, where occupancy costs grew 55 per cent.
The booming economics of the Asia-Pacific region continue to support strong demand for office space and to drive occupancy costs at a faster rate than in any other region, said CBRE in the report.

In comparing the costs, it looked at the typical achievable rent for a 10,000 sq ft unit in a top-quality building in a prime location.

Of the 171 markets it monitored, 85 per cent recorded growth in occupancy costs.

London's West End - which registered 41.9 per cent growth - still has the most expensive office space, at US$328.91 (S$476.76) psf a year.

Mumbai came in a distant second, at US$189.51 psf a year. But it is already 5 per cent more expensive than London City, where occupancy costs came to US$180.80 psf a year.

Moscow is ranked fourth most expensive, at US$180.78 psf a year.

To facilitate comparisons across markets, the report based the most expensive rents on US dollars while rental growth was measured in local currency terms.

Singapore is ranked 11th on the world's most expensive list, at US$102.37 (S$148.39) psf a year.

It came just after Hong Kong, where costs were at US$106.31 psf a year.

At $100.79 psf a year, rents for prime office space in New York's Midtown have come down. Costs in Tokyo ranged from US$154.56 to US$178.61 psf a year.

As was the case with other key Asian financial centres such as Tokyo and Hong Kong, office vacancy rates remained low in Singapore at 5 per cent or less, said CBRE.

It noted that the uncertainty in global financial markets has had no discernible impact on demand for office space in Singapore.

The companies in Singapore that require larger spaces are largely from the fast-growing financial and insurance sectors. And before year-end, several sizeable bookings by companies in these two sectors are expected, CBRE said.

The report also echoed comments by property consultants about rising tenant resistance to rental hikes as rents are at record-high levels.

Companies are now more prepared to move to cheaper space further out of town to avoid paying high rents.

ECs Gain Appeal As HDB, Private Home Price Gap Widens

Source : The Straits Times, Nov 22, 2007

Easing of rules expected to increase demand for exec condos

THE rising property market has brought executive condominiums (ECs) back from the brink of extinction.

















ON A REBOUND: Developers of executive condos, such as the Quintet ECs (above), are optimistic as prices for these homes are expected to rise. Many had expected La Casa in Woodlands to be the last EC project on the market when it was launched for sale in 2005.

These homes - which are halfway between public housing and private condominiums - suddenly looked much more appealing after rules for buyers were relaxed on Tuesday.

















Property consultants now expect that more plots for ECs, such as the 2.27ha site placed on the market on Tuesday, will soon be offered.

The main reason: the widening gap between prices of resale Housing Board flats and those of private condos. ECs, which come with condo facilities but with sale restrictions similar to those for public housing, were introduced in 1995 to bridge this gap.

They became relatively unpopular, however, after the property market plunged a few years later, making private condos more affordable.
In fact, when the first few ECs hit the resale market in 2004 after the minimum five-year occupation period, many were sold at a loss or at breakeven prices. This was because they were booked when prices were at their peak in 1996.

Many people expected Far East Organization's La Casa in Woodlands to be the last EC project on the market when it was launched for sale in 2005.

'Mass market condo prices were in the doldrums, making ECs redundant. Today, that's a different story,' said Colliers International's director of research and consultancy, Ms Tay Huey Ying.

Private home prices surged 22.9 per cent in the first nine months of the year - more than twice the rate achieved by resale HDB flats.

Lower-priced ECs are more attractive now because prices of condos in the suburbs - where ECs tend to be sited - have started to move up significantly. In the July-

September period, prices of non-landed homes outside the central region rose 7.9 per cent. Consultants expect this growth to continue.

The easing of EC rules is also expected to increase demand from people looking to move from HDB flats. The HDB removed a hurdle for upgraders by scrapping a resale levy payable by EC buyers who had previously bought government-subsidised flats.

Buyers of new EC units are also no longer barred from buying second new EC units or new flats. In addition, the HDB now requires developers to reserve 90 per cent of units for first-time buyers in the first month of sale.

Although ECs still cannot be sold within the first five years and remain out of bounds to foreigners within the first 10 years, the easing of rules has helped ECs shake off their tag as second-rate condos, said Mr Eric Cheng, the executive director of the HSR property group.

Potential buyers include property agent Lester Tan, 27, who has been living with his parents for the past five years since he got married.

He and his wife started looking for a condo about two years ago, but regretted waiting so long to buy one, as prices have shot up.

He said: 'We heard that the Punggol EC may be launched, and we are quite excited about it.'

Potential upgraders like Ms Elsie Cheng, 31, are also eyeing the future EC in Punggol. The teacher - who lives with her husband, seven-month-old son and maid in a two-bedroom EC unit in Tampines - is looking to move into a bigger EC.

'Why pay so much for a private condo?' she asked.

Knight Frank's head of research and consultancy, Mr Nicholas Mak, said the changes were likely to raise the proportion of upgraders among EC buyers, from an estimated 5 per cent to 10 per cent, to 20 per cent to 25 per cent.

Developers such as Frasers Centrepoint Homes, which built the Lilydale and Quintet ECs, are optimistic. Its chief operating officer, Mr Cheang Kok Kheong, told The Straits Times: 'The EC will do well in today's market as a hybrid property - apartments with condo facilities but without private condo price tags.'

He added: 'As a reflection of the strong confidence and growth potential of the EC market, we expect to see increased competition in this market segment and more developers taking part in upcoming EC land tenders.'

Buyers hoping to make a quick buck from ECs, however, should take heed. 'The (full) value of the EC will not be realised immediately but in 10 years, subject to the property market being buoyant at that time,' said PropNex chief executive Mohamed Ismail.

For now, all eyes are on the EC site in Punggol Field. Estimated to be able to fit about 620 homes, it will be put up for tender once a developer commits to a minimum bid that meets the Government's reserve price.

The EC units, however, will meet only a small portion of the current demand for new homes. In a recent HDB sales exercise, almost 8,000 families applied for just 400 flats in Telok Blangah, while more than 1,600 applied for 516 homes in Punggol.

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Growing interest

# The HDB has removed a hurdle for upgraders by scrapping a resale levy that executive condo (EC) buyers who already own HDB flats have to pay.

# ECs bridge the price gap between HDB flats and private homes. Private home prices rose 22.9 per cent in the first nine months of the year - more than twice the rate achieved by HDB flats.

# ECs are more attractive now because prices of condos in the suburbs - where they tend to be sited - have started to move up significantly.