Singapore Office Occupancy Costs 7th Highest Worldwide: Survey

Source : The Business Times, September 9, 2008

GRADE A office space in Singapore was the seventh most expensive in the world in June this year, a survey has found.

The average annual Grade A office gross rent here was US$125.06, according to the study by Colliers International.

Cities that were dearer included Hong Kong (US$213.68), London's West End (US$207.42) and Moscow (US$167.29).

Singapore was the third most expensive location in the Asia-Pacific region, after Hong Kong and Tokyo.

In its Global Office Real Estate Review Midyear 2008, Colliers says average annual Grade A office rent in Singapore soared to US$113.49 in December 2007, from US$84.64 in June 2007.

In terms of vacancy rates, Singapore at 7.5 per cent in June 2008 ranked 13th in the Asia-Pacific, below the likes of Perth (0.3 per cent), Seoul (0.7 per cent) and Brisbane (1.2 per cent).

While the vacancy rate here rose marginally from 6.1 per cent in December 2007, Collier's director of research and advisory Tay Huey Ying said: 'Singapore registered a comparatively higher vacancy rate in the first six months of this year. This was due in part to the government providing relief to the supply shortage by leasing out some disused state properties and selling several sites for transitional office use.'

Companies appear to be increasingly receptive to alternative business locations and premises, Ms Tay said.

'Office users, who have had to grapple with the frenzied pace of rental growth experienced since mid- 2006, can heave a sigh of relief as rental growth eased substantially in the first half of 2008 on the back of reduced pressure on supply,' she said.

In terms of supply, Colliers said Singapore had 8.6 million sq ft of offices under construction in June, putting it in 16th position below cities like Dubai (42 million sq ft), Shanghai (41.6 million sq ft) and Guangzhou (19.8 million sq ft).

Office investment held up in the Asia-Pacific but was down in Europe and North America.

Global office investment fell 60 per cent - or 41 per cent excluding portfolio sales - in the first half of 2008 to $108 billion, from $268.6 billion a year earlier.

But Japan saw office transactions increase 103 per cent, followed by Hong Kong (up 86 per cent) and Singapore (up 58 per cent). China registered a drop of 16 per cent.

Capitalisation rates / initial yield in Tokyo (Central Wards), Hong Kong and Singapore were 3.9, 3.42 and 6.19 per cent respectively.

In Spain and The Netherlands, office transactions increased 77 per cent and 14 per cent respectively, while in London they fell 64 per cent.

The US remained the most active office investment sales market, even though volume dropped 69 per cent to US$28.6 billion.

50% Of Retail Space Leased At Fusionopolis

Source : The Business Times, September 9, 2008

Cold Storage and Fitness First are two of the largest tenants

AS the first phase of Fusionopolis approaches its official opening next month, more than 50 per cent of retail space in the development has been taken up.

The upcoming research and development (R&D) hotspot, comprising two towers and a podium in phase one, has around 183,000 sq ft of retail space. With seven tenants already secured, some 86,100 sq ft are left.

Upcoming hotspot: Rents for the retail space range from $4.50 to $12 per sq ft, depending on the usage

Cold Storage and Fitness First are two of the largest tenants. Fitness First @ Fusionopolis, with a rooftop swimming pool, will occupy 30,000 sq ft. According to JTC Corporation, the fitness club's members have been able to use the facilities starting yesterday.

Starbucks Coffee, Harry's Bistro & Bar, food and beverage (F&B) outlet Black Canyon, Raffles Medical Group and Frames & Lenses (Optical) will also be moving into the first phase of Fusionopolis.

Rents for the retail space range from $4.50 to $12 per sq ft, depending on how the units are used. Larger units also enjoy a lower psf rent.

'We are heartened by the enthusiastic response from our business partners in locating their retail and F&B outlets at Fusionopolis,' said JTC Corp's assistant CEO, Philip Su.

'It is an endorsement of what the vibrant Fusionopolis stands for, as the first integrated development within one-north which embraces all four work-live-play-learn elements.'

Frasers Hospitality will also be launching its brand of serviced apartments in Fusionopolis, comprising 50 work loft units.

JTC Corp is in talks with more retail and F&B businesses to take up the remaining space. 'We welcome all other like-minded and enterprising business partners to join us in realising the vision of this unique innovative hub,' said Mr Su.

Fusionopolis is a major development at one-north catering to the infocomm, media, science and engineering industries. The first phase has around 1.29 million sq ft of floor space and major R&D tenants include institutes and laboratories under A*Star's science and engineering research council.

Phases 2A and 2B of the Fusionopolis are likely to be completed by 2010.

China Developers Hard Pressed, Not Distressed Yet

Source : The Business Times, September 9, 2008

Govt moves to ease property curbs cool funds' firesale hopes

(HONG KONG) Bargain Chinese property projects will be up for grabs in coming months as developers scramble to survive falling home sales and a funding crunch.

But circling foreign funds can no longer expect a big firesale as the Chinese government eases its tough steps to cool the market, fearing mass bankruptcies and a property price slide that would send a shiver through the economy.

In the balance: With loans to developers down 30% in the first half of this year, many firms are vulnerable, especially if they took part in a land buying frenzy last year

When Beijing upped the ante in a fight against property speculation at the end of last year by ruling that buyers of second homes must pay 40 per cent in equity, apartment sales and prices slid in the southern cities of Guangzhou and Shenzhen.

Developers, already squeezed by a land appreciation tax and a clampdown on bank lending, then found that capital market turmoil closed off share and debt issuance.

Some fund managers believed their time had come, and cheap deals would open up a Chinese property market where a yearly influx of 8 million people into cities promises long-term riches.

They are still waiting. 'We expected there to be a lot more guys going under and a lot more forced sale situations,' said Chris Gradel, managing partner at Pacific Alliance, which manages about US$4.5 billion in alternative asset funds targeted at China and Vietnam.

Describing the resilience of Chinese developers as 'one of the biggest surprises of the year', Mr Gradel said property firms had muddled through with presales, delayed payments to contractors, and borrowing from banks and other sources.

Local authorities have also been stretching payment schedules for land, and choosing not to implement a government edict that developers lose land if they fail to build within two years.

However, with bank loans to developers down 30 per cent in the first half of this year to 399 billion yuan (S$83 billion), according to the central bank, thousands of firms are vulnerable, especially if they took part in a land buying frenzy last year.

'The guys who blew all their cash in the second half of last year are the guys who are having the most trouble,' Mr Gradel said. 'I think there's a good chance we'll see some more distress over the rest of the year.' So far, few bankruptcies have been reported, even as Beijing and Shanghai home sales fell by half in July from a year earlier.

Nanjing property tycoon Liu Fulin abandoned his home building business in February in favour of pig farming when hog prices soared, local television reported.

Another firm in the eastern city, Nanjing Panlong Jinling Property Development Co, went bankrupt in July, according to property website focus.cn.

The downturn was best illustrated by Changhui, one of the country's biggest property agencies, which closed half its 1,800 outlets late last year as sales dried up.

Property price falls must soon follow, analysts say, but developers appear to be holding out, with homes an average 7 per cent more expensive in July than a year earlier.

Government austerity measures are at the root of the housing slowdown.

But the policies were conceived to narrow the gap between rich and poor, not to suppress the property market, economists say, as the government is wary of damaging an industry that accounts for 8 per cent of gross domestic product (GDP).

Beijing is widely expected to relax its stance in early 2009.

'In China, it really depends on the macro-economy and the kind of government policy that is going to be put in place,' said Wilkie Lai, director and chief risk officer at Tribridge Investment Partners, a fixed-income focused hedge fund manager.

'Tightening is not the keyword anymore'.

The prospect that the market will bounce back strongly is giving hope to foreign investors.

US banks Citigroup and JP Morgan have said they are keen to spend their own money and their managed funds in China, expecting developers to offer plum deals.

Morgan Stanley , which bought distressed property assets from Chinese banks in the early 2000s, is targeting China for nearly a fifth of a US$10 billion global real estate fund it is raising, Reuters reported last week.

With shares in Chinese developers down about 70 per cent since a peak last November, as many as 30 Chinese developers have shelved IPOs planned for this year and are looking for foreign funds for capital to finish their projects.

The listing candidates often took on pre-IPO funding from private equity and hedge funds, and will have to repay investors soon if they do not push through stock market listings.

'These developers are refinancing, or selling land and offering joint venture projects to raise money,' said Anthony Ryan, head of Asia property investment banking at JP Morgan.

'An increase in restructuring activities will appear between now and the first quarter of next year.' But even when developers are forced out of business, foreign funds are found jostling at the back of the queue of buyers.

'If there are good opportunities they're taken up by other developers in off-market deals, very quietly,' said Hendrik Broeker, national director for Asia capital markets at consultants Jones Lang LaSalle in Hong Kong. -- Reuters

You've Got A Home... But Does Your Car?

Source : The Straits Times, Sep 8, 2008

Carparks at newer condos smaller; some even have fewer lots than units

HOME owners looking to buy a condominium within the next few years may soon find themselves in a squeeze when it comes to parking their cars at home.

A Straits Times survey of 26 condominiums launched or built after 2005 showed carparks are getting smaller, with some even falling below a government standard of at least one lot per unit.

About 50 per cent of the condominiums surveyed will have just one lot for each unit - plus not more than 5 per cent of extra lots - when completed.

The situation is more pronounced in the city. At least three new developments - The Sail @ Marina Bay, Marina Bay Residences and Icon in Tanjong Pagar - have between 20 per cent and 40 per cent fewer lots than units.

In comparison, a survey of about 10 condos built between 1980 and 2000 showed they were more generous, with over 50 per cent of them giving at least 15 per cent more leeway for lots.

For instance, Kembangan's Windy Heights, which was completed around 1978, has 274 lots to its 202 units - about 36 per cent more lots than units.

In comparison, The Sail @ Marina Bay will have 700 lots for its 1,111 units - but only because it has 'direct access to MRT stations, Raffles Place and is within walking distance to many workplaces and amenities', said a spokesman for the developer CDL.

The upcoming Dakota Residences in Mountbatten, when completed in 2010, will have one lot for each of the 348 units while The Reflections at Keppel Bay, when ready in 2013, will have about 1,200 lots for its 1,129 apartments - just 6 per cent more lots than units.

While many of these condos have not yet been completed, and the problem has not quite set in, there have been a few rumblings.

For instance, a handful of retailers at the mostly sold Icon - a retail-cum-residential development - said a few customers have complained how hard it can be to find a lot during the peak hours of lunchtime and 5pm to 8pm.

Investor Hengky Oeni, 54, who has bought a unit at The Sail @ Marina Bay, believes visitors may face problems finding a spot at certain times if forced to park outside at nearby office buildings. 'On weekdays when employees are around, parking spaces in these buildings will be difficult to find and expensive.'

Real-estate firm Knight Frank's director of research and consultancy Nicholas Mak pointed out that home owners-to-be would not feel the effects now.

'But once they move in, for instance when they throw a house-warming party, they will realise there may not be enough parking lots,' he said.

During festive seasons such as Chinese New Year, visitors who take up spaces meant for residents may cause spats in the estate too, he said.

Management consultant Ong Tee Jin, 46, complained he often had to park in HDB estates and walk over when visiting friends in some of the new developments, 'because their carparks are so crowded'.

'Some of my friends regretted buying these condos after they found out about the parking problems,' he said.

He also said condo owners who can afford these homes are likely to have more than one car.

Reasons for the downward trend vary: Some say it is the sheer cost of land and construction, and the smaller plots of land for sale these days.

Also, basement carparks, while ideal solutions for narrow land plots, cost three times as much as above-ground carparks to construct, said Mr Mak.

Assistant Professor Erwin Viray from the National University of Singapore's architecture faculty told The Straits Times that the authorities or developers may want to 'encourage a green urban lifestyle, where people...live healthy lives by walking and using public transport'.

He described how the well-off in cities such as Manhattan and Tokyo often ditch their cars to walk, and have 'created a sort of healthy trend'. 'It could be a sign of things to come in Singapore,' he said.

A rule change in 2005 meant that developers no longer have to provide as many parking spots, if the condo falls in the Central Business District or is near an MRT station. But it is largely still up to developers to decide what works for them.

Mr Mak said: 'People usually take parking for granted. When choosing a condo to buy...parking is one essential that often gets neglected.'

The exception is usually super deluxe condos, which sell for about $3,000 or more per sq ft. For example, the upcoming Boulevard Vue will provide up to four lots for each penthouse unit.


--------------------------------------------------------------------------------

Some malls make the most of their carparks

SEVERAL shopping malls have been converting parts of their carparks to other uses over the past few years as well.

For instance, about one-quarter of the lots in Hougang Mall and the White Sands Mall in Pasir Ris were converted to retail use in 2006 and last year respectively.

This retail space on basement one of Hougang Mall was carved out of about one-quarter of the mall's carpark lots. -- ST PHOTO: JOYCE FANG

The spaces became shops and facilities, such as travellators, nursing rooms and children's play areas, after the authorities relaxed lot rules for commercial buildings near MRT stations, said Ms Stephanie Ho, deputy general manager of AsiaMalls Management, the buildings' management.

Under the Land Transport Authority's old parking provision standards, malls must have one car space per 200 to 400 sq m of gross floor area, depending on which zone it is in.

In 2005, the rule was relaxed so malls in the Central Business District or near MRT stations can go below this requirement by up to 20 per cent.

Ms Ho said this move had increased shopper traffic, and made 'more efficient use of the carpark', with the number of cars using a lot per day increasing by up to 70 per cent in some cases.

In 2000, Parkway Parade in Marine Parade also converted about 100 lots to 'leasable space', its spokesman said.

At Raffles City, a large chunk of what used to be the Basement 1 carpark was converted into shops such as pharmacies, eateries and lifestyle shops.

However, it replaced the lots by carving them out of unutilised space in Basement 2 and 3, its spokesman said.

A spokesman for carpark management company Elite Parking said: 'The income from carpark space versus shops or offices is too great a difference.

'Most building owners will take up the chance to gear up income.'

However, if a mall cannot pull in the crowd, the number of parking spaces available does not matter, said carpark management company Metro Parking's managing director Tyrone Lopez.

He said he believed the reduction of parking lots in buildings was not happening on a large scale as yet.

'Reducing supply of parking lots fits in with the overall government transportation policy,' he said. Reducing the supply of lots will 'in the long run reduce the volume of traffic in a given area'.

Mr Nicholas Mak from Knight Frank said most building owners would weigh the cost of business disruption from the conversion against the possible additional revenue to see if it makes business sense.

He added that this trend would unlikely affect office buildings, because carparks in offices with their 'low ceilings, no view, poor air' make for 'very undesirable space'.

--------------------------------------------------------------------------------

Enough HDB parking? 465,000 cars, 697,500 lots

THERE are no hard and fast rules that govern parking lot numbers in HDB estates, unlike private estates.

The Housing and Development Board, in response to Straits Times queries, said it would consider two factors: the type of flat and the number of flats built in the precinct.

Public housing is not covered under the Land Transport Authority's parking provision standards, which say residential units should generally have one lot each.

Delay For New UWC Campus

Source : The Straits Times, Sep 8, 2008

Only infant school will open by August 2010, cutting number of pupils who can enrol

PARENTS whose children are on the waiting list of United World College (UWC) Southeast Asia's new Tampines campus may be in for a disappointment.

Only part of the campus slated to open in 2010 will be ready then, which will cut the number of students who were supposed to enrol.

UWC principal Julian Whiteley said that contractors keen on the project have told the school that they would not be able to complete it on time as they have other projects on their hands.

Read Jane Ng's full story in Tuesday's edition of The Straits Times.