The Sail Generates Top Gains In Subsale Deals

Source : The Business Times, March 19, 2009

Largest windfall of $6.7m achieved for a unit above the 60th floor

TRANSACTIONS at The Sail @ Marina Bay last year topped the subsales deals that generated the highest gains, both in absolute as well as in percentage terms, a caveats analysis by Savills Singapore shows.

The Sail @ Marina Bay: In all, there were 74 instances of gains generated from subsale transactions at The Sail in 2008

In absolute dollar terms, the biggest gain of $6.66 million was achieved for a unit above the 60th floor of the 99-year leasehold project. It was bought for $8.8 million or $1,508 psf in November 2005 from the project's developer, and sold in the subsale market for $15.5 million or $2,650 psf in August last year.

The top percentage gain of 178 per cent was generated by a 49th floor unit at The Sail that was sold for $1.42 million or $2,400 psf in the subsale market in May last year. The seller had picked up the unit for $510,400 or $862 psf from the developer (a joint venture between City Developments and AIG) in December 2004.

Two other units at The Sail also yielded subsale profits of 176 per cent and 175 per cent; the sellers had bought their units from the developer.

In all, there were 74 instances of gains generated from subsale transactions at The Sail in 2008. Market watchers noted that this was because the project's launch in two phases in 2004 and 2005 was 'perfectly timed' before residential property prices shot up in 2006 onwards.


















As for subsale deals that produced losses last year, the biggest loss in absolute quantum, $1.03 million, was suffered for a unit around the 20th floor at Scotts Square. It was sold in November last year for $3.7 million or $3,050 psf; the seller had bought it up in the primary market in August 2007 for nearly $4.8 million or $3,890 psf.

The largest percentage loss (36 per cent) was incurred by the owner of a 26th floor unit at Tribeca on Kim Seng Road who had paid the developer $885,800 or $1,553 psf in February 2007 and sold his unit at $570,000 or $999 psf in December last year.

Looking ahead, Savills Singapore director Steven Ming said: 'It's reasonable to expect that subsale losses may increase this year, unless macro and global economic problems are ironed out and financing eases,' he added.

Knight Frank executive director (residential) Peter Ow notes that what would usually make an investor cut losses in the subsale market is when it is time to pay up the developer. 'An investor exposed to a few properties he has bought on deferred payment scheme may want to cut losses on the first one or two to improve his cashflow, so that when it is time to pay up for the third one, he can afford it,' he added.

In the event that a buyer has difficulty getting a bank loan and footing the bill for a chunk of the purchase price to the developer when the project receives Temporary Occupation Permit (TOP), some developers may be prepared to repudiate the sale and purchase agreement and forfeit the 20 per cent initial payment collected from the buyer and proceed to resell the unit.

But other developers may sue the buyers and force them to complete the sale and purchase agreement at the contracted price. 'Most buyers wouldn't want to take the risk of defaulting because they don't know the position of the developer and risk being sued and even bankrupted,' Mr Ow said.

For projects completing in 2011/2012, most investors will tend to hold their units as there is a possibility of a property market recovery, he predicts. 'But for projects receiving TOP, say, this year, investors will have to weigh risks of whether they have the financial means to pay up. If not, it may be better to cut loss,' Mr Ow said.

Mr Ow estimates that most investors would be prepared to cut a loss of up to 20 per cent on their purchase price (assuming they have already paid an initial 20 per cent to the developer) since they will then not have to take a further hit.

However, if they subsell the property at, say, 70 per cent of their purchase price, they would have to fork out a further 10 per cent to the developer before the developer agrees to transfer the title to the new buyer.

Occupancy Cost Of Offices Falls In Singapore

Source : The Business Times, March 19, 2009

But it still ranks as third most expensive city in Asia-Pacific, says Colliers

GRADE A office occupancy cost in Singapore dropped 22 per cent from an annual average gross rent of US$125.06 per sq ft in the first half of 2008 to US$97.07 psf in the second half.

But Singapore remained the third most expensive city in the Asia-Pacific, according to a report by Colliers International.

Occupancy cost is defined as the annual average gross rent of central business district (CBD) Grade A office space. Hong Kong and Tokyo retained their first and second spots, with respective average gross rents of US$177.86 psf and US$128.40 psf.

Worldwide, Singapore was ranked the sixth most expensive city, while Hong Kong was the most expensive.

Tay Huey Ying, director of research and advisory at Colliers, said: 'Despite the fact that Singapore's CBD Grade A office rents registered a 22 per cent decline in H2 2008, it has retained a high position in the regional and global ranking.

'This is because office rents in almost all other cities have been similarly pressured down by the global financial crisis.'

Colliers' report shows that nine of the major Asia-Pacific cities surveyed registered rental declines exceeding 20 per cent. Brisbane and Perth experienced the steepest declines of more than 28 per cent.

While Singapore remains expensive, Ms Tay believes cost competitiveness has improved slightly, particularly against other key financial cities like Hong Kong and Tokyo.

She noted that Singapore's office occupancy cost is now 45 per cent cheaper than Hong Kong's, widening from 41 per cent in June 2008. Compared with Tokyo, occupancy cost here is now 24 per cent cheaper, versus just 3 per cent in June 2008.

The Grade A office vacancy rate in Singapore rose 1.4 percentage points to 8.9 per cent in the second half on 2008. The 8.9 per cent figure is high compared with Hong Kong and Tokyo, both with 4 per cent.

Seoul had the lowest vacancy rate at 0.7 per cent, while Guangzhou had the highest vacancy rate at 23 per cent.

Ms Tay said: 'The growing vacancy rate in Singapore is due to the interplay of dwindling demand and surging supply.'

Colliers says demand for office space here shrank for the first time in four-and- a-half years in December 2008.

New supply, on the other hand, was about 1.4 million sq ft in 2008 - the largest amount since 2002 and exceeding the cumulative net new supply of office space from 2003 to 2007 by almost 1 million sq ft.

Ms Tay said that in line with the economic contraction, demand for office space in Singapore is set to slide in 2009 and the vacancy rate is set to rise.

'On the supply side, 2.9 million sq ft of office space is estimated to come on stream in 2009, on top of the bumper crop of net new completion amounting to 1.4 million sq ft seen in 2008,' she said.

The situation will be aggravated by the supply of 2.5 million sq ft of new hi-spec industrial space due for completion in 2009, as well as a rise in shadow space.

Although close to 50 per cent of the new hi-spec space has been pre-committed, Ms Tay believes the remaining space is likely to compete with the office sector for tenants.

In addition, shadow supply is expected to grow in 2009 as companies downsize or relocate to cheaper premises prior to lease expiry.

Worse In Store For US Commercial Property

Source : The Business Times, March 19, 2009

(NEW YORK) The US commercial real estate market is bad and investors expect it to get a whole lot worse, according to a closely followed survey by PricewaterhouseCoopers.

No takers: Store closings rose 50.1% to 6,913 last year and forecasts call for more than 8,000 closings in 2009

'As investors painfully watch the value of their assets decline, many feel troubled knowing that the ills of the US economic recession have yet to fully impact the commercial real estate industry,' starts the first- quarter Korpacz Real Estate Investor Survey of more than 100 investors from real estate investment trusts, pension funds, private equity firms and insurance and mortgage firms.

Many investors are struggling with ways to preserve the value of their investments and maintain ownership in the wake of restricted debt sources, declining tenant demand, and falling values, the survey said.

Investors do not expect the commercial real estate sector to rebound until well into 2010 at the earliest.

'Investors are not expecting this recovery, when it does happen, to be a sharp recovery where it hits bottom and bounces up,' said Susan Smith, a director at PricewaterhouseCoopers in the real estate group and the survey's editor. 'It's going to be a very slow sluggish recovery,' she said. 'There are just too many things right now that are impacting the industry to make investors very confident about what's going on,' she said.

Some property owners are lowering rental rates and increasing concessions, which results in lower revenue.

Compared to a year ago, the average amount of free rent landlords are offering has increased to six month in several major office markets, such as Boston, where it rose from 2.15 months; Manhattan, where it grew from 41/2 months and San Francisco, where it rose from 31/2 months.

One investor in the survey suggested 'making the best deal you can today because tomorrow's deal will be worse.' Investors believe that the overall cap rates, or returns, for US commercial real estate over the next six months will rise by an average 0.47 percentage points from 7.49 per cent in the first quarter 2009, the survey said. When cap rates rise, prices fall.

In the retail real estate arena of malls and shopping centres, investors expect power centres, home of the big box stores, to lose value by the greatest amount, with cap rates rising by an average of 0.744 percentage points from 7.63 per cent, according to the survey. They see cap rates for regional malls rising 0.65 percentage points.

Investors expect rent and occupancy for retail properties to continue to decline in 2009, the survey said. Last year, store closings rose 50.1 per cent to 6,913 and forecasts call for more than 8,000 store closings in 2009, according to the survey.

Most investors said they expect the eroding fundamentals to press values down by 10 per cent to 26 per cent from the 2007 peak, with the most pessimistic investors seeing declines of about 40 per cent, the survey said. - Reuters

Property Transactions With Contract Dates Between March 2nd - 7th, 2009

美房地产市场 出现复苏迹象

Source : 《联合早报》March 19, 2009

（华盛顿路透电）一些最新数据显示，美国经济正显现令人鼓舞的生命迹象。房地产市场开始出现新工程和复工，消费者开始重新踏进购物商场，制造业者开始清空库存。

周二公布的数据显示，2月份的房屋工程开工量和建筑许可证数量都回弹，开工量暴增22.2%，是去年4月抵押贷款市场引发金融危机以来的首个增长。

犹他州奥勒姆市某建筑工地的木工正在为兴建中的房子安装地板。（彭博社）

分析师认为，虽然目前不应对经济复苏作出任何仓促预测，但也认为房地产市场出现稳定迹象。瑞士再保险公司的美国首席经济师卡尔说：“这些数字仍然糟糕，但方向是好的。”

上个星期，零售业指数显示，消费者开始购买基本消费品以外的货品，例如电子产品和家具。

商家开始清空库存

在去年底因为消费暴跌而大受影响的商家，今年初也开始积极清空库存。如果消费回弹能够持续，制造业者不久后就须要提高生产。

美联银行国际经济师布莱森说：“一些惊吓已经消失，就算消费者信心不是都很高，但惊吓已经消失。”

投资者感受到最糟糕的情况可能已经过去，所以开始投资一些遭受严重打击的领域，包括零售业和建筑业。标准普尔零售指数周二上升了3%，自本月6日的谷底以来，已累计上升了18%。道琼斯住宅建筑指数也在同期上升了25%。

美国联邦储备局主席伯南克日前在电视节目上表示，美国经济复苏的“幼苗”已经出现，他有信心经济将在今年结束衰退，明年走上复苏之路。

经济师：非复苏 是衰退开始放缓

然而，有经济学家认为，这些迹象并非显示经济开始复苏，只是显示经济下滑的速度开始减缓。经济恢复增长仍有数月之遥，也还不足以创造就业机会。这意味着失业率仍会继续上升，仍会有很多人无法按时偿还贷款，银行仍然面对压力。

纽约巴克莱银行经济师哈里斯说：“我不认为这是复苏的开始，这只是衰退放缓的开始。你必须先学会走路，才能学跑。”

经济学家也认为，华盛顿的政策有望在今年内让这些暂时性经济复苏现象转化成经济增长，但政策实行过失也可能对复苏造成威胁。

政府官员至今仍无法让投资者者和选民相信，他们已掌控了金融动荡和正在迅速处理危机当中。华尔街股市在最近几周的跌宕起伏，是投资者对政府动作的信心写照，而不是对经济前景的信心。