URA has advised the public to interpret the projections of future rental increases with caution. It said Savills assertion that office rentals in Singapore could surpass those in Hong Kong by end-08 may not have taken into consideration the additional supply of office and business park space that will be generated from the Singapore governments latest initiatives.
URA has launched the sale of the first transitional office site at Scotts Road and has announced the launch of the sale of a commercial site at Anson Road which will generate up to almost 40,000 sqm of office space to cope up with the demand for office space in the short to medium term.
The Singapore government is taking positive steps to ease the situation by launching transitional office sites, disallowing any depletion in the existing CBD stock and making available vacant state and land buildings for interim use until the new supply comes in. It may also step up measures to free up space by moving some public organisations out of CBD. We remain positive on the efforts by the Singapore government to maintain Singapores competitiveness and the outlook for the office segment remains positive due to its favourable demand supply dynamics and attractive pricing in comparison to other Asian cities such as Hong Kong, Tokyo and Mumbai.
Key beneficiaries: K-REIT, CCT, A-REIT, Suntec REIT, Keppel Land and City Developments
20-Apr-2007 Suntec, Marina Centre area rents surge 37% AVERAGE monthly rent for offices in the Suntec, Marina Centre and City Hall area surged 37 per cent quarter on quarter in Q1 to $10.90 per sq ft, outstripping a 28 per cent gain in the Raffles Place area, says Knight Frank. The Suntec, Marina Centre and City Hall micro-market - which includes the office towers of Suntec City, Millenia Singapore and Raffles City - was 'relatively under-priced compared with the Raffles Place area during the run-up in office rents last year', according to Knight Frank director (business space - office) Agnes Tay. 'So it's a case of catching up now.' Q1 2007 average rent in Raffles Place was $10.90 psf, with Republic Plaza achieving $13 psf, says Knight Frank. 'The rental performance of Grade A office buildings in other micro-markets was similarly upbeat,' it says. 'Average monthly rent in the Shenton Way and Robinson Road area rose 19 per cent quarter on quarter to $7.90 psf, while that in the Orchard Road area increased 9 per cent quarter on quarter to $8 psf. Average Grade A office rents maintained a chronically strong upward trend, charging ahead another 21 per cent quarter on quarter to $9.80 psf.' As supply of vacant Grade A space dried up, demand filtered down to Grade B blocks in the CBD. As a result, average rent for Grade B space jumped 24 per cent quarter on quarter to $8.30 psf in Q1. In the suburbs, the picture was mixed. Office rents in the west, including Alexandra Rd area, remained largely unchanged after showing the biggest rise among suburban locations in Q4 last year. But the north such as Novena and Toa Payoh, and the east such as Tampines, posted quarter on quarter gains of 16 and 25 per cent to $6.10 psf and $5.30 psf respectively. Knight Frank predicts a full-year 2007 increase of 50-60 per cent in average prime Grade A office rents to $14 psf. The Q1 increase was 20 per cent. Island-wide, the average office rent increase will come in around 20-30 per cent, Knight Frank reckons.
Sentiment is at an all time high in the Singapore residential property sector. Prices for high-end have been reaching record levels and developers continue to report good sales results from their launches. We believe this sector will continue to flourish in the future due to the increase in foreign participation, decrease in stocks due to en-bloc sales and the prospect of an increase in population.
As developers replenish their land bank, they have been increasingly tapping into the en-bloc market for prime freehold land. People who are displaced due to en-bloc sales need to find new homes, hence driving up demand. Higher influx of foreign and permanent residents as well as the governments desire to achieve 6.5m in population, are driving demand and supporting the current buoyant market sentiment.
Our top picks are City Development Limited, Wheelock Properties, Wing Tai and SC Global as they are in the best position to benefit from the up-turn of the physical market.
Friday December 15, 8:17 AM Govt withdraws deferment of stamp duty payment on all contracts SINGAPORE : The government has withdrawn the deferment of stamp duty payment on all contracts.
The concession for deferment was introduced about eight years ago as part of the off-budget measures to cushion the impact of the economic slowdown.
It allowed property buyers to pay the stamp duty at a later date.
But in a statement, the Inland Revenue Authority says this has now been withdrawn because the economic conditions and property market have improved.
So property buyers must now pay stamp duty within 14 days from the date of acceptance of the Option to Purchase.
Those who have accepted it before Dec 15 will not be affected by this change. - CNA /ls
Singapore Property Market Wrap Oct 2006: real prices fulfilling trajectories predicted bystock prices
• Integrated Resort renewed investor interest. The recent Sentosa IR bid submissions have underpinned positive sentiments and funds inflows into Singapore's property sector. We think recent underlying price and rental gains merely confirm trajectories already factored into share prices though, and rolling over NAVs to 07 estimates will do little to eliminate the premiums at which many stocks are trading to RNAVs.
• Foreign funds continue to flood Singapore's property market. Foreign investors, many of them property funds which are new to the market, have poured more thanS$2.5 billion into Singapore's property market this year. As Singapore property markets provide a combination of steady income stream and capital gain, we expect more funds to flow into this market, and especially to the investment-grade property market.
• Results season kicked in. No major surprises so far for the announced S-REITs results. CCT's 3Q06 DPU was inline with our expectation, but the price strength indicated that the re-rating on the back of robust rental growth is past. The bulk of developer results for 3Q06 are due within the next few days
Our key calls
Robust market sentiments and the continuing funds flows from foreign investors have brought share prices well above even 07 RNAV estimates. However, we remain of the view that sufficient impending supply in the residential segment exists to check the pace of RNAV upgrades and that increases in the rate of return for office property will cap the upside in this sub-sector. We favor the industrial property sector as share prices have yet to catch up with fundamentals and we prefer developers with an integrated platform combining asset management and origination capability.
Our top picks are The Ascott Group and CapitaLand for developers and Mapletree Logistics Trust and A-REIT for the industrial sector.
Share price performance Singapore property stocks continued their robust performance in Oct 06, up 8% versus the previous month and outperforming the Straits Times Index by 3%, leading by Keppel Land, the only player who exposes materially to both office and residential sector in Singapore. Office players remain as the front runner of the market, whereas outlook for residential property developers is deteriorating. As share price movements are normally 6-month ahead of the underlying market, we start to see corrections for developers, allowing catch ups from the physical markets. JPMorgan's S-REIT index rose 3% M/M. A sectoral bias was in evidence, with the office S-REITs (like CapitaCommercial Trust and K-REIT Asia and Allco REIT) rising by between 4-14% M/M, and the industrial REIT lagging behind.
Macro issues
Foreign investors snap up underlying property
Foreign investors, many of them new entrants, have ploughed more than SGD 2.5 billion into Singapore's property market this year. According to CBRE, many of them are still willing to continue paying top dollar for plum prospects. New players including Citadel Equity Fund, CLSA Merchant Bank and Pacific Coast Assets have recently bought development sites and investment properties.
Sentosa Island Integrated Resort (IR) – awaiting for result announcement Submissions for the Sentosa Island IR were made on 10 Oct 06, with the successful bidder likely to be made known by end November/early December. Three consortia have submitted bids: (1) Kerzner International/CapitaLand with a total investment of S$5.28 billion; (2) Genting International/Star Cruises investing S$5.1billion; (3) Eight Wonder with a bid of S$5.6billion.
UPDATE: Singapore Orchard Road Site Attracts Strong Bids
SINGAPORE (Dow Jones)--A prime site along Orchard Road, Singapore's main shopping area, Wednesday received a top bid of S$421.1 million, reflecting continued bullishness toward real estate in the city-state.
Far East Organization, a large property group with listed units in Singapore and Hong Kong, offered to pay S$11,683 per square meter of gross floor area, which works out to around S$1,085 per square foot of built-up space.
ADVERTISEMENT In per square foot terms, the figure was around 6% higher than the winning bid for the nearby Orchard Turn site that was sold to a joint venture comprising CapitaLand Ltd. (C31.SG) and Sun Hung Kai Properties Ltd. (0016.HK) for S$1.38 billion last month.
"The strong bid is in line with what we had seen at Orchard Turn, and in line with the generally improved sentiment along Orchard Road," said UOB Kay Hian Securities' property analyst Pratik Burman Ray.
In fact, several analysts had expected the winning bid for the so-called Somerset site to come in even higher, due to talk in the market that Fraser & Neave Ltd. (F27.SG) unit Centrepoint Properties Ltd. was determined to land the site because it could be developed together with Centrepoint, the F&N unit's flagship shopping mall.
The Somerset site comprises a 0.66 hectare car park that is directly across the road from the Centrepoint mall, as well as the subterranean space beneath Orchard Road that links the mall to the car park.
Centrepoint Properties ranked only fourth among the six bidders, with a bid of S$356.88 million.
The other players included Indonesia's Lippo Group, which placed the second highest bid of S$400 million, and local property giant City Developments Ltd. (C09.SG), which came in third with its bid of S$370.8 million.
The Urban Redevelopment Authority will formally announce the winner of the site next week.
According to the URA, the Singapore government's real estate development agency, the 99-year leasehold Somerset site can yield some 387,000 square feet of space and can be used for a commercial building of up to 16 storeys.
At least 60% of the total gross floor area must be set aside for retail, food & beverage and/or entertainment use, while the remaining area can be developed for other commercial and complementary hotel and residential uses.
Interest in property along Orchard Road has picked up in recent months, fueled by the recovering economy and increased visitor arrivals amid plans by Singapore to rejuvenate its tourism industry.
Besides releasing land for development along Orchard Road and sprucing up the sidewalks, Singapore has also legalized casino gambling and brought in international attractions like Crazy Horse Paris and London's Ministry of Sound to support its goal of doubling visitor arrivals to 17 million by 2015.
