Complete Property Market Updates of Singapore

February 29, 2008

Marina Bay to provide 1.1m sq m of office space

Filed under: General — Propertymarketupdates @ 3:36 pm

It will become a seamless extension of Raffles Place, says Mah

THE upcoming financial district at Marina Bay will be twice the size of London’s Canary Wharf and will provide as much Grade A office space as Hong Kong’s Central.

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Revealing more plans for Singapore’s new financial hub, National Development Minister Mah Bow Tan told Parliament yesterday that Marina Bay remains the centrepiece of the government’s efforts to provide more office space.

‘URA (the Urban Redevelopment Authority) will make available more sites for development in this area over the next five to six years, in line with market demand,’ he said. ‘When completed, these new developments will provide more than 1.1 million sq m of office space, to match the total amount of office space at Raffles Place today.’

The area will become a seamless extension of Raffles Place, Mr Mah said. It is expected to take more than 15 years to materialise, depending on market demand.

The existing central business district will not be neglected, he said. URA will release land around the Tanjong Pagar precinct as well as redevelop the Ophir/Rochor corridor into an office cluster.

Mr Mah also touched on plans for Orchard Road, saying that URA plans to work with the private sector to build a pedestrian network with underground links, walkways at street level and second-storey links between buildings.

The Ministry of National Development will set out its land use plans for the next 10-15 years in the next few months in its Master Plan 2008. The plans have been developed with three key objectives in mind – to ensure that Singapore has sufficient land to support economic growth; to reduce commuting by bringing jobs closer to home; and to provide greater greenery and leisure options.

Addressing a now-hot topic, Mr Mah said that sustainable development will continue to be a priority.

To encourage environmentally friendly practices, the government will look at a range of measures including public education, research and development, and possibly legislation, he said.

Source : Business Times – 29 Feb 2008

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Marina Bay prime office space equal to HK business site

Filed under: General — Propertymarketupdates @ 3:29 pm

It’ll be a ’seamless extension’ of CBD, to rival London’s and Hong Kong’s.

THE new Marina Bay growth area will be a ’seamless extension’ of the Central Business District (CBD) and will offer a significant amount of office space, said National Development Minister Mah Bow Tan yesterday.

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LIVELY WATERFRONT: Fifteen years from now, the new Marina Bay financial district will provide premium office space, pedestrian-friendly covered walkways and an extensive underground network. — PHOTO: URBAN REDEVELOPMENT AUTHORITY

Adjacent to Raffles Place and Shenton Way, it will be more than twice the size of London’s Canary Wharf and provide as much premium office space as Hong Kong’s Central district.

Mr Mah was responding to a question by Mr Liang Eng Hwa (Holland-Bukit Timah GRC) on plans to rejuvenate the CBD and develop Marina Bay.

Mr Mah said: ‘Marina Bay remains the centrepiece of our efforts. It will be a seamless extension of Raffles Place, and will offer high-quality office spaces along a lively waterfront.’

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The district will have a land area of 85ha, more than double the size of London’s bustling financial and shopping hub, Canary Wharf.

It will also offer an estimated 2.82 million sq m of office space, the equivalent of Hong Kong’s main business district.

Mr Mah also revealed that the Urban Redevelopment Authority (URA) will release more sites in this area over the next five to six years.

Once built, these projects will provide more than 1.1 million of office space – the total amount of office space in Raffles Place.

The new Marina Bay financial district is expected to take more than 15 years to materialise, he added.

Mr Mah also said the URA will release land around Tanjong Pagar and ‘redevelop the Ophir-Rochor corridor into a vibrant office cluster’.

Mr Mah also addressed a query from Mr Zainudin Nordin (Bishan-Toa Payoh GRC) on having more underground connections between buildings in the downtown area.

He said Marina Bay will be a pedestrian-friendly area, with covered walkways on the ground and an extensive underground network linking developments to MRT stations.

He added that the Government is working to ease the office space crunch in both the short and long term.

In the short term, the Government has released land for transitional office sites and vacant state properties, which will yield 150,000 sq m of space. These spaces will be available within a year.

The Government has also temporarily disallowed the conversion of office space to other uses in the central area.

Over the long term, about 1.4 million sq m of office space, equal to about five years of supply, will be completed mostly in 2010 and beyond.

Mr Mah said: ‘These measures are going to take some time to filter through to the market. I will suggest that in the meantime, tenants can look at alternative locations outside the central area.’

Source : Straits Times – 29 Feb 2008

Newton area growing as a hub for hybrid offices

Filed under: General — Propertymarketupdates @ 3:10 pm

NEWTON is shaping up as a centre for hybrid offices, with another company, The Ascott Group, moving to the neighbourhood.

The Urban Redevelopment Authority (URA) also said yesterday that it would release not one, but two, transitional office sites between Scotts Road and Anthony Road for sale.

Ascott, which is officed at the former Temasek Tower, could not say how much space has been decanted in the move but did say that its new offices in Newton will accommodate some 50 to 80 employees, including trainers, trainees and staff who will support the training activities at its Ascott Centre for Excellence there.

A spokesman for Ascott said that it leased the former Anthony Road Girls’ School in mid-2007 on a 3+3+3 year lease from the Singapore Land Authority, and started moving in from the end of last year after refurbishing it.

URA offered its first transitional office site in Newton in August 2007 too. This was sold to Hwa Hong Corporation and KOP Capital for $37 million – $219 per square foot per plot ratio (psf ppr).

While the two new sites now being offered are equally well located, Knight Frank director (research and consultancy) Nicholas Mak believes bidding ‘will be more cautious this time’.

Both parcels are to be sold on short-term leases of 15 years, and Knight Frank estimates the first of the new sites, Parcel A, which can yield a maximum gross floor area (GFA) of 140,189 sq ft, could see bids of between $14 million and $18.2 million, or a unit land price of $100-$130 psf ppr.

Parcel B, which can yield a maximum GFA of 145,915.4 sq ft, could see bids of between $14.6 million and $19 million, representing the same unit price range of $100-$130 psf ppr.

Mr Mak noted that current monthly gross rents for the Scotts Road area are comparatively low at between $6 and $8 psf.

He also highlighted that the proposed transitional office developments are expected to be completed by the middle of next year – and about 2.6 million sq ft of new office space is expected to be supplied to the market in 2009.

Savills Singapore director of commercial services June Chua believes that there could still be an attractive profit margin for any developer, but adds that the developer, or possibly even contractor, would have to secure a tenant first, so that there is a minimal ‘void period’, during which the landlord has to secure a tenant.

She also said that the target rental would have to be around $7 psf per month.

Source : Business Times – 29 Feb 2008

URA launches 2 more temp office sites in Newton

Filed under: General — Propertymarketupdates @ 3:09 pm

Analysts see good demand just like for a nearby plot launched earlier.

TWO more transitional office sites have been launched by the Urban Redevelopment Authority (URA) in a move to help ease some of the pressure on space.

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The adjacent sites – parcel A is 8,682.8 sq m in size and parcel B is 9,037.9 sq m – are near the Newton MRT station, between Scotts Road and Anthony Road.

The sites can accommodate developments of up to four storeys that can be built within a year.

Transitional office sites, a relatively new concept, were introduced as a quick fix to the lack of space in the Central Business District (CBD).

They have 15-year leases, significantly less than the usual 99-year leases for commercial buildings.

The response has been mixed. A plot launched by the URA in Aljunied recently flopped, with all bids rejected as being too low.

The URA believes the Newton sites will fare better.

‘Based on market feedback, there is still demand for transitional office sites in the city centre,’ it said.

Property experts also expect a more enthusiastic response.

Mr Nicholas Mak, Knight Frank’s head of research and consultancy, said the prime location near the CBD and Newton MRT would draw bidders.

And the sites being adjacent means a developer could combine the land.

‘There is a potential for amalgamation to create bigger floor space,’ added Mr Mak, who estimated that the sites could sell for around $100 to $130 per sq ft (psf).

This values the parcels from $14 million to $19 million each.

Mr Mak felt the Aljunied site was ‘too close to the red-light district of Geylang’.

For the two latest plots, the industry experts interviewed expect a level of response similar to the Scotts Spazio site, which is across the road and was eagerly received by developers.

KOP Capital is developing the site, which cost $37 million, with partners Hwa Hong Group and Dubai Investment Group.

Insurer Prudential will lease the four-storey building for 14 years, paying $6.50 psf a month. The company should move in by September.

However, some experts believe that transitional office sites will not be commercially viable given their brief tenure. Tenders for the two Newton sites close on April 24 for parcel A and April 30 for parcel B.

Source : Straits Times – 29 Feb 2008

CDL boss prepared to delay launches in subdued market

Filed under: General — Propertymarketupdates @ 3:08 pm

Some projects can be held off till 2009, he says, as full-year gain swells to $725m

THE property market may have stalled for now, but City Developments (CDL) executive chairman Kwek Leng Beng is not too worried.

He said that if necessary, he can hold off launches of new developments until next year.

‘Rather than launch today when the market is subdued, I would rather start construction on some projects first’ and launch them when demand picks up, Mr Kwek said yesterday.

‘If today there are not many buyers, this means that pent-up demand is building up, which can be very powerful.’

CDL plans to launch more than 400 units in four projects by June, assuming market conditions do not worsen.

It will release the 77 units at Shelford Suites in Bukit Timah, which is said to have been ready for launch for some time.

The group also intends to launch 100 units of the 228-unit Quayside Isle @ Sentosa Cove, and another 100 at a new development on the former Lock Cho Apartments in Thomson Road, which will have 336 units.

The fourth project is a joint venture at Pasir Ris Drive 1. About 150 of its 724 units are targeted for release by June.

Even if the launches end up delayed, CDL may first start construction on Shelford Suites and the Thomson Road project, said Mr Kwek.

This could also bring in more upfront cash for the group when it does sell the homes. Buyers have to pay 30 per cent in cash after foundation work is done, compared with only 20 per cent if no construction has started.

Mr Kwek’s comments yesterday came on the back of a sterling year for CDL last year.

The developer, Singapore’s second-largest, said full-year net profit more than doubled to a record $725 million. Revenue rose 22 per cent to $3.11 billion.

Earnings per share more than doubled to 78.3 cents for the year. Net asset value per share rose to $5.72 as at Dec 31, from $5.21 a year ago.

Last year, CDL booked profits from projects such as St Regis Residences, Tribeca and The Sail @ Marina Bay.

But it has yet to recognise any profits from One Shenton, The Solitaire, Cliveden at Grange and Wilkie Studio – which account for about $1.7 billion of sales. In all, the group sold 1,655 homes last year for a record $3.4 billion.

CDL’s hotel and office properties are also enjoying high occupancy rates in the buoyant market. Its offices are almost 96 per cent occupied, compared with a market average of 92 per cent.

The group has also not adopted the same approach to revaluing its properties as some of its competitors, which have reported huge revaluation gains. With these gains, its profit would have surged to $2.8 billion, it said.

The group is recommending a final cash dividend, tax-exempt, of 20 cents a share in total.

LATENT DEMAND

‘If today there are not many buyers, this means that pent-up demand is building up, which can be very powerful.’

MR KWEK, on why he would rather begin construction on some projects, and launch them later on when demand picked up.

Source : Straits Times – 29 Feb 2008

HDB will cater to buyers with different income levels: Mah

Filed under: General — Propertymarketupdates @ 3:07 pm

THE Housing & Development Board (HDB) will continue to provide a range of housing options to cater to buyers of differing income levels and aspirations, Minister for National Development Mah Bow Tan told Parliament yesterday.

He was responding to concerns that the price gain in the HDB market is putting flats out of the reach of many. HDB resale prices rose by about 17 per cent last year. In addition, reports said that buyers forked out up to $727,000 for a five-room flat in a private-developer built, condo-style project offered under the Design, Build and Sell Scheme (DBSS).

The price gain for resale homes should slow this year. Mr Mah said: ‘The HDB resale price index grew by only one per cent in January, and I expect prices to grow at a more moderate pace in 2008.’

The HDB plans to release three more DBSS sites to build up a ‘reasonable stock’ of DBSS flats, Mr Mah said. Together with the four sites already released, the new sites will yield about 4,000 flats.

He said HDB will continue to cater to buyers with different aspirations and means by providing a range of housing options.

However, Mr Mah said that flats built by HDB will continue to be the mainstay of new supply.

‘Similar to executive condominiums, DBSS flats serve a small niche market of buyers that can afford to pay higher prices for public housing with different designs and features,’ he said.

Mr Mah also unveiled details of HDB’s new Lease Buyback Scheme, which aims to help low-income and elderly households.

Under the scheme, which will be implemented next year, the HDB will purchase the tail-end of the flat lease from an elderly household. The occupants will continue to stay in the flat, which will be left with a 30-year lease. On top of the housing equity unlocked, it will provide an additional $10,000 subsidy.

Of the total amount, $5,000 will be given to the household as an upfront lump sum, while the remainder will be used to purchase a CPF Life Plan to provide the owner with a monthly stream of income for life. If the flat is jointly owned by an elderly couple, they will get individual CPF Life Plans.

Source : Business Times – 29 Feb 2008

Why income cap for HDB buyers won’t be raised

Filed under: General — Propertymarketupdates @ 3:06 pm

THE Housing Board will not raise the $8,000 income ceiling for first-time buyers of HDB flats, despite numerous calls from MPs and the public for it to do so.

The reason: The income criteria capture some eight in 10 Singaporean families, including upper middle-income earners, said National Development Minister Mah Bow Tan yesterday.

‘I hope Members will agree with me this is more than generous and will not be surprised if I tell them HDB has no plans to revise the income ceiling,’ he added.

His reply during the debate on his ministry’s budget was sparked by calls from MPs such as Mr Christopher de Souza (Holland-Bukit Timah GRC) during the debate earlier in the week on the Finance Minister’s Budget statement.

Mr de Souza said buyers, especially young couples, had no access to affordable housing if they earned more than $8,000.

Mr Mah acknowledged HDB resale prices saw ‘heady’ growth of about 17 per cent last year. But he did not expect the spike to continue.

There are other affordable alternatives for such couples, he said, citing the resale market in executive flats.

Mr Mah also assured Singaporeans that the Government will ensure HDB flats remain within reach of the vast majority, especially young couples seeking to buy their first home. For instance, they will get more chances in balloting exercises for new flats.

On average, the Government spent $1.4 billion a year over the last five years on public housing. In the coming 2008 financial year, it has set aside $1.6 billion.

The vast sums are spent on providing Singaporeans with various housing types to meet changing aspiration and various needs, said Mr Mah as he detailed HDB plans, policies and programmes.

Affordable housing

NEW HDB flats are priced below market value. And the subsidy for first-time buyers can go up to $88,000.

As a result, first-time home owners last year used, on average, only 20 per cent of their monthly income to pay their home loan.

This is well within the 30 per cent benchmark for affordability.

Also, at least 70 per cent do not fork out cash from their pockets each month but settle their mortgage entirely with their CPF contributions.

Many choices

THREE more sites will be offered to private developers to build condo-style flats, under HDB’s Design, Build and Sell scheme.

It will bring the total of such HDB flats to around 4,000 units, to cater to families who can afford to pay more.

But Mr Mah stressed that HDB-built flats will still be the mainstay of new flat supply.

Sufficient supply

ABOUT 700 new flats in Punggol and Sengkang are still available for purchase, said Mr Mah, who allayed concerns over whether supply is enough to meet growing demand.

HDB builds flats only if buyers show firm commitment, in the form of a deposit. It started the practice following a glut of unsold flats in the 1990s.

This build-to-order scheme has not reduced supply. Some 10,500 flats have been launched since last year, and HDB will continue to do more of such projects.

Mr Mah also assured the House that getting a new flat was not a case of tikam-tikam (’trying your luck’), a phrase Mr Baey Yam Keng (Tanjong Pagar GRC) used of couples who came to see him when they could not get flats.

Mr Mah said his checks with HDB showed in the past six years, only 250 were still unsuccessful after taking part in more than four HDB sales exercises. ‘This is less than 1 per cent of first-timer applicants applying for a new HDB flat,’ he said. Also, four out of five of the 250 applied only for homes in established towns.

Such outcomes, Mr Mah said, are why he repeatedly advises young couples to be flexible and go for new flats in newer towns or resale flats.

Source : Straits Times – 29 Feb 2008

Low: When will it be Hougang’s turn for HDB upgrading?

Filed under: General — Propertymarketupdates @ 3:05 pm

OPPOSITION MP Low Thia Khiang crossed swords with Minister of State (National Development) Grace Fu over the upgrading of HDB flats, especially those in his Hougang constituency.

Mr Low yesterday repeatedly pressed her for answers as to when his residents could benefit from upgrading and asked if they were being fairly treated.

He accused the Government of using upgrading as a political tool to change voting behaviour, and wanted to know how much it spent on upgrading flats in different precincts.

He also claimed that the Government ‘owes every eligible flat owner in Hougang constituency $22,500 to $27,000 for the long overdue upgrading’.

This is based on the average cost of $30,000 for a basic upgrading package, of which the Government pays the major portion and residents the rest.

It has been 12 years since he was told that Hougang’s turn for the Main Upgrading Programme (MUP) would not happen for ‘many, many years’, he said during the debate on the National Development Ministry’s budget.

Noting that the MUP has since been replaced by schemes such as the Home Improvement Programme (HIP), he asked: ‘Will opposition wards need to start all over again and wait many, many years for HIP to happen?’

Ms Fu said the HIP was the result of residents asking for more flexibility and consultation in upgrading.

The programme would benefit 300,000 flats across the island.

Explaining that the MUP was restructured so that flats could be spruced up more quickly, she said the change applied to PAP and non-PAP constituencies.

Mr Low had asked about the amount spent upgrading each flat and how these government funds would be applied fairly to everyone.

Responding, Ms Fu said the amount was about $30,000 a unit. But she told Mr Low that the question of fairness did not arise in this matter.

‘It is not a case of an entitlement. It does not mean that every Singapore household can come and claim for this sum of money,’ she said.

‘It is something that we will prioritise. It’s something that we will do depending on the age, the quality of the flats.’

And who gets HIP first also depends on the funds available.

The Government’s focus now is to have lifts stop at every floor of HDB blocks by 2014, she said.

‘And Hougang residents can look forward to that by 2014,’ she said, adding that Mr Low could speed the process up by having his town council undertake the upgrading of the lifts in his constituency.

Source : Straits Times – 29 Feb 2008

HDB unveils ‘income for life’ scheme for the elderly

Filed under: General — Propertymarketupdates @ 3:03 pm

It will buy back tail-end of flat lease at market rate, with money going to CPF Life.

FOR 68-year-old retiree Teng Kiat Hwa, who owns a three-room HDB flat in Toa Payoh, his home is his only asset.

Since he fell ill and stopped driving a taxi, he has had no income and his CPF money has been dried up by medical bills.

But come next year, Mr Teng will be able to sell part of his flat’s remaining lease to HDB, and receive a cash payment of $5,000 and an annuity payout of about $500 monthly from CPF Life.

Details of the long-awaited ‘Lease Buyback Scheme’, which helps the elderly sell their HDB flats to the Government for cash – while still being able to stay in them – were unveiled yesterday by National Development Minister Mah Bow Tan.

This is how it works: HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household. So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner’s name.

According to Mr Mah, the cash is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat’s ownership is then transferred to HDB.

If the flat owner dies before the 30 years is up, his family gets a pro-rated refund from the HDB. If he outlives the 30-year lease, HDB may extend the lease or relocate the flat owner to rental housing.

To encourage people to opt for the scheme, HDB is also providing a $10,000 ‘bonus’ for anyone eligible for the scheme who signs up. Half of this – $5,000 – will be paid immediately in cash. The other $5,000 goes into the CPF Life annuity.

One catch: the scheme will be available only to 25,000 low-income households in Singapore. That’s because the eligibility criteria restricts the scheme to those aged 62 and above and who own two- or three-room HDB flats.

Among other things, they must also have fully paid up for their flats, or else have a loan amount outstanding of less than $5,000.

Mr Mah said in Parliament yesterday that this is consistent with the objectives of the scheme, which was first announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally.

He said the scheme is meant to supplement the recently announced CPF Life annuity by providing a stream of retirement income for poor households who may not have the minimum sum needed to sign up for CPF Life, but still need steady income in old age.

He added that the 25,000 households that qualify for the scheme represent about 70 per cent of elderly households in two- and three-room flats.

Asked for his reaction, Mr Teng said in Mandarin that it was ‘an interesting option’.

‘But we must consider it thoroughly before taking it up. My wife and I wanted to leave this flat to our kids,’ he added.

Meanwhile, industry players yesterday welcomed the scheme, but expressed concern that the criteria were too strict.

This was also brought up in Parliament by Madam Ho Geok Choo (West Coast GRC), who asked if owners of larger HDB flat can qualify for the scheme.

Mr Mah replied that this can be examined after the scheme was implemented and feedback given.

Mr Eugene Lim, the assistant vice-president of ERA Realty Network said renting out the flat may give better yield or payouts than the annuity.

Source : Straits Times – 29 Feb 2008

Three-pronged strategy to resolve rental flat shortage

Filed under: General — Propertymarketupdates @ 3:01 pm

A review of the public rental scheme will also be carried out to ensure more holistic assessment criteria.

THE Government has unveiled a three-pronged strategy to tackle rising demand for public housing rental flats.

National Development Minister Mah Bow Tan yesterday said he has asked the Housing Board to resolve the shortage in three ways.

One is to increase flat supply. Secondly, the eligibility criteria for rental flats will be reviewed; and thirdly, enforcement will be stepped up to weed out those who abuse the rules on use of flats.

To address stronger demand, the stock of rental flats will go up by 20 per cent to 50,000 over the next few years, said Mr Mah. Since 2006, when building for rental flats resumed, some 2,200 new units have been built.

Another 930 rental flats converted from vacant blocks will also be ready by next month.

This year, another 2,000 units will be built across different estates, and ready for families to move in from 2011.

Mr Mah was responding to calls by some MPs to review the policy on rental flats.

Ms Irene Ng (Tampines GRC) questioned whether the current 5 per cent of total housing stock for rental was sufficient. She also called for rules on rental flats to be relaxed ’so that Singaporeans have more access to them’.

Mr Mah disclosed that a ‘comprehensive review’ will be done on the public rental scheme.

‘This review will put in place more holistic assessment criteria of rental flat applicants,’ he said.

Mr Mah also noted that Singaporeans who can afford home ownership or have family support should not join the queue, otherwise, ‘the more needy cases will be crowded out’.

He referred to an example raised by Mr Masagos Zulkifli (Tampines GRC) of elderly residents who had no place to go after selling their flats and giving the proceeds to their children who subsequently refused to live with them.

‘Our rental flats cannot be used to support such irresponsible behaviour of the children,’ said Mr Mah.

Addressing another point raised by Ms Ng on low-income divorcee families who are increasingly turning to rental flats, Mr Mah said: ‘We have to look at the overall issue of low-income dysfunctional families from a wider perspective together with the Ministry of Community Development, Youth and Sports and other ministries. The issue cannot be just limited to housing.’

Among others, the review will also study how existing tenants can buy their own homes when their situation improves.

In reply to MPs who shared anecdotes of tenants installing air-conditioning units or sub-letting their rental flats, Mr Mah said that ‘HDB will not hesitate to terminate the flat tenancy of those who abuse or violate the conditions of the lease’, and will re-distribute these to the more deserving cases in the queue.

The Government will continue to be flexible to help families in financial hardship, added Mr Mah.

‘But the individual has to exercise prudence and financial responsibility.’

Source : Straits Times – 29 Feb 2008

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