Complete Property Market Updates of Singapore

March 31, 2008

K-Reit may raise more funds after its rights issue

Filed under: Financing,REIT — Propertymarketupdates @ 4:26 am

K-REIT Asia will look at more forms of financing once its $551.7 million rights issue is completed, Tan Swee Yiow, chief executive of the trust’s manager, told BT.
 
The real estate investment trust (Reit) is holding an extraordinary general meeting today to get shareholder approval for a rights issue to raise $551.7 million in gross proceeds – partly to repay the $942 million bridging loan it took from Keppel Corp when it purchased its one-third stake in One Raffles Quay (ORQ) last year.

K-Reit is expected to get the mandate for the rights issue easily enough. But shareholders will want to know what plans the trust has to raise the balance needed to repay the loan.

Mr Tan said that the management is well aware of the need to raise more funds, and will address the issue with ‘appropriate debt instruments’ after the rights issue.

‘The $942 million is a bridging loan and we will have to resolve it somehow,’ said Mr Tan. ‘We will have to address that, but we are not addressing it at the same time as the rights issue because we want to do the rights issue first,’ Mr Tan said.

The rights issue, which will significantly reduce the Reit’s gearing, will put the trust in a better place to negotiate with banks, he said.

Upon completion of the rights issue, K-Reit’s gearing will be cut to 27.7 per cent, from 53.9 per cent at present, which is approaching the maximum allowable limit of 60 per cent.

To raise more funds, K-Reit will look at a variety of options, including convertible bonds, commercial mortgage-backed securities and straight debt, Mr Tan said.

Right now, the rights issue means that Keppel Corp and Keppel Land, which have both given irrevocable undertakings to take up their respective allocations of the rights units, could increase their stakes in the Reit. As at end-February, KepCorp and KepLand together owned 72.7 per cent of the Reit.

Mr Tan said that this ‘can’t be helped’. K-Reit had initially decided to go with a convertible bond and unit issue to finance its ORQ purchase. But the plan had to be called off because of weak equity and credit markets. If the issue had gone through, both KepCorp and KepLand would have reduced their stakes, Mr Tan said.

‘Moving forward, if the situation is appropriate, there is nothing to stop them (KepCorp and KepLand) from reducing their stakes, which is the long-term plan,’ Mr Tan said. He is also Keppel Land’s chief executive for Singapore Commercial.

Source : Business Times – 31 Mar 2008

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End of property boom in sight?

Filed under: Market Watch — Propertymarketupdates @ 4:25 am

WHAT IT IS

FLASH estimates of the property market’s showing in the first three months of the year will be released by the Government tomorrow.

The figures, released quarterly, track prices and rents of HDB flats and private property. They are based on caveats lodged in the first 10 weeks of each three-month period.

Fuller figures and more detailed information will be given out on April 25.

WHY IT MATTERS

This round of figures is expected to shed light on the million-dollar question: Is it the beginning of the end for the housing boom?

The last set of numbers showed that a stellar rise in home prices over the last two years was starting to slow.

Since then, the market has reached a virtual standstill.

Property developers have delayed launches as buyers, spooked by the worsening global credit crunch stemming from the US, are holding off buying.

Individual home sellers convinced of Singapore’s economic fundamentals, meanwhile, are refusing to lower their prices.

If tomorrow’s data shows prices have plateaued or even dipped, it will be welcome news for homebuyers.

Source : Straits Times – 31 Mar 2008

HDB resale market healthy but prices rising at slower pace

Filed under: General — Propertymarketupdates @ 4:19 am

Total sale prices likely to be steady or higher while upfront cash demands may continue to slide.

WHILE quiet may prevail in the private homes market, the resale market for HDB flats offers another picture – one filled with steady activities.

Still, a number of potential HDB resale flat buyers are kept out of the market by the high upfront cash sums that some sellers demand.

These cash sums are on top of the valuation price of a flat and can be paid only in cash.

Last year, when HDB resale prices rose 17.5 per cent in line with the private property boom, many sellers rode on the buying wave and started asking for cash- over-valuation sums ranging from $50,000 to more than $100,000.

For those who are holding off their HDB purchases for a lower price, property agents say cash- over-valuation amounts could continue to slide. But HDB resale flat prices are unlikely to tumble in the foreseeable future, they say.

‘The HDB market is still very healthy,’ said Mr Chris Koh, director of Dennis Wee Properties .

Resale prices are still rising – albeit at a slower rate than last year – as valuations have generally risen, property agents say.

Even if the cash-over-valuations are slightly lower than late last year, the total resale price will still be steady or higher.

ERA Realty Network’s assistant vice-president, Mr Eugene Lim, said his firm expects the first-quarter HDB resale price index to show a marginal rise of 3 per cent or less.

The resale price index increased by 5.7 per cent in the fourth quarter of last year.

Cash-rich en-bloc sellers

‘WE ARE still seeing en-bloc sellers downgrading to the bigger HDB flats such as the executive flats,’ said Mr Koh.

With their $2 million or so sales proceeds, some en-bloc sellers, especially the retired ones, prefer to buy an HDB flat to live in and a small private property for investment, he said.

Meanwhile, some of the HDB resale flat buyers are downgrading to smaller flats.

As a result, there is more sales activity among three- or five-room flats and executive flats, said Mr Koh.

He said some collective sale sellers are of the view that the private property market will fall some time down the road.

This group would buy an HDB resale flat to live in while they wait for a good time to enter the private property market, he said.

They need to live in their resale flats for only one year before they can sell them, if they are taking a bank loan for the purchase.

Those who take an HDB loan for a resale flat purchase have to live in it for 21/2 years before they can sell it.

While this group may not be big, they do help to prop up the HDB market to a certain extent.

Lower upfront demands

THE Government has increased the supply of HDB flats as its stock depletes, and has assured the public that it will boost supply when needed.

As buyers now have more choices, some agents are taking double the time to sell resale flats, compared with around one month on average late last year, said Mr Eric Cheng, executive director of HSR Property Group.

Because of the weak sentiment in the private homes market this year, HDB flat sellers have also become more realistic in asking for lower sums of cash, property agents say.

Today, sellers in prime areas like Holland and Tiong Bahru may ask for $35,000 to $60,000 cash, compared with maybe $80,000 to $100,000 last year, said Mr Cheng.

Mr Koh said cash-poor buyers need not consider only far-out areas like Marsiling. They can also look at towns such as Yishun, Tampines, or Pasir Ris, where sellers are now asking for less cash.

The HDB recently said its records for last month showed that about a quarter of the resale flats were transacted at prices not exceeding $10,000 above market valuation. These included those in more established towns such as Ang Mo Kio, Bedok, Tampines and Yishun.

Such cash-over-valuation levels of below $10,000 for flats in established towns are attractive in today’s market, said Mr Cheng.

Those who do not have an urgent need for a place to live in can wait a little longer to see if they can buy a resale flat with a smaller cash sum, say some property agents. But do not expect the valuation price to fall just yet.

Numerous options

Cash-poor buyers need not consider only far-out areas like Marsiling, says Mr Chris Koh, director of Dennis Wee Properties . They can also look at more established towns such as Yishun, Tampines, or Pasir Ris, where sellers are asking for less cash.

Source : Sunday Times – 30 Mar 2008

Ritz-Carlton Residences: Putting on the Ritz

Filed under: General — Propertymarketupdates @ 4:15 am

Luxury living goes up a notch with personal housekeeping and sommelier services at the first Ritz-Carlton Residences in Singapore.

THE first Ritz-Carlton Residences in Singapore – and Asia – is sparing no expense to make its residents feel right at home.

The 36-storey luxury residence in Cairnhill Road, which has 58 residential units, will feature three recreation sky terraces. Spanning over 5,000 sq ft each, the one on the fourth level will have a 34m-long lap pool, hydro pool, gym, yoga space and spa facilities.

There will also be a reading room and a cafe with billiard tables on the 14th floor. With a gourmet kitchen and a wine cellar on the 24th floor, a team of service staff can also help residents organise private parties for up to 20 people.

The project is a partnership between The Ritz-Carlton and Hayden Properties , which is a joint venture between real estate firm KOP Capital and Emirates Tarian Capital.

Prices for each 2,800 sq ft three-bedroom unit start from $11.5 million, while the 3,057 sq ft four-bedroom ones go from $15.5 million, says Hayden’s managing director Ong Chih Ching.

The junior penthouses, which are more than 3,500 sq ft, cost from $18 million. The project is expected to be completed in 2010.

At the launch last December, the development achieved a record price of $5,146 per sq ft (psf) or over $15 million for a four-bedroom unit. That month, it also sold four other units from $5,053 psf upwards.

But sales have slowed down since. Last month, only a three-bedroom unit was sold at $4,140 psf, which is about $11.6 million, and none in January.

The market is expected to remain lacklustre given the snowballing global financial crisis originating from the United States, say property experts.

Property developers in Singapore say they sold only 185 new units in February, down from the 328 sold in January.

So far, 30 per cent of the The Ritz-Carlton Residences’ apartments have been snapped up. Currently, more than 50 per cent of the buyers are from Russia, Indonesia, Japan, Korea and the Middle East. A few also intend to lease out their units, says Ms Ong.

Monthly rentals at The Ritz-Carlton Residences could fetch more than $25,000 for the four-bedroom units. Already, a 2,885 sq ft four-bedroom unit at the nearby Ardmore Park, which is located off Draycott Drive, is going for $22,000 a month.

However, all this luxury does come at a price. At The Ritz-Carlton Residences, residents have to pay a $2,500 monthly fee, which will include a 24-hour concierge service, housekeeping and sommelier service.

Source : Business Times – 29 Mar 2008

LTA awards site at Serangoon for transport hub development

Filed under: General — Propertymarketupdates @ 4:15 am

SINGAPORE will have 10 integrated public transport hubs in about 10 years.

The Land Transport Authority (LTA) yesterday awarded a ‘white’ site at Serangoon Central for an integrated development to a unit of Pramerica RealEstate Investors (Asia) and reiterated that four more integrated public transport hubs will be built – at Marina South, Jurong, Joo Koon and Bedok – over the next 10 years.

Typically, these developments comprise air-conditioned bus interchanges, MRT stations and retail/other developments.

So far, three such hubs have been completed – at Ang Mo Kio, Toa Payoh and Sengkang. Another two are being built – at Boon Lay and Clementi – slated for completion by 2009 and 2011 respectively, LTA announced.

‘Integrated public transport hubs will enhance connectivity by making our bus interchanges and MRT stations more accessible,’ LTA chief executive Yam Ah Mee said in a statement yesterday.

‘Residents have told us they enjoy the comfort and convenience of our air-conditioned bus interchanges at Ang Mo Kio, Toa Payoh and Sengkang. Public transport ridership at these areas has gone up steadily.’

Pramerica Asia will develop a mall on the Serangoon Central site, which it clinched for $800.9 million or $850 psf per plot ratio.

LTA said in its statement: ‘Under this tender, the developer will design and construct a development with a bus interchange, to be integrated with the Serangoon North-East Line MRT Station and the Serangoon Circle Line MRT Station.’

In its release yesterday, LTA did not give the locations of the four new integrated public transport hubs.

But market watchers reckon the ones in Jurong and Bedok are likely to be around the existing Jurong East and Bedok MRT stations.

The Marina South hub could be in the vicinity of a new station planned to serve the new cruise terminal at Marina South as part of an extension to the current North-South Line, which now ends at Marina Bay Station.

Source : Business Times – 29 Mar 2008

Parking squeeze may take shine off new buildings

Filed under: General — Propertymarketupdates @ 4:14 am

Rules vastly reducing carpark lots in new office buildings and malls are poised to bite.

New office buildings and shopping malls coming up in the central areas of Singapore – especially in new downtown Marina Bay – are likely to feel the full force of existing rules limiting the number of parking spots allowed for each building.

And with a whole slew of commercial buildings nearing completion over the next few years, a severe shortage of carpark lots is imminent. New ‘white’ sites, such as the Marina View land parcels, get just one carpark spot for every 425 sq m – or 4,575 sq ft – of commercial space. White sites can be developed into a combination of uses.

Developers are allowed to provide more spots, but at the expense of giving up office or retail space. As yields for commercial space are significantly higher than those for carpark lots, most will not do so.

What this translates to is quite startling – a company that takes up one entire floor in Marina Bay Financial Centre (MBFC) with a large floor plate of 25,000 sq ft could be entitled to just six carpark lots.

Similarly, in a medium- sized building, a company occupying an entire floor – or some 10,000 sq ft of space – will get just two parking spots.

And for the upcoming mega office building on the Marina View site, this means that the 1.7 million sq ft of office space the owner is required to provide would entitle the development to around just 380 parking spots.

While the rules have been in place for all new buildings since May 2002, the impact has not really been felt so far because in the old central business district (CBD), an excess of carpark lots in older buildings make up for the shortfall in newer ones.

Golden Shoe Car Park and Market Street Car Park also provide some much-needed supply.

But for new downtown Marina Bay, there will be no such buffers. Buildings in the area will mostly all be new – which means that they will not have excess carpark spaces.

‘The ruling is a bit harsh, especially if you look at all the big projects coming up in Marina Bay,’ said one local developer. ‘Those buildings will have thousands of workers, and only a few hundred carpark lots each.’

Singapore is trying to attract more financial institutions, which means that more professionals from the banking and financial services sectors are expected to relocate from abroad. But some of them may find that they cannot drive to work, the developer added.

Macquarie Global Property Advisors’ Marina View development – which combines two sites won in government land tenders – is one building that will likely be hit by the shortage, industry players said. The project is required to provide some 1.7 million sq ft of office space.

MBFC, on the other hand, is expected to fare slightly better. Although the building is a white site and therefore subject to the ‘one carpark lot for 425 sq m of commercial space’ rule, it also has ‘hub status’, which means that it is allowed to have slightly more carpark lots without having to sacrifice its commercial gross floor area (GFA). But while Marina Bay will likely be the first to be hit, the existing CBD is also going to face the same problem in the future, market watchers said.

‘Right now, the CBD is managing,’ said Nicholas Mak, director of research and consultancy at Knight Frank. ‘But if developers continue tearing down and then building new buildings, then we will have a problem.’ This is because new projects on the sites of old buildings are also subject to the newer guidelines.

For some of these buildings, the number of parking spots will be reduced from one for every 400 sq m (4,306 sq ft) of office space to one for every 425 sq m (4,575 sq ft). Parking space was a lot more liberal in some older buildings.

Adding to the woes of drivers is also the impending loss of Market Street Car Park. CapitaCommercial Trust (CCT) recently said that it has been granted planning permission to redevelop the building into an office tower.

Other than office buildings, any upcoming new shopping malls, hotels, cinemas, theatres, restaurants and bars will also be affected. The impact will be greatest in the central areas, but are also being felt elsewhere – especially for white sites.

A retail development slated for a plum white site above Serangoon MRT Station will have only slightly over 200 carpark spots – which Danny Yeo, Knight Frank’s deputy managing director, said would be a ‘tricky situation’. The mall has a maximum permissible GFA of 942,132 sq ft.

By contrast, Singapore’s now-largest suburban mall Causeway Point has a GFA of 629,160 sq ft of GFA and 915 carpark lots. Even then, it gets ‘pretty crowded’ during the weekends as the mall is the only shopping centre in Woodlands, a spokeswoman for Frasers Centrepoint said.

Industry players believe the squeeze is part of the government’s move to push more people to use public transport. But developers point out that the shortage of parking spaces will come at a time when the car population is climbing.

BT understands that for the Serangoon site, analysts recommended that the authorities provide close to 1,000 parking spots. But despite this, only over 200 units were allowed. ‘Shopping centres without enough carpark lots will suffer,’ said one property analyst. ‘There will be a complete change in shopping patterns.’

When contacted, the Land Transport Authority (LTA) said it currently regulates parking by stipulating the minimum number of car parking lots to be provided based on the given floor area of a development. ‘Developers may build more carpark lots but they have to balance them with the opportunity cost of the additional space.’

Source : Business Times – 29 Mar 2008

Prudential and SingPost launch property fund

Filed under: General — Propertymarketupdates @ 4:13 am

SINGAPORE Post and Prudential Singapore Asset Management (Singapore) have launched an International Opportunities Fund (IOF) – Asian Property Securities, exclusive to SingPost customers.

The fund, offered from yesterday, will invest mainly in closed-end real estate investment trusts (Reits) and property -related securities of companies incorporated, listed in or focused on the Asia-Pacific region.

‘Asia’s concrete long-term growth, large population and growing middle-class fuel demand for commercial and residential properties ,’ said Jene Lua, general manager of Prudential Singapore.

SingPost and Prudential Singapore said the fund may also invest in depository receipts including American Depository Receipts and Global Depository Receipts, as well as debt securities convertible into common shares, preference shares and warrants.

A minimum investment of $1,000 is required for Class F shares, while $5,000 is the minimum for Class Fd shares. The fund aims to make one per cent payout every quarter for Fd shares.

The initiative is the result of the growing partnership between SingPost and Prudential Singapore since 2006. For SingPost, the fund increases the range of investment products under its Care for Life Portfolio.

‘The synergy between the two companies can create value to customers,’ Prudential’s Ms Lua said. ‘The partnership allows SingPost customers direct access to Prudential’s range of funds. The investment products we offer via the branches are funds with established track records, spread across a spectrum of asset classes.’

Source : Business Times – 29 Mar 2008

CCT’s ratings may be downgraded

Filed under: General — Propertymarketupdates @ 4:13 am

CAPITACOMMERCIAL Trust (CCT) faces a possible ratings downgrade after it said on Thursday that it would buy the prime office building at 1 George Street for $1.17 billion.
 
Ratings agency Moody’s Investors Service yesterday placed the trust’s ratings ‘on review for possible downgrade’, it said in an e-mail.

The move stems from concerns that the proposed acquisition, which is to be fully funded through debt that CCT has already secured, will ‘weaken CCT’s financial metrics’, said Moody’s vice-president and senior analyst Kathleen Lee.

CCT’s corporate family rating is now A3, or upper- medium grade. Its senior unsecured debt rating is Baa1, meaning it is subject to moderate credit risks.

Ms Lee, however, was quick to add that CCT’s ability to line up enough debt funding for the deal in the first place ’speaks of its ability to maintain funding access amid a weak credit environment’. She also said buying 1 George Street would enhance the ‘asset quality and income diversity’ of the $5.1 billion trust.

She said, though, that CCT’s weaker credit metrics were unlikely to improve soon without an equity injection, which was unlikely given the state of the equity markets.

CCT is not the only Singapore-listed property trust to deal with ratings issues. Allco Reit hit headlines last week for going to court to fend off a downgrade.

Source : Straits Times – 29 Mar 2008

Poser over homes with 99-year lease

Filed under: General — Propertymarketupdates @ 4:12 am

MR K.S. RAJAH’S letter, ‘Right to hold property guaranteed by law’ (March 20), rebuts Ms Susan Prior’s comment in an earlier letter, ‘En bloc sales eroding our sense of kampung’ (March 17), that ‘your home is not really your home’.

Mr Rajah’s interpretation that ‘the right to acquire, hold and dispose of property is enshrined in the Constitution…’ may well be correct in the case of properties that are freehold, or even 999-year leasehold. But can the same be said to apply where leases are of only 99-year tenure, straddling barely a couple of generations, as is typical of public housing and many private estates, like the one where I am residing, with a quarter of the lease already run out?

Seen in this latter context, anybody who has made payment on such a leasehold property can be said to have not much more than what used at one time to be known as ’squatting rights’, and would be liable to eviction when the lease expires. In the very early 1950’s, the 100-year lease to the site of where Malayan Banking presently stands in Battery Road was on the point of expiry, and failed to attract a bid when put up for auction owing to the uncertainty of an extension by the authorities. This is the likely scenario when these 99-year leases also wind down. Ms Prior may therefore not be altogether wrong to think, and feel, that ‘your home is not really your home’.

Narayana Narayana

Source : Straits Times – 29 Mar 2008

Condo spirit better than HDB’s

Filed under: General — Propertymarketupdates @ 4:12 am

MS SUSAN Prior’s letter, ‘En bloc sales eroding our sense of kampung’ (March 17), about the sense of kampung in condominiums is certainly not overstated. The kampung spirit in condominiums is very much better than in HDB estates where residents hardly interact with each other.

In fact, all en-bloc sales are motivated by greed, worsened by en-bloc speculators who hope to make quick profits by flipping the properties without any feelings for the residents who do not want to sell. It is a load of rubbish to say that enbloc is good for rejuvenation of an estate. In this regard, I would suggest that the Government raise the percentage of approval required from the present 80 per cent to 90 per cent in order to protect the interests of the minority owners.

William Tay Kay Chiak

Source : Straits Times – 29 Mar 2008

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