Abterra exercises option to buy office units

MINING and logistics company Abterra exercised an option from Park Central Investments to buy six office units in Suntec Tower One for $31.6 million on Friday last week.

The proposed acquisition of the 14,380 sq ft of space is scheduled for completion on Aug 28.

The property has 99-year leasehold tenure that expires in February 2088.

The price paid, which equates to $2,200 per sq ft (psf), took into account the current market value of Suntec Tower office units and the rental potential for portions Abterra may not use.

According to caveats filed on Suntec City office space, three offices have changed hands so far this year at $2,300 psf and one at $2,115 psf.

Abterra plans to move from its current premises in Shenton Way to the Suntec Tower units when the acquisition is complete.

‘As a result of the proposed move, the company will be able to stabilise its operating expenses and buffer against possible rental hikes incurred from an extension of the use of its current premises,’ it said yesterday.

‘Furthermore, the property has separate strata titles for the entire building … There are very few offices available for sale on a strata basis. Hence the company decided to acquire the property when the opportunity arose.’

The company has paid Park Central a deposit of 10 per cent of the purchase price. The balance will be funded externally and/or internally.

Abterra does not expect the proposed acquisition to have a material impact on the group’s financial performance in the current financial year.

Abterra shares closed half a cent lower at 8.5 cents yesterday.

Source : Business Times – 10 Jun 2008

Stalemate over prices leads to lowest auction sales in 10 years

THE property auction market has hit a brick wall with buyers and sellers in a stand-off over prices that could jam up the works for the rest of the year.

Sales are likely to hit their lowest point in a decade, with only 31 properties worth $27.28 million bought between January and last month, said Colliers International.

Residential sales are particularly flat with just six private homes worth $8.38 million sold over the five months.

Compare that with the same period last year when 108 properties worth $204.64 million found buyers, it added.

Business is so slow that at least three auctioneers are now holding monthly sales instead of fortnightly sales.

Ms Grace Ng, Collier’s deputy managing director and auctioneer, said: ‘The sales so far (residential and commercial) are likely the lowest in 10 years, but it is not a reflection of poor market conditions.

‘It’s mainly due to the lack of mortgagee sales and the stalemate between buyers and sellers.’

Mortgagee sales occur when a cash-strapped home owner cannot service the debt and the bank force-sells the property.

The same stand-off is evident in the general private homes market, where buyers want lower prices but sellers are refusing to budge.

Ms Mary Sai, Knight Frank’s executive director (auctions), said: ‘Right now, there are offers on the table, but owners are not biting because the offers are about 10 per cent to 15 per cent below previous transacted levels.’.

The last time auction rates were so low was in the first half of 1998, when 52 properties worth $56.44 million were sold, said Colliers.

Auction clearances went on to hit a record high in 1999, thanks largely to mortgagee sales. Many owners were hit by the financial crisis and forced to sell their homes, while buyers were picking up bargains after property values plunged from the 1996 peak.

Ms Sai said the bargain hunters are back, but mortgagee sales have yet to surface in a major way – and consultants do not expect them to.

Ms Ng said: ‘In 1998-1999, a lot of people could not service their loans or rent their properties out. Affordability wasn’t there.’

‘Now, our employment rate is still high, so people are still servicing their loans. Interest rates are also attractive even if they are rising.’

A senior director at DTZ Debenham Tie Leung, Mr Shaun Poh, added: ‘The market attracted a fair bit of speculators last year. Some of them may have trouble offloading their properties, so we may see a small increase in mortgagee sales towards the end of the year.’

But unless buyers or sellers give ground, the market – both for auctions and general sales – is likely to stay at a stalemate.

The one area where auctioneers have been more active is the commercial arena, with shop units, shophouses and industrial property successfully going under the hammer.

Of the 31 properties sold in the first five months of the year, six were residential properties, 16 were shop units or shophouses worth $13.92 million, and seven were industrial properties worth $2.81 million, said Colliers.

Of the remaining two properties, one is an office unit and the other is a piece of land.

‘This year, we are seeing more interest in strata-titled commercial and industrial units,’ Mr Poh said.

‘They are buying for their own use because office rents have risen so much.’

POOR MORTGAGEE SALES TO BLAME

‘The sales so far are…not a reflection of poor market conditions. It’s mainly due to the lack of mortgagee sales and the stalemate between buyers and sellers.’ – MS GRACE NG, COLLIER’S DEPUTY MANAGING DIRECTOR AND AUCTIONEER

Source : Straits Times – 10 Jun 2008

Sim Lian Land is top bidder for DBSS site at Simei

SIM Lian Land Pte Ltd yesterday emerged as the top bidder in a Housing & Development Board (HDB) tender for a Design, Build and Sell Scheme (DBSS) site at Simei Road.

The $52 million bid, or $137 per square foot per plot ratio (psf ppr), was at the lower range of earlier market expectations. Industry observers projected in April that the site could fetch between $49 million and $76 million, or $130 to $200 psf ppr.

The fifth DBSS site, with a lease term of 103 years and a maximum allowable gross floor area of 380,300 sq ft, attracted another bid from AMK Development Pte Ltd. Its bid of $37.3 million, or $98 psf ppr, was 28 per cent lower than Sim Lian Land’s.

Managing director of Sim Lian Land Kuik Sing Beng told BT that the site is expected to yield about 340 units. Five-room flats would make up 60 to 70 per cent of the units, and the rest would be a mix of four- and three-room flats. Sim Lian Land plans to launch the units for sale next May.

Mr Kuik also said that the breakeven cost would be about $350 psf of sellable area. He noted that the selling price for resale flats in the Simei area is about $380 psf of sellable area.

Cushman & Wakefield managing director Donald Han believes that HDB is likely to award the site. He observed that in spite of the gap between the two bids, Sim Lian Land’s bid is in line with current market expectations.

According to Mr Han, the small number of bids reflects the cautious attitude that developers have adopted. Rising construction costs are also posing a challenge for developers, Mr Han pointed out. Echoing this, Mr Kuik said that construction costs have increased substantially in the past one year.

HDB is expected to make a decision in the next two weeks.

Source : Business Times – 4 Jun 2008

Tian Hock wins Choa Chu Kang Drive tender

THE Urban Redevelopment Authority (URA) yesterday awarded the tender for a residential site at Choa Chu Kang Drive to Tian Hock Properties.

Tian Hock Properties, a unit of Far East Organization, was top bidder for the site at $116.01 million, or $203 per square foot per plot ratio (psf ppr).

The 99-year leasehold site has a maximum gross floor area of 572,600 sq ft.

On Monday URA closed the tender for the site, which attracted four other bids from companies such as Sim Lian Land.

Market watchers’ estimates of the breakeven cost of a new development on the site range from $550-$600 psf, translating to a selling price of $610-$650 psf.

Source : Business Times – 29 May 2008

Bids for residential site fall short of expectations

URA closes tender after top bid of just $203 psf ppr for the 99-yr leasehold site

A RESIDENTIAL site in Choa Chu Kang Drive has attracted a top bid of just $203 per square foot per plot ratio (psf ppr), reflecting weak sentiment in the property market.

The Urban Redevelopment Authority (URA) yesterday closed the tender for the 99-year leasehold site, which has a maximum gross floor area of 572,600 square feet.

 
The tender drew five bids – Tian Hock Properties came out tops with an offer of $116.01 million, or $203 psf ppr.

This was 7.4 per cent higher than the next highest bid – from Sim Lian Land, at $108 million or $189 psf ppr. The lowest offer came from HHA Properties – at $80.2 million or $140 psf ppr.

Analysts had expected bids ranging from $230 to $270 psf ppr, or $131.7 million to $154.6 million in all.

‘The lower quantum of the bid prices is a reflection of the current subdued mood in the residential market, taking into account the current cautious environment and the relatively lacklustre take-up of new projects in the first four months of the year,’ said CB Richard Ellis Research’s executive director Li Hiaw Ho. But five bids reflect ‘fairly good interest in the site’, he added.

The director of research and advisory at Colliers International, Tay Huey Ying, noted the absence of larger developers such as Far East Organisation, saying this could be a sign of weak market sentiment.

While the bids for this site were ‘healthier compared with recent ones received for the Ten Mile Junction site’, Ms Tay also feels the bids were in ‘the lower range of expectations’.

A site at Choa Chu Kang Road and Woodlands Road, where the state-owned Ten Mile Junction currently sits, recently drew a top bid of only $61 million or $162 psf ppr.

Market observers believe that URA may nevertheless award the site. According to Ms Tay, the ‘bid price is fair under current market conditions’, and the project may result in a breakeven cost of about $550 psf and a selling price of $610-$620 psf.

Mr Li also reckons the top bid for Ten Mile Junction was ‘reasonably fair’. Based on the bid, he estimates a breakeven cost of $580-$600 psf, which would translate to a selling price of about $650 psf.

URA launched the tender for the Choa Chu Kang Drive site in March and will decide on a possible award after evaluating the bids.

Source : Business Times – 27 May 2008

Five bids for Choa Chu Kang tender

A UNIT of property giant Far East Organization has put in the top bid for a condominium site at Choa Chu Kang Drive, about five minutes’ walk from Choa Chu Kang MRT Station.

Tian Hock Properties offered $116 million for the 204,514 sq ft plot, which works out to about $203 per sq ft per plot ratio (psf ppr).

The site drew a respectable five bids when its tender closed yesterday, possibly due to the perceived strength of the mass-market condo segment, experts said. Far East’s offer topped those of Sim Lian Land, Hong Leong Holdings, GuocoLand and Hiap Hoe.

But property consultants said the bid amounts remained low, reflecting a continuing caution and lacklustre demand in the overall property market.

Mr Li Hiaw Ho, executive director of CB Richard Ellis Research, estimated the site’s breakeven cost at about $600 psf, based on the top bid. The units could be sold for $650 psf in about a year, he added.

Homes at nearby condos such as Yew Tee Residences, Northvale and The Warren have fetched $450 to $650 psf recently, Mr Li said.

Far East’s bid yesterday came in higher than the top bid submitted last month for a similar site at the junction of Choa Chu Kang Road and Woodlands Road.

That site, home to the Ten Mile Junction mall, drew a top bid of $61 million, or $162 psf ppr.

Source : Straits Times – 27 May 2008

Interest in property auctions picking up

Record 810 sales closed this year as transparency of process, immediacy of deals attracts buyers

ONE of the more striking consequences of the booming real estate market has been the sharp increase in the amount of property – residential and commercial – going under the hammer.

Auctions, which used to be associated mainly with forced sales of repossessed properties, got the thumbs-up from owners this year.

A record 810 properties were auctioned this year – 210 more than last year – while the value of sales shot from $129.54 million to $264.7 million.

‘The rising market earlier this year actually encouraged more buyers to buy at auctions because it is a transparent process and a confirmed buy,’ said Ms Mok Sze Sze, the head of auctions at Jones Lang LaSalle.

While some buyers can be intimidated by auctions – where they face a room full of potential rivals – they can yield results.

Mr Teo Jing Kok, the Singapore Land Authority’s (SLA’s) deputy director of sales, said: ‘Unlike a tender, the auction process gives individuals who may not be familiar with the real estate market the time and opportunity to adjust their bids.

‘In a tender, an amateur will have only one chance to get his bid correct and it favours those who are more experienced, for example, land developers.’

The SLA held a first-of-its-kind auction of six small residential plots aimed at individuals keen on developing their own landed homes. All six were sold at the auction last month.

The bulk of auction sales this year – 45 per cent – were in the residential sector and included good-class bungalows. Private retail units made up 21 per cent while HDB shops accounted for 17 per cent of the total.

Shophouses, while forming only 5 per cent of auction sales, reflect one of the most significant trends in real estate this year – soaring office rents.

Because rents have escalated due to tight supply, some firms have opted to buy shophouses via an auction in a bid to avoid paying exorbitant rates in prime areas, said Knight Frank’s executive director (auctions), Ms Mary Sai.

A wider variety of homes was put up for auction this year, including penthouses and high-end condominiums such as The Berth by the Cove, Marina Bay Residences and Paterson Residence. However, many failed to sell, with buyers discouraged by the price levels, said Ms Sai.

Auctions can yield bargains for canny bidders. A three-bedroom walk-up apartment in Joo Chiat Place went for $490,000 earlier this month – about $40,000 above the opening bid – but around $10,000 or more less than what such properties usually fetch, said Ms Sai.

But a 2,465 sq ft unit at Watten Estate Condominium sold for $2.4 million in an April auction, compared with the $1.73 million price tag for a similar-sized unit in the estate late last year.

There were a few bidders who were probably betting on the estate’s en-bloc potential and thus drove prices up, added Ms Sai.

Owners taking the auction plunge typically pay a charge of 1 per cent as well as the 7 per cent goods and services tax. There is also an administrative fee that can range from $500 to $1,000 to cover advertisements, printing of the property’s particulars, auction room rental and other costs.

A key benefit owners enjoy from auctions is that ‘they get their money straightaway and there is no need for any negotiation, even on sale terms’, said Ms Sai. But if the real estate sector is quiet, buyers might be thin on the ground and bids may struggle to rise above the reserve.

The cooler market over the past two months has seen few sales done at auctions but more are expected next year, especially from the mass market segment, consultants said.

Those keen to buy at auctions should arrange for a viewing beforehand and ensure they can slap down an upfront payment of 10 per cent of the sale price if their bid succeeds.

The first auction of the new year will be on Jan 10 when Knight Frank will auction off residential properties and a strip of land behind a row of houses in Balestier.

Colliers International will hold one on Jan 16, followed by DTZ on Jan 17 and Jones Lang LaSalle on Jan 29.

Source : Sunday Times – 30 Dec 2007

SLA auctions off 6 infill sites for $30.6m

THE Singapore Land Authority (SLA) yesterday auctioned off six 99-year leasehold residential land parcels for some $30.6 million in all – but some of the sites went for bargain prices.

A 16,690 sq ft good class bungalow (GCB) site at Eng Neo Avenue was picked up by a buyer for at the starting auction price of $6 million – which works out to $360 per square foot (psf). The buyer, Foo Chee King John, said that he was lucky to have won the site at such a good price.

‘Leasehold land on Sentosa can go for over $1,000 psf,’ he pointed out. The land, he said, is for his own private use.

And another GCB plot, also on Eng Neo Avenue, was sold to individual buyer Hu Nan Lee for $12.1 million – significantly above the starting price of $9.5 million. But the 29,200 sq ft site was still considered a good buy as it went for $414 psf.

The auction was SLA’s first for infill sites, the government agency said. Over 120 individuals and companies turned up for the auction, including professionals, businessmen, construction companies and niche developers.

Other than the GCB sites, SLA also auctioned off one other site in one of Singapore’s prime districts – a 6,290 sq ft semi-detached housing plot Moonbeam Walk, which is in District 10. The site fetched $3.9 million (as compared to the starting bid of $3.3 million), which works out at $626 psf.

The three other sites, at Somme Road, Jalan Insaf and Bedok Close went for $3.8 million, $3.5 million and $1.3 million respectively. The price works out to $353 psf for the Somme Road site, $508 psf for the Jalan Insaf site and $307 psf for the land parcel on Bedok Close.

The Somme Road plot proved to be the most popular of the six land parcels on offer and there were altogether 64 bids before it was awarded to Sarda Pte Ltd.

‘We are very encouraged by the strong bids shown at this auction,’ said SLA chief executive Lam Joon Khoi. ‘We will consider releasing more infill sites to help meet the current market demand for high quality residential properties.’

Source : Business Times – 30 Nov 2007

Keen interest at first SLA auction for small plots

MORE than 120 eager buyers yesterday crowded into a room at M Hotel hoping for a bargain deal at a first-of-its kind auction of six small plots of land.

The buyers were mostly hoping to buy a plot on which to build their own dream home.

And after some brisk bidding, six of them each left with a 99-year leasehold plot – some with what they saw as bargains.

The plots sold at prices from $1.3 million to $12.1 million, for a total of $30.64 million.

It was the Singapore Land Authority’s (SLA) first auction of residential ‘infill’ sites.

‘Infill’ sites are pockets of state land, located in the midst of an established housing estate, that have been left untouched by nearby developments or were once used for public purposes.

The six sites were mostly hotly contested, reflecting strong interest in the attractively-priced sites.

The bidders included professionals, businessmen, construction firms and niche developers, said SLA in a statement.

Included in an SLA sale for the first time were two good- class bungalow (GCB) parcels, which were sold to individual buyers for up to $12.1 million.

Still, one of the two top-end plots – a 16,689 sq ft site – attracted just one bidder. Fund manager John Foo met with zero competition when he bought the smaller of the two plots at Eng Neo Avenue for $6 million or $359.50 per sq ft (psf).

He reckoned he got a good deal for the site, which is for his own use. ‘Sentosa leasehold plots can be over $1,000 psf while District 10 GCB plots are going for $800 to $1,000 psf.’

The other GCB plot, at 29,201 sq ft in size, attracted more bidders. Bids came in hefty $50,000 increments but bidders did not hesitate long as they fired in a total of 52 bids, driving the price up from $9.5 million to $12.1 million.

The interest is not surprising, given that GCB sites, particularly one as big as 29,201 sq ft, are quite rare, said Ms Mok Sze Sze, Jones Lang LaSalle’s director and head of auction and sales.

The successful buyer, Ms Hu Nan Lee, is a Singaporean who is overseas. Her representative said it is meant for her own use.

Of the six plots, the most popular was one at Somme Road. It attracted a whopping 64 bids before local firm Sarda clinched it at $3.76 million.

Sarda’s price was 52 per cent above the $2.48 million opening bid for the 3,547 sq ft residential site, which comes with commercial use on the first floor.

A 6,971 sq ft site in Jalan Insaf, suitable for a pair of two-storey semi-detached houses or a bungalow, was sold to Lye Holdings for $3.54 million, up from the starting bid of $2.9 million.

Avadh, another firm, paid $1.3 million for a 4,228 sq ft site in Bedok Close, suitable for a two-storey bungalow. The opening bid was $880,000.

Both Sarda and Avadh have a shareholder in common: Mr Shriniwas Rai, the veteran lawyer and former Nominated Member of Parliament.

Another firm, Liverland Investments, bought a 6,293 sq ft Moonbeam Walk site for $3.94 million. Bids for the site, which can be used to build a pair of two-storey semi-detached houses, opened at $3.32 million.

Ms Mok said the strong response shows people are open to buying leasehold plots to build their dream homes.

SLA’s chief executive, Mr Lam Joon Khoi, said: ‘We will consider releasing more infill sites to help meet the current market demand for high quality residential properties.’

Source : Straits Times – 30 Nov 2007

Modest bidding for CBD office site as caution sinks in

The new-found caution surrounding the Singapore office market is now spilling over to the Central Business District.

Reflecting this, a site at Marina View diagonally behind One Shenton yesterday attracted a top bid from Macquarie Global Property Advisors (MGPA) of $779.42 psf per plot ratio – only about half of the group’s winning bid in September for the site next door.

Knight Frank managing director Tan Tiong Cheng acknowledged that office investors have turned cautious. ‘The outcome of the sub-prime episode may have an impact on demand for office space in Singapore, while the government has expressly stated recently it will boost supply of office land in the next few years to alleviate the current shortage,’ he said.

Another reason for the lower bid for the latest site – Marina View Land Parcel B – is that it has a minimum hotel component of at least 25 per cent of the site’s maximum gross floor area, property consultants said. ‘Hotel land values are a lot lower than office values,’ said Mr Tan.

‘The latest tender outcome is also a knee jerk-reaction to what has been happening lately in the US – the sub-prime crisis being worse than initially thought and big banks being affected. Banks are prime users of office space.’

The only other bid at yesterday’s tender came from units of CapitaLand, at $898 million or $734.52 psf ppr.

BT understands that CapitaLand was to team up with Thai tycoon Charoen Sirivadhanabhakdi’s privately held vehicle Pacific Coast Assets, had its bid been successful.

By most counts, the top bid at yesterday’s tender by MGPA unit MGP Kimi of $952.89 million or $779 psf ppr was lower than had been predicted.

CB Richard Ellis executive director Li Hiaw Ho had expected Marina View Land Parcel B to fetch about $1,200 to $1,300 psf ppr, lower than the $1,409 psf ppr that an MGPA unit paid in September for the next door Marina View Land Parcel A, considering the minimum hotel component for the latest plot. ‘There is a chance that the state’s reserve price may not have been met and that the latest site may not be awarded,’ Mr Li suggests.

However, other property consultants argued that the plot will be awarded.

Mr Tan said his firm, Knight Frank, predicted in late July projected that the site would attract bids of $1.1 billion to $1.3 billion, or $900-1,060 psf ppr. ‘Taking the mid point of $1.2 billion, the top bid was about 20 per cent lower than our projection. To me that is within range, and I would expect the site to be awarded,’ Mr Tan said.

‘The price is still substantially higher than other sites sold in the Marina Bay area in recent years.’

Jones Lang LaSalle’s Asia Capital Markets head Stuart Crow said: ‘The price seems fair going by recent land bids and taking into account the hotel component for this site.’

MGPA’s top bid at yesterday’s tender also ‘reinforces the foreign investor interest in the Singapore property market fundamentals’, he added. ‘In my view, the site will be awarded.’

Mr Crow estimates that MGPA’s bid price for Parcel B yesterday reflects a break-even cost of about $2,200 to $2,300 psf for the office component of a potential development on the site. As for the hotel component, market watchers estimate the break-even cost could be about $700,000 to $800,000 per room.

Marina View Land Parcel B has a site area of about 0.9 hectare and can be developed into a maximum gross floor area (GFA) of about 1.22 million sq ft, of which at least 60 per cent must be for offices and at least another 25 per cent for hotel use.

Source : Business Times – 14 Nov 2007