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PRICES and rentals of industrial space continued to soften in the third quarter of 2015, according to JTC statistics released on Thursday.

Overall industrial prices fell 0.3 per cent over the preceding quarter, while those of multiple-user factories fell 0.4 per cent.

Overall industrial rentals fell 0.8 per cent over the preceding quarter, while those of multiple-user factories fell 1.1 per cent.

Occupancy rates likewise dipped. Overall industrial occupancies fell 0.2 per cent over the preceding quarter, while those of multiple-user factories fell 0.1 per cent.

The fall in occupancy rates was even starker at business parks, which fell 0.9 per cent, while those at warehouses bucked the trend to rise 0.9 per cent.

The softening trend looks set to continue going forward.

In the fourth quarter of 2015 and the whole of 2016, about 3.8 million square metres (sq m) of industrial space - including 810,000 sq m of multiple-user factory space - are estimated to come onto the market.

This is significantly higher than the average annual supply and demand of around 1.6 million sq m and 1.2 million sq m in the past three years, and is likely to exert further downward pressure on occupancy rates, JTC said.

At the same time, the upcoming supply would also mean ample space options for industrialists, it added.

Credits: ST Property


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Posted by on in New Launches

Luxury home sales continued to stumble in the third quarter this year with 112 luxury apartments sold, down from 162 units during the same period a year ago and 188 units in Q3 2013, reported The Straits Times citing analysis from DTZ Research.

Luxury apartments are defined as units with a floor area of at least 2,000 sq ft and located in Districts 9 to 11.

The consultancy stated that high-end apartments also accounted for a smaller proportion of total secondary non-landed sales.

In Q3 2015, luxury apartments accounted for 10 percent (73 units) of secondary non-landed sales, down from the previous quarter’s 12 percent (147 units) and 12 percent (97 units) in Q3 last year.

“Sales for the segment are slower primarily because of the Additional Buyer’s Stamp Duty (ABSD), as the amount is higher given the quantum,” said DTZ regional research head Dr Lee Nai Jia.

“Another reason is the price gap between sellers and buyers. Sellers (of luxury homes) have better holding power compared with those of mass-market condominiums. At the same time, buyers have been looking for steep discounts.”

Nonetheless, DTZ noted that sales of landed homes in Districts 9 to 11 are holding up, with 30 homes worth a total of $266.3 million sold during the quarter to date. This is comparable to the 32 homes worth $274.9 million sold during the same period last year and 23 homes worth $244 million finding buyers in 2013.

Top-selling projects in the primary market this year include Leedon Residence, d’Leedon and Palms @ Sixth Avenue.

In the secondary sales market, the most popular developments include Goodwood Residence, St Regis Residences and Urban Resort Condominium.

Dr Lee added that while the number of foreign purchases of high-end apartments have generally declined, purchases by Malaysian and Indian buyers are the most resilient.

Acquisitions by Chinese buyers dropped 37 percent from two years ago to 34 units in Q2, while those by Malaysians dipped by 18 percent to 32 units.


credits: propertyguru


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Posted by on in New Launches

Apart from price, location and flat type, what are some other factors first-time BTO buyers need to consider before applying? We let you in on three important tips.

1) Know your timeline. After your e-application for a flat in your neighbourhood of choice, you will likely have to wait about one month before the HDB issues you a ballot number (also called a queue number).

Two weeks after that, you have to decide on which unit you want, and pay the option fee; you should also apply for your loan soon after.

In four months, the HDB will contact you to sign the agreement for lease, whereupon you must fork out the down payment for your flat. If you selected a completed unit, you can collect your keys immediately. If not, you will have to wait till it is completed before collecting your keys.

2) Get the best queue number possible. This doesn’t depend purely on luck, though it does play a part. You can participate in as many BTO exercises as you want, but remember that if you reject an invitation to select a flat, you will automatically be placed at the back of the queue.

In order to avoid this, participate selectively. Also, applying for a unit in a severely oversubscribed neighbourhood drastically reduces your chances of getting a good queue number, and your options may be reduced to units that are far from ideal. So weigh all the pros and cons very carefully before even applying for your flat.

3) Determine your level of patience. While there is a considerable period between application and key collection, it pays to wait for the right BTO launch.

If you plan to live in more popular neighbourhoods, such as Tampines or Clementi, it is wise to wait for new flats to be released, instead of applying where many already have.

However, if you do not wish to wait out the typical two- to three-year BTO construction period, the Sale of Balance Flats (SBF) exercise is a viable option. The frequency of the SBF varies, but the upside is that you can move in as soon as six months after applying.

credits: propertyguru

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Posted by on in New Launches

Singapore will be negatively affected by the depreciation of the Malaysian ringgit and the country’s struggling economy due to close economic links between both countries, said Foreign Affairs Minister K Shanmugam yesterday, reported Channel NewsAsia.

“We are the biggest investor in Iskandar Malaysia, so any trouble there is serious issue for us,” he said during a forum organised by the Singapore Press Club called ‘Small state diplomacy: Challenges and opportunity for Singapore’.

This means Malaysia’s currency and economic problems won’t leave Singaporeans unscathed, especially those who purchased property in Johor.

On a positive note, Singaporeans planning to go shopping across the Causeway will have greater spending power given the current favourable exchange rate of one Singapore dollar per 3.01 ringgit.

credits: property guru

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Posted by on in New Launches
Total bank-lending in the city-state rose month-on-month in July 2015 on the back of stronger demand for housing loans and from the general commerce sector, revealed data from the central bank on Monday.Loans and advances by domestic banks amounted to $610.4 billion last month, up 0.6 percent from $606.8 billion in June. According to the Monetary Authority of Singapore (MAS), the rate of monthly growth in July was lower than the 1.6 percent increase in June, which was boosted by construction loans.Meanwhile, bank lending in July grew 2.2 percent from $597.4 billion in the same period last year.Housing and bridging loans rose from $180.3 billion in June to $181.6 billion last month. These loans grew by about 5.2 percent from $172.6 billion last year.

credits: propertyguru
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Posted by on in New Launches

Market Updates transactions as of july 2015




Credits: ERA Realtor Network Pte Ltd

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PROPERTY developer and jewellery retailer Aspial Corporation's net profit dipped 92 per cent year-on-year to S$2.26 million for the first quarter ended March 31, 2015.

This was due in part to subdued demand for Singapore properties as a result of various property cooling measures. Aspial's retail sales were also affected by a decline in tourist arrivals and consumer spending.

The group's revenue was down 22 per cent to S$100.1 million, due to lower revenue contributions from its property and jewellery business. Revenue from its property business declined on lower recognition of sales from projects, the result of slow construction progress at This email address is being protected from spambots. You need JavaScript enabled to view it.?Itemid=143#.VX-1S_mqpBc">Waterfront@Faber and The Hillford.

The lower revenue from its jewellery business was attributed to "weak market sentiments and a smaller retail network". The ongoing consolidation of retail stores had resulted in a reduction of 12 stores in the first quarter as compared to a year ago.


The group's earnings per share stood at 0.12 cents, while its net asset value was 17.6 cents per ordinary share. No dividend has been declared.

Aspial's counter closed on Thursday, when it was last traded, at 39 cents, up half a cent.


Credits: businesstimes

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Posted by on in New Launches

Executive condominium (EC) buyers look set to be spoilt for choice with up to seven of this popular style of housing headed for market in the rest of the year.

However, many of these new projects will be near or even next to existing or upcoming EC sites, which presents challenging conditions for developers.

ECs are a hybrid of public and private housing. The possible launches are in Westwood Avenue, Canberra and Sembawang, Anchorvale Crescent, Choa Chu Kang Grove and Yishun.

They could add about 4,600 units to an EC market that was already grappling with about 2,130 unsold units as at the end of last month.

Experts note that while developers have been hanging on to average prices of about $800 per sq ft, demand has been weak.

"If the new launches this year are still going to be priced around such levels, we may expect slow take-up as we have seen (so far)," said Mr Ong Teck Hui, JLL national research director.

At recent launches, including Bellewoods, Bellewaters, The Terrace and The Amore, median prices at launch varied from $795 psf to $813 psf. As at the end of March, their take-up rates were 22 per cent to 34 per cent.

Pricing to sell would mean that developers must offer the units significantly below the price of condos, while benchmarking themselves against falling Housing Board resale prices to cater to second- timers, said Mr Ku Swee Yong, Century 21 chief executive.

"First-time buyers would also be referencing resale condo prices. Even if an EC is launched at $750 psf, a neighbouring condo - with no restrictions, but also no government grants - could be about $750 psf as well."

As a result, developers of ECs will have to price units attractively relative to these other segments which are all trending down.

HDB resale prices have dropped about 11.1 per cent since their peak in April 2013, while condo resale prices are down about 6.2 per cent from a peak in January 2014, going by SRX Property's March flash estimates.

Many of the ECs which could be launched this year are in the north and north-east.

One EC site in Sembawang - won in July last year by a tie-up between units of Frasers Centrepoint and Keong Hong Holdings - is next to Skypark Residences EC. The latter project, by JBE Holdings and Keong Hong Holdings, was launched in September 2013 and has 142 unsold units.

In Yishun, a tie-up between units of City Developments and Hong Leong Holdings is set to slug it out with JBE Holdings over two adjacent sites in Street 51.

In Anchorvale Crescent, The Vales EC by SingHaiyi Group, a 517-unit project, which has not yet been launched, is near Bellewaters EC, which had 430 unsold units at end-March.

Competition could worsen as another nearby site in Anchorvale Crescent was won by Sim Lian Land in February this year. A further estimated 2,055 EC units could be added next year, based on land sales so far, said Mr Ong Kah Seng, R'ST Research director.

But EC land prices are trending down, with a consensus among developers seeming to emerge this year that these should be less than $300 psf per plot ratio (ppr), he added. This is down from less than $400 psf ppr last year, with most top land bids around $350 psf ppr then.

Buyers are expecting the two EC sites sold this year so far - the Anchorvale Crescent site, and another in Woodlands Avenue 12 - to be launched next year at reduced prices of as low as $720 psf.

Launch prices for projects in the coming months will likely be a touch above that level, at $750 to $770 psf, down from today's prices, said Mr Ong.

An exception, however, could be Westwood Residences in Westwood Avenue in Boon Lay, for which e-applications could begin next month. Apart from Lake Life, no other ECs have been introduced to the Jurong area since 2010. This could mean buyer interest, even at slightly higher prices.


Credits: asiaone


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Posted by on in New Launches

There were no signs of declining interest in Thailand properties from Singapore buyers and investors last weekend when close to 100 people attended a one-day Thailand property exhibition featuring Circle Sukhumvit 31, the first time its developer Fragrant Group had showcased this project in the city-state.

Sophia Leung, Country Manager of the Singapore Business Unit of Fragrant Group, said: “There is robust interest in Thailand Properties in Singapore. That is why our parent company (Fragrant Group) decided to set up a branch in Singapore last year to better serve our expanding clientele in Singapore and extend our reach.

“In addition, Thailand is a Popular Property Investment and Tourist Destination and it will continue to remain so, especially with AEC coming into force at the end of this year, as well as the push for several Infrastructure Development projects such as the multi-billion International Railway Projects being planned with China and Japan.

“With these Infrastructure Developments, it will have the potential to become a major Transportation Hub of Asia”, she added.

Christian Glanville, Chief Executive Officer of Limcharoen Legal, was also on hand to provide legal answers to questions from potential buyers and investors.

When completed in 2016 Circle Sukhumvit 31 will offer its residents an urban living and eco-innovative lifestyle on Bangkok’s Sukhumvit – a prime location with one of the fastest-rising land prices anywhere Thailand.

The area is popular with both international investors and Thais, and is located near the Phrom Phong mass transit BTS station as well as the EM District and Japan Town.

Designed for smart city-living, Circle Sukhumvit 31 reflects the pinnacle of contemporary living in harmony with nature. Features will include fully-multi-functional furniture, solar shield, underwater aquasonic speakers for the swimming Pool, heat recovery and water recycling systems.


Taken Property GUru

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An EC site is part of the deal.

The Urban Redevelopment Authority (URA) unveiled that two residential sites estimated to yield about 900 housing units have been launched for sale today.

According to the URA, the residential site at Lorong Puntong and Executive Condominium site at Sembawang Road / Canberra Link are launched for sale today under the Confirmed List.

"To provide home buyers with more choices for private housing, the Urban Redevelopment Authority (URA) and Housing & Development Board (HDB), as the Government's land sales agents, will be releasing two residential sites for sale in August 2014 under the 2nd half 2014 (2H2014) Government Land Sales (GLS) Programme. Together, these two sites can yield about 900 residential units," noted the URA.

Credits: Singapore Business Review

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Trends solidify this not-so-sunny forecast.

With interim results coming soon for China property, it is believed that they will be generally lackluster, due to various trends that have led to the forecast.

According to a research note from Maybank Kim Eng, these trends are: higher gearing HoH due to slower-than-expected cash collection ratio, and most developers maintaining contract sales targets for 2014 w/ a few exceptions (potentially Hopson, Sino-Ocean).

Further, another trend was also noted in the form of lower margin guidance for some that have not guided down.

The report said that it must be recalled that Agile, CG and Shimao already guided lower GPMs before blackout.

Here's more from Maybank Kim Eng:

Est 5-8% YoY profit growth for 1H: For the sector, we expect 5-8% YoY growth in underlying profit for 1H14, with COLI, KWG, and Shimao to post highest YoY core earnings growth.

So far, a few developers including COGO (81 HK, NR) and Greenland (337 HK, NR) announced negative profit warnings.

We believe the interim earnings represent more backward looking sales and might not represent full year's picture if there are some outlier projects being delivered.

In our view, future margin outlook and the cashflow situations are key.

A good number of China developers under our coverage would have to guide more negative operating cashflow for this year and likely to slow down either new landbanking or new starts GFA to maintain healthy cashflows.

Margin-wise, we see there could be some downside risks to consensus for Yuexiu Prop and Agile.

Our 2014F earnings for Sunac, Franshion, and Agile are 5% or more above Bloomberg consensus while 8% lower for Yuexiu Prop and 7% lower for Sino-Ocean.

Over 1M, property stocks under our coverage rose an average 21%.

There should be better stock entry points given some lackluster results pending in August.

Credits: Singapore Business Review

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She has been connected with Kallang Development for 20 years.

Bukit Sembawang Estates announced the appointment of Fam Lee San as non-executive non-independent director.

Ms Fam, 47, joined Kallang Development, a subsidiary of Lee Rubber Co in 1994. As a financial controller, she is responsible for overseeing the finance, corporate treasury, accounting and corporate secretarial functions of various property companies in the group that are involved in property development and investment businesses in both Singapore and Malaysia, according to a Bukit Sembawang Estates report.

Prior to joining the group, Ms Fam was an auditor with an international public accounting firm. Ms Fam holds a Bachelor of Accountancy degree from the National University of Singapore and is a member of the Institute of Singapore Chartered Accountants.

Credits: Singapore Business Review

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We're fully regulated by Singaporean law, the group asserts.

Brazilian property development firm EcoHouse yesterday issued a scathing reply to the fact that it had been listed under the MAS' Investor Alert List.

The company reiterated that the MAs list does not imply that EcoHouse Group has contravened any Singaporean laws.

"We are somewhat surprised that some individuals had the impression that the company was under MAS regulation and welcome and clarification provided by the MAS list. EcoHouse Group is, and has always been, fully regulated as required by Singaporean law," the group stated.

Here's more from EcoHouse

Furthermore, MAS publicly announced that EcoHouse had been added to the Investor Alert List in April 2014, therefore it seems extremely strange to see this news surface in some circles of the press three months later and being portrayed as a new development.

We can only conclude that this resurfacing of old news is driven by those with an agenda against the company, who wish to impede EcoHouse Groups's work in delivering quality homes to Brazilian families and market leading returns to investors.

To reiterate, the MAS list does not imply that EcoHouse Group has contravened any Singaporean regulations, or that there has been anything improper in the company's marketing and promotions.

Nor is the list intended to advise anyone against investing against the companies featured on it. Conversely, some of the leading real estate companies in Singapore also feature on the list as they are unregulated by the MAS.

Credits: Singapore Business Review

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Recent price cuts are no cause for celebration.

It's too early to be relieved about recent price declines. Despite a slight dip in private home prices in 2Q14, private homes remain 57% more expensive compared to the last price trough in 2009, a report by Barclay's revealed.

According to Barclay's, CCR prices have declined by 5% since its peak, with prices for high-end homes falling 1.5% qoq in Q2 compared to the 1.1% drop in Q1.

"We maintain our negative stance on the Singapore residential sector and estimate prices will fall 5-15% in 2015 as interest rates rise, coinciding with the peak in supply. The Ministry of National Development (MND) declared yesterday that it is still too early to roll back property cooling measures, affirming our belief that the government will only start unwinding measures when prices fall a steeper 10-15%, perhaps in 2015," noted the report.

Here's more from Barclays:

We expect both volumes and prices to languish given: 1) the ongoing government curbs, 2) looming oversupply, and 3) rising interest/mortgage rates in 2H15. The government also declared yesterday it is too early to relax any measures.

In the Core Central Region (CCR), which usually represents high-end homes, prices fell 1.5% after declining 1.1% in the 1Q14. This is the fifth consecutive quarter of price declines in this segment, bringing the total decline of CCR prices to 5.0% since the peak.

The price decline of suburban homes – proxied by the Outside Central Region (OCR) – accelerated for the third consecutive quarter, by -1.1%, compared with the 0.1% decrease in the previous quarter.

In the Rest of Central Region (RCR), mid-end home prices fell 0.6%, compared with the 3.3% decrease in the previous quarter.

Prices of landed private residential properties fell for the third consecutive quarter, by 1.5%, after the decline of 0.7% in the previous quarter. While there were eight new launches in May, mostly in RCR and OCR areas in the median price range of S$1,018-S$1,626 psf, not all of them sold well.

The price decline of mass market homes – proxied by the Outside Central Region (OCR) – accelerated to -1.1% q/q vs -0.1% in the previous quarter, due to the large amount of supply coming onstream.

In the Core Central Region (CCR), which usually represents high-end homes, prices fell 1.5% q/q after declining 1.1% in 1Q14. This is the fifth consecutive quarter of price declines in this segment, bringing the total decline of CCR prices to 5.0% since the peak. The price decline of mid-end homes eased to -0.6% q/q vs -3.3% in 1Q14.

Credits: Singapore Business Review

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Behold a new EC location.

The Urban Redevelopment Authority today released three residential sites under the 1st half 2014 (1H2014) Government Land Sales (GLS) Programme.

The two residential sites at Fernvale Road (Parcels A & B) and one Executive Condominium site at Choa Chu Kang Drive are launched for sale today under the Confirmed List.

According to the URA, "To provide home buyers with more choices for private housing, the Urban Redevelopment Authority (URA) and Housing & Development Board (HDB), as the Government's land sales agents, will be releasing three residential sites for sale in June 2014 under the 1st half 2014 (1H2014) Government Land Sales (GLS) Programme."

Credits: Singapore Business Review

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Move over drivers. That seems to be one of the takeaways of a new research study which has called for a shift from a motorist-oriented to a people-first approach in tropical cities.

Conducted in March by the Urban Land Institute (ULI) and the Centre for Liveable Cities (CLC), together with Danish architect Jan Gehl, the "Active Mobility" study examined cycling and pedestrian issues in Singapore and provided lessons on improving walkability and bikeability here.

Firstly, there should be greater emphasis placed on safety for pedestrians and cyclists – through the redesign of junctions, as well as giving them more priority with continuous sidewalks, at-grade crossings, and shared streets at high pedestrian volume areas.

The study also suggested that cycling and walking infrastructure should be integrated with public transport to make it easier for pedestrians and cyclists undertaking longer trips.

Another idea was for street tree planting and sheltered public walkways, which the government has been extensively providing, to make active travel a more comfortable experience.

At the same time, developers and building owners should be encouraged to install end-of-trip shower facilities or even drop-and-go laundries in offices.

Cycling is becoming increasingly popular in Singapore, though only one percent of peak hour trips are made on bicycles in the city-state. For 100,000 people, four kilometres of cycling tracks are provided.

Dr Limin Hee, Director at CLC, said: "Cities like Singapore are quite into Sunday cycling, on our wonderful park connectors. Now, the challenge is how to bring Sunday cycling onto Monday cycling, where it could be a viable alternative to taking motorised transport. Cities will be better for it, as walking and cycling takes up so much less precious space."

Credits: Property Guru

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Singaporeans getting a bit richer in last 4 years.

It would seem like the number of Singaporeans warming up to the idea of going home to luxury units are slowly ballooning, as the total inventory of unsold posh units fell down to 9,900 in 2013 from 19,300 in 2009. Thanks to the big fat 16.1% drop in prime luxury private home prices, both developers and buyers are sitting pretty amidst better sales for the former and better living for the latter.

According to Nomura, their estimates suggest unsold inventory in the high-end housing market has been pared down significantly over the past four years.

Here's more from Nomura:

Using private residential projects located in the Core Central Region (CCR) as a proxy for the high-end segment, our survey suggests the total inventory of unsold units (projects completed since 2009 + projects uncompleted as of end-2013 + projects yet to be launched) fell from c.19,300 units at the end of 2009 to c.9,900 units by the end of 2013 (i.e. almost halved in four years).

We believe the average fall of 16.1% in prime luxury private home prices from its end-2007 peak may have helped to move the high-end inventory over the last four years.

That being said, in light of the more stringent regulation on property purchases and higher transaction costs such as the Additional Buyer's Stamp Duty (ABSD), we think it could still take a while for the remaining inventory to be taken up.

Moreover, our estimates also suggest about 12,000 non-landed private homes could be completed in the CCR between 2014 and 2016 – i.e. an average of about 4,000 units a year, vs. about 2,800 units completed in 2013. This could imply further competition for rental and/or secondary demand.

Credits: Singapore Business Review

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Posted by on in Commercial

AMONG the major sectors of the local property market, the office sector had been seen as a pariah. The post-Lehman crisis redrew the financial landscape where deleveraging was the buzzword. Financial institutions were in no mood to expand, cost cuttings were deep and on top of that, the crisis triggered a series of flare-ups in the eurozone. As the supply of Grade A office buildings in the CBD increased with the completion of the new buildings in the Marina Bay area, vacancy levels started to rise. Consequently, by the law of demand and supply, rents began to decline, and had been doing so continuously since the second quarter of 2011.

The appetite for micro-strata units from small-time investors driven out of the residential market has maintained, if not, increased the rate per square foot paid for commercial property. This, in addition to a low interest rate environment has squeezed yields as capital values remained high, leading transaction volumes to decline as institutional buyers found it difficult to justify a purchase based on initial rental returns.

When the projected supply of CBD Grade A office space looked alarming, the fortunes of the office market started to reverse in Q1 2013 with rents surprisingly taking a strong rebound and rising 1.2 per cent quarter-on-quarter.

Although one can explain away the rental increase using the traditional argument of falling vacancy rates, observers are struggling to comprehend how this can be, when some 1.5 million sq ft of Grade A space in the CBD remains vacant. This is more than a year's average demand of 1.07 million sq ft in the past 10 years. If one looks islandwide, the total supply of office space from now till 2017 is expected to average 1.8 million sq ft per annum. This is significantly above the 10-year average islandwide net demand of 1.2 million sq ft per annum.

Doesn't this point to a market glut and so why then are rents and capital values rising?

There are a few possible reasons why and they are:

A sizeable amount of the new supply is in the non-CBD region.
The continued low interest rate environment
Tactical short-term behaviour of the landlords
Supply in the non-CBD region

Of the 5.5 million sq ft of new office supply (all grades) coming on stream from 2013 to 2016, 52 per cent is in the non-CBD regions. With the Urban Redevelopment Authority attempting to set up regional business hubs in places like Jurong Gateway and Paya Lebar Central, as well as the proliferation of business parks, it is now insufficient to merely look at broad statistics to determine rents or capital values.

Financial institutions are likely to continue housing their front to mid-offices in CBD Grade A offices, if rents remain at reasonable levels. Non-financial companies, for example, representative companies for foreign manufacturing firms, fast moving consumer goods companies and petroleum corporations, having normally been located in the fringes of the CBD or ageing CBD properties, may well be enticed to move to locations outside the CBD.

With more non-CBD location options, the market is becoming segmented with CBD Grade A offices catering to institutions who need to remain there and others moving out.

With only 2.6 million sq ft of office space (all grades) slated for completion in the CBD from now till 2016, it represents an annualised supply of about 661,700 sq ft, clearly below the annual average take-up. This is a very low number and explains why landlords are becoming bold to raise rents.

Low interest rate environment

Whilst office yields have been falling since Q2 2008, so too have interest rates. The spread between these two is still wide.

In fact, it is so glaring that for some financial institutions who are renting space, from an opportunity cost angle, wouldn't it be better for them to purchase their own building (subject to the approval from the Monetary Authority of Singapore), than to lend out their surplus cash at overnight rates which last stood at 0.03 per cent in March 2013.

The fact of the matter here is that in Singapore, the lack of an interest rate policy meant that interest rates here have been lower than they should have been if there had been a policy. What this means is that the office yields will be low as they track our already benign interest rates.

For investors who hail from countries which have an interest rate policy, trying to replicate their initial yield driven investment philosophy here would therefore be a challenge. Office yields here will remain lower than global yields because of this important feature that we do not have an interest rate policy. Investors will have to reap their all-in returns through rental inflation and/or a higher terminal value when they sell the asset.

Landlords' behaviour

For the period up to 2015, there are very few landlords holding the new supply of CBD Grade A office space, while older stock in Raffles Place, City Hall and Orchard Road are sporting low vacancy rates. As such landlords can easily manage this vacancy, whether it is a few floors or a few hundred thousand square feet, allowing them to hold up rents.

The low interest rate environment is also lending a helping hand to these landlords as their holding cost is minimal.

With a number of smaller, new-to-market tenants, seeking to "be seen" in the CBD, unit rent is unlikely to be the determining factor; as location and image prevail.


We believe that with new supply of CBD Grade A office buildings being limited over the coming three to four years, office rents will rise rather than fall, aided by key landlords' control over current supply and stronger than normal holding power supported by the low interest rate environment. While this may appear counter-intuitive to some observers, given the excess supply, one must keep in mind that 52 per cent of this new supply is in areas outside the CBD.

For offices in the CBD, demand is still likely to derive from financial, financial related companies like private equity, and oil and commodity trading set-ups. These are recognisable entities and landlords for new buildings that have either just completed or will be completing soon should be able to capitalise on these known drivers.

Therefore, there is a very high chance that at least for the next two to three years, rents for CBD Grade A offices can rise significantly.

Credits: BT Invest

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Should local players be scared?

According to BNP Paribas, in the past few years, it has seen foreign developers, especially the Chinese developers, making an effort to gain market share, possibly for scale effect, and for beefing up their pipeline to sustain their business operations in Singapore.

Here's more:

Since the recovery in 2009, more foreign developers have entered the land market to compete against local developers. While they may have contributed to the property market in terms of fresh development ideas and product diversity, their presence has in no doubt heated up competition for land. Based on SLP studies, foreign players' participation rate has increased from 8% in 2009 to 26% in 2013.

Before 2009-10, foreign developers were mainly from Malaysia such as IOI Properties (IOIPG MK), SP Setia (SPSB MK) and Sunway (SWB MK), and from Hong Kong such as Cheung Kong Holdings (1 HK) and MCL Land. Since then, we have seen more Chinese developers entering the market, such as Qingjian (not listed), MCC Land, Hao Yuan and Kingsford Development.

Although relative newcomers as developers, some of them (such as Qingjian and MCC Land) are familiar with the Singapore property market, and have operated here for over a decade as construction companies.

Different approaches of participation

Foreign developers adopt various approaches when investing in the Singapore land market. Japanese players tend to participate in joint ventures with local developers.

For example, Mitsui Fudosan (8801 JP) has a JV with Hong Leong via TID. Mitsubishi Estate (8802 JP) has a long standing partnership with CapitaLand, while Sekisui House (1928 JP) with Fraser Centrepoint and Far East. We also see Malaysian developer, Sunway, teaming up with local Hoi Hup (not listed), while more recently China Vanke entered the Singapore land market by partnering with Keppel Land.

Hong Kong players such as Cheung Kong and MCL Land (part of Hong Kong Land group) tend to participate on their own, as do most Chinese players such as Qingjian, MCC Land, Hao Yuan and Kingsford.

Credits: Singapore Business Review

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With Singapore being named the world's most expensive city, the Straits Times has published a comparative study on the five big ticket items which contributed to the ranking.

The Straits Times report compared the prices of these items with those of a similar standard in five different developed nations.

The following are the items and the price comparisons:

Property rental

A three-bedroom apartment of between 1,200 and 1,500 sq ft averages S$8,000 (RM20,700) a month in Singapore.

In New York, a three-bedroom apartment of between 950 and 1,800 sq ft ranges from US$1,750 (S$2,221, RM5,700) to US$2,500 in the outlying neighbourhoods and US$6,000 to US$15,000 in Manhattan.

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