High-tech industrial space rents jump 11.9% in Q2

High-tech industrial space rents jump 11.9% in Q2
Office space crunch, rising rents spur firms to look to high-tech properties

By ARTHUR SIM

AVERAGE rents for high-tech industrial space have increased by 11.9 per cent, the highest quarterly increase in the past five years, boosted by a migration of businesses from the Central Business District (CBD).

Sources show that American Express is the latest financial institution to have moved its back-of-house operations, which have gone to Mapletree’s The Comtech at Alexandra Business Hub.
In its quarterly report on industrial space, CB Richard Ellis (CBRE) said it expects rents to keep rising.
CBRE director (industrial and logistics services) Bernard Goh said: ‘Further rent increases for high-tech space during the second half of the year are expected as demand for offices is unlikely to let up while supply of office space will still remain tight.’
Mr Goh says limited supply of office space coupled with rising rents has encouraged qualifying companies to look to high-tech properties to meet their needs. And average rents have increased from $2.10 per square foot (psf) in Q12007 to $2.35 psf in Q2.
DTZ Debenham Tie Leung also noted the double-digit increase in rents for high-tech space, compared with 9 per cent and 7per cent for average monthly industrial rents for first-storey and upper-storey industrial space.
In its quarterly report on industrial space, DTZ said: ‘Strong demand has led some landlords of high-tech industrial space, especially business park space, to ask for above $4 psf.’ It added that this compares favourably with rents for decentralised office space which averages $6 psf.
Supply for business space is expected to be alleviated with the completion of Cintech4 in Science Park1 with an estimated 103,340 sq ft coming on stream.
More significant supply can be expected in end-2010 when Mapletree completes its redevelopment of Alexandra Distripark to become part of its new business hub there.
Mapletree will demolish three existing industrial blocks with a gross floor area of around 1.6 million sq ft and build four new blocks with an estimated 1.96 million sq ft of business park space.
Mapletree COO Tan Boon Leong added that redeveloping Alexandra Distripark is part of its efforts to ‘rejuvenate our assets’, following earlier projects at its HarbourFront Precinct.
Mr Tan added: ‘Apart from the Alexandra Business Hub, we are seeking planning approval to redevelop the SPI Building, our remaining redevelopment site at the HarbourFront Precinct. Upgrading works are also ongoing at PSA Building and Tanjong Pagar Distripark.’
Apart from high-tech space, other industrial space sectors also showed increases in average rents in Q22007.
CBRE notes that warehouse rents for ground-floor units rose to $1.45 psf quarter-on-quarter or 11.5 per cent and 4.5per cent for upper floors.
Factory space also increased about 4 per cent quarter on quarter to $1.35psf for ground-floor units and $1.10 psf for upper-floors.
With average capital values also rising, CBRE’s Mr Goh did, however, say: ‘Keen competition for investment-grade industrial properties could see Reit (real estate investment trust) players lowering their yield expectations for properties to be acquired.’
Source : The Business Times, 03 July 2007

URA signals caution as rise in home prices spreads

URA signals caution as rise in home prices spreads
Q2 private home prices surge 7.9%, with gains reaching mass market and HDB resale segments

By KALPANA RASHIWALA

(SINGAPORE) Official flash estimates show the rise in home prices spreading beyond the high-end to other parts of the market including private condos in the city fringe, mass market areas and even to the HDB resale market - prompting some words of caution from the Urban Redevelopment Authority (URA).

Market watchers say the trend is being driven by people who have sold their prime district homes through en bloc sales finding replacement properties further from prime locations.
The URA price index for private homes rose 7.9 per cent in the second quarter over Q1 - the biggest quarter-on-quarter gain since Q2 1999. The latest flash estimate shows a year-on-year gain of 20.6 per cent for Singapore as a whole.
The biggest price gains were not in luxury homes, as reflected in URA’s Core Central Region, covering districts 9, 10 and 11, Downtown Core (including Marina Bay), and Sentosa. While non-landed private home prices in this region increased by 7.6 per cent in Q2 over Q1, the Rest of Central Region (which covers places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) posted an even bigger 7.9 per cent gain over the same period.
Prices in the Outside Central Region - which covers suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok - were 6.5 per cent higher in Q2 than in the first three months of the year.
The Housing & Development Board’s resale flat price index registered a 2.9 per cent increase in Q2 over Q1, going by the board’s latest flash estimate. This shows prices for public housing rising faster than before, as there was a quarterly gain of just 1.3 per cent in the index in Q1.
In a departure from recent tradition, the URA yesterday advised potential home buyers that they should take into account that there is ’sufficient pipeline supply of private housing, as well as the potential supply from Government Land Sales sites, when deciding to make a property purchase’.
The URA reminded people that the Government will ensure there are sufficient homes to meet demand, saying that it will continue to monitor the market closely.
DTZ Debenham Tie Leung executive director Ong Choon Fah said: ‘There has been a sense of urgency for some people to buy a home when they see the market going up. Obviously the Government is a little bit concerned, but this market is driven by fear and greed. Fear of missing the boat, and greed to make more. These are very emotional things, so people may not act rationally.’
Another property consultancy, CB Richard Ellis, noted that the URA’s overall price index for private homes has increased 13.1 per cent in the first six months of this year. It predicts a full-year gain of 20 to 25 per cent for the whole of this year.
ERA Singapore similarly forecasts an increase of 20 per cent or more for 2007. For the HDB resale flat price index, ERA predicts an increase for the whole year of about 8 to 10 per cent. PropNex also reckons the gain will be about 10 per cent.
Market watchers see yesterday’s data as evidence that the recovery in the high-end residential sector is at last filtering through to other parts of the market.
Knight Frank managing director Tan Tiong Cheng says the key driver of this trend is the growing number of owners of prime district homes who went through en bloc sales and are priced out of the most expensive districts. ‘They are instead forced to find replacement homes outside these locations, starting with city-fringe locations and even spreading to the suburbs,’ Mr Tan said.
In some cases, especially en bloc sales of privatised HUDC estates, the replacement homes may even be HDB resale flats in Queenstown, Bukit Merah and other areas, Mr Tan reckons.
ERA Singapore assistant vice-president Eugene Lim reckons that fear among home buyers that they may miss the boat and lose out on good property buys is also fuelling the current buying frenzy.
‘Everyone seems to want a piece of the action. Those who can’t afford the high prices in prime locations are moving outwards,’ Mr Lim added.
PropNex CEO Mohamed Ismail reckons the increases in the price indices for the Rest of Central Region and Outside Central Region are due to many buyers previously sitting on the fence deciding to buy out of fear that prices may escalate further.
CBRE executive director Li Hiaw Ho highlighted projects in several locations that saw new price levels being achieved in Q2, including Kallang (The Riverine By The Park, $1,400-1,500 psf), Novena (Novelis@Novena, $1,400 psf) and suburban areas (Botannia in the West Coast area, Casa Merah near Tanah Merah MRT Station, Northwood in Sembawang, and Parc Mondrian at Woodleigh Close, in the $600 to $720 psf range).
PropNex’s Mr Mohamed warned that the 7.9 per cent hike in the private home price index for Q2 is ‘bullish and if the growth continues at this pace, it is not healthy for the property market in the long run’.

Source : The Business Times, 03 July 2007

Prices in Bedok, West Coast, Thomson lagging behind market

Prices in Bedok, West Coast, Thomson lagging behind market
By Fiona Chan, Property Reporter

HOME seekers need not despair at the rapid rise in home prices shown by the latest estimates released yesterday.
They can turn to a number of residential areas and developments that are still lagging behind the market, with one area even falling in price, according to a study by Savills Singapore.
The property firm noted that in areas such as Bedok and the West Coast, average home prices have risen by less than 5 per cent over the last 12 months.
In contrast, home prices across Singapore have surged by about 20.6 per cent in the same period, boosted by a 7.9 per cent jump in the last three months alone.
For suburban areas as a whole, home prices have gone up by slightly more than 11 per cent over the last year, according to figures released by the Urban Redevelopment Authority yesterday.
But Savills data shows that in Bedok, home prices inched up only 4.9 per cent in the period. In the West Coast, the increase was about 4.8 per cent.

And in Upper Thomson, prices in the general area actually fell by 4.1 per cent, said Savills.
‘There hasn’t been much attention paid to these areas because there haven’t been many new launches there,’ said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.
Also, in areas such as Paya Lebar, home sales and prices have been affected because of the Circle Line MRT construction that has been going on for a few years, he pointed out.
According to Savills, home prices in Paya Lebar have gone up by only about 7.5 per cent in the last year.
‘If HDB flats can go to the $700,000 type levels, units in these areas are also good buys,’ said Mr Ku.
In a market where values of popular condominiums rise by the week, the slow price climb of developments in these areas serves as a reminder that there is no need to panic, he added.
‘Many homebuyers don’t bother to do their homework,’ he said. ‘If they haven’t heard of a development, they just write it off even though it might be of good value.’
Many of these more affordable projects are fairly new. Some are even freehold but have suffered from a lack of publicity.
There are even developments in these and other areas that have fallen in price over the last 12 months. In the Upper Thomson area, Savills singled out Bullion Park in Lentor Loop, where average prices have slipped by 1 per cent from $520 per sq ft a year ago to $515 psf now.
The Linear in Upper Bukit Timah has also seen average prices dip by 0.7 per cent in the same period, said Savills. Prices were about $564 psf a year ago but are $560 psf now.
Source : The Straits Times, 03 July 2007

Several launches achieve prices close to records

Several launches achieve prices close to records
THE roaring market shows no signs of easing, going by recent project launches.
New developments around the country have started to reach prices not seen since the property peak of 1996.
Units in Duchess Residences in Bukit Timah, for instance, have crossed the $2,000 per sq ft (psf) mark - the first time homes in the area have done so in almost a decade.
More than 80 per cent of the project’s 120 units have been sold since they were put up for sale last week, with all the smaller three- and four-bedroom units sold, said developer UOL Group.
Singaporeans were the main buyers but 20 per cent of the homes were sold to buyers from Hong Kong, Malaysia and Indonesia, said UOL, adding that many of them were from the finance industry.
Developer Wing Tai, meanwhile, has quietly sold all 50 units it has released in Helios Residences in Cairnhill.

The Straits Times understands that the units were priced at around $3,000 psf - also a benchmark for the area.
Prices for two-bedroom apartments are believed to start from $3.51 million.
Wing Tai said it would release the rest of the project’s 140 units soon, although it did not specify a date.
But the central areas are not the only ones doing well.
In the relatively quieter Kembangan, a 32-unit boutique project called D’Oasia had half its units sold for as much as $1,003 psf, said Savills Singapore, which is marketing the project at Lorong Melayu.
Despite prices in the area hovering around $700 psf or lower for several years, D’Oasia developer Monfort Land has managed to sell 15 units of the freehold project at an average of $950 psf.
And strata-bungalow development Dunsfold 18 has enjoyed a good take-up in Lorong Chuan.
Since mid-May, 10 of its 18 bungalows have been sold at prices ranging from $3.08 million to $3.56 million each, or an average price of $770 psf.
Source : The Straits Times, 03 July 2007

Govt reassures buyers: Plenty of new homes in the pipeline

Govt reassures buyers: Plenty of new homes in the pipeline

THE Government has taken the unusual step of reassuring private home buyers that there are plenty of brand-new unsold units in the pipeline - about 22,700 of them.
It offered this new figure in what is being seen as a move to calm the booming property market, even as the latest estimates show that private home prices shot up 7.9 per cent over the last three months.
In an unusual addendum to the price estimates released yesterday, the Urban Redevelopment Authority (URA) reassured home buyers that the supply of homes over the next few years will be plentiful.
It reiterated that around 42,200 new homes will be completed between now and 2010. Of these, slightly more than half have yet to be sold, it said.
These include units that have already been launched but not yet taken up, as well as those that have not yet been launched for sale.
While the URA did not provide details of where these homes will be located, property consultants estimated that most of them will be in the central areas.

For the rest of the island, the Government has already taken steps to alleviate the situation. Last month, it announced it will release a slew of land plots in the second half of this year, enough for developers to build about 8,000 homes.
This comes as some property watchers issue alerts of a potential supply crunch of homes in the market, following an unprecedented wave of collective sales that will lead to thousands of homes being torn down.
But the Government was quick to assure buyers that ‘it will continue to monitor the market very closely’.
‘The Government will ensure that there will be sufficient supply of residential space to meet demand,’ the URA said. ‘If necessary, the Government will make available even more sites for private residential development… next year.’
It added that ‘prospective home buyers should take into consideration the sufficient pipeline supply of private housing, as well as the potential supply… when deciding to make a property purchase’.
Dr Chua Yang Liang, head of Singapore research at Jones Lang LaSalle, saw the Government’s statement as ‘quite a strong indication to tell the market there is adequate supply, and not to go on a panicked buying spree’.
The URA also appeared to be addressing fears of a property bubble in its statement. It was quick to say that the jump in home prices was due to strong fundamentals. ‘The increase in private housing prices in recent quarters is in line with greater economic growth and rising confidence,’ it said.
‘Private housing prices are now increasing at a faster pace because of good economic prospects going forward and the increasing attractiveness of Singapore as a global city.
Source : The Straits Times, 03 July 2007

HDB resale prices show steady growth, up 2.85% in second quarter

HDB resale prices show steady growth, up 2.85% in second quarter
 
Demand is picking up due largely to better economy and upbeat sentiment: Analysts
By Joyce Teo, Property Correspondent
THERE has barely been a pulse in the public housing scene for the past couple of years but the beast is stirring and showing distinct signs of life.
It is certainly attracting more attention, thanks to some cashed-up collective-sale sellers picking up Housing Board (HDB) flats at mind-boggling prices.
Fortunately, the action is not just limited to those infrequent deals. Demand has largely picked up with a better economy and greater market confidence, said property experts.
It is all a far cry from the grim days of about three years ago when HDB prices were artificially inflated by rampant cash-back arrangements.
These illegal deals involved the seller declaring a higher price in order to secure a bigger loan for the buyer and so facilitating the sale. Rules were introduced in April 2005 to curb these deals.
Preliminary government estimates yesterday showed a 2.85 per cent rise in HDB resale flat prices in the second quarter, up from 1.25 per cent in the first.

Experts are forecasting continued price growth in line with Singapore’s positive economic outlook.
The HDB resale market is experiencing a ‘filter-down effect’ from the strong private property market, said ERA Singapore’s assistant vice-president, Mr Eugene Lim. ‘Homebuyers who are priced out of the private property market will be looking at the larger flat types such as the five-room and executive flats.’
The asking prices of these larger flats have already risen to as much as $50,000 to $150,000 above valuation, he said.
In the past, weak demand meant that many flats, particularly the larger ones, were selling at levels below valuation.
Things have perked up since with units now largely selling above valuation, and some flats in the outlying areas going for about $10,000 to $30,000 above valuation, consultants said.
Some sellers are asking for very high prices, hoping to land a windfall similar to those two owners who hit the headlines last month after reaping prices of $675,000 and $720,000 for their conveniently-located flats.
But these deals are not everyday occurrences, said Mr Lim, and sellers must be realistic as the typical flat buyer depends a lot on bank financing.
If the resale flat is not a standout - that includes having unblocked panoramic views and a snazzy decor - rational buyers would not pay a high premium for a 99-year property, he said.
And only flats in certain areas such as Tiong Bahru and Redhill, which are near collective-sale sites, appear to be attracting higher prices, said PropNex chief executive Mohamed Ismail.
He noted that not all sellers in collective sales are taking the HDB route; some are buying into ageing suburban condominiums which offer facilities like a pool.
He described the price rise in the HDB resale market as ‘fair’ as prices had been lagging behind those of private properties.
For the full year, HDB resale prices may rise by about 10 per cent, said property experts.
A HDB market with steady growth would help support the private property market, added Savills Singapore’s director of marketing and business development, Mr Ku Swee Yong.
The official figures for the second quarter will be released at the end of the month.

Source : The Straits Times, 03 July 2007