Singapore Q3 rents for high-tech industrial space up 15%

Singapore Q3 rents for high-tech industrial space up 15%

By ARTHUR SIM

THE average monthly rent for high-tech industrial space has increased by 15 per cent in this quarter to $3.45 per square foot per month, real estate consultant DTZ Debenham Tie Leung reported.

High-tech industrial space includes business park and science park space such as Changi Business Park and International Business Park, and rents there now range from $3 to $4.50 psf per month. The monthly asking rent for the newly completed Eightrium @ Changi Business Park is also in the vicinity of $4 psf.

DTZ executive director (consultancy and research) Ong Choon Fah attributed the increasing rents to the continuing spillover demand for conventional office space.

The latest figures showed that business parks experienced a 5 per cent drop in occupancy in the second quarter of this year due to the completion of Eightrium @ Changi Business Park and Xinlinx Asia Pacific’s business park development at Changi Business Park Vista.

Mrs Ong added: ‘Notwithstanding the dip in occupancy rate, demand for business parks remains strong.’

HSBC will take up 10,000 square feet of space at the Comtech, she noted.

Islandwide, private industrial stock, which includes factory and warehouse space, rose one per cent to 295 million sq ft in the second quarter. The average occupancy rate of private factory space rose marginally by 0.1 of a percentage point quarter-on-quarter to 90.7 per cent in the second quarter while islandwide occupancy rate of warehouse space stood at 89 per cent.

Separately, JTC Corporation launched a 20,867 square metre land parcel at Jalan Tepong for sale yesterday. Industry executives expect this site, which is the second of the two industrial sites for the year to be launched under the Government Land Sales Confirmed List, to go for between $380 and $400 per sq m per plot ratio. The site has a plot ratio of 1.4 and can be used for light industry, general industry, warehousing, utilities or telecommunications.

Demand for high-tech space could see new entrants into the market building their own facilities.

Jones Lang LaSalle (JLL) associate director (industrial markets) Tahlil Khan said that his firm is working with a number of organisations and is looking at public tenders and direct allocation of sites ‘depending on the preferences, accommodation needs and objectives of the occupier’.

David Wilton, JLL regional director and head of industrial (Asia) said that users were unlikely to find space at what he called ‘the existing business park or high-tech inventory’.

He said that these users were left with three options: purchase land to occupy; commission a leased facility; or negotiate with owners/developers on facilities under development or construction.
Source : Business Times - 29 sept 2007

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Singgapore Mass-market sector rebounded in ‘06: CBRE

Singgapore Mass-market sector rebounded in ‘06: CBRE
Singapore Non-landed projects in non-prime areas turn in strong sales volume
By CONRAD TAN

MASS-MARKET property sales actually staged a recovery last year, earlier than widely believed, said property consultant CB Richard Ellis (CBRE) yesterday.

The residential market is likely to remain active in the final quarter of this year amid strong economic growth.

In a study of the take-up rates of new non-landed projects in non-prime areas, CBRE found that the mid-tier and mass-market projects turned in strong sales volume in 2006, although prices for these segments only began rising this year.

‘Until now, the market had perceived that these segments trailed the luxury segment in their recovery, and had begun to recover only in early-2007, in terms of volume and price,’ it said.

An analysis of the new units launched last year and the corresponding take-up volumes ’shows otherwise’, it said.

It found that 68 per cent of the new projects launched last year in the West Coast, in districts 5 and 21, were taken up. Similarly, take-up rates for projects in districts 15 and 16 were about 90 per cent - ‘not far’ from the take-up rates of 74 per cent for projects in the prime districts 9 and 10 and 96 per cent for those in the downtown and Sentosa Cove areas.

‘Of course, in terms of pricing, the mass market and mid-tier projects have only begun to inch up in the previous two quarters of 2007,’ said Joseph Tan, executive director for residential property at CBRE.
‘But the strong sales of non-prime projects since a year ago show the return of buying power for upgraders and private homeowners, who, at that time, saw good investment value in the projects, while anticipating the upside in prices later on.’

Since then, the number of projects on the market has increased dramatically.

The number of new units launched in the west has tripled from a year ago, with the launch of One-north Residences, One Rochester, Botannia and The Parc Condominium, it said.

Meanwhile, the number of new units launched in the Newton/Novena area has doubled from 578 units in 2006 to 1,351 units so far this year. Take-up rates have been ‘very healthy’ at 90 per cent, said CBRE.

In districts 15 and 16 in the east, the take-up rate so far this year has been ‘equally strong’ at 85 per cent.

Residential rents have also risen sharply ‘due to the shortage of apartments for lease following the slew of collective sales of existing developments in the past two years’, said CBRE.

After rising 18.7 per cent on average in the first half, rents are expected to increase by another 8-10 per cent in the third quarter.

Rents in the popular areas of Tanjong Rhu, Meyer Road, East Coast, Dunman, Joo Chiat and Siglap have gone up 40.9 per cent since the fourth quarter of 2006, with median rents now at $2.62 per square foot per month.

The next biggest increase in rents were for apartments in the Orchard Road, Grange Road, Tanglin and Bukit Timah areas, where rents have gone up by 37.5 per cent to $3.74 per square foot per month on average.

The residential market is likely to remain active in the final quarter of this year, amid strong growth in the economy, CBRE said.

Source : Business Times - 29 sept 2007

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Charged atmosphere at Horizon appeal hearing - Singapore

Charged atmosphere at Horizon appeal hearing - Singapore

Gallery boos buyers’ application to intervene
By MICHELLE QUAH
(SINGAPORE) It was an animated session - to say the least - in the High Court yesterday as the owners of Horizon Towers gathered to appeal against the Strata Titles Board’s (STB) dismissal of their collective sale application.
Court 6C was packed to the hilt with at least 35 lawyers from no less than five law firms representing the buyers and different groups of owners. It made for a charged atmosphere.

The appeal had been filed by the former sales committee of Horizon Towers, which had filed the application for a collective sale order, and was to be attended by themselves and the minority sellers who had objected to the sale.

But numerous other parties turned up yesterday, on the grounds that they also had a stake in the outcome. One such group comprised the buyers of Horizon Towers: Hotel Properties Ltd (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority. Represented by Allen & Gledhill, they applied before the High Court to intervene at the appeal.

Their application was greeted by boos from the gallery. Senior Counsel K Shanmugam was interrupted so often that Justice Choo Han Teck, who presided over the hearing, had to ask the crowd for restrain.

The buyers’ unpopularity with the majority sellers stemmed from the fact that HPL and its partners have sued the sellers for breach of the collective sale agreement.

The majority sellers’ application to the STB was rejected by the board in August, on the grounds that it was defective: specifically, because certain key pages were missing from the application.

STB’s decision, coming just days before the sale completion deadline, effectively scuppered the en bloc sale. The buyers then sued the majority sellers, claiming damages arising from a loss of profit of up to $1 billion.

That suit was stayed on Thursday, after the majority sellers agreed last week to extend the sale completion deadline to Dec 11.

Yesterday also saw another group of 13 Horizon Towers owners - who form part of the majority that agreed to the collective sale - applying to intervene in the appeal. This group, which includes local singer Ho Yeow Sun and her husband Kong Hee, are represented by Rajah & Tann.

Both these applications to intervene were met with strong objections. The minority owners - represented by several law firms, including Harry Elias and Tan Kok Quan Partnership - said, among other things, that allowing these two parties in would unnecessarily increase the time and costs involved.

Such proceedings yesterday meant that there was not even time for the STB appeal to be heard. The session will resume on Monday, when Judge Choo will rule on whether to allow HPL and its partners and the group of 13 owners to intervene in the appeal. He will then hear the appeal and decide whether to set aside STB’s decision.
Source : Business Times - 29 sept 2007

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Singapore Office demand spills out of CBD as rents soar

Singapore Office demand spills out of CBD as rents soar

Temporary supply shrinkage adds to space crunch: DTZ
By ARTHUR SIM

(SINGAPORE) Office rents across Singapore have all breached historic highs, says real estate consultant DTZ Debenham Tie Leung, with Raffles Place now commanding average monthly rents of $14.50 per square foot (psf).

This represents an increase of 11 per cent over the previous quarter.

And despite the completion of the 81,460 square feet of new office space at 135 Cecil Street during the quarter, the office market still suffered a net loss of 455,390 sq ft of stock due to the demolition of Asia Chambers Building and the addition and alteration works going on at two existing office blocks - OUB Building and Ocean Building.

The authorities have been trying, among other measures, to address the crunch by making short-term lease office space available.

DTZ executive director (consulting and research) Ong Choon Fah said: ‘The rapid rise of office rents is likely to impel prospective tenants to source for lower-cost alternatives outside the CBD.’

In its report, DTZ highlights that CBD fringe and decentralised areas like Alexandra and Novena have been attracting much of this spill-over demand.

In particular, the Alexandra zone now enjoys full occupancy with average monthly gross rents at $6.80, an increase of 13 per cent quarter on quarter.

In the Orchard Road zone, monthly rental increases are significantly higher at 25 per cent quarter on quarter and now the rents stand at $10.60 psf per month.

Future supply can be expected from government land sales sites.

In the third quarter, three sites were sold.

Two were at Anson Road/Enggor Street, going to Mapletree Investments and LaSalle Investment Management, while one site was at Beach Road, which went to a consortium consisting of City Developments, Istithmar and El-Ad Group.

DTZ believes the sites could generate an estimated 1.03 million sq ft of gross floor area of office space.

It also noted that there is another 5.7 million sq ft of commercial space from various government sources available in H2 2007.

But with demand from the financial sector for office space not expected to decline anytime soon - DTZ cites a Bank for International Settlements report which ranks Singapore as its fifth-largest centre for foreign exchange trading - interim government initiatives have had to be introduced to alleviate some pressure.

The Urban Redevelopment Authority launched two transitional office sites at Scotts Road and Tampines Concourse with 15-year leases in the quarter, with the site at Scotts Road drawing 11 bidders.

And DTZ also estimates that at the end of the third quarter, 663,766 sq ft of short-term lease office space has been made available through the Singapore Land Authority.

Source : Business Times - 29 sept 2007

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Singapore MAS tightens rules for Reits to protect retail investors

Singapore MAS tightens rules for Reits to protect retail investors

No more discounts for institutional investors at listing time
By SIOW LI SEN

THE Monetary Authority of Singapore (MAS) has tightened up the rules for property funds to improve the odds for retail investors.
Institutional investors or the big boys will no longer have discounts for subscriptions made at the time of the listing of a real estate investment trust (Reit) under new guidelines for Reits issued by MAS yesterday.

Another change limits what’s allowed under fixed-term management contracts to five years.

These fixed-term management contracts have been used by fund managers as a poison pill to entrench their positions and to provide an obstacle to takeovers, as it makes it expensive to fire them.

In a statement, MAS said the revised rules ‘are intended to improve safeguards for investors and to provide greater clarity and flexibility for commercial transactions’.

MAS said a majority of the respondents to its public consultation exercise in March raised objections to disallowing discounts to institutional investors.

They felt that the discounts are justifiable because such investors enter into binding subscription agreements prior to the launch of the initial public offering (IPO); institutional investors were also said to have helped ensure the success of a Reit offering, particularly in difficult markets, by providing a useful signal to the retail market about the quality of the Reit.

Those who wanted to retain the discounts suggested full disclosure, putting a cap on discounts and/or a moratorium or the sale of the Reit units.

But MAS said: ‘As a matter of policy, there does not seem to be any good reason why different groups of investors should be permitted to pay different amounts for the same interests in these assets at the time of the IPO.’

MAS said it is prepared to allow discounts that are given to investors who assume equity risks different from those of IPO investors, for example if they are willing to underwrite the listing.

On management contracts which have been a contentious issue, the new guideline said the term of a compensation provision should not be more than five years and the compensation amount payable to the Reit manager should not exceed the sum of the fixed component of unearned management fees (excluding variable or performance fees) over the remaining term of the provision.

Industry players had argued that entrenchment clauses in management contracts were to help professional Reit managers who do not hold large stakes in a Reit and ‘would be discouraged from establishing Reits in Singapore if there is no flexibility to implement measures to obtain appropriate compensation if they are removed as managers’.

But MAS said: ‘We continue to be concerned with entrenchment arrangements that impede the market for corporate control and place significant restrictions on the ability of unit-holders to terminate management contracts.’

Ronnie Tan, chief executive of Bowsprit Capital, the manager of First Reit, said he supported not giving discounts to institutional investors.

‘It’s not fair for the small investors,’ he said.

He added that if demand is an issue, ‘Reit issuers should look at pricing rather than use discounts as a (sales) mechanism’.

‘Removal of the poison pill (means) the takeover rules would be similar to other listed companies,’ he said on the new rule which makes it easier to fire the Reit manager.
Source : Business Times - 29 sept 2007

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130,000 may get to watch S/pore GP, 3 other races

130,000 may get to watch S/pore GP, 3 other races

Corporate packages, hospitality suites to go on sale in Nov
By NISHA RAMCHANDANI
(SINGAPORE) It is all systems go for Singapore’s Formula One Grand Prix street circuit which has received in-principle approval from the Federation Internationale de l’Automobile (FIA), a green light that will see construction on the circuit beginning as early as next month.

And gathered around that circuit when the event roars to life a year from now will be a possible 130,000 spectators, who will get to enjoy three supporting races apart from the main fare. The announcements came yesterday at the one-year countdown to the Singapore Grand Prix 2008 being held by the Singapore Tourism Board (STB) along with race promoter Singapore GP Pte Ltd (SGP).

Singapore’s 5.067-km-long circuit will host the first street race in Asia. It is also one of only three circuits in the world to run counter-clockwise. It can be granted a full circuit licence only during the final FIA inspection in the week of the race itself.

Another highly anticipated announcement involved corporate hospitality suites and packages, which will go on sale in late November. Members of the public will be able to purchase three-day passes from December. Single-day passes, if any, will be issued just before Chinese New Year.

SGP and STB are hoping to garner 125,000-130,000 spectators for the event. ‘Where we may not be able to put seats because of the limitations of the terrain, we will have options for people to be standing and watching the race,’ said Leong Yue Kheong, director of F1 Projects for STB.

In addition to the 26,000-person seating gallery opposite the floating platform, there are provisional plans to build additional grandstands at the Padang, opposite the pit lane near the starting grid and at the War Memorial Park, among others.

‘There are several options being examined by the race promoter together with the various agencies to see how we can maximise the spectators value,’ he added.

F1 fans can also look forward to three supporting races - GP2, saloon cars and BMW Junior Championships - which are slated to start at 2pm - in the run-up to the main event.

The Land Transport Authority (LTA) will be in charge of managing the modifications to existing infrastructure such as the widening of roads and the removal of road curbs and traffic islands along certain areas of the circuit. A 1.2-km road which will constitute the start and finish straight of the track will also be built alongside the pit building.

LTA announced yesterday the award of three contracts for the road works totalling $18.014 million to Or Kim Peow Contractors (Pte) Ltd, Sato Kogyo (Singapore) Pte Ltd and Works Infrastructure Pte Ltd. Over $50 million is expected to be invested in public road works and infrastructure changes.

What remains pending now is confirmation of whether the 61-lap street race will be a night one. If so, it will set a precedent in F1 history. Minister of State for Trade and Industry S Iswaran said feedback from trials conducted in Europe in recent months has been positive. ‘We are in the last mile,’ he reckoned, acknowledging that the outlook was optimistic. He also launched the countdown clock on the official F1 Singapore website - www.singaporegp.sg - which will enable F1 afficionados to be privy to regular updates and insider tips.

Source : Business Times - 29 sept 2007

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Singapore F1 circuit gets the go-ahead

Singapore F1 circuit gets the go-ahead

Construction, repaving work will begin soon to get track ready for race
By Leonard Lim

SINGAPORE’S Formula One street circuit has been given the green light from the authorities.
The International Automobile Federation (FIA) has granted in-principle approval for the 5.067-kilometre Marina Bay circuit, meaning construction work can now be speeded up ahead of the race.

At a press conference yesterday to mark the one-year countdown to the Singapore Grand Prix - the race takes place on Sept 28 next year - Minister of State (Trade and Industry) S. Iswaran said the track is all but set.

‘The only thing now is they would want to look at details in terms of how the track is being prepared before they give final approval,’ he said.

‘But I’d say we can take it as more or less that this is the circuit for 2008.’

Like all other F1 circuits, the full circuit licence will be granted during the final FIA inspection during the week of the race. The Singapore track is likely to be completed by May, ahead of the 90-day pre-race requirement stipulated by the FIA.

The 61-lap circuit will run in an anti-clockwise direction - one of the main changes since the circuit was first introduced in May. This is so there will be more run-off areas: Sections of the circuit that allow more space for overtaking and also ensure that cars which over-accelerate have a lesser chance of skidding off the track.

The Singapore track is one of only three on the F1 circuit that runs counter-clockwise. The others are in Istanbul and Sao Paulo.

There are a number of must-see stretches along the Singapore circuit.

Raffles Boulevard is one - it is where cars are likely to reach top speeds of over 300kmh.

Another is at Turn 14, just in front of the Fullerton Hotel.

Approaching the 97-year-old Anderson Bridge, the drivers will have to slow their cars down from about 200kmh to about 90kmh in a matter of seconds - before accelerating to speeds of close to 300kmh again.

Said Mr Colin Syn, deputy chairman of race organisers Singapore GP: ‘After months of poring over the drawing board, we are now one step closer to our dream.’

But more work lies ahead.

Road works, expected to start next month, will be a top priority. These will include the widening of Raffles Boulevard (between the Pan Pacific Hotel and Marina Square), the construction of a new 1.2km road for the start/finish line, and the removal of some kerbs.

Repaving the entire stretch will also have to be done, and this might cause the most inconvenience to traffic, with work expected to last about four months. But the Land Transport Authority said that work is likely to be done at night, and in segments, to minimise traffic disruption to a busy area.

Up next: Organisers are now awaiting the go-ahead to host F1’s first night race. Approval is expected in a few weeks.

Source : Straits Times - 29 sept 2007

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Sngapore Govt spent $2.8b per year over last 5 years to fund grants, subsidies

Sngapore Govt spent $2.8b per year over last 5 years to fund grants, subsidies

By Lydia Lim, Senior Political Correspondent

THE Government has spelt out just how much it spends on grants and subsidies that go into people’s retirement savings in a rebuttal to criticisms that it is tight-fisted.
Over the last five years, it ploughed back an average of $2.8 billion a year of investment income into the Budget, Second Finance Minister Tharman Shanmugaratnam said in an interview with The Straits Times. That stream of income was used to fund grants and top-ups that benefited all Singaporeans, especially the lower-income.

He also released data to show that a typical lower-income household received $136,000 worth of basic grants, which helped to build up their retirement savings.

That sum would amount to at least a third of their total savings and assets at retirement, he said.

It includes the Central Provident Fund (CPF) housing grant, additional housing grant for poorer families, the HDB loan subsidy and the Workfare Income Supplement.

It would be even bigger if CPF top-ups, subsidies for HDB upgrading and the new lease buy-back scheme were included.

The disclosure came amid calls from MPs and the public for the Government to ensure higher returns on CPF savings, better than the new interest rates announced recently. The new rates are part of a suite of changes to give people more money for retirement.

Critics had also accused the Government of using CPF as ‘cheap funds’ which it invests for much higher returns than it gives to CPF members.

Some called for the reserves to be used to fund a national pension plan to provide retirement support for the poor.

Mr Tharman took on each of the criticisms. First, on the call for a national pension fund, often referred to as the ‘first pillar’ of a social security framework, he said that Singapore already had a ‘very substantial pillar’.

The various housing grants, Workfare subsidies and CPF top-ups go towards making this pillar.

As for CPF returns, he explained that the Government pegs them to market rates to keep the system self-funded.

CPF members are also protected from risks because their savings are placed in special securities issued by the Government.

When the Government earns good returns on its investments, it channels the gains back to the Budget to fund subsidies.

‘That’s the disciplined way - make sure you can afford it on the Budget…and not shift the burden to future generations,’ Mr Tharman said.

The Singapore way also encourages people to save for their own retirement, not depend on others.’It’s what’s got Singapore to where it is today, and will hopefully survive for many more years,’ he said.

The Government did not need CPF funds. If it needed to borrow, it could do so at much lower rates on the market by issuing government bonds, he added. ‘CPF money is actually expensive money for the Government, not cheap money.’
Source : Straits Times - 29 sept 2007

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