Office market tested with Merchant Square sale

Office market tested with Merchant Square sale

By Jessica Cheam

The guide price for Merchant Square is now $48 million, down from $73 million in February last year, the peak of the previous property boom.

MERCHANT Square, a four-storey office building off Merchant Road, is up for sale again - this time at a deep discount to its last asking price.

The leasehold property was on the market in February last year at the guide price of $73 million but the offers then ‘did not meet the owner’s expectations’, said CB Richard Ellis (CBRE), who is marketing the property.

This time, the seller - Jackson International - is testing the market with a significantly revised guide price of $48 million, said the firm.

CBRE’s director of investment properties, Mr Charles Hoon, said yesterday the difference in the guide price was mainly due to the high valuations and asking prices at the peak of the previous property boom in February last year.

With the new guide price and a total net lettable area of 50,262 sq ft, the sale price works out to about $955 psf.

The office building, which comprises a four-storey office tower and two blocks of shophouses, sits on a land area of about 27,668 sq ft and has two levels of basement carpark comprising 76 lots. The property was completed in 1996.

Chesterton Suntec International’s research and consultancy director Colin Tan said the disparity between the two asking prices was ’slightly surprising’.

‘Although if you look at office rentals, they have come down by up to half from peak prices,’ he noted.

Rentals in the office market are still declining, although sale prices are firming up due to the recent exuberance in the property market, said Mr Tan.

Still, the market will take some time to recover owing to ample supply, he added.

Industry observers will be keenly watching how the market responds to Merchant Square’s sale.

CBRE’s Mr Hoon said yesterday that the property is ‘a good acquisition opportunity and remain sought after among end-users’.

The expression of interest exercise closes at 3pm on Oct 6, said CBRE.

Source : Straits Times - 01 September 2009

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Punggol Spectra to offer new 2- and 3-room flats

Punggol Spectra to offer new 2- and 3-room flats

By Charissa Yong

THE Housing Board launched Punggol Spectra yesterday, the third of its build-to-order (BTO) projects in Punggol this year and the first to introduce two- and three-room flats.

Under the BTO scheme, flats are built only when a certain level of demand is reached.

Located in Punggol Central and a short drive from Tampines Expressway, Punggol Spectra will offer 301 two-roomers, 285 three-roomers, and 556 four-room flats.

The two-roomers of 46 to 47 sq m are priced at $89,000 to $109,000, and three-room flats of 69 sq m are selling for $151,000 to $179,000.

Four-room flats of 94 to 96 sq m are selling for $234,000 to $293,000. Similar, smaller standard resale flats sell for $310,000 to $357,000, said HDB.

First-time buyers with an average monthly household income of $5,000 or less can apply for an Additional CPF Housing Grant of up to $40,000.

PropNex corporate communications manager Adam Tan expects Spectra to be very well-received, as it is the first in the area to offer two- and three-room flats.

‘Smaller families will be attracted to these units, given their attractive prices,’ he said, adding that the median resale prices for two- and three-room flats across Singapore have not seen such affordable levels for more than two years.

Mr Tan expects the Spectra units to be at least four times oversubscribed. This follows the strong interest in the recent BTO project Punggol Residences, which was launched in July and was seven times oversubscribed.

Previous BTO projects in Punggol include Nautilus @ Punggol, launched in March, and premium project Punggol Regalia, launched last December.

According to HDB, this year’s total BTO supply is expected to reach 8,000 units, located in towns such as Punggol, Sengkang and Sembawang.

Source : Straits Times - 01 September 2009

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Development charges come down

Development charges come down

Modest cuts reflect cautious stance by Government, say consultants

By Joyce Teo

THE Government has made some moderate cuts to the development charges which property developers pay for enhancing the use of non-landed residential sites, such as condominium sites.

This reflects the Government’s cautious outlook on the property market, some property consultants say, though one consultant queried any cut in the current red-hot residential market.

The rates for development charges fell by an average of 2 per cent, compared with a 15 per cent cut six months ago. These charges can vary from a few million dollars to tens of millions depending on the size of the project involved.

Some areas were unchanged while others were subject to bigger falls. The rate for Sentosa, for instance, got the biggest cut - 16.67 per cent - while there was a 10 per cent fall for the Balestier area.

There was no change in the latest regular six-monthly review in relation to landed private home sites and industrial sites.

Property consultants mostly said the cuts were within expectations.

This ‘reflects the Government’s cautious stance with regard to the outlook for the property market, in view of the still uncertain economic outlook’, said Colliers International’s director for research and advisory, Ms Tay Huey Ying.

‘This is especially prominent for the non-landed residential and industrial use group,’ she said.

DTZ’s head of SEA Research, Ms Chua Chor Hoon, was surprised that the charges were lowered for non-landed residential property given the rally in property prices from the secondquarter.

‘The Government is probably being cautious as there were hardly any land deals in the past six months,’ she added.

In a statement, CBRE Research said it believed the Government did not ‘tamper too much’ with the charges as developers started looking for development sites seriously only in July.

‘It is heartening to note that the Government had not been unduly influenced by the recent buying fever seen in the home sales market nor the rapidly rising interest seen for development sites,’ said Ms Tay.

There has been overwhelming interest in Singapore’s private homes market in recent months. Developers have of late shown strong interest in buying land.

Developers will still be keen on redeveloping or acquiring new development sites as the demand for residential properties is still expected to be healthy in the coming months, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

But the overall 2 per cent drop in non-landed residential development charge rates is too small to spur collective sales, he said.

The Government also cut the rates for commercial sites and sites for hotel and hospital use by 4 per cent.

The largest falls for commercial sites of 13 per cent were in such core central business district areas as Raffles Place, Marina Bay and Shenton Way.

The cut in rates for commercial sites was expected, given the weak office market with rents continuing to tumble.

Also, the hotel sector is still suffering from falling visitor arrivals and low occupancy.

The National Development Ministry sets the rates - which reflects land values - every March and September, taking into account market values, in consultation with the Chief Valuer.

The new rates apply from today.

Source : Straits Times - 01 September 2009

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Merchant Sq, Katong bungalows up for sale

Merchant Sq, Katong bungalows up for sale

By KALPANA RASHIWALA

MERCHANT Square in the Clemenceau Avenue area and four freehold strata bungalows at Bournemouth Road in the Katong locale are among the latest offerings in the property investment sales market.

The guide price for Merchant Square is about $48 million - or 34 per cent lower than the $73 million sought for the property in February last year.

Its owner, carpet manufacturer Jackson Carpet, did not get its asking price then for the property, which comprises offices, some shop space and 76 car park lots.

BT understands that the latest price reflects a net property yield of close to 4 per cent, based on Merchant Square’s current passing income.

The latest $48 million guide price is about $955 per square foot, based on Merchant Square’s 50,262 sq ft net lettable area. This compares with about $1,450 psf, based on last year’s $73 million price tag.

Merchant Square was completed in 1996 and is on a site with a remaining lease of about 83 years. It comprises a four-storey office tower, two blocks of shophouses, and a couple of basement levels for carpark lots. CB Richard Ellis is marketing Merchant Square through an expression of interest exercise that closes on Oct 6.

Separately, Credo Real Estate has launched a sale through tender of four strata bungalows at 61 and 63 Bournemouth Road with a price tag of $24 million to $26 million.

The bungalows have a total freehold site area of 24,443 sq ft, and are being sold by three parties - one of whom owns two units and the other two, one bungalow each.

The sale is not being pitched as a redevelopment site as the bungalows are relatively new and in good condition; they were completed around 2000.

The development, originally known as Sayang Villa, will be ideal for extended families, or groups of friends who would like to be neighbours, or simply investors looking to occupy one or two units and lease out the rest.

‘Should the buyer choose to redevelop the site in the medium term, he or she could build five conventional detached or strata houses,’ Credo said. The tender closes on Oct 8.

Source : Business Times - 01 September 2009

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410 units snapped up at Trevista preview

410 units snapped up at Trevista preview

Singaporeans make up 87% of buyers; even Swiss nationals among purchasers

NTUC Choice Homes has sold 410 of the total 460 units it released for the preview of its Trevista condo in Toa Payoh last week. The co-operative is expected to release more units in the 590-unit project this weekend when it does an official launch, accompanied by an advertising campaign, for the project.

Worth the wait: More units in the 590-unit project are expected to be released at its official launch this weekend
Singaporeans picked up 87 per cent of the total 410 units. Permanent residents made up 7 per cent and non-PR foreigners, 6 per cent, of buyers.

The majority of PRs and non-PR foreigners were from China; some were also from Indonesia and Malaysia; there were also a few Swiss nationals, an NTUC Choice Homes spokeswoman said.

She said 70 per cent of the buyers have HDB addresses and the other 30 per cent, private addresses.

About 80 per cent of buyers purchased on the normal progress payment scheme. The remaining 20 per cent who opted for interest absorption scheme are being charged a 2 per cent price premium, the Choice Homes spokeswoman said.

When sales in the 99-year leasehold condo began on Friday morning for the first batch of 210 units, the average price was $898 per square foot, but with two subsequent batches of additional units released, prices were adjusted marginally upwards, although this also had to do with the newer units being on higher floors and having better orientation.

The average price currently is understood to be around $920 psf.

What’s left are a limited number of two-bedroom units, with the majority of what’s available being three- and four-bedroom apartments, BT understands. The remaining 130 units in the condo are expected to be released this weekend and they include prime pool-fronting units.

Trevista is being marketed by CB Richard Ellis and ERA.

Over at Ridgewood Close in the Mount Sinai area, Singapore Land is understood to have sold slightly more than 100 units at its preview of Trizon, a 289-unit freehold condo.

Two of the project’s three blocks have been released for sale. The units were priced between $1,250 psf and $1,550 psf and buyers are understood to be mostly Singaporeans with some foreigners (predominantly Indonesians).

A typical three-bedroom unit of 1,550 sq ft costs about $2.12 million.

SingLand is selling the 24-storey project with only the normal progress payment scheme. It will hold an official launch of Trizon this weekend.

Source : Business Times - 01 September 2009

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6 floors of Prudential Tower being sold

6 floors of Prudential Tower being sold

K-Reit said to be buying space at about $1,550 psf of net lettable area

By KALPANA RASHIWALA

IN a deal that could help benchmark office values in the Raffles Place area and smooth the way for more office investment transactions, a property fund is said to be selling six floors at Prudential Tower for about $1,550 per square foot or about slightly over $100 million.

Back in the fold: KepLand group is buying back the property at a lower price than what it sold the space for 13 years ago — FILE PHOTO
The buyer in the deal being stitched together is believed to be listed K-Reit Asia, which already owns 44.4 per cent of the strata area in the 30-storey building at the corner of Church and Cecil streets.

Prudential Tower is on a site with a remaining lease of about 85 years. Jones Lang LaSalle is said to be brokering the latest sale involving net lettable area (NLA) of about 67,000 sq ft.

As at the end of last year, K-Reit’s existing space at Prudential Tower was valued at $224 million, or $2,066 psf based on 108,436 sq ft NLA.

So the price of $1,550 psf that K-Reit is expected to pay for its latest acquisition of six floors is about 25 per cent lower than the end-2008 valuation on its existing space.

Some market watchers described the latest pricing as ‘not unreasonable’.

‘They seem to be slapping themselves by buying additional floors in Prudential Tower that could affect the valuation of their existing space in the building. But one could argue that the end-2008 valuation was too high in the first place,’ one property consultant said.

In any case, an industry observer points out that K-Reit could still use a higher valuation than $1,550 psf for Prudential Tower when it revalues its assets at end-2009.

It also made sense for K-Reit to raise its stake in Prudential Tower and gain control of the building as that could create other strategic options for the Reit.

The latest deal involves the 20th to 25th levels. The seller is Asia Property Fund, sponsored by LaSalle Investment Management and PruPIM. The fund bought the six floors in 2007 for $141 million or just under $2,100 psf from Prudential Assurance Company Singapore. The latter received units in the fund in exchange for selling the floors. Prudential Assurance Co Singapore and PruPIM are part of the Prudential UK Group.

Prudential Assurance Co Singapore still owns the 30th floor of the building, sources say. It had purchased the seven floors in the development in early 1996 for $183 million from Straits Steamship Land, now known as Keppel Land.

That transaction worked out to $2,200 psf. Although this figure was based on floor space and not NLA, property consultants say the dollar psf price on NLA at which KepLand sold the space in 1996 would be higher than what K-Reit (a KepLand unit) is paying in the latest deal.

In short, KepLand group is buying back the space at a lower price than what it sold it for 13 years ago.

Following its sale of the seven floors to Prudential Assurance, KepLand also sold further space in the building to other parties before divesting its remaining 44.4 per cent stake in Prudential Tower to K-Reit, which was created from a de-merger from KepLand and listed in 2006.

Source : Business Times - 01 September 2009

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Social media: New tools to address business challenges

Social media: New tools to address business challenges

Social networking tools like Facebook and YouTube are gaining traction among SMEs that are starting to use them to support business operations like customer engagement, market research and even recruitment

A STUDY by British company Fasthosts Internet shows the use of social networks is growing among small businesses there, with 24 per cent of respondents saying they use these networks to promote sales or plan to look at doing so this year. ‘The aim of social networking is to create interaction between people,’ says Steve Hodgkinson, research director with Ovum Research. ‘Commercially, the aim is to harness this energy to provide insights into customer needs or to promote a brand.’

Embracing technology: The Culture Group, which operates the Bali Culture, Beach Culture and Swiss Culture restaurants, is one local SME that uses social media to market itself. (from left) Managing director Raymond Png with operations director Desmond Png and kitchen director Edmund Lim
Marketing and research

The Culture Group, which operates the Bali Culture, Beach Culture and Swiss Culture restaurants, is one local SME that uses social media to market itself.

Earlier this year it started using Facebook to create events and promote them to friends and customers. For example, its Jack Daniel’s Black Jack Night, at Bali Culture on July 25, attracted some 300 people, about 60 per cent of whom were its Facebook members, says managing director Raymond Png.

Civil servant Marcus Lee, 28, was introduced to Bali Culture by a friend who got to know about the restaurant’s Facebook group and decided to join it. ‘It’s a good way to get updated on events,’ he says. ‘There are no push messages, no spam mail. I simply go there weekly to check what’s on.’ According to Mr Png, Facebook allows the restaurant to gauge how many guests will attend an event and to send them a reminder closer to the date.

Social networking tools appeal more to the younger, go-ahead set, while newspaper and TV advertising is usually for the general crowd, he says. But this may change. As Mr Png has noticed, more and more older people are getting on to Facebook to look for long-lost friends and keep in touch with existing ones. ‘I have people in their 50s adding me as their friend in Facebook,’ he says. ‘This technology has the potential to change people’s behaviour.’

Besides marketing and promotions, social media tools can be used by businesses to conduct market research - for example, to get feedback on products and services - at a fraction of the time and cost associated with traditional methods such as surveys and focus group discussions.

As Patricia Law, digital strategist with Ogilvy 360° Digital Influence, points out: ‘If you conduct a survey the traditional way you’d be lucky to see initial findings in two weeks. With the right social media tools you obtain your findings as soon as the first person utters a word online.’

Social media as a recruitment tool

Besides interacting with customers, some SMEs have been using social networks to recruit. In the US, a survey by recruitment firm Jobvite found about 80 per cent of companies use or plan to use social networking sites to attract candidates this year.

Significantly, 66 per cent of respondents said they have hired a candidate identified by or introduced through an online social network, showing this channel is not only being used but is producing results.

Social networking sites, which can range from generic ones such as LinkedIn, Facebook and Twitter to more niche communities, enable SMEs to cast their net wider and reach an audience they might not be able to engage through the traditional media - for example, the younger and more IT-savvy community.

When social media monitoring solution provider JamiQ was looking to hire a developer, it used the platform it knew best. Founder and chief executive Benjamin Koe went to IT developer communities in Singapore, Malaysia and China to look for the right person.

The company posted the job specs online. ‘The thing that’s really interesting is that unlike job sites, which are usually country-specific, we get to post to an international community,’ Mr Koe says. ‘And it worked for us because we did not need the person to be situated in Singapore.’

JamiQ received between 10 and 20 responses within a week of posting its job ad, and eventually hired an online candidate.

The social networking platform also allows potential candidates to find out more about would-be employers and engage in frank discussions that helps give them a good understanding of the company. For its part, a company can assess a candidate’s capabilities through the quality of their contribution to online discussions.

Extracting value from social networks

Ovum’s Dr Hodgkinson says a simple way SMEs can start harnessing the power of social networking is to participate in networks such as Facebook, MySpace and LinkedIn as members - observing the likes and dislikes of users, their language and behaviour.

It is important for the participation to be ‘authentic’. For example, ’snooping’ under an alias is frowned upon by online communities. The tone of contributions is also critical - people react very negatively to ‘corporate speak’ in social networks, says Dr Hodgkinson. And that’s why overt marketing attempts or straight advertising may not work.

The trick is to tune into the flow of dialogue in a way that addresses the needs and priorities of the network community, rather than the advertising schedule of the company.

Employees, too, have to be educated on the code of conduct in social media to avoid misunderstandings. For example, they have to know whether they are allowed to share information about their company or its products on their blogs, and if so, to what extent.

Another key point for SMEs to note is that while many social media tools are free, significant effort has to be invested to use them effectively. SMEs have to understand what social media can and cannot do.

‘In the same way you don’t use a spoon to cut a steak, it’s important to understand the advantages and disadvantages of social media,’ says Ogilvy’s Ms Law. ‘From a broad perspective, social media is best used for relationship building and gathering insights - you’re not about to generate the sale of 100 Boeing business jets on Facebook.

‘SMEs need to look beyond the medium and concentrate on the objectives and the problems these objectives were derived from. A sound strategy can morph itself to fit any medium.’

This article was contributed by the Infocomm Development Authority of Singapore. Visit www.ida.gov.sg/sme to find out how the Infocomm@SME programme can help you adopt infocomm for your business

Source : Business Times - 01 September 2009

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Punggol Spectra launched by HDB

Punggol Spectra launched by HDB

THE Housing and Development Board yesterday launched Punggol Spectra under the build-to-order (BTO) system, following strong interest in the recent BTO project, Punggol Residences.

Punggol Spectra will offer 1,142 units, comprising 301 with two rooms, 285 units of three rooms and 556 with four rooms.

Located on Punggol Central, Punggol Spectra is within walking distance of Oasis LRT station and Tampines Expressway is just a short drive away, offering good connectivity to the rest of Singapore, HDB said. The precinct has commercial facilities such as shops, an eating house and a supermarket. The future Punggol Town Centre is minutes away. Educational institutions such as Horizon Primary School and Punggol Secondary School are also nearby.

Prices at Punggol Spectra range from $89,000 to $109,000 for the two-room flats, $151,000 to $179,000 for three-room flats and $234,000 to $293,000 for the four-room flats. These prices are lower than those for similar flats in the market, making them affordable for first-time buyers, HDB said.

Based on the income of flat applicants in the first half of this year, HDB expects first-time buyers will need to use only 20-26 per cent of their monthly household income to meet their housing loan commitment.

Source : Business Times - 01 September 2009

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Keppel completes Senoko purchase within $462m

Keppel completes Senoko purchase within $462m

Deal within indicative price; asset to be held in business trust

By LYNETTE KHOO

KEPPEL Corporation’s environmental solutions unit Keppel Integrated Engineering (KIE) has completed the acquisition of Senoko Incineration Plant (SIP) from the government.

The deal was done within the indicative price of $462 million, which was mutually agreed between KIE and the government on a willing-buyer, willing-seller basis.

The asset is being held in a business trust - Senoko Trust - with KIE as the sponsor and investor of the trust. Plans to publicly list the business trust are still in the bag.

‘We continue to seek a listing of this asset when suitable market conditions return,’ said a Keppel spokesman. There is no timeframe for the listing.

With this acquisition, which is funded internally, KIE will be the only private operator of incineration plants treating general waste in Singapore.

SIP’s capacity to treat 2,400 tonnes of waste per day will enable KIE to treat more than a third or 35.8 per cent of Singapore’s total volume of waste sent for incineration.

‘Our agreement with the Singapore government for incineration services will create steady recurring income and generate strong cash flow for Keppel, which is particularly attractive in the current times of economic uncertainty,’ said KIE deputy chairman Michael Chia.

KIE will provide incineration services for 15 years starting today to the National Environment Agency. KIE will also maintain and repair SIP, and upgrade the flue gas treatment system of the plant.

Last September, the government decided to divest SIP through a trade sale instead of a public listing of a business trust due to market conditions.

Source : Business Times - 01 September 2009

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Koh Brothers wins $58.9m HDB contract

Koh Brothers wins $58.9m HDB contract

Firm will pursue public infrastructure and govt building contracts, says CEO

By FELDA CHAY

CONSTRUCTION company Koh Brothers Group has clinched a $58.9 million contract from the Housing and Development Board (HDB) to build the second part of Punggol Waterway - a 4.2km waterway that will be connected to Sungei Punggol.

In January, Koh Brothers won a $144.6 million contract from the HDB for the construction of the first part of the waterway.

The latest contract brings Koh Brothers’ order book to more than $579 million.

Construction of the second part of the waterway is set to start this month and is expected to be completed by the end of next year. Other ancillary works are expected to be completed by the fourth quarter of 2011.

The latest deal is not expected to have a positive material impact on the group’s financial performance for the year ending Dec 31, 2009.

‘Our past record shows that public projects carry more certainty in terms of payment compared with private projects.’

- Mr Koh

Chief executive Francis Koh said that the company will continue to pursue public infrastructure and government building projects over private construction projects.

‘Our past record shows that public projects carry more certainty in terms of payment compared with private projects,’ said Mr Koh.

Koh Brothers announced last month that net profit surged to $4.4 million in the first half of the year ended June 30, 2009, from $0.5 million for the corresponding period a year earlier. The improvement was on the back of a 17 per cent increase in revenue to $138.6 million.

The group attributed the higher revenue to the good performance of its construction and real estate divisions.

A construction, property development and specialist engineering solutions provider, Koh Brothers now has ‘more than 40 subsidiaries, joint-venture and associated companies spread over Singapore, China, Indonesia, Malaysia and Vietnam’.

Koh Brothers shares closed down 1.8 per cent yesterday at 27 cents.

Source : Business Times - 01 September 2009

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