Property deals pick up

Property deals pick up

By Dickson Li

THINGS are looking up in the property investment sector, according to DTZ Research.

It reports a hike in both the number and size of property investment deals with a value of at least $5 million over the past year. DTZ noted that in the fourth quarter alone, the number of transactions across residential, government and private sales jumped to 38 from 14 for the same period last year.

Its data excludes transactions involving residential property which cannot be redeveloped into more than one unit.

Larger deals dominated investments in the last quarter.

Transactions valued above $100 million - of which there were eight in the fourth quarter - accounted for 77 per cent of total transaction value. This marked a 48 per cent improvement on the third quarter, and a sharp turnaround from the first half of the year when no such deals were registered.

DTZ’s Head of South-east Asia Research Chua Chor Hoon puts the rally down to a return of developers to the property market.

‘We now see a change in the profile of buyers - from smaller to bigger… Developers have been actively bidding in the Government’s land sales programme,’ she said.

The residential sector took 56 per cent of investment sales in the October to December period. This accounted for $14.6 billion worth of deals, representing half of the year’s total transaction value.

The retail sector followed closely behind, taking 16 per cent of the year’s transaction value.

DTZ said that activity in the office market remained muted.

‘Sellers don’t want to sell low, and buyers don’t want to buy high… Also, many foreigners still are not looking at our market,’ Ms Chua said. She expects the residential sector to continue to dominate the investment scene.

‘Much activity will come from the government land sales programme, which has eight sites on the confirmed list to be released for tender,’ she added.

Source : Straits Times - 29 December 2009

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Mapletree buys $68m warehouse

Mapletree buys $68m warehouse

The warehouse in Japan has a property yield of 7.26%

By JOYCE HOOI

MAPLETREE Logistics Trust acquired its ninth piece of property - a warehouse - in Japan for about $68 million, announced its managers, Mapletree Logistics Trust Management Ltd (MLTM), yesterday.

The warehouse has a property yield of 7.26 per cent, higher than the implied property yield of its existing Japan portfolio of 4.5 per cent.

Based on the actual nine-month financial results for 2009, the proforma financial effect of the acquisition on the annualised distribution per unit is an additional 0.103 cents or 1.75 per cent, assuming a unit price of 69 cents.

The warehouse, which is located in Chiba on freehold land, is leased to a major Japanese multinational corporation.

‘We are very pleased with the acquisition of this property, which is located in a popular logistics hub for in-land distribution for the Kanto region,’ said Chua Tiow Chye, chief executive officer of MLTM.

‘We continue to find the Japan logistics market attractive due to its breadth and depth which is currently unmatched in Asia. We will continue to expand our portfolio in Japan by selectively acquiring yield-accretive logistics assets of good quality and location.’

The acquisition, which will be fully funded by debt, is expected to be completed in Q1 2010, and brings Mapletree’s Japan portfolio to about 43 billion yen in value.

In November, the trust launched a private placement of 115 million new units to raise up to $82 million in order to create debt headroom for the funding of the acquisition.

The private placement had been launched in order to finance two local acquisitions - a six-storey warehouse in the west of Singapore and a multi-storey warehouse in the east of Singapore, for about $43 million and $34 million, respectively.

These acquisitions are expected to be completed by the end of this month.

Mapletree’s latest logistics play in Japan comes on the back of an announcement by its sponsor , Mapletree Investments Pte Ltd, that it had signed a memorandum of understanding on a joint venture with Itochu Corporation to develop logistics facilities in Japan, earlier this month.

Source : Business Times - 29 December 2009

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More investment deals worth above $100m

More investment deals worth above $100m
They account for 77% of total transactions, valued at $2.5b, in Q4

By KALPANA RASHIWALA

THE trend of small deals dominating property investment sales deals in Singapore seen in the first three quarters of this year is reversing, according to DTZ Research.

There were eight transactions above $100 million each this quarter, accounting for 77 per cent of the $2.5 billion total transaction value in the fourth quarter - up substantially from a 48 per cent share (with six deals) in Q3. The total investment sales tally for Q3 was also around $2.5 billion.

There were no deals above $100 million in the first half of this year.

DTZ figures showed the total investment sales for the whole of this year came to about $5.9 billion. This is significantly lower than CB Richard Ellis’s estimated $9.4 billion year-to-date tally provided to BT earlier this month.

DTZ South-east Asia research head Chua Chor Hoon explains that the lower figure for her firm is due to DTZ excluding transactions of single apartments as well as landed homes and residential sites which cannot be redeveloped into more units - even if these are priced at at least $5 million apiece.

CBRE includes sales of apartments and landed residential property with a value of at least $5 million. Earlier this month, it predicted investment sales for 2010 could be in the region of $15 billion, with 2010 expected to be a recovery year for the Singapore economy.

Yesterday, Ms Chua said that based on DTZ’s methodology, her investment sales forecast for the whole of 2010 could exceed $10 billion.

In addition to improving market sentiment, she said that ‘much activity will come from the Government Land Sales Programme, which has eight residential sites in the confirmed list to be released for tender in the next half year’.

‘The residential sector, which has recovered in 2009, is likely to continue to dominate as developers seek to replenish their landbank,’ she added.

For the whole of this year, the residential sector accounted for the lion’s share or half of the $5.9 billion total investment sales figure.

This was followed by the retail sector, with a 16 per cent share. The bulk of this figure was contributed by the $541.9 million transaction of Clementi Mall in November, which is also the biggest overall investment sale transaction this year, taking into account all sectors of the property market.

Among the over-$100 million apiece deals this year were the $248 million sale of Katong Mall, UOL Group’s $329 million purchase of a 99-year leasehold condo plot at Dakota Crescent at a state tender, and Overseas Union Enterprise’s sale of the former Parisian site at Angullia Park to China Sonangol Land for $283 million.

Source : Business Times - 29 December 2009

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Two Dawson BTO projects see overwhelming demand

Two Dawson BTO projects see overwhelming demand

Some flats were 12 times over- subscribed at the close of applications

By UMA SHANKARI

TWO highly anticipated public housing projects in Dawson estate have drawn overwhelming response, with some flats close to 12 times over-subscribed.

Centrepiece: There was strong interest in the two Dawson projects, given their choice location, says HDB. SkyVille@Dawson and SkyTerrace@Dawson are near the city centre and also close to Queenstown MRT station
The 1,718 flats at SkyVille@Dawson and SkyTerrace@Dawson in Queenstown - offered by the Housing and Development Board (HDB) under the build-to-order (BTO) scheme - had received 10,098 applications as at 5pm yesterday.

Applications for the project ended yesterday.

‘As expected, there has been strong interest in the two Dawson projects, given their choice location,’ HDB noted in a statement.

SkyVille@Dawson and SkyTerrace@Dawson are near Singapore’s city centre and also close to Queenstown MRT station.

The five-room Dawson flats were the most popular, with 2,090 applications received for 176 available flats - about 11.9 times over-subscribed.

The 1,102 four-room flats attracted 6,015 applications while the 270 three-room flats drew 806 applications.

The 40 studio apartments available at the two projects also saw hot demand - 429 applications were received, making the studio apartments 10.7 times over-subscribed.

Paired units under HDB’s new multi-generational scheme also saw high demand. The scheme allows parents and married children to buy paired flats. HDB received 379 pairs of applications for the 65 pairs of flats available at SkyTerrace@Dawson.

Other than Dawson’s attractive location, the high prices of new private condominium apartments may have also pushed some buyers to these projects, noted Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

Demand was also strong - albeit to a lesser degree - at the two other BTO projects launched by HDB. At Montreal Dale in Sembawang, 1,412 applications were received for 424 flats. And at Segar Grove in Bukit Panjang, 1,367 applications were received for 528 flats.

However, the two-room flats in both Sembawang and Bukit Panjang, and the three-room flats at Bukit Panjang were under-subscribed, which analysts said could be due to the low income ceiling that might exclude some potential buyers.

‘HDB may have to review the income ceiling because the salary levels of Singaporeans have increased over the years,’ said Mr Mak.

HDB said that the next BTO launch will be held on Jan 5. Buyers can look forward to another 1,300 flats in Choa Chu Kang and Hougang then. Added the agency: ‘HDB will continue to launch more BTO projects in 2010 if there is sustained demand for new flats.’

Source : Business Times - 29 December 2009

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Bid for 99-year Sengkang residential site

Bid for 99-year Sengkang residential site
Analysts expect 2-3 times the committed bid of $70m for site

By UMA SHANKARI

A 99-YEAR leasehold residential site in Sengkang has been triggered for sale from the government’s reserve list.

The plot, at the junction of Sengkang West Avenue and Fernvale Link, will be launched for a public tender in about two weeks. It is being made available after an unnamed developer committed to bid at least $70 million, or $128 per sq ft of gross floor area. But analysts expect it to fetch two to three times that amount in the tender.

Under the reserve list system, a site is only put up for public tender once an application is received from a developer who commits to bid at or above a minimum price deemed acceptable to the government.

The Sengkang parcel is 182,973 sq ft and has a maximum allowable gross floor area of 548,920 sq ft. It is estimated that about 450 units of 1,200 sq ft can be built on the site.

Market watchers say that the triggering of the site - likely to be the last triggered sale in 2009 - shows that interest in residential plots is likely to continue to be strong in 2010.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak expects three to seven bids for the site, and reckons that the top few bids will be in the region of $260-$300 psf per plot ratio.

Peter Ow, Knight Frank’s executive director for residential, is more bullish - he expects the winning bid to be in the region of $370-$420 psf per plot ratio. He also feels that the site will receive ‘more than a few’ bids.

‘It is still an upgraders’ market and I think there is still demand from HDB upgraders for projects,’ he said.

At the nearby 625-unit The Quartz, the average resale price of units over the past six months was $714 psf. But The Quartz is in a more attractive location, Mr Ow said.

The latest site is in a relatively undeveloped area, so the number of bids will be smaller than in previous government tenders, analysts believe.

Earlier this month, a landed housing site at Jurong West put up for sale by the government drew a whopping 32 bids. The top bid for the 99-year leasehold parcel was $38.5 million or $254 psf of land area.

Source : Business Times - 29 December 2009

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Global construction industry upbeat about prospects

Global construction industry upbeat about prospects

Most optimistic are contractors in Asia, KPMG survey finds

By UMA SHANKARI

(SINGAPORE) The fourth edition of KPMG’s Global Construction Survey found that despite the deepest recession in 60 years, the construction industry is surprisingly positive about its future prospects.

Almost two-thirds, or 64 per cent, of respondents expect to either increase or maintain profit levels by mid-2010. And 53 per cent of global respondents stated that their backlog volume of jobs has gone up or stayed level in the past 12 months.

‘Having completed longer-term backlog projects, many executives expect new bid opportunities to arise as a result of pent-up demand from before the credit crisis,’ noted the report which presented the survey findings.

‘There is a perception that the global financial crisis has devastated the construction industry,’ said Geno Armstrong, international sector leader of KPMG’s engineering and construction practice.

‘While it certainly has had significant impact on the way these companies do business, the survey found that they view these conditions as an opportunity to get leaner. When the recovery does finally arrive, these companies should be well-prepared to succeed.’

35% of global respondents have not reduced their workforce at all, and 28% have taken no action with regards to workforce.

In particular, contractors from Asia were considerably more upbeat about their prospects than those in other regions, noted the survey.

‘Such a view may be influenced by the substantial government stimulus programs in this part of the world, notably in Hong Kong,’ said the report.

Contractors in the Asia Pacific also had the most confidence in government stimulus packages with 82 per cent of respondents from the region expecting a moderate or significant increase in opportunities over the next 24 months.

Globally, only 12 per cent of global respondents believe that the proposed government stimulus packages will bring a significant increase in opportunities over the next two years.

However, the report also found that the last year or so has taken its toll on margins, although not as much as might have been expected.

Some 44 per cent of respondents said that projected profit rates in their backlog of contracts have decreased compared to 2008. But another 20 per cent said that the projected profit rates from their backlog have increased compared to last year.

Another indicator of the industry’s optimism is seen in its workforce numbers.

Some 35 per cent of global respondents have not reduced their workforce at all, and 28 per cent have taken no action with regards to their workforce numbers.

The survey responses were gathered through interviews in mid-2009 with 108 senior leaders - many of them chief executive officers - from leading engineering and construction companies in 30 countries around the world.

Respondent companies’ turnover ranged from less than US$250 million to more than US$5 billion, with a mix of operations from global through regional to purely domestic.

Source : Business Times - 29 December 2009

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Terrace prices are king among landed homes

Terrace prices are king among landed homes

For 4 years running their prices have been most resilient, Credo study finds

By KALPANA RASHIWALA

(SINGAPORE) Landed home prices have largely continued to rise this year in the five most popular districts despite price fatigue setting in for condominiums and apartments.

A caveats analysis by Credo Real Estate, covering a four-year period from when the residential property market first stirred to life in 2006, shows that prices of terrace houses have been the most resilient over the past four years, rising by over 50 per cent in some areas.

More than semi-detached houses and bungalows, the average per square foot price of terrace houses has risen consistently between 2006 and 2009 in the five most popular districts.

The most sought-after landed housing location is District 19, followed by Districts 15, 28, 20 and 10.

Credo’s study does not include the Good Class Bungalow Areas (GCBAs) and Sentosa Cove (which are the more exclusive landed housing locations in Singapore), and strata landed homes. The latter are a hybrid housing form with shared condo-type facilities like swimming pool and tennis courts, and are usually built more intensively than conventional landed housing.

While terrace home prices have fared relatively better than semi-Ds and bungalows, landed home prices on the whole have also appreciated steadily between 2006 and 2009 in the five districts. ‘For most districts and sub-classifications of landed, we are at the all-time peak in terms of prices,’ says Credo’s managing director Karamjit Singh.

In most instances, price gains were achieved last year despite the general property downturn.

Agents attribute this resilience to the relatively limited supply and stock of landed homes.

‘There’s a very strong desire on the part of many Singaporean households to upgrade to landed property, which is regarded as an emotionally satisfying form of housing to own because you actually own something very tangible on the ground rather than in the air,’ says Credo’s Mr Singh.

The government’s promotion of larger families - with three or more children - has also set more parents thinking about the need for bigger homes with at least four bedrooms.

‘Many times you’ll find terrace houses offer better value than large apartments and condos. A 2,000 sq ft 4-plus-1, brand-new freehold condo in Katong might cost $2.4 million. But you can probably buy an intermediate terrace for about $2 million and have a bigger gross floor area of 2,500 sq ft, with saleable area inclusive of car porches possibly exceeding 3,000 sq ft. And you could have as many as five bedrooms,’ Mr Singh says.

He also points out that landed housing is an asset class that is predominantly bought and sold by Singaporeans rather than foreigners - which accounts for why landed ‘has always been like a steady ship, less volatile than high-end condos in particular’.

Knight Frank chairman Tan Tiong Cheng reckons, however, that new citizens could also be potential buyers. ‘A lot of new citizens also like landed homes, once they realise security is not an issue in Singapore,’ he said.

Terrace houses, which form the bulk of landed housing stock here, made up the lion’s share or nearly 60 per cent of the total 1,552 caveats lodged for landed homes in 2009 in the five hot spots.

In the most popular location of District 19 (which includes Serangoon Gardens and Yio Chu Kang), the average price of terrace houses has risen from $409 psf of land area in 2006 to $586 psf this year - an increase of 43.3 per cent.

In the second most sought after locale, District 15 (covering Katong, Opera Estate, Mountbatten and Joo Chiat), the average terrace home price has appreciated 51.8 per cent, from $475 psf in 2006 to $721 psf this year. Average terrace house prices in 2009 are at an all-time high in four of the five districts, and close to the record level in the fifth district.

Bucking the overall uptrend in bungalow and semi-detached home prices last year, the average detached home price in District 15 fell 23.1 per cent to $635 psf in 2008 from $826 psf in 2007. ‘District 15 detached houses benefited from that wave of buying we saw for luxury condos in 2007. But they also shared a similar fate when prices later fell in 2008,’ says Mr Singh.

District 28 includes Seletar Hills Estate, Luxus Hill and the Mimosa and Saraca areas; District 20 covers Jalan Pemimpin, Sembawang Hills Estate, Thomson Ridge Estate and Soo Chow Gardens; while District 10 includes the Bukit Timah and Holland Road areas.

The five hot spots account for 54.2 per cent of total caveats lodged this year for landed homes in Singapore, excluding GCBAs, Sentosa Cove and strata landed properties.

Overall, the 1,552 caveats lodged for landed homes in the five districts this year is about 65 per cent higher than last year’s figure, but still below the 2,516 caveats lodged in 2007.

More than 90 per cent of landed homes transacted this year in Singapore (excluding GCBAs, Sentosa Cove and strata landed homes) were in the secondary market - which is not surprising given the dearth of new project launches in the primary market.

For the year ahead, Knight Frank’s Mr Tan reckons the outlook for landed home prices remains strong, ‘just like the recovery in 2009 - and more so than condos’.

He reasoned: ‘Not only is supply limited but also static. It’s more difficult to create landed housing stock; when government sells land, it wants to maximise value especially if it’s near MRT stations. Hence the tendency to award higher plot ratios and these can’t be maximised by doing landed housing.’

Mr Singh, too, is upbeat about prospects for landed homes as long as the economy continues to grow. ‘Landed is dependent on Singaporeans at large feeling richer and confident about their earnings prospects. It has also got to do with the other forms of wealth creation taking place, like people becoming IPO-rich, or en bloc-rich,’ he says.

Source : Business Times - 29 December 2009

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