Published January 29, 2011

Q4 new office demand surges to 3-year high
It wraps up the total for 2010 to 1.65m sq ft, a sharp reversal of negative demand of about 236,806 sq ft in 2009

By KALPANA RASHIWALA

NET new office demand surged to 753,473 square feet in the fourth quarter of 2010, the highest quarterly take-up since Q1 2007, according to latest government numbers.

The fourth-quarter take-up was triple the 258,334 sq ft for the preceding quarter and took the total for 2010 to 1.65 million sq ft, a sharp reversal of negative demand of about 236,806 sq ft in 2009.

'This once again demonstrates the fast recovery in the office market and the voracious appetite of office occupiers for expansion space whenever the economy picks up,' said CB Richard Ellis (CBRE) executive director Li Hiaw Ho.

The Urban Redevelopment Authority's islandwide office vacancy rate, which had spiked to 13 per cent at end-Q3 2010 (from 12.3 per cent at end-Q2) eased to 12.1 per cent at the end of last year - as tenants moved into recently completed office projects.

Most of the new project completions last year took place in the first three quarters, such as Marina Bay Financial Centre (MBFC) Tower 1 in Q1, Mapletree Business City in Q2 and MBFC Tower 2 in Q3.

The islandwide stock of office space rose 2.6 per cent to nearly 76 million sq ft at the end of last year, from about 74 million sq ft at end-2009.

URA's office rental index rose 4.7 per cent quarter on quarter in Q4, slowing from the 6 per cent gain in Q3. For the whole of last year, the index appreciated 12.6 per cent, a marked turnaround from a drop of 23.6 per cent in 2009. The latest index, however, is nearly 20.2 per cent below its previous peak in Q2 2008.

According to CBRE's numbers, the average gross monthly rental value for Grade A office space climbed 22.2 per cent last year to $9.90 per square foot (psf) but is still 47.3 per cent shy of the recent high of $18.80 psf in Q3 2008.

Property consultants are generally predicting an increase of around 15 per cent in Grade A office rents this year.

Agnes Tay, Savills Singapore director (commercial leasing), said that over the next two years, there would be considerable secondary office stock being returned to the market as occupiers vacate existing premises to move to newly completed office developments.

'However, the impact of secondary stock is likely to be cushioned by a reduction in supply from demolition or refurbishment of a number of older office blocks. On the demand side too, a healthy 54 per cent of the new office space to be completed in the CBD in 2011-2012 has already been pre-committed.

'Savills has identified an inflection point appearing in late 2011 when the return of secondary stock will impact the market. At this point, we expect to see a greater spread in rents between the international Grade office space and the rest of the market.'

URA's shop rental index recovered 2.9 per cent last year, against a 7.4 per cent drop in 2009.

Amid Singapore's economic recovery, the rental indices for flatted factory and warehouse space appreciated 11.7 per cent and 17.7 per cent - against respective declines of 12.1 per cent and 15.6 per cent in 2009.


Source: www.businesstimes.com.sg

Published January 11, 2011

Two office blocks change hands for $225m
Credit Suisse fund sells 112 Robinson Rd; CDL selling The Corporate Building

By KALPANA RASHIWALA

(SINGAPORE) The buzz in the office investment sales market continues, with two freehold office blocks, 112 Robinson Road and the nearby The Corporate Building, being transacted at $168 million and $57 million respectively.

A Credit Suisse managed fund's sale price for 112 Robinson Road (formerly known as HB Robinson) works out to $1,822 per square foot based on its net lettable area (NLA) of 92,205 sq ft. The sale and purchase agreement was signed last month.

The 14-storey freehold office block with three ground floor shop units underwent a major refurbishment in 2003.

CB Richard Ellis brokered 112 Robinson Road's sale following an expression of interest (EOI) exercise which closed in mid-December.

Grace Global, the Singapore outfit of a low-key Indonesian family, is buying the property for long term investment. The building's existing gross floor area of about 115,000 sq ft reflects a plot ratio (ratio of maximum gross floor area to land area) of nearly 11.8, which exceeds the 11.2 assigned for the 9,780 sq ft site under Master Plan 2008.

112 Robinson Road is said to be about 90 per cent let. Tenants include Saxon Financials and India's Jet Airways. The net yield on Grace Global's purchase price is said to be just over 3 per cent. The EOI for the office block, which has only five car park lots, is said to have been hotly contested. 'The office market is enjoying a powerful recovery with rents and prices rebounding from their low points in 2010 and investors are actively looking for office investment deals,' according to CBRE's executive director (investment properties) Jeremy Lake.

Grace Global is familiar with Singapore's CBD office market, being the owner of 137 Market Street which it bought a few years ago. That building is being refur`bished and upon completion around the middle of this year will have total NLA of about 43,000 sq ft.

As for 112 Robinson Road, the Credit Suisse fund that is selling the office tower picked it up for $119 million or about $1,290 psf in 2007 from a CLSA fund, which had acquired it in 2006 for $80 million or $869 psf from Ho Bee.

Market watchers described 112 Robinson's latest price of $1,822 psf as in sync with values in the area.

In October last year, Oxley Holdings paid $1,956 psf on existing NLA for The Corporate Office nearby but analysts say that deal should be viewed in terms of unit land price as Oxley is said to be eyeing redeveloping the freehold property to a strata office project for sale. On this basis, that transaction reflected a unit land price of about $1,260-1,270 psf per plot ratio (psf ppr) inclusive of development charges.

Similarly, Oxley's latest acquisition, The Corporate Building, works out to $2,789 psf on existing NLA but a more palatable $1,280 psf ppr assuming Oxley redevelops the plot to strata offices.

DTZ is believed to be brokering the sale of The Corporate Building, which is being divested by City Developments. The listed property giant last year also sold The Corporate Office to Oxley. The two buildings are separated by Chow House, which was picked up last year by an entity linked to WyWy Group founder Y Y Wong.

Meanwhile, an expression of interest for Finexis Building at 108 Robinson Road (formerly known as GMG Building) closed on Dec 16 attracting a handful of offers. Owner Robinson Land's asking price is said to be about $110 million or about $2,042 psf on its strata area of 53,873 sq ft.

Robinson Land - whose shareholders include the Buxani Group of Singapore - clinched the 12-storey freehold office block in 2006 for $48 million and is said to have refurbished it for about $10 million.

Due diligence is said to be in progress for the Singapore Technologies Building in the Tanjong Pagar area. The pricing is said to be close to the seller's asking price of about $1,500 psf or about $148 million.

CBRE figures show that nearly $9 billion of office investment sales were done last year. BT Weekend reported that NTUC Income is nearing a deal to buy a 49 per cent stake in 16 Collyer Quay in a deal that values the office tower at about $2,365 psf on NLA or $661 million.

Capital Square, a Grade A office development at Church Street, is expected to be put up for sale soon. The vendor, German insurer Ergo, is said to be eyeing $2,700-2,800 psf on NLA, or crossing the $1 billion mark.


Source:www.businesstimes.com.sg

Published November 16, 2010


Primary market shrugs off impact of cooling measures as Oct sales rise; industry watchers wonder if this will prompt new steps from govt

By KALPANA RASHIWALA

(SINGAPORE) After September's slump came October's rebound. This turnaround, reflected in the latest developer sales figures revealed yesterday, has prompted some industry observers to say that another round of demand-cooling measures may follow, as those announced on Aug 30 do not seem to have had a strong or lasting impact.

Developers sold 1,058 private homes excluding executive condominium (EC) units in October, up 16.1 per cent from September's sales volume of 911 units, according to primary-market sales data released by the Urban Redevelopment Authority yesterday. In addition, developers sold 529 ECs in October (no ECs were sold in September), taking total developer sales (including ECs) for October to 1,587 units.

The number of private homes sold in the $2,000 to $2,500 per square foot price band in October was 207 units, or about eight times the 26 units developers sold in September. The increase was partly due to the release of The Glyndebourne (along Dunearn Road) and Suites at Orchard (at Handy Road).

Excluding ECs (which are a hybrid of public and private housing), developers had sold 1,259 units in August before the cooling measures pushed this number down to 911 in September. It climbed back to 1,058 in October.

Said Knight Frank chairman Tan Tiong Cheng: 'Gauging by new sales, I suppose what government is trying to do doesn't seem to have had a severe impact on the market.

'The market is still buoyant; it's hard to say it's not. It would seem to me that if the government feels that current price levels are still high, we can expect more measures to cool the market.'

In the first 10 months of this year, developers sold 13,109 private homes excluding ECs - against 14,688 units for the whole of last year. Property consultants reckon the full-year tally may reach 14,700-15,000 and could surpass the record 14,811 units sold in 2007.

DTZ executive director (consulting) Ong Choon Fah said: 'Demand is still liquidity driven; it goes beyond the property market. It's an overall market phenomenon.'

She also pointed to the emergence of a two-tier market, with new projects launched by developers commanding a price premium of 20 per cent or more to earlier developments in the area.

The number of private homes (excluding ECs) sold by developers in the Core Central Region and Rest of Central Region rose, but sales in Outside Central Region (where mass-market homes are found) fell about 25 per cent.

In tandem with this trend, Colliers International's analysis shows that the number of private homes (excluding ECs) costing up to $1,000 psf sold by developers declined from 427 units in September to 183 last month.

Some of the demand in the low-price band was probably siphoned off to the two new EC projects released last month - Esparina Residences in Buangkok and The Canopy in Yishun - the first EC launches in five years, with sales of 425 units (at $761 psf median price) and 104 units (at $658 psf median price). Developers also continued to roll out smallish units to drive up sales and per square foot prices, such as Suites @ Sims, RV Point along River Valley Road and Kovan Grandeur.

The most expensive new home sold by a developer last month was a $4,800 psf unit at Boulevard Vue, a 33-storey freehold development at Cuscaden Walk. BT understands that the deal involved a 4,500 sq ft high-floor apartment, amounting to $21.6 million.

Other high-priced deals in October included Tomlinson Heights ($3,416 psf), Marina Bay Suites ($3,328 psf), Paterson Suites ($3,133 psf), Alba in Cairnhill Rise ($3,100 psf), Twin Peaks in the Leonie Hill area ($2,885 psf) and Seascape in Sentosa Cove ($2,838 psf).

In terms of sales volume, October's top-selling primary market projects included the two new ECs. The total of 979 units in these two projects boosted total units launched by developers in October to 2,049 units.

Excluding ECs, developers released 1,070 private homes in October, slightly above the 1,058 units in September.

Other projects that sold well last month include The Glyndebourne (112 units at $2,149 psf median price), NV Residences in Pasir Ris (81 units at $831 psf), Suites at Orchard (80 units at $2,140 psf) and Vacanza @ East (77 units at $1,081 psf).

Source: /www.businesstimes.com.sg

Price expectations for the freehold office block are $1,500 psf of NLA

THE Singapore Technologies Building in the Tanjong Pagar area has been put on the market.

Price expectations for the 13-storey freehold office block, completed in 1986, are $1,500 per square foot of net lettable area (NLA) and above. Based on the building's current NLA of 98,906 sq ft, a price of $1,500 psf reflects an absolute sum of $148.4 million. The office block's current occupancy rate is close to 90 per cent.

The property is not being pitched for redevelopment potential as the current existing gross floor area of about 128,600 sq ft reflects a plot ratio of about 6.6 - which is higher than the 5.6 plot ratio assigned to the site under Master Plan 2008. The site is zoned for commercial use.

However, there is scope for additions and alterations work that could carve out more NLA and boost the property's rental profile, says Jones Lang LaSalle's national director (investment sales) Anthony Barr.

Jones Lang LaSalle has been appointed by the property's owner, Singapore Technologies group, to conduct an expressions of interest campaign for the sale of the property. The closing date for submissions is Nov 4. The building has ample car parking of 135 lots and is located at the corner of Cantonment and Lim Teck Kim roads. Vehicular access is via the laneway off Cantonment Road, allowing users to access the building without incurring Electronic Road Pricing charges, JLL highlighted.

'The building is currently occupied by various office tenants and provides the buyer with exposure to the improving CBD office rent cycle in addition to potential for further enhancement via refurbishment and asset management initiatives,' it added.


The building has ample car parking of 135 lots and is at the corner of Cantonment and Lim Teck Kim roads.

Source: http://www.businesstimes.com.sg

Price around $1,956 psf of net lettable area; buyer led by Oxley Holdings

Published October 1, 2010
By KALPANA RASHIWALA

SINGAPORE) City Developments Ltd (CDL) is said to be selling a 21-storey freehold office block at the corner of Robinson Road and McCallum Street for $215 million.

the corporate officeThe buyer of The Corporate Office is understood to be a consortium led by Oxley Holdings group. The price works out to $1,956 per square foot based on the building's net lettable area of 109,920 sq ft.

The Corporate Office, which is about 25 years old, has 112 carpark lots, something of a rarity in office towers in that part of the CBD. About 15 per cent of the building's net lettable area is currently vacant and the lease for a further 7-8 per cent of space is said to expire early next year. But that's not necessarily a bad thing for the buyers.

Sources suggest that Oxley - which is headed by Ching Chiat Kwong - is looking to move its headquarters into The Corporate Office. The group currently operates out of Singapore Land Tower in Raffles Place and is said to be gunning for an initial public offer by year end. Oxley has been in the news lately for developing projects with shoebox apartments, including Suites@Guillemard and VivaVista in Pasir Panjang.

On the group's purchase of The Corporate Office along Robinson Road, market watchers suggest that in the medium term, Oxley and its partners may consider redeveloping the property, which has a land area of 16,032 sq ft, into a residential project with commercial use on the first storey or into a commercial-residential development. Under Master Plan 2008, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to land area). The site can be developed up to 35 storeys high. The Corporate Office's existing gross floor area is said to reflect a plot ratio of about 9.27, which points to some unutilised plot ratio.

DTZ is thought to have brokered the sale of The Corporate Office through a private treaty deal. The property consultancy also brokered the sale of Chow House next door a couple of months ago for $101 million to a group led by WyWy Group' founder, YY Wong.

The price for Chow House, a six-storey freehold office block which has redevelopment potential, is said to work out to about $1,300 per square foot per plot ratio assuming it is redeveloped into apartments. The site has a land area of 9,084 sq ft and is zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008. However, outline planning permission has been granted to redevelop the Chow House site into residential use with commercial use on the first storey.

Chow House sits between The Corporate Office and another CDL-owned property - The Corporate Building.

The property giant's sale of The Corporate Office is its latest divestment of non-core assets. In recent years, CDL has also sold North Bridge Commercial Complex (near Bugis Junction), The Office Chamber along Jalan Besar, Chinatown Point mall, and Commerce Point near Raffles Place MRT Station.


Source: http://www.businesstimes.com.sg

Goldman funds take big loss, sell property to Deka

Published September 24, 2010
By KALPANA RASHIWALA


(SINGAPORE) Chevron House at Raffles Place has been sold for $547 million to a fund managed by Deka Immobilien of Germany, taking the total value of Singapore office investment sales deals so far this year to nearly $3 billion.

The price for Chevron House works out to around $2,083 per square foot based on the building's existing net lettable area (NLA) of 262,650 sq ft, BT understands.

Chevron House, which was formerly known as Caltex House, is a 33-storey building on a site with a remaining lease of about 78 years.

The property is being sold by Goldman Sachs funds, which are walking away with a loss, having paid $730 million or about $2,780 psf for the property in 2007. That acquisition was funded mostly by a consortium of lenders headed by Standard Chartered. The latest transaction is slated for completion by late October, ahead of the expiry of the financing facility, sources say.

Chevron House is the second Singapore office property to be sold by Goldman Sachs funds lately following last month's $870.5 million divestment of DBS Towers One and Two along Shenton Way to Overseas Union Enterprise. Goldman reaped a profit from that transaction; it paid $690 million for the office blocks in 2005.

The US bank's funds also bought Hitachi Tower, behind Chevron House, in early 2008 for $811 million or about $2,900 psf of NLA. The 999-year leasehold office tower, fronting Collyer Quay, is expected to be put up for sale within the next few months given that the financing facility on the asset - also extended by a Stanchart-led consortium - is said to end early next year.

The Singapore office market has seen a steady rental recovery after the slump in the wake of the global financial crash.

'The fundamentals are attractive. Investors have realised this over the past three months and investor appetite has increased significantly. Parties looking to invest include Reits, other property funds and private investors. Appetites range from $100 million to $500 million-plus,' said a market watcher.

Deka, which is buying Chevron House, is a unit of DekaBank in Germany. The deal marks Deka's first major property acquisition in Singapore and is said to be at close to 4 per cent net yield. Chevron House is currently 98 per cent let. Major tenants include Chevron and Visa.

The property comprises a four-storey retail podium, 29-storey office tower and three basement levels. B1 has shops linked directly to the Raffles Place MRT Station, while B2 and B3 contain 96 carpark lots.

It is thought that the property was marketed through an expression of interest exercise which closed in the third week of August.

BT understands the exercise was well received and that about six parties were then shortlisted for due diligence and further negotiations, culminating in the sale to the Deka-managed fund. CB Richard Ellis is understood to have brokered the sale of Chevron House

Source: http://www.businesstimes.com.sg