Bartley Terrace sold en bloc for $40 million

05:55 AM Jan 28, 2011

SINGAPORE - Owners at Bartley Terrace (picture) are set to receive $1.14 million to $1.8 million each after the collective sale of the 32-unit property closed on Jan 17.

Meadows Investment is paying $40 million for the site near the Bartley MRT Station, said Urban Front Real Estate, which brokered the deal.

It said the price translates to about $760 per square foot per plot ratio, after factoring in the development charge with 10-per-cent balcony space that the developer might have to pay for.

Bartley Terrace has a land area of about 40,482 sq ft and is designated for residential use with a plot ratio of 1.4.

Majority owners are applying to the Strata Titles Board for a sale order, Urban Front said.

Source: Todayonline.com

Published January 26, 2011

CDL moves in on Tanglin Shopping Centre
Marine Point being sold en bloc for about $1,000 psf ppr

(SINGAPORE) The tender for Tanglin Shopping Centre's collective sale closed yesterday and is understood to have drawn at least one submission - from City Developments Limited (CDL).

The reserve price for the en bloc sale is said to be $1.25 billion, working out to a whopping unit land price of about $4,000 per square foot of potential gross floor area, assuming the freehold site is redeveloped. Market watchers find it hard to believe that CDL would be prepared to pay such a price, suggesting some conditions could have been attached to its bid.

CDL's London-listed hotel unit Millennium & Copthorne Hotels, through its wholly-owned unit King's Tanglin Shopping Pte Ltd, owns 85 strata retail and office units as well as all 325 carpark lots in the development, reflecting more than 30 per cent interest in Tanglin Shopping Centre's total strata area, based on earlier reports. The carpark lots are in the basement as well as in a rear multi-storey building.

M&C revealed in June last year that it had signed the Collective Sale Agreement for the sale of its strata-titled interest in the complex.

When contacted yesterday evening, Jean Goh, senior marketing director of ERA Realty Network, the marketing agent for Tanglin Shopping Centre's collective sale, said: 'We cannot comment at this point in time as we are still in the midst of negotiation.'

Based on Tanglin Shopping Centre's existing strata area of about 380,000 sq ft (comprising shops, offices, medical suites and carparking space), the $1.25 billion reserve price works out to about $3,300 per square foot.

Tanglin Shopping Centre has a freehold land area of about 68,512 sq ft. It is zoned for commercial use with a 4.2+ plot ratio under Master Plan 2008. ERA has previously said the property has potential for a mixed development comprising residential and retail units or commercial office cum retail and/or a hotel annex.

Assuming the authorities allow a new commercial development on the site built up to the existing gross floor area (GFA) of 313,437 sq ft with no development charge (DC) payable, the $1.25 billion reserve price would work out to $3,988 per square foot per plot ratio (psf ppr).

However, a DC may be payable for a mixed development scheme that includes a residential component, sources suggest.

The building's existing GFA slightly exceeds the maximum 287,750 sq ft allowed for the site under Master Plan 2008.

Tanglin Shopping Centre currently consists of 363 units of retail, office and medical units, plus the 325 carpark lots in the basement and eight-level multistorey carpark.

Market watchers say that the interest by CDL, which is part of Singapore's Hong Leong Group, in the property is expected, given the group's stronghold in the area. Besides its stake in Tanglin Shopping Centre, the group also has stakes in St Regis Singapore next door, Orchard Hotel and Palais Renaissance.

Separately, BT has learned that a collective sale deal for Marine Point at Marine Parade Road could take place soon. The price of the 51,185 sq ft freehold site is said to be about $95 million, or slightly below $1,000 psf ppr inclusive of DC. Selangor Dredging has been tipped as the potential buyer. Marine Point has a 2.1 plot ratio, which means it can be built into a new project with up to 107,489 sq ft GFA

Source: www.businesstimes.com.sg

SINGAPORE - Regent Court, a freehold residential property at Serangoon Road, has been put up for sale via tender by its marketing agent Cushman & Wakefield.

The property has a land area of 38,857 sq ft and is zoned for high-rise residential development of up to 36 storeys. It has a plot ratio of 2.8, which allows a maximum gross floor area of 108,800 sq ft. No development charge is payable.

According to Cushman & Wakefield, the site will allow a developer to build some 200 apartment units with average sizes of 500 sq ft.

The property is worth more than $83 million, translating to a minimum price of $763 per sq ft per plot ratio. The break-even project cost is about $1,200 psf, said Cushman & Wakefield.

The firm's vice-chairman Donald Han, said the Serangoon area has been recognised as a strategic suburban residential area due to the its proximity to the city centre, as well as HDB upgraders' interest to own and occupy condominiums.

Cushman & Wakefield said the connectivity of the Serangoon area would be improved with the completion of the Circle Line and the Upper Serangoon PIE viaduct.

The tender is expected to close on Feb 28. Jo-ann Huang


by Jo-Ann Huang Limin
05:55 AM Jan 21, 2011

Source: www.todayonline.com

In a changed market, there is little, if anything, to be excited about

by Ku Swee Yong

05:55 AM Jan 14, 2011

Several articles have been published in the media and by property analysts in recent months about the frenzy surrounding en bloc deals and the increasing values of these collective sales.

Some of these are really bullish about the potential for such transactions this year.

I cannot see where the excitement is because I understand the hurdles to en bloc deals have increased.

Several things have changed since the last peak of the en bloc market in 2007. The most obvious one has been highlighted by some of the articles: The average size of residential en bloc deals last year was about $50 million and only one exceeded $100 million. In comparison, more than 20 of the 200 residential en bloc deals in 2007 exceeded $100 million in value, as shown in Table 1.



THE DEVELOPERS

There are several reasons for the current lack of interest in large en bloc offerings - that is, those over $100 million in value - even though many developers are actively building up their land banks.

From the developers' point of view, the economics of an en bloc deal are less attractive today than in 2007 because of the following reasons:



a) The Government Land Sales (GLS) programme was at a record high in 2010. And, given the seemingly-insatiable demand from property investors and upgraders, the GLS will be at least as high in 2011. Developers participate in the GLS as it is a straightforward way to purchase 99-year leasehold land. It is hassle-free compared to the process of purchasing from an en bloc sale (unless there is 100-per-cent agreement from the owners of the en bloc development).

An en bloc sale requires clearance from the Strata Titles Board and the subsequent relocation of the existing owners of the project. Developers do not want to risk their investment cashflow being delayed by potentially lengthy appeals. The Land Titles (Strata) Act was last amended in the middle of last year to improve en bloc rules, making the process more transparent but more onerous.



b) From January 2009, planters within a residential unit and bay windows in all developments are not exempted from gross floor area (GFA). Based on this rule change, the uplift from the en bloc development's current plot ratio to the new buildable GFA is more limited compared to that during 2007.

For example, Tulip Garden was sold en bloc for $516 million in mid-2007 (although the buyer did not follow through the following year). At that time, developers were betting on launching new projects at Farrer Road upwards of $1,600 per sq ft. Additional profit margins for the developers could be derived from the sellable GFA of bay windows and planters (exceeding the plot ratio limit).

Today, without the additional GFA, developers would have to launch at higher prices in order to maintain their 15- to 20-per-cent profit margin. As a comparison, Tulip Garden is asking for $650 million in the current 2010 en bloc exercise.



c) Development Charge (DC) rates have gone back up to just below 5 per cent of the peak levels of March 2008. Average DC rates for September last year are 2 per cent below those of September 2007, 53 per cent above July 2007 and 114 per cent above March 2007.

Given the last few months of strong sales, particularly when looking at prices achieved in the mass market residential segment, I believe DC rates will increase in March this year, possibly exceeding those of March 2008 in many of the sectors.



d) Construction cost estimates, according to RLB, a global property and construction consultant, are higher in Q3 2010 than in Q3 2007, as shown in Table 2.



Developers now face higher costs from the DC impost and with less strata area to sell, even as market prices are about the same as those in 2007 for the Holland Road stretch.

For developers to view en bloc deals as economically viable investments, the reserve/asking prices cannot go too high up. En bloc sellers need to be realistic if they want to achieve a win-win deal for themselves and the developers.



THE FINANCIERS AND LENDERS

However, the biggest dampener to the fever of the en bloc market is the drastically reduced access to financing. This point has escaped the discussion of all the recent articles.

In 2007, there were many sources of financing - debt funds, hedge funds, etc. Developers could also choose to partner with investment banks such as Lehman Brothers, Goldman Sachs, Wachovia or hedge funds such as Citadel, etc. In addition to getting senior debt at up to 70 per cent of the price of the land and construction, developers/investment funds may also avail themselves of another 20 per cent more in junior debt, mezzanine financing or convertible bonds, and so on.

A lot depends on the credit standing of the developer, but it does mean that, to buy Pine Grove en bloc, a top notch developer could require as little as $170 million, or about 10 per cent of equity.

Today, we are left with simple, senior debt (normal straight loans from banks) and the lending ratio may be capped at 60 per cent - which means the developer wishing to buy Pine Grove en bloc would need to invest well over half a billion dollars of equity. And, on top of that, the developer has to put up even more cash for development charges and construction costs, which are now also subject to lower loan limits.

Most real estate consultants will only look at the developer side of the equation. But we cannot forget that the lenders play a big role. Without credit and financing, the real estate market can at best stroll at a leisurely pace. And for the en bloc market to continue to grow actively, we need financial institutions and debt funds, especially the non-bank lenders, to regain their appetite for real estate risks.

Otherwise, the success of large en bloc deals such as Hawaii Tower, Pine Grove, Pandan Valley, Tanglin Park and Tulip Garden will remain a dream.



Ku Swee Yong is the founder of real estate agency International Property Advisor (IPA), which provides services to high-net-worth individuals.

Source:www.todayonline.com

Published January 11, 2011

Newton View up for collective sale again

NEWTON View is up for collective sale again for the second time in less than six months - but with a slight cut in the asking price.

The owners of the district 11 freehold project are now asking for $150 million, slightly less than the $153-$155 million they were looking for when the site was first put on the market in August 2010.

Then, the tender closed with several developers submitting interest and bids but the reserve price was not achieved, said marketing agent Savills Singapore.

The new asking price works out to $1,302 psf per plot ratio (psf ppr), including an estimated development charge of some $582,000 and assuming a gross floor area of 115,737 sq ft.

Newton View, at 26 Newton Road, sits on a 37,577 square foot site with a plot ratio of 2.8 and a permissible gross floor area (GFA) of 105,215 sq ft. Including an extra 10 per cent of space for balconies, the GFA can go up to 115,737 sq ft.

At the asking price of $1,302 psf ppr, the estimated breakeven is about $1,981 psf, Savills Singapore said. It expects the winning developer to be able to build a condominium with about 147 units averaging 750 sq ft each.

Savills Singapore executive director and head of investment sales Steven Ming said that since the property was last offered for sale in August 2010, the high-end market has picked up.

More transactions have taken place in recent weeks and several projects are enjoying good sales velocity, he said: 'This has sparked a renewal of interest among developers for prime sites and hence a decision was undertaken to launch the site for sale now.'

The tender for the site will close at 3pm on Jan 28.


Source: www.businesstimes.com.sg

Based on URA and HDB projections, there could be a deluge of homes in 2013 and 2014

by Ku Swee Yong

05:55 AM Jan 07, 2011
It was a week before last Christmas when we celebrated the Housing and Development Board's (HDB) completion of 1 million flats.

This is an awesome achievement. With 1 million flats averaging about 1,000 sq ft each, the HDB has within 50 years completed and handed over a billion sq ft of residential space. A billion sq ft. One, followed by nine zeros. That is more square footage than the above-ground portion of the Great Wall of China, which spans 6,500km.

Now, the actual number of HDB flats that exist today is just below 900,000. According to the HDB's annual report, as of March 31, 2010, there were 890,212 flats under management. More than 100,000 flats have been demolished since the '70s, many of them rental flats. Older estates, such as Brickworks and Queenstown, have been upgraded.

Over the years, small individual estates have also been amalgamated into towns such as Bukit Merah Town, Clementi New Town, etc, under various estates renewal programmes, such as Selective En bloc Redevelopment Scheme (Sers).

The completion of an average of 20,000 flats per year in the HDB's 50-year history was in tandem with the growth of Singapore's population.

In the last 15 years, from 1995 to 2010, population growth (Singaporean citizens and permanent residents) averaged 50,000 per year, accommodated by the growth of public (additional 13,950 flats a year) and private housing (8,593 units a year). This is an average of one apartment for every two to three Singapore citizens and PRs. If we included non-residents (Work Permit and Employment Pass holders, for example), then this is an average of one new HDB or private home for every four new people added to the "headcount" in Singapore.

Table 1 shows the actual supply of physical units versus population growth. The 15-year data looks balanced.

However, within the 15 years, there were several tumultuous periods. Early on, a long queue of up to five years for HDB flats formed due to a perception of supply shortage and rising prices. Executive Condominiums were introduced.

The massive construction boom around 1995, with fuel added by en-bloc deals, led to a massive increase of 44,000 residential units per year in the period spanning 1998 to 2000. This is net additional physical supply; that is, demolitions from en-bloc deals have reduced the total count.



THE SCOURGE OF SARS

The economy dipped in 2001 after the dotcom crash, which was followed by 911, Gulf War II, the Bali bomb blast, and then Sars. The blip during the Sars crisis was the worst: A recession with a population exodus of 61,000 in 2003, during which there was an accumulated excess of residential units.

By March 2004, HDB announced it would stop building five-room flats because it had 10,000 units that were waiting to be taken up. At that time, three-bedroom private apartments could easily be had at $500,000 and there was little demand from a population that shrank by 61,000.

The over-supply, apparent since 2001, brought on a revamp of the HDB and the introduction of the Build-To-Order (BTO) scheme. HDB flats will be constructed only when there are enough buyers, allowing the board to adjust supply based on demand from applicants.

In 2002, the registration for flats system was suspended and till today, the BTO scheme remains the main mode of HDB's sales. The Design, Build and Sell Scheme (DBSS) was introduced in 2005 for private sector developers to participate in public housing projects. This scheme contributes about 10 per cent of total new HDB supply.

The period of 2004 to 2005 was one of slow growth as there was excess supply which had to be absorbed by new demand from the population growth before equilibrium could be reached. Government Land Sales slowed down, leading to the next squeeze.



MARKET RECOVERS AMID EN-BLOC FEVER

From 2006 to 2008, real estate prices recovered on a combination of factors, including: (a) rapid population growth on the back of strong jobs creation; (b) rosy economic outlook spurred by the promise of the integrated resorts; (c) developers replenishing freehold land bank through en bloc transactions and (d) small number of project starts in 2003 to 2005 leading to low completion numbers in 2006 to 2008.

Of the above factors, the en bloc phenomenon created the biggest squeeze because it (a) demolished physical housing units to make way for redevelopment, reducing total stock; (b) put millions of dollars of windfall into the hands of the en bloc sellers, amplifying purchasing power, and (c) en bloc sellers had to buy another property for their own stay at a time when net new supply was already low.

The average growth of population in the last five years - from 2006 to last year - was 162,000 per year. The demand for housing was way higher than the net supply growth of private residential at 5,780 units per year and the additional supply of 2,129 HDB flats per year, partly due to Sers rejuvenation of older estates. The timing could not have been better.

If we narrowed our analysis down to the numbers for 2006 to 2008, the shortage of space is even more pronounced. Vacancies dropped to a low of around 4 per cent as the average annual increase of 4,077 units of private residential stock (TOP completions minus en bloc demolitions) and 1,858 units of HDB stock were hardly enough for the influx of population at 191,200 a year! Assuming the new population agreed to squeeze into residential units 10 people at a time, we would need a supply of 19,100 units each year in 2006 to 2008. But the additional stock count was only 5,935. So naturally, rentals and capital values spiked.



SUPPLY OUTLOOK

We need to look at the planning for physical supply and not merely the real estate market based on launches and pre-sales. Some schools of thought favour the idea that, in land-scarce Singapore, property investors merely care about capital gains, not the steady rental income stream. For me, I stress the importance of long-term returns from real estate and therefore, I keep a close eye on physical supply and asset utilisation.

A property has real value only when it is well-used. Most hard, capital-intensive assets are like that: Ships, aeroplanes, machinery, satellites, ports, highways, and so on. If you leaned towards feng shui, you would also believe that the higher the human traffic and goods flow (especially for industrial, retail and commercial properties), the better the property.

An over-supply of completed residential properties, with insufficient end-users and poor utilisation, would naturally lead to price weakness.

Conversely, insufficient supply or too-rapid a population or demand growth will lead to sky-rocketing prices - similar to the situation in 2007. This would not go down well with our central planners. Despite being a top-notch economy, Singapore does not like to price itself out of the market. So, we can expect more supply to quench the fire of rising prices.

Since the middle of 2009, public housing demand has been robust and prices have moved up sharply. From Table 2, we see that HDB launches of BTOs were ramped up significantly last year.



According to the HDB: "The ramp-up of flat supply is part of a series of additional measures to reinforce the Government's commitment to provide affordable and adequate public housing supply for first-timer households." If demand remains strong, the HDB may launch up to 22,000 BTO flats and release land for 7,000 DBSS units this year. That's a potential 29,000 HDB units. That's huge.

However, the numbers do not indicate when the physical supply will be completed. The HDB supplies new flats based on various demand factors, such as new households formed from marriages, number of resale transactions, etc. To satisfy the strong demand and in order to shorten the waiting time for first-time buyers, Mr Mah Bow Tan, the Minister for National Development, has announced that the HDB will endeavour to complete construction within two-and-a-half years, shorter than the previous average of three years, for all BTOs starting from September last year.

Based on the above information, public housing supply is estimated to be as shown in Table 3:



If we net out the number of HDB units that may be demolished for estate renewal, the supply looks comfortable, especially since most of the BTO flats have found owners before construction began.

However, if we look at the total supply of residential units (both HDB and private) as shown in Table 4, the numbers become somewhat scary.



If you recall from Table 1 above, the 15-year average annual supply is about 22,000 units of HDB and private housing. The recent record high Government Land Sales programme and the ramp up of HDB supply may lead to a supply of over 30,000 units in 2013 and 43,000 units in 2014.

The last time so many residential units were completed was during the period of 1998 to 2000, when an average 44,000 units were completed per year. That was a supply level that was challenging to absorb as new family formations through marriages tracked at around 25,000 per year and thepopulation increased at 70,000 per year. And not all newly-weds purchase homes or move out of their parents' nests, while new population may come in the form of students or contract workers who occupy dormitories rather than residential units.

That period of over-supply led to a long period of indigestion from 2002 to 2005, when prices stagnated on the back of an economy hit by Sars and external turbulence. Vacancies of private residential units hovered above 8 per cent for most of 2002 to 2005, much higher than the 5 to 6 per cent of 2009-2010.



WHAT MIGHT BE THE LEVERS TO PULL?

Should the Urban Redevelopment Authority's projections of residential completions be accurate and HDB supply remains high, we must brace ourselves for a deluge in 2013 and 2014. We are now in 2011, so that gives us over a year to prepare. There are, however, a few ways that may mitigate the over-supply threat:



- Speeding up estate renewal programmes

By 2015, there will be more than 200,000 flats that will be over 30 years old. Old flats could be torn down sooner. Current tenants will be given notice to move out into other HDB flats. However, HDB's pace of renewal programmes is not entirely clear to market watchers, so I would not be able to take a stab here.



- Slowing down construction

The HDB can choose to slow down the supply of new flats. In the case of BTOs, the process of applications, queueing, balloting, selection, etc, and then contracting the construction companies to build are within the control of HDB. If physical supply is high and vacancies increase, the completion of construction could be delayed for the market to take up some slack.



- Embracing more foreigners

The demand side of the equation could be jacked up by welcoming more foreigners to our shores. This is especially so if the economic growth in the next five years can hold up at 5 per cent or higher, ensuring that jobs growth will be robust. If executed well, an increase in housing demand produces the best outcome for the whole market.



It remains to be seen if the large supply can be supported by demand. It is critical for stakeholders to make informed decisions, thinking through a comprehensive set of real estate data such as housing demolitions, population growth policies, public and private housing TOPs, etc, to the extent that such information is available.



The writer is the founder of real estate agency International Property Advisor (IPA), which provides services to high-net-worth individuals.

Soure: www.todayonline.com

 

Whitley Heights, rezoned for landed housing, will see hot bidding: Analyst

by Jo-Ann Huang Limin

05:55 AM Jan 06, 2011

SINGAPORE - After a strong run last year, it looks like the en bloc market is ushering in the New Year with a bang.

Apartment complex Whitley Heights is up for collective sale - the first property to be offered this year. Rezoned for landed housing, the site should attract substantial interest, analysts say.

Experts say sites like the Whitley Heights apartment complex are a rare find. Located off Whitley Road, it consists of three blocks of three storeys each with a total of 45 units. Apartment sizes range from 1,600 sq ft to 2,100 sq ft.

"There are very few residential redevelopment sites available in the market place for them to get their hands on to build landed properties or mixed landed," said Mr Karamjit Singh, managing director of Credo Real Estate, the appointed marketing agents for Whitley Heights.

He said the rezoning to mixed landed housing would allow developers to build a whole variety of terraces, semi-detached or detached houses.

Whitley Heights is the largest freehold plot in Districts 9 to 11; sized at 130,165 sq ft, it is the largest site up for collective sale in more than three years, said Mr Singh.

Now that demand for landed property is rising due to supply constraints, analysts expect Whitley Heights to attract bids from mid-tier as well as major developers.

Prices for landed housing increased 20 per cent last year, outpacing the non-landed residential market, which saw a 10- to 12-per-cent rise.

Mr Ku Swee Yong, chief executive officer of International Property Advisors, said the supply of landed housing is very limited. "Total stock in Singapore is just under 70,000 units. What's coming up in the next five years could be about 3,000 to 4,000 units of new landed housing. That isn't enough to meet the demand," he said.

Analysts said Whitley Heights is expected to attract bids ranging from $185 million to $210 million. This translates to $1,421 to $1,613 per sq ft over the land area and means that every owner gets to pocket a cool $4 million if the sale goes through.

Credo Real Estate said Whitley Heights could be developed into as many as 80 strata terrace houses, or about 60 strata semi-detached houses, subject to approval.

Analysts are bullish on the future of the landed housing market. They forecast that prices of landed housing would rise by 8 to 10 per cent this year.

Mr Ku noted that other private properties, which have the potential to follow in Whitley Heights' footsteps, are Kiam Hock Gardens, Kew Lodge, Orchid Apartments and Charming Gardens.

Source:www.todayonline.com

Published December 28, 2010

A mild collective sale fever
Most of the en bloc sales this year transacted at less than $50 million each, writes NICHOLAS MAK

THE residential en bloc or collective sales market in Singapore is picking up again in 2010 after taking a hiatus last year. To date, some 30-odd en bloc sales amounting to about $1.6 billion have been successfully concluded.

Meng Garden Apartments: With just 27 units, the project at Lloyd Road fetched $137m in an en bloc sale, the largest transacted this year. During the height of the boom in 2007, the average en bloc sale value was $119.3m
However, unlike the en bloc sales fever of 2005 to 2007, the size of each collective sales transacted in 2010 was smaller by comparison.

Most of the collective sales of residential developments transacted this year were less than $50 million each. The average value of each deal was about $52.6 million.

The largest collective sale transacted in 2010 was that of the 27-unit Meng Garden Apartments at Lloyd Road, which was sold for $137 million. By comparison, the average value of each collective sale that was concluded during the height of the previous property market boom in 2007 was $119.3 million.

The size, in terms of land area and the number of existing apartments, of each collective sale that was transacted in 2010 was also smaller. The average land area of the collective sales properties concluded in 2010 is about 36,000 sq ft, which is dwarfed by the average 105,000 sq ft of land of the en bloc sales in 2007.

Typically, about 94 per cent of the successful collective sale developments in 2010 consisted of less than 50 existing units. The average size is about 22 existing units in each project.

By contrast, the average number of existing units of the successful collective sale projects in 2007 is about 3.5 times larger.

The prime residential areas also witnessed fewer collective sales this year. Only about one-fifth of the successful en bloc sale developments in 2010 were located within the prime Districts 9, 10 and 11. The total transacted value of these en bloc projects in the prime districts added up to $678 million.

A significant number of collective sales projects were situated in the city-fringe areas, such as Districts 12 and 14. In 2007, the prime districts held about half of the 104 successful collective sales.

Government land sales

These prime district en bloc sales properties had a combined transacted value of some $8.5 billion.

One of the reasons for the smaller and fewer collective sales in 2010 is that many of the bigger developments in the prime districts and the popular East Coast region that could potentially be collective sales projects were already sold to developers in 2005 to 2007.

A second reason is that the flood of development sites from the Government Land Sale (GLS) programme for 2010, especially for the second half of this year, had attracted the attention and resources of many developers.

In response to the increase in housing demand and prices in 2009 and 2010, in the second half of 2010, the Singapore government released the largest supply of residential development land in the past 15 years. The 18 land parcels to be sold through the Confirmed List in H2, 2010 could potentially yield 8,300 housing units. In addition, there are another 13 sites on the Reserve List that could be developed into 6,000 homes.

So far this year, the authorities have sold 20 private 99-year leasehold residential sites amounting to $3.63 billion and another eight executive condominium (EC) sites that fetched $1.32 billion. This is not including the 14 smaller land parcels at Sembawang designated for landed housing that were auctioned off for $134.6 million in October.

In total, the government's residential land sales in 2010 had absorbed about $5.1 billion of funds from developers, which is more than three times the amount that developers spent on private en bloc sales.

Some developers prefer to acquire GLS sites because the process is faster and more transparent. In almost all government land tenders, all the names of the bidders and their respective bids are revealed hours after the close of the tender.

By comparison, property agents who conduct en bloc sales are never known to reveal the list of bidders and their bids in the same manner as the government.

Furthermore, once the highest bid exceeded the government's reserve price, the authorities would usually award the site to the highest bidder within a week after the close of the tender.

By comparison, some en bloc sales can be long drawn-out dramas, including protracted litigations, especially if some of the owners objected to the en bloc sale strongly or the estate agents had made some administrative mistakes.

Another reason why developers have been drawn to GLS tenders is the market segment that has enjoyed the most robust sales in the past two years is the mass market.

Condominium projects that are located near MRT stations are highly popular with homebuyers, provided they are priced reasonably. Developers are only too aware of this fact and there is a good selection of such land parcels in the recent GLS programmes.

The type of land that developers will buy would depend on the type of products that they are confident that they can sell at an attractive profit margin. The present trend of developers preferring small en bloc projects could continue into the first half of 2011.

This is because there are few indications that the sale volume in the high-end residential market would surge in the next few months.

In the past eight months, the sales volume of private homes in the prime districts had been relatively lacklustre as they made up less than one-fifth of the total number of private homes sold by developers.

On average, between April and November this year, 224 housing units in the Core Central Region (CCR) were sold in the primary market each month, while developers sold an average of 486 units and 642 units in the city-fringe and suburban regions respectively.

Furthermore, the asking price of the owners of the collective sales projects are unlikely to soften as they factor in the rising replacement cost of their new homes. Most collective sales could take months to conclude. And during that period, home prices could continue to rise.

But some developers may be turned away by the high asking prices as they could acquire the relatively cheaper GLS sites. Ironically, the very market forces that drive the en bloc sales market could also derail some of the potential deals.

Mega deals

In January 2011, four collective sales tenders are scheduled to close, including those with reserve prices exceeding $600 million each. It is an uphill task to successfully conclude such mega deals mainly because it would require the developer to put many of his eggs in one basket.

With a budget of $600 million, the developer could possibly acquire three to four GLS sites or 12 smaller en bloc sales sites, thereby diversifying his risks.

Each of the 20 GLS private condominium sites were sold by the government in 2010 for an average of about $181.4 million, while a large majority of collective sales in 2010 were transacted below $50 million each.

In addition, there is the risk of more cooling measures by the government in 2011. Any new government intervention is likely to further target property investors, while sparing first-time homebuyers.

And since a significant proportion of the high-end property buyers are investors and very few first-time homebuyers can afford luxury properties, any new property market curbs by the government is likely to affect the mid-tier and high-end segments.

However, there are also some major developers who are interested to acquire freehold trophy sites to add to their land bank.

But they are rather selective and the total land price, including the development charge that is payable to the government, is just one of the key selection criteria for the land parcels to be purchased.

In the coming year, there will be more collective sales attempts as some property owners try to cash in on the rising market.

In the face of such eagerness to sell, it is quite probable that one or two mega en bloc sales could be concluded in 2011.

However, the en bloc sales market in 2011 is unlikely to reach the red hot level of 2007.

Nicholas Mak is executive director (research & consultancy), SLP International Property Consultants


Source: www.businesstimes.com.sg

Published December 16, 2010

Tuan Sing buys Serene House for $99.1m
Unit land price is about $1,388 psf of potential gross floor area of 75,492 sq ft

By KALPANA RASHIWALA

TUAN Sing has made its second Singapore real estate property purchase this week. It yesterday inked a deal to buy Serene House, opposite the upcoming Botanic Gardens MRT Station, through a collective sale for $99.1 million.

The price for the freehold District 10 property, a short walk away from Botanic Gardens' Eco-Lake, works out to a unit land price of about $1,388 per square foot of potential gross floor area of about 75,492 sq ft.

This takes into account an estimated $5.7 million payable to the state for the potential acquisition of a 9,192 sq ft driveway and 10 per cent additional gross floor area for balconies. No development charge is payable due to the high development baseline reflecting a 1.8 plot ratio on the site.

Under Master Plan 2008, the site is zoned for residential use with a 1.4 plot ratio. Serene House has a freehold land area of 39,828 sq ft. Assuming the site, at Cluny Park Road, can be amalgamated with the driveway, the total site area can be potentially enlarged to about 49,021 sq ft.

The enlarged plot can be built into a four-storey condo with 68 units averaging 1,000 sq ft nestled in a predominantly landed housing locale.

Analysts estimate the project could break even at about $2,000-2,100 psf. Units at Nassim Park Residences have sold at an average price of $3,659 psf in the second half of this year.

On Tuesday, Tuan Sing emerged as the top bidder for a 99-year leasehold low-rise private residential site at Seletar Road . Its bid of $123 million works out to $468 per square foot per plot ratio (psf ppr). Analysts have estimated the breakeven cost for a new condo on the site at $800-900 psf.

As for its latest purchase of Serene House, Tuan Sing said yesterday that it intends to develop 'an ultra-luxurious project for this exclusive freehold site'.

In a statutory filing with Singapore Exchange, the group said its acquisition of Serene House is subject to Strata Titles Board's approval and conditional upon Tuan Sing receiving an in-principle approval for the purchase of the adjoining state land from Singapore Land Authority.

Serene House is a four-storey walk-up residential block comprising 24 apartment units. Its owners will each receive about $4.1 million from the sale, said Colliers International, which brokered the sale.

The tender for the property closed on Dec 14, attracting seven bids. Tuan Sing's offer was the highest.

'The tender was well participated by significant property market players including major developers and contractors. The seven highly-competitive bids we received demonstrate the excellent development potential of Serene House in terms of location, convenience and exclusivity,' said Colliers executive director (investment services) Tang Wei Leng.

Colliers is also marketing Serene Centre nearby. An expression of interest exercise for this property also closed on Dec 14 and is said to have drawn strong interest. Serene Centre has a plot ratio of 1.4 and is zoned for commercial/ residential use. It is owned by Lok Joo Pte Ltd, controlled by an Ng family that was also involved with developing Textile Centre

Source: www.businesstimes.com.sg

Published December 14, 2010


Euro-Asia, Bartley Grove up for collective sale

TWO more properties - Euro-Asia Apartments along Serangoon Road and Bartley Grove Apartments along Bartley Road - have been put up for collective sale.

Both properties are freehold. The owners of the 84-unit Euro-Asia Apartments are asking for $142 million. Including an estimated development charge of about $339,000, the price works out to about $899 per square foot per plot ratio (psf ppr).

The property has a land area of about 56,476 sq ft and a 2.8 plot ratio, giving it a potential gross floor area of 158,133 sq ft.

The site may be redeveloped into a 140-unit residential project with an average size of 1,130 sq ft, said Urban Front Real Estate, which is the marketing agent. The firm estimates that any new project that comes up on the site will have a breakeven price of about $1,250 psf.

The existing owners stand to bag between $1.09 million and $2.6 million for each unit if the sale is successful.

The second property, the 25-unit Bartley Grove Apartments, comes with a $70 million price tag. This works out to about $904 psf ppr. There is no development charge payable.

Urban Front Real Estate estimates that the site may be redeveloped into a 80-unit residential project with an average size of 1,000 sq ft per unit. The breakeven price of the project is estimated to be around $1,250 psf.

Bartley Grove Apartments has a land area of about 55,287 sq ft and a 1.4 plot ratio. The property has a potential gross floor area of 77,402 sq ft.

The owners of the 25 units stand to receive between $1.38 million and $3.59 million each if the collective sale is successful.

The tenders for Euro-Asia Apartments and Bartley Grove Apartments close on Jan 25 and 26 next year respectively

Source: www.businesstimes.com.sg

Published December 1, 2010

Hawaii Tower up for en bloc sale
$700m reserve price works out to $1,401 psf ppr for the freehold site on Meyer Road

ONE of the biggest collective sale sites in dollar terms so far this year is expected to be launched for sale next week.

Hawaii Tower, on Meyer Road, has a reserve price of $700 million. This works out to about $1,401 per square foot per plot ratio (psf ppr) inclusive of a development charge (DC) of about $55 million. The all-in investment for the successful developer of the 192,340 sq ft freehold site is expected to be around $1 billion.

Based on the unit land price of $1,401 psf ppr, the breakeven cost for a new luxury condo project on the site could be about $1,950-2,100 psf. A 25th floor unit at the nearby Aalto was transacted at $2,373 psf this month. Over at Seafront@Meyer, units on the 17-20th floors have traded at $1,875-2,051 psf in the past few months.

The Hawaii Tower site is zoned for residential use with a 2.8 plot ratio (ratio of maximum gross floor area to land area) and height of up to 36 storeys. The plot may potentially be developed into a new condo project with about 345 units of an average size of 1,500 sq ft or 430 units averaging 1,200 sq ft.

A new development on the site will boast unobstructed views towards the sea, Marina Bay Sands and the city skyline as well as the Mountbatten landed housing estate. The regular-shaped plot has frontage of over 130 metres along both Meyer Road and the East Coast Parkway.

CB Richard Ellis is marketing Hawaii Tower's collective sale through a tender which will close on Jan 26.

Owners controlling slightly over 80 per cent of share values and strata floor area have signed the collective sale agreement. They stand to receive about $5-million-plus per apartment and $8.8-million-plus per penthouse. Hawaii Tower comprises three blocks holding 129 apartments of about 2,200 sq ft each and six penthouses of about 4,300 sq ft each.

Market watchers pointed to two land deals in the vicinity earlier this year - two adjacent bungalows at Margate Road that sold for $1,023 psf ppr including DC, and 16 terrace houses at Fort Road which fetched about $1,080 psf ppr including DC and the estimated cost of buying a cul-de-sac from the state.

For Hawaii Tower, this would be the third attempt at an en bloc sale. The two previous attempts were in 2007. The initial effort began in the first half of that year, starting at $700 million and rising to $800 million; about 70-odd per cent consent level from owners was secured before the deadline for obtaining the minimum consent passed.

Another attempt was launched in late 2007 at $800 million but this soon petered out as market sentiment began to weaken and developers lost their appetite for land.

Data from Credo Real Estate shows that 31 en bloc sales (involving multiple owners coming together to sell their properties) have been sealed so far this year for a total $1.5 billion.

Source; www.businesstimes.com.sg

Published November 17, 2010

Pine Grove to en bloc, $1.7b reserve price: report


THE 99-year leasehold Pine Grove in Ulu Pandan could be up for collective sale again with an estimated reserve price of $1.7 billion, said Channel NewsAsia yesterday.


The deal, if successful, would be the largest in the collective sales market since Farrer Court changed hands for $1.34 billion in 2007.

Channel NewsAsia said that property agents have been gathering residents' signatures since November last year, and they have amassed 80 per cent of votes for the collective sale to start. A cooling period is now in place in case residents change their minds.

The 660-unit Pine Grove is a former HUDC estate. Several discussions had taken place between agents and residents to sell the estate in the last few years. The en bloc fever was particularly strong in 2007 as the property market heated up and developers snapped up several estates.

But not all residents in Pine Grove were keen on a deal then. A 'Save The Pine Grove' group was even formed to stop the sale process.

The collective sales market took a breather during the financial crisis and has revived recently, but deals have involved mostly smaller estates with more affordable price tags.

Sources: www.businesstimes.com.sg

Residential collective sales gaining momentum, set to continue next year

by Stella Hoh
05:55 AM Nov 05, 2010

Collective sale transactions have totalled $975.6 million so far this year and over 90 per cent of this total is made up of residential transactions. Renewed confidence in the Singapore home market and an increasing number of residential transactions over the past months lead us to believe that the "en bloc" trend will continue to gain momentum moving into next year.

Since the phenomenon of collective sales began in the mid-1990s, more than 400 buildings have been sold en bloc. Historically, the focus has always been on the residential sector rather than mixed-use developments as the latter often face challenges that arise when apportioning the sales proceeds to satisfy the owners.

This is further complicated by the allotment of share value, which vests more shares per square metre for shops in comparison to offices or residential units and the location or frontage of the units.

Despite these challenges and among a handful of total mixed-use collective sales, Jones Lang LaSalle successfully brokered most of such sales, including Katong Mall, Kim Seng Plaza and Eng Cheong Tower. It is currently marketing Paramount Hotel and Shopping Centre, the tender of which closes on Nov 23.

The rise in the popularity of collective sales this year could be attributed to improving fundamentals of the Singapore property market and the widening gap between new sale and resale prices for homes.

Median prices for new sales average 48 per cent above those of resale transactions during the first three quarters of this year. These factors seem to have encouraged owners of older properties to band together and attempt a collective sale of their estates.

The collective sale process begins with the formation of a sales committee. The committee appoints solicitors and a real estate consultant to act on its behalf, for the owners' consideration. The appointment of the sales committee, real estate consultants and solicitors, and the terms and conditions of the collective sale agreement, are finalised through extraordinary general meetings.

Most importantly, a reserve price and a method of apportioning the sale proceeds have to be approved by the owners. Following this, the collective sale development has a maximum period of 12 months to secure the mandate from at least 80 per cent of the owners by both share value and strata floor area if the estate is older than 10 years.

Upon achieving this 80 per cent mark and before the next 12 months are up, the site is launched for sale by tender. Upon the award of tender or the final negotiation of the sales and purchase agreement, the owners will apply to the Strata Title Board (STB) for an order for sale. If there is 100 per cent consensus to sell from the owners, the STB application process is not required.

Mediation and the STB order for sale follow. However, if the STB order is not obtained, application to the High Court is required and the time required to obtain the sale order will be subjected to the proceedings of the High Court. Minority owners may contest the sale of the property - often this occurs when there is a difference over the apportionment method. In this case, the STB will be the mediator.

Completion of the sale typically takes three months and is then followed by a four-to-six month period of vacant possession. Generally speaking, the end-to-end collective sale process takes between 18 and 36 months and requires matching a developer or investor to the site for sale.

Apartment owners in a building opting for a collective sale are usually seeking a potential price gap or "premium" from selling their apartment by collective sale as opposed to an individual sale. In the case of owner-occupiers, the cost of a replacement property is a major consideration.

Developers or investors are often seeking potential gains from the pricing gap between new sale and resale transactions, as mentioned earlier. When the forward cycle remains on the uptrend, potential gains will be maintained if not widened.

Developers or investors are also seeking gains from land intensification - or the gap between baseline and maximum permissible gross floor area (GFA) for redevelopment purposes.

The property measures announced in August may have some impact on the prices of new residential launches, especially in the upgraders market. However, developers, especially the small to medium-sized ones, will look to replenish their land supply in a strong and improving economic situation.

In the current market for collective sales, investor interest seems to be focused on the Central, City fringe and East Coast. However, successful collective sales have been recorded mainly in upgraders' locations, including Balestier and Toa Payoh (District 12), Geylang and Eunos (District 14) and Serangoon, and Hougang (District 19).

In particular, District 19 has stood out this year in terms of transactional value. Jones Lang LaSalle recently closed the collective sale of Glenville at Lim Tua Tow Road off Upper Serangoon Road for $39.5 million and set a benchmark price in excess of $700 per square foot per plot ratio (psf ppr) for the Serangoon area.

In line with the increase in the popularity of residential collective sales, we are seeing a bounce back in terms of transactional values. The largest collective sale transacted so far this year was the sale of Meng Garden in the River Valley area, which sold for $137 million or $1,380 psf ppr. This is a significant quantum and still competitive when compared with the latest collective sales in the vicinity that were transacted in 3Q07.

Considering that Jones Lang LaSalle's prime capital values have returned to the 3Q07 level, land values have yet to catch up when compared to Grange Court, which sold for $72.8 million or S$1,710 psf ppr, and Char Yong Garden for $420 million or $1,800 psf ppr. Incidentally, Char Yong Garden was successfully sold by Jones Lang LaSalle.

As long as economic conditions continue to improve, we expect collective sales prices will continue to trend up. Collective sale volumes will be maintained next year, in line with moderate growth in capital values expected off the back of recent government measures, as the price gap between new sale and resale prices remains large.

The writer is Head of Investments at Jones Lang LaSalle.

Source: www.todayonline.com

Published November 5, 2010

OWNERS controlling at least 80 per cent of the share values and strata area of the freehold Tanglin Shopping Centre have given consent for its collective sale.

The tender for the sale is slated to be launched around the end of this month by marketing agent ERA Realty Network. With a reserve price of $1.25 billion, it will be the biggest collective sale launched for a commercial building in the Orchard/Tanglin area.

The reserve price works out to about $4,021 per sq ft of potential gross floor area - a record price if it is achieved. The assumption in the unit land price calculation is that no development charge is payable and the new owner will be able to build up to the property's existing gross floor area of 310,800 sq ft (pending verification by Urban Redevelopment Authority) - even though this slightly exceeds the maximum 287,750 sq ft allowed for the site under Master Plan 2008.

Millennium & Copthorne Hotels (M&C), the London-listed hotel arm of City Developments Ltd (CDL), disclosed in June that it had signed the collective sale agreement for Tanglin Shopping Centre. M&C holds its stake in the shopping and office complex through its wholly owned subsidiary King's Tanglin Shopping Pte Ltd. The company owns 85 freehold strata retail/office units and 325 car parking lots that have been held as a long-term investment since 1981. This works out to about 34 per cent interest in the total strata area.

Tanglin Shopping Centre has a freehold land area of 68,512 sq ft. Under Master Plan 2008, the site is zoned for commercial use with a 4.2 + plot ratio - the ratio of maximum potential gross floor area to land area - and a maximum height of 20 storeys.

'This will be a very attractive site for redevelopment into a super luxury residential project with a commercial or hotel tower, or residential units with a retail podium,' ERA said. 'Some developers are already eyeing the property in view of its prime location.'

While market watchers agree the site is prime, they say it remains to be seen whether developers will be willing to pay the steep reserve price.

The 12-storey centre comprises retail space from basement two to level six, including about two levels of medical suites; offices from levels seven to 12; and parking lots in the basement and a rear multi-storey block.


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

Published November 4, 2010

By UMA SHANKARI

(SINGAPORE) Collective sale transactions have hit $975.6 million so far this year, according to Jones Lang LaSalle (JLL).

And residential collective sales - at $883.6 million year-to-date - account for over 90 per cent of the total.

In contrast, there was only one successful collective sale in 2009 - that of Dragon Mansion for $100.8 million.

'The rise in popularity of collective sales this year could be attributed to the improving fundamentals of the Singapore property market and the widening gap between prices of new and resale residential property,' said Stella Hoh, head of investments at JLL.

'Median prices for sales of new property averaged 48 per cent above those for resale transactions during the first three quarters of 2010. These factors seem to have encouraged owners of older properties to band together and attempt a collective sale of their estates.'

JLL's report also found that investor interest is focused on the central, city fringe and East Coast areas.

But successful collective sales have been recorded in upgrader locations such as Balestier and Toa Payoh (District 12), Geylang and Eunos (District 14), and Serangoon, Serangoon Gardens and Hougang (District 19).

In line with the increase in residential collective sales, there is also evidence of transaction values bouncing back, JLL said. The largest collective sale so far this year is that of Meng Garden, for $137 million or $1,380 per square foot per plot ratio (psf ppr).

JLL said: 'This is a significant quantum, and competitive compared with collective sales in the same vicinity that were transacted in the third quarter of 2007.'

Although mixed-use collective sale transaction value comprises just 5 per cent of the total amount, JLL's head of commercial investments Quek Soh Hoon said large freehold sites are still generating interest among investors.

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

Published October 21, 2010

By UMA SHANKARI

MARINE Point, a freehold residential development at Marine Parade Road, is up for collective sale with a $110 million price tag.

The indicative price for the 18-storey block works out to $1,116 per square foot per plot ratio (psf ppr), including an estimated development charge of $10 million.

The project has a site area of 51,185 sq ft and a 2.1 gross plot ratio, giving a maximum gross floor area of 107,489 sq ft.

The existing development comprises 30 apartments and two penthouses.

ERA Asia Pacific, which is conducting the public tender for the sale, estimates that the site can be re-developed to accommodate around 90-100 apartments averaging 1,000 sq ft each.

More than 80 per cent of the owners by share value and strata floor area have signed the collective agreement. The tender for Marine Point closes at 3.30pm on Nov 18.

Separately, the Urban Redevelopment Authority (URA) said yesterday that it has accepted an application from an unnamed developer to put up a 30-year leasehold industrial site at Pioneer Road North/Soon Lee Street for sale.

The 1.44 hectare land parcel was made available for sale through the government's Reserve List system on May 27 this year. Sites on the Reserve List are only put up for tender if a developer indicates a minimum bid price in an application, and that bid price is deemed to be acceptable.

The unnamed developer has committed to bid at least $13.8 million, or $44 psf ppr, for the land parcel. But Savills Singapore's industrial director Dominic Peters said the top bid could be in the region of $60-$70 psf ppr.

'There should be strong demand for the site as the industrial sector is still very open to investors, unlike other segments of Singapore's property market,' Mr Peters said.

The land parcel has a maximum gross plot ratio of 2.0. It is zoned for 'Business 2' use, which means it can be developed for a variety of uses such as clean, light and general industries which include industries related to bio-technology, vehicle repair and servicing, and manufacture of electrical and electronic products.

The tender for the site will be launched in two weeks' time.

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

ONG TECK HUI says Singapore is faced with a looming under-supply situation in the prime and mid-prime segments

Published September 23, 2010
ONG TECK HUI

THE residential property market roared back to life in the second half of 2009 with both transaction volume and prices surging upwards, following a year of relative inactivity due to the global financial crisis. Against this backdrop, buyers flooded the market again and developers were busy replenishing their land banks so as to capitalise on the growing demand. The recently announced measures to cool both the HDB resale and private housing sectors may change certain dynamics in the market for enbloc sites so it may be timely for a quick review

Prime shortage looming?

As the market became more buoyant, transactions in prime district residential properties picked up. Buyers are attracted by their central location, ability to command better rental yields, investment appeal, and other reasons.

During the first half of 2010, prime residential properties accounted for nearly one-third of primary market sales. Interest in the prime districts has been picking up in the last couple of years - in 2008, 23 per cent of primary market sales were attributable to prime properties while in 2009, there was an increase to 25 per cent.

Year-to-date, developers have poured more than $2.5 billion into residential sites (excluding executive condominium or EC sites) offered under the Government Land Sales programme (GLS).

Most of the GLS residential sites cater to mass suburban housing where the bulk of housing demand lies. It is certainly a sub-market which no housing developer can ignore. Furthermore, GLS sites are large, offering economies of scale in the entire investment chain for a developer, including site search, acquisition, planning, design, development, marketing, and sales.

While the GLS programme caters more to the suburban sector, demand for prime and mid-prime residential properties are generally met by sites offered within the private domain, including those under collective sales.

Year-to-date, developers have spent some $1.3 billion on private residential sites, with prime district sites accounting for 33 per cent of that value. Over the total amount invested in both GLS and private sites, it accounts for just 11 per cent. This seems to suggest an under-investment in prime district sites. The amount invested in mid- prime sites is also low, at 14 per cent of the total.

At this rate there would be a shortage of supply of prime and mid-prime residential properties. Barely 300 units will be generated by the prime sites transacted thus far while mid-prime sites would yield about 700 units.

In contrast, GLS residential sites would result in well over 7,000 suburban housing units being developed. It is noted that as at the second quarter of 2010, there are 10,997 units with pre-requisites for sale but not yet launched and 39 per cent of that supply is from the prime districts. However, that quantum is barely equivalent to demand in a good year and we need to address the needs of the market beyond that time horizon.

Fallout from new measures

We now consider the recent measures to cool the market in our review. The increased holding period for Sellers' Stamp Duty (SSD), reduced loan limit of 70 per cent, and increased upfront cash of 10 per cent for buyers with one or more outstanding mortgages would deter speculators and short- term investors, and encourage greater financial prudence amongst buyers in general. This should result in some calming effect on the market.

The HDB measures, on the other hand, have been designed to cool the HDB resale market.

The higher income ceiling for Design, Build, and Sell Scheme (DBSS) flats, increased supply for executive condominiums and DBSS flats, longer minimum occupation period (MOP) of five years for resale flats, and ban on concurrent ownership of HDB resale flats and private housing during the MOP - these are expected to moderate HDB resale activity.

As HDB households ride on a buoyant resale market to upgrade into the suburban housing market, we believe this housing segment will feel the effects of the market moderation more than the upper market segments. The prime and mid-prime residential markets appear to be more insulated from lower end market risks and could be more resilient.

While the suburban housing market appears set to have more challenges, it does not mean that it is to be avoided by developers. At realistic price levels, buyers would surely bite and any housing developer would strive to maintain an adequate suburban land stock to realise such opportunities.

However, good investment is about balance and ability to manage exposure and risks. It is timely for housing developers to review their portfolios and to re-balance if necessary. We are faced with a looming under-supply situation in the prime and mid-prime segments while the suburban market is more amply supplied.

Collective sales trends

During the course of this year, residential collective sales activity has been gradually picking up with increasing interest from buyers. In Q1, $141 million worth of collective sales were done. The quantum rose to $505 million in Q2 and registered $586 million in Q3 to date.

The outlook is for this trend to continue for the rest of this year into 2011. As suburban residential sites are likely to face more challenges from the new measures, we see a likely shift by developers toward collective sales.

An additional trend is toward increased investment in collective sale sites in prime locations. Year-to-date, only three out of 20 successful collective sales have occurred in the prime districts, accounting for 31 per cent of total collective sales value. As developers realise the under-investment in prime as well as mid-prime sites and a potential shortage of supply from these locations, they are expected to focus more on these segments.

Demand for collective sale sites will be met by more than 80 sites awaiting sales launches. Nearly half of these are in prime districts and a good number are in mid-prime locations. The stage is set for a change in market play in collective sales - all that is needed is for the players to act

The writer is executive director, research and consultancy, Credo Real Estate

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

Published October 9, 2010

A JOINT venture involving ACT Holdings, Nobel Design Holdings and two other partners has bought a four-storey freehold residential block at Lim Tua Tow Road, off Upper Serangoon Road, through a collective sale for $39.51 million.

According to Jones Lang LaSalle (JLL), which brokered the deal, the price works out to about $740 per square foot per plot ratio (psf ppr) including development charges. A 32-unit development called Glenville sits on the 43,335 sq ft plot.

The other two shareholders in the joint venture are Soh Chooi Lai and Aspen Development.

In May this year, the same joint venture bought an adjoining 29,623 sq ft site occupied by a development called New Gardens. If they amalgamate the two plots, the combined land area of almost 73,000 sq ft could be redeveloped into a new five-storey condo with about 100 units averaging 980 sq ft, analysts say.

The New Gardens site was sold for $21 million or $560 psf ppr including an estimated development charge of $2.26 million.

Under Master Plan 2008, both sites are zoned for residential use with a 1.4 plot ratio - the ratio of potential maximum gross floor area to land area.

JLL marketed Glenville through a tender exercise that closed on Oct 5 and is said to have attracted a handful of bids.

The sale to the ACT-Nobel joint venture is subject to approval by the Strata Titles Board, as unanimous approval of owners has not been secured.

The owners of the 32 existing apartments will receive about $1.18 million to $1.27 million per unit.

Last month, JLL announced the collective sale of Naung Court, which is closer to the Hougang Central area, for $28 million or $662 psf ppr including a development charge of $2.3 million if applicable.

Including the latest sale of Glenville, 23 collective sales have taken place so far this year for a total $1.14 billion, according to data from Credo Real Estate. Last year, there was just one deal for $100 million.

In 2008, there were eight collective sales amounting to $346 million, while in the peak year of 2007 there were 87 such transactions totalling $11.6 billion.

Published October 9, 2010

A JOINT venture involving ACT Holdings, Nobel Design Holdings and two other partners has bought a four-storey freehold residential block at Lim Tua Tow Road, off Upper Serangoon Road, through a collective sale for $39.51 million.

According to Jones Lang LaSalle (JLL), which brokered the deal, the price works out to about $740 per square foot per plot ratio (psf ppr) including development charges. A 32-unit development called Glenville sits on the 43,335 sq ft plot.

The other two shareholders in the joint venture are Soh Chooi Lai and Aspen Development.

In May this year, the same joint venture bought an adjoining 29,623 sq ft site occupied by a development called New Gardens. If they amalgamate the two plots, the combined land area of almost 73,000 sq ft could be redeveloped into a new five-storey condo with about 100 units averaging 980 sq ft, analysts say.

The New Gardens site was sold for $21 million or $560 psf ppr including an estimated development charge of $2.26 million.

Under Master Plan 2008, both sites are zoned for residential use with a 1.4 plot ratio - the ratio of potential maximum gross floor area to land area.

JLL marketed Glenville through a tender exercise that closed on Oct 5 and is said to have attracted a handful of bids.

The sale to the ACT-Nobel joint venture is subject to approval by the Strata Titles Board, as unanimous approval of owners has not been secured.

The owners of the 32 existing apartments will receive about $1.18 million to $1.27 million per unit.

Last month, JLL announced the collective sale of Naung Court, which is closer to the Hougang Central area, for $28 million or $662 psf ppr including a development charge of $2.3 million if applicable.

Including the latest sale of Glenville, 23 collective sales have taken place so far this year for a total $1.14 billion, according to data from Credo Real Estate. Last year, there was just one deal for $100 million.

In 2008, there were eight collective sales amounting to $346 million, while in the peak year of 2007 there were 87 such transactions totalling $11.6 billion.

Published September 25, 2010


A SMALL 16-unit walk-up development at Pasir Panjang Road has been sold in a collective sale exercise to boutique developer Link (THM) Greenleaf for $33 million.

The sale was handled by Credo Real Estate - its third successful en bloc deal in as many weeks. The other two were Pastoral View and Robin Court.

So far this year, Credo has closed seven en bloc deals, giving it a market share of 44 per cent by deal value.

The Pasir Panjang project, built in the 1960s, was put up for sale by tender with an indicative price of $26 million to $30 million.

Credo managing director Karamjit Singh said yesterday the tender closed with several parties offering above $30 million. Link (THM) emerged the winner in a hotly contested tender that attracted a total of 10 offers. Mr Singh attributed the strong interest to the site's location, less than 100 metres from the future Haw Par MRT Station. It also has elevated terrain that allows for sea views from the third level upwards.

The land area is 2,626 square metres or 28,263 sq ft. Under the 2008 Master Plan, it is zoned for residential development up to a gross plot ratio (GPR) of 1.4 and an allowable height of up to five storeys.

A proposed new development built at a GPR of 1.4 plus 10 per cent bonus for balconies would also be free of a development charge, as the development baseline is high.

The total gross floor area (GFA) allowed is 53,523 sq ft, including the additional 10 per cent balcony GFA. The site may be configured into about 40 apartment units with an average size of 1,000 sq ft, depending on layout and configuration.

The sale price of $33 million translates to a land cost of $758 per sq ft per plot ratio (psf ppr) at a GPR of 1.54 (including the balcony GFA) or $834 psf ppr at a GPR of 1.4.

With the sale, the owners stand to receive an average price of $2.06 million. The sale is subject to the approval for sale by the Strata Titles Board, if necessary.

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