May 31, 09
The Sunday Times
Analysts say buyers looking for good value slowly trickling back into market. Interest in the top end of the property market appears to be slowly picking up from near non-existent levels.
Several investors have trickled back to the resale property market, taking the chance to pick up posh apartments at prices mostly below $2,000 psf, or way below what was quoted last year.
One such unit at the 55-unit The Ladyhill that cost no less than $6.5 million has just been sold to a Korean investor. The price for the freehold apartment works out to $1,700 per sq ft - which was the average price of the first 20 units sold at the condo's 2000 launch. Prior to this deal, only two caveats had been lodged for the property in the past 12 months. Both were done at higher levels - one was for a bigger unit in July last year at $2,149 psf or $9 million, and the other was for a 3,283 sq ft unit for $2,193 psf or $7.2 million last November.
Consultancy Cushman & Wakefield, which brokered the latest deal, said the volume of top-end deals is not quite there yet but interest is certainly slowly picking up. Buyers are looking for good value, said property experts. Resale deals are slowly being done because some sellers are more willing to be flexible and there is limited supply in the market, they said. Developers are still lying low where top-end launches are concerned, said Savills residential director Phylicia Ang.
Indeed, few developers of high-end developments want to sell at today's prices, said Cushman's managing director Donald Han. They would rather wait for the right time to launch as going to market now would require them to cut their price levels by a significant amount, he said.
Government data compiled by Cushman & Wakefield shows that six deals - each worth more than $5 million - were done last month, up from three deals in March. It is a slight improvement from the dismal levels last November (zero deal) and December (one deal). Before the downturn got worse, such deals numbered 21 and 43 in May and June last year. While high-end prices have not stabilised, there may not be a repeat of some very low price levels registered in recent months, experts said. 'Just about three months ago, you could get an Ardmore II unit at less than $1,800 psf. At that time, you couldn't see the daylight in the market,' Ms Ang said. Indeed, a mid-floor Ardmore II unit was sold for only $3.375 million or just $1,668 psf in February while a high-floor unit went for $3.6 million, or $1,779 psf in March, according to caveats lodged.
Caveats lodged last month show four deals done from $1,600 psf to $1,917 psf. At the 2006 launch of Ardmore II, apartments were sold for an average price of about $2,300 psf, or between $4.2 million and $5.5 million per unit. At the nearby 330-unit Ardmore Park - long associated with posh living - no deals were registered in the first three months of this year.
Caveats lodged show that three deals were done last month at $1,976 to $2,184 psf, below the deals of $2,635 to $2,791 psf in June and July last year. Come the second half of the year, Mr Han said he expects to see more resale activity in the upper end of the market for deals worth $5 million and above. Top-end launches, however, may not surface this year. 'If you're talking about the high-end market, as in those priced above $2,000 psf, there won't be any launches until the market improves,' said a consultant who declined to be named. 'If you go above $2,000 psf today, these buyers will disappear.'
Sunday, May 31, 2009
Saturday, May 30, 2009
Developers readying for launches as activity rises
May 29, 09
The Straits Times
MORE developers are preparing to launch new properties in response to a marked improvement in sentiment in Singapore's property market, experts say.
Activity has picked up in the past two to four weeks, they observe. Some developers are now rushing to prepare projects for launch, but they face some inevitable delays. They may lack promotional materials, for instance.
Starting today, Frasers Centrepoint Homes will be releasing more units at its 302-unit freehold Martin Place Residences in the River Valley area. It recently sold more than 100 units of the project after it cut prices. The units were released at $1,260 per sq ft (psf) to $1,700 psf, compared with $1,700 psf to $2,000 psf last year.
Chief operating officer Cheang Kok Kheong said prices ranged from $1.5 million for a two-bedder to about $2 million for a three-bedder. He said Frasers was aiming to sell the remaining units at $1,350 psf to $1,700 psf.
Other weekend launches include Balcon East in Upper East Coast Road. Tong Eng Group started sales at its 37-unit development on Thursday last week and managed to sell 28 units. Prices ranged from just below $500,000 to $1.39 million, with the one- to two-bedders costing about $850 psf, and three-bedders at $780 psf, said Savills Residential director Phylicia Ang.
Next month, new re-launches could include the 91-unit Nathan Residences in Nathan Road and Frasers' 330-unit leasehold project near the Woodleigh MRT station. The former's preview last September at an average of $2,000 psf met with no success.
Frasers has reconfigured the layout in the Woodleigh project, which previously had 300 units, to accommodate the more affordable one-bedders of 400 sq ft. The rest will be two-, three- and four-bedders. Prices will be 'at the upper end of $750 psf to $780 psf', said Mr Cheang.
There are still many projects waiting to be launched and certainly not all will be on the market soon. 'Those developers who are ready will see this as a good window period to launch, but the really high-end projects won't come out soon,' said Ms Ang.
Developers will launch if they can accept today's pricing, as the recent re-launches are easily 25 per cent to 30 per cent below the peak, said Knight Frank executive director Peter Ow.
The Straits Times
MORE developers are preparing to launch new properties in response to a marked improvement in sentiment in Singapore's property market, experts say.
Activity has picked up in the past two to four weeks, they observe. Some developers are now rushing to prepare projects for launch, but they face some inevitable delays. They may lack promotional materials, for instance.
Starting today, Frasers Centrepoint Homes will be releasing more units at its 302-unit freehold Martin Place Residences in the River Valley area. It recently sold more than 100 units of the project after it cut prices. The units were released at $1,260 per sq ft (psf) to $1,700 psf, compared with $1,700 psf to $2,000 psf last year.
Chief operating officer Cheang Kok Kheong said prices ranged from $1.5 million for a two-bedder to about $2 million for a three-bedder. He said Frasers was aiming to sell the remaining units at $1,350 psf to $1,700 psf.
Other weekend launches include Balcon East in Upper East Coast Road. Tong Eng Group started sales at its 37-unit development on Thursday last week and managed to sell 28 units. Prices ranged from just below $500,000 to $1.39 million, with the one- to two-bedders costing about $850 psf, and three-bedders at $780 psf, said Savills Residential director Phylicia Ang.
Next month, new re-launches could include the 91-unit Nathan Residences in Nathan Road and Frasers' 330-unit leasehold project near the Woodleigh MRT station. The former's preview last September at an average of $2,000 psf met with no success.
Frasers has reconfigured the layout in the Woodleigh project, which previously had 300 units, to accommodate the more affordable one-bedders of 400 sq ft. The rest will be two-, three- and four-bedders. Prices will be 'at the upper end of $750 psf to $780 psf', said Mr Cheang.
There are still many projects waiting to be launched and certainly not all will be on the market soon. 'Those developers who are ready will see this as a good window period to launch, but the really high-end projects won't come out soon,' said Ms Ang.
Developers will launch if they can accept today's pricing, as the recent re-launches are easily 25 per cent to 30 per cent below the peak, said Knight Frank executive director Peter Ow.
Tuesday, May 26, 2009
Gradual rise in home prices seen
May 26, 09
The Straits Times
PRIVATE home prices in most sectors could start to rise gradually this year but high-end property will stay in the doldrums until later next year, according to tycoon Kwek Leng Beng.
Mr Kwek – executive chairman of the Hong Leong Group – said there are many cash-rich buyers waiting for the right time to buy.
‘Every time the market turns, some people would get caught out,’ he added.
The key question that many buyers are asking is: Has the market turned?
Urban Redevelopment Authority data shows that 1,207 new private homes were sold in April, making it the third consecutive month that sales have crossed the 1,000-unit mark.
It is a level reminiscent of the boom period and one that some analysts believe is unlikely to be sustained for long.
But Mr Kwek, who was speaking to The Straits Times on the sidelines of a recent hotel investment conference, feels that these levels of sales can be maintained ‘if the world economy stabilises’.
‘Confidence is the quick key to recovery. When you have confidence, you will invest,’ he said.
Mr Kwek said developers are sometimes wrong but the key is to be more often right than wrong.
He also reiterated that property is an investment over the medium to long term, anywhere from three to 10 years.
Developers got the market message this year and have cut prices to meet buyers’ expectations, following a stand-off that saw just 100-plus units sold in January.
‘If you’re listed, you’ll have to sell something. Otherwise, every quarter, you have no sales,’ said Mr Kwek.
Some developers have actually started to raise their asking prices slightly from their adjusted lows.
The strong sales so far this year have largely prompted two foreign investment houses to turn more positive on the residential market.
A recent UBS report points out that the sales momentum has been stronger than expected, with the possibility of higher prices in the second half of this year and next year.
It had already in a late April report called a ‘buy’ on the property sector, saying that demand from domestic upgraders – not foreign buying – will jump-start the recovery, as with previous recoveries in the 1990s.
Goldman Sachs has also projected a 5 per cent gain in Singapore private home prices next year, reversing its earlier tip of a 10 per cent fall.
‘We think the alignment of developers’ asking prices and buyer expectations would be key for generating sustainable demand,’ said the UBS report.
Nevertheless, not all are optimistic about the market.
‘This wave of purchases, once it’s over, won’t come back until the economy has recovered and embarked on its way up,’ said a property fund manager who declined to be named.
The pent-up demand is coming mostly from owner-occupiers or small investors and these people usually cannot afford to buy more than one unit, he said.
‘Foreigners are still leaving Singapore. When there are not enough real users for all the supply, prices will continue to fall.’
What is happening now in the real estate sector could be similar to the bear rally some analysts foresee for the stock market, he said, adding that the only good news is that mass-market prices are likely to hold at current levels.
Unlike high-end prices, which have fallen at least 35 per cent to 40 per cent from their all-time peak, the mass and mid-market sectors have had falls that are much less steep.
The price fall in high-end homes – which shot to more than $5,000 per sq ft during the boom from around $1,800 psf – is thus steeper, he said.
Average high-end prices may dip to around $2,300 psf, which is still higher than pre-boom levels.
Mr Kwek said the Hong Leong Group – which includes listed Hong Leong Finance, developer City Developments, Hong Leong Asia and London-listed Millennium & Copthorne Hotels – will hold off high-end home launches for now, preferring to start building first.
City Developments, the developer behind projects such as The Sail @ Marina Bay, has in its pipeline The Quayside Isle Collection in Sentosa Cove, a 99-year leasehold enclave where values have more or less collapsed.
High-end home prices were to a large extent boosted by foreign buying. ‘Foreigners will slowly come back but not so soon,’ said Mr Kwek.
The Indonesians, he said, are very slowly returning. Although the trend is barely discernible, it is a change from the previous downturn where they had all but disappeared.
Still, he cautioned against comparing prices with levels done a decade ago: ‘Ten years ago and now, Singapore has changed. Fundamentals are good.’
The country will soon benefit from two integrated resorts, for instance.
‘Worldwide, it is the worst downturn ever. But you see the amount of stimulus around. You can’t see the effects immediately. It will take some time,’ he said.
The Straits Times
PRIVATE home prices in most sectors could start to rise gradually this year but high-end property will stay in the doldrums until later next year, according to tycoon Kwek Leng Beng.
Mr Kwek – executive chairman of the Hong Leong Group – said there are many cash-rich buyers waiting for the right time to buy.
‘Every time the market turns, some people would get caught out,’ he added.
The key question that many buyers are asking is: Has the market turned?
Urban Redevelopment Authority data shows that 1,207 new private homes were sold in April, making it the third consecutive month that sales have crossed the 1,000-unit mark.
It is a level reminiscent of the boom period and one that some analysts believe is unlikely to be sustained for long.
But Mr Kwek, who was speaking to The Straits Times on the sidelines of a recent hotel investment conference, feels that these levels of sales can be maintained ‘if the world economy stabilises’.
‘Confidence is the quick key to recovery. When you have confidence, you will invest,’ he said.
Mr Kwek said developers are sometimes wrong but the key is to be more often right than wrong.
He also reiterated that property is an investment over the medium to long term, anywhere from three to 10 years.
Developers got the market message this year and have cut prices to meet buyers’ expectations, following a stand-off that saw just 100-plus units sold in January.
‘If you’re listed, you’ll have to sell something. Otherwise, every quarter, you have no sales,’ said Mr Kwek.
Some developers have actually started to raise their asking prices slightly from their adjusted lows.
The strong sales so far this year have largely prompted two foreign investment houses to turn more positive on the residential market.
A recent UBS report points out that the sales momentum has been stronger than expected, with the possibility of higher prices in the second half of this year and next year.
It had already in a late April report called a ‘buy’ on the property sector, saying that demand from domestic upgraders – not foreign buying – will jump-start the recovery, as with previous recoveries in the 1990s.
Goldman Sachs has also projected a 5 per cent gain in Singapore private home prices next year, reversing its earlier tip of a 10 per cent fall.
‘We think the alignment of developers’ asking prices and buyer expectations would be key for generating sustainable demand,’ said the UBS report.
Nevertheless, not all are optimistic about the market.
‘This wave of purchases, once it’s over, won’t come back until the economy has recovered and embarked on its way up,’ said a property fund manager who declined to be named.
The pent-up demand is coming mostly from owner-occupiers or small investors and these people usually cannot afford to buy more than one unit, he said.
‘Foreigners are still leaving Singapore. When there are not enough real users for all the supply, prices will continue to fall.’
What is happening now in the real estate sector could be similar to the bear rally some analysts foresee for the stock market, he said, adding that the only good news is that mass-market prices are likely to hold at current levels.
Unlike high-end prices, which have fallen at least 35 per cent to 40 per cent from their all-time peak, the mass and mid-market sectors have had falls that are much less steep.
The price fall in high-end homes – which shot to more than $5,000 per sq ft during the boom from around $1,800 psf – is thus steeper, he said.
Average high-end prices may dip to around $2,300 psf, which is still higher than pre-boom levels.
Mr Kwek said the Hong Leong Group – which includes listed Hong Leong Finance, developer City Developments, Hong Leong Asia and London-listed Millennium & Copthorne Hotels – will hold off high-end home launches for now, preferring to start building first.
City Developments, the developer behind projects such as The Sail @ Marina Bay, has in its pipeline The Quayside Isle Collection in Sentosa Cove, a 99-year leasehold enclave where values have more or less collapsed.
High-end home prices were to a large extent boosted by foreign buying. ‘Foreigners will slowly come back but not so soon,’ said Mr Kwek.
The Indonesians, he said, are very slowly returning. Although the trend is barely discernible, it is a change from the previous downturn where they had all but disappeared.
Still, he cautioned against comparing prices with levels done a decade ago: ‘Ten years ago and now, Singapore has changed. Fundamentals are good.’
The country will soon benefit from two integrated resorts, for instance.
‘Worldwide, it is the worst downturn ever. But you see the amount of stimulus around. You can’t see the effects immediately. It will take some time,’ he said.
Firm demand boosts sales of private homes
May 26 09
The Business Times
DEVELOPERS continued to report encouraging private home sales last week, and some have upped prices on firmer demand.
BelleRive on Keng Chin Road and Martin Place Residences on Kim Yam Road are among the projects where prices have been raised. BelleRive's average price is now 13 per cent higher than when it was previewed in mid-April.
Frasers Centrepoint sold 60 more units last week at Martin Place Residences; new units were released over the weekend at prices that were about 5-7 per cent higher.Chia Boon Kuah, Far East Organization chief operating officer, property sales, told BT that 'in recent weeks, we're seeing growing broad-based demand for our products across our portfolio in every price bracket, from upgrader market to the upper-middle segments to high-end luxury projects'.
Last week, the property giant sold more than 40 units, up from the 30 a week earlier. Far East's home sales for the May 18-24 week include two units at Vida on Peck Hay Road which fetched an average price of $2,030 psf; the buyers did not take up the rental guarantee offered by Far East for the recently completed condo. The developer also sold nine units at Floridian in Bukit Timah at an average price of $1,220 psf.
In the upgrader housing segment, it sold seven units at Mi Casa in Choa Chu Kang, nine units each at Lakeshore near Jurong Lake and Waterfront Waves near Bedok Reservoir. Waterfront Waves is a joint development with Frasers Centrepoint.
Frasers Centrepoint also sold four units each at its Caspian condo in the Jurong Lake location and Woodsville 28 last week.
At Martin Place Residences, the developer released fresh units below the 14th floor sky terrace in the second and final block in the 33-storey condo.
Prices of the freshly released units start from $1,350 psf, higher than the $1,260 psf starting price in the earlier block during the preceding weekend's marketing campaign.
However, the latest pricing is still below the $1,700 psf starting price for the 33-storey freehold project when it was previewed last year. Inclusive of the units sold last week, 168 units in the 302-unit condo are now sold.
Frasers Centrepoint is offering an interest absorption scheme (IAS) for all its four projects on the market - in exchange for a 3 per cent price premium for Caspian and a 2 per cent premium for the rest.
Over in Bukit Timah, a Sing Holdings subsidiary is understood to have sold five units last weekend at BelleRive, taking total sales to 39 units in the 51-unit freehold project. BelleRive was initially priced at $1,350 psf average when it was previewed in mid-April; this was raised to $1,430 psf last week and upped further to $1,530 psf this week. This translates to a 13 per cent price hike in about six weeks.
The average pricing is for the apartments in the 15-storey project, and excludes the two penthouses. About 75 per cent of BelleRive buyers have taken up the IAS offered by the developer at no extra cost.
The units were picked up predominantly by Singaporeans. BelleRive's draws include its proximity to Anglo-Chinese School (Primary) on Barker Road and Singapore Chinese Girls' School along Dunearn Road.
In the Balestier area, Soilbuild is understood to have sold another 25 units at Mezzo over the weekend. The project is priced at about $850-900 psf on average; the cost is 2 per cent more for IAS. Property giant City Developments also sold 14 units last week for The Arte at Thomson condo. The average price in the project is now $900-930 psf, compared with $880 psf when previews began in March. The 336-unit condo is 84 per cent sold.
Near Botanic Gardens, Straits Trading has upped the price of the remaining few units at Gallop Gables to $1,400 psf, from the $1,188 psf average achieved for units sold in the past six weeks. The price increase comes after the developer achieved the sale of its 40th unit in the completed freehold condo.
In the secondary market, some 50-plus units are said to have been sold last week at RiverGate condo near the Singapore River.
These are out of 88 units listed in a sales campaign last week. The average price is about $1,400 to $1,500 psf.The 88 units were from an original pool of 100 units purchased in 2005 by a fund managed by Ferrell Asset Management.
The Business Times
DEVELOPERS continued to report encouraging private home sales last week, and some have upped prices on firmer demand.
BelleRive on Keng Chin Road and Martin Place Residences on Kim Yam Road are among the projects where prices have been raised. BelleRive's average price is now 13 per cent higher than when it was previewed in mid-April.
Frasers Centrepoint sold 60 more units last week at Martin Place Residences; new units were released over the weekend at prices that were about 5-7 per cent higher.Chia Boon Kuah, Far East Organization chief operating officer, property sales, told BT that 'in recent weeks, we're seeing growing broad-based demand for our products across our portfolio in every price bracket, from upgrader market to the upper-middle segments to high-end luxury projects'.
Last week, the property giant sold more than 40 units, up from the 30 a week earlier. Far East's home sales for the May 18-24 week include two units at Vida on Peck Hay Road which fetched an average price of $2,030 psf; the buyers did not take up the rental guarantee offered by Far East for the recently completed condo. The developer also sold nine units at Floridian in Bukit Timah at an average price of $1,220 psf.
In the upgrader housing segment, it sold seven units at Mi Casa in Choa Chu Kang, nine units each at Lakeshore near Jurong Lake and Waterfront Waves near Bedok Reservoir. Waterfront Waves is a joint development with Frasers Centrepoint.
Frasers Centrepoint also sold four units each at its Caspian condo in the Jurong Lake location and Woodsville 28 last week.
At Martin Place Residences, the developer released fresh units below the 14th floor sky terrace in the second and final block in the 33-storey condo.
Prices of the freshly released units start from $1,350 psf, higher than the $1,260 psf starting price in the earlier block during the preceding weekend's marketing campaign.
However, the latest pricing is still below the $1,700 psf starting price for the 33-storey freehold project when it was previewed last year. Inclusive of the units sold last week, 168 units in the 302-unit condo are now sold.
Frasers Centrepoint is offering an interest absorption scheme (IAS) for all its four projects on the market - in exchange for a 3 per cent price premium for Caspian and a 2 per cent premium for the rest.
Over in Bukit Timah, a Sing Holdings subsidiary is understood to have sold five units last weekend at BelleRive, taking total sales to 39 units in the 51-unit freehold project. BelleRive was initially priced at $1,350 psf average when it was previewed in mid-April; this was raised to $1,430 psf last week and upped further to $1,530 psf this week. This translates to a 13 per cent price hike in about six weeks.
The average pricing is for the apartments in the 15-storey project, and excludes the two penthouses. About 75 per cent of BelleRive buyers have taken up the IAS offered by the developer at no extra cost.
The units were picked up predominantly by Singaporeans. BelleRive's draws include its proximity to Anglo-Chinese School (Primary) on Barker Road and Singapore Chinese Girls' School along Dunearn Road.
In the Balestier area, Soilbuild is understood to have sold another 25 units at Mezzo over the weekend. The project is priced at about $850-900 psf on average; the cost is 2 per cent more for IAS. Property giant City Developments also sold 14 units last week for The Arte at Thomson condo. The average price in the project is now $900-930 psf, compared with $880 psf when previews began in March. The 336-unit condo is 84 per cent sold.
Near Botanic Gardens, Straits Trading has upped the price of the remaining few units at Gallop Gables to $1,400 psf, from the $1,188 psf average achieved for units sold in the past six weeks. The price increase comes after the developer achieved the sale of its 40th unit in the completed freehold condo.
In the secondary market, some 50-plus units are said to have been sold last week at RiverGate condo near the Singapore River.
These are out of 88 units listed in a sales campaign last week. The average price is about $1,400 to $1,500 psf.The 88 units were from an original pool of 100 units purchased in 2005 by a fund managed by Ferrell Asset Management.
Location is key if buying to rent out
May 24 2009
Joyce Teo
Now that rents for condominiums are falling, investors looking for buy-to-let homes should be mindful of declining rental yields.
'Rentals in the private housing market are now falling at an estimated average rate of 3 per cent per month, so expect your rental yields to continue falling,' warned Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.
Still, falling yields shouldn't be an issue over the longer term. Said Knight Frank's director of research and consultancy, Mr Nicholas Mak: 'There will be short-term adjustments, but long-term, yields tend to be stable at 2.5 to 3.5 per cent on a net level.'
Low rental yield means either lower rental value per sq ft (psf) per month or higher capital value per sq ft, noted Ms Jacqueline Wong, who heads Jones Lang LaSalle's residential division.For now, the fall in rents looks set to continue and even gather pace.
Urban Redevelopment Authority (URA) data shows private home rents fell 8.5 per cent in the first quarter - the largest quarterly fall since the fourth quarter of 1998. Rents for non-landed prime homes fell the most, by 10.3 per cent.CBRE Research expects rents to stay on a downtrend for the year.
It sees a 3 to 5 per cent fall per quarter till year-end, which would add up to a full-year decline of 15 to 20 per cent.If you are thinking of buying a newly completed unit for rental income, remember there are now fewer expatriates and smaller budgets, but plenty of supply.
Many new developments were bought by investors or speculators. 'Speculators are turning to the rental market to cushion their debt obligations while they wait for prices to improve,' Mr Tan said.
One property investor, who declined to be named, advised: 'If you're buying a resale home for rent, you should try to buy in at a 5 per cent rental yield so you will have, say, a 4 per cent yield when the rental contract ends and has to be renewed at a lower rent.'
This is because leases typically run for two years and rents take a while to catch up. For those still keen on buying to let, Ms Wong's advice is to go for areas popular with expatriates, and be aware of the supply, both existing and upcoming.
Homes in prime districts continue to enjoy stable yields as expats still prefer these areas, she said, adding that projects in such areas posted an average rental yield of 3.5 to 3.7 per cent in the first quarter.
Still, posh homes in prime areas do not command the highest psf rents. First-quarter URA data shows median rents at Icon in Tanjong Pagar and Strata in the Novena area came to $6 psf and $5.11 psf respectively.
In contrast, the newly completed, upscale St Regis Residences commanded just $4.80 psf. Ardmore Park, a coveted property, went for $5.42 psf, down from $6.15 psf in the previous quarter.
'The rental rates for Strata and Icon may seem high, but most of the units are 45 to 100 sq m, whereas those at St Regis Residences and Four Seasons Park are 210 to 300 sq m, so the absolute quantum is smaller,' said CBRE Research.
Rentals are a function of location, unit size, age, condition, quality and other factors. And generally, yields from luxury homes tend to be lower because of their high prices, experts said.
At St Regis Residences and Four Seasons Park, prices range from $1,700 to $2,100 psf, so yields would come to 2.8 to 3.4 per cent, lower than those at Icon, said CBRE Research.
Ms Wong noted that mid-tier projects with smaller units would have higher psf rental values than luxury market projects, as they would still be affordable. Such mid-tier projects would appeal to a middle management expat with a budget of $3,000 to $6,000 a month, she added.
For example, at $5.08 psf a month, a 689 sq ft one-bedder at The Sail @ Marina Bay would cost him $3,500 a month. At $4.83 psf a month, a 1,100 sq ft two-bedder at the swankier Cosmopolitan might appear cheaper at first, but he would have to fork out $5,300 for the larger unit.
All things being equal, 99-year leasehold properties enjoy higher rental yields than freehold ones as they usually cost less. A property's tenure - freehold or leasehold - does not affect the rental value as much as it does the price, experts said.
Location is key, said Ms Wong, so look for a property that is more lettable - one in a prime area or near an MRT station. 'The capital values of such properties will also hold better.'
Joyce Teo
Now that rents for condominiums are falling, investors looking for buy-to-let homes should be mindful of declining rental yields.
'Rentals in the private housing market are now falling at an estimated average rate of 3 per cent per month, so expect your rental yields to continue falling,' warned Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.
Still, falling yields shouldn't be an issue over the longer term. Said Knight Frank's director of research and consultancy, Mr Nicholas Mak: 'There will be short-term adjustments, but long-term, yields tend to be stable at 2.5 to 3.5 per cent on a net level.'
Low rental yield means either lower rental value per sq ft (psf) per month or higher capital value per sq ft, noted Ms Jacqueline Wong, who heads Jones Lang LaSalle's residential division.For now, the fall in rents looks set to continue and even gather pace.
Urban Redevelopment Authority (URA) data shows private home rents fell 8.5 per cent in the first quarter - the largest quarterly fall since the fourth quarter of 1998. Rents for non-landed prime homes fell the most, by 10.3 per cent.CBRE Research expects rents to stay on a downtrend for the year.
It sees a 3 to 5 per cent fall per quarter till year-end, which would add up to a full-year decline of 15 to 20 per cent.If you are thinking of buying a newly completed unit for rental income, remember there are now fewer expatriates and smaller budgets, but plenty of supply.
Many new developments were bought by investors or speculators. 'Speculators are turning to the rental market to cushion their debt obligations while they wait for prices to improve,' Mr Tan said.
One property investor, who declined to be named, advised: 'If you're buying a resale home for rent, you should try to buy in at a 5 per cent rental yield so you will have, say, a 4 per cent yield when the rental contract ends and has to be renewed at a lower rent.'
This is because leases typically run for two years and rents take a while to catch up. For those still keen on buying to let, Ms Wong's advice is to go for areas popular with expatriates, and be aware of the supply, both existing and upcoming.
Homes in prime districts continue to enjoy stable yields as expats still prefer these areas, she said, adding that projects in such areas posted an average rental yield of 3.5 to 3.7 per cent in the first quarter.
Still, posh homes in prime areas do not command the highest psf rents. First-quarter URA data shows median rents at Icon in Tanjong Pagar and Strata in the Novena area came to $6 psf and $5.11 psf respectively.
In contrast, the newly completed, upscale St Regis Residences commanded just $4.80 psf. Ardmore Park, a coveted property, went for $5.42 psf, down from $6.15 psf in the previous quarter.
'The rental rates for Strata and Icon may seem high, but most of the units are 45 to 100 sq m, whereas those at St Regis Residences and Four Seasons Park are 210 to 300 sq m, so the absolute quantum is smaller,' said CBRE Research.
Rentals are a function of location, unit size, age, condition, quality and other factors. And generally, yields from luxury homes tend to be lower because of their high prices, experts said.
At St Regis Residences and Four Seasons Park, prices range from $1,700 to $2,100 psf, so yields would come to 2.8 to 3.4 per cent, lower than those at Icon, said CBRE Research.
Ms Wong noted that mid-tier projects with smaller units would have higher psf rental values than luxury market projects, as they would still be affordable. Such mid-tier projects would appeal to a middle management expat with a budget of $3,000 to $6,000 a month, she added.
For example, at $5.08 psf a month, a 689 sq ft one-bedder at The Sail @ Marina Bay would cost him $3,500 a month. At $4.83 psf a month, a 1,100 sq ft two-bedder at the swankier Cosmopolitan might appear cheaper at first, but he would have to fork out $5,300 for the larger unit.
All things being equal, 99-year leasehold properties enjoy higher rental yields than freehold ones as they usually cost less. A property's tenure - freehold or leasehold - does not affect the rental value as much as it does the price, experts said.
Location is key, said Ms Wong, so look for a property that is more lettable - one in a prime area or near an MRT station. 'The capital values of such properties will also hold better.'
Rents for ground floor shops in Orchard Rd hold up
May 25, 2009 - The Business Times
Kalpana Rashiwala
(SINGAPORE) The heat is on for Orchard Road retail rents with declining retail sales and substantial new supply completing soon, but Cushman and Wakefield says opportunistic retailers entering the final stages of negotiations for limited remaining choice ground-floor spots in new malls have kept demand for prime retail space firm in the first six weeks of this quarter.
The average monthly rental value for prime street-level retail space on Orchard Road dipped 1.1 per cent in the six weeks between end-Q1 2009 and mid-Q2 2009, lower than the 4.6 per cent quarter-on-quarter contraction seen in Q1 2009.
'Demand for retail space fell into a state of paralysis in Q4 2008 and early 2009 as the global economy was clouded under the tint of uncertainty. However, retailers have now moved into a state of acceptance and we are seeing more leases under negotiation,' says Cushman's associate director of retail consulting and leasing Turner Canning.
Cushman's average monthly rental value for prime ground floor Orchard Road retail space stood at $36.50 per square foot (psf) as at May 15, down 1.1 per cent from $36.90 psf as at end-March 2009. The latest mid-Q2 2009 figure represents a fall of 5.7 per cent since end-2008.
'While there is short-term resilience in prime retail rents, our forecast calls for a decline of a further 5-10 per cent in Orchard prime ground floor retail rentals through to the end of the year because of the generally weak retail outlook,' said Cushman's director of research Ang Choon Beng.
According to Knight Frank figures, ION Orchard, Orchard Central, 313@Somerset and Mandarin Gallery are among the new malls that will add a total 1.8 million square feet of net retail space in Singapore's prime Orchard Road shopping belt from now till mid-2010, a whopping 40 per cent increase from the current stock of 4.5 million sq ft.
Knight Frank managing director Danny Yeo, a veteran in the retail property consultancy sector, noted that despite the pressure from all the new shop space on Orchard Road, rents for ground floor space will probably hold up better than on the upper floors as the number of street-level units facing Orchard Road are limited in supply, whereas the supply on upper floors will be more substantial. 'So the rental drop on upper floors will be more severe than for ground floor space,' he added.
Cushman's Mr Canning reckons that upper floor shop space for new and existing malls on Orchard Road could today be fetching monthly rents of about $20-25 psf, lower than around $25-35 psf a year ago.
Knight Frank's Mr Yeo says it is difficult to quantify decreases in retail rents as traditionally measured on a fixed monthly psf basis. 'Increasingly, we're seeing more leases on a mix comprising slightly lower fixed rentals but also including a percentage of sales. This model cushions tenants when business is not on a level they want and enables them to tide over lean times, but once the market turns around, their total rental bill could be higher as retail sales pick up.'
CB Richard Ellis director (retail services) Letty Lee observes that retailers are increasingly being challenged by the economic downturn which is driving down tourist numbers.
'Coupled with the H1N1 virus, retailers face the prospect of not being able to achieve their projected turnover. The increase in supply is another challenge. Particularly for existing retailers, they will have to brace themselves for fresh competition, fresh concepts and malls incorporating new and different retail experiences,' she added.
Mr Yeo reckons that generally, retail sales at suburban malls have fared better than on Orchard Road over the past six to nine months. Retail turnover of suburban malls may have fallen by 5-15 per cent on average over this period, 'with the impact being a little bit more on fashion retailers than others such as those in groceries and F&B'.
'As for retailers along Orchard Road, for those relying heavily on tourists and big-ticket items, I wouldn't be surprised if their sales drop has been about 15-20 per cent on average over the past six to nine months, although a few may even have experienced a more substantial drop of 20-40 per cent.'
Kalpana Rashiwala
(SINGAPORE) The heat is on for Orchard Road retail rents with declining retail sales and substantial new supply completing soon, but Cushman and Wakefield says opportunistic retailers entering the final stages of negotiations for limited remaining choice ground-floor spots in new malls have kept demand for prime retail space firm in the first six weeks of this quarter.
The average monthly rental value for prime street-level retail space on Orchard Road dipped 1.1 per cent in the six weeks between end-Q1 2009 and mid-Q2 2009, lower than the 4.6 per cent quarter-on-quarter contraction seen in Q1 2009.
'Demand for retail space fell into a state of paralysis in Q4 2008 and early 2009 as the global economy was clouded under the tint of uncertainty. However, retailers have now moved into a state of acceptance and we are seeing more leases under negotiation,' says Cushman's associate director of retail consulting and leasing Turner Canning.
Cushman's average monthly rental value for prime ground floor Orchard Road retail space stood at $36.50 per square foot (psf) as at May 15, down 1.1 per cent from $36.90 psf as at end-March 2009. The latest mid-Q2 2009 figure represents a fall of 5.7 per cent since end-2008.
'While there is short-term resilience in prime retail rents, our forecast calls for a decline of a further 5-10 per cent in Orchard prime ground floor retail rentals through to the end of the year because of the generally weak retail outlook,' said Cushman's director of research Ang Choon Beng.
According to Knight Frank figures, ION Orchard, Orchard Central, 313@Somerset and Mandarin Gallery are among the new malls that will add a total 1.8 million square feet of net retail space in Singapore's prime Orchard Road shopping belt from now till mid-2010, a whopping 40 per cent increase from the current stock of 4.5 million sq ft.
Knight Frank managing director Danny Yeo, a veteran in the retail property consultancy sector, noted that despite the pressure from all the new shop space on Orchard Road, rents for ground floor space will probably hold up better than on the upper floors as the number of street-level units facing Orchard Road are limited in supply, whereas the supply on upper floors will be more substantial. 'So the rental drop on upper floors will be more severe than for ground floor space,' he added.
Cushman's Mr Canning reckons that upper floor shop space for new and existing malls on Orchard Road could today be fetching monthly rents of about $20-25 psf, lower than around $25-35 psf a year ago.
Knight Frank's Mr Yeo says it is difficult to quantify decreases in retail rents as traditionally measured on a fixed monthly psf basis. 'Increasingly, we're seeing more leases on a mix comprising slightly lower fixed rentals but also including a percentage of sales. This model cushions tenants when business is not on a level they want and enables them to tide over lean times, but once the market turns around, their total rental bill could be higher as retail sales pick up.'
CB Richard Ellis director (retail services) Letty Lee observes that retailers are increasingly being challenged by the economic downturn which is driving down tourist numbers.
'Coupled with the H1N1 virus, retailers face the prospect of not being able to achieve their projected turnover. The increase in supply is another challenge. Particularly for existing retailers, they will have to brace themselves for fresh competition, fresh concepts and malls incorporating new and different retail experiences,' she added.
Mr Yeo reckons that generally, retail sales at suburban malls have fared better than on Orchard Road over the past six to nine months. Retail turnover of suburban malls may have fallen by 5-15 per cent on average over this period, 'with the impact being a little bit more on fashion retailers than others such as those in groceries and F&B'.
'As for retailers along Orchard Road, for those relying heavily on tourists and big-ticket items, I wouldn't be surprised if their sales drop has been about 15-20 per cent on average over the past six to nine months, although a few may even have experienced a more substantial drop of 20-40 per cent.'
Gillman Heights sale finally completed
May 24, 2009 - The Business Times
Uma Shankari
THE $548 million sale of Gillman Heights Condominium to Ankerite Pte Ltd, a subsidiary of CapitaLand, was completed yesterday, the developer said in a statement. Ankerite will redevelop the site into a condominium with about 1,000 apartments.
The sale was not completed by the previous deadline of May 15, leading to some speculation that the collective sale might be off. But lawyers for the buyers and sellers quickly clarified that they were looking at the new deadline of May 22 instead.
The sale of the 99-year-leasehold estate on Alexandra Road dragged on for two years since the deal was first inked in 2007. The sale of Gillman Heights finally got the go-ahead this February after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the deal.
But last week, last-minute hurdles emerged.
One sticking point was the transfer of $750,000 from the management corporation's (MCST) management fund to the sinking fund in August 2007 and March 2008, which was discovered during the due diligence exercise.
The lawyers for the buyers wanted the transfer reversed. That issue, and a separate suit by a local contractor against the MCST, were both eventually resolved - clearing the way for the sale to go through.
Earlier reports had indicated that owners of the estate's 607 units stood to receive between $870,000 and $950,000 for their apartments.
Uma Shankari
THE $548 million sale of Gillman Heights Condominium to Ankerite Pte Ltd, a subsidiary of CapitaLand, was completed yesterday, the developer said in a statement. Ankerite will redevelop the site into a condominium with about 1,000 apartments.
The sale was not completed by the previous deadline of May 15, leading to some speculation that the collective sale might be off. But lawyers for the buyers and sellers quickly clarified that they were looking at the new deadline of May 22 instead.
The sale of the 99-year-leasehold estate on Alexandra Road dragged on for two years since the deal was first inked in 2007. The sale of Gillman Heights finally got the go-ahead this February after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the deal.
But last week, last-minute hurdles emerged.
One sticking point was the transfer of $750,000 from the management corporation's (MCST) management fund to the sinking fund in August 2007 and March 2008, which was discovered during the due diligence exercise.
The lawyers for the buyers wanted the transfer reversed. That issue, and a separate suit by a local contractor against the MCST, were both eventually resolved - clearing the way for the sale to go through.
Earlier reports had indicated that owners of the estate's 607 units stood to receive between $870,000 and $950,000 for their apartments.
Ferrell puts 80 RiverGate units back on market
May 24, 2009 - The Business Times
Emilyn Yap
FERRELL Asset Management, which counts Indonesia's Lippo Group as one of its investors, has put around 80 apartments at the RiverGate back on the market for sale, BT understands.
According to agents, a private preview began a few days ago and around 30 to 40 units have been taken up. The 545-unit freehold condominium in the Robertson Quay area received Temporary Occupation Permit in March, and was a joint development between CapitaLand and Hwa Hong Corporation.
The apartments on sale are spread over several floors and comprise three-bedders, four-bedders and penthouses. They are selling at $1,450 - $1,550 psf, one source said. Prices of lower-level units may even start from $1,380 psf.
According to Urban Redevelopment Authority data on caveats lodged, recent transactions of RiverGate units took place between $1,150 - $1,470 psf.
The seller of the apartments is believed to be fund manager Ferrell Asset Management. One of its funds, the Ferrell Premier Real Estate Investment Fund, had paid over $180 million for 100 units in 2005, bought in two separate tranches of 80 and 20 units.
Previous reports did not mention the per-square-foot price of the fund's units. When RiverGate was first launched in 2005, units were priced at $1,080 psf on average. That subsequently rose to $1,600 psf in the final phase of release in 2006.
Ferrell Premier Real Estate Investment Fund's website states that the fund invests in the 'high-yielding sector' of Singapore's property market.
'The objective of this sub-fund is to achieve returns of 10 - 15 per cent per annum through investments in properties with medium to long-term capital appreciation potential.'
BT understands that associates of Knight Frank and DTZ are marketing the units. Savills could also be marketing the units.
Emilyn Yap
FERRELL Asset Management, which counts Indonesia's Lippo Group as one of its investors, has put around 80 apartments at the RiverGate back on the market for sale, BT understands.
According to agents, a private preview began a few days ago and around 30 to 40 units have been taken up. The 545-unit freehold condominium in the Robertson Quay area received Temporary Occupation Permit in March, and was a joint development between CapitaLand and Hwa Hong Corporation.
The apartments on sale are spread over several floors and comprise three-bedders, four-bedders and penthouses. They are selling at $1,450 - $1,550 psf, one source said. Prices of lower-level units may even start from $1,380 psf.
According to Urban Redevelopment Authority data on caveats lodged, recent transactions of RiverGate units took place between $1,150 - $1,470 psf.
The seller of the apartments is believed to be fund manager Ferrell Asset Management. One of its funds, the Ferrell Premier Real Estate Investment Fund, had paid over $180 million for 100 units in 2005, bought in two separate tranches of 80 and 20 units.
Previous reports did not mention the per-square-foot price of the fund's units. When RiverGate was first launched in 2005, units were priced at $1,080 psf on average. That subsequently rose to $1,600 psf in the final phase of release in 2006.
Ferrell Premier Real Estate Investment Fund's website states that the fund invests in the 'high-yielding sector' of Singapore's property market.
'The objective of this sub-fund is to achieve returns of 10 - 15 per cent per annum through investments in properties with medium to long-term capital appreciation potential.'
BT understands that associates of Knight Frank and DTZ are marketing the units. Savills could also be marketing the units.
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