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.
Tuesday, May 26, 2009
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.'
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