News Highlights Tuesday 27 May 2008

Has the property market peaked?
In the midst of bearish reports on the property market, LaSalle Investment Management has released optimistic forecasts of the residential capital values, with Singapore topping the list with capital values, which are expected to grow 35-37% over 2008-2010. The 35-37% gain in property prices focused on private property in the mid to luxury end in the range of $1,500 – 4,000 psf, the very segments that analysts are predicting the largest price drops due to oversupply. LaSalle’s projection of a cumulative capital value growth of 35-37% over 2008-2010 works out to around 11.67-12.3% per year. With URA property price index showing a price increase of 3.7% in private home prices in Q1, and assuming the price increase in the next few quarters continues at 3-3.7%, the full year price increase would be around 12-14.8%, exceeding LaSalle’s forecast. Savills is also optimistic about the Singapore property market, saying that there has been no massive outflow in expatriates, who will continue to fuel demand for homes in Singapore. Banks are also still looking to expand their private banking arms in Singapore, thus bringing more expats here for work. Another positive sign in the property auction market. Property auctioneers have reduced the frequency of their auctions, signaling that there aren’t any fire sales and property prices are still holding up. Concerns of an oversupply situation are also overplayed and that supply-demand dynamics are likely to remain in a healthy equilibrium over the next 5 years, said DMG analysts.


- The Edge, CC3






Bids for residential site fall short of expectations
A residential site in Choa Chu Kang Drive has attracted a top bid of just $203 psf ppr. The tender for the 99-year leasehold site has a maximum gross floor area of 572,600 sq ft. The tender drew five bids - Tian Hock Properties came out tops with an offer of $116.01 million, or $203 psf ppr. Analysts had expected bids ranging from $230 to $270 psf ppr. The lower bid prices is a reflection of the current subdued mood in the residential market, taking into account the current cautious environment and the relatively lacklustre take-up of new projects in the first four months of the year, said CBRE. Colliers International noted the absence of larger developers such as Far East Organisation could be a sign of weak market sentiment. Colliers also said the bid price is fair under current market conditions, and the project may result in a breakeven cost of about $550 psf and a selling price of $610-$620 psf.


- The Business Times, P26








Katong Mall up for sale with $220m-$250m tag
Katong Mall has been put up for collective sale at the indicative price of $220 million to $250 million. The 78,158 sq ft site is zoned for commercial use and has a plot ratio of up to 3.6. According to marketing agent Jones Lang LaSalle (JLL), the strata-titled 258-unit mall can be redeveloped into a commercial or retail project with a gross floor area (GFA) of up to 281,369 sq ft. Based on this GFA, the unit land price works out to be between $782 and $888 psf ppr. Outline planning permission has also been obtained for a mixed residential and commercial development, with an approved plot ratio of up to 3. This translates to a GFA of up to 234,474 sq ft and could yield up to 100 residential and 185 commercial/retail units of average sizes of 1,200 sq ft and 400 sq ft respectively.


- The Business Times, P26






Brokers’ Take – Property Sector – DBS Group Research
The Draft Master Plan 2008 was largely grounded in a few growth areas - Jurong Lake, Paya Lebar, Kallang Riverside and Marina Bay - and there was an absence of increase in plot ratios for existing developments. This means that developers and landowners hoping for a windfall by way of an increase in the legally permissible plot ratios for the redevelopment of their land would have to wait at least another five years, for the next Master Plan review in 2013.


- The Business Times, P6




Property firms raise rents in central Tokyo
Japan's leading estate firms including Mitsui Fudosan Co have begun proposing big rent rises in central Tokyo, where office vacancy rates have been hovering near 20-year lows. The low vacancy rates have helped leading estate firms weather tougher times for much of Japan's property market, which has been hit by tighter credit and stricter apartment building codes. Developers intend to raise office rents in central Tokyo by an average of 10-20%. The office vacancy rate in Tokyo's 23 wards stood at 2.1% last month. Average rent in Tokyo's five central wards last month was 15,120 yen (S$199) per approximately 3.3 sq m, a 12% increase from June last year.


- The Business Times, P28






New Mapletree project
Mapletree is developing property worth US$320 million in China's Guangdong through its private real estate fund. The Mapletree India-China Fund will have an 80% stake in the project, which includes seven blocks of serviced apartments and a mall. The 33-hectare project in the Nanhai district of Foshan city is the fund's third in China, and also includes a business park. Named Nanhai Business City, it will be built over five to eight years.


- The Business Times, P4








Key player in Jade saga set to sell luxury home
Dr Anthony Soh, the businessman caught out when his takeover of Jade Technologies descended into farce and recrimination has put his multimillion-dollar home on the market, with an asking price of $13.88 million. Similar-sized bungalow plots are being advertised for as much as $15 million. The home near the Singapore Island Country Club in Windsor Park Road sits on 21,000 sq ft of land and boasts a pool, badminton court and parking for up to 10 cars.


- The Straits Times, H20








Economist sees signs of Asia decoupling from US economy
Strong growth in China, India and other emerging economies, along with improvements in investment spending in Asian markets like Singapore, has cushioned the region from the impact of flagging US consumer demand, said Deutsche Bank's chief Asian strategist. The global credit crunch appears to have had only a limited impact on Asia thus far, as evidenced by the region's two major financial centres – Hong Kong and Singapore. Singapore's offshore loan growth accelerated to 43.3% in March, while domestic loan growth continues to climb steadily to about 23.9%.

- The Straits Times, H16