News Highlights Friday 18 July 2008

Property Comment: The IR effect on housing demand
With the two integrated resorts expected to employ some 75,000 people, demand for mass-market homes is likely to go up. Assuming 30% of the jobs (some 23,000) are taken up by locals and the remaining 70% (52,000 jobs) by foreigners, this would generate a substantial demand for housing, especially in the rental market, and the primary and secondary sales market. It is estimated that around 44,000 resort workers will most likely reside in the lower tier of the housing market. Hence, most of the demand would enter the HDB and lower end of the mass private residential housing rental market. Although the URA Q1 figures show that there were 14,862 vacant private residential units available in the market, Savills believe that they could include units from condos that were sold en bloc and old apartments in unliveable conditions. Hence, the current available private units could be as few as 7,500 units. The mass segment will see a moderate supply of only 8,400 units to be completed between 2008 and 2010. This modest supply and the strong demand in the rental market are likely to boost homebuyers’ and investors’ confidence in the residential mass-market. More jobs will be created not just from the effects of IRs, but also other on-going mega-projects from Exxon Mobil and the soon-to-be-completed shopping malls, like ION Orchard and Orchard Central. This, together with the Government’s efforts to attract foreign investment will ensure the continued influx of foreigners. With so much potential, Savills believes the demand for mass-market homes will remain strong in the coming months, barring any unforeseen circumstances that could rock the global economy.
Writers: Ku Swee Yong, director of marketing and business development, & Jane Kwa, senior research and consultancy analyst at Savills Singapore

- Today, B9



$1.99b loan for Farrer Rd condo
CapitaLand-led consortium has raised $1.996 billion loan to re-develop the en-bloc purchase of Farrer Court site into a high-rise condominium - the largest syndicated residential project loan in Singapore. The privatised HUDC estate of 77,898 sq m (838,488 sq ft) will be re-developed into 36-storey condominium consisting of 1,500 homes. This is the only private residential site in the Farrer Road and Holland Road area to be accorded a high plot ratio of 2.8 and a maximum height of 36 storeys. The project will cost about $3 billion, including land price, making it the largest value residential project in Singapore. The 99-year leasehold project is slated to be launched in the first half of 2009 and its pricing will be determined at that time. Its breakeven pricing is around $1,350-$1,450 psf. CapitaLand said that the group is ready to hold back the launch to achieve a desirable pricing. The mandated lead arrangers and bookrunners of the loan are DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland plc.

- The Business Times, P5 – also see The Straits Times, H27 “$3b Farrer condo boasts sensuous curvy towers”


Tanglin Road site goes at 124% above guide rent
The former Ministry of Home Affairs complex at Phoenix Park, off Tanglin Road, has been awarded to LHN Group for $368,888 a month - 124% more than the guide rent of $165,000 a month. The site, with a gross floor area of 143,195.4 sq ft, is managed by the Singapore Land Authority (SLA). The tender attracted 11 bids - 10 of them at or above the guide rent. LHN plans to configure the site into separate tenant clusters. The investment cost at Phoenix Park is expected to be about $4 million. He estimates that rents could be around $6 psf per month when it opens at year-end. Rising office rents are forcing more businesses to consider alternative office space like Phoenix Park. The highest bid for another state-owned site, the former Monk's Hill Secondary School at Winstedt Road, came from marine engineering firm Allbest Equipments. Allbest put in the highest bid of $211,328 per month for the site (43% higher than the guide rent of $147,300). GFA of the site is 83,889.5 sq ft. Allbest said it will lease the remaining space at $7.50-$10 psf a month. Cushman and Wakefield commented that transitional office space at Newton area is going for $7.50-$8 psf a month, while the former Gan Eng Seng School could achieve $4.50-$5 psf a month.


- The Business Times, P6 – also see The Straits Times, H26 “2 state owned sites pull in strong bids”



Rents, prices in central, prime areas may drop
Rents and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL). In the worst case scenario, JLL projects a 3.5 to 4.5 % drop in rents in the typical prime districts by year-end. The central districts could experience 5 to 7% drop in rents in 2009. The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease. Most completed supply could appear in the central districts. Average resale prices in the central districts could ease about 1% by 2009, while prices in the luxury prime districts could dive 11-13%. JLL referred to the forecasts as more of a worst-case scenario. Singapore's fundamentals are attractive to investors and demand will return when uncertainty clears. Taking a medium to longer-term view, JLL said that a fall in potential future supply in Singapore is due to a stall in collective sales. There were only two transactions worth $55.3 million in H1 this year, compared with 51 deals in the same period last year. Prime districts are seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell 1% and typical prime rents dropped 2%. Average rents in central districts rose 11%. JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 % to $2,595 psf in the first half of the year, while central district prices eased 0.5 % to $1,020 psf. The shift of rental demand from the prime to central districts has sustained investor interest in central district property. The mass market stood out with 3% growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.

- The Business Times, P6



Another door closes on Horizon minorities
Minority owners seeking to stop the en bloc sale of Horizon Towers have been defeated yet again. Singapore's High Court dismissed their appeal, on the grounds that they failed to prove the sale was done in bad faith and prejudiced their rights. The minority owners of Horizon Towers said they were still considering their options but will soon be meeting to decide if they will take the matter to the Court of Appeal, or start a civil suit to claim for any financial loss - which will be their final recourse. If they decide not to appeal further, the $500 million sale of the Leonie Hill development to a consortium led by Hotel Properties Ltd will go through.

- The Business Times, P1



Some unease as China's GDP growth slows
China's economy grew at 10.4% over the first six months of the year - its weakest pace since 2005, sparking renewed concerns of a slowdown amid an ongoing battle against inflation. The figure was 1.8 percentage points down on the same period last year. The economy grew 10.1% in the three months to June 30, down from 10.6% in the first three months of the year. But the second-quarter figures were still 0.3 percentage points above the average growth rate since China opened up its economy 30 years ago.

- The Straits Times, H24


Jia
- 65 Wilkie Road
- Freehold
- 22 luxurious apartments
- 1,200 – 1,600 sq ft
- 2, 3-bedrooms
- Private lift lobbies
- Private preview: 19-20 July, 10am-5pm
- Special privileges during preview
- Expected TOP: 30 April 2012
- Expected legal completion: 30 Apr 2015
- Developer: sdb asia pte ltd
- The Straits Times, H25 - advertisement
De’ Cove Sanctuary @ The Waterfront
- Landed house in Jakarta
- 5km from Jakarta Beachfront
- In the middle of 550ha of Dunia Fantasi, the largest theme park in South East Asia
- 5 min to Mangga Dua Shopping Centre and 15 min to Soekarno Hatta Airport, Jakarta Business District
- Prices start from S$2000/sqm landed house
- Only 12 units
- Developer: Jaya Ancol
- Exclusive property consultant: TZ
- Public preview in Grand Hyatt Hotel Singapore, Sir Henry Keppel Room
- The Straits Times, P23 - advertisement

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