Foreigners could be switching from leasing to buying property, says Savills Singapore
Residential leasing transactions have stagnated in the past two years after falling from a recent high of 33,874 in 2005.
According to an analysis of Urban Redevelopment Authority data by Savills Singapore, transactions were about 15 per cent lower at 28,928 in 2006 and 28,893 in 2007, versus 2005.
Savills Singapore director of marketing and business development Ku Swee Yong said that as leases are generally renewed on a two-year basis, the drop between 2005 and 2006 should imply a rise in 2008.
But figures for the first two months of this year indicate that residential leasing is not likely to pick up. Indeed, Savills’ analysis reveals only 3,495 transactions.
The lowest number of quarterly transactions since the start of 2000 was 4,024 in Q1 2003, while the high of 9,917 was recorded in Q3 2005.
Mr Ku, who reckons foreigners make up about 90 per cent of the leasing market here, said it will be important to watch the figures over the next few quarters.
He thinks fewer financial-sector expatriates may relocate here due to the global credit crunch.
But according to some foreign business associations, there has been no let-up in the influx of expatriates so far.
American Chamber of Commerce executive director Dom LaVigne said: ‘Due to the strong business conditions in Singapore and based on what we’ve heard from our members hiring more employees, we think that the number of American expats living here will continue to rise in the coming years. Two years ago, there were 14,000 Americans in Singapore. Today there are 15,000 Americans and more than 3,000 US businesses here.’
The number of British expatriates here has also increased over the past two years, with the British Chamber of Commerce (BCC) saying about 20,000 British nationals now live in Singapore.
BCC spokesman Roman Scott, who is also managing director of the Calamander Group, said: ‘Although everyone is moaning (about rents), it’s mourning the end of a particularly good deal, not complaining that the recent sharp rises are unfair.’
BCC, which tracks the cost of housing and offices, believes the rise in rents is a function of market forces and a ‘long-overdue cyclical correction from artificial lows’.
Pointing out that rents fell sharply 10 years ago, Mr Scott said: ‘Given that real wages and wealth have actually risen in those 10 years in Singapore, this means rents are still cheaper in real terms than the previous high 10 years back, and affordable compared with other global cities, particularly Hong Kong and Tokyo.’
Rents, however, have been increasing rapidly. Based on Savills’ basket of properties, rents for high-end homes increased about 30 per cent year on year in Q4 2007. Savills noted that a 2,885-sq-ft unit at Ardmore Park was recently leased for $20,000 a month or about $7 per square foot (psf) a month.
For high-end properties, Savills says the quarterly average rent is now $6.68 psf a month.
January saw a particularly low number of new leases, with just 1,474 transactions. District 10, the most popular district, suffered a 42.2 per cent drop to 203 transactions, compared with 351 a year earlier.
Other districts in the top five, including districts 15, 9, 14 and 16, saw transactions fall 39.2, 50, 19.8 and 43.2 per cent respectively.
A shrinking pool of leasing properties due to collective sales could have exacerbated the drop in numbers, especially in the prime districts. But as Savills’ Mr Ku points out, demand should have spilled over into other districts, keeping the overall number of transactions up.
He believes foreigners could be simply switching from leasing to buying property.
‘This was helped by the attractive low cost of mortgages in Singapore and also the favourable tax advantages foreigners from certain countries enjoy from owning properties in Singapore,’ he said. ‘We certainly saw many tenants convert from leasing to owning in 2006-2007, starting with a change in US Federal Tax on US nationals’ housing benefits overseas.’
A separate analysis of property data by Chesterton International seems to support this assertion.
Comparing data from 1995 - during the run-up to previous property market peak - and 2007, Chesterton’s head of research and consultancy Colin Tan notes that while the percentage of foreigners, including permanent residents (PRs), buying non-landed private property increased from 17.9 per cent in 1995 to 29 per cent in 2007, the percentage of acquisitions by PRs alone doubled from 6.7 per cent to 14.4 per cent.
The relevance of this, according to Mr Tan, is that PRs tend to buy for owner-occupation while foreigners are more likely to buy for investment.
He said: ‘In recent years we have seen many purchases by Indian and Chinese nationals who are buying for owner-occupation, not investment. These people eventually become citizens. I personally know a number of them.’
Source : Business Times - 8 Apr 2008
Showing posts with label rental. Show all posts
Showing posts with label rental. Show all posts
Monday, April 07, 2008
S’pore Grade A office rents continue to rise in Q1
8.4% surge driven by banks with eye on private wealth management in Asia
OFFICE rents in Singapore continued to power ahead in the first quarter of this year, despite a slowdown in the US economy and possible fallout for Asia.
According to a Jones Lang LaSalle (JLL) report, the CBD core Grade A gross effective office rent now stands at $17.35 per sq ft per month - an increase of 8.4 per cent from $16 psf per month in Q4 2007.
JLL said: ‘Amid a slowdown in the US economy, the Singapore office market remains positive with sustained rental growth recorded island-wide.’
Chris Archibold, JLL’s national director and head of commercial markets, said he was ‘quite surprised’ by the 8.4 per cent increase in Grade A rents, especially as it represents almost half of JLL’s projected rental increase of around 18 per cent for full-year 2008.
JLL says demand for CBD core office space continues to be driven by the banks and financial institutions, ‘many of which have set their sights on the burgeoning private wealth management in Asia’.
CBD core Grade B office rents rose by a more sanguine 11.2 per cent to $13.80 psf per month in Q1 2008 from Q4 2007. Noting the rise, Mr Archibold said CBD core Grade B office rents are ‘catching up’.
‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market, the increase in rental value is largely a spillover from the previous quarters,’ he said.
‘The supply environment will remain in the landlord’s favour for a few more quarters before any significant increase in supply tilts the balance towards the occupiers.’
Supply of office space here remains tight.
According to a report by CB Richard Ellis (CBRE), the Grade A vacancy rate remained below one per cent in the first quarter of the year, even though at 0.6 per cent it was slightly higher than the 0.2 per cent rate in Q4 2007.
CBRE executive director (office services) Moray Armstrong said: ‘There is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers. Further rental advancement is likely in selected buildings that enjoy full occupancy.’
According to CBRE, prime rents averaged $16 psf per month while Grade A rents averaged $18.65 psf per month in Q1 this year, reflecting respective increases of 6.7 per cent and 8.7 per cent from the preceding quarter.
CBRE noted that the rate of increase in Q1 2008 moderated compared with the four quarterly increases in 2007.
It also estimates that 10.3 million sq ft of office space could be completed between 2008 and 2012, the bulk of which will come on stream in 2010 and 2011.
Mr Armstrong said: ‘The overall volume of confirmed office supply does not appear excessive, but we believe the government needs to be sensitive to the forces of demand and supply - prudence in future Government Land Sales programmes is required.’
Source : Business Times - 8 Apr 2008
OFFICE rents in Singapore continued to power ahead in the first quarter of this year, despite a slowdown in the US economy and possible fallout for Asia.
According to a Jones Lang LaSalle (JLL) report, the CBD core Grade A gross effective office rent now stands at $17.35 per sq ft per month - an increase of 8.4 per cent from $16 psf per month in Q4 2007.
JLL said: ‘Amid a slowdown in the US economy, the Singapore office market remains positive with sustained rental growth recorded island-wide.’
Chris Archibold, JLL’s national director and head of commercial markets, said he was ‘quite surprised’ by the 8.4 per cent increase in Grade A rents, especially as it represents almost half of JLL’s projected rental increase of around 18 per cent for full-year 2008.
JLL says demand for CBD core office space continues to be driven by the banks and financial institutions, ‘many of which have set their sights on the burgeoning private wealth management in Asia’.
CBD core Grade B office rents rose by a more sanguine 11.2 per cent to $13.80 psf per month in Q1 2008 from Q4 2007. Noting the rise, Mr Archibold said CBD core Grade B office rents are ‘catching up’.
‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market, the increase in rental value is largely a spillover from the previous quarters,’ he said.
‘The supply environment will remain in the landlord’s favour for a few more quarters before any significant increase in supply tilts the balance towards the occupiers.’
Supply of office space here remains tight.
According to a report by CB Richard Ellis (CBRE), the Grade A vacancy rate remained below one per cent in the first quarter of the year, even though at 0.6 per cent it was slightly higher than the 0.2 per cent rate in Q4 2007.
CBRE executive director (office services) Moray Armstrong said: ‘There is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers. Further rental advancement is likely in selected buildings that enjoy full occupancy.’
According to CBRE, prime rents averaged $16 psf per month while Grade A rents averaged $18.65 psf per month in Q1 this year, reflecting respective increases of 6.7 per cent and 8.7 per cent from the preceding quarter.
CBRE noted that the rate of increase in Q1 2008 moderated compared with the four quarterly increases in 2007.
It also estimates that 10.3 million sq ft of office space could be completed between 2008 and 2012, the bulk of which will come on stream in 2010 and 2011.
Mr Armstrong said: ‘The overall volume of confirmed office supply does not appear excessive, but we believe the government needs to be sensitive to the forces of demand and supply - prudence in future Government Land Sales programmes is required.’
Source : Business Times - 8 Apr 2008
Growth seen in Asia office rentals in ‘08
But analysts say some cities, including S’pore, may see slowing rental growth, reports UMA SHANKARI
BUOYED by limited office supply in some cities and high GDP growth, all major office markets in Asia are expected to see rental growths in 2008, but the pace of growth will vary from city to city, property analysts say.
‘Across the board, we still see positive demand for office markets across Asia,’ said Megan Walters, director of research and business analytics for Asia Pacific at Cushman & Wakefield (C&W). ‘But obviously the problems in the financial markets in the US have not been played out yet, and we have yet to see how it will affect investment markets in the region.’
The firm expects all offices markets in key cities across Asia to record increasing rents in 2008. However, about half the cities profiled - Singapore, Beijing, Shanghai, Chengdu, New Delhi, Mumbai, Kuala Lumpur and Bangkok - are expected to see slowing rental growth. The other cities - Hong Kong, Tokyo, Seoul, Taipei, Bangalore and Ho Chi Minh City - are still seeing accelerating rental growths.
Industry players here will perhaps be most interested in what is happening in Singapore and Hong Kong - long been seen as rivals in the region as a centre for international office services. The slowing rental growth in Singapore will be welcomed by many on the back of fears that the Singapore office market was overheating.
Rents here have been pushed up over the last few years mainly by expansion in the financial services sector owing to factors such as domestic growth, economic restructuring that resulted in the expansion of the service industries as well as the influx of both regional and global jobs into the market.
Rentals are not just climbing - they are climbing at a pace faster than ever seen before. Industry veterans have expressed fears that this could make Singapore less competitive compared with Hong Kong, where rents are rising at a more sedate pace.
For example, data from C&W shows that rents at Raffles Place in Singapore’s Central Business District (CBD) have risen 100 per cent in the last year unlike Hong Kong’s more moderate 15 per cent. And according to some reports, it is now more expensive to take up office space in Singapore than in Hong Kong.
Data released by Jones Lang LaSalle (JLL) yesterday shows that CBD core Grade A gross effective office rent in Singapore for the small space category (less than 10,000 square feet) stands at $17.35 per square foot per month (psf pm), up 8.4 per cent quarter on quarter from the $16.00 psf pm seen in Q4 2007. This is marginally higher than the quarterly rental growth of 7.4 per cent registered in Q4 2007, JLL said.
‘In comparison with Hong Kong, the current gross effective rent of Grade A offices in Hong Kong Central - equivalent to Raffles Place in Singapore - stands at US$15.10 psf pm,’ said JLL’s report. ‘This is some 21 per cent higher than Singapore’s CBD core prime Grade A gross effective rental value of US$12.50 psf pm (or $17.35 psf pm).’
However, things should even out with more supply coming onstream in Singapore. Market watchers say that the rate of rental growth will slow and occupancy rates will fall this year. ‘The growth in rental values is expected to moderate this year after a record increase in 2007,’ said Cheng Siow Ying, DTZ Debenham Tie Leung’s executive director.
Chris Archibold, head of commercial leasing at JLL, similarly noted that the rapid rental increase seen in Q1 2008 is mainly due to spillover demand.
He said: ‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market condition, the increase in rental value is largely a spillover from the previous quarters.’
And a new report by DTZ says that islandwide office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter on quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.
The average occupancy of office buildings at Raffles Place dropped half a percentage point to 97.8 per cent in Q1, while that at Marina Centre rose 0.7 percentage point to 99.8 per cent.
DTZ attributed the slight dips in occupancy partly to two office buildings coming onstream. Together, The Central and VisionCrest Commercial added some 538,100 sq ft of new office space - raising islandwide office stock one per cent quarter on quarter to 56.6 million sq ft. Both buildings are not even fully leased yet.
Some occupiers are beginning to exercise caution in their medium-term leasing requirements, DTZ’s Ms Cheng said. Going forward, the demand for CBD core office space in Singapore is expected to continue to be strong on the back of more demand from banks and financial institutions, many of which have set their sights on the burgeoning private wealth management in Asia.
But there will be some moderation for both rents and capital values. ‘Although the financial and business sector is still expected to remain robust, the more modest economic growth projected will see companies limiting their expansion of office space requirements,’ Knight Frank noted in a recent note. ‘Some landlords would also be more accommodating of tenants in order to attract or retain these users of office space.’
And for the rest of Asia, a lot depends on how the sub-prime crisis in the US plays out, property analysts said. The region’s investment markets - including for the office sector - are expected to emerge from the credit crunch better than their US or European counterparts.
Source : Business Times - 8 Apr 2008
BUOYED by limited office supply in some cities and high GDP growth, all major office markets in Asia are expected to see rental growths in 2008, but the pace of growth will vary from city to city, property analysts say.
‘Across the board, we still see positive demand for office markets across Asia,’ said Megan Walters, director of research and business analytics for Asia Pacific at Cushman & Wakefield (C&W). ‘But obviously the problems in the financial markets in the US have not been played out yet, and we have yet to see how it will affect investment markets in the region.’
The firm expects all offices markets in key cities across Asia to record increasing rents in 2008. However, about half the cities profiled - Singapore, Beijing, Shanghai, Chengdu, New Delhi, Mumbai, Kuala Lumpur and Bangkok - are expected to see slowing rental growth. The other cities - Hong Kong, Tokyo, Seoul, Taipei, Bangalore and Ho Chi Minh City - are still seeing accelerating rental growths.
Industry players here will perhaps be most interested in what is happening in Singapore and Hong Kong - long been seen as rivals in the region as a centre for international office services. The slowing rental growth in Singapore will be welcomed by many on the back of fears that the Singapore office market was overheating.
Rents here have been pushed up over the last few years mainly by expansion in the financial services sector owing to factors such as domestic growth, economic restructuring that resulted in the expansion of the service industries as well as the influx of both regional and global jobs into the market.
Rentals are not just climbing - they are climbing at a pace faster than ever seen before. Industry veterans have expressed fears that this could make Singapore less competitive compared with Hong Kong, where rents are rising at a more sedate pace.
For example, data from C&W shows that rents at Raffles Place in Singapore’s Central Business District (CBD) have risen 100 per cent in the last year unlike Hong Kong’s more moderate 15 per cent. And according to some reports, it is now more expensive to take up office space in Singapore than in Hong Kong.
Data released by Jones Lang LaSalle (JLL) yesterday shows that CBD core Grade A gross effective office rent in Singapore for the small space category (less than 10,000 square feet) stands at $17.35 per square foot per month (psf pm), up 8.4 per cent quarter on quarter from the $16.00 psf pm seen in Q4 2007. This is marginally higher than the quarterly rental growth of 7.4 per cent registered in Q4 2007, JLL said.
‘In comparison with Hong Kong, the current gross effective rent of Grade A offices in Hong Kong Central - equivalent to Raffles Place in Singapore - stands at US$15.10 psf pm,’ said JLL’s report. ‘This is some 21 per cent higher than Singapore’s CBD core prime Grade A gross effective rental value of US$12.50 psf pm (or $17.35 psf pm).’
However, things should even out with more supply coming onstream in Singapore. Market watchers say that the rate of rental growth will slow and occupancy rates will fall this year. ‘The growth in rental values is expected to moderate this year after a record increase in 2007,’ said Cheng Siow Ying, DTZ Debenham Tie Leung’s executive director.
Chris Archibold, head of commercial leasing at JLL, similarly noted that the rapid rental increase seen in Q1 2008 is mainly due to spillover demand.
He said: ‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market condition, the increase in rental value is largely a spillover from the previous quarters.’
And a new report by DTZ says that islandwide office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter on quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.
The average occupancy of office buildings at Raffles Place dropped half a percentage point to 97.8 per cent in Q1, while that at Marina Centre rose 0.7 percentage point to 99.8 per cent.
DTZ attributed the slight dips in occupancy partly to two office buildings coming onstream. Together, The Central and VisionCrest Commercial added some 538,100 sq ft of new office space - raising islandwide office stock one per cent quarter on quarter to 56.6 million sq ft. Both buildings are not even fully leased yet.
Some occupiers are beginning to exercise caution in their medium-term leasing requirements, DTZ’s Ms Cheng said. Going forward, the demand for CBD core office space in Singapore is expected to continue to be strong on the back of more demand from banks and financial institutions, many of which have set their sights on the burgeoning private wealth management in Asia.
But there will be some moderation for both rents and capital values. ‘Although the financial and business sector is still expected to remain robust, the more modest economic growth projected will see companies limiting their expansion of office space requirements,’ Knight Frank noted in a recent note. ‘Some landlords would also be more accommodating of tenants in order to attract or retain these users of office space.’
And for the rest of Asia, a lot depends on how the sub-prime crisis in the US plays out, property analysts said. The region’s investment markets - including for the office sector - are expected to emerge from the credit crunch better than their US or European counterparts.
Source : Business Times - 8 Apr 2008
Wednesday, April 02, 2008
HDB, private apartment rentals set to rise
Rentals for HDB and mass market private apartments are set to rise in the coming years, with more foreign workers heading for Singapore.
Property agents expect rents to climb by about 10 percent this year.
They say HDB flat-owners could gain from the spike in demand.
Singapore’s two integrated resorts will be ready in the next two years.
Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.
Resorts World at Sentosa says it will be hiring 10,000 people directly.
And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.
Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.
But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.
On average, monthly rentals for private apartments range between $2,500 and $3,500 dollars.
This may be too much for some workers.
Mohamed Ismail, CEO of PropNex, said: “The public housing becomes next best alternative where today people are still able to rent at $1,500 to $2,000. I expect this trend to continue, as far as estates that will have a greater demand … such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh. Anything that is not too far away from town or to the integrated resorts will definitely have greater take-up rates.”
Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.
All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de
Source : Channel NewsAsia - 3 Apr 2008
Property agents expect rents to climb by about 10 percent this year.
They say HDB flat-owners could gain from the spike in demand.
Singapore’s two integrated resorts will be ready in the next two years.
Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.
Resorts World at Sentosa says it will be hiring 10,000 people directly.
And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.
Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.
But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.
On average, monthly rentals for private apartments range between $2,500 and $3,500 dollars.
This may be too much for some workers.
Mohamed Ismail, CEO of PropNex, said: “The public housing becomes next best alternative where today people are still able to rent at $1,500 to $2,000. I expect this trend to continue, as far as estates that will have a greater demand … such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh. Anything that is not too far away from town or to the integrated resorts will definitely have greater take-up rates.”
Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.
All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de
Source : Channel NewsAsia - 3 Apr 2008
Sunday, March 30, 2008
Will retiree be better off with annuity or rental income?
Q I AM wondering if I should continue to rent out my property or dispose of it and use the proceeds to buy an annuity that will provide a retirement income.
Rentals will rise with inflation while an annuity is more or less fixed and will not keep up with inflation.
Being a landlord, however, also has its minuses. As the property gets older, repairs and maintenance will get more costly. Also, in a recession or if supply exceeds demand, rentals will fall.
What would you advise?
A IN RECENT months, property investments and annuities have generated much debate among Singaporeans.
Improper management of these financial vehicles could have an adverse impact on your retirement plans, so let us look at the key characteristics of these two asset classes.
Property investments are popular because of their potential capital gains. In a boom cycle, they offer attractive capital appreciation. In contrast, annuity products have no potential for capital gains.
On the income side, rentals fluctuate as demand and supply conditions change. Thus, property investments may not be able to provide the constant and predictable cash flow that annuities can.
This uncertainty could be painful for retirees who rely solely on rentals for their retirement income. Furthermore, repairs and maintenance are unavoidable and potentially troublesome.
The most attractive benefit of an annuity is that you have a guaranteed stream of regular income throughout your lifetime. You need not worry about outliving your savings. This makes annuities an apt choice for many retirees.
Also, the introduction of the National Lifelong Income Scheme, or CPF Life, which is essentially an annuity scheme, allows you to explore more ways of generating a retirement income, as you can pledge your property towards the Minimum Sum.
If you sell a property that has been pledged, the money from the sale of the property would be returned to your Minimum Sum. This could then be used for an additional stream of income for life.
In your case, this certainly sounds like good news. You can keep your pledged property for rental income and enjoy any market upside, while the monthly payout from the Lifelong Income scheme covers your basic living needs.
When planning for retirement, you must first ensure that your minimum cost of living over your lifetime is provided for - in this case, with an annuity product. Indeed, the CPF Board has effectively addressed the basic retirement needs of many Singaporeans with the Lifelong Income scheme.
You can supplement your income by investing in other asset classes, such as pension endowments, real estate investment trusts or dividend-paying stocks. You can even take up an additional private annuity.
A well-diversified retirement portfolio will provide a staggered stream of income from various sources as you get older. As it is becoming increasingly common for people to have more than one source of retirement income, it is important to manage all these financial instruments properly.
I would advise you to engage a professional financial planner to work out your retirement expense cash flow and assess how your annuity or rental income can complement your current retirement portfolio as a whole. Do this before you decide to sell your property , buy a private annuity or choose a CPF Life option.
Xanne Leo Sen Yun
Associate Manager, New Independent
Advice provided in this column is not meant as a substitute for comprehensive professional advice.
Source : Sunday Times - 30 Mar 2008
Rentals will rise with inflation while an annuity is more or less fixed and will not keep up with inflation.
Being a landlord, however, also has its minuses. As the property gets older, repairs and maintenance will get more costly. Also, in a recession or if supply exceeds demand, rentals will fall.
What would you advise?
A IN RECENT months, property investments and annuities have generated much debate among Singaporeans.
Improper management of these financial vehicles could have an adverse impact on your retirement plans, so let us look at the key characteristics of these two asset classes.
Property investments are popular because of their potential capital gains. In a boom cycle, they offer attractive capital appreciation. In contrast, annuity products have no potential for capital gains.
On the income side, rentals fluctuate as demand and supply conditions change. Thus, property investments may not be able to provide the constant and predictable cash flow that annuities can.
This uncertainty could be painful for retirees who rely solely on rentals for their retirement income. Furthermore, repairs and maintenance are unavoidable and potentially troublesome.
The most attractive benefit of an annuity is that you have a guaranteed stream of regular income throughout your lifetime. You need not worry about outliving your savings. This makes annuities an apt choice for many retirees.
Also, the introduction of the National Lifelong Income Scheme, or CPF Life, which is essentially an annuity scheme, allows you to explore more ways of generating a retirement income, as you can pledge your property towards the Minimum Sum.
If you sell a property that has been pledged, the money from the sale of the property would be returned to your Minimum Sum. This could then be used for an additional stream of income for life.
In your case, this certainly sounds like good news. You can keep your pledged property for rental income and enjoy any market upside, while the monthly payout from the Lifelong Income scheme covers your basic living needs.
When planning for retirement, you must first ensure that your minimum cost of living over your lifetime is provided for - in this case, with an annuity product. Indeed, the CPF Board has effectively addressed the basic retirement needs of many Singaporeans with the Lifelong Income scheme.
You can supplement your income by investing in other asset classes, such as pension endowments, real estate investment trusts or dividend-paying stocks. You can even take up an additional private annuity.
A well-diversified retirement portfolio will provide a staggered stream of income from various sources as you get older. As it is becoming increasingly common for people to have more than one source of retirement income, it is important to manage all these financial instruments properly.
I would advise you to engage a professional financial planner to work out your retirement expense cash flow and assess how your annuity or rental income can complement your current retirement portfolio as a whole. Do this before you decide to sell your property , buy a private annuity or choose a CPF Life option.
Xanne Leo Sen Yun
Associate Manager, New Independent
Advice provided in this column is not meant as a substitute for comprehensive professional advice.
Source : Sunday Times - 30 Mar 2008
Friday, March 28, 2008
Singapore office rents could peak this year
Tenant resistance will ease pace of rental growth, and office take-up may slow over 5 years, writes MORAY ARMSTRONG
IT WAS a year of new records for the Singapore office market in 2007. Rents were driven to new highs in terms of growth rates - prime rents surged a staggering 92 per cent year on year - and in terms of rent levels that far exceeded previous market cycle peaks. Vacancy rates dropped to unprecedented lows. Meanwhile, the sheer size of many leasing transactions was also on an unparalleled scale.
Shortage of space: Office leasing deals are still happening in spite of worries over the state of the US economy and the financial markets
All in all, a performance that made landlords, developers and property funds fairly content. In contrast, there was growing anxiety in the occupier community over fiercely rising office costs and a critical shortage of available space to accommodate business expansion. This was a consistent theme heard most vocally among various chambers of commerce.
The cries for help had, in fact, already been picked up early in the proceedings and government policy reaction was in full swing. Office development parcels and vacant state buildings were quickly offered to the private sector and 11 government land sale sites were awarded in 2007 (no office sites were awarded the previous year).
The concept of transitional office sites offered on short 15-year ground leases was tested successfully. The lower land premium levels (versus more traditional 99-year leases) reduce the developer’s cost and allow space to be leased out at lower rents. Furthermore, the government identified a number of departments located in the CBD that could potentially relocate to decentralised areas, thereby releasing available office space for the private sector to lease.
So where does the office market go from here? Will Singapore’s office market pitch from critical shortage of space to a glut? What should tenants budget for when leases are due for renewal (and just how do you explain to the head office a fourfold increase in your rent in Singapore when there is financial carnage at home base?) We have set out below a few observations and our thoughts on the market outlook.
Supply
From our tracking we can identify a total confirmed five-year (2008-2012) office supply of 10.18 million sq ft (of which almost two-thirds is attributable to government land sales), the bulk of which will be delivered only after 2010. This supply figure grew dramatically through 2007.
The volume of supply does not in our view appear excessive. An average 2.03 million sq ft per annum is lower than the average 2.21 million sq ft per annum delivered to the market through the 1990s. Bear in mind that the total office stock in Singapore today (70.33 million sq ft) is 186 per cent greater than the total office stock in 1990. Also note that there is a healthy level of occupier pre-commitment in many of the new developments.
Notwithstanding the above, a factor that should be taken into account is the prospect of secondary office stock (availability in existing office buildings) increasing, particularly after 2011 when some major occupiers will move to new CBD developments and some support functions are relocated out of town. Keep an eye out also for potential sub-lease space increasing if there is a greater economic downturn.
As matters currently stand, our sense is that secondary stock is not likely to impact significantly. Bear in mind that most corporates in Singapore right now are desperately short on space and are not holding much ‘fat’ in either their headcount or real estate.
Demand and take-up
Deals are still happening in spite of worries over the state of the US economy and the financial markets. It is noteworthy that the strong tenant interest in decentralisation (Tampines, Changi Business Park, Harbourfront and Mapletree Business City are favoured destinations) has carried forward from last year.
As these commitments are usually financially compelling, it is perhaps unsurprising. Pre-lease momentum for prime buildings may slow in the short term as financial institutions grapple with other issues. We are, however, still actively seeking immediate expansion space for many of our banking clients.
Over the past two years office take-up averaged 2.23 million sq ft. Going forward, we anticipate that take-up may fall back to 1.6 million sq ft on average over the next five years. It is notoriously difficult to accurately call the level of office demand, but in order to build some office occupancy modelling, we have adopted this take-up figure and our assumptions here suggest that overall islandwide occupancy could remain above 90 per cent over the next five years. Hardly over-supply conditions.
Rents
The tightness of availability and excess of unsatisfied occupier demand is likely to drive (selectively) further rental growth. Early last year, we suggested that the pace of rental growth would modify going into 2008. Our preliminary Q1 2008 figures seem to bear this out: Grade A rents advanced 8.7 per cent quarter on quarter to $18.65 per sq ft a month and average prime rents rose 6.7 per cent to $16 psf a month.
While market fundamentals remain highly favourable to landlords, we expect sentiment and a healthy dose of tenant resistance to higher rents will further ease the pace of growth and rents could well peak this year and then stabilise. Greater competition from 2010 onwards suggests that rents could ease downwards. Expect certain landlords with older buildings to moderate rent expectations through this period. Tenant retention will be higher on the agenda.
Policy and land sales
The planners appear to have made a telling contribution over the past couple of years and a welcome increase in supply is now visible. Hard-pressed occupiers already have relief in sight. It may be a timely moment to ease back on priming supply and monitor how the demand side holds up in the light of more cautious times ahead.
Moray Armstrong is executive director (office services), CB Richard Ellis
Source : Business Times - 27 March 2008
IT WAS a year of new records for the Singapore office market in 2007. Rents were driven to new highs in terms of growth rates - prime rents surged a staggering 92 per cent year on year - and in terms of rent levels that far exceeded previous market cycle peaks. Vacancy rates dropped to unprecedented lows. Meanwhile, the sheer size of many leasing transactions was also on an unparalleled scale.
Shortage of space: Office leasing deals are still happening in spite of worries over the state of the US economy and the financial markets
All in all, a performance that made landlords, developers and property funds fairly content. In contrast, there was growing anxiety in the occupier community over fiercely rising office costs and a critical shortage of available space to accommodate business expansion. This was a consistent theme heard most vocally among various chambers of commerce.
The cries for help had, in fact, already been picked up early in the proceedings and government policy reaction was in full swing. Office development parcels and vacant state buildings were quickly offered to the private sector and 11 government land sale sites were awarded in 2007 (no office sites were awarded the previous year).
The concept of transitional office sites offered on short 15-year ground leases was tested successfully. The lower land premium levels (versus more traditional 99-year leases) reduce the developer’s cost and allow space to be leased out at lower rents. Furthermore, the government identified a number of departments located in the CBD that could potentially relocate to decentralised areas, thereby releasing available office space for the private sector to lease.
So where does the office market go from here? Will Singapore’s office market pitch from critical shortage of space to a glut? What should tenants budget for when leases are due for renewal (and just how do you explain to the head office a fourfold increase in your rent in Singapore when there is financial carnage at home base?) We have set out below a few observations and our thoughts on the market outlook.
Supply
From our tracking we can identify a total confirmed five-year (2008-2012) office supply of 10.18 million sq ft (of which almost two-thirds is attributable to government land sales), the bulk of which will be delivered only after 2010. This supply figure grew dramatically through 2007.
The volume of supply does not in our view appear excessive. An average 2.03 million sq ft per annum is lower than the average 2.21 million sq ft per annum delivered to the market through the 1990s. Bear in mind that the total office stock in Singapore today (70.33 million sq ft) is 186 per cent greater than the total office stock in 1990. Also note that there is a healthy level of occupier pre-commitment in many of the new developments.
Notwithstanding the above, a factor that should be taken into account is the prospect of secondary office stock (availability in existing office buildings) increasing, particularly after 2011 when some major occupiers will move to new CBD developments and some support functions are relocated out of town. Keep an eye out also for potential sub-lease space increasing if there is a greater economic downturn.
As matters currently stand, our sense is that secondary stock is not likely to impact significantly. Bear in mind that most corporates in Singapore right now are desperately short on space and are not holding much ‘fat’ in either their headcount or real estate.
Demand and take-up
Deals are still happening in spite of worries over the state of the US economy and the financial markets. It is noteworthy that the strong tenant interest in decentralisation (Tampines, Changi Business Park, Harbourfront and Mapletree Business City are favoured destinations) has carried forward from last year.
As these commitments are usually financially compelling, it is perhaps unsurprising. Pre-lease momentum for prime buildings may slow in the short term as financial institutions grapple with other issues. We are, however, still actively seeking immediate expansion space for many of our banking clients.
Over the past two years office take-up averaged 2.23 million sq ft. Going forward, we anticipate that take-up may fall back to 1.6 million sq ft on average over the next five years. It is notoriously difficult to accurately call the level of office demand, but in order to build some office occupancy modelling, we have adopted this take-up figure and our assumptions here suggest that overall islandwide occupancy could remain above 90 per cent over the next five years. Hardly over-supply conditions.
Rents
The tightness of availability and excess of unsatisfied occupier demand is likely to drive (selectively) further rental growth. Early last year, we suggested that the pace of rental growth would modify going into 2008. Our preliminary Q1 2008 figures seem to bear this out: Grade A rents advanced 8.7 per cent quarter on quarter to $18.65 per sq ft a month and average prime rents rose 6.7 per cent to $16 psf a month.
While market fundamentals remain highly favourable to landlords, we expect sentiment and a healthy dose of tenant resistance to higher rents will further ease the pace of growth and rents could well peak this year and then stabilise. Greater competition from 2010 onwards suggests that rents could ease downwards. Expect certain landlords with older buildings to moderate rent expectations through this period. Tenant retention will be higher on the agenda.
Policy and land sales
The planners appear to have made a telling contribution over the past couple of years and a welcome increase in supply is now visible. Hard-pressed occupiers already have relief in sight. It may be a timely moment to ease back on priming supply and monitor how the demand side holds up in the light of more cautious times ahead.
Moray Armstrong is executive director (office services), CB Richard Ellis
Source : Business Times - 27 March 2008
Singapore retail rents unlikely to soften
But Singapore’s retail operators finding it tough to sustain their businesses, writes SHERENE SNG
SHOPPING seems to be in the psyche of every Singaporean but how will the dynamics in the retail sector - rising rents in particular - reshape our favourite pastime? First, let’s look at the current situation, where retail space has inched up by less than 2 per cent between 2003 and 2007 - from 34.07 million sq ft to 34.64 million sq ft at end-2007.
That has been followed by retail rents around Singapore rising 33.9 per cent in the same period. The island-wide shop space rental index grew from 86.9 in 4Q 2003 to 116.4 in 4Q 2007.
All segments of the retail market saw rental increases. For example, in Orchard Road (central), average monthly gross rental at end-2007 was $45.45 per sq ft per month (psf pm), up from $36.88 psf pm at the beginning of 2005. Average monthly gross rental for suburban areas rose to $28.98 psf pm, up from $26.35 psf pm three years ago.
At these levels, they are still some way behind prime retail rents in Hong Kong ($86.40 psf pm), London ($126.61 psf pm) and New York ($142.77 psf pm).
But prime rents in Kuala Lumpur and Bangkok are lower than in Singapore. The comparisons are made with rents of typical shops in prime retail locations, that is, situated on the ground floor and with good frontage.
What is the impact of rising rentals in shopping malls and how does it impact the shopper?
Retail business cost is largely made up of rent, salaries, training, advertising and promotion (A & P) and for some retailers, backroom support. When rent goes up, and revenue does not rise to a similar extent, retailers will spend less in other areas. Over time, they will cut spending on A & P or training as a way to rein in costs.
For some retailers, especially small and medium-sized companies, profits are reduced to the point that they maintain business for the sake of keeping it going, that is, their shops stay open only as long they can cover costs.
Do retailers feel that they are being squeezed out of the market?
One retailer told me that rents have become too high and many of them are feeling the pinch. If it were not for the fact that he had bought his own shop, things would be hard for him. He felt that many tenants are facing tough times and finding it difficult to sustain their businesses.
It does not help that retailers find it difficult to control other operating costs, including staff salaries and, in the case of food and beverage operators, food costs. In the case of a fashion retailer, staff costs typically make up 10-12 per cent of his sales. This is higher than, say, Hong Kong, where staff costs may range from 8-10 per cent of sales.
By and large, retailers want to be in business for the long term. However, in order to justify investment in business, they need security of tenure. If they are uncertain how long they will be in a particular mall, they would be reluctant to put in a lot of investment. It wouldn’t make sense to train staff and build up a customer base, only to close after three years because of high rents.
All this impacts the consumer. When shopping centres are mainly tenanted to retailers with deep pockets, shopping centres will see a duplication of such tenants and this will result in less variety for shoppers. For retailers that operate on lower margins, for example, electronics, electrical and technology shops, bookshops and large format supermarkets, there is concern that one day they may no longer be found in shopping centres.
To differentiate themselves from the competition, landlords look for new shopping concepts for their malls. Fresh concepts will be a draw, but retailers may be reluctant to bring in new brand names because of the high setup costs involved. Licensees and franchisees have to pay a lot of money for rights to set up new brands in Singapore. High rental costs make retailers think twice about testing new concepts because of the risks involved. One way to get around this would be for landlords to charge such operators lower rent to help them get a foothold in the market. Consumer behaviour is another bugbear of retailers. Singaporeans are viewed as thrifty and with less disposable income. A large number of them enjoy taking budget flights overseas to shop and eat. However, figures from the Singapore Department of Statistics and Knight Frank Research show that retail sales value (excluding motor vehicles) has risen over the last five years to $22.53 billion in 2007. This is an increase of 9.02 per cent from the previous year.
Similar increases for retail sales per square foot of retail space and retail sales per capita have been observed. In 2007, retail sales of $650.50 psf of total retail stock was captured, an increase of 9.57 per cent year-on-year. On a per capita basis, retail sales were $4,814. This means that each square foot of retail space is churning out more sales every year. And each person in Singapore is also generating more sales each year. Along with the yearly increase in tourist arrivals, retails sales will certainly be boosted.
Last year, Singapore successfully secured the rights to host the Formula One race for five years, starting with the inaugural 2008 Formula One SingTel Singapore Grand Prix. This, together with upcoming projects like the two integrated resorts, the rejuvenation of Orchard Road, development of Gardens By The Bay and the Sports Hub will put Singapore on track to achieve the Singapore Tourism Board’s 2015 goal of $30 million in tourism receipts and 17 million visitor arrivals. In 2007, the figures were $13.8 billion and 10.3 visitor arrivals respectively.
Finally, will there be a slowdown in rental increases as retailers hope? Will we face a supply overhang in the next few years?
Between now and 2010, about 6.8 million sq ft of retail space is expected to come on stream. That actually works out to fewer feet of retail space per person than currently: There will be an estimated 6.89 sq ft of retail space per capita of population, down from 7.4 sq ft in 2007.
It appears that the hoped-for softening of rents may not materialise. So what can consumers look forward to? Will they bear the brunt of retailers’ high operating costs should these be passed on to them? That’s the last thing they want.
What shoppers want is to visit malls where the landlord and tenants act together to produce a fresh and vibrant retail mix. Where they can find familiar brands and know that when they come back, these names will still be there. Where shops are well-stocked and sales staff are knowledgeable about the merchandise.
However, retail operators take their lead from their customers. To a certain extent, our shopping habits shape the retail environment. No doubt, Singapore’s market is relatively small but if shoppers send a clear message about the goods and services that they really want and spend their money accordingly, then the spectre of rising rents will not be as disheartening as it appears.
Sherene Sng is head, retail, Knight Frank Pte Ltd.
Source : Business Times - 27 March 2008
SHOPPING seems to be in the psyche of every Singaporean but how will the dynamics in the retail sector - rising rents in particular - reshape our favourite pastime? First, let’s look at the current situation, where retail space has inched up by less than 2 per cent between 2003 and 2007 - from 34.07 million sq ft to 34.64 million sq ft at end-2007.
That has been followed by retail rents around Singapore rising 33.9 per cent in the same period. The island-wide shop space rental index grew from 86.9 in 4Q 2003 to 116.4 in 4Q 2007.
All segments of the retail market saw rental increases. For example, in Orchard Road (central), average monthly gross rental at end-2007 was $45.45 per sq ft per month (psf pm), up from $36.88 psf pm at the beginning of 2005. Average monthly gross rental for suburban areas rose to $28.98 psf pm, up from $26.35 psf pm three years ago.
At these levels, they are still some way behind prime retail rents in Hong Kong ($86.40 psf pm), London ($126.61 psf pm) and New York ($142.77 psf pm).
But prime rents in Kuala Lumpur and Bangkok are lower than in Singapore. The comparisons are made with rents of typical shops in prime retail locations, that is, situated on the ground floor and with good frontage.
What is the impact of rising rentals in shopping malls and how does it impact the shopper?
Retail business cost is largely made up of rent, salaries, training, advertising and promotion (A & P) and for some retailers, backroom support. When rent goes up, and revenue does not rise to a similar extent, retailers will spend less in other areas. Over time, they will cut spending on A & P or training as a way to rein in costs.
For some retailers, especially small and medium-sized companies, profits are reduced to the point that they maintain business for the sake of keeping it going, that is, their shops stay open only as long they can cover costs.
Do retailers feel that they are being squeezed out of the market?
One retailer told me that rents have become too high and many of them are feeling the pinch. If it were not for the fact that he had bought his own shop, things would be hard for him. He felt that many tenants are facing tough times and finding it difficult to sustain their businesses.
It does not help that retailers find it difficult to control other operating costs, including staff salaries and, in the case of food and beverage operators, food costs. In the case of a fashion retailer, staff costs typically make up 10-12 per cent of his sales. This is higher than, say, Hong Kong, where staff costs may range from 8-10 per cent of sales.
By and large, retailers want to be in business for the long term. However, in order to justify investment in business, they need security of tenure. If they are uncertain how long they will be in a particular mall, they would be reluctant to put in a lot of investment. It wouldn’t make sense to train staff and build up a customer base, only to close after three years because of high rents.
All this impacts the consumer. When shopping centres are mainly tenanted to retailers with deep pockets, shopping centres will see a duplication of such tenants and this will result in less variety for shoppers. For retailers that operate on lower margins, for example, electronics, electrical and technology shops, bookshops and large format supermarkets, there is concern that one day they may no longer be found in shopping centres.
To differentiate themselves from the competition, landlords look for new shopping concepts for their malls. Fresh concepts will be a draw, but retailers may be reluctant to bring in new brand names because of the high setup costs involved. Licensees and franchisees have to pay a lot of money for rights to set up new brands in Singapore. High rental costs make retailers think twice about testing new concepts because of the risks involved. One way to get around this would be for landlords to charge such operators lower rent to help them get a foothold in the market. Consumer behaviour is another bugbear of retailers. Singaporeans are viewed as thrifty and with less disposable income. A large number of them enjoy taking budget flights overseas to shop and eat. However, figures from the Singapore Department of Statistics and Knight Frank Research show that retail sales value (excluding motor vehicles) has risen over the last five years to $22.53 billion in 2007. This is an increase of 9.02 per cent from the previous year.
Similar increases for retail sales per square foot of retail space and retail sales per capita have been observed. In 2007, retail sales of $650.50 psf of total retail stock was captured, an increase of 9.57 per cent year-on-year. On a per capita basis, retail sales were $4,814. This means that each square foot of retail space is churning out more sales every year. And each person in Singapore is also generating more sales each year. Along with the yearly increase in tourist arrivals, retails sales will certainly be boosted.
Last year, Singapore successfully secured the rights to host the Formula One race for five years, starting with the inaugural 2008 Formula One SingTel Singapore Grand Prix. This, together with upcoming projects like the two integrated resorts, the rejuvenation of Orchard Road, development of Gardens By The Bay and the Sports Hub will put Singapore on track to achieve the Singapore Tourism Board’s 2015 goal of $30 million in tourism receipts and 17 million visitor arrivals. In 2007, the figures were $13.8 billion and 10.3 visitor arrivals respectively.
Finally, will there be a slowdown in rental increases as retailers hope? Will we face a supply overhang in the next few years?
Between now and 2010, about 6.8 million sq ft of retail space is expected to come on stream. That actually works out to fewer feet of retail space per person than currently: There will be an estimated 6.89 sq ft of retail space per capita of population, down from 7.4 sq ft in 2007.
It appears that the hoped-for softening of rents may not materialise. So what can consumers look forward to? Will they bear the brunt of retailers’ high operating costs should these be passed on to them? That’s the last thing they want.
What shoppers want is to visit malls where the landlord and tenants act together to produce a fresh and vibrant retail mix. Where they can find familiar brands and know that when they come back, these names will still be there. Where shops are well-stocked and sales staff are knowledgeable about the merchandise.
However, retail operators take their lead from their customers. To a certain extent, our shopping habits shape the retail environment. No doubt, Singapore’s market is relatively small but if shoppers send a clear message about the goods and services that they really want and spend their money accordingly, then the spectre of rising rents will not be as disheartening as it appears.
Sherene Sng is head, retail, Knight Frank Pte Ltd.
Source : Business Times - 27 March 2008
Thursday, March 27, 2008
Prices and rentals of landed homes set to rise
Land scarcity in Singapore should ensure sustainable capital growth in landed housing in the medium to long term, write STEVEN MING and AVIN SEOW
LANDED homes saw their strongest price rise last year since 1994 but they have yet to catch up with their non-landed counterparts, leaving room for more capital as well as rental growth in 2008. Prices of landed homes rose 23.4 per cent last year, going by the Urban Redevelopment Authority's (URA) index of landed private residential property island-wide. This growth rate reaffirmed the upward trend, especially compared with the negligible growth in previous years - 0.6 per cent in 2004 and 2.4 per cent in 2005.
For landed homes in the suburban areas, average prices rose to $636 per sq ft, an increase of 45.1 per cent year-on-year. Landed homes in the prime districts of 9, 10 and 11 enjoyed healthy capital growth of 24.3 per cent to reach $961 per sq ft in 4Q 2007.
Good Class Bungalows (GCBs) were the star performers in 2007. According to URA numbers, average prices of GCBs surged 58.7 per cent year-on-year to $763 psf from $539 psf in 2006. The average cost of a GCB stood at $13.8 million in 2007, compared to $10.3 million in the preceding year. The trend of some GCBs being sold and resold within 12 to 18 months continued into 2007.
An example of this trend is a GCB at First Avenue that was sold for $10 million in September 2007, only to be resold at $12.5 million in October 2007, and then resold again at $16 million in December 2007. This is a whopping increase of 60 per cent in just four months.
Boasting a unique waterfront lifestyle, new 99-year leasehold homes on Sentosa Cove have redefined luxury landed living since their emergence in 2004. Expatriates and overseas investors have since lent much support to the capital growth in this segment. Average prices climbed 20.8 per cent to $1,463 psf by end-2007.
Another trend which we have observed is the increasing popularity of cluster housing. Since it resurfaced in 2000, this lifestyle concept has become ever more popular, especially among younger home owners and permanent residents. Cluster houses, offering shared facilities, blend the elements of landed property with condominium style living. Known as strata landed housing, these developments may be bungalows, terraced or semi-detached homes. Some developers have added more exclusivity to their projects by including a private swimming pool in each house. Notable launches last year were Dunsfold 18 and 8 @ Stratton in Stratton Green, both of which received good sales response.
There are several reasons for optimism across all landed housing segments this year. We believe that more capital gains can be expected this year since the price index of landed homes remains some 25 per cent below the peak of 2Q 1996. Landed homes have yet to see the sharp price rises of their non-landed counterparts. Emerging from a relatively low base, landed properties may be more appealing to investors this year.
Secondly, landed housing will always be considered a luxury in land scarce Singapore. This inherent scarcity should continue to lend support to the landed housing market. As such, GCBs look poised for yet another good year of capital value growth. It would not be surprising to see average GCB land prices cross $900 psf in 2008, due to the scarcity of such bungalows (there are an estimated 2,500 of them) coupled with the rising transacted prices on Sentosa Cove.
Similarly, landed homes on Sentosa Cove should continue to trend higher. Unlike those on the mainland, these houses have a broader market. There are no restrictions on foreign ownership of landed homes on Sentosa Cove. The continued influx of expatriates, together with the growing appetite of the rich for something unique and exclusive, is likely to fuel prices of these luxurious homes.
Rental yields are an attractive component of property investments, providing landlords with regular and stable income. Landed properties have become increasingly popular with tenants, with rents rising at their fastest pace in seven years. As at 4Q 2007, average rents of terrace houses and semi-detached houses climbed to $1.87 and $2.22 psf per month respectively, up 52 per cent year on year, while rents for detached houses rose by 23 per cent to $3.09 psf per month.
Rental growth is clearly outpacing capital growth for landed homes, and with the expectation that landed home prices will catch up this year, landed properties could offer an investor both healthy rental and capital gains in 2008 and beyond.
Given the above factors, the landed housing market should be able to attain capital gains of 10 to 20 per cent this year, notwithstanding the continued US credit turmoil. Singapore's property market remains fundamentally sound, backed by a robust job market and an expanding economy. Perhaps the most fundamental fact is the scarcity of land in Singapore which should ensure sustainable capital growth in landed housing in the medium to long term.
Steven Ming is director at Savills Prestige Homes and Avin Seow, analyst, Savills Research & Consultancy.
Source : Business Times - 27 Mar 2008
LANDED homes saw their strongest price rise last year since 1994 but they have yet to catch up with their non-landed counterparts, leaving room for more capital as well as rental growth in 2008. Prices of landed homes rose 23.4 per cent last year, going by the Urban Redevelopment Authority's (URA) index of landed private residential property island-wide. This growth rate reaffirmed the upward trend, especially compared with the negligible growth in previous years - 0.6 per cent in 2004 and 2.4 per cent in 2005.
For landed homes in the suburban areas, average prices rose to $636 per sq ft, an increase of 45.1 per cent year-on-year. Landed homes in the prime districts of 9, 10 and 11 enjoyed healthy capital growth of 24.3 per cent to reach $961 per sq ft in 4Q 2007.
Good Class Bungalows (GCBs) were the star performers in 2007. According to URA numbers, average prices of GCBs surged 58.7 per cent year-on-year to $763 psf from $539 psf in 2006. The average cost of a GCB stood at $13.8 million in 2007, compared to $10.3 million in the preceding year. The trend of some GCBs being sold and resold within 12 to 18 months continued into 2007.
An example of this trend is a GCB at First Avenue that was sold for $10 million in September 2007, only to be resold at $12.5 million in October 2007, and then resold again at $16 million in December 2007. This is a whopping increase of 60 per cent in just four months.
Boasting a unique waterfront lifestyle, new 99-year leasehold homes on Sentosa Cove have redefined luxury landed living since their emergence in 2004. Expatriates and overseas investors have since lent much support to the capital growth in this segment. Average prices climbed 20.8 per cent to $1,463 psf by end-2007.
Another trend which we have observed is the increasing popularity of cluster housing. Since it resurfaced in 2000, this lifestyle concept has become ever more popular, especially among younger home owners and permanent residents. Cluster houses, offering shared facilities, blend the elements of landed property with condominium style living. Known as strata landed housing, these developments may be bungalows, terraced or semi-detached homes. Some developers have added more exclusivity to their projects by including a private swimming pool in each house. Notable launches last year were Dunsfold 18 and 8 @ Stratton in Stratton Green, both of which received good sales response.
There are several reasons for optimism across all landed housing segments this year. We believe that more capital gains can be expected this year since the price index of landed homes remains some 25 per cent below the peak of 2Q 1996. Landed homes have yet to see the sharp price rises of their non-landed counterparts. Emerging from a relatively low base, landed properties may be more appealing to investors this year.
Secondly, landed housing will always be considered a luxury in land scarce Singapore. This inherent scarcity should continue to lend support to the landed housing market. As such, GCBs look poised for yet another good year of capital value growth. It would not be surprising to see average GCB land prices cross $900 psf in 2008, due to the scarcity of such bungalows (there are an estimated 2,500 of them) coupled with the rising transacted prices on Sentosa Cove.
Similarly, landed homes on Sentosa Cove should continue to trend higher. Unlike those on the mainland, these houses have a broader market. There are no restrictions on foreign ownership of landed homes on Sentosa Cove. The continued influx of expatriates, together with the growing appetite of the rich for something unique and exclusive, is likely to fuel prices of these luxurious homes.
Rental yields are an attractive component of property investments, providing landlords with regular and stable income. Landed properties have become increasingly popular with tenants, with rents rising at their fastest pace in seven years. As at 4Q 2007, average rents of terrace houses and semi-detached houses climbed to $1.87 and $2.22 psf per month respectively, up 52 per cent year on year, while rents for detached houses rose by 23 per cent to $3.09 psf per month.
Rental growth is clearly outpacing capital growth for landed homes, and with the expectation that landed home prices will catch up this year, landed properties could offer an investor both healthy rental and capital gains in 2008 and beyond.
Given the above factors, the landed housing market should be able to attain capital gains of 10 to 20 per cent this year, notwithstanding the continued US credit turmoil. Singapore's property market remains fundamentally sound, backed by a robust job market and an expanding economy. Perhaps the most fundamental fact is the scarcity of land in Singapore which should ensure sustainable capital growth in landed housing in the medium to long term.
Steven Ming is director at Savills Prestige Homes and Avin Seow, analyst, Savills Research & Consultancy.
Source : Business Times - 27 Mar 2008
Residential rents seen rising further
En bloc sales and population increase caused by influx of foreigners will continue to fuel demand, writes LEONARD TAY
RESIDENTIAL rents bottomed out in 2004, recovering until 2007 when they staged an extraordinary rise, surging by more than 40 per cent within the year. This was the highest rate of increase in Urban Redevelopment Authority's private residential rental index since the index started in 1990.
And 2008 is likely to see continued strength in rentals, although growing at a more modest pace of 5-10 per cent.
Rents rose a negligible 0.2 per cent in 2004, and then a stronger 3.1 per cent in 2005, according to the URA private residential rental index. But as the residential sector recovered strongly from 2006 onwards, rental values rose more steeply.
The non-landed residential segment, which forms the bulk of the leasing market, chalked up rental growth of 15 per cent in 2006 before sky-rocketing 43.1 per cent in 2007.
A key reason for the supernormal growth in rents was the population increase as a result of immigration. Singapore's total population rose from 4,401,400 in 2006 to 4,588,600 in 2007, an addition of 187,200, of which Singapore residents made up 57,200 while foreigners constituted 130,000. This is a 14.8 per cent rise year-on-year and is the largest increase in the number of foreigners seen in over seven years. The foreign population refers to professionals, workers, students and their family members. This is the first time the total has crossed the one-million mark. The increase in 2006 was 9.7 per cent.
Main attractions
The positive run in the economy, growth prospects for the country and an attractive living environment brought many here, leading to the surge in demand for housing accommodation. The foreigners chose Singapore because of the job opportunities here and its connectivity to other major cities in Asia. Generally, they formed the bulk of the tenant pool and the prime districts (Orchard, Holland and Bukit Timah areas) were their favourite locations. However, due to the recent escalating rents, more expatriates have opted to move out of the prime districts for cheaper accommodation elsewhere. Some have even gone ahead to buy their own homes instead of renting.
The swelling demand was further fuelled by the number of residential projects that were sold on the collective sale market. A number of displaced home owners have rented in the interim while waiting for their new replacement homes to be completed.
While rents have increased islandwide, some regions are ahead of the pack. Rents in the Core Central Region (districts 9, 10, 11, Downtown Core and Sentosa) lead the market with a median rent of $3.86 per sq ft per month, going by URA's median rent numbers at end-2007. This is followed by the Rest of Central Region with a median rent of $2.74 psf per month and the areas Outside of Central Region with a median rent of $2.01 psf per month.
Using CBRE Research's basket of properties for the luxury, prime and island-wide segments of the leasing market, average rents have reached even higher levels. The average rent for luxury residences ended 2007 at $6.10 psf per month, having risen 36 per cent during the year. Properties in this luxury class include the top 10 to 15 completed condominiums located in the prestigious areas around Orchard Road.
Average rents for prime residential properties were $4.50 psf per month, having increased by 55 per cent in 2007, while islandwide rents were $2.65 psf per month, after rising 33 per cent in the same period.
As rentals at prime and popular locations become more expensive, both local and foreign residents have been moving further out; first to the city fringe and eventually along the east-west axis of the MRT lines to the suburban areas. A comparison of non-landed median rents from the URA's Realis system in December 2006 and December 2007 shows that the most significant increases have not been restricted to the central areas, but have been seen in the eastern and western parts of the island.
It should be noted that although districts 9 and 10 remain the most popular among expatriates, these districts have a range of old and new residences, leading to a relatively lower median rent compared with those in district 4. The residential landscape in district 4 (Telok Blangah/Harbourfront) is generally more homogenous and comprises newer developments that can fetch a premium.
Outlook for 2008
The leasing market is expected to remain firm in 2008 and rents will continue to rise, albeit at a more moderate pace in line with the less aggressive growth projected for the economy. The same phenomenon experienced in 2007 will continue into 2008 as fringe and suburban areas become more sought after by occupiers who find the higher rents in the prime central areas prohibitive. The spillover from the central area would cause rents to rise in other parts of the island and lead to overall growth in the leasing market.
At the same time, as Singapore continues to attract the well-heeled from around the world, rents for luxury and city living condominiums in the popular areas around Orchard Road and the CBD will continue to move upwards. Average residential rents are expected to increase by about 5-10 per cent this year.
Leonard Tay is a director of CBRE Research
Source : Business Times - 27 Mar 2008
RESIDENTIAL rents bottomed out in 2004, recovering until 2007 when they staged an extraordinary rise, surging by more than 40 per cent within the year. This was the highest rate of increase in Urban Redevelopment Authority's private residential rental index since the index started in 1990.
And 2008 is likely to see continued strength in rentals, although growing at a more modest pace of 5-10 per cent.
Rents rose a negligible 0.2 per cent in 2004, and then a stronger 3.1 per cent in 2005, according to the URA private residential rental index. But as the residential sector recovered strongly from 2006 onwards, rental values rose more steeply.
The non-landed residential segment, which forms the bulk of the leasing market, chalked up rental growth of 15 per cent in 2006 before sky-rocketing 43.1 per cent in 2007.
A key reason for the supernormal growth in rents was the population increase as a result of immigration. Singapore's total population rose from 4,401,400 in 2006 to 4,588,600 in 2007, an addition of 187,200, of which Singapore residents made up 57,200 while foreigners constituted 130,000. This is a 14.8 per cent rise year-on-year and is the largest increase in the number of foreigners seen in over seven years. The foreign population refers to professionals, workers, students and their family members. This is the first time the total has crossed the one-million mark. The increase in 2006 was 9.7 per cent.
Main attractions
The positive run in the economy, growth prospects for the country and an attractive living environment brought many here, leading to the surge in demand for housing accommodation. The foreigners chose Singapore because of the job opportunities here and its connectivity to other major cities in Asia. Generally, they formed the bulk of the tenant pool and the prime districts (Orchard, Holland and Bukit Timah areas) were their favourite locations. However, due to the recent escalating rents, more expatriates have opted to move out of the prime districts for cheaper accommodation elsewhere. Some have even gone ahead to buy their own homes instead of renting.
The swelling demand was further fuelled by the number of residential projects that were sold on the collective sale market. A number of displaced home owners have rented in the interim while waiting for their new replacement homes to be completed.
While rents have increased islandwide, some regions are ahead of the pack. Rents in the Core Central Region (districts 9, 10, 11, Downtown Core and Sentosa) lead the market with a median rent of $3.86 per sq ft per month, going by URA's median rent numbers at end-2007. This is followed by the Rest of Central Region with a median rent of $2.74 psf per month and the areas Outside of Central Region with a median rent of $2.01 psf per month.
Using CBRE Research's basket of properties for the luxury, prime and island-wide segments of the leasing market, average rents have reached even higher levels. The average rent for luxury residences ended 2007 at $6.10 psf per month, having risen 36 per cent during the year. Properties in this luxury class include the top 10 to 15 completed condominiums located in the prestigious areas around Orchard Road.
Average rents for prime residential properties were $4.50 psf per month, having increased by 55 per cent in 2007, while islandwide rents were $2.65 psf per month, after rising 33 per cent in the same period.
As rentals at prime and popular locations become more expensive, both local and foreign residents have been moving further out; first to the city fringe and eventually along the east-west axis of the MRT lines to the suburban areas. A comparison of non-landed median rents from the URA's Realis system in December 2006 and December 2007 shows that the most significant increases have not been restricted to the central areas, but have been seen in the eastern and western parts of the island.
It should be noted that although districts 9 and 10 remain the most popular among expatriates, these districts have a range of old and new residences, leading to a relatively lower median rent compared with those in district 4. The residential landscape in district 4 (Telok Blangah/Harbourfront) is generally more homogenous and comprises newer developments that can fetch a premium.
Outlook for 2008
The leasing market is expected to remain firm in 2008 and rents will continue to rise, albeit at a more moderate pace in line with the less aggressive growth projected for the economy. The same phenomenon experienced in 2007 will continue into 2008 as fringe and suburban areas become more sought after by occupiers who find the higher rents in the prime central areas prohibitive. The spillover from the central area would cause rents to rise in other parts of the island and lead to overall growth in the leasing market.
At the same time, as Singapore continues to attract the well-heeled from around the world, rents for luxury and city living condominiums in the popular areas around Orchard Road and the CBD will continue to move upwards. Average residential rents are expected to increase by about 5-10 per cent this year.
Leonard Tay is a director of CBRE Research
Source : Business Times - 27 Mar 2008
Tuesday, March 25, 2008
Home, retail, office rental growth to ease
Housing rentals to rise 5-15% year-on-year in 2008: Knight Frank
PRIVATE housing rents are expected to grow at a slower pace this year than last year, Knight Frank said in a report yesterday.
The property consultancy firm expects a year-on-year rise of 5-15 per cent in 2008 - after a massive 40 per cent year-on-year increase in 2007.
Knight Frank’s estimates are based on the resistance of tenants and companies to even higher rents, and the limited availability of places at foreign schools for children of expatriates.
‘Due to the fact that foreign schools are full and there are long waiting lists faced by children of foreign families who relocated here, housing demand from new foreign family tenants is projected to decrease,’ Knight Frank said.
‘On top of this, foreign tenants as well as corporate HR (departments) have readjusted housing allowances this year, which constricts rental demand according to their budgets.’
Despite this, a demand-supply imbalance could still result in rental rises until a supply of new units is felt significantly from 2009.
About 8,400 new private homes will be completed this year. But the number will expand dramatically in the three years from 2009 to 2011, with an estimated 16,000 to 17,000 units completed each year.
This could put downward pressure on rents, Knight Frank said.
The same holds true for the retail sector. Knight Frank predicts that landlords could face stronger resistance from retailers to rising rents in the later part of 2008 as more space comes on stream.
‘Rents are forecast to maintain at their current level only until early 2008,’ it said. ‘Faced with a larger supply in the pipeline in the second half of 2008, island-wide prime retail rents are projected to appreciate by a relatively modest 5-10 per cent for entire 2008, compared to 22.1 per cent growth in 2007.’
Knight Frank also said growth in office rents and capital values in 2008 and 2009 will likely to be more moderate than in 2007. Office rents are forecast to rise 10-20 per cent year on year, while capital values are expected to increase 10-15 per cent year on year.
Source : Business Times - 25 Mar 2008
PRIVATE housing rents are expected to grow at a slower pace this year than last year, Knight Frank said in a report yesterday.
The property consultancy firm expects a year-on-year rise of 5-15 per cent in 2008 - after a massive 40 per cent year-on-year increase in 2007.
Knight Frank’s estimates are based on the resistance of tenants and companies to even higher rents, and the limited availability of places at foreign schools for children of expatriates.
‘Due to the fact that foreign schools are full and there are long waiting lists faced by children of foreign families who relocated here, housing demand from new foreign family tenants is projected to decrease,’ Knight Frank said.
‘On top of this, foreign tenants as well as corporate HR (departments) have readjusted housing allowances this year, which constricts rental demand according to their budgets.’
Despite this, a demand-supply imbalance could still result in rental rises until a supply of new units is felt significantly from 2009.
About 8,400 new private homes will be completed this year. But the number will expand dramatically in the three years from 2009 to 2011, with an estimated 16,000 to 17,000 units completed each year.
This could put downward pressure on rents, Knight Frank said.
The same holds true for the retail sector. Knight Frank predicts that landlords could face stronger resistance from retailers to rising rents in the later part of 2008 as more space comes on stream.
‘Rents are forecast to maintain at their current level only until early 2008,’ it said. ‘Faced with a larger supply in the pipeline in the second half of 2008, island-wide prime retail rents are projected to appreciate by a relatively modest 5-10 per cent for entire 2008, compared to 22.1 per cent growth in 2007.’
Knight Frank also said growth in office rents and capital values in 2008 and 2009 will likely to be more moderate than in 2007. Office rents are forecast to rise 10-20 per cent year on year, while capital values are expected to increase 10-15 per cent year on year.
Source : Business Times - 25 Mar 2008
Wednesday, March 12, 2008
Singapore: costliest industrial spot in Asia ex-Japan
It rises 2 notches to take 12th place in the world
SINGAPORE has risen two notches to become the 12th most expensive industrial location in the world.
And excluding Japan, which is ranked third in the world, Singapore is the most expensive location in Asia, surpassing Hong Kong (23rd), Mumbai (26th) and Taipei (36th).
Average net rents are now at $1.70 per square foot a month after rising 26 per cent year-on-year (y-o-y) last year. Total occupancy cost was US$14.64 psf a year at end-December 2007.
Singapore was also the eighth highest in terms of y-o-y rental increase as reflected in Cushman & Wakefield's (C&W) report, Industrial Space Across the World, which covers 138 global locations.
On industrial rents here, C&W (Singapore) managing director Donald Han said that demand rose across all segments including manufacturing, warehouses and business parks. The latter, in particular, gained from the spillover effects of the office space crunch in the CBD.
As a result, Singapore moved up two places to become the 12th most expensive industrial location in the world.
Mr Han believes the outlook for rental increases for industrial space here remains bullish.
He said: 'In the past 12 months, we saw the opening of the KPE and Terminal 3 besides other initiatives that are under construction such as the Circle Line MRT. All these will help to raise the attractiveness of industrial parks located in the peripheral areas and along with it, the rentals.'
London (near Heathrow) remained the most expensive industrial location with a total occupancy cost of US$28.91 psf a year followed by Dublin at US$21.81 psf. Oslo, with a total occupancy cost of US$18.32 psf took fourth place.
Despite European cities accounting for seven out of the top 10 locations in the global ranking, regional growth in Europe was slowest of all the global regions at just 2.5 per cent last year.
However, while Western Europe saw average rental growth of 1.3 per cent, Central and Eastern Europe increased by 7 per cent with the key locations being Poland, the Czech Republic and Romania.
In Asia, Mumbai moved up 11 places to 26th position. It also saw the highest rental increase of 94.44 per cent y-o-y followed by Istanbul (60 per cent) and Bogota (54.2 per cent).
Source : Business Times - 13 March 2008
SINGAPORE has risen two notches to become the 12th most expensive industrial location in the world.
And excluding Japan, which is ranked third in the world, Singapore is the most expensive location in Asia, surpassing Hong Kong (23rd), Mumbai (26th) and Taipei (36th).
Average net rents are now at $1.70 per square foot a month after rising 26 per cent year-on-year (y-o-y) last year. Total occupancy cost was US$14.64 psf a year at end-December 2007.
Singapore was also the eighth highest in terms of y-o-y rental increase as reflected in Cushman & Wakefield's (C&W) report, Industrial Space Across the World, which covers 138 global locations.
On industrial rents here, C&W (Singapore) managing director Donald Han said that demand rose across all segments including manufacturing, warehouses and business parks. The latter, in particular, gained from the spillover effects of the office space crunch in the CBD.
As a result, Singapore moved up two places to become the 12th most expensive industrial location in the world.
Mr Han believes the outlook for rental increases for industrial space here remains bullish.
He said: 'In the past 12 months, we saw the opening of the KPE and Terminal 3 besides other initiatives that are under construction such as the Circle Line MRT. All these will help to raise the attractiveness of industrial parks located in the peripheral areas and along with it, the rentals.'
London (near Heathrow) remained the most expensive industrial location with a total occupancy cost of US$28.91 psf a year followed by Dublin at US$21.81 psf. Oslo, with a total occupancy cost of US$18.32 psf took fourth place.
Despite European cities accounting for seven out of the top 10 locations in the global ranking, regional growth in Europe was slowest of all the global regions at just 2.5 per cent last year.
However, while Western Europe saw average rental growth of 1.3 per cent, Central and Eastern Europe increased by 7 per cent with the key locations being Poland, the Czech Republic and Romania.
In Asia, Mumbai moved up 11 places to 26th position. It also saw the highest rental increase of 94.44 per cent y-o-y followed by Istanbul (60 per cent) and Bogota (54.2 per cent).
Source : Business Times - 13 March 2008
Tuesday, March 11, 2008
Foreigners snap up homes as rents start to bite
Their purchases could account for half of 2007 transactions on the secondary market.
A record number of foreigners here have opted to purchase homes instead of renting them at ever-climbing rates.
According to an analysis of transactions of private residential properties by DTZ Debenham Tie Leung, foreigners bought 6,536 non-landed homes from the secondary market in 2007 - the largest number since 1995.
They could account for more than 50 per cent of the secondary market transactions last year.
That is because while more than 20,000 non-landed homes were sold on the secondary market last year, this number includes the units from more than 100 collective sales. DTZ’s analysis does not include en bloc units - though earlier reports had put this figure at around 6,000 for the first half of 2007 alone.
Purchases by foreigners on the secondary market represent a 105 per cent increase in volume compared to 2006.
DTZ research senior director Chua Chor Hoon said that while some buyers were investors, there were also those who ‘are not on company budget and find it more worthwhile to buy rather than face escalating rentals, especially if they are going to be in Singapore for more than a couple of years’.
DTZ’s figures for 2007 reveal that rents of prime apartments and condominiums increased 45 per cent year-on-year in 2007 to average $4.80 per square foot (psf). This was attributed to the influx of expatriates and a tight supply of prime apartments, as numerous prime developments were demolished or slated for redevelopment after being collectively sold.
The percentage of foreigners buying non-landed property from the primary market (developer sales) was lower at 25.4 per cent, or 2,314 transactions out of a total of 9,089, reinforcing the assertion that foreigners are more inclined to buy a home for immediate occupation.
Indonesians and Malaysians remain the biggest foreign buyers here, accounting for 23 and 17 per cent of all foreigners in 2007 respectively, but Indians (12 per cent), Britishers (8 per cent), Chinese (7 per cent) and Koreans (7 per cent) are also well represented.
While foreigners bought non-landed homes in record numbers last year, boosting demand in the process, their absence in the landed homes sector (because of restrictions imposed by the government) did not stop a record number of landed homes being sold in the secondary market.
DTZ’s analysis reveals that of the total 5,211 landed homes sold in 2007, 4,823 were from the secondary market.
Apart from the bullish sentiment which ’spilled over’ from the non-landed sector last year, the landed sector also saw demand rise as it was still considered comparatively good value.
DTZ’s figures show that average capital values for non-landed freehold homes in the prime districts increased by 55 per cent year-on-year to $1,480 psf.
For freehold landed homes in the prime districts, average capital values of detached homes increased 31 per cent year- on-year, while average capital values of semi-detached and terrace homes rose 29 and 27 per cent respectively.
The situation was also exacerbated by the tight supply of new launches of landed homes in the year, estimated at around 650 units.
DTZ’s Ms Chua also believes that with speculation less rampant in the landed housing sector - ‘most buyers are owner-occupiers’ - prices are expected to be more stable and could even prove ‘more resilient’ if the downturn in the global economy is protracted.
However, DTZ expects future supply of landed homes to be relatively low at just 3,100 units over the next few years, so this could push up demand and prices for both primary and secondary market landed homes.
Speculation, defined by the number of subsales, was rampant among developer sales of non-landed homes last year, hitting an all-time high of 4,631 transactions - a 312 per cent year-on-year increase over 2006.
Interestingly, while subsale transaction volume in 2007 was just 27 per cent higher than during the previous peak of 1996, the value of subsales was almost twice as high, hitting $7.9 billion.
The fourth quarter, however, marked a shift in sentiment in the property market. Only 3,947 non-landed homes were transacted in the quarter, of which just 846 were sold by developers, reflecting a 64 per cent quarter-on-quarter drop. This was one of the worst performing quarters in the last three years.
Source : Business Times - 12 March 2008
A record number of foreigners here have opted to purchase homes instead of renting them at ever-climbing rates.
According to an analysis of transactions of private residential properties by DTZ Debenham Tie Leung, foreigners bought 6,536 non-landed homes from the secondary market in 2007 - the largest number since 1995.
They could account for more than 50 per cent of the secondary market transactions last year.
That is because while more than 20,000 non-landed homes were sold on the secondary market last year, this number includes the units from more than 100 collective sales. DTZ’s analysis does not include en bloc units - though earlier reports had put this figure at around 6,000 for the first half of 2007 alone.
Purchases by foreigners on the secondary market represent a 105 per cent increase in volume compared to 2006.
DTZ research senior director Chua Chor Hoon said that while some buyers were investors, there were also those who ‘are not on company budget and find it more worthwhile to buy rather than face escalating rentals, especially if they are going to be in Singapore for more than a couple of years’.
DTZ’s figures for 2007 reveal that rents of prime apartments and condominiums increased 45 per cent year-on-year in 2007 to average $4.80 per square foot (psf). This was attributed to the influx of expatriates and a tight supply of prime apartments, as numerous prime developments were demolished or slated for redevelopment after being collectively sold.
The percentage of foreigners buying non-landed property from the primary market (developer sales) was lower at 25.4 per cent, or 2,314 transactions out of a total of 9,089, reinforcing the assertion that foreigners are more inclined to buy a home for immediate occupation.
Indonesians and Malaysians remain the biggest foreign buyers here, accounting for 23 and 17 per cent of all foreigners in 2007 respectively, but Indians (12 per cent), Britishers (8 per cent), Chinese (7 per cent) and Koreans (7 per cent) are also well represented.
While foreigners bought non-landed homes in record numbers last year, boosting demand in the process, their absence in the landed homes sector (because of restrictions imposed by the government) did not stop a record number of landed homes being sold in the secondary market.
DTZ’s analysis reveals that of the total 5,211 landed homes sold in 2007, 4,823 were from the secondary market.
Apart from the bullish sentiment which ’spilled over’ from the non-landed sector last year, the landed sector also saw demand rise as it was still considered comparatively good value.
DTZ’s figures show that average capital values for non-landed freehold homes in the prime districts increased by 55 per cent year-on-year to $1,480 psf.
For freehold landed homes in the prime districts, average capital values of detached homes increased 31 per cent year- on-year, while average capital values of semi-detached and terrace homes rose 29 and 27 per cent respectively.
The situation was also exacerbated by the tight supply of new launches of landed homes in the year, estimated at around 650 units.
DTZ’s Ms Chua also believes that with speculation less rampant in the landed housing sector - ‘most buyers are owner-occupiers’ - prices are expected to be more stable and could even prove ‘more resilient’ if the downturn in the global economy is protracted.
However, DTZ expects future supply of landed homes to be relatively low at just 3,100 units over the next few years, so this could push up demand and prices for both primary and secondary market landed homes.
Speculation, defined by the number of subsales, was rampant among developer sales of non-landed homes last year, hitting an all-time high of 4,631 transactions - a 312 per cent year-on-year increase over 2006.
Interestingly, while subsale transaction volume in 2007 was just 27 per cent higher than during the previous peak of 1996, the value of subsales was almost twice as high, hitting $7.9 billion.
The fourth quarter, however, marked a shift in sentiment in the property market. Only 3,947 non-landed homes were transacted in the quarter, of which just 846 were sold by developers, reflecting a 64 per cent quarter-on-quarter drop. This was one of the worst performing quarters in the last three years.
Source : Business Times - 12 March 2008
Thursday, February 21, 2008
Rise in office rents to slow this year
Office rents in Singapore are likely to rise at a slower pace this year, even as supply, especially in prime areas, remains tight.
Robust demand for grade A office space by financial institutions and other companies will still contribute to overall rental growth, but it would not match the upward spiral seen last year, said property consultants.
“A variety of factors indicate a slower pace of rental growth. These include companies’ willingness to move outside prime areas, a few signs of rising caution due to external issues in the United States and the growing realisation by occupiers that the market will be more friendly beyond 2010,” said CBRE’s Moray Armstrong, executive director of office services.
“Office rental growth is reaching a point of inflection, not a turning point,” according to Mr Steve Smith, deputy managing director at property consultancy Savills. He expected prime office rentals to grow 15 to 20 per cent this year, after rising 90 per cent last year.
While the top-end office rents in Singapore still remain lower than Hong Kong’s, “the average Grade A office rents in Singapore could possibly exceed Hong Kong’s by the second quarter this year because Hong Kong has a bigger supply coming through this year, about 3 million sq ft,” Mr Smith added.
The supply crunch in grade A office space prompted the Government to put forth plans during Budget 2008 last week to make available more space in the central area. Finance Minister Tharman Shanmugaratnam said the Government planned to relocate some agencies out of the central area to free up 20,000 sq metres of office space by early next year. It has also released 15 transitional office sites that will add 150,000 sq metres of office space in the near term.
According to the Urban Redevelopment Authority (URA), office rentals islandwide rose 56.1 per cent last year. In the last quarter, competition for the pockets of vacant space in the central business district remained intense and prime office rents averaged $15 psf per month, said CBRE. By the end of the year, prime rents could average $17 per square foot per month, it added.
Source : Today - 22 Feb 2008
Robust demand for grade A office space by financial institutions and other companies will still contribute to overall rental growth, but it would not match the upward spiral seen last year, said property consultants.
“A variety of factors indicate a slower pace of rental growth. These include companies’ willingness to move outside prime areas, a few signs of rising caution due to external issues in the United States and the growing realisation by occupiers that the market will be more friendly beyond 2010,” said CBRE’s Moray Armstrong, executive director of office services.
“Office rental growth is reaching a point of inflection, not a turning point,” according to Mr Steve Smith, deputy managing director at property consultancy Savills. He expected prime office rentals to grow 15 to 20 per cent this year, after rising 90 per cent last year.
While the top-end office rents in Singapore still remain lower than Hong Kong’s, “the average Grade A office rents in Singapore could possibly exceed Hong Kong’s by the second quarter this year because Hong Kong has a bigger supply coming through this year, about 3 million sq ft,” Mr Smith added.
The supply crunch in grade A office space prompted the Government to put forth plans during Budget 2008 last week to make available more space in the central area. Finance Minister Tharman Shanmugaratnam said the Government planned to relocate some agencies out of the central area to free up 20,000 sq metres of office space by early next year. It has also released 15 transitional office sites that will add 150,000 sq metres of office space in the near term.
According to the Urban Redevelopment Authority (URA), office rentals islandwide rose 56.1 per cent last year. In the last quarter, competition for the pockets of vacant space in the central business district remained intense and prime office rents averaged $15 psf per month, said CBRE. By the end of the year, prime rents could average $17 per square foot per month, it added.
Source : Today - 22 Feb 2008
Office rents in Singapore on upward climb: property firms
THE occupancy cost for office space in Singapore is now higher than in Hong Kong, according to a new report.
Data from property firm CB Richard Ellis (CBRE) show that total occupancy cost here hit US$10.42 per square foot per month (psf pm) at the end of 2007.
By comparison, total occupancy cost for Hong Kong was US$9.74 psf pm at the end of last year.
Total occupancy cost reflects base rents as well as other property-related expenses such as management fees and property tax, according to CBRE.
Prime office rents in Singapore rose 19.1 per cent in just the fourth quarter of 2007, CBRE's report said. For the entire year, office rents rose a staggering 92.3 per cent.
'Competition for pockets of vacant space in the central business district (CBD) remained intense, and several expansion transactions towards the end of the (fourth) quarter suggested that demand may be sustained,' CBRE said.
In response to the report, the Urban Redevelopment Authority (URA) pointed out that CBRE represents just one viewpoint.
A recent Cushman & Wakefield (C&W) report, for example, said that office occupancy cost for prime office space in Singapore was US$10.80 psf pm in end-2007, much lower than the US$19.90 psf pm in Hong Kong.
The discrepancy between the two sets of data was due to the fact that CBRE considers office space in Hong Kong's CBD as well as other areas outside the city centre when compiling office occupancy cost data for Hong Kong - while C&W only considers Hong Kong's CBD. Both firms look only at Singapore's CBD when calculating occupancy cost here.
Separately, property firm Savills - which said that office rents in Singapore are close to Hong Kong's at present - predicted that rents here could increase by another 15-20 per cent this year.
Office rents in Hong Kong, on the other hand, are expected to rise by a slower 5 per cent in 2008, said Simon Smith, Savills' head of research and consultancy. He expected rents in Singapore to overtake rents in Hong Kong sometime this year.
Mr Smith also said that luxury home prices in Singapore will climb 8-12 per cent this year, after jumping about 50 per cent in 2007.
Source : Business Times - 22 Feb 2008
Data from property firm CB Richard Ellis (CBRE) show that total occupancy cost here hit US$10.42 per square foot per month (psf pm) at the end of 2007.
By comparison, total occupancy cost for Hong Kong was US$9.74 psf pm at the end of last year.Total occupancy cost reflects base rents as well as other property-related expenses such as management fees and property tax, according to CBRE.
Prime office rents in Singapore rose 19.1 per cent in just the fourth quarter of 2007, CBRE's report said. For the entire year, office rents rose a staggering 92.3 per cent.
'Competition for pockets of vacant space in the central business district (CBD) remained intense, and several expansion transactions towards the end of the (fourth) quarter suggested that demand may be sustained,' CBRE said.
In response to the report, the Urban Redevelopment Authority (URA) pointed out that CBRE represents just one viewpoint.
A recent Cushman & Wakefield (C&W) report, for example, said that office occupancy cost for prime office space in Singapore was US$10.80 psf pm in end-2007, much lower than the US$19.90 psf pm in Hong Kong.
The discrepancy between the two sets of data was due to the fact that CBRE considers office space in Hong Kong's CBD as well as other areas outside the city centre when compiling office occupancy cost data for Hong Kong - while C&W only considers Hong Kong's CBD. Both firms look only at Singapore's CBD when calculating occupancy cost here.
Separately, property firm Savills - which said that office rents in Singapore are close to Hong Kong's at present - predicted that rents here could increase by another 15-20 per cent this year.
Office rents in Hong Kong, on the other hand, are expected to rise by a slower 5 per cent in 2008, said Simon Smith, Savills' head of research and consultancy. He expected rents in Singapore to overtake rents in Hong Kong sometime this year.
Mr Smith also said that luxury home prices in Singapore will climb 8-12 per cent this year, after jumping about 50 per cent in 2007.
Source : Business Times - 22 Feb 2008
Friday, February 15, 2008
HDB to review eligibility criteria for public rental scheme
The Housing and Development Board (HDB) is reviewing the eligibility criteria for the Public Rental Scheme.
National Development Minister Mah Bow Tan said this is to ensure that the heavily subsidised rental flats are targeted at those who are genuinely poor and without other housing options.
More details on the review will be announced when ready.
Mr Mah disclosed this in a written answer to a question by Member of Parliament for Tanjong Pagar GRC Baey Yam Keng.
Mr Baey had asked for an update on the demand for the scheme and the measures to address increasing demand for rental flats.
Prior to 2003, there were 2,300 eligible applicants a year. This went up to 4,700 in 2007.
According to Mr Mah, the increase was mainly due to the raising of the income ceiling for applicants from $800 to $1,500 in 2003. - CNA /ls
Source : Channel NewsAsia - 15 Feb 2008
National Development Minister Mah Bow Tan said this is to ensure that the heavily subsidised rental flats are targeted at those who are genuinely poor and without other housing options.More details on the review will be announced when ready.
Mr Mah disclosed this in a written answer to a question by Member of Parliament for Tanjong Pagar GRC Baey Yam Keng.
Mr Baey had asked for an update on the demand for the scheme and the measures to address increasing demand for rental flats.
Prior to 2003, there were 2,300 eligible applicants a year. This went up to 4,700 in 2007.
According to Mr Mah, the increase was mainly due to the raising of the income ceiling for applicants from $800 to $1,500 in 2003. - CNA /ls
Source : Channel NewsAsia - 15 Feb 2008
Tuesday, February 05, 2008
SLA puts 6 houses up for rent
THE Singapore Land Authority (SLA) is releasing four bungalows and two semi-detached houses on its open bidding system from Feb 18.
This follows SLA’s January open bidding exercise which saw 75 bids for five state-owned residential properties . One of these properties , a bungalow at Hyderabad Road, was awarded at a monthly rent of $20,258, 50 per cent or over $6,700 above SLA’s guide rent.
SLA deputy director of land lease (private) Teo Cher Hian said: ‘The keen response to the launch of the open bidding system for residential state properties shows that the rental market for residential properties is still buoyant.’
Four of the six properties being made available this month are in the Seletar Airbase vicinity. Guide rents for a semi-detached house, with 127 sq m of built-up area, is $1,800 a month while guide rents for a bungalow with 197 sq m of built up area is $3,400 a month.
There is also a larger house with 670 sq m of built-up area available on Gibraltar Crescent in the Sembawang area with a guide rent of $6,600 a month and a smaller house at Lornie Road with 206 sq m of built-up area with a guide rent of $3,900 a month.
Giving an idea of possible bid rents, Knight Frank head of corporate leasing (residential) Ervin Scully said that the semi-detached house could see bids come in at between $2,300- $2,800 a month. This is assuming that the new tenant will have to install his own appliances, lights, window treatments, air-conditioning units, wardrobes and the like.
Assuming the house at Gibraltar Crescent has three-bedrooms, servants quarters and land area of about 12,000 sq ft, Mr Scully estimates the winning bid could be between $8,000 - $9,000.
Mr Scully said that generally, the rental market has stabilised since last year. ‘We are not seeing the same kind of frenzy anymore,’ he added.
While there is still demand for rental homes, Mr Scully said expectations were also more, ‘realistic’. He added that generally, rents could continue to rise by about 10 per cent this year.
SLA expects to put out eight more properties for rent in March and about 36 units in total by the first half of this year.
Viewing for the February batch of properties is on 16 Feb. More details on the schedules and guide rent can be found at SLA’s SPIO website.
Source : Business Times - 6 Feb 2008
This follows SLA’s January open bidding exercise which saw 75 bids for five state-owned residential properties . One of these properties , a bungalow at Hyderabad Road, was awarded at a monthly rent of $20,258, 50 per cent or over $6,700 above SLA’s guide rent.
SLA deputy director of land lease (private) Teo Cher Hian said: ‘The keen response to the launch of the open bidding system for residential state properties shows that the rental market for residential properties is still buoyant.’
Four of the six properties being made available this month are in the Seletar Airbase vicinity. Guide rents for a semi-detached house, with 127 sq m of built-up area, is $1,800 a month while guide rents for a bungalow with 197 sq m of built up area is $3,400 a month.
There is also a larger house with 670 sq m of built-up area available on Gibraltar Crescent in the Sembawang area with a guide rent of $6,600 a month and a smaller house at Lornie Road with 206 sq m of built-up area with a guide rent of $3,900 a month.
Giving an idea of possible bid rents, Knight Frank head of corporate leasing (residential) Ervin Scully said that the semi-detached house could see bids come in at between $2,300- $2,800 a month. This is assuming that the new tenant will have to install his own appliances, lights, window treatments, air-conditioning units, wardrobes and the like.
Assuming the house at Gibraltar Crescent has three-bedrooms, servants quarters and land area of about 12,000 sq ft, Mr Scully estimates the winning bid could be between $8,000 - $9,000.
Mr Scully said that generally, the rental market has stabilised since last year. ‘We are not seeing the same kind of frenzy anymore,’ he added.
While there is still demand for rental homes, Mr Scully said expectations were also more, ‘realistic’. He added that generally, rents could continue to rise by about 10 per cent this year.
SLA expects to put out eight more properties for rent in March and about 36 units in total by the first half of this year.
Viewing for the February batch of properties is on 16 Feb. More details on the schedules and guide rent can be found at SLA’s SPIO website.
Source : Business Times - 6 Feb 2008
More colonial bungalows up for rent
Demand for these state-owned buildings is strong due to relatively low rentals.
ANYONE with a hankering for a home with lots of nature and space, and does not mind living some distance from town might want to take note.
The Singapore Land Authority (SLA) will be leasing out four of these colonial bungalows this month, along with two semi-detached houses.
The properties are in Maida Vale and Brompton Road in Seletar, Gibraltar Crescent in Sembawang and Lornie Road near Bukit Timah.
This comes on the heels of a sizzling response to five similar properties the SLA put on the bidding block last month. They drew 75 bids in all and were rented out for about double the guide rents.
All these form part of the SLA’s stock of 2,360 black-and-white homes - properties ranging from apartments to bungalows dating back to the 1930s and are inherited from British colonial days.
Demand for these state-owned buildings has traditionally been very strong, partly because of relatively low asking rentals.
Monthly guide rents for the latest batch of homes, for example, start at $1,800 for a 1,367 sq ft semi-detached house in Brompton Road. They go up to $6,600 for a Gibraltar Crescent bungalow with 7,212 sq ft of built-up area and 16,145 sq ft of land.
Mr Ku Swee Yong, director of business development and marketing at Savills Singapore, thinks the homes can fetch even more.
‘These guide rents are extremely attractive. Normally, you would be able to get at least double the price, if the properties are in good condition,’ he said.
Last month, the SLA rented out three apartments in Clemenceau Avenue North at between $1,856 and $2,500 - double their guide rents of $960 to $1,110. Two more bungalows in Alexandra Road and Dover were let for $20,258 and $15,100, also about twice the guidance.
The guide rents are decided by the SLA’s valuers, who take into account the property ’s last rental, location, condition and whether it comes with a swimming pool, air conditioning and furnishings.
All the properties are in move-in condition and are regularly maintained by SLA-appointed managing agents.
The homes, which come either unfurnished or partially furnished, are located in areas such as Sembawang, Alexandra Park, Adams Park, Telok Blangah, Bukit Timah and Woodleigh Park.
The SLA will put another eight properties up for rent next month, including in Bukit Timah and Newton. Another 11 are in the pipeline between April and June.
Monthly rents range from $400 for a small apartment to more than $20,000 for a black-and-white bungalow.
About 91 per cent of the homes are currently occupied, a rise of about 6 per cent over a few months ago. Most are let for two years, although tenants are normally allowed to renew their leases when they lapse.
Deirdre Dempster, for instance, is planning to extend her lease at a black-and-white bungalow at Goodwood Hill when it runs out in August. The 40-year-old, who is in marketing, has been living there for four years with her banker husband and two kids.
‘I love it. I wouldn’t trade this house for anything,’ she said. ‘What attracted me was the area and the grounds, and there’s a lot of character and history attached to these properties . I hope they don’t tear them down.’
Interested tenants can bid for this month’s properties via the SLA’s new open bidding system. An open house will be held for the homes, and bids will be accepted for a week after the date of the viewing.
-------------------------------------------------
‘I love it. I wouldn’t trade this house for anything… There’s a lot of character and history attached to these properties .’
MS DEMPSTER, who is in marketing, on her black-and-white bungalow at Goodwood Hill
‘Normally, you would be able to get at least double the price, if the properties are in good condition.’
MR KU, of Savills Singapore, who believes monthly guide rents for black-and-white homes are now extremely attractive.
Source : Straits Times - 6 Feb 2008
ANYONE with a hankering for a home with lots of nature and space, and does not mind living some distance from town might want to take note.
The Singapore Land Authority (SLA) will be leasing out four of these colonial bungalows this month, along with two semi-detached houses.
The properties are in Maida Vale and Brompton Road in Seletar, Gibraltar Crescent in Sembawang and Lornie Road near Bukit Timah.
This comes on the heels of a sizzling response to five similar properties the SLA put on the bidding block last month. They drew 75 bids in all and were rented out for about double the guide rents.
All these form part of the SLA’s stock of 2,360 black-and-white homes - properties ranging from apartments to bungalows dating back to the 1930s and are inherited from British colonial days.
Demand for these state-owned buildings has traditionally been very strong, partly because of relatively low asking rentals.
Monthly guide rents for the latest batch of homes, for example, start at $1,800 for a 1,367 sq ft semi-detached house in Brompton Road. They go up to $6,600 for a Gibraltar Crescent bungalow with 7,212 sq ft of built-up area and 16,145 sq ft of land.
Mr Ku Swee Yong, director of business development and marketing at Savills Singapore, thinks the homes can fetch even more.
‘These guide rents are extremely attractive. Normally, you would be able to get at least double the price, if the properties are in good condition,’ he said.
Last month, the SLA rented out three apartments in Clemenceau Avenue North at between $1,856 and $2,500 - double their guide rents of $960 to $1,110. Two more bungalows in Alexandra Road and Dover were let for $20,258 and $15,100, also about twice the guidance.
The guide rents are decided by the SLA’s valuers, who take into account the property ’s last rental, location, condition and whether it comes with a swimming pool, air conditioning and furnishings.
All the properties are in move-in condition and are regularly maintained by SLA-appointed managing agents.
The homes, which come either unfurnished or partially furnished, are located in areas such as Sembawang, Alexandra Park, Adams Park, Telok Blangah, Bukit Timah and Woodleigh Park.
The SLA will put another eight properties up for rent next month, including in Bukit Timah and Newton. Another 11 are in the pipeline between April and June.
Monthly rents range from $400 for a small apartment to more than $20,000 for a black-and-white bungalow.
About 91 per cent of the homes are currently occupied, a rise of about 6 per cent over a few months ago. Most are let for two years, although tenants are normally allowed to renew their leases when they lapse.
Deirdre Dempster, for instance, is planning to extend her lease at a black-and-white bungalow at Goodwood Hill when it runs out in August. The 40-year-old, who is in marketing, has been living there for four years with her banker husband and two kids.
‘I love it. I wouldn’t trade this house for anything,’ she said. ‘What attracted me was the area and the grounds, and there’s a lot of character and history attached to these properties . I hope they don’t tear them down.’
Interested tenants can bid for this month’s properties via the SLA’s new open bidding system. An open house will be held for the homes, and bids will be accepted for a week after the date of the viewing.
-------------------------------------------------
‘I love it. I wouldn’t trade this house for anything… There’s a lot of character and history attached to these properties .’
MS DEMPSTER, who is in marketing, on her black-and-white bungalow at Goodwood Hill
‘Normally, you would be able to get at least double the price, if the properties are in good condition.’
MR KU, of Savills Singapore, who believes monthly guide rents for black-and-white homes are now extremely attractive.
Source : Straits Times - 6 Feb 2008
SLA offers 6 state homes for rent through open bid
The Singapore Land Authority (SLA) is offering another six residential state properties for rent.
They comprise four bungalows and two semi-detached properties in Seletar, Sembawang and Lornie Road.
They are being offered through an open bidding system from 16 February.
The system is more transparent than the previous first-come-first-served procedure under the waiting list or balloting system.
Bidders can submit their bids at SLA's office on Monday, 18 February, following the Open House on Saturday.
Currently, SLA manages about 2,360 residential state properties.
It will progressively place those with available tenancies of at least two years on the open bidding system.
SLA has projected that it will place eight more properties for rent in March and about 36 units in total by the first half of the year. - CNA/so
Source : Channel NewsAsia - 5 Feb 2008
They comprise four bungalows and two semi-detached properties in Seletar, Sembawang and Lornie Road.They are being offered through an open bidding system from 16 February.
The system is more transparent than the previous first-come-first-served procedure under the waiting list or balloting system.
Bidders can submit their bids at SLA's office on Monday, 18 February, following the Open House on Saturday.
Currently, SLA manages about 2,360 residential state properties.
It will progressively place those with available tenancies of at least two years on the open bidding system.
SLA has projected that it will place eight more properties for rent in March and about 36 units in total by the first half of the year. - CNA/so
Source : Channel NewsAsia - 5 Feb 2008
More black-and-white homes for rental, spurred by keen response
About 36 units will be made available by first half of this year.
RESPONSE to the open bidding for black-and-white bungalows and apartments has been so keen that Singapore Land Authority is offering more such state properties for rent this month.
Four bungalows and two semi-detached in Seletar, Sembawang and Lornie Road will be put up for bidding from next weekend. The rents start at $1,800 a month for the semi-detached and between $3,400 and $6,600 for the bungalows.
Bidders can submit their bids at SLA's office on Feb 18, after the open house on Feb 16.
This follows a successful launch in January, which saw 75 bids for five residential properties comprising two black-and-white bungalows and three apartments.
There was keen interest with over 200 prospective tenants attending the open house at Clemenceau Ave North, Hyderabad Road, and Dover Road, said SLA in a statement on Tuesday.
The winning bids ranged between $1,856 per month for an apartment at Clemenceau Avenue North, with a built-in floor area of about 53 sqm, and $20,258 per month, for a bungalow at Hyderabad with a built-in floor area of 369 sqm.
'SLA has received positive response to the open bidding. The open bidding system enhances transparency compared to the previous 'first-come-first-serve' under a waiting list or balloting system,' said the land authority. 'The public has access to a wide choice of properties and the process is also more efficient.'
SLA currently manages about 2,360 residential state properties and will make progressively place those with available tenancies for at least two years on the opening bidding system.
It plans to put up eight more properties for rent in March and about 36 units in total by the first half of this year.
Said SLA's Deputy Director of Land Lease Private, Mr Teo Cher Hian: 'The keen response to the launch of the open bidding system for residential State properties shows that the rental market for residential properties is still buoyant. This is evident even for the smaller apartments, which are very popular with singles and those with small families.'
The appeal of living in a heritage black-and-white building is shared by many. Lush greenery, unique and heritage architectural designs and most of all, the ideal location near many public amenities, were often cited as reasons for their penchant for heritage State buildings.
For 47-year-old Mr Quah Jin Kok, it appeared to be an obvious choice. A second-time bidder, he liked the new system as it allowed him to bid for the next available apartment if he was not successful in the previous round.
'When I first saw a picture of the apartment, I was attracted to its simple structure and its peaceful environment. It is in a building built in the early 60s. I like its resemblance to an old colonial building with old style windows,' said Mr Quah, a business analyst, who is renting a third -storey apartment at Clemenceau Ave North, after an unsuccessful bid for another on the eighth floor. He put in the top bid of $2,500 per month for a two-year tenancy.
Previously, Mr Quah was renting a HDB flat at Waterloo Street. 'Most of the State properties that I am aware of are old but well-preserved.'
Besides Mr Quah, another first-time bidder Ms Norfalizah Bte Sowtali also managed to get the apartment she wanted. Ms Norfalizah, 29, a personal trainer, was looking for a place near her workplace at Novena, and which has public amenities nearby such as a MRT station and a food centre. The unit at Clemenceau North hence suited her needs.
The results of the bidding showing the top five bids will be published on SLA's State Property Information Online (SPIO) website at www.spio.sla.gov.sg within hours of the close of bidding.
Source : Straits Times - 5 Feb 2008
RESPONSE to the open bidding for black-and-white bungalows and apartments has been so keen that Singapore Land Authority is offering more such state properties for rent this month.
Four bungalows and two semi-detached in Seletar, Sembawang and Lornie Road will be put up for bidding from next weekend. The rents start at $1,800 a month for the semi-detached and between $3,400 and $6,600 for the bungalows.
Bidders can submit their bids at SLA's office on Feb 18, after the open house on Feb 16.
This follows a successful launch in January, which saw 75 bids for five residential properties comprising two black-and-white bungalows and three apartments.
There was keen interest with over 200 prospective tenants attending the open house at Clemenceau Ave North, Hyderabad Road, and Dover Road, said SLA in a statement on Tuesday.
The winning bids ranged between $1,856 per month for an apartment at Clemenceau Avenue North, with a built-in floor area of about 53 sqm, and $20,258 per month, for a bungalow at Hyderabad with a built-in floor area of 369 sqm.
'SLA has received positive response to the open bidding. The open bidding system enhances transparency compared to the previous 'first-come-first-serve' under a waiting list or balloting system,' said the land authority. 'The public has access to a wide choice of properties and the process is also more efficient.'
SLA currently manages about 2,360 residential state properties and will make progressively place those with available tenancies for at least two years on the opening bidding system.
It plans to put up eight more properties for rent in March and about 36 units in total by the first half of this year.
Said SLA's Deputy Director of Land Lease Private, Mr Teo Cher Hian: 'The keen response to the launch of the open bidding system for residential State properties shows that the rental market for residential properties is still buoyant. This is evident even for the smaller apartments, which are very popular with singles and those with small families.'
The appeal of living in a heritage black-and-white building is shared by many. Lush greenery, unique and heritage architectural designs and most of all, the ideal location near many public amenities, were often cited as reasons for their penchant for heritage State buildings.
For 47-year-old Mr Quah Jin Kok, it appeared to be an obvious choice. A second-time bidder, he liked the new system as it allowed him to bid for the next available apartment if he was not successful in the previous round.
'When I first saw a picture of the apartment, I was attracted to its simple structure and its peaceful environment. It is in a building built in the early 60s. I like its resemblance to an old colonial building with old style windows,' said Mr Quah, a business analyst, who is renting a third -storey apartment at Clemenceau Ave North, after an unsuccessful bid for another on the eighth floor. He put in the top bid of $2,500 per month for a two-year tenancy.
Previously, Mr Quah was renting a HDB flat at Waterloo Street. 'Most of the State properties that I am aware of are old but well-preserved.'
Besides Mr Quah, another first-time bidder Ms Norfalizah Bte Sowtali also managed to get the apartment she wanted. Ms Norfalizah, 29, a personal trainer, was looking for a place near her workplace at Novena, and which has public amenities nearby such as a MRT station and a food centre. The unit at Clemenceau North hence suited her needs.
The results of the bidding showing the top five bids will be published on SLA's State Property Information Online (SPIO) website at www.spio.sla.gov.sg within hours of the close of bidding.
Source : Straits Times - 5 Feb 2008
Saturday, February 02, 2008
Rental increases hard to swallow, say eateries
SIX hundred and ninety.
That is the extra number of Vietnamese sandwiches that Baguette, a sandwich store in Raffles City, has to sell a month to adjust to an increase in rent.
Indeed, food and beverage (F&B) outlets have not been spared by recent retail rental hikes of as much as 40 per cent per sq ft (psf) in Raffles Place.
Some businesses have had to relocate as a result.
Mr Wei Chan, business development manager of Baguette, says the store, whose lease is up in May, is facing a 65 per cent spike in rent. His outlet offers no seating so there is a limit to the number of customers he can attract and makes ’selling 690 more sandwiches a month a near-impossible task’.
He is considering shifting to a larger outlet with seating in Capital Square where the rent psf is lower.
Rising rents also affected Eurasian restaurant Quentin’s, previously in East Coast Road.
Chef-owner Quentin Pereira shifted to a much larger unit in the Eurasian Association in Ceylon Road in December last year because the rent is almost 40 per cent less.
Explaining the rent increase, Mr Donald Han, managing director of property consultant Cushman & Wakefield, says: ‘In the last two years, the Singapore economy grew at its fastest pace, above 7 per cent per annum since it was in the doldrums in 2003. The boom resulted in new retail tenants and F&B concepts jostling for limited retail space.’
According to Mr Charles Chua, PropNex Realty’s head of commercial department, rents for a Raffles Place ground-level shop have increased by some 40 per cent, from $18 to $35 psf, and basement shops by some 35 per cent, from $12 to 25 psf.
He says the rental hike in areas outside Orchard Road is more manageable, about 3 to 5 per cent year-on-year on average.
Local sandwich chain Cedele, which has three outlets in Raffles Place, had to bear the brunt of rental hikes of between 18 and 50 per cent when the leases of some of its 13 outlets were up for renewal last year.
The chain chose to remain in these locations to retain customers. But its executive director Yeap Cheng Guat says: ‘This rent increment is becoming more difficult to absorb as we cannot pass this to our customers.
‘If rental continues to escalate at this non-sustainable and unrealistic rate, we will have no alternative but to consider relocating.’
Mr Han says rents are expected to climb 5 to 8 per cent this year though successful and established malls are likely to ask 10 to 15 per cent more.
He adds that the rental market might ‘adjust itself to offer more value to F&B tenants’ in the next two years, given the addition of some 3 million sq ft of retail space with the opening of three malls in Orchard Road, as well as the Marina Bay Sands shopping mall.
Consumers LifeStyle interviewed say they will still patronise their favourite eateries even if they relocate.
Civil servant Julia d’Silva, 55, a fan of Quentin’s, says: ‘No matter where it moves, I will follow because it’s the only restaurant here serving good Eurasian food.’
Source : Sunday Times - 3 Feb 2008
That is the extra number of Vietnamese sandwiches that Baguette, a sandwich store in Raffles City, has to sell a month to adjust to an increase in rent.
Indeed, food and beverage (F&B) outlets have not been spared by recent retail rental hikes of as much as 40 per cent per sq ft (psf) in Raffles Place.
Some businesses have had to relocate as a result.
Mr Wei Chan, business development manager of Baguette, says the store, whose lease is up in May, is facing a 65 per cent spike in rent. His outlet offers no seating so there is a limit to the number of customers he can attract and makes ’selling 690 more sandwiches a month a near-impossible task’.
He is considering shifting to a larger outlet with seating in Capital Square where the rent psf is lower.
Rising rents also affected Eurasian restaurant Quentin’s, previously in East Coast Road.
Chef-owner Quentin Pereira shifted to a much larger unit in the Eurasian Association in Ceylon Road in December last year because the rent is almost 40 per cent less.
Explaining the rent increase, Mr Donald Han, managing director of property consultant Cushman & Wakefield, says: ‘In the last two years, the Singapore economy grew at its fastest pace, above 7 per cent per annum since it was in the doldrums in 2003. The boom resulted in new retail tenants and F&B concepts jostling for limited retail space.’
According to Mr Charles Chua, PropNex Realty’s head of commercial department, rents for a Raffles Place ground-level shop have increased by some 40 per cent, from $18 to $35 psf, and basement shops by some 35 per cent, from $12 to 25 psf.
He says the rental hike in areas outside Orchard Road is more manageable, about 3 to 5 per cent year-on-year on average.
Local sandwich chain Cedele, which has three outlets in Raffles Place, had to bear the brunt of rental hikes of between 18 and 50 per cent when the leases of some of its 13 outlets were up for renewal last year.
The chain chose to remain in these locations to retain customers. But its executive director Yeap Cheng Guat says: ‘This rent increment is becoming more difficult to absorb as we cannot pass this to our customers.
‘If rental continues to escalate at this non-sustainable and unrealistic rate, we will have no alternative but to consider relocating.’
Mr Han says rents are expected to climb 5 to 8 per cent this year though successful and established malls are likely to ask 10 to 15 per cent more.
He adds that the rental market might ‘adjust itself to offer more value to F&B tenants’ in the next two years, given the addition of some 3 million sq ft of retail space with the opening of three malls in Orchard Road, as well as the Marina Bay Sands shopping mall.
Consumers LifeStyle interviewed say they will still patronise their favourite eateries even if they relocate.
Civil servant Julia d’Silva, 55, a fan of Quentin’s, says: ‘No matter where it moves, I will follow because it’s the only restaurant here serving good Eurasian food.’
Source : Sunday Times - 3 Feb 2008
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