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Price for Peirce Rd properties works out to an average of $365 psf

Entities controlled by Simon Cheong of SC Global Developments have bought six Good Class Bungalows (GCBs) along Peirce Road for a total of $35 million, sources say.

The price works out to an average of $365 per square foot based on the freehold site’s total land area of 95,839 sq ft.

The six bungalows, completed about five years ago, were designed by renowned architect Ettore Sottsass, a grandee of late 20th century Italian designer and the founder of the early 1980s Memphis Collective architectural movement. Jones Lang LaSalle brokered the deal.

Right next to the bungalows that Mr Cheong has bought, property tycoon Ng Teng Fong’s Far East Organization owns a site of about 120,000 sq ft.

The property giant has started work on the plot and is expected to launch its bungalows later this year.

Behind Mr Cheong’s bungalows, Stanley Quek’s Region Development last year sold six bungalow plots, some of which are now being developed by their new owners.

‘The whole area is getting busier with new bungalow construction activity, and it will get even busier when Far East launches its properties,’ a property consultant said.

The six bungalows at 26 and 26 A-E Peirce Road that Mr Cheong has bought were sold by two members of a Koh family - Koh Poh Seng and his sister Koh Ah Kim. The mortgagee for the property was Citibank.

Mr Cheong’s average acquisition price of $365 psf of land area is lower than the $401-$419 psf at which Dr Quek sold his six bungalow plots at 19 Swettenham Road. Five of Dr Quek’s parcels comprised just land, while the sixth has a bungalow on it that must be conserved.

Market watchers suggest Mr Cheong could keep one or more of the Pierce Road bungalows for himself and his family and sell the rest.

Some even suggest that potential buyers who don’t like the look of the current bungalows on the site may tear them down and redevelop them.

GCBs have traditionally been the most prestigious form of housing in Singapore - though it is possible they could soon be knocked off the top perch by waterfront bungalows with private berths being built at Sentosa Cove.

The Urban Redevelopment Authority has safeguarded 39 areas in Singapore for GCBs. Besides the Peirce and Swettenham area, these include Nassim Road, Chatsworth Park, Queen Astrid Park, Chestnut Avenue, Eng Neo Avenue and Caldecott Hill Estate.

Developments in these areas are governed by stringent planning rules that ensure the exclusivity and low-rise character of the neighbourhoods are preserved.

Source : Business Times - 20 Jan 2006

AMBERVILLE was snapped up yesterday for the bumper price of $183 million and in the process became the first former HUDC estate to be sold collectively.

Its 168 owners have plenty to celebrate. The price exceeded their reserve of $171 million and each will get an average $1.089 million for their unit, at least 85 per cent above market value, said sale manager Knight Frank.

‘For a 99-year site, it’s a record price,’ said Ms Tang Wei Leng, director of property consultancy DTZ Debenham Tie Leung.

Far East Organization outbid rivals City Developments, Wing Tai and MCL Land for the Katong site in a tender process that closed on Tuesday.

Its price translates into $396 per square foot per plot ratio (psf ppr), after accounting for a development charge of about $35.2 million and a differential premium of $23.8 million to top up the lease from 71 years to 99 years.

Knight Frank said the price indicates ‘developers’ confidence in the property market’. The price also surpassed recent prices of nearby sites. Centrepoint paid $280 psf ppr in 2001 for a nearby 99-year leasehold site, which is now home to the 612-unit Cote d’Azur next to Parkway Parade.

Recent freehold collective sales in the Katong area were also made at lower levels: Maryland Point site went for $351 psf ppr and the Sea View condominium site for about $370 psf ppr.

Knight Frank said the Amberville site is a ‘rare and substantial’ one where Far East can capitalise on the unblocked views of the sea and East Coast Park.

Amberville is likely to break even above $600 psf to $650 psf. Knight Frank said it can accommodate a condominium of up to 36 storeys, with 474 units of 1,200 sq ft on average each.

The firm also brokered the sale of Eng Cheong Tower, the first 99-year leasehold property to be sold en bloc, and the deal that sparked interest in collective sales of such leasehold properties.

Other ex-HUDC estates, such as Pine Grove and Farrer Court, also hope to land a collective sale.

Next week, the tender closes for the 342-unit Minton Rise - the first ex-HUDC estate to get in-principle approval for a lease top-up to 99 years.

Source : Straits Times - 19 Jan 2006

It makes $421m offer for 0.6ha area, higher than next best bid by 5%

THE buzz over new developments on Orchard Road continues after privately-held Far East Organization offered $421.1 million for the former Glutton’s Square site across from Centrepoint Shopping Centre, the highest of six bids.

The 0.6ha site is only the second Orchard Road site to be put up for tender in over a decade after the $1.38 billion Orchard Turn site near Orchard MRT station, which was awarded late last year.

Market watchers say the Far East offer is ‘fair’. They note that the Glutton’s Square development will be much smaller than the Orchard Turn extravaganza - but that the price per sq ft (psf) Far East is offering is higher.

But they say developers are often willing to pay more psf for smaller sites, as the total sums are relatively low.

When bidding closed yesterday, Far East had submitted a bid, made through its unit Orchard City, that works out to $11,682.62 per sq m or $1,085 psf of gross floor area.

That is about 6 per cent above CapitaLand and Sun Hung Kai Properties’ bid of $1,020 psf for the Orchard Turn site, which has a gross floor area of 1.35 million sq ft.

Far East’s bid is about 5 per cent higher than the second highest bid for the site of $400 million from a grouping led by Indonesia’s Lippo Group.

The Urban Redevelopment Authority (URA) is expected to announce the winner in a week, with Far East likely to be awarded the 99-year leasehold site.

Industry sources said that assuming Far East is awarded the site, it is likely to devote all the 387,985 sq ft of gross floor area to retail.

The URA has stipulated that at least 60 per cent has to be for retail, food and beverage, and entertainment uses. An underground pedestrian mall linking the new development to Centrepoint and Somerset MRT also has to be built.

If the project, which has a long frontage along Orchard Road, is all retail space, it could have five or six storeys above ground and two basements, said property consultancy Knight Frank’s research director, Mr Nicholas Mak.

‘In order to get it to work, the maximum potential is really retail,’ said Jones Lang LaSalle’s regional director, Mr Lui Seng Fatt.

If the site houses a full retail project, its breakeven cost would work out to be about $2,350-$2,400 psf, below CapitaLand’s breakeven price of about $2,500 psf for Orchard Turn, consultants said.

‘In today’s market, the Somerset site could potentially fetch rentals of about $18-$20 psf,’ said Knight Frank executive director Danny Yeo. This compares with current average rents of around $15-$16 psf at Centrepoint.

But the picture could change in a few years. The Government is putting on its reserve list a second Somerset site and interested parties will probably include those who fail to get the first site.

Together with Centrepoint, the new projects should draw more shoppers into the area, enabling rentals for the former Glutton’s Square site to rise beyond $20 psf, said Mr Yeo.

The Somerset area is anchored by Centrepoint and Specialists’ Shopping Centre, which sits between the two Somerset sites and is owned by OCBC Bank.

Indeed, Centrepoint mall’s majority owner Centrepoint Properties had worked on the bid with OCBC and was expected to be the top bidder because Specialists’ and the two sites could be combined to build a mega mall.

But it came in fourth with a bid of $356.9 million.

While Far East may be relatively quiet on the retail front, it has in recent years shown its interest in gaining a stronger foothold in the retail sector through acquisitions and efforts to create the successful Level One at Far East Plaza.

It bought Pacific Plaza for $111 million last May and has an upcoming mall in the mixed development Central above Clarke Quay MRT station.

‘They have built up quite a sizeable presence in Orchard Road since the 1970s. At one time they were called the kings of Orchard Road,’ said Mr Lui.

The move by the URA to put the Somerset site up for tender was triggered by an unnamed developer who on Oct 6 committed to put in a minimum bid of $200 million.

Source : Straits Times - 19 Jan 2006

Giving a strong signal that it believes the recovery in the property market is for real, Far East Organization yesterday scored a double victory.

The property giant was the highest bidder for the former Glutton’s Square site next to Somerset MRT Station and Specialists’ Shopping Centre, with a $421.1 million bid.

And it was awarded Amberville, a privatised HUDC estate in Katong that can be redeveloped into a sea-facing condo, for $183 million.

Significantly, this is the group’s first private sector residential purchase in Singapore for almost 10 years.

For Glutton’s Square, the price works out to $1,085 per square foot of potential gross floor area, or 6 per cent higher than the $1,020 psf per plot ratio that CapitaLand and Sun Hung Kai paid last month for the plum Orchard Turn site.

Far East - probably the biggest property owner in the Orchard Road area - is expected to build an all-retail project on the Somerset site with about 270,000 to 280,000 sq ft net lettable area.

Its breakeven cost could be about $2,300 to $2,400 psf, analysts reckon.

Knight Frank executive director Danny Yeo said the mall, if it is well designed and has a strong tenant mix, should be able to achieve average gross month rent of at least $18 psf.

This assumes there will be no anchor tenants in the mall, but perhaps several mini-anchors of 4,000 to 20,000 sq ft each.

Based on this and using a $2,350 psf breakeven cost, the net yield works out to 7.5 per cent - similar to CapitaLand’s projection for its mall on the Orchard Turn site.

The actual rent that Far East achieves could be higher.

‘As this stretch of Orchard Road is rejuvenated over the next few years with new developments, Far East should be able to achieve a higher average rent of say $20 psf by the time the mall is completed,’ Mr Yeo said.

The highest-yielding shop units in the development are expected to be those at street level fronting Orchard Road. ‘Specialty shops of about 1,000 sq ft or even smaller should be able to command in excess of $50 psf in monthly rentals,’ according to Mr Yeo.

Far East’s top bid was 5.3 per cent higher than the second-highest offer, which came from a joint venture involving Lippo Group and Pacific Star group.

Yesterday’s tender for the Glutton’s Square site attracted six bids.

The other contenders were City Developments, Centrepoint Properties, businessman Chng Gim Huat and a unit of Hong Kong’s Park Hotel Group, which last year bought Crown Hotel, also on Orchard Road.

Market watchers had expected Centrepoint Properties to be the most aggressive bidder, as the site - offered by the Urban Redevelopment Authority - includes an underground stretch to be built as a pedestrian mall linking Centrepoint Shopping Centre to Somerset MRT Station.

Colliers International associate director Tay Huey Ying described participation in the Glutton’s Square tender as thin.

She said this may be due to ‘diversion of attention’ to another plot on the other side of Specialists’ Centre and which URA will make available for application in March.

In her opinion, the second site is superior to the Glutton’s Square parcel.

Source : Business Times - 19 Jan 2006

INDONESIA’S Lippo Group continues to grow its footprint in Singapore. It is close to signing a deal to buy a 55 per cent stake in the freehold 79 Anson Road office block for about $90 million from Pramerica Asia, formerly known as GRA Singapore, sources say.

The purchase price works out to around $830 per square foot, based on the previously reported 108,000 sq ft net lettable area (NLA) that Pramerica Asia owns in the building.

The other 45 per cent of the 23-storey building, which has a total NLA of 197,238 sq ft, is owned by the Central Provident Fund Board, according to earlier reports.

Pramerica Asia will exit the investment with a loss. It bought its space at 79 Anson Road in 2000 for about $135 million or $1,250 psf.

The transaction is Lippo’s second major office acquisition in Singapore in the past couple of years. In August 2004, it bought a substantial interest in 78 Shenton Way - now known as Lippo Centre - in a $151 million transaction that translated to $505 psf of net lettable area. The property is on a site that had about 78 years left of its original 99-year lease then.

Lippo also bought Newton Heights through a collective sale in February last year for $43.6 million. It plans to redevelop the freehold site into a 120-unit condo that is slated for launch this year.

The group’s Singapore-listed vehicle Auric Pacific last month bought Bukit Timah Mansions through a $15.4 million en bloc sale. The property, between Balmoral and Keng Chin roads, is said to have a site area of about 20,000 sq ft. Factoring in an estimated development charge of about $6 million, the acquisition price works out to a land cost of about $510 psf of potential gross floor area. The existing property is a seven-storey block with 10 apartments. There are also car parking lots and a swimming pool.

Lippo has been scouring the island for property investments. It has been bidding at major government land tenders in recent months - including the Business & Financial Centre facing Marina Bay, the plum Orchard Turn site tender which closed last month, and yesterday’s tender for the former Glutton’s Square site also in Orchard Road. Lippo emerged as the second-highest bidder in the Glutton’s Square tender.

Source : Business Times - 19 Jan 2006