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$1,058 psf ppr land price, including devt charges, is highest since 1997

Property tycoon Ng Teng Fong’s Far East Organization continues to expand its presence in the prime Orchard Road belt. This time it has clinched the freehold Angullia Mansion, near the Four Seasons Park condo, through a $120 million collective sale, sources say.

The price works out to a land cost of $1,058 per square foot per plot ratio (psf ppr) inclusive of development charges (DC). This is 65 per cent higher than the $643 psf ppr including DC that Wheelock Properties paid in December 2004 for Angullia View just opposite the latest site, reflecting the dramatic recovery in sentiment in the high-end residential market over the past 15 months.

More importantly, Far East’s $1,058 psf ppr unit land price for Angullia Mansion is the highest for a collective sale site here since the 1996-97 market peak, property consultants say.

The price is also just 3 per cent shy of the record unit land price for a collective sale which Far East itself set in January 1997 when it bought Scotts Tower through an auction for $1,093 psf ppr including DC.

During a subsequent wave of collective sales that began in 1999, the highest price fetched was for the freehold Kim Lin Mansion on Grange Road, which went for $996 psf ppr including DC.

But the highest-ever price for a freehold residential site in Singapore is $1,122 psf ppr that Hong Leong Group paid in April 1997 for Boulevard Hotel, which has been approved for redevelopment into a condo.

And the benchmark for an all-residential 99-year leasehold site is still held by Wing Tai with its June 1997 winning bid of $1,104 psf ppr for the Draycott Park site that it has since redeveloped into the Draycott 8 condo.

Angullia Mansion, located in Angullia Park, is on 44,730 sq ft of land that is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area). A new 36-storey condo on the site could break even at about $1,400 psf or even lower, based on Far East’s acquisition cost, property consultants say. The site can be redeveloped into a project of about 60-plus apartments averaging 2,000 sq ft.

Far East’s offer of $120 million is understood to have led the property’s marketing agent DTZ Debenham Tie Leung to call off a tender last week ahead of the scheduled closing date of tomorrow.

Market sources say DTZ may also have called off the tender partly because it already had the unanimous agreement of owners of all 21 existing apartments at Angullia Mansion for an en bloc sale at a much lower reserve price, said to be about $106 million.

In short, Far East’s $120 million offer on the table surpassed the owners’ already-high expectations and there was no certainty that a tender would have resulted in a still-higher bid.

‘A bird in hand is better than two in the bush, as they say,’ said a market watcher.

This is the second Orchard Road property Far East has bagged this year. Last month, it clinched the former Glutton’s Square plot next to Somerset MRT Station and Specialists’ Shopping Centre for $421.1 million or $1,085 psf ppr in a state tender. Far East is expected to do an all-retail development on the 99-year leasehold plot.

In May last year, it bought Pacific Plaza on Scotts Road for $111 million. Far East also has stakes in Far East Plaza, Far East Shopping Centre, Lucky Plaza, Orchard Shopping Centre, Orchard Plaza and Orchard Parade Hotel, besides full ownership of Orchard Parksuites, Regency House and Elizabeth Hotel, among other properties - making it the biggest private property owner in the Orchard Road area.

The collective sale market has been hotting up since last year, as developers selectively replenish their landbanks in response to the strong recovery in home buying in the luxury segment.

Collective sales are a good source of the prime freehold sites that developers are keen to have.

More prime district properties are expected to hit the en bloc sale trail soon, including Habitat I and Ardmore Point along Ardmore Park, Beverly Mai in the Orchard Boulevard area and Casa Rosita along Bukit Timah Road.

However, property consultants say that with reports of higher land prices being achieved, it becomes more trying to do collective sales as owners’ asking prices also rise.

Source : Business Times - 8 Feb 2006

ALEXANDRA Centre has hit the market for collective sales, making an entry with a $40 million asking price.

This works out to $270 psf per plot ratio inclusive of an estimated $1.153 million development charge.

The freehold property on Alexandra Road is zoned for residential with commercial use on the first storey. It may be redeveloped to a height of four storeys with a maximum 3.0 plot ratio - the ratio of potential gross floor area to land area.

Alexandra Centre has a land area of 50,838 sq ft. The existing two-storey building, which is about 25 years old, houses 12 ground-floor shops and 12 apartments.

Owners controlling more than 80 per cent of share values have consented to the collective sale, which is being handled by CB Richard Ellis.

Based upon $40 million, apartment owners will receive about $1.1 million each, and the shopowners about $2.1 million each.

‘This is about 100 per cent more than the price which the units can achieve if they are sold individually,’ says CBRE executive director Jeremy Lake.

Alexandra Centre is within walking distance of Queenstown MRT Station. Nearby landmarks include the Queens condo, Ikea and The Anchorage. The tender for Alexandra Centre closes on March 8.

Source : Business Times - 8 Feb 2006

New COO says it will be on the lookout for further acquisitions

UNITED Overseas Land is extending its buying spree into the new year with its latest acquisition of a residential redevelopment site in Akyab Road for $20.9 million.

And UOL’s new chief operating officer Liam Wee Sin, who was previously group general manager and promoted yesterday, confirms that it is actively looking to expand its land bank.

The freehold Akyab Road site, which is in the Novena area, will be amalgamated with a smaller adjoining site in Minbu Road that it bought in October 2005. Last year, UOL made a slew of acquisitions which included Maryland Park, Eng Cheong Tower, Oasis Garden and Bo Bo Tan Mansion/Gardens.

Mr Liam said UOL expects to launch several projects this year, including one in Kuala Lumpur.

Indeed, of its new land bank, more may be expected to be overseas. ‘For en-bloc sales sites especially, we are increasingly faced with fast escalating and unrealistic asking prices,’ he added.

Saying that today’s property market is ‘highly competitive’, Mr Liam noted that an ‘immense amount of energy is spent on product development’. Some of UOL’s better known products include the award winning One Moulmein Rise in Novena.

New niche products include its new economy condominium at One-North in Buona Vista, a joint venture project with Kheng Leong Company and Low Keng Huat. As COO, Mr Liam will oversee the investment, project, marketing and engineering divisions. UOL is also looking to expand its service apartment arm which will also fall under the COO’s purview.

‘We have just bought One Residency in Kuala Lumpur and we plan to operate it as service apartments. Locally, we will also be launching our proposed service suites at Somerset Road sometime next year,’ he added.

Also promoted was general manager of finance Wellington Foo who will now serve as CFO of UOL.

Perhaps more indicative of UOL’s expansion plans is the confirmation that Kam Tin Seah, former Centrepoint Properties’ assistant general manager of development, has joined UOL and is now general manager of investments.

Source : Business Times - 7 Feb 2006

In July 2002, CapitaMall Trust became the first real estate investment trust (Reit) to successfully list in Singapore.

The Hong Kong market had to wait until November last year - at which point Singapore already had seven Reits listed - to see its first Reit successfully listed, namely Link Reit. However, Link Reit’s size dwarfs that of Singapore’s Reits. Its successful listing was quickly followed by listings of Prosperity Reit and GZI Reit.

Experts believe there may be as many as 10 Reit initial public offerings in Hong Kong this year. Hong Kong property giants like Henderson Land and Sun Hung Kai Properties are tipped to join the Reit bandwagon.

Market players believe Hong Kong is quickly shaping up as a key challenger to Singapore’s position as the Asia ex-Japan market leader in Reits. Opinion though is divided as to whether the development of Hong Kong’s Reit market will help or hurt Singapore.

Optimists think a larger Reit sector in Asia ex-Japan will draw more global investors to invest in Asia ex-Japan Reits. Others take the view that funds dedicated to yield plays may choose one market over the other.

The later part of last year marked the end of the easy money phase for Reit investors. Rising interest rates in Singapore caused prices of Reits to slide. Concerns were raised over the ability of some Reits to grow via acquisitions.

But Singapore’s Reit market is not standing still and investor support is intact. Last month, Mapletree Logistics Trust (MLT) raised $130 million in equity from a placement of new units to institutional investors that was close to four times subscribed and an ATM offering that was fully taken up within eight minutes of the opening of the offering.

About two weeks back, CapitaLand’s subsidiary, the Ascott Group, announced its intention to establish a new pan-Asian service residence Reit to be called Ascott Residence Trust (ART). ART will have an initial portfolio of 12 properties and will be listed on the Singapore Exchange.

Citigroup Research said ‘ART will be a more capital efficient vehicle to hold Ascott’s properties’ and ‘CapitaLand is a beneficiary of the expanding Reit market in Asia given its strong track record in Singapore and its ability to offer a complete range of real estate services’.

Certainly, CapitaLand continues to set the pace in the Reit sector in Asia ex-Japan. Of more significance for the Singapore Reit market is that ART represents a broadening of the type of Reits in Singapore and the increasing importance of foreign properties in Singapore Reits.

Experts believe Singapore’s continued leadership in Reits in Asia ex-Japan will depend on its ability to innovate by broadening the type of Reits in the Singapore market and to attract more Reits owning properties in multiple countries.

With ART, the Singapore market moves beyond having Reits owning retail, office and industrial properties. A successful listing of ART could pave the way for Millennium & Copthorne Hotels to launch a hotel Reit here.

Bankers would say any property type that generates strong enough cash flow could find its way into a Reit. Perhaps it would not be beyond the imagination and ability of bankers and other practitioners here to create hospital, airport and prison Reits.

ART holds $856 million worth of properties, with Singapore accounting for 33 per cent of total property values. The rest comprises properties from China, Vietnam, Indonesia and the Philippines. With ART, there are challenges such as whether investors like to own a Reit with properties in various jurisdictions and whether investors are comfortable with around 45 per cent of total apartment rental income backed by length of stay of less than six months.

How popular ART proves with investors, time will tell. MLT’s successful equity raising, which was to help fund among others, acquisitions of properties in China and Hong Kong, though shows there is appetite from both institutional and retail investors to back Singapore Reits in making overseas acquisitions.

Reits have been the bright spot in the Singapore capital markets and a major driver in growth of market capitalisation on the SGX. By being early in this game, experts believe Singapore’s market players and regulators have an edge over other emerging Reit markets.

There will be competition from other jurisdictions but the signs are positive for Singapore to be the Reit hub for the region.

Source : Business Times - 6 Feb 2006

Analysts see it building land bank, looking for more marquee projects

AMBERVILLE, a privatised HUDC estate in Katong that property heavyweight Far East Organization bought for $183 million last month, may turn out to be the group’s first private sector residential purchase in Singapore for almost 10 years.

The lengthy absence from the market was not for want of trying, though.

Privately held Far East has been putting in bids at other developments in the past year - including the Sentosa Cove sites, and a commercial/residential site next to Yew Tee MRT Station at Choa Chu Kang, but in each case Far East was outbid by other developers.

But the purchase of Amberville and Far East’s clinching of the former Glutton’s Square site at Orchard Road signal a change of tack.

Property consultants believe that Far East’s sense that the property market is picking up is guiding its actions, but internal factors are also in play.

‘They are replenishing their land bank,’ said Knight Frank’s director of research and consultancy, Nicholas Mak. ‘If the market is picking up, most developers who have substantial inventory on hand will want to clear that first. When they have come to a certain level where they think that they need to have more inventory to sustain their activities, then they’ll go in and bid,’ he added.

DTZ Debenham Tie Leung’s executive director of consulting and research Ong Choon Fah feels that Far East is being astute, moving in as and when a project suits it. ‘As a developer, they are always looking out for opportunities, and they will zoom in when good opportunities arise.’

>From traditionally competing with the Hong Leong group of companies as the developer that moves the most number of residential properties, Far East fell behind last year.

It sold 900 units, taking the fourth spot behind the Hong Leong Group’s companies, Centrepoint Properties and Keppel Land.

But in other areas - retail and commercial projects - Far East has been making more progress.

It has done well with its SoHo (small office, home office) project at Clarke Quay, with 95 per cent of the 227 units sold. Far East is also busy with the Novena Medical Centre, selling the suites to doctors in private practice.

And it is moving ahead with converting the office building NatWest Centre on McCallum Street into apartments.

Jones Lang LaSalle’s regional director and head of investments Lui Seng Fatt said that Far East’s approach on the residential front is a strategic one, as the company is shifting to sectors with higher capital yield.

‘In the 1990s, they capitalised on the buoyancy of the residential market, so the focus was a lot on residential land,’ Mr Lui explained. ‘The shift of strategy, from residential -driven in the ’90s, back to being commercial-driven, is probably the natural trend, with tourism and retail leading the recovery.’

Mr Lui said retail is looking especially attractive, with more room to grow, as retail rentals are still low here, compared with rates charged by other Asian markets. Far East has also traditionally being retail-centred, at one point being dubbed the ‘King of Orchard Road’ for its multiple properties along the retail stretch.

Mr Lui pointed out that Far East’s retail focus was signalled through its purchase of Pacific Plaza last year. He expects it to be ‘one of the front-runners’ for the other Somerset site - a reserve-list site - part of which is currently used as a carpark. It will be made available for application by developers in March and could be launched for tender in June.

Now that Far East is back, analysts are expecting it to be on the prowl for more marquee projects.

DTZ’s Ms Ong reckons that Far East will ‘cherry-pick’, choosing to go into projects that will fit their overall portfolio, be it residential, office or retail.

‘My guess is that they may look for one or two more projects to acquire, then after that they will turn their attention to developing and selling those projects,’ said Knight Frank’s Mr Mak.

JLL’s Mr Lui added: ‘Far East is a big organisation. There’s still a lot of capacity for them to go for residential sites and other retail sites that might come up.’

Source : Straits Times - 3 Feb 2006