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Highest bid of $289m from Pramerica Asia entity: sources

THE combined tender for DBS Tampines Centre and the adjacent Pavillion complex near Tampines MRT Station has attracted five bids, with the highest of almost $289 million coming from an entity controlled by Pramerica Asia, sources say.

Pramerica Asia, formerly known as GRA Singapore, is said to have placed its bid on behalf of Asian Retail Mall Fund II, for which it is the fund and asset manager.

Its bid price works out to about $780 per square foot of potential floor area, including an estimated $10.8 million in development charges payable to the state to redevelop the combined site into a new mall with much more floor area than the two existing buildings together.

Analysts say Pramerica Asia’s bid price works out to a breakeven cost of about $1,800 psf for a new mall. This assumes it does not top up the combined site’s lease - the remaining tenure is about 83 years - to the original 99 years.

Based on this breakeven cost, it may be possible for Pramerica to achieve a net property yield of at least 6 per cent by the time the new mall is completed in about three years.

Outline provisional permission has been obtained to redevelop the combined site of about 90,700 sq ft into a five-storey shopping centre with three basements, with a 4.2 plot ratio (ratio of maximum gross floor area to land area).

Besides Pramerica Asia, other bidders for the properties may have included CapitaLand, Centrepoint Properties, Lippo group and Lend Lease, sources suggest.

DBS Tampines Centre was securitised by DBS Bank in 1999. The eight-storey block has shops in the basement and on the first and second storeys, and offices on the upper floors.

The four-storey Pavillion, owned by Cathay Organisation, was formerly used as a cineplex but is now leased for food and beverage, and entertainment use.

Knight Frank, which handled the joint tender for the two properties, declined comment yesterday.

Source : Business Times - 1 Mar 2006

A DEVELOPER has committed to bid a price of not less than $130 million for a 99-year leasehold residential site at Tanah Merah Kechil Avenue.

The 2.19 ha site falls under the Urban Redevelopment Authority’s (URA) Reserve List system. The URA said yesterday that it had accepted the bid, which means that the site will be put up for public tender.

The site, near Tanah Merah MRT station, has a plot ratio of 2.8 and a maximum gross floor area of 61,255 sq m. An estimated 510-unit residential development can be built here.

URA first made the site available for sale through the Reserve List system in April 2005. It says the launch of the public tender will now be in about two weeks, and a tender period of about four weeks will be allowed.

At the minimum price of $130 million, the site works out at about $212 psf per plot ratio. Property analysts earlier predicted bids from $200 to $250 psf.

Source : Business Times - 1 Mar 2006

Some of the latest increases are the biggest in 6 years

Significant increases in development charge (DC) rates to enhance land use could affect collective sales and the rejuvenation of the old Central Business District, property consultants say.

Some of the increases - announced yesterday - are the biggest in six years. Leading the hikes are rates for non-landed residential use, which are up by an average of 9.3 per cent from today. Landed DC rates are up 4.8 per cent on average.

The average DC rate for commercial use has gone up 5.9 per cent, and that for hotel use 1.6 per cent. Industrial DC rates remain unchanged, according to a Jones Lang LaSalle analysis.

For non-landed residential use, actual increases by location range from 1.5 per cent in the Nassim area to a whopping 37.5 per cent on Sentosa.

The rate increase for many prime districts - the hotbed for collective sales - varies from about 7 per cent in Oxley and Leonie Hill/St Thomas area to 19 per cent in the Ardmore/Draycott area.

Some industry observers are especially taken aback by the Chief Valuer’s decision to raise non-landed residential DC rates for much of the Central Business District by 20 to 33.3 per cent. Such a steep hike could discourage owners of ageing office blocks to redevelop them for residential use.

JLL’s regional director and head of investments Lui Seng Fatt noted yesterday that the significant DC hikes follow a recent increase in private-sector rejuvenation plans to redevelop old office blocks into housing projects - for example, NatWest Centre and 1 Shenton Way.

And CB Richard Ellis executive director Soon Su Lin said: ‘The authorities should weigh the overall objective of urban renewal of an area where some of the buildings are 30 years old against a tax on redevelopment.’

DC rates - revised every six months, on March 1 and Sept 1 - are widely tracked in property circles because they reflect values and affect the breakeven costs of developers seeking to redevelop sites.

DC rates are specified according to use across 118 locations throughout Singapore.

As for the impact of DC rate rises on collective sales, JLL’s Mr Lui said: ‘A 10 per cent rise in DC rates in the prime districts translates to a roughly 6 per cent increase in breakeven cost for a redevelopment. Someone has to pay for the lunch. It depends on who has more bargaining power.

‘In a rising market, there’s a good chance that the cost will be passed on to the eventual buyers of the end-units in the new project. But if en bloc sale sites continue to increase until the market is flooded and developers have more choice of sites, part of the DC rate hike may have to be partly absorbed by the land sellers.’

Commercial DC rates have gone up most in the vicinity of the two prime Orchard Road sites sold by the state recently. At Orchard Turn, the rate has been raised 24.2 per cent. And for the former Glutton’s Square site, it has gone up 25 per cent.

The rate for the World Trade Centre area - with coming attractions like Vivocity mall and the nearby Sentosa integrated resort - has been raised 25 per cent. And in the New Downtown location - home to the Business & Financial Centre and Marina Bay integrated resort - the rise is 22.9 per cent.

JLL’s analysis shows that Sentosa led the rate hikes for landed and non-landed residential use, with gains of 29 per cent and 37.5 per cent respectively. This is not surprising given the ever-increasing prices being achieved for bungalow and condo sites at Sentosa Cove.

Source : Business Times - 1 Mar 2006

FAR East Organization (FEO) clinched another redevelopment site yesterday, bringing the number of sites it has bought to four in the first two months of this year.

The latest transaction is an en bloc sale of a low-rise residential development in Pasir Panjang called Pacific Court. At $27.2 million, the deal is modest compared with FEO’s other acquisitions, but signals a confidence in the overall property market nonetheless.

The other sites FEO bought include Amberville in Katong ($183 million), Angullia Mansion, off Orchard Boulevard ($120 million) and Glutton Square at Somerset ($421.1 million).

The Pacific Court site has a plot ratio of 1.4 and can be built up to five storeys with a maximum gross floor area (GFA) of 89,190 sq ft. Including the development charge, the price of the site in terms of its maximum GFA is $377 per square foot per plot ratio. Breakeven cost for a new residential development is expected to be around $670 psf.

Jones Lang LaSalle handled the sale. Its regional director and head of investments Lui Seng Fatt said he was amazed by the speed at which the deal was struck. ‘Pacific Court hit the record as the swiftest successful en bloc transaction in Singapore. It took just two months for the owners to decide on commissioning the sale by tender to awarding the tender to Far East Organization,’ he added.

The 32 apartment unit owners of Pacific Court will each get about $850,000, about an 80 per cent premium over the current market price.

Source : Business Times - 1 Mar 2006