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More properties on River Valley, Thomson Rd, Robin Rd and Balmoral on en bloc market

THE collective sales train continues to chug along. Hoi Hup Realty is buying Cairnhill Gardens for $52.38 million, even as more properties in the River Valley, Thomson Road, Robin Road and Balmoral areas jump on the en bloc bandwagon.

The price Hoi Hup is paying for the 25,083 sq ft freehold Cairnhill Gardens site works out to $795 psf of potential gross floor area inclusive of development charges, BT understands.

Jones Lang LaSalle handled the sale of the site, which is zoned residential with a 2.8 plot ratio.

Unit land prices fetched for collective sales in the Cairnhill area have been creeping up. Last week, Chip Eng Seng announced that it paid $785 psf per plot ratio (psf ppr) for Venus Mansion in Peck Hay Road. No DC is payable for the freehold Venus Mansion.

And last month, Bukit Sembawang bought a property in the vicinity, The Vermont, for $750 psf ppr including DC. In July last year, Wing Tai bagged Phoenix Mansion for $716 psf ppr.

All eyes are now on the Hilltops Apartments tender, which closed yesterday.

Meanwhile, ERA yesterday announced the launch of a tender for the collective sale of 433-471B River Valley Road, with an asking price of $70.5 million. This works out to $387 psf ppr inclusive of a small DC.

The existing development on the site is a part freehold/part 999-year leasehold three-storey walk-up apartment. The site fronts River Valley Road and is a short walk from Great World City.

The long, rectangular plot, with a service road and back lane, totals 64,967 sq ft. It is zoned residential with a 2.8 plot ratio and a maximum height of only five storeys.

‘Based on the Urban Redevelopment Authority’s approval, a five-storey party-wall development abutting the road line is allowed,’ ERA said yesterday. The developer can build about 120 unis averaging 1,200 sq ft, according to ERA.

CB Richard Ellis has launched an expression of interest exercise for Balmoral View with an asking price of $52 million or $733 psf ppr inclusive of an estimated $7.9 million DC.

The 51,080 sq ft site is zoned residential with a 1.6 plot ratio and height control of up to 12 storeys.

Credo Real Estate has also launched two collective sale sites this week - The Albany and No 1 Robin Road.

The Albany, a 41,688 sq ft freehold site diagonally opposite Thomson Medical Centre, is expected to fetch between $60 million and $65 million.

This reflects a unit land cost of $413 to $445 psf ppr inclusive of DC to maximise the site’s redevelopment potential, as well as a land premium for adjoining state land of some 10,000 to 15,000 sq ft.

At No 1 Robin Road, the owners expect between $12 million and $12.5 million for their 15,070 sq ft freehold site. This works out to $482 to $498 psf ppr inclusive of an estimated $3.31 million DC.

The tender for No 1 Robin Rd closes on May 16, that for The Albany on May 18 and for the River Valley site on May 19. Expressions of interest for Balmoral View close on May 25.

Source : Business Times - 20 Apr 2006

Guess which property brought the highest price per square foot (psf) last year? A condo in the upmarket BLVD? Or the Ladyhill? Or Cairnhill Crest? Wrong on all counts. The biggest gold mine was underground - a tiny shop in the basement of Orchard Road’s ageing Lucky Plaza.

Watch retailer All Watch paid $900,000 for the freehold unit - all 86 sq ft of it - working out to a massive $10,452 psf. Figures reported by SISV Services, based on caveats captured by its REALink 21 database, show the Lucky Plaza deal was not only the most expensive in terms of per square foot of floor area for last year, but also the dearest since the database started in 1995.

In contrast, luxury residential apartments which are more often in the limelight are priced at a fraction of what shop units normally cost. For example, in recent months, a unit in The Boulevard Residence cost up to $2,200 psf, while at The Ladyhill prices peaked at $2,086 psf, and Cairnhill Crest $2,002 psf.

All Watch managing director Sunny Ng told BT his firm bought unit B1-130 in Lucky Plaza to extend its business that occupied adjacent units B1-128 and B-129. The group refurbished all three units and the new combined shop opened a few days ago. Why did Mr Ng pay so much psf for B1-130? It’s an investment in the future of Orchard Road, he said. ‘Rentals are going up year after year, so it’s better to own your own property.’ All Watch’s four other outlets - one each at Wisma Atria and Albert Complex, and two in Bugis Junction, including one in the Seiyu department store - are rented.

SISV Services’ report says the most expensive deal psf so far this year was for a first-level shop in Sim Lim Square, which changed hands for $8,446 psf. The 355.2 sq ft unit sold for $3 million. Sim Lim Square - at Rochor Canal Road, on a site with a remaining lease of about 76 years - is a magnet for electronic goods and computer shoppers. So it’s no surprise that it recorded the second-highest psf price price last year - $5,912 psf for a first-level unit that was bought for $2.1 million.

Another mall fetching high psf prices last year and this year is the freehold but ageing Far East Plaza on Scotts Road - again a magnet for shoppers. The most expensive psf price there last year was $5,814 psf, while the dearest so far this year was $4,999 psf. Sim Lim Square and Far East Plaza are crowd pullers, which makes them favourites among small retailers, with 34 and 33 deals done last year.

SISV Services says the highest total price paid for a shop last year was for a basement one unit in Northpoint Shopping Centre in Yishun. The 20,473 sq ft unit is understood to have been sold by Dairy Farm group to Frasers Centrepoint for $28.8 million. Frasers Centrepoint thus gained full ownership of the mall which it is expected to inject into a proposed shopping centre real estate investment trust. Last year’s most expensive office unit in terms of total price was on the 19th floor of Suntec City. It sold for $10.82 million or $900 psf. In psf terms, last year’s priciest office was a 990 sq ft unit on the 12th floor of Peninsula Plaza, which brought $1,760 psf.

SISV Services also reported an increase in medical suite transactions, resulting mainly from the Novena Medical Centre being developed by Far East Organization.

Source : Business Times - 19 Apr 2006

Another ageing CBD office block looks set to make way for homes. BT understands that SingTel is likely to sell 71 Robinson Road - which houses Robinson Post Office - after securing provisional permission to redevelop the property into a 51-storey project.

Provisional approval has been granted for 315 apartments on the upper 44 storeys, which will be above a six-storey carpark podium and one level of commercial space.

The commercial space is expected to be at street level. The plot ratio - the ratio of potential gross floor area to land area - approved is 11.2. This means the project can be built up to a gross floor area of 274,746 sq ft - a significant enhancement from the existing 99,383 sq ft.

Approval is subject to the site being rezoned from commercial use to residential with commercial use on the first storey. A development charge will be payable to the state in exchange for the right to develop a bigger project on the site.

In addition, the successful developer is expected to apply to the authorities to top up the 24,531 sq ft site’s lease from the remaining 45 years to the original 99 years.

The seven-storey building, formerly known as Crosby House, is at the corner of Robinson Road and McCallum Street.

Other ageing office blocks expected to make way for homes include NatWest Centre and Asia Chambers - both in McCallum Street - 1 Shenton Way and the HMC Building in Mistri Road.

SingTel is expected to put up 71 Robinson Road for sale in line with its policy of divesting non-core property to redeploy the resources to its core telco business.

In February, it sold a former telephone exchange in Old Holland Road for $30 million.

Tenders have closed for two sites in West Coast and Hillcrest roads.

Source : Business Times - 19 Apr 2006

Development has estimated asking price of $380m

PRIVATISED HUDC development, Waterfront View in Bedok, is up for collective en bloc sale for an estimated $380 million. If it finds a buyer, it will be the second such development after Far East Organization bought Amberville in Katong for $183 million in January.

Although the amount for the 809,037 sq ft Waterfront View site is high, the price based on the plot ratio of 2.5 is $240 per square foot per plot ratio (psfpr), lower than the $396 psfpr paid for Amberville.

A differential premium of about $102.2 million based on the new plot ratio of 2.5 and upgrading of the lease on the 20-year-old development back to 99 years will be paid by the future developer. At the asking price of $380 million, existing owners could get around $650,000 for their units, or about a 40 per cent premium over current market prices.

Tang Wei Leng, director of Investment Advisory Services at DTZ Debenham Tie Leung, which is also brokering the deal, says that 1,400 condominium units with an average unit size of 1,300 sq ft can be built.

She also estimates that the breakeven cost is about $450 psf. Last week, a 99-year leasehold condo site near Tanah Merah MRT Station was sold to NTUC Choice Homes/Wing Tai for $210 million or $318.50 psfpr.

The breakeven cost was estimated at between $520-530 psf.

Also for sale is a good class bungalow (GCB) site on Astrid Hill for about $13.5 million or about $500 psf. The 26,510 sq ft site cannot be subdivided into smaller plots as GCBs must be a minimum of about 15,000 sq ft.

Consequently, Steven Ming, director and head of Prestige Homes, which is brokering the deal, says such a large site for one house is quite ‘rare’. He also says that there are only 20 GCB plots on Astrid Hill.

There is an old two-storey house on the site but Mr Ming expects the future owner to tear it down. He adds that recent GCB transactions in the nearby Belmont Road area have also gone for about $500 psf. This is less than the asking price of around $600 in neighbourhoods like Jervois Hill.

Source : Business Times - 18 Apr 2006

HAS Auric Pacific, controlled by Indonesia’s Lippo Group, overpaid for its stake in retailer Robinson?

Last Thursday, Auric said its unit will buy a 29.9 per cent stake in Robinson from OCBC for $7.90 a share - a 17 per cent premium to Robinson’s $6.75 closing price the previous day and 18.6 times the group’s FY 2005 earnings.

The counter yesterday shed 20 cents to close at $6.55 - not surprising now that talk of a takeover battle that boosted the stock has come to nothing.

Yesterday’s price drop makes Auric’s purchase price look even pricier. But the Riady family, which controls Lippo and Auric, is looking at the longer term. The Riadys see great value in the Robinsons trade name - and intend to extract value from their investment by taking that name to markets like Indonesia, China and Malaysia.

Ultimately, it will be the Riadys’ ability to help Robinson expand into these markets that will determine whether Auric has overpaid.

But what are Robinson’s chances of success outside Singapore? After 148 years, its presence in other markets is not much to shout about.

In fact, its entire overseas operation comprises two Marks & Spencer stores in Malaysia run under a franchise agreement.

One of its biggest missed opportunities has to be giving up a 100,000 sq ft department store spot in Kuala Lumpur’s Suria-KLCC mall, which it secured in 1996. As the mall’s opening neared in 1998 - during the Asian financial crisis and amid a retail space glut - the group got cold feet.

‘That was a mistake. Short-term it would not have been profitable, but long-term it would have been profitable,’ Robinson’s former CEO Peter Husum told BT in 2004 as he was leaving the group.

Perhaps that decision was not Mr Husum’s alone? Perhaps having a conservative major shareholder like OCBC made Robinson less daring when it came to risking a full-fledged store in KL - even though OCBC has been a passive shareholder that steered clear of day-to-day operations.

It should be a different story with Lippo and the Riadys on board. Lippo controls Indonesia’s largest listed retailer Matahari, so the Riadys have a feel for the business.

Lippo also has extensive property interests in Indonesia, which should help Robinson clinch store locations there. And the Riadys have business connections elsewhere in the region, such as Malaysia, Hong Kong and China. Lippo has teamed up with Malaysian tycoon Ananda Krishnan’s Astro group to tap Indonesia’s pay-TV market. It also has a joint venture with China Resources involved in property investment and development and equity investment.

In Singapore, Robinson’s current management, headed by John Cheston, has not sat idle while waiting for OCBC to sell its stake.

It has secured new M&S locations in Malaysia, where the number of M&S outlets will double to four by the end of next year.

Robinson will also nearly double the sales floor at the existing M&S store at Suria-KLCC in the next few months.

This expansion of the M&S business follows the strong response from shoppers to permanent price cuts introduced last year at M&S outlets in Singapore and Malaysia.

Robinson is also understood to be studying prospects for M&S stores in Vietnam.

And management is believed to be once more considering a Robinsons department store in Malaysia - this time at an extension to the Mid Valley mall in Petaling Jaya opening next year. But Robinson will have to weigh this matter carefully, given the mid-to-upper department store market in Malaysia is already crowded with players like Metrojaya, Parkson and Sogo.

In contrast, a Robinsons department store would face less competition in Indonesia. And that market has a ready base of shoppers among well-heeled Indonesians who visit Robinsons during their trips to Singapore.

The group would probably find it tough to export its John Little format overseas, given that there are so many lower-priced retailers established in the region.

Prospects for expanding the M&S format are also limited, as Robinson only has the franchise for the brand in Singapore and Malaysia. There are already M&S outlets in most parts of Asia - except China and Indochina. And principal Marks & Spencer Group plc may have its owns plans to enter China.

So the Robinsons department store is likely to be the key engine to drive the group’s overseas expansion.

In this regard a remake begun last year - to again sell more exclusive merchandise at higher prices in the Robinsons stores - is a step in the right direction. With lower-priced formats crowding the Asian retail scene, building the image of a more upmarket Robinsons department store should give the group a better chance of standing out - in Jakarta or, who knows, even Beijing, Shanghai or Guangzhou.

Whether Auric has overpaid or bought an undervalued stock will be seen in the months and years to come.

Source : Business Times - 18 Apr 2006