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Group signs options to buy properties worth $44.5m

SOILBUILD Group Holdings is expanding its presence in the Balestier Road area. The group said yesterday that it has signed various options to purchase properties worth $44.5 million through its wholly owned subsidiary SB (Blueteak) Development Pte Ltd.

They include 24 units of apartments under a collective sale in Minbu Road and Martaban Road and adjacent terrace houses and apartments. The owners of the 24 units who have given their sale consent will get about 70 per cent more than what they will get if they sell their units individually, said property consultants Teakhwa Real Estate. Soilbuild said it will also be acquiring certain adjoining lots.

‘Altogether, the total land size is about 4,498 sq metres and the total land cost is about $44.5 million,’ said Soilbuild. ‘Based on the approved plot ratio of 2.8 and an estimated development charge of $0.2 million, the cost of the land is about $329 psf per plot ratio.’

The combined freehold site can be re-developed into a condominium of maximum 36 storeys, with about 90-100 units assuming an average size of 1,500 sq ft per unit. The breakeven cost for the new condominium development on the freehold plot is estimated to be approximately $560 psf, said Teakhwa. This new project is expected to be launched by 2007.

‘From our completed projects, we have also built up an extensive database of potential buyers and we are confident that there will be a strong demand for the new condominium units at Minbu/Mandalay Roads,’ said Low Soon Sim, Soilbuild’s executive director.

This is not the first time Soilbuild has had projects in the Balestier Road area. Its other projects include the 18-storey Pinnacle 16 and Mandale Heights. Including the new purchase, Soilbuild will have four new upcoming residential property projects, including One Tree Hill Residence, the site at Bright Apartments and the recently acquired site at Cashew Road. The latest acquisition will be funded by internal resources and bank borrowings.

Source : Business Times - 22 Jun 2006

50 leasehold units due to be sold at $1,400-$1,800 psf, come July 8

FAR East Organization will launch apartments at Orchard Scotts for sale at prices near the top end of current market prices.

The target launch date for the 99-year leasehold development is July 8, and 50 units will go on sale at $1,400-$1,800 psf.

On the expected take-up, Far East’s chief operating officer Chia Boon Kuah says he is encouraged by the pace of redevelopment and the ‘reinvention of Orchard Road’. Far East is also banking on the trend for city living and that those affected by the spate of en bloc sales in the Cairnhill area ’still want to live in the city’. As such, he expects about 50 per cent of buyers to be locals.

The current projected benchmark for prime 99-year leasehold residential property is $1,800-$2,000 psf for CapitaLand and Sun Hung Kai Properties’ future Orchard Turn development. Other 99-year leasehold developments like Wing Tai’s Draycott 8 are reported to be selling for $1,600-$1,800 psf, while the second tower of City Developments’ The Sail @ Marina Bay is said to have been priced around $1,200 psf.

At Orchard Scotts, there will eventually be a total of 180 units for sale in two towers. Reflecting the high-end target market, 124 units or almost 70 per cent have four bedrooms or are suites. These units start at 2,282 sq ft and go up to 3,627 sq ft for the suites.

The third tower that makes up Orchard Scotts will be retained by Far East and operated as serviced residences. Explaining why, Mr Chia said rent returns from serviced residences here are generally more attractive, between 1.5-2.5 per cent above average residential rental returns.

With nine serviced residences projects, Far East is the largest owner-operator in Singapore. It does not have an umbrella brand for these but Mr Chia hinted that with the opening of Orchard Scotts serviced residences, Far East could be ‘consolidating its brands next year’ in line with plans to expand the business regionally.

Orchard Scotts serviced residences will represent the top tier, with units going for about $10 psf per month or $6,000 for a 600 sq ft unit.

Source : Business Times - 22 Jun 2006

It offers decent yield plus solid exposure to an improving outlook for office and retail properties, says LESLIE YEE

LISTED in December 2004, Suntec Real Estate Investment Trust (Suntec Reit) has a wide investment mandate that allows it to invest in retail and office properties. At its listing, Suntec Reit’s portfolio comprised office and retail space in Suntec City, a prime integrated commercial complex in the central business district.

Since then, Suntec Reit has added two more properties, Park Mall and Chijmes, to its portfolio. Latest valuations of the trust’s properties as at April 1 put the portfolio at $2.75 billion, throwing up a revaluation surplus of $106 million.

Suntec Reit’s manager is ARA Trust Management (Suntec) Limited (ARA Suntec), which is part of ARA Asset Management Limited Group (ARA). ARA in turn belongs to Hong Kong tycoon Li Ka-shing’s Cheung Kong (Holdings).

The trust’s substantial shareholders are Capital Group with a 6.1 per cent stake and Cheng Yu Tung, Lee Shau Kee and Shaw Trustee, each of whom has a 5.8 per cent stake. The free float is 70 per cent

‘We have delivered five consecutive quarters of consistent growth in distribution since our listing,’ says ARA Suntec chief executive officer Yeo See Kiat. Annualised distribution per unit (DPU) for Suntec Reit of 7.34 cents for the latest quarter ended March 2006 is 22 per cent higher than that in a roughly comparable period a year ago.

Mr Yeo is pleased with Suntec Reit’s acquisitions of Chijmes and Park Mall and is now focusing on creating a more exciting experience for shopper and visitors at these properties. Looking ahead, Suntec Reit is keen on further acquisitions. ‘We have been and are pro active on the acquisition front,’ says Mr Yeo.

But Suntec Reit is not in any hurry to join an increasing number of Reits which are looking to acquire properties outside Singapore. Mr Yeo says, ‘As to cross border acquisitions, we are still focused on Singapore presently.’

Suntec Reit has a four-pronged acquisition strategy involving a focus on new growth corridors, the strengthening office sector, the robust retail market and asset enhancement opportunities.

The trust does not own the convention space at Suntec City, but Mr Yeo is excited by Suntec City being the venue for this year’s annual meetings of the International Monetary Fund and World Bank in September. The high-profile international event would further boost Suntec City’s prominence, he says.

Mr Yeo is positive about prospects for prime office space in Singapore in the coming years. As for potential competition from new big shopping malls that are coming up such as VivoCity, he says that they will ’strengthen Singapore as a regional shopping hub’.

Each mall will have to focus on its respective strength, he says. For Suntec City, the Reit is focusing on creating more concepts, excitement and vibrancy to make a visit to Suntec City a positive and enjoyable experience, he says. Suntec Reit has implemented asset enhancement initiatives such as a New Happy Kidz Zone, which saw the entry of Toy ‘R’ Us megastore.

For its latest quarter ended March, Suntec Reit’s DPU was 1.81 cents, almost 20 per cent ahead of forecast in the initial public offering prospectus. In the latest quarter, office occupancy at Suntec City continued to rise while retail revenue grew by close to 4 per cent quarter-on-quarter. Financing cost averaged 3.2 per cent, and 70 per cent of the net debt had been hedged as at end-March.

Of late, interest rate worries have proved a major bugbear for Reits. Coupled with that, investors in Reits are increasingly spoilt for choice as more alternatives hit the market, such as Frasers Centrepoint Trust.

Still, fears of interest rate rises may be overdone and Reits with quality assets and a track record of successfully acquiring assets and capable of growing organically, such as Suntec Reit, could be worth investing in.

Suntec Reit has hedged a significant portion of its debt. Moreover a rising interest rate environment could be linked with higher inflation as well as higher office and retail rents.

In terms of transport infrastructure, the completion of the Circle Line MRT will benefit Suntec City and Park Mall. A big theme playing out in Singapore is the rejuvenation of the urban centre, with mega projects like the Business and Financial Centre and the Integrated Resort at Marina Bay coming on stream.

There’s debate as to whether quality new projects will cannibalise demand for prime office and retail space.

New projects, though, need time to complete and in the meantime, properties like Suntec City can ride on the improving economic prospects in Singapore and the benign office and retail property cycles here. And when the new projects are completed, Singapore could become an even more important business and convention hub.

All this means that properties like Suntec City and Chijmes, if managed well, should enjoy the spinoffs as Singapore moves closer to the leading global cities of London and New York.

Suntec Reit offers investors the chance to tap into the Marina Bay area as it becomes an exciting place in which to live, work and play.

But there is potential dilution to DPU that kicks in 42 months after December 2004 stemming from the issue of deferred units to the vendor of Suntec City’s retail and office space. Assuming these deferred units were issued at the listing date, Suntec Reit’s DPU for its latest quarter would have been reduced by 14 per cent.

Using annualised DPU for the latest quarter, Suntec Reit is currently trading at a yield of 6.3 per cent. Overall, Suntec Reit offers investors coming in now a decent yield plus solid exposure to an improving outlook for office and retail properties.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Source : Business Times - 22 Jun 2006

St Regis Residences drive price to highest in 9 years, says CBRE

The launch of St Regis Residences helped set records in luxury home prices and sales volumes in the second quarter, according to CB Richard Ellis (CBRE).

The average price for its basket of freehold completed luxury properties posted a quarter-on-quarter increase of 7.7 per cent in Q2 to $1,670 per square foot (psf) - the highest figure in nine years. Such a level had not been seen since Q4 1997, when the average price was $1,987 psf.

And 62 private homes, mostly at St Regis Residences, have changed hands at above $2,000 psf so far this quarter - probably the highest quarterly figure ever, CBRE reckons.

Since the start of this year, about 70 private homes priced above $2,000 psf have changed hands, including 58 from St Regis Residences. Assuming the same level of sales is repeated in the second half, the year could end with about 140 private residential deals above the $2,000 psf mark.

This would surpass levels achieved during the market peak in 1996 and 1997, when 71 and 44 deals respectively were done above $2,000 psf, says CBRE.

The 7.7 per cent gain in the average luxury home price in Q2 followed a flat performance in Q1 and is in line with the firm’s earlier forecast of an increase of 15-20 per cent for the whole of this year.

The increase for the whole of last year was 15.2 per cent, the bulk of which came in Q3 when CBRE’s average price for luxury homes posted an 11.5 per cent quarter-on-quarter gain to $1,500 psf from $1,345 psf - a level it had stayed at for seven consecutive quarters.

Back in Q3 last year, The Sail @ Marina Bay was the catalyst for the price spike. And this quarter, the catalyst has been the launch of St Regis Residences. While these are uncompleted projects, the buoyant sentiment they created has had a spillover effect on prices of completed luxury freehold projects captured in CBRE’s basket.

CBRE director (residential services) Joseph Tan notes that despite buoyant sentiment in the high-end residential segment, market conditions today are still markedly different from those in the heyday in 1996-1997.

‘Back then, home prices were driven up by both local and foreign speculators, nudged by a relaxation of housing regulations and Housing & Development Board sale and resale conditions, as well as strong economic performance,’ he says. ‘Today, foreigners are the key drivers behind the demand for luxury properties. Until 2005, home prices here were still more than 30 per cent below peak levels in 1996-1997, so there is still potential for an upward movement in prices. We expect demand from foreigners to sustain, with Singapore developing as a financial centre.’

CBRE’s report, released yesterday, also shows that developers launched about 2,200 private homes in Q2, similar to the figure of 2,111 in the preceding quarter. In the primary market, developers sold about 1,800-2,000 units in Q2, similar to the Q1 figure of 1,858. This took developers’ first-half sales to 3,600-3,800 units, against 4,030 in first half of last year.

CBRE predicts primary market sales of 1,800-2,200 units in Q3 and reckons prices could continue to rise. Expected high-end launches include Hong Leong’s Tate Residence, CapitaLand’s Scotts High Park and Far East Organization’s Orchard Scotts.

Demand for private homes in the secondary market remained strong in Q2, with 2,100-2,300 units changing hands.

Source : Business Times - 22 Jun 2006

The properties next to Naga Court have an expected price tag of about $51m

PROMINENT neighbours in Bukit Timah are teaming up again to sell their freehold properties next to Naga Court, with an expected price tag of about $51 million.

The latest property offer sees Hock Tong Bee, Singapore’s oldest family-owned wine merchant, joining forces with descendants of the late Seah Eck Jim - a pioneering local architect. The properties are at the corner of Bukit Timah and Keng Chin roads.

In July 2004, the two sides put up their properties for sale, but the four sites totalling about 35,381 square feet and with four bungalows standing on them were not sold then as the offers were not high enough for the owners.

This time, they have included a neighbour’s bungalow plot and a road reserve which was originally thought to belong to the state but has since been confirmed as being part of the estate of Mr Seah’s widow.

Including these two plots has resulted in a bigger combined land area of 44,976 sq ft. The $51 million which the owners are hoping for works out to about $703 per square foot (psf) of potential gross floor area, including an estimated development charge (DC) of $15.5 million. This unit land price is 68 per cent higher than the $419 psf per plot ratio (ppr) including DC that market watchers had expected in 2004. The 2004 unit land price expectation factored in the cost of buying the adjoining road reserve from the state.

DTZ Debenham Tie Leung, which is marketing the 44,976 sq ft site, says that it is zoned for residential use with a 2.1 plot ratio and 24-storey height limit under Master Plan 2003. The site can be redeveloped into a new condominium with about 60 units averaging 1,500 sq ft.

The current price expectation is pegged at the $703 psf ppr including DC that Keppel Land paid for Naga Court next door in a collective sale in 1999. In 2001, KepLand wrote down the value of the 49,168-sq-ft freehold site to $409 psf ppr.
Sentiment in the property market has certainly picked up markedly since then. DTZ director for investment advisory services Tang Wei Leng says: ‘Given the better outlook, we anticipate this site to fetch at least the same price if not better than the $703 psf ppr Naga Court price.’

The latest site comprises six parcels, including Nos 347 and 351 Bukit Timah Road belonging to Hock Tong Bee, No 349 Bukit Timah Road belonging to Kwok Weng Fai (grandson of the late Mr Seah), No 353 Bukit Timah Road owned by his sister, Dawn Kwok, and her husband, Wee Kok Wah, group president of Stamford Tyres.

The other two plots are the road reserve, which belongs to the estate of Lim Buck Sim (Mr Seah’s widow), and No 2 Keng Chin Road, owned by a neighbour. The six plots combined form a regular-shaped rectangular plot which should appeal to developers.

Li-Ann Wee, daughter of Dawn Kwok, said the two bungalow plots being sold by her parents and her uncle Kwok Weng Fai are the last two land parcels owned by the family in the area.

The Seah family rode out the Japanese Occupation in the area, and there were stories of how the family had to really struggle, hiding family members to prevent them from being killed by the Japanese,’ said Dr Wee, who grew up in No 353 Bukit Timah Road. ‘They planted vegetables like tapioca in the gardens to survive. So the properties do have a lot of memories for us. But we’ve been waiting for the market upturn and we think it’s a good time to sell now.’

The tender for the site closes on July 18.

DTZ also clarified that the nearly $70 million price for the expressions of interest exercise for the Balmoral Condominium collective sale which it launched earlier this week is an indicative price, and not asking price.
Two more collective sale sites have been put on the market. CB Richard Ellis has launched an expressions of interest for the freehold Makeway View, off Newton Road. The asking price of $66 million works out to about $622 psf ppr inclusive of an estimated $6.32 million DC. The 41,560-sq-ft site has a 2.8 plot ratio.

Credo Real Estate has launched the tender for the freehold Emerald Mansion, at the corner of Emerald Hill and Saunders roads, with an indicative land price of $73 million to $75 million. This works out to about $846 to $870 psf ppr. This is based on a redevelopment scheme with 86,240 sq ft gross floor area and assuming no DC is payable

Source : Business Times - 22 Jun 2006