SGHOUSING.COM 新加坡房地产网

Other operators like Ascott and Fraser also have similar expansion plans

AS DEMAND for service apartments hots up, property developer Far East Organization (FEO) is adding another 205 luxury flats to its portfolio, targeted at well-heeled expatriates.

Already the largest service apartment operator in Singapore, FEO appears keen to capitalise on rising service apartment occupancies and rates, as the improving economy draws more expatriates back here.

Other major service apartment operators such as The Ascott Group and Fraser Serviced Residences also have similar intentions to expand here.

FEO will devote an entire block at its 99-year leasehold, 387-unit project Orchard Scotts in the Newton area to service apartments. The project is expected to be ready for lease by about the middle of next year.

The new flats are believed to be more luxurious than the firm’s 225-unit Orchard Parksuites service apartments behind Wisma Atria mall.

Occupancy at Orchard Parksuites is in the high 90s in percentage terms while rates have climbed by 20 per cent since last year.

Other FEO service apartment properties, including Regency House in Penang Road and Central Place in Hougang, are also reporting occupancies of above 90 per cent.

Like the hotel industry, the service apartment market too was hit by the outbreak of Sars in 2003.

But occupancies and rates have since bounced back, said Serviced Apartments Association president Tan Kim Seng.

In line with increasing business activity in an improved economy, occupancy levels have gone up to about 90 per cent, he said.

‘Rates are creeping up for sure. With limited supply and continued demand, rates will soon go back to the pre-1997 level…That will attract further investments.”

There has not been any significant new supply added to the existing pool of 3,600 service apartment units in Singapore in the past few years.

Mr Kwek Leng Beng, City Developments’ chairman, originally wanted to set aside a block or 130 units of his super-luxurious St Regis project.

‘But if he can sell them at $2,600 to $2,800 per sq ft, why not,” said Mr Tan.

At The Ascott Group, its properties at home are reporting occupancies in the high 80s in percentage terms.

‘Room rates are expected to increase across the industry and we will also be looking at increasing our room rates in tandem,” said an Ascott spokesman. Ascott has said it could add an Ascott property, and one or two Citadines branded properties in Singapore.

Fraser is also keen to grow here. Its two properties, Fraser Suites and Fraser Place, are reporting occupancies in the mid-90s in percentage terms.

joyceteo@sph.com.sg

Far East Organization will devote an entire block of 205 units at its 99-year leasehold, 387-unit project Orchard Scotts to service apartments

Source : Straits Times - 21 Jun 2006

A SITE in Woodlands Industrial Park (E2/E9) will be awarded soon after a public tender closed yesterday - the third award of such a site this year.

The highest bid for the 167,034 sq ft site - with a plot ratio of 1.0 - was $5.85 million or $35 per sq ft per plot ratio (psf ppr) by Evan Lim & Co. Teambuild Realty bid $5.512 million or $33 psf ppr, while Leong Huat Hardware bid $5.2 million or $29 psf ppr. There were eight bids, all of which the Urban Redevelopment Authority (URA) will evaluate before it awards the site.

Savills Singapore director of industrial business space Dominic Peters said the ‘good prices’ signal a return of confidence in the industrial sector. Factoring in construction cost of about $70 psf, Mr Peters said the rental for the eventual industrial space could be as high as $1.30 psf.

Noting that the bidders were predominantly building and construction-based companies, he said: ‘These days, big developers do not go into industrial property.’

Colliers International managing director Dennis Yeo pointed out that industrial land-sale sites have been relatively small, with low plot ratios, and consequently lower development costs. ‘These sites are quite sought-after as they can be built as single-storey space,’ he said.

And there could be increasing demand for this type of space in the future. ‘What these developers could build might be an alternative to JTC’s flatted factories,’ Mr Yeo added.

Coincidentally, JTC Corporation was meant to close the tender for a 2.92 ha site - with a plot ratio of 2.5 - in Serangoon North but yesterday said the deadline had been extended. A spokesman for JTC Corporation said: ‘The tender submission for the land parcel at Serangoon North Avenue 4 has been extended to July 4 in response to the requests of the developers and industrialists.’

Closer to the CBD, URA has formally released a reserve site at New Bridge/North Canal roads for commercial development. The 0.12 ha land parcel has a plot ratio of 4.2 and a maximum permissible gross floor area of about 5,390 sq m.

Source : Business Times - 21 Jun 2006

Owners asking for a total of $175 million or $1,143 psf ppr

AFTER a flurry of collective sales in the Cairnhill and Orchard Boulevard areas in recent months, en bloc fever has headed towards Orange Grove Road.

Orange Grove Condominium is the first property to be put up for collective sale in Orange Grove Road this year, says marketing agent Jones Lang LaSalle.

Market sources say the owners expect about $175 million, which works out to $1,143 per square foot of potential gross floor area inclusive of an estimated development charge of $6 million. The 98,953 sq ft freehold site at the corner of Orange Grove and Stevens roads is zoned for residential use with a 1.6 plot ratio - the ratio of potential gross floor area to land area - with a 12-storey height limit.

Analysts estimate a new condominium project on the District 10 site could break even at about $1,650 psf.

‘We expect keen competition for the site. There is a very limited supply of sites for sale in Orange Grove Road. Most of the stock is tightly held - there’s Shangri-La Hotel, RELC and several serviced apartments. Also, the location is close to Nassim Road, which is highly sought after,’ says JLL’s regional director and head of investments Lui Seng Fatt.

Other prime district residential sites now on the market include Habitat One with an asking price that works out to a $1,280 psf per plot ratio including DC, Nassim Park with an asking price of $1,218 psf ppr and a site at Lengkok Angsa in the Paterson Road vicinity at $1,184 psf ppr.

Assuming Orange Grove Condominium’s owners get the price they expect, they will pocket on average $5 million to $6 million per unit, with the biggest unit fetching about $10 million. These sums are almost 90 per cent more than the units would fetch if sold on an individual basis.

The existing development comprises two four-storey blocks housing a total 31 apartments and maisonettes with floor areas ranging from 2,917 sq ft to 7,276 sq ft.

The development is about 18 years old. A few Hong Kong investors collectively own four units in the development.

Currently, owners controlling more than 80 per cent of share values in the estate have agreed to a collective sale. The tender closes on July 19.

Source : Business Times - 20 Jun 2006

Rents up 23.2% from Q405; seen rising 12-15% in H2, 15% in 2007

TIGHTENING prime office space and buoyant demand pushed up the average Grade A office rental value in the prime Raffles Place area by 13.1 per cent in Q2 over the preceding quarter, says Colliers International.

The $6.37 per square foot average monthly gross rent in Q2 for the location - which the firm defines as including new developments in the Marina Bay area like One Raffles Quay - is 23.2 per cent higher than the Q4 2005 level.

Colliers predicts a further 12 to 15 per cent increase in the second half of this year, followed by another 15 per cent for the whole of 2007. ‘New supply of good grade office space will remain muted till the completion of the Business & Financial Centre in 2009-10,’ the firm said yesterday.

The average monthly gross rent for Grade A offices in Raffles Place has recovered by 61.3 per cent from the recent bottom of $3.95 psf in Q1 2004. But the latest figure of $6.37 psf is still below the 1996 peak of $9.77 psf, the firm said.

The 13.1 per cent hike in Q2 surpassed the previous quarter’s 8.9 per cent gain and is also the biggest quarterly rise recorded in the past 10 quarters for Grade A office space in Raffles Place.

The property consultancy says that in Raffles Place as well as all major office micromarkets across the island, the second quarter’s Grade A office rents saw their steepest increases since the market bottomed in Q1 2004. ‘Currently, Grade A office stock in Singapore has reached the technical full occupancy rate of above 95 per cent. ‘Good quality office space with large floor plate in excess of 15,000 sq ft is highly sought after. This is evident from the take-up rate of 1.3 million sq ft of office space in One Raffles Quay, which was fully committed way ahead of its completion date,’ says Ms Tay.

‘This has enabled One Raffles Quay (ORQ) to achieve benchmark rentals which swiftly filtered down to the rest of the office market, leading to broad-based rental growth,’ she said.

ORQ, which boasts big-name tenants like Deutsche Bank, ABN Amro, UBS, Barclays Bank, Credit Suisse, Societe Generale and Ernst & Young, is marketed by property consultancy CB Richard Ellis. The development comprises two towers. The first tower was completed in April and the second is slated for completion in October.

‘An example of just how tight the office market is becoming can be seen in Merrill Lynch’s recent leasing commitment to the HarbourFront office micromarket, which includes more than half of HarbourFront Tower 5, which is slated to complete only in late 2008,’ says CB Richard Ellis executive director Moray Armstrong.

Source : Business Times - 20 Jun 2006

Developer will sell one tower entirely as serviced residences

FAR East Organization says it will launch Orchard Scotts soon, and one tower will be entirely sold as serviced residences.

Far East has not released details on the launch but says that it intends to blend private residences and serviced suites with hotel-styled luxury for the first tower.

The news comes shortly after City Developments Ltd launched St Regis Residences, which also offers hotel-style services, and achieved good take-up.

It may be too early to say if this is the start of a trend but serviced residences will certainly be more attractive to buyers in terms of leasing and investment potential and so other developers are likely to follow suit.

Tay Huey Ying, associate director of research and consultancy at Colliers International, says it would be a ‘good trend’ as it ‘take the hassle away from property investors’.

‘These investors will not need to worry about management and maintenance issues,’ she added.

Far East may also offer leasing services or guaranteed rental returns. On this, Ms Tay says the concept is not new, and is usually done without fanfare.

She does not think the trend will develop along the lines of ‘condotels’ which are residential apartments leased out on a short-term basis, as there are currently restrictions on this.

‘Mid- to long-term leases should not be an issue,’ she said. A typical lease is about two to three years, she added.

Jones Lang LaSalle regional director and head of investments (capital markets) Lui Seng Fatt notes that rental yields for serviced residences could indeed be more attractive, at around 4.5 per cent.

Already, he says that non-serviced residences like Wing Tai’s Light @ Cairnhill are fetching rental yields of 4 per cent. And the actual rental could be twice as much, at about $10 psf per month. ‘There will be investors who are happy to park their money and wait for capital gain,’ he said.

Still, Mr Lui says that not all developments are good candidates for becoming serviced residences. As a rough guide, he says that properties within one kilometre of the Orchard Road/Scotts Road junction are more likely candidates.

Highlighting that serviced residences are not common here, Mr Lui added: ‘In the past, it was difficult in terms of management.’ In this light, Far East, which already owns hotels and serviced apartments, could be at an advantage as it will have economies of scale.

Mr Lui expects response for Orchard Scotts to be good. Earlier estimates put the average price at around $1,000 psf but this could now be as high as $1,500.

Source : Business Times - 20 Jun 2006