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Of the 4 changes effective from July 1, 2 will impact trade directly

Changes to Central Provident Fund (CPF) schemes announced a year ago will take effect on July 1, but property consultants do not expect them to have a significant effect on the property market.

Of the four changes, two - the phasing out of the Non-Residential Properties Scheme (NRPS) and restrictions on the use of CPF savings for multiple property purchases - will impact the market directly.

>From next month, only those who have set aside the prevailing Minimum Sum cash component of $47,300 in their Ordinary and Special Accounts can use their CPF savings on a second property. But Singaporeans’ appetite for property investments has been waning anyway.

‘In the past couple of years, there have been people who lost money in the property and stock market, and they are now more careful about how they invest their money,’ said ERA Real Estate vice-president Eugene Lim.

View the CPF Board’s press release

On dropping the NRPS, the CPF Board said earlier that take-up had been low. The scheme covers commercial properties including offices, warehouses and shops. Mr Lim expects buyers of retrofitted shophouses in the $1 million price range to be most affected. But even so, this is not a large market.

Knight Frank director Nicholas Mak said the changes are meant to have more of a ‘mid- to long-term effect’.

CPF changes that took effect earlier - allowing non-related singles to use CPF savings, and extending the cap on the age of leasehold properties that can be bought with CPF savings - may have had a positive effect on the property market.

Mr Mak said the latest changes are likely to curb ‘over-investing in property’ especially for buyers in the ‘upgrader and mass markets’. He added: ‘Previously, this segment of buyers would have had more liquidity to buy bigger units.’

Although the property market seems to have had a ’shot in the arm’ from the buoyant high-end segment, Mr Mak said ‘the recovery of the mass-market has been less than spectacular’. As such, he is concerned that the changes could contribute to the slow pick-up of the mass market.

In the latest analysis of property transactions in Q1 2006 by DTZ Debenham Tie Leung, the number of transactions by purchasers with Housing Development Board addresses have fallen 14 per cent quarter on quarter.

DTZ executive director Ong Choon Fah, however, believes the mass-market is hampered by a lack of new launches. Noting that the take-up at GuocoLand’s The Quartz in Buangkok is ‘quite decent’, she adds: ‘There will be no impact on the mass-market from the CPF changes because most are buying their first property.’

The other CPF changes that take effect from July 1 include the transfer of excess Medisave Account contributions to Special or Retirement Account instead of the Ordinary Account, and the increase in CPF Minimum Sum, Medisave Minimum Sum and Medisave Contribution Ceiling.

Source : Business Times - 14 Jun 2006

TWO redevelopment sites at Killiney Road are up for sale by public tender.

Killiney Apartments is the larger of the two. Its site covers 40,348 square feet, with a plot ratio of 2.8 and a height restriction of 10 storeys.

The site is marketed by Colliers International (Singapore), whose director for investment sales, Ho Eng Joo, says the owners expect a price of about $94 million-$96 million. This works out to be between $835-$852 per square foot per plot ratio (psf ppr).

Earlier this month, Phoenix Court at the corner of St Thomas Walk and Killiney Road went on the market for $100 million or around $850 psf ppr.

A smaller redevelopment site, Chez Bright Apartments (34,402 sq ft) sold for $54 million, or $625 psf ppr inclusive of an estimated $6.25 million development charge.

Related articles:

View the press release from Colliers International

View the location maps

Colliers is also marketing a smaller redevelopment site located at 118-128 Killiney Road which occupies a land area of 10,050 sq ft. Zoned for residential development with the first storey for commercial use, the site has a plot ratio of 2.8 and a height restriction of six storeys. The asking price is $21 million-$23 million, or $750-$820 psf ppr.

Speaking about the demand for redevelopment sites, Mr Ho said: ‘The prime sites in Districts 9 and 10 will still attract developers but the bidding prices may not be as aggressive. Owners may have to moderate their expectation of price if they want a successful sale. At the moment, there are still quite a number of en bloc sale sites in the stage of preparation to launch for sale in the market.’

Source : Business Times - 14 Jun 2006

Sector gets boost from spillover demand for new projects; en bloc caveats also cited

(SINGAPORE) Transactions in the secondary market for prime district apartments and condos hit a 10-year high in the first quarter of this year, according to latest research by DTZ Debenham Tie Leung.

The property consultancy’s analysis of caveats captured by the URA Realis system shows that there were 759 sales of such units in Q1, up 13 per cent from the preceding quarter.

The firm attributes the surge to continued interest in some relatively new completed projects as well as significant price increases among selected high-end residential developments which also encouraged resales in prestigious projects like Ardmore Park.

DTZ highlighted two recent resales of high-floor units at Ardmore Park in March and April at $2,073 per square foot and $2,028 psf, respectively.

Another factor that contributed to the surge in caveats lodged for secondary market deals of prime district apartments lately has been the current wave of collective sales.

The quarter saw 58 caveats registered for Eng Lok Mansion at Napier Road, which is being sold to Hasetrale Holdings for a record unit land price of $1,218 psf per plot ratio.

There is some inconsistency in how caveats involving collective sales are lodged.

In some cases, all the units involved in the en bloc deal are captured as a single caveat while in others, individual caveats are lodged for all the apartments in the estate in the collective sale.

As a result, DTZ could not provide an accurate gauge of the number of resale deals in prime districts involving collective sales.

While secondary market deals involving apartments and condos in districts 9, 10 and 11 surged in Q1, it was a different story in the primary or developer sale market, which registered a 51 per cent quarter-on-quarter decrease, from 628 units in Q4 last year to 307 units in the first three months of this year.

This was not surprising, given that there were few new launches in prime districts in Q1.

Looking ahead, however, DTZ expects sales of prime district apartments and condos in both the primary and secondary markets to strengthen as more high-quality projects are released following the recent launch of St Regis Residences, which has set a new price benchmark.

‘Notwithstanding competition from lifestyle-driven projects such as two condominiums at Sentosa Cove that may be launched in the second half of 2006 - one from City Developments and TID, and the other from Ho Bee - the interest for prime district projects is likely to remain keen, as investors continue to expect a strong recovery in high-end residential prices,’ DTZ said.

Collective sales will also continue to support the prime residential resale market, it added.

In the landed residential segment, DTZ’s analysis of caveats showed the total number of landed homes changing hands in the prime districts in both primary and secondary markets fell 10.3 per cent quarter-on-quarter, from 155 in Q4 last year to 139 in Q1.

Nonetheless, the Q1 figure was the fifth highest quarterly figure over the decade, DTZ notes.

While there were generally few foreign buyers of landed homes in the prime districts, the number has seen an upturn since Q2 last year. It hit 19 deals each in both Q4 last year and Q1 this year, to reach the highest level in a decade.

The bulk (or 54) of the prime district landed homes transacted in January to March this year were detached houses.

DTZ notes that interest for quality landed homes in these locations continues to be driven by the scarcity of these homes including Good Class Bungalows in the island’s prime districts, coupled with expected price increases in tandem with the property market recovery.

Source : Business Times - 13 Jun 2006

Reserve-list site at Unity St ‘triggered’ just 3 weeks after site was available

THE Urban Redevelopment Authority (URA) yesterday said it has accepted a successful application from a developer for a reserve-list hotel site at the corner of Unity Street and Clemenceau Avenue to be put up for tender.

The developer has committed to bid at least $25 million during the tender for the 99-year leasehold site. This price works out to $210 per square foot of potential gross floor area.

A hotel consultant estimates that assuming the developer is looking to build a hotel with 190 rooms on the site, the $25 million minimum price translates to a breakeven cost of about $300,000 per hotel room. This reflects an estimated net yield of 6 to 8 per cent. Of course, it remains to be seen just how aggressive the bidding will be during the tender for the site. The tender is slated for launch in about two weeks and will close about eight weeks later.

The Urban Redevelopment Authority’s (URA) announcement yesterday that the reserve-list site had been triggered for tender is just within three weeks of the site being made available for application - the shortest period since the government introduced the reserve-list system in June 2001.

The previous record of five weeks was held for the Somerset Central site, whose tender closes in August.

Sites on the state’s reserve list are released for tender only if there is a successful application by a developer with an undertaking to offer at least a minimum bid which is acceptable to the state.

Some property industry observers reckon the quick release of the Unity Street hotel site reflects improving investor interest in the Singapore hotel market on the back of bullish sentiment fuelled by the government’s award last month of the the Marina Bay Integrated Resort site to Las Vegas Sands.

The Singapore Tourism Board’s 2015 vision announced in January last year aims to double visitor arrivals to 17 million and triple tourism receipts to $30 billion by 2015.

URA said the Unity Street site is the first hotel plot to be triggered for sale from the government reserve list since the sale of a plot at Bras Basah Road/North Bridge Road, next to Carlton Hotel, in January last year.

The Unity Street hotel site is one of three hotel plots on the Government’s reserve list for the first half of this year. There’s still no news of a successful application of a hotel site at Sinaran Drive near Novena MRT Station which has been available for application since April.

The final plot, in the budget hotel/backpacker haunt of Bencoolen Street, will be offered later this month.

Source : Business Times - 13 Jun 2006

Sale of site slated for commercial devt could fetch up to $58m

Riding on the recovery in the property market, Simon Cheong’s SC Global Developments has put up for sale a commercial site it bought last year at the corner of Newton and Thomson roads which some in the market say could fetch around $42 million to $58 million.

If this price is indeed achieved, it would make for a handsome profit given that SC Global bought the 15,490 sq ft freehold site for just $13.5 million in August last year when sentiment was weaker.

Besides the vast improvement in sentiment in the commercial property market, an additional reason for the increase in the site’s value comes from SC Global’s decision to pitch the proposed commercial development for medical suites.

This makes sense given that the Novena area seems to be shaping up as a medical hub with Far East Organization’s Novena Medical Centre coming up and the site’s proximity to Tan Tock Seng Hospital. SC Global’s site - previously used as a Shell petrol station - is also close to Thomson Medical Centre and KK Women’s and Children’s Hospital.

SC Global’s site is currently approved for a 12-storey commercial building with a 3.0 plot ratio (ratio of potential gross floor area to land area). This allows a maximum gross floor area (GFA) of 46,470 sq ft. No development charge (DC) is currently payable.

However, the property group, which is well-known for its upscale residential properties, recently submitted an outline application for a higher plot ratio of 4.2 entailing an 18-storey commercial project with 65,058 sq ft GFA. The latter scheme, if approved, would involve payment of a development charge of nearly $1 million.

SC Global itself has not placed a price tag for the property, which is being marketed by DTZ Debenham Tie Leung by a tender that closes on July 12.

However, by some estimates, the site could fetch about $900 psf of potential gross floor area, inclusive of development charges, if any. This works out to an absolute amount of about $42 million based on the approved redevelopment scheme with 3.0 plot ratio.

Using the proposal for a higher 4.2 plot ratio, the plot’s value translates to a higher figure of $57.6 million using the same $900 psf per plot ratio unit land price.

The breakeven cost for the new freehold project works out to about $1,800 psf to $1,900 psf.

Currently, Far East Organization is said to be selling 99-year leasehold medical suites at its upcoming Novena Medical Centre nearby for about $2,000 psf. The location is set for transformation. Novena Square is being repositioned as a sports and lifestyle mall with a new name of Velocity@Novena. And the Urban Redevelopment Authority will soon launch for tender a residential plot near Novena Medical Centre, which will create more homes in the area.

Across the road, next to SC Global’s site, the owners of units in the four-storey Goldhill Centre are also said to be planning a collective sale and are understood to have submitted a planning application for a commercial redevelopment of their site.

SC Global bought its site last August from Shell Singapore through a tender.

Source : Business Times - 12 Jun 2006