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OWNERS at Horizon Towers near Orchard Road are within a few votes of backing a collective sale that could smash records - if developers stump up the $500 million they are demanding.

The whopping price would shatter the existing benchmark - the $385 million paid for the leasehold Waterfront View in Bedok Reservoir Road in May.

And the 204,742 sq ft site would also be the largest to go on sale in the coveted District 9, surpassing the 169,188 sq ft of Lucky Towers, the Grange Road freehold property that sold for $383 million in May.

So far, 78 per cent of the owners at Horizon Towers have backed a sale, 2 per cent shy of the 80 per cent minimum.

‘With more owners promising to sign on over the next two days, we expect to hit 80 per cent by the weekend,’ Mr Arjun Samtani, chairman of the condo’s management council told The Straits Times yesterday.

The sprawling leasehold property comprises 199 units and 11 penthouses in two towers set on elevated ground near Grange Road, the primest of prime land for developers.

Property experts said it would be ideal for serviced apartments or upmarket condos, the hottest segment of the property market.

Mr Alvin Er, managing director of First Tree Properties, which is marketing the block, said: ‘The owners’ minimum expectation is $500 million, or $835 per square foot, inclusive of an estimated upgrading premium of about $31 million.’

That would mean owners picking up about $2.3 million each for their apartments, while penthouse dwellers stand to bag between $3.83 million and $6.28 million.

These prices would be 80 per cent above the open market rate.

‘Our units are getting old and the maintenance costs are rising rapidly. It makes sense to sell collectively and move out,’ said owner Claude Reghenzani.

Apart from its blue-chip location near Orchard Road and Great World City, the estate’s huge size is one of its key selling points.

‘Our site should be particularly attractive to developers as there is a possibility of developing service apartments, or a combination of service apartments and condo in two towers,’ said Mr Samtani.

The $835 per sq ft price is based on a plot ratio of 3.1, which means a developer can erect a building 3.1 times the plot size.

Mr Er said: ‘We see a potential gross floor area of around 650,000 sq ft pending the authorities’ confirmation, with a height limit of 36 storeys.’

Its potential gross floor area would allow 320 condo units averaging 2,000 sq ft to be built.

The proposed $835 per sq ft price is significantly less than $1,134 paid for Lucky Towers, but that was a freehold site.

The developer who buys Horizon Towers will have to pay about $31 million to top up its 99-year lease, of which 27 years has been used up.

Source : Straits Times - 6 Jul 2006

THE operator of a Clarke Quay restaurant will have to foot the entire $500,000 bill for a fire that damaged a neighbouring office after he lost a court fight to get the building’s owner to split the costs.

In a landmark judgment issued last week, the Court of Appeal overturned a High Court ruling that liability for damage caused by the fire - caused by an uncleaned exhaust duct in the kitchen - should be shared by Hong Kong Seafood Place Restaurant and landlord Clarke Quay Pte Ltd.

The November 2002 blaze was started by an unattended wok of oil.  The fire was put out before firemen arrived but, unknown to staff, the heat ignited oil and grease that had built up in the exhaust duct.

The fire built up in a part of the duct hidden from view and spread up to the third floor, eventually reaching the chimney on the roof. It burned wooden louvres at the top of the chimney and the flaming debris fell through a skylight and into the offices of advertising agency Saatchi & Saatchi, causing damage to its property.

The Appeal Court ruled that the duct was not part of the building’s common areas like stairways, lifts and carparks, which are normally expected to be maintained and kept clean by the building owners.

The fire started because the restaurant failed to keep the duct clean, it said. The restaurant owner, Mr Tan Hun Ling, cannot expect the building owner to share the cost of repairing damage caused by its own staff’s neglect.

Source : Straits Times - 5 July 2006

Asia Insurance Building, Hotel Asia to be turned into service - apartments

THE Ascott Group is paying $217.5 million to acquire two prime properties that will be turned into service apartments to meet surging demand from long-stay visitors and expatriates.

Its acquisitions, due to be completed in about three weeks, are part of the group’s strategy to double its local portfolio to 1,600 units by 2010.

The most prominent property is the 20-storey Asia Insurance Building at Finlayson Green - at one time, one of South-east Asia’s tallest buildings.

Ascott will pay the Asia Life Assurance Society $109.5 million for the block, which it aims to turn into a luxury property of about 100 units targeted at corporate travellers. It will be known as Ascott Raffles Place.

‘It will be the flagship property of our Ascott global brand. It will be the best property that we have,’ said managing director and chief executive officer Cameron Ong.

The other property - Hotel Asia on Scotts Road - was believed to have been fought over by about 20 developers, including the giant Lippo Group, before Ascott secured it for $108 million. This figure includes $4.3 million for the hotel management company.

Ascott, the service residence arm of property giant CapitaLand, will retain the staff and run the hotel for a year or so, said Mr Ong. But the property will likely house another Ascott brand project or one under its upper-tier Somerset brand.

The two properties will eventually add about 300 or more units to Ascott’s local portfolio.

Mainboard-listed Ascott is already the world’s largest service residence owner-operator outside the United States. Its acquisitions come at a time when the service apartment sector here is experiencing rising occupancies and rates.

Tourism is also poised for increased growth with a government initiative to double visitor arrivals to 17 million by 2015 and triple tourism receipts to $30 billion by 2015.

Ascott chairman Lim Chin Beng said: ‘In recent years, the supply of high-end, good quality accommodation in Singapore has been reduced as a number of four- and five-star hotels have been converted into condominiums.”

With the Government’s efforts to attract more visitors, Ascott’s proposed acquisitions will be ‘timely’ to cater to the expected rise in demand for good quality accommodation for extended stay, he said.

Ascott Raffles Place will replace the firm’s only Ascott-branded property here, The Ascott Singapore in Scotts Road, which was sold together with Scotts Shopping Centre to Wheelock Properties in 2004.

Mr Ong described the proposed Ascott Raffles Place as the ‘best place’. It will be near one of the integrated resorts, well-placed for the central business district (CBD) and near Collyer Quay, which will be redeveloped into a lifestyle hub.  ‘The whole place will be revitalised and that will give us a very good platform to bring back life to the CBD area,’ said Mr Ong.

The project will see the Asia Insurance Building, erected in the early 1950s and famed across the region for its height, refurbished and brought back to its former glory, added Mr Ong. The 999-year leasehold office building has a gross floor area of about 150,000 sq ft. Ascott’s purchase price works out to $727 per sq ft.

Its price for the freehold Hotel Asia is about $720 psf of potential gross floor area.

Hotel Asia has a potential gross floor area of about 150,700 sq ft and a land area of around 35,900 sq ft. Ascott’s plan, said Mr Ong, is to enhance the two properties and hold them before they are ready to be injected into its pan-Asian real estate investment trust called Ascott Residence Trust.

On another front, Ascott will soon announce plans for a Citadines property here, catering for about 180 units. Citadines is a European value-for-money brand that Ascott acquired in 2004. It is employing it in its expansion plans in Asia.

Ascott, whose global portfolio now totals more than 16,000 units, is targeting to achieve 25,000 units by 2010.

Source : Straits Times - 5 July 2006

A new benchmark could be set if the $220m asking price for the prime location is met

A NEW benchmark could be set for the price of freehold residential land if owners of Ardmore Point are successful in the collective sale of their homes in the prime Ardmore Park location.

They are asking for $220 million, which translates to a unit land price of $1,432 psf of potential gross floor area, including an estimated $22.7 million development charge (DC).

Market watchers suggest the actual reserve price set by the owners could be 5 to 10 per cent lower, at $1,289 to $1,360 psf per plot ratio including DC.

But even at these levels, if they are achieved, Ardmore Point will still topple the current record of $1,218 psf ppr set by Eng Lok Mansion in March this year.

‘We’re confident that with competition from bidders, we’ll be able to exceed Ardmore Point’s reserve price,’ says CB Richard Ellis executive director Jeremy Lake, whose firm is marketing the collective sale. Based on the asking price of $1,432 psf ppr, the breakeven cost for a new condo project on the Ardmore Point site could work out to around $1,950 psf. Using the likely reserve price, the breakeven would be a lower $1,830 psf. That still leaves a profit margin for its developer going by current pricing expectations for coming launches in the area.

Across the road, Wheelock Properties (Singapore) will launch in October its 118-unit condo, Ardmore II, on the amalgamated Ardmore View and Habitat II site at an average $2,250 psf, Wheelock CEO David Lawrence told BT yesterday.

The development will comprise of two 36-storey towers and all 118 units in the project will be four-bedroom apartments of 2,050 sq ft each.

Ardmore Point has a freehold land area of 60,533 sq ft and market watchers say that whoever bags it is also likely to be eyeing the next door Pin Tjoe Court, which is expected to be put up for tender soon.

The two sites will have a combined land area of over 120,000 sq ft - enough to accommodate a new condo with about 165 units averaging 2,000 sq ft. Both sites are zoned for residential use with a 2.8 plot ratio (ratio of potential maximum gross floor area to land area) and a maximum height of 36 storeys.

Ardmore Point’s tender closes on August 8.

The existing 20-storey Ardmore Point has 47 units.

Based on the $220 million asking price, owners stand to receive sums ranging from $2.3 million to $7.9 million per unit.

These are about 120 per cent more than what the units would fetch if sold individually.

Source : Business Times - 5 July 2006

NEW business models like real estate investment trusts (Reits) are posing new challenges that the valuation industry must be flexible enough to meet.

Reits were held up as a prime example yesterday by the Minister of State for Finance and Transport, Mrs Lim Hwee Hua, who said valuers would have to venture into the realm of finance in order to tap the fast-growing sector.

Mrs Lim told the Asean Valuers Association (AVA) Congress that industry professionals will need a better understanding of the complex

real estate transactions and the underlying business model that property trusts employ.

Reits have become one of the most successful business models that have developed in recent years, with the Asian sector hitting a market capitalisation of about US$31 billion (S$49.4 billion) by the end of last year.

The Singapore Government has also promoted Reits through revised regulations and tax incentives, helping the country become a regional leader.

It has meant opportunities - and challenges - for valuers.

‘As new business models emerge in the real estate sector and advancements are made in technology, valuers must be prepared to exploit the latest technological advancements and improvements in financial modelling to offer new business solutions,’ said Mrs Lim.

She gave the opening address at the congress, which has attracted about 150 valuers from across the region.

She said the growth of Reits and the influx of foreign investment into the region have also meant an increase in cross-border real estate investments.

‘This means Singaporean and Asean valuers will increasingly have the opportunity to conduct valuations beyond their traditional domestic markets,’ said Mrs Lim.

She added that exploiting such cross-border opportunities would require valuers to keep up with new developments in Asia and the issues that will affect the property valuation, such as changes in legal frameworks and even specific political events.

As well, industry associations like the AVA and the Singapore Institute of Surveyors and Valuers, which organised the three-day event, must organise more training courses to raise the level of professionalism in the industry, she added.

Source : Straits Times - 4 July 2006