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A SMALLISH freehold residential site on the East Coast is up for collective sale by tender. Marketing agent Knight Frank said yesterday the price for Heiwa Court is at least $10.5 million, or $367 per square foot per plot ratio, including a development charge estimated at $85,000. The tender closes at 3pm on Nov 23.

Heiwa Court, located in a low-rise residential area on East Coast Road, comprises two blocks of three-storey walk-up apartments on a site of 1,896.2 square metres.

Under the 2003 Master Plan, the site is zoned for residential use with a maximum plot ratio of 1.4 and a five-storey height limit. Knight Frank estimates it can be redeveloped into 25-30 apartments averaging 900 to 1,100 sq ft. The site is within a kilometre of Tao Nan School, CHIJ (Katong) and Ngee Ann Primary School.

Source : Business Times - 26 Oct 2006

THE surging cost of space on Orchard Road has pushed Singapore’s famous retail row up one place to 13th in the league table of the world’s most expensive shopping locations.

Its move has been driven by a rental boom, with prime ground floor space rising 13.2 per cent over the past year to $39 per sq ft (psf) a month or US$292 (S$462) a year, said property consultancy Cushman & Wakefield, which compiles the annual survey.

The rent boom has, in turn, been fuelled by increased spending and a rise in tourist numbers, said Mr Donald Han, the firm’s Singapore managing director.

‘International brands and local retailers are all jostling for a prime presence in Singapore’s key retail hub,’ he said. ‘With the limited supply in Orchard Road, there is only direction rents can go - up.’

While Orchard Road has moved up, it remains far behind the top six. New York’s Fifth Avenue is still the costliest street on which to rent shopping space, with rents at US$1,350 psf a year, followed by Hong Kong’s Causeway Bay at US$1,134 psf.

Avenue des Champs Elysees in Paris is third, followed by London’s New Bond Street, Tokyo’s Ginza district and Dublin’s Grafton Street.

Wanfujing Street in Beijing remains at 20, while Khan Market in New Delhi climbed from 41st to 24th, with rents at US$180 psf a year.

The report tracks retail rents in the world’s top 233 shopping locations across 47 countries.

Source : Business Times - 26 Oct 2006

They issue buy calls on counters like Robinson, Metro, Sincere Watch

WITH the macro-economy performing strongly, analysts are now saying that the outlook is just as rosy for the retail sector.

>From department stores like the Robinsons group and Metro to luxury watch businesses like Sincere Watch, a quick check found that ‘buy’ recommendations have also been issued recently on a range of retail counters, which have seen their prices rising in the past year, some by more than 60 per cent.

Government estimates released on Oct 10 showed that the economy had grown a surprisingly strong 7.1 per cent year-on-year in the third quarter, and looks set to carry the momentum through to the end of the year.

The services sector alone expanded 6.6 per cent in Q3. While no exact details for the retail component were available beyond that it too had recorded faster growth, analysts are confident that sentiments in retail will remain buoyant.

Singapore Retailers Association executive director Lau Chuen Wei, for one, feels that consumer confidence is up.

With unemployment rates at a low and economic growth at a high, ‘consumer confidence seems to be on the rise, and this is indeed good news for the retail industry, the performance of which is very closely linked to consumer confidence,’ she observed.

Mavis Seow, director of retail services at CB Richard Ellis, notes that rent levels have been rising and brands are still expanding, with retailers still looking for space.

‘Across the board in various sectors, from health and fitness to fashion, really, it’s looking quite positive at the moment,’ she told BT.

With more buyers snapping up more homes and residential prices moving up, there could even be a trickle-down effect from the property sector to the home furnishings trade, she reckoned.

The opening three weekends ago of Vivocity, Singapore’s biggest mall yet, has injected further buzz into the retail scene, adding some 300 stores, with 1.04 million sq ft of shopping space, offering new products and new fashion labels.

But there is a word of caution from UOB Kay Hian research head Yang Sy Jian, who pointed out that higher sales volume does not mean higher profits per item.

‘The discounts during sales periods mean lower margins, which would not be reflected in the sales volume figures,’ he said.

Ms Lau said: ‘There are many factors that contribute to economic performance measurements. These might include interest rates, rental rates,’ she said.

‘Whilst these contribute to the positive performance of the financial and property sectors, they have a reverse effect on the retail industry for whom these represent escalating costs. If sales revenue does not escalate in tandem, then margins will be at stake.’

Still, a number of analysts are favouring retailers such as Robinson and FJ Benjamin which are launching new stores and labels in Vivocity. DBS Vickers issued a buy call for Robinson on Aug 24, anticipating revenue boost from the group’s three new stores at Vivocity, including a 13,000 sq ft Marks & Spencer.

Fashion retailer FJ Benjamin, which has brought in new labels Gap and Banana Republic, received a ‘buy’ recommendation from Kim Eng on Sept 28.

Both counters have seen their stock price climb in the past year, with FJ Benjamin rising 65 per cent to close at 54.5 cents yesterday.

On the luxury end, Sincere Watch received a recent ‘buy’ call from Kim Eng, which said in an Oct 12 report that ‘the luxury market in Singapore remains upbeat with rising consumer interest in fine jewellery and watches’.

Indeed, Philip Securities analyst Brandon Ng noted the growing ranks of millionaires in Singapore. According to a Merrill Lynch-Capgemini survey, the number of this group expanded 13.4 per cent last year to 55,000.

Source : Business Times - 26 Oct 2006

They buy, refurbish and resell industrial property to Reits

Savvy businessmen and industrialists are fast becoming a new class of investors as they are finding that there is more money to be made in selling property than in toiling over a lathe.

DTZ Debenham Tie Leung director and auctioneer Shaun Poh says some people are snapping up good industrial properties at auctions, refurbishing them, finding tenants, securing leases, then selling them to industrial Reits for a neat profit.

Up to 10 individuals or companies are involved, he says. It is not a large number but ‘before Ascendas Reit, there was no such thing as an industrial property investor’.

Some of the bigger players include Crescendas Group, Trivec and Steel Industries.

In July, Trivec sold a building in Joo Seng Road to Mapletree Logistics Trust (MLT) for $13 million. It paid about $3.8 million for it in August 2005. In May, Crescendas sold a building in Tai Seng Drive to MLT for about $38 million. It paid $7.18 million for it in January 2005.

Although the profits look very attractive, Mr Poh points out that the buildings are usually in very ’shabby’ condition so investors could spend between $3 million and $5 million retrofitting them.

More important is that these investors are also industrialists, who can guarantee leases of up to five years - an important factor in a sale and leaseback deal with a Reit. The tenants come from the investors’ subsidiary businesses or through their industry network.

The value of industrial property has been rising. According to a report by DTZ Research, $141.55 million of properties were auctioned by the four major auction houses in Q3 2006 - a 137 per cent year-on-year increase. The transaction value of industrial properties more than doubled to $20.06 million compared with Q3 2005, although there was no marked increased in the number of industrial properties sold.

DTZ Research analyst Serina Wong believes this is due to increased sales of larger properties. ‘In Q3 2006, almost all the industrial properties sold in the auction market had floor areas between 35,000 and 95,000 sq ft,’ she says. Almost all were mortgagee sales.

Reits specifically look for large properties. Among the industrial properties sold at auctions recently, Mr Poh estimates that at least three could be ‘Reit plays’. The highest price paid - $5.01 million or $63 psf - was for a choice property in Genting Lane that is likely to be resold to a Reit.

What do industrial Reits look for in a property? It must have about 100,000 sq ft of floor area and a minimum 40-year lease, and the seller must also have market credibility as securing leases is crucial for Reits.

Many business folded during the last economic slowdown, resulting in banks foreclosing on properties, says Mr Poh. ‘A lot of banks are now willing to cut losses through mortgagee sales.’

There still is, of course, demand from traditional industrialists. Mr Poh says a property in Sungei Kadut was hotly contested during a recent auction - bidding started at $2.5 million and the property was sold for $3.5 million, a 40 per cent premium.

DTZ Research says the average price of industrial properties sold at auctions increased in Q3 2006 to an average of $3.34 million, up 367 per cent quarter-on-quarter and 259 per cent year-on-year.

Source : Business Times - 25 Oct 2006

Sources say it is likely to develop site into a luxury residential condo

City Developments has bagged a freehold residential site at Leonie Hill Road for $287.3 million in a collective sale, sources say.

The price paid by the property developer for Futura, which was put up for sale last month, works out to $1,179 per sq ft per plot ratio (psfppr).

CityDev is likely to develop a luxury residential project on the site, market watchers said. Over 150 units of an average 1,600 sq ft each can be built.

The site was awarded to CityDev after the owners’ reserve price was met.

DTZ Debenham Tie Leung was the marketing agent.

The 87,034 sq ft site has a plot ratio of 2.8, giving it a maximum gross floor area of 243,695 sq ft. The maximum building height for any upcoming development is 36 storeys. It is estimated that there is no development charge payable.

There currently are 69 units and three penthouses at Futura. With the reserve asking price met, owners will walk away with an en-bloc premium of up to 70 per cent.

Futura’s price is comparable to that of the nearby Grange Tower, which was sold for $180 million, or $1,207 psfppr, to Chip Eng Seng last month.

But the numbers are still lower than the record set by Ardmore Point in plush Ardmore Park. Earlier this month, Wing Tai Holdings forked out $201 million for the site, pushing the price of residential land in Singapore to $1,369 psfppr, including a development charge.

With this latest buy, CityDev’s land bank, which is estimated to be one of the largest among property developers here, will grow even further. When announcing its first half results in August, the developer said that it has around 6.3 million sq ft of potential residential gross floor area in its Singapore land bank, enough to last about five years.

Going forward, it seems that CityDev will be concentrating its resources on building upmarket residential projects.

The company has said that it will develop at least another three high-end apartment projects within two years to capitalise on increasing prices in Singapore’s luxury residential market. The three new developments are all on sites in the prime districts. They are Kim Lim Mansion, for which CityDev paid $251 million ($996 psfppr) in 1999; Boulevard Hotel, which was closed down in 2000 to make way for a plush condominium; and Lucky Tower in Grange Road, which cost the company $383 million ($1,134 psfppr) in May this year.

CityDev’s shares closed at $10.90 on Monday. Since the start of the year, its stock has climbed by 25.3 per cent.

Source : Business Times - 25 Oct 2006