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But Mortgagee Sales Dive 38.8%, Helped By An Improving Economy

It’s like a tale of two cities in the Singapore property auctions market. While the number of properties put up for auction by owners has jumped 68 per cent this year to a record 600, the number of properties put under the hammer by mortgagees fell 38.8 per cent this year to 1,418, according to latest figures issued yesterday by Colliers International.

The property consultancy attributed the decline in the number of properties auctioned off by lenders to a more upbeat economy, buoyant property market and high employment rates.

Colliers said the growing trend for owners to put up their properties at auction, shows that they are increasingly recognising this as an efficient way of selling, especially for prime properties like Good Class Bungalows and even prime development sites.

Colliers also said that the total value of properties actually sold at auctions has jumped 49 per cent from about $213 million in 2005 to $318 million this year.

This is the highest level seen since 1999, when $409.5 million worth of properties were knocked down to the highest bidder. The surge this year was contributed largely by the record sale of 12 bungalow land parcels at Sentosa Cove in August for a total of $86.34 million.

Knight Frank, which also released its auctions report yesterday, offered a further reason for this year’s strong auction sales - increased investor interest in apartments believed to have collective sale potential.

‘They are usually in mature developments that are more than 10 years old, strategically situated in prime locations and are not built to their full development potential as allowed under the new planning regulations in Master Plan 2003.

‘Some examples of such auction transactions include a unit in Tulip Garden which was transacted at $1.73 million, a high-end penthouse unit at Silver Tower in Cairnhill sold for $6.12 million, a $1.38 million studio apartment in The Beaumont and a Braddell Heights apartment,’ Knight Frank observed.

Generally, these properties were knocked down at a premium compared to recently transacted units in the development, indicating that these buyers have priced in an en bloc premium for these units, Knight Frank said.

The firm predicts that the number of properties put up for auction by owners in 2007 is expected to further catch up with the number of mortgagee properties that go under the hammer. It also suggested that following the successful sale of highly sought-after penthouses at Marina Bay Residences earlier this month through a closed tender, there is a possibility of developers exploring other sales modes such as auction to obtain the highest prices for their properties.

In its report, Colliers highlighted that auction has also started to gain popularity among owners trying to find buyers in the subsale market for uncompleted properties in highly sought-after projects such as The Sail @ Marina Bay, The Arc at Draycott and The Berth by The Cove.

However, the numbers so far have been small. Fewer than 10 such units - or just 0.5 per cent of the total 2,018 properties put up for auction this year - went under the hammer, according to Colliers International executive director and auctioneer Grace Ng. None of these properties was actually sold during auctions, although some may have changed hands afterwards through private treaty deals, she added.

‘Most owners will do the actual transaction through private treaty but will use auction as a platform to generate publicity for their properties and source for buyers,’ Ms Ng said.

Colliers said the biggest percentage decline in mortgagee properties going to auction was in the office sector, as many owners who were in default with their bank loans were able to find buyers in the open market, thanks to the current shortage of office space.

Source : Business Times - 29 Dec 2006

Contributions to renovation costs can be considered when determining various parties’ shares in a piece of property, and this applies both to HDB flats and private property, a High Court ruling has determined.

The decision by Judge Sundaresh Menon which was released earlier this month concerned a dispute between a son and his stepmother who were co-owners of a HDB flat. However, Judge Menon ordered that the proceeds of the sale of the flat be divided in the ratio of contribution of the parties to the purchase and renovation of the flat.

Taking into consideration these contributions, this meant that the son, Tan Chui Lian, would get 53.4 per cent of the net proceeds and the stepmother 46.6 per cent.

Lawyers say this decision is significant for several reasons: first, because it clarifies that parties can gain an interest in HDB flats according to their respective contributions to the purchase of the property even if they are not registered owners, provided that they are not ineligible to acquire an interest.

‘This decision potentially applies even to persons who have contributed, are otherwise eligible to own an interest in the HDB flat, but are not named as joint tenants or tenants-in-common,’ Drew & Napier director Christina Ng said.

The decision seems to run counter to a plain reading of section 51(6) of the Housing and Development Act, which states that no person shall be entitled to any flat under an resulting or constructive trust. Resulting and constructive trusts give contributing parties a share in the property according to the value of their contributions.

However, Judge Menon examined parliamentary debates and said that Parliament’s intention was to prevent parties who are ineligible to own an interest in HDB flats to do so, rather than to prevent people from being entitled to interests in HDB flats regardless of the circumstances.

Lawyers also say the decision is significant as it says that in determining the shareholding of parties in property, the contribution towards renovation costs can be considered.

Chandra Mohan, partner at Rajah & Tann, explains: ‘If you contributed $10,000 to the purchase of the property and I contributed $5,000 to the purchase, but I also contributed another $5,000 to the renovations which went towards improving the value of the property, then it is possible both parties be deemed that they made equal contributions to the purchase of the property and hold the property equally.’

However, the renovations must be done around the time that the property was purchased. Judge Menon said that especially where HDB flats are concerned, purchasers very often intend to spend considerable sums on renovations or improvements soon after a flat is bought. This is because it is possible to get longer terms and cheaper financing for buying a property than it is for the cost of carrying out renovations.

Contributions towards costs of renovations done much later after the property is purchased may not affect the ownership ratio of parties in the property, but can merit compensation if they improve its value.

Source : Business Times - 28 Nov 2006

Rentals for Singapore’s most premium office space posted their largest-ever rise in the last quarter of this year - and are expected to hit a new high within six months.

Grade A office rents in Raffles Place surged by an unprecedented 24.4 per cent in the October to December period from the previous three months, according to a new report by Colliers International.

They hit $8.61 per sq ft (psf), surpassing the last high of $7.77 psf achieved in 2001.

If this ’sweltering pace’ continues, Colliers International director of research and consultancy Tay Huey Ying predicts that Grade A rents in Raffles Place will ‘breach 1996’s all-time high of $9.77 psf by the first half of next year’.

They are also likely to reach $12 psf by the end of next year - an annual growth rate of close to 40 per cent, she said yesterday.

The jump in rents comes on the back of an acute supply crunch and a six-year high in demand for offices that reached 2.9 million sq ft this year, Colliers said.

This has also meant most other office rentals have notched up their largest quarterly rises in two years, across locations and office grades.

With a few exceptions, office rents recorded increases of up to 37.6 per cent in the last quarter of this year - the highest rises since the market bottomed out in early 2004, noted Colliers.

Rents in Grade B offices in the Tampines and Jurong regional centres rose the most, due to a spillover of demand for almost-full Grade A office buildings in the area, which recorded occupancy rates of 99.1 per cent this month.

Similarly, Grade B office rents in Beach Road jumped 31 per cent.

Offices in Shenton Way saw rents increase by an average of 29 per cent across all office types, while those in the Marina and City Hall areas rose by 20.5 per cent.

Rents across the office market will end the year ‘33 per cent to 69.5 per cent higher than last year’, said Ms Tay.

Prime rents, especially, will ‘face immense upward pressure, given the limited supply of Grade A office buildings scheduled for completion next year’, she added.

To ease the supply crunch, Ms Tay suggested that government offices located downtown ‘rationalise their office space usage and streamline their operations’.
 
 
Source : Straits Times - 28 Dec 2006

Quek Leng Chan’s Singapore-listed property arm GuocoLand could be eyeing an average price of about $1,500 psf for its freehold boutique development The View @ Meyer, which it is expected to release early next month, according to sources.

The view @ Meyer

This will be a new record for the Meyer Road area - if the price is achieved, say property consultants.

Knight Frank director Nicholas Mak says that units in fairly new projects in the vicinity are changing hands for about $750 psf on average.

However, during the market peak, The Makena at Meyer Road fetched $1,095 psf on average in 1996, while The Sovereign achieved a higher average price of $1,268 psf in 1997, according to caveats lodged.

The highest price achieved for an apartment in the location is said to have been around $1,500 psf for a unit at The Atria in 1997. More recently, a high-floor unit at The Belvedere is said to have changed hands at about $860 psf.

While some market watchers consider $1,500 psf on a project-average basis to be an ambitious price target for The View @ Meyer, others argue it may be achievable after all, reflecting a nearly 25 per cent discount to the $1,950 psf average achieved for Marina Bay Residences earlier this month.

And that was for a 99-year leasehold project, although one in a plum location directly fronting Marina Bay, unlike developments in the Meyer Road location which are still some distance from the sea even if they have unobstructed sea views.

As a property player puts it: ‘With current hot demand for waterfront homes, even projects which are not that close to the water, but which have unobscured views of the sea, should generate strong buying interest.

‘And don’t forget, Meyer Road has always been the prime stretch of the Katong area plus it can now benefit from the ‘IR effect’, as it’s about 10 minutes’ drive from the future Marina Bay integrated resort.’

The View @ Meyer will be a 23-storey development on the former Katong Park Hotel site comprising 45 luxuriously fitted units, according to GuocoLand.

The group is now preparing a series of special previews for clients in Singapore and abroad, GuocoLand added.

The project will comprise mostly apartments with three bedrooms (plus a guestroom) and four-bedder units. Two penthouses on the top two floors feature private sky gardens.

‘All the 45 apartments command a sweeping southern view of the Katong Park, the East Coast Park or beyond, the South China Sea. Every unit also has a northern view of the swimming pool. Hence the project’s name, The View @ Meyer,’ GuocoLand saidyesterday.

The pricing for The View @ Meyer will be closely watched by other developers in the area. CapitaLand has a condo with about 350 units that it will develop on the First Mansion and Meyer Tower sites. CapitaLand is also expected to launch the project next year.
 
Source : Business Times - 28 Dec 2006

This could help alleviate office space crunch, curb rent rises: Colliers

Property consultant Colliers International yesterday suggested that government departments located in the Central Business District (CBD) rationalise their use of office space and streamline their operations wherever possible to release much-needed space for the private sector.

This could help alleviate the short-term shortage of office space and dampen rental escalation which, if unchecked, could jeopardise Singapore’s ambitions of being a global financial hub, the firm warned yesterday.

‘It is of paramount importance that the relevant authorities look into ways to alleviate the short-term shortage of good-quality office space,’ the firm’s director for research and consultancy Tay Huey Ying said in a release yesterday.

Colliers said the Singapore office market saw net new demand for 2.9 million square feet this year - the highest level in six years - and this pushed up rental rates significantly across most key micromarkets on the island.

Average gross monthly rents across the various key office micro-markets will end the year anywhere between 33 per cent and 69.5 per cent higher than a year ago. ‘Prime rents are likely to face immense upward pressure given the limited supply of Grade A office buildings scheduled for completion in year 2007,’ Ms Tay said.

Colliers predicts that the average monthly gross rent of Grade A office space in Raffles Place, which has leapt 66.5 per cent over the past 12 months - from $5.17 per square foot (psf) in 2005 to $8.61 psf this year - will breach 1996’s all-time high of $9.77 psf by the first half of next year and reach $12 psf by the end of next year. This reflects an annual escalation of nearly 40 per cent.

In the fourth quarter of this year alone, the increase was an unprecedented 24.4 per cent over the preceding quarter. In fact, in almost all micromarkets, the quarter-on-quarter gains ranging from 17 to 37.6 per cent recorded in the October-to December period of this year were the biggest increases since the office market bottomed out in Q1 2004, Colliers observed.

Booming demand for offices as international banks, MNCs and domestic companies expand their operations and a slowdown in building new office projects during the office glut a few years ago have combined to boost office rents across Singapore.

This year’s 2.9 million-sq-ft net new demand for offices is higher than the annual average of 1.3 million sq ft for the preceding 10-year period.

On the supply side, net new supply of offices this year is estimated at 1.05 million sq ft, lower than the average annual figure of 1.73 million sq ft between 1996 and 2005. New office supply is expected to nosedive over the next few years until the first phase of the Business & Financial Centre is completed in 2010.

‘If rents continue to rise unabated amidst shortage of good-quality office space, Singapore’s drive to be an international financial centre may be undermined and our competitiveness could erode to some extent, as the lack of quality office space will limit current companies’ expansion plans and potentially drive away prospective new entrants into Singapore,’ Mr Tay said in the release.

Last week, the Ministry of National Development (MND) stepped up the supply of office sites in its latest six-monthly review of the Government Land Sales (GLS) Programme.

Three confirmed list sites slated to be launched for tender in the first half of next year will help boost the supply of offices - a plot at Central Boulevard right behind City Development’s No 1 Shenton Way; the former NCO Club site at Beach Road, and a plot in Tampines Finance Park.

In addition, three reserve list sites will also boost office supply - two at Anson Rd and one above Outram Park MRT Station.

But Ms Tay argues that due to the time lag required for construction, releasing land via the GLS Programme will ‘not be a viable option in overcoming the short-term supply crunch’.

In its announcement last week, the MND also mentioned that outside the GLS programme, there will be nearly one million sq ft that can be leased in vacant state buildings catering to demand for office and commercial school space in the first half of 2007.

However, Colliers in its report yesterday noted that the ‘leasing of vacant State properties, which are suitable for interim office use by the private sector, is only practical in meeting demand to a small degree and will only cater to business operations that do not need to locate in the CBD.

‘One feasible option is for the various government departments, particularly those located in the CBD, to rationalise their office space usage and streamline their operations wherever possible; thereby, releasing the much-needed office space for the private sector. This will certainly help to relieve the current tight office supply situation,’ Ms Tay said.

Government bodies located in the CBD include the Monetary Authority of Singapore at Shenton Way, the Ministry of Manpower at Havelock Rd, the Singapore Land Authority at Temasek Tower and the Urban Redevelopment Authority and the Ministry of National Development at Maxwell Rd. Many of these ministries and state agencies are housed in their own buildings.

Source : Business Times - 28 Dec 2006