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DTZ-brokered en bloc sale sets new benchmark for Mount Sinai area

SINGAPORE Land has acquired Himiko Court at Ridgewood Close in the Mount Sinai area for $336 million, or $821 psf of potential gross floor area, inclusive of an estimated $1.07 million development charge.

Himiko Court

DTZ Debenham Tie Leung brokered the collective sale, which sets a new benchmark for the Mount Sinai area and which will be closely watched by owners of nearby properties, including Ridgewood Condo next door.

Himiko Court’s unit land price is 143 per cent higher than the $338 psf per plot ratio that Ho Bee paid in April 2004 for the former Yang’s Garden Village site next door, which it is deve loping into the Montville condo.

Prior to yesterday’s deal, the record for land price in the Mount Sinai area is said to have been the $533 psf ppr that Pidemco Land (now CapitaLand) paid for the Grenville condo site in January 2000.

Vito Koh, the group general manager of SingLand and its parent United Industrial Corporation, estimates the break-even cost for a new condo project on the 195,400 sq ft freehold Himiko site to be about $1,150 to $1,200 psf.

‘We plan to develop a condo with over 300 units and hope to market it next year,’ he said.

Himiko Court is zoned for residential use with a 2.1 plot ratio (ratio of maximum potential gross floor area to land area) and a maximum height of 24 storeys.

The collective sale to SingLand is subject to approval from the Strata Titles Board.

Owners of Himiko Court’s 177 units will receive sums ranging from $1.6 million to $3.9 million, depending on the size of their units, which vary from 1,076 sq ft to 3,692 sq ft, says DTZ director Tang Wei Leng. The $363 million price for Himiko Court works out to an average of $1,293 psf based on the existing development’s strata area.

DTZ has brokered over $2 billion worth of collective sale deals since the start of the year. Last week, it handled the $835 million or $1,062 psf ppr sale of Leedon Heights to GuocoLand.

‘Based on these latest prices achieved, it looks like developers are looking at selling prices for new projects of around $1,800 to $2,000 psf in the Leedon/Holland location and of about $1,500 to $1,600 psf in the Mount Sinai area,’ according to Savills Singapore managing director Michael Ng.

His firm is the marketing agent for the 672,000 sq ft Ridgewood Condo site next door and is in the midst of securing the requisite minimum 80 per cent consent level from owners.

Assuming a price of $800 to $821 psf ppr, the Ridgewood site could be worth over $1.1 billion.

The UIC group has been stepping up its property acquisitions.

Last month, UIC bought its namesake Shenton Way office building for $600 million, and is expected to redevelop it into a residential project.

This weekend, UIC is previewing Northwood, a 140-unit freehold condo off Sembawang Road.

It is expected to release a 203-unit freehold condo in the Jalan Jurong Kechil location towards the end of the year.

Source : Business Times - 03 May 2007

It has received expressions-of- interest for former CPIB Building

The Singapore Land Authority (SLA) has released another three state properties strictly for use as office space, bringing the total to six this year. So far, one site, a former school at River Valley Road, has received four bids with the highest tendered monthly rent at $75,555 a month.

Moulmein Community Centre

Based on the the gross floor area of 47,253 sq ft for the River Valley site, the monthly rent works out to be about $1.60 psf.

SLA said the bids are still being evaluated. Nevertheless, ERC Holdings - an investment holdings company - which put in the highest bid said it was keen enough to pump in another $3 million to $5 million to upgrade the building.

Like many businesses today, ERC is facing a space crunch and needs the space urgently. Its CEO Andy Ong said that the company already occupies about 20,000 sq ft in the Central Business District (CBD) but needs 10,000-15,000 sq ft more.

Rising rents are also putting increasing pressure on business here. ‘Our current leases will expire and we are now looking at rental increases of about 300 per cent,’ he added.

Of the three new sites being offered for office use, SLA said one has already received expressions-of-interest from businesses such as financial institutions, real estate and software development companies. The site is the former CPIB Building on Cantonment Road, on the fringe of the CBD.

The popularity of these old state buildings will depend on the severity of the office space crunch. CB Richard Ellis executive director (office services) Moray Armstrong said: ‘The sites would apply to tenants who are not tied to prime locations and prime office buildings to the extent that companies are prepared to move out to these temporary sites. The space that these companies free up might then go some way to alleviate the tight office supply situation.’

The other two sites that SLA has made available for office space are the former ITE Pasir Panjang building and the former Moulmein Community Centre, the first community centre that could be converted into an office. SLA also revealed that it is evaluating the possibility of including another four community centres for this purpose.

Source : Business Times - 03 May 2007

Listed construction and property group group Chip Eng Seng said yesterday that its freehold Ventuno Balmoral is fully sold and it plans to launch three more condominium projects in the next few months.

The 35-unit Ventuno Balmoral, in Balmoral Road, was launched in March this year and sold at an average of $1,300 per sq ft. Chip Eng Seng now plans to launch one project each in Peck Hay and Grange roads and the West Coast. All three sites, secured through collective sales, are being jointly developed with other parties. The Peck Hay and Grange road projects will be luxury condominiums.

At Peck Hay Road, Chip Eng Seng and partner Lehman Brothers Real Estate II plan to build 70 units on what is now Venus Mansion. At Grange Road, Chip Eng Seng’s partner is the Citadel Equity Fund, part of the Chicago-based Citadel Investment group. The partners paid $180 million or $1,207 per square foot of potential gross floor area for Grange Tower, which is being redeveloped into a 68-unit luxury development.

The third proposed development is a 668-unit freehold condominium at West Coast Walk/Road, on the site of the present Westpeak Condominium. Chip Eng Seng is teaming up with a Lehman Brothers unit for this project.

Chip Eng Seng said yesterday that Ventuno Balmoral and the three future projects should contribute positively for the current financial year ending Dec 31, 2007.

Source : Business Times - 03 May 2007

SLA releases three Government sites for dedicated office use

Companies looking for more affordable office rental may just see their wish come true.

The Singapore Land Authority (SLA) has released three more state properties into the market for dedicated office use.

These include a former Government building, a former tertiary institution and a community centre.

All three properties will come with a tenancy for an initial term of three years and are renewable for another three years up to 2016.

“In the last couple of months we have received more enquiries from smaller tenants exploring other options, as their landlords decided to increase their rentals,” said Mr Colin Tan, head of research and consultancy at Chesterton International.

He said good market sentiments have led landlords to push their luck when upping rents, knowing that tenants do not have much choice but to pay up.

“The property put up by the government, I’m not sure how popular they will be due to their not so central location, but will definitely release some of the pressure from the lower-end market, giving small tenants real options to call the bluff of landlords,” said Mr Tan.

He added that the soaring office rentals in the Central Business District (CBD) have also led small companies to consider cheaper alternatives such as business parks and factory premises to relocate.

SLA had earlier put up three other properties for tender. The former River Valley Primary School saw four bids submitted by businesses such as property management and hostel operation, which are currently being evaluated.

Source : Today - 3 May 2007

Reit listings here expected to rise in next 12 months

If you think Singapore’s real estate investment trust (Reit) sector has reached its full potential, think again. Though the local market can rightly claim to be Asia’s most developed, it still has considerable room to grow, according to James Fleming, UBS head of equity capital markets for South-east Asia.

The potential is not just in real estate. Infrastructure trusts are even less developed and have immense potential, and many sizeable corporates are seeking cross-border listings, says Mr Fleming.

But the biggest trend, for now, is in real estate.

UBS was the leading player in terms of raising equity capital in 2006, according to Dealogic, and has been involved in several Reit listings, the most recent being that of MacarthurCook Industrial Reit.

What Mr Fleming has observed is a lot of activity happening out of the public eye. Many South-east Asian companies are seeking to sell assets to lighten their balance sheets. Private funds buy the assets and lease them back, warehousing and pooling them. In time, even though it is more difficult in Asia’s fragmented markets than in the US or Australia, these private funds will be merged, and the asset pool securitised into a Reit and sold to the public.

According to UBS, less than one-tenth of Singapore property is securitised, a fraction compared with the US or Australia, where the proportion is closer to three-quarters.

‘The Asia real estate paradigm has just started. We are at the tip of the iceberg,’ says Mr Fleming. His colleague Patrick Lee, who heads the Singapore and Malaysia investment banking team, expects the number of Reits listed in Singapore to rise substantially in the next 12 months.

The same is happening with infrastructure, another sector with low penetration. Again, private funds are acquiring assets to structure a public fund later on. Investing in infrastructure has become a cliche, yet there are virtually no publicly listed Asia-focused infrastructure funds, save for Temasek’s CitySpring.

Currently, private equity is prepared to pay far higher multiples, up to 23 times earnings before interest, tax, depreciation and amortisation (Ebitda) on a recent infrastructure deal, according to Mr Lee. Says Mr Fleming: ‘If I were an infrastructure operator and wanted to monetise, I would seriously consider public versus private valuations today.’ He also says widespread economic growth has led to a broadening of the IPO pipeline over the last six to nine months to include every country in South-east Asia and most sectors. Mr Lee anticipates a growing number of cross-border listings of international, ‘boundary-less firms’, like last year’s BanyanTree.

While the Singapore Exchange (SGX) may still find it challenging to attract government-linked ‘national champions’ from other countries, it is just a matter a time before it attracts sizeable listings from Vietnam, the Philippines, or other countries, says Mr Fleming. This includes large Chinese firms. After Yangzijiang, China’s fourth-largest shipbuilder, raised over $1 billion in capital last month, UBS has received several enquiries from other Chinese firms in other sectors of similar size, according to him.

Yet upcoming deals could be barely enough to feed global appetite for Asian issues, with liquidity driven by cash-generating growth and exacerbated by a less obvious switch in asset allocation by US investors away from their home market and towards high-growth economies abroad.

‘People look at a deal and say, yeah, I want 5 per cent. The dollar amount is academic,’ says Mr Fleming. ‘The biggest complaint we get is: we want more stock.’ Many deals are too small for large portfolio managers, who need to acquire holdings that are large enough to impact their portfolios. For example, he recalls an Asia-based hedge fund with US$3 billion, of which only US$2 billion was deployed.

The excess cash could be comfortably levered up - and they’re not a massive fund, he says.

Source : Business Times - 2 May 2007