SGHOUSING.COM 新加坡房地产网

Surge in moves leads to boom for movers, executive relocation firms

BUSINESS is booming for moving companies in Singapore as soaring rents force expat families to bail out of pricey areas in favour of cheaper outlying suburbs.

Demand is so great that some executive relocation firms are reporting a 15 to 25 per cent increase in charges and double the volume of business from last year.

The expat outflow has been most notable in blue-chip districts such as Holland Road, Bukit Timah and Tanglin, where rents have gone through the roof.

Average flat rents in districts 9, 10 and 11 - which include the upscale Orchard/Cairnhill, Tanglin/Holland Road and Newton/Bukit Timah enclaves - have rocketed by 36 per cent in a year, said real estate consultancy Savills Singapore.

Renting a unit at the posh Ardmore Park condominium now costs $17,000 to $19,000 a month, for example.

Rental increases started biting in March, sparking a house-hopping surge that has swamped moving companies serving the corporate accounts of multinational corporations (MNCs).

One company reported that the volume of moves has doubled from a year ago.

Asian Tigers K.C.Dat, which specialises in relocating executives of MNCs, is finding it hard to cope with the growth in business.

‘The volume of local moves is double what we handled last year, and this is after we turned away an equal volume because demand was just too high,’ said group general manager John Lim.

Most of those moving are ‘high-end executives, with rental budgets of $8,000 to $15,000 a month’, he added.

Another relocation specialist, UniGroup Worldwide UTS Singapore, said its volume of local moves began to surge in March, when it was 35 per cent higher than the same time last year.

By June, UniGroup’s monthly volumes of local moves were up 86 per cent year-on-year.

‘Nearly 80 per cent of the increase in local moves can be attributed to expatriates moving from districts 9, 10, and 11 to outlying areas such as Upper Bukit Timah, Ang Mo Kio or locations along the East Coast,’ said the company.

As well, Crown Worldwide has enjoyed a 30 to 35 per cent increase in the number of local moves for expat families.

Its general manager for household goods, Mr William Lee, said: ‘We have seen several cases where people moved because they couldn’t afford to live at the same place any more.’

The expat musical chairs occurs mostly at the end of the month, when residential leases usually end.

Expats are being caught in a classic supply-demand squeeze. Singapore’s recent rush of collective sales - where entire condominiums are bought by developers to be torn down and redeveloped - is slashing the supply of rental flats in choice districts, while the booming economy is drawing in more expats and so pushing up housing demand.

‘Low vacancy levels, coupled with strong demand from overseas staff as well as from tenants and owners displaced by collective sales, are expected to translate into rising rents over the short to medium term,’ said Mr Simon Hill, regional director of residential leasing at Savills.

‘We note that there is little room for negotiation on asking rents,’ he added.

The trend looks unlikely to ease soon, with Savills predicting a 15 to 20 per cent increase in luxury home rents over the rest of the year, ‘while rents in fringe/ suburban areas will follow suit, benefiting from the spillover demand’.

‘We are also likely to see a growing number of expatriates choosing to buy rather than rent.’

Source : Straits Times - 27 Jul 2007

The lease period for the Urban Redevelopment Authority’s (URA) first transitional office site, at Scotts Road, is to be increased from the proposed 10 years to 15, the authority said yesterday.

The extension is being made in response to market feedback that most investors prefer a longer lease to recoup their investments and to meet the needs of prospective tenants.

In view of the change, the closing date for the tender has been extended by three weeks to Aug22, to give more time for interested investors to reconsider their bids, the URA said.

Industry players generally welcomed the news. ‘At 10 years, it could not work out for investors; they’re likely to end with a loss from the venture. At 15 years, it can be a marginally profitable venture,’ said an industry observer.

CB Richard Ellis (CBRE) executive director Li Hiaw Ho said: ‘It’s probably workable at 15 years. We’ve heard of potential tenants who are interested, and are looking for a developer to build a transitional office building on the site and lease the whole building to them.

‘They reckon rents should be lower than in the CBD or Orchard Road and the location is convenient, right next to Newton MRT station.’

CBRE estimates the maiden transitional plot should generate about 140,000 sq ft net lettable area of offices.

URA has previously said it expects a low-rise development of three to four storeys which can be built quickly in about a year.

‘The site is likely to be awarded for about $100-$150 per square foot per plot ratio,’ Mr Li estimated.

Source :  Business Times - 27 Jul 2007

The authorities have finetuned a ground-breaking move designed to help ease the severe office space shortage.

A plot in Scotts Road, known as a ‘transitional office site’, will now be offered with a lease for 15 years, instead of the original 10 years.

The Urban Redevelopment Authority (URA) also said yesterday that the tender - the first of its kind - will now close three weeks later on Aug 22.

This was in response to market feedback, which the URA has received since the site was launched early this month.

The feedback showed that most interested investors would be more comfortable with a longer lease period, in terms of meeting tenants’ needs and recouping their investments.

The URA has said future transitional sites may be released if the response to the maiden tender is good. They would have lease periods dependent on the sites’ planned use and future development needs.

Located next to Newton MRT Station, the 1.04ha site can be built up to a gross floor area of 15,666 sq m. The extension of the site’s lease would allow for a longer payback period, property consultants said.

‘It would allow the developer to put in more amenities, such as raised flooring or additional power supply provisions, to attract higher-quality tenants,’ said consultancy Cushman & Wakefield’s managing director, Mr Donald Han.

Such tenants - including financial services firms - can pay higher rents, which would make the site more attractive to a developer, he said.

‘A 15-year lease is the bare minimum for the site to be feasible, as the developer would be looking at a payback of seven to 10 years,’ said Mr Han.

He added that construction of a low-rise office building on the site could take 14 to 16 months. With the lease extension, the site could sell for about $165 per sq ft (psf) of potential gross floor area or about $28 million.

Consultancy CBRE, meanwhile, said the site could fetch around $100 psf to $150 psf of potential gross floor area. Rents for the site could go up to $8 psf, experts have said.

Rents of prime Grade A office space have continued to rise as vacancy falls.

Source : Straits Times - 27 Jul 2007

There was an added element of interest in a property cashback court case yesterday - run-away lawyer David Rasif was fingered as a ‘prime mover’ in the scam.

In the dock was property agent Goh Chong Liang, 37, who admitted his role in a cashback scam to cheat banks into giving out housing loans.

But all in the gallery listened attentively when both defence lawyer Peter Fernando and Deputy Public Prosecutor Jason Chan pointed to Rasif’s stake in the scam.

District Judge Liew Thiam Leng was told of how Goh conspired with Rasif to dupe the banks into granting loans in the scam.

DPP Chan gave the court an idea of how such a scam worked.

A property agent works with a buyer and seller to inflate the price of the seller’s flat. This secures a higher housing loan for the buyer. The difference between the loan amount and the actual price of the resale flat is then split between those involved in the scam.

The court heard that Goh had roped in Rasif, through his law firm at the time, to act for flat sellers in the scam.

In order to inflate the price of a flat, Goh included the renovation costs for the flat by a shell company he helped set up. However, the company never carried out any work.

After Rasif’s law firm deducted its fees from the sale of the flats, the remainder of the money Goh made was shared by those involved in the scam.

Rasif’s law firm, which has since closed, was involved in 22 such transactions in 2004.

In June 2005, the Commercial Affairs Department (CAD) got wind of the scam.

Aware of the CAD investigation, Goh turned to Rasif and another lawyer in the firm for help.

They told him to forge the documents used in the transactions to throw CAD officers off the trail.

Yesterday, Mr Fernando urged the court to be lenient with his client.

He pointed out that Goh had been very cooperative with investigating officers, which ’significantly’ included ‘his voluntary information of the role played by him and each and every one involved in the conspiracy’.

Goh is the first to be charged and convicted in the scam. No one else has yet been brought to court.

Goh, who could be jailed for up to seven years, will be sentenced next Thursday.
 
Source : Straits Times - 27 Jul 2007

Following feedback, the Urban Redevelopment Authority (URA) will extend the lease period for the transitional office site on Scotts Road to 15 years.

It said interested investors wanted a longer lease period to enable them to recoup their investments and cater to tenants’ needs.

The original lease period was pegged at 10 years as future development works in the area could affect the site. However, the lease period was extended following a URA review.

“This fairly regular plot could contribute about 140,000sq ft of offices to the Orchard Road micro-market. The vacancy rate for the area was below 3.5 per cent in the second quarter of 2007,” said Mr Li Hiaw Ho, executive director, CBRE Research.

“It is likely that the site would be of interest to developers as well as single owner-occupiers. It is likely to be awarded for about $100 to $150psf per plot ratio,” he added.

The URA is extending the tender period for the 1.04-ha site, next to Newton MRT station, by three weeks to close at noon on Aug 22. — Joseph Yadao

Source : Today - 27 Jul 2007