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Rules vastly reducing carpark lots in new office buildings and malls are poised to bite.

New office buildings and shopping malls coming up in the central areas of Singapore - especially in new downtown Marina Bay - are likely to feel the full force of existing rules limiting the number of parking spots allowed for each building.

And with a whole slew of commercial buildings nearing completion over the next few years, a severe shortage of carpark lots is imminent. New ‘white’ sites, such as the Marina View land parcels, get just one carpark spot for every 425 sq m - or 4,575 sq ft - of commercial space. White sites can be developed into a combination of uses.

Developers are allowed to provide more spots, but at the expense of giving up office or retail space. As yields for commercial space are significantly higher than those for carpark lots, most will not do so.

What this translates to is quite startling - a company that takes up one entire floor in Marina Bay Financial Centre (MBFC) with a large floor plate of 25,000 sq ft could be entitled to just six carpark lots.

Similarly, in a medium- sized building, a company occupying an entire floor - or some 10,000 sq ft of space - will get just two parking spots.

And for the upcoming mega office building on the Marina View site, this means that the 1.7 million sq ft of office space the owner is required to provide would entitle the development to around just 380 parking spots.

While the rules have been in place for all new buildings since May 2002, the impact has not really been felt so far because in the old central business district (CBD), an excess of carpark lots in older buildings make up for the shortfall in newer ones.

Golden Shoe Car Park and Market Street Car Park also provide some much-needed supply.

But for new downtown Marina Bay, there will be no such buffers. Buildings in the area will mostly all be new - which means that they will not have excess carpark spaces.

‘The ruling is a bit harsh, especially if you look at all the big projects coming up in Marina Bay,’ said one local developer. ‘Those buildings will have thousands of workers, and only a few hundred carpark lots each.’

Singapore is trying to attract more financial institutions, which means that more professionals from the banking and financial services sectors are expected to relocate from abroad. But some of them may find that they cannot drive to work, the developer added.

Macquarie Global Property Advisors’ Marina View development - which combines two sites won in government land tenders - is one building that will likely be hit by the shortage, industry players said. The project is required to provide some 1.7 million sq ft of office space.

MBFC, on the other hand, is expected to fare slightly better. Although the building is a white site and therefore subject to the ‘one carpark lot for 425 sq m of commercial space’ rule, it also has ‘hub status’, which means that it is allowed to have slightly more carpark lots without having to sacrifice its commercial gross floor area (GFA). But while Marina Bay will likely be the first to be hit, the existing CBD is also going to face the same problem in the future, market watchers said.

‘Right now, the CBD is managing,’ said Nicholas Mak, director of research and consultancy at Knight Frank. ‘But if developers continue tearing down and then building new buildings, then we will have a problem.’ This is because new projects on the sites of old buildings are also subject to the newer guidelines.

For some of these buildings, the number of parking spots will be reduced from one for every 400 sq m (4,306 sq ft) of office space to one for every 425 sq m (4,575 sq ft). Parking space was a lot more liberal in some older buildings.

Adding to the woes of drivers is also the impending loss of Market Street Car Park. CapitaCommercial Trust (CCT) recently said that it has been granted planning permission to redevelop the building into an office tower.

Other than office buildings, any upcoming new shopping malls, hotels, cinemas, theatres, restaurants and bars will also be affected. The impact will be greatest in the central areas, but are also being felt elsewhere - especially for white sites.

A retail development slated for a plum white site above Serangoon MRT Station will have only slightly over 200 carpark spots - which Danny Yeo, Knight Frank’s deputy managing director, said would be a ‘tricky situation’. The mall has a maximum permissible GFA of 942,132 sq ft.

By contrast, Singapore’s now-largest suburban mall Causeway Point has a GFA of 629,160 sq ft of GFA and 915 carpark lots. Even then, it gets ‘pretty crowded’ during the weekends as the mall is the only shopping centre in Woodlands, a spokeswoman for Frasers Centrepoint said.

Industry players believe the squeeze is part of the government’s move to push more people to use public transport. But developers point out that the shortage of parking spaces will come at a time when the car population is climbing.

BT understands that for the Serangoon site, analysts recommended that the authorities provide close to 1,000 parking spots. But despite this, only over 200 units were allowed. ‘Shopping centres without enough carpark lots will suffer,’ said one property analyst. ‘There will be a complete change in shopping patterns.’

When contacted, the Land Transport Authority (LTA) said it currently regulates parking by stipulating the minimum number of car parking lots to be provided based on the given floor area of a development. ‘Developers may build more carpark lots but they have to balance them with the opportunity cost of the additional space.’

Source : Business Times - 29 Mar 2008

SINGAPORE Post and Prudential Singapore Asset Management (Singapore) have launched an International Opportunities Fund (IOF) - Asian Property Securities, exclusive to SingPost customers.

The fund, offered from yesterday, will invest mainly in closed-end real estate investment trusts (Reits) and property -related securities of companies incorporated, listed in or focused on the Asia-Pacific region.

‘Asia’s concrete long-term growth, large population and growing middle-class fuel demand for commercial and residential properties ,’ said Jene Lua, general manager of Prudential Singapore.

SingPost and Prudential Singapore said the fund may also invest in depository receipts including American Depository Receipts and Global Depository Receipts, as well as debt securities convertible into common shares, preference shares and warrants.

A minimum investment of $1,000 is required for Class F shares, while $5,000 is the minimum for Class Fd shares. The fund aims to make one per cent payout every quarter for Fd shares.

The initiative is the result of the growing partnership between SingPost and Prudential Singapore since 2006. For SingPost, the fund increases the range of investment products under its Care for Life Portfolio.

‘The synergy between the two companies can create value to customers,’ Prudential’s Ms Lua said. ‘The partnership allows SingPost customers direct access to Prudential’s range of funds. The investment products we offer via the branches are funds with established track records, spread across a spectrum of asset classes.’

Source : Business Times - 29 Mar 2008

CAPITACOMMERCIAL Trust (CCT) faces a possible ratings downgrade after it said on Thursday that it would buy the prime office building at 1 George Street for $1.17 billion.

Ratings agency Moody’s Investors Service yesterday placed the trust’s ratings ‘on review for possible downgrade’, it said in an e-mail.

The move stems from concerns that the proposed acquisition, which is to be fully funded through debt that CCT has already secured, will ‘weaken CCT’s financial metrics’, said Moody’s vice-president and senior analyst Kathleen Lee.

CCT’s corporate family rating is now A3, or upper- medium grade. Its senior unsecured debt rating is Baa1, meaning it is subject to moderate credit risks.

Ms Lee, however, was quick to add that CCT’s ability to line up enough debt funding for the deal in the first place ’speaks of its ability to maintain funding access amid a weak credit environment’. She also said buying 1 George Street would enhance the ‘asset quality and income diversity’ of the $5.1 billion trust.

She said, though, that CCT’s weaker credit metrics were unlikely to improve soon without an equity injection, which was unlikely given the state of the equity markets.

CCT is not the only Singapore-listed property trust to deal with ratings issues. Allco Reit hit headlines last week for going to court to fend off a downgrade.

Source : Straits Times - 29 Mar 2008

I REFER to Mr Lau Chee Kian’s ‘Sense of kampung in condos overstated’ (March 20) in response to Ms Susan Prior’s ‘En-bloc sales eroding our sense of kampung’ (March17). In almost all en-bloc sales, most owners wished they had not sold their homes because they realised too late.

Has no property developer, who has made purchases in hundreds of en-bloc sales so far, ever regretted its land-banking? For confirmation, we should hear from a horse’s mouth, as reported in the Business Times on Nov 15 last year, ‘S’pore home price gains set to slow’: ‘Mr Lim Ee Seng, chief executive officer of Frasers Centrepoint Group, one of the biggest buyers in en-bloc sales, says: ‘We are still looking to boost our land bank, but we are opportunistic and won’t pay current values because our costs would be too high.’ The price gain has helped the developer on earlier purchases of existing apartments, which are sold at a profit. An example is the St Thomas Suites development in the city’s downtown, where apartments were recently sold at $2,189 a square foot. ‘We bought the site of St Thomas Suites at $600 per square foot,’ said Mr Lim in the report. That’s a whopping 365 per cent profit that the Frasers Centrepoint Group has made. That’s why, with their ‘paltry windfall’, the majority owners will never be able to buy a replacement unit. Sad to say, they must regret and downgrade.

Mr Lau rightly points out: ‘The kampung era is long gone. The world has moved on.’ The tremendous advances in science and technology have transformed our way of life altogether, chief of which is changing us from a caring into an impersonal society. Fortunately, Singapore has led in the field of preserving our cultural heritage from being eroded by these negative influences. Singapore has, by and large, succeeded in preserving our core values shared by all in our multi-racial, multi-religious and multi-cultural society. And the ’sense of kampung’ embodied in our core values is part and parcel of our rich cultural heritage.

Admittedly, it is an uphill task to mobilise every Singaporean to imbibe the kampung spirit of yesteryear, but it is not an impossible task. The majority owners in an en-bloc sale cannot be regarded as a litmus test of their view on the ’sense of kampung’. Our uniquely Singapore has, against all odds, managed to accomplish almost everything that we have set our hearts and minds to do - most difficult of all is in uniting a people as pluralistic as Singapore into an almost homogenous nation in just 42 years. And it is a matter of time before the long and tedious process of re-moulding our people into this tremendous sense of kampung camaraderie bear fruits. Succeed we will.

Han Soon Juan

Germany

Source : Straits Times - 29 Mar 2008

IN HIS letter, ‘Sense of kampung in condos overstated’ (March 20), Mr Lau Chee Kian warned that ‘old estates’ could ‘degenerate into slums like in many countries’. Nassim Park was only 14 years old when it went en bloc although it was in very good condition.

Horizon Hill Towers, the subject of the long running and costly acrimonious dispute now being heard in the High Court, is in pristine condition even though it is older than Nassim Park. Cavenagh Gardens in Cavenagh Road was built in the early 1960s whereas Pacific Mansion in the River Valley area and built slightly later are now around 45 years old and can hardly be considered slums by any standard, being in much better condition than some of the HDB flats only about 20 years old.

Whether an estate would turn into a slum is more dependent on the maintenance rather than age, as the many examples in China, India, Europe and others where some of the buildings are centuries old, have shown. ‘The fact that the majority are willing to sell’ needs not and does not justify the compulsory sale by dissenting subsidiary proprietors, as the former’s decision could have been misconceived, ill advised, wrongly influenced, etc, and, as it is, turned out to be wrong, because in most cases the price they sold was too low. Dispute, acrimony and ruined lives could have been avoided from the beginning if all those concerned had faced up to the root causes and inherent deficiencies faced in most management corporations.

Bin Hee Heng

Source : Straits Times - 29 Mar 2008