Property Market Updates (16 Nov 2010)

After blip, property is hot again
After Sept's slump came Oct's rebound. This turnaround, reflected in the latest developer sales figures revealed yesterday, has prompted some industry observers to say that another round of demand-cooling measures may follow, as those announced on Aug 30 do not seem to have had a strong or lasting impact. Developers sold 1,058 private homes excluding (EC) units in Oct, up 16.1% from Sept's sales volume of 911 units, according to primary-market sales data released by the URA yesterday. In addition, developers sold 529 ECs in Oct (no ECs were sold in Sept), taking total developer sales (including ECs) for Oct to 1,587 units. The number of private homes sold in the $2,000 to $2,500 psf price band in Oct was 207 units, or about eight times the 26 units developers sold in Sept. The increase was partly due to the release of The Glyndebourne (along Dunearn Road) and Suites at Orchard (at Handy Road). Excluding ECs, developers had sold 1,259 units in Aug before the cooling measures pushed this number down to 911 in Sept. It climbed back to 1,058 in Oct.

- The Business Times, P1
- Also quoted in The Straits Times, B26: “October private home sales beat forecast.”

Serene House and Serene Centre up for sale
Serene House and Serene Centre, both off Bukit Timah Road, have been put up for sale through property firm Colliers International. Colliers said yesterday that Serene House, a freehold residential site, will be offered via tender with an indicative price of $95 million to $98 million, or about $1,500 psf ppr. This assumes that no development charge is payable and includes the alienation of a neighbouring government-owned site. Serene House is a four- storey walk-up residential block comprising 24 apartments. The land area is 39,828 sq ft. Under the 2008 Master Plan, the rectangular site is zoned for residential use and has a gross plot ratio of 1.4.Colliers said the successful buyer can increase the total land area to 49,020 sq ft by amalgamating the neighbouring state land of 9,192 sq ft. The combined site can accommodate a new residential development comprising a four-storey block with 80 units of 850 sq ft each. The tender for Serene House closes on Dec 14.

Serene Centre
Serene Centre, a commercial / residential development, is being put up for sale through expression of interest. The indicative price is $120 million to $130 million, which works out to $1,500 per sq ft per plot ratio, based on a proposed plot ratio of three. The four-storey development comprises shop units on the first and second storeys, and 10 apartments on the third and fourth storeys. Serene Centre is on a 32,225 sq ft corner land plot fronting Farrer and Bukit Timah roads. Under the 2008 Master Plan, the site is zoned for commercial / residential use. The buyer can either refurbish the property to enhance the lettable area or redevelop the site into a new commercial / residential development. Expressions of interest must be submitted by Dec 14.

- The Business Times, P33
- Also quoted in The Straits Times, B24: “Serene Centre up for collective sale.”

Fragrance Properties to buy S$28m site
Fragrance Properties, the property development unit of Fragrance Group, is acquiring a site at Upper Paya Lebar Road for S$28 million. Known as MK23 Lot 03331T, the site currently houses a block of old apartments. The freehold site is zoned for residential development. It has a total land area of 3,173.6 sqm and has a maximum gross plot ratio of 1.4. The land can yield a max GFA of 4.887.34 sqm, including an additional 10% balcony space. Pending approval, Fragrance Properties intends to develop a residential apartment building on the site.

- CNA

More reclaimed land for new industries on Jurong Island
More land is being reclaimed off Ayer Merbau on Jurong Island to accommodate new investors like soap and detergent makers at a new value-add petrochemicals corridor shaping up there, as well as other potential downstream parties, BT has learnt. Shell just last week said it was ramping production of high-purity ethylene oxide (HPEO) needed by investors at the new corridor there. And sources said that JTC Corporation is reclaiming about 18 hectares off Ayer Merbau, starting with some 7-8 ha in the south and another 5 ha in the north of the area. Ayer Merbau is where Shell's mono-ethylene glycol (MEG) plant - part of its new US$3 billion petrochemical complex - and it’s now wholly-owned Ethylene Glycols Singapore plant, is sited.

- The Business Times, P4

HDB launches Lakeside site for 580 DBSS flats
HDB is launching a public housing site at Lakeside for sale, which can potentially yield 580 flats. The 2.1 hectare plot comes under HDB's design, build and sell scheme (DBSS). It is at Yuan Ching Road, near open spaces such as Jurong Lake and the Jurong Country Club golf course, and education institutions such as Jurong Secondary School. The site is also near the upcoming Jurong Lake District, which the government is developing as a major regional centre. However, the plot is some distance away from an MRT station. Both the Lakeside and Boon Lay stations are several bus stops away. The land parcel has a maximum allowable gross floor area of 684,574 sq ft and carries a lease term of 103 years (including a four-year construction period). The tender will close on Jan 5. SLP International Property Consultants' research executive director Nicholas Mak believes that the top bid for the site could range from $133.5-147 million, translating to $195-215 psf ppr. There might be four to six bidders, most of whom would be contractors- cum-developers, he added.

- The Business Times, P32

Global business confidence is down, but S'pore is upbeat
Uncertainty over economic recovery continues to plague investment and business confidence, according to a third-quarter global economic conditions survey by the Association of Chartered Certified Accountants (ACCA). But Singapore, notably, remained optimistic and was the only major ACCA market to report accelerating gains in business confidence in the three months. The picture was a lot brighter in Singapore, with 72% of the 109 respondents here saying they believe the global economy is either recovering or about to. 51% said they are more confident about their organisations' prospects than they were three months earlier. ACCA noted that satisfaction with government policies since the beginning of the crisis is much higher in Singapore than in any other market.

- The Business Times, P4

Understanding property developers
Anyone gathering case studies of the management principle 'vertical integration' need look no further than Singapore's property development industry. Several small to mid-size developers here started out as construction or engineering firms, building homes or offices for other developers. With bigger margins to be made down the value chain, these firms later decided to go into property development themselves. Tee International is one such example. It began operations in the 1980s as an electrical and mechanical engineer. In 2007, it started to acquire properties for redevelopment into new homes, sometimes with joint venture partners. Tee International's projects include Thomson Duplex and Cantiz @ Rambai. It will be co-developing a condominium project at Cairnhill Circle with another partner. Teambuild Construction Pte Ltd is another example. It started out in 1992 handling small sub-contracting jobs for Housing and Development Board projects, and later moved on to doing full construction and upgrading works. Today, the firm is also a private property developer, with residential projects such as Casa Aerata, D'Casita and Blissville under its belt.

- The Business Times, P

Top banker joins Threadneedle
One of Asia's top bankers, Mr Raymundo Yu, is coming out of retirement to spearhead British-headquartered asset manager Threadneedle's bid to become a force in this part of the world. Mr Yu, former Merrill Lynch chairman for Asia-Pacific, told The Straits Times that the chance to build Threadneedle's Asian franchise, virtually from scratch, was extremely compelling. He aims to make it one of the leading providers of fund management services in Asia. 'I like to build,' says the 55-year old Singaporean banker, who retired in 2008 after 27 years with Merrill. 'If you follow my career, it's always restructure and build'. At least (for) this one I don't have to go through the pain of restructuring.' Threadneedle manages about US$102.1 billion (S$133 billion) in assets and is the international investment arm of United States- listed financial service firm Ameriprise Financial. He plans to more than double the firm's Asia headcount to more than 30 staff in the next year, with the majority of the hires to be based here. The rest will work in Taipei, Hong Kong and Tokyo. Mr Yu also wants to diversify the business beyond its mainly institutional customers, such as government entities, to include the 'mass affluent' space and wealthy families. To do this, he will rely on his network and make new senior appointments, mostly in marketing and distribution. He will also work closely with Asia's leading banks.

- The Straits Times, B25

India to enjoy decades of high growth: minister
(New Delhi) India's Finance Minister Pranab Mukherjee held out the prospect of decades of 'high growth' as he sought to woo investors to Asia's third-largest economy. 'In the short term, it is reasonable to expect that the economy will go back to the robust growth path of 9% average that it was on before the global crisis slowed it down,' Mr Mukherjee told the India Economic Summit in New Delhi on Sunday. 'We are in a position to sustain high economic growth in the coming decades.' India needs US$1 trillion of investment in infrastructure including roads and ports between 2012 and 2017, double the estimated spending in the previous five years, to narrow the gap with China, Prime Minister Manmohan Singh's government says. China's economy, which was about the same size as India's US$183 billion in 1980, has swelled to close to US$5 trillion, four times that of India, after it boosted public spending. Mr Singh wants to boost economic expansion to a 9% pace for at least three decades, which he says is needed to pull the 828 million people living on less than US$2 a day out of poverty. – Bloomberg

- The Business Times, P19

Sunshine 100 plans US$1b HK IPO in H1 2011
(Beijing/Hong Kong) Chinese property developer Sunshine 100 aims to launch an initial public offering (IPO) in HK in the first half of next year, after a delay from this year over policy uncertainties. In June, the Beijing- based developer said it aimed to list in HK this year, but its plans did not materialise with concern among developers about central government tightening measures to cool the property market. 'We must choose a good time to list, and we are not so desperate for money. We think the early half of next year should be a good time,' Sunshine 100 Real Estate Group vice-president Fan Xiaochong told Reuters Insider TV. Sunshine 100, which focuses on second- and third- tier cities in which there is relatively less speculation, said it had sufficient cash to buy land next year totalling about three million square metres.

- The Business Times, P32

China steps up ownership curbs for foreign homebuyers
(Shanghai) China ordered first-time foreign homebuyers to show proof they don't own other properties in the country as it steps up measures to curb gains in the real estate market, the housing ministry and currency regulator said. Foreigners will have to provide home ownership statements before their purchases, along with proof of at least a year's employment in China, the State Administration of Foreign exchange and the Ministry of Housing and Urban-Rural Development said. Overseas companies are only allowed to buy offices in cities where they are registered, it said.

- The Business Times, P33

Tasweek scopes out opportunities in region
(Dubai) Abu Dhabi-based Tasweek Real Estate Development and Marketing recently explored the property and financial markets of Malaysia and Singapore to assess business opportunities and local market trends. According to the adviser and solutions provider serving the Middle East real estate markets, the trip affirmed the sustainable growth of the property sectors of both Malaysia and Singapore. With regard to Malaysia, the firm said the Malaysian market has been experiencing a property upsurge particularly in its high-end residential segment due to the availability of cheap financing, new launches, favourable regulations, and enticing promotions. Tasweek chief executive Masood Al Awar said the Asian discussions and observations proved that cheap financing was vital to ensuring the availability and sustainability of property returns and opportunities. He observed that Singapore and Malaysia both had various channels to fund property, allowing their real estate sector to continue to be productive despite the global crisis. 'We intend to adopt elements of the financing strategies we have witnessed in both countries to secure even better business for our company in 2011,' said Mr Al Awar who met with Malaysian and Singaporean banks and finance houses involved in real estate to gain more insights on their financing schemes. The financing model employed by Tasweek aims to achieve a combination of timeliness and speed, cost, and quality, the company said in a statement. Its mortgage financing options are aimed at leveraging the United Arab Emirates' lucrative mortgage market which is currently valued at around 50 billion dirhams (S$17.6 billion). Tasweek's business activities include the purchase and sale of strategic assets, asset management, joint ventures, and strategic alliances as well as marketing consultancy. -- Bernama