Property Market Updates (6th November 2010)

Far East top bidder at Woodlands site

FEO has lodged the top offer in a six-way bidding battle for a Woodlands site. The firm tendered $105.1 million or $333 psf ppr for the 99-year leasehold plot at the junction of Woodlands Avenue 1 and Rosewood Drive. EL Development is the next highest on $100.9 million. BS Capital, Sim Lian Land, TID Residential and Ecco Development, with the lowest bid of $73 million, were also in the hunt. Far East is planning to develop a five-storey condo incorporating some townhouses on the site. CBRE Research executive director Li Hiaw Ho estimates that Far East’s bid price would translate to a likely breakeven cost of about $650-700 psf. ‘The project will likely be launched above $800 psf,’ he added. In the subsale market, units in the low-rise Rosewood Suites (under construction) were sold at $650-700 psf in the July-September period. In the secondary market, units in Woodgrove Condominium (also a low-rise project) changed hands at $560-675 psf while those in the Casablanca and Rosewood condo (these are mid-rise developments) were sold at $620-750 psf over the same period. The site is a stone’s throw from the Singapore Sports School and about 1km from the Singapore American School. It is also around 700m from Woodlands MRT Station.

Far East executive director (development and planning) Chng Kiong Huat said: ‘We envisage a five-storey condominium development that will incorporate some townhouses, designed to complement the low-rise set-up. Buyers will have a choice of one to four-bedroom units and townhouses which will come with private terraces, roof gardens and dedicated car park lots. ‘This is an area that Far East Organization is familiar with, having developed a number of successful themed residential projects there such as Casablanca and La Casa executive condominium as well as a collection of New England-style houses within Woodgrove Estate popular with American expats with children attending the Singapore American School next to it.’

- Mediasources

Small size, big draw

Small studio apartments might be a tight squeeze for some, but they have punched above their weight - and size - by achieving record prices, even in less glitzy areas outside the city centre.

These so-called shoebox apartments, typically less than 500 sq ft in size, first made their presence felt around 2006 in mainly prime districts. The Robertson Edge project off Mohamed Sultan Road is one example. But the trend has since spread to regions outside the central area.

In fact, a 474 sq ft apartment at The Scala, near Lorong Chuan MRT station, was sold for $1,522 psf - or about $720,000 - in August, according to caveats lodged with the URA. Experts said this was likely to be a benchmark price set for a 99-year leasehold project outside the central region. Another two similarly sized apartments sold for $1,467 psf and $1,437 psf last month. Other apartments which have fetched high prices include a 484 sq ft unit at 99-year leasehold project Optima@Tanah Merah, which sold for $1,280 psf, or $620,000, in September. A 420 sq ft unit at Siglap V - also outside the central area - transacted at $1,584 psf, or $665,000, in August, while a 409 sq ft unit at Suites@Changi sold for $1,379 psf, or $564,000, in September. Both projects, however, are freehold.

Experts said buyers are drawn to the more affordable investment prices of shoebox units, compared with those of family-sized homes. The rising prices of Housing Board flats might also have nudged some to buy private properties at comparable prices instead. The success of earlier shoebox developments, which have enjoyed capital gains in line with the market and higher rental yields, has also fed the trend, they added.

A CB Richard Ellis report last month said about 10 residential projects featuring predominantly small-format units will be launched in the next few months. With the exception of one, all the sites are in suburban areas like Telok Kurau, Siglap and Eunos. 'Buyers of shoebox units are mixed in profile, but are usually singles or couples without kids, who do consider renting out the units... although the majority do not mind using them for owner occupation should there be limitations in finding the right tenants,' added Mr Ong.,Shoebox units also achieve slightly better rental yields than larger units because of their lower prices. Robertson Edge, for example, fetches a rental yield of 6.6%, while the average yield for a centrally located condominium is 3% to 4%, he said.

- The Straits Times, B16

Local firm wins global high-rise prize

Home-grown architectural firm Woha's Bangkok condominium tower, the 230m The Met, is proving a towering success in more ways than one. It has just won The International Highrise Award (IHA) 2010 - the first time that the biennial prize has been won by a local firm. The US$132-million (S$170-million) building beat a top line-up of four other finalists: the 828m Burj Khalifa in Dubai; the 492m Shanghai World Financial Center; the 262m Aqua Tower in Chicago; and Tokyo's Mode Gakuen Cocoon Tower, which stands at 203m. The finalists were selected from 27 worldwide entries. A feature of The Met is that its apartments have been designed for residents to go without air-conditioning if they wish, thanks to its clever cross- ventilation. The 370-unit structure, completed in 2009, has greenery on all its 66 storeys. Balconies have private planters. The IHA is given to a building that stands out for its special aesthetics, pioneering design, integration into its urban context, sustainability, innovative technology and cost-effectiveness.

- The Straits Times, D10

Singapore's private bankers ride the Asian wealth wave

Since the start of the year, UBS Wealth Management has hired close to 400 new people in the region, including 150 private bankers. In the medium term, it is looking to grow the number of private bankers in the Asia-Pacific to 1,200 from the current 900. 'One of the key trends that we are witnessing is how Asia-Pacific remains a key area of focus for the wealth management industry globally,' said Christine Ong, chief executive of UBS Wealth Management in Singapore.

Barclays Wealth, the wealth management and private banking division of Barclays Bank PLC, is doubling its spending on people and technology investments to 700 million pounds (S$1.46 billion) for 2010-2012. Typically, the bank spends about 350 million pounds over three years on the area. A chunk of this investment will go to expanding its operations in Asia, where it wants to double its number of private bankers and quadruple assets under management (AUM) in Asia over the next four years. According to the Capgemini World Wealth Report 2010, the Asia-Pacific's population of high net worth individuals grew 25.8% to some three million last year. Their fortunes have also increased, surging some 30.9% to US$9.7 trillion in 2009, surging past Europe's for the first time.

UOB Private Banking is looking at a 20-25% growth in staff strength 'over the next few years' to support the growing number of high net worth individuals from Singapore and Asia, said Wilson Aw, UOB private banking head.

Citi's private bank is looking to double its headcount in China and hire up to half as many bankers in India. Earlier this year, it said that it will hire some 40 people this year across the Asia-Pacific - based mainly in Singapore and Hong Kong - to serve clients in the region. It now has US$165 billion in AUM in Asia. Globally, it has hired over 100 managing directors and directors, and expects to hire another 300 bankers over the next three years.

The Standard Chartered Private Bank has increased its number of private bankers by 15% year on year in Singapore in the first six months of the year - which saw AUM grow by 15%. The bank now expects full-year growth to be between 20 and 25%. It also expanded its operations in India, where it opened its fifth private banking office earlier this year.

- The Business Times, P4

Condo rentals rising more slowly

Rents for non-landed properties such as condominiums are rising at a slower pace. Latest data from the URA showed such rentals rose just 3.6% in the third quarter, compared to 6% in the preceding quarter and 4.8% in the first quarter. Property analysts said the downward trend indicates that the market has reached a sustainable level and the growth is in tandem with the capital values of property, which have seen slower rates of increase as well. Property prices have stabilised due to the recent cooling measures by the Government. Still, a robust economy that is expected to bring in more foreign workers will likely buoy the rental property market, analysts said. Already demand for rental properties has been growing. Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said the number of rental contracts increased 5% per month for the first nine months of this year. "The proportion of owner-occupier purchases has come down significantly, so the supply of rental units is actually greater. When supply is higher relative to demand, rentals decline or show a slower pace of increase," he said. For the next year, analysts expect rentals to continue to rise steadily at about 2 to 3% quarterly. "The bulk of supply that we are seeing in mass and mid-end markets will be completed in 2013. That will be 22,000 units coming on board. The market may soften then but rental recovery will be strong for the next 24 months," said Mr Han.

- Today

S'pore firms keep eye on impact of China rate hike

'The rise in interest rates in China will surely increase our financing costs in future. We are still taking a close watch on the situation,' said Joel Leong, chief financial officer (CFO) at Changjiang Fertilizer. 'However, if borrowing costs are too high, we may consider share placement or warrants issuance as another option,' he added. Meanwhile, property developers that BT spoke to - namely, CapitaLand and Yanlord - are still optimistic about China's property market and their operations there. DMG said in its report that CapitaLand could face a bigger fallout than its peers from the policy risks in the Chinese property market as 35% of its revised net asset value comes from China. A CapitaLand spokeswoman later told BT that higher interest rates in China will have an insignificant impact on the group's business. 'Our portfolio is balanced. We are not only in residential development, but also in office buildings, shopping malls, serviced residences, and mixed developments like the ones under our Raffles City brand,' she said. Yanlord's spokeswoman noted that 'demand is still sufficient compared to supply'. The 25 basis-point hike in interest rates is expected to translate to added costs of $2.3 million per annum for a group, which generated $325.4 million of profits last year. While the actual impact of China's rates move can only be ascertained when companies' fourth-quarter results are out, businesses operating in China seem to have grown accustomed to policy changes. Prior to the rate hike, provinces and cities throughout the country have raised their minimum wage levels this year, stung by labour shortages and increased worker unrest. As Mr Koh of Fuxing puts it: 'Policy risks always exist in China. Our business operations just have to factor in such unexpected changes.'

- The Business Times, P2

Indonesia's Q3 growth comes in below forecast at 5.82%

Indonesia's economy grew a lower-than-expected 5.82% n the third quarter from a year earlier, data showed yesterday, surprising economists who had forecast growth of around 6.2%. Of the 13 economists polled by Reuters, none had forecast third-quarter GDP growth of below 6.1%. The central bank had forecast growth of 6.3% in the quarter. 'That is really low,' said Helmi Arman, economist at Bank Danamon in Jakarta. 'The risk to achieving the 6.1% figure for full-year growth is definitely to the downside now.' Quarter-on-quarter GDP growth was 3.45%, Slamet Sutomo, deputy at the country's statistics bureau told a news conference. Analysts said the data made it even more likely that the central bank will keep its policy rate on hold at 6.5% well into 2011.

- The Business Times, P15

Exchange Rates (extracted from xe.com)