Financial firms take up more Marina Bay space

Tags

Commercial / Industrial Singapore, Offices

04 May 2012 06:00

Space occupied by the financial and insurance sector in Marina Bay closes in on that in Raffles Place

SINGAPORE – Marina Bay has a higher percentage of financial and insurance (FI) companies compared to Raffles Place, according to a recent study by DTZ.

As of Q1 2012, about 75 per cent of occupied office space in Marina Bay was taken up by companies in the FI sector as opposed to approximately 55 per cent in Raffles Place.

The study covers buildings with more than 100,000 sq ft of net lettable area.

Although Raffles Place has a lower proportion of companies in the FI sector, the absolute amount of space occupied by such companies is still higher compared to Marina Bay because of the larger stock in the traditional prime office area.

FI companies occupied slightly more than 4 million sq ft of office space in Raffles Place, compared to about 2.6 million square feet in Marina Bay.

The amount of space occupied by FI companies in Marina Bay is however expected to grow as occupiers move in to newly completed buildings such as Asia Square Tower 1 and Marina Bay Financial Centre (MBFC) Tower 3.

Based on known pre-commitments by FI companies in these two buildings, the total amount of space occupied by the FI sector in Marina Bay will increase to over 3.3 million sq ft in the next few quarters as the tenants move in. DBS Bank, for example, will be occupying 18 floors (600,000 sq ft) at MBFC Tower 3 which received its Temporary Occupation Permit (TOP) in March 2012.

Chua Chor Hoon, DTZ’s Head of Asia Pacific Research, commented: “The desire by FI companies to be in prestigious locations and in newer buildings designed to suit their needs has led to their gravitation to Marina Bay. As more buildings are completed in Marina Bay, the space occupied by FI companies there could soon close in on that in Raffles Place in the next five years.”

The office stock in Marina is expected to increase by about 2.6 million sq ft with additions from Asia Square Tower 2 in 2013 and developments on the land swap sites by M-S Pte Ltd around 2016. Conversely, Raffles Place will see only 720,000 sq ft from the redevelopment of the Market Street car park to an office building (CapitaGreen) in 2014.

Despite the relocation of FI companies to Marina Bay, the occupancy rate in Raffles Place has held up better in Q1 2012 because of its bigger base of tenants.

The average occupancy rate of office space in Marina Bay fell more than 30 percentage-points year-on-year (y-o-y) to 68.1 per cent in Q1 2012 following the completion of Asia Square Tower 1 in mid-2011 and MBFC Tower 3 recently.

Taking into consideration about 1.0 million sq ft of pre-committed space from both FI and non-FI companies at the newly completed buildings which will be filled soon, the average occupancy rate of office space in Marina Bay will rise to about 86 per cent. This is still lower than the 91.3 per cent in Raffles Place which fell 3.6 percentage-points from the same period last year but grew 1.3 percentage points on a quarter-on-quarter (q-o-q) basis in Q1 2012.

Cheng Siow Ying, DTZ’s Executive Director, Business Space noted: “There are still some pockets of demand for office space from companies venturing into the growing South East Asian markets and looking to set up branch offices in Singapore. However, leasing transactions are limited to small and mid-sized tenancies. In light of the continued economic uncertainties, existing occupiers are careful to take up space only on a need-to basis and avoid pre-committing to additional space. Most corporates choose to renew their leases or expand within the same building to avoid capital outlay and moving cost.”

Landlords of buildings with high occupancy rates are still keeping gross face rents unchanged.

The average gross face rent for prime office space, which does not take into account rent holiday, stood at S$12.00 per sq ft per month in Marina Bay and S$9.80 in Raffles Place in Q1 2012.

However, there is an increase in leasing incentives offered in the form of longer rent holiday, ranging between two and six months, by landlords who are more keen to fill up their space. Assuming a typical lease period of three years, a two-month rent holiday translates to a 5.6 per cent saving on effective rent.

Although the net increase in supply is low in 2012, there will nonetheless be downward pressure on rents as occupiers remain cautious and a substantial amount of existing space could be returned to the market for lease.

The net increase in supply is projected to be only 1.1 million sq ft in 2012 taking into account 1.7 million sq ft of new completions and 0.6 million sq ft of existing stock which could be terminated for redevelopment.

However, shadow space which represents excess space that companies have leased but are looking to assign and sublet grew about 15.0 per cent q-o-q in Q1 2012 to approximately 215,000 sq ft of which more than half can be found in Raffles Place and 80,000 sq ft in Marina Bay.

For the rest of the year, we expect another 700,000 sq ft of space to be returned to the market, either as shadow space or following lease expiries, as occupiers move in to newly completed space that they have pre-committed to. – DTZ Research

Source: Business Times 04 May 2012

To list or to buy?

Tags

Commercial / Industrial Singapore, Offices

02 May 2012 10:37 by TAY HUEY YING

THE recent spate of renewed activity in the strata-titled office market may spark interest among firms to purchase premises that they can use to operate their business. This article outlines some of the benefits and drawbacks of owner-occupying office premises, and provides a snapshot of available options in the market.

	>> Click here for the full price list of strata office, warehouse and factory space in Singapore

Benefits of owner occupation

Besides being able to exercise control over the premises, the greatest lure of operating from an owned premises is being free from a volatile office rental environment. Businesses can therefore enjoy a greater level of certainty when it comes to their operating costs.

Companies would also be able to look forward to a higher level of permanancy in their business address, and avoid the hassle of moving.

They would also save on moving and fit-out costs, which arise from the typical short, three-year leasing contracts.

Moreover, according to URA’s Q4 2011 real estate statistics, the prices for offices have yet to push past the last historical high. They are still some 24 per cent below the historic peak in Q3 1996. As such, there is potential for businesses to enjoy capital appreciation.

Finally, the current historical low borrowing costs should help to keep the monthly mortgage payment fairly manageable, and may be comparable if not lower that what a business would need to fork out in rent.

Drawbacks of owner occupation

The compelling benefits of owner-occupation are, however, not without costs. For one thing, as banks typically loan up to 60-70 per cent of the market value or purchase price, whichever is lower, a business must be prepared to have substantial capital tied up in the illiquid asset. This could entail higher opportunity costs given that a higher return on equity would likely be generated when the capital is injected into its core business.

Secondly, permanence in business location also brings with it a loss in mobility and the ability to be responsive to market changes. A company would have less flexibility in upgrading or downgrading its business premises according to market conditions. In fact, upsizing or downsizing would in general be a challenge.

 

To read the rest of the story, grab a copy of The SME Magazine from your newstands, free with The Business Times today.

Originally published in The SME Magazine, a magazine of The Business Times

Source: Business Times 02 May 2012

Punggol residential project to be launched at $850 psf

Tags

New Launches

BY

LIM WEI SHENG

ANOTHER private residential project in Punggol, FLO Residence, is being launched this May.

The project, a joint-venture between Capital Development Pte Ltd and ZACD Investments Pte Ltd, is located at Punggol Field Walk, near Coral Edge LRT.

Comprising a total of 530 apartments, FLO Residences offers 106 two-bedders (between 764 and 861 sq ft), 317 three-bedders (between 926 and 1,044 sq ft), 92 four-bedders (between 1,227 sq ft and 1,346 sq ft) as well as 15 penthouse units (between 1,500 and 2,500 sq ft).

The project is priced at an average of $850 psf, according to SLP International, the marketing agent, with the cost of two-bedders starting at $620,000, three-bedders at $750,000 and four-bedders at $990,000.

SLP added: “While there have been launches in Punggol in the past, most of them are either ECs or are priced beyond $900 psf.”

Watertown, a 99-year leasehold Punggol project launched in January, achieved median prices of about $1,340 psf in February and March, with 17 out of a total of 992 units returned.

SLP also said: “The site adjacent to FLO Residence has recently been earmarked for an international school. This immediately increases the investment potential … as (these schools) traditionally bring about increased rental demand for housing nearby,”

FLO Residence will be open for viewing by the public from May 12 onwards. Buyers will have up to 18 chances to win a Volkswagen car.

The Punggol district is set to be a waterfront town comprising three commercial centres, according to the government’s Punggol 21 Plus vision set down in 2007.

Source: Business Times 02 May 2012

Woodlands executive condo site draws 5 bids

Tags

Land Sales / Tender

Chinese group tops tender with $317.65 psf ppr offer, 3.5% above MCL Land’s

BY

KALPANA RASHIWALA

A STATE tender for a 99-year leasehold executive condo (EC) site at Woodlands Avenue 5/Woodlands Drive 16 has fetched five bids.

Top bidder Hao Yuan Investment, controlled by mainland China parties, offered $247 million or $317.65 per square foot per plot ratio (psf ppr). Its bid was 3.5 per cent higher than the next highest offer of $238.7 million or nearly $307 psf ppr by MCL Land.

When the tender for the site – which is next to the completed La Casa EC development – was launched in March, property consultants polled by BT predicted that the winning bid for the site would be in the $250-330 psf ppr range. One consultant forecast three to five bids for the site. So yesterday’s tender outcome was within expectations.

A spokesman for Hao Yuan said yesterday evening that the group’s scheme for the site is a project with about 700 units comprising three and four-bedroom apartments. The plan is to launch the project before year end, he added.

CBRE Research executive director Li Hiaw Ho estimates the project’s breakeven cost at around $630-650 psf.

ECs are a hybrid of public and private housing with initial buyer eligibility and resale restrictions which are lifted 10 years after the completion of an EC project.

Hao Yuan is also developing The Nautical, a 99-year leasehold private condo in Sembawang. It began selling the project in December and to date almost 70 per cent of the 435 units have been sold, said Hao Yuan’s spokesman. According to URA data, 40 units were sold in March at a median price of $882 psf.

Other bidders at yesterday’s tender for the EC site in Woodlands included EL Development ($228.3 million or $293.60 psf ppr) and City Developments unit White Haven Properties, which offered $222.5 million (about $286 psf ppr). The lowest bid of about $186.8 million (around $240 psf ppr) was from a partnership between Frasers Centrepoint unit FCL Place Pte Ltd and Maxdin Pte Ltd. The latter is a subsidiary of UE E&C Ltd, which in turn is part of the United Engineers Group.

Credo Real Estate executive director Ong Teck Hui described Hao Yuan’s top bid of about $318 psf ppr as “confident” and “taking into account the fact that there are no new EC projects in Woodlands, hence tapping into demand from upgraders in the vicinity”.

However, Mr Ong noted that tender participation was rather mediocre, with five bids. “Interested parties could be looking more at next week’s tender for the Tampines Central 7 EC site, next to Tampines Trilliant, which is in a relatively more attractive location than Woodlands,” he added.

Source: Business Times 4 May 2012

Govt monitoring ABSD reimbursing

Tags

New Policies / Guides / Views, Singapore Property Outlook / Views

Redas supports ‘fair and transparent practices’ by property developers

BY

FELDA CHAY

[SINGAPORE] Several developers are reimbursing the hefty additional buyer’s stamp duty (ABSD) – imposed by the government late last year to cool the residential property market – in a bid to move sales in selected projects.

And the practice, which has created concerns about the possible distortion of property and loan values, has drawn the attention of regulators and raised the possibility of intervention should it get out of hand.

“As long as they do not distort prices, there is no need for the government to intervene against such business decisions and practices. We will therefore continue to monitor the market closely for now to ensure transparency,” the Ministry of National Development (MND) said in response to BT queries.

The Monetary Authority of Singapore (MAS) also reiterated that consumers, when taking up home loans, should disclose to the bank any rebates or discounts received from the seller or any other party in the transaction.

The latest sales ploy of reimbursing the ABSD is a step beyond the usual marketing gimmicks of handing out furniture vouchers and giving upfront discounts to defray the buyer’s stamp duty. If isolated, such reimbursements may not have a serious impact. But on a wide scale, the practice could sabotage the government’s efforts to promote transparency in the market, industry watchers say.

These “discounts” could distort property prices as they are given only after a buyer has completed the transaction. This means sales caveats may not reflect the actual purchase price of the property, unlike upfront discounts which are worked into the reported transacted price.

Said one property consultant, who declined to be named: “The ABSD reimbursement is being made in this way so that it does not affect the pricing. If they give a discount on the price, then their pricing is affected, and the developers don’t want that because it may upset their earlier buyers who did not get to enjoy the discount.”

The steepest ABSD rate of 10 per cent applies to foreigners buying residential property in Singapore. The offer to reimburse the ABSD in full could amount to a hefty discount that is not reflected in the Urban Redevelopment Authority’s (URA) records, he added.

The Real Estate Developers’ Association of Singapore (Redas) said it “supports MND’s position on fair and transparent practices which will enable homebuyers to make an informed decision”.

Developers which have been reimbursing the ABSD include Cheung Kong (Holdings) Ltd, Far East Organization, Allgreen Properties and Aspial Corporation’s World Class Land.

Some offer to reimburse fully the additional stamp duty charges, while others cover a part of it.

The projects involved range from high-end to mass-market developments. They include Marina Bay Suites in the Marina Bay area, which Cheung Kong is developing jointly with Hongkong Land and Keppel Land; Thomson Grand in Upper Thomson; and Holland Residences on Taman Warna in the Holland Road area.

Thomson Grand is a Cheung Kong project, while Holland Residences is being developed by Allgreen.

A spokesman from Property Enterprises Development (Singapore), Cheung Kong’s subsidiary, said: “The reimbursement of ABSD will be payable to the purchasers upon the payment of the 20 per cent of the purchase price, the proof of the Certificate of Stamp Duty on the Agreement and the duly executed sales-and-purchase agreement.”

Since introducing its reimbursement scheme in February, Cheung Kong has sold about 165 units at Thomson Grand. Roughly 10 per cent were sold to foreigners, with unit sizes ranging from around 900- 1,400 square feet. The units were sold at $1,250- 1,450 per square foot.

An Allgreen spokesman also confirmed it was offering partial ABSD reimbursements to affected buyers of Holland Residences units.

At Fragrance Group’s Parc Rosewood in Woodlands, sales agents said their commissions were high enough for them to offer ABSD reimbursements out of their own pocket.

Marina Bay Suites’ manager, Raffles Quay Asset Management, would only say that “more than 70 per cent of the units have been sold and we continue to sell our apartments through private previews and regional road shows, some of which were done in partnership with marketing agents”.

Keppel Land, however, said it does not offer ABSD reimbursements for its own projects.

Said Far East’s chief operating officer of property sales, Chia Boon Kuah: “Our marketing programme seeks to build a stronger base of long-term buyers for the organisation. It could include discounts from the listed price, stamp duty subsidies and furniture vouchers.

“The amount varies according to different projects as well as marketing phases. For instance, some of our projects with stamp duty subsidies are Hillsta, The Scotts Tower and Seawind.”

Aside from price transparency, the practice of reimbursing the ABSD has raised the concern that it could distort loan values.

“Developers may provide discounts, reimbursements or incentives such as furniture vouchers,” said Ku Swee Yong, CEO of International Property Advisor (IPA). “Buyers who take loans should declare the value of such incentives to the banks when they apply for the loan by giving the bankers the Offer To Purchase and all other side letters. Otherwise, the loan-to-value ratios might exceed MAS’s limit.”

When contacted, MAS said: “When taking up a housing loan, the consumer is required to disclose to the bank whether he has received any rebates or discounts from the seller or any other party, and if so, the amount of the rebate or discount. The bank will deduct any discount, rebate or any other benefit offered from the purchase price before calculating the loan amount.”

Source: Business Times 30 April 2012

Singapore March bank lending up 1.5% from Feb

Tags

Economic / Financial / Investment / Outlook

SINGAPORE – Total bank lending in Singapore rose 1.5 per cent in March from February, central bank data showed on Monday.

Bank lending in the city-state was S$432.6 billion (US$349.29 billion) last month, up from S$426.4 billion in February. Bank lending rose 26 per cent in March from a year earlier.

Housing loans to consumers rose to S$134.8 billion in March from S$133.8 billion in February.

Singapore banks have seen strong loan growth in recent months, helped by market share gains in areas such as trade finance as European banks reduce their emerging markets exposure.

DBS CEO Piyush Gupta said on Friday the bank’s loans growth is likely to slow to the “low teens” this year from last year’s 28 per cent rise.

Source: Business Times 30 April 2012

Singapore’s interest rate balancing act

Tags

Economic / Financial / Investment / Outlook, Mortgage / Interest Rates / Financing / Banking

More direct measures may have to be used to rein in price pressures

BY

EMILYN YAP

Appetite for wheels: In the car market, the tight supply of COEs and the resulting surge in COE premiums have led to soaring car prices

– FILE PHOTO

[SINGAPORE] Singapore may be fighting inflation by tightening monetary policy, but the outcome of this isn’t so straightforward. What this means is that policy makers may have to resort to more direct measures to rein in price pressures if these continue unabated.

In its latest review earlier this month, the Monetary Authority of Singapore (MAS) announced that it would let the Singapore dollar appreciate at a faster pace – to make imports cheaper and keep inflation in check. The central bank increased the slope of the exchange rate policy band slightly while narrowing the band.

But a strong Singapore dollar, together with ultra-low interest rates in the United States, could draw more funds here in search of better returns. The excess liquidity could depress domestic interest rates further – at least in theory. And lower borrowing costs may sustain strong domestic demand and push prices of big ticket items from property to cars further up.

April’s tightening “is likely to impute downward pressure on domestic short-term interest rates”, said Citigroup economist Kit Wei Zheng in a recent report. “With the bulk of mortgages pegged to Sibor (Singapore Interbank Offered Rate) and/or SOR (Swap Offer Rate) fixings, the stimulatory effect on property demand could be met with further cooling measures, especially if home sales continue at the breakneck pace of Q1.”

As the MAS manages the exchange rate in an open capital regime, it has to cede control of interest rates, allowing the latter to track rates globally. US rates have a considerable influence – the three month Singapore-dollar Sibor has historically moved closely with the three month US-dollar Libor.

The US Federal Open Market Committee decided last week to keep interest rates near zero. “US interest rates including the federal funds rate are expected to be quite low till late 2014,” said Aurobindo Ghosh, programme director at Singapore Management University’s Sim Kee Boon Institute for Financial Economics. “Following that, interest rates like Sibor or SOR are expected to be low as well due to capital mobility.”

This, coupled with the expected strength of the Singapore dollar, could keep interest rates here low as well. “Faster currency appreciation makes Singapore even more attractive to foreign investors than it is already. Other things being equal, inflows go up and interest rates go down,” said DBS group research managing director David Carbon. “That raises demand for interest-rate sensitive goods like property and autos.”

Certainly, there are other factors in the mix, and so far, the impact of the latest MAS move has not been pronounced. Since MAS announced its monetary policy decision, the three-month Singapore-dollar Sibor has dipped less than 0.01 per cent to 0.382 per cent last Friday, while the three-month Singapore-dollar SOR has risen slightly to 0.344 per cent.

The 3-month Sibor and SOR have traded mostly sideways since the announcement as markets remained unsettled over tail risks, including the fallout from the eurozone debt crisis, noted OCBC economist Selena Ling.

Also, the Singapore dollar appreciation story is less straightforward at this point with Singapore’s GDP growth forecast at just 1-3 per cent this year, she said. “Fund inflows into Asia have pulled back sharply for both the equity and bond markets, which signals generally decreasing investor confidence, especially with the ongoing Chinese growth slowdown.”

Several economists pointed out as well that narrowing the exchange rate policy band also prevents the Singapore dollar from rising too sharply.

Still, expectations are for MAS’s tightening moves to contribute to low or lower domestic interest rates, with implications for domestic demand.

Prices in some property sectors are still climbing. In the first quarter, private home prices in the Outside Central Region – where mass-market condominiums are – rose 1.1 per cent from the previous quarter. Prices of industrial space jumped 7.3 per cent. In the car market, the tight supply of certificates of entitlement (COEs) and the resulting surge in COE premiums have led to soaring car prices. Yet, the appetite for wheels remain, partly sustained by low interest rates for car loans.

What monetary policy cannot target, other measures will have to kick in, economists say.

“In adopting the exchange rate mechanism, we have given up interest rate autonomy. That leaves us to conclude that macroprudential and sector-specific measures are perhaps best suited for tackling risks associated with property prices,” said Mizuho economist Vishnu Varathan.

Barclays Capital economist Leong Wai Ho noted that existing curbs on property speculation are already strong dampeners and have helped offset the effect of low borrowing costs.

If property prices and transaction volumes resume their uptrend, there could be additional curbs, he said. “These are likely to be extensions of current prudential measures, such as a further increase in the rate of the additional buyer’s stamp duty (ABSD), or tougher measures to prevent developers from offering cash rebates to foreign buyers that offset the ABSD.”

Rising car prices are feeding directly into headline inflation figures. But the supply of COEs is set to remain tight as the government seeks to rein in vehicle population growth. Some market watchers have suggested instead that car loan rules be tightened. Buyers can take up car loans of up to 100 per cent of the purchase price today, but they may think twice if a sizeable down payment is needed.

Heightened domestic inflation risks make it even more important to keep imported inflation at bay, say policy watchers.

“I believe there is scope for monetary policy to be tightened further on an incremental basis, if global energy prices remain elevated for longer, if external demand should re-accelerate, or if we see more generalised increases in services costs in the economy,” Mr Leong said.

“When you are in the midst of a painful domestic cost adjustment (higher COEs and higher wages), it makes sense to keep your guard up to prevent additional imported price pressures from filtering through into the economy.”

Source: Business Times 30 April 2012

Govt keeping close watch on inflation: Tharman

Tags

Economic / Financial / Investment / Outlook

Most citizens not affected as much as CPI suggests

BY

LEE U-WEN

Mr Tharman: Govt closely monitoring prices of everyday goods, services

[SINGAPORE] The government is keeping a close watch on inflation, but its impact on most Singapo-reans is not as severe as the consumer price index (CPI) indicates.

This was the assurance given by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday, even as he noted how last month’s CPI increased 5.2 per cent year-on-year.

He explained that more than half of this “headline” inflation rate came from higher certificates of entitlement (COEs) for cars and the effect of higher market rents on homes.

“Although most Singaporeans own their homes, the CPI index still records an imputed rental on these owner-occupied homes. The vast majority of Singaporeans – who already own their homes and are not buying a new car – will not feel the effects of these sharp increases,” said Mr Tharman at last night’s annual May Day dinner.

He shared how the increase in prices of daily necessities and essential services such as food, clothing and education had been “much more moderate” at 3 per cent or lower.

“The inflation in actual household expenditures for most Singaporeans is hence lower than 5 per cent,” he told his 1,500-strong audience at the Orchid Country Club that included Deputy Prime Minister Teo Chee Hean, Emeritus Senior Minister Goh Chok Tong and labour chief Lim Swee Say.

Mr Tharman, who is also Manpower Minister, said the government is closely monitoring the situation, including the prices of everyday goods and services. He shared how the Monetary Authority of Singapore (MAS) – of which he is the current chairman – had also been strengthening the value of the Singapore dollar to reduce the impact of imported inflation.

The government, too, had taken actions to cool the property market, even though property prices were not part of the CPI.

“When you have an overheated property market, many other prices can also go up. We will keep a close watch on the property market,” said Mr Tharman.

In the meantime, however, the government would provide some assistance to Singaporean households to cope with the rising cost of living, such as through Goods and Services Tax (GST) vouchers that benefit the lower-income groups.

But taking into account Singapore’s ongoing economic restructuring and a tight labour market, Mr Tharman warned that cost pressures on businesses were to be expected as wages increased.

“There will be pressure on consumer prices this year and for the next few years. We must do our utmost to raise productivity. With higher productivity, businesses will be able to pay higher wages in a tight labour market without pushing up prices,” he said.

And with the National Wages Council discussing its wage guidelines for 2012 and 2013, Mr Tharman said he was confident that it would consider all factors carefully before releasing its recommendations in June.

“I hope the guidelines will allow workers to get their fair share from the growth over the past year and get wage increases that can be sustained while still ensuring that businesses in Singapore remain competitive and continue to generate good jobs,” he said.

Following his speech, the labour movement gave out May Day awards to 92 individuals and companies – the largest number of recipients since the first awards presented in 1963.

Source: Business Times 30 April 2012

Commercial space boom set to chug into KL Sentral

Tags

Kuala Lumpur, Malaysia, Overseas / Global Properties

Transit hub to house 80% of KL suburban supply: CBRE M’sia

BY

PAULINE NG

IN KUALA LUMPUR

 

One new building that won’t have any occupancy problems is the newly completed Menara 3 Petronas.

 

THE transit hub of KL Sentral is expected to see a boom in commercial space this year, when three million square feet or 45 per cent of Kuala Lumpur’s new office space comes onto the market.

An estimated 6.7 million sq ft of net lettable space is scheduled to be completed in the greater Kuala Lumpur area, with about 3.4 million sq ft located in suburban Kuala Lumpur, according to CBRE Malaysia.

KL Sentral will house 80 per cent of the suburban KL supply, the real estate consultancy said in a fourth-quarter 2011 report.

KL Sentral is a key beneficiary of the current trend where tenants are searching for cheaper rentals or less traffic congestion, and are relocating from the city centre to suburban offices. Projections indicate this trend is likely to accelerate in coming years.

Last year, KL Sentral gained over two million sq ft of office space.

As a transit hub – its train station is a major point for the commuter, light rail transit and KLIA Express – KL Sentral has grown exponentially in the past few years with multinational companies signing on and because of the area’s Multimedia Super Corridor status. Firms based in the KL Sentral area are entitled to certain tax benefits if they meet the criteria.

Kuala Lumpur Sentral CBD, as it is called by government-linked developer MRCB, is a “fully-planned CBD” spanning 72 acres of integrated development comprising Grade A offices, hotels, retail and luxury condominiums.

Even so, the effect of so much commercial space coming onstream in a relatively short period remains to be seen.

“While the overall development has been a success, parking and access issues are commonly cited, and the rents are typically no lower than those in KL city centre,” CBRE observed.

In the city centre, average gross asking rents for the bulk of Grade A buildings were flattish last year at RM6 (S$2.43) to RM8 psf. The occupancy rate held steady at 89 per cent.

There was a slight decline in office space of 0.2 per cent to 11.3 per cent, largely driven by the expansion of oil and gas and financial firms.

But property consultants remain wary about the excess supply in commercial space to come, given that the city centre’s annual absorption rate of new supply is estimated at 1.5 million sq ft.

One new building that will not have any occupancy problems is the newly completed Menara 3 Petronas.

With some 840,000 sq ft of net lettable space, the prime building is said to be almost completely taken up, the result of some tenants relocating from the nearby Petronas Twin Tower 2, as well as other companies attracted to KL’s most prestigious address.

Petronas’ latest 60-storey tower is one of only a handful that are able to command rentals in excess of RM10 psf.

Source: Business Times 30 April 2012

Prices of private residential properties register marginal decline in 1st quarter 2012

Tags

Singapore Property Outlook / Views

The Urban Redevelopment Authority (URA) released today the real estate statistics for 1st Quarter 2012.

PRIVATE RESIDENTIAL PROPERTIES

Prices and Rentals

Prices of private residential properties fell marginally by 0.1% in 1st Quarter 2012, compared with the 0.2% increase in the previous quarter. This was the first quarterly fall in prices since 2nd Quarter 2009, following nine consecutive quarters of declining price increases.

Prices of non-landed properties in Core Central Region (CCR)1  and Rest of Central Region (RCR) both fell by 0.6% in 1st Quarter 2012, compared with the 0.5% and 0.1% respective increase in the previous quarter. For Outside Central Region (OCR), prices increased by 1.1% in 1st Quarter 2012, compared with an increase of 0.6% in the previous quarter (see Annexes A-1, A-2 & A-62).

Rentals of private residential properties registered a lower rate of increase compared to the previous quarter. Rentals increased by 0.3% in 1st Quarter 2012, less than the 0.4% increase in the previous quarter (see AnnexesA-3 & A-4).  The rate of increase in rentals has been moderating for three consecutive quarters, since 3Q2011.

Launches and Take-up

A total of 6,903 uncompleted private residential units were launched for sale by developers in 1st Quarter 2012, compared with 4,105 units in 4th Quarter 2011 (see Annex C-1).

6,458 uncompleted private residential units were sold by developers in 1st Quarter 2012, compared with 3,525 units in 4th Quarter 2011. Take-up of shoe-box units (i.e. smaller than 50 sqm) accounted for 27% (or 1,764 units) of new sales in the quarter (see Annex C-3).  Lower-priced units less than $750,000 accounted for 42% (or 2,766 units) of new sales in 1Q2012, much higher than the 25% (or 911 units) seen last quarter (see Annex C-3).  Overall, many of these units are located in the suburbs, as 82% of the new units sold by developers were from OCR in 1Q2012 (see Annex C-2).

Resales and Sub-sales

The volume of resale transactions declined for the third consecutive quarter to 1,906 units in 1Q2012. This was the lowest since 1Q2009, which had 1,143 resale transactions. Resale transactions accounted for only 21.8% of all sales in 1Q2012, a historical low since such data was collected in 1999 (see Annex D). Prices for completed non-landed properties (ie. resales) declined by 0.7%, compared to the 0.2% price increase for uncompleted non-landed properties (see Annex A-1).

Sub-sales accounted for 3.6% of all sale transactions in 1st Quarter 2012, lower than the 9.1% recorded in 4th Quarter 2011 (see Annex D).

Supply in the Pipeline

As at the end of 1st Quarter 2012, there was a total supply of 78,572 uncompleted private residential units from projects in the pipeline3, higher than the 77,089 units in 4th Quarter 20114 (see Annexes E-1 & E-25).  The pipeline supply of 78,572 units was the highest ever recorded since such data were first available in 1999. Another 4,100 private housing units are expected to come from sites that had been sold or had been released for sale via the 1st Half 2012 GLS Programme.

Of the supply in the pipeline, 36,552 units remained unsold as at 1st Quarter 2012. The unsold units comprised 10,729 units in CCR, 8,895 units in RCR and 16,928 units in OCR (see Annexes B-1 & B-2).

Stock and Vacancy

The stock of completed private residential units increased by 2,152 units in 1st Quarter 2012. The vacancy rate of completed private residential units increased from 5.9% as at the end of 4th Quarter 2011 to 6.0% as at the end of 1st Quarter 2012 (see Annex E-1).

Executive Condominiums

The total stock of completed Executive Condominium (EC) units remained unchanged at 10,430 units as at the end of 1st Quarter 2012. However, there were 7,139 EC units in the pipeline (see Annex E-1).  Another 2,900 EC units are expected to come from EC sites that had been sold or had been released for sale via the 1st Half 2012 GLS Programme.

Developers launched 1,864 new EC units for sale in 1st Quarter 2012 (see Annex F).  Developers also sold 1,557 uncompleted EC units in 1st Quarter 2012, compared with 432 units sold in 4th Quarter 2011.

OFFICE SPACE

Prices and Rentals

Rentals for office space, based on leases which had commenced, decreased by 0.5% in 1st Quarter 2012, compared with the increase of 0.3% in 4th Quarter 2011 (see Annexes A-3 & A-5). Prices of office space remained unchanged in 1st Quarter 2012, compared with the 1.0% increase in the previous quarter (see Annex A-1).

Supply in the Pipeline

As at the end of 1st Quarter 2012, there was a total supply of about 762,000 sq m GFA of office space in the pipeline (see Annexes E-1 & E-2).

More supply of office space will also come from the GLS sites which were sold by the Government in 2011. This includes the commercial sites at Robinson Road / Cecil Street and Peck Seah Street / Choon Guan Street. In addition, more supply of office space is also expected from the development of the 6 plots of land at Marina Bay and Ophir Road / Rochor Road to be jointly developed by M+S Pte Ltd.

Stock and Vacancy

The amount of occupied office space increased by 53,000 sq m (nett) in 1st Quarter 2012, as compared to the increase of 50,000 sq m (nett) in the previous quarter.  On the other hand, the stock of office space increased by 97,000 sq m (nett) in 1st Quarter 2012. The island-wide vacancy rate of office space as at the end of 1st Quarter 2012 increased to 11.7%, from 11.3% as at the end of 4th Quarter 2011 (see Annexes A-5 & E-1).  

SHOP SPACE

Prices and Rentals

Rentals for shop space, based on leases which had commenced, increased by 0.1% in 1st Quarter 2012, compared with the 0.5% increase registered in 4th Quarter 2011 (see Annexes A-3 & A-5).  At the same time, prices of shop space increased by 0.2% in 1st Quarter 2012, same as the rate of increase registered in the previous quarter (see Annex A-1).

Supply in the Pipeline

As at the end of 1st Quarter 2012, there was a total supply of 488,000 sq m GFA of shop space from projects in the pipeline (see Annexes E-1 & E-2).

Stock and Vacancy

The amount of occupied shop space decreased by 13,000 sq m (nett) in 1st Quarter 2012.  On the other hand, the stock of shop space increased by 5,000 sq m (nett) in 1st Quarter 2012. The island-wide vacancy rate of shop space was 5.8% as at the end of 1st Quarter 2012, compared with the 5.3% vacancy rate as at the end of 4th Quarter 2011 (see Annexes A-5 & E-1).  

INDUSTRIAL SPACE

Prices and Rentals

Prices of multiple-user factory space increased by 7.2% in 1st Quarter 2012, compared with 3.8% in the previous quarter (see Annex A-1).  Rentals of multiple-user factory space increased by 1.3% in 1st Quarter 2012, compared with the increase of 0.6% in the previous quarter (see Annex A-3).

Supply in the Pipeline

As at the end of 1st Quarter 2012, there was a total supply of 3.696 million sq m GFA of factory space from projects in the pipeline (see Annexes E-1 & E-2).

Stock and Vacancy

The amount of occupied factory space increased by 199,000 sq m (nett) in 1st Quarter 2012, higher than the increase of 196,000 sq m (nett) in 4th Quarter 2011. On the other hand, the stock of factory space increased by 200,000 sq m (nett) in 1st Quarter 2012. The vacancy rate of factory space remained unchanged at 6.8% as at the end of 1st Quarter 2012 (see Annex E-1).

URA’S REAL ESTATE INFORMATION SERVICE

More detailed information on the price and rental indices, supply in the pipeline, stock and vacancy position of the various property sectors can be found in the Real Estate Information System (REALIS), an online database of URA.

 

More information on REALIS can be found at http://spring.ura.gov.sg/lad/ore/login/index.cfm.  You can also contact the REALIS hotline at 6329 3456.

1     Core Central Region comprises postal districts 9, 10, 11, Downtown Core Planning Area and Sentosa. A map of Central Region showing the Core Central Region (CCR) and the Rest of Central Region (RCR) is available at: http://spring.ura.gov.sg/lad/ore/login/map_ccr.pdf

2     The prices of private residential properties are not uniform and vary from project to project. Home-buyers can view more detailed information on transactions of private residential properties at:http://www.ura.gov.sg/propertyinfo. Similar information can also be accessed by users on the go via the new iphone/ipad application introduced by URA. The application can be downloaded directly fromhttp://itunes.apple.com/us/app/property-market-information/id428469176?mt=8&ls=1.

3       The term “projects in the pipeline” refers to new development and redevelopment projects with planning approvals, i.e. either Provisional Permissions (PPs) or Written Permissions (WPs). A WP is a final approval granted under the Planning Act for a proposed development, as compared with a PP, which is a conditional approval.

4    The expected completion dates of private residential projects in the pipeline are provided by the developers of these projects.

5       More detailed data on supply in the pipeline by market segment, development status and expected year of completion can be found at http://www.ura.gov.sg/propertyinfo.

Summary of Key Information for 1st Quarter 2012

Annex	Title
Annex A-1	Comparison of Property Price Index for 4th Quarter 2011 and 1st Quarter 2012
Annex A-2	Price Indices of Non-Landed Properties by Locality and Completion Status.
Annex A-3	Comparison of Rental Index for 4th Quarter 2011 and 1st Quarter 2012
Annex A-4	Rental Indices of Non-Landed Properties by Locality
Annex A-5	Median Rentals and Vacancy of Office and Shop Space
Annex A-6	Chart of Property Price Index by Type of Property
Annex A-7	Chart of Residential Property Price Index by Type
Annex B-1	Number of Unsold Private Residential Units from Projects with Planning Approvals
Annex B-2	Number of Unsold Private Residential Units from Projects with Planning Approvals by Market Segment
Annex C-1	Number of Uncompleted Private Residential Units Launched in the Quarter by Market Segment
Annex C-2	Number of Private Residential Units Sold in the Quarter by Market Segment
Annex C-3	Number of Private Residential Units sold by Size and Price
Annex D	Number of New Sale, Sub-Sale and Resale Transactions for Private Residential Units by Market Segment
Annex E-1	Stock & Vacancy and Supply in the Pipeline as at End of 1st Quarter 2012
Annex E-2	Supply in the Pipeline by Development Status and Expected Year of Completion as at End of 1st Quarter 2012
Annex F	Number of Executive Condominium Units Launched and Sold in the Quarter

 

Source: ura.gov.sg 27 April 2012