While Japan, South Korea and New Zealand have zero restrictions against foreign ownership of residential property, other countries across Asia Pacific have a full spectrum of restrictions for both resident and non-resident foreigners.

Here is a regional snapshot.

Thailand

• Foreign buyers can buy freehold for up to 49% of a single development, if exceeded, the tenure will be leasehold.
• Foreigners can buy land as a leasehold, whereas the improvements (residence) can be freehold.

Cambodia

• Foreigners are allowed to own apartments and condominium units above the ground floor.
• Land can be held by foreigners on long (renewable) leases.

India

• A foreign national of non-Indian origin, resident outside India cannot purchase any immovable property in India unless such property is acquired by way of inheritance from a person who was a resident in India.

Vietnam

• Non-resident purchasers who do not meet other criteria set out in Decree 51 are unable to purchase apartments or condominiums.
• Foreigners are not allowed to own land (red book).

• Foreigners can buy property without restriction but must pay a 15% additional buyer’s stamp duty.

Malaysia

• No restrictions but subject to a general pricing threshold of RM500,000 and above per unit.

Singapore

• Foreigners can buy private condominiums freely although they are subject to 15% additional buyer’s stamp duty.
• Sentosa Cove is the only place in Singapore where non-PR foreigners may buy a landed home.

Indonesia

• A foreign national who is not resident or considered to benefit national development is unable to buy residential property in Indonesia.

China

• Non-resident foreigners are not permitted to buy property in mainland China.

Australia

• Foreigners can purchase dwellings that add to the housing stock. This includes ‘new dwellings’: off-the-plan properties under construction or yet to be built, or vacant land for development. Foreigners cannot buy established dwellings as investment properties or as homes.

Japan, South Korea and New Zealand

• No restrictions.

Source: BTINVEST

In an effort to hedge against rising mortgage rates in the US, Singaporeans are expected to switch to fixed-rate loans. However, some local banks have already raised the interest rates on their products.

For instance, Maybank increased the interest rate of its three-year fixed loan by 0.1 percentage point on Monday, while ANZ raised its two-year fixed mortgage by 0.17 percentage point.

On the other hand, some lenders have put an end to fixed-rate packages. Standard Chartered stopped offering fixed-rates, while Citi discontinued this product last month.

Moreover, ANZ’s two-year fixed loan rose from 1.48 percent to 1.65 percent, while Maybank’s interest rates now start at 1.25 percent for the first year and average out to about 1.4 percent in the next three years.

Despite the increase, the rates are still relatively easy on the pocket, as a rise from 1.15 to 1.25 percent works out to an additional monthly payment of around S$50 for a S$1 million 30-year mortgage.

However, some fixed rates are 0.1 to 0.2 percentage points higher than the floating rates, so “do not assume refinancing in the future will have lower spreads”, noted FindaHomeLoan.sg Founder Sean Lim.

Source: PROPERTYGURU

Singaporeans are often said to have a love affair with property. But the issue may be wider than that. The search for yield and a fear of the alternatives is what drives many to keep faith with property.

THE regulator’s recent move on bank lending is not meant to be another property market cooling measure but it will certainly have a bearing on anyone contemplating a real estate investment.

It’s not that buyers haven’t already been softened up somewhat, given there have been seven rounds of cooling measures since 2009 in a bid to slow rising home prices.

The Urban Redevelopment Authority (URA) index for private properties is up about 60 per cent from 2009.

But even as prices remain at an all-time high and even as buyers appear to take every new cooling measure in their stride, there is little doubt that the market has started to cool its heels.

Data shows that flash estimates of prices for the second quarter increased just 0.8 per cent. For the first quarter, they inched up 0.6 per cent.

Measures to date

THE first round of measures in 2009 included scrapping an interest absorption scheme which allowed buyers to avoid interest for a certain period. The confirmed list of government land sites for sale was reinstated.

In February 2010, a seller’s stamp duty was imposed on residential property and land bought and sold within a year.

Loan-to-valuation (LTV) limits – the proportion of a home’s value that a buyer can borrow – were tightened. They were reduced to 80 per cent, meaning a 20 per cent downpayment was required.

In August 2010, the holding period for the seller’s stamp duty was increased to three years.

The LTV limit was cut to 70 per cent for those with other home loans, meaning a downpayment of 30 per cent would now be required.

In January 2011, the seller’s stamp duty was extended to homes sold within four years of acquisition and the rates were increased.

The benefit of these moves was to help remove the speculative froth from the market. People had been turning up at new launches and then flipping properties within a few months for a quick buck.

In December of that year, the additional buyer’s stamp duty (ABSD) was introduced. Foreigners now had to pay a 10 per cent duty on their first purchase while Singapore citizens were hit once they bought a third and subsequent properties.

These measures were aimed at curbing foreigner demand, one of the factors seen as responsible for surging prices.

The measures changed tack last year and focused less on speculation. This time there was more of a focus on curbing investor demand while tackling more comprehensively the risk of borrowers taking on too much debt.

First-time buyers remained untouched.

Last September’s measures included capping new home loan tenures at 35 years.

The seventh set of cooling measures unveiled in January this year included raising the ABSD by between 5 and 7 percentage points. The proportion of a home’s value that a buyer can borrow was slashed to as low as 20 per cent for certain buyers, while minimum cash down payments for those with at least one housing loan were raised.

Chief operating officer at DTZ Southeast Asia Ong Choon Fah noted that the measures “have resulted in a sharp decline in foreign demand from about 20 per cent in the last quarter of 2011 to the current 7 per cent.”

Total debt servicing ratio

WHILE not regarded as a cooling measure as such, the latest policy move – called total debt servicing ratio – took effect on June 29 and imposes a new lending framework on banks.

A person’s total monthly debt repayments cannot now exceed 60 per cent of his gross monthly income so anyone applying for a new mortgage will have to consider how their entire debt load stacks up. That means any car or personal loan will now be factored into the debt equation as well.

These measures are timely as the cheap flow of money stemming from the United States Federal Reserve that has depressed interest rates here and elsewhere looks like it is going to be eased.

It is also clear that there is a group of borrowers in Singapore who are potentially at risk from rising interest rates. First-quarter numbers from the Credit Bureau show that about 12 per cent of borrowers held multiple loans.

Deputy Prime Minister Tharman Shanmugaratnam noted over the weekend that with interest rates set to rise, between 5 and 10 per cent of borrowers may be over-leveraged.

Unintended consequences

EVERY policy has side effects. One of them here is that banks may end up having their hands tied too much.

Take the 30 per cent discount that has to be imposed on the variable element of a borrower’s pay. While that is a prudent move, banks need to appreciate that in the ever-changing workplace, there are fewer jobs where a fixed pay is the norm.

In efforts to be more responsive to changes in market conditions, more jobs may offer pay with a higher variable element. Banks should be given some leeway to ensure that while prudence remains the priority, they are also sensitive to the growing number of people whose pay fluctuates from month to month and indeed year to year.

Rethinking property investing

THE question is often asked if all these measures will sound the death-knell for the Singaporean’s undying love affair with property, one that is shared by those in Malaysia, Hong Kong and China.

Yet the issue may be wider than that. To encourage people to invest in other asset classes may require a review of the alternatives out there.

What drives many investors is the search for yield in a market where it is increasingly difficult to find good returns.

But many are loath to view stocks as the new Prince Charming in waiting. One reason could be investors’ painful experience of the global financial crisis.

Another could be how the Central Provident Fund (CPF) rules skew investors towards property.

If I have $5,000 in my account that is allowed to be invested in equities or unit trusts, I can buy only $5,000 worth of SingTel shares. However, I can start paying for a $1 million residential property in Singapore with regular monthly CPF payments.

And while investing in blue chips on the Straits Times Index should be a safe bet from a corporate governance point of view, investors have to be conscious of market risk as these big boys expand overseas.

What it means is that putting $100,000 in CapitaLand requires an understanding of the risks the firm faces in the China market, for example, while buying DBS Group Holdings shares means understanding policy risks in Hong Kong and Indonesia.

Indeed, the daily gyrations of shares may engender a sense of insecurity and the challenge of deciphering financial statements makes stocks appear riskier and more complex.

While the price of some S-chips has plunged practically to zero, the perception is that property in Singapore will at least retain some of its value and offer a regular income stream.

That is why many investors feel comfortable buying a property here. Simply put, a property investor living in Pasir Ris and buying an investment property in the same area feels more comfortable with the risks and growth potential. He knows if new amenities are coming up nearby. He can see the condo taking shape. He knows there are laws to protect him should a developer go bust.

Meanwhile other suitors stand waiting in the wings.

Anecdotally, many investors have made a beeline for property in Iskandar, Kuala Lumpur, London and Australia.

DTZ’s Ms Ong notes that since January, there has been a sharp increase in demand for properties in Iskandar. Others have ventured into more speculative investments such as land in the United States, she adds.

A few hundred thousand dollars can get you a property in Thailand. Around $200,000 offers a chance to own a serviced apartment in Dubai.

The irony is that Singaporeans are starting to put their funds in markets overseas, which are harder to track and where the investor protection framework is sometimes less established.

There are risks to owning property such as not being able to rent out the place or not being able to meet loan repayments.

But for most people, a property still speaks to a fundamental need for a source of retirement income and a sense of security. A change in that mindset will require a review of our investing framework.

Source: STPROPERTY

The outlook for Singapore’s banking system has plunged from stable to negative due to the recent period of soaring loan growth, as well as rising property prices locally and in countries where Singapore banks operate.

According to Moody’s Investors Service, these factors increase the chance that credit quality would deteriorate under potential adverse conditions in future.

“The operating environment for Singapore’s banking system has been favourable for an extended period, with low interest rates and strong economic growth domestically and in the surrounding region,” said Moody’s Vice President and Senior Analyst Gene Fang.

“With the potential risk of a turn in the interest rate cycle, we view strong asset inflation and credit growth trends as vulnerabilities, as this combination would likely cause credit costs to rise from their current low base.”

Fang was commenting on the recently released Moody’s report called Singapore Banking System Outlook, which details Moody’s forecasts on how bank creditworthiness will evolve in this system for the next 12 to 18 months.

Singapore banks have enhanced their non-performing loans (NPLs) in the past few years. However, asset quality may have peaked both in the city-state and in many regional markets in which these banks are active. A reversal in the credit cycle could likely lead to higher credit costs and a worsening of NPL ratios.

While it is difficult to accurately predict turning points in banking credit cycles, Moody’s believes the slowing of the US Federal Reserve’s bond-buying programme could be a potential trigger.

Nevertheless, Singapore banks continue to have robust financial metrics, which supports their high average ratings compared to other banking systems globally, both on standalone and supported bases.

Source: PROPERTYGURU

The Monetary Authority of Singapore (MAS) has introduced a new rule which prohibits financial institutions (FIs) from tying up with property developers and agents to sell property, according to local media reports.

FIs were informed of this new rule the same day the latest property loan curbs were announced that will, among others, prevent banks from providing preferential interest rates to clients acquiring certain properties.

“MAS is of the view that, except for the granting of property loans, FIs should not be offering any property-related services to customers in general. FIs should therefore not engage in property advertisements or tie-ups with property developers/agents,” an MAS spokesman said.

“This is regardless of the location of the property (in Singapore or overseas) or the type of the property (residential, commercial or industrial). MAS will take into account an FI’s compliance on this issue, in its supervisory assessment of the FI,” he noted, adding that the central bank expects full compliance from FIs.

Tie-ups and property advertisements referred to in the new regulation include but are not limited to sending notifications (via phone text, mail or email) to customers on properties for sale or purchase or property launches; advertisement of properties for sale or property launches on mobile applications, websites and premises of FIs; organising special previews of property launches for customers; inviting customers to property launches; and arranging with property developers/agents to offer customers preferential rates for loans to acquire designated properties.

Source: PROPERTYGURU

The 60 percent cap on the Total Debt Servicing Ratio (TDSR) will not be expanded to include non-property loans anytime soon, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, who is also Chairman of the Monetary Authority of Singapore (MAS).

“We don’t intend to, any time soon, extend the TDSR to other types of loans, but it’s really for the banks to factor it into their own internal assessments,” said Mr Tharman on the sidelines of a community event in Jurong yesterday.

“Supervision is more useful when it comes to the broad range of loans, not just more and more rules.”

Implemented at the end of last month for all property loans, the new ruling takes into account the borrower’s total debt obligation including mortgages as well as car, student and personal loans.

The latest loan-to-ratio cap is expected to be a long term measure.

“There’s no hard data on this but our rough assessment is that five to ten percent (of borrowers) are at risk of having over-leveraged, bearing in mind that interest rates are going to rise, and you can’t say for sure what the economy will be like, what unemployment will be like, a few years down the road,” he added.

Source: YAHOO! NEWS

THE company behind Resorts World Sentosa (RWS) has started building the first hotel in one of Singapore’s newly-emerging business and leisure hubs, Jurong Lake District.

Genting Singapore broke ground yesterday for the new hotel on Jurong Town Hall Road which is slated to open in the first half of 2015.

The Jurong Lake District has been earmarked by the Urban Redevelopment Authority as a new growth area with commercial, business and leisure facilities.

The 550-room hotel, five minutes away from the Jurong East MRT station, is on a 9,027 sq m site and has a 99-year lease.

Tan Sri Lim Kok Thay, chairman of the Genting Group and executive chairman of Genting Singapore, said the new hotel “signifies our commitment to reinvesting in Singapore”.

“With our hotel being the first to open in this growing precinct, we hope to create another unique hospitality product that will crank up the buzz meter in this already vibrant area to even higher levels,” he added.

Mr Tan Hee Teck, president and chief operating officer of Genting Singapore, said: “We will deliver a product that will bring incremental business to neighbouring merchants, accommodation convenience to companies in the vicinity, and amenities to Jurong West residents.”

The new hotel will be the seventh hospitality development for Genting Singapore, which owns six hotel properties at RWS – Crockfords Tower, Hotel Michael, Festive Hotel, Hard Rock Hotel Singapore, Equarius Hotel and the Beach Villas.

Source: STPROPERTY

INDUSTRIAL rents are expected to stabilise for the rest of the year amid a fragile economic outlook and ample supply for tenants, Colliers International said.

The property consultancy yesterday reported that rents were flat across all segments in the second quarter over the previous quarter. Colliers divides industrial property into prime conventional factory and warehouse space, high-specifications space and business park space.

Average gross rents for prime conventional factory space in Q2 was $2.49 per square foot (psf) for ground floors and $2.18 psf for upper levels. For warehouse premises, rents were at $2.62 psf for ground floor space and $2.15 psf for upper floor space.

Rents for high-specifications space was $3.30 psf for ground floors and $2.98 psf for upper floors.

Business park space also held steady at $4.04 psf.

“The stability in the rental movement across all segments in Q2 2013 was a reflection of landlords generally holding onto their rental expectations and a relatively tepid leasing demand,” said Tan Boon Leong, executive director of industrial services at Colliers International.

He specifically thinks that rents for prime conventional factory and warehouse space may have peaked.

The overall take-up rate was slow in the second quarter as tenants took more time to evaluate their real estate needs amid lingering economic uncertainties, Mr Tan said.

“Additionally, in some cases, the leasing process was also prolonged by more detailed checks conducted to qualify users and to ensure compliance with the government’s guidelines.”

Industrial properties generally can only devote up to 40 per cent of floor area for non-industrial use such as offices and canteens. At least two developers were rapped by the authorities for illicit usage earlier in the year.

With cost-conscious tenants, as well as sufficient supply of industrial real estate, any increase in rents will be limited for the rest of the year, said Chia Siew Chuin, director of research and advisory at Colliers International.

Ms Chia expects rents to remain unchanged for prime conventional industrial space, with some upside for high-specifications and business park space.

In the sales market, average prices rose in Q2 over the previous quarter.

Mr Tan said healthy demand from genuine end users and long-term investors for freehold industrial properties with good locations and specifications held up prices, even as speculative activity waned with the introduction of a Sellers’ Stamp Duty in January on all industrial properties sold within three years of purchase.

Average capital values for ground floor space at prime freehold conventional factory space gained 0.7 per cent to $718 psf; those for upper floor space rose 1.5 per cent to $658 psf.

For prime freehold conventional warehouse space, prices grew by 1.1 per cent to $656 psf for ground-floor premises and 0.9 per cent to $581 psf for upper-floor space.

Ms Chia expects prices to gain 3 per cent for the full year for these two property types, significantly lower than the 10 to 22 per cent growth last year.

Source: STPROPERTY

MAS Introduces Debt Servicing Framework for Property Loans

Singapore, 28 June 2013 … The Monetary Authority of Singapore (MAS) will introduce a Total Debt Servicing Ratio (TDSR) framework for all property loans granted by financial institutions (FIs) to individuals¹.  This will require FIs to take into consideration borrowers’ other outstanding debt obligations when granting property loans. They will help strengthen credit underwriting practices by FIs and encourage financial prudence among borrowers.

2   MAS will also refine rules related to the application of the existing Loan-to-Value (LTV) limits on housing loans.  These refinements seek to ensure the effectiveness of the LTV limits that were put in place to cool investment demand in the housing market.  In particular, they aim to prevent circumvention of the tighter LTV limits on second and subsequent housing loans.

Introduction of TDSR framework

3   MAS conducted a thematic inspection of banks’ residential property loan portfolios in 2012.  While banks generally had in place sound policies to assess the credit worthiness of borrowers, the inspection and subsequent surveys revealed uneven practices with respect to the application of debt servicing ratios and highlighted areas for improvement in credit underwriting practices.

4   The TDSR framework will provide FIs a robust basis for assessing the debt servicing ability of borrowers applying for property loans, taking into consideration their other outstanding debt obligations.  FIs will be required to compute the TDSR, or the percentage of total monthly debt obligations to gross monthly income, on a consistent basis.²

5   The coverage of the TDSR framework will be more comprehensive than FIs’ current practice.  The TDSR will apply to loans for the purchase of all types of property, loans secured on property,³ and the re-financing of all such loans.⁴   6   The methodology for computing the TDSR will be standardised.  FIs will be required to:

• take into account the monthly repayment for the property loan that the borrower is applying for plus the monthly repayments on all other outstanding property and non-property debt obligations of the borrower;
• apply a specified medium-term interest rate or the prevailing market interest rate, whichever is higher, to the property loan that the borrower is applying for when calculating the TDSR;⁵
• apply a haircut of at least 30% to all variable income (e.g. bonuses) and rental income; and
• apply haircuts⁶ to and amortise the value of any eligible financial assets taken into consideration in assessing the borrower’s debt servicing ability, in order to convert them into ‘income streams’ in computing the TDSR.

7   FIs will be required to verify and obtain relevant documentation on a borrower’s debt obligations and income used in the computation of the TDSR.

8   MAS expects any property loan extended by the FI to not exceed a TDSR threshold of 60% and will regard any property loan in excess of a 60% TDSR to be imprudent.⁷ The threshold is set at 60% for a start to allow both the FIs and borrowers to familiarise themselves with the TDSR framework and its computation methodology.  MAS will monitor and review the 60% threshold over time, with a view to further encouraging financial prudence.

Refinement of rules related to application of LTV limits

9   MAS will refine certain rules related to the application of the existing LTV limits on housing loans granted by FIs.  In particular, MAS will require:

• borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken;
• “guarantors” who are standing guarantee for borrowers otherwise assessed by the FI at the point of application for the housing loan not to meet the TDSR threshold for a property loan to be brought in as co-borrowers; and
• in the case of joint borrowers, that FIs use the income-weighted average age of borrowers⁸ when applying the rules on loan tenure.⁹

Measures for the long term

10   The new rules will take effect from 29 June 2013.

11   The TDSR framework and refinements to the rules relating to the application of LTV limits are structural in nature, and will be in place for the long term. They aim to encourage prudent borrowing by households and strengthen credit underwriting standards by FIs.

12   They do not involve changes to the LTV limits on housing loans themselves, which were last tightened in January 2013 as part of the government’s package of measures to promote stable and sustainable conditions in the housing market.¹⁰ The current LTV limits are not permanent, and will be reviewed depending on the state of the property market.

Source: MAS

Although net absorption in Q2 2013 was 55% quarter-on quarter (q-o-q) lower than Q1, at only 170,000 sq ft, islandwide office occupancy rates increased notably q-o-q by 0.9 percentage-points from 95.4% to 96.3% in Q2. The increase in occupancy rates were in part contributed by substantial office building terminations in Q2.

Occupancy improved the most across all areas in Shenton Way/Robinson Road/Cecil Street by 3.3 percentage-points q-o-q to 94.8% while in Raffles Place, occupancy increased by about 1.0 percentage-point to 94.3%. Average gross office rents in both Shenton Way/Robinson Road/Cecil St and Raffles Place held firm q-o-q at $7.25 per sq ft per month and $9.30 per sq ft per month, but fell year-on-year (y-o-y) by 4% and 2% respectively.

Occupancy rates for Q2 improved because of the fairly large office stock removals in the quarter. These buildings, located mainly in Shenton Way/Robinson Road/Cecil St, have a cumulative net lettable area (NLA) of approximately 430,000 sq ft which are no longer available for occupation. The entire Robinson Towers and its Annex Building, International Factors Building, The Corporate Office, Cecil House and some floors in DBS Tower 1 were vacated in Q2 in view of future redevelopment plans. Some of the displaced tenants from these older buildings due for redevelopment moved either into nearby buildings in the CBD or the CBD fringe, where rents can be about 10% to 20% lower. Rental increases were seen in some areas in the CBD fringe due to sustained demand from a diversified tenant profile, additional demand from displaced tenants and the recent lack of new supply. Average gross rents in Orchard Rd, Bras Basah/Selegie Road and River Valley edged up by 2.3%, 2.4% and 3.3% respectively in Q2. Elsewhere, in Marina Centre, Anson Rd/Tanjong Pagar and Beach Road/North Bridge Road, average gross rents held firm in Q2.

Cheng Siow Ying, DTZ’s Executive Director of Business Space commented, “Rents in decentralised offices have also held up well. Last quarter saw some movement of occupiers from industrial space to decentralised offices as the government authorities continue to reinforce eligibility criteria on users in hi-tech buildings. In addition, tenants from older buildings and those displaced from buildings due for redevelopment are propping up demand for decentralised office space as well, such as in the soon-to-be completed Metropolis. Although 1.5 million sq ft of decentralised office space will be completed in H2 2013, only 14% lower than islandwide supply last year, there will still be room for decentralised office rents to grow. Nexus@One-North, Jem and Metropolis have all secured strong pre-commitments before its completion date. Jem is currently fully committed, while Metropolis and Nexus@One North have a known pre-commitment rate of 89% and 83% respectively.”

Meanwhile, in Marina Bay, occupancy rates also increased by 1.6 percentage-points q-o-q to 95.2% in Q2 as average gross rents in Marina Bay held firm at $10.50 per sq ft per month. New occupiers continued to move into Asia Square Tower 1 and Marina Bay Financial Centre Tower 3. In Asia Square Tower 1, new leases over Q2 were signed from companies in the advertising, legal, energy and trading fields, bringing its total occupancy to above 90%. With occupancy rates in Marina Bay improving consistently since the start of 2012, some landlords are now less flexible with settling rents. This is an indication that rents in Marina Bay are firming and could start moving slightly upwards in H2 2013. A similar uptrend in rents is expected in Raffles Place and Shenton Way, supported by healthy occupancy rates and continued demand from non-financial sectors.

Lee Lay Keng, DTZ’s Head of Singapore Research, commented, “If economic growth improves as expected in H2, we expect CBD office rents to start rising in H2. This increase in rents however will be calibrated as demand for office space from banks and financial services firms, which tend to pay higher rents, will remain modest. Office demand will continue to be supported by the non-financial sectors such as the IT, energy and infocomm and professional sectors which have recorded more positive sentiment.”

Source: DTZ Singapore

Despite increasing activity in the manufacturing sector, price growth of first and upper-storey conventional industrial space continued to decelerate q-o-q in Q2 2013 while rents held steady, according to DTZ, a UGL company.

The capital value growth of industrial properties is losing momentum with resale prices of first and upper-storey space rising marginally by 0.3% and 0.6% q-o-q respectively in Q2. This brought price growth of first and upper-storey space to 0.8% and 2.6% for H1 2013 respectively, slower than the 7.8% and 6.5% growth in H2 2012.

Transaction activity for strata-titled industrial units also continued to fall in Q2. Based on caveats from URA REALIS, only 266 resale strata factory units were transacted in Q2, 17% less than that recorded for Q1. As a whole, the total number of strata-titled factory transactions for H1 2013 was 53% lower than H2 2012 and also 46% lower than H1 2012.

Lee Lay Keng, DTZ’s Head of Singapore Research said, “Besides the dampening effect of the seller’s stamp duty (SSD) implemented in January, the fall in transaction volume was also due to a mismatch in expectations between buyers and sellers. Sellers are holding on to their asking prices while buyers are becoming increasingly cautious due to the SSD and the possibility of an increase in interest rates.”

Meanwhile, based on a basket of existing buildings tracked by DTZ Research, rents for industrial space held firm q-o-q. Average gross rents for first and upper-storey conventional industrial space were unchanged at $2.15 per sq ft per month and $1.75 per sq ft per month respectively. Similarly, hi-tech rents held steady q-o-q at $3.10 per sq ft per month after a 3.3% increase in Q1.

According to Angela Tan, DTZ’s Regional Head, Occupier Services, “In the business park segment, rents held steady at $4.70 per sq ft per month as this quarter saw continued interest from companies in the pharmaceutical, infocomm, media and technology sectors which favour the newer, better quality and more self-sufficient environment offered by business parks. Although the business park segment will see a surge in supply of about 2.5 million sq ft over the next two years, rents are still projected to increase alongside the expected economic recovery in H2 2013. Moreover, about 60% of this upcoming supply is owner-occupied or has been pre-leased, thus the impact of this new supply on business park rents will be somewhat limited.”

Between Q2 2013 and 2014, approximately 32 million sq ft NLA of industrial space will be completed. Of this amount, 32% will encompass warehouse space while another 24% will be single-user factory developments, both predominantly located in the western region of Singapore. On the other hand, the majority of multiple-user factory developments are more evenly spread across the island and constitute about 27% of the oncoming supply from Q2 2013 till 2014. Some of the major multiple-user factory developments anticipated to be completed in the next two years include North Spring Bizhub (2013), Premier@ Kaki Bukit (2014) and Synergy @ KB (2014). –

Source: DTZ Singapore