Real Estate News

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Industrial site with prominent and long frontage for sale by tender

DTZ has been appointed as the sole marketing agent for the sale of 11 Gul Crescent, Singapore.

The regular-shaped industrial site is located at Gul Crescent, with a prominent and long frontage along Pioneer Road. It sits on a land of approximately 29,384.5 sq m (316,292 sq ft) with land tenure of 30 year lease commencing 1 January 2011.

According to the Master Plan 2008, the site is zoned ‘Business 2’ at plot ratio 1.4, with allowable gross floor area of approximately 41,138.3 sq m (442,809 sq ft). The existing development comprises two single-storey high clearance factories with ancillary office space, a canteen and a staff restroom. It has a total approved gross floor area of approximately 12,639.51 sq m (136,050 sq ft).

The subject property is well connected to the rest of the island via Benoi Road, Pioneer Road, Tuas Road, Pan Island Expressway (PIE) and Ayer Rajah Expressway (AYE). Gul Circle MRT station, which is scheduled to complete in 2016, is a short distance away. Industrial factories in the area are occupied by companies such as SONY Electonics, Sanofi Aventis, HTC, Energizer and Keppel Logistics.

With the port leases for the City Terminals at Tanjong Pagar, Keppel and Pulau Brani expiring in 2027, PSA is working to consolidate all the container port activities over the long term in Tuas. The port’s first berths are scheduled to begin operation in 2022. When completed the port development is expected to handle up to 65 million twenty-foot equivalent units (TEUs) a year, nearly double PSA Singapore terminals’ current capacity of 35 million TEUs.

Shaun Poh, DTZ’s Head of Investment Advisory Services commented: “It is rare to have a 3-hectare industrial site for sale in Singapore. With the completion of Gul Circle MRT station in 2016, public transportation will be improved and workers in the area will be able to save on travel time. We envisage that demand for industrial land is expected to increase around Tuas and this property will draw keen interest from buyers who wish to operate close to the new Tuas Port development.” The indicative price for 11 Gul Crescent is in the region of S$33 million, reflecting approximately S$75 per sq ft on gross floor area.


Source:  DTZ

Singapore property won’t crash on US monetary stimulus concerns

The reported tapering in the US monetary stimulus is unlikely to significantly impact property prices in Singapore, analysts have said.

“It usually comes down because of distressed selling. But economic growth is stronger than expected. People are keeping their jobs…Even if it comes down, there won’t be a crash,” noted Tata Goeyardi, Property Analyst at Religare Capital Markets.

The US Federal Reserve’s monetary stimulus has created cheap liquidity and helped boost Asian real estate, but as it comes to an end, many markets in Asia will likely feel the pains as well, media reports said.

In Singapore, the effects of such a move in the market is now underway and could last three to six months, said Tim Gibson, Head of Asian Property Equities at Henderson Global.

“Anything that is yield-like has been sold off” as a knee-jerk reaction to the unwinding of the asset purchase programme, but “we are in a cyclical macro recovery…It should be positive for real estate in terms of top line rental growth”, he added.

Meanwhile, David Neubronner, National Director for Residential Property at Jones Lang LaSalle Property in Singapore, said: “There’s still strong demand for homes, especially in the suburbs and there’s still liquidity in the market.”

But several concerns may arise going forward. “In the short term, it (housing market) should hold up, but medium to long term, there will be pressure because of the new supply coming up,” said Neubronner.



Singapore unveils master plan for port, airport, waterfront

The Singapore government unveiled a master plan yesterday to double capacity at Southeast Asia’s busiest airport, build a new waterfront city, move its massive port and relocate a military airbase to free up land for development.

The plan announced by Prime Minister Lee Hsien Loong (pic) follows mounting discontent in one of the world’s wealthiest nations over an influx of foreign workers and expatriates blamed for a range of problems – from strained infrastructure to among the highest living costs in Asia.

In an annual National Day address, Lee sought to allay those fears, elaborating on a trove of long-term plans that appear intended to counter a growing voter backlash against the People’s Action Party (PAP) that has ruled Singapore for more than half a century.

These include changes to Singapore’s health-care and education systems, and the move of its port – the world’s second-busiest hub for container shipping – to a new location in Tuas in western Singapore from 2027. That would free up land in Tanjong Pagar, next to the central business district, for a sprawling new waterfront city, Lee said.

He also unveiled plans for a fourth runway at Changi Airport, Southeast Asia’s busiest. This will alllow the government to move a military airbase in central Singapore to Changi after 2030 and free up 800 hectares (1,980 acres) of land for homes, factories and businesses.

“This is how we can stay the hub in Southeast Asia and create many more opportunities for Singaporeans,” he said, citing competition from Kuala Lumpur and Bangkok.

Pacifying a new generation Lee’s speech seemed intended to show voters that Singapore under the PAP will evolve well beyond the era of his father, the 89-year-old Lee Kuan Yew, the country’s founder prime minister. The elder Lee’s stern and technocratic policies are credited with turning Singapore from a colonial outpost in the 1960s into a flourishing financial centre with clean streets and the world’s highest concentration of millionaires.

A new generation has begun to openly question the ruling party’s wisdom, clamouring for more say in the country’s direction.
Online forums bristle with criticism of government plans announced in January to lift the population of 5.3 million by as much as 30% by 2030, mostly through foreign workers to offset a low birth rate. This has sparked debate over how many people can fit onto an island half the size of London and how much the national identity will be diluted.
The younger Lee’s speech might help appease worries that the island is running out of space.

Changi Airport, a base for Singapore Airlines Ltd, operates two runways but can take over a third now being used by the military. A fourth runway will be used by the air force, allowing the military to shut its airbase in the central region of Paya Lebar………..


China group buys Grand Park Orchard hotel at record price

Grand Park Orchard hotel including its retail podium Knightsbridge are said to have been sold at slightly over $1.15 billion. The freehold property is being sold by Park Hotel Group to Bright Ruby Resources, a Singapore-incorporated vehicle controlled by the Du family of China.

The buyer’s diversified businesses include shipping, resources and property. Bright Ruby has acquired several commercial properties in Australia, though this is believed to be its first major investment in the Singapore real estate sector.

The cash-flush group has been doing due diligence for the acquisition of Grand Park Orchard for several weeks.

Seller Park Hotel Group is expected to continue managing the 308-room hotel.

Jones Lang LaSalle group is understood to have brokered the transaction.

Market watchers say the sale is the biggest ever private-sector property transaction in Singapore – excluding asset sales undertaken as part of real estate investment trust floats, and Government Land Sales and other public sector-originated deals.

The deal also sets a benchmark price for Singapore hotel rooms.

Besides the 308-room hotel, the transaction includes about 74,000 sq ft net lettable area of retail space.

Assuming the retail space is valued at $9,500 per square foot, the hotel would be valued at almost $1.5 million per room. A higher price of $10,000 psf for the retail space would translate to a hotel pricing of close to $1.4 million per room.

Either way, this busts the previous highest Singapore hotel pricing of around $1.1 million per room.

The price being paid by Bright Ruby is understood to translate to a net yield of just over 4 per cent.

Current average room rates at Grand Park Orchard are said to be around $300 per night, with occupancy rates of more than 90 per cent.

Knightsbridge has been leased to retailers such as Abercrombie & Fitch, Topshop/Topman, Brooks Brothers, Tommy Hilfiger, Dickson Watch & Jewellery, and The Hour Glass at monthly rents said to be in the $25-35 psf band.

Grand Park Orchard is the second property that Park Hotel Group has sold in Singapore.

The first was the Park Hotel Clarke Quay, which it sold in late March for $300 million or $893,000 per room to Ascendas Hospitality Trust.

That deal entailed a contract to lease back the hotel to a unit of Park Hotel Group for 10 years with an option for a further five-year term.

The rental income will comprise an initial fixed rent component of $11.5 million for the first year subject to an escalation of 3 per cent per annum and variable rent components tied to the hotel’s performance.

The 336-room Clarke Quay property is on a site with a balance lease term of about 93 years.

The group is now left with one other hotel in Singapore, Grand Park City Hall in Coleman Street. A few potential buyers are understood to have studied the asset but a deal has yet to materialise.

Set up in Hong Kong in 1961 by three sibilings of the Law family – Raymond, Lobo and Elizabeth – Park Hotel Group moved its headquarters to Singapore in 2005.

Last year, the group clinched contracts to manage two hotels in Singapore being developed by third parties – one being developed by Chip Eng Seng next to Ikea in Alexandra Road, and the other by RB Capital above Farrer Park MRT Station in Little India.


Two Retail Properties Up For Sale

Recent retail properties put up for sale includes the 5-storey retail and entertainment centre Broadway Plaza located in Ang Mo Kio Town Centre, which will be sold through an expression of interest. The estimated price is around $65 to $70 million that would translate into a net yield of 5- 5.5%. This exercise is designated to end by Sept 6.

This plaza has a total net lettable area of 41,829 square feet, and stands on a site that has a balance lease term of around 63 years. The building is fully leased and was refurbished earlier this year. Its land area is 18,450 sq ft, and has a gross floor area of 55,351 sq ft. Its tenants include day surgery and endoscopy centre, NHG 1-Health, Ang Mo Kio Family Medicine Clinic, K Box, a childcare center, and F&B food outlets.

Property experts spoke highly of the building, citing its ‘exceptional entry yield with potential to grow current income levels’.

Another building up for sale is Upper Thomson Road’s 11,011 sq ft retail unit Thomson Imperial Court which sale will be conducted via a private treaty.  Its estimated cost ranges between $22 to $23 million, working out to a net yield of 2.3%, or $1,998 to $2, 089 psf on net lettable area.

It is currently leased to supermarket chain Sheng Shiong until December 2016, with an option to renew for 3 years, by then followed by another renewal option of the same period. Recent sale transactions of retail units in the building was concluded at an average of $2,238 psf. Property researchers say that this sale provides an opportunity for investors to own a freehold property that gives strong and stable returns for the midterm.

There is potential of acquiring a larger yield through the rental of the building, done by sub-dividing the retail unit or converting into other uses – which may include F&B outlets, a childcare centre or fitness centre upon the expiry of its current lease.


Industrial properties see price, rental declines

While Singapore’s property market as a whole remains firm, industrial properties have recorded price declines, according to data from the Urban Redevelopment Authority (URA).

The all-industrial price index for last quarter dipped 0.6 percent from a 4.5 percent increase in Q1. The index for multiple-user factory space rose 0.5 percent from 185.3 to 186.3, but prices for multiple-user warehouse spaces fell 5.9 percent to 200.6 from the previous 213.2.

As for rentals, multiple-user factory space posted 0.1 percent growth, down from 0.4 percent in Q1. Meanwhile, multiple-user warehouse rentals were down 2.4 percent. As such, the all-industrial rental index fell 0.1 percent compared to a 0.4 percent gain in Q1.

Moving forward, the industrial sector will have a pipeline of 4.436 million sq m in gross floor area (GFA) of factory space.

Last quarter, occupied factory space grew by 139,000 sq m (nett) compared to the 83,000 sq m (nett) hike in Q1.

“On the other hand, the stock of factory space increased by 385,000 sq m (nett) in 2nd Quarter 2013, higher than the increase of 100,000 sq m (nett) in 1st Quarter 2013. The vacancy rate of factory space increased from 7.0 percent at the end of 1st Quarter 2013 to 7.6 percent at the end of 2nd Quarter 2013,” the URA said.


Henley Industrial Building in Upper Paya Lebar sold for $37m

Henley Industrial Building

Henley Industrial Building, a four-storey freehold property off Upper Paya Lebar Road, has been sold to a subsidiary of Novelty Group for $37 million.

The price works out to about $545 per sq ft of gross floor area, said property services firm CBRE on Monday.

CBRE brokered the sale through a tender exercise, which closed on July 5.

The 17-unit industrial property has an area of about 27,161 sq ft, the firm said said.

“We received good response at the public tender from a handful of business occupiers wanting a standalone building with naming rights and developers, which is a testament to the excellent attributes of Henley Industrial Building,” said Mr Galven Tan, associate director of investment properties at CBRE.

He added that the price is in line with recent transactions of similar freehold industrial properties, such as the sale of 14 Little Road in November last year, 3 Playfair Road in December last year and 100H Pasir Panjang in April this year.

The sale of Henley Industrial Building is subject to approval from the Strata Titles Board.

Property investment sales in Singapore grew by 22 per cent to reach $2.78 billion in the second quarter of this year, reversing a decline recorded in the first three months of the year, CBRE said.

“The investment sales market recorded a reasonably active first-half this year and we are confident that the momentum will keep pace in the second half,” added Mr Tan.

Source: ST

Review: Many restrictions for foreign property buyers across Asia Pacific

singapore flag
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.


  • 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.


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


  • 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.


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


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


  • 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.


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


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


  • 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.



S’pore banks raise fixed-rate loans

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 Founder Sean Lim.



Why property is still investors’ pick

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.



Moody’s downgrades Singapore banking system to ‘negative’

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.


MAS clamps down on bank-developer tie-ups

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.



New measures won’t be expanded to non-property loans

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.


Work starts on Jurong Lake District hotel

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.



Stable year for industrial rents: Colliers

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.



Another Cooling Measure?

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


Rental increases in CBD fringe, while rents in CBD bottom

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

Growth of industrial capital values continue to decelerate as rents hold firm

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

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