Access to financing, income growth, foreign demand will up housing sales
The outlook for the Malaysian property market is promising, with sales volume expected to increase by 5 to 10 per cent this year, according to RAM Holdings Bhd.
In stating this, its chief economist Yeah Kim Leng said that the improving economic outlook and friendly lending policy will help to increase the confidence level of consumers and boost the property market.
‘Affordable housing and domestic-led growth strategy implies supportive policies will continue, though Bank Negara Malaysia remains wary of asset bubbles,’ Dr Yeah said at a talk organised by the International Real Estate Federation (FIABCI) here yesterday.
He added that the favourable demographics, stricter-but-still easy access to home financing, rural- urban migration, foreign demand and income growth are all expected to improve housing sales.
Dr Yeah said that expectation that the central bank will start ‘normalisation’ of its monetary measures beginning this month will not dampen home purchases, especially when economic growth strengthened further.
RAM expects an increase of 0.75 to 1.00 percentage point in the overnight policy rate by year-end.
Loan growth is projected to expand between 8 and 10 per cent this year with non-performing loans likely to hover around 2-3 per cent.
Loans growth remained positive at 6.5 per cent last year during the first 11 months of 2009 despite the economic recession as loans to the broad property sector outpaced overall loan growth.
Dr Yeah said that consumer credit will continue to remain the core focus of banks’ lending, but competition from non-financial institutions is likely to intensify.
Property loans accounted for 36.2 per cent of total banking system loans.
‘The banks still view residential property lending as relatively safe, accounting for 26-27 per cent of their loans portfolios,’ he said, adding that credit conditions are not expected to tighten as demand is not overly excessive and an output gap remains for the rest of the year.
On the Malaysian economy, Dr Yeah said that the country is expected to resume modest growth this year with an upside bias should public sector reform and transformation policies and strategies strengthen further consumer and investor confidence, thus triggering a surge in domestic and foreign direct investment.
‘After a massive running down of inventories last year, re-stocking will contribute to higher production this year but ‘autonomous’ or ’self- sustaining’ growth has to come from private consumption and investment,’ he said.
RAM projects the country’s economy to grow by 4.9 per cent in 2010 and 5.4 per cent in 2011, supported by domestic-driven private sector spending and government spending.
Dr Yeah said that Malaysia could reduce its budget deficit to below 3.0 per cent of the gross domestic product (GDP) from 2013 onwards, compared with the forecast of 5.6 per cent this year.
According to him, there is a chance for the deficit to be reduced from next year if economic growth can improve further.
‘With the goods and services tax (GST) introduction next year, the country can raise more revenue and will be able to cut back on spending,’ he said.
Currently, taxes and royalties from oil and gas account for 40 per cent of the government revenue while its debt level makes up 40 per cent of the GDP.
Source : Business Times – 4 Mar 2010
Thursday, April 8, 2010
Japan Reit sector may halve due to M&As
Consolidation is the way to go given tighter credit markets, falling property prices, says one seller
Japan’s real estate investment trusts will accelerate takeovers in the US$32 billion industry as banks pressure them to consolidate amid a tighter credit market and falling property prices, said Curtis Freeze, who agreed to sell his Reit to a unit of Oaktree Capital Management LLC.
The number of Japanese Reits may fall by half to about 20 in the next year as the funds seek merger partners to counter falling demand and tighter loan terms, Mr Freeze, chairman of Honolulu-based Prospect Asset Management Inc, said.
Japan’s 37-member TSE Reit Index has lost 58 per cent from its peak in May 2007 as the global credit crisis made it harder for them to refinance loans and acquire capital to purchase properties. Mr Freeze, faced with refinancing problems, last week agreed to sell Prospect Reit Investment Corp to Japan Rental Housing Investment Inc, controlled by Oaktree Capital, marking the fifth Reit takeover in Japan since September.
‘Japanese Reit merger and acquisitions are just getting started,’ Mr Freeze said in an interview in Tokyo yesterday. ‘There is a clear divide between the winners and losers, and by agreeing to merge, Prospect went from the losing camp into the winning camp.’
Property acquisitions by Japan’s 41 publicly traded real estate investment trusts before some trusts merged, surged to 66.4 billion yen (S$1.04 billion) in the three months ended December, from 3.6 billion yen in the previous quarter, according to Urban Research Institute Corp. The pick-up came after the government started a fund to support Reits, which derive most of their profit from rental income and pay out the majority of it as dividends.
Prospect Reit rose 2.6 per cent to close at 87,400 yen on the Tokyo Stock Exchange, compared with a 0.5 per cent gain for the broader TSE Reit Index. Japan Rental Housing rose 1.2 per cent to 128,000 yen.
Japan opened the Reit market in September 2001, with its first two Reits – Nippon Building Fund Inc and Japan Real Estate Investment Corp – playing catch-up in developing the securities pioneered by the US in the 1960s.
The benchmark TSE Reit Index had a record market value of about 6.79 trillion yen in May 2007, compared with about 2.84 trillion yen today. The decline came as the collapse of Lehman Brothers Holdings Inc in September tightened credit conditions.
Japanese bank lending dropped 1.7 per cent in January from a year earlier, the largest decline since September 2005, the Bank of Japan said last month. The drop, amid a five-year low in demand for loans, compares with a 1.2 per cent contraction in December.
Shareholders will receive 0.75 of a share in Japan Rental Housing for each Prospect share they own, the two companies said on Feb 26. Japan Rental Housing will be the surviving entity. The takeover, which is expected to be completed in July, will create a trust with assets of about 184 billion yen.
The takeover of Prospect follows four other combinations of Japanese Reits. Advance Resident Investment Corp merged with Nippon Residential Investment Corp on March 1, and Japan Retail Investment Corp and Lasalle Japan Reit Inc combined on the same day.
Out of the five mergers, only two funds have announced plans to raise capital as part of the deal, according to data compiled by IB Research and Consulting Inc. Japan Rental Housing said that it would issue five billion yen worth of shares through private placement, while Daiwa Housing Industry Co bought six billion yen in new shares in failed New City Resident Investment Corp after it merged with Daiwa’s Reit.
‘There will be more J-Reit mergers on the back of declining credit worthiness and difficulty in refinancing,’ said Mikio Namiki, an analyst at Mizuho Securities Co. ‘The key to success would be finding a financially sound partner rather than how big the funds would become, so that they can improve their creditworthiness.’
Rating and Investment Information, a Japanese rating company, in a note dated March 1 said that the fund-raising environment for Prospect is not ‘favourable’ even after the merger plan announcement. Mr Freeze said that refinancing of his bonds worth 24.8 billion yen due in March should not be a problem.
‘Every merger in Japan has to win banks’ support and Reits are no exception. We agreed to merge because the credit quality is much better for Japan Rental. There is no problem with our refinancing due in March.’
Mr Freeze said that by exiting the day-to-day management of his own Reit, he plans to help Oaktree find trusts to buy, declining to identify any targets. He began buying Tokyo properties in 2002, when Japan was emerging from its third recession in a decade, and invests in 14 Japanese Reits, according to Bloomberg data.
Source : Business Times – 4 Mar 2010
Japan’s real estate investment trusts will accelerate takeovers in the US$32 billion industry as banks pressure them to consolidate amid a tighter credit market and falling property prices, said Curtis Freeze, who agreed to sell his Reit to a unit of Oaktree Capital Management LLC.
The number of Japanese Reits may fall by half to about 20 in the next year as the funds seek merger partners to counter falling demand and tighter loan terms, Mr Freeze, chairman of Honolulu-based Prospect Asset Management Inc, said.
Japan’s 37-member TSE Reit Index has lost 58 per cent from its peak in May 2007 as the global credit crisis made it harder for them to refinance loans and acquire capital to purchase properties. Mr Freeze, faced with refinancing problems, last week agreed to sell Prospect Reit Investment Corp to Japan Rental Housing Investment Inc, controlled by Oaktree Capital, marking the fifth Reit takeover in Japan since September.
‘Japanese Reit merger and acquisitions are just getting started,’ Mr Freeze said in an interview in Tokyo yesterday. ‘There is a clear divide between the winners and losers, and by agreeing to merge, Prospect went from the losing camp into the winning camp.’
Property acquisitions by Japan’s 41 publicly traded real estate investment trusts before some trusts merged, surged to 66.4 billion yen (S$1.04 billion) in the three months ended December, from 3.6 billion yen in the previous quarter, according to Urban Research Institute Corp. The pick-up came after the government started a fund to support Reits, which derive most of their profit from rental income and pay out the majority of it as dividends.
Prospect Reit rose 2.6 per cent to close at 87,400 yen on the Tokyo Stock Exchange, compared with a 0.5 per cent gain for the broader TSE Reit Index. Japan Rental Housing rose 1.2 per cent to 128,000 yen.
Japan opened the Reit market in September 2001, with its first two Reits – Nippon Building Fund Inc and Japan Real Estate Investment Corp – playing catch-up in developing the securities pioneered by the US in the 1960s.
The benchmark TSE Reit Index had a record market value of about 6.79 trillion yen in May 2007, compared with about 2.84 trillion yen today. The decline came as the collapse of Lehman Brothers Holdings Inc in September tightened credit conditions.
Japanese bank lending dropped 1.7 per cent in January from a year earlier, the largest decline since September 2005, the Bank of Japan said last month. The drop, amid a five-year low in demand for loans, compares with a 1.2 per cent contraction in December.
Shareholders will receive 0.75 of a share in Japan Rental Housing for each Prospect share they own, the two companies said on Feb 26. Japan Rental Housing will be the surviving entity. The takeover, which is expected to be completed in July, will create a trust with assets of about 184 billion yen.
The takeover of Prospect follows four other combinations of Japanese Reits. Advance Resident Investment Corp merged with Nippon Residential Investment Corp on March 1, and Japan Retail Investment Corp and Lasalle Japan Reit Inc combined on the same day.
Out of the five mergers, only two funds have announced plans to raise capital as part of the deal, according to data compiled by IB Research and Consulting Inc. Japan Rental Housing said that it would issue five billion yen worth of shares through private placement, while Daiwa Housing Industry Co bought six billion yen in new shares in failed New City Resident Investment Corp after it merged with Daiwa’s Reit.
‘There will be more J-Reit mergers on the back of declining credit worthiness and difficulty in refinancing,’ said Mikio Namiki, an analyst at Mizuho Securities Co. ‘The key to success would be finding a financially sound partner rather than how big the funds would become, so that they can improve their creditworthiness.’
Rating and Investment Information, a Japanese rating company, in a note dated March 1 said that the fund-raising environment for Prospect is not ‘favourable’ even after the merger plan announcement. Mr Freeze said that refinancing of his bonds worth 24.8 billion yen due in March should not be a problem.
‘Every merger in Japan has to win banks’ support and Reits are no exception. We agreed to merge because the credit quality is much better for Japan Rental. There is no problem with our refinancing due in March.’
Mr Freeze said that by exiting the day-to-day management of his own Reit, he plans to help Oaktree find trusts to buy, declining to identify any targets. He began buying Tokyo properties in 2002, when Japan was emerging from its third recession in a decade, and invests in 14 Japanese Reits, according to Bloomberg data.
Source : Business Times – 4 Mar 2010
China home prices unlikely to crash: CBRE
Residential prices could plateau in H22010 but major correction unlikely
RENOWNED short-seller Jim Chanos sees a property bubble on the verge of bursting in China. But other well-known investors disagree – and on their side of the fence is CB Richard Ellis president and CEO for Asia Chris Brooke.
Residential prices in China could plateau in the second half of this year but a major correction is unlikely, he said in an interview with BT.
He also believes that large parts of the Singapore and Hong Kong property markets are not in risky territory.
For China, 2010 could be ‘a year of consolidation and stabilisation and getting back to a more sustainable market’, he said. ‘Residential prices could probably increase a little bit in the first half and stabilise in the second half.’
Price growth in China has slowed in the past few months, Mr Brooke said. There is a seasonal effect – buying tends to ebb during the festive period.
Government measures to cool the property market have had an impact, he said. For instance, the China Banking Regulatory Commission told banks last month to raise downpayments and interest rates for third mortgages.
Such initiatives have dampened sentiment. ‘Buyers take a step back and say ‘maybe I’ll wait and see what happens before I make that decision’,’ Mr Brooke said.
The government could implement more measures to calm the market, he said. ‘Policy risk is always there in China. The government has probably more involvement in the market there than anywhere else.
‘But because the real estate sector as a whole is an important part of broader economic growth, I think the government will look to strike a delicate balance.’
Naysayers are worried not just about fervour in China’s residential sector but a potential supply glut in its commercial sector. Reports of buildings left vacant while massive new ones take shape have fuelled more talk of a bubble.
But Mr Brooke is sanguine. It may take several years for supply to be absorbed, but there will be demand from multinational corporations and domestic companies, he said.
For instance, there has been strong demand recently for offices in Beijing, where rent for Grade A space may have bottomed.
As for Hong Kong and Singapore, he sees limited speculation but little policy risk. Recent anti-speculative measures introduced in both markets have signalled that the authorities are keeping a close eye, he said.
In Hong Kong, home prices shot up in the luxury segment but rose at a more measured pace in the mass to mid-market. As such, prices have more room to grow this year in the mid-market than in the luxury segment, Mr Brooke reckons.
Source : Business Times – 4 Mar 2010
RENOWNED short-seller Jim Chanos sees a property bubble on the verge of bursting in China. But other well-known investors disagree – and on their side of the fence is CB Richard Ellis president and CEO for Asia Chris Brooke.
Residential prices in China could plateau in the second half of this year but a major correction is unlikely, he said in an interview with BT.
He also believes that large parts of the Singapore and Hong Kong property markets are not in risky territory.
For China, 2010 could be ‘a year of consolidation and stabilisation and getting back to a more sustainable market’, he said. ‘Residential prices could probably increase a little bit in the first half and stabilise in the second half.’
Price growth in China has slowed in the past few months, Mr Brooke said. There is a seasonal effect – buying tends to ebb during the festive period.
Government measures to cool the property market have had an impact, he said. For instance, the China Banking Regulatory Commission told banks last month to raise downpayments and interest rates for third mortgages.
Such initiatives have dampened sentiment. ‘Buyers take a step back and say ‘maybe I’ll wait and see what happens before I make that decision’,’ Mr Brooke said.
The government could implement more measures to calm the market, he said. ‘Policy risk is always there in China. The government has probably more involvement in the market there than anywhere else.
‘But because the real estate sector as a whole is an important part of broader economic growth, I think the government will look to strike a delicate balance.’
Naysayers are worried not just about fervour in China’s residential sector but a potential supply glut in its commercial sector. Reports of buildings left vacant while massive new ones take shape have fuelled more talk of a bubble.
But Mr Brooke is sanguine. It may take several years for supply to be absorbed, but there will be demand from multinational corporations and domestic companies, he said.
For instance, there has been strong demand recently for offices in Beijing, where rent for Grade A space may have bottomed.
As for Hong Kong and Singapore, he sees limited speculation but little policy risk. Recent anti-speculative measures introduced in both markets have signalled that the authorities are keeping a close eye, he said.
In Hong Kong, home prices shot up in the luxury segment but rose at a more measured pace in the mass to mid-market. As such, prices have more room to grow this year in the mid-market than in the luxury segment, Mr Brooke reckons.
Source : Business Times – 4 Mar 2010
Coralis @ Marine Parade
Coralis is located within close proximity of Parkway Parade shopping mall. The development is also beside Katong Mall, which is under Perennial Katong Retail Trust. The mall be going to redevelopment works to transform into a lifestyle and Food and beverage hub. Marine Parade is one of the estate identified to be in the future Eastern Region Line Rail Project.
Coralis is in close proximity to East Coast Park, CBD, Marina Bay, Sports Hub, Changi International Airport, and Changi Business Park.
Nearby top & international schools include Tao Nan, CHIJ Katong, Kong Hwa Primary, St. Patrick’s, Dunman High, Lasalle-SIA, Victoria JC, Temasek JC, Temasek Polytechnic, Singapore 4th University
Location: 530 Joo Chiat Road (District 15)
Tenure: Freehold
Expected Completion: March 2014
Site Area: 4650.35 sqm
Total Units: 127 (20 storey)
Unit Types:
1 bedroom ~ 495 – 549 sqft
2 bedroom ~ 861 – 1066 sqft
3 bedroom ~ 1206 – 1281 sqft
Penthouse ~ 2659 – 3089 sqft
Contact us at propertydollars@gmail.com or +65 9650 2709 with the following to register your interest:
Coralis / name / contact # / unit type interested
STC takes over Chancery Five project
THE Straits Trading Company (STC) is taking over a private developer and its cluster bungalow project at Chancery Lane.
It said on Monday that it would pay an aggregate of some $13.9 million for the proposed acquisition of Tertius Development Pte Ltd, including the assignment of specified shareholders’ loans. The vendors are two individuals.
With the deal, STC will gain control of Chancery Five, a project with 12 freehold strata bungalows at 5 Chancery Lane. The development is next to Anglo-Chinese School (Primary) and Anglo-Chinese School (Barker Road).
Each bungalow will have five rooms, an entertainment room, an attic, a private basement car park, a private swimming pool and a lift spread across two levels. The homes will range from 4,800 square feet to 6,500 sq ft in size.
Tertius’ commitment to the project – including land cost, development cost and incidental selling costs – up to 2012 is estimated by the purchaser at about $58.24 million.
Eric Teng, chief executive of STC’s property arm, told BT that his unit has been looking out for opportunities in the property market. He has not set a date for the launch of Chancery Five. The project is under construction and could obtain temporary occupation permit in April next year.
According to caveats lodged with the Urban Redevelopment Authority, a detached house at Chancery Lane changed hands at $900 per sq ft in November last year.
STC’s acquisition is expected to be completed in April. The company does not foresee the purchase having a significant impact on its financial position for the year ending Dec 31, 2010.
STC shares rose five cents yesterday to close at $4.15.
Source : Business Times – 3 Mar 2010
It said on Monday that it would pay an aggregate of some $13.9 million for the proposed acquisition of Tertius Development Pte Ltd, including the assignment of specified shareholders’ loans. The vendors are two individuals.
With the deal, STC will gain control of Chancery Five, a project with 12 freehold strata bungalows at 5 Chancery Lane. The development is next to Anglo-Chinese School (Primary) and Anglo-Chinese School (Barker Road).
Each bungalow will have five rooms, an entertainment room, an attic, a private basement car park, a private swimming pool and a lift spread across two levels. The homes will range from 4,800 square feet to 6,500 sq ft in size.
Tertius’ commitment to the project – including land cost, development cost and incidental selling costs – up to 2012 is estimated by the purchaser at about $58.24 million.
Eric Teng, chief executive of STC’s property arm, told BT that his unit has been looking out for opportunities in the property market. He has not set a date for the launch of Chancery Five. The project is under construction and could obtain temporary occupation permit in April next year.
According to caveats lodged with the Urban Redevelopment Authority, a detached house at Chancery Lane changed hands at $900 per sq ft in November last year.
STC’s acquisition is expected to be completed in April. The company does not foresee the purchase having a significant impact on its financial position for the year ending Dec 31, 2010.
STC shares rose five cents yesterday to close at $4.15.
Source : Business Times – 3 Mar 2010
Big boys go looking for swank, new offices
IDA said to have leased 160,000 sq ft; rents may inch up as banks expand in prime areas
The upswing in office leasing deals that started around July last year shows no signs of letting up. The healthy demand has persuaded some property consultants that rents for the best quality space in Singapore’s financial district could be close to their bottom and poised to perk up.
The Infocomm Development Authority (IDA) is understood to have inked a lease for about 160,000 square feet at Mapletree Business City on Pasir Panjang Road.
This is said to be spread over six floors in the 18-storey office tower of the development, which is expected to receive Temporary Occupation Permit (TOP) soon. With IDA secured as a tenant, the tower’s 436,300 sq ft net lettable space is now fully leased, BT understands. The project is near Labrador Park MRT Station, which opens next year.
IDA is expected to move out of Suntec City, where its lease is said to be expiring next year.
Barclays Capital, which has leased 100,000 sq ft at Marina Bay Financial Centre’s Tower 2, is said to be close to inking a deal for another 250,000 sq ft in the same tower, which is expected to receive TOP next quarter. The bank is expected to exit from Atrium @ Orchard.
Barclays also occupies about 100,000 sq ft at One Raffles Quay’s South Tower and its retail bank has a technology centre at Eightrium @ Changi Business Park. The bank’s headcount in Singapore has increased from just several hundred people in 2004 to over 3,500 currently. Of these, about 2,000 are employed at Barclays Capital Global Support Hub.
As new office projects are rolled out, big tenants such as banks are being offered more choices. For instance, ANZ, which is currently at OUB Centre at 1 Raffles Place, is said to be deciding whether to move to the new tower being built in the same development, or to Ocean Financial Centre along Collyer Quay.
The latter, a 43-storey development under construction that will have about 850,000 sq ft net lettable area, is also said to have attracted some tenants from Ocean Towers next door. These include Ifast, Verizon Communications and DMG & Partners Securities.
Other tenants at Ocean Financial Centre are said to include Stamford Law Corporation, which is currently in Republic Plaza, and serviced office operator The Executive Centre.
Colliers International executive director Calvin Yeo said: ‘We are starting to see our clients, who are MNCs including financial institutions, planning for expansion as their existing leases approach expiry.’
While some of the initial buzz in the office leasing market was a game of musical chairs involving relocating from older buildings to newer properties, the market is now starting to move beyond replacement demand to actual expansion or new demand, say market watchers.
‘We’re seeing quite a few law firms from Europe coming to Singapore as well as existing law firms in Singapore expanding,’ says Jones Lang LaSalle regional director and head of markets Chris Archibold.
‘Insurance companies are starting to look at headcount growth of about 5 per cent this year followed by a further 5-10 per cent per annum for the next few years. Banks are boosting their headcount, not just for private banking but across the board. We’re seeing a number of them bringing high-end back-office support functions again to Singapore,’ he added.
Mr Archibold reckons that for international standard prime Grade A offices in the Raffles Place and Marina Bay area, rents will probably bottom out at their current levels of about $8 psf a month for smaller occupiers and $7 psf for bigger occupiers. These levels are about 58 per cent below the Q3 2008 peak figures. ‘However, rents for A- and B+ grade offices may still decline a few per cent from current levels though the drop should end by Q4 2010.’
Another office property consultant also said that office landlords are more confident and not prepared to discount rents any further. ‘But older buildings may relatively underperform and that means rentals in even good-quality buildings may not rebound quickly until space availability in new developments tightens,’ he added.
Others are more optimistic. UBS has predicted a 30 per cent jump in the average monthly Grade A office rental value from $8.10 psf at the end of last year to $10.60 psf at end-2010, citing growth in demand. The impact of new office completions is not likely to be as grave as feared earlier since some one million sq ft of existing office stock is expected to be removed in 2010-2011 for conversion to residential use.
Source : Business Times – 3 Mar 2010
The upswing in office leasing deals that started around July last year shows no signs of letting up. The healthy demand has persuaded some property consultants that rents for the best quality space in Singapore’s financial district could be close to their bottom and poised to perk up.
The Infocomm Development Authority (IDA) is understood to have inked a lease for about 160,000 square feet at Mapletree Business City on Pasir Panjang Road.
This is said to be spread over six floors in the 18-storey office tower of the development, which is expected to receive Temporary Occupation Permit (TOP) soon. With IDA secured as a tenant, the tower’s 436,300 sq ft net lettable space is now fully leased, BT understands. The project is near Labrador Park MRT Station, which opens next year.
IDA is expected to move out of Suntec City, where its lease is said to be expiring next year.
Barclays Capital, which has leased 100,000 sq ft at Marina Bay Financial Centre’s Tower 2, is said to be close to inking a deal for another 250,000 sq ft in the same tower, which is expected to receive TOP next quarter. The bank is expected to exit from Atrium @ Orchard.
Barclays also occupies about 100,000 sq ft at One Raffles Quay’s South Tower and its retail bank has a technology centre at Eightrium @ Changi Business Park. The bank’s headcount in Singapore has increased from just several hundred people in 2004 to over 3,500 currently. Of these, about 2,000 are employed at Barclays Capital Global Support Hub.
As new office projects are rolled out, big tenants such as banks are being offered more choices. For instance, ANZ, which is currently at OUB Centre at 1 Raffles Place, is said to be deciding whether to move to the new tower being built in the same development, or to Ocean Financial Centre along Collyer Quay.
The latter, a 43-storey development under construction that will have about 850,000 sq ft net lettable area, is also said to have attracted some tenants from Ocean Towers next door. These include Ifast, Verizon Communications and DMG & Partners Securities.
Other tenants at Ocean Financial Centre are said to include Stamford Law Corporation, which is currently in Republic Plaza, and serviced office operator The Executive Centre.
Colliers International executive director Calvin Yeo said: ‘We are starting to see our clients, who are MNCs including financial institutions, planning for expansion as their existing leases approach expiry.’
While some of the initial buzz in the office leasing market was a game of musical chairs involving relocating from older buildings to newer properties, the market is now starting to move beyond replacement demand to actual expansion or new demand, say market watchers.
‘We’re seeing quite a few law firms from Europe coming to Singapore as well as existing law firms in Singapore expanding,’ says Jones Lang LaSalle regional director and head of markets Chris Archibold.
‘Insurance companies are starting to look at headcount growth of about 5 per cent this year followed by a further 5-10 per cent per annum for the next few years. Banks are boosting their headcount, not just for private banking but across the board. We’re seeing a number of them bringing high-end back-office support functions again to Singapore,’ he added.
Mr Archibold reckons that for international standard prime Grade A offices in the Raffles Place and Marina Bay area, rents will probably bottom out at their current levels of about $8 psf a month for smaller occupiers and $7 psf for bigger occupiers. These levels are about 58 per cent below the Q3 2008 peak figures. ‘However, rents for A- and B+ grade offices may still decline a few per cent from current levels though the drop should end by Q4 2010.’
Another office property consultant also said that office landlords are more confident and not prepared to discount rents any further. ‘But older buildings may relatively underperform and that means rentals in even good-quality buildings may not rebound quickly until space availability in new developments tightens,’ he added.
Others are more optimistic. UBS has predicted a 30 per cent jump in the average monthly Grade A office rental value from $8.10 psf at the end of last year to $10.60 psf at end-2010, citing growth in demand. The impact of new office completions is not likely to be as grave as feared earlier since some one million sq ft of existing office stock is expected to be removed in 2010-2011 for conversion to residential use.
Source : Business Times – 3 Mar 2010
Call for review of housing policies
ALTHOUGH it was not directly addressed in Budget 2010, worries about the cost of housing in Singapore were reflected in several MPs’ speeches yesterday.
There were calls to review housing policies, including current rules that allow private property owners to buy HDB flats and to sublet them.
It was also suggested that the $8,000 household income ceiling be raised to allow more Singaporeans to buy new subsidised flats (that are not executive condominiums) from the Housing Board.
The growing number of new immigrants in recent years has caused not just a squeeze on jobs, but also on transport and housing, said MPs.
Mr Inderjit Singh (Ang Mo Kio GRC) said: ‘By bringing in too many people too quickly…the cost of living has gone up rapidly. The clearest manifestation of this is the cost of HDB flats.’
He said though permanent residents (PRs) cannot buy new flats, they still indirectly inflate prices. This is because demand by PRs in the resale market can push up prices, and the price of new HDB flats is pegged to the resale market.
There are also many PRs who rent HDB flats and this contributes to the upward pressure on flat prices, he added.
HDB resale prices have risen about 40 per cent in the past three years, far outstripping Singapore’s economic growth.
The Ministry of National Development has maintained that PRs, who make up only one in five resale flat buyers, have minimal impact on resale prices.
Yesterday’s debate also saw Dr Ahmad Magad (Pasir Ris-Punggol GRC) raise concerns on the effectiveness of recent measures to curb property speculation.
Three days before the Budget statement on Feb 22, the Government announced new rules: A property buyer has to pay extra stamp duty if he sells the property within a year; and the amount buyers can borrow from lending institutions was reduced from 90 per cent to 80 per cent of the property’s value.
Despite these measures, people are still thronging showrooms and snapping up properties, said Dr Ahmad.
He was particularly concerned about the policy that allows private property owners to own HDB flats as well. While the policy says they must live in the flats, anecdotal evidence shows many do not, and are renting them out. ‘If no stern action is taken, it will encourage more dual property owners to do the same,’ he said.
Mr Sin Boon Ann (Tampines GRC) wants the Government to review the income ceiling for a group of young Singaporeans – graduates who have worked a few years before deciding to settle down – struggling to buy a new HDB flat.
He argued that not all couples whose incomes exceed the current limit can afford private housing, or have enough cash to meet the down payment for a pricier resale HDB flat from the secondary market.
National Development Minister Mah Bow Tan said recently the Government was looking into measures for the HDB market and that announcements would be made in Parliament some time this week or the next.
Source : Straits Times – 3 Mar 2010
There were calls to review housing policies, including current rules that allow private property owners to buy HDB flats and to sublet them.
It was also suggested that the $8,000 household income ceiling be raised to allow more Singaporeans to buy new subsidised flats (that are not executive condominiums) from the Housing Board.
The growing number of new immigrants in recent years has caused not just a squeeze on jobs, but also on transport and housing, said MPs.
Mr Inderjit Singh (Ang Mo Kio GRC) said: ‘By bringing in too many people too quickly…the cost of living has gone up rapidly. The clearest manifestation of this is the cost of HDB flats.’
He said though permanent residents (PRs) cannot buy new flats, they still indirectly inflate prices. This is because demand by PRs in the resale market can push up prices, and the price of new HDB flats is pegged to the resale market.
There are also many PRs who rent HDB flats and this contributes to the upward pressure on flat prices, he added.
HDB resale prices have risen about 40 per cent in the past three years, far outstripping Singapore’s economic growth.
The Ministry of National Development has maintained that PRs, who make up only one in five resale flat buyers, have minimal impact on resale prices.
Yesterday’s debate also saw Dr Ahmad Magad (Pasir Ris-Punggol GRC) raise concerns on the effectiveness of recent measures to curb property speculation.
Three days before the Budget statement on Feb 22, the Government announced new rules: A property buyer has to pay extra stamp duty if he sells the property within a year; and the amount buyers can borrow from lending institutions was reduced from 90 per cent to 80 per cent of the property’s value.
Despite these measures, people are still thronging showrooms and snapping up properties, said Dr Ahmad.
He was particularly concerned about the policy that allows private property owners to own HDB flats as well. While the policy says they must live in the flats, anecdotal evidence shows many do not, and are renting them out. ‘If no stern action is taken, it will encourage more dual property owners to do the same,’ he said.
Mr Sin Boon Ann (Tampines GRC) wants the Government to review the income ceiling for a group of young Singaporeans – graduates who have worked a few years before deciding to settle down – struggling to buy a new HDB flat.
He argued that not all couples whose incomes exceed the current limit can afford private housing, or have enough cash to meet the down payment for a pricier resale HDB flat from the secondary market.
National Development Minister Mah Bow Tan said recently the Government was looking into measures for the HDB market and that announcements would be made in Parliament some time this week or the next.
Source : Straits Times – 3 Mar 2010
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