Issue 44

Copyright 2011-2012 www.Propwise.sg. All Rights Reserved.

CONTENTS
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Singapore Property News This Week Should Shoe-box Factories Be Allowed? Resale Property Transactions (March 7 March 13)

FROM THE

EDITOR

Welcome to the 44th edition of the Singapore Property Weekly. Hope you like it! Mr. Propwise

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SINGAPORE PROPERTY WEEKLY Issue 44

Singapore Property This Week

Residential
Freehold Westvale Condominium up for collective sale The 32-unit strata walk-up development located along 334 Pasir Panjang Road is asking for $85.5 million or $974 psf ppr based on a 1.4 gross plot ratio. The building sits on a 62,710 sq ft site zoned 'residential' that can be redeveloped up to a maximum of five storeys. If the additional 10% GFA allowed for balcony area is taken into account, the new potential 96,574 sq ft GFA would mean a price of $892 psf ppr and a potential development of 115 800 sq ft-units. However, the additional balcony space would also mean a development charge of $625,000. The site is expected to be popular given its proximity to NUS and the Haw Par Villa MRT Station and the scarcity of freehold sites in the area. The tender will close on April 19. Commercial Rents for prime office space to slow With most deals concluded since the beginning of 2012 being less than 25,000 sq ft, we can see the decline in demand for such spaces fromthe banking and financial institutions that typically rent large prime spaces. Occupancy levels and rental rates are likely to continue their decline with the decreased demand coupled with increased supply from newly completed projects.

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SINGAPORE PROPERTY WEEKLY Issue 44 Nevertheless, a sharp decline in the rent is not expected nor is the decline expected to last, especially with only two Grade A office projects to be completed in the next two years. In the meantime, firms in other industries have begun taking up large spaces. Some MNCs are also planning to set up regional headquarters here, which will contribute to the overall occupancy rates even if the deals tend to be for small or medium spaces. JLLs average gross effective monthly rental value for Raffles Place Grade A office space (excluding Marina Bay) has fallen by 4-5% in Q1 2012 from $9.75 psf in Q4 2011 and it also predicted a 9-11%fall to $8.70-8.80 psf by end-2012. CBREs estimates reflected a 34% decline from 2011s year-end figures and a 15% year-on-year decline is expected for the whole market, including Grade A spaces which includes Marina Bay, Raffles Place and Marina Centre, leading toa rate of $9.35 psf at end-2012 from $11 psf at end-2011. Vacancy rate for Grade A Raffles Place (including Marina Bay) office space is also expected to increase from 8.7% in Q4 2011 to 12.5-13% by end-2012. Supply-wise, 1.35 million sq ft net lettable area of office space is expected to be completed this year, with another 2.4 million sq ft in 2013 and 1.5 million sq ft in 2014. Rents of retail spaces to plateau in 2012

Average retail rents are expected to plateau in 2012, and increases, if any, would probably be between 1-2%. This is probably a result of new policies that will lower the proportion of foreign workers companies in the service

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SINGAPORE PROPERTY WEEKLY Issue 44 sector can employ to 45% from 50% in July, which meant that productivity costs will increase, and in turn affect the rental rates.The average prime retail rate for all locations remained unchanged at $29.90 psf in Q1 2012. In particular, the average prime rents for the central Orchard Road belt, Orchard Road fringe and Marina Centre, City Hall and Bugis rentals remained unchanged at $41.60 psf, $24.10 psf and $29.40 psf respectively in Q1 2012, while the rents for such spaces at the city fringe and suburban regions experienced some minor changes at$22.50 psf and $32.10 psf respectively in the same period. While prime retail spaces will continue to see demand and increases in rental rates by 2-3% given its scarcity, more retailers are considering retail spaces located in the city fringe and suburban areas,especially those situated in residential
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or new growth areas with high-income residents who can afford to spend more. This has led to an increase in supply of retail space in these areas; 55% and 21% of the upcoming 2.7 million sq ft net lettable retail space are from suburban areas and fringe areas respectively. Competitive bidding industrial plot for Serangoon

The 0.8 hectare 58-year leasehold industrial plot located at Serangoon North Avenue 4 attracted a top bid of $47.1 million or $216.68 psf ppr from Soon Hock Property Development, just 0.4% above the next highest bid. The high bids from these two developers might be due to the developers confidence in increasing the saleable floor area of the site or their inexperience in industrial property market.
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SINGAPORE PROPERTY WEEKLY Issue 44 The competitive bidding could also be attributed to the general lack of industrial sites in the region. The site with a 2.5 maximum gross plot ratio is zoned Business 1, and its expected breakeven price and selling price are $340-380 psf and $450-$500 psf respectively. Expression of interest exercise for Macpherson freehold industrial building The seven-storey freehold industrial building located 37 Mactaggart Road in Macpherson is asking for$26 million or $612 psfbased on its total GFA of 42,480 sq ft or $1,532 psf basedon the 16,968 sq ft land area. Zoned for Business 1 industrial use, the2.5 gross plot ratio site could potentially fetch $800-880 psf based on saleable floor area once a new freehold industrial development is built. The site is likely to be popular since such
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properties with cold room facilities are rare in this area. Furthermore, with the ABSD, investors have been turning from the residential sector to the industrial sector. The site could potentially be refurbished or redeveloped for strata sale, if the approval from relevant authorities is granted. The building is currently leased out to a single tenant whose tenancy expires in 2014. The exercise will close on April 18 at 3pm. New mall in Orchard in H2 2013 Orchardgateway The mall is part of Orchardgateway, an integrated development consisting of two towers - 20-storey hotel-retail development located next to Somerset MRT station and an 11-storey office-retail development named orchardgateway@emerald.The mall straddles the two towers, which are diagonally opposite
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SINGAPORE PROPERTY WEEKLY Issue 44 and linked by both an overhead bridge and an underpass, with 150,000 sq ft of retail space on 277 Orchard Road and another 30,000 sq ft on 218 Orchard Road. Tenants will include library@orchard and the Singapore Visitors Centre@Orchard as well as several other fashion and lifestyle retail and food-andbeverage establishments. Buona Vistas new mall The Star Vista The Star Vista which will open in September is located next to Buona Vista MRT interchange station. It will consist of over a 100 shops in its three-storey 163,000 square feet of net lettable area (NLA), over half of which is occupied by food and beverage establishments. Other offerings include a 7,000 sq ft Cold Storage supermarket at the basement and a fully equipped, 5,000-seat theatre located above the mall - The Star
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Performing Arts Centre. Over 50% of the mall has been leased at $14-18 psf. The mall is expected to serve over 400,000 residents, students, and working population in the area, and has over 800 car parking spaces. Compass Point Shopping Centre up for sale Five-storey 269,546 sq ft Compass Point Shopping Centre has been put up for public tender to redeem the bonds secured against it, which are due in November this year. The 99-year leasehold mall (since 2000) is not setting any asking price, but expects to be offered morethan $645 million or $2,393 psf. The mall next to Sengkang MRT station and bus interchange is almost fully occupied with a gross rent of $11.71 psf per month and has 428 carpark spaces. The strata-titled mall with a strata floor area of 414,119 sq ft has
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SINGAPORE PROPERTY WEEKLY Issue 44 134 strata lots with a share value of about 74%. The tender will close on May 3. Prices and rents for industrial property set to fall While prices and rents of strata industrial properties reached a record high in 2011, having an increase of 30% and 15-20% respectively, they may have reached their peak and are expected to fall this year by 510% and up to 8% respectively. The increase in land supply to 24 ha for the Industrial Government Land Sales Programme, and the new conditions on strata subdivision of industrial development might be one contributing factor.

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SINGAPORE PROPERTY WEEKLY Issue 44

Should Shoe-box Factories Be Allowed?

By Mr. Propwise A recent investigative report by The Straits Times found a diverse array of non-industrial businesses and institutions taking up space in industrial estates. A check by the reporter across places like Woodlands Industrial Park, Jalan Pemimpin, Alexandra Industrial Estate and Henderson Industrial Park found furniture markers and warehouse operators co-located with offices, churches, tuition centers, travel agencies and fashion retailers.

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SINGAPORE PROPERTY WEEKLY Issue 44 Rental arbitrage is the root cause of this phenomenon The root cause of this phenomenon is what I call rental arbitrage businesses taking advantage of lower rents in industrial areas (around $2 psf) versus commercial buildings (up to around $9 psf). These non-industrial users are technically violating URA guidelines as these spaces are meant for businesses like manufacturing, storage, workshops and certain e-businesses. There is also some allowance for supporting facilities like childcare centers and canteens. If the URA investigates these violations they can ask the business to stop, failing which they can be fined up to $200,000 or even jailed. Some observers argue that these nonindustrial businesses are hurting genuine industrialists as they push up rents in these spaces, while others argue that forcing these non-industrial businesses out will hurt the growth of SMEs as they cant afford commercial space in the first place. The end of shoe-box factories? Even Minister Khaw has chimed in by chastising non-industrial tenants who are abusing lower rents in industrial buildings, labeling what theyre doing as wrong. At the center of this controversy are units known as shoe-box factories that are as small as 50100 sqm. We first saw the shrinking of apartments as property prices rose and developers strove to maximize their selling price per square foot while keeping total unit costs affordable

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SINGAPORE PROPERTY WEEKLY Issue 44 for investors. As the Government continued clamping down on the residential sector with anti-speculation measures many investors shifted their attention to the commercial and industrial sectors. And developers, ever ready to take advantage of any opportunity to cash in, started creating smaller units in industrial projects that they could strata-title and sell to these yield-hungry investors.I think it was implicitly known by the developers and investors right from the beginning that the potential tenants for these shoe-box factory units would largely not be industrial users. For some reason, approvals for these projects were given by the relevant authorities anyway. However, according to Minister Khaw, JTC has estimated that a genuine industrial enduser would need at least 150 sqm of space,
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and the URA has also used a similar norm. Thus going forward, we are not likely to see new industrial developments with shoe-box units they will likely not secure the necessary approvals. Does industrial zoning still make sense? Given the medias and the Governments attention this issue, the URA might also start cracking down on violators. I believe that this would be an unnecessary blow to the SME sector in Singapore. In the first place, are there enough genuine industrial users to fill the space? One of the landlords quotes in The Straits Times article mentioned that he gets one enquiry for larger spaces measuring 20,000 sqft or more versus four to five calls for spaces of 1,000 sqft or less. There is simply less demand

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SINGAPORE PROPERTY WEEKLY Issue 44 for large-scale industrial activity, especially in general purpose industrial buildings. Furthermore, older industrial buildings built without facilities such as loading bays will find it hard to get genuine industrial tenants. Does it then make sense to leave these spaces vacant or to be more flexible in their usage? Furthermore, the lower rents in industrial areas are supposed to help industrialists keep business costs low. In effect, they are a subsidy by the Government to help the industrial sector stay competitive in a tough global market. But are they then saying that industrialists (whether SMEs or not) are worth subsidizing while non-industrial SMEs are not? The definition of industrial use is already fairly grey does it make sense to penalize certain types of businesses while subsidizing others? Do industrial users add more value to the economy versus other types of businesses?
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High rentals can be fatal to SMEs Many SMEs can simply not survive if forced to pay full commercial rents, which will be a drain on their startup capital even as they struggle to build a customer base and make profits. I have a friend in the fashion retail business who says that it is almost impossible for any new entrant to survive in malls today with rents of close to $20 psf. A 1,000 sqft shop can cost $20,000 per month in rent, which can be fatal to the proprietor if business is bad for a few months. In order to encourage and nurture the growth of SMEs, perhaps the Government can consider the relaxation of the use of these spaces. Doing so could unleash a flurry of commercial activity in otherwise deteriorating industrial areas, while at the same time giving SMEs the space to get a foothold in the market without being crushed by huge rental overheads.
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SINGAPORE PROPERTY WEEKLY Issue 44

Non-Landed Residential Resale Property Transactions for the Week of Mar 7 Mar 13
Postal District 2 3 3 3 5 5 5 5 5 7 7 8 8 8 8 8 9 9 9 9 9 9 9 9 Area Transacted Price Tenure (sqft) Price ($) ($ psf) 850 740,000 870 99 872 1,140,000 1,308 99 1,281 1,650,000 1,288 99 1,399 1,650,000 1,179 99 1,302 1,500,000 1,152 FH 1,711 1,950,000 1,139 FH 1,313 1,270,000 967 FH 1,259 1,080,000 858 FH 1,894 1,500,000 792 99 840 1,344,000 1,601 999 1,119 1,085,000 969 999 893 1,340,000 1,500 99 1,507 2,100,000 1,394 FH 1,507 2,080,000 1,380 FH 1,270 1,370,000 1,079 99 1,098 910,000 829 99 1,668 5,350,000 3,207 FH 840 2,226,629 2,652 FH 3,175 7,050,000 2,220 FH 1,496 2,992,000 2,000 FH 1,055 2,100,000 1,991 FH 2,013 3,500,000 1,739 FH 1,313 2,180,000 1,660 FH 1,141 1,730,000 1,516 103 Postal District 10 10 10 10 10 10 10 11 11 11 11 11 11 11 11 12 12 12 14 14 14 14 14 14 Area Transacted Price Tenure (sqft) Price ($) ($ psf) 2,583 6,900,000 2,671 FH 1,496 3,600,000 2,406 FH 1,625 3,235,000 1,990 FH 3,175 5,350,000 1,685 FH 861 1,328,000 1,542 FH 990 1,500,000 1,515 FH 1,044 1,566,000 1,500 999 1,539 2,668,000 1,733 FH 947 1,638,000 1,729 FH 2,250 3,620,000 1,609 FH 700 990,000 1,415 FH 1,485 2,100,000 1,414 FH 1,238 1,720,000 1,389 99 1,238 1,700,000 1,373 99 1,152 1,566,720 1,360 FH 1,302 2,180,000 1,674 FH 1,647 1,770,000 1,075 FH 915 915,000 1,000 FH 700 760,000 1,086 FH 883 818,000 927 FH 980 880,000 898 99 980 870,000 888 99 969 845,000 872 99 1,109 955,000 861 FH

Project Name SPOTTISWOODE PARK RIVER PLACE DOMAIN 21 THE METROPOLITAN CONDOMINIUM THE PARC CONDOMINIUM LANDRIDGE CONDOMINIUM THE CASSANDRA BAYVILLE CONDOMINIUM PARK WEST THE 101 SULTAN GATE PLACE CITYLIGHTS CITY SQUARE RESIDENCES CITY SQUARE RESIDENCES KERRISDALE KENTISH GREEN HELIOS RESIDENCES VIDA BELLE VUE RESIDENCES RIVERGATE RIVERGATE CAIRNHILL CREST URBANA 8 @ MOUNT SOPHIA

Project Name GRANGE RESIDENCES BEAUFORT ON NASSIM KUM HING COURT REGENCY PARK VIZ AT HOLLAND ONE JERVOIS MILL POINT RESIDENCES @ EVELYN NOVENA SUITES RESIDENCES @ EVELYN NINETEEN SHELFORD ROAD PAVILION 11 AMARYLLIS VILLE AMARYLLIS VILLE CITY EDGE THE RIVERINE BY THE PARK TRELLIS TOWERS SUNVILLE THE WATERINA KEMBANGAN PLAZA SIMSVILLE SIMSVILLE SIMSVILLE THE SUNNY SPRING

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SINGAPORE PROPERTY WEEKLY Issue 44

Postal District 14 14 14 14 14 14 14 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 16 16 16 Project Name SIMSVILLE ESCADA VIEW GUILIN MANSIONS GUILLEMARD VIEW DELIGHT COURT WING FONG COURT ATRIUM RESIDENCES THE MAKENA GRAND DUCHESS AT ST PATRICK'S HAWAII TOWER COSTA RHU ONE FORT EMERALD EAST WATER PLACE WATER PLACE CALLIDORA VILLE HAIG COURT CHAPEL COURT DUNMAN PLACE GALLERY 8 MANDARIN GARDEN CONDOMINIUM EASTVILLE APARTMENTS LAGUNA PARK GIDEON'S LODGE COSTA DEL SOL CASA MERAH THE SUMMIT Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,238 1,000,000 808 99 1,442 1,150,000 797 FH 1,076 840,000 780 FH 1,206 900,000 747 FH 1,324 957,000 723 FH 1,055 750,000 711 FH 2,271 1,488,888 656 FH 1,636 2,280,000 1,394 FH 1,507 1,988,000 1,319 FH 2,239 2,850,000 1,273 FH 990 1,250,000 1,262 99 1,055 1,300,000 1,232 FH 926 1,130,000 1,221 FH 1,227 1,450,000 1,182 99 1,356 1,540,000 1,135 99 1,141 1,290,000 1,131 FH 1,550 1,650,000 1,065 FH 1,690 1,780,000 1,053 FH 1,389 1,400,000 1,008 FH 1,206 1,090,000 904 FH 1,528 1,380,000 903 99 1,001 890,000 889 FH 1,615 1,410,000 873 99 1,313 1,100,000 838 FH 1,475 1,650,000 1,119 99 1,249 1,285,000 1,029 99 1,238 1,248,000 1,008 FH Postal District 16 16 16 16 17 17 18 18 18 19 19 19 19 19 20 20 20 20 20 21 21 21 21 21 23 23 23 Project Name CHANGI GREEN EAST MEADOWS BEDOK COURT KEW GREEN CARISSA PARK CONDOMINIUM EDELWEISS PARK CONDOMINIUM LIVIA RIS GRANDEUR MODENA KOVAN MELODY RIO VISTA KENSINGTON PARK CONDOMINIUM RIO VISTA CENTRAL VIEW BOONVIEW RAFFLESIA CONDOMINIUM BISHAN 8 BRADDELL VIEW BRADDELL VIEW MAPLEWOODS HIGHGATE PANDAN VALLEY SOUTHAVEN I SHERWOOD TOWER THE DAIRY FARM GLENDALE PARK HAZEL PARK CONDOMINIUM Area Transacted Price Tenure (sqft) Price ($) ($ psf) 1,055 1,050,000 995 FH 1,227 1,070,000 872 99 2,260 1,750,000 774 99 2,971 1,800,000 606 99 926 850,000 918 FH 1,625 1,370,000 843 FH 1,270 1,170,000 921 99 1,539 1,368,000 889 FH 1,550 1,350,000 871 99 1,302 1,365,000 1,048 99 1,378 1,230,000 893 99 1,582 1,400,000 885 999 1,249 1,000,000 801 99 1,216 935,000 769 99 1,292 1,438,000 1,113 FH 915 1,000,000 1,093 99 1,195 1,300,000 1,088 99 1,615 1,180,000 731 99 1,615 1,138,000 705 99 1,507 1,820,000 1,208 FH 1,227 1,215,000 990 FH 1,335 1,300,000 974 FH 1,528 1,200,000 785 99 1,518 1,050,000 692 99 1,281 1,200,000 937 FH 1,044 970,000 929 FH 1,389 1,250,000 900 999

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SINGAPORE PROPERTY WEEKLY Issue 44

Postal District 23 23 23 23 23 23 23 23 25 25 26 26 27 27 Area (sqft) 1,130 1,647 1,001 936 1,259 1,206 1,270 1,206 1,195 2,745 1,292 1,152 1,313 1,625 Transacted Price Tenure Price ($) ($ psf) 980,000 867 99 1,426,680 866 999 860,000 859 FH 750,000 801 99 910,000 723 99 868,888 721 99 882,000 694 99 815,000 676 99 885,000 741 99 1,500,000 546 99 995,000 770 99 877,000 761 99 920,000 701 FH 1,030,000 634 FH

Project Name HILLVIEW REGENCY CASHEW HEIGHTS CONDOMINIUM CENTURY MANSIONS PARKVIEW APARTMENTS REGENT GROVE PALM GARDENS PARKVIEW APARTMENTS PALM GARDENS CASABLANCA ROSEWOOD SEASONS PARK CASTLE GREEN SELETARIS SELETARIS

NOTE: This data only covers non-landed residential resale property transactions with caveats lodged with the Singapore Land Authority. Typically, caveats are lodged at least 2-3 weeks after a purchaser signs an OTP, hence the lagged nature of the data.

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