Property Market Sentiments

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(15-11-2014, 09:39 PM)corydorus Wrote:
(14-11-2014, 09:21 PM)CY09 Wrote: Hi safetyfirst,

I can offer an explanation to why some developers trade above their book value; and that is because they hold valuable land bank bought in the years before the 90s property boom and recorded at such cost on their B/S. For CDL, it bought a large piece of land at pasir ris for a few tens of Mil around the early 90s. It was recently subdivided into 5 CDL projects and CDL is selling them off with the first two TOP. The revenue from these 5 condo projects are in the billion figures and probably half has been recognized. Bukit Sembawang is another example. It holds freehold land in the vicinity of AMK/YCK and I believe Bukit sembawang values them at the cost of the early years of Singapore when the family was still doing rubber plantation business. There are a lot of untapped valuable land banks in such companies unlike the sovereign linked developers who have to develop their land bank quickly due to reasons you and I can infer/aware of, but can't post here

(15-11-2014, 08:19 AM)opmi Wrote:
(14-11-2014, 09:21 PM)CY09 Wrote: Hi safetyfirst,

I can offer an explanation to why some developers trade above their book value; and that is because they hold valuable land bank bought in the years before the 90s property boom and recorded at such cost on their B/S. For CDL, it bought a large piece of land at pasir ris for a few tens of Mil around the early 90s. It was recently subdivided into 5 CDL projects and CDL is selling them off with the first two TOP. The revenue from these 5 condo projects are in the billion figures and probably half has been recognized. Bukit Sembawang is another example. It holds freehold land in the vicinity of AMK/YCK and I believe Bukit sembawang values them at the cost of the early years of Singapore when the family was still doing rubber plantation business. There are a lot of untapped valuable land banks in such companies unlike the sovereign linked developers who have to develop their land bank quickly due to reasons you and I can infer/aware of, but can't post here

I think that Pasir Ris farmland was bought before the 90s. When Pasir Ris New Town first started. IIRC.

So is there accounting consistency in this across developer on mark to market? Just curious. Example reits do value their property annually.

City Developement residential landbank all at costs... that is their pride...
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http://www.businesstimes.com.sg/real-est...-investors

Singapore 2nd top Asia destination for China real estate investors
China's cooling market, abundant liquidity and a strong renminbi driving capital outwards: Cushman report

By
Lynette Khoolynkhoo@sph.com.sg@LynetteKhooBT
sgmbskyline1911.jpg From 2008 till June this year, the Chinese pumped US$3.23 billion (S$4.18 billion) into Singapore's real-estate market. PHOTO: SPH
19 Nov5:50 AM
Singapore

THE cooling real-estate market in China has prompted mainland Chinese investors to put their cash to work in overseas properties, with Singapore emerging the second most-preferred outbound destination in Asia after Hong Kong.

Abundant liquidity among developers, investment institutions and wealthy individual investors, supported by a rising renminbi, are also driving the current capital outflow, Cushman & Wakefield said.

From 2008 till June this year, the Chinese pumped US$3.23 billion (S$4.18 billion) into Singapore's real-estate market. Half of that was spent on development sites and nearly a quarter (23.8 per cent) on retail assets, said the property consultancy.

This trails the US$3.84 billion put into Hong Kong real estate by mainland Chinese investors over the same period.

A string of high profile deals by Greenland Holding, China Vanke, Dalian Wanda, Country Garden and Fosun International have drawn attention to the growing presence of Chinese investors in global real estate.

Overall, Chinese investors spent US$33.7 billion on 353 deals from January 2008 to June 2014.

The US$5.1 billion spent in the first half of this year was almost equivalent to the amount spent for the whole of 2012.

The most popular investment models for Chinese investors are greenfield investment and mergers and acquisitions, Cushman & Wakefield said in a recent report.

Private enterprises and individuals accounted for 62.6 per cent of the total value of outbound investments, and state-owned enterprises, 37.4 per cent.

Chinese investors seem to prefer mature markets: The US was the top destination for Chinese real-estate dollars, registering 124 deals worth US$9.72 billion; of this, more than US$7.05 billion was spent in 2013 alone.

This is followed by the UK (US$5.8 billion), which accounted for 62.7 per cent of the total Chinese real-estate investments in Europe.

Cushman noted that the Chinese have also warmed up to South-east Asia, given its proximity to China and its strong presence of ethnic Chinese communities. Malaysia has also emerged a hotspot, with Chinese investors pouring in US$2.07 billion there over the same period.

While Chinese investors are generally drawn to strata-titled offices in Singapore, they prefer land development in Malaysia, Cushman noted.

In Europe, Chinese investors favour commercial real estate.

Shanghai-based, state-owned Greenland stood out for its aggressive moves in recent years, including a US$500 million residential project in Sydney in 2013 and the US$1 billion mixed-use Metropolis project in Los Angeles. Shenzhen-based Vanke teamed up with New York's Tishman Speyer to build a luxury condominium in San Francisco last year.

After Beijing gave the go-ahead to Chinese insurers to invest a percentage of their assets in prime commercial assets, Ping An insurance snapped up London's iconic Lloyd's Building in 2013 for £260 million (S$528 million); China Life jointly acquired a landmark office tower in London's Canary Wharf with Qatar Holding at £795 million this year.

Cushman said it expects the Chinese outbound investment trend to continue, as wealthy individuals and cash-rich companies look further afield to diversify and expand their global presence. Smaller and lesser known firms are also starting to follow the trail blazed by top-tier developers and investors.

The property consultancy pointed out however, that while the impetus for outbound investment among Chinese investors was strong, challenges are in the way. The lengthy approval procedure to transfer large sums of money out of China is "a significant issue" in fast-moving markets, where deals need to be closed quickly.

"Chinese investors also face a steep learning curve with differences in corporate and management cultures, divergent business practices and unfamiliarity with foreign legal and regulatory environments," Cushman said.
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http://www.todayonline.com/business/prop...pply-spike

BY
LEE YEN NEE
leeyennee@mediacorp.com.sgPUBLISHED: 4:03 AM, NOVEMBER 19, 2014
SINGAPORE — Cloudy days are in store for the resilient Grade A office market in Singapore, with rents expected to come under pressure in the second half of next year as competition for tenants intensifies, the manager of Marina Bay Financial Centre (MBFC) and One Raffles Quay said yesterday.

An upcoming avalanche of supply from several mega projects from 2016 will be exacerbated by slowing demand from the financial sector — traditionally the key driver behind premium office rents — amid signs that some international firms are putting their expansion plans on hold as they re-evaluate business strategies, Mr Warren Bishop, chief executive of Raffles Quay Asset Management (RQAM), told reporters.

“Marina One is due to complete at the end of 2016 or in 2017 and Tanjong Pagar Centre in the middle of 2016, so that’s a large amount of space of about 2 million sq ft in the horizon. The question is, when will that begin to affect the market? My best guess is probably towards the end of next year,” he said.

Jones Lang LaSalle estimates close to 4 million sq ft of new office space is expected to be completed in Singapore in 2016, a historical high since 1997 that exceeds the 10-year average island-wide demand of 1.5 million sq ft per year.

“When most tenants consider renewing their leases, they look 12 months ahead … Given that the bigger chunk of space will not come online until 2016, 2017, that won’t affect the market until towards the end of next year, when a downward trend will begin,” Mr Bishop said.
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http://www.bloomberg.com/news/2014-11-12...sales.html

Singapore to Face Fire Sales With Home Curbs, Developer Says
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Judging by the sentiments in recent Auctions. Residential & Industrial sectors are generally dead.
It is a fact in the market now that landlords(residential+Industrial) are forced to lower rent as they vie for tenants. So the single whammy of increased supply is hitting the landlords. Going forward 2015-16, we are likely to see more completed units and a possibility of a interest rate increase. Dark days ahead.

What remains scorching hot right now are HDB shophouses. Rightly so as the number of HDB shops have decreased even as the population increased at a rapid pace the last couple of years. Sadly, I do not own any HDB shops, otherwise I would be a very happy man.
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(19-11-2014, 09:54 PM)Big Toe Wrote: Judging by the sentiments in recent Auctions. Residential & Industrial sectors are generally dead.
It is a fact in the market now that landlords(residential+Industrial) are forced to lower rent as they vie for tenants. So the single whammy of increased supply is hitting the landlords. Going forward 2015-16, we are likely to see more completed units and a possibility of a interest rate increase. Dark days ahead.

What remains scorching hot right now are HDB shophouses. Rightly so as the number of HDB shops have decreased even as the population increased at a rapid pace the last couple of years. Sadly, I do not own any HDB shops, otherwise I would be a very happy man.

I do noticed that HDB shops are highly sought after, especially those with two storey, with live-in space in 2nd floor. I am not sure, but I heard that the restriction is much lesser for those properties amid the current curbs.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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Retail rents in Singapore 7th most expensive in Asia Pacific: Colliers

Business | Updated 18 Nov at 08:02 PM
By Cheryl Ong

SINGAPORE - Singapore remains an attractive destination for international brands and new labels to set up shop, despite steep rents and tough operating conditions, property consultancy Colliers International said on Tuesday.

Still, brick-and-mortar retailers are feeling the heat from the competition posed by e-commerce firms, rising costs, a tighter labour supply and shrinking profits, it added in a report on a study that had looked at 125 retail real estate markets in 50 countries.

Retail rents in Singapore were one of the 10 most expensive in Asia Pacific, coming in seventh place at US$348 per sq ft (psf) a year, the study found.

This was down a spot from its sixth place last year, when retail rents were steeper at US$355 psf a year.

Rents for retail space in Hong Kong's Queen's Road Central were the costliest in Asia Pacific and second most expensive in the world at US$2,073 psf.

Monthly gross rents in the prime shopping belt of Orchard Road were mostly unchanged in the past year at $36.25 psf, just slightly down from $36.38 a year ago.

"Despite the demand for space by new stores and food and beverage outlets, the retail environment is challenging due to rising costs, shrinking profits and a tight labour market," said Ms Chia Siew Chuin, director of research and advisory at Colliers.

But more chains have made their way into Orchard Road the past year, opening shops such as Adolfo Dominguez, Etam, Cath Kidston and Cos.

Mr Simon Lo, executive director of resaerch and advisory, Asia, at Colliers, said that Asian retailers have been competing with the increasing popularity of online firms. But top-tier brands will remain in core city areas, where the supply of new retail space is limited in cities like Seoul and Singapore. This will result in the mid-range labels moving out to decentralised areas, he said.

In Singapore, more suburban malls are expected to open their doors to shoppers over the next year. This includes Waterway Point in Punggol, which has an estimated net lettable area (NLA) of 344,370 sq ft, and Big Box in Jurong East, with an NLA of 260,000 sq ft.

Monthly gross rents for prime retail space on the ground floor in city-fringe malls were $24.35 psf as at Sept 30, up from $23.39 psf a year ago. In the suburban regional centres, monthly rents were $33.72 psf, up a touch from $33.46 a year ago.

"Malls in Orchard Road are facing increased competition from malls in other districts including those in the suburban and regional areas, which enjoy a captive and ready shopper catchment," said Ms Chia. "These malls have proven to be resilient in performance, largely due to this advantage and their close proximity to MRT stations.

Worldwide, New York's Fifth Avenue has the most expensive rents at US$3,550 psf each year. Hong Kong's Canton Road was in third place at US$2,011 psf per year.
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For the past few years, I was hunting and hoping to find a good deal on a HDB shophouse in a not so ulu location but there is none at all. Even the worst locations are actually fetching decent rental from businesses that do not require any traffic. Coffeeshops and supermarkets are bidded to tens of thousands of dollars of rent/mth. A new BTO HDB in woodlands concluded bidding recently and it is >80K/mth for a 300sqm coffeeshop.

I have no idea how profitable the coffeeshop trade is but what I do know is that drinking a cup of kopi there is not going to be cheap. It is beyond my comprehension how it is possible to run a coffeeshop with rent excess of 80K/mth(excluding all other overheads).
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Which leads to the question, are kopitiam used in the same way Italian mafia use pasta restaurants and laundry shops??

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http://www.businesstimes.com.sg/real-est...fice-rents

Tight supply rather than demand driving up office rents
JLL's average Prime Grade A CBD office rent up 19.8% in 2014, double 2013's gain; 7% rise seen in 2015

By
Kalpana Rashiwalakalpana@sph.com.sg@KalpanaBT
sgcbdbuildngf2411.jpg CBD office rents are projected to continue climbing in 2015, albeit at a slower clip in the choicest segment. PHOTO: SPH
24 Nov5:50 AM
Singapore

SINGAPORE office rents have continued to rise this quarter, taking the full-year growth past that for last year, amid shrinking vacancies. (see infographic)

CBD office rents are projected to continue climbing in 2015, albeit at a slower clip in the choicest segment. While the current landlord's market is set to continue next year, there is an air of caution among office-leasing agents.

"We are slightly concerned that the market performance appears to have been driven more by the tightness of availability rather than an abundance of demand," said CBRE executive director (office services) Moray Armstrong.

Since last year, demand has softened. Chris Archibold, head of markets at JLL, said: "Net absorption is low compared to the 20-year average of 1.5 million sq ft; 2013 was 1.2 million sq ft and 2014 looks like it's coming in at about 900,000 sq ft to one million sq ft."

"Financial institutions, which have been the largest contributor to office space demand over the past 10 years, are not expanding and in some cases have been giving up space," he added.

Marcus Loo, executive director of office services at Colliers International, highlighted that "a decent share of the leasing transactions this year stem from firms playing 'musical chairs', moving from one building to another to lower their rental expense.

"Tenants are still trying to come to terms with rising cost of premises, which is forcing some to look at lower-cost alternatives or buildings that would enable better space utilisation".

Looking ahead, CBRE's Mr Armstrong said: "The prospect of slower economic growth would inextricably lead to lower take-up levels."

And with supply continuing to remain tight over the next couple of years, the scene is set for further rent growth in the short term, though downward pressure will start to emerge as the time draws nearer to a big pick-up in office project completions come 2017.

For the fourth quarter of 2014, JLL estimates a 4.2 per cent quarter-on-quarter rise in the average gross monthly rental value for Prime Grade A CBD office space to S$12.44 per square foot (psf). This would be the same pace of growth as Q3 2014 and translate to a full-year increase of 19.8 per cent - double the 9.3 per cent appreciation for 2013.

Colliers International too estimates a full-year 2014 increase of 15.5 per cent for its Premium Grade Raffles Place/New Downtown average rental value, nearly double the 8 per cent growth last year.

Its baskets for various office micromarkets across the island also reflect rent appreciation for Grade A and B space this year. The increases vary widely though, from 3.6 per cent for Grade B offices in Orchard Road to 12.2 per cent for suburban Grade A offices.

Next year, Colliers predicts further rent growth of 11.5 per cent for Premium Grade Raffles Place/New Downtown offices, before the figure tapers off in 2016 with a 0.9 per cent rise. In all other micromarkets, too, the property consulting group forecasts rents will continue climbing next year before either plateauing (for Grade A space in all micromarkets except Shenton Way/Tanjong Pagar) or falling (for Grade B space in all areas) in 2016. In that year, Grade A rents in Shenton Way/Tanjong Pagar are forecast to dip.

Mr Archibold, who expects JLL's Prime Grade A CBD rents to appreciate 7 per cent next year, said: "Rents will continue to go up in the early part of next year because of the low vacancies. There is bound to be some pressure on rents based on the new supply that will be coming in from early 2017. Exactly when that will kick in is difficult to ascertain. However, based on previous history, it would be around 12 months before completion of the next wave of supply."

"This has to slow down rental growth and could potentially have a slightly negative impact on rents," added Mr Archibold.

CBRE estimates a 15.4 per cent full-year 2014 rise in its Grade A (CBD Core) average monthly rental value to S$11.25 psf after last year's 1.8 per cent gain. "We anticipate rental growth particularly in the early part of next year, with the pace of increase likely to slacken later in 2015 as the impact of the upcoming future supply becomes apparent," said Mr Armstrong. Full-year 2015, the increase could amount to 10-15 per cent.

The office rental appreciation has been accompanied by a fall in vacancy rates, reflecting a tightening of supply. CBRE's Grade A vacancy rate has eased from 9.2 per cent in Q3 2013 to 4.3 per cent in Q3 2014.

On the supply front, by some accounts, so far this year the net increase in completed office space (taking into account withdrawal of stock) has amounted to around 970,000 sq ft, with hardly any new offices completed in the financial district.

CapitaGreen and South Beach Tower are expected to receive Temporary Occupation Permit (TOP) by year-end, taking the 2014 net increase in supply to around 2.2 million sq ft - ahead of 1.76 million sq ft in 2013, 1.62 million sq ft in 2012 and 1.97 million sq ft in 2011. However, new completions next year will be just about 350,000 sq ft, followed by 1.3 million sq ft in 2016 before rising to 2.8 million sq ft in 2017.

M+S, the developer of the Marina One and Duo projects, has told BT the estimated TOP dates for the office components of the two developments will be in 2017. Despite the anticipated supply gap next year, some relief is expected from the nearly one million sq ft of offices estimated to become available in 2015 when tenants move out of existing buildings to their new offices, DTZ pointed out in an earlier report.

Net increase in demand in the first nine months of this year has been sluggish at around 760,000 sq ft (based on JLL figures). Full year, the figure could be around 900,000 to one million sq ft, below the 1.4 million sq ft average annual take-up between 2009 and 2013. "Next year, I think demand will be similar to 2014; I do not see demand from the banks coming back in 2015," said Mr Archibold.

Said CBRE's Mr Armstrong: "We will likely be reliant on the key sectors that have been driving the market this year - notably insurance, IT including e-commerce, professional services and Asia-Pacific financial institutions. We are at this stage still applying only hope value to the return of US and European banks to the Singapore office market. . ."

While the current landlord's market will prevail in the short term, a number of landlords are securing longer tenancies that go past 2017 to minimise the impact of new completions. Said JLL's Mr Archibold. "This is being done selectively for sizeable tenants, relative to the size of the building." Tenants are offered more attractive rental rates to encourage them to lock in for a longer lease.

Mr Armstrong, too, said: "Landlords will likely be more motivated by tenant retention in the medium term. We foresee an increase in early restructuring of existing leases possibly with incentives to tie in longer-term lease deals. Landlords that may have future vacancy arising from loss of tenants to new developments will need to be pro-active in order to mitigate against voids."
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