Property news round up 1 Apr 2018

0
68
Singapore office market grade A

Amber Park, Royalville en bloc sales pushing up prices in vicinity

RESALE prices of existing condos and private apartments in District 15, which includes the Katong and Amber Road areas, as well as District 10 have risen significantly following news of the Amber Park and Royalville collective sales last year.

Edmund Tie & Co’s caveats analysis of URA Realis data also showed that in some instances, prices of larger units in the resale market have seen a bigger price hike compared with smaller units.

Analysts say resale prices of existing homes are being driven up by strong demand for replacement homes by cash-flush individuals and families who have sold their homes through collective sales in the nearby areas, among other factors.




Singapore property auction sales in Q1 up 31%

THE number of properties sold in auction sales rose to 11 units in the first quarter of 2018, from eight in the corresponding quarter a year ago.

This was despite the number of new properties put up for sale staying unchanged year-on-year at 63 units in both periods.

The total value of properties sold via auction in Q1 2018 was S$19.97 million, 31.2 per cent higher from S$15.23 million a year ago, and S$9.62 million two years ago, reflecting the positive sentiments and strong demand in the market, Edmund Tie & Company (ET&Co) said in a release on Thursday.

The figures do not include private treaty sales and units transacted before or after the auction.

Need for tie-ups to sew up Holland Rd tender

A KEY talking point about the recent dual-envelope tender for the commercial and residential site near Holland Village MRT Station was the alliances that surfaced.

All 15 entries came from 10 consortiums, with some placing multiple bids. One alliance was between City Developments (CDL) and RB Capital, the first tie-up between the two (more on this later).

Another point of interest was the recently separated partners in the Capitol project – Perennial Real Estate Holdings and (an affiliate of) Pontiac Land – each embracing other parties for the tender.

Pontiac teamed up for the first time with Australia’s Lendlease, while Perennial partnered Qingjian Realty.

Also read: List of new launch projects in Singapore in 2018

Total tab for Mandarin Gardens could hit S$4b

IF the Mandarin Gardens condominium ends in a successful en bloc sale, the buyer could end up with an overall price tag of S$4 billion.

Marketing agent C&H Properties told owners this at a second extraordinary general meeting on Sunday afternoon, where they approved the asking price of S$2.48 billion as well as the method of apportionment.

The owners also approved the collective sales agreement at the meeting held at Touch Centre at Marine Parade Central, according to Nelson Lim, C&H Properties’ key executive officer.




HBL to invest 40m euros in Credit Suisse fund

PROPERTY developer Ho Bee Land (HBL) on Monday said it has agreed to invest up to 40 million euros (S$64.8 million) in Credit Suisse (Lux) European Property Fund II.

It has also committed to co-invest up to an additional 50 million euros by acquiring notes issued by a securitisation company called Clouse SA, Compartment 29.

The fund invests in real estate and investment structures in key cities in Europe. As for Clouse SA, it is a public limited liability company set up in Luxembourg.

The notes are issued through private placement, and the proceeds will be invested in a commercial building complex of about 45,000 sqm next to the main railway station in Munich, Germany.

8M buys shophouses, commercial building for S$82.5m

HOMEGROWN investment property company 8M Real Estate has bagged a portfolio of nine conservation shophouses and a commercial building in District 1 near the Singapore River for a total of S$82.5 million.

The properties are in two clusters – one in Boat Quay/Circular Road and the other along New Bridge Road.

The properties are being sold by Lee Brothers (Wee Kee), which is held by the family of the late Lee Wee Nam, a well-known Teochew businessman, community leader and and philanthropist who set up the Four Seas Bank, which was later sold to OCBC Bank.

He was also a founding member of Boys’ Town as well as the Singapore Chinese Chamber of Commerce and Industry.

Also read: Viva industrial trust analysis

Lian Beng unit heads for Catalist listing

LIAN Beng Group has restructured its businesses and will be spinning off its property development unit, SLB Development, to be listed on the Catalist Board of the Singapore Exchange (SGX).

SLB’s preliminary offer document, out on the SGX on Tuesday, did not as yet contain details on the number and issue price of shares that will be offered.

But Lian Beng’s announcement, out the same day, said that SLB would be the holding company for the companies in the group that are engaged in the property development business in connection with Catalist listing. This gives it a presence both in Singapore as well as China.




Sasseur Reit IPO is more than 3.7 times subscribed

THE initial public offering (IPO) of Sasseur Real Estate Investment Trust (Reit) attracted applications that represented more than 3.7 times the number of available units in the public tranche, ballot results on Tuesday showed.

The offering, which is priced at S$0.80 per unit, comprises 252.8 million placement units and a public tranche of 13.8 million units.

For the public tranche, there were 2,832 valid applications for 51.4 million units that represented some S$41.1 million worth of valid applications.

The company said the placement tranche was oversubscribed by institutional investors.

Sasseur Reit, as Singapore’s first Reit IPO this year, would raise S$396 million in gross proceeds through this listing this month.

This makes it the largest IPO in Singapore to date this year.

SPH, Kajima break ground on landmark Bidadari project

THE first private residential-cum-retail project in the new Bidadari estate will offer some 680 residential units and close to 28,000 sq m of retail gross floor area.

The development – a maiden tie-up between Singapore Press Holdings (SPH) and Japanese developer Kajima Development – will be connected to Singapore’s first air-conditioned basement bus interchange and will also boast a police post and community club.

OrangeTee & Tie and Savills Singapore are the appointed marketing agents for the two to four-bedroom condos in The Woodleigh Residences, while the developers will retain The Woodleigh Mall for recurring income.

Also read: Stay in a mixed development and right beside an MRT at Woodleigh Residences near Bidadari

Kajima hopes to double S’pore revenue contribution

JAPAN-LISTED Kajima Corporation is looking to double revenue contribution from Singapore within three years, mainly driven by construction and engineering contracts.

It is also keen to take part in more joint development projects with Singapore Press Holdings (SPH) here, particularly mixed-use developments

Singapore contributed about 10 per cent of Kajima Corporation’s overseas revenue, which in turn accounted for 24 per cent of total group revenue of 1.33 trillion yen (S$16.5 billion) for the three quarters ended Dec 31, 2017.




Sasseur Reit debuts on SGX mainboard at S$0.805

CHINA outlet mall operator Sasseur Real Estate Investment Trust on Wednesday made its first appearance on the Singapore bourse – opening at S$0.805 per unit, marginally above its initial public offering (IPO) price of S$0.80.

In a filing to the Singapore Exchange (SGX), Sasseur Asset Management, the manager of Sasseur Reit, announced that 1.18 billion units in the trust currently in issue and held by Sasseur Cayman Holding II (Cayman Holdco) were listed on SGX’s mainboard.

BT earlier reported that Sasseur Reit’s IPO attracted applications representing more than 3.7 times the number of available units in the public tranche, according to ballot results on Tuesday.

The offering comprised 252.8 million placement units to investors, and a public tranche of 13.8 million units. An aggregate of 228.4 million units were also issued to cornerstone investors.

Mapletree Greater China Commercial Trust to buy 6 Japan office properties

MAPLETREE Greater China Commercial Trust (MGCCT) Management on Wednesday announced that it has entered into various conditional agreements to acquire a 98.5 per cent stake in a portfolio of six freehold commercial properties in Greater Tokyo, for 60.9 billion yen (S$753 million).

Subject to and upon completion of the proposed acquisition, MGCCT will be renamed Mapletree North Asia Commercial Trust.

DBS Trustee Limited served as the trustee of MGCCT in this deal with vendor MJOF, a private real estate closed-end fund managed by Mapletree Investments Japan Kabushiki Kaisha (MIJ), with Mapletree Real Estate Advisors (MREAL) as the investment adviser.

Also read: Plenty of potential at Jurong Lake District

Singapore prime office rents up 3% in Q1; demand to stay strong: JLL

PRIME office rents in Singapore climbed for a fourth consecutive quarter, rising 3 per cent in the first quarter of this year from the previous three months as leasing stayed active, said JLL in a report on Wednesday.

The increase brings average rents for Grade A office space in the Central Business District to S$9.51 per sq ft (psf) per month, according to JLL’s preliminary estimates.

Rent growth was broad-based across all sectors, with the Marina Bay sub-market continuing to enjoy a competitive edge, it said.

The average monthly gross rent of Grade A office space in Marina Bay rose 3.3 per cent to S$10.84 psf from S$10.49 psf three months ago.




Cushman & Wakefield interviewing advisers for IPO

TPG-BACKED Cushman & Wakefield is interviewing advisers to help take the company public, according to people familiar with the matter.

The century-old real estate brokerage giant could have an initial public offering (IPO) as soon as this year, said one of the people, who asked not to be identified because the matter is private.

The company began holding informal meetings with banks last year about a listing, with any decision on moving ahead to be based both on the company’s performance and market conditions.

Since Bloomberg first reported the talks, Cushman & Wakefield’s closest publicly traded peers, CBRE Group and Jones Lang LaSalle, have climbed 57 per cent and 76 per cent respectively.

Amber Park, Royalville en bloc sales pushing up prices in vicinity

RESALE prices of existing condos and private apartments in District 15, which includes the Katong and Amber Road areas, as well as District 10 have risen significantly following news of the Amber Park and Royalville collective sales last year.

Edmund Tie & Co’s caveats analysis of URA Realis data also showed that in some instances, prices of larger units in the resale market have seen a bigger price hike compared with smaller units.

Analysts say resale prices of existing homes are being driven up by strong demand for replacement homes by cash-flush individuals and families who have sold their homes through collective sales in the nearby areas, among other factors.

Also read: Decline in distribution per unit for Keppel REIT

Singapore property auction sales in Q1 up 31%

THE number of properties sold in auction sales rose to 11 units in the first quarter of 2018, from eight in the corresponding quarter a year ago.

This was despite the number of new properties put up for sale staying unchanged year-on-year at 63 units in both periods.

The total value of properties sold via auction in Q1 2018 was S$19.97 million, 31.2 per cent higher from S$15.23 million a year ago, and S$9.62 million two years ago, reflecting the positive sentiments and strong demand in the market, Edmund Tie & Company (ET&Co) said in a release on Thursday.

Warehouses now worth more than offices, thanks to e-commerce

WHILE China slams the brakes on buying trophy properties and the retail apocalypse draws nigh, something less sexy but striking is going on in real estate.

Warehouses are now worth more than office buildings. Giant, high-tech warehouses, to be precise.

These “big box” affairs are defined as having at least 18,600 square metres and 8.5-m ceilings, in a report by Colliers International Group that calls out the surge in their value.

Colliers looked at 14 North American markets – all but one, Toronto, in the US – and found that such warehouses sold last year at an average capitalisation rate of 5.8 per cent.

That’s comfortably lower than the 6.7 per cent cap rate for US office space, including suburban and rural properties, and neck and neck with offices in central business districts, at 5.7 per cent. Cap rates, which measure yield, fall as asset values rise.




Developers send Q1 property investment sales to new high

A FLURRY of land-banking activities by developers propelled Singapore’s property investment sales market to its strongest quarter in the first three months this year.

Preliminary estimates by property consultancy JLL show that some S$10.84 billion worth of investment deals were sewn up in the first quarter as of March 28 – the highest first-quarter sales on record since JLL started tracking such deals in 1994.

This surpassed the preceding quarter’s high of S$8.34 billion. The residential sector was the star performer in the first quarter with S$8.93 billion, accounting for more than four-fifths of the quarter’s total investment sales value.

record investment salesAre Reits worth considering when rates rise?

WITH interest rates on the way up, an argument can be made for avoiding Real Estate Investment Trusts or Reits.

After all, why opt for a distribution that is not certain, when it is possible to get a guaranteed return from money in the bank.

Right now, it is possible to earn around 1 per cent on US dollar deposits.

And if market estimates are right, another six interest rate hikes by the end of 2019 could lift deposit rates to 2.5 per cent.

However, that enticing interest rate would still be less attractive than the average yields on Singapore and Malaysian Reits of about 6 per cent, even though the payouts could be risker.

The question is whether the juice is worth the squeeze.

Put another way, is the premium worth the risk? Before we address that question, it is worth considering something that is quite salient to Reits.

They must pay out 90 per cent of their income to investors, regardless. The distribution is not discretionary.

If the Reit makes money, then it must pay out most of it to unitholders, if it wants to enjoy a favourable tax status.

Secondly, Reits have often been viewed as a proxy for bonds. But they aren’t the same as those fixed-interest instrument. Unlike bond prices, the share price of Reits doesn’t necessarily fall when interest rates rise. They might even rise.

So, we shouldn’t assume that all Reits could be adversely affected by rising interest rates.

In fact, a Reit’s performance is influenced by two factors, namely, the prevailing credit conditions and the state of the economy.

If either the economy is doing well, or credit is readily available, then Reits should perform well too.

So, unitholders could continue to receive uninterrupted distributions.

But it is important to choose the right Reits – not just the one with the highest yield.

One way to evaluate Reits is to look at how much we are paying for every dollar of profit they make.

With shares, the price-to-earnings can be helpful. But with Reits, the P/E ratio can, at best, be misleading and, at worst, almost useless.

Cash is probably more relevant than earnings, which tend to be complicated by accounting rules that require Reits to depreciate their properties.

Property values tend to rise over time, rather than depreciate.

But general accounting rules require properties to be depreciated over their lifetime.

So, the reported profit number could underestimate the “true” profit. Reits also tend to hang on to their properties for ages.

These assets are carefully chosen to generate long-term income.

In fact, we should probably be a little concerned if a Reit buys and sells its buildings too frequently.

Consequently, Funds from Operation (FFO) can be a better gauge of profit.

It adjusts for depreciation, amortisation, and any gains or losses from property disposals.

Currently, the median Price-to-FFO for Singapore and Malaysian Reits is a high, but not-too-demanding 17. It means that we are paying around S$17 for every dollar of cash generated.

A common problem with comparing different Reits is that it can be a bit like pitting almonds against pistachios.

That’s just nuts.

How do we compare, say, a Reit with prime properties in the Central Business District with another that owns a portfolio of suburban malls?

One useful way is to look at their capitalisation rates.

It is a measure of the annual rental income that Reits generate from their properties.

Currently, the median capitalisation rate for Singapore and Malaysian Reits is around 5.3 per cent.

This means that they could generate roughly S$5.30 of rental income from every S$100 of property assets. It is important to bear in mind that a high capitalisation rate is not necessarily better.

It could mean that a landlord is charging too much rent, which might not be sustainable over the long haul.

Finally, we should never lose sight that Reits are property assets. So, it is important to think of them as such.

We should consider carefully how much we are paying for every dollar of their net assets. One way is to look at their book values.

Since the properties held by Reits are appraised regularly, the book value should provide a reasonable gauge.

Currently, Singapore and Malaysian Reits are, on average, trading at slightly below their book values, though some are trading at quite a hefty premium.

Singapore is the second-largest Reit market in Asia. When combined with the Reits that are available in Malaysia, there are more than 50 that we can choose from. That can be both a blessing and a curse.

Choice is never a bad thing.

Some Reits can be quite outstanding, some are mediocre, while some could disappoint. Focusing on yields may provide instant gratification.

But for long-term investors, considering the sustainability of distributions can be more satisfying over the long haul.

Highest yielding REITS

BT REIT Yields 31 Mar 2018Also read: Jewel of the West and at the doorstep of Jurong Lake District – Twin Vew condo