Latest curbs could see developers lower prices up to 10%
DEVELOPERS may trim prices of new launches by as much as 10 per cent from their earlier indications in response to the latest round of property cooling measures, with high-end homes likely to see bigger adjustments, analysts say.
In downgrading their stock ratings across several developers, some have started pricing in a 5-10 per cent reduction in average selling prices (ASP) in their forecasts, though they note that it is too early for any developer to consider writedowns on their projects yet.
Maybank Kim Eng property analyst Derrick Heng, who has priced in a 5-10 per cent ASP reduction in his projections, said: “While we expect a moderation in EBIT (earnings before interest and tax) margins to single digits for most projects, we do not see any developer losing money.”
Tourism sector growth spree set to continue in 2nd half
THE tourism sector will likely retain its growth momentum in the second half of the year, underpinned by burgeoning travel demand and tourist flows from markets such as China and India.
However, downside risks remain, say industry watchers, including the spectre of a full-blown trade war, which could dampen sentiment.
Overall visitor arrivals for the January to April period are up nearly 7 per cent year-on-year to 6.18 million, preliminary estimates from the Singapore Tourism Board (STB) show.
Cluster near Boon Keng going for S$133.66m
A CLUSTER of freehold shophouses, terrace houses and walk-up apartments at the intersection of St George’s Road and Serangoon Road is on the market, with a reserve price of S$133.66 million.
At that price, owners of the 29 units spanning a 25,621 sq ft site located near Boon Keng MRT, are expected to receive between S$2.3 million to S$10.6 million each.
But a prospective buyer will also have to pay more than the asking price. The tender, which will start on Monday, comes with two conditions: the developer has to get in-principle approval from the Singapore Land Authority (SLA) to purchase some 8,611 sq ft of state land for about S$7.6 million within the boundary of the site. The land, which comprise back lanes and roads, has a plot ratio of 1.4.
After July spike, developers seek clues in next few months
NEW home sales in June dropped almost half from May – but the numbers will jump back up this month with the last-minute buying frenzy the night before a new round of cooling measures kicked in on July 6.
Given the skewed performance in July – over 1,000 units in Riverfront Residences, Park Colonial and Stirling Residences were snapped up on the night of July 5 – market watchers expect the impact of these measures on buying demand to be more clearly felt only in the months ahead.
Such uncertainty has given developers cause for pause, with many reviewing their project launch dates.
Keppel Reit to begin unit buy-back
KEPPEL Reit, which posted flat second quarter distribution per unit (DPU), plans to initiate unit buy-backs to enhance long-term total returns for unitholders of the trust, which its manager believes is undervalued.
In view of the planned buy-backs, the Distribution Reinvestment Plan (DRP) will be suspended, the manager of the trust announced on Monday evening in its results statement for the second quarter ended June 30.
The unit buy-backs will be pursuant to the mandate obtained at the annual general meeting in April this year as part of the manager’s proactive capital management strategy.
UOL unveils deals to beef up its Indonesian hospitality portfolio
UOL Group on Monday announced that it has acquired 180 apartments and ancillary facilities at Thamrin Nine’s Tower 2 for US$56.3 million from Indonesian developer PT Pu-tragaya Wahana. It plans to develop the apartments into a 180-key Parkroyal Serviced Suites.
Located in central Jakarta, Thamrin Nine is a 5.4-hectare mixed-use development – comprising apartments, hotel, offices, retail and other facilities – situated along Jalan MH Thamrin Jakarta Pusat, a prestigious address in Indonesia’s golden triangle.
The site will be directly connected to the upcoming Dukuh Atas MRT Station via an underground link. Constructed in phases, Tower 2 is expected to be completed in 2022. UOL plans to finance the acquisition by internal resources and external borrowings; it added that the purchase is not expected to have a material impact on the group’s net tangible assets or earnings per share for the fiscal year ending Dec 31, 2018.
Soilbuild Reit DPU dips 13.8% in Q2
SOILBUILD Business Space Reit (Soilbuild Reit) has posted a distribution per unit (DPU) of 1.264 Singapore cents in the second quarter, down 13.8 per cent from the same period a year earlier.
Gross revenue fell 13.1 per cent to S$18.7 million, while net property income fell 13.2 per cent to S$16.2 million.
The decline was due mainly to lower income from 72 Loyang Way, lower occupancy at West Park BizCentral, as well as the absence of income from KTL Offshore, which was divested in February.
Two freehold central sites up for en bloc
SUMMER Green is the latest condo to hit the collective sale market with a reserve price of S$48 million.
The reserve price translates to a land rate of approximately S$1,178 per square foot per plot ratio (psf ppr), inclusive of a development charge of approximately S$320,000, for the freehold site with 24 apartments.
Owners at the 13-storey condo off Balestier Road could net themselves about S$2 million per unit. The development, which spans 14,646 sq ft, has an approved plot ratio of 2.8.
US homeowners possess record amount of equity
HOMEOWNERS in the US are sitting on a record amount of equity, but this time they’re stubbornly reluctant to borrow against it.
Strong home price appreciation has handed Americans more than US$5.8 trillion of equity they could be tapping and are not, more than double the level in 2011, according to data provider Black Knight.
At least part of that reluctance stems from rising rates, which means debt carrying adjustable rates will keep growing more expensive.
UK home prices fall for first time in 7 months as London drop intensifies
UK house prices fell for the first time in seven months as sellers adapted to the reality of the weaker market.
Asking prices slipped 0.1 per cent in July from a month earlier, property website Rightmove said on Monday. In London, prices slipped 0.5 per cent, with smaller apartments falling faster than bigger homes.
The reduction in asking prices can “be a sign of a falling market”, Rightmove director Miles Shipside said.
China’s June property investment growth slows to 6-month low
CHINA’S property investment posted its weakest growth in six months in June as developers faced fresh curbs and tighter funding conditions, in a sign one of the economy’s key drivers was losing steam.
Growth in real estate investment, which mainly focuses on residential but also includes commercial and office space, cooled to 8.4 per cent in June year-on-year, compared with a 9.8 per cent rise in May.
This is according to Reuters calculations based on data from the National Bureau of Statistics (NBS) released on Monday.
Hot weekend demand for Sun Hung Kai’s Victoria Harbour flats
HIGH demand and a record local price for Sun Hung Kai Properties units in Hong Kong over the weekend showed that the property market is yet to cool after Chief Executive Carrie Lam unveiled a vacancy tax.
The developer sold 44 of 45 flats at a North Point site on Sunday, varying from studios to two-bedroom apartments.
The prices ranged from HK$10.25 million (S$1.78 million) to HK$21.87 million, based on the maximum discounts offered to buyers.
Impact of latest curbs has Redas seminar abuzz
PROPERTY players are still coming to terms with the surprise cooling measures that took effect on July 6, with various views on their impact aired at Real Estate Developers’ Association of Singapore’s (Redas) property market update seminar for 2018.
While Redas sees the heftier additional buyer’s stamp duty (ABSD) on developers as a “big setback” for the property market here, JLL sees moderate price growth ahead for property prices and demand being able to match supply in the years ahead so long as launches are paced “sensitively”.
Redas president Augustine Tan warned on Tuesday that cooling measures that kicked in on July 6 raised the cost of home ownership and cooled demand from investors and foreigners.
First Reit Q2 net property income up 5%; DPU at 2.15 cents
CONTRIBUTIONS from First Reit’s latest assets – Siloam Hospitals Buton & Lippo Plaza Buton and Siloam Hospitals Yogyakarta, acquired in 2017 – as well as from the existing properties lifted results for the healthcare real estate investment trust, in its second quarter.
Distribution per unit (DPU) edged up to 2.15 Singapore cents from 2.14 Singapore cents in the year-ago period, the group said in a Singapore Exchange filing on Tuesday evening. That came as Q2 income available for distribution crept up 1.6 per cent to S$16.9 million from the preceding year.
For the three months ended June 30, gross revenue increased 5.3 per cent to S$28.9 million from the previous year. Net property income increased 5 per cent to S$28.5 million from the preceding year.
Keppel-KBS US Reit’s Q2 DPU surpasses forecast
KEPPEL-KBS US Reit’s second-quarter distribution per unit (DPU) crept up to 1.5 US cents from its forecast of 1.49 US cents, it said on Tuesday.
This was despite a drop in rental from a tenant at Westmoor Center in Denver, Colorado, which vacated the premises ahead of its lease expiry.
That said, the tenant had paid a compensation fee in the first quarter of 2018 which the trust said will be used to offset the drop in rental income and maintain distribution from the second to fourth quarter of 2018 until the replacement tenant starts contributing cash rental income from December 2018.
Keppel DC Reit DPU up 4.6%; KIT DPU stable in Q2
KEPPEL DC Reit has posted a second-quarter distribution per unit (DPU) of 1.82 Singapore cents, up 4.6 per cent from the same period a year earlier.
The higher distributable income was due mainly to higher contributions from maincubes data centre in the Frankfurt region and the assets in Singapore and Dublin. However, this was partially offset by the absence of the one-off capital distribution in relation to Keppel DC Singapore 3 in Tampines, lower contribution from Basis Bay data centre in Malaysia, as well as higher finance costs and manager’s fees.
Gross revenue in the three months ended June 30 jumped 21.5 per cent to S$41.9 million. Net property income jumped 21.4 per cent to S$38.1 million.
CDL takes another green step forward
CITY Developments Limited (CDL), announced that it will have its carbon reduction targets assessed and validated by the Science Based Targets Initiative (SBTi), making it the first local real estate company to do so.
This move is part of its accelerated climate change strategy amid the backdrop of Singapore’s impending 2019 carbon tax and the global transition to a low carbon economy.
The SBTi, which is fast becoming a standard business practice among top global companies, helps companies to establish and validate science-based carbon reduction targets aligned with the drive to limit global warming to below 2 deg C, as set out by the Paris Agreement.
‘Amazon effect’ turns warehouses into London’s hottest properties
NEVER mind West End shopfronts and Mayfair offices. The big money in London real estate is chasing small warehouses.
Rents for the dwindling amount of industrial space inside cities are soaring as online retailers like Amazon.com seek local hubs to cut delivery times.
That, in turn, is luring some of the world’s largest investors, from Blackstone Group to Singapore’s GIC.
The so-called “Amazon effect” first reached big-box warehouses, those located outside of town that can span the size of 15 football fields.
CapitaLand bags 4 awards, DBS strikes ‘royal flush’ at Singapore Corporate Awards
MAINBOARD-listed CapitaLand was one of the biggest winners at the 13th annual Singapore Corporate Awards (SCA) on Wednesday, alongside DBS Group, which was conferred the Special Recognition Award for its “all-round excellence in corporate governance”.
This year, 34 companies and six individuals were honoured for their exemplary performance in corporate governance and shareholder communication. The event, often dubbed as the “Oscars” of the Singapore business world, was held at the Resorts World Convention Centre.
In a welcome address, Kelvin Tan, a council member of the Institute of Singapore Chartered Accountants (ISCA), quipped that DBS had struck the “royal flush” – being the first company to have won in each of the five categories of awards from 2013 to 2017. The five are the Best Managed Board, Best Chief Executive Officer (CEO), Best Chief Financial Officer (CFO), Best Investor Relations and Best Annual Report.
Toll group’s S$228m hub takes logistics to new level
AUTOMATION and efficiency are at the heart of the Tuas-based Toll City, the S$228 million logistics hub officially launched on Wednesday.
Located near road links to Malaysia and the growing Jurong region, it is expected to improve Toll’s Asia Pacific network and traffic.
The hub, spread 100,000 sq m, boasts innovation aimed at increasing efficiency.
For example, its dedicated healthcare logistics hub includes Unmanned Aerial Vehicles (UAVs) and Automated Guided Vehicles (AGVs) replacing forklifts to rack and transport goods at the warehouse.
Kentish Green joins en bloc fray
KENTISH Green on Oxford Road has joined the roster of developments here trying for a collective sale.
Owners are asking for a reserve price of S$230 million for the site spanning 59,143 sq ft. The 122-unit condo is close to Farrer Park MRT Station. At this price, a sale would net each owner between S$1.736 million and S$2.086 million.
The site can be redeveloped to accommodate 219 to 259 apartments with a small commercial component.
Marketing agent ERA Realty said that one draw could be an upcoming Russian Cultural Centre to be built at the neighbouring Rangoon Road, which it believes will drive demand for accommodation and retail activity in the area. Work on the cultural centre is expected to start sometime later this year, a Russian embassy representative confirmed with The Business Times.
Indonesian central bank aims to revive country’s sluggish property market
AS Indonesia’s central bank drives up interest rates to defend a fragile currency, its governor Perry Warjiyo is banking on a revival of the sluggish property sector to maintain growth momentum in South-east Asia’s biggest economy.
Five years ago, luxury Indonesian apartment prices skyrocketed amid a commodities boom, during which wealthy buyers paid for their properties with cash upfront. The end of the boom, slower economic growth and rules to curb property speculation put the brakes on that.
Now, the authorities want to encourage buying. From next month, Bank Indonesia (BI) will scrap its 15 per cent minimum mortgage downpayment for first-time homebuyers and relax rules on loan disbursements in a bid to support listless credit expansion.
4 shophouses opposite Singapore Khalsa Association for sale
A ROW of four adjoining freehold conservation shophouses at Nos 15, 17, 19 and 21 Tessensohn Road have been put up for sale together, with a reserve price of S$25 million.
This works out to S$1,399 per square foot on the allowable maximum gross floor area (GFA) of 17,873 sq ft. This figure does not include any development charge that may be payable to the state.
The properties comprise four individual land titles with a total site area of about 5,958 sq ft. Under the Urban Redevelopment Authority’s Master Plan 2014, the site is zoned residential with commercial at first storey, with a gross plot ratio of 3.0.
Nature to play big part in future HDB estates
HOUSING Board estates and nature are set to be intertwined under an updated framework that will be progressively applied to new housing projects from this month.
The Biophilic Town Framework, introduced in 2013 and refined through collaboration with the National University of Singapore, goes beyond just providing greenery for residents.
Instead, it incorporates a holistic assessment of how the landscape and residents can benefit from natural ecosystems during the planning and designing process of an HDB estate.
AEW boosts Singapore office exposure
AEW is increasing its presence in the Singapore office market. The US-based global institutional property investment manager is understood to be the buyer of 55 Market Street in the traditional Raffles Place financial district.
Last week, vendor Frasers Commercial Trust (FCOT) announced the S$216.8 million sale of the 16-storey building but did not name the buyer. This is the second Singapore office asset AEW clinched in less than two weeks. In late June, it entered into a deal to buy Twenty Anson from CapitaLand Commercial Trust (CCT) for S$516 million. CCT in its announcement of the sale also did not name the buyer.
Market watchers say the acquisition prices seem to be on the high side, translating to low entry yields.
Daintree Residence to launch for sale on July 28
ALL eyes will be on Daintree Residence when it launches for sale on July 28 – the first condominium to do so since the latest round of cooling measures came into effect.
But the pricing has left analysts divided: the Toh Tuck Road condo will likely go in the region of an average of S$1,800 per square foot (psf), Neo Keng Hoe, general manager for the developer SP Setia, told The Business Times.
Previews began last weekend, with 3,000 people coming through the showflat. These include upgraders and young families, Mr Neo said.
There is a lack of new launches in the area in the last few years, he said. The last was the retirement resort project The Hillford in 2014. Proximity to the Beauty World MRT and schools in the Bukit Timah area will also likely boost homebuyer demand, he added.
Chip Eng Seng, Lum Chang have new ventures
DEVELOPERS cum construction firms Chip Eng Seng and Lum Chang on Friday announced acquisitions of new businesses in education and healthcare respectively.
Chip Eng Seng said that its subsidiary has signed a sale and purchase agreement with an affiliate of private equity firm Navis Capital to acquire 70 per cent of White Lodge Education Group Services for S$13.3 million in cash.
White Lodge currently operates a chain of pre-school centres in Singapore and Malaysia. Since its inception in 1999, White Lodge has expanded from one pre-school centre in Bukit Timah, Singapore, to seven pre-school centres in Singapore and two pre-school centres in Malaysia.
CapitaMall Trust ups Q2 DPU after sale of Sembawang mall
CAPITALAND Mall Trust is handing out a higher second-quarter distribution per unit (DPU), after the recent sale of Sembawang Shopping Centre.
DPU came in at 2.81 Singapore cents for the three months to June 30, or a 2.2 per cent increase over the same period the year before, the manager said on Friday. Net property income grew by 2.8 per cent to S$120.8 million, on a 1.6 per cent rise in gross revenue to S$171.4 million.
Tony Tan, chief executive of the manager, said in a statement that the real estate investment trust (Reit) “overcame soft market conditions to deliver another set of stable results”.
Pinetree Condo at Balmoral Rd up for collective sale with S$148m reserve price
PINETREE Condominium in the upmarket Balmoral Park enclave has been put on the collective sale market with a reserve price of S$148 million.
At that price, each owner in the 50-unit freehold District 10 development stands to receive between S$2.57 million and S$4.09 million, said SLP Scotia, the marketing agent for the deal.
The development sits on 41,276 square feet (sq ft) of land and consists of predominantly three-bedroom units measuring between 1,162 sq ft and 1,851 sq ft.