Rising interest rates, sale of Rivervale mall by AEW and other property news you need to know

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The interest rate on mortgages is now 50% higher than a year ago as 3-Month SIBOR continues its upward trend. The 3-month SIBOR is now ~2%, up from 1.4% 12 months ago . The last time the benchmark hit 2% was in 2007. As a result, mortgage costs have increased 0.8-0.9%pts YoY to 2.3-2.4%. Next month, the rate for DBS’ most popular fixed home rate mortgages – which pegs the home loan to the banks S$FD – will go up by 40bps, following a 15bps hike in Dec-18. OCBC Bank in Dec-18 announced average hikes of 55bps across the board effective Jan-19. This followed a 30bps hike on selected mortgage packages in Aug-2018. UOB was the first among the three local banks to raise its Singapore dollar fixed deposit (FD) rates in 2019. As a result, UOB borrowers with mortgages based on FD rates will see sharp hikes in their monthly instalments by as much as 70bps. (Source: The Business Times)

AEW has sold Rivervale Mall in Sengkang for S$230m to SC Capital Partners, according to news sources. The price works out to S$2,833 psf on NLA of 81,193 sqf with a net yield of slightly more than 4%. AEW bought Rivervale Mall in late 2015 for S$190.5m from CapitaLand Mall Trust (CT) and did some renovation works in the second half of 2016. Located at the corner of Rivervale Crescent and Rivervale Drive, the mall is on a site with 99-year leasehold tenure starting 6-Dec-97; this translates to a balance land lease of nearly 78 years. (Source: The Business Times)

Sales of new private residential launches have generally been subdued in the past two weekends. Florence Residences in Hougang sold ~60/1,410 units at nearly ~S$1,400 psf. In contrast, Affinity at Serangoon, in a slightly better location, sold 112 units during its first weekend in Jun-18 at S$1,575 psf. By some estimates, more than 40 projects totaling some 18,000 units could be launch ready this year, though some could flow into next year . Meanwhile commission rates for property agents are going up. For new launches, it is becoming increasingly common for developers to offer commissions of 2-3%, compared with about 1.5% or less early last year , which would be beneficial for agents, assuming they do not share a portion of the commission with buyers. However, developers have been standing pat on pricing given little room for bargain hunting as most have paid higher land prices. (Source: The Business Times)

CORPORATE NEWS

Frasers Property Limited (FPL) has incorporated a wholly-owned subsidiary, Frasers Property Investments (Bermuda), for investment holding. ( Source: Frasers Property Limited)

SECTOR NEWS

139 Cecil Street up for sale again after an 18-month asset enhancement (AEI), which increased the number of floors of the building to 16 from 11. The 85,000 sqf office building is fully leased to Campfire Collaborative Spaces, a Hong Kong based co-working space, for six years. The property, formerly known as Cecil House, was unsuccessfully put up for sale in April 2017 with an indicative price of S$210m. It is owned by Ececil, a JV between Vibrant Group and DB2 Group. (Source: The Business Times)

Mandarin Gardens raises en-bloc asking price by 5% to S$2.927b (S$1,250 psf on ppr), up from the previous asking price of S$2.788b (S$1,191 psf), in order to secure the 80% consensus required from owners, which has risen 3% pts to 67% following the previous price hike. Consent must be secured before the collective sales agreement (CSA) expires by 24 March. Several tenders have closed without a bid, including for Grange Heights, while Spanish Village is in the process of lowering its reserve price to S$828m from S$882m. Another mega site, Dairy Farm estate, also raised its reserve price by 9% to S$1.84b, with 71% signed, ahead of the expiry of its CSA on 6 Apr. (Source: The Straits Times)

Indonesian real estate developer Lippo Karawaci has secured US$1.01b in funding via a rights issue and asset divestments which will be used to partly pare debt, while putting in place a new management team as part of its broader transformation programme. LPKR said the rights issue – targeting proceeds of US$730m- is underwritten by the billionaire Riady family. Another US$280m will come from asset divestments, including the sale of Lippo Mall Puri to Lippo Malls Indonesia Retail Trust. (Source: The Business Times)

The Great Room to open 15,000 sqf co-working space at Raffles Hotel , occupying one wing of the six-star hotel after it reopens following a major refurb later this year. The Great Room currently charges S$2,500 for a seat in a dedicated office at its current locations, 20% higher than competitors’, and expects memberships to be even more expensive at Raffles Hotel. (Source: Bloomberg)

Singapore retail sales increased 7.6% YoY in Jan-19, beating analysts’ expectations for a 2.6% increase. The Jan-19 increase followed 2 consecutive months of declines in Nov/Dec-18. The increase was driven by higher car sales (+20% YoY), partially due to the Singapore Motor show. Analysts also added the rise was due to the low base in Jan-18. Excluding Motor Vehicles, retail sales rose 5.3% YoY in Jan-19 driven by strong growth of wearing apparel and footwear (+10.5% YoY), Medical goods (+9,3% YoY), Department stores (+8.9% YoY), Supermarkets (+8.8% YoY), and Food retailers (+8% YoY). However, computer and telecommunications equipment revenue slid 11.5%, due partly to lower demand for mobile phones. Online sales comprised 4.8% of total sales. (Source: The Straits Times)

Singapore resale condo prices up 0.5% MoM in February , after two consecutive months of decline in December and January, led by mid-end (+0.8%), followed by mass market (+0.5%) and high-end (+0.2%), according to SRX Property. YoY, prices are up 4.6%. (Source: The Business Times)

Resi resale condo transactions fell 7.8% in 2018 to 11,215 units due to a 47% HoH plunge in volumes in 2H18. Almost half (49%) the transactions came from the mass market, with the mid-end (30%) and high-end (20%) making up the remainder. Edmund Tie expects resale volumes for non-landed properties to moderate in 2019 due to competition from new sales. (Source: CommercialGuru)

ECONOMY NEWS

Singapore has been ranked the second top city in Asia for work and recreation, according to the Economist Intelligence Unit’s (EIU) report entitled “The 2019 Bleisure Barometer”. The city-state received a score of 4.05 and is among five countries that got five stars for business and leisure. Meanwhile, Tokyo was named as the best bleisure destination in Asia out of 26 cities in the region. (Source: Commercial Guru)

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