High-end homes shine in sub-sale market

The sub-sale market in the high-end residential segment was abuzz in the second quarter, both in terms of price gains and activity, as those who bought units earlier took the opportunity to sell them for a tidy profit.

DTZ Debenham Tie Leung’s latest analysis of caveats shows the median price of private apartments and condos that changed hands in the sub-sale market in Q2 jumped 37 per cent from Q1. The median price rose from $598 per square foot in Q1 to $822 psf in Q2.

This was the highest level since $830 psf a decade ago in Q2 1996 at the peak of the property market, according to the firm’s analysis of caveats captured by the URA Realis database.

Subsales essentially refer to cases in which buyers who bought from developers sell in the secondary market prior to the project receiving Certificate of Statutory Completion. The certificate is typically issued about a year after a project receives Temporary Occupation Permit.

Sub-sales – often seen as a proxy of the level of speculative activity in the property market – were transacted largely for apartments/condos in the higher price brands in the April-June quarter this year, DTZ says.

The two highest price bands DTZ used in its five-tier analysis – units costing $1 million to less than $1.4 million, and units priced at $1.4 million and above – accounted for 44 per cent of total sub-sale transactions in Q2.

These two price bands posted respective quarter-on-quarter increases of 73 per cent and 23 per cent in the number of sub-sale deals. There was also a 60 per cent quarter-on-quarter rise in number of sub-sales of units costing $800,000 to less than $1 million.

DTZ attributes this partly to strong interest in exclusive projects that were either completed recently or are nearing completion – such as The Pier at Robertson along the Singapore River, and The Berth By The Cove at Sentosa Cove.

‘People who want to buy homes for owner occupation or for investment with immediate rental income flow tend to prefer a unit that is nearing or has received Temporary Occupation Permit,’ says DTZ executive director Ong Choon Fah.

She also points to sub-sale interest in popular projects such as Icon in Tanjong Pagar, The Berth by The Cove and The Sail @ Marina Bay (first tower) that were launched by developers a few years ago at prices lower than those of similar projects released recently.

For instance, Ho Bee launched The Berth by The Cove in late 2004 at an average of $785 psf. Condo units there today would be worth more than $1,000 psf, property agents say.

DTZ says: ‘With the price recovery in high-end residential projects, those who bought units earlier in such developments have been able to benchmark the value of their properties against the newer projects.

‘This has created an opportunity for them to sell their units in the sub-sale market to the increasing number of buyers who are keen on such high-profile exclusive projects.’

DTZ’s analysis shows that while there was a pick-up in sub-sale deals in the higher price bands in Q2, activity in the two lowest price tiers declined from the preceding three months. As a result, the total number of apartments and condos sold in the sub-sale market for Q2 – at 115 – was hardly changed from the Q1 figure of 113.

Buyers with HDB addresses continued to account for a lower share of the number of sub-sale deals for private apartments and condos, down to to 23 per cent in Q2 from 38 per cent in Q1.

The firm also notes that the number of sub-sales continued to remain relatively low in Q2 – at 2.8 per cent of the total 4,096 apartment and condo transactions in the quarter.

‘Going forward, while sub-sales will still be significantly lower than the levels between 1996 and 1999, the momentum for the sub-sales market is expected to strengthen on the back of the recovery of the high-end residential market and several high-profile projects that are expected to be launched,’ DTZ says.

‘These will boost median prices of apartments/condos transacted in the sub-sale market. In addition, a strong take-up for these forthcoming high-profile launches may also lead buyers who are unable to secure a choice unit to remain interested in the sub-sale market for several top-quality projects which have been previously released at lower prices.’

Source : Business Times – 29 Aug 2006

PUB to help defray cost of private sewer repairs

PRIVATE property owners may soon have to pay to repair leaky sewers on their premises, Minister for the Environment and Water Resources Yaacob Ibrahim said yesterday.

‘About half of the sewers in Singapore are private sewers that perform the function of channeling used water from individual premises into the public sewers,’ Dr Yaacob said.

‘Used water that leaks out will find its way into the water bodies . . . creating aesthetic and possible health problems.’

The Public Utilities Board (PUB) will conduct free checks on the condition of private sewers, he said. ‘Should repairs be needed, PUB will help to defray part of the costs.’ PUB’s director of policy and planning Tan Yok Gin said the cost will vary widely, depending on the scale of repairs involved and the amount of subsidy from PUB.

‘For landed premises we expect them to cost maybe about $2,000 and for high-rise buildings, it may cost around $20,000,’ he said. ‘But anyway, these are just estimates because until we actually get the work carried out we don’t really know how much it will cost.’

PUB said that for an average high-rise building with 100 units, the estimated per-unit cost should repairs be required would be $200. The amount of subsidy will depend on the length of the affected sewers, Mr Tan said.

He said that under the Sewerage and Drainage Act, owners are responsible for maintaining sewers on their property. Work will begin in the Rochor canal area because the sewers there are some of the oldest in Singapore, he added.

Source : Business Times – 29 Aug 2006

Making a quick profit from good class bungalows

Some rich people are getting richer by selling their new Good Class Bungalows (GCBs) for a quick profit.

An analysis of caveats by Savills Singapore revealed that eight such properties were bought and resold at an average profit of about 20 per cent in the past 12 months.

And considering that GCBs now easily cost upwards of $10 million, the investment returns are attractive.

A caveat is a legal document lodged with the Singapore Land Authority by a purchaser to protect his/her interests after an option to purchase is exercised or a Sales & Purchase Agreement is signed.

According to the caveats lodged, one GCB in Peirce Road was bought eight months ago for $4.3 million and resold three months later for $9 million.

Another in Queen Astrid Park was bought for $12.5 million and resold a month later for $16 million.

Steven Ming, director of Savills’ GCB arm Prestige Homes, said the number of ‘quick sales’ has increased since the property market started to pick up but added: ‘A point to note is that it does not make up a lot of transactions.’

GCBs are located in designated areas, mostly in District 10, and have to be on a plot of at least 15,000 sq ft. There are about 2,500 such homes here.

Savills’ analysis did not include detached houses on plots of less than 15,000 sq ft. As such, it does not include the many new houses coming up at Sentosa Cove or ordinary detached houses that may sit on land as small as 4,300 sq ft up to 15,000 sq ft.

Mr Ming estimated that about 10 per cent of recently transacted GCBs have been bought and resold within a year, with an increasing number bought by permanent residents. So far this year, there have been 68 transactions.

The ‘quick sales’ – Mr Ming believes ’speculation’ is too strong a word – can mostly be attributed to opportunistic selling.

‘Some buyers went into the market one or two years ago without anticipating that prices would increase,’ he said.

But with his 12-month projection of a further 10-15 per cent increase in prices for GCBs – similar to that for high-end condominiums – more may see GCBs as a lucrative investment.

Giving an insight into GCB buyers, Douglas Wong, associate director of Knight Frank’s GCB arm Regal Homes, said the pool of buyers is very small.

‘There are probably between 800-1,000 such buyers and many of them own more than one GCB. Some own three to four,’ he said.

Mr Wong also believes that ’speculator’ is not the right term for these investors. ‘They are not really speculators because it’s not easy to speculate in this segment,’ he said, referring to the big price tags.

Mr Wong, who has been in this market for close to 10 years, believes that these buyers are long-term investors.

Still, he too has seen some ‘quick sales’ recently, saying that one GCB in the Nassim area was recently sold for $15 million by a buyer who paid $9.8 million for it a year ago.

Perhaps the surest sign that the GCB market is hot must be that the first collective sale could take place soon.

Credo Real Estate is marketing a 26,254 sq ft GCB site in Bin Tong Park, and Credo managing director Karamjit Singh said the owners of the neighbouring GCB are keen to cash out too, so much so that they are prepared to either sell part of their own land or even the whole plot as a ‘collective sale’.

The two GCBs combined could yield enough land for a total of three GCBs, so even if the present owners choose to stay, they could sell one house for $11-13 million.

Mr Singh estimated that the potential return on such a development could be 20-30 per cent, ‘which is not bad’, he said.

Source : Business Times – 28 Aug 2006

OCBC enters reverse mortgage fray

Catering to the needs of Singapore’s ageing population, OCBC Bank has become the first bank here to offer reverse mortgage loans, joining pioneer, NTUC Income, which has been offering such loans for several years. A reverse mortgage is a special type of loan homeowners can take against their home, which enables them to convert their home-equity into cash.

Other banks here have no immediate plans to offer reverse mortgages – and some bankers think there is not much demand for the product.

Tan Chia Seng, Citibank Singapore’s business director for secured assets group, said: ‘As our existing suite of mortgage offerings meets the needs of our customers, we have no immediate plans to introduce reverse mortgage packages.

‘The feedback from our regular conversations with customers, either directly or via market research, indicates that customers who may have a need to unlock the cash value of their properties usually prefer to do so by downsizing to smaller properties.’

Koh Kar Siong, managing director of secured loans at DBS Bank, said: ‘We have been monitoring the development and business opportunity closely. There are currently more popular alternatives available to the older homeowners who require cash.’

Mr Koh said older homeowners can, among other things, consider taking out mortgage term loans, downgrading their property, sub-letting or renting.

Kevin Lam, head of the loans division at United Overseas Bank, said: ‘We will monitor the demand for reverse mortgages.’

NTUC Income, which introduced a reverse mortgage scheme for private properties in January 1997, has about 350 reverse mortgage policy-holders for private properties. In March, following the government’s announcement to allow HDB flat owners to obtain reverse mortgages, NTUC Income started to offer such mortgages for HDB flats. And so far it has approved 10 such mortgages for HDB flat owners.

Melissa Yam, senior manager at NTUC Income, said: ‘Reverse mortgages allow our customers to continue to stay in their homes, enjoy capital appreciation on their property and help them cover day-to-day expenses.’

OCBC’s scheme is for private properties, and there are term-based and annuity-linked options.

For the term-based option, customers receive a monthly payout for up to 25 years or when they reach 90 years of age, whichever is earlier. The bank has the right to sell the property at the earlier of the end of the term of the loan or when a customer reaches 90.

Those concerned about outliving the payouts can choose the annuity-linked option, under which monthly payouts continue until death.

The term-based and annuity-linked options are priced at annual interest rates of 5 per cent and 4.88 per cent respectively. These rates are not guaranteed and can change over time, depending on how interest rates here move.

Taking the maximum financing quantum of 70 per cent on a property valued at $500,000 and free of encumbrances, the monthly payout is $823 for a 20-year loan. Using the same example, the monthly payout is $670 during the first 10 years and $557 subsequently under the annuity option.

‘We recognise that with longer life expectancy, many senior citizens are concerned about the rising cost of living and reduced income streams during retirement,’ said Gregory Chan, head of consumer secured lending at OCBC, who sees reverse mortgage loans providing an additional option for senior citizens.

‘We don’t see a big influx into reverse mortgages,’ he said. However, he believes the time is right to launch the reverse mortgage product because there is now greater awareness of retirement planning. Mr Chan thinks reverse mortgage loans can be useful for Singaporeans who are asset rich but cash poor. To be eligible for a reverse mortgage loan from OCBC, applicants must be Singapore citizens or permanent residents, aged 65 years and above and must own or co-own a private property with a remaining lease of at least 45 years at the end of the loan tenure.

Customers who might want to change their mind about reverse-mortgaging their property can unwind the arrangement by repaying the bank in full the money received from the reverse mortgage. A penalty fee of $500 is payable should this happen in the first five years of the reverse mortgage.

Source : Business Times – 28 Aug 2006

Some older private apartments going for below $400,000

IF YOU ARE scouting around for a two- to three-bedroom apartment and think you can afford only a Housing Board (HDB) flat, it is time to think twice.

Property agents say there are many old private apartments selling for about the same price as a large HDB flat.

But these are typically older, 99-year leasehold properties located in far-flung corners of Singapore such as Bukit Panjang, Loyang and Jurong. They also tend to be in fairly large developments.

For example, in June, a 1,485 sq ft unit in Loyang Valley condominium in Loyang Avenue was sold for the fairly modest price of $320,000. That translates to about $215 per sq ft (psf) for a three-bedroom unit in a project which has a lease of about 75 years left.

‘It’s a very reasonable price,’ said PropNex Realty’s senior division director, Mr Eric Cheng. ‘A lot of people are focusing on freehold properties and neglecting the 99-year leasehold ones. But when the market picks up, prices of leasehold properties will also rise.’

Average prices of a three-bedroom unit at the 362-unit Loyang Valley are about $380,000 to $420,000, which translates to less than $300 on a psf basis, he said.

This compares with about $390,000 on average for a 1,572 sq ft to 1,625 sq ft executive HDB flat in Pasir Ris.

In fact, an executive HDB flat in Pasir Ris was sold for $440,000 in June. ‘The monthly maintenance fees for large, older projects are usually around $200 to $250 on average. It is not very much more than the combined service and conservancy charges and parking fees for an executive flat,’ said Mr Cheng.

Over in the Bukit Panjang area, the 636-unit Maysprings condominum in Petir Road also has units going for less than $400,000. In June, a 1,291 sq ft unit there was sold for $380,000 or about $294 psf.

It is easier to find cheaper apartments in bigger projects simply because there is more competition among the sellers.

Bargains can be found in quality projects, which are sometimes small ones. But these properties are likely to be old, in a not very convenient location or in a less desirable residential neighbourhood such as Geylang, agents said.

Bayshore Park, for one, may have some bargain apartments, said Mr Colin Tan of property consultancy Chesterton International. While it is a fairly old property with about 75 years left on its lease, it has spacious grounds and sea views from units on the higher floors, he said.

Other fairly large projects that may turn up some bargains include the 950-unit Parc Oasis at the junction of Boon Lay Way and Jurong Town Hall Road and the 645-unit Regent Heights in Bukit Batok.

Ageing 99-year leasehold apartments remain attractive to those who are keen to soak up the lifestyle of a private home but have a limited budget, agents said.

‘If you get a private apartment instead of an HDB flat, you may have to compromise on amenities such as food outlets and accessibility but you gain on privacy and facilities such as swimming pools,’ said Mr Cheng. ‘If you don’t mind the compromises, there are a lot of good buys out there. You just have to look around.’

Source : Sunday Times – 27 Aug 2006

Sentosa Cove bungalow plots sold at record highs

PRICE records were smashed yesterday when buyers paid between $5.56 million and $8.15 million for 12 prized bungalow plots in exclusive Sentosa Cove.

The much-anticipated auction attracted about 400 people and bidding was frenzied, especially for some of the more prized plots facing the ocean.

Bids could be made at increments of $20,000, but some impatient buyers upped their offers by far bigger amounts with one even raising his offer by $500,000 in one go.

One local buyer managed to land two adjoining plots, an afternoon’s buying that set him back about $14.8 million.

Most of the 12 buyers were from Singapore with four from Malaysia, Indonesia, India and Myanmar. Mr Tony Phua, the chairman of furniture company Da Vinci Holdings, is understood to be another of the local buyers.

Auctioneer Grace Ng from property consultant Colliers International, which conducted the sale with Christie’s Great Estates, knew what was driving the high level of interest. The buyers are buying a waterfront lifestyle in a secure gated community, she said.

For the first time in a property aution here, proceedings were webcast live to registered bidders in Australia, London, Indonesia, Hong Kong and Malaysia.

The record prices were set on a square foot basis and varied according to the size of the plots – all 99-year lease – and ranging from 6,927 sq ft to 11,124 sq ft. These even topped prices of good class bungalows, the most prestigious class of bungalows here.

A local buyer paid the highest price – $1,039 per sq ft (psf) for a 7,841 sq ft plot, easily trumping the previous high of $500 psf set last year, Sentosa Cove said in a statement.

The absolute price set the buyer back $8.15 million. He also bought a 8,089.5 sq ft parcel next door for $6.68 million or $826 psf. His desire to amalgate the plots probably explained the record $1,039 psf bid, said Ms Ng.

The largest plot was one facing the water canals and went for $7.3 million or the lowest psf price of $656.

But buyers also earned a special bonus: free membership of the nearby One 15 Marina Club, which currently costs $30,888.

The stock market soon got wind of the keen interest and sent the shares of niche developer Ho Bee Investment three cents higher to 91 cents.

Ho Bee has several Sentosa Cove projects, including condominum units in The Baywater Collection site and bungalows on Paradise Island.

‘In the next three years, most of Ho Bee’s income will come from Sentosa Cove. Its shares will benefit every time prices in Sentosa Cove reach a new high,’’ said Sias Research analyst Roger Tan.

The 12 plots sold yesterday are the first batch to go from Sentosa Cove’s southern precinct, which comprises 156 bungalow plots and four condominium plots for 972 homes.

The tender for the last two condominium plots in the northern precinct closes next month.

Source : Straits Times – 26 Aug 2006

More owners try to stop sale

THE number of applications to the Strata Titles Board from home owners hoping to block the collective sale of their estate has shot up this year.

In 2004, there were 10 applications, and the number rose to 14 last year. So far this year, the figure has already more than doubled to 32.

Most cases are settled at the mediation stage. If this fails, the matter will be decided by a tribunal, which is a five-person panel whose members are drawn from an approved list of lawyers, architects, property consultants and surveyors.

Parties unhappy with the tribunal’s decision can appeal to the High Court and Court of Appeal.

A check with court records and lawyers who handle such disputes show that very few people go that far.

In fact, since the law was changed in 1999 to allow collective sales to go through on a 80 per cent majority for estates more than 10 years old, only one person has taken her case to the High Court.

In 2003, accountant Koh Gek Hwa lost her bid in the High Court to get about $200,000 more from her unit at the Dragon Court condominium in Holland Road.

Source : Straits Times – 25 Aug 2006

SingTel’s sale of former Crosby House set to attract keen interest

RIVAL developers from here and overseas are expected to be in the race for SingTel’s ageing Robinson Road building, which was put up for sale yesterday.

The seven-storey block at No. 71 – once known as Crosby House – is one of the last underdeveloped sites on the prime financial district street.

The 1950s property, which houses the Robinson Road Post Office, could be turned into a 35-storey office building or a 52-floor apartment block.

Marketing agent Credo Real Estate said the sale by tender could yield about $143 million, which would include a fee to intensify the land use and top up the remaining 45 years lease to 99 years.

The price would work out to $521 per sq ft (psf) per plot ratio. This would enable the new owner to sell a redeveloped office building for $1,300 psf.

In June, the 35-storey SIA building a few doors down was sold to CLSA Capital Partners for $343.9 million or $1,165 psf.

Credo managing director Karamjit Singh said the positive outlook for both the office sector and inner-city apartments should ensure a high level of interest from local developers and foreign funds backed by developers.

The new owners could build flats on the site as SingTel has been granted the permission to redevelop the building into a 52-storey, 330-unit apartment block with shops on the first level.

Leasehold inner-city apartments are in demand, judging from prices of The Sail @ Marina Bay in the new downtown. Units here are going for between $1,000 psf and $1,400 psf in the resale market, said Credo.

The Clift at the Natwest Centre site at nearby McCallum Street is being marketed at between $1,000 psf and $1,100 psf.

About 120 units of the 312-unit project have been sold since its preview early last month.

However, it may be better to redevelop SingTel’s block as an office building considering the shortage of office space, said Mr Donald Han, managing director of property consultancy Cushman & Wakefield.

Robinson Road is still a respectable address for offices, he said.

‘It’s also quite a sizeable plot,’ he said, adding that the new development would be similar in size to one tower of SGX Centre in Shenton Way.

The tender closes on Sept 28.

Source : Straits Times – 24 Aug 2006

DC hikes could dent en bloc market

The en bloc market could take a hit when development charge (DC) rates go up on Sept 1, property consultants say. But much will still boil down to supply and demand.

They reckon that DC rates – payable to the state for enhancing a site’s use or developing a bigger project on it – could rise as much as 15-20 per cent for non-landed residential use in prime locations like Ardmore Park, Tomlinson Road and Grange Road, where collective sales have set new benchmark prices in the past six months.

‘If owners stick to the same minimum land price quantum, the total land price to developers will increase by the quantum of the DC hike,’ says Knight Frank executive director Foo Suan Peng. ‘This means the unit land cost in terms of per square foot per plot ratio will be increased, without any benefit to owners. It has a dampening effect on the collective sale market.’

But not all en bloc sales will be affected. Collective sale sites with little or no DC component like Derbyshire Mansion and Grange Tower will be spared any blow from DC rate hikes.

There are also sites in locations like Cairnhill and Newton with a high development baseline or where the existing development’s gross floor area is high relative to what is allowed under the current Master Plan. Such sites are liable for either no or little DC payment if they were to be redeveloped, says Mr Foo.

But sites with a significant DC component as a percentage of total land value could suffer from a substantial increase in DC rates. An example is Minton Rise, where the reported DC estimate of $84 million works out to about 27 per cent of the total land cost.

‘For some of these cases, it may make it harder for owners to achieve, or for developers to pay, reserve prices – because of the higher DC rate,’ says CB Richard Ellis executive director Jeremy Lake.

Agreeing, Credo Real Estate managing director Karamjit Singh says: ‘There are cases where the DC forms about 20-30 per cent of total land cost. In such a case, if the DC rate goes up by, say, 10 per cent, it could, overnight, wipe out around 2.5-4.3 per cent of owners’ land value. This can be quite significant – especially if the collective sale premium is not that fantastic – and reduce owners’ incentive to go for an en bloc sale.’

But Jones Lang LaSalle’s regional director and head of investments Lui Seng Fatt reckons the market is unlikely to be shocked by any DC rate rise because the last increases six months ago were so steep.

DC rates – which are specified according to land use (such as non-landed residential, landed residential and commercial) and location – are published by the Ministry of National Development in consultation with the Chief Valuer, who takes into account current market value.

The increases that kicked-in on March 1 this year were among the biggest in six years. For non-landed residential use – the group that often applies to collective sale sites – rates in the prime Ardmore/Claymore/ Draycott location went up 19 per cent. Other popular en bloc haunts like River Valley, Leonie Hill/St Thomas, One Tree Hill/Angullia Park and Cairnhill saw smaller increases of 6 to 15 per cent.

Market observers expect another round of substantial hikes for non-landed residential DC rates in prime locations, pointing out that since March 1, en bloc deals in such areas have continued to set benchmark prices that reflect land values significantly higher than those implied by the March 1 DC rates.

Examples include Beverly Mai in Tomlinson Road and Lucky Tower in Grange Road. Their respective transacted prices of $1,184 and $1,134 per square foot per plot ratio inclusive of DC were 68 per cent and 110 per cent above DC-rate implied land values for the area.

Similarly, Habitat One was sold last month at $1,228 psf ppr – 50 per cent higher than the $818 psf ppr DC rate-implied land value for the area.

CBRE predicts that non-landed residential DC rates in Ardmore Park, Grange Road and Tomlinson Rd could go up 5-10 per cent come Sept 1.

Colliers International predicts that rates in places like Ardmore and Angullia Park will rise by 10-15 per cent.

JLL expects a bigger increase of 18-22 per cent in the central areas of the prime districts 9, 10 and 11. But JLL’s Mr Lui reckons that availability of sites is a more important factor than any DC rate rise – alluding to the large supply of en bloc sites now weighing down the market.

He believes that developers will still be willing to buy in prime locations like Draycott, Orange Grove, and to some extent Newton, regardless of a DC rate rise. But they may not be so willing to shoulder the burden of a higher DC in less choice areas – particularly for huge sites like former HUDC estates.

In such cases, owners may have to bite the bullet and cut their reserve prices. ‘It boils down to the scarcity value of the site and how much demand there is for it,’ Mr Lui says.

Source : Business Times – 24 Aug 2006

DC rates in Orchard Rd area expected to rise

THE record price achieved in last week’s tender for the Somerset Central commercial plot is expected to lead to an increase of up to 25 per cent in commercial development charge (DC) rates in the Orchard Road area come Sept 1, property consultants say.

DC rates are revised twice a year on March 1 and Sept 1, and are specified according to use group – such as commercial, non-landed residential and industrial – and based on 118 locations or ‘geographic sectors’ across Singapore.

The average DC rate for commercial use is expected to increase by anywhere from 3 to 10 per cent, according to property consultants polled by BT.

For non-landed residential use, the average rate could rise 5 to 8 per cent, while for landed residential, the average hike is expected to be one to 5 per cent. Industrial DC rates are expected to stay put, with Colliers International arguing that there could even be a case for reductions in some locations.

Hotel DC rates are expected to increase on the back of current bullish sentiment in the tourism industry – as reflected in this week’s strong top bid for a hotel plot at Unity Street in the Robertson Quay area.

DC rate changes are tracked in property circles because they reflect values and can affect the breakeven costs of developers seeking to redevelop sites.

DC is payable by developers to the state for enhancing a site’s use or intensity. Revisions are made by the Ministry of National Development in consultation with the Chief Valuer, who takes into account current market value.

For commercial DC rates, a key transaction that the Chief Valuer will look at is Lend Lease’s top bid of $1,455 psf per plot ratio for the Somerset Central site last week, which is 117 per cent higher than the land value of $669 psf ppr implied by the prevailing commercial DC rate for the location.

As a result, the Orchard area is likely to see the biggest hike for commercial DC rates, to the tune of 20-25 per cent, predicts Colliers International’s director for research and consultancy Tay Huey Ying.

CB Richard Ellis, too, forecasts the increase for the location will be about 20 per cent, while Jones Lang LaSalle reckons the hike could come in at 10-15 per cent, sparked by the Orchard Road rejuvenation theme.

JLL also sees an increase of the same quantum for commercial DC rates in the Marina Bay area, as land values there will benefit from major projects like the Integrated Resort and the Business and Financial Centre.

CBRE reckons that commercial DC rates in the existing Central Business District will also be raised, citing several high-profile office building deals in recent months, such as SIA Building, which was sold for $1,165 psf of net lettable area, and Robinson Centre ($1,115 psf).

The firm also predicts hikes in commercial DC rates in places like Tampines, Woodlands and Alexandra Road following the sale of DBS Tampines Centre & Pavillion, Causeway Point and Anchorpoint.

As for non-landed residential DC rates, the biggest gains of 18-22 per cent are expected to be recorded in prime districts, triggered by bullish collective sale transactions over the past six months like Beverly Mai, Lucky Tower and Habitat One at prices substantially above the DC rate-implied land values, JLL reckons.

CBRE predicts a 10-15 per cent rise in the non-landed residential rate at Sentosa as well as a double-digit gain for the landed residential DC rate in the same location – on the back of continuing appreciation in land prices in Sentosa Cove, the up-scale waterfront housing district shaping up on Sentosa.

As for industrial use, Colliers’ Ms Tay says: ‘The rates are expected to remain unchanged or may even be revised downwards for some locations like Tuas, Bedok and Serangoon North, as successful tender bids for industrial Government Land Sale sites in these areas are still below the DC rate-implied land values for the locations.’

Market watchers expect DC rates for hotel use to be raised, especially in the Marina Bay and Singapore River locations. The government has offered several sites in the Singapore River vicinity for hotel development. One of them – at Unity Street/Clemenceau Avenue – attracted a bullish top bid that was more than double the minimum price at a tender that closed earlier this week.

Source : Business Times – 24 Aug 2006