(C) Rents continue to rise at phenomenal rate
- (C.1.) Orchard Road prime Retail rents 4th highest in Asia
Singapore’s busiest shopping street, Orchard Road, is now world’s 14th most expensive area. It is the 4th most expensive shopping location in this region, after those in Hong Kong, Tokyo and Seoul.
The recent survey studied the retail rents in the world’s top 231 shopping locations across 44 countries. It showed that annual prime rates increased by 11.3% for Orchard Road. Although rents in Singapore will continue to rise, it will be slower than the rent rises in other cities, notably in India.
The trend will help Singapore remain competitive and maintain its attractiveness as a retail destination in the region. Rental growth across Asia as a whole has increased by 23.8%.
- (C.2.) Raffles Place Retail rents are higher
In tandem with a soaring demand for office space in Raffles Place business district, rents for shop space there have also risen 24% in the past two years.
- Average gross rent for Raffles Place ground floor space is between $18 and $35 per sq ft a month, up from $13 to $25 psf a month two years ago.
- Space in the basement levels are priced at between $12 to $25 psf a month, compared with $9 to $18 psf a month two years back.
- In the upper floors, rents now hover between $8 to $14 psf a month, up from $6 to $9 psf a month two years ago.
With no new supply in sight, the upward trend is expected to continue as the economy charges ahead and tenants are expected to pay 10% to 15% more in the coming years.
Most retail centres in Raffles Place such as OUB Centre, Raffles Xchange, One Fullerton and Republic Plaza are enjoying full occupancy.
Comparatively in Orchard Road, retail rents have been registering single-digit increases in the past few years as rents there are already very high.
- (C.3.) Singapore prime Office rents rose the fastest in the world
Singapore also has the fastest growing prime office rent in the world, outpacing Mumbai.
Average prime office rents have risen 82.6% to $12.60 psf a month by end of September 2007. However, London’s West End is the most expensive place to rent an office if you have US$328.91 to spend for every square foot a year, followed by Bumbai.
At US$102.37 psf a year, Singapore is ranked 11th on the list of worldwide office rentals. Hong Kong is still more expensive than Singapore at 10th position with costs at US$106.31 psf a year.
- (C.4.) Rising rents hit the poor hard
Rising rents in the open market are forcing more low-income Singaporeans to queue for subsidised HDB rental flats, but the waiting period is now twice as long. They now must wait five to 11 months instead of two to six months to move into a rental HDB flat.
Applications for such flats went up 11%. Most of the 3,000 or so applicants in the queue now are unlikely to get a home until the first quarter of next year.
The Housing Board is converting three blocks in Boon Lay and Woodlands into 938 rental units expected to be ready early next year. It will also convert two blocks in Redhill to about 290 rental homes and build 976 units in Choa Chu Kang, Sembawang and Yishun, all by next year.
Rents for HDB flats have shot up by more than 30%. Only families earning no more than $1,500 a month are allocated subsidised rental flats.
- (C.5.) Desperate measure - Old flats vacated under SERS to be rented out
To increase the supply of rental flats, HDB will release a batch of old flats left vacant under the Selective En bloc Redevelopment Scheme (Sers) to the public on a short term basis.
The first batch of 120 units - 60 three-room flats and 60 4-room flats - in five blocks in Tiong Bahru Road will be leased out to a master tenant on a three year tenancy, with option to renew for another three years.
HDB will continue to increase the supply of about 4,000 to 5,000 units if the need arises.
(D) En bloc sale news
In the third quarter of this year, only 13 en bloc deals worth about $1.1 billion were done, down from $6.4 billion for 45 sites in the previous quarter. The en bloc sale market took the full brunt of the sudden 40% increase of Development Charge percentage to market value (i.e. from 50% to 70% of market value) and a hefty half-year rate review (over 58% increase).
In October 2007, only one project Toho Garden was sold collectively. However, in November the en bloc sale market was more active. Here are the details:
- (D.1.) 15 houses in Balestier sold en bloc
In the first landed property en bloc sale, a total of 15 houses were sold for $61 million to a joint venture company set up by a Chinese property developer and his Singaporean partner.
Owners of each of the 15 District 12 landed properties received about $4 million or $739 psf of potential gross area. The sale price represents an en bloc premium of close to 3 times the current market value of the houses.
The en bloc deal took 18 months to complete as 100% consent must be obtained before the sale is sealed due to their land title status. (For strata-titled apartments, the consent is 80% or 90% of the majority by share value and floor area)
- (D.2.) 5 old apartment projects in Kent Road area sold en bloc together
A stretch of five old apartment projects behind Blk 51 Kent Road was sold en bloc to KSH Holdings for $120 million. The combined site area is 74,355 sq ft with a plot ratio of 2.8 and the unit price works out to be $580 psf ppr.
The five District 8 developments, looking from the Central Expressway (CTE) include Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui which is opposite Norkfolk Court and off Rangoon Road. This leaves Mergui Mansions standing alone
- (D.3.) Makeway View sold for $162.8m
District 11 Makeway View in the Newton area has been sold collectively for $162.8 million or $1,583 psf per plot ratio including an estimated $21.5 million development charge (DC).
Each of the 32 owners will receive gross sale proceeds of about $3.7 million to $10.4 million per unit.
The freehold site has a land area of 41,582 sq ft and is zoned for residential use. It has a plot ratio of 2.8 which gives a maximum height of 36 storeys. The breakeven cost for a new project on the site is about $2,100 psf.
The en bloc sale was sealed in a private treaty arrangement following a tender that closed last month. Under the new en bloc sale rules (effective 4 Oct 07), a private treaty sale is allowed after the public tender but the sale must be concluded within 10 weeks after the close of the tender.
- (D.4.) District 9 Grange Heights on the collective sale market
District 9 Grange Heights condo at No 15, 19 and 23 of Grange Road at the Leoniehill Road vicinity has been put up for collective sale for $845 million or $2,200 psf per plot ratio (ppr). The sale is by tender.
The freehold site has a land area of 136,678 sq ft and a plot ratio of 2.8 which gives a maximum height of 36 storeys. No development charge is payable for the site.
According to the marketing agent, an exclusive 36-storey condominium development may be erected on the site with a gross floor area of about 35,554 sq m (382,695 sq ft), subject to approval and payment of development charge. This could yield some 80-90 apartments units with an average size of 3,800 sq ft based on ultra-luxurious apartment concept.
|
