THE Urban Redevelopment Authority (URA) will be launching a transitional office site at Mohamed Sultan Road for sale in around two weeks’ time, after a developer committed to pay at least $9.33 million for it.

The bid, which works out to $94 per square foot per plot ratio (psf ppr), is double that which URA received in 2008 when it last tried to sell the site. This has raised a few eyebrows, considering the soft state of affairs in the office market.

The 15-year-leasehold office site has a site area of 66,482 sq ft and a maximum permissible gross floor area (GFA) of 99,728 sq ft. It can accommodate a four-storey building.

DTZ executive director Ong Choon Fah believes that the parcel stood out because of its location, which is not too far from the central business district and is near entertainment spots at Clarke Quay. Companies in the creative industry may find the site attractive, she said.

Cushman & Wakefield Singapore managing director Donald Han agrees that the site’s location is appealing. Given the relatively high offer, he suggests that the bidder could be a firm looking to own and occupy the site, or a developer which ‘knows the game, and is confident of developing transitional office sites’.

He added that the bidder could be expecting a recovery in the office market and as a result, higher rents in future, after the development on the office site is ready around the second half of 2011.

Leasing activity in the office market has picked up in the last few months as the economy stabilised. ‘Although we expect office rents to continue to slide perhaps to the end of this year or early next year, the worst is probably over,’ says Mrs Ong. ‘There’s a lot more confidence.’

But both consultants do not expect to see many other bidders for the site when the tender is launched. With this bid being so much higher than the previous one, ‘there could be some segments saying ‘it’s not cheap’,’ Mr Han quipped.

URA had launched the site for sale in August 2008 when it was on the confirmed list. It received one bid of $4.65 million or $47 psf ppr from RSP Architects Planners & Engineers, but rejected it as it was too low. URA transferred the site to the reserve list in October that year.

The agency last sold a transitional office site at Scotts Road/Anthony Road in May 2008, for $32.99 million or $226 psf ppr.

Separately, owners of the freehold residential development Holland Hill Lodge have put their estate up for collective sale. The asking price ranges from $15 million to $16 million, and this translates to a land price of $1,038-$1,107 psf ppr, based on a gross plot ratio of 1.6.

The site measures some 9,033 sq ft and the existing GFA of the development is 18,086 sq ft. The owners are checking with the authorities on whether this GFA can be fully utilised upon redevelopment.

Credo Real Estate is marketing the site and the tender closes on Feb 25.

Source : Business Times – 29 Jan 2010

STARHILL Global Real Estate Investment Trust posted a 5.5 per cent increase in income available for distribution to $19.1 million for its fourth quarter ended Dec 31, 2009, from $18.1 million a year ago.

Income to be distributed rose 5.6 per cent to $18.8 million. An amount of $0.3 million of income available for distribution for the quarter had been retained to satisfy legal reserve requirements in China.

Distribution per unit (DPU) rose 5.4 per cent to 0.97 cents from Q4 2008’s restated 0.92 cents. Q4 2008’s DPU was restated to take account of rights units.

In August last year, Starhill, which owns stakes in Wisma Atria and Ngee Ann City, had completed a rights issue which had raised net proceeds of $326.1 million.

For the year, net income available for distribution rose 8.7 per cent to $75.5 million.

After retaining about $2 million to satisfy the legal reserve requirements in China and for working capital and capital expenditure purposes, net income to be distributed stood at $73.5 million, up 7.2 per cent from $68.6 million in 2008.

DPU for 2009 stood at 3.8 cents, up 6.1 per cent from 2008’s 3.58 cents, which again took into account the rights issue.

Net property income for the quarter rose 3.2 per cent year-on-year to $26.8 million, driven by increased revenue from new leases and lower property tax expenses.

For the year, the group posted net property income of $106.9 million, an 11.5 per cent increase from $95.9 million.

As at Dec 31, 2009, the trust’s gearing ratio was 26.9 per cent. The manager of the trust is in ‘active discussions’ with its banks to finalise terms for the refinancing of $570 million of debt that falls due in September.

The group’s outlook for the year is a cheery one.

‘Business sentiment has improved significantly over the last quarter. The completion of our acquisition of the David Jones Building in Perth earlier this month is timely, as the property will start contributing immediately to Starhill Global Reit’s FY2010 revenue and net property income,’ said Francis Yeoh, executive chairman of YTL Pacific Star.

‘Visitorship to our Singapore malls have continued to improve with the added buzz arising from new malls and the rejuvenation of Orchard Road and we expect this to increase in tandem with tourist arrivals when the integrated resorts open.’

Its retail assets in Singapore are expected to mitigate the effects of retail rents and occupancy rates in Japan that might still be reeling from economic weakness. Starhill rose 1.5 cents to close at $0.545 yesterday.

Source : Business Times – 29 Jan 2010

THE Housing Board will launch new flats every month over the next six months in response to growing fears that demand is outstripping supply.

National Development Minister Mah Bow Tan, speaking on the sidelines of a housing event on Wednesday, said that ‘HDB will build flats to meet demand as long as there’s genuine demand’. It is looking to offer 7,000 new flats in the first half of this year and is planning 12,000 for the whole of 2010.

For higher income earners who aspire to own private property, Mr Mah said the HDB was catering to this group by selling land for development into executive condominiums – a hybrid flat with condo facilities but HDB rules.

He assured first-time buyers that there was no need to rush into buying, given that there are ‘more than sufficient flats’. ‘If there is even stronger demand, of course HDB will build even more flats,’ he said.

Mr Mah claimed the high subscription rates at recent launches – at popular projects such as Dawson, where 11 applications were received for every flat – was not a measure of genuine demand.

‘We know that many of them are multiple applicants…they apply every month to make sure they have a better chance…that means the number of subscribers may appear large, but it doesn’t mean that that is the total demand,’ he said.

‘The final test is when we finally offer the flats to these buyers, (we’ll) see what the take-up rate will be.’

The minister emphasised that if there was real demand, the HDB would respond with its build-to-order (BTO) scheme.

‘As the name suggests…you order, we build. That’s the situation.’

Mr Mah pointed out that waiting for a flat to be built was not new. In the past, home buyers have had to wait for as long as seven years for a flat, he said.

Under the BTO scheme, HDB is ‘promising, in a way…that you will get your flat in three to four years, once you have booked it.’

Source : Straits Times – 29 Jan 2010

LIFESTYLE and wellness provider Mary Chia Holdings Ltd has entered into a joint venture to develop a heritage hotel in Singapore.

The group, together with businessman Lee Boon Leng, will operate Hotel Culture, a local company incorporated last September. Hotel Culture has purchased properties worth $20 million on Chinatown’s Mosque Street for the development of the hotel.

Hotel Culture has an issued and paid-up share capital of $500,000, of which 51 per cent is held by Mary Chia and 49 per cent by Mr Lee. Mary Chia paid for its shares in cash, from proceeds of its initial public offering. To fund the $20 million purchase price for the properties, $16 million will be borrowed externally, $500,000 will be from equity, and the remaining $3.5 million will be derived from shareholders’ loans.

In addition, the development cost for the hotel is estimated to be about $6 million, of which $3 million will be financed by borrowings and $3 million by shareholders’ loans. Mary Chia’s share of the shareholders’ loans of $1.53 million will be funded through internal resources and/or borrowings.

The group said that the move will complement Mary Chia’s lifestyle and wellness business. Mary Chia intends to both expand its range of offerings and broaden its asset and earning bases. Hotel Culture is also expected to provide the company, best known for its beauty and slimming services, with an alternative long-term source of revenue.

Mr Lee is the spouse of Wendy Ho, the chief executive and controlling shareholder of Mary Chia. He is also the son-in-law of the group’s executive chairman and controlling shareholder Mary Chia.

Due to his experience in the food and beverage business, he will take charge of this aspect of Hotel Culture’s business. Mary Chia will handle the hotel’s lifestyle and wellness services.

The hotel, to be developed from restored Chinatown shophouses, will have 92 rooms, ‘with retail and a lifestyle and wellness centre on its first storey’.

Source : Business Times – 29 Jan 2010

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Bank of America plans to raise new money for Merrill Lynch’s Asia property funds business instead of selling it due to a recovery in the real estate sector, sources said.

BoA was in talks with several private equity firms, including Blackstone Group and Apollo Investment Management, to sell management rights to its US$2.65 billion Asia Real Estate Opportunity Fund which the bank regarded as a non-core business, Reuters reported in July.

Despite negotiations lasting more than six months, no deal was reached because of disagreements over financial terms and the complicated structure of Merrill property funds, sources with direct knowledge of the matter told Reuters yesterday.

BoA has hired people in Beijing to raise money for a new Asia-focused property fund, the sources said, adding China remains a focus for the Merrill funds.

In China, Merrill invested a few years ago in the development of the Beijing Yintai Centre, a top-end complex where the luxury hotel Park Hyatt Beijing is located on the historic Chang An Avenue.

The sources, who were involved in the bidding process and have business ties with BoA, declined to be identified as they were not authorised to speak to the media.

‘Basically there was a lack of interest from Merrill Lynch’s part to go forward with the process,’ said a prospective bidder, who asked not to be identified.

A BoA spokesman in Hong Kong declined to comment.

Bank of America took over Merrill at the end of 2008 during the financial crisis.

In October 2008, just two months before the deal went through, Merrill closed and launched the Asia property fund with focus on Japan, China, India and South Korea.

Investors, also known as limited partners, in the Merrill property fund include many rich families and some sovereign funds in the region, said one of the sources.

Property market transactions in Asia have risen in recent months as investor confidence improves and banks start lending.

A research report released last week by property consultancy firm DTZ, for instance, showed the value of property transactions in South-east Asia rose 25 per cent in the last three months of 2009 from the preceding quarter.

Despite a clear recovery in the sector, some analysts and government officials are worried that asset bubbles were forming due to the sharp rises in property prices.

Merrill is not alone making property investments in Asia.

Rivals, including Goldman Sachs and Morgan Stanley, are long-time players in some key Asian markets like China.

In March, Morgan Stanley raised US$6 billion for a new global property fund, including money from China Investment Corp, the sovereign wealth fund.

Source : Business Times – 28 Jan 2010

THE second phase of Orchard Medical Specialists Centre will be offered for sale and rent from tomorrow by Hong Property Investments.

The fifth floor of Lucky Plaza has been transformed into an exclusive medical hub with occupants engaged in fields such as psychological medicine, dentistry and women’s wellness. Since the first launch some two years ago, eight units have been sold and another 30 are tenanted.

The remaining 18 units are now being offered for sale at average prices of $3,100 to $3,200 per square foot (psf) and for rent at $11 to $12 psf per month.

Knight Frank, which is marketing the units, said that with the renewed buying interest in high-end apartments at Orchard Road as well as the continued growth in medical tourism in Singapore, medical practitioners and retail investors can generally envisage the capital appreciation and the rentability of the medical suites in the mid to long term.

According to Knight Frank, at the nearby 99-year Mount Elizabeth Medical Centre, a 1,206 sq ft unit changed hands at $3,701 psf last month while another 893 sq ft unit was sold for $4,798 psf in November last year.

Over at Novena Medical Centre, there were some transactions of the 99-year leasehold units in the range of $2,800 psf to $3,000 psf.

Rents of medical suites in the Orchard Road vicinity, such as at Paragon Medical Centre and Mount Elizabeth Medical Centre, are in the range of $14-$16 psf, Knight Frank said.

Source : Business Times – 28 Jan 2010

TWO out of three people are satisfied with the service they get from real estate agents but there is still room for improvement, according to a survey conducted by Ngee Ann Polytechnic.

Of the 1,041 people questioned in the poll – 564 of whom had prior experience of property transactions – 64.6 per cent said they were either satisfied or very satisfied with the service they got from their agents.

Another 27.7 per cent felt neutral about the service provided, while the remainder were either very dissatisfied or dissatisfied.

Even among those who were satisfied, 71.1 per cent reported negative experiences of their property agents.

Chief among their complaints was failing to negotiate a ‘good’ price for the property. The second most common gripe was being given the ‘wrong advice’.

Of the survey’s respondents, 63.8 per cent felt that a property agent should have at least two years of relevant work experience before being accredited by a professional body.

The polytechnic’s real estate lecturer Nicholas Mak, who is the survey’s research coordinator, said: ‘Two years is an indicator of the standard a real estate professional accreditation body should require from its members.’

An overwhelming majority – 96.6 per cent – of respondents called on the Government to implement changes to the industry.

The most popular proposed action was for the implementation of a property agent certification scheme. Although such a scheme might involve higher costs, 49.1 per cent of respondents did not mind paying a higher commission if they got experienced property agents.

Dr Tan Tee Khoon, chief executive of the Singapore Accredited Estate Agencies, acknowledged that despite a variety of measures taken towards self-regulation, ‘there is still much to be desired of this industry’.

Publication of the Ngee Ann Polytechnic survey, which was conducted in the middle of last year, comes before the expected publication of the Ministry of National Development’s proposed regulatory framework for the real estate industry.

Source : Straits Times – 28 Jan 2010

But weaker room rates drag down RevPAR by 13.6% to $159 in Q4′09

CDL Hospitality Trusts (CDLHT), a favourite stockmarket proxy for the improving outlook for Singapore’s tourism sector, achieved an average occupancy rate of 88.9 per cent for its five Singapore hotels in the fourth quarter last year, a better showing than the fourth quarters of the preceding two years.

‘We’re seeing demand levels back to where they were prior to the economic crisis, albeit room rates are lower,’ said Vincent Yeo, CEO of the trust’s manager.

‘In November 2009, we did the highest occupancy rate ever bar one month (since the inception of our Reit in July 2006),’ he added.

However, weaker room rates dragged down room revenue per available room (RevPAR) by 13.6 per cent to $159 in Q4 2009 from $184 in Q4 2008. RevPAR peaked at $222 in Q2 2008.

The trust posted income available for distribution to unitholders of about $21.7 million for Q4 2009, a 14 per cent improvement from the same year-ago period.

Despite a 7.1 per cent year-on-year (y-o-y) drop in gross revenue to $26.1 million in Q4 2009, CDLHT achieved a 14 per cent y-on-y rise in net property income to $24.7 million. This was due to lower property tax expenses (inclusive of a 40 per cent property tax rebate granted by the Singapore government last year) and lower other property expenses.

The latest Q4 distributable income reflects a distribution per unit (DPU) of 2.58 cents.

For full year ended Dec 31, 2009, CDLHT posted total distributable income of $75.8 million, a decline of 17.6 per cent from the preceding year. The trust is paying out a total of $71.7 million, reflecting a 94.6 per cent payout ratio. It is retaining the balance $4.1 million (which is tax-exempt income) to help fund future capital expenditure on its properties.

CDLHT had $5.7 million in cash and cash equivalents as at end-2009.

CDLHT, which pays distributions semi-annually, will be making a payout of 4.71 cents per unit for the second half of last year. The full-year 2009 payout works out to 8.57 cents, which translates to nearly 5.2 per cent yield based on the counter’s $1.66 closing price yesterday.

The trust, which was listed on the Singapore Exchange in July 2006, owns five hotels in Singapore – Orchard, Grand Copthorne Waterfront, M, Copthorne King’s and Novotel Clarke Quay – and Orchard Hotel Shopping Arcade. It also owns a hotel in New Zealand – the Rendezvous Hotel Auckland.

London-listed Millennium & Copthorne Hotels (M&C), as sponsor of CDLHT with a 39.5 per cent stake, has given a right of first refusal to sell its Singapore properties to the trust for a five-year period starting from CDLHT’s listing date in July 2006. M&C will open a new hotel, Studio M, in the Robertson Quay area around April.

M&C’s parent City Developments has a stake in the St Regis Singapore. Overseas, the trust’s acquisition strategy is dependent on where the deals emerge and ‘the markets where we’re seeing the most deals flow are Australia and Japan’, Mr Yeo said.

Singapore’s pool of hotel rooms is expected to increase by about 5,800 rooms or 17 per cent this year. Most of the additional supply will come from the two integrated resorts (IRs).

Achieving even a 0.5-night increase in the average length of visitor stay in Singapore will help to offset a large part of the additional supply in 2010, Mr Yeo argues.

The demand-pull factors in Singapore are escalating to a new plane with the opening of the IRs. With a mix of gaming entertainment, conference facilities and the Universal Studios theme park, ‘the IRs mark a significant step forward in Singapore’s transformation into a world-class travel destination and a preferred mono-travel destination’, the trust manager said.

Mr Yeo said that ‘gaming is somewhat addictive so you could see very frequent visits’ from visitors in neighbouring countries such as Indonesia and Malaysia.

The draw of the IRs should also help to convert some of the transit passengers at Changi Airport to visitor arrivals into Singapore.

‘Less than 7.4 million of a total of 37.2 million passengers passing through Changi Airport in 2009 would have visited Singapore,’ the trust manager noted.

Source : Business Times – 28 Jan 2010