Results 1 to 2 of 2

Thread: Firms shelve supply of 1,000 new apartments

  1. #1
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default Firms shelve supply of 1,000 new apartments

    http://www.businesstimes.com.sg/sub/...75940,00.html?

    Published December 22, 2008

    Firms shelve supply of 1,000 new apartments

    Project development deferred; en bloc properties return to rental market

    By ARTHUR SIM


    (SINGAPORE) At least 1,000 projected new apartment units can be expected to be withdrawn from immediate supply in Singapore's property market, as properties that were sold en bloc in recent years are put back on the market for rental.


    Still standing: Lucky Tower has been leased to a master tenant that intends to sub-let the 91 units

    The latest of these is Lucky Tower at Grange Road which was bought by City Developments Ltd (CDL) in May 2006.

    A CDL spokesman said that the entire development of 91 units has been leased to a master tenant that intends to sub-let the units.

    According to data complied by Savills Singapore, Lucky Tower was expected to be redeveloped into a 178-unit condominium. However, with redevelopment pushed back, these units are not expected to come on to the market anytime soon.

    Another development, the 192-unit The Grangeford at Leonie Hill, acquired by OUE in 2007, has also been put back on the rental market.

    OUE is controlled by the Lippo Group and Malaysian tycoon Ananda Krishnan. Lippo Realty executive director Thio Gim Hock said that approximately 70 per cent of the units have already been leased, mainly to expatriates.

    On why it decided to defer redevelopment, Mr Thio said: 'The market does not look good for this year or the next.'

    It is understood that asking rents for The Grangeford start at about $3,500 for 1,110 square foot two-bedroom units and about $4,500 for a 1,700 sq ft three-bedroom unit.

    The Pontiac Land Group has also started to lease out Pin Tjoe Court, which it acquired in September 2006. Senior vice-president (residential leasing) William Teh said that it expects to redevelop the site next year. 'Till then, we are offering very short-term leases, and this is not representative of typical rental in the market,' he added.

    Frasers Centrepoint said that Flamingo Valley, which it acquired in early 2007, has been put on the rental market with close to 60 per cent of the 185 units leased out.

    Other en bloc developments back on the rental market include Furama Towers, Fairways Condominium, Sophia Court, and Lincoln Lodge.

    The increasing number of en bloc sites put back on the rental market is expected to further depress already weakening rentals.

    Referring to this 'hidden leasing supply', Japanese investment house Nomura said: 'The move by developers to return en bloc units back to the leasing market to cover to a degree of the holding costs is not unanticipated.'

    In the case of Grangeford, assuming a gross rent of $3.40 psf for the 396,483 sq ft apartment block, Nomura estimates that it could secure net income of $14.6 million, equating to a 2.3 per cent yield over its $625 million acquisition price, 'providing some relief to covering the site's holding costs'.

    Regardless of 'hidden leasing supply', rentals are already expected to fall. Still, Knight Frank director (research and consultancy) Nicholas Mak believes that the 'hidden supply' of leasing units will not make much of a dent on the rental market. For starters, he notes, many of these en bloc developments have already reached a state of disrepair.

    Pointing out that the 108-unit Fairways is about 10 per cent leased, he says that many of the units have been 'stripped bare'.

    He also noted that these units have short leases and tenants may be given only one-month's notice to vacate.

    Another consequence of deferred en bloc redevelopment is the impact this has on future supply.

    Savills Singapore estimates that based on the en bloc deals between 2005 and 2007, over 23,000 new units could be added to the market.

    But, as Nomura notes, supply has been increasingly pushed to 2012. As at the third quarter of this year, it found that some 16,762 units are scheduled for completion in 2012, versus the previous quarter's estimate of 14,179 units.

    Based on an analysis of official data since Q499, it also found that actual completions lagged behind forecast completions.

    The Urban Redevelopment Authority (URA) has also clarified that while developments are deemed 'under construction' in its database, this does not necessarily mean construction has begun.

    A spokesman for URA said that it considers a project to be 'under construction' once the Building and Construction Authority records indicate that a project has been issued a permit to commence structural works.

    As at Q308, there are 10,007 units under construction. URA said: 'As developers do not have to inform the government of actual ground-breaking after obtaining the permit to commence structural works, URA does not have information on the number of units, expected to be completed in 2009, which have actually broken ground.'

    However, it added that it understands that actual construction for a project typically begins within 1-3 months after the developer obtains the permit to commence structural works for the project.

    The number of developments that could be deferred will remain unknown. CB Richard Ellis executive director Jeremy Lake pointed out: 'Even if the property has been demolished, a meaningful number of projects will be delayed as construction costs are expected to fall over the next 18 months.'

  2. #2
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006
    Posts
    8,129

    Default Rents to hold steady despite en bloc influx

    http://www.straitstimes.com/Money/St...ry_317656.html

    December 23, 2008 Tuesday

    Rents to hold steady despite en bloc influx

    Supply limited and not all are fit to be rented out, say consultants

    By Joyce Teo


    Airview Towers at St Thomas Walk in River Valley is one of a number of collective sale developments that would be put back onto the rental market next year. -- PHOTO: DTZ

    MORE units at developments sold enbloc are expected to be released onto the rental market, as developers look to ride out the market downcycle by renting them out, instead of leaving them empty.

    But the additional supply of apartments from these developments should not weigh heavily on an already falling rental market, property consultants said.

    Several developments that were sold en bloc last year and intended for demolition and redevelopment were put back onto the rental market this year, following the deterioration of market sentiment.

    There has been a thin but regular stream of such developments since early this year. They are typically leased out at rents that are at least about 20 per cent below market level, said Knight Frank director of research and consultancy Nicholas Mak.

    More will follow next year as some developers have yet to take possession of their collective sale properties. For instance, Airview Towers in the River Valley area will be leased out from February next year, for a one-year period.

    Units there will be rented out at more than $2,000 to less than $4,000 a month.

    An owner there said their rent-free period will end in February, but a few units are already being leased out to quite a number of foreigners on work permits.

    Two other developments, Spottiswoode Park and Oakswood Heights, on Spottiswoode Park Road are also likely to be put on the rental market early next year, said a market watcher.

    Mr Mak said these developments are unlikely to add much downward pressure on rents as there are not many of such developments, which come with just basic facilities and a short lease.

    Secondly, they are mostly rented out to existing tenants or ex-owners of the development, he said. 'Thirdly, not all the units in the developments are fit for rental. One reason why these developments went for en-bloc sale is because they are rundown,' said Mr Mak.

    Also, as the projects are meant for redevelopment eventually, developers are unlikely to spend a lot of money to spruce them up, consultants said.

    'Rents in general, like capital values, reflect the physical condition of the stock, the tenure, location et cetera,' said Jones Lang LaSalle's South-east Asia research head, Dr Chua Yang Liang.

    As the reported rents must also account for the transient nature of the leases, the depressive effect of such rents on the general market is marginal, he said.

    Rents of private residential properties here have fallen and are expected to fall further next year. Average prime rents are now at $4 to $4.40 psf, slightly down from $4.20 to $4.60 psf in the third quarter, according to CB Richard Ellis.

    Other collective sale developments being leased out include Fairways in Telok Blangah, Grangeford at Leonie Hill, Lucky Tower in Grange Road and even Merlin Mansion in the East Coast Road area.

    Fairways is offering a one-year lease at rents from $1,900 a month while rents at Grangeford start from about $3,500 for a two-bedroom unit. Both were bought around the middle of last year.

    Developments that have already been in the rental market for months include Leedon Heights off Holland Road, Sophia Court in Adis Road and Lincoln Lodge off Newton Road.

    [email protected]

Similar Threads

  1. Replies: 0
    -: 15-11-21, 09:57
  2. Why are developers delisting their firms?
    By reporter2 in forum HDB, EC, commercial and industrial property discussion
    Replies: 0
    -: 13-12-12, 13:40
  3. Little the government can do to ease the supply crunch until the new apartments areup
    By moneyspinner in forum Singapore Private Condominium Property Discussion and News
    Replies: 0
    -: 22-06-07, 19:06
  4. Cho Yaw's firms are top en bloc buyers
    By mr funny in forum En Bloc Discussion and News
    Replies: 2
    -: 30-05-07, 05:01
  5. Runaway prices crank up supply of luxury apartments
    By mr funny in forum Singapore Private Condominium Property Discussion and News
    Replies: 4
    -: 24-01-07, 16:52

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •