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Thread: Swift response to Gallop Gables units

  1. #1
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    Default Swift response to Gallop Gables units

    http://www.businesstimes.com.sg/sub/...28268,00.html?

    Published April 14, 2009

    Swift response to Gallop Gables units

    By EMILYN YAP


    INVESTORS made a dash for high-end residential development Gallop Gables after The Straits Trading Company offered a two- year guaranteed rental yield of 7 per cent on 10 units there last week.

    Not only did the company let go of all 10 units at the freehold Farrer Road estate in three days, it managed to sell another 16 without providing a rental guarantee. Prices of the 26 units ranged from $3,075,200 to $3,840,000, fetching an average of $1,220 psf.

    The 'overwhelming response' was surprising because sales in the high-end property sector have been weak since the financial crisis erupted, said Straits Trading's executive vice- president Eric Teng.

    Even though the rental guarantee applied on just 10 apartments, 'we were still able to sell more units because our prices were reasonable and competitive and we have an excellent well-maintained product', he said.

    Located near the Botanic Gardens, asking prices at the 12-year-old Gallop Gables have dropped in the last few months. Straits Trading put up two blocks of apartments for sale in July last year with a price tag of about $1,500 psf.

    'Feedback from prospects and buyers suggest that with less than one per cent per annum (from) fixed deposits in banks today, a yield of 3 to 4 per cent per annum and above in property rental is still an attractive proposition,' Mr Teng added.

    According to him, buyers were mainly locals in their mid-thirties to late- seventies. Most bought the units for investment though a few said they might move in when the rental guarantee ends.

    The situation indicates that well-located high-end properties can still sell with good advertising, said Chesterton Suntec International's head of research and consultancy Colin Tan.

    'It shows what clever marketing and publicity can do . . . Of course, the property itself is good.'

    Encouraged by the response, Straits Trading is ready to sell more units at Gallop Gables but it is raising prices by up to 10 per cent. The new prices are 'still reasonable' compared with those a year or two ago, said Mr Teng.

    Units available for sale are 'limited' but the company prefers not to disclose the number as it is still monitoring the property market.

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    Default

    http://business.asiaone.com/Business...08-134152.html

    Fri, Apr 10, 2009

    The Straits Times

    Straits Trading selling 10 apartments

    By Joyce Teo


    INVESTORS are being offered 10 units in the 12-year-old Farrer Road district residential development Gallop Gables at the knock-down price of around $3 million each - complete with a rental guarantee.

    The seller is Straits Trading, which has had a year to conduct a strategic review of its assets after Ms Chew Gek Khim's Tecity group took over as a controlling shareholder.

    The firm's new executive vice-president Eric Teng told The Straits Times the sale is to enable it to invest in distressed assets that may surface locally and regionally - even though the sale itself is being done at a reduced price. 'This is just our financial discipline. Before you buy something, you should sell something,' said Mr Teng.

    The average sale price per sq ft (psf) is about 23 per cent lower than what Straits Trading was seeking for the units last July.

    Gallop Gables is a freehold four-storey 140-unit development near the Botanic Gardens. It has seven low-rise blocks.

    For each of the 10 units, Straits Trading is offering a guaranteed rental yield of 7 per cent for two years. It will also absorb the maintenance fee for two years.

    The units are fairly big, from 2,800 sq ft to 3,200 sq ft each. The firm said it is offering investors a 'rare opportunity' to invest in 'a solid piece of real estate, with an unprecedented yield of 7 per cent a year or 14 per cent for two years'.

    At that kind of yield, the rent should be about $12,000 to $13,000 a month. But right now, the yield for the estate should be only around 4 to 5 per cent, said a property expert who declined to be named.

    The firm's average asking price for the 10 units is $1,156 psf, slightly above the average $1,130 psf registered for two recent deals in the development.

    Last July, the firm invited expressions of interest at $1,500 psf, or about $4.5 million each, for 38 tenanted units there. The property market has since deteriorated markedly.

    That sale bid had come about three months after Tecity gained control of Straits Trading. Tecity is the parent of a group of investment companies built by the late Tan Chin Tuan, former OCBC Bank chairman - Ms Chew's grandfather.

    He had helped OCBC acquire Straits Trading in the 1950s.

    In the 1980s, Straits Trading's share price was more than $4, almost twice its price between 1995 and 2003. Tecity paid $6.70 a share for Straits Trading.

    Yesterday, the shares closed five cents higher at $3.20 each.

    In a separate announcement, Straits Trading said Mrs Victoria Tse will be retiring as the senior executive vice-president and group chief financial officer on July 7. She will be succeeded by Mr Eldon Wan, financial controller of Tecity, from yesterday.

    It has also appointed Mr Iqbal Jumabhoy, who has more than 20 years of executive management experience, as chief executive of hospitality to oversee its hospitality management arm and hotel assets.

    Mr Teng was named executive vice-president of property sales and leasing as well as adviser, corporate communications. He retains his role as adviser to Tecity and CEO of Tan Chin Tuan Foundation.

    Mr Teng will oversee the sale of completed residential property owned by the group as well as the leasing of the Straits Trading Building in Battery Road. This office block will be ready by the end of the year and is now about 25 per cent leased.

    Straits Trading was founded in 1887. Apart from hotels and property, its other business is in tin mining.

    This article was first published in The Straits Times.

  3. #3
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    Default Isnt this expensive?

    Why would someone pay $1200 psf for this when newer condos around are selling for $1300-$1400? Really puzzled by this

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