A UNIT of City Developments (CDL) lodged the highest bid for a Sengkang site in a hotly contested tender that attracted some of the biggest names in property development.

Sunmaster Holdings trumped its nine rival bidders with an offer of $200.5 million, or $365.26 per square foot (psf) of potential gross floor area, for the 182,986 sq ft plot.

This was 185 per cent above the reserve price of $70 million or $128 psf, said Mr Li Hiaw Ho, executive director at CB Richard Ellis Research.

The Sunmaster Holdings bid for the 99-year leasehold residential site at the corner of Sengkang West Avenue and Fernvale Link was followed by Tuas Hi-Tech Park’s offer of $177 million.

Frasers Centrepoint was just $92,000 behind at $176,908,000.

Other bidders included a joint venture between Hoi Hup Realty and Sunway Developments, First Changi Development, Allgreen Properties, CEL Development and Lippo Estates, with the lowest bid at $115.6 million.

‘The healthy number of bids received shows that developers remain confident of the market for mass-market homes,’ said the director of research and advisory at Colliers International, Ms Tay Huey Ying.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak pointed out that although developers ‘are still somewhat hungry for good development sites’, most bids were reasonable.

This is possibly because of the ample supply of government land sales projects coming up in the first half of the year, he said.

The site is estimated to be able to accommodate up to 465 condominium units and has a maximum allowable gross floor area of 50,996 sq m or 548,916 sq ft. It is near the Layar LRT station on Sengkang West Avenue.

Based on breakeven estimates of $650-$700 psf, Mr Li expects selling prices at the new development to range from $750 to $800 psf.

Units at another condominium in the vicinity, the Quartz, had been transacting at prices averaging $745 psf since last October, Ms Tay said.

With five-room and executive resale HDB flats in Sengkang selling for $400,000 to $500,000, Mr Li believes that there should be demand from HDB upgraders whose flats have or will soon turn five years old.

Demand could also come from the nearby Seletar private estate, he said.

The Housing Board will award the tender within the next two weeks.

Source: Straits Times, 5 Feb 2010

A STUDY will look at ways to carve out more underground space – for possible use as public areas such as museums and galleries.

It could also be used for facilities such as power stations and for storage, said Senior Minister of State for National Development and Education Grace Fu.

Singapore now has underground malls and pedestrian walkways, though underground uses can be ‘quite varied’, she said.

‘We can foresee a museum, an art gallery, a science museum, something for the public to use as well as public infrastructure like an electrical substation,’ said Ms Fu, co-chair of the ESC sub-committee on land productivity.

Talks are under way on using MRT stations for such functions. ‘URA has always been thinking about what we can do at the Botanic Gardens station… We know there’s a potential there; we haven’t found a specific use so we will look out for the opportunity,’ she said.

Architect Tai Lee Siang said if underground space was promoted properly, ‘people’s acceptance… will change rapidly, especially because Singapore has a finite land resource’. He added underground areas can suit uses needing little or no daylight, such as theatres.

Ms Fu said a national geology office could be set up almost immediately, with an underground masterplan to follow.

Source: Straits Times, 5 Feb 2010

EVEN in property-obsessed Singapore, industrial sites are often dismissed as drab, dull areas that hold no interest for the general public.

But new-era industrial parks like the one planned at Lorong Halus in Tampines could change all this.

Formerly a landfill, the land is now home to a wide diversity of wildlife.

When it is turned into an industrial park in the years to come, factories and plants will be sited among lush greenery and waterfront lifestyle amenities that the public can use.

The planned Lorong Halus industrial area was one of the examples cited by the Economic Strategies Committee sub-committee on how to make better use of land. Among its recommendations was a suggestion to better integrate residential, business, leisure and even ‘clean’ industrial uses into ‘live-work-play’ enclaves.

Source: Straits Times, 5 Feb 2010

SINGAPORE should look more closely at how it can use its industrial land to help enhance its liveability as a city, the high-level Economic Strategies Committee has recommended.

One proposal is to site offices, shops and restaurants alongside manufacturing plants. And if this is done well, these new facilities can breathe new life into previously sterile areas.

In an interview on Wednesday, Senior Minister of State for National Development Grace Fu – who co-chaired the ESC sub-committee on maximising value from land – said the Government should inject this type of flexibility into the use of land in a gradual and targeted manner.

But she also warned against too much flexibility, as it could raise the price of industrial land to an unaffordable level for businesses.

Still, one example of an industry that could benefit from flexibility in land zoning is food manufacturing, suggested Ms Fu.

There is no reason why a food manufacturer with its manufacturing business in an industrial park should not be able to locate its plant next to an office where research and development is done or a kitchen or restaurant where products can be tested by consumers, she said.

Over time, this type of area could even become a hub for the food and beverage industry to test consumer responses and tastes, she added.

Suki Sushi director Kelvin Ong said: ‘We’re not allowed to do commercial sales in a factory.

‘Yet doing it this way means the profit margin is good, and the consumers benefit because you cut out the middleman’s fees and you don’t need to pay the shopping mall landlord.’

He also said mall rents are high for start-ups, and added: ‘Besides, on weekends, some people may want to go to a factory area to shop for cheap goods. There will be more choices.’

Ms Fu also said the Government should be prepared to explore different lease tenures. Now, industrial land typically comes with a 30-year lease, with an option to extend.

‘In our discussions with industrialists, we have realised product life cycles are a lot shorter. We thought we could explore other lease terms.’

Other ideas the sub-committee threw up included a suggestion that land allocation be subject to a measurement of productivity like the number of jobs created per hectare.

Industrialists are also being encouraged to build higher instead of wider. Ms Fu said grants can be made to industrialists for them to study all this.

And turning to the subject of industrial landlord JTC, she said: ‘From developing land, JTC may have to look at developing townships for new industrial parks.’

Mr Tan Tiong Cheng, chairman of Knight Frank property consultancy, said injecting flexibility is clearly good.

‘If people see Singapore as very adaptable and conscious of change, it becomes more attractive,’ he said.

Source: Straits Times, 5 Feb 2010

A REVIEW of the reserve list system for government land sales is in the works, after the Economic Strategies Committee (ESC) called for changes to help developers trigger the sale of sites more easily.

This would be the first revamp of the system since it was introduced in 2001. One possible tweak could allow developers to pay lower deposits after they apply for a site on the list.

In a report released yesterday, the ESC sub-group tasked to find ways to boost land productivity noted the importance of managing cost volatility. The degree of fluctuation in housing and office rents could influence corporate and individual decisions to relocate to Singapore, it said.

Reviewing the reserve list system to make it ‘less onerous’ for developers to trigger the sale of sites could ensure that ’supply can be more easily activated when needed’.

Senior Minister of State for National Development and Education Grace Fu, who is also co-chair of the sub-group, shared more details in an interview. She said there has been feedback from developers about the cost of triggering the sale of sites.

‘We are trying to look at ways to make this as low-cost as possible, so developers do not have to cross a very high barrier to trigger,’ she said. ‘That is to make the government land sales system more responsive to the market.’

At present, a developer keen on a site on the reserve list has to submit an application to the government, stating the minimum price it is willing to pay. Only when the state accepts the application will the developer have to pay a deposit, which is 5 per cent of the minimum price committed.

The developer has two weeks to pay the deposit via a cashier’s order, banker’s guarantee or a bank transfer. If this does not happen, acceptance of the application lapses.

Take the sale of a residential site at Upper Thomson Road last year, for example. A developer committed to pay at least $82 million for the plot. This means the deposit was $4.1 million.

Industry players BT spoke to had few issues to raise about the reserve list system. Roxy-Pacific chief executive Teo Hong Lim said financially-prudent developers would most likely have ‘blessings of bankers’ before even applying for a site. A Hiap Hoe spokesperson agreed, saying developers would usually have prepared funds for the entire development cost when bidding for a site.

Reducing the deposit needed could encourage a few more developers to apply for sites, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak. The deposit could be cut to 2-3 per cent of the minimum price committed, he added.

Apart from the deposit, other procedures in the reserve list system are under review. Knight Frank chairman Tan Tiong Cheng suggested the government provide an indicative range of reserve prices for sites, so developers can be more certain their application would be accepted.

On the whole, the system works ‘pretty well’, he said. ‘It’s a case of what’s in the reserve list. The quality of the sites is important.’

Source: Business Times, 5 Feb 2010

IT is a beautiful day, and from the deck of a gorgeous, 964-square-metre four-bedroom villa, you overlook an infinity pool and the Gulf of Thailand, with the beach just a stroll away. This brand new abode is one of 17 luxurious three to five-bedroom villas that form part of the W Koh Samui Retreat & Residences, located on a stunning cape with dramatic views of both sunrise and sunset.

And it is for sale.

So yes, borrowing catchphrases from its marketing brochure, it would be very nice to ‘own it’, many will definitely ‘want it’ and think it’s ‘worth it’, even if they live hours away by air. But unless you can scrape together a cool US$4 million, such a branded residence is available only if its eventual purchaser leases it back to the adjacent 75-villa W Retreat Koh Samui for booking by the resort’s guests.

Just launched last month, W Residences on the sunny Thai island is the latest to join a burgeoning list of upmarket, hotel-branded residential homes in South-east Asia that only those with a few spare millions in US dollars can buy.

Luxury hotel and resort brands which have licensed their names to residential developments – usually located next to hotels and resorts which are also licensed to bear the same name – include W, St Regis, Ritz-Carlton, Bulgari, Alila and Six Senses. And the list is set to grow.

S’pore projects

In Singapore alone, a 228-unit W Residences will come up on the Sentosa Quayside site around mid-2012, where a 250-room W Hotel will also be built by City Developments. Units at the 99-year-leasehold residential development will have two, three and four bedrooms, and could be priced from about $2,500 to $3,000 per square foot (psf). It will join the St Regis and Ritz-Carlton residences as the third hotel-branded residential development in the country.

From the hotel brand’s point of view, a luxury residential project bearing its name offers several benefits.

Says Bulgari of its first Bulgari Residences in Bali, which will feature five exclusive villas designed by acclaimed architectural firm Antonio Citterio & Partners, and priced from a whopping US$6 million upwards: ‘We feel confident that this project will actually enhance our good name, as Bulgari will approve all the designs, and the services will be provided by the Bulgari Resort next door.’

It is ‘quite likely’ that future Bulgari Hotels will also feature a residential component, says the Italian luxury company.

A hotel-branded project can also help boost the hotel’s bottom line.

‘The revenue from the additional services provided to the residential owners increases the gross revenue and profitability of the hotel, and thereby increases the fees earned by the hotel operator,’ says Mark Edleson, president and CEO of Alila Hotels and Resorts, which has resorts with residential components at two newly opened resorts in Bali – Alila Villas Uluwatu and Alila Villas Soori.

Both are designed by award-winning Singapore firms. The Uluwatu project, by WOHA, has so far sold 16 out of 25 three-bedroom pool villas where prices start from US$2.5 million. Meanwhile, the 48-villa Soori project, which was designed and developed by SCDA Architects, is sold out. Alila has other properties under development that will also offer residential villas in Thailand, India and Oman.

‘As long as the sales documentation for the residential development is clear, with strong covenants of what the buyers can and cannot do with their units, there shouldn’t be any harm to the brand,’ Mr Edleson believes.

For developers, hotel-branded residences simply make financial sense – it is a cash injection to help offset heavy development costs.

‘Building a hotel is very capital-intensive in the dollar sense,’ explains real estate lecturer Nicholas Mak. ‘It takes a long time to recoup the investment and you have to keep investing to maintain it. So by selling branded residences adjacent to it, it is a way of monetising the hotel.’

Such residences also give the operator more and larger units to let, says Adam Taugwalder, head of Six Senses Private Residences, adding that the branded residence also creates a community of enthusiasts that is ‘very beneficial’ to Six Senses’ resorts. The brand has three luxury residential projects in Thailand and Vietnam. In the pipeline are residences in Maldives, Greece and the Caribbean.

But while there is no shortage of developers who want to put a hotel brand on their residential projects, brand owners will consider several factors before they license their names.

‘We always look for a strong developer, designer and marketing team and we make sure we hire the top names because we want to produce top-notch products,’ says Alexandra Yao, director of residential development (Asia Pacific) for Starwood Hotels & Resorts, which owns the W, St Regis and Westin brands, among others. ‘We do have a lot of requests, but even though some are good developers, one thing we really look at is location. They have to offer a good site first.’

As for buyers, the attractions are clear – the prestige of owning an exclusive luxury home in sometimes stunning locations bearing the name of a premium hotel brand; enjoying the lifestyle the brand offers; gaining priority access to the luxury services and amenities of the hotel or resort it is adjacent to; and in most cases, being able to reap returns by leasing the unit back to the hotel. Being serviced and managed by an internationally acclaimed luxury hotel operator, the idea is that capital appreciation is also ensured.

At the W Residences on Koh Samui, for instance, you can literally move in with just your suitcases – every unit will come fully furnished, right down to the cutlery and tableware. ‘This is the first W Retreat (W’s name for its resort hotels) in South-east Asia and the first non-condominium residences for W worldwide,’ says Sunny Bajaj, managing director of Amburaya, W Koh Samui’s developer. ‘We are giving people who love the brand an opportunity to check in and never have to check out. It’s an investment in a lifestyle. And they can put it back into the rental market, with freedom to tell us how much of the time they want to rent it out. The design is also something different, because with W, everything is done with a twist.’

A branded residence adds to the options of investors who are interested in property, but want to diversify. ‘They could just buy an address, or they could buy something managed by professionals from an established hotel brand, so it’s a bit hedged,’ says Mr Mak.

Of course, buyers pay a premium for such perks. For instance, at the 58-unit Ritz-Carlton Residences on Cairnhill Road, developed by the KOP Group, most units were transacted at an average of $4,000 psf, way above average luxury condominium prices.

‘This trend has continued despite the economic climate, bearing testimony to the fact that buyers acknowledge the long-term investment value of this esteemed project,’ says Leny Suparman, KOP’s chief operating officer. In Ritz-Carlton Residences’ case, not actually being situated next to the hotel brings benefits such as dedicated staff, providing ‘the highest levels of truly personalised service, rather than a ‘transient’ one’, she adds.

And the buyers of these high-priced assets? The cosmopolitan and sophisticated, from wealthy businessmen and entrepreneurs to celebrities and corporations from all over the world. According to Nichlas Maratos, Starwood’s director of sales and marketing operations, city locations such as Singapore tend to attract a mix of locals and foreign investors, while in a resort location, purchasers are often people who travel there for holidays and who might want a second home or an investment.

Caveat emptor

You can expect basic monthly maintenance fees at branded residences to start from at least US$500. And a la carte services from the hotel, such as in-residence housekeeping, laundry, catering, grocery-shopping, fitness training and spa treatments are charged separately.

Buyers must also look into any limitations placed on foreign ownership in overseas projects, as well as the length of the development’s lease and how long it is licensed to use the hotel’s name.

What is more complicated, though, is the sensitive issue of what happens after the licence expires. Because contractual terms between the hotel brand and developer are unique in each development, it is anyone’s guess what will happen in future.

In the worst-case scenario, where owners of the residences fail to renew the licence, the project will lose the hotel name and its associated benefits, and consequently, a large part of its attractiveness. Should this happen, investors might start to view branded residences with cynicism going forward.

Bottom line

More common in the West, hotel-branded residences are still in their infancy in South-east Asia. But the momentum is building up, with lesser-known names also joining the bandwagon now.

‘The sale of branded residences will become a key financial engine for any luxury operator,’ says Six Senses’ Mr Taugwalder. ‘Demand is coming from all corners of the world, from a new generation of buyers who enjoy owning a villa with all the five-star hotel services.’

Mr Bajaj agrees: ‘Indians used to like to buy a second home in London, and Indonesians, in Singapore. But the new generation wants something more lifestyle. Not just another urban apartment.’

And as wealth continues to be created in Asia, property-loving Asians are expected to keep pouring money into homes – all the better if they come branded, with the requisite bells and whistles.

Source: Business Times, 5 Feb 2010

The government could be making a wide range of changes to the property market – from offering a greater variety of lease tenures to relaxing rules for industrial land use.

These are some of several proposals from the Economic Strategies Committee (ESC) sub-group studying ways to maximise the value of Singapore’s land. It also suggested that the government track land productivity more closely, review the reserve list system of land sales, and enhance links with land-abundant neighbouring countries.

These ideas came in a report from the sub-group yesterday. The paper also contains proposals announced earlier on Monday, calling for the makeover of Tanjong Pagar into a waterfront district, the creation of underground space and more intensive use of industrial land.

Improving choice and flexibility in the property market was one of the key themes in the report. ‘In addition to robust planning, we should also focus on making our land use system more nimble and remove barriers that may impede the flow of land resources from less to more land-efficient economic activities,’ the sub-group said.

The sub-group recognised that a wider range of lease tenures would meet varying corporate needs. While industrial sites tend to carry 30 or 30+30-year leases, some capital-intensive industries have asked for longer leases for greater certainty on their investments. For commercial sites, the state usually sells them with 15 or 99-year leases but some have asked for something in between, say 60-year leases.

Property consultants generally welcomed the proposal. For instance, banks may feel more secure lending to businesses operating on sites with longer leases, said Knight Frank chairman Tan Tiong Cheng. But there are also concerns – having different lease tenures in an area may impede urban renewal later, he added.

Another suggestion from the ESC sub-group pertains to zoning and land use. Some firms have asked for an expansion of allowable uses for state property, or more relaxed guidelines on housing other activities within an industrial zone.

These requests are particularly relevant as product cycles get shorter, and the line between production and services becomes blurred. And in developing entire industries, manufacturing, research and consumer-testing activities may have to come together.

Other zoning assumptions such as buffers between residential and industrial areas may be in for a review, said Senior Minister of State for National Development and Education Grace Fu in an interview. She is also co-chair of the sub-group.

But increased zoning flexibility will come ‘in a very targeted way’, she emphasised. ‘Zoning allows us to segment land use and therefore keep industrial land affordable. . . We are not talking about very broad-based changes in the zoning framework.’

There were also positive responses to having more wiggle room in land use and zoning. Colliers International research and advisory director Tay Huey Ying supported this, though she noted that ‘it may make land valuation a bit more tricky’.

The government should also consider offering more types of business locations, the sub-group said. For instance, Gillman Village could become home to a creative cluster, while Lorong Halus could be a waterfront industrial park with more amenities and lush greenery.

The ESC sub-group further recommended that the government place greater emphasis on land productivity when deciding how to allocate land among various uses. For instance, it should track and consider indicators such as value-added and jobs generated per hectare.

As the other co-chair of the sub-group, Boustead Singapore chairman and group CEO Wong Fong Fui described: ‘It is like you have a land budget for economic development and thinking about how to invest it to maximise the economic ‘yield’ from the land.’

The wide range of proposals is expected to have some impact on the upcoming Concept Plan 2011, but Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that ‘it is still early days’ to say how reviews would go. Changes should be gradual, he reckoned.

Source: Business Times, 5 Feb 2010

THE government’s move to turn on the supply tap for private residential land appears to be having an effect on developers’ bids, property consultants said after the tender for a 99-year leasehold private condo plot in Sengkang closed yesterday.

The site, next to Sungei Punggol and in front of an LRT station, still drew a considerable 10 bids, suggesting that developers remain hungry for land, especially in the hot-selling mass-market segment.

The top bid by a City Developments Ltd (CDL) subsidiary – $200.5 million or $365.26 per square foot of potential gross floor area – was some 13 per cent higher than the next highest offer of about $322 psf ppr by a Far East Organization unit.

However, CDL’s price was lower than the top range of bids, of up to $420 psf per plot ratio (psf ppr), that had been predicted by some consultants in late December, when the government announced that the plot had been triggered from its reserve list.

‘We’re probably moving to a more stable market. Developers are becoming more realistic; the government this week reiterated that there is sufficient supply from its Government Land Sales (GLS) Programme for first half 2010,’ said CB Richard Ellis executive director Li Hiaw Ho.

The Urban Redevelopment Authority stressed that the number of private homes from the confirmed and reserve lists in the H1 2010 GLS Programme – 10,550 – is the highest in the programme’s history.

Commenting on the outcome of yesterday’s tender, Knight Frank chairman Tan Tiong Cheng said: ‘Developers are still trying to secure mass-market housing land as shown by the number of bids but this time, at more sensible prices.’

Colliers International director Tay Huey Ying described the top bid as ‘relatively realistic optimism on the part of developers’ compared with market expectations as well as achievable selling prices for the project in about a year’s time when it is likely to be launched.

Consultants estimate that based on CDL’s bid, its breakeven cost could be about $650-760 psf and its target selling price around $750-830 psf. This price range is still higher than current prices in the area cited by consultants.

A CDL spokeswoman said that the plot, at the corner of Sengkang West Avenue and Fernvalue Link, is well positioned, directly in front of Layar LRT Station. If awarded the site, CDL, which is part of the Hong Leong Group, plans to build a 24 to 25-storey condo.

‘This bid is in line with CDL’s continued strategy to build value into, and replenish its landbank,’ she added.

Assuming CDL is awarded the plot, it would mean that the Hong Leong group has clinched three out of the seven state plots (with private housing element) whose tenders have closed in the past six months.

Yesterday’s tender, conducted by the Housing & Development Board, also drew bids from Frasers Centrepoint (about $322 psf ppr), Chip Eng Seng, Allgreen Properties and GuocoLand, among others.

Source: Business Times, 5 Feb 2010

THE Housing Board (HDB) will be going back to 200 blocks islandwide which underwent the Lift Upgrading Programme (LUP) and re-doing work on the lifts.

Some of the lifts at these blocks started operating months ago, but after residents complained, lifts in the affected blocks will be ‘re-upgraded’.

At issue: Electronic panels that tell residents which floor a lift is at.

The board had initially decided to do away with the panels at lift landings – except for the lobby – to save costs.

The lift landings were fitted only with displays that showed arrows pointing upwards or downwards that would light up just before a lift arrives.

Another 170 blocks that have not been upgraded yet were to have received similar up/down indicators.

But when residents in the upgraded blocks complained that their new lifts were worse than the old ones because they could not tell how long they would have to wait for them, the HDB changed its mind.

It will now retrofit the lift landings in the affected blocks. The plans for the 170 blocks that have not been upgraded yet have also been changed.

In notices that went up on noticeboards of the affected blocks this week, the HDB said: ‘In response to feedback from residents, HDB will be gradually replacing the up/down indicators with simplified position display panels.’

The electronic panels will display a floor number and an arrow to indicate the lift direction, but will not display other electronic text, like the block number.

The notices did not give a timeline for the replacement works, but said they would be done ‘progressively’ when the new panels become available.

HDB said it initially chose simple up/down indicators because they were cost-effective: They were 65 per cent cheaper to install, 80 per cent cheaper to maintain and have a longer lifespan – seven years compared with four years – than position display panels. This, it said, would help town councils reduce capital and maintenance costs.

Asked about whether retrofitting upgraded lifts with position indicators would be more expensive than fitting them to begin with, HDB would only say that the cost would vary from site to site. It added: ‘However, as the number of blocks affected is not large, and the replacement works straightforward, the cost is estimated to be very much less than 1 per cent of the overall LUP cost for each precinct.’

It said the change would not affect residents’ share of the lift upgrading cost indicated during the polling phase – which varies from block to block, but is capped at $3,000 for Singaporeans.

When asked how much more a retrofitting exercise would cost, lift company Fujitec Singapore’s director of operations Phuah Cheng Kok estimated it would be between $5,000 and $10,000 per lift, but added that this could vary depending on the product.

Fujitec was not involved in putting up lifts at the affected blocks.

Residents of 11 blocks at Bedok North Street 4 and Avenue 4 who had called for better lift indicators welcomed the news, though they added that it was overdue.

The Straits Times reported last October that they had called the block’s LUP hotline and their town council about the issue; the HDB said then that it was looking into enhancement works.

Block 94B resident Florence Yong said she hopes the HDB will now tell them when the work will be done.

The 55-year-old, who is now between jobs, said: ‘Of course, we hope they will give us a timeline when they are going to start, when they are going to finish…otherwise they can take their time to do it.’

Fujitec estimated that it would take a week for a lift to be retrofitted in a 25-storey block if no hacking or other building work is needed.

It added that sourcing the new panels and manpower to carry out the upgrades was the more time-consuming task.

Source, Straits Times 5 February 2010