Developer Sim Lian Land has clinched the tender for the residential site at Tampines Avenue 1 and Avenue 10. It submitted the top bid of S$302 million for the 3.2-hectare plot.

The site with a 99-year lease had attracted a total of eight bids. The remaining bids range between S$168 million and S$289 million.

The Urban Redevelopment Authority (URA) said it is the fourth residential site to be sold through the Confirmed List of the Government’s Land Sales Programme in the first half of 2010. Others include land parcels at Choa Chu Kang Road, Buangkok Drive and Yishun Avenue 11.

The four sites can potentially yield 1,710 housing units.

URA added that another four residential sites will be released for sale in March and April, which could add an extra 1,215 units. They are located at Boon Lay Way, Simei Street 3, Sembawang Road and Upper Serangoon Road.

URA has also assured that there is sufficient land supply to meet any surge in demand. It said a potential supply of 10,550 units will be made available from the Confirmed List and Reserve List system for the first half of the year.

This is the highest total supply quantum from any half-yearly government land sales programme.

Separately, URA has also awarded the tender for a transitional office site at Mohamed Sultan Road to LINK (THM) Holdings at S$17.2 million.

Source: Channel News Asia, 19 Mar 2010

It provides flexibility for acquisitions and asset enhancement initiatives: Goldman

CAPITACOMMERCIAL Trust’s (CCT) second major fund-raising exercise in less than a year could pave the way for the office landlord to improve its portfolio, analysts said.

The trust on Wednesday said that it will issue $225 million worth of convertible bonds and use 75-90 per cent of the proceeds to enhance its assets and refinance debt.

‘Although bite-sized, we think the proceeds from convertible bonds provides financial flexibility and paves the way for long awaited acquisition(s) and/or asset enhancement initiatives to enhance its office portfolio,’ said Goldman Sachs analyst Paul Lian, who has a ‘buy’ call on CCT.

He added that the news allays market concerns that CCT, which is partly owned by Singapore’s largest property group CapitaLand, is losing its foothold in the office market with the sale of Robinson Point and the potential redevelopment of StarHub Centre to residential use. Both deals were announced early this year.

In an update yesterday, CCT said that the convertible bonds issue has been fully placed out to institutional and accredited investors. The bonds, which are due in April 2015, are unsecured and convertible into new CCT units at a conversion price of $1.356 per new unit. They come with an interest rate of 2.7 per cent per year.

Credit Suisse, the lead manager for the issue, could exercise an option within the next 28 days to increase the size of the issue by up to $25 million to $250 million, CCT added.

The bond issue marks the second big fund-raising action for CCT in less than a year. The trust in mid-2009 raised $804 million in a rights issue and paid off some of its debt to cut down its gearing.

With this latest convertible bond issue, CCT will have more cash on hand. But gearing is expected to climb.

Goldman Sachs estimates that 2010 gearing could rise to 36 per cent from 32 per cent. But CCT has no major refinancing pressure until its $355 million convertible bond put option is due in May 2011 and $520 million worth of commercial mortgage-backed securities is due in Sept 2011.

CCT chief executive Lynette Leong pointed out that the bonds are unsecured, which preserves CCT’s existing pool of unsecured properties and ‘will give CCT the financial flexibility to respond quickly to any growth opportunities in the future’.

Eight properties with a total asset value of $2.8 billion (out of CCT’s eleven properties) are unsecured against any borrowings.

In a statement, Moody’s Investors Service said that it sees no impact on CCT’s ‘Baa2′ corporate family rating or ‘Baa3′ senior unsecured debt rating from the latest convertible bond issue.

‘Leverage will increase modestly, but the long-dated convertible bond issue will improve CCT’s liquidity and funding stability,’ said Moody’s vice-president and senior credit officer Peter Choy. ‘It will also provide funding for CCT’s portfolio reconstitution, designed to enhance asset quality.’

But others were bearish on the stock as office rents in Singapore are expected to continue sliding.

‘We think office rents could continue to trend downwards over the next 1-2 quarters and possibly bottoming out by end-2010,’ said DMG & Partners Securities, which issued a fresh ’sell’ call. ‘Judging from the huge supply of office space, it could take at least 1-2 years for excess capacity to be absorbed before rents start their upward climb.’

CCT shares lost four cents, or 3.5 per cent, to close at $1.09 yesterday.

Source: Business Times, 19 Mar 2010

But group expects little growth in sales volume this year

China Overseas Land, the country’s largest property firm by market value, posted strong half-year profit growth and said it would increase spending by almost a third this year.

China Overseas Land & Investment Ltd earmarked HK$54.5 billion (S$9.8 billion) for 2010 capital expenditure on land purchases and property development, up from HK$41.7 billion last year, chairman Kong Qingping said yesterday.

But China Overseas sees little growth in sales volume, with analysts saying government measures to keep prices from rising too sharply may dampen the financial performance of property developers.

China Overseas, a unit of construction firm China Construction Engineering Corp, sees no growth in volume sales this year from last year’s 4.8 million square metres.

The company, and its rivals Vanke and Soho China, benefited from a property boom last year that was fuelled by nearly 10 trillion yuan (S$2 trillion) in new lending and massive economic stimulus spending. A strong rebound in the property market prompted consolidation of prices at a high level.

‘Some recent policies and measures have already affected the property market in the short term,’ the company said in a statement, though it remains upbeat about the long-term development of China’s property market.

Executives from the Hong Kong-listed company did not rule out a China listing, but declined to elaborate at yesterday’s news conference.

July-December profit rose 62 per cent to HK$4.43 billion from HK$2.74 billion a year earlier, according to Reuters calculations, beating consensus forecasts for HK$3.44 billion by Thomson Reuters I/B/E/S.

Full year net profit was HK$7.47 billion, versus a year-earlier HK$5 billion, on revenue nearly doubled at HK$37.3 billion.

China Overseas shares fell 1.6 per cent after the results, closing at HK$16.90, while the main market slipped 0.25 per cent.

Shares in China Overseas have gained 3 per cent this year, beating a broader market that has dipped 2.5 per cent.

Source: Business Times, 19 Mar 2010

PROSPECTS for real estate investment trusts (Reits) in Singapore remain challenging as there will be a greater supply of office, industrial and retail space coming onstream, said Moody’s Investors Service yesterday.

The rating agency kept its outlook for the sector over the next 12 months negative. This places it at the bearish end of the scale compared with two other research houses – DMG & Partners has a ‘neutral’ rating on Reits and OCBC Investment Research recently upped its call to ‘overweight’.

Moody’s was particularly concerned about the influx of office, industrial and downtown retail space at a time of unexceptional economic growth. Its sovereign unit estimates that Singapore’s GDP will expand by around 5 per cent this year.

‘This is below the average GDP growth of 8 per cent from 2004 to 2007 and will not be adequate to absorb the strong increase in supply of commercial properties that was planned before 2008, based upon the then much higher economic growth rate,’ it said in a report.

According to Moody’s, around 6.6 million square foot of new office space will enter the market between this year and 2012. While landlords have managed to secure tenants for more than 30 per cent of the new supply, there will still be pressure on occupancy and rents over the medium term, it said.

When it came to the retail sector, Moody’s was more worried about rents at Orchard Road. This is because about 3.7 million sq ft of new space will be ready in the next two years, some of it at the two integrated resorts.

Moody’s acknowledged that most Reits have been rather resilient and have turned in stable results. But ‘pressure on earnings may increase in 2011 when new supply comes on stream across all property segments if demand is not increased’, it said.

Not all market watchers shared Moody’s view completely. DMG analyst Jonathan Ng agreed that office Reits would face a tougher time as rents continue to slip, but he was neutral about prospects for retail and industrial Reits, and positive on hospitality Reits’ performance.

Mr Ng was not particularly concerned about new retail space coming onstream as pre-commitment rates have been strong.

In a March 4 report, OCBC Investment Research upgraded its call on the Reits sector. Of the eight Reits it covers, five most recently turned in results meeting the house’s forecasts while three did better than expected.

Source: Business Times, 19 Mar 2010

THE Urban Redevelopment Authority (URA) yesterday received surprisingly high bids for a transitional office site at Mohamed Sultan Road.

The 15-year leasehold plot attracted three bids. The highest was $17.19 million, or $172 per sq ft per plot ratio (psf ppr), from a boutique property developer and sports fashion retailer Link (THM) Holdings Pte Ltd.

Yesterday’s top bid was eye-catching on several counts. First, it was 3.7 times that of the sole bid which URA received in 2008 when it last tried to sell the site. That bid, at just $4.65 million, was rejected.

Second, it far exceeded the trigger price for the site. URA put the site up for tender again in February after a developer committed to pay at least $9.33 million for the land.

The other two bids which came in yesterday were also higher than the trigger price. OKH Management Pte Ltd, a unit of building contractor OKH Holdings Pte Ltd, offered to pay $13.29 million, or $133 psf ppr.

The third bid, at $11.16 million or $112 psf ppr, came from Agrow Investments Pte Ltd.

The results of yesterday’s tender ‘exceeded expectations’ and reflects confidence about the office market, said Savills Singapore commercial leasing director Agnes Tay.

The office site spans 66,482 sq ft and has a maximum gross floor area of 99,728 sq ft. Ms Tay estimated that with construction costs, total investment in the site could come up to around $32.2 million.

This would translate to a breakeven rental of around $2.50-$3.00 psf over 14 years – the amount of lease remaining when the site is ready in about a year’s time. This would be ‘appealing to many office users, especially big organisations who appreciate less volatility in rents over time’, she said.

Cushman & Wakefield Singapore managing director Donald Han also described the bids for the site as ‘aggressive’. The top bidder is perhaps confident of controlling construction costs, he said.

According to Link (THM)’s website, the company has developed a number of landed homes in Districts 9, 10 and 11. Its latest launches include a good class bungalow at Astrid Hill and semi-detached houses at Holland Road.

Link (THM) also distributes bags by brands such as Nike and Adidas. It has shops in VivoCity, Jurong Point and other malls.

Mr Han added that by the middle of next year, when the office space is completed, rents in the market would probably have picked up.

Source: Business Times, 19 Mar 2010

ACTRESSES dressed as Hollywood icons such as Marilyn Monroe and prancing lion dancers were in attendance at Sentosa yesterday when the Universal Studios theme park greeted its first visitors at precisely 8.28am. The park is the last of the attractions at Resorts World Sentosa (RWS) to accept visitors under Phase 1 of its opening.

Universal Studios’ 18 attractions include the Battlestar Galactica roller coaster, several movie-themed thrill rides, and shows like Waterworld, which is based on the movie of the same title.

Most of the visitors in the early morning crowd of about 200 yesterday were Singaporeans with children in tow.

Lawyer Zee Liew, 39, who was with his wife and two sons aged eight and six, said the family had checked into the resort’s Festive Hotel on Wednesday for a school holiday ’staycation’.

His elder son, Wei Jin, gave the theme park a big thumbs-up and said the Jurassic Park ride was his favourite.

For newlyweds Raymond Ling and Liew Soo Eng, the star attraction was the Battlestar Galactica.

Mr Ling, 27, a sales manager, and Ms Liew, 23, a teacher, made a beeline for the ride and loved it.

Mr Ling said: ‘The goal was to come here first and experience the most terrifying rides. We’ll definitely be taking it as many times as we can.’

The 20ha park, Universal Studios’ fourth after those in Orlando, Hollywood and Osaka, completes RWS’ first phase line-up of the casino, four hotels and a retail and dining strip.

Still to come are a maritime museum, two more hotels, a marine life park, water theme park and luxury spa. No timeframe has been given for them.

No major glitches were reported yesterday, in contrast to the casino’s opening on Feb 14, when there were complaints of overcrowding, lack of sanitation facilities and long entry queues, among other things.

Park-goers yesterday said there were fewer people than expected, and that they did not have to stand in line for long.

This could have been due to the limited number of tickets sold.

RWS spokesman Robin Goh declined to say how many tickets were sold, but said that they numbered ‘in the thousands’.

He said limits were placed to avoid ‘over-stressing the system’.

Genting Group chairman Lim Kok Thay told reporters yesterday that RWS’ performance so far has ‘exceeded our own expectations’.

Both RWS and the Marina Bay Sands integrated resort – which will begin its phased opening on April 27 – are expected to boost visitor arrivals to Singapore.

In addition, they are expected to create about 60,000 jobs for Singaporeans and add $5.4 billion to the economy by 2015.

Judging by the reaction from tourists, the theme park is working its magic.

Australian Kirsteen Knevitt declared that Universal Studios Singapore is better than the theme parks back home.

She said: ‘Everything is beautiful, and the rides are really, really good.’

Indonesian businessman Edwin Purwohandianto, 44, said: ‘This is one of the more spectacular places in Singapore. I think many people from Asian countries will want to come.

‘Before this, the only attraction was Orchard Road.’

Source: Straits Times, 19 Mar 2010

THE tender for a transitional office site in Mohamed Sultan Road closed yesterday with a top bid almost four times greater than an offer received in 2008 when the property failed to sell.

Boutique development firm Link (THM) Holdings bid $17.19 million, or $172.37 per sq ft (psf) of gross floor area.

That was nearly 30 per cent above the second highest bid of $13.29 million, or $133.26 psf of gross floor area, from OKH Management.

Agrow Investments was last with $111.86 psf, or $11.16 million, yet that was still well ahead of the $4.65 million offered – and rejected – for the site in 2008.

The land between Kim Yam and Martin Roads comes with a shorter-than-usual 15-year lease.

It can accommodate a four-storey building with a total floor area of almost 100,000 sq ft.

The site was triggered for launch in late January at a minimum price of $9.33 million.

Property experts had suggested then that response may not be strong given the ample office supply in the market and that the minimum bid was twice the 2008 bid.

The site was launched in August 2008, when it was on the confirmed list. The Urban Redevelopment Authority received just that one bid of $4.65 million from RSP Architects Planners & Engineers but rejected it as too low.

It transferred the site to the reserve list in October that year.

Cushman & Wakefield Singapore managing director Donald Han said the top bidder this time is probably keen to keep some of the space for its own use.

‘They will have to control their costs well, as their total bill could come up to about $400 psf,’ he said, adding that apart from the land cost, construction expenses will likely amount to $150 to $180 psf.

Rents in the office sector are almost at the bottom of the cycle. The development may be completed by the middle of next year, when office rents may recover, said Mr Han. ‘If they can lease out at $5.50 psf, they can get a yield of about 10 per cent.’

Source: Straits Times, 19 Mar 2010

Agents collecting cheques even before next week’s preview

BUYERS are said to be already showing interest in a condominium project in the Central Business District, although the preview will not be until next Thursday.

Property agents have apparently collected cheques from buyers for the 99-year leasehold development in Shenton Way, according to sources.

Pre-marketing is common these days, with agents busy drumming up interest before the preview, so some buyers try to get in early.

‘On the ground, there seems to be a lot of interest, but the real test will come next week when it is previewed,’ said one agent.

A property expert added: ‘New launches are hot today, but the older condos are forgotten.’

The 39-storey downtown condominium – called 76 Shenton – is being developed by Hong Leong Holdings. It is at 76 Shenton Way in Tanjong Pagar on the site that used to house the Ong Building, next to Lippo Centre.

Prices range from just below $1,700 per sq ft (psf) to $2,500 psf, with units on the 23rd to 27th floors being quoted at $1,900 psf to $2,200 psf.

It will have 202 units – all below 1,000 sq ft – and seven shops.

‘Smallish units are still in play and attracting strong buying support,’ said Mr Michael Ng, managing director of Savills Singapore, linked to one of the marketing agents, Huttons.

Knight Frank is the other marketing agent.

‘The bite-sized units are very palatable… City living is also finally taking off now that the Marina Bay Sands integrated resort will open soon.’

The project will have 134 one-bedders ranging in size from 592 sq ft to 624 sq ft and 68 two-bedroom units of 969 sq ft to 980 sq ft.

The Residences at W Singapore, being developed by City Developments in Sentosa Cove, will also be released for sale next week, as will Ho Bee’s Sentosa Cove project, Seascape.

Hong Leong is also in final preparations to launch the 65-unit Nathan Suites in the Bishopsgate area, said its spokesman.

Talk is that the freehold Nathan Suites – located next to Regency Park – will sell for around $2,000 psf.

Apart from these high-end projects, developers are also preparing to release mid-range residences.

These include Frasers Centre-point’s 393-unit project on the old Flamingo Valley site in Siglap and Far East Organization’s 104-unit freehold project, The Sound, in Telok Kurau.

The spate of launches comes amid a buoyant market, with sentiment especially high for new releases.

Developers sold 2,676 new private homes in the first two months of the year, more than the 2,552 homes sold in the first quarter of last year.

Cheung Kong (Holdings) sold at least 160 units of The Vision in West Coast Crescent recently for a whopping $1,000 psf to $1,200 psf after a few rounds of marketing.

Source: Straits Times, 19 Mar 2010