THE Housing Board (HDB) rental market continues to strengthen with larger units showing the biggest rental jump.

Overall median monthly rentals inched up in the second quarter, helped by the demand from those fleeing from high private property rents. Foreigners and locals who have sold their homes in a hot market are among those boosting HDB rents, experts say.

Overall, median rentals for two- and three-room flats were flat at $1,200 and $1,500 respectively. But four-room, five-room and executive flats saw median rental increases of between $50 and $100 a month from the previous quarter.

Four-room flat monthly rentals rose to $1,800 from $1,750, five-room flat rentals were $2,000 from $1,900 and executive flat rentals climbed to $2,100 from $2,000 in the previous quarter.

Median rentals for executive flats in Queenstown also passed the $3,000 mark for the first time since the fourth quarter of 2008, rising to $3,200. There were, however, fewer than 10 of such sublets.

Five-room flats median monthly rentals in the central region also hovered over the $3,000 benchmark for the second consecutive quarter at $3,150.

Executive flats in Jurong East saw one of the largest jumps, of $300, from $2,100 to $2,400, while areas such as Bukit Batok and Sengkang generally saw higher rentals across all flat types.

Property experts say these second quarter median rentals have hit the peak previously achieved in the second half of 2008. They expect further rise and new benchmarks to be set later this year.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said as private rentals rose steadily, some tenants were likely to look for cheaper alternatives.

‘The rate of rental increase might have outpaced the rental budget and so some tenants might prefer an HDB flat in a better location,’ he said.

HSR executive director (agency) Jeffrey Hong said that the strong demand is partly due to an influx of foreigners this year into sectors such as information technology, as companies have started hiring again.

Some Singaporeans who sold their property to cash in on high property prices have also decided to rent temporarily instead of buying immediately, he said.

Ms Hwa Hui-en, 24, a social worker, has been renting a four-room flat with four others near Ghim Moh for $2,000 a month since November last year.

She is worried her rent might rise when her lease ends in November as some of her friends have had to move out of rented homes due to higher asking rents.

‘Rentals are quite costly… We’re splitting the rent among five people and are sharing rooms now. If we don’t, it will probably take up a huge portion of our salary, maybe even one quarter of it.’

HDB said subletting deals rose about 15 per cent from 6,606 in the first quarter to 7,595 in the second – taking total approved sublet units to 30,500.

Source: Straits Times, 24 Jul 2010

Prices hit new high, could rise further with economic recovery

SALES of private homes slowed towards the end of the second quarter but prices still kept heading north into record territory.

Prices rose 5.3 per cent in the second quarter – above the preliminary estimate of 5.2 per cent and not far from the first quarter rise of 5.6 per cent.

According to Urban Redevelopment Authority (URA) data released yesterday, prices are up 11.6 per cent since January and are expected to continue climbing although the pace may ease, said analysts.

Prices are now at record levels, eclipsing the 1996 peak, after shrugging off a dip in sales that began in May when Europe’s debt crisis rocked global stock markets, observers said.

Rents were also rocketing – up 5.9 per cent in the second quarter to take the half-year rise to 10.9 per cent. Rents fell by 14.6 per cent last year.

‘The continuing recovery in the economy facilitated the increased hiring of expatriate staff, which in turn, drove the rental market,’ said Mr Li Hiaw Ho, CBRE Research’s executive director.

Cushman and Wakefield managing director Donald Han added: ‘In the second half of last year, prices went up more than 20 per cent but rents fell. So, there was some fear of a bubble forming.

‘But prices are now moving in line with rent rises. As long as rents go up, the price rise should be supported.’

Non-landed home prices rose the most in suburban areas, up 5.7 per cent, from a 4.3 per cent increase in the first quarter.

City-fringe home prices were up 4.6 per cent while city-centre ones rose 5.4 per cent.

Prices of landed homes also continued to surge, climbing 6.2 per cent in the second quarter after jumping 8.3 per cent in the first quarter.

Luxury homes are the only sector yet to reach record heights, experts noted.

Yesterday’s URA data also showed that 4,033 new homes were sold in the second quarter, down about 8 per cent from the first.

As at the second quarter, there were 61,831 private residential units in the pipeline. Of these, 32,630 units were still unsold. The URA said: ‘This number is equivalent to about three years of supply based on the average take-up of about 11,300 units per year over the last three years.’

While some buyers hesitate, others have been snapping up property.

Copywriter Daryl Lee, 34, said: ‘The last thing I want is to lock my cash up in a mortgage when all people are doing is chasing higher prices to pay higher asking prices.’

Another potential buyer Alex Wee, 37, said: ‘On the one hand, things are pricey. But on the other hand, we’re afraid that if we don’t buy, we will miss the boat.’

Accounts executive Kris Lau, 33, who bought a small investment unit at a newly released project, 368 Thomson, after selling her HDB flat, said: ‘It’s a good time to cash out and upgrade.’

Jones Lang LaSalle’s head of residential project sales, Mr David Neubronner, told The Straits Times: ‘Prices… should take a breather. But given the current backdrop where our economic recovery is generating wealth, they are likely to continue to rise this year.

‘Quite a lot of people are parking their money in property for the long term. In the worst-case scenario, I think prices may stay flat.’

Ngee Ann Polytechnic real estate lecturer Nicholas Mak believes private home prices will continue to rise this year and possibly into next year but at less than 5 per cent a quarter as sales slow.

The level of speculation now is within manageable levels, he felt.

URA data shows that sub-sales fell to 723 units in the second quarter, from 996 in the first.

Mr Li said the surprisingly strong economic growth in the second quarter will help keep market sentiment positive.

‘However, as the Government is also anticipating a slowdown in the growth momentum for the rest of the year, the residential market is likely to move at a more moderate pace,’ he said.

Sales of new homes may still reach 14,000 units this year – below last year’s 14,688 units while home prices may rise by 12 to 15 per cent, he said.

Mr Mak is looking at a price rise of 16 to 21 per cent this year.

Meanwhile, office rents rose 1.1 per cent in the second quarter compared with 0.4 per cent in the first quarter.

Rents for shops and industrial properties rose by 0.5 per cent and 1.3 per cent respectively in the second quarter.

Source: Straits Times, 24 Jul 2010

Cash over valuation now $30,000 even as supply of new flats increases

RESALE prices for HDB flats have smashed records for the eighth straight quarter with a surge of 4.1 per cent in the April to June period.

Prices passed the 1996 peak back in 2008 and have not looked back since.

And the march shows no sign of letting up, with median cash over valuation (COV) at a record $30,000 in the second quarter.

This is 20 per cent ahead of the $25,000 in the January to March quarter.

COV is the cash paid upfront by a buyer over a flat’s valuation, and is often an indication of demand levels.

The HDB figures out yesterday show resale prices are almost 18 per cent above the previous peak in the last quarter of 1996.

Meanwhile, the HDB said yesterday it launched almost 9,000 new flats in the first half – equal to last year’s total supply – and will launch another 7,200 in the second half to meet demand.

It will launch 1,000 new flats in Jurong West and Bukit Panjang this month. The total home supply will be complemented by 4,700 new homes under HDB’s design, build and sell scheme (DBSS) and recently sold executive condo sites.

Despite this, resale activity keeps growing. Transactions hit 9,114 in the second quarter, up about 7 per cent on the first.

Nearly all deals involved cash paid upfront. The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter.

The pace being set by buyers and sellers has also prompted fresh concerns on whether the market is overheating.

In estates like Queenstown the median resale price for an executive flat was an eye-popping $781,500 in the second quarter and $685,500 in Bishan.

The median resale price for five-roomers was $682,500 in Marine Parade and $675,000 for Queenstown.

Associate Professor Sing Tien Foo of the National University of Singapore’s real estate department noted that apart from the price index surpassing the 1996 peak, it has also increased by more than 60 per cent compared with 2003 prices.

He said that price increases appear to be supported by strong economic fundamentals for now, with demand coming from upgraders, downgraders, PRs and home buyers who cannot wait three years for new HDB flats.

As government policies on resale flats discourage speculation, this price growth is unlikely to be a housing bubble, observed ERA Asia-Pacific associate director Eugene Lim.

Prof Sing added: ‘But if price rises continue unabated, we should be concerned. When deviations from fundamentals are too large, some corrections in prices could occur.’

Mr Lim noted that the robust resale market is having a spillover effect on private property as HDB owners can upgrade thanks to the relatively high prices they can get for their flats.

Values in the private property market rose 5.3 per cent in the second quarter over the first despite slowing sales.

But as private property prices inch up, some buyers in that market could turn to the HDB resale sector, adding to demand, said PropNex chief executive Mohamed Ismail.

Some analysts believe prices have reached a new era.

‘Property prices move in cycles and prices will go up and down. But generally, it will move in an uptrend due to scarcity of land in Singapore,’ said Mr Lim.

‘Even if prices come down, I think it’ll still be higher than five years ago. It is unlikely we will go back to that level.’

While property agents say home buyers – especially first-timers – are getting increasingly disgruntled about blazing resale prices, some estates are still selling at levels below the 1996 peak.

PropNex agent Steven Ng, who recently helped a couple in their 50s sell a five-room Bishan flat for $615,000 – $70,000 above valuation – said the sellers were happy as they bought it at less than half that amount more than 10 years ago.

‘But some sellers in Bishan who bought at 1996 peak have still yet to see price levels at the price they paid,’ he said.

Source: Straits Times, 24 Jul 2010

SHOPPERS in China kept up their pace of spending and helped CapitaRetail China Trust (CRCT) deliver robust results in the second quarter.

The property trust saw net property income rise 8.8 per cent year-on-year to 97.2 million yuan (S$19.7 million) as revenue increased at its busy malls and property expenses decreased.

Distribution per unit was up 6.7 per cent at 2.07 cents from 1.94 cents a year ago, while distributable income rose 7.3 per cent to $12.9 million. Payouts will be distributed on Sept 24.

Gross revenue rose 3.7 per cent to 145.1 million yuan year-on-year, but fell 2.8 per cent in Singapore dollars because of the local currency’s rise against the yuan in the three months to June 30 compared with a year ago.

Mr Victor Liew, chairman of CapitaRetail China Trust Management, said resilient domestic consumption is still driving growth in China, whose economy is expected to grow 10.5 per cent this year.

‘We continue to benefit from the Chinese government’s stimulus measures to boost domestic consumption and maintain stable and sustainable economic growth,’ he said.

CRCT said tenant sales grew 28.8 per cent while shopper traffic was up 14.4 per cent over levels last year. Occupancy rates are at 96.1 per cent.

The trust’s portfolio consisted of eight retail mall properties in five cities worth 5.8 billion yuan as of June 30.

Net asset value per unit as of June 30 was $1.13. CRCT’s units closed up one cent at $1.26 yesterday.

Separately, Ascott Residence Trust reported a 4 per cent rise in distribution per unit to 1.87 cents in the second quarter from 1.79 cents a year ago.

Distributable income was up 5 per cent at $11.6 million while revenue rose 3 per cent to $44.4 million. Payouts will be made on Aug 27.

Ascott Residence Trust Management’s chief executive, Mr Chong Kee Hiong, said the rise in revenue was led mainly by a better performance in China and Singapore arising from higher occupancies and rental rates.

‘The level of business activities in Singapore has increased in line with the strong economic growth, resulting in higher demand for serviced residences,’ he said.

Ascott Reit’s portfolio has a total asset value of $1.59 billion, comprising 38 properties with 3,644 units in 11 cities across seven countries.

Net asset value per unit as of June 30 was $1.38. Ascott Reit’s units closed down one cent at $1.23 yesterday.

Source: Straits Times, 24 Jul 2010

Turmoil in Europe, protectionist pressures may hurt world economy

ASIA is recovering well from the financial crisis but there are still risks to the world economy, including the turmoil in Europe and protectionist pressures in many countries, according to Dr Tony Tan, deputy chairman of the Government of Singapore Investment Corporation (GIC).

Dr Tan told the Swiss Re Forum Singapore yesterday that the global recovery is likely to continue into the next year but at a more moderate pace.

But he cautioned that the rebound is ‘fragile’ and ‘negative shocks could push the global economy towards a recession sooner than expected’.

And while growth prospects are much better for Asia than for the developed world, Dr Tan does not see Asia ‘aggressively challenging’ the global order, which has benefited the region for decades.

‘Asian countries, including China, generally share the view that a multilateral, rules-based international order is critical to their long-term growth and development,’ said Dr Tan. ‘Asia’s rise therefore is not inevitably a zero-sum geopolitical game where the US and Europe must decline as Asian countries grow.’

Dr Tan flagged the turmoil in Europe, saying that growth there should be weaker at around 1 per cent.

According to some analysts, there are growing signs that Europe’s sovereign debt crisis is feeding through into the

euro-area economy in the form of a sharp rise in unemployment and a slowdown in manufacturing recovery.

Dr Tan warned that ‘protectionism also remains a risk despite the recovery, given high unemployment and what seems to be, for the first time in many years, increasing tensions between American and European businesses and the Chinese policy environment’.

Dr Tan’s comments come at a time when investors are increasingly upbeat about Asia’s growth outlook, but less bullish about the global economy.

Earlier this month, the Asian Development Bank raised its 2010 forecast for aggregate growth across Asia – embracing East Asia excluding Japan, South-east Asia, South and Central Asia as well as the Pacific island economies – from 7.5 per cent to 7.9 per cent.

Yet Citigroup forecast global growth to rise 3.7 per cent this year and 3.3 per cent next year, trimming its projections by 0.1 percentage points for each year.

Dr Tan said the post-crisis global economic and financial environment will be affected by three major trends.

The first is that the developed world will take a ‘long time’ to fully heal from the crisis.

The second is the increasing importance of the emerging economies, anchored by Brazil, Russia, India and China.

And the third major trend, as Dr Tan describes it, will be ‘increased vulnerability’ to negative events, and ‘extreme reliance’ on government policies for both support and far- reaching reforms over the next few years.

Dr Tan said: ‘The challenge for policymakers in many developed economies will be to convince markets that they have credible plans to ensure sustainable public finances over the medium to long term, while minimising the negative short-term impact on growth.’

In the emerging economies, policy-makers will have to deal with rising inflation and possible asset price bubbles, he said.

Source: Straits Times, 24 Jul 2010

Dangers to world economy include Europe’s debt turmoil, deleveraging in the United States, and protectionist pressures

A FRAGILE economic recovery could see the world tip back into recession ‘sooner than expected’, says Tony Tan, deputy chairman of the Government of Singapore Investment Corp (GIC).

Dr Tan, also GIC’s executive director and chairman of Singapore Press Holdings (SPH), told delegates at the Swiss Re Forum here yesterday that downside risks to the global economy have increased, highlighting three in particular: the debt turmoil in Europe, deleveraging in the United States, and protectionist pressures around the world.

‘It will take a long time for the developed world to fully heal from this crisis,’ Dr Tan said. ‘The economic recovery, while real, is fragile and there is a risk that negative shocks could push the global economy towards a recession sooner than expected.’

Meanwhile, the developing economies will gain in economic importance and will expect more say on world affairs. ‘The shift in economic power to the emerging world will likely increase geopolitical risks,’ he said. ‘Conflicts could also arise over access to natural resources.’

Investors, meanwhile, will have to place a larger proportion of their assets in emerging markets. ‘Far from being a risky and perhaps optional part of their portfolios, emerging markets will become a core and unavoidable asset class in global portfolios,’ he said.

But one major risk investors face is that the global recovery has so far been supported by extraordinarily benign government policies. ‘Changes in policies or mistakes will thus have a significant impact on the global economic and financial environment,’ Dr Tan said. ‘A key challenge for policymakers is to properly time the withdrawal of unprecedented monetary and fiscal policies.’

However, governments will have to juggle exit policies with, in some cases, the pressing need to repair public finances. ‘The challenge for policymakers in many developed economies will be to convince markets that they have credible plans to ensure sustainable public finances over the medium to long term, while minimising the negative short-term impact on growth,’ Dr Tan said.

Asia meanwhile will have its own set of problems. ‘Asia will increasingly face labour, natural resource and commodity constraints to its high-growth strategy.’ As well, growth will have to depend on a more balanced economic model in that case, he said, which should boost Asian currencies and consumption. But policymakers will have to beware asset price bubbles, rising inflation and populist anger in the developed world that could lead to ‘excessive regulation and protectionism’, he warned.

Dr Tan said: ‘Asia is at the cusp of the next stage in its development. There will likely be bumps along the way – perhaps a few crises – but if we learn the right lessons from history, especially those of the recent Great Crisis, Asia will innovate and adapt

Source: Business Times, 24 Jul 2010

New Creation and City Harvest don’t flout new rules but will have to abide by usage curbs: URA

THE commercial investments of New Creation Church and City Harvest Church do not infringe the Urban Redevelopment Authority’s (URA) new guidelines, it has been clarified. But plans for the one-north hub and Suntec Convention Centre will have to comply with restrictions on the use of commercial space for worship, prayer and preaching.

Guidelines made public on Tuesday stated that commercial premises ‘cannot be owned by or exclusively leased to religious organisations’, raising questions over City Harvest’s minority stake in Suntec Singapore and plans to spend $310 million on a move there next year, as well as New Creation Church’s joint venture via business arm Rock Productions with CapitaMalls Asia, to build a $1 billion lifestyle hub at one-north.

In response to a BT query, URA clarified that religious groups whose business units own commercial property do not contravene the guidelines, meant to provide clarity and keep commercial space secular.

These guidelines, the URA spokesman said, concern the limited and non-exclusive use of auditoriums, function halls, convention halls and cinemas within commercial and hotel developments for religious activities. ‘It is in this context that such premises cannot be owned by, or exclusively leased to, religious organisations,’ the spokesman said.

‘The ownership of these premises can, however, be held by commercial entities of the religious organisations as these commercial entities also conduct other secular events at these premises,’ URA added. For instance, New Creation’s Rock Productions, which leases the Rock Auditorium in Suntec City from Suntec Reit, rents it out for events and meetings on weekdays.

However, both the one-north complex and Suntec Convention Centre are commercial developments, so the churches’ plans to shift worship services there in future will have to comply with the new guidelines.

Each religious entity can use up to 10,000 square metres of a commercial development’s space at any one time, for up to two days a week, while each commercial landlord cannot rent out more than 20,000 sq m or 20 per cent of a development’s gross floor area, whichever is smaller.

Current leases to religious organisations at Suntec fall within these limits. New Creation’s weekend services use The Rock Auditorium, which has a gross floor area of about 3,500 sq m, and a few other cinema halls and rooms.

Things are not as clear at the Singapore Expo, which reserved comment when contacted about compliance with the new guidelines. Currently, City Harvest rents Hall 8 (10,000 sq m) while Faith Community Baptist Church (FCBC) rents the Max Pavilion and Hall 9 (10,000 sq m each). The smaller Bethesda Community Church rents halls covering 844 sq m. The total floor space leased by these churches thus appears to exceed the 20,000 sq m limit.

But some in the property line point out that the guidelines only govern space used for religious activities – namely worship, prayer and preaching – and that the Expo’s halls are easily partitioned. FCBC also said that Hall 9 is used largely as a foyer and holding area for the congregation before and after services.

In any case, URA said on Tuesday that it will ‘exercise flexibility to allow some religious organisations sufficient time to meet the guidelines’ so as to ‘minimise disruption to their current activities’.

Source: Business Times, 24 Jul 2010

Momentum of recovery in private residential rents also picked up

PRIVATE home prices generally rose at a slightly slower pace in Q2 than they did in Q1, but latest official numbers show a broad-based growth in property prices – with stronger quarter-on-quarter gains for office, shop and industrial properties, as well as HDB resale flat prices in Q2 than in the first quarter.

The momentum of recovery in private residential rents also picked up in the second quarter, supported by an acceleration in hiring of expats as Singapore’s economy continues to expand.

‘Sentiment among developers and market watchers probably moderated from the end of first quarter as a result of the eurozone’s economic problems, but the recent spectacular official GDP growth forecast for Singapore has probably helped to restore some confidence,’ said Real Estate Developers Association of Singapore CEO Steven Choo.

The Urban Redevelopment Authority’s (URA) benchmark overall price index for private homes rose 5.3 per cent in the second quarter over the preceding quarter, close to the 5.6 per cent per cent hike in Q1.

The price index for office space increased 4.6 per cent quarter on quarter in Q2, a bigger gain than the 1.8 per cent quarter-on-quarter rise in Q1.

Likewise, the shop price index went up 3.9 per cent in Q2, following a 1.8 per cent pick-up in the first three months. URA’s flatted factory and warehouse price indices rose 5.4 and 9.4 per cent in Q2. In Q1, each of these increased 1.5 per cent.

In the private housing market, prices of detached houses rose 6.8 per cent in Q2, slower than the 9.6 per cent increase in Q1. Semi-D and terrace houses appreciated 6 per cent and 5.6 per cent respectively in Q2 – compared with increases of 7.5 and 7.4 per cent in the first three months.

Non-landed home prices in Core Central Region (which includes the prime districts, Marina Bay and Sentosa Cove) climbed 5.4 per cent in Q2, higher than the 4.4 per cent growth in Q1. Likewise, the price index for Outside Central Region (where suburban condos are located) rose 5.7 per cent in Q2 after increasing 4.3 per cent in Q1.

However, in Rest of Central Region the pace of price gain slowed from 7.9 per cent in the first quarter to 4.6 per cent in Q2.

In the primary market, developers sold a total of 4,033 private homes in Q2, down 7.9 per cent from Q1. In the secondary market, strong buying momentum was also seen in the resale market, with 4,682 private homes changing hands in Q2, although this was 5.6 per cent lower than the first three months of the year. However, subsale volumes eased 27.4 per cent, from 996 deals in Q1 to 723 in Q2.

‘Resales were strong in Q2 because prices are more reasonable for older, completed properties than new project launches. On the other hand, subsales (which are secondary-market deals involving projects that have yet to receive Certificate of Statutory Completion) come in waves. Those who bought homes from developers in the past few months are probably waiting for prices to rise further before they offload their units,’ suggests a market watcher.

In the leasing market, URA’s All Residential rental index rose 5.9 per cent in Q2 over the preceding quarter, compared with a 4.7 per cent quarter-on-quarter gain in Q1. The index has appreciated 10.9 per cent since end-2009.

Rents accelerated for both landed and non-landed private homes. Terrace houses led the landed segment, with rents rising 6.6 per cent in Q2, followed by semi-detached houses (up 5.6 per cent) and detached (up 4.6 per cent). For non-landed homes, rents in Core Central Region appreciated the most, by 6.4 per cent, followed by Outside Central Region (up 6.1 per cent) and Rest of Central Region (5.1 per cent).

However, the latest All Residential rental index is about 11.1 per cent below its peak in Q2 2008.

Jones Lang LaSalles’ head of residential Jacqueline Wong said the latest official figures confirm feedback from the ground. Monthly rentals of four-bedroom apartments in high-end developments such as Grange Residences, Draycott 8 and Ardmore Park are hitting $16,000-$18,000 on average – an improvement from $14,000-$15,000 in the second half of last year.

‘But we still haven’t achieved the peak levels of $18,000-$22,000 seen in the late 2007 to mid-2008 period,’ Ms Wong added. ‘We’re seeing rehiring of expats again but housing allowances are not as generous as before.’

Ms Wong is predicting flattish rents until the end of this year, citing new competition with the impending completion of The Orchard Residences and The Marq on Paterson Hill.

URA numbers show 4,379 private homes received Temporary Occupation Permit (TOP) in Q2, compared with 1,407 units in Q1. The surge in new completions pushed up the islandwide vacancy rate for private homes to 5.4 per cent at end-Q2, from 4.6 per cent at end-Q1. But this could ease again as owners or tenants move into the new homes.

Major residential projects completed in April-June 2010 include One Amber, Marina Bay Residences, Dakota Residences and The Arte.

With a further 4,958 units expected to receive TOP by year end, the full-year tally will be 10,744, slightly above last year’s 10,488 units

Source: Business Times, 24 Jul 2010

NET office demand surged in the second quarter of this year to its highest quarterly level since Q3 2007.

Urban Redevelopment Authority figures released yesterday showed a net increase in demand of 398,264 square feet in Q2, up about 68 per cent from the previous quarter. The Singapore office market has not seen such strong quarterly take-up since Q3 2007, when net demand of 646,000 sq ft was created.

The strong Q2 demand takes the first-half tally to about 635,000 sq ft. CB Richard Ellis is forecasting that the full-year 2010 take-up could be about 1.8 million sq ft, given that the first phase of Marina Bay Financial Centre is fully leased and pre-committed. The estimate exceeds the 1.28 million sq ft average annual take-up for the past five years (2005-2009).

‘This fast and furious recovery from the negative take-up of about 236,000 sq ft last year reflects the close correlation between economic growth and office demand,’ says CBRE executive director Li Hiaw Ho.

Roaring demand during the office market’s heyday back in 2006-2007 sent rents skyrocketing in the face of a supply shortage. This time around, there is still ample supply in the pipeline for now, with about 9.6 million sq ft in gross floor area of offices expected to be completed between Q3 this year and 2013, according to URA figures.

Says Knight Frank chairman Tan Tiong Cheng: ‘While some of this space is already pre-committed, much of it is still available. And don’t forget, some of the leasings at new buildings are a game of musical chairs being played as occupiers vacate older buildings. So right now there’s no shortage of space.’

Still, some market watchers such as CBRE’s Mr Li have been calling on the government to address the market’s concerns about a potential gap in office supply after 2013.

Knight Frank’s Mr Tan believes that the government policy would be to release office sites on a regular basis through both the confirmed and reserve lists. Under the second half 2010 Government Land Sales Programme, a white site next to International Plaza with a minimum office and hotel component is expected to be launched next week. Sites at Paya Lebar and Jurong East with minimum office components will also be made available for application under the reserve list later this year.

However, some market players are asking the government to do more and release a choice plot or two in the Marina Bay area, where Singapore’s new financial district is coming up, to cater to future demand for prime office space from international financial institutions and MNCs.

Singapore’s existing office stock may also be reduced by the removal of some ageing office blocks which are torn down for redevelopment, very often into apartments.

For example, last month, Ececil Pte Ltd received provisional permission to redevelop Aviva Building and Cecil House, two adjoining office blocks at Cecil Street, into a new project that will have 227 apartments.

Ececil is controlled by Cheong Sim Lam, whose family developed International Plaza in the 1970s. Mr Cheong is said to have bought Aviva Building and Cecil House from Yi Kai Group and Fission Group, which in turn picked up the two office blocks last year for $101 million from insurer Aviva.

Source: Business Times, 24 Jul 2010

CAUSEWAY Point is embarking on a $72million facelift to better serve the 300,000 residents in Woodlands.

The 12-year-old mall at the Woodlands regional centre is part of the portfolio that makes up Frasers Centrepoint Trust (FCT), which yesterday reported record third-quarter earnings.

For the three months to June 30, FCT achieved a 34.6per cent rise in income available for distribution to $16.3million. This translates to a 6.7per cent rise in distribution per unit to 2.07 cents.

During this period, gross revenue rose by 44.7per cent to $30.7million, while net property income climbed by 46.3per cent to $21.5million.

The upgrading of Causeway Point – FCT’s crown jewel – will boost income and ‘provide further organic growth in years to come’, said Dr Chew Tuan Chiong, chief executive of the manager of FCT.

Opened in 1998, the seven-storey mall has a net lettable area (NLA) of about 418,500 square feet. To unlock value, space occupied by ‘big box’ tenants, for example, Metro department store, will be reduced to 50per cent of NLA from 65per cent currently.

‘As specialty tenants pay higher rentals in view of their smaller footprint, this will help to raise average rental at the mall,’ the FCT manager said.

To improve visibility of shops and create new retail space in prime locations, escalators at the mall will be moved to more convenient areas. A new food and beverage cluster on level five will be created.

Overall, the 30-month upgrading is aimed at increasing net property income by 22 per cent to $51.5million.

A review of its third-quarter results showed that FCT was successful in raising rents. Rental from renewal and replacement leases commencing during the quarter at Causeway Point and Anchorpoint saw an average increase of 8.5 per cent over expiring leases. The occupancy rate of all its properties remains at 99.4 per cent.

FCT units yesterday fell one cent to $1.39.

Source: Straits Times, 24 Jul 2010