They include Belmont Road bungalow, Fernhill Road site and condo units

(SINGAPORE) As action in the property market drifts up to the high end, more top-notch properties are surfacing at auctions.

A good-class bungalow (GCB) on Belmont Road, a 7,000-square-foot freehold site on Fernhill Road and condo units at St Regis Residences, Leonie Towers and Gallop Gables are among properties that will go under the hammer next week.

The GCB at 62 Belmont Road has been put up for sale at an indicative price of $26 million to $30 million. This works out to $797 to $919 per square foot (psf) based on the sprawling site of 32,627 square feet.

The existing single-storey bungalow, which will be offered at Knight Frank’s auction on June 23, is more than 30 years old.

‘The property can be rebuilt into a new two-storey bungalow with a basement. And there’s space for a tennis court and swimming pool,’ says Knight Frank executive director and auctioneer Mary Sai.

Colliers International’s auction on June 24 will feature a recently renovated two-storey freehold bungalow with six bedrooms and a maid’s room at 2 Branksome Road, off Tanjong Katong Road.

The property is being offered at an indicative price of $9 million or $815 psf of land area, says Colliers deputy managing director and auctioneer Grace Ng. The bungalow has a swimming pool and Balinese-style decor.

A trustee sale of a 7,232-sq-ft freehold vacant site in Fernhill Road is indicatively priced at $6.5 million to $7 million, which reflects a unit land price of $641 to $691 psf of potential gross floor area (GFA). This excludes any development charge that may be payable.

The site is zoned for residential use with a 1.4 plot ratio – the ratio of maximum potential GFA to site area. It can be developed into a small apartment project or a landed housing development.
Jones Lang LaSalle (JLL) is auctioning the property on June 26.

Another property at the event will be a sheriff’s sale of a maisonette on the 12th floor of Leonie Towers, a freehold condo at Leonie Hill. The indicative price is $2.6 million to $2.8 million or $895-$964 psf of strata area.

The sheriff’s sale is being held to recover a debt owed by the owner, which is a company, to two individuals. The unit will be sold with vacant possession.

Colliers is also offering at its auction an apartment with four bedrooms plus a maid’s room on the 13th floor of St Regis Residences. It is also selling a two-bedroom unit with a utility room on the third level at Gallop Gables.

The Gallop Gables unit, which is leased until August 2013, has a prospective price of $1,400 to $1,500 psf of strata area, working out to $1.6 million to $1.7 million. That translates to a net annual yield of about 2.7 per cent.

The St Regis unit’s indicative pricing is $5 million or $2,358 psf. The property is subject to a two-year tenancy starting this month, with a monthly rental of $11,000.

If all of the above properties are sold at the various auctions next week, it would provide a fillip to auction sales this year, which totalled $47.7 million in the first five months.

The figure for the whole of last year was $83.7 million – an 11-year low.

JLL’s head of auctions Mok Sze Sze says ‘the competitive method of auction bidding is the best way to fetch the optimum price for owners of high-end properties, especially if they are rare and few in supply’.

Source: Business Times, 18 June 2009

Some developers have raised prices as a result

DEVELOPERS continued to report encouraging private home sales last week, and some have upped prices on firmer demand.

BelleRive on Keng Chin Road and Martin Place Residences on Kim Yam Road are among the projects where prices have been raised. BelleRive’s average price is now 13 per cent higher than when it was previewed in mid-April.

Frasers Centrepoint sold 60 more units last week at Martin Place Residences; new units were released over the weekend at prices that were about 5-7 per cent higher.

Chia Boon Kuah, Far East Organization chief operating officer, property sales, told BT that ‘in recent weeks, we’re seeing growing broad-based demand for our products across our portfolio in every price bracket, from upgrader market to the upper-middle segments to high-end luxury projects’.

Last week, the property giant sold more than 40 units, up from the 30 a week earlier. Far East’s home sales for the May 18-24 week include two units at Vida on Peck Hay Road which fetched an average price of $2,030 psf; the buyers did not take up the rental guarantee offered by Far East for the recently completed condo. The developer also sold nine units at Floridian in Bukit Timah at an average price of $1,220 psf.

In the upgrader housing segment, it sold seven units at Mi Casa in Choa Chu Kang, nine units each at Lakeshore near Jurong Lake and Waterfront Waves near Bedok Reservoir. Waterfront Waves is a joint development with Frasers Centrepoint.

Frasers Centrepoint also sold four units each at its Caspian condo in the Jurong Lake location and Woodsville 28 last week.

At Martin Place Residences, the developer released fresh units below the 14th floor sky terrace in the second and final block in the 33-storey condo.

Prices of the freshly released units start from $1,350 psf, higher than the $1,260 psf starting price in the earlier block during the preceding weekend’s marketing campaign.

However, the latest pricing is still below the $1,700 psf starting price for the 33-storey freehold project when it was previewed last year. Inclusive of the units sold last week, 168 units in the 302-unit condo are now sold.

Frasers Centrepoint is offering an interest absorption scheme (IAS) for all its four projects on the market – in exchange for a 3 per cent price premium for Caspian and a 2 per cent premium for the rest.

Over in Bukit Timah, a Sing Holdings subsidiary is understood to have sold five units last weekend at BelleRive, taking total sales to 39 units in the 51-unit freehold project. BelleRive was initially priced at $1,350 psf average when it was previewed in mid-April; this was raised to $1,430 psf last week and upped further to $1,530 psf this week. This translates to a 13 per cent price hike in about six weeks.

The average pricing is for the apartments in the 15-storey project, and excludes the two penthouses. About 75 per cent of BelleRive buyers have taken up the IAS offered by the developer at no extra cost.

The units were picked up predominantly by Singaporeans. BelleRive’s draws include its proximity to Anglo-Chinese School (Primary) on Barker Road and Singapore Chinese Girls’ School along Dunearn Road.

In the Balestier area, Soilbuild is understood to have sold another 25 units at Mezzo over the weekend. The project is priced at about $850-900 psf on average; the cost is 2 per cent more for IAS.

Property giant City Developments also sold 14 units last week for The Arte at Thomson condo. The average price in the project is now $900-930 psf, compared with $880 psf when previews began in March. The 336-unit condo is 84 per cent sold.

Near Botanic Gardens, Straits Trading has upped the price of the remaining few units at Gallop Gables to $1,400 psf, from the $1,188 psf average achieved for units sold in the past six weeks. The price increase comes after the developer achieved the sale of its 40th unit in the completed freehold condo.

In the secondary market, some 50-plus units are said to have been sold last week at RiverGate condo near the Singapore River. These are out of 88 units listed in a sales campaign last week. The average price is about $1,400 to $1,500 psf.

The 88 units were from an original pool of 100 units purchased in 2005 by a fund managed by Ferrell Asset Management.

Source: Business Times, 26 May 2009

Buyers respond well to scheme introduced at some projects

(SINGAPORE) Some developers here are turning to rental guarantees to lure buyers in the current down-market.

Under such schemes – which are offered only for certain units within selected projects – developers help buyers secure tenants, and also ensure that the owner gets a minimum pre-determined yield.

Far East Organization, for example, offers rental guarantees for selected units in selected projects such as Orchard Scotts, Vida, River Place, Tanglin View and Icon.

‘Through our marketing efforts over the years, we found that investors do not have the time to lease out or manage the tenancy of their apartments that they have bought from us,’ said Chia Boon Kuah, chief operating officer for property sales at Far East Organization.

‘Therefore, in 2006, we rolled out the rental guarantee scheme to assist our investment buyers in leasing out their properties. With our own in-house leasing and estate management teams, we are able to provide a seamless one-stop service to our buyers.’

For Vida, which is located in Cairnhill Rise, Far East is now offering a guaranteed rental yield of 5 per cent a year. This, according to Far East, can potentially work out to a return on invested equity of about 10-13 per cent a year.

‘Vida is a superior investment as we are offering a yield or return on invested equity of around 10-13 per cent per annum,’ said Far East in a recent letter to potential buyers.

Several other developers are offering schemes along the same vein.

At Belle Vue Residences, Wing Tai Holdings is offering a guaranteed return of 20 per cent on the downpayment a buyer makes if he picks up a unit using the deferred payment scheme. (DPS).
Under the scheme, the buyer will have to pay 20 per cent of the property’s price as the
downpayment. For a property worth $4 million, for example, this works out to $800,000.

But under Wing Tai’s scheme, he will get some of that money back.

Buyers who use the DPS to buy units in Belle Vue will get a guaranteed income of 10 per cent a year for two years on their downpayments. The guarantee will kick in once Belle Vue receives its temporary occupation permit (TOP) at the end of 2010. Using the same example as earlier, the buyer will get some $160,000 two years after TOP.

Market watchers said yield guarantee schemes are generally well-received in a down-market.
Investors, for example, snapped up units at 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 in April. All 10 units at the freehold Farrer Road estate sold in three days.

Elsewhere, at its preview for The Mezzo, Soilbuild Group Holdings offered a 6 per cent annual rental guarantee for two years, apart from the interest absorption scheme. The rental guarantee kicks in right after the TOP date. Soilbuild said recently that the launch of the first phase of The Mezzo was ‘met with an encouraging response’.

Market sources told BT that at least a few more new upcoming projects will offer variations of such schemes. Developers have historically offered such schemes to entice buyers when the property market is weak.

Hong Leong Group’s 71-unit luxury development Cuscaden Residence had such a scheme when it was launched in 2004 shortly after the Sars scare. Wing Tai Holdings also offered something similar for Duchess Crest in Bukit Timah in 1998, during the Asian financial crisis.

However, yield guarantees are a popular option for developers, said Joseph Tan, CB Richard Ellis’ executive director for residential. This is because such schemes force developers to manage units once they have been sold.

A check with Singapore’s three largest listed developers – CapitaLand, City Developments and Keppel Land – showed that none of them are currently offering any kind of rental guarantee schemes.

Units with yield guarantees could also come at a higher price, said Peter Ow, executive director for residential at Knight Frank. For example, developers who offer the interest absorption scheme at their properties usually charge a price premium of 2-3 per cent for units sold under the scheme, Mr
Ow pointed out. This is because the developers have to absorb the interest costs that would otherwise have been borne by the buyers. The same principle applies for units offering yield guarantees, he said.

Source: Business Times, 26 May 2009

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.

Source: Business Times, 14 April 2009

SOME high-end condominiums recorded sparkling weekend sales even though the overall property market was generally quiet in terms of new launches.

Of the two new previews, Illuminaire on Devonshire sold out its 72 units at $1,630 to $1,730 per sq ft (psf), while Verdure in Holland Road sold 14 units of 34 launched units at $1,400 psf.

Source: Straits Times, 14 April 2009

The 12-year-old Gallop Gables saw far stronger than expected demand, with investors picking up 28 units, even though they are about $3 million or more each.

Previously, the new projects that have attracted fairly strong interest, given today’s climate, were not in such prime areas. But some investors may be looking around now that the market has fallen quite a bit.

Mr Peter Ow of Knight Frank, which is marketing Verdure and Gallop Gables, said the response at these two sales showed individual investors are back.

‘These buyers are savvy investors who are already staying in prime areas,’ he said. ‘Generally, the property market is still weak, but there are value buys around. And people are beginning to see value in well-located projects.’

Of 14 Verdure units that Bukit Sembawang has sold during the preview, a few are penthouses. While the overall project is priced at $1,350 psf on average, the 14 were sold at an average of $1,400 psf, or from $1.5 million to $2.8 million.

A scheme offering interest absorption was available without any extra charge. The project, which has 68 units, will be launched this weekend.

Over at Gallop Gables near Botanic Gardens, Straits Trading sold 26 units – 16 more than its target. It had offered only 10 units with a guaranteed rental yield of 7 per cent for two years. The rest were purchased without the 7 per cent guarantee, but mostly with existing tenancies offering a rental yield of 3 to 5 per cent.

The buyers paid between $3,075,200 and $3,840,000, or an average price of $1,220 psf for the units, which averaged about 2,800 sq ft.

The buyers were mainly residents ranging in age from the mid-30s to the late 70s who bought for investment purposes, said Straits Trading, which had earlier said the sales would generate cash to allow it to invest in distressed assets.

A few buyers, it added, said they may live in the apartments after the end of the two-year rental guarantee period.

At Illuminaire, the affordable price drew both investors and speculators, industry experts said. As it has only one- and two-bedroom units, ranging in size from just 441 sq ft to 721 sq ft, the total price was kept low – from $749,000 to $1.21 million.

EL Development managing director Lim Yew Soon said he had changed the design of the project from a 36-unit development to a 72-unit one last September. By then, a three-bedroom showflat had already been completed – and had to be reconfigured into a smaller unit.
‘I realised the market would prefer small units,’ he said.

Mr Lim, who bought one unit for himself and kept two for business associates, said most buyers were keen on the interest absorption scheme, which was offered at no additional cost.

Some buyers also liked the unusual automated car parking system. There are two car lifts that will store cars in an adjoining multi-storey carpark block.

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.

Source: Straits Times, 8 April 2009