Cushman and Wakefiled’s Donald Han offers his views on the property market in the Channel NewsAsia programme, When The Bears Are Out - Invest Wise, hosted by Lin Xueling.

What are your favourite locations at the moment? And for which categories?

It all depends on your investment profile and investment criteria. I always say that you should go into a project or property sector that you are most familiar with.

For someone who is looking at residential properties, you might want to go into the first-tier residential market where you can get fairly good returns for your investment.

The more sophisticated ones are banding their investment dollars to create a larger quantum and investing in markets where we’ve seen substantial depreciation in asset values.

And one of the more common routes would be to go to the United States. This could present an opportunity, in terms of going in to buy US40 cents (54 cents) out of US$1 and getting what we call the deep-sea fishing expedition prices.

So it’s a question of waiting for the right time. But generally, you’re still pretty bullish about the market?

I’m still pretty bullish. I think everyone says it’s all about location, location, location. I think you need to put another important doctrine to that. It’s also about timing, timing, timing.

In fact, history has shown that one can make more money from timing than just from location over a short period of time.

We Asians tend to be really keen on property. Do you think that’s going to continue?

If you’re looking at the market right now, it’s a perfect opportunity for investors who have missed out over the last one or two years and have cash.

This is the investor whose money in the bank is earning interest rates of less than one per cent, considering that inflation is going to be four, or even six per cent.

At the end of the day, you’re better off hedging that and putting your money in asset location - with part of it being in property. This can help because as an asset class, it’s a hedge against inflation.

Also, owners and buyers are now more realistic in terms of pricing. If they were quoting a price 10 to 20 per cent higher than the market value last year, they’re now willing to sell at, or below market value.

You’ve been talking about time being everything. Do you think that the timing is right now?

I think the timing could be anything from the next six to 12 months. A lot depends on what unfolds from the sub-prime and, more importantly, the banking mess. It will affect the demand and sentiment.

At the end of the day, the Singapore property market is affected by sentiment - what you hear and what’s in the headlines tomorrow.

The headlines recently have been pretty much stellar economic growth for the first quarter - 7.2 per cent. That’s excellent. If the stock market doesn’t go down from current levels, that would help sentiment again. And we’ll have to wait for some of the Urban Renewal Authority data in terms of the analysis of the first quarter. We’ll make a decision at that point of time and over the next six months.

What would be your top tips for surviving the next six months?

Go for prime properties … it’s probably the first to go up in any recovery and the last to come down, so it’s very defensive. And measure your investment on the kind of yields that you can get and prime properties typically would be able to be leased out very quickly. Always look into prime properties wherever you go. It works in Singapore, Tokyo and US, too.

The programme is shown on Channel NewsAsia every Thursday at 9.30pm.

Source : Today - 3 May 2008

Investors check out posh units in cities like London, where values have fallen

As the global credit crunch drags on, home prices are falling all over the world, from Britain and Spain to India and Australia.

But in Singapore, property values are proving stubbornly resilient. Private home prices continued to climb 4.2 per cent in the first quarter of the year despite plunging sales and market pessimism.

From an investor’s point of view, properties outside Singapore might look more attractive now, agents say.

‘The Singapore market has risen substantially over the last two years, and we don’t see it dropping dramatically in the short term,’ said Mr Sean Parker, the sales director of JL Property Group, which sells overseas properties here.

‘But the benefit of that has been that Singaporeans can leverage some of the gains they’ve made on property here and redistribute them to other areas.’

More and more Singaporeans are looking to markets such as London, New York, Dubai and Australia for investment options, he added. The group has sold more than 100 properties since Christmas, most of them in Australia.

‘We think this is going to be one of our biggest years in a long, long time,’ Mr Parker said. ‘We’ve seen a significant jump, not just in sales, but also in Singaporeans seeking information to become better-educated investors.’

In a city such as Melbourne, he said, the highest-end properties go for A$1,000 (S$1,269) per sq ft (psf) - a far cry from the $5,000 psf record in Singapore.

Given the current market uncertainty and turmoil, Ms Doris Tan of DST International Property Services advises investors to consider more established markets such as London and New York.

In London, the new Chelsea Apartments in the fashionable Chelsea district has one-bedroom flats that go for £1 million (S$2.7 million) each. That is about the price of a similar unit at Scotts Square in Scotts Road here.

Over in New York, US$1 million (S$1.4 million), or less than US$1,000 psf, secures a one-bedroom apartment in Manhattan’s posh Upper West Side or its smart TriBeCa district. In Singapore, that budget would get you only into Holland Village.

There is also a growing trend of older, wealthier Singaporeans buying investment properties that double up as luxurious holiday homes, said Mr Ku Swee Yong, the director of business development and marketing at Savills Singapore.

‘They’re not just investing,’ he said. ‘They also want to enjoy the properties they buy, so they’re more willing to look at resorts and villas in Thailand and other areas.’

But despite growing interest in foreign properties, not all Singaporeans are out hunting for investment bargains now, Mr Ku added.

‘Most people are affected by the bad mood now. They just clam up and pay down their home loans rather than invest,’ he said. ‘But once the sentiment improves, it’s likely people will start comparing - if prices here are $3,000 psf, why not buy in Thailand for $600 psf?’

However, he also cautioned that each market holds its own particular risks for investors.

‘In New York or Australia, it might be tax issues, but in Phuket or Bali, it could be procedures Singapore buyers are not familiar with,’ he said.

‘For our customers who buy Thai and Indonesian properties, they almost always can’t get loans and have to pay in cash.’

LONDON: Exclusive condos along the Thames

AQUARIUS HOUSE
St George Wharf, London
England

Touted as London’s most exclusive riverside apartments, Aquarius House is the latest instalment in a new large-scale development along the Thames known as St George Wharf.

The 14-storey tower, expected to be completed in 2010, sits next to Vauxhall Bridge on London’s South Bank. The increasingly gentrified neighbourhood is near the Houses of Parliament and a gay village.

St George Wharf itself offers on-site facilities such as a supermarket, dry cleaners, a medical centre and restaurants.

Prices for the 85 one- and two-bedroom apartments in Aquarius House start at £399,000 (S$1.06 million), or £800 per sq ft (psf).

Over here in Singapore, apartments overlooking the river at trendy Robertson Quay have been sold recently at prices ranging from $1,300 psf for Robertson 100 to over $2,000 psf for The Pier at Robertson.

SHANGHAI: Inner-city living in an ultra-hip district

RESIDENCE 8
Xintiandi, Shanghai
China

You could be Chinese actress Gong Li’s neighbour in this brand-new condo in Shanghai’s stylish Xintiandi area, all for the same price as an apartment in Holland Village.

Residence 8 offers one- and two-bedroom units as well as 14 penthouses, each featuring furniture from Italian design giant B&B Italia and Bang & Olufsen audiovisual systems.

Each of the 308 apartments also comes with Poggenpohl luxury kitchens, built-in Gaggenau appliances and 47-inch LCD TV sets.

Gong Li will be one of the development’s first residents when it is completed next year.

The units range in price from eight million yuan (S$1.55 million) to 13 million yuan (S$2.5 million), averaging 9,290 yuan per sq ft (psf).

Xintiandi, Shanghai’s ultra-hip pedestrian district, carries echoes of Holland Village, where apartments are going for $1,200 to $1,600 psf.

HONG KONG: Pricey areas but always sought after

JARDINE SUMMIT
Tai Hang district
Hong Kong

Hong Kong may be the only Asian market where high-end home prices have skyrocketed as much as in Singapore in the last year.

Recently, the ever-popular pursuit of luxury homes in the financial hub has intensified, given tight supply and investors keen to seek safe capital havens.

The traditionally pricey districts of Tai Hang and Jardine’s Lookout have the highest occupancy rate. Prices rose 8.5 per cent in the last quarter of last year and rents 3.1 per cent, noted CB Richard Ellis.

Until recently, Jardine’s Lookout held the record for the priciest penthouse, a HK$33,000 (S$5,722) per sq ft (psf) unit at Cheung Kong’s luxury project The Legend.

Nearby, brand-new units at Jardine Summit go for HK$12,000 to HK$13,000 psf or at least HK$14 million each, a level similar to that for units at Cairnhill Crest here.

Rents are also comparable, at HK$35 to HK$45 psf.

JAKARTA: Luxury living in a mix of choices

THE ST MORITZ
Jakarta
Indonesia

This US$1 billion (S$1.4 billion) mixed development by the Lippo Group boasts the tallest tower in Indonesia and three blocks of luxury apartments. Each block is targeted at a different market, and units are sized and priced accordingly.

Prices start at US$90,000 for a 947 sq ft unit at The St Monaco Tower - less than a Housing Board flat would cost in Singapore. The luxury part comes in at the top end of the project: A 14,000 sq ft penthouse at The St Moritz Tower is going for US$10 million, making it the country’s largest and most expensive penthouse.

Jakarta is seeing a rise in the supply of high-end homes that has led to prices flattening out. But The St Moritz is part of an upcoming trend of large mixed developments that have proved very popular.

PHUKET: Villas with guaranteed rentals

BANYAN TREE RESIDENCES
Laguna Phuket, Phuket island
Thailand

In Singapore, $2.5 million is barely enough to buy a semi-detached house in the East Coast.

In Phuket, that could get you a 4,000 sq ft, fully furnished villa with a private lap pool and jet pool.

Located next to the Laguna Phuket Golf Club, with beaches, restaurants and spas nearby, the villas are strictly for investment purposes.

Banyan Tree rents them out to tourists on behalf of the owners, who get part of the rentals. Rents average US$1,800 (S$2,432) a night.

Buyers can choose a 6 per cent fixed return or 33 per cent of the net room revenue. They also get to use the villas for 60 days a year.

Most of the villas have been sold. Those still available range in price from US$1.7 million (S$2.3 million) to US$3 million (S$4.1 million).

Source : Sunday Times - 20 Apr 2008

For investment, emerging localities are preferable to established and often saturated ones any time - ANUJ PURI

IN Indian real estate today, the only constant is change. Hot destinations of the last year are not assuredly the best options this year, and the next year brings its unique set of emerging investment destinations with it.

The reason for this state of flux is that the real estate boom is causing many of the country’s metros and even some of the previously popular Tier II towns to saturate at an incredible pace.

Property prices there skyrocket beyond the reach of middle-income home buyers, causing them to look a little further afield each year. Investors observe these migration trends, analyse the magnitude and scope of activity, and identify one or the other new town as the next destination.

Information technology (IT) companies, which are now the primary drivers in the Indian real estate market, are not dependent on central business locations.

The crux of the whole outsourcing boom is that it makes more sense for foreign-based companies to offload back-office functions and even research processes to India than to undertake these in their home countries.

However, what would necessarily be a CBD-based business function in, say, the US, can be a non-CBD-dependent function in India.

After all, both the sellers and final buyers of IT-based products and services are based abroad anyway. This means that IT/ITES (information technology enabled services) companies can operate from anywhere in India, as long as there is access to skilled manpower and necessary resources.

The fact that such companies can benefit from the advantage of cheaper real estate prices in smaller towns has led to the Tier II/III city boom. IT/ITES companies catalyse every other sector of real estate wherever they go, so the retail, residential and infrastructure sectors soon start perking up in those localities.

A fundamental real estate investment mantra is that emerging localities are preferable to established and often saturated ones. Established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates.

Moreover, there is little scope for new market drivers such as malls to find a place in saturated localities - meanwhile, prices remain high.

This is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic time-frame. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight.

It follows that in 2008, we will be looking at an entirely new set of hotspots in the Indian real estate market.

A few of these are given below, along with some vital statistics and the basic reasons for their emerging high profiles on the Indian property landscape.

Vizag - Andhra Pradesh

Vizag’s growth drivers are availability of land at cheaper cost vis-a-vis Hyderabad, relatively lower cost of skilled manpower (as well as lower attrition rates), improving infrastructure, and considerable demand. The market also has less competition and project costs are lower, leading to increased margins.

Meanwhile, overall purchasing power in Vizag is high. The upcoming commercial and retail destinations in Vizag are Dwarakanagar, Seethamadhara, Gajuwaka, Rushikonda, Anakapalli, Bheemili and Paarwada.

For residential investment, the best areas now are Madhurawada, Pendurthy, Parawada, Bheemunipatnam and the areas towards the Anakapalli Corridor.

Property rates:

 Seethammadhara (1,400-3,000 rupees per square foot)
 Murali Nagar (1,400-2,200 rupees psf)
 Beach Road, MVP colony (2,800- 3,500 rupees psf)
 Siripuram (2,500-3,200 rupees psf)
 Parwada (1,200-2,000 rupees psf)

Vadodara - Gujarat

Vadodara definitely ranks high among the emerging investment destinations.

The prime residential areas are Alkapuri, Race Course Road, Old Padra Road, Jetalpur, Akota and Fatehganj.

Property rates:

 Old Padra Rd (1,200-1,500 rupees psf)
 Alkapuri (1,900-2,300 rupees psf)
 Race Course Road (1,500-1,800 rupees psf)
 Fatehganj (1,300-1,700 rupees psf)

Dehradun - Uttrakhand

Dehradun is seeing a gradual but definite boom associated with the rise of malls in the region. Land rates are rising and there is considerable infrastructure development. Another driver is the growth of the IT sector in the region.

The State Industrial Development Corporation of Uttaranchal is setting up a high-tech software park on more than 1,000 hectares of land in Dehradun. Chatrata Road, Mussoorie Bypass and Sahastradhara Road are the best locations for small to medium-sized investments.

Here, investors can expect between 10 and 12 per cent appreciation over the next three years.
Indore - Madhya Pradesh

Indore’s real estate star is on the rise, and offers good investment opportunities in projects with low entry cost that are located in an area with good appreciation potential.

Property rates:

 Vijay Nagar (3,000-10,000 rupees psf)
 Bypass, AB Road (3,000-10,000 rupees psf)
 Rau (600-1,200 rupees psf)
 Gulmohur Colony (3,500-6,500 rupees psf)
 Green Park Colony (800-3,500 rupees psf)

Nashik - Maharashtra

Nashik is displaying an increasingly buoyant industrial scenario, with considerable growth expected in the IT/ITES industry.

Overall infrastructure and connectivity to Mumbai and other regional towns is improving rapidly, lending increased credibility to Nashik’s real estate market. It is the vertex of the Pune-Mumbai-Nashik Urban Golden Triangle.

The upcoming suburbs of Anandwalli (Gangapur Road), Indiranagar, Untwadi, Aadgaon (off Mumbai-Agra Road) and along Pathardi Link Road bear watching.

Property rates:

 Gangapur Road (1,200-1,900 rupees psf)
 Mumbai Agra Road (800-1,600 rupees psf)
 Agra Road (600-1,000 rupees psf)

Guwahati - Assam

The capital city of Assam has witnessed a population growth of over 40 per cent over the last 10 years. This extensive population growth has been responsible for a quiet revolution in Guwahati’s real estate market.

There is an upsurge in the retail sector, and outskirt locations such as Khanapara, Zoo-Narengi Road, Basistha and Beltola are emerging as the new residential destinations.

Current rates are between 1,800 and 2,500 rupees psf. The upcoming Games Village at Sarusajai will add a new flavour to the residential market along NH-37.

Chandigarh - Union Territory

Though there has been a lot of speculation in Punjab’s real estate market, this joint capital of Punjab and Haryana states is among the emerging cities that are seeing very encouraging real estate trends.

Chandigarh is India’s first planned city, and it conforms perfectly to the key parameters by which we judge a city’s growth - property market, people, physical infrastructure, social infrastructure, and business environment.

Chandigarh scores high on these counts, especially in terms of the potential of its property market. Its boom derives from the rapid development taking place on its outskirts.

Some of these areas are:

 Panchkula (2,500-3,000 rupees psf)
 Mohali (1,500-2,500 rupees psf)
 Dera Bassi (1,300-2,000 rupees psf); and
 Zirakpur (2,700-3,200 rupees psf).

The writer is chairman and country head, Jones Lang LaSalle Meghraj

Source : Business Times - 15 Apr 2008

Asia’s retail and hospitality sectors are expected to benefit from strong growth in intra-regional travel, reports UMA SHANKARI

DEVELOPERS are investing in the retail and hospitality sectors in Singapore and the rest of Asia in a big way, banking on an expected surge in retail spending and tourism.

Consumer spending in the region is supported by rising income levels that are translating into retail sales and the development of the shopping scene into something closer to that in the US and Europe. One clear sign of positive retail sentiment is that many international and luxury brands are expanding into major retail hubs across Asia, CB Richard Ellis (CBRE) points out.

Some of the world’s biggest names, including Bulgari and Giorgio Armani, unveiled flagship stores in Tokyo in the fourth quarter of 2007 - despite Japan’s overall sluggish economic recovery.

The rise in retail spending in Asia is also driven by growing intra-regional tourism, industry players say.

Asia continues to benefit from its position as the world’s second-most visited region after Europe, achieving record growth in terms of hotel occupancy and average room rates in 2007.

South Asia and South-east Asia in particular enjoyed double-digit growth in revenue per available room, with South Asia seeing a 40.4 per cent increase and South-east Asia seeing 16.9 per cent growth, according to data from industry body, the Pacific Asia Travel Association (Pata).

Cushman & Wakefield (C&W) noted in a recent report: ‘Inter-regional in-bound visitors are expected to continue in the medium-term, but the greatest growth will be intra-regional through the continuing expansion of road and air routes throughout Asia, including budget airlines, as well as the enhanced capacity of the new aircraft - the A380 and B787.’

Intra-Asia travel is expected to be especially strong on two routes - Hong Kong traffic into Japan is expected to grow 17 per cent from 2007 to 2009, while the number of visitors from the Chinese mainland to Singapore is expected to grow 16 per cent in the same period.

In view of all this, it is perhaps not surprising that investors and developers are forking out big bucks for retail and hospitality property such as hotels, serviced apartments and malls, as well as assets such as retail and hotel-based real estate investment trusts (Reits).

The interest in retail assets is driven by expectations of a broad-based increase in rents and capital values in Singapore, brought on by increased retail spending.

Singapore’s retail sector was especially active in 2007, with retail sales totalling some $23.8 billion - 7.1 per cent higher than in 2006. This year, retail sales are expected to grow about 5-10 per cent and demand for retail space is expected to remain strong.

In a recent report, Credit Suisse said it expects retail growth here to be supported by benign economic indicators, high population growth, increasing household income, tourism growth and other ‘feel-good’ factors.

‘This is expected to drive rentals up 5-10 per cent, translating into 10 per cent rental revenue growth for suburban malls and 20 per cent for central malls in 2008 given strong reversions,’ Credit Suisse analysts Shirley Wong and Leng Chye Teo said.

The research team recently initiated coverage of three Singapore-listed retail Reits: CapitaMall Trust, Frasers Centrepoint Trust and Macquarie Meag Prime Reit, with ‘outperform’ calls on the first two and a ‘neutral’ call on the third.

CBRE said similarly that retail rents are likely to increase in 2008, albeit at a more moderate rate due to an abundance of choice for retailers as a significant amount of new space comes on stream. ‘We expect both Orchard Road and suburban mall rents to increase 3-5 per cent in 2008, down from our earlier estimate of 4-7 per cent for Orchard Road and 3-6 per cent for suburban malls,’ CBRE said.

However, the retail sector here will have to grapple with downside risks such as rising inflation, the trickle- down impact of the US sub-prime mortgage crisis and lacklustre global stock markets, property analysts say.

The outlook for the hospitality sector is a bit more bullish. In particular, Singapore, which enjoyed record growth in terms of both occupancy and room rates in 2007, is expected to see more corporate and meetings, incentives, conventions & exhibitions (MICE) travellers. Industry players believe this segment will continue to grow even if leisure tourism were to slow.

Hoteliers here have told BT they expect room rates to shoot up another 25-40 per cent this year, driven by the Formula One Grand Prix race and the tight supply of hotel rooms. Room rates rose 15-25 per cent in 2007.

One new trend that is expected to shake up both the retail and hospitality sectors across Asia is the arrival of gaming in a big way.

Right now, roulette wheels are spinning and jackpot machines are whirring in casinos across a dozen Asian countries, C&W noted in a report.

Investment in casinos is continuing apace in Macau - thought by many to be Asia’s gambling capital - where there are currently more than 20 casino complexes. Singapore is about to open its own two integrated resorts, while Japan is moving closer to an overhaul of its strict gambling laws - which could see luxury casino complexes opening in Tokyo and on the southern island of Okinawa by 2012. Other countries reportedly considering lifting bans on casinos include Taiwan, Thailand and Indonesia.

Said C&W: ‘Governments may not always be totally happy with the idea of their citizens gambling, or tourists pouring in for slot machines and blackjack, but Macau’s US$7.2 billion in gaming income, US$15 billion in investment in just five years, 68.7 per cent surge in construction investment, an 80 per cent rise in property transactions, large-scale convention centre and hotel construction, thousands of new jobs and 19 per cent per annum retail sales growth are mighty powerful inducements - and most (governments) seem to think these are numbers worth betting on.’

Source : Business Times - 15 Apr 2008

Cityscape Asia is drawing a great deal of interest from major western developers

THE global real estate sector is going through big changes and this could not be more apparent at this year’s Cityscape Asia 2008.

While Cityscape Asia is an Asia-focused real estate exhibition and conference, several major western developers are offering developments to Asian investors seeking to take advantage of favourable exchange rates to buy US real estate.

And MGM Mirage’s CityCenter being developed on the Las Vegas strip will be difficult to miss.

Costing over US$7.8 billion, CityCenter is a mega hotel, casino and condo development. It is the largest privately financed development in the US and is now on show in Asia too.

Rohan Marwaha, managing director of Cityscape, said: ‘Two months ago, we found that many real estate players were watching global events unfold with a sense of unreality. Now they are already moving on with their plans and actively looking at the new opportunities to emerge since the upheaval, with deal-making strongly back in the frame.’

The importance of identifying the latest trends in real estate, architecture, urban planning and design from around the world is underscored by the state of flux in many property markets today.

Kwek Leng Beng, executive chairman of Singapore-based City Developments Ltd, which is exhibiting as part of the Green Pavilion at Cityscape Asia 2008, said: ‘Today, the mood is not one of panic, unlike the Asian financial crisis of 1997.

‘We are not in recession today, but rather we are the victims of our own success. Because we did not anticipate that our economy would be firing on all cylinders, we have a shortage of almost every type of property today.’

Dubai International Capital’s announcement that it intends to invest US$5 billion in Asia over the next three to four years gives clear indication of where the action would be in the future.

Emerging markets

Cityscape Asia 2008 exhibitions director Theresa Gan expects interest to focus on emerging regional markets such as Malaysia, Indonesia and Vietnam.

‘There will be a thorough debate of ‘where to next’ for the mature but still dynamic Singapore market where the Urban Redevelopment Authority and the Building and Construction Authority will spearhead a strong government sector contingent educating the market,’ Ms Gan said.

Real estate consultancy CB Richard Ellis recently reported strong demand in all sectors of the Vietnam real estate market and estimates that around US$5 billion - much of it from foreign direct investment - was invested in Vietnam property in 2007.

Graham Wood, Cityscape Asia exhibition director and organiser, added that Middle Eastern investors will continue to make their presence felt, both in offering major Middle Eastern developments to Asian investors, and investing their own capital to increase their own portfolios across Asia in 2008.

‘This year’s Cityscape Asia will effectively provide a crossroads for these inter-regional investment trends to play out.’

Over three days, Cityscape Asia will give an insight into both the emerging and mature property markets in Asia by being the only international property event in Asia to combine a conference and exhibition that maximises both learning and networking opportunities with more than 6,000 international and regional real estate professionals.

It will feature more than 50 speakers including CEOs, managing directors and government officials, and will examine the opportunities in Asia including real estate investment trusts, derivatives and even an Asian investment property databank.

Leaders in their fields will also deliver presentations on clusters and hubs for financial institutions, and investment opportunities in airport cities.

Closer to home, the impact of integrated resorts on the Singapore market will be examined.

Building on the success of the inaugural Cityscape Asia 2007 that saw more than 100 exhibitors from 35 countries sell out 6,000 square metres of exhibition space, Cityscape Asia is a showcase of opportunities and iconic architecture from Malaysia, Thailand, Indonesia, Vietnam, Singapore, Japan and the surrounding Pacific region.

But this year, the notion of ‘the sustainable city’ is set to be a key theme for discourse.

Going green

Apart from the Green Pavilion, Cityscape Asia will host the World Architecture Congress where techniques to reduce the ecological footprint of modern buildings and cities in Asia will be introduced.

In addition to this, there is a Building Green Seminar where key exhibitors will share their vision of a sustainable future.

Mr Wood highlighted that a recent Jones Lang LaSalle survey of 414 companies revealed that 12 per cent in Asia said that they were willing to pay premiums of over 10 per cent for ’sustainable’ buildings, compared to just 3 per cent in North America and Europe.

‘Asian countries, led by Japan, Singapore, Hong Kong and India, are introducing green building ratings along the lines of systems operating in Britain and the United States and the concept is catching on,’ added Mr Wood.

Source : Business Times - 15 Apr 2008

Property investment sales rose nearly 3 percent to S$8.36 billion in the first quarter compared to the previous three months. But this was still 36.6 percent below the peak of S$13.2 billion worth of sales amassed in the third quarter last year.

This is according to latest figures from property consultants Colliers International.

Colliers said with the exception of the commercial and industrial sectors, all other key property sectors experienced a decline in sales volume in the first quarter of this year.

The commercial investment sales market gathered momentum in March, chalking up some S$3.2 billion worth of transactions, or 38.6 percent of total investment sales.

The industrial investment sales market registered S$731 million worth of sales, up 10 percent on quarter. The majority of industrial sales transactions came from REITs purchases.

Colliers’ Director for Research and Consultancy Tay Huey Ying said CapitaCommercial Trust’s acquisition of One George Street for S$1.165 billion was the most significant commercial transaction in the first quarter, in terms of absolute sale quantum.

By unit price, the most notable investment deal was the acquisition of the 999-year Hitachi Tower by Goldman Sachs at S$811 million.

Residential investment sales dropped about 36 percent in the first quarter to $2.3 billion, compared to the previous three months.

Colliers said sentiment in the collective sale market also weakened.

The private sector accounted for the bulk of the investment sales activity, raking in some S$5.6 billion, or 11 percent higher than the fourth quarter.

Colliers said the strong participation of developers at recent land tenders has demonstrated their continued confidence in the mid-term prospects of Singapore’s property market.

The consultancy expects the confidence to continue to underpin investment sales activities for the rest of this year. - CNA /ls

Source : Channel NewsAsia - 8 Apr 2008

Non-landed residential market most likely to gain from influx of foreign talent, say CHUA YANG LIANG and JACQUELINE WONG

SINGAPORE’S non-landed residential market put in a strong performance last year, sub-prime notwithstanding, driven by the luxury and prime segments whose resale capital values saw stunning year-on-year growth of 51.7 per cent and 50.6 per cent respectively.

Lights, camera, action: Key projects and events, including the Marina Bay Sands integrated resort (above), the Singapore Formula One Grand Prix and the Singapore Youth Olympics in 2010, will push Singapore up a notch on the tourist destination list and also increase the expatriate work force and demand for housing

The buoyant buying sentiment coupled with high global liquidity helped propel high-end condominium prices beyond the $4,000 per square foot mark, with one new development reportedly closing at $5,000 psf - a historic milestone.

Spurred by the large gap of around 35 per cent between resale and new residential launch prices in prime districts (9-11), investor interest was at a crest in 2007. There was $8.5 billion worth of collective sales transacted by institutional investors and developers. This is 18 per cent more than the value of en bloc deals done in 2006 and 2005 put together ($7.2 billion).

With the new en bloc regulations introduced last October, overall costs of collective sale deals have risen and coupled with the overall cautious sentiment, the level of en bloc transactions will be more moderate in 2008.

The euphoria in the non-landed residential market is an unexpected by-product of an enlarged foreign population that catapulted leasing demand to a new level and changed the residential investment climate. While the clouds brought on by the US sub-prime debacle remain in the short term, the long-term outlook is positive.

Shifting buyer demographics

As the birth rate of the indigenous population is below replacement level, immigration is necessary to sustain the continued growth of the local economy. In 2007, the total population stood at 4.59 million with foreigners making up well over a million. This is an increase of 33 per cent from the 750,000 foreigners recorded in 2000.

Naturally, the residential market feels the impact of this sudden influx. The ratio of Singaporean buyers in the Core Central region today is less than half while foreigners of non-resident status have edged up to a quarter of the total buyers. Although less pronounced in the Outside Central region, foreign ownership (excluding companies) has also increased by some nine percentage points.

Continual government efforts to attract foreign investments and immigration-friendly policies to support this long-term economic growth will benefit the residential market tremendously.

Last year, the Economic Development Board brought in more than $16 billion worth of commitments in fixed-asset investment. These are expected to create some 28,600 new jobs and add $11.6 billion per year to Singapore’s GDP. This strong job creation benefited both locals and foreigners - local employment grew by 92,100 while foreign employment jumped by a remarkable 144,500. As a result of the slower growth in Singapore’s indigenous work force and a faster increase in employment opportunities, one out of three of the 2.73 million people employed in Singapore is a foreigner.

Continual population growth is essential to fuel our economic engine. The estimated population of 6.5 million is projected to be met in 40 to 50 years’ time, predominantly through immigration. These foreigners do not qualify for subsidised public housing and require ministerial approval for the purchase of any landed properties. So the non-landed residential market is likely to feel the bulk of this demand.

Just in 2007 alone, foreigners and permanent residents (PRs) chalked up 8,884 units in sales (some 77.8 per cent higher than 2006), which accounts for 29.1 per cent of total private non-landed residential transactions. This sales figure is the highest in 13 years and is likely to rise further over time.

While foreign purchasers are still predominantly from our neighbouring countries - Indonesia, Malaysia and Thailand - the buyers are increasingly becoming more diversified. The next emerging groups are South Koreans (7 per cent), mainland Chinese (7 per cent) and Indians (12 per cent). Notable countries making their first foray into the Singapore market include Myanmar, the Middle East, Russia and Ireland.

Return of corporate buyers

Another rising trend is residential investments made by property funds and financial institutions since 2003. Attracted by yields above 4 per cent between 2003 and H105, these foreign institutional investors snapped up residential units to inject into their yield-focused investment portfolios. In the last 12 months, although yields have compressed to below 4 per cent, interest from Middle Eastern funds and opportunistic funds has been strong.

Out of the total $2.6 billion worth of non-landed residential developments, 42 per cent was transacted by these funds, and included anything from several units to whole condominium blocks and even development sites. These investors include Macquarie Global Property Advisors, Kuwait Finance House and US-based Wachovia Development.

Institutional investors remain optimistic about the upside potential of the Singapore residential market. Many of these investors are looking at total return, that is, including capital appreciation rather than just income yield. The majority of the investors have pumped these projects into their investment portfolio.

The minority have exited by riding on local capital growth or price differential when these properties were marketed in the home country of these foreign funds. This trend of institutional buyers in the residential market is likely to remain. Their interest is fuelled by the remaking of Singapore where several new developments and initiatives have been slated to transform it into a global city.

New lifestyle

With tourism a key component of GDP, two massive integrated resorts are now under construction - Marina Bay Sands, located at Marina South (completion in 2009) and Resorts World at Sentosa (completion in 2010). Other key projects and events include the Singapore Formula One Grand Prix and the Singapore Youth Olympics in 2010. The completion of these projects and events will push Singapore up a notch on the tourist destination list and also increase the expatriate workforce and demand for housing.

Pro-business environment

Singapore’s strength lies in its corruption-free government, socially and politically stable climate, sound economic fundamentals, favourable tax policies, and a well-regulated and robust financial sector. Singapore has always been perceived as a safe, pro-business environment that is supported by a well-respected government with transparent and consistent policies that protect companies’ physical and intellectual property (IP) investments.

Investors can also enjoy the benefits of an extensive global network of free trade agreements, avoidance of double taxation agreements and investment guarantee agreements. No longer seen as a little red dot on the global stage, Singapore has transformed itself into a global hub for business and investment. In the 2007 World Competitiveness Yearbook, Singapore was ranked second to the US as the most competitive economy globally.

While the banking and insurance-related services still constitute the largest component of financial sector GDP, several emerging financial clusters have contributed increasingly to its growth. These include the sentiment-sensitive industries of wealth advisory, brokerage and treasury clusters. Collectively, these sectors all contribute towards the growth of Singapore as an internationally competitive financial centre.

Singapore’s multicultural and racial base also offers the corporate world a platter of business platforms conducted in a choice of languages other than English.

The network and cultural connections that the indigenous population has with its neighbouring countries make Singapore the ideal melting pot where deals are made between Asia and the rest of the world. Coupled with a well-educated and highly skilled work force, and a world-class network of air, sea and IT infrastructure, it is not surprising that capital, enterprise and talent have been attracted to this island city-state.

Consequently, more than 26,000 international companies have made Singapore their base camp as well as a gateway to the region.

Hubs of hubs

Singapore is also recognised as one of the premier asset management centres in the Asia-Pacific. Its pro-business regulatory framework and competitive tax framework also spearheaded its success as a Reit hub.

The operation of Changi Airport’s Terminal 3 along with the proposed Seletar Aerospace Park has enabled the city state to consolidate its status as a regional aviation hub as well as an aerospace maintenance, repair and overhaul (MRO) hub.

Ranked the best in Asia by the World Health Organisation, Singapore has also established itself as a multi-faceted medical hub serving Asia and the world and is earning a global reputation as a medical convention and training centre.

More than 400,000 international patients visit Singapore for a whole range of healthcare services annually. It has also attracted many world renowned medical professionals to work in the internationally accredited hospitals and specialty centres located here.

Besides priding itself on an international standard education system, Singapore has also attracted world-class institutions with strong industry links to set up centres of excellence in education and research. They include respected names such as Insead and University of Chicago Graduate School of Business.

To meet the rising demand for quality schools for expatriate children, the list of international schools has also been growing. The NPS International School, part of a pioneering group of educational institutions headquartered in Bangalore, India, opened its Singapore campus in January 2008, while United World College of South-east Asia has announced plans to set up a second campus.

With such accolades and continual developmental growth in each economic sector, Singapore continues to attract a global pool of investors and talent. Incoming talent will not only bring their unique expertise but also put demand on the housing market. Eventually, some of them will bring their families and possibly even consider permanent residency.

All these developments have collectively positioned Singapore high on the list of many global investors and given them the confidence to continue investing in the Singapore residential market.

A global city in the tropics

With Singapore being a base for many regional and international conglomerates, it is also now home to a myriad of global talents and their families. Singapore is indeed transforming itself into a global city in the tropics, possibly close to being on par with London and New York in the West.

The economic rise of Asia, especially China and India, has filtered through to a buoyant economy in Singapore, resulting in a surge in demand for both office and housing space. Both office rents and housing prices have escalated over the past year. Nonetheless, prices remain highly competitive when compared to global cities such as London, New York and Hong Kong.

Singapore’s strategic placement between two rising global economic engines of India and China makes it a popular choice of relocation, if not as a base for a second home for expatriates.

The non-landed residential market will continue to benefit further from the influx of these foreigners. The demand pool for the non-landed residential market, which traditionally came from the local population and residents of neighbouring countries - Malaysia and Indonesia - will become ethnically more diverse with buyers from China, India, Korea and corporate entities increasing their share.

Its multiculturalism and tolerance of diverse ethnicities support the quick and smooth assimilation of new immigrants into the larger society - a sociological strength that favours Singapore greatly. This attribute will continue to attract expatriates as well as residents of other Asian cities to Singapore.

In the longer term, the foreign ownership of residential properties in Singapore will become increasingly more cosmopolitan than that of Hong Kong, which is likely to remain dominated by mainland Chinese. The level of foreign ownership will continue to rise and eventually resemble what is found in London today - making Singapore the first global city of the tropics.

Chua Yang Liang is head of research, South-east Asia, Jones Lang LaSalle; and Jacqueline Wong is head of residential, Singapore, Jones Lang LaSalle

Source : Business Times - 27 Mar 2008

There are still pockets of new developments in Singapore that are priced below $1,000 per sq ft, writes PETER OW

HOUSE hunting can be challenging at a time when sellers are holding firm despite a quieter property market while buyers are expecting a steeper discount based on weaker sentiment from the US sub-prime woes.

Those on a strict budget should note, however, that the record prices were achieved mainly by new launches in the first 10 months of 2007. This is also true in suburban locations as buyers pay more for new developments under construction. Nonetheless, there are still pockets of new developments in selected parts of Singapore that are priced below $1,000 per sq ft such as Bedok and Jurong.

Well, it may be the right time to start looking for a second home as an investment. Given the more cautious economic climate and rising inflation, price naturally becomes the most significant factor for a property purchase as that would have an impact on initial cash outlay and the long-term mortgage financing of the property. Here are seven key tips to note when shopping for a second residential property for investment. Before buying, ask yourself the following questions:

# Is the price reasonable?

# What are the prospects of getting a tenant?

# Can you possibly stay there yourself?

# Can you get financing and service the monthly instalments?

# What is the expected return on the investment?

# How long will you hold your investment?

# Is the tenure important?

Price: While price is a key consideration, nobody can predict when prices will hit rock bottom. Thoroughly research the locations you are interested in, walk around the area and check out the resale values. This is probably the best time to negotiate when nobody is interested in buying as there will be less competition.

Location: Location, location, location, that’s what property is all about. We have to ask ourselves: Is this a location where expatriates like to stay? Districts 9, 10 and 11 will readily satisfy the criteria of convenience and proximity to the CBD. Outside these districts, a development near an MRT station, suburban shopping centre, or good views of the sea or waterway have great potential. For such locations, regardless of good times or bad, one will be able to find a tenant. Getting the wrong location might result in vacant periods when the economy is not doing well.

Returns: When buying primarily for investment, yield or return on investment is the key thing to consider. If the financing cost is low and the returns are much higher, then the second residential property purchase will, indeed, be an asset and a financial nest egg. A savvy investor might find that investing in equities offers higher returns. But equities are also riskier. Any property that gives you a gross return of 4-5 per cent is considered fair, while 6-7 per cent is good. Rentals are usually fixed for two years which gives you security of tenure.

Under current conditions, an investment in property will be better than putting money into bonds or fixed deposits, where yields are relatively low. However, when shopping around do not get the notion that high-end or luxury properties always give better returns. Keep in mind that not many expatriates have a rental budget of $30,000 to $40,000 a month. You may be surprised to find that an HDB flat near an MRT station will give you a higher return (possibly 10 per cent) than most private properties.

Financing: Look for a financing package that suits your needs. Most banks offer packages without a lock-in period at higher interest rates while those with lock-ins have a lower rate. However, early redemption or refinancing can be costly. If you are an investor with a long-term view, go for a package that offers the lower interest rate so as to reduce your costs as much as possible.

You must also consider how affordable your monthly repayments are. As a guide, they should not exceed 30 per cent of your disposable income. Most of us use our CPF to pay part of the purchase price or the monthly instalments. The prudent approach is not to do that. One should keep enough money in the CPF to pay instalments for a one-year period. This is a defensive strategy so that should you be out of work for a year, the loan can still be serviced.

Time frame: Property is an illiquid asset - it takes time to get in as well as to sell out. Thus, we should look at a longer time frame for property investment, preferably a three- to five-year holding period. Property prices go up and down, but if you look back over 30 years, the new peak has always been higher than the previous one. This leads us to the next consideration.

Can you stay in the property?: It is good to take this into consideration because if there is a need you can move into the property, be it for downgrading or upgrading. So if you have a family of four, it is advisable to buy a three or four-bedroom apartment. You will also have a choice of which property to rent out and which to occupy. You may want to rent out the unit that gives you the better return.

Tenure: Is a freehold property better than a 99-year leasehold? The answer is no because the rentals of both will be the same since the tenant will not bother about the tenure. Leasehold properties, being cheaper, will give a comparatively higher yield. Every investor has his own criteria for investment, thus a property suitable for one might not be suitable for another. However, bear in mind that the less risky the investment, the lower the likely return. Also, with any property investment, it is best to take the long-term view.

Peter Ow is executive director (residential) at Knight Frank

Source : Business Times - 27 Mar 2008

IT was an eventful 2007 for the Singapore property investment sales market, which hit a record $55.29 billion in volume of transactions. This was 81 per cent higher than the previous record of $30.59 billion in 2006. The robust momentum in the investment market was largely driven by active acquisition of development sites by developers in both the private and public sectors. The office sector was also very active.

The investment market was exceptionally active last year for the following reasons:

# A reversal of the ‘perfect storm’ - a combination of factors that allowed Singapore’s property market to hit the sweet spot.

# Strong economic growth of 7.7 per cent in 2007.

# Office and residential market property booms.

# Strong interest from foreign real estate investors, both corporate and individuals.

# Emergence of Singapore as a service centre hub for Asia, for example private banking, back offices, medical centre and education.

# Feel-good factors such as the Formula One and integrated resorts.

The private sector investment sales market took the lead in 2007, accounting for 79 per cent of total investment sales or $43.63 billion. Public sector sales contributed the remaining 21 per cent or $11.66 billion.

Altogether, 39 government sites were bought by developers during the year, made up of three ‘white’ sites, 12 residential sites, eight commercial sites, six hotel sites and 10 industrial sites.

In addition, five residential sites at Sentosa Cove were sold for a total of $1.11 billion in 2007.

Significant public land sales in 2007 included a prime ‘white’ site at Marina View (Land Parcel A), which was awarded to Macquarie Global Property Advisors (MGPA) for $2.02 billion, and a commercial site at Beach Road, which was sold to a consortium comprising City Developments, the Istithmar Group and the Elad Group for $1.69 billion.

By sector, the residential sector took the lead in investment sales in 2007. Total residential investment sales amounted to $34.43 billion in 2007, representing 62 per cent of total investment sales and an increase of 118 per cent year on year.

A total of 116 collective sales were transacted in 2007, generating investment sales of $13.64 billion, exceeding the $8.2 billion from a total of 79 collective sales concluded in 2006 and is the highest ever.

Interestingly, many, including a number of overseas institutions and individuals, were observed to have purchased bulk apartments in residential projects before or after each project was officially launched for sale.

There was the purchase of 16 units at The Orchard Residences by a Thai investor for $135 million and a fund linked to MGPA acquired 162 units at The Cascadia for a total of $280.36 million. Also, a joint venture between US-based Wachovia Group and City Developments acquired 44 units at Cliveden at Grange for $432.43 million.

Investment activity in the office sector remained strong throughout the year, with increasing foreign investor participation, supported by strong market fundamentals.

Total office investment sales generated $14.19 billion worth of sales or 26 per cent of the year’s total investment sales. This was nearly triple the $4.79 billion recorded in 2006. On the back of an upbeat office market, prime office properties continued to be highly sought after by Reits and foreign funds as they expanded their investment reach in Singapore.

About $4.86 billion worth of private en bloc office buildings and strata-titled office properties was acquired by these investors which in turn gave them a 54 per cent share of the $8.97 billion in total private major office transactions in 2007. The most significant transaction was the acquisition of Temasek Tower by MGPA at $1.04 billion.

Other notable office sales included the sale of Chevron House to a US fund for $730 million and the sale of 78 Shenton Way to Commerz Grundbesitz Investmentgesellschaft (CGI), a German fund, for $650.78 million. The deal was CGI’s first foray into the Singapore property market.

Another German fund, SEB Asset Management, displayed strong interest in office properties by acquiring the SIA Building, 12 floors at Springleaf Tower and 10 floors in 79 Anson Road for a total of $965.91 million in 2007.

In addition, New Star Asset Management, a UK fund, acquired Parakou Building for $128 million and One Phillip Street for $99.02 million.

Reit-related office sales in 2007 included Keypoint at Beach Road which was acquired by Allco Commercial Reit for $370 million, inclusive of income support of up to $10.5 million for two years to be provided by the vendor. Both Keppel Land and Cheung Kong Holdings divested their one-third stakes in One Raffles Quay to K-Reit and Suntec Reit respectively, for $941.5 million each.

Looking ahead, strong office demand and potential for further rental escalation will lead to more buying of quality office properties in 2008. The sustained influx of foreign investors should continue to lead to brisk activity in the office investment market and provide strong support to prices.

Despite some volatility resulting from the global credit crunch and the slowing down of the US economy, investment sentiment will remain positive albeit a little cautious in 2008, due to the healthy economic forecast for Singapore.

Mounting inflationary pressure, the divergence of the weakening US dollar, the high level of liquidity in the investment market and the perception of promising returns have combined to make Singapore real estate an attractive investment alternative.

Investment activity in the office sector is likely to continue to outperform other property sectors given the limited supply coming on stream in the short term.

Foreign funds and Reit-related parties will also continue to lend support to the investment market, showing keen interest particularly in offices, retail and industrial assets.

The writer is executive director, investment properties, at CB Richard Ellis

Source : Business Times - 27 Mar 2008

PROPERTY EXPERTS GIVE SOME TIPS

# Seven tips for buying a second home

Did you know, for example, that an HDB flat near an MRT station will give you a higher rental yield than most private properties?

# The importance of being earnest when going en bloc

A major en bloc sales agent discusses the impact of the new legislation on collective sales introduced last year on warring owners.

# Are you overpaying for your home loan?

Is the deferred payment period on the condo unit you bought a little while ago expiring soon? Read an independent mortgage broker’s advice before you go shopping for that home loan.

# Aim for a landed home

So you’ve missed out buying a condo last year? Not to worry. Landed homes may become more appealing this year as they have yet to see the sharp price appreciation experienced by their non-landed counterparts.

Source : Business Times - 25 Mar 2008