Market News

White site at Marina View triggered from Reserve List

By Nisha Ramchandani

The Urban Redevelopment Authority (URA) will launch for public tender a white site at Marina View after an unnamed developer made a successful application for the site's release from the Reserve List.

The 99-year leasehold site - which can yield about 905 private homes, 2,000 square metre (sq m) gross floor area (GFA) of commercial space and 540 hotel rooms - will be released for sale on June 28. The white site was on the Reserve List of the H1 2021 Government Land Sales (GLS) programme.

The developer has committed to bid a price of at least S$1.508 billion at tender, which works out to about S$1,379 per square foot per plot ratio (psf ppr), given the maximum GFA of 101,629 sq m.

However, analysts expect the winning bid will ultimately be higher. Knight Frank's head of research Leonard Tay highlighted that the trigger price is lower than other comparable GLS residential sites in the Downtown Core, clocking 10.2 per cent and 5.7 per cent less than the winning bids for the Tan Quee Lan Street and Bernam Street sites respectively.

Still, "when the tender closes 12 weeks from the launch, it is expected that the bids will be above all these previous GLS sales on a psf ppr basis, especially if the developer who wins the tender is intent on constructing a luxury class residence with a six-star hotel that would be positioned to benefit in a post-coronavirus world," Mr Tay added.

Desmond Sim, deputy chief executive of Edmund Tie & Company, said that the triggering of the site from the Reserve List is testament to developers' desire to build up their landbank. "It's a good indication that some developers out there are looking to replenish their landbank," said Mr Sim.

Given the large quantum for the site and that smaller sites are presently proving to be more palatable for developers, Mr Sim doesn't rule out consortiums coming together to bid for the site.

Pointing to the site's appealing location in the Downtown Core with the future Shenton Way MRT station at its doorstep, Wong Siew Ying, PropNex's head of research and content, said: "We expect the site to potentially garner good interest among developers which have deeper pockets and have experience in residential or mixed-use developments or perhaps those with hotel interests."

The upcoming hotel supply in the Downtown Core is modest, with 350 of the 5,029 hotel rooms under construction as at end-Q1 2021 situated in the Downtown Core Planning Area, she highlighted.

Meanwhile, analysts expect robust demand for residential units at the site, given that the last major residential project launched in the area was Marina One Residences back in 2014.

Wong Xian Yang, Cushman & Wakefield's head of research (Singapore), said: "With more family offices setting up shop in Singapore, demand for prime residential units within the CBD is expected to rise."

Mr Wong went on to point out that Marina One Residences has sold some 90 per cent of its units thus far, with transactions gathering pace last year. In 2020, 185 new and resale units at Marina One Residences were sold , up from 140 units in 2019.

Based on year-to-date transacted prices of comparable residential properties as well as the trajectory of the property prices, "the future residential units in the development on Marina Bay could be sold between S$2,500 and S$2,800 psf," estimates Nicholas Mak, head of research and consultancy at ERA. The caveat to this, however, would be that no fresh cooling measures are implemented by the government prior to the launch of the project.

"The site at Marina View will further inject more homes into the CBD, supporting the government's vision of making the CBD vibrant after working hours," said Huttons chief executive Mark Yip. "With a hotel component as part of the development, it shows the confidence of the party who triggered the site that global travel will resume soon and it is key to secure a first-mover advantage by acting now."

And with a cap of 2,000 sq m for commercial space, office space - if proposed as part of the mixed-use development - will likely cater to small-and-medium enterprises or flexible space solutions, CBRE's director of research (South-east Asia) Catherine He added.

Adapted from: The Business Times, 11 June 2021

Increased supply of private homes on confirmed sites a calibrated move as developers seek land

By Nisha Ramchandani

The bump in the supply of private housing on the Confirmed List under the H2 2021 Government Land Sales (GLS) Programme is a calibrated move by the government - one that will nonetheless be welcomed by developers hungry to replenish their landbank amid diminishing inventory, analysts said.

Analysts expect keen demand for the four residential sites on the Confirmed List, which can potentially yield about 2,000 private homes (including executive condominium or EC units), citing heated bidding in recent tenders for GLS sites at Northumberland Road, Ang Mo Kio Avenue 1 and Tengah Garden Walk.

At 2,000 units, this is a jump of nearly 25 per cent from the 1,605 units released under the H1 2021 GLS Programme. Still, ERA's head of research and consultancy Nicholas Mak pointed out that the supply of 2,000 units is less than the 2,775 potential units that the six Confirmed List sites under the H1 2018 GLS Programme could yield.

Despite the sizeable increase in supply over the H1 2021 Confirmed List, JLL's senior director of research & consultancy Ong Teck Hui described the programme as conservative, adding: "The recent wave of Covid-19 infections that prompted heightened measures shows that the economy and residential market can be disrupted from time to time by the pandemic. This creates more uncertainty and will have an impact on transaction volumes and possibly prices."

Cushman & Wakefield's head of research (Singapore), Wong Xian Yang, said: "Amid economic uncertainties, the government is erring on the side of caution and leaving most of the units in the Reserve List, allowing the market to dictate market supply."

On the Reserve List are six residential sites, two white sites, as well as a hotel site at River Valley Road. This works out to another 4,860 private residential units (including EC units), 90,000 square metres (sq m) gross floor area (GFA) of commercial space and 530 hotel rooms. Of the six residential sites, three are newly introduced, namely two parcels at Pine Grove and one at Lentor Hills Road.

Taken together, the Confirmed and Reserve Lists can yield a total of 6,860 units, easing 2.6 per cent from 7,045 units under the H1 2021 GLS Programme.

Sites on the Reserve List are launched only upon successful application by a developer or when there is sufficient market interest in a site.

In a release on Thursday morning, the Ministry of National Development (MND) said: "The unsold inventory of private housing units has declined over the past year amidst strong demand. Nonetheless, even as the economy is recovering from the recession in 2020, there are continued uncertainties in the economic and labour market conditions due to the ongoing Covid-19 situation globally and locally."

As such, the government has decided to moderately increase the supply of private housing on the Confirmed List to 2,000 units, MND added.

This comes after MND beefed up private housing supply from confirmed sites under the H1 2021 GLS programme by 17.2 per cent.

Of the four sites on the Confirmed List, three are in the Outside Central Region (OCR), while the fourth is at Jalan Tembusu in the Rest of Central Region (RCR).

Ismail Gafoor, chief executive of PropNex, said: "We believe the move to offer more sites in the OCR may help to stave off a potential supply crunch in this sub-market, providing buyers - many of whom may be HDB upgraders - with a wider selection of mass market homes."

He added that the supply of unsold private homes has come down sharply from 36,839 unsold units (excluding ECs) in Q1 2019 to 21,602 unsold units in Q1 2021.

Analysts reckon sites on the Confirmed List that will most likely appeal to developers include the Jalan Tembusu site in the Tanjong Katong area, which can yield 645 units, and an EC site at Bukit Batok West Avenue 8, which can yield 375 units.

JLL's Mr Ong reckons that the EC site will be sought after, owing to the moderate supply of new EC projects in the West. He said: "It is good to offer an EC site in the West, after releasing the Tampines Street 62 site (under the H1 2021 programme) so EC buyers are able to find opportunities in different geographical areas."

The EC site is near a recent tender at Tengah Garden Walk which was awarded for S$603 per square foot per plot ratio, said director (research) at Huttons Asia, Lee Sze Teck. Mr Lee added: "This site may fetch lower taking into consideration that it is not within walking distance to an MRT station."

Also on the Confirmed List is a site at Lentor Hills Road which can yield 595 residential units, while a second parcel at Lentor Hills Road with a potential yield of 265 units is on the Reserve List.

Knight Frank's head of research, Leonard Tay, said: "The sites that are likely to be triggered on the Reserve List would be the smaller ones where 600 units or less can be built, as larger sites in excess of 800 units do not currently appear to be appetising for developers given the increased financial risk, as well as the challenge of not being able to sell out within the timeframe for Additional Buyers Stamp Duty remission."

Cushman & Wakefield's Mr Wong also reckons the Lentor Hills Road parcel on the Reserve List could attract developers given that it is the smallest site in the GLS Programme, and will benefit from greater accessibility once the Thomson East Coast Line is up and running.

Adapted from: The Business Times, 11 June 2021

Govt hikes private housing supply from confirmed sale sites by 25% for 2nd half of 2021

By Grace Leong

The supply of private homes from confirmed sites under the Government Land Sales (GLS) programme for the second half of this year has been raised by 24.6 per cent to 2,000 units, up from 1,605 units for the first half of the year, in response to land-hungry developers and the dwindling unsold new home supply.

While this marks the second increase in the private home supply after five consecutive reductions in previous GLS confirmed lists, analysts called it a conservative and measured programme given the macro-economic uncertainties amid the pandemic.

It is a far cry, for instance, from the 7,000-8,000 units that the Government released in the second half of 2010 and 2012 to satisfy the rebound in demand for private housing after the global financial crisis, Cushman & Wakefield said.

"On balance, the Government has decided to moderately increase the supply of private housing on the confirmed list," the Ministry of National Development (MND) said on Thursday (June 10).

MND had raised the private housing supply from confirmed sites in the first half of 2021 by 17 per cent, after cutting it by 23 per cent to 1,370 units in the second half of 2020 as a result of Covid-19.

Nonetheless, Mr Ong Teck Hui, senior director of research & consultancy at JLL, said the phase two (heightened alert) measures to stem the spread of Covid-19 following the emergence of several infection clusters "show that the economy and residential market can be disrupted. This will have an impact on transaction volumes and possibly prices."

Citing URA Realis data, he pointed to a 30 per cent drop in new private home sales in May from April.

The latest confirmed list comprises four private residential sites - including one executive condominium (EC) site - that can yield about 2,000 private residential units, including 375 EC units.

Supply from sites on the reserve list can add another 4,860 private home units, bringing total potential supply to 6,860 units.

This is 2.6 per cent lower than the 7,045 units for the first half of 2021.

The reserve list comprises six private residential sites (including one EC site), two white sites that allow a range of uses, and one hotel site.

Apart from the 4,860 private homes (including 700 EC units), the sites can yield 90,000 sq m gross floor area of commercial space and 530 hotel rooms.

"The Government is erring on the side of caution and leaving most of the units in the reserve list," said Mr Wong Xian Yang, head of research, Singapore, at Cushman & Wakefield.

The latest confirmed list features two new sites - Lentor Hills Road (Parcel A) in Ang Mo Kio and Bukit Batok West Avenue 8 (EC) - as well as two other sites, Jalan Tembusu in Tanjong Katong and Dairy Farm Walk, that were moved from the reserve list.

Ms Catherine He, director of research, South-east Asia, at CBRE, said these sites are likely to attract keen bidding, given the recent robust tender closings for a GLS site at Ang Mo Kio Ave 1, and an EC site in Tengah Garden Walk.

The move to offer more sites in the suburbs may help to stave off a potential supply crunch in this sub-market, providing buyers - many of whom may be upgrading from Housing Board flats - with a wider selection of homes, PropNex chief executive Ismail Gafoor said.

Ms He said: "Together with a site at Lentor Central, which is currently open for tender, the Lentor Hills Road site seeks to revitalise the area, with new parks and commercial amenities planned."

The Lentor Hills Road site, which can yield 595 units, is near the upcoming Lentor MRT Station and amenities in Ang Mo Kio town.

Mr Nicholas Mak, head of research and consultancy at ERA realty, expects strong "double-digit" bids in the upcoming tenders for sites in Jalan Tembusu and Lentor Hills Road.

Adapted from: The Straits Times, 11 June 2021

BT Explains: Why office landlords aren't fretting over banks cutting space

By Fiona Lam

The trend of Singapore banks trimming office space is not spelling doom and gloom in the leasing market.

Who's been scooping up these workspaces, and which landlords have exposure to them? The Business Times takes a closer look.

Meet the new heavyweights

Singapore's banking sector will cut office space by 30 per cent over the next few years as office leases expire, a DBS report noted. But firms from other industries have been quick to pounce on these prime commercial units, often in prominent locations and boasting panoramic views of the city skyline.

Investors, developers and real estate investment trusts (Reits) thus appear scarcely concerned, and welcome the new mix of tenants. In particular, a technology, media, real estate and corporate blitz looks to be underway.

Citi analyst Brandon Lee expects the space vacated by banks to be filled up by tech and corporate tenants.

CBRE Research wrote recently that large corporates will probably leverage the pullback in rents to move to higher-quality and better-located offices, fuelling a recovery in the Grade A market.

At the Marina Bay Financial Centre (MBFC) Tower 1, tech firms from the US, China and Singapore are among those expressing "very strong interest" in roughly 200,000 sq ft across nine and a half floors.

Media companies and financial services providers are also keen on that MBFC space, which is part of the 400,000 sq ft currently leased to Standard Chartered, The Business Times (BT) reported. The UK bank's lease expires in October 2022, with an option for renewal.

Similarly, Keppel Reit is seeing demand from US tech and corporate tenants. In Singapore, the Reit owns a 79.9 per cent interest in Ocean Financial Centre, one-third of MBFC, a one-third stake in One Raffles Quay, and the entire Keppel Bay Tower.

Suntec Reit also has a 33.3 per cent exposure to MBFC.

Data from JLL Research showed that financial services' share of office space in new buildings across Singapore shrank from 47 per cent in 2004-2014 to about 26 per cent in 2015-2020.

In the same period, occupiers from the tech sector grew their footprint to 22 per cent of the market, up from 8 per cent. Real estate companies accounted for 13 per cent in 2015-2020, swelling from 3 per cent in 2004-2014.

Landlords unfazed, even optimistic

Keppel Reit, whose portfolio includes 10 big banking tenants taking up more than 40,000 square feet (sq ft) each, is confident of backfilling most of its potential vacancies, Citi's Mr Lee wrote.

It would be similar to how the Reit managed to fill former anchor tenant UBS Group's vacated space at One Raffles Quay, he said. TikTok owner ByteDance took up three floors spanning over 60,000 sq ft in the building, which is also jointly owned by Hongkong Land and Suntec Reit, after the Swiss bank moved out, Bloomberg reported.

Four of Keppel Reit's key banking tenants are reportedly looking to surrender their space, including DBS's about 75,000 sq ft in MBFC Tower 3, StanChart in MBFC Tower 1, and ANZ's one floor in Ocean Financial Centre.

Any downtime or "short-term income void" could be mitigated by positive rent reversions and S$467 million of undistributed capital gains, Mr Lee said.

Some investors are also maintaining a rosy view of the office leasing segment.

Blackstone Group plans to invest in more properties in Singapore due to "compelling opportunities for high-quality office spaces", the US private equity giant told BT when it acquired The Sandcrawler, a Grade A business-park building in Buona Vista.

This demand is driven by an influx of global tech companies setting up regional headquarters in the city-state. Such occupiers are keen to take up office space in low-rise buildings in business parks with a "unique campus-style experience", instead of skyscrapers in the CBD, Blackstone added.

Meanwhile, Hongkong Land, which owns a one-third interest in MBFC's commercial space, said it expects to achieve rents of between S$11 and S$12 per square foot (psf) per month for the StanChart floors that are being marketed.

That is above the average of S$10.40 psf per month during Q1 2021 in CBRE Research's basket of Grade A (Core CBD) office rents.

The Singapore office sector has seen improved supply-demand dynamics, Mr Lee said. Supply is limited, given the potential delays of two sizeable office buildings - in GuocoLand's Guoco Midtown and IOI Properties' Central Boulevard Towers - to 2023 and 2024.

First movers: Big Tech

Tech giants from the US and China, including ByteDance, have snapped up real estate in Singapore since last year. Lazada and its parent Alibaba Group signed up for 140,000 sq ft at 5One Central on Bras Basah Road. In May 2020, Alibaba bought a half stake in AXA Tower.

ByteDance's TikTok is also continuing to expand its physical footprint here, having leased two floors amounting to 58,000 sq ft at GuocoLand's Guoco Tower. The space previously housed Dentsu Aegis Network. Inc took over three floors totalling 90,000 sq ft in Asia Square Tower 1 that Citigroup used to occupy.

Mr Lee noted that the fall in Singapore office demand from banks and co-working operators should be mitigated by Chinese tech demand, including expansion by "first liners" - Alibaba/Lazada, ByteDance and Tencent - which are already here, as well as "second liners".

Adapted from: The Business Times, 10 June 2021

HDB rents up 0.7% in May, condominium rents rise 0.3%: SRX

By Lisa Kriwangko

Rents for condominiums increased 0.3 per cent in May 2021 from the previous month, while that of Housing Development Board (HDB) flats rose 0.7 per cent in the same period.

This marks the fifth and eleventh consecutive month of rising condo and HDB rents respectively, according to Wednesday's SRX flash estimates.

According to Christine Sun, senior vice-president of research and analysis at OrangeTee & Tie, the market "remained robust" despite fewer foreigners entering Singapore, as tenants continued to renew their leases.

She said landlords may want to take advantage of recovering private resale prices by selling their flats, which means affected tenants will have to look for new accommodation.

More Singaporeans are also renting temporarily as some homeowners did not wait to find a replacement home before selling their flats as they wish to capitalise on rising resale prices, added Ms Sun.

Condominium rents increased by 7.3 per cent year-on-year (yoy), but are still down 11.4 per cent from their peak in January 2013.

This was led by a 9.7 per cent rise in the outside central region (OCR), followed by a 6.1 per cent increase in the rest of central region (RCR), and 5.1 per cent growth in the core central region (CCR).

Compared to April 2021, CCR and OCR rents gained 1.1 per cent and 0.5 per cent respectively, while RCR rents fell 0.6 per cent.

The month also saw a 1.7 per cent increase in volume to an estimated 4,603 units in May, compared to 4,527 units in April.

This is 39.3 per cent higher than rental volume from a year ago, and 0.1 per cent higher than the five-year average volume for the month of May.

According to Lee Sze Teck, director of research at Huttons Asia, this number was capped by Phase 2 (Heightened Alert) restrictions, which limited the number of visitors in a viewing.

"Otherwise, rental volume for condos in the month of May will be even higher," he said.

SRX data showed volumes were led by OCR with 41.2 per cent, followed by 30.7 per cent from RCR, and 28 per cent from CCR.

HDB rents increased by 7.9 per cent y-o-y, although this is still 9.2 per cent down from their peak in August 2013.

Rents in mature and non-mature estates climbed 7.2 per cent and 8.6 per cent respectively. All room types recorded rent increases - three-room by 7.3 per cent, four-room by 9.1 per cent, five-room by 7.2 per cent, and executive flats by 4.9 per cent.

That being said, HDB rental volumes declined by 0.9 per cent to an estimated 1,686 units, compared to 1,702 flats from the month before.

This is 8.5 per cent lower than the five-year average volume for the month of May, but 30.4 per cent higher than the rental volume in May 2020.

Some 36.8 per cent of the month's rental volume came from four-room apartments, 31.4 per cent from three-room, 24.8 per cent from five-room, and 7 per cent from executive flats.

Nicholas Mak, head of research and consultancy at ERA, said that while rental volumes remained "largely unchanged", resale volumes of both HDB flats and condos took a dip in May from a month ago.

He noted that HDB resale transactions dropped 16 per cent while that of condos fell 11.4 per cent last month.

According to Mr Mak, this was because of the shorter commitment period and smaller financial outlay of renting a property, as compared to purchasing one.

"Therefore, relatively more tenants are willing to seal rental transactions remotely, compared to property acquisitions, especially for certain popular locations," he said.

Adapted from: The Business Times, 9 June 2021

Price premium of HDB resale flats in mature estates may shrink further

By Fiona Lam

The price gap between Housing Board (HDB) flats in mature estates and those in non-mature estates is likely to continue to narrow in the coming years, Huttons Research said.

This comes as buyers are shunning decaying leases despite amenities and accessibility, while some younger estates are also transforming and winning favour with residents, the real estate consultancy noted in a report on Friday.

If the trend persists, "it is possible that we will see a million-dollar flat in a non-mature estate soon", said Lee Sze Teck, director of research at Huttons Asia.

Last month, HDB resale prices rose more quickly in non-mature estates, climbing 12.4 per cent year on year and increasing 1.4 per cent from April, flash figures from property portal SRX showed. Mature estates, meanwhile, saw prices grow by 11.6 per cent year on year and 0.9 per cent month on month.

Singapore's mature estates include Ang Mo Kio, Bishan, Central Area, Clementi, Pasir Ris, Tampines and Toa Payoh. Non-mature HDB estates include Bukit Batok, Choa Chu Kang, Jurong East, Punggol, Sengkang and Woodlands.

With a more central location as well as numerous amenities and facilities nearby, flats in mature towns tend to command a premium over those in non-mature estates. Sellers also expect this because they too had paid a premium when they first bought their flats, Huttons wrote.

Generally, that should be the case, given real estate's "location, location, location" mantra. But the differentiation between mature and non-mature estates has blurred in recent years, with average resale prices in the latter areas climbing at a faster rate, the research team found from its analysis of price data from 2010 to May 2021.

One possible reason for the shrinking premium is the age or remaining land tenure of the flats that changed hands, Huttons said. "Even if your flat is in a mature estate, you will not be able to fight against a decaying lease, which seems to have a greater impact."

The gap narrowed for three-room and five-room flats in the past decade, partly because there was an increase in new supply of such flats being built and sold in non-mature estates. That meant the average age of these flat types transacted in non-mature estates came down more quickly than in mature estates.

However, four-room flats' price gap remained fairly stable as both mature and non-mature towns saw an influx of such homes. Their average ages therefore started to decline across the country at around the same time.

Executive and larger flats also saw the price premium thinning. Huttons attributed this to robust demand for bigger living spaces since the start of the Covid-19 pandemic, driven by work-from-home arrangements and movement restrictions. That helped prices rise more significantly in non-mature estates, even though the public housing authority had stopped building larger homes in recent years as family demographics changed.

Meanwhile, the reverse was seen for two-room flats, with their average transacted prices in non-mature estates fetching a premium over those in mature estates. This came as the former's transactions involved much newer flats; on average, they were less than 10 years old, versus mature towns' flats which were more than 35 years old.

"It appears that age plays a more important role in the value of flats in recent years, rather than the location in a mature or non-mature estate," the Huttons analysts wrote.

"This is a valid concern, as no one likes the thought of their home depreciating to zero as the lease runs down," they said.

Some homebuyers may also be turning to newer estates as the prices of available HDB resale flats in mature estates have surged beyond their budgets, said ERA Singapore head of research and consultancy Nicholas Mak.

In addition, Huttons noted that as connectivity and amenities improve in non-mature estates, some of their resale flat prices have inched close to mature estates'.

For example, a five-room flat in non-mature Punggol fetched S$910,000, approaching the S$1.095 million price tag for a five-room flat in Clementi.

Punggol is one of several non-mature estates that underwent a "huge transformation" over the last 10 years; it now houses Punggol Waterway Park, Waterway Point mall and numerous schools, with the upcoming Punggol Digital District likely to make the estate even more attractive, Huttons said. The town is also well-planned with a "unique character", and some flats there do not have the typical cookie-cutter designs seen in certain mature estates, it added.

Adapted from: The Business Times, 7 June 2021