Singapore - Housing 01 (May 08 - Oct 08)

[ishak]

MARINA BAY FINANCIAL CENTRE
Over 65% of Phase 1 leased out
BHP Billiton and Macquarie take up total of more than 216,000 sq ft
BT, 11 Sep 2008

The first phase of Marina Bay Financial Centre is 65.6 per cent pre-leased, almost two years ahead of its completion in Q2 2010. Two big names from Australia, BHP Billiton and Macquarie Group, are among the latest tenants announced by the consortium developing the mega project.

The BHP Billiton deal confirms a BT story last month.

The resources giant will lease 142,000 sq ft on levels 44 to 50 of MBFC's Tower 2 under the project's first phase, while Macquarie will take more than 74,000 sq ft on levels 16 to 18 of the same tower. Both tenancies are for 10 years, with options for renewal and expansion.

Murex Southeast Asia, which is involved in software development for trading, risk management and processing, has leased about 25,000 sq ft on level 19 of Tower 2 under a six-year tenancy agreement.

With the latest signings, the total 2.92 million sq ft of Grade A office space in both phases of the MBFC development is 61 per cent pre-committed.

The project is a symbol of Singapore's ambition to be a leading financial centre.

The office component of MBFC's Phase 1 comprises Tower 1, fully let and anchored by Standard Chartered Bank, and Tower 2, which is now 45 per cent pre-leased. The second phase, slated for completion in Q2 2012, consists of Tower 3, which is 55 per cent pre-committed and anchored by DBS Bank with a 700,000 sq ft lease.

MBFC marketing agent CB Richard Ellis's executive director Moray Armstrong said that while overall office leasing momentum in Singapore has eased in the past few months, the latest signings at MBFC are 'a good indicator that demand for quality office space remains in positive territory'.

'There is, of course, some caution among occupiers, but across the majority of our client base we sense there is underlying confidence in Singapore's relative position,' he said.

The MBFC project also includes two residential developments and 119,000 sq ft of retail space. The project is being developed by a consortium comprising Hongkong Land, Keppel Land and Li Ka-shing's Cheung Kong (Holdings)/ Hutchison Whampoa.

[ishak]

High-end home market going off the boil
Developers are testing the market to see if their projects will sell
BT, 12 Sep 2008

MOST developers are still holding off launching luxury condominiums, but a few projects are slowly being put on the market.

Frasers Centrepoint has launched and sold about 30 units at its 302-unit Martin Place Residences, with apartments going for about $1,800 per square foot (psf) on average.

Martin Place Residences is in the River Valley neighbourhood in District 9.

And nearby, SC Global Developments said last week it had released and sold 30 apartments in its Martin No 38, which has 91 units in total.

The average price fetched was $2,130 psf, with sales coming at $1,881-$2,494 psf.

Developers are pushing out luxury condo projects cautiously, with most releasing them in small phases.

Many are also trying to test the market to see if their high-end homes will sell and gauge how much buyers will be willing to pay.

Yesterday, the en-bloc purchasers of Lincoln Lodge said they will be launching the new development on the site - Lincoln Suites - by early next year.

But the developers - Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group, which each have an equal stake in the project - will only release some of the project's 175 units in the first phase.

And current residents of Lincoln Lodge will probably be allowed to stay in their homes well into next year.

'We are not going to launch all the units at one go,' said Francis Koh, chief executive of Koh Brothers. 'The price will be determined by buyers' willingness to buy.'

Prices will be similar to or 'even lower than' comparable projects nearby, Mr Koh said.

Units in the newly-built nearby development, Park Infinia at Wee Nam, are going for $1,300-$1,600, property consultants said.

The consortium bought Lincoln Lodge for $243 million, or $1,449 psf per plot ratio, including an estimated development charge of $413,000, in June last year at the height of the en bloc frenzy.

They then decided to hold off tearing down the existing project, and have instead allowed occupants to keep renting apartments for at least six months from the sale completion date in July this year.

Now, the showflat for Lincoln Suites will be built with Lincoln Lodge still standing.

Depending on the market response, the leases of the tenants could be extended past January next year.

[winston]

Real Estate Developers Association of Singapore president Simon Cheong says private home prices are unlikely to drop much from current levels as selling prices are close to replacement costs, inclusive of construction costs.

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Winston's comments:-
1) I think the above is from the point of view of a developer and applies only to new properties that has not been developed.
2) For new properties which has been developed, then it depends on how much holding power the developer has
3) For the resale market, property prices depends on Supply & Demand not replacement costs.
Example.. If a speculator ( aka investor ) who bought last year and am trying to get out because he has lost a lot of money, he does not care about the replacement cost. He just wants to get out ...

[ishak]

Real Estate Developers Association of Singapore president Simon Cheong says private home prices are unlikely to drop much from current levels as selling prices are close to replacement costs, inclusive of construction costs.

========================================

Winston's comments:-
1) I think the above is from the point of view of a developer and applies only to new properties that has not been developed.
2) For new properties which has been developed, then it depends on how much holding power the developer has
3) For the resale market, property prices depends on Supply & Demand not replacement costs.
Example.. If a speculator ( aka investor ) who bought last year and am trying to get out because he has lost a lot of money, he does not care about the replacement cost. He just wants to get out ...

Home prices near replacement cost
So they are unlikely to fall by much, argues Redas chief
BT, 13 Sep 2008

REAL Estate Developers Association of Singapore (Redas) president Simon Cheong says private home prices are unlikely to drop much from current levels as selling prices are close to replacement costs, inclusive of construction costs.

Also, developers had a good year last year and 'a lot of buffer', he added, suggesting that they will be under less pressure to lower prices to chalk up further sales. 'So I don't anticipate that the drop will be too severe if there is one,' Mr Cheong told reporters on the sidelines of Redas' Mid-Autumn Festival Celebration yesterday.

However, some market watchers point out that developers are not uniform in financial strength.

DTZ senior director (research) Chua Chor Hoon agreed that the established developers who have made supernormal profits in the last few years have more holding power. 'However, some new players who bought sites at high prices last year may not have enjoyed big profits. And there are smaller developers who may need to roll projects one after another to generate cashflow,' she said.

Analysts say weaker players may be more inclined to trim prices if necessary to dispose of their projects. Another factor affecting price levels is the secondary market, including subsale transactions.

The median subsale prices of Citylights and The Sail @ Marina Bay eased about 2 and 14 per cent respectively in the second quarter of 2008 from the preceding quarter, according to a recent caveats analysis by DTZ.

Mr Cheong also said that high-end home prices have peaked but will probably achieve a new high 'eventually when the sentiment improves, the economy improves, come 2010 when the integrated resorts come into play and with Singapore being a successful wealth management centre'.

Mr Cheong also said he continued to be upbeat about the Singapore property market in the long term, citing the Republic's political stability and strong fundamentals, as well as upcoming projects/events that will further position Singapore as a global city. 'I think when the whole storm blows over, the market should be able to accept the situation better and hopefully by next year, say 12 months' time, we will be in a better state than now,' he said.

Despite the generally upbeat tone of Mr Cheong's comments, there is no denying the uncertainty in the short term.

Frasers Centrepoint CEO Lim Ee Seng, when quizzed on where the property market is headed in the next six months, said: 'I don't know. I hope that the market will be better. It's all sentiment-driven. But I believe if there is good news in the market, the good sentiment will come back very quickly.'

Gwee Lian Kheng, group chief executive of UOL Group, said that there may be a tendency for some developers to slow down on the construction of their projects given that holding cost (interest cost) is 3 to 5 per cent, much lower than the 30 per cent rise in construction costs in the past nine months. 'So there's an advantage by slowing down.' On a more positive note, Mr Gwee noted that prices of some construction materials like steel have started to stabilise.

Others like City Developments can ride on the advantage of having a diverse residential landbank comprising low-, mid- and high-end sites, said the company's group general manager Chia Ngiang Hong. 'We can pull out projects for which there is demand in the market. For the time being, the low- and mid-ends are still quite resilient,' he added.

[-dol-]

Agree with winston.

I wonder if buyers even have the concept of "replacement cost" in their heads in their purchase decision-making?

Developers and some in the industry are putting a brave front and making self-serving comments. Where property prices are heading depend on many factors - and I would not put much store on "replacement costs" to prevent prices from going down. We cannot eliminate the possibility that prices can drop more significantly - and in the process if some developers cannot cover their replacement costs - so be it. This is part and parcel of life and business.

[millionairemind]

Machiam same analogy can be drawn in the stock market.

The buy and hold ppe. cannot target the fall and they just want to get out, causing the share prices to fall further..

[-dol-]

Same analogy... it plays out slower on the property market... need patience, staying power and lots of financial resources.

It would be interesting to see our developers being stress-tested.

[iam802]

When developers says 'break even cost'... it highlights one point.

They don't want to lose money. Everybody wants a sure-profit business.

So... the more they say.... the more we wait.

[kennynah]

lucky i never do business with you...u too savvy already....let u makan until i call tor long...hahaha

[HengHeng]

actually to me when too many people wait also not good ... developer later turn into rental bussiness then die