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Two cecil street being considered for sale

Two cecil street being considered for sale

The struggling strata office market may have prompted the owners of two adjacent buildings in Cecil Street to consider putting their properties up for sale.

Mr Cheong Sim Lam, whose family developed International Plaza, is understood to be asking $220 million for ICS Building, which is the former Aviva Building.

The 12-storey office building with two basements has a net lettable area of about 6,525 sq m and sits on a 920 sq m freehold site.

Mr Cheong bought 137 Cecil Street from Yi Kai Group and Fission Group shortly after the firms had paid $65 million for the property in July 2009. It is not known how much he paid as the transaction was through a sale of shares.

The owners of neighbouring Cecil House at 139 Cecil Street are also said to be considering selling at an asking price of $150 million.

Vibrant Group and DB2 Group bought the 11-storey office building from Mr Cheong in June last year for $110 million. Cecil House sits on a 737 sq m site with about 65 years left on its lease.

A Vibrant Group spokesman said it is waiting for building plans to be approved before it starts alteration work. The plan is to strata-subdivide and sell the property, he said.

Vibrant and DB2 are also part-owners of GSH Plaza, which has sold about 60 out of a total of 259 strata office units since launching in April. The owners are said to have reserved about 40 of these units, while caveats for 17 have been lodged at an average of $3,125 per square foot (psf).

Crown@Robinson, where caveats for eight units have been lodged at an average of $3,513 psf since its launch in April, also reflects the stalling strata office market.

Strata office sales were booming between 2011 and 2013 when many projects were launched. But the implementation of the total debt servicing ratio framework from June 2013 and the completion of some of these projects have constrained the market, said Savills Singapore research head Alan Cheong.

Developers have scaled down unit sizes to keep lump sum prices affordable, he noted. Units at GSH Plaza are priced from sizes of 480 sq ft to 1,700 sq ft, while those at Crown@Robinson are from 592 sq ft to 1,152 sq ft.

Added Mr Cheong: “End users find it challenging to fit into such unit sizes. Some recent completions have caused potential buyers to question if they will be able to find tenants.”

For instance, Paya Lebar Square, where close to 57 per cent of the 556 strata office units are under 550 sq ft, has an occupancy of about 15 per cent. The development was completed in the fourth quarter of last year.

(Source: The Straits Times)

 
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Posted by on August 29, 2015 in Commercial

 

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Investors eye rich pickings in shophouses

SHOPHOUSES are fast emerging as an attractive prospect for investors confronted by dwindling investment opportunities in a downbeat property market.

While the residential market is now a pale shadow of itself from two years ago, deals in the shophouse space have picked up.

Just this month, two units at 10 and 12 Gemmill Lane changed hands for $10 million, according to sources. A 99-year leasehold unit at nearby 22 Gemmill Lane was also sold for $14 million at about the same time.

Based on the built-up area, the price works out to about $2,000 to $2,300 per sq ft (psf) each.

At least four units in Pagoda Street were snapped up for between $14 and $18 million each this week. Caveats from the Urban Redevelopment Authority revealed that one unit at 16 Gemmill Lane changed hands for $10.5 million last month and another one at 43 Keong Saik Road went for $7.8 million in August.

Shophouses, which are limited in supply, have traditionally been held by owners who inherited them and feel no pressure to sell. The units are therefore harder to buy, experts said.

But the landscape is fast changing, with investors jumping into the commercial market after eight rounds of cooling measures and stringent mortgage lending rules squeezed many out of the residential segment.

Mr Richard Tan, a realtor specialising in shophouses at PropNex, said: “Many do not realise the huge gains they’re sitting on until investors offer them a deal they cannot refuse.”

Shophouses are popular with foreign buyers as they do not face restrictions such as the additional buyer’s stamp duty, unlike in the residential segment.

Also, conserved shophouses are concentrated in the prime Central Business District (CBD) and offer a cultural charm, said Mr Tan.

Mr Zain Fancy, founder of Clifton Real Estate Group, a firm investing mainly in shophouses, said the main draw is in “restoring units to their former glory”.

“It’s like owning a landed property with your own building with a piece of Singapore history.”

URA data, based on land area, shows median prices of shophouses have surged by 50 per cent to $3,412 psf in the last two years.

“Generally, people who buy shophouses believe in capital appreciation. Shophouse rents have not moved as fast as capital values,” said Mr Ian Loh, director and head of investment and capital markets at Knight Frank.

One drawback cited by industry players is that information on the units’ built-up areas and rents is not freely available, resulting in a market that is still fragmented.

So landlords have not raised rents in line with the market, said Mr Tan. But this represents potentially better rental yields.

He cited a tenant who recently renewed a lease at $29,000 for a 4,000 sq ft three-storey shophouse in Tanjong Pagar – up from $18,000 three years ago.

Ms Chia Siew Chuin, director of research and advisory at Colliers, said shophouses have become popular with food and beverage outlets, budget hotels and even firms that do not require Grade A office space. CBD office rents can fall between $7 psf for older buildings and $12.50 psf in the Marina Bay financial district.

However, Mr Loh noted that shophouses are costlier to invest in, compared with other commercial assets such as strata office or retail space. A conserved shophouse in the CBD, for instance, can cost at least $7 million.

(Source: The Straits Times)

 
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Posted by on October 21, 2014 in Commercial

 

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168690__1402884765PROPERTY fortunes move in cycles, a fact that real estate investor Zain Fancy knows all too well.

The 40-year-old former high- flying investment banker has already been through more professional ups and downs than most people experience in a lifetime.

After a stellar 10-year career in real estate investment banking at Morgan Stanley, Mr Fancy left to spearhead an ill-fated property investment joint venture that ended in an acrimonious legal wrangle.

Now, the Pakistan-born father of one is finding success again in his latest endeavour: a Singapore-based firm investing in properties across Asia worth between $10 million and $100 million each.

Clifton Real Estate Group prides itself on being very “picky” about its property choices, since it focuses on unlocking value over the long term, Mr Fancy told The Straits Times in a recent interview.

The company has amassed a portfolio worth about $250 million so far, many of which are Singapore shophouses.

“We look for assets that are well-located but have been neglected or require an upgrade or renovation in order to fulfil their true potential,” said Mr Fancy, who became a Singapore citizen in 2009 and lives here with his wife and daughter. “We evaluated over 150 potential shophouses for over a year before we made our first investment.”

After investing in a property, Clifton renovates the asset with a singularly meticulous approach that Mr Fancy described as its competitive edge. Its “extremely hands-on” methods include carefully selecting each piece of material for the renovation process.

“Our goal is to create the nicest looking property on the street,” he said. “We would like to be known for our attention to detail and our quality finishes.”

The renovated properties are usually rented out to new, higher-paying tenants. Clifton is now renovating four shophouses it owns in colourful Pagoda Street in the heart of Chinatown, and expects to double their rental income once works are completed.

“We really believe in the Chinatown area – lots of good foot traffic, near the MRT,” he said.

But sometimes, the company gets an offer too good to refuse.

Last year, Clifton bought a 6,910 sq ft shophouse at 72 Peck Seah Street for $12.2 million and resold it for $16.8 million – all within the space of a few months.

“Most pan-Asian investors complain that Singapore does not offer attractive investment opportunities currently and there is too much capital ‘chasing’ opportunities,” Mr Fancy said.

“While this may be true broadly, in our space we have still been able to find compelling opportunities.”

In fact, Clifton, which now has 12 employees, initially planned to invest across Asia but has yet to venture beyond Singapore due to the “extremely interesting investment opportunities here”.

The Government’s property cooling measures, which have dampened some of the red-hot demand for real estate here recently, have presented buying chances, Mr Fancy said. “We believe in the long-term fundamentals of the Singapore property market.”

He sees particular potential in shophouses, which are limited in supply and have historical charm but are often not well-managed.

The prices of such properties have stayed resilient through economic crises, but their rents remain much lower than that of premium office and shop spaces, resulting in strong leasing demand and significant room for shophouse rents to catch up, he said.

Clifton is also looking into other types of investments here and abroad. “I expect we will start setting up overseas operations in the next 12 to 24 months,” he said.

That would be coming full circle for the former head of Morgan Stanley’s real estate investment unit in Asia.

Mr Fancy was appointed to the post in 2005, following a string of successful property deals he had led in the region.

He was just 31 then and had been at the bank for a decade, working in New York and in Hong Kong. In 2006, Morgan Stanley made him a managing director.

But in 2008, having built a 120-strong real estate team for the bank, Mr Fancy left to form Och-Ziff Asia Real Estate, a joint venture with New York-based fund manager Och-Ziff Capital Management Group.

The timing wasn’t great: his stint at Och-Ziff coincided with the onset of the global financial crisis and ended with a lawsuit. In October 2010, he departed the venture and sued two of the fund manager’s Singapore-based units for millions that he said he was owed.

Och-Ziff’s position was that he had acted in bad faith by not disclosing his involvement in a probe being conducted by United States authorities into one of Mr Fancy’s subordinates, Mr Garth Peterson, at Morgan Stanley.

Mr Fancy told The Straits Times he could not comment on the legal proceedings, which were reportedly settled out of court. Subsequent reports cleared Mr Fancy of any blame for Mr Peterson’s corrupt actions.

By then, Mr Fancy had moved on. In 2011, he started Clifton Real Estate, named after the affluent suburb in Karachi, Pakistan, where he was born.

“Having worked in an institutional environment for over 15 years, and having always had an entrepreneurial interest, I felt I was ready to venture out on my own,” he recalled.

“In a larger managerial role at Morgan Stanley I was starting to spend most of my time in admin and management and much less in actually being hands-on with managing property or with evaluating and negotiating investments.”

Given his keen personal interest in properties, it is no surprise that Mr Fancy’s own investments have mostly turned out well.

His best personal investment was a condo in Hong Kong’s Amoy Gardens right after Sars had stopped spreading in the territory.

Amoy Gardens had been one of the housing estates most severely affected by the outbreak and was therefore seen as “tainted”.

“Some owners were panic selling, which made pricing attractive at the time,” he said.

As for his worst investment, it would be a property in Pakistan, whose value suffered from the country’s currency depreciation.

“Luckily I waited for the market to recover and was able to get the full amount of my capital investment back,” he said.

“That is the beauty of property – if you are able to purchase assets with good layouts in attractive locations, over the long run, the value should appreciate.”

A lesson, surely, that applies to people with strong fundamentals too.

(Source: The Straits Times)

 
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Posted by on June 16, 2014 in Commercial, Investment Tips

 

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Four more industrial sites for sale

SINGAPORE — JTC Corporation (JTC) yesterday launched for sale by public tender four plots of industrial land in Woodlands and Tuas.

The sites — comprising one plot in Woodlands Industrial Park E9 and three at Tuas South Streets 11 and 13 — are zoned for Business-2 development.

 

This means the areas may be used for industry, warehouse, utilities and telecommunication purposes within a prescribed nuisance buffer zone.

The site at Woodlands Industrial Park E9, which is 18,394.1 sq m, has a lease of 30 years and a maximum permissible gross plot ratio of 2.5.

The sites at Tuas South Streets 11 and 13 have a lease of 21 years 6 months and a maximum permissible gross plot ratio of 1.0.

These smaller plots with shorter tenure are targeted at industrialists who need to custom-build their own facilities, according to the JTC.

This is also in line with the government’s efforts to make industrial property more affordable.

(Source: Channel NewsAsia)

 
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Posted by on December 1, 2013 in Commercial, Government Land Sales

 

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The Arcade is likely to go en bloc

The Arcade, which is a prime albeit small commercial site in Raffles Place, is in talks for a collective sale soon. 

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Word on the street is that the price tag for the 20-storey office-and-retail building is around $3,000 psf ppr, inclusive of development charges of $100 million or more. Sitting on a site of 21,900 sq ft, The Arcade’s owners will stand to pocket around $800 million if the en bloc deal goes through.

According to the annual report of City Developments, the property group owns nearly 47,500 sq ft of space in the building, which translates to slightly more than 30% of the building’s total strata area of 157,300 sq ft, and 30% of share value, making it the biggest owner. 

The Business Times have understood that owners controlling at least 80% of share value and strata area in the property have consented to The Arcade‘s collective sale, but verification of one or two signatures is pending. Once this is settled, a tender for the collective sale can be launched.

The Arcade is sitting on a site with land tenure of 999 years starting April 1826, but some owners have only 99-year leasehold interest (starting October 1979) on their units. CDL, which holds the reversionary interest on the 99-year leasehold title of such units, has agreed to sign off for The Arcade to be sold on 999-year tenure for the 99-year units whose owners agree to the collective sale.

Completed 32 years ago, The Arcade has significant redevelopment potential. Its existing gross floor area reflects a plot ratio of 8.0, which is significantly lower than the maximum 13.86 allowed for the site under Master Plan 2008, inclusive of bonus plot ratio for the site’s proximity to Raffles Place MRT Station. The site is zoned for commercial use.

While The Arcade is a rare 999 year-leasehold commercial site in the Raffles Place financial district available for sale, one drawback is the site’s small area and narrow configuration.

However, if Singapore Land, the owner of Clifford Centre next door, were to buy The Arcade, it could potentially merge the two sites to form a more substantial site for redevelopment.

Alternatively, The Arcade‘s collective sale may also draw potential investors who may not be looking at immediate redevelopment of the property. There is potential to trade the existing strata retail units, which are mostly tiny and can hence fetch high psf of thousands and up.

 
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Posted by on November 15, 2013 in Commercial

 

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Work starts on the first Jurong Lake District Hotel

THE company behind Resorts World Sentosa (RWS) has started building the first hotel in one of Singapore’s newly-emerging business and leisure hubs, Jurong Lake District.

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Genting Singapore broke ground yesterday for the new hotel on Jurong Town Hall Road which is slated to open in the first half of 2015.

The Jurong Lake District has been earmarked by the Urban Redevelopment Authority as a new growth area with commercial, business and leisure facilities.

The 550-room hotel, five minutes away from the Jurong East MRT station, is on a 9,027 sq m site and has a 99-year lease.

Tan Sri Lim Kok Thay, chairman of the Genting Group and executive chairman of Genting Singapore, said the new hotel “signifies our commitment to reinvesting in Singapore”.

“With our hotel being the first to open in this growing precinct, we hope to create another unique hospitality product that will crank up the buzz meter in this already vibrant area to even higher levels,” he added.

Mr Tan Hee Teck, president and chief operating officer of Genting Singapore, said: “We will deliver a product that will bring incremental business to neighbouring merchants, accommodation convenience to companies in the vicinity, and amenities to Jurong West residents.”

The new hotel will be the seventh hospitality development for Genting Singapore, which owns six hotel properties at RWS – Crockfords Tower, Hotel Michael, Festive Hotel, Hard Rock Hotel Singapore, Equarius Hotel and the Beach Villas.

(Source: The Straits Times)

 
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Posted by on July 15, 2013 in Commercial

 

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Healthy outlook for retail space demand

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ORCHARD ROAD MALLS: American furniture retailer Crate and Barrel will be the anchor tenant at the upcoming 172,000 sq ft Orchardgateway mall (above) in Somerset, which is now expected to be finished by the first quarter of next year. — PHOTO: ORCHARD GATEWAY

DEMAND for retail space in Orchard Road and suburban areas is likely to remain healthy as more international retail brands seek to establish a Singapore presence, consultants said.

Though rising business costs and a manpower crunch have put a dent in rents and occupancy rates in the short to medium term, Singapore is gaining more recognition as a global city, they added.

Orchard Road is set for a renewal, with old malls being refurbished and new ones built.

Take the former Heeren. It will be turned into a six-storey, 180,000 sq ft regional flagship department store called Robinsons Orchard.

The refurbishment of Shaw Centre and Shaw House is also likely to be finished by early next year, said Orchard Road Business Association (Orba) executive director Steven Goh.

Mr Goh added that the prime shopping district has managed to attract international brands such as French confectioner Laduree, Hong Kong fashion conglomerate I.T and American furniture retailer Crate and Barrel.

Crate and Barrel will be the anchor tenant at the upcoming Orchardgateway, a $700 million, 172,000 sq ft mall on the site of the former Specialists’ Centre, at Somerset. It was supposed to be completed by the end of this year but Mr Goh said it is more likely to be finished in the first quarter of next year.

Another mall is 268 Orchard Road, which is being redeveloped by a unit of Ngee Ann Development into a 147,500 sq ft complex likely to open early next year.

These projects are set to give the area a fresh lease of life.

With many international brands still choosing Orchard Road to make their debut, Orba and mall owners are working together to ensure the area maintains its vibrancy, Mr Goh added.

Consultancy Colliers International said occupancy rates in Orchard Road slid from 95.1 per cent as at the end of last year to 92.7 per cent as of March 31.

“Nonetheless, with overall occupancies above 90 per cent, demand for space in Orchard Road is still robust with retailers looking for well-located space in the popular malls,” said research and advisory head Chia Siew Chuin.

Estimates of average Orchard Road rents ranged from $32.20 to $36.75 psf per month as at the end of March, depending on the basket of properties tracked.

Colliers found that rents were 1.3 per cent down quarter-on- quarter, reflecting retailers’ resistance to further rental increases, especially in older malls, while CBRE said they grew 1.9 per cent from the preceding quarter.

 

CBRE said Orchard Road retail rents fetch a roughly 8 per cent premium over suburban retail rents, which stayed flat at $29.75 psf per month in the first quarter.

“Resilient domestic demand and a healthy tourism market have managed to stabilise the rental market in the suburban market,” said CBRE retail services director Letty Lee, adding that the bulk of retail supply this year will be in suburban areas.

This comes mainly from the 818,000 sq ft Jem and 420,000 sq ft Westgate malls in the Jurong Lake District. Others include the 88,200 sq ft Paya Lebar Square and 220,000 sq ft Bedok Mall and Hotel-retail mixed mall – Alexandra Central (picture below).Image

Colliers’ Ms Chia said suburban malls tend to be more resilient than those in Orchard Road as they “cater to an immediate captive residential catchment population”.

Suburban retail occupancy rates were at a solid 97.3 per cent as of March, edging down from 97.7 per cent as of December.

Ms Chia added that the overall retail sector was likely to remain resilient despite uncertain conditions, noting that the average occupancy rates of shop space islandwide stayed at a healthy 93 per cent during the Asian financial crisis in 1997 and 91 per cent during the Sars pandemic in 2003.

(Source: The Straits Times)

 
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Posted by on May 29, 2013 in Commercial

 

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