18th June Singapore Property News and Views
71 Robinson Road quietly put on the market
Stealth marketing is going on at 71 Robinson Road, which was last transacted in April 2008 at a then-record price of S$3,125 per square foot.
The Business Times understands that an expression-of-interest exercise to find a buyer for the 15-storey office block began without publicity in April, with the appointed marketing agents, CBRE and JLL, approaching a small pool of potential buyers.
Submissions of offers by potential buyers were made last month; building owner Commerz Real is still in talks with shortlisted parties, BT understands.
The word in the street is that the building, with almost 74 years of its leasehold tenure left, was presented to the market with an indicative pricing of S$2,850 per square foot on net lettable area (NLA).
Based on 71 Robinson Road’s approximately 237,645 sq ft NLA, this works out to a price tag of around S$677.3 million.
Market watchers noted that the S$2,850 psf indicative pricing is lower than the S$2,308 psf which Robinson 77 next door fetched late last year. Buyer Gaw Capital paid the seller, a fund managed by CLSA Real Estate, nearly S$710 million for that 35-storey property.
Both buildings are on sites with state leases that expire in February 2093.
That said, Robinson 77 is an older building. It was completed in 1997 (against 2008 for 71 Robinson Road), but has been substantially refurbished a few years ago.
The newer 71 Robinson Road has superior specifications. It has bigger floor plates, that is, leasable space per floor, each of which spans about 20,000 sq ft; the next-door property’s floor plates typically range between 8,000 to 12,000 sq ft.
71 Robinson also has higher floor-to-ceiling height, in addition to having full-height windows, note office leasing agents. Reflecting its superior specs, this property has been commanding higher rents, say market watchers.
When Robinson 77 went to the market around last July/August, the average monthly passing rental was said to have been around the mid-S$7 psf mark. The building’s occupancy rate was a shade above 90 per cent.
On the other hand, 71 Robinson Road is said to be running at full house with an average passing rent in the low-S$10 psf range. Tenants in the building include CommerzBank, Visa, Ogilvy and WeWork.
A senior office leasing agent said: “Blue-chip tenants with bigger space requirements would choose a building with a larger floor plate, so they can operate more efficiently over fewer floors.”
71 Robinson Road stands on the site of the former Crosby House, which Singtel sold in 2006 to a Lehman Brothers-Kajima Overseas Asia partnership. They redeveloped the site into the current 71 Robinson Road office block, selling the property on a turnkey basis to Commerz Real in April 2008, as it was being built.
At the time, the site had about 85 years left on its lease term.
That transaction came with a coupon payment by the seller to Commerz Real, amounting to 4.5 per cent for the duration of construction.
The S$3,125 psf transaction remained a benchmark price for an entire office building in Singapore for eight years. In 2016, that record was broken when listed MYP Ltd, controlled by the family of Indonesian tycoon and philanthropist Tahir, bought the Straits Trading Building at 9 Battery Road for S$3,524 psf on NLA, or a total quantum of S$560 million. (The 28-storey, 999-year leasehold building has since been renamed MYP Centre.)
Meanwhile, the owner of Anson House is said to have granted exclusive due-diligence rights to a potential buyer.
Market watchers say it is likely to be Arch Capital Management.
The price is expected at around S$210 million, which works out to over S$2,400 psf on an NLA of about 86,200 sq ft.
Located near Tanjong Pagar MRT station, Anson House is on a site with nearly 77 years left on its lease. The property is owned by a fund managed by Savills Investment Management, formerly known as SEB Asset Management.
Chinese Chamber Realty is understood to have bought the entire Level 14 of the 999-year leasehold Samsung Hub in Church Street for S$44 million.
This translates to S$3,356 psf on approximately 13,110 sq ft of strata area.
This was a mortgagee sale; the mortgagor, Kyen Resources Pte Ltd, had paid S$39.72 million or S$3,030 psf for the floor in 2014.
Kyen Resources is in receivership.
Including the latest deal, Chinese Chamber Realty, which is fully owned by The Financial Board of the Singapore Chinese Chamber of Commerce, owns a total of 11 floors (Levels 22 to 30, and Levels 14 and 15) in the 30-storey building. Chinese Chamber Realty co-developed Samsung Hub, which was completed in 2005.
Based on Savills Singapore data, Singapore office transactions of S$10 million and above in the private sector so far this year have totalled S$1.9 billion. The figure for the whole of last year was S$5.2 billion.
Colliers International’s average monthly rental value for CBD Grade A office space rose 2.3 per cent quarter on quarter to S$9.64 psf in Q1 2019.
For the whole of this year, the group is looking at an 8 per cent increase, moderating from the high base last year, when the rise was 14.9 per cent on the back of tight supply and limited new completion.
Colliers said in its Q1 Singapore office market report: “We expect capital values to trail our projected rent growth, and hence, yields to remain largely stable over 2019-2021.”
In general, global capital still favours gateway cities such as Singapore, it added.
Adapted from: The Business Times, 15 June 2019
Want to rent a luxury home for $1,000 a night?
One is a 1920s heritage bungalow in Grange Road, a stone’s throw from Orchard Road. It comes with a sprawling courtyard, playground, garden and pool, complete with a caretaker and a gardener, and parking for up to five cars.
The other is a 5,000 sq ft mansion in Dunearn Road, just a three-minute stroll from the Botanic Gardens, also with a private lap pool and garden.
Both are available on Airbnb for slightly over $1,000 for a night’s stay, excluding cleaning and service fees.
They are among at least 20 landed properties available for rent on the home-sharing platform, out of around 300 listed Singapore homes. One of the more expensive ones is a three-storey semi-detached house near Frankel Avenue going for $2,400 a night. It is advertised as being able to house up to 20 people.
All of the landed property owners who listed their houses on Airbnb and approached by The Sunday Times declined comment. Based on their profiles, they are a mix of Singaporeans and expatriates.
Property consultants were surprised to hear of such listings. They said these owners of luxury houses, which can cost from $15 million to $35 million in today’s market, may be turning to Airbnb short-term leases simply because they fetch money.
“After deducting expenses, they may still pocket $30,000 a month. It’s good money. Sometimes, the landlord may choose to lease it on Airbnb because he can’t rent it out on a longer term,” said property consultant Adeline Yeo.
Senior research manager at Cushman & Wakefield Wong Xian Yang said income from short-term rentals can potentially be higher than those for the long-term rental market, assuming occupancy rates in the short term are good. He added that the target market tends to be tourists and professionals on business trips.
Those who rent these houses have left largely positive reviews on Airbnb. They wrote that they rented these houses because they are spacious, allowing for large families to stay in or for corporate team meetings to be held.
Nick, a visitor from Britain who stayed at the house in Grange Road, wrote: “The house is straight out of an E.M. Forster novel, with an amazing outdoor pool and dining area which is just fabulous to enjoy an evening cocktail.”
But owners of these houses may be running afoul of the law, as rentals of private properties for periods of less than three consecutive months are illegal in Singapore. Under the Planning Act, those who convert the use of a property for short-term accommodation without approval may be fined up to $200,000 and/or jailed for up to 12 months.
In 2016, the Urban Redevelopment Authority (URA) raided a four-storey terraced house in Sembawang after close to 40 residents in the neighbourhood submitted a petition asking for the authorities to take action against the owner.
The house was listed on Airbnb and another home-sharing site, HomeAway.
Between 2014 and 2016, the URA investigated over 1,000 private residential properties, most of which were condominiums, for breaching the minimum stay duration.
In 2017, the minimum rental period for private homes was lowered from six to three months. Last year, the URA investigated 756 cases of unauthorised short-term accommodation in private homes. From January to March this year, it investigated 154 such cases. Most involved condominiums.
Globally, Airbnb homes are popular with some as they may be cheaper and offer a more unique environment compared with hotels.
But some homeowners are less keen, especially those living in closely clustered spaces such as HDB flats or condominium apartments. Some say they feel unsafe having strangers going in and out of their blocks, or are upset over the noise they make.
A URA spokesman said: “URA has been stepping up enforcement checks and upon confirmation of an infringement, all offenders will be faced with a fine. When appropriate, we will not hesitate to charge offenders in court.”
So far, it has successfully charged four people, who were each fined between $13,000 and $70,000.
During a recent visit by The Sunday Times to the Botanic Gardens house, its front was obscured by a metal garage door. Its high walls prevented passers-by from looking in. Next door, a middle-aged resident, who declined to be named, said he was aware of the rental activity but is not too bothered by it.
“I see foreigners, mainly tourists, coming in and out. There is not much noise and I don’t think it is unsafe as that house has its own security cameras,” he said.
Adapted from: The Straits Times, 16 June 2019
UOB reaffirms offer to buyers of two condo projects under receivership
United Overseas Bank (UOB) has reaffirmed its offer to bear the additional costs to complete the construction of two unfinished residential projects which have been put under receivership after their developers ran into financial difficulties.
However, the bank, which is the mortgagee in both projects, told The Business Times that this remains conditional on the home buyers waiving their rights to claim liquidated damages – compensation that developers must pay buyers for delays – against their progress payments. Based on the sale and purchase agreement, the developer will have to pay liquidated damages of 10 per cent per annum of what buyers have to pay.
“We appreciate the concerns of the homebuyers of the Sycamore Tree and Laurel Tree projects and the unique circumstances of this situation. Our intention is to assist these homebuyers to take ownership of their completed units by helping to see to the full completion of both projects for their benefit,” a UOB spokesman said.
The receivers for both Sycamore Tree and Laurel Tree – three partners of KPMG led by Bob Yap – have commenced a tender process to identify financially sound and quality contractors to determine the cost to take over and complete the construction.
“Given the complexities and after evaluating the various possible courses of action with new contractors assessing and taking over the completion of the delayed projects, we have offered to cover the additional costs expected to be incurred,” the spokesman added.
“UOB’s offer will save homebuyers from having to make additional fund top-ups beyond their agreed unit purchase price. This is subject to all the homebuyers agreeing not to deduct any claims for liquidated damages against their remaining scheduled payments to be made into the project accounts.”
The receivers from KPMG said this is necessary as “the proposal is intended to allow the receivers to oversee the completion of the construction works for both development projects so that the purchasers of Laurel Tree and Sycamore Tree can take possession of their units”.
“The proposal is premised on all purchasers agreeing to continue to make outstanding progress payments for the construction and not set off such liquidated damages due from the original developer against progress payments,” the receivers said.
More information will be shared during the next townhall meeting, which is likely to be held in July-August, when the receivers will provide updates on the replacement contractors appointed and the expected timeline to completion.
BT understands that the waiver is necessary to protect future progress payments from potential liquidated damages, which could result in insufficent funds to complete the projects.
However, it does not mean buyers are waiving their rights to sue the original developer for liquidated damages arising from the delays in construction. Buyers who wish to pursue this course of action will have to consult their own lawyers.
If accepted, buyers will have to enter into a separate amended sales and purchase agreement. Save the waiver condition, the terms will essentially be the same – delivering vacant possession of the unit, the Certificate of Statutory Completion, separate legal title to the unit, and providing the benefit of a 12-month defect liability.
Some 183 people received a nasty surprise when construction of the 70-unit freehold condominium at Laurel Tree in Hillview Terrace and the 96 residential units and 17 shops at Sycamore Tree in Joo Chiat, stalled after the project accounts were found to have insufficient funds for the next phases of construction.
Project accounts hold payments from buyers that can only be used to pay construction and other costs relating to the project. The two freehold projects were supposed to have received their Temporary Occupancy Permit in 2016.
Astoria Development was the developer behind Sycamore Tree, while Lerida was the developer of Laurel Tree.
Both developers are linked to Tan Hock Keng, a former property player and one of the “Geylang Kings” before the Asian Financial Crisis wiped out his property portfolio.
The Controller of Housing at the Urban Redevelopment Authority is examining the project accounts of the two projects to check whether money earmarked for them has been misused, and if there have been other regulatory breaches.
Adapted from: The Business Times, 17 June 2019
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