WEEK OF DECEMBER 29, 2008

Residential outlook still bleak Funds and investors in search of opportunities

Looking for daylight next year More sales activity expected in 2H2009 for offi ce sector

Beach Road MAKEOVER Even though construction of major projects here may have been deferred or cancelled, the refurbishment of older, Aerial view of Beach Road with smaller buildings by new owners is still very much alive Raffles Hotel at No 1 Beach Road on the left and the South Beach site on the right

THEEDGE | DECEMBER 29, 2008 • CC3

CITY&COUNTRY Beach Road makeover Even though construction of the crown jewel of the area, the $2.5 billion South Beach project, may be deferred, and the tender for the Ophir- white site cancelled, the refurbishment of older, smaller buildings in the hands of new owners is still very much alive

| BY CECILIA CHOW | if triggered by an offer by a developer with a minimum bid that meets the each Road, with its medley URA’s reserve price for the site. of shophouses, mixed-use In November, CDL also announced commercial developments that the consortium was deferring the and high-rise office towers, construction of the $2.5 billion South was earmarked last year by Beach project to 2H2009 in anticipa- Bthe authorities as “the next develop- tion of lower construction costs. EDGE SINGAPORE CHUA/THE SAMUEL ISAAC ment hot spot”. The authorities have gone ahead While Marina Bay and the existing to gazette Master Plan 2008, which CBD will continue to be key commer- puts into effect the government’s cial centres in Singapore to meet the plan for land use over the next 10 to demand for space coming from the fi- 15 years. The government is sticking nancial, business services and tourism to the four key thrusts outlined in sectors, the Beach Road/Ophir-Rochor the plan: “to enhance Singapore as a corridor “will be developed as strate- home of choice, a magnet for business, gic gateways to the city centre”, ac- an exciting playground and a home cording to the URA Master Plan 2008. to cherish”, according to URA in the The plans call for the doubling in size Dec 5 announcement. The “magnet of Singapore’s financial district to that for business” is where Ophir Road- of Hong Kong’s with a total of 30.35 Beach Road is positioned, and the gov- million sq ft office space. ernment plans to release more devel- In line with its development plans opment land parcels in the area over for the area, the government also pro- the next five to 10 years. moted a 2.67 ha white site located on The mega development projects Ophir Road-Beach Road and adjacent may have been shelved for now, but to at an international there are still pockets of redevelop- property road show in Cannes early ment or refurbishment of older build- this year. The white site has the po- ings taking place on Beach Road. For tential to be developed into a mixed- instance one of the most significant use project with commercial space of launches this year was that of Con- 1.5 million sq ft in gross floor area and course Skyline in September, devel- a 480-room hotel. Pegged at a price oped by the family-owned, Singapore- tag of $1.4 billion back in March, it listed Hong Fok Corp. was regarded then by property ana- Construction of the 360-unit Con- lysts as the most desirable on the gov- course Skyline residential high-rise ernment’s list of confirmed sites for towers has started and consists of re- sale this year. developing retail po- The white site (the green field in front of Parkview Square) on Ophir Road-Beach Road has been moved from the confirmed list The enthusiasm was not unfound- dium and serviced apartments. The to the reserved list ed as the consortium of City Devel- developer also paid the government opments Ltd (CDL), Dubai World’s $83 million to get a new 99-year lease by I.M. Pei, James Ad- rey office building at 67 Beach Road improves. “Ideally, it should be refur- Istithmar World, and Elad Group bid on the site. ams for Parkview Square, and Nor- from NTUC Income for $21.5 mil- bished in line with the plan to spruce for, and won, another site along Beach The soft launch may have been man Foster for the upcoming South lion. Previously called NTUC Income up this area,” admits Jones Lang La- Road in September 2007 for $1.69 bil- ill-timed — just the week before the Beach project. Beach Junction, the building is locat- Salle’s Archibold. lion. The new mixed development on collapse of Lehman Brothers on the “Most of the new developments ed across the street from Shaw Tow- the 376,737 sq ft site, which includes weekend of Sept 13/14 – however, along Beach Road are by very estab- ers and the upcoming South Beach Government picks up slack the conservation of the former Non- Hong Fok still sold 60 units out of 90 lished and in many cases [boast] fa- project. Bulkhaul is said to be plan- Private sector development projects Commissioned Officers’ Club and three released in the first phase that week, mous architects,” acknowledges Jones ning a facelift and refurbishment of may have taken a backseat, but the army barracks built in the 1930s, is with prices ranging from $1,500 to Lang LaSalle’s Archibold. “The area the building to be in keeping with government is picking up the slack designed by renowned architect Nor- $1,800 psf. will be rejuvenated significantly with the government’s plans to rejuvenate and going ahead with its plan to in- man Foster. Philip Cox, the appointed design the new buildings being planned in Beach Road, and the Ophir Road-Ro- vest a total of $6.7 billion in three “I see [Beach Road] as a definite architect of Concourse Skyline, joins the area.” chor Corridor. stages for the construction of the Cir- CBD extension but not necessarily the growing list of luminary archi- Another building that’s ripe for re- cle Line MRT project. That will make like Harbourfront,” observes Chris tects who’ve developed projects along Investor interest development is the Golden Mile Com- the whole Beach Road corridor more Archibold, regional director and head Beach Road — Paul Rudolph for the A couple of older commercial build- plex, which commands a prominent accessible, and extend the connectiv- of markets at Jones Lang LaSalle. “It original Concourse development, ings changed hands earlier this year frontage along Beach Road and the ity of Beach Road towards the East will have more of an entertainment and are now at various stages of re- . Built at a cost of $18 Coast and HarbourFront, says Archi- feel with the retail portion of CDL’s furbishment and repositioning, a sign million in 1973, it was pronounced “a bold. The three stages of the Circle Beach Road development and the il- of investor interest in the area. One vertical slum”, “terrible eyesore” and Line will have 29 MRT stations in a uma, an urban entertainment centre of them is KeyPoint, a 25-storey of- “national disgrace” by Nominated 33.3km stretch. Some of the stations currently under construction on Victo- fice building with two retail/F&B po- Member of Parliament Ivan Png two will be in the vicinity of Beach Road, ria Street. We may well also see more dium levels. It was acquired by the years ago. Various attempts by owners including Nicoll Highway MRT, and F&B outlets springing up in the shop- former Allco Commercial REIT (now to put the development up for collec- Promenade Circle Line MRT. houses to service the new apartments GWYNETH YEO/THE EDGE SINGAPORE Frasers Commercial Trust) in Decem- tive sale failed due to complications, In addition to boosting infrastruc- and offices.” ber last year for $370 million, in an the main one being the 705 strata-ti- ture and accessibility, the government attempt to improve its tenant mix and tles in a mixed use development with is also keen on preserving Beach Road’s Global financial crisis clouds hence, rentals. residential, retail and offices, each en- eclectic charm. The road is surround- development plans Early this year, real estate equity titled to its own share of votes. The ed by the cultural, arts and education By October, as the global financial fund, Fine Grain Property, purchased new and more cumbersome en bloc hub in Bras Basah Road combined crisis continued to ravage markets, the former InCity Lofts for $70 mil- regulations introduced on Oct 4 last with the urban entertainment district and Singapore fell into recession, it lion. It is close to completing the re- year made things worse. of Bugis; the hodgepodge of F&B and was clear that something had to be furbishment of the eight-storey build- With the fallout of the global fi- retail businesses in the conservation done. On Oct 31, the URA cancelled Archibold: Most of the new develop- ing into a designer boutique office nancial crisis, weakening property shophouses in the Kampong Glam the tender for the Ophir Road-Beach ments along Beach Road are by very project called “700 Beach”, and is al- market and high construction costs, district; the upcoming Sports Hub Road white site, and along with the established and in many cases famous ready 75% leased. developers’ appetite for such collec- and waterfront district; and other sites on the confirmed list, was architects. The area will be significantly Meanwhile, in August, British tive sales have waned. Any plan of the Marina Bayfront developments. pushed into the reserved list, meaning rejuvenated with the new buildings container transportation company a collective sale by the owners will They all play a role in the rejuvena- a site will only be launched for tender planned in the area. Bulkhaul Ltd acquired the six-sto- have to be shelved until the market tion of Beach Road. E CC4 • THEEDGE SINGAPORE | DECEMBER 29, 2008

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N1 SOUTH BEACH DEVELOPMENT • Architect: Norman Foster • Owner: City Developments Ltd, Dubai World and Elad Group • Description: Mixed-use project consisting of a retail piazza and two high-rise towers — the 42m high North Tower and 45m high South Tower. Development consists of office, hotel and residences as well as areas marked for conservation. • TOP date: 2012 • Tenure: 99 years • Site area: 376,737 sq ft • Gross floor area: 1.58 million sq ft • Recent activity: Sold for $1.689 billion. Positioned as an environmentally- friendly building, the development is aiming to achieve the BCA Green Mark Platinum Award, the highest category for sustainability.

N2 SHAW TOWERS • Architect: Iversen van Sitteren & Partners • Owner: Shaw Towers Realty • Year built: 1974 • Floor area: about 10,000 sq ft • Gross floor area: about 280,000 sq ft • Anchor tenants: DTZ Debenham Tie Leung, Daiken Corp, Bates 141 Singapore, BBC World, Frost & Sullivan, Hill & BEACH ROAD GOES UP Knowlton. BY CECILIA CHOW, WITH RESEARCH BY JONES LANG LASALLE GRAPHICS BY MEDELINE TING A N3 67 BEACH ROAD • Owner: Bulkhaul N4 PARKVIEW SQUARE N5 OPHIR-ROCHOR SITE N6 TH (Singapore) • Architect: • Development: • Ow • Description: James Adams Design, White site for commercial, hotel and/or residential use Sin Six-storey office DP Architects • Site area: 287,065 sq ft • Ar development near • Owner: Chyau • Maximum permissible GFA: 1.722 million sq ft • De the South Beach Fwu Development • Tenure: 99 years Tw development at the (Singapore) • Project completion period: 8 1/2 years eac junction of Middle • Description: • Remarks: Can be developed into a 40-storey development. 15 Road and Beach Road. 24-storey office • Ye • Tenure: 999 years building with unique • Sit from 1827. Commercial intricate art deco 24 zoning with maximum exteriors and interiors. • Flo permissible plot ratio • Year built: 2002 10 of 4.2 • Cost of construction: • Gr • Site area: 3,945 sq ft $88 million 10 • Net lettable area: • Floor area: About • An 18,775 sq ft 15,000 sq ft per floor Be • Floor area: • Gross floor area: Bro 3,000 sq ft per floor 500,000 sq ft Tos • Recent activity: Bulkhaul acquired the property from NTUC • Anchor tenants: Embassy of United Arab Emirates, Ko Income in August for $21.5 million and plans to refurbish the McKinsey, Hitachi Medical Systems, Austrian Embassy, Pac building in line with government plans to reposition Beach Emirates Airlines, Cadbury Schweppes, ACE Insurance, DHL Gla Road including the Ophir-Rochor corridor. Global Forwarding THEEDGE SINGAPORE | DECEMBER 29, 2008 • CC5

CITY&COUNTRY N7 THE PLAZA • Owner: UOL Group, strata-title • Description: A mixed- use development along Beach Road comprising hotel, shops, offices, service apartments and two adjacent four-storey commercial buildings. • Year built: 1979 • Floor area: 13,000 sq ft • Gross floor area: 10 KEYPOINT About 300,000 sq ft N • Owner: Frasers Commercial Trust (formerly Allco • Anchor tenants: Diners Commercial REIT) World Travel, Teva Pharmaceutical • Description: 22-storey office tower with a three-storey • Recent activity: Minor refurbishment works recently podium, and a four-storey car park block with 227 car bays completed • Year built: Constructed in 1978 and underwent a $35-million refurbishment that was completed in early 2000 8 CONCOURSE SKYLINE N • Tenure: 99 years from 1976 • Architect: • Site area: 78,242 sq ft The Cox Group • Total lettable area: 311,892 sq ft • Owner: • Recent activity: Former Allco Commercial REIT had Hong Fok Corporation acquired the property in October 2007 for $370 million • Description: Two ($1,186 psf), and it became part of Frasers Commercial 28- and 40-storey Trust’s portfolio in July. Also, 2nd and 3rd floor retail podium towers having a total of have floor plates of 45,000 sq ft and office tower from 4th 342 units with a seven- floor up have floor plates of 9,600 sq ft storey podium block with 18 apartments. The 11 700 BEACH proposed development N • Architect: Wee Chwee Heng comprises one to four- of Kumpulan Akitek bedroom apartments, • Owner: Private equity sky suites, penthouses real-estate firm Fine Grain and super penthouses. Property • TOP date: End 2012 • Description: Boutique office • Tenure: 99 years development comprising an • Average sale price: $1,500–1,800 psf eight-storey loft-style office for the 1-4 bedroom apartments tower • Gross floor area: 514,515 sq ft • Year built: 2002 • Recent activity: Hong Fok has set aside $200 million for • Tenure: 99 years from 2004 its construction. This is a redevelopment of existing retail and • Site area: 18,396 sq ft serviced apartment podiums into two blocks of residential • Floor area: apartments, with commercial space at the first storey. About 8,500 sq ft per floor • Gross floor area: 67,000 sq ft N9 THE CONCOURSE • Sale price: $70 million • Architect: Paul Rudolph, Architects 61 • Anchor tenants: • Owner: Hong Fok Corporation Hirsch Bedner Associates, GroupM, Mindshare • Description: • Recent activity: The building has just completed major 41-storey office block standing at 180m high refurbishment works. $3.5 million have been spent to fully • Year built: 1994 upgrade and reposition it as a boutique office development. • Tenure: 99 years • Cost of construction: $248 million UPMARKET • Site area: 220,563 sq ft DELINE TING AND PC LEE, PHOTOS BY SAMUEL ISAAC CHUA • Floor area: About 13,000 sq ft • Gross floor area: 1.14 million sq ft • Anchor tenants: Boehringer Ingelheim International, Cargill 6 THE GATEWAY N Asia Pacific, Parsons Brinckerhoff, Merck Sharp & Dohme, • Owner: American Express International, Dentsu Young & Rubicam Singapore Land • Recent activity: Part of The Concourse retail podium is being • Architect: I.M. Pei redeveloped into the Concourse Skyline. • Description: Two 37-storey towers each standing at 12 ent. 150m high. N • Architect: DP Architects • Year built: 1990 • Owner: CDL, strata title • Site area: • Description: Golden Mile is considered one of the first mixed- 242,801 sq ft use developments in Singapore where residential, commercial • Floor area: About and office spaces are integrated into one infrastructure. 10,000 sq ft per floor • Year built: 1973 • Gross floor area: • Tenure: 99 years from 1969 105,307 sq ft • Cost of construction: $18 million • Anchor tenants: • Site area: 139,931 sq ft BenQ Singapore, • Recent activity: Minor refurbishment works were done in Brother International, 1983 and 1986. As this is a strata-titled mixed development, Toshiba Asia Pacific, Zuken Singapore, Connell Wagner, there had been plans for an en bloc sale, but these have since Koelnmesse, Iggesund Paperboard, Pfizer, Mastercard Asia been shelved given the weak property market. Pacific, Rider Hunt Levett & Bailey, Mitsubishi Heavy Industries, GlaxoSmithKline, Sumitomo Chemical, NDK, Kao Singapore. BROUGHT TO YOU BY: CC6 • THEEDGE SINGAPORE | DECEMBER 29, 2008

CITY&COUNTRY

| BY CECILIA CHOW | the ing he residential report card this year has Residential prices, rentals to fer been bleak. Only 310 new homes were hou sold in October and November, with 450 to 500 units in the full 4Q ring- wil ing in at. The full-year figure stands remain earthbound in 2009 ues Tat 4,300 to 4,350 units, “a record low since eva the early 1990s”, says Joseph Tan, executive of b director of residential services at CB Richard Funds and investors looking for more attractive opportunities, developers out Ellis (CBRE). plo Prices of new luxury homes have declined looking to sell properties beyond Singapore’s shores ing 25% y-o-y from an average of $3,200 to $3,500 psf to an average of $2,400 psf. “How the lux- few ury market will fare will depend on the rate Looking beyond 2009 unt of recovery from the global financial turmoil,” Perhaps distressed sales are exactly the thing CBR BLOOMBERG says Tan. needed to unclog the logjam before buyers sale Generally, most property consultants are jump into the market again. “There are buyers sho expecting residential prices and rentals to be — both institutional and private — waiting for don earth bound next year, although no one is able these opportunities,” says Tan Tiong Cheng, fore to call the bottom as yet. Tan expects weak managing director of Knight Frank. vel sentiment to continue into 1Q2009, and fore- Other pockets of opportunities could come ma casts overall private residential prices to drop from developers and homeowners who are another 10% to 15% in the new year, with prepared to reduce their asking prices “to fa- the “even larger adjustments expected for the top cilitate cash flow”, says CBRE’s Tan. He adds er end of the market”. He’s also expecting rents that some developers may also consider sell- uct to soften by 5% to 10% next year. ing units in bulk at an attractive price. swe There are already property funds looking to sta DPS fears overblown? deploy capital to invest in residential as “they dev Analysts have been speculating about the proper- like the residential story”, says Christopher Fos- eng ties bought under the deferred payment scheme sick, managing director of Jones Lang LaSalle sign (DPS) that are due for completion next year, for Singapore and Southeast Asia. “From a lot inc figuring that the en masse unloading by cash- of investors’ perspective, they may have felt and strapped owners will likely have a catastrophic that they had missed the boat in 2007… But (lik impact on an already weakened market. Prob- with prices coming down in 2009, they [now] CB ably to put an end to the speculation, the URA have a chance to get into the market.” life released the DPS figures on Dec 19. Foreign funds are exploring several alter- tinu The DPS introduced in October 1997, in the natives: either a joint venture with a local de- wil wake of the Asian financial crisis, was scrapped veloper who has already bought sites and pro- hol at the end of October last year. Unlike a normal vide an equity infusion, or buy units en bloc. progressive payment scheme that is linked to There is some concern in the property market that “The foreign funds haven’t changed their me- the completion of each construction phase, the dium- to long-term view of Singapore,” notes DPS home buyer need not pay anything after a large number of the uncompleted homes sold Fossick. “They still believe that Singapore will putting down the initial 10% or 20% down pay- under the DPS could be disposed at distressed grow, and give them good returns.” ment on the property until the temporary occu- pation permit (TOP) is received — that’s when prices in 2009 and 2010 as the buyers are required Collective sales? Not just yet the project is completed. It also means that the The collective sale market was pretty much dor- owner need not take a mortgage nor pay any- to pay the balance of the purchase price when the mant in 2008 as markets turned south. Lukewarm thing beyond the down payment until then. response to new launches, rising construction According to URA figures, as at end-Novem- projects are completed — Mak costs and the worsening global financial crisis ber 2008, 10,450 units sold in 2005-08 offered also took a toll on the collective sale market. “Al- DPS, and will be completed in the next five Of the total number to be completed in 2010, could further depress real estate prices, and though construction costs have come down and years. The largest chunk that’s due for com- around 30% were sold on DPS. some of these buyers may not wish to do so will continue to do so in 2009, the global econom- pletion — an estimated 4,560 units (44%) — “There is some concern in the property mar- in a weak property market.” ic downturn is expected to be protracted, lead- is coming on stream next year. ket that a large number of the uncompleted However, most of the units that are due for ing to further downside risks,” says CBRE’s Tan. Knight Frank’s director of research and con- homes sold under the DPS could be disposed completion over the next two years were prob- “We do not expect much interest from develop- sultancy, Nicholas Mak, estimates that 10,033 of at distressed prices in 2009 and 2010 as the ably purchased in 2005-06 at prices that are ers [in collective sale sites] in the next three to new homes will to be completed in 2009. This buyers are required to pay the balance of the still relatively lower than today’s levels or per- six months, as they have already built up a sub- means 45% of total new private homes to be com- purchase price when the projects are complet- haps even the price levels in 2009, say property stantial landbank in 2006-07.” pleted next year will be those that offered DPS. ed,” acknowledges Mak. “Such distressed sales consultants. (Refer to table of major projects Some have also decided to put their collec- to TOP from now till end-2009). tive sale purchases back on the leasing mar- The Real Estate Developers’ Association of ket for the time being. The latest was the 193- FIRST PACIFIC VALUERS Singapore issued a statement recently voicing unit Grangeford apartment block at Leonie Hill the same sentiment, adding that “with the pur- Road, says Tony Darwell, head of Singapore re- PROPERTY CONSULTANTS SDN BHD (682491-M) V(1)0036 chase prices of these units likely to be below search (property) at Nomura Singapore in Dec current market prices, we are confident that 12 report. Grangeford was acquired by Over- EXCLUSIVE MARKETING AGENT such property purchasers will want to proceed seas Union Enterprise (OUE) for $625 million with completion of their sale, upon their unit’s in August 2007 at an estimated $1,810 psf (in- RETAIL HYPERMARKET IN JOHOR grant of the TOP”. cluding the lease top-up premium to a fresh FOR SALE According to Chua Yang Liang, head of re- 99-year lease). • 2 storey new purpose built hypermarket PRICE: search at Jones Lang LaSalle (JLL), about 13% “The move by developers to return en bloc • Land area - 4.033 acres RM60 MILLION of new homes sold in 2007 eventually resur- units back to the leasing market to cover a degree • Building lettable area - 160,000sqft faced as subsales on the secondary market. of the holding costs is not unanticipated,” notes • Quality MAIN TENANT, subleting to 40 specialty shops (Note that subsale buyers are generally not Darwell. With such developers being “price tak- • Potential future income 20,000sqft lettable space entitled to DPS). Assuming the same percent- ers”, adds Darwell, this would put pressure on • Car parking within building - 340 bays age of buyers sell their property next year pri- an already weakened rental market. He forecasts • Terms - 15 years + 15 years with rental review increase  xed at or to TOP, this will bring down the number of rents to fall 16.3% in 2009, and at a time of rising DPS units next year to just under 4,000 units risk premiums, “the reality is that asset prices are 10% every 3 years interval or 40%, estimates Chua. destined to fall at a faster rate than we posited • NET INCOME - RM 3.3 million per annum “There is insufficient information on the credit in March 2008”. Hence, his forecast is for luxury • Innitial yields @5.5% rising to over 8% standing of these buyers,” points out Chua, and residential prices to fall a precipitous 43.8% over this makes it difficult to ascertain the number 2008-10, and for mass market residential prices Suite A-07-05 Block A, of properties likely to default. “There are chal- to fall by 32.1% over the same period. Plaza Mont Kiara, No.2, Jalan Kiara, lenges,” he admits. “On the other hand, in the Mont Kiara, 50480 Kuala Lumpur. For further info, please contact event that distressed sales do happen, this will To launch or not to launch Tel: 03-6203 1188 Fax: 03-6203 9814 provide an opportunity for buyers who are wait- Knight Frank’s Tan is also expecting home buyers Email: plleekl@ rstpaci c.com.my Mr P.L.Lee 012-211 9813 ing on the sidelines to jump in.” at the mass market segment to turn cautious with THEEDGE SINGAPORE | DECEMBER 29, 2008 • CC7

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Major projects likely to be completed between December 2008 and December 2009 CBRE RESEARCH PROJECT DISTRICT LOCATION TYPE NO OF UNITS TENURE DEVELOPER the rapidly deteriorating economy and tighten- The Clift 1 McCallum Street Apt 312 99Y Far East Organization ing labour market. “Some buyers may even de- The Metropolitan 3 Alexandra Road/Tiong Bahru Road Condo 382 99Y CapitaLand/Lippo Group fer their housing aspirations, by choosing public The Regency@Tiong Bahru 3 Chay Yan Street Apt 158 Fh UOL/UIC housing over private homes,” he adds. The Oceanfront@Sentosa Cove 4 Ocean Drive Condo 264 99Y City Developments/TID Developers with projects in the pipeline The Coast 4 Ocean Drive Condo 249 99Y Ho Bee Developments/Ergo Corp will have to prioritise their launches, contin- The Infi niti 5 West Coast Road /Upper Ayer Rajah Road Condo 315 Fh Frasers Centrepoint Ltd ues Knight Frank’s Tan. They would need to Botannia 5 West Coast Park Condo 493 999Y City Developments/CapitaLand evaluate which projects are in “critical need” one-north residences 5 One North Gateway/Slim Barracks Rise Apt 405 99Y Kheng Leong Co/UOL/Low Keng Huat of being launched, and which ones are with- Carabelle 5 West Coast Way Condo 338 956Y Sim Lian Land out “strong physical selling points”, and de- ClementiWoods 5 West Coast Road Condo 240 99Y Frasers Centrepoint Ltd Southbank 7 North Bridge Road Mixed Devt 197 99Y UOL/Low Keng Huat ploy creative marketing methods and packag- City Square Residences 8 Kitchener Road//Serangoon Rd Com/Resi 910 FH City Developments ing for the latter. Parc Emily 9 Mount Emily Road Condo 295 FH City Developments/TID For some projects, developers may have Vida 9 Peck Hay Road /Cairnhill Rise Apt 137 FH Far East Organization few options apart from waiting out the crisis The Inspira 9 Arnasalam Chetty Road Condo 120 FH Hock Giap Land until market confidence returns, says Tan of RiverGate 9 Robertson Quay Condo 545 FH CapitaLand/S’pore Warehouse CBRE. Some are hoping that they could achieve The Trillium 9 Kim Seng Road Condo 231 FH Lippo Real Estate Pte Ltd sales by embarking on overseas marketing road St Thomas Suites 9 St Thomas Walk Condo 176 FH Frasers Centrepoint shows. Beyond the traditional markets of In- Tribeca By The Waterfront 9 Kim Seng Rd/Jiak Kim St Condo 175 Fh Hong Leong Holdings/City Developments donesia and Kuala Lumpur, still the top two The Suites At Central 9 Devonshire Road/St Thomas Walk Condo 157 FH Keppel Land/Chip Eng Seng Corp Ltd foreign buyers of Singapore property, some de- One Jervois 10 Jervois Close/Road Condo 275 FH Frasers Centrepoint Ltd The Orchard Residences 10 Orchard Boulevard Mixed 175 99Y CapitaLand Retail S’pore Investments & Gresward velopers are also venturing to other emerging The Sixth Avenue Residences 10 Sixth Avenue Condo 175 FH Keppel Land/Singapore Land markets such as Russia and India. Waterfall Gardens 10 Farrer Road Condo 132 FH MCL Land There are developers who have turned up Ardmore ll 10 Ardmore Park/Anderson Road Condo 118 FH Wheelock Properties their creativity a few notches to achieve great- Sky@eleven 11 Thomson Road Condo 273 FH Singapore Press Holdings er product differentiation (in terms of prod- Pavilion 11 11 Minbu/Akyab Road Condo 180 FH UOL uct development, promotional activities and One St Michael’s 12 St Michael’s Road/Serangoon Road Condo 131 FH Frasers Centrepoint Ltd sweeteners to entice buyers.) “Starchitects” or Atrium Residences 14 Lorong 28 Geylang Condo 142 FH Novelty Properties Pte ltd star architects are increasingly popular with One Amber 15 Amber Gardens Condo 562 FH UIC/UOL/SingLand developers. Also popular is the practice of The Seafront On Meyer 15 Meyer Road Condo 327 FH CapitaLand engaging renowned or celebrity interior de- Tierra Vue 15 St Patrick’s Road Condo 129 FH MCL Land Grand Duchess@St Patrick’s 15 St Patrick’s Road Condo 121 Fh UIC Ltd sign firms to dress up show apartments, and Casa Merah 16 Tanah Merah Kechil Avenue Condo 556 99Y NTUC Choice Homes/Wing Tai incorporating branded finishing and fittings, Ferraria Park 17 Flora Drive Condo 472 FH Tripartite Developers Pte Ltd and recreational facilities with wow-factors The Quartz 19 Compass Bow/Sengkang Central/Buangkok Drive Condo 625 99Y GuocoLand (like an aqua gym). In terms of promotions, Fontaine Parry 19 Poh Huat Road Condo 125 999Y OUB Centre Ltd CBRE’s Tan also sees more co-branding with The Centris 22 Jurong West Central 3/Jurong West St 64 Mixed 610 99Y Guthrie/Lee Kim Tah/TMW Asia Pty Fund No 1 lifestyle retailers. Tying up with banks to con- Yew Tee Residence 23 Yew Tee Close/Choa Chu Kang North 6 Com/Resi 139 99Y NTUC Choice Homes tinue offering the Interest Absorption Scheme TOTAL 11,366 will also help in giving purchasers “a payment Projects in Sentosa Cove, downtown & prime districts — 3,677 or 32.4% of total Data as at Dec 17, 2008 holiday” till TOP. E

ad.indd 1 12/23/08 4:45:37 PM CC8 • THEEDGE SINGAPORE | DECEMBER 29, 2008

CITY&COUNTRY

| BY CECILIA CHOW | nvestment sales all but evaporat- More sales activity expected ed this year, especially in 2H2008. Of the $5.29 billion worth of office investment sales done in 2008, 96.5% took place in 1H2008. The Isituation in 1H2009 will likely mirror in 2H2009 for office sector 2H2008 — with very few transactions as buyers and sellers are still holding ple watching the market closely for the ation funds and foundations, as well now substantially below 50% to 60%. Goldman Sachs for $811 million ($2,901 on to very different price expectations, first two quarters of 2009. as wealthy private individuals. These Poh feels that those who’ve already psf), and Commerz Real (a subsidiary says Jeremy Lake, executive director “There are still a number of property funds may now be forced to liquidate raised equity and are looking to se- of Commerzbank AG) bought 71 Rob- of investment properties at CB Richard funds that are gearing up to buy,” says their properties. cure debt financing will be looking to inson Road for $743.5 million ($3,125 Ellis (CBRE). “Sellers want last year’s Poh. The dilemma for some of them is “Most of the buyers of Grade A and buy assets “at deep discounts”. With psf). Meanwhile two CapitaLand- price and buyers want next year’s that, on the one hand they have raised B commercial buildings over the last two the debt portion substantially reduced, linked REITs, CapitaCommercial Trust price,” says Lake. equity, but they haven’t drawn down years had been largely foreign funds”, and very few funds willing to buy prop- acquired for $1.17 He expects the price gap to be as they have yet to make an acquisi- acknowledges DTZ’s Poh. He reckons erties using only cash, the quantum billion ($2,600 psf) and CapitaMall bridged for some deals in 2H2009, tion. With the asset-value destruction that those who have properties in Sin- amount for acquisitions is also cur- Trust bought The Atrium@Orchard and forecasts that total office invest- happening in the market, “the real gapore, Hong Kong and Shanghai and rently relatively small, at US$100 mil- for $839.9 million ($2,249 psf). ment sales in 2009 could possibly fall fear is that if they bought something looking to liquidate them, are likely to lion ($146 million) to US$200 million, DTZ’s Poh observes that there will be below $5 billion, the volume seen in today, the next day, the value would see greater interest from buyers, given say property consultants. buying opportunities for funds emerg- 2002 when Singapore was last in a drop further”, he adds. that these are established commercial ing in the commercial sector next year. recession. markets with high trading activity. “I Buying opportunities next year “They are more familiar with commer- Shaun Poh, senior director for in- Forced to liquidate wouldn’t call them distressed assets, This is a far cry from 1H2008, where cial property, and will prefer to look vestment advisory services and auc- There are also funds that had bought but if you’re meeting with buyers to- some acquisitions made by funds and at properties which are already gen- tion at DTZ, is expecting to see more property in the last two years and are day, you would have to be prepared REITs were either close to, or exceed- erating income, and which they could assets coming up for sale, and more now starting to face redemption re- to get some not-so-attractive offers,” ed $1 billion. Singapore Power Build- sell later,” he adds. The expectation is deals happening in the commercial mar- quests from some of their investors says Poh. ing was sold to Pacific Star Group for that the level of activity will pick up in ket. Like Lake, he is expecting deals to — typically, a mix of institutional in- With debt funding getting increas- $1.01 billion, Hitachi Tower was ac- 2H2009, and perhaps we will see some only start happening in 3Q, with peo- vestors like fund of funds, superannu- ingly difficult, loan-to-value ratios are quired by one of the funds linked to buildings changing hands. E THE EDGE SINGAPORE View of Singapore’s city area — a bird’s eye view on buying opportunities?

Canning. “They just expand- in 2009 — ION Orchard, Orchard ed a little too quickly.” Central, 313@Somerset and the The market will be espe- New Mandarin Gallery — are cially challenging for new en- about 60% leased, notes Can- A mixed picture for retail in 2009 trants trying to get a toehold ning. “How much more of that in Singapore. “If you’re an ex- they are really going to fill? It is

SAMUEL ISAAC CHUA/THE EDGE SINGAPORE CHUA/THE SAMUEL ISAAC tension brand, and you may be slow going right now.” big in say, in your home coun- Canning expects Orchard try but nowhere else, then it’s Road rentals to remain rela- going to be tough,” says Can- tively flat next year, as there ning. “The F&B market is pret- hasn’t been any new supply ty fickle. When push comes to on Singapore’s main shopping shove, people batten down the belt in over a decade. hatches and go to Yakun Kaya “I think they are going to Toast, or Toastbox, and Food take a dip right now, but they Republic.” are not going to take a tum- A trend that’s emerging ble,” he says. “There’s a fi- among consumers as a result nite amount of space on Or- rentals to remain relatively flat next of the global financial crisis is chard Road.” year, and perhaps see a slight dip creative ways to indulge without On the bright side, the big- blowing your budget. Instead of gest opportunities in 2009 will a $10,000 vacation, people may be for smaller brands, fashion he news that sent shock firm, Cushman & Wakefield. cessories retailers in taking up is that retailers are renegotiat- opt for a $200 meal instead. “It’s retailers “who take the bull waves through the retail “I spent all day on the phone new space. “It has fallen off a ing with landlords to reduce still an indulgence,” says Can- by the horns and take space Tsector was not really the calming people down, every- cliff,” says Canning, who helps the space they are planning ning. “People are still buying that was not otherwise avail- collapse of Lehman Brothers, one freaked out.” several shopping mall landlords to take up in some of the up- — you still need clothes, you able to them”, notes Canning. the sale of Merrill Lynch to Prior to coming to Singapore along Orchard Road find ten- coming malls. still need food.” With consum- “When you see the big names Bank of America, or the bail- in March this year, Canning ants, and retailers find space. F&B players, on the other ers tightening their belts, even slowing down, and pulling out of AIG in September. It spent six years in Shanghai, “Even the luxury brands are hand, are going strong — lo- retail sales have been affected, out, and maybe not taking was the announcement in ear- where he worked for a Morgan taking a hit,” he adds. cal players are still looking to with October sales dropping space they otherwise would ly October that Singapore was Stanley Real Estate joint ven- make acquisitions, he notes. 6.8% versus September, and have, it is a tenant’s market. in recession. “I remember that ture building hypermarket-an- Seizing up Big coffee chains, however, 3.6% from October 2007. So, it is a good thing as it al- Friday, it was terrible,” recalls chored shopping malls. Along Orchard Road, while are trimming back their oper- lows smaller brands to get a Turner Canning, associate di- The biggest shift in the re- F&B space may still be quickly ations or starting to walk away ‘Slow going right now’ foothold, and take space that rector of retail consulting and tail sector is the sluggishness taken up, the retail portion is from deals. “It’s really a matter To date, most of the new malls is otherwise earmarked for leasing at property consulting on the part of fashion and ac- seizing up. Word on the street of being overextended,” says along Orchard that are opening someone else.” E