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06-01-14, 16:28
http://www.businesstimes.com.sg/archive/thursday/premium/top-stories/non-residential-en-bloc-sizzle-20140102
Published January 02, 2014
Non-residential en bloc to sizzle
More commercial and industrial collective sales expected this year
By Mindy Tan [email protected]
[SINGAPORE] The revived interest in commercial and industrial en bloc sales here is likely to persist this year, say consultants, as preference for residential deals starts to dwindle, dampened by the various cooling measures last year which were largely aimed at the latter segment.
Indeed, 2013 was a good year for non-residential collective sales - about $675.4 million worth of successful commercial and industrial en bloc sales were completed, compared with $116.4 million in 2012 and $126.8 million in 2011, according to data provided by Jones Lang LaSalle (JLL).
Notably, Serangoon Plaza broke the mould when it changed hands for $400 million in November, while industrial en bloc sales emerged as a new trend.
Guang Ming Industrial Building, a stone's throw from Tai Seng MRT station, was the largest deal, at $45.8 million. Henley Industrial Building, off Upper Paya Lebar Road, changed hands at $37 million. Pak Chong Building, another "Business 1" freehold development at Playfair Road was sold for $34.6 million.
"Industrial en bloc sales is a new trend that started in 2013. While we expect to see a few more coming onto the market in 2014, it is still expected to remain small," said Karamjit Singh, head of investments and residential, at Jones Lang LaSalle.
Serangoon Plaza's $400 million price tag made it the largest collective sale of a commercial property on record. Others that went through include San Centre at Chin Swee Road ($113 million) and Bright Chambers at Middle Road ($45 million).
In total, commercial deals shot up to $558 million in 2013, from $116.4 million the year before, while industrial deals contributed $117.4 million to the pot. No industrial collective sale deals were concluded in 2012.
As at Nov 6, total value of collective sale transactions for 2013 was $1.325 billion. While this is comparable with the $1.425 billion posted a year ago (after removing the failed attempt by Harbour View Gardens and Thomson View), it is worth noting that the number of successful deals fell from 25 to 15.
Alex Oh, OrangeTee head of investments and advisory, expects developers to continue focusing on mixed development (residential/commercial), commercial and industrial projects, barring further policy changes and/or cooling measures. But this does not sound the death knell for the residential collective sales market.
"Smaller (residential) sites up to $50 million will continue to attract interest from developers, especially for sites with good attributes, but due to the slowdown in the market, especially in the residential sector, developers will be more price-sensitive going forward," said Mr Oh.
Unsurprisingly, 2013's successful residential collective sales were generally of a smaller quantum.
"Developers prefer to be nimble as this allows them to react and respond better to changes in market conditions and any policy changes," said Tang Wei Leng, executive director of investment services, at Colliers International.
Demand for private residential properties was much stronger in the mass market, with plenty of 99-year Government Land Sales (GLS) sites to choose from last year, pointed out JLL's Mr Singh.
As a result of this, residential transactions raked in about $650.2 million as at Nov 6, compared with $794.1 million a year ago. As a proportion of the total collective sales market, residential transactions fell to 49.1 per cent in 2013, from 85.3 per cent in 2011 and 55.7 per cent in 2012.
This could potentially change in the coming year however, with the government tapering supply through its GLS programme. Of the eight confirmed list sites, seven are private residential sites (including four executive condominium sites) and one commercial and residential site. In terms of pure residential sites, only seven will be rolled out in H1, from 10 previously.
Separately, it has been an eventful year in the courts, with the landmark cases of Harbour View Gardens and Thomson View making it clear that it was bad faith for either the Collective Sale Committee or the Marketing Agents to enter into any side agreements or sweeten the deal to entice owners to sign the Collective Sale Agreement, said Colliers's Ms Tang.
"The two cases are different but have the same effect in putting a stop to owners who try to hold out for more money," she said.
That said, the cases should not dampen collective sales as the spirit of it is to allow for rejuvenation to take place while enriching owners of properties that have reached value saturation point, said Ms Tang.
In the meantime, the tenders for two residential collective sales will close in January.
Jervois Gardens, which comprises two four-storey walk-up blocks, with 14 maisonettes and three apartments, on a 34,038 sq ft site, is on the market for about $72 million.
Eunosville, which could become the largest collective sale in six years, will also be closely watched. The 99-year leasehold property in Sims Avenue failed in its first attempt in June - the TDSR was introduced barely 10 days after the tender was first launched - and is back on the market for $688 million.
The tender for Eunosville closes at 2.30pm on Jan 14, while the one for Jervois Gardens closes at 3pm on Jan 22.
Published January 02, 2014
Non-residential en bloc to sizzle
More commercial and industrial collective sales expected this year
By Mindy Tan [email protected]
[SINGAPORE] The revived interest in commercial and industrial en bloc sales here is likely to persist this year, say consultants, as preference for residential deals starts to dwindle, dampened by the various cooling measures last year which were largely aimed at the latter segment.
Indeed, 2013 was a good year for non-residential collective sales - about $675.4 million worth of successful commercial and industrial en bloc sales were completed, compared with $116.4 million in 2012 and $126.8 million in 2011, according to data provided by Jones Lang LaSalle (JLL).
Notably, Serangoon Plaza broke the mould when it changed hands for $400 million in November, while industrial en bloc sales emerged as a new trend.
Guang Ming Industrial Building, a stone's throw from Tai Seng MRT station, was the largest deal, at $45.8 million. Henley Industrial Building, off Upper Paya Lebar Road, changed hands at $37 million. Pak Chong Building, another "Business 1" freehold development at Playfair Road was sold for $34.6 million.
"Industrial en bloc sales is a new trend that started in 2013. While we expect to see a few more coming onto the market in 2014, it is still expected to remain small," said Karamjit Singh, head of investments and residential, at Jones Lang LaSalle.
Serangoon Plaza's $400 million price tag made it the largest collective sale of a commercial property on record. Others that went through include San Centre at Chin Swee Road ($113 million) and Bright Chambers at Middle Road ($45 million).
In total, commercial deals shot up to $558 million in 2013, from $116.4 million the year before, while industrial deals contributed $117.4 million to the pot. No industrial collective sale deals were concluded in 2012.
As at Nov 6, total value of collective sale transactions for 2013 was $1.325 billion. While this is comparable with the $1.425 billion posted a year ago (after removing the failed attempt by Harbour View Gardens and Thomson View), it is worth noting that the number of successful deals fell from 25 to 15.
Alex Oh, OrangeTee head of investments and advisory, expects developers to continue focusing on mixed development (residential/commercial), commercial and industrial projects, barring further policy changes and/or cooling measures. But this does not sound the death knell for the residential collective sales market.
"Smaller (residential) sites up to $50 million will continue to attract interest from developers, especially for sites with good attributes, but due to the slowdown in the market, especially in the residential sector, developers will be more price-sensitive going forward," said Mr Oh.
Unsurprisingly, 2013's successful residential collective sales were generally of a smaller quantum.
"Developers prefer to be nimble as this allows them to react and respond better to changes in market conditions and any policy changes," said Tang Wei Leng, executive director of investment services, at Colliers International.
Demand for private residential properties was much stronger in the mass market, with plenty of 99-year Government Land Sales (GLS) sites to choose from last year, pointed out JLL's Mr Singh.
As a result of this, residential transactions raked in about $650.2 million as at Nov 6, compared with $794.1 million a year ago. As a proportion of the total collective sales market, residential transactions fell to 49.1 per cent in 2013, from 85.3 per cent in 2011 and 55.7 per cent in 2012.
This could potentially change in the coming year however, with the government tapering supply through its GLS programme. Of the eight confirmed list sites, seven are private residential sites (including four executive condominium sites) and one commercial and residential site. In terms of pure residential sites, only seven will be rolled out in H1, from 10 previously.
Separately, it has been an eventful year in the courts, with the landmark cases of Harbour View Gardens and Thomson View making it clear that it was bad faith for either the Collective Sale Committee or the Marketing Agents to enter into any side agreements or sweeten the deal to entice owners to sign the Collective Sale Agreement, said Colliers's Ms Tang.
"The two cases are different but have the same effect in putting a stop to owners who try to hold out for more money," she said.
That said, the cases should not dampen collective sales as the spirit of it is to allow for rejuvenation to take place while enriching owners of properties that have reached value saturation point, said Ms Tang.
In the meantime, the tenders for two residential collective sales will close in January.
Jervois Gardens, which comprises two four-storey walk-up blocks, with 14 maisonettes and three apartments, on a 34,038 sq ft site, is on the market for about $72 million.
Eunosville, which could become the largest collective sale in six years, will also be closely watched. The 99-year leasehold property in Sims Avenue failed in its first attempt in June - the TDSR was introduced barely 10 days after the tender was first launched - and is back on the market for $688 million.
The tender for Eunosville closes at 2.30pm on Jan 14, while the one for Jervois Gardens closes at 3pm on Jan 22.