sg-invest-q3-2011

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Savills

Research

www.savills.com

Savills Research ISingapore

Sales & Investment

MICA(P) No. 212 / 09 / 2011

Company Reg No. 198703410D

Image: RCL Centre, Keppel Road

"Investment activity in Q3/2011 moderated amid growingeconomic uncertainties. Nevertheless, transactions totallingS$21.3 billion were recorded for the first three quarters, 5.6%higher compared with the same period last year."

Investment sales totalled S$4.51 billion in Q3/2011,

about half of the S$8.51 billion recorded in Q2.

The private sector dominated the market with

S$2.97 billion of investment transactions,

accounting for 65.7% of all investment sales in

the quarter.

In contrast to the declines in the residential,

commercial and hotel markets, the industrial sector

was the bright star in the private sector, with a

quarterly increase of 171% in terms of transaction

value.

1 November 2011

Ten land parcels worth S$1.55 billion were

awarded under the Government Land Sales (GLS)

Programme.

The whole year's investment sales are expected

to reach S$27 to S$28 billion.

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I 02

Sales & Investment


Market overview

Investment transactions worth approximately S$4.51

billion were recorded in Q3/2011, falling 46.9% quarter-

on-quarter from Q2s total of S$8.51 billion.

Transaction value of investment sales, Q1/2009

Q3/2011

Private-sector investment sales accounted for a bigger

share of total investment sales at 65.7% or S$2.97

billion, while the public sector chalked up the remaining

34.3% or S$1.55 billion. On a quarterly basis, the private

sector saw a decline of 26.7% from S$4.05 billion in

Q2. The residential, commercial1 and hotel sectors saw

declines in transaction values in the order of 46.1%,

56.1% and 43.9% quarter-on-quarter. On the other hand,

the industrial sector was the star performer, surging

170.5% from S$418.6 million in Q2 to S$1.13 billion in

Q3. The increase was boosted by the divestiture of the

second phase of JTC Corporations (JTC) industrial

properties and industrial REITs portfolio acquisitions.

In the public sector, ten government land parcels,

comprising six residential sites, three industrial sites

and one commercial site, were bought by developers.

Similarly, sales volume was 65.3% lower than the

previous quarter, partly due to the high base in Q2 when

15 state land parcels were sold.

1 Including office and retail

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Q12009

Q2 Q3 Q4 Q12010

Q2 Q3 Q4 Q12011

Q2 Q3

S$ millionPublic Private

Source: Savills Research & Consultancy

Weaker prospects for the US and eurozone economies,

coupled with the volatile stock market, have dampened

market sentiment among developers, funds, individual

investors and end users alike. Caution prevailed in the

market, as evidenced by the thinning number of big

deals that were transacted and subdued responses to

the state land tenders, which received more realistic

bids. For example, there were only 11 private-sector

transactions over S$50 million each in the reviewed

quarter, significantly less than the 20 deals in Q2. The top

bids for several sites from the GLS Programme, such as

the industrial site at Woodlands Avenue 12 (parcel 3), two

residential sites at Upper Serangoon and a commercial

site at Robinson Road/Cecil Street, were noticeably lower

than prices of nearby plots sold at earlier dates.

Investment sales by property sector, Q3/2011

Residential

Total investment sales in the residential sector amounted

to S$2.20 billion in Q3/2011. In spite of a 50.4% drop fromQ2, this sector still accounted for the highest share (48.6%)

in total investment sales.

In the public sector, six residential sites under the GLS

Programme were sold for a total of S$1.1 billion. While

choice sites with good locations continued to receive

overwhelming responses from developers, bids have been

more reasonable, indicating developers cautious stance in

view of ample supply from the GLS Programme and price

resistance for private residential properties. For example,

while the non-landed parcel at Upper Serangoon Road/

Pheng Geck Avenue attracted a total of 15 bids, Tuan Sing

Holdings top bid of S$185 million or S$567 per sq ft perplot ratio (psf ppr) was 6.6% lower than the price of an

adjacent site which was awarded in June 2010.

Residential,S$2.20 bil (49%)

CommercialS$848.3 mil (1 9%)

HotelS$194.1 mil (4%)

IndustrialS$1,28 bil (28%)


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Over 200 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East.

I 03

Sales & Investment


The collective sale market has moderated in Q3 with

five transactions worth S$453.5 million. The largest

transaction was the S$171.1 million sale of Hong Leong

Garden Shopping Centre, followed by Whitley Heights

which was sold for S$159 million. The other three deals

Grand Tower, Daisy Apartments and Permai Court,

were below S$100 million each. Uncertainty surrounding

the property market, together with sellers unrealistic

price aspirations, has limited the number of successful

sales. This is particularly so for the large leasehold sites

competing for the same capital as GLS sites, which havethe advantage of offering a more certain and expedient

sales process. Therefore, smaller sites might still be well-

received, albeit at prices that are reflective of prevailing

conditions.

Commercial

Commercial investment sales, amounting to S$848.3

million, accounted for 18.8% of total investment sales

in Q3/2011. It shrank by 53.1% quarter-on-quarter from

S$1.81 billion in Q2.

The market response to the state tender of a 0.29-ha

commercial site located at Robinson Road/Cecil Street

was tepid, with just three bids and a top bid of S$311.8

million or S$882 psf ppr, which is reasonable in view

of the increasing vacancies and moderating rents

experienced in the CBD office market.

Two office buildings changed hands in the reviewed

quarter RCL Centre on Keppel Road for S$175 million

and a small office building at 182 Clemenceau Avenue

for S$74 million. It was noted that the buyers for these

two properties were Asia-based private investors. Unlike

institutional funds who have dominated the market in theprevious years, these regional high net worth buyers do

not only look at investment yields, but more at capital

preservation, particularly under the current high-inflation

environment.

Three strata office properties were transacted above

S$10 million in Q3, down from six recorded in the

previous quarter. Despite the subdued activity, the

transacted prices by square footage S$2,800 per sq f t

for the 20th storey of Samsung Hub and S$2,880 per

sq ft for the 42th storey of Suntec City Tower 1 were

the highest in the last ten years.

The retail investment market remained relatively active

with the sale of five shophouses, one strata-titled shop

unit in Peoples Park Centre and the entire Bedok Point.

Frasers Centrepoint Trust (FCT) bought Bedok Point,

the first mall in the Bedok area from Frasers Centrepoint

Limited for S$127 million, S$1,568 per sq ft on a net

lettable area of 80,985 sq ft.

Industrial

Industrial investment sales totalled S$1.28 billion inQ3/2011, forming the second highest share (28.3%) of

total investment transactions after the residential sector.

The most notable transaction in the private sector was the

second phase divestiture of JTCs industrial properties

for S$688.6 million. Soilbuild Group Holdings Ltd was

awarded ten blocks of flatted factories and amenity centres

for S$288.3 million, while Mapletree Industrial Trust (MIT)

acquired the remaining 11 blocks for S$400.3 million.

Following a relatively quiet Q2, industrial REITs resumed

their acquisition trail in the reviewed quarter. Besides the

acquisition of JTCs properties by MIT, Q3 saw another

five acquisitions by REITs. Among these, Cache Logistics

Trust bought 22 Loyang Lane for S$13 million, while

Sabana REIT purchased four properties for S$132.3

million, the first time since its listing on the Singapore

Exchange last year.

In the reviewed quarter, three industrial sites located

at Tuas View Square, Pioneer Road North/Soon Lee

Road (parcels 3 and 4) and Woodlands Avenue 12

(parcel 3) were sold under the GLS Programme for a

total of S$143.6 million. The Woodlands site received

only four bids, with the top bid being 6.6% less than thatof the neighbouring plot sold in June, due largely to the

weakening sentiment and the perceived abundance of

industrial space in the area.

Hotel

Singapores tourism industry has been robust in 2011.

In the first eight months, Singapore welcomed a total of

8.8 million visitors, representing a 15.5% increase year-

on-year. The rosy performance of the tourism industry

has fuelled market confidence in Singapores hotel

market. As a result, the market witnessed a pick-up in

hotel acquisitions.

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For further information, please contact:

This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars donot constitute, nor constitute part of, an offer or contract; interested parties should not rely on the statements or representations of fact but must satisfy themselves by inspection orotherwise as to the accuracy. No person in the employment of the agent or the agent's principal has any authority to make any representations or warranties whatsoever in relation tothese particulars and Savills cannot be held responsible for any liability whatsoever or for any loss howsoever arising from or in reliance upon the whole or any part of the contents ofthis document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written permission of the publisher, Savills. Savills (Hong Kong)Limited. 2011.

Sales & Investment

singapore

Christopher J MarriottCEO, South East Asia

+65 6415 3888

[email protected]

investment sales, singapore

Steven MingExecutive Director

+65 6415 3624

[email protected]

regional capital markets, singapore

Craig WardDirector

+65 6415 7582

[email protected]

research & consultancy, singapore

Alan CheongAssociate Director

+65 6415 3641

[email protected]

research & consultancy, asia pacific

Simon SmithSenior Director

+852 2842 4573

[email protected]

address

Savills (Singapore) Pte Limited30 Cecil Street#20-03 Prudential TowerSingapore 049712

T: +65 6836 6888

F: +65 6836 2668

corporate website

www.savills.com


Three hotels were sold in Q3/2011 Ibis Novena (241

rooms) on Irrawaddy Road for S$118 million, New Cape

Inn Hotel (61 rooms) on Seng Poh Road for S$34 million

and The Saff Hotel (79 rooms) on Keong Saik Road for

S$42 million. Investors have turned their attention to

small-scale investments (such as hotels with no more

than 200 rooms) due to limited offerings in the market and

mounting risks emanating from the current turbulence in

the global economy.

Major land sales under the GLS Programme, Q3/2011

Major private investment sales, Q3/2011

Outlook

Eurozone debt jitters and a potential double-dip

recession in the US continue to weigh on the market.

Compared with the preceding quarters, the higher risk

environment may prolong investors decision-making

process. However, choice properties and prime sites

that are well-located with longer tenure and better

specifications will continue to attract interest. Therefore,

the investment market is likely to stay healthy for the rest

of the year, with investment sales reaching S$27 billion

to S$28 billion for the whole of 2011.

Location Type ofdevelopment

allowed

Date ofaward

Successfultender price

Name ofsuccessful

tendererS$ mil S$ psf

ppr

Robinson Road/Cecil Street

Commercial Sep2011

311.8 882 Boo Han HoldingsPte Ltd and

Pearlvine Pte Ltd

Upper SerangoonCrescent/UpperSerangoon Road

Non-landedresidential

Sep2011

270.3 292 Allgreen Propert iesLtd

Punggol Way/Punggol Field

Non-landedresidential(executive

condominium)

Jul2011

219.5 270 FCL TampinesCourt Pte Ltd

and Keong HongConstruction

Pte Ltd

Upper Serangoon

Road/PhengGeck Avenue

Non-landed

residential

Aug

2011

185.2 567 Clerodendrum

Land Pte Ltd

Punggol Field/Punggol FieldWalk

Non-landedresidential

Sep2011

169.6 323 CapitalDevelopmentPte Ltd/ZACDInvestments

Pte Ltd

Source: URA, HDB, Savills Research & Consultancy

Property Sector Transacteddate

Price(S$ mil)

Buyer

Eleven blocks of flattedfactories and amenitycentres

Industrial Jul 2011 400.3 MIT

Ten blocks of flattedfactories and amenitycentres

Industrial Jul 2011 288.3 Soilbuild GroupHoldings

RCL Centre Office Jul 2011 175.0 Private Indonesianinvestor

Hong Leong GardenShopping Centre

Residential Sep 2011 171.1 A consor tium ledby Oxley Holdings

Whitley Heights Residential Sep 2011 159.0 Hoi Hup Realty


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This document is prepared by Savills for information only. Whilst reasonable care has been exercised in preparing this document, it is subject to change and these particulars do not constitute, nor constitute part

of, an offer or contract; interested parti es should not rely on the statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy. No person in the employment of the

agent or the agents principal has any authority to make any representations or warranties whatsoever in relation to these particulars and Savills cannot be held responsible for any liability whatsoever or for any

loss howsoever arising from or in reliance upon the whole or any part of the contents of this document. This publication may not be reproduced in any form or in any manner, in part or as a whole without written

permission of the publisher, Savills. Savills (Hong Kong) Limited. 2011. (IX/11)

Savills, the international real estate advisor established in the UK since 1855 with over 200 offices and associates worldwide.

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Raymond Lee - CEO, Greater China

Chris Marriott - CEO, South East Asia

Charles Chan - MD, Valuation & Professional Services, Greater China

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sg-invest-q3-2011