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The Real Deals (20-12-2012)

The Real Deals (20-12-2012)

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Published by: proptalk on Dec 21, 2012
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12/30/2012

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SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
T
HE
 
R
EAL
 
D
EALS
 –
 
Ins
 
&
 
Outs
 
of 
 
Singapore
 
Real
 
Estate
 
Singapore
 
Co. Reg No: 198700034EMICA (P) : 099/03/2012
 
20 December 2012
Looking To 2013
Project launches next year.
Excluding en-bloc’ed and Executive Condominium sites, around 21 already-sold sites are expectedto be launched next year. We examine the remainder of the Government Land Sales (GLS) sites that have been sold andcompare them to launches and secondary market transactions nearby. We will be focusing on the Farrer and Tanah Merah areas;Farrer sites were one of the highest-priced GLS sites, while Tanah Merah is seeing an explosive incoming supply.
Interest in Farrer could be revived.
Evidently, sites on Farrer have had slower take-up rates relative to mass-market projects.Under changes announced by SLA recently, the project completion period for residential en-bloc sites will now start from date ofthe collective sale order, instead of the date of the issue of a Qualifying Certificate. This may prompt developers to en-bloc largersites, such as the en-bloc attempt for Tulip Gardens in 2007. Among the new sites, two sites that were hot favourites for smalldevelopers and funds and achieved the highest GLS prices, indicating there is still an innate price premium for the Farrer area.
Explosive supply in Tanah Merah vicinity.
Previously, supply in Tanah Merah was limited and coming solely from thesecondary market. But it was clear that interest in future sites in the area was bound to spike when Optima@ Tanah Merahreceived an overwhelming take-up rate of over 98% within two months in mid-2009. YTD, GLS has released 1,863 units in theTanah Merah vicinity. The recent top bid for New Upper Changi Road (Parcel A) was from Keppel Land at a land cost ofSGD434.6m or SGD791.4psf, a 17.1% premium to the price at which Urban Vista’s land was sold in August. Keppel’s site wasalso sold at 48% above the price that Far East, Fraser Centrepoint and Seikui House jointly paid for their Eco site. A reserve site just beside the Eco project will be launched in February 2013 and comprise approximately 600 units. In addition, a commercialsite has been slated between Urban Vista and Optima @ Tanah Merah, which will be a hot seller as it is directly next to the TanahMerah MRT station. However, the commercial site’s date of availability is still indefinite.
Figure 1: Year-to-date GLS sites sold yet to launch(ex-EC)
Awarddate Type LocationTender price $psf Units DeveloperProjectname
Jan Res Jalan Lempeng 408 554.4 685 IOI Corp TrilinqJan Res Mount Vernon Road 388.1 495 785 CDL/ Hong LeongFeb Res Jervois Road 118.9 880.7 140 SingLand Mon JervoisMar Res Hillview Avenue 243.2 638 370 Kingsford DevelopmentKingsfordHillview PeakMar ResTampines Avenue 10/ TampinesAvenue 1 252.8 417.9 600Lakeside, FCL Topaz & SekisuiHouseApr Res Elias Road/ Pasir Ris Drive 3 165.9 471.3 345 Elitist DevelopmentMay Res Boon Lay Way (Jurong Gateway) 369.8 705.9 590 MCL LandJun Res Pasir Ris Drive 3/ Pasir Ris Drive 10 210.1 416.5 495 Capital Development Pte. Ltd.Jun Res Buangkok Drive/ Sengkang Central 301 508.2 580 White Haven Properties Pte. Ltd.Jun Res Sengkang Square / Compassvale Drive 383.3 527.6 710 El Development La FiestaJun Res Farrer Drive 113.2 1,048.5 100 SinglandJun Res Pheng Geck Avenue (Parcel B) 114.8 628 200 Santarli CorpAug ResTanah Merah Kechil Road/ TanahMerah Kechil Link 285.2 676 415 Fragrance Group & World Class Urban VistaAug Res Bright Hill Drive 291.5 719.8 405 UVD (JV with Sing Land & UOL)Aug Res Farrer Road 45.8 1,107.6 54 Far East SohoSep Res Tai Thong Crescent (Parcel C) 245 793 293 Verwood Holdings and Intrepid InvSept Res Dairy Farm 244.1 615.5 First Shine PropertiesSept Res Prince Charles Crescent 516.3 960.3 Wingstar inv Metro Aus, MaxdinOCt Res New Upper Chang Road (Parcel A) 434.6 791.4 700 Keppel landNov Res Bishan Street 14 505 852.8 Capitaland
Source: Company data, URA
 
 
20 December 2012 Page 2 of 9
 
T
HE
 
R
EAL
 
D
EALS
Ins
 
&
 
Outs
 
of 
 
Singapore
 
Real
 
Estate
 Farrer could be heating up.
Two plots along Farrer were sold this year via the Reserve List.
 
Situated along the bustling FarrerRoad, the Farrer Road site attracted the most bidders – a total of 15 bids, with Far East beating Soon Hock Tuas Development bya narrow 3.3%. The site achieved the highest psf in GLS this year, an ASP of SGD1,108psf. The site area is 2,741.5sqm, andcould house approximately 54 units. The Farrer Drive site, nestled between Sommerville Grandeur and Sommerville Park,received a total of six bids and won by SingLand. It was 5.6% cheaper than the Farrer Road site sold just two months later.
Potential value?
While take-up of CapitaLand’s D’Leedon’s was slow, Leedon Residences was recently launched, renewingoptimism in the area. It has achieved a take-up rate of 25.7% since its launch in Oct 2012, and an ASP of SGD1,985psf. Currentresale transactions of newer projects around Farrer, such as The Levelz and Waterfall Gardens, are achieving ASPs ofSGD1,538psf YTD, approximately 29% cheaper than Leedon Residences and 4% cheaper than D’Leedon.
Figure 2: Farrer sites description
 
Farrer Drive site Farrer Road site
Maximum GFA (sq ft) 107,962.9 41,324Tenure 99 years 99 yearsNo. of units 100 54Land cost (SGD m)/ psf (SGD) 113.2/ 1,048.5 45.8/ 1,108No. of bids offered 6 15Difference to 2
nd
highest bid (%) 10.1% 3.3%
Source: Company data 
Figure 3: 2012 year-to-date average selling prices along Farrer
Project Tenure Completion New Sale ($ psf) Resale ($ psf) Sub Sale ($ psf) Avg. ($ psf)
D'Leedon 99 Yr fm 2010 Uncompleted 1,567 0 1,640 1,567Leedon Residence Freehold Uncompleted 1,985 0 0 1,985The Levelz Freehold 2004 0 1,473 0 1,473Waterfall Gardens Freehold 2010 0 1,605 1,599 1,603
Source: Company data 
Figure 4: Farrer Drive site Figure 5: Farrer Road site
 
Source: URA Source: URA
M
OST BIDDED SITE
 – 
 
F
ARRER
R
OAD SITE
 
M
OST BIDDED FOR SITE
 – 
 
F
ARRER
R
OAD
 
 
20 December 2012 Page 3 of 9
 
T
HE
 
R
EAL
 
D
EALS
Ins
 
&
 
Outs
 
of 
 
Singapore
 
Real
 
Estate
 
Current transactions.
The launch of Eco was widely successful, with take-up rates reaching 53% in the first month of launch.With explosive supply coming onstream, resale prices in older projects have edged up. For example, the average selling price forCasa Merah YTD has crossed SGD1,000psf, while East Meadows is closing in on the SGD1,000psf mark. Optima @ TanahMerah, sold at between SGD822-874psf in mid-2009, is now seeing sub-sale transactions taking place at an average ofSGD1,224psf YTD. As of the end of last quarter, rental yields in the vicinity range between 3.9% and 4.2%. We estimate that newlaunches will be priced, between SGD1,300 and SGD1,500psf, next year. Assuming rental psf pm averages at SGD4, rentalyields will range between 3.2% and 3.7%. However, we note that as these projects reach TOP in 2016-17, rental rates may besuppressed and rental yields will not be as ideal as they face competition for tenants from one another.
Figure 6: Details on recent GLS sites
Project/siteMaximumGFA (sq ft) DeveloperLand cost(SGD m) $ psf UnitsNo.bidsDifferenceto 2nd bid
Eco 647,498 Far East, Fraser Centrepoint, Seikui House 345.9 534.2 748 7 1.50%Urban Vista 421,906 Fragrance Group, World Class Dev 285.2 676.0 415 13 1.80%New Upper Changi Road 549,082 Keppel Land 434.6 791.4 700 11 7%New Upper Changi Road(Parcel B) 583,075
To be launched in February 2013 
600
Source: URA
Figure 7: Rental yields
Project District25th %(psf/pm)Median(psf/pm)75th %(psf/pm) No. of units ASP Median Yield (%)
Casa Merah 16 3.3 3.7 3.9 15 1098.3 4.0East Meadows 16 3.2 3.2 3.4 24 923.6 4.2The Tanamera 16 2.6 2.8 2.9 12 856 3.9
Source: realis 
Figure 8: Year to date resale transactions
Source: Realis 
Figure 9: Sites surrounding Tanah Merah MRT station
Source: Onemap.sg 
700.0900.01,100.01,300.01,500.0Dec-11 Feb-12 Apr-12 May-12 Jul-12 Aug-12 Oct-12 Dec-12Optima @ Tanah Merah Casa Merah East Meadows The Tanamera
S
TRONG UPCOMING SUPPLY
-
 
T
ANAH
M
ERAH
Commercial site
PPR – 2.8x 
 
Eco (99Yr/’12)
TOP 2017Far East, Fraser Centrepoint,Sekisui HouseOct’12 ASP – SGD1,392psfLaunched Sept’12
Urban Vista (TBL)
Fragrance Group & WorldClass LimitedLand price – SGD676psfAwarded Aug ‘12
Optima @ Tanah Merah (99 Yr/’08)
JV between Mitsui Fudosan & HongLeong GroupTOP 2012/13Nov’12 ASP – SGD1,319psf
East Meadow (99 Yr/’98)
Far EastTOP 2002Nov’12 ASP – SGD963psf
Casa Merah (99Yr/’06)
NTUC Choice Homes/WingtaiTOP 2009Nov’12 ASP – SGD956psf
GLS (99Yr)Site area –25,794mEst. Units -600FutureDevelopmentGLS(Sold Oct’12)
Keppel LandLand price – SGD434.6m/ 791.4sf

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