Singapore Real Estate

IT WAS probably the most profitable “flip” in the property market.

In a deal announced last week, GE Real Estate made a whopping 73 per cent profit on its initial $75-million investment, when it sold Anson House for $129.5 million, a year after purchasing it.

The 13-storey building, located at Anson Road, is now owned by a private property fund managed by Australia’s Macquarie Bank.

Analysts told Today the sale is a sign that in the booming local property market, price flipping — the practice of buying assets and quickly reselling them for a tidy profit — is expected to be the norm.Mr Donald Han of property consultants Cushman and Wakefield said he is seeing scores of investors putting their money in prime spaces in the Shenton Way area because the potential gain from a sale could be huge.

“Many investors we know have the intention of keeping their assets for a minimum of two to five years because the Singapore office property market has climbed 90 per cent rental-wise and capital values have almost doubled,” said the managing director.

Foreign financiers eyeing office space in the financial district have no qualms paying anywhere between $1,800 and $3,000 per sq ft in rentals, he added.

The new owners of Anson House, for instance, are paying about $1,701 per sq ft for a net lettable area of 76,127 sq ft.

As Singapore’s economy grows, so will property prices, said Ms Ong Choon Fah, executive director of global estate advisers Debenham Tie Leung.

And these escalating prices could be a godsend to developers, she added. “As these new owners take over, these older sites may also be given a chance to rejuvenate through renovations and the like,” said Ms Ong.

Even though a supply glut is expected by 2010, it is unlikely to affect “high-grade buildings” in the financial district.

“Investors are buying into quality and location, so, if there is going to be an oversupply, they can still rent them out without much of an issue,” said Mr Han.

But one analyst disagreed.

“That really depends on how fast the economy is growing, but when the oversupply cover comes, we believe rents could face downward pressures,” said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

It may look like a quick way to make a profit, but Mr Colin Tan of Chesterton International argued that these big investors usually come into a market armed with an exit plan.

“These include things such as the number of years they’ve been holding the property, and once their targets have been realised, they would seriously consider selling their properties.”

Such was the case with the Anson House sale, said Savills Singapore’s director of marketing and business development, Mr Ku Swee Yong.

“But, we can’t use the word ‘flipping’ for the Anson sale because funds like GE Real Estate are in for the long haul. They had only one asset here, so, they couldn’t say no when the right price was offered to them,” he explained.

Flipping prices or not, will this constant buying and selling ultimately affect rents in the long run?

“In the next 30 months, right up to mid-2010, you can be sure that rentals would continue to go up at a higher rate,” said Mr Ku. more…

SINGAPORE : Sales of new private residential homes in Singapore look set to plateau this quarter.

According to the Urban Redevelopment Authority (URA), 593 units were sold in November, up by about 5% from the previous month.

Market watchers said they expect overall prices to rise by 5-8% for the last quarter of this year. This will bring the full year price increase to between 27% and 30%.

Based on the latest figures, analysts said they expect the number of units sold this quarter to fall below 2,000, compared to 5,129 in the second quarter and 3,450 on the third quarter.

Analysts said the withdrawal of the deferred payment scheme took some wind out of the market, but strong economic fundamentals meant the mass market segment will see strong interest well into 2008.

“I think we’ll probably be in a region of about 5-8%, in terms of the increase (in price) for the fourth quarter. That brings the overall close to about 30% and I think that’s still respectable, considering that the main movement of the market came about during the first 7 months of this year,” said Donald Han, Managing Director of Cushman & Wakefield.

In November, 80% of the units sold were in the mid-tier or mass market segments. This follows from October, when there was a more than 50% drop in the the number of units sold in the core central region. more…

SINGAPORE (Reuters) - LaSalle Investment Management is raising investment in Asia over the next three to four years to up to $20 billion as investor appetite for the region grows despite a credit squeeze, an executive said on Friday.

The firm, which manages about $47 billion in assets including private real estate and publicly listed property securities, is upbeat on Asia as the region has remained largely unscathed from the U.S. subprime mortgage crisis that has dented business and consumer confidence elsewhere.

“Even with all the uncertainty in the global debt markets, we still see opportunity in this part of the world and are confident in raising more money,” David Edwards, the firm’s regional investment strategist for Asia Pacific, told Reuters.

“We expect that at least half of our investment will be in Japan but we don’t make specific market allocations,” he added.

LaSalle raised more funds for direct real estate investment in the region after saying in August that it would plough $15 billion in the next three to five years to buy and develop property in Asia. more…