Market to record steady growth
Wee-Liat Lee
Friday, May 11, 2007
With strong economic fundamentals, a buoyant labor market, rising incomes and the impetus stemming from the generous offerings in the 2007-08 budget, the property market in Hong Kong as a whole recorded steady growth in the first quarter.
Demand in the Hong Kong Grade A office market continued to benefit from corporate expansions despite moderate economic growth through the latter part of 2006, and anecdotal evidence suggested that this momentum continued into the first quarter.
While banking, finance and legal services companies continued to expand in Central, the market likewise saw a steady level of expansion across the other markets.
Meanwhile, cost-sensitive tenants continued to relocate to non-core markets like Kowloon East and to non- Grade A offices within core areas.
With the exception of Hong Kong East, all office sub-markets recorded a positive net take-up in the first quarter. Overall net take-up amounted to about 342,000 square feet, slightly higher than that in the fourth quarter of 2006.
On the supply side, no new Grade A office project was completed in the first quarter after the delay of 633 King's Road's completion until the second quarter.
With the absence of new supply and the strong leasing activity in Central and the Kowloon non-core office sub- markets, overall vacancy decreased from 5.4 percent to 5 percent at the end of the first quarter.
The investment market was highlighted by the whole-block purchase of three adjoining non-Grade A office buildings in Sheung Wan by Citigroup Property Investors for about HK$1.5 billion. It is reported that the three sites will be amalgamated and redeveloped into Grade A offices.
During the first quarter, overall average net effective rental for Grade A offices rose by 2.8 percent quarter on quarter while overall average capital value increased by 2.3 percent.
In the retail property market, growing incomes stemming from rising salaries and bonus payments contributed to a higher level of domestic demand. The retail market continued to register robust growth in the first quarter, with retail sales increasing by 11.4 percent year on year during the January-February period. The various tax benefits proposed in the 2007-08 budget are set to benefit the consumption market. In the long run, the tax cut will raise the disposable income of taxpaying households by 23 percent. This will in turn induce further spending.
With the strengthening consumer confidence, the market saw stronger expansion demand for prime retail properties in major shopping districts from brand-name retailers throughout the quarter. These retailers are generally those with wider profit margins and stronger financial positions to bear rising rental costs.
The renovation of Crawford House (formerly Lane Crawford House) in Central was completed in the quarter with the opening of H&M as its anchor tenant in March.
During the quarter, rents for prime street shops grew by 3.3 percent while prime and decentralized shopping center rentals grew by 5.6 percent and 2.9 percent respectively. Leveraging on the existing momentum and additional stimulus from tax relief, we expect a more positive outlook.
Rents in prime streets and prime shopping centers could continue to achieve moderate rental growth in the next 12-month period.
In the residential market, the sales market saw a significant pick-up in transaction volume in the first quarter, driven primarily by lower mortgage rates and improved buyer affordability stemming from salary increases and year-end bonuses.
The generous offerings in the 2007-08 budget will also relieve the financial burden of property buyers, thus triggering stronger "end-user" demand.
The number of residential sale and purchase agreements rose by 31.6 percent year on year to 23,328 units during the quarter.
During the quarter, capital values for luxury properties rose by 5.1 percent.
Demand for high-end properties remained strong for the leasing market, with those on Hong Kong Island particularly sought after.
The remaining units in Hos Villa in Stanley and Luard on the Park in Wan Chai were all leased out in the quarter. Rents recorded a rise of 1.9 percent in the same period.
The pay rises underpinned by the buoyant labor market and the generous offerings in the 2007-08 budget, will help boost buyer confidence and trigger upgrading demand.
Capital values for the overall residential market will continue to grow while rental values for luxury properties will continue to rise on the back of the inflow of expatriates and tight supply.
In the industrial market, the momentum of the warehouse market remained strong during the quarter, on the back of a robust trading environment.
Total imports and exports grew by 9 percent year on year in the first two months.
The outlook for local consumption and retail sales in Hong Kong remained upbeat, leading to sustained demand for warehouses from retailer and other logistics operator.
The quarter saw a pickup in leasing activity.
The sales market continued to be energetic amidst the limited availability of large and quality warehouse space for sale in the market. Sales transactions were more for smaller and strata-titled properties (on a floor-by-floor basis).
The narrowing choice of warehouse stocks started to divert the attention of institutional investors to other industrial premises including flatted factories and industrial-office buildings.
During the quarter, no new warehouse completion was recorded. Warehouse rents and capital values rose by 0.2 percent and 0.8 percent, respectively. With such vibrant economic growth, local consumption and other business investment activities will help ensure a sustained level of domestically driven warehouse demand.
The external trade sector will continue to benefit from China's growing export activity, putting healthy pressure on Hong Kong's warehouse properties and other logistics facilities.
Wee-Liat Lee is head of research, Greater China, at Jones Lang LaSalle
Friday, May 11, 2007
Thursday, May 10, 2007
The rush to push deals through …in en bloc sales
With residents increasingly holding out for higher payouts as estates around the island continue to fetch record reserve prices in en bloc sales, allegations have emerged of sale committees trying to push through deals before new legislation kicks in.
King’s Mansion resident Abdul Hamid, for one, was shocked at the haste in which the en bloc sale process was carried out. All it took was three days and “all that was left for us to do was to sign or not sign the Collective Sale Agreement (CSA)”, he said.
The Government has announced plans to amend the current laws governing en bloc sales by the year’s end. While this was welcomed by many, calls are growing for urgent action to address issues such as the lack of transparency and neglect of minority interests during an en bloc sale.
Over at Minton Rise, a resident, who declined to be named, accused his estate’s sales committee of pressuring unit owners into agreeing to the sale.
When contacted, the estate manager maintained that the sale committee did everything by the book, but he declined to comment further.
A member of Clementi Park’s sale committee, Mr K C Lim, conceded that his committee was looking to bring forward the deadline for residents to decide on the deal — not because of the impending legislative changes but due to the soaring prices.
Already, a group of owners at Horizon Towers are trying to back out of an en bloc sale because they felt that the $500-millon deal no longer reflect the condominium’s “true value”.
Said Mr Lim: “If everybody is playing a waiting game, it becomes very tedious and time-consuming to carry on.”
When contacted, a Ministry of Law spokesperson told Today that the ministry has “no intention” to suspend the current en bloc regulations pending the review exercise.
The spokesperson said: “Owners who object to the en bloc sale of their development need not sign the CSA. If they have valid grounds to object, they can file their objections with the Strata Titles Board (STB).”
And refuting suggestions that the current regulatory framework appeared to side with the majority owners, the ministry reiterated that the STB was “not partisan”.
So, can anything be done to help the aggrieved parties before the new laws kick in?
One way, lawyer S K Phang suggested, is for more developers and sale committees to work out old-for-new exchanges for unit owners, under which they would get back a comparable unit in the same location.
Said Dr Phang, who has helped facilitate such deals at Eng Kong Green and Paterson Lodge, where all the owners opted for a straight swap: “If I were a developer, I would save on land costs, cash outlay and the interest to pay. The risk is also smaller.” This way, homeowners would not be affected by property-market fluctuations, he added.
Chesterton International’s research director Colin Tan attributes the unhappiness to a “misunderstanding” of the majority consent rule. He said: “Many of those on the sale committees see the 80- or 90-per-cent majority consent required as the magic number. They think that as long as they structure a deal which the majority will agree to, their job is done.”
A change in approach on the part of the sale committee, such as taking into account the interest of everyone involved, could go a long way in reducing acrimony during an en bloc sale. Mr Tan added that the impending legislative amendments merely seek to “make it clearer that the whole process must be fair”.
For some such as Mr Abdul Hamid, the amendments cannot arrive quickly enough. He said: “Year-end is too late. By then, I would have lost my home. What the Government does six months later is of no advantage to me.”
Source: Today
King’s Mansion resident Abdul Hamid, for one, was shocked at the haste in which the en bloc sale process was carried out. All it took was three days and “all that was left for us to do was to sign or not sign the Collective Sale Agreement (CSA)”, he said.
The Government has announced plans to amend the current laws governing en bloc sales by the year’s end. While this was welcomed by many, calls are growing for urgent action to address issues such as the lack of transparency and neglect of minority interests during an en bloc sale.
Over at Minton Rise, a resident, who declined to be named, accused his estate’s sales committee of pressuring unit owners into agreeing to the sale.
When contacted, the estate manager maintained that the sale committee did everything by the book, but he declined to comment further.
A member of Clementi Park’s sale committee, Mr K C Lim, conceded that his committee was looking to bring forward the deadline for residents to decide on the deal — not because of the impending legislative changes but due to the soaring prices.
Already, a group of owners at Horizon Towers are trying to back out of an en bloc sale because they felt that the $500-millon deal no longer reflect the condominium’s “true value”.
Said Mr Lim: “If everybody is playing a waiting game, it becomes very tedious and time-consuming to carry on.”
When contacted, a Ministry of Law spokesperson told Today that the ministry has “no intention” to suspend the current en bloc regulations pending the review exercise.
The spokesperson said: “Owners who object to the en bloc sale of their development need not sign the CSA. If they have valid grounds to object, they can file their objections with the Strata Titles Board (STB).”
And refuting suggestions that the current regulatory framework appeared to side with the majority owners, the ministry reiterated that the STB was “not partisan”.
So, can anything be done to help the aggrieved parties before the new laws kick in?
One way, lawyer S K Phang suggested, is for more developers and sale committees to work out old-for-new exchanges for unit owners, under which they would get back a comparable unit in the same location.
Said Dr Phang, who has helped facilitate such deals at Eng Kong Green and Paterson Lodge, where all the owners opted for a straight swap: “If I were a developer, I would save on land costs, cash outlay and the interest to pay. The risk is also smaller.” This way, homeowners would not be affected by property-market fluctuations, he added.
Chesterton International’s research director Colin Tan attributes the unhappiness to a “misunderstanding” of the majority consent rule. He said: “Many of those on the sale committees see the 80- or 90-per-cent majority consent required as the magic number. They think that as long as they structure a deal which the majority will agree to, their job is done.”
A change in approach on the part of the sale committee, such as taking into account the interest of everyone involved, could go a long way in reducing acrimony during an en bloc sale. Mr Tan added that the impending legislative amendments merely seek to “make it clearer that the whole process must be fair”.
For some such as Mr Abdul Hamid, the amendments cannot arrive quickly enough. He said: “Year-end is too late. By then, I would have lost my home. What the Government does six months later is of no advantage to me.”
Source: Today
One good turn…Orchard Turn...Orchard Turn Retail Mall
All eyes are now on CapitaLand’s upcoming retail project atop the Orchard MRT station.
Commonly dubbed Orchard Turn because of its address, 2 Orchard Turn, the landmark mall is part of a $2-billion retail and residential joint venture between Singapore’s biggest developer and Hong Kong’s Sun Hung Kai Properties.
But responding to queries from Life!, a CapitaLand spokesman says: ‘The brand name of our retail mall, Orchard Turn Retail Mall, has yet to be confirmed.’
Ms Soon Su Lin, chief executive of the joint venture company Orchard Turn Developments, says the name is likely to be announced in July.
‘We are exploring possible names… The name that we select will be unique and will give our mall a personality and branding that our target shoppers can identify and engage with,’ she says.
Orchard Turn Developments is currently working with a brand consultant, she adds.
The first new building to emerge in Orchard Road in a decade, the 218m-tall, 56-storey luxury project will also be the tallest along the shopping stretch.
The mall will take up eight floors - four basement levels and the four floors above ground - while 175 luxurious apartments will occupy the other 48 floors.
Called Orchard Residences, the first phase of 98 apartments were snapped up at a record average price of $3,213 per sq ft in March.
The retail mall will have more than 450 stores spread over 1 million sq ft of retail space. VivoCity, Singapore’s largest mall, has about 1.1 million sq ft of retail space.
The mall is set to be completed by the end of next year while the apartments will be ready at the end of 2009.
Property insiders Life! spoke to are not surprised that Orchard Turn’s name is still up in the air.
‘The name was too generic to begin with. I expect a name which will better reflect the mall’s unique positioning,’ says Ms Claire Cher, senior marketing and communications manager of UOL Group, which owns malls such as Velocity @ Novena Square and United Square.
Mr John Ting, former president of the Singapore Institute of Architects, agrees.
‘Orchard Turn could be anything. It could be a hotel, a mall. It doesn’t conjure up an image in people’s minds.’
He declines to suggest a name, but says: ‘It should have something to do with Orchard because this name is well-known and has value.
‘Everyone wants to be associated with Orchard. Even buildings a mile away state that they are within 10 minutes of Orchard Road.’
A mall’s name ‘makes a statement about what the mall stands for’, says Dr Seshan Ramaswami, practice associate professor of marketing at Singapore Management University.
‘It should add to the brand cachet of the mall rather than just describe its owners or location,’ he adds.
‘For instance, a plaza seems to denote a low-end atmosphere while the ‘city’ in Ngee Ann City or VivoCity brings to mind vastness.’
CapitaLand’s mixed project also makes it unique because there is a need for separate names for two projects under one roof.
Mr Danny Yeo, executive director of property consultancy Knight Frank, says: ‘In retail, the easier a name is to pronounce and remember, the better. But with residential projects, names tend to be fancy so they sound high class.’
Developers often rope in brand consultants, advertising agencies and focus groups to help christen their projects.
The process can cost anything from $3,000 to more than $30,000 and can take up to several months.
Take UOL Group, which paid home-grown branding consultants Bonsey Group and an advertising agency more than $50,000 when developing the name of Velocity @ Novena Square.
‘Advertising agencies are in the creative industry and bring a fresh perspective to the table,’ says Ms Cher.
Industry players tell Life! good names share three traits: They stand out, are easy to pronounce and stick in the mind.
Mr Ting cites The Centrepoint as a good example: ‘The Centrepoint is easy to remember and makes you think that it’s the centre of activity.’
Mrs Jannie Tay, managing director of luxury watch retailer The Hour Glass and president of the Singapore Retailers Association, agrees: ‘It made the mall sound more important simply by adding one word.’
Formerly known as Centrepoint, the mall owned by Frasers Centrepoint Malls was renamed last December.
Ms Cher says a good name should also convey a mall’s selling points, such as brand positioning or a unique experience - what the mall can offer.
One mall that passed this test is Paragon.
Dr Ramaswami says: ‘It is a nice name that captures the high-end nature of the mall.’
Others have problems with Ngee Ann City.
‘The fact that most people refer to the building as Taka, short for department store Takashimaya in the mall, suggests that the name was never effective,’ says Mr Spencer Ball, design director of British branding consultancy Fitch.
Then there are those that draw mixed reviews.
Mr Ting says of Palais Renaissance, home to designer labels like DKNY and Valentino: ‘Unless you know French, the name won’t make sense. You wouldn’t associate it with Singapore.’
But Mrs Tay feels the name suits its high-end image. ‘Palais Renaissance caters to a small niche market so its name is well-suited,’ she says.
At the end of the day, however, the success of a mall boils down to its location, design and mix of stores, says Dr Ramaswami.
But he notes that the name is ‘part of the package and can make a mall more attractive at practically no additional cost’.
Mr Yeo of Knight Frank believes an Orchard Turn by any other name would smell just as sweet.
‘I think people will head to the mall no matter what it’s called because it’s in a prime location,’ he says.
Source: The Straits Times
Commonly dubbed Orchard Turn because of its address, 2 Orchard Turn, the landmark mall is part of a $2-billion retail and residential joint venture between Singapore’s biggest developer and Hong Kong’s Sun Hung Kai Properties.
But responding to queries from Life!, a CapitaLand spokesman says: ‘The brand name of our retail mall, Orchard Turn Retail Mall, has yet to be confirmed.’
Ms Soon Su Lin, chief executive of the joint venture company Orchard Turn Developments, says the name is likely to be announced in July.
‘We are exploring possible names… The name that we select will be unique and will give our mall a personality and branding that our target shoppers can identify and engage with,’ she says.
Orchard Turn Developments is currently working with a brand consultant, she adds.
The first new building to emerge in Orchard Road in a decade, the 218m-tall, 56-storey luxury project will also be the tallest along the shopping stretch.
The mall will take up eight floors - four basement levels and the four floors above ground - while 175 luxurious apartments will occupy the other 48 floors.
Called Orchard Residences, the first phase of 98 apartments were snapped up at a record average price of $3,213 per sq ft in March.
The retail mall will have more than 450 stores spread over 1 million sq ft of retail space. VivoCity, Singapore’s largest mall, has about 1.1 million sq ft of retail space.
The mall is set to be completed by the end of next year while the apartments will be ready at the end of 2009.
Property insiders Life! spoke to are not surprised that Orchard Turn’s name is still up in the air.
‘The name was too generic to begin with. I expect a name which will better reflect the mall’s unique positioning,’ says Ms Claire Cher, senior marketing and communications manager of UOL Group, which owns malls such as Velocity @ Novena Square and United Square.
Mr John Ting, former president of the Singapore Institute of Architects, agrees.
‘Orchard Turn could be anything. It could be a hotel, a mall. It doesn’t conjure up an image in people’s minds.’
He declines to suggest a name, but says: ‘It should have something to do with Orchard because this name is well-known and has value.
‘Everyone wants to be associated with Orchard. Even buildings a mile away state that they are within 10 minutes of Orchard Road.’
A mall’s name ‘makes a statement about what the mall stands for’, says Dr Seshan Ramaswami, practice associate professor of marketing at Singapore Management University.
‘It should add to the brand cachet of the mall rather than just describe its owners or location,’ he adds.
‘For instance, a plaza seems to denote a low-end atmosphere while the ‘city’ in Ngee Ann City or VivoCity brings to mind vastness.’
CapitaLand’s mixed project also makes it unique because there is a need for separate names for two projects under one roof.
Mr Danny Yeo, executive director of property consultancy Knight Frank, says: ‘In retail, the easier a name is to pronounce and remember, the better. But with residential projects, names tend to be fancy so they sound high class.’
Developers often rope in brand consultants, advertising agencies and focus groups to help christen their projects.
The process can cost anything from $3,000 to more than $30,000 and can take up to several months.
Take UOL Group, which paid home-grown branding consultants Bonsey Group and an advertising agency more than $50,000 when developing the name of Velocity @ Novena Square.
‘Advertising agencies are in the creative industry and bring a fresh perspective to the table,’ says Ms Cher.
Industry players tell Life! good names share three traits: They stand out, are easy to pronounce and stick in the mind.
Mr Ting cites The Centrepoint as a good example: ‘The Centrepoint is easy to remember and makes you think that it’s the centre of activity.’
Mrs Jannie Tay, managing director of luxury watch retailer The Hour Glass and president of the Singapore Retailers Association, agrees: ‘It made the mall sound more important simply by adding one word.’
Formerly known as Centrepoint, the mall owned by Frasers Centrepoint Malls was renamed last December.
Ms Cher says a good name should also convey a mall’s selling points, such as brand positioning or a unique experience - what the mall can offer.
One mall that passed this test is Paragon.
Dr Ramaswami says: ‘It is a nice name that captures the high-end nature of the mall.’
Others have problems with Ngee Ann City.
‘The fact that most people refer to the building as Taka, short for department store Takashimaya in the mall, suggests that the name was never effective,’ says Mr Spencer Ball, design director of British branding consultancy Fitch.
Then there are those that draw mixed reviews.
Mr Ting says of Palais Renaissance, home to designer labels like DKNY and Valentino: ‘Unless you know French, the name won’t make sense. You wouldn’t associate it with Singapore.’
But Mrs Tay feels the name suits its high-end image. ‘Palais Renaissance caters to a small niche market so its name is well-suited,’ she says.
At the end of the day, however, the success of a mall boils down to its location, design and mix of stores, says Dr Ramaswami.
But he notes that the name is ‘part of the package and can make a mall more attractive at practically no additional cost’.
Mr Yeo of Knight Frank believes an Orchard Turn by any other name would smell just as sweet.
‘I think people will head to the mall no matter what it’s called because it’s in a prime location,’ he says.
Source: The Straits Times
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