The gap between prices fetched by new and resale homes in the prime districts is now at a record high, an analysis of official data shows.
A preliminary analysis of caveats lodged in the third quarter of 2007 by Jones Lang LaSalle (JLL) shows that for new homes there was a record premium of over 60 per cent from July to September this year.
Since 2000, the average premium has been between 20 and 42 per cent, JLL said.
But strong demand for new luxury projects in the third quarter - such as for Scotts Square, Cliveden at Grange, Helios Residences and The Lumos - means that the price gap between new apartments and homes in the resale market has widened rapidly over the past year, said Chua Yang Liang, JLL’s head of research for South-east Asia.
In addition, prices of new homes could be climbing faster as buyers can use the deferred payment scheme for new projects, but not for resale units, said Knight Frank’s director of research and consultancy Nicholas Mak.
Resale transactions take into account sales of homes in completed developments, while sales of new units are in projects that have been launched, but are yet to be built.
However, JLL added that gap is likely to narrow as prices of resale homes will look more attractive.
‘Buyers will find it increasingly less attractive to purchase new developments when perfectly habitable resale dwellings at much more affordable price range are readily available,’ Dr Chua said.
The preliminary average selling price for new sales - based on caveats lodged in the prime districts - is estimated to be around $2,500 per square foot (psf) in the third quarter, JLL said.
In comparison, amidst the continuous strong interest in new sales, prices in the resale market rose to close at an average of $1,220 psf for the same three months, albeit during a traditionally seasonal weaker period.
This puts the price gap at around 105 per cent, but JLL’s Dr Chua says that once more caveats are lodged for third quarter transactions, the gap will come to ‘more than 60 per cent’.
In the short term, the high premium gap seen in the third quarter is unlikely to be sustained, experts said.
JLL, for one, estimates that the price gap will stabilise to between 32 per cent and 38 per cent over the next three to five years.
But with the gap narrowing, the collective sales market can be expected to slow down, JLL said.
‘The attractiveness and success of en bloc transactions depends largely on this premium gap. The wider the gap, the more attractive is the market for collective sales,’ the property firm said.
Dr Chua reckons that the collective sales market is likely to slow down in the medium term, given that growth in new sales prices are likely to decline over the same period.
As the premium gap narrows, en bloc activities should slow down as developers find it increasingly less attractive to undertake such redevelopments, especially in light of diminishing returns and impending changes to the Strata Titles Act.
Source : Business Times - 5 Oct 2007
, an analysis of official data shows.
A preliminary analysis of caveats lodged in the third quarter of 2007 by Jones Lang LaSalle (JLL) shows that for new homes there was a record premium of over 60 per cent from July to September this year.
Since 2000, the average premium has been between 20 and 42 per cent, JLL said.
But strong demand for new luxury projects in the third quarter - such as for Scotts Square, Cliveden at Grange, Helios Residences and The Lumos - means that the price gap between new apartments and homes in the resale market has widened rapidly over the past year, said Chua Yang Liang, JLL’s head of research for South-east Asia.
In addition, prices of new homes could be climbing faster as buyers can use the deferred payment scheme for new projects, but not for resale units, said Knight Frank’s director of research and consultancy Nicholas Mak.
Resale transactions take into account sales of homes in completed developments, while sales of new units are in projects that have been launched, but are yet to be built.
However, JLL added that gap is likely to narrow as prices of resale homes will look more attractive.
‘Buyers will find it increasingly less attractive to purchase new developments when perfectly habitable resale dwellings at much more affordable price range are readily available,’ Dr Chua said.
The preliminary average selling price for new sales - based on caveats lodged in the prime districts - is estimated to be around $2,500 per square foot (psf) in the third quarter, JLL said.
In comparison, amidst the continuous strong interest in new sales, prices in the resale market rose to close at an average of $1,220 psf for the same three months, albeit during a traditionally seasonal weaker period.
This puts the price gap at around 105 per cent, but JLL’s Dr Chua says that once more caveats are lodged for third quarter transactions, the gap will come to ‘more than 60 per cent’.
In the short term, the high premium gap seen in the third quarter is unlikely to be sustained, experts said.
JLL, for one, estimates that the price gap will stabilise to between 32 per cent and 38 per cent over the next three to five years.
But with the gap narrowing, the collective sales market can be expected to slow down, JLL said.
‘The attractiveness and success of en bloc transactions depends largely on this premium gap. The wider the gap, the more attractive is the market for collective sales,’ the property firm said.
Dr Chua reckons that the collective sales market is likely to slow down in the medium term, given that growth in new sales prices are likely to decline over the same period.
As the premium gap narrows, en bloc activities should slow down as developers find it increasingly less attractive to undertake such redevelopments, especially in light of diminishing returns and impending changes to the Strata Titles Act.
Source : Business Times - 5 Oct 2007
Saturday, October 6, 2007
Hertford Mansion, is located at Hertford Road/Bristol Road, near Farrer Park, and the indicative price for the 11,527-square-foot plot is $12 million
HOME owners are going ahead with collective sales, with Colliers International marketing two new freehold sites.
One site, Hertford Mansion, is located at Hertford Road/Bristol Road, near Farrer Park, and the indicative price for the 11,527-square-foot plot is $12 million or $744 per sq foot per plot ratio (psf ppr).
The other site, Holland Hill Lodge, is expected to fetch $16 million. This works out to $1,108 psf ppr for the 9,033-sq-ft site.
Home owners’ price expectations may have been affected by the resent US sub-prime mortgage crisis as well as new requirements for collective sales. Colliers executive director (investment sale) Ho Eng Joo said: ‘Sellers have to be more realistic in the event that the en bloc sales slow down. It’s always a two-way traffic.
‘Every owner would, of course, like to sell their property at a price as high as possible. But, they also need to take into consideration whether developers are willing to pay the price.
‘Developers will be watching very closely the launches of new projects in order to price their costs of acquisition.’
With the process of organising an en bloc sale likely to be slower than before, Mr Ho expects the buying interest of developers could turn towards the city fringe and/or suburban areas where prices are lagging behind the high-end market.
The break-even cost for Hertford Mansion is about $1,100-$1,200 psf.
Mr Ho believes that given the flat contour and the regular shape of this site, the successful bidder could redevelop it into a boutique residential development with a five-storey block accommodating 20 units of 900 sq ft each.
The break-even price for Holland Hill Lodge is approximately $1,500-$1,600 psf. Mr Ho said: ‘Given that all the owners have already consented to proceed with the sale, there is no need for approval from the Strata Titles Board. As such, the legal process of transferring the ownership can be expected to complete within three months.’
There is no development charge payable for either site.
Source : Business Times - 4 Oct 2007
One site, Hertford Mansion, is located at Hertford Road/Bristol Road, near Farrer Park, and the indicative price for the 11,527-square-foot plot is $12 million or $744 per sq foot per plot ratio (psf ppr).
The other site, Holland Hill Lodge, is expected to fetch $16 million. This works out to $1,108 psf ppr for the 9,033-sq-ft site.
Home owners’ price expectations may have been affected by the resent US sub-prime mortgage crisis as well as new requirements for collective sales. Colliers executive director (investment sale) Ho Eng Joo said: ‘Sellers have to be more realistic in the event that the en bloc sales slow down. It’s always a two-way traffic.
‘Every owner would, of course, like to sell their property at a price as high as possible. But, they also need to take into consideration whether developers are willing to pay the price.
‘Developers will be watching very closely the launches of new projects in order to price their costs of acquisition.’
With the process of organising an en bloc sale likely to be slower than before, Mr Ho expects the buying interest of developers could turn towards the city fringe and/or suburban areas where prices are lagging behind the high-end market.
The break-even cost for Hertford Mansion is about $1,100-$1,200 psf.
Mr Ho believes that given the flat contour and the regular shape of this site, the successful bidder could redevelop it into a boutique residential development with a five-storey block accommodating 20 units of 900 sq ft each.
The break-even price for Holland Hill Lodge is approximately $1,500-$1,600 psf. Mr Ho said: ‘Given that all the owners have already consented to proceed with the sale, there is no need for approval from the Strata Titles Board. As such, the legal process of transferring the ownership can be expected to complete within three months.’
There is no development charge payable for either site.
Source : Business Times - 4 Oct 2007
BANYAN Tree, a leading manager and developer of premium resorts, hotels, spas and galleries, is on an aggressive expansion push
BANYAN Tree, a leading manager and developer of premium resorts, hotels, spas and galleries, is on an aggressive expansion push to more than double its global portfolio by 2010.
Banyan Tree executive chairman Ho Kwon Ping said it is moving into new markets in Latin America, the Caribbean, the Mediterranean and the Middle East, in addition to stepping up its presence in South-east Asia, the Indian Ocean and North-east Asia (China and Korea).
The group’s investments will involve new projects as well as organic growth as it continues to improve and add capacity to existing properties, he said in an interview on the sidelines of celebrations to mark its 20th year in Phuket. On Phuket island, where the flagship Banyan Tree resort is located, plans are afoot for a new project adjacent to the existing 600-acre Laguna Phuket which houses six properties that are built on land which has been rehabilitated from a polluted abandoned tin mine.
Banyan Tree subsidiary, Laguna Resorts and Hotels, has just concluded a joint-venture agreement with a prominent local Phuket businessman Kanit Yongsakul to develop the 7 million sq ft plot for housing, retail and commercial uses (including office space), plus a hotel. To be called Laguna Lake, the project is expected to reach the peak of development in three to four years.
The potential revenue contributions from this development could be S$400 million to be realised over a medium-term period, the company said.The residential portion of the development will offer upscale condominium units, bungalows and townhouses.
Mr Ho also revealed that within Laguna Phuket, the group plans to add a seventh hotel. This one will be under its Angsana brand. Room rates will be the second highest after the flagship Banyan Tree Phuket.Construction of the 150-room property will start next year and is scheduled to be completed in 2009. It will cost 1.5-2 billion baht (S$70-93.4 million).
The group’s first hotel to open in Laguna Phuket in 1987 was the Dusit Laguna. This was followed by the other five properties, Laguna Beach Resort, Sheraton Grande Laguna Phuket and The Allamanda (all suites), Banyan Tree Phuket and the Laguna Holiday Club (time-share units).
Laguna Phuket has become the reference point for the group’s projects elsewhere, such as Laguna Vietnam whose construction will start early next year near Hue in central Vietnam. Mr Ho hopes this project will replicate the success of Laguna Phuket.
On Banyan Tree’s global expansion plans, Mr Ho said: ‘We want to have strong growth in the next one to three years. Given the strong pipeline of projects that we have - over 40 new hotels (compared with our current existing portfolio of 22) and at least 55 spa projects, we are confident of our growth plan.
‘The key drivers will come from three core segments - hotel investment income, fee-based income (such as hotel, spa and design management fees) and property sales. Based on existing signed and sealed contracts that we have, we would have about 60 hotels and resorts by 2010. This is bearing in mind that we will continue to work on increasing this figure.’
Banyan Tree adopts a practical approach in its quest to spread its roots. Its strategy is to further expand into low-cost locations close to its key customer markets.
Mr Ho elaborated: ‘In some of these so-called ‘low-cost’ regions, such as China and Mexico (Latin America), we have managed to leverage on the growth in the tourism sectors there to accelerate our growth there. These regions account for over 20 existing projects in development and continue to present more opportunities for growth.’
Mr Ho is a firm believer in nurturing a brand instead of relying on cost competitiveness. He said: ‘One prevalent business model in Asia is to use low cost labour - with many companies manufacturing for other people, as opposed to developing their own brand. My view is that this is not a sustainable business model because someday someone cheaper will come along.
‘The key to success is to invest in a brand and build it - like what we have done with Banyan Tree. We need to compete on brand, not cost competitiveness, which takes long-term commitment and mindset, and to be close to the market,’ he said.
‘Banyan Tree is all about creating unforgettable, deeply personal and cherished memories. It is about the romance of travel and connecting people with a ’sense of place’ through the design and architecture of our resorts, that promotes the uniqueness of indigenous cultures of the place. As we have our own full-time in-house design capabilities, we are therefore able to graft the ‘Banyan Tree’ experience onto our real estate offerings from the ground up.’
‘Banyan Tree’s business model is to be in exotic destinations, and places like China and Latin America offer a plethora of such destinations. One of the reasons for Banyan Tree’s success is that we have stayed in our niche. It’s like within this ’sandbox’, as long as we are the King of the hill, we could be No 1.’
He added: ‘In our space, going global is not about having a few hundred hotels and resorts, but a necklace of jewels that span the globe with a representation in every key market. It is not about being everywhere, but being where we need to be to remain among the best of the best.’
Source : Business Times - 4 Oct 2007
Banyan Tree executive chairman Ho Kwon Ping said it is moving into new markets in Latin America, the Caribbean, the Mediterranean and the Middle East, in addition to stepping up its presence in South-east Asia, the Indian Ocean and North-east Asia (China and Korea).
The group’s investments will involve new projects as well as organic growth as it continues to improve and add capacity to existing properties, he said in an interview on the sidelines of celebrations to mark its 20th year in Phuket. On Phuket island, where the flagship Banyan Tree resort is located, plans are afoot for a new project adjacent to the existing 600-acre Laguna Phuket which houses six properties that are built on land which has been rehabilitated from a polluted abandoned tin mine.
Banyan Tree subsidiary, Laguna Resorts and Hotels, has just concluded a joint-venture agreement with a prominent local Phuket businessman Kanit Yongsakul to develop the 7 million sq ft plot for housing, retail and commercial uses (including office space), plus a hotel. To be called Laguna Lake, the project is expected to reach the peak of development in three to four years.
The potential revenue contributions from this development could be S$400 million to be realised over a medium-term period, the company said.The residential portion of the development will offer upscale condominium units, bungalows and townhouses.
Mr Ho also revealed that within Laguna Phuket, the group plans to add a seventh hotel. This one will be under its Angsana brand. Room rates will be the second highest after the flagship Banyan Tree Phuket.Construction of the 150-room property will start next year and is scheduled to be completed in 2009. It will cost 1.5-2 billion baht (S$70-93.4 million).
The group’s first hotel to open in Laguna Phuket in 1987 was the Dusit Laguna. This was followed by the other five properties, Laguna Beach Resort, Sheraton Grande Laguna Phuket and The Allamanda (all suites), Banyan Tree Phuket and the Laguna Holiday Club (time-share units).
Laguna Phuket has become the reference point for the group’s projects elsewhere, such as Laguna Vietnam whose construction will start early next year near Hue in central Vietnam. Mr Ho hopes this project will replicate the success of Laguna Phuket.
On Banyan Tree’s global expansion plans, Mr Ho said: ‘We want to have strong growth in the next one to three years. Given the strong pipeline of projects that we have - over 40 new hotels (compared with our current existing portfolio of 22) and at least 55 spa projects, we are confident of our growth plan.
‘The key drivers will come from three core segments - hotel investment income, fee-based income (such as hotel, spa and design management fees) and property sales. Based on existing signed and sealed contracts that we have, we would have about 60 hotels and resorts by 2010. This is bearing in mind that we will continue to work on increasing this figure.’
Banyan Tree adopts a practical approach in its quest to spread its roots. Its strategy is to further expand into low-cost locations close to its key customer markets.
Mr Ho elaborated: ‘In some of these so-called ‘low-cost’ regions, such as China and Mexico (Latin America), we have managed to leverage on the growth in the tourism sectors there to accelerate our growth there. These regions account for over 20 existing projects in development and continue to present more opportunities for growth.’
Mr Ho is a firm believer in nurturing a brand instead of relying on cost competitiveness. He said: ‘One prevalent business model in Asia is to use low cost labour - with many companies manufacturing for other people, as opposed to developing their own brand. My view is that this is not a sustainable business model because someday someone cheaper will come along.
‘The key to success is to invest in a brand and build it - like what we have done with Banyan Tree. We need to compete on brand, not cost competitiveness, which takes long-term commitment and mindset, and to be close to the market,’ he said.
‘Banyan Tree is all about creating unforgettable, deeply personal and cherished memories. It is about the romance of travel and connecting people with a ’sense of place’ through the design and architecture of our resorts, that promotes the uniqueness of indigenous cultures of the place. As we have our own full-time in-house design capabilities, we are therefore able to graft the ‘Banyan Tree’ experience onto our real estate offerings from the ground up.’
‘Banyan Tree’s business model is to be in exotic destinations, and places like China and Latin America offer a plethora of such destinations. One of the reasons for Banyan Tree’s success is that we have stayed in our niche. It’s like within this ’sandbox’, as long as we are the King of the hill, we could be No 1.’
He added: ‘In our space, going global is not about having a few hundred hotels and resorts, but a necklace of jewels that span the globe with a representation in every key market. It is not about being everywhere, but being where we need to be to remain among the best of the best.’
Source : Business Times - 4 Oct 2007
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