Just like Katie Perry’s California girls, our property market is pretty hot. Or like Katie Perry, our property is hot.

But lets not digress from this thread. Park Regis hotel at New Market Street/Merchant Road near the Singapore River, which is said to have been sold for $218 million to Indonesian mining magnate Yusuf Merukh.

On a separate note, a 50 per cent stake each in the retail portion of Malacca Centre in the Raffles Place area and three shop units at Coronation Plaza have been sold to a single buyer (buyer’s details not disclosed to public at this moment) in a deal valuing the assets at about $40 million, and this deal involves a yield guarantee as well, which I find very interesting.

Another interesting deal involves Chow House, a six-storey freehold office block at Robinson Road, is believed to have been sold for slightly over $100 million. Chow House has redevelopment potential, and it is presumed that the buyers will have the intention of building up to reap greater returns.

A secretive deal involving a Singaporean buyer (who’s details are not revealed), has bought up Ibis Bencoolen. But according to Business Time’s sources, the 3-star hotel that opened last year has been sold for over $200million, and they claim that the buyers are a subsidiary of Singapore-based Grand Line International.

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Every once in a while, someone would write an article making a comparison between leasehold and freehold properties. Of course, when we are referring to leasehold, very often, it is referring to the 99 year leasehold, the 999 year which is as good as it gets, though still leasehold is taken to be equivalent to freehold in our local market context.

An article was published in the Today newspaper discussing this issue, which I feel is a over discussed issue. But since they have raised some points and so lets look at it for the purpose of pure discussion. Read the article here – http://bit.ly/clhu3F

My view is that why discuss it when objectives for own stay or investment differs, and each property is unique, each estate has different value/positive attributes, there is no apple to apple comparison, hence why compare at all? But still people like to compare to make themselves feel good that their purchase decision was right.

The writers of the article stated that:  ”We studied resale prices of freehold versus leasehold properties and found that the difference was between 10 and 15 per cent. ” This situation of the price gap narrowing has only occurred since 2009, since our latest bull run, prior to this, the price gap has been higher. With new property launches at higher prices, leasehold properties in the vicinity enjoy (on paper) value appreciation, owners wanting to sell naturally use new launch prices as a benchmark for their property as well, and they sell at marginally cheaper than new launched projects.

But I believe these studies done may not have taken into account that the comparison is going to be difficult as all properties are unique and the informed buyer of today takes this view to the fullest. Leasehold properties with very good amenities and connectivity to MRT has always maintained not only good rental yields, but consistent price value. In good times, its price appreciation will not fall behind freehold properties, in bad times, its depreciation will not be by too much, as compared to freehold properties in far flung locales.

The only point I strongly agree with the writer of the article is that:

“for leasehold properties – age is a factor. Once the tenure of a leasehold property goes below 30 years, its value declines sharply as prospective buyers will not be able to withdraw funds from their Central Provident Fund account or secure a loan for the property purchase. ”

When leasehold properties age, and as it is at the end of its life like a really old car without available spare parts, it doesn’t become and antique car, but something more suitable for the scrap heap, its intrinsic “scrap” value is quite low. But in all property investments, if you had gone in right at the beginning, you would have reaped the full benefit from the entire life of the property, even if it went for a song at the end of its life.

If you had a choice of a freehold property far away from MRT and a leasehold property walking distance to the MRT station, which would you choose if the price is similar, do share your views with us.

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The open space between International Plaza and White House (or Wallich Street), which is now a green space/park launched by URA yesterday is expected to fetch over $1 Billion.

International Plaza despite its age, is fetching about $1,400 psf  and rentals are still looking attractive at $7 to $8 psf per month. Since this new White Site is sitting squarely on top of Tanjong Pagar MRT, it is definitely a highly coveted; the 99 year leasehold site will generate nearly 1.7 million square feet maximum gross floor area (GFA), of which at least 60 per cent must be for offices and another 10 per cent for hotel use. Most market watchers expect the successful developer to put the balance 30 per cent GFA to residential use, cashing in on strong demand for inner-city apartments. Sales of apartments will help part-finance the development.

Of course even if they wish to sell the offices it will still be snapped up within days, as some smaller companies prefer the Tanjong Pagar area because of the amenities this area offers, and it lacks the “stressful” environment of Raffles Place, well the last comment is my personal opinion of the place (where I spent over 1 year there).

I would definitely be watching this space very closely.

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I wouldn’t believe it either, but its the unbelievable truth that it has happened!

Sun Hung Kai Properties Ltd, developer of the Larvotto project sold out all 92 flats in a first batch put up for sale over the weekend. Averaging at about HK$40M (S$7.1M) per unit. Reported by The Business Times, an agent that had assisted a client to purchase a unit has this to say:

‘The price is reasonable for properties of this quality,’ Eva Yeung, an agent at Centaline Property Agency Ltd who bought a HK$47 million unit on behalf of a Hong Kong-based client, said outside the project’s showroom at the International Financial Centre building in the Central business district on Saturday.

Ms Yeung said the luxury property market in Hong Kong will be supported by the lack of supply and increased demand from Chinese buyers. That may counter Hong Kong government efforts to curb a 38 per cent surge in home prices since the beginning of 2009 amid concerns that housing is becoming unaffordable.

What this means for the Singapore market?

This is how I see it is that as there is demand from Chinese buyers, they cannot find suitable investment opportunities in China or Hong Kong, they will naturally turn to Singapore. Data shows that strong sales figures are coming from China buyers in buildings located especially in the financial district. Top sellers will be properties with high investment potential and rental yields. Quality locations in the Central Business District will continue to be coveted, and this will put an upward pressure on prices and rentals.

A total of 5543 sqft of retail space at Holland Village Shopping Centre is up for grabs! Comprising of fourteen strata shop units on the second storey of hip, artsy shopping centre have been put up for sale.

The four-storey building located at 211 Holland Avenue. Has been a haven for shops like Lim Arts and caters to a widely expat audience.

The units have separate titles but are to be sold jointly. All the units are currently tenanted and the tenancy will expire in 2013.

The indicative price ranges between S$28 million and S$29 million. And this works out to about S$5,051 to S$5,231 per square foot.

With the new improvements to the neighbourhood including the new MRT station situated just a stone throw away, capital and rental appreciation is expected.

Many buy properties in expectation of making a profit when it goes for en bloc. But this may not necessarily be the case when you are dealing with a HDB en bloc. Recently a few blocks at Bukit Merah View, blk 113 and 114 have been ear-marked for Selective En Block and Redevelopment Scheme (SERs), however this have the retail shop owners in these 2 blocks unhappy with the new terms that they are offered.

It happens that the new shops that HDB have allocated are only one-third of the size of current shop space, and with only a 30 year lease term (as opposed to their current shops which still have 60 year lease term left).

Very frequently many clients that do ask about buying of HDB shops – ask about the viability of HDB shops in the long term, with limited tenure left on the shop, purchasing a HDB Shop is no safeguard against the raw end of the deal should it be ear-marked for SERs.  And in deed the Bukit Merah View is a classical case. Out of the 31 shop owners, only 7 are willing to take up units at the new premises.

Compensation ranging from S$486,000 to S$780,000 was being offered by HDB to affected shopowners, but they said it is not enough. According to HDB (quoted from their website) -

Eligible flat owners are compensated for their flats.

• The compensation is based on the prevailing market value as at the date of publication of gazette notification.
• Reasonable expenses will also be paid.

As the dateline to accept the HDB offer draws near, and with limited number of acceptance by the shop owners, HDB has extended the dateline to allow these shop owners additional time to consider the offer. However I feel that they may be at the end of the road with further options from HDB, and the clock is still ticking.

Despite the influx of new office space, office rental in Singapore are recovering slowly, as market sentiment improves. The contrary situation in Malaysia, where recovery is impeded by the influx of new supply of office space. According to DTZ’s research report, rents continue to experience downward pressure as companies remain cautious about expansion amid substantial new supply. The average prime office rent fell to RM6.02 psf in 1Q2010 from RM6.08 psf in 4Q2009. With significant levels of new supply, 2.06 million sq ft scheduled for 2010 and 14.90 million sq ft in the pipeline between 2010 and 2014, office rents will continue to face downward pressure in the next few years.

Which means that prices on quality office space in prime areas in KL are expected to remain soft, which is an excellent opportunity for investors to snap up good deals. Foreign demand and the general upbeat sentiment of the overall economic climate in Malaysia would stablize prices, and provide support for prices in the near term, as such for investors that are looking long term, may consider buying into a fundamentally soft market for office space.

Tougher rules and taxes could possibly frighten some property speculators, especially those that truly do not have the appetite for such a risky business. Truth be told, a 3 % isn’t truly going to turn away true blue property investors and those that have been investing and flipping for a long time. Any investor would tell you that if the profits that have deducted the cost of funds, any legal expenses, GST and now Stamp Duty, some of them will tell you it is worth the while when the profits are right.

Of course in such risky business, there are times when bad decisions are made, sums calculated wrongly and losses are part of the territory. Such costly mistakes do not only hurt the individuals or groups that go into such business, but the economy and society as a whole. Artificially inflating the market to achieve personal gains are what speculators do, and that is why for the general health of the real estate market and the economy as a whole the government has to step in to cool the buoyant property market, which started to move again in January this year.

The tightened rules on the mortgage loans only allowing 80% of the purchase price doesn’t have such a great impact on the speculators, but rather hitting some marginalised (and genuine) buyers. I truly disagree with this move. As it really hurts those that are not trying to artificially inflate the market, but buyers who are looking to buy for their own, especially those that are wanting to start a family. The impact won’t be that great on sales figures though. Buyers will just have to stick to buying property which they can truly afford, and not try to over-stretch themselves.

The global economy is recovering, US economic data shows improvement, and hence our Singapore government is concerned that the global economic recovery will cause an overheating of the property market, and the risky global economic factors may hurt many should the market correct itself. I seriously doubt so. Its a little far fetched, but as usual, in Singapore, we’re all Kiasu, so its better to be prepared then not to be.

We should promote Simon Cheong to “The grandmaster” of property. This savvy property developer is making a profit from selling The Village Centre again. Both times he sold it he made a good profit from the sale.

Yes you read it right. Mr Cheong’s privately-held vehicle recently sold The Village Centre at Pasir Panjang and a site next door for $23 million.  This is double the $10.8 million he paid a NatSteel associate for the assets in 2004. But prior to this, Mr Cheong’s family vehicle had sold the freehold properties to NatSteel in 1996 for $26 million.

He is not the only one to have made two rounds of money from The Village Centre and the site next door.Property consultancy group DTZ brokered the latest deal as well as the one in 2004.

In the latest transaction, Mr Cheong’s Ridge Investments has sold the properties to Hume Homes Pte Ltd, a boutique property developer controlled by Ching Chiat Kwong, Low See Ching and Tee Wee Sien.

The Village Centre, at No 3 South Buona Vista Road, is a four-storey commercial and residential building comprising shop units on the first to third levels, seven apartments on the top level and 29 basement carpark lots.The apartments are currently vacant while retail tenants include Cold Storage, Harry’s Bar and Thai restaurant Lemon Grass.  About 92 per cent of the total 23,363 sq ft net lettable area for the shop units are currently leased. The next door plot at No 7 South Buona Vista Road is currently a surface carpark with 30 lots. The properties can be redeveloped.

Under Master Plan 2008, The Village Centre plot is zoned for commercial and residential use with a 3.0 plot ratio (ratio of maximum potential gross floor area or GFA to land area). The next door plot, No 7 South Buona Vista Road, is zoned for residential use with a 1.4 plot ratio.

An estimated development charge (DC) of $7 million is payable to redevelop the two plots to their maximum potential. However, there is a major road line sitting on the two sites, which means that Hume would have to make setback provisions if it redevelops the properties. Assuming the properties are redeveloped to their maximum Master Plan 2008 potential, the $23 million purchase price reflects a unit land price of $351 per square foot of potential GFA inclusive of the $7 million DC.

Fragrance hotel – a chain of boutique hotels all across Singapore put in a tender for a hotel site in Short Street at a whopping $15.5 million. The 1,164.5 square metres with a 99 year tenure site was awarded to Fragrance Assets Pte Ltd by URA on Tuesday. It was not without a fight, the site was well sought after by 14 others – Regal Land, Centurion Properties and Sim Lian Group. Take a look at the details of the tender (from the URA Website).