In an uncharacteristic move from the government, the second half land sales programme features a number of sites with a high gross worth yield. The government releases two major lots of land sales opportunities for the private sector and for the last few years the first half (of the year) list comprises of tenders more attractive to private developers. However, for 2011 the second half list features a low-density private housing site in Jervois Road in District 10 next to the Chatsworth Park Good Class Bungalow Area as well as a 'white site' at Marina View, behind the UIC Building that will have a minimum office quantum.
(The commercial sector in Singapore seems more promising.)
Providing fresher impetus into the bidding proceedings for property developers, the second half land sales list has some extremely promising financial estimations with the Marina View site being valued between S$1.3-1.5 billion. Although the site is currently on the reserve list there is strong anticipation from market experts that the bidders will trigger its release for purchase and that it will go quickly. Industry analysts are projecting a potential per sq ft (psf) price of $1,200 – $1,400 per plot ratio (ppr), for what would undoubtedly be a coup for the successful buyer. The kicker for this site is explained by Craig Ward, Director of Capital Markets for Savills in Singapore, who explains the building may go on to trade at around S$2,700-2,800 PSF. For the office property market a price psf of this magnitude has not been seen since a peak in 2007 of $1,400 psf ppr for what is now the Asia Square Tower 1.
One of the key aspects of this particular development is what it insinuates for the future of office real estate. Jones Lang LaSalle’s Head of Markets, Chris Archibold states the potential gains Singapore could experience from such a sale, "a lot of jobs in the financial sector are coming to Hong Kong and Singapore. But Hong Kong has no more supply pipeline in its major prime CBD office districts of Central and Admiralty. So financial institutions' ability to expand in Hong Kong will be constrained and Singapore stands to benefit from spill over demand from these institutions by building a steady office pipeline".
Whilst making effective use of the expanding office space in the CBD, measures should seemingly be taken to implement the foundations for sustainable office real estate growth in the future. The Business Times reports how the Ministry of Development have moved a commercial site in Payar Lebar from the original reserve list to the second half 2011 list in order to encourage quicker development of commercial space outside the CBD. All in all the commercial property prospects are looking bright for the immediate future of Singapore’s rapidly progressive business environment.
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Related Categories: Market Reviews & Market Outlooks, Non-Residential
Tags: Asia Square, CBD, Central Business District, Chatsworth Park, commercial property, commercial property trends in Singapore, Good Class Bungalow, Jervois Road, Land Sales Programme, Marina, Marina View, office space, property development, Real Estate
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