THE WEEK OF FEBRUARY 22, 2016 716 A PULLOUT WITH MCI (P) 046/03/2015 PPS 1519/09/2012 (022805) Visit TheEdgeProperty.com to find properties, research market trends and read the latest news MAKE BETTER DECISIONS Post-election Myanmar Growth drivers for the office sector PG4 Deal watch Freehold apartment near Holland Village selling at $1,412 psf PG5 Home design Grab attention with a dash of red PG 6 SAMUEL ISAAC CHUA/THE EDGE SINGAPORE City View s boon Hefty gains for DBSS sellers BY LIN ZHIQIN & ESTHER HOON Based on HDB data, there have been three resale transactions at City View @ Boon Keng a Design, Build and Sell Scheme (DBSS) development that recently fulfilled its Minimum Occupation Period (MOP). The profit margin for these resale units is estimated to range from 35% to 59%. Judging from the 73 units at City View @ Boon Keng listed for sale on TheEdgeProperty.com, many owners are looking to cash in on this boon. A three-room flat on the fourth to sixth storeys of City View @ Boon Keng was sold at $590,000 this month. Separately, a four-room unit located on the 37th to 39th floors changed hands for $880,000 this month, while a fiveroom unit on the 22nd to 24th floors was sold for $855,000 in January. City View @ Boon Keng was launched in 2008 at prices ranging from $349,000 to $394,000 for three-room flats; $523,000 to $597,000 for four-room flats; and $536,000 to $727,000 for five-room flats. Using the midpoint of the price ranges as reference, the resold three-room flat fetched a $218,500 profit, representing a profit margin of 59%. The fourroom flat fetched $320,000, or 57% in profits, while the five-room unit yielded profits of $223,500, or 35% (see Table 1 on next page). These resale prices also represent a $194,000, or 49%, premium over the average resale price of a three-room flat within 500m of City View @ Boon Keng in 2015 and so far this year. The premium is $313,000, or 55%, over an average four-room resale flat; and $74,550, or 10%, over an average five-room resale flat in the vicinity. The price premium notwithstanding, buyers seemed eager to snap up the DBSS units as soon as they fulfilled their MOP of five years last month. According to a recent news report, 10 units were sold before their MOP ended, under special approval by HDB. The DBSS was first introduced by then Minister for National Development Mah Bow Tan in 2005 to involve developers in the building of public housing and to offer buyers with higher disposable incomes a wider variety of housing. Because of their better design and finishes, DBSS projects usually command a higher premium than built-to-order and resale HDB flats. The sale of DBSS sites has been discontinued since 2011, following a public outcry over the hefty price tags of newer projects. Thirteen DBSS projects have been launched so far, of which only The Premiere @ Tampines and City View @ Boon Keng have fulfilled their five-year MOP. In 2008, the average resale price of a threeroom flat located within 500m of City View @ Boon Keng was $284,000. Resale prices averaged $455,000 for four-room flats and $594,000 for five-room flats. In 2015 and so far this year, resale prices averaged $396,000 for three-room CONTINUES NEXT PAGE
EP2 THEEDGE SINGAPORE FEBRUARY 22, 2016 THEEDGE PROPERTY COVER STORY EDITORIAL EDITOR Ben Paul THE EDGE PROPERTY HEAD OF RESEARCH Feily Sofi an SENIOR ANALYST Esther Hoon ANALYSTS Lin Zhiqin, Tan Chee Yuen COPY-EDITING DESK Elaine Lim, Evelyn Tung, Chew Ru Ju, Tan Gim Ean, Choy Wai Fong PHOTO EDITOR Samuel Isaac Chua PHOTOJOURNALIST Bryan Tay EDITORIAL COORDINATOR Rahayu Mohamad DESIGN DESK Tan Siew Ching, Christine Ong, Monica Lim, Nik Edra, Mohd Yusry, Henry Lee ADVERTISING + MARKETING THE EDGE SINGAPORE GROUP SALES MANAGER Cecilia Kay SENIOR MANAGER Windy Tan MANAGERS Mabel Wong, Danna Pusta, Elaine Tan The rental yield for the HDB cluster on Towner Road is 4.8% to 6.2% SAMUEL ISAAC CHUA/THE EDGE SINGAPORE THE EDGE PROPERTY GROUP SALES MANAGER Cowie Tan SENIOR MANAGER Diana Lim ACCOUNT MANAGER Ken Tan EVENTS MARKETING SENIOR MANAGER Sivam Kumar DIGITAL MARKETING ASSISTANT Tim Jacobs COORDINATOR Nor Aisah Bte Asmain CIRCULATION MARKETING MANAGER Coleman Lim OPERATIONS MANAGER Cesar Banzuela De Jesus, Jr EXECUTIVES Keith Lee, Malliga Muthusamy, Sandrine Gerber CORPORATE CHIEF EXECUTIVE OFFICER Ben Paul DIRECTOR Anne Tong CORPORATE AFFAIRS DIRECTOR Ng Say Guan PUBLISHER The Edge Publishing Pte Ltd 150 Cecil Street #08-01 Singapore 069543 Tel: (65) 6232 8622 Fax: (65) 6232 8620 PRINTER KHL Printing Co Pte Ltd 57 Loyang Drive Singapore 508968 Tel: (65) 6543 2222 Fax: (65) 6545 3333 We welcome your comments and criticism: propertyeditor.sg@ bizedge.com Pseudonyms are allowed but please state your full name, address and contact number for us to verify. Seventy-three units on sale at City View @ Boon Keng FROM PREVIOUS PAGE flats, $567,000 for four-room flats and $780,000 for five-room flats. Buyers who bought in 2008 and resold in 2015 or this year could have made profits of $112,000, or 39%, for three-room flats; $116,000, or 25%, for four-room flats; and $186,000, or 31%, for fiveroom flats. Against City View @ Boon Keng, these non-dbss flats have a lower profit margin of 20 percentage points for three-room flats, 32pps for four-room flats and 4pps for five-room flats. The larger difference in profit margin for four-room flat types is likely owing to the large height premium for the flat on the 37th to 39th floors at City View @ Boon Keng. The DBSS units are able to command a premium as well as higher profit margins over resale HDB units probably because they are newer. Still, to enjoy a higher profit margin, a buyer looking to sell upon fulfilment of MOP would have been better off buying a unit at City View @ Boon Keng in 2008 instead of a nearby HDB flat on the resale market. City View @ Boon Keng is located a stone s throw away from the Boon Keng MRT station, but there are two HDB clusters located directly across the road from the station. The rental yield for Bendemeer Ville, the cluster located on Bendemeer Road, ranges from 5.9% to 6.5%. Rental yield ranges between 4.8% and 6.2% for the HDB cluster located on Towner Road. In general, the rental yield for non-dbss developments located within 500m of City View @ Boon Keng ranges between Table 2 Lacklustre rental yield of City View @ Boon Keng versus properties within a 500m radius PROJECT NAME COMPLETED AVERAGE PRICE SALES AVERAGE MONTHLY RENTAL RENTAL YIELD ($ PSM) VOLUME RENT ($ PSM) VOLUME (%) 8 Boon Keng Road* 2011 7,847 1 32.10 1 4.9 5 Boon Keng Road 1996 6,146 2 24.00 4 4.7 22 Boon Keng Road 1974 5,710 2 28.40 4 6.0 26 Bendemeer Road 1972 5,656 2 30.80 4 6.5 28 Bendemeer Road 1972 5,996 2 29.70 4 5.9 34 Whampoa West 1972 5,500 3 30.90 12 6.8 107 Towner Road 1983 5,335 3 27.50 4 6.2 108C McNair Road 2005 7,599 1 30.10 4 4.8 103 Towner Road 1983 5,780 2 23.00 1 4.8 105 Towner Road 1984 5,834 1 30.20 6 6.2 Notes: Based on resale and rental contracts within past six months; excludes projects without resale and rental contracts *City View @ Boon Keng 4.7% and 6.8%. There has been only one rental contract at City View @ Boon Keng (8 Boon Keng Road), reflecting a rental yield of 4.9%, which is at the lower end of the rental yield range for HDB flats in the vicinity (see Table 2). Rental yield for City View @ Boon Keng and surrounding HDB developments was generated using the Location Scan tool on TheEdgeProperty. com. The tool allows users to obtain prices, rents and yield of properties within a 100m-to-3km radius of a selected location or landmark. Despite the more affordable prices and higher rental yield of non-dbss flats, many DBSS projects still possess favourable attributes such as good locations, better designs and finishes, and a younger age. Their popularity with buyers is evidenced by the 107 transactions at The Premiere @ Tampines so far. Owners of DBSS flats appear eager to capitalise on these factors, with 28 units at The Premiere @ Tampines and 73 units at City View @ Boon Keng listed for sale on TheEdgeProperty.com. In comparison, the next highest number of units listed for sale at other HDB developments stands at just 16 in the vicinity of The Premiere @ Tampines and three around City View @ Boon Keng. E Table 1 Higher profit margin for DBSS flats CITY VIEW @ BOON KENG DBSS RESALE HDB WITHIN 500M FLAT TYPE 2008 LAUNCH 2016 RESALE ESTIMATED ESTIMATED AVERAGE 2008 AVERAGE 2015/16 AVERAGE AVERAGE PROFIT PRICE ($) PRICE ($) PROFIT ($) PROFIT MARGIN (%) RESALE PRICE ($) RESALE PRICE ($) PROFIT ($) MARGIN (%) Three-room 349,000 to 394,000 590,000 218,500 59 284,244 395,795 112,150 39 Four-room 523,000 to 597,000 880,000 320,000 57 454,923 567,471 116,139 25 Five-room 536,000 to 727,000 855,000 223,500 35 594,071 780,450 186,379 31 TABLES: HDB, THE EDGE PROPERTY Notes: Profit for City View @ Boon Keng estimated based on the midpoint of the launch price range Computation of profit does not account for any housing grants
THEEDGE SINGAPORE FEBRUARY 22, 2016 EP3
EP4 THEEDGE SINGAPORE FEBRUARY 22, 2016 THEEDGE PROPERTY PROPERTY TAKE If you wish to contribute columns, please write in to propertyeditor.sg@bizedge.com Positive catalysts for Yangon s office sector Myanmar s dramatic emergence from decades of military dictatorship to a democratically elected government is almost complete. The largely peaceful political transition has surprised many. More encouragingly, since the landslide election win for the National League for Democracy, the existing government and military leaders have committed to ensuring a peaceful and orderly transition, while the NLD has taken a conciliatory stance to bring the country forward. A continuation of this collaboration could see a boost in investor confidence to enter the market. Even in its last breath, the outgoing government managed to push through several legislations. In December 2015, the Stock Exchange of Myanmar commenced operations. Last month, the Condominium Act was passed after years of deliberations. On Jan 15, the Directorate of Investment and Company Administration announced that the Myanmar Investment Commission had approved nine foreign investments, three local investments and five joint-venture investments, including two housing projects, one private hospital, 10 garment factories, one heavy machinery rental service and two wooden factories in January. On Feb 11, it was reported that Australian PanAust Group had been granted exploration licences for three mining blocks. PanAust is the first foreign firm to receive the licence after a new mining law was passed last December. These changes in regulations have put in place positive catalysts for foreign investments. With many foreign investors still waiting on the sidelines, we expect more investments to materialise as the new government begins to take shape in the coming months. Based on an International Monetary Fund report in October 2015, Myanmar s economy registered impressive growth of an average of 8.5% per annum for the past three years, making it the fastest-growing economy in Southeast Asia. This trend is expected to persist. Office rent corrected but recovery expected Based on our office rental index, computed based on a weighted basket of international-quality office spaces, Yangon office rent registered six consecutive quarters of decline as at end-2015. The office rent in 4Q2015 was 11% lower than the previous quarter and 64% lower than its peak. This was largely due to the completion of two office towers in Myanmar Centre in mid-2015. The current rent is at US$55 ($77) to US$65 per sq m a month. We expect the office rent in Yangon to inch upwards, as the demand for office space coming from various sources would help to fill the new supply coming into the market. Office space demand has slowed but could pick up from 2016 Based on our survey of modern highrise office buildings, the overall office Myanmar Centre is gaining good traction among potential tenants, as it is the first large-scale integrated development to reach the market occupancy rate eased to 64% in 4Q2015. This was mainly due to the completion of Myanmar Centre late in the year. The centre is gaining good traction among potential tenants, as it is the first large-scale integrated development to reach the market. The older office buildings, such as Sakura Tower and Centrepoint Tower, are feeling the threat of the new entrants, losing tenants to them. Meanwhile, good-quality office buildings, such as the Union Business Centre and Union Financial Centre, were well taken up, with nearly 100% occupancy as at end-2015. We expect the overall occupancy to pick up from 2016, as the older office stock might be redeveloped or refurbished. Demand for quality office space could also come from companies that have been operating in stand-alone houses and non-grade A office premises, switching to larger and more prestigious, integrated developments. Lastly, foreign businesses are likely to increase their investments in the country, as the new government takes shape and possibly opens up more economic sectors to foreign participation. Increase in new company formation suggests demand could increase The potential increase in demand can be observed from the increase in the total number of registered companies. As at March 2015, the number of registered companies was 58,789. This suggests 8,309 new companies were formed within the year, a y-o-y increase of 16%. On average, 7,096 new companies were formed annually in the last four years. Based on the assumption that an average of 7,000 new companies are formed each year, 20% of the new companies require office space in Yangon, each company employs five people and each person occupies 80 sq ft of gross office space, this will translate into an annual demand of 560,000 sq ft of office space. This BY TAN KOK KEONG means Yangon would require four new Sakura Towers every year to meet the demand for office space from these new companies. Limited supply in the near term There are several office building projects in the pipeline, namely Naing Group Tower II by Naing Group, Sule Square by Shangri-La Group, Times City by Crown Advance Construction and Crystal Tower @ Junction City by Shwe Taung Group. Some of these are expected to be completed in the next two to three years, which might provide short-term corrections in market rents and occupancy. Flight to quality office space For the Yangon office sector, we expect that the relative lack of quality office stock could result in rental at quality spaces being sustained at current levels. Over the short term, the lumpy nature of large, new completions will result in moderate volatility in rents. However, we expect yield compression to begin as the market starts to mature and more investors enter the market. This should provide earlier investors with sufficient upside that commensurates with the risk. E Tan Kok Keong is CEO of real estate consultancy REMS Advisors and co-founder of Fund places, a real estate-dedicated crowdfunding platform. He can be reached at kk.tan@ rems.asia. Figure 1 Myanmar has the highest GDP growth in Southeast Asia % 9 Average GDP growth in the past three years Average GDP growth in 8 the next three years 7 6 5 4 3 2 1 0 Thailand Indonesia Malaysia Philippines Vietnam Cambodia Myanmar Note: The past three years refer to 2013, 2014 and 2015, while the next three years refer to 2016, 2017 and 2018 Figure 2 The number of new companies formed 10000 8000 6000 4000 2000 0 Figure 3 Office Rental Index Index (Base = 3Q2012) 140 130 120 110 100 90 80 70 60 2006 to 2007 3Q2012 4Q2012 2007 to 2008 Note: Year ends in March 1Q2013 Average of 7,096 companies formed in the past four years 2008 to 2009 2Q2013 3Q2013 2009 to 2010 4Q2013 2010 to 2011 1Q2014 2Q2014 2011 to 2012 3Q2014 2012 to 2013 4Q2014 1Q2015 2013 to 2014 2Q2015 2014 to 2015 3Q2015 4Q2015 REMS ADVISORS DICA, REMS ADVISORS IMF, REMS ADVISORS BLOOMBERG
THEEDGE SINGAPORE FEBRUARY 22, 2016 EP5 THEEDGE PROPERTY DEAL WATCH Freehold apartment near Holland Village selling at $1,412 psf SAMUEL ISAAC CHUA/THE EDGE SINGAPORE BY TAN CHEE YUEN A 1,948 sq ft unit at Holland Court is being put up for sale at $2.75 million, or $1,412 psf, on TheEdge- Property.com. The unit is understood to be tenanted until January 2018. The latest transaction in the project was in March 2014 when a 1,948 sq ft unit on the third floor sold for $3 million, or $1,540 psf. Another 1,948 sq ft unit, also on the third floor, fetched $1,540 psf in December 2013. Holland Court is a freehold apartment project comprising just 22 units. It is located about 200m from the Holland Village MRT station and Holland Village, a lifestyle destination known for its F&B outlets and bars. Schools within 2km of the property include Fairfield Methodist School (Primary), Henry Park Primary School and Nanyang Primary School. There were two rental contracts in 2015. A three-bedroom unit of between 1,500 and 1,600 sq ft was rented out for $4,500, or $2.90 psf, a month in January. In November, another three-bedroom unit of between 1,200 and 1,300 sq ft was rented out for $3,500, or $2.80 psf, a month. E Scan the QR code for value deals at Holland Court and nearby projects As TheEdgeProperty.com is not party to the contract between the client and agent, it is unable to verify information provided by the agent Holland Court is located about 200m from the Holland Village MRT station and Holland Village Table 1 Historical transactions for 1,948 sq ft units at Holland Court CONTRACT DATE PRICE ($) PRICE PSF ($) March 21, 2014 3,000,000 1,540 Dec 17, 2013 3,000,000 1,540 May 28, 2012 2,450,000 1,258 April 16, 2012 2,900,000 1,488 March 21, 2012 2,630,000 1,350 Table 2 Historical rental contracts for threebedroom units at Holland Court LEASE DATE AREA ( SQ FT) MONTHLY RENT $ $ psf November 2015 1,200 to 1,300 3,500 2.80 January 2015 1,500 to 1,600 4,500 2.90 November 2014 1,200 to 1,300 3,700 3.00 November 2014 1,200 to 1,300 4,000 3.20 April 2014 1,700 to 1,800 4,800 2.70 March 2014 1,700 to 1,800 4,500 2.60 TABLES: URA, THE EDGE PROPERTY
EP6 THEEDGE SINGAPORE FEBRUARY 22, 2016 THEEDGE PROPERTY DESIGN Grab attention with a dash of red BY ANGELA LIM Red is a stimulant and the richest and hottest of the warm colours. It represents power and importance, hence the red power tie for business people and the red carpet for celebrities and very important people. In many cultures, red also denotes purity, joy and celebration. Red is the colour of luck, happiness and prosperity in China and may be used to attract good luck. It is often the colour worn by brides in the East. In the West, red is the symbolic colour of love, romance, courage and passion. PICTURES COURTESY OF SUMISURA In feng shui Red will bring the desired energy into your abode for it carries the energy of the fire element, which has been a symbol of both constructive and destructive energy. A balanced feng shui fire element in your home will bring joy, excitement and strong sexual desire, according to feng shui expert Rodika Tchi. Red should be used in moderation in children s rooms. In interior decoration Red always signifies richness and luxury. I would usually inject red punches as part of my accessorising to grab attention. This is especially good when you want to bring things into focus and not let things blend into the background. It is important to note that a strong colour like red should be used sparingly since small doses can often be more effective than large amounts. If overused, it can bring about restlessness and overstimulation. I propose using red with caution. It is always easier to bring red into your décor as part of your accessories, rather than with wall colour. Injecting red into furnishings and wall colour has to be done delicately and usually with a mixture of other colours. Have fun decorating. E Angela Lim is co-founder of SuMisura, a multiple award-winning interior design firm. Better known for her glamorous, haute couture show flats, Angela has had her works featured in many design magazines. She can be reached at angela.lim@sumisura.asia. 1 1. Red signifies luxury and wealth 2. It is safer to inject red in your décor through accessories, than as a wall colour 3. Use red to draw attention to certain parts of the room 4. A strong colour like red should be used sparingly, as a large dosage can cause restlessness 2 3 4