Singapore Property Weekly Issue 238

8/20/2019 Singapore Property Weekly Issue 238

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Issue 238Copyright © 2011-2014 www.Propwise.sg. All Rights Reserved.

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CONTENTS

p2 The Beginner’s Guide to Investing in REITs

p7 Singapore Property News This Week

p10 Resale Property Transactions

(November 25 – December 1 )

Welcome to the 238th edition of the

Singapore Property Weekly .

Hope you like it!

Mr. Propwise

FROM THE

EDITOR

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SINGAPORE PROPERTY WEEKLY Issue 238

Page | 2Back to Contents

By Tam Ging Wien (guest contributor)

REITs in recent years have been garnering

significant investor interest due to their stable

income and high yields. With the Asian

investor’s affinity for property, REITs took off

in a big way. At the time of writing, the largestREIT markets in Asia are Japan, Hong Kong

and Singapore.

What is a REIT?

A REIT is short form for Real Estate

Investment Trust. REITs are a type of professionally managed collective investment

scheme with its primary business being the

acquiring, owning and financing of income

generating real estate.

The Beginner’s Guide to Investing in REITs


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REITs have the benefit of providing investors

with a regular income stream and prospects

of long term capital appreciation.

REITs provide investors an affordable meansto invest in a diverse range of real estate

assets. REITs tend to have a specific portfolio

focus. Typical REITs are classified into the

following categories:

Residential (e.g. Condominiums, Housing,

Apartments)

Retail (e.g. Retail spaces, Shopping

malls, Shops and Shophouses)

Offices (e.g. Office buildings)

Industrial (e.g. Factories, Warehouses,

Industrial parks)

Healthcare (e.g. Hospitals, Nursing

homes)

Hospitality (e.g. Hotels, Service

Apartments)

Some creative REITs may even have

investments in Car Parks, Billboards, StorageSpaces, Mines and Plantations just to name a

few examples.

Some REITs specialize in portfolios in one

region or country, while others hold a portfolio

of properties in multiple countries.

Shareholders of REITs are also protected as

regulations require that the REIT’s properties

are held by an independent trustee. REITs

have appointed managers to manage the

REIT and act in the best interest of the

shareholders. REIT Managers set thestrategic direction, manage their assets and

liabilities, and give recommendations to the

trustee on the acquisition,


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divestment or enhancement of assets in

accordance with the REIT’s stated investment

mandate.

Typical structure of a REITBelow is a diagram illustrating the typical

structure of a REIT:

Some REITs have sponsors (typically but not

necessarily property developers) which

provide backing to the REIT by injecting their

own properties into the REIT during listing.

These sponsors continue to support the

growth of the REITs by providing the REIT

rights to acquire the sponsor’s future pipeline

of properties. These sponsors may

sometimes themselves be a major

shareholder of the REIT they sponsor.

There are a group of securities which are said

to have both a REIT and a Business Trust

structure combined. These are known as

“Stapled Securities” and are typically seen in

the hospitality sector. The reasons for such

structures are for risk management. For example, a hospitality REIT running a group

of hotels may appoint an external hotel

operator.


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In the event that the hotel operator is not able

to fulfil its obligations, the REIT using the

business trust is able to take over the hotel

operations pending appointment of a new

operator.

In Singapore, REITs are required to distribute

least 90% of their net income after tax to

shareholders. Shareholders enjoy these tax-

exempted distributions in regular intervals

(e.g. quarterly or half-yearly) throughout theyear in the form of dividends. The first

Singapore REIT was launched and listed on

the SGX in July 2002.

Benefits and risks of investing in REITs

Investing in REITs provide various benefits as

well as risks when compared to investing in

the underlying property or real-estate.

Below is a table summarizing these points:


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Direct property investment is capital intensive.

Large amount of cash is required for the

down payment and transaction costs (e.g.

stamp duties, legal fees, property tax etc.)

Purchasing of property for most would also

require a bank loan of easily 70% to 80% of

the property price.

On the other hand, investing in REITs can be

quite affordable. Yields are typically also

higher, enabling investors to get a better return on their capital.

By guest contributor Tam Ging Wien, an avid

investor and blogger who spends his time

empowering the masses in financial

education.

http://www.propertyconnectionasia.com/http://www.moneymatters.sg/http://www.propertyconnectionasia.com/http://www.propertyconnectionasia.com/http://www.propertyconnectionasia.com/http://www.propertyconnectionasia.com/http://www.propertyconnectionasia.com/


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SINGAPORE PROPERTY WEEKLY I 238


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be a mandatory prefabricated prefinished

volumetric construction (PPVC) requirement.

Ng believes that developers who are not

familiar with PPVC may not have placed a bid

for the site. He added that if the PPVCrequirement was not included, the top bid

could have exceeded $700 psf ppr. Market

experts believe that the breakeven price for

the project would stand at $1,100 psf. The

site is likely to be developed into two 40-

storey towers with about 500 units.

(Source: Business Times)

R e s a l e p r i c e i n d e x f o r n o n - l a n d e d p r i v a t e

homes in C C R increased by 1. 6%

According to SRX Property’s flash estimates,

the resale price index for non-landed private

homes in the core central region (CCR) and

rest of central region (RCR) had increased

1.6% and 2.3% respectively from December

2014 to November 2015. However in the

same period, the outside central region

(OCR) resale price index for non-landed

private homes fell by 2.6%. Wong Xian Yang

from OrangeTee said that this could bebecause resale prices in the CCR and RCR

had experienced bigger drops last year,

compared to in the OCR. Nonetheless, Wong

believes that the surge in completed private

homes across Singapore next year will

negatively affect prices. Furthermore, as 55%

of the 22,351 private homes slated for

completion next year will be located in the

OCR, resale prices in that region are

expected to fall further. According to the flash

estimates, the overall resale price index for

non-landed private homes had fallen by 1.3%

year-on-year in November.




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Commercial

Of f ice rent s expect ed t o f a l l in 2016

Market experts predict that office rents will

continue to fall in 2016 due to weakeningdemand and a surge in the number of

expected office completions next year. Savills

Singapore estimates that in Q4 this year, the

overall CBD Grade A average monthly rental

value for a 5,000 sq ft lease is $9.36 psf,

which is 5.3% lower than from a year ago.Furthermore, JLL predicts that there will be a

14.4% full-year drop in the CBD Grade A

average office rental value to $10.32 psf as at

Q4 this year. Chris Archibold from JLL said

that in the coming year, the surge in office

supply will put pressure on the market asvacancy rates increases. Moray Armstrong

from CBRE added that weak demand from

industries, such as the energy and

commodities industry and the financial sector,

will negatively affect office rents.



http://propertymarketinsights.com/


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Non-Landed Residential Resale Property Transactions for the Week of Nov 25 – Dec 1

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

1 THE CLIFT 506 1,025,000 2,026 99

3 MERAPRIME 1,313 1,910,000 1,454 99

3 PEARL BANK APARTMENT 1,755 1,480,000 844 993 QUEENS 915 1,190,000 1,301 99

3 RIVER PLACE 797 980,000 1,230 99

4 THE INTERLACE 3,821 3,123,900 818 99

4 REFLECTIONS AT KEPPEL BAY 980 1,525,000 1,557 99

5 HORIZON RESIDENCES 990 1,520,000 1,535 FH

5 PARK WEST 1,894 1,324,000 699 99

5 HERITAGE VIEW 1,163 1,320,000 1,135 99

7 SUNSHINE PLAZA 1,345 1,500,000 1,115 99

8 KERRISDALE 1,270 1,420,000 1,118 99

9 THE LIGHT @ CAIRNHILL 1,690 3,030,000 1,793 FH

9 ASPEN HEIGHTS 1,582 2,400,000 1,517 999

9 CAIRNHILL CREST 1,206 2,038,000 1,690 FH

9 PARC EMILY 1,206 1,970,000 1,634 FH

9 PARC SOPHIA 474 875,000 1,847 FH

10 FONTANA HEIGHTS 3,466 5,100,000 1,471 FH

10 BELMOND GREEN 1,636 2,380,000 1,455 FH

10 VIZ AT HOLLAND 1,109 1,580,000 1,425 FH

10 QUINTERRA 1,389 1,575,000 1,134 99

11 NEWTON SUITES 1,238 2,150,000 1,737 FH

11 CUBE 8 1,475 2,050,000 1,390 FH

13 PARC ASTON 1,163 1,360,000 1,170 FH

14 WATERBANK AT DAKOTA 1,572 2,160,000 1,374 99

14 LE CRESCENDO 1,453 1,638,888 1,128 FH

15 PEBBLE BAY 2,745 4,120,000 1,501 99

15 SILVERSEA 980 1,565,000 1,598 99

Postal

DistrictProject Name

Area

(sqft)

Transacted

Price ($)

Price

($ psf)Tenure

15 RITZ REGENCY 1,270 1,410,000 1,110 FH

16 RIVIERA RESIDENCES 1,453 1,680,000 1,156 FH

17 ESTELLA GARDENS 1,830 1,450,000 792 FH17 LOYANG VALLEY 1,873 1,180,000 630 99

17 FERRARIA PARK CONDOMINIUM 1,356 1,150,000 848 FH

19 THE MINTON 1,216 1,400,000 1,151 99

19 HIGHLAND CENTRE 1,550 1,200,000 774 FH

19 PARC VERA 710 800,000 1,126 99

20 THE GARDENS AT BISHAN 1,206 1,200,000 995 99

21 MAPLEWOODS 2,971 3,880,000 1,306 FH

21 PINE GROVE 1,690 1,160,000 686 99

21 ROYAL COURT 1,055 1,050,000 995 FH

22 CASPIAN 1,604 1,490,000 929 99

22 PARC OASIS 1,507 1,350,000 896 99

22 PARC OASIS 1,076 940,000 873 99

23 GUILIN VIEW 1,572 1,200,000 764 99

23 THE JADE 1,087 1,150,000 1,058 99

23 THE MADEIRA 1,238 1,100,000 889 99

23 GUILIN VIEW 1,281 980,000 765 99

23 HILLVIEW REGENCY 1,195 950,000 795 99

23 PARKVIEW APARTMENTS 1,119 780,000 697 99

23 PARKVIEW APARTMENTS 980 750,000 766 99

26 THE CALROSE 1,249 1,438,000 1,152 FH

27 EUPHONY GARDENS 2,056 1,330,888 647 99

NOTE: This data only covers non-landed residential resale propertytransactions with caveats lodged with the Singapore Land Authority.Typically, caveats are lodged at least 2-3 weeks after a purchasersigns an OTP, hence the lagged nature of the data.

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Singapore Property Weekly Issue 238