ERA Daily Research - 24 June

Group led by Daniel Teo buys Mount Rosie bungalow for S$43.8m

The Business Times, 24 Jun 2021, Thu  

By Kalpana Rashiwala

A GROUP of investors led by veteran property developer Daniel Teo of Hong How Group is buying an old bungalow at 21 Mount Rosie Road, near Barker Road, for S$43.8 million with a view to redeveloping it into several landed homes for sale.

The Business Times understands that the property is being sold by Teo Choon Seng and Teo Tiou Seng, who are sons of Pacific International Lines' (PIL) founding chairman, the late Teo Woon Tiong (alias Chang Yun Chung or YC Chang).

Though bearing the same surname, Mr Daniel Teo is not related to the Teos of PIL fame.

The transacted price for 21 Mount Rosie Road works out to S$1,429 per square foot on the freehold land area of 30,659 sq ft. "We plan to redevelop this site into luxury landed homes. We are planning a project that will preserve the tranquil ambience of this locale of District 11," said Mr Daniel Teo, when contacted by BT. He is chairman and managing director of the Hong How Group of Companies and a director of Tong Eng Group of Companies. "The purchase of the Mount Rosie property was via private treaty. A mutual friend of ours and the owners recommended the property to us; we met the owners a few times before concluding the deal," Mr Teo added, without commenting on the owners' identities.

The purchase is being made through a company whose shareholders include a vehicle owned by Mr Teo and his immediate family members. Another shareholder is a special purpose vehicle of Fraxtor group. which offers a platform for small investors to participate in property development and investment ventures through bite-sized capital outlay. However, participants have to be accredited investors, according to Monetary Authority of Singapore criteria.

Fraxtor was set up in 2017 by Mr Teo's daughter Rachel and former Singapore Air Force helicopter pilot Oliver Siah.

Prior to the latest venture on Mount Rosie, small investors have come on board the Fraxtor platform to participate in three landed housing projects in Singapore - in Haig Road, Jalan Novena Selatan, and Gardenia Road in the Upper Thomson area.

Fraxtor platforms have also enabled individuals and family offices to own small stakes in real estate funds. An example is a fund that invests in purpose-built student accommodation in the United Kingdom; the fund is managed by Q Investment Partners. Another is a ZACD-managed fund that is developing a strata food factory project in Mandai, Singapore.

Typically investors put in sums ranging from S$50,000 to S$500,000 via the Fraxtor platform.

For the Mount Rosie Road property, the plan is to begin redeveloping the site in March next year and complete the project 18 months later. The new homes on the site can be expected to be launched for sale sometime next year.

The psf price for 21 Mount Rosie Road is higher than the S$1,304 psf fetched for a nearby property in August last year. That was for a S$38.38 million estate sale of a bungalow with a land area of 29,430 sq ft.

Savills Singapore acted for the seller in that deal, and Knight Frank, for the buyer.

Galven Tan, deputy managing director of investment sales and capital markets at Savills Singapore, noted that "interest in landed homes has strengthened significantly in the past 12 months, as they are much desired by Singaporeans".

"Consequently, their prices have increased."


Family offices driving a few car park deals; Chinatown offers latest million-dollar lot

The Business Times, 23 Jun 2021, Wed  

By Lisa Kriwangko

A CAR park at People's Park Complex has joined the mix of such assets up for purchase, with a few recent sales of other car parks closed by family offices.

This week, a multi-storey car park with a restaurant unit at People's Park Complex was put up for public tender at a guide price of S$42 million.

The property spans across four floors on levels 3, 4, 5 and 6, comprising 648 car parking spaces, 56 motorcycle parking spaces and a restaurant unit on the top level of the podium, said sole marketing agent Brilliance Capital.

For the car park, the price works out to about S$208 per square foot (psf) for the entire area, or S$57,000 per parking space. The total strata area stands at 182,340 square feet (sq ft), including the 2,809 sq ft space taken by the restaurant. The restaurant unit is priced at S$1,673 psf.

The latest tender comes even as fewer Singapore residents are driving compared with a decade ago. The latest population census showed that about a quarter of all residents used to drive a car to work in 2010. In 2020, this group shrank to about one-fifth of respondents.

Sammi Lim, executive director of Brilliance Capital, said the car park sector is an "appealing alternative" to traditional real estate classes such as residential and commercial units for its limited supply and steady cash inflow.

She noted that since the 1980s, communal car parks were no longer allowed separate strata titles, making car parks "one of the most tightly held but rarely available" asset classes.

"There are also no bad debts in holding car parks. If you don't pay, you can't leave the car park," she added.

Despite the current work-from-home arrangements, Ms Lim expects a steady crowd as People's Park Complex is a mixed-use commercial and residential development.

Located at the heart of Chinatown, the commercial podium at People's Park Complex is largely occupied by food and beverage stalls, retail shops and offices.

"There are some investors who are reviewing possible decanting of the car park, to apply for change of use to convert to other usages in the likes of e-commerce, self-storage, outdoor recreation area, community and sports facilities, subject to the authorities' approvals," she said.

"There is also another group of buyers who are keen to purchase car parks to self-operate; some are new entrants to the market, while some are existing operators who wish to add onto their portfolio," Ms Lim added.

Earlier this year, Brilliance Capital concluded the sale of a parking lot at Parklane Shopping Centre, bought by a local family office for S$16.2 million or S$70,000 per parking space.

In 2020, the agency also saw two car park purchases.

One at Holland Road Shopping Centre was bought for S$17.3 million or more than S$360,000 per parking space by an ultra-high net worth family office from Hong Kong, while another at Bukit Timah Shopping Centre was purchased at S$16.2 million - or close to S$43,000 per parking space - by property player LHN.

Separately but just a stone's throw away, a strata office unit at Chinatown Point has also been put up for sale via expression of interest with a guide price of S$4.46 million, sole marketing agent CBRE said on Tuesday.

Located on the 18th storey, the 2,347 sq ft office can be sold vacant or with a leaseback arrangement for one year, noted CBRE.

In its vicinity is Chinatown MRT, Hong Lim Food Centre, The State Courts and the Family and Juvenile Court.

Michael Tay, head of capital markets at CBRE Singapore said: "On the investment front, against the backdrop of tight office supply in the short to mid-term, we believe this offering will appeal to investors, including family offices, high net-worth individuals and boutique investment firms, who may be looking to buy into a recovering office rental cycle."

The car park tender will close on July 29 at 3pm, while the expression of interest for the office will close on August 5 at 3pm.


Singapore core inflation rises for 4th month, will continue to gradually increase

The Straits Times, 23 Jun 2021, Wed  

By Sue-Ann Tan

Core inflation in Singapore continued its upward climb in May, driven by higher services inflation and a smaller decline in the cost of retail and other goods.

Core inflation, which excludes accommodation and private road transport costs, rose to 0.8 per cent on a year-on-year basis last month, up from the 0.6 per cent recorded in April. This is the fourth straight month that core inflation has risen, after spending a year in negative territory.

Meanwhile, overall inflation rose to 2.4 per cent, up from 2.1 per cent in April. This was on account of higher private transport and accommodation costs, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI), which released the data on Wednesday (June 23).

The inflation figures exceeded the expectations of economists polled by Bloomberg, who predicted core inflation to rise to 0.7 per cent and overall inflation to come in at 2.2 per cent.

The increase in both inflation indicators was partly due to the low base in May last year when circuit breaker measures were in place, MAS and MTI said.

UOB economist Barnabas Gan added: “Moreover, Singapore saw a persistent deflation environment in the period between April and November 2020, on the back of a relatively weaker economic environment and low oil prices then. 

“As such, the rise of consumer prices may continue to be observed in the months ahead, although it is expected to be transitory when the base effects eventually dissipate.”

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