Monthly Archives: March 2010

Expect to pay more for exec condos

Executive condominium (EC) prices look set to rise further with the close of two EC tenders at higher-than-expected bids in the past two weeks.

The Sengkang EC site attracted a top bid of $315 per sq ft (psf) of gross floor area, while the Yishun EC site drew a top bid of $281 psf of gross floor area.

Analysts estimated that the winning bidders will have to sell the units at Sengkang for $650 to $700 psf and those in Yishun for $600 to $650 psf.

CBRE Research said the median price of new 99-year leasehold private condo units in similar locations as ECs was just $663 psf as of last month.

However, the latest 99-year condo The Estuary in Yishun sold at some $750 to $800 psf, with more than 500 units snapped up since early this month. It is therefore reasonable to expect that new EC projects may be launched at more than $600 psf, it said.

In the resale market, EC unit prices have risen in line with the market, closing the gap between resale prices of EC and private condo units.

As of last month, resale EC unit prices have reached $557 psf, up 75 per cent from the market bottom in the third quarter of 2006.

The price gap between resale private condo units and resale EC units has narrowed to 11 per cent, from 14 per cent late last year, according to CBRE Research.

This could have a bearing on the gap between new EC units and new private condo units – the gap could become smaller than the historical one of 25 per cent to 35 per cent, said its executive director Li Hiaw Ho.

Said PropNex chief executive Mohamed Ismail: ‘There will still be a gap of around 25 per cent. It is still there, but it may be slightly smaller because land cost has become more competitive.’

This price gap reflects the constraints attached to ECs such as qualifying conditions and the restriction on resale only after the minimum occupation period of five years, experts said.

ECs come with condo facilities but have initial sale restrictions similar to those for public housing. They convert to a private property only after a decade.

They were introduced in 1995 to bridge the gap between public housing and private apartments, aimed at Singaporeans who could afford more than an HDB flat but might find private property out of their reach.

Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000 a month, slightly above the $8,000 income ceiling for a new HDB flat.

Despite the expected higher EC prices, there is likely to be pent-up demand for the new ECs, Mr Ismail and Ngee Ann Polytechnic lecturer Nicholas Mak predicted.

Firstly, there have not been any EC launches since 2005, when La Casa in Woodlands was marketed, said Mr Mak.

Also, prices of 99-year leasehold condo units as well as HDB resale flats have gone up, he pointed out.

‘Those who earn more than $8,000 do not qualify for build-to-order or design, build and sell scheme HDB flats. They would have a greater motivation to apply for ECs,’ said Mr Ismail.

Besides, the higher psf price may not translate to a huge lump sum. ‘Given the two recent EC bids, the developers are likely to offer more smaller units, such that they can sell them at the right prices,’ he said.

‘Developers these days are offering more smaller units. Buyers will have a better lifestyle but they will have to compromise on space.’

Source : Sunday Times – 14 Mar 2010

Orchard Central: Love it, hate it

It has been roundly criticised for being user-unfriendly, but the owners and architects behind Orchard Central are unfazed by the brickbats.

They say the design of the mall is ‘ground-breaking’ for Singapore and believe shoppers will grow to appreciate it in time.

Orchard Central’s shopping experience will also be further enhanced when an adjacent site is built and linked to the mall, they added.

‘As the mall design is ground-breaking, we are not surprised to receive such feedback from shoppers,’ said Mr Tai Lee Siang, director of home-grown architectural firm DP Architects, which designed the mall.

‘It will take time for them to become familiar with and like a mall that is less than conventional.’

Orchard Central opened last May at a cost of more than $700 million. At about 36,000 sq m, it is the smallest of three new shopping centres that have sprung up in Orchard Road.

Ion Orchard, which opened last July, is about 61,300 sq m, and the mall, together with its accompanying luxury residence, The Orchard Residences, cost $2 billion to build.

The mall 313@Somerset is about 39,400 sq m and opened last December at a cost of more than $900 million.

In a recent newspaper report, Orchard Central’s tenants said they were hurting from poor business and few walk-in customers. At least one shop, Fox Salon, has closed and about 70 tenants were said to have gone to the landlord to plead for rental rebates. Shoppers said the mall’s confusing layout kept them away.

Mr Tai said the floor plans for the different levels vary according to themes ranging from food to beauty. These thematic clusters are designed to form interlocking spaces rather than uniformly stacked areas.

Of the unusual layout, Mr Chng Kiong Huat, executive director of development and planning at Far East Organization, which owns Orchard Central, said: ‘This is a long, narrow site, not a square site that is easy to handle, so we knew we could not use a traditional model and hope for the best.

‘We embraced the challenge as an opportunity to create something distinct and new.’

He said Far East bid for the land because it was a chance to participate in the rejuvenation of the Orchard shopping belt. Far East also owns Pacific Plaza in Scotts Road and had built Far East Plaza and Far East Shopping Centre in the area.

Mr Chng added that Orchard Central’s location was a draw because it houses Discovery Walk. This is a sheltered shopping street connecting Orchard Central, 313@Somerset, and the Specialists’ Shopping Centre and Hotel Phoenix site. It is jointly owned by them.

DP Architects worked with Orchard Central’s narrow piece of land by building vertically, resulting in an 11-storey mall, the tallest all-retail building here. The small land area also meant a circular carpark ramp instead of a straight one, which shoppers have complained is too steep.

Mr Tai said 11 floors with the same repetitive floor plan would have been ‘quite boring’.

‘To create visual excitement and spatial sensation, we zoned the space and matched the architecture of each zone to the tenant profile.’

Hence, the youth area has an edgy design – a winding ramp built around its own atrium, with small shops selling knick-knacks and apparel along the ramp.

The cluster of beauty and wellness shops, on the other hand, is ensconced in a far corner to offer customers privacy.

Vertical malls, though novel here, are common in population-dense cities such as Tokyo, and the architects drew inspiration for their design from malls in these cities, such as Herbis Osaka, Mr Tai said.

But shoppers’ criticisms have not fallen on deaf ears. Mr Chng said Far East has added more lighting to increase the visibility of shops and put up more signs at a cost of almost $4 million.

It is also reviewing the performance of the outlets monthly and granting rental help when appropriate. It plans to pump about $5 million this year into advertising and promoting the mall.

Mr Chng added that Orchard Central’s shopping experience will be further enhanced when the adjacent site, previously occupied by Specialists’ Shopping Centre and Hotel Phoenix, is built.

OCBC Bank, which owns the land, recently announced that it was in talks with construction and property group United Engineers Limited to build a hotel and mall there.

Far East has worked with OCBC to have link bridges on the upper floors that connect Orchard Central to OCBC’s future development. Currently, the bridges lead straight into a partition wall separating the mall from the adjacent site.

When the OCBC development is ready, the partition will be removed and shoppers will be able to walk around, with the Discovery Walk between the two buildings acting as an atrium.

Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic, noted the importance of malls having user-friendly designs.

‘If the layout does not register positively in the minds of customers, they might not return, especially in a competitive shopping area such as Orchard Road,’ he said.

Mr John Ting, former president of the Singapore Institute of Architects, noted that mall layouts here are becoming ‘more interesting’. Orchard Central, he felt, ‘is too ahead of its time here and shoppers are not yet sophisticated enough to appreciate it’.

Source : Sunday Times – 14 Mar 2010