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Investors snap up Paya Lebar Square units

(2012-03-28 21:47:45) 下一个

Straits Times: Wed, Mar 28

MANY investors here are determined to put their cash into bricks and mortar, no matter what obstacles are thrown up in their path.

In the wake of a round of tough government measures designed to dampen demand for residential property, they have turned instead to commercial property.

The latest example of this reflex to stick with property is Paya Lebar Square - with 556 strata-titled office units next to Paya Lebar MRT station.

Investors have bought 55 per cent of the more than 400 units sold there since they went on sale late last December. Prices range from $1,550 per sq ft (psf) to $1,980 psf - a benchmark for the area.

HSR Property Group special adviser Donald Han said there have been few new strata-titled office launches in the past years with which to compare.

The closest comparison would be PS100, which sold strata-titled office units at an average of about $3,000 psf earlier this month. Still, this project is near Tanjong Pagar MRT station in the Central Business District.

Mr Han expects investors to achieve a net yield of about 3.5 per cent to 4.5 per cent for Paya Lebar Square. This is far better than placing cash in the bank at a very low interest rate, and looks less risky to many than the volatile stock market.

The rest of the units sold so far have been bought by those intending to use the office space themselves. They include auditors, interior design firms, architectural firms and consultancies.

About 60 per cent of the buyers also formed companies to carry out their purchases, which would likely allow them to claim back the GST from the tax authorities, subject to certain requirements.

One of the developers, Guthrie GTS executive director Michael Leong, said on the sidelines of the project's ground-breaking ceremony yesterday that buyer response was 'better than expected'.

The project was designed to cater to end-users who do not require a business address in the city centre and do not want to be subject to the volatility of cyclical office market rents.

Paya Lebar Square, which is expected to cost $900 million, includes units ranging from 480 sq ft to 2,000 sq ft.

Its smallest office suite of 480 sq ft has been 'test-fitted' to ensure that it can accommodate five to six people comfortably, he emphasised.

'The project is not just meant for investors... We got feedback from SMEs (small and medium-sized enterprises), small trading companies and professionals who wanted an office to call their own but also something they can afford.

'I think the threshold is about $1 million, and if you work backwards you will probably get the area (of about 480 sq ft),' Mr Leong added.

He revealed that an auditing firm had bought 12 units for $14 million.

Office rents are expected to be about $6 psf a month at Paya Lebar Square, less than the $10 psf to $12 psf a month in the city centre, Mr Leong added.

Retail rents at the 95,000 sq ft podium with 159 shop units are expected to range from $16 psf to $18 psf a month. About half of these units are expected to be food and beverage outlets.

Unlike the office space, the shop units will not be sold individually.

The 99-year leasehold development, which is being developed by a consortium of Low Keng Huat, Guthrie GTS and the Sun Venture group, is part of the upcoming Paya Lebar commercial hub.

Minister of State for National Development and Manpower Tan Chuan-Jin, who was guest of honour at the ground-breaking ceremony, said there is about 12ha of land available for development in Paya Lebar Central, with a potential commercial floor space of more than 500,000 sq m.

'(The area) is envisaged to be a size- able pedestrian-friendly hub on the fringe of the city with a distinct cultural identity.

'Establishing these hubs around Singapore will also play an important role in enabling a better spread of the population,' he added.

The 13-storey development is expected to be ready by mid-2014.

esthert@sph.com.sg

Investors have bought 55 per cent of the more than 400 units sold there since they went on sale late last December. Prices range from $1,550 per sq ft (psf) to $1,980 psf - a benchmark for the area.


Source: The Straits Times
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