Property

Property: CBRE said mthly avg rent for prime Orchard Road space remained at $30.10 psf pm in 2Q, unchg qoq, but contracted marginally by 0.5% over 1H11.
Prime suburban rents dipped by 0.7% qoq to $28.90 psf pm in 2Q, possibly due to competition from imminent supply of 520k sf of space due to come on stream in 2H11...

CBRE estimates that confirmed retail supply totals ~4.3m sf in the next 4yrs and beyond. Of this, only 13.2%, (a size less than the total NLA of Nex mall) will be located in Orchard Road. The bulk, 55.2% of retail supply will be in the suburbs, notably ~1.2m sf coming up within 1km radius around Jurong East MRT station by 2015, boosting private retail stock in the Jurong East area from ~0.9m sf currently to 2.1m sf...

This suggests Orchard Road rents may remain more buffered than suburban rents going forward.
CBRE added the retail leasing mkt remained active underpinned by stable economic growth, low unemployment rate and healthy consumer spending. Notes well managed malls and necessity trades hould continue to flourish, and retailers may take the opportunity to expand their retail network...

Overall, news is slightly positive for Starhill Global Reit, whose main property exposure is in Ngee Ann City in Orchard Road. Street ratings mostly positive with recent TP btwn $0.70- 0.74. Reit offers 6.5% FY11E yield.

Property: URA closed a tender for a residential parcel at Choa Chu Kang/Phoenix Road yday after receiving 5 bids. The land parcel has an area of over 15k sm and a max permissible GFA of 32k sm...

Top bidder is a joint bid by Far East and China Construction Devt at $142.8m. This translates to ~ $411 psf ppr. This is below market estimates in May. Some consultants expected a top bid of $425-500 psf ppr, or even $600-640 psf ppr. The group plans to develop two 24-storey towers with one to four-bedroom apartments along with some townhouses...

Next highest bid is from EL Devt at $122m placing the spread between them at 17%.
CBRE places the breakeven cost at $800-850psf and estimates around 335units to be released, while Colliers and SLP Int’l estimates ASP at $900-1000psf...

Credo Real Estate notes the 2H11 Govt Land Sales program might have caused the softening in demand for less attractive sites as developers become more cautious and selective.
URA will announce the award of tender at a later date.