Sep 30, 2010
Fresh steps to cool China's property market
BEIJING: China yesterday announced it had taken further steps to cool its red-hot property market, ordering banks not to provide loans for third or more home purchases.
The new measures are aimed at preventing house prices from rising too fast, the State Council, or Cabinet, said in a statement, amid fears of a speculative bubble that analysts say could derail the world's second largest economy.
The State Council said down-payments on all home purchases would now have to be at least 30 per cent. It also limited the number of homes that people can buy in cities where prices are too high, have risen too quickly or where supply is tight.
In April, Beijing announced it would increase deposits on first homes of over 90 sq m to 30 per cent from 20 per cent. Prior to April, all first-time buyers had to make a deposit of 20 per cent.
The new measures urged banks to strengthen their oversight of consumer loans, banning them from being used to buy homes.
The State Council also called for a trial property tax reform now being carried out in some cities to be sped up and gradually expanded to the whole of China. This is widely expected to entail an expansion of the tax on commercial real estate to cover residential houses.
'The new measures are not dramatic, but they convey a clear policy message: Beijing is serious about controlling property prices,' Mr Qu Hongbin, a Hong Kong-based economist with HSBC Holdings, said in e-mailed comments yesterday. 'This should help dampen the expectations' that housing prices will rise quickly, he said.
The new measures are the latest in a series issued this year to try and prevent the property market from overheating.
Official data has suggested that these efforts have started to pay off, with growth in China's property prices slowing for the fourth straight month in August.
But the government has eschewed draconian measures, anxious not to topple a vital pillar of the economy. Real estate accounts for a quarter of investment and 10 per cent of total output.
AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS
Thursday, September 30, 2010
ST : Site of 'showbiz central' up for sale
Sep 30, 2010
Site of 'showbiz central' up for sale
THE site of the old Singapura Theatre that served as showbiz central for thousands of Malay and Indian movie fans is up for sale at $45 million.
In its heyday in the 1970s, the cinema in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits.
It closed in 1985, reportedly because of competition from the video industry. It was turned into a furniture exhibition centre and later a temporary shopping complex.
Owner Shaw Brothers renovated the three-storey building in 1992, and the cinema screened Tamil movies for a while.
The building has been only partly used for the past couple of years. A section of the first floor is leased to a foodcourt while the rest is taken up by an entertainment centre that also occupies the second floor. The third floor is vacant.
Shaw Brothers wants to sell the freehold site at No. 55 Changi Road in order to capitalise on the rejuvenation of the Paya Lebar area, said marketing agent Knight Frank.
The land is next to the upcoming Paya Lebar Central, a commercial hub to be developed as part of the Urban Redevelopment Authority's decentralisation strategy to provide alternative zones for businesses.
It is also near the Paya Lebar station on the Circle Line and the Eunos station on the East West Line.
The asking price of $45 million translates to a land price of $769 per sq ft (psf) on the potential gross floor area of about 58,490 sq ft.
No development charge is payable, Knight Frank said.
The regular-shaped plot sits on a land area of about 19,497 sq ft. Under the 2008 Master Plan, it is zoned for commercial use at a plot ratio of 3.0.
'The site is not fully built-up currently. It is likely to be torn down and can be redeveloped into a taller building subject to approval,' said Mr Ian Loh, Knight Frank's senior manager, investment.
He said the site would be suitable for a superstore like Courts or a private school.
The tender closes on Nov 11.
JOYCE TEO
In its heyday in the 1970s, the Singapura Theatre in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits. -- PHOTO: KNIGHT FRANK
Site of 'showbiz central' up for sale
THE site of the old Singapura Theatre that served as showbiz central for thousands of Malay and Indian movie fans is up for sale at $45 million.
In its heyday in the 1970s, the cinema in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits.
It closed in 1985, reportedly because of competition from the video industry. It was turned into a furniture exhibition centre and later a temporary shopping complex.
Owner Shaw Brothers renovated the three-storey building in 1992, and the cinema screened Tamil movies for a while.
The building has been only partly used for the past couple of years. A section of the first floor is leased to a foodcourt while the rest is taken up by an entertainment centre that also occupies the second floor. The third floor is vacant.
Shaw Brothers wants to sell the freehold site at No. 55 Changi Road in order to capitalise on the rejuvenation of the Paya Lebar area, said marketing agent Knight Frank.
The land is next to the upcoming Paya Lebar Central, a commercial hub to be developed as part of the Urban Redevelopment Authority's decentralisation strategy to provide alternative zones for businesses.
It is also near the Paya Lebar station on the Circle Line and the Eunos station on the East West Line.
The asking price of $45 million translates to a land price of $769 per sq ft (psf) on the potential gross floor area of about 58,490 sq ft.
No development charge is payable, Knight Frank said.
The regular-shaped plot sits on a land area of about 19,497 sq ft. Under the 2008 Master Plan, it is zoned for commercial use at a plot ratio of 3.0.
'The site is not fully built-up currently. It is likely to be torn down and can be redeveloped into a taller building subject to approval,' said Mr Ian Loh, Knight Frank's senior manager, investment.
He said the site would be suitable for a superstore like Courts or a private school.
The tender closes on Nov 11.
JOYCE TEO
In its heyday in the 1970s, the Singapura Theatre in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits. -- PHOTO: KNIGHT FRANK
ST : Lifestyle hub a buffer for Serangoon Gardens residents
Sep 30, 2010
Lifestyle hub a buffer for Serangoon Gardens residents
Sited next to workers' dorm, it aims to offer family-centric activities
By Jessica Lim & Cheryl Ong
COMING up next to the controversial foreign workers' dormitory in Serangoon Gardens: a lifestyle centre with art workshops, drama studios and sports facilities.
The $1 million refurbishment of the Lifestyle Hub @ Burghley includes building a carpark, renovating existing buildings and constructing sheltered walkways. It is likely to be ready next month.
The centre's operator, Hean Nerng Facilities Management, was awarded the tender by the Singapore Land Authority (SLA) in June.
The subsidiary of LHN Group, which manages more than 10 properties including residential and commercial properties, said there are 15 units available for rent. A list of prospective tenants is awaiting SLA's approval, but so far none of them had been given units.
The 6,880 sq m site - slightly larger than a football field - is about 15m away from the dormitory and is separated from it by a fence about 2m high.The site, a sub-plot of the old Serangoon Garden Technical School, currently has three single-storey blocks with a gross floor area of about 1,900 sq m. The rest of the former school compound now houses the controversial foreign workers' dormitory.
Residents in the area were upset when the Government proposed building the dormitory there two years ago. More than 1,400 residents petitioned against it, citing concerns that it would increase crime rates and lower their property values.
To address the problem, the quarters took in 600 workers to prevent the area from becoming overcrowded. An access road was also built so the workers would not have to go through the estate to get to the dormitory.
The lifestyle centre was, in fact, 'deliberately carved out to form a buffer between the dorm and the residential areas in Serangoon Gardens', said Member of Parliament for the area Lim Hwee Hua, who had previously met residents to allay their fears.
The member of the Aljunied GRC team pointed out that there is no direct access between the centre and the dorm. Describing the new hub as 'largely family-centric', she said pains were taken to ensure that businesses in the centre would be compatible with the surrounding residential area. 'We were concerned about potential traffic issues if too many people were to descend onto this area, or if there were noise and other disruption to the residents,' she said.
The site is approved for art schools and studios, and for sports facilities such as tennis and squash courts. It is not approved for retail or food and beverage outlets.
However, this might be exactly the problem for the new sub-tenants there, said property developers.
Research director Colin Tan of Chesterton Suntec International said it might be tough for tenants to succeed unless they can attract those who live beyond the estate.
'The catchment is quite restricted to people who drive or those who live nearby,' he said. 'Tenants have to be quite well known to draw people from outside the estate.' The short lease, he added, made it a challenge for them to establish themselves in the area.
Hean Herng's initial lease agreement is for two years, but can be renewed until 2014. The company was the only bidder. It offered to pay $21,008 a month, more than $6,000 above the estimate given by the SLA.
Residents have been enthusiastic about the centre.
Retired teacher Rajakrishnan, 71, who lives a minute's walk away from the centre, said: 'We have a lot of retired folk in this area so it'll be good if we don't have to travel too far to participate in activities. It's just a hop, skip and jump away from my home.'
Asked about the dormitory, she said: 'The situation is not bad at all. The fence around it has helped to keep the workers from coming into our estate. None of my neighbours has grouses against the foreign workers. The hub will be in between us and the dorm - it helps things.'
Others such as retiree John Leow, who chaired a residents' committee on the dormitory issue, said he did not object to the hub as it would 'add to the facilities in Serangoon Gardens'.
However, the 69-year-old, who met SLA about two months ago to discuss plans for the site, said some tenants were a no-go. 'We would definitely object to tenants such as bars or karaoke lounges,' he said, adding that he will be meeting SLA again to find out more about the tenants who will be moving in.
limjess@sph.com.sg
ongyiern@sph.com.sg
The new lifestyle centre being built next to the workers' dormitory at Serangoon Gardens will feature art workshops and sports facilities, but not retail or food and beverage outlets. -- ST PHOTO: DESMOND FOO
Lifestyle hub a buffer for Serangoon Gardens residents
Sited next to workers' dorm, it aims to offer family-centric activities
By Jessica Lim & Cheryl Ong
COMING up next to the controversial foreign workers' dormitory in Serangoon Gardens: a lifestyle centre with art workshops, drama studios and sports facilities.
The $1 million refurbishment of the Lifestyle Hub @ Burghley includes building a carpark, renovating existing buildings and constructing sheltered walkways. It is likely to be ready next month.
The centre's operator, Hean Nerng Facilities Management, was awarded the tender by the Singapore Land Authority (SLA) in June.
The subsidiary of LHN Group, which manages more than 10 properties including residential and commercial properties, said there are 15 units available for rent. A list of prospective tenants is awaiting SLA's approval, but so far none of them had been given units.
The 6,880 sq m site - slightly larger than a football field - is about 15m away from the dormitory and is separated from it by a fence about 2m high.The site, a sub-plot of the old Serangoon Garden Technical School, currently has three single-storey blocks with a gross floor area of about 1,900 sq m. The rest of the former school compound now houses the controversial foreign workers' dormitory.
Residents in the area were upset when the Government proposed building the dormitory there two years ago. More than 1,400 residents petitioned against it, citing concerns that it would increase crime rates and lower their property values.
To address the problem, the quarters took in 600 workers to prevent the area from becoming overcrowded. An access road was also built so the workers would not have to go through the estate to get to the dormitory.
The lifestyle centre was, in fact, 'deliberately carved out to form a buffer between the dorm and the residential areas in Serangoon Gardens', said Member of Parliament for the area Lim Hwee Hua, who had previously met residents to allay their fears.
The member of the Aljunied GRC team pointed out that there is no direct access between the centre and the dorm. Describing the new hub as 'largely family-centric', she said pains were taken to ensure that businesses in the centre would be compatible with the surrounding residential area. 'We were concerned about potential traffic issues if too many people were to descend onto this area, or if there were noise and other disruption to the residents,' she said.
The site is approved for art schools and studios, and for sports facilities such as tennis and squash courts. It is not approved for retail or food and beverage outlets.
However, this might be exactly the problem for the new sub-tenants there, said property developers.
Research director Colin Tan of Chesterton Suntec International said it might be tough for tenants to succeed unless they can attract those who live beyond the estate.
'The catchment is quite restricted to people who drive or those who live nearby,' he said. 'Tenants have to be quite well known to draw people from outside the estate.' The short lease, he added, made it a challenge for them to establish themselves in the area.
Hean Herng's initial lease agreement is for two years, but can be renewed until 2014. The company was the only bidder. It offered to pay $21,008 a month, more than $6,000 above the estimate given by the SLA.
Residents have been enthusiastic about the centre.
Retired teacher Rajakrishnan, 71, who lives a minute's walk away from the centre, said: 'We have a lot of retired folk in this area so it'll be good if we don't have to travel too far to participate in activities. It's just a hop, skip and jump away from my home.'
Asked about the dormitory, she said: 'The situation is not bad at all. The fence around it has helped to keep the workers from coming into our estate. None of my neighbours has grouses against the foreign workers. The hub will be in between us and the dorm - it helps things.'
Others such as retiree John Leow, who chaired a residents' committee on the dormitory issue, said he did not object to the hub as it would 'add to the facilities in Serangoon Gardens'.
However, the 69-year-old, who met SLA about two months ago to discuss plans for the site, said some tenants were a no-go. 'We would definitely object to tenants such as bars or karaoke lounges,' he said, adding that he will be meeting SLA again to find out more about the tenants who will be moving in.
limjess@sph.com.sg
ongyiern@sph.com.sg
The new lifestyle centre being built next to the workers' dormitory at Serangoon Gardens will feature art workshops and sports facilities, but not retail or food and beverage outlets. -- ST PHOTO: DESMOND FOO
ST : Banks feel chill of new property rules
Sep 29, 2010
Banks feel chill of new property rules
Some report dip in home loan applications
By Esther Teo
SOME banks are starting to feel the chill of property cooling measures, a month after tougher home ownership rules were unveiled to rein in speculators.
They have reported a dip in home loan applications, in tandem with weakened buying sentiment as the measures kick in.
Most banks said, however, that there has also been an increase in the number of enquiries on the new measures, as buyers consider their financing options.
A DBS Bank spokesman said yesterday that it has seen a rise in enquiries from customers over the new measures on their loan applications.
United Overseas Bank's (UOB), head of loans division Chia Siew Cheng said that the property market has slowed down, with potential homebuyers staying on the sidelines to assess the impact of the new measures.
It seems that most property developers, however, are still proceeding with their latest project launches, she said.
It was a different story at Maybank Singapore, though. Its head of consumer banking Helen Neo said there has been no significant impact in terms of loan applications.
The turnaround time for processing loans, though, has been affected, owing to the additional checks required as a result of the new guidelines, she added.
Ms Neo said that while no customers had cancelled their loan applications as yet, many were taking a wait-and-see stance, even as the bank received a higher number of enquiries from prospective homebuyers.
The new rules, announced on Aug 30, state that buyers with one or more outstanding housing loans will now have to stump up a downpayment of at least 30 per cent of the property's price, up from 20 per cent previously.
At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
'In the short term, however, these benefits will be less obvious because credit costs on housing loans usually remain low until property prices start falling. Furthermore, a decrease in loan demand could negatively impact banks' interest income,' the report said.
A healthy property sector is critical for the three local banks - DBS, UOB and OCBC Bank - Moody's said.
All have 'significant exposures to the property market' - 52 per cent to 54 per cent of total loans as of June 30 - through their housing loans and lending to the construction and real estate sectors, of which a majority of borrowers are Singaporean.
On the ground, the picture is not clear yet. All eyes were on Hoi Hup Sunway Development's preview launch of its 473-unit Vacanza@East - a freehold project in Lengkong Tujoh near the Pan-Island Expressway in the east - yesterday. It is the third project to be launched after the measures were introduced.
In the first phase of the preview, 141 units were launched, the majority of which were two-bedroom and three-bedroom apartments. Hoi Hup Sunway, however, declined to reveal sales figures.
When The Straits Times visited its showflat yesterday afternoon, however, more than 100 people were milling around to view the property.
One potential buyer, who wanted to be known only as Ms Poh, said she was eyeing a 1,012 sq ft three-bedroom apartment listed at $1.14 million - or $1,126 per sq ft.
She decided against the purchase eventually, as she had an existing mortgage and would be able to take out only a 70 per cent loan with the tighter financing rules. 'With the new measures, it's now out of (my) price range,' she said.
esthert@sph.com.sg
--------------------------------------------------------------------------------
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
Banks feel chill of new property rules
Some report dip in home loan applications
By Esther Teo
SOME banks are starting to feel the chill of property cooling measures, a month after tougher home ownership rules were unveiled to rein in speculators.
They have reported a dip in home loan applications, in tandem with weakened buying sentiment as the measures kick in.
Most banks said, however, that there has also been an increase in the number of enquiries on the new measures, as buyers consider their financing options.
A DBS Bank spokesman said yesterday that it has seen a rise in enquiries from customers over the new measures on their loan applications.
United Overseas Bank's (UOB), head of loans division Chia Siew Cheng said that the property market has slowed down, with potential homebuyers staying on the sidelines to assess the impact of the new measures.
It seems that most property developers, however, are still proceeding with their latest project launches, she said.
It was a different story at Maybank Singapore, though. Its head of consumer banking Helen Neo said there has been no significant impact in terms of loan applications.
The turnaround time for processing loans, though, has been affected, owing to the additional checks required as a result of the new guidelines, she added.
Ms Neo said that while no customers had cancelled their loan applications as yet, many were taking a wait-and-see stance, even as the bank received a higher number of enquiries from prospective homebuyers.
The new rules, announced on Aug 30, state that buyers with one or more outstanding housing loans will now have to stump up a downpayment of at least 30 per cent of the property's price, up from 20 per cent previously.
At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
'In the short term, however, these benefits will be less obvious because credit costs on housing loans usually remain low until property prices start falling. Furthermore, a decrease in loan demand could negatively impact banks' interest income,' the report said.
A healthy property sector is critical for the three local banks - DBS, UOB and OCBC Bank - Moody's said.
All have 'significant exposures to the property market' - 52 per cent to 54 per cent of total loans as of June 30 - through their housing loans and lending to the construction and real estate sectors, of which a majority of borrowers are Singaporean.
On the ground, the picture is not clear yet. All eyes were on Hoi Hup Sunway Development's preview launch of its 473-unit Vacanza@East - a freehold project in Lengkong Tujoh near the Pan-Island Expressway in the east - yesterday. It is the third project to be launched after the measures were introduced.
In the first phase of the preview, 141 units were launched, the majority of which were two-bedroom and three-bedroom apartments. Hoi Hup Sunway, however, declined to reveal sales figures.
When The Straits Times visited its showflat yesterday afternoon, however, more than 100 people were milling around to view the property.
One potential buyer, who wanted to be known only as Ms Poh, said she was eyeing a 1,012 sq ft three-bedroom apartment listed at $1.14 million - or $1,126 per sq ft.
She decided against the purchase eventually, as she had an existing mortgage and would be able to take out only a 70 per cent loan with the tighter financing rules. 'With the new measures, it's now out of (my) price range,' she said.
esthert@sph.com.sg
--------------------------------------------------------------------------------
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
ST : The housing bubble trouble
Sep 29, 2010
THE ST INTERVIEW
The housing bubble trouble
In Singapore, Government's repeated intervention in the market is a good thing, says US expert
By Tan Hui Yee
IN MOST parts of the world, a government that intervened in the property market three times in one year would heighten uncertainty.
But not so in Singapore, observes Professor Joseph Gyourko, a housing economist from the University of Pennsylvania who was in town recently to speak at a forum conducted by the National University of Singapore's (NUS) Institute of Real Estate Studies.
He says: 'If the government gets into a habit of intervening all the time, it will harm market development. Investors won't want to invest because they can't be sure what the government is going to do Monday versus Friday.'
But the picture is clearly different in Singapore, he notes. The Government tried to temper speculation by abolishing developers' interest absorption schemes in September last year, and followed that with two additional rounds of measures in February and August this year that made it increasingly expensive for speculators to flip properties.
'You are sending a clear signal to investors that you are going to stop the price boom. The fact that you're doing the third round is a signal that you are going to do whatever it takes,' he says.
'And that actually may be providing clarity. You are telling everyone, 'Okay, we're just not stopping, we'll come up with something else down the road.''
This show of political will may just be what it takes to deflate Singapore's property bubble, he says.
Prof Gyourko, 54, knows bubbles intimately, having studied the sizzling property market in China and being privy to local developments as a board member of NUS' real-estate institute.
He believes home prices in Hong Kong, Singapore and China are being driven up by a mixture of real economic growth and short-term capital flows.
'Singapore's inflation rate is above the rate banks pay on deposits. When that happens, people want to put their money elsewhere. And one of the few alternative investments you can make is in housing.
'That's shifting a lot of money into homes. And that's not permanent or sustainable,' he says.
When the economy grows rapidly again, companies will ramp up production, the competition for capital will heat up, interest rates will rise - leaving over-leveraged property buyers in danger of defaulting on their loans. That could send property prices into a tailspin.
That said, he concedes that housing bubbles are by nature unpredictable, and the fact the Government here had to intervene three times indicates it had difficulty calibrating the measures required to tame the beast.
'Clearly, if the Singapore Government had known, it would have introduced Round Three right up front,' he says.
He rejects claims that rising property prices widen inequality, based on his experience in the United States market.
'The housing market is cyclical, so the claim is not true in the long run. In the US, when we had the boom...people were worried about wealth gains along coastal California and the East Coast of the US, which had the highest price rises. But prices cycle, and guess what? They fell - by a lot. What generates long-run inequality are skill differences, not home ownership,' says Prof Gyourko.
He predicts property prices in Hong Kong, China and Singapore will take a hit in the next one to three years, effectively cancelling out the gains owner-occupiers have made in the recent run-up.
'I don't worry about the fact that people got a bunch of capital gains because I think they are going to lose those capital gains,' he says, pointing out that these are paper gains.
But although property gains and losses even out over a lifetime, the resulting short-term frustrations may be hard to handle. 'It's easy for an academic to go, 'Don't worry, this stuff cycles.' If you are a politician, you've got to worry about that person being angry now because he has the vote, and you've got an election coming up.'
He acknowledges that while land in Singapore is scarce and property prices can be chased up without adequate control, the Government here has tried its best to make housing affordable through its public housing programme.
'You guys do public housing about as good as it's done anywhere in the world,' he says. 'For such a small place, it's well-planned. It's affordable to people with modest incomes,' says Prof Gyourko.
But one suggestion he has is that Singapore could be more flexible about the housing grants or similar subsidies it gives households, to give them more freedom over what homes they can buy and where they can live.
Currently, subsidised households can use their housing grant of $30,000 to $40,000 to buy only HDB resale flats. With a voucher system, they would not be limited to government housing.
He also questions Singapore's system of allowing Central Provident Fund savings to be used to pay for homes. This encourages people to base a huge chunk of their retirement savings on the fortunes of the property market in a tiny country. In investment speak, this is considered 'undiversified'.
'That's a really risky thing to do. What happens if there is a housing market collapse?' he asks.
The Singapore property market has had its hairy moments: Housing prices plunged after the 1997 Asian financial crisis, although they have since bounced back and even surpassed 1996 levels.
Singaporeans, he says, have to understand that the CPF housing scheme amounts to an 'implicit subsidy' as it lowers the interest payable on bank loans by reducing a home buyer's loan amount.
'I view housing as a consumption good. I view it literally as 'I'm eating my house.'' That means retirement savings should be kept separate from housing expenditure, he says.
In his view, owner-occupied homes especially are not investments that can yield returns, so people should not devote their retirement savings to their homes in the hope of growing their money.
Asked about the attributes of an ideal housing system, he offers a verbal sketch of its key planks: It should be equitable, responsive and flexible.
This means society would have to determine some minimum quality of housing that everyone should be entitled to. Households that cannot afford to pay for this minimum standard would get subsidies. Poor households with children would get more subsidies because 'kids do not get to pick their parents, and thus, are not responsible in any way for their poverty'.
Ideally, housing supply should be plentiful, in the sense that the rules should allow developers to easily ramp up home building to meet increased demand.
This moderates housing prices, he says, as it will allow prices to be close to or at the level required to cover land costs, construction costs and a builder's usual profit.
Finally, an ideal system would offer different kinds of housing - including rental housing - to meet the needs of the population over its life cycle. It is also one where the population is 'educated on the true benefits and costs of the different types of housing'.
He accuses governments worldwide of a bias 'towards encouraging owning' homes instead of being upfront on the opportunity cost of doing that.
As a result, most people underestimate the costs of owning a property, he says. They forget the transaction costs of buying and selling a home are 'quite high', and it does not occur to them to set aside money for long-term maintenance.
Buyers also risk getting stuck with their homes if a sharp drop in prices pulls the value of their homes below the mortgage amount.
Unless a home owner in such a predicament has enough cash to make up the shortfall, he cannot move house. Some academics have fingered such 'underwater' mortgages as a possible explanation for stubbornly high unemployment figures in the US, as it means people living in declining cities cannot move to places where jobs are more plentiful.
In Singapore, which takes just about an hour to cross by car, the problems posed by such immobility are less serious. Still, he thinks being stuck in such 'underwater' homes could result in longer commutes to workplaces and stop families from moving close to the school they want their children to attend.
Prof Gyourko - a home owner himself in Philadelphia - is careful to declare he has nothing against home ownership, especially as it makes someone a stakeholder in his community. In the case of Singapore, it makes one a stakeholder in the nation.
But the goal of the Government should be to get people to 'make the right choice about owning versus renting, not that owning always is better'.
In sum, housing choices should follow people's needs over their lifetime, instead of determining how they have to live their lives.
Young people, he says, make 'natural renters' instead of home buyers because this arrangement allows them to respond quickly to changing circumstances.
'You can move to opportunity. You can get married. You can do all types of different things instead of being stuck in a house,' he says.
tanhy@sph.com.sg
--------------------------------------------------------------------------------
An authority on real estate and housing policy
'I bet that housing does not drive child-bearing decisions'
· What do you make of Singapore's quotas for different ethnic groups in public housing estates to discourage racial enclaves from forming?
I've never been a fan of quotas. My preference is to always incentivise people positively.
I would prefer paying a positive price for you to live in someone else's neighbourhood if you were of a different ethnicity. I'd bribe you to go into an area where you are not the majority. You get a bounty.
It provides more freedom of mobility and choice. But governments don't like my way because it is costly.
· Young couples in Singapore have complained that they are not able to start families because they have been priced out of the housing market. Your view?
I understand the claim, but I don't put much credibility in it. Governments like yours are famous for trying to encourage child-bearing through financial inducements. It doesn't work very well, does it?
It's because this decision is incredibly complex, incredibly long-term. My gut feel is the claim is made by people who just want a subsidy, and it's not affecting child-bearing decisions at all.
If it were a simple matter of finance, Singapore would not have a fertility problem. And there'd be no one with kids in Bangladesh.
· How has your view of housing as a consumption good shaped your own consumption of housing?
I certainly did not buy a bigger house than I needed because I knew the costs were very high. I tried to figure out with my wife how many kids we were going to have, and how much space we needed. We thought we wanted to have two kids; we bought our house when our first was coming.
But our family decisions drove our housing decisions, not the other way around.
Having said that, there's no doubt that incomes can affect fertility. For instance, in the Great Depression, fertility dropped worldwide. If you don't think you can support a family, you won't start a family.
Back then, it was about unemployment of 25 per cent and the danger of starving. Here, you are talking about an extra bedroom. There's a big difference.
· Still, wouldn't the lack of an extra bedroom make you delay child-bearing?
I think so. Living with mum and dad could delay it because of the lack of space. But the right way to do deal with this is to develop a rental market.
· So isn't housing cost an opportunity cost vis-a-vis having a family?
Without a doubt. Kids are expensive that way. The correlation could be worth looking at across countries. And you will have to take into account a lot of stuff.
Just think about Catholic countries where you have a religious group saying 'no' to birth control. You're going to see high fertility rates, no matter how low the income and what type of housing there is.
That's what makes it so hard to tell. But I still bet that housing does not drive child-bearing decisions.
THE ST INTERVIEW
The housing bubble trouble
In Singapore, Government's repeated intervention in the market is a good thing, says US expert
By Tan Hui Yee
IN MOST parts of the world, a government that intervened in the property market three times in one year would heighten uncertainty.
But not so in Singapore, observes Professor Joseph Gyourko, a housing economist from the University of Pennsylvania who was in town recently to speak at a forum conducted by the National University of Singapore's (NUS) Institute of Real Estate Studies.
He says: 'If the government gets into a habit of intervening all the time, it will harm market development. Investors won't want to invest because they can't be sure what the government is going to do Monday versus Friday.'
But the picture is clearly different in Singapore, he notes. The Government tried to temper speculation by abolishing developers' interest absorption schemes in September last year, and followed that with two additional rounds of measures in February and August this year that made it increasingly expensive for speculators to flip properties.
'You are sending a clear signal to investors that you are going to stop the price boom. The fact that you're doing the third round is a signal that you are going to do whatever it takes,' he says.
'And that actually may be providing clarity. You are telling everyone, 'Okay, we're just not stopping, we'll come up with something else down the road.''
This show of political will may just be what it takes to deflate Singapore's property bubble, he says.
Prof Gyourko, 54, knows bubbles intimately, having studied the sizzling property market in China and being privy to local developments as a board member of NUS' real-estate institute.
He believes home prices in Hong Kong, Singapore and China are being driven up by a mixture of real economic growth and short-term capital flows.
'Singapore's inflation rate is above the rate banks pay on deposits. When that happens, people want to put their money elsewhere. And one of the few alternative investments you can make is in housing.
'That's shifting a lot of money into homes. And that's not permanent or sustainable,' he says.
When the economy grows rapidly again, companies will ramp up production, the competition for capital will heat up, interest rates will rise - leaving over-leveraged property buyers in danger of defaulting on their loans. That could send property prices into a tailspin.
That said, he concedes that housing bubbles are by nature unpredictable, and the fact the Government here had to intervene three times indicates it had difficulty calibrating the measures required to tame the beast.
'Clearly, if the Singapore Government had known, it would have introduced Round Three right up front,' he says.
He rejects claims that rising property prices widen inequality, based on his experience in the United States market.
'The housing market is cyclical, so the claim is not true in the long run. In the US, when we had the boom...people were worried about wealth gains along coastal California and the East Coast of the US, which had the highest price rises. But prices cycle, and guess what? They fell - by a lot. What generates long-run inequality are skill differences, not home ownership,' says Prof Gyourko.
He predicts property prices in Hong Kong, China and Singapore will take a hit in the next one to three years, effectively cancelling out the gains owner-occupiers have made in the recent run-up.
'I don't worry about the fact that people got a bunch of capital gains because I think they are going to lose those capital gains,' he says, pointing out that these are paper gains.
But although property gains and losses even out over a lifetime, the resulting short-term frustrations may be hard to handle. 'It's easy for an academic to go, 'Don't worry, this stuff cycles.' If you are a politician, you've got to worry about that person being angry now because he has the vote, and you've got an election coming up.'
He acknowledges that while land in Singapore is scarce and property prices can be chased up without adequate control, the Government here has tried its best to make housing affordable through its public housing programme.
'You guys do public housing about as good as it's done anywhere in the world,' he says. 'For such a small place, it's well-planned. It's affordable to people with modest incomes,' says Prof Gyourko.
But one suggestion he has is that Singapore could be more flexible about the housing grants or similar subsidies it gives households, to give them more freedom over what homes they can buy and where they can live.
Currently, subsidised households can use their housing grant of $30,000 to $40,000 to buy only HDB resale flats. With a voucher system, they would not be limited to government housing.
He also questions Singapore's system of allowing Central Provident Fund savings to be used to pay for homes. This encourages people to base a huge chunk of their retirement savings on the fortunes of the property market in a tiny country. In investment speak, this is considered 'undiversified'.
'That's a really risky thing to do. What happens if there is a housing market collapse?' he asks.
The Singapore property market has had its hairy moments: Housing prices plunged after the 1997 Asian financial crisis, although they have since bounced back and even surpassed 1996 levels.
Singaporeans, he says, have to understand that the CPF housing scheme amounts to an 'implicit subsidy' as it lowers the interest payable on bank loans by reducing a home buyer's loan amount.
'I view housing as a consumption good. I view it literally as 'I'm eating my house.'' That means retirement savings should be kept separate from housing expenditure, he says.
In his view, owner-occupied homes especially are not investments that can yield returns, so people should not devote their retirement savings to their homes in the hope of growing their money.
Asked about the attributes of an ideal housing system, he offers a verbal sketch of its key planks: It should be equitable, responsive and flexible.
This means society would have to determine some minimum quality of housing that everyone should be entitled to. Households that cannot afford to pay for this minimum standard would get subsidies. Poor households with children would get more subsidies because 'kids do not get to pick their parents, and thus, are not responsible in any way for their poverty'.
Ideally, housing supply should be plentiful, in the sense that the rules should allow developers to easily ramp up home building to meet increased demand.
This moderates housing prices, he says, as it will allow prices to be close to or at the level required to cover land costs, construction costs and a builder's usual profit.
Finally, an ideal system would offer different kinds of housing - including rental housing - to meet the needs of the population over its life cycle. It is also one where the population is 'educated on the true benefits and costs of the different types of housing'.
He accuses governments worldwide of a bias 'towards encouraging owning' homes instead of being upfront on the opportunity cost of doing that.
As a result, most people underestimate the costs of owning a property, he says. They forget the transaction costs of buying and selling a home are 'quite high', and it does not occur to them to set aside money for long-term maintenance.
Buyers also risk getting stuck with their homes if a sharp drop in prices pulls the value of their homes below the mortgage amount.
Unless a home owner in such a predicament has enough cash to make up the shortfall, he cannot move house. Some academics have fingered such 'underwater' mortgages as a possible explanation for stubbornly high unemployment figures in the US, as it means people living in declining cities cannot move to places where jobs are more plentiful.
In Singapore, which takes just about an hour to cross by car, the problems posed by such immobility are less serious. Still, he thinks being stuck in such 'underwater' homes could result in longer commutes to workplaces and stop families from moving close to the school they want their children to attend.
Prof Gyourko - a home owner himself in Philadelphia - is careful to declare he has nothing against home ownership, especially as it makes someone a stakeholder in his community. In the case of Singapore, it makes one a stakeholder in the nation.
But the goal of the Government should be to get people to 'make the right choice about owning versus renting, not that owning always is better'.
In sum, housing choices should follow people's needs over their lifetime, instead of determining how they have to live their lives.
Young people, he says, make 'natural renters' instead of home buyers because this arrangement allows them to respond quickly to changing circumstances.
'You can move to opportunity. You can get married. You can do all types of different things instead of being stuck in a house,' he says.
tanhy@sph.com.sg
--------------------------------------------------------------------------------
An authority on real estate and housing policy
'I bet that housing does not drive child-bearing decisions'
· What do you make of Singapore's quotas for different ethnic groups in public housing estates to discourage racial enclaves from forming?
I've never been a fan of quotas. My preference is to always incentivise people positively.
I would prefer paying a positive price for you to live in someone else's neighbourhood if you were of a different ethnicity. I'd bribe you to go into an area where you are not the majority. You get a bounty.
It provides more freedom of mobility and choice. But governments don't like my way because it is costly.
· Young couples in Singapore have complained that they are not able to start families because they have been priced out of the housing market. Your view?
I understand the claim, but I don't put much credibility in it. Governments like yours are famous for trying to encourage child-bearing through financial inducements. It doesn't work very well, does it?
It's because this decision is incredibly complex, incredibly long-term. My gut feel is the claim is made by people who just want a subsidy, and it's not affecting child-bearing decisions at all.
If it were a simple matter of finance, Singapore would not have a fertility problem. And there'd be no one with kids in Bangladesh.
· How has your view of housing as a consumption good shaped your own consumption of housing?
I certainly did not buy a bigger house than I needed because I knew the costs were very high. I tried to figure out with my wife how many kids we were going to have, and how much space we needed. We thought we wanted to have two kids; we bought our house when our first was coming.
But our family decisions drove our housing decisions, not the other way around.
Having said that, there's no doubt that incomes can affect fertility. For instance, in the Great Depression, fertility dropped worldwide. If you don't think you can support a family, you won't start a family.
Back then, it was about unemployment of 25 per cent and the danger of starving. Here, you are talking about an extra bedroom. There's a big difference.
· Still, wouldn't the lack of an extra bedroom make you delay child-bearing?
I think so. Living with mum and dad could delay it because of the lack of space. But the right way to do deal with this is to develop a rental market.
· So isn't housing cost an opportunity cost vis-a-vis having a family?
Without a doubt. Kids are expensive that way. The correlation could be worth looking at across countries. And you will have to take into account a lot of stuff.
Just think about Catholic countries where you have a religious group saying 'no' to birth control. You're going to see high fertility rates, no matter how low the income and what type of housing there is.
That's what makes it so hard to tell. But I still bet that housing does not drive child-bearing decisions.
Tuesday, September 28, 2010
ST Forum : The other story - rogue clients
Sep 28, 2010
The other story - rogue clients
I REFER to the article ("Do your checks before signing the cheques"; Aug 22) and Miss Koh Wee Leng's letter on Sunday ("It can be tough for property agents").
The reality of the business is that it is far from easy to be a successful property agent. Besides needing the skills and tenacity to edge out competition in this highly competitive industry, there are also rogue clients to deal with.
We often hear complaints about rogue agents, yet the total number of complaints is only about 1 to 2 per cent, based on the Consumers Association of Singapore's complaints against the number of HDB transactions.
What people do not often hear about are the clients who make life even more difficult for agents. Those who refuse to pay commission after the deal, not just those who delay payment.
Those who try to renegotiate the commission after the transaction is complete.
Those who engage multiple agents to begin multiple deals, none of which can, therefore, be completed.
Those who take advantage of agents by asking for personal loans to settle their outstanding service and conservancy charges so their flat can be sold, and so on.
The Ministry of National Development is regulating the real estate industry, and rightly so. If only there was a way to regulate those rogue consumers as well.
Adam Tan
Corporate Communications Manager
PropNex Realty
The other story - rogue clients
I REFER to the article ("Do your checks before signing the cheques"; Aug 22) and Miss Koh Wee Leng's letter on Sunday ("It can be tough for property agents").
The reality of the business is that it is far from easy to be a successful property agent. Besides needing the skills and tenacity to edge out competition in this highly competitive industry, there are also rogue clients to deal with.
We often hear complaints about rogue agents, yet the total number of complaints is only about 1 to 2 per cent, based on the Consumers Association of Singapore's complaints against the number of HDB transactions.
What people do not often hear about are the clients who make life even more difficult for agents. Those who refuse to pay commission after the deal, not just those who delay payment.
Those who try to renegotiate the commission after the transaction is complete.
Those who engage multiple agents to begin multiple deals, none of which can, therefore, be completed.
Those who take advantage of agents by asking for personal loans to settle their outstanding service and conservancy charges so their flat can be sold, and so on.
The Ministry of National Development is regulating the real estate industry, and rightly so. If only there was a way to regulate those rogue consumers as well.
Adam Tan
Corporate Communications Manager
PropNex Realty
ST : Tougher for investors to apply for PR status
Sep 28, 2010
Tougher for investors to apply for PR status
Minimum investment, turnover levels go up, and houses don't count
By Melissa Kok
FOREIGNERS who want to become Singapore permanent residents (PRs) under a scheme for investors must now meet stricter requirements.
Under new rules for the Global Investor Programme (GIP), they will have to more than double their investments here to $2.5 million.
Their companies must also have an annual turnover of $30 million - up from $10 million previously.
And they will no longer be allowed to count the cost of buying a private home as part of their required investment.
The changes - some of which take effect from this Friday - come on the heels of other measures by the Government to better manage the pace of the growth of immigrants.
The GIP is offered by Contact Singapore, an alliance of the Economic Development Board and the Manpower Ministry.
It was started in 2004 to ease the way for foreign entrepreneurs and businessmen to set up and run businesses here.
A spokesman for Contact Singapore would not say how many investors have become PRs this way.
As for the changes, the spokesman said they were intended 'to fine-tune the criteria and the mode of investment to ensure a higher calibre of investors who are participating in the programme'.
The amendments were announced without fanfare on the Contact Singapore website on Aug 31.
Currently, foreign entrepreneurs and businessmen applying for the GIP must have an annual company turnover of at least $10 million a year, and an average turnover of the same amount for the last three years.
That will be tripled to $30 million from this Friday.
How much they need to invest will also change.
Right now, GIP applicants must invest a minimum of $1 million. From January next year, this will be raised to $2.5 million.
Under current rules, those investing at least $2 million can use up to half the amount on an owner-occupied private home. That option will no longer be available.
Parents and parents-in-law will also be excluded from the main candidate's GIP application for PR status.
Although some of the changes take effect in January, applications received from this Friday will be subject to the new requirements as the average processing time for an application is eight months.
The changes follow the Government's move late last year to tighten the PR and citizenship framework. Those applying for PR status and citizenship now, for example, face more stringent eligibility criteria such as a higher income bar and residential requirements to ensure they can contribute to Singapore economically and also integrate well into society.
The tougher rules seem to have an effect.
Last year, 59,500 foreigners were granted PR status, compared with 79,200 in 2008. The slowdown becomes more apparent when comparing with the figures between April last year and the end of March this year, after the new rules kicked in. During this period, 46,300 foreigners were granted PR status.
The GIP is similar to other government schemes which aim to attract the wealthy by offering PR status. They include the Monetary Authority of Singapore's Financial Investor Scheme, targeted at foreigners with at least $20 million in net personal assets.
Other countries such as New Zealand, Australia and Canada offer similar schemes.
Mr Leong Wai Ho, senior regional economist at Barclays Capital, said the changes would not deter investors from applying for the scheme as most 'definitely will have more than that amount to invest'.
But he added: 'Removing the property option might be detrimental for the property market outlook in the near term, particularly in the top end, but it removes speculative pressure.'
Political observer Eugene Tan of the Singapore Management University said the changes show the Government is addressing the concerns of Singaporeans, particularly those who feel PR status is given away easily.
He said: 'In a way, it is raising the bar, and so that helps enhance the talent pool here.'
melk@sph.com.sg
Additional reporting by Amanda Tan
--------------------------------------------------------------------------------
Changes to the criteria
CURRENT RULES
1. Applicants with entrepreneurial experience and a business track record must have a company turnover of at least $10 million per annum in the most recent year, and at least $10 million per annum on average for the last three years.
2. In addition, applicants must make an investment. Their options:
· Invest at least $1 million in a new business start-up or expansion of an existing business operation.
· Those who invest at least $1.5 million can also choose to do so in a fund approved by the Global Investor Programme (GIP).
· For those who invest $2 million or more, up to 50 per cent of the amount can be in a private residential property occupied by the applicant.
3. Parents and parents-in-law of applicants are eligible for PR at an additional investment of $300,000 per person.
NEW RULES
From Oct 1, the company turnover requirement will be raised to at least $30 million per annum.
From Jan 1 next year:
· Minimum investment sum will be raised to at least $2.5 million.
· Money spent on residential property will no longer be considered part of the applicant's investments.
· Parents and parents-in-law are no longer eligible to be included in the candidate's GIP application for PR status. They can instead apply for a five-year Long Term Visit Pass, which is renewable and tied to the validity of the main applicant's re-entry permit.
· These changes will apply to all applications received from Oct 1.
Tougher for investors to apply for PR status
Minimum investment, turnover levels go up, and houses don't count
By Melissa Kok
FOREIGNERS who want to become Singapore permanent residents (PRs) under a scheme for investors must now meet stricter requirements.
Under new rules for the Global Investor Programme (GIP), they will have to more than double their investments here to $2.5 million.
Their companies must also have an annual turnover of $30 million - up from $10 million previously.
And they will no longer be allowed to count the cost of buying a private home as part of their required investment.
The changes - some of which take effect from this Friday - come on the heels of other measures by the Government to better manage the pace of the growth of immigrants.
The GIP is offered by Contact Singapore, an alliance of the Economic Development Board and the Manpower Ministry.
It was started in 2004 to ease the way for foreign entrepreneurs and businessmen to set up and run businesses here.
A spokesman for Contact Singapore would not say how many investors have become PRs this way.
As for the changes, the spokesman said they were intended 'to fine-tune the criteria and the mode of investment to ensure a higher calibre of investors who are participating in the programme'.
The amendments were announced without fanfare on the Contact Singapore website on Aug 31.
Currently, foreign entrepreneurs and businessmen applying for the GIP must have an annual company turnover of at least $10 million a year, and an average turnover of the same amount for the last three years.
That will be tripled to $30 million from this Friday.
How much they need to invest will also change.
Right now, GIP applicants must invest a minimum of $1 million. From January next year, this will be raised to $2.5 million.
Under current rules, those investing at least $2 million can use up to half the amount on an owner-occupied private home. That option will no longer be available.
Parents and parents-in-law will also be excluded from the main candidate's GIP application for PR status.
Although some of the changes take effect in January, applications received from this Friday will be subject to the new requirements as the average processing time for an application is eight months.
The changes follow the Government's move late last year to tighten the PR and citizenship framework. Those applying for PR status and citizenship now, for example, face more stringent eligibility criteria such as a higher income bar and residential requirements to ensure they can contribute to Singapore economically and also integrate well into society.
The tougher rules seem to have an effect.
Last year, 59,500 foreigners were granted PR status, compared with 79,200 in 2008. The slowdown becomes more apparent when comparing with the figures between April last year and the end of March this year, after the new rules kicked in. During this period, 46,300 foreigners were granted PR status.
The GIP is similar to other government schemes which aim to attract the wealthy by offering PR status. They include the Monetary Authority of Singapore's Financial Investor Scheme, targeted at foreigners with at least $20 million in net personal assets.
Other countries such as New Zealand, Australia and Canada offer similar schemes.
Mr Leong Wai Ho, senior regional economist at Barclays Capital, said the changes would not deter investors from applying for the scheme as most 'definitely will have more than that amount to invest'.
But he added: 'Removing the property option might be detrimental for the property market outlook in the near term, particularly in the top end, but it removes speculative pressure.'
Political observer Eugene Tan of the Singapore Management University said the changes show the Government is addressing the concerns of Singaporeans, particularly those who feel PR status is given away easily.
He said: 'In a way, it is raising the bar, and so that helps enhance the talent pool here.'
melk@sph.com.sg
Additional reporting by Amanda Tan
--------------------------------------------------------------------------------
Changes to the criteria
CURRENT RULES
1. Applicants with entrepreneurial experience and a business track record must have a company turnover of at least $10 million per annum in the most recent year, and at least $10 million per annum on average for the last three years.
2. In addition, applicants must make an investment. Their options:
· Invest at least $1 million in a new business start-up or expansion of an existing business operation.
· Those who invest at least $1.5 million can also choose to do so in a fund approved by the Global Investor Programme (GIP).
· For those who invest $2 million or more, up to 50 per cent of the amount can be in a private residential property occupied by the applicant.
3. Parents and parents-in-law of applicants are eligible for PR at an additional investment of $300,000 per person.
NEW RULES
From Oct 1, the company turnover requirement will be raised to at least $30 million per annum.
From Jan 1 next year:
· Minimum investment sum will be raised to at least $2.5 million.
· Money spent on residential property will no longer be considered part of the applicant's investments.
· Parents and parents-in-law are no longer eligible to be included in the candidate's GIP application for PR status. They can instead apply for a five-year Long Term Visit Pass, which is renewable and tied to the validity of the main applicant's re-entry permit.
· These changes will apply to all applications received from Oct 1.
ST : Resale home price rises slowing
Sep 28, 2010
Resale home price rises slowing
Sales of new homes also reported to be quiet over weekend
By Joyce Teo
PRICES of private resale homes are continuing to hit record highs, although the pace of increase has generally continued to slow this quarter, according to a report by property consultancy DTZ.
Over the rest of the year, this weakening growth is likely to grind to a halt as recent government measures to cool the residential market take effect, it said.
'Sales volume is expected to be lower as sellers continue to maintain their asking prices while potential buyers hold out for lower prices.'
The DTZ report said resale prices of suburban leasehold homes increased by 2 per cent to $660 psf in this third quarter.
This compares with a 4 per cent rise in the second quarter, which took prices to $648 psf. The 2007 peak for these homes was $615 psf.
In the new homes market last weekend, sales were generally fairly quiet, as buyers may have been distracted by the Singapore Grand Prix, said an industry source.
NV Residences in Pasir Ris sold another 35 units, lifting total sales to 335 out of 380 launched units, said a City Developments Ltd (CDL) spokesman.
It sold 50 units the previous weekend and 90 units over the Hari Raya weekend.
The 642-unit condo had sold 160 units at its Sept 8 preview despite the Aug 30 cooling measures having kicked in by then.
The CDL spokesman said a 'good mix of all types' of homes were sold and that there had been no change in price. CDL had earlier raised the price by 1 to 2 per cent from $830 psf on average.
Over in Leonie Hill Road, Overseas Union Enterprise could not provide a sales update for its 99-year leasehold Twin Peaks project launched about a week ago.
But executive chairman Stephen Riady said he is confident of selling the 462-unit project, where homes are sold on a fully furnished basis.
The firm released 70 units for sale last weekend - the number needed to cover construction costs. It sold half of them, achieving prices of $2,890 psf.
Another 12 units are booked, having been reserved two months ago by buyers wanting to delay their decisions because of the cooling measures, he said.
The DTZ report said resale freehold condo prices in prime districts 9, 10 and 11 rose 1.4 per cent to touch $1,513 psf, slowing from a 2.6 per cent rise in the second quarter as well-heeled investors remained cautious about the growth of major economies in the West.
Still, the price level is already above the previous 2007 record of $1,483 psf.
Luxury condos - the only segment where prices are still just below the 2007 peak - also saw a slower rise, of 1.6 per cent quarter-on-quarter, to $2,630 psf.
The landed homes segment, which has seen robust growth since the second quarter of last year, was not spared the slowdown, DTZ research shows.
Prices of prime freehold landed homes rose by 2 per cent quarter-on-quarter to $1,611 psf, compared with the 3.3 per cent growth clocked up in the second quarter of this year.
Outside the prime districts, landed home prices inched up by 1.7 per cent to $952 psf. But this rise means these prices have, for the first time, surpassed the high of $943 psf recorded during the 1996 boom, DTZ said.
joyceteo@sph.com.sg
Resale home price rises slowing
Sales of new homes also reported to be quiet over weekend
By Joyce Teo
PRICES of private resale homes are continuing to hit record highs, although the pace of increase has generally continued to slow this quarter, according to a report by property consultancy DTZ.
Over the rest of the year, this weakening growth is likely to grind to a halt as recent government measures to cool the residential market take effect, it said.
'Sales volume is expected to be lower as sellers continue to maintain their asking prices while potential buyers hold out for lower prices.'
The DTZ report said resale prices of suburban leasehold homes increased by 2 per cent to $660 psf in this third quarter.
This compares with a 4 per cent rise in the second quarter, which took prices to $648 psf. The 2007 peak for these homes was $615 psf.
In the new homes market last weekend, sales were generally fairly quiet, as buyers may have been distracted by the Singapore Grand Prix, said an industry source.
NV Residences in Pasir Ris sold another 35 units, lifting total sales to 335 out of 380 launched units, said a City Developments Ltd (CDL) spokesman.
It sold 50 units the previous weekend and 90 units over the Hari Raya weekend.
The 642-unit condo had sold 160 units at its Sept 8 preview despite the Aug 30 cooling measures having kicked in by then.
The CDL spokesman said a 'good mix of all types' of homes were sold and that there had been no change in price. CDL had earlier raised the price by 1 to 2 per cent from $830 psf on average.
Over in Leonie Hill Road, Overseas Union Enterprise could not provide a sales update for its 99-year leasehold Twin Peaks project launched about a week ago.
But executive chairman Stephen Riady said he is confident of selling the 462-unit project, where homes are sold on a fully furnished basis.
The firm released 70 units for sale last weekend - the number needed to cover construction costs. It sold half of them, achieving prices of $2,890 psf.
Another 12 units are booked, having been reserved two months ago by buyers wanting to delay their decisions because of the cooling measures, he said.
The DTZ report said resale freehold condo prices in prime districts 9, 10 and 11 rose 1.4 per cent to touch $1,513 psf, slowing from a 2.6 per cent rise in the second quarter as well-heeled investors remained cautious about the growth of major economies in the West.
Still, the price level is already above the previous 2007 record of $1,483 psf.
Luxury condos - the only segment where prices are still just below the 2007 peak - also saw a slower rise, of 1.6 per cent quarter-on-quarter, to $2,630 psf.
The landed homes segment, which has seen robust growth since the second quarter of last year, was not spared the slowdown, DTZ research shows.
Prices of prime freehold landed homes rose by 2 per cent quarter-on-quarter to $1,611 psf, compared with the 3.3 per cent growth clocked up in the second quarter of this year.
Outside the prime districts, landed home prices inched up by 1.7 per cent to $952 psf. But this rise means these prices have, for the first time, surpassed the high of $943 psf recorded during the 1996 boom, DTZ said.
joyceteo@sph.com.sg
ST : Uninhabited isles in Malaysia for sale
Sep 26, 2010
Uninhabited isles in Malaysia for sale
Foreigners invited to form joint ventures with locals or build homes there to spur economy
Osaka - Malaysia welcomes foreigners who wish to buy or develop any of its uninhabited islands as this could help stimulate the country's economy and bring in more tourist dollars.
Foreigners can develop these islands as joint ventures with locals or even build their homes there and make Malaysia their second home, said Tourism Minister Ng Yen Yen. She stressed, however, that state governments would have the final say on such transactions as land is a state matter.
'We are, however, open to this idea. It will help open up our economy and provide more opportunities to Malaysians as well,' she said, adding that there were 1,007 islands around the country with the majority uninhabited.
Dr Ng, on a promotion tour of Japan, was speaking to a group of Japanese investors, travel agents and operators, and airline representatives in Osaka. She said Malaysia enjoyed political stability, was not exposed to natural disasters and was a reasonably cheap place to live in.
The Star/Asia News Network
Uninhabited isles in Malaysia for sale
Foreigners invited to form joint ventures with locals or build homes there to spur economy
Osaka - Malaysia welcomes foreigners who wish to buy or develop any of its uninhabited islands as this could help stimulate the country's economy and bring in more tourist dollars.
Foreigners can develop these islands as joint ventures with locals or even build their homes there and make Malaysia their second home, said Tourism Minister Ng Yen Yen. She stressed, however, that state governments would have the final say on such transactions as land is a state matter.
'We are, however, open to this idea. It will help open up our economy and provide more opportunities to Malaysians as well,' she said, adding that there were 1,007 islands around the country with the majority uninhabited.
Dr Ng, on a promotion tour of Japan, was speaking to a group of Japanese investors, travel agents and operators, and airline representatives in Osaka. She said Malaysia enjoyed political stability, was not exposed to natural disasters and was a reasonably cheap place to live in.
The Star/Asia News Network
ST : Er, what is COV?
Sep 26, 2010
FINANCIAL QUOTIENT
Er, what is COV?
Where do you see this?
In articles on HDB resale flats and online or classified advertisements.
What does it mean?
COV is short for cash- over-valuation. It refers to the cash amount that buyers typically pay on top of the valuation of an HDB resale flat. It occurs when buyers choose to pay more than the market value of the flats as determined by an HDB panel of independent professional valuers.
COV payments are not compulsory, though they can be the norm in a booming market.
Why is it important?
It affects the price of a resale flat; it has to be paid upfront in cash as the amount the HDB or the banks will lend is based only on the flat's valuation.
So you want to use the term. Just say...
'I am waiting for COV to drop before I go flat-hunting.'
Joyce Teo
FINANCIAL QUOTIENT
Er, what is COV?
Where do you see this?
In articles on HDB resale flats and online or classified advertisements.
What does it mean?
COV is short for cash- over-valuation. It refers to the cash amount that buyers typically pay on top of the valuation of an HDB resale flat. It occurs when buyers choose to pay more than the market value of the flats as determined by an HDB panel of independent professional valuers.
COV payments are not compulsory, though they can be the norm in a booming market.
Why is it important?
It affects the price of a resale flat; it has to be paid upfront in cash as the amount the HDB or the banks will lend is based only on the flat's valuation.
So you want to use the term. Just say...
'I am waiting for COV to drop before I go flat-hunting.'
Joyce Teo
ST : Calls to preserve train station
Sep 26, 2010
Calls to preserve train station
Heritage buffs say Tanjong Pagar site has rich history and must stay open to the public
By Amanda Tan
Now that the land around the Tanjong Pagar railway station has been given to Singapore, the next question is: What should the Government do with the site?
While there are no concrete plans for the station, which sits on prime land, people familiar with the place are calling for it to remain open and accessible to all.
A group is lobbying for it to be turned into a transportation museum, much like how some people wanted to turn the old Collyer Quay into a maritime museum.
Whatever it is, experts and people who have a special attachment to the station feel it should retain some of its old flavour, to honour its historical significance.
Above all, it should remain a public space, one that people from all walks of life can enjoy.
Said Ms Carolyn Seet, 38, who started a petition in July to turn the station into a transportation museum: 'The railway was for everyone - rich or poor, or those who could not afford other means of travel in the past. So we must keep it accessible and not so posh that only a select few can go there.'
The assistant general manager of an IT firm hopes to send her petition to the Prime Minister's Office once she garners 1,000 signatures. She has now collected about 300 online.
She also started a group on social networking site Facebook that now has more than 1,000 followers, many of whom have fond memories of the station. Ms Seet herself rode on the trains on her first trip out of the country almost 30 years ago.
'I feel a sense of loss, with so many of the places I knew as a child gone or demolished. We've lost so much in one generation. If we lose that nostalgia and memories, then we have less to grasp of our past,' said the mother of two young boys.
In a land swop agreement reached last week between Singapore and Malaysia, Malaysia received six land parcels in Marina South and the Ophir-Rochor area in exchange for giving up six Malayan Railway sites in Tanjong Pagar, Kranji, Woodlands and Bukit Timah.
Development of the land around the station will be carried out by M-S Pte Ltd, a 60-40 joint venture between Khazanah Nasional and Temasek Holdings.
Tanjong Pagar station reminds people of an important point in local history, said Dr Chua Ai Lin, a historian at the National University of Singapore (NUS).
'The railway was crucial to our economic development as it was the main mode of transporting key commodities such as tin and rubber from across the peninsula.'
Singapore's port thrived because of the goods the country processed and exported internationally. Trains supported this by being efficient in transporting large volumes of goods, she said.
Dr Lai Chee Kien, an assistant professor at NUS' architecture department who has done research on the railway's history, said the place represents the social relations between Singapore and Malaysia.
'Our connections go beyond politics: We have economic, geographical, historical and social ties,' he said, adding that pre-1965 history has not yet been taught comprehensively to the younger generation.
He hopes the space can be used to help educate the public about this aspect of history.
Heritage buffs also want the building to be gazetted as a national monument. Said Mr Ho Weng Hin, director of Studio Lapis, an architectural conservation specialist consultancy: 'It is great architecturally, historically and socially. Its significance in these three areas is very high,' he said.
The 36-year-old feels the land should be developed holistically because 'the value is in the entire whole'. This includes the greenery along the railway tracks.
Mr Ho also urged developers to consider the environmental impact when deciding what to do with the site.
He has done extensive research on the station for a book he is co-authoring on architecture in Singapore from the 1920s to 1970s. Published by the Singapore Heritage Society, it is expected to be out in stores by the end of next year.
Modelled after great early 20th century train terminals in the United States - in which modern technology was used to create huge spaces - the Tanjong Pagar station was designed by D.S. Petrovich of Swan & McLaren, one of Singapore's earliest architectural firms. It opened in 1932.
'No matter what it becomes, it should not be a place for a limited few,' argued Mr Ho.
'The new use should be meaningful not just to future generations, but to people who identified with the building in the past.'
tamanda@sph.com.sg
--------------------------------------------------------------------------------
Worthy of preservation
Most will agree that the Tanjong Pagar Railway Station and the railway line are historically significant. Those familiar with the place say there are some important artefacts there. We take a look at what these are, and why they are of value.
Four statues at the front of the station, each with an emblem above and the letters F, M, S and R
FMSR stands for Federated Malay States Railways, as the railway operator was previously called, and refers to the consolidated train operation that allowed for interstate travel. It tells the story of developments in then Malaya - economically, politically and socially.
The railway enabled trade and allowed the British to expand their political clout and economic power from the 1870s to 1930s.
The four statues also represent four economic pillars - agriculture, industry, transport and commerce. They are a powerful statement to all who see that this station has enabled these elements to flourish.
Mr Ho Weng Hin, an architectural conservation specialist and consultant, said art was one way of conveying messages to the public, who were mostly non-literate.
The same message of economic activities is repeated on the murals inside the station.
Murals inside station
Each measuring about 8m by 3m, the murals depict the economic activities of the people of pre-war Singapore and Malaya.
The murals capture scenes such as shipping, agriculture, mining and rubber cultivation.
It is interesting to note, Mr Ho said, that the murals were made of the same material that made Singapore rich - rubber.
Keeping the murals in the same space as the passengers' waiting hall conveys a sense of grandeur, and arrival to Singapore as a principal city in British Malaya, said Mr Ho.
Key token system
The key tokens were exchanged between train drivers or crew whenever they reached a station or intersection. Gaining the key token signified permission to proceed, based on security and traffic conditions.
Introduced in 1885 when the Keretapi Tanah Melayu (KTM) trains first rolled out, the system is still being used in several regions along the trains' routes.
Only the Central route, which includes stops such as Kuala Lumpur, has switched to electronic signalling systems, which are more efficient and require less manpower to handle.
Mr Mohd Fazil Ismail, senior corporate communications manager at KTM Berhad, said the key token system will be fully replaced with the electronic system in the next 10 years.
Push trolleys
Push trolleys were introduced in 1885 and were used by station inspectors daily to check the railway. They used to be pulled by coolies, or general workers of that time.
Last used in the 1960s, they have now been replaced by higher-functioning machines such as the EM20, which monitors track strength, the diesel trolley, and the ultrasonic trolley, which can detect problems with the tracks.
Amanda Tan
--------------------------------------------------------------------------------
Keep it accessible
'The railway was for everyone - rich or poor, or those who could not afford other means of travel in the past. So we must keep it accessible and not so posh that only a select few can go there.'
MS CAROLYN SEET, 38, who started a petition to turn the station into a transportation museum
Calls to preserve train station
Heritage buffs say Tanjong Pagar site has rich history and must stay open to the public
By Amanda Tan
Now that the land around the Tanjong Pagar railway station has been given to Singapore, the next question is: What should the Government do with the site?
While there are no concrete plans for the station, which sits on prime land, people familiar with the place are calling for it to remain open and accessible to all.
A group is lobbying for it to be turned into a transportation museum, much like how some people wanted to turn the old Collyer Quay into a maritime museum.
Whatever it is, experts and people who have a special attachment to the station feel it should retain some of its old flavour, to honour its historical significance.
Above all, it should remain a public space, one that people from all walks of life can enjoy.
Said Ms Carolyn Seet, 38, who started a petition in July to turn the station into a transportation museum: 'The railway was for everyone - rich or poor, or those who could not afford other means of travel in the past. So we must keep it accessible and not so posh that only a select few can go there.'
The assistant general manager of an IT firm hopes to send her petition to the Prime Minister's Office once she garners 1,000 signatures. She has now collected about 300 online.
She also started a group on social networking site Facebook that now has more than 1,000 followers, many of whom have fond memories of the station. Ms Seet herself rode on the trains on her first trip out of the country almost 30 years ago.
'I feel a sense of loss, with so many of the places I knew as a child gone or demolished. We've lost so much in one generation. If we lose that nostalgia and memories, then we have less to grasp of our past,' said the mother of two young boys.
In a land swop agreement reached last week between Singapore and Malaysia, Malaysia received six land parcels in Marina South and the Ophir-Rochor area in exchange for giving up six Malayan Railway sites in Tanjong Pagar, Kranji, Woodlands and Bukit Timah.
Development of the land around the station will be carried out by M-S Pte Ltd, a 60-40 joint venture between Khazanah Nasional and Temasek Holdings.
Tanjong Pagar station reminds people of an important point in local history, said Dr Chua Ai Lin, a historian at the National University of Singapore (NUS).
'The railway was crucial to our economic development as it was the main mode of transporting key commodities such as tin and rubber from across the peninsula.'
Singapore's port thrived because of the goods the country processed and exported internationally. Trains supported this by being efficient in transporting large volumes of goods, she said.
Dr Lai Chee Kien, an assistant professor at NUS' architecture department who has done research on the railway's history, said the place represents the social relations between Singapore and Malaysia.
'Our connections go beyond politics: We have economic, geographical, historical and social ties,' he said, adding that pre-1965 history has not yet been taught comprehensively to the younger generation.
He hopes the space can be used to help educate the public about this aspect of history.
Heritage buffs also want the building to be gazetted as a national monument. Said Mr Ho Weng Hin, director of Studio Lapis, an architectural conservation specialist consultancy: 'It is great architecturally, historically and socially. Its significance in these three areas is very high,' he said.
The 36-year-old feels the land should be developed holistically because 'the value is in the entire whole'. This includes the greenery along the railway tracks.
Mr Ho also urged developers to consider the environmental impact when deciding what to do with the site.
He has done extensive research on the station for a book he is co-authoring on architecture in Singapore from the 1920s to 1970s. Published by the Singapore Heritage Society, it is expected to be out in stores by the end of next year.
Modelled after great early 20th century train terminals in the United States - in which modern technology was used to create huge spaces - the Tanjong Pagar station was designed by D.S. Petrovich of Swan & McLaren, one of Singapore's earliest architectural firms. It opened in 1932.
'No matter what it becomes, it should not be a place for a limited few,' argued Mr Ho.
'The new use should be meaningful not just to future generations, but to people who identified with the building in the past.'
tamanda@sph.com.sg
--------------------------------------------------------------------------------
Worthy of preservation
Most will agree that the Tanjong Pagar Railway Station and the railway line are historically significant. Those familiar with the place say there are some important artefacts there. We take a look at what these are, and why they are of value.
Four statues at the front of the station, each with an emblem above and the letters F, M, S and R
FMSR stands for Federated Malay States Railways, as the railway operator was previously called, and refers to the consolidated train operation that allowed for interstate travel. It tells the story of developments in then Malaya - economically, politically and socially.
The railway enabled trade and allowed the British to expand their political clout and economic power from the 1870s to 1930s.
The four statues also represent four economic pillars - agriculture, industry, transport and commerce. They are a powerful statement to all who see that this station has enabled these elements to flourish.
Mr Ho Weng Hin, an architectural conservation specialist and consultant, said art was one way of conveying messages to the public, who were mostly non-literate.
The same message of economic activities is repeated on the murals inside the station.
Murals inside station
Each measuring about 8m by 3m, the murals depict the economic activities of the people of pre-war Singapore and Malaya.
The murals capture scenes such as shipping, agriculture, mining and rubber cultivation.
It is interesting to note, Mr Ho said, that the murals were made of the same material that made Singapore rich - rubber.
Keeping the murals in the same space as the passengers' waiting hall conveys a sense of grandeur, and arrival to Singapore as a principal city in British Malaya, said Mr Ho.
Key token system
The key tokens were exchanged between train drivers or crew whenever they reached a station or intersection. Gaining the key token signified permission to proceed, based on security and traffic conditions.
Introduced in 1885 when the Keretapi Tanah Melayu (KTM) trains first rolled out, the system is still being used in several regions along the trains' routes.
Only the Central route, which includes stops such as Kuala Lumpur, has switched to electronic signalling systems, which are more efficient and require less manpower to handle.
Mr Mohd Fazil Ismail, senior corporate communications manager at KTM Berhad, said the key token system will be fully replaced with the electronic system in the next 10 years.
Push trolleys
Push trolleys were introduced in 1885 and were used by station inspectors daily to check the railway. They used to be pulled by coolies, or general workers of that time.
Last used in the 1960s, they have now been replaced by higher-functioning machines such as the EM20, which monitors track strength, the diesel trolley, and the ultrasonic trolley, which can detect problems with the tracks.
Amanda Tan
--------------------------------------------------------------------------------
Keep it accessible
'The railway was for everyone - rich or poor, or those who could not afford other means of travel in the past. So we must keep it accessible and not so posh that only a select few can go there.'
MS CAROLYN SEET, 38, who started a petition to turn the station into a transportation museum
ST : HDB rules apply to landbanking
Sep 26, 2010
HDB rules apply to landbanking
Interest in residential land, even if vacant, constitutes ownership of private property
By Esther Teo
Housing Board flat owners who want to invest in land abroad through landbanking companies will now have to think twice before parting with their savings.
The HDB has confirmed with The Sunday Times that they will be caught out by Singapore's new property rules, which state that HDB flat owners are not allowed to concurrently own an HDB flat and private property - local overseas - within the minimum occupation period (MOP).
An interest in residential land, even vacant land, does constitute ownership of private property, the HDB said last Friday.
This means that if a landbanking investor who has a share of residential land buys an HDB resale flat on or after Aug 30, he must dispose of one of those properties within six months of the purchase.
It also means that an HDB flat owner can enter into a landbanking investment that involves residential land only after the MOP of five years.
An HDB owner yet to meet his MOP will therefore need to be careful when investing in landbanking firms, as he might have to dispose of land initially not zoned residential if it later acquires residential zoning.
But the HDB has also acknowledged that there may be small groups of people who require special consideration and is willing to help them.
'The HDB will need to look into the specifics of such cases, and evaluate whether the interest in the land is substantial enough to be considered private property ownership. They can write to us with the necessary documents and details of their appeal,' it said.
Landbanking firms buy large plots of land and subdivide them into smaller parcels to sell to investors.
These firms usually tell investors they can buy undeveloped plots of rural land overseas. When development plans are drawn up, investors are told they can sell their plots to developers who are willing to pay higher prices to secure the land.
For example, Canadian-based Edgeworth Properties, which has about 2,000 Singapore clients, of which about half are HDB flat owners, is offering investors the option to buy 7,260 sq ft - or one-sixth of an acre - of land in Alberta, Canada, for about $15,000.
This plot, however, already has an area structure plan that establishes the general planning framework for future development.
Walton International, a Canadian-based landbanking firm, said it was too early to comment on the effect the new rules would have on its business. But it added that it was discussing the matter with the HDB.
Another landbanking firm, which declined to be named, expects to be unaffected by the new rules.
It said half of its land parcels were sold to developers 'within months' of zoning approvals being obtained. This means that investors exited very soon after a piece of land was zoned residential.
The remainder were fixed-term, fixed-return contracts that would see investors getting their payouts before any homes are built on them.
But while the effect of the HDB's ruling may still be unclear, some landbanking investors are questioning its rationale.
One investor, who wanted to be known only as Mr Lim, said landbanking should be seen as a real estate investment scheme rather than as having an interest in private residential property.
'We are at the very early stages of the real estate life cycle, before even any dwellings are built... It is more of an investment where you get in and then get out. I don't think landbanking should be covered under HDB's rules,' he added.
Mr T.H. Tan, who has been approached to invest in land through landbroking firms in the past, added: 'What happens in six months' time if the private property investment cannot be disposed of, maybe due to a lack of takers? What is the Government going to do to help these people?'
Mr Christopher Tan, chief executive of financial advisory firm Providend, said that with most Singaporeans living in HDB flats, and the investment quantums involved in landbanking not being very large, the majority of landbanking investors could well be HDB dwellers.
He disagreed with the HDB's ruling as it would not help to cool down the property market, but he added: 'This is one more reason for investors to be more cautious when investing in landbanking, since there are even more grey areas and unknowns to navigate now.'
esthert@sph.com.sg
HDB rules apply to landbanking
Interest in residential land, even if vacant, constitutes ownership of private property
By Esther Teo
Housing Board flat owners who want to invest in land abroad through landbanking companies will now have to think twice before parting with their savings.
The HDB has confirmed with The Sunday Times that they will be caught out by Singapore's new property rules, which state that HDB flat owners are not allowed to concurrently own an HDB flat and private property - local overseas - within the minimum occupation period (MOP).
An interest in residential land, even vacant land, does constitute ownership of private property, the HDB said last Friday.
This means that if a landbanking investor who has a share of residential land buys an HDB resale flat on or after Aug 30, he must dispose of one of those properties within six months of the purchase.
It also means that an HDB flat owner can enter into a landbanking investment that involves residential land only after the MOP of five years.
An HDB owner yet to meet his MOP will therefore need to be careful when investing in landbanking firms, as he might have to dispose of land initially not zoned residential if it later acquires residential zoning.
But the HDB has also acknowledged that there may be small groups of people who require special consideration and is willing to help them.
'The HDB will need to look into the specifics of such cases, and evaluate whether the interest in the land is substantial enough to be considered private property ownership. They can write to us with the necessary documents and details of their appeal,' it said.
Landbanking firms buy large plots of land and subdivide them into smaller parcels to sell to investors.
These firms usually tell investors they can buy undeveloped plots of rural land overseas. When development plans are drawn up, investors are told they can sell their plots to developers who are willing to pay higher prices to secure the land.
For example, Canadian-based Edgeworth Properties, which has about 2,000 Singapore clients, of which about half are HDB flat owners, is offering investors the option to buy 7,260 sq ft - or one-sixth of an acre - of land in Alberta, Canada, for about $15,000.
This plot, however, already has an area structure plan that establishes the general planning framework for future development.
Walton International, a Canadian-based landbanking firm, said it was too early to comment on the effect the new rules would have on its business. But it added that it was discussing the matter with the HDB.
Another landbanking firm, which declined to be named, expects to be unaffected by the new rules.
It said half of its land parcels were sold to developers 'within months' of zoning approvals being obtained. This means that investors exited very soon after a piece of land was zoned residential.
The remainder were fixed-term, fixed-return contracts that would see investors getting their payouts before any homes are built on them.
But while the effect of the HDB's ruling may still be unclear, some landbanking investors are questioning its rationale.
One investor, who wanted to be known only as Mr Lim, said landbanking should be seen as a real estate investment scheme rather than as having an interest in private residential property.
'We are at the very early stages of the real estate life cycle, before even any dwellings are built... It is more of an investment where you get in and then get out. I don't think landbanking should be covered under HDB's rules,' he added.
Mr T.H. Tan, who has been approached to invest in land through landbroking firms in the past, added: 'What happens in six months' time if the private property investment cannot be disposed of, maybe due to a lack of takers? What is the Government going to do to help these people?'
Mr Christopher Tan, chief executive of financial advisory firm Providend, said that with most Singaporeans living in HDB flats, and the investment quantums involved in landbanking not being very large, the majority of landbanking investors could well be HDB dwellers.
He disagreed with the HDB's ruling as it would not help to cool down the property market, but he added: 'This is one more reason for investors to be more cautious when investing in landbanking, since there are even more grey areas and unknowns to navigate now.'
esthert@sph.com.sg
ST : New condos to keep prime rents in check
Sep 26, 2010
property
New condos to keep prime rents in check
Rents at some prime projects already feeling the impact of the new supply of private homes
By Joyce Teo
Some recently-completed prime condominium developments are commanding above-market rents and thus helping to prop up the average rentals in existing prime projects, said a recent report from Jones Lang LaSalle.
But other properties in the central areas as well as those in alternative locations are already feeling the impact of the new supply, it said.
The consultancy's preliminary estimates showed that average prime non-landed residential rents rose 1.1 per cent quarter-on-quarter to $4.65 per sq ft (psf) a month in the third quarter.
Yet, average rentals in popular central areas such as the Central Business District remained unchanged in the third quarter while rentals in the popular East Coast districts slipped 4.3 per cent quarter-on-quarter to $3.30 psf per month.
Overall, the rental market is likely to remain largely flat in the coming months, experts said.
The new prime supply in the market includes projects such as Skypark at St Thomas Walk, Ardmore II in the posh Ardmore Park area and Belle Vue Residences in Oxley Walk.
Jones Lang LaSalle said that from the beginning of this year to last month, about 1,520 new units have been completed in prime districts 9, 10 and 11.
While it is unable to release the deals done due to confidentiality, average rentals around the Ardmore area remain stable at around $18,000 per month (or about $5.50 to $6.50 psf), with some units fetching less due to construction work in the vicinity, it said.
According to OrangeTee head of research and consultancy Tan Kok Keong, the recent completion of projects means that tenants now have more choices.
'As a result, rents at better located projects are holding firm while rents at those that are affected by temporary inconveniences are softening.'
For instance, the asking monthly rent for a unit at Ardmore II was reduced from $14,000 to $11,000 due to the construction noise in the vicinity, he said.
New completions will intensify competition in the leasing market, as better located or newer units will command a rental premium, said Cushman & Wakefield's senior manager of research, Asia Pacific, Mr Ong Kah Seng.
This is especially so as there are more new developments that come with more unusual designs and exclusive lifestyle concepts.
Still, tenants will choose newer premises only if the rental premium is minimal, he said.
'Some slowdown in leasing activity leading to a muted pace of rental recovery is in sync with the moderation in economic recovery,' he said.
While the recent round of cooling measures is targeted at speculators, the leasing market may also see some spillover effect.
'Given that the private residential market will undergo a temporal softening after the slew of government measures, tenants are unlikely to be willing to accept significantly higher asking rents,' said Mr Ong.
Looking further ahead, experts said a substantial upcoming supply of prime homes in the next few years is expected to keep prime rents in check.
As more of these new prime projects come onstream, rents of some older properties are likely to be hit, said Jones Lang LaSalle's head of South-east Asia research Chua Yang Liang.
'Over time, the rental premium in new projects may ease if tenant demand is unable to keep pace with the supply coming onstream,' added Dr Chua.
An estimated 14,000 more units are scheduled for completion from the third quarter to 2015, which translates to around 2,500 units per annum on average or 1.5 times the historical 10-year average of around 1,600 units per annum, he said.
joyceteo@sph.com.sg
property
New condos to keep prime rents in check
Rents at some prime projects already feeling the impact of the new supply of private homes
By Joyce Teo
Some recently-completed prime condominium developments are commanding above-market rents and thus helping to prop up the average rentals in existing prime projects, said a recent report from Jones Lang LaSalle.
But other properties in the central areas as well as those in alternative locations are already feeling the impact of the new supply, it said.
The consultancy's preliminary estimates showed that average prime non-landed residential rents rose 1.1 per cent quarter-on-quarter to $4.65 per sq ft (psf) a month in the third quarter.
Yet, average rentals in popular central areas such as the Central Business District remained unchanged in the third quarter while rentals in the popular East Coast districts slipped 4.3 per cent quarter-on-quarter to $3.30 psf per month.
Overall, the rental market is likely to remain largely flat in the coming months, experts said.
The new prime supply in the market includes projects such as Skypark at St Thomas Walk, Ardmore II in the posh Ardmore Park area and Belle Vue Residences in Oxley Walk.
Jones Lang LaSalle said that from the beginning of this year to last month, about 1,520 new units have been completed in prime districts 9, 10 and 11.
While it is unable to release the deals done due to confidentiality, average rentals around the Ardmore area remain stable at around $18,000 per month (or about $5.50 to $6.50 psf), with some units fetching less due to construction work in the vicinity, it said.
According to OrangeTee head of research and consultancy Tan Kok Keong, the recent completion of projects means that tenants now have more choices.
'As a result, rents at better located projects are holding firm while rents at those that are affected by temporary inconveniences are softening.'
For instance, the asking monthly rent for a unit at Ardmore II was reduced from $14,000 to $11,000 due to the construction noise in the vicinity, he said.
New completions will intensify competition in the leasing market, as better located or newer units will command a rental premium, said Cushman & Wakefield's senior manager of research, Asia Pacific, Mr Ong Kah Seng.
This is especially so as there are more new developments that come with more unusual designs and exclusive lifestyle concepts.
Still, tenants will choose newer premises only if the rental premium is minimal, he said.
'Some slowdown in leasing activity leading to a muted pace of rental recovery is in sync with the moderation in economic recovery,' he said.
While the recent round of cooling measures is targeted at speculators, the leasing market may also see some spillover effect.
'Given that the private residential market will undergo a temporal softening after the slew of government measures, tenants are unlikely to be willing to accept significantly higher asking rents,' said Mr Ong.
Looking further ahead, experts said a substantial upcoming supply of prime homes in the next few years is expected to keep prime rents in check.
As more of these new prime projects come onstream, rents of some older properties are likely to be hit, said Jones Lang LaSalle's head of South-east Asia research Chua Yang Liang.
'Over time, the rental premium in new projects may ease if tenant demand is unable to keep pace with the supply coming onstream,' added Dr Chua.
An estimated 14,000 more units are scheduled for completion from the third quarter to 2015, which translates to around 2,500 units per annum on average or 1.5 times the historical 10-year average of around 1,600 units per annum, he said.
joyceteo@sph.com.sg
ST : Punggol site bids below expectations
Sep 24, 2010
Punggol site bids below expectations
Lower bids suggest cooling measures starting to have impact, say observers
By Jessica Cheam
A PUNGGOL executive condominium site tender closed yesterday with four developers putting in bids below industry expectations.
The highest bid for the Punggol Drive plot was $136.2 million, coming from Qingdao Construction (Singapore) and working out to be $237 per sq ft (psf) - below the anticipated $250 to $290 psf predicted by analysts.
The bid was only 2.2 per cent higher than the second-highest offer of $133.2 million from Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
SLP International research and consultancy executive director Nicholas Mak noted that Qingdao's bidding price was 23 per cent lower than the amount paid by ChoiceHomes Investments and CEL Development for another exec condo site in Punggol Field earlier in June.
Industry observers say the tender results suggest that the Government's supply-side measures to cool Singapore's red-hot property market are beginning to have an impact on land prices.
For the second half of the year, the state has earmarked the largest potential amount of land for release since the start of the land sales programme in 2001.
This, together with government measures introduced last month to dampen demand by tightening financing and home ownership rules, appear to be lowering land prices, said Mr Mak.
'This could lead to more price competition among developers next year,' he added.
'Whether this would (eventually) lead to lower home prices will depend on whether the investment and economic climate at that time will be worse than that experienced today.'
ChoiceHomes Investments and CEL Development put in the third-highest bid for the site tender that closed yesterday - $119.9 million - with Frasers Centrepoint coming in last at $103.4 million.
CBRE Research executive director Li Hiaw Ho said that the plot had received a 'fair response' and that the modest number of bids reflected the location, which is some distance from Punggol Central.
He predicted that the units in the new exec condo project 'will possibly sell at around $600 psf'.
Similar homes sold in the resale market, such as those at Park Green, The Rivervale and The Florida, were commanding prices of $550 to $650 psf between June and last month, he noted.
Mr Li felt that the project will likely appeal to young couples and those with young families, given the Government's plans to develop Punggol New Town into a residential estate with mostly waterfront housing.
In a separate statement issued yesterday, CBRE executive director of residential services Joseph Tan said rising home prices were likely to be capped by the recent cooling measures.
'We expect the residential market to mellow in the fourth quarter of this year,' he said.
Mr Tan also noted that about 3,300 to 3,500 new homes were sold in the third quarter. Despite being a strong volume, this was considerably lower than the 4,033 and 4,380 units sold in the second and first quarters respectively.
'Projects with strong location attributes and projects with small-format units continued to be the star performers,' he said.
Projects expected to be launched in the near future include Vacanza @ East in Lengkong Tujoh, and executive condominiums Esparina Residences in Compassvale Bow and The Canopy in Yishun.
Mr Tan anticipates the volume of new homes sales in the fourth quarter to be lower than in previous quarters, at around 2,000 units.
'Developers will continue to look for development sites but will likely be less bullish in their bids,' he added.
jcheam@sph.com.sg
--------------------------------------------------------------------------------
Four bids
· Qingdao Construction (Singapore):
$136.17 million ($2,550.96 per sq m/gross floor area)
· Hoi Hup Realty, Sunway Developments and SC Wong Holdings
$133.21 million ($2,495.50psm/gfa)
· ChoiceHomes Investments/CEL Development
$119.88 million ($2,245.78psm/gfa)
· Frasers Centrepoint
$103.43 million ($1,937.59psm/gfa)
SOURCE: HDB
Punggol site bids below expectations
Lower bids suggest cooling measures starting to have impact, say observers
By Jessica Cheam
A PUNGGOL executive condominium site tender closed yesterday with four developers putting in bids below industry expectations.
The highest bid for the Punggol Drive plot was $136.2 million, coming from Qingdao Construction (Singapore) and working out to be $237 per sq ft (psf) - below the anticipated $250 to $290 psf predicted by analysts.
The bid was only 2.2 per cent higher than the second-highest offer of $133.2 million from Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
SLP International research and consultancy executive director Nicholas Mak noted that Qingdao's bidding price was 23 per cent lower than the amount paid by ChoiceHomes Investments and CEL Development for another exec condo site in Punggol Field earlier in June.
Industry observers say the tender results suggest that the Government's supply-side measures to cool Singapore's red-hot property market are beginning to have an impact on land prices.
For the second half of the year, the state has earmarked the largest potential amount of land for release since the start of the land sales programme in 2001.
This, together with government measures introduced last month to dampen demand by tightening financing and home ownership rules, appear to be lowering land prices, said Mr Mak.
'This could lead to more price competition among developers next year,' he added.
'Whether this would (eventually) lead to lower home prices will depend on whether the investment and economic climate at that time will be worse than that experienced today.'
ChoiceHomes Investments and CEL Development put in the third-highest bid for the site tender that closed yesterday - $119.9 million - with Frasers Centrepoint coming in last at $103.4 million.
CBRE Research executive director Li Hiaw Ho said that the plot had received a 'fair response' and that the modest number of bids reflected the location, which is some distance from Punggol Central.
He predicted that the units in the new exec condo project 'will possibly sell at around $600 psf'.
Similar homes sold in the resale market, such as those at Park Green, The Rivervale and The Florida, were commanding prices of $550 to $650 psf between June and last month, he noted.
Mr Li felt that the project will likely appeal to young couples and those with young families, given the Government's plans to develop Punggol New Town into a residential estate with mostly waterfront housing.
In a separate statement issued yesterday, CBRE executive director of residential services Joseph Tan said rising home prices were likely to be capped by the recent cooling measures.
'We expect the residential market to mellow in the fourth quarter of this year,' he said.
Mr Tan also noted that about 3,300 to 3,500 new homes were sold in the third quarter. Despite being a strong volume, this was considerably lower than the 4,033 and 4,380 units sold in the second and first quarters respectively.
'Projects with strong location attributes and projects with small-format units continued to be the star performers,' he said.
Projects expected to be launched in the near future include Vacanza @ East in Lengkong Tujoh, and executive condominiums Esparina Residences in Compassvale Bow and The Canopy in Yishun.
Mr Tan anticipates the volume of new homes sales in the fourth quarter to be lower than in previous quarters, at around 2,000 units.
'Developers will continue to look for development sites but will likely be less bullish in their bids,' he added.
jcheam@sph.com.sg
--------------------------------------------------------------------------------
Four bids
· Qingdao Construction (Singapore):
$136.17 million ($2,550.96 per sq m/gross floor area)
· Hoi Hup Realty, Sunway Developments and SC Wong Holdings
$133.21 million ($2,495.50psm/gfa)
· ChoiceHomes Investments/CEL Development
$119.88 million ($2,245.78psm/gfa)
· Frasers Centrepoint
$103.43 million ($1,937.59psm/gfa)
SOURCE: HDB
ST : Demand 'set to push up prime office rents'
Sep 24, 2010
Demand 'set to push up prime office rents'
No fear of oversupply, say Credit Suisse analysts who see office Reits as a good buy
By Gabriel Chen
CREDIT Suisse has dismissed fears of an oversupply in the office sector and is tipping that rents will rise as demand picks up.
The bank's analysts said new space is being taken up, while old supply is being removed from the market and converted into residential use.
'We think rents are on the rise and could hit $12 per sq ft (psf) by 2012 for Super Prime A. Meanwhile, we expect Grade A rents to trend up to $10.50 to $11.50 psf, and prime buildings such as Bugis Junction Towers and Suntec to hit the $9 psf level in 2012.'
There is no official grading system for office space, but Grade A typically refers to the most premium category. For CB
Richard Ellis, offices that lie within the Raffles Place, Marina Bay and Marina Centre area are classified as prime. Credit Suisse splits Grade A into two categories - normal Grade A and Super Prime A.
Falling under Super Prime A are new or soon-to-be-completed buildings such as One Raffles Quay, Marina Bay Financial Centre, Ocean Financial Centre and 50 Collyer Quay.
Normal Grade A refers to older but strategically located buildings such as 6 Battery Road, Capital Tower and Prudential Tower.
Suntec City, Keppel Tower, GE Tower and Bugis Junction Tower have been categorised under Prime, which refers to older buildings that fall inside the central business district.
The Credit Suisse report noted that rents for Super Prime A hit a peak of $18.40 psf a month in the third quarter of 2008.
Analysts from across the sector say the rental outlook is favourable as office demand is expected to grow in step with the economy.
'With rental values on the rebound, larger occupiers are anxious to lock in rents for prime office space. This has led to strong pre-commitment rates for uncompleted office buildings like Ocean Financial Centre,' said Ms Cheng Siow Ying, DTZ Debenham Tie Leung's executive director for business space.
DTZ Research said the office market has rebounded, with rents rising in all districts in the third quarter.
It added that prime rents in Raffles Place rose 6.3 per cent quarter-on-quarter to an average of $8.40 psf.
Investors keen on the sector should look at office real estate investment trusts (Reits) because they have the greatest exposure to Grade A space, say Credit Suisse analysts.
When rents increase, so should the unit prices of these Reits.
The bank's top pick in the office Reit sector is CapitaCommercial Trust (CCT). It has an 'outperform' rating on the Reit and a target price of $1.63.
'We believe its $750 million war chest is likely to be reinvested into higher-yielding opportunities,' said the bank.
CCT closed eight cents higher yesterday at $1.48.
gabrielc@sph.com.sg
Demand 'set to push up prime office rents'
No fear of oversupply, say Credit Suisse analysts who see office Reits as a good buy
By Gabriel Chen
CREDIT Suisse has dismissed fears of an oversupply in the office sector and is tipping that rents will rise as demand picks up.
The bank's analysts said new space is being taken up, while old supply is being removed from the market and converted into residential use.
'We think rents are on the rise and could hit $12 per sq ft (psf) by 2012 for Super Prime A. Meanwhile, we expect Grade A rents to trend up to $10.50 to $11.50 psf, and prime buildings such as Bugis Junction Towers and Suntec to hit the $9 psf level in 2012.'
There is no official grading system for office space, but Grade A typically refers to the most premium category. For CB
Richard Ellis, offices that lie within the Raffles Place, Marina Bay and Marina Centre area are classified as prime. Credit Suisse splits Grade A into two categories - normal Grade A and Super Prime A.
Falling under Super Prime A are new or soon-to-be-completed buildings such as One Raffles Quay, Marina Bay Financial Centre, Ocean Financial Centre and 50 Collyer Quay.
Normal Grade A refers to older but strategically located buildings such as 6 Battery Road, Capital Tower and Prudential Tower.
Suntec City, Keppel Tower, GE Tower and Bugis Junction Tower have been categorised under Prime, which refers to older buildings that fall inside the central business district.
The Credit Suisse report noted that rents for Super Prime A hit a peak of $18.40 psf a month in the third quarter of 2008.
Analysts from across the sector say the rental outlook is favourable as office demand is expected to grow in step with the economy.
'With rental values on the rebound, larger occupiers are anxious to lock in rents for prime office space. This has led to strong pre-commitment rates for uncompleted office buildings like Ocean Financial Centre,' said Ms Cheng Siow Ying, DTZ Debenham Tie Leung's executive director for business space.
DTZ Research said the office market has rebounded, with rents rising in all districts in the third quarter.
It added that prime rents in Raffles Place rose 6.3 per cent quarter-on-quarter to an average of $8.40 psf.
Investors keen on the sector should look at office real estate investment trusts (Reits) because they have the greatest exposure to Grade A space, say Credit Suisse analysts.
When rents increase, so should the unit prices of these Reits.
The bank's top pick in the office Reit sector is CapitaCommercial Trust (CCT). It has an 'outperform' rating on the Reit and a target price of $1.63.
'We believe its $750 million war chest is likely to be reinvested into higher-yielding opportunities,' said the bank.
CCT closed eight cents higher yesterday at $1.48.
gabrielc@sph.com.sg
ST : Land use to be reviewed in Concept Plan
Sep 24, 2010
KTM SITES
Land use to be reviewed in Concept Plan
THE future use of the land parcel at Tanjong Pagar railway station as well as the other five plots involved in the historical land swop with Malaysia are to be reviewed under the Urban Redevelopment Authority's Concept Plan next year.
The National Development Ministry has announced that the future use of the plots 'will be reviewed under the URA Concept Plan and Master Plan exercises, and the land parcels will be put to optimal use'.
Next year, URA is due to review its Concept Plan, which maps out Singapore's land use strategies over the next 40 to 50 years and is re-examined every 10 years.
And its Master Plan, which is reviewed every five years and translates the long-term strategies of the Concept Plan into detailed plans over the next 10 to 15 years, is scheduled for reappraisal in 2013.
The land swop deal inked on Monday resulted in Singapore and Malaysia agreeing to swop six parcels in Marina South and the Ophir-Rochor area for six Malayan railway (KTM) sites in Tanjong Pagar, Kranji, Woodlands and Bukit Timah.
Although the developments likely on these sites are uncertain at this stage, a recent Nomura Singapore report suggests that the deal is likely to benefit United Overseas Land (UOL) and Keppel Land as both companies have assets in the areas involved.
It cites Keppel Land as an obvious beneficiary of the development of the Marina South parcels because of its stakes in the upcoming Marina Bay Financial Centre and the Ocean Financial Centre in the Marina Bay area.
But UOL is tipped by Nomura as being the top beneficiary, given that it offers comprehensive exposure to the Rochor and Tanjong Pagar make-over - its new Spottiswoode Park residential project is just behind the Tanjong Pagar railway station.
UOL, which is currently readying its showflat, expects to launch the project by the end of the year.
Although URA's plans for Tanjong Pagar will not be announced before the launch of UOL's project, Nomura expects the potential of the railway station's redevelopment to be reflected in both prices and buyer expectations.
According to the 2008 master plan, a portion of the Tanjong Pagar railway station land parcel is zoned for commercial use with a plot ratio of 4.2, while a large chunk of it is zoned for residential use with a plot ratio of 2.8.
The rejuvenation of the Rochor district, notes Nomura, bodes well for two assets there that UOL has indirect stakes in: The Plaza and The Gateway.
And the development of the Ophir-Rochor land parcels and URA's plans are likely to help rejuvenate Rochor and Tanjong Pagar respectively.
'We believe assets in these areas could see more potential upside versus those in the Marina Bay area, as the latter is already regarded as the new Downtown (with the completion of the Marina Bay Sands and the upcoming MBFC development) and asset values have appreciated accordingly,' Nomura said.
JOYCE TEO
--------------------------------------------------------------------------------
ROCHOR BOOM
'We believe assets in these areas could see more potential upside versus those in the Marina Bay area, as the latter is already regarded as the new Downtown...and asset values have appreciated accordingly.'
Nomura Singapore report
KTM SITES
Land use to be reviewed in Concept Plan
THE future use of the land parcel at Tanjong Pagar railway station as well as the other five plots involved in the historical land swop with Malaysia are to be reviewed under the Urban Redevelopment Authority's Concept Plan next year.
The National Development Ministry has announced that the future use of the plots 'will be reviewed under the URA Concept Plan and Master Plan exercises, and the land parcels will be put to optimal use'.
Next year, URA is due to review its Concept Plan, which maps out Singapore's land use strategies over the next 40 to 50 years and is re-examined every 10 years.
And its Master Plan, which is reviewed every five years and translates the long-term strategies of the Concept Plan into detailed plans over the next 10 to 15 years, is scheduled for reappraisal in 2013.
The land swop deal inked on Monday resulted in Singapore and Malaysia agreeing to swop six parcels in Marina South and the Ophir-Rochor area for six Malayan railway (KTM) sites in Tanjong Pagar, Kranji, Woodlands and Bukit Timah.
Although the developments likely on these sites are uncertain at this stage, a recent Nomura Singapore report suggests that the deal is likely to benefit United Overseas Land (UOL) and Keppel Land as both companies have assets in the areas involved.
It cites Keppel Land as an obvious beneficiary of the development of the Marina South parcels because of its stakes in the upcoming Marina Bay Financial Centre and the Ocean Financial Centre in the Marina Bay area.
But UOL is tipped by Nomura as being the top beneficiary, given that it offers comprehensive exposure to the Rochor and Tanjong Pagar make-over - its new Spottiswoode Park residential project is just behind the Tanjong Pagar railway station.
UOL, which is currently readying its showflat, expects to launch the project by the end of the year.
Although URA's plans for Tanjong Pagar will not be announced before the launch of UOL's project, Nomura expects the potential of the railway station's redevelopment to be reflected in both prices and buyer expectations.
According to the 2008 master plan, a portion of the Tanjong Pagar railway station land parcel is zoned for commercial use with a plot ratio of 4.2, while a large chunk of it is zoned for residential use with a plot ratio of 2.8.
The rejuvenation of the Rochor district, notes Nomura, bodes well for two assets there that UOL has indirect stakes in: The Plaza and The Gateway.
And the development of the Ophir-Rochor land parcels and URA's plans are likely to help rejuvenate Rochor and Tanjong Pagar respectively.
'We believe assets in these areas could see more potential upside versus those in the Marina Bay area, as the latter is already regarded as the new Downtown (with the completion of the Marina Bay Sands and the upcoming MBFC development) and asset values have appreciated accordingly,' Nomura said.
JOYCE TEO
--------------------------------------------------------------------------------
ROCHOR BOOM
'We believe assets in these areas could see more potential upside versus those in the Marina Bay area, as the latter is already regarded as the new Downtown...and asset values have appreciated accordingly.'
Nomura Singapore report
Thursday, September 23, 2010
BT : The next wave
Business Times - 23 Sep 2010
The next wave
By UMA SHANKARI
WHAT is next for Singapore's property market? No one - neither developers, analysts nor homebuyers - can answer the question with any certainty right now.
After subdued sales through all of 2008, the residential market here took off in February last year. And the buying volume and price growth continued into 2010 - despite a slew of government measures announced over the past 12 months to dampen demand for both private homes and HDB flats, and boost supply.
But the latest round of cooling measures, announced by National Development Minister Mah Bow Tan on Aug 30, are considered to be harsher than the previous policy changes and could have a greater impact.
Developers trust that the measures - which include the decision to disallow concurrent ownership of HDB flats and private residential properties within the specified minimum occupation period - are not likely to keep away genuine buyers. They are also hoping that the flux in the market will settle in a few months and that buying interest will continue apace.
Over the next few pages, we examine the key aspects of Singapore's property market, taking an in-depth look at the residential market and the commercial sector as well as key overseas markets.
We ask experts for their views on the impact of the latest round of government measures and look at where the next wave of activity will come from after the market, investors and homebuyers digest the latest news.
There is no denying the importance of Singapore's property sector. How the market fares will impact not only developers, investors and 'regular Joe' homeowners, but also related sectors. These include banks which have been enjoying brisk business dishing out housing loans over the last two years.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The next wave
By UMA SHANKARI
WHAT is next for Singapore's property market? No one - neither developers, analysts nor homebuyers - can answer the question with any certainty right now.
After subdued sales through all of 2008, the residential market here took off in February last year. And the buying volume and price growth continued into 2010 - despite a slew of government measures announced over the past 12 months to dampen demand for both private homes and HDB flats, and boost supply.
But the latest round of cooling measures, announced by National Development Minister Mah Bow Tan on Aug 30, are considered to be harsher than the previous policy changes and could have a greater impact.
Developers trust that the measures - which include the decision to disallow concurrent ownership of HDB flats and private residential properties within the specified minimum occupation period - are not likely to keep away genuine buyers. They are also hoping that the flux in the market will settle in a few months and that buying interest will continue apace.
Over the next few pages, we examine the key aspects of Singapore's property market, taking an in-depth look at the residential market and the commercial sector as well as key overseas markets.
We ask experts for their views on the impact of the latest round of government measures and look at where the next wave of activity will come from after the market, investors and homebuyers digest the latest news.
There is no denying the importance of Singapore's property sector. How the market fares will impact not only developers, investors and 'regular Joe' homeowners, but also related sectors. These include banks which have been enjoying brisk business dishing out housing loans over the last two years.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : HDB market set to normalise
Business Times - 23 Sep 2010
HDB market set to normalise
Measures to cool the property market appear to have made some impact already, says EUGENE LIM
A MASSIVE building programme was undertaken by the Housing and Development Board (HDB) in the 1970s due to a shortage of housing for the masses. Back then, there was no resale HDB market. From the 1980s to the mid-1990s, as the housing shortage eased, the public housing programme shifted from building to satisfy a shortage, to deregulation and the creation of a resale market.
In 1989, the government made major policy changes by removing the income ceiling for buying resale HDB flats; allowing HDB owners to invest in private residential properties; as well as allowing private property owners and Singapore permanent residents (PRs) to buy resale HDB flats for owner occupation.
Since then, resale HDB prices have seen their ups and downs. But in the second quarter of this year, HDB numbers showed that resale HDB prices hit their highest point since 1990. Resale HDB prices were 18 per cent higher than the first peak in Q4 1996; and five times more than flat prices in 1990, when the resale market started.
Despite higher valuations, 96 per cent of resale transactions in Q2 were done at higher and higher cash-over-valuation (COV). Prices continued to climb in July and August. Resale HDB transactions handled by ERA agents showed that the median COV increased to $35,000, up 17 per cent from Q2's $30,000.
But it was 11 times more than the market low of $3,000 just 14 months ago. On the ground, many deals were closed by negotiating on the COV rather than the resale price of the flat.
For five straight quarters starting in Q2 2009, resale transactions shot past 8,000 units; with three-room transactions accounting for 30 per cent; four-room 36 per cent; five-room 25 per cent; and executive 9 per cent.
This exuberance in the resale market was happening despite the HDB's launch of some 66,500 new flats since 2006 - including the estimated 16,700 units this year.
Many first-time buyers, priced out of the resale HDB market, put the blame on, among other things, the artificial demand coming from those buying HDB flats for investment or short-term speculation.
These were people who did not need a roof over their heads but were riding the buoyant resale HDB market for personal profit, and in the process driving up prices.
While there were no official statistics as proof, these claims have some validity. A three-room resale flat bought at $300,000 that rents for $2,000 a month gives a yield of 8 per cent per annum; well above the average private property yield of 3-4 per cent.
A resale flat bought in 2008 and sold in 2010 could net the seller a gain of at least 30 per cent. A PR can buy a resale flat, rent it out for an income stream, and after a few years sell it for a good profit. The profit could be channelled to buy a better house back home and other luxuries.
An astute investor with spare cash could be tempted to take a punt in the resale HDB market, despite flouting public housing rules.
Impact of new measures
On Aug 30, the government announced measures designed to help first-time buyers, as well as to keep the resale HDB market in check. These measures were:
· Minimum occupation period for resale HDB flats extended to five years.
· Private property owners who buy resale flats have to sell their private home within six months of buying the flat. Private homes include overseas properties.
· Those with existing mortgages can only take a maximum loan of 70 per cent; and need to fork out a mandatory cash deposit of 10 per cent.
· First-timer households with monthly income of between $8,000 and $10,000 can buy new flats under the Design, Build, and Sell Scheme (DBSS).
· HDB speeds up completion of flats from three years to two-and-a-half years.
While these measures may help to rein in runaway prices, they have also made buying and selling property more complicated.
Those who buy a resale flat from Aug 30 onwards can no longer buy private property within the first five years of the resale flat purchase.
Should they buy private property after five years, they will have to put up a higher cash downpayment of 10 per cent of the purchase price if their current loan is not fully paid up. In addition, they can only take a maximum loan quantum of 70 per cent.
After buying the private property, it may not make sense for them to sell their resale flat to buy another one, unless they are prepared to sell the private property within six months. This means they can no longer bequeath their private property to their children or rent it out for income.
Meanwhile, should PRs buy a resale HDB flat, they will have to part with any property they own in their homeland within six months of the flat purchase. With non-genuine demand taken out of the equation, PRs are placed in a dilemma.
First-time buyers will have a large supply and variety of flats to choose from: Build-To- Order (BTO) flats (16,700 units in 2010 and up to 22,000 units in 2011), DBSS flats (up to 7,000 units in 2010 and 2011), and executive condominiums (up to 8,000 units in 2010 and 2011). As such, we estimate that demand for resale HDB flats may drop by some 30 per cent.
If that happens, total resale volume this year could dip below 30,000 units and median COVs fall to $20,000 or lower by year's end. With lower transacted prices, valuations will also be lower and this may again impact future resale prices. A price correction in the resale HDB market is in the offing.
Measures to cool the property market appear to have made some impact already. The recent launch of the Yishun Riverwalk BTO project attracted only 3,225 applications for 1,408 flats - well below the ratio seen in past BTO launches when up to six times the number of bids were seen for each unit.
This may indicate that first-timers may be intending to return to the HDB resale market in anticipation of falling prices. These buyers had been priced out of the resale market during the property boom and flocked to join the queue for new HDB flats. They may now be waiting to see if resale prices will drop.
Those who have an immediate need for homes will probably go to the resale market instead of queuing for a new flat which may take three years to build.
The five-year minimum occupation period (MOP) only affects resale applications received by HDB from Aug 30. For those who bought their flats before that, the previous MOP of three years, 2.5 years or one year still applies, depending on when they acquired their flats and the type of loans they took.
These HDB owners can sublet their HDB flats after occupying it for three years. They can also invest in a private property during their MOP; unlike buyers after Aug 30.
Days of high COV transactions may be over
With the new measures taking effect, the froth in the resale HDB market has been removed. Coupled with new housing options for first-time buyers and the sandwiched class, the key driver for the resale HDB market going forward will be those with immediate housing needs - whether they are Singapore citizens or PR households.
The resale HDB market should now reflect the real demand for housing. As such, the days of high COV transactions may be over.
The writer is associate director, ERA Asia-Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
HDB market set to normalise
Measures to cool the property market appear to have made some impact already, says EUGENE LIM
A MASSIVE building programme was undertaken by the Housing and Development Board (HDB) in the 1970s due to a shortage of housing for the masses. Back then, there was no resale HDB market. From the 1980s to the mid-1990s, as the housing shortage eased, the public housing programme shifted from building to satisfy a shortage, to deregulation and the creation of a resale market.
In 1989, the government made major policy changes by removing the income ceiling for buying resale HDB flats; allowing HDB owners to invest in private residential properties; as well as allowing private property owners and Singapore permanent residents (PRs) to buy resale HDB flats for owner occupation.
Since then, resale HDB prices have seen their ups and downs. But in the second quarter of this year, HDB numbers showed that resale HDB prices hit their highest point since 1990. Resale HDB prices were 18 per cent higher than the first peak in Q4 1996; and five times more than flat prices in 1990, when the resale market started.
Despite higher valuations, 96 per cent of resale transactions in Q2 were done at higher and higher cash-over-valuation (COV). Prices continued to climb in July and August. Resale HDB transactions handled by ERA agents showed that the median COV increased to $35,000, up 17 per cent from Q2's $30,000.
But it was 11 times more than the market low of $3,000 just 14 months ago. On the ground, many deals were closed by negotiating on the COV rather than the resale price of the flat.
For five straight quarters starting in Q2 2009, resale transactions shot past 8,000 units; with three-room transactions accounting for 30 per cent; four-room 36 per cent; five-room 25 per cent; and executive 9 per cent.
This exuberance in the resale market was happening despite the HDB's launch of some 66,500 new flats since 2006 - including the estimated 16,700 units this year.
Many first-time buyers, priced out of the resale HDB market, put the blame on, among other things, the artificial demand coming from those buying HDB flats for investment or short-term speculation.
These were people who did not need a roof over their heads but were riding the buoyant resale HDB market for personal profit, and in the process driving up prices.
While there were no official statistics as proof, these claims have some validity. A three-room resale flat bought at $300,000 that rents for $2,000 a month gives a yield of 8 per cent per annum; well above the average private property yield of 3-4 per cent.
A resale flat bought in 2008 and sold in 2010 could net the seller a gain of at least 30 per cent. A PR can buy a resale flat, rent it out for an income stream, and after a few years sell it for a good profit. The profit could be channelled to buy a better house back home and other luxuries.
An astute investor with spare cash could be tempted to take a punt in the resale HDB market, despite flouting public housing rules.
Impact of new measures
On Aug 30, the government announced measures designed to help first-time buyers, as well as to keep the resale HDB market in check. These measures were:
· Minimum occupation period for resale HDB flats extended to five years.
· Private property owners who buy resale flats have to sell their private home within six months of buying the flat. Private homes include overseas properties.
· Those with existing mortgages can only take a maximum loan of 70 per cent; and need to fork out a mandatory cash deposit of 10 per cent.
· First-timer households with monthly income of between $8,000 and $10,000 can buy new flats under the Design, Build, and Sell Scheme (DBSS).
· HDB speeds up completion of flats from three years to two-and-a-half years.
While these measures may help to rein in runaway prices, they have also made buying and selling property more complicated.
Those who buy a resale flat from Aug 30 onwards can no longer buy private property within the first five years of the resale flat purchase.
Should they buy private property after five years, they will have to put up a higher cash downpayment of 10 per cent of the purchase price if their current loan is not fully paid up. In addition, they can only take a maximum loan quantum of 70 per cent.
After buying the private property, it may not make sense for them to sell their resale flat to buy another one, unless they are prepared to sell the private property within six months. This means they can no longer bequeath their private property to their children or rent it out for income.
Meanwhile, should PRs buy a resale HDB flat, they will have to part with any property they own in their homeland within six months of the flat purchase. With non-genuine demand taken out of the equation, PRs are placed in a dilemma.
First-time buyers will have a large supply and variety of flats to choose from: Build-To- Order (BTO) flats (16,700 units in 2010 and up to 22,000 units in 2011), DBSS flats (up to 7,000 units in 2010 and 2011), and executive condominiums (up to 8,000 units in 2010 and 2011). As such, we estimate that demand for resale HDB flats may drop by some 30 per cent.
If that happens, total resale volume this year could dip below 30,000 units and median COVs fall to $20,000 or lower by year's end. With lower transacted prices, valuations will also be lower and this may again impact future resale prices. A price correction in the resale HDB market is in the offing.
Measures to cool the property market appear to have made some impact already. The recent launch of the Yishun Riverwalk BTO project attracted only 3,225 applications for 1,408 flats - well below the ratio seen in past BTO launches when up to six times the number of bids were seen for each unit.
This may indicate that first-timers may be intending to return to the HDB resale market in anticipation of falling prices. These buyers had been priced out of the resale market during the property boom and flocked to join the queue for new HDB flats. They may now be waiting to see if resale prices will drop.
Those who have an immediate need for homes will probably go to the resale market instead of queuing for a new flat which may take three years to build.
The five-year minimum occupation period (MOP) only affects resale applications received by HDB from Aug 30. For those who bought their flats before that, the previous MOP of three years, 2.5 years or one year still applies, depending on when they acquired their flats and the type of loans they took.
These HDB owners can sublet their HDB flats after occupying it for three years. They can also invest in a private property during their MOP; unlike buyers after Aug 30.
Days of high COV transactions may be over
With the new measures taking effect, the froth in the resale HDB market has been removed. Coupled with new housing options for first-time buyers and the sandwiched class, the key driver for the resale HDB market going forward will be those with immediate housing needs - whether they are Singapore citizens or PR households.
The resale HDB market should now reflect the real demand for housing. As such, the days of high COV transactions may be over.
The writer is associate director, ERA Asia-Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Sentosa Cove still a coveted address
Business Times - 23 Sep 2010
Sentosa Cove still a coveted address
The luxury enclave saw the return of buying interest on the back of an improving global economy, report STEVEN MING and ZENG ZHEN
SENTOSA Cove, Singapore's first gated waterfront residential enclave located on the eastern shores of Sentosa island, is taking shape with the completion of some 920 upscale condominium units and 200 waterfront and hillside bungalows since its inception in 2004. In tandem with the buoyant home sales on the mainland and coupled with the opening of the integrated resorts (IRs), the luxury enclave of Sentosa Cove saw the return of buying interest on the back of an improving global economy.
There are now nine condominium and seven landed housing developments for sale. The most recent launches include City Developments' 228-unit The Residences at W Singapore Sentosa Cove, and Ho Bee & IOI's 151-unit Seascape, both of which saw good take-up.
Non-landed
Amid favourable market conditions, sales remain strong for non-landed residential homes in Sentosa Cove. There were 104 sales transactions registered from January to July 2010.
Despite falling short of the 130 sales transactions recorded for 2009, the sales value for the first seven months of 2010 has outperformed that of last year, with $541 million recorded thus far compared with $497.9 million in 2009.
With the release of new projects, the primary market enjoyed a 430 per cent increase in volume, albeit from a relatively low base in the previous year. In the secondary market, because only The Oceanfront@Sentosa Cove received Temporary Occupation Permit (TOP) in March this year, the sub-sale activity has turned relatively quiet with only 21 caveats, down from 101 in 2009, whilst resale activity has firmed up by 57.9 per cent from 19 in 2009 to 30 transactions.
The first seven months of this year have seen rising prices across the board. Fuelled by higher prices of new launches in the vicinity, the prices of projects that were launched before 2010 have shown an increase ranging from 2.2 per cent to 30.8 per cent, with some surpassing their previous peaks in 2007.
As a result, the average price of non-landed residential in Sentosa Cove has soared from $1,691 per sq ft in 2009 to $2,344 per sq ft in 2010, representing a 38.6 per cent increase.
Appreciation in capital values of non-landed homes has lent support to the investment activities in Sentosa Cove, especially the sub-sale transactions in those projects approaching TOP dates.
Caveat matches of 19 sub-sales from January to July show that 94.7 per cent, or 18 sub-sales, yielded a profit between $179,400 and $3.06 million, significantly higher than the 71.7 per cent for the whole of 2009.
In addition, the average gain per unit almost doubled from $600,025 in 2009 to $1.16 million in the first seven months of 2010. This was a result of increased percentage of sub-sales that yielded gains exceeding $1 million.
So far this year, the sub-sales of nine units in The Oceanfront@Sentosa Cove have earned profits from $1,005,970 to $3,056,700, accounting for 47.4 per cent of the total profitable sub-sales.
On the other hand, there were only seven out of the 67 profitable sub-sales that reaped a profit of more than $1 million in the preceding year.
Landed
Unlike Good Class Bungalows (GCBs) on the mainland, the landed housing segment in Sentosa Cove is unique as it offers an exclusive waterfront.
More importantly, the landed houses in Sentosa Cove appeal to a wider market as foreigners who do not have permanent residence status are allowed to purchase them.
According to the caveats lodged between January and July 2010, 39 landed houses in Sentosa Cove have been sold, only one less than the total recorded for the whole of 2009. The transaction value has surged by 20.5 per cent from $507.3 million in 2009 to $611.3 million in the first seven months of 2010, attributed to the 19 houses costing more than $15 million each that were transacted during this period. In stark contrast, there were only nine transactions above $15 million in the preceding years from 2005 to 2009.
Of these 39 sales, foreign buyers chalked up 19 transactions or 48.7 per cent, with Chinese investors being the most dominant, inking 12 transactions, or 63.2 per cent, of all foreign purchases in the reviewed period. The Chinese buyers have ranked top among the foreigners since 2009; overtaking the Indonesians.
The average unit price based on land area climbed from $1,568 per sq ft in 2009 to $1,892 per sq ft in 2010, up by 20.7 per cent. In terms of unit price, the most expensive home sold this year was a terrace house in The Villas@Sentosa Cove which was transacted at $8 million or $2,929 per sq ft in May.
Interestingly, this house was first bought in June 2007 from the developer for $4.6 million or $1,682 per sq ft, yielding the vendor a profit of $3.4 million.
Outlook
On the economic front, Singapore has probably not seen better days. The government has revised the GDP growth forecast for 2010 up to 15 per cent from its previous forecast of 7 to 9 per cent.
Despite this, the market is not absolutely immune from external downside factors. Market sentiment has been affected by the rising concerns over the uncertainty of US economic recovery and the eurozone debt crisis. Meanwhile, the government's latest tightening measures, coupled with the ample supply from the government land sales programme, has cast a cloud over the property market.
Nevertheless, we expect that these cooling measures would have limited impact on the luxury developments in Sentosa Cove. The government's measures are designed to curb speculation, especially in the mass-market and public housing re-sale segments.
Still, the sales activity in Sentosa Cove may soften in the near term as buyers adopt a wait-and-see approach to the new measures.
However, the broader fundamentals for the private residential market are still good, and driven by the low interest environment, and abundant liquidity from Asia's booming wealth, Sentosa Cove would continue to attract both local and foreign buyers who take a mid to longer term view of the market.
Steven Ming is executive director, Savills Singapore and Zeng Zhen, senior manager, Savills Research & Consultancy
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Sentosa Cove still a coveted address
The luxury enclave saw the return of buying interest on the back of an improving global economy, report STEVEN MING and ZENG ZHEN
SENTOSA Cove, Singapore's first gated waterfront residential enclave located on the eastern shores of Sentosa island, is taking shape with the completion of some 920 upscale condominium units and 200 waterfront and hillside bungalows since its inception in 2004. In tandem with the buoyant home sales on the mainland and coupled with the opening of the integrated resorts (IRs), the luxury enclave of Sentosa Cove saw the return of buying interest on the back of an improving global economy.
There are now nine condominium and seven landed housing developments for sale. The most recent launches include City Developments' 228-unit The Residences at W Singapore Sentosa Cove, and Ho Bee & IOI's 151-unit Seascape, both of which saw good take-up.
Non-landed
Amid favourable market conditions, sales remain strong for non-landed residential homes in Sentosa Cove. There were 104 sales transactions registered from January to July 2010.
Despite falling short of the 130 sales transactions recorded for 2009, the sales value for the first seven months of 2010 has outperformed that of last year, with $541 million recorded thus far compared with $497.9 million in 2009.
With the release of new projects, the primary market enjoyed a 430 per cent increase in volume, albeit from a relatively low base in the previous year. In the secondary market, because only The Oceanfront@Sentosa Cove received Temporary Occupation Permit (TOP) in March this year, the sub-sale activity has turned relatively quiet with only 21 caveats, down from 101 in 2009, whilst resale activity has firmed up by 57.9 per cent from 19 in 2009 to 30 transactions.
The first seven months of this year have seen rising prices across the board. Fuelled by higher prices of new launches in the vicinity, the prices of projects that were launched before 2010 have shown an increase ranging from 2.2 per cent to 30.8 per cent, with some surpassing their previous peaks in 2007.
As a result, the average price of non-landed residential in Sentosa Cove has soared from $1,691 per sq ft in 2009 to $2,344 per sq ft in 2010, representing a 38.6 per cent increase.
Appreciation in capital values of non-landed homes has lent support to the investment activities in Sentosa Cove, especially the sub-sale transactions in those projects approaching TOP dates.
Caveat matches of 19 sub-sales from January to July show that 94.7 per cent, or 18 sub-sales, yielded a profit between $179,400 and $3.06 million, significantly higher than the 71.7 per cent for the whole of 2009.
In addition, the average gain per unit almost doubled from $600,025 in 2009 to $1.16 million in the first seven months of 2010. This was a result of increased percentage of sub-sales that yielded gains exceeding $1 million.
So far this year, the sub-sales of nine units in The Oceanfront@Sentosa Cove have earned profits from $1,005,970 to $3,056,700, accounting for 47.4 per cent of the total profitable sub-sales.
On the other hand, there were only seven out of the 67 profitable sub-sales that reaped a profit of more than $1 million in the preceding year.
Landed
Unlike Good Class Bungalows (GCBs) on the mainland, the landed housing segment in Sentosa Cove is unique as it offers an exclusive waterfront.
More importantly, the landed houses in Sentosa Cove appeal to a wider market as foreigners who do not have permanent residence status are allowed to purchase them.
According to the caveats lodged between January and July 2010, 39 landed houses in Sentosa Cove have been sold, only one less than the total recorded for the whole of 2009. The transaction value has surged by 20.5 per cent from $507.3 million in 2009 to $611.3 million in the first seven months of 2010, attributed to the 19 houses costing more than $15 million each that were transacted during this period. In stark contrast, there were only nine transactions above $15 million in the preceding years from 2005 to 2009.
Of these 39 sales, foreign buyers chalked up 19 transactions or 48.7 per cent, with Chinese investors being the most dominant, inking 12 transactions, or 63.2 per cent, of all foreign purchases in the reviewed period. The Chinese buyers have ranked top among the foreigners since 2009; overtaking the Indonesians.
The average unit price based on land area climbed from $1,568 per sq ft in 2009 to $1,892 per sq ft in 2010, up by 20.7 per cent. In terms of unit price, the most expensive home sold this year was a terrace house in The Villas@Sentosa Cove which was transacted at $8 million or $2,929 per sq ft in May.
Interestingly, this house was first bought in June 2007 from the developer for $4.6 million or $1,682 per sq ft, yielding the vendor a profit of $3.4 million.
Outlook
On the economic front, Singapore has probably not seen better days. The government has revised the GDP growth forecast for 2010 up to 15 per cent from its previous forecast of 7 to 9 per cent.
Despite this, the market is not absolutely immune from external downside factors. Market sentiment has been affected by the rising concerns over the uncertainty of US economic recovery and the eurozone debt crisis. Meanwhile, the government's latest tightening measures, coupled with the ample supply from the government land sales programme, has cast a cloud over the property market.
Nevertheless, we expect that these cooling measures would have limited impact on the luxury developments in Sentosa Cove. The government's measures are designed to curb speculation, especially in the mass-market and public housing re-sale segments.
Still, the sales activity in Sentosa Cove may soften in the near term as buyers adopt a wait-and-see approach to the new measures.
However, the broader fundamentals for the private residential market are still good, and driven by the low interest environment, and abundant liquidity from Asia's booming wealth, Sentosa Cove would continue to attract both local and foreign buyers who take a mid to longer term view of the market.
Steven Ming is executive director, Savills Singapore and Zeng Zhen, senior manager, Savills Research & Consultancy
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Too hot to handle?
Business Times - 23 Sep 2010
Too hot to handle?
WENDY TANG and PNG POH SOON examine the impact of cooling measures on HDB, mass, mid- and high-end residential properties
MUCH has been said about the government's recent cooling measures and their likely impact on the residential property market. While some think the latest measures have enough bite to cool the entire market, others expect that only the mass market and public housing (HDB flats) segments will be affected.
In the aftermath of the financial crisis, China, Hong Kong, Singapore, and Australia have seen their property markets performing strongly in tandem with the recovering economies. Prices had risen so rapidly that there were worries about a property bubble. China has tried to cool its property market as has Singapore, with three rounds of cooling measures.
The property market generally turns cautious when the government changes the demand and supply levers. The market is still digesting the new measures and market watchers are anxiously monitoring response to new project launches.
How will the new measures affect the HDB, mass, mid- and high-end residential properties? Prior to the new measures, HDB buyers typically comprised locals, PRs, upgraders, downgraders or even private property owners.
The wide range of buyers was due to the relaxation of rules by the Housing and Development Board in the late 1980s. This allowed permanent residents (PRs) to buy HDB flats and HDB owners to invest in private property, with certain conditions. Later on, private property owners were allowed to buy HDB flats from the resale market as these units were deemed not to be subsidised. Collectively, this group forms the base of HDB buyers.
Over the past 10 years, Singapore's population (residents and non-residents) grew by 26 per cent. The number of Singapore residents (citizens and PRs) rose by 15.6 per cent, and non-residents (foreigners) by a hefty 72 per cent. The number of new completed HDB flats, however, has dropped significantly since 2006 while the overall population has increased. HDB resale prices escalated in response and have risen by some 45 per cent since 2000.
The new measures are likely to affect the HDB segment most since demand will be crimped as those owning private property here and overseas will no longer be allowed to buy HDB flats unless they sell the private property within six months of getting the HDB flat.
Existing HDB owners upgrading or downgrading to another HDB flat are also affected. To qualify for 80 per cent financing, they have to show proof of sale of their existing unit within two weeks of the first sales appointment. Hence, arrangements with the buyer of their existing flat and the seller of the flat have to be well planned. Otherwise, buyers are limited to borrowing no more than 70 per cent of the purchase price of their new flat. In addition, the cash downpayment will be doubled to at least 10 per cent.
The seller's stamp duty, which used to apply to properties sold within a year, has now been extended to those sold within three years. But this should not affect the HDB segment as buyers have to occupy the new flat for at least five years before they can sell it.
On the supply side, 16,000 new flats will be offered in 2010 which is more than 3.5 times the average number of new HDB flats completed between 2006 and 2008. Going forward, the HDB is prepared to launch up to 22,000 new flats in 2011 should demand continue to be strong. The new supply will eventually ease demand pressure on existing stock.
The introduction of the new measures is in line with the government's view that HDB flats are homes to live in rather than investments. The restrictive measures which crimp demand, in addition to the looming supply, will dampen any capital appreciation of HDB flats. This will happen even when the private property market recovers in the future.
In fact, in the HDB resale market, anecdotal evidence points to early signs of price moderation, in particular the cash over valuation (COV) component, as buyers' and sellers' expectations change. However, any decline in HDB prices should not be drastic in the near term due to the limited completed stock. In the medium term, prices will remain stable with limited price appreciation.
The private mass market segment will also be significantly affected as those with HDB addresses typically form the bulk of such buyers. This group of buyers are usually price-sensitive and have been motivated by the current low interest rates.
A lower loan to value quantum raises the hurdle for HDB owners looking to make their first private property investment. Assuming a purchase price of $1 million, a total of $300,000 is payable, of which $100,000 must be in cash. The latter is double what was required in the past. Buyers without the additional funds will have to wait longer before they can enter the market.
Previously, buyers whose monthly household income ranged from $8,000 to $10,000 a month were not able to buy new HDB flats. Some opted to buy smaller private residential units in order to keep the absolute price affordable. This was a more appealing option than paying high COV for older HDB resale flats.
The new measures now allow these buyers to purchase new flats under the Design, Build, and Sell Scheme (DBSS). If the response to DBSS flats is good, more of them may be released. As such, some demand for private homes may be diverted to public housing.
Buyers now have more housing options, including executive condominiums (EC) which were introduced in 1995 for buyers whose household income was too high to qualify for a new HDB flat but who might not have found private property affordable. ECs are sold with eligibility and ownership restrictions similar to public housing, but are fully converted to private housing after 10 years. Going forward, the government will be launching three EC sites in Pasir Ris, Bukit Panjang, and Tampines that are expected to yield 1,415 units.
Developers seem more cautious of late judging from recent results of government land sales (GLS) tenders. The highest tender price of $340 per sq ft per plot ratio at Hougang Avenue 7 was 25 per cent lower than that of another site sold at Hougang Avenue 2 in May. The premium between the top and second bidder narrowed to 2.5 per cent.
In the second half of 2010, land that can potentially yield about 13,900 new private homes will be up for tender. It is the highest in the history of the GLS programme. Of the upcoming supply, about 8,100 units are confirmed for sale without the need for prior developer interest. If demand remains strong, the government is prepared to increase supply in the first half of 2011.
In light of this, prices of mass market properties may ease by 10 per cent in a year's time. This is not to say all mass market prices will follow suit as developments in better locations, near MRT stations or which offer good value should hold up.
Mid- to high-end properties are less likely to be adversely affected by the cooling measures as buyers are not as price-sensitive as those in the mass market. As such, the lower loan to value ratio for an investment property is unlikely to affect them as much as buyers of mass market and HDB properties. Sellers' stamp duties will also not affect investors so long as they do not sell within three years. In any case, the amount is not significant in relation to the overall value of the property.
Interest in prime property remains strong. However, buyers are cautious as the global economy is still fragile. Buying activity remains selective. Assuming there isn't another crisis, mid- to high-end properties are likely to remain fairly stable with prices down by 5-10 per cent over the next 12 months.
To sum up, the property market is unlikely to crash as the government monitors the market closely. In the past, measures have been taken to revive the property market if prices are depressed and vice versa. While the new policies benefit some people, they adversely affect many others. Time will tell whether this round of measures is well-calibrated or excessive. The authorities are equally anxious to monitor the impact and may well ease up should it hurt more deeply than intended.
No one benefits if the residential market is badly destabilised, particularly in a country where property is viewed as a valuable investment. Hopefully, the latest round of cooling measures will bring Singapore closer to a stable and sustainable property market.
Wendy Tang is director, residential services, Knight Frank and Png Poh Soon is senior manager, consultancy & research, Knight Frank
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Too hot to handle?
WENDY TANG and PNG POH SOON examine the impact of cooling measures on HDB, mass, mid- and high-end residential properties
MUCH has been said about the government's recent cooling measures and their likely impact on the residential property market. While some think the latest measures have enough bite to cool the entire market, others expect that only the mass market and public housing (HDB flats) segments will be affected.
In the aftermath of the financial crisis, China, Hong Kong, Singapore, and Australia have seen their property markets performing strongly in tandem with the recovering economies. Prices had risen so rapidly that there were worries about a property bubble. China has tried to cool its property market as has Singapore, with three rounds of cooling measures.
The property market generally turns cautious when the government changes the demand and supply levers. The market is still digesting the new measures and market watchers are anxiously monitoring response to new project launches.
How will the new measures affect the HDB, mass, mid- and high-end residential properties? Prior to the new measures, HDB buyers typically comprised locals, PRs, upgraders, downgraders or even private property owners.
The wide range of buyers was due to the relaxation of rules by the Housing and Development Board in the late 1980s. This allowed permanent residents (PRs) to buy HDB flats and HDB owners to invest in private property, with certain conditions. Later on, private property owners were allowed to buy HDB flats from the resale market as these units were deemed not to be subsidised. Collectively, this group forms the base of HDB buyers.
Over the past 10 years, Singapore's population (residents and non-residents) grew by 26 per cent. The number of Singapore residents (citizens and PRs) rose by 15.6 per cent, and non-residents (foreigners) by a hefty 72 per cent. The number of new completed HDB flats, however, has dropped significantly since 2006 while the overall population has increased. HDB resale prices escalated in response and have risen by some 45 per cent since 2000.
The new measures are likely to affect the HDB segment most since demand will be crimped as those owning private property here and overseas will no longer be allowed to buy HDB flats unless they sell the private property within six months of getting the HDB flat.
Existing HDB owners upgrading or downgrading to another HDB flat are also affected. To qualify for 80 per cent financing, they have to show proof of sale of their existing unit within two weeks of the first sales appointment. Hence, arrangements with the buyer of their existing flat and the seller of the flat have to be well planned. Otherwise, buyers are limited to borrowing no more than 70 per cent of the purchase price of their new flat. In addition, the cash downpayment will be doubled to at least 10 per cent.
The seller's stamp duty, which used to apply to properties sold within a year, has now been extended to those sold within three years. But this should not affect the HDB segment as buyers have to occupy the new flat for at least five years before they can sell it.
On the supply side, 16,000 new flats will be offered in 2010 which is more than 3.5 times the average number of new HDB flats completed between 2006 and 2008. Going forward, the HDB is prepared to launch up to 22,000 new flats in 2011 should demand continue to be strong. The new supply will eventually ease demand pressure on existing stock.
The introduction of the new measures is in line with the government's view that HDB flats are homes to live in rather than investments. The restrictive measures which crimp demand, in addition to the looming supply, will dampen any capital appreciation of HDB flats. This will happen even when the private property market recovers in the future.
In fact, in the HDB resale market, anecdotal evidence points to early signs of price moderation, in particular the cash over valuation (COV) component, as buyers' and sellers' expectations change. However, any decline in HDB prices should not be drastic in the near term due to the limited completed stock. In the medium term, prices will remain stable with limited price appreciation.
The private mass market segment will also be significantly affected as those with HDB addresses typically form the bulk of such buyers. This group of buyers are usually price-sensitive and have been motivated by the current low interest rates.
A lower loan to value quantum raises the hurdle for HDB owners looking to make their first private property investment. Assuming a purchase price of $1 million, a total of $300,000 is payable, of which $100,000 must be in cash. The latter is double what was required in the past. Buyers without the additional funds will have to wait longer before they can enter the market.
Previously, buyers whose monthly household income ranged from $8,000 to $10,000 a month were not able to buy new HDB flats. Some opted to buy smaller private residential units in order to keep the absolute price affordable. This was a more appealing option than paying high COV for older HDB resale flats.
The new measures now allow these buyers to purchase new flats under the Design, Build, and Sell Scheme (DBSS). If the response to DBSS flats is good, more of them may be released. As such, some demand for private homes may be diverted to public housing.
Buyers now have more housing options, including executive condominiums (EC) which were introduced in 1995 for buyers whose household income was too high to qualify for a new HDB flat but who might not have found private property affordable. ECs are sold with eligibility and ownership restrictions similar to public housing, but are fully converted to private housing after 10 years. Going forward, the government will be launching three EC sites in Pasir Ris, Bukit Panjang, and Tampines that are expected to yield 1,415 units.
Developers seem more cautious of late judging from recent results of government land sales (GLS) tenders. The highest tender price of $340 per sq ft per plot ratio at Hougang Avenue 7 was 25 per cent lower than that of another site sold at Hougang Avenue 2 in May. The premium between the top and second bidder narrowed to 2.5 per cent.
In the second half of 2010, land that can potentially yield about 13,900 new private homes will be up for tender. It is the highest in the history of the GLS programme. Of the upcoming supply, about 8,100 units are confirmed for sale without the need for prior developer interest. If demand remains strong, the government is prepared to increase supply in the first half of 2011.
In light of this, prices of mass market properties may ease by 10 per cent in a year's time. This is not to say all mass market prices will follow suit as developments in better locations, near MRT stations or which offer good value should hold up.
Mid- to high-end properties are less likely to be adversely affected by the cooling measures as buyers are not as price-sensitive as those in the mass market. As such, the lower loan to value ratio for an investment property is unlikely to affect them as much as buyers of mass market and HDB properties. Sellers' stamp duties will also not affect investors so long as they do not sell within three years. In any case, the amount is not significant in relation to the overall value of the property.
Interest in prime property remains strong. However, buyers are cautious as the global economy is still fragile. Buying activity remains selective. Assuming there isn't another crisis, mid- to high-end properties are likely to remain fairly stable with prices down by 5-10 per cent over the next 12 months.
To sum up, the property market is unlikely to crash as the government monitors the market closely. In the past, measures have been taken to revive the property market if prices are depressed and vice versa. While the new policies benefit some people, they adversely affect many others. Time will tell whether this round of measures is well-calibrated or excessive. The authorities are equally anxious to monitor the impact and may well ease up should it hurt more deeply than intended.
No one benefits if the residential market is badly destabilised, particularly in a country where property is viewed as a valuable investment. Hopefully, the latest round of cooling measures will bring Singapore closer to a stable and sustainable property market.
Wendy Tang is director, residential services, Knight Frank and Png Poh Soon is senior manager, consultancy & research, Knight Frank
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : The evolution of the luxury home market
Business Times - 23 Sep 2010
The evolution of the luxury home market
Despite the ever-evolving definition of luxury residences, two characteristics continue to stand out: location and space, says HAN HUAN MEI
WHAT constitutes luxury homes today, especially when the entire price structure of residential homes has changed so drastically in the past five years?
Prior to 2003, one could safely define prime residential areas as postal districts 9, 10, and 11 which comprise the Cairnhill, Orchard, Grange, Tanglin, Holland, Bukit Timah, Dunearn, Newton, and Novena areas. The districts immediately surrounding these three would comprise the next price range of housing.
Anywhere beyond, going into the HDB estates and new towns would be homes of the lower price range, catering to the masses. In dollar terms, prime residential had a price tag of $1,500 per square foot (psf) and above at that time. The mid-tier price range was $900-$1,400 psf and mass market homes were priced below $900 psf.
The prime residential market saw a watershed year in 2007 because there was a clear split between prime and luxury homes when the latter attained headline prices way above $3,000 psf. When some new projects hit $4,000 psf and above, they formed a new class called 'super-luxury' homes.
Unfortunately, a misnomer was created when small-format homes began to sprout in the prime districts to counter the high quantum. These units fetched prices ranging from $2,500 psf to $3,500 psf but their product attributes could not offer a luxurious lifestyle.
Luxury living in Singapore has evolved over time, from quality finishes to designer fittings to branded residences with butler services and lifestyle features like carpark lofts and private berths for waterfront homes.
The rich and well-heeled are attracted to them because owning a trophy residence beats owning a standard home any time. Two characteristics of luxury residences continue to stand out: location and space.
They are located at exclusive addresses and come with generous living areas for the enjoyment of space. URA has demarcated the Core Central Region (CCR) as the location where high-end homes are found.
This comprises the traditional prime districts 9, 10, and 11 as well as the waterfront locations of Marina Bay, Sentosa Cove, and Keppel Bay.
In recognition of the various types of residences and in consideration of the current higher price levels, the general consensus is that prime properties fall within the $2.5 million to $5 million price band, luxury homes within the $5 million to $8 million band, and super-luxury homes are those priced $8 million and above.
As a guide, luxury and super- luxury homes are taken to be 2,500 sq ft and above, befitting a lavish lifestyle.
In 2007, sales volume was at a record high and home prices peaked.
URA data for the selected districts where luxury homes are found showed that 230 homes in the primary market (Table 1) were sold at prices $5 million and above from Jan to Aug 2010. Within this basket, 144 new homes (Table 2) were of sizes 2,500 sq ft and above.
At the peak of the market in 2007, 701 new homes were sold at $5 million and above (Table 1) and of these, 402 were 2,500 sq ft and above. On the whole, luxury prices in 2010 are still lower than those in 2007.
In the secondary market, the first eight months of 2010 saw the sale of 182 luxury homes above $5 million sold in 2007, of which 166 were over 2,500 sq ft. This compared with 489 homes in the same price range sold in 2007 but a higher number of 532 homes were over 2,500 sq ft. The higher number of large units sold could be attributed to the more affordable price levels of older properties.
Back in 2007, the focus of the market was on new projects setting new benchmarks, causing the rift between luxury prices in the secondary and primary markets to widen.
It is foreseeable that the luxury transaction volume in 2010 will not measure up to that in 2007. Price-wise, the prices of secondary luxury homes have more or less caught up with the levels in 2007 but those in the primary market are still lagging behind by 10 per cent on the average.
The implication is that there is a potential for current prices of new luxury homes to rise as the economy strengthens and sentiment improves. Some 1,000 units in luxury projects like Ardmore II, 8 Napier, and Paterson Suites were completed this year, with another 1,400 units due for completion between September 2010 and December 2011.
Among them, around 900 units remain unsold. It was reported that property funds have been involved in the bulk deals of high-end apartments.
One of these was Arch Capital, who bought all 34 units of Royal Oak - a refurbished project in Anderson Road - at around $200 million or $2,337 psf. The likely route that developers will take is to source for such bulk purchasers. Alternatively, they may keep them for rental income until higher prices are achieved later.
The writer is associate director, CBRE Research, Singapore
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The evolution of the luxury home market
Despite the ever-evolving definition of luxury residences, two characteristics continue to stand out: location and space, says HAN HUAN MEI
WHAT constitutes luxury homes today, especially when the entire price structure of residential homes has changed so drastically in the past five years?
Prior to 2003, one could safely define prime residential areas as postal districts 9, 10, and 11 which comprise the Cairnhill, Orchard, Grange, Tanglin, Holland, Bukit Timah, Dunearn, Newton, and Novena areas. The districts immediately surrounding these three would comprise the next price range of housing.
Anywhere beyond, going into the HDB estates and new towns would be homes of the lower price range, catering to the masses. In dollar terms, prime residential had a price tag of $1,500 per square foot (psf) and above at that time. The mid-tier price range was $900-$1,400 psf and mass market homes were priced below $900 psf.
The prime residential market saw a watershed year in 2007 because there was a clear split between prime and luxury homes when the latter attained headline prices way above $3,000 psf. When some new projects hit $4,000 psf and above, they formed a new class called 'super-luxury' homes.
Unfortunately, a misnomer was created when small-format homes began to sprout in the prime districts to counter the high quantum. These units fetched prices ranging from $2,500 psf to $3,500 psf but their product attributes could not offer a luxurious lifestyle.
Luxury living in Singapore has evolved over time, from quality finishes to designer fittings to branded residences with butler services and lifestyle features like carpark lofts and private berths for waterfront homes.
The rich and well-heeled are attracted to them because owning a trophy residence beats owning a standard home any time. Two characteristics of luxury residences continue to stand out: location and space.
They are located at exclusive addresses and come with generous living areas for the enjoyment of space. URA has demarcated the Core Central Region (CCR) as the location where high-end homes are found.
This comprises the traditional prime districts 9, 10, and 11 as well as the waterfront locations of Marina Bay, Sentosa Cove, and Keppel Bay.
In recognition of the various types of residences and in consideration of the current higher price levels, the general consensus is that prime properties fall within the $2.5 million to $5 million price band, luxury homes within the $5 million to $8 million band, and super-luxury homes are those priced $8 million and above.
As a guide, luxury and super- luxury homes are taken to be 2,500 sq ft and above, befitting a lavish lifestyle.
In 2007, sales volume was at a record high and home prices peaked.
URA data for the selected districts where luxury homes are found showed that 230 homes in the primary market (Table 1) were sold at prices $5 million and above from Jan to Aug 2010. Within this basket, 144 new homes (Table 2) were of sizes 2,500 sq ft and above.
At the peak of the market in 2007, 701 new homes were sold at $5 million and above (Table 1) and of these, 402 were 2,500 sq ft and above. On the whole, luxury prices in 2010 are still lower than those in 2007.
In the secondary market, the first eight months of 2010 saw the sale of 182 luxury homes above $5 million sold in 2007, of which 166 were over 2,500 sq ft. This compared with 489 homes in the same price range sold in 2007 but a higher number of 532 homes were over 2,500 sq ft. The higher number of large units sold could be attributed to the more affordable price levels of older properties.
Back in 2007, the focus of the market was on new projects setting new benchmarks, causing the rift between luxury prices in the secondary and primary markets to widen.
It is foreseeable that the luxury transaction volume in 2010 will not measure up to that in 2007. Price-wise, the prices of secondary luxury homes have more or less caught up with the levels in 2007 but those in the primary market are still lagging behind by 10 per cent on the average.
The implication is that there is a potential for current prices of new luxury homes to rise as the economy strengthens and sentiment improves. Some 1,000 units in luxury projects like Ardmore II, 8 Napier, and Paterson Suites were completed this year, with another 1,400 units due for completion between September 2010 and December 2011.
Among them, around 900 units remain unsold. It was reported that property funds have been involved in the bulk deals of high-end apartments.
One of these was Arch Capital, who bought all 34 units of Royal Oak - a refurbished project in Anderson Road - at around $200 million or $2,337 psf. The likely route that developers will take is to source for such bulk purchasers. Alternatively, they may keep them for rental income until higher prices are achieved later.
The writer is associate director, CBRE Research, Singapore
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Subscribe to:
Posts (Atom)
Posts
