Mar 25, 2010
Use sharper tools to fix property market flaws
I REFER to Mr Bobby Jayaraman's letter, 'New measures won't help market bloom' (Feb 23). There may be room to re-examine market statistics in greater detail and consider sharper tools to tackle specific problems instead of slapping stamp fees on sellers across the board.
The Urban Redevelopment Authority keeps statistics of property transactions. Nineteen different headings are listed for each transaction, including 'purchaser address indicator' which describes whether a buyer is from HDB or private housing, and 'type of sale' which describes whether a sale is new, resale or sub-sale.
A quick comparison of non-landed property sales in districts 9, 16 and 27 over the past year shows different transaction patterns in different locations.
For example, in district 9, 20 per cent were reported to be buyers with HDB 'address indicator' and 21 per cent of the 2,500 transactions were 'sub-sales'. In district 16, only 10 per cent were 'sub-sales' with 45 per cent buyers with HDB 'address indicator' in the 1,710 cases. In district 27, the total number of sales was 239, with 161 with HDB 'address indicator'.
Armed with such info, the authorities can use sharper tools to correct market imperfections caused in particular locations or by particular groups of people.
Patrick Sio
Thursday, March 25, 2010
ST : Keen interest in high-end properties
Mar 25, 2010
Keen interest in high-end properties
Prices tipped to rise though they are still below 2007 boom levels
By Esther Teo
POSH property seems to be back in vogue, with one recent launch snapped up and new high-end developments slated for previews in the coming days.
Home-hunters showed keen interest in Keppel Land's Reflections at Keppel Bay over the weekend, and projects in Sentosa, Nathan Road and Shenton Way are also apparently generating interest.
But while prices are robust and tipped to move up, they are still below the boom-time levels with some experts suggesting that developers are keen to cash in on the buoyant market while they can.
Reflections at Keppel Bay, a development of 1,129 apartments on the southern coast, saw a strong weekend response with 29 of the 30 units launched sold. Prices averaged $2,200 per sq ft (psf) although they hit as high as $2,600 psf.
That priced two-bedders at about $2 million, a three-bedroom unit at $2.5 million and a four-bedroom apartment at $6 million. This was the first time two-, three- and four-bedroom units were being sold from the centre tower, known for having the best waterfront views.
The 99-year leasehold development has six glass towers of 24 and 41 storeys and 11 shorter blocks of villa apartments.
Keppel Land chairman Choo Chiau Beng said yesterday that positive economic sentiments, the improved job market and the buzz sparked by the integrated resorts have helped re-ignite the property market.
Since Reflections' launch in 2007, almost 98 per cent of its 700 released units had been sold as of last month. It is expected to be completed in 2012.
Keppel Land's chief executive of its Singapore residential unit, Mr Augustine Tan, said the weekend response had been very good and that 20 more units are being slated for release.
He expects to launch a total of 100 to 200 units this year. About 70 per cent of buyers were Singapore citizens while the rest were permanent residents and foreigners, he added.
Although the luxury segment has not moved as much as the mass market, Mr Tan expects demand to pick up this year with prices increasing by about 5 per cent to 10 per cent.
City Developments is having a media preview of the 228-unit Residences at W in Sentosa Cove today. Industry sources say that it could be priced for about $2,500 psf to $3,000 psf. Developer TID will release the 65-unit freehold development Nathan Suites on Nathan Road, in the prime District 10, at the end of the month at an average price of $2,100 psf.
The 39-storey 76 Shenton downtown condo developed by Hong Leong Holdings also previews today. Prices range from just below $1,700 psf to $2,500 psf.
However, Chesterton Suntec International's research and consultancy director Colin Tan said the luxury end is still struggling to reach its peak, with prices about 20 per cent lower than in 2007.
'(Developers) might have thought the optimism in the mass market would spread to the luxury end, but that has not been the case. They know that good times won't last forever so they might just be trying to get what they can now,' he said. He also noted that the slew of luxury projects being launched might not necessarily mean sustainable recovery.
Rather, it could be a sign of developers getting nervous since the market share for high-end residences is limited. They might just be jostling to get their slice of the pie, he added.
esthert@sph.com.sg
Keen interest in high-end properties
Prices tipped to rise though they are still below 2007 boom levels
By Esther Teo
POSH property seems to be back in vogue, with one recent launch snapped up and new high-end developments slated for previews in the coming days.
Home-hunters showed keen interest in Keppel Land's Reflections at Keppel Bay over the weekend, and projects in Sentosa, Nathan Road and Shenton Way are also apparently generating interest.
But while prices are robust and tipped to move up, they are still below the boom-time levels with some experts suggesting that developers are keen to cash in on the buoyant market while they can.
Reflections at Keppel Bay, a development of 1,129 apartments on the southern coast, saw a strong weekend response with 29 of the 30 units launched sold. Prices averaged $2,200 per sq ft (psf) although they hit as high as $2,600 psf.
That priced two-bedders at about $2 million, a three-bedroom unit at $2.5 million and a four-bedroom apartment at $6 million. This was the first time two-, three- and four-bedroom units were being sold from the centre tower, known for having the best waterfront views.
The 99-year leasehold development has six glass towers of 24 and 41 storeys and 11 shorter blocks of villa apartments.
Keppel Land chairman Choo Chiau Beng said yesterday that positive economic sentiments, the improved job market and the buzz sparked by the integrated resorts have helped re-ignite the property market.
Since Reflections' launch in 2007, almost 98 per cent of its 700 released units had been sold as of last month. It is expected to be completed in 2012.
Keppel Land's chief executive of its Singapore residential unit, Mr Augustine Tan, said the weekend response had been very good and that 20 more units are being slated for release.
He expects to launch a total of 100 to 200 units this year. About 70 per cent of buyers were Singapore citizens while the rest were permanent residents and foreigners, he added.
Although the luxury segment has not moved as much as the mass market, Mr Tan expects demand to pick up this year with prices increasing by about 5 per cent to 10 per cent.
City Developments is having a media preview of the 228-unit Residences at W in Sentosa Cove today. Industry sources say that it could be priced for about $2,500 psf to $3,000 psf. Developer TID will release the 65-unit freehold development Nathan Suites on Nathan Road, in the prime District 10, at the end of the month at an average price of $2,100 psf.
The 39-storey 76 Shenton downtown condo developed by Hong Leong Holdings also previews today. Prices range from just below $1,700 psf to $2,500 psf.
However, Chesterton Suntec International's research and consultancy director Colin Tan said the luxury end is still struggling to reach its peak, with prices about 20 per cent lower than in 2007.
'(Developers) might have thought the optimism in the mass market would spread to the luxury end, but that has not been the case. They know that good times won't last forever so they might just be trying to get what they can now,' he said. He also noted that the slew of luxury projects being launched might not necessarily mean sustainable recovery.
Rather, it could be a sign of developers getting nervous since the market share for high-end residences is limited. They might just be jostling to get their slice of the pie, he added.
esthert@sph.com.sg
ST : S'poreans in JB housing nightmare back in court
Mar 25, 2010
S'poreans in JB housing nightmare back in court
73 are appealing against court order to auction off their dream homes
By Elizabeth Looi
PUTRAJAYA: Singaporean Norsiah Suja'i thought she had found her dream home when she forked out her life savings to buy a double-storey terrace house in Johor Baru in 1998 for more than RM335,000 (S$141,500 now).
Instead, the retired teacher and 72 other Singaporeans in Taman Permata are about to lose their property to the developer's bank - after the developer went bust in 2000.
The bank won a court order from the Johor Baru High Court to auction off their property four years ago. The court also ruled that the houses were an abandoned project.
Yesterday, some 30 of the 73 Singaporeans travelled by bus to Putrajaya, about 40km from Kuala Lumpur, to hear their appeal against the High Court's decision.
But the case was adjourned after their lawyer Rosli Kamaruddin asked for one of the three judges to recuse himself, as he was the same judge who allowed the bank to auction off three houses in Taman Permata.
'We have suffered so much loss, I hope we can all get some justice in this case,' said Madam Norsiah, 65.
Most of the Singaporean buyers are retirees, who paid for their houses in cash with their pension and life savings.
The developer had failed to deliver on its promise that the 136-unit Taman Permata would be a posh residential area complete with condo facilities such as a swimming pool and security guards.
Most of the Singapore buyers have been forced to live there now, as they cannot afford another property in Singapore.
'I spend my weekdays in JB and I visit my daughters in Singapore on weekends,' said Madam Norsiah. 'I have no choice.'
Another buyer, who wanted to be known only as Madam Safia, 60, said the JB High Court had also ordered buyers to pay another 10 per cent on top of what they paid for their houses to obtain their title deeds. But only a few were willing to pay and even then they did not immediately get the title deeds.
She said although the houses were built in 1998, they were allowed to move in only after they obtained the certificate of fitness in 2005. 'By that time, our houses were already in bad shape and each of us had to fork out about RM50,000 to fix our houses,' she said.
Madam Safia said they had tried various ways to save their houses.
In 2003, they had even met then Prime Minister Abdullah Badawi and then Local Government and Housing Minister Ong Ka Ting.
The bank's lawyers declined to comment on the case.
elizlooi@sph.com.sg
Some of the Singaporeans who travelled to Putrajaya for the hearing having a discussion with lawyer Rosli Kamaruddin outside the court after the case was adjourned. -- ST PHOTO: ELIZABETH LOOI
S'poreans in JB housing nightmare back in court
73 are appealing against court order to auction off their dream homes
By Elizabeth Looi
PUTRAJAYA: Singaporean Norsiah Suja'i thought she had found her dream home when she forked out her life savings to buy a double-storey terrace house in Johor Baru in 1998 for more than RM335,000 (S$141,500 now).
Instead, the retired teacher and 72 other Singaporeans in Taman Permata are about to lose their property to the developer's bank - after the developer went bust in 2000.
The bank won a court order from the Johor Baru High Court to auction off their property four years ago. The court also ruled that the houses were an abandoned project.
Yesterday, some 30 of the 73 Singaporeans travelled by bus to Putrajaya, about 40km from Kuala Lumpur, to hear their appeal against the High Court's decision.
But the case was adjourned after their lawyer Rosli Kamaruddin asked for one of the three judges to recuse himself, as he was the same judge who allowed the bank to auction off three houses in Taman Permata.
'We have suffered so much loss, I hope we can all get some justice in this case,' said Madam Norsiah, 65.
Most of the Singaporean buyers are retirees, who paid for their houses in cash with their pension and life savings.
The developer had failed to deliver on its promise that the 136-unit Taman Permata would be a posh residential area complete with condo facilities such as a swimming pool and security guards.
Most of the Singapore buyers have been forced to live there now, as they cannot afford another property in Singapore.
'I spend my weekdays in JB and I visit my daughters in Singapore on weekends,' said Madam Norsiah. 'I have no choice.'
Another buyer, who wanted to be known only as Madam Safia, 60, said the JB High Court had also ordered buyers to pay another 10 per cent on top of what they paid for their houses to obtain their title deeds. But only a few were willing to pay and even then they did not immediately get the title deeds.
She said although the houses were built in 1998, they were allowed to move in only after they obtained the certificate of fitness in 2005. 'By that time, our houses were already in bad shape and each of us had to fork out about RM50,000 to fix our houses,' she said.
Madam Safia said they had tried various ways to save their houses.
In 2003, they had even met then Prime Minister Abdullah Badawi and then Local Government and Housing Minister Ong Ka Ting.
The bank's lawyers declined to comment on the case.
elizlooi@sph.com.sg
Some of the Singaporeans who travelled to Putrajaya for the hearing having a discussion with lawyer Rosli Kamaruddin outside the court after the case was adjourned. -- ST PHOTO: ELIZABETH LOOI
ST : Redas chief on land supply, home prices
Mar 25, 2010
Redas chief on land supply, home prices
THE Government has to shoulder some of the blame for the short supply of land and high property prices, said Mr Simon Cheong, president of the Real Estate Developers' Association of Singapore (Redas), yesterday.
Mr Cheong told the audience at the launch of a new property price index that land values are largely determined by the Government's reserve price system that features in all state land tenders. Yet a site's reserve price is not revealed.
'During periods of high volatility, it is not able to respond quickly enough to real-time changes happening in the marketplace,' he said.
Mr Cheong, who is also chairman and chief executive of developer SC Global, picked out two recent government land tenders to illustrate the 'conundrum and the dilemma' developers face in bidding for such sites.
A single bid for a Tampines site was rejected in June 2008 for being too low but was awarded in March at $421 per sq ft per plot ratio (psf ppr), or 3.6 times higher.
A Ten Mile Junction mixed-use site also had a failed bid of $162 psf ppr in April 2008 but went for $437 psf ppr, or 2.7 times higher, in February.
'Had the two sites (along with other tenders) been awarded back then at 'market prices', the current demand-supply mismatch scenario in the residential market may have been more smoothened and price increases for such mass market projects more muted overall,' said Mr Cheong.
Such a blunt assessment of the supply situation and other factors driving the market buoyancy by a Redas chairman is unusual. Mr Cheong acknowledged as much, saying he had been advised to avoid commenting about the market for fear of it being a sensitive topic. He said public housing has become an important de facto driver of private property prices.
A strong HDB resale market fuelled the ongoing upgrading process and it was the mass-market segment recovery - fuelled by demand from HDB upgraders - that has led the recovery in the general private residential market.
He also addressed private housing affordability and asked whether the state should be so concerned about where private housing prices are heading when it serves only 16.5 per cent of the population.
'Should it intervene to restrain the rise in property values to make private housing more affordable or should it be left to market forces?'
Affordability is not only influenced by rising values. There is also short-term demand and available supply imbalances or too much credit expansion in the financial system, said Mr Cheong.
'Someone who uses very little bank borrowings to buy and exit properties is not a speculator in the same sense as one who leverages aggressively... As we see it, buying what you cannot afford is speculation,' he added.
Signs of heightened speculative activity were part of the reasons for the Government to introduce measures last September to cool the market. It came out with further steps in February.
'But what or how much buying is considered excessive? Is it measured by volume, value or quantum? Should the market be left on its own to decide?' asked Mr Cheong.
The continued buoyancy is caused by various factors such as high liquidity, the upsurge in population and foreign buying.
The pent-up demand in the early phase of economic recovery in mass-market housing, for example, was interrupted by the global financial crisis and never ran its course in the last property cycle, he said.
'Is it any wonder, then, that the recent measures to cool the private property market did not quench the appetite of genuine home buyers and investors?'
Mr Cheong added that the new price index will hopefully be 'a step towards improving market transparency and help lessen future needs for frequent market interventions, allowing a freer hand for market forces to work out its own genius'.
JOYCE TEO
Redas chief on land supply, home prices
THE Government has to shoulder some of the blame for the short supply of land and high property prices, said Mr Simon Cheong, president of the Real Estate Developers' Association of Singapore (Redas), yesterday.
Mr Cheong told the audience at the launch of a new property price index that land values are largely determined by the Government's reserve price system that features in all state land tenders. Yet a site's reserve price is not revealed.
'During periods of high volatility, it is not able to respond quickly enough to real-time changes happening in the marketplace,' he said.
Mr Cheong, who is also chairman and chief executive of developer SC Global, picked out two recent government land tenders to illustrate the 'conundrum and the dilemma' developers face in bidding for such sites.
A single bid for a Tampines site was rejected in June 2008 for being too low but was awarded in March at $421 per sq ft per plot ratio (psf ppr), or 3.6 times higher.
A Ten Mile Junction mixed-use site also had a failed bid of $162 psf ppr in April 2008 but went for $437 psf ppr, or 2.7 times higher, in February.
'Had the two sites (along with other tenders) been awarded back then at 'market prices', the current demand-supply mismatch scenario in the residential market may have been more smoothened and price increases for such mass market projects more muted overall,' said Mr Cheong.
Such a blunt assessment of the supply situation and other factors driving the market buoyancy by a Redas chairman is unusual. Mr Cheong acknowledged as much, saying he had been advised to avoid commenting about the market for fear of it being a sensitive topic. He said public housing has become an important de facto driver of private property prices.
A strong HDB resale market fuelled the ongoing upgrading process and it was the mass-market segment recovery - fuelled by demand from HDB upgraders - that has led the recovery in the general private residential market.
He also addressed private housing affordability and asked whether the state should be so concerned about where private housing prices are heading when it serves only 16.5 per cent of the population.
'Should it intervene to restrain the rise in property values to make private housing more affordable or should it be left to market forces?'
Affordability is not only influenced by rising values. There is also short-term demand and available supply imbalances or too much credit expansion in the financial system, said Mr Cheong.
'Someone who uses very little bank borrowings to buy and exit properties is not a speculator in the same sense as one who leverages aggressively... As we see it, buying what you cannot afford is speculation,' he added.
Signs of heightened speculative activity were part of the reasons for the Government to introduce measures last September to cool the market. It came out with further steps in February.
'But what or how much buying is considered excessive? Is it measured by volume, value or quantum? Should the market be left on its own to decide?' asked Mr Cheong.
The continued buoyancy is caused by various factors such as high liquidity, the upsurge in population and foreign buying.
The pent-up demand in the early phase of economic recovery in mass-market housing, for example, was interrupted by the global financial crisis and never ran its course in the last property cycle, he said.
'Is it any wonder, then, that the recent measures to cool the private property market did not quench the appetite of genuine home buyers and investors?'
Mr Cheong added that the new price index will hopefully be 'a step towards improving market transparency and help lessen future needs for frequent market interventions, allowing a freer hand for market forces to work out its own genius'.
JOYCE TEO
ST : New monthly index of private home prices
Mar 25, 2010
New monthly index of private home prices
It will offer closer tracking of prices of non-landed properties
By Joyce Teo
A NEW index that tracks the price of private non-landed homes month by month has been created to help owners, investors and other property watchers keep a handle on the fast-moving market.
The Singapore Residential Price Index (SRPI), as it is called, has been formulated by the National University of Singapore (NUS) after two years of research.
It functions much like the Straits Times Index for shares but instead of following certain stocks, the SRPI is based on the transacted prices of a selected basket of completed non-landed private homes.
The only other index that tries to get a grip on the property market is one put out by the Urban Redevelopment Authority, but that is only published quarterly.
It is compiled based on all types of private home transactions and is intended to provide a broad indication of price trends.
The new index, which has a narrower focus, was launched yesterday by Senior Minister of State for National Develop- ment Grace Fu.
Ms Fu told the function at the Four Seasons hotel that the index can help analyse price trends and assist investors in making more informed decisions.
Associate Professor Lum Sau Kim, who led the NUS project, said formulating the index was motivated by industry interest in property derivatives.
These financial products can give investors exposure to real estate or help others manage risks in their investments.
The SRPI reflects such risks. It is based on a basket that broadly represents the target market, so landed homes, forming such a small segment, are excluded.
It also excludes projects that are more than a decade old, those that are small, rarely traded, or targeted for en bloc sale.
The basket will change every two years to reflect changes in the completed stock of private non-landed homes.
Its initial make-up comprises 74,359 units in 364 projects across 26 postal districts, completed between October 1998 and September last year.
Only completed homes are used so as to reduce the influence of new launch prices and sub-sales, which may not reflect the market. Care will also be taken to dampen the effect of one-off deals or over-the-top prices.
'Once it is an index that people trade on, it has to be very robust to guard against manipulations,' said Savills Singapore managing director Michael Ng.
While property derivatives may be some time away, the SRPI's immediate benefit will be in providing reliable price data, said Mr Simon Cheong, president of the Real Estate Developers' Association of Singapore.
Mr Cheong said it is all the more timely as the non-landed homes sector is going through 'a particularly volatile period with shorter cycles where market watchers are eagerly looking for more transparency and greater clarity on market movements'.
Cushman & Wakefield managing director Donald Han added: 'We're seeing higher volumes and rapid movements in prices, so there's a need to have a monthly coverage of property prices.
'The SRPI will have a more accurate picture. It helps to reduce panic.'
Updated on the 28th of each month, the SRPI is on the NUS website at www.ires.nus.edu.sg/srpi_main.aspx
New monthly index of private home prices
It will offer closer tracking of prices of non-landed properties
By Joyce Teo
A NEW index that tracks the price of private non-landed homes month by month has been created to help owners, investors and other property watchers keep a handle on the fast-moving market.
The Singapore Residential Price Index (SRPI), as it is called, has been formulated by the National University of Singapore (NUS) after two years of research.
It functions much like the Straits Times Index for shares but instead of following certain stocks, the SRPI is based on the transacted prices of a selected basket of completed non-landed private homes.
The only other index that tries to get a grip on the property market is one put out by the Urban Redevelopment Authority, but that is only published quarterly.
It is compiled based on all types of private home transactions and is intended to provide a broad indication of price trends.
The new index, which has a narrower focus, was launched yesterday by Senior Minister of State for National Develop- ment Grace Fu.
Ms Fu told the function at the Four Seasons hotel that the index can help analyse price trends and assist investors in making more informed decisions.
Associate Professor Lum Sau Kim, who led the NUS project, said formulating the index was motivated by industry interest in property derivatives.
These financial products can give investors exposure to real estate or help others manage risks in their investments.
The SRPI reflects such risks. It is based on a basket that broadly represents the target market, so landed homes, forming such a small segment, are excluded.
It also excludes projects that are more than a decade old, those that are small, rarely traded, or targeted for en bloc sale.
The basket will change every two years to reflect changes in the completed stock of private non-landed homes.
Its initial make-up comprises 74,359 units in 364 projects across 26 postal districts, completed between October 1998 and September last year.
Only completed homes are used so as to reduce the influence of new launch prices and sub-sales, which may not reflect the market. Care will also be taken to dampen the effect of one-off deals or over-the-top prices.
'Once it is an index that people trade on, it has to be very robust to guard against manipulations,' said Savills Singapore managing director Michael Ng.
While property derivatives may be some time away, the SRPI's immediate benefit will be in providing reliable price data, said Mr Simon Cheong, president of the Real Estate Developers' Association of Singapore.
Mr Cheong said it is all the more timely as the non-landed homes sector is going through 'a particularly volatile period with shorter cycles where market watchers are eagerly looking for more transparency and greater clarity on market movements'.
Cushman & Wakefield managing director Donald Han added: 'We're seeing higher volumes and rapid movements in prices, so there's a need to have a monthly coverage of property prices.
'The SRPI will have a more accurate picture. It helps to reduce panic.'
Updated on the 28th of each month, the SRPI is on the NUS website at www.ires.nus.edu.sg/srpi_main.aspx
BT : S'pore top city to live in for Asian expats
Business Times - 25 Mar 2010
S'pore top city to live in for Asian expats
Ranking makes city appealing to global firms wishing to bring in staff: ECA
By TEH SHI NING
SINGAPORE has emerged as the top place for Asian expatriates to live in for an 11th year running, according to global human resource consultancy ECA International.
High quality infrastructure, alongside low health risks, air pollution and crime rates, and a cosmopolitan population make Singapore the best city for Asian expats to relocate to, ECA says. Singapore came in first ahead of Sydney and Kobe, both of which retained their rankings from 2009 too.
Its annual location ratings report is intended to help global companies decide on 'hardship allowances' for expatriates, by analysing the quality of life for over 400 locations. The assessments take into account the home and destination countries of employees, which explains why while Singapore is top of the chart for Asian expats, it ranks 55th on the list for Western European ones. On that list, European cities dominate the top spots, but Singapore still ranks above Hong Kong, Tokyo and the major Chinese cities.
Lee Quane, Asia regional director of ECA, told BT that hardship allowances could come up to 20 per cent of an assignee's base salary in less favourable locations.
Singapore's emerging top on this survey thus bodes well for its cost attractiveness to global companies who wish to bring in staff from abroad. But these allowances are just one component of an expatriate's overall compensation package.
In an ECA report comparing cities' cost of living last December, Singapore climbed three spots to be the ninth most expensive Asian city for expatriates from all over.
Even then, Mr Quane said: 'If you look at the wider picture, of the major cities in Asia - Singapore, Hong Kong, Shanghai, Beijing, Tokyo and Seoul - the cost to a company of sending an employee from elsewhere in Asia to Singapore would probably still be lowest.'
For instance, neither Hong Kong nor Singapore's quality of living would warrant a 'hardship allowance' recommendation from ECA, but the cost of living in Hong Kong is still higher than in Singapore. This makes the overall compensation package for an Asian assignee sent here more cost competitive, he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
S'pore top city to live in for Asian expats
Ranking makes city appealing to global firms wishing to bring in staff: ECA
By TEH SHI NING
SINGAPORE has emerged as the top place for Asian expatriates to live in for an 11th year running, according to global human resource consultancy ECA International.
High quality infrastructure, alongside low health risks, air pollution and crime rates, and a cosmopolitan population make Singapore the best city for Asian expats to relocate to, ECA says. Singapore came in first ahead of Sydney and Kobe, both of which retained their rankings from 2009 too.
Its annual location ratings report is intended to help global companies decide on 'hardship allowances' for expatriates, by analysing the quality of life for over 400 locations. The assessments take into account the home and destination countries of employees, which explains why while Singapore is top of the chart for Asian expats, it ranks 55th on the list for Western European ones. On that list, European cities dominate the top spots, but Singapore still ranks above Hong Kong, Tokyo and the major Chinese cities.
Lee Quane, Asia regional director of ECA, told BT that hardship allowances could come up to 20 per cent of an assignee's base salary in less favourable locations.
Singapore's emerging top on this survey thus bodes well for its cost attractiveness to global companies who wish to bring in staff from abroad. But these allowances are just one component of an expatriate's overall compensation package.
In an ECA report comparing cities' cost of living last December, Singapore climbed three spots to be the ninth most expensive Asian city for expatriates from all over.
Even then, Mr Quane said: 'If you look at the wider picture, of the major cities in Asia - Singapore, Hong Kong, Shanghai, Beijing, Tokyo and Seoul - the cost to a company of sending an employee from elsewhere in Asia to Singapore would probably still be lowest.'
For instance, neither Hong Kong nor Singapore's quality of living would warrant a 'hardship allowance' recommendation from ECA, but the cost of living in Hong Kong is still higher than in Singapore. This makes the overall compensation package for an Asian assignee sent here more cost competitive, he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : A better picture of the private property market
Business Times - 25 Mar 2010
A better picture of the private property market
New, monthly price index will also help in development of property derivatives
By UMA SHANKARI
(SINGAPORE) Singapore now has a second price index to provide information on the state of the private housing market here.
The new Singapore Residential Price Index, or SRPI, aims to provide a resource for the development of property derivatives. It tracks month-on-month price movements in the private non-landed residential property market.
Right now, property investors have just one price index to work with: the Urban Redevelopment Authority's (URA) private residential property price index. That index is released on a quarterly basis and has sometimes been criticised for lagging a fast-moving market.
The National University of Singapore's Institute of Real Estate Studies developed the SRPI after a dialogue with industry players as well as help from the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).
The institute hopes that, as real estate grows in importance as an asset class in the region, the SRPI will serve as a benchmark index and a reference for structuring property derivative products.
'As the index gains in acceptance, it can potentially be used for risk management through the development of products such a property derivatives,' said Senior Minister of State for National Development Grace Fu, who officially launched the SRPI yesterday. 'Such derivatives may be one way for real estate developers, asset managers, banks and investors to hedge their property exposure.'
The new index differs from URA's in several significant ways. For one thing, it will be updated every month, instead of once a quarter.
The SRPI is also computed using the market values of a basket of only completed properties. Right now, the basket has 364 private residential projects located across the island that were completed between October 1998 and September 2009.
Uncompleted projects were not included in the basket as price movements in such projects can be vastly different from those seen for the rest of the market. But the impact of new launches on the prices of completed properties in the vicinity will be factored in.
The URA index, on the other hand, includes transactions at new launches and sub-sales.
The SRPI also considers the address, completion date, tenure, leasehold maturity, floor level and strata area of all units in the projects in its basket.
The differences mean that the two indices can throw up very different numbers.
According to the SRPI, prices of non-landed private homes rose 22.2 per cent from December 2008 to December 2009. But URA's private residential property price index showed that prices of non-landed properties increased just 0.5 per cent for the whole of 2009.
And as for Singapore's central areas, the SRPI showed a 27.3 per cent jump in prices from December 2008 to December 2009 for the 'central region' (postal districts 1-4 and 9-11). The URA price index, by contrast, showed that prices of non-landed properties in the 'core central region' fell 1.8 per cent over 2009.
Knight Frank chairman Tan Tiong Cheng pointed out that the methodology used to develop the SRPI is 'clearly spelled out' while that used by URA for its price index is 'less known'.
'This can lead to some misunderstanding of the URA price index, especially in a volatile market,' Mr Tan said. 'What it means is there will be a lag effect when price movements in a fast-moving market do not get reflected immediately in the price index. This became quite obvious when the market corrected itself significantly post-Lehman, and the URA index clearly did not reflect that.'
A developer BT spoke to also said that it might be easier to 'bet' on the property market using the SRPI, instead of the URA price index, as more information is available about how the SRPI is calculated.
But he warned that there will still be some lag effect in the new index as it still uses transaction data from URA. This is derived from caveats lodged by buyers, who can sometimes take months to lodge a caveat - or even choose not to lodge one at all.
URA said the SRPI is compiled for the purpose of trading property derivatives. It lets market participants refer to an index that tracks the price movements of a specific basket of properties, or the specific sector of the property market which they wish to gain exposure to or hedge against.
On the other hand, URA's property price index is designed to provide the general public and industry players with a 'broad indication of price trends in the private residential market'.
URA's index captures 'all transactions and so may present a different picture from specific parts of the market', a spokesman said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
A better picture of the private property market
New, monthly price index will also help in development of property derivatives
By UMA SHANKARI
(SINGAPORE) Singapore now has a second price index to provide information on the state of the private housing market here.
The new Singapore Residential Price Index, or SRPI, aims to provide a resource for the development of property derivatives. It tracks month-on-month price movements in the private non-landed residential property market.
Right now, property investors have just one price index to work with: the Urban Redevelopment Authority's (URA) private residential property price index. That index is released on a quarterly basis and has sometimes been criticised for lagging a fast-moving market.
The National University of Singapore's Institute of Real Estate Studies developed the SRPI after a dialogue with industry players as well as help from the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).
The institute hopes that, as real estate grows in importance as an asset class in the region, the SRPI will serve as a benchmark index and a reference for structuring property derivative products.
'As the index gains in acceptance, it can potentially be used for risk management through the development of products such a property derivatives,' said Senior Minister of State for National Development Grace Fu, who officially launched the SRPI yesterday. 'Such derivatives may be one way for real estate developers, asset managers, banks and investors to hedge their property exposure.'
The new index differs from URA's in several significant ways. For one thing, it will be updated every month, instead of once a quarter.
The SRPI is also computed using the market values of a basket of only completed properties. Right now, the basket has 364 private residential projects located across the island that were completed between October 1998 and September 2009.
Uncompleted projects were not included in the basket as price movements in such projects can be vastly different from those seen for the rest of the market. But the impact of new launches on the prices of completed properties in the vicinity will be factored in.
The URA index, on the other hand, includes transactions at new launches and sub-sales.
The SRPI also considers the address, completion date, tenure, leasehold maturity, floor level and strata area of all units in the projects in its basket.
The differences mean that the two indices can throw up very different numbers.
According to the SRPI, prices of non-landed private homes rose 22.2 per cent from December 2008 to December 2009. But URA's private residential property price index showed that prices of non-landed properties increased just 0.5 per cent for the whole of 2009.
And as for Singapore's central areas, the SRPI showed a 27.3 per cent jump in prices from December 2008 to December 2009 for the 'central region' (postal districts 1-4 and 9-11). The URA price index, by contrast, showed that prices of non-landed properties in the 'core central region' fell 1.8 per cent over 2009.
Knight Frank chairman Tan Tiong Cheng pointed out that the methodology used to develop the SRPI is 'clearly spelled out' while that used by URA for its price index is 'less known'.
'This can lead to some misunderstanding of the URA price index, especially in a volatile market,' Mr Tan said. 'What it means is there will be a lag effect when price movements in a fast-moving market do not get reflected immediately in the price index. This became quite obvious when the market corrected itself significantly post-Lehman, and the URA index clearly did not reflect that.'
A developer BT spoke to also said that it might be easier to 'bet' on the property market using the SRPI, instead of the URA price index, as more information is available about how the SRPI is calculated.
But he warned that there will still be some lag effect in the new index as it still uses transaction data from URA. This is derived from caveats lodged by buyers, who can sometimes take months to lodge a caveat - or even choose not to lodge one at all.
URA said the SRPI is compiled for the purpose of trading property derivatives. It lets market participants refer to an index that tracks the price movements of a specific basket of properties, or the specific sector of the property market which they wish to gain exposure to or hedge against.
On the other hand, URA's property price index is designed to provide the general public and industry players with a 'broad indication of price trends in the private residential market'.
URA's index captures 'all transactions and so may present a different picture from specific parts of the market', a spokesman said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Let private property fly free, urges Simon Cheong
Business Times - 25 Mar 2010
Let private property fly free, urges Simon Cheong
Redas chief says state intervention on supply side not always helpful
By UMA SHANKARI
(SINGAPORE) The president of the Real Estate Developers' Association of Singapore (Redas), Simon Cheong, came out strongly yesterday to say the government should allow the property market here to operate fully as a free market.
Mr Cheong, who was speaking at the launch of a new price index for private homes in Singapore, also asked if the state should be so concerned with private housing prices when the segment serves only 16.5 per cent of the overall population.
Mr Cheong, who is also chief executive of SC Global Developments, said that he was commenting on the market despite being personally advised not to do so for fear of it being a 'sensitive topic'.
'But, on balance, in the interest of Singapore's property market, I decided to do so,' he said. 'If Redas members who are fighting in the foxhole everyday for the interest of a healthier property market do not speak up, then who will?' Real estate developers in Singapore now have the unenviable task of having to step up their game very quickly to satisfy demand, he said.
In Singapore, the government, which owns more than two-thirds of all land, controls the land supply. Land price here is largely determined by the reserve price system.
'As the supply side of the development equation is managed by the public sector, market forces are often not wholly free to respond to demand,' Mr Cheong said.
To illustrate his point, he highlighted the results of two recent government land tenders, which he said illustrated the 'conundrum and the dilemma developers face' when they bid for sites in the government land sales programme.
A site in Tampines first put up for sale by the government in June 2008 was not sold after the sole bid of $118 per square foot per plot ratio (psf ppr) was rejected for failing to meet the reserve price.
But earlier this month in another tender exercise, it was awarded to the top bidder at $421 psf ppr - 3.6 times the previous price.
Similarly, a mixed-use site at Ten Mile Junction, which had a failed bid of $162 psf ppr back in April 2008, was awarded in February this year for $437 psf ppr.
In both cases, the higher bid prices generated more revenue for state coffers but also accentuated the demand-supply mismatch.
'With a higher land cost, these developers must now sell at higher prices just to maintain an equitable level of profitability.'
Mr Cheong also questioned recent government measures designed to keep private housing affordable, such as the introduction of a stamp duty for sellers and the removal of the deferred payment and interest absorption schemes.
While some felt private property was being priced out of their reach, he pointed out that it served only 16.5 per cent of the demography. 'Should it (the state) intervene to restrain the rise in property values to make private housing more affordable or should it be left to market forces?'
Mr Cheong also said that a certain level of speculative activity in the marketplace can, in theory, improve the liquidity of real estate assets and catalyse the sales of new developments.
When demand exceeds supply by a large margin, speculators provide investors with another source of a scarce commodity at a price premium. And encouraged by the higher prices, developers respond by launching more developments for sale and, in so doing, narrow the gap with demand, Mr Cheong added.
He concluded his speech by pointing out that there are various factors that make real estate the preferred asset class in the near term, such as pent-up demand for mass-market housing and high liquidity, with some $301 billion of cash deposits in banks and another $67 billion of investible CPF funds reported last year.
'Is it any wonder then that the recent measures to cool the private property market did not quench the thirst of genuine home buyers and investors - local and foreign alike - who clearly have strong confidence in the fundamentals of Singapore's real economy and its ascendancy as a global city in Asia?' he said.
Mr Cheong added that he hopes that the launch of the new index will be 'a step towards improving market transparency and help lessen future needs for frequent market interventions, allowing a freer hand for market forces to work out its own genius'.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Cheong: Higher land cost means developers must sell at higher prices
Let private property fly free, urges Simon Cheong
Redas chief says state intervention on supply side not always helpful
By UMA SHANKARI
(SINGAPORE) The president of the Real Estate Developers' Association of Singapore (Redas), Simon Cheong, came out strongly yesterday to say the government should allow the property market here to operate fully as a free market.
Mr Cheong, who was speaking at the launch of a new price index for private homes in Singapore, also asked if the state should be so concerned with private housing prices when the segment serves only 16.5 per cent of the overall population.
Mr Cheong, who is also chief executive of SC Global Developments, said that he was commenting on the market despite being personally advised not to do so for fear of it being a 'sensitive topic'.
'But, on balance, in the interest of Singapore's property market, I decided to do so,' he said. 'If Redas members who are fighting in the foxhole everyday for the interest of a healthier property market do not speak up, then who will?' Real estate developers in Singapore now have the unenviable task of having to step up their game very quickly to satisfy demand, he said.
In Singapore, the government, which owns more than two-thirds of all land, controls the land supply. Land price here is largely determined by the reserve price system.
'As the supply side of the development equation is managed by the public sector, market forces are often not wholly free to respond to demand,' Mr Cheong said.
To illustrate his point, he highlighted the results of two recent government land tenders, which he said illustrated the 'conundrum and the dilemma developers face' when they bid for sites in the government land sales programme.
A site in Tampines first put up for sale by the government in June 2008 was not sold after the sole bid of $118 per square foot per plot ratio (psf ppr) was rejected for failing to meet the reserve price.
But earlier this month in another tender exercise, it was awarded to the top bidder at $421 psf ppr - 3.6 times the previous price.
Similarly, a mixed-use site at Ten Mile Junction, which had a failed bid of $162 psf ppr back in April 2008, was awarded in February this year for $437 psf ppr.
In both cases, the higher bid prices generated more revenue for state coffers but also accentuated the demand-supply mismatch.
'With a higher land cost, these developers must now sell at higher prices just to maintain an equitable level of profitability.'
Mr Cheong also questioned recent government measures designed to keep private housing affordable, such as the introduction of a stamp duty for sellers and the removal of the deferred payment and interest absorption schemes.
While some felt private property was being priced out of their reach, he pointed out that it served only 16.5 per cent of the demography. 'Should it (the state) intervene to restrain the rise in property values to make private housing more affordable or should it be left to market forces?'
Mr Cheong also said that a certain level of speculative activity in the marketplace can, in theory, improve the liquidity of real estate assets and catalyse the sales of new developments.
When demand exceeds supply by a large margin, speculators provide investors with another source of a scarce commodity at a price premium. And encouraged by the higher prices, developers respond by launching more developments for sale and, in so doing, narrow the gap with demand, Mr Cheong added.
He concluded his speech by pointing out that there are various factors that make real estate the preferred asset class in the near term, such as pent-up demand for mass-market housing and high liquidity, with some $301 billion of cash deposits in banks and another $67 billion of investible CPF funds reported last year.
'Is it any wonder then that the recent measures to cool the private property market did not quench the thirst of genuine home buyers and investors - local and foreign alike - who clearly have strong confidence in the fundamentals of Singapore's real economy and its ascendancy as a global city in Asia?' he said.
Mr Cheong added that he hopes that the launch of the new index will be 'a step towards improving market transparency and help lessen future needs for frequent market interventions, allowing a freer hand for market forces to work out its own genius'.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Cheong: Higher land cost means developers must sell at higher prices
BT : Investment land sales up 16 times in Q1
Business Times - 25 Mar 2010
Investment land sales up 16 times in Q1
77% of total sales of $4.4b came from private market
By TEH SHI NING
THE investment sales market strengthened further in the first quarter of 2010, as robust sales of residential government land sale (GLS) sites showed developers' hunger for land.
Total investment sales came up to $4.41 billion in the first quarter, 16 times more than the paltry $273.83 million in Q1 last year, a CB Richard Ellis report said yesterday.
Of these, 77 per cent or $3.4 billion came from the private investment sales market, while investment sales in the public sector contributed the remainder.
CBRE's Q1 tally includes land deals, collective sales, transactions of entire office and other buildings as well as strata-titled units above $5 million, which have taken place since the start of the year.
Residential investment sales - including good class bungalow (GCB) sales - chalked up $2.11 billion in transacted value, accounting for 48 per cent of the quarter's total investment sales. This was 27 per cent below the $2.88 billion in residential investment sales recorded for Q409, but is significantly higher than the $149.91 million registered in Q109.
GLS sites sold in the quarter include the Sengkang West Avenue site awarded to City Developments for $200.5 million. A Tampines site sold to Sim Lian Land for $302 million while Far East Organisation was awarded the mixed residential Ten Mile Junction. Two executive condominium sites were also sold during the quarter.
To date, 18 GCBs have been sold for a combined total of $283.61 million. With the GCB market's current momentum, CBRE says a possible 80 to 90 GCBs could be sold in 2010, which translates into $1.2 to $1.4 billion in value.
The commercial investment market was also active in Q1, with $1.08 billion in sales recorded to date, making up 24.5 per cent of total investment sales.
As for the industrial sector, 26 known transactions so far in the quarter made up 26.3 per cent of $1.16 billion of total investment sales.
The CBRE report noted that while many transactions in the industrial sector last year were from end-users, 2010 has seen the return of selective purchases by the real estate investment trusts (Reits) such as A-Reit and MapletreeLog. Cache Logistics Trust, also purchased the six properties which will make up its portfolio when it soon lists.
Jeremy Lake, executive director of investment properties at CBRE said: 'While most of the major investment sales transactions in 2009 were dominated by Asian investors, there is now a diverse pool of buyers. Among these would include local as well as foreign developers competing for GLS sites for residential development. Investment funds are also looking for opportunities.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
__._,_.___
Investment land sales up 16 times in Q1
77% of total sales of $4.4b came from private market
By TEH SHI NING
THE investment sales market strengthened further in the first quarter of 2010, as robust sales of residential government land sale (GLS) sites showed developers' hunger for land.
Total investment sales came up to $4.41 billion in the first quarter, 16 times more than the paltry $273.83 million in Q1 last year, a CB Richard Ellis report said yesterday.
Of these, 77 per cent or $3.4 billion came from the private investment sales market, while investment sales in the public sector contributed the remainder.
CBRE's Q1 tally includes land deals, collective sales, transactions of entire office and other buildings as well as strata-titled units above $5 million, which have taken place since the start of the year.
Residential investment sales - including good class bungalow (GCB) sales - chalked up $2.11 billion in transacted value, accounting for 48 per cent of the quarter's total investment sales. This was 27 per cent below the $2.88 billion in residential investment sales recorded for Q409, but is significantly higher than the $149.91 million registered in Q109.
GLS sites sold in the quarter include the Sengkang West Avenue site awarded to City Developments for $200.5 million. A Tampines site sold to Sim Lian Land for $302 million while Far East Organisation was awarded the mixed residential Ten Mile Junction. Two executive condominium sites were also sold during the quarter.
To date, 18 GCBs have been sold for a combined total of $283.61 million. With the GCB market's current momentum, CBRE says a possible 80 to 90 GCBs could be sold in 2010, which translates into $1.2 to $1.4 billion in value.
The commercial investment market was also active in Q1, with $1.08 billion in sales recorded to date, making up 24.5 per cent of total investment sales.
As for the industrial sector, 26 known transactions so far in the quarter made up 26.3 per cent of $1.16 billion of total investment sales.
The CBRE report noted that while many transactions in the industrial sector last year were from end-users, 2010 has seen the return of selective purchases by the real estate investment trusts (Reits) such as A-Reit and MapletreeLog. Cache Logistics Trust, also purchased the six properties which will make up its portfolio when it soon lists.
Jeremy Lake, executive director of investment properties at CBRE said: 'While most of the major investment sales transactions in 2009 were dominated by Asian investors, there is now a diverse pool of buyers. Among these would include local as well as foreign developers competing for GLS sites for residential development. Investment funds are also looking for opportunities.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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BT : Reflections: All but one unit sold at latest launch
Business Times - 25 Mar 2010
Reflections: All but one unit sold at latest launch
By FELDA CHAY
WATERFRONT apartments at Reflections at Keppel Bay are riding high on the property wave, with 710 of the 740 units launched at the 99-year leasehold project already sold.
At the latest launch at the weekend, 29 of 30 units released in tower block 2B - touted as the block with the best view - were bought. The average selling price of these units - two to four-bedroom apartments, one penthouse and a 13,300 sq ft super penthouse - was $2,200 per sq ft, with the highest price hitting $2,600 psf. Market sources say the lowest price was about $1700-1750 psf.
Keppel Corp owns 70 per cent of the development, while its property arm Keppel Land owns the other 30 per cent.
At the topping out ceremony for the first tower yesterday, KepLand's Singapore residential chief executive Augustine Tan said Keppel is looking to release another 20 more units in tower 2B, and may launch between 100-200 apartments for the entire year, depending on demand.
Sale of the remaining units will be paced, he said. 'We are not really rushing to sell them. We have another two years of construction to go.'
Reflections at Keppel Bay will be completed by the first half of 2012. It comprises six towers and 11 villa apartment blocks, featuring a total of 1,129 waterfront apartments along a 750-metre shore line.
Mr Tan said three other plots of land at Keppel Bay are in the design development stage. It will take at least a year or two before development plans for them can be firmed up, he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
__._,_.___
Reflections: All but one unit sold at latest launch
By FELDA CHAY
WATERFRONT apartments at Reflections at Keppel Bay are riding high on the property wave, with 710 of the 740 units launched at the 99-year leasehold project already sold.
At the latest launch at the weekend, 29 of 30 units released in tower block 2B - touted as the block with the best view - were bought. The average selling price of these units - two to four-bedroom apartments, one penthouse and a 13,300 sq ft super penthouse - was $2,200 per sq ft, with the highest price hitting $2,600 psf. Market sources say the lowest price was about $1700-1750 psf.
Keppel Corp owns 70 per cent of the development, while its property arm Keppel Land owns the other 30 per cent.
At the topping out ceremony for the first tower yesterday, KepLand's Singapore residential chief executive Augustine Tan said Keppel is looking to release another 20 more units in tower 2B, and may launch between 100-200 apartments for the entire year, depending on demand.
Sale of the remaining units will be paced, he said. 'We are not really rushing to sell them. We have another two years of construction to go.'
Reflections at Keppel Bay will be completed by the first half of 2012. It comprises six towers and 11 villa apartment blocks, featuring a total of 1,129 waterfront apartments along a 750-metre shore line.
Mr Tan said three other plots of land at Keppel Bay are in the design development stage. It will take at least a year or two before development plans for them can be firmed up, he said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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BT : Building world-class public housing
Business Times - 25 Mar 2010
Building world-class public housing
HDB offers a range of lifestyle options for the majority of the population. ADAM TAN explores the new public housing landscape
IF the Resale Price Index (RPI) released by the Housing & Development Board (HDB) is anything to go by, public housing in Singapore is gaining popularity by the day. Quarterly results have recorded just four dips in over five years, with the RPI growing a modest 3.2 per cent annually for the past decade.
Despite the rising prices, a very visible explanation for this increasing preference for HDB flats would be the evolving lifestyle landscape of public housing estates. Public housing no longer means a collection of cookie-cutter buildings across the island offering exactly the same designs for each flat type.
The fact is that public housing for the masses has come a long way from its beginnings in 1960. The early flats and their surroundings were far simpler than flats and estates built today, with the objective being to house the burgeoning population as quickly as possible.
Fast forward to today and the landscape is very different. New blocks now have lifts on every floor. Individual units and blocks are better designed and estates now incorporate more recreational facilities within them, such as jogging tracks, gardens and exercise areas. Each cluster of flats has its own identity, from the colour of the flat blocks and the design of the playgrounds, to the layout of the greenery in the estate and the amenities offered nearby.
Living in the heartlands has certainly changed over the years, with malls near most estates and an improved infrastructure connecting the residents to the rest of the island via the MRT and Light Rail Transit (LRT) network. Bus services have also improved for greater connectivity.
And it all boils down to an improvement in living standards for the masses. The HDB has progressed from merely providing roofs over people's heads, to proffering a range of lifestyle options for the mass population.
The Pinnacle@Duxton
A prime example is The Pinnacle@Duxton at Cantonment Road, the landmark public housing development that offers a higher standard of living than previously seen in public housing. Housed in seven 50-storey blocks, The Pinnacle@Duxton also holds the record for being the tallest public housing buildings in Singapore.
Flats for The Pinnacle@Duxton were completed in December 2009 and its new residents enjoy facilities like the two unique skybridges, which create possibly the world's longest continuous sky garden. These skybridges play a leading role in the lifestyle of residents there.
The skybridges, located at the 26th and 50th storeys, offer views of Chinatown, Marina Bay, Mount Faber and the city. Besides that, the skybridge on the 26th floor also incorporates a residents' committee centre, children's playground and exercise facilities such as a jogging track, senior citizens' fitness corner and outdoor gym.
The anticipated demand for the skybridges is such that there are restrictions in place to maintain a level of comfort and safety for all visitors and users. For instance, only 1,000 people are allowed onto the skybridges at any one time and the 26th floor skybridge is reserved exclusively for residents. Furthermore, non-residential access to the sky garden on the 50th floor is chargeable at $5 per person per entry, to help defray maintenance costs.
Rounding off the estate's amenities are a food centre and daycare centre, while sports and recreational facilities can also be found within the estate. In terms of accessibility, six bus services go to The Pinnacle@Duxton while Outram Park and Tanjong Pagar MRT stations are but a short stroll away.
Two other notable public housing projects are the recent build-to-order (BTO) launches by HDB, namely SkyVille@Dawson and SkyTerrace@Dawson.
Once built, these two BTO projects will be among the closest HDB flats to the Orchard shopping belt. Besides their proximity to Orchard Road, there are also various amenities nearby. These include a supermarket, eateries, parks, schools and recreational facilities.
Mainly because of the location, these public homes are naturally priced on the high side. During the balloting exercise held in September 2008, the price range of 5-room flats at The Pinnacle@Duxton, at $545,000 to $646,000, was comparable only to the median resale prices for 5-room flats in the Central area, Marine Parade and Queenstown (Table 1).
Similarly, the price range for a 5-room flat at SkyVille@Dawson and SkyTerrace@Dawson, at their launch in mid-December 2009, was $532,000 to $643,000. The median price for such units was below the median resale prices for 5-room flats only in Bukit Merah, Queenstown and Marine Parade ( Table 2 below).
For those who may baulk at paying such high prices for public housing, but still crave a vibrant lifestyle in the surrounding environs, Punggol is an increasingly viable, and more cost-efficient, alternative.
In the last 12 months, six out of the 16 BTO projects launched were located in Punggol. The prices of flats there ranged from $228,000 to $322,000 for 4-room flats, and no more than $409,000 for a 5-room flat, roughly 60 per cent of the price tag for the units in SkyVille@Dawson and SkyTerrace@Dawson. In addition, the BTO projects at Punggol also introduced studio, 2-room and 3-room flats to the estate, providing more variety for future residents there.
One factor behind the focus on Punggol is the Punggol21 Master Plan. There are government plans to remake the estate into a vibrant waterfront town, a recreational and housing hub that is also set to be Singapore's first eco-town for the tropics.
Work on the waterway is set to be completed by the end of the year, and will offer the targeted 21,000 public and private homes along its banks the allure of waterfront living. By end-2011, there will be about 23,000 completed flats in Punggol.
Another exciting development in public housing is Clementi Town Centre. The former bus interchange is set to be unveiled this year as a new 40-storey complex housing a new air-conditioned bus interchange, a five-storey mall, a community library, Town Council office and 388 units of public housing. This will be the first time that a single complex will house public residences, commercial properties and a transportation hub.
In a bid to act as an example of a typical 21st Century HDB town, Punggol is being designed as an eco-town. It will act as a test-bed for various eco-friendly and energy-saving initiatives, such as solar panels to harness energy for lighting common areas, a rainwater collection system and the Energy SAVE Programme. The latter is designed to reduce energy usage in households by 10 per cent over the next five years. These new measures are all part of HDB's sustainability efforts and Punggol is set to spearhead them.
Then, in January this year, HDB launched the tender for two executive condominium (EC) sites in Sengkang and Yishun. ECs, while considered public housing, offer facilities that are comparable to private condominiums, and have a monthly household income cap of $10,000. These will be the first ECs to be launched since mid-2005, simply because the gap between public housing and mass market private properties had been relatively narrow for years.
However, even as household incomes have been rising, the prices of new launches in the mass market have also been going up.
There is therefore a growing segment of the population whose household income of above $8,000 makes them ineligible for new HDB flats, yet for whom the prices of mass market properties are beyond their means. The demand from this 'sandwich class' makes the re-introduction of ECs a welcome move from the government.
Staying affordable
In short, all these new developments point to the future of public housing: a richer lifestyle offering enhanced connectivity, more choices for dining, entertainment and education, as well as other amenities, and all within a convenient distance.
And while the government has made it clear that it will not control prices in the property market, it has also stated that public housing will always remain affordable.
Naturally, there will be estates where the prices of public housing units are similar to those of some mass market private properties, but, geographically, prices will never overlap.
To illustrate, one could opt to stay in a centrally located HDB flat or opt for a private property unit in the Outside Central region. That is why Singapore's public housing will never challenge entry-level private housing.
The choice between one and the other all depends on how status-conscious the buyer is, and whether there is a need for private amenities.
As there is a minimum occupancy period for the new projects, there should be no effect on the resale prices of surrounding flats. The HDB resale price index is expected to see an overall 5-8 per cent growth this year, barring any unforeseen financial crises.
The writer is corporate communications manager, PropNex Realty Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Contrast: While the early flats, for example these in Toa Payoh (above), were basic, the latest HDB estates in Punggol (next) will enjoy eco-town facilities as the government plans to remake the estate into a vibrant waterfront town, a recreational and housing hub
Building world-class public housing
HDB offers a range of lifestyle options for the majority of the population. ADAM TAN explores the new public housing landscape
IF the Resale Price Index (RPI) released by the Housing & Development Board (HDB) is anything to go by, public housing in Singapore is gaining popularity by the day. Quarterly results have recorded just four dips in over five years, with the RPI growing a modest 3.2 per cent annually for the past decade.
Despite the rising prices, a very visible explanation for this increasing preference for HDB flats would be the evolving lifestyle landscape of public housing estates. Public housing no longer means a collection of cookie-cutter buildings across the island offering exactly the same designs for each flat type.
The fact is that public housing for the masses has come a long way from its beginnings in 1960. The early flats and their surroundings were far simpler than flats and estates built today, with the objective being to house the burgeoning population as quickly as possible.
Fast forward to today and the landscape is very different. New blocks now have lifts on every floor. Individual units and blocks are better designed and estates now incorporate more recreational facilities within them, such as jogging tracks, gardens and exercise areas. Each cluster of flats has its own identity, from the colour of the flat blocks and the design of the playgrounds, to the layout of the greenery in the estate and the amenities offered nearby.
Living in the heartlands has certainly changed over the years, with malls near most estates and an improved infrastructure connecting the residents to the rest of the island via the MRT and Light Rail Transit (LRT) network. Bus services have also improved for greater connectivity.
And it all boils down to an improvement in living standards for the masses. The HDB has progressed from merely providing roofs over people's heads, to proffering a range of lifestyle options for the mass population.
The Pinnacle@Duxton
A prime example is The Pinnacle@Duxton at Cantonment Road, the landmark public housing development that offers a higher standard of living than previously seen in public housing. Housed in seven 50-storey blocks, The Pinnacle@Duxton also holds the record for being the tallest public housing buildings in Singapore.
Flats for The Pinnacle@Duxton were completed in December 2009 and its new residents enjoy facilities like the two unique skybridges, which create possibly the world's longest continuous sky garden. These skybridges play a leading role in the lifestyle of residents there.
The skybridges, located at the 26th and 50th storeys, offer views of Chinatown, Marina Bay, Mount Faber and the city. Besides that, the skybridge on the 26th floor also incorporates a residents' committee centre, children's playground and exercise facilities such as a jogging track, senior citizens' fitness corner and outdoor gym.
The anticipated demand for the skybridges is such that there are restrictions in place to maintain a level of comfort and safety for all visitors and users. For instance, only 1,000 people are allowed onto the skybridges at any one time and the 26th floor skybridge is reserved exclusively for residents. Furthermore, non-residential access to the sky garden on the 50th floor is chargeable at $5 per person per entry, to help defray maintenance costs.
Rounding off the estate's amenities are a food centre and daycare centre, while sports and recreational facilities can also be found within the estate. In terms of accessibility, six bus services go to The Pinnacle@Duxton while Outram Park and Tanjong Pagar MRT stations are but a short stroll away.
Two other notable public housing projects are the recent build-to-order (BTO) launches by HDB, namely SkyVille@Dawson and SkyTerrace@Dawson.
Once built, these two BTO projects will be among the closest HDB flats to the Orchard shopping belt. Besides their proximity to Orchard Road, there are also various amenities nearby. These include a supermarket, eateries, parks, schools and recreational facilities.
Mainly because of the location, these public homes are naturally priced on the high side. During the balloting exercise held in September 2008, the price range of 5-room flats at The Pinnacle@Duxton, at $545,000 to $646,000, was comparable only to the median resale prices for 5-room flats in the Central area, Marine Parade and Queenstown (Table 1).
Similarly, the price range for a 5-room flat at SkyVille@Dawson and SkyTerrace@Dawson, at their launch in mid-December 2009, was $532,000 to $643,000. The median price for such units was below the median resale prices for 5-room flats only in Bukit Merah, Queenstown and Marine Parade ( Table 2 below).
For those who may baulk at paying such high prices for public housing, but still crave a vibrant lifestyle in the surrounding environs, Punggol is an increasingly viable, and more cost-efficient, alternative.
In the last 12 months, six out of the 16 BTO projects launched were located in Punggol. The prices of flats there ranged from $228,000 to $322,000 for 4-room flats, and no more than $409,000 for a 5-room flat, roughly 60 per cent of the price tag for the units in SkyVille@Dawson and SkyTerrace@Dawson. In addition, the BTO projects at Punggol also introduced studio, 2-room and 3-room flats to the estate, providing more variety for future residents there.
One factor behind the focus on Punggol is the Punggol21 Master Plan. There are government plans to remake the estate into a vibrant waterfront town, a recreational and housing hub that is also set to be Singapore's first eco-town for the tropics.
Work on the waterway is set to be completed by the end of the year, and will offer the targeted 21,000 public and private homes along its banks the allure of waterfront living. By end-2011, there will be about 23,000 completed flats in Punggol.
Another exciting development in public housing is Clementi Town Centre. The former bus interchange is set to be unveiled this year as a new 40-storey complex housing a new air-conditioned bus interchange, a five-storey mall, a community library, Town Council office and 388 units of public housing. This will be the first time that a single complex will house public residences, commercial properties and a transportation hub.
In a bid to act as an example of a typical 21st Century HDB town, Punggol is being designed as an eco-town. It will act as a test-bed for various eco-friendly and energy-saving initiatives, such as solar panels to harness energy for lighting common areas, a rainwater collection system and the Energy SAVE Programme. The latter is designed to reduce energy usage in households by 10 per cent over the next five years. These new measures are all part of HDB's sustainability efforts and Punggol is set to spearhead them.
Then, in January this year, HDB launched the tender for two executive condominium (EC) sites in Sengkang and Yishun. ECs, while considered public housing, offer facilities that are comparable to private condominiums, and have a monthly household income cap of $10,000. These will be the first ECs to be launched since mid-2005, simply because the gap between public housing and mass market private properties had been relatively narrow for years.
However, even as household incomes have been rising, the prices of new launches in the mass market have also been going up.
There is therefore a growing segment of the population whose household income of above $8,000 makes them ineligible for new HDB flats, yet for whom the prices of mass market properties are beyond their means. The demand from this 'sandwich class' makes the re-introduction of ECs a welcome move from the government.
Staying affordable
In short, all these new developments point to the future of public housing: a richer lifestyle offering enhanced connectivity, more choices for dining, entertainment and education, as well as other amenities, and all within a convenient distance.
And while the government has made it clear that it will not control prices in the property market, it has also stated that public housing will always remain affordable.
Naturally, there will be estates where the prices of public housing units are similar to those of some mass market private properties, but, geographically, prices will never overlap.
To illustrate, one could opt to stay in a centrally located HDB flat or opt for a private property unit in the Outside Central region. That is why Singapore's public housing will never challenge entry-level private housing.
The choice between one and the other all depends on how status-conscious the buyer is, and whether there is a need for private amenities.
As there is a minimum occupancy period for the new projects, there should be no effect on the resale prices of surrounding flats. The HDB resale price index is expected to see an overall 5-8 per cent growth this year, barring any unforeseen financial crises.
The writer is corporate communications manager, PropNex Realty Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Contrast: While the early flats, for example these in Toa Payoh (above), were basic, the latest HDB estates in Punggol (next) will enjoy eco-town facilities as the government plans to remake the estate into a vibrant waterfront town, a recreational and housing hub
BT : Clinching the smartest home loan deals
Business Times - 25 Mar 2010
Clinching the smartest home loan deals
Short-term trading profits in real estate are not high, while the risks are considerable. DENNIS NG shows you the numbers
IT'S tough enough figuring out which housing loan package is the best for you. But how will the latest changes in property financing rules affect your property purchase?
The recent curbs on the property market include measures such as the scrapping of interest-only loans, capping financing to 80 per cent of the property's value, and a stamp duty on properties sold within a year of purchase.
Also, are there different things to consider in financing a property that you mean to live in versus one you intend to rent out? What are the things to look out for in choosing a housing loan?
Fret not, this article will help you to decipher housing loan packages like a pro, even if you're buying property for the first time.
Scrapping of interest-only loans
In interest-only loans, the borrower chooses not to repay any principal at all, and only services the interest cost in his monthly instalments.
Many home buyers are shocked by the idea, and unable to understand the logic of not making any principal repayment on a housing loan.
However, for a property investor, one simple way to reduce his monthly cash outlay and increase return on investment is to minimise the capital outlay on the property. Interest-only loans help by minimising the monthly cash outlay, thereby increasing the possibility of positive cashflows from the property. That is, the rental income from the property more than covers the monthly instalment. It also enables the property investor to cut his monthly debt repayment obligations, and reduce his debt-service ratio, or DSR.
Thus, Minister for National Development Mah Bow Tan announced the discontinuation of interest-only property loans in September last year to dampen speculative demand. However, this measure does not affect the average home buyer or investor since most people take housing loans that repay both principal and interest.
Property as home or investment
Is there a difference between taking a housing loan for an an owner-occupied home versus one for investment?
Yes, there is. Because a person buying a property for investment has quite different considerations from someone buying it as a home. The main differences are summarised in the table.
How banks view rental income
If a tenant pays you rent of $3,000 a month, does your monthly income go up by $3,000? Most people mistakenly think that it does. But what happens is that the bank might factor in just 50 per cent of the gross rental income as your additional income in calculating your debt-service ratio (DSR).
The all-important debt service ratio
The DSR is basically the percentage of your income used to repay your monthly debt obligations.
Here's an illustration. Let's say Mr A's gross salary is $5,000. He has a car loan with a monthly instalment of $500 and a housing loan instalment of $2,000. Thus, his total monthly debt repayment obligation works out to $2,500. Divide that by his gross income and his DSR works out to 50 per cent.
In general, provided you have a prompt debt repayment record, banks would work out the maximum loan they can grant you based on a maximum DSR of 50 per cent.
Now Mr A plans to buy a second property for $1 million. He expects to rent it out for $3,500 a month. He estimates that if he takes an 80 per cent loan ($800,000) with a 30-year loan period, his monthly instalment would be $2,956.95. This is based on the current interest rate of about 2 per cent for housing loans.
However, he does not know that because there are incidental costs to a property, such as maintenance fees, insurance and other costs, banks do not take the gross rental income of $3,500 as additional income. Some banks, for the sake of prudence, might only factor in half the rental income, or $1,750. Thus, his total income works out to $5,000 plus $1,750 or $6,750.
What interest rate should one use to estimate housing loan instalments? Interest rates on housing loans fluctuate from time to time. When the economy is strong, such as in 2007, housing loan interest rates were about 4 per cent.
Thus, in calculating DSR, it might be prudent for banks and property investors to use a higher interest rate, such as 4 per cent, to calculate the cost of the loan.
Based on 4 per cent, Mr A's monthly instalment for a loan of $800,000 works out to $3,819 (or about 30 per cent higher than using a 2 per cent interest rate.) His revised total monthly debt repayment obligation works out to $6,319, while his revised total income is $6,750.
Thus, his revised DSR stands at 93.6 per cent, which means that his loan application for a second property is likely to be rejected by the bank.
So to avoid nasty surprises, it is best to get in-principle approval for a bank loan before committing to a property.
Effect of seller's stamp duty
As of Feb 20, any investor who sells a property within one year of purchase will have to pay a seller's stamp duty, which is roughly 2.5 per cent of the purchase price. This could greatly reduce the gains from selling a property within a year.
If you had bought a property for $1 million, and sold it for $1.1 million, what are your gains after deducting the cost of property purchase and sale? Refer to the table (above right) for the calculations.
The table shows that short-term trading profits in real estate are in fact not high, while the risks are considerable. If you sell your house two years later, you would not have to pay the seller's stamp duty of $27,600 (based on the $1.1 million sale price). However, you would have to bear more interest payments for an extra year of loans.
The interest cost could come up to an extra $30,000. So if property prices rise by 10 per cent, you would not make much money at all. Of course, property agents might not volunteer such information.
To put your housing loan on a sounder footing and to get an unbiased analysis and comparison of all housing loan packages on offer, it might make sense to talk to an independent mortgage broker. After all, bank officers can only offer packages from the bank they work for.
Dennis Ng is an accountant by training with 17 years of bank lending experience. He founded http://www.HousingLoanSG.com, a mortgage consultancy, in 2003.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Clinching the smartest home loan deals
Short-term trading profits in real estate are not high, while the risks are considerable. DENNIS NG shows you the numbers
IT'S tough enough figuring out which housing loan package is the best for you. But how will the latest changes in property financing rules affect your property purchase?
The recent curbs on the property market include measures such as the scrapping of interest-only loans, capping financing to 80 per cent of the property's value, and a stamp duty on properties sold within a year of purchase.
Also, are there different things to consider in financing a property that you mean to live in versus one you intend to rent out? What are the things to look out for in choosing a housing loan?
Fret not, this article will help you to decipher housing loan packages like a pro, even if you're buying property for the first time.
Scrapping of interest-only loans
In interest-only loans, the borrower chooses not to repay any principal at all, and only services the interest cost in his monthly instalments.
Many home buyers are shocked by the idea, and unable to understand the logic of not making any principal repayment on a housing loan.
However, for a property investor, one simple way to reduce his monthly cash outlay and increase return on investment is to minimise the capital outlay on the property. Interest-only loans help by minimising the monthly cash outlay, thereby increasing the possibility of positive cashflows from the property. That is, the rental income from the property more than covers the monthly instalment. It also enables the property investor to cut his monthly debt repayment obligations, and reduce his debt-service ratio, or DSR.
Thus, Minister for National Development Mah Bow Tan announced the discontinuation of interest-only property loans in September last year to dampen speculative demand. However, this measure does not affect the average home buyer or investor since most people take housing loans that repay both principal and interest.
Property as home or investment
Is there a difference between taking a housing loan for an an owner-occupied home versus one for investment?
Yes, there is. Because a person buying a property for investment has quite different considerations from someone buying it as a home. The main differences are summarised in the table.
How banks view rental income
If a tenant pays you rent of $3,000 a month, does your monthly income go up by $3,000? Most people mistakenly think that it does. But what happens is that the bank might factor in just 50 per cent of the gross rental income as your additional income in calculating your debt-service ratio (DSR).
The all-important debt service ratio
The DSR is basically the percentage of your income used to repay your monthly debt obligations.
Here's an illustration. Let's say Mr A's gross salary is $5,000. He has a car loan with a monthly instalment of $500 and a housing loan instalment of $2,000. Thus, his total monthly debt repayment obligation works out to $2,500. Divide that by his gross income and his DSR works out to 50 per cent.
In general, provided you have a prompt debt repayment record, banks would work out the maximum loan they can grant you based on a maximum DSR of 50 per cent.
Now Mr A plans to buy a second property for $1 million. He expects to rent it out for $3,500 a month. He estimates that if he takes an 80 per cent loan ($800,000) with a 30-year loan period, his monthly instalment would be $2,956.95. This is based on the current interest rate of about 2 per cent for housing loans.
However, he does not know that because there are incidental costs to a property, such as maintenance fees, insurance and other costs, banks do not take the gross rental income of $3,500 as additional income. Some banks, for the sake of prudence, might only factor in half the rental income, or $1,750. Thus, his total income works out to $5,000 plus $1,750 or $6,750.
What interest rate should one use to estimate housing loan instalments? Interest rates on housing loans fluctuate from time to time. When the economy is strong, such as in 2007, housing loan interest rates were about 4 per cent.
Thus, in calculating DSR, it might be prudent for banks and property investors to use a higher interest rate, such as 4 per cent, to calculate the cost of the loan.
Based on 4 per cent, Mr A's monthly instalment for a loan of $800,000 works out to $3,819 (or about 30 per cent higher than using a 2 per cent interest rate.) His revised total monthly debt repayment obligation works out to $6,319, while his revised total income is $6,750.
Thus, his revised DSR stands at 93.6 per cent, which means that his loan application for a second property is likely to be rejected by the bank.
So to avoid nasty surprises, it is best to get in-principle approval for a bank loan before committing to a property.
Effect of seller's stamp duty
As of Feb 20, any investor who sells a property within one year of purchase will have to pay a seller's stamp duty, which is roughly 2.5 per cent of the purchase price. This could greatly reduce the gains from selling a property within a year.
If you had bought a property for $1 million, and sold it for $1.1 million, what are your gains after deducting the cost of property purchase and sale? Refer to the table (above right) for the calculations.
The table shows that short-term trading profits in real estate are in fact not high, while the risks are considerable. If you sell your house two years later, you would not have to pay the seller's stamp duty of $27,600 (based on the $1.1 million sale price). However, you would have to bear more interest payments for an extra year of loans.
The interest cost could come up to an extra $30,000. So if property prices rise by 10 per cent, you would not make much money at all. Of course, property agents might not volunteer such information.
To put your housing loan on a sounder footing and to get an unbiased analysis and comparison of all housing loan packages on offer, it might make sense to talk to an independent mortgage broker. After all, bank officers can only offer packages from the bank they work for.
Dennis Ng is an accountant by training with 17 years of bank lending experience. He founded http://www.HousingLoanSG.com, a mortgage consultancy, in 2003.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Sustaining an upturn
Business Times - 25 Mar 2010
Sustaining an upturn
By KALPANA RASHIWALA
THE property market has made a dramatic recovery over the past year. In the residential sector, prices of mass-market homes have even surpassed their 2007 peak. Expectations are running high that some time this year too the luxury segment will touch 2007 record highs.
Things are also picking up in the office market, which has seen a flurry of leasing activity since Q4 last year. Demand has already turned positive and there are even predictions in some quarters of a 30 per cent increase in Grade A office rentals this year.
However, one should not get carried away. The authorities in many parts of Asia are already keeping a watchful eye on asset bubbles building from hot money flowing into real estate. Liquidity and low interest rates remain the key fuel of the property upturn.
The question on everyone's mind is whether this recovery can be sustained. A lot depends on how well Singapore and the rest of the world perform. Sovereign debt default concerns in several European countries continue to stoke worries about a double-dip recession. Closer to home, the drive towards higher labour productivity could give rise to job insecurity and dampen demand from house hunters.
2010 sees the completion of several major landmark projects here - including the Marina Bay Financial Centre and the Marina Bay Sands and Resorts World Sentosa integrated resorts.
The two IRs are expected to boost Singapore's tourism numbers, which should generate multipliers for the broader economy. That will be positive for the Singapore property market.
Many property industry players have long been pinning their hopes on the IRs drawing high-rollers into town who will be impressed with Singapore and want to invest in property here. Singapore will also be on the radar screens of overseas investors if the IRs are successful.
Domestically, though, affordability remains a key concern, especially in the mass-market housing segment. A substantial interest rate increase could also hit price-sensitive buyers.
The Singapore government for its part has come up with a few measures to weed out speculators from the housing market. It also has the option of increasing land supply.
The following pages will hopefully guide you through the Singapore property market. I leave you with the timeless advice of property market doyen Kwek Leng Beng: Always buy within your means and remember that property is a mid to long-term investment.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Sustaining an upturn
By KALPANA RASHIWALA
THE property market has made a dramatic recovery over the past year. In the residential sector, prices of mass-market homes have even surpassed their 2007 peak. Expectations are running high that some time this year too the luxury segment will touch 2007 record highs.
Things are also picking up in the office market, which has seen a flurry of leasing activity since Q4 last year. Demand has already turned positive and there are even predictions in some quarters of a 30 per cent increase in Grade A office rentals this year.
However, one should not get carried away. The authorities in many parts of Asia are already keeping a watchful eye on asset bubbles building from hot money flowing into real estate. Liquidity and low interest rates remain the key fuel of the property upturn.
The question on everyone's mind is whether this recovery can be sustained. A lot depends on how well Singapore and the rest of the world perform. Sovereign debt default concerns in several European countries continue to stoke worries about a double-dip recession. Closer to home, the drive towards higher labour productivity could give rise to job insecurity and dampen demand from house hunters.
2010 sees the completion of several major landmark projects here - including the Marina Bay Financial Centre and the Marina Bay Sands and Resorts World Sentosa integrated resorts.
The two IRs are expected to boost Singapore's tourism numbers, which should generate multipliers for the broader economy. That will be positive for the Singapore property market.
Many property industry players have long been pinning their hopes on the IRs drawing high-rollers into town who will be impressed with Singapore and want to invest in property here. Singapore will also be on the radar screens of overseas investors if the IRs are successful.
Domestically, though, affordability remains a key concern, especially in the mass-market housing segment. A substantial interest rate increase could also hit price-sensitive buyers.
The Singapore government for its part has come up with a few measures to weed out speculators from the housing market. It also has the option of increasing land supply.
The following pages will hopefully guide you through the Singapore property market. I leave you with the timeless advice of property market doyen Kwek Leng Beng: Always buy within your means and remember that property is a mid to long-term investment.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Office market beckons
Business Times - 25 Mar 2010
Office market beckons
Singapore set to emerge as premier gateway city in region, say JUNE CHUA and CHRISTINE SUN
ONE year into the global financial crisis that almost brought all major economies to their knees, Asia staged an impressive rebound at the end of 2009 with an ensemble of massive government stimulus packages.
Despite lingering doubts about the debt-laden European economies, Asia is expected to continue its strong recovery in 2010. The guarded optimism should continue to boost business confidence and revive corporate spending here.
While the local residential and retail sectors were beneficiaries of the market exuberance, the office sector is still suffering the brunt of the financial meltdown. Office vacancy remains above equilibrium as supply outstrips demand. On the back of tenant relocations and corporate downsizing in the first half of 2009, it is estimated that 300,000 sq ft of shadow space has emerged in the Raffles Place and Marina Centre areas.
Consequently, Grade A office rents, which had been rising at a double-digit rate since 2007, tumbled from a peak of $15.10 per sq ft per month in Q2 2008 to $8.80 psf in Q4 2009. Taking into account the incentives provided by landlords, effective office rents now range from $6 to $8 psf per month.
Between 2010 and 2013, the rental correction may slow down as leasing demand rises to mop up the new supply entering the market. With the gradual return of business confidence, more companies are expected to revisit their office space planning with a view to expansion.
Recent trends seem to affirm this proposition as the market saw a slowdown in the surrender of unused space and a withdrawal of shadow space.
Nevertheless, the 10-year average demand of 670,000 sq ft per annum is well below the new supply entering the market at an average rate of 2 million sq ft per annum.
Grade A rent fell by 35 per cent last year and is predicted to continue falling albeit at a slower rate of 20-25 per cent this year before a plausible bottoming out in 2011/2012.
On a more positive note, the prospect of distress may bring the potential for opportunities.
First, the delayed rental recovery supported by sound market fundamentals might bode well for the Republic in the short term. Singapore and Hong Kong are often the preferred Asian cities for incorporation or expansion of businesses among foreign investors.
In a recent Savills survey that compared the top five buildings in each market, Hong Kong ranked first in terms of prime office costs, followed by Tokyo, then Singapore and Seoul in third place.
Due to limited supply, Grade A rents in Hong Kong are expected to rise between 5 and 10 per cent this year. The spike in rents could be further exacerbated as Hong Kong is likely to face a severe shortage of office space once current vacancies are filled.
Little is also expected in the way of new supply in Hong Kong with a mere one million sq ft per annum is likely to be added between 2010 and 2013.
A rising cost base in Hong Kong with the consolidation of regional office markets could result in many multinational corporations relocating their businesses to lower cost centres such as Singapore. Singapore's advantage lies in its financial stability, cultural affinity and strategic location.
Hence, Singapore may outpace other Asian Tigers to be a premier gateway city for MNCs to expand their influence here in South-east Asia. In recent years, over 7,000 MNCs have set up their operational bases here, with more being expected to expand further as office rentals decline to more affordable levels.
Secondly, a more sanguine outlook for the office investment market has emerged with the turnaround of capital values in the latter half of 2009. Average Grade A capital values held steady at $1,700 per square foot (psf) in the fourth quarter of 2009, ending five quarters of decline.
In January 2010, a private fund of AEW Asia purchased Robinson Point for $203.25 million or $1,527 psf, a 20 per cent uplift from the $1,280 psf paid for Parakou Building, another office building located further down the street, in May 2009.
Outside the CBD, City Developments Ltd (CDL) sold the Office Chamber at Jalan Besar for $13.2 million or $940 psf in December 2009, and its majority stake in the 999-year leasehold North Bridge Commercial Complex near Bugis Junction for $46 million or $1,194 psf of strata floor area in November last year.
In the strata-office market, average capital values at Suntec City and The Central have increased by 5.7 per cent and 9.8 per cent quarter-on-quarter to $2,000 psf and $1,686 psf respectively in Q4 2009.
Due to more steady income derived from contractual rental streams, the office investment market could be an attractive alternative in the current market. As the office sector continues on its road to recovery, we could expect more investors to diversify into the office market.
Therefore, buying interest in the investment market is expected to gain momentum in 2010 and an increase of 5-10 per cent in Grade A capital values is likely for the full year. Buyers may also be looking to capitalise on possible long-term rental growth beyond 2010/2011.
Thirdly, the commercial landscape of Singapore is set to be rejuvenated with the emergence of a two-tier Grade A office market. New Grade A offices such as Marina Bay Financial Centre (3 million sq ft), Ocean Financial Centre (one million sq ft) and Asia Square (2.3 million sq ft) have begun to lace the city facade, raising Singapore's office standards several notches higher with more efficient layouts, state-of-the-art facilities and larger floor plates.
Vacancies in the older Grade A and B buildings will continue to intensify. The situation could be exacerbated when tenants move out of existing buildings to new buildings like Marina Bay Financial Centre Towers 1 and 2 this year. This would continue to weigh down rents and may prompt landlords of older office buildings to upgrade or redevelop their investment properties to remain viable.
June Chua is director, commercial leasing, and Christine Sun is senior manager, research & consultancy, Savills (Singapore) Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
New for old: When tenants move out of existing buildings to new buildings like MBFC, rents of older office buildings will be weighed down
Office market beckons
Singapore set to emerge as premier gateway city in region, say JUNE CHUA and CHRISTINE SUN
ONE year into the global financial crisis that almost brought all major economies to their knees, Asia staged an impressive rebound at the end of 2009 with an ensemble of massive government stimulus packages.
Despite lingering doubts about the debt-laden European economies, Asia is expected to continue its strong recovery in 2010. The guarded optimism should continue to boost business confidence and revive corporate spending here.
While the local residential and retail sectors were beneficiaries of the market exuberance, the office sector is still suffering the brunt of the financial meltdown. Office vacancy remains above equilibrium as supply outstrips demand. On the back of tenant relocations and corporate downsizing in the first half of 2009, it is estimated that 300,000 sq ft of shadow space has emerged in the Raffles Place and Marina Centre areas.
Consequently, Grade A office rents, which had been rising at a double-digit rate since 2007, tumbled from a peak of $15.10 per sq ft per month in Q2 2008 to $8.80 psf in Q4 2009. Taking into account the incentives provided by landlords, effective office rents now range from $6 to $8 psf per month.
Between 2010 and 2013, the rental correction may slow down as leasing demand rises to mop up the new supply entering the market. With the gradual return of business confidence, more companies are expected to revisit their office space planning with a view to expansion.
Recent trends seem to affirm this proposition as the market saw a slowdown in the surrender of unused space and a withdrawal of shadow space.
Nevertheless, the 10-year average demand of 670,000 sq ft per annum is well below the new supply entering the market at an average rate of 2 million sq ft per annum.
Grade A rent fell by 35 per cent last year and is predicted to continue falling albeit at a slower rate of 20-25 per cent this year before a plausible bottoming out in 2011/2012.
On a more positive note, the prospect of distress may bring the potential for opportunities.
First, the delayed rental recovery supported by sound market fundamentals might bode well for the Republic in the short term. Singapore and Hong Kong are often the preferred Asian cities for incorporation or expansion of businesses among foreign investors.
In a recent Savills survey that compared the top five buildings in each market, Hong Kong ranked first in terms of prime office costs, followed by Tokyo, then Singapore and Seoul in third place.
Due to limited supply, Grade A rents in Hong Kong are expected to rise between 5 and 10 per cent this year. The spike in rents could be further exacerbated as Hong Kong is likely to face a severe shortage of office space once current vacancies are filled.
Little is also expected in the way of new supply in Hong Kong with a mere one million sq ft per annum is likely to be added between 2010 and 2013.
A rising cost base in Hong Kong with the consolidation of regional office markets could result in many multinational corporations relocating their businesses to lower cost centres such as Singapore. Singapore's advantage lies in its financial stability, cultural affinity and strategic location.
Hence, Singapore may outpace other Asian Tigers to be a premier gateway city for MNCs to expand their influence here in South-east Asia. In recent years, over 7,000 MNCs have set up their operational bases here, with more being expected to expand further as office rentals decline to more affordable levels.
Secondly, a more sanguine outlook for the office investment market has emerged with the turnaround of capital values in the latter half of 2009. Average Grade A capital values held steady at $1,700 per square foot (psf) in the fourth quarter of 2009, ending five quarters of decline.
In January 2010, a private fund of AEW Asia purchased Robinson Point for $203.25 million or $1,527 psf, a 20 per cent uplift from the $1,280 psf paid for Parakou Building, another office building located further down the street, in May 2009.
Outside the CBD, City Developments Ltd (CDL) sold the Office Chamber at Jalan Besar for $13.2 million or $940 psf in December 2009, and its majority stake in the 999-year leasehold North Bridge Commercial Complex near Bugis Junction for $46 million or $1,194 psf of strata floor area in November last year.
In the strata-office market, average capital values at Suntec City and The Central have increased by 5.7 per cent and 9.8 per cent quarter-on-quarter to $2,000 psf and $1,686 psf respectively in Q4 2009.
Due to more steady income derived from contractual rental streams, the office investment market could be an attractive alternative in the current market. As the office sector continues on its road to recovery, we could expect more investors to diversify into the office market.
Therefore, buying interest in the investment market is expected to gain momentum in 2010 and an increase of 5-10 per cent in Grade A capital values is likely for the full year. Buyers may also be looking to capitalise on possible long-term rental growth beyond 2010/2011.
Thirdly, the commercial landscape of Singapore is set to be rejuvenated with the emergence of a two-tier Grade A office market. New Grade A offices such as Marina Bay Financial Centre (3 million sq ft), Ocean Financial Centre (one million sq ft) and Asia Square (2.3 million sq ft) have begun to lace the city facade, raising Singapore's office standards several notches higher with more efficient layouts, state-of-the-art facilities and larger floor plates.
Vacancies in the older Grade A and B buildings will continue to intensify. The situation could be exacerbated when tenants move out of existing buildings to new buildings like Marina Bay Financial Centre Towers 1 and 2 this year. This would continue to weigh down rents and may prompt landlords of older office buildings to upgrade or redevelop their investment properties to remain viable.
June Chua is director, commercial leasing, and Christine Sun is senior manager, research & consultancy, Savills (Singapore) Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
New for old: When tenants move out of existing buildings to new buildings like MBFC, rents of older office buildings will be weighed down
BT : HDB resale market to stay buoyant
Business Times - 25 Mar 2010
HDB resale market to stay buoyant
EUGENE LIM reckons the current huge base of upgraders, downgraders and PRs is likely to grow and prop up demand for resale HDB flats
THE HDB resale market has been sizzling of late. In fact, prices have hit their highest level since 1990 when the Housing & Development Board started tracking resale HDB flat prices through its quarterly resale price index.
Prices of resale HDB flats rose 3.9 per cent in Q4 2009, for an 8.2 per cent rise for the year. This took the resale index to its all-time high of 150.8 points.
Last year's performance follows from a rise of 17.5 per cent in 2007 and 14.5 per cent in 2008. Over the last three years, resale prices have increased by some 40.2 per cent, or an average of 13.4 per cent a year.
Resale volume, as shown by the number of resale applications registered quarterly, hovered around 28,000 to 29,000 units annually from 2006 to 2008.
Last year, the total volume jumped by more than 8,000 units to 37,205 resale applications. Resale volume for 4-room flats saw the largest increase of more than 13,600 units over 2008; followed by 3-room flats with an increase of nearly 10,400 units. Five-room and Executive flats saw a smaller increase of over 9,800 and almost 3,000 units respectively.
HDB's numbers also show that the median cash-over-valuation (COV) across all flat types was $24,000 in Q4 2009; double the $12,000 in Q3 2009; and the highest since Q2 2007 when such figures were made available. In particular, the Q4 2009 median COV of $20,500 for 3-room and $25,000 for 4-room flats have exceeded their peaks of $19,000 and $20,000 in Q3 2008 by 8 per cent and 25 per cent respectively.
Why the market is hot
Various reasons have been cited as the cause for the sizzling market in resale flats.
One view is that there are not enough HDB flats to meet demand as there are massive over-subscriptions whenever the HDB launches new flats through its build-to-order (BTO) programme.
However, it was reported in Parliament recently that while the HDB released 13,500 new flats last year and plans to release another 12,000 or more this year, in recent selection exercises, one-third of the flats were rejected on the first day of selection, when all the flats were available. So, the idea that there are not enough HDB flats to meet demand is not true.
Some have pointed to permanent residents (PRs) as the culprits who have been pushing prices up. PRs cannot buy new flats directly from the HDB and can only buy from the resale HDB market.
While PR buyers currently make up some 20-25 per cent of resale transactions, it was reported by the government that the median COV paid by PRs was the same as the nationwide median COV in the past two quarters. Cases of PRs paying high COVs are an exception, forming only 14 per cent of the 58 cases of resale transactions with COV exceeding $70,000.
A third view is that private property owners are the ones pushing up prices.
But according to the government, their numbers are not large enough to have a significant impact on prices. This group accounts for less than 20 per cent of resale transactions with COV exceeding $70,000.
While no one group can be blamed for driving up prices, they all add to the total numbers.
Resale HDB transaction volume jumped by almost 8,800 to more than 37,000 units in 2009. This is significant for any one year, especially when annual resale volume has been in the 28,000 to 29,000 range in recent years.
New policy changes
In response to calls to rein in potentially runaway prices, the HDB recently announced several policy changes. Two of them are likely to have some impact on the resale HDB market.
The first is the standardised minimum occupation period (MOP) for non-subsidised flats. This policy change is designed to curb speculation in HDB flats.
Data from HDB shows that the proportion of flat owners who sell their units within three years of purchase rose to 8.9 per cent for the first 10 months of last year. In 2008, 7.9 per cent of buyers sold their units within three years.
In comparison, less than 7 per cent of buyers sold their flats within three years between 2005 and 2007. There were concerns that some buyers were using HDB flats to speculate in the property market and driving up prices in the process.
To reduce the number of people speculating in HDB flats, the time that buyers are required to stay in their flats before reselling them - the MOP - will be increased to three years for all flats bought in the resale market without a CPF Housing Grant.
Before this change, the MOP was 2.5 years for buyers who took a HDB concessionary loan and just one year for buyers who either took a commercial bank loan or did not take any loan.
Based on ERA's transactions last year, 50 per cent of buyers took loans from commercial banks while 10 per cent bought with cash. This means that before the policy change, 60 per cent of the buyers would be able to resell their properties after just one year.
By standardising the MOP at three years, the turnover rate is slowed down from one year to three years. This has the effect of preventing flippers from pushing up resale prices with their short-term objectives.
Next, HDB will now allow buyers to take a second concessionary loan from the agency even if they downsize or move to a flat of the same size. Previously, only upgraders qualified for a second concessionary loan.
This may actually lead to an increase in market activity due to an increase in downgraders, and it could boost resale prices for smaller flats.
However, it is still early days and we would need to continue monitoring the market.
What else can be done?
One populist view is that the rampant subletting of flats is a key factor in driving up flat prices, and the recent slew of measures to curb speculative buying and selling of HDB flats did not address this issue.
Under current rules, buyers of resale HDB flats can sublet the entire flat after three years if they did not take a government grant.
According to government numbers, of the 682,000 HDB flats that are eligible for subletting, only 3 per cent are sublet, suggesting that most flat owners are buying for occupation, and not rental.
However, the rental market indirectly influences the price of resale flats. For example, a 3-room HDB flat will yield a return of almost 7 per cent with a median rent of $1,500 a month at a median resale price of $260,000. There is no way one can achieve a 7 per cent return by investing in private residential property.
Also, the continued price rise in the private property market makes HDB flats very attractive in terms of capital outlay and yield.
Home owners, realising that they can make money from rentals, may be unlikely to sell their HDB flats even if they go on to buy private property. This leads to a drop in the number of resale flats in the market, hence driving up prices.
Also, 'investors' may be attracted to buy HDB resale flats to rent out immediately. Though this infringes HDB's subletting rules, some may find a yield of 7 per cent too attractive to pass up. These buyers may already own a private home and are not in need of a HDB flat.
With such attractive returns, it is no surprise that some, if not many, may be prepared to flout the rules. Whether this group is large or small, it adds to overall demand for flats and therefore impact resale prices.
It may be an opportune time for the HDB to relook the current subletting rules that were implemented in 2007 following amendments made in 2005 and 2003 to allow HDB home owners to monetise their flats.
Before 2003, owners were not allowed to rent out their flats unless they were going overseas to work or had other valid reasons. Another way is to step up policing. Unless the current rules are enforced strictly, some people will continue to flout them.
Going forward, with the improving economy, we can expect the HDB resale market to remain buoyant for the rest of the year.
As for COVs, they are likely to stabilise as there is beginning to be some resistance to the current quantums.
With more new flats being built and priority given to first-timers, this group is shunning the resale market for obvious reasons.
However, the current base of upgraders, downgraders and PRs remain huge and is likely to grow, and they are propping up demand for resale HDB flats.
The writer is associate director, ERA Asia Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved
HDB resale market to stay buoyant
EUGENE LIM reckons the current huge base of upgraders, downgraders and PRs is likely to grow and prop up demand for resale HDB flats
THE HDB resale market has been sizzling of late. In fact, prices have hit their highest level since 1990 when the Housing & Development Board started tracking resale HDB flat prices through its quarterly resale price index.
Prices of resale HDB flats rose 3.9 per cent in Q4 2009, for an 8.2 per cent rise for the year. This took the resale index to its all-time high of 150.8 points.
Last year's performance follows from a rise of 17.5 per cent in 2007 and 14.5 per cent in 2008. Over the last three years, resale prices have increased by some 40.2 per cent, or an average of 13.4 per cent a year.
Resale volume, as shown by the number of resale applications registered quarterly, hovered around 28,000 to 29,000 units annually from 2006 to 2008.
Last year, the total volume jumped by more than 8,000 units to 37,205 resale applications. Resale volume for 4-room flats saw the largest increase of more than 13,600 units over 2008; followed by 3-room flats with an increase of nearly 10,400 units. Five-room and Executive flats saw a smaller increase of over 9,800 and almost 3,000 units respectively.
HDB's numbers also show that the median cash-over-valuation (COV) across all flat types was $24,000 in Q4 2009; double the $12,000 in Q3 2009; and the highest since Q2 2007 when such figures were made available. In particular, the Q4 2009 median COV of $20,500 for 3-room and $25,000 for 4-room flats have exceeded their peaks of $19,000 and $20,000 in Q3 2008 by 8 per cent and 25 per cent respectively.
Why the market is hot
Various reasons have been cited as the cause for the sizzling market in resale flats.
One view is that there are not enough HDB flats to meet demand as there are massive over-subscriptions whenever the HDB launches new flats through its build-to-order (BTO) programme.
However, it was reported in Parliament recently that while the HDB released 13,500 new flats last year and plans to release another 12,000 or more this year, in recent selection exercises, one-third of the flats were rejected on the first day of selection, when all the flats were available. So, the idea that there are not enough HDB flats to meet demand is not true.
Some have pointed to permanent residents (PRs) as the culprits who have been pushing prices up. PRs cannot buy new flats directly from the HDB and can only buy from the resale HDB market.
While PR buyers currently make up some 20-25 per cent of resale transactions, it was reported by the government that the median COV paid by PRs was the same as the nationwide median COV in the past two quarters. Cases of PRs paying high COVs are an exception, forming only 14 per cent of the 58 cases of resale transactions with COV exceeding $70,000.
A third view is that private property owners are the ones pushing up prices.
But according to the government, their numbers are not large enough to have a significant impact on prices. This group accounts for less than 20 per cent of resale transactions with COV exceeding $70,000.
While no one group can be blamed for driving up prices, they all add to the total numbers.
Resale HDB transaction volume jumped by almost 8,800 to more than 37,000 units in 2009. This is significant for any one year, especially when annual resale volume has been in the 28,000 to 29,000 range in recent years.
New policy changes
In response to calls to rein in potentially runaway prices, the HDB recently announced several policy changes. Two of them are likely to have some impact on the resale HDB market.
The first is the standardised minimum occupation period (MOP) for non-subsidised flats. This policy change is designed to curb speculation in HDB flats.
Data from HDB shows that the proportion of flat owners who sell their units within three years of purchase rose to 8.9 per cent for the first 10 months of last year. In 2008, 7.9 per cent of buyers sold their units within three years.
In comparison, less than 7 per cent of buyers sold their flats within three years between 2005 and 2007. There were concerns that some buyers were using HDB flats to speculate in the property market and driving up prices in the process.
To reduce the number of people speculating in HDB flats, the time that buyers are required to stay in their flats before reselling them - the MOP - will be increased to three years for all flats bought in the resale market without a CPF Housing Grant.
Before this change, the MOP was 2.5 years for buyers who took a HDB concessionary loan and just one year for buyers who either took a commercial bank loan or did not take any loan.
Based on ERA's transactions last year, 50 per cent of buyers took loans from commercial banks while 10 per cent bought with cash. This means that before the policy change, 60 per cent of the buyers would be able to resell their properties after just one year.
By standardising the MOP at three years, the turnover rate is slowed down from one year to three years. This has the effect of preventing flippers from pushing up resale prices with their short-term objectives.
Next, HDB will now allow buyers to take a second concessionary loan from the agency even if they downsize or move to a flat of the same size. Previously, only upgraders qualified for a second concessionary loan.
This may actually lead to an increase in market activity due to an increase in downgraders, and it could boost resale prices for smaller flats.
However, it is still early days and we would need to continue monitoring the market.
What else can be done?
One populist view is that the rampant subletting of flats is a key factor in driving up flat prices, and the recent slew of measures to curb speculative buying and selling of HDB flats did not address this issue.
Under current rules, buyers of resale HDB flats can sublet the entire flat after three years if they did not take a government grant.
According to government numbers, of the 682,000 HDB flats that are eligible for subletting, only 3 per cent are sublet, suggesting that most flat owners are buying for occupation, and not rental.
However, the rental market indirectly influences the price of resale flats. For example, a 3-room HDB flat will yield a return of almost 7 per cent with a median rent of $1,500 a month at a median resale price of $260,000. There is no way one can achieve a 7 per cent return by investing in private residential property.
Also, the continued price rise in the private property market makes HDB flats very attractive in terms of capital outlay and yield.
Home owners, realising that they can make money from rentals, may be unlikely to sell their HDB flats even if they go on to buy private property. This leads to a drop in the number of resale flats in the market, hence driving up prices.
Also, 'investors' may be attracted to buy HDB resale flats to rent out immediately. Though this infringes HDB's subletting rules, some may find a yield of 7 per cent too attractive to pass up. These buyers may already own a private home and are not in need of a HDB flat.
With such attractive returns, it is no surprise that some, if not many, may be prepared to flout the rules. Whether this group is large or small, it adds to overall demand for flats and therefore impact resale prices.
It may be an opportune time for the HDB to relook the current subletting rules that were implemented in 2007 following amendments made in 2005 and 2003 to allow HDB home owners to monetise their flats.
Before 2003, owners were not allowed to rent out their flats unless they were going overseas to work or had other valid reasons. Another way is to step up policing. Unless the current rules are enforced strictly, some people will continue to flout them.
Going forward, with the improving economy, we can expect the HDB resale market to remain buoyant for the rest of the year.
As for COVs, they are likely to stabilise as there is beginning to be some resistance to the current quantums.
With more new flats being built and priority given to first-timers, this group is shunning the resale market for obvious reasons.
However, the current base of upgraders, downgraders and PRs remain huge and is likely to grow, and they are propping up demand for resale HDB flats.
The writer is associate director, ERA Asia Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved
BT : Always a way to do up a micro unit
Business Times - 25 Mar 2010
Always a way to do up a micro unit
Space planning is paramount, Axis ID boss William Ong tells KALPANA RASHIWALA
'A LOT of people don't understand that you can still make a small apartment feel comfortable if you do not put in the wrong things. Space planning to me is the most important part of interior design; it is not about decoration first,' says William Ong, executive chairman of Axis ID.
Micro apartments and shoebox units have gained currency in the past year or so as some developers have shrunk apartment sizes to keep lumpsum unit prices within reach of lower-budget investors.
However, there has been concern about the challenges that buyers will face in fitting out their units when they take possession of their properties.
Mr Ong argues that while such units are small, they can still be practical and liveable if designed and laid out correctly. And one can always count on some clever interior design tricks to help make them appear bigger than they are.
'In terms of space, you have to first see the space; then see how to lay out the furniture so that it is usable, it doesn't clutter up (the room); and thirdly, the scale of the items and the furniture you put inside must complement the space.
'So you can't put in super-large sofas; or if you can only put in a two-seater, you should not force in a three-seater, for instance . . . If you put in the right scale, things will turn out right.'
No matter how small an apartment is, there is a way to lay out the bed so that it sits nicely and still gives occupants space to move around, to have access to the wardrobes without having to climb over the bed.
'If you put your bed against the wall, you have a lot more space to walk in a small room. But if you want to put your bed as an island by itself, then you need space around it, and it (the room) will look a lot smaller.'
Design tricks
Besides careful space planning and the use of correctly scaled furniture, one can employ mirrors and lighter colours to make small apartments appear bigger.
'Another issue that a lot of people find with a small apartment is they don't have enough storage space. But there are so many ways to cleverly design and build storage areas without having to clutter up the whole apartment.' An example would be to have a full-height storage cabinet that forms part of a wall.
In any case, size is just one factor. The configuration of the apartments, how they are laid out by the architects, is also important, says Mr Ong, who also co-founded Axis' architectural business.
'Sometimes layouts are very odd because of site constraints. In such a case, even if you have a bigger apartment, it would be quite useless. There would be a lot of wasted space with long corridors, for instance, or a lot of odd-shaped rooms. Instead, if you have a nice regular-shaped apartment, then even if it's small, you can do quite a lot with it.'
Practical necessity
The phenomenon of tiny apartments is neither new nor unique to Singapore. Studio apartments have been around for ages, Mr Ong points out. 'When the cost of real estate is very high, people can only afford to buy smaller units, especially in prime areas,' says Mr Ong.
Small apartments may serve the needs of a single person or even a couple, and are also suitable for leasing to expats who just want to have a pad when they are in town. 'I see a trend where these small apartments may also be bought by companies for housing their foreign staff,' Mr Ong says.
A major part of Axis ID's business is designing and building showflats for residential projects of Singapore developers such as City Developments, Ho Bee, Allgreen and Wing Tai.
Singaporean home owners increasingly want their homes to look like showflats and boast a wow factor, according to Mr Ong.
'A home used to be something comfortable to come back to, and live in. It didn't have to be glamorous and eye-catching. But increasingly, owners want their homes to be more like showflats, a place they can show off to their friends. The wow factor must be there.'
As a result, the interior design gap between real apartments and showflats is closing, says Mr Ong.
While Axis ID's staple business is showflats for residential project launches, the firm also does interior design for homes of individuals - but only selectively and usually when its sister company, Axis Architects Planners, also provides the architectural design services to these clients.
Growing affluence has spawned several trends on the Singapore ID scene. For one, home owners are acquiring a feel for luxury and quality. 'It has nothing to do with the style. Luxury can be very modern, can be very traditional, can be very eclectic. It has to do with versatility of people travelling, living in beautiful hotels all over the world.'
The affluent and well-travelled are also expressing their own personal style when it comes to their homes - instead of following the crowd. 'Nowadays, I don't think there is a definite design style that people will follow, not like before when there was a certain design direction, for example, minimalist or Asian.'
Another thing that Singaporeans have picked up as they've acquired greater wealth is a penchant for collecting - antiques, artworks, furniture.
Their budgets for doing up their homes have also grown.
'You can see the trend. When housing was cheaper than what it is now, people did not want to spend a lot on interior design. But now when they spend millions for an apartment, they wouldn't want the interiors to be fitted up cheaply. Probably the norm is within the range of $400,000 to $600,000 for a new homeowner with an average-sized three-bedroom apartment in the prime districts, as many would prefer their homes to be fitted with imported designer furniture. '
It's worth investing in more expensive furniture as it is of better quality and lasts longer, argues Mr Ong.
'Somehow, when you custom-make something locally, it will never match the quality of something you buy from a furniture maker because they specialise in designing and making the furniture; how could a contractor here do something comparable?'
Axis ID also has clients in the hospitality industry - resorts, hotels and serviced residences - here and in the region. It opened a Shanghai branch in early 2004.
The 56-year-old Mr Ong says: 'I don't take my job as work, I take it as a hobby. I enjoy what I'm doing. I think that's very important.'
He also lists travelling overseas as a hobby. 'Every trip, I make it a point to visit new places, hotels, new developments, visit other people's showflats and see how they do things. I can tell you Singapore showflats are some of the best I have seen. I am talking not just about the ones done by us but also some of the other firms.
'I was very happy when I was in Bangkok recently. I spoke to one of the big developers there and he said to me: 'You know how we improve our standards? We go to Singapore and study the showflats there. They have become our benchmark'.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Always a way to do up a micro unit
Space planning is paramount, Axis ID boss William Ong tells KALPANA RASHIWALA
'A LOT of people don't understand that you can still make a small apartment feel comfortable if you do not put in the wrong things. Space planning to me is the most important part of interior design; it is not about decoration first,' says William Ong, executive chairman of Axis ID.
Micro apartments and shoebox units have gained currency in the past year or so as some developers have shrunk apartment sizes to keep lumpsum unit prices within reach of lower-budget investors.
However, there has been concern about the challenges that buyers will face in fitting out their units when they take possession of their properties.
Mr Ong argues that while such units are small, they can still be practical and liveable if designed and laid out correctly. And one can always count on some clever interior design tricks to help make them appear bigger than they are.
'In terms of space, you have to first see the space; then see how to lay out the furniture so that it is usable, it doesn't clutter up (the room); and thirdly, the scale of the items and the furniture you put inside must complement the space.
'So you can't put in super-large sofas; or if you can only put in a two-seater, you should not force in a three-seater, for instance . . . If you put in the right scale, things will turn out right.'
No matter how small an apartment is, there is a way to lay out the bed so that it sits nicely and still gives occupants space to move around, to have access to the wardrobes without having to climb over the bed.
'If you put your bed against the wall, you have a lot more space to walk in a small room. But if you want to put your bed as an island by itself, then you need space around it, and it (the room) will look a lot smaller.'
Design tricks
Besides careful space planning and the use of correctly scaled furniture, one can employ mirrors and lighter colours to make small apartments appear bigger.
'Another issue that a lot of people find with a small apartment is they don't have enough storage space. But there are so many ways to cleverly design and build storage areas without having to clutter up the whole apartment.' An example would be to have a full-height storage cabinet that forms part of a wall.
In any case, size is just one factor. The configuration of the apartments, how they are laid out by the architects, is also important, says Mr Ong, who also co-founded Axis' architectural business.
'Sometimes layouts are very odd because of site constraints. In such a case, even if you have a bigger apartment, it would be quite useless. There would be a lot of wasted space with long corridors, for instance, or a lot of odd-shaped rooms. Instead, if you have a nice regular-shaped apartment, then even if it's small, you can do quite a lot with it.'
Practical necessity
The phenomenon of tiny apartments is neither new nor unique to Singapore. Studio apartments have been around for ages, Mr Ong points out. 'When the cost of real estate is very high, people can only afford to buy smaller units, especially in prime areas,' says Mr Ong.
Small apartments may serve the needs of a single person or even a couple, and are also suitable for leasing to expats who just want to have a pad when they are in town. 'I see a trend where these small apartments may also be bought by companies for housing their foreign staff,' Mr Ong says.
A major part of Axis ID's business is designing and building showflats for residential projects of Singapore developers such as City Developments, Ho Bee, Allgreen and Wing Tai.
Singaporean home owners increasingly want their homes to look like showflats and boast a wow factor, according to Mr Ong.
'A home used to be something comfortable to come back to, and live in. It didn't have to be glamorous and eye-catching. But increasingly, owners want their homes to be more like showflats, a place they can show off to their friends. The wow factor must be there.'
As a result, the interior design gap between real apartments and showflats is closing, says Mr Ong.
While Axis ID's staple business is showflats for residential project launches, the firm also does interior design for homes of individuals - but only selectively and usually when its sister company, Axis Architects Planners, also provides the architectural design services to these clients.
Growing affluence has spawned several trends on the Singapore ID scene. For one, home owners are acquiring a feel for luxury and quality. 'It has nothing to do with the style. Luxury can be very modern, can be very traditional, can be very eclectic. It has to do with versatility of people travelling, living in beautiful hotels all over the world.'
The affluent and well-travelled are also expressing their own personal style when it comes to their homes - instead of following the crowd. 'Nowadays, I don't think there is a definite design style that people will follow, not like before when there was a certain design direction, for example, minimalist or Asian.'
Another thing that Singaporeans have picked up as they've acquired greater wealth is a penchant for collecting - antiques, artworks, furniture.
Their budgets for doing up their homes have also grown.
'You can see the trend. When housing was cheaper than what it is now, people did not want to spend a lot on interior design. But now when they spend millions for an apartment, they wouldn't want the interiors to be fitted up cheaply. Probably the norm is within the range of $400,000 to $600,000 for a new homeowner with an average-sized three-bedroom apartment in the prime districts, as many would prefer their homes to be fitted with imported designer furniture. '
It's worth investing in more expensive furniture as it is of better quality and lasts longer, argues Mr Ong.
'Somehow, when you custom-make something locally, it will never match the quality of something you buy from a furniture maker because they specialise in designing and making the furniture; how could a contractor here do something comparable?'
Axis ID also has clients in the hospitality industry - resorts, hotels and serviced residences - here and in the region. It opened a Shanghai branch in early 2004.
The 56-year-old Mr Ong says: 'I don't take my job as work, I take it as a hobby. I enjoy what I'm doing. I think that's very important.'
He also lists travelling overseas as a hobby. 'Every trip, I make it a point to visit new places, hotels, new developments, visit other people's showflats and see how they do things. I can tell you Singapore showflats are some of the best I have seen. I am talking not just about the ones done by us but also some of the other firms.
'I was very happy when I was in Bangkok recently. I spoke to one of the big developers there and he said to me: 'You know how we improve our standards? We go to Singapore and study the showflats there. They have become our benchmark'.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : New engines drive expat rental hubs
Business Times - 25 Mar 2010
New engines drive expat rental hubs
DESMOND SIM says demand likely from financial, biomedical sectors
THE leasing market for non-landed homes showed signs of recovery in the final quarter of 2009, going by Urban Redevelopment Authority numbers. Median rents saw their first quarter-on-quarter growth of 0.5 per cent following five quarters of continued decline from a peak in Q2 2008. The monthly median rent in Q4 2009 was $3.02 per sq ft. Occupancy rates also jumped, achieving 94.5 per cent in Q4 2009 - a level previously seen only in 2006/2007.
While these indicators may suggest a recovery in the leasing market, the strength and sustainability of this positive turn are yet to be ascertained.
Overall, leasing demand has been rising over the years as a result of a boost in the foreign workforce. Singapore's strategy to open its employment market to more foreigners has benefited the leasing market as this transient group looks for short-term housing in the private residential market. The population of Singapore has grown from 4.03 million in 2000 to 4.99 million in 2009. The number of foreigners grew in tandem from 754,500 in 2000 to 1.25 million in 2009.
On the back of better economic performance, the Ministry of Trade and Industry has revised its growth forecast for 2010 from a range of 3-5 per cent to 4.5-6.5 per cent. Job creation has improved, marked by the doubling of total employment from 14,000 in Q3 2009 to 37,500 in Q4 2009. The result is the creation of some 37,600 jobs for the whole of 2009 - a remarkable feat considering the economy was in a recession.
Although the number of foreigners employed has declined by 4,200 in 2009, there are still some 1.05 million of them working in Singapore. The job losses were mainly in the manufacturing sector. The construction and services industries, on the other hand, gained 19,700 and 10,400 new hires respectively.
Demand by industry
Anecdotally, leasing demand remains driven by the financial industry. This sector is making a strong rebound from the financial tsunami, with total employment in Q4 2009 turning a positive 3,000. This trend is expected to continue, further supported by recent poll results from the Business Expectations for the Services Sector Q4 2009 survey by the Department of Statistics. The financial services sector has the most positive outlook in terms of employment and general business expectations.
In addition, based on the latest report on wages in Singapore by the Ministry of Manpower, the financial services sector recorded the second highest median gross wage in 2008 at $9,170 per month for managers aged 35 to 39.
The other emerging leasing demand driver is the biomedical industry. Under the government's aggressive drive to develop Singapore into a biomedical hub, the country reportedly bagged some US$2 billion worth of investments over the past four years. They include plans to set up six new biologics manufacturing plants that are expected to create some 1,380 jobs. Despite the manufacturing sector reporting negative 4.1 per cent growth in 2009, biomedical manufacturing expanded by 11.5 per cent.
Looking ahead, new leasing demand is likely to come from either the financial or the biomedical industry.
Demand profile
The foreign employment market today is different from what it was a decade ago. Currently, instead of the traditional top management hire, foreign employment involves more middle management to executive levels with a limited housing budget. These expatriates are likely to be young executives working for a financial institution or researchers and laboratory executives. Despite the increase in foreign employees, the average housing budgets have remained relatively low. These new expatriates are likely to be given a housing allowance and are motivated by cost savings. They either downsize or seek discounted rents whenever the opportunity presents itself. As a result, smaller residential units close to their workplace or with good accessibility to public transport remain the main attraction.
Based on rental transactions recorded by URA Realis and sorted by districts, several observations can be made from the rental transaction volume over the decade.
While the prime districts of 9, 10 and 11 remain the traditional hot spots for leasing, the number of leasing deals there has been observed to be falling. At the same time, the Central Area (CBD/HarbourFront) comprising districts 1 to 5 has gained popularity as can be judged from the increase in leasing volume. A key factor is the revival of inner city living with tenants attracted by the proximity to the CBD, the arts and cultural activity, and other amenities within the area.
In addition, there are two emerging regions where we expect strong leasing demand in the future.
Based on the backroom operations of multinational financial institutions such as Credit Suisse, Citigroup and Standard Chartered Bank, residential projects in the vicinity of the Changi Business Park will be in demand. As such, we expect leasing demand growth in Simei, Upper East Coast and Tampines (Districts 16,17 and 18).
With the biomedical industry expected to expand in Biopolis, leasing demand in residential projects in the vicinity of this purpose-built biomedical estate (District 5) is also expected to increase.
The drivers and leasing profiles have changed dramatically over the decade. This has influenced developers' product offerings and also recently caught the attention of investors who have been making a beeline to these areas.
Evolving supply
Over the decade, developers have also been tweaking their product offerings to match changing demand. Overall, the market supply is shifting towards smaller apartments. Smaller units are easier to lease while maintaining a high per sq ft rental value. Similarly, smaller units are also more palatable in terms of absolute quantums paid. At the same time, developers are able to maintain their selling price on a per sq ft basis. Using a sample of major launches in the prime districts (9,10 and 11), an analysis of the composition by bedrooms was done. Studio apartments were excluded from the analysis.
There is a stronger focus on units with fewer bedrooms. Increasingly, one and two-bedroom apartments are found in the new supply. Based on the sample comparison study, one and two-bedroom apartments account for half the supply launched currently. This compares with 2000, when two-bedroom apartments made up just 15 per cent of the supply (with no count of one-bedroomers). This sample comparison shows that while demand has shifted over the decade, developers are also redesigning their product offerings to accommodate these changes.
Market outlook
After a challenging 2009, Singapore, along with the rest of Asia, is expected to experience a strong economic recovery this year. Financial markets are reported to have stabilised, while trade flows and industrial production have also picked up strongly. However, the recovery in Europe and the US remains weak. A pan-continental movement of talent from Europe and the US to Asia can be expected.
As Singapore continues to attract top talent here, leasing demand is also expected to grow. This is coupled with the improved economic outlook and the planned business expansions that are scheduled for the second half of this year. Island-wide rents are expected to grow in the region of 3-5 per cent by end-2010. However, rents will still remain affordable as they have generally come off during the recent economic downturn. Further rental upside is expected in the Central Area (Districts 1-4), Buona Vista (District 5) and Simei/Tampines and Upper East Coast (Districts 16,17 & 18).
The writer is associate director, research and consultancy, Jones Lang LaSalle
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
New engines drive expat rental hubs
DESMOND SIM says demand likely from financial, biomedical sectors
THE leasing market for non-landed homes showed signs of recovery in the final quarter of 2009, going by Urban Redevelopment Authority numbers. Median rents saw their first quarter-on-quarter growth of 0.5 per cent following five quarters of continued decline from a peak in Q2 2008. The monthly median rent in Q4 2009 was $3.02 per sq ft. Occupancy rates also jumped, achieving 94.5 per cent in Q4 2009 - a level previously seen only in 2006/2007.
While these indicators may suggest a recovery in the leasing market, the strength and sustainability of this positive turn are yet to be ascertained.
Overall, leasing demand has been rising over the years as a result of a boost in the foreign workforce. Singapore's strategy to open its employment market to more foreigners has benefited the leasing market as this transient group looks for short-term housing in the private residential market. The population of Singapore has grown from 4.03 million in 2000 to 4.99 million in 2009. The number of foreigners grew in tandem from 754,500 in 2000 to 1.25 million in 2009.
On the back of better economic performance, the Ministry of Trade and Industry has revised its growth forecast for 2010 from a range of 3-5 per cent to 4.5-6.5 per cent. Job creation has improved, marked by the doubling of total employment from 14,000 in Q3 2009 to 37,500 in Q4 2009. The result is the creation of some 37,600 jobs for the whole of 2009 - a remarkable feat considering the economy was in a recession.
Although the number of foreigners employed has declined by 4,200 in 2009, there are still some 1.05 million of them working in Singapore. The job losses were mainly in the manufacturing sector. The construction and services industries, on the other hand, gained 19,700 and 10,400 new hires respectively.
Demand by industry
Anecdotally, leasing demand remains driven by the financial industry. This sector is making a strong rebound from the financial tsunami, with total employment in Q4 2009 turning a positive 3,000. This trend is expected to continue, further supported by recent poll results from the Business Expectations for the Services Sector Q4 2009 survey by the Department of Statistics. The financial services sector has the most positive outlook in terms of employment and general business expectations.
In addition, based on the latest report on wages in Singapore by the Ministry of Manpower, the financial services sector recorded the second highest median gross wage in 2008 at $9,170 per month for managers aged 35 to 39.
The other emerging leasing demand driver is the biomedical industry. Under the government's aggressive drive to develop Singapore into a biomedical hub, the country reportedly bagged some US$2 billion worth of investments over the past four years. They include plans to set up six new biologics manufacturing plants that are expected to create some 1,380 jobs. Despite the manufacturing sector reporting negative 4.1 per cent growth in 2009, biomedical manufacturing expanded by 11.5 per cent.
Looking ahead, new leasing demand is likely to come from either the financial or the biomedical industry.
Demand profile
The foreign employment market today is different from what it was a decade ago. Currently, instead of the traditional top management hire, foreign employment involves more middle management to executive levels with a limited housing budget. These expatriates are likely to be young executives working for a financial institution or researchers and laboratory executives. Despite the increase in foreign employees, the average housing budgets have remained relatively low. These new expatriates are likely to be given a housing allowance and are motivated by cost savings. They either downsize or seek discounted rents whenever the opportunity presents itself. As a result, smaller residential units close to their workplace or with good accessibility to public transport remain the main attraction.
Based on rental transactions recorded by URA Realis and sorted by districts, several observations can be made from the rental transaction volume over the decade.
While the prime districts of 9, 10 and 11 remain the traditional hot spots for leasing, the number of leasing deals there has been observed to be falling. At the same time, the Central Area (CBD/HarbourFront) comprising districts 1 to 5 has gained popularity as can be judged from the increase in leasing volume. A key factor is the revival of inner city living with tenants attracted by the proximity to the CBD, the arts and cultural activity, and other amenities within the area.
In addition, there are two emerging regions where we expect strong leasing demand in the future.
Based on the backroom operations of multinational financial institutions such as Credit Suisse, Citigroup and Standard Chartered Bank, residential projects in the vicinity of the Changi Business Park will be in demand. As such, we expect leasing demand growth in Simei, Upper East Coast and Tampines (Districts 16,17 and 18).
With the biomedical industry expected to expand in Biopolis, leasing demand in residential projects in the vicinity of this purpose-built biomedical estate (District 5) is also expected to increase.
The drivers and leasing profiles have changed dramatically over the decade. This has influenced developers' product offerings and also recently caught the attention of investors who have been making a beeline to these areas.
Evolving supply
Over the decade, developers have also been tweaking their product offerings to match changing demand. Overall, the market supply is shifting towards smaller apartments. Smaller units are easier to lease while maintaining a high per sq ft rental value. Similarly, smaller units are also more palatable in terms of absolute quantums paid. At the same time, developers are able to maintain their selling price on a per sq ft basis. Using a sample of major launches in the prime districts (9,10 and 11), an analysis of the composition by bedrooms was done. Studio apartments were excluded from the analysis.
There is a stronger focus on units with fewer bedrooms. Increasingly, one and two-bedroom apartments are found in the new supply. Based on the sample comparison study, one and two-bedroom apartments account for half the supply launched currently. This compares with 2000, when two-bedroom apartments made up just 15 per cent of the supply (with no count of one-bedroomers). This sample comparison shows that while demand has shifted over the decade, developers are also redesigning their product offerings to accommodate these changes.
Market outlook
After a challenging 2009, Singapore, along with the rest of Asia, is expected to experience a strong economic recovery this year. Financial markets are reported to have stabilised, while trade flows and industrial production have also picked up strongly. However, the recovery in Europe and the US remains weak. A pan-continental movement of talent from Europe and the US to Asia can be expected.
As Singapore continues to attract top talent here, leasing demand is also expected to grow. This is coupled with the improved economic outlook and the planned business expansions that are scheduled for the second half of this year. Island-wide rents are expected to grow in the region of 3-5 per cent by end-2010. However, rents will still remain affordable as they have generally come off during the recent economic downturn. Further rental upside is expected in the Central Area (Districts 1-4), Buona Vista (District 5) and Simei/Tampines and Upper East Coast (Districts 16,17 & 18).
The writer is associate director, research and consultancy, Jones Lang LaSalle
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Luxury hotspots set to re-emerge
Business Times - 25 Mar 2010
Luxury hotspots set to re-emerge
PETER OW and ONG KAH SENG examine high-end residential properties that may see increasing buying interest from foreigners and locals
THIS is the year that high-end residential properties are expected to shine. Indeed, prices of luxury homes could recover by at least 10 per cent in 2010, bringing them close to the all-time high at end-2007. As Singapore's economic recovery takes hold, the traditional prime districts of 9, 10 and 11 should re-emerge as residential hotspots.
But new high-end enclaves are also likely to gain prominence. These hotspots will be found along the southern corridor, in places like Marina Bay, Tanjong Pagar/Shenton Way and Sentosa Cove/Keppel Bay.
The emerging luxury enclaves are the beneficiaries of several defining developments in Sentosa Cove and Marina Bay, which are coming to fruition this year.
Marina Bay
Homes in Marina Bay will benefit from the opening of the Marina Bay Sands integrated resort, slated for end-April. But the prestige of this area also comes from the fact that Marina Bay is the newest prime office hub, where up-and-coming executives want to be seen at. Having a loft in this sophisticated new hotspot would certainly be something to flaunt.
The Sail @ Marina Bay was the first high-end residential project in the area to come on the market. Completed in the second half of 2008, the 1,111-unit Sail saw median monthly rents climb steadily, from $4.25 per sq ft in Q1 2009, to $5.15 psf in Q4 2009, going by figures from the Urban Redevelopment Authority (URA).
Although there will be no major residential projects to be launched after Marina Bay Suites is entirely released, the buzz in Marina Bay is expected to translate into encouraging resale and leasing activity.
Tanjong Pagar/Shenton Way
The excitement of city living extends beyond Marina Bay. The traditional CBD, such as Tanjong Pagar and Shenton Way, is increasingly popular with working professionals. Icon, One Shenton and The Clift are successful projects that were launched from 2003. The completed Icon condominium is enjoying monthly median rents of about $6 per sq ft. Meanwhile, Altez, a 60-storey development in Tanjong Pagar, was recently launched. Offering panoramic sea and city views, the project is priced from $2,100 psf to $2,300 psf.
UIC Building and 76 Shenton Way, both office buildings, will soon be converted into prime residential developments, enhancing the attractiveness of the area. 76 Shenton, a 39-storey condominium, is the newest launch in the area. These projects are testimony to the attractions of inner city living, where residents enjoy maximum convenience, whether at work or play.
The Economic Strategies Committee, in looking at maximising Singapore's land use, has recommended turning Tanjong Pagar into a new waterfront district, by relocating the Tanjong Pagar port to Tuas once its lease is up in 2027.
Sentosa Cove & Keppel Bay
The excitement in Sentosa Cove started with the launch of the first condominium project - The Berth by the Cove - in 2004. Since then, several other waterfront condominiums have been completed on Sentosa. According to URA figures, The Berth by the Cove and The Coast at Sentosa Cove enjoyed attractive monthly rents of between $3.50 psf and $4.80 psf at end-2009.
Sentosa Cove is poised to become more exciting this year. Two new condominiums - The Oceanfront@Sentosa Cove and Turquoise - are scheduled for completion in 2010 while the Marina Collection will be ready in 2011. Meanwhile, Seascape and The Residences at W Singapore - both at Sentosa Cove - are being released this week. When these developments are built, Sentosa Cove will be a lively residential enclave with all the supporting amenities. These developments will transform Sentosa island into a self-sufficient waterfront haven.
The Keppel Bay area, comprising Caribbean at Keppel Bay and Reflections at Keppel Bay, will also remain attractive to investors.
Traditional prime
The traditional prime residential districts are perennially attractive to home buyers and investors who prize a central location and all its conveniences, particularly the allure of shopping along Orchard Road. Generally, prices of high-end residential resale properties in the prime districts recovered by about 15 per cent in 2009, following a 27 per cent slide in 2008.
Prices this year could well hit the all-time high seen at end-2007, as experience shows that prime residential properties are the first to move in the early stages of an economic recovery.
The prime leasing market is also expected to improve, as companies boost their senior expatriate headcount incrementally and become more generous with housing allowances.
For the first time in a long while, Orchard Road last year saw the opening of three new malls - Ion Orchard, Orchard Central and 313 @ Somerset. The new malls have refreshed the shopping experience in the premier shopping belt. This will benefit existing property owners as well as help sell new projects in the vicinity, such as The Vermont on Cairnhill and Hilltops.
Property investors should be able to find opportunities in all these residential hotspots, from the southern corridor to the traditional prime districts. However, the performance of the property sector will depend on the bigger picture - the economy and market sentiment.
As such, astute investors will need to analyse the prospects for the high-end residential market, before looking for their preferred property.
The government recently introduced measures to cool speculative activity, by lowering the loan-to-value ratio and introducing a seller's stamp duty if a property is re-sold within a year. These measures, however, are likely to only impact speculators. Perhaps investors of high-end residential property can safely read that, following the latest government measures and pronouncements, there will be no further attempts for the time being to cool the residential market.
After all, the pace of recovery for the high-end segment this year will be modest compared with 2007 and can be seen as a recovery rather than price escalation. A realistic price recovery this year may offer investors who commit today a chance to enjoy gradual capital appreciation in 2011 and 2012.
Foreign interest
Owners and developers of high-end residential properties can also expect to enjoy increasing buying interest from foreigners. Although Singapore is seeing more competition from regional cities where developers are improving luxury residential offerings, escalating prices in domestic markets in China and Hong Kong could make buyers there view our high-end properties favourably.
The full impact of the IRs on the property market will be felt this year, with the opening of Resorts World Sentosa and Marina Bay Sands strengthening the appeal of high-end residential properties in the southern corridor. The benefit of the IRs could extend to high-end property throughout Singapore, as the developments take the city up a rung in international exposure.
Visitors may be increasingly interested in Singapore for work and leisure, which would lead them to consider investment opportunities in high-end residential hotspots. This could lead to an increasingly international buyer profile in the luxury market.
Peter Ow is managing director of residential services and Ong Kah Seng is manager of consultancy & research at Knight Frank Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Generating excitement: Sentosa Cove developments will transform the island into a self-sufficient waterfront haven
Luxury hotspots set to re-emerge
PETER OW and ONG KAH SENG examine high-end residential properties that may see increasing buying interest from foreigners and locals
THIS is the year that high-end residential properties are expected to shine. Indeed, prices of luxury homes could recover by at least 10 per cent in 2010, bringing them close to the all-time high at end-2007. As Singapore's economic recovery takes hold, the traditional prime districts of 9, 10 and 11 should re-emerge as residential hotspots.
But new high-end enclaves are also likely to gain prominence. These hotspots will be found along the southern corridor, in places like Marina Bay, Tanjong Pagar/Shenton Way and Sentosa Cove/Keppel Bay.
The emerging luxury enclaves are the beneficiaries of several defining developments in Sentosa Cove and Marina Bay, which are coming to fruition this year.
Marina Bay
Homes in Marina Bay will benefit from the opening of the Marina Bay Sands integrated resort, slated for end-April. But the prestige of this area also comes from the fact that Marina Bay is the newest prime office hub, where up-and-coming executives want to be seen at. Having a loft in this sophisticated new hotspot would certainly be something to flaunt.
The Sail @ Marina Bay was the first high-end residential project in the area to come on the market. Completed in the second half of 2008, the 1,111-unit Sail saw median monthly rents climb steadily, from $4.25 per sq ft in Q1 2009, to $5.15 psf in Q4 2009, going by figures from the Urban Redevelopment Authority (URA).
Although there will be no major residential projects to be launched after Marina Bay Suites is entirely released, the buzz in Marina Bay is expected to translate into encouraging resale and leasing activity.
Tanjong Pagar/Shenton Way
The excitement of city living extends beyond Marina Bay. The traditional CBD, such as Tanjong Pagar and Shenton Way, is increasingly popular with working professionals. Icon, One Shenton and The Clift are successful projects that were launched from 2003. The completed Icon condominium is enjoying monthly median rents of about $6 per sq ft. Meanwhile, Altez, a 60-storey development in Tanjong Pagar, was recently launched. Offering panoramic sea and city views, the project is priced from $2,100 psf to $2,300 psf.
UIC Building and 76 Shenton Way, both office buildings, will soon be converted into prime residential developments, enhancing the attractiveness of the area. 76 Shenton, a 39-storey condominium, is the newest launch in the area. These projects are testimony to the attractions of inner city living, where residents enjoy maximum convenience, whether at work or play.
The Economic Strategies Committee, in looking at maximising Singapore's land use, has recommended turning Tanjong Pagar into a new waterfront district, by relocating the Tanjong Pagar port to Tuas once its lease is up in 2027.
Sentosa Cove & Keppel Bay
The excitement in Sentosa Cove started with the launch of the first condominium project - The Berth by the Cove - in 2004. Since then, several other waterfront condominiums have been completed on Sentosa. According to URA figures, The Berth by the Cove and The Coast at Sentosa Cove enjoyed attractive monthly rents of between $3.50 psf and $4.80 psf at end-2009.
Sentosa Cove is poised to become more exciting this year. Two new condominiums - The Oceanfront@Sentosa Cove and Turquoise - are scheduled for completion in 2010 while the Marina Collection will be ready in 2011. Meanwhile, Seascape and The Residences at W Singapore - both at Sentosa Cove - are being released this week. When these developments are built, Sentosa Cove will be a lively residential enclave with all the supporting amenities. These developments will transform Sentosa island into a self-sufficient waterfront haven.
The Keppel Bay area, comprising Caribbean at Keppel Bay and Reflections at Keppel Bay, will also remain attractive to investors.
Traditional prime
The traditional prime residential districts are perennially attractive to home buyers and investors who prize a central location and all its conveniences, particularly the allure of shopping along Orchard Road. Generally, prices of high-end residential resale properties in the prime districts recovered by about 15 per cent in 2009, following a 27 per cent slide in 2008.
Prices this year could well hit the all-time high seen at end-2007, as experience shows that prime residential properties are the first to move in the early stages of an economic recovery.
The prime leasing market is also expected to improve, as companies boost their senior expatriate headcount incrementally and become more generous with housing allowances.
For the first time in a long while, Orchard Road last year saw the opening of three new malls - Ion Orchard, Orchard Central and 313 @ Somerset. The new malls have refreshed the shopping experience in the premier shopping belt. This will benefit existing property owners as well as help sell new projects in the vicinity, such as The Vermont on Cairnhill and Hilltops.
Property investors should be able to find opportunities in all these residential hotspots, from the southern corridor to the traditional prime districts. However, the performance of the property sector will depend on the bigger picture - the economy and market sentiment.
As such, astute investors will need to analyse the prospects for the high-end residential market, before looking for their preferred property.
The government recently introduced measures to cool speculative activity, by lowering the loan-to-value ratio and introducing a seller's stamp duty if a property is re-sold within a year. These measures, however, are likely to only impact speculators. Perhaps investors of high-end residential property can safely read that, following the latest government measures and pronouncements, there will be no further attempts for the time being to cool the residential market.
After all, the pace of recovery for the high-end segment this year will be modest compared with 2007 and can be seen as a recovery rather than price escalation. A realistic price recovery this year may offer investors who commit today a chance to enjoy gradual capital appreciation in 2011 and 2012.
Foreign interest
Owners and developers of high-end residential properties can also expect to enjoy increasing buying interest from foreigners. Although Singapore is seeing more competition from regional cities where developers are improving luxury residential offerings, escalating prices in domestic markets in China and Hong Kong could make buyers there view our high-end properties favourably.
The full impact of the IRs on the property market will be felt this year, with the opening of Resorts World Sentosa and Marina Bay Sands strengthening the appeal of high-end residential properties in the southern corridor. The benefit of the IRs could extend to high-end property throughout Singapore, as the developments take the city up a rung in international exposure.
Visitors may be increasingly interested in Singapore for work and leisure, which would lead them to consider investment opportunities in high-end residential hotspots. This could lead to an increasingly international buyer profile in the luxury market.
Peter Ow is managing director of residential services and Ong Kah Seng is manager of consultancy & research at Knight Frank Pte Ltd
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Generating excitement: Sentosa Cove developments will transform the island into a self-sufficient waterfront haven
BT : More auctions expected in high-end residential sector
Business Times - 25 Mar 2010
More auctions expected in high-end residential sector
The market is likely to chalk up more than $200 million worth of transactions this year, says GRACE NG
IT was a stellar year for auctions last year despite the unfavourable market conditions. About $168.4 million worth of properties were sold at auctions in 2009, doubling the $83.67 million done in 2008.
The residential sector was the star performer, chalking up $88.4 million worth of transactions, or slightly over half the total sales value. The retail sector was the next best performer, with $43.4 million worth of sales.
Strong interest was seen for shops and shophouses, as investors chose to park their money in higher yielding investments rather than keep it in the bank for paltry interest rates. The sector that saw the highest growth rate was industrial property. Sales value jumped 223 per cent, from $6.2 million in 2008 to $20 million last year.
Buoyant market pushes up sales
Mirroring the buoyant sales in the primary residential market, residential properties at auctions saw a 250 per cent jump in sales value in 2009. The figure soared from $25.2 million in 2008 to $88.4 million last year.
More residential buyers are turning their attention to auction sales because the properties available at auctions are deemed to be better value for money as most of the older properties tend to have much larger land or built-up areas.
In addition, buyers who are owner-occupiers can move into the property when the sale is completed, which is typically three months after the payment of deposit. In comparison, purchasing from a developer could mean a wait of about two years before the property is ready for occupation.
Popular picks in 2009
· Landed properties: Terrace and semi-detached. In our land-scarce country, owning a landed property remains the aspiration of many Singaporeans. It is also a status symbol, as these properties are only available to Singaporeans and permanent residents with approval from the Land Dealings (Approval) Unit.
Even though landed properties do not come with facilities like those found in cluster housing or condominiums, they remain popular, as such properties usually have a private garden and car porch and do not have maintenance charges. Thus, it is not surprising that landed houses have become popular at auctions.
In 2009, terrace houses costing around $1 million and below were in demand because of their affordability. Five terraces were sold at prices ranging from $820,000 to $1.25 million.
Corner terraces and semi-detached houses, especially those that sit on large land areas, were the favourites, as these properties are rarely available. A total of 11 semi-detached houses were sold during the year at prices ranging from $1.05 million to $3.7 million. The majority of the transactions were below $2 million and the properties had land areas ranging from 2,400 sq ft to 4,414 sq ft.
Buyers also favoured semi-detached houses with large land areas. Nine of the 11 semi-detached houses sold at last year's auctions had land areas in excess of 3,500 sq ft.
The popularity of this type of property can be attributed to the fact that newer semi-detached houses have smaller land areas of about 2,150 sq ft, which could translate to a higher price per sq ft.
· Apartments with large floor areas: With developers building smaller apartments - some of them dubbed Mickey Mouse flats - in their new developments, the older and larger apartments have become a popular alternative at auctions with owner-occupiers as well as upgraders.
Apartments in the secondary market are generally larger with a 2-bedroom unit averaging 800 sq ft, a 3-bedroom 1,250 sq ft and a 4-bedroom unit 1,800 sq ft. In comparison, new apartments today are much smaller starting from 300 sq ft for a studio, 527 sq ft for a 2-bedder and 861 sq ft for a 3-bedder.
Given the limited number of large apartments in the primary market, many throng the auction halls in search of their ideal apartments. Apartments ranging from 1,000 sq ft to 1,299 sq ft were popular at auctions. Eighteen out of the 42 units sold last year fell within this category.
The apartments bought were at various locations. At International Plaza at Tanjong Pagar, a 1,033 sq ft 2-bedroom apartment was sold at auction for $800,000. At Shanghai One in River Valley, an 883 sq ft 2-bedroom unit went for $1.08 million and in Oxford Road, a 1,097 sq ft 2-bedroom apartment in Kentish Green was sold for $620,000.
· Properties below $1million: Apartments and condominiums below $1 million were popular too, as evidenced by the 27 successful transactions seen in this category out of the 42 made available at auctions.
· Apartments in prime districts: The other property type that was sought after at auctions in 2009 was high-end apartments. Apartments located in the prime inner city and District 10 under mortgagee sales were in demand. Two apartments at The Clift were sold for $605,000 and $1.047 million. Another two apartments at Four Seasons Park were sold for about $4.8 million each.
What will be popular in 2010?
In line with the recovery in the high-end sector, homes in districts 9, 10, 11, as well as prime inner city and Sentosa, will continue to be popular at auctions. We can expect to see an increase in sales of homes in these areas this year. The proportion of apartment sales is likely to rise to 35 per cent compared with 29 per cent achieved last year.
The opening of the two integrated resorts (IRs) will enhance Singapore's reputation as a world-class city. Residential properties located near the two IRs were given a boost in value as a result, and were in demand as buyers aimed to cash in on the market.
Apartments such as The Sail and Marina Bay Suites, as well as properties in Sentosa Cove, will be sought after by investors and owner-occupiers alike.
Prices of high-end homes in the Core Central Region are still about 11 per cent below their Q1 2008 peak. Improving market sentiment in line with the recovery in the economy, ample liquidity and a low interest rate environment, as well as a hunger for alternative investment opportunities, are factors pointing to a recovery.
As such, we are likely to continue to see owners taking the auction route this year to sell their high-end properties in hopes of achieving the best price through competitive bidding.
We could also see some developers exploring auctions as a mode of sale for their properties if the high-end market picks up steam.
Some developers had success when they used an auction to sell their high-end properties. For instance, 12 parcels of bungalow land in Sentosa Cove were successfully auctioned off in 2006 for a total value of $86.34 million.
And in 2007, another developer successfully auctioned 12 luxury apartments at The Botanika for $52.92 million, which set new benchmark prices for the area.
The competitive bidding helped these developers achieve record prices for their developments, and they also gained international exposure as the auctions were beamed live via satellite to cities such as Hong Kong, Jakarta, London and Sydney to tap foreign buyers.
With an improved economy, the number of properties sold at auctions this year should rise to more than 140, from the 118 seen in 2009.
More activity is expected in the high-end residential sector and this is likely to boost the sales value at auctions. As such, the market is likely to chalk up more than $200 million worth of transactions this year.
Grace Ng is deputy managing director (agency & business services) and auctioneer, Colliers International
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Popular: Apartments in District 10 like the Four Seasons Park (above) were in demand
More auctions expected in high-end residential sector
The market is likely to chalk up more than $200 million worth of transactions this year, says GRACE NG
IT was a stellar year for auctions last year despite the unfavourable market conditions. About $168.4 million worth of properties were sold at auctions in 2009, doubling the $83.67 million done in 2008.
The residential sector was the star performer, chalking up $88.4 million worth of transactions, or slightly over half the total sales value. The retail sector was the next best performer, with $43.4 million worth of sales.
Strong interest was seen for shops and shophouses, as investors chose to park their money in higher yielding investments rather than keep it in the bank for paltry interest rates. The sector that saw the highest growth rate was industrial property. Sales value jumped 223 per cent, from $6.2 million in 2008 to $20 million last year.
Buoyant market pushes up sales
Mirroring the buoyant sales in the primary residential market, residential properties at auctions saw a 250 per cent jump in sales value in 2009. The figure soared from $25.2 million in 2008 to $88.4 million last year.
More residential buyers are turning their attention to auction sales because the properties available at auctions are deemed to be better value for money as most of the older properties tend to have much larger land or built-up areas.
In addition, buyers who are owner-occupiers can move into the property when the sale is completed, which is typically three months after the payment of deposit. In comparison, purchasing from a developer could mean a wait of about two years before the property is ready for occupation.
Popular picks in 2009
· Landed properties: Terrace and semi-detached. In our land-scarce country, owning a landed property remains the aspiration of many Singaporeans. It is also a status symbol, as these properties are only available to Singaporeans and permanent residents with approval from the Land Dealings (Approval) Unit.
Even though landed properties do not come with facilities like those found in cluster housing or condominiums, they remain popular, as such properties usually have a private garden and car porch and do not have maintenance charges. Thus, it is not surprising that landed houses have become popular at auctions.
In 2009, terrace houses costing around $1 million and below were in demand because of their affordability. Five terraces were sold at prices ranging from $820,000 to $1.25 million.
Corner terraces and semi-detached houses, especially those that sit on large land areas, were the favourites, as these properties are rarely available. A total of 11 semi-detached houses were sold during the year at prices ranging from $1.05 million to $3.7 million. The majority of the transactions were below $2 million and the properties had land areas ranging from 2,400 sq ft to 4,414 sq ft.
Buyers also favoured semi-detached houses with large land areas. Nine of the 11 semi-detached houses sold at last year's auctions had land areas in excess of 3,500 sq ft.
The popularity of this type of property can be attributed to the fact that newer semi-detached houses have smaller land areas of about 2,150 sq ft, which could translate to a higher price per sq ft.
· Apartments with large floor areas: With developers building smaller apartments - some of them dubbed Mickey Mouse flats - in their new developments, the older and larger apartments have become a popular alternative at auctions with owner-occupiers as well as upgraders.
Apartments in the secondary market are generally larger with a 2-bedroom unit averaging 800 sq ft, a 3-bedroom 1,250 sq ft and a 4-bedroom unit 1,800 sq ft. In comparison, new apartments today are much smaller starting from 300 sq ft for a studio, 527 sq ft for a 2-bedder and 861 sq ft for a 3-bedder.
Given the limited number of large apartments in the primary market, many throng the auction halls in search of their ideal apartments. Apartments ranging from 1,000 sq ft to 1,299 sq ft were popular at auctions. Eighteen out of the 42 units sold last year fell within this category.
The apartments bought were at various locations. At International Plaza at Tanjong Pagar, a 1,033 sq ft 2-bedroom apartment was sold at auction for $800,000. At Shanghai One in River Valley, an 883 sq ft 2-bedroom unit went for $1.08 million and in Oxford Road, a 1,097 sq ft 2-bedroom apartment in Kentish Green was sold for $620,000.
· Properties below $1million: Apartments and condominiums below $1 million were popular too, as evidenced by the 27 successful transactions seen in this category out of the 42 made available at auctions.
· Apartments in prime districts: The other property type that was sought after at auctions in 2009 was high-end apartments. Apartments located in the prime inner city and District 10 under mortgagee sales were in demand. Two apartments at The Clift were sold for $605,000 and $1.047 million. Another two apartments at Four Seasons Park were sold for about $4.8 million each.
What will be popular in 2010?
In line with the recovery in the high-end sector, homes in districts 9, 10, 11, as well as prime inner city and Sentosa, will continue to be popular at auctions. We can expect to see an increase in sales of homes in these areas this year. The proportion of apartment sales is likely to rise to 35 per cent compared with 29 per cent achieved last year.
The opening of the two integrated resorts (IRs) will enhance Singapore's reputation as a world-class city. Residential properties located near the two IRs were given a boost in value as a result, and were in demand as buyers aimed to cash in on the market.
Apartments such as The Sail and Marina Bay Suites, as well as properties in Sentosa Cove, will be sought after by investors and owner-occupiers alike.
Prices of high-end homes in the Core Central Region are still about 11 per cent below their Q1 2008 peak. Improving market sentiment in line with the recovery in the economy, ample liquidity and a low interest rate environment, as well as a hunger for alternative investment opportunities, are factors pointing to a recovery.
As such, we are likely to continue to see owners taking the auction route this year to sell their high-end properties in hopes of achieving the best price through competitive bidding.
We could also see some developers exploring auctions as a mode of sale for their properties if the high-end market picks up steam.
Some developers had success when they used an auction to sell their high-end properties. For instance, 12 parcels of bungalow land in Sentosa Cove were successfully auctioned off in 2006 for a total value of $86.34 million.
And in 2007, another developer successfully auctioned 12 luxury apartments at The Botanika for $52.92 million, which set new benchmark prices for the area.
The competitive bidding helped these developers achieve record prices for their developments, and they also gained international exposure as the auctions were beamed live via satellite to cities such as Hong Kong, Jakarta, London and Sydney to tap foreign buyers.
With an improved economy, the number of properties sold at auctions this year should rise to more than 140, from the 118 seen in 2009.
More activity is expected in the high-end residential sector and this is likely to boost the sales value at auctions. As such, the market is likely to chalk up more than $200 million worth of transactions this year.
Grace Ng is deputy managing director (agency & business services) and auctioneer, Colliers International
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Popular: Apartments in District 10 like the Four Seasons Park (above) were in demand
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