CNA : URA launches tender for commercial site at Stamford Road and North Bridge Road

URA launches tender for commercial site at Stamford Road and North Bridge Road
By Mok Fei Fei | Posted: 21 April 2010 1203 hrs

SINGAPORE: The Urban Redevelopment Authority (URA) is launching a closely-watched commercial site at Stamford Road and North Bridge Road for sale by public tender.

The URA is launching the sale after a developer committed to bid at least S$100 million dollars for the 99-year-leasehold site, which was placed on the Reserve List system.

URA says the land parcel, which is 1.43 hectares in size, is slated for commercial use with a hotel component.

It contains a cluster of three historically and architecturally significant buildings, namely Capitol Theatre, Capitol Building and Stamford House.

As part of the redevelopment, those buildings must be retained and restored for adaptive reuse.

The site will be sold together with a subterranean parcel below North Bridge Road that provides seamless access to the City Hall MRT station.

The maximum permissible gross floor area for the development is close to 50,500 square metres.

Of that space, a minimum of 25 per cent is to be set aside for hotel use.

The land parcel is envisaged to also feature other uses like retail, food and beverage, art and entertainment facilities.

The tender will close on 18th August. - CNA/fa



URA says the land parcel, which is 1.43 hectares in size, is slated for commercial use with a hotel component - Image from URA

ST : Aspial buys Changi Complex

Apr 22, 2010

Aspial buys Changi Complex

By Esther Teo

JEWELLERY retailer Aspial Corp has gone back into the property scene to snap up Changi Complex in a collective sale deal for $54.3 million.

It will also have to pay a development charge of $3.6 million for the site, which is zoned 'residential with commercial on the first storey', according to property consultants Teakhwa Real Estate, which brokered the deal.

The owners of the 40 apartments will get about $1.2 million each while the owner of the shop unit will get $1.8 million, Teakhwa said.

The freehold site at the busy corner of Bedok Road and Upper Changi Road has a plot ratio of 1.4 and an area of 61,670 sq ft. It could yield a permissible gross floor area of about 94,972 sq ft, including the additional 10 per cent balcony area.

Aspial, which bought the site through its subsidiary World Class Land, said yesterday that it intends to have commercial units on the first storey and flats on the second to fourth storeys.

'As the property has a wide frontage and is prominently located, the company plans to create an iconic landmark development with a 'vibrant, hip village setting' with lifestyle shops and alfresco eateries,' it added. Teakhwa said the site could accommodate a low-rise development of about 200 units of 500 sq ft each.

It added that the breakeven cost would be $980 per sq ft (psf) to $1,000 psf. New apartments can fetch about $1,300 psf while the shop units can sell in excess of $2,000 psf, Teakhwa said.

Aspial may also be able to buy adjoining land of a total of 10,457 sq ft from the relevant authorities.

This is not the first time the firm - which operates the largest jewellery chain in Singapore under the brand names Aspial, Lee Hwa, Citigems and Goldheart - has ventured into property.

Last August, World Class Land bought a cluster of 18 freehold shophouses fronting Joo Chiat Road and Onan Road for $25.63 million. The properties comprised two rows of nine units of three-storey shophouses with a site area of 35,440 sq ft.

Aspial said the cost of the Changi Complex acquisition and development will be funded internally and through bank borrowings.

The transaction is not expected to have any material impact on the earnings and net tangible assets of the company this year, it said.

ST : Double-helix bridge to open with a bang

Apr 22, 2010

Double-helix bridge to open with a bang

Fireworks to mark its debut in Marina Bay; name to be unveiled

By Tessa Wong

SINGAPORE's newest landmark in Marina Bay will debut this Saturday.

This is the iconic pedestrian bridge shaped like a double helix, which will link the part of the Bay near the floating platform to the soon-to-be opened Marina Bay Sands integrated resort.

The official name of the bridge will be unveiled that evening, and the public is invited to catch a two-minute pyrotechnics display, along with music, dance, drum and gongfu performances.

The vehicular bridge running parallel to it and the Youth Olympic Park at the entrance to the bridges will also be declared open that evening. The first vehicles will cruise across the bridge from 3pm the next day.

Those attending Saturday's event may use the seats on the floating platform on Marina Bay from 6.30pm.

Bands, jugglers, stilt-walkers and fire-twirlers will add to the evening's razzmatazz from 7.30pm. This will be followed by the pyrotechnics at 8pm, at the official opening attended by National Development Minister Mah Bow Tan.

The 280m long bridge, built to take 16,000 people, will welcome its first public users at 9.30pm; the organisers expect about 2,000 party-goers to show up.

The festivities will continue the next day, with more dance and musical performances from 5.30pm to 9pm.

The pedestrian bridge, plans for which were announced in 2006, was conceived as one of many jewels on a 'necklace of attractions' ringing the Bay.

These include the Marina Bay Sands integrated resort, the Marina Bay Financial Centre, and the upcoming Fullerton Bay Hotel and Customs House, a nightspot complex.

With the double-helix bridge and the pedestrian footpath on the vehicular bridge open, a 3.5km pedestrian loop around the Bay will be complete.

Designed by Australia's Cox Group, the London-founded Arup and homegrown Architects 61, the bridge arches 8.8m above Marina Bay, giving enough clearance under it for pleasure craft to enter the Bay.

The steel used in the structure is no ordinary metal. It is a special duplex stainless steel normally used in the chemical industry to transport highly corrosive material.

The Marina Bay Sands resort on one end of the bridge will have its Phase 1 opening on Tuesday. From then on, it will be accessible by car via the vehicular bridge.

Those walking to the resort from next week can use the double-helix bridge and cross over to the pedestrian footpath on the vehicular bridge.

When the Phase 2 of Marina Bay Sands opens in June, the double-helix bridge will lead directly to the resort.

The Youth Olympic Park next to the floating platform on the other end of the bridge is Singapore's first art park.

Named after the upcoming Youth Olympic Games in August, it will feature 27 pieces of art by local youths, depicting life's aspirations; Olympic-themed artwork will be introduced in July.

The two bridges and the park cost $82.9 million.

twong@sph.com.sg



ST PHOTO: DESMOND WEE

ST : Sibor and SOR fall, but home loan rates rise

Apr 22, 2010

Sibor and SOR fall, but home loan rates rise

Banks charging more in response to rising property market

By Gabriel Chen & Harsha Jethnani

TWO key interest rates that determine how much your home loan costs are near their all-time lows but borrowers taking out new mortgages may not be better off.

Borrowers usually benefit when these measures drop but this time banks are responding to the riskier economic climate and surging property market by charging more for loans.

The most well-known of these measures - the three-month Singapore Interbank Offered Rate, or Sibor - fell below 0.6 per cent on Tuesday. This brought it near the all-time low of 0.56 per cent struck in June 2003.

Another popular benchmark rate - the Singapore dollar Swap Offer Rate (SOR) - hit 0.307 per cent last Thursday. This was the lowest level in at least a decade, according to Bloomberg data.

The rates, already low as they track prevailing United States rates, which are at rock bottom, fell further last week after the Singdollar rose.

Borrowers can take out mortgages pegged to these measures but those who expect these loans will follow the two rates down will be disappointed. Some banks have upped the spreads that they charge above Sibor and SOR, making loans linked to the rates more expensive.

'Property prices have gone up to previous highs and the risk of financing a property has gone up, so banks are pricing this risk into their margins,' said a consumer banker.

At DBS Bank, a home buyer taking a loan of 80 per cent of his property's value around March would have paid a rate of Sibor plus 0.5 percentage points for the first year and Sibor plus 0.75 percentage points for the second.

A buyer opting for this DBS package now will have to pay Sibor plus 1 percentage point for the first two years.

Standard Chartered Bank has also revised spreads for its three-month Sibor-pegged loan. It is now charging Sibor plus 1.25 percentage points, compared with 1 percentage point in March.

Loans pegged to the SOR have also been hit by the increasing spreads.

For example, the margins for OCBC Bank's two-year packages linked to the SOR have shot up from March to April, with a rise of 0.25 percentage points for its one- and two-year packages.

The higher spreads will affect a growing number of borrowers as Sibor-linked loans have become increasingly popular since their launch about three years ago.

Mr Dennis Ng, spokesman for www.HousingLoanSG.com - a mortgage consultancy portal - said lenders on the new DBS package will fork out more each month than those on the older deal. Mr Ng calculated that borrowing $500,000 over 20 years at a constant Sibor rate of 0.7 per cent will cost $115 more in monthly instalments during the first year, and $58 a month more in the second.

Sibor is very low now as it tracks the US Federal Reserve Fed funds target rate, which is near zero.

SOR comprises the bank's prevailing lending costs plus Sibor.

Both Sibor and SOR, both already low, dropped over the last week after the Monetary Authority of Singapore tightened the Singapore dollar. The appreciation of the Singdollar is likely to attract capital inflows, which means banks have plenty of cash to lend.

'When you have excess liquidity, this will typically drive down short-term interest rates,' said OCBC economist Selena Ling.

With higher interest rates expected in the later part of this year, home buyers opting for floating rate packages such as Sibor-pegged mortgages could end up paying more - assuming bank loan spreads do not change.

'I think Sibor will likely creep slightly higher in a fairly gradual and incremental fashion from current levels towards the 0.8 per cent to 1 per cent range in the second half of this year,' Ms Ling added.

The increasing spreads that banks charge above Sibor and SOR are unlikely to affect the property market for now at least, say real estate experts.

'The perceived returns and profits from investing in property are still higher and can justify the interest rate,' said Mr Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic.

DBS said it offers competitively-priced deals with different features. StanChart and OCBC said their rates were reviewed periodically so that they moved in line with the industry, the general interest rate environment and business considerations.

Other banks including UOB, Citi, Maybank, HSBC, and Hong Leong Finance did not comment on whether any changes would be made to their interest rates in the future.

gabrielc@sph.com.sg

harshamj@sph.com.sg


--------------------------------------------------------------------------------


With higher interest rates expected in the later part of this year, home buyers opting for floating rate packages such as Sibor-pegged mortgages could end up paying more



PHOTO ILLUSTRATION: MIKE M DIZON and ISTOCKPHOTO

BT : Hong Kong may suffer fallout from China's anti-bubble moves

Business Times - 22 Apr 2010

Hong Kong may suffer fallout from China's anti-bubble moves

Stronger yuan will make HK homes more attractive to mainland Chinese

(HONG KONG) China's steps to cool record property price gains and allow the yuan to appreciate may stymie Hong Kong's efforts to contain surging home values in a city with its own currency pegged to the US dollar.

A stronger yuan would make Hong Kong's homes more affordable to mainland Chinese, who have helped drive a 38 per cent jump in prices since end-2008, and fuel further increases, seven out of nine analysts surveyed by Bloomberg News said. A revaluation may also encourage locals to buy property to hedge against inflation, they said.

China may allow the yuan to appreciate as it tries to avert the bursting of asset bubbles after stimulating an economic recovery last year with record new loans. The government is stepping up measures to rein in the real estate market with curbs on third-home purchases and increased downpayment requirements after a record increase in home prices in March.

'China can't care so much about Hong Kong, because it has problems cooling down its own property market,' said Francis Lui, an economics professor at the Hong Kong University of Science and Technology. 'Hong Kong can't control China, it has no monetary policy and the only tool is to increase land supply, but it will take around four years to build.'

China will allow the yuan to appreciate by June 30 to curb inflation, a survey of analysts showed last week. Options prices suggest that Hong Kong's central bank would maintain its 26-year-old peg to the greenback.

Ruled as a special administrative region of China, Hong Kong is the mainland's trade and financial hub with its own legal and currency systems. With the peg to the US currency, Hong Kong has kept its base rate at a record low of 0.5 per cent since December 2008, resulting in 20-year-low home loan costs.

Low interest rates, coupled with an inflow of Chinese buying, led Hong Kong's home values to rise 29 per cent last year, according to Centaline Property Agency Ltd, one of the city's biggest realtors. Luxury residences climbed 45 per cent, according to London-based property broker Savills Plc.

About 19 per cent of buyers of luxury properties - those that cost at least HK$10 million (S$1.77 million) each or are bigger than 1,000 square feet - last year were from mainland China, Centaline said.

The price jump has sparked a public outcry over housing costs and increased pressure on Hong Kong's government to raise land supply. Financial Secretary John Tsang said yesterday that the government was 'highly concerned' about gains in home prices and would speed up land auctions to make more property available.

The city may also raise the stamp duty on homes sold for less than HK$20 million and warned that low mortgage rates won't continue forever. The government in February said that the stamp duty on homes selling for more than HK$20 million would be increased to 4.25 per cent from 3.75 per cent as of April 1.

It raised downpayments on luxury homes to 40 per cent from 30 per cent in October, limited coverage on some loans and clamped down on marketing techniques.

The city's home prices rose the most among the world's major housing markets last year, London- based property adviser Knight Frank LLP said in January, climbing 33 per cent on average.

The International Monetary Fund and investor Jim Rogers warned of a possible bubble in Hong Kong. Mr Tsang said that the government wants to reduce the risk of a 'property bubble' and keep housing affordable when he delivered his Budget speech on Feb 24.

'Mainland Chinese buying is the most important factor driving up Hong Kong luxury home prices,' said Louis Chan, managing director of residential properties at Centaline. A stronger yuan would 'be positive for luxury properties, as they like to buy those that cost between HK$20 million and HK$30 million', Mr Chan said.

He likened the rich mainlanders to wealthy Hong Kong residents buying properties in London. 'These people have deep pockets; the Chinese buy Hong Kong homes to invest, and they like the freedom here where turnover is quick and there are no government constraints on property transactions.' - Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : International Property Advisor aims to bridge gap between banking, real estate

Business Times - 22 Apr 2010

International Property Advisor aims to bridge gap between banking, real estate

It will help manage real estate portfolios of wealthy investors

By UMA SHANKARI

FORMER Savills analyst Ku Swee Yong hopes to shake up the real estate scene here with his new agency International Property Advisor (IPA).

IPA aims to connect high net worth individuals to suitable real estate investment products.

'We want to provide a service to represent the private wealth that goes into real estate investments,' said Mr Ku.

He was most recently a director with SG Private Banking's real estate division before he left early this year to set up IPA. Prior to joining SG Private Banking in 2008, he was director of marketing and business development at Savills Singapore for more than two years.

Mr Ku said that he set up IPA to fill a gap in the real estate advisory space. Right now, most property firms in Singapore employ agents who instruct clients on buying, selling or leasing physical real estate - without considering other classes of real estate investments such as equities.

But private clients - generally defined as clients who qualify for private banking accounts - require a different approach, says Mr Ku

'We require consultants and brokers who are able to think on behalf of the private client, and this involves knowledge of the client's portfolio and the wide range of investment products competing for the client's attention,' he said.

With IPA, Mr Ku expects to bridge the gap between bankers and real estate consultants.

'Bankers are typically not equipped to deal with or cannot understand or manage real estate as part of their core work,' he said. 'And real estate professionals typically do not have enough financial knowledge. We bridge this gap and differentiate ourselves by providing a holistic solution for clients.'

IPA will help manage the real estate portfolios of wealthy investors to preserve and enhance value, tailor real estate portfolio strategies to clients' objectives, such as estate planning to wealth creation, and broker transactions on the ground, which will give the team first-hand knowledge on prices and the demand and supply situation.

Mr Ku says that there is tremendous potential for such services. About a fifth of high net worth individual wealth in the Asia-Pacific is in real estate and there has been growing interest in property-related investments.

Mr Ku, who is already working on projects for clients, is looking to tie up with private banks and businesses in need of real estate expertise. He is also looking to hire and will increase IPA's headcount from the current five to 12.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



'Bankers are typically not equipped to deal with or cannot understand or manage real estate as part of their core work.'
- Mr Ku

BT : HK to release sites to counter home price rise

Business Times - 22 Apr 2010

HK to release sites to counter home price rise

(HONG KONG) Hong Kong's government is 'highly concerned' about gains in home prices and will accelerate a series of auctions to make more property available, Financial Secretary John Tsang told lawmakers yesterday.

Mr Tsang said the city may also raise the stamp duty on homes sold for less than HK$20 million (S$3.5 million) and warned that 20-year-low mortgage rates won't continue forever. The government in February said the stamp duty on homes selling for more than HK$20 million would be increased to 4.25 per cent from 3.75 per cent as of April 1.

'I urge residents or investors to carefully assess the impact of climbing interest rates on mortgage payments when they consider buying apartments,' Mr Tsang said.

Buying by mainland Chinese and low borrowing costs drove a 29 per cent surge in Hong Kong home prices last year, prompting the government to raise downpayments on luxury homes in October and increase taxes on those purchases this month. Mr Tsang pledged to reduce the risk of a property market bubble and keep housing affordable for low-income families.

'I understand the worries of residents about rapidly rising home prices, and I agree that we need to reduce the bubble risk in the property market to avoid any impact on the financial system's stability and the recovery in the real economy,' Mr Tsang said.

Two residential sites, one in Kowloon and the other on Hong Kong Island, will be auctioned off in June and July, bringing to four the total number of sites the government is selling in the coming three months, Mr Tsang said.

Low interest rates won't be sustained for long as governments around the world wind back stimulus measures, he said\. \-- Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Good returns seen from mature markets

Business Times - 22 Apr 2010

Good returns seen from mature markets

KepLand property fund unit positive on residential, office, retail and hospitality

By EMILYN YAP

EMERGING economies may be all the rage, but Keppel Land's property fund manager Alpha Investment Partners still sees good returns coming from matured Asian markets.

Alpha is positive on the residential, office, retail and hospitality sectors in 'core' markets such as Singapore, Hong Kong, South Korea and Taiwan. The one sector that has not caught its fancy is that of logistics properties.

'On a risk-adjusted basis, the returns are quite attractive,' said Alpha managing director Loh Chin Hua yesterday, at the sidelines of the Asian Public Real Estate Association Property Leaders Forum.

Alpha adopts a barbell strategy for the Alpha Asia Macro Trends Fund, which is 70-80 per cent focused on core markets, and 20-30 per cent focused on fast-growing ones.

It is not for a lack of opportunities that Alpha is less involved in developing economies. Take China for instance - Mr Loh recognises that it is an important market offering much investment potential, but there are other downsides at play.

'We always look at risk-adjusted returns, how easy it is to execute transactions, and right now, it is quite challenging for an institutional investor to be investing in China,' he said.

During a panel discussion at the forum, Mr Loh spoke of changing regulations in China and the complexities that poses. A lot of these changes are retroactive and 'you just have to accept them'.

But Alpha will continue to seek out deals in China, and it is confident that residences catering to middle income earners in second tier cities will still see demand.

In Singapore, Alpha is interested in the retail, hospitality and residential sectors. It has a fund which is part of a consortium owning Katong Mall. 'We still believe that suburban malls generally will do well,' Mr Loh said. 'There will be a number of new subway lines coming up, so there could be more opportunities in that area.'

The office market here could surprise on the upside, he added. While a substantial amount of new office space will be coming up, rents have historically 'responded more to demand changes than to supply changes'. Banks are hiring again, and 'the analysts might be a little bit too negative on the office sector', he said.

According to Mr Loh, Alpha is seeing a healthy deal flow and is working on a number of transactions. Around 30 per cent of its US$1.2 billion Asia Macro Trends fund has been invested, and this could rise to 50-60 per cent soon.

He also said that risk appetite has improved, and some investors have approached Alpha to start new funds.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



Mr Loh: Alpha is seeing a healthy deal flow and is working on a number of transactions

BT : New govt curbs won't dampen demand: Mobius

Business Times - 22 Apr 2010

New govt curbs won't dampen demand: Mobius

(SHANGHAI) Demand for housing in China will withstand government bank lending curbs, and further declines in the nation's property stocks may be an opportunity to buy the shares, Templeton Asset Management's Mark Mobius said.

'We don't see fundamentals of the property industry will change much because of these new policies,' Mr Mobius, executive chairman at Templeton, said in response to questions.

'We are in general still light on Chinese developers and if this correction brings valuations to more attractive levels, it would be a good opportunity for us to step up our positions.'

A measure of 34 property stocks on the Shanghai Composite Index has plunged 8.8 per cent this week after the government limited loans for third-home purchases, increased down payment requirements and raised mortgage rates. China's cabinet has said stricter measures to control speculation are needed after property prices in 70 cities jumped a record 11.7 per cent in March.

Martin Currie's Chris Ruffle said in an interview this week Chinese real estate stocks are becoming 'more attractive' as government measures drove valuations to a year-low and made interest rate increases less likely.

China Asset Management, the nation's biggest mutual fund company, bought developers in its flagship fund in the first quarter, predicting 'gentle' tightening this year, according to its website.

Economists are split on the timing of the nation's first interest rate increase since 2007. Royal Bank of Canada said higher rates are likely this quarter and could come this month, while Bank of America-Merrill Lynch sees no move until the fourth quarter.

The SE Shang Property Index has lost 19 per cent this year, the most among the five industry groups. It now trades at 22.8 times reported earnings, the lowest since March 2009, according to data compiled by Bloomberg.

China on Tuesday ordered developers not to take deposits for sales of uncompleted apartments without proper approval and barred them from charging 'abnormally high' prices, stepping up efforts to prevent a property bubble. The Ministry of Housing and Urban-Rural Development vowed to punish developers that 'artificially' create supply shortages.

China's banking regulator also told larger banks to conduct quarterly stress tests on property loans and ensure the risks of such lending is strictly controlled, according to a statement on the China Banking Regulatory Commission's website.

'Recent policy changes on property and mortgages were introduced with the purpose of curbing speculation, but not hurting real demand,' Mr Mobius said.

Shenyin & Wanguo Securities Co analysts led by Zhu Anping said on Tuesday investors should avoid property-related stocks because earnings at developers may deteriorate.

Mr Mobius said China will have 'strong real housing demand growth' over the next decade as more people move to the cities\. \-- Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.



Mr Mobius: Policy changes introduced to curb speculation and not hurt real demand

BT : Boon Keng Development makes top bid for Woodlands industrial site

Business Times - 22 Apr 2010

Boon Keng Development makes top bid for Woodlands industrial site

By UMA SHANKARI

BOON Keng Development made the top bid of $65.2 million for an industrial site at Woodlands Avenue 12 in a government tender which closed yesterday.

Boon Keng's bid, which works out to $75 per square foot per plot ratio (psf ppr), is 29 per cent higher than the second highest bid of $50.6 million ($58 psf ppr) submitted by TGFB Pte Ltd and more than twice the application bid which triggered the tender. There were six bids in all for the site from developers including Soilbuild Group and Wee Hur Holdings

The 60-year leasehold site was launched after an unnamed party committed to bid at least $25.0 million ($29 psf ppr) for it last month. The site has a maximum gross floor area of 868,628 sq ft.

'The strong GDP growth of 13.1 per cent year-on-year in Q1 2010, driven by a 30 per cent year-on-year surge in the manufacturing, has resulted in demand for new industrial space as evidenced by the six bids received by the Urban Redevelopment Authority,' said executive director of CBRE Research Li Hiaw Ho.

The top bid is also more than twice the winning bid for industrial sites in Woodlands in the past two years.

A 60-year leasehold industrial site at the junction of Woodlands Industrial Park E5/Avenue 4 was awarded to Wee Hur in July last year for $22.9 million, or $34 psf ppr. And before that, a 60-year leasehold site along Woodlands Industrial Park E5 was awarded to Soilbuild Group in July 2008 for $13.6 million, or $30 psf ppr.

Mr Li estimates that the breakeven cost for this development is estimated to be about $240 psf to $260 psf. In the first four months of 2010, strata-titled units in Admiralty Industrial Park, located along Woodlands Industrial Park E1, went for between $163 psf and $249 psf, CBRE's data shows.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : IMF flags 'bubble trouble' in Asia

Business Times - 22 Apr 2010

IMF flags 'bubble trouble' in Asia

Many property markets overheating and correction fears loom; S'pore sees big share of new bank lending going into real estate

By VIKRAM KHANNA

(SINGAPORE) The International Monetary Fund warns that residential real estate markets in East Asia are overheating and that by some measures, valuations are stretched.

In its just-released Global Financial Stability report (April 2010), the IMF notes that since the second half of 2009, housing prices - especially at the high-end of the market - have rebounded quickly in China, Hong Kong, South Korea, and Singapore as well as Australia and New Zealand. In many markets, prices now exceed their 2008 peaks.

The rebound has been mainly driven by 'unprecedented policy measures to mitigate the impact of the global financial crisis and the ensuing return of risk appetite'.

· Mortgage rates are at historical lows as central banks around the globe have cut policy rates.

· Real estate loan growth has been revived. So has the proportion of real estate loans to total bank lending, which in Singapore was close to 80 per cent in Q4 2009. This is the highest among the markets highlighted in the report. In percentage terms, year-on- year, the real estate loan growth has picked up most sharply in China.

· Governments in China and Korea introduced housing-related tax breaks in late 2008 to help boost their property markets.

· Capital inflows have further fuelled property price increases, particularly in Hong Kong and Singapore.

In Singapore, foreigners and companies accounted for 12.5 per cent of the third-quarter home purchases in 2009, compared with 8 per cent in the previous quarter.

The Fund cautions that by some measures, housing valuations are stretched. Although the average price-to-income ratio has risen modestly, in some markets - notably, China, Hong Kong, Singapore and Korea - price-to-rent ratios are 'elevated'. It adds that many purchasers have been buying 'in the expectation of price appreciation, rather than simply for dwelling purposes'.

The region's booming real estate markets may pose risks to financial stability in the future, according to the IMF. Banks are 'increasingly vulnerable' to a price correction. Moreover, as most mortgage loans in Asian economies carry floating rates, 'the widely anticipated rate hikes in the region will increase the burden on household balance sheets'.

The Fund acknowledges that governments in the region have taken measures to cool real estate markets, including tighter requirements on mortgage lending, increased land supply, and the reimposition of higher transaction taxes, such as stamp duties.

In Hong Kong, the average loan-to-value ratio of new mortgage loans has dropped significantly from its peak in June 2009, and banks in mainland China have started to tighten their mortgage criteria. In response to such measures, the growth rates of transaction values have declined, including in Singapore.

However, the full effects of the cooling measures 'are still to be seen in the coming quarters', says the Fund. It also suggests that governments may need to fine-tune their policies 'to maintain a delicate balance between leaning against housing bubbles and ensuring a solid economic recovery'.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.