Jul 20, 2010
parliament
Act closes loophole on using flats for loans
Moneylenders won't get first bite of sales proceeds under amended law
By Jessica Cheam
A HOUSING Bill was sped through Parliament and passed yesterday, with the aim of ending the growing practice by moneylenders who exploit cash-strapped home owners desperate for loans.
The Housing and Development (Amendment) Bill disallows HDB home owners from using the proceeds of selling their homes as collateral for loans, or for the payment of debts, except in approved circumstances.
The new law does not affect loans issued by banks or financial institutions.
Speaking on the urgency of the Bill, National Development Minister Mah Bow Tan told the House that a worrying trend had emerged recently. He said more home owners were pledging their flats to borrow money, and moneylenders were lodging caveats against the flats to claim a payment from the sales proceeds.
Previously, a legal loophole had allowed moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.
In 2008, there were only 12 registered resale applications with caveats lodged by moneylenders, but the figure shot up to 546 last year; and in just the first half of this year, there were 556 cases.
This trend 'undermines the intention of the home ownership policy which seeks to provide a home for our people for long-term stay', said Mr Mah.
The issue was flagged in Parliament in April by Madam Halimah Yacob (Jurong GRC), who yesterday recounted a case of a 46-year-old cleaner who became homeless after he received only $250 after selling his three-room flat in Yishun and had to camp at East Coast Park.
She also asked if the Ministry of National Development (MND) could assist those who had caveats lodged against their flats in the period before the amended Bill was passed.
Mr Mah replied that the Government cannot change existing obligations under contracts already signed, but that help is available from credit counsellors and financial assistance from the community development councils.
Other MPs who weighed in on the Bill broadly supported it. The last time a Bill was expedited through Parliament using the Certificate of Urgency was during the Sars outbreak in 2003.
Madam Halimah and Madam Ho Geok Choo (West Coast GRC) highlighted the role of irresponsible housing agents who act in cahoots with moneylenders to mislead home owners.
Mr Mah acknowledged this, adding that MND will introduce a new Bill soon to establish a new regulatory authority that will oversee estate agents by licensing them.
He also said HDB will look into a suggestion by Mr Ang Mong Seng (Hong Kah GRC) that a one-week cooling-off period be given to home owners to think about the sale of their flats. Mr Mah reiterated to the House the function of the HDB flat as a long-term asset as well as a shelter.
'Flat owners should not willy-nilly or too freely use it to cash out, to take loans, to finance other uses. Even for very deserving uses...the HDB flat is not the cash cow that allows you to cash out and to spend the money, and the legislative changes that I've introduced today serve to emphasise this point,' he said.
jcheam@sph.com.sg
Thursday, July 22, 2010
ST : More Indian nationals moving here
Jul 20, 2010
More Indian nationals moving here
The draw: low crime rate, family-friendly and homeland nearby
By Melissa Kok , Melissa Sim
· Bulk of Indian nationals are work permit holders
· Number of professionals rising
· Surge in firms owned by Indian expatriates
· Boom in businesses and services catering to them
· Growth in domestic cricket league
FOREIGNERS from India now form almost a quarter of the 1.79 million foreigners and permanent residents (PRs) who currently live here.
The number of Indian nationals living and working here has now crossed the 400,000 mark, according to the Indian Embassy.
Two years ago, the number stood at around 200,000.
Although the bulk of them are work permit holders with jobs in the construction or marine sectors, a rising number are professionals, said Mr Bernard Menon, centre manager of the Migrant Workers Centre, a non-governmental organisation that provides assistance to foreign workers on employment-related issues.
Industries such as engineering, information technology and finance are among the areas where Indian nationals are making a name for themselves, said Mr Vasanth Kumar, the Indian Embassy's first secretary.
Many are also striking out on their own once they arrive here.
The Singapore Indian Chamber of Commerce and Industry (SICCI) has seen a surge in the number of companies owned by Indian expatriates, from around 1,500 in 2006, to 3,000 today.
Said an SICCI spokesman: 'Their businesses mainly lie in information technology, finance, trading, and food and beverage.'
A boom in businesses and services catering to Indians has also resulted.
The Global Indian International School, for example, now has 4,000 students - four times the number it had five years ago. Indian nationals make up 90 per cent of its students.
In Little India, about 20 per cent more grocery shops and restaurants have popped up in the past five to 10 years to cater to growing demand, said Mr Raja-kumar Chandra, chairman of the Little India Shopkeepers and Heritage Association.
Indian nationals are also making an impact on the playing field.
The Singapore Cricket Association said its domestic league has grown from 36 teams in 2007 to about 90 now.
Mr Dharmichand Mulewa, the association's general manager, said many of the new teams are made up of Indian expats.
However, not just the cricket league is growing. Across Singapore on weekends, stumps are as common a sight on playing fields as goal posts.
There were 1.79 million foreigners and PRs in Singapore last year, up from 1.04 million in 2000. The Immigration and Checkpoints Authority does not provide a breakdown on the number of foreigners here by nationality.
However, National University of Singapore sociologist Gavin Jones, who researches population and development issues, believes Chinese and Indian nationals, as well as Malaysians, Indonesians, Filipinos and Bangladeshis, form the largest groups of foreigners and PRs here.
'Most new PRs in recent years have come from Asian countries, and it is generally accepted that the Chinese, Indians and Malaysians are prominent among these,' said Professor Jones, when asked to explain.
Indian associations such as the Indian Women's Association and SICCI told The Straits Times that Singapore is gaining popularity as a destination of choice among Indian immigrants because it offers a business- and family-friendly environment, has a low crime rate and is just a short flight from India.
A large proportion of the Indian immigrants here come from Tamil Nadu, said Mr Nikhilesh Gupta, president of the Bengali Association Singapore. Apart from proximity, language is a key reason they make tracks for Singapore.
'Tamil is an official language here, and it gives them a kind of connection to Singapore, in terms of feeling more at home,' he explained.
Some who left India for other countries have also found their way here.
Mr Nikhil Engineer, 34, who left London with his family to work in Singapore two years ago, is one such example.
He said he came here to be nearer relatives in India and because Singapore is a good place to raise his two young children.
The vice-president of product control at Credit Suisse said: 'It is the easiest place to settle down in; everything is straightforward.'
Asked if he planned to stay here permanently, he added: 'That's the plan. It would be tough to adjust to another place because Singapore tends to spoil you.'
melk@sph.com.sg
simlinoi@sph.com.sg
More Indian nationals moving here
The draw: low crime rate, family-friendly and homeland nearby
By Melissa Kok , Melissa Sim
· Bulk of Indian nationals are work permit holders
· Number of professionals rising
· Surge in firms owned by Indian expatriates
· Boom in businesses and services catering to them
· Growth in domestic cricket league
FOREIGNERS from India now form almost a quarter of the 1.79 million foreigners and permanent residents (PRs) who currently live here.
The number of Indian nationals living and working here has now crossed the 400,000 mark, according to the Indian Embassy.
Two years ago, the number stood at around 200,000.
Although the bulk of them are work permit holders with jobs in the construction or marine sectors, a rising number are professionals, said Mr Bernard Menon, centre manager of the Migrant Workers Centre, a non-governmental organisation that provides assistance to foreign workers on employment-related issues.
Industries such as engineering, information technology and finance are among the areas where Indian nationals are making a name for themselves, said Mr Vasanth Kumar, the Indian Embassy's first secretary.
Many are also striking out on their own once they arrive here.
The Singapore Indian Chamber of Commerce and Industry (SICCI) has seen a surge in the number of companies owned by Indian expatriates, from around 1,500 in 2006, to 3,000 today.
Said an SICCI spokesman: 'Their businesses mainly lie in information technology, finance, trading, and food and beverage.'
A boom in businesses and services catering to Indians has also resulted.
The Global Indian International School, for example, now has 4,000 students - four times the number it had five years ago. Indian nationals make up 90 per cent of its students.
In Little India, about 20 per cent more grocery shops and restaurants have popped up in the past five to 10 years to cater to growing demand, said Mr Raja-kumar Chandra, chairman of the Little India Shopkeepers and Heritage Association.
Indian nationals are also making an impact on the playing field.
The Singapore Cricket Association said its domestic league has grown from 36 teams in 2007 to about 90 now.
Mr Dharmichand Mulewa, the association's general manager, said many of the new teams are made up of Indian expats.
However, not just the cricket league is growing. Across Singapore on weekends, stumps are as common a sight on playing fields as goal posts.
There were 1.79 million foreigners and PRs in Singapore last year, up from 1.04 million in 2000. The Immigration and Checkpoints Authority does not provide a breakdown on the number of foreigners here by nationality.
However, National University of Singapore sociologist Gavin Jones, who researches population and development issues, believes Chinese and Indian nationals, as well as Malaysians, Indonesians, Filipinos and Bangladeshis, form the largest groups of foreigners and PRs here.
'Most new PRs in recent years have come from Asian countries, and it is generally accepted that the Chinese, Indians and Malaysians are prominent among these,' said Professor Jones, when asked to explain.
Indian associations such as the Indian Women's Association and SICCI told The Straits Times that Singapore is gaining popularity as a destination of choice among Indian immigrants because it offers a business- and family-friendly environment, has a low crime rate and is just a short flight from India.
A large proportion of the Indian immigrants here come from Tamil Nadu, said Mr Nikhilesh Gupta, president of the Bengali Association Singapore. Apart from proximity, language is a key reason they make tracks for Singapore.
'Tamil is an official language here, and it gives them a kind of connection to Singapore, in terms of feeling more at home,' he explained.
Some who left India for other countries have also found their way here.
Mr Nikhil Engineer, 34, who left London with his family to work in Singapore two years ago, is one such example.
He said he came here to be nearer relatives in India and because Singapore is a good place to raise his two young children.
The vice-president of product control at Credit Suisse said: 'It is the easiest place to settle down in; everything is straightforward.'
Asked if he planned to stay here permanently, he added: 'That's the plan. It would be tough to adjust to another place because Singapore tends to spoil you.'
melk@sph.com.sg
simlinoi@sph.com.sg
ST : Illegal subletting: Stiffer penalties soon
Jul 20, 2010
parliament
Illegal subletting: Stiffer penalties soon
SINGAPOREANS who qualify for highly subsidised public rental flats but sublet them illegally will soon face tougher penalties.
National Development Minister Mah Bow Tan yesterday announced changes to existing legislation giving the Housing Board the same punitive powers over public rental flats that it has over sold HDB flats.
Currently, when rental flats are sublet illegally, the HDB's only recourse is to take back the flats and bar the tenants from renting for a fixed period.
However, experience showed that was not a sufficient deterrent and stiffer penalties were needed to keep rental flats for the truly needy, Mr Mah told Parliament.
The vast majority of those who sublet rental flats had alternative accommodation, and were abusing the highly subsidised monthly rentals of up to $60, he said.
In 2008, the HDB terminated the tenancies of 221 residents for illegal subletting.
The number of such cases has come down due to warnings against the practice, he added.
Last year, there were 170 cases. The first six months of this year saw 63 cases.
parliament
Illegal subletting: Stiffer penalties soon
SINGAPOREANS who qualify for highly subsidised public rental flats but sublet them illegally will soon face tougher penalties.
National Development Minister Mah Bow Tan yesterday announced changes to existing legislation giving the Housing Board the same punitive powers over public rental flats that it has over sold HDB flats.
Currently, when rental flats are sublet illegally, the HDB's only recourse is to take back the flats and bar the tenants from renting for a fixed period.
However, experience showed that was not a sufficient deterrent and stiffer penalties were needed to keep rental flats for the truly needy, Mr Mah told Parliament.
The vast majority of those who sublet rental flats had alternative accommodation, and were abusing the highly subsidised monthly rentals of up to $60, he said.
In 2008, the HDB terminated the tenancies of 221 residents for illegal subletting.
The number of such cases has come down due to warnings against the practice, he added.
Last year, there were 170 cases. The first six months of this year saw 63 cases.
ST : Prestige bungalows soar in price
Jul 20, 2010
Prestige bungalows soar in price
Good class bungalow sales in first half pass $1b mark, and demand unlikely to flag: Report
By Joyce Teo
THE priciest homes just keep getting pricier, with the values of upmarket, prime-area bungalows rocketing this year, and sales totalling more than $1 billion in the first six months.
And just to underline the boom in what are called 'good class bungalows', a Nassim Road house sold in April for $43.5 million, that is $1,800 psf and just shy of the record $1,899 psf set in 2007 for a plot along the same road, according to a Savills Singapore report.
The most expensive bungalow sold this year in terms of overall price was a sprawling Leedon Park plot that went last month for a whopping $59.4 million, or $1,419 psf.
Good class bungalows tend to be big and exclusive, and are arguably Singapore's most coveted landed homes.
They typically sit on plots of at least 1,400 sq m, or 15,070 sq ft, and can be found in 39 prime gazetted areas such as Nassim Road.
In the first half of this year, sales of good class bungalows reached about $1.12 billion, which is about 81 per cent of the value done last year, said Savills.
There were 54 deals done in the first six months, compared with 24 in the same period last year, it said.
Prices have continued edging higher on the revived demand from well-heeled buyers, added Savills.
The average price of good class bungalows rose from $928 psf in the first quarter to $1,082 psf in the second and is now 36 per cent higher than a year ago.
'This year we are seeing more demand from ultra-rich, new citizens and PRs in the market, which could possibly have resulted in the higher volume and prices,' said the firm's director of prestige homes and investment, Mr Steven Ming.
An agent who declined to be named added: 'Some new citizens from China are still looking for good class bungalows.'
He said the market has quietened down a bit recently as the gap between buyers' and sellers' price expectations widens.
CB Richard Ellis director (luxury homes) Douglas Wong said: 'Good class bungalow prices have continued to rise since 2007 and through the global financial crisis. Owners' expectations are still high due to the limited supply.'
Some sellers have been asking for higher prices after hearing talk of a Cluny Road bungalow achieving a record price of slightly over $2,000 psf, agents said.
Buyers may be sitting on the sidelines but they are likely to come back to market soon when they realise that prices are not going to fall, Mr Wong said.
The managing director of RealStar Premier Property, Mr William Wong, said he has already seen some local investors returning to the good class bungalow market recently.
But foreign buyers are few and far between. They need special permission and must be permanent residents to own landed property.
Foreigners who are not permanent residents can buy landed homes in Sentosa Cove, subject to government approval.
In recent years, the typically smaller landed homes in the 99-year leasehold gated residential enclave have also seen exceptional prices.
Average prices of Sentosa Cove bungalows rose 55 per cent to $1,959 psf in the second quarter over the same period a year ago, said Savills.
In the first half, there were 35 caveats lodged for bungalows in Sentosa Cove compared with 36 for all of last year, it said.
Just over half of this year's bungalow caveats were lodged by Singaporeans.
China accounted for 10 deals, the largest of the foreign buying contingent.
But Mr Ming said that good class bungalow prices are looking more attractive than the prices of leasehold Sentosa Cove bungalows.
He added that good class bungalow prices may rise by a further 5 to 10 per cent this year, given the more robust economic recovery and the fact that the buyer base has expanded.
joyceteo@sph.com.sg
The typically large size of the properties, such as the 18,000 sq ft this Leedon Park home occupies, and their rarity contribute to their high price tags. -- ST FILE PHOTO
Prestige bungalows soar in price
Good class bungalow sales in first half pass $1b mark, and demand unlikely to flag: Report
By Joyce Teo
THE priciest homes just keep getting pricier, with the values of upmarket, prime-area bungalows rocketing this year, and sales totalling more than $1 billion in the first six months.
And just to underline the boom in what are called 'good class bungalows', a Nassim Road house sold in April for $43.5 million, that is $1,800 psf and just shy of the record $1,899 psf set in 2007 for a plot along the same road, according to a Savills Singapore report.
The most expensive bungalow sold this year in terms of overall price was a sprawling Leedon Park plot that went last month for a whopping $59.4 million, or $1,419 psf.
Good class bungalows tend to be big and exclusive, and are arguably Singapore's most coveted landed homes.
They typically sit on plots of at least 1,400 sq m, or 15,070 sq ft, and can be found in 39 prime gazetted areas such as Nassim Road.
In the first half of this year, sales of good class bungalows reached about $1.12 billion, which is about 81 per cent of the value done last year, said Savills.
There were 54 deals done in the first six months, compared with 24 in the same period last year, it said.
Prices have continued edging higher on the revived demand from well-heeled buyers, added Savills.
The average price of good class bungalows rose from $928 psf in the first quarter to $1,082 psf in the second and is now 36 per cent higher than a year ago.
'This year we are seeing more demand from ultra-rich, new citizens and PRs in the market, which could possibly have resulted in the higher volume and prices,' said the firm's director of prestige homes and investment, Mr Steven Ming.
An agent who declined to be named added: 'Some new citizens from China are still looking for good class bungalows.'
He said the market has quietened down a bit recently as the gap between buyers' and sellers' price expectations widens.
CB Richard Ellis director (luxury homes) Douglas Wong said: 'Good class bungalow prices have continued to rise since 2007 and through the global financial crisis. Owners' expectations are still high due to the limited supply.'
Some sellers have been asking for higher prices after hearing talk of a Cluny Road bungalow achieving a record price of slightly over $2,000 psf, agents said.
Buyers may be sitting on the sidelines but they are likely to come back to market soon when they realise that prices are not going to fall, Mr Wong said.
The managing director of RealStar Premier Property, Mr William Wong, said he has already seen some local investors returning to the good class bungalow market recently.
But foreign buyers are few and far between. They need special permission and must be permanent residents to own landed property.
Foreigners who are not permanent residents can buy landed homes in Sentosa Cove, subject to government approval.
In recent years, the typically smaller landed homes in the 99-year leasehold gated residential enclave have also seen exceptional prices.
Average prices of Sentosa Cove bungalows rose 55 per cent to $1,959 psf in the second quarter over the same period a year ago, said Savills.
In the first half, there were 35 caveats lodged for bungalows in Sentosa Cove compared with 36 for all of last year, it said.
Just over half of this year's bungalow caveats were lodged by Singaporeans.
China accounted for 10 deals, the largest of the foreign buying contingent.
But Mr Ming said that good class bungalow prices are looking more attractive than the prices of leasehold Sentosa Cove bungalows.
He added that good class bungalow prices may rise by a further 5 to 10 per cent this year, given the more robust economic recovery and the fact that the buyer base has expanded.
joyceteo@sph.com.sg
The typically large size of the properties, such as the 18,000 sq ft this Leedon Park home occupies, and their rarity contribute to their high price tags. -- ST FILE PHOTO
ST : HDB not distracted from core mission: Mah
Jul 20, 2010
parliament
HDB not distracted from core mission: Mah
THE House yesterday passed a law to allow the Housing Board (HDB) to play a consultancy role here and overseas, as a goodwill gesture to foreign governments which have sought its expertise.
However, that will not detract from the Board's main mission to provide good and affordable public housing to Singaporeans, Minister for National Development Mah Bow Tan said.
Responding to the reservations of two MPs, Mr Mah stressed that the HDB was not over-extending itself. For one, its staff would continue to be assessed on 'how they can build up a more vibrant community (and) continue to provide more affordable housing'.
'That is their key performance indicator,' he said, debunking the notion that they would be assessed instead on 'how much money they make for local SMEs'.
The worries about the HDB being distracted from its core mission and inadvertently squeezing out smaller home-grown developers were flagged by Ms Lee Bee Wah (Ang Mo Kio GRC) and Madam Cynthia Phua (Aljunied GRC). They spoke in the debate on the amendment to the Housing and Development Bill.
In explanation, Mr Mah said the HDB had been asked by foreign governments to share its expertise in home ownership and financing policies.
The board had no intention of getting involved in town planning overseas. That, he said, was the job of Surbana Corporation, a subsidiary of investment company Temasek Holdings and an offshoot of the HDB.
He did not see overseas consultancy projects as a 'money spinner' for the board, but rather as 'creating a reservoir of goodwill with other governments'. That was the principle behind the HDB's involvement in the Tianjin eco-city project, a collaboration between the Singapore and Chinese governments.
The HDB also plans to work with Singapore companies on home turf, in technical areas like green buildings, solar panels and lifts.
Here, its mandate is 'not to become a company or compete with local companies', but to share its expertise with small firms to help them export their services, he said.
parliament
HDB not distracted from core mission: Mah
THE House yesterday passed a law to allow the Housing Board (HDB) to play a consultancy role here and overseas, as a goodwill gesture to foreign governments which have sought its expertise.
However, that will not detract from the Board's main mission to provide good and affordable public housing to Singaporeans, Minister for National Development Mah Bow Tan said.
Responding to the reservations of two MPs, Mr Mah stressed that the HDB was not over-extending itself. For one, its staff would continue to be assessed on 'how they can build up a more vibrant community (and) continue to provide more affordable housing'.
'That is their key performance indicator,' he said, debunking the notion that they would be assessed instead on 'how much money they make for local SMEs'.
The worries about the HDB being distracted from its core mission and inadvertently squeezing out smaller home-grown developers were flagged by Ms Lee Bee Wah (Ang Mo Kio GRC) and Madam Cynthia Phua (Aljunied GRC). They spoke in the debate on the amendment to the Housing and Development Bill.
In explanation, Mr Mah said the HDB had been asked by foreign governments to share its expertise in home ownership and financing policies.
The board had no intention of getting involved in town planning overseas. That, he said, was the job of Surbana Corporation, a subsidiary of investment company Temasek Holdings and an offshoot of the HDB.
He did not see overseas consultancy projects as a 'money spinner' for the board, but rather as 'creating a reservoir of goodwill with other governments'. That was the principle behind the HDB's involvement in the Tianjin eco-city project, a collaboration between the Singapore and Chinese governments.
The HDB also plans to work with Singapore companies on home turf, in technical areas like green buildings, solar panels and lifts.
Here, its mandate is 'not to become a company or compete with local companies', but to share its expertise with small firms to help them export their services, he said.
BT : Credit loss risks on residential property loans limited: S&P
Business Times - 20 Jul 2010
Credit loss risks on residential property loans limited: S&P
THE credit loss risks of Singapore banks would be limited even if an asset bubble were to form, Standard & Poor's Ratings Services said yesterday.
Singapore banks' heavy exposure to home loans and the strong climb in property prices in the past year have raised many questions, including the credit loss risks that banks face, it noted in a report. However, 'a high savings rate and low household debt support borrower repayment ability when collateral values fall', said Standard & Poor's credit analyst Ivan Tan.
Negative equity (when the loan amount exceeds valuation of the home) by itself, is not a sufficient condition for default, he added.
Standard & Poor's said that its view was based on the reasonable level of housing affordability, sound borrower repayment ability, low loan-to-value ratios, the government's measures to cool the market, and mortgage rates turning upward. Mortgages represent the single largest industry exposure for Singapore banks, at about 25 per cent of loan portfolios.
The risk of financial losses to banks would increase if affordability declines, which could occur if property prices continue climbing or if household incomes slip, the rating agency said.
'We believe an unabated increase in property prices is unlikely, given the government's past willingness to implement cooling measures,' Mr Tan said.
On the other hand, household incomes can fall sharply for a few reasons: job loss in a recession is the most common factor. Nevertheless, the rapid economic recovery has led to an improvement in the unemployment rate to 2.2 per cent as of March 2010, almost back to pre-crisis levels.
In February 2010, the government lowered the ceiling for home loans to 80 per cent of valuation - one of the steps that it took in trying to rein in the market.
'We believe Singapore banks seldom extended loans of more than 80 per cent of valuation even before the loan ceiling was lowered,' said the report.
'Banks are beginning to price in higher risk premiums by raising home loan rates . . . The higher home loan rates will counterbalance the returns from property investments. This, in turn, helps reduce the likelihood of a speculative bubble and limit the risk of credit loss for banks.'
Last week, Standard & Poor's affirmed its rating on the three Singapore banks, citing the lenders' strong financial profiles and prudent management strategies.
S&P kept its long-term rating for DBS at AA-/Stable, United Overseas Bank (UOB) at A+/Stable, and OCBC Bank as A+/Stable.
The banks' short-term ratings stand at DBS with A-1+, UOB with A-1, and OCBC with A-1.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Credit loss risks on residential property loans limited: S&P
THE credit loss risks of Singapore banks would be limited even if an asset bubble were to form, Standard & Poor's Ratings Services said yesterday.
Singapore banks' heavy exposure to home loans and the strong climb in property prices in the past year have raised many questions, including the credit loss risks that banks face, it noted in a report. However, 'a high savings rate and low household debt support borrower repayment ability when collateral values fall', said Standard & Poor's credit analyst Ivan Tan.
Negative equity (when the loan amount exceeds valuation of the home) by itself, is not a sufficient condition for default, he added.
Standard & Poor's said that its view was based on the reasonable level of housing affordability, sound borrower repayment ability, low loan-to-value ratios, the government's measures to cool the market, and mortgage rates turning upward. Mortgages represent the single largest industry exposure for Singapore banks, at about 25 per cent of loan portfolios.
The risk of financial losses to banks would increase if affordability declines, which could occur if property prices continue climbing or if household incomes slip, the rating agency said.
'We believe an unabated increase in property prices is unlikely, given the government's past willingness to implement cooling measures,' Mr Tan said.
On the other hand, household incomes can fall sharply for a few reasons: job loss in a recession is the most common factor. Nevertheless, the rapid economic recovery has led to an improvement in the unemployment rate to 2.2 per cent as of March 2010, almost back to pre-crisis levels.
In February 2010, the government lowered the ceiling for home loans to 80 per cent of valuation - one of the steps that it took in trying to rein in the market.
'We believe Singapore banks seldom extended loans of more than 80 per cent of valuation even before the loan ceiling was lowered,' said the report.
'Banks are beginning to price in higher risk premiums by raising home loan rates . . . The higher home loan rates will counterbalance the returns from property investments. This, in turn, helps reduce the likelihood of a speculative bubble and limit the risk of credit loss for banks.'
Last week, Standard & Poor's affirmed its rating on the three Singapore banks, citing the lenders' strong financial profiles and prudent management strategies.
S&P kept its long-term rating for DBS at AA-/Stable, United Overseas Bank (UOB) at A+/Stable, and OCBC Bank as A+/Stable.
The banks' short-term ratings stand at DBS with A-1+, UOB with A-1, and OCBC with A-1.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Loophole exploited by moneylenders closed
Business Times - 20 Jul 2010
YESTERDAY IN PARLIAMENT
Loophole exploited by moneylenders closed
Proceeds from sale of HDB flats no longer allowed as collateral for loans
By LEE U-WEN
(SINGAPORE) Homeowners will no longer be allowed to use their HDB flat or its sale proceeds as collateral for taking loans or paying off debts.
Parliament yesterday fast-tracked the passing of a bill to prevent creditors from laying first claim to the flat, following a spike in the number of people using their flats as security to borrow money from licensed moneylenders.
They enter into agreements to assign the sales proceeds from their HDB flats as repayment of monies owed. The moneylenders then lodge caveats against the borrower's flat to claim an interest in the sales proceeds. This allows the moneylenders to demand repayment before they agree to withdraw the caveat for the sale transaction to go through.
Two years ago, there were only 12 registered resale applications with caveats lodged by moneylenders. Last year, there were cases. From January to June this year alone, there have been 556 cases.
Revealing these numbers in Parliament, National Development Minister Mah Bow Tan said that the government was 'concerned' about this trend because it 'undermines the intention of the home ownership policy' that is meant to provide a home for everyone.
It was back in 2008 when the House first approved the Moneylenders Bill to revamp the regulatory regime for moneylenders. The aim was to introduce more flexibility in regulating the industry to keep up with the modern credit economy and resulted in a sharp increase in the number of moneylender licences issued.
What the moneylenders are doing is fully legal as they exploited a loophole under the current framework, which states that flat-owners are not allowed to use their flat as security or collateral for any debt, obligation or claim.
Now that the bill has been amended, this restriction will be expanded to include the sales proceeds from the flat as well. Financial institutions, however, can continue to grant mortgage loans on the security of flats.
The changes also include a new rule that voids any contract or agreement to use flats, including the sales proceeds, as security or collateral. Caveats against flats to repay debt can also no longer be lodged once the bill is in force.
'The problem is that once a person has sold his flat and repaid the moneylender, he cannot afford to purchase his next flat,' Mr Mah said. 'The flat-seller and the other occupiers become homeless and pose a burden to their family and friends for their housing needs. Some also join HDB's queue for rental flats when they, in fact, do not qualify for rental housing.'
The message that the minister wanted to drive home was that HDB flats are for home ownership and should be regarded as a 'long-term asset for retirement'.
Meanwhile, Mr Mah said that the Council of Estate Agencies, a new statutory board, would be operational by the end of this year. It will take over the licensing of the 30,000 agents to raise the industry's professionalism and better safeguard consumer interest.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
YESTERDAY IN PARLIAMENT
Loophole exploited by moneylenders closed
Proceeds from sale of HDB flats no longer allowed as collateral for loans
By LEE U-WEN
(SINGAPORE) Homeowners will no longer be allowed to use their HDB flat or its sale proceeds as collateral for taking loans or paying off debts.
Parliament yesterday fast-tracked the passing of a bill to prevent creditors from laying first claim to the flat, following a spike in the number of people using their flats as security to borrow money from licensed moneylenders.
They enter into agreements to assign the sales proceeds from their HDB flats as repayment of monies owed. The moneylenders then lodge caveats against the borrower's flat to claim an interest in the sales proceeds. This allows the moneylenders to demand repayment before they agree to withdraw the caveat for the sale transaction to go through.
Two years ago, there were only 12 registered resale applications with caveats lodged by moneylenders. Last year, there were cases. From January to June this year alone, there have been 556 cases.
Revealing these numbers in Parliament, National Development Minister Mah Bow Tan said that the government was 'concerned' about this trend because it 'undermines the intention of the home ownership policy' that is meant to provide a home for everyone.
It was back in 2008 when the House first approved the Moneylenders Bill to revamp the regulatory regime for moneylenders. The aim was to introduce more flexibility in regulating the industry to keep up with the modern credit economy and resulted in a sharp increase in the number of moneylender licences issued.
What the moneylenders are doing is fully legal as they exploited a loophole under the current framework, which states that flat-owners are not allowed to use their flat as security or collateral for any debt, obligation or claim.
Now that the bill has been amended, this restriction will be expanded to include the sales proceeds from the flat as well. Financial institutions, however, can continue to grant mortgage loans on the security of flats.
The changes also include a new rule that voids any contract or agreement to use flats, including the sales proceeds, as security or collateral. Caveats against flats to repay debt can also no longer be lodged once the bill is in force.
'The problem is that once a person has sold his flat and repaid the moneylender, he cannot afford to purchase his next flat,' Mr Mah said. 'The flat-seller and the other occupiers become homeless and pose a burden to their family and friends for their housing needs. Some also join HDB's queue for rental flats when they, in fact, do not qualify for rental housing.'
The message that the minister wanted to drive home was that HDB flats are for home ownership and should be regarded as a 'long-term asset for retirement'.
Meanwhile, Mr Mah said that the Council of Estate Agencies, a new statutory board, would be operational by the end of this year. It will take over the licensing of the 30,000 agents to raise the industry's professionalism and better safeguard consumer interest.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Debate as HDB spreads its wings
Business Times - 20 Jul 2010
Debate as HDB spreads its wings
(SINGAPORE) The amendment in the bill was a minute one, but it provoked two Members of Parliament enough to raise concerns about the government's proposal to allow the Housing and Development Board to expand its services overseas.
Ang Mo Kio GRC MP Lee Bee Wah was worried that the statutory board would 'lose sight of its original mandate' of looking after Singaporeans and building communities, but National Development Minister Mah Bow Tan was quick to quell her fears.
Earlier, the minister had tabled an amendment to the Housing and Development Act to allow HDB to provide 'much sought-after technical and consultancy services' both locally and abroad on matters within its expertise. '(This) would allow HDB to act as the government's agent to service requests to share its expertise in public housing development both within and outside of Singapore. HDB will also be able to develop, sell and acquire intellectual property rights on a commercial basis,' Mr Mah told the House.
In response, Ms Lee asked if, by doing so, HDB would open a pandora's box as other government agencies could follow suit and venture overseas in order to make huge profits for themselves. Cynthia Phua (Aljunied GRC) was the other MP who sought clarification from the minister.
Mr Mah said he was in no doubt that HDB's work locally would not be affected by this move. 'I'm very clear that is our primary responsibility, the main responsibility, is that HDB must do its work in Singapore. That's the reason why we have hived off Surbana to allow it to do its work outside,' he said.
Surbana Corp, formerly the HDB's building and development division, was corporatised to become HDBCorp and then re-branded as its current name in 2005.
Mr Mah explained that, from time to time, Singapore receives requests from other governments asking it to do some consultancy work in their country. It accepts these requests to share its success stories and generate 'a reservoir of goodwill' with others.
He cited the Tianjin Eco-city project, a partnership between Singapore and China to develop the modern township. 'Within this township, one aspect we are talking about is the provision of a good public housing system, and this is where HDB's expertise and consultancy services are required,' said Mr Mah.
'It's not so much in the planning of the town itself. It's about sharing the policies - rental, home ownership, financial - that have worked for us, and those that have not worked so well.'
Mr Mah added that HDB has plans to work with local companies, especially small and medium-sized firms, on specific technical and consultancy services such as the concept of green buildings.
'This provision enables HDB to do such work. It's not going to be a big money-spinner for us,' said Mr Mah.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Debate as HDB spreads its wings
(SINGAPORE) The amendment in the bill was a minute one, but it provoked two Members of Parliament enough to raise concerns about the government's proposal to allow the Housing and Development Board to expand its services overseas.
Ang Mo Kio GRC MP Lee Bee Wah was worried that the statutory board would 'lose sight of its original mandate' of looking after Singaporeans and building communities, but National Development Minister Mah Bow Tan was quick to quell her fears.
Earlier, the minister had tabled an amendment to the Housing and Development Act to allow HDB to provide 'much sought-after technical and consultancy services' both locally and abroad on matters within its expertise. '(This) would allow HDB to act as the government's agent to service requests to share its expertise in public housing development both within and outside of Singapore. HDB will also be able to develop, sell and acquire intellectual property rights on a commercial basis,' Mr Mah told the House.
In response, Ms Lee asked if, by doing so, HDB would open a pandora's box as other government agencies could follow suit and venture overseas in order to make huge profits for themselves. Cynthia Phua (Aljunied GRC) was the other MP who sought clarification from the minister.
Mr Mah said he was in no doubt that HDB's work locally would not be affected by this move. 'I'm very clear that is our primary responsibility, the main responsibility, is that HDB must do its work in Singapore. That's the reason why we have hived off Surbana to allow it to do its work outside,' he said.
Surbana Corp, formerly the HDB's building and development division, was corporatised to become HDBCorp and then re-branded as its current name in 2005.
Mr Mah explained that, from time to time, Singapore receives requests from other governments asking it to do some consultancy work in their country. It accepts these requests to share its success stories and generate 'a reservoir of goodwill' with others.
He cited the Tianjin Eco-city project, a partnership between Singapore and China to develop the modern township. 'Within this township, one aspect we are talking about is the provision of a good public housing system, and this is where HDB's expertise and consultancy services are required,' said Mr Mah.
'It's not so much in the planning of the town itself. It's about sharing the policies - rental, home ownership, financial - that have worked for us, and those that have not worked so well.'
Mr Mah added that HDB has plans to work with local companies, especially small and medium-sized firms, on specific technical and consultancy services such as the concept of green buildings.
'This provision enables HDB to do such work. It's not going to be a big money-spinner for us,' said Mr Mah.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : URA launches site in Kaki Bukit for tender
Business Times - 20 Jul 2010
URA launches site in Kaki Bukit for tender
By KALPANA RASHIWALA
THE Urban Redevelopment Authority (URA) has launched a 3ha site at Kaki Bukit Avenue 4 for tender under the confirmed list.
The plot, with a 2.5 plot ratio, is being offered on 60-year-leasehold tenure and is designated for Business 2 use, which means it can be developed for various uses such as light and general industry, warehousing, utility or telecommunications.
The tender for the land parcel will close on Sept 14.
Colliers International director (industrial) Tan Boon Leong expects the site to fetch bids of $60-$70 per square foot of potential gross floor area, or $48.5 million to $56.5 million.
The unit land price is below the $105 per square foot per plot ratio (psf ppr) fetched for a 30-year-leasehold Business 2 plot at Kaki Bukit Road 2 sold by the government in August last year.
'The earlier site was better located, in the main thoroughfare of the Kaki Bukit industrial area. It was also much smaller at about one hectare and a lower plot ratio of 1.0, resulting in the gross floor area of 115,384 sq ft, compared with 807,833 sq ft for the latest plot. For these reasons, I expect the latest site to fetch a lower unit land price despite its longer leasehold tenure.'
Mr Tan also believes that the confirmed-list site at Kaki Bukit Avenue 4 will fetch lower bids than a 3.5ha Business 1 site at Ubi Road 1 that was launched for tender in June and whose tender will close on Aug 11. The 60-year-leasehold plot, with 2.5 plot ratio, may fetch bids of $80-$90 psf ppr, he forecasts.
'It enjoys a choice location, about 200-300 metres from Tai Seng MRT Station,' Mr Tan notes.
The Ubi site was released under the confirmed list of the government's first-half 2010 industrial land sales programme.
The second-half confirmed list has three sites. Besides the Kaki Bukit Avenue 4 plot which has just been released, a site at Yishun Street 23 and another plot at Old Toh Tuck Road will be launched for sale in August and October this year respectively. Both are zoned for Business 2 use.
In addition, the reserve list will offer seven industrial plots in locations such as Woodlands, Tuas View, Kaki Bukit, Ang Mo Kio, Pioneer Road North, Ubi and Serangoon North.
While the government releases sites on the confirmed list according to a pre-stated schedule, it launches sites on the reserve list only upon application by developers.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
URA launches site in Kaki Bukit for tender
By KALPANA RASHIWALA
THE Urban Redevelopment Authority (URA) has launched a 3ha site at Kaki Bukit Avenue 4 for tender under the confirmed list.
The plot, with a 2.5 plot ratio, is being offered on 60-year-leasehold tenure and is designated for Business 2 use, which means it can be developed for various uses such as light and general industry, warehousing, utility or telecommunications.
The tender for the land parcel will close on Sept 14.
Colliers International director (industrial) Tan Boon Leong expects the site to fetch bids of $60-$70 per square foot of potential gross floor area, or $48.5 million to $56.5 million.
The unit land price is below the $105 per square foot per plot ratio (psf ppr) fetched for a 30-year-leasehold Business 2 plot at Kaki Bukit Road 2 sold by the government in August last year.
'The earlier site was better located, in the main thoroughfare of the Kaki Bukit industrial area. It was also much smaller at about one hectare and a lower plot ratio of 1.0, resulting in the gross floor area of 115,384 sq ft, compared with 807,833 sq ft for the latest plot. For these reasons, I expect the latest site to fetch a lower unit land price despite its longer leasehold tenure.'
Mr Tan also believes that the confirmed-list site at Kaki Bukit Avenue 4 will fetch lower bids than a 3.5ha Business 1 site at Ubi Road 1 that was launched for tender in June and whose tender will close on Aug 11. The 60-year-leasehold plot, with 2.5 plot ratio, may fetch bids of $80-$90 psf ppr, he forecasts.
'It enjoys a choice location, about 200-300 metres from Tai Seng MRT Station,' Mr Tan notes.
The Ubi site was released under the confirmed list of the government's first-half 2010 industrial land sales programme.
The second-half confirmed list has three sites. Besides the Kaki Bukit Avenue 4 plot which has just been released, a site at Yishun Street 23 and another plot at Old Toh Tuck Road will be launched for sale in August and October this year respectively. Both are zoned for Business 2 use.
In addition, the reserve list will offer seven industrial plots in locations such as Woodlands, Tuas View, Kaki Bukit, Ang Mo Kio, Pioneer Road North, Ubi and Serangoon North.
While the government releases sites on the confirmed list according to a pre-stated schedule, it launches sites on the reserve list only upon application by developers.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
ST : Sculpting a new city, serving a community
Jul 19, 2010
special report
Sculpting a new city, serving a community
Johor's upcoming Medini city aims to be 'people-centric'
By Tan Hui Yee
A CITY skyline that inspires, modern trams to cut downtown traffic, and homes, offices and parks that blend seamlessly with surrounding hills.
A brave new city is rising from scratch in Johor just a 15-minute drive from the Singapore-Malaysia border, piquing the interest of Singapore investors.
It is a giant construction site now, but much of the 955ha Medini - the size of Punggol town - is expected to combine the best urban designs from success stories around the world: London's Canary Wharf office district; seaside developments in some parts of Australia's Gold Coast; exclusive golf-course fringed housing in Miami, Florida, as well as condominiums and recreational areas in the Newton area in Singapore.
This blueprint for a thriving, liveable, and environmentally friendly district for more than 200,000 was the product of 18 months' work by urban planners, traffic consultants and architects from countries such as the United States, Australia, Malaysia and Britain.
Medini, a key development of the Iskandar special economic region, is expected to be worth over US$20 billion (S$28 billion) when fully completed in 15 to 20 years. So far, work on Asia's first Legoland theme park, a new shopping centre and a Parkway Holdings hospital there is already under way.
Medini's masterplan paints a picture of a vibrant Islamic financial centre linked to exclusive homes as well as recreational and communal facilities. The city hopes to attract major banking names to become an Islamic financial hub of the region.
Middle East investors like Abu Dhabi-based Mubadala Development Company and Aldar Properties PJSC, Beirut-based Millennium Development International and Kuwait Finance House were reported in April to have invested at least US$1.2 billion to develop Medini.
To create a cool, shady environment, over 13 per cent of the district will be left as parks and public spaces.
The knolls which dot the former oil palm and fruit plantation land will be refashioned into parks interlaced with connecting pathways like the park connecters in Singapore.
Rainwater will be channelled through artificial rivers to retention ponds, which will slow the flow of run-off and help filter it before it enters the Strait of Johor. Sewage will be recycled into non-drinking water for various uses. In the future, sewage may even be recycled into drinking water - Newater style - to reduce the township's impact on the environment.
Beirut-based development manager Millennium Development International, which is overseeing 70 per cent of the project, is planning a 'people-centric' township, says its Malaysia country manager Richard Polkinghorne.
Medini's financial centre will have a tram line serving residents, workers and visitors when enough people have moved in. Its roads and walkways will be barrier-free and pedestrian-friendly. To make sidewalks pleasant and bike commutes safe, most of the roads will be designed for traffic moving at just 20kmh to 30kmh.
Mr Polkinghorne says: 'That's fine, as long as there is no traffic jam. We are trying to make the roads service the community, rather than the other way around.'
Meanwhile, building owners will be subject to strict building controls. They will have to build adequate street level pedestrian linkage and align their property in a way that will share the views of the surrounding scenery with occupants of buildings behind. Building owners who want to deviate from planning rules will have to submit their designs to a panel for consideration.
Of course, much of this transformation still hinges on future investment.
Until recently, investor interest from Singapore has been muted by the country's oft prickly ties with Malaysia. This could change now that both countries have settled a 20-year dispute over railway land and pledged to invest jointly in a wellness township in Iskandar.
tanhy@sph.com.sg
An artist's impression of what the new city Medini will be like (above) though the plot of land in Johor is just a giant construction site for now. Work on Asia's first Legoland theme park there is already under way. -- PHOTOS: MILLENNIUM DEVELOPMENT HOLDINGS, TERENCE TAN
special report
Sculpting a new city, serving a community
Johor's upcoming Medini city aims to be 'people-centric'
By Tan Hui Yee
A CITY skyline that inspires, modern trams to cut downtown traffic, and homes, offices and parks that blend seamlessly with surrounding hills.
A brave new city is rising from scratch in Johor just a 15-minute drive from the Singapore-Malaysia border, piquing the interest of Singapore investors.
It is a giant construction site now, but much of the 955ha Medini - the size of Punggol town - is expected to combine the best urban designs from success stories around the world: London's Canary Wharf office district; seaside developments in some parts of Australia's Gold Coast; exclusive golf-course fringed housing in Miami, Florida, as well as condominiums and recreational areas in the Newton area in Singapore.
This blueprint for a thriving, liveable, and environmentally friendly district for more than 200,000 was the product of 18 months' work by urban planners, traffic consultants and architects from countries such as the United States, Australia, Malaysia and Britain.
Medini, a key development of the Iskandar special economic region, is expected to be worth over US$20 billion (S$28 billion) when fully completed in 15 to 20 years. So far, work on Asia's first Legoland theme park, a new shopping centre and a Parkway Holdings hospital there is already under way.
Medini's masterplan paints a picture of a vibrant Islamic financial centre linked to exclusive homes as well as recreational and communal facilities. The city hopes to attract major banking names to become an Islamic financial hub of the region.
Middle East investors like Abu Dhabi-based Mubadala Development Company and Aldar Properties PJSC, Beirut-based Millennium Development International and Kuwait Finance House were reported in April to have invested at least US$1.2 billion to develop Medini.
To create a cool, shady environment, over 13 per cent of the district will be left as parks and public spaces.
The knolls which dot the former oil palm and fruit plantation land will be refashioned into parks interlaced with connecting pathways like the park connecters in Singapore.
Rainwater will be channelled through artificial rivers to retention ponds, which will slow the flow of run-off and help filter it before it enters the Strait of Johor. Sewage will be recycled into non-drinking water for various uses. In the future, sewage may even be recycled into drinking water - Newater style - to reduce the township's impact on the environment.
Beirut-based development manager Millennium Development International, which is overseeing 70 per cent of the project, is planning a 'people-centric' township, says its Malaysia country manager Richard Polkinghorne.
Medini's financial centre will have a tram line serving residents, workers and visitors when enough people have moved in. Its roads and walkways will be barrier-free and pedestrian-friendly. To make sidewalks pleasant and bike commutes safe, most of the roads will be designed for traffic moving at just 20kmh to 30kmh.
Mr Polkinghorne says: 'That's fine, as long as there is no traffic jam. We are trying to make the roads service the community, rather than the other way around.'
Meanwhile, building owners will be subject to strict building controls. They will have to build adequate street level pedestrian linkage and align their property in a way that will share the views of the surrounding scenery with occupants of buildings behind. Building owners who want to deviate from planning rules will have to submit their designs to a panel for consideration.
Of course, much of this transformation still hinges on future investment.
Until recently, investor interest from Singapore has been muted by the country's oft prickly ties with Malaysia. This could change now that both countries have settled a 20-year dispute over railway land and pledged to invest jointly in a wellness township in Iskandar.
tanhy@sph.com.sg
An artist's impression of what the new city Medini will be like (above) though the plot of land in Johor is just a giant construction site for now. Work on Asia's first Legoland theme park there is already under way. -- PHOTOS: MILLENNIUM DEVELOPMENT HOLDINGS, TERENCE TAN
ST : Marina Bay iconic, like Shanghai's Bund
Jul 19, 2010
Marina Bay iconic, like Shanghai's Bund
It will be platform, catalyst for S'pore's future growth: PM
By Nur Dianah Suhaimi
THE new downtown that is Marina Bay will help distinguish Singapore in the same way the Bund area now defines Shanghai.
Predicting this yesterday, Prime Minister Lee Hsien Loong said the area, with its financial district and own distinct skyline, will be a platform and catalyst for Singapore's future growth.
And with attractive outdoor features like the Helix bridge and a 3.5km long promenade - he strolled on it yesterday - it will be a getaway for Singaporeans too, especially in the evenings and weekends.
This view of the Marina Bay as a new centre of activity was detailed by Mr Lee when he opened two key attractions there: the Waterfront Promenade and Marina Bay City Gallery.
His last outline of what the area would look like came at the National Day Rally last year, when he took his audience on a simulated fly-through of Marina Bay.
But yesterday, much of that on-screen and technological animation was presented as reality as Mr Lee - who also flagged off participants of The New Paper Big Walk - toured the promenade route linking Marina Centre, Collyer Quay and the Marina Bayfront.
Speaking of the area, Mr Lee said it would 'eventually, in fact, not so long in the future' become a new downtown 'with a signature skyline'.
'It will define Singapore in the same way that the Bund defines Shanghai,' he said.
The Bund is Shanghai's riverfront promenade and home to historic buildings, banks, hotels and leisure outlets.
'The private sector has shown its confidence in Marina Bay. Already it has attracted $20 billion of private sector investments in real estate,' he noted.
'And we've got firms - local and from around the world: America, Australia, Europe, the Middle East. They have come, they are optimistic and bullish about the developments. In fact, they would like us to develop it further.'
His hope is that in years to come, the area will be host to the regional and global headquarters for companies operating in Asia 'and be a symbol of what Singapore is and what Singapore will be'.
Despite the newness of the area, Marina Bay is attracting a high level of interest from Singaporeans too, he said.
'I came here one evening a few weeks ago, walked along the bridge and the bay, and it was full of people: Families, children, courting couples, tourists taking in the sights, enjoying the atmosphere.'
There will be venues for public and mass outdoor events, with Urban Redevelopment Authority chief executive Cheong Koon Hean describing the area as a place where 'we can work, live and play 24/7'.
But Marina Bay will not be the only part of Singapore to see improvements.
'All over our island, we are building, improving, upgrading to continue to build the best home for all Singaporeans,' Mr Lee said.
'And so long as we make our economy prosper, so long as we work hard, together we can make this the best home - and improving every year so that we are proud of it and we can look forward to something better all the time.'
ndianah@sph.com.sg
Additional reporting by Andrea Ong
A couple watercyling on Marina Bay's Waterfront Promenade (above), which PM Lee Hsien Loong opened yesterday. He likened Marina Bay to Shanghai's iconic Bund, a riverfront promenade home to historic buildings, banks, hotels and leisure outlets. Mr Lee also saw Marina Bay becoming a lifestyle getaway for Singaporeans and tourists. ST PHOTO: CHINA NATIONAL TOURISM
Marina Bay iconic, like Shanghai's Bund
It will be platform, catalyst for S'pore's future growth: PM
By Nur Dianah Suhaimi
THE new downtown that is Marina Bay will help distinguish Singapore in the same way the Bund area now defines Shanghai.
Predicting this yesterday, Prime Minister Lee Hsien Loong said the area, with its financial district and own distinct skyline, will be a platform and catalyst for Singapore's future growth.
And with attractive outdoor features like the Helix bridge and a 3.5km long promenade - he strolled on it yesterday - it will be a getaway for Singaporeans too, especially in the evenings and weekends.
This view of the Marina Bay as a new centre of activity was detailed by Mr Lee when he opened two key attractions there: the Waterfront Promenade and Marina Bay City Gallery.
His last outline of what the area would look like came at the National Day Rally last year, when he took his audience on a simulated fly-through of Marina Bay.
But yesterday, much of that on-screen and technological animation was presented as reality as Mr Lee - who also flagged off participants of The New Paper Big Walk - toured the promenade route linking Marina Centre, Collyer Quay and the Marina Bayfront.
Speaking of the area, Mr Lee said it would 'eventually, in fact, not so long in the future' become a new downtown 'with a signature skyline'.
'It will define Singapore in the same way that the Bund defines Shanghai,' he said.
The Bund is Shanghai's riverfront promenade and home to historic buildings, banks, hotels and leisure outlets.
'The private sector has shown its confidence in Marina Bay. Already it has attracted $20 billion of private sector investments in real estate,' he noted.
'And we've got firms - local and from around the world: America, Australia, Europe, the Middle East. They have come, they are optimistic and bullish about the developments. In fact, they would like us to develop it further.'
His hope is that in years to come, the area will be host to the regional and global headquarters for companies operating in Asia 'and be a symbol of what Singapore is and what Singapore will be'.
Despite the newness of the area, Marina Bay is attracting a high level of interest from Singaporeans too, he said.
'I came here one evening a few weeks ago, walked along the bridge and the bay, and it was full of people: Families, children, courting couples, tourists taking in the sights, enjoying the atmosphere.'
There will be venues for public and mass outdoor events, with Urban Redevelopment Authority chief executive Cheong Koon Hean describing the area as a place where 'we can work, live and play 24/7'.
But Marina Bay will not be the only part of Singapore to see improvements.
'All over our island, we are building, improving, upgrading to continue to build the best home for all Singaporeans,' Mr Lee said.
'And so long as we make our economy prosper, so long as we work hard, together we can make this the best home - and improving every year so that we are proud of it and we can look forward to something better all the time.'
ndianah@sph.com.sg
Additional reporting by Andrea Ong
A couple watercyling on Marina Bay's Waterfront Promenade (above), which PM Lee Hsien Loong opened yesterday. He likened Marina Bay to Shanghai's iconic Bund, a riverfront promenade home to historic buildings, banks, hotels and leisure outlets. Mr Lee also saw Marina Bay becoming a lifestyle getaway for Singaporeans and tourists. ST PHOTO: CHINA NATIONAL TOURISM
ST : Home Run
Jul 18, 2010
property buying guide
Home Run
A large number of new properties are set to be launched in the next six to 12 months. The Sunday Times looks at what savvy buyers should look out for.
By Esther Teo
Sovereign debt crises may have hobbled property markets elsewhere, but not here it seems.
Buoyed by Singapore's strong economic recovery, optimism has staged a vigorous comeback, with property developers set to launch at least 3,500 new homes by year-end on top of about 8,500 they have already released so far this year.
This will result in an estimated total of between 12,000 and 14,000 new units this year.
And the supply of available building land shows no sign of drying up: 31 residential sites will be up for grabs from the Government Land Sales (GLS) programme in the second half of this year.
In the years ahead, new residential enclaves are predicted to emerge with the completion of the Circle Line, boosting once sleepy areas such as Paya Lebar, Mountbatten and Dakota.
Up, up and away
Analysts say that despite the uncertainty triggered by eurozone sovereign debt issues, overall buying interest here remains positive - especially in mass-market and mid-tier projects.
Although the overall upbeat sentiment has dipped slightly of late, with lower volume and slower price increases, the residential market looks set to remain largely strong given the strength of the economic rebound.
The Government forecasts a stunning 13 to 15 per cent growth in gross domestic product (GDP) this year, up sharply from an earlier prediction of 7 to 9 per cent, due mainly to the huge recent surge in manufacturing.
DTZ South-east Asia research head Chua Chor Hoon is upbeat about the market. 'There is still buying interest and more new developments are being planned for launch in the coming months. If they are well taken up, that would motivate more developers to launch other projects and stimulate more buyer interest,' she said.
Knight Frank manager of consultancy and research Ong Kah Seng is slightly more cautious about prospects, but still thinks the outlook is good.
'Buyers are likely to rethink about rushing into home purchases and adopt a wait-and-see attitude... However, although sales will moderate, it is still reflective of a healthy residential market.'
Against this broadly bullish backdrop, prices have continued to climb ever higher.
Official estimates show they rose a higher-than-expected 5.2 per cent in the second quarter of this year after a 5.6 per cent jump in the first.
Prices are now 1.5 per cent above their peak in the second quarter of 1996.
And property experts are pencilling in price increases for the full year of between 12 per cent and 20 per cent, with the average estimate at about 15 per cent.
CB Richard Ellis (CBRE) residential director Joseph Tan thinks that because economic fundamentals 'are still intact', home prices will increase slightly in the second half of the year.
'Projects which are well located and are close to main transport nodes could still enjoy a slight premium,' he added.
Prime pickings
With developers looking to make the most of this positive market, Knight Frank is anticipating another 17 major launches (of at least 50 units each) within the next six months - a total of 4,056 apartments added to the market.
Upscale residences in districts 9, 10 and 11 are likely to make up almost half of these major launches, but a surge of mid and mass-market developments is slated from next year onwards as GLS land sites situated mainly outside the central regions are released, Mr Ong said.
CBRE notes that 38 apartment launches - inclusive of small to mid-size projects - are likely within the next six months.
Of these, 22 are located in the core central region, 10 in the rest of the central region and six outside the central region - allowing home buyers to cherry pick according to their budgets.
They range from Allgreen Properties' prime 360-unit Skysuites @ Anson in Enggor Street to the mass market 408-unit executive condominium project in Yishun Avenue 10 by MCC Land.
In addition, experts say that prime developments are beginning to appear in numbers on the horizon as developers scent rising prices.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said developers may have held back many of their high-end launch-ready projects, some of which were prime freehold sites from the 'en bloc' fever three years ago.
'Some developers may have decided that high-end prices may take even longer to reach their desired levels. Given that there are still risks ahead, they may decide to make the best of an uncertain situation and launch within the next few weeks and months,' he added.
A buyer's spread
With 15 residential sites sold through the GLS programme in the first half of this year (four of which were executive condominiums) - and more than double that number planned for the second half - the property pipeline shows no sign of drying up.
Mass and mid-market homes are likely to be launched on these sites in areas such as Simei Street 3 and Hougang Avenue 2 as the Government attempts to dampen demand.
The plots are certainly being snapped up by developers eager to replenish their land banks and willing to pay top dollar for well-located plots.
A 99-year leasehold residential site at Simei Street 3�released for tender in March received a total of 18 bids, with the top bid at $152.7 million or $523 psf per plot ratio (ppr) coming from developer Chip Eng Seng. This was well above market expectations of between $300 and $400 psf ppr.
UOB Kay Hian property analyst Vikrant Pandey estimates the break-even price for the site to be in the range of $800 to $850 psf and, assuming a 15 per cent development margin, the average selling price to be�upwards of $970 psf.
'Resale prices for the secondary market projects in the vicinity are in the range of $600 to $800 psf.�The top bid is quite aggressive, factoring in a 20 to 30 per cent future price appreciation�in the region,' he said.
Similarly, the hotly contested tender of a choice residential plot in Boon Lay Way next to Lakeside MRT station attracted a whopping 14 bids in May, with Keppel Land (Mayfair) putting in the top bid of $499 psf ppr, or $302.98 million.
Property experts estimate the break-even level for units on the site will be $800 to $850 psf, with an eventual selling price of about $950 psf - which factors in a 10 to 20 per cent�future rise in prices within the next year.
DTZ's Ms Chua said that developers were already inching up prices at new projects, with many recent launches being priced higher than neighbouring projects.
However, the bumper release of 31 residential sites by the GLS programme in the second half of this year could dampen some of the exuberance in the market, moderating mass market prices.
There are 18 residential or residential/commercial sites on the programme for confirmed sale, with another 13 sites for residential use put on the reserve list.
The plots - which include 20 that are new and not rolled over - could accommodate 13,905 new homes and are anticipated for launch next year.
They are located in areas such as Jurong West and Pasir Ris but also in mass-market areas like Hougang and Tampines.
The sites commanding the most attention are, predictably, those with the best locations and amenities.
CBRE's Mr Tan said sites with better amenities and close to MRT stations will generally attract more interest from developers. And mixed-use sites located at the town centre of HDB estates are likely to be vied for.
One of the most attractive sites is the land parcel at the junction of Woodland Avenue 1 and Woodgrove Avenue, he said, which is located within the American expatriate enclave and close to the Singapore American School.
Mr Tan pointed out that condominiums and landed homes in the nearby Woodgrove Estate were enjoying strong rentals, and the last condominium project launched in this location - Rosewood Suites in November 2008 - was fully sold.
Elsewhere, the commercial- cum-residential site in New Upper Changi Road and Bedok North Drive is expected to attract strong bidding, given that it will be the first comprehensive development in Bedok New Town and comprise a retail mall, residential units and a bus interchange.
Knight Frank's Mr Ong added that close proximity to existing and upcoming MRT sites could well drive prices higher at a number of new plots.
These include the Alexandra Road site, the Tanah Merah Kechil site - near existing condos East Meadows and Optima@Tanah Merah - and the Petir site next to City Developments' recently launched 429-unit Tree House.
Chesterton's Mr Tan said: 'The fact that there are still en bloc transactions taking place - most of which are in the suburbs - indicates that developers will still bid for land.'
However, with economists predicting a slowdown in growth in the second half of this year due to concerns over the European debt crisis and the bumper supply of land released, some analysts are less bullish.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that with an average of three tenders a month, developers were both limited in their budget and manpower resources.
'We might see the level of interest in GLS sites drop towards the end of this year... If signs of economic uncertainty re-emerge and if companies start putting their expansion plans on the backburner, developers might start bidding more cautiously,' he said.
esthert@sph.com.sg
property buying guide
Home Run
A large number of new properties are set to be launched in the next six to 12 months. The Sunday Times looks at what savvy buyers should look out for.
By Esther Teo
Sovereign debt crises may have hobbled property markets elsewhere, but not here it seems.
Buoyed by Singapore's strong economic recovery, optimism has staged a vigorous comeback, with property developers set to launch at least 3,500 new homes by year-end on top of about 8,500 they have already released so far this year.
This will result in an estimated total of between 12,000 and 14,000 new units this year.
And the supply of available building land shows no sign of drying up: 31 residential sites will be up for grabs from the Government Land Sales (GLS) programme in the second half of this year.
In the years ahead, new residential enclaves are predicted to emerge with the completion of the Circle Line, boosting once sleepy areas such as Paya Lebar, Mountbatten and Dakota.
Up, up and away
Analysts say that despite the uncertainty triggered by eurozone sovereign debt issues, overall buying interest here remains positive - especially in mass-market and mid-tier projects.
Although the overall upbeat sentiment has dipped slightly of late, with lower volume and slower price increases, the residential market looks set to remain largely strong given the strength of the economic rebound.
The Government forecasts a stunning 13 to 15 per cent growth in gross domestic product (GDP) this year, up sharply from an earlier prediction of 7 to 9 per cent, due mainly to the huge recent surge in manufacturing.
DTZ South-east Asia research head Chua Chor Hoon is upbeat about the market. 'There is still buying interest and more new developments are being planned for launch in the coming months. If they are well taken up, that would motivate more developers to launch other projects and stimulate more buyer interest,' she said.
Knight Frank manager of consultancy and research Ong Kah Seng is slightly more cautious about prospects, but still thinks the outlook is good.
'Buyers are likely to rethink about rushing into home purchases and adopt a wait-and-see attitude... However, although sales will moderate, it is still reflective of a healthy residential market.'
Against this broadly bullish backdrop, prices have continued to climb ever higher.
Official estimates show they rose a higher-than-expected 5.2 per cent in the second quarter of this year after a 5.6 per cent jump in the first.
Prices are now 1.5 per cent above their peak in the second quarter of 1996.
And property experts are pencilling in price increases for the full year of between 12 per cent and 20 per cent, with the average estimate at about 15 per cent.
CB Richard Ellis (CBRE) residential director Joseph Tan thinks that because economic fundamentals 'are still intact', home prices will increase slightly in the second half of the year.
'Projects which are well located and are close to main transport nodes could still enjoy a slight premium,' he added.
Prime pickings
With developers looking to make the most of this positive market, Knight Frank is anticipating another 17 major launches (of at least 50 units each) within the next six months - a total of 4,056 apartments added to the market.
Upscale residences in districts 9, 10 and 11 are likely to make up almost half of these major launches, but a surge of mid and mass-market developments is slated from next year onwards as GLS land sites situated mainly outside the central regions are released, Mr Ong said.
CBRE notes that 38 apartment launches - inclusive of small to mid-size projects - are likely within the next six months.
Of these, 22 are located in the core central region, 10 in the rest of the central region and six outside the central region - allowing home buyers to cherry pick according to their budgets.
They range from Allgreen Properties' prime 360-unit Skysuites @ Anson in Enggor Street to the mass market 408-unit executive condominium project in Yishun Avenue 10 by MCC Land.
In addition, experts say that prime developments are beginning to appear in numbers on the horizon as developers scent rising prices.
Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said developers may have held back many of their high-end launch-ready projects, some of which were prime freehold sites from the 'en bloc' fever three years ago.
'Some developers may have decided that high-end prices may take even longer to reach their desired levels. Given that there are still risks ahead, they may decide to make the best of an uncertain situation and launch within the next few weeks and months,' he added.
A buyer's spread
With 15 residential sites sold through the GLS programme in the first half of this year (four of which were executive condominiums) - and more than double that number planned for the second half - the property pipeline shows no sign of drying up.
Mass and mid-market homes are likely to be launched on these sites in areas such as Simei Street 3 and Hougang Avenue 2 as the Government attempts to dampen demand.
The plots are certainly being snapped up by developers eager to replenish their land banks and willing to pay top dollar for well-located plots.
A 99-year leasehold residential site at Simei Street 3�released for tender in March received a total of 18 bids, with the top bid at $152.7 million or $523 psf per plot ratio (ppr) coming from developer Chip Eng Seng. This was well above market expectations of between $300 and $400 psf ppr.
UOB Kay Hian property analyst Vikrant Pandey estimates the break-even price for the site to be in the range of $800 to $850 psf and, assuming a 15 per cent development margin, the average selling price to be�upwards of $970 psf.
'Resale prices for the secondary market projects in the vicinity are in the range of $600 to $800 psf.�The top bid is quite aggressive, factoring in a 20 to 30 per cent future price appreciation�in the region,' he said.
Similarly, the hotly contested tender of a choice residential plot in Boon Lay Way next to Lakeside MRT station attracted a whopping 14 bids in May, with Keppel Land (Mayfair) putting in the top bid of $499 psf ppr, or $302.98 million.
Property experts estimate the break-even level for units on the site will be $800 to $850 psf, with an eventual selling price of about $950 psf - which factors in a 10 to 20 per cent�future rise in prices within the next year.
DTZ's Ms Chua said that developers were already inching up prices at new projects, with many recent launches being priced higher than neighbouring projects.
However, the bumper release of 31 residential sites by the GLS programme in the second half of this year could dampen some of the exuberance in the market, moderating mass market prices.
There are 18 residential or residential/commercial sites on the programme for confirmed sale, with another 13 sites for residential use put on the reserve list.
The plots - which include 20 that are new and not rolled over - could accommodate 13,905 new homes and are anticipated for launch next year.
They are located in areas such as Jurong West and Pasir Ris but also in mass-market areas like Hougang and Tampines.
The sites commanding the most attention are, predictably, those with the best locations and amenities.
CBRE's Mr Tan said sites with better amenities and close to MRT stations will generally attract more interest from developers. And mixed-use sites located at the town centre of HDB estates are likely to be vied for.
One of the most attractive sites is the land parcel at the junction of Woodland Avenue 1 and Woodgrove Avenue, he said, which is located within the American expatriate enclave and close to the Singapore American School.
Mr Tan pointed out that condominiums and landed homes in the nearby Woodgrove Estate were enjoying strong rentals, and the last condominium project launched in this location - Rosewood Suites in November 2008 - was fully sold.
Elsewhere, the commercial- cum-residential site in New Upper Changi Road and Bedok North Drive is expected to attract strong bidding, given that it will be the first comprehensive development in Bedok New Town and comprise a retail mall, residential units and a bus interchange.
Knight Frank's Mr Ong added that close proximity to existing and upcoming MRT sites could well drive prices higher at a number of new plots.
These include the Alexandra Road site, the Tanah Merah Kechil site - near existing condos East Meadows and Optima@Tanah Merah - and the Petir site next to City Developments' recently launched 429-unit Tree House.
Chesterton's Mr Tan said: 'The fact that there are still en bloc transactions taking place - most of which are in the suburbs - indicates that developers will still bid for land.'
However, with economists predicting a slowdown in growth in the second half of this year due to concerns over the European debt crisis and the bumper supply of land released, some analysts are less bullish.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that with an average of three tenders a month, developers were both limited in their budget and manpower resources.
'We might see the level of interest in GLS sites drop towards the end of this year... If signs of economic uncertainty re-emerge and if companies start putting their expansion plans on the backburner, developers might start bidding more cautiously,' he said.
esthert@sph.com.sg
ST : What you need to know before buying your home
Jul 18, 2010
property buying guide
What you need to know before buying your home
By Phang Lah Hwa
Buying a home is one of the biggest purchases you will make in your lifetime, so it's important to do your homework before you apply for that loan.
· Prepare in advance
You must pay at least 1 per cent of the purchase price in exchange for an option to purchase. After that, you have 14 days to decide whether to proceed with the deal and pay the balance of 9 per cent for a completed property or 4 per cent for one under construction.
At this point, consult a mortgage specialist about financing. Mortgage documentation takes about 10 to 12 weeks to complete, so apply early.
Note that most banks charge a cancellation fee of up to 1.5 per cent on the loan amount if you pull out later.
Banks determine the maximum loan amount by applying a debt servicing ratio of between 30 and 35 per cent of your monthly income.
Therefore your total monthly repayment should not exceed this ratio when compared to your monthly income. Other commitments, such as a car loan, will be taken into consideration as part of your monthly commitments.
· Select your loan tenure
Generally, the maximum loan tenure is 35 years, but it depends on the borrower's age. In the case of joint applicants, the maximum tenure will be based on the age of the youngest borrower as long as the loan tenure plus the age of the youngest borrower does not exceed 70 years on loan maturity.
For example, if a borrower wanted to select the maximum loan tenure of 35 years, he must not be more than 35 years old.
Here are some useful tips:
· Choose the right package according to your needs
Most banks offer three types of home loan packages: fixed-rate, variable-rate and market-pegged packages.
It is important to understand your needs and intentions before you decide which package suits you.
A fixed-rate package is suitable for those who want peace of mind as during the fixed-rate period, there will be no rate volatility.
But it is not recommended if you want to make a partial prepayment or full settlement during this period as there will be penalties.
A variable-rate package is one where the rate is pegged against the bank's reference or board rate. This allows the borrower to make prepayments.
If you have a good understanding of market-pegged rates and you do not mind rate movements, go for the market-pegged package.
The rate offered by banks in Singapore is generally pegged to the Singapore Inter Bank Offer Rate (Sibor).
It also allows you to make loan prepayment without penalty for no lock-in packages on specific rollover dates.
· Get mortgage insurance for protection
Mortgage insurance - or Mortgage Reducing Term Assurance - covers the home loan balance in the event that the borrower dies or is totally and permanently disabled.
Although not compulsory, it is recommended. If an unfortunate event strikes, the loan repayments will be covered by the insurance.
Have difficulty in your repayments? Talk to your bankers. Late charges or non-repayment penalties are but a deterrent for non-payment. More importantly, promptly seek help in managing an overdue debt.
Banks try to help customers work through such difficult times. It might include allowing customers to pay only the interest portion of the loan for a short period, stretching the loan period so as to reduce the monthly repayment amount.
Help might also come in the form of allowing borrowers to include a second loan applicant to help service the initial loan.
It is not in the bank's interest to foreclose on home loans. We advise customers who have loans to pay off and are close to running into the risk of not being able to make payments, to speak to their bank officers before their situation gets worse.
The writer is OCBC Bank's head of secured lending.
property buying guide
What you need to know before buying your home
By Phang Lah Hwa
Buying a home is one of the biggest purchases you will make in your lifetime, so it's important to do your homework before you apply for that loan.
· Prepare in advance
You must pay at least 1 per cent of the purchase price in exchange for an option to purchase. After that, you have 14 days to decide whether to proceed with the deal and pay the balance of 9 per cent for a completed property or 4 per cent for one under construction.
At this point, consult a mortgage specialist about financing. Mortgage documentation takes about 10 to 12 weeks to complete, so apply early.
Note that most banks charge a cancellation fee of up to 1.5 per cent on the loan amount if you pull out later.
Banks determine the maximum loan amount by applying a debt servicing ratio of between 30 and 35 per cent of your monthly income.
Therefore your total monthly repayment should not exceed this ratio when compared to your monthly income. Other commitments, such as a car loan, will be taken into consideration as part of your monthly commitments.
· Select your loan tenure
Generally, the maximum loan tenure is 35 years, but it depends on the borrower's age. In the case of joint applicants, the maximum tenure will be based on the age of the youngest borrower as long as the loan tenure plus the age of the youngest borrower does not exceed 70 years on loan maturity.
For example, if a borrower wanted to select the maximum loan tenure of 35 years, he must not be more than 35 years old.
Here are some useful tips:
· Choose the right package according to your needs
Most banks offer three types of home loan packages: fixed-rate, variable-rate and market-pegged packages.
It is important to understand your needs and intentions before you decide which package suits you.
A fixed-rate package is suitable for those who want peace of mind as during the fixed-rate period, there will be no rate volatility.
But it is not recommended if you want to make a partial prepayment or full settlement during this period as there will be penalties.
A variable-rate package is one where the rate is pegged against the bank's reference or board rate. This allows the borrower to make prepayments.
If you have a good understanding of market-pegged rates and you do not mind rate movements, go for the market-pegged package.
The rate offered by banks in Singapore is generally pegged to the Singapore Inter Bank Offer Rate (Sibor).
It also allows you to make loan prepayment without penalty for no lock-in packages on specific rollover dates.
· Get mortgage insurance for protection
Mortgage insurance - or Mortgage Reducing Term Assurance - covers the home loan balance in the event that the borrower dies or is totally and permanently disabled.
Although not compulsory, it is recommended. If an unfortunate event strikes, the loan repayments will be covered by the insurance.
Have difficulty in your repayments? Talk to your bankers. Late charges or non-repayment penalties are but a deterrent for non-payment. More importantly, promptly seek help in managing an overdue debt.
Banks try to help customers work through such difficult times. It might include allowing customers to pay only the interest portion of the loan for a short period, stretching the loan period so as to reduce the monthly repayment amount.
Help might also come in the form of allowing borrowers to include a second loan applicant to help service the initial loan.
It is not in the bank's interest to foreclose on home loans. We advise customers who have loans to pay off and are close to running into the risk of not being able to make payments, to speak to their bank officers before their situation gets worse.
The writer is OCBC Bank's head of secured lending.
ST : Protect the roof over your head
Jul 18, 2010
Protect the roof over your head
It's important to insure home loans in case breadwinner dies early
By Lorna Tan
The house we own is easily a family's biggest of big-ticket items, but only three out of 10 home loan customers here buy mortgage insurance.
While we believe we have insurance for nearly all of our needs, from children's education to hospitalisation, some of us do not realise that our home loans need to be insured too.
Mortgage insurance offers decreasing coverage over the duration of your policy to align itself with your outstanding mortgage loan. Cover can also be extended to cover permanent disability, critical illness and unemployment.
Without a suitable mortgage cover or the means to pay up the mortgage if the breadwinner dies prematurely, the bereaved family stands to lose the roof over their heads should the bank repossesses the house.
Mr Dennis Ng, founder of mortgage consultancy portal Housing LoanSG.com, pointed out that although mortgage insurance is compulsory for an HDB flat owner who uses his Central Provident Fund Board savings, it is not a bank requirement for private home owners.
The good news is that DBS Bank and HSBC have started bundling mortgage insurance into some of their home loan packages.
DBS incorporates Aviva's MyProtector Mortgage in some of its schemes, thereby protecting its customers in the event of death, total and permanent disability and critical illness.
Although the insurance does not come free, it saves home owners the hassle of looking for their own mortgage insurance.
Experts believe mortgage insurance is an important part of an overall financial plan.
'This is because our home is most likely our biggest purchase and financial commitment in our lifetime. It is important to ensure that, in the event of unforeseen circumstances, our family members will not be burdened with the cost of outstanding home repayments, or worse, face the possibility of having to sell their home,' said insurance firm Aviva Singapore's chief executive Simon Newman.
This is something the Lee family realised when breadwinner Andrew Lee (not his real name) died from cancer in 2007, leaving an outstanding housing loan of nearly $300,000.
Fortunately, Mr Lee had bought a Manulife mortgage decreasing term plan in 1998 which mirrored his housing loan of $475,000 over a 29-year term. It covered death and total and permanent disability, with the reducing home loan spread out over 29 years. The annual premium was $988.
At the point of Mr Lee's death, the insurance proceeds from his mortgage policy were about $397,000. His family received an initial $150,000 payout from Manulife in 2007. The rest was paid last year when the grant of probate was completed.
The family can pay off the housing loan in a lump sum or continue the mortgage instalments. In this case, there is a surplus of insurance proceeds over the outstanding loan which the family can use for their needs.
If there had been no policy, the family could have lost their home if they were unable to meet the loan repayments.
The policy Mr Lee bought is widely available from most insurers and contains a feature of reducing insurance cover over a period of time.
OCBC Bank's vice-president of wealth management, Ms Anne Tay, said such a feature tries to mirror your outstanding mortgage loan.
'You may start with a $500,000 mortgage on your home but as you make your monthly mortgage payments, your outstanding loan will reduce over the loan period. Accordingly, your mortgage liability will reduce too,' says Ms Tay.
And by providing insurance cover on a reducing term basis, the premium will be relatively cheaper compared to a typical level term-life insurance policy.
Despite the importance of mortgage insurance, DBS Bank's Mr Rick Vargo, managing director of bancassurance, said that only 25 per cent to 30 per cent of the bank's home loan customers have such cover. This is consistent with the overall estimate provided by Mr Ng.
Mortgage insurance is not to be confused with fire insurance which the banks do require home loan customers to take up, and this may be provided free by the banks in the first year.
Tips on mortgage insurance
Home owners should understand their needs first when shopping around for a suitable mortgage cover. Here are some considerations.
1 The amount of cover
Aviva suggests that consumers should consider if they already have existing insurance plans that can cover the outstanding mortgage loan liabilities before buying mortgage insurance.
Some people may decide to buy mortgage insurance to cover a portion of the loan amount as they may have other insurance or other means to meet repayments if needed, said Mr Ng.
'But if you do not have any other funding source, it is best to cover 100 per cent of the loan amount instead,' he added.
Another consideration is whether you want to be covered for just death or to include total and permanent disability, terminal illness and critical illness as well.
2 Buy on a joint life basis
If you own a property jointly with another person, it is prudent to get mortgage insurance on a joint life basis so that it pays out the sum assured if either owner dies. Getting a separate insurance cover for each owner would result in a much higher premium, said Mr Ng.
3 Buy early
Ms Tay observed that there is a tendency for most people to procrastinate and buy mortgage insurance only when they are older. But the older you are, the higher the premium you have to pay.
For example, a 20-year $500,000 mortgage reducing term assurance plan will cost a male property owner aged 50 an annual premium of $2,305. The same policy will cost a 40-year-old male just $814 in annual premiums. The difference of $1,491 is the cost of a 10-year procrastination, she added.
4 Interest rate assumption
The sum assured and the time period of a mortgage reducing term assurance plan are usually matched to the mortgage loan amount and tenure. As the coverage is on a reducing basis, how fast or slowly the loan reduces over time is based on the assumed loan interest rate, which is decided at the inception of cover.
Mr Patrick Lim, associate director at financial advisory firm PromiseLand Independent, noted that some insurers may limit interest rates to a range of say, 3 per cent to 7 per cent, as in the case of Prudential Assurance's PRUmortgage.
On the other hand, insurer TM Asia Life offers a wider range from 0 per cent to 9.75 per cent in even increments of 0.25 per cent.
'It is important for consumers not to be restricted in their choice of a suitable interest rate,' said Mr Lim.
Mr Ng suggests that policyholders assume 4 per cent so that the sum assured will be reduced at a slower pace than a lower interest rate. If the interest rate is assumed too low, there is a risk that the insurance proceeds might not be enough to pay off the outstanding loan.
5 Guaranteed premiums
It is worth checking if the annual premiums are guaranteed upon renewal, said Mr Lim. He noted that in the case of AIA's mortgage reducing term assurance plan, the product summary states that the premiums are not guaranteed.
But this is not the norm as the premiums for the basic mortgage plan are usually priced to be non-reviewable and guaranteed.
6 Check the supplementary benefits
One area of concern is the cap on benefits such as total and permanent disability.
Mr Lim pointed out that permanent disability is capped at $2 million at AXA Life but $3 million at AIA.
Another consideration is when the benefits expire. For most insurers, the total and permanent disability benefit expires on the policyholder's 65th birthday.
Aviva's MyProtector Mortgage extends the benefit expiration to just before the 70th birthday. At Overseas Assurance Corp (OAC), it is the 66th birthday, said Mr Lim.
Also, check the definition of what constitutes total and permanent disability and whether the payout comes in a lump sum or as instalments spread out over a few years. Lump sums are better.
Both Mr Lim and Prudential Assurance's director of product management, Mr Daniel Lum, recommend that consumers go for a mortgage cover that offers to waive the premiums if the insured is diagnosed with critical illness.
Other home-related insurance covers
Besides mortgage insurance, home owners should consider fire insurance that covers the building structures, and home contents insurance. The latter also covers personal belongings that are taken outside the home like hi-fi systems, said the General Insurance Association of Singapore.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Don't burden family members
'Our home is most likely our biggest purchase and financial commitment in our lifetime. It is important to ensure that, in the event of unforeseen circumstances, our family members will not be burdened with the cost of outstanding home repayments, or worse, face the possibility of having to sell their home.'
MR SIMON NEWMAN, chief executive of insurance firm Aviva Singapore
Protect the roof over your head
It's important to insure home loans in case breadwinner dies early
By Lorna Tan
The house we own is easily a family's biggest of big-ticket items, but only three out of 10 home loan customers here buy mortgage insurance.
While we believe we have insurance for nearly all of our needs, from children's education to hospitalisation, some of us do not realise that our home loans need to be insured too.
Mortgage insurance offers decreasing coverage over the duration of your policy to align itself with your outstanding mortgage loan. Cover can also be extended to cover permanent disability, critical illness and unemployment.
Without a suitable mortgage cover or the means to pay up the mortgage if the breadwinner dies prematurely, the bereaved family stands to lose the roof over their heads should the bank repossesses the house.
Mr Dennis Ng, founder of mortgage consultancy portal Housing LoanSG.com, pointed out that although mortgage insurance is compulsory for an HDB flat owner who uses his Central Provident Fund Board savings, it is not a bank requirement for private home owners.
The good news is that DBS Bank and HSBC have started bundling mortgage insurance into some of their home loan packages.
DBS incorporates Aviva's MyProtector Mortgage in some of its schemes, thereby protecting its customers in the event of death, total and permanent disability and critical illness.
Although the insurance does not come free, it saves home owners the hassle of looking for their own mortgage insurance.
Experts believe mortgage insurance is an important part of an overall financial plan.
'This is because our home is most likely our biggest purchase and financial commitment in our lifetime. It is important to ensure that, in the event of unforeseen circumstances, our family members will not be burdened with the cost of outstanding home repayments, or worse, face the possibility of having to sell their home,' said insurance firm Aviva Singapore's chief executive Simon Newman.
This is something the Lee family realised when breadwinner Andrew Lee (not his real name) died from cancer in 2007, leaving an outstanding housing loan of nearly $300,000.
Fortunately, Mr Lee had bought a Manulife mortgage decreasing term plan in 1998 which mirrored his housing loan of $475,000 over a 29-year term. It covered death and total and permanent disability, with the reducing home loan spread out over 29 years. The annual premium was $988.
At the point of Mr Lee's death, the insurance proceeds from his mortgage policy were about $397,000. His family received an initial $150,000 payout from Manulife in 2007. The rest was paid last year when the grant of probate was completed.
The family can pay off the housing loan in a lump sum or continue the mortgage instalments. In this case, there is a surplus of insurance proceeds over the outstanding loan which the family can use for their needs.
If there had been no policy, the family could have lost their home if they were unable to meet the loan repayments.
The policy Mr Lee bought is widely available from most insurers and contains a feature of reducing insurance cover over a period of time.
OCBC Bank's vice-president of wealth management, Ms Anne Tay, said such a feature tries to mirror your outstanding mortgage loan.
'You may start with a $500,000 mortgage on your home but as you make your monthly mortgage payments, your outstanding loan will reduce over the loan period. Accordingly, your mortgage liability will reduce too,' says Ms Tay.
And by providing insurance cover on a reducing term basis, the premium will be relatively cheaper compared to a typical level term-life insurance policy.
Despite the importance of mortgage insurance, DBS Bank's Mr Rick Vargo, managing director of bancassurance, said that only 25 per cent to 30 per cent of the bank's home loan customers have such cover. This is consistent with the overall estimate provided by Mr Ng.
Mortgage insurance is not to be confused with fire insurance which the banks do require home loan customers to take up, and this may be provided free by the banks in the first year.
Tips on mortgage insurance
Home owners should understand their needs first when shopping around for a suitable mortgage cover. Here are some considerations.
1 The amount of cover
Aviva suggests that consumers should consider if they already have existing insurance plans that can cover the outstanding mortgage loan liabilities before buying mortgage insurance.
Some people may decide to buy mortgage insurance to cover a portion of the loan amount as they may have other insurance or other means to meet repayments if needed, said Mr Ng.
'But if you do not have any other funding source, it is best to cover 100 per cent of the loan amount instead,' he added.
Another consideration is whether you want to be covered for just death or to include total and permanent disability, terminal illness and critical illness as well.
2 Buy on a joint life basis
If you own a property jointly with another person, it is prudent to get mortgage insurance on a joint life basis so that it pays out the sum assured if either owner dies. Getting a separate insurance cover for each owner would result in a much higher premium, said Mr Ng.
3 Buy early
Ms Tay observed that there is a tendency for most people to procrastinate and buy mortgage insurance only when they are older. But the older you are, the higher the premium you have to pay.
For example, a 20-year $500,000 mortgage reducing term assurance plan will cost a male property owner aged 50 an annual premium of $2,305. The same policy will cost a 40-year-old male just $814 in annual premiums. The difference of $1,491 is the cost of a 10-year procrastination, she added.
4 Interest rate assumption
The sum assured and the time period of a mortgage reducing term assurance plan are usually matched to the mortgage loan amount and tenure. As the coverage is on a reducing basis, how fast or slowly the loan reduces over time is based on the assumed loan interest rate, which is decided at the inception of cover.
Mr Patrick Lim, associate director at financial advisory firm PromiseLand Independent, noted that some insurers may limit interest rates to a range of say, 3 per cent to 7 per cent, as in the case of Prudential Assurance's PRUmortgage.
On the other hand, insurer TM Asia Life offers a wider range from 0 per cent to 9.75 per cent in even increments of 0.25 per cent.
'It is important for consumers not to be restricted in their choice of a suitable interest rate,' said Mr Lim.
Mr Ng suggests that policyholders assume 4 per cent so that the sum assured will be reduced at a slower pace than a lower interest rate. If the interest rate is assumed too low, there is a risk that the insurance proceeds might not be enough to pay off the outstanding loan.
5 Guaranteed premiums
It is worth checking if the annual premiums are guaranteed upon renewal, said Mr Lim. He noted that in the case of AIA's mortgage reducing term assurance plan, the product summary states that the premiums are not guaranteed.
But this is not the norm as the premiums for the basic mortgage plan are usually priced to be non-reviewable and guaranteed.
6 Check the supplementary benefits
One area of concern is the cap on benefits such as total and permanent disability.
Mr Lim pointed out that permanent disability is capped at $2 million at AXA Life but $3 million at AIA.
Another consideration is when the benefits expire. For most insurers, the total and permanent disability benefit expires on the policyholder's 65th birthday.
Aviva's MyProtector Mortgage extends the benefit expiration to just before the 70th birthday. At Overseas Assurance Corp (OAC), it is the 66th birthday, said Mr Lim.
Also, check the definition of what constitutes total and permanent disability and whether the payout comes in a lump sum or as instalments spread out over a few years. Lump sums are better.
Both Mr Lim and Prudential Assurance's director of product management, Mr Daniel Lum, recommend that consumers go for a mortgage cover that offers to waive the premiums if the insured is diagnosed with critical illness.
Other home-related insurance covers
Besides mortgage insurance, home owners should consider fire insurance that covers the building structures, and home contents insurance. The latter also covers personal belongings that are taken outside the home like hi-fi systems, said the General Insurance Association of Singapore.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Don't burden family members
'Our home is most likely our biggest purchase and financial commitment in our lifetime. It is important to ensure that, in the event of unforeseen circumstances, our family members will not be burdened with the cost of outstanding home repayments, or worse, face the possibility of having to sell their home.'
MR SIMON NEWMAN, chief executive of insurance firm Aviva Singapore
ST : The appeal of designer condos
Jul 18, 2010
The appeal of designer condos
More developers are engaging world-class architects as buyers get more sophisticated
By Joyce Teo
It is hard to miss the striking high-rise residential projects in central Singapore, some designed by internationally renowned architects.
In recent years, these internationally acclaimed names include German Ole Scheeren - who was behind The Interlace in the Alexandra Road area - and American Daniel Libeskind, who designed Reflections at Keppel Bay.
Equally famed Zaha Hadid is behind a huge condominium project on the former Farrer Court site, which has yet to be launched for sale.
Developers say it is crucial to differentiate their products in a challenging market where buyers are becoming more discerning.
Far East Organization, Singapore's largest private developer, launched an ultra luxury brand called 'Inessence' last month.
Apart from allowing it to tap further into the rapidly growing wealth in the Asia-Pacific region, the developer said its move is a testament to Singapore's strong foundations and transformation into a vibrant global city.
Mr Augustine Tan, chief executive officer, Singapore residential, Keppel Land, said: 'With increasing globalisation, home buyers have also becoming increasingly sophisticated, so much so that owning a home is beyond the brick and mortar but involves the considerations of prestige, lifestyle and other value propositions associated with the development, such as designer architects.'
Property experts say that condos designed by world-renowned architects have a particular appeal to brand-conscious buyers.
Furthermore, these architects are believed to be able to design condos with superior layout and lifestyle concepts - for both the individual apartments and the overall development, said Colliers International's director for research and advisory Tay Huey Ying.
Many of these designer condos are then able to command a pre- mium.
'It's one of the marketing tools for developers to help them achieve their price target,' said ERA Asia-Pacific associate director Eugene Lim.
'If I put a brand-name architect to a high-end project, I can push the price slightly higher. The pre- mium is possible because of the product differentiation.
'People have to associate what they are paying for with what they are getting. It's about selling an image, a lifestyle and status.'
The price premium, said Ms Tay, is, however, not guaranteed.
'More often, they are differentiators that can help to move sales, particularly in a competitive market.'
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said buyers will be willing to pay a premium only if the property comes with other attributes - such as a desirable location and a sensible layout.
And developers do change the designs to fit the market if needed. Far East Organization, for instance, did away with an eye-catching design by Mr Scheeren for Scotts Tower as the market had changed significantly.
It had wanted to launch the project - which had only 67 large units - back in late 2007 but the high-end market had started to show signs of slowing.
It has since replaced the original design, featuring four suspended towers, with a creation by Mr Ben van Berkel of UNStudio.
Singapore can expect to see more designer condos, but they would not be flooding the market any time soon. They will remain in a class of their own.
'Not all developers can afford to pay for the services of a world-renowned architect. Moreover, such architects may also be selective in the projects that they want to be a part of,' said Ms Tay.
'As such, it is unlikely that designer condos will be the norm one day, although such condos could grow in numbers, particularly in the higher-end segments.'
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Status symbol
'If I put a brand-name architect to a high-end project, I can push the price slightly higher. The premium is possible because of the product differentiation. People have to associate what they are paying for with what they are getting. It's about selling an image, a lifestyle and status.'
ERA ASIA-PACIFIC ASSOCIATE DIRECTOR EUGENE LIM
The appeal of designer condos
More developers are engaging world-class architects as buyers get more sophisticated
By Joyce Teo
It is hard to miss the striking high-rise residential projects in central Singapore, some designed by internationally renowned architects.
In recent years, these internationally acclaimed names include German Ole Scheeren - who was behind The Interlace in the Alexandra Road area - and American Daniel Libeskind, who designed Reflections at Keppel Bay.
Equally famed Zaha Hadid is behind a huge condominium project on the former Farrer Court site, which has yet to be launched for sale.
Developers say it is crucial to differentiate their products in a challenging market where buyers are becoming more discerning.
Far East Organization, Singapore's largest private developer, launched an ultra luxury brand called 'Inessence' last month.
Apart from allowing it to tap further into the rapidly growing wealth in the Asia-Pacific region, the developer said its move is a testament to Singapore's strong foundations and transformation into a vibrant global city.
Mr Augustine Tan, chief executive officer, Singapore residential, Keppel Land, said: 'With increasing globalisation, home buyers have also becoming increasingly sophisticated, so much so that owning a home is beyond the brick and mortar but involves the considerations of prestige, lifestyle and other value propositions associated with the development, such as designer architects.'
Property experts say that condos designed by world-renowned architects have a particular appeal to brand-conscious buyers.
Furthermore, these architects are believed to be able to design condos with superior layout and lifestyle concepts - for both the individual apartments and the overall development, said Colliers International's director for research and advisory Tay Huey Ying.
Many of these designer condos are then able to command a pre- mium.
'It's one of the marketing tools for developers to help them achieve their price target,' said ERA Asia-Pacific associate director Eugene Lim.
'If I put a brand-name architect to a high-end project, I can push the price slightly higher. The pre- mium is possible because of the product differentiation.
'People have to associate what they are paying for with what they are getting. It's about selling an image, a lifestyle and status.'
The price premium, said Ms Tay, is, however, not guaranteed.
'More often, they are differentiators that can help to move sales, particularly in a competitive market.'
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said buyers will be willing to pay a premium only if the property comes with other attributes - such as a desirable location and a sensible layout.
And developers do change the designs to fit the market if needed. Far East Organization, for instance, did away with an eye-catching design by Mr Scheeren for Scotts Tower as the market had changed significantly.
It had wanted to launch the project - which had only 67 large units - back in late 2007 but the high-end market had started to show signs of slowing.
It has since replaced the original design, featuring four suspended towers, with a creation by Mr Ben van Berkel of UNStudio.
Singapore can expect to see more designer condos, but they would not be flooding the market any time soon. They will remain in a class of their own.
'Not all developers can afford to pay for the services of a world-renowned architect. Moreover, such architects may also be selective in the projects that they want to be a part of,' said Ms Tay.
'As such, it is unlikely that designer condos will be the norm one day, although such condos could grow in numbers, particularly in the higher-end segments.'
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Status symbol
'If I put a brand-name architect to a high-end project, I can push the price slightly higher. The premium is possible because of the product differentiation. People have to associate what they are paying for with what they are getting. It's about selling an image, a lifestyle and status.'
ERA ASIA-PACIFIC ASSOCIATE DIRECTOR EUGENE LIM
ST : New 'hot' residential districts coming up
Jul 18, 2010
property buying guide
New 'hot' residential districts coming up
Non-traditional prime areas have emerged as the property boom spreads to the suburbs
By Fiona Chan
For years, Districts 9, 10 and 11 - covering Orchard, Holland, Newton and Bukit Timah - have been the must-have residential areas in Singapore.
But as the recent property boom spreads to the suburbs, a number of newly popular districts have emerged outside these traditional prime areas.
Developers with a keen eye snapped up land around city-fringe locations and suburban MRT stations, and have been launching projects in these areas over the last few months to great demand.
Some of these new sizzling spots may come as no surprise. District 2, for instance, comprises mainly the Tanjong Pagar area around the Central Business District, which is evolving into an inner-city residential hub. Recent launches such as City Developments' 76 Shenton and Far East Organization's Altez have been well-received.
Slightly farther from the city is District 14, where Waterbank @ Dakota and Casa Aerata have been sell-outs, and Dakota Residences is 95 per cent sold.
Property consultants say the opening of the two integrated resorts this year has boosted the popularity of these more centrally located areas.
Mr Joseph Tan, executive director for residential services at real estate consultancy CB Richard Ellis, said: 'Not only do they attract people who bought for their own use, they also attract a good number of property investors with a view to future price appreciation or rental income.'
Ms Tay Huey Ying, director of research and advisory at Colliers International, explained: 'District 2 has grown in popularity since 2006 and 2007 when the development of the two integrated resorts and Marina Bay Financial Centre popularised inner-city living.'
She added that homes there have remained popular since then, although sales have slowed, owing to their relatively high price tags, and especially with investors turning more cautious following the global financial crisis.
But there are also other 'hot' districts that may be less obvious, including District 5 in the West Coast and District 16 in Upper East Coast.
In District 5, recent launches such as Hundred Trees and The Vision were 95 per cent sold within three months, and Parc Imperial was 100 per cent sold, according to data from DTZ Debenham Tie Leung. Over in District 16, Optima @ Tanah Merah sold out in just three days.
These areas have drawn interest because of their proximity to current or future MRT stations, good local schools and international schools, said Mr Tan. Buyers of homes in the area are mostly locals - HDB upgraders and private homeowners - and also permanent residents settling down here.
'These properties tend to be more affordably priced than those situated in the city or at the city fringe,' he said.
Ms Chua Chor Hoon, head of South-east Asia research at DTZ Debenham Tie Leung, said in general, there are more 'hot' areas in Singapore now than in the past because of two main reasons: collective sales of estates in older areas and deliberate government policies to decentralise office hubs.
With more people, including expats, working outside the CBD, there is higher demand for rental homes - and hence more potential for property investors - in other parts of the island now, she said.
CBRE's Mr Tan agreed: 'With new initiatives to chart the progress of the country, future growth areas like Marina Bay, Jurong East, Kallang Riverside and Punggol Waterfront town are becoming more and more attractive because there is still room to encompass new ideas.'
It helps that the Government is constructing more MRT lines, consultants said. 'The MRT network is reaching more areas of Singapore, making outlying places more accessible and desirable,' said Ms Chua.
In the years to come, Ms Tay believes new emerging districts would include those with newly opened or soon-to-be-constructed MRT lines, as well as districts within growth areas designated by the Government.
These could include District 22 in Jurong and Boon Lay, which could benefit from the Government's plan to develop the Jurong Lake District, and District 23 - Bukit Batok and Hillview - which would get a double boost from the construction of the MRT's Downtown Line stage 2 as well as the spillover effects of the development of the Jurong Lake District.
Still, property consultants maintain that the traditional prime residential districts of 9, 10 and 11 will always retain their charm.
'The exclusivity and prestige attached to certain addresses cannot be fully replicated in the new growth areas,' concluded Mr Tan.
fiochan@sph.com.sg
--------------------------------------------------------------------------------
New growth areas
'With new initiatives to chart the progress of the country, future growth areas like Marina Bay, Jurong East, Kallang Riverside and Punggol Waterfront town are becoming more and more attractive because there is still room to encompass new ideas.'
MR JOSEPH TAN, executive director for residential at CB Richard Ellis
property buying guide
New 'hot' residential districts coming up
Non-traditional prime areas have emerged as the property boom spreads to the suburbs
By Fiona Chan
For years, Districts 9, 10 and 11 - covering Orchard, Holland, Newton and Bukit Timah - have been the must-have residential areas in Singapore.
But as the recent property boom spreads to the suburbs, a number of newly popular districts have emerged outside these traditional prime areas.
Developers with a keen eye snapped up land around city-fringe locations and suburban MRT stations, and have been launching projects in these areas over the last few months to great demand.
Some of these new sizzling spots may come as no surprise. District 2, for instance, comprises mainly the Tanjong Pagar area around the Central Business District, which is evolving into an inner-city residential hub. Recent launches such as City Developments' 76 Shenton and Far East Organization's Altez have been well-received.
Slightly farther from the city is District 14, where Waterbank @ Dakota and Casa Aerata have been sell-outs, and Dakota Residences is 95 per cent sold.
Property consultants say the opening of the two integrated resorts this year has boosted the popularity of these more centrally located areas.
Mr Joseph Tan, executive director for residential services at real estate consultancy CB Richard Ellis, said: 'Not only do they attract people who bought for their own use, they also attract a good number of property investors with a view to future price appreciation or rental income.'
Ms Tay Huey Ying, director of research and advisory at Colliers International, explained: 'District 2 has grown in popularity since 2006 and 2007 when the development of the two integrated resorts and Marina Bay Financial Centre popularised inner-city living.'
She added that homes there have remained popular since then, although sales have slowed, owing to their relatively high price tags, and especially with investors turning more cautious following the global financial crisis.
But there are also other 'hot' districts that may be less obvious, including District 5 in the West Coast and District 16 in Upper East Coast.
In District 5, recent launches such as Hundred Trees and The Vision were 95 per cent sold within three months, and Parc Imperial was 100 per cent sold, according to data from DTZ Debenham Tie Leung. Over in District 16, Optima @ Tanah Merah sold out in just three days.
These areas have drawn interest because of their proximity to current or future MRT stations, good local schools and international schools, said Mr Tan. Buyers of homes in the area are mostly locals - HDB upgraders and private homeowners - and also permanent residents settling down here.
'These properties tend to be more affordably priced than those situated in the city or at the city fringe,' he said.
Ms Chua Chor Hoon, head of South-east Asia research at DTZ Debenham Tie Leung, said in general, there are more 'hot' areas in Singapore now than in the past because of two main reasons: collective sales of estates in older areas and deliberate government policies to decentralise office hubs.
With more people, including expats, working outside the CBD, there is higher demand for rental homes - and hence more potential for property investors - in other parts of the island now, she said.
CBRE's Mr Tan agreed: 'With new initiatives to chart the progress of the country, future growth areas like Marina Bay, Jurong East, Kallang Riverside and Punggol Waterfront town are becoming more and more attractive because there is still room to encompass new ideas.'
It helps that the Government is constructing more MRT lines, consultants said. 'The MRT network is reaching more areas of Singapore, making outlying places more accessible and desirable,' said Ms Chua.
In the years to come, Ms Tay believes new emerging districts would include those with newly opened or soon-to-be-constructed MRT lines, as well as districts within growth areas designated by the Government.
These could include District 22 in Jurong and Boon Lay, which could benefit from the Government's plan to develop the Jurong Lake District, and District 23 - Bukit Batok and Hillview - which would get a double boost from the construction of the MRT's Downtown Line stage 2 as well as the spillover effects of the development of the Jurong Lake District.
Still, property consultants maintain that the traditional prime residential districts of 9, 10 and 11 will always retain their charm.
'The exclusivity and prestige attached to certain addresses cannot be fully replicated in the new growth areas,' concluded Mr Tan.
fiochan@sph.com.sg
--------------------------------------------------------------------------------
New growth areas
'With new initiatives to chart the progress of the country, future growth areas like Marina Bay, Jurong East, Kallang Riverside and Punggol Waterfront town are becoming more and more attractive because there is still room to encompass new ideas.'
MR JOSEPH TAN, executive director for residential at CB Richard Ellis
ST : Selling en bloc? Big gains unlikely
Jul 18, 2010
Selling en bloc? Big gains unlikely
Analysts say prices now start from a higher base and attractive prime sites have already been sold
By Joyce Teo
Last Wednesday, a relatively small property, Melrose Court, off Balestier Road, was launched for collective sale.
Owners of the 32 freehold units there are
asking for $48 million, and hoping to reap between $1.23 million and $2.46 million each.
Marketing agent Colliers International said the 'en bloc' premium each seller will get is around
40 per cent to 50 per cent more than what he can get if he were to sell his unit on his own.
Compared with those of the collective sale boom of 2006-2007, the premiums are lower these days because existing apartment values are high, said Mr Ho Eng Joo, the firm's executive director of investment sales.
Property pundits say the market recovery last year has been fast and furious, so prices are now starting from a higher base.
'We see an erosion of en bloc premiums today. In 2006 and 2007, the premiums can easily be 80 per cent to 100 per cent. Today, they are more like 30 per cent to 50 per cent,' said Mr Jeffrey Goh, head of investment sales at HSR International.
Some investors may want to cash in fast before the collective sale. This will close the gap between the potential collective sale price and the individual sale price, experts said.
But the higher prices they fetch may not be a true reflection of the market, said Knight Frank executive director Nicholas Wong.
'A handful of them may be able to sell at higher prices before the collective sale. But if all the owners were to go out and sell their units individually, they wouldn't get those kinds of prices,' he said.
The rest of the owners who may now want to pull out of the collective sale after some sell at higher prices, or who then become unhappy with the collective sale prices, should be aware of the risks of a failed sale, as the value of their estate will likely come down if that happens.
Also, today's new rules mean that a two-year restriction period will kick in, making it harder to restart the collective sale process after a failed attempt, Mr Wong said.
An expert, who declined to be named, said: 'The en bloc premium is relative. It just has to be a level that can get people excited, with which they think they are able to find a replacement property. This would be around 50 per cent more than what they can sell at individually.'
Besides prices having moved up to a higher base, most of the attractive prime sites have already been sold in previous collective sale booms over the past 15 years, property experts say.
'Nowadays, sites that have been sold or put up for sale are in the city fringes and are small,' said Ms Suzie Mok, director of investment sales at Savills Singapore.
'The en bloc premiums for prime spots tend to be higher than those for suburban estates as they are the more sought-after sites. The prime spots appeal to the bigger developers who are willing to pay more because of their scarcity and the appeal of the posh address.'
While there are still underbuilt sites out there, many of the estates eyeing collective sales today are very old developments and may have low redevelopment potential, experts said.
Some of these estates have already used up their maximum built-up area allowed, and may thus get a lower premium when they want to sell en bloc, the experts pointed out.
joyceteo@sph.com.sg
Selling en bloc? Big gains unlikely
Analysts say prices now start from a higher base and attractive prime sites have already been sold
By Joyce Teo
Last Wednesday, a relatively small property, Melrose Court, off Balestier Road, was launched for collective sale.
Owners of the 32 freehold units there are
asking for $48 million, and hoping to reap between $1.23 million and $2.46 million each.
Marketing agent Colliers International said the 'en bloc' premium each seller will get is around
40 per cent to 50 per cent more than what he can get if he were to sell his unit on his own.
Compared with those of the collective sale boom of 2006-2007, the premiums are lower these days because existing apartment values are high, said Mr Ho Eng Joo, the firm's executive director of investment sales.
Property pundits say the market recovery last year has been fast and furious, so prices are now starting from a higher base.
'We see an erosion of en bloc premiums today. In 2006 and 2007, the premiums can easily be 80 per cent to 100 per cent. Today, they are more like 30 per cent to 50 per cent,' said Mr Jeffrey Goh, head of investment sales at HSR International.
Some investors may want to cash in fast before the collective sale. This will close the gap between the potential collective sale price and the individual sale price, experts said.
But the higher prices they fetch may not be a true reflection of the market, said Knight Frank executive director Nicholas Wong.
'A handful of them may be able to sell at higher prices before the collective sale. But if all the owners were to go out and sell their units individually, they wouldn't get those kinds of prices,' he said.
The rest of the owners who may now want to pull out of the collective sale after some sell at higher prices, or who then become unhappy with the collective sale prices, should be aware of the risks of a failed sale, as the value of their estate will likely come down if that happens.
Also, today's new rules mean that a two-year restriction period will kick in, making it harder to restart the collective sale process after a failed attempt, Mr Wong said.
An expert, who declined to be named, said: 'The en bloc premium is relative. It just has to be a level that can get people excited, with which they think they are able to find a replacement property. This would be around 50 per cent more than what they can sell at individually.'
Besides prices having moved up to a higher base, most of the attractive prime sites have already been sold in previous collective sale booms over the past 15 years, property experts say.
'Nowadays, sites that have been sold or put up for sale are in the city fringes and are small,' said Ms Suzie Mok, director of investment sales at Savills Singapore.
'The en bloc premiums for prime spots tend to be higher than those for suburban estates as they are the more sought-after sites. The prime spots appeal to the bigger developers who are willing to pay more because of their scarcity and the appeal of the posh address.'
While there are still underbuilt sites out there, many of the estates eyeing collective sales today are very old developments and may have low redevelopment potential, experts said.
Some of these estates have already used up their maximum built-up area allowed, and may thus get a lower premium when they want to sell en bloc, the experts pointed out.
joyceteo@sph.com.sg
ST : Property investment starts at home
Jul 18, 2010
property buying guide
Property investment starts at home
HDB flats also can be a tool for making money as owners move into the private market
By Adam Tan
You don't have to own a condo near Orchard Road to be on the path to property riches; your HDB flat can serve as a fine investment springboard.
After all, even if you have a mortgage on your home, the fact that you are an owner and not renter means you are already a property investor.
So view your HDB home as a tool for making you more money as you move into the private market.
Assume you bought a three-room HDB flat in Tampines for about $180,000 five years ago. You could rent out the flat today for about $1,600 a month - an investment yield of about 10.7 per cent.
This is a very good yield and is unique to smaller units. By contrast, a five-room HDB flat in Marine Parade bought five years ago cost about $485,000 and would fetch a monthly rental now of $2,500 - a yield of about 6.2 per cent.
However, HDB flats are primarily meant for public housing and should not really be retained by owners for investment purposes.
That is why there are many restrictions put in place by the HDB, such as a Minimum Occupation Period (MOP).
Flat owners can rent out their home only after occupying it for three years if it is a resale flat bought without any Central Provident Fund grants. The term is five years if it was bought directly from the HDB, or a resale flat purchased with a CPF grant.
Timing is paramount when upgrading from HDB to private property. The idea is to make the jump from public to private housing when the price gap between the two narrows.
HDB flat prices are almost guaranteed to slowly but steadily increase, while private home prices tend to fluctuate depending on factors such as the global economy and the supply of new homes.
That three-room Tampines flat used as an example earlier could be sold today for around $300,000.
As a seller, you would then have realised a profit of about $120,000. Naturally you would have to plough some of that back into your CPF account with accrued interest, but essentially you would now have cash to buy a new property.
You could buy a slightly larger unit in the nearby freehold Ferraria Park Condominium in Tampines. That would cost about $630,000.
After paying $126,000 or 20 per cent of the sale price in cash and CPF, a loan for the remaining 80 per cent, or $504,000, would involve a monthly instalment of less than $2,200 for the next 25 years, based on prevailing interest rates of 2 per cent.
In February, the Government introduced tougher rules on bank loans that allow lending institutions to lend only up to 80 per cent of the purchase price in a bid to cool the market by weeding out overzealous investors.
If you empty your CPF account to reduce the loan, you could reduce the amount for a shorter mortgage term or lower monthly instalments.
Alternatively, if you had bought a four-room build-to-order flat in Treelodge@Punggol at $231,000 in March 2007, the same flat would be worth around $369,000 on the resale market today.
Imagine the value of the flat when you collect your keys next year, and when you are eligible to sell your flat in 2016, especially given the blossoming Punggol neighbourhood.
However, note that all property investments require a mid- to long-term view. Whether you are a first-time buyer having to fulfil an MOP or not, expect to stay in your property for at least five to 10 years.
Then do your research on the flats in your targeted area. Are they old and due for an en bloc sale? Will there be an MRT station or a mall close by in a couple of years? These are just some of the many factors which will enhance the value of your property over time.
It also helps to always buy within your means. It is not advisable to wipe out your CPF account and savings, and then take a massive loan and hefty mortgage repayments just to acquire a more expensive apartment.
You might also need interim accommodation and furniture storage when upgrading from HDB to private property, as well as funds for renovations.
HDB resale prices are still growing slowly but steadily, both in terms of cash-over-valuation as well as the Resale Price Index.
Prices should go up by another 5 per cent over the next six months for an overall growth of 10 per cent this year.
The writer is corporate communications manager of PropNex Realty.
property buying guide
Property investment starts at home
HDB flats also can be a tool for making money as owners move into the private market
By Adam Tan
You don't have to own a condo near Orchard Road to be on the path to property riches; your HDB flat can serve as a fine investment springboard.
After all, even if you have a mortgage on your home, the fact that you are an owner and not renter means you are already a property investor.
So view your HDB home as a tool for making you more money as you move into the private market.
Assume you bought a three-room HDB flat in Tampines for about $180,000 five years ago. You could rent out the flat today for about $1,600 a month - an investment yield of about 10.7 per cent.
This is a very good yield and is unique to smaller units. By contrast, a five-room HDB flat in Marine Parade bought five years ago cost about $485,000 and would fetch a monthly rental now of $2,500 - a yield of about 6.2 per cent.
However, HDB flats are primarily meant for public housing and should not really be retained by owners for investment purposes.
That is why there are many restrictions put in place by the HDB, such as a Minimum Occupation Period (MOP).
Flat owners can rent out their home only after occupying it for three years if it is a resale flat bought without any Central Provident Fund grants. The term is five years if it was bought directly from the HDB, or a resale flat purchased with a CPF grant.
Timing is paramount when upgrading from HDB to private property. The idea is to make the jump from public to private housing when the price gap between the two narrows.
HDB flat prices are almost guaranteed to slowly but steadily increase, while private home prices tend to fluctuate depending on factors such as the global economy and the supply of new homes.
That three-room Tampines flat used as an example earlier could be sold today for around $300,000.
As a seller, you would then have realised a profit of about $120,000. Naturally you would have to plough some of that back into your CPF account with accrued interest, but essentially you would now have cash to buy a new property.
You could buy a slightly larger unit in the nearby freehold Ferraria Park Condominium in Tampines. That would cost about $630,000.
After paying $126,000 or 20 per cent of the sale price in cash and CPF, a loan for the remaining 80 per cent, or $504,000, would involve a monthly instalment of less than $2,200 for the next 25 years, based on prevailing interest rates of 2 per cent.
In February, the Government introduced tougher rules on bank loans that allow lending institutions to lend only up to 80 per cent of the purchase price in a bid to cool the market by weeding out overzealous investors.
If you empty your CPF account to reduce the loan, you could reduce the amount for a shorter mortgage term or lower monthly instalments.
Alternatively, if you had bought a four-room build-to-order flat in Treelodge@Punggol at $231,000 in March 2007, the same flat would be worth around $369,000 on the resale market today.
Imagine the value of the flat when you collect your keys next year, and when you are eligible to sell your flat in 2016, especially given the blossoming Punggol neighbourhood.
However, note that all property investments require a mid- to long-term view. Whether you are a first-time buyer having to fulfil an MOP or not, expect to stay in your property for at least five to 10 years.
Then do your research on the flats in your targeted area. Are they old and due for an en bloc sale? Will there be an MRT station or a mall close by in a couple of years? These are just some of the many factors which will enhance the value of your property over time.
It also helps to always buy within your means. It is not advisable to wipe out your CPF account and savings, and then take a massive loan and hefty mortgage repayments just to acquire a more expensive apartment.
You might also need interim accommodation and furniture storage when upgrading from HDB to private property, as well as funds for renovations.
HDB resale prices are still growing slowly but steadily, both in terms of cash-over-valuation as well as the Resale Price Index.
Prices should go up by another 5 per cent over the next six months for an overall growth of 10 per cent this year.
The writer is corporate communications manager of PropNex Realty.
ST : Room for growth in high-end market
Jul 18, 2010
property buying guide
Room for growth in high-end market
Trends in other cities show demand for luxury apartments in S'pore may grow yet
By Christine Sun
Singapore has long been seen as a safe investment haven - and foreigners are responding by snapping up property across the island.
About 23,000 non-landed private homes have been bought by foreigners since 2007 - of which about 35 per cent are high-end homes in districts 1, 2, 4, 9, 10 and 11 - based on the Urban Redevelopment Authority's (URA) record of caveats lodged.
Yet, the high-end apartments sector still has room for growth if trends in other cities are anything to go by.
Data from Savills shows that the average price of high-end apartments was $2,154 per sq ft (psf) in the second quarter, while that of super luxury private homes was $3,055 psf.
Super luxury homes - a subset of high-end homes - are defined as developments that achieved an average of $2,500 psf in the fourth quarter of 2006.
In Hong Kong, however, prices for high-end residences in the same quarter hit HK$14,520 (S$2,570) psf, 20 per cent higher than those here. As common spaces like corridors are taken into account in computing unit prices in Hong Kong, the actual price disparity could be even greater.
In fact, prices for high-end apartments in Hong Kong rose 47 per cent last year, raising concerns about an already overheated market. On the other hand, high-end values here went up by only 3.9 per cent last year.
Moreover, the most expensive private apartment in Hong Kong is a 6,830 sq ft unit at The Albany - which sold for HK$49,488 psf, or HK$338 million in total, this year. This is about 58 per cent more than Singapore's priciest apartment, a 5,048 sq ft home at Orchard Residences, which sold for $28.3 million, or $5,600 psf, in 2007.
In addition, Sydney apartment prices are about 28 per cent up on Singapore's while London's values are an eye-watering 41 per cent higher.
China, however, is a mixed story. While prices in its two major cities are lower, they shot up 32 per cent in Shanghai last year and 15 per cent in Beijing - and are both at record levels, marginalising any potential short-term capital gains.
Furthermore, the high-end market in Singapore is the only sector where prices are still below previous peaks. Prices of high-end apartments are 11 per cent below record levels set in the fourth quarter of 2007 while super luxury prices are 17 per cent cheaper.
In contrast, mass market prices in May were already 15 per cent over previous peaks with mid-tier apartments a more modest 5 per cent above. As positive economic prospects for Singapore are likely to continue into the second half of this year, it is possible that prices of high-end apartments could reach previous peak levels by early next year.
Compared to the full year of 2009, the number of apartments sold above $2,500 psf has already more than trebled over the last six months, with some even falling in the $3,500 to $4,000 psf range.
With rising anxiety over bubble risks and fears of more tightening measures that could derail prices, many East Asian investors may shift their funds to Singapore.
The government imposed 11 cooling measures in China earlier this year, helping to send new home sales plummeting 60 to 70 per cent in Beijing, Shanghai and Shenzhen in May alone.
As a result, more foreign buyers, especially mainland Chinese, have flocked to Singapore, at times buying with full cash payments.
They have displaced Malaysians this year as the No. 2 buyers of super luxury homes priced $5 million and above.
The growing number of high net worth individuals and millionaire Singaporeans could also see an increasing demand for luxury homes.
However, prime redevelopment sites for sale are lacking. The average take-up rate of high-end homes between 2005 and last year is 3,500 units per year, sitting comfortably above the average of 2,500 units being constructed yearly from this year to 2014.
Therefore, the supply of luxury homes is expected to be limited in the coming years and this imbalance should continue to sustain prices.
Luxury apartment prices are expected to rise by 5 to 8 per cent in the second half of this year.
Optimism surrounding the integrated resorts and robust GDP growth - and the increased expatriate employment it brings - should keep drawing affluent foreign buyers here.
This should help sustain demand for high-end homes even as an approximate 1,800 luxury apartments are expected to be launched in the second half of this year.
The writer is the senior manager, research & consultancy of Savills Singapore
Singapore's priciest apartment is a 5,048 sq ft home at Orchard Residences (above), sold for $28.3 million in 2007. The price pales in comparison to that of Hong Kong's most expensive unit, which cost HK$338 million (S$59.8 million). -- PHOTO: ORCHARD TURN DEVELOPMENTS
property buying guide
Room for growth in high-end market
Trends in other cities show demand for luxury apartments in S'pore may grow yet
By Christine Sun
Singapore has long been seen as a safe investment haven - and foreigners are responding by snapping up property across the island.
About 23,000 non-landed private homes have been bought by foreigners since 2007 - of which about 35 per cent are high-end homes in districts 1, 2, 4, 9, 10 and 11 - based on the Urban Redevelopment Authority's (URA) record of caveats lodged.
Yet, the high-end apartments sector still has room for growth if trends in other cities are anything to go by.
Data from Savills shows that the average price of high-end apartments was $2,154 per sq ft (psf) in the second quarter, while that of super luxury private homes was $3,055 psf.
Super luxury homes - a subset of high-end homes - are defined as developments that achieved an average of $2,500 psf in the fourth quarter of 2006.
In Hong Kong, however, prices for high-end residences in the same quarter hit HK$14,520 (S$2,570) psf, 20 per cent higher than those here. As common spaces like corridors are taken into account in computing unit prices in Hong Kong, the actual price disparity could be even greater.
In fact, prices for high-end apartments in Hong Kong rose 47 per cent last year, raising concerns about an already overheated market. On the other hand, high-end values here went up by only 3.9 per cent last year.
Moreover, the most expensive private apartment in Hong Kong is a 6,830 sq ft unit at The Albany - which sold for HK$49,488 psf, or HK$338 million in total, this year. This is about 58 per cent more than Singapore's priciest apartment, a 5,048 sq ft home at Orchard Residences, which sold for $28.3 million, or $5,600 psf, in 2007.
In addition, Sydney apartment prices are about 28 per cent up on Singapore's while London's values are an eye-watering 41 per cent higher.
China, however, is a mixed story. While prices in its two major cities are lower, they shot up 32 per cent in Shanghai last year and 15 per cent in Beijing - and are both at record levels, marginalising any potential short-term capital gains.
Furthermore, the high-end market in Singapore is the only sector where prices are still below previous peaks. Prices of high-end apartments are 11 per cent below record levels set in the fourth quarter of 2007 while super luxury prices are 17 per cent cheaper.
In contrast, mass market prices in May were already 15 per cent over previous peaks with mid-tier apartments a more modest 5 per cent above. As positive economic prospects for Singapore are likely to continue into the second half of this year, it is possible that prices of high-end apartments could reach previous peak levels by early next year.
Compared to the full year of 2009, the number of apartments sold above $2,500 psf has already more than trebled over the last six months, with some even falling in the $3,500 to $4,000 psf range.
With rising anxiety over bubble risks and fears of more tightening measures that could derail prices, many East Asian investors may shift their funds to Singapore.
The government imposed 11 cooling measures in China earlier this year, helping to send new home sales plummeting 60 to 70 per cent in Beijing, Shanghai and Shenzhen in May alone.
As a result, more foreign buyers, especially mainland Chinese, have flocked to Singapore, at times buying with full cash payments.
They have displaced Malaysians this year as the No. 2 buyers of super luxury homes priced $5 million and above.
The growing number of high net worth individuals and millionaire Singaporeans could also see an increasing demand for luxury homes.
However, prime redevelopment sites for sale are lacking. The average take-up rate of high-end homes between 2005 and last year is 3,500 units per year, sitting comfortably above the average of 2,500 units being constructed yearly from this year to 2014.
Therefore, the supply of luxury homes is expected to be limited in the coming years and this imbalance should continue to sustain prices.
Luxury apartment prices are expected to rise by 5 to 8 per cent in the second half of this year.
Optimism surrounding the integrated resorts and robust GDP growth - and the increased expatriate employment it brings - should keep drawing affluent foreign buyers here.
This should help sustain demand for high-end homes even as an approximate 1,800 luxury apartments are expected to be launched in the second half of this year.
The writer is the senior manager, research & consultancy of Savills Singapore
Singapore's priciest apartment is a 5,048 sq ft home at Orchard Residences (above), sold for $28.3 million in 2007. The price pales in comparison to that of Hong Kong's most expensive unit, which cost HK$338 million (S$59.8 million). -- PHOTO: ORCHARD TURN DEVELOPMENTS
ST : Signs of another en bloc rush
Jul 18, 2010
property buying guide
Signs of another en bloc rush
Sale proceedings may have begun at up to 80 developments, with many more to follow
By Karamjit Singh , Pamela Kow
They were a feature of the last boom but fast fell out of favour when markets went south, yet there are signs that another collective sale rush is in the making.
There have been at least 16 collective sales this year, not counting many smaller ones that may have gone unreported.
This is in stark contrast to last year, when only one collective sale was sealed. There were 10 in 2008 but most were late spillover deals from the boom of 2006 and 2007.
The greatest spell of collective sales remains the first six months of 2007, when at least 55 projects were sold for an astounding $9.3 billion.
The slow start this year is not due to a lack of demand for collective sales, but a shortage in supply arising from the extra time needed to meet the tougher legal formalities and more detailed logistical arrangements when gathering owners' consent.
We should certainly see more collective sales over the remaining months of the year as the organisational momentum picks up pace.
As many as 80 developments are believed to have formally embarked on steps to sell their properties en bloc, although the actual figure may well be more. But not all will secure the 80 per cent owners' mandate or find a buyer.
Numbers aside, larger projects are also expected to be introduced this year and next.
The average deal size of the 16 successful cases this year is $50 million - a far cry from the average deal size of $170 million in the first half of 2007.
The 52-unit Goodrich Park near Kovan MRT station was sold in a collective sale to BBR Holdings for $86 million this month, but as the deal has not won unanimous approval from owners, it may need approval from the Strata Titles Board (STB).
Each of its owners is set to receive gross sale proceeds of between $1.55 million and $1.72 million - or about 70 to 80 per cent more than the market price.
In April, Culford Gardens in Siglap was also sold to Fragrance Properties for $39 million.
Despite the dominance of the Government Land Sales (GLS) programme this year, we believe that collective sales are still relevant in today's market as they fill the void left by the programme.
GLS sites have leasehold tenure and are mostly located in suburban areas, and their large-sized plots mean they typically cater mainly to bigger developers.
In most cases, collective sales complement the GLS programme, especially when they produce large prime freehold sites, which are in short supply.
However, leasehold collective sales in mass-market locations might find it harder to make large profits as developers might prefer the relative ease and certainty that GLS sites offer.
Owners contemplating such sales should also understand that sale activity takes place in waves since the factors that give rise to price differentials do not stack up for very long.
Many owners get concerned over the rising cost of replacement homes but this paradox is always present as collective sales inherently occur only when the market is buoyant. Acting decisively might help offset the risks of being caught cold.
It is also important for owners to elect objective and honest leaders, appoint and listen to competent lawyers and property consultants, set realistic prices, act decisively and stay united to ensure a happy ending.
Some owners might also wonder if there is a possibility that we will see another Horizon Towers dispute.
Horizon Towers was the most high-profile property sold in early 2007, just before the steep run-up in land prices. This factor and other technical irregularities resulted in the Leonie Hill Road condo becoming embroiled in one legal suit after another before the deal finally collapsed.
Since then, the laws have been refined. They now load more work and costs upfront for the owners, providing relief for developers with clearer rules.
Recent changes include the STB being relieved of its role of making rulings in disputed cases. The STB will continue its mediatory role, but this will be limited to 60 days - again to expedite the resolution of disputes over contentious sales.
In other words, warring parties can head to the High Court earlier in the process to have their disputes resolved, reducing the time taken to resolve the more difficult cases.
Minority owners are now unlikely to find as many faults as most of the typical grouses in the past have been adequately addressed. As a result, we expect fewer cases to reach the High Court and the Court of Appeal.
As we also do not see the market moving this year and next as dramatically as it did in the boom years, the motivation for a minority owner to challenge a sale may not be as strong as in 2007.
The laws are more robust and structured now and should make collective sales less controversial and more predictable.
Karamjit Singh is managing director and Pamela Kow the senior manager of Credo Real Estate.
--------------------------------------------------------------------------------
More legal formalities
The slow start this year is not due to a lack of demand for collective sales, but a shortage in supply arising from the extra time needed to meet the tougher legal formalities and more detailed logistical arrangements when gathering owners' consent.
property buying guide
Signs of another en bloc rush
Sale proceedings may have begun at up to 80 developments, with many more to follow
By Karamjit Singh , Pamela Kow
They were a feature of the last boom but fast fell out of favour when markets went south, yet there are signs that another collective sale rush is in the making.
There have been at least 16 collective sales this year, not counting many smaller ones that may have gone unreported.
This is in stark contrast to last year, when only one collective sale was sealed. There were 10 in 2008 but most were late spillover deals from the boom of 2006 and 2007.
The greatest spell of collective sales remains the first six months of 2007, when at least 55 projects were sold for an astounding $9.3 billion.
The slow start this year is not due to a lack of demand for collective sales, but a shortage in supply arising from the extra time needed to meet the tougher legal formalities and more detailed logistical arrangements when gathering owners' consent.
We should certainly see more collective sales over the remaining months of the year as the organisational momentum picks up pace.
As many as 80 developments are believed to have formally embarked on steps to sell their properties en bloc, although the actual figure may well be more. But not all will secure the 80 per cent owners' mandate or find a buyer.
Numbers aside, larger projects are also expected to be introduced this year and next.
The average deal size of the 16 successful cases this year is $50 million - a far cry from the average deal size of $170 million in the first half of 2007.
The 52-unit Goodrich Park near Kovan MRT station was sold in a collective sale to BBR Holdings for $86 million this month, but as the deal has not won unanimous approval from owners, it may need approval from the Strata Titles Board (STB).
Each of its owners is set to receive gross sale proceeds of between $1.55 million and $1.72 million - or about 70 to 80 per cent more than the market price.
In April, Culford Gardens in Siglap was also sold to Fragrance Properties for $39 million.
Despite the dominance of the Government Land Sales (GLS) programme this year, we believe that collective sales are still relevant in today's market as they fill the void left by the programme.
GLS sites have leasehold tenure and are mostly located in suburban areas, and their large-sized plots mean they typically cater mainly to bigger developers.
In most cases, collective sales complement the GLS programme, especially when they produce large prime freehold sites, which are in short supply.
However, leasehold collective sales in mass-market locations might find it harder to make large profits as developers might prefer the relative ease and certainty that GLS sites offer.
Owners contemplating such sales should also understand that sale activity takes place in waves since the factors that give rise to price differentials do not stack up for very long.
Many owners get concerned over the rising cost of replacement homes but this paradox is always present as collective sales inherently occur only when the market is buoyant. Acting decisively might help offset the risks of being caught cold.
It is also important for owners to elect objective and honest leaders, appoint and listen to competent lawyers and property consultants, set realistic prices, act decisively and stay united to ensure a happy ending.
Some owners might also wonder if there is a possibility that we will see another Horizon Towers dispute.
Horizon Towers was the most high-profile property sold in early 2007, just before the steep run-up in land prices. This factor and other technical irregularities resulted in the Leonie Hill Road condo becoming embroiled in one legal suit after another before the deal finally collapsed.
Since then, the laws have been refined. They now load more work and costs upfront for the owners, providing relief for developers with clearer rules.
Recent changes include the STB being relieved of its role of making rulings in disputed cases. The STB will continue its mediatory role, but this will be limited to 60 days - again to expedite the resolution of disputes over contentious sales.
In other words, warring parties can head to the High Court earlier in the process to have their disputes resolved, reducing the time taken to resolve the more difficult cases.
Minority owners are now unlikely to find as many faults as most of the typical grouses in the past have been adequately addressed. As a result, we expect fewer cases to reach the High Court and the Court of Appeal.
As we also do not see the market moving this year and next as dramatically as it did in the boom years, the motivation for a minority owner to challenge a sale may not be as strong as in 2007.
The laws are more robust and structured now and should make collective sales less controversial and more predictable.
Karamjit Singh is managing director and Pamela Kow the senior manager of Credo Real Estate.
--------------------------------------------------------------------------------
More legal formalities
The slow start this year is not due to a lack of demand for collective sales, but a shortage in supply arising from the extra time needed to meet the tougher legal formalities and more detailed logistical arrangements when gathering owners' consent.
ST : Quick House move to stop moneylenders from laying claim on flats
Jul 17, 2010
Quick House move to stop moneylenders from laying claim on flats
By Rachel Lin
A BILL to prevent licensed moneylenders from laying first claim to the proceeds of HDB flat sales will be rushed through the House when Parliament sits next Monday.
This will put a stop to the phenomenon of credit companies giving loans to homeowners using their HDB flats as collateral, said the chairman of the Government Parliamentary Committee (GPC) on National Development, Mr Cedric Foo.
Currently, a legal loophole allows these moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.
'Then, when people sell the flats, they get nothing and still have to pay high interest on their loans. Some even become homeless,' Jurong GRC MP Halimah Yacob told The Straits Times yesterday.
These moneylenders advertise aggressively in newspapers and even collude with housing agents, she added.
Minister for National Development Mah Bow Tan told Parliament in April that his ministry was working on measures to curb the activities of these moneylenders.
The progress of next week's Bill will be accelerated with the use of a Certificate of Urgency, which allows all three readings of the Bill to be effected in one parliamentary sitting.
The last time a Bill was expedited through Parliament was during the Sars outbreak in 2003, when the Infectious Diseases Act was amended to provide heavier fines and jail terms for those breaching Home Quarantine Orders.
On Monday, the Minister for Home Affairs will also introduce a Hostage-Taking Bill for its first reading.
The Home Affairs Ministry (MHA) said yesterday the Bill will criminalise and establish extra-territorial jurisdiction over hostage-taking offences. It will also make it easier for Singapore to help other countries extradite offenders.
'The Bill will allow Singapore to give domestic effect to the International Convention Against the Taking of Hostages,' said MHA.
Monday's parliamentary sitting will also see an adjournment motion, filed by Nominated MP Viswa Sadasivan, on the subject of 'looking beyond GDP as a measurement of a country's well-being'.
The motion allows Mr Viswa to speak on his topic for 20 minutes, followed by a 10-minute response from a minister.
When contacted, Mr Viswa said he was motivated by the need to keep up with best practices in developed nations elsewhere as Singapore society becomes more affluent and sophisticated.
Another pressing issue that will be raised by MPs next week is the effectiveness of government measures to ensure that workers travel in lorries safely.
MPs including Dr Lim Wee Kiak (Sembawang GRC), chairman of the GPC for Transport, Mr Yeo Guat Kwang (Aljunied GRC) and Madam Halimah have tabled questions on whether the deadline for the implementation of safety rules should be brought forward.
Also featuring prominently on the agenda are questions regarding the Government's anti-radicalisation efforts and the causes of last month's flash floods.
Quick House move to stop moneylenders from laying claim on flats
By Rachel Lin
A BILL to prevent licensed moneylenders from laying first claim to the proceeds of HDB flat sales will be rushed through the House when Parliament sits next Monday.
This will put a stop to the phenomenon of credit companies giving loans to homeowners using their HDB flats as collateral, said the chairman of the Government Parliamentary Committee (GPC) on National Development, Mr Cedric Foo.
Currently, a legal loophole allows these moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.
'Then, when people sell the flats, they get nothing and still have to pay high interest on their loans. Some even become homeless,' Jurong GRC MP Halimah Yacob told The Straits Times yesterday.
These moneylenders advertise aggressively in newspapers and even collude with housing agents, she added.
Minister for National Development Mah Bow Tan told Parliament in April that his ministry was working on measures to curb the activities of these moneylenders.
The progress of next week's Bill will be accelerated with the use of a Certificate of Urgency, which allows all three readings of the Bill to be effected in one parliamentary sitting.
The last time a Bill was expedited through Parliament was during the Sars outbreak in 2003, when the Infectious Diseases Act was amended to provide heavier fines and jail terms for those breaching Home Quarantine Orders.
On Monday, the Minister for Home Affairs will also introduce a Hostage-Taking Bill for its first reading.
The Home Affairs Ministry (MHA) said yesterday the Bill will criminalise and establish extra-territorial jurisdiction over hostage-taking offences. It will also make it easier for Singapore to help other countries extradite offenders.
'The Bill will allow Singapore to give domestic effect to the International Convention Against the Taking of Hostages,' said MHA.
Monday's parliamentary sitting will also see an adjournment motion, filed by Nominated MP Viswa Sadasivan, on the subject of 'looking beyond GDP as a measurement of a country's well-being'.
The motion allows Mr Viswa to speak on his topic for 20 minutes, followed by a 10-minute response from a minister.
When contacted, Mr Viswa said he was motivated by the need to keep up with best practices in developed nations elsewhere as Singapore society becomes more affluent and sophisticated.
Another pressing issue that will be raised by MPs next week is the effectiveness of government measures to ensure that workers travel in lorries safely.
MPs including Dr Lim Wee Kiak (Sembawang GRC), chairman of the GPC for Transport, Mr Yeo Guat Kwang (Aljunied GRC) and Madam Halimah have tabled questions on whether the deadline for the implementation of safety rules should be brought forward.
Also featuring prominently on the agenda are questions regarding the Government's anti-radicalisation efforts and the causes of last month's flash floods.
ST : From slums to prosperous city-state
Jul 17, 2010
S'PORE PUBLIC HOUSING
From slums to prosperous city-state
By Sanjeev Sanyal
PUBLIC housing is not a new idea and various versions of it have been tried across the world. However, it must be remembered that it has very rarely been a wholesale success. In many cases, it has created ghettos of poverty and despondency. In others, the relatively rich have 'captured' the projects and benefited from the subsidies.
One of the few exceptions is Singapore, where public housing projects played a very important role in transforming the city-state, within a generation, from a poor, slum-riddled port to one of the world's most prosperous and advanced cities. What makes it even more impressive is that this was achieved by the mobilisation of internal resources and not the deployment of a windfall from oil or some such natural resource.
In the early 1960s, Singapore suffered from severe housing shortages. A large section of the population lived in unhygienic squatter camps that were prone to frequent fires and communal tensions.
In a single fire at Bukit Ho Swee in 1961, several people were killed and 16,000 people were made homeless.
The race riots of July 1964 left 23 people dead and hundreds injured. In other words, life in Singapore's slums was no better than that in slums that we see in Indian cities today.
The British-run colonial government decided to set up the Housing and Development Board (HDB) in 1960. The agency had built more than 54,000 housing units by the time Singapore became independent in 1965.
In the initial phase, the flats were basic and were meant for renting. Over time, the quality and choice of housing were increased even as schemes were introduced to help people buy their homes.
An important financing innovation in 1968 was to allow citizens to use money from the Central Provident Fund for down payments and servicing.
HDB housing grew very rapidly in the 1970s and 1980s. In tandem with this growth, the Government invested heavily in common amenities such as health, education and public transport. Special efforts were made to accommodate small businesses as well as community hubs, such as sports facilities and places of worship.
Today, about 80 per cent of Singaporeans live in HDB housing and 95 per cent own their homes. It is extraordinary that the citizens of one of the world's most prosperous cities choose to live in public housing.
What can we learn?
I have found that Indian 'urban experts' arrogantly dismiss Singapore as a small-scale experiment.
I disagree.
Singapore is a small country but it is a reasonably large city of five million - larger than all but six Indian cities. It has been able to dramatically raise the standards of living of its population in a very dense urban environment purely through internally generated resources.
This is why, for the last two decades, a string of Chinese mayors have swallowed their pride and made pilgrimages to the city-state. I know that Singapore's public housing policies cannot be blindly applied to India, but there are some important principles that are universal and worthy of consideration.
Clear property rights are very important for creating a sense of ownership.
However, note that there is a big difference in the Singaporean approach and that of Peruvian economist Hernando de Soto. The latter is in favour of regularising squatter rights whereas the Singaporeans preferred to wipe the slate clean using public acquisition of land.
From the Singaporean viewpoint, regularising squatter rights would reward squatting and ultimately undermine the very basis of property rights.
Public housing may be partly subsidised but it should not be too cheap - and never free. Instead, there is a housing ladder that starts with cheap rentals and ends in high-end condominium apartments like those in the Pinnacle complex.
In other words, the urban poor are not seen as a static group in need of handouts. The underlying assumption is that people have aspirations and they will work hard and climb the ladder quite quickly if given the chance.
This is very different from Mr de Soto's world of small holdings and micro-finance, where the poor improve their situation in tiny incremental steps. Perhaps the difference in world view reflects the difference between the rapid growth experience of Asia and the slow growth of Latin America.
Management of the 'commons' is critical. Thus, the Singaporean approach invests very heavily in common amenities, public transport, maintenance and so on.
Residents of HDB estates are made to pay a small management fee every month. Similarly, every effort is made to cluster economic and social nodes within each HDB estate. Even informal sector activities like 'hawker centres' are designed into the public housing system.
Again, this is very different from Mr de Soto's approach that focuses on private ownership of property and largely ignores the commons.
Real estate laws are transparent and evenly applied by a quick legal system. This is a necessary corollary of properly defined property rights. This is one area where the Singaporeans and Mr de Soto would strongly agree with each other.
The purpose of this article is to point out that there is an 'Asian model' for thinking about public housing and slum upgrade.
This does not mean that rock star economists like Mr de Soto should be ignored. He clearly has ideas that should be considered seriously.
I merely hope that the Indian government will weigh various options before embarking on an important and expensive project.
The author is president of the Sustainable Planet Institute in India. He took part in the recent World Cities Summit in Singapore. This is an excerpt from an article that first appeared in the Business Standard in India on Wednesday.
S'PORE PUBLIC HOUSING
From slums to prosperous city-state
By Sanjeev Sanyal
PUBLIC housing is not a new idea and various versions of it have been tried across the world. However, it must be remembered that it has very rarely been a wholesale success. In many cases, it has created ghettos of poverty and despondency. In others, the relatively rich have 'captured' the projects and benefited from the subsidies.
One of the few exceptions is Singapore, where public housing projects played a very important role in transforming the city-state, within a generation, from a poor, slum-riddled port to one of the world's most prosperous and advanced cities. What makes it even more impressive is that this was achieved by the mobilisation of internal resources and not the deployment of a windfall from oil or some such natural resource.
In the early 1960s, Singapore suffered from severe housing shortages. A large section of the population lived in unhygienic squatter camps that were prone to frequent fires and communal tensions.
In a single fire at Bukit Ho Swee in 1961, several people were killed and 16,000 people were made homeless.
The race riots of July 1964 left 23 people dead and hundreds injured. In other words, life in Singapore's slums was no better than that in slums that we see in Indian cities today.
The British-run colonial government decided to set up the Housing and Development Board (HDB) in 1960. The agency had built more than 54,000 housing units by the time Singapore became independent in 1965.
In the initial phase, the flats were basic and were meant for renting. Over time, the quality and choice of housing were increased even as schemes were introduced to help people buy their homes.
An important financing innovation in 1968 was to allow citizens to use money from the Central Provident Fund for down payments and servicing.
HDB housing grew very rapidly in the 1970s and 1980s. In tandem with this growth, the Government invested heavily in common amenities such as health, education and public transport. Special efforts were made to accommodate small businesses as well as community hubs, such as sports facilities and places of worship.
Today, about 80 per cent of Singaporeans live in HDB housing and 95 per cent own their homes. It is extraordinary that the citizens of one of the world's most prosperous cities choose to live in public housing.
What can we learn?
I have found that Indian 'urban experts' arrogantly dismiss Singapore as a small-scale experiment.
I disagree.
Singapore is a small country but it is a reasonably large city of five million - larger than all but six Indian cities. It has been able to dramatically raise the standards of living of its population in a very dense urban environment purely through internally generated resources.
This is why, for the last two decades, a string of Chinese mayors have swallowed their pride and made pilgrimages to the city-state. I know that Singapore's public housing policies cannot be blindly applied to India, but there are some important principles that are universal and worthy of consideration.
Clear property rights are very important for creating a sense of ownership.
However, note that there is a big difference in the Singaporean approach and that of Peruvian economist Hernando de Soto. The latter is in favour of regularising squatter rights whereas the Singaporeans preferred to wipe the slate clean using public acquisition of land.
From the Singaporean viewpoint, regularising squatter rights would reward squatting and ultimately undermine the very basis of property rights.
Public housing may be partly subsidised but it should not be too cheap - and never free. Instead, there is a housing ladder that starts with cheap rentals and ends in high-end condominium apartments like those in the Pinnacle complex.
In other words, the urban poor are not seen as a static group in need of handouts. The underlying assumption is that people have aspirations and they will work hard and climb the ladder quite quickly if given the chance.
This is very different from Mr de Soto's world of small holdings and micro-finance, where the poor improve their situation in tiny incremental steps. Perhaps the difference in world view reflects the difference between the rapid growth experience of Asia and the slow growth of Latin America.
Management of the 'commons' is critical. Thus, the Singaporean approach invests very heavily in common amenities, public transport, maintenance and so on.
Residents of HDB estates are made to pay a small management fee every month. Similarly, every effort is made to cluster economic and social nodes within each HDB estate. Even informal sector activities like 'hawker centres' are designed into the public housing system.
Again, this is very different from Mr de Soto's approach that focuses on private ownership of property and largely ignores the commons.
Real estate laws are transparent and evenly applied by a quick legal system. This is a necessary corollary of properly defined property rights. This is one area where the Singaporeans and Mr de Soto would strongly agree with each other.
The purpose of this article is to point out that there is an 'Asian model' for thinking about public housing and slum upgrade.
This does not mean that rock star economists like Mr de Soto should be ignored. He clearly has ideas that should be considered seriously.
I merely hope that the Indian government will weigh various options before embarking on an important and expensive project.
The author is president of the Sustainable Planet Institute in India. He took part in the recent World Cities Summit in Singapore. This is an excerpt from an article that first appeared in the Business Standard in India on Wednesday.
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