Business Times - 23 Sep 2010
The next wave
By UMA SHANKARI
WHAT is next for Singapore's property market? No one - neither developers, analysts nor homebuyers - can answer the question with any certainty right now.
After subdued sales through all of 2008, the residential market here took off in February last year. And the buying volume and price growth continued into 2010 - despite a slew of government measures announced over the past 12 months to dampen demand for both private homes and HDB flats, and boost supply.
But the latest round of cooling measures, announced by National Development Minister Mah Bow Tan on Aug 30, are considered to be harsher than the previous policy changes and could have a greater impact.
Developers trust that the measures - which include the decision to disallow concurrent ownership of HDB flats and private residential properties within the specified minimum occupation period - are not likely to keep away genuine buyers. They are also hoping that the flux in the market will settle in a few months and that buying interest will continue apace.
Over the next few pages, we examine the key aspects of Singapore's property market, taking an in-depth look at the residential market and the commercial sector as well as key overseas markets.
We ask experts for their views on the impact of the latest round of government measures and look at where the next wave of activity will come from after the market, investors and homebuyers digest the latest news.
There is no denying the importance of Singapore's property sector. How the market fares will impact not only developers, investors and 'regular Joe' homeowners, but also related sectors. These include banks which have been enjoying brisk business dishing out housing loans over the last two years.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Thursday, September 23, 2010
BT : HDB market set to normalise
Business Times - 23 Sep 2010
HDB market set to normalise
Measures to cool the property market appear to have made some impact already, says EUGENE LIM
A MASSIVE building programme was undertaken by the Housing and Development Board (HDB) in the 1970s due to a shortage of housing for the masses. Back then, there was no resale HDB market. From the 1980s to the mid-1990s, as the housing shortage eased, the public housing programme shifted from building to satisfy a shortage, to deregulation and the creation of a resale market.
In 1989, the government made major policy changes by removing the income ceiling for buying resale HDB flats; allowing HDB owners to invest in private residential properties; as well as allowing private property owners and Singapore permanent residents (PRs) to buy resale HDB flats for owner occupation.
Since then, resale HDB prices have seen their ups and downs. But in the second quarter of this year, HDB numbers showed that resale HDB prices hit their highest point since 1990. Resale HDB prices were 18 per cent higher than the first peak in Q4 1996; and five times more than flat prices in 1990, when the resale market started.
Despite higher valuations, 96 per cent of resale transactions in Q2 were done at higher and higher cash-over-valuation (COV). Prices continued to climb in July and August. Resale HDB transactions handled by ERA agents showed that the median COV increased to $35,000, up 17 per cent from Q2's $30,000.
But it was 11 times more than the market low of $3,000 just 14 months ago. On the ground, many deals were closed by negotiating on the COV rather than the resale price of the flat.
For five straight quarters starting in Q2 2009, resale transactions shot past 8,000 units; with three-room transactions accounting for 30 per cent; four-room 36 per cent; five-room 25 per cent; and executive 9 per cent.
This exuberance in the resale market was happening despite the HDB's launch of some 66,500 new flats since 2006 - including the estimated 16,700 units this year.
Many first-time buyers, priced out of the resale HDB market, put the blame on, among other things, the artificial demand coming from those buying HDB flats for investment or short-term speculation.
These were people who did not need a roof over their heads but were riding the buoyant resale HDB market for personal profit, and in the process driving up prices.
While there were no official statistics as proof, these claims have some validity. A three-room resale flat bought at $300,000 that rents for $2,000 a month gives a yield of 8 per cent per annum; well above the average private property yield of 3-4 per cent.
A resale flat bought in 2008 and sold in 2010 could net the seller a gain of at least 30 per cent. A PR can buy a resale flat, rent it out for an income stream, and after a few years sell it for a good profit. The profit could be channelled to buy a better house back home and other luxuries.
An astute investor with spare cash could be tempted to take a punt in the resale HDB market, despite flouting public housing rules.
Impact of new measures
On Aug 30, the government announced measures designed to help first-time buyers, as well as to keep the resale HDB market in check. These measures were:
· Minimum occupation period for resale HDB flats extended to five years.
· Private property owners who buy resale flats have to sell their private home within six months of buying the flat. Private homes include overseas properties.
· Those with existing mortgages can only take a maximum loan of 70 per cent; and need to fork out a mandatory cash deposit of 10 per cent.
· First-timer households with monthly income of between $8,000 and $10,000 can buy new flats under the Design, Build, and Sell Scheme (DBSS).
· HDB speeds up completion of flats from three years to two-and-a-half years.
While these measures may help to rein in runaway prices, they have also made buying and selling property more complicated.
Those who buy a resale flat from Aug 30 onwards can no longer buy private property within the first five years of the resale flat purchase.
Should they buy private property after five years, they will have to put up a higher cash downpayment of 10 per cent of the purchase price if their current loan is not fully paid up. In addition, they can only take a maximum loan quantum of 70 per cent.
After buying the private property, it may not make sense for them to sell their resale flat to buy another one, unless they are prepared to sell the private property within six months. This means they can no longer bequeath their private property to their children or rent it out for income.
Meanwhile, should PRs buy a resale HDB flat, they will have to part with any property they own in their homeland within six months of the flat purchase. With non-genuine demand taken out of the equation, PRs are placed in a dilemma.
First-time buyers will have a large supply and variety of flats to choose from: Build-To- Order (BTO) flats (16,700 units in 2010 and up to 22,000 units in 2011), DBSS flats (up to 7,000 units in 2010 and 2011), and executive condominiums (up to 8,000 units in 2010 and 2011). As such, we estimate that demand for resale HDB flats may drop by some 30 per cent.
If that happens, total resale volume this year could dip below 30,000 units and median COVs fall to $20,000 or lower by year's end. With lower transacted prices, valuations will also be lower and this may again impact future resale prices. A price correction in the resale HDB market is in the offing.
Measures to cool the property market appear to have made some impact already. The recent launch of the Yishun Riverwalk BTO project attracted only 3,225 applications for 1,408 flats - well below the ratio seen in past BTO launches when up to six times the number of bids were seen for each unit.
This may indicate that first-timers may be intending to return to the HDB resale market in anticipation of falling prices. These buyers had been priced out of the resale market during the property boom and flocked to join the queue for new HDB flats. They may now be waiting to see if resale prices will drop.
Those who have an immediate need for homes will probably go to the resale market instead of queuing for a new flat which may take three years to build.
The five-year minimum occupation period (MOP) only affects resale applications received by HDB from Aug 30. For those who bought their flats before that, the previous MOP of three years, 2.5 years or one year still applies, depending on when they acquired their flats and the type of loans they took.
These HDB owners can sublet their HDB flats after occupying it for three years. They can also invest in a private property during their MOP; unlike buyers after Aug 30.
Days of high COV transactions may be over
With the new measures taking effect, the froth in the resale HDB market has been removed. Coupled with new housing options for first-time buyers and the sandwiched class, the key driver for the resale HDB market going forward will be those with immediate housing needs - whether they are Singapore citizens or PR households.
The resale HDB market should now reflect the real demand for housing. As such, the days of high COV transactions may be over.
The writer is associate director, ERA Asia-Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
HDB market set to normalise
Measures to cool the property market appear to have made some impact already, says EUGENE LIM
A MASSIVE building programme was undertaken by the Housing and Development Board (HDB) in the 1970s due to a shortage of housing for the masses. Back then, there was no resale HDB market. From the 1980s to the mid-1990s, as the housing shortage eased, the public housing programme shifted from building to satisfy a shortage, to deregulation and the creation of a resale market.
In 1989, the government made major policy changes by removing the income ceiling for buying resale HDB flats; allowing HDB owners to invest in private residential properties; as well as allowing private property owners and Singapore permanent residents (PRs) to buy resale HDB flats for owner occupation.
Since then, resale HDB prices have seen their ups and downs. But in the second quarter of this year, HDB numbers showed that resale HDB prices hit their highest point since 1990. Resale HDB prices were 18 per cent higher than the first peak in Q4 1996; and five times more than flat prices in 1990, when the resale market started.
Despite higher valuations, 96 per cent of resale transactions in Q2 were done at higher and higher cash-over-valuation (COV). Prices continued to climb in July and August. Resale HDB transactions handled by ERA agents showed that the median COV increased to $35,000, up 17 per cent from Q2's $30,000.
But it was 11 times more than the market low of $3,000 just 14 months ago. On the ground, many deals were closed by negotiating on the COV rather than the resale price of the flat.
For five straight quarters starting in Q2 2009, resale transactions shot past 8,000 units; with three-room transactions accounting for 30 per cent; four-room 36 per cent; five-room 25 per cent; and executive 9 per cent.
This exuberance in the resale market was happening despite the HDB's launch of some 66,500 new flats since 2006 - including the estimated 16,700 units this year.
Many first-time buyers, priced out of the resale HDB market, put the blame on, among other things, the artificial demand coming from those buying HDB flats for investment or short-term speculation.
These were people who did not need a roof over their heads but were riding the buoyant resale HDB market for personal profit, and in the process driving up prices.
While there were no official statistics as proof, these claims have some validity. A three-room resale flat bought at $300,000 that rents for $2,000 a month gives a yield of 8 per cent per annum; well above the average private property yield of 3-4 per cent.
A resale flat bought in 2008 and sold in 2010 could net the seller a gain of at least 30 per cent. A PR can buy a resale flat, rent it out for an income stream, and after a few years sell it for a good profit. The profit could be channelled to buy a better house back home and other luxuries.
An astute investor with spare cash could be tempted to take a punt in the resale HDB market, despite flouting public housing rules.
Impact of new measures
On Aug 30, the government announced measures designed to help first-time buyers, as well as to keep the resale HDB market in check. These measures were:
· Minimum occupation period for resale HDB flats extended to five years.
· Private property owners who buy resale flats have to sell their private home within six months of buying the flat. Private homes include overseas properties.
· Those with existing mortgages can only take a maximum loan of 70 per cent; and need to fork out a mandatory cash deposit of 10 per cent.
· First-timer households with monthly income of between $8,000 and $10,000 can buy new flats under the Design, Build, and Sell Scheme (DBSS).
· HDB speeds up completion of flats from three years to two-and-a-half years.
While these measures may help to rein in runaway prices, they have also made buying and selling property more complicated.
Those who buy a resale flat from Aug 30 onwards can no longer buy private property within the first five years of the resale flat purchase.
Should they buy private property after five years, they will have to put up a higher cash downpayment of 10 per cent of the purchase price if their current loan is not fully paid up. In addition, they can only take a maximum loan quantum of 70 per cent.
After buying the private property, it may not make sense for them to sell their resale flat to buy another one, unless they are prepared to sell the private property within six months. This means they can no longer bequeath their private property to their children or rent it out for income.
Meanwhile, should PRs buy a resale HDB flat, they will have to part with any property they own in their homeland within six months of the flat purchase. With non-genuine demand taken out of the equation, PRs are placed in a dilemma.
First-time buyers will have a large supply and variety of flats to choose from: Build-To- Order (BTO) flats (16,700 units in 2010 and up to 22,000 units in 2011), DBSS flats (up to 7,000 units in 2010 and 2011), and executive condominiums (up to 8,000 units in 2010 and 2011). As such, we estimate that demand for resale HDB flats may drop by some 30 per cent.
If that happens, total resale volume this year could dip below 30,000 units and median COVs fall to $20,000 or lower by year's end. With lower transacted prices, valuations will also be lower and this may again impact future resale prices. A price correction in the resale HDB market is in the offing.
Measures to cool the property market appear to have made some impact already. The recent launch of the Yishun Riverwalk BTO project attracted only 3,225 applications for 1,408 flats - well below the ratio seen in past BTO launches when up to six times the number of bids were seen for each unit.
This may indicate that first-timers may be intending to return to the HDB resale market in anticipation of falling prices. These buyers had been priced out of the resale market during the property boom and flocked to join the queue for new HDB flats. They may now be waiting to see if resale prices will drop.
Those who have an immediate need for homes will probably go to the resale market instead of queuing for a new flat which may take three years to build.
The five-year minimum occupation period (MOP) only affects resale applications received by HDB from Aug 30. For those who bought their flats before that, the previous MOP of three years, 2.5 years or one year still applies, depending on when they acquired their flats and the type of loans they took.
These HDB owners can sublet their HDB flats after occupying it for three years. They can also invest in a private property during their MOP; unlike buyers after Aug 30.
Days of high COV transactions may be over
With the new measures taking effect, the froth in the resale HDB market has been removed. Coupled with new housing options for first-time buyers and the sandwiched class, the key driver for the resale HDB market going forward will be those with immediate housing needs - whether they are Singapore citizens or PR households.
The resale HDB market should now reflect the real demand for housing. As such, the days of high COV transactions may be over.
The writer is associate director, ERA Asia-Pacific
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Sentosa Cove still a coveted address
Business Times - 23 Sep 2010
Sentosa Cove still a coveted address
The luxury enclave saw the return of buying interest on the back of an improving global economy, report STEVEN MING and ZENG ZHEN
SENTOSA Cove, Singapore's first gated waterfront residential enclave located on the eastern shores of Sentosa island, is taking shape with the completion of some 920 upscale condominium units and 200 waterfront and hillside bungalows since its inception in 2004. In tandem with the buoyant home sales on the mainland and coupled with the opening of the integrated resorts (IRs), the luxury enclave of Sentosa Cove saw the return of buying interest on the back of an improving global economy.
There are now nine condominium and seven landed housing developments for sale. The most recent launches include City Developments' 228-unit The Residences at W Singapore Sentosa Cove, and Ho Bee & IOI's 151-unit Seascape, both of which saw good take-up.
Non-landed
Amid favourable market conditions, sales remain strong for non-landed residential homes in Sentosa Cove. There were 104 sales transactions registered from January to July 2010.
Despite falling short of the 130 sales transactions recorded for 2009, the sales value for the first seven months of 2010 has outperformed that of last year, with $541 million recorded thus far compared with $497.9 million in 2009.
With the release of new projects, the primary market enjoyed a 430 per cent increase in volume, albeit from a relatively low base in the previous year. In the secondary market, because only The Oceanfront@Sentosa Cove received Temporary Occupation Permit (TOP) in March this year, the sub-sale activity has turned relatively quiet with only 21 caveats, down from 101 in 2009, whilst resale activity has firmed up by 57.9 per cent from 19 in 2009 to 30 transactions.
The first seven months of this year have seen rising prices across the board. Fuelled by higher prices of new launches in the vicinity, the prices of projects that were launched before 2010 have shown an increase ranging from 2.2 per cent to 30.8 per cent, with some surpassing their previous peaks in 2007.
As a result, the average price of non-landed residential in Sentosa Cove has soared from $1,691 per sq ft in 2009 to $2,344 per sq ft in 2010, representing a 38.6 per cent increase.
Appreciation in capital values of non-landed homes has lent support to the investment activities in Sentosa Cove, especially the sub-sale transactions in those projects approaching TOP dates.
Caveat matches of 19 sub-sales from January to July show that 94.7 per cent, or 18 sub-sales, yielded a profit between $179,400 and $3.06 million, significantly higher than the 71.7 per cent for the whole of 2009.
In addition, the average gain per unit almost doubled from $600,025 in 2009 to $1.16 million in the first seven months of 2010. This was a result of increased percentage of sub-sales that yielded gains exceeding $1 million.
So far this year, the sub-sales of nine units in The Oceanfront@Sentosa Cove have earned profits from $1,005,970 to $3,056,700, accounting for 47.4 per cent of the total profitable sub-sales.
On the other hand, there were only seven out of the 67 profitable sub-sales that reaped a profit of more than $1 million in the preceding year.
Landed
Unlike Good Class Bungalows (GCBs) on the mainland, the landed housing segment in Sentosa Cove is unique as it offers an exclusive waterfront.
More importantly, the landed houses in Sentosa Cove appeal to a wider market as foreigners who do not have permanent residence status are allowed to purchase them.
According to the caveats lodged between January and July 2010, 39 landed houses in Sentosa Cove have been sold, only one less than the total recorded for the whole of 2009. The transaction value has surged by 20.5 per cent from $507.3 million in 2009 to $611.3 million in the first seven months of 2010, attributed to the 19 houses costing more than $15 million each that were transacted during this period. In stark contrast, there were only nine transactions above $15 million in the preceding years from 2005 to 2009.
Of these 39 sales, foreign buyers chalked up 19 transactions or 48.7 per cent, with Chinese investors being the most dominant, inking 12 transactions, or 63.2 per cent, of all foreign purchases in the reviewed period. The Chinese buyers have ranked top among the foreigners since 2009; overtaking the Indonesians.
The average unit price based on land area climbed from $1,568 per sq ft in 2009 to $1,892 per sq ft in 2010, up by 20.7 per cent. In terms of unit price, the most expensive home sold this year was a terrace house in The Villas@Sentosa Cove which was transacted at $8 million or $2,929 per sq ft in May.
Interestingly, this house was first bought in June 2007 from the developer for $4.6 million or $1,682 per sq ft, yielding the vendor a profit of $3.4 million.
Outlook
On the economic front, Singapore has probably not seen better days. The government has revised the GDP growth forecast for 2010 up to 15 per cent from its previous forecast of 7 to 9 per cent.
Despite this, the market is not absolutely immune from external downside factors. Market sentiment has been affected by the rising concerns over the uncertainty of US economic recovery and the eurozone debt crisis. Meanwhile, the government's latest tightening measures, coupled with the ample supply from the government land sales programme, has cast a cloud over the property market.
Nevertheless, we expect that these cooling measures would have limited impact on the luxury developments in Sentosa Cove. The government's measures are designed to curb speculation, especially in the mass-market and public housing re-sale segments.
Still, the sales activity in Sentosa Cove may soften in the near term as buyers adopt a wait-and-see approach to the new measures.
However, the broader fundamentals for the private residential market are still good, and driven by the low interest environment, and abundant liquidity from Asia's booming wealth, Sentosa Cove would continue to attract both local and foreign buyers who take a mid to longer term view of the market.
Steven Ming is executive director, Savills Singapore and Zeng Zhen, senior manager, Savills Research & Consultancy
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Sentosa Cove still a coveted address
The luxury enclave saw the return of buying interest on the back of an improving global economy, report STEVEN MING and ZENG ZHEN
SENTOSA Cove, Singapore's first gated waterfront residential enclave located on the eastern shores of Sentosa island, is taking shape with the completion of some 920 upscale condominium units and 200 waterfront and hillside bungalows since its inception in 2004. In tandem with the buoyant home sales on the mainland and coupled with the opening of the integrated resorts (IRs), the luxury enclave of Sentosa Cove saw the return of buying interest on the back of an improving global economy.
There are now nine condominium and seven landed housing developments for sale. The most recent launches include City Developments' 228-unit The Residences at W Singapore Sentosa Cove, and Ho Bee & IOI's 151-unit Seascape, both of which saw good take-up.
Non-landed
Amid favourable market conditions, sales remain strong for non-landed residential homes in Sentosa Cove. There were 104 sales transactions registered from January to July 2010.
Despite falling short of the 130 sales transactions recorded for 2009, the sales value for the first seven months of 2010 has outperformed that of last year, with $541 million recorded thus far compared with $497.9 million in 2009.
With the release of new projects, the primary market enjoyed a 430 per cent increase in volume, albeit from a relatively low base in the previous year. In the secondary market, because only The Oceanfront@Sentosa Cove received Temporary Occupation Permit (TOP) in March this year, the sub-sale activity has turned relatively quiet with only 21 caveats, down from 101 in 2009, whilst resale activity has firmed up by 57.9 per cent from 19 in 2009 to 30 transactions.
The first seven months of this year have seen rising prices across the board. Fuelled by higher prices of new launches in the vicinity, the prices of projects that were launched before 2010 have shown an increase ranging from 2.2 per cent to 30.8 per cent, with some surpassing their previous peaks in 2007.
As a result, the average price of non-landed residential in Sentosa Cove has soared from $1,691 per sq ft in 2009 to $2,344 per sq ft in 2010, representing a 38.6 per cent increase.
Appreciation in capital values of non-landed homes has lent support to the investment activities in Sentosa Cove, especially the sub-sale transactions in those projects approaching TOP dates.
Caveat matches of 19 sub-sales from January to July show that 94.7 per cent, or 18 sub-sales, yielded a profit between $179,400 and $3.06 million, significantly higher than the 71.7 per cent for the whole of 2009.
In addition, the average gain per unit almost doubled from $600,025 in 2009 to $1.16 million in the first seven months of 2010. This was a result of increased percentage of sub-sales that yielded gains exceeding $1 million.
So far this year, the sub-sales of nine units in The Oceanfront@Sentosa Cove have earned profits from $1,005,970 to $3,056,700, accounting for 47.4 per cent of the total profitable sub-sales.
On the other hand, there were only seven out of the 67 profitable sub-sales that reaped a profit of more than $1 million in the preceding year.
Landed
Unlike Good Class Bungalows (GCBs) on the mainland, the landed housing segment in Sentosa Cove is unique as it offers an exclusive waterfront.
More importantly, the landed houses in Sentosa Cove appeal to a wider market as foreigners who do not have permanent residence status are allowed to purchase them.
According to the caveats lodged between January and July 2010, 39 landed houses in Sentosa Cove have been sold, only one less than the total recorded for the whole of 2009. The transaction value has surged by 20.5 per cent from $507.3 million in 2009 to $611.3 million in the first seven months of 2010, attributed to the 19 houses costing more than $15 million each that were transacted during this period. In stark contrast, there were only nine transactions above $15 million in the preceding years from 2005 to 2009.
Of these 39 sales, foreign buyers chalked up 19 transactions or 48.7 per cent, with Chinese investors being the most dominant, inking 12 transactions, or 63.2 per cent, of all foreign purchases in the reviewed period. The Chinese buyers have ranked top among the foreigners since 2009; overtaking the Indonesians.
The average unit price based on land area climbed from $1,568 per sq ft in 2009 to $1,892 per sq ft in 2010, up by 20.7 per cent. In terms of unit price, the most expensive home sold this year was a terrace house in The Villas@Sentosa Cove which was transacted at $8 million or $2,929 per sq ft in May.
Interestingly, this house was first bought in June 2007 from the developer for $4.6 million or $1,682 per sq ft, yielding the vendor a profit of $3.4 million.
Outlook
On the economic front, Singapore has probably not seen better days. The government has revised the GDP growth forecast for 2010 up to 15 per cent from its previous forecast of 7 to 9 per cent.
Despite this, the market is not absolutely immune from external downside factors. Market sentiment has been affected by the rising concerns over the uncertainty of US economic recovery and the eurozone debt crisis. Meanwhile, the government's latest tightening measures, coupled with the ample supply from the government land sales programme, has cast a cloud over the property market.
Nevertheless, we expect that these cooling measures would have limited impact on the luxury developments in Sentosa Cove. The government's measures are designed to curb speculation, especially in the mass-market and public housing re-sale segments.
Still, the sales activity in Sentosa Cove may soften in the near term as buyers adopt a wait-and-see approach to the new measures.
However, the broader fundamentals for the private residential market are still good, and driven by the low interest environment, and abundant liquidity from Asia's booming wealth, Sentosa Cove would continue to attract both local and foreign buyers who take a mid to longer term view of the market.
Steven Ming is executive director, Savills Singapore and Zeng Zhen, senior manager, Savills Research & Consultancy
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Too hot to handle?
Business Times - 23 Sep 2010
Too hot to handle?
WENDY TANG and PNG POH SOON examine the impact of cooling measures on HDB, mass, mid- and high-end residential properties
MUCH has been said about the government's recent cooling measures and their likely impact on the residential property market. While some think the latest measures have enough bite to cool the entire market, others expect that only the mass market and public housing (HDB flats) segments will be affected.
In the aftermath of the financial crisis, China, Hong Kong, Singapore, and Australia have seen their property markets performing strongly in tandem with the recovering economies. Prices had risen so rapidly that there were worries about a property bubble. China has tried to cool its property market as has Singapore, with three rounds of cooling measures.
The property market generally turns cautious when the government changes the demand and supply levers. The market is still digesting the new measures and market watchers are anxiously monitoring response to new project launches.
How will the new measures affect the HDB, mass, mid- and high-end residential properties? Prior to the new measures, HDB buyers typically comprised locals, PRs, upgraders, downgraders or even private property owners.
The wide range of buyers was due to the relaxation of rules by the Housing and Development Board in the late 1980s. This allowed permanent residents (PRs) to buy HDB flats and HDB owners to invest in private property, with certain conditions. Later on, private property owners were allowed to buy HDB flats from the resale market as these units were deemed not to be subsidised. Collectively, this group forms the base of HDB buyers.
Over the past 10 years, Singapore's population (residents and non-residents) grew by 26 per cent. The number of Singapore residents (citizens and PRs) rose by 15.6 per cent, and non-residents (foreigners) by a hefty 72 per cent. The number of new completed HDB flats, however, has dropped significantly since 2006 while the overall population has increased. HDB resale prices escalated in response and have risen by some 45 per cent since 2000.
The new measures are likely to affect the HDB segment most since demand will be crimped as those owning private property here and overseas will no longer be allowed to buy HDB flats unless they sell the private property within six months of getting the HDB flat.
Existing HDB owners upgrading or downgrading to another HDB flat are also affected. To qualify for 80 per cent financing, they have to show proof of sale of their existing unit within two weeks of the first sales appointment. Hence, arrangements with the buyer of their existing flat and the seller of the flat have to be well planned. Otherwise, buyers are limited to borrowing no more than 70 per cent of the purchase price of their new flat. In addition, the cash downpayment will be doubled to at least 10 per cent.
The seller's stamp duty, which used to apply to properties sold within a year, has now been extended to those sold within three years. But this should not affect the HDB segment as buyers have to occupy the new flat for at least five years before they can sell it.
On the supply side, 16,000 new flats will be offered in 2010 which is more than 3.5 times the average number of new HDB flats completed between 2006 and 2008. Going forward, the HDB is prepared to launch up to 22,000 new flats in 2011 should demand continue to be strong. The new supply will eventually ease demand pressure on existing stock.
The introduction of the new measures is in line with the government's view that HDB flats are homes to live in rather than investments. The restrictive measures which crimp demand, in addition to the looming supply, will dampen any capital appreciation of HDB flats. This will happen even when the private property market recovers in the future.
In fact, in the HDB resale market, anecdotal evidence points to early signs of price moderation, in particular the cash over valuation (COV) component, as buyers' and sellers' expectations change. However, any decline in HDB prices should not be drastic in the near term due to the limited completed stock. In the medium term, prices will remain stable with limited price appreciation.
The private mass market segment will also be significantly affected as those with HDB addresses typically form the bulk of such buyers. This group of buyers are usually price-sensitive and have been motivated by the current low interest rates.
A lower loan to value quantum raises the hurdle for HDB owners looking to make their first private property investment. Assuming a purchase price of $1 million, a total of $300,000 is payable, of which $100,000 must be in cash. The latter is double what was required in the past. Buyers without the additional funds will have to wait longer before they can enter the market.
Previously, buyers whose monthly household income ranged from $8,000 to $10,000 a month were not able to buy new HDB flats. Some opted to buy smaller private residential units in order to keep the absolute price affordable. This was a more appealing option than paying high COV for older HDB resale flats.
The new measures now allow these buyers to purchase new flats under the Design, Build, and Sell Scheme (DBSS). If the response to DBSS flats is good, more of them may be released. As such, some demand for private homes may be diverted to public housing.
Buyers now have more housing options, including executive condominiums (EC) which were introduced in 1995 for buyers whose household income was too high to qualify for a new HDB flat but who might not have found private property affordable. ECs are sold with eligibility and ownership restrictions similar to public housing, but are fully converted to private housing after 10 years. Going forward, the government will be launching three EC sites in Pasir Ris, Bukit Panjang, and Tampines that are expected to yield 1,415 units.
Developers seem more cautious of late judging from recent results of government land sales (GLS) tenders. The highest tender price of $340 per sq ft per plot ratio at Hougang Avenue 7 was 25 per cent lower than that of another site sold at Hougang Avenue 2 in May. The premium between the top and second bidder narrowed to 2.5 per cent.
In the second half of 2010, land that can potentially yield about 13,900 new private homes will be up for tender. It is the highest in the history of the GLS programme. Of the upcoming supply, about 8,100 units are confirmed for sale without the need for prior developer interest. If demand remains strong, the government is prepared to increase supply in the first half of 2011.
In light of this, prices of mass market properties may ease by 10 per cent in a year's time. This is not to say all mass market prices will follow suit as developments in better locations, near MRT stations or which offer good value should hold up.
Mid- to high-end properties are less likely to be adversely affected by the cooling measures as buyers are not as price-sensitive as those in the mass market. As such, the lower loan to value ratio for an investment property is unlikely to affect them as much as buyers of mass market and HDB properties. Sellers' stamp duties will also not affect investors so long as they do not sell within three years. In any case, the amount is not significant in relation to the overall value of the property.
Interest in prime property remains strong. However, buyers are cautious as the global economy is still fragile. Buying activity remains selective. Assuming there isn't another crisis, mid- to high-end properties are likely to remain fairly stable with prices down by 5-10 per cent over the next 12 months.
To sum up, the property market is unlikely to crash as the government monitors the market closely. In the past, measures have been taken to revive the property market if prices are depressed and vice versa. While the new policies benefit some people, they adversely affect many others. Time will tell whether this round of measures is well-calibrated or excessive. The authorities are equally anxious to monitor the impact and may well ease up should it hurt more deeply than intended.
No one benefits if the residential market is badly destabilised, particularly in a country where property is viewed as a valuable investment. Hopefully, the latest round of cooling measures will bring Singapore closer to a stable and sustainable property market.
Wendy Tang is director, residential services, Knight Frank and Png Poh Soon is senior manager, consultancy & research, Knight Frank
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Too hot to handle?
WENDY TANG and PNG POH SOON examine the impact of cooling measures on HDB, mass, mid- and high-end residential properties
MUCH has been said about the government's recent cooling measures and their likely impact on the residential property market. While some think the latest measures have enough bite to cool the entire market, others expect that only the mass market and public housing (HDB flats) segments will be affected.
In the aftermath of the financial crisis, China, Hong Kong, Singapore, and Australia have seen their property markets performing strongly in tandem with the recovering economies. Prices had risen so rapidly that there were worries about a property bubble. China has tried to cool its property market as has Singapore, with three rounds of cooling measures.
The property market generally turns cautious when the government changes the demand and supply levers. The market is still digesting the new measures and market watchers are anxiously monitoring response to new project launches.
How will the new measures affect the HDB, mass, mid- and high-end residential properties? Prior to the new measures, HDB buyers typically comprised locals, PRs, upgraders, downgraders or even private property owners.
The wide range of buyers was due to the relaxation of rules by the Housing and Development Board in the late 1980s. This allowed permanent residents (PRs) to buy HDB flats and HDB owners to invest in private property, with certain conditions. Later on, private property owners were allowed to buy HDB flats from the resale market as these units were deemed not to be subsidised. Collectively, this group forms the base of HDB buyers.
Over the past 10 years, Singapore's population (residents and non-residents) grew by 26 per cent. The number of Singapore residents (citizens and PRs) rose by 15.6 per cent, and non-residents (foreigners) by a hefty 72 per cent. The number of new completed HDB flats, however, has dropped significantly since 2006 while the overall population has increased. HDB resale prices escalated in response and have risen by some 45 per cent since 2000.
The new measures are likely to affect the HDB segment most since demand will be crimped as those owning private property here and overseas will no longer be allowed to buy HDB flats unless they sell the private property within six months of getting the HDB flat.
Existing HDB owners upgrading or downgrading to another HDB flat are also affected. To qualify for 80 per cent financing, they have to show proof of sale of their existing unit within two weeks of the first sales appointment. Hence, arrangements with the buyer of their existing flat and the seller of the flat have to be well planned. Otherwise, buyers are limited to borrowing no more than 70 per cent of the purchase price of their new flat. In addition, the cash downpayment will be doubled to at least 10 per cent.
The seller's stamp duty, which used to apply to properties sold within a year, has now been extended to those sold within three years. But this should not affect the HDB segment as buyers have to occupy the new flat for at least five years before they can sell it.
On the supply side, 16,000 new flats will be offered in 2010 which is more than 3.5 times the average number of new HDB flats completed between 2006 and 2008. Going forward, the HDB is prepared to launch up to 22,000 new flats in 2011 should demand continue to be strong. The new supply will eventually ease demand pressure on existing stock.
The introduction of the new measures is in line with the government's view that HDB flats are homes to live in rather than investments. The restrictive measures which crimp demand, in addition to the looming supply, will dampen any capital appreciation of HDB flats. This will happen even when the private property market recovers in the future.
In fact, in the HDB resale market, anecdotal evidence points to early signs of price moderation, in particular the cash over valuation (COV) component, as buyers' and sellers' expectations change. However, any decline in HDB prices should not be drastic in the near term due to the limited completed stock. In the medium term, prices will remain stable with limited price appreciation.
The private mass market segment will also be significantly affected as those with HDB addresses typically form the bulk of such buyers. This group of buyers are usually price-sensitive and have been motivated by the current low interest rates.
A lower loan to value quantum raises the hurdle for HDB owners looking to make their first private property investment. Assuming a purchase price of $1 million, a total of $300,000 is payable, of which $100,000 must be in cash. The latter is double what was required in the past. Buyers without the additional funds will have to wait longer before they can enter the market.
Previously, buyers whose monthly household income ranged from $8,000 to $10,000 a month were not able to buy new HDB flats. Some opted to buy smaller private residential units in order to keep the absolute price affordable. This was a more appealing option than paying high COV for older HDB resale flats.
The new measures now allow these buyers to purchase new flats under the Design, Build, and Sell Scheme (DBSS). If the response to DBSS flats is good, more of them may be released. As such, some demand for private homes may be diverted to public housing.
Buyers now have more housing options, including executive condominiums (EC) which were introduced in 1995 for buyers whose household income was too high to qualify for a new HDB flat but who might not have found private property affordable. ECs are sold with eligibility and ownership restrictions similar to public housing, but are fully converted to private housing after 10 years. Going forward, the government will be launching three EC sites in Pasir Ris, Bukit Panjang, and Tampines that are expected to yield 1,415 units.
Developers seem more cautious of late judging from recent results of government land sales (GLS) tenders. The highest tender price of $340 per sq ft per plot ratio at Hougang Avenue 7 was 25 per cent lower than that of another site sold at Hougang Avenue 2 in May. The premium between the top and second bidder narrowed to 2.5 per cent.
In the second half of 2010, land that can potentially yield about 13,900 new private homes will be up for tender. It is the highest in the history of the GLS programme. Of the upcoming supply, about 8,100 units are confirmed for sale without the need for prior developer interest. If demand remains strong, the government is prepared to increase supply in the first half of 2011.
In light of this, prices of mass market properties may ease by 10 per cent in a year's time. This is not to say all mass market prices will follow suit as developments in better locations, near MRT stations or which offer good value should hold up.
Mid- to high-end properties are less likely to be adversely affected by the cooling measures as buyers are not as price-sensitive as those in the mass market. As such, the lower loan to value ratio for an investment property is unlikely to affect them as much as buyers of mass market and HDB properties. Sellers' stamp duties will also not affect investors so long as they do not sell within three years. In any case, the amount is not significant in relation to the overall value of the property.
Interest in prime property remains strong. However, buyers are cautious as the global economy is still fragile. Buying activity remains selective. Assuming there isn't another crisis, mid- to high-end properties are likely to remain fairly stable with prices down by 5-10 per cent over the next 12 months.
To sum up, the property market is unlikely to crash as the government monitors the market closely. In the past, measures have been taken to revive the property market if prices are depressed and vice versa. While the new policies benefit some people, they adversely affect many others. Time will tell whether this round of measures is well-calibrated or excessive. The authorities are equally anxious to monitor the impact and may well ease up should it hurt more deeply than intended.
No one benefits if the residential market is badly destabilised, particularly in a country where property is viewed as a valuable investment. Hopefully, the latest round of cooling measures will bring Singapore closer to a stable and sustainable property market.
Wendy Tang is director, residential services, Knight Frank and Png Poh Soon is senior manager, consultancy & research, Knight Frank
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : The evolution of the luxury home market
Business Times - 23 Sep 2010
The evolution of the luxury home market
Despite the ever-evolving definition of luxury residences, two characteristics continue to stand out: location and space, says HAN HUAN MEI
WHAT constitutes luxury homes today, especially when the entire price structure of residential homes has changed so drastically in the past five years?
Prior to 2003, one could safely define prime residential areas as postal districts 9, 10, and 11 which comprise the Cairnhill, Orchard, Grange, Tanglin, Holland, Bukit Timah, Dunearn, Newton, and Novena areas. The districts immediately surrounding these three would comprise the next price range of housing.
Anywhere beyond, going into the HDB estates and new towns would be homes of the lower price range, catering to the masses. In dollar terms, prime residential had a price tag of $1,500 per square foot (psf) and above at that time. The mid-tier price range was $900-$1,400 psf and mass market homes were priced below $900 psf.
The prime residential market saw a watershed year in 2007 because there was a clear split between prime and luxury homes when the latter attained headline prices way above $3,000 psf. When some new projects hit $4,000 psf and above, they formed a new class called 'super-luxury' homes.
Unfortunately, a misnomer was created when small-format homes began to sprout in the prime districts to counter the high quantum. These units fetched prices ranging from $2,500 psf to $3,500 psf but their product attributes could not offer a luxurious lifestyle.
Luxury living in Singapore has evolved over time, from quality finishes to designer fittings to branded residences with butler services and lifestyle features like carpark lofts and private berths for waterfront homes.
The rich and well-heeled are attracted to them because owning a trophy residence beats owning a standard home any time. Two characteristics of luxury residences continue to stand out: location and space.
They are located at exclusive addresses and come with generous living areas for the enjoyment of space. URA has demarcated the Core Central Region (CCR) as the location where high-end homes are found.
This comprises the traditional prime districts 9, 10, and 11 as well as the waterfront locations of Marina Bay, Sentosa Cove, and Keppel Bay.
In recognition of the various types of residences and in consideration of the current higher price levels, the general consensus is that prime properties fall within the $2.5 million to $5 million price band, luxury homes within the $5 million to $8 million band, and super-luxury homes are those priced $8 million and above.
As a guide, luxury and super- luxury homes are taken to be 2,500 sq ft and above, befitting a lavish lifestyle.
In 2007, sales volume was at a record high and home prices peaked.
URA data for the selected districts where luxury homes are found showed that 230 homes in the primary market (Table 1) were sold at prices $5 million and above from Jan to Aug 2010. Within this basket, 144 new homes (Table 2) were of sizes 2,500 sq ft and above.
At the peak of the market in 2007, 701 new homes were sold at $5 million and above (Table 1) and of these, 402 were 2,500 sq ft and above. On the whole, luxury prices in 2010 are still lower than those in 2007.
In the secondary market, the first eight months of 2010 saw the sale of 182 luxury homes above $5 million sold in 2007, of which 166 were over 2,500 sq ft. This compared with 489 homes in the same price range sold in 2007 but a higher number of 532 homes were over 2,500 sq ft. The higher number of large units sold could be attributed to the more affordable price levels of older properties.
Back in 2007, the focus of the market was on new projects setting new benchmarks, causing the rift between luxury prices in the secondary and primary markets to widen.
It is foreseeable that the luxury transaction volume in 2010 will not measure up to that in 2007. Price-wise, the prices of secondary luxury homes have more or less caught up with the levels in 2007 but those in the primary market are still lagging behind by 10 per cent on the average.
The implication is that there is a potential for current prices of new luxury homes to rise as the economy strengthens and sentiment improves. Some 1,000 units in luxury projects like Ardmore II, 8 Napier, and Paterson Suites were completed this year, with another 1,400 units due for completion between September 2010 and December 2011.
Among them, around 900 units remain unsold. It was reported that property funds have been involved in the bulk deals of high-end apartments.
One of these was Arch Capital, who bought all 34 units of Royal Oak - a refurbished project in Anderson Road - at around $200 million or $2,337 psf. The likely route that developers will take is to source for such bulk purchasers. Alternatively, they may keep them for rental income until higher prices are achieved later.
The writer is associate director, CBRE Research, Singapore
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The evolution of the luxury home market
Despite the ever-evolving definition of luxury residences, two characteristics continue to stand out: location and space, says HAN HUAN MEI
WHAT constitutes luxury homes today, especially when the entire price structure of residential homes has changed so drastically in the past five years?
Prior to 2003, one could safely define prime residential areas as postal districts 9, 10, and 11 which comprise the Cairnhill, Orchard, Grange, Tanglin, Holland, Bukit Timah, Dunearn, Newton, and Novena areas. The districts immediately surrounding these three would comprise the next price range of housing.
Anywhere beyond, going into the HDB estates and new towns would be homes of the lower price range, catering to the masses. In dollar terms, prime residential had a price tag of $1,500 per square foot (psf) and above at that time. The mid-tier price range was $900-$1,400 psf and mass market homes were priced below $900 psf.
The prime residential market saw a watershed year in 2007 because there was a clear split between prime and luxury homes when the latter attained headline prices way above $3,000 psf. When some new projects hit $4,000 psf and above, they formed a new class called 'super-luxury' homes.
Unfortunately, a misnomer was created when small-format homes began to sprout in the prime districts to counter the high quantum. These units fetched prices ranging from $2,500 psf to $3,500 psf but their product attributes could not offer a luxurious lifestyle.
Luxury living in Singapore has evolved over time, from quality finishes to designer fittings to branded residences with butler services and lifestyle features like carpark lofts and private berths for waterfront homes.
The rich and well-heeled are attracted to them because owning a trophy residence beats owning a standard home any time. Two characteristics of luxury residences continue to stand out: location and space.
They are located at exclusive addresses and come with generous living areas for the enjoyment of space. URA has demarcated the Core Central Region (CCR) as the location where high-end homes are found.
This comprises the traditional prime districts 9, 10, and 11 as well as the waterfront locations of Marina Bay, Sentosa Cove, and Keppel Bay.
In recognition of the various types of residences and in consideration of the current higher price levels, the general consensus is that prime properties fall within the $2.5 million to $5 million price band, luxury homes within the $5 million to $8 million band, and super-luxury homes are those priced $8 million and above.
As a guide, luxury and super- luxury homes are taken to be 2,500 sq ft and above, befitting a lavish lifestyle.
In 2007, sales volume was at a record high and home prices peaked.
URA data for the selected districts where luxury homes are found showed that 230 homes in the primary market (Table 1) were sold at prices $5 million and above from Jan to Aug 2010. Within this basket, 144 new homes (Table 2) were of sizes 2,500 sq ft and above.
At the peak of the market in 2007, 701 new homes were sold at $5 million and above (Table 1) and of these, 402 were 2,500 sq ft and above. On the whole, luxury prices in 2010 are still lower than those in 2007.
In the secondary market, the first eight months of 2010 saw the sale of 182 luxury homes above $5 million sold in 2007, of which 166 were over 2,500 sq ft. This compared with 489 homes in the same price range sold in 2007 but a higher number of 532 homes were over 2,500 sq ft. The higher number of large units sold could be attributed to the more affordable price levels of older properties.
Back in 2007, the focus of the market was on new projects setting new benchmarks, causing the rift between luxury prices in the secondary and primary markets to widen.
It is foreseeable that the luxury transaction volume in 2010 will not measure up to that in 2007. Price-wise, the prices of secondary luxury homes have more or less caught up with the levels in 2007 but those in the primary market are still lagging behind by 10 per cent on the average.
The implication is that there is a potential for current prices of new luxury homes to rise as the economy strengthens and sentiment improves. Some 1,000 units in luxury projects like Ardmore II, 8 Napier, and Paterson Suites were completed this year, with another 1,400 units due for completion between September 2010 and December 2011.
Among them, around 900 units remain unsold. It was reported that property funds have been involved in the bulk deals of high-end apartments.
One of these was Arch Capital, who bought all 34 units of Royal Oak - a refurbished project in Anderson Road - at around $200 million or $2,337 psf. The likely route that developers will take is to source for such bulk purchasers. Alternatively, they may keep them for rental income until higher prices are achieved later.
The writer is associate director, CBRE Research, Singapore
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : A Tale of Two Centres
Business Times - 23 Sep 2010
A Tale of Two Centres
Jurong Gateway and Paya Lebar Central are two up-and-coming commercial hubs, report DESMOND SIM and CHUA YANG LIANG
SINGAPORE'S population reached 5.08 million as at end-June 2010 based on advance estimates. This is a 26 per cent increase from the last census conducted in 2000. The Ministry of Trade and Industry also forecast that the economy would grow between 13 and 15 per cent in 2010 while the long-term economic growth should moderate to a more sustainable level of 5-6 per cent as most economists have suggested. If this population trend supported by the strong economic growth prospect continues, we should expect greater urbanisation of suburban centres.
The rise of these regional centres not only spreads jobs across the island (so as to avoid overloading the downtown) but effectively expanded the commercial area which was traditionally in the downtown, to meet Singapore's long-term economic needs.
Four regional centres were first identified in 1990: Tampines, Jurong East, Woodlands, and Seletar. Seletar was subsequently dropped while Tampines regional centre became an exemplary success of this decentralisation plan. In 1992, Tampines New Town was given the World Habitat Award by the Building and Social Housing Foundation of the United Nations for outstanding contribution toward human settlement and development.
In addition, several sub-regional centres were also identified to serve as supporting hubs between the Central Business District and these regional centres. They include Buona Vista, Bishan, Serangoon, Paya Lebar, and Marine Parade. These commercial hubs are to be linked by orbital rail lines like the Circle Line. To date, Bishan is an exemplary sub-regional centre, buzzing with a large day and night population served by an MRT interchange, a modern retail mall, offices, and a regional riverine park.
In May 2008, the Urban Redevelopment Authority (URA) revealed the Master Plan 2008 and announced that there would be further plans to intensify these decentralised commercial hubs. Two of the plans include the Jurong Lake District and Paya Lebar Central. The former is to be transformed into a regional centre for business and leisure and the latter into a sub-regional centre with offices, retail, hotels, and attractive public spaces.
Jurong Lake District
Since the 1960s, Jurong has been synonymous with the industrialisation of Singapore. However this image is fast changing. Currently, in addition to the existing industrial areas, there is also a large resident population housed predominantly in public housing and smaller pockets of private housing estates.
The 2008 Master Plan unveiled grand plans to re- brand Jurong into a more vibrant neighbourhood. Renamed as Jurong Lake District, this 360-hectare precinct will consist of a commercial hub focused on the Jurong East MRT interchange - appropriately named as the Jurong Gateway plus a synergistic connection to the leisure destination around the existing Jurong Lake.
The 70-hectare Jurong Gateway will be set in a unique lakeside environment, providing some 500,000 sq m of office stock and another 250,000 sq m of retail and entertainment space. This quantum is in fact more than two-and-a-half times the size of today's Tampines regional centre. Complementing the Jurong Gateway is the International Business Park, as well as the research and educational institutions in the vicinity. Coupled with plans for 1,000 new private homes to be added around the MRT station, and up to 2,800 hotel rooms in the area, it is poised to be the biggest commercial hub outside the CBD.
The public, including property developers, has embraced the plans for this new district. A few months after the launch of the 2008 Master Plan, Frasers Centrepoint Homes launched Caspian - a 712-unit, 99-year leasehold condominium located close to Lakeside MRT station. This project, despite being launched in the midst of a global economic slowdown, was sold out within weeks of its launch.
Riding on this momentum, there was also strong interest from developers when another 99-year leasehold residential site adjacent to Lakeside MRT station was launched on the confirmed list in March this year. This 16,117.2 sq m site attracted a total of 14 bids with Keppel Land putting up the winning bid of $499 psf per plot ratio. This is double the land price that Frasers Centrepoint Homes paid for the Caspian site at $248 psf per plot ratio in December 2007.
In June 2010, the white site at Jurong Gateway Road was awarded to Lend Lease when it submitted the highest tender price for the site at $650 psf per plot ratio.
As a result of strong interest in Jurong over the past six months, the Ministry of National Development has revised upwards the development charge (DC) rates for the area. According to the URA's DC map, the Jurong Gateway falls within Sector 112 while Lakeside falls within Sector 113. Based on the commercial use group, Sector 112 witnessed the highest growth among the other 118 sectors at 25 per cent, while Sector 113 was tagged with a growth of 7 per cent. On the non-landed residential use group, both Sectors 112 and 113 saw increases of 13 per cent and 17 per cent respectively.
In the residential use group, both Tampines and Jurong Gateway started off at a similar implied land value. Possibly through greater interest in the Tampines region since the late 90s, its implied land value has edged higher. Post 2003, the residential implied land value for Jurong Gateway witnessed a surge and now commands a notable premium over Tampines. More residential developments especially in the West Coast/Clementi areas is the main factor.
Interest for development land in the Jurong Gateway and Lakeside areas are likely to intensify over the next few years. Land prices in these areas are likely to face upward pressure resulting in a narrower gap between Lakeside and Tampines, and Jurong Gateway to command an even higher premium over Tampines eventually.
Over on the commercial use group, Tampines has been enjoying a premium over the other two sectors since the mid-90s. Recent land transactions however have reduced the premium that Tampines has over Jurong Gateway. It is probable that the implied land value in Jurong Gateway would eventually surpass that in Tampines.
Paya Lebar Central
Based on the 2008 Master Plan, the vision for Paya Lebar Central is to develop it into a lively, pedestrian-friendly commercial hub with a distinctive Malay cultural identity. A new public plaza next to Paya Lebar MRT will be developed as a focal point. There are about 12 hectares of land available for development, translating to some 294,000 sq m of office, and another 200,000 of hotel and retail, spaces. In addition, there will be more community spaces and a new and wider pedestrian mall that would enhance the area's distinctive Malay heritage.
Listed under the government land sales reserve list, there is presently a commercial site available for tender that is located next to the Paya Lebar MRT interchange. This 1.42-hectare site can generate about 59,640 sq m of commercial gross floor area with further details to be released in December 2010.
Of all the new growth areas identified by the 2008 Master Plan, Paya Lebar Central seems to be the most inert in terms of activity so far. As compared to Sector 104 (Bishan sub-regional centre), the implied land values for Sector 101 (Paya Lebar Central) for both commercial and residential use groups still lag far behind.
Perhaps due to the proximity to good schools and established amenities in Bishan, Sector 104 (Bishan sub-regional centre) commands a much higher residential land premium over Paya Lebar Central. In commercial use group terms, the Bishan sub-regional centre again has had a sustained premium over Paya Lebar Central since 1996.
Looking ahead, as the development plans for Paya Lebar Central are focused mainly on commercial activities around the Paya Lebar MRT interchange, there will be greater pressure on the implied land value to rise to that of the Bishan sub-regional centre. However the same cannot be said for the residential implied land value.
Conclusion
Tampines regional and Bishan sub-regional centres are two living examples of the impact of the 1991 Concept Plan. These areas have not only established, but commanded a premium over other areas in terms of land values. If the planner's vision is upheld and Singapore continues to enjoy sustained economic growth, more property investments in the suburban growth centres can be expected. Land values in places such as Jurong Lake District and Paya Lebar Central can but only move northwards.
Desmond Sim is associate director, research and consultancy Singapore and Chua Yang Liang is head of research, South-east Asia, Jones Lang LaSalle
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
A Tale of Two Centres
Jurong Gateway and Paya Lebar Central are two up-and-coming commercial hubs, report DESMOND SIM and CHUA YANG LIANG
SINGAPORE'S population reached 5.08 million as at end-June 2010 based on advance estimates. This is a 26 per cent increase from the last census conducted in 2000. The Ministry of Trade and Industry also forecast that the economy would grow between 13 and 15 per cent in 2010 while the long-term economic growth should moderate to a more sustainable level of 5-6 per cent as most economists have suggested. If this population trend supported by the strong economic growth prospect continues, we should expect greater urbanisation of suburban centres.
The rise of these regional centres not only spreads jobs across the island (so as to avoid overloading the downtown) but effectively expanded the commercial area which was traditionally in the downtown, to meet Singapore's long-term economic needs.
Four regional centres were first identified in 1990: Tampines, Jurong East, Woodlands, and Seletar. Seletar was subsequently dropped while Tampines regional centre became an exemplary success of this decentralisation plan. In 1992, Tampines New Town was given the World Habitat Award by the Building and Social Housing Foundation of the United Nations for outstanding contribution toward human settlement and development.
In addition, several sub-regional centres were also identified to serve as supporting hubs between the Central Business District and these regional centres. They include Buona Vista, Bishan, Serangoon, Paya Lebar, and Marine Parade. These commercial hubs are to be linked by orbital rail lines like the Circle Line. To date, Bishan is an exemplary sub-regional centre, buzzing with a large day and night population served by an MRT interchange, a modern retail mall, offices, and a regional riverine park.
In May 2008, the Urban Redevelopment Authority (URA) revealed the Master Plan 2008 and announced that there would be further plans to intensify these decentralised commercial hubs. Two of the plans include the Jurong Lake District and Paya Lebar Central. The former is to be transformed into a regional centre for business and leisure and the latter into a sub-regional centre with offices, retail, hotels, and attractive public spaces.
Jurong Lake District
Since the 1960s, Jurong has been synonymous with the industrialisation of Singapore. However this image is fast changing. Currently, in addition to the existing industrial areas, there is also a large resident population housed predominantly in public housing and smaller pockets of private housing estates.
The 2008 Master Plan unveiled grand plans to re- brand Jurong into a more vibrant neighbourhood. Renamed as Jurong Lake District, this 360-hectare precinct will consist of a commercial hub focused on the Jurong East MRT interchange - appropriately named as the Jurong Gateway plus a synergistic connection to the leisure destination around the existing Jurong Lake.
The 70-hectare Jurong Gateway will be set in a unique lakeside environment, providing some 500,000 sq m of office stock and another 250,000 sq m of retail and entertainment space. This quantum is in fact more than two-and-a-half times the size of today's Tampines regional centre. Complementing the Jurong Gateway is the International Business Park, as well as the research and educational institutions in the vicinity. Coupled with plans for 1,000 new private homes to be added around the MRT station, and up to 2,800 hotel rooms in the area, it is poised to be the biggest commercial hub outside the CBD.
The public, including property developers, has embraced the plans for this new district. A few months after the launch of the 2008 Master Plan, Frasers Centrepoint Homes launched Caspian - a 712-unit, 99-year leasehold condominium located close to Lakeside MRT station. This project, despite being launched in the midst of a global economic slowdown, was sold out within weeks of its launch.
Riding on this momentum, there was also strong interest from developers when another 99-year leasehold residential site adjacent to Lakeside MRT station was launched on the confirmed list in March this year. This 16,117.2 sq m site attracted a total of 14 bids with Keppel Land putting up the winning bid of $499 psf per plot ratio. This is double the land price that Frasers Centrepoint Homes paid for the Caspian site at $248 psf per plot ratio in December 2007.
In June 2010, the white site at Jurong Gateway Road was awarded to Lend Lease when it submitted the highest tender price for the site at $650 psf per plot ratio.
As a result of strong interest in Jurong over the past six months, the Ministry of National Development has revised upwards the development charge (DC) rates for the area. According to the URA's DC map, the Jurong Gateway falls within Sector 112 while Lakeside falls within Sector 113. Based on the commercial use group, Sector 112 witnessed the highest growth among the other 118 sectors at 25 per cent, while Sector 113 was tagged with a growth of 7 per cent. On the non-landed residential use group, both Sectors 112 and 113 saw increases of 13 per cent and 17 per cent respectively.
In the residential use group, both Tampines and Jurong Gateway started off at a similar implied land value. Possibly through greater interest in the Tampines region since the late 90s, its implied land value has edged higher. Post 2003, the residential implied land value for Jurong Gateway witnessed a surge and now commands a notable premium over Tampines. More residential developments especially in the West Coast/Clementi areas is the main factor.
Interest for development land in the Jurong Gateway and Lakeside areas are likely to intensify over the next few years. Land prices in these areas are likely to face upward pressure resulting in a narrower gap between Lakeside and Tampines, and Jurong Gateway to command an even higher premium over Tampines eventually.
Over on the commercial use group, Tampines has been enjoying a premium over the other two sectors since the mid-90s. Recent land transactions however have reduced the premium that Tampines has over Jurong Gateway. It is probable that the implied land value in Jurong Gateway would eventually surpass that in Tampines.
Paya Lebar Central
Based on the 2008 Master Plan, the vision for Paya Lebar Central is to develop it into a lively, pedestrian-friendly commercial hub with a distinctive Malay cultural identity. A new public plaza next to Paya Lebar MRT will be developed as a focal point. There are about 12 hectares of land available for development, translating to some 294,000 sq m of office, and another 200,000 of hotel and retail, spaces. In addition, there will be more community spaces and a new and wider pedestrian mall that would enhance the area's distinctive Malay heritage.
Listed under the government land sales reserve list, there is presently a commercial site available for tender that is located next to the Paya Lebar MRT interchange. This 1.42-hectare site can generate about 59,640 sq m of commercial gross floor area with further details to be released in December 2010.
Of all the new growth areas identified by the 2008 Master Plan, Paya Lebar Central seems to be the most inert in terms of activity so far. As compared to Sector 104 (Bishan sub-regional centre), the implied land values for Sector 101 (Paya Lebar Central) for both commercial and residential use groups still lag far behind.
Perhaps due to the proximity to good schools and established amenities in Bishan, Sector 104 (Bishan sub-regional centre) commands a much higher residential land premium over Paya Lebar Central. In commercial use group terms, the Bishan sub-regional centre again has had a sustained premium over Paya Lebar Central since 1996.
Looking ahead, as the development plans for Paya Lebar Central are focused mainly on commercial activities around the Paya Lebar MRT interchange, there will be greater pressure on the implied land value to rise to that of the Bishan sub-regional centre. However the same cannot be said for the residential implied land value.
Conclusion
Tampines regional and Bishan sub-regional centres are two living examples of the impact of the 1991 Concept Plan. These areas have not only established, but commanded a premium over other areas in terms of land values. If the planner's vision is upheld and Singapore continues to enjoy sustained economic growth, more property investments in the suburban growth centres can be expected. Land values in places such as Jurong Lake District and Paya Lebar Central can but only move northwards.
Desmond Sim is associate director, research and consultancy Singapore and Chua Yang Liang is head of research, South-east Asia, Jones Lang LaSalle
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : How en bloc sales may pan out
Business Times - 23 Sep 2010
How en bloc sales may pan out
ONG TECK HUI says Singapore is faced with a looming under-supply situation in the prime and mid-prime segments
THE residential property market roared back to life in the second half of 2009 with both transaction volume and prices surging upwards, following a year of relative inactivity due to the global financial crisis. Against this backdrop, buyers flooded the market again and developers were busy replenishing their land banks so as to capitalise on the growing demand. The recently announced measures to cool both the HDB resale and private housing sectors may change certain dynamics in the market for enbloc sites so it may be timely for a quick review.
Prime shortage looming?
As the market became more buoyant, transactions in prime district residential properties picked up. Buyers are attracted by their central location, ability to command better rental yields, investment appeal, and other reasons.
During the first half of 2010, prime residential properties accounted for nearly one-third of primary market sales. Interest in the prime districts has been picking up in the last couple of years - in 2008, 23 per cent of primary market sales were attributable to prime properties while in 2009, there was an increase to 25 per cent.
Year-to-date, developers have poured more than $2.5 billion into residential sites (excluding executive condominium or EC sites) offered under the Government Land Sales programme (GLS).
Most of the GLS residential sites cater to mass suburban housing where the bulk of housing demand lies. It is certainly a sub-market which no housing developer can ignore. Furthermore, GLS sites are large, offering economies of scale in the entire investment chain for a developer, including site search, acquisition, planning, design, development, marketing, and sales.
While the GLS programme caters more to the suburban sector, demand for prime and mid-prime residential properties are generally met by sites offered within the private domain, including those under collective sales.
Year-to-date, developers have spent some $1.3 billion on private residential sites, with prime district sites accounting for 33 per cent of that value. Over the total amount invested in both GLS and private sites, it accounts for just 11 per cent. This seems to suggest an under-investment in prime district sites. The amount invested in mid- prime sites is also low, at 14 per cent of the total.
At this rate there would be a shortage of supply of prime and mid-prime residential properties. Barely 300 units will be generated by the prime sites transacted thus far while mid-prime sites would yield about 700 units.
In contrast, GLS residential sites would result in well over 7,000 suburban housing units being developed. It is noted that as at the second quarter of 2010, there are 10,997 units with pre-requisites for sale but not yet launched and 39 per cent of that supply is from the prime districts. However, that quantum is barely equivalent to demand in a good year and we need to address the needs of the market beyond that time horizon.
Fallout from new measures
We now consider the recent measures to cool the market in our review. The increased holding period for Sellers' Stamp Duty (SSD), reduced loan limit of 70 per cent, and increased upfront cash of 10 per cent for buyers with one or more outstanding mortgages would deter speculators and short- term investors, and encourage greater financial prudence amongst buyers in general. This should result in some calming effect on the market.
The HDB measures, on the other hand, have been designed to cool the HDB resale market.
The higher income ceiling for Design, Build, and Sell Scheme (DBSS) flats, increased supply for executive condominiums and DBSS flats, longer minimum occupation period (MOP) of five years for resale flats, and ban on concurrent ownership of HDB resale flats and private housing during the MOP - these are expected to moderate HDB resale activity.
As HDB households ride on a buoyant resale market to upgrade into the suburban housing market, we believe this housing segment will feel the effects of the market moderation more than the upper market segments. The prime and mid-prime residential markets appear to be more insulated from lower end market risks and could be more resilient.
While the suburban housing market appears set to have more challenges, it does not mean that it is to be avoided by developers. At realistic price levels, buyers would surely bite and any housing developer would strive to maintain an adequate suburban land stock to realise such opportunities.
However, good investment is about balance and ability to manage exposure and risks. It is timely for housing developers to review their portfolios and to re-balance if necessary. We are faced with a looming under-supply situation in the prime and mid-prime segments while the suburban market is more amply supplied.
Collective sales trends
During the course of this year, residential collective sales activity has been gradually picking up with increasing interest from buyers. In Q1, $141 million worth of collective sales were done. The quantum rose to $505 million in Q2 and registered $586 million in Q3 to date.
The outlook is for this trend to continue for the rest of this year into 2011. As suburban residential sites are likely to face more challenges from the new measures, we see a likely shift by developers toward collective sales.
An additional trend is toward increased investment in collective sale sites in prime locations. Year-to-date, only three out of 20 successful collective sales have occurred in the prime districts, accounting for 31 per cent of total collective sales value. As developers realise the under-investment in prime as well as mid-prime sites and a potential shortage of supply from these locations, they are expected to focus more on these segments.
Demand for collective sale sites will be met by more than 80 sites awaiting sales launches. Nearly half of these are in prime districts and a good number are in mid-prime locations. The stage is set for a change in market play in collective sales - all that is needed is for the players to act.
The writer is executive director, research and consultancy, Credo Real Estate
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
How en bloc sales may pan out
ONG TECK HUI says Singapore is faced with a looming under-supply situation in the prime and mid-prime segments
THE residential property market roared back to life in the second half of 2009 with both transaction volume and prices surging upwards, following a year of relative inactivity due to the global financial crisis. Against this backdrop, buyers flooded the market again and developers were busy replenishing their land banks so as to capitalise on the growing demand. The recently announced measures to cool both the HDB resale and private housing sectors may change certain dynamics in the market for enbloc sites so it may be timely for a quick review.
Prime shortage looming?
As the market became more buoyant, transactions in prime district residential properties picked up. Buyers are attracted by their central location, ability to command better rental yields, investment appeal, and other reasons.
During the first half of 2010, prime residential properties accounted for nearly one-third of primary market sales. Interest in the prime districts has been picking up in the last couple of years - in 2008, 23 per cent of primary market sales were attributable to prime properties while in 2009, there was an increase to 25 per cent.
Year-to-date, developers have poured more than $2.5 billion into residential sites (excluding executive condominium or EC sites) offered under the Government Land Sales programme (GLS).
Most of the GLS residential sites cater to mass suburban housing where the bulk of housing demand lies. It is certainly a sub-market which no housing developer can ignore. Furthermore, GLS sites are large, offering economies of scale in the entire investment chain for a developer, including site search, acquisition, planning, design, development, marketing, and sales.
While the GLS programme caters more to the suburban sector, demand for prime and mid-prime residential properties are generally met by sites offered within the private domain, including those under collective sales.
Year-to-date, developers have spent some $1.3 billion on private residential sites, with prime district sites accounting for 33 per cent of that value. Over the total amount invested in both GLS and private sites, it accounts for just 11 per cent. This seems to suggest an under-investment in prime district sites. The amount invested in mid- prime sites is also low, at 14 per cent of the total.
At this rate there would be a shortage of supply of prime and mid-prime residential properties. Barely 300 units will be generated by the prime sites transacted thus far while mid-prime sites would yield about 700 units.
In contrast, GLS residential sites would result in well over 7,000 suburban housing units being developed. It is noted that as at the second quarter of 2010, there are 10,997 units with pre-requisites for sale but not yet launched and 39 per cent of that supply is from the prime districts. However, that quantum is barely equivalent to demand in a good year and we need to address the needs of the market beyond that time horizon.
Fallout from new measures
We now consider the recent measures to cool the market in our review. The increased holding period for Sellers' Stamp Duty (SSD), reduced loan limit of 70 per cent, and increased upfront cash of 10 per cent for buyers with one or more outstanding mortgages would deter speculators and short- term investors, and encourage greater financial prudence amongst buyers in general. This should result in some calming effect on the market.
The HDB measures, on the other hand, have been designed to cool the HDB resale market.
The higher income ceiling for Design, Build, and Sell Scheme (DBSS) flats, increased supply for executive condominiums and DBSS flats, longer minimum occupation period (MOP) of five years for resale flats, and ban on concurrent ownership of HDB resale flats and private housing during the MOP - these are expected to moderate HDB resale activity.
As HDB households ride on a buoyant resale market to upgrade into the suburban housing market, we believe this housing segment will feel the effects of the market moderation more than the upper market segments. The prime and mid-prime residential markets appear to be more insulated from lower end market risks and could be more resilient.
While the suburban housing market appears set to have more challenges, it does not mean that it is to be avoided by developers. At realistic price levels, buyers would surely bite and any housing developer would strive to maintain an adequate suburban land stock to realise such opportunities.
However, good investment is about balance and ability to manage exposure and risks. It is timely for housing developers to review their portfolios and to re-balance if necessary. We are faced with a looming under-supply situation in the prime and mid-prime segments while the suburban market is more amply supplied.
Collective sales trends
During the course of this year, residential collective sales activity has been gradually picking up with increasing interest from buyers. In Q1, $141 million worth of collective sales were done. The quantum rose to $505 million in Q2 and registered $586 million in Q3 to date.
The outlook is for this trend to continue for the rest of this year into 2011. As suburban residential sites are likely to face more challenges from the new measures, we see a likely shift by developers toward collective sales.
An additional trend is toward increased investment in collective sale sites in prime locations. Year-to-date, only three out of 20 successful collective sales have occurred in the prime districts, accounting for 31 per cent of total collective sales value. As developers realise the under-investment in prime as well as mid-prime sites and a potential shortage of supply from these locations, they are expected to focus more on these segments.
Demand for collective sale sites will be met by more than 80 sites awaiting sales launches. Nearly half of these are in prime districts and a good number are in mid-prime locations. The stage is set for a change in market play in collective sales - all that is needed is for the players to act.
The writer is executive director, research and consultancy, Credo Real Estate
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Housing loans demystified
Business Times - 23 Sep 2010
Housing loans demystified
DENNIS NG explains what the latest changes in property financing are and what they mean to you
WHAT is the outlook for interest rates? How will the latest changes in property financing affect you? Fret not, this article will help guide you in the right direction.
From Aug 30, 2010, regardless of whether you're a Singaporean, permanent resident or foreigner, if you have an existing housing loan on a property - whether the property is in Singapore or overseas - the maximum financing you can get for your property purchase has been revised downwards to 70 per cent from 80 per cent previously.
And also from Aug 30, 2010, if you have an existing housing loan, and if you want to purchase another property, the minimum cash downpayment has been revised to 10 per cent from 5 per cent previously.
Thus, if you have an existing housing loan and are thinking of buying a property, it is time to re-work your numbers. And you might need to put off the decision to buy a property for the time being if you do not have the required minimum 30 per cent downpayment for the property, as the maximum financing has been reduced to 70 per cent.
However, if you have an existing property that is fully paid, and have no outstanding housing loan, and if you buy a property, you can still get up to 80 per cent financing. The above measures on the cash downpayment and 70 per cent financing limit apply to all property purchases with date of option to purchase dated Aug 30 or later.
How does it affect upgraders and people in the process of selling their property?
The government's main intention of introducing this new measure is to deter speculation in property. However, it can affect upgraders and people in the process of selling their existing property.
For instance, if you have an existing property which has an outstanding housing loan, but want to buy a new condominium project to be completed in a few years' time, you can only get maximum 70 per cent financing.
Those with plans to move are affected as well. If you plan to move to a new home and you purchase the new home before you sell your existing home, and if there is an outstanding loan on your existing home, you can only get a maximum of 70 per cent financing for your new home.
For those who have sold their property but the transaction is not completed yet, they might be affected as well.
In order to qualify for 80 per cent financing, homebuyers must prove the sale of their existing home to get the 80 per cent loan. For HDB flats, this requires an approval letter from HDB to the seller within two weeks from the date of the first sales appointment, which typically is about one to two months after the date of option to purchase.
For private properties, a signed sales and purchase agreement is required as proof, and a certificate from Iras showing that the stamp duty has been paid by the buyer of the existing home.
Types of housing loan packages available
With the recent entry of new players into the market, such as ANZ Bank and CIMB Bank, there are currently altogether 16 financial institutions that are active in providing housing loans in Singapore.
Each financial institution offers five to 10 different home loan packages. Thus, at any point in time, there are easily over 120 different housing loan packages available for you to choose from.
Housing loan packages with interest rates pegged to Sibor and SOR were only introduced since 2007.
Over the last three years, as interest rates remain low, and with more consumers aware of the availability of such packages, there seems to be a trend of more people choosing a housing loan package pegged to Sibor or SOR instead of floating rate packages, with interest rates pegged to bank board rates.
The reason for this is Sibor and SOR are transparent and are average market interest rates and are not subject to unilateral changes by individual banks, but each bank has its own discretion in determining the board rates.
Which is the best housing loan package?
Because of competition, banks change their housing loan packages very often. Furthermore, other than interest rates, banks vary their other terms and conditions, such as the penalty period, which varies from zero penalty period to three years' penalty period; penalty fees, which might vary from one per cent to 1.5 per cent; flexibility in making partial repayment within the penalty period; number of years of free fire insurance provided; amount of legal subsidy provided; etc.
A common misconception is that consumers might think there is such a thing as a best housing loan package.
The fact is, different home loan packages are suitable for people with different needs and priorities. Thus, there is no one-size-fits-all solution. You need to choose a housing loan package that is most suitable for you.
In this aspect, instead of trying to check with different banks on the different home loan packages available, which can be very confusing to consumers, a better choice might be to talk to an independent mortgage consultancy, who will, based on your needs and priorities, help you shortlist a few of the housing loan packages that are most suitable for you.
This service is provided free to you as a consumer, as the mortgage brokers are separately paid a fee by the banks for the service they provide.
Outlook for interest rates
Sibor (Singapore Interbank Offered Rate), the average interest rate banks borrow/lend money to one another, is used as a guideline by banks in setting interest rates on housing loans.
Currently, Sibor is at its lowest level. The three-month Sibor (as at Sept 3) was 0.543 per cent while the SOR (Swap Offer Rate) was at 0.308 per cent. SOR is basically Sibor + US$ swap cost into S$ rates, it involves swapping US$ into S$. Thus SOR is also affected by the volatility of the exchange rate of US$ versus S$.
In turn, Sibor is affected by mainly two factors. Namely, the US Fed interest rates and the liquidity of the Singapore banking sector.
Given that the US economy remains weak, it is likely that the US will continue to keep interest rates low for the next six to 12 months. And given the ample liquidity in Singapore's banking sector, it is likely that Sibor, and thus housing loan interest rates, will remain low in the next six to 12 months as well.
Outlook for housing loans market
This year saw the entry of two new players to the housing loan market, namely CIMB and ANZ Bank, which makes the already competitive housing loan industry even more competitive.
This is indeed good news to consumers as competition typically results in better and more competitive home loan offers from banks.
The writer is an accountant by training with 17 years of bank lending experience. In 2003, he set up www.HousingLoanSG.com, an independent mortgage consultancy portal
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Doing your sums: If you have an existing housing loan and are thinking of buying a property, it is time to re-work your numbers
Housing loans demystified
DENNIS NG explains what the latest changes in property financing are and what they mean to you
WHAT is the outlook for interest rates? How will the latest changes in property financing affect you? Fret not, this article will help guide you in the right direction.
From Aug 30, 2010, regardless of whether you're a Singaporean, permanent resident or foreigner, if you have an existing housing loan on a property - whether the property is in Singapore or overseas - the maximum financing you can get for your property purchase has been revised downwards to 70 per cent from 80 per cent previously.
And also from Aug 30, 2010, if you have an existing housing loan, and if you want to purchase another property, the minimum cash downpayment has been revised to 10 per cent from 5 per cent previously.
Thus, if you have an existing housing loan and are thinking of buying a property, it is time to re-work your numbers. And you might need to put off the decision to buy a property for the time being if you do not have the required minimum 30 per cent downpayment for the property, as the maximum financing has been reduced to 70 per cent.
However, if you have an existing property that is fully paid, and have no outstanding housing loan, and if you buy a property, you can still get up to 80 per cent financing. The above measures on the cash downpayment and 70 per cent financing limit apply to all property purchases with date of option to purchase dated Aug 30 or later.
How does it affect upgraders and people in the process of selling their property?
The government's main intention of introducing this new measure is to deter speculation in property. However, it can affect upgraders and people in the process of selling their existing property.
For instance, if you have an existing property which has an outstanding housing loan, but want to buy a new condominium project to be completed in a few years' time, you can only get maximum 70 per cent financing.
Those with plans to move are affected as well. If you plan to move to a new home and you purchase the new home before you sell your existing home, and if there is an outstanding loan on your existing home, you can only get a maximum of 70 per cent financing for your new home.
For those who have sold their property but the transaction is not completed yet, they might be affected as well.
In order to qualify for 80 per cent financing, homebuyers must prove the sale of their existing home to get the 80 per cent loan. For HDB flats, this requires an approval letter from HDB to the seller within two weeks from the date of the first sales appointment, which typically is about one to two months after the date of option to purchase.
For private properties, a signed sales and purchase agreement is required as proof, and a certificate from Iras showing that the stamp duty has been paid by the buyer of the existing home.
Types of housing loan packages available
With the recent entry of new players into the market, such as ANZ Bank and CIMB Bank, there are currently altogether 16 financial institutions that are active in providing housing loans in Singapore.
Each financial institution offers five to 10 different home loan packages. Thus, at any point in time, there are easily over 120 different housing loan packages available for you to choose from.
Housing loan packages with interest rates pegged to Sibor and SOR were only introduced since 2007.
Over the last three years, as interest rates remain low, and with more consumers aware of the availability of such packages, there seems to be a trend of more people choosing a housing loan package pegged to Sibor or SOR instead of floating rate packages, with interest rates pegged to bank board rates.
The reason for this is Sibor and SOR are transparent and are average market interest rates and are not subject to unilateral changes by individual banks, but each bank has its own discretion in determining the board rates.
Which is the best housing loan package?
Because of competition, banks change their housing loan packages very often. Furthermore, other than interest rates, banks vary their other terms and conditions, such as the penalty period, which varies from zero penalty period to three years' penalty period; penalty fees, which might vary from one per cent to 1.5 per cent; flexibility in making partial repayment within the penalty period; number of years of free fire insurance provided; amount of legal subsidy provided; etc.
A common misconception is that consumers might think there is such a thing as a best housing loan package.
The fact is, different home loan packages are suitable for people with different needs and priorities. Thus, there is no one-size-fits-all solution. You need to choose a housing loan package that is most suitable for you.
In this aspect, instead of trying to check with different banks on the different home loan packages available, which can be very confusing to consumers, a better choice might be to talk to an independent mortgage consultancy, who will, based on your needs and priorities, help you shortlist a few of the housing loan packages that are most suitable for you.
This service is provided free to you as a consumer, as the mortgage brokers are separately paid a fee by the banks for the service they provide.
Outlook for interest rates
Sibor (Singapore Interbank Offered Rate), the average interest rate banks borrow/lend money to one another, is used as a guideline by banks in setting interest rates on housing loans.
Currently, Sibor is at its lowest level. The three-month Sibor (as at Sept 3) was 0.543 per cent while the SOR (Swap Offer Rate) was at 0.308 per cent. SOR is basically Sibor + US$ swap cost into S$ rates, it involves swapping US$ into S$. Thus SOR is also affected by the volatility of the exchange rate of US$ versus S$.
In turn, Sibor is affected by mainly two factors. Namely, the US Fed interest rates and the liquidity of the Singapore banking sector.
Given that the US economy remains weak, it is likely that the US will continue to keep interest rates low for the next six to 12 months. And given the ample liquidity in Singapore's banking sector, it is likely that Sibor, and thus housing loan interest rates, will remain low in the next six to 12 months as well.
Outlook for housing loans market
This year saw the entry of two new players to the housing loan market, namely CIMB and ANZ Bank, which makes the already competitive housing loan industry even more competitive.
This is indeed good news to consumers as competition typically results in better and more competitive home loan offers from banks.
The writer is an accountant by training with 17 years of bank lending experience. In 2003, he set up www.HousingLoanSG.com, an independent mortgage consultancy portal
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Doing your sums: If you have an existing housing loan and are thinking of buying a property, it is time to re-work your numbers
BT : There's life in the old' CBD yet
Business Times - 23 Sep 2010
There's life in the ol' CBD yet
The old CBD is fast shedding its drab image and becoming more lively, says CHUA CHOR HOON
SHENTON Way, which saw the building of many office blocks in the 1970s, stood on par with Raffles Place in terms of rents at the time. But it was overtaken by Raffles Place which grew in the last three decades to be the prime office area, with bigger and newer office buildings. Average rents in Raffles Place in the second quarter of 2010 were 34 per cent higher than those in Shenton Way.
Rents in Raffles Place were more than 100 per cent higher than those in the Anson/Tanjong Pagar area in the 1970s as the latter was further away from the centre of activity.
However, the rental gap closed to about 70 per cent in the 1990s as buildings like Fuji Xerox Tower, Southpoint, and Keppel Towers improved the stock offering. Nevertheless, the area remains a poor cousin to Raffles Place. And so is Shenton Way, with its assorted buildings that do not form a critical mass.
But things are looking up for both Shenton Way and the Anson/Tanjong Pagar area, even as interest and hype centre on Marina Bay which is taking shape. The two older parts of the Central Business District (CBD) are undergoing a rejuvenation and becoming more vibrant too.
Living in the city taking off
Living in the city did not take off for many years despite government efforts through its land sales programme. International Plaza was one of the few pioneer buildings in the 1970s that integrated residential with office use.
The Urban Redevelopment Authority's (URA) 1995 planning report for the Downtown Core listed the lack of a live-in population in the predominantly office area as a weakness. Plans were made to introduce residential developments into the central business district.
State land was sold for mixed developments that included residential use. Office space was allowed to be converted into other uses including residential, except for a brief period between May 2007 and October 2008 when office space was in short supply.
This has resulted in new residential developments springing up in the old CBD like the Icon (completed), One Shenton, 76 Shenton, The Clift, Lumiere (completed recently), and Altez.
Their prices range from $1,700 to $2,110 per sq ft, slightly below the $2,000 to $2,600 per sq ft which smallish developments in District 9 like the Espada, Vivace, and Vida currently command. Owning a home in the CBD has become an investor's favourite, as evidenced by the quick sale of units at The Icon, One Shenton, and 76 Shenton when they were launched.
Hotel cluster is forming
There are currently only two large hotel developments - M Hotel (413 rooms) and The Amara (380 rooms) - in the Anson/Tanjong Pagar area. There are, however, numerous boutique hotels such as Klapsons, Berjaya Singapore, and New Majestic Hotel.
The cluster of hotels is growing, with two hotels (660 rooms) currently being built on government sale sites at Tanjong Pagar, and a confirmed site next to Tanjong Pagar MRT, which was launched for tender on July 30, that could supply an estimated 315 hotel rooms.
In addition, there are three reserve hotel sites in the H2 2010 government land sale programme - two at Tanjong Pagar and one at Robinson Road - which could contribute close to 900 rooms. When completed, the cluster of hotels at Tanjong Pagar will be comparable in size to those at the Singapore River.
Rental gap with Raffles Place closer
The office rental gap between Raffles Place and Anson/ Tanjong Pagar has closed since the 1990s to 42 per cent recently as new office buildings of prime quality were completed. Some occupiers from the prime Raffles Place area have moved to the new buildings at Anson/Tanjong Pagar, which reflects the area's growing attraction.
For example, BlueScope Steel has relocated its office from Singapore Land Tower to Twenty Anson while QBE and Sumitomo Corporation have shifted from OCBC Centre and Equity Plaza respectively to Mapletree Anson.
Although the rental gap between the Raffles Place and Shenton Way areas has remained at about 35 per cent since 1990, this could become closer in the future as more old buildings are renovated or redeveloped. There is hardly any state land in Shenton Way that the government can sell to assist in rejuvenation. However, the private sector has in recent years been active in refreshing the area.
Many old buildings have or are undergoing rebuilding such as Tokio Marine Centre (former Asia Chambers Building), UIC Building, Afro Asia Building, and VTB Building. More changes are in the pipeline as several old buildings have recently changed hands, like Marina House, Chow House, Aviva Building, Cecil House, and DBS Building.
The old CBD is fast shedding its drab image and becoming more lively. The Anson/Tanjong Pagar end is developing into a mixed use area with spanking new offices and hotels while the Shenton Way area is becoming more residential with old offices being upgraded. The 24-hour McDonald's at Springleaf Tower speaks volumes for the growing population and nightlife in the old CBD.
The writer is head of South-east Asia research, DTZ
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
There's life in the ol' CBD yet
The old CBD is fast shedding its drab image and becoming more lively, says CHUA CHOR HOON
SHENTON Way, which saw the building of many office blocks in the 1970s, stood on par with Raffles Place in terms of rents at the time. But it was overtaken by Raffles Place which grew in the last three decades to be the prime office area, with bigger and newer office buildings. Average rents in Raffles Place in the second quarter of 2010 were 34 per cent higher than those in Shenton Way.
Rents in Raffles Place were more than 100 per cent higher than those in the Anson/Tanjong Pagar area in the 1970s as the latter was further away from the centre of activity.
However, the rental gap closed to about 70 per cent in the 1990s as buildings like Fuji Xerox Tower, Southpoint, and Keppel Towers improved the stock offering. Nevertheless, the area remains a poor cousin to Raffles Place. And so is Shenton Way, with its assorted buildings that do not form a critical mass.
But things are looking up for both Shenton Way and the Anson/Tanjong Pagar area, even as interest and hype centre on Marina Bay which is taking shape. The two older parts of the Central Business District (CBD) are undergoing a rejuvenation and becoming more vibrant too.
Living in the city taking off
Living in the city did not take off for many years despite government efforts through its land sales programme. International Plaza was one of the few pioneer buildings in the 1970s that integrated residential with office use.
The Urban Redevelopment Authority's (URA) 1995 planning report for the Downtown Core listed the lack of a live-in population in the predominantly office area as a weakness. Plans were made to introduce residential developments into the central business district.
State land was sold for mixed developments that included residential use. Office space was allowed to be converted into other uses including residential, except for a brief period between May 2007 and October 2008 when office space was in short supply.
This has resulted in new residential developments springing up in the old CBD like the Icon (completed), One Shenton, 76 Shenton, The Clift, Lumiere (completed recently), and Altez.
Their prices range from $1,700 to $2,110 per sq ft, slightly below the $2,000 to $2,600 per sq ft which smallish developments in District 9 like the Espada, Vivace, and Vida currently command. Owning a home in the CBD has become an investor's favourite, as evidenced by the quick sale of units at The Icon, One Shenton, and 76 Shenton when they were launched.
Hotel cluster is forming
There are currently only two large hotel developments - M Hotel (413 rooms) and The Amara (380 rooms) - in the Anson/Tanjong Pagar area. There are, however, numerous boutique hotels such as Klapsons, Berjaya Singapore, and New Majestic Hotel.
The cluster of hotels is growing, with two hotels (660 rooms) currently being built on government sale sites at Tanjong Pagar, and a confirmed site next to Tanjong Pagar MRT, which was launched for tender on July 30, that could supply an estimated 315 hotel rooms.
In addition, there are three reserve hotel sites in the H2 2010 government land sale programme - two at Tanjong Pagar and one at Robinson Road - which could contribute close to 900 rooms. When completed, the cluster of hotels at Tanjong Pagar will be comparable in size to those at the Singapore River.
Rental gap with Raffles Place closer
The office rental gap between Raffles Place and Anson/ Tanjong Pagar has closed since the 1990s to 42 per cent recently as new office buildings of prime quality were completed. Some occupiers from the prime Raffles Place area have moved to the new buildings at Anson/Tanjong Pagar, which reflects the area's growing attraction.
For example, BlueScope Steel has relocated its office from Singapore Land Tower to Twenty Anson while QBE and Sumitomo Corporation have shifted from OCBC Centre and Equity Plaza respectively to Mapletree Anson.
Although the rental gap between the Raffles Place and Shenton Way areas has remained at about 35 per cent since 1990, this could become closer in the future as more old buildings are renovated or redeveloped. There is hardly any state land in Shenton Way that the government can sell to assist in rejuvenation. However, the private sector has in recent years been active in refreshing the area.
Many old buildings have or are undergoing rebuilding such as Tokio Marine Centre (former Asia Chambers Building), UIC Building, Afro Asia Building, and VTB Building. More changes are in the pipeline as several old buildings have recently changed hands, like Marina House, Chow House, Aviva Building, Cecil House, and DBS Building.
The old CBD is fast shedding its drab image and becoming more lively. The Anson/Tanjong Pagar end is developing into a mixed use area with spanking new offices and hotels while the Shenton Way area is becoming more residential with old offices being upgraded. The 24-hour McDonald's at Springleaf Tower speaks volumes for the growing population and nightlife in the old CBD.
The writer is head of South-east Asia research, DTZ
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Strata-landed market gaining ground
Business Times - 23 Sep 2010
Strata-landed market gaining ground
Strata-landed homes have changed hands so far this year at prices averaging $646 per sq ft, report DOREEN GOH and ELIZA LEE
STRICTER development guidelines on the density of strata-landed housing developments, which were implemented on Feb 3, 2009, had effectively reduced the potential supply of new strata- landed homes. Notwithstanding, there are plenty of options available in the secondary market for those keen on owning a strata-landed property. Where should buyers begin their search? What kind of price range can they expect? And for those who still prefer new developments, what are some of the upcoming projects they can look out for?
Strata-landed housing are landed houses with strata-titles and common facilities. Most are found in cluster housing developments that are allowed within Designated Landed Housing Areas, and may comprise of solely bungalows, semi-detached or terrace houses, or a combination of these housing types. To a lesser extent, they are also known as townhouses within mixed landed/non- landed developments. Based on caveat records from the Urban Redevelopment Authority's Real Estate Information System (URA Realis), on Aug 26, 2010, 337 strata- lnded homes have changed hands so far this year at prices averaging $646 per sq ft, up 13.7 per cent from 2009's level and surpassing the previous peak of $621 per sq ft in 2007 by 4.1 per cent.
Strata terrace houses which traditionally dominated transaction activity has to date accounted for about two-thirds of this year's strata-landed transactions, with prices averaging $637 per sq ft. Another 22 per cent of the transactions involved semi-detached houses at an average price of $681 per sq ft, while the remaining 11 per cent were bungalows at prices averaging $632 per sq ft.
Unlike the past five years where most deals were sealed in the primary market, the majority (64.7 per cent or 218 units) of the strata-landed transactions so far this year occurred in the secondary market, with the potential to exceed the 237 secondary market transactions in 2009.
The heightened level of activity in the secondary market is unsurprising since the revised guidelines for strata-landed developments stipulating a minimum plot size per unit type will effectively reduce the potential supply in the market.
The number of new strata-landed units launched had declined from a high of 108 units in Q3 2009 to 42 units in Q2 2010, as the effect of the revised guidelines kicked in. As such, prospective buyers would need to warm up to the idea of house hunting within the secondary market.
What's available in the secondary market
The secondary strata-landed housing market offers prospective buyers many options in terms of location, price, housing concept/type, and strata area to suit varying budgets and lifestyle.
To date, there are some 120 developments supplying over 3,000 strata- landed houses in Singapore. The highest concentration of units can be found in Bukit Timah (684 units), Bedok (653 units), and Serangoon (527 units), while established residential areas like Ang Mo Kio, Yishun, and Novena house smaller pockets of strata-landed units.
While most are small-scale or boutique developments of less than 50 units, with limited facilities such as swimming pools, security, and Jacuzzis, there are about 10 large- scale strata-landed projects with over 100 units each, supplying around half of the estimated available supply of strata-landed houses in the secondary market.
These developments also offer more facilities such as swimming pools, gymnasiums, tennis courts, children's playgrounds, security, club houses, Jacuzzis, barbecue pits, spas, mini golf ranges, etc. Examples include The Shaughnessy (254 units) in Yishun, D'Manor (174 units) in Bedok, Hillcrest Villa (163 units) and The Teneriffe (148 units) in Bukit Timah, Horizon Gardens (157 units) in Ang Mo Kio, and Springhill (115 units) in Sembawang.
In terms of pricing, projects located in the Outside Central Region (OCR) are the most affordable. Using transactions in 2010 (as of Aug 26, 2010) as a guide, prospective buyers with a maximum housing budget of $1.5 million could consider terrace houses with strata area of less than 5,000 sq ft in the OCR, whereas those with a more generous budget of up to $2.5 million can consider semi- detached and detached houses in developments such as Aston Green in Hougang, Dalla Vale in Yishun, Sungrove in West Coast, Water Villas in Kovan, and Northshore Bungalows in Punggol.
As for those with a budget of above $2.5 million, they could extend their options to a wide range of terraces, semi-detached, and detached houses in high-end/luxury projects in the Core Central Region (CCR) with varying strata areas. Popular examples include Barker Terraces, Barker Ville, Estrivillas, Hillcrest Villas, Shamrock Villas, The Teneriffe, Villas@Gilstead, and Watten Residences in the Bukit Timah and Novena localities.
What's available from developers
If one is set on a first-hand property, he/she could still turn to new launches by developers. However, the numbers could be limited in years to come, as developers with the option of developing either non-landed and/ or strata-landed housing forms are likely to have a preference for the former which allows them to maximise the potential gross floor area of a site.
For those who do not wish to wait for future project launches, there are still unsold units for selection in some of the launched projects such as Five Chancery on Chancery Road, Mosella on Muswell Hill, Mt Sinai Residences on Mount Sinai Lane, Residences at Emerald Hill on Emerald Hill Road, Seven Crescent on Crescent Road, Sommerville Residences and Water Villas in Kovan.
As for those who prefer new projects, there are still some 600-plus units planned or in the pipeline. Major projects include Cabana (Phase 4) with 78 units; Watercove Ville (80 units); Nim Park, a proposed 121-unit cluster housing development by MCL Land; and a proposed 193-unit cluster housing development on Mount Rosie.
Conclusion
Strata-landed housing, in particular cluster housing projects, is expected to remain an appealing housing option to home buyers seeking the best of both worlds, ie a landed property with condominium-style facilities.
The expected healthy demand, coupled with the limited new supply in the pipeline, could translate into some potential upside in prices, as well as generate more activity in the secondary strata-landed housing market, where a wide selection of developments are available to suit varying needs.
Doreen Goh is a senior manager and Eliza Lee is a research analyst, research & advisory. Both are with Colliers International
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Strata-landed market gaining ground
Strata-landed homes have changed hands so far this year at prices averaging $646 per sq ft, report DOREEN GOH and ELIZA LEE
STRICTER development guidelines on the density of strata-landed housing developments, which were implemented on Feb 3, 2009, had effectively reduced the potential supply of new strata- landed homes. Notwithstanding, there are plenty of options available in the secondary market for those keen on owning a strata-landed property. Where should buyers begin their search? What kind of price range can they expect? And for those who still prefer new developments, what are some of the upcoming projects they can look out for?
Strata-landed housing are landed houses with strata-titles and common facilities. Most are found in cluster housing developments that are allowed within Designated Landed Housing Areas, and may comprise of solely bungalows, semi-detached or terrace houses, or a combination of these housing types. To a lesser extent, they are also known as townhouses within mixed landed/non- landed developments. Based on caveat records from the Urban Redevelopment Authority's Real Estate Information System (URA Realis), on Aug 26, 2010, 337 strata- lnded homes have changed hands so far this year at prices averaging $646 per sq ft, up 13.7 per cent from 2009's level and surpassing the previous peak of $621 per sq ft in 2007 by 4.1 per cent.
Strata terrace houses which traditionally dominated transaction activity has to date accounted for about two-thirds of this year's strata-landed transactions, with prices averaging $637 per sq ft. Another 22 per cent of the transactions involved semi-detached houses at an average price of $681 per sq ft, while the remaining 11 per cent were bungalows at prices averaging $632 per sq ft.
Unlike the past five years where most deals were sealed in the primary market, the majority (64.7 per cent or 218 units) of the strata-landed transactions so far this year occurred in the secondary market, with the potential to exceed the 237 secondary market transactions in 2009.
The heightened level of activity in the secondary market is unsurprising since the revised guidelines for strata-landed developments stipulating a minimum plot size per unit type will effectively reduce the potential supply in the market.
The number of new strata-landed units launched had declined from a high of 108 units in Q3 2009 to 42 units in Q2 2010, as the effect of the revised guidelines kicked in. As such, prospective buyers would need to warm up to the idea of house hunting within the secondary market.
What's available in the secondary market
The secondary strata-landed housing market offers prospective buyers many options in terms of location, price, housing concept/type, and strata area to suit varying budgets and lifestyle.
To date, there are some 120 developments supplying over 3,000 strata- landed houses in Singapore. The highest concentration of units can be found in Bukit Timah (684 units), Bedok (653 units), and Serangoon (527 units), while established residential areas like Ang Mo Kio, Yishun, and Novena house smaller pockets of strata-landed units.
While most are small-scale or boutique developments of less than 50 units, with limited facilities such as swimming pools, security, and Jacuzzis, there are about 10 large- scale strata-landed projects with over 100 units each, supplying around half of the estimated available supply of strata-landed houses in the secondary market.
These developments also offer more facilities such as swimming pools, gymnasiums, tennis courts, children's playgrounds, security, club houses, Jacuzzis, barbecue pits, spas, mini golf ranges, etc. Examples include The Shaughnessy (254 units) in Yishun, D'Manor (174 units) in Bedok, Hillcrest Villa (163 units) and The Teneriffe (148 units) in Bukit Timah, Horizon Gardens (157 units) in Ang Mo Kio, and Springhill (115 units) in Sembawang.
In terms of pricing, projects located in the Outside Central Region (OCR) are the most affordable. Using transactions in 2010 (as of Aug 26, 2010) as a guide, prospective buyers with a maximum housing budget of $1.5 million could consider terrace houses with strata area of less than 5,000 sq ft in the OCR, whereas those with a more generous budget of up to $2.5 million can consider semi- detached and detached houses in developments such as Aston Green in Hougang, Dalla Vale in Yishun, Sungrove in West Coast, Water Villas in Kovan, and Northshore Bungalows in Punggol.
As for those with a budget of above $2.5 million, they could extend their options to a wide range of terraces, semi-detached, and detached houses in high-end/luxury projects in the Core Central Region (CCR) with varying strata areas. Popular examples include Barker Terraces, Barker Ville, Estrivillas, Hillcrest Villas, Shamrock Villas, The Teneriffe, Villas@Gilstead, and Watten Residences in the Bukit Timah and Novena localities.
What's available from developers
If one is set on a first-hand property, he/she could still turn to new launches by developers. However, the numbers could be limited in years to come, as developers with the option of developing either non-landed and/ or strata-landed housing forms are likely to have a preference for the former which allows them to maximise the potential gross floor area of a site.
For those who do not wish to wait for future project launches, there are still unsold units for selection in some of the launched projects such as Five Chancery on Chancery Road, Mosella on Muswell Hill, Mt Sinai Residences on Mount Sinai Lane, Residences at Emerald Hill on Emerald Hill Road, Seven Crescent on Crescent Road, Sommerville Residences and Water Villas in Kovan.
As for those who prefer new projects, there are still some 600-plus units planned or in the pipeline. Major projects include Cabana (Phase 4) with 78 units; Watercove Ville (80 units); Nim Park, a proposed 121-unit cluster housing development by MCL Land; and a proposed 193-unit cluster housing development on Mount Rosie.
Conclusion
Strata-landed housing, in particular cluster housing projects, is expected to remain an appealing housing option to home buyers seeking the best of both worlds, ie a landed property with condominium-style facilities.
The expected healthy demand, coupled with the limited new supply in the pipeline, could translate into some potential upside in prices, as well as generate more activity in the secondary strata-landed housing market, where a wide selection of developments are available to suit varying needs.
Doreen Goh is a senior manager and Eliza Lee is a research analyst, research & advisory. Both are with Colliers International
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : The changing retail landscape
Business Times - 23 Sep 2010
The changing retail landscape
JOANNA CHEN looks at how the retail market has changed since the 1980s and what the future holds
THE retail scene in Singapore has undergone massive change since the 1980s when shopping centres were fewer and less differentiated. The 1990s to early 2000s saw rapid growth in the supply of retail space, especially in the suburbs. Between 2002 and 2009, we have seen transformations in landlord- tenant relationships, space reconfiguration in malls, the listing of real estate investment trusts (Reits), government policy changes, and more discerning consumers.
With new shopping malls springing up in the central area as well as the success of suburban malls, the retail sector has come into its own. Here's an insight into how Singapore's retail market has changed since the 1980s and what the future holds.
Late 1980s: Strata-titled, family-oriented malls
With only a few single-owner malls such as Parkway Parade and Goldhill Square (now United Square), shopping centres then were mostly strata-titled. As such, any refurbishment carried out was generally piecemeal and involved individual shops rather than the entire mall.
Most of the developers in the late 1980s focused on creating family-oriented shopping malls. Tenant mix usually comprised a few anchor tenants and shops that catered to the needs of the entire family.
Tenant mix of three prominent shopping malls (Wisma Atria, Marina Square, and Plaza Singapura) showed a considerable portion (28-52 per cent) of lettable area allocated to department stores. In Plaza Singapura, both Yaohan and OG Elite were anchor tenants occupying at least four floors in the development. Tokyu and Metro, on the other hand, were secured at the two strategic ends at the cross- shaped structure of Marina Square.
To attract the target customers that ranged from children to the elderly, these malls allocated at least 10 per cent of net lettable area to bookstores, electronic stores, and arts and crafts shops. Even though Wisma Atria had the largest percentage of fashion retailers, it also offered special features such as a large aquarium at the basement and a children's playground on the rooftop podium for a more family-friendly atmosphere.
1990s to early 2000s: Into the suburbs
Singapore's retail landscape saw tremendous growth between 1992 and 2002 when retail supply grew by more than 80 per cent.
In line with the Urban Redevelopment Authority's (URA) Concept Plan to have decentralised regional and sub-regional commercial hubs, a slew of suburban malls were built, giving consumers the option of being able to shop without going into Orchard Road.
The move by URA created micro markets which allowed retailers to expand their foothold into different regions. Such expansion was well-received by retailers and shoppers alike.
These suburban malls achieved high occupancy and attracted foreign retailers. Foreign department stores such as Seiyu opened in Lot One Shoppers' Mall. Both John Little and Marks & Spencer expanded in malls like White Sands Pasir Ris, and Yishun Northpoint.
New retail trends also surfaced during this period of change. Suburban malls interweaved shopping with entertainment, leisure, and education. Cineplexes and libraries could be found in malls such as Hougang Mall and Junction 8 to provide a more holistic experience for shoppers. Atriums were also created within the malls for entertainment and family activities.
Malls in Orchard Road and other downtown core areas offered the alternative of concept shopping where themes and niche marketing were carefully thought through and implemented, typical examples being The Heeren Shops and Funan DigitaLife Mall.
2002-2009: Retail transformation
From 2002 to 2009, there was a dramatic transformation in the retail landscape. The successful landlord-tenant relationships where the developer, major owner, major tenant, and even mall manager are related companies, as seen in Ngee Ann City, are rare. Most malls before 2002 followed the typical landlord (developer) and tenant (retailer) relationship.
However, with the listing of Reits in 2002, this relationship was transformed. The role of landlords could pass from developers to asset managers, while shoppers could also have vested interest in these malls as shareholders of listed Reits.
More importantly, the nature of Reits constantly challenges the asset managers to think out of the box to create better value for shareholders. This includes growth strategies to acquire properties and initiatives to enhance existing retail assets. This led to positive trickle-down effects for shopping malls here.
During this period, the configuration of the typical shopping mall also evolved. Government policy allowed creative use of space, as seen in malls like Bishan Junction 8 and Tiong Bahru Plaza in 2003.
Unit sizes of shops shrank due to the growing preference for smaller mini-anchor tenants such as Mango, Zara, etc. Such preferences are likely due to higher spending power and the increasingly affluent lifestyle of consumers.
There were also malls that comprised many small niche retailers to provide variety. A pioneer of this trend was Far East Plaza. In 2002, with the closure of department store Metro on the first level, Far East Organisation successfully put in place a variety of shops catering to the young and trendy.
2010 & beyond: The best is yet to be
With the continued success of suburban malls and the opening of new city malls like ION Orchard, 313@Somerset, and Orchard Central, Singapore's retail scene has grown colourful and vibrant. The success of the suburban malls is clearly demonstrated in the opening of Uniqlo's first flagship store in Tampines One. Orchard Road, the main shopping boulevard, has its own innovative architecture with malls such as Orchard Central and *Scape. The multi-sensory experience in ION Orchard has also taken the retail experience to a higher level.
So what lies ahead? The prospects are bright for the retail market. On the supply side, malls in Orchard Road near Cuscaden Road, Claymore Drive, and Angullia Park have potential for development. There will also be an upcoming wave of supply from both refurbished and new suburban malls. The former Katong Mall is undergoing a $60 million facelift to create a new shopping experience with a Peranakan theme. At the opposite end of Singapore, JCube (the former Jurong Entertainment Centre) offers an Olympic-sized ice-skating rink, a multiplex cinema, and retail offerings around the clock.
On the demand side, the many new shopping malls added in the central area have enhanced Singapore's status as the retail city of the East. Complemented by the vibrancy from the two integrated resorts, the city is likely to attract more tourists and shopping dollars.
There will be a rising tendency for locals to prefer hanging out at shopping malls, given the combination of smaller homes to relax in and a growing preference for eating out. With increased affluence, there will also be greater propensity for locals to spend on their favourite pastime - shopping.
Over the last 30 years, Singapore's retail landscape has grown increasingly vibrant. But this does not mean there isn't room to grow. With the synergy from exciting events such as Formula One and the bustling activity generated by the integrated resorts and Marina Bay, the best is yet to come.
The writer is an analyst with Knight Frank Consultancy & Research
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The changing retail landscape
JOANNA CHEN looks at how the retail market has changed since the 1980s and what the future holds
THE retail scene in Singapore has undergone massive change since the 1980s when shopping centres were fewer and less differentiated. The 1990s to early 2000s saw rapid growth in the supply of retail space, especially in the suburbs. Between 2002 and 2009, we have seen transformations in landlord- tenant relationships, space reconfiguration in malls, the listing of real estate investment trusts (Reits), government policy changes, and more discerning consumers.
With new shopping malls springing up in the central area as well as the success of suburban malls, the retail sector has come into its own. Here's an insight into how Singapore's retail market has changed since the 1980s and what the future holds.
Late 1980s: Strata-titled, family-oriented malls
With only a few single-owner malls such as Parkway Parade and Goldhill Square (now United Square), shopping centres then were mostly strata-titled. As such, any refurbishment carried out was generally piecemeal and involved individual shops rather than the entire mall.
Most of the developers in the late 1980s focused on creating family-oriented shopping malls. Tenant mix usually comprised a few anchor tenants and shops that catered to the needs of the entire family.
Tenant mix of three prominent shopping malls (Wisma Atria, Marina Square, and Plaza Singapura) showed a considerable portion (28-52 per cent) of lettable area allocated to department stores. In Plaza Singapura, both Yaohan and OG Elite were anchor tenants occupying at least four floors in the development. Tokyu and Metro, on the other hand, were secured at the two strategic ends at the cross- shaped structure of Marina Square.
To attract the target customers that ranged from children to the elderly, these malls allocated at least 10 per cent of net lettable area to bookstores, electronic stores, and arts and crafts shops. Even though Wisma Atria had the largest percentage of fashion retailers, it also offered special features such as a large aquarium at the basement and a children's playground on the rooftop podium for a more family-friendly atmosphere.
1990s to early 2000s: Into the suburbs
Singapore's retail landscape saw tremendous growth between 1992 and 2002 when retail supply grew by more than 80 per cent.
In line with the Urban Redevelopment Authority's (URA) Concept Plan to have decentralised regional and sub-regional commercial hubs, a slew of suburban malls were built, giving consumers the option of being able to shop without going into Orchard Road.
The move by URA created micro markets which allowed retailers to expand their foothold into different regions. Such expansion was well-received by retailers and shoppers alike.
These suburban malls achieved high occupancy and attracted foreign retailers. Foreign department stores such as Seiyu opened in Lot One Shoppers' Mall. Both John Little and Marks & Spencer expanded in malls like White Sands Pasir Ris, and Yishun Northpoint.
New retail trends also surfaced during this period of change. Suburban malls interweaved shopping with entertainment, leisure, and education. Cineplexes and libraries could be found in malls such as Hougang Mall and Junction 8 to provide a more holistic experience for shoppers. Atriums were also created within the malls for entertainment and family activities.
Malls in Orchard Road and other downtown core areas offered the alternative of concept shopping where themes and niche marketing were carefully thought through and implemented, typical examples being The Heeren Shops and Funan DigitaLife Mall.
2002-2009: Retail transformation
From 2002 to 2009, there was a dramatic transformation in the retail landscape. The successful landlord-tenant relationships where the developer, major owner, major tenant, and even mall manager are related companies, as seen in Ngee Ann City, are rare. Most malls before 2002 followed the typical landlord (developer) and tenant (retailer) relationship.
However, with the listing of Reits in 2002, this relationship was transformed. The role of landlords could pass from developers to asset managers, while shoppers could also have vested interest in these malls as shareholders of listed Reits.
More importantly, the nature of Reits constantly challenges the asset managers to think out of the box to create better value for shareholders. This includes growth strategies to acquire properties and initiatives to enhance existing retail assets. This led to positive trickle-down effects for shopping malls here.
During this period, the configuration of the typical shopping mall also evolved. Government policy allowed creative use of space, as seen in malls like Bishan Junction 8 and Tiong Bahru Plaza in 2003.
Unit sizes of shops shrank due to the growing preference for smaller mini-anchor tenants such as Mango, Zara, etc. Such preferences are likely due to higher spending power and the increasingly affluent lifestyle of consumers.
There were also malls that comprised many small niche retailers to provide variety. A pioneer of this trend was Far East Plaza. In 2002, with the closure of department store Metro on the first level, Far East Organisation successfully put in place a variety of shops catering to the young and trendy.
2010 & beyond: The best is yet to be
With the continued success of suburban malls and the opening of new city malls like ION Orchard, 313@Somerset, and Orchard Central, Singapore's retail scene has grown colourful and vibrant. The success of the suburban malls is clearly demonstrated in the opening of Uniqlo's first flagship store in Tampines One. Orchard Road, the main shopping boulevard, has its own innovative architecture with malls such as Orchard Central and *Scape. The multi-sensory experience in ION Orchard has also taken the retail experience to a higher level.
So what lies ahead? The prospects are bright for the retail market. On the supply side, malls in Orchard Road near Cuscaden Road, Claymore Drive, and Angullia Park have potential for development. There will also be an upcoming wave of supply from both refurbished and new suburban malls. The former Katong Mall is undergoing a $60 million facelift to create a new shopping experience with a Peranakan theme. At the opposite end of Singapore, JCube (the former Jurong Entertainment Centre) offers an Olympic-sized ice-skating rink, a multiplex cinema, and retail offerings around the clock.
On the demand side, the many new shopping malls added in the central area have enhanced Singapore's status as the retail city of the East. Complemented by the vibrancy from the two integrated resorts, the city is likely to attract more tourists and shopping dollars.
There will be a rising tendency for locals to prefer hanging out at shopping malls, given the combination of smaller homes to relax in and a growing preference for eating out. With increased affluence, there will also be greater propensity for locals to spend on their favourite pastime - shopping.
Over the last 30 years, Singapore's retail landscape has grown increasingly vibrant. But this does not mean there isn't room to grow. With the synergy from exciting events such as Formula One and the bustling activity generated by the integrated resorts and Marina Bay, the best is yet to come.
The writer is an analyst with Knight Frank Consultancy & Research
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Bank loans looking more enticing
Business Times - 23 Sep 2010
Bank loans looking more enticing
Several banks are enjoying decent HDB home loan sales, reports SIOW LI SEN
THE recent property measures have not dented HDB flat buyers' enthusiasm for taking on bank loans because the historic low interest rates have made them cheaper than borrowing from the government. In addition, banks sweeten their deals with cash payouts which can run into the thousands. For example, interest savings from a bank loan from HSBC can be as high as almost 50 per cent over an initial two- year period versus taking on the HDB concessionary loan based on a $100,000 loan amount.
Under HSBC's loyalty package, the interest payable for the two years comes to $2,623, a savings of 47 per cent against $5,007 payable if one took the HDB concessionary rate. On a loan from Maybank which is offering special deals as part of its 50th anniversary, for every $100,000 loan, interest paid over three years would come to $4,470, against paying $7,468 on the HDB concessionary loan. This represents a hefty 40 per cent savings or $2,998, according to Maybank Singapore. Maybank also offers a three-year fixed rate package and savings here is 36 per cent when compared with a HDB loan.
The HDB concessionary interest rate is currently at 2.6 per cent. It is pegged at 0.1 per cent point above the CPF Ordinary Account Interest Rate which is subject to a minimum of 2.5 per cent.
If interest rates slide further, the HDB concessionary rate remains at 2.6 per cent but if interest rates rally sharply, the HDB concessionary rate could be revised upwards.
Here though is the major factor why some refuse to be tempted by the banks' current lower rates. The view is that the government will not raise its HDB concessionary rate without taking other factors - such as the public good - into consideration, while the banks will revise them at the drop of a hat, or rather any time interest rates move.
But for the present, it's no wonder that several banks continue to enjoy decent HDB home loan sales in the three weeks since the government unleashed restrictions to stop the property market from running away.
OCBC Bank and United Overseas Bank though said they are seeing a slowdown in HDB loan applications. Still, with the current record low interest rates looking to slide further, those who are buying, they are likely to look for bank loans rather than borrow from the HDB, said bankers.
Those who worry about interest rate movements can lock in their rates for as long as five years, an option which is gaining favour, said some bankers.
Jeremy Soo, DBS Bank managing director and head of consumer banking group (Singapore), said most HDB home buyers want certainty in their repayments as they are purchasing for long-term occupation.
'For many, this is their first big financial commitment. Thus, the fixed rate packages remain most popular with our customers who continue to see value in locking in the fixed rates in the current, low interest rate environment,' said Mr Soo.
With the new five-year minimum occupation period (MOP), DBS is seeing an increased interest in its five-year fixed rate (at 2.25 per cent) which is lower than the concessionary rates charged by HDB (of 2.6 per cent).
Under DBS' five-year fixed rate package, for a $250,000 loan over a 25-year period, the monthly instalment is about $44 lower or about 4 per cent when compared to the HDB concessionary package. Over the five- year fixed rate period, the savings amount to $2,600. This is on the assumption that the concessionary rate stays at 2.6 per cent.
Citibank, HSBC, Maybank, and Standard Chartered say since Aug 31 it's pretty much business as usual for sales of HDB home loans. 'As of now, we have not seen a significant drop in applications for loans,' said Vibha Coburn, Citibank Singapore business director for secured finance. Helen Neo, Maybank Singapore consumer banking head, said, 'So far, it is business as usual for HDB loans with minimal negative impact.'
Dennis Khoo, Stanchart general manager retail banking products, Singapore, and Malaysia, said the bank does not expect a significant change in the behaviour of its customers. 'Currently, there is a spike in terms of enquires about the new property measures - some have provided feedback that they are thinking of putting their purchases on hold in anticipation of a drop in property prices,' said Mr Khoo.
'However, there are also some customers that will continue to take up loans with us as they are buying properties for homeownership,' said Mr Khoo.
But OCBC Bank said it is seeing more caution among buyers. 'Based on our observations, the market has slowed down as buyers become more cautious and are taking time to understand the implications of the new measures on them,' said Phang Lah Hwa, OCBC Bank head of consumer secured lending.
Bankers said the majority of HDB loans are for the bigger four- and five-room flats and many borrowers are young couples. Borrowers are buyers of 'mainly four rooms and above, and are young professionals', said Ms Neo.
As for their borrowers' views on the direction of interest rates, banks report a mixed picture. Maybank and StanChart said there is a balanced take-up between the floating rate and fixed rate loans.
The preference is still for the conventional fixed rate packages, although there is a growing pool of borrowers who hold specific views of the interest rate market and therefore opt for variable packages, said Ms Phang. HSBC and Citi see more clients who prefer variable rate loans.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Bank loans looking more enticing
Several banks are enjoying decent HDB home loan sales, reports SIOW LI SEN
THE recent property measures have not dented HDB flat buyers' enthusiasm for taking on bank loans because the historic low interest rates have made them cheaper than borrowing from the government. In addition, banks sweeten their deals with cash payouts which can run into the thousands. For example, interest savings from a bank loan from HSBC can be as high as almost 50 per cent over an initial two- year period versus taking on the HDB concessionary loan based on a $100,000 loan amount.
Under HSBC's loyalty package, the interest payable for the two years comes to $2,623, a savings of 47 per cent against $5,007 payable if one took the HDB concessionary rate. On a loan from Maybank which is offering special deals as part of its 50th anniversary, for every $100,000 loan, interest paid over three years would come to $4,470, against paying $7,468 on the HDB concessionary loan. This represents a hefty 40 per cent savings or $2,998, according to Maybank Singapore. Maybank also offers a three-year fixed rate package and savings here is 36 per cent when compared with a HDB loan.
The HDB concessionary interest rate is currently at 2.6 per cent. It is pegged at 0.1 per cent point above the CPF Ordinary Account Interest Rate which is subject to a minimum of 2.5 per cent.
If interest rates slide further, the HDB concessionary rate remains at 2.6 per cent but if interest rates rally sharply, the HDB concessionary rate could be revised upwards.
Here though is the major factor why some refuse to be tempted by the banks' current lower rates. The view is that the government will not raise its HDB concessionary rate without taking other factors - such as the public good - into consideration, while the banks will revise them at the drop of a hat, or rather any time interest rates move.
But for the present, it's no wonder that several banks continue to enjoy decent HDB home loan sales in the three weeks since the government unleashed restrictions to stop the property market from running away.
OCBC Bank and United Overseas Bank though said they are seeing a slowdown in HDB loan applications. Still, with the current record low interest rates looking to slide further, those who are buying, they are likely to look for bank loans rather than borrow from the HDB, said bankers.
Those who worry about interest rate movements can lock in their rates for as long as five years, an option which is gaining favour, said some bankers.
Jeremy Soo, DBS Bank managing director and head of consumer banking group (Singapore), said most HDB home buyers want certainty in their repayments as they are purchasing for long-term occupation.
'For many, this is their first big financial commitment. Thus, the fixed rate packages remain most popular with our customers who continue to see value in locking in the fixed rates in the current, low interest rate environment,' said Mr Soo.
With the new five-year minimum occupation period (MOP), DBS is seeing an increased interest in its five-year fixed rate (at 2.25 per cent) which is lower than the concessionary rates charged by HDB (of 2.6 per cent).
Under DBS' five-year fixed rate package, for a $250,000 loan over a 25-year period, the monthly instalment is about $44 lower or about 4 per cent when compared to the HDB concessionary package. Over the five- year fixed rate period, the savings amount to $2,600. This is on the assumption that the concessionary rate stays at 2.6 per cent.
Citibank, HSBC, Maybank, and Standard Chartered say since Aug 31 it's pretty much business as usual for sales of HDB home loans. 'As of now, we have not seen a significant drop in applications for loans,' said Vibha Coburn, Citibank Singapore business director for secured finance. Helen Neo, Maybank Singapore consumer banking head, said, 'So far, it is business as usual for HDB loans with minimal negative impact.'
Dennis Khoo, Stanchart general manager retail banking products, Singapore, and Malaysia, said the bank does not expect a significant change in the behaviour of its customers. 'Currently, there is a spike in terms of enquires about the new property measures - some have provided feedback that they are thinking of putting their purchases on hold in anticipation of a drop in property prices,' said Mr Khoo.
'However, there are also some customers that will continue to take up loans with us as they are buying properties for homeownership,' said Mr Khoo.
But OCBC Bank said it is seeing more caution among buyers. 'Based on our observations, the market has slowed down as buyers become more cautious and are taking time to understand the implications of the new measures on them,' said Phang Lah Hwa, OCBC Bank head of consumer secured lending.
Bankers said the majority of HDB loans are for the bigger four- and five-room flats and many borrowers are young couples. Borrowers are buyers of 'mainly four rooms and above, and are young professionals', said Ms Neo.
As for their borrowers' views on the direction of interest rates, banks report a mixed picture. Maybank and StanChart said there is a balanced take-up between the floating rate and fixed rate loans.
The preference is still for the conventional fixed rate packages, although there is a growing pool of borrowers who hold specific views of the interest rate market and therefore opt for variable packages, said Ms Phang. HSBC and Citi see more clients who prefer variable rate loans.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
ST : 1,329 new flats in Woodlands for sale
Sep 22, 2010
1,329 new flats in Woodlands for sale
BTO launches in Yishun, Bukit Panjang, Sengkang and Punggol on the way
THE Housing Board launched 1,329 new flats for sale in Woodlands yesterday, with more projects in Bukit Panjang, Punggol, Sengkang and Yishun in the pipeline.
The latest offering, which comprises 789 units at Woodlands Dew and 540 at Woodlands Meadow, brings the total number of flats for sale by the HDB to 14,200.
In line with its move to ramp up the supply of new homes, the HDB said it will launch another 1,320 units in Bukit Panjang and Sengkang next month under its build-to-order (BTO) scheme.
Later in the year, home buyers can look forward to BTO launches in Punggol and Yishun, although details will be available only at a later date.
Those in the higher-income bracket will also be able to choose from a supply of about 4,600 homes under HDB's design, build and sell scheme and executive condominiums.
Prices of the latest flats at Woodlands Dew range from $78,000 to $105,000 for a two-room unit, and $224,000 to $280,000 for a four-room unit.
At Woodlands Meadow, a three-room flat costs from $136,000 to $168,000, and a five-room unit from $270,000 to $328,000.
Mr Eugene Lim, ERA Asia Pacific associate director, said these new offerings will help to cool the market for first-time buyers.
He cited the recently concluded Yishun BTO project that drew fewer than three applications per unit.
'Normally, the number (of applications) will be about five per unit. But the increase in supply of BTO flats, the slowdown in the resale market and more information put out by HDB have made first-time buyers more relaxed now, compared to the sense of urgency felt earlier this year.' he said.
PropNex communications manager Adam Tan noted that the median pricing of the Woodlands flats is 'already cheaper by 23 per cent to 39 per cent than similar resale flats in the area, making it very attractive'.
Applications for the new BTO flats will close on Oct 4.
In a separate statement, the HDB said it will launch two new residential sites offering 805 homes in Woodlands and Upper Serangoon for sale today.
The first site, at Woodgrove Avenue, is a 99-year leasehold site for strata landed or condominium units that could offer 265 new homes, said HDB.
The second leasehold site is located at Upper Serangoon View, near Hougang MRT station, and could yield 540 condominium units.
The tenders for these plots will close on Nov 4 and Nov 9 respectively.
The Government has moved to ramp up supply in both public and private property markets recently.
It released enough land to cater to 13,905 private residential units in the second half of this year - the highest potential amount of supply since the land sales programme started in 2001.
HDB said it will also be releasing another two new residential sites for executive condominium development in Tampines Avenue 8 and Segar Road next month.
DARYL CHIN
1,329 new flats in Woodlands for sale
BTO launches in Yishun, Bukit Panjang, Sengkang and Punggol on the way
THE Housing Board launched 1,329 new flats for sale in Woodlands yesterday, with more projects in Bukit Panjang, Punggol, Sengkang and Yishun in the pipeline.
The latest offering, which comprises 789 units at Woodlands Dew and 540 at Woodlands Meadow, brings the total number of flats for sale by the HDB to 14,200.
In line with its move to ramp up the supply of new homes, the HDB said it will launch another 1,320 units in Bukit Panjang and Sengkang next month under its build-to-order (BTO) scheme.
Later in the year, home buyers can look forward to BTO launches in Punggol and Yishun, although details will be available only at a later date.
Those in the higher-income bracket will also be able to choose from a supply of about 4,600 homes under HDB's design, build and sell scheme and executive condominiums.
Prices of the latest flats at Woodlands Dew range from $78,000 to $105,000 for a two-room unit, and $224,000 to $280,000 for a four-room unit.
At Woodlands Meadow, a three-room flat costs from $136,000 to $168,000, and a five-room unit from $270,000 to $328,000.
Mr Eugene Lim, ERA Asia Pacific associate director, said these new offerings will help to cool the market for first-time buyers.
He cited the recently concluded Yishun BTO project that drew fewer than three applications per unit.
'Normally, the number (of applications) will be about five per unit. But the increase in supply of BTO flats, the slowdown in the resale market and more information put out by HDB have made first-time buyers more relaxed now, compared to the sense of urgency felt earlier this year.' he said.
PropNex communications manager Adam Tan noted that the median pricing of the Woodlands flats is 'already cheaper by 23 per cent to 39 per cent than similar resale flats in the area, making it very attractive'.
Applications for the new BTO flats will close on Oct 4.
In a separate statement, the HDB said it will launch two new residential sites offering 805 homes in Woodlands and Upper Serangoon for sale today.
The first site, at Woodgrove Avenue, is a 99-year leasehold site for strata landed or condominium units that could offer 265 new homes, said HDB.
The second leasehold site is located at Upper Serangoon View, near Hougang MRT station, and could yield 540 condominium units.
The tenders for these plots will close on Nov 4 and Nov 9 respectively.
The Government has moved to ramp up supply in both public and private property markets recently.
It released enough land to cater to 13,905 private residential units in the second half of this year - the highest potential amount of supply since the land sales programme started in 2001.
HDB said it will also be releasing another two new residential sites for executive condominium development in Tampines Avenue 8 and Segar Road next month.
DARYL CHIN
ST : Tanjong Pagar railway station could kick-start area's revamp
Sep 22, 2010
Tanjong Pagar railway station could kick-start area's revamp
By Joyce Teo , Esther Teo
THE Tanjong Pagar railway station land could turn out to be a bustling 'city within a city'.
The site is one of six Malaysian railway plots that Singapore will get as part of its land swop deal with Malaysia.
A Straits Times check of the Singapore Land Authority land information service shows a sprawling site measuring 159,075.6 sq m, or 15.91ha, with a 999-year lease. This works to about 11/2 times the size of the Padang.
It includes the railway station's passenger terminal, which is zoned for commercial use with a plot ratio of 4.2 and must be preserved, and disused tracks near Kampong Bahru Road.
This area is zoned for residential use with a plot ratio of 2.8. On the current basis, it could turn out to be one of the largest residential sites downtown.
The size should get developers excited. One of the largest condo projects expected to hit the market later this year is on the former Farrer Court site, with a land size of about 78,000 sq m. That site, with a plot ratio of 2.8, can take a maximum height of 36 storeys and about 1,500 homes.
All these factors add up to a rare slice of downtown that could ignite the area's regeneration.
Together with the planned waterfront redevelopment, the site could well become 'a city within a city', according to Cushman & Wakefield managing director Donald Han.
Knight Frank chairman Tan Tiong Cheng also sees the site as the 'missing part in the comprehensive redevelopment of the area, which is an extension of the central business district'.
'Now, the planning authorities will have no further obstacles to the redevelopment of the area, which in the longer term requires the relocation of the port,' he said.
Property experts see any number of uses for the site, including a mall, hotel, offices or condos, while the passenger terminal could host a boutique hotel or nightspot.
'There could be a hotel or a St James Power Station-like entertainment venue surrounded by a retail mall and offices, and then residential blocks at the fringe,' said Mr Han, who believes the land could be worth up to $850 per sq ft of potential gross floor area, or a few billion dollars.
Apart from the Tanjong Pagar land, Singapore will get a plot in Kranji, one in Woodlands and three in Bukit Timah.
It is unclear where the other plots are, but one site is rail land along Upper Bukit Timah Road, running down from The Rail Mall near Hume Avenue to Hindhede Road.
The 10.8ha strip currently on a 999-year lease is a reserve site, so its specific use has yet to be determined, although it is likely to be zoned residential, experts said.
Although it is long and narrow, the Government could combine it with adjoining state land to offer a more regular-shaped parcel.
Mr Ong Teck Hui, Credo Real Estate executive director of research and consultancy, said the future selling price of projects in the area, estimated at $1,100 psf, suggests a valuation of about $500 million.
The land's value must take into account the possibility that up to 25 per cent of the site might be used for infrastructure purposes such as roads and drains, he said.
Mr Han noted: 'One of the problems is how do you put a value to these elongated sites. On its own, it is almost impossible to develop... But when amalgamated with neighbouring residential sites, the value will go up.'
Tanjong Pagar railway station could kick-start area's revamp
By Joyce Teo , Esther Teo
THE Tanjong Pagar railway station land could turn out to be a bustling 'city within a city'.
The site is one of six Malaysian railway plots that Singapore will get as part of its land swop deal with Malaysia.
A Straits Times check of the Singapore Land Authority land information service shows a sprawling site measuring 159,075.6 sq m, or 15.91ha, with a 999-year lease. This works to about 11/2 times the size of the Padang.
It includes the railway station's passenger terminal, which is zoned for commercial use with a plot ratio of 4.2 and must be preserved, and disused tracks near Kampong Bahru Road.
This area is zoned for residential use with a plot ratio of 2.8. On the current basis, it could turn out to be one of the largest residential sites downtown.
The size should get developers excited. One of the largest condo projects expected to hit the market later this year is on the former Farrer Court site, with a land size of about 78,000 sq m. That site, with a plot ratio of 2.8, can take a maximum height of 36 storeys and about 1,500 homes.
All these factors add up to a rare slice of downtown that could ignite the area's regeneration.
Together with the planned waterfront redevelopment, the site could well become 'a city within a city', according to Cushman & Wakefield managing director Donald Han.
Knight Frank chairman Tan Tiong Cheng also sees the site as the 'missing part in the comprehensive redevelopment of the area, which is an extension of the central business district'.
'Now, the planning authorities will have no further obstacles to the redevelopment of the area, which in the longer term requires the relocation of the port,' he said.
Property experts see any number of uses for the site, including a mall, hotel, offices or condos, while the passenger terminal could host a boutique hotel or nightspot.
'There could be a hotel or a St James Power Station-like entertainment venue surrounded by a retail mall and offices, and then residential blocks at the fringe,' said Mr Han, who believes the land could be worth up to $850 per sq ft of potential gross floor area, or a few billion dollars.
Apart from the Tanjong Pagar land, Singapore will get a plot in Kranji, one in Woodlands and three in Bukit Timah.
It is unclear where the other plots are, but one site is rail land along Upper Bukit Timah Road, running down from The Rail Mall near Hume Avenue to Hindhede Road.
The 10.8ha strip currently on a 999-year lease is a reserve site, so its specific use has yet to be determined, although it is likely to be zoned residential, experts said.
Although it is long and narrow, the Government could combine it with adjoining state land to offer a more regular-shaped parcel.
Mr Ong Teck Hui, Credo Real Estate executive director of research and consultancy, said the future selling price of projects in the area, estimated at $1,100 psf, suggests a valuation of about $500 million.
The land's value must take into account the possibility that up to 25 per cent of the site might be used for infrastructure purposes such as roads and drains, he said.
Mr Han noted: 'One of the problems is how do you put a value to these elongated sites. On its own, it is almost impossible to develop... But when amalgamated with neighbouring residential sites, the value will go up.'
ST : More keen on buying homes: Poll
Sep 19, 2010
property
More keen on buying homes: Poll
Survey shows higher interest after cooling measures; many expect prices to stabilise or fall
By Joyce Teo
A Savills Singapore survey has found that more people are keen on buying a home in the next six months after the Government announced measures to cool the property market on Aug 30.
The property consultancy said this could be because more respondents now expect prices to stabilise or fall.
Savills conducted two separate surveys involving 200 respondents each - one four weeks before the measures were introduced and one right after.
More than 90 per cent of the respondents in both surveys are in the 21-59 age group. About two-thirds of them own Housing Board (HDB) flats.
Savills said the number of people who would consider buying a property post-measures rose by 20 percentage points, from 14 per cent to 34 per cent.
Although 80 per cent of the respondents still feel that Singapore's home prices are high, a bigger group than before now believes prices will fall.
Some 45 per cent of the respondents expect home prices to fall after the implementation of the measures, compared with 15 per cent before the measures were announced.
A much smaller group than before - 26 per cent of the respondents compared with 62 per cent previously - expect prices to continue to rise.
The new cooling measures include tighter lending rules for those with existing mortgages looking to buy another property. They can now borrow up to only 70 per cent of the property's value, down from 80 per cent.
Also, those who buy an HDB resale flat on or after Aug 30 must sell their private property - including any held overseas - within six months of the purchase.
The housing market had resisted two earlier rounds of cooling measures - in September last year and in February this year. The measures included doing away with the interest absorption scheme and the imposition of a stamp duty for those who sell their property within a year of buying it.
Private home prices have surged since the middle of last year while HDB resale prices have continued to reach new quarterly highs since 2008.
For a start, property experts expect the new measures to slow home sales for the rest of the year. Already, the impact can be felt in the HDB and private resale markets, they said.
Cushman and Wakefield's senior manager of research, Asia-Pacific, Mr Ong Kah Seng, said the slowdown in the private market will be most evident in the suburban areas as the government measures are targeted at stabilising prices of mass-market private homes.
The softening of the market may signal a buying opportunity for some people, said Savills.
However, nearly half of the respondents - down nine percentage points from 57 per cent - said they would still not consider buying a property.
'These people may be cautious about entering the market now and prefer to take a step back to assess the market impact of the new measures first before making a decision,' said Savills' senior manager, research and consultancy, Ms Christine Sun.
The other reason is that they do not need a home in the next six months, she said.
The survey also found that more repeat buyers than first-time buyers perceived that there was ample housing supply for them.
'This could be due to the tight supply in the public housing market, which is predominantly the domain of first-time buyers,' said Ms Sun.
As the Government plans to raise the supply of new HDB flats from more than 16,000 this year to as many as 22,000 next year, this perception of first-time buyers may change, she said.
And with the new measures, more buyers - apart from repeat buyers - felt more confident entering the property market in the next six months, Savills said.
Some respondents had commented that they were more willing to enter the market now, knowing that the Government was closely monitoring the situation and may do more to prevent any further price spikes or property bubble from forming, it said.
Others are also expecting more home options, given the huge upcoming supply in the private and public markets.
'These new measures may therefore sway some buyers who were sitting on the sidelines... to make a purchase in the next six months,' said Ms Sun.
'We can expect more rational buying in the coming months.'
joyceteo@sph.com.sg
property
More keen on buying homes: Poll
Survey shows higher interest after cooling measures; many expect prices to stabilise or fall
By Joyce Teo
A Savills Singapore survey has found that more people are keen on buying a home in the next six months after the Government announced measures to cool the property market on Aug 30.
The property consultancy said this could be because more respondents now expect prices to stabilise or fall.
Savills conducted two separate surveys involving 200 respondents each - one four weeks before the measures were introduced and one right after.
More than 90 per cent of the respondents in both surveys are in the 21-59 age group. About two-thirds of them own Housing Board (HDB) flats.
Savills said the number of people who would consider buying a property post-measures rose by 20 percentage points, from 14 per cent to 34 per cent.
Although 80 per cent of the respondents still feel that Singapore's home prices are high, a bigger group than before now believes prices will fall.
Some 45 per cent of the respondents expect home prices to fall after the implementation of the measures, compared with 15 per cent before the measures were announced.
A much smaller group than before - 26 per cent of the respondents compared with 62 per cent previously - expect prices to continue to rise.
The new cooling measures include tighter lending rules for those with existing mortgages looking to buy another property. They can now borrow up to only 70 per cent of the property's value, down from 80 per cent.
Also, those who buy an HDB resale flat on or after Aug 30 must sell their private property - including any held overseas - within six months of the purchase.
The housing market had resisted two earlier rounds of cooling measures - in September last year and in February this year. The measures included doing away with the interest absorption scheme and the imposition of a stamp duty for those who sell their property within a year of buying it.
Private home prices have surged since the middle of last year while HDB resale prices have continued to reach new quarterly highs since 2008.
For a start, property experts expect the new measures to slow home sales for the rest of the year. Already, the impact can be felt in the HDB and private resale markets, they said.
Cushman and Wakefield's senior manager of research, Asia-Pacific, Mr Ong Kah Seng, said the slowdown in the private market will be most evident in the suburban areas as the government measures are targeted at stabilising prices of mass-market private homes.
The softening of the market may signal a buying opportunity for some people, said Savills.
However, nearly half of the respondents - down nine percentage points from 57 per cent - said they would still not consider buying a property.
'These people may be cautious about entering the market now and prefer to take a step back to assess the market impact of the new measures first before making a decision,' said Savills' senior manager, research and consultancy, Ms Christine Sun.
The other reason is that they do not need a home in the next six months, she said.
The survey also found that more repeat buyers than first-time buyers perceived that there was ample housing supply for them.
'This could be due to the tight supply in the public housing market, which is predominantly the domain of first-time buyers,' said Ms Sun.
As the Government plans to raise the supply of new HDB flats from more than 16,000 this year to as many as 22,000 next year, this perception of first-time buyers may change, she said.
And with the new measures, more buyers - apart from repeat buyers - felt more confident entering the property market in the next six months, Savills said.
Some respondents had commented that they were more willing to enter the market now, knowing that the Government was closely monitoring the situation and may do more to prevent any further price spikes or property bubble from forming, it said.
Others are also expecting more home options, given the huge upcoming supply in the private and public markets.
'These new measures may therefore sway some buyers who were sitting on the sidelines... to make a purchase in the next six months,' said Ms Sun.
'We can expect more rational buying in the coming months.'
joyceteo@sph.com.sg
ST Forum : Confused over stand on fixed commission rates
Sep 18, 2010
Confused over stand on fixed commission rates
ACCORDING to Minister for National Development Mah Bow Tan, the Council for Estate Agencies cannot fix commission rates as such a measure is anti-competitive; and it is better for such rates to be influenced by market forces ('Oct 22 start for real estate stat board'; Thursday).
If it is possible to fix commission rates for the insurance industry without such fixing being viewed as anti-competitive, why can't the same apply to property brokers?
By adopting fixed commission rates as a rule, a chunk of current issues, such as the complaints about unethical agents, will be resolved.
The insurance industry penalises an agent who is caught under-cutting commissions by revoking his licence.
The same deterrent can be applied with equal effectiveness to real estate agents.
Koh Wee Leng (Miss)
Confused over stand on fixed commission rates
ACCORDING to Minister for National Development Mah Bow Tan, the Council for Estate Agencies cannot fix commission rates as such a measure is anti-competitive; and it is better for such rates to be influenced by market forces ('Oct 22 start for real estate stat board'; Thursday).
If it is possible to fix commission rates for the insurance industry without such fixing being viewed as anti-competitive, why can't the same apply to property brokers?
By adopting fixed commission rates as a rule, a chunk of current issues, such as the complaints about unethical agents, will be resolved.
The insurance industry penalises an agent who is caught under-cutting commissions by revoking his licence.
The same deterrent can be applied with equal effectiveness to real estate agents.
Koh Wee Leng (Miss)
ST : Hougang condo plot draws six bidders
Sep 18, 2010
Hougang condo plot draws six bidders
Cautious tenders show developers less bullish about residential market
By Joyce Teo
A CONDOMINIUM plot in Hougang Avenue 7 has attracted six bidders, but their fairly conservative tenders show that developers are taking a cautious approach.
The top bid of $160 million or $339.6 per sq ft per plot ratio (psf ppr) came from Sim Lian Land.
Its offer was just 2.5 per cent above the second highest bid of $331.3 psf ppr from a Hoi Hup Realty, Sunway Developments and SC Wong Holdings joint venture.
Analysts had expected bids between $320 and $370 psf ppr.
Sim Lian's bid was also only 50 per cent above the bottom bid of $225 psf ppr from Meadows Investment, a firm owned by Tiong Aik Group executive director Neo Tiam Boon.
Other bidders include GuocoLand's First Changi Development and Hong Leong Group's Intrepid Investments.
Sim Lian wants to build 400 to 450 units, with a good mix of two- to four-bedders, said Sim Lian Group executive director Diana Kuik.
The launch could be in the next nine to 12 months, although a lot would depend on the market conditions, Ms Kuik added.
The 99-year leasehold Hougang plot is within the Hougang Housing Board estate. It is 15,630 sq m in size, with a maximum gross floor area of 43,765 sq m.
CBRE Research executive director Li Hiaw Ho said the six bids showed that developers are interested, but 'as the top bid is only 50 per cent higher than the last bid, it shows that developers are cautious and less bullish about the residential market'.
The Government had announced measures to cool the property market on Aug 30. While the impact is not clear as yet, experts expect home sales this year to be hit.
Cushman & Wakefield managing director Donald Han said the tender results showed that developers are 'constrained' in their bids.
'They are no longer putting in aggressive bids that will lead to runaway prices. If you miss this, you can go for another site coming up for tender,' he said.
You can now see the impact of the cooling measures on developers' price expectations, he added.
DTZ head of South- east Asia research Chua Chor Hoon believes developers are now more selective in bidding for sites.
The Hougang plot is targeted at HDB upgraders, so the bids were adjusted accordingly, she said.
Ms Chua estimates a break-even cost of $640 psf, based on the top bid. The final selling price of the units could be around $770 psf.
CBRE's Mr Li said the top bid reflects a higher break-even cost of around $680 psf, and that units in the new project will possibly sell for $800 to $850 psf.
For comparison, units in the recently launched The Minton in Lorong Ah Soo sold at around $860 psf from June to August.
Units in Kovan Residences, adjacent to Kovan MRT station, were transacting at around $900 psf over the same period, Mr Li said.
joyceteo@sph.com.sg
Hougang condo plot draws six bidders
Cautious tenders show developers less bullish about residential market
By Joyce Teo
A CONDOMINIUM plot in Hougang Avenue 7 has attracted six bidders, but their fairly conservative tenders show that developers are taking a cautious approach.
The top bid of $160 million or $339.6 per sq ft per plot ratio (psf ppr) came from Sim Lian Land.
Its offer was just 2.5 per cent above the second highest bid of $331.3 psf ppr from a Hoi Hup Realty, Sunway Developments and SC Wong Holdings joint venture.
Analysts had expected bids between $320 and $370 psf ppr.
Sim Lian's bid was also only 50 per cent above the bottom bid of $225 psf ppr from Meadows Investment, a firm owned by Tiong Aik Group executive director Neo Tiam Boon.
Other bidders include GuocoLand's First Changi Development and Hong Leong Group's Intrepid Investments.
Sim Lian wants to build 400 to 450 units, with a good mix of two- to four-bedders, said Sim Lian Group executive director Diana Kuik.
The launch could be in the next nine to 12 months, although a lot would depend on the market conditions, Ms Kuik added.
The 99-year leasehold Hougang plot is within the Hougang Housing Board estate. It is 15,630 sq m in size, with a maximum gross floor area of 43,765 sq m.
CBRE Research executive director Li Hiaw Ho said the six bids showed that developers are interested, but 'as the top bid is only 50 per cent higher than the last bid, it shows that developers are cautious and less bullish about the residential market'.
The Government had announced measures to cool the property market on Aug 30. While the impact is not clear as yet, experts expect home sales this year to be hit.
Cushman & Wakefield managing director Donald Han said the tender results showed that developers are 'constrained' in their bids.
'They are no longer putting in aggressive bids that will lead to runaway prices. If you miss this, you can go for another site coming up for tender,' he said.
You can now see the impact of the cooling measures on developers' price expectations, he added.
DTZ head of South- east Asia research Chua Chor Hoon believes developers are now more selective in bidding for sites.
The Hougang plot is targeted at HDB upgraders, so the bids were adjusted accordingly, she said.
Ms Chua estimates a break-even cost of $640 psf, based on the top bid. The final selling price of the units could be around $770 psf.
CBRE's Mr Li said the top bid reflects a higher break-even cost of around $680 psf, and that units in the new project will possibly sell for $800 to $850 psf.
For comparison, units in the recently launched The Minton in Lorong Ah Soo sold at around $860 psf from June to August.
Units in Kovan Residences, adjacent to Kovan MRT station, were transacting at around $900 psf over the same period, Mr Li said.
joyceteo@sph.com.sg
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