ST : Home sellers in flood areas may lose out some

Aug 22, 2010

property

Home sellers in flood areas may lose out some

Buyer interest falls, but effect is temporary, say property experts

By Esther Teo

The floodwaters may have long receded, but property agents report that homeowners in flood-affected areas are facing reduced buyer interest.

Industry players say that property bargain hunters, however, might see the floods as a bargaining chip and an opportunity to invest should they chance upon an urgent seller.

They say that the floods are expected to be a temporary problem with drainage improvement works and flood prevention measures slated to be carried out by the Government, after which prices would resume their upward trend.

A number of condominiums in property hot spots, such as the Tessarina and Gentle Reflections in Bukit Timah, had their carparks flooded during heavy rain over the past two months, damaging parked cars and angering residents.

Landed home residents in Opera Estate and Jalan Ma'mor in Balestier woke up to muddy water gushing through their homes on a Saturday morning last month after a storm with nearly twice the force of the two in June battered the central and eastern parts of Singapore.

Managing director of property agency AC MacGyver, Mr Alexs Chua, said homes located in flood-prone areas might need to be priced at an estimated 15 per cent discount compared to those on higher ground.

'It is hard to compensate a buyer who may have to change his furniture whenever it floods,' he said.

Mr Steven Tan, executive director of residential at the OrangeTee agency, said that flood areas were likely to face price resistance in the short term.

'Prices might not necessarily go down, but they might not move as quickly upwards compared to other projects in the area if the problem persists or if buyers remain wary,' he said.

Property agents say that homes in popular areas such as Bukit Timah, Upper Thomson and Telok Kurau are being viewed by reluctant buyers who have lost some interest in projects devastated by the floods. Some sellers are more willing to negotiate on their asking prices.

Fire sale prices, however, are unlikely, agents say, since most sellers are not urgently divesting. But with buyers having more bargaining power now, they may be able to tease out small discounts from more flexible sellers.

PropNex chief executive Mohamed Ismail said: 'No seller is going to sell a house at a 20 per cent discount just because of the floods, especially when they know the problem is not expected to be a permanent one.'

Knight Frank agent Mindy Yong, who markets the Tessarina condo in Wilby Road, said sellers may be open to offers $20,000 to $50,000 below their asking price.

A property agent who wanted to be known only as Mr Tay said that the current gap in price expectations between buyers and sellers in previously flooded areas has kept the market quiet since the floods.

'Some buyers expected a fire sale and asked for a 20 per cent discount. Of course, sellers refused. But if they ask for a more reasonable 5 per cent discount, then why not?' he said.

Mr Tay added that if no transactions were sealed in the next few months, it was inevitable that some sellers might become desperate and start lowering their selling prices.

However, prices are not expected to stay flat in the long term with the PUB already announcing plans to alleviate flooding in these hot spots, some experts say.

Singapore's water agency said that works will include raising roads as well as widening and deepening drains. Where possible, the works will be expedited.

For example, improvement works in areas like Jalan Ma'mor and Jalan Bahagia will see water flow diverted to Sungei Whampoa and the drains deepened. Tenders for improvement works have also been called last month for the stretch of Bukit Timah Canal between Wilby Road and Maple Avenue.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said landlords rather than owner-occupiers are more likely to sell their flood-prone homes as they may decide to reinvest.

While potential gains will be affected, the market is still moving upwards, he said, adding that over the long term, most buyers may forget about the floods.

esthert@sph.com.sg



Fire sale prices at properties like the Tessarina condo in Bukit Timah (above), which had its carpark flooded during heavy rain, are unlikely, say agents, but buyers may be able to tease out small discounts. -- PHOTO: JERRY CHAN

ST : Better service expected

Aug 22, 2010

Better service expected

Service levels in the fragmented and unregulated industry are set to improve once the Estate Agents Bill is passed. This is likely to happen later this year.

Consultations began last year but some details have already been made clear.

There will be higher entry requirements, such as a minimum of four GCE O-level passes and the need to take a mandatory industry examination.

All agencies will have to be licensed and all agents registered.

'Everyone will be responsible for their own actions knowing that they may end up losing their licence and registration number to practise,' said Dennis Wee Group director Chris Koh.

Here are some other changes to expect:

· Code of ethics

The proposed changes also include a code of ethics and professional conduct for agencies as well as property agents, said the Ministry of National Development.

'A failure to observe provisions in the code may render the estate agents and/or the salesman to disciplinary actions under the Bill,' said Mr Norman Ho, a partner at law firm Rodyk & Davidson. 'As such, this code would serve as a means to directly establish and enforce service standards in the industry.'

· No dual representation

The Consumers Association of Singapore has long maintained that agents should not take commissions from both the buyer and the seller as there is a potential conflict of interest.

This notion will largely be met under the new Bill: Agents will not be able to collect commissions from both the buyer and the seller.

In a private home transaction, the buyer's agent will continue the current practice in which he takes a cut of the seller's commission from the seller's agent.

Still, in future, the buyer may want to consider paying his own agent a commission to ensure his interests are best protected, said C&H Realty managing director Albert Lu.

· Standard agreements

Exclusive sale agreements between clients and agents differ from agency to agency, but this will change under the new Bill.

There will be standard agency agreements between clients and agents.

If estate agency services are carried out without this required agreement, the agent will not be able to recover any fees or seek any legal remedy, the Government has said.

Details of this standard form contract have yet to be provided.

But Mr Ho expects that the agreement will greatly standardise the market practice among estate agencies and agents with regard to the scope and standard of services.

ST : Do your checks before signing the cheques

Aug 22, 2010

PROPERTY AGENTS

Do your checks before signing the cheques

Consumers should ensure they know how much commission they're paying and what they get out if it

By Joyce Teo

It is no secret that good agents can make tons of money from helping others buy and sell property, especially in the sort of market we are experiencing now.

But if you are on the sharp end of the deal - the one paying the commission and other fees - you may wonder if you have overpaid your agent when he is driving a BMW and you are still taking the bus.

The Sunday Times looks at how agents earn their keep and the service standards consumers should demand.

· No fixed rate

Agents collect a commission for their services and many will tell you that a 2 per cent seller's commission, for instance, is 'market practice', 'the norm' or that 'everyone pays this amount'.

The truth is that the commission is not fixed and consumers are free to negotiate the amount with the agents.

The Institute of Estate Agents (IEA) used to have guidelines recommending that a Housing Board flat seller pays a minimum 2 per cent of the price as commission, while the buyer pays 1 per cent.

In a private home deal, the guideline called only for the seller to pay a 2 per cent commission.

But in 2008 the Competition Commission of Singapore ruled that these IEA guidelines, which were adopted in 1999, were uncompetitive and must go.

The guidelines were then removed that year.

'Setting rules on commission rates for agents is viewed as anti-competitive and could infringe the Competition Act,' said the Ministry of National Development.

'Instead, consumers are encouraged to find out about the different commission rates charged by different estate agencies and negotiate the rate and service to be provided before engaging them.'

· Current practice

Estate agencies can and do set their own fee guidelines but almost all of them follow the previous commission guidelines, said Institute of Estate Agents president Mohamed Ismail.

Dennis Wee Group director Chris Koh added that agents tend to follow what they are familiar with.

Mr Eric Cheng, chief executive of ECG Property Group, says it trains agents to inform clients of the need to pay a commission to avoid any misunderstanding later on.

'Before you serve any (Housing Board) buyers, you must let them know that they will need to pay a commission,' he said.

Experts say the best time to negotiate the commission rate is at the start of the deal, so if you are not happy, you can opt for another agent. Most people seem resigned to paying the usual commission but there are cases where some have paid more and others less.

'The seller may have signed an exclusive agreement but the commission rate is still subject to negotiation,' said C&H Realty managing director Albert Lu.

Property experts said that some clients have happily paid more when the agent was able to help them clinch a deal at a much higher price.

On the other hand, clients have negotiated to pay 1 to 1.5 per cent if the agent does not get them the agreed selling price, said Mr Koh.

There are also cases where clients may negotiate a lower rate in a quick sale, where there was minimum advertising and effort involved, said Mr Lu.

There are cases where buyers have negotiated the commission down to as low as 0.5 per cent, particularly if they have engaged the same agent to sell their flat earlier, experts said.

The executive director of the Consumers Association of Singapore (Case), Mr Seah Seng Choon, said it has received complaints about agents overcharging for commissions.

'Most of the problems have their roots in the poor quality of service provided, resulting in consumers disputing the commission payable,' he said.

'When agents fail to keep to their side of the bargain, consumers are aggrieved and feel the commission payable should also be reviewed. Such disputes occurred all the time, even when the fee guidelines were in place.'

· What are you paying for?

Consumers should be clear on what they are getting for their buck.

Arranging for viewings is just one aspect of an agent's work.

To earn his commission, the agent should also advise the buyer on suitable properties and 'highlight the pros and cons of the properties viewed and negotiate prices on the buyer's behalf', said the chief executive of the Singapore Accredited Estate Agencies, Dr Tan Tee Khoon.

'In HDB resale transactions, the buyer's appointed agent would take the buyer through the entire process, from the paperwork and documentation through to the second appointment at HDB.'

And before the deal is closed, the agent will arrange for a final flat inspection to make sure that everything is in order.

This includes checking the inventory list and ensuring that items such as the air-conditioning system or lighting fixtures are in place, said Mr Ismail, who is also the chief executive of Propnex.

If there are problems, the buyers' agent can delay the completion of the deal, he said.

HDB flat sellers typically pay a higher commission because of the additional advertising cost involved.

'An agent can easily spend $300 to $400 a month on twice-a-week classified advertisements,' said Mr Ismail.

In private home deals, buyers typically do not pay a commission as their agent will typically take a cut of 0.5 per cent of the purchase price from the seller's agent, he said.

But there are exceptions. Agents serving foreign buyers new to Singapore usually charge a fee. This is because they provide extra services such as picking them up from the airport and taking them to the hotel, and then escorting them on the house hunt while advising them on the market.

Consumers should also know that agents do not keep the entire commission. Agencies typically take a cut of 10 to 30 per cent from each agent's deal.

New agents may get 70 per cent of the commission while the agency keeps 30 per cent, said Mr Koh.

'At the end of the day, it is whether the agent can help you close the deal at the price you want,' said Mr Lu.

'If they are looking after your interests, they will help you negotiate a good price. That will be worth more than the commission you are paying them.'

joyceteo@sph.com.sg

ST : Look Ma, it's raining inside

Aug 21, 2010

home & garden

Look Ma, it's raining inside

It is not only difficult to pinpoint the cause of leakages, but it is also problematic to resolve

By huang huifen

A thunderstorm woke up business manager Ray Ang and his family at 5am two months ago. But it was more than deafening thunderclaps that did it - the booms were followed by the sound of water splashing.

The family got out of their beds and saw rainwater gushing into the room of Mr Ang's father through a hole in the false ceiling of the double-storey terrace house in Bukit Timah. The leak was so bad, it also caused water damage in other rooms on the second floor.

Mr Ang's daughter, Tabitha, 24, says: 'We couldn't sleep after that. With the continuous heavy rain, we were afraid the whole ceiling would collapse.'

As a temporary measure, Mr Ang screwed a wooden plank into the ceiling to cover the 30cm-long hole. He plans to renovate the house soon and redesign its pitched roof, which he thinks is the cause of the problem.

'The unusually high amount of rainfall overflowed the gutter and caused rainwater to seep through the tiles of the roof and the false ceiling to give way,' says the 54-year-old, whose family has lived in the house for 17 years.

Aside from causing flash floods across the island, the recent heavy rainfall has resulted in water leakage in many houses.

Managing director Francis Lee of Lee Construction, which provides waterproofing application and repair services, says his firm has seen double the number of repair jobs related to damage caused by the rain in the last two months. The figure is up from the usual 10 cases a month.

He adds: 'A heavy rainy season is the time when most areas will see leakage, as buildings, with wear and tear over the years, will not have sufficient waterproofing to withstand the rain.'

Another waterproofing company, Mastercoat Services, reports a 20 per cent increase in repair cases in the last three months. Its director Micky Pang says: 'With the continuous rain, many roofs will leak and need to be re-waterproofed. We have seen six cases a month compared to the usual four cases.'

The recent spate of bad weather in Singapore is providing an unforgiving test of waterproofing systems that are old and worn and improperly or poorly installed.

What makes water leakage more of a pain than other construction problems is that it is often difficult to identify the cause of the leak.

Then, once the exact nature of the leak is pinned down, the affected area may need to be hacked to fix the leak.

For Ms J. Yeo, 50, it took several unsuccessful attempts to fix a leak in her toilet, which affected her direct neighbour below, before she decided to refurbish it.

The decision caused the director of an investment company thousands of dollars and three weeks of inconvenience to the tenants of her Balmoral Road property.

After a ponding test - where an area is flooded with water for about 48 hours to check for seepage - the leak was suspected to be caused by the wear and tear of the old waterproofing membrane.

To repair it, the contractors said the bathroom's floor tiles and concrete had to be hacked and they had to apply a layer of flexible cementitious-based membrane - or a cement-based liquid-applied waterproofing material - to the surface. The leaking has since stopped.

'It was so inconvenient. To make sure this does not happen again, I renovated the affected bathroom in the master bedroom and the common bathroom,' says Ms Yeo.

Depending on the scale of the problem and where the leakage occurs, a typical waterproofing repair work may take days to weeks to complete, and cost a few hundred dollars to $100,000.

Waterproofing is a construction process where layers of chemical membranes such as cementitious, acrylic or polyurethane-based membrane are applied over the surface before the cement is laid.

When waterproofing fails, the affected areas are usually fixed with polyurethane grouting - a hole is drilled into a wall, floor or ceiling and the chemicals are injected into it to seal up the cracks. For more serious cases, the entire area may need to be hacked and re-waterproofed.

For leaking roofs, re-waterproofing and re-tiling should solve the problem, at a cost ranging from $1,000 to $100,000.

Obviously, the key to avoiding such hassles is to have good waterproofing workmanship done right at the construction stage. But that is easier said than done.

In an industry where fast is good and cheap is gold, waterproofing specialists say they are not given enough time to cure the material and conduct watertightness tests to ensure a foolproof system before the next group of workers starts work.

A waterproofing process takes a few days, including time taken to cure and strengthen the membrane as well as to conduct a 48-hour ponding test.

And even after all this is done correctly, during the course of the rest of the construction, the waterproofing might be damaged by other workers and this might not be reported to the main contractor.

'As a result, waterproofing specialists are not alerted to touch up the openings in the waterproofing membrane,' says Ms Teresa Lim of Quicseal Construction Chemicals, a manufacturer and supplier of waterproofing materials.

There is another possible problem.

Mr Lee of Lee Construction says: 'Nowadays, as long as you have money, you can set up a company and get the general workers to do waterproofing. But waterproofing is a high-skilled work which requires training.'

As such, the Waterproofing Trades Association Singapore, which was set up in 2008 to promote exchange of information among the industry players, will be releasing two guidebooks on material selection and instructions on waterproofing application methods.

Currently, similar guidelines are available under the National Productivity and Quality Specifications project by the Building and Construction Authority, Singapore Institute of Architects, Institution of Engineers Singapore and Association of Consulting Engineers Singapore.

The guidebooks will be 'more specific and a practical guide to waterproofing', says Mr Alfred Lim, president of the association.

For HDB flats, HDB's website provides renovation guidelines on waterproofing requirements. Home owners also cannot replace the original waterproofed toilet floor and wall tiles for three years after getting the keys to a new flat.

Despite these guidelines, about 64 of the 72 disputes between neighbours brought before the Strata Titles Boards last year involved leaks. Properties with strata titles are private residential apartments such as condominiums and mixed development with commercial and residential in one building.

In 2005, the board made owners of upper-floor units responsible for water leaks as a result of wear and tear through their floors. Under the HDB Lease, both residents of the upper- and lower-floor units share the responsibility.

No matter what guidelines are in place and adhered to, the sobering truth, experts say, is that all buildings will face leakage at some point in time. Only the degree of leakage differs, says Mr Lee.

Mr Ashvin Kumar, president of the Singapore Institute of Architects, adds: 'When there are freak weather conditions, like a once-in-50-years severe storm, no building can be detailed sufficiently or appropriately to address the ramifications of such havoc.'

hfhuang@sph.com.sg


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

STOP THE FLOW

Signs of water leakage

· Flaking on the ceiling

· Water dripping from the ceiling

· White crystallisation appearing near the exposed pipe areas

· Dampness on walls, ceilings and floor slabs

What to do

· Engage a trusted contractor. The Singapore Concrete Institute, a non-profit organisation, has a list of accredited waterproofing firms on its website (www.scinst.org.sg).

· The Building and Construction Authority (BCA) also has a list of registered waterproofing contractors on its website (www.bca.gov.sg).

In addition, it has a Good Industry Practices Guide Book on its website for industry players and home owners to find out more about the standards of waterproofing internal wet areas and external walls.

Sources: Quicseal Construction Chemicals, Bestcoat Contract Services and Singapore Institute of Architects


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

'It was so inconvenient. To make sure this does not happen again, I renovated the affected bathroom in the master bedroom and the common bathroom'

Ms J. Yeo, whose toilet in her condo apartment leaked and affected her neighbour



After a 30cm hole in the ceiling (above) let rainwater gush into a room in Mr Ray Ang?s house, the business manager boarded it up with a wooden plank. -- ST PHOTOS: AIDAH RAUF

ST : One more station for Downtown Line

Aug 21, 2010

One more station for Downtown Line

It will be in Jalan Besar; Stage 3 serving the east to be completed by 2017

By Christopher Tan

STAGE 3 of the MRT Downtown Line, connecting the eastern suburbs of Changi, Tampines, Bedok and MacPherson to the Marina Bay downtown area, will be 21km long and have 16 stations.

This makes it 2km longer and gives it one station more than originally planned.

Stage 3 of the Downtown Line will offer commuters in parts of the island now unserved by the rail network an alternative transport choice.

'For instance, a person living in Tampines and working in the Kaki Bukit industrial estate will take half the time to get to work,' said Transport Minister Raymond Lim yesterday, adding that his 25-minute journey by bus today will be cut down to just 10 minutes by train.

Someone living near Bedok Reservoir heading for Chinatown will need only 35 minutes to get there, compared with 50 minutes today, added Mr Lim as he announced the long-awaited alignment of the third and final stage of the Downtown Line.

Tampines resident Francis Tan, 49, said: 'This is great. I can go almost anywhere in Singapore.'

The line stretches from Singapore Expo in the east to Liang Court in River Valley in the south. Stops will include Tampines East, Bedok Town Park, Kampong Ubi, Kaki Bukit and Kallang Bahru.

It will wind through some of the busiest parts of the city, including Sungei Road and Bencoolen Street.

The extra station will be in Jalan Besar.

'This was added to meet the needs of workers commuting to and from the nearby industrial estates and other future developments in the area,' said Mr Lim during his visit to the soon-to-open one-north station on the Circle Line.

The Land Transport Authority (LTA) said the original $12 billion budget for the whole Downtown Line - all 42km and 34 stations of it - will be busted, but it would not say by how much.

Stage 1 of the Downtown Line is in the city area; Stage 2 goes to Bukit Panjang, via Bukit Timah.

With Stage 3 now a slightly bigger project, it will take longer to complete - 2017 instead of 2016, said Mr Lim.

Stage 3 will cost more to build as a result, given that construction costs have risen sharply since plans for the Downtown Line were unveiled in 2007.

The later year of completion, however, is still earlier than the 2018 deadline first set three years ago.

Asked whether the longer duration of works will also push back the deadlines of future projects such as the Thomson and Eastern Region lines, the LTA said it has to finish preparatory works and engineering studies for a clearer picture of the completion dates of the other lines.

Downtown Line Stage 3 will have three interchanges: MacPherson station, which connects to the Circle Line, and the Tampines and Expo stations, which connect to the East-West Line.

The Straits Times understands that the River Valley station could be an interchange that hooks up with the Thomson Line, currently slated to be up by 2018.

Tenders for Downtown Line Stage 3 contracts will start going out later this month, and physical works are expected to commence in the middle of next year.

Construction will involve some property acquisitions - a Shell station in Upper Changi Road East, two parking lots in Bencoolen House, part of a food court in Peony Mansion, vacant spaces behind Kaki Bukit Techpark and Techview Building, as well as a vacant plot next to Plaza By The Park.

Fifteen landed houses in Merpati Road and Jalan Anggerek in MacPherson will be acquired; the space, with an adjacent tract of state land, will be redeveloped into high-density housing.

Mr Lim, in an update on the Circle Line, said it is on track to be fully open next year.

The remaining two stages - from Marymount to HarbourFront via Holland Village, one-north and Botanic Gardens - are near completion.

An LTA spokesman said the stations are expected to receive their Temporary Occupation Permits later this year. Testing and commissioning works will start in the following months.

christan@sph.com.sg

BT : JTC offers two sites for sale by tender

Business Times - 21 Aug 2010

JTC offers two sites for sale by tender

By MELISSA TAN

JTC said yesterday that two sites - at Yishun and the Biopolis - will be put up for sale by tender. The site at Yishun Street 23/Yishun Avenue 9 is 4.65 ha and has a 60-year lease. Near Yishun Industrial Park, it is to be developed as a ramp-up factory with direct vehicle access to all units. It will be launched on Monday and sold under the Industrial Government Land Sales programme. The tender closes on Oct 4.

The Biopolis phase five site, for laboratory buildings at one-north, will be launched through the Concept and Price Tender programme. The land area is 0.96 ha, with a 30-plus-30 years renewal tenure. The launch date is Oct 4 and developers will have until Dec 3 to submit tenders.

JTC said details for the two tenders will be published on its website on the launch dates.

The tenders were announced at JTC's Industrial Property Exchange conference yesterday. JTC chief executive Manohar Khiatani said JTC is 'mindful that an efficient and competitive industrial space market is crucial for Singapore's manufacturing sector'.

JTC will work with the Ministry of Trade and Industry to 'continue to provide adequate land supply through the various land-launch mechanisms', he said.

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

BT : First Chevron House, then Hitachi Tower

Business Times - 21 Aug 2010

First Chevron House, then Hitachi Tower

Deals involving the two prominent buildings may shake up the office market

By KALPANA RASHIWALA

CHEVRON House could be the next big office deal on the cards, say market watchers. This follows the sale of about $1.9 billion worth of office blocks so far this year. Chevron House was bought by Goldman Sachs funds in late 2007 for $730 million or about $2,780 per sq ft of net lettable area and the purchase was mostly funded by a consortium of lenders led by Standard Chartered. That financing facility is understood to be expiring in October and the bankers and Goldman Sachs are said to be weighing their options.

BT understands that potential buyers have been knocking on the doors of Goldman Sachs and the lenders and that property agents could soon be appointed to conduct a sale process such as a tender or expression of interest. 'The way I look at it, Goldman could have about three options - seek refinancing, bring in a joint venture partner or sell the asset completely,' suggests an industry observer.

Analysts say that the consortium of banks could have loaned the Goldman funds about 65 per cent of the 2007 purchase price, which would work out to about $1,800 psf of net lettable area. The loan-to-value covenant on the financing facility would have been breached sometime ago following the steep slide in office capital values last year. Interest coverage ratio for Chevron House would also have fallen on lease renewals in the building; average Grade A office rents in Singapore today are about $9 psf a month, or 40 per cent lower than the $15 psf three years ago.

Analysts polled by BT estimate the property could fetch anything from about $1,900 psf to $2,200 psf (or about $500 million to $577 million). The most recent benchmark would be the $2,125 psf that Ho Bee achieved when it sold four office floors at Samsung Hub at Church Street. While Samsung Hub is a much newer asset and stands on a site with superior leasehold tenure (999 years) than Chevron House (which is on a site with 78 years' remaining lease), the latter boasts a more choice location next to Raffles Place MRT Station.

Goldman Sachs funds also bought Hitachi Tower, behind Chevron House, in early 2008 for $811 million or about $2,900 psf of NLA. Stanchart also heads the consortium of lenders for that purchase; the financing facility is said to end early next year. So a sale of Hitachi Tower could also be on the cards a little later down the road.

Hitachi Tower would be worth more than Chevron House, say analysts, citing its superior land tenure (999 years) and facing (along Collyer Quay). However, one drawback about the asset is the impending departure of American Express - which is said to occupy about 70,000 sq ft - to Marina Bay Financial Centre Tower 2.

Last week, Goldman Sachs funds sold DBS Towers One and Two along Shenton Way for $870.5 million or around $970 psf of NLA, marking the biggest commercial property deal in Singapore since mid-2008. Goldman Sachs reaped a profit from that deal, having paid $690 million for the property in 2005.

Some of the blocks sold this year were 'pure office' deals, that is the buyers bought the assets on their existing office use - such as 1 Finlayson Green and Robinson Point - while others such as Chow House and StarHub Centre were probably acquired for their potential for redevelopment into other uses.

Interest from both local and foreign investors in the Singapore office market has been warming on the back of recovering office rentals and the easier climate for fund-raising.

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



CHEVRON HOUSE
Bought by Goldman Sachs funds in 2007 for $730m or about $2,780 per sqft of net lettable area

TODAY ONLINE : Sibor or SOR? Now you can have them both

Sibor or SOR? Now you can have them both

ANZ Bank offers unique floating rate mortgage

05:55 AM Aug 20, 2010

by Julie Quek

SINGAPORE - ANZ Bank has launched a new floating rate home loan, believed to be the first of its kind here.

The bank claims it could reduce the anxiety of homeowners because the loan is pegged to at least two reference rates, unlike the banking norm in Singapore where home loans are usually pegged to only one.

Floating rate home loans are usually pegged to either the Singapore Interbank Offered Rate (Sibor) or the Swap Offer Rate (SOR).

Sibor is the rate at which banks in Singapore lend to one another, whereas SOR refers to the average cost of funds used by banks here for commercial lending.

As most housing loan interest rates track movements in the Sibor or SOR, this means that when the respective rates shift upwards or downwards, the interest rates of the home package will move in the same direction.

Analysts say that for homeowners buying properties over long-term periods, it is advisable to choose a loan with fixed rates or Sibor-pegged home package, as Sibor rates are known to be relatively more stable than SOR rates.

However, for home buyers with more aggressive risk appetite and who are investing over a shorter time horizon, they may consider the SOR-pegged packages at a time when the SOR rates are lower and more attractively-priced than Sibor rates.



Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Office take-up rate higher

Office take-up rate higher

05:55 AM Aug 20, 2010



SINGAPORE - The improving economic climate and stronger business confidence have boosted office space take-up rates in Singapore and across the Asia-Pacific, and analysts believe that it will get better.

According to Jones Lang LaSalle, the second quarter of this year saw take-up of office space across the Asia-Pacific's Tier I cities spike by 13 per cent on quarter to 1.3 million square metres.

To tap on the growth of the commercial property sector, the founders of property website PropertyGuru, have created a new portal.

CommercialGuru.com.sg is believed to be Singapore's first dedicated portal for commercial properties.

Reports said Singapore has about 44 million square feet - or the size of about 32 UOB buildings - of vacant commercial space today.

CommercialGuru currently lists over 7,000 available vacant properties in Singapore and the region, a figure that is expected to double over the next year. Its chief executive and co-founder Mr Steve Melhuish, said: "For users, there's an increasing focus on commercial property as a result of not just the macro-economic demand but also in terms of investors shifting from residential."

Mr Melhuish also said his website had a number of Malaysian developers who are promoting their properties on the site's overseas section. May Wong



Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Watch what they do, not what they say

Watch what they do, not what they say

Jurong West EC site and Bedok mixed-use tenders presage bumpier ride ahead

05:55 AM Aug 20, 2010

by Chesterton



The Real Estate Developers' Association of Singapore (Redas) elicited much controversy when it launched its Real Estate Sentiment Index (Resi) for Q2 2010.

Sceptics questioned the credibility of developers as they would have a natural vested bias towards generating positive sentiment, which would help them sell their properties.

There is a lot of noise generated in the market these days and, if you are inexperienced, you would not be able to separate the truth from the noise. It pays to approach every news item with a good dose of cynicism until convinced otherwise.

Even "impartial" property analysts are known to scramble to put their views across to the media at every opportunity to shape opinion. Reporters have it so much easier today. In the past, they had to trouble experts for their views. Today, they have more unsolicited opinion than they can use.

As a result, we often get too much micro-analysis of the data but very little of the big picture that matters. This can be confusing for readers because the views are not always consistent.

The reader needs to be a lot more discerning today. It is important to know where the comments are coming from. A marketing person will give you marketing talk, while a public relations person will give you PR talk.

Personally, I welcome the launch of Resi as it shows that Redas is adapting to today's fast-changing market. In the current globalised environment, property cycles can peak and trough in a matter of a few years. Every channel that relays feedback quickly is welcomed.

Over time, the market will learn to embrace Resi and its findings. The discerning reader will evaluate its reliability according to its source.

People often complain to me about developers and their media comments. But to me, they are the true experts of the property market. After all, they are putting their money where their mouths are.

The trick is not to put too much weight on what they say but to focus on what they do or do not do.

Last Wednesday, developers said a lot when they did not submit even a single bid for the tender of the Executive Condominium (EC) site at Jurong West.

Experts say the site is remote and not next to an MRT station. As far as I can recall, there has never been any EC site next to a station. These sites are usually reserved for private housing as they generate more revenue.

It is not much more remote than other EC sites. Even if it was perceived to be remote, are we not in the midst of a strong property bull run?

One developer was quoted as saying that because ECs catered to a closed market, its location was especially important. I would think location is important for all properties, not just ECs.

Even if the site is not that good, developers can always submit lower bids. After all, they are supposed to be still hungry for sites.

Contrast this result with the high bids and good participation in an industrial land tender, which closed only the day before.

For sure, closing the tender within the Hungry Ghost Month was just tempting fate a little too far. As a group, developers are a lot more superstitious than buyers.

It did not help that the stock market was having a bad run. The benchmark Straits Times Index had been declining each trading day since a week before. The market was stumbling right up to the date and time of close of tender.

The turmoil was probably enough to spook developers, which leads me to question whether the housing market is on edge and not as robust as we thought. Previous tenders have rode out such similar crises.

I was hoping that a tender closing on Tuesday for a mixed-use site with some residential component next to the Bedok bus interchange and MRT station might help clarify some doubts but the tender closing was delayed. I understand it was to give developers more time to assess the site.

Probably, but is there more to it? I leave it to the reader to decide. Whatever the actual reason, the ride for the housing market is going to be a little bit more bumpy from now on.



The writer is Head of Research and Consultancy at Chesterton Suntec International.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Pushing price boundaries in private residential market

Pushing price boundaries in private residential market

05:55 AM Aug 20, 2010

by Tan Kok Keong



In business strategy classes, we often learn that the most successful businesses are the ones that are early leaders in identifying a need or are able to create a market by convincing consumers to pay for something which they never knew they wanted.

In the last property boom, the race was to build the biggest and priciest apartment.

To achieve this, projects were co-branded by contracting renowned architects to produce distinctive products and stuffing the apartment with the best appliances.

CapitaLand and Sun Hung Kai engaged the services of renowned Benoy when developing The Orchard Residences. "Branded" apartments were introduced.

City Developments brought the St Regis brand to Singapore. Specialist luxury home developer SC Global took this to a new level by introducing 6,000-square-feet apartments at The Marq, which comes with your own 15m lap pool. These distinctive projects helped to inject life and interest into the luxury housing market and pushed the price boundaries in their respective segments.

Coming out of the economic recession last year, a turning point of sorts for the private residential market was the successful launch of The Alexis at Alexandra Road, jointly developed by Fission Group and Yi Kai Development.

Before its launch and rumoured sell out, my initial thoughts were that the site attributes were not fantastic. I could not imagine staying in a 400-sq-ft apartment and thought that occupants might get dizzy from facing the giant rotating Mercedes billboard across the road.

But as it turned out, the developer had astutely identified the need for affordable houses at the expense of size. The project was sold out at launch and at a price more than 20 per cent above that of "proper" apartments in the vicinity. The developer created a market for small apartments, which have since become a "must-have" in projects in order to maximise returns.

Then, early this year, Cheung Kong created another market via introducing "luxury housing in the suburbs".

Before its launch, sceptics lamented about the noise and congestion caused by the long container trucks plying the West Coast Highway, the bad air in West Coast and even the sea view.

But the aptly named The Vision, a 99-year leasehold project, managed to shatter the price ceiling, selling at more than 20 to 30 per cent above existing condominium prices. More significantly, its successful launch helped lift prices of existing homes in the area, which had lagged the market.

Adding $100 to $200 per square feet to a price may not be so much of a stretch during periods of economic boom and positive sentiment.

Still, taking a unit of 1,000 sq ft, each $100 psf rise in price implies that the buyer needs to fork out $20,000 more in downpayment and an additional $316 per month in mortgage payments (at 2.5 per cent interest per annum and 30-year loan term).

With overall private property prices at an all-time peak now and a wider variety of choices, it becomes even more important to differentiate the product offering.

Which projects can inject that new element that could compel home buyers to part with their cheques and pay premium "future" prices for their dream homes? Could we see 99-year leasehold projects command $2,000 psf in the Holland area or $1,500 psf in Thomson or $1,300 psf in Jurong Lakeside? Could new launches at Yishun, Woodlands or Tampines burst the $1,000 psf mark?

Existing home owners should keep watch as they could benefit from gains in value, even on paper, if and when developers manage to push pricing boundaries.

For those thinking of buying but are not too inclined to pay "future prices", they could consider taking up positions in localities where they feel developers have the gumption to push pricing boundaries.

The writer is Head of the Research and Consultancy Department at Orange Tee.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : New kid on the block is good news

New kid on the block is good news

Launch prices of new condos often raise resale values of nearby developments

05:55 AM Aug 20, 2010

by Png Poh Soon property@mediacorp.com.sg



When the show flat of a new residential project is ready, the new kid on the block often creates a buzz among the residents living nearby. People are generally curious about what the project looks like, its launch and completion date, and most importantly, the launch price.

Homes in these new projects are often priced higher than the average transacted value of resale units in the neighbourhood because of several factors, such as newer designs and longer tenures.

Many homeowners have asked how these new launches affect the value of their homes. Does the pricing of these new properties affect the prices of nearby resale units and, if so, to what extent?

Knight Frank has carried out a study to examine the pricing effects of new projects on resale properties in their vicinity. Our study is adjusted against the benchmark Urban Redevelopment Authority (URA) price index in the respective regions to take into account the effects of broad general market movements.

The price effect is based on the change in transacted prices per square foot over time of selected new and resale properties over the period from 2004 to last year in the Core Central Region (CCR), the Rest of Central Region (RCR) and the Outside Central Region (OCR), according to the URA's geographical classification.

The average transacted prices of similar-sized units in developments adjacent to the new project were studied and compared over a three-month period before and after the new launch. Sizes were controlled to reduce price distortion where smaller units command higher prices on a psf basis and vice-versa.

Anecdotal comparisons showed that new projects were generally priced 20 to 40 per cent higher than the average transacted prices of nearby developments of similar sizes. This was especially so in the CCR and the RCR region and during property market upturns.

The new developments were found to have a positive effect on the transacted values of resale units after adjusting for broad market movements.

Resale prices moved up in tandem following the launch of higher-priced developments. The average resale unit price appreciation was 12.98 per cent in the CCR, 19.14 per cent in the RCR and 4.23 per cent in the OCR over and above the benchmark price index.

Prima facie, new launches do seem to have a positive effect on resale prices.

For example, when Marina Bay Residences was launched in December 2006 at a premium of 38 per cent to the average price of similar-sized units in the neighbouring development, transacted prices of the already-launched The Sail went up by some 21 per cent after adjusting for broad market movement. Likewise, the transacted prices of The Metropolitan went up by 12.2 per cent after The Ascentia Sky was launched at a premium of 36.3 per cent in July last year.

Arguably, the positive effect arises because resale units take reference from the transacted prices in the vicinity, including the higher priced new projects.

Higher priced launches raise the selling price expectations of the owners of resale units, particularly if they are located near the new project.

From the buyers' perspective, resale units may also appear to offer value for money if they cost lower than their new neighbours. Inadvertently, this results in price appreciation for these resale units.

The real estate adage of "location, location, location" also applies in this instance, where the price effects of new launches have greater impact in the CCR and the RCR rather than the OCR.

Apparently, older properties in better locations benefited more where buyers have deeper pockets vis-a-vis buyers in the suburban regions.

But before you decide to jump on the property bandwagon, we would like to add a caveat. We noticed in our study instances where new launches did not result in a positive effect on the prices of nearby resale units.

Broadly, these instances occur during periods where home buyers' sentiment was weak, such as when the broad market was awash with negative news or in the doldrums. There were also periods when buyers' sentiment turned cautious after the announcement of public policies aimed at cooling the property market.

For example, in September last year, the Government announced the withdrawal of the interest absorption scheme and interest-only loan as an attempt to pre-empt a speculative bubble from forming.

The property market turned quiet for a while as buyers adopted a cautious stance. Resale units near new launches during this period did not exhibit much price movement compared to the market before the announcement.

To sum up, while new projects are still popular with potential home buyers, resale properties may be worth a second look, whether it is for owner-occupation or for investment.

Gems can be uncovered, especially for properties near sites with potential for new developments.

Perhaps it may help to look at yet-to-be launched sites that had been tendered between last year and this year.

If your sums, market conditions and timing are right, a pot of gold may be waiting at the end of the rainbow.

The writer is senior manager at Knight Frank's consultancy and research department.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Twin Peaks of luxury

Twin Peaks of luxury

05:55 AM Aug 20, 2010

SINGAPORE - Overseas Union Enterprise's latest residential offering, Twin Peaks, is poised to test the high-end luxury condominium market amid expectations of slower economic growth in the second half of the year.

This project is located in the District 9 Leonie Hill and River Valley area, and is expected to be launched next month.

Nearby, in Orchard Boulevard, two projects - The Orchard Residences and Boulevard Vue - have both recorded prices of up to $4,000 psf based on caveats lodged as at the end of last month.

One unique selling point of the Twin Peaks is that it has fully-furnished units retrofitted with iconic designer furnishings with the likes of Tom Dixon.

Made up of two 36-storey towers, Twin Peaks has 462 units ranging from one-bedroom to three-bedroom apartments.

Buyers will have the flexibility of combining a one-bedroom unit with two or three-bedroom units to make the space bigger.

This may appeal to extended multi-generation family living, as it retains privacy with separate entrances yet provides convenience for cross movement between the two apartments.

Other than a full-service concierge desk, residents at Twin Peaks will also be able to enjoy hotel services provided by the nearby Mandarin Orchard Singapore, such as laundry and housekeeping services.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

BT : Call for land tenders that go beyond price

Business Times - 20 Aug 2010

Call for land tenders that go beyond price

Extending dual-envelope tenders will encourage innovative design and architecture: focus group

By KALPANA RASHIWALA

(SINGAPORE) Singapore may have a greener tinge and a vastly more interesting skyline, if the suggestions contained in the final reports by two focus groups for Concept Plan 2011 see the light of day.

There is, for example, a call to review the land tender system to create an 'inspiring global and Asian city'.

'By setting land price as the main or only criteria in evaluating tender submissions, we are not putting sufficient value on good architecture, which can contribute significantly to building a distinctive, innovative and interesting city skyline,' said the report of the focus group on Quality of Life.

It proposes extending the government's dual-envelope tender system, currently used for selected major development sites like Capitol Theatre, to more state land tender projects to 'signal the government's support for more innovative design concepts and architecture'. Under this system, concept proposals are first evaluated against a specified set of criteria and only those meeting these conditions will be considered. The site will then be awarded to the party with the highest bid price among those with acceptable concept proposals.

Some market watchers reckon that most state sites will still be awarded on price, except for plots with unique value or other important considerations. Having a design-based competition adds costs to tenderers especially when there will be only one winning bid. 'The better solution for such unique sites is the government should establish what it considers the land price that it is prepared to sell the land for, and all bidders will then focus on design, concept or whatever other criteria are set - rather than have to second guess the land price,' says Knight Frank chairman Tan Tiong Cheng.

The focus group also suggests that to deepen the sense of community, the government should consider the social merits of proposals when evaluating tender submissions for selected state land and properties. 'These evaluation criteria could include whether the proposal takes into account community, elderly or youth-related amenities and needs or whether they are from VWOs and NGOs. Such a move would send a positive signal to the private sector on the priorities of our society and help inculcate a greater consciousness of the issues,' the report said.

Other suggestions made by the focus groups include tax rebates for owners of buildings achieving Green Mark Platinum or GoldPlus standards and setting up a 'neutral zone' around places of worship in heritage areas and historic districts where pubs and lounges are not allowed. There is also a suggestion for more affordable rental apartments for young adults.

The focus group also says towns should be designed to evolve with residents' changing needs and respond to lifecycles of HDB estates. 'Instead of redeveloping estates entirely, we should continue to retain some empty plots...for future development so that estates can evolve and be rejuvenated over time,' the report said. For now, these plots could be kept as open spaces for people to simply 'stretch out', and the community could be given more say on their best use.

DTZ executive director Ong Choon Fah says this approach will ensure such land is not left idle. 'Land can be used not just for commercial purpose, but there's also value when you use it for social purpose; it adds value to the quality of life if people have more places to go to to relax, to bond. Perhaps you'll have less crime and stress and so ultimately there'll be economic benefits - although you may not be able to measure the commercial benefits of such an approach,' she said.

Another proposal from the focus groups is a need to facilitate ageing in familiar surroundings. HDB flats could be built in a modular fashion so walls can be easily knocked down for two or three units to be joined to cater to changes to household sizes at different stages of a family lifecycle. For elders who prefer independent living options, retirement housing communities near existing residential estates are recommended.

The focus group on Sustainability and Identity recommends that the Green Mark Scheme be expanded to cover the entire lifecycle of a building - from design and planning, to construction, operation and maintenance. Developers and owners are required to document the materials and resources used throughout a building's lifespan.

At construction stage, the extraction, processing and transport of raw materials should be assessed carefully so that these are carried out in an environmentally sustainable manner that inflicts minimal damage to the physical and natural environments. 'We should use locally-obtained, recyled and renewable resources where possible to reduce the need for transportation of materials, thereby also reducing Singapore's carbon footprint,' says the report.

A City Developments spokeswoman said: 'Perhaps the government can consider introducing incentives to encourage the industry to reuse and recycle natural resources, which can also help minimise construction and demolition waste going into our landfills.'



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

ST : Asia-Pacific office markets 'offer value'

Aug 20, 2010

Asia-Pacific office markets 'offer value'

Index sees commercial real estate in region promising better returns than that in Europe

By Esther Teo

A NEWLY launched global property index covering commercial real estate sees Asia-Pacific markets as more attractive than those in Europe but less so than that in the United States.

The Fair Value Index, as it is called, is compiled by property consultancy DTZ and offers investors an insight into the relative attractiveness of global markets over a five-year investment period.

The Asia-Pacific region scored 67 on the index in the second quarter, outstripping the global score of 62 and beating Europe's 49, but lagging behind the US' score of 89. A score above 50 indicates a hot market as expected returns exceed risk-adjusted required returns. Anything below 50 means a market is cold.

Mr David Green-Morgan, DTZ's head of Asia-Pacific research, said that Hong Kong, Singapore and Tokyo offer some of the most attractive opportunities across office, retail and industrial properties.

'Hong Kong and Singapore, two traditionally volatile markets, are set to record strong rental growth, particularly in the office sector, over the next five years as they rebound from sharp falls in rents in 2009,' he said. 'This will result in strong capital growth, boosting returns for investors and placing both markets in the hot category across the board.'

While the office sector in the Asia-Pacific region is leading the way with a score of 70, all three sectors - office, retail and industrial - offer opportunities to investors with scores above 50. The Asia-Pacific's retail sector is performing in line with the regional average at 67, while industrial stands at 61, DTZ said.

It added that the second quarter is in complete contrast to the same period a year ago when the Asia-Pacific all-property score was half of what it is now.

The economic recovery since then has improved liquidity and demand.

'Despite a pause in investment activity in China and Japan recently, the attractive pricing in many markets is seeing an increased number of buyers who are encouraged by occupational resilience and the resumption of rental and capital value growth,' DTZ said.

Mainland China continues to offer good value, led by office markets in Shanghai, Beijing and Chengdu. But office space in Guangzhou and Shenzhen and retail space in Shanghai are overpriced, according to the index.

Shanghai saw a number of retail construction projects in the lead-up to this year's World Expo. While they will sustain the sector this year, the outlook for investor returns over the medium term is expected to be subdued, DTZ said.

Meanwhile, a CBRE report yesterday said that more than half of the office rental markets in the Asia-Pacific region have either stabilised or started growing during the second quarter. Dr Raymond Torto, CBRE's global chief economist, said the region was the driving force behind the sector's global recovery, with over half of the markets either at the bottom of the rental cycle or in growth mode.

'Hong Kong, Shanghai and Beijing led the region's markets due to a push for office space from the financial sector in central business locations... Singapore, Bangalore and Mumbai followed closely as employment levels improved and prime rents and incentives remained stable.'

esthert@sph.com.sg

BT : Is there a property bubble in China?

Business Times - 20 Aug 2010

Is there a property bubble in China?

There may be a visible slowdown in housing starts and construction towards the end of this year, KELVIN TAY believes

THRUST centre stage as a result of the decline in the G-7 economies in a post-2008 credit crisis world, the Chinese economy has gained a new level of significance and scrutiny that often generates unwanted, alarmist racket.

Is there a property bubble in China? The answer bears more significance now than ever before. China's construction and real estate sectors are likely to contribute to an estimated 11 per cent of its GDP in 2010. The construction industry employs 14.3 per cent of all workers in urban areas and consumes 40 per cent of all steel and lumber produced in China.

The private residential sector currently accounts for almost 40 per cent of the buildings completed by the construction industry. Never before has the health of the Chinese construction and real estate sectors been more closely followed.

Analysing a large, diverse economy like China's is complex, to say the least. Her sheer size and diversity in terms of economic development makes nationwide average figures rather meaningless. For example, from April 2009 to April 2010, residential property prices in China rose by 15 per cent and when juxtaposed with the price declines in 2008, would hardly set alarm bells ringing.

However, a closer examination of tier 1 cities revealed that in the 12-month period to April 2010, property prices rose by 64 per cent in Beijing, 39 per cent in Shanghai and actually doubled in Shenzhen.

The tier 1 cities accounted for almost 22 per cent of urban residential property sales, rather disproportionate to their share of 8 per cent of total floor space. Prices in Beijing reached a stratospheric 28,000 yuan per square metre in the same period.

Although long documented trends of urbanisation, rural to urban migration and a shortfall in the supply of public housing have resulted in property prices in China rising steadily over the last five years, what actually fuelled the extraordinary climb in prices over the last 12 months has largely been attributed to the increasing participation of state-owned enterprises (SOEs) in the property market.

Higher price

A study conducted by researchers from the National University of Singapore and Tsinghai University found that the transaction price of land tends to be 27.4 per cent higher when it is successfully bid by an SOE.

In certain cities like Beijing, the local and central SOEs' share of developers' land purchases have reached an estimated 71 per cent in early 2010, up from about 37 per cent in 2003.

Leverage, another indication of whether an asset bubble is building, has also seen a steady increase. If we assume that only urban households have access to mortgage lending, then mortgage debt as a proportion of urban household income is near 50 per cent, which makes it a tad uncomfortable.

We also need to take into consideration that in the case of China, where a large share of household wealth exists in the form of bank deposits, it is vulnerable to various forms of asset bubbles as and when households decide to shift a certain proportion to other asset classes, including property.

Although property purchases require a larger amount of capital (initial down payment), it is clearly not a major obstacle, especially in a period when property prices are escalating and return expectations get artificially inflated.

In that sense, we view the property tightening measures announced by the Chinese government in May with measured relief.

The policies are largely aimed at stabilising the market by curbing speculative demand and at the same time, increasing the supply of housing, in particular public housing.

At this stage of its economic cycle, a slowdown in China's property market is very much welcome news. If the Chinese real estate sector continues to grow at breakneck speed with little breathing space, it would certainly magnify the risk of overheating followed by a systemic collapse. This would have serious ramifications for Asia, including Singapore.

A collapse in China's property market resulting in financial contagion might affect the Singapore property market both directly and indirectly. As of July this year, Chinese nationals are currently the second largest source of foreign buyers of property in Singapore. Any crash in China's property market and subsequent economic slowdown would probably change that equation.

Furthermore, over the past two decades, systemic crises have always negatively impacted Singapore's property market. The Asian financial crisis in July 1997, Nasdaq crash in March 2000 and the credit crisis in 2008 all resulted in double-digit declines in the local property market.

However, it is the indirect impact that is actually more worrying. Since 2007, almost all home loans in Singapore are based on floating rates. Mortgage rates are usually pegged to the three-month Singapore Interbank Offered Rate (Sibor) or three-month Singapore Offered Rate (SOR), plus a premium that ranges between 1.25 per cent and 1.75 per cent.

Spike

Therefore, if Sibor or SOR spikes up suddenly and remains at stubbornly elevated levels for a period of time, property owners tied to such loans might suddenly find their monthly mortgages taking up a disproportionate amount of their monthly income.

Have there been instances when Sibor suddenly behaved erratically? The Asian financial crisis was one such example. Sibor spiked up to a high of 7.75 per cent before finally sliding to 1.9 per cent in December 1998. The average rate of Sibor during that 18-month period hovered at 4.9 per cent. As Asia was fortunately not at the epicentre of the credit crisis in 2008, Sibor did not behave erratically but averaged around 1.3 per cent, more than twice the current rate of 0.56 per cent.

So what is the likelihood of the above scenario panning out? Fortunately, we believe the chances are slim. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact.

Although we do not expect China's property sector or economic growth to collapse, we believe that there may be a rather visible slowdown in housing starts and construction towards the end of this year, with any possibility of a reversal of the property tightening measures and/or loosening in monetary policy likely to be in early 2011. We believe this could potentially be the catalyst for the Shanghai A-Share Composite index, which is currently the worst performing stock market in Asia ex-Japan, to outperform.

The writer is chief investment strategist Singapore, at UBS Wealth Management.

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



Complex market: A pedestrian looking up at a billboard advertising luxury apartments under construction in central Beijing. The sharp appreciation in property prices in China have been largely restricted to the tier 1 cities, leaving the fundamentals of the broader market intact

BT : S'pore commercial property sizzling: DTZ

Business Times - 20 Aug 2010

S'pore commercial property sizzling: DTZ

By EMILYN YAP

SINGAPORE'S prime industrial, retail and office properties offer some of the most attractive returns in the world, according to a new study by DTZ.

The property consultancy launched a set of fair value indices yesterday, derived by forecasting the returns commercial property investors can get above government bond yields, over five years across 180 markets.

Markets where expected returns exceed required returns would be labelled 'hot'. The larger the number of hot markets in a region, the higher its index score would be.

Results showed that Singapore was a hot market in the second quarter. The island's industrial property sector came in as the most attractive to invest in, ahead of Antwerp and Hong Kong in second and third places respectively. DTZ estimates that industrial assets here were underpriced by some 11 per cent.

Industrial rents are 'expected to return to growth this year in Hong Kong and Singapore after an extended period of weakness' that started in H2 2008, DTZ said in a release.

Singapore's retail property sector took third spot in terms of investment attractiveness, behind first-placed Los Angeles and second-placed Chicago. DTZ found that malls here were underpriced by 9 per cent.

Offices in Singapore were also underpriced by around 9 per cent, but the presence of even better returns in other cities meant that the country fell out of the top three spots. The office market in San Francisco offered the best value, followed by that in Hong Kong and Tokyo.

DTZ believes that office rents in Singapore will register strong growth in the next five years - they could rise 5-10 per cent in H2 this year - and this will lead to capital growth. Its global head of forecasting Tony McGough added that Singapore's office market is likely to stay hot in the next few quarters.

The reading for the global fair value index was 62 in Q2, surging from 24 a year ago, reflecting the increased number of investment opportunities brought about by the economic recovery.

The Asia-Pacific index had a score of 67, meaning that the region's commercial property market offered relatively better returns.

But pickings were richest in the US - its index clocked a reading of 89. According to DTZ's Asia-Pacific business development and client services head David Watt, many investment funds are focusing their attention on buying opportunities in the US now. The thinking is, 'we know Asia is a great story, but we'll get back to it', he said.

The index for Europe had a score of 49, the lowest among the three regions.

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

MND : INTRODUCES ESTATE AGENTS BILL

Press Releases

MND INTRODUCES ESTATE AGENTS BILL
IN PARLIAMENT ON 16 AUGUST 2010

1 The Ministry of National Development (MND) introduced the Estate Agents Bill for a First Reading at the Parliamentary Session on 16 August 2010. The proposed Estate Agents Bill seeks to establish the Council for Estate Agencies (CEA) as a new statutory board under MND to regulate the real estate agency industry.

Key Features of the Estate Agents Bill

Coverage of Framework and Establishment of CEA

2 The proposed Estate Agents Bill will apply to all estate agency work for Singapore and foreign properties marketed, sold or leased in Singapore. CEA will be established to administer the new regulatory framework.

Licensing of Estate Agencies and Registration of Salespersons

3 Estate agencies will continue to be licensed, but with enhanced conditions. Each agency will have to appoint a key executive officer (KEO) to be responsible for the proper administration and overall management of the business and supervision of all its salespersons. The KEO, all partners and directors in each agency will have to satisfy enhanced licensing conditions, such as fulfilling fit and proper criteria and prohibition to simultaneously hold a moneylender’s license, or be an employee, director or partner of a licensed moneylender.

4 Estate agencies will be required to exercise effective supervision of their salespersons and take responsibility for their actions. To enable agencies to do so, the Bill will require a salesperson to contract with only one agency and to operate under a written agreement with the agency. Salespersons will need to be registered with CEA through and with the support of their agencies, before they are allowed to do estate agency work.

5 Estate agencies will have to ensure that all their registered salespersons are professionally competent and meet the fit and proper criteria. Salespersons also need to have the necessary qualifications, pass the CEA’s salesperson examination and undertake continuing professional development relating to estate agency work. Information on all registered salespersons will be available on a public register, including the agency they are working for and any disciplinary action taken against them.

Duties and Liability of Estate Agencies and Salespersons

6 The Bill will empower CEA to prescribe codes of practice, ethics and professional conduct to regulate the practices of estate agencies and salespersons. Failure to comply with the codes may render the estate agency and/or salesperson liable to disciplinary action.

7 The CEA will also prescribe standard estate agency agreements between estate agencies and their clients, to ensure that the agreements do not contain unfair clauses. An estate agency that performs estate agency work without the required agreement will not be able to recover any fees or seek any remedy in legal proceedings.

Investigative and Disciplinary Powers

8 The Bill will provide CEA with powers of investigation to enable CEA to investigate breaches and enforce regulatory requirements. Under these provisions, CEA investigators will be able to summon agencies’ KEOs and salespersons, and seize relevant materials and documents.

9 The Bill will allow CEA to set up a Disciplinary Committee to hear and consider disciplinary cases. The Disciplinary Committee can mete out penalties including revocation, suspension, fines, admonishment and other conditions on estate agencies and salespersons if it finds the agencies and/or salespersons responsible.

10 The Bill will allow any person who is aggrieved by the decisions of CEA to lodge an appeal to an independent Appeals Boards. The decision of the Appeals Board shall be final.

Dispute Resolution

11 Estate agencies and salespersons will be required to participate in CEA’s prescribed dispute resolution process covering mediation and arbitration, once this has been initiated by the consumer.

Transition Arrangement

12 The Bill includes transition provisions for existing agencies to be deemed as licensed by CEA for the remainder of the duration of the licence previously issued by the Inland Revenue Authority of Singapore (IRAS) until 31 December 2010. Other transitional arrangements will be provided for in the regulations to be published in the Gazette after the Bill is passed.

Second Reading

13 The Bill will be tabled for a Second Reading at the following available Parliament sitting.

Issued by: Ministry of National Development
Date: 16 August 2010

ST : Global uncertainty slows sale of high-end homes

Aug 19, 2010

Global uncertainty slows sale of high-end homes

Outlook still favourable but mass market properties more popular

By Joyce Teo

BUYERS are still showing relatively muted interest in the most luxurious homes in the city centre, the latest set of new home sales data shows.

But they are making a beeline for very popular mass market homes, followed by mid-tier units, the figures show.

Property experts say the outlook for the luxury sector remains favourable, though growth has slowed and current global uncertainties mean these prime high-end homes are unlikely to rebound this year as some experts had hoped.

A few months back, it was expected that luxury projects such as Ardmore3 and those on the former Grangeford and Parisian condo sites in the Orchard area would be launched in the first half year.

No major luxury projects were launched last year.

Developers of these homes have been cautious again this year. Bukit Sembawang recently said it will be launching the marketing of Paterson Suites in its current financial year ending March31 - unusually late in the game for a project that has already received its temporary occupation permit.

Underscoring the point, City Developments chairman Kwek Leng Beng last week said luxury homes had not sold as well as the industry had expected.

He said this segment would perform well - perhaps next year - only if the wider global economy stabilises.

Said Cushman & Wakefield managing director Donald Han: 'Singapore may not be the place to make extraordinary gains but the good thing is the luxury market is still compelling.The market is just taking a breather. The earliest possible time for the return of interest in the luxury end market will be at the end of the year.'

While the prime segment (homes selling for $2.5million to $5million) saw some activity in the first half, transactions in the luxury ($5-$8million) and super-luxury (above $8million) segments have been rather scarce, said CBRE executive director, residential, Mr Joseph Tan.

'Most homebuyers were generally more cautious towards high-priced projects under the present uncertain conditions on the global front.'

Still, Colliers International's director of research and advisory, Ms Tay Huey Ying said the price rebound in high-end and luxury properties, which started in the second half of last year, had continued this year, though the pace of growth has moderated to more sustainable rates.

'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'

More investors are going for cheaper new properties - mostly those under $1,500 psf - as global uncertainties have put a lid on risk appetites, said Ms Tay.

The slight slowdown means that price growth in the high-end and luxury segments is likely to come in towards the low end of the firm's forecast range of 15-20per cent for this year, she said.

Experts note that in the first half year, the Urban Redevelopment Authority's price index for non-landed homes in prime districts was already up 10per cent, and is just 1.8per cent off the 2008 peak. This is just a tad slower than the 10.3per cent and 12.9per cent price gains seen for non-landed homes in the city fringes and suburban areas respectively.

CBRE expects high-end home prices - still about 5-10per cent below 2007 boom levels - to be stable till year-end.

While high-end prices are up this year, sales volume has not picked up significantly owing to fresh concerns on the global economic recovery's sustainability.

But the number of high-end home deals of $3,000 psf and above has risen from eight units in the fourth quarter to 29 units and 35 units in the first and second quarters respectively, noted Savills Prestige Homes director Steven Ming.

'This is an indication that pockets of luxury home buyers are still streaming into the local market,' he said.

However, as high-end homes are very dependent on foreign demand, sales could recover to previous peaks in the next 12 to 18 months after macro-economic concerns have been sorted out, he said.

CBRE's Mr Tan said developers have adopted a low-key strategy to marketing luxury projects, such as direct invitations for private previews and appointments.

For example, Far East Organization recently launched its luxury brand 'Inessence', and sold a handful of units in Boulevard Vue and Skyline @ Orchard Boulevard. Wheelock Properties and Hong Leong Group sold a few units at their respective new super-luxury projects, Orchard View and Sage.

Mr Tan said there is a 'strong likelihood' the high-end market will continue in this manner for the rest of the year.

However, the few possible high-end launches in September such as Twin Peaks and The Peak @ Cairnhill will test the market's receptivity. If these launches do well, it will motivate developers to launch more high-end projects, he said.

joyceteo@sph.com.sg


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DEVELOPERS HOLDING BACK

'Developers are holding back their high-end and luxury launches because there has been some derailment in the strength of the economic recovery due to the euro zone crisis. There is also growing uncertainty in the recovery of the US economy. Prices are not yet at the levels they are aiming for.'

Colliers International's director of research and advisory, Ms Tay Huey Ying



Possible September launches, such as for Twin Peaks, will test the market's receptivity. -- ST PHOTO: ALPHONSUS CHERN

ST : Prime Capitol site tender draws 14 submissions

Aug 19, 2010

Prime Capitol site tender draws 14 submissions

By Joyce Teo

THE much anticipated tender for the stretch of colonial buildings along Stamford Road that includes the Capitol Theatre has drawn a strong response, with 14 submissions lodged by nine firms.

Big-gun developers here and overseas, including Far East Organization and CapitaLand, have lined up for the prime land, which could go for more than $300million.

The high number of tenders surprised experts, as the Government has placed some tough constraints on how the 1.43ha plot at the junction of Stamford and North Bridge roads can be used.

The 99-year leasehold site comprises Stamford House, Capitol Building, Capitol Theatre and Capitol Centre.

The dingy Capitol Centre can be demolished but the other three buildings must be conserved.

The winning developer must use Capitol Theatre as an arts or entertainment-related performance venue. It must also build an underground walkway lined with shops and restaurants to link the site to City Hall MRT station.

A quarter of the land parcel's total gross floor area of 50,389 sqm must also be used for hotel rooms, to add to the existing hotel cluster in the area.

'The challenges for the developers and designers will be quite intense because the buildings are in the civic precinct, which is the the original heart of Singapore and they have to be conserved,' said architect John Ting.

Stamford House was built in 1904 in a neo-classical style by Regent Alfred John Bidwell, the architect behind the Raffles Hotel.

Capitol Theatre, which housed Singapore's first cinema, was built in 1929, and Capitol Building, previously known as Shaw Building, was built in 1933.

The buildings also mark the time when the same neoclassical language was used in the civic precinct. They are private developments, but belong to the same era as government buildings such as City Hall and the Supreme Court, added Mr Ting. 'The designers have to be very creative to come up with something that is relevant to today's use,' he said.

Knight Frank group managing director Danny Yeo added: 'What you are putting into the site is key. I think the conserved buildings could house a unique, upmarket hotel, while the new development there could house a mall. Whoever can bring something new to the site will have an extra edge.'

Far East submitted three ideas for the land while Wing Tai Group lodged two. United Engineers, GuocoLand Group, CapitaLand, Hong Kong-based Park Hotel Group, Malaysia's YTL Corporation and private equity firm Gaw Capital Partners made submissions as well.

A proposal also came from a consortium formed by Mr Pua Seck Guan, former chief executive of CapitaMall Trust Management, comprising Perennial (Capitol), a subsidiary of his Perennial Real Estate Group, Mr Kwee Liong Seen's Chesham Properties and Top Global's Top Property Investment.

'The high number of bids reflects optimism in the commercial and hospitality sectors,' said DTZ's head of South-east Asia research, Ms Chua Chor Hoon.

Bids were not revealed yesterday as the tender is on a two-envelope system, in which developers submit their design proposals and tender prices in two separate envelopes.

The Urban Redevelopment Authority will first shortlist the designs and then choose the one with the highest bid. The South Beach and Clifford Pier plots were also sold this way.

CBRE Research expects bids to be in the range of $220million to $270million. This would work out to $400 to $500 per sq ft (psf) of total floor area.

Said Mr Yeo: 'We expect the bids to be high because of the conservation requirements and the underground link. The price could easily be about $550 to $600 psf per plot ratio.'



The 1.43ha plot comprises Capitol Theatre (above), Capitol Centre, Capitol Building and Stamford House. -- ST FILE PHOTO