Are HDB flats affordable?
by Mah Bow Tan
05:55 AM Nov 12, 2010
Recently, the Housing and Development Board was conferred the UN-Habitat Scroll of Honour Award - the most prestigious human settlements award in the world. In recognising Singapore's achievement, the UN-Habitat Chief of Information Services said: "It's really quite impressive for a country to provide adequate shelter and home ownership for so many."
Ask most housing experts and observers, and they will say that HDB flats remain within reach of the majority of Singaporeans. After all, HDB builds and sells flats at heavily-subsidised prices to ensure affordability. This has made it possible for an average of 15,000 young couples every year to join the ranks of homeowners.
Most of these couples buying new flats use just 20 to 25 per cent of their monthly income to pay for their flats. With their CPF contributions, few have to pay any cash for their mortgage payments. In total, more than 80 per cent of Singaporeans live in 900,000 HDB flats today. Yet, people still worry that HDB flats are not affordable. Why are there such sentiments?
Indeed, housing affordability - whether a flat is within financial reach - is not a straightforward issue. Different people have different notions of what is "within reach". Some argue that a 30-year housing loan is too long for a flat to be considered affordable. Others say that flat prices are much higher compared to their parents' time. The debate is further complicated by rising aspirations - whether housing is "within reach" also depends on what we aspire towards.
For a meaningful discussion on affordability, we need objective and commonly accepted yardsticks. So, what are the measures of affordability? How does HDB ensure that flats remain within reach of Singaporeans?
MEASURES TO ENSURE AFFORDABILITY
Focus on first-timers. To ensure that first-time buyers have access to affordable housing, we do several things. First, HDB prices its new flats below market value, taking into account the income of homebuyers. Hence, first-timers enjoy a substantial subsidy when they buy new flats from HDB.
Next, for first-timers who cannot wait for a new flat or wish to buy a specific flat in a specific location, HDB provides a CPF Housing Grant of $30,000 (or $40,000 if they stay near their parents) to buy a resale flat. Beyond that, new and resale flat buyers can apply for a concessionary loan. For a $200,000 loan over 30 years, the interest subsidy amounts to about $30,000.
Help according to income. For households earning $5,000 or less a month, an Additional CPF Housing Grant of up to $40,000 is provided for their purchase of new or resale flats. In other words, a family earning $1,500 can get as much as $80,000 in housing grants. Families earning more, between $8,000 and $10,000, can now buy new flats under the Design, Build and Sell Scheme (DBSS), in addition to Executive Condominiums, and enjoy a CPF Housing Grant of $30,000.
MEASURES OF AFFORDABILITY
I have been discussing affordability in layman's terms. Let me now get into the technical stuff. In particular, how do experts determine housing affordability? There are a few generally accepted benchmarks.
Income affordability. One is the housing price-to-income ratio (or HPI), which compares median house price to annual household income.
In a Straits Times article in February 2010, two NUS professors, Tu Yong and Yu Shi Ming, noted that Singapore's HPI for resale flats in non-mature estates is 5.8, compared to Hong Kong's 19.8 and London's 7.1. That means Singaporeans generally need 5.8 times of their annual household income to buy a resale flat in non-mature estates, whereas a Hong Kong resident needs more than three times that amount.
If we take Department of Statistics 2009 data on the median income of younger households - those aged between 25 and 35 years old - who are likely to be first-timers, their HPI is even lower, at 4.5 for resale flats and 3.8 for new flats. This is because they have higher incomes than average households.
Financing affordability. While the HPI is relatively easy to understand, it does not consider factors like loan availability and financing costs, which are important for many deciding to buy a flat. Therefore, another widely-accepted measure is the debt-service-ratio (DSR), which looks at the proportion of the monthly income used to pay mortgages.
The DSR for new HDB flats in non-mature estates, based on an industry norm of a 30-year loan, averaged 23 per cent this year. This is well within the 30-35 per cent international benchmark for affordable expenditure on housing.
Depending on flat type, the DSR ranged from 11 per cent for standard flats to 29 per cent for premium projects like the Punggol Waterway Terraces, which cater to higher income households.
We must also remember that CPF savings can be used for the initial downpayment and monthly instalments. Hence, more than 80 per cent of new flat buyers pay for their housing loans entirely out of CPF, without having to touch their take-home pay.
Whichever objective measure we choose, it is clear that there are enough HDB flats within reach of today's homebuyers. They range from smaller, no-frills flats in non-mature estates to premium flats in mature estates, catering for different aspirations and budgets (see table above). I hope buyers choose carefully, taking into account their budgets and aspirations. Housing affordability is decided not just by the options offered by HDB but also the choices of homebuyers.
BALANCING HOMEBUYER AND TAXPAYER INTERESTS
I can understand the anxiety among young couples wanting to buy a flat of their choice, within their budget, and as soon as possible. HDB has ramped up supply significantly and recently introduced more measures to temper excessive exuberance in the market and to moderate prices.
HDB also regularly reviews its subsidies to ensure affordability. But I must caution that there are limits to how much we can increase subsidies, without compromising other interests.
In other words, we must also consider affordability from a national standpoint. If we increase housing subsidies, what would we have to give up? The quality of education for our children? Healthcare services for our parents? Or do we impose a higher tax burden on Singaporeans?
There are no easy answers. Ultimately, we need to balance the interests of affordability for homebuyers and the burden on taxpayers.
The writer is the Minister for National Development.
Showing posts with label TODAY Online. Show all posts
Showing posts with label TODAY Online. Show all posts
Friday, November 12, 2010
TODAY Online : No end to bidders for land?
No end to bidders for land?
by Colin Tan property@mediacorp.com.sg
05:55 AM Nov 12, 2010
The headline of a news report for a recent tender for private housing development screamed "Serangoon site draws just 4 bids". Another said the top two bids were just 2.6 per cent apart. It was alluding to the fact that the margins between the top bids before the Aug 30 cooling measures were mainly in the double digits, peaking at 31 per cent for a condominium plot in Yishun in August. They are now in the single digits.
For sure, these are all legitimate market signals but are we reading too much significance into them? Yes, we know developers, as a group, have become more cautious. The recently-released real estate sentiment index said as much. But these developers are in the tender to win it, not just to nick it by a small margin. If they keep losing it by the odd percentage point, I am sure they will up the ante for the next tender.
I would suggest that the real story behind these land tenders - coming fast and furious at a pace never witnessed before - is this: Is there no ebb to the demand for land for residential developments?
Before the dust settles on one tender, another is announced. Except for one site for executive condominium development, there has been no strong indication that the demand for land has waned in a big way.
And the demand will still be there as long as there are home sales. So, the market signal to slow the demand for land has to come from the demand side of the housing equation.
Interestingly, the analyses on which the news report was based for the story on the closing gap between the top bids did not mention anything about the gap between the highest and lowest bids.
If we are saying that there is now a greater consensus of views, then why are the margins between the top and lowest bids still showing the wide divergence among developers. Mostly, the margin is about 40 per cent, going up to as high as close to 100 per cent.
Property is all about location and we see it in the bids for the various plots. Those with smaller winning margins were for sites in the far-flung areas, while the wider margins were for plots closer to the city. When tenders for plots closer to the city are offered, then we may see wider margins once again.
In any case, four bids is not in any way a poor market response. We have to look at the location and, mind you, the winning bid is still not cheap. The analysis is not wrong, but let's complete it and give it a fuller picture.
Another story which caught my eye recently was the fuss about the Urban Redevelopment Authority's estimates of future housing supply. The worry was that some investors might make the wrong decision to buy, thinking supply for the year was low when it was actually high, and would, therefore, have difficulty finding tenants later.
Firstly, since when did it become the top priority of investors to buy properties off the plan for rental income? If their first priority is to collect rental income, they would be better off picking a completed property. The reality is that most investors today buy for capital gains first before rental income.
Also, should not the proportion of investor buyers vis-a-vis owner-occupier purchasers for projects completing in the year be more important when analysing the rental potential?
A 400-unit project which secures Temporary Occupation Permit today also does not mean that all 400 units will be potentially be up for rental tomorrow. In reality, the handing over of keys for the entire project can take between three and six months, depending on the size of the development. Investors who get their keys within a month have a head start over those who receive them three to four months later. The time lag can make a big difference to the rental income achieved.
Fewer units are being completed this year and the number of rental contracts has actually gone up by about 5 per cent but there has still been a slowdown in the pace of rental growth. This can only happen because a higher proportion of the completed units were up for rental rather than owner-occupation.
In any case, it was clear that these figures were compiled based on feedback from developers. The market is more dynamic now than in the past and circumstances can and do change.
The numbers will only be more critical if sales are allowed only upon completion of the units. If the vast majority of units were to be unleashed on the market at the same time, then prices could be influenced significantly.
The writer is Head of Research and Consultancy at Chesterton Suntec International.
by Colin Tan property@mediacorp.com.sg
05:55 AM Nov 12, 2010
The headline of a news report for a recent tender for private housing development screamed "Serangoon site draws just 4 bids". Another said the top two bids were just 2.6 per cent apart. It was alluding to the fact that the margins between the top bids before the Aug 30 cooling measures were mainly in the double digits, peaking at 31 per cent for a condominium plot in Yishun in August. They are now in the single digits.
For sure, these are all legitimate market signals but are we reading too much significance into them? Yes, we know developers, as a group, have become more cautious. The recently-released real estate sentiment index said as much. But these developers are in the tender to win it, not just to nick it by a small margin. If they keep losing it by the odd percentage point, I am sure they will up the ante for the next tender.
I would suggest that the real story behind these land tenders - coming fast and furious at a pace never witnessed before - is this: Is there no ebb to the demand for land for residential developments?
Before the dust settles on one tender, another is announced. Except for one site for executive condominium development, there has been no strong indication that the demand for land has waned in a big way.
And the demand will still be there as long as there are home sales. So, the market signal to slow the demand for land has to come from the demand side of the housing equation.
Interestingly, the analyses on which the news report was based for the story on the closing gap between the top bids did not mention anything about the gap between the highest and lowest bids.
If we are saying that there is now a greater consensus of views, then why are the margins between the top and lowest bids still showing the wide divergence among developers. Mostly, the margin is about 40 per cent, going up to as high as close to 100 per cent.
Property is all about location and we see it in the bids for the various plots. Those with smaller winning margins were for sites in the far-flung areas, while the wider margins were for plots closer to the city. When tenders for plots closer to the city are offered, then we may see wider margins once again.
In any case, four bids is not in any way a poor market response. We have to look at the location and, mind you, the winning bid is still not cheap. The analysis is not wrong, but let's complete it and give it a fuller picture.
Another story which caught my eye recently was the fuss about the Urban Redevelopment Authority's estimates of future housing supply. The worry was that some investors might make the wrong decision to buy, thinking supply for the year was low when it was actually high, and would, therefore, have difficulty finding tenants later.
Firstly, since when did it become the top priority of investors to buy properties off the plan for rental income? If their first priority is to collect rental income, they would be better off picking a completed property. The reality is that most investors today buy for capital gains first before rental income.
Also, should not the proportion of investor buyers vis-a-vis owner-occupier purchasers for projects completing in the year be more important when analysing the rental potential?
A 400-unit project which secures Temporary Occupation Permit today also does not mean that all 400 units will be potentially be up for rental tomorrow. In reality, the handing over of keys for the entire project can take between three and six months, depending on the size of the development. Investors who get their keys within a month have a head start over those who receive them three to four months later. The time lag can make a big difference to the rental income achieved.
Fewer units are being completed this year and the number of rental contracts has actually gone up by about 5 per cent but there has still been a slowdown in the pace of rental growth. This can only happen because a higher proportion of the completed units were up for rental rather than owner-occupation.
In any case, it was clear that these figures were compiled based on feedback from developers. The market is more dynamic now than in the past and circumstances can and do change.
The numbers will only be more critical if sales are allowed only upon completion of the units. If the vast majority of units were to be unleashed on the market at the same time, then prices could be influenced significantly.
The writer is Head of Research and Consultancy at Chesterton Suntec International.
TODAY Online : Do your homework Overseas properties may offer good returns but risks abound
Do your homework
Overseas properties may offer good returns but risks abound
by Png Poh Soon
05:55 AM Nov 12, 2010
Signs of a slowdown in Singapore home sales showed in both the number of primary and secondary transactions following the Government's announcement of property market cooling measures on Aug 30.
The number of developers' sales, subsales and resales fell by about 28 per cent, 52 per cent and 42 per cent, respectively, in September from the previous month.
While there has been a decrease in property transactions within Singapore, there has been a pickup in marketing efforts for overseas properties from as near as Malaysia to as far as the United Kingdom. There has been an increase in the number of advertisements in recent weeks inviting Singapore investors to exhibitions and road shows for overseas properties.
Investors here are increasingly attracted by potential opportunities overseas as the local market takes a breather. With the current low savings rates, they are looking for better yielding assets to park their money. Potential price appreciation, income guarantees, low mortgage rates and favourable exchange rates are some of the main factors attracting investors to foreign markets.
Based on recent Knight Frank research, Singapore investors formed the third-largest group of buyers from Asia, after those from China and Hong Kong, of prime London properties from July last year to June this year.
Before jumping on the bandwagon, potential buyers should not assume that the same institutional and legal framework that is applicable in Singapore will apply in other countries.
What should buyers look out for when investing in overseas properties? What are the risks and who should they consult?
Many often buy properties in countries that they are familiar with. Some might have studied in a particular country and have developed a fondness for it. Others feel safer if their investment is closer to home and, therefore, prefer to buy a property in neighbouring countries.
From experience, up to 20 per cent of buyers who purchased foreign properties during exhibitions had not visited the city and up to 70 per cent of buyers had not inspected the project site. As environments change and cities evolve, it is prudent to re-visit the site and not to rely solely on memories or gut feel.
For completed overseas properties, it is also advisable to seek an independent professional valuation. One may want to reconsider the purchase if there is a big difference between the asking price and the valuation. In any case, if bank financing is required, a valuation will be carried out by the bank. It may also be worthwhile to get a structural survey done, too. If significant problems are highlighted, one can either forgo the purchase or negotiate a lower price to account for the rectification cost.
Some projects offer purchasers rental guarantees, some as high as 8 per cent. A rental guarantee is a contract between the granter, usually the developer or the vendor and the buyer, where the latter is paid a fixed income based on a guaranteed rate on the purchase price.
For example, a guaranteed rental of 6 per cent on an apartment bought for £250,000 ($519,000) in London amounts to £15,000 per year.
Most rental guarantees are on a gross basis where the buyer is still required to pay all outgoings, such as maintenance costs and property taxes. Because of this, the net return will be lower.
Properties with rental guarantees often also come at a higher price to compensate the granter for bearing the risk of not earning an income when tenants cannot be secured in time or higher vacancies during off-peak holiday periods. Buyers should note that the rent collected may drop significantly after the guarantee period.
It is important to engage reliable managing agents to look for tenants, to collect rent and to look after general repairs. Usually they charge a fee of 5 to 10 per cent of the monthly rent. An agent's commission for securing a tenant is usually the equivalent of one month's rent for a two-year lease, similar to the practice in Singapore. Total outgoings average between about 10 to 20 per cent of gross rental income per year.
There are other miscellaneous costs such as legal fees, stamp duties, valuation fees and bank processing fees. The amounts vary across countries and the prospective buyer should seek professional advice.
Potential buyers should also be aware of tax regulations, especially for mature markets such as the United States and Australia. In many instances, rental income is taxed at the progressive personal income tax scale in the country where the income is sourced. While capital gains tax does not apply in Singapore, it may be applicable in other countries. Buyers should consult tax advisers to ensure they understand all tax issues.
To guard against poor workmanship, the sale and purchase agreement should provide for a two- to six-month liability period for the developer to rectify the faults. In instances where there are delays in the completion, purchasers should be compensated or can opt to rescind the purchase with the money refunded.
The types of legal recourse available are subject to the terms and conditions in the sale and purchase agreement. Buyers are advised to read the document carefully before signing and paying the initial reservation fee, which is often non-refundable. They can engage lawyers to advise them on their rights if things go awry.
If a developer goes bankrupt during the construction stage, any monies paid directly to the developer rather than to a trust fund are usually not recoverable. Hence when buying properties off-the-plan or under construction, one should look at the developer's reputation, track record and financial standing to reduce the risk of potential losses.
There are also other legal considerations to note. Some countries have laws that restrict resale property ownership. For example, in Australia, residential properties can be resold only to Australian citizens, permanent residents and foreign students or foreign companies that have obtained the Foreign Investment Review Board's approval to buy for owner occupation.
In Malaysia, the government's consent is required for the sale of freehold landed properties to non-citizens. In some instances, the property can only be sold to the bumiputera.
In a nutshell, while there are many success stories, buying that overseas property is not as simple as some may think. One needs to look beyond the glossy brochures and the glitzy displays. Engaging competent and experienced advisers will help the process but at the end of the day, it is still caveat emptor (buyer beware).
The writer is Senior Manager, Consultancy and Research, at Knight Frank.
Overseas properties may offer good returns but risks abound
by Png Poh Soon
05:55 AM Nov 12, 2010
Signs of a slowdown in Singapore home sales showed in both the number of primary and secondary transactions following the Government's announcement of property market cooling measures on Aug 30.
The number of developers' sales, subsales and resales fell by about 28 per cent, 52 per cent and 42 per cent, respectively, in September from the previous month.
While there has been a decrease in property transactions within Singapore, there has been a pickup in marketing efforts for overseas properties from as near as Malaysia to as far as the United Kingdom. There has been an increase in the number of advertisements in recent weeks inviting Singapore investors to exhibitions and road shows for overseas properties.
Investors here are increasingly attracted by potential opportunities overseas as the local market takes a breather. With the current low savings rates, they are looking for better yielding assets to park their money. Potential price appreciation, income guarantees, low mortgage rates and favourable exchange rates are some of the main factors attracting investors to foreign markets.
Based on recent Knight Frank research, Singapore investors formed the third-largest group of buyers from Asia, after those from China and Hong Kong, of prime London properties from July last year to June this year.
Before jumping on the bandwagon, potential buyers should not assume that the same institutional and legal framework that is applicable in Singapore will apply in other countries.
What should buyers look out for when investing in overseas properties? What are the risks and who should they consult?
Many often buy properties in countries that they are familiar with. Some might have studied in a particular country and have developed a fondness for it. Others feel safer if their investment is closer to home and, therefore, prefer to buy a property in neighbouring countries.
From experience, up to 20 per cent of buyers who purchased foreign properties during exhibitions had not visited the city and up to 70 per cent of buyers had not inspected the project site. As environments change and cities evolve, it is prudent to re-visit the site and not to rely solely on memories or gut feel.
For completed overseas properties, it is also advisable to seek an independent professional valuation. One may want to reconsider the purchase if there is a big difference between the asking price and the valuation. In any case, if bank financing is required, a valuation will be carried out by the bank. It may also be worthwhile to get a structural survey done, too. If significant problems are highlighted, one can either forgo the purchase or negotiate a lower price to account for the rectification cost.
Some projects offer purchasers rental guarantees, some as high as 8 per cent. A rental guarantee is a contract between the granter, usually the developer or the vendor and the buyer, where the latter is paid a fixed income based on a guaranteed rate on the purchase price.
For example, a guaranteed rental of 6 per cent on an apartment bought for £250,000 ($519,000) in London amounts to £15,000 per year.
Most rental guarantees are on a gross basis where the buyer is still required to pay all outgoings, such as maintenance costs and property taxes. Because of this, the net return will be lower.
Properties with rental guarantees often also come at a higher price to compensate the granter for bearing the risk of not earning an income when tenants cannot be secured in time or higher vacancies during off-peak holiday periods. Buyers should note that the rent collected may drop significantly after the guarantee period.
It is important to engage reliable managing agents to look for tenants, to collect rent and to look after general repairs. Usually they charge a fee of 5 to 10 per cent of the monthly rent. An agent's commission for securing a tenant is usually the equivalent of one month's rent for a two-year lease, similar to the practice in Singapore. Total outgoings average between about 10 to 20 per cent of gross rental income per year.
There are other miscellaneous costs such as legal fees, stamp duties, valuation fees and bank processing fees. The amounts vary across countries and the prospective buyer should seek professional advice.
Potential buyers should also be aware of tax regulations, especially for mature markets such as the United States and Australia. In many instances, rental income is taxed at the progressive personal income tax scale in the country where the income is sourced. While capital gains tax does not apply in Singapore, it may be applicable in other countries. Buyers should consult tax advisers to ensure they understand all tax issues.
To guard against poor workmanship, the sale and purchase agreement should provide for a two- to six-month liability period for the developer to rectify the faults. In instances where there are delays in the completion, purchasers should be compensated or can opt to rescind the purchase with the money refunded.
The types of legal recourse available are subject to the terms and conditions in the sale and purchase agreement. Buyers are advised to read the document carefully before signing and paying the initial reservation fee, which is often non-refundable. They can engage lawyers to advise them on their rights if things go awry.
If a developer goes bankrupt during the construction stage, any monies paid directly to the developer rather than to a trust fund are usually not recoverable. Hence when buying properties off-the-plan or under construction, one should look at the developer's reputation, track record and financial standing to reduce the risk of potential losses.
There are also other legal considerations to note. Some countries have laws that restrict resale property ownership. For example, in Australia, residential properties can be resold only to Australian citizens, permanent residents and foreign students or foreign companies that have obtained the Foreign Investment Review Board's approval to buy for owner occupation.
In Malaysia, the government's consent is required for the sale of freehold landed properties to non-citizens. In some instances, the property can only be sold to the bumiputera.
In a nutshell, while there are many success stories, buying that overseas property is not as simple as some may think. One needs to look beyond the glossy brochures and the glitzy displays. Engaging competent and experienced advisers will help the process but at the end of the day, it is still caveat emptor (buyer beware).
The writer is Senior Manager, Consultancy and Research, at Knight Frank.
Monday, September 13, 2010
TODAY ONLINE : Cooling measures not meant to punish but to protect
Cooling measures not meant to punish but to protect
by Colin Tan
05:55 AM Sep 10, 2010
There have been numerous analyses recently on how the housing market is reacting to the Government's property cooling measures.
But to date, the only impact we can be truly certain of is the huge toll they have taken on the health of overworked reporters. Many have taken ill after rushing out market updates and analyses.
Beyond that, it is too early to assess how much the market has changed. The strongest buying interest has always been for new launches. The correlation between launches and sales is high.
Understandably, developers have held back their projects, taking time to re-assess the market and come up with new pricing strategies. Without new launches, we are never going to be sure of the effectiveness of the measures.
It is two weeks now since the big announcement but many are still not getting it. There have been an unusually high number of complaints about the unfairness of the measures.
Contrary to what some may think, the measures are not meant to penalise any group of buyers but to protect the financial system. It is to weed out risky buying - be it from speculators, investors or even genuine upgraders. What has fairness got to do with it?
If risky buying is allowed to continue, the bubble will become bigger as prices and fundamentals grow further apart. If it bursts, the system may collapse. Nobody benefits - everyone is a loser.
For speculators and investors, the message is clear: Manage your risks to make your money but do not be so greedy as to put the entire system at risk.
To genuine upgraders: If the timing of your sale and purchase under the new rules is so precarious financing-wise, you should seriously reconsider whether you should be upgrading at all in the current overly bullish market.
Do remember that the authorities see an overall heightened market risk, hence they have put in place the measures.
For most of us, property buying is almost always an emotional decision. Often, a great deal of objectivity is lost during the buying stage. A year or two later, these same measures may be looked upon as a blessing in disguise.
Some recent analyses also appear to assume that prices will always be rising. Prices do and will come down eventually. It should not be a case of upgrade now or never. It is much safer to upgrade during a stable or market correction phase.
Similarly, new ownership rules for HDB resale flats that exclude private property owners unless they sell their private homes first are meant to solve the shortage of resale flats for genuine occupiers, not to penalise investors. Surely even they cannot begrudge the advantage given to those who have yet to own their first property.
But what got me really baffled was the advice to people not to give up owning an HDB flat as it keeps its value better than a leasehold private apartment. Surely, a golden rule of investing is to buy low and sell high.
If prices of HDB resale flats have reached record highs with little further upside expected, is it not better to sell? One should not be unduly fixated on whether it has turned into something that sometimes money cannot buy.
The measures are meant to stabilise the resale market, which means less volatility going forward. Less volatility means less opportunity for profit making. Such advice does not make sense for investors.
For the average Singaporean, it would not matter much anyway. The majority of Singaporeans have enough financial resources to own only one property. And if they upgrade, most cannot afford to keep their previous property.
That is the reality. It is the reason why most are unhappy about runaway property prices. They see their upgrading dreams dashed, not because they lost out on making money.
The writer is head of research and consultancy at Chesterton Suntec International.
by Colin Tan
05:55 AM Sep 10, 2010
There have been numerous analyses recently on how the housing market is reacting to the Government's property cooling measures.
But to date, the only impact we can be truly certain of is the huge toll they have taken on the health of overworked reporters. Many have taken ill after rushing out market updates and analyses.
Beyond that, it is too early to assess how much the market has changed. The strongest buying interest has always been for new launches. The correlation between launches and sales is high.
Understandably, developers have held back their projects, taking time to re-assess the market and come up with new pricing strategies. Without new launches, we are never going to be sure of the effectiveness of the measures.
It is two weeks now since the big announcement but many are still not getting it. There have been an unusually high number of complaints about the unfairness of the measures.
Contrary to what some may think, the measures are not meant to penalise any group of buyers but to protect the financial system. It is to weed out risky buying - be it from speculators, investors or even genuine upgraders. What has fairness got to do with it?
If risky buying is allowed to continue, the bubble will become bigger as prices and fundamentals grow further apart. If it bursts, the system may collapse. Nobody benefits - everyone is a loser.
For speculators and investors, the message is clear: Manage your risks to make your money but do not be so greedy as to put the entire system at risk.
To genuine upgraders: If the timing of your sale and purchase under the new rules is so precarious financing-wise, you should seriously reconsider whether you should be upgrading at all in the current overly bullish market.
Do remember that the authorities see an overall heightened market risk, hence they have put in place the measures.
For most of us, property buying is almost always an emotional decision. Often, a great deal of objectivity is lost during the buying stage. A year or two later, these same measures may be looked upon as a blessing in disguise.
Some recent analyses also appear to assume that prices will always be rising. Prices do and will come down eventually. It should not be a case of upgrade now or never. It is much safer to upgrade during a stable or market correction phase.
Similarly, new ownership rules for HDB resale flats that exclude private property owners unless they sell their private homes first are meant to solve the shortage of resale flats for genuine occupiers, not to penalise investors. Surely even they cannot begrudge the advantage given to those who have yet to own their first property.
But what got me really baffled was the advice to people not to give up owning an HDB flat as it keeps its value better than a leasehold private apartment. Surely, a golden rule of investing is to buy low and sell high.
If prices of HDB resale flats have reached record highs with little further upside expected, is it not better to sell? One should not be unduly fixated on whether it has turned into something that sometimes money cannot buy.
The measures are meant to stabilise the resale market, which means less volatility going forward. Less volatility means less opportunity for profit making. Such advice does not make sense for investors.
For the average Singaporean, it would not matter much anyway. The majority of Singaporeans have enough financial resources to own only one property. And if they upgrade, most cannot afford to keep their previous property.
That is the reality. It is the reason why most are unhappy about runaway property prices. They see their upgrading dreams dashed, not because they lost out on making money.
The writer is head of research and consultancy at Chesterton Suntec International.
TODAY ONLINE : Will proposed supply lead to more proposals?
Will proposed supply lead to more proposals?
by Dr Megan Walters
05:55 AM Sep 10, 2010
For any young Singaporean looking to get married and start a family, the new measures to help first-time buyers, together with those to maintain a stable and sustainable property market, should come as welcome news.
The Government and the Housing and Development Board (HDB) have done a good job in keeping the cost of public housing broadly in line with general inflation.
Recent research by Jones Lang LaSalle shows after adjusting for consumer price inflation, HDB flat prices had been largely rising at just below or in line with the rate of inflation from 1998 to 2007.
But in the last couple of years, HDB prices have started to accelerate away.
The recent rise in HDB flat prices beyond the general inflation rate is down to the supply and demand characteristics of the housing market.
So the announcement from the HDB that it will be offering 16,000 new flats this year is good news - as it is close to the number of households formed by first-time marriage, thereby broadly balancing supply with demand.
Household formation from first-time marriages in Singapore is around 17,500 per year. Not all of these young couples will want to live with their parents. Many will want a place of their own. Ramping up new flat supply to 16,000 units a year is a good start. However, it is likely that the HDB will need to further increase supply and go ahead with its preparations for 22,000 flats next year.
This additional supply will help to bring housing prices back into a long-term sustainable rate of increase and prevent prices from escalating out of control. In recent years, the rate of HDB market supply has been well below what is required to meet the first-time marriage rate. There are two reasons for this.
First, the HDB has done a good job of refurbishing and redeveloping older estates to meet the rising wealth and aspirations of the population. But the downside is that this temporarily reduces net additional supply into the market, as withdrawing the older flats reduces the net supply of new flats any particular year.
Second, and more importantly, is the move from walk-in selection to build-to-order. In the switch to build-to-order, on an annual basis, fewer flats are delivered and available to live in, due to the longer time to build the flats. The decision to switch to build-to-order was a sensible move as it maximised Singapore's resources and stopped any oversupply of empty flats from occurring.
The downside is that it may take another two years to get supply back up to a rate that meets the demand from first-time marriages. The new HDB plans to shorten build-to-order waiting times from 3 years to 2.5 years will help alleviate this problem.
While the recent move to increase supply will bring the HDB market roughly in line with demand from first-time marriages, what is more difficult to determine is the number of flats required to meet the shortfall that has built up over the last few years.
So the recent moves by the Government and the statement by the HDB that it can ramp up supply to 22,000 units, if required, is welcome news for young couples currently living with their parents.
Furthermore, helping more newly-weds own a home of their own might have the welcome side effect of boosting the nation's falling birth rates.
The writer is head of research for Asia-Pacific capital markets, Jones Lang LaSalle.
by Dr Megan Walters
05:55 AM Sep 10, 2010
For any young Singaporean looking to get married and start a family, the new measures to help first-time buyers, together with those to maintain a stable and sustainable property market, should come as welcome news.
The Government and the Housing and Development Board (HDB) have done a good job in keeping the cost of public housing broadly in line with general inflation.
Recent research by Jones Lang LaSalle shows after adjusting for consumer price inflation, HDB flat prices had been largely rising at just below or in line with the rate of inflation from 1998 to 2007.
But in the last couple of years, HDB prices have started to accelerate away.
The recent rise in HDB flat prices beyond the general inflation rate is down to the supply and demand characteristics of the housing market.
So the announcement from the HDB that it will be offering 16,000 new flats this year is good news - as it is close to the number of households formed by first-time marriage, thereby broadly balancing supply with demand.
Household formation from first-time marriages in Singapore is around 17,500 per year. Not all of these young couples will want to live with their parents. Many will want a place of their own. Ramping up new flat supply to 16,000 units a year is a good start. However, it is likely that the HDB will need to further increase supply and go ahead with its preparations for 22,000 flats next year.
This additional supply will help to bring housing prices back into a long-term sustainable rate of increase and prevent prices from escalating out of control. In recent years, the rate of HDB market supply has been well below what is required to meet the first-time marriage rate. There are two reasons for this.
First, the HDB has done a good job of refurbishing and redeveloping older estates to meet the rising wealth and aspirations of the population. But the downside is that this temporarily reduces net additional supply into the market, as withdrawing the older flats reduces the net supply of new flats any particular year.
Second, and more importantly, is the move from walk-in selection to build-to-order. In the switch to build-to-order, on an annual basis, fewer flats are delivered and available to live in, due to the longer time to build the flats. The decision to switch to build-to-order was a sensible move as it maximised Singapore's resources and stopped any oversupply of empty flats from occurring.
The downside is that it may take another two years to get supply back up to a rate that meets the demand from first-time marriages. The new HDB plans to shorten build-to-order waiting times from 3 years to 2.5 years will help alleviate this problem.
While the recent move to increase supply will bring the HDB market roughly in line with demand from first-time marriages, what is more difficult to determine is the number of flats required to meet the shortfall that has built up over the last few years.
So the recent moves by the Government and the statement by the HDB that it can ramp up supply to 22,000 units, if required, is welcome news for young couples currently living with their parents.
Furthermore, helping more newly-weds own a home of their own might have the welcome side effect of boosting the nation's falling birth rates.
The writer is head of research for Asia-Pacific capital markets, Jones Lang LaSalle.
TODAY ONLINE : Condo launch draws the crowds
Condo launch draws the crowds
by Joanne Chan
05:55 AM Sep 11, 2010
SINGAPORE - Almost two weeks after the Government unveiled its latest round of property cooling measures, demand was high for the newest condominium project to hit the market.
On Friday, the afternoon rain did not deter the interest of home-seekers who flocked to NV Residences in Pasir Ris, the latest condo to be launched.
Huttons, the marketing agent for NV Residences, said the cooling measures have weeded out the speculators but there was still a "healthy demand" from those looking for a unit for owner-occupation or mid- to long-term investment.
One buyer, a 48-year-old IT trainer, bought a 2-bedroom unit for rental investment. He said the recent changes, which includes a higher cash outlay, meant he had to lower his expectations and buy a smaller unit.
Huttons Asia senior associate director Daniel Lim noted a greater interest from permanent residents in the project - and he attributed this partly to the anti-specutive measures.
Said Mr Lim: "In order for them to buy an HDB resale flat now, they would have to give up their properties back home ... So perhaps due to this, PRs are more keen to buy private property now."
At 5pm on Friday, the condo's developer, City Developments Limited, said 40 units have been sold since Wednesday's launch. This brings the total number of units sold to 200, out of the 250 units released so far.
Suntec Chesterton International head of research and consultancy Colin Tan observed: "For some investors and buyers who are on the margins, (the cooling measures) would make them think twice or even go for smaller flats. But there are still lots of other people who are interested, so they probably more than make up for those who fall by the wayside."
Mr Tan said the response to NV Residences would probably give other developers the confidence to go ahead with their launches. And prices are likely to maintain at current levels or even rise further, fuelled by continued demand, he added.
by Joanne Chan
05:55 AM Sep 11, 2010
SINGAPORE - Almost two weeks after the Government unveiled its latest round of property cooling measures, demand was high for the newest condominium project to hit the market.
On Friday, the afternoon rain did not deter the interest of home-seekers who flocked to NV Residences in Pasir Ris, the latest condo to be launched.
Huttons, the marketing agent for NV Residences, said the cooling measures have weeded out the speculators but there was still a "healthy demand" from those looking for a unit for owner-occupation or mid- to long-term investment.
One buyer, a 48-year-old IT trainer, bought a 2-bedroom unit for rental investment. He said the recent changes, which includes a higher cash outlay, meant he had to lower his expectations and buy a smaller unit.
Huttons Asia senior associate director Daniel Lim noted a greater interest from permanent residents in the project - and he attributed this partly to the anti-specutive measures.
Said Mr Lim: "In order for them to buy an HDB resale flat now, they would have to give up their properties back home ... So perhaps due to this, PRs are more keen to buy private property now."
At 5pm on Friday, the condo's developer, City Developments Limited, said 40 units have been sold since Wednesday's launch. This brings the total number of units sold to 200, out of the 250 units released so far.
Suntec Chesterton International head of research and consultancy Colin Tan observed: "For some investors and buyers who are on the margins, (the cooling measures) would make them think twice or even go for smaller flats. But there are still lots of other people who are interested, so they probably more than make up for those who fall by the wayside."
Mr Tan said the response to NV Residences would probably give other developers the confidence to go ahead with their launches. And prices are likely to maintain at current levels or even rise further, fuelled by continued demand, he added.
Monday, August 30, 2010
TODAY ONLINE : Home loans below 1%
Home loans below 1%
Maybank S'pore ups the ante in residential mortgage market
05:55 AM Aug 28, 2010
by Ephraim Seow Siew Lee
SINGAPORE - Maybank Singapore has raised the bar in the home loans market with a slew of offerings that include mortgage rates below 1 per cent.
Its fixed rate packages, with either a three or five-year fixed term, offer the lowest rate in town at 0.88 per cent a year in the first year.
For its home loans pegged to interbank lending rates, Maybank is offering a rate starting at 0.5 percentage point above the three-month Sibor for the first year. Sibor, which stands for Singapore Interbank Offered Rate, is the rate at which Singapore banks lend to each other. It currently stands at 0.55 per cent.
Meanwhile, for its variable rate home loans package, Maybank is offering interest rates that will start at 0.80 per cent a year. This is 2.95 percentage points lower than the Singapore Residential Financing Rate (SRFR) for the first year. SRFR is Maybank's board rate, which has been at 3.75 per cent since 2007.
In another variable rate package, the bank is offering a $5,000 cashback and an interest rate of 1.3 per cent a year for the first year.
Maybank Singapore's Head of Consumer Banking, Ms Helen Neo, said the fixed rate packages are very popular because they give borrowers certainty in financing their mortgages.
The new packages are in celebration of Maybank's 50th anniversary. As part of the ongoing celebration, it has also launched a Privilege Plus Savings Account, a savings product for those aged 50 years and above.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Maybank S'pore ups the ante in residential mortgage market
05:55 AM Aug 28, 2010
by Ephraim Seow Siew Lee
SINGAPORE - Maybank Singapore has raised the bar in the home loans market with a slew of offerings that include mortgage rates below 1 per cent.
Its fixed rate packages, with either a three or five-year fixed term, offer the lowest rate in town at 0.88 per cent a year in the first year.
For its home loans pegged to interbank lending rates, Maybank is offering a rate starting at 0.5 percentage point above the three-month Sibor for the first year. Sibor, which stands for Singapore Interbank Offered Rate, is the rate at which Singapore banks lend to each other. It currently stands at 0.55 per cent.
Meanwhile, for its variable rate home loans package, Maybank is offering interest rates that will start at 0.80 per cent a year. This is 2.95 percentage points lower than the Singapore Residential Financing Rate (SRFR) for the first year. SRFR is Maybank's board rate, which has been at 3.75 per cent since 2007.
In another variable rate package, the bank is offering a $5,000 cashback and an interest rate of 1.3 per cent a year for the first year.
Maybank Singapore's Head of Consumer Banking, Ms Helen Neo, said the fixed rate packages are very popular because they give borrowers certainty in financing their mortgages.
The new packages are in celebration of Maybank's 50th anniversary. As part of the ongoing celebration, it has also launched a Privilege Plus Savings Account, a savings product for those aged 50 years and above.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : The key to investing in homes
The key to investing in homes
05:55 AM Aug 27, 2010
by Colin Tan
Most of us have heard it all before from the experts. Investing in homes is one of the safest and surest forms of investment. If you cannot re-sell the property for a good profit within a couple of years, you can always hold it for the long term because it will always appreciate.
But if everyone follows this advice, will it still work? Surely it is a recipe for disaster. If everyone is going to earn it the easy way, who will do all the hard work?
Given today's price levels, the vast majority of Singaporeans who own their homes are sitting on large paper profits. Many are paper millionaires; for them to become real millionaires, they would have no roofs over their heads.
Nevertheless, it is hard to argue against such a track record. In fact, the earlier the property was purchased, the greater the capital appreciation.
Most of us have bought our homes to live in, rather than as a get-rich-quick investments. When you buy for owner occupation, you have a guaranteed tenant - yourself. Instead of rentals, you are paying monthly mortgage payments.
It is a vastly different scenario when you are buying for investment. You do not have a guaranteed occupier. If you are not able to sell your property before its completion, you will have to look for tenants.
You will need to look at the yields and compare that with other forms of investments. You will need to assess the overall housing demand-and-supply situation. You will need to know how the economy is doing - now and in the future.
This means that you will need to do your homework and not go by herd instinct. The herd never gets it right all the time - hence economic and property cycles.
When an owner-occupier times his purchase right, he has one fewer big worry in life.
When an investor gets it right, he gets a windfall and lives the good life, but it never stops there, does it? The euphoria of earning big in a short few months or over one to two years what he could not earn in 10 or 15 years is intoxicating, to say the least. The profits will be re-invested in, what else, but property.
We read of success stories of people starting with a single property and having a string of them within a decade or two. How do they do it? We see many advertisements these days offering courses that will teach us how to make it big by investing in property. It is not a big secret: It is called leveraging - using other people's money to work for you.
When the value of your home rises significantly, as they always do during an up-cycle, you can secure a loan from banks by pledging your home as collateral. This is because your property's market value is much more than your outstanding loan.
You can use this loan to re-invest in property. In Singapore, buying a property under construction allows the investor to maximise his leverage. Since only a 20-per-cent down payment is required upon purchase, the investor can, in theory, play with an asset which is worth five times his initial capital.
Some people can own a number of properties in a short time because they are fully invested and fully leveraged. Profits are almost immediately re-invested. Like a person who buys his furniture on hire purchase, it looks like he is the owner, but the furniture is not yet fully his, even though no one else knows that.
This brings me to my last point. When an owner-occupier mis-times his purchase, he spends his whole working life paying for it. When a fully-leveraged investor gets it wrong, like in the real estate board game Monopoly, he becomes a bankrupt and retires from the game.
The writer is head of research and consultancy at Chesterton Suntec International.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Aug 27, 2010
by Colin Tan
Most of us have heard it all before from the experts. Investing in homes is one of the safest and surest forms of investment. If you cannot re-sell the property for a good profit within a couple of years, you can always hold it for the long term because it will always appreciate.
But if everyone follows this advice, will it still work? Surely it is a recipe for disaster. If everyone is going to earn it the easy way, who will do all the hard work?
Given today's price levels, the vast majority of Singaporeans who own their homes are sitting on large paper profits. Many are paper millionaires; for them to become real millionaires, they would have no roofs over their heads.
Nevertheless, it is hard to argue against such a track record. In fact, the earlier the property was purchased, the greater the capital appreciation.
Most of us have bought our homes to live in, rather than as a get-rich-quick investments. When you buy for owner occupation, you have a guaranteed tenant - yourself. Instead of rentals, you are paying monthly mortgage payments.
It is a vastly different scenario when you are buying for investment. You do not have a guaranteed occupier. If you are not able to sell your property before its completion, you will have to look for tenants.
You will need to look at the yields and compare that with other forms of investments. You will need to assess the overall housing demand-and-supply situation. You will need to know how the economy is doing - now and in the future.
This means that you will need to do your homework and not go by herd instinct. The herd never gets it right all the time - hence economic and property cycles.
When an owner-occupier times his purchase right, he has one fewer big worry in life.
When an investor gets it right, he gets a windfall and lives the good life, but it never stops there, does it? The euphoria of earning big in a short few months or over one to two years what he could not earn in 10 or 15 years is intoxicating, to say the least. The profits will be re-invested in, what else, but property.
We read of success stories of people starting with a single property and having a string of them within a decade or two. How do they do it? We see many advertisements these days offering courses that will teach us how to make it big by investing in property. It is not a big secret: It is called leveraging - using other people's money to work for you.
When the value of your home rises significantly, as they always do during an up-cycle, you can secure a loan from banks by pledging your home as collateral. This is because your property's market value is much more than your outstanding loan.
You can use this loan to re-invest in property. In Singapore, buying a property under construction allows the investor to maximise his leverage. Since only a 20-per-cent down payment is required upon purchase, the investor can, in theory, play with an asset which is worth five times his initial capital.
Some people can own a number of properties in a short time because they are fully invested and fully leveraged. Profits are almost immediately re-invested. Like a person who buys his furniture on hire purchase, it looks like he is the owner, but the furniture is not yet fully his, even though no one else knows that.
This brings me to my last point. When an owner-occupier mis-times his purchase, he spends his whole working life paying for it. When a fully-leveraged investor gets it wrong, like in the real estate board game Monopoly, he becomes a bankrupt and retires from the game.
The writer is head of research and consultancy at Chesterton Suntec International.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Thursday, August 26, 2010
TODAY ONLINE : Pasir Panjang apartment block up for en bloc sale
Pasir Panjang apartment block up for en bloc sale
05:55 AM Aug 24, 2010
by Ephraim Seow Siew Lee
SINGAPORE - A 16-unit walk-up apartment block in Pasir Panjang has been put up for collective sale for between $26 million and $30 million in the latest addition to the en bloc revival.
The freehold site, at 252 to 258 Pasir Panjang Road, is near the future Haw Par Villa MRT Station and covers 28,263 square feet.
Under the Urban Redevelopment Authority's 2008 Master Plan, it is zoned for residential development with a gross plot ratio of up to 1.4 and an allowable height of up to five storeys.
The total gross floor area allowed is about 43,523 sq ft, after including the additional 10 per cent balcony space, according to marketing agent Credo Real Estate.
The asking price "translates to a land rate of approximately $597 psf to $689 psf on potential GFA, including balconies", said Mr Karamjit Singh, managing director of Credo.
He added that there would be no development charge. Credo said the site may be configured into about 40 apartment units with an average size of 1,000 square feet.
Ms Christina Sim, director of investment at Cushman and Wakefield, says the asking price is reasonable since the site is freehold and close to major research and educational institutions like Science Parks 1 and 2 and the National University of Singapore.
The tender closes on Sept 23.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Aug 24, 2010
by Ephraim Seow Siew Lee
SINGAPORE - A 16-unit walk-up apartment block in Pasir Panjang has been put up for collective sale for between $26 million and $30 million in the latest addition to the en bloc revival.
The freehold site, at 252 to 258 Pasir Panjang Road, is near the future Haw Par Villa MRT Station and covers 28,263 square feet.
Under the Urban Redevelopment Authority's 2008 Master Plan, it is zoned for residential development with a gross plot ratio of up to 1.4 and an allowable height of up to five storeys.
The total gross floor area allowed is about 43,523 sq ft, after including the additional 10 per cent balcony space, according to marketing agent Credo Real Estate.
The asking price "translates to a land rate of approximately $597 psf to $689 psf on potential GFA, including balconies", said Mr Karamjit Singh, managing director of Credo.
He added that there would be no development charge. Credo said the site may be configured into about 40 apartment units with an average size of 1,000 square feet.
Ms Christina Sim, director of investment at Cushman and Wakefield, says the asking price is reasonable since the site is freehold and close to major research and educational institutions like Science Parks 1 and 2 and the National University of Singapore.
The tender closes on Sept 23.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Friday, August 20, 2010
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
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
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
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
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
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
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
Sunday, August 15, 2010
TODAY ONLINE : Speculators - are they making a comeback?
Speculators - are they making a comeback?
Recent launch prices for condos in outlying areas way above existing properties'
05:55 AM Aug 13, 2010
by Colin Tan
The confirmation of the positive numbers for the private residential sector in Singapore for 2Q2010 appears to have unleashed another wave of buying onto the market.
From landed homes to HDB flats, the market is awash with liquidity. My colleagues in the appraisal department tell me that the rising prices for properties not matched by their valuations have not scuttled too many deals.
In the public housing market, higher cash-over-valuation (COVs) on top of higher prices have also not slowed the rise in the HDB resale market.
With so much cash floating around, I have often maintained that the market is always waiting for a good excuse to renew its buying activity.
That excuse was provided within the past two weeks. The Scala, a 99-year leasehold project near Lorong Chuan MRT station attracted hundreds of potential buyers - or over a thousand according to one report - that balloting was needed to sort out who got to enter the showflat first.
Of course, it helped that a private preview held earlier for Hong Leong staff and other buyers meant that about a third of the units had already been sold before the official launch.
The timing of the launch was also spot on as it came after more stations on the Circle Line from Bartley right through to Dhoby Ghaut were opened for public use. This meant that most residents in the area have already had experience using the new line.
Because the Circle Line serves mainly lower population density areas, there is less overcrowding on the trains. This means that most rides are much more pleasant than rides on the older North-South or East-West lines. To be near an MRT station is already a plus, but to be near the Circle Line is a bonus.
In the following week, the preview of The Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate. The showflat closed at 2am the following morning in order to cope with the demand.
It has been a while since we saw such frenzied buying activity. Who are these people who stayed up to the wee hours after midnight to book a unit? Are we seeing the return of speculators to the market?
All the signs are there. On a per-square-foot basis, the reported average selling price of about $1,150 psf for The Scala is about 1.5 times the prices of existing apartments in the area.
One buyer was quoted as hoping for a 10- to 20-per-cent increase in prices within two years. This sounds reasonable, until you realise that he is already paying 50-per-cent more than for existing apartments in the area.
The jump in prices are definitely going to flow through into the third quarter private housing statistics.
The launch price for The Greenwich was at $980 psf on average, rising to $1,025 psf over the weekend - a record for a location so far away from the city centre.
One consultant was spot on when he was quoted as saying "the buyers are those who really like this corner of Singapore".
Yes, it is really in one corner of Singapore. You need to own a car to live there or it can be pretty troublesome. Most residents in the area prefer living in houses rather than apartments. And the reason why they opt to live so far away from the city is because it is the only way houses can be affordable for them.
Why would someone choose to live in an apartment there when there are more than ample choices of apartments closer to the city with a better public transport network.
By any stretch of reasoning, I cannot see how owner occupiers can justify their purchases at these launch prices. It is also a little too much for investors.
That leaves the speculator, someone who plays the odds in the hope that it pays off and pays off really well. By their own reckoning, they need not depend on other Singaporean buyers. After all, the Chinese are coming. And they are known to pay big. Really big.
The writer is head of research and consultancy at Chesterton Suntec International.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Recent launch prices for condos in outlying areas way above existing properties'
05:55 AM Aug 13, 2010
by Colin Tan
The confirmation of the positive numbers for the private residential sector in Singapore for 2Q2010 appears to have unleashed another wave of buying onto the market.
From landed homes to HDB flats, the market is awash with liquidity. My colleagues in the appraisal department tell me that the rising prices for properties not matched by their valuations have not scuttled too many deals.
In the public housing market, higher cash-over-valuation (COVs) on top of higher prices have also not slowed the rise in the HDB resale market.
With so much cash floating around, I have often maintained that the market is always waiting for a good excuse to renew its buying activity.
That excuse was provided within the past two weeks. The Scala, a 99-year leasehold project near Lorong Chuan MRT station attracted hundreds of potential buyers - or over a thousand according to one report - that balloting was needed to sort out who got to enter the showflat first.
Of course, it helped that a private preview held earlier for Hong Leong staff and other buyers meant that about a third of the units had already been sold before the official launch.
The timing of the launch was also spot on as it came after more stations on the Circle Line from Bartley right through to Dhoby Ghaut were opened for public use. This meant that most residents in the area have already had experience using the new line.
Because the Circle Line serves mainly lower population density areas, there is less overcrowding on the trains. This means that most rides are much more pleasant than rides on the older North-South or East-West lines. To be near an MRT station is already a plus, but to be near the Circle Line is a bonus.
In the following week, the preview of The Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate. The showflat closed at 2am the following morning in order to cope with the demand.
It has been a while since we saw such frenzied buying activity. Who are these people who stayed up to the wee hours after midnight to book a unit? Are we seeing the return of speculators to the market?
All the signs are there. On a per-square-foot basis, the reported average selling price of about $1,150 psf for The Scala is about 1.5 times the prices of existing apartments in the area.
One buyer was quoted as hoping for a 10- to 20-per-cent increase in prices within two years. This sounds reasonable, until you realise that he is already paying 50-per-cent more than for existing apartments in the area.
The jump in prices are definitely going to flow through into the third quarter private housing statistics.
The launch price for The Greenwich was at $980 psf on average, rising to $1,025 psf over the weekend - a record for a location so far away from the city centre.
One consultant was spot on when he was quoted as saying "the buyers are those who really like this corner of Singapore".
Yes, it is really in one corner of Singapore. You need to own a car to live there or it can be pretty troublesome. Most residents in the area prefer living in houses rather than apartments. And the reason why they opt to live so far away from the city is because it is the only way houses can be affordable for them.
Why would someone choose to live in an apartment there when there are more than ample choices of apartments closer to the city with a better public transport network.
By any stretch of reasoning, I cannot see how owner occupiers can justify their purchases at these launch prices. It is also a little too much for investors.
That leaves the speculator, someone who plays the odds in the hope that it pays off and pays off really well. By their own reckoning, they need not depend on other Singaporean buyers. After all, the Chinese are coming. And they are known to pay big. Really big.
The writer is head of research and consultancy at Chesterton Suntec International.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Wednesday, August 11, 2010
TODAY ONLINE : Housing bubble slowly shrinking?
Housing bubble slowly shrinking?
Beijing's efforts to deter property speculators look to be paying off
11:55 AM Aug 10, 2010
BEIJING - China's property prices rose at the slowest pace in six months in July as the government clamped down on speculation to prevent asset bubbles and keep housing affordable.
Prices in 70 major cities climbed 10.3 per cent from a year earlier, the Statistic Bureau's newspaper, China Information News, reported this morning. That was less than an 11.4-per-cent increase in June and the median estimate of 10.5 per cent in a Bloomberg survey of eight economists.
China's banking regulator said on Friday that the government will maintain policies to cool the property market, damping speculation that slowing economic growth would encourage an easing of the measures. The regulator has told lenders to conduct stress tests to gauge the impact of home prices falling as much as 60 per cent in the hardest-hit markets, a source said last week.
"The government's resolve on property curbs will be tested as increasing risks to external demand and slowing domestic production and investment cool growth later this year," said Mizuho Securities Asia economist Shen Jianguang. "The government may continue to rein in property speculation, but some of the most stringent measures may be adjusted at the end of this year when price corrections start to spur transactions."
Restrictions imposed by the government this year have included higher down-payment and mortgage rates for multiple- home buyers and instructions for lenders to halt third-home loans in areas with "excessive price gains".
Price increases have slowed from a record 12.8 per cent gain in April. Prices were unchanged in July from June, following a 0.1 per cent month-on-month decline in June that was the first decrease in 16 months.
Investment in real-estate development rose 37.2 per cent in the first seven months of 2010 from a year earlier to 2.39 trillion yuan ($476 billion) after a 38.1-per-cent gain in the first six months, the newspaper said. BLOOMBERG
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Beijing's efforts to deter property speculators look to be paying off
11:55 AM Aug 10, 2010
BEIJING - China's property prices rose at the slowest pace in six months in July as the government clamped down on speculation to prevent asset bubbles and keep housing affordable.
Prices in 70 major cities climbed 10.3 per cent from a year earlier, the Statistic Bureau's newspaper, China Information News, reported this morning. That was less than an 11.4-per-cent increase in June and the median estimate of 10.5 per cent in a Bloomberg survey of eight economists.
China's banking regulator said on Friday that the government will maintain policies to cool the property market, damping speculation that slowing economic growth would encourage an easing of the measures. The regulator has told lenders to conduct stress tests to gauge the impact of home prices falling as much as 60 per cent in the hardest-hit markets, a source said last week.
"The government's resolve on property curbs will be tested as increasing risks to external demand and slowing domestic production and investment cool growth later this year," said Mizuho Securities Asia economist Shen Jianguang. "The government may continue to rein in property speculation, but some of the most stringent measures may be adjusted at the end of this year when price corrections start to spur transactions."
Restrictions imposed by the government this year have included higher down-payment and mortgage rates for multiple- home buyers and instructions for lenders to halt third-home loans in areas with "excessive price gains".
Price increases have slowed from a record 12.8 per cent gain in April. Prices were unchanged in July from June, following a 0.1 per cent month-on-month decline in June that was the first decrease in 16 months.
Investment in real-estate development rose 37.2 per cent in the first seven months of 2010 from a year earlier to 2.39 trillion yuan ($476 billion) after a 38.1-per-cent gain in the first six months, the newspaper said. BLOOMBERG
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Thursday, July 29, 2010
TODAY ONLINE : Four HDB flats confiscated
Four HDB flats confiscated
05:55 AM Jul 29, 2010
by Esther Ng
SINGAPORE - One homeowner had sublet her flat illegally to a religious group while she stayed with her family. Another had used his flat as collateral and allowed his moneylender to sublet the flat to repay his loan.
Both did not resume occupation in their flats even though they had been warned by the Housing and Development Board (HDB). Both were among four owners who had their flats confiscated between January and May - compared to four cases over the last two years - while six others had to pay a penalty of $4,200 to $14,400.
The latest figures are the first since the HDB set up a hotline in March for people to complain about homeowners illegally subletting their flats - and 740 people have called since.
However, the bulk of cases detected have come from stepped-up routine inspections - 1,860 to be exact.
In the first five months of the year, a record 2,600 checks were conducted - a four-fold increase from 690 inspections carried out from August to December last year.
Real estate agents told MediaCorp that unauthorised subletting is widespread.
"Some rent the whole unit, as they had taken out bank loans and their Central Provident Fund contribution is not enough to pay for their mortgage," said property agent Azhar Johar. Others stay with their parents or live in their private property to cash in on the red-hot rental market.
"Demand from foreigners and limited flat supply have pushed up HDB rentals even in Woodlands," said real estate agent Liz Choo. "A few years ago, you could get a four-room flat there for $1,300. Now, the minimum is $1,600."
There also have been cases of flat owners who try to circumvent HDB's rules by locking up one room and subletting the rest of the flat without physically staying in the flat.
Such cases will be treated as unauthorised subletting of flats if home owners did not meet the minimum occupation period and did not seek HDB's approval to sublet their flats, said HDB. They must also register their sub-tenants if they sublet rooms.
Members of the public are encouraged to call HDB's hotline on 1800-555-6370 to report any suspected cases of unauthorised subletting.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Jul 29, 2010
by Esther Ng
SINGAPORE - One homeowner had sublet her flat illegally to a religious group while she stayed with her family. Another had used his flat as collateral and allowed his moneylender to sublet the flat to repay his loan.
Both did not resume occupation in their flats even though they had been warned by the Housing and Development Board (HDB). Both were among four owners who had their flats confiscated between January and May - compared to four cases over the last two years - while six others had to pay a penalty of $4,200 to $14,400.
The latest figures are the first since the HDB set up a hotline in March for people to complain about homeowners illegally subletting their flats - and 740 people have called since.
However, the bulk of cases detected have come from stepped-up routine inspections - 1,860 to be exact.
In the first five months of the year, a record 2,600 checks were conducted - a four-fold increase from 690 inspections carried out from August to December last year.
Real estate agents told MediaCorp that unauthorised subletting is widespread.
"Some rent the whole unit, as they had taken out bank loans and their Central Provident Fund contribution is not enough to pay for their mortgage," said property agent Azhar Johar. Others stay with their parents or live in their private property to cash in on the red-hot rental market.
"Demand from foreigners and limited flat supply have pushed up HDB rentals even in Woodlands," said real estate agent Liz Choo. "A few years ago, you could get a four-room flat there for $1,300. Now, the minimum is $1,600."
There also have been cases of flat owners who try to circumvent HDB's rules by locking up one room and subletting the rest of the flat without physically staying in the flat.
Such cases will be treated as unauthorised subletting of flats if home owners did not meet the minimum occupation period and did not seek HDB's approval to sublet their flats, said HDB. They must also register their sub-tenants if they sublet rooms.
Members of the public are encouraged to call HDB's hotline on 1800-555-6370 to report any suspected cases of unauthorised subletting.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : Resale prices still rising
Resale prices still rising
Median COV now $30,000 but observers say a threshold is near
05:55 AM Jul 24, 2010
by Joanne Chan
SINGAPORE - HDB resale flat prices have hit record highs again. Prices rose by 4.1 per cent in the second quarter of this year, compared with the previous quarter, making it the fifth straight quarter of increase.
Analysts say the demand is driven by those who don't qualify for a new flat or want a flat quickly.
High prices in the private property market have also made resale flats an appealing choice, said Dennis Wee Group director Chris Koh.
The high demand also sent the cash-over-valuation (COV) upwards, with 96 per cent of transactions in Q2 closing above valuation.
According to the latest data from HDB, the median COV is now about $30,000 for all resale transactions.
Mr Koh said: "A lot of people who are selling their HDB flats today are cashing out, with $100,000 to $200,000 (in hand).
"So, if you ask them to put down a COV of $50,000, for example, for the next flat they buy, they wouldn't mind."
But market-watchers say the market could be reaching a threshold soon. That's because of a ruling introduced in March, requiring home buyers who want a second HDB loan to plough back half their cash profits from the sale of the first flat.
PropNex CEO Mohamed Ismail said: "Even if (you make) a $100,000 profit, you have to plough back $50,000 into the new flat, and you're left with $50,000 ... If you pay a high COV of $40,000, you are left with nothing."
He added that the market is showing signs of resistance, and expects the COV to hit a threshold of $40,000.
Real Estate Lecturer at Ngee Ann Polytechnic Nicholas Mak agrees the market may be reaching its limit.
He added that the median COV of $30,000 amounts to the annual income of the average Singaporean.
Market watchers noted that many buyers and sellers now treat the COV as part and parcel of any resale transaction.
And this is not healthy for the market in the long term, as a transaction done with COV becomes "a comparable for future valuations that inevitably have to go higher and higher", says Associate Director of ERA Asia Pacific, Eugene Lim.
PropNex's Mr Ismail also noted that home buyers who pay huge amounts of cash upfront may not always be able to recoup their investment, even with home prices expected to continue rising.
The Housing and Development Board says it'll ensure that there's an adequate supply of new flats for first-time buyers.
In the first six months of 2010, HDB launched close to 9,000 Build-To-Order (BTO) flats. With another 7,200 BTO flats to be launched in the second half, this will bring the total BTO flat supply for 2010 to 16,000.
This is an increase of 80 percent over the previous year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Median COV now $30,000 but observers say a threshold is near
05:55 AM Jul 24, 2010
by Joanne Chan
SINGAPORE - HDB resale flat prices have hit record highs again. Prices rose by 4.1 per cent in the second quarter of this year, compared with the previous quarter, making it the fifth straight quarter of increase.
Analysts say the demand is driven by those who don't qualify for a new flat or want a flat quickly.
High prices in the private property market have also made resale flats an appealing choice, said Dennis Wee Group director Chris Koh.
The high demand also sent the cash-over-valuation (COV) upwards, with 96 per cent of transactions in Q2 closing above valuation.
According to the latest data from HDB, the median COV is now about $30,000 for all resale transactions.
Mr Koh said: "A lot of people who are selling their HDB flats today are cashing out, with $100,000 to $200,000 (in hand).
"So, if you ask them to put down a COV of $50,000, for example, for the next flat they buy, they wouldn't mind."
But market-watchers say the market could be reaching a threshold soon. That's because of a ruling introduced in March, requiring home buyers who want a second HDB loan to plough back half their cash profits from the sale of the first flat.
PropNex CEO Mohamed Ismail said: "Even if (you make) a $100,000 profit, you have to plough back $50,000 into the new flat, and you're left with $50,000 ... If you pay a high COV of $40,000, you are left with nothing."
He added that the market is showing signs of resistance, and expects the COV to hit a threshold of $40,000.
Real Estate Lecturer at Ngee Ann Polytechnic Nicholas Mak agrees the market may be reaching its limit.
He added that the median COV of $30,000 amounts to the annual income of the average Singaporean.
Market watchers noted that many buyers and sellers now treat the COV as part and parcel of any resale transaction.
And this is not healthy for the market in the long term, as a transaction done with COV becomes "a comparable for future valuations that inevitably have to go higher and higher", says Associate Director of ERA Asia Pacific, Eugene Lim.
PropNex's Mr Ismail also noted that home buyers who pay huge amounts of cash upfront may not always be able to recoup their investment, even with home prices expected to continue rising.
The Housing and Development Board says it'll ensure that there's an adequate supply of new flats for first-time buyers.
In the first six months of 2010, HDB launched close to 9,000 Build-To-Order (BTO) flats. With another 7,200 BTO flats to be launched in the second half, this will bring the total BTO flat supply for 2010 to 16,000.
This is an increase of 80 percent over the previous year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : Still going according to plan
Still going according to plan
Despite changes in the Land Strata Titles Act, developments are continuing their en bloc runs
05:55 AM Jul 23, 2010
by Jo-ann Huang joannhuang@mediacorp.com.sg
SINGAPORE - Property owners with en bloc sale aspirations seem unfazed by the new provisions to the Land Strata Titles Act which took effect last week as a number of them are still proceeding with their collective sales as planned.
Developments such as Allsworth Park, Mayfair Gardens, Thomson View and Shenton House are among those continuing their en bloc runs and have elected sales committees.
Analysts are also expecting between 20 to 40 en bloc launches for the rest of the year with an average deal value of between $50 million and $100 million.
Things are also looking smooth for Laguna Park, whose new sales committee has appointed Knight Frank as marketing agent and Khattar Wong as lawyer.
Laguna Park dwellers are looking to open for tender by the first quarter of next year, a resident told MediaCorp.
Market watchers also expect several smaller developments with fewer than 50 units to be en bloc ready by year end.
The latest amendments in the Land Strata Titles Act have won the approval of marketing agents and residents who believe the provisions will help prevent a lengthy and convoluted en bloc process.
In particular, they laud the recommendation to raise the requisition rate to reconvene another extraordinary general meeting to 50 per cent of share value or total number of residents.
That is higher than the previous 20 per cent of share value or 25 per cent of the total number of owners required and will apply to homeowners who failed their initial attempt at an en bloc sale.
The Ministry of Law said the new provision is to discourage numerous en bloc tries if there is insufficient interest from homeowners.
Some changes in the Land Strata Titles Act - such as the two-year restriction if a first attempt fails - should help en bloc sellers to time their sale in a property upswing and increase their odds at pocketing larger profits.
"Collective sales should be moving along swiftly as it is now or never for them," said Ms Christina Sim, director of investment at Cushman and Wakefield.
"For the property agents, they know they are embarking on something serious and the chances of it coming to fruition are better," she added.
However, property analysts believe that with more launches expected in the second half of this year, this may result in a developers' market.
This means that with the onset of launches, developers will have more to choose from and sellers will have to keep their prices competitive and "realistic", said Ms Sim.
"With the buffet spread of collective sales coming up, and with the limited spending power from developers, the sites have to be priced realistically to meet the balance between market demand and residents' needs," she explained.
Just this month, tenders for two en bloc sites were completed with the People's Mansion in Lorong 31 Geylang selling for $42.68 million, and Meng Garden Apartments in Killiney Road going for $137 million.
This week, CBRE launched the en bloc sale of Holland Tower with an indicative asking price of $68 million.
"The 13 en bloc deals in the first half of the year were relatively small, averaging at $40 million," said Mr Karamjit Singh, managing director of Credo Real Estate.
He also expects 20 to 40 en bloc launches in the second half, mainly medium sized projects and a handful of large ones.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Despite changes in the Land Strata Titles Act, developments are continuing their en bloc runs
05:55 AM Jul 23, 2010
by Jo-ann Huang joannhuang@mediacorp.com.sg
SINGAPORE - Property owners with en bloc sale aspirations seem unfazed by the new provisions to the Land Strata Titles Act which took effect last week as a number of them are still proceeding with their collective sales as planned.
Developments such as Allsworth Park, Mayfair Gardens, Thomson View and Shenton House are among those continuing their en bloc runs and have elected sales committees.
Analysts are also expecting between 20 to 40 en bloc launches for the rest of the year with an average deal value of between $50 million and $100 million.
Things are also looking smooth for Laguna Park, whose new sales committee has appointed Knight Frank as marketing agent and Khattar Wong as lawyer.
Laguna Park dwellers are looking to open for tender by the first quarter of next year, a resident told MediaCorp.
Market watchers also expect several smaller developments with fewer than 50 units to be en bloc ready by year end.
The latest amendments in the Land Strata Titles Act have won the approval of marketing agents and residents who believe the provisions will help prevent a lengthy and convoluted en bloc process.
In particular, they laud the recommendation to raise the requisition rate to reconvene another extraordinary general meeting to 50 per cent of share value or total number of residents.
That is higher than the previous 20 per cent of share value or 25 per cent of the total number of owners required and will apply to homeowners who failed their initial attempt at an en bloc sale.
The Ministry of Law said the new provision is to discourage numerous en bloc tries if there is insufficient interest from homeowners.
Some changes in the Land Strata Titles Act - such as the two-year restriction if a first attempt fails - should help en bloc sellers to time their sale in a property upswing and increase their odds at pocketing larger profits.
"Collective sales should be moving along swiftly as it is now or never for them," said Ms Christina Sim, director of investment at Cushman and Wakefield.
"For the property agents, they know they are embarking on something serious and the chances of it coming to fruition are better," she added.
However, property analysts believe that with more launches expected in the second half of this year, this may result in a developers' market.
This means that with the onset of launches, developers will have more to choose from and sellers will have to keep their prices competitive and "realistic", said Ms Sim.
"With the buffet spread of collective sales coming up, and with the limited spending power from developers, the sites have to be priced realistically to meet the balance between market demand and residents' needs," she explained.
Just this month, tenders for two en bloc sites were completed with the People's Mansion in Lorong 31 Geylang selling for $42.68 million, and Meng Garden Apartments in Killiney Road going for $137 million.
This week, CBRE launched the en bloc sale of Holland Tower with an indicative asking price of $68 million.
"The 13 en bloc deals in the first half of the year were relatively small, averaging at $40 million," said Mr Karamjit Singh, managing director of Credo Real Estate.
He also expects 20 to 40 en bloc launches in the second half, mainly medium sized projects and a handful of large ones.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
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Pre-development Land Investing
In business for over 30 years, success in providing real estate investment opportunities to clients around the world is a simple, yet effective separation of roles and responsibilites. The four pillars of strength guide the land from the research and acquisition, through to the exit, including the distribution of proceeds to our clients ......
To know more how this is really work for you and your clients....
Please contact me Terence Tay @ (+65) 9387-5896 or email : terencetay.kh@gmail.com
To know more how this is really work for you and your clients....
Please contact me Terence Tay @ (+65) 9387-5896 or email : terencetay.kh@gmail.com
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