Oct 3, 2010
Little Thailand to be moved across road
New park, with sepak takraw courts and other facilities, for Thai workers to enjoy
By Rachel Chang
After years of complaints from residents, grassroots leaders in Kampong Glam have a plan to 'move' Little Thailand.
The popular haunt of hundreds of Thai workers is a Housing Board estate located across the road from the Golden Mile Complex.
The workers gather there on weekends, occupying void decks, playgrounds and common areas.
Residents allege the workers litter, play loud music late into the night, drink alcohol and relieve themselves in the drains.
These workers play an important role in Singapore, acknowledged the chairman of Kampong Glam's Citizens' Consultative Committee, Mr Woon Tai Hean.
'But while the whole of Singapore benefits from their work, we carry the national burden in Kampong Glam,' he added.
Now, after years of lobbying, the area's grassroots leaders are renting from the Singapore Land Authority (SLA) a small plot of land next to the Golden Mile Complex. The hope is that the Thai workers will migrate across the street to the grounds, named Harmony Park, and residents will finally be placated.
Grassroots leaders obtained a grant of about $400,000 from the National Development Ministry's Community Improvement Projects Committee, to pay for landscaping, fencing, and facilities such as sepak takraw courts, a miniature football field and pavilions for shelter.
By the end of the year, there will also be food stalls and Thai movie screenings at night.
The Sunday Times understands the use of the land was approved by the SLA a year ago, after endorsement by the ministries of manpower and trade and industry - two government bodies directly involved in regulating foreign labour.
The problem of 'Little Thailand' arose about 15 years ago.
Until then, Thai workers would gather on weekends at a sprawling grassy area next to Golden Mile Complex, known as Crawford Park.
They were, however, driven from it by the construction of a tunnel leading to Nicoll Highway.
They began congregating across the street at HDB blocks, where a cluster of shops selling Thai food and goods soon sprang up.
Mr Woon acknowledged they were not doing anything wrong in congregating in a common area.
'That is the behavioural norm in their country,' he said. However, he added that residents did not feel safe walking home through the mass of workers.
Many attempts have been made to address residents' concerns.
A year ago, Aetos security officers, paid for by the Ministry of Manpower, began to patrol the area to ensure orderly behaviour.
The town council also schedules cleaning on weekend afternoons, which leaves the floors wet and discourages the workers from sitting there. Residents said these measures had improved the situation, but not solved the problem.
With Harmony Park, grassroots leaders hope they have found the answer. In time, they hope the park can become self-funded, with the rental fees from vendors paying for its maintenance.
They also hope residents will use Harmony Park on weekdays, making it a 'win-win situation'.
An advocacy group, Transient Workers Count Too, welcomed the idea. Said its executive director, Vincent Wijeysingha: 'Given their extremely low wages, the workers are priced out of most social and sporting venues... this space will be close to them and accessible.'
rchang@sph.com.sg
Monday, October 4, 2010
ST : Leasing out a shoebox flat
Oct 3, 2010
property
Leasing out a shoebox flat
While Mickey Mouse flats may be relatively affordable, buyers should be aware that rents depend on location and proximity to amenities
By Joyce Teo
Buying a shoebox apartment for lease sounds like a very attractive proposition because such units are relatively more affordable. But investors should know what to expect because not everyone will want to rent such small units, experts said.
A record number of these small-format homes - also known as Mickey Mouse flats - have been sold in the first three quarters of the year, and at higher and higher prices.
The sale of 906 apartments of 500 sq ft and below in that period is 84 per cent higher than that in the same period last year, said CBRE Research, citing URA Realis. This has also exceeded the full-year sale of 722 units last year, it said.
Median prices of such homes have risen to $1,314 per sq ft (psf) so far this year, from $1,190 psf last year, and asking rents on a psf basis are comparable to those for prime developments in town.
'At first glance, investing in shoebox apartments might appear to be an attractive proposition due to the relative quantum affordability and rental yields,' said CBRE Research executive director Li Hiaw Ho.
However, the rents will depend on many factors, such as location, proximity to amenities, and demand and supply conditions, he said.
Currently, some owners of one-bedroom and studio units in projects such as Kembangan Suites in Kembangan, Parc Imperial in Pasir Panjang and Soho 188 in Race Course Road are asking for rents of $2,000 to $3,600 a month.
In July, a 431 sq ft one-bedroom unit in Urban Lofts in Rangoon Road was leased out at $2,400 a month, while a similar-sized one-bedroom unit at Mountbatten Lodge in Mountbatten Road went for $2,300 a month.
Based on current valuations, indicative gross rental yields for shoebox units are estimated at 3 per cent to 5 per cent, said CBRE Research.
'These figures, however, do not take into account the utility and condo management fees, insurance, mortgage interest payments, property taxes and maintenance charges - all of which will make the net yield considerably lower,' said Mr Li.
ECG Property chief executive Eric Cheng said most people buy shoebox units to lease out but they should be aware that any rental projection given at the launch may not pan out.
For instance, when a project in the Thomson area was launched a few years ago, the rentals were projected at $3,500 to $4,500 a month, but the transacted rents now are more like $1,800 to $2,600 a month, he said.
Cushman & Wakefield's senior manager of Asia-Pac research, Mr Ong Kah Seng, said a large supply of shoebox apartments is scheduled for completion, and rents may come under pressure as leasing competition intensifies.
Also, while tiny apartments seem suitable for single expatriate tenants, not all will want to pay so much for a small unit unless it is in a prime area, or conveniently located near an MRT station, experts said.
Said Mr Ong: 'Owners of shoebox apartments... can at best rely on junior expatriates, besides local professionals.'
But since junior expatriates are cost-sensitive, they may be open to HDB flats which are conveniently located and offer a larger space for nearly the same rent as that for a shoebox apartment, he said.
Yet, CBRE Research found that more people are paying higher prices for a shoebox unit during new launches.
Buyers picked up 383 new shoebox units which cost $600,000 and above in the first nine months of this year, compared with 133 last year and 121 in 2008.
Experts said the question is whether these units can support even higher rentals when they are completed.
The introduction of cooling measures by the Government in late August has also affected the 'flippers'. Extending the imposition period of the sellers' stamp duty of about 3 per cent from one to three years makes it less lucrative for speculators to flip a unit, experts said.
Previously, investors could make significant capital gains from shoebox units with just a small investment sum and a short holding period.
Of the shoebox units launched last year, 66 units were sold in the first eight months of the year for capital gains of $6,400 to $232,000, said CBRE Research.
But for projects launched this year, only four units were sold and gains were in the $9,400 to $101,000 range, it said.
The 'already high buy-in prices' during a new launch might make it hard for an investor to sell it later at higher prices unless it is in a prime location, said Mr Li.
In the next few months, about 10 projects with mainly small-format units are expected to be launched. Apart from one in River Valley Road, the rest are in suburban areas such as Geylang and Eunos, said CBRE.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Renting it out
'Owners of shoebox apartments...can at best rely on junior expatriates, besides local professionals.'
MR ONG KAH SENG, Cushman & Wakefield's senior manager of Asia-Pac research, who added that junior expatriates may also consider bigger HDB flats for the same rent
While buyers are paying more for shoebox apartments, rental projections at the launch may not always pan out. -- ST FILE PHOTO
property
Leasing out a shoebox flat
While Mickey Mouse flats may be relatively affordable, buyers should be aware that rents depend on location and proximity to amenities
By Joyce Teo
Buying a shoebox apartment for lease sounds like a very attractive proposition because such units are relatively more affordable. But investors should know what to expect because not everyone will want to rent such small units, experts said.
A record number of these small-format homes - also known as Mickey Mouse flats - have been sold in the first three quarters of the year, and at higher and higher prices.
The sale of 906 apartments of 500 sq ft and below in that period is 84 per cent higher than that in the same period last year, said CBRE Research, citing URA Realis. This has also exceeded the full-year sale of 722 units last year, it said.
Median prices of such homes have risen to $1,314 per sq ft (psf) so far this year, from $1,190 psf last year, and asking rents on a psf basis are comparable to those for prime developments in town.
'At first glance, investing in shoebox apartments might appear to be an attractive proposition due to the relative quantum affordability and rental yields,' said CBRE Research executive director Li Hiaw Ho.
However, the rents will depend on many factors, such as location, proximity to amenities, and demand and supply conditions, he said.
Currently, some owners of one-bedroom and studio units in projects such as Kembangan Suites in Kembangan, Parc Imperial in Pasir Panjang and Soho 188 in Race Course Road are asking for rents of $2,000 to $3,600 a month.
In July, a 431 sq ft one-bedroom unit in Urban Lofts in Rangoon Road was leased out at $2,400 a month, while a similar-sized one-bedroom unit at Mountbatten Lodge in Mountbatten Road went for $2,300 a month.
Based on current valuations, indicative gross rental yields for shoebox units are estimated at 3 per cent to 5 per cent, said CBRE Research.
'These figures, however, do not take into account the utility and condo management fees, insurance, mortgage interest payments, property taxes and maintenance charges - all of which will make the net yield considerably lower,' said Mr Li.
ECG Property chief executive Eric Cheng said most people buy shoebox units to lease out but they should be aware that any rental projection given at the launch may not pan out.
For instance, when a project in the Thomson area was launched a few years ago, the rentals were projected at $3,500 to $4,500 a month, but the transacted rents now are more like $1,800 to $2,600 a month, he said.
Cushman & Wakefield's senior manager of Asia-Pac research, Mr Ong Kah Seng, said a large supply of shoebox apartments is scheduled for completion, and rents may come under pressure as leasing competition intensifies.
Also, while tiny apartments seem suitable for single expatriate tenants, not all will want to pay so much for a small unit unless it is in a prime area, or conveniently located near an MRT station, experts said.
Said Mr Ong: 'Owners of shoebox apartments... can at best rely on junior expatriates, besides local professionals.'
But since junior expatriates are cost-sensitive, they may be open to HDB flats which are conveniently located and offer a larger space for nearly the same rent as that for a shoebox apartment, he said.
Yet, CBRE Research found that more people are paying higher prices for a shoebox unit during new launches.
Buyers picked up 383 new shoebox units which cost $600,000 and above in the first nine months of this year, compared with 133 last year and 121 in 2008.
Experts said the question is whether these units can support even higher rentals when they are completed.
The introduction of cooling measures by the Government in late August has also affected the 'flippers'. Extending the imposition period of the sellers' stamp duty of about 3 per cent from one to three years makes it less lucrative for speculators to flip a unit, experts said.
Previously, investors could make significant capital gains from shoebox units with just a small investment sum and a short holding period.
Of the shoebox units launched last year, 66 units were sold in the first eight months of the year for capital gains of $6,400 to $232,000, said CBRE Research.
But for projects launched this year, only four units were sold and gains were in the $9,400 to $101,000 range, it said.
The 'already high buy-in prices' during a new launch might make it hard for an investor to sell it later at higher prices unless it is in a prime location, said Mr Li.
In the next few months, about 10 projects with mainly small-format units are expected to be launched. Apart from one in River Valley Road, the rest are in suburban areas such as Geylang and Eunos, said CBRE.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Renting it out
'Owners of shoebox apartments...can at best rely on junior expatriates, besides local professionals.'
MR ONG KAH SENG, Cushman & Wakefield's senior manager of Asia-Pac research, who added that junior expatriates may also consider bigger HDB flats for the same rent
While buyers are paying more for shoebox apartments, rental projections at the launch may not always pan out. -- ST FILE PHOTO
ST Forum : Hard to spot home loan changes
Oct 2, 2010
Hard to spot home loan changes
IN MARCH 2004, I refinanced my HDB home loan with HSBC's Smartmortage package, which offered an interest offset feature with a linked current account.
I meticulously checked the loan terms with the bank officer and asked her why the agreement gave the bank a unilateral right to vary any condition, thereby defeating the purpose of signing a contract. Her reply was that it was industry practice.
Early last month, I wrote in to redeem the loan as I had sold my house. Later, I was puzzled to see interest debit costs charged to my account in my latest statement.
The bank replied that there was a standard term that allowed interest to be levied during the three-month redemption notice. I could not find such a condition in my loan agreement. On Wednesday, HSBC indicated where it was: in a few sentences included in several monthly statements in 2008, stating an amendment.
When a customer receives a monthly statement, his focus will be on checking the accuracy of the figures. Now he must check for amendments to the loan agreement as well.
Signing a long-term loan, such as a home loan, with a bank seems like signing a blank sheet of paper where the bank can change the conditions unilaterally at any time.
Mohamed Rafiq Hamjah
Hard to spot home loan changes
IN MARCH 2004, I refinanced my HDB home loan with HSBC's Smartmortage package, which offered an interest offset feature with a linked current account.
I meticulously checked the loan terms with the bank officer and asked her why the agreement gave the bank a unilateral right to vary any condition, thereby defeating the purpose of signing a contract. Her reply was that it was industry practice.
Early last month, I wrote in to redeem the loan as I had sold my house. Later, I was puzzled to see interest debit costs charged to my account in my latest statement.
The bank replied that there was a standard term that allowed interest to be levied during the three-month redemption notice. I could not find such a condition in my loan agreement. On Wednesday, HSBC indicated where it was: in a few sentences included in several monthly statements in 2008, stating an amendment.
When a customer receives a monthly statement, his focus will be on checking the accuracy of the figures. Now he must check for amendments to the loan agreement as well.
Signing a long-term loan, such as a home loan, with a bank seems like signing a blank sheet of paper where the bank can change the conditions unilaterally at any time.
Mohamed Rafiq Hamjah
ST Forum : Market will fix commission rates
Oct 2, 2010
Market will fix commission rates
WE THANK Miss Koh Wee Leng for her feedback ('Confused over stand on fixed commission rates'; Sept 18). The Council for Estate Agencies, when it is set up, will not prescribe commission rates, but will instead allow them to be determined by market forces. Estate agents will then have the right incentive to price their services competitively, and consumers can negotiate the best rates.
In general, the Competition Act prohibits market players from fixing prices. The Competition Commission of Singapore ruled earlier that the Institute of Estate Agents' guidelines for professional fees, commission for estate agents and salespersons would likely infringe the Act, and advised that estate agents and salespersons set their fees and fee structures independently.
Although the guidelines are non-binding, they may still discourage price competition below the recommended rate and facilitate price coordination. More efficient estate agents, who can charge lower rates, would then have little incentive to do so. The institute voluntarily withdrew the guidelines shortly after the ruling.
Consumers should compare fees and services before deciding on their choice of agent and negotiate fees and terms to facilitate and encourage competition. To let consumers make informed choices, agents can provide a breakdown of their fees vis-a-vis the level of services and options they provide.
Cheryl Lim (Ms)
Deputy Director
(Regulatory Control)
Ministry of National Development
Market will fix commission rates
WE THANK Miss Koh Wee Leng for her feedback ('Confused over stand on fixed commission rates'; Sept 18). The Council for Estate Agencies, when it is set up, will not prescribe commission rates, but will instead allow them to be determined by market forces. Estate agents will then have the right incentive to price their services competitively, and consumers can negotiate the best rates.
In general, the Competition Act prohibits market players from fixing prices. The Competition Commission of Singapore ruled earlier that the Institute of Estate Agents' guidelines for professional fees, commission for estate agents and salespersons would likely infringe the Act, and advised that estate agents and salespersons set their fees and fee structures independently.
Although the guidelines are non-binding, they may still discourage price competition below the recommended rate and facilitate price coordination. More efficient estate agents, who can charge lower rates, would then have little incentive to do so. The institute voluntarily withdrew the guidelines shortly after the ruling.
Consumers should compare fees and services before deciding on their choice of agent and negotiate fees and terms to facilitate and encourage competition. To let consumers make informed choices, agents can provide a breakdown of their fees vis-a-vis the level of services and options they provide.
Cheryl Lim (Ms)
Deputy Director
(Regulatory Control)
Ministry of National Development
ST : Private home prices rise at slower rate
Oct 2, 2010
Private home prices rise at slower rate
High asking prices put off buyers even before govt measures kicked in
By Joyce Teo
THE heat started coming out of the private homes market even before the Government imposed cooling measures on Aug 30.
Some buyers have been holding fire for a couple of months at least, deterred by sky-high asking prices, especially in the mass market.
Private home prices rose 3.1 per cent in the three months to Sept 30, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday, down on the 5.3 per cent increase in the previous quarter.
The estimates capture mainly transactions in July and August before the measures took effect. The data will be updated four weeks later.
Price rises have moderated over the past four quarters, but private home prices are still up 14.7 per cent in the first nine months of the year.
This puts the URA residential price index at 4.7 per cent above its all-time peak in the second quarter of 1996.
CBRE Research said the continuing upward trend in prices was 'probably due to the strong sales momentum in July and August, as the market slowed down from September after the government introduced the property measures'.
Yesterday's flash estimates showed that prices of non-landed private homes rose by 1.6 per cent in the city centre and 2.4 per cent in the city fringes and suburban areas.
City fringe prices have shot up 15.6 per cent this year while they are up 12.9 per cent in suburban spots and 11.7 per cent in the city centre.
CBRE Research said the stronger price growth in the city fringes and suburban areas could be due to the higher price benchmarks set by successful new launches such as The Scala, The Greenwich, Viva Vista and NV Residences.
But overall, buyers have become more price-resistant in the mass market segment, say experts.
Colliers International's director for research and advisory, Ms Tay Huey Ying, said the Aug 30 measures were more pre-emptive in nature and would hit sales numbers first.
Indeed, Jones Lang LaSalle (JLL) said that sales volume seems to be consolidating, with private home transactions in the third quarter possibly dropping by about 30 per cent from the second quarter.
The latest cooling measures will be more effective in shrinking demand and so are expected to curb overall price growth, said JLL's head of research for South-east Asia, Dr Chua Yang Liang.
The number of home sales in the fourth quarter will be far lower than in the first three quarters of the year, said CBRE Research.
But new projects near MRT stations are still expected to do well and prices overall will still be up about 15 per cent for the year, it added.
Ms Tay reckons that prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year.
'Price resistance is still there and there's the traditional slowdown during the year-end period, compounded by the cooling measures,' she said.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year, said Colliers International's director for research and advisory, Ms Tay Huey Ying.
Private home prices rise at slower rate
High asking prices put off buyers even before govt measures kicked in
By Joyce Teo
THE heat started coming out of the private homes market even before the Government imposed cooling measures on Aug 30.
Some buyers have been holding fire for a couple of months at least, deterred by sky-high asking prices, especially in the mass market.
Private home prices rose 3.1 per cent in the three months to Sept 30, according to flash estimates from the Urban Redevelopment Authority (URA) yesterday, down on the 5.3 per cent increase in the previous quarter.
The estimates capture mainly transactions in July and August before the measures took effect. The data will be updated four weeks later.
Price rises have moderated over the past four quarters, but private home prices are still up 14.7 per cent in the first nine months of the year.
This puts the URA residential price index at 4.7 per cent above its all-time peak in the second quarter of 1996.
CBRE Research said the continuing upward trend in prices was 'probably due to the strong sales momentum in July and August, as the market slowed down from September after the government introduced the property measures'.
Yesterday's flash estimates showed that prices of non-landed private homes rose by 1.6 per cent in the city centre and 2.4 per cent in the city fringes and suburban areas.
City fringe prices have shot up 15.6 per cent this year while they are up 12.9 per cent in suburban spots and 11.7 per cent in the city centre.
CBRE Research said the stronger price growth in the city fringes and suburban areas could be due to the higher price benchmarks set by successful new launches such as The Scala, The Greenwich, Viva Vista and NV Residences.
But overall, buyers have become more price-resistant in the mass market segment, say experts.
Colliers International's director for research and advisory, Ms Tay Huey Ying, said the Aug 30 measures were more pre-emptive in nature and would hit sales numbers first.
Indeed, Jones Lang LaSalle (JLL) said that sales volume seems to be consolidating, with private home transactions in the third quarter possibly dropping by about 30 per cent from the second quarter.
The latest cooling measures will be more effective in shrinking demand and so are expected to curb overall price growth, said JLL's head of research for South-east Asia, Dr Chua Yang Liang.
The number of home sales in the fourth quarter will be far lower than in the first three quarters of the year, said CBRE Research.
But new projects near MRT stations are still expected to do well and prices overall will still be up about 15 per cent for the year, it added.
Ms Tay reckons that prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year.
'Price resistance is still there and there's the traditional slowdown during the year-end period, compounded by the cooling measures,' she said.
joyceteo@sph.com.sg
--------------------------------------------------------------------------------
Prices may stay flat or rise by just 2 per cent in the fourth quarter and be stable in the first quarter of next year, said Colliers International's director for research and advisory, Ms Tay Huey Ying.
ST : HDB resale deals fall 25% after new rules
Oct 2, 2010
HDB resale deals fall 25% after new rules
Fewer homes changed hands last month compared to August
By Jessica Cheam
NEW measures to cool the sizzling property market have already made an impact with sales down, prices and cash-over-valuations (COVs) moderating and buyers taking a breather.
Official estimates released yesterday point to a slowing market in both the private and Housing Board (HDB) segments with experts tipping that the pace will slow further as the year draws to a close.
HDB said yesterday that 'the impact of the measures is not fully reflected in the data yet' as most of its third-quarter transactions were submitted before the new rules were announced.
Nonetheless, it estimated that transactions of HDB resale flats fell an estimated 25 per cent last month compared with August. As a result, an estimated 8,200 homes changed hands in the three months to Sept 30, or 10 per cent fewer than the previous quarter.
The measures cooled a market that rose 4 per cent to another new record in the two months before the latest measures were announced.
The market has now seen nine straight quarters of record prices. Prices had risen 4.1 per cent in the second quarter compared to the first.
There was no official indication yesterday as to what happened to prices last month. But one agency boss reckoned they had softened about 5 per cent.
The story is more sombre in the private property market, with price rises moderating even before the measures were implemented.
Urban Redevelopment Authority (URA) estimates showed prices rose 3.1 per cent in the third quarter, down from a 5.3 per cent rise in the previous quarter.
Property agencies said their own data confirmed last month's slowdown in the HDB resale market.
ERA Asia Pacific's sales volume last month fell by almost 30 per cent over August while at PropNex, third-quarter volumes fell 35 per cent compared with the second.
Agency bosses say the new rules have hit demand in the resale market as permanent residents and private property owners have been effectively shut out of the sector by tough ownership restrictions.
HSR Property Group chief executive Patrick Liew said sales at his agency dipped 10 per cent in the past month while cash upfront asked by sellers, or COVs, have dropped 15 per cent.
'Sales have slowed because while people are waiting on the sidelines for prices to become clearer, sellers are also not desperate to sell,' he said.
ERA Asia Pacific associate director Eugene Lim said its data showed median COV for resale flats hit a high of $35,000 in August before dropping to $28,000 last month.
The median COV for the second quarter was $30,000, according to the HDB.
Mr Lim added the falling COVs implied they had softened about 5 per cent.
The new rules, which are aimed at halting a property bubble, tighten financing and restrict ownership of HDB flats.
PropNex chief executive Mohamed Ismail added: 'Many upgraders have been stumped by the higher downpayment needed for a second home now.'
Mr Lim estimates that COV could go as low as $10,000 by the end of the year while PropNex's Mr Ismail tips $22,000.
He feels that when the median COV dips below $20,000, buyers will be tempted to return to the resale market.
COV was a major factor for engineer Hildya Yong, 26, and her fiance. They bought a new five-room flat in Sengkang directly from the HDB last week.
'Even though COV is coming down, we still cannot afford it. So we decided to go with a new flat instead,' she told The Straits Times.
The full impact of the measures will be seen only in the fourth quarter, say industry analysts. HSR's Mr Liew predicts that sales and prices will stay flat before picking up next year.
But Mr Nicholas Mak, the executive director of SLP International Property Consultants, said the drop in resale flat sales will hit prices in coming months.
'The impact of the property measures will continue to be felt next year,' he said. 'They are not expected to directly cause prices to fall. However, they could be the catalyst of a decline in prices if there was any weakness in the Singapore economy in the coming year.'
Meanwhile, the HDB will launch 3,400 new flats before the year end and 5,000 in the first quarter of next year.
jcheam@sph.com.sg
HDB resale deals fall 25% after new rules
Fewer homes changed hands last month compared to August
By Jessica Cheam
NEW measures to cool the sizzling property market have already made an impact with sales down, prices and cash-over-valuations (COVs) moderating and buyers taking a breather.
Official estimates released yesterday point to a slowing market in both the private and Housing Board (HDB) segments with experts tipping that the pace will slow further as the year draws to a close.
HDB said yesterday that 'the impact of the measures is not fully reflected in the data yet' as most of its third-quarter transactions were submitted before the new rules were announced.
Nonetheless, it estimated that transactions of HDB resale flats fell an estimated 25 per cent last month compared with August. As a result, an estimated 8,200 homes changed hands in the three months to Sept 30, or 10 per cent fewer than the previous quarter.
The measures cooled a market that rose 4 per cent to another new record in the two months before the latest measures were announced.
The market has now seen nine straight quarters of record prices. Prices had risen 4.1 per cent in the second quarter compared to the first.
There was no official indication yesterday as to what happened to prices last month. But one agency boss reckoned they had softened about 5 per cent.
The story is more sombre in the private property market, with price rises moderating even before the measures were implemented.
Urban Redevelopment Authority (URA) estimates showed prices rose 3.1 per cent in the third quarter, down from a 5.3 per cent rise in the previous quarter.
Property agencies said their own data confirmed last month's slowdown in the HDB resale market.
ERA Asia Pacific's sales volume last month fell by almost 30 per cent over August while at PropNex, third-quarter volumes fell 35 per cent compared with the second.
Agency bosses say the new rules have hit demand in the resale market as permanent residents and private property owners have been effectively shut out of the sector by tough ownership restrictions.
HSR Property Group chief executive Patrick Liew said sales at his agency dipped 10 per cent in the past month while cash upfront asked by sellers, or COVs, have dropped 15 per cent.
'Sales have slowed because while people are waiting on the sidelines for prices to become clearer, sellers are also not desperate to sell,' he said.
ERA Asia Pacific associate director Eugene Lim said its data showed median COV for resale flats hit a high of $35,000 in August before dropping to $28,000 last month.
The median COV for the second quarter was $30,000, according to the HDB.
Mr Lim added the falling COVs implied they had softened about 5 per cent.
The new rules, which are aimed at halting a property bubble, tighten financing and restrict ownership of HDB flats.
PropNex chief executive Mohamed Ismail added: 'Many upgraders have been stumped by the higher downpayment needed for a second home now.'
Mr Lim estimates that COV could go as low as $10,000 by the end of the year while PropNex's Mr Ismail tips $22,000.
He feels that when the median COV dips below $20,000, buyers will be tempted to return to the resale market.
COV was a major factor for engineer Hildya Yong, 26, and her fiance. They bought a new five-room flat in Sengkang directly from the HDB last week.
'Even though COV is coming down, we still cannot afford it. So we decided to go with a new flat instead,' she told The Straits Times.
The full impact of the measures will be seen only in the fourth quarter, say industry analysts. HSR's Mr Liew predicts that sales and prices will stay flat before picking up next year.
But Mr Nicholas Mak, the executive director of SLP International Property Consultants, said the drop in resale flat sales will hit prices in coming months.
'The impact of the property measures will continue to be felt next year,' he said. 'They are not expected to directly cause prices to fall. However, they could be the catalyst of a decline in prices if there was any weakness in the Singapore economy in the coming year.'
Meanwhile, the HDB will launch 3,400 new flats before the year end and 5,000 in the first quarter of next year.
jcheam@sph.com.sg
Friday, October 1, 2010
ST : Pasir Ris condo plot receives four tenders
Oct 1, 2010
Pasir Ris condo plot receives four tenders
By Joyce Teo
A CONDOMINIUM plot in Pasir Ris attracted four bidders, though the offers were relatively conservative.
The top tender - from a joint venture between Frasers Centrepoint and Far East Organization - came in slightly lower than expected at $151.38 million, or $334.85 per sq ft (psf) per plot ratio (ppr).
That was 7.6 per cent above the $140.69 million offered by a tie-up between Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
Allgreen Properties was next with $131.89 million, with Meadows Investment, a firm owned by Tiong Aik Group executive director Neo Tiam Boon, in fourth place with $106 million.
Property experts said the response shows that developers who lodged bids were in two minds - cautious following the August cooling measures but fairly keen on this particular site even though it is not near an MRT station.
The 99-year leasehold plot at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 is a 10-minute walk from the Downtown East lifestyle and entertainment hub. It has a site area of about 20,000 sq m and an allowable gross floor area of 42,000 sq m.
If successful, Frasers Centrepoint and Far East plan to build a 12-storey condo with 11 blocks comprising 400 to 450 units in all and aimed at HDB upgraders.
'The quantum of the bids indicates that the developers are optimistic about this site, given the strong sales at the recently launched NV Residences in Pasir Ris Drive 1, in addition to the sea view for units on the higher floors,' said CBRE Research executive director Li Hiaw Ho.
Before the August cooling measures were introduced, industry sources said the site might not attract strong bids as it was not near an MRT station. One forecast bids of between $350 and $390 psf ppr, although even that proved optimistic.
The bid from Frasers and Far East translates into a break-even cost of $650 to $680 psf, according to CBRE Research. Units in the new project on the site would possibly sell for about $800 psf.
NV Residences nearby reportedly sold around 350 units at the average price of $835 psf last month, it added.
Units in Livia, adjacent to NV Residences, were sold at between $720 and $840 psf in the July to September period.
And units at Oasis @ Elias in Elias Road sold for between $650 and $740 psf in the same period, noted Mr Li.
The Frasers and Far East joint offer was similar to the highest bid some executive condominium sites received in the first half, noted Cushman & Wakefield's senior manager of research, Asia Pacific, Mr Ong Kah Seng.
Lower prices are ultimately beneficial for developers as the break-even price will be lower, he added.
The potential for better profit margins is there should prices not fall significantly, he said.
Developers are increasingly cautious given an expected economic slowdown after robust first-half growth, uncertainties in the wider economy and a temporary slowdown in buying interest, he added.
The HDB said it will evaluate the tender bids and announce the results within two weeks.
Pasir Ris condo plot receives four tenders
By Joyce Teo
A CONDOMINIUM plot in Pasir Ris attracted four bidders, though the offers were relatively conservative.
The top tender - from a joint venture between Frasers Centrepoint and Far East Organization - came in slightly lower than expected at $151.38 million, or $334.85 per sq ft (psf) per plot ratio (ppr).
That was 7.6 per cent above the $140.69 million offered by a tie-up between Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
Allgreen Properties was next with $131.89 million, with Meadows Investment, a firm owned by Tiong Aik Group executive director Neo Tiam Boon, in fourth place with $106 million.
Property experts said the response shows that developers who lodged bids were in two minds - cautious following the August cooling measures but fairly keen on this particular site even though it is not near an MRT station.
The 99-year leasehold plot at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 is a 10-minute walk from the Downtown East lifestyle and entertainment hub. It has a site area of about 20,000 sq m and an allowable gross floor area of 42,000 sq m.
If successful, Frasers Centrepoint and Far East plan to build a 12-storey condo with 11 blocks comprising 400 to 450 units in all and aimed at HDB upgraders.
'The quantum of the bids indicates that the developers are optimistic about this site, given the strong sales at the recently launched NV Residences in Pasir Ris Drive 1, in addition to the sea view for units on the higher floors,' said CBRE Research executive director Li Hiaw Ho.
Before the August cooling measures were introduced, industry sources said the site might not attract strong bids as it was not near an MRT station. One forecast bids of between $350 and $390 psf ppr, although even that proved optimistic.
The bid from Frasers and Far East translates into a break-even cost of $650 to $680 psf, according to CBRE Research. Units in the new project on the site would possibly sell for about $800 psf.
NV Residences nearby reportedly sold around 350 units at the average price of $835 psf last month, it added.
Units in Livia, adjacent to NV Residences, were sold at between $720 and $840 psf in the July to September period.
And units at Oasis @ Elias in Elias Road sold for between $650 and $740 psf in the same period, noted Mr Li.
The Frasers and Far East joint offer was similar to the highest bid some executive condominium sites received in the first half, noted Cushman & Wakefield's senior manager of research, Asia Pacific, Mr Ong Kah Seng.
Lower prices are ultimately beneficial for developers as the break-even price will be lower, he added.
The potential for better profit margins is there should prices not fall significantly, he said.
Developers are increasingly cautious given an expected economic slowdown after robust first-half growth, uncertainties in the wider economy and a temporary slowdown in buying interest, he added.
The HDB said it will evaluate the tender bids and announce the results within two weeks.
ST : Foreigners parking assets for PR must invest $10m
Oct 1, 2010
Foreigners parking assets for PR must invest $10m
Minimum asset value to double from next year under MAS investor scheme
By Teh Joo Lin
FOREIGNERS aiming to become permanent residents in Singapore through a government scheme will have to double the minimum value of assets they park here to $10 million.
The Monetary Authority of Singapore's (MAS) Financial Investor Scheme (FIS) is the second permanent residency programme targeted at wealthy foreigners which has tightened its qualifying criteria recently.
Stricter rules for the Economic Development Board's Global Investor Programme (GIP), some of which kick in today, were reported early this week.
These moves come as the Government acts to better manage the pace and flow of immigrants to address concerns among Singaporeans.
The new FIS rules, effective from Jan 1 next year, require applicants to place at least $10 million in assets for a continuous period of five years, up from a minimum of $5 million previously. The assets must be placed with a financial institution regulated by the MAS, although a portion - up to $2 million - can be used to buy private residential properties.
The MAS declined to comment on the changes. But The Straits Times understands that some banks were notified of the new rules about a month ago.
While the more stringent criteria may dampen response for the PR scheme in the short run, analysts are confident that over time, wealthy individuals will still be attracted to park their funds and settle here.
Bank of Singapore's executive director Lee Woon Shiu told The Straits Times they will 'realise Singapore is a serious private wealth banking hub which doesn't want to attract just a quick inflow of funds'.
'Ten million is a fair amount to attract the right pedigree of clients - not just the newly minted crowd who have struck the jackpot once,' he said.
Other changes to the FIS scheme include allowing the applicant's parents and parents-in-law to apply only for five-year long-term visit passes. Currently, they can be included as part of his PR application if he puts up $2.5 million per parent.
Banks and immigration specialists The Straits Times spoke to expect a surge in applications from China, Taiwan and Indonesia before the changes take effect.
For many prospective FIS applicants, the raised bar was an issue of willingness, not affordability, said Mr Pearce Cheng, an immigration and relocation specialist.
Noting that current applicants generally need a personal net worth of $20 million, he said: 'It could be a turn-off for them to park so much money and be locked in for five years, because there are many other options such as Canada and the United States.'
Sociologist Tan Ern Ser said: 'The point is how you balance the need for good global talent while satisfying local citizens, so maybe they did some linear programming and found this is the optimum solution.'
joolin@sph.com.sg
Foreigners parking assets for PR must invest $10m
Minimum asset value to double from next year under MAS investor scheme
By Teh Joo Lin
FOREIGNERS aiming to become permanent residents in Singapore through a government scheme will have to double the minimum value of assets they park here to $10 million.
The Monetary Authority of Singapore's (MAS) Financial Investor Scheme (FIS) is the second permanent residency programme targeted at wealthy foreigners which has tightened its qualifying criteria recently.
Stricter rules for the Economic Development Board's Global Investor Programme (GIP), some of which kick in today, were reported early this week.
These moves come as the Government acts to better manage the pace and flow of immigrants to address concerns among Singaporeans.
The new FIS rules, effective from Jan 1 next year, require applicants to place at least $10 million in assets for a continuous period of five years, up from a minimum of $5 million previously. The assets must be placed with a financial institution regulated by the MAS, although a portion - up to $2 million - can be used to buy private residential properties.
The MAS declined to comment on the changes. But The Straits Times understands that some banks were notified of the new rules about a month ago.
While the more stringent criteria may dampen response for the PR scheme in the short run, analysts are confident that over time, wealthy individuals will still be attracted to park their funds and settle here.
Bank of Singapore's executive director Lee Woon Shiu told The Straits Times they will 'realise Singapore is a serious private wealth banking hub which doesn't want to attract just a quick inflow of funds'.
'Ten million is a fair amount to attract the right pedigree of clients - not just the newly minted crowd who have struck the jackpot once,' he said.
Other changes to the FIS scheme include allowing the applicant's parents and parents-in-law to apply only for five-year long-term visit passes. Currently, they can be included as part of his PR application if he puts up $2.5 million per parent.
Banks and immigration specialists The Straits Times spoke to expect a surge in applications from China, Taiwan and Indonesia before the changes take effect.
For many prospective FIS applicants, the raised bar was an issue of willingness, not affordability, said Mr Pearce Cheng, an immigration and relocation specialist.
Noting that current applicants generally need a personal net worth of $20 million, he said: 'It could be a turn-off for them to park so much money and be locked in for five years, because there are many other options such as Canada and the United States.'
Sociologist Tan Ern Ser said: 'The point is how you balance the need for good global talent while satisfying local citizens, so maybe they did some linear programming and found this is the optimum solution.'
joolin@sph.com.sg
ST : New Buangkok EC attracts keen interest
Oct 1, 2010
New Buangkok EC attracts keen interest
300 at showflat viewing of first new executive condo project in 5 years
By Esther Teo
HOME buyers showed keen interest at a viewing of Esparina Residences near Buangkok MRT Station yesterday - the first new executive condominium (EC) up for sale in five years.
Despite light rain, more than 300 potential buyers visited the showflat yesterday, with 220 registering interest in a ballot next Friday to book a preferred unit.
They came in droves even though new rules allow the so-called sandwich class - households earning between $8,000 to $10,000 - to also buy the cheaper design, build and sell scheme (DBSS) flats.
The EC is among the first new housing projects to hit the market since new rules unveiled in August to curb speculation.
Experts say the keen interest was due to the limited supply of ECs, pent-up demand from first-time home buyers, and affordable price tags for smaller units.
These flats boast condo-like facilities and were once the only way the sandwich class - ineligible for build-to-order (BTO) flats - could buy new HDB flats.
But they can now buy DBSS flats after the Government raised the income cap for these homes to $10,000. The last DBSS project launched was Parc Lumiere in Simei in April last year.
Esparina developer Frasers Centrepoint Homes said many of those visiting yesterday were young couples, young families and professionals under 40.
The 99-year leasehold project with 573 units will be the first EC launched since Far East's La Casa in Woodlands in 2005. Units range from 829 sq ft for a two-bedroom flat to 2,583 sq ft for a four-bedroom penthouse, with prices ranging from $730 to $750 per sq ft on average, Frasers said.
Two-bedders will be sold for between $590,000 and $723,000, three-bedders for between $697,000 and $981,000, and four-bedders at $1.005 million to $1.181 million. Penthouse prices will range from $864,000 to $1.3 million.
Frasers will also offer 71 dual-key units - a studio attached to either a two- or three-bedder - to cater to extended families who want to live close together.
Frasers chief operating officer Cheang Kok Kheong said the keen interest was driven by a sandwich class aspiring to the lifestyle element that an EC offers: 'The sandwich class is very interesting because with their income at $10,000, they must be rising up the corporate ladder somehow, or having their own businesses, so their expectations are high but yet they want something to start with first.'
Although up to 30 per cent might be interested in DBSS flats, the other 70 per cent like condo facilities, and this would sustain demand, Mr Cheang said.
ERA Asia-Pacific associate director Eugene Lim said that demand was expected to be strong since it was the logical and affordable choice for the sandwich class.
'DBSS flats might be priced lower but they lack facilities; an EC is more lifestyle-driven and many home buyers aspire to live in condos,' he added.
But one industry player said that the pricing of Esparina was on the high side. ECs are usually about 20 per cent below private condos to make up for their sale restrictions, he said. 'With NV Residences in Pasir Ris selling at $830 psf, the pricing here might not be that attractive.'
One potential buyer, who wanted to be known only as Mrs Ong, said she and her husband of two years will apply for Esparina's ballot as they had been unable to get a flat through the BTO scheme. They are now above the $8,000 income ceiling.
'Compared with an HDB resale flat, we feel an EC provides more value for money,' she said, adding the facilities would be good as they have a child.
esthert@sph.com.sg
More than 300 attended an Esparina Residences viewing yesterday, even though new rules allow the 'sandwich' class to also buy design, build and sell scheme flats. -- ST PHOTO: CHEW SENG KIM
New Buangkok EC attracts keen interest
300 at showflat viewing of first new executive condo project in 5 years
By Esther Teo
HOME buyers showed keen interest at a viewing of Esparina Residences near Buangkok MRT Station yesterday - the first new executive condominium (EC) up for sale in five years.
Despite light rain, more than 300 potential buyers visited the showflat yesterday, with 220 registering interest in a ballot next Friday to book a preferred unit.
They came in droves even though new rules allow the so-called sandwich class - households earning between $8,000 to $10,000 - to also buy the cheaper design, build and sell scheme (DBSS) flats.
The EC is among the first new housing projects to hit the market since new rules unveiled in August to curb speculation.
Experts say the keen interest was due to the limited supply of ECs, pent-up demand from first-time home buyers, and affordable price tags for smaller units.
These flats boast condo-like facilities and were once the only way the sandwich class - ineligible for build-to-order (BTO) flats - could buy new HDB flats.
But they can now buy DBSS flats after the Government raised the income cap for these homes to $10,000. The last DBSS project launched was Parc Lumiere in Simei in April last year.
Esparina developer Frasers Centrepoint Homes said many of those visiting yesterday were young couples, young families and professionals under 40.
The 99-year leasehold project with 573 units will be the first EC launched since Far East's La Casa in Woodlands in 2005. Units range from 829 sq ft for a two-bedroom flat to 2,583 sq ft for a four-bedroom penthouse, with prices ranging from $730 to $750 per sq ft on average, Frasers said.
Two-bedders will be sold for between $590,000 and $723,000, three-bedders for between $697,000 and $981,000, and four-bedders at $1.005 million to $1.181 million. Penthouse prices will range from $864,000 to $1.3 million.
Frasers will also offer 71 dual-key units - a studio attached to either a two- or three-bedder - to cater to extended families who want to live close together.
Frasers chief operating officer Cheang Kok Kheong said the keen interest was driven by a sandwich class aspiring to the lifestyle element that an EC offers: 'The sandwich class is very interesting because with their income at $10,000, they must be rising up the corporate ladder somehow, or having their own businesses, so their expectations are high but yet they want something to start with first.'
Although up to 30 per cent might be interested in DBSS flats, the other 70 per cent like condo facilities, and this would sustain demand, Mr Cheang said.
ERA Asia-Pacific associate director Eugene Lim said that demand was expected to be strong since it was the logical and affordable choice for the sandwich class.
'DBSS flats might be priced lower but they lack facilities; an EC is more lifestyle-driven and many home buyers aspire to live in condos,' he added.
But one industry player said that the pricing of Esparina was on the high side. ECs are usually about 20 per cent below private condos to make up for their sale restrictions, he said. 'With NV Residences in Pasir Ris selling at $830 psf, the pricing here might not be that attractive.'
One potential buyer, who wanted to be known only as Mrs Ong, said she and her husband of two years will apply for Esparina's ballot as they had been unable to get a flat through the BTO scheme. They are now above the $8,000 income ceiling.
'Compared with an HDB resale flat, we feel an EC provides more value for money,' she said, adding the facilities would be good as they have a child.
esthert@sph.com.sg
More than 300 attended an Esparina Residences viewing yesterday, even though new rules allow the 'sandwich' class to also buy design, build and sell scheme flats. -- ST PHOTO: CHEW SENG KIM
ST : Shatec in $4m rental dispute
Oct 1, 2010
Shatec in $4m rental dispute
Company sues tourism training school over lease on building space
By Selina Lum
HOSPITALITY and tourism training school Shatec is being sued for nearly $4million in a rental dispute.
The company that has filed the lawsuit, multimedia products manufacturer and distributor General Magnetics, claims it had leased out space in its building in Toa Payoh to Shatec, but the school repeatedly pushed back the handover date.
It also refused to take over the premises or to formalise the tenancy agreement, said General Magnetics. The company, in its suit filed last week in the High Court, is claiming $3.98 million in rent from August last year to 2012.
In the second half of 2008, it appointed Savills to handle the leasing out of the first three storeys of its five-storey GenMag building in Lorong 4 Toa Payoh.
It said in court filings that around October, Shatec - set up in 1983 as the training arm of the Singapore Hotel Association - indicated through Savills that it was keen to rent the space and use it as a food catering and ancillary training centre.
General Magnetic, represented by Mr Adrian Wong, claims there was an agreement to lease out the premises to Shatec. A letter dated Nov 3, 2008 offered Shatec the five floors, totalling 104,185 sq ft, at $1.30 per sq ft.
The rent for the first three floors, about $86,000, was payable in advance, while that for the fourth and fifth floors was to be paid on handover.
General Magnetics claims that the terms and conditions were 'unconditionally and irrevocably' accepted by Shatec. To formalise the lease, draft agreements were circulated.
In March last year, General Magnetics told Shatec that it was ready to hand over the first three floors, but Shatec refused to take delivery until approvals from the relevant authorities were obtained.
It was later agreed that the first three floors would be handed over on the Housing Board's approval, and the fifth floor, two months after that.
On April 23, General Magnetics received in-principle approval from HDB to change the use of the premises to a food catering and training centre, and told Shatec it would hand over the building by May 1.
Shatec asked for this to be delayed until May 30. General Magnetics delayed the handover to May 15, and a draft agreement with this new date was sent to Shatec, but it went unsigned.
Later, the handover was again pushed to June 29, and still Shatec asked for another extension.
On July 13, when the school was asked again to finalise the tenancy agreement, it said the document had to be cleared by its board, which would take a few weeks.
After the board meeting, the two sides could not agree on the issues of the capping of rent and the availability of the fourth floor.
General Magnetics then pressed Shatec to sign the agreement by Aug 25. The school brought up three matters to be resolved, and the deadline was pushed to Sept 1.
That day, Shatec asked for two more rent-free months to fit out the building, but General Magnetics rejected this.
At a meeting on Sept 9, Shatec asked General Magnetics to waive a month's rent. The company said it would waive half a month's rent if Shatec returned a signed copy of the agreement.
The school asked for more time. In its suit, General Magnetics said it has not received a signed agreement from Shatec.
Contacted by The Straits Times, Shatec said it will be 'vigorously defending the claim'.
selinal@sph.com.sg
--------------------------------------------------------------------------------
Key dates
· October 2008: Shatec indicated it was keen to rent General Magnetics' five-storey building in Toa Payoh.
· March 2009: General Magnetics told Shatec it was ready to hand over the first three floors, but Shatec refused to take delivery.
· April 2009: General Magnetics received in-principle approval from the HDB to change the use of the premises to a food catering and training centre.
· July 2009: When Shatec was again asked to finalise the tenancy agreement, it said the agreement had to be approved by its board.
· Sept 1, 2009: Shatec asked for two more months rent-free so it could fit out the building, but General Magnetics rejected this.
· Sept 9, 2009: At a meeting Shatec asked General Magnetics to waive a month's rent, and again asked for more time.
Shatec in $4m rental dispute
Company sues tourism training school over lease on building space
By Selina Lum
HOSPITALITY and tourism training school Shatec is being sued for nearly $4million in a rental dispute.
The company that has filed the lawsuit, multimedia products manufacturer and distributor General Magnetics, claims it had leased out space in its building in Toa Payoh to Shatec, but the school repeatedly pushed back the handover date.
It also refused to take over the premises or to formalise the tenancy agreement, said General Magnetics. The company, in its suit filed last week in the High Court, is claiming $3.98 million in rent from August last year to 2012.
In the second half of 2008, it appointed Savills to handle the leasing out of the first three storeys of its five-storey GenMag building in Lorong 4 Toa Payoh.
It said in court filings that around October, Shatec - set up in 1983 as the training arm of the Singapore Hotel Association - indicated through Savills that it was keen to rent the space and use it as a food catering and ancillary training centre.
General Magnetic, represented by Mr Adrian Wong, claims there was an agreement to lease out the premises to Shatec. A letter dated Nov 3, 2008 offered Shatec the five floors, totalling 104,185 sq ft, at $1.30 per sq ft.
The rent for the first three floors, about $86,000, was payable in advance, while that for the fourth and fifth floors was to be paid on handover.
General Magnetics claims that the terms and conditions were 'unconditionally and irrevocably' accepted by Shatec. To formalise the lease, draft agreements were circulated.
In March last year, General Magnetics told Shatec that it was ready to hand over the first three floors, but Shatec refused to take delivery until approvals from the relevant authorities were obtained.
It was later agreed that the first three floors would be handed over on the Housing Board's approval, and the fifth floor, two months after that.
On April 23, General Magnetics received in-principle approval from HDB to change the use of the premises to a food catering and training centre, and told Shatec it would hand over the building by May 1.
Shatec asked for this to be delayed until May 30. General Magnetics delayed the handover to May 15, and a draft agreement with this new date was sent to Shatec, but it went unsigned.
Later, the handover was again pushed to June 29, and still Shatec asked for another extension.
On July 13, when the school was asked again to finalise the tenancy agreement, it said the document had to be cleared by its board, which would take a few weeks.
After the board meeting, the two sides could not agree on the issues of the capping of rent and the availability of the fourth floor.
General Magnetics then pressed Shatec to sign the agreement by Aug 25. The school brought up three matters to be resolved, and the deadline was pushed to Sept 1.
That day, Shatec asked for two more rent-free months to fit out the building, but General Magnetics rejected this.
At a meeting on Sept 9, Shatec asked General Magnetics to waive a month's rent. The company said it would waive half a month's rent if Shatec returned a signed copy of the agreement.
The school asked for more time. In its suit, General Magnetics said it has not received a signed agreement from Shatec.
Contacted by The Straits Times, Shatec said it will be 'vigorously defending the claim'.
selinal@sph.com.sg
--------------------------------------------------------------------------------
Key dates
· October 2008: Shatec indicated it was keen to rent General Magnetics' five-storey building in Toa Payoh.
· March 2009: General Magnetics told Shatec it was ready to hand over the first three floors, but Shatec refused to take delivery.
· April 2009: General Magnetics received in-principle approval from the HDB to change the use of the premises to a food catering and training centre.
· July 2009: When Shatec was again asked to finalise the tenancy agreement, it said the agreement had to be approved by its board.
· Sept 1, 2009: Shatec asked for two more months rent-free so it could fit out the building, but General Magnetics rejected this.
· Sept 9, 2009: At a meeting Shatec asked General Magnetics to waive a month's rent, and again asked for more time.
BT : China's property stocks jump despite new curbs
Business Times - 01 Oct 2010
China's property stocks jump despite new curbs
Rally likely to be short-lived because of sector's cloudy outlook: traders
(SHANGHAI) China's property shares unexpectedly soared yesterday, a day after the government announced fresh measures to subdue bubbly real estate prices.
Shanghai's property sub-index closed up 3.9 per cent, with one major developer, Poly Real Estate Group Co Ltd, climbing 8.9 per cent.
Traders said investors were jumping back into the market after a slump in property shares since mid-April, in response to a clampdown on real estate speculation.
But they cautioned that the rally was likely to be short-lived because of a cloudy outlook for the sector.
Surging property prices that are unbalancing the economy have become a serious headache for the government and pose a potential threat to social stability. Prices are beyond the reach of large segments of the population.
Following up on its April campaign, Beijing on Wednesday instructed banks to demand a downpayment of at least 30 per cent from all mortgage applicants and to restrict loans to buyers of third homes.
'The market was expecting negative news on new property controls, so now that the information is out, property companies like Vanke which have been in a continuous slump are able to gain,' said Ren Chengde, an analyst at Galaxy Securities in Shanghai.
Shanghai's stock market, one of the world's worst-performing bourses, gained 11 per cent in the third quarter but is still down nearly 21 per cent so far this year. China's restrictions on bank lending and the property market have taken a toll despite robust economic growth.
Industry experts said the government had responded to a rebound in property transactions and prices, worrying that they could set the stage for a new flurry of speculative buying.
'The new steps were taken at the perfect time, when potential buyers are hesitating whether to enter the market,' said Liu Yuan, a senior research manager at the Centaline Group, a leading domestic property service and research institution.
Property companies helped the Shanghai market close up 1.7 per cent at a three-week high.
The country's largest listed developer, China Vanke Co Ltd jumped 7.6 per cent, while Gemdale Corp rose 5.3 per cent.
China's property inflation slowed to 9.3 per cent in the year to August, down from a peak of 12.8 per cent in April. But real estate investment has remained buoyant, with growth picking up to 34.1 per cent in the year to August from 33 per cent in July.
'These gains may just be a short-term burst. I expect property shares could gain a maximum of 10-15 per cent,' said Zheng Weigang, a senior trader at Shanghai Securities. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
China's property stocks jump despite new curbs
Rally likely to be short-lived because of sector's cloudy outlook: traders
(SHANGHAI) China's property shares unexpectedly soared yesterday, a day after the government announced fresh measures to subdue bubbly real estate prices.
Shanghai's property sub-index closed up 3.9 per cent, with one major developer, Poly Real Estate Group Co Ltd, climbing 8.9 per cent.
Traders said investors were jumping back into the market after a slump in property shares since mid-April, in response to a clampdown on real estate speculation.
But they cautioned that the rally was likely to be short-lived because of a cloudy outlook for the sector.
Surging property prices that are unbalancing the economy have become a serious headache for the government and pose a potential threat to social stability. Prices are beyond the reach of large segments of the population.
Following up on its April campaign, Beijing on Wednesday instructed banks to demand a downpayment of at least 30 per cent from all mortgage applicants and to restrict loans to buyers of third homes.
'The market was expecting negative news on new property controls, so now that the information is out, property companies like Vanke which have been in a continuous slump are able to gain,' said Ren Chengde, an analyst at Galaxy Securities in Shanghai.
Shanghai's stock market, one of the world's worst-performing bourses, gained 11 per cent in the third quarter but is still down nearly 21 per cent so far this year. China's restrictions on bank lending and the property market have taken a toll despite robust economic growth.
Industry experts said the government had responded to a rebound in property transactions and prices, worrying that they could set the stage for a new flurry of speculative buying.
'The new steps were taken at the perfect time, when potential buyers are hesitating whether to enter the market,' said Liu Yuan, a senior research manager at the Centaline Group, a leading domestic property service and research institution.
Property companies helped the Shanghai market close up 1.7 per cent at a three-week high.
The country's largest listed developer, China Vanke Co Ltd jumped 7.6 per cent, while Gemdale Corp rose 5.3 per cent.
China's property inflation slowed to 9.3 per cent in the year to August, down from a peak of 12.8 per cent in April. But real estate investment has remained buoyant, with growth picking up to 34.1 per cent in the year to August from 33 per cent in July.
'These gains may just be a short-term burst. I expect property shares could gain a maximum of 10-15 per cent,' said Zheng Weigang, a senior trader at Shanghai Securities. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : CDL sells The Corporate Office for $215m
Business Times - 01 Oct 2010
CDL sells The Corporate Office for $215m
Price around $1,956 psf of net lettable area; buyer led by Oxley Holdings
By KALPANA RASHIWALA
(SINGAPORE) City Developments Ltd (CDL) is said to be selling a 21-storey freehold office block at the corner of Robinson Road and McCallum Street for $215 million.
The buyer of The Corporate Office is understood to be a consortium led by Oxley Holdings group. The price works out to $1,956 per square foot based on the building's net lettable area of 109,920 sq ft.
The Corporate Office, which is about 25 years old, has 112 carpark lots, something of a rarity in office towers in that part of the CBD. About 15 per cent of the building's net lettable area is currently vacant and the lease for a further 7-8 per cent of space is said to expire early next year. But that's not necessarily a bad thing for the buyers.
Sources suggest that Oxley - which is headed by Ching Chiat Kwong - is looking to move its headquarters into The Corporate Office. The group currently operates out of Singapore Land Tower in Raffles Place and is said to be gunning for an initial public offer by year end. Oxley has been in the news lately for developing projects with shoebox apartments, including Suites@Guillemard and VivaVista in Pasir Panjang.
On the group's purchase of The Corporate Office along Robinson Road, market watchers suggest that in the medium term, Oxley and its partners may consider redeveloping the property, which has a land area of 16,032 sq ft, into a residential project with commercial use on the first storey or into a commercial-residential development. Under Master Plan 2008, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to land area). The site can be developed up to 35 storeys high. The Corporate Office's existing gross floor area is said to reflect a plot ratio of about 9.27, which points to some unutilised plot ratio.
DTZ is thought to have brokered the sale of The Corporate Office through a private treaty deal. The property consultancy also brokered the sale of Chow House next door a couple of months ago for $101 million to a group led by WyWy Group' founder, YY Wong.
The price for Chow House, a six-storey freehold office block which has redevelopment potential, is said to work out to about $1,300 per square foot per plot ratio assuming it is redeveloped into apartments. The site has a land area of 9,084 sq ft and is zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008. However, outline planning permission has been granted to redevelop the Chow House site into residential use with commercial use on the first storey.
Chow House sits between The Corporate Office and another CDL-owned property - The Corporate Building.
The property giant's sale of The Corporate Office is its latest divestment of non-core assets. In recent years, CDL has also sold North Bridge Commercial Complex (near Bugis Junction), The Office Chamber along Jalan Besar, Chinatown Point mall, and Commerce Point near Raffles Place MRT Station.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
CDL sells The Corporate Office for $215m
Price around $1,956 psf of net lettable area; buyer led by Oxley Holdings
By KALPANA RASHIWALA
(SINGAPORE) City Developments Ltd (CDL) is said to be selling a 21-storey freehold office block at the corner of Robinson Road and McCallum Street for $215 million.
The buyer of The Corporate Office is understood to be a consortium led by Oxley Holdings group. The price works out to $1,956 per square foot based on the building's net lettable area of 109,920 sq ft.
The Corporate Office, which is about 25 years old, has 112 carpark lots, something of a rarity in office towers in that part of the CBD. About 15 per cent of the building's net lettable area is currently vacant and the lease for a further 7-8 per cent of space is said to expire early next year. But that's not necessarily a bad thing for the buyers.
Sources suggest that Oxley - which is headed by Ching Chiat Kwong - is looking to move its headquarters into The Corporate Office. The group currently operates out of Singapore Land Tower in Raffles Place and is said to be gunning for an initial public offer by year end. Oxley has been in the news lately for developing projects with shoebox apartments, including Suites@Guillemard and VivaVista in Pasir Panjang.
On the group's purchase of The Corporate Office along Robinson Road, market watchers suggest that in the medium term, Oxley and its partners may consider redeveloping the property, which has a land area of 16,032 sq ft, into a residential project with commercial use on the first storey or into a commercial-residential development. Under Master Plan 2008, the site is zoned for commercial use with an 11.2+ plot ratio (ratio of maximum potential gross floor area to land area). The site can be developed up to 35 storeys high. The Corporate Office's existing gross floor area is said to reflect a plot ratio of about 9.27, which points to some unutilised plot ratio.
DTZ is thought to have brokered the sale of The Corporate Office through a private treaty deal. The property consultancy also brokered the sale of Chow House next door a couple of months ago for $101 million to a group led by WyWy Group' founder, YY Wong.
The price for Chow House, a six-storey freehold office block which has redevelopment potential, is said to work out to about $1,300 per square foot per plot ratio assuming it is redeveloped into apartments. The site has a land area of 9,084 sq ft and is zoned for commercial use with an 11.2+ plot ratio under Master Plan 2008. However, outline planning permission has been granted to redevelop the Chow House site into residential use with commercial use on the first storey.
Chow House sits between The Corporate Office and another CDL-owned property - The Corporate Building.
The property giant's sale of The Corporate Office is its latest divestment of non-core assets. In recent years, CDL has also sold North Bridge Commercial Complex (near Bugis Junction), The Office Chamber along Jalan Besar, Chinatown Point mall, and Commerce Point near Raffles Place MRT Station.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Frasers C'point launches Esparina Residences EC
Business Times - 01 Oct 2010
Frasers C'point launches Esparina Residences EC
FRASERS Centrepoint's new 573-unit executive condominium (EC), Esparina Residences, drew more than 300 visitors who took up 230 ballot numbers at the project's launch yesterday.
Apartment sizes at the Sengkang project range from 829 square feet for a two-bedroom flat to 2,583 sq ft for a four-bedroom penthouse. Prices range from $590,000 to $723,000 for a two-bedder; $697,000 to $981,000 for a three-bedder; and $1 million to $1.18 million for a four-bedroom unit. Penthouses are priced at between $864,000 and $1.3 million. Applications are open until Oct 5. Successful applicants will be issued a ballot number. On Oct 8, they will get priority to enter the showflat for the balloting and booking of units. Those without a ballot number will be admitted to the showflat only after all ballot numbers have been processed.
Frasers Centrepoint, which is the property arm of Fraser and Neave, said 71 units - or 12 per cent of all apartments - at Esparina Residences will be dual-key units. This means they can be divided into two separate apartments with different entrances. The design was conceptualised and introduced at Frasers Centrepoint's Caspian and 8@Woodleigh condominiums. More such units are available at Esparina Residences due to their past popularity, said Cheang Kok Kheong, chief executive of Frasers Centrepoint Homes. 'These dual-key units were snapped up very quickly in our previous launches,' he said.
There will also be seven thematic spas in the development. ECs are a hybrid of public and private housing. New ECs are sold with initial eligibility, ownership and resale restrictions similar to public housing, but these restrictions cease to apply after 10 years.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Frasers C'point launches Esparina Residences EC
FRASERS Centrepoint's new 573-unit executive condominium (EC), Esparina Residences, drew more than 300 visitors who took up 230 ballot numbers at the project's launch yesterday.
Apartment sizes at the Sengkang project range from 829 square feet for a two-bedroom flat to 2,583 sq ft for a four-bedroom penthouse. Prices range from $590,000 to $723,000 for a two-bedder; $697,000 to $981,000 for a three-bedder; and $1 million to $1.18 million for a four-bedroom unit. Penthouses are priced at between $864,000 and $1.3 million. Applications are open until Oct 5. Successful applicants will be issued a ballot number. On Oct 8, they will get priority to enter the showflat for the balloting and booking of units. Those without a ballot number will be admitted to the showflat only after all ballot numbers have been processed.
Frasers Centrepoint, which is the property arm of Fraser and Neave, said 71 units - or 12 per cent of all apartments - at Esparina Residences will be dual-key units. This means they can be divided into two separate apartments with different entrances. The design was conceptualised and introduced at Frasers Centrepoint's Caspian and 8@Woodleigh condominiums. More such units are available at Esparina Residences due to their past popularity, said Cheang Kok Kheong, chief executive of Frasers Centrepoint Homes. 'These dual-key units were snapped up very quickly in our previous launches,' he said.
There will also be seven thematic spas in the development. ECs are a hybrid of public and private housing. New ECs are sold with initial eligibility, ownership and resale restrictions similar to public housing, but these restrictions cease to apply after 10 years.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Top bid for Pasir Ris site from Frasers Centrepoint, Far East
Business Times - 01 Oct 2010
Top bid for Pasir Ris site from Frasers Centrepoint, Far East
FRASERS Centrepoint and Far East Organization have jointly put in the top bid of $151.4 million, or $335 per square foot per plot ratio (psf ppr) for a residential site at Pasir Ris.
Just four bids were received for the 99-year leasehold site at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 at close of the state tender yesterday.
Frasers Centrepoint and Far East plan to build a project with 400-450 units through a 50:50 joint venture if the site is awarded to them. The project, which will be completed in about five years, will target HDB upgraders in the east and the vicinity.
The offer by the two developers was 8 per cent above the second-highest offer of $140.7 million or $311 psf ppr from Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
The two other bids came from Allgreen Properties ($131.9 million or $292 psf ppr) and Meadows Investment ($106 million or $234 psf ppr).
The tender result mirrors that for an executive condominium site at Punggol which closed on Sept 23 and drew just four bids.
Since the government introduced new measures to cool the property market on Aug 30, developers have been increasingly cautious with land tender bids, said Nicholas Mak, executive director of SLP International Property Consultants.
He also noted that in the current second half-year, no Reserve List site has been triggered for tender as the government is pushing out a large supply of land under the Confirmed List.
The top bid of $335 psf ppr for the Pasir Ris site translates to a breakeven cost of $650-$680 psf, said Li Hiaw Ho, executive director of CBRE Research. He expects that units in the new residential project could sell for about $800 psf.
CBRE's data shows that private homes nearby have been selling for around that price.
Around 350 units at the nearby NV Residences have reportedly been sold at an average price of $835 psf in the past month. And units at Livia, adjacent to NV Residences, went for between $720 psf and $840 psf between July and September. Over at Elias Road, units at Oasis@Elias sold at between $650 psf and $740 psf in the same period.
Separately, the Urban Redevelopment Authority yesterday released detailed sale conditions for an industrial site at Woodlands Avenue 12.
Developers interested in purchasing the site can now apply to URA for it to be put up for tender.
The 60-year leasehold parcel - the first of four new sites to be released for sale under the Reserve List of the government's H2 2010 industrial land sales programme - covers about 2.1 ha and has a gross plot ratio of 2.5.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Top bid for Pasir Ris site from Frasers Centrepoint, Far East
FRASERS Centrepoint and Far East Organization have jointly put in the top bid of $151.4 million, or $335 per square foot per plot ratio (psf ppr) for a residential site at Pasir Ris.
Just four bids were received for the 99-year leasehold site at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 at close of the state tender yesterday.
Frasers Centrepoint and Far East plan to build a project with 400-450 units through a 50:50 joint venture if the site is awarded to them. The project, which will be completed in about five years, will target HDB upgraders in the east and the vicinity.
The offer by the two developers was 8 per cent above the second-highest offer of $140.7 million or $311 psf ppr from Hoi Hup Realty, Sunway Developments and SC Wong Holdings.
The two other bids came from Allgreen Properties ($131.9 million or $292 psf ppr) and Meadows Investment ($106 million or $234 psf ppr).
The tender result mirrors that for an executive condominium site at Punggol which closed on Sept 23 and drew just four bids.
Since the government introduced new measures to cool the property market on Aug 30, developers have been increasingly cautious with land tender bids, said Nicholas Mak, executive director of SLP International Property Consultants.
He also noted that in the current second half-year, no Reserve List site has been triggered for tender as the government is pushing out a large supply of land under the Confirmed List.
The top bid of $335 psf ppr for the Pasir Ris site translates to a breakeven cost of $650-$680 psf, said Li Hiaw Ho, executive director of CBRE Research. He expects that units in the new residential project could sell for about $800 psf.
CBRE's data shows that private homes nearby have been selling for around that price.
Around 350 units at the nearby NV Residences have reportedly been sold at an average price of $835 psf in the past month. And units at Livia, adjacent to NV Residences, went for between $720 psf and $840 psf between July and September. Over at Elias Road, units at Oasis@Elias sold at between $650 psf and $740 psf in the same period.
Separately, the Urban Redevelopment Authority yesterday released detailed sale conditions for an industrial site at Woodlands Avenue 12.
Developers interested in purchasing the site can now apply to URA for it to be put up for tender.
The 60-year leasehold parcel - the first of four new sites to be released for sale under the Reserve List of the government's H2 2010 industrial land sales programme - covers about 2.1 ha and has a gross plot ratio of 2.5.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Office investment deals surge in Q3
Business Times - 01 Oct 2010
PROPERTY
Office investment deals surge in Q3
Retail property deals jump from $6.8m in Q2 to $250m in Q3
By UMA SHANKARI
THE property investment market gained further momentum in the third quarter of this year, as transactions in the rebounding office sector crossed $1 billion - a level not breached since Q2 2008.
And the tally does not include deals for Chow House, Samsung Hub and Chevron House, which are pending legal completion.
Figures compiled by DTZ Research show office investment deals more than quadrupled quarter on quarter in Q3 to $1.7 billion, driven by the sale of DBS Towers 1 & 2. The $870.5 million that Overseas Union Enterprises paid for the two buildings accounted for half of all office sales.
Deals involving retail properties also jumped significantly, from just $6.8 million in Q2 to $250 million in Q3, partly due to the sale of 287 strata-titled units in Chinatown Point to a consortium led by Perennial Real Estate Group.
'The upturn in the commercial property market is creating opportunities for buyers and sellers,' said Shaun Poh, senior director for investment advisory services and auction at DTZ. 'More sales are envisaged in the next few months as a few deals are being finalised.'
Growing demand is likely to be hampered by a lack of supply, he said. Total investment sales in Q3 rose to $6.1 billion, up 23 per cent from $5 billion in Q2 2010.
Residential property investments hit $1.9 billion in Q3, accounting for the largest share - about 30 per cent - of all investment purchases.
Unlike in Q2 2010, when investments were mainly geared towards government land sales of residential sites, the private sector had a 59 per cent share of all residential transactions in Q3.
More than half of the private residential investment amount came from the collective sale market. Bulk purchases of luxury condominium units by institutions and funds accounted for the rest.
Collective sale deals totalled $634.8 million in Q3 2010, up from $329.9 million in Q2.
In contrast, government land sales of residential sites were less buoyant. After 15 sites were sold in the first half of the year, and with plenty of parcels yet to be released, government sales of residential sites fell 59 per cent quarter on quarter to $760.9 million in Q3.
The industrial segment gained ground during the quarter, with transactions rising 65 per cent quarter on quarter to $758.3 million.
Investment figures compiled by DTZ Research comprise transactions of more than $5 million. They exclude about $1.4 billion of transactions involving single residential units, lots that cannot be redeveloped or subdivided and deals deemed to be interested person or party transactions.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
PROPERTY
Office investment deals surge in Q3
Retail property deals jump from $6.8m in Q2 to $250m in Q3
By UMA SHANKARI
THE property investment market gained further momentum in the third quarter of this year, as transactions in the rebounding office sector crossed $1 billion - a level not breached since Q2 2008.
And the tally does not include deals for Chow House, Samsung Hub and Chevron House, which are pending legal completion.
Figures compiled by DTZ Research show office investment deals more than quadrupled quarter on quarter in Q3 to $1.7 billion, driven by the sale of DBS Towers 1 & 2. The $870.5 million that Overseas Union Enterprises paid for the two buildings accounted for half of all office sales.
Deals involving retail properties also jumped significantly, from just $6.8 million in Q2 to $250 million in Q3, partly due to the sale of 287 strata-titled units in Chinatown Point to a consortium led by Perennial Real Estate Group.
'The upturn in the commercial property market is creating opportunities for buyers and sellers,' said Shaun Poh, senior director for investment advisory services and auction at DTZ. 'More sales are envisaged in the next few months as a few deals are being finalised.'
Growing demand is likely to be hampered by a lack of supply, he said. Total investment sales in Q3 rose to $6.1 billion, up 23 per cent from $5 billion in Q2 2010.
Residential property investments hit $1.9 billion in Q3, accounting for the largest share - about 30 per cent - of all investment purchases.
Unlike in Q2 2010, when investments were mainly geared towards government land sales of residential sites, the private sector had a 59 per cent share of all residential transactions in Q3.
More than half of the private residential investment amount came from the collective sale market. Bulk purchases of luxury condominium units by institutions and funds accounted for the rest.
Collective sale deals totalled $634.8 million in Q3 2010, up from $329.9 million in Q2.
In contrast, government land sales of residential sites were less buoyant. After 15 sites were sold in the first half of the year, and with plenty of parcels yet to be released, government sales of residential sites fell 59 per cent quarter on quarter to $760.9 million in Q3.
The industrial segment gained ground during the quarter, with transactions rising 65 per cent quarter on quarter to $758.3 million.
Investment figures compiled by DTZ Research comprise transactions of more than $5 million. They exclude about $1.4 billion of transactions involving single residential units, lots that cannot be redeveloped or subdivided and deals deemed to be interested person or party transactions.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Thursday, September 30, 2010
ST : Fresh steps to cool China's property market
Sep 30, 2010
Fresh steps to cool China's property market
BEIJING: China yesterday announced it had taken further steps to cool its red-hot property market, ordering banks not to provide loans for third or more home purchases.
The new measures are aimed at preventing house prices from rising too fast, the State Council, or Cabinet, said in a statement, amid fears of a speculative bubble that analysts say could derail the world's second largest economy.
The State Council said down-payments on all home purchases would now have to be at least 30 per cent. It also limited the number of homes that people can buy in cities where prices are too high, have risen too quickly or where supply is tight.
In April, Beijing announced it would increase deposits on first homes of over 90 sq m to 30 per cent from 20 per cent. Prior to April, all first-time buyers had to make a deposit of 20 per cent.
The new measures urged banks to strengthen their oversight of consumer loans, banning them from being used to buy homes.
The State Council also called for a trial property tax reform now being carried out in some cities to be sped up and gradually expanded to the whole of China. This is widely expected to entail an expansion of the tax on commercial real estate to cover residential houses.
'The new measures are not dramatic, but they convey a clear policy message: Beijing is serious about controlling property prices,' Mr Qu Hongbin, a Hong Kong-based economist with HSBC Holdings, said in e-mailed comments yesterday. 'This should help dampen the expectations' that housing prices will rise quickly, he said.
The new measures are the latest in a series issued this year to try and prevent the property market from overheating.
Official data has suggested that these efforts have started to pay off, with growth in China's property prices slowing for the fourth straight month in August.
But the government has eschewed draconian measures, anxious not to topple a vital pillar of the economy. Real estate accounts for a quarter of investment and 10 per cent of total output.
AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS
Fresh steps to cool China's property market
BEIJING: China yesterday announced it had taken further steps to cool its red-hot property market, ordering banks not to provide loans for third or more home purchases.
The new measures are aimed at preventing house prices from rising too fast, the State Council, or Cabinet, said in a statement, amid fears of a speculative bubble that analysts say could derail the world's second largest economy.
The State Council said down-payments on all home purchases would now have to be at least 30 per cent. It also limited the number of homes that people can buy in cities where prices are too high, have risen too quickly or where supply is tight.
In April, Beijing announced it would increase deposits on first homes of over 90 sq m to 30 per cent from 20 per cent. Prior to April, all first-time buyers had to make a deposit of 20 per cent.
The new measures urged banks to strengthen their oversight of consumer loans, banning them from being used to buy homes.
The State Council also called for a trial property tax reform now being carried out in some cities to be sped up and gradually expanded to the whole of China. This is widely expected to entail an expansion of the tax on commercial real estate to cover residential houses.
'The new measures are not dramatic, but they convey a clear policy message: Beijing is serious about controlling property prices,' Mr Qu Hongbin, a Hong Kong-based economist with HSBC Holdings, said in e-mailed comments yesterday. 'This should help dampen the expectations' that housing prices will rise quickly, he said.
The new measures are the latest in a series issued this year to try and prevent the property market from overheating.
Official data has suggested that these efforts have started to pay off, with growth in China's property prices slowing for the fourth straight month in August.
But the government has eschewed draconian measures, anxious not to topple a vital pillar of the economy. Real estate accounts for a quarter of investment and 10 per cent of total output.
AGENCE FRANCE-PRESSE, BLOOMBERG, REUTERS
ST : Site of 'showbiz central' up for sale
Sep 30, 2010
Site of 'showbiz central' up for sale
THE site of the old Singapura Theatre that served as showbiz central for thousands of Malay and Indian movie fans is up for sale at $45 million.
In its heyday in the 1970s, the cinema in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits.
It closed in 1985, reportedly because of competition from the video industry. It was turned into a furniture exhibition centre and later a temporary shopping complex.
Owner Shaw Brothers renovated the three-storey building in 1992, and the cinema screened Tamil movies for a while.
The building has been only partly used for the past couple of years. A section of the first floor is leased to a foodcourt while the rest is taken up by an entertainment centre that also occupies the second floor. The third floor is vacant.
Shaw Brothers wants to sell the freehold site at No. 55 Changi Road in order to capitalise on the rejuvenation of the Paya Lebar area, said marketing agent Knight Frank.
The land is next to the upcoming Paya Lebar Central, a commercial hub to be developed as part of the Urban Redevelopment Authority's decentralisation strategy to provide alternative zones for businesses.
It is also near the Paya Lebar station on the Circle Line and the Eunos station on the East West Line.
The asking price of $45 million translates to a land price of $769 per sq ft (psf) on the potential gross floor area of about 58,490 sq ft.
No development charge is payable, Knight Frank said.
The regular-shaped plot sits on a land area of about 19,497 sq ft. Under the 2008 Master Plan, it is zoned for commercial use at a plot ratio of 3.0.
'The site is not fully built-up currently. It is likely to be torn down and can be redeveloped into a taller building subject to approval,' said Mr Ian Loh, Knight Frank's senior manager, investment.
He said the site would be suitable for a superstore like Courts or a private school.
The tender closes on Nov 11.
JOYCE TEO
In its heyday in the 1970s, the Singapura Theatre in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits. -- PHOTO: KNIGHT FRANK
Site of 'showbiz central' up for sale
THE site of the old Singapura Theatre that served as showbiz central for thousands of Malay and Indian movie fans is up for sale at $45 million.
In its heyday in the 1970s, the cinema in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits.
It closed in 1985, reportedly because of competition from the video industry. It was turned into a furniture exhibition centre and later a temporary shopping complex.
Owner Shaw Brothers renovated the three-storey building in 1992, and the cinema screened Tamil movies for a while.
The building has been only partly used for the past couple of years. A section of the first floor is leased to a foodcourt while the rest is taken up by an entertainment centre that also occupies the second floor. The third floor is vacant.
Shaw Brothers wants to sell the freehold site at No. 55 Changi Road in order to capitalise on the rejuvenation of the Paya Lebar area, said marketing agent Knight Frank.
The land is next to the upcoming Paya Lebar Central, a commercial hub to be developed as part of the Urban Redevelopment Authority's decentralisation strategy to provide alternative zones for businesses.
It is also near the Paya Lebar station on the Circle Line and the Eunos station on the East West Line.
The asking price of $45 million translates to a land price of $769 per sq ft (psf) on the potential gross floor area of about 58,490 sq ft.
No development charge is payable, Knight Frank said.
The regular-shaped plot sits on a land area of about 19,497 sq ft. Under the 2008 Master Plan, it is zoned for commercial use at a plot ratio of 3.0.
'The site is not fully built-up currently. It is likely to be torn down and can be redeveloped into a taller building subject to approval,' said Mr Ian Loh, Knight Frank's senior manager, investment.
He said the site would be suitable for a superstore like Courts or a private school.
The tender closes on Nov 11.
JOYCE TEO
In its heyday in the 1970s, the Singapura Theatre in Geylang Serai was ablaze with neon signs and colourful posters proclaiming the latest Hindustani and Malay hits. -- PHOTO: KNIGHT FRANK
ST : Lifestyle hub a buffer for Serangoon Gardens residents
Sep 30, 2010
Lifestyle hub a buffer for Serangoon Gardens residents
Sited next to workers' dorm, it aims to offer family-centric activities
By Jessica Lim & Cheryl Ong
COMING up next to the controversial foreign workers' dormitory in Serangoon Gardens: a lifestyle centre with art workshops, drama studios and sports facilities.
The $1 million refurbishment of the Lifestyle Hub @ Burghley includes building a carpark, renovating existing buildings and constructing sheltered walkways. It is likely to be ready next month.
The centre's operator, Hean Nerng Facilities Management, was awarded the tender by the Singapore Land Authority (SLA) in June.
The subsidiary of LHN Group, which manages more than 10 properties including residential and commercial properties, said there are 15 units available for rent. A list of prospective tenants is awaiting SLA's approval, but so far none of them had been given units.
The 6,880 sq m site - slightly larger than a football field - is about 15m away from the dormitory and is separated from it by a fence about 2m high.The site, a sub-plot of the old Serangoon Garden Technical School, currently has three single-storey blocks with a gross floor area of about 1,900 sq m. The rest of the former school compound now houses the controversial foreign workers' dormitory.
Residents in the area were upset when the Government proposed building the dormitory there two years ago. More than 1,400 residents petitioned against it, citing concerns that it would increase crime rates and lower their property values.
To address the problem, the quarters took in 600 workers to prevent the area from becoming overcrowded. An access road was also built so the workers would not have to go through the estate to get to the dormitory.
The lifestyle centre was, in fact, 'deliberately carved out to form a buffer between the dorm and the residential areas in Serangoon Gardens', said Member of Parliament for the area Lim Hwee Hua, who had previously met residents to allay their fears.
The member of the Aljunied GRC team pointed out that there is no direct access between the centre and the dorm. Describing the new hub as 'largely family-centric', she said pains were taken to ensure that businesses in the centre would be compatible with the surrounding residential area. 'We were concerned about potential traffic issues if too many people were to descend onto this area, or if there were noise and other disruption to the residents,' she said.
The site is approved for art schools and studios, and for sports facilities such as tennis and squash courts. It is not approved for retail or food and beverage outlets.
However, this might be exactly the problem for the new sub-tenants there, said property developers.
Research director Colin Tan of Chesterton Suntec International said it might be tough for tenants to succeed unless they can attract those who live beyond the estate.
'The catchment is quite restricted to people who drive or those who live nearby,' he said. 'Tenants have to be quite well known to draw people from outside the estate.' The short lease, he added, made it a challenge for them to establish themselves in the area.
Hean Herng's initial lease agreement is for two years, but can be renewed until 2014. The company was the only bidder. It offered to pay $21,008 a month, more than $6,000 above the estimate given by the SLA.
Residents have been enthusiastic about the centre.
Retired teacher Rajakrishnan, 71, who lives a minute's walk away from the centre, said: 'We have a lot of retired folk in this area so it'll be good if we don't have to travel too far to participate in activities. It's just a hop, skip and jump away from my home.'
Asked about the dormitory, she said: 'The situation is not bad at all. The fence around it has helped to keep the workers from coming into our estate. None of my neighbours has grouses against the foreign workers. The hub will be in between us and the dorm - it helps things.'
Others such as retiree John Leow, who chaired a residents' committee on the dormitory issue, said he did not object to the hub as it would 'add to the facilities in Serangoon Gardens'.
However, the 69-year-old, who met SLA about two months ago to discuss plans for the site, said some tenants were a no-go. 'We would definitely object to tenants such as bars or karaoke lounges,' he said, adding that he will be meeting SLA again to find out more about the tenants who will be moving in.
limjess@sph.com.sg
ongyiern@sph.com.sg
The new lifestyle centre being built next to the workers' dormitory at Serangoon Gardens will feature art workshops and sports facilities, but not retail or food and beverage outlets. -- ST PHOTO: DESMOND FOO
Lifestyle hub a buffer for Serangoon Gardens residents
Sited next to workers' dorm, it aims to offer family-centric activities
By Jessica Lim & Cheryl Ong
COMING up next to the controversial foreign workers' dormitory in Serangoon Gardens: a lifestyle centre with art workshops, drama studios and sports facilities.
The $1 million refurbishment of the Lifestyle Hub @ Burghley includes building a carpark, renovating existing buildings and constructing sheltered walkways. It is likely to be ready next month.
The centre's operator, Hean Nerng Facilities Management, was awarded the tender by the Singapore Land Authority (SLA) in June.
The subsidiary of LHN Group, which manages more than 10 properties including residential and commercial properties, said there are 15 units available for rent. A list of prospective tenants is awaiting SLA's approval, but so far none of them had been given units.
The 6,880 sq m site - slightly larger than a football field - is about 15m away from the dormitory and is separated from it by a fence about 2m high.The site, a sub-plot of the old Serangoon Garden Technical School, currently has three single-storey blocks with a gross floor area of about 1,900 sq m. The rest of the former school compound now houses the controversial foreign workers' dormitory.
Residents in the area were upset when the Government proposed building the dormitory there two years ago. More than 1,400 residents petitioned against it, citing concerns that it would increase crime rates and lower their property values.
To address the problem, the quarters took in 600 workers to prevent the area from becoming overcrowded. An access road was also built so the workers would not have to go through the estate to get to the dormitory.
The lifestyle centre was, in fact, 'deliberately carved out to form a buffer between the dorm and the residential areas in Serangoon Gardens', said Member of Parliament for the area Lim Hwee Hua, who had previously met residents to allay their fears.
The member of the Aljunied GRC team pointed out that there is no direct access between the centre and the dorm. Describing the new hub as 'largely family-centric', she said pains were taken to ensure that businesses in the centre would be compatible with the surrounding residential area. 'We were concerned about potential traffic issues if too many people were to descend onto this area, or if there were noise and other disruption to the residents,' she said.
The site is approved for art schools and studios, and for sports facilities such as tennis and squash courts. It is not approved for retail or food and beverage outlets.
However, this might be exactly the problem for the new sub-tenants there, said property developers.
Research director Colin Tan of Chesterton Suntec International said it might be tough for tenants to succeed unless they can attract those who live beyond the estate.
'The catchment is quite restricted to people who drive or those who live nearby,' he said. 'Tenants have to be quite well known to draw people from outside the estate.' The short lease, he added, made it a challenge for them to establish themselves in the area.
Hean Herng's initial lease agreement is for two years, but can be renewed until 2014. The company was the only bidder. It offered to pay $21,008 a month, more than $6,000 above the estimate given by the SLA.
Residents have been enthusiastic about the centre.
Retired teacher Rajakrishnan, 71, who lives a minute's walk away from the centre, said: 'We have a lot of retired folk in this area so it'll be good if we don't have to travel too far to participate in activities. It's just a hop, skip and jump away from my home.'
Asked about the dormitory, she said: 'The situation is not bad at all. The fence around it has helped to keep the workers from coming into our estate. None of my neighbours has grouses against the foreign workers. The hub will be in between us and the dorm - it helps things.'
Others such as retiree John Leow, who chaired a residents' committee on the dormitory issue, said he did not object to the hub as it would 'add to the facilities in Serangoon Gardens'.
However, the 69-year-old, who met SLA about two months ago to discuss plans for the site, said some tenants were a no-go. 'We would definitely object to tenants such as bars or karaoke lounges,' he said, adding that he will be meeting SLA again to find out more about the tenants who will be moving in.
limjess@sph.com.sg
ongyiern@sph.com.sg
The new lifestyle centre being built next to the workers' dormitory at Serangoon Gardens will feature art workshops and sports facilities, but not retail or food and beverage outlets. -- ST PHOTO: DESMOND FOO
ST : Banks feel chill of new property rules
Sep 29, 2010
Banks feel chill of new property rules
Some report dip in home loan applications
By Esther Teo
SOME banks are starting to feel the chill of property cooling measures, a month after tougher home ownership rules were unveiled to rein in speculators.
They have reported a dip in home loan applications, in tandem with weakened buying sentiment as the measures kick in.
Most banks said, however, that there has also been an increase in the number of enquiries on the new measures, as buyers consider their financing options.
A DBS Bank spokesman said yesterday that it has seen a rise in enquiries from customers over the new measures on their loan applications.
United Overseas Bank's (UOB), head of loans division Chia Siew Cheng said that the property market has slowed down, with potential homebuyers staying on the sidelines to assess the impact of the new measures.
It seems that most property developers, however, are still proceeding with their latest project launches, she said.
It was a different story at Maybank Singapore, though. Its head of consumer banking Helen Neo said there has been no significant impact in terms of loan applications.
The turnaround time for processing loans, though, has been affected, owing to the additional checks required as a result of the new guidelines, she added.
Ms Neo said that while no customers had cancelled their loan applications as yet, many were taking a wait-and-see stance, even as the bank received a higher number of enquiries from prospective homebuyers.
The new rules, announced on Aug 30, state that buyers with one or more outstanding housing loans will now have to stump up a downpayment of at least 30 per cent of the property's price, up from 20 per cent previously.
At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
'In the short term, however, these benefits will be less obvious because credit costs on housing loans usually remain low until property prices start falling. Furthermore, a decrease in loan demand could negatively impact banks' interest income,' the report said.
A healthy property sector is critical for the three local banks - DBS, UOB and OCBC Bank - Moody's said.
All have 'significant exposures to the property market' - 52 per cent to 54 per cent of total loans as of June 30 - through their housing loans and lending to the construction and real estate sectors, of which a majority of borrowers are Singaporean.
On the ground, the picture is not clear yet. All eyes were on Hoi Hup Sunway Development's preview launch of its 473-unit Vacanza@East - a freehold project in Lengkong Tujoh near the Pan-Island Expressway in the east - yesterday. It is the third project to be launched after the measures were introduced.
In the first phase of the preview, 141 units were launched, the majority of which were two-bedroom and three-bedroom apartments. Hoi Hup Sunway, however, declined to reveal sales figures.
When The Straits Times visited its showflat yesterday afternoon, however, more than 100 people were milling around to view the property.
One potential buyer, who wanted to be known only as Ms Poh, said she was eyeing a 1,012 sq ft three-bedroom apartment listed at $1.14 million - or $1,126 per sq ft.
She decided against the purchase eventually, as she had an existing mortgage and would be able to take out only a 70 per cent loan with the tighter financing rules. 'With the new measures, it's now out of (my) price range,' she said.
esthert@sph.com.sg
--------------------------------------------------------------------------------
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
Banks feel chill of new property rules
Some report dip in home loan applications
By Esther Teo
SOME banks are starting to feel the chill of property cooling measures, a month after tougher home ownership rules were unveiled to rein in speculators.
They have reported a dip in home loan applications, in tandem with weakened buying sentiment as the measures kick in.
Most banks said, however, that there has also been an increase in the number of enquiries on the new measures, as buyers consider their financing options.
A DBS Bank spokesman said yesterday that it has seen a rise in enquiries from customers over the new measures on their loan applications.
United Overseas Bank's (UOB), head of loans division Chia Siew Cheng said that the property market has slowed down, with potential homebuyers staying on the sidelines to assess the impact of the new measures.
It seems that most property developers, however, are still proceeding with their latest project launches, she said.
It was a different story at Maybank Singapore, though. Its head of consumer banking Helen Neo said there has been no significant impact in terms of loan applications.
The turnaround time for processing loans, though, has been affected, owing to the additional checks required as a result of the new guidelines, she added.
Ms Neo said that while no customers had cancelled their loan applications as yet, many were taking a wait-and-see stance, even as the bank received a higher number of enquiries from prospective homebuyers.
The new rules, announced on Aug 30, state that buyers with one or more outstanding housing loans will now have to stump up a downpayment of at least 30 per cent of the property's price, up from 20 per cent previously.
At least 10 per cent must be in cash - up from 5 per cent before - but the remainder can come from their Central Provident Fund (CPF) accounts.
This means that buyers will now be able to borrow up to only 70 per cent of the property's purchase price, instead of 80 per cent previously.
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
'In the short term, however, these benefits will be less obvious because credit costs on housing loans usually remain low until property prices start falling. Furthermore, a decrease in loan demand could negatively impact banks' interest income,' the report said.
A healthy property sector is critical for the three local banks - DBS, UOB and OCBC Bank - Moody's said.
All have 'significant exposures to the property market' - 52 per cent to 54 per cent of total loans as of June 30 - through their housing loans and lending to the construction and real estate sectors, of which a majority of borrowers are Singaporean.
On the ground, the picture is not clear yet. All eyes were on Hoi Hup Sunway Development's preview launch of its 473-unit Vacanza@East - a freehold project in Lengkong Tujoh near the Pan-Island Expressway in the east - yesterday. It is the third project to be launched after the measures were introduced.
In the first phase of the preview, 141 units were launched, the majority of which were two-bedroom and three-bedroom apartments. Hoi Hup Sunway, however, declined to reveal sales figures.
When The Straits Times visited its showflat yesterday afternoon, however, more than 100 people were milling around to view the property.
One potential buyer, who wanted to be known only as Ms Poh, said she was eyeing a 1,012 sq ft three-bedroom apartment listed at $1.14 million - or $1,126 per sq ft.
She decided against the purchase eventually, as she had an existing mortgage and would be able to take out only a 70 per cent loan with the tighter financing rules. 'With the new measures, it's now out of (my) price range,' she said.
esthert@sph.com.sg
--------------------------------------------------------------------------------
A report by Moody's Investors Service earlier this month said that Singapore banks will benefit over the medium term, as their exposure to heavily indebted customers and future property price shocks will be reduced. This will enable their earnings to stabilise due to a decline in potential loan losses.
ST : The housing bubble trouble
Sep 29, 2010
THE ST INTERVIEW
The housing bubble trouble
In Singapore, Government's repeated intervention in the market is a good thing, says US expert
By Tan Hui Yee
IN MOST parts of the world, a government that intervened in the property market three times in one year would heighten uncertainty.
But not so in Singapore, observes Professor Joseph Gyourko, a housing economist from the University of Pennsylvania who was in town recently to speak at a forum conducted by the National University of Singapore's (NUS) Institute of Real Estate Studies.
He says: 'If the government gets into a habit of intervening all the time, it will harm market development. Investors won't want to invest because they can't be sure what the government is going to do Monday versus Friday.'
But the picture is clearly different in Singapore, he notes. The Government tried to temper speculation by abolishing developers' interest absorption schemes in September last year, and followed that with two additional rounds of measures in February and August this year that made it increasingly expensive for speculators to flip properties.
'You are sending a clear signal to investors that you are going to stop the price boom. The fact that you're doing the third round is a signal that you are going to do whatever it takes,' he says.
'And that actually may be providing clarity. You are telling everyone, 'Okay, we're just not stopping, we'll come up with something else down the road.''
This show of political will may just be what it takes to deflate Singapore's property bubble, he says.
Prof Gyourko, 54, knows bubbles intimately, having studied the sizzling property market in China and being privy to local developments as a board member of NUS' real-estate institute.
He believes home prices in Hong Kong, Singapore and China are being driven up by a mixture of real economic growth and short-term capital flows.
'Singapore's inflation rate is above the rate banks pay on deposits. When that happens, people want to put their money elsewhere. And one of the few alternative investments you can make is in housing.
'That's shifting a lot of money into homes. And that's not permanent or sustainable,' he says.
When the economy grows rapidly again, companies will ramp up production, the competition for capital will heat up, interest rates will rise - leaving over-leveraged property buyers in danger of defaulting on their loans. That could send property prices into a tailspin.
That said, he concedes that housing bubbles are by nature unpredictable, and the fact the Government here had to intervene three times indicates it had difficulty calibrating the measures required to tame the beast.
'Clearly, if the Singapore Government had known, it would have introduced Round Three right up front,' he says.
He rejects claims that rising property prices widen inequality, based on his experience in the United States market.
'The housing market is cyclical, so the claim is not true in the long run. In the US, when we had the boom...people were worried about wealth gains along coastal California and the East Coast of the US, which had the highest price rises. But prices cycle, and guess what? They fell - by a lot. What generates long-run inequality are skill differences, not home ownership,' says Prof Gyourko.
He predicts property prices in Hong Kong, China and Singapore will take a hit in the next one to three years, effectively cancelling out the gains owner-occupiers have made in the recent run-up.
'I don't worry about the fact that people got a bunch of capital gains because I think they are going to lose those capital gains,' he says, pointing out that these are paper gains.
But although property gains and losses even out over a lifetime, the resulting short-term frustrations may be hard to handle. 'It's easy for an academic to go, 'Don't worry, this stuff cycles.' If you are a politician, you've got to worry about that person being angry now because he has the vote, and you've got an election coming up.'
He acknowledges that while land in Singapore is scarce and property prices can be chased up without adequate control, the Government here has tried its best to make housing affordable through its public housing programme.
'You guys do public housing about as good as it's done anywhere in the world,' he says. 'For such a small place, it's well-planned. It's affordable to people with modest incomes,' says Prof Gyourko.
But one suggestion he has is that Singapore could be more flexible about the housing grants or similar subsidies it gives households, to give them more freedom over what homes they can buy and where they can live.
Currently, subsidised households can use their housing grant of $30,000 to $40,000 to buy only HDB resale flats. With a voucher system, they would not be limited to government housing.
He also questions Singapore's system of allowing Central Provident Fund savings to be used to pay for homes. This encourages people to base a huge chunk of their retirement savings on the fortunes of the property market in a tiny country. In investment speak, this is considered 'undiversified'.
'That's a really risky thing to do. What happens if there is a housing market collapse?' he asks.
The Singapore property market has had its hairy moments: Housing prices plunged after the 1997 Asian financial crisis, although they have since bounced back and even surpassed 1996 levels.
Singaporeans, he says, have to understand that the CPF housing scheme amounts to an 'implicit subsidy' as it lowers the interest payable on bank loans by reducing a home buyer's loan amount.
'I view housing as a consumption good. I view it literally as 'I'm eating my house.'' That means retirement savings should be kept separate from housing expenditure, he says.
In his view, owner-occupied homes especially are not investments that can yield returns, so people should not devote their retirement savings to their homes in the hope of growing their money.
Asked about the attributes of an ideal housing system, he offers a verbal sketch of its key planks: It should be equitable, responsive and flexible.
This means society would have to determine some minimum quality of housing that everyone should be entitled to. Households that cannot afford to pay for this minimum standard would get subsidies. Poor households with children would get more subsidies because 'kids do not get to pick their parents, and thus, are not responsible in any way for their poverty'.
Ideally, housing supply should be plentiful, in the sense that the rules should allow developers to easily ramp up home building to meet increased demand.
This moderates housing prices, he says, as it will allow prices to be close to or at the level required to cover land costs, construction costs and a builder's usual profit.
Finally, an ideal system would offer different kinds of housing - including rental housing - to meet the needs of the population over its life cycle. It is also one where the population is 'educated on the true benefits and costs of the different types of housing'.
He accuses governments worldwide of a bias 'towards encouraging owning' homes instead of being upfront on the opportunity cost of doing that.
As a result, most people underestimate the costs of owning a property, he says. They forget the transaction costs of buying and selling a home are 'quite high', and it does not occur to them to set aside money for long-term maintenance.
Buyers also risk getting stuck with their homes if a sharp drop in prices pulls the value of their homes below the mortgage amount.
Unless a home owner in such a predicament has enough cash to make up the shortfall, he cannot move house. Some academics have fingered such 'underwater' mortgages as a possible explanation for stubbornly high unemployment figures in the US, as it means people living in declining cities cannot move to places where jobs are more plentiful.
In Singapore, which takes just about an hour to cross by car, the problems posed by such immobility are less serious. Still, he thinks being stuck in such 'underwater' homes could result in longer commutes to workplaces and stop families from moving close to the school they want their children to attend.
Prof Gyourko - a home owner himself in Philadelphia - is careful to declare he has nothing against home ownership, especially as it makes someone a stakeholder in his community. In the case of Singapore, it makes one a stakeholder in the nation.
But the goal of the Government should be to get people to 'make the right choice about owning versus renting, not that owning always is better'.
In sum, housing choices should follow people's needs over their lifetime, instead of determining how they have to live their lives.
Young people, he says, make 'natural renters' instead of home buyers because this arrangement allows them to respond quickly to changing circumstances.
'You can move to opportunity. You can get married. You can do all types of different things instead of being stuck in a house,' he says.
tanhy@sph.com.sg
--------------------------------------------------------------------------------
An authority on real estate and housing policy
'I bet that housing does not drive child-bearing decisions'
· What do you make of Singapore's quotas for different ethnic groups in public housing estates to discourage racial enclaves from forming?
I've never been a fan of quotas. My preference is to always incentivise people positively.
I would prefer paying a positive price for you to live in someone else's neighbourhood if you were of a different ethnicity. I'd bribe you to go into an area where you are not the majority. You get a bounty.
It provides more freedom of mobility and choice. But governments don't like my way because it is costly.
· Young couples in Singapore have complained that they are not able to start families because they have been priced out of the housing market. Your view?
I understand the claim, but I don't put much credibility in it. Governments like yours are famous for trying to encourage child-bearing through financial inducements. It doesn't work very well, does it?
It's because this decision is incredibly complex, incredibly long-term. My gut feel is the claim is made by people who just want a subsidy, and it's not affecting child-bearing decisions at all.
If it were a simple matter of finance, Singapore would not have a fertility problem. And there'd be no one with kids in Bangladesh.
· How has your view of housing as a consumption good shaped your own consumption of housing?
I certainly did not buy a bigger house than I needed because I knew the costs were very high. I tried to figure out with my wife how many kids we were going to have, and how much space we needed. We thought we wanted to have two kids; we bought our house when our first was coming.
But our family decisions drove our housing decisions, not the other way around.
Having said that, there's no doubt that incomes can affect fertility. For instance, in the Great Depression, fertility dropped worldwide. If you don't think you can support a family, you won't start a family.
Back then, it was about unemployment of 25 per cent and the danger of starving. Here, you are talking about an extra bedroom. There's a big difference.
· Still, wouldn't the lack of an extra bedroom make you delay child-bearing?
I think so. Living with mum and dad could delay it because of the lack of space. But the right way to do deal with this is to develop a rental market.
· So isn't housing cost an opportunity cost vis-a-vis having a family?
Without a doubt. Kids are expensive that way. The correlation could be worth looking at across countries. And you will have to take into account a lot of stuff.
Just think about Catholic countries where you have a religious group saying 'no' to birth control. You're going to see high fertility rates, no matter how low the income and what type of housing there is.
That's what makes it so hard to tell. But I still bet that housing does not drive child-bearing decisions.
THE ST INTERVIEW
The housing bubble trouble
In Singapore, Government's repeated intervention in the market is a good thing, says US expert
By Tan Hui Yee
IN MOST parts of the world, a government that intervened in the property market three times in one year would heighten uncertainty.
But not so in Singapore, observes Professor Joseph Gyourko, a housing economist from the University of Pennsylvania who was in town recently to speak at a forum conducted by the National University of Singapore's (NUS) Institute of Real Estate Studies.
He says: 'If the government gets into a habit of intervening all the time, it will harm market development. Investors won't want to invest because they can't be sure what the government is going to do Monday versus Friday.'
But the picture is clearly different in Singapore, he notes. The Government tried to temper speculation by abolishing developers' interest absorption schemes in September last year, and followed that with two additional rounds of measures in February and August this year that made it increasingly expensive for speculators to flip properties.
'You are sending a clear signal to investors that you are going to stop the price boom. The fact that you're doing the third round is a signal that you are going to do whatever it takes,' he says.
'And that actually may be providing clarity. You are telling everyone, 'Okay, we're just not stopping, we'll come up with something else down the road.''
This show of political will may just be what it takes to deflate Singapore's property bubble, he says.
Prof Gyourko, 54, knows bubbles intimately, having studied the sizzling property market in China and being privy to local developments as a board member of NUS' real-estate institute.
He believes home prices in Hong Kong, Singapore and China are being driven up by a mixture of real economic growth and short-term capital flows.
'Singapore's inflation rate is above the rate banks pay on deposits. When that happens, people want to put their money elsewhere. And one of the few alternative investments you can make is in housing.
'That's shifting a lot of money into homes. And that's not permanent or sustainable,' he says.
When the economy grows rapidly again, companies will ramp up production, the competition for capital will heat up, interest rates will rise - leaving over-leveraged property buyers in danger of defaulting on their loans. That could send property prices into a tailspin.
That said, he concedes that housing bubbles are by nature unpredictable, and the fact the Government here had to intervene three times indicates it had difficulty calibrating the measures required to tame the beast.
'Clearly, if the Singapore Government had known, it would have introduced Round Three right up front,' he says.
He rejects claims that rising property prices widen inequality, based on his experience in the United States market.
'The housing market is cyclical, so the claim is not true in the long run. In the US, when we had the boom...people were worried about wealth gains along coastal California and the East Coast of the US, which had the highest price rises. But prices cycle, and guess what? They fell - by a lot. What generates long-run inequality are skill differences, not home ownership,' says Prof Gyourko.
He predicts property prices in Hong Kong, China and Singapore will take a hit in the next one to three years, effectively cancelling out the gains owner-occupiers have made in the recent run-up.
'I don't worry about the fact that people got a bunch of capital gains because I think they are going to lose those capital gains,' he says, pointing out that these are paper gains.
But although property gains and losses even out over a lifetime, the resulting short-term frustrations may be hard to handle. 'It's easy for an academic to go, 'Don't worry, this stuff cycles.' If you are a politician, you've got to worry about that person being angry now because he has the vote, and you've got an election coming up.'
He acknowledges that while land in Singapore is scarce and property prices can be chased up without adequate control, the Government here has tried its best to make housing affordable through its public housing programme.
'You guys do public housing about as good as it's done anywhere in the world,' he says. 'For such a small place, it's well-planned. It's affordable to people with modest incomes,' says Prof Gyourko.
But one suggestion he has is that Singapore could be more flexible about the housing grants or similar subsidies it gives households, to give them more freedom over what homes they can buy and where they can live.
Currently, subsidised households can use their housing grant of $30,000 to $40,000 to buy only HDB resale flats. With a voucher system, they would not be limited to government housing.
He also questions Singapore's system of allowing Central Provident Fund savings to be used to pay for homes. This encourages people to base a huge chunk of their retirement savings on the fortunes of the property market in a tiny country. In investment speak, this is considered 'undiversified'.
'That's a really risky thing to do. What happens if there is a housing market collapse?' he asks.
The Singapore property market has had its hairy moments: Housing prices plunged after the 1997 Asian financial crisis, although they have since bounced back and even surpassed 1996 levels.
Singaporeans, he says, have to understand that the CPF housing scheme amounts to an 'implicit subsidy' as it lowers the interest payable on bank loans by reducing a home buyer's loan amount.
'I view housing as a consumption good. I view it literally as 'I'm eating my house.'' That means retirement savings should be kept separate from housing expenditure, he says.
In his view, owner-occupied homes especially are not investments that can yield returns, so people should not devote their retirement savings to their homes in the hope of growing their money.
Asked about the attributes of an ideal housing system, he offers a verbal sketch of its key planks: It should be equitable, responsive and flexible.
This means society would have to determine some minimum quality of housing that everyone should be entitled to. Households that cannot afford to pay for this minimum standard would get subsidies. Poor households with children would get more subsidies because 'kids do not get to pick their parents, and thus, are not responsible in any way for their poverty'.
Ideally, housing supply should be plentiful, in the sense that the rules should allow developers to easily ramp up home building to meet increased demand.
This moderates housing prices, he says, as it will allow prices to be close to or at the level required to cover land costs, construction costs and a builder's usual profit.
Finally, an ideal system would offer different kinds of housing - including rental housing - to meet the needs of the population over its life cycle. It is also one where the population is 'educated on the true benefits and costs of the different types of housing'.
He accuses governments worldwide of a bias 'towards encouraging owning' homes instead of being upfront on the opportunity cost of doing that.
As a result, most people underestimate the costs of owning a property, he says. They forget the transaction costs of buying and selling a home are 'quite high', and it does not occur to them to set aside money for long-term maintenance.
Buyers also risk getting stuck with their homes if a sharp drop in prices pulls the value of their homes below the mortgage amount.
Unless a home owner in such a predicament has enough cash to make up the shortfall, he cannot move house. Some academics have fingered such 'underwater' mortgages as a possible explanation for stubbornly high unemployment figures in the US, as it means people living in declining cities cannot move to places where jobs are more plentiful.
In Singapore, which takes just about an hour to cross by car, the problems posed by such immobility are less serious. Still, he thinks being stuck in such 'underwater' homes could result in longer commutes to workplaces and stop families from moving close to the school they want their children to attend.
Prof Gyourko - a home owner himself in Philadelphia - is careful to declare he has nothing against home ownership, especially as it makes someone a stakeholder in his community. In the case of Singapore, it makes one a stakeholder in the nation.
But the goal of the Government should be to get people to 'make the right choice about owning versus renting, not that owning always is better'.
In sum, housing choices should follow people's needs over their lifetime, instead of determining how they have to live their lives.
Young people, he says, make 'natural renters' instead of home buyers because this arrangement allows them to respond quickly to changing circumstances.
'You can move to opportunity. You can get married. You can do all types of different things instead of being stuck in a house,' he says.
tanhy@sph.com.sg
--------------------------------------------------------------------------------
An authority on real estate and housing policy
'I bet that housing does not drive child-bearing decisions'
· What do you make of Singapore's quotas for different ethnic groups in public housing estates to discourage racial enclaves from forming?
I've never been a fan of quotas. My preference is to always incentivise people positively.
I would prefer paying a positive price for you to live in someone else's neighbourhood if you were of a different ethnicity. I'd bribe you to go into an area where you are not the majority. You get a bounty.
It provides more freedom of mobility and choice. But governments don't like my way because it is costly.
· Young couples in Singapore have complained that they are not able to start families because they have been priced out of the housing market. Your view?
I understand the claim, but I don't put much credibility in it. Governments like yours are famous for trying to encourage child-bearing through financial inducements. It doesn't work very well, does it?
It's because this decision is incredibly complex, incredibly long-term. My gut feel is the claim is made by people who just want a subsidy, and it's not affecting child-bearing decisions at all.
If it were a simple matter of finance, Singapore would not have a fertility problem. And there'd be no one with kids in Bangladesh.
· How has your view of housing as a consumption good shaped your own consumption of housing?
I certainly did not buy a bigger house than I needed because I knew the costs were very high. I tried to figure out with my wife how many kids we were going to have, and how much space we needed. We thought we wanted to have two kids; we bought our house when our first was coming.
But our family decisions drove our housing decisions, not the other way around.
Having said that, there's no doubt that incomes can affect fertility. For instance, in the Great Depression, fertility dropped worldwide. If you don't think you can support a family, you won't start a family.
Back then, it was about unemployment of 25 per cent and the danger of starving. Here, you are talking about an extra bedroom. There's a big difference.
· Still, wouldn't the lack of an extra bedroom make you delay child-bearing?
I think so. Living with mum and dad could delay it because of the lack of space. But the right way to do deal with this is to develop a rental market.
· So isn't housing cost an opportunity cost vis-a-vis having a family?
Without a doubt. Kids are expensive that way. The correlation could be worth looking at across countries. And you will have to take into account a lot of stuff.
Just think about Catholic countries where you have a religious group saying 'no' to birth control. You're going to see high fertility rates, no matter how low the income and what type of housing there is.
That's what makes it so hard to tell. But I still bet that housing does not drive child-bearing decisions.
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