Feb 24, 2010
Impose stamp duty on third flat
I READ with interest Monday's report, "HDB review: Findings out next month".
I greatly commend the Government's timely and wise measures to curb speculation in HDB flats. There are clear signs of market exuberance and that could result in a real estate bubble at some unpredictable time.
People now have to pay a new stamp duty of about 3 per cent if they sell their properties within a year of buying them. Plus, financial institutions like banks can now grant housing loans of up to only 80 per cent of a property's value, compared to 90 per cent previously.
I suggest that flat owners who have sold their homes twice also pay the 3 per cent stamp duty when they make their third sales transaction, even if they had lived in their last flat for more than three years.
Simultaneously, when these flat owners buy another flat from the resale market, they should also pay the 3 per cent stamp duty.
The authorities must also be aware of and take action against unprofessional market practices common among property agents, sellers and buyers. This includes intentional under-declaring of the value of flats for sale. Such actions could further spur market speculation in HDB resale flats.
Teo Kueh Liang
Thursday, February 25, 2010
ST : UIC Building may become residential block
Feb 24, 2010
UIC Building may become residential block
UIC board still assessing options, says chief of UOL, whose full-year profits surge to $424m
By Harsha Jethnani
UNITED Industrial Corporation (UIC) has won in-principle approval from the Urban Redevelopment Authority to convert its UIC Building in Shenton Way into a mainly residential development.
But no firm decision has been made on the building's fate.
The UIC board is assessing all alternatives to ensure the best use for the property, according to UOL group chief executive Gwee Lian Kheng.
He disclosed this yesterday as the property group announced a near tripling in full-year profits to $424.2 million in the 12 months ended Dec 31.
The sharp jump was predominantly attributable to UIC having become a 32 per cent associated company of UOL.
Net profits included a negative goodwill sum of $281.1 million from the acquisition of shares in UIC.
Earnings from associated company Nassim Park Residences also contributed to the surge in profits.
UOL posted a record-breaking year in revenues, which rose 12 per cent from $899 million to just over the $1 billion mark.
'Our strategy of tapping the demand of mass- and mid-market housing segments was well timed,' said Mr Gwee.
'This has helped us reach a major milestone of becoming a billion-dollar company by turnover.'
Strong sales from the group's Double Bay Residences and Meadows@Peirce contributed to the revenue rise.
The group's property development arm represented 53 per cent of revenue.
Higher average rental rates brought about a 12 per cent rise in revenue from investment properties to $141.7 million.
Revenue from hotel operations declined 13 per cent to $294.5 million as revenue per available room fell amid a slowdown in tourism, the group's statement said.
Pan Pacific Hotels Group, the group's listed hotel subsidiary, saw revenue fall by 9 per cent due to weaker performance in the group's hotels.
Mr Gwee said the 'difficult period for the hotel industry may be over' and that efforts would be made to 'secure more hotel management contracts, thus increasing fee-based income'.
The developer remains focused on Singapore's resilient mass and mid-tier to high-end residential market.
A total of 1,138 residential units are in the pipeline this year. Developments at its Dakota Crescent and Toh Tuck Road sites are expected to be launched by the second quarter of this year. A total of 616 and 172 units respectively are estimated to be made available at these sites.
In the second half of the year, the group will launch a development in the Spottiswoode area, where it had purchased Spottiswoode Apartment and Oakswood Heights in 2007, releasing about 350 units.
Overseas, another 1,014 units are in the pipeline - 520 in a mixed development in Tianjin, China, and another 494 units in a development located in Kuala Lumpur.
Full-year earnings per share were 53.7 cents, up from 18.5 cents the year before.
Net asset value per share as of Dec 31 stood at $5.29, up from $4.26 previously. A final dividend of 10 cents per share has been proposed.
UOL shares closed 11 cents higher at $4 yesterday before the results were announced.
harshamj@sph.com.sg
UIC Building may become residential block
UIC board still assessing options, says chief of UOL, whose full-year profits surge to $424m
By Harsha Jethnani
UNITED Industrial Corporation (UIC) has won in-principle approval from the Urban Redevelopment Authority to convert its UIC Building in Shenton Way into a mainly residential development.
But no firm decision has been made on the building's fate.
The UIC board is assessing all alternatives to ensure the best use for the property, according to UOL group chief executive Gwee Lian Kheng.
He disclosed this yesterday as the property group announced a near tripling in full-year profits to $424.2 million in the 12 months ended Dec 31.
The sharp jump was predominantly attributable to UIC having become a 32 per cent associated company of UOL.
Net profits included a negative goodwill sum of $281.1 million from the acquisition of shares in UIC.
Earnings from associated company Nassim Park Residences also contributed to the surge in profits.
UOL posted a record-breaking year in revenues, which rose 12 per cent from $899 million to just over the $1 billion mark.
'Our strategy of tapping the demand of mass- and mid-market housing segments was well timed,' said Mr Gwee.
'This has helped us reach a major milestone of becoming a billion-dollar company by turnover.'
Strong sales from the group's Double Bay Residences and Meadows@Peirce contributed to the revenue rise.
The group's property development arm represented 53 per cent of revenue.
Higher average rental rates brought about a 12 per cent rise in revenue from investment properties to $141.7 million.
Revenue from hotel operations declined 13 per cent to $294.5 million as revenue per available room fell amid a slowdown in tourism, the group's statement said.
Pan Pacific Hotels Group, the group's listed hotel subsidiary, saw revenue fall by 9 per cent due to weaker performance in the group's hotels.
Mr Gwee said the 'difficult period for the hotel industry may be over' and that efforts would be made to 'secure more hotel management contracts, thus increasing fee-based income'.
The developer remains focused on Singapore's resilient mass and mid-tier to high-end residential market.
A total of 1,138 residential units are in the pipeline this year. Developments at its Dakota Crescent and Toh Tuck Road sites are expected to be launched by the second quarter of this year. A total of 616 and 172 units respectively are estimated to be made available at these sites.
In the second half of the year, the group will launch a development in the Spottiswoode area, where it had purchased Spottiswoode Apartment and Oakswood Heights in 2007, releasing about 350 units.
Overseas, another 1,014 units are in the pipeline - 520 in a mixed development in Tianjin, China, and another 494 units in a development located in Kuala Lumpur.
Full-year earnings per share were 53.7 cents, up from 18.5 cents the year before.
Net asset value per share as of Dec 31 stood at $5.29, up from $4.26 previously. A final dividend of 10 cents per share has been proposed.
UOL shares closed 11 cents higher at $4 yesterday before the results were announced.
harshamj@sph.com.sg
ST : TEN MILE JUNCTION SITE
Feb 24, 2010
TEN MILE JUNCTION SITE
Bid 2 years ago: $61 million
Top bid now: $164 million
Suburban plot draws eight bids with Far East unit submitting top offer
By Joyce Teo
IN A striking sign of how the property sector has rebounded, a site that failed to sell two years ago when it attracted an offer of just $61 million has now received a bid of $164 million in a new tender.
Eight developers placed bids for the suburban plot that can accommodate residential and commercial development.
The top offers for the site at the junction of Choa Chu Kang and Woodlands roads were all in a fairly tight range, with Far East Organization's Dollar Land Singapore on top with a bid that beat market expectations.
It offered nearly $164 million, or $436.65 per sq ft (psf) of gross floor area, about 10 per cent more than the $148.28 million or $394.80 psf offered by second-placed Chip Eng Seng's CEL Development.
Sim Lian Land was next with $138.89 million or $369.79 psf.
Other bidders included a joint venture between Frasers Centrepoint and NTUC FairPrice Cooperative, and Soilbuild Group Holdings, which came in last with a bid of just $71.23 million.
CBRE Research had expected bids to range from $135 million to $150 million.
The $164 million bid could reflect a price of $50 million to $70 million for the commercial podium, with the developer possibly selling the apartments for around $700 psf to $800 psf, consultants said.
In April 2008, the site attracted just two bids of $61 million and $45.68 million when its sale tender closed. The bids were rejected as being too low.
The site, to be co-located with the Ten Mile Junction LRT station on the third storey of the podium block, will be near the future Bukit Panjang MRT station, part of the future Downtown Line 2 and due for completion by 2015.
Property consultants said the results showed that demand for land was still fairly strong, particularly coming after the Government's recent measures to pre-empt a property bubble.
The Government has imposed a duty on sellers who offload property within a year of purchase, and lowered the maximum loan-to-value amount buyers can borrow from 90 per cent to 80 per cent.
Knight Frank chairman Tan Tiong Cheng said: 'The top three bidders are the more experienced players familiar with the suburban market.
'Their bids suggest they would think the recent measures would not affect prices in the longer term.'
With fewer sources of private land, developers are chasing government sites as they need to replenish land banks, said Colliers International executive director (investment sales) Ho Eng Joo.
He said the cooling measures will affect the sales market more than developers' demand for land.
In the short term, some potential buyers will want to wait and see if prices will fall, experts said.
But those who are already planning to buy will likely go ahead.
Ms Christina Sim, Cushman and Wakefield's director of investment and capital markets, said the one-year timeline for the seller's duty is relatively short and unlikely to affect the market much.
Still, an analyst who declined to be named said: 'The latest announcement begs the question - what conditions would qualify as a stable market? If transactions are above 1,000 units a month, that's probably a warning sign.'
joyceteo@sph.com.sg
TEN MILE JUNCTION SITE
Bid 2 years ago: $61 million
Top bid now: $164 million
Suburban plot draws eight bids with Far East unit submitting top offer
By Joyce Teo
IN A striking sign of how the property sector has rebounded, a site that failed to sell two years ago when it attracted an offer of just $61 million has now received a bid of $164 million in a new tender.
Eight developers placed bids for the suburban plot that can accommodate residential and commercial development.
The top offers for the site at the junction of Choa Chu Kang and Woodlands roads were all in a fairly tight range, with Far East Organization's Dollar Land Singapore on top with a bid that beat market expectations.
It offered nearly $164 million, or $436.65 per sq ft (psf) of gross floor area, about 10 per cent more than the $148.28 million or $394.80 psf offered by second-placed Chip Eng Seng's CEL Development.
Sim Lian Land was next with $138.89 million or $369.79 psf.
Other bidders included a joint venture between Frasers Centrepoint and NTUC FairPrice Cooperative, and Soilbuild Group Holdings, which came in last with a bid of just $71.23 million.
CBRE Research had expected bids to range from $135 million to $150 million.
The $164 million bid could reflect a price of $50 million to $70 million for the commercial podium, with the developer possibly selling the apartments for around $700 psf to $800 psf, consultants said.
In April 2008, the site attracted just two bids of $61 million and $45.68 million when its sale tender closed. The bids were rejected as being too low.
The site, to be co-located with the Ten Mile Junction LRT station on the third storey of the podium block, will be near the future Bukit Panjang MRT station, part of the future Downtown Line 2 and due for completion by 2015.
Property consultants said the results showed that demand for land was still fairly strong, particularly coming after the Government's recent measures to pre-empt a property bubble.
The Government has imposed a duty on sellers who offload property within a year of purchase, and lowered the maximum loan-to-value amount buyers can borrow from 90 per cent to 80 per cent.
Knight Frank chairman Tan Tiong Cheng said: 'The top three bidders are the more experienced players familiar with the suburban market.
'Their bids suggest they would think the recent measures would not affect prices in the longer term.'
With fewer sources of private land, developers are chasing government sites as they need to replenish land banks, said Colliers International executive director (investment sales) Ho Eng Joo.
He said the cooling measures will affect the sales market more than developers' demand for land.
In the short term, some potential buyers will want to wait and see if prices will fall, experts said.
But those who are already planning to buy will likely go ahead.
Ms Christina Sim, Cushman and Wakefield's director of investment and capital markets, said the one-year timeline for the seller's duty is relatively short and unlikely to affect the market much.
Still, an analyst who declined to be named said: 'The latest announcement begs the question - what conditions would qualify as a stable market? If transactions are above 1,000 units a month, that's probably a warning sign.'
joyceteo@sph.com.sg
TODAY Online : If your condo developer doesn't deliver ...
If your condo developer doesn't deliver ...
05:55 AM Feb 24, 2010
When developers do not meet standards promised in their brochures and agreements, will the Building and Construction Authority (BCA) help buyers?
While it "cannot intervene in private contractual disagreements between buyers and developers", BCA will try to facilitate meetings ... to resolve such disputes, "as part of its standard operating procedure for good service", said National Development Minister Mah Bow Tan in a written reply to a query from Member of Parliament Fatimah Lateef.
Mr Mah cited a list of safeguards in place to protect buyers of uncompleted private residential properties. For instance, developers must ensure no misleading information appears in their ads, and must used prescribed Option to Purchase and Sale and Purchase forms with an avenue for buyers to seek recourse. If defects surface within a year, the buyer can require the developer to rectify these at no charge.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Feb 24, 2010
When developers do not meet standards promised in their brochures and agreements, will the Building and Construction Authority (BCA) help buyers?
While it "cannot intervene in private contractual disagreements between buyers and developers", BCA will try to facilitate meetings ... to resolve such disputes, "as part of its standard operating procedure for good service", said National Development Minister Mah Bow Tan in a written reply to a query from Member of Parliament Fatimah Lateef.
Mr Mah cited a list of safeguards in place to protect buyers of uncompleted private residential properties. For instance, developers must ensure no misleading information appears in their ads, and must used prescribed Option to Purchase and Sale and Purchase forms with an avenue for buyers to seek recourse. If defects surface within a year, the buyer can require the developer to rectify these at no charge.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
BT : Tender soon for Yishun industrial site
Business Times - 24 Feb 2010
Tender soon for Yishun industrial site
By CHEW XIANG
THE Urban Redevelopment Authority (URA) will put a 60-year leasehold industrial site in Yishun up for tender after a developer triggered the sale with a minimum bid of $11.5 million.
The 1.42 hectare plot is located at the corner of Yishun Avenue 6 and Yishun Street 23. It is zoned for Business 1 use, or clean and light industrial and warehouse use and has a maximum gross plot ratio of 2.5.
The industrial site was made available for sale through the Reserve List system in May 2007 and a public tender will be launched in about two weeks, URA said.
The minimum bid price works out to just over $30 per square foot per plot ratio (psf ppr).
Dominic Peters, director, industrial at Savills Singapore, said that the price was within the fair market value of the plot, which he estimates at between $30 and $40 psf ppr, but he expects 'lukewarm response' to the tender due to the location of the site.
Recent industrial land sales have seen strong demand, with a 30-year site at Pioneer Road North drawing eight bids in December. The top bid from Kng Realty was $48 psf ppr.
And a plot in Kaki Bukit Road 2 attracted a record 18 bids when the tender closed in August, while one at Woodlands drew eight bids when its tender closed in July.
The highest bid for the 115,342 square foot Kaki Bukit site was just under $105 psf ppr, from Kng Development.
Wee Hur Development placed the highest bid for the Woodlands site, at $34 psf ppr for the 2.5 hectare plot.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Tender soon for Yishun industrial site
By CHEW XIANG
THE Urban Redevelopment Authority (URA) will put a 60-year leasehold industrial site in Yishun up for tender after a developer triggered the sale with a minimum bid of $11.5 million.
The 1.42 hectare plot is located at the corner of Yishun Avenue 6 and Yishun Street 23. It is zoned for Business 1 use, or clean and light industrial and warehouse use and has a maximum gross plot ratio of 2.5.
The industrial site was made available for sale through the Reserve List system in May 2007 and a public tender will be launched in about two weeks, URA said.
The minimum bid price works out to just over $30 per square foot per plot ratio (psf ppr).
Dominic Peters, director, industrial at Savills Singapore, said that the price was within the fair market value of the plot, which he estimates at between $30 and $40 psf ppr, but he expects 'lukewarm response' to the tender due to the location of the site.
Recent industrial land sales have seen strong demand, with a 30-year site at Pioneer Road North drawing eight bids in December. The top bid from Kng Realty was $48 psf ppr.
And a plot in Kaki Bukit Road 2 attracted a record 18 bids when the tender closed in August, while one at Woodlands drew eight bids when its tender closed in July.
The highest bid for the 115,342 square foot Kaki Bukit site was just under $105 psf ppr, from Kng Development.
Wee Hur Development placed the highest bid for the Woodlands site, at $34 psf ppr for the 2.5 hectare plot.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Ten Mile Junction site draws robust bids
Business Times - 24 Feb 2010
Ten Mile Junction site draws robust bids
By EMILYN YAP
(SINGAPORE) The first government land sale tender to close after measures were announced last Friday to cool the property market managed to draw some solid bids.
A 99-year leasehold residential site at the junction of Choa Chu Kang and Woodlands roads - which houses Ten Mile Junction - drew a top bid of $164 million or $437 per sq ft per plot ratio (psf ppr).
Far East Organization unit Dollar Land Singapore topped seven rivals with this bid.
Chip Eng Seng's CEL Development put in the second-highest bid of $148.3 million or $395 psf ppr.
The top two bids are not too far from market predictions in early January, even though the government has just introduced anti-speculation measures - a seller's stamp duty on residential property bought after Feb 19 and sold within a year, as well as a lower loan-to-value limit of 80 per cent for all private housing loans.
The response to the latest government land tender 'suggests that some developers think the measures will not have a significant impact in the longer term', said Knight Frank chairman Tan Tiong Cheng.
Going by the tender results, Colliers International research and advisory director Tay Huey Ying said some developers are 'realistically bullish' and there is still confidence in the mass-market sector.
Still, consultants point out that competition for land seems to have eased from a few months back. Ms Tay noted that bids for sites in the second half of last year were usually much higher than expected.
Jones Lang LaSalle South-east Asia research head Chua Yang Liang noted that there was just a 10 per cent gap between the top and second bids this time around. The gap can be as large as 20-30 per cent when the market is hot, he said.
Other participants in the tender that closed yesterday included Sim Lian Group and a tie-up between Frasers Centrepoint and NTUC FairPrice Co-operative. The lowest bid came from Soilbuild Group, at $71.2 million or $190 psf ppr.
The 1.56-hectare site is occupied by the three-storey Ten Mile Junction. The first two levels comprise commercial space with a gross floor area (GFA) of 121,191 sq ft, while the third houses an LRT station.
The winning developer will gain control of the commercial component. It can also build a residential development with a GFA of 254,394 sq ft on top of Ten Mile Junction. The residential project could yield some 200 apartments.
Going by consultants' estimates, the average selling price of the residential units could range from $700-$850 psf.
At the 99-year leasehold Mi Casa nearby, launched last year, three caveats were lodged for transactions at $658-$731 psf in January and February.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Ten Mile Junction site draws robust bids
By EMILYN YAP
(SINGAPORE) The first government land sale tender to close after measures were announced last Friday to cool the property market managed to draw some solid bids.
A 99-year leasehold residential site at the junction of Choa Chu Kang and Woodlands roads - which houses Ten Mile Junction - drew a top bid of $164 million or $437 per sq ft per plot ratio (psf ppr).
Far East Organization unit Dollar Land Singapore topped seven rivals with this bid.
Chip Eng Seng's CEL Development put in the second-highest bid of $148.3 million or $395 psf ppr.
The top two bids are not too far from market predictions in early January, even though the government has just introduced anti-speculation measures - a seller's stamp duty on residential property bought after Feb 19 and sold within a year, as well as a lower loan-to-value limit of 80 per cent for all private housing loans.
The response to the latest government land tender 'suggests that some developers think the measures will not have a significant impact in the longer term', said Knight Frank chairman Tan Tiong Cheng.
Going by the tender results, Colliers International research and advisory director Tay Huey Ying said some developers are 'realistically bullish' and there is still confidence in the mass-market sector.
Still, consultants point out that competition for land seems to have eased from a few months back. Ms Tay noted that bids for sites in the second half of last year were usually much higher than expected.
Jones Lang LaSalle South-east Asia research head Chua Yang Liang noted that there was just a 10 per cent gap between the top and second bids this time around. The gap can be as large as 20-30 per cent when the market is hot, he said.
Other participants in the tender that closed yesterday included Sim Lian Group and a tie-up between Frasers Centrepoint and NTUC FairPrice Co-operative. The lowest bid came from Soilbuild Group, at $71.2 million or $190 psf ppr.
The 1.56-hectare site is occupied by the three-storey Ten Mile Junction. The first two levels comprise commercial space with a gross floor area (GFA) of 121,191 sq ft, while the third houses an LRT station.
The winning developer will gain control of the commercial component. It can also build a residential development with a GFA of 254,394 sq ft on top of Ten Mile Junction. The residential project could yield some 200 apartments.
Going by consultants' estimates, the average selling price of the residential units could range from $700-$850 psf.
At the 99-year leasehold Mi Casa nearby, launched last year, three caveats were lodged for transactions at $658-$731 psf in January and February.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : DC rates may rise and affect en bloc sales
Business Times - 24 Feb 2010
DC rates may rise and affect en bloc sales
Consultants expect rates for residential use to climb 5-10%
By KALPANA RASHIWALA
(SINGAPORE) Development charges, which are paid to enhance or intensify the use of some sites, are headed north for residential use at the upcoming DC rate revision effective March 1, say property consultants.
They cite the increase in private home values since last year as well as aggressive land bids for residential sites at state tenders in the past six months.
On average, DC rates for landed and non-landed residential use could rise about 5 to 10 per cent. However, consultants are predicting that rates for commercial, industrial and hotel use could remain flat.
The upcoming DC rate revision will also be monitored by those trying to embark on collective sales, especially for sites whose redevelopment would involve sizeable DC payment. DC is part of total land cost to a developer. If the DC rate increases significantly and the value of the site remains constant, the developer will offer owners less for the site, explains CB Richard Ellis executive director Jeremy Lake.
'The problem today is that there's already a price gap between owners' and developers' expectations. This will be compounded if there's a significant hike in DC rates, in the case of sites with a significant DC component. The current environment (of rising private residential price expectations) is not conducive to owners reducing asking prices,' he adds.
'Hence for en bloc sites with significant DC component, the exposure to DC volatility can be very unhelpful in a rising market, whereas sites with zero or low DC component are fairly immune to DC volatility and those are good sites to work on.' Mr Lake reckons that the next DC rate revision on Sept 1 may be more keenly watched - than the March 1 update - as a higher number of en bloc sale efforts are likely to be at a more advanced stage then.
DC rates - which are revised on March 1 and Sept 1 each year - are specified by use groups (such as landed and non-landed residential, commercial and hotels) across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with Chief Valuer, who takes into account current market values.
Colliers International is projecting 8 to 10 per cent rise in average DC rates for non-landed residential use from March 1. The biggest hikes of up to 20 per cent are likely to be in places like Serangoon Avenue 3, Upper Thomson Road and Sengkang West Avenue where winning land bids at state tenders have been at substantial premiums of 48-86 per cent to land values imputed from the Sept 1, 2009 DC rates for these geographical sectors, says the firm's director Tay Huey Ying.
Suburban locations could see a bigger rise in DC rates than upmarket locations as last year's rebound in home sales and prices was led by the mass market segment, she argues.
Private-sector land deals too point to higher DC rates. For instance, the Parisian site at Angullia Park was sold in October at $2,058 psf per plot ratio - about 70 per cent above the DC-rate implied land value for the area.
DTZ's SE Asia research head Chua Chor Hoon reckons that non-landed DC rates will go up 15 to 25 per cent from March 1. Jones Lang LaSalle's associate director (research and consultancy) Desmond Sim predicts 10-15 per cent hikes in non-landed residential DC rates in mass-market suburban locations, outpacing a 5-8 per cent rise in prime districts.
As for landed residential DC rates, he forecasts a 10-15 per cent increase across all geographical sectors, with a bigger increase likely for Sentosa Cove and Good Class Bungalow Areas.
CB Richard Ellis executive director Li Hiaw Ho notes that the official price indices for detached, semi-detached and terrace houses rose 20-odd per cent from July to December 2009. In addition, 2009 saw the highest total value of GCB sales at $1.64 billion. He forecasts an average 5-10 per cent rise this round for landed rates.
Mr Li forecasts DC rates for commercial and industrial use will remain unchanged or even fall very marginally.
Colliers's Ms Tay, who is projecting an up to 5 per cent climb in average DC rate for industrial use, says: 'The government is unlikely to make significant upward adjustments to DC rates for industrial use group in general in the upcoming review given the nascent recovery of the manufacturing sector and the industrial property market. Also, JTC Corp industrial land rents have not been adjusted since they were revised downward in January 2009, says Ms Tay.
She reckons commercial DC rates will remain largely unchanged as office rents have remained weak.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
DC rates may rise and affect en bloc sales
Consultants expect rates for residential use to climb 5-10%
By KALPANA RASHIWALA
(SINGAPORE) Development charges, which are paid to enhance or intensify the use of some sites, are headed north for residential use at the upcoming DC rate revision effective March 1, say property consultants.
They cite the increase in private home values since last year as well as aggressive land bids for residential sites at state tenders in the past six months.
On average, DC rates for landed and non-landed residential use could rise about 5 to 10 per cent. However, consultants are predicting that rates for commercial, industrial and hotel use could remain flat.
The upcoming DC rate revision will also be monitored by those trying to embark on collective sales, especially for sites whose redevelopment would involve sizeable DC payment. DC is part of total land cost to a developer. If the DC rate increases significantly and the value of the site remains constant, the developer will offer owners less for the site, explains CB Richard Ellis executive director Jeremy Lake.
'The problem today is that there's already a price gap between owners' and developers' expectations. This will be compounded if there's a significant hike in DC rates, in the case of sites with a significant DC component. The current environment (of rising private residential price expectations) is not conducive to owners reducing asking prices,' he adds.
'Hence for en bloc sites with significant DC component, the exposure to DC volatility can be very unhelpful in a rising market, whereas sites with zero or low DC component are fairly immune to DC volatility and those are good sites to work on.' Mr Lake reckons that the next DC rate revision on Sept 1 may be more keenly watched - than the March 1 update - as a higher number of en bloc sale efforts are likely to be at a more advanced stage then.
DC rates - which are revised on March 1 and Sept 1 each year - are specified by use groups (such as landed and non-landed residential, commercial and hotels) across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with Chief Valuer, who takes into account current market values.
Colliers International is projecting 8 to 10 per cent rise in average DC rates for non-landed residential use from March 1. The biggest hikes of up to 20 per cent are likely to be in places like Serangoon Avenue 3, Upper Thomson Road and Sengkang West Avenue where winning land bids at state tenders have been at substantial premiums of 48-86 per cent to land values imputed from the Sept 1, 2009 DC rates for these geographical sectors, says the firm's director Tay Huey Ying.
Suburban locations could see a bigger rise in DC rates than upmarket locations as last year's rebound in home sales and prices was led by the mass market segment, she argues.
Private-sector land deals too point to higher DC rates. For instance, the Parisian site at Angullia Park was sold in October at $2,058 psf per plot ratio - about 70 per cent above the DC-rate implied land value for the area.
DTZ's SE Asia research head Chua Chor Hoon reckons that non-landed DC rates will go up 15 to 25 per cent from March 1. Jones Lang LaSalle's associate director (research and consultancy) Desmond Sim predicts 10-15 per cent hikes in non-landed residential DC rates in mass-market suburban locations, outpacing a 5-8 per cent rise in prime districts.
As for landed residential DC rates, he forecasts a 10-15 per cent increase across all geographical sectors, with a bigger increase likely for Sentosa Cove and Good Class Bungalow Areas.
CB Richard Ellis executive director Li Hiaw Ho notes that the official price indices for detached, semi-detached and terrace houses rose 20-odd per cent from July to December 2009. In addition, 2009 saw the highest total value of GCB sales at $1.64 billion. He forecasts an average 5-10 per cent rise this round for landed rates.
Mr Li forecasts DC rates for commercial and industrial use will remain unchanged or even fall very marginally.
Colliers's Ms Tay, who is projecting an up to 5 per cent climb in average DC rate for industrial use, says: 'The government is unlikely to make significant upward adjustments to DC rates for industrial use group in general in the upcoming review given the nascent recovery of the manufacturing sector and the industrial property market. Also, JTC Corp industrial land rents have not been adjusted since they were revised downward in January 2009, says Ms Tay.
She reckons commercial DC rates will remain largely unchanged as office rents have remained weak.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
CNA : Tender for Ten Mile Junction site attracts eight bids
Tender for Ten Mile Junction site attracts eight bids
By Wong Siew Ying, Channel NewsAsia | Posted: 23 February 2010 1914 hrs
SINGAPORE : The tender for a commercial-residential site at Ten Mile Junction in Choa Chu Kang has attracted eight bids.
The 1.56-hectare site is the first to be launched for tender this year under the Confirmed List of the government land sales programme.
The top bid of nearly S$164 million came from Dollar Land Singapore, a subsidiary of Lucky Realty Company.
This translates to a tendered sale price of some S$4,700 per square metre of gross floor area. And it is higher than market expectation of between S$135 million and S$150 million.
CEL Development, a subsidiary of Chip Eng Seng Corporation, put in the second highest bid at about S$148 million, followed by Sim Lian Land at about S$139 million.
The remaining bids for the site at the junction of Choa Chu Kang Road and Woodlands Road ranged from S$71 million to S$126 million.
The award of the tender will be announced at a later date pending evaluation of the bids.
In 2008, the government rejected the top bid of S$61 million for the same site as it was too low. - CNA/ms
By Wong Siew Ying, Channel NewsAsia | Posted: 23 February 2010 1914 hrs
SINGAPORE : The tender for a commercial-residential site at Ten Mile Junction in Choa Chu Kang has attracted eight bids.
The 1.56-hectare site is the first to be launched for tender this year under the Confirmed List of the government land sales programme.
The top bid of nearly S$164 million came from Dollar Land Singapore, a subsidiary of Lucky Realty Company.
This translates to a tendered sale price of some S$4,700 per square metre of gross floor area. And it is higher than market expectation of between S$135 million and S$150 million.
CEL Development, a subsidiary of Chip Eng Seng Corporation, put in the second highest bid at about S$148 million, followed by Sim Lian Land at about S$139 million.
The remaining bids for the site at the junction of Choa Chu Kang Road and Woodlands Road ranged from S$71 million to S$126 million.
The award of the tender will be announced at a later date pending evaluation of the bids.
In 2008, the government rejected the top bid of S$61 million for the same site as it was too low. - CNA/ms
CNA : URA releases Yishun industrial site for sale by public tender
URA releases Yishun industrial site for sale by public tender
By Mok Fei Fei, Channel NewsAsia | Posted: 23 February 2010 1431 hrs
SINGAPORE: More land for industrial use is being made available to the market.
The Urban Redevelopment Authority (URA) said on Tuesday that it has accepted an application from a developer to put up the industrial site at Yishun Avenue 6 for public tender.
The land parcel was made available for sale through the Reserve List system in May 2007. Under the system, a site would be released for sale only if a bid with an acceptable minimum price is received.
URA said it has received an application from a developer who has committed to bid at a price of not less than S$11.5 million for the land parcel.
As such, URA is making public the minimum price committed for the site. It will launch the public tender for the site in about two weeks.
The site, which has a maximum permissible gross plot ratio of 2.5, has a 60-year lease period and an area of 14,192.8 square metres.
- CNA/sc
By Mok Fei Fei, Channel NewsAsia | Posted: 23 February 2010 1431 hrs
SINGAPORE: More land for industrial use is being made available to the market.
The Urban Redevelopment Authority (URA) said on Tuesday that it has accepted an application from a developer to put up the industrial site at Yishun Avenue 6 for public tender.
The land parcel was made available for sale through the Reserve List system in May 2007. Under the system, a site would be released for sale only if a bid with an acceptable minimum price is received.
URA said it has received an application from a developer who has committed to bid at a price of not less than S$11.5 million for the land parcel.
As such, URA is making public the minimum price committed for the site. It will launch the public tender for the site in about two weeks.
The site, which has a maximum permissible gross plot ratio of 2.5, has a 60-year lease period and an area of 14,192.8 square metres.
- CNA/sc
ST : New progressive property tax system
Feb 23, 2010
BUDGET 2010
New progressive property tax system
By Jessica Cheam
SINGAPORE is shifting to a progressive property tax system that will mean lower- and middle-income property owners living in their homes will pay less tax.
All Housing Board (HDB) flat owners and a large majority of private property owners will enjoy tax savings of $240 a year as a result of the new system.
Finance Minister Tharman Shanmugaratnam said yesterday in his Budget statement that the Government intends to keep the property tax 'as a means of redistribution in our society, together with our income tax regime'.
Although the current system already taxes the wealthy more than others, there is 'scope for us to introduce further progressivity in property taxes', he said.
The new property tax regime is a three-tiered one at 0 per cent, 4 per cent and 6 per cent, and replaces the current flat 4 per cent concessionary rate for owner-occupied residential homes.
The first $6,000 of a home's annual value (AV) will be exempted from property tax - saving owners $240.
The next $59,000 will be taxed at 4 per cent and any AV above $65,000 will be taxed at 6 per cent.
The AV is the estimated annual rent of an owner-occupied property if it were rented out, excluding rent for furniture, fittings and any service charge.
The new system will apply for property tax payable from January next year.
Currently, owner-occupied homes with AVs below $10,000 also enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AV of their properties.
This will cease and be replaced by the new system. All other non owner-occupied properties are taxed at 10 per cent and are unaffected by the new tax regime.
Mr Tharman explained yesterday that when the Government abolished estate duty entirely in 2008, property tax was the remaining form of tax on assets.
He said the Government intended to retain property tax as it did not affect the middle and upper-middle groups more than the wealthier ones.
This was the reason that estate duty, which had been impacting middle and upper-middle income earners to a disproportionate extent, had been scrapped.
Mr Tharman added that a moderately progressive property tax system, together with an income tax system that collects more tax from the wealthy and a flat goods and services tax rate that everyone pays, will, together form a fair system of taxes in Singapore.
'Everyone pays something, but the rich pay more. Taken together, the overall burden of taxes will and must remain low by international standards,' he said.
He also noted, however, that as HDB homes gradually appreciate in value over the long term, flat owners will see an increasing property tax bill over time.
KPMG executive director (tax services) Leonard Ong said yesterday that the new system is a 'fairer way of collecting property taxes, as only a small, wealthier majority end up paying more'.
Indeed, owners of high-end properties will see a small increase in tax payable.
They comprise the top 3 per cent of private owner-occupied residential properties, or the top 0.4 per cent of all owner-occupied homes in Singapore, said Mr Tharman.
Homes with AVs of about $80,000 will face only a small increase in tax, of slightly less than $100 per year.
A property with an AV of $150,000, which typically is a large property in the central districts and is within the top 0.5 per cent level of private owner-occupied homes, will face an increase in property tax of about $1,500 per year.
However, the new tax rates, even for the high-end, will remain lower than in most international cities, he added.
'That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals alike.'
Real estate consultancy Colliers International managing director of China, Singapore and Taiwan, Mr Dennis Yeo, said the switch to a more moderate progressive tax schedule is a more long-term approach than the periodic tax rebates extended by the Government previously.
'It is expected to have little bearing on the property market in terms of market sentiment and activities,' he said.
This new progressive system of property taxes will cost the Government about $230 million a year initially, said Mr Tharman.
--------------------------------------------------------------------------------
What's changing
CURRENTLY: Owner-occupied residential properties are taxed at a concessionary 4 per cent rate.
In addition, owner-occupied residential properties with an annual value (AV) of below $10,000 can enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AV of their properties.
The AV is the estimated annual rent of your property if it were to be rented out, excluding the rent for furniture, fittings and any service charge.
All other properties are taxed at 10 per cent.
BUDGET 2010:
For property tax payable from January next year, the 1994 property tax rebates will be replaced by a progressive property tax schedule for owner-occupied residential properties:
· 0 per cent for the first $6,000 of AV;
· 4 per cent for the next $59,000 of AV;
· 6 per cent for the balance of AV in excess of $65,000.
Non-owner-occupied residential properties and other properties will continue to be subject to 10 per cent property tax.
BUDGET 2010
New progressive property tax system
By Jessica Cheam
SINGAPORE is shifting to a progressive property tax system that will mean lower- and middle-income property owners living in their homes will pay less tax.
All Housing Board (HDB) flat owners and a large majority of private property owners will enjoy tax savings of $240 a year as a result of the new system.
Finance Minister Tharman Shanmugaratnam said yesterday in his Budget statement that the Government intends to keep the property tax 'as a means of redistribution in our society, together with our income tax regime'.
Although the current system already taxes the wealthy more than others, there is 'scope for us to introduce further progressivity in property taxes', he said.
The new property tax regime is a three-tiered one at 0 per cent, 4 per cent and 6 per cent, and replaces the current flat 4 per cent concessionary rate for owner-occupied residential homes.
The first $6,000 of a home's annual value (AV) will be exempted from property tax - saving owners $240.
The next $59,000 will be taxed at 4 per cent and any AV above $65,000 will be taxed at 6 per cent.
The AV is the estimated annual rent of an owner-occupied property if it were rented out, excluding rent for furniture, fittings and any service charge.
The new system will apply for property tax payable from January next year.
Currently, owner-occupied homes with AVs below $10,000 also enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AV of their properties.
This will cease and be replaced by the new system. All other non owner-occupied properties are taxed at 10 per cent and are unaffected by the new tax regime.
Mr Tharman explained yesterday that when the Government abolished estate duty entirely in 2008, property tax was the remaining form of tax on assets.
He said the Government intended to retain property tax as it did not affect the middle and upper-middle groups more than the wealthier ones.
This was the reason that estate duty, which had been impacting middle and upper-middle income earners to a disproportionate extent, had been scrapped.
Mr Tharman added that a moderately progressive property tax system, together with an income tax system that collects more tax from the wealthy and a flat goods and services tax rate that everyone pays, will, together form a fair system of taxes in Singapore.
'Everyone pays something, but the rich pay more. Taken together, the overall burden of taxes will and must remain low by international standards,' he said.
He also noted, however, that as HDB homes gradually appreciate in value over the long term, flat owners will see an increasing property tax bill over time.
KPMG executive director (tax services) Leonard Ong said yesterday that the new system is a 'fairer way of collecting property taxes, as only a small, wealthier majority end up paying more'.
Indeed, owners of high-end properties will see a small increase in tax payable.
They comprise the top 3 per cent of private owner-occupied residential properties, or the top 0.4 per cent of all owner-occupied homes in Singapore, said Mr Tharman.
Homes with AVs of about $80,000 will face only a small increase in tax, of slightly less than $100 per year.
A property with an AV of $150,000, which typically is a large property in the central districts and is within the top 0.5 per cent level of private owner-occupied homes, will face an increase in property tax of about $1,500 per year.
However, the new tax rates, even for the high-end, will remain lower than in most international cities, he added.
'That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals alike.'
Real estate consultancy Colliers International managing director of China, Singapore and Taiwan, Mr Dennis Yeo, said the switch to a more moderate progressive tax schedule is a more long-term approach than the periodic tax rebates extended by the Government previously.
'It is expected to have little bearing on the property market in terms of market sentiment and activities,' he said.
This new progressive system of property taxes will cost the Government about $230 million a year initially, said Mr Tharman.
--------------------------------------------------------------------------------
What's changing
CURRENTLY: Owner-occupied residential properties are taxed at a concessionary 4 per cent rate.
In addition, owner-occupied residential properties with an annual value (AV) of below $10,000 can enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AV of their properties.
The AV is the estimated annual rent of your property if it were to be rented out, excluding the rent for furniture, fittings and any service charge.
All other properties are taxed at 10 per cent.
BUDGET 2010:
For property tax payable from January next year, the 1994 property tax rebates will be replaced by a progressive property tax schedule for owner-occupied residential properties:
· 0 per cent for the first $6,000 of AV;
· 4 per cent for the next $59,000 of AV;
· 6 per cent for the balance of AV in excess of $65,000.
Non-owner-occupied residential properties and other properties will continue to be subject to 10 per cent property tax.
ST Forum : New measures won't help market bloom
Feb 23, 2010
PROPERTY
New measures won't help market bloom
LAST Saturday's report, 'New rules to curb property speculation', puzzles me. Each time the media reports on a heightened interest in the property market, such as queues for condominiums or higher prices of newly launched condos, a new rule is introduced.
A situation in which all players in the market must guess constantly about government policy is unhealthy for a stable property market.
The market is currently trying to pick itself up after a state of depression since the most recent boom in 1997.
There are still many mass market condos today where owners have been unable to break even (after factoring in interest costs) on units they bought more than a decade ago.
For every new condo launched at a record-breaking price, there are several in the secondary market in good areas transacted at less than $600 per sq ft.
However, as this secondary market is of less news interest, the general impression given is that all condos are hitting record prices and the market is out of hand.
As for loans, banks are now extra prudent following the economic downturn and Singaporeans in general are not highly leveraged.
Speculation has not reached unduly high levels and trying to attack it too early may damage the entire market, not just curb speculation.
The fundamental problem now is not a property bubble but the unrealistic expectations of buyers who want good locations and good views at affordable prices but are not willing to accept the fact that, in a healthy and growing economy, it is normal and even desirable for prices to rise steadily.
Bobby Jayaraman
PROPERTY
New measures won't help market bloom
LAST Saturday's report, 'New rules to curb property speculation', puzzles me. Each time the media reports on a heightened interest in the property market, such as queues for condominiums or higher prices of newly launched condos, a new rule is introduced.
A situation in which all players in the market must guess constantly about government policy is unhealthy for a stable property market.
The market is currently trying to pick itself up after a state of depression since the most recent boom in 1997.
There are still many mass market condos today where owners have been unable to break even (after factoring in interest costs) on units they bought more than a decade ago.
For every new condo launched at a record-breaking price, there are several in the secondary market in good areas transacted at less than $600 per sq ft.
However, as this secondary market is of less news interest, the general impression given is that all condos are hitting record prices and the market is out of hand.
As for loans, banks are now extra prudent following the economic downturn and Singaporeans in general are not highly leveraged.
Speculation has not reached unduly high levels and trying to attack it too early may damage the entire market, not just curb speculation.
The fundamental problem now is not a property bubble but the unrealistic expectations of buyers who want good locations and good views at affordable prices but are not willing to accept the fact that, in a healthy and growing economy, it is normal and even desirable for prices to rise steadily.
Bobby Jayaraman
ST Forum : They don't go far enough in curbing excess
Feb 23, 2010
They don't go far enough in curbing excess
WHILE I welcome the government measures announced in last Saturday's report, 'New rules to curb property speculation', I doubt if they are effective enough to cool the market.
The rise in private and public property prices in the past four years has far outpaced the average Singaporean's pay hike.
I can think of half a dozen reasons for the sharp increase in private property prices:
· Low interest rates;
· The sharp rise in the non-resident population between 2006 and last year;
· A loss of faith in investing with banks, investment banks and fund managers following the collapse of Lehman Brothers;
· The low deposit and creative payment schemes crafted by developers;
· The storage of collective property sales which were not promptly developed but kept in developers' land banks, resulting in short supply; and
· The herd mentality leading to the property chase.
To discourage speculation, the Government should raise the interbank interest rate to at least 2.5 per cent to help beat its projected inflation rate of 2 to 3 per cent this year.
Review capital gains tax on property bought and sold within three years - a measure used in the middle of the last decade.
Ban collective sales of condominiums or landed property which are less than 30 years old, unless there is a good reason to do so.
To avoid a land squeeze, developers must redevelop an en bloc property within three years of acquisition.
David Goh
They don't go far enough in curbing excess
WHILE I welcome the government measures announced in last Saturday's report, 'New rules to curb property speculation', I doubt if they are effective enough to cool the market.
The rise in private and public property prices in the past four years has far outpaced the average Singaporean's pay hike.
I can think of half a dozen reasons for the sharp increase in private property prices:
· Low interest rates;
· The sharp rise in the non-resident population between 2006 and last year;
· A loss of faith in investing with banks, investment banks and fund managers following the collapse of Lehman Brothers;
· The low deposit and creative payment schemes crafted by developers;
· The storage of collective property sales which were not promptly developed but kept in developers' land banks, resulting in short supply; and
· The herd mentality leading to the property chase.
To discourage speculation, the Government should raise the interbank interest rate to at least 2.5 per cent to help beat its projected inflation rate of 2 to 3 per cent this year.
Review capital gains tax on property bought and sold within three years - a measure used in the middle of the last decade.
Ban collective sales of condominiums or landed property which are less than 30 years old, unless there is a good reason to do so.
To avoid a land squeeze, developers must redevelop an en bloc property within three years of acquisition.
David Goh
Tuesday, February 23, 2010
ST : Property stocks fall in wake of govt measures
Feb 23, 2010
Property stocks fall in wake of govt measures
FTSE ST Real Estate Index down 7.30 points to close at 629.40
By Joyce Teo, Property Correspondent
PROPERTY shares fell yesterday in the wake of Government steps to cool the real estate market although buyers were still out in force at the weekend.
Losses were felt across the board with industry leaders CapitaLand down 14 cents to $3.76, City Developments off 52 cents to $10.30 and Keppel Land down seven cents to $3.30. Wing Tai fell nine cents to $1.68.
Among the smaller firms, Ho Bee closed six cents down at $1.69, GuocoLand inched down two cents to $2.01. Allgreen shares dipped by just one cent to $1.13.
The FTSE ST Real Estate Index lost 7.30 points to close at 629.40.
Investors bailed out of the sector after the Government announced two measures last Friday evening to let some air out of a potential property bubble.
A stamp duty to deter short-term speculators will require sellers to pay a levy of about 3 per cent if they offload a property within a year of purchase.
The Government also lowered the loan-to-value limit of housing loans from 90 per cent to 80 per cent. This means buyers will have to fork out more downpayment to buy a property.
National Development Minister Mah Bow Tan said on Sunday that there was 'high risk' of a bubble forming and it was acting now with a small step, rather than later when harsher ones may be needed.
Some analysts saw yesterday's selldown as a knee-jerk reaction that has created buying opportunities.
A DMG & Partners Securities report said the Government's actions reflect 'a very cautious approach and strike a more serious tone' as compared with the market-cooling measures last September.
It reckoned the measures came out so quickly because the Government's confirmed list sales method - which increases supply as sites are tendered out according to a schedule - appears ineffective.
Developers have continued to bid aggressively for sites, with prices that suggest they may have to sell for 10 per cent to 30 per cent more than completed neighbouring projects.
HDB resale prices are also at a record high and still rising, despite increased supply of build-to-order flats.
DMG said the sector-wide kneejerk correction of share prices may last for more than a day and is likely to have a greater impact on developers with higher exposure to the mass market sector.
It continues to favour the shares of high-end developers, as it sees them prospering on the back of the better economy, potential for higher prices for their flats and relatively more attractive valuations.
OCBC Investment Research is also relatively upbeat. It said the impact of the moves may not as be as significant as the cooling measures put in last September.
'We believe the pre-emptive measures are to prevent more people from speculating...when (the market) continues to pick up for the rest of the year,' it said.
'Despite the measures, our fundamental view...remains unchanged as we believe that genuine demand will not be affected and interest from foreigners will continue to drive demand higher.'
But some are not as optimistic.
'If the measures have minimal impact, it heightens the policy risk and potential impact from future policies; if the measures work better than expected, valuations would decline,' said a DBS report.
An analyst who declined to be named told The Straits Times: 'There is negligible impact from the measures alone, but clearly the message is that there will be more measures if volumes and prices continue to shoot up.'
He said the Government is clearly concerned about the entire residential market as it mentioned the January sales spike of new, private homes as one danger sign. Nearly half of the sales were in prime areas.
Unless you are a really long-term investor, it is risky to start buying property stocks, he said.
Meanwhile, Far East Organization said visitorship was hit but keen buyers were mostly undeterred.
Wing Tai said it sold more than 70 per cent of the 48 flats released at the 147-unit L'viv in Newton Road at the weekend at an average of $2,000 per sq ft, or $1.25 million to $2.3 million for units ranging from 614 sq ft to 1,001 sq ft.
'Our L'viv clientele are genuine buyers seeking...long-term value; hence the new rules do not seem to have affected (them),' said a Wing Tai spokesman.
An industry observer said small projects, particularly those packed with compact units and in suburban areas, are likely to feel the heat from the measures.
'Speculators do go for these smaller units as they are easier to flip,' he said.
joyceteo@sph.com.sg
Property stocks fall in wake of govt measures
FTSE ST Real Estate Index down 7.30 points to close at 629.40
By Joyce Teo, Property Correspondent
PROPERTY shares fell yesterday in the wake of Government steps to cool the real estate market although buyers were still out in force at the weekend.
Losses were felt across the board with industry leaders CapitaLand down 14 cents to $3.76, City Developments off 52 cents to $10.30 and Keppel Land down seven cents to $3.30. Wing Tai fell nine cents to $1.68.
Among the smaller firms, Ho Bee closed six cents down at $1.69, GuocoLand inched down two cents to $2.01. Allgreen shares dipped by just one cent to $1.13.
The FTSE ST Real Estate Index lost 7.30 points to close at 629.40.
Investors bailed out of the sector after the Government announced two measures last Friday evening to let some air out of a potential property bubble.
A stamp duty to deter short-term speculators will require sellers to pay a levy of about 3 per cent if they offload a property within a year of purchase.
The Government also lowered the loan-to-value limit of housing loans from 90 per cent to 80 per cent. This means buyers will have to fork out more downpayment to buy a property.
National Development Minister Mah Bow Tan said on Sunday that there was 'high risk' of a bubble forming and it was acting now with a small step, rather than later when harsher ones may be needed.
Some analysts saw yesterday's selldown as a knee-jerk reaction that has created buying opportunities.
A DMG & Partners Securities report said the Government's actions reflect 'a very cautious approach and strike a more serious tone' as compared with the market-cooling measures last September.
It reckoned the measures came out so quickly because the Government's confirmed list sales method - which increases supply as sites are tendered out according to a schedule - appears ineffective.
Developers have continued to bid aggressively for sites, with prices that suggest they may have to sell for 10 per cent to 30 per cent more than completed neighbouring projects.
HDB resale prices are also at a record high and still rising, despite increased supply of build-to-order flats.
DMG said the sector-wide kneejerk correction of share prices may last for more than a day and is likely to have a greater impact on developers with higher exposure to the mass market sector.
It continues to favour the shares of high-end developers, as it sees them prospering on the back of the better economy, potential for higher prices for their flats and relatively more attractive valuations.
OCBC Investment Research is also relatively upbeat. It said the impact of the moves may not as be as significant as the cooling measures put in last September.
'We believe the pre-emptive measures are to prevent more people from speculating...when (the market) continues to pick up for the rest of the year,' it said.
'Despite the measures, our fundamental view...remains unchanged as we believe that genuine demand will not be affected and interest from foreigners will continue to drive demand higher.'
But some are not as optimistic.
'If the measures have minimal impact, it heightens the policy risk and potential impact from future policies; if the measures work better than expected, valuations would decline,' said a DBS report.
An analyst who declined to be named told The Straits Times: 'There is negligible impact from the measures alone, but clearly the message is that there will be more measures if volumes and prices continue to shoot up.'
He said the Government is clearly concerned about the entire residential market as it mentioned the January sales spike of new, private homes as one danger sign. Nearly half of the sales were in prime areas.
Unless you are a really long-term investor, it is risky to start buying property stocks, he said.
Meanwhile, Far East Organization said visitorship was hit but keen buyers were mostly undeterred.
Wing Tai said it sold more than 70 per cent of the 48 flats released at the 147-unit L'viv in Newton Road at the weekend at an average of $2,000 per sq ft, or $1.25 million to $2.3 million for units ranging from 614 sq ft to 1,001 sq ft.
'Our L'viv clientele are genuine buyers seeking...long-term value; hence the new rules do not seem to have affected (them),' said a Wing Tai spokesman.
An industry observer said small projects, particularly those packed with compact units and in suburban areas, are likely to feel the heat from the measures.
'Speculators do go for these smaller units as they are easier to flip,' he said.
joyceteo@sph.com.sg
ST : HDB sticking with build-to-order scheme
Feb 23, 2010
HDB sticking with build-to-order scheme
By Jeremy Au Yong
THE build-to-order (BTO) scheme introduced in 2001 by the Housing Board has reduced uncertainty for both flat buyers and the Government.
Applicants are now in a good position to plan for when they will get their flats, while the Government has a better gauge of demand.
National Development Minister Mah Bow Tan made these points in Parliament yesterday when responding to Madam Ho Geok Choo (West Coast GRC). She had asked if the Government would consider reverting to the previous Registration for Flat System.
Under that system, the HDB would build flats according to the number of applicants on its waiting list.
For the BTO scheme, however, flats are built only when there is sufficient take-up of flats in a project and down payments have been made. The HDB uses 70 per cent as a guide for the required take-up rate.
Mr Mah said the old system led to a situation in the 1990s when the Government was at one point left with 31,000 unsold flats. 'HDB took five years to clear its stock of unsold flats. Having such a large stock of unsold flats is a waste of public money,' he said.
This happened because under the old system, it was difficult to discern how much of the demand was genuine.
Mr Mah said: 'You are anticipating demand based on the length of the queue, and you don't know whether that is genuine demand or not because there is no commitment to buy.'
At the height of the property boom in the mid-1990s, there were about 150,000 applicants on the HDB's waiting list. The waiting time was between six and seven years. Then, in the wake of the Asian financial crisis in 1997, applicants dropped off the list and the HDB found it had no buyers for the flats.
Mr Mah said that with the BTO system now in place, the average waiting time for buyers was around 31/2 years: Processing applications and administrative work could take up to six months, and construction would take three years.
The main cause of delays in previous years - applicants having to wait for a successful ballot - has also been addressed as there has been an increase in construction. The HDB announced plans to build some 12,000 flats this year.
'Under the current speed of rolling out BTO projects, which is once a month now, the chances of the person being successful is actually very high,' Mr Mah said. He added that the vast majority of those applying for BTO flats in non-mature estates succeed within two tries.
Asked by Madam Cynthia Phua (Aljunied GRC) and Mr Yeo Guat Kwang (Aljunied GRC) if the stipulation, that roughly 70 per cent of a project must be sold before construction can start, added to the delay, Mr Mah said this hurdle was often easily cleared. 'This hurdle rate of 70 per cent is not difficult to achieve. On the other hand, it does give us fairly comfortable assurance that if we proceed to build, there will not be oversupply,' he said.
According to the HDB, since the BTO scheme began, only four projects did not draw enough buyers.
Punggol Vista BTO flats under construction. Under the BTO scheme, flats are built only when there is sufficient take-up and down payments have been made. -- ST PHOTO: ALPHONSUS CHERN
HDB sticking with build-to-order scheme
By Jeremy Au Yong
THE build-to-order (BTO) scheme introduced in 2001 by the Housing Board has reduced uncertainty for both flat buyers and the Government.
Applicants are now in a good position to plan for when they will get their flats, while the Government has a better gauge of demand.
National Development Minister Mah Bow Tan made these points in Parliament yesterday when responding to Madam Ho Geok Choo (West Coast GRC). She had asked if the Government would consider reverting to the previous Registration for Flat System.
Under that system, the HDB would build flats according to the number of applicants on its waiting list.
For the BTO scheme, however, flats are built only when there is sufficient take-up of flats in a project and down payments have been made. The HDB uses 70 per cent as a guide for the required take-up rate.
Mr Mah said the old system led to a situation in the 1990s when the Government was at one point left with 31,000 unsold flats. 'HDB took five years to clear its stock of unsold flats. Having such a large stock of unsold flats is a waste of public money,' he said.
This happened because under the old system, it was difficult to discern how much of the demand was genuine.
Mr Mah said: 'You are anticipating demand based on the length of the queue, and you don't know whether that is genuine demand or not because there is no commitment to buy.'
At the height of the property boom in the mid-1990s, there were about 150,000 applicants on the HDB's waiting list. The waiting time was between six and seven years. Then, in the wake of the Asian financial crisis in 1997, applicants dropped off the list and the HDB found it had no buyers for the flats.
Mr Mah said that with the BTO system now in place, the average waiting time for buyers was around 31/2 years: Processing applications and administrative work could take up to six months, and construction would take three years.
The main cause of delays in previous years - applicants having to wait for a successful ballot - has also been addressed as there has been an increase in construction. The HDB announced plans to build some 12,000 flats this year.
'Under the current speed of rolling out BTO projects, which is once a month now, the chances of the person being successful is actually very high,' Mr Mah said. He added that the vast majority of those applying for BTO flats in non-mature estates succeed within two tries.
Asked by Madam Cynthia Phua (Aljunied GRC) and Mr Yeo Guat Kwang (Aljunied GRC) if the stipulation, that roughly 70 per cent of a project must be sold before construction can start, added to the delay, Mr Mah said this hurdle was often easily cleared. 'This hurdle rate of 70 per cent is not difficult to achieve. On the other hand, it does give us fairly comfortable assurance that if we proceed to build, there will not be oversupply,' he said.
According to the HDB, since the BTO scheme began, only four projects did not draw enough buyers.
Punggol Vista BTO flats under construction. Under the BTO scheme, flats are built only when there is sufficient take-up and down payments have been made. -- ST PHOTO: ALPHONSUS CHERN
BT : BUDGET 2010: PROPERTY - What they say
Business Times - 23 Feb 2010
BUDGET 2010: PROPERTY
What they say
'As expected, the 2010 Budget is rather soft on the property market given the run-up in the residential market. The restructuring of the property tax system is unlikely to have an adverse affect on the residential sector given that the impact of these changes is limited to only a very small proportion of the market. Any cool off in the residential market in the forthcoming months is more likely to be a direct response to the recent spate of anti-speculative measures rather than a reaction to this property tax restructuring.'
- Chua Yang Liang, South-east Asia research head, Jones Lang LaSalle
'The adjustment to the property tax system is fair. It will make more people happy, and those who have to pay more should not be significantly affected by the 2% increase on their net annual value of their homes.'
- Choo Eng Chuan, tax partner, Ernst & Young Solutions LLP
'The REIT market faced considerable challenges during the recent financial crisis and this very positive move to extend the tax incentives for REITs to March 31, 2015, strengthens the confidence of investors and REIT sponsors that Singapore will continue to be the hub for REIT listings in the region. The dampener, however, is the introduction of a sunset clause for exemption of foreign sourced income for REITs which takes effect for such income received after March 31, 2015.'
- Leonard Ong, executive director, KPMG Tax Services
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BUDGET 2010: PROPERTY
What they say
'As expected, the 2010 Budget is rather soft on the property market given the run-up in the residential market. The restructuring of the property tax system is unlikely to have an adverse affect on the residential sector given that the impact of these changes is limited to only a very small proportion of the market. Any cool off in the residential market in the forthcoming months is more likely to be a direct response to the recent spate of anti-speculative measures rather than a reaction to this property tax restructuring.'
- Chua Yang Liang, South-east Asia research head, Jones Lang LaSalle
'The adjustment to the property tax system is fair. It will make more people happy, and those who have to pay more should not be significantly affected by the 2% increase on their net annual value of their homes.'
- Choo Eng Chuan, tax partner, Ernst & Young Solutions LLP
'The REIT market faced considerable challenges during the recent financial crisis and this very positive move to extend the tax incentives for REITs to March 31, 2015, strengthens the confidence of investors and REIT sponsors that Singapore will continue to be the hub for REIT listings in the region. The dampener, however, is the introduction of a sunset clause for exemption of foreign sourced income for REITs which takes effect for such income received after March 31, 2015.'
- Leonard Ong, executive director, KPMG Tax Services
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Eyes on Estuary for impact of anti-speculation moves
Business Times - 23 Feb 2010
Eyes on Estuary for impact of anti-speculation moves
This week's preview of MCL condo could indicate if demand has been dented
By KALPANA RASHIWALA
ALL eyes in the property market are on MCL Land's preview this week of its Yishun condo to see if demand has been dented by last Friday's anti-speculation measures.
One and two-bedroom units - which have typically been popular among some speculators at property launches over the past year - make up nearly 40 per cent of the total 608 units in the project, The Estuary.
The Hongkong Land subsidiary will preview about 200 units in the 99-year leasehold condo at an average price of about $750 per sq ft (psf), said MCL chief executive Koh Teck Chuan.
Property industry watchers will be focusing on the demand for smaller units - especially the 85 one-bedders which range from 590-603 sq ft. Smallish apartments have often been targets for speculators over the past year as the lump sum outlay is relatively more affordable. And for developers, smallish units can achieve the highest psf price.
MCL is pricing its one-bedders at $835 psf on average, translating to a lump sum investment of about $500,000.
Meanwhile, property giant Far East Organization said last Friday night's government announcement of measures to cool the market had affected the number of show-flat visitors at the weekend.
The group's chief operating officer, property sales, Chia Boon Kuah, said: 'We have seen some impact on visitors. The weekend launch of Altez (in Tanjong Pagar) received about 600 groups of visitors. So far we have sold a total of 140 out of 155 units released.
'Across our other show flats, we noticed a slowdown in visitorship, though the number of units sold remain comparable over a typical weekend.
'The majority of Far East's buyers are owner-occupiers or investors with a mid to long-term investment horizon. We will continue to meet demand from this segment and expect to proceed with our planned launches this year, while keeping a close watch on market reactions.'
As for Yishun, where MCL is gearing up to preview The Estuary, Mr Koh said: 'We believe our buyers will comprise mostly owner-occupiers and will not be affected by the government's measures. There hasn't been any private condo launch in Yishun for many years.'
The development, in blocks of 15-17 storeys, is near Khatib Station and overlooks Lower Seletar Reservoir.
Last Friday night, the government announced the introduction of a seller's stamp duty for those buying residential properties from Feb 20 and selling them within a year, in a bid to curb short-term speculation. The new seller's stamp duty is in addition to the buyer's stamp duty.
As well, the loan-to-value limit for all housing loans provided by financial institutions will be reduced from 90 per cent to 80 per cent to foster greater financial prudence.
Some property consultants say the second measure could have an impact on some buyers of entry-level private condos.
'That can be quite a challenge for some HDB upgraders as effectively it could mean having to come up with 20 per cent cash downpayment, since their CPF savings would be tied up in their existing flats,' said Knight Frank managing director (residential services) Peter Ow.
'And schemes like interest absorption and deferred payment - which helped such buyers tide over the construction of their new homes - are no longer available.'
The Estuary's two-bedroom units range from 904 to 926 sq ft and have an average price of $780 psf. Its three-bedders (1,184 to 1,302 sq ft) cost $722 psf on average, while the four-bedders (1,453-1,528 sq ft) have an average price of $689 psf.
Savills Singapore's analysis of URA Realis caveats information as of yesterday showed 191 caveats for sub-sales - sometimes seen as a proxy for speculative activity - of non-landed private homes were lodged last month and 10 for February. The highest monthly figure last year was in June, when 597 sub-sale caveats were lodged. During the 2007 bull run, the highest monthly figure was in July, with 867 caveats.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The Estuary: One and two-bedroom units make up nearly 40 per cent of the total 608 units in the project. Some 200 units in the 99-year leasehold condo will be previewed at an average price of about $750 per sq ft
Eyes on Estuary for impact of anti-speculation moves
This week's preview of MCL condo could indicate if demand has been dented
By KALPANA RASHIWALA
ALL eyes in the property market are on MCL Land's preview this week of its Yishun condo to see if demand has been dented by last Friday's anti-speculation measures.
One and two-bedroom units - which have typically been popular among some speculators at property launches over the past year - make up nearly 40 per cent of the total 608 units in the project, The Estuary.
The Hongkong Land subsidiary will preview about 200 units in the 99-year leasehold condo at an average price of about $750 per sq ft (psf), said MCL chief executive Koh Teck Chuan.
Property industry watchers will be focusing on the demand for smaller units - especially the 85 one-bedders which range from 590-603 sq ft. Smallish apartments have often been targets for speculators over the past year as the lump sum outlay is relatively more affordable. And for developers, smallish units can achieve the highest psf price.
MCL is pricing its one-bedders at $835 psf on average, translating to a lump sum investment of about $500,000.
Meanwhile, property giant Far East Organization said last Friday night's government announcement of measures to cool the market had affected the number of show-flat visitors at the weekend.
The group's chief operating officer, property sales, Chia Boon Kuah, said: 'We have seen some impact on visitors. The weekend launch of Altez (in Tanjong Pagar) received about 600 groups of visitors. So far we have sold a total of 140 out of 155 units released.
'Across our other show flats, we noticed a slowdown in visitorship, though the number of units sold remain comparable over a typical weekend.
'The majority of Far East's buyers are owner-occupiers or investors with a mid to long-term investment horizon. We will continue to meet demand from this segment and expect to proceed with our planned launches this year, while keeping a close watch on market reactions.'
As for Yishun, where MCL is gearing up to preview The Estuary, Mr Koh said: 'We believe our buyers will comprise mostly owner-occupiers and will not be affected by the government's measures. There hasn't been any private condo launch in Yishun for many years.'
The development, in blocks of 15-17 storeys, is near Khatib Station and overlooks Lower Seletar Reservoir.
Last Friday night, the government announced the introduction of a seller's stamp duty for those buying residential properties from Feb 20 and selling them within a year, in a bid to curb short-term speculation. The new seller's stamp duty is in addition to the buyer's stamp duty.
As well, the loan-to-value limit for all housing loans provided by financial institutions will be reduced from 90 per cent to 80 per cent to foster greater financial prudence.
Some property consultants say the second measure could have an impact on some buyers of entry-level private condos.
'That can be quite a challenge for some HDB upgraders as effectively it could mean having to come up with 20 per cent cash downpayment, since their CPF savings would be tied up in their existing flats,' said Knight Frank managing director (residential services) Peter Ow.
'And schemes like interest absorption and deferred payment - which helped such buyers tide over the construction of their new homes - are no longer available.'
The Estuary's two-bedroom units range from 904 to 926 sq ft and have an average price of $780 psf. Its three-bedders (1,184 to 1,302 sq ft) cost $722 psf on average, while the four-bedders (1,453-1,528 sq ft) have an average price of $689 psf.
Savills Singapore's analysis of URA Realis caveats information as of yesterday showed 191 caveats for sub-sales - sometimes seen as a proxy for speculative activity - of non-landed private homes were lodged last month and 10 for February. The highest monthly figure last year was in June, when 597 sub-sale caveats were lodged. During the 2007 bull run, the highest monthly figure was in July, with 867 caveats.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The Estuary: One and two-bedroom units make up nearly 40 per cent of the total 608 units in the project. Some 200 units in the 99-year leasehold condo will be previewed at an average price of about $750 per sq ft
BT : New scheme to maximise land use benefits 9 sectors
Business Times - 23 Feb 2010
BUDGET 2010: PROPERTY
New scheme to maximise land use benefits 9 sectors
By UMA SHANKARI
THE government has decided to do away with a tax allowance scheme for businesses introduced in the 1940s to encourage Singapore's industrialisation. The axed scheme will be replaced by one designed to enhance land productivity - but only companies from nine chosen sectors will benefit from the new scheme.
Singapore should promote the intensification of industrial land use and move towards more land-efficient and higher value- added activities, Finance Minister Tharman Shanmugaratnam said yesterday.
'The Industrial Building Allowance (IBA) has met its objective but is no longer adequate or relevant to meet our current priorities,' he said. 'It does not distinguish between efficient and inefficient uses of industrial land.'
In its report earlier this year, the Economic Strategies Committee said Singapore has to support the intensification of industrial land use as there are now greater demands on the country's limited land resources.
The IBA gave tax allowances to companies for capital expenditure on the construction or purchase of an industrial building or structure.
Its replacement, the Land Intensification Allowance (LIA), similarly allows companies to claim for capital expenditure incurred to construct a qualifying building or structure.
But only companies from nine sectors - pharmaceuticals, petrochemicals, petroleum, chemicals, semiconductor-wafer fabrication, aerospace, marine and offshore engineering, solar cell manufacturing and other 'speciality' industries - will qualify for the LIA.
These sectors have been singled out as part of the government's long-term plans to move Singapore's manufacturing sector up the value-added chain.
The building or structure will also have to meet the gross plot ratio (GPR) benchmark relevant to the industry sector of the building user. To encourage intensification, the benchmarks for each industry sector will be set around the 75th percentile of actual GPRs for the sector.
Qualifying firms will be granted a first-time allowance of 25 per cent, then 5 per cent each year for qualifying expenditure on the construction of buildings.
Analysts are surprised by the switch, as fewer companies will now qualify.
'The old IBA did not restrict the benefits to only a few sectors,' said David Lee, executive director of tax services for KPMG. 'At the end of the day, if those (nine industry) sectors are the ones they are encouraging, they can always give them incentives instead.'
He pointed out that the new scheme means that companies in some of Singapore's biggest industries - such as electronics manufacturing and equipment manufacturing - will be missed out.
Ernst & Young tax director Helen Bok said: 'Many companies will be disappointed that the IBA will be phased out because this is a significant deduction for those carrying on qualifying activities. This will increase their cost of doing business in Singapore.'
But pegging the tax allowances to building plot ratios will encourage building owners to maximise land use, which is a good move for land-scarce Singapore, said Colliers managing director Dennis Yeo.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BUDGET 2010: PROPERTY
New scheme to maximise land use benefits 9 sectors
By UMA SHANKARI
THE government has decided to do away with a tax allowance scheme for businesses introduced in the 1940s to encourage Singapore's industrialisation. The axed scheme will be replaced by one designed to enhance land productivity - but only companies from nine chosen sectors will benefit from the new scheme.
Singapore should promote the intensification of industrial land use and move towards more land-efficient and higher value- added activities, Finance Minister Tharman Shanmugaratnam said yesterday.
'The Industrial Building Allowance (IBA) has met its objective but is no longer adequate or relevant to meet our current priorities,' he said. 'It does not distinguish between efficient and inefficient uses of industrial land.'
In its report earlier this year, the Economic Strategies Committee said Singapore has to support the intensification of industrial land use as there are now greater demands on the country's limited land resources.
The IBA gave tax allowances to companies for capital expenditure on the construction or purchase of an industrial building or structure.
Its replacement, the Land Intensification Allowance (LIA), similarly allows companies to claim for capital expenditure incurred to construct a qualifying building or structure.
But only companies from nine sectors - pharmaceuticals, petrochemicals, petroleum, chemicals, semiconductor-wafer fabrication, aerospace, marine and offshore engineering, solar cell manufacturing and other 'speciality' industries - will qualify for the LIA.
These sectors have been singled out as part of the government's long-term plans to move Singapore's manufacturing sector up the value-added chain.
The building or structure will also have to meet the gross plot ratio (GPR) benchmark relevant to the industry sector of the building user. To encourage intensification, the benchmarks for each industry sector will be set around the 75th percentile of actual GPRs for the sector.
Qualifying firms will be granted a first-time allowance of 25 per cent, then 5 per cent each year for qualifying expenditure on the construction of buildings.
Analysts are surprised by the switch, as fewer companies will now qualify.
'The old IBA did not restrict the benefits to only a few sectors,' said David Lee, executive director of tax services for KPMG. 'At the end of the day, if those (nine industry) sectors are the ones they are encouraging, they can always give them incentives instead.'
He pointed out that the new scheme means that companies in some of Singapore's biggest industries - such as electronics manufacturing and equipment manufacturing - will be missed out.
Ernst & Young tax director Helen Bok said: 'Many companies will be disappointed that the IBA will be phased out because this is a significant deduction for those carrying on qualifying activities. This will increase their cost of doing business in Singapore.'
But pegging the tax allowances to building plot ratios will encourage building owners to maximise land use, which is a good move for land-scarce Singapore, said Colliers managing director Dennis Yeo.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Anti-speculation moves dent property counters
Business Times - 23 Feb 2010
Anti-speculation moves dent property counters
Capital gains tax could be next, says RBS, since govt keen to avoid bubble
By OH BOON PING
(SINGAPORE) Singapore property counters took a hit yesterday, after the government's latest moves to quell speculation.
CapitaLand lost 14 cents to $3.76, City Developments fell 52 cents to $10.30, and Keppel Land slipped 7 cents to $3.30.
The falls came after the government last week introduced a seller's stamp duty (SSD) on all residential land and property bought after Feb 19 and sold within a year, and cut the loan-to- value (LTV) limit for all private housing loans to 80 per cent, from 90 per cent.
Citi economist Kit Wei Zheng believes the impact of the lower LTV ratio will be limited, since fewer than 10 per cent of housing loans are granted at an LTV of more than 80 per cent.
And the SSD, designed to discourage the marginal would-be speculators, 'is clearly less drastic than similar measures implemented in 1996, when the minimum holding period was three years', he said.
'One can also argue that the seller stamp duty rate - 3 per cent minus $5,400 - is not large enough to act as a serious deterrent at this stage.'
Still, Citi considers the moves prudent, since high sales in prime districts 'raise the possibility that buyers of such units could be highly-leveraged middle income households buying for investment or speculative purposes, rather than genuine first-time home buyers'.
'Although households have been deleveraging since 2003, the recent surge in property transactions and mortgage lending would probably be of concern to regulators,' Citi says.
'Thus, it is not just from a political but also prudential perspective that the government may have decided to act quickly in the latest episode.'
Royal Bank of Scotland (RBS) thinks property gains tax could be next, as the government has stated that more measures will be implemented if necessary to prevent a property bubble.
These tools include tweaking credit rules, and land supply and tax policies in extreme cases.
'Given that supply and credit rules have been tweaked, we believe property gains tax is next, albeit at rates lower than implemented in 1996. This is because the government hopes to introduce calibrated measures to avoid a crash in the property market.'
DMG believes the fundamentals and outlook for Singapore property remain healthy, especially in the high-end segment.
'Our mid-cap and small-cap top picks within the overweight property sector remain Wing Tai and SC Global respectively,' it says.
On the economics front, Citi feels the first quarter was mixed, with disappointing non-oil domestic exports (NODX) and a continued recovery in services coupled with official caution over the second-half outlook.
Indicators to look out for include NODX and industrial production momentum, tourism activity (especially from the opening of the integrated resorts), and wage and imported inflation pressures.
Citi also feels the Singapore dollar may have limited room to appreciate, given the US dollar's strength, even though an unwinding of short euro positions could drive the euro up in the near term, in turn allowing the Sing dollar to strengthen in a similar time frame.
'At the same time, the pressure for MAS to tighten in April has likely eased, though we would still expect it to tighten by October at the latest,' it says.
'In any case, any downward pressure on US$-S$ from MAS tightening would probably be limited, given the S$ net effective exchange rate (NEER) is already at the strong side of the policy band, while a change in slope allows for only incremental gains in the S$ NEER in the near term.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Anti-speculation moves dent property counters
Capital gains tax could be next, says RBS, since govt keen to avoid bubble
By OH BOON PING
(SINGAPORE) Singapore property counters took a hit yesterday, after the government's latest moves to quell speculation.
CapitaLand lost 14 cents to $3.76, City Developments fell 52 cents to $10.30, and Keppel Land slipped 7 cents to $3.30.
The falls came after the government last week introduced a seller's stamp duty (SSD) on all residential land and property bought after Feb 19 and sold within a year, and cut the loan-to- value (LTV) limit for all private housing loans to 80 per cent, from 90 per cent.
Citi economist Kit Wei Zheng believes the impact of the lower LTV ratio will be limited, since fewer than 10 per cent of housing loans are granted at an LTV of more than 80 per cent.
And the SSD, designed to discourage the marginal would-be speculators, 'is clearly less drastic than similar measures implemented in 1996, when the minimum holding period was three years', he said.
'One can also argue that the seller stamp duty rate - 3 per cent minus $5,400 - is not large enough to act as a serious deterrent at this stage.'
Still, Citi considers the moves prudent, since high sales in prime districts 'raise the possibility that buyers of such units could be highly-leveraged middle income households buying for investment or speculative purposes, rather than genuine first-time home buyers'.
'Although households have been deleveraging since 2003, the recent surge in property transactions and mortgage lending would probably be of concern to regulators,' Citi says.
'Thus, it is not just from a political but also prudential perspective that the government may have decided to act quickly in the latest episode.'
Royal Bank of Scotland (RBS) thinks property gains tax could be next, as the government has stated that more measures will be implemented if necessary to prevent a property bubble.
These tools include tweaking credit rules, and land supply and tax policies in extreme cases.
'Given that supply and credit rules have been tweaked, we believe property gains tax is next, albeit at rates lower than implemented in 1996. This is because the government hopes to introduce calibrated measures to avoid a crash in the property market.'
DMG believes the fundamentals and outlook for Singapore property remain healthy, especially in the high-end segment.
'Our mid-cap and small-cap top picks within the overweight property sector remain Wing Tai and SC Global respectively,' it says.
On the economics front, Citi feels the first quarter was mixed, with disappointing non-oil domestic exports (NODX) and a continued recovery in services coupled with official caution over the second-half outlook.
Indicators to look out for include NODX and industrial production momentum, tourism activity (especially from the opening of the integrated resorts), and wage and imported inflation pressures.
Citi also feels the Singapore dollar may have limited room to appreciate, given the US dollar's strength, even though an unwinding of short euro positions could drive the euro up in the near term, in turn allowing the Sing dollar to strengthen in a similar time frame.
'At the same time, the pressure for MAS to tighten in April has likely eased, though we would still expect it to tighten by October at the latest,' it says.
'In any case, any downward pressure on US$-S$ from MAS tightening would probably be limited, given the S$ net effective exchange rate (NEER) is already at the strong side of the policy band, while a change in slope allows for only incremental gains in the S$ NEER in the near term.'
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Developers come under pressure
Business Times - 23 Feb 2010
Top Stories for Front Page
Developers come under pressure
STI ends flat after govt announces fresh set of anti-speculative property measures over weekend
By R SIVANITHY
SENIOR CORRESPONDENT
PRESSURE on property developers was one of the main features of trading yesterday after the government announced a fresh set of anti-speculative measures over the weekend.
The other factor at work was a weak opening for Europe, probably in anticipation of a soft Wall Street. The end result was that the Straits Times Index first added 15 points but ended just 0.32 of a point higher at 2,757.46.
The unspectacular finish was perhaps not as much as might have been expected given the 2.4 per cent bounce in Hong Kong, but this was probably because the STI had, on Friday, first dropped 40 points before ending with just a 12-point loss, with the bulk of this bounce coming in the final few minutes that day.
As for the government's Budget, brokers said that as was the case most of the time, there was little or no impact.
Over the weekend the government announced its second set of property cooling measures, namely a sellers' stamp duty of 3 per cent for properties sold within a year of purchase and a lowering of the loan-to-value limit from 90 to 80 per cent. CapitaLand lost 14 cents at $3.76, City Developments dropped 52 cents to $10.30 and Wing Tai lost nine cents at $1.68.
UBS Investment Research said that it believes that more measures will be introduced if 1) prices rise more than 5-7 per cent per quarter, 2) new sales volume rises above 1,000 per month, 3) sub-sales make up over 25 per cent of total sales and 4) other jurisdictions tighten policies which could result in inflows into Singapore assets. It said that investors have probably been caught by surprise by the measures and so it expects a short-term correction in prices of residential developers.
Citi Investment Research said that it thinks that like the first batch of measures announced last September, the new measures will have little real impact. 'They simply reinforce the earlier government message to speculators, that is, it is monitoring the situation and will act when deemed necessary,' said Citi.
Credit Suisse, in the meantime, maintained an 'overweight' on the sector and recommended buying on dips.
Genting Singapore proved to be the market's other focal point when it rose three cents to 97 cents after releasing its Q4 2009 results last Friday, which included mainly revenue drops and net losses.
OCBC Investment Research described the results as disappointing, reduced its fair value for the stock from $1.35 to $1.04, but retained a 'buy'.
Credit Suisse, on the other hand, said that Genting's 2009 results were largely irrelevant as the company was still in the process of rolling out its Sentosa project and so Q4 figures were weighed down by pre-operating costs. However, it called an 'underperform' with a 94-cent target because it described Genting as one of the world's most expensive gaming stocks. 'If Genting were to trade in line with the Singapore market, this would suggest a value of 46 cents. The experience from Macau has been for an 11-29 per cent drop in share prices after new casino openings.'
OCBC rose two cents to $8.56 after releasing its results last Friday. Analysts responded with a mixed bag of recommendations - JP Morgan called an 'overweight' with a target price of $11 using a dividend-discount model while Deutsche Bank called a 'hold' with $9.10 as the target.
Morgan Stanley however, retained an 'underweight' on OCBC, pointing to an unexciting growth outlook and uncompelling valuations. Its target is $8.54.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Top Stories for Front Page
Developers come under pressure
STI ends flat after govt announces fresh set of anti-speculative property measures over weekend
By R SIVANITHY
SENIOR CORRESPONDENT
PRESSURE on property developers was one of the main features of trading yesterday after the government announced a fresh set of anti-speculative measures over the weekend.
The other factor at work was a weak opening for Europe, probably in anticipation of a soft Wall Street. The end result was that the Straits Times Index first added 15 points but ended just 0.32 of a point higher at 2,757.46.
The unspectacular finish was perhaps not as much as might have been expected given the 2.4 per cent bounce in Hong Kong, but this was probably because the STI had, on Friday, first dropped 40 points before ending with just a 12-point loss, with the bulk of this bounce coming in the final few minutes that day.
As for the government's Budget, brokers said that as was the case most of the time, there was little or no impact.
Over the weekend the government announced its second set of property cooling measures, namely a sellers' stamp duty of 3 per cent for properties sold within a year of purchase and a lowering of the loan-to-value limit from 90 to 80 per cent. CapitaLand lost 14 cents at $3.76, City Developments dropped 52 cents to $10.30 and Wing Tai lost nine cents at $1.68.
UBS Investment Research said that it believes that more measures will be introduced if 1) prices rise more than 5-7 per cent per quarter, 2) new sales volume rises above 1,000 per month, 3) sub-sales make up over 25 per cent of total sales and 4) other jurisdictions tighten policies which could result in inflows into Singapore assets. It said that investors have probably been caught by surprise by the measures and so it expects a short-term correction in prices of residential developers.
Citi Investment Research said that it thinks that like the first batch of measures announced last September, the new measures will have little real impact. 'They simply reinforce the earlier government message to speculators, that is, it is monitoring the situation and will act when deemed necessary,' said Citi.
Credit Suisse, in the meantime, maintained an 'overweight' on the sector and recommended buying on dips.
Genting Singapore proved to be the market's other focal point when it rose three cents to 97 cents after releasing its Q4 2009 results last Friday, which included mainly revenue drops and net losses.
OCBC Investment Research described the results as disappointing, reduced its fair value for the stock from $1.35 to $1.04, but retained a 'buy'.
Credit Suisse, on the other hand, said that Genting's 2009 results were largely irrelevant as the company was still in the process of rolling out its Sentosa project and so Q4 figures were weighed down by pre-operating costs. However, it called an 'underperform' with a 94-cent target because it described Genting as one of the world's most expensive gaming stocks. 'If Genting were to trade in line with the Singapore market, this would suggest a value of 46 cents. The experience from Macau has been for an 11-29 per cent drop in share prices after new casino openings.'
OCBC rose two cents to $8.56 after releasing its results last Friday. Analysts responded with a mixed bag of recommendations - JP Morgan called an 'overweight' with a target price of $11 using a dividend-discount model while Deutsche Bank called a 'hold' with $9.10 as the target.
Morgan Stanley however, retained an 'underweight' on OCBC, pointing to an unexciting growth outlook and uncompelling valuations. Its target is $8.54.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Property tax gets a welcome tweak
Business Times - 23 Feb 2010
BUDGET 2010: PROPERTY
Property tax gets a welcome tweak
More progressive system will benefit more owners, won't hit high-end demand
By KALPANA RASHIWALA
MOST market watchers have welcomed Finance Minister Tharman Shanmugaratnam's move towards a progressive property tax regime for owner-occupied residential properties as a fairer system.
Currently, owner-occupied residential properties are taxed at a flat rate of 4 per cent of annual value (AV) or the estimated annual rent of a property, excluding the rent for furniture, fittings and service charge.
But for property tax payable on such properties from January 2011, there will be three tiers of tax rates. The first $6,000 of AV will be exempted from property tax. The next $59,000 AV will be taxed at 4 per cent and the balance of AV above $65,000 will be taxed at 6 per cent.
'The new system ... will benefit most Singaporeans ... all HDB flat owners and the large majority of private property owners will pay lower taxes compared to the current system,' Mr Tharman said.
'...our property tax rates, even for the high-end, will remain lower than in most international cities. That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals,' he added.
All owner-occupied homes will enjoy tax savings of $240 as a result of the exemption of the first $6,000 of AV, according to Mr Tharman.
'Owners of high-end properties with AVs of more than $77,000 will see a small increase in tax payable, as their effective tax rates will be higher than the current 4 per cent. They comprise the top 3 per cent of private owner-occupied residential properties, or the top 0.4 per cent of all owner-occupied homes in Singapore.
'Homes with AVs of about $80,000 will face only a small increase in tax, of slightly less than $100 per year. A property with an AV of $150,000, which typically is a large property in the central districts and is within the top 0.5 per cent level of private owner-occupied homes, will face an increase in property tax of about $1,500 per year,' he added.
The move will cost the government about $230 million a year initially.
Knight Frank managing director (residential services) Peter Ow welcomed the change, describing it as 'taxing the rich to give the poor. It's a fairer system'.
He does not expect the higher property tax rate payable for higher AV properties to dent demand for residential properties bought for owner occupation. 'The 2 per cent will not hurt the pockets of owners in this bracket. A property with $65,000 AV would probably be worth around $2.5 million to $3 million.'
Leonard Ong, executive director, KPMG Tax Services, said: 'We think it is a good way for Government to help owner occupiers of residential properties in Singapore. The bulk of them will be in the lower band of property tax; only a minority, those who own higher-value properties, will be in the upper tax band. This benefits more people than the current structure, which is a flat rate system.'
The property tax for non-owner-occupied residential properties as well as other properties will remain at a flat rate of 10 per cent of AV.
Inland Revenue Authority of Singapore determines the AV of a property by analysing rents of similar properties.
Currently, in addition to the 4 per cent concessionary tax rate, owner-occupied residential properties with AVs below $10,000 can enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AVs of the properties. The rebates, introduced together with the Goods and Services Tax, are aimed at supporting the lower- and middle-income groups. 'It has significantly reduced property tax payable by HDB flat owners. However, as HDB homes gradually appreciate in value over the long term, flat owners will see an increasing property tax bill over time,' Mr Tharman said.
The government provided special additional rebates last month to mitigate increases in tax payable as a result of higher rentals and hence AVs of HDB flats over the past two years.
However, the need for a longer-term solution that provides a fair and balanced system for all property owners led Mr Tharman to announce the progressive property tax schedule for owner-occupied residential property.
Market watchers also noted that there were no property tax rebates for commercial and industrial properties in the latest Budget statement.
Earlier in his Budget speech when he covered the fiscal position for FY2009, Mr Tharman also revealed that a strong recovery in the volume of transactions in the property market boosted stamp duty collections which ended up $1.3 billion higher than initially estimated.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Fair: The need for a longer-term solution that provides a fair and balanced system for all property owners led Mr Tharman to announce the progressive tax schedule
BUDGET 2010: PROPERTY
Property tax gets a welcome tweak
More progressive system will benefit more owners, won't hit high-end demand
By KALPANA RASHIWALA
MOST market watchers have welcomed Finance Minister Tharman Shanmugaratnam's move towards a progressive property tax regime for owner-occupied residential properties as a fairer system.
Currently, owner-occupied residential properties are taxed at a flat rate of 4 per cent of annual value (AV) or the estimated annual rent of a property, excluding the rent for furniture, fittings and service charge.
But for property tax payable on such properties from January 2011, there will be three tiers of tax rates. The first $6,000 of AV will be exempted from property tax. The next $59,000 AV will be taxed at 4 per cent and the balance of AV above $65,000 will be taxed at 6 per cent.
'The new system ... will benefit most Singaporeans ... all HDB flat owners and the large majority of private property owners will pay lower taxes compared to the current system,' Mr Tharman said.
'...our property tax rates, even for the high-end, will remain lower than in most international cities. That is as it should be, so that we remain a vibrant and attractive place for businesses and individuals,' he added.
All owner-occupied homes will enjoy tax savings of $240 as a result of the exemption of the first $6,000 of AV, according to Mr Tharman.
'Owners of high-end properties with AVs of more than $77,000 will see a small increase in tax payable, as their effective tax rates will be higher than the current 4 per cent. They comprise the top 3 per cent of private owner-occupied residential properties, or the top 0.4 per cent of all owner-occupied homes in Singapore.
'Homes with AVs of about $80,000 will face only a small increase in tax, of slightly less than $100 per year. A property with an AV of $150,000, which typically is a large property in the central districts and is within the top 0.5 per cent level of private owner-occupied homes, will face an increase in property tax of about $1,500 per year,' he added.
The move will cost the government about $230 million a year initially.
Knight Frank managing director (residential services) Peter Ow welcomed the change, describing it as 'taxing the rich to give the poor. It's a fairer system'.
He does not expect the higher property tax rate payable for higher AV properties to dent demand for residential properties bought for owner occupation. 'The 2 per cent will not hurt the pockets of owners in this bracket. A property with $65,000 AV would probably be worth around $2.5 million to $3 million.'
Leonard Ong, executive director, KPMG Tax Services, said: 'We think it is a good way for Government to help owner occupiers of residential properties in Singapore. The bulk of them will be in the lower band of property tax; only a minority, those who own higher-value properties, will be in the upper tax band. This benefits more people than the current structure, which is a flat rate system.'
The property tax for non-owner-occupied residential properties as well as other properties will remain at a flat rate of 10 per cent of AV.
Inland Revenue Authority of Singapore determines the AV of a property by analysing rents of similar properties.
Currently, in addition to the 4 per cent concessionary tax rate, owner-occupied residential properties with AVs below $10,000 can enjoy the ongoing 1994 property tax rebates ranging from $25 to $150, depending on the AVs of the properties. The rebates, introduced together with the Goods and Services Tax, are aimed at supporting the lower- and middle-income groups. 'It has significantly reduced property tax payable by HDB flat owners. However, as HDB homes gradually appreciate in value over the long term, flat owners will see an increasing property tax bill over time,' Mr Tharman said.
The government provided special additional rebates last month to mitigate increases in tax payable as a result of higher rentals and hence AVs of HDB flats over the past two years.
However, the need for a longer-term solution that provides a fair and balanced system for all property owners led Mr Tharman to announce the progressive property tax schedule for owner-occupied residential property.
Market watchers also noted that there were no property tax rebates for commercial and industrial properties in the latest Budget statement.
Earlier in his Budget speech when he covered the fiscal position for FY2009, Mr Tharman also revealed that a strong recovery in the volume of transactions in the property market boosted stamp duty collections which ended up $1.3 billion higher than initially estimated.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Fair: The need for a longer-term solution that provides a fair and balanced system for all property owners led Mr Tharman to announce the progressive tax schedule
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