News Update 24 April 2012

SINGAPORE ECONOMY


Inflation hits 5.2% in March

INFLATION shot up an unexpectedly high 5.2 per cent last month as vehicle prices and housing rentals continued to escalate while rising wages added to health-care and education costs.

The sharp increase in the consumer price index (CPI), which caught out economists, reverses the trend of moderating inflation seen in the first two months of the year.

Prices rose 4.8 per cent in January and 4.6 per cent in February. The March figure raises the spectre of a further period of painful price rises.

The latest inflation figure also raises the possibility of further moves by the Monetary Authority of Singapore (MAS), which announced last week it would let the Singdollar appreciate at a faster pace.

The MAS may need to allow the currency to rise further, which helps to combat imported inflation, said Citigroup economist Kit Wei Zheng.

But OCBC economist Selena Ling said allowing the currency to appreciate may not help bring inflation down as domestic inflation may continue to rise.

While the usual suspects, car prices and housing costs, were again the main inflation drivers, health-care and other domestic services saw higher than normal price increases, the Department of Statistics report showed.

The cost of private transport leapt 9.6 per cent year-on-year last month compared with 4.3 per cent in February.

Accommodation cost increases eased from 10.2 per cent in February to 9.8 per cent last month but still remained the single largest contributor to inflation.

Even when housing rents, which form a large part of accommodation costs, were taken out of the CPI gauge, March inflation still posted a 4.1 per cent increase.

Consumers were also feeling the impact of a tight labour market and rising wages.

Bank of America Merrill Lynch economist Chua Hak Bin, noted that about 60 per cent of inflation is imported.

Health-care inflation hit 3.9 per cent last month, largely due to the cost of medical treatment, which was up 5.2 per cent from March last year.

Noting that the health-care sector employed many foreign workers, DBS economist Irvin Seah said the cost increases were due to measures to tighten the inflow of foreign workers. This will raise foreign labour costs, which will get passed on to consumers, he said.

The MAS and Trade and Industry Ministry said in a joint statement yesterday that inflation could average about 5 per cent year-on-year in the first half of this year before 'easing gradually' in the second half.

Economists said the easing would be due more to the fact that car price and rental increases probably will not go much higher.

Source: The Straits Times – 24 April 2012

News Update 24 April 2012

RESIDENTIAL MARKET


Builders make bid to move unsold units

SOME developers are ramping up their marketing and throwing in discounts in a bid to move unsold units.

Bukit Sembawang marketed 19 units from its Paterson Suites, in Paterson Road, over the weekend with offers that effectively meant lower prices for buyers.

One incentive could be the guaranteed 5 per cent rental yield for four years advertised in The Straits Times last Friday by the developer.

This works out to $300,000 a year - or $25,000 each month - for four years, on a $6 million apartment. So if the rent falls below $25,000 a month, the developer will top up the difference.

Owner-occupiers were given an outright 10 per cent discount off the purchase price.

Encouraged by strong sales figures in recent months, developers may relaunch or revive promotions as they want a slice of the pie.

Source: The Straits Times – 24 April 2012

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News Update - 23 May 2012

COMMERCIAL MARKET


S'pore 10th most popular retail city

A SURVEY of 326 of the world's top retailers showed that 38.9 per cent of them are in Singapore, making it the 10th most popular retail city in the world.

The only Asian city to fare better was Hong Kong, which ranked sixth with 40.5 per cent of retailers surveyed in the city.

Shanghai and Beijing were ranked 11th and 13th respectively, followed by Tokyo in 19th place.

Singapore is the most targeted market in Asia for European retailers, with 39.9 per cent of European brands present here, the survey found.

This is testament to the successful evolution of Singapore as a global city and tourist destination. Singapore remains an accessible potential test bed for new brands and retailers seeking a South East Asian, Asian exposure.

For new retailer entries in the region, Vietnam has been a consistently growing market over the last two years, with a large, young and increasingly affluent population who are becoming ever more fashion-conscious.

Chinese cities will continue to dominate shopping centre development activity, over the next few years. Eight out of the top 10 most-active retail development markets globally are in China.

On an international basis, London has reclaimed the top spot as the most targeted market for international retailers.

The city attracts more than half of all international retail brands surveyed after sharing the top spot with Dubai last year.

Source: Business Times – 21 April 2012

News Update - 23 April 2012

RESIDENTIAL MARKET


107 new home buyers backed out in March

BUYERS of 107 new private homes had a change of heart last month and returned their units to developers.

The numbers, contained in a report from Goldman Sachs, show that even in a hot market, some people get cold feet. The same report also stated that 100 homes were returned the month before.

That means these buyers have paid an option fee but have chosen not to exercise the option and go ahead to complete the purchase.

If the buyer chooses to back out, he forfeits a quarter of the option fee, or 1.25 per cent of the purchase price.

The 107 units returned in March could have been bought in either January or February.

Analysts were not surprised by the high number of options lapsing, as the number of options lapsing tends to be correlated to the number of sales made.

Buyers bought 4,289 units in the first two months of the year.

In March, most of the returned units came from the mass market, but this could be because more projects were launched within the sector.

The Straits Times looked at a sample of 15 upcoming projects and found, for instance, 11 units were returned at the 689-unit Parc Rosewood in Woodlands.

Watertown, a 992-unit mixed-use development in Punggol, had 17 units returned.

Bartley Residences and The Hillier, both had nine units returned.

Since no new cooling measures have been introduced in the market since last December, which means many buyers could be pulling out because of personal reasons.

Some may have bought in haste while other buyers might have been attracted to better choices elsewhere.

Source: The Straits Times – 23 April 2012

News Update 20 April 2012

RESIDENTIAL MARKET


Home sales to foreigners dive 78 per cent

HOME purchases by foreigners plummeted 78 per cent in the first quarter as the effects of the 10 per cent additional buyer's stamp duty hit hard.

Most foreigners have retreated hastily from the market, buying just 293 homes in the first three months of the year.

This is 78 per cent down from the 1,358 homes bought by foreigners in the fourth quarter.

Permanent residents (PRs) are not included as foreigners in these figures.

Among PRs, home purchases dipped just 7.5 per cent to 790 units, while Singaporean purchases fell 12 per cent.

Experts say the implementation of ABSD has caused foreigners to pull out of the market in a knee-jerk reaction as they reevaluate their options. They say some foreigners might still see long-term potential in Singapore's property market and are attracted by rebates offered by some developers to cushion the impact of the tax, but others are simply watching and waiting. Uncertainty in global markets might have also taken its toll on foreign purchases.

Source: The Straits Times – 20 April 2012

Shoebox flats rake in higher rental yields

 

TINY 'shoebox' homes here are raking in much higher rental yields for investors than other apartment types but experts warn the good times might not last.

Data from the Singapore Real Estate Exchange (SRX) found that gross yields for shoebox apartments were 5.4 per cent in the first three months of the year.

This is well above the 2.5 to 3.5 per cent yields that residential properties typically return to investors.

The SRX shoebox yield was based on the average rent of $6.51 per sq ft (psf) per month for the 197 leasing deals inked in the period. The average unit price of the 123 shoebox homes sold then was $1,450 psf.

Experts say investors have flocked to the shoebox segment in droves, attracted by the affordable prices - typically less than $1 million. In fact, about one in seven buyers picked up new homes 500 sq ft and smaller last year.

This is more than double the rental yield of 2.4 per cent in the luxury segment. It also dwarfs the 3.6 per cent yield in the mid-end segment and 4.1 per cent yield for mass market homes.

But these high yields are not expected to last as an increasing supply of completed shoebox homes enters the market.

The number of these small homes is expected to double from about 4,100 units later this year to 8,200 units by the end of 2015.

While a dip in prices of shoebox flats could cause yields to rise temporarily, yields are likely to trend towards the norm of 2.5 to 3.5 per cent in the long run as supply picks up.

Source: The Straits Times – 20 April 2012

70% of residential units in Katong Regency booked

Property giant UOL Group has put out its first mixed-use development for sale in 2012.

Some 70 per cent of residential units in Katong Regency were booked on its launch. Of these, the sale of about 130 units have been confirmed.

Kam Tin Seah, Senior General Manager (Investment & Strategic Development) at UOL, said: “It is a very well associated kind of Tanjong Katong address. So you would expect the core demand to still come from this immediate neighbourhood.”

Located at the junction of Tanjong Katong Road, the site used to house the former Lion City Hotel and Hollywood Theatre. It is a mixed development which consist of 244 residential units and commercial space.

Prices for the residential units range between S$950,000 for a 550 square feet one bedroom unit, and S$2.52 million for a three bedroom pent house unit of 1,970 square feet. That works out to about S$1,475 to S$1,727 per square foot.

Analysts said the pricing is at the steep end, compared to units at nearby developments, which are about five to 10 per cent cheaper.

Still, buyers response are expected to be healthy. Analysts said this is because the government is planning to rejuvenate the area.

The apartments will sit above the upcoming ONE KM mall. To be managed by UOL, the retail development will have a total net lettable area of 210,000 square feet with some 150 retail tenants. Some of the buyers have said that they like the retail mall as there is a lack of malls in the Katong area.

Source : Channel NewsAsia – 19 Apr 2012

News Update - 19 April 2012

RESIDENTIAL MARKET


Showflats to show fact, not fiction, come May

The days of "artificially" enlarged showflats decked up with made- to-measure furnishings are numbered, following changes to the Housing Developers Rules (HDR) yesterday.

Developers will now need to provide drawn- to-scale location plans and a breakdown of a unit's floor area by its various components - comprising bedrooms, balconies and bay windows - to help buyers better visualise the amount of usable space.

In addition, developers will also need to obtain a buyer's consent for any alterations to the layout of a property (such as changes in the location of facilities) and offer more information on the project before the option-to-purchase is issued.

Shoebox units have become increasingly popular and there are concerns about whether buyers - who predominantly hold HDB addresses - truly understand how small these units really are.

It is widely known that many of such showflats do not demarcate the living space, planter and balcony area clearly, giving an inaccurate impression of a unit's actual size.

Developers are also unlikely to build showflats for all the different unit types in a development as it would not be practical. Hence, much is left to the imagination of buyers.

Still, most consultants do not expect demand for shoebox units to take a big hit following these measures. Smaller units remain sought after as they are affordable - being priced around the $1 million mark - amid a low-interest-rate environment. A huge number of them will be rolled out over the next few years.

Other changes that will take effect come mid-May include the need for developers to offer buyers details on their past projects in Singapore, prior to the issuance of the option-to-purchase.

The amendments to the HDR will apply to sales of all private residential properties with effect from May 18, regardless of the launch date of the project.

URA noted that some of the changes proposed previously, such as directions on setting up showflats, will require amendments to the Housing Developers (Control & Licensing) Act and will be implemented only in the later half of this year.

Source: Business Times – 19 April 2012

'Beware oversupply of shoebox flats'

PROPERTY analysts have issued a blunt warning to investors keen to buy so-called shoebox apartments in hopes of capital gains and good rental returns.

The strong interest in these units - mainly 500 sq ft or smaller - is playing a central role in fuelling the robust demand in the overall private property market.

Analysts at major research firms cautioned that investors should look before they leap even though the price tags look tempting, given the units' small size.

They said investors should understand that thousands of these tiny homes are set to flood the market in the next year or so, which could mean headaches in getting a tenant - or a good resale price.

The analysts said most buyers for such units tended to be investors rather than owner occupiers, many of whom lived in HDB flats that were larger than the shoebox units they were buying.

The BNP report also stated that tighter immigration rules may mean investors would face even more difficulty finding enough tenants for the units.

'Facing an uncertain demand ahead, we believe the physical market could start to feel the first pains of oversupply as early as (the second half of next year) via softening rents and buyer sentiments,' it said.

The researchers also warned that rising interest rates could dampen home demand. 'Coupled with other risks such as an earlier-than-expected climb in interest rates, this could indeed have a significant impact on the financial well-being of HDB households, which typically have less holding power,' said Nomura.

Likewise, the BNP report warned that a rise in mortgage rates could hurt home affordability, 'unless household income rises faster or home prices fall faster'.

Source: The Straits Times – 19 April 2012

News Update - 18 April 2012

SINGAPORE

Bar raised for investors in search of PR status

First a scheme that allowed rich foreigners to fast-track their permanent resident applications was scrapped. Now the bar has been raised for entrepreneurs from abroad who seek PR status by investing in Singapore.

Fresh updates made by the Economic Development Board (EDB) showed that criteria for the Global Investor Programme (GIP) - have been tightened.

EDB, which administers the GIP programme with the Ministry of Manpower through Contact Singapore, updated its website on Monday to say that GIP applicants need to be entrepreneurs whose companies have made at least $50 million in the most recent year, and at least $50 million per annum on average for the last three years.

Previously, entrepreneurs needed only to show a company turnover of $30 million per year. This applied to all sectors.

Now a new and stricter exception has been created for entrepreneurs making their mark in the real estate or construction business.

They must show that their companies have a turnover of least $200 million in the most recent year, and at least $200 million per annum on average for the last three years.

Source: Business Times – 18 April 2012

News Update - 18 April 2012

RESIDENTIAL MARKET


Harbour View Gardens up for sale

FREEHOLD residential development, Harbour View Gardens, is being put up for collective sale, with an indicative price of between $36 million and $38 million.

This translates to between $836 and $883 per square foot per plot ratio, based on the site area of 30,745 sq ft.

Under the 2008 Master Plan, the site is zoned for "residential" use, with a gross plot ratio of 1.4.

The three-storey residential development, which is located at 211/A to 223/A Pasir Panjang Road, comprises 14 units - seven maisonettes with an average floor area of 2,411 sq ft each and seven walk-up apartments with an average floor area of 1,195 sq ft each.

Upon success of the collective sale, each owner could receive between $1.6 million and $3.6 million.

The successful buyer could re-develop the site to accommodate a five-storey residential development comprising some 50 units of 775 sq ft each, subject to relevant authorities' approval.

Source: Business Times – 18 April 2012

SC Global unveils luxury project at Ardmore Park

SC GLOBAL Developments has unveiled its plans to develop its latest luxury project, the Sculptura Ardmore, on the highest point of the exclusive Ardmore Park neighbourhood.

The 36-storey freehold tower located at 8 Ardmore Park will offer 35 apartments ranging from 2,800 square feet to 11,000 sq ft, built on a one-acre site with a gross floor area of 140,000 sq ft.

The smaller units, which comprise 19 apartments ranging from 2,800 sq ft to 3,000 sq ft, will take up the 5th storey up to the 16th storey. Another 12 units have areas varying from 3,200 sq ft to 4,000 sq ft.

The more generous sized units are single-floor apartments with private lap pools. The smallest is a four-bedder of around 4,200 sq ft, while the largest is a super penthouse boasting a staggering 11,000 sq ft.

So far, there has been no indicative pricing released for the project, and the expected launch date is still being decided upon, the developer said.

Source: Business Times – 18 April 2012

S'pore still most liveable city for Asian expats

SINGAPORE has once again been crowned the most liveable city in the world for Asian expatriates, according to the latest location ratings released by ECA International, retaining its top spot out of 265 locations worldwide.

Updated annually, ECA International's ratings are based on a wide range of factors, from which locations are assessed and ranked accordingly.

Lee Quane, regional director of ECA International, Asia, credits Singapore's position as one of only two Asian cities in the global top 10 to its "good air quality, excellent infrastructure and healthcare facilities, low crime and health risks".

Its geographical location in the heart of South-east Asia makes the city-state even more appealing to Asian expatriates, thanks to its close distance to their homes, relatively low culture and language barriers and its comfortable climate.

Air pollution proved to be the crucial stumbling block for Singapore's long-time regional rival, Hong Kong, one of the "worst countries in the world for air quality".

"Hong Kong is very liveable city in many respects," said Mr Quane of the city, which came in ECA's ranking. However, its poor air quality was a serious consideration for any employees intending to relocate there.

Source: Business Times – 18 April 2012