RESIDENTIAL MARKET
HDB resale prices in Q3 ratchet up another 2%
Prices of resale flats stayed at a record high in the third quarter, after having grown at the fastest pace of the year.
But while analysts expect the upward trend to continue, they do not forecast runaway prices.
The Resale Price Index (RPI) for Q3 stood at 197.9, an increase of 2 per cent over the previous quarter, data from the Housing and Development Board (HDB) showed yesterday. This was in line with earlier official estimates.
Resale prices had grown at a 1.3 per cent clip in the second quarter, and 0.6 per cent in the first quarter.
For the first nine months of the year, prices have gone up 3.9 per cent, the HDB said.
The number of resale transactions fell 6 per cent to 6,560 from Q2, after surging 19 per cent in the previous quarter, the HDB said.
On the demand side, analysts cited buyers who cannot or prefer not to wait for a new flat, second-time home buyers and those ineligible for Built To Order (BTO) units, such as permanent residents and singles, for driving up prices.
As the cost of resale flats have headed north, so too has the premium that buyers have to pay out of pocket. The median cash-over- valuation (COV) in Q3 rose between 15 and 20 per cent from the previous quarter to $30,000 overall, data from analysts showed.
HDB figures bear this out. For instance, the median COV for a five-room flat in Bishan in Q3 was $66,500, and that for a four-room flat in Queenstown, $55,000. In the previous quarter, the figure was $46,500 for such Bishan flats and $43,000 for Queenstown ones.
Eugene Lim, key executive officer at ERA Realty, agreed broadly with that reading, citing a low unemployment rate here and a growing economy.
Prices could also face pressure from the recent cap on home loan tenures, as homeowners may simply drop their plans to move, he said.
"That adds to the supply crunch of HDB resale flats."
That said, analysts do not expect growth for resale flat prices to reach the rates of the previous two years. They forecast overall increases of 5 to 7 per cent this year, compared to the 10.7 per cent last year and 14.1 per cent the year before.
The record 27,000 BTO units that the HDB is offering this year will help offset any sharp hikes, said Mr Lim
Source: Business Times – 30 October 2012
Heron Bay penthouse sold for record $1.774m
A new record price of $1.774 million has been set for a five-bedroom penthouse unit in the recently launched Heron Bay executive condominium (EC), surpassing last week's transaction for the most expensive EC to date.
Last week, a double-storey penthouse at 1 Canberra in Yishun was sold for $1.61 million, setting a record for EC transactions.
To be sure, the higher prices are largely due to the size of some of these new ECs, analysts said.
The price for the Heron Bay penthouse unit, which stands at 2,845 sq ft, was $624 per square foot (psf). The unit price for the 2,716-sq-ft 1 Canberra unit was $595 psf.
Before the 1 Canberra unit made headlines, a 2,476-sq-ft unit at The Rainforest in Choa Chu Kang was the most expensive EC with a price tag of $1.58 million, which translated to $637 psf.
ERA Realty key executive officer Eugene Lim said these skyrocketing prices do not reflect overall pricing for ECs on the whole.
"These type of transactions are not common. It is a one-off for big units, which is why there is a premium pricing to it," he said.
The smallest unit at Heron Bay, a 775-sq-ft two-bedroom unit, sold for about $553,000 or $713 psf.
In its opening weekend of sales which started on Oct 26, more than 90 per cent of units were snapped up, reflecting the healthy demand for ECs. The average selling price was $725 psf.
Earlier this year, Heron Bay also set a record for the number of applications it received relative to subscription rates for an EC over the past few years. There were 1,664 applications for its 394 units, which translated to approximately 4.2 applicants for each unit.
"EC home-buyers today are more sophisticated as they expect better quality and service and at affordable prices, and this is where Heron Bay addressed their needs. Otherwise, it would have been another cookie-cutter, utilitarian EC project," said Leslie Lim, managing partner of EVIA Real Estate Management Pte Ltd, one of the developers of Heron Bay.
Other developers in the consortium are Ho Lee Group, See Hup Seng and CNH Investment.
Construction for Heron Bay is due to be completed in 2016.
Source: Business Times – 30 October 2012
Two bungalows sold for $26.1m and $10.38m
There has been no dearth of bungalow transactions recently, despite signs of a slowing economy.
A Good Class Bungalow (GCB) at 27 Olive Road was sold for $26.1 million while another bungalow at 44 Faber Drive was sold for $10.38 million.
The GCB at 27 Olive Road was put up for sale by the estate of the late Khoo Oon Teik via an expression of interest exercise which closed on Sept 18, 2012.
Nestled in a GCB enclave at Caldecott Hill Estate, the bungalow has a land area of 23,423 square feet, which translates to a land rate of about $1,114 per square foot (psf).
Transactions of properties along Andrew Road and Olive Road typically fetch prices of $1,100-$1,200 psf.
A bungalow along Olive Road is believed to have changed hands for about $30 million or $1,185 psf earlier this year.
The second bungalow at Faber Drive is located at an elevated site of 11,719 sq ft. This reflects a land rate of approximately $886 psf.
Future developments for the Faber Drive bungalow site could see the construction of two smaller detached houses.
Source: Business Times – 30 October 2012
Coming up: Over 100,000 housing units
The number of new private properties in the pipeline has ballooned to more than 100,000 units at the end of the third quarter, said the Urban Redevelopment Authority (URA) yesterday.
The news may bring cheer to buyers concerned about the persistent uptick in prices but dismay to those who had bought for investment or leasing purposes.
The upcoming private home supply comprises 83,975 private residential units, 9,824 executive condominiums and 10,070 units from land sites that the Government has sold, or that are slated for sale. This is the highest-ever total recorded since data was collected in 2001.
The URA said many of the units will be completed in the next three or four years. More than 35,000 units will be ready next year and in 2014, with the rest completed after that.
More than 36,000 private residential units or about 44 per cent of the upcoming supply remain unsold. Developers have some leeway to hold back units, but not much. A cooling measure last year requires that they build and sell residential units within five years or face a 10 per cent stamp duty.
In addition, the Housing Board (HDB) announced yesterday it will roll out another 6,400 Build-To-Order flats next month in Bedok, Choa Chu Kang, Queenstown, Sengkang and Toa Payoh, bringing its crop of new flats this year to the promised 27,000 - also a record high.
The hefty numbers, combined with the Government's move to slow the influx of foreign labour, will likely hit the rental market the hardest in the coming years, said analysts.
The vacancy rate of completed private residential units has increased slightly to 6.1 per cent in the third quarter from 5.9 per cent the quarter before, said the URA.
Low interest rates will sustain buying momentum but "if interest rates shoot up, there will be a glut everywhere", said ERA Realty key executive officer Eugene Lim.
For now, buyers seem undeterred and willing to pay. Private home prices rose 0.6 per cent in the third quarter, up from 0.4 per cent in the second quarter. The HDB's resale price index climbed 2 per cent, up from 1.3 per cent in the second quarter.
Developers sold more private units in the third quarter - 5,916, up from 5,402 in the second quarter - despite launching 20 per cent fewer properties.
As has been the case since cooling measures brought the number of foreign buyers down, demand in the third quarter was driven by mass-market homes in the suburbs. About 74 per cent of the units sold by developers were in the outside central region, which saw prices rise 1 per cent, compared to the 0.1 per cent uptick in the core central region.
Shoebox units accounted for 16 per cent of all sales in the quarter, less than the 19 per cent in the previous quarter, said the URA.
In the HDB resale market, analysts said a bottleneck in the supply of flats is sustaining price inflation. Resale transactions fell by 6 per cent to 6,560 cases in the third quarter.
More HDB upgraders are holding on to their flats when they buy a private home, preferring to lease them out rather than release them into the resale market, they said, in the belief that they can make money from rental yield, and sell for a higher price later.
According to the HDB, the number of flats approved for sub-letting grew to 42,920 in the third quarter. They form about 4.5 per cent of the total stock of flats.
Source: The Straits Times – 30 October 2012
HDB, URA release more rental data
The authorities are releasing more information on rentals to help landlords and tenants get a fuller picture of their options.
The rental data on private and public housing will be made available by the Urban Redevelopment Authority (URA) and the Housing Board (HDB) respectively on their websites.
The move, said the agencies yesterday, is aimed at providing timely information on rentals and helping people make informed decisions before signing a contract.
Those thinking of renting out an HDB flat, for instance, are now able to check the monthly rental for a particular room type at a specified block and road, if the transaction was done within the past year. They would also be privy to when the lease was taken up.
To protect the privacy of owners, unit details, such as the level and floor area, are not given.
Previously, information on HDB rentals was restricted to the median amount, and broken down by town and flat type.
As for private properties, one is now able to check the monthly rental for a unit in a particular condominium or executive condominium and landed home, from as far back as the start of this year.
Such data includes the number of bedrooms if they are non-landed units, size of the place, street name and postal district.
In the past, the URA provided general information such as the aggregated median per square metre rentals for a project.
But the provision of more information does not necessarily lower rentals. "It will make the market work more efficiently but rising rentals are due to demand and that has not changed," he added.
Rentals of private residential properties rose by 0.9 per cent in the third quarter this year, compared to 0.3 per cent in the second quarter.
On the HDB front, the number of subletting transactions rose 4 per cent, compared to 3 per cent in the previous quarter.
Source: The Straits Times – 30 October 2012
Room for more property cooling measures?
The local residential property market seems to have defied six rounds of cooling measures over the past three years.
The latest measure, introduced earlier this month to stop home buyers from over-extending themselves, has had little discernible effect on developers' home sales so far.
Some smug property investors may see this as another instance of King Canute trying to hold back the tide - the tide being the assumption that demand for property in economically strong and politically stable Singapore will always remain high.
But, in fact, the tide in this case is coming in from far beyond Singapore's shores. And there's a rip current in it that can endanger the naive investor who wants to surf the waves.
It isn't just Singapore that is taking measures to cool overheating property markets. There are no easy ways to stem the strong flow of cheap money from abroad, afforded by the ultra loose monetary policy that is being pursued by the central banks in the United States, Britain, the euro zone and Japan.
In Singapore, the latest government measure sought to restrict all home loans to a more reasonable timeframe, of up to 35 years.
Home buyers who take a loan that lasts more than 30 years, or extends past their retirement age of 65, will now have to fork out significantly more in cash.
Where previously a buyer may borrow up to 80 per cent of the property's value for his first mortgage, he can now do so for up to 60 per cent if he busts the 30-year loan or 65-year-old age limit. Under a similar scenario, the borrowing ceiling shrinks to just 40 per cent for his second and subsequent mortgages.
The new rules are a further refinement of a previous measure to tighten the loan-to-value ratios.
Other measures included creating new stamp duties; up to 16 per cent on the seller and an additional buyer's stamp duty that goes as high as 10 per cent for foreigners.
Taken together, Singapore is said to have put in some of the harshest property cooling measures in the freewheeling capitalist world.
Is the Government running out of ammunition under its calibrated approach to cool the market?
Not by a long shot, judging by the range of measures that other regional economies have pursued to combat their rising domestic home prices.
Malaysia, for instance, has imposed a real property gains tax (RPGT) - similar to a capital gains tax - of up to 10 per cent for properties disposed of within two years.
Hong Kong, meanwhile, has introduced rules limiting the maximum loan tenor of new mortgages to 30 years and lowering the debt servicing ratio limit - a borrower's total monthly debt payments divided by his net income - to 40 per cent for certain purchases.
Many of their measures are similar to Singapore's. The most common are: lowering the loan-to-valuation ratio for certain home purchases, imposing a penalty for those who flip properties in a short span of time and raising the barrier of entry for foreign home buyers.
In 2010, Malaysia raised the minimum price of residential property that foreigners can purchase to RM500,000 (S$200,800) from RM250,000 previously. There is speculation that this might be further raised to RM1 million.
When these measures did not have the desired effect, the Malaysian government rolled out another round of measures that will include a hike in the RPGT from Jan1 next year.
Hong Kong last week announced fresh measures that impose a stamp duty of 15 per cent on home purchases by foreigners, as well as raise the resale tax on property by about 5 percentage points and extend the period during which it will apply from two years to three.
It is also slated to start banning foreigners from buying new homes in the city, with a pilot scheme on two sites restricting sales to permanent residents of Hong Kong.
The city's sizzling real estate market has seen prices skyrocket about 85 per cent over the past 21/2 years, buoyed by demand from mainland Chinese buyers.
But the most draconian measures can be found in China, where the authorities have restricted the number of properties that a household can own in bustling cities such as Beijing and Shanghai.
Being an open city, however, Singapore is unlikely to implement such socialist measures outside the realm of public housing.
Here, it bears mentioning that the Government is most concerned with Housing Board flat prices.
This is not surprising, given that 80 per cent of Singaporeans live in HDB flats. The Government cannot allow prices - at least those of new flats - to climb beyond the affordability of most first-time buyers.
As the HDB market has a symbiotic relationship with private housing - except at the very high end - cooling the private housing market is also a way of cooling the HDB resale market.
As a result, the latest cooling measure is unlikely to be the last if demand for housing shows no sign of abating and prices continue to head north.
The good news is that private home prices have risen by just 1 per cent in the first nine months of the year. However, resale HDB prices have climbed by 3.9 per cent over the same period.
Until both the public and private housing markets show clear signs of stabilising or softening, the next stick may not be too far away.
Taking its cue from cooling measures implemented by other countries, one additional measure the Government can consider is curbs to restrict the number of homes that foreign buyers can purchase - or subjecting them to a hefty multiple ownership tax.
Alternatively, simply tightening the screw on existing measures may also be effective. For instance, the period where the seller's stamp duty is applied now can be lengthened from its current four years, or tax rates can be hiked further.
But whether or not to unleash more draconian measures will be a key decision for policymakers down the road, considering Singapore's reputation as an open and free economy.
The property market is a key plank of the economy and its health is closely intertwined with the wealth of Singaporeans.
Regional countries have introduced outright bans on foreign ownership, capital gains tax on property and even restrictions on the number of properties citizens can own. These are levers Singapore has not contemplated - at least publicly.
But whichever levers it pulls, the Government must continue with its calibrated approach: keep Singapore's economy generally free and open to foreign investment, while keeping the property market on an even keel. That calls for more smart manoeuvring.
Source: The Straits Times – 30 October 2012
COMMERCIAL MARKET
Shop and office rents continue decline in third quarter
While the prices of homes and industrial space continue to surge, shop and office rents are edging downwards.
Office rents dipped 0.1 per cent in the third quarter from the preceding three months while shop space rents were 0.3 per cent lower.
This was a slight improvement over the second quarter, where office rents fell 0.5 per cent while shop space dipped 0.3 per cent.
The smaller decline in office rents in the three months to Sept 30, from the preceding quarter, was largely due to increased demand and a 237,000 sq ft contraction in supply during the period.
Net new demand for offices more than doubled from the second quarter to 764,000 sq ft in the third, the highest take-up rate in 51/2 years.
The bulk of office clusters within the central area saw a slight decrease in rent of between 0.6 per cent and 0.9 per cent from the preceding quarter.
This central area includes Grade A and A+ offices in Raffles Place, the Suntec and Marina area and Orchard Road.
Grade A office buildings in Raffles Place are still recovering from the loss of major tenants who moved to newer buildings at Marina Bay, he said.
But office rents in suburban areas, Shenton Way and Tanjong Pagar remained flat from the second quarter.
Increased retail space supply in the central region due to completion of new malls, coupled with falling demand, helped send down shop rentals, which have now declined for two consecutive quarters..
Source: The Straits Times – 30 October 2012
Bt Timah Saddle Club site up for tender
A public tender for a site occupied by the Bukit Timah Saddle Club (BTSC) will be launched today.
The site, located at 51 Fairways Drive, occupies 104,567.2 square metres of land and the guide rent per month is $38,700 per month, said the Singapore Land Authority yesterday. The gross floor area of the site is 2,202.3 sq m.
Currently, BTSC is leasing just five hectares and pays about $18,000 a month for rental of the space.
BTSC has been leasing the site since 1999 through a short-term tenancy that has been extended several times. The club was informed by SLA in May last year that a final tenancy extension would be given in January this year and would expire on Dec 31.
In May 2011, the site was made available for interim use until the end of 2018, according to directions from the Urban Redevelopment Authority.
SLA decided to launch a public tender for the site to allow other interested parties, who wish to run a saddle club, to have an opportunity to bid for the use of the site.
BTSC board chairman Doug Harrison told BT that it was in the interest of members to participate in the tender, though a decision had not been finalised.
"We have to see all the terms and conditions, but we would definitely like to stay where we are," he said.
Besides the BTSC, there are two other parties who have expressed interest in the site.
Indicative use for the site will remain primarily for equestrian purposes, and public riding must be made available. Other ancillary uses, such as restaurants and shops, must be capped at GFA of 251 sq m.
To minimise disruption to BSTC's operations, SLA is providing the club the option of a back-to-back arrangement by giving a six-month extension until June 30, 2013.
"This will allow BTSC to continue its operations on the premises with minimal disruption if it decides to participate in the tender and is successful," said Lee Seng Lai, director, land operations (private) division, SLA.
The tender will close on Nov 20 at 11am.
Source: Business Times – 30 October 2012
Satinder Garcha buying Murray Terrace
Satinder Garcha's Elevation group is understood to have inked a deal to buy Murray Terrace for $75 million.
Talk in the market is that Mr Garcha plans to convert the conservation property into a hotel, subject to approval from the authorities.
US-based property fund group AEW is selling the property, which comprises a row of 14 conserved shophouses just off Maxwell Road and opposite URA Centre. Thirteen of these shophouses are three storeys high and the remaining one, four storeys high.
The premises, at Nos 2 to 28 Murray Street, are now leased as offices, with ad agency Leo Burnett being the anchor tenant.
Murray Terrace's net lettable area is about 50,000 sq ft, so assuming how the hotel rooms are carved out, the property could potentially yield about 150 rooms with an average size of 30 sq m (about 323 sq ft).
Market watchers reckon Murray Terrace could be transformed into a boutique upmarket hotel, given its unique location, near the financial district, Chinatown and the Club Street dining belt. It is also a short walk from Tanjong Pagar MRT Station.
Murray Terrace is on a site with land area of 25,151 sq ft and a remaining lease term of about 60 years. The site is currently zoned for commercial use under Master Plan 2008.
The pre-war conservation shophouses were restored in 2009, earning the project an Architectural Heritage Award from Urban Redevelopment Authority the following year.
In the Little India location, Mr Garcha is said to be planning an art-themed boutique hotel within six adjoining three-storey freehold conservation shophouses in Syed Alwi Road that he bought for $23 million earlier this year. Conversion of the shophouses into a hotel would again be subject to securing all approvals from the authorities.
The six shophouses have gross floor area of about 18,500 sq ft and stand on a site of around 8,100 sq ft.
In South America, the 41-year-old Singapore citizen and avid polo player is also restoring the historic City Hotel in downtown Santiago facing the Plaza de las Armas. The property is expected to be a full-fledged hotel with signature restaurants, ballrooms and conference facilities.
New Delhi-born Mr Garcha made his fortune in Silicon Valley during the dotcom boom before moving to Singapore and setting up Elevation group. The group has developed a string of bungalows in Singapore's Good Class Bungalow Areas as well as in the upscale waterfront housing district of Sentosa Cove.
Source: Business Times – 30 October 2012
INDUSTRIAL MARKET
Industrial property prices step on the gas
While cooling measures kept home prices in check, the industrial property market kept racing away and registered a hike for the 12th consecutive quarter.
According to data released by the Urban Redevelopment Authority (URA), the industrial property price index rose 8.8 per cent in Q3, to 183.3, comfortably surpassing the previous historic peak seen in Q1 1997.
This brings total price growth for the first nine months of the year to 26.7 per cent, which is only slightly below the full year price gain of 27.2 per cent recorded in 2011.
The unabated growth in prices comes as no surprise, given the spillover in demand from the residential market. In addition, industrialists continue to look to purchasing their own premises to have better control and certainty over their real estate costs in the face of rising rents.
Specifically, the price index for multiple-user factory space increased by 10.1 per cent in Q3, compared with a rise of 8.3 per cent the previous quarter.
The price index for multiple-user warehouses on the other hand increased by 2.3 per cent in Q3, from 8.6 per cent previously.
Rental growth also lost some momentum, rising by 1.2 per cent in Q3, from 2.8 per cent the previous quarter.
This brought the overall rental increase in the first nine months of 2012 to 6 per cent, substantially lower than the full year rental increase of 15.5 per cent recorded in 2011..
Also, the electronics clusters has been slowing down while the biomedical (pharmaceutical) cluster remains volatile - and both clusters are typically large space occupiers.
This was largely supported by prices in the landed housing segment increasing 1.1 per cent in Q3, after rising 0.4 per cent in Q2. Detached home prices rebounded the most, by 2 per cent quarter-on-quarter.
Prices of detached homes in the Serangoon area increased from $918 psf on average in Q2 to $1,080 psf on average in Q3.
Prices of non-landed homes in the Outside Central Region grew 1.0 per cent in Q3, versus 0.5 per cent in Q2.
In the Rest of Central Region the price index was up 0.8 per cent in Q3, versus 0.4 per cent in Q2. The index for Core Central Region edged up 0.1 per cent in Q3, compared to 0.6 per cent the previous quarter.
Source: Business Times – 30 October 2012
About 49,000 sq ft at Delta House up for sale
A total 49,053 sq ft of freehold strata industrial space at Delta House in the Alexandra /Delta Road vicinity has come on the market. The space comprises two strata units, one with about 36,308 sq ft occupying the entire fourth level of the eight-storey building and another unit of 12,745 sq ft on the third level.
The two units are owned b y a g r o u p o f h i g h net-worth investors.
Based on a price of $1,100 psf, the lumpsum price works out to nearly $54 million.
Delta House was completed as an industrial building about 30 years ago, but under Urban Redevelopment Authority's current Master Plan 2008, the site is zoned for residential use with 2.1 plot ratio (ratio of maximum gross floor area to land area).
Delta House is on a site with land area of 88,537 sq ft and just about 200 metres from the upmarket Jervois Road residential belt.
A back of the envelope calculation shows that the site can be potentially redeveloped into a new condominium project with about 170 units of an average size of 1,000 sq ft.
"The residential zoning adds considerable additional value to the property.
"That said, the fundamentals of the property based on its existing industrial use, its prestigious location and ample carparking make it an exciting income- producing investment opportunity or suitable for an owner occupier," said Mr Ward.
Delta House has 82 surface carpark lots.
The space being offered is equivalent to strata share value of 20.7 per cent in Delta House. The space is currently vacant.
Urban Redevelopment Authority's All Industrial property price index has rise n 3 1.7 percent year-on-year in Q3 2012.
Source: Business Times – 30 October 2012
