News Update - 16 Aug 2012

RESIDENTIAL MARKET

Sale of private homes jumps 42% in July

Demand for private residential homes, excluding executive condominiums (ECs), rebounded in July, with 1,943 units snapped up last month, 42 per cent more than the 1,371 units sold in June.

Even as mass-market sales continued to monopolise the market, the Core Central Region (CCR) - which includes Districts 9, 10 and 11, Downtown Core (including Marina Bay) and Sentosa - saw the steepest rise in buying activity, with 253 units sold in July, an increase of 79 per cent month on month.

This was propped up by the launch of V on Shenton - 144 of the 190 units at the development sold in July, at a median price of $2,061 per square foot (psf), making up 57 per cent of sales in the region.

Sales in the Outside Central Region (OCR), where mass-market projects are located, also continued to drive primary-market sales, accounting for 77.7 per cent, or 1,509 of the 1,943 private homes (excluding ECs) sold last month. Two of July's top-selling projects, Parc Centros in Punggol and Parc Olympia at Upper Changi, sold 492 units at a median price of $924 psf and 204 units at $874 psf, respectively.

The modest median launch prices of $874 and $924, which are fairly comparable to the neighbouring projects, reflect local buyers' growing resistance to further price increase. Unsold supply or future supply in the vicinity also contributes to the stabilization of prices in the neighbourhood.

Elsewhere in the Rest of Central Region (RCR), developers sold a total of 181 units out of the 281 released. The only new project launched, The Line @ Tanjong Rhu, found 13 buyers for the 62 units released from the 130-unit development. Other previously launched developments such as Eight Riversuites (33 units sold), M66 (28 units sold), Nottinghill Suites (12 units sold) and Idyllic Suites (11 units sold) continued to move units. As a result, sales volume was up 52.1 per cent in the region.

The strong sales in the mid-tier RCR were contributed by the increasing prices of suburban homes.

In July, about two-third of the private housing units sold in the RCR were in the price range of $1,001 to $1,500 psf. Thus, the overlapping of prices of private homes in the OCR and RCR could make the housing units in the RCR more appealing to home buyers.

Interest for ECs is expected to be positive despite the slowdown observed in July, backed by strong housing aspirations and well-designed projects.

However, the five-year minimum occupation period and the requirement to dispose of HDB flat after occupation of EC may discourage some buyers who are looking at long-term investment possibilities and capital appreciation of their HDB flat, especially for those which are in established estates with good property leasing fundamentals.

Looking ahead, primary market activity is expected to slow down in August, due mainly to the seventh lunar month.

Source: Business Times – 16 August 2012

Caldecott Hill bungalow of late NKF founder up for sale

A BUNGALOW owned by the late philanthropist Khoo Oon Teik is up for sale.

The good class bungalow (GCB) at 27 Olive Road has a land area of 23,423 sq ft and is being sold via an expression of interest by Knight Frank.

The two-storey bungalow, built over 30 years ago, sits on the site, which nestles within the GCB enclave of Caldecott Hill Estate. It is within walking distance of Caldecott MRT station.

The asking price for the property is between $26 million and $28 million, representing a land rate of about $1,110 to $1,200 per sq ft (psf). Buyers have up to Sept 18 to indicate their interest.

Recent transactions within the estate, such as properties situated along Andrew Road and Olive Road, have hovered around the $1,100 psf to $1,200 psf mark.

A bungalow along Olive Road is believed to have changed hands for about $30 million or $1,185 psf last month. The 25,300 sq ft sale site houses a two-storey detached house, which the buyer is expected to tear down and rebuild.

The GCB market has perked up, with transactions doubling in the second quarter to 18 units compared with the first three months of the year.

GCBs typically have a minimum plot size of 15,069.46 sq ft, but some sites may be smaller as a result of being gazetted under GCB areas in 1980.

They are highly prized because no new GCB areas will be gazetted, which means any fresh supply on the market can come only from carving up a much larger parcel of land into two or more plots, each of which must meet the minimum plot requirement.

Source: The Straits Times – 15 August 2012

Freehold Kovan residential site up for sale

KOVAN Lodge - one of the last few older freehold blocks on Kovan Road - was put up for sale by tender yesterday.

Comprising a total land area of 27,090 square feet, the residential-zoned site currently occupied by Kovan Lodge is said to have the potential to be redeveloped into a much bigger residential development, subject to the authorities' approval.

Notably, if approval is granted to purchase an adjoining plot of state land of about 505 sq ft, the site could be built up to 38,633 sq ft based on the present gross plot ratio of 1.4, which translates to around $802 per sq ft per plot ratio (psf ppr) based on the indicative asking price of $31 million.

Location-wise, the property is situated in District 19 and is near popular shopping centres such as nex mall, Heartland Mall and Hougang Mall, providing easy access to amenities.

In addition, the development is just a stone's throw away from the up-and-coming food street@Simon Road, located at Kovan MRT Station.

Source: Business Times – 16 August 2012

Luxury home prices, rents to go further south

PRICES of Singapore's luxury prime properties continue to lose steam despite a pick-up in the segment's sales volume in the second quarter, and this trend is likely to continue.

The average resale capital value for prime luxury properties fell 2.9 per cent quarter-on-quarter in Q2 to around $2,380 per square foot (psf), marking a second consecutive quarterly fall after a long period of stability.

At the same time, resale capital values of typical prime properties also dipped during the period by 1.5 per cent from the last quarter to about $1,350 psf.

This, despite a pick-up in sales volume in the prime districts, according to preliminary estimates, which showed a 22 per cent increase in units transacted to 528 units in Q2 compared with 434 units in Q1.

The spike was mainly driven by healthy uptake in both new sale and resale segments, which recorded a respective growth in volumes of 38.5 per cent and 22.9 per cent over the previous quarter.

A higher number of prime market developments launched in Q2 also helped to generate interest and buoy transaction volumes. A total of 101 core central region (CCR) units were launched in April and May (close to the 112 launched during Q1), providing new supply to the segment.

Specifically, new boutique developments, such as UP @ Robertson Quay and 1919 on Mount Sophia, proved popular among buyers, selling more than 60 per cent and 90 per cent of their units respectively at the end of the quarter.

An estimated 778 units were completed in Q2, up almost five times from Q1. The largest project, The Trizon, added 289 units to the market, followed by Rochelle at Newton with 129 units and RV Suites with 96 units.

However, the jump in supply dampened overall yields as average prime rental values dipped 1.2 per cent from Q1 to around $49 psf per annum ($4.08 psf per month), while average typical prime rental values fell 2.2 per cent to $38 psf per annum ($3.16 psf per month).

Rents have fallen, especially in older prime properties, large units, and properties facing construction. Lower rents are increasingly being accepted in struggling projects, while housing allowances are being reduced and expatriates are relocating to other countries negatively impacting leasing demand.

Source: Business Times – 16 August 2012

News Update - 15 Aug 2012

RESIDENTIAL MARKET

50-year mortgage won't affect public housing much: MND

The government said yesterday that a novel 50-year mortgage is unlikely to be popular and will not have significant impact on the public housing market.

The 50-year housing loans will cost the borrowers more, besides imposing a longer-term financial

Since the United Overseas Bank (UOB) launched its 50-year mortgage last month - the longest loan in the market - the government has criticised the product, and warned borrowers not to fall for it and overextend themselves.

MND said: "While some borrowers may be attracted by the lower monthly instalments, we do not expect 50-year housing loans to be popular."

It added: "Their impact on the public housing market is unlikely to be significant."

HDB does not offer 50-year loans as they are not necessary and BTO (build to order) flats are priced to be affordable, well within one working lifetime, said MND.

The maximum loan tenure for HDB housing loans is 30 years, with an age ceiling of 65. In practice, the average loan tenure taken up is lower, at 24 years. At this loan tenure, the monthly housing loan instalment constitutes about a quarter of the monthly household income, and can be mostly paid for using CPF contributions with zero or minimum cash outlay, said MND.

CIMB head of research Kenneth Ng said the product is a marketing gimmick by banks to gain some loan volume in an environment where loan growth is diminishing. "Mortgage is one of the lowest loss history products and it is no wonder banks want to hold on to their loan share.

Source: Business Times – 14 August 2012

Two launches planned despite Hungry Ghost Festival

TWO launches are on the cards over the next few weeks despite the traditionally inauspicious Hungry Ghost Festival starting on Friday.

Developers have tended to shy away from launching in the Chinese seventh month but there are increasing signs that superstition is taking a back seat when sales are in the offing.

Marketing agents say the 752-unit eCO project in Bedok South Avenue 3 is expected to launch early next month.

Units are likely to be priced from $1,150 per sq ft (psf) to $1,300 psf, meaning a typical 1,166 sq ft three-bedder will be about $1.4 million.

The 99-year leasehold project, jointly developed by Far East Organization, Frasers Centrepoint and Sekisui House, will feature various units, including suites, small office, home office (Soho) apartments and townhouses.

The freehold mixed development One Dusun Residences at Jalan Dusun in Balestier is also readying for launch.

It consists of 154 Soho apartments - largely two-bedders or two-plus-study units - and 76 shop units. Marketing materials suggest its preview will be at the end of this month.

Two-bedroom units - from 452 sq ft to 786 sq ft - are estimated to cost more than $600,000 while buyers of commercial units will have to stump up between $700,000 and $1.3 million.

Some experts say that the habit of developers avoiding new launches in the seventh month could be less common now as the younger generation of home buyers might be less superstitious.

However, ERA Realty key executive officer Eugene Lim said most developers still avoid the seventh month for launches.

"Developers might do the ground work by gathering buyer interest and holding the preview during that time but the main launch is often after the seventh month," he added.

He noted that at least three executive condominium projects - in Punggol, Sengkang and Woodlands - with a total of more than 1,700 units are expected to be pushed out in the fourth quarter.

Source: The Straits Times – 14 August 2012

SINGAPORE

New MRT line in east by 2020; will have 10 stops

THE new Eastern Region Line (ERL) will have 10 stations and pass through estates such as Marine Parade, Tanjong Rhu, Siglap, Bedok South and Upper East Coast.

Slated to open by 2020, it will be 13km long, fully underground, and use driverless four-car trains. Its stations will link to the city centre and to the upcoming Thomson Line which will also use a four-car train. The older North-South and East-West lines use six-car trains.

The ERL, which will run almost parallel to the existing East-West Line, was first announced in the LTA's 2008 Masterplan.

Together with the Thomson Line, scheduled to open in 2018 to connect northern Singapore to the Marina Bay area, the new lines are meant to alleviate congestion on existing MRT lines, but little information about the ERL has emerged since.

The documents also included mention of an "integrated" interchange station linking the new ERL with an extension of an existing MRT line - though it did not specify which existing line this was.

It also did not give further details about the new interchange station.

Source: The Straits Times – 14 August 2012

News Update - 13 Aug 2012

RESIDENTIAL MARKET

Tampines holds its own with attractive amenities

 

TAMPINES has stayed on the radar of home buyers despite stiff competition from a bumper supply of launches in other suburban estates.

The area - designated a secondary commercial zone after the central business district - has continued to attract buying interest largely due to its wide array of amenities and easy accessibility.

The presence of international schools such as the United World College of South East Asia and its proximity to the Changi Business Park and Seletar Aerospace Park have also caught the eye of investors looking for healthy rental yields.

Experts say home prices in Tampines have outpaced the national average due to pent-up demand from Housing Board upgraders and the relatively lower supply in the pipeline.

Developments in the area have enjoyed price gains of between 23 per cent and 53 per cent over the past two years.

Tampines rental yields are between 4 per cent and 4.5 per cent, at the higher end of the typical 2 per cent to 4.5 per cent range found across the country.

Analysts noted that Tampines is well-served by three major shopping malls and transport links, including the East-West MRT line and the Downtown line, due to be completed by 2017.

Tampines Finance Park, which houses the backroom functions of some banks and insurance companies, is another economic driver.

About 75 per cent of Tampines residents live in HDB four-room and five-room flats - a potential pool of buyers for new launches.

There have not been many new projects in the area so demand is likely building up.

Source: The Straits Times – 11 August 2012

New homes put pressure on high-end rentals

 

LANDLORDS of newly completed upmarket homes are being warned that they may have to be prepared to accept lower rents.

More than 4,000 private homes are set to be completed in the second half of the year - with many of them in the city centre and city fringe regions - possibly putting further pressure on rents of posh apartments that have already been softening.

Many of these high-end projects were rolled out in a slew of launches between 2007 and 2009 after the collective sale fever of the mid-2000s.

That was a vastly different landscape from the bumper supply of suburban launches from government land sale sites in the past two years.

Rents of non-landed city centre homes dipped 0.1 per cent in the second quarter - the only private non-landed rental segment to slide - according to data from the Urban Redevelopment Authority (URA).

The average monthly rent, tracked by analysts, dipped to $5.03 per sq ft per month in the second quarter, sliding 3 per cent compared with the three months before. On a year-on-year basis, prime rents fell by 8 per cent.

Experts say that the upcoming completions of upscale units will weigh further on the market.

But as long as Singapore remains a cost-competitive choice for corporates, newly completed projects should keep finding tenants, though landlords might have to manage rental expectations.

Vacancy rates for city centre homes have been trending up - to 8.2 per cent in the second quarter, from 7.8 per cent in the first.

This is in contrast to islandwide vacancy rates falling from 6 per cent to 5.9 per cent in the same period.

Leasing volume of high-end homes to ease in the third quarter as rental budgets continue to shrink. This may see many mid-level expats moving to the suburban areas.

However, the supply of high- end apartments is gradually tapering off as more suburban homes are completed in the next few years instead, experts note.

Almost 200 of the 4,285 homes expected to be completed this year are still looking for buyers. This adds to the 1,233 units in completed projects still unsold as at the second quarter, URA's data showed.

Source: The Straits Times – 11 August 2012

HDB resale policy has weeded out speculators

AS RECENTLY as five years ago, private-property owners were snapping up resale Housing Board flats at market rates, making up 10 per cent of yearly resale transactions.

But tightened policies have cut the number of such transactions to just 3 per cent in the first six months of this year, going by fresh data from the Housing Board.

This means those going after resale units are now genuine downgraders who have either cashed out amid a property boom, or want to move to live closer their children, analysts said.

The turnaround was sparked by a change on Aug30, 2010. Before that, private property owners could buy a non-subsidised resale flat at any time, even while hanging on to their private property.

The policy that kicked in on that date required private property owners to sell off their property within six months of buying a resale Housing Board flat. This was to reinforce the principle that Housing Board flats are meant for long-term owner occupation, not for rental income or to make a quick buck.

The change effectively cut back on speculation in public housing among those well-off enough to own a private property and buy a Housing Board flat as investment.

ERA Realty key executive officer Eugene Lim said: "A substantial number of people bought flats in the past for investment and never lived in them."

The attraction for them was that Housing Board flats offer up to twice the yearly rental yield, at 6 to 8 per cent.

As of current, only genuine downgraders are entering the resale market, as they are saddled with a minimum-occupancy period of five years before they can sell the flat. It will be a constraint on their investments thereafter.

Source: The Straits Times – 10 August 2012

Property market sentiment improves in Q2

PROPERTY market sentiment improved slightly in the second quarter, but the mood was still dampened by the uncertainty over the euro zone debt crisis.

The Redas-NUS real estate composite sentiment index for April to June inched up to 4.7, from 4.6 in the first quarter.

It had declined for four straight quarters last year to plumb a nadir of 3.3 in the fourth quarter of last year.

A score below five indicates deteriorating market conditions while a score above five reflects improving market conditions.

The hotel sector continues to garner forward momentum with a net balance of 33 per cent of industry players surveyed saying they were optimistic about its current state, Redas and the National University of Singapore (NUS) said in a joint statement yesterday.

In contrast, the office sector is struggling owing to uncertainty over the global economic outlook, with a net balance of 31 per cent of respondents saying they were pessimistic about how it was currently faring.

A net balance figure is the difference between the proportion of respondents who were optimistic and the proportion who were pessimistic.

Fewer private residential units are expected to come onto the market in the coming months. Of the developers surveyed, 46 per cent expected more units to be launched soon, a sharp decline from 77 per cent in the first quarter of the year.

More of them than before also think prices will hold at current levels over the next half year.

"The uncertainty arising from the European sovereign debt crisis instils some degree of risk aversion in developers and buyers," said NUS real estate associate professor Sing Tien Foo.

"Some developers are adopting the 'wait and see' approach by moderating down new launches to the market."

The composite index, developed by the Real Estate Developers' Association of Singapore (Redas) and NUS' Department of Real Estate, combines two indices - the current sentiment index and the future sentiment index.

The current sentiment index, in which real estate industry players rate market conditions now compared with six months ago, stood at 4.9 for the second quarter, up from 4.8 in the first.

The future sentiment index, which indicates industry players' market outlook over the next six months, also moved up marginally from 4.4 in the first quarter to 4.5 in the second quarter.

Source: The Straits Times – 10 August 2012

News Update - 6 Aug 2012

RESIDENTIAL MARKET

50-year home loan a 'gimmick', says Khaw

IN THE midst of global economic uncertainties, Singaporeans should stay focused, be prudent and spend within their means, said Minister for National Development Khaw Boon Wan yesterday.

He also advised Singaporeans against taking up 50-year housing loans, which at least one bank here has recently started offering.

Last month, The Straits Times reported that United Overseas Bank (UOB) had started offering home loans spanning 50 years, likely the longest-term loan available here. Among other banks, loans range from an average of 20 to 40 years.

Mr Khaw said he checked on the take-up rate of this new 50-year loan and "so far, the number is very few, which I think is a good sign, that Singaporeans know we should always be prudent".

When asked, UOB's head of secured loans, Ms Chia Siew Cheng, said the majority of those who take up a home loan with the bank still tend to apply for loans with a tenor ranging from 25 to 30 years.

The bank also carefully assesses each application for all types of home loans, and applicants cannot be above the age of 80 at the end of the loan period, she said.

Analyst said that while a 50-year loan would allow people to take a bigger loan and buy a more expensive property, there would not be much room to manoeuvre if the interest rate were to go up, or if the person were to lose his source of income, and the borrower might be caught in a financial vice.

Source: The Straits Times – 6 August 2012

Chinese foreigners buy fewer homes here

HEFTY new stamp duty and a slowing economy at home are deterring Chinese nationals from buying property here, according to new sales figures.

Once the biggest group of foreign buyers, the Chinese fell to second in the first six months of the year, purchasing 259 homes behind the 372 bought by Indonesians, according to caveats lodged with the Urban Redevelopment Authority.

Additional buyer's stamp duty has dampened foreign home demand, with overseas buyers accounting for just 7 per cent of the deals in the first half of the year, down from 20 per cent in the same period last year.

This can be seen clearly from last year's sales numbers. Chinese buyers bought 799 homes in the first six months of last year, while Indonesians bought 614 units.

Landed and non-landed sales - both new and resale - are included, but executive condominiums are excluded.

Landed sales here refer to homes sold at Sentosa Cove, as foreigners are barred from buying landed property elsewhere in Singapore.

Agents say some Chinese buyers might now be turning to the non-residential sector to avoid paying the 10per cent additional buyer's stamp duty.

Mr Terence Teo, investment manager at developer Tong Eng Brothers, said foreigners seem to be more cautious now and are sitting on the sidelines, possibly waiting for the extra stamp duty to be lifted.

Source: The Straits Times – 6 August 2012

ECs enjoy pricing edge over condos

LOWER construction costs have given executive condominiums (ECs) a pricing edge as developers chase buyers in a competitive market.

Cheaper building expenses mean firms can pitch the units at levels below that of private apartments, but that initial price gap narrows as an EC gets closer to completing its minimum occupancy period and resale restrictions ease.

ECs - an upmarket hybrid of public and private housing - can be built for about 22 per cent cheaper than their private counterparts. This lower cost is partly why EC projects are typically priced about 25 per cent below comparable private mass market homes, experts say.

Experts pointed out various other possible differences between ECs and private residential projects but these are usually small and not of huge significance.

For instance, the fittings and furnishings - floor tiles, kitchen appliances and sanitary ware - are typically of a lower grade in ECs.

EL Development managing director Lim Yew Soon said private condos might opt for branded European appliances while ECs could use lower-grade appliances although they might not necessarily be of poorer quality.

"But when contractors tender for an EC project, they might factor in a discount and a lower bud-get because the perception is for ECs to be more basic."

The aesthetics of the project might also differ, with private projects having "more flair" - for instance, more curvature in its external design or a swanky clubhouse - that would cost more to build.

Source: The Straits Times – 4 August 2012

Serangoon Garden continues to charm buyers

SERANGOON Garden is one of Singapore's oldest housing estates, yet it has held its own despite the many new towns that have surfaced over the years.

The upper middle-class enclave, built to house British soldiers, keeps pulling in buyers with its wide choice of landed homes and lifestyle amenities.

Residents are mostly Singaporeans, but more expatriate families are moving in, due to several international schools in the area.

Gains in home prices are also typically higher than the national average, say experts.

Terrace home prices in Serangoon Garden have risen by 44 per cent in the past two years while semi-detached values have climbed 50 per cent.

Islandwide, terrace prices have gone up 36 per cent in that period and semi-detached home prices have risen 30 per cent, according to the Urban Redevelopment Authority's data on prices.

Rental yields of landed homes range from 2 to 3.5 per cent in Serangoon Garden, with Farleigh Avenue, Conway Circle and Tavistock Avenue popular with tenants. But compared with landed homes in nearby Braddell, Serangoon Garden rents are lower.

Homes in Braddell estate, especially in areas such as Dunsfold Drive and Cotswold Close, are closer to the Australian International School and Stamford American International School and so more appealing to expat tenants. Rents here are about 5 to 10 per cent higher.

The estate is also self-sufficient, with amenities like the myVillage mall and popular hawker centre Chomp Chomp.

Most buyers are also owner-occupiers keen on capital appreciation rather than rental yields in land-scarce Singapore.

However, the popularity of the area has led to plenty of parking problems.

But the outlook remains fairly positive, with a recent 99-year leasehold landed housing project, Haus@Serangoon Gardens, enjoying healthy take-up rates and fetching prices close to $1,500 per sq ft. Other recent launches include Cardiff Residence and Verdana Villas.

Rents in Serangoon Garden are likely to keep stable in the long-term.

Rents in prime areas are expected to continue to soften over the next six to nine months, especially on the back of a weaker global economy. This could exert some downside pressure on rents in outlying areas to keep the rental gap between prime and non- prime markets stable.

Source: The Straits Times – 4 August 2012

SINGAPORE

Split-second home loans? Hold it . . .

GETTING an approval for a home loan by the United Overseas Bank might not be as instant as it was marketed to be, following a clarification from the Monetary Authority of Singapore (MAS).

MAS has put a dampener on the bank's latest offering, the Split-Second Home Loan approval service, by saying that home loan approvals cannot be done from temporary locations at property launch sites.

Launched earlier this week, the loan service, which is directly linked to the Credit Bureau of Singapore and UOB's credit evaluation system, is said to provide home buyers with a quicker credit evaluation and approval process using the latest technologies.

It allows instant loan approval for the purchase of new homes as well as the refinancing of private property home loans, HDB home loans and commercial property loans.

MAS issued a clarification yesterday stating: "MAS rules allow banks to set up a temporary location at a property launch site to receive applications for residential property loans. We do not permit loan applications for residential property to be approved at such temporary locations, whether in-principle or otherwise, verbal or in writing. MAS has instructed banks that this is not allowed under our rules."

The authority also highlighted that a residential property loan is a long-term financial commitment, and by allowing banks to approve applications at temporary locations, imprudent lending by banks might occur.

Said an MAS spokesman: "In granting residential property loans, MAS expects banks to conduct credit assessment of borrowers in a thorough and prudent manner. When banks entice consumers with loan approvals at temporary locations, consumers may be rushed into accepting a long-term financial commitment, even if a cooling off period is incorporated within the approval."

When approached by BT regarding MAS's statement about the service, a UOB spokesman commented: "UOB's new service assesses a serious homebuyer's eligibility for a home loan instantly at selected showflats.

"The homebuyer's eligibility for a home loan can be determined instantly because UOB has streamlined and automated some of its back office processes for faster credit evaluation. The bank continues to use the same strict credit review parameters, including a credit check with the Credit Bureau (Singapore)."

Process-wise, UOB's mortgage bankers use an iPad to input an applicant's information into the system. From there, the home buyer's loan application will continue to be processed and approved at the head office and will be subject to the terms and conditions set out in the letter of offer such as UOB's verification of the applicant's documents.

The bank also pointed out that should the home buyer ultimately choose to take up the loan, he will still have to go down to a UOB branch to submit and finalise certain documents in order for the bank to issue a letter of offer.

As such, the Split-Second Home Loan approval service still requires a fair amount of time and effort before a home buyer can indeed be sure of his home loan approval.

Source: Business Times – 4 August 2012

News Update- 3 Aug 2012

RESIDENTIAL MARKET

Busting the myth of a hot property market

When you read about units being snapped up at a record pace, you might think that the property market is sizzling.

But buried beneath the headline numbers, two distinct trends appear to puncture this myth.

Not only is the average unit size sold by developers much smaller now, compared to the pre-global crisis peak year of 2007, but islandwide the average price per square foot is also much lower. That's because more units are being sold in the suburbs instead of the Core Central Region (CCR), where properties are costlier.

In fact, the state of the property market looks very different when viewed from the perspective of total square footage and total dollar quantum of apartments/condos sold by developers, rather than the number of units.

Although developers sold more non-landed private housing units last year and in 2012 (on an annualised basis) than in 2007, the total area of these units and their dollar value were lower than 2007's levels.

The total area of 13.43 million sq ft in the non-landed units developers sold last year was also about 19.2 per cent lower than the 16.62 million sq ft they sold in 2007.

The average size of private apartments and condos sold by developers in CCR - which includes the traditional prime districts 9, 10 and 11, the financial district and Sentosa Cove - has declined by 30.2 per cent from 1,639 sq ft in 2007 to 1,144 sq ft last year. It dipped further to 1,052 sq ft in H1 2012.

In the Rest of Central Region (RCR), the average size of units sold has shrunk almost a third from 1,338 sq ft in 2007 to 898 sq ft last year before contracting further to 831 sq ft in H1 2012.

In the Outside Central Region (OCR) - home to mass-market condos in suburban locations - the figure slipped 25.3 per cent from 1,292 sq ft in 2007 to 965 sq ft last year. In H1 2012, the figure was 876 sq ft.

Taken individually, the average psf primary market prices achieved in each of the three regions last year and in H1 2012 surpassed those in 2007. But the total islandwide dollar value of the units sold by developers in 2011 and 2012 (annualised), at $16.9 billion and $16.3 billion respectively, are shy of 2007's $22.7 billion.

Commenting on the shrinking average home size, Roxy-Pacific Holdings executive chairman Teo Hong Lim observes this is due not just to a proliferation of shoebox units but a general contraction of unit size across the board - two, three, four bedders - as developers try to keep lump sum investment sums affordable to buyers.

He also highlights that since the 2009 rule change to include bay windows and planter boxes as part of gross floor area, the saleable area of an apartment has shrunk by about 5-6 per cent even if it has a similar internal layout as before.

Source: Business Times – 3 August 2012

Chateau Eliza offered for collective sale again

CHATEAU Eliza, a freehold residential re-development site along Mount Elizabeth, is back on the market after three failed collective sale attempts.

This time, the owners are looking to lower the current reserve price of $108 million further, said marketing agent Knight Frank.

"To date, 79 per cent of the owners have agreed to lower the current reserve price, subject to a five-day cooling off period."

Based on the current asking price of $108 million, this works out to about $2,042 psf per plot ratio (psf ppr) based on the proposed gross floor area (GFA) of 52,887 sq ft that a new development could build on the site. No development charge is payable.

With an additional 10 per cent balcony area, it translates to $1,925 psf ppr, based on the potential GFA of about 58,176 sq ft with a development charge of some $4 million payable.

The breakeven cost is expected to be between $2,600 psf and $2,650 psf.

Located just off Orchard Road, Chateau Eliza comprises 37 apartments of 829 sq ft to 3,337 sq ft, on a land area of about 18,000 sq ft. Under the 2008 Master Plan, the land is zoned for residential use with a plot ratio of 2.8.

The tender will close on Aug 14 at 3pm.

Source: Business Times – 3 August 2012

Public grading for property firms next year

PROPERTY agencies will soon be publicly graded, just like hawker stalls and security guard firms.

The Council for Estate Agencies (CEA), which regulates them, told property agency bosses on Monday that it intends to start releasing grades next year, based on the quality of their agents.

The grades will primarily be decided by the number of complaints lodged with the CEA from the public against an agency, as well as instances of disciplinary action taken against its agents.

The CEA also said at the briefing that it is unlikely to issue letter grades like "A" or "B", but rather bands such as "Excellent", "Fair", and "Poor".

In response to queries from The Straits Times, the CEA would only say that it encourages agencies to "constantly improve the services delivered by their salespersons and put in place effective processes to manage complaints when service lapses occur".

Details on new initiatives to raise professionalism will be shared when they are confirmed, it added.

When it is implemented, the proposed grading system will be the CEA's latest step to professionalise the industry since the agency was set up in 2010.

But the proposal is already encountering some resistance from real estate agencies.

Property agency bosses are worried that frivolous complaints and a simplistic methodology will result in worse grades than they deserve, they said.

Chief among agencies' concerns is that the criteria disregard the number of transactions each agency chalks up.

The CEA currently provides each agency with its own quarterly number of complaints per 100 agents. Last year, the agency that topped the charts had 5.7 complaints per 100 agents.

"It is simplistic to divide only by the number of agents," said ERA Realty key executive officer Eugene Lim, who stewards some 5,000 agents.

He pointed out that ERA agents, for example, carry out an average of 3,300 resale and rental transactions a month.

If 10 complaints are lodged, that works out to a 0.003 complaint rate; but its statistic per 100 agents would be a higher 0.2.

"It's not fair to a company that does a very high volume compared to the rest," said Mr Lim.

There are also smaller agencies which do not have more than 100 agents.

The Straits Times understands that the CEA intends to use a different set of criteria to grade such smaller agencies.

Bosses also claimed that the "majority" of complaints that streamed in from the public to the CEA have been frivolous.

Examples of frivolous complaints include cases where tenants have security deposits forfeited by a landlord.

There have also been instances of complaints against agents for not including their CEA registration numbers in advertisements, even though these ads were published before the CEA came into existence.

Despite these concerns, property agencies are resigned to the public grading system, and expressed hope that the CEA will work with them to iron out the kinks.

Source: The Straits Times – 3 August 2012

News Update - 2 Aug 2012

RESIDENTIAL MARKET

Home prices 'likely to remain stable'

HOME prices are likely to flatline over the next six months, with falling interest from foreign home buyers eliminating the need for more cooling measures, according to CapitaLand bosses yesterday.

President and chief executive Liew Mun Leong said the additional buyer's stamp duty of up to 10 per cent introduced in December last year has met its aim of dampening foreign demand.

Foreign buyers and companies accounted for only 7 per cent of the private home market in the first half of the year, down from 20 per cent for all of last year.

Mr Wong Heang Fine, chief executive of CapitaLand Residential, told the meeting that "strong fundamentals" will keep home prices stable for this half of the year.

Developers sold almost 12,000 new homes in the first half of the year, 48 per cent more than in the same period last year.

But CapitaLand sold just 259 homes here in the first half, with a total value of $467 million, in projects such as Sky Habitat, The Interlace and d'Leedon. Mr Wong said new units will continue to be released at its launched projects, which should lead to more sales in the second half.

Broadly, it will be looking to build up its residential land bank, particularly in Singapore, but also in China, in the value-homes segment. It will also look at developing or acquiring more malls.

Source: The Straits Times – 2 August 2012

56% stake in Southbank on sale for $63m

REAL estate investor Chan Heng Fai of SingXpress Land is selling 32 Soho units and a retail outlet at Southbank for $63 million.

The properties constitute 56 per cent of Southbank Soho Block - a mixed development project built by UOL Group, comprising a 40-storey residential tower, 20-storey Soho (small-office home office) block with 16 shops on the first floor.

Of the 32 Soho units, 29 are duplex loft units. The duplex loft consists of units from 883 sq ft to 1,593 sq ft. Three are single level units ranging from 463 sq ft to 603 sq ft. The shop is 129 sq ft.

The development currently enjoys views over the Kallang River and Kallang Basin. The Urban Redevelopment Authority plans to rejuvenate the Kallang area to make it a lifestyle hub with offices and waterfront residences.

The asking price works out to $1,812 per sq ft and should mean a sizeable gain for Mr Chan and his investment holding firm Hong Kong-listed Xpress Group, the parent company of Catalist-listed SingXpress Land, as the properties were accumulated between 2006 and 2010.

The sale may attract those investors who want to avoid paying the Additional Buyer's Stamp Duty or Seller's Stamp Duty.

As the Soho block is zoned commercial, these stamp duties will not apply.

Source: The Straits Times – 2 August 2012

Tender triggered for Victoria St hotel site

THE buoyant tourism sector has spurred interest in a hotel site near Lavender MRT station. A tender for the 0.84ha site was triggered after a developer committed a minimum bid of $148.7 million.

This works out to $446 per sq ft (psf) per plot ratio (ppr) for the reserve list site at the junction of Jalan Sultan and Victoria Street.

Sites on the reserve list are put up for tender only if developers make an acceptable initial offer.

Experts say the tourism boom has led to a number of reserve list sites being triggered for sale in the past year, as investors hunt for well-located hotel sites.

For instance, a hotel site in Rangoon Road was triggered in February. It sold for $151 million in April to RB Capital group.

Analyst expects the top bid to come in at between $650 psf ppr and $700 psf ppr, or from $217 million to $233 million.

This estimate is based on the assumption that a three-star hotel with about 500 rooms is built.

However, the hefty overall quantum might limit the number of bidders to about six.

Developers will have a few options at hand as to their plans for the site, as it has been zoned for either hotel or commercial and residential use. However, both have a minimum hotel component.

If hotel use is chosen, at least 60 per cent of total gross floor area (GFA) must be for hotel rooms and hotel-related uses. The remainder can be used for commercial and/or residential purposes.

But opting for commercial and residential use still requires a minimum of 30 per cent of the GFA to be kept for hotel use. A minimum of 60 per cent must be for homes, while commercial use can take up a maximum of 10 per cent.

Source: The Straits Times – 2 August 2012

COMMERCIAL MARKET

Orchard malls decking up to stay ahead

In a bid to outdo their competitors, several mall owners are resorting to splashing out more to enhance their retail assets along the prime Orchard Road shopping belt.

Even relatively new malls such as CapitaLand's three-year old Ion Orchard are working at improving its offerings. It plans to create a new beauty cluster, which will comprise South-east Asia's first standalone Yves Saint Laurent Beaute boutique store and several new-to-market brands such as VMV Hypoallergenics, among others.

Jasmine Chua, director of retail management at Ion Orchard, said: "The introduction of a dedicated beauty cluster will further enhance our unique retail mix of international flagship brands and new-to-market concept stores.

A CapitaLand spokesperson revealed that Ion Orchard's basement Food Hall has been earmarked for a revamp, which will be completed later this year.

Just next door, Wisma Atria, owned by Starhill Global Reit, is undergoing refurbishment works for around a quarter of its net lettable area.

Aimed at enhancing the mall's positioning along Orchard Road, the improvements - in the shape of an updated facade and the introduction of several new-to-market labels - are expected to be completed around September. Earlier this year, popular lifestyle brand Tommy Bahama and luxury lifestyle label Tory Burch opened at Wisma Atria.

Other established shopping malls such as The Heeren and Tangs Orchard are also expected to dish out new offerings by the end of 2013 and 2015 respectively, while the integration of Plaza Singapore and The Atrium @ Orchard is slated to be completed by the year's end, according to the Orchard Road Business Association (ORBA).

Despite the flurry of upgrading activity going on along Orchard Road, some consultants expect spending by mall owners to slow down as demand and rents start to weaken along the prime retail belt.

Reflecting this, prevailing rents along Orchard Road have stopped rising, with monthly prime ground floor rents in the locale dipping 1.9 per cent quarter-on-quarter to $37.58 per square foot in the second quarter after being unchanged in Q1.

Source: Business Times – 2 August 2012

News Update - 1 Aug 2012

RESIDENTIAL MARKET

$285.2m top bid for Tanah Merah residential site

A RESIDENTIAL site in Tanah Merah has attracted a bullish top bid of $285.2 million in a closely fought 13-way tussle - in a sign developers are still hungry for well-located mass-market plots.

A joint bid by Fragrance Group and World Class Land topped the table with a bid of $676 per sq ft (psf) per plot ratio (ppr). The 14,000 sq m site is set to boast an estimated 415 homes.

Experts say that the strong tender response is largely due to the site's proximity to Tanah Merah MRT station and the expectation of very keen demand from buyers interested in this locality.

Another possible plus factor is the site next door, which has a commercial zoning and is likely to have retail facilities should it be sold and developed.

This would enhance the convenience of the site as well as others in the vicinity.

ERA Realty key executive officer Eugene Lim noted that developers are "optimistic on the site and its potential".

Residential sites within walking distance of MRT stations have proven to be a formula for success, and usually sell out, he added. Mr Lim expects a breakeven price of just below $1,000 psf and an estimated selling price of $1,200 psf to $1,300 psf.

As the site is close to the predominantly landed residential area of Bedok Road, Simpang Bedok and Lucky Heights estate, there could be a sizeable portion of potential downgraders from these landed properties.

Source: The Straits Times – 1 August 2012

Grant for low-income households enhanced

SINGAPORE - About 17 months after the Special CPF Housing Grant (SHG) was introduced to help low-income households own their first flat, it has been enhanced to expand the housing options for these families.

Announcing the launch of seven new Build-To-Order (BTO) projects yesterday - offering almost 4,200 flats - the Housing and Development Board also announced the enhancement of the SHG: Households earning S$1,500 and below that are looking to buy their first flat can qualify for a grant of S$20,000 when they buy a three-room standard flat in non-mature estates. Previously, these households qualified for the SHG only if they bought a two-room standard flat in non-mature estates.

SHG-eligible households would have to undergo credit assessment if they are taking an HDB loan to ensure that they are able to afford the monthly instalments before they can proceed with their flat purchase.

ERA Realty Network Key Executive Officer Eugene Lim welcomed HDB's move. "For this income group, price quantum is crucial as this is a long-term commitment," he said.

The enhancement will take effect from the HDB's launch of the new BTO projects yesterday. These projects offer new flats in two non-mature estates (Choa Chu Kang and Punggol) and three mature estates (Bukit Merah, Clementi and Geylang). Applications for these flats can be submitted online until Aug 6.

This is the fourth BTO launch this year and the HDB said remains on track to launch 25,000 flats this year.

More than 6,000 flats will also be up for sale next month: Some 3,700 new BTO flats in Ang Mo Kio, Choa Chu Kang, Kallang/Whampoa, Tampines and Woodlands, as well as 3,000 flats under the Sale of Balance Flats (SBF) exercise.

Analysts TODAY spoke to noted that many buyers may adopt a wait-and-see attitude for the BTO projects launched yesterday - given the combined BTO and SBF launch next month.

Said Mr Lim: "The popular sites such as the one in Telok Blangah will still see a good response but, (in) sites which are not as attractive, we may see a washout as buyers would prefer to wait for the next round."
Source: Today – 1 August 2012