By UMA SHANKARI

THE Housing and Development Board (HDB) has launched a site at Clementi Avenue 4 for sale under its design, build and sell scheme (DBSS).

An estimated 770 flats can be built on the plot, which has a site area of 235,800 square feet and a maximum allowable gross floor area of 825,300 sq ft. The site carries a lease term of 103 years (including a four-year construction period).

Analysts expect a top bid in the range of $200-$250 per square foot per plot ratio (psf ppr) for the plot. This translates to an overall land cost of $165 million to $206 million.

'This is one of the more attractive sites offered under the DBSS scheme,' said Nicholas Mak, head of research at SLP International. 'It is close to Clementi MRT station. Clementi New Town is also becoming more vibrant, with new projects such as The Clementi Mall.'

While buying sentiment has significantly moderated in both the public and private housing sectors, participation from developers for this site is likely to be motivated by the project's physical strengths and opportunities, said Ong Kah Seng, Cushman & Wakefield senior manager of Asia-Pacific research.

'This site is likely to see moderate interest from developers, who are still interested in providing homes for this specific segment although generally, home-buying sentiments are expected to remain cautious in the months ahead,' Mr Ong said.

The last site offered for sale under the DBSS scheme, at Yuan Ching Road in Jurong, drew a top bid of $192 psf ppr. Six bids were submitted for the site.

The tender for this site will close at noon on March 8, 2011.

Last year, HDB sold five land parcels for DBSS development in Yishun, Bedok, Tampines, Hougang and Jurong West. These five land parcels will yield about 3,000 DBSS flats, and this pipeline supply will come on-stream progressively in 2011.

Another DBSS site at Pasir Ris Central, with an estimated yield of 460 units, will be launched for tender in March. More sites for DBSS development will be made available if there is sustained demand, HDB added.

Flats sold under DBSS are offered to buyers under HDB's eligibility conditions. But the developers who buy such sites have some flexibility in designing, pricing and selling the flats.


Source; www.businesstimes.com.sg

Published January 26, 2011

DBSS site at Clementi launched for sale

By UMA SHANKARI

THE Housing and Development Board (HDB) has launched a site at Clementi Avenue 4 for sale under its design, build and sell scheme (DBSS).

An estimated 770 flats can be built on the plot, which has a site area of 235,800 square feet and a maximum allowable gross floor area of 825,300 sq ft. The site carries a lease term of 103 years (including a four-year construction period).

Analysts expect a top bid in the range of $200-$250 per square foot per plot ratio (psf ppr) for the plot. This translates to an overall land cost of $165 million to $206 million.

'This is one of the more attractive sites offered under the DBSS scheme,' said Nicholas Mak, head of research at SLP International. 'It is close to Clementi MRT station. Clementi New Town is also becoming more vibrant, with new projects such as The Clementi Mall.'

While buying sentiment has significantly moderated in both the public and private housing sectors, participation from developers for this site is likely to be motivated by the project's physical strengths and opportunities, said Ong Kah Seng, Cushman & Wakefield senior manager of Asia-Pacific research.

'This site is likely to see moderate interest from developers, who are still interested in providing homes for this specific segment although generally, home-buying sentiments are expected to remain cautious in the months ahead,' Mr Ong said.

The last site offered for sale under the DBSS scheme, at Yuan Ching Road in Jurong, drew a top bid of $192 psf ppr. Six bids were submitted for the site.

The tender for this site will close at noon on March 8, 2011.

Last year, HDB sold five land parcels for DBSS development in Yishun, Bedok, Tampines, Hougang and Jurong West. These five land parcels will yield about 3,000 DBSS flats, and this pipeline supply will come on-stream progressively in 2011.

Another DBSS site at Pasir Ris Central, with an estimated yield of 460 units, will be launched for tender in March. More sites for DBSS development will be made available if there is sustained demand, HDB added.

Flats sold under DBSS are offered to buyers under HDB's eligibility conditions. But the developers who buy such sites have some flexibility in designing, pricing and selling the flats.


Source: www.businesstimes.com.sg

While the Government has to act to prevent the property market from getting beyond the reach of most Singaporeans, I am however not very comfortable that the latest steps - announced last week - are the best means of dealing with the issue.

Not only are the measures fairly drastic, they appear to be dealing more with curbing demand than raising supply.

The Government has claimed that there is no shortage of supply. It points out that the sites awarded last year under the Government Land Sales Programme (GLS) will yield about 13,300 units. For the first half of this year, it says it will make available sites that would be able to yield about 14,300 units.

Further, as at the end of the third quarter of last year, there were about 64,400 uncompleted units in the pipeline, of which roughly half were still unsold. These compare with the annual take-up rate of about 12,700 units between 2007 and last year. Unfortunately, there is a lag period between the site award and the sale of the property.

The latest attempt to cool the property market may have the unintended effect of reducing supply as developers decide to take a wait-and-see approach. They might be even willing to pay the penalties for missing completion deadlines rather than sell at a loss. It could also see the bigger developers with the financial muscle to hold being able to take advantage of those who can't hang on to their sites.

And will the new rules which took effect the day after they were announced - Jan 13 - force buyers to give up options, now that financing will be more difficult to obtain?

Under the new rules, financial institutions can only grant loans amounting to half the value of the properties purchased by non-individuals, such as companies, trusts and collective investment schemes. Individuals with existing outstanding mortgages can now borrow only up to 60 per cent of the value of their next property purchase.

Another unintended effect could be that those who have the financial resources will be able to get more properties on the cheap - to sell when prices recover later.

But should the Government be overly concerned with private-sector housing? Should it be going all out to prevent a fool from parting with his money?

Despite numerous warnings about the dangers of a property bubble bursting and that the current low interest rate regime might not last for too long, property prices, prior to the latest measures, continued to climb.

I believe the Government should be more concerned about housing the masses. It has done a marvellous job, having built more than one million units since the Housing and Development Board (HDB) was established. At present, some 900,000 units house more than four-fifths of the population. For the vast majority of newly-weds, their first home is likely to be an HDB flat. These are the people whom the Government has to be concerned with.

The Government has said it will be building more HDB flats - up to 22,000 Build-To-Order flats this year - to accommodate the masses. Will these be enough?

It should perhaps also get out of building executive condominiums (EC) units which provide condo-like facilities and the Design, Build and Sell Scheme (DBSS) units. The HDB says land for some 8,000 of these could be launched this year. Why should the HDB be catering to the needs of this select group?

Look at what is happening to the estates that were built by the HUDC for an earlier group of the so-called sandwiched class. Some like Farrer Court, Amberville and Bedok Reservoir, have been sold en bloc to private developers. The remaining ones - Shunfu, Braddell Heights, Pine Grove, Laguna Park, Neptune Court, Chancery Court and Eunosville - have been privatised or are in the process of being privatised in anticipation of en bloc sales. Why must public funds be used to cater to such profiteering?

Rather than be all things to all people, the Government should concentrate on housing the masses.

by Conrad Raj
05:55 AM Jan 21, 2011

Conrad Raj is editor-at-large with Today.

Source: www.todayonline.com

Based on URA and HDB projections, there could be a deluge of homes in 2013 and 2014

by Ku Swee Yong

05:55 AM Jan 07, 2011
It was a week before last Christmas when we celebrated the Housing and Development Board's (HDB) completion of 1 million flats.

This is an awesome achievement. With 1 million flats averaging about 1,000 sq ft each, the HDB has within 50 years completed and handed over a billion sq ft of residential space. A billion sq ft. One, followed by nine zeros. That is more square footage than the above-ground portion of the Great Wall of China, which spans 6,500km.

Now, the actual number of HDB flats that exist today is just below 900,000. According to the HDB's annual report, as of March 31, 2010, there were 890,212 flats under management. More than 100,000 flats have been demolished since the '70s, many of them rental flats. Older estates, such as Brickworks and Queenstown, have been upgraded.

Over the years, small individual estates have also been amalgamated into towns such as Bukit Merah Town, Clementi New Town, etc, under various estates renewal programmes, such as Selective En bloc Redevelopment Scheme (Sers).

The completion of an average of 20,000 flats per year in the HDB's 50-year history was in tandem with the growth of Singapore's population.

In the last 15 years, from 1995 to 2010, population growth (Singaporean citizens and permanent residents) averaged 50,000 per year, accommodated by the growth of public (additional 13,950 flats a year) and private housing (8,593 units a year). This is an average of one apartment for every two to three Singapore citizens and PRs. If we included non-residents (Work Permit and Employment Pass holders, for example), then this is an average of one new HDB or private home for every four new people added to the "headcount" in Singapore.

Table 1 shows the actual supply of physical units versus population growth. The 15-year data looks balanced.

However, within the 15 years, there were several tumultuous periods. Early on, a long queue of up to five years for HDB flats formed due to a perception of supply shortage and rising prices. Executive Condominiums were introduced.

The massive construction boom around 1995, with fuel added by en-bloc deals, led to a massive increase of 44,000 residential units per year in the period spanning 1998 to 2000. This is net additional physical supply; that is, demolitions from en-bloc deals have reduced the total count.



THE SCOURGE OF SARS

The economy dipped in 2001 after the dotcom crash, which was followed by 911, Gulf War II, the Bali bomb blast, and then Sars. The blip during the Sars crisis was the worst: A recession with a population exodus of 61,000 in 2003, during which there was an accumulated excess of residential units.

By March 2004, HDB announced it would stop building five-room flats because it had 10,000 units that were waiting to be taken up. At that time, three-bedroom private apartments could easily be had at $500,000 and there was little demand from a population that shrank by 61,000.

The over-supply, apparent since 2001, brought on a revamp of the HDB and the introduction of the Build-To-Order (BTO) scheme. HDB flats will be constructed only when there are enough buyers, allowing the board to adjust supply based on demand from applicants.

In 2002, the registration for flats system was suspended and till today, the BTO scheme remains the main mode of HDB's sales. The Design, Build and Sell Scheme (DBSS) was introduced in 2005 for private sector developers to participate in public housing projects. This scheme contributes about 10 per cent of total new HDB supply.

The period of 2004 to 2005 was one of slow growth as there was excess supply which had to be absorbed by new demand from the population growth before equilibrium could be reached. Government Land Sales slowed down, leading to the next squeeze.



MARKET RECOVERS AMID EN-BLOC FEVER

From 2006 to 2008, real estate prices recovered on a combination of factors, including: (a) rapid population growth on the back of strong jobs creation; (b) rosy economic outlook spurred by the promise of the integrated resorts; (c) developers replenishing freehold land bank through en bloc transactions and (d) small number of project starts in 2003 to 2005 leading to low completion numbers in 2006 to 2008.

Of the above factors, the en bloc phenomenon created the biggest squeeze because it (a) demolished physical housing units to make way for redevelopment, reducing total stock; (b) put millions of dollars of windfall into the hands of the en bloc sellers, amplifying purchasing power, and (c) en bloc sellers had to buy another property for their own stay at a time when net new supply was already low.

The average growth of population in the last five years - from 2006 to last year - was 162,000 per year. The demand for housing was way higher than the net supply growth of private residential at 5,780 units per year and the additional supply of 2,129 HDB flats per year, partly due to Sers rejuvenation of older estates. The timing could not have been better.

If we narrowed our analysis down to the numbers for 2006 to 2008, the shortage of space is even more pronounced. Vacancies dropped to a low of around 4 per cent as the average annual increase of 4,077 units of private residential stock (TOP completions minus en bloc demolitions) and 1,858 units of HDB stock were hardly enough for the influx of population at 191,200 a year! Assuming the new population agreed to squeeze into residential units 10 people at a time, we would need a supply of 19,100 units each year in 2006 to 2008. But the additional stock count was only 5,935. So naturally, rentals and capital values spiked.



SUPPLY OUTLOOK

We need to look at the planning for physical supply and not merely the real estate market based on launches and pre-sales. Some schools of thought favour the idea that, in land-scarce Singapore, property investors merely care about capital gains, not the steady rental income stream. For me, I stress the importance of long-term returns from real estate and therefore, I keep a close eye on physical supply and asset utilisation.

A property has real value only when it is well-used. Most hard, capital-intensive assets are like that: Ships, aeroplanes, machinery, satellites, ports, highways, and so on. If you leaned towards feng shui, you would also believe that the higher the human traffic and goods flow (especially for industrial, retail and commercial properties), the better the property.

An over-supply of completed residential properties, with insufficient end-users and poor utilisation, would naturally lead to price weakness.

Conversely, insufficient supply or too-rapid a population or demand growth will lead to sky-rocketing prices - similar to the situation in 2007. This would not go down well with our central planners. Despite being a top-notch economy, Singapore does not like to price itself out of the market. So, we can expect more supply to quench the fire of rising prices.

Since the middle of 2009, public housing demand has been robust and prices have moved up sharply. From Table 2, we see that HDB launches of BTOs were ramped up significantly last year.



According to the HDB: "The ramp-up of flat supply is part of a series of additional measures to reinforce the Government's commitment to provide affordable and adequate public housing supply for first-timer households." If demand remains strong, the HDB may launch up to 22,000 BTO flats and release land for 7,000 DBSS units this year. That's a potential 29,000 HDB units. That's huge.

However, the numbers do not indicate when the physical supply will be completed. The HDB supplies new flats based on various demand factors, such as new households formed from marriages, number of resale transactions, etc. To satisfy the strong demand and in order to shorten the waiting time for first-time buyers, Mr Mah Bow Tan, the Minister for National Development, has announced that the HDB will endeavour to complete construction within two-and-a-half years, shorter than the previous average of three years, for all BTOs starting from September last year.

Based on the above information, public housing supply is estimated to be as shown in Table 3:



If we net out the number of HDB units that may be demolished for estate renewal, the supply looks comfortable, especially since most of the BTO flats have found owners before construction began.

However, if we look at the total supply of residential units (both HDB and private) as shown in Table 4, the numbers become somewhat scary.



If you recall from Table 1 above, the 15-year average annual supply is about 22,000 units of HDB and private housing. The recent record high Government Land Sales programme and the ramp up of HDB supply may lead to a supply of over 30,000 units in 2013 and 43,000 units in 2014.

The last time so many residential units were completed was during the period of 1998 to 2000, when an average 44,000 units were completed per year. That was a supply level that was challenging to absorb as new family formations through marriages tracked at around 25,000 per year and thepopulation increased at 70,000 per year. And not all newly-weds purchase homes or move out of their parents' nests, while new population may come in the form of students or contract workers who occupy dormitories rather than residential units.

That period of over-supply led to a long period of indigestion from 2002 to 2005, when prices stagnated on the back of an economy hit by Sars and external turbulence. Vacancies of private residential units hovered above 8 per cent for most of 2002 to 2005, much higher than the 5 to 6 per cent of 2009-2010.



WHAT MIGHT BE THE LEVERS TO PULL?

Should the Urban Redevelopment Authority's projections of residential completions be accurate and HDB supply remains high, we must brace ourselves for a deluge in 2013 and 2014. We are now in 2011, so that gives us over a year to prepare. There are, however, a few ways that may mitigate the over-supply threat:



- Speeding up estate renewal programmes

By 2015, there will be more than 200,000 flats that will be over 30 years old. Old flats could be torn down sooner. Current tenants will be given notice to move out into other HDB flats. However, HDB's pace of renewal programmes is not entirely clear to market watchers, so I would not be able to take a stab here.



- Slowing down construction

The HDB can choose to slow down the supply of new flats. In the case of BTOs, the process of applications, queueing, balloting, selection, etc, and then contracting the construction companies to build are within the control of HDB. If physical supply is high and vacancies increase, the completion of construction could be delayed for the market to take up some slack.



- Embracing more foreigners

The demand side of the equation could be jacked up by welcoming more foreigners to our shores. This is especially so if the economic growth in the next five years can hold up at 5 per cent or higher, ensuring that jobs growth will be robust. If executed well, an increase in housing demand produces the best outcome for the whole market.



It remains to be seen if the large supply can be supported by demand. It is critical for stakeholders to make informed decisions, thinking through a comprehensive set of real estate data such as housing demolitions, population growth policies, public and private housing TOPs, etc, to the extent that such information is available.



The writer is the founder of real estate agency International Property Advisor (IPA), which provides services to high-net-worth individuals.

Soure: www.todayonline.com

 

Published January 6, 2011

Jurong public housing site attracts top bid of $131.6m

By FELDA CHAY


A TIE-UP between Hoi Hup Realty, Sunway Developments and SC Wong Holdings has put in the highest bid of $131.6 million for a public housing site on Yuan Ching Road in Jurong.

This is 5 per cent above the second highest tender from Yuan Ching Development. Six bids were put up for the site, which can potentially yield 580 flats. The lowest bid was $68.5 million.

The top bid translates to a per square foot per plot ratio (psf ppr) price of $192 for the site under the Design, Build and Sell Scheme (DBSS), which is 'within expectations', said Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield.

This is, however, 'considerably lower than that of recent DBSS sites awarded, which are at least $200 psf', said Mr Ong. This could be due to the less central location of the plot of land, as compared with previous DBSS sites located in Upper Serangoon and the Bedok Reservoir area.

Overall moderation in home- buying sentiment in the public residential sector could also have played a part, Mr Ong added.

Credo Real Estate executive director Ong Teck Hui said the six bids put up for the site showed there was 'fair interest' in the tender. 'Going forward, bidders would be mindful of the supply of DBSS sites coming into the market. Response in terms of bid prices and participation level will depend on the locations and attributes of the sites,' he said.

The 2.1 hectare Yuan Ching plot is near Jurong Lake and the Jurong Country Club golf course, as well as education institutions such as Jurong Secondary School. Both Lakeside and Boon Lay MRT stations are several bus stops away.

The land parcel has a maximum allowable gross floor area of 684,574 sq ft and carries a lease term of 103 years (including a four-year construction period).

The Housing and Development Board (HDB) said it will evaluate the tender bids and announce the final results within the next two weeks

Source: www.businesstimes.com.sg

by Joanne Chan
05:55 AM Dec 21, 2010

SINGAPORE - The rising property prices have shown few signs of slowing since Singapore's recovery from the global economic downturn.

This year, a strong economy, low unemployment rate and ample liquidity pushed private property prices past the previous peak in 1996.

In the public housing sector, prices in the resale market hit new highs.

The cash premium buyers pay upfront - also known as cash-over-valuation (COV) - climbed to $30,000.

Faced with the possibility of a property bubble, the Government introduced cooling measures in September last year and February this year. The slew of measures ranged from raising housing supply to clamping down on speculation by tightening existing rules.

However, demand continued unabated.

Mr Nicholas Mak, the executive director of Research and Consultancy at SLP International, said: "The market seemed to take it into its stride and continued to expand; sales were still climbing and so were prices."

So, another round of measures were implemented in August, including raising the effective period of the seller's stamp duty to three years.

The maximum bank loan amount was also reduced to 70 per cent.

Analysts noted that this approach of taking "small steps" to regulate the property market is unlike the previous property run, when a capital gains tax was introduced prior to the market crash in 1996.

In a recent interview with MediaCorp, National Development Minister Mah Bow Tan reiterated this cautious approach of incremental steps is to bring prices down to a sustainable level but not crash the market.

Said Mr Mah: "We are not taking a big bang approach but taking a very calibrated approach to this."

Noting that the measures introduced in August appear to have had more impact on the public housing market, Mr Mah added: "The big change was when we disallowed dual ownership of public and private property within this minimum occupation period, which is now five years. Previously it was three years."



'Sellers should be more realistic'

COV for resale flats has declined gradually, dropping to $22,000 last month.

Observers say COV levels may eventually drop to $10,000 to $20,000, as more housing becoming available.

The Government plans to release 22,000 new public flats next year, depending on the take-up rate. The HDB will also release land sites for another 4,000 flats under the Design, Build and Sell Scheme and 4,000 executive condominium units.

Dennis Wee Group Director Chris Koh said sellers need to be more realistic about their expectations in the current market.

Said Mr Koh: "This isn't like a year ago, when you could ask for COV as high as possible and people may just grab it. But I think buyers are now a lot more wiser. And those who were really in need and desperate would have bought."

The impact of the measures on the private property market remains to be seen.

September saw a frosty reception from buyers, with the number of private homes sold plummeting below the 1,000 unit level.

However, the market rebounded quickly. Last month, some 1,900 units were sold.

The Government has indicated it will introduce more measures if necessary to temper demand.

But for now, it appears no further action will be taken as it monitors the impact of its latest measures.

SLP International's Mak said the next round of measures, if any, would likely come in the middle of next year.

"One possibility is that they could further tighten the loan-to-value for investors, thus making it more expensive or more risky for investors who already own one or two properties and are buying their third or fourth one," said Mr Mak.

A broad measure, such as a capital gains tax which will affect all homebuyers, should only be a last resort, Mr Mak added.

Source: www.todayonline.com

Published December 1, 2010

Upper Serangoon DBSS site draws just 2 bids
LKH unit offers $155.2m, pipping Sim Lian's $113.3m


By UMA SHANKARI

A LAND parcel offered for sale under the Design, Build and Sell Scheme (DBSS) at Upper Serangoon Road received just two bids at the close of the government tender yesterday.


A unit of Low Keng Huat (Singapore) made the higher bid of $155.2 million. The price works out to $206 per square foot per plot ratio (psf ppr), which is within analyst expectations.

Low Keng Huat's offer was 37 per cent higher than the other bid, from Sim Lian Land. Sim Lian offered $113.3 million, or $150 psf ppr.

Eugene Lim, associate director of ERA Asia Pacific, said that based on the tender price, Low Keng Huat will be looking to sell the upcoming flats on the site at about $500-540 psf.

He added that this would make the upcoming DBSS flats significantly cheaper than new private homes in the locality.

New sites for private residential developments in the vicinity are now being sold for upwards of $300 psf ppr, he said.

ERA's data shows that four-room resale HDB flats in the area are selling for $400,000-420,000 while five-room resale flats are going for around $500,000-540,000.

Market watchers had expected the Upper Serangoon Road site to draw a small number of bids when it was launched in October. Interest in such sites might be muted given the recent property cooling measures and the expected economic slowdown, they said.

Ong Kah Seng, senior manager of Asia-Pacific research at Cushman & Wakefield, said when the site was launched that it would draw only 'modest' interest and estimated that the highest bid would probably come in at the $200-230 psf ppr range.

The 103-year leasehold site along Upper Serangoon Road is about 215,300 sq ft in size and has a maximum allowable gross floor area of 753,500 sq ft. It can accommodate an estimated 630 units.

Under the Housing Board's DBSS scheme, private developers will undertake the entire public housing development process, from tendering for the land to designing, building and selling the flats

Source; www.businesstimes.com.sg

by Colin Tan
05:55 AM Nov 19, 2010

If there is anything remarkable about the recently-released developer sales for last month, it has to be the spectacular return of HDB upgraders to the housing market.

In all, 1,597 units were sold during the month, of which about a third or 529 were executive condominiums (ECs). They helped propel developer sales to a dazzling 74 per cent gain over the previous month.

The release of new ECs for the first time in about five years helped relieve some of the growing pent-up demand from upgraders, as well as absorb some of the liquidity pressures in the lower tiers of the housing market.

For many months now, upgraders have been sidelined by investor buyers in the private housing market. While liquidity levels are also at much higher levels at the lower end of the housing market, they cannot match the funds in the hands of investors.

Much of the upgrader demand has no place to turn to as prices of even the mass market segment rise beyond the affordability of most of these buyers. The limited options available to this sandwiched class are to upgrade to ECs and, to a lesser extent, Design, Build and Sell Scheme (DBSS) units.

I expect sales from the upgrader segment to continue to grow from strength to strength in the coming months as more EC and DBSS projects are launched.

Some have suggested that ECs are siphoning off some of the demand for the lower-priced mass market private housing apartments. They note that mass market condos in suburban areas had suffered a drop of about 25 per cent in sales volume, compared with the figure in September.

I would think not. The markets are quite distinct by now, polarised by the jump in prices over the past several months. Upgrader buyers in the private housing market are now in the small minority.

If there was a sharp drop in sales of mass market condos, it was because fewer such projects were launched.

It was also reported that the number of private homes sold in the $2,000 to $2,500 per sq ft price band last month was 207 units, or about eight times the 26 units developers sold in September.

If there were more units sold in the higher price bands, it was because more of such projects were launched during the month. This statistic in itself does not mean prices have risen much higher.

If we analyse price trends without regard to the launches, it will be very confusing. Prices will be shooting up one month and down sharply in another.

Some have commented that the buoyant sales last month may soon lead to another round of cooling measures. Without a proper analysis of prices, I think it is a little premature to talk about a new set of measures.

Have the cooling measures worked?

Industry observers have not helped with their comments. This is partly because they themselves are not clear about the objectives of the cooling measures. If anything, the calibrated approach in the introduction of the cooling measures is meant to restrain prices rather than curtail sales.

And the measures are not targeted at any one housing segment. While they may appear to affect the mass market segment more than others, I am pretty sure that was not the primary objective of policymakers.

The measures are meant to safeguard the system, not punish developers or investors. If sales soared while prices stayed flat, I do not think they will put the system at further risk. The problem is rapid price increases without corresponding growth in fundamentals.

Has that happened again? Maybe yes, maybe no. The test will be when the flash estimate of the property price index is released at the end of this year.

Finally, there has been much debate about housing affordability as well as statistics put out to show if housing is still affordable or otherwise.

At the end of the day, it boils down to the individual household. Even as household incomes rise, they may have less to spend for housing after setting aside money for necessaries.

Many people tell me that children's tuition, music and ballet lessons and holidays are necessary expenditure these days. So are mobile phones, flat screen TVs, broadband and housemaids. With a growing list of necessaries, housing affordability will always be an issue with some households.

Perceptions of affordability also depend on the threshold of the household. Are they conservative spenders or risk takers? A conservative household will always need to set aside more before spending on a home.



The writer is head, research and consultancy at Chesterton Suntec International.

Source; www.todayonline.com

Published November 17, 2010


First Yishun DBSS project to be launched after CNY

By KAREN NG


ADORA Green, for which a groundbreaking ceremony was held yesterday, will be the first design, build and sell project in Yishun under the Housing & Development Board's DBS Scheme. 'The development will be launched next year after the Chinese New Year season,' said Guthrie SK Land executive director Michael Leong. 'The price of the flats is expected to range from $450-500 per square foot.'

The project, at the junction of Yishun Avenue 11 and Yishun Central, will comprise about 800 apartments. Some 65 per cent will be four-room flats, 15 per cent will be five-room flats and the remaining 20 per cent three-room flats. Sizes range from 67 square metres for a three-room flat, 92 sq m for a four-room flat and 112 sq m for a five-room flat. Costs will be $300,000-400,000 plus for a three-room flat, $400,000-500,000 plus for a four-room flat, and $500,000-600,000 plus for a five-room flat.

Under DBSS, private developers build public housing flats with condo-like finishes. Adora Green will comprise six 16-storey blocks, with recreational facilities such as fitness stations and barbecue pits, as well as commercial facilities such as a mini-mart, shops, an eating house and childcare facilities.

At yesterday's ground-breaking ceremony, Minister for Law and Home Affairs K Shanmugam said: 'One of these measures was to allow eligible first-time households with a monthly income between $8,000 and $10,000 to buy new DBSS flats with a CPF housing grant of $30,000. This revision will be applicable to DBSS projects launched for public sale after Aug 30, 2010 which includes Adora Green.'

Source: www.businesstimes.com.sg

Published November 16, 2010

2.1 hectare plot expected to draw bids of $195-215 per sq ft per plot ratio


By EMILYN YAP

THE Housing and Development Board (HDB) is launching a public housing site at Lakeside for sale, which can potentially yield 580 flats

The 2.1 hectare plot comes under HDB's design, build and sell scheme (DBSS).

It is at Yuan Ching Road, near open spaces such as Jurong Lake and the Jurong Country Club golf course, and education institutions such as Jurong Secondary School.

The site is also near the upcoming Jurong Lake District, which the government is developing as a major regional centre.

However, the plot is some distance away from an MRT station.

Both the Lakeside and Boon Lay stations are several bus stops away.

The land parcel has a maximum allowable gross floor area of 684,574 sq ft and carries a lease term of 103 years (including a four-year construction period). The tender will close on Jan 5.

SLP International Property Consultants' research executive director Nicholas Mak believes that the top bid for the site could range from $133.5-147 million, translating to $195-215 per sq ft per plot ratio (psf ppr).

There might be four to six bidders, most of whom would be contractors- cum-developers, he added.

'Compared to some of the earlier DBSS sites sold this year, this site is less attractive as it is not situated near the nearest MRT station,' Mr Mak said.

As a result, he expects bids for the Yuan Ching site to be lower.

He cited as an example a DBSS site at Bedok Reservoir Crescent, near an upcoming MRT station on the Downtown line, which was recently sold for $224 psf ppr.

'The prices of resale flats in Bedok are also generally higher than those in Jurong West,' he said.

According to him, the average price of five-room resale flats in Bedok is $500,000, while that in Jurong West is $490,000.

Under the DBSS, the winning developer enjoys flexibility in designing, pricing and selling the flats.

First-timer households with a monthly income of up to $10,000 are now able to buy new DBSS flats and they can apply for a CPF housing grant of $30,000, but they will not be able to obtain a HDB concessionary loan.



Source: www.businesstimes.com.sg

KELVIN TAY looks at how the new measures introduced by the government will affect residential property prices here

Published September 23, 2010
KELVIN TAY


THE 1980s witnessed one of the most spectacular property bubbles in modern history. It was brought on by a combination of a buoyant Japanese economy, the forced appreciation of the Japanese yen by virtue of the 1985 Plaza Accord, and low interest rates. The mixture was so potent that, at its height in 1989, prime properties in Tokyo's Ginza district were being sold for $125,000 per square foot (psf).


In 1991, the Japanese property market bubble burst spectacularly and almost 20 years later, the market remains moribund. More recently, the collapse of the US housing market brought capitalism to its knees in October 2008, with the resulting de-leveraging ramifications still being felt in the global economy almost 24 months later.

Although some market observers are still debating whether there is a bubble in the Singapore property market and therefore a need for price stabilisation measures, the fact that there is such debate is already proof of a pie in the making. As of the second quarter of this year, the HDB resale price index was 18 per cent above its previous peak in 1996. Prices in the mass market segment of the private residential market are as much as 23 per cent above its previous peak in 1996 as well.

In fact, the HDB resale and mass market segments may currently be in a state of denial - that prices will keep rising forever, a fundamental myth of asset bubbles. During a bubble, people generally believe prices would not fall. Although this has been proven wrong so many times in the past, many have not learnt from the past. And very often, homeowners are often the biggest victims of any property bubble.

It is with these thoughts in mind that we view the latest round of government policies to stabilise property prices in Singapore with relief. This is especially so as the recent run-up in property prices in Singapore has been concentrated largely in the HDB resale and mass market segments of the private residential market, where the majority of Singaporeans reside.

Most of the policies that were introduced three weeks ago are targeted at the HDB resale market, which in turn underpins prices in the mass market segment of the private residential market. Any decline in HDB resale prices will in turn affect the private mass market segment and vice-versa. The measures are broad-based, targeting both market demand and supply, with the 'demand' focused measures largely aimed at reducing speculative demand.

For example, buyers with a second mortgage now require a higher down payment of 30 per cent (previously 20 per cent), while the minimum cash payment has been increased to 10 per cent (previously 5 per cent). In our view, these two measures are likely to seriously dampen the HDB dweller's enthusiasm to upgrade to private property at current prices, as it reduces affordability.

A typical HDB upgrader would be looking at purchasing a 1,200 sq ft apartment at $850 psf, or around $1 million. Assuming that the couple still has an existing mortgage for the HDB flat they are upgrading from, they would need to cough up at least $100,000 in cash to meet the 10 per cent cash requirement and fund the remaining $200,000 from their CPF accounts. If we include the usual renovation expenses of about $30,000, then the cash requirement becomes a rather prohibitive $130,000, or close to 11 months of the couple's monthly net median income of $12,000.

Over time, the increase in supply of Design, Build, and Sell Scheme (DBSS), Build-to-order (BTO), and executive condominiums (ECs) in the market will also affect prices of the HDB resale market as buyers have a greater choice of homes available.

Some of the latest measures also reversed a long-standing policy that sparked the previous upturn in the HDB resale market in the 1990s. Back in 1991, the Ministry of National Development allowed HDB flat owners who have passed the minimum occupation period (MOP) of five years to invest in a private property.

Subsequently in 1993, the HDB relaxed mortgage valuations from 1984 values to current values and also permitted funds in the CPF ordinary account to be used for mortgage payments. Arguably, these two landmark policy changes at that point in time started the strong upturn in the HDB resale market in the 1990s, with the market hitting a peak in Q2 1996 before turning down sharply as a consequence of the Asian financial crisis.

Part of the package of measures announced at the end of August now disallow home owners from concurrently owning a private and public property within the MOP.

We expect this tightening to have a meaningful impact on the HDB resale market, as this is likely to reduce volumes and moderate price appreciation, if any. The subsequent impact is a decline in the average cash-over-valuation (COV) of the HDB resale market, which currently hovers at an average of $30,000.

With all these measures targeting the HDB resale market, it is difficult not to envisage the mass market segment of the private residential market being impacted as the former acts as a firm price support and catalyst for the latter. The last year or so has seen the emergence of 'shoebox' apartments ranging from 350 to 650 sq ft in size.

These smaller apartments are usually the targets of speculators as the absolute financial outlay and commitment is smaller and not surprisingly, we believe these apartments are also likely to be among the first to decline as the HDB resale and private mass market segment takes a breather.

Ironically, the most effective 'policy' of the government in stabilising the property prices might be interest rates. The Singapore property market has never been an interest rate sensitive market until 2007 and our sense is that the average home buyer may not be sanguine about how interest rates would impact his mortgage payments.

Prior to 2007, most housing loan rates in Singapore were pegged to the banks' and finance companies' prime lending rates (plus a premium of one per cent), which not only tended to be much higher than the Singapore Interbank Offered Rate (Sibor) or Swap Offer Rate (SOR) but also usually stayed consistently high, regardless of how low the base rates were.

However since 2007, the bulk of home loans are now pegged to Sibor or SOR (plus a premium of 1.25 per cent). With Sibor at historically low levels (0.51 per cent as of Sept 16, 2010), mortgages are currently artificially low, making homes that were once out of reach based on the old lending rates very affordable. However, the current low Sibor rates will normalise at some point. It is just a question of when and how fast.

Have there been instances where Sibor behaved erratically? The Asian financial crisis was one such example. Sibor spiked to a high of 7.75 per cent before finally sliding to 1.9 per cent in December 1998. The average rate of Sibor during that 18-month period hovered at 4.9 per cent.

As Asia was fortunately not at the epicentre of the credit crisis in 2008, Sibor did not behave erratically but averaged around 1.3 per cent, almost three times the current rate of 0.51 per cent.

So what is the likelihood of the above scenario panning out? At this point in time, with the global economic recovery still wobbly, a high interest rate environment looks rather unlikely. The good news is that history has shown that there are usually several warning signs before a financial crisis engulfs an economy.

We are also hopeful that history would have taught the average Singaporean buyer not to overextend his debt like his Japanese and American counterparts, buying property that cost more than they could rationally afford because they assumed that values would only rise and interest rates would always remain at such levels. The bad news is that humans seldom learn from history.

The writer is chief investment strategist Singapore, UBS Wealth Management

Source: http://www.businesstimes.com.sg

05:55 AM Sep 17, 2010
by Png Poh Soon

Following the recent Government measures to curb property speculation, some buyers have forfeited their booking fees on their planned purchases in anticipation of a dip in property prices.

In the HDB resale market, anecdotal evidence has shown early signs of price moderation, in particular the cash-over-valuation component, as the expectations of buyers and sellers change. If HDB prices were to moderate, it will be easier for the HDB upgraders and downgraders.

Price is just one part of the equation. With the new measures, the variables for this group of people to consider have also become more complicated.

Upgraders and downgraders applying for a housing loan from banks or financial institutions now require a higher upfront cash payment as they are limited to a loan quantum of no more than 70 per cent for their next HDB purchase unless they meet a certain criteria. This is down from the previous 80 per cent limit. In this instance, HDB upgraders and downgraders have to fork out a 30 per cent payment, of which 10 per cent must be in cash, to purchase a HDB flat, unless they have no more outstanding housing loans.

Timing then becomes crucial to qualify for the 80 per cent financing, as HDB owners have to show sufficient proof of sale of their existing unit within two weeks from the date of the first sales appointment. Hence, arrangements with the buyer of their existing flat and the seller of the flat have to be well planned. This is akin to contra arrangements in the current market, where the precise execution of the property transaction is imperative.

Upgraders and downgraders intending to purchase uncompleted HDB flats will be limited to a maximum of 70 per cent financing if they buy the flat with an existing home loan. If this group of buyers wishes to obtain 80 per cent home loan financing, they will either have to pay off their existing home loan or sell their flat first and look for temporary housing before the new flat is completed. Either way, this implies a higher cash outlay for the purchase of the new flat.

HDB owners will therefore need to do their sums carefully to ensure that they have sufficient cash before making a decision to upgrade or downgrade.

Upgraders whose current household income is below and approaching the $8,000 level need not hurry to purchase HDB flats as more options are now available to them. Buyers whose household income is between $8,000 and $10,000 but was previously unable to purchase HDB flats, are now allowed to purchase Design, Build, and Sell Scheme (DBSS) flats.

If the response to DBSS flats is good, more supply in this category may be subsequently released. After all, the Government has over recent years been gradually pushing out more DBSS projects such as Parc Lumiere at Simei, The Peak at Toa Payoh and Park Central at Ang Mo Kio. Invariably, this is also good news for private downgraders within this income range. However, a 30 month debarment period applies after they have sold off their private property.

The introduction of the new measures is in line with the Government's intention for HDB flats to be more for home ownership than for investment. When speculative demand is crimped, this will have a dampening effect on the capital appreciation of HDB flats, even when the private property market recovers in the future. Inadvertently, the HDB-private price gap widens, making it harder for upgraders to buy without sufficient cash on hand.

The HDB market has certainly become more complex than before. Before you jump on the bandwagon, it is advisable to seek the help of qualified experts before you pay for that dream home.

The writer is Senior Manager, Consultancy and Research, at Knight Frank.

Source: http://www.todayonline.com

Published October 12, 2010
By FELDA CHAY


THE Housing and Development Board (HDB) is putting up for sale today a public housing site at Upper Serangoon Road under the Design, Build, and Sell Scheme (DBSS) - the third piece of land to be sold under the scheme this year.


HDB also said that a DBSS site at Yuan Ching Road and Corporation Drive will be up for tender in November this year, with an estimated yield of 580 units. It added that more sites will be put onto the market if there is sustained demand.

This means that at least four DBSS sites will be launched by the end of this year - the highest number sold in a particular year since the scheme was launched in 2005.

HDB said in August that it will release more land for tender for executive condominiums and the DBSS, where private sector operators develop public housing projects.

But interest in such sites might be muted given the recent property cooling measures, and the expected economic slowdown.

The Upper Serangoon site, for instance, is expected to see just modest interest, says at least one market watcher.

The site along Upper Serangoon Road is a 103- year land parcel that is about 215,278 sq ft in size, and has a maximum allowable gross floor area of 753,474 sq ft. It can accommodate an estimated 630 units. The tender will close at 12 noon on Nov 30.

While the site appears to be situated in a reasonably attractive location, Ong Kah Seng, senior manager of research in the Asia-Pacific at Cushman & Wakefield, said: 'The DBSS site at Upper Serangoon is likely to receive modest buying interest from developers, reflecting increasing cautiousness from developers.'

The site, he said, is likely to see between three to five bids, with the highest bid likely to be between $200-230 per square foot per plot ratio (psf ppr).


Source: http://www.businesstimes.com.sg