by Tan Kok Keong
05:55 AM Jan 28, 2011

The Government's move to introduce a new set of property market cooling measures two weeks ago was widely anticipated but the harshness of the measures surprised many.

The initial reaction from buyers was mixed. On the weekend immediately after the Jan 14 measures, buyers at Spottiswoode 18 snapped up 170 out of the 251 units launched, surprising many observers. The nonchalant reaction could be because the cooling measures were already a known market risk. These buyers had already overcome their reservations during the pre-launch marketing period and were primed and ready to buy.

This was somewhat similar to the good response to the launch of NV Residences after the earlier round of cooling measures on Aug 30 last year.

In contrast, over the same weekend after the Jan 14 measures, sales cooled in Austville Residences - an executive condominium project - despite earlier reports of potential buyers queueing overnight.

Beyond these anecdotal examples, we collaborated with the research team at leading real estate portal PropertyGuru.com to get a clearer picture of pre-transaction activities.

The number of visitor sessions to the website fell 10.7 per cent in the week after the measures compared with the week before. Comparatively, visitor sessions only fell by 3.5 per cent following the Aug 30, 2010 measures. Visitors searching for resale HDB flats saw the sharpest decline (Chart 1A and 1B). In addition, the number of new listings fell by 6 per cent, while the number of listings rose 2 per cent following the Aug 30 measures.

While there are many other factors that affect the visitor numbers, the comparison gives us a clearer picture of market activity following the measures.

The statistics above reinforce the consensus view that overall marketing activity has fallen. If this persists, transaction volumes will decline. Based on historical analysis, a drop in total sales volume over four quarters tends to lead to a fall in the overall Urban Redevelopment Authority's private residential price index thereafter. This happened at two most recent turning points for prices - in Q2 '00 and Q2 '08. The question remains as to whether the current market cooling measures would lead to a persistent fall in volume and thus prices.

To answer this, an analysis of events after the May 1996 market cooling measures could be a good gauge, as that was the last time when a similarly harsh set of measures was introduced.

Within a year from May 1996, overall private home prices fell 8.9 per cent. While there can be no doubt that market cooling measures played an important role, a closer look suggests that other factors could have contributed to the plunge in prices.

Firstly, the rental market weakened over the same period. Overall occupancy rate fell from 93.8 per cent in Q2 '96 to 91.7 per cent in Q2 '97 due to an increase in the number of units completed. As a result, rents also fell by 9.9 per cent over the same period. In addition, interbank three-month Sibor rose slightly to 5.94 per cent from 5.75 per cent over that period. Buying property for investment became less appealing.

Secondly, the stock market also began to decline over the same period. The benchmark Straits Times Index fell 13.4 per cent within a year from June 1996. To add to the woes, the Asian Financial Crisis started in mid-1997. The loss in wealth in the stock market probably motivated investors to sell assets, which could be another important factor that precipitated the continued fall in property prices.

The above analysis shows that for the current set of market cooling measures to cause another prolonged period of price decline, other conditions need to fall in place. This could come in the form of a decline in the stock market or the business environment, higher unemployment and a deterioration of property market basics. The lack of "wealth destructive" factors was the key reason for the ineffectiveness of the last two rounds of market cooling measures, in my opinion.

Going into the new year, the wealth creation effect appears to be largely on track. According to various equity strategists, the Singapore stock market is expected to perform well this year, on the basis that forward price-to-earnings ratios are still undemanding compared with previous peaks. Business prospects look more promising and employers are planning to expand hiring and increase wages and bonuses.

For the property market, the occupancy rate looks like it could remain above historical average of 92 per cent as completions in 2011 are expected to reach only 6,722 units - below the historical average, according to Urban Redevelopment Authority numbers.

Meanwhile, the prospect for a sharp increase in interest rate appears to be muted. Taken together, this suggests that the slowdown in transaction activity and price growth might again turn out to be temporary. Ironically, if that is the case, we should expect more market cooling measures, which will remain as a market risk in 2011. But by themselves, the measures may not be enough to turn sentiment.

In conclusion, while I expect the market to face immediate downward pressure on volume and prices, the year-on-year price fall in 2011 could be marginal. In the meantime, people interested in properties should keep watch for any of the "wealth destruction" catalysts, which in some instances can fall into place very fast.

Buyers should also note the potential for a weaker rental market from next year due to the large number of housing units to be completed from then onwards. Buyers who are stretching their last dollar to buy their dream home might want to dream less and work their numbers based on more prudent assumptions and exit strategies.



Tan Kok Keong is Head of Research and Consultancy at Orange Tee.


Source: www.todayonline.com

Published January 19, 2011

Small units a big hit at Spottiswoode 18

By UMA SHANKARI

(SINGAPORE) Around 170 units in Roxy-Pacific Holdings' 251-unit Spottiswoode 18 were snapped up at the project's launch yesterday at an average price of $1,900 per square foot (psf) - catching many market watchers by surprise.

The project's mostly small units proved to be popular with investors. Most apartments on offer at Spottiswoode 18 - 150 out of the 251 units - are just 387 sq ft. Apartments at the project go up to 1,324 sq ft in size.

There was also balloting for a handful of units as more than one buyer was keen on them.

The group initially wanted to sell only around 100 units but released all choice units due to the strong response, said Roxy-Pacific chief executive Teo Hong Lim. But he added that last week's government measures to cool the market have had some impact on sentiment as not many units were contested for.

Roxy-Pacific's news comes a day after Oxley Holdings said it has sold 22 out of the 36 residential units at its newly-launched Vibes@Kovan over the weekend.

Apartments at Vibes@Kovan are also small - the 22 apartments range in size from 377 square feet to 1,001 sq ft. They were sold for an average selling price of $1,255 psf.

The deals surprised industry players. Said one industry veteran: 'The thinking now is that small units are mostly sought after by speculators, which is the segment that the government targeted with its measures. So it's surprising that these projects are still selling so quickly.'

But United Engineers reported that sales of its 540-unit executive condominium project Austville Residences were slower as a result of the latest curbs. The developer has sold about 20 per cent of units since its first sales day on Jan 13 - the same day the government unveiled new measures.

'Our sales are affected by the government's announcement on the new set of cooling measures. We are observing a dip in buying interest as most home buyers are still trying to digest the changes introduced to the property market,' said a spokesman for the group.

The morning of the first day of sales saw a high number of visitors and brisk transactions, but the enthusiastic demand was subsequently quelled by the government's announcement later in the day, the spokesman added. But the group is still positive that sales will pick up soon. Units at the project are selling at an average price of $680 psf and the deferred payment scheme is being offered to buyers.

Austville Residences implemented a 'first-come, first-served' system to allocate its 540 units. It was initially well received by the market, with more than 100 successful applicants forming an overnight queue outside its showflat a day before the first sales day.


Source:www.businesstimes.com.sg

by Millet Enriquez

05:55 AM Jan 18, 2011

SINGAPORE - The turnout of buyers for today's soft launch of Roxy Pacific Holdings' Spottiswoode 18 is likely to be good despite the cooling measures announced by the Government last week, analysts said.

"I think the response would be fairly warm. Of course, it would've been very hot if the project had been introduced prior to the cooling measures," said Mr Donald Han, Cushman & Wakefield's vice-chairman of property brokerage.

The 36-storey freehold residential development near Outram Park comprises 251 units, with sizes ranging from 387 to 1,324 sq feet. Huttons Asia is the sole marketing agent.

Roxy Pacific said yesterday that the price list was still being finalised and disputed a news report that said the cheapest unit would be selling for $600,000.

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, also expected a good level of buyer interest, given that the development offers some shoebox units.

"The announcement of measures caught many by surprise and most developers have already committed costs to showflats. So these launches cannot be postponed and have to go ahead," he said.

Whether or not there would be more launches would depend on the market's response, Mr Tan said.

Mr Han said the latest round of cooling measures will definitely "knock some wind out of the market". But he added it was still too early to say if developers would reduce their prices, saying it might take a couple of months before prices soften.

Source: www.todayonline.com

Published January 18, 2011

LETTER TO THE EDITOR
Spottiswoode 18 units don't start at $600,000


ON behalf of Roxy-Pacific Holdings Ltd, we refer to the article 'Developers offer price cuts, discounts on new projects' (BT, Jan 17).


The group wishes to state categorically that none of the units in Spottiswoode 18 starts from a lower price range of $600,000, as stated in the article. The price list is being finalised ahead of the soft launch of the 251-unit prime property today.-Pacific Holdings,

Huttons Asia Pte Ltd has been appointed by Roxy-Pacific as its sole marketing agent. Roxy-Pacific will release further information in due course as and when required, in accordance with the SGX-ST Listing Rules.

Koh Seng Geok
Foo Soon Soo
Company secretaries
Roxy Pacific Holdings


Source:www.businesstimes.com.sg

Published January 18, 2011


Developers report sales over the weekend
Roxy-Pacific rolls out Spottiswoode 18 project today

By UMA SHANKARI

PROPERTY groups continued to report deals yesterday. Oxley Holdings, which launched its Vibes@Kovan over the weekend, said that it has sold 22 out of the 36 residential units and three out of the five shop units available at the project.

The 22 apartments, which range in size from 377 square feet to 1,001 sq ft, were sold for an average selling price of $1,255 per square foot (psf).

The three shop units, which range from 269 sq ft to 312 sq ft, were sold for an average selling price of $2,400 psf.

Sales at other projects were also reported over the weekend. Far East Organization said in an update on Sunday that it sold 18 units over the weekend across its mid and high-end projects. Eight of the units sold were from The Tennery at Bukit Panjang.

A handful of units were also sold at Allgreen Properties' The Cascadia in Bukit Timah.

Today, Roxy-Pacific Holdings will roll out its new residential project, Spottiswoode 18. Prices at the project on Spottiswoode Park Road will start from $688,900, the developer said yesterday. Previously, agents had said that prices started from upwards of $700,000.

The 251-unit Spottiswoode 18 has one- and two-bedroom units as well as duplexes and penthouses. Units range in size from 387 sq ft to 1,324 sq ft. More than half of the units - 150 out of 251 - are 387 sq ft.

Spottiswoode 18 will built on the site which now houses Dragon Mansion. Roxy-Pacific in 2009 bought the 72-unit Dragon Mansion in a collective sale for $100.8 million, or $863 psf per plot ratio including the estimated development charge

Source:Published January 18, 2011

Published January 17, 2011

Developers offer price cuts, discounts on new projects
They want to entice buyers to exercise their options to purchase

By UMA SHANKARI

(SINGAPORE) DEVELOPERS have started to cut prices and offer discounts on a case-by-case basis in a bid to stop buyers from walking away from planned purchases.

At least one developer, Roxy-Pacific Holdings, has cut asking prices for the upcoming launch of its new residential project, Spottiswoode 18. Previously, prices for one-bedroom units started from $700,000. Now, in light of the new measures to cool the property market announced last Thursday, prices will start from $600,000 instead. Prices for other types of units at the project have been cut as well.

More such price cuts at upcoming launches are likely, market sources said.

In addition, some developers are giving potential buyers discounts on a case-by-case basis in order to entice them to exercise their options to purchase, the sources said.

In one case, a listed developer offered a group of investors a discount of around 5 per cent to persuade them to exercise their option to purchase a unit at a project in Cairnhill. But the investors still chose to walk away and forfeit their deposit. Some developers have also offered to absorb the buyer's stamp duty, which is up to 3 per cent of the price, sources said.

Developers are reacting to the government's decision to raise the seller's stamp duty for private homes to 16 per cent, 12 per cent, 8 per cent and 4 per cent for properties that are bought on or after Jan 14 this year and sold in the first, second, third and fourth year after purchase respectively.

Previously, owners who sold houses and apartments less than three years after buying them had to pay a seller's stamp duty of only up to 3 per cent.

The Loan-To-Value (LTV) limit on housing loans was also lowered from 70 per cent to 60 per cent for individual buyers with one or more outstanding housing loans.

The measures dampened buying sentiment over the weekend. Showflats on Saturday and Sunday were markedly quieter as agents reported a fall in buyer interest - although a few projects still drew interest.

'Turnout at showflats was quite mixed,' said DMG & Partners property analyst Brandon Lee who visited showflats over the weekend.

But there were deals done. Far East Organization said in an update that it sold 18 units over the weekend across its mid and high-end projects. Eight of the units sold were from The Tennery at Bukit Panjang. A handful of units were also sold at Allgreen Properties' The Cascadia in Bukit Timah.

Oxley Holdings also rolled out its 36-unit Vibes@Kovan, along Kovan Road, over the weekend. The developer could not provide a sales update yesterday.

A spokeswoman for CapitaLand, Singapore's largest listed developer, also said it was 'business as usual' for the group. She added that homebuyers who recently bought its properties have completed the Sale and Purchase agreements.

Looking ahead, developers are likely to hold back property launches as they wait for the market to absorb the news.

City Developments and Far East Organization have both said they are assessing the situation. Lim Yew Soon, managing director of EL Development, similarly said that the launch of his company's Skysuites17 at Balestier could be delayed.

'We were scheduled to launch it in March, but now we will monitor how the market reacts before deciding whether to launch it or to hold it back,' Mr Lim said

Source: www.businesstimes.com.sg