Published January 29, 2011


8,430 new private homes set to be completed in 2011
URA data also shows nearly half of them will be in the core central region

By UMA SHANKARI

CLOSE to half of the estimated 8,430 new private homes that are slated to be completed in 2011 will be in the upmarket core central region, according to fresh data released by the Urban Redevelopment Authority (URA) yesterday.

The government agency has also bumped up its estimate for the projected supply of private homes due to be completed this year by 25 per cent from three months ago. In October 2010, URA estimated that 6,766 new private homes will be completed in 2011.

Sources told BT that URA has been surveying developers more closely over the last few months in a bid to compile more accurate pipeline supply figures. The agency computes the estimated supply of private housing units in the pipeline through a quarterly survey of developers.

In response to a query from BT, URA said it will continue to work closely with developers to ensure that they submit up-to-date estimations of the expected completion dates of their projects.

'URA's survey of the developers' completion (for 2011) is only starting to increase. The increase from Q3 2010's forecast for 2011 completions to Q4 2010's forecast is a significant 25 per cent. Over the next few quarters, we expect to see further upward revisions,' said Ku Swee Yong, chief executive of real estate firm International Property Advisor.

Looking at the latest completion estimates, analysts once again warned that home-buyers need to brace themselves for a very large supply of private residential units due to be completed each year from 2011 to 2015.

URA currently estimates that 8,116 units will be completed in 2012; 17,111 units in 2013; 17,421 units in 2014; and 13,453 units in 2015.

In fact, 2010's number of newly completed private homes, which stands at around 10,400 units, is already higher than the historical average annual increase in housing supply of around 6,400 private units over the last decade, Mr Ku pointed out. For 2011, a total of 3,874 homes will be added to the housing supply in the core central region, which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove. This will make up 46 per cent of the islandwide housing supply of 8,430 new private homes.

Another 2,265 private homes will be completed in the rest of central region, while in the outside central region, 2,291 units will be completed this year.

URA also said that as at the end of Q4 2010, there was a total supply of 65,699 uncompleted units of private housing from projects in the pipeline. Of these, 32,776 units were still unsold.


Source: www.businesstimes.com.sg

Published January 29, 2011

The charge of the bungalows brigade
URA's sub-index for detached homes soars 37.6%, boosting overall index's gain to 17.6%

By KALPANA RASHIWALA

IN a year fuelled by strong liquidity and economic growth, bungalows were the stars that led the surge in the Singapore property market in 2010. Latest data from the Urban Redevelopment Authority shows that its price index for landed homes climbed 30.8 per cent last year. The sub-index for detached houses, or bungalows, soared 37.6 per cent against a 5.6 per cent rise in 2009.

The index for non-landed private homes rose 14 per cent last year, following a 0.5 per cent gain in 2009. The biggest price hike in 2010 in this segment was for completed non-landed homes in Core Central Region, which climbed 19.5 per cent last year, although prices of uncompleted units in the same region rose at a much slower rate of 10.6 per cent in 2010.

URA's overall price index for private homes swelled 17.6 per cent last year, after posting a 1.8 per cent rise in 2009. It rose 2.7 per cent quarter on quarter in Q4 2010.

Knight Frank chairman Tan Tiong Cheng observed that the index has appreciated by about 65 per cent over the past five years, translating to an average annual increase of 13 per cent. 'This is a very significant increase considering that we had the biggest financial crisis during this period,' he added. Developers sold a record 16,292 private homes (excluding executive condos) last year, up 10.9 per cent from 2009 and busting the previous high of 14,811 units in 2007.

The other sectors of the property market also saw sharp turnarounds last year, according to the latest URA numbers. For instance, the office price index rose 18.9 per cent in 2010, against a 16.4 per cent drop in 2009. Flatted factory and warehouse prices, too, shot up 23.7 per cent last year, compared with respective declines of 14.2 per cent and 16 per cent in 2009.

Looking ahead, market watchers expect some wind to be taken out of the residential sector following the latest property cooling measures. Investors are channelling their money to the commercial and industrial property segments, which were not the target of the cooling measures announced on Jan 13.

DTZ's SE Asia research head Chua Chor Hoon is predicting a minus 5 per cent to 0 per cent change in URA's overall private home price index this year. Others are more sanguine. Colliers International director of research and advisory Tay Huey Ying forecasts a 5-8 per cent rise with the increase led by mid and high-end properties.

Prices of mass market homes are expected to stay relatively unchanged or ease by up to 2 per cent given the ample new supply in this segment, she said.

As for the landed segment, RealStar Premier Property managing director William Wong, who had earlier predicted an average 10 per cent rise this year in Good Class Bungalow (GCB) prices - the creme de la creme of landed homes on mainland Singapore, now expects prices to hold in 2011.

'Transaction volumes are expected to fall 20-30 per cent over the next 3-6 months. Owners are not prepared to adjust prices downwards while buyers are waiting for prices to go down. This may not happen.'

Another bungalow specialist, KH Tan, managing director of Newsman Realty, said that some sellers have started to withdraw GCBs from the market following the latest cooling measures as they would face longer holding periods on any replacement bungalows they may purchase because of the hikes in seller's stamp duties.

Nevertheless, he predicts an increase of about 10 per cent in GCB prices this year, following last year's appreciation of about 35 per cent, because of the limited stock of GCBs, wealth effect from new ultra high net worth citizens and low interest rates. On Sentosa Cove, where foreigners may buy landed homes, the price gain this year could be higher, about 15 per cent, as 'there are still a lot of rich Chinese foreigners coming in'. Bungalow prices on Sentosa climbed 30 per cent last year on average, he estimated.

On URA's numbers, CB Richard Ellis executive director Li Hiaw Ho observed that while the price index for uncompleted non-landed homes in Outside Central Region (where mass-market condos are located) has surpassed the peak in Q2 2008 by 19.1 per cent, the equivalent index for Core Central Region (which covers the traditional prime districts, financial district and Sentosa Cove) is still 7.1 per cent below its Q1 2008 high.

Meanwhile, the National University of Singapore's Singapore Residential Price Index (SRPI) flash estimate shows that prices of completed non-landed private homes in Singapore's Central region (postal districts 1-4 and 9-11) appreciated 7.8 per cent last year, while the sub-index for the Non-Central region rose 15 per cent. As a result, the overall SRPI increased 11.9 per cent in 2010. In 2009, the three indices posted respective gains of 27.3 per cent, 19.5 per cent and 22.2 per cent.

URA's data showed that 10,399 private homes were completed last year - close to the 10,488 units in 2009 and 10,122 units in 2008. The overall private residential rental index rose 17.9 per cent last year, a sharp reversal from the 14.6 per cent slide in 2009.

Savills Singapore director for residential leasing Patrick Lai said that overall residential rents may increase a further 5 per cent in 2011. 'We believe that the rental rates for super high-end condominiums and GCBs will remain robust and are likely to increase by 6-10 per cent as more top executives relocate to Singapore.

'For example, we have just leased out a 2,852 square foot unit at The Orchard Residences for $20,000 per month. We also recently handled the leasing of a GCB in the Peirce Villas/Swettenham Road neighbourhood for $40,000-45,000 per month.'


Source: www.businesstimes.com.sg

A study has found that prices (in psf) increases by 3% for every 1km closer to the CBD

By KLAUS SPREMANN AND WEINI ZHANG

WHEN property owners or investors make their decisions to buy or to sell, they usually form expectations of how prices of property are changing in general over time. These changes are driven by common perception of the scarcity of land, the number of developments in the pipeline and estates under construction; by shifts in the rate of interest or inflation; and by political measures.

Such factors put property as an asset class in bright sunshine, or at times, in dim light. But concluding whether a particular real estate object is to be considered cheap or expensive requires a second line of reasoning.

In Singapore, like in all other countries, property is a heterogeneous asset class. Although condos can have up to a thousand units, the units differ in size, view, and other characteristics. Among the many estates in Singapore, their heterogeneity refers to the location, to the age, the reputation of the developer and other features of the condominium. Such particularities are mirrored in relative prices.

Relative prices, for example, consider the multiple of the per square foot (psf) of a condo in the central business district to the psf in suburban areas. Likewise, relative prices reflect the relation between the psf of a freehold condo to one having a 99-year lease or the typical relation of the price of a condo in walking distance to a MRT station, to the psf of a condo that is further away from public transport facilities.

Thus, a prospective owner or investor should also take note of whether the condo under consideration looks cheap or expensive with respect to the typical relative prices. Relative prices appear to remain stable over a longer period of time, although they might be different in Hong Kong or London from Singapore.

Relative prices can be determined with hedonic models, which were developed by American economists 30 years ago. Although hedonic models are regularly used to explore particularities of the real estate markets in America, England, Hong Kong and other markets, we can present a few new insights by adopting the model to Singapore.

Our model considers structural attributes such as the age, project characteristics such as tenure and facilities, the type of sale (at launch or subsale), and characteristics of accessibility and neighbourhood such as the distance to the Central Business District (CBD), to schools and shopping centres.

All 9,029 transactions (2009) of 470 different condominium projects, reported by the Real Estate Information System (Realis), have been used as inputs to the hedonic model.

The study confirmed that distance to the CBD is among all other factors the most important characteristic in influencing the price of a condominium. Based on the results, the price of a condominium (in psf) increases by 3 per cent for every 1km closer to the CBD.

In addition, prestige of the neighbourhood, age and tenure of a condominium are found to be major determinants in explaining condominium prices. An interesting finding is that for every 10 per cent increase in percentage of private properties in the neighbourhood, the price of a condominium increases by about 4 per cent.

In other words, buyers are willing to pay 4 per cent more for a condominium if the percentage of private properties in the neighbourhood increases by 10 per cent.Buyers might perceive a neighbourhood with high concentration of private properties as a form of prestige or they take this as a signal of more lifestyle facilities being nearby.

Launch discount As expected, the price of a condominium decreases by about 1.5 per cent per year on average as it ages. This could be due to depreciation of the condominium such as its design and electrical systems, thus incurring higher maintenance, renovation and repair fees. The difference between freehold or 99-year leases accounts for 8 per cent.

Our study also revealed the magnitude of the price discount associated with buying at launch. In Singapore, it amounts to 7 per cent.

A person who is buying later in a subsale has the advantage of selecting condos with successful launches. Thus, the price discount of 7 per cent compensates the early bird for the uncertainty of how a development will be accepted during the several launches.

Our research also looked at proximity to premier primary schools. The price of a condominium located within 1km radius of at least one primary school is on average 3.9 per cent higher than one without close proximity to a top primary school.

A subject of many discussions in Singapore is low-rise versus high-rise. The model shows that the ground floor condominium is subjected to a price discount, meaning that home buyers on average are less willing to pay for a ground floor condominium compared to other floors. Furthermore, home buyers are willing to pay more for high-floor units (16th floor and above), compared to middle floor units (7th to 15th floor). We also confirmed that superstition for unlucky floor units is capitalised into the price of condominiums.

The number four is commonly known as an unlucky number among the Chinese. The price discount could also be explained by the fact that home buyers avoid staying on an unlucky floor as they are worried that it may harm the future resale price of the unit.

There is only weak empirical confirmation of the hypothesis though, that selling a unit on the eighth floor yields a hefty extra premium in a subsale. If you are not superstitious and plan to sell in a subsale, don't pay a fee for the eighth floor when you visit a launch event.

Published January 28, 2011

The writers are, respectively a professor at the University of St Gallen and an analyst at Goldman Sachs

Source; www.businesstimes.com.sg

10:20 PM Jan 28, 2011

SINGAPORE - Private home prices rose by less than 1 per cent last month from the previous month, according to the latest National University of Singapore (NUS) Singapore Residential Price Index.

The Singapore Residential Price Index (SRPI) for all properties grew 0.9 per cent month-on-month to 155.5 points. Suburban home prices grew the most, with month-on-month growth coming in at 2.2 per cent to reach 154.8. However, homes prices in the central region fell 0.8 per cent month-on-month.

Still, for the whole year, prices of completed homes increased by 11.9 per cent.

The SRPI is a transactions-based index that tracks the month-on-month price movements of private non-landed residential properties in Singapore. Compiled by the NUS Institute of Real Estate Studies, the index covers only completed non-landed properties in the central region and non-central regions.

Analysts say demand in the secondary residential market remains buoyant. They say a healthy resale market is evidence of strong owner-occupier demand, considered by experts to be a barometer of genuine buying interest. Dr Chua Yang Liang, Head Of Research South-east Asia, Jones Lang Lasalle said: "It reflects the mood of the real market and the real economy, the secondary market, in other words. Less speculative, unlike new launches." Jo-Ann Huang

Source: www.todayonline.com

SINGAPORE - The recent Government measures to cool Singapore's property market will bring down sales volumes but may not cause a significant fall in prices, according to real estate consultant DTZ Research.

In a report issued yesterday, DTZ said it expected prices to be largely stable this year, with a possible decline of not more than 5 per cent for the whole year.

DTZ said the hefty seller's stamp duty of up to 16 per cent for sales on properties sold within the first year of purchase will weed out short-term speculators and cause sales volumes to fall.

But not all investors will withdraw from the market, DTZ said, as some may find the 4-per-cent stamp duty on properties sold in the fourth year after purchase to be surmountable. Buyers may also shift their focus to purchasing uncompleted units that are set for completion in three to four years.

"Landed homes, small apartments and high-end apartments are envisaged to be less affected by the measures," said Ms Margaret Thean, DTZ's South-east Asia executive director for residential properties. She added that "small units with their low price quantum will continue to attract investors with spare cash, or singles wanting their own units".

She said that the four-year seller's stamp duty will also have little impact on landed homes, as most of them are purchased by long-term owner-occupiers. The same goes for high-end apartments, which will continue to garner interest from foreign buyers.

Ms Chua Chor Hoon, head of South-east Asia Research at DTZ, said price stability would be underpinned by economic growth, low interest rates, strong holding power of developers and the appreciation of the Singapore dollar.

Property clampdowns in China and Hong Kong could also prompt more mainland Chinese to set their sights on overseas markets such as Singapore. The number of these Chinese property buyers grew to 19 per cent last year, from 7 per cent in 2007.

Among foreign buyers, the Chinese were on par with Indonesian and Malaysian buyers during the fourth quarter of last year, DTZ said.

The property consultancy said it did not rule out the possibility of another set of Government measures to cool the property market in Singapore should demand rebound after levelling off.

But DTZ added that with a healthy supply pipeline, prices and rentals could come under pressure.

As a record number of units are offered through public housing and Government land sales programmes, DTZ estimates close to 33,000 units to be completed every year over the next four years, assuming that all sites are released. This is almost double the average for the last 10 years.

DTZ said Singapore's property market would also face challenges due to continued uncertainty of recovery in major Western economies. If they recover well, interest rates will move up and reduce the affordability of mortgage payments. On the other hand, if they continue to languish, this will eventually have an impact on the Singapore economy and optimism in the property market.

As the residential market faces numerous challenges, DTZ said investors would likely identify opportunities in other segments of the property market. Some attractive options include commercial and industrial properties where rental rates are recovering.

by Jonathan Peeris

05:55 AM Jan 28, 2011

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

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

In a changed market, there is little, if anything, to be excited about

by Ku Swee Yong

05:55 AM Jan 14, 2011

Several articles have been published in the media and by property analysts in recent months about the frenzy surrounding en bloc deals and the increasing values of these collective sales.

Some of these are really bullish about the potential for such transactions this year.

I cannot see where the excitement is because I understand the hurdles to en bloc deals have increased.

Several things have changed since the last peak of the en bloc market in 2007. The most obvious one has been highlighted by some of the articles: The average size of residential en bloc deals last year was about $50 million and only one exceeded $100 million. In comparison, more than 20 of the 200 residential en bloc deals in 2007 exceeded $100 million in value, as shown in Table 1.



THE DEVELOPERS

There are several reasons for the current lack of interest in large en bloc offerings - that is, those over $100 million in value - even though many developers are actively building up their land banks.

From the developers' point of view, the economics of an en bloc deal are less attractive today than in 2007 because of the following reasons:



a) The Government Land Sales (GLS) programme was at a record high in 2010. And, given the seemingly-insatiable demand from property investors and upgraders, the GLS will be at least as high in 2011. Developers participate in the GLS as it is a straightforward way to purchase 99-year leasehold land. It is hassle-free compared to the process of purchasing from an en bloc sale (unless there is 100-per-cent agreement from the owners of the en bloc development).

An en bloc sale requires clearance from the Strata Titles Board and the subsequent relocation of the existing owners of the project. Developers do not want to risk their investment cashflow being delayed by potentially lengthy appeals. The Land Titles (Strata) Act was last amended in the middle of last year to improve en bloc rules, making the process more transparent but more onerous.



b) From January 2009, planters within a residential unit and bay windows in all developments are not exempted from gross floor area (GFA). Based on this rule change, the uplift from the en bloc development's current plot ratio to the new buildable GFA is more limited compared to that during 2007.

For example, Tulip Garden was sold en bloc for $516 million in mid-2007 (although the buyer did not follow through the following year). At that time, developers were betting on launching new projects at Farrer Road upwards of $1,600 per sq ft. Additional profit margins for the developers could be derived from the sellable GFA of bay windows and planters (exceeding the plot ratio limit).

Today, without the additional GFA, developers would have to launch at higher prices in order to maintain their 15- to 20-per-cent profit margin. As a comparison, Tulip Garden is asking for $650 million in the current 2010 en bloc exercise.



c) Development Charge (DC) rates have gone back up to just below 5 per cent of the peak levels of March 2008. Average DC rates for September last year are 2 per cent below those of September 2007, 53 per cent above July 2007 and 114 per cent above March 2007.

Given the last few months of strong sales, particularly when looking at prices achieved in the mass market residential segment, I believe DC rates will increase in March this year, possibly exceeding those of March 2008 in many of the sectors.



d) Construction cost estimates, according to RLB, a global property and construction consultant, are higher in Q3 2010 than in Q3 2007, as shown in Table 2.



Developers now face higher costs from the DC impost and with less strata area to sell, even as market prices are about the same as those in 2007 for the Holland Road stretch.

For developers to view en bloc deals as economically viable investments, the reserve/asking prices cannot go too high up. En bloc sellers need to be realistic if they want to achieve a win-win deal for themselves and the developers.



THE FINANCIERS AND LENDERS

However, the biggest dampener to the fever of the en bloc market is the drastically reduced access to financing. This point has escaped the discussion of all the recent articles.

In 2007, there were many sources of financing - debt funds, hedge funds, etc. Developers could also choose to partner with investment banks such as Lehman Brothers, Goldman Sachs, Wachovia or hedge funds such as Citadel, etc. In addition to getting senior debt at up to 70 per cent of the price of the land and construction, developers/investment funds may also avail themselves of another 20 per cent more in junior debt, mezzanine financing or convertible bonds, and so on.

A lot depends on the credit standing of the developer, but it does mean that, to buy Pine Grove en bloc, a top notch developer could require as little as $170 million, or about 10 per cent of equity.

Today, we are left with simple, senior debt (normal straight loans from banks) and the lending ratio may be capped at 60 per cent - which means the developer wishing to buy Pine Grove en bloc would need to invest well over half a billion dollars of equity. And, on top of that, the developer has to put up even more cash for development charges and construction costs, which are now also subject to lower loan limits.

Most real estate consultants will only look at the developer side of the equation. But we cannot forget that the lenders play a big role. Without credit and financing, the real estate market can at best stroll at a leisurely pace. And for the en bloc market to continue to grow actively, we need financial institutions and debt funds, especially the non-bank lenders, to regain their appetite for real estate risks.

Otherwise, the success of large en bloc deals such as Hawaii Tower, Pine Grove, Pandan Valley, Tanglin Park and Tulip Garden will remain a dream.



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

Source:www.todayonline.com

by Colin Tan

Updated 11:11 AM Jan 14, 2011

In a Sunday feature article entitled "History-making year ahead", eight events and issues were highlighted by the writer which are expected to loom large in 2011. Seventh on the list was how to cool the property market without crashing it.

Last year, private housing prices eclipsed the previous 1996 peak, while the cash-over-valuation (COV) levels for public flats reached historic highs even as the Government unveiled two sets of cooling measures and ramped up the supply of housing sites and the number of new public flats for sale. It was a tumultuous year to say the least.

While the events in the property market may not be as central as the General Election and Presidential Polls listed as first and second on the list, it has the potential to significantly affect the results of the two.

Fortunately, the impact of the most recent set of cooling measures appears to have yielded results for the time being at least.

Flash estimates released by the Urban Redevelopment Authority (URA) recently show that private housing prices edged up by only 2.7 per cent in Q4, down from 2.9 per cent in Q3, albeit taking the price index to a fresh high.

However, sales volumes have not dampened. Over 15,500 new private homes are estimated to have been sold last year - a new benchmark.

Over at the HDB market, prices of resale flats rose 2.4 per cent in Q4 2010 - a slower rate of growth than the 4 per cent increase in Q3 2010. But while the resale price index was pushed to yet another all-time record, transaction volumes fell.

The resale volume declined by about 21 per cent in Q4. The median COV amount is also estimated to have fallen by $7,000 or 23 per cent, from $30,000 in Q3 to $23,000 in Q4 2010. But prices of public housing resale flats are still going up.

With the region awash with liquidity and healthy economic growth, the upward trend of the property market is expected to continue in 2011.

The finalised set of market numbers will determine whether a new round of cooling measures is forthcoming.

However, even if prices remain stable, if sales of new homes continue to be very high, then the concern is that a lot of it may not be owner-occupier demand. This has strong ramifications for the rental market. If the cost of borrowings should suddenly shoot up, a crash cannot be ruled out even if our track record shows that we have always managed a soft landing.

To outsiders who are not familiar with our housing market, all of our current market indicators, including those on the economic front, are gelling together to produce what can be considered to be the perfect property bull run if there is such a thing.

It is a sign of the anxious times, when single-property owners have mixed feelings even as many are made millionaires on paper.

Personally, I am not so sure the effects of the latest set of cooling measures will last. Our housing market must be among the most open and attractive to investors all over the world.

Is it time for some measures regulating the amount of liquidity flowing into Singapore and into the local housing market? Can there be more focused cooling measures without affecting genuine buyers and sellers? Is it time to pool together all the data of all the various government bodies to get to the bottom of the "problem" if it has not already been done yet?

It is very difficult to suggest solutions if there are still big gaps on what we know about the market. If the gap persists should not there be greater efforts to plug them?

Much as I like speculators to learn from their mistakes, a crash benefits no one.

Personally, I am not in favour of changing the goal posts midway with respect to investors. It breeds uncertainty and affects investor confidence. As I see it, part of the problem is that the market does not appear to take the Government's warning - that it will not let the market overheat - seriously. Either that or it has short memories.

I prefer a more direct approach. Lay down all the cooling measures to be taken upfront. Have four sets, one for each quarter. Set the trigger points for each of them, say x per cent rise in the price index. If the price index surpasses this figure, the first set of cooling measures automatically kicks in and so on. The trigger points can be linked to fundamentals, say the percentage GDP growth for the previous quarter plus x per cent.

This should send a very clear message to investors. At the same time, the market has a choice; whether it wants to trigger the measures or not.



Colin Tan is head, research and Consultancy, at Chesterton Suntec International.

Source: www.todayonline.com

Published January 11, 2011

Newton View up for collective sale again

NEWTON View is up for collective sale again for the second time in less than six months - but with a slight cut in the asking price.

The owners of the district 11 freehold project are now asking for $150 million, slightly less than the $153-$155 million they were looking for when the site was first put on the market in August 2010.

Then, the tender closed with several developers submitting interest and bids but the reserve price was not achieved, said marketing agent Savills Singapore.

The new asking price works out to $1,302 psf per plot ratio (psf ppr), including an estimated development charge of some $582,000 and assuming a gross floor area of 115,737 sq ft.

Newton View, at 26 Newton Road, sits on a 37,577 square foot site with a plot ratio of 2.8 and a permissible gross floor area (GFA) of 105,215 sq ft. Including an extra 10 per cent of space for balconies, the GFA can go up to 115,737 sq ft.

At the asking price of $1,302 psf ppr, the estimated breakeven is about $1,981 psf, Savills Singapore said. It expects the winning developer to be able to build a condominium with about 147 units averaging 750 sq ft each.

Savills Singapore executive director and head of investment sales Steven Ming said that since the property was last offered for sale in August 2010, the high-end market has picked up.

More transactions have taken place in recent weeks and several projects are enjoying good sales velocity, he said: 'This has sparked a renewal of interest among developers for prime sites and hence a decision was undertaken to launch the site for sale now.'

The tender for the site will close at 3pm on Jan 28.


Source: www.businesstimes.com.sg

CapitaLand Residential expects continued demand, price rises for private residential housing

by Jo-Ann Huang Limin

05:55 AM Jan 10, 2011

SINGAPORE - CapitaLand Residential will sell 1,700 private residential units this year out of its existing inventory of 2,500 ready-to-launch homes that it has yet to release for sale, chief executive officer Wong Heang Fine said in his first presentation to the media.

The units that will be sold this year will be from some of CapitaLand Residential's most high-profile developments, such as d'Leedon, The Interlace, Urban Resort and The Nassim, said Mr Wong, who joined the CapitaLand Group in 2006 and was named in July last year to succeed Ms Patricia Chia as CEO of CapitaLand Residential.

As many as 750 units of the 1,715-unit d'Leedon, the former Farrer Court, will be launched this year. MediaCorp understands that another 300 units will be launched next week, after 93 per cent of the initial 250 units launched last month were sold.

The residential unit of CapitaLand, South-east Asia's largest property developer, will also release the remaining 390 apartments at The Interlace for sale this year, Mr Wong, a UK-trained mechanical engineer who was formerly the CEO of SembCorp Engineers and Constructors, said in his briefing. The developer has sold 94 per cent of the initial 650 units that it launched last year.

The Urban Resort and The Nassim, which are luxury developments located in the core central region, will also be launched this year.

Homes at the new Bedok Town Centre site will also be up for grabs. The site will be developed into a mixed retail-and-residential property with 500 apartments, three levels of retail space and a bus interchange.

CapitaLand sold 15,025 units in total in the first 11 months last year, a marginal increase from the 14,688 units sold in 2009. But the developer reported better per-unit sales value than its rivals - its average sales value amounted to $2.3 million per unit, higher than the industry average of $1.52 million per unit. Overall, total residential sales rose 54 per cent to $1.85 billion last year, compared with $1.2 billion in 2009.

In the first 11 months of last year, buyers took possession of 629 CapitaLand homes, including 127 units at Latitude, 327 apartments at The Seafront on Meyer and 175 units at The Orchard Residences.

CapitaLand expects demand for private residential housing to sustain this year, buoyed by robust economic performance, land scarcity and increasing wealth in the region.

It will also be a year of land banking for the developer. The company said it would continue looking at sites in city-fringe areas and near MRT stations. It may tap both the government land sales programme and the collective sale market to acquire land, Mr Wong said.

"We will, of course, bid for the sites at a price we think is consistent with our margin," said Mr Liew Mun Leong, chief executive officer of CapitaLand, who was also present at the media briefing.

CapitaLand expects private home prices to increase by 5 to 10 per cent this year, with the high-end residential segment experiencing gains in the region of 10 to 15 per cent.

The developer also aims to market its iconic projects such as d'Leedon and The Interlace overseas, especially to buyers from China and India, which are emerging as CapitaLand's key new foreign markets.

Foreign buying may become a sizeable chunk of CapitaLand's sales. For example, wealthy Chinese investors have been looking for homes priced at $10 million and above, said Mr Liew.

However, market watchers have expressed concern over foreign ownership and its increasing influence on the private property market in Singapore.

Mr Liew believes that any further Government measures to cool the property market should not target foreign buyers.

"Singapore is an open economy and it will have to attract professionals and expatriates," he said. "I will consider it unprogressive to say that foreigners cannot buy housing here," he added.


Source: www.todayonline.com

SINGAPORE - Prices of private residential properties hit new highs in the fourth quarter of last year, capping a year of spectacular surge in private home prices.

According to flash estimates from the Urban Redevelopment Authority (URA) yesterday, the price index for private residential property jumped 17.6 per cent last year - a 10-fold spike in the rate of increase compared to the recession-hit 2009, when overall prices of private properties rose by 1.7 per cent.

The spot of good news for private home hunters is that the increase in prices appears to be moderating: Prices rose 2.7 per cent between October and December, compared to a 2.9 per cent increase in the third quarter.

With private home prices already surging past their 1996 peaks, property analysts believe there is little room for further increase; and as prices stabilise, they noted that the Government may not need to introduce new measures to curb overheating any time soon.

Cushman & Wakefield vice- chairman of property brokerage Donald Han said: "If you look into the price increases we saw both for HDB and private property, the price increases were in the comfortable range, between 2 per cent and 3 per cent quarterly ... Alarm bells will ring if you see a quarter-to-quarter increase of between 5 and 6 per cent, or even in excess of that."

For the whole of 2010, private home prices surged 14.3 per cent, 17.5 per cent and 14.5 per cent in the central, city-fringe and suburban regions, respectively.

Property analysts said increases of similar magnitude are unlikely to be seen this year as economic growth moderates.

Singapore's economy is expected to expand between 4 and 6 per cent this year, compared to an estimated 14.7 per cent growth last year.

Prices of non-landed residential properties in the core-central region increased 2.3 per cent in the fourth quarter, more than any other region. The city-fringe area recorded a 1.7-per-cent rise, while the suburban areas witnessed a price increase of 1.6 per cent in the same period.

Analysts expect private home prices to rise between 8 and 12 per cent this year, with high-end homes - which are yet to reach their 2008 peak - leading the price increases. They noted that foreigners will continue to favour mid-tier housing.

Said Ms Tay Huey Ying, director of research and consultancy at Colliers International: "In view of uncertainties still lurking in the larger global economies, by and large, foreign demand would continue to look to contain their risk exposure in the property sector by focusing their purchases in the more affordable range in the mass market and the mid-tier."

She added: "When these homes are eventually completed and there is a lack of rental demand, this may not bode well for the market."

Ms Tay said that developers may be keeping "aggressive pricing strategies at bay", following the Government's cooling measures in August and its ramping up of land supply.

But Mr Han, for one, was not ruling out further Government intervention should prices increase "beyond economic fundamentals". Mr Han added that should the Government be forced to act, it could tweak the loan-to-value ratio for homeowners' second and subsequent properties which stands at 70 per cent currently.

by Jo-Ann Huang Limin
05:55 AM Jan 04, 2011

Source: www.todayonline.com

by Jo-Ann Huang Limin
05:56 AM Dec 31, 2010
SINGAPORE - Australian real estate may present a good investment opportunity next year as a robust economy and a growing shortage of homes underpin prices that, according to analysts, have room to go up still further.

Analysts say that foreigners will be drawn to the market, with Chinese, Singaporean and Malaysian buyers continuing to lead demand. Despite restrictions on foreign buyers of Australian properties, Asian investors are still snapping up homes Down Under, especially in major cities such as Sydney and Melbourne.

"Foreigners do have restrictions. When they are selling, they have to sell to Australian nationals, but this doesn't seem to affect people," said Mr Julian Sedgwick, senior associate director for international residential sales at real estate agency Savills.

He said there were 800 enquiries received at Savills over a recent weekend for two or three property launches in Sydney.

"We sold about 25 per cent of the units from one such property and as many as 10 per cent to 15 per cent of the buyers are Asian," he said.

Prices of Australian homes have risen 56 per cent in the past 10 years. Yet the Housing Industry Association in Australia estimates that the price-to-income ratio is slightly lower today than it was in December 2007.

And options for home buyers are not limited to Sydney and Melbourne. With prices in these two cities reaching record levels - an inner-city one-bedroom home in Sydney currently commands up to A$750,000 ($984,000) - analysts say that it may be worthwhile for foreign home buyers to shift their attention to a city such as Brisbane, where prices are relatively lower.

To ward off the threat of asset bubbles, Australian policy-makers raised interest rates to 4.75 per cent last month.

But analysts say this will not put off Asian investors. Singaporeans, for example, can finance their Australian properties with loans pegged to a lower interest rate.

"We can actually borrow in Singapore dollars, so as a result our interest rate is about 1.5 per cent to 2 per cent," said Ms Donna Lim, head of overseas projects at HSR International Realtors.

For apartments in the central business district, "you probably would be able to get 6 per cent to 7 per cent, for houses in the suburbs you will probably enjoy 5 per cent rental return; so there's definitely a positive cash flow here," she added.

Due to high foreign demand and a lack of new housing supply in key Australian cities, market watchers expect property prices to rise as much as 8 per cent next year. An index of home prices in Australia's eight capital cities was 5.7-per-cent higher in the three months ended this September, compared with the final quarter of 2009.

Source: www.todayonline.com

by Chris Howells
05:55 AM Dec 29, 2010

SINGAPORE - It has been a good year for agents selling luxury properties to foreigners in Singapore. Ms Jasmine Png, an associate director with real estate agency OrangeTee, says she has never before seen as many earnest buyers from China.

What's drawing them here are "the tightening measures in China and Hong Kong, which have actually made the Singapore residential market look appealing," said Ms Png. The "relative ease in obtaining financing for purchasing Singapore properties" is also helping, she added.

Credit is getting costlier in China. The central bank raised the benchmark interest rate by 25 basis points to 5.81 per cent last Saturday, the second increase since October. Analysts expect another 100-basis-point increase in the first half of next year. They say that the People's Bank of China (PBOC) is still behind the curve in combating inflation and will likely employ a slew of measures next year to contain rising consumer prices and cool the overheated property market.

The authorities in Beijing have already banned mortgages for third-home purchases and restricted developers from pre-sales of properties. These steps, along with the threat of a property tax, have driven some buyers to overseas markets.

According to Singapore's Urban Redevelopment Authority, Chinese nationals have snapped up 1,474 private properties so far this year, surpassing the 1,448 purchases made by Indonesian buyers.

Chinese nationals have accounted for 5.3 per cent of the local private housing market this year. Among foreigners, they are second only to Malaysians, who make up 6 per cent.

In the third quarter, Chinese buyers accounted for 20 per cent of all foreign purchases in Singapore's housing market, the highest ever, according to property consultancy DTZ. Although Singapore, too, has taken steps to damp speculative fervour in the property market, the low borrowing costs here are attracting foreigners, especially the Chinese, who are expecting a significant increase in their home-country interest rates next year.

In the PBOC's previous tightening cycle from March 2006 to August 2008, the central bank raised the lending rate by 189 basis points to 7.47 per cent and increased the reserve requirement ratio for banks by 1,000 basis points, to 17.5 per cent.

After Saturday's increase, the lending rate is currently at 5.81 per cent, though at 18.5 per cent, reserve requirement ratios are already above pre-crisis highs.

Source: www.todayonline.com

Published December 28, 2010

A mild collective sale fever
Most of the en bloc sales this year transacted at less than $50 million each, writes NICHOLAS MAK

THE residential en bloc or collective sales market in Singapore is picking up again in 2010 after taking a hiatus last year. To date, some 30-odd en bloc sales amounting to about $1.6 billion have been successfully concluded.

Meng Garden Apartments: With just 27 units, the project at Lloyd Road fetched $137m in an en bloc sale, the largest transacted this year. During the height of the boom in 2007, the average en bloc sale value was $119.3m
However, unlike the en bloc sales fever of 2005 to 2007, the size of each collective sales transacted in 2010 was smaller by comparison.

Most of the collective sales of residential developments transacted this year were less than $50 million each. The average value of each deal was about $52.6 million.

The largest collective sale transacted in 2010 was that of the 27-unit Meng Garden Apartments at Lloyd Road, which was sold for $137 million. By comparison, the average value of each collective sale that was concluded during the height of the previous property market boom in 2007 was $119.3 million.

The size, in terms of land area and the number of existing apartments, of each collective sale that was transacted in 2010 was also smaller. The average land area of the collective sales properties concluded in 2010 is about 36,000 sq ft, which is dwarfed by the average 105,000 sq ft of land of the en bloc sales in 2007.

Typically, about 94 per cent of the successful collective sale developments in 2010 consisted of less than 50 existing units. The average size is about 22 existing units in each project.

By contrast, the average number of existing units of the successful collective sale projects in 2007 is about 3.5 times larger.

The prime residential areas also witnessed fewer collective sales this year. Only about one-fifth of the successful en bloc sale developments in 2010 were located within the prime Districts 9, 10 and 11. The total transacted value of these en bloc projects in the prime districts added up to $678 million.

A significant number of collective sales projects were situated in the city-fringe areas, such as Districts 12 and 14. In 2007, the prime districts held about half of the 104 successful collective sales.

Government land sales

These prime district en bloc sales properties had a combined transacted value of some $8.5 billion.

One of the reasons for the smaller and fewer collective sales in 2010 is that many of the bigger developments in the prime districts and the popular East Coast region that could potentially be collective sales projects were already sold to developers in 2005 to 2007.

A second reason is that the flood of development sites from the Government Land Sale (GLS) programme for 2010, especially for the second half of this year, had attracted the attention and resources of many developers.

In response to the increase in housing demand and prices in 2009 and 2010, in the second half of 2010, the Singapore government released the largest supply of residential development land in the past 15 years. The 18 land parcels to be sold through the Confirmed List in H2, 2010 could potentially yield 8,300 housing units. In addition, there are another 13 sites on the Reserve List that could be developed into 6,000 homes.

So far this year, the authorities have sold 20 private 99-year leasehold residential sites amounting to $3.63 billion and another eight executive condominium (EC) sites that fetched $1.32 billion. This is not including the 14 smaller land parcels at Sembawang designated for landed housing that were auctioned off for $134.6 million in October.

In total, the government's residential land sales in 2010 had absorbed about $5.1 billion of funds from developers, which is more than three times the amount that developers spent on private en bloc sales.

Some developers prefer to acquire GLS sites because the process is faster and more transparent. In almost all government land tenders, all the names of the bidders and their respective bids are revealed hours after the close of the tender.

By comparison, property agents who conduct en bloc sales are never known to reveal the list of bidders and their bids in the same manner as the government.

Furthermore, once the highest bid exceeded the government's reserve price, the authorities would usually award the site to the highest bidder within a week after the close of the tender.

By comparison, some en bloc sales can be long drawn-out dramas, including protracted litigations, especially if some of the owners objected to the en bloc sale strongly or the estate agents had made some administrative mistakes.

Another reason why developers have been drawn to GLS tenders is the market segment that has enjoyed the most robust sales in the past two years is the mass market.

Condominium projects that are located near MRT stations are highly popular with homebuyers, provided they are priced reasonably. Developers are only too aware of this fact and there is a good selection of such land parcels in the recent GLS programmes.

The type of land that developers will buy would depend on the type of products that they are confident that they can sell at an attractive profit margin. The present trend of developers preferring small en bloc projects could continue into the first half of 2011.

This is because there are few indications that the sale volume in the high-end residential market would surge in the next few months.

In the past eight months, the sales volume of private homes in the prime districts had been relatively lacklustre as they made up less than one-fifth of the total number of private homes sold by developers.

On average, between April and November this year, 224 housing units in the Core Central Region (CCR) were sold in the primary market each month, while developers sold an average of 486 units and 642 units in the city-fringe and suburban regions respectively.

Furthermore, the asking price of the owners of the collective sales projects are unlikely to soften as they factor in the rising replacement cost of their new homes. Most collective sales could take months to conclude. And during that period, home prices could continue to rise.

But some developers may be turned away by the high asking prices as they could acquire the relatively cheaper GLS sites. Ironically, the very market forces that drive the en bloc sales market could also derail some of the potential deals.

Mega deals

In January 2011, four collective sales tenders are scheduled to close, including those with reserve prices exceeding $600 million each. It is an uphill task to successfully conclude such mega deals mainly because it would require the developer to put many of his eggs in one basket.

With a budget of $600 million, the developer could possibly acquire three to four GLS sites or 12 smaller en bloc sales sites, thereby diversifying his risks.

Each of the 20 GLS private condominium sites were sold by the government in 2010 for an average of about $181.4 million, while a large majority of collective sales in 2010 were transacted below $50 million each.

In addition, there is the risk of more cooling measures by the government in 2011. Any new government intervention is likely to further target property investors, while sparing first-time homebuyers.

And since a significant proportion of the high-end property buyers are investors and very few first-time homebuyers can afford luxury properties, any new property market curbs by the government is likely to affect the mid-tier and high-end segments.

However, there are also some major developers who are interested to acquire freehold trophy sites to add to their land bank.

But they are rather selective and the total land price, including the development charge that is payable to the government, is just one of the key selection criteria for the land parcels to be purchased.

In the coming year, there will be more collective sales attempts as some property owners try to cash in on the rising market.

In the face of such eagerness to sell, it is quite probable that one or two mega en bloc sales could be concluded in 2011.

However, the en bloc sales market in 2011 is unlikely to reach the red hot level of 2007.

Nicholas Mak is executive director (research & consultancy), SLP International Property Consultants


Source: www.businesstimes.com.sg

by Jo-Ann Huang Limin
05:55 AM Dec 17, 2010

SINGAPORE - More top-end condominiums in the core central region (CCR) have been changing hands - at higher prices - with each passing month. Yet, deals above $4,000 psf are still rare. Analysts say that this shows the luxury segment still has room for capital appreciation.

November saw only one such transaction - a Scotts Square unit which sold for $4,358 psf, according to the Urban Redevelopment Authority (URA). In October, a Boulevard Vue unit sold for $4,800 psf.

Back in 2007, a unit at Orchard Residences went for as high as $5,094 psf, while one at the Marque on Paterson Hill fetched $5,262 psf. In all, 13 units sold at higher than $4,000 psf in the second half of 2007. So far, in the second half of this year, there have been only five such sales.

Investors are still not paying top dollar for extra exclusivity - a sign that they have been cautious on luxury homes in the current property cycle. Prices of mass-market homes, meanwhile, have already surpassed their 2007 peaks.

Even then, analysts say it's only a matter of time before prices of luxury properties catch up with - and exceed - their 2007 peak.

"There's room to grow a further 5 to 8 per cent to reach 2007 price levels," said Dr Chua Yang Liang, head of research, South-east Asia at Jones Lang LaSalle.

Sales of new luxury homes have also been volatile, according to the URA's data. Sales in the CCR in November fell to 213 from 335 units in October. In September, following the government's Aug 30 measures to cool the property market, CCR sales were as low as 84 units.

But investors need not worry about the erratic sales volumes, analysts say.

"Luxury property sales tend to see some volatility because there are fewer luxury property developments compared with mass market ones," said Dr Chua. "High-end property developers launch their projects more sporadically."

With China clamping down hard on the property market in its tier-one cities, ultra-rich investors are likely to move capital to Singapore, analysts say.

"High-end residential properties in Singapore, which traditionally enjoy significant foreign home buying interest, may benefit as a number of investors from across the world are looking at diversifying their investments geographically," said Mr Ong Kah Seng, senior manager of research at Cushman & Wakefield.

Credit Suisse says investors should exit the residential real-estate market in China and move their money to the residential and commercial property markets in Singapore, Hong Kong and Japan.

The bank expects residential property prices in Singapore to increase 5 per cent in each of the next two years, on top of an estimated 15 per cent gain this year.

Still, analysts warn that the policy risk going into next year remains high for all types of properties, including luxury units that are typically unscathed by measures that seek to curb leveraged home-buying.

They said harsher cooling measures may be introduced - such as a tax on profits from property sales after URA data this week showed that 1,909 private residential units were sold last month,a surprising 80 per cent jump from October's 1,058 units.

Source: www.todayonline.com

by Ku Swee Yong
05:54 AM Dec 17, 2010

The term "shoebox" apartment is generally defined as a studio or a one-bedroom apartment that has less than 500 sq ft of strata area. The area includes, say, about 15 per cent allocated to balconies, planters, bay windows, aircon ledges and, in some cases, even bomb shelters. Therefore a 380-sq-ft one-bedroom unit might have a real usable space of about 330 sq ft in the living/dining room, kitchen and bedroom.

How do the economics stack up?

Per-square-foot prices and rentals generally go up when the sizes of the apartments go down. So in several recent launches, the one-bedroom units fetched, for example, $1,200 psf, while the three-bedroom units transacted at below $1,000 psf - a 20 per cent premium that arises because the smaller unit with a lower selling price quantum has a wider reach.

As for rentals, let's take a hypothetical example, say, in River Valley. A one-bedroom, 550-sq-ft unit may lease for $3,800 a month, a 900-sq-ft two-bedroom unit for $5,500, while a 1,200-sq-ft three-bedroom unit, $6,500. The rentals per square foot increase as the sizes of the apartments drop (see Table 1). However, up to a point, the equation fails to apply. In this example, a 350 sq ft studio unit in River Valley may, for example, be able to fetch about $2,800 per month of rental. However, that is near the limit of how high rentals can go for shoebox units. This unit is similar in size as the deluxe hotel rooms in River Valley area.

If we tried to push rentals beyond $3,000 per month (ie above $100 per day), it may be more economical for the tenant to take a long-term let with a hotel around River Valley, given the more flexible lease terms that include daily housekeeping, electricity, fully furnished/equipped rooms and probably complimentary laundry. He would also save on rental whenever he travels out of Singapore.

As for costs, if every single apartment in a development were shoebox sized units, their share values would be five for every apartment. The maintenance fees and sinking funds for the common areas and shared services would be equally borne by all the owners of the development.

However, if a project has some shoebox units mixed with larger sized two- to four-bedroom units, then the shoebox units will contribute proportionately higher maintenance fees and sinking funds.

Under current share value allocation rules - apartments of less than 50 sq m are allotted share value of five, larger apartments up to 100 sq m are allotted six and so on, increasing by one share for every additional 50 sq m of strata area.

The yields - net of maintenance fees and sinking funds - become narrower between shoebox units and their larger sized cousins. Should the economy weaken and vacancies run high, and normal two-bedrooms are available for rent at $3,000 to $4,000 per month, how would shoebox units stand up to price competition?

I wonder what new social challenges may prevail in the future for the developments that contain a wide mix of units. In developments where the $600,000 shoebox or one-bedroom units were bought by investors and $2 million four-bedroom units purchased by owner-occupiers, will the low-budget tenants from the shoebox units make good neighbours for the rest?

Will there be poor cousins in a rich compound just like I was a poor student living in a 120-sq-ft bedsit within the posh Kensington neighbourhood? In such a mixed development, will investor-landlords be willing to contribute that little extra to maintenance and sinking funds as compared to house-proud owner-occupiers? We'll have to observe as such heterogeneous projects, most still under construction today, become mature and fully occupied estates over the next five to 10 years.

From the list of about 130 projects that have shoebox units (see Table 2), it is interesting to note that the most common name used is "suites". This is merely terminology and not to be confused with hotel suites (which are generally bigger than shoebox units) nor with several luxury projects that do not have shoebox units, such as Marina Bay Suites, Paterson Suites and Nathan Suites.

In land scarce Singapore, space is a real luxury. While trying to improve the quality of life, we also need to maximise the use of every square foot of land. HDB blocks have risen up to 50 storeys. Shrinking apartment sizes is another way to satisfy the demand from more, and smaller, households. The proliferation of shoebox apartments should be an expected consequence of the steadily rising population density. Cramped spaces, anyone?



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

Source: www.todayonline.com

It's a sprint to the finish
by Colin Tan 05:54 AM Dec 17, 2010After setting a scorching pace in the early part of the year, it was widely expected that the housing sales market would lose a lot of its steam towards the year-end. Instead, Urban Redevelopment Authority data released on Wednesday showed developers' sales of private homes hit 1,909 units last month, indicating the market is not limping home but headed for a sprint finish. This will set a new benchmark that I believe will take years, nay, a few property cycles to beat.

November's numbers brought cumulative home sales for the year to 15,025 units, surpassing the previous record of 14,811 in 2007. If we were to describe the performance of the property market over the past few years as a marathon, is the market getting its second wind, a resurgence of energy that many long-distance runners experience during a race which helps them attack the course with renewed vigour?

Many sceptics who have long held the belief that the present strong housing demand is unsustainable must be wondering if this is the end, or just the beginning of a new wave of buying?

Every market player except the Government takes a narrow view and acts individually in its own interest. Because of commercial interests, they cannot be taking the macro view and acting appropriately to protect the industry. That responsibility of looking at the broad picture belongs to the authorities. They have the statistics and power to change policy.

At the moment, the end supply and demand numbers do not look right, even if the authorities want to leave enough room for choice, for the right of market players to learn from their mistakes.

In a free market, the end numbers are supposed to be right as they are determined by market forces or the "invisible hand". However, the direct and sustained interference of governments around the world in the aftermath of the United States sub-prime mortgage fiasco has robbed the markets of their ability to work their magic.

In a report released this week, IIFL Securities Research noted that Singapore banks' exposure to the property sector was comparable to the 52 per cent in Hong Kong.

But the two cities have significantly higher exposure than the 20-to-30-per-cent norm for the rest of Asian banks.

A key difference, according to IIFL, is that, while Hong Kong's loans are largely to property developers (27 per cent), the bulk of Singapore loans (35 per cent) are to home buyers. That tells you where the burden of a sharp correction, should it happen, will fall heaviest upon.

Another matter that has grabbed the headlines this week is interest rates. What caught my attention was the comment by a banking research head who said that Singapore's interest rates were too high. Hold on, say that again?

He said this explained why Singapore's rise in foreign currency reserves from April last year to October this year amounted to 31 per cent of gross domestic product - the highest increase in Asia.

Given a 3-per-cent currency appreciation, he said Singapore's interest rates should be 3 per cent below partner interest rates. Instead, Singapore's three-month interbank offered rate is 0.44 per cent, while the average comparable rate in the United States, Europe and Japan is 0.41 per cent. This gives excess returns of about 303 basis points.

Most countries attack inflation using interest rates while Singapore uses its exchange rate. In the past, our interest rate movements tended to mirror those in the US. Given current economic conditions there, we know US rates are not going up any time soon. On that score alone, we can safely say our rates - in particular, mortgage rates - are likely to stay low for the time being. This means domestic home buyers and investors are not affected.

If our currency is up 3 per cent and is expected to continue to go up, it means most foreign buyers, except those in China and Australia - face higher prices. Will this significantly affect foreign buying?

Will 2011 be the year of the high-end sector as some have suggested? It could still happen. After all, Credit Suisse recently issued a report for investors to get out of China's housing market and head for the same markets in Hong Kong, Japan and, you guessed it, Singapore.



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

Source: www.todayonline.com

Analysts say surge in private home sales reinforce the case for harsher measures

by May Wong
05:55 AM Dec 16, 2010

SINGAPORE - A surprising surge in private home sales last month - coming at a time when the Government's cooling measures were expected to take effect - has prompted analysts to predict that another round of intervention could be on the cards.

Private home sales in November jumped almost 80 per cent from the previous month, bringing the total number of homes sold so far this year to more than 15,000, surpassing the 2007 record of about 14,800 units.

According to data released yesterday by the Urban Redevelopment Authority (URA), 1,909 private residential units, excluding executive condominiums, were sold last month, up from 1,058 units in October.

Lakefront Residences in Jurong was the most popular property, selling 437 units at $1,075 per square foot (psf) last month.

The most expensive residential unit, priced at $4,358 psf, was sold at Scotts Square, a Wheelock Properties' project on Scotts Road, while the cheapest sale was at Waterview, a Sim Lian project at Tampines Avenue, for $501 psf.

The surge in sales caught analysts off-guard as it comes just three-and-a-half months after the Government took steps on Aug 30 to cool the property market, including asking banks to demand more upfront cash from homebuyers with existing mortgages.

Said Colliers International director of research and advisory Tay Huey Ying: "It just goes to show that a lot of investors are still viewing property as a safe place to park their wealth in spite of the high exposure to policy risks."

Ms Tay noted that another "driving factor" could be foreign purchases that were "diverted from the HDB resale market" as well as from Hong Kong and China, which introduced property curbs in recent months.

The suburban market led the pack in November, with 1,229 units sold outside the prime central region; the core central region, by comparison, saw just 213 transactions, with the remaining 467 units getting sold in the rest of the central region.

Analysts said that buyers are rushing to take advantage of low interest rates amid concerns about overleveraging.

In the latest annual Financial Stability Review, MAS said that while "household balance sheets continue to be strong, supported by conducive economic conditions" household credit exposures "need to be closely monitored and the risks appropriately managed".

According to URA, 2,329 units were launched last month. Industry watchers expect between 800 and 1,300 units to be sold this month as developers will likely launch fewer properties during Christmas and New Year.

Industry watchers say yesterday's figures have buttressed the case for another, harsher set of cooling measures, such as a tax on profits from property sales, in the next few months.

Chesterton Suntec International head of research and consultancy Colin Tan said: "What's going to happen if the buying doesn't stop? While we may not feel the impact now, the consequences may come a year or two later, and they can be pretty adverse."

Source: www.todayonline.com

Published December 16, 2010

Tuan Sing buys Serene House for $99.1m
Unit land price is about $1,388 psf of potential gross floor area of 75,492 sq ft

By KALPANA RASHIWALA

TUAN Sing has made its second Singapore real estate property purchase this week. It yesterday inked a deal to buy Serene House, opposite the upcoming Botanic Gardens MRT Station, through a collective sale for $99.1 million.

The price for the freehold District 10 property, a short walk away from Botanic Gardens' Eco-Lake, works out to a unit land price of about $1,388 per square foot of potential gross floor area of about 75,492 sq ft.

This takes into account an estimated $5.7 million payable to the state for the potential acquisition of a 9,192 sq ft driveway and 10 per cent additional gross floor area for balconies. No development charge is payable due to the high development baseline reflecting a 1.8 plot ratio on the site.

Under Master Plan 2008, the site is zoned for residential use with a 1.4 plot ratio. Serene House has a freehold land area of 39,828 sq ft. Assuming the site, at Cluny Park Road, can be amalgamated with the driveway, the total site area can be potentially enlarged to about 49,021 sq ft.

The enlarged plot can be built into a four-storey condo with 68 units averaging 1,000 sq ft nestled in a predominantly landed housing locale.

Analysts estimate the project could break even at about $2,000-2,100 psf. Units at Nassim Park Residences have sold at an average price of $3,659 psf in the second half of this year.

On Tuesday, Tuan Sing emerged as the top bidder for a 99-year leasehold low-rise private residential site at Seletar Road . Its bid of $123 million works out to $468 per square foot per plot ratio (psf ppr). Analysts have estimated the breakeven cost for a new condo on the site at $800-900 psf.

As for its latest purchase of Serene House, Tuan Sing said yesterday that it intends to develop 'an ultra-luxurious project for this exclusive freehold site'.

In a statutory filing with Singapore Exchange, the group said its acquisition of Serene House is subject to Strata Titles Board's approval and conditional upon Tuan Sing receiving an in-principle approval for the purchase of the adjoining state land from Singapore Land Authority.

Serene House is a four-storey walk-up residential block comprising 24 apartment units. Its owners will each receive about $4.1 million from the sale, said Colliers International, which brokered the sale.

The tender for the property closed on Dec 14, attracting seven bids. Tuan Sing's offer was the highest.

'The tender was well participated by significant property market players including major developers and contractors. The seven highly-competitive bids we received demonstrate the excellent development potential of Serene House in terms of location, convenience and exclusivity,' said Colliers executive director (investment services) Tang Wei Leng.

Colliers is also marketing Serene Centre nearby. An expression of interest exercise for this property also closed on Dec 14 and is said to have drawn strong interest. Serene Centre has a plot ratio of 1.4 and is zoned for commercial/ residential use. It is owned by Lok Joo Pte Ltd, controlled by an Ng family that was also involved with developing Textile Centre

Source: www.businesstimes.com.sg