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

05:55 AM Jan 28, 2011

SINGAPORE - CapitaLand has agreed to buy Marine Point for $100.68 million through a collective sale, the developer said yesterday.

Inclusive of an estimated development charge of $12.8 million, the total acquisition cost works out to $1,056 per sq ft per plot ratio.

CapitaLand plans to redevelop the site into a condominium with 150 units, comprising one-bedroom plus study and two-bedroom apartments, bringing its pipeline of homes in Singapore to a total of over 2,600 units.

Located along Marine Parade Road, Marine Point sits on a 51,185 sq ft freehold site with a maximum gross floor area of 107,488 sq ft. There are 32 apartments in the existing development. The completion of the transaction, expected to take place in the third quarter of the year, is subject to the approval of the Strata Titles Board.

CapitaLand Residential Singapore chief executive Wong Heang Fine said: "For the new development, we will be maximising its height to approximately 19 storeys. This will give the majority of the apartments a good view of the surrounding skyline and the sea. We plan to have the new development ready for launch in the first half of 2012."

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

SINGAPORE - SDB Asia's latest property offering is the freehold OKIO Residences in the city fringe region of Balestier.

On a land size of about 22,285 sq ft, the single 18-storey block comprises one-bedroom, two-bedroom and penthouse units.

Sizes of the 104 units range from 420 sq ft to 1,098 sq ft. There are eight one- and two-bedroom units with private enclosed space, 48 one-bedroom units, 44 two-bedroom units and four penthouses altogether.

Facilities include a swimming pool, a hydrotherapy pool, a barbecue pit, a pool deck and a poolside gym.

OKIO Residences faces Balestier Road and is a five-minute drive away from the Central Expressway. The Novena MRT and Boon Keng MRT stations are about a 10-minute-walk away. Nearby schools include ITE College West, Balestier Hill Primary School and Queen Margaret University Asia Campus.

The property is expected to get its temporary occupancy permit at the end of 2014. Jo-ann Huang

by Jo-ann Huang
05:55 AM Jan 28, 2011

Source: www.todayonline.com

Some wonder if they should wait and see if the recent cooling measures push down prices significantly

by Ong Teck Hui

05:55 AM Jan 28, 2011

The Government's latest round of measures to cool the residential property market was clearly targeted at short-term investors and speculators.

Effective since Jan 14, they include the highly punitive stamp duties which apply to the resale of residential properties within four years of purchase, the reduced loan limit of 60 per cent for buyers with one or more outstanding mortgages, as well as the 50-per-cent loan limit for buyers who are non-individuals, for example companies and trusts.

It would appear that the measures have been applied to slow down the market to avoid the growth of a property bubble, as well as to allow genuine buyers the opportunity to purchase their dream homes without runaway prices.

Genuine home buyers do form a significant demand pool, and many have planned to make their purchases in the near term. The introduction of the fresh measures has led them to wonder whether prices would soften and whether it might be worth their while to wait. Some are hoping for a substantial price correction, "maybe 20 per cent or more", before deciding to buy.



SEEING PRICE DECLINES IN PERSPECTIVE

But would the residential property market correct by that magnitude - 20 per cent or more - due to the measures alone? It would be useful for us to analyse past declines in prices to arrive at an informed conclusion on the price outlook.

The most recent price correction in the residential property market was due to the economic recession arising from the global financial crisis. From the peak in mid-2008 to trough in mid-2009, prices softened by 25 per cent, according to the Urban Redevelopment Authority's residential property price index. The impact of the new measures will certainly be nowhere as catastrophic as that of the global financial crisis.

Another benchmark is the decline in prices following the announcement of the anti-speculation measures in May 1996. The very harsh measures, which included a 20-per-cent upfront downpayment in cash for all property purchases and taxes on gains from properties sold within three years of purchase, affected the entire residential market, bringing transaction volumes down by 75 per cent. Prices eased by 8.9 per cent over a one-year period before being dragged down by a further 40 per cent by the Asian financial crisis.

In contrast, the current measures have been calibrated to discourage shorter-term investors and speculators, leaving genuine home buyers relatively unaffected.

Barring external shocks or economic downturns, the measures by themselves are unlikely to drag prices down significantly, if at all. Under the present positive market conditions, sellers are on a stable footing and under no pressure to slash prices.



BUYERS' IMPATIENCE

After the set of measures announced on Aug 30 last year, potential buyers retreated to the sidelines to watch how the residential market would pan out.

Last August, developers launched 1,165 units and sold 1,259. What potential buyers saw was a slightly slower market in September, with 1,058 units launched and 911 sold. Activity in October picked up, with 1,070 units launched and 1,066 sold, but that was the month when two new executive condominiums (ECs) were launched, generating much hype and interest. Including ECs, 2,049 units were launched in October and 1,596 sold.

The market also watched developers' response to the sale of residential sites. Tenders for mediocre residential and EC sites were met with fair response and cautious bids, while the more attractive sites saw strong competitive bidding.

The URA's property price index for 3Q2010 showed that residential property prices rose 2.9 per cent, although it would have captured primarily pre-measures pricing. Market behaviour and evidence would have led most potential buyers to conclude that the residential market was holding up well against the measures, transactional activity was resuming and prices were unlikely to soften.

By November, the residential property market picked up with a vengeance with several major launches and good take-up. Including ECs, 2,331 units were launched and 2,092 sold, making November almost the busiest month last year. The December figures for homes launched and sold (including ECs) were lower at 1,859 and 1,699, respectively, but this was expected as it was the typical year-end holiday period.

When the 4Q2010 price index was released, it showed residential property prices continuing to climb by 2.7 per cent, notwithstanding the effect of the measures. It only served to confirm potential buyers' fear that prices would continue to rise.




TO WAIT OR NOT TO WAIT?

Potential buyers' behaviour over the next few months would determine the direction of the residential property market for the rest of this year. If buying sentiment recovers in the short term, transactional activity would pick up, leading to firm prices with, perhaps, some upside. However, if the market slows without an improvement in sentiment, prices could eventually soften.

The dilemma that many genuine home buyers face is whether to continue with their intended purchases or to hold off in the hope that prices will correct significantly.

It would be worthwhile waiting if prices do eventually decline substantially, but delaying also runs two main risks: Higher interest rates and stronger measures imposed by the Government that may affect even genuine home buyers. On the other hand, higher interest rates and stronger Government measures could result in price softening, but that would mean postponing one's purchase even longer.

Historical experience may show that prices are unlikely to correct significantly due to measures such as those recently introduced. But it is what potential home buyers believe or perceive that will drive their behaviour, which will, in turn, influence the market.

The residential property market may have been jolted by the Jan 14 measures, but market fundamentals remain favourable. Together with inflation concerns, the current low interest rates and expectations of long-term capital appreciation, it appears that buyers would likely be drawn back to the residential property market after an expected period of hesitation.



Ong Teck Hui is executive director of research and consultancy at Credo Real Estate.


Source: www.todayonline.com

Bartley Terrace sold en bloc for $40 million

05:55 AM Jan 28, 2011

SINGAPORE - Owners at Bartley Terrace (picture) are set to receive $1.14 million to $1.8 million each after the collective sale of the 32-unit property closed on Jan 17.

Meadows Investment is paying $40 million for the site near the Bartley MRT Station, said Urban Front Real Estate, which brokered the deal.

It said the price translates to about $760 per square foot per plot ratio, after factoring in the development charge with 10-per-cent balcony space that the developer might have to pay for.

Bartley Terrace has a land area of about 40,482 sq ft and is designated for residential use with a plot ratio of 1.4.

Majority owners are applying to the Strata Titles Board for a sale order, Urban Front said.

Source: Todayonline.com

Last year was a bright year for Singapore's private residential market. Indeed, it was a year of records, particularly for developer sales activity and prices of suburban private homes. However, with the announcement of the latest Government cooling measures effective on Jan 14, such exceptional performance will cease to be relevant for extrapolating future private residential market performance.

In the latest Government cooling measures, sellers' stamp duty was hiked and the loan-to-value ratio for second and subsequent homes was reduced, reflecting its persistence to minimise speculation and investment in private homes.



CONVENTIONAL PERCEPTIONS

The common belief is that the first hit by these measures will be speculators - the main culprits behind the price escalations, particularly those of suburban condominiums.

Indeed, with the revision in sellers' stamp duty, buyers are less likely to have the intention to re-sell and profit in the short run, unless property prices can grow well in excess of 16 per cent over a year or 12 per cent in two years, considering other costs and financing.

Speculators aside, investments are discouraged, particularly with the lowering of the loan-to-value ratio for subsequent homes.

Genuine buyers and high-end residential property buyers may be less impacted but with the demand pool shrinking, it is widely anticipated that property prices will fall.

Notwithstanding the pessimism, there is hope for the private residential market, underpinned by a sustained economic recovery and lit by ample liquidity.

While the tough measures can dampen sentiment, this may be viewed as moderating home buying interest until the sentiment eventually reaches a steady state - as buyers remain cautious while adjusting to the new environment.

Also, a reduction in home sales this year may not necessarily mean a significant price correction - for it leads to a more sustainable base in home buying that is not fuelled by speculation and excessive financing.

Some speculation is necessary to drive market momentum but excessive flipping that leads to asset bubbles can cripple home prices.

The new round of measures is harsh to many, for it eliminates speculators and, most importantly, it deters investors.

It must be recognised that investments in private residential properties are not detrimental for the market. But in times of overwhelming housing demand, the priority of genuine owner occupiers should prevail, to assist every aspiring eligible buyer to have an opportunity in private home ownership.

Additionally, many investors and speculators would have already profited from previous housing booms and may be seen to have a weaker case to compete with the rest, such as younger entrants, who have yet to enjoy the benefits of a private residential property.




SELF-FULFILLING PROPHECY

The common question asked about the impact of the cooling measures is: How much are prices expected to fall in the year?

While there are various well-supported forecasts, it should be appreciated that price falls are often sticky in economic viable times.

Price falls can be a result of a self-fulfilling prophecy as well - where prices can indeed correct as home buyers persistently believe in an imminent decline and refuse to enter the market. In such a context, buyers have also been consistently advised prices may suffer drastic falls.

If a short-term price correction is almost a certainty given the severity of the cooling measures, the more crucial question would be how long this may last - and thereafter, what are the chances of a revival? If the economic recovery can be sustained this year, with ample liquidity, a 5- to 7 per-cent-price-correction for suburban condominiums in H1 '11 can be potentially stabilised or gradually revived in H1 '11, bringing prices at the end of this year to be comparable or slightly lower than the beginning of the year.

Moreover, experience has shown that when assets are attractively repriced, it can potentially encourage sidelined buyers to enter the market if overall economic fundamentals are in place.

Although the current cooling measures may be very restrictive, a potential buyer may still purchase after much deliberation if prices ultimately become affordable. Suitable property repricing can release latent demand from prospective owner occupiers, providing support to overall demand base.

And if prices see continual correction throughout the year, there would be significant opportunities for a turnaround after the year as the new demand base may emerge stronger, if economic fundamentals stay firm.


STRUCTURAL CHANGE IN BUYING PREFERENCES?

It is a challenge to cater to competing concerns of all stakeholders and further so to achieve market equilibrium.

To achieve the steady state, fine-tuning policies may even be necessary, such as the withdrawing or mitigating of some of the cooling measures along the way.

But before the equilibrium is reached, the pain from the calibration process can be relieved with nimble adjustments from market participants.

For one, developers are likely to hold phased launches of selected projects in H1 '11 to test overall home buying interest, pricing and observe structural changes in buying preferences.

A structural change can develop as forthcoming home buyers would likely be mainly owner-occupiers instead of investors and speculators.

A different product mix may have implications for a project's breakeven cost and land tender prices.

The recent home buying euphoria had created unnecessary anxiety among many potential buyers.

Prior to the cooling measures, there were many who bought with a view that not buying a property will mean losing the opportunity ahead. While they are not speculators, they may have created undue stress for themselves and everyone - aggravated by some who stretched affordability even if they are genuine buyers.

The material justification for a genuine home buyer should be his confidence in financing his home and not simply his intention to own a piece of property for occupation.

The slowdown in home buying can provide many stakeholders time to compare aspirations with the reality, where home buying is after all a major decision involving huge capital.

If the calibration is successful, it may ultimately sculpt an environment where genuine homebuyers are completely confident in the buying decision, including considering financial contingencies.


by Ong Kah Seng

05:55 AM Jan 28, 2011

Ong Kah Seng is senior manager, Research - Asia Pacific at Cushman & Wakefield.





Source: www.todayonline.com