Luxury condo prices up 17% from Q1; new peak for prime area landed homes
Latest figures from DTZ show that prices of completed landed and non-landed private homes in various segments continued to recover in the third quarter after bottoming out in the first quarter of this year in the aftermath of the global financial crash.
One of the strongest price gains was reflected in the average price of freehold completed prime district condos, which rose 22.3 per cent from the recent low of $1,120 per square foot in Q1 to $1,370 psf in Q3. ‘As more buyers were drawn to the market, average private home prices continued on the uptrend in Q3 2009, led by smaller homes in the prime districts of 9, 10 and 11,’ DTZ said.
The average capital value for DTZ’s basket of completed luxury freehold condos rose 17 per cent from $1,880 psf in Q1 to $2,200 psf in Q3; however, the latest figure is still 21.4 per cent shy of the all-time high of $2,800 psf in late 2007/early 2008.
The recovery in home buying and prices in Q2 and Q3 this year also rubbed off on the landed housing segment. The average price of completed freehold landed homes in prime districts 9, 10 and 11 appreciated 15.9 per cent from the recent low in Q1 to scale a fresh peak of $1,383 psf of land area in Q3, according to DTZ’s data.
In the 99-year suburban landed market too, the average capital value of $593 psf as at Q3 was up 9.4 per cent from Q1.
DTZ’s landed housing baskets exclude Good Class Bungalows, whose values have also appreciated. And for both landed homes as well as condos, its baskets cover only completed projects.
‘We’ve seen strong interest in landed properties in Q3 – whether it’s bungalows, terrace houses or semi-detached homes. Buyers are mostly owner occupiers,’ says DTZ SE Asia research head Chua Chor Hoon.
‘The general home buying sentiment has spilled over to the landed segment. Landed property prices did not move up as much as condo prices in the 2007 run-up.’
A universal trend for all types of private housing shown in DTZ’s data is that prices have been appreciating since bottoming out in Q1 this year.
However, while the average quarter-on-quarter price gains for suburban condos were higher for Q3 than for Q2, the price appreciation slowed in Q3 for prime district and luxury condos.
The average capital value of freehold suburban condos rose 5.6 per cent in Q3 over the preceding quarter, after posting a 3.1 per cent quarter-on-quarter gain in Q2. For 99-year suburban condos too, the average price increased 6.5 per cent in Q3 to $610 psf, nearly double the 3.2 per cent increase in Q2.
Quarter on quarter, the average capital value for prime district freehold condos surged 11.3 per cent in Q2 and 9.9 per cent in Q3. The average price of luxury freehold condos appreciated 9.6 per cent in Q2 and 6.8 per cent in Q3.
DTZ said rental values found some stability after four consecutive quarters of decline. ‘The average monthly rental value of non-landed homes in prime districts was unchanged at $3.32 psf in Q3 2009 while that of luxurious condos stayed at $4.65 psf.’
Over the next six months, Ms Chua predicts, private home prices are likely to see some level of stabilisation with more moderate increases. While sentiment is still strong at the moment, she pointed to an easing in sales volume from frenzied levels seen in Q3 on the back of fewer projects in the pipeline as well as the market cooling measures announced by the government on Sept 14.
DTZ noted that new private home sales by developers in Q3 are poised to break the previous quarterly record of 5,129 units set in Q2 2007. This was after developers sold a total of 4,471 homes in July and August alone. The full-year figure is also expected to top 2007’s record of 14,811 units.
Source: Business Times, 30 Sep 2009
Wednesday, September 30, 2009
Protect the interests of first-time home buyers
I APPLAUD Miss Tan Hui Yee's commentary yesterday, "Go back to basics for affordable flats".
An HDB flat is more than just an asset; to many Singaporeans, especially first-time buyers, flats are their humble abode, their place of security. The convenient call to lower expectations cannot hold if the yardstick for affordability varies between the authorities and buyers.
The steady rise in the standard of living has led to a general increase in household incomes; however, the trend has been balanced out by a corresponding rise in the cost of living.
The recession and higher prices have led to home-seekers being unable to purchase flats, because a home loan would place an additional financial burden on them.
For speculators and investors, public housing has turned into a money-spinning tool - be it in terms of rental or investment. If the authorities sustain or even increase the value of public housing, demand and prices would continue to spiral upwards. Home prices in Singapore have soared in recent months, with transactions hitting record monthly highs. This could lead to a real estate bubble and buyers paying extremely inflated prices for their first homes.
The mentality of home owners to go all out to rake in huge profits should be addressed, and controlled. Remember, public housing was predicated on the belief that every Singaporean deserves an affordable and safe shelter over his head. It is not a monetary tool to be exploited by hungry pragmatists and investors.
Ultimately, the authorities should safeguard the interests of first-time buyers. The predominance of public housing in Singapore underlines the urgency and need for the authorities to introduce measures to strike an equilibrium between helping first-time home buyers and sustaining home values in the long run.
Kwan Jin Yao
Source: Straits Times, 30 Sep 2009
An HDB flat is more than just an asset; to many Singaporeans, especially first-time buyers, flats are their humble abode, their place of security. The convenient call to lower expectations cannot hold if the yardstick for affordability varies between the authorities and buyers.
The steady rise in the standard of living has led to a general increase in household incomes; however, the trend has been balanced out by a corresponding rise in the cost of living.
The recession and higher prices have led to home-seekers being unable to purchase flats, because a home loan would place an additional financial burden on them.
For speculators and investors, public housing has turned into a money-spinning tool - be it in terms of rental or investment. If the authorities sustain or even increase the value of public housing, demand and prices would continue to spiral upwards. Home prices in Singapore have soared in recent months, with transactions hitting record monthly highs. This could lead to a real estate bubble and buyers paying extremely inflated prices for their first homes.
The mentality of home owners to go all out to rake in huge profits should be addressed, and controlled. Remember, public housing was predicated on the belief that every Singaporean deserves an affordable and safe shelter over his head. It is not a monetary tool to be exploited by hungry pragmatists and investors.
Ultimately, the authorities should safeguard the interests of first-time buyers. The predominance of public housing in Singapore underlines the urgency and need for the authorities to introduce measures to strike an equilibrium between helping first-time home buyers and sustaining home values in the long run.
Kwan Jin Yao
Source: Straits Times, 30 Sep 2009
Wet markets' buyout causes upset
Residents oppose plans for 'air-conditioned markets'; stallholders worry about livelihoods
PLANS to shut down five wet markets in Choa Chu Kang, Serangoon North, Bukit Batok West and Bukit Panjang are making two groups of people unhappy.
Residents in these neighbourhoods are upset over what looks to be a loss of lower prices, freshness and variety, and market stallholders are wondering what is to become of their livelihoods. Some have gone to see their Members of Parliament.
The target of their joint ire: supermarket chain Sheng Siong, which bought the markets from boutique property developer Heeton for $25.55 million.
The five markets to cease operations in March next year are in Choa Chu Kang Street 62, Choa Chu Kang Avenue 1, Serangoon North Avenue 3, Bukit Batok West Avenue 8 and Fajar Road.
Sheng Siong plans to convert them into 'air-conditioned markets', although it has yet to spell out how the space in these five sites will be used.
Wet market patrons have already equated 'air-conditioned market' with 'supermarket', which they say they do not want or need.
But Sheng Siong is adamant about avoiding the term 'supermarket'. In its still-unconfirmed blueprint, an 'air-conditioned market' might well be '70 per cent wet market and 30 per cent supermarket', its spokesman explained.
Figures from the National Environment Agency (NEA) show that the island now has 101 wet markets, of which 82 are government-owned and the rest, private. NEA manages the 82 government-owned ones, but does hygiene checks on all 101.
The affected markets, which look like typical heartland wet markets, are privately owned.
Engineer Alex Ng, 45, who visits Serangoon market thrice weekly, is among those who are upset: 'If we have a wet market in our neighbourhood, we can compare prices there with big-chain prices. Usually, wet market prices are lower.'
For Madam Nirmala Narayanan, 48, a customer at the Serangoon market for 15 years, it is about variety. The wet market is where she goes for fresh mutton and grated coconut.
It is the same story with residents in the west. Housewife Winnie Tan, 52, spotted at the market in Choa Chu Kang Street 62, said: 'I don't need an air-conditioned market. Closing this place will be inconvenient for us. It is our only wet market.'
And then there are the stall operators, who feel blindsided. Those interviewed by The Straits Times said they were handed new contracts to sign a month ago.
Fishmonger Mohd Sabri, 52, whose stall is in the Serangoon market, said: 'The old contract didn't have a clause allowing the owners to kick us out in three months. The new one did. I didn't know better and signed it.'
Mr Mohd Sabri and about 140 other stallholders received a letter a week ago, which said they needed to move out by Dec 16.
He has so far tried unsuccessfully to get a stall at three other wet markets.
After some stallholders met Heeton and Sheng Siong representatives, the move-out date was pushed to March, but it is small comfort to the stallholders.
Mr Kelvin Lim, 47, who runs a vegetable stall in the Fajar Road market, said: 'We're not preventing Sheng Siong from taking over the market. We just hope they'll leave it as it is. They can still earn money from rental.
'Can't they empathise? They are such a huge chain, and we are just trying to earn enough to feed ourselves.'
A group of 26 Serangoon market stallholders were anxious enough to approach their MP, Mr Seah Kian Peng, for help.
Acknowledging their fears and noting that the wet market was well patronised, he pointed out that Nex, a mall that will come up behind the market late next year, will already have a supermarket, 'so there certainly will be no shortage of supermarkets in the area'.
But Sheng Siong's managing director Lim Hock Chee said this was unlikely to be an issue 'if residents are able to obtain quality daily necessities at reasonable prices, and are spoilt for choice in the neighbourhood'.
Source: Straits Times, 30 Sep 2009
PLANS to shut down five wet markets in Choa Chu Kang, Serangoon North, Bukit Batok West and Bukit Panjang are making two groups of people unhappy.
Residents in these neighbourhoods are upset over what looks to be a loss of lower prices, freshness and variety, and market stallholders are wondering what is to become of their livelihoods. Some have gone to see their Members of Parliament.
The target of their joint ire: supermarket chain Sheng Siong, which bought the markets from boutique property developer Heeton for $25.55 million.
The five markets to cease operations in March next year are in Choa Chu Kang Street 62, Choa Chu Kang Avenue 1, Serangoon North Avenue 3, Bukit Batok West Avenue 8 and Fajar Road.
Sheng Siong plans to convert them into 'air-conditioned markets', although it has yet to spell out how the space in these five sites will be used.
Wet market patrons have already equated 'air-conditioned market' with 'supermarket', which they say they do not want or need.
But Sheng Siong is adamant about avoiding the term 'supermarket'. In its still-unconfirmed blueprint, an 'air-conditioned market' might well be '70 per cent wet market and 30 per cent supermarket', its spokesman explained.
Figures from the National Environment Agency (NEA) show that the island now has 101 wet markets, of which 82 are government-owned and the rest, private. NEA manages the 82 government-owned ones, but does hygiene checks on all 101.
The affected markets, which look like typical heartland wet markets, are privately owned.
Engineer Alex Ng, 45, who visits Serangoon market thrice weekly, is among those who are upset: 'If we have a wet market in our neighbourhood, we can compare prices there with big-chain prices. Usually, wet market prices are lower.'
For Madam Nirmala Narayanan, 48, a customer at the Serangoon market for 15 years, it is about variety. The wet market is where she goes for fresh mutton and grated coconut.
It is the same story with residents in the west. Housewife Winnie Tan, 52, spotted at the market in Choa Chu Kang Street 62, said: 'I don't need an air-conditioned market. Closing this place will be inconvenient for us. It is our only wet market.'
And then there are the stall operators, who feel blindsided. Those interviewed by The Straits Times said they were handed new contracts to sign a month ago.
Fishmonger Mohd Sabri, 52, whose stall is in the Serangoon market, said: 'The old contract didn't have a clause allowing the owners to kick us out in three months. The new one did. I didn't know better and signed it.'
Mr Mohd Sabri and about 140 other stallholders received a letter a week ago, which said they needed to move out by Dec 16.
He has so far tried unsuccessfully to get a stall at three other wet markets.
After some stallholders met Heeton and Sheng Siong representatives, the move-out date was pushed to March, but it is small comfort to the stallholders.
Mr Kelvin Lim, 47, who runs a vegetable stall in the Fajar Road market, said: 'We're not preventing Sheng Siong from taking over the market. We just hope they'll leave it as it is. They can still earn money from rental.
'Can't they empathise? They are such a huge chain, and we are just trying to earn enough to feed ourselves.'
A group of 26 Serangoon market stallholders were anxious enough to approach their MP, Mr Seah Kian Peng, for help.
Acknowledging their fears and noting that the wet market was well patronised, he pointed out that Nex, a mall that will come up behind the market late next year, will already have a supermarket, 'so there certainly will be no shortage of supermarkets in the area'.
But Sheng Siong's managing director Lim Hock Chee said this was unlikely to be an issue 'if residents are able to obtain quality daily necessities at reasonable prices, and are spoilt for choice in the neighbourhood'.
Source: Straits Times, 30 Sep 2009
Tuesday, September 29, 2009
Industry suggests licensing of property agents
Just like drivers, some suggest property agents should be licensed by a government body – and subject to a demerit point system too.
That would mean being allowed to a set number of points, before facing possible suspension for misconduct.
Such ideas were floated by industry players yesterday at a forum organised by the Institute of Estate Agents (IEA), as the Ministry of National Development (MND) began this month its consultation process on a new regulatory framework for the real estate sector.
Complaints of agents’ poor service are rising and customers are now more discerning and demanding, so such regulations will be necessary to keep the standards of the profession up to mark, said IEA president Jeff Foo.
National Development Minister Mah Bow Tan had said in March that the whole system was “not satisfactory” and the status quo “not tenable”, after several cases of unethical practices by housing agents came to light.
The framework, suggested HSR International Realtors chief executive officer Patrick Liew, should include mandating minimum hours of training and certification to improve professionalism.
An official mediation and complaints resolution centre – sorely lacking now – should also be set up, he said at the forum.
According to the Consumers Association of Singapore, of the 1,100 complaints received last year about the real estate industry, more than half (635) concerned agents.
About 500 complaints have been made as of July this year, and the eventual total is expected to match or exceed last year’s.
But while licensing and certification would help to give consumers peace of mind, a demerit point system has its limitations in weeding out rogue agents, said PropNex property consultant Joseph Tan.
“They can still do unethical things so long as they don’t hit the limit for demerit points,” he said.
There was also a concern about possible additional costs that might come with licensing, said IEA’s Mr Foo. But going by fees paid elsewhere, for example, about HK$700 (S$128) a year in Hong Kong, the “average agent” should have no problems paying, he said.
Property consultant and Ngee Ann Polytechnic real estate lecturer Nicholas Mak said regulations will need to be closely enforced for them to have bite.
“And the punishment has to be sufficient … If someone stands to gain S$100,000 by misrepresenting a property, and the punishment is only a S$5,000 fine, then he might consider it a risk worth taking,” he said.
Source: Channel News Asia, 29 Sep 2009
That would mean being allowed to a set number of points, before facing possible suspension for misconduct.
Such ideas were floated by industry players yesterday at a forum organised by the Institute of Estate Agents (IEA), as the Ministry of National Development (MND) began this month its consultation process on a new regulatory framework for the real estate sector.
Complaints of agents’ poor service are rising and customers are now more discerning and demanding, so such regulations will be necessary to keep the standards of the profession up to mark, said IEA president Jeff Foo.
National Development Minister Mah Bow Tan had said in March that the whole system was “not satisfactory” and the status quo “not tenable”, after several cases of unethical practices by housing agents came to light.
The framework, suggested HSR International Realtors chief executive officer Patrick Liew, should include mandating minimum hours of training and certification to improve professionalism.
An official mediation and complaints resolution centre – sorely lacking now – should also be set up, he said at the forum.
According to the Consumers Association of Singapore, of the 1,100 complaints received last year about the real estate industry, more than half (635) concerned agents.
About 500 complaints have been made as of July this year, and the eventual total is expected to match or exceed last year’s.
But while licensing and certification would help to give consumers peace of mind, a demerit point system has its limitations in weeding out rogue agents, said PropNex property consultant Joseph Tan.
“They can still do unethical things so long as they don’t hit the limit for demerit points,” he said.
There was also a concern about possible additional costs that might come with licensing, said IEA’s Mr Foo. But going by fees paid elsewhere, for example, about HK$700 (S$128) a year in Hong Kong, the “average agent” should have no problems paying, he said.
Property consultant and Ngee Ann Polytechnic real estate lecturer Nicholas Mak said regulations will need to be closely enforced for them to have bite.
“And the punishment has to be sufficient … If someone stands to gain S$100,000 by misrepresenting a property, and the punishment is only a S$5,000 fine, then he might consider it a risk worth taking,” he said.
Source: Channel News Asia, 29 Sep 2009
Seletar aviation base on track
JTC pushes on with infrastructure and facility development at the 300-hectare site to host aerospace businesses and services.
THE economic downturn may have slowed things down for the aviation industry, but it has yet to stop work at the upcoming Seletar Aero+sPace (SAP). Construction is ongoing at the 300-hectare site to turn it into a premier aviation base. SAP will host aerospace maintenance, repair and overhaul (MRO) services; aircraft system design and manufacturing activities; and business and general aviation. Research and training institutes will also set up shop there.
As the agency spearheading Singapore's industrial growth, JTC Corporation is developing various infrastructure and facilities to support businesses at SAP.
'Singapore's MRO hub is the most comprehensive in Asia and demand remains strong despite the global downturn,' says Tang Wai Yee, JTC director of aerospace, marine and cleantech cluster, in the agency's FY2008 annual report.
'JTC, together with the Civil Aviation Authority of Singapore, will take this opportunity to lay a strong foundation for SAP by investing in infrastructure development so that the park is well poised to take off when the upturn comes.'
Singapore's aerospace industry employed some 19,000 people and contributed $6.9 billion in output in 2007. SAP could create more than 10,000 jobs and contribute more than $3 billion to the economy annually when it is completed in 2018.
SAP will have a Business Aviation Complex for companies providing a variety of support services - they may be supplying aircraft parts, managing fleets, leasing aircraft or handling aviation insurance. The complex will accommodate existing businesses in the Seletar airbase and also new entrants to the industry.
Construction of the Business Aviation Complex should start by the fourth quarter of the year and the building is expected to receive temporary occupation permit (TOP) by the first quarter of 2011.
JTC reveals that existing companies have committed to 25 per cent of the space, and it believes that the take-up rate will reach 50 per cent by TOP.
Aviation central
JTC is also planning for a 2.6-hectare General Aviation Centre that will offer shared facilities and space for line maintenance and the parking of smaller aircraft. Not only would the centre optimise space usage in SAP, it would also help individual companies cut down on fixed infrastructure investment and save on operational costs in the long run.
JTC has consulted several industry players to find out what their business requirements are, and to come up with an effective model for sharing facilities. It is keen on allocating the site for the centre to general aviation companies by early next year.
SAP will also have a Component Manufacturing & MRO Facility. It aims to offer companies a quick start-up route, by providing ready-built land-based factories for aircraft parts production or MRO services.
JTC hopes to market the three-hectare site early next year through the industrial Government Land Sales programme. Interested developers can bid for the construction of the factories, and the facility should be ready by the second quarter of 2011. The agency is confident that market demand for the facility will be strong.
JTC began the first phase of infrastructure works at SAP in late 2007 and is close to completing it. It has constructed a new sewer network, road network and drainage system, and will commission a 66kV substation in the next six months to supply power to the eastern part of SAP.
A new fuel farm site and the West Camp Road leading to Seletar Airport should be ready by the first quarter of 2010.
JTC also kicked off the second phase of infrastructure works early this year. Some houses made way for new developments, and construction of a dual three-lane arterial road began in May. The third phase of works is likely to start in 2012.
To preserve Seletar's rustic charm, JTC has conserved 32 black-and-white houses for 'adaptive reuse' as food and beverage outlets, training institutions, and avionics simulator centres. It has also retained the Seletar Camp Guard House and post-war lamp posts as historical landmarks.
JTC is also working on keeping SAP lush and green. Developers which remove trees of substantial sizes have to replace them, and their sites have to abide by the agency's planning design guidelines.
It's a bird, it's a plane...
Even the bus stops at SAP will be designed differently. Modelled after a fighter aircraft called Supermarine Spitfire, the bus stops will help to boost the character of SAP as an aviation base.
SAP has attracted several players in the aviation industry. One is ST Aerospace, which has opened new hangars for airframe maintenance and modifications. Another firm is Jet Aviation Asia Pacific, which has service centre authorisations from a wide range of original equipment manufacturers.
Engine makers Rolls Royce and Pratt and Whitney will also be at SAP.
'Companies at SAP will benefit from synergies in this integrated environment that include economies of scale and increased efficiency,' JTC says in its annual report.
'There is also significant scope for new industry collaborations - alliances brought about by the Park's shared infrastructure, and close proximity to suppliers, customers and partners within the tightly knit aerospace community.'
Source: Business Times, 29 Sep 2009
THE economic downturn may have slowed things down for the aviation industry, but it has yet to stop work at the upcoming Seletar Aero+sPace (SAP). Construction is ongoing at the 300-hectare site to turn it into a premier aviation base. SAP will host aerospace maintenance, repair and overhaul (MRO) services; aircraft system design and manufacturing activities; and business and general aviation. Research and training institutes will also set up shop there.
As the agency spearheading Singapore's industrial growth, JTC Corporation is developing various infrastructure and facilities to support businesses at SAP.
'Singapore's MRO hub is the most comprehensive in Asia and demand remains strong despite the global downturn,' says Tang Wai Yee, JTC director of aerospace, marine and cleantech cluster, in the agency's FY2008 annual report.
'JTC, together with the Civil Aviation Authority of Singapore, will take this opportunity to lay a strong foundation for SAP by investing in infrastructure development so that the park is well poised to take off when the upturn comes.'
Singapore's aerospace industry employed some 19,000 people and contributed $6.9 billion in output in 2007. SAP could create more than 10,000 jobs and contribute more than $3 billion to the economy annually when it is completed in 2018.
SAP will have a Business Aviation Complex for companies providing a variety of support services - they may be supplying aircraft parts, managing fleets, leasing aircraft or handling aviation insurance. The complex will accommodate existing businesses in the Seletar airbase and also new entrants to the industry.
Construction of the Business Aviation Complex should start by the fourth quarter of the year and the building is expected to receive temporary occupation permit (TOP) by the first quarter of 2011.
JTC reveals that existing companies have committed to 25 per cent of the space, and it believes that the take-up rate will reach 50 per cent by TOP.
Aviation central
JTC is also planning for a 2.6-hectare General Aviation Centre that will offer shared facilities and space for line maintenance and the parking of smaller aircraft. Not only would the centre optimise space usage in SAP, it would also help individual companies cut down on fixed infrastructure investment and save on operational costs in the long run.
JTC has consulted several industry players to find out what their business requirements are, and to come up with an effective model for sharing facilities. It is keen on allocating the site for the centre to general aviation companies by early next year.
SAP will also have a Component Manufacturing & MRO Facility. It aims to offer companies a quick start-up route, by providing ready-built land-based factories for aircraft parts production or MRO services.
JTC hopes to market the three-hectare site early next year through the industrial Government Land Sales programme. Interested developers can bid for the construction of the factories, and the facility should be ready by the second quarter of 2011. The agency is confident that market demand for the facility will be strong.
JTC began the first phase of infrastructure works at SAP in late 2007 and is close to completing it. It has constructed a new sewer network, road network and drainage system, and will commission a 66kV substation in the next six months to supply power to the eastern part of SAP.
A new fuel farm site and the West Camp Road leading to Seletar Airport should be ready by the first quarter of 2010.
JTC also kicked off the second phase of infrastructure works early this year. Some houses made way for new developments, and construction of a dual three-lane arterial road began in May. The third phase of works is likely to start in 2012.
To preserve Seletar's rustic charm, JTC has conserved 32 black-and-white houses for 'adaptive reuse' as food and beverage outlets, training institutions, and avionics simulator centres. It has also retained the Seletar Camp Guard House and post-war lamp posts as historical landmarks.
JTC is also working on keeping SAP lush and green. Developers which remove trees of substantial sizes have to replace them, and their sites have to abide by the agency's planning design guidelines.
It's a bird, it's a plane...
Even the bus stops at SAP will be designed differently. Modelled after a fighter aircraft called Supermarine Spitfire, the bus stops will help to boost the character of SAP as an aviation base.
SAP has attracted several players in the aviation industry. One is ST Aerospace, which has opened new hangars for airframe maintenance and modifications. Another firm is Jet Aviation Asia Pacific, which has service centre authorisations from a wide range of original equipment manufacturers.
Engine makers Rolls Royce and Pratt and Whitney will also be at SAP.
'Companies at SAP will benefit from synergies in this integrated environment that include economies of scale and increased efficiency,' JTC says in its annual report.
'There is also significant scope for new industry collaborations - alliances brought about by the Park's shared infrastructure, and close proximity to suppliers, customers and partners within the tightly knit aerospace community.'
Source: Business Times, 29 Sep 2009
HK property on the fast track to recovery
Home prices 26% up this year, erasing Q4 '08 post-Lehman loss
(HONG KONG) Hedge fund manager Pan Lin Feng and two friends sensed opportunity when Hong Kong property prices plunged 20 per cent last year after Lehman Brothers Holdings Inc collapsed.
In November, they bought a 1,500 square foot apartment, more than double the size of a typical Hong Kong flat, in the affluent Mid-Levels district for HK$9.8 million (S$1.8 million) from an owner shoring up stock and property losses. In July, the trio was offered HK$15 million.
'It was a good deal,' Mr Pan, 33, said. 'It was real luck and everyone has benefited since.'
Hong Kong home prices are up 26 per cent this year, erasing losses posted between the Sept 15, 2008 demise of Lehman Brothers and Dec 31, 2008, according to the weekly Centa-City Leading Index. Mainland Chinese buyers and record mortgage rates lower than London and New York enabled Hong Kong to recover while the other financial centres struggle.
Hong Kong is the world's fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.
The average value of all Manhattan apartments sold in the first six months of 2009 fell 12 per cent from a year earlier, according to figures from Prudential Douglas Elliman Real Estate. Average home prices in London rose 0.3 per cent in the first seven months, according to the UK Land Registry.
Hong Kong property recovered faster because its banks are healthy and residents save money, said Khiem Do, head of the multi-asset group at Baring Asset Management (Asia) Ltd, which holds US$7 billion in assets, including shares of Hong Kong and China developers.
Banks cut mortgage rates to their lowest in 19 years, with some offering loans with a one per cent interest rate, and the increasing number of customers helped boost property prices.
'In Manhattan and London, if you see a great deal and you want to borrow from the bank, you'll find it difficult,' Mr Do said. 'In Hong Kong and Singapore, the banks will be happy to lend.'
Cindy Gan, a communications manager, said local banks undercut each other competing for her mortgage for a HK$3.8 million apartment near Causeway Bay in May. 'They would counter-offer by improving the cash rebate and providing free first-year insurance,' she said. 'It was all about sweetening the deal.'
She chose a 15-year loan with ICBC (Asia) Ltd starting with a one per cent rate.
The Hong Kong Monetary Authority (HKMA), the de facto central bank, warned lenders this month that their 'intense price competition' on home loans wasn't sustainable.
Financial services in Hong Kong suffered fewer job losses than in New York or London. The number of people employed on March 31 was 181,860, the Census and Statistics Department said. That's down 10,840 since 2007.
New York City is projected to lose 68,300 finance jobs in 2008 and 2009 combined, according to the New York State Department of Labor.
In London, those losses will total an estimated 57,000, the Centre for Economics and Business Research said in April.
Luxury homes in Hong Kong outperformed the housing market as tycoons snapped up properties, said Wong Leung-sing, research director at Centaline Property Agency Ltd. Prices of homes worth at least HK$10 million rose 30 per cent this year, he said.
'It's reflecting not only a buoyant economy, but also the shortage of new supply in an extremely limited pipeline in the luxury market,' said Simon Smith, senior director of research at Savills LLC in Hong Kong.
In July, a house in Sky High on the Peak, the city's most expensive residential area, sold for HK$300 million, making it this year's most costly at HK$41,500 per square foot, said Benedict Ma, an analyst at CB Richard Ellis Group Inc. Sky High has four homes ranging in size from 540 to 620 square metres.
Sun Hung Kai Properties Ltd, Hong Kong's biggest developer by market value, raised prices of two penthouses at The Cullinan project by 50 per cent. The 4,000 sq ft apartments are offered for HK$300 million, or HK$75,000 psf, each, said Victor Lui, executive director of the company's real-estate broker.
That would be the world's second-most expensive price after a Monaco developer asked for the equivalent of HK$100,000, said Xavier Wong, head of research for Greater China at Knight Frank.
Those amounts signal a price bubble in Hong Kong, said Francis Lun, general manager at Fulbright Securities Ltd.
'The property developers are charging unconscionable prices and making obscene profit,' Mr Lun said. 'Those luxury properties are bought by mainlanders as trophies.'
Luxury home prices may rise another 10 per cent the rest of this year because of low interest rates and improving stock markets, Mr Ma said. The most ever paid psf for a local luxury house is HK$56,000 in June 2008 for Severn 8 at the Peak, another Sun Hung Kai project.
'It's hard to put a cap on the luxury end as you can't use affordability ratio for any tycoon,' said Buggle Lau of Midland Holdings Ltd, real estate firm.
Prospective buyers lined up outside The Masterpiece, a high-rise across Victoria Harbor from the Central District, for apartments with 180-degree views of the skyline. A mainland Chinese client paid HK$150 million, or about HK$37,000 psf, for a furnished 4,088 sq ft show flat, said Jeff Lau, senior sales and marketing manager for builder New World Development Co.
A local businessman paid HK$24.5 million, or HK$30,025 psf, for a one-bedroom, 816 sq ft apartment there.
The overall home index may rise another 7 percentage points for an annual gain of 30 per cent, Mr Wong said.
Interior designer Andrew Bell moved to Hong Kong two years ago and bought a 40-year-old walk-up apartment in the trendy Soho district. He sold the 400 sq ft unit last year for HK$4.5 million, double what he paid.
He then bought a 260 sq ft unit last month for HK$2 million. He hopes to rent it for HK$25,000 after furnishing it with Qing dynasty antiques.
'A lot of people think I'm crazy for buying this place,' Mr Bell, 53, said. 'But I really have confidence because everybody is really thanking God that the crisis is over.'
Hong Kong home prices rebounded faster than the stock market. The weekly measure by Centaline and the City University of Hong Kong recovered to levels before Lehman's collapse by June. The Hang Seng Index reached pre-collapse levels about a month later.
Hong Kong's yearlong recession ended last quarter, when a boost in export demand from China helped the economy grow 3.3 per cent from the previous three months. Sales of all residential apartments in August almost tripled to HK$41 billion from a year ago, Land Registry figures show.
The number of sales agreements on luxury residences more than tripled to 500, the agency said.
The average size of a Hong Kong flat is about 700 sq ft, Knight Frank's Mr Wong said. An apartment larger than 1,000 sq ft is considered a luxury flat by local industry standards.
Mr Pan and his friends paid about HK$6,533 psf. They rejected the HK$15 million offer for their 27-year-old flat, where the monthly rent triples the mortgage payment.
'We think there's more upside if we wait,' Mr Pan said. -- Bloomberg
Source: Business Times, 29 Sep 2009
(HONG KONG) Hedge fund manager Pan Lin Feng and two friends sensed opportunity when Hong Kong property prices plunged 20 per cent last year after Lehman Brothers Holdings Inc collapsed.
In November, they bought a 1,500 square foot apartment, more than double the size of a typical Hong Kong flat, in the affluent Mid-Levels district for HK$9.8 million (S$1.8 million) from an owner shoring up stock and property losses. In July, the trio was offered HK$15 million.
'It was a good deal,' Mr Pan, 33, said. 'It was real luck and everyone has benefited since.'
Hong Kong home prices are up 26 per cent this year, erasing losses posted between the Sept 15, 2008 demise of Lehman Brothers and Dec 31, 2008, according to the weekly Centa-City Leading Index. Mainland Chinese buyers and record mortgage rates lower than London and New York enabled Hong Kong to recover while the other financial centres struggle.
Hong Kong is the world's fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.
The average value of all Manhattan apartments sold in the first six months of 2009 fell 12 per cent from a year earlier, according to figures from Prudential Douglas Elliman Real Estate. Average home prices in London rose 0.3 per cent in the first seven months, according to the UK Land Registry.
Hong Kong property recovered faster because its banks are healthy and residents save money, said Khiem Do, head of the multi-asset group at Baring Asset Management (Asia) Ltd, which holds US$7 billion in assets, including shares of Hong Kong and China developers.
Banks cut mortgage rates to their lowest in 19 years, with some offering loans with a one per cent interest rate, and the increasing number of customers helped boost property prices.
'In Manhattan and London, if you see a great deal and you want to borrow from the bank, you'll find it difficult,' Mr Do said. 'In Hong Kong and Singapore, the banks will be happy to lend.'
Cindy Gan, a communications manager, said local banks undercut each other competing for her mortgage for a HK$3.8 million apartment near Causeway Bay in May. 'They would counter-offer by improving the cash rebate and providing free first-year insurance,' she said. 'It was all about sweetening the deal.'
She chose a 15-year loan with ICBC (Asia) Ltd starting with a one per cent rate.
The Hong Kong Monetary Authority (HKMA), the de facto central bank, warned lenders this month that their 'intense price competition' on home loans wasn't sustainable.
Financial services in Hong Kong suffered fewer job losses than in New York or London. The number of people employed on March 31 was 181,860, the Census and Statistics Department said. That's down 10,840 since 2007.
New York City is projected to lose 68,300 finance jobs in 2008 and 2009 combined, according to the New York State Department of Labor.
In London, those losses will total an estimated 57,000, the Centre for Economics and Business Research said in April.
Luxury homes in Hong Kong outperformed the housing market as tycoons snapped up properties, said Wong Leung-sing, research director at Centaline Property Agency Ltd. Prices of homes worth at least HK$10 million rose 30 per cent this year, he said.
'It's reflecting not only a buoyant economy, but also the shortage of new supply in an extremely limited pipeline in the luxury market,' said Simon Smith, senior director of research at Savills LLC in Hong Kong.
In July, a house in Sky High on the Peak, the city's most expensive residential area, sold for HK$300 million, making it this year's most costly at HK$41,500 per square foot, said Benedict Ma, an analyst at CB Richard Ellis Group Inc. Sky High has four homes ranging in size from 540 to 620 square metres.
Sun Hung Kai Properties Ltd, Hong Kong's biggest developer by market value, raised prices of two penthouses at The Cullinan project by 50 per cent. The 4,000 sq ft apartments are offered for HK$300 million, or HK$75,000 psf, each, said Victor Lui, executive director of the company's real-estate broker.
That would be the world's second-most expensive price after a Monaco developer asked for the equivalent of HK$100,000, said Xavier Wong, head of research for Greater China at Knight Frank.
Those amounts signal a price bubble in Hong Kong, said Francis Lun, general manager at Fulbright Securities Ltd.
'The property developers are charging unconscionable prices and making obscene profit,' Mr Lun said. 'Those luxury properties are bought by mainlanders as trophies.'
Luxury home prices may rise another 10 per cent the rest of this year because of low interest rates and improving stock markets, Mr Ma said. The most ever paid psf for a local luxury house is HK$56,000 in June 2008 for Severn 8 at the Peak, another Sun Hung Kai project.
'It's hard to put a cap on the luxury end as you can't use affordability ratio for any tycoon,' said Buggle Lau of Midland Holdings Ltd, real estate firm.
Prospective buyers lined up outside The Masterpiece, a high-rise across Victoria Harbor from the Central District, for apartments with 180-degree views of the skyline. A mainland Chinese client paid HK$150 million, or about HK$37,000 psf, for a furnished 4,088 sq ft show flat, said Jeff Lau, senior sales and marketing manager for builder New World Development Co.
A local businessman paid HK$24.5 million, or HK$30,025 psf, for a one-bedroom, 816 sq ft apartment there.
The overall home index may rise another 7 percentage points for an annual gain of 30 per cent, Mr Wong said.
Interior designer Andrew Bell moved to Hong Kong two years ago and bought a 40-year-old walk-up apartment in the trendy Soho district. He sold the 400 sq ft unit last year for HK$4.5 million, double what he paid.
He then bought a 260 sq ft unit last month for HK$2 million. He hopes to rent it for HK$25,000 after furnishing it with Qing dynasty antiques.
'A lot of people think I'm crazy for buying this place,' Mr Bell, 53, said. 'But I really have confidence because everybody is really thanking God that the crisis is over.'
Hong Kong home prices rebounded faster than the stock market. The weekly measure by Centaline and the City University of Hong Kong recovered to levels before Lehman's collapse by June. The Hang Seng Index reached pre-collapse levels about a month later.
Hong Kong's yearlong recession ended last quarter, when a boost in export demand from China helped the economy grow 3.3 per cent from the previous three months. Sales of all residential apartments in August almost tripled to HK$41 billion from a year ago, Land Registry figures show.
The number of sales agreements on luxury residences more than tripled to 500, the agency said.
The average size of a Hong Kong flat is about 700 sq ft, Knight Frank's Mr Wong said. An apartment larger than 1,000 sq ft is considered a luxury flat by local industry standards.
Mr Pan and his friends paid about HK$6,533 psf. They rejected the HK$15 million offer for their 27-year-old flat, where the monthly rent triples the mortgage payment.
'We think there's more upside if we wait,' Mr Pan said. -- Bloomberg
Source: Business Times, 29 Sep 2009
Weak demand for factory space
Sales of industrial space are at their lowest since 2000, while rents slide, but the worst may be over
WHILE most economic indicators point to an improvement, the industrial property market remains depressed today as the weak business environment is likely to persist, with global demand still subdued. The first eight months of the year saw 436 industrial sale transactions, a drop of more than 45 per cent from the corresponding period last year, according to caveats lodged. This is the lowest volume since 2000.
Weak demand for industrial space continues to weigh on industrial rents and prices this year. The average monthly rents of Savills' basket of prime flatted factories and warehouses in central Singapore slid lower in Q3. Flatted factories saw rents slip to S$1.35 - S$1.65 per sq ft, from $1.70 - $2.00 psf in Q4 2008. Warehouses saw a slide from $1.70 - $2.10 psf at the end of 2008, to S$1.25 - S$1.55 psf.
High-tech industrial rents are also experiencing downward pressure as relocation of office users to high-tech industrial space slows down. Office users are now less inclined to relocate to high-tech industrial space as asking office rents in the CBD have fallen significantly and office landlords keen to retain their existing tenants are offering extras like rental concessions and fitting out costs. Consequently, average monthly high-tech rents fell from a high of S$2.50 - S$3.80 psf in 2008 to S$2.40 - S$3.20 psf recently. For instance, monthly asking rents of high-tech industrial space in city-fringe areas like Frontech Centre dipped from about S$4 psf in Q1 to S$3.60 per sq ft in August.
Meanwhile, average prices of strata flatted factory space (leasehold) in the central industrial cluster and outside the central cluster declined from their peaks of S$300 per sq ft and S$260 per sq ft in Q2/2008 to S$220 per sq ft and S$210 per sq ft respectively. Similarly, the average price of freehold flatted factories and warehouses declined from a peak of S$350 - S$500 per sq ft in Q2 2008 to S$200 - S$320 per sq ft respectively.
Recently, a number of Reits were able to leverage on the improved market sentiment and raised funds to shore up balance sheets as well as to capitalise any future opportunistic acquisitions. Even so, declining industrial rents and prices mean that deleveraging remains the Reits' top priority, largely driven by asset devaluation and the ensuing rising gearing ratios. Besides refinancing, the Reits are concerned with retaining their existing tenants to ensure steady cashflow to their unit holders. This is especially so with a sizeable amount of industrial space (31.3 million sq ft) expected to enter the market over the next 18 months.
In addition, it is understood that some head tenants who inked sale and leaseback agreements with the Reits some years ago are not renewing their leases on expiry. Therefore, more industrial space from Reits may be available in the market soon. For example, Ascendas Reit (A-Reit) reported that it had an industrial property located at International Business Park repossessed after the tenant failed to meet its lease obligations. Likewise, a Reit-owned industrial property located in the Tai Seng area is reportedly up for lease after the head tenant opted not to renew the lease.
The macro picture
In terms of investment sales activity, the only notable transaction so far this year was by A-Reit. It acquired a 149,392 sq ft 99-year plot of industrial land in Kim Chuan from SingTel for S$16 million or S$45 per sq ft per plot ratio (ppr). A-Reit will build a nine-storey high-tech building with a gross floor area (GFA) of 353,723 sq ft and lease it back to SingTel for an initial period of 20 years.
This is the first acquisition by a Reit since Q2 2008. The volume is significantly lower than last year which saw S$700 million worth of deals done, albeit with the majority of them concluded in Q1 2008. While the credit crunch has eased, the number of potential acquisitions by Reits is not likely to surge given the still fragile economic outlook.
Singapore continues to position itself as an R&D and biomedical manufacturing hub. Active efforts to attract manufacturing investment into Singapore should bode well for the industrial property market as a whole and the science/biomedical parks in particular.
According to the Economic Development Board, biomedical companies from around the world invested more than US$500 million into Singapore in 2008, while research and development spending exceeded US$760 million. Japanese drug maker Takeda launched its regional headquarters and regional clinical coordination. GlaxoSmithKline opened a S$600 million vaccine plant while Agilent Technologies set up a new life sciences manufacturing facility.
Furthermore, the manufacturing sector is starting to look up after posting several quarters of negative growth. Manufacturing saw its first positive growth of 49.5 per cent in Q2, spurred by a surge in pharmaceutical output and increased inventory restocking in the electronics sector. At the same time, the August reading of the Singapore Purchasing Managers' Index of 54.4 indicated that the manufacturing sector has expanded for the fourth time after contracting for eight consecutive months. The positive indicators, coupled with the upward revision in the GDP forecast by the Ministry Trade and Industry from between -9 and -6 per cent to -6 and -4 per cent, reinforce the general belief that the worst of Singapore's recession is over.
The writer is Director, Industrial, Savills Singapore
Source: Business Times, 29 Sep 2009
WHILE most economic indicators point to an improvement, the industrial property market remains depressed today as the weak business environment is likely to persist, with global demand still subdued. The first eight months of the year saw 436 industrial sale transactions, a drop of more than 45 per cent from the corresponding period last year, according to caveats lodged. This is the lowest volume since 2000.
Weak demand for industrial space continues to weigh on industrial rents and prices this year. The average monthly rents of Savills' basket of prime flatted factories and warehouses in central Singapore slid lower in Q3. Flatted factories saw rents slip to S$1.35 - S$1.65 per sq ft, from $1.70 - $2.00 psf in Q4 2008. Warehouses saw a slide from $1.70 - $2.10 psf at the end of 2008, to S$1.25 - S$1.55 psf.
High-tech industrial rents are also experiencing downward pressure as relocation of office users to high-tech industrial space slows down. Office users are now less inclined to relocate to high-tech industrial space as asking office rents in the CBD have fallen significantly and office landlords keen to retain their existing tenants are offering extras like rental concessions and fitting out costs. Consequently, average monthly high-tech rents fell from a high of S$2.50 - S$3.80 psf in 2008 to S$2.40 - S$3.20 psf recently. For instance, monthly asking rents of high-tech industrial space in city-fringe areas like Frontech Centre dipped from about S$4 psf in Q1 to S$3.60 per sq ft in August.
Meanwhile, average prices of strata flatted factory space (leasehold) in the central industrial cluster and outside the central cluster declined from their peaks of S$300 per sq ft and S$260 per sq ft in Q2/2008 to S$220 per sq ft and S$210 per sq ft respectively. Similarly, the average price of freehold flatted factories and warehouses declined from a peak of S$350 - S$500 per sq ft in Q2 2008 to S$200 - S$320 per sq ft respectively.
Recently, a number of Reits were able to leverage on the improved market sentiment and raised funds to shore up balance sheets as well as to capitalise any future opportunistic acquisitions. Even so, declining industrial rents and prices mean that deleveraging remains the Reits' top priority, largely driven by asset devaluation and the ensuing rising gearing ratios. Besides refinancing, the Reits are concerned with retaining their existing tenants to ensure steady cashflow to their unit holders. This is especially so with a sizeable amount of industrial space (31.3 million sq ft) expected to enter the market over the next 18 months.
In addition, it is understood that some head tenants who inked sale and leaseback agreements with the Reits some years ago are not renewing their leases on expiry. Therefore, more industrial space from Reits may be available in the market soon. For example, Ascendas Reit (A-Reit) reported that it had an industrial property located at International Business Park repossessed after the tenant failed to meet its lease obligations. Likewise, a Reit-owned industrial property located in the Tai Seng area is reportedly up for lease after the head tenant opted not to renew the lease.
The macro picture
In terms of investment sales activity, the only notable transaction so far this year was by A-Reit. It acquired a 149,392 sq ft 99-year plot of industrial land in Kim Chuan from SingTel for S$16 million or S$45 per sq ft per plot ratio (ppr). A-Reit will build a nine-storey high-tech building with a gross floor area (GFA) of 353,723 sq ft and lease it back to SingTel for an initial period of 20 years.
This is the first acquisition by a Reit since Q2 2008. The volume is significantly lower than last year which saw S$700 million worth of deals done, albeit with the majority of them concluded in Q1 2008. While the credit crunch has eased, the number of potential acquisitions by Reits is not likely to surge given the still fragile economic outlook.
Singapore continues to position itself as an R&D and biomedical manufacturing hub. Active efforts to attract manufacturing investment into Singapore should bode well for the industrial property market as a whole and the science/biomedical parks in particular.
According to the Economic Development Board, biomedical companies from around the world invested more than US$500 million into Singapore in 2008, while research and development spending exceeded US$760 million. Japanese drug maker Takeda launched its regional headquarters and regional clinical coordination. GlaxoSmithKline opened a S$600 million vaccine plant while Agilent Technologies set up a new life sciences manufacturing facility.
Furthermore, the manufacturing sector is starting to look up after posting several quarters of negative growth. Manufacturing saw its first positive growth of 49.5 per cent in Q2, spurred by a surge in pharmaceutical output and increased inventory restocking in the electronics sector. At the same time, the August reading of the Singapore Purchasing Managers' Index of 54.4 indicated that the manufacturing sector has expanded for the fourth time after contracting for eight consecutive months. The positive indicators, coupled with the upward revision in the GDP forecast by the Ministry Trade and Industry from between -9 and -6 per cent to -6 and -4 per cent, reinforce the general belief that the worst of Singapore's recession is over.
The writer is Director, Industrial, Savills Singapore
Source: Business Times, 29 Sep 2009
Landlord 'king' sells before rate rise 'slaughter'
(LONDON) Fergus Wilson, the ex-mathematics teacher dubbed Britain's buy-to-let 'king', says he is selling 700 rental properties before interest rate rises bring 'slaughter' to landlords in the UK housing market.
Mr Wilson, who together with his wife Judith rank among the 1,000 wealthiest Britons according to this year's Sunday Times Rich List, said it was inevitable that interest rates would rise from a historic low, pummelling rental landlords.
'You've got a lot of people who have taken out a mortgage and are right up to their throats' in debt, said Mr Wilson as he settled into a black armchair at a hotel in Maidstone, south-eastern England. 'As soon as rates go up, they're going to be slaughtered.'
Rates are forecast to rise, hurting buy-to-let landlords in particular because they pay more than other mortgage borrowers. The Bank of England base rate, a benchmark for British mortgages, will reach 1.25 per cent by the end of next year from its current 0.5 per cent, according to economist estimates compiled by Bloomberg. Most landlord loans are already much more costly, at 4 per cent or higher, according to personal finance website Money facts.co.uk. The UK has about 1.2 million buy-to-let loans, 11 per cent of the total.
'There are a huge number of people very sensitive to interest-rate rises, both in buy-to-let and owner-occupied mortgages,' said David Watts, a London-based analyst at CreditSights Inc.
The Wilsons bought most of their property empire in the decade to 2007, purchasing houses with two or three bedrooms using interest-only mortgages. At their acquisitive peak, they purchased a house a day in Ashford, a commuter town in the south-eastern county of Kent that boomed after the opening of the London-to-Paris high-speed rail link.
The former teachers used rental income to cover mortgage payments and when house prices rose, they used the equity gained to fund more purchases.
That model has now changed, with many lenders leaving the buy-to-let market altogether and others pushing interest rates substantially higher than the Bank of England base rate, said Ed Stansfield, chief property economist at Capital Economics Ltd, the London-based economics consultancy. In addition, many buy-to-let 'teaser' rates are now resetting at higher levels, he said. Any rise will particularly hurt the 60 per cent of buy-to-let investors owning fewer than four properties, Mr Stansfield added.
The Wilsons, called 'The King and Queen of Buy-to-Let' by newspapers including the Guardian, last week agreed to sell their investment for £180 million (S$407 million) to an asset management company 'possibly representing Russians', Mr Wilson said.
He would not identify the potential buyer, citing a confidentiality agreement. The pair stand to make a £90 million profit after taxes and expenses incurred in the sale, he added.
Buy-to-let, also known as landlord loans, grew in popularity in the decade to 2007, as property prices tripled and banks flooded the economy with cheap credit. Lenders such as Bradford & Bingley Plc and WestLB AG's Basinghall Finance unit offered interest-only mortgages to new landlords. Last year, Bradford & Bingley, the UK's biggest buy-to-let lender, was nationalised and WestLB received a German government bailout. Basinghall Finance is closed to new business, according to Matt Smith, a company spokesman.
While mortgages more than three months in arrears rose to a 12-year high of 2.43 per cent on June 30, according to Council of Mortgage Lenders figures, Bradford & Bingley says its rate is more than double, at 5.88 per cent. British house prices have declined 19 per cent from the August 2007 peak, according to a house price index produced by Halifax, part of Lloyds Banking Group Plc.
The US may also face problems in any housing market recovery. About 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said last Wednesday.
'There's an awful lot of people who have avoided going into arrears simply because interest rates have been so low,' said Mr Stansfield of Capital Economics, who expects property prices to fall as much as 40 per cent from the 2007 peak. 'Anyone looking to refinance a buy-to-let mortgage is going to have an enormous problem because lending standards have been tightened more than for any other type of mortgage.'
The number of buy-to-let mortgage products available to borrowers plunged 94 per cent to 209 as at Sept 24, from 3,662 at the end of August 2007, according to Moneyfacts. Buy-to-let borrowers are 'more susceptible' to any rise in interest rates because they may not be able to raise rents to cover rising mortgage payments when tenants are threatened by stagnant incomes and rising unemployment, CreditSights' Mr Watts said.
'When you've got low rates, there's only one way they can go, and that's up,' Mr Wilson said. 'There's no better time to sell.' - Bloomberg
Source: Business Times, 29 Sep 2009
Mr Wilson, who together with his wife Judith rank among the 1,000 wealthiest Britons according to this year's Sunday Times Rich List, said it was inevitable that interest rates would rise from a historic low, pummelling rental landlords.
'You've got a lot of people who have taken out a mortgage and are right up to their throats' in debt, said Mr Wilson as he settled into a black armchair at a hotel in Maidstone, south-eastern England. 'As soon as rates go up, they're going to be slaughtered.'
Rates are forecast to rise, hurting buy-to-let landlords in particular because they pay more than other mortgage borrowers. The Bank of England base rate, a benchmark for British mortgages, will reach 1.25 per cent by the end of next year from its current 0.5 per cent, according to economist estimates compiled by Bloomberg. Most landlord loans are already much more costly, at 4 per cent or higher, according to personal finance website Money facts.co.uk. The UK has about 1.2 million buy-to-let loans, 11 per cent of the total.
'There are a huge number of people very sensitive to interest-rate rises, both in buy-to-let and owner-occupied mortgages,' said David Watts, a London-based analyst at CreditSights Inc.
The Wilsons bought most of their property empire in the decade to 2007, purchasing houses with two or three bedrooms using interest-only mortgages. At their acquisitive peak, they purchased a house a day in Ashford, a commuter town in the south-eastern county of Kent that boomed after the opening of the London-to-Paris high-speed rail link.
The former teachers used rental income to cover mortgage payments and when house prices rose, they used the equity gained to fund more purchases.
That model has now changed, with many lenders leaving the buy-to-let market altogether and others pushing interest rates substantially higher than the Bank of England base rate, said Ed Stansfield, chief property economist at Capital Economics Ltd, the London-based economics consultancy. In addition, many buy-to-let 'teaser' rates are now resetting at higher levels, he said. Any rise will particularly hurt the 60 per cent of buy-to-let investors owning fewer than four properties, Mr Stansfield added.
The Wilsons, called 'The King and Queen of Buy-to-Let' by newspapers including the Guardian, last week agreed to sell their investment for £180 million (S$407 million) to an asset management company 'possibly representing Russians', Mr Wilson said.
He would not identify the potential buyer, citing a confidentiality agreement. The pair stand to make a £90 million profit after taxes and expenses incurred in the sale, he added.
Buy-to-let, also known as landlord loans, grew in popularity in the decade to 2007, as property prices tripled and banks flooded the economy with cheap credit. Lenders such as Bradford & Bingley Plc and WestLB AG's Basinghall Finance unit offered interest-only mortgages to new landlords. Last year, Bradford & Bingley, the UK's biggest buy-to-let lender, was nationalised and WestLB received a German government bailout. Basinghall Finance is closed to new business, according to Matt Smith, a company spokesman.
While mortgages more than three months in arrears rose to a 12-year high of 2.43 per cent on June 30, according to Council of Mortgage Lenders figures, Bradford & Bingley says its rate is more than double, at 5.88 per cent. British house prices have declined 19 per cent from the August 2007 peak, according to a house price index produced by Halifax, part of Lloyds Banking Group Plc.
The US may also face problems in any housing market recovery. About 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said last Wednesday.
'There's an awful lot of people who have avoided going into arrears simply because interest rates have been so low,' said Mr Stansfield of Capital Economics, who expects property prices to fall as much as 40 per cent from the 2007 peak. 'Anyone looking to refinance a buy-to-let mortgage is going to have an enormous problem because lending standards have been tightened more than for any other type of mortgage.'
The number of buy-to-let mortgage products available to borrowers plunged 94 per cent to 209 as at Sept 24, from 3,662 at the end of August 2007, according to Moneyfacts. Buy-to-let borrowers are 'more susceptible' to any rise in interest rates because they may not be able to raise rents to cover rising mortgage payments when tenants are threatened by stagnant incomes and rising unemployment, CreditSights' Mr Watts said.
'When you've got low rates, there's only one way they can go, and that's up,' Mr Wilson said. 'There's no better time to sell.' - Bloomberg
Source: Business Times, 29 Sep 2009
London luxury home prices rise 4%
Broker attributes surge to shortage of prime properties
(LONDON) Luxury-home prices in central London rose 4 per cent in the third quarter from the previous three months as buyers competed for fewer properties, Savills plc said.
Houses and apartments worth more than £1 million (S$2.3 million) in the most expensive areas fell 4.9 per cent on an annual basis, the property broker said in a statement on Friday.
The biggest quarterly increases were in the districts of Chelsea, Kensington and Belgravia in west London. The annual decline narrowed from 11.5 per cent at the end of the second quarter.
'There isn't enough property on the market in prime areas and priced attractively to satisfy demand,' said Camilla Dell, managing partner of Black Brick Property Solutions LLC, which finds and buys homes for wealthy customers. Her company, which has advised on £45 million of property deals this year, participated in closed-bid auctions for two multimillion-pound homes in London last week, she said.
The number of homes for sale is about 25 per cent less than the average for the past five years, London-based Savills estimates. Demand for luxury properties increased after values fell by about 18 per cent from the market's peak in September 2007, the broker said. The pound's weakness also made purchases cheaper for overseas buyers. Sterling slid about 20 per cent against the euro and the dollar since the peak.
The scarcity of prime real estate on the market may not last, according to Yolande Barnes, joint head of residential research at Savills.
The strongest market in two years will probably encourage more homeowners to sell. 'Prices are expected at best to level out again and may fall back,' Ms Barnes said. The rate of unemployment and how quickly the economy emerges from recession will be critical, she said.
Knight Frank LLP said in a separate report that luxury-home prices gained 1.3 per cent in September from August. They dropped 8.9 per cent from a year earlier, the smallest annual decline in 12 months.
'UK buyers have been especially keen to take advantage of low mortgage-rate costs,' said Liam Bailey, head of residential research at Knight Frank. 'The real test in the market will come when interest rates rise.'
The UK housing market as a whole may also be stabilising, according to a survey published by the Royal Institution of Chartered Surveyors on Sept 15. The number of respondents saying prices increased in August exceeded those reporting declines by 11 percentage points, the first positive reading since July 2007.
Home prices in England and Wales rose 4.9 per cent from March through July, according to figures compiled by the Land Registry, lifting the average value to £196,338.
A rebound is also beginning for what Savills describes as ultra-prime properties that cost an average of £15 million. Prices for those homes gained 0.9 per cent in the third quarter from the previous three months, Savills said.
Brian D'Arcy Clark, head of Savills's private office unit, advised the owners of 96 Cheyne Walk in Chelsea a year ago to delay selling the 12,770-square- foot house overlooking the River Thames.
The week, he will start marketing the home, a former residence of painter James Whistler. Parts of it date back to 1670. The asking price - £25 million - includes six bedrooms, separate accommodations for guests or staff, and off- street parking for eight cars. 'For an estate agent to advise a client not to do a deal is unusual,' Mr D'Arcy Clark said. The move to sell 'is an indication of our confidence.'
The biggest price jumps among the city's prime residential markets occurred in south-west London in the third quarter, according to the broker.
Prices in districts such as Fulham, Clapham, Wandsworth and Richmond, which range from £500,000 to £2 million, climbed 8.4 per cent from the previous three months.
Values in these areas fell almost 26 per cent from the peak of the market to the end of March, triggering purchases from owner-occupiers who don't require large mortgages, said Lucian Cook, a research director at Savills. Prices rose 6.4 per cent in the second quarter from the previous three months. -- Bloomberg
Source: Business Times, 29 Sep 2009
(LONDON) Luxury-home prices in central London rose 4 per cent in the third quarter from the previous three months as buyers competed for fewer properties, Savills plc said.
Houses and apartments worth more than £1 million (S$2.3 million) in the most expensive areas fell 4.9 per cent on an annual basis, the property broker said in a statement on Friday.
The biggest quarterly increases were in the districts of Chelsea, Kensington and Belgravia in west London. The annual decline narrowed from 11.5 per cent at the end of the second quarter.
'There isn't enough property on the market in prime areas and priced attractively to satisfy demand,' said Camilla Dell, managing partner of Black Brick Property Solutions LLC, which finds and buys homes for wealthy customers. Her company, which has advised on £45 million of property deals this year, participated in closed-bid auctions for two multimillion-pound homes in London last week, she said.
The number of homes for sale is about 25 per cent less than the average for the past five years, London-based Savills estimates. Demand for luxury properties increased after values fell by about 18 per cent from the market's peak in September 2007, the broker said. The pound's weakness also made purchases cheaper for overseas buyers. Sterling slid about 20 per cent against the euro and the dollar since the peak.
The scarcity of prime real estate on the market may not last, according to Yolande Barnes, joint head of residential research at Savills.
The strongest market in two years will probably encourage more homeowners to sell. 'Prices are expected at best to level out again and may fall back,' Ms Barnes said. The rate of unemployment and how quickly the economy emerges from recession will be critical, she said.
Knight Frank LLP said in a separate report that luxury-home prices gained 1.3 per cent in September from August. They dropped 8.9 per cent from a year earlier, the smallest annual decline in 12 months.
'UK buyers have been especially keen to take advantage of low mortgage-rate costs,' said Liam Bailey, head of residential research at Knight Frank. 'The real test in the market will come when interest rates rise.'
The UK housing market as a whole may also be stabilising, according to a survey published by the Royal Institution of Chartered Surveyors on Sept 15. The number of respondents saying prices increased in August exceeded those reporting declines by 11 percentage points, the first positive reading since July 2007.
Home prices in England and Wales rose 4.9 per cent from March through July, according to figures compiled by the Land Registry, lifting the average value to £196,338.
A rebound is also beginning for what Savills describes as ultra-prime properties that cost an average of £15 million. Prices for those homes gained 0.9 per cent in the third quarter from the previous three months, Savills said.
Brian D'Arcy Clark, head of Savills's private office unit, advised the owners of 96 Cheyne Walk in Chelsea a year ago to delay selling the 12,770-square- foot house overlooking the River Thames.
The week, he will start marketing the home, a former residence of painter James Whistler. Parts of it date back to 1670. The asking price - £25 million - includes six bedrooms, separate accommodations for guests or staff, and off- street parking for eight cars. 'For an estate agent to advise a client not to do a deal is unusual,' Mr D'Arcy Clark said. The move to sell 'is an indication of our confidence.'
The biggest price jumps among the city's prime residential markets occurred in south-west London in the third quarter, according to the broker.
Prices in districts such as Fulham, Clapham, Wandsworth and Richmond, which range from £500,000 to £2 million, climbed 8.4 per cent from the previous three months.
Values in these areas fell almost 26 per cent from the peak of the market to the end of March, triggering purchases from owner-occupiers who don't require large mortgages, said Lucian Cook, a research director at Savills. Prices rose 6.4 per cent in the second quarter from the previous three months. -- Bloomberg
Source: Business Times, 29 Sep 2009
Going the extra mile pays off handsomely for SLP Int'l
This exemplary property agency does a lot more than merely bring buyer and seller together
SLP International Property Consultants Pte Ltd does something many of its ilk just don't. And it is this extra touch that has propelled the property agency into the ranks of Singapore's top SMEs.
SLP doesn't just bring buyer and seller together; it takes the trouble to find out what potential buyers want and how potential sellers can deliver.
Helmed by the husband-and-wife team of Stanley Yeo and Kain Sim, the outfit took off in 2001 with the objective of serving clients in the commercial and industrial property sectors. Notably, both of them had earlier helped developers and investors to acquire more than S$48 million worth of investment properties in Singapore; some A$383 million (S$471 million) worth of properties in Australia; and over £128 million (S$289 million) worth of properties in London.
So it carved a niche for itself by assisting developers in designing properties that meet the demands of the target market, recommending them potential land and buildings for development that have strong projected returns.
On the buyer or lessee side, SLP takes the initiative of going to them. Its marketing team visits SMEs at their premises so as to better understand their needs. This way, it can propose better facilities even before the client looks for it.
Over time, it will also be able to tell developers what sort of space will be in demand. Hence, SLP likes to work closely with developers right from the start.
The agency built its reputation right from the first project it secured, after facing its fair share of problems as a small outfit getting its first break. The job: assisting in the sale and development of a 265-unit light and clean industrial building in Bukit Batok.
The economic downturn back then, in 2001, naturally impeded the selling process. But SLP dug in and generated sufficient sales proceeds to assist the developer in funding the development. The project was completed on time without the developer suffering any major cash flow problems along the way.
Topping that, SLP managed to sell every unit over a period of 18 months for the project.
'To us, it was a very good record because back in 2001, no local industrial development of this size was able to achieve 100 per cent sale before temporary occupation permit was granted,' Ms Sim recalls.
This was also an important precursor to the many subsequent projects that SLP was to be involved in. But rising business drove the outfit into another wall: hiring people. Recruitment was a challenge because it was difficult to attract people to work for a relatively unknown company. SLP tackled the problem by offering on-the-job training to encourage people who did not have prior experience in the field to join the company. And it worked.
Having established a favourable business presence in the commercial and industrial property sectors, SLP diversified into residential property. By 2004, it was expanding beyond Singapore. Today, it has operations in Indonesia and China.
SLP has achieved many milestones. It sold out industrial office building Alexcia - where its head office is located - in just two months. Just recently, it broke the industry track record with the 100 per cent sale of Northstar, a 654-unit industrial building, within 15 months.
SLP is proud to have maintained its commitment to each project from the start till the end, regarding each project as completed only when every unit is sold. Because of that, SLP has become a well-recognised brand name for business space solutions within the industry. The confidence in SLP's expertise and dedication has brought in a continuous stream of clients, allowing the company to reinvest its earnings to fund its regional expansion.
In the residential property sector, in which SLP is a relatively new player, the company has also fared well. A living testimony of its achievement here is the recent three stunning blocks of DBSS (Design, Build and Sell Scheme) public housing apartments, Natura Loft, each standing at 40 stories high along Bishan Street 24.
Qingjian Realty Pte Ltd, one of China's leading developers, engaged SLP as its consultant in its first foray into property development in Singapore. Not only was SLP put in charge of the sale and marketing of the property but, more importantly, SLP contributed to the successful bid for the project by Qingjian, as well as the design and development of the housing project with its knowledge of the needs of the local population.
SLP's partnership with Qingjian seeks to change the local perception of public housing and property projects undertaken by mainland Chinese property developers. This partnership has also set a new benchmark in residential property value and quality.
On a walkthrough of the project's showroom with Ms Sim, we were impressed by the high quality of the materials used, the thoughtfulness of the spatial arrangements, and the environment-friendly design of the interior space and exterior landscaping.
Last November, SLP won the prestigious Enterprise 50 Award, a clear recognition of the company's successful approach to business and its strong growth potential in the coming years.
Looking ahead, SLP's owners are convinced that the only way for the company to grow is to venture into foreign lands. In 2004, it started searching actively for strategic partners locally and internationally to begin its expansion into the region, starting with the Indonesia market. Last October, SLP made its foray into the Chinese market amid the financial turmoil, beginning with the city of Shanghai.
'Despite the global financial crisis, our Shanghai office was able to break even in just two months. Now, we are in the process of opening the second branch in Shanghai,' Ms Sim says.
The founders also believe that the company is capable of fulfilling its targeted milestone of establishing 35 branches nationwide in China within the next 3-5 years.
Besides wanting to expand overseas, Mr Yeo and Ms Sim also want to grow the company from within. 'We have the vision to gradually move towards the next stage - to nurture the next generation of leaders in the company and to let key management staff become business owners,' Ms Sim says.
As a parting shot, she advises: 'You must dare to dream big dreams when starting a business. There will be plenty of setbacks and disappointments, but if you are passionate about what you are doing, you will be able to overcome the problems that come along your way.'
The writers are students of the NUS Business School
Source: Business Times, 29 Sep 2009
SLP International Property Consultants Pte Ltd does something many of its ilk just don't. And it is this extra touch that has propelled the property agency into the ranks of Singapore's top SMEs.
SLP doesn't just bring buyer and seller together; it takes the trouble to find out what potential buyers want and how potential sellers can deliver.
Helmed by the husband-and-wife team of Stanley Yeo and Kain Sim, the outfit took off in 2001 with the objective of serving clients in the commercial and industrial property sectors. Notably, both of them had earlier helped developers and investors to acquire more than S$48 million worth of investment properties in Singapore; some A$383 million (S$471 million) worth of properties in Australia; and over £128 million (S$289 million) worth of properties in London.
So it carved a niche for itself by assisting developers in designing properties that meet the demands of the target market, recommending them potential land and buildings for development that have strong projected returns.
On the buyer or lessee side, SLP takes the initiative of going to them. Its marketing team visits SMEs at their premises so as to better understand their needs. This way, it can propose better facilities even before the client looks for it.
Over time, it will also be able to tell developers what sort of space will be in demand. Hence, SLP likes to work closely with developers right from the start.
The agency built its reputation right from the first project it secured, after facing its fair share of problems as a small outfit getting its first break. The job: assisting in the sale and development of a 265-unit light and clean industrial building in Bukit Batok.
The economic downturn back then, in 2001, naturally impeded the selling process. But SLP dug in and generated sufficient sales proceeds to assist the developer in funding the development. The project was completed on time without the developer suffering any major cash flow problems along the way.
Topping that, SLP managed to sell every unit over a period of 18 months for the project.
'To us, it was a very good record because back in 2001, no local industrial development of this size was able to achieve 100 per cent sale before temporary occupation permit was granted,' Ms Sim recalls.
This was also an important precursor to the many subsequent projects that SLP was to be involved in. But rising business drove the outfit into another wall: hiring people. Recruitment was a challenge because it was difficult to attract people to work for a relatively unknown company. SLP tackled the problem by offering on-the-job training to encourage people who did not have prior experience in the field to join the company. And it worked.
Having established a favourable business presence in the commercial and industrial property sectors, SLP diversified into residential property. By 2004, it was expanding beyond Singapore. Today, it has operations in Indonesia and China.
SLP has achieved many milestones. It sold out industrial office building Alexcia - where its head office is located - in just two months. Just recently, it broke the industry track record with the 100 per cent sale of Northstar, a 654-unit industrial building, within 15 months.
SLP is proud to have maintained its commitment to each project from the start till the end, regarding each project as completed only when every unit is sold. Because of that, SLP has become a well-recognised brand name for business space solutions within the industry. The confidence in SLP's expertise and dedication has brought in a continuous stream of clients, allowing the company to reinvest its earnings to fund its regional expansion.
In the residential property sector, in which SLP is a relatively new player, the company has also fared well. A living testimony of its achievement here is the recent three stunning blocks of DBSS (Design, Build and Sell Scheme) public housing apartments, Natura Loft, each standing at 40 stories high along Bishan Street 24.
Qingjian Realty Pte Ltd, one of China's leading developers, engaged SLP as its consultant in its first foray into property development in Singapore. Not only was SLP put in charge of the sale and marketing of the property but, more importantly, SLP contributed to the successful bid for the project by Qingjian, as well as the design and development of the housing project with its knowledge of the needs of the local population.
SLP's partnership with Qingjian seeks to change the local perception of public housing and property projects undertaken by mainland Chinese property developers. This partnership has also set a new benchmark in residential property value and quality.
On a walkthrough of the project's showroom with Ms Sim, we were impressed by the high quality of the materials used, the thoughtfulness of the spatial arrangements, and the environment-friendly design of the interior space and exterior landscaping.
Last November, SLP won the prestigious Enterprise 50 Award, a clear recognition of the company's successful approach to business and its strong growth potential in the coming years.
Looking ahead, SLP's owners are convinced that the only way for the company to grow is to venture into foreign lands. In 2004, it started searching actively for strategic partners locally and internationally to begin its expansion into the region, starting with the Indonesia market. Last October, SLP made its foray into the Chinese market amid the financial turmoil, beginning with the city of Shanghai.
'Despite the global financial crisis, our Shanghai office was able to break even in just two months. Now, we are in the process of opening the second branch in Shanghai,' Ms Sim says.
The founders also believe that the company is capable of fulfilling its targeted milestone of establishing 35 branches nationwide in China within the next 3-5 years.
Besides wanting to expand overseas, Mr Yeo and Ms Sim also want to grow the company from within. 'We have the vision to gradually move towards the next stage - to nurture the next generation of leaders in the company and to let key management staff become business owners,' Ms Sim says.
As a parting shot, she advises: 'You must dare to dream big dreams when starting a business. There will be plenty of setbacks and disappointments, but if you are passionate about what you are doing, you will be able to overcome the problems that come along your way.'
The writers are students of the NUS Business School
Source: Business Times, 29 Sep 2009
Population growth slowest in 3 years
FEELING the heat of the economic downturn, Singapore's population growth eased to its slowest in three years to 4.99 million as at end-June.
The 3.1 per cent growth from a year ago was lower than the 4.3 per cent and 5.5 per cent growth seen in 2007 and 2008 respectively, data from the Department of Statistics (DOS) shows.
The number of Singapore citizens increased by 1.1 per cent to 3.2 million in 2009, while the number of permanent residents grew 11.5 per cent to 530,000.
Foreigners make up 25 per cent of the Singapore's population. The pace of growth among this segment eased to 4.8 per cent this year, compared to growth rates of over 10 per cent in 2008 and 2007.
Economists were unsurprised by the data, which they felt was in line with the bleak job market this year.
CIMB-GK economist Song Seng Wun noted that the decline in growth of foreigners here shows the flexibility of Singapore's labour market.
'Going forward, population growth underscoring labour demand growth will be contingent on the recovery profile,' he said.
OCBC economist Selena Ling said that she believes such deceleration of population growth, especially involving foreigners, is a blip and should improve with the recovery in the global economy and the opening of the two integrated resorts here.
The Population Trends 2009 report released yesterday also gave a grim snapshot of Singapore's ageing population trend, falling fertility rates and a delay in marriages.
The median age of Singaporeans rose to 37 years in 2009 from 20 years in 1970. Elderly persons aged 65 years and above make up 8.8 per cent of the resident population in 2009, up from 7 per cent in 1999.
The ratio of working-age residents to elderly residents has also declined. In 2009, there were 8.3 residents aged 15-64 years for every resident aged 65 and above, compared to an old-age support ratio of 10.1 in 1999.
Interestingly, the number of marriages last year hit a record high since 2000, with a total of 24,596 marriages registered here. However, marriage rates fell across the younger age groups below 30 years in 2008, suggesting that people are delaying marriage.
The median age of first marriage across all educational groups also increased. For brides with university qualification, the median age of first marriage has reached 28.2 years in 2008 from 26.8 years a decade ago. For grooms in the same educational group, that has risen to 30.1 years from 29 years.
'There is also a tendency towards delay in child-bearing,' said DOS. 'While the peak in fertility was in the age group 25-29 years in 1990, the peak has moved to the age group 30-34 years from 2002 onwards.'
Fertility rates have fallen across all age groups over the past two decades, with those in the 25-29 years age group registering the largest decline from 110 births per 1,000 women in 2000 to 79 per 1,000 women in 2008.
But there were slightly more babies born last year, which may be attributable to the enhanced baby bonuses doled out by the government. The number stood at 39,826, a 0.9 per cent increase from 2007.
Source: Business Times, 29 Sep 2009
The 3.1 per cent growth from a year ago was lower than the 4.3 per cent and 5.5 per cent growth seen in 2007 and 2008 respectively, data from the Department of Statistics (DOS) shows.
The number of Singapore citizens increased by 1.1 per cent to 3.2 million in 2009, while the number of permanent residents grew 11.5 per cent to 530,000.
Foreigners make up 25 per cent of the Singapore's population. The pace of growth among this segment eased to 4.8 per cent this year, compared to growth rates of over 10 per cent in 2008 and 2007.
Economists were unsurprised by the data, which they felt was in line with the bleak job market this year.
CIMB-GK economist Song Seng Wun noted that the decline in growth of foreigners here shows the flexibility of Singapore's labour market.
'Going forward, population growth underscoring labour demand growth will be contingent on the recovery profile,' he said.
OCBC economist Selena Ling said that she believes such deceleration of population growth, especially involving foreigners, is a blip and should improve with the recovery in the global economy and the opening of the two integrated resorts here.
The Population Trends 2009 report released yesterday also gave a grim snapshot of Singapore's ageing population trend, falling fertility rates and a delay in marriages.
The median age of Singaporeans rose to 37 years in 2009 from 20 years in 1970. Elderly persons aged 65 years and above make up 8.8 per cent of the resident population in 2009, up from 7 per cent in 1999.
The ratio of working-age residents to elderly residents has also declined. In 2009, there were 8.3 residents aged 15-64 years for every resident aged 65 and above, compared to an old-age support ratio of 10.1 in 1999.
Interestingly, the number of marriages last year hit a record high since 2000, with a total of 24,596 marriages registered here. However, marriage rates fell across the younger age groups below 30 years in 2008, suggesting that people are delaying marriage.
The median age of first marriage across all educational groups also increased. For brides with university qualification, the median age of first marriage has reached 28.2 years in 2008 from 26.8 years a decade ago. For grooms in the same educational group, that has risen to 30.1 years from 29 years.
'There is also a tendency towards delay in child-bearing,' said DOS. 'While the peak in fertility was in the age group 25-29 years in 1990, the peak has moved to the age group 30-34 years from 2002 onwards.'
Fertility rates have fallen across all age groups over the past two decades, with those in the 25-29 years age group registering the largest decline from 110 births per 1,000 women in 2000 to 79 per 1,000 women in 2008.
But there were slightly more babies born last year, which may be attributable to the enhanced baby bonuses doled out by the government. The number stood at 39,826, a 0.9 per cent increase from 2007.
Source: Business Times, 29 Sep 2009
Hundred Trees defies market chill elsewhere
Sales taper off at many projects as cooling measures start to seep in
(SINGAPORE) City Developments Ltd (CDL) sold a whopping 316 units last week at its Hundred Trees condo in the West Coast, a quarter of them on interest absorption scheme (IAS). Demand for most other projects, however, seemed to falter.
'Hundred Trees is amongst the last few developments where buyers may opt for IAS,' CDL noted in its press release yesterday. The developer has raised the 956-year leasehold condo's average price from $895 psf initially to about $910 psf. Those who buy on IAS pay a 2.5 per cent price premium.
It was a different story elsewhere as house-hunters ponder the implications of the Sept 14 measures by the government to cool the market. These include scrapping IAS and restarting confirmed list government land sales in first half 2010.
One property consultant even hazarded a guess that 'a pull-back in demand of 10 per cent is not unrealistic'.
BT understands that CapitaLand and its partners last week sold fewer than 20 units at The InterLace condo which will be developed on the Gillman Heights site, after selling 233 units the preceding week. No IAS is being offered for the 99-year leasehold condo.
Analysts point out that the project's pricing is also not compelling. Prices range from $850 to $1,150 psf though market watchers say that on average, the price is about $1,000 psf. The project's unique design may appeal to some but not others, they added.
InterLace also does not have any one-bedroom units, which typically involve a lower lump sum investment and tend to sell off fastest in projects, a market watcher said.
In the Marine Parade location, GuocoLand sold another 21 units at its freehold Elliot At The East Coast project last week. This brings total units sold to 66 units. The developer has released 80 of the total 119 units in the five-storey project at an average price of $970 psf. It is offering IAS in exchange for a 2 per cent price premium. So far four buyers have taken up the scheme. GuocoLand began selling the condo on Sept 19.
Sales at projects that have been on the market longer have tapered off. For instance, NTUC Choice Homes last week sold five units at its 99-year leasehold Trevista condo in Toa Payoh bringing total units sold to 478 units in the 590-unit condo.
So far this month, the developer appears to have sold 65 units. The average price currently is $935 psf, higher than $898 psf initially. The price premium for IAS buyers is 2 per cent. So far 21 per cent of the total 478 units sold have been on IAS.
Far East Organization sold 24 units last week at its various projects across the island. Its top selling projects were Waterfront Keys and Waterfront Waves in Bedok, Floridian in Bukit Timah, and Mi Casa in Choa Chu Kang.
BT understands several other projects on the island saw sales of just one or two units over the weekend. Meadows @ Peirce is said to have seen sales of two units and Trizon in the Mount Sinai area, just one unit.
A seasoned property consultant said: 'The market had cooled off slightly even before the Sept 14 measures as price resistance set in after rapid price increases between May and August. People throng showflats of newly released developments, looking for the best units and buy what they can afford. After that, it can be a slow climb in terms of sales volume.'
Most developers and agents have been arguing that the removal of IAS will not make a big dent on home sales as only a minority of buyers in projects where it is offered at a price premium have been taking up the scheme in recent months.
'However, it is not the removal of IAS but the overall message, that the government is monitoring the market closely and ready to do more if necessary, that is having a psychological impact,' reckons DTZ's South-east Asia research head Chua Chor Hoon.
'The Sept 14 package was a warning to market participants and a reminder to potential buyers to be careful,' she added.
A property agent told BT that some people have walked away from buying units in new condos from developers recently as prices at some just-completed developments nearby or projects which are nearing completion are about 20 per cent less in some instances.
CDL said yesterday that 85 per cent of Hundred Trees' buyers were Singaporeans.
'There was a balanced mix of HDB upgraders and buyers who hold private property addresses,' it added. All 22 one-bedroom units, priced from $500,000, and 66 two-bedroom apartments, priced from $701,000, have been sold,' it added.
All six penthouses costing between $2.4 million and $2.6 million have also been taken up. So far, CDL has soft launched 350 of Hundred Trees' total 396 units.
It will release the remaining units this weekend, when it does an official launch, involving an ad campaign.
Source: Business Times, 29 Sep 2009
(SINGAPORE) City Developments Ltd (CDL) sold a whopping 316 units last week at its Hundred Trees condo in the West Coast, a quarter of them on interest absorption scheme (IAS). Demand for most other projects, however, seemed to falter.
'Hundred Trees is amongst the last few developments where buyers may opt for IAS,' CDL noted in its press release yesterday. The developer has raised the 956-year leasehold condo's average price from $895 psf initially to about $910 psf. Those who buy on IAS pay a 2.5 per cent price premium.
It was a different story elsewhere as house-hunters ponder the implications of the Sept 14 measures by the government to cool the market. These include scrapping IAS and restarting confirmed list government land sales in first half 2010.
One property consultant even hazarded a guess that 'a pull-back in demand of 10 per cent is not unrealistic'.
BT understands that CapitaLand and its partners last week sold fewer than 20 units at The InterLace condo which will be developed on the Gillman Heights site, after selling 233 units the preceding week. No IAS is being offered for the 99-year leasehold condo.
Analysts point out that the project's pricing is also not compelling. Prices range from $850 to $1,150 psf though market watchers say that on average, the price is about $1,000 psf. The project's unique design may appeal to some but not others, they added.
InterLace also does not have any one-bedroom units, which typically involve a lower lump sum investment and tend to sell off fastest in projects, a market watcher said.
In the Marine Parade location, GuocoLand sold another 21 units at its freehold Elliot At The East Coast project last week. This brings total units sold to 66 units. The developer has released 80 of the total 119 units in the five-storey project at an average price of $970 psf. It is offering IAS in exchange for a 2 per cent price premium. So far four buyers have taken up the scheme. GuocoLand began selling the condo on Sept 19.
Sales at projects that have been on the market longer have tapered off. For instance, NTUC Choice Homes last week sold five units at its 99-year leasehold Trevista condo in Toa Payoh bringing total units sold to 478 units in the 590-unit condo.
So far this month, the developer appears to have sold 65 units. The average price currently is $935 psf, higher than $898 psf initially. The price premium for IAS buyers is 2 per cent. So far 21 per cent of the total 478 units sold have been on IAS.
Far East Organization sold 24 units last week at its various projects across the island. Its top selling projects were Waterfront Keys and Waterfront Waves in Bedok, Floridian in Bukit Timah, and Mi Casa in Choa Chu Kang.
BT understands several other projects on the island saw sales of just one or two units over the weekend. Meadows @ Peirce is said to have seen sales of two units and Trizon in the Mount Sinai area, just one unit.
A seasoned property consultant said: 'The market had cooled off slightly even before the Sept 14 measures as price resistance set in after rapid price increases between May and August. People throng showflats of newly released developments, looking for the best units and buy what they can afford. After that, it can be a slow climb in terms of sales volume.'
Most developers and agents have been arguing that the removal of IAS will not make a big dent on home sales as only a minority of buyers in projects where it is offered at a price premium have been taking up the scheme in recent months.
'However, it is not the removal of IAS but the overall message, that the government is monitoring the market closely and ready to do more if necessary, that is having a psychological impact,' reckons DTZ's South-east Asia research head Chua Chor Hoon.
'The Sept 14 package was a warning to market participants and a reminder to potential buyers to be careful,' she added.
A property agent told BT that some people have walked away from buying units in new condos from developers recently as prices at some just-completed developments nearby or projects which are nearing completion are about 20 per cent less in some instances.
CDL said yesterday that 85 per cent of Hundred Trees' buyers were Singaporeans.
'There was a balanced mix of HDB upgraders and buyers who hold private property addresses,' it added. All 22 one-bedroom units, priced from $500,000, and 66 two-bedroom apartments, priced from $701,000, have been sold,' it added.
All six penthouses costing between $2.4 million and $2.6 million have also been taken up. So far, CDL has soft launched 350 of Hundred Trees' total 396 units.
It will release the remaining units this weekend, when it does an official launch, involving an ad campaign.
Source: Business Times, 29 Sep 2009
Bid to stop re-routing of road rejected
A SPAT between two developers about the re-routing of an access road has gone all the way to the Court of Appeal.
Both Pacific Rover and Yickvi Realty have condominium projects on adjoining parcels of land off Newton Road. But Yickvi had a right-of-way access road to its new 11-storey property that cut through Pacific Rover’s land.
Pacific Rover, which had received planning permission to build two 30-storey residential units, wanted to optimise land usage and shift part of the access road nearer to the property’s boundary. Its condominium, called Trilight, is due to be completed in April 2011.
Yickvi initially agreed to the request, provided the subterranean electric cables, pipes and other service installations beneath the road were shifted in line with the newly adjusted road.
But talks broke down last year and the case went to the High Court, which ruled Yickvi could not object to the road shift as it would not cause a major inconvenience to the occupants of its building.
Yickvi, through lawyers from Rajah & Tann, appealed to the highest court, which agreed with the earlier ruling but ordered Pacific Rover to make sure Yickvi had immediate access, whenever reasonably required, to maintain and repair the cables running under the original route.
The Court of Appeal made clear the inconvenience caused by the realignment of the access road was not the real issue.
Chief Justice Chan Sek Keong, in delivering the grounds on the court’s behalf, said: ‘First, because of the scarcity of land in Singapore, land should be allowed to be developed to its optimal potential as permitted by planning law and the claimant suffers no injury or inconvenience as a result.’
He added that allowing the road shift would prevent further suits taking place and this was a second public benefit.
Lawyers from Rodyk & Davidson, acting for Pacific Rovers, said the judgment was a landmark move as past cases showed a right-of-way cannot be changed without the consent of the party who held that right.
Lawyer Ling Tien Wah said the court showed in this case that, in certain circumstances, the change could go ahead.
‘The court held the owner of the right could not stop the other party from realigning the right-of-way, provided it was advantageous to both parties,’ he said.
---------------------------------------------------------------
DEVELOP LAND OPTIMALLY
‘Because of the scarcity of land in Singapore, land should be allowed to be developed to its optimal potential as permitted by planning law and the claimant suffers no injury or inconvenience as a result.’ - Chief Justice Chan Sek Keong
Source: Straits Times, 29 Sep 2009
Both Pacific Rover and Yickvi Realty have condominium projects on adjoining parcels of land off Newton Road. But Yickvi had a right-of-way access road to its new 11-storey property that cut through Pacific Rover’s land.
Pacific Rover, which had received planning permission to build two 30-storey residential units, wanted to optimise land usage and shift part of the access road nearer to the property’s boundary. Its condominium, called Trilight, is due to be completed in April 2011.
Yickvi initially agreed to the request, provided the subterranean electric cables, pipes and other service installations beneath the road were shifted in line with the newly adjusted road.
But talks broke down last year and the case went to the High Court, which ruled Yickvi could not object to the road shift as it would not cause a major inconvenience to the occupants of its building.
Yickvi, through lawyers from Rajah & Tann, appealed to the highest court, which agreed with the earlier ruling but ordered Pacific Rover to make sure Yickvi had immediate access, whenever reasonably required, to maintain and repair the cables running under the original route.
The Court of Appeal made clear the inconvenience caused by the realignment of the access road was not the real issue.
Chief Justice Chan Sek Keong, in delivering the grounds on the court’s behalf, said: ‘First, because of the scarcity of land in Singapore, land should be allowed to be developed to its optimal potential as permitted by planning law and the claimant suffers no injury or inconvenience as a result.’
He added that allowing the road shift would prevent further suits taking place and this was a second public benefit.
Lawyers from Rodyk & Davidson, acting for Pacific Rovers, said the judgment was a landmark move as past cases showed a right-of-way cannot be changed without the consent of the party who held that right.
Lawyer Ling Tien Wah said the court showed in this case that, in certain circumstances, the change could go ahead.
‘The court held the owner of the right could not stop the other party from realigning the right-of-way, provided it was advantageous to both parties,’ he said.
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DEVELOP LAND OPTIMALLY
‘Because of the scarcity of land in Singapore, land should be allowed to be developed to its optimal potential as permitted by planning law and the claimant suffers no injury or inconvenience as a result.’ - Chief Justice Chan Sek Keong
Source: Straits Times, 29 Sep 2009
Financial flexibility remains key for Singapore REITs
Singapore REITs (S-REITs) have, to a large extent, refinanced their maturing debt obligations in 2009 and have benefited from a recent share price recovery, though questions still remain regarding their financial flexibility and refinancing ability, notes Fitch Ratings in a new special report.
In the report, the agency discusses some of the aspects of S-REITs’ structures, highlighting its concerns, and discusses the impact of the financial crisis and the outlook for S-REITs and their ratings as they emerge from the crisis.
S-REITs have been negatively affected by the financial crisis as a limited availability of debt financing and stock price corrections forced them to restrict their previous aggressive asset acquisition programmes and concentrate on survival and tenant retention in a difficult market. S-REITs responded to the changing market dynamics by sourcing bank loans in advance for their refinancing and by reducing their capex and acquisition plans, and development pipelines; some S-REITs have successfully issued equity. These steps are positive, from a ratings standpoint, but do not address other aspects of the debt structure and liquidity profile on which Fitch continues to have concerns.
‘The requirement for S-REITs to distribute a major portion of their earnings affects their liquidity profiles. This coupled with concentrated debt maturity profiles can significantly increase the refinancing risk around S-REITs,’ says Peeyush Pallav, Director with the agency’s REIT team.
S-REITs are moderately geared at an average of 31.0% (as at June 2009) although industrial S-REITs are more highly geared at an average of 39.6% (as of June 2009). In the year ending June 2009, S-REITs have faced falling asset valuations as well, for instance, office S-REITs reported a 4.2% drop in total assets in the year ending June 2009, compared with an increase of about 54% in the previous year, while retail S-REITs added 1.5% to their total assets in the same period. Fitch does not expect leverage to increase significantly in the near term as S-REITs are currently focused on tenant retention and organic portfolio growth, and may only look to acquisitions when they become yield accretive.
The ability of S-REITs to access the capital markets and maintain adequate liquidity for their debt refinancing and capex requirements remains critical to their ratings outlook. ‘S-REITs would benefit from long term undrawn committed bank facilities, less reliance on secured financing and a wider spread of debt maturities to ensure debt refinancing funding is available even in the most difficult circumstances,’ adds Mr Pallav.
Fitch will continue to monitor the steps taken by S-REITs in the wake of the financial crisis, including their efforts to reduce debt concentration, acquire sufficient committed bank facilities and improve their liquidity profiles. Fitch’s overall outlook for the sector remains negative owing to negative asset performance expectations; however the sector’s credit performance is expected to be driven by the industry sub-sectors, and hence individual S-REITs may have different outlooks.
Source: Business Times, 29 Sep 2009
In the report, the agency discusses some of the aspects of S-REITs’ structures, highlighting its concerns, and discusses the impact of the financial crisis and the outlook for S-REITs and their ratings as they emerge from the crisis.
S-REITs have been negatively affected by the financial crisis as a limited availability of debt financing and stock price corrections forced them to restrict their previous aggressive asset acquisition programmes and concentrate on survival and tenant retention in a difficult market. S-REITs responded to the changing market dynamics by sourcing bank loans in advance for their refinancing and by reducing their capex and acquisition plans, and development pipelines; some S-REITs have successfully issued equity. These steps are positive, from a ratings standpoint, but do not address other aspects of the debt structure and liquidity profile on which Fitch continues to have concerns.
‘The requirement for S-REITs to distribute a major portion of their earnings affects their liquidity profiles. This coupled with concentrated debt maturity profiles can significantly increase the refinancing risk around S-REITs,’ says Peeyush Pallav, Director with the agency’s REIT team.
S-REITs are moderately geared at an average of 31.0% (as at June 2009) although industrial S-REITs are more highly geared at an average of 39.6% (as of June 2009). In the year ending June 2009, S-REITs have faced falling asset valuations as well, for instance, office S-REITs reported a 4.2% drop in total assets in the year ending June 2009, compared with an increase of about 54% in the previous year, while retail S-REITs added 1.5% to their total assets in the same period. Fitch does not expect leverage to increase significantly in the near term as S-REITs are currently focused on tenant retention and organic portfolio growth, and may only look to acquisitions when they become yield accretive.
The ability of S-REITs to access the capital markets and maintain adequate liquidity for their debt refinancing and capex requirements remains critical to their ratings outlook. ‘S-REITs would benefit from long term undrawn committed bank facilities, less reliance on secured financing and a wider spread of debt maturities to ensure debt refinancing funding is available even in the most difficult circumstances,’ adds Mr Pallav.
Fitch will continue to monitor the steps taken by S-REITs in the wake of the financial crisis, including their efforts to reduce debt concentration, acquire sufficient committed bank facilities and improve their liquidity profiles. Fitch’s overall outlook for the sector remains negative owing to negative asset performance expectations; however the sector’s credit performance is expected to be driven by the industry sub-sectors, and hence individual S-REITs may have different outlooks.
Source: Business Times, 29 Sep 2009
Wee Hur Holdings to buy 70% stake in Villas@Gilstead development
Wee Hur Holdings said it plans to buy a 70 per cent stake in the Villas@Gilstead development for S$9 million.
It said the proposed acquisition is in line with its growth strategy to diversify into the property development business.
Villas@Gilstead is a residential property project at Gilstead Road, near Novena MRT station.
It is a strata housing development comprising 10 semi-detached houses, 6 terrace houses and 2 bungalows.
It is around 50 per cent sold and is expected to obtain Temporary Occupation Permit (TOP) in the third quarter of 2011.
Source: Channel News Asia, 29 Sep 2009
It said the proposed acquisition is in line with its growth strategy to diversify into the property development business.
Villas@Gilstead is a residential property project at Gilstead Road, near Novena MRT station.
It is a strata housing development comprising 10 semi-detached houses, 6 terrace houses and 2 bungalows.
It is around 50 per cent sold and is expected to obtain Temporary Occupation Permit (TOP) in the third quarter of 2011.
Source: Channel News Asia, 29 Sep 2009
Hundred Trees sells another 116 units
WEEKEND buyers again flocked to one of the most popular recent mass market condominium launches, though the frenzied pace of selling of late last week appeared to have slowed slightly.
City Developments (CDL) said it had sold another 116 units at the weekend preview of its latest condo project Hundred Trees, bringing total sales to 316 units.
That is nearly 80 per cent of the development, or more than 90 per cent of the 350 launched units. The condo, which sits on the 267,598 sq ft former Hong Leong Garden condo site in West Coast Drive, has 396 units.
The average price achieved is about $910 per sq ft (psf), up from the initial price of $895 psf for the first 151 units sold, the developer said yesterday.
There was a 'slight adjustment of 1 to 2 per cent increase in price' for the subsequent phases, it said.
As with many recent launches, the smaller units were the first to be snapped up. CDL started the preview last Thursday and sold 200 units, including all the 22 one-bedders and most of the two-bedders, within two days.
The 66 two-bedders priced from $701,000 as well as the six penthouses costing $2.4 million to $2.6 million were sold out after the weekend.
CDL will be formally launching the 956-year leasehold condo for sale this weekend even though most units were sold in the preview.
About 25 per cent of the buyers paid 2.5 per cent on top of their purchase price in order to take up the interest absorption scheme.
The scheme allows them to defer the bulk of the purchase price until the condo is completed. This option was removed by the Government earlier this month, though projects that were offered for sale with the scheme before the removal can continue to do so.
CDL said 85 per cent of the buyers were locals, and that they were a balanced mix of HDB upgraders and buyers who already live in private residential property.
Its group general manager Chia Ngiang Hong said the company observed that some buyers were keen to hold their units for investment or rental income in view of the upcoming redevelopment projects like Clementi Town Centre.
Source, Straits Times 29 Sep 2009
Go back to basics for affordable flats
WHAT does 'affordable' mean?
With rising home prices hitting headlines in recent weeks, Singaporeans are falling over themselves trying to pin down affordability.
The Government, which built its reputation housing a nation, has defended its record. It says that public housing is affordable because new home owners use less than 30 per cent of their income to service their housing loans.
While this is persuasive, public scepticism has been just as strong. The gap exists because there is no agreement on what 'affordability' means.
The Government feels flats are affordable because those who applied for them will not be paying through their noses. But this, however, does not take into account home seekers priced out of these flats in the first place.
Many home seekers, meanwhile, feel aggrieved because an HDB flat that does not require a long commute to work is getting out of reach.
Furthermore, a study by National University of Singapore economists Tilak Abeysinghe and Gu Jiaying published last year found that the buying power of people's lifetime earnings in 2007 was lower than it was in 1990 when tracked against the prices of HDB resale flats. By this measure, the prices of HDB resale flats have become less affordable.
The HDB's pricing system for new flats has also caused suspicion. New flats are priced at a discount from their market value, but this figure - as well as the size of the discount - has never been revealed. What is known is that the HDB bases the market value on the resale price of similar flats in the area. This means new flat prices can be affected by the speculative bubbles that emerge in the wider market. Enhancements made to new flats over the years have also raised prices.
In July's batch of new premium flats offered in Punggol - which comes with timber and ceramic flooring and toilet fittings - four-room flats were going for a top price of $322,000. This is just $2,500 shy of the median resale price of four-room flats in the same town from April to June.
The response of the authorities to all these? It all boils down to home owners' expectations, they say. Lower your expectations, live further away from town, or buy a smaller flat.
But perhaps it is time to take a hard look at the HDB's increasingly conflicting mandates. In a Sept 14 letter to The Straits Times Forum page, the HDB said its 'key responsibilities are to help first-time home buyers and to ensure flat values are sustained over the long term'.
The HDB undoubtedly had an easier time accomplishing these goals in its early days, when flat owners were largely resettled families who had not quite caught on to the income-generating potential of their homes. Both of the HDB's goals could then be met rather easily by giving subsidies, keeping estates well maintained, and upgrading them over time.
Today, with the buying, selling and renting of HDB flats supporting an industry, it has become more difficult for the HDB to meet its goals.
The humble flat today is a shelter, an asset, as well as a source of rental and retirement income with the Board's lease buyback scheme. A flat owner who moves on to a bigger home is entitled to a second subsidised home loan from the Board, while others who sell their first subsidised flat can go back for a second if they pay a levy. The benefits are substantial once someone gets his foot in.
But this cradle-to-grave system has also raised expectations about how much money flat owners can make from their property. People have come to expect that their flat values will rise - indefinitely. They do not seem to realise that this rise has to, to some extent, come at the expense of home seekers down the line. But just like passengers on a plane, they hope it will take off once they get on it.
Such expectations - supported by the HDB's mandate to sustain flat values - also prevent the housing authority from building too many new flats at any one point in time. If the Board builds enough to satisfy quickly the demand of all home seekers, prices in the resale market will fall.
It was not too long ago that flat owners in Sengkang complained that the surplus of new flats created by the Asian financial crisis was suppressing the value of their homes. But the pendulum these days may have swung too far against the interests of home seekers.
What this means is that the HDB may be forced to prioritise one of its two mandates: Should it focus on helping home seekers own homes, or should it focus on protecting the value of the existing flats of existing home owners?
The Board cannot abandon either goal without political consequences. But it cannot achieve both in equal measure either.
It need not look far for clues about the way out. Former HDB chief executive Niam Chiang Meng declared in 2003 that the Board was going back to basics to improve the workmanship on its flats. Over the next few years, the Board cut out the more elaborate features in its upgrading programmes and focused instead on practical improvements like plugging ceiling leaks.
Why not apply this back-to-basics approach to the HDB's goals: Provide shelter first before worrying about the values of existing flats?
The HDB could also slowly dismantle the systems that feed into the unreasonable expectations of home owners. For example, eligible households might be limited to just one subsidised flat, or just one housing subsidy, so as to wean people from the assumption that huge profits automatically await every flat owner.
Flat owners, meanwhile, have to realise that there are limits to how far public housing can be commercialised. They certainly cannot demand that the value of their properties appreciate - or even be protected - under any circumstances.
After all, they were all home seekers once, looking for that same leg up on the property ladder as the people who are starting off now.
Source, Straits Times 29 Sep 2009
Monday, September 28, 2009
Luxury apartments for $7 million
In the latest caveats for the week of Aug 28 to Sept 4, there were four transactions for apartments in the $7 million range, mainly for existing freehold projects in the luxury prime districts of 9 and 10.
One is a 3,477 sq ft second-floor unit at the 32-year-old Nassim Mansion, a luxury freehold 72-unit development on Nassim Hill in a neighbourhood of Good Class Bungalows. It was sold for $7.5 million ($2,157 psf), according to a caveat lodged with URA Realis on Sept 3. The previous owner had purchased it for $7.45 million ($2,143 psf) just two years ago, according to a transaction in May 2007. The owner who had sold him the unit made a 58.5% gain as he had purchased it just a year earlier for $4.7 million ($1,352 psf). The seller himself had made a 68% gain as he in turn had purchased it for $2.8 million ($805 psf) in September 2001. This apartment has changed hands four times in eight years.
At Ardmore Park, which is still the bellwether for luxury projects, resale prices are once again at the $2,500 psf level. Most recently, a sixth-floor unit was sold for $7.2 million ($2,496 psf). This unit last changed hands in early 2007 for $6.3 million ($2,184 psf), thus providing the seller a 13.89% gain in over two years. The first owner bought the project at launch in 1997 for $5.14 million ($1,783 psf).
At Grange Residences, a 10th-floor, 2,852 sq ft unit recently sold for $7 million ($2,454 psf), giving the previous owner a 37% upside from his initial purchase price of $5.1 million ($1,788 psf) in 2006. Prior to that, the unit was purchased from the developer at launch for $3.59 million ($1,259 psf) in July 2004. This means the owner made a 42% gain from the sale in just two years.
Meanwhile, the St Thomas Suites twin tower, a 176-unit luxury condo at the top of St Thomas Walk off River Valley Road, is expected to receive its temporary occupation permit by end-2010. Developer Frasers Centrepoint Ltd launched the condo in early 2007 and it was fully sold within a few months. A 29th-floor, five bedroom 4,672 sq ft unit was sold in a sub-sale for $7.95 million ($1,702 psf) at end-August. However, this was 17.6% below the initial price, as according to a caveat lodged in April 2007, the previous owner had purchased the apartment at launch for $9.1 million ($1,949 psf).
Source: The Edge, 28 Sep 2009
One is a 3,477 sq ft second-floor unit at the 32-year-old Nassim Mansion, a luxury freehold 72-unit development on Nassim Hill in a neighbourhood of Good Class Bungalows. It was sold for $7.5 million ($2,157 psf), according to a caveat lodged with URA Realis on Sept 3. The previous owner had purchased it for $7.45 million ($2,143 psf) just two years ago, according to a transaction in May 2007. The owner who had sold him the unit made a 58.5% gain as he had purchased it just a year earlier for $4.7 million ($1,352 psf). The seller himself had made a 68% gain as he in turn had purchased it for $2.8 million ($805 psf) in September 2001. This apartment has changed hands four times in eight years.
At Ardmore Park, which is still the bellwether for luxury projects, resale prices are once again at the $2,500 psf level. Most recently, a sixth-floor unit was sold for $7.2 million ($2,496 psf). This unit last changed hands in early 2007 for $6.3 million ($2,184 psf), thus providing the seller a 13.89% gain in over two years. The first owner bought the project at launch in 1997 for $5.14 million ($1,783 psf).
At Grange Residences, a 10th-floor, 2,852 sq ft unit recently sold for $7 million ($2,454 psf), giving the previous owner a 37% upside from his initial purchase price of $5.1 million ($1,788 psf) in 2006. Prior to that, the unit was purchased from the developer at launch for $3.59 million ($1,259 psf) in July 2004. This means the owner made a 42% gain from the sale in just two years.
Meanwhile, the St Thomas Suites twin tower, a 176-unit luxury condo at the top of St Thomas Walk off River Valley Road, is expected to receive its temporary occupation permit by end-2010. Developer Frasers Centrepoint Ltd launched the condo in early 2007 and it was fully sold within a few months. A 29th-floor, five bedroom 4,672 sq ft unit was sold in a sub-sale for $7.95 million ($1,702 psf) at end-August. However, this was 17.6% below the initial price, as according to a caveat lodged in April 2007, the previous owner had purchased the apartment at launch for $9.1 million ($1,949 psf).
Source: The Edge, 28 Sep 2009
Keeping cool in the heat
Are the recent measures by the government to cool the property market appropriate and effective?
Pauline Goh, Managing Director, CB Richard Ellis Singapore
THE measures are aimed at cooling the market by lowering demand and increasing supply. On the demand side, the removal of the special payment schemes will effectively encourage homebuyers to reassess their cashflow position carefully before they make purchase commitments. Those who have sufficient funds only for the upfront 20 per cent downpayment and are relying on the future sale of their existing homes to help finance their new purchases may now be encouraged to hold back on newly launched projects and possibly look instead to the secondary market including projects that are close to TOP.
On the supply side, the re-introduction of the confirmed list back into the government land sales programme will provide better visibility to the market on the pipeline of future supply.
These measures should help to moderate, to more sustainable levels, the current sales momentum which has escalated since March and looks set to easily exceed the record volume of 14,811 units in 2007.
Laura Deal, Executive Director, The American Chamber of Commerce in Singapore
THE American Chamber of Commerce in Singapore just conducted its eighth annual Business Outlook Survey of US businesses across Asean. As part of this survey, companies rate their satisfaction level with aspects of the business environment of the country in which they operate.
Overall, Singapore is viewed extremely positively by US companies based here as a place to do business. However, for several years, the greatest dissatisfaction has been with the cost of overheads - mainly housing and office leases. In 2008, 74 per cent of the surveyed US companies based in Singapore reported being dissatisfied with housing and office lease costs. In 2009, that number declined to 55 per cent for housing and 47 per cent for office leases. Anecdotally, our members also cite housing and office lease costs as the greatest challenge to planning business expansion in Singapore rather than other countries in the region.
It is crucial for the Singapore government to keep housing and office lease prices low as the country rebounds from the world economic downturn. Through these measures, the government is ensuring that Singapore remains competitive in attracting and keeping foreign companies.
David Leong, Managing Director, PeopleWorldwide Consulting Pte Ltd
HAVING witnessed the burst US property bubble, it is not hard to imagine how those conditions - if not tempered with cooling-off measures by Ministry of National Development - will put Singapore in similar dire straits. Property prices should be aligned with economic fundamentals. With the current spiralling of prices, these are signs of heightened speculative activity with no major shift in economic fundamentals.
The intervention with the immediate withdrawal of the interest absorption scheme (IAS) and interest only loans (IOL) being offered for purchases of uncompleted property developments will halt any frivolous speculations for the moment. However, with the interest rate pedal nailed to the floorboard and remaining so low for such a long time, new money will find properties as good investment options.
Whatever the case, it looks like demand outstrips supply and therefore there is a chasing up of the property prices. Private home sales witnessed strong upswing since February this year when 11 times more homes were sold compared to January's 108 units. Since then, developers have sold more than 10,000 units, more than double the 4,300 sold in the entire 2008.
All eyes are on the economic performance since should growth turn out weaker than expected, all buyers of property will be chasing the tails of escalating prices with possible capital losses should the market suddenly correct and rebalance. This will create a negative wealth effect traceable to a flattening out or worst, a drop in property prices.
On the other hand, should the recovery maintain its course, interest rates will shoot north and drive up financing cost and this can have serious implications for those who are over-extended with no real money to back their purchase.
The removal of the IAS and IOLs will technically remove the speculative element from the burgeoning sales volume. This is good for mid to long-term genuine homebuyers and investors as it will take out the speculative element in the pricing of the property.
The cooling-off measures by the government will discourage property 'flippers' but I suspect that property prices and sales volumes will continue to improve, with a more sustainable pace of increase and with less volatility as hopefully, cool and level heads will prevail.
Reto Isenring, Managing Director, VP Bank (Singapore) Ltd
DEVELOPERS' launches and sale volume in June 2009 exceeded even the pre-crisis 2007 levels, and while the government initiatives are well-intended at preventing another property bubble, I feel that there was an oversight on the type of property buyers participating in this round of growth.
In the bull market of 2007, property purchases required only 10 per cent cash outlay, and everything else was easily loaned from banks on interest-serving loans. That set the stage for speculation and consequently, the property bubble.
However, the 2009 scenario is dramatically different, as tighter credit policies capped bank loans at 80 per cent loan-to-value. Coupled with a lower valuation to sale price, cash-tight investors and pure speculators were eliminated from the market as the cash capital is drastically higher than before.
Therefore the government measures of removing the interest absorption scheme and interest-only housing loans are only marginally effective.
Instead, I feel that the deciding factor on the behaviour of property buyers will emerge from the leasing market front. Looming pipeline supply amid weak growth foreseen for expatriate population and demand will remain a concern, and if the rental yields decline sharply, there will be a shift in funds from property investments into other potentially more lucrative investments.
Teng Yeow Heng Michael, Managing Director, Corporate Turnaround Centre Pte Ltd
THE measures to cool the property market are not appropriate. The real estate prices have actually not hit the roof yet. Singapore property prices are merely rising in line with what is happening in Asia and also catching up on lost ground.
The funds are currently coming fast and furious into Asia because of the major central banks' fiscal stimuli a few months ago. We are seeing real estate prices and stock markets rising in many countries in Asia, not just Singapore.
I believe that this escalation of real estate prices is short term as the economic fundamentals are still weak globally. Our government should just let the property market run its course without any interference as it will not be effective in changing market sentiments.
Wee Piew, CEO, HG Metal Manufacturing Ltd
A RECENT report by Savills Singapore shows that quite a number of property sub-sales resulted in substantial losses for owners who sold in Q1 this year. A large number of these owners who suffered losses were short-term speculators. I believe that such losses are the best way to weed out property speculators. Once bitten, they are less likely to try their luck in buying a property and hoping for a quick 'flip'.
However, in any form of investment, some form of speculation is healthy to create a thriving market where there are ready buyers and sellers. The key is to prevent runaway or excessive speculation.
As such, I believe that the recent government measures to remove interest absorption schemes will help ensure buyers are more 'genuine' or have enough resources to buy and hold the property for a longer time horizon.
However, the government must be mindful that it treads a thin line in having to avoid excessive interference in the market, thereby dampening a market which just six months ago was still in the doldrums.
After all, the current property boom, being liquidity driven, is not unique to Singapore as you will see similar trends in Hong Kong and China.
Loi Pok Yen, Group CEO, CWT
RECENT events over the last year has shown that capitalism in its purest form may be flawed. The assumption that markets are efficient and allowing market participants to get ahead of themselves is potentially dangerous.
Singapore's government has always taken an approach that prevents financial disruptions which may cause damage to the social fabric and destroy the lives of its citizens. I like to consider this capitalism with a conscience.
The recent measures present buyers and sellers with a different perspective - the government's. Being able to talk down the market without resorting to monetary policy is always the preferred route. Whether it can be effective in the long run, however, remains to be seen.
Kelvin Lum, Executive Director, LC Development Ltd
THE effectiveness of the recently announced government measures to cool the property market will probably be more evident in the upcoming expected launches till year-end which supposedly will yield about 3,700 units.
The run-up in prices for the mass to mid-market sectors might also start to face resistance from the recent price surge as well as talk about a slowing equity market. From a global perspective, the Federal Reserve's decision to maintain measures to support the fragile US economy suggests that fundamentals still remain weak, and ultimately would have an impact on other major Asian economies.
These factors, coupled with the recent measures, might possibly dampen the sentiment among speculators but genuine home buyers could still support buying interest in homes as they are likely to be undeterred by the removal of the IAS and IOL.
Lim Soon Hock, Managing Director, Plan-B ICAG Pte Ltd
PEOPLE believe that the economy is finally turning around. They base this on the positive economic growth data across the globe and the rally in the stock market. Anticipating that property prices will likewise increase, they are buying now, including speculators.
I believe that the government's actions are not targeted at the genuine buyers, for example the HDB upgraders and en bloc sellers, but rather the unscrupulous speculators. However, in the current somewhat buoyant environment, where there is demand, the government's hand in curbing speculation is weak relative to market forces, as was seen in recent property launches after the government's intervention.
That said, as a result of the measures, I expect price increases will be gradual, rather than spiralling to dizzying heights, that were seen pre-financial crisis.
Alastair Hughes, Chief Executive Officer - Asia-Pacific, Jones Lang LaSalle
THE announcement of the measures was intended to send a strong signal to the market that the government will step in to balance supply and demand to avoid an overheating of the property market and curb speculation.
In the weeks following the announcement, it has not created any significant knee-jerk reactions in the market and there has been no evidence of any significant reduction in demand. It has, however, made the market sit up and assess the current pricing.
The real test of the effectiveness of these measures will be in the medium to long term. A number of factors come into consideration, including the recovery prospects of the global economy, which will have an impact on Singapore; as well as the financial strength and affordability of developers and homebuyers respectively. How these factors play out will determine whether the government needs to re-evaluate its stance.
Maintaining a stable property market with regulatory transparency and consistency is important for Singapore to keep its position as a regional business hub and therefore, a combination of market forces plus prudent central influence on demand and supply is a recipe for success.
Liu Chunlin, CEO, K&C Protective Technologies Pte Ltd
I THINK that the measures are good. But the issues are more complex than just cooling the market. There are other concerns to be addressed and the baby should not be thrown out with the bath water.
For example, there are genuine buyers, especially HDB upgraders who have held back over the last one year or so. Some of them may be hit by financial difficulties after committing to a purchase and they would need help.
There will inevitably be speculation or flipping, and certainly we want to avoid the debilitating effect of an asset bubble, especially as Singapore is a small market. And nobody wants the property market to be manipulated to the detriment of the genuine buyers.
In essence, the government has intervened by being one of the players, and a significant player at that, in its role as regulator and major supplier of land.
Krishna Ramachandra, Managing Director, Arfat Selvam Alliance LLC
THE recent measures adopted by the government are just about perfectly weighted. I say this because these measures have the clear intent of signalling to the market that a firm interventionist approach is still on hand, and yet the measures adopted are not really going to shock the market and send it into free fall.
These measures have not and will not seriously hurt the players in the property market. But what they have done is diffuse the uneasiness that surrounds the phenomenal rise in property prices. Clearly, the government has learnt from past experiences that any intervention has to be appropriate in what it intends to achieve but more importantly, the timing of such intervention is critical.
The economy is still very fragile - and still yearning for positivism - and as such, if the intervention was any harsher than what has already been instituted, it would have been an over-kill. So 'well done' to the policymakers in getting this one just right.
Jimmie Lee, Chairman, Dynaforce International Pte Ltd
AS a property owner, I would love to see prices continue to escalate (albeit in a more realistic manner). But I am also a potential buyer because property is now one of the safer investments. So as a potential buyer, I am glad to see that the government making this move. In a 'guided' economy like Singapore, it is definitely the right message at the right time. But we have also seen that it has not tamed the raging bull.
Not unexpectedly, we see the media roped in to accentuate the message. The press has listed the average loss that buyers of luxury apartments suffered. The teacher has taken out the cane and whacked it on the table. He's got our attention and we know his intentions. But like my old classmates in ACS, many will still be itching to test the limit.
R Dhinakaran, Managing Director, Jay Gee Enterprises Pte Ltd
THE high volatility and frequent swings in Singapore's property market is perhaps a combined function of its small land mass, present high liquidity in the market and rampant speculative behaviour.
While demand and supply in its own course can correct much of these anomalies in a fairly large market, the scarce land resource buoyed by speculative interests often leads to a panic situation among genuine buyers.
The recent announcement is aimed to make buyers think on their longer-term financial liabilities than to look at property as short-term investment.
While it is definitely a step in the right direction, it addresses the speculative behaviour only partially. Similar to the stock market, a more elaborate framework to desist 'insider trading' and conflict of interest would help in further limiting speculation.
Additional taxes on gains made from frequent speculative trading activities will help in curbing this behaviour to some extent.
Deb Dutta, Vice-President, Asia-Pacific, Brocade
IN the near term, these measures will cool off rising property prices. However, when the property market takes a beating, these same measures will be relaxed again to encourage existing home owners to upgrade and new owners to buy. Within a year since the financial market meltdown, this is the second time that the government has proposed mitigating measures to regulate the property market.
Increasing land supply means more property developments in the pipeline and therefore more jobs. All these are good. However, Singapore is just one small island with a finite supply of land. Land reclamation is one way to increase land area while urban renewal is another to clear out the old buildings for taller and swankier-looking high-rise residences, at the expense of heritage and nature conservation.
The government may like to take a step back and revisit the property market from both genuine home owners and investors' view points, so that a longer-term and more sustainable measure that works for both groups of buyers can be put in place.
David Low, CEO, Futuristic Store Fixtures Pte Ltd
THE recession may now be recent history but fundamentally, the world at large is still experiencing slow growth. Yet property transactions are rife and mirror that of peak times in 2007 despite a polar economic setting. This is an interesting phenomenon that seems to defy financial sense, and calls for more in-depth study.
For a start, there is an urgent need to marry market fundamentals with sentiments to moderate rife speculation which could otherwise lead to another burst property bubble or worse, will create a depression.
What the government is doing to tame investment and speculative property purchases is certainly timely. Measures such as the removal of the interest absorption scheme and interest only housing loans are certainly effective as a wake up call to mass market buyers who are hoping to make a pile from speculation that may well be beyond their financial call. This will help to moderate advanced cash spending and prevent an alarmingly high-debt society from forming.
Dora Hoan, Group CEO, Best World International Ltd
THE Singapore property sector is in the midst of a boom quite like that of 2007, when we made headlines as the world's hottest real estate market. There is a confluence of factors that has triggered the returning frenzy and I believe that many of them are positive. Singapore is recognised as the top destination in which to do business. Such a bright prospect is made even more vibrant by signs of global economic recovery, the stock market rally, the imminent completion of massive casino resorts, low interest rates and a search for more stable, alternative investments - all these contributed to encourage property buying.
While speculation is inevitable for any market, the government has done well in acting quickly to temper the heightened exuberance which may result in a speculative bubble that will be hazardous for both Singapore and the region. We do not need much memory refreshing to realise that a red hot property market can go out of bounds and mimic what happened in the United States before the sub-prime crisis. I believe however that if we remain upbeat but cautious, we can seize opportunities here in positive light.
Source: Business Times, 28 Sep 2009
Pauline Goh, Managing Director, CB Richard Ellis Singapore
THE measures are aimed at cooling the market by lowering demand and increasing supply. On the demand side, the removal of the special payment schemes will effectively encourage homebuyers to reassess their cashflow position carefully before they make purchase commitments. Those who have sufficient funds only for the upfront 20 per cent downpayment and are relying on the future sale of their existing homes to help finance their new purchases may now be encouraged to hold back on newly launched projects and possibly look instead to the secondary market including projects that are close to TOP.
On the supply side, the re-introduction of the confirmed list back into the government land sales programme will provide better visibility to the market on the pipeline of future supply.
These measures should help to moderate, to more sustainable levels, the current sales momentum which has escalated since March and looks set to easily exceed the record volume of 14,811 units in 2007.
Laura Deal, Executive Director, The American Chamber of Commerce in Singapore
THE American Chamber of Commerce in Singapore just conducted its eighth annual Business Outlook Survey of US businesses across Asean. As part of this survey, companies rate their satisfaction level with aspects of the business environment of the country in which they operate.
Overall, Singapore is viewed extremely positively by US companies based here as a place to do business. However, for several years, the greatest dissatisfaction has been with the cost of overheads - mainly housing and office leases. In 2008, 74 per cent of the surveyed US companies based in Singapore reported being dissatisfied with housing and office lease costs. In 2009, that number declined to 55 per cent for housing and 47 per cent for office leases. Anecdotally, our members also cite housing and office lease costs as the greatest challenge to planning business expansion in Singapore rather than other countries in the region.
It is crucial for the Singapore government to keep housing and office lease prices low as the country rebounds from the world economic downturn. Through these measures, the government is ensuring that Singapore remains competitive in attracting and keeping foreign companies.
David Leong, Managing Director, PeopleWorldwide Consulting Pte Ltd
HAVING witnessed the burst US property bubble, it is not hard to imagine how those conditions - if not tempered with cooling-off measures by Ministry of National Development - will put Singapore in similar dire straits. Property prices should be aligned with economic fundamentals. With the current spiralling of prices, these are signs of heightened speculative activity with no major shift in economic fundamentals.
The intervention with the immediate withdrawal of the interest absorption scheme (IAS) and interest only loans (IOL) being offered for purchases of uncompleted property developments will halt any frivolous speculations for the moment. However, with the interest rate pedal nailed to the floorboard and remaining so low for such a long time, new money will find properties as good investment options.
Whatever the case, it looks like demand outstrips supply and therefore there is a chasing up of the property prices. Private home sales witnessed strong upswing since February this year when 11 times more homes were sold compared to January's 108 units. Since then, developers have sold more than 10,000 units, more than double the 4,300 sold in the entire 2008.
All eyes are on the economic performance since should growth turn out weaker than expected, all buyers of property will be chasing the tails of escalating prices with possible capital losses should the market suddenly correct and rebalance. This will create a negative wealth effect traceable to a flattening out or worst, a drop in property prices.
On the other hand, should the recovery maintain its course, interest rates will shoot north and drive up financing cost and this can have serious implications for those who are over-extended with no real money to back their purchase.
The removal of the IAS and IOLs will technically remove the speculative element from the burgeoning sales volume. This is good for mid to long-term genuine homebuyers and investors as it will take out the speculative element in the pricing of the property.
The cooling-off measures by the government will discourage property 'flippers' but I suspect that property prices and sales volumes will continue to improve, with a more sustainable pace of increase and with less volatility as hopefully, cool and level heads will prevail.
Reto Isenring, Managing Director, VP Bank (Singapore) Ltd
DEVELOPERS' launches and sale volume in June 2009 exceeded even the pre-crisis 2007 levels, and while the government initiatives are well-intended at preventing another property bubble, I feel that there was an oversight on the type of property buyers participating in this round of growth.
In the bull market of 2007, property purchases required only 10 per cent cash outlay, and everything else was easily loaned from banks on interest-serving loans. That set the stage for speculation and consequently, the property bubble.
However, the 2009 scenario is dramatically different, as tighter credit policies capped bank loans at 80 per cent loan-to-value. Coupled with a lower valuation to sale price, cash-tight investors and pure speculators were eliminated from the market as the cash capital is drastically higher than before.
Therefore the government measures of removing the interest absorption scheme and interest-only housing loans are only marginally effective.
Instead, I feel that the deciding factor on the behaviour of property buyers will emerge from the leasing market front. Looming pipeline supply amid weak growth foreseen for expatriate population and demand will remain a concern, and if the rental yields decline sharply, there will be a shift in funds from property investments into other potentially more lucrative investments.
Teng Yeow Heng Michael, Managing Director, Corporate Turnaround Centre Pte Ltd
THE measures to cool the property market are not appropriate. The real estate prices have actually not hit the roof yet. Singapore property prices are merely rising in line with what is happening in Asia and also catching up on lost ground.
The funds are currently coming fast and furious into Asia because of the major central banks' fiscal stimuli a few months ago. We are seeing real estate prices and stock markets rising in many countries in Asia, not just Singapore.
I believe that this escalation of real estate prices is short term as the economic fundamentals are still weak globally. Our government should just let the property market run its course without any interference as it will not be effective in changing market sentiments.
Wee Piew, CEO, HG Metal Manufacturing Ltd
A RECENT report by Savills Singapore shows that quite a number of property sub-sales resulted in substantial losses for owners who sold in Q1 this year. A large number of these owners who suffered losses were short-term speculators. I believe that such losses are the best way to weed out property speculators. Once bitten, they are less likely to try their luck in buying a property and hoping for a quick 'flip'.
However, in any form of investment, some form of speculation is healthy to create a thriving market where there are ready buyers and sellers. The key is to prevent runaway or excessive speculation.
As such, I believe that the recent government measures to remove interest absorption schemes will help ensure buyers are more 'genuine' or have enough resources to buy and hold the property for a longer time horizon.
However, the government must be mindful that it treads a thin line in having to avoid excessive interference in the market, thereby dampening a market which just six months ago was still in the doldrums.
After all, the current property boom, being liquidity driven, is not unique to Singapore as you will see similar trends in Hong Kong and China.
Loi Pok Yen, Group CEO, CWT
RECENT events over the last year has shown that capitalism in its purest form may be flawed. The assumption that markets are efficient and allowing market participants to get ahead of themselves is potentially dangerous.
Singapore's government has always taken an approach that prevents financial disruptions which may cause damage to the social fabric and destroy the lives of its citizens. I like to consider this capitalism with a conscience.
The recent measures present buyers and sellers with a different perspective - the government's. Being able to talk down the market without resorting to monetary policy is always the preferred route. Whether it can be effective in the long run, however, remains to be seen.
Kelvin Lum, Executive Director, LC Development Ltd
THE effectiveness of the recently announced government measures to cool the property market will probably be more evident in the upcoming expected launches till year-end which supposedly will yield about 3,700 units.
The run-up in prices for the mass to mid-market sectors might also start to face resistance from the recent price surge as well as talk about a slowing equity market. From a global perspective, the Federal Reserve's decision to maintain measures to support the fragile US economy suggests that fundamentals still remain weak, and ultimately would have an impact on other major Asian economies.
These factors, coupled with the recent measures, might possibly dampen the sentiment among speculators but genuine home buyers could still support buying interest in homes as they are likely to be undeterred by the removal of the IAS and IOL.
Lim Soon Hock, Managing Director, Plan-B ICAG Pte Ltd
PEOPLE believe that the economy is finally turning around. They base this on the positive economic growth data across the globe and the rally in the stock market. Anticipating that property prices will likewise increase, they are buying now, including speculators.
I believe that the government's actions are not targeted at the genuine buyers, for example the HDB upgraders and en bloc sellers, but rather the unscrupulous speculators. However, in the current somewhat buoyant environment, where there is demand, the government's hand in curbing speculation is weak relative to market forces, as was seen in recent property launches after the government's intervention.
That said, as a result of the measures, I expect price increases will be gradual, rather than spiralling to dizzying heights, that were seen pre-financial crisis.
Alastair Hughes, Chief Executive Officer - Asia-Pacific, Jones Lang LaSalle
THE announcement of the measures was intended to send a strong signal to the market that the government will step in to balance supply and demand to avoid an overheating of the property market and curb speculation.
In the weeks following the announcement, it has not created any significant knee-jerk reactions in the market and there has been no evidence of any significant reduction in demand. It has, however, made the market sit up and assess the current pricing.
The real test of the effectiveness of these measures will be in the medium to long term. A number of factors come into consideration, including the recovery prospects of the global economy, which will have an impact on Singapore; as well as the financial strength and affordability of developers and homebuyers respectively. How these factors play out will determine whether the government needs to re-evaluate its stance.
Maintaining a stable property market with regulatory transparency and consistency is important for Singapore to keep its position as a regional business hub and therefore, a combination of market forces plus prudent central influence on demand and supply is a recipe for success.
Liu Chunlin, CEO, K&C Protective Technologies Pte Ltd
I THINK that the measures are good. But the issues are more complex than just cooling the market. There are other concerns to be addressed and the baby should not be thrown out with the bath water.
For example, there are genuine buyers, especially HDB upgraders who have held back over the last one year or so. Some of them may be hit by financial difficulties after committing to a purchase and they would need help.
There will inevitably be speculation or flipping, and certainly we want to avoid the debilitating effect of an asset bubble, especially as Singapore is a small market. And nobody wants the property market to be manipulated to the detriment of the genuine buyers.
In essence, the government has intervened by being one of the players, and a significant player at that, in its role as regulator and major supplier of land.
Krishna Ramachandra, Managing Director, Arfat Selvam Alliance LLC
THE recent measures adopted by the government are just about perfectly weighted. I say this because these measures have the clear intent of signalling to the market that a firm interventionist approach is still on hand, and yet the measures adopted are not really going to shock the market and send it into free fall.
These measures have not and will not seriously hurt the players in the property market. But what they have done is diffuse the uneasiness that surrounds the phenomenal rise in property prices. Clearly, the government has learnt from past experiences that any intervention has to be appropriate in what it intends to achieve but more importantly, the timing of such intervention is critical.
The economy is still very fragile - and still yearning for positivism - and as such, if the intervention was any harsher than what has already been instituted, it would have been an over-kill. So 'well done' to the policymakers in getting this one just right.
Jimmie Lee, Chairman, Dynaforce International Pte Ltd
AS a property owner, I would love to see prices continue to escalate (albeit in a more realistic manner). But I am also a potential buyer because property is now one of the safer investments. So as a potential buyer, I am glad to see that the government making this move. In a 'guided' economy like Singapore, it is definitely the right message at the right time. But we have also seen that it has not tamed the raging bull.
Not unexpectedly, we see the media roped in to accentuate the message. The press has listed the average loss that buyers of luxury apartments suffered. The teacher has taken out the cane and whacked it on the table. He's got our attention and we know his intentions. But like my old classmates in ACS, many will still be itching to test the limit.
R Dhinakaran, Managing Director, Jay Gee Enterprises Pte Ltd
THE high volatility and frequent swings in Singapore's property market is perhaps a combined function of its small land mass, present high liquidity in the market and rampant speculative behaviour.
While demand and supply in its own course can correct much of these anomalies in a fairly large market, the scarce land resource buoyed by speculative interests often leads to a panic situation among genuine buyers.
The recent announcement is aimed to make buyers think on their longer-term financial liabilities than to look at property as short-term investment.
While it is definitely a step in the right direction, it addresses the speculative behaviour only partially. Similar to the stock market, a more elaborate framework to desist 'insider trading' and conflict of interest would help in further limiting speculation.
Additional taxes on gains made from frequent speculative trading activities will help in curbing this behaviour to some extent.
Deb Dutta, Vice-President, Asia-Pacific, Brocade
IN the near term, these measures will cool off rising property prices. However, when the property market takes a beating, these same measures will be relaxed again to encourage existing home owners to upgrade and new owners to buy. Within a year since the financial market meltdown, this is the second time that the government has proposed mitigating measures to regulate the property market.
Increasing land supply means more property developments in the pipeline and therefore more jobs. All these are good. However, Singapore is just one small island with a finite supply of land. Land reclamation is one way to increase land area while urban renewal is another to clear out the old buildings for taller and swankier-looking high-rise residences, at the expense of heritage and nature conservation.
The government may like to take a step back and revisit the property market from both genuine home owners and investors' view points, so that a longer-term and more sustainable measure that works for both groups of buyers can be put in place.
David Low, CEO, Futuristic Store Fixtures Pte Ltd
THE recession may now be recent history but fundamentally, the world at large is still experiencing slow growth. Yet property transactions are rife and mirror that of peak times in 2007 despite a polar economic setting. This is an interesting phenomenon that seems to defy financial sense, and calls for more in-depth study.
For a start, there is an urgent need to marry market fundamentals with sentiments to moderate rife speculation which could otherwise lead to another burst property bubble or worse, will create a depression.
What the government is doing to tame investment and speculative property purchases is certainly timely. Measures such as the removal of the interest absorption scheme and interest only housing loans are certainly effective as a wake up call to mass market buyers who are hoping to make a pile from speculation that may well be beyond their financial call. This will help to moderate advanced cash spending and prevent an alarmingly high-debt society from forming.
Dora Hoan, Group CEO, Best World International Ltd
THE Singapore property sector is in the midst of a boom quite like that of 2007, when we made headlines as the world's hottest real estate market. There is a confluence of factors that has triggered the returning frenzy and I believe that many of them are positive. Singapore is recognised as the top destination in which to do business. Such a bright prospect is made even more vibrant by signs of global economic recovery, the stock market rally, the imminent completion of massive casino resorts, low interest rates and a search for more stable, alternative investments - all these contributed to encourage property buying.
While speculation is inevitable for any market, the government has done well in acting quickly to temper the heightened exuberance which may result in a speculative bubble that will be hazardous for both Singapore and the region. We do not need much memory refreshing to realise that a red hot property market can go out of bounds and mimic what happened in the United States before the sub-prime crisis. I believe however that if we remain upbeat but cautious, we can seize opportunities here in positive light.
Source: Business Times, 28 Sep 2009
Pssst, want to buy 'fraction' of a condo?
Firm marketing shares in apartments; industry watchers still wary
(SINGAPORE) A new way of selling condominium units here has emerged amid the recent resurgence in the property market.
Registered three months ago, Primespace Investments Pte Ltd is marketing 'shares' in apartments to investors with at least $62,000 to spare.
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It has two studio units available - one at One-North Residences in Buona Vista and the other at One Shenton near Raffles Place.
While Primespace says it is selling 'fractional ownership', investors will not own the properties directly. The apartments will be bought and held by other private limited companies, and what investors pay for are shares in those vehicles. BT understands investors will not lodge caveats on the properties.
Each of these companies' share capital will be split into 15 lots. An investor has to pay $62,000 for one lot in the company which owns the One-North unit, or $110,000 for one lot in the company that owns the One Shenton unit.
After the share capital is allotted to investors, Primespace will continue to manage and rent out the properties. It says it will distribute rental income to investors every year, and it is offering a guaranteed yield of 5 per cent for the first year of investment. If an apartment's value increases by 'a certain level (usually 40 per cent)', Primespace will sell it and share the profit among investors.
Investors who wish to cash out before the homes are sold can sell their shares to other people. Or they can turn to Primespace, which says on its website that it guarantees repurchase of the shares 'after a minimum commitment period (two years for most projects)... at fair market value less a re-marketing fee.'
The idea of pooling funds to invest in property is not new here - many friends and relatives already do it. But Primespace's business is uncommon in that it lets strangers invest jointly in condominium units. It works like an unlisted property trust, which is more familiar to investors in countries such as Australia.
Primespace says its model allows those who 'could not otherwise afford or choose to purchase' property to still invest in it. Property consultants BT spoke to agree this is an advantage, especially in light of the downturn. But they also point out the drawbacks of investing in such private vehicles. For instance, investors may not have much say over the management, leasing and maintenance of the apartments, and they may find it hard to trade their shares.
Market watchers also urge investors to do thorough research. 'Reputation, years of related experience and the track record of the offering company is critical,' said Cushman & Wakefield Singapore managing director Donald Han. 'Investors are depending on its capability and experience to generate maximum returns,' said Mr Han.
Primespace's website offers no details about its management. The firm is registered with the Accounting and Corporate Regulatory Authority and records show its director is Trisha Suresh, who could be 24.
The Consumers Association of Singapore (Case) executive director Seah Seng Choon said the investment model is not regulated and investors need to be cautious. For example, they should ensure that companies offering 'fractional ownership' cannot sell more than the agreed number of shares.
Chesterton Suntec International research and consultancy director Colin Tan says there are more safeguards for investors in listed real estate investment trusts. Those invested in private vehicles 'may have to resort to costly litigation if things don't pan out the way they expected,' he says.
BT contacted Primespace to find out more about its business, but the firm declined to comment.
Source: Business Times, 28 Sep 2009
(SINGAPORE) A new way of selling condominium units here has emerged amid the recent resurgence in the property market.
Registered three months ago, Primespace Investments Pte Ltd is marketing 'shares' in apartments to investors with at least $62,000 to spare.
It has two studio units available - one at One-North Residences in Buona Vista and the other at One Shenton near Raffles Place.
While Primespace says it is selling 'fractional ownership', investors will not own the properties directly. The apartments will be bought and held by other private limited companies, and what investors pay for are shares in those vehicles. BT understands investors will not lodge caveats on the properties.
Each of these companies' share capital will be split into 15 lots. An investor has to pay $62,000 for one lot in the company which owns the One-North unit, or $110,000 for one lot in the company that owns the One Shenton unit.
After the share capital is allotted to investors, Primespace will continue to manage and rent out the properties. It says it will distribute rental income to investors every year, and it is offering a guaranteed yield of 5 per cent for the first year of investment. If an apartment's value increases by 'a certain level (usually 40 per cent)', Primespace will sell it and share the profit among investors.
Investors who wish to cash out before the homes are sold can sell their shares to other people. Or they can turn to Primespace, which says on its website that it guarantees repurchase of the shares 'after a minimum commitment period (two years for most projects)... at fair market value less a re-marketing fee.'
The idea of pooling funds to invest in property is not new here - many friends and relatives already do it. But Primespace's business is uncommon in that it lets strangers invest jointly in condominium units. It works like an unlisted property trust, which is more familiar to investors in countries such as Australia.
Primespace says its model allows those who 'could not otherwise afford or choose to purchase' property to still invest in it. Property consultants BT spoke to agree this is an advantage, especially in light of the downturn. But they also point out the drawbacks of investing in such private vehicles. For instance, investors may not have much say over the management, leasing and maintenance of the apartments, and they may find it hard to trade their shares.
Market watchers also urge investors to do thorough research. 'Reputation, years of related experience and the track record of the offering company is critical,' said Cushman & Wakefield Singapore managing director Donald Han. 'Investors are depending on its capability and experience to generate maximum returns,' said Mr Han.
Primespace's website offers no details about its management. The firm is registered with the Accounting and Corporate Regulatory Authority and records show its director is Trisha Suresh, who could be 24.
The Consumers Association of Singapore (Case) executive director Seah Seng Choon said the investment model is not regulated and investors need to be cautious. For example, they should ensure that companies offering 'fractional ownership' cannot sell more than the agreed number of shares.
Chesterton Suntec International research and consultancy director Colin Tan says there are more safeguards for investors in listed real estate investment trusts. Those invested in private vehicles 'may have to resort to costly litigation if things don't pan out the way they expected,' he says.
BT contacted Primespace to find out more about its business, but the firm declined to comment.
Source: Business Times, 28 Sep 2009
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