Saturday, January 31, 2009
These date back to Singapore’s founding in 1819 and include Chinatown, Boat Quay and Little India. Most buildings are shophouses. The buildings have architectural features unique to the different races and cultures that have lived there. Some area-specific guidelines include preserving the building’s exterior and interior in their original states.
Residential historic districts
Applies to rows of terrace houses along the streets of Cairnhill and Emerald Hill. Most are people’s homes although some are commercial premises.
The guidelines have some allowances, such as permitting a rear extension, for owners who want to maximise living space.
For houses used as businesses, shopfronts cannot be a blank wall as this would be out of character. Decorative features on the facade must also be kept and restored.
Good Class Bungalow and fringe areas
Bungalows in this category include those in Nassim Road, Chatsworth Park and Mountbatten Road. They are usually in woody areas and are either one or two storeys. The architecture is a mix of Western and local building styles.
The URA specifies that the main house must be kept, although outhouses can be demolished for extensions. If it is large enough, the land can be also divided for other developments.
This covers old buildings surrounded mostly by newer developments, such as shophouses in areas like Jalan Besar, Joo Chiat, Mount Sophia and River Valley.
Here, the external facade, the original structure and defining features must remain untouched.
Owners may modify the interior to suit their needs.
Source: Straits Times - 31 Jan 2009
I refer to the letter, ‘Property Agents Mislead With Ads’ by Dr and Mrs Rupert See (Life! Jan 17).
The Institute of Estate Agents (IEA) is very much concerned with the product knowledge, skills, ethics and professionalism of estate agents.
For a better regulated industry, IEA has been advocating mandatory regulations such as pre-requisite qualifications and licensing of estate agents to ensure that they are properly trained and qualified before they are allowed to practise. Over the years, non-compulsory measures that were implemented have proven inadequate to lift industry standards.
I empathise with Dr and Mrs See regarding their unpleasant encounters with estate agents. There is no excuse for agents to act improperly, using false or inaccurate advertising to mislead their customers. Such acts betray the trust of their customers and give the other estate agents a bad name.
IEA is concerned about the unprofessional conduct of those who act as ‘runners or salesmen’. Such individuals perform a perfunctory role on behalf of others in showing the property, usually with little or no product knowledge. IEA is aware of such practices although it does not sanction this.
Mandatory regulations should be implemented to eventually license all estate agents. With proper legislation in place, every agent can then be held accountable. Service standards and professionalism will be raised and it will be good for consumers too.
President, Institute of Estate Agents
Source: Straits Times - 31 Jan 2009
Thursday, January 29, 2009
Analysts expect more ’shadow space’ ahead
Even as office rentals are tumbling fast, more space is lying idle at vacancy levels approaching those seen just before the recent boom years.
As at the end of last month, the island-wide vacancy rate of office space stood at 8.8 per cent,up from the third quarter’s rate of 8.2 per cent, according to data released last week by the Urban Redevelopment Authority (URA).
A big reason was a sudden year-end exodus: Occupied office space dropped by 34,000 sq m in the fourth quarter, an about-turn from the increase of 16,000 sq m in the previous quarter.
The negative take-up in the last quarter “effectively wiped out the take-up in the first six months of 2008″, said Mr Li Hiaw Ho, executive director of CBRE Research.
Mr Donald Han, managing director of consultancy Cushman and Wakefield, pins it down to the rocky banking sector, where financial institutions have been releasing excess space into the market. When tenants lease, or sub-let their premises, the excess space added to market supply is known as “shadow space” in industry terminology.
“In months to come, as companies downsize, we might see more supply coming from shadow space,” Mr Han told Today. “The current problem is lack of demand.”
For now, he isn’t too worried about the vacancy rates creeping up. “As long as it’s a single digit, it’s okay,” he said.
But a touch away from double digits are Category 2 office space, which refers to areas outside of the central business district and Orchard. The vacancy rate for Category 2, which accounts for about 80 per cent of all office space in Singapore, was 9.8 per cent at end-December; it was 15.1 per cent in early 2005, the year before the global economy started its three-year upswing.
Undoubtedly, the market has turned in favour of tenants. The decline in office rentals is accelerating, as they slipped 6.5 per cent in the fourth quarter from the third quarter, a quicker pace than the 0.8-per-centdecline in the preceding quarter, according to URA statistics.
But present rentals remain dramatically higher than four years ago. URA said tenants who signed their leases in the fourth quarter typically agreed to $5.94 per square foot per month (psf pm) for Category 2 office space. That is little changed from the median rentals of $6.01 psf pm and $6.43 psf pm for leases that took effect in the fourth and third quarters respectively.
It is also a far cry from Category 2’s median rental of about $3.10 psf pm for leases inked in 2005.
There is much more room to go down south. Said CBRE’s Mr Li: “The office leasing environment will be highly competitive as rents continue to fall through 2009.”
Source: Today - 29 Jan 2009
Serious house-buyers are getting the flats they want sooner because a group of ‘frivolous’ buyers, who used to clog up the queue and waste everyone’s time by rejecting flats offered to them, appear to have dropped out.
The change has followed new HDB rules introduced last May to deter time-wasters from applying for flats they are not really keen to buy.
The HDB says that since the change, the number of applications has dropped. It now gets two to three times the number of applications than flats available; previously, the number received could be 5.6 times the number of flats.
Fewer are also turning down the flats offered to them. The rejection rate used to be between 22 and 77 per cent; now it is between 14 and 50 per cent.
The changed behaviour of applicants is seen as a vindication of the HDB’s ‘two strikes and you’re out’ approach to discourage frivolous applications. People appear to be more selective when applying and more likely to say yes when offered a flat.
The rule change meant that a first-time buyer who rejects an offer to buy a flat twice or more in any HDB sales exercise, loses his first-timer priority for a year. That effectively moves him to the back of the queue with second-timers.
Mr Mark Zhou, 26, a first-time home buyer working in the financial industry, said the change made him think twice before applying. ‘I think the new rules have changed the behaviour of home buyers for the better,’ he said. ‘It makes getting a flat more efficient, and people give it more serious thought before applying.’
Chesterton Suntec International head of research and consultancy Colin Tan said the change has likely ’shortened the whole booking process’.
Property agency ERA Asia-Pacific’s associate director Eugene Lim said latest data has proved that the new rules do work. ‘Demand has stabilised due to the tweaking of rules, and also due to market sentiment. First-timers are shown to be taking their applications seriously,’ he said.
The changes have also reduced the HDB’s administrative load considerably.
Previously, a new HDB project would see many more applicants than units, but the high rejection rate would see many flats still available for sale in the end.
After the rule change, projects such as Compassvale Pearl in Sengkang last May saw no units left over.
The tougher HDB regime was put in place to allay growing concern that the thousands of applications for HDB’s build-to-order (BTO) projects bore little relation to the actual take-up rate.
Demand for new flats picked up at the end of 2007 and shot up last year after young couples priced out of the resale market swamped the HDB with applications for new homes.
Such homes are only built when a set demand level is reached, take up to three years to complete, and are typically cheaper than flats in the resale market.
Source: Straits Times - 29 Jan 2009
A $144.6 million contract for the first part of the Punggol Waterway has been awarded to Koh Brothers Building and Civil Engineering Contractor, said the Housing Board (HDB) yesterday.
The 2.4 km stretch - the entire waterway will be 4.2 km long - is expected to be completed late next year, the HDB said.
Punggol Waterway is part of the ‘Punggol 21-plus’ masterplan unveiled by Prime Minister Lee Hsien Loong in his National Day Rally speech in 2007.
The new town will boast features like a freshwater lake and a waterway running through the estate, with homes and a town centre on the banks.
The coastal suburb will also have facilities for water sports, gardens and parks with jogging tracks, and eateries for al-fresco dining, Mr Lee had said.
The Punggol Waterway, which will be connected to Sungei Punggol, will have an average depth of 4m, with its width varying from 10 to 85m.
HDB said yesterday its plans to launch the first sale site at Punggol’s Town Centre for a mixed commercial and private residential development ‘are also on track’.
The board launched more than 4,000 flats in Punggol last year. By end-2011, there will be about 23,000 completed flats in the area.
In the longer term, a further 21,000 public and private homes will be built ‘along the waterway for residents to enjoy waterfront housing’, said the HDB.
Source: Straits Times - 29 Jan 2009
Wednesday, January 28, 2009
Some developers are considering granting payment extensions to their home buyers if they face difficulty paying up when the projects get Temporary Occupation Permit (TOP), BT understands. Buyers on the deferred payment scheme (DPS) will have to pay up the chunk of the purchase price then.
Developers may give buyers a longer period to pay, or work out an instalment programme for them to complete the purchase of their units.
It is still early days but BT understands a few developers are prepared for this eventuality for projects in Sentosa and Districts 9 and 10.
A seasoned developer said: ‘I think if the buyer demonstrates good faith that he intends to pay up eventually (by committing to make regular payments), developers should try to be sympathetic. The whole idea is to get buyers to commit more than the 20 per cent they’ve paid so far under DPS. If they’re able to do this, it’s better than taking them to court.
‘There’s not much point taking financially-strapped buyers to court and suing them for specific performance to make them complete their purchase at the contracted price. The most is, we’ll make them bankrupt. It doesn’t serve our purpose.’
Some developers could already be letting buyers send in their payments late. A banker who handles property investments for overseas buyers said that in some cases developers were letting his clients send them cheques for their homes three or four months late. ‘They are not chasing them for the money,’ he said.
Frasers Centrepoint Homes chief operating officer Cheang Kok Kheong told BT the group has two residential projects for TOP in Q3 2009 - One Jervois and One St Michael’s. ‘Based on the prices at which we sold to DPS customers and the current market prices, there’s still a comfortable gap in favour of our DPS buyers. If buyers have difficulty getting loans, from an economic viewpoint, the best thing to do would be to sell their units in the market,’ he said. Frasers Centrepoint did not extend DPS to subsale buyers.
‘Generally, I think most projects that TOP this year would have been launched in 2006 or early 2007 before the market peaked, so assuming developers offered DPS to primary market buyers only, the DPS buyers should still be comfortable. Of course a lot will depend on how home prices fare this year. But DPS buyers in projects that will TOP in 2010 may face some difficulty,’ Mr Cheang added.
Analysts say not all developers may be able to help troubled buyers. If problem cases are few, developers may use existing cashflow to accommodate payment extensions. But if the incidence is widespread, developers may need the support of their own banks before they can give more breathing room to buyers.
Repayment plans will also have to be customised according to buyers’ circumstances and they’ll have to prove they’re in financial difficulty.
Developers are entitled to pocket interest on any late payments from buyers beyond a 14-day deadline, under the prescribed Sale & Purchase Agreement for private properties. The interest is calculated on a daily basis at the rate of 2 per cent above the average of the prevailing prime lending rates of the three local banks. However, a spokeswoman for the Urban Redevelopment Authority said it is up to the developer to exercise his contractual right. ‘That is, the developer may waive the interest for late payment, in full or in part, if he wishes to,’ she added.
Developers say they’ll be judicious in granting payment extensions. ‘In some cases, we’ll sue for specific performance, if the buyers aren’t in financial difficulty and are just trying to walk away from the deal,’ the seasoned developer added.
City Developments Ltd (CDL), which expects City Square Residences to obtain TOP this year, told BT that ‘to date, only a small number of DPS clients have approached us for help’.
‘While these clients have a legal obligation to fulfil the terms under the contract, for cases which are genuine, we’ve tried our best to help. We have referred to banks loyal CDL customers and those with good financial track records. We also offer other forms of assistance where appropriate on a case-by-case basis,’ a CDL spokeswoman said.
DTZ’s senior director (research) Chua Chor Hoon advises buyers facing hardship to inform developers early to try and work out some instalment schedule rather than keeping mum.
Developers are also weighing other options, including asking buyers if they’d like to exchange their units for smaller ones (if any unsold units are available) to reduce their financial commitment. Some developers are also prepared to help buyers find tenants to help them generate cashflow on their investment. Far East Organization, for example, has an in-house leasing team to find tenants for properties. The scheme was launched in 2006, and could well gain some impetus during these hard times. Other developers have been helping DPS buyers get loans by introducing them to their bankers.
Already, innovative financing schemes that mimic DPS (which was scrapped in October 2007) are aplenty as developers try to make their homes more appealing. At Roxy Homes’ Nova 88, the developer has tied up with OCBC Bank to absorb the interest rate due from buyers during the construction period. Buyers, having secured a bank loan, need not make any payment to the bank until the TOP. Then, the buyer will have to start making loan payments.
‘Buyers expect these kind of schemes now,’ said Teo Hong Lim, chief executive of listed Roxy-Pacific, the parent company of Roxy Homes. ‘Those projects that don’t offer such schemes are at a disadvantage,’ he added. A market watcher estimated that up to 90 per cent of projects launched in recent months offer some variation of this scheme.
Source: Business Times - 28 Jan 2009
Asia property stocks are definitely out of fashion in 2009, but brave contrarian investors may find dabbling in Japanese landlords or Chinese developers could pay off.
Asia property markets are slumping in the same way they did after the 1997-98 financial crisis and probably will not recover until 2010, with home prices in Singapore and Hong Kong forecast to slide 20-25 per cent this year as the global economy weakens.
But a strong rebound in property counters across the region towards the end of 2008, even as developers reported slumps in home sales, suggests investors will buy if they see deep value.
More bad economic news in Asia, such as waning exports, would spark flurries of broad market selloffs, but also give investors with longer-term investment views a chance to hunt for bargains.
‘The market’s divided on whether stock prices will make new lows in 2009, but we expect volatility to continue,’ said Adam Upton, who helps manage the JF Asia Property Fund in Hong Kong.
‘In this environment the fund will look to take advantage of near-term trading opportunities.’ The JF Asia Property Fund is keen to trade volatile Chinese property stocks, but is underweight on Australia and mostly neutral on other markets in the region.
Asian property stocks have risen more than 30 per cent from lows in late 2008. Chinese shares led the way with a 70 per cent surge after Beijing unveiled measures to aid the ailing sector, even though many analysts believe government efforts to build mass-housing will undercut listed developers.
Investment house CLSA is neutral or negative on all Asian property markets but likes Hong Kong property trust Link Reit and some property trusts in Japan, as well as office landlord NTT Urban Development Link Reit has been billed as recession-proof because many retailers in its shopping malls sell necessities ranging from rice to toothpaste, unlike swanky new malls where retailers are struggling as consumers cut spending on expensive items. Tokyo’s office market, seen by some as the last stronghold for property investors in the recession-hit economy, is expected to stay resilient because of a shortage of top-notch buildings.
Even with vacancies creeping up, rents for existing contracts will decline only slightly, and not until 2010, according to CLSA. Landlords reacted slowly to a climb in office values in the last four years and are still able to nudge rents up this year. Asian developers learnt the lessons of overbuilding in the 1997-98 crisis, and only Singapore has a large supply of new office blocks coming onto the market in the next few years.
‘We have less of an issue of supply,’ said Frankie Lee, fund manager with Henderson Global Investor in Singapore. ‘It’s all about demand and whether the growth will pick up later this year, after all the government stimulus take effect.’
Analysts warn investors to steer clear of Hong Kong and Singapore office landlords as both cities will be hit hard by the global trade slowdown and upheaval in financial markets.
Source: Business Times - 28 Jan 2009
The coast-to-coast fire sale in the US housing market appears at long last to have caught a bit of a bid.
Yes, residential real estate remains in the throes of the worst downturn since the Great Depression.
Yes, home prices are the lowest in six years and still falling. And yes, it still takes three quarters of a year to sell a house.
Nevertheless, the market may have turned a pivotal corner last month, if a surprising increase in existing home sales is any guide.
Until now, plunging home prices have been keeping many potential home buyers at bay because they were leery of buying an asset that was all but guaranteed to lose value, at least initially.
Now, though, prices appear to have fallen enough in some regions to make buying cheaper than renting, particularly in the West. And with record low mortgage rates, demand has started to rebound.
‘You can now own a home in several areas for less than it costs to rent,’ said Mollie Carmichael, senior vice-president with John Burns Real Estate Consulting, an Irvine, California-based consultant to the real estate industry.
In Southern California, home sales jumped 50.5 per cent from the year earlier as median prices fell 34.6 per cent to US$278,000 and buyers snapped up foreclosed properties, MDA DataQuick said last week.
Home prices have dropped so much in some areas of California that monthly mortgage payments on single-family detached homes are comparable to apartment rents.
Ms Carmichael said that in California’s foreclosure-plagued Inland Empire, Riverside and San Bernardino counties east of Los Angeles, the average monthly rent for an apartment is US$1,157 and the average after-tax monthly mortgage payment on a median-priced single-family detached home is US$1,154 - and is projected to decline to US$979 by mid-year.
And while distressed properties account for an abundance of sales around the country, the trend is nevertheless helping assuage one of the market’s biggest banes: a huge supply of unsold homes.
Existing home sales across the United States rose 6.5 per cent to an annual rate of 4.74 million units in December from a rate of 4.45 million in November, a National Association of Realtors report showed on Monday.
That said, in 2008, existing home sales fell 13.1 per cent to 4.91 million units - the lowest since 1997.
The median national home price fell 15.3 per cent from the year earlier to US$175,400, the largest decline since the association started keeping records in 1968 and probably the largest since the Great Depression, Lawrence Yun, its chief economist, told reporters.
‘The report confirms our forecast that sales have bottomed,’ said Celia Chen, senior director of housing economics at Moody’s Economy.com in West Chester, Pennsylvania.
‘The price discounting on foreclosures is helping draw down on inventories, particularly in the West where lower prices are helping pull in new buyers,’ she said.
The lowest mortgage rates in decades are another driver.
Interest rates on the 30-year fixed-rate mortgage averaged 5.12 per cent for the week ending Jan 22, nearly one percentage point lower than where they were in late November, according to Freddie Mac.
A week before, mortgage rates were 4.96 per cent, which was the lowest since Freddie Mac started surveying them in 1971.
The National Association of Realtors said inventory of existing homes for sale fell 11.7 per cent to 3.68 million units in December from 4.16 million in November, translating into 9.3 months of supply.
‘But, six months is the natural rate of inventories, so supply remains high,’ Moody’s Economy.com’s Ms Chen said.
‘Nevertheless, the fact that inventory is shrinking is good news,’ she said.
Source: Business Times - 28 Jan 2009
Monday, January 26, 2009
S$1 billion has been earmarked for greening Singapore’s infrastructure over the next five years.
Experts said the real challenge lies not in new developments, but in retrofitting existing buildings.
Lee Siew Eang, head, Energy Sustainability Unit, School of Design and Environment, National University of Singapore, said: “That forms approximately about 80 per cent of our existing building stocks and these lots of buildings will be operating for a long time to come, perhaps for the next 20, 30 years… we really should look into making sure that they are more energy efficient, more sustainable.”
One area to target is air conditioning systems, which consume about 60 per cent of energy in most buildings.
For buildings that are inefficient, this number can go up to 80 per cent.
A government subsidy for landlords to become more energy efficient will certainly help to reduce the nation’s carbon footprint.
Other initiatives to consider include more solar-powered public lighting, or motion sensor lights that remain off when no one is around.
But one problem that Singapore faces in the implementation of clean or renewable energy projects is the lack of local expertise.
Many of these projects currently rely on foreign consultants. But the government hopes to change that by subsidising professional conversion courses, so that a mechanical engineer retrenched in the manufacturing sector, for example, can undergo training, and then play a part in greening Singapore.
The Building and Construction Authority plans to train at least 8,000 specialists in areas like sustainable building design and energy management, over the next five years.
Source: Channel NewsAsia - 26 Jan 2009
Sunday, January 25, 2009
In every downturn, there will be some investors or speculators - made desperate by the change in market direction - who want to get out of their private home deals.
Property consultants said they have of late received calls from such buyers seeking ways to get out of their purchases. A litigator, who declined to be named, said inquiries on this matter started flowing in late last year.
The Real Estate Developers’ Association of Singapore has indeed reminded buyers that they cannot just walk away from their sales contracts and return their units.
Its honorary legal adviser Kwa Kim Li reminded buyers of that point again when she spoke at a construction and property prospects seminar earlier this month.
Try as these buyers might, if they have inked a sale and purchase agreement, they have little chance of getting out of a binding contract, property consultants and lawyers said.
Buyers who had bought on deferred payment in 2006 and 2007 in particular are having cold feet as the completion date of their developments approaches and the bulk of the payment is due.
The Government revealed late last year that there were 10,450 uncompleted private homes bought under the deferred payment scheme, which allows buyers to pay just 10 to 20 per cent up front for an uncompleted home and the rest upon completion.
Market watchers had cautioned that the already weak property market would be hit hard by potential defaults, should many buyers fail to follow through with their deals.
Whether they can or cannot do so, there are apparently a sizeable number of buyers out there who are willing to forfeit their 20 per cent deposit to get out of a long-term commitment they never planned for, particularly in Singapore’s sharpest and deepest recession, industry sources said.
‘If you are at the option stage, you can walk away.
‘But once you exercise it, you can’t walk away unless you declare yourself a bankrupt,’ said Jones Lang LaSalle head of residential Jacqueline Wong.
A purchase starts with the seller making an irrevocable offer - an Option to Purchase - to the buyer, so that he will not sell the same property within a period of usually 14 days to another buyer.
The buyer can walk away at this stage.
But after he exercises the Option to Purchase, he cannot do so as a binding contract has been created.
How the rules work…
Under Singapore’s Housing Developers Rules, a buyer who wants to walk away from or repudiate his sale and purchase agreement has to get the developer to agree to it.
‘If the purchaser fails to pay an instalment, the vendor (developer or seller) has a right to choose to annul the sale and purchase agreement or to claim against the purchaser for the unpaid instalment as a debt,’ said Ms Foo Soon Yien, director of Bernard & Rada Law Corp.
If it is the former, the vendor has the right to keep 20 per cent of the purchase price as well as the interest from all unpaid instalments, and resell the unit, she said.
If he chooses the second option, he can take legal action, obtain judgment and enforce it against the buyer to compel him to pay.
That’s not all. The buyer also has further liability to meet any price shortfall if the property is sold at a lower price, said Mr Lim Ker Sheon, a director at law firm Characterist.
While they can allow it, developers have no wish to let buyers walk away in a weak market as they would have problems selling the units they take back, experts said.
‘If a developer agrees, it will be like opening a Pandora’s box. Nobody will agree to it,’ said Ms Wong.
‘On the flip side, in a bull run, the seller or developer can’t turn around and tell the buyer to offload it back to them just because they can sell it at a higher price.’
A more likely scenario would see the developer taking the buyer to court and declaring him a bankrupt, she said.
Marco Polo Developments, now known as Wheelock Properties (Singapore), did sue those who defaulted on the progress payments for its posh Ardmore Park project due to the 1997 Asian financial crisis and win some suits.
‘Usually, the threat of a legal suit is enough to wake the buyer up,’ said Ms Wong.
Still, a number of Indonesians walked away from their purchases during the Asian financial crisis and disappeared, said an industry veteran who declined to be named.
What next for buyers?
Buyers who have difficulty paying for their purchases will have to sell the properties at a lower price.
Under genuine circumstances where the buyer wants to pay but has problems doing so, the developers may, on a case-by-case basis, offer alternative payment modes such as staggered payments or instalments, consultants said.
‘They may choose to allow the buyers a longer period to repay, with or without interest,’ said the industry veteran, adding that the critical stage where potential defaults are concerned has yet to come.
‘In every downturn, there will be people who want to walk away but can’t.’
Source: Sunday Times - 25 Jan 2009
Cash hongbao, stamp duty waivers and outright discounts of as much as 50 per cent have all been rolled out to entice home buyers.
Some agents have also resorted to tricks such as advertising an unusually low price for a unit, just to get home buyers to call.
And this could be just the tip of the iceberg, said property experts. In past recessions, developers have been known to offer free cars with certificates of entitlement, years of maintenance fee waivers and free interior decoration services.
No other sweetener interests buyers more than price discounts, according to property agents.
As buyers adopt a wait-and-see attitude towards buying property, an increasing number of developments have slashed their prices - some by as much as 50 per cent.
AG Capital’s The Aristo@Amber for example, has had its prices cut from about $1,700 per sq ft (psf) last July to $900 psf last month.
At City Square Residences in Kitchener Road by City Developments, prices have fallen from a high of over $1,000 psf last year to less than $800 psf for some units recently
Developers are also giving non-official discounts to buyers who bother to haggle.
Businessman Derrick Wong, 44, who has been shopping for an apartment, said he was offered discounts ranging from 6 to 10 per cent even before he asked.
‘These developers seem really desperate to sell. A year ago, when the property market was booming, getting a 3 per cent discount was unimaginable,’ he said.
The most common sweetener offered by property developers, it seems, is a stamp duty waiver.
Of the 10 new property developments The Sunday Times checked with, eight cited waiving stamp duty fees as a perk for buyers.
Stamp duty is a tax on commercial and legal documents that buyers have to pay. It is about 3 per cent of the transacted price of a property.
It may not sound like a lot, but stamp duty fees for a $1 million property can come up to $30,000.
Buyers can pay the amount by cash or from their Central Provident Fund monies.
Other developers are luring home seekers with cash giveaways.
Far East Organization, for example, is giving out $12,888 hongbao to the first eight buyers of the Lakeshore and Hillview Regency condominiums starting today.
Agents marketing its Waterfront Waves condominium in Bedok Reservoir also recently text-messaged their clients informing them of hongbao giveaways of up to $12,888 for those who buy now.
But developers say the hongbao are not bait.
‘The hongbao are meant to add to the good cheer of the season, rather than a sweetener per se,’ said a Far East Organization spokesman.
Still, agents are so keen to sell that some even offer to open showflats at night and during the Chinese New Year public holiday specially for busy potential buyers.
One agent who is marketing a new apartment project in the east said that he would open showflats for clients as late as 10pm.
‘Most of our clients are professionals who work until very late. Some even work on weekends. So we try to accommodate their schedules as much as we can,’ he said.
Stories of agents using dirty tricks have also surfaced.
Engineer Aloysius Tan spotted an online advertisement for a two-bedroom Bayshore apartment selling for $680,000. But when he called the agent, he was told that the price is actually $1.2 million.
The agent then tried to push to him the other apartments she was selling that fell within his $700,000 budget.
Said Mr Tan, 29: ‘I don’t understand how the agent could have got the price wrong in the ad, unless she had the intention to deceive in the first place.’
Other home shoppers say agents would entice them to visit showflats with the promise of discounts, although they would not say how much.
Said housewife Rina Mohamed, 37: ‘The agents will make us go down to the showflat and then we find out they are offering just $1,000 to $2,000 worth of discounts. What a waste of time.’
In the East Coast and Telok Kurau area, where more than 15 new residential developments will be ready in the next few years, competition is especially stiff among property agents.
Some have resorted to bad-mouthing their competitors to buyers and are all too happy to list the inferior qualities of the other developments.
Said Mrs S. Goh, 32, a teacher: ‘Sometimes, I find agents tend to focus more on the negative points of other developments instead of marketing their own projects.’
Source: Sunday Times - 25 Jan 2009
Saturday, January 24, 2009
Singapore private home prices fell 6.1 per cent in the fourth quarter as the city-state plunged into its worst ever recession, government data showed on Friday.
The drop marked the second quarterly decline in residential property prices following a 2.4 per cent fall in July-September.
The decline in prices during the fourth quarter was also steeper than the initial estimate of a 5.7 per cent drop made earlier this month.
Rents during the October-December period fell by 5.3 per cent, the Urban Redevelopment Authority (URA) said.
Singapore releases advance estimates on property prices shortly after the end of each quarter based primarily on transactions during the first 10 weeks of the period.
The government subsequently provides detailed data for the period that includes price changes by region as well as rental trends.
Singapore’s gross domestic product shrank in the fourth quarter at a deeper-than-expected seasonally adjusted rate of 16.9 per cent, the biggest fall on record, and the government said the economy may contract as much as 5 per cent this year.
Source: Business Times - 23 Jan 2009
AFTER more than four years of steady increases, rents and prices of industrial space have finally caved in to the economic slowdown, falling 3.7 per cent and 6.5 per cent respectively in Q4 2008 from Q3.
The office sector also continued to weaken, with rents and prices sliding 6.5 per cent and 4.9 per cent respectively.
Falling rents are likely to provide some comfort to companies hit by slumping demand amid the downturn. And with the government pushing out cost-cutting measures in the Budget, some property owners could pass on savings to tenants.
Q4 data from the Urban Redevelopment Authority (URA) yesterday showed the first signs of weakness in the industrial property sector, as several consultants had expected. Until then, rents and prices had been rising quarterly since Q2 2004.
‘The economic turmoil and shrinking manufacturing sector slowed the take-up rate for factories and warehouses in the fourth quarter,’ said CB Richard Ellis Research’s executive director Li Hiaw Ho.
For instance, the amount of occupied factory space jumped 175,000 square metres in Q4, but this increase was lower than the 344,000 sq m in Q3.
Still, industrial rents chalked up a 4.2 per cent increase year-on-year in 2008. Prices also rose slightly, by 1.5 per cent. Performance was buoyed by strong take-up in the first three quarters of the year.
Unsurprisingly, the office sector softened again in Q4. ‘The continued price for office space reflects limited investor interest in quality office buildings as economic sentiment remains pessimistic,’ said Knight Frank’s director of consultancy and research Nicholas Mak.
Office rents rose 5.8 per cent year-on-year in 2008, but this was disappointing compared with 2007, when they soared 56.1 per cent. Prices in the office sector fell 7 per cent in 2008, a striking turnaround from the 32.6 per cent gain in 2007.
Mr Mak expected the office market to continue to weaken this year, but said that he sees a silver lining. ‘Sombre economic conditions will encourage office space providers to be more understanding,’ he said. ‘Landlords will be more willing to retain tenants by renewing leases at lower rents, and offer more generous incentives such as longer rent-free periods.’
The Budget’s 40 per cent property tax rebate for industrial and commercial properties in 2009 could also help. ‘The government strongly urges landlords to pass on the benefits of this rebate to their tenants,’ Finance Minister Tharman Shanmugaratnam said in Thursday’s Budget statement.
To help reduce business costs, ‘we intend to pass on the property tax rebates to tenants of CapitaLand’s wholly owned commercial and industrial buildings as well as the portfolio of properties owned by CapitaCommercial Trust’, a CapitaLand spokesperson said. Similarly, ‘we will pass on the property tax rebates in full to our tenants in properties owned by CapitaLand Retail and CapitaMall Trust’.
City Developments also told BT that it is looking at various ways to pass on savings to its tenants.
Source: Business Times - 24 Jan 2009
THE public housing market - the only property segment still growing - suffered a sharp fall in transaction volume in the fourth quarter of 2008. HDB’s Resale Price Index rose just 1.4 per cent - a marked slowdown from 4.2 per cent in Q3 and 4.5 per cent in Q2.
Analysts had expected price increases to moderate because the economy was losing steam.
But what has taken some by surprise was the steep drop in transactions.
The number of resale homes sold fell 24 per cent, from 8,110 in Q3 to 6,190 in Q4 - the lowest Q4 volume ever, according to one analyst.
The poor showing meant total transaction volume for 2008 was 28,419 units - 1,926 fewer than 2007’s 29,436.
The median cash-over-valuation (COV) amount in Q4 also fell, by $4,000 to $15,000. Sales involving COV constituted 85 per cent of all resale transactions, 4 per cent fewer than in Q3.
‘ERA’s resale transaction volume for Q4 was quite stable and that led us to predict resale volume of about 30,000 units for the whole of 2008. So the overall dip certainly caught us by surprise,’ said Eugene Lim, associate director for ERA Asia Pacific. ERA says it has a 45 per cent share of the HDB resale market.
One of the main reasons for the dip could be that COV amounts have been falling. ‘The days of transactions involving more than $50,000 COV are over,’ said Mr Lim. Unusual exceptions are well-renovated flats with unobstructed, panoramic views.
With the economy likely to shrink further and more lay-offs on the way, home buyers have become sharper, analysts say.
They start by making offers below valuation, and many deals now are closed at valuation, or at most a COV of $5,000-$30,000.
Propnex chief executive Mohamed Ismail said that this is ‘indeed a buyer’s market’. The dip in 2008 transaction volume can be explained partly by the financial crash in October and partly by fewer launches, which led to fewer upgrading transactions.
Another reason for the dip could be that HDB plans to increase the supply of new flats in 2009. With this, buyers have more choice, so demand is taken away from the resale market.
Demand for public housing is still expected to grow this year, but probably not at the double-digit pace of 2007 and 2008. Mr Ismail expects the resale price index to grow 3-7 per cent in 2009, with smaller (three and four-room) flats accounting for 5-8 per cent growth and larger flats seeing slower one to 3 per cent growth.
‘If the economy doesn’t improve there will be more downgraders and increasingly cautious buyers in the wake of retrenchments and tighter budgets,’ he said. ‘But we should still see growth because demand exceeds supply.’
The public housing sector is also expected to get a boost from the Government’s Budget announcement on Thursday that it will widen the Additional CPF Housing Grant (AHG) for first-time home-buyers.
To ensure that public housing remains affordable for first-timers, the Government has decided to increase the maximum grant to $40,000, from $30,000. At the same time, the household income ceiling will be raised from $4,000 to $5,000.
An extra 2,700 first-time buyers will benefit from the enhanced AHG every year, taking the number of beneficiaries of the scheme to 8,000 a year.
Analysts reckon that this will boost demand from first-timers who look to the resale market rather than waiting for new homes to be completed by HDB.
Source: Business Times - 24 Jan 2009
DEVELOPERS appear to be turning their backs on the property market, deferring more projects as property prices keep falling.
Private residential property prices fell 4.7 per cent last year. This, after rising over 30 per cent in 2007. On a quarterly basis, prices fell 6.1 per cent.
And according to statistics from the Urban Redevelopment Authority (URA), the number of private residential homes expected to be completed between 2009 and 2011 is now also expected to be lower.
URA said that as at Q4 2008, there were 64,982 private residential units in the pipeline. Of these, about 31,000 units were expected to be completed between 2009 and 2011, lower than the pipeline supply of about 34,600 private residential units as at Q3 2008.
URA said that the decline in the pipeline supply was mainly because a number of developers had in Q4 2008, made adjustments to the expected year of completion of their private housing projects to beyond 2011.
DTZ senior director for research Chua Chor Hoon said that while developers have already been delaying completions over the last few quarters, the momentum increased in Q4 2008. She also believes that with the recent Budget announcements giving developers more leeway to delay completion of their projects, ‘there would be further adjustments to improve the supply-demand balance’.
Still, she notes that 10,448 private housing units are expected to be completed this year, which is higher than the past 10-year average of 8,700 units. ‘These projects are at the advanced stage of construction and cannot be delayed. These would add pressure on prices and rentals.’
While the property tax deferment on approved development sites is expected to cost the government $290 million over the next two years, Knight Frank director of research and development Nicholas Mak said that this will not have much impact on the supply pipeline - but only because many developers have already decided to do this. He does, however, believe that it will help developers bear the holding costs.
Barclays economist Leong Wai Ho added: ‘I don’t think these (Budget) measures per se will reverse the slide in the property market. The dominant factors in the near term are the increase in white-collar unemployment and falling household income.’
Poorer economic prospects are more likely to persuade developers to defer projects.
Already, of the 64,982 uncompleted units in the pipeline, 43,414 units were still unsold. These comprised 3,880 units that had been launched for sale by developers and 14,386 units which had the pre-requisite conditions for sale and could be launched for sale immediately. The remaining 25,148 units with planning approvals did not have the pre-requisite conditions for sale.
Prices of non-landed properties fell by 6.3 per cent in Q4 2008 compared with the decline of 2.5 per cent in the previous quarter. For the full year, prices of non-landed properties fell by 5.3 per cent.
Prices of non-landed properties in Core Central Region1 (CCR) fell by 6.5 per cent in the quarter while prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) fell by 6.2 per cent and 5.9 per cent respectively. For the whole 2008, prices of non-landed properties in CCR, RCR and OCR fell by 5.6, 4.7 and 2.9 per cent respectively.
Mr Mak said that despite the mass market sector experiencing the slightest decline in home prices, a drop in prices in OCR reflected that buying interest for mass-market private homes has waned. ‘Prices of mass-market homes were initially thought to be able to hold better than high-end private residential properties in 2008, as some buyers settle for mass-market private homes for lower-cost alternatives. However, the cautious homebuying sentiments have become so significant that some homeseekers chose to purchase HDB resale flats,’ he added.
Rental decline accelerated, easing by 5.3 per cent in Q4 2008 quarter-on-quarter. Mr Mak noted: ‘On a yearly basis, the 2 per cent growth rate in 2008, though still positive, is a far cry from the double-digit expansion observed in the last two years.’
Last year saw the total number of homes sold fall to 13,593 units, down from a record high of 40,654 units in 2007.
CBRE Research executive director Li Hiaw Ho notes that the fall in sales volume was seen in both the primary and secondary markets, with only 419 new homes, 965 resale homes and 203 sub-sales registered in the fourth quarter. ‘The decline in sales momentum was indeed significant as both home-buyers and developers retreated from the market,’ noted Mr Li.
For the whole year, the 4,264 new private homes sold was a record low, and made up only 29 per cent of the 14,811 new homes sold in 2007. Similarly, a total of 7,701 resale homes were transacted last year, compared with 20,980 sold in 2007. Sub-sales fell to 1,628 in 2008 from 4,097 in 2007.
Source: Business Times - 24 Jan 2009
NOT all their wishes for the Budget were met, but real estate developers were still glad to receive property tax rebates and other measures that would help them with project deferments in these tough times.
But even before the government stepped in, the slow property market had already forced several developers to hold back their projects. What the Budget does is to reduce the pain of doing so.
Among other measures announced on Thursday, the government gave a one-year extension of the completion period for private residential projects. It also extended from two to four years the period for developers with Qualifying Certificates to dispose of all residential units in their projects, and developers can rent out unsold units during this period.
The extended timeline creates ‘more flexibility in the way we market the property and also provides an alternative source of revenue in the interim, through rental’, said a City Developments (CDL) spokesperson. As a UBS Investment Research report also pointed out, the help ‘relieves pressure on developers who bought en bloc projects in 2006-2008 to rush to complete projects and avoid exacerbation of residential price declines’.
But even before the Budget, some property developers were already delaying their projects in the face of slumping demand and prices. According to the Urban Redevelopment Authority yesterday, private residential prices fell 6.1 per cent in Q4 2008.
For projects which have not been built, developers have another incentive to postpone them as construction costs are expected to fall further.
‘Developers have to defer (projects) whether they like it or not,’ said Thio Gim Hock, CEO and group managing director of OUE. The developer, which bought The Grangeford at Leonie Hill en bloc in 2007, has put the property back on the rental market. It is also deferring another project, the Parisian.
Large property developers have made similar plans. Keppel Land said on Wednesday that it will consider delaying the construction of some projects to save costs. CDL also said late last year that it will hold back the launch of new residential projects such as The Arte at Thomson and The Quayside Collection.
‘We will continue to monitor the market conditions closely, reassess and decide (launches) accordingly at the appropriate time,’ the CDL spokesperson told BT.
Source: Business Times - 24 Jan 2009
THE property slump gathered pace on two fronts late last year with rents moderating and private home prices registering their biggest quarterly fall in a decade.
Developers also continued to delay the completion of new flats as well as office projects as the recession tightened its grip.
Prices slumped 6.1 per cent in the last three months of last year, according to the Urban Redevelopment Authority (URA) yesterday, higher than the earlier estimate of 5.7 per cent.
The slump follows a 2.4 per cent fall in the third quarter, which was the first decline in over four years.
Private home prices - which started last year on an uptrend even as sales fell dramatically - dropped 4.7 per cent over the whole of the 12 months. It was a striking contrast to 2007 when prices surged a whopping 31.2 per cent.
The declines will likely continue this year with some consultants estimating that falls of 10 to 20 per cent are possible.
In the fourth quarter, homes in prime districts fell the most - by 6.5 per cent - while suburban home prices dropped 5.9 per cent.
The slump in suburban home prices reflects waning buying interest for mass-market property, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
This segment was initially expected to hold up better than the high-end segment last year but the mood has become so cautious that some homeseekers are buying HDB resale flats instead, he said.
Rents are feeling the pain as well. Private home rents fell 5.3 per cent in the fourth quarter after a marginal 0.9 per cent decline in the third quarter.
Non-landed homes in prime districts recorded the largest drop of 6.1 per cent with mass-market homes down 4.3 per cent. Overall, private home rents rose 2 per cent last year.
Sales are on the slide as well. A total of 7,701 resale homes were transacted last year, down from 20,980 in 2007 while sub-sales, an indicator of speculative activity, fell to 1,628 units last year, down from 4,097 in 2007.
New home sales went into freefall last year, with a record low of only 4,264 changing hands, down from 14,811 in 2007.
Price declines should be accompanied by increased buying volumes, said Chesterton Suntec International’s head of research and consultancy, Mr Colin Tan.
But one reason that is not happening now is that prices have not fallen low enough. To generate demand, the price drops have to be bigger than seen in previous downturns as this is the worst downturn ever, he said.
To add to the gloom, there is also a standstill in the investment market due to the tight credit situation facing developers. ‘Those who want to capitalise on the lower prices today still find it hard to do so,’ said a market watcher.
The two parallel markets give rise to a divergence in the price expectations of buyers and sellers, he said.
The market will take several quarters to find its new footing with at least some price convergence between buyers and sellers, he added.
This quarter is likely to be a slow period due to the cautious sentiment, poor economic conditions and interruptions by the Chinese New Year celebrations, said CBRE Research.
While the market is expected to stay tentative, the continued price falls should kick-start some sales, especially in mid-tier and mass-market projects, said its executive director, Mr Li Hiaw Ho.
There is no lack of supply, even as developers pushed back the completion of more projects to beyond 2011.
The URA now expects 7,012 private homes to be completed next year, down from an earlier estimate of 8,538. The number for 2011 has been revised to 13,686, down from a forecast of 16,145.
Meanwhile, rentals of office space, shops and industrial properties all fell in the fourth quarter, as leasing interest softened in light of the economic climate.
Further drops in rentals are expected, experts said.
Source: Straits Times - 24 Jan 2009
The amount of property tax a landlord has to pay amounts to 10 per cent of the gross rental amount they collect per year. This amount is also called the annual value of their property.
For example, if a mall’s annual value is assessed at $120,000 a year, the landlord will have to pay $12,000 in property tax a year (10 per cent of $120,000).
A 40 per cent rebate, amounting to savings of $4,800, means the landlord pays only $7,200.
The savings, of $4,800, accounts for 4 per cent of the annual value.
Source: Straits Times - 24 Jan 2009
WHEN the Government gave landlords a property tax rebate in 2003, many did not pass on the savings by reducing the rent for tenants, a post-Budget forum heard last night.
With the provision in this year’s Budget of a 40 per cent property tax rebate, what assurance do tenants have that landlords will do so this time, asked optometrist Christopher Tan.
Mr Tan, who rents a shop at The Adelphi shopping centre, raised the question at the forum, a day after Finance Minister Tharman Shanmugaratnam unveiled a $20.5 billion Budget to help Singaporeans keep jobs and ensure that viable companies can stay afloat in a downturn that is set to be deep and long.
Forum participants at The Grassroots Club in Ang Mo Kio had other concerns about how various measures could be effectively implemented.
One was worried that the needy living in larger flats may not get enough help. Another, who said that people may not spend their payouts wisely, suggested having financial literacy classes for them.
On the issue of rebates, Acting Manpower Minister Gan Kim Yong said channelling it to landlords made the scheme easier to administer.
‘The whole idea of this Package is to try to keep it simple, so that the money and help can flow through to companies as soon as possible,’ he told some 60 participants, including national servicemen, businessmen and grassroots leaders.
‘We will continue to encourage property owners to pass down (the rebate).’
Landlords who passed on the savings would also become more competitive than those who did not, he explained.
He added that tenants would in any case benefit from other measures - such as the 1 percentage point cut in the corporate tax rate, and the Jobs Credit scheme that gives bosses a cash grant for each resident worker on their Central Provident Fund payroll.
The need for simplicity and efficient implementation was also the reason why the Government linked some help measures for households to the size of their flat, he said at the forum organised by Reach, the Government’s feedback arm.
He encouraged needy families who did not qualify for more aid due to their larger flat size to see their MPs.
Reach chairman Amy Khor told participants earlier that the feedback would be useful when implementing the Budget.
The forum was one of three jointly organised with the Finance Ministry.
At one of the other sessions, Senior Minister of State (Finance) Lim Hwee Hua said the Jobs Credit scheme may not reduce the number of jobs lost. But it could slow down the pace of layoffs.
She was speaking to reporters after an online forum where participants posed questions on jobs and why the Budget’s focus seemed more on helping businesses rather than individuals.
On the question of banks not lending to companies, she said there was a need to discuss with banks whether they need to change the way they assess credit, and the credit-worthiness of companies.
Banks should think long-term and consider the kind of relationship they want to have with the companies they lend to, she added.
‘Ultimately when we recover, these are the customers that they will need to keep…Banks that stick with companies through the bad times will also be remembered by the companies in good times.
And when the companies grow they will continue to bank with them and deal with them.’
Source: Straits Times - 24 Jan 2009
Having achieved this, Singapore will have to think of ingenious ways and means to keep this a green and clean city, Minister Mentor Lee Kuan Yew said yesterday after touring the Eastern Coastal Park Connector Network.
‘It’s (about) maximising our limited land space to give the most to everybody who wants to get out of the urban jungle. So you can come here and feel that your surroundings are completely different, the ambience is different,’ he said after an hour-long tour.
‘And we’ve got to do this in many parts of Singapore in ingenious ways.’
This will make Singapore a unique city, he added.
‘There are very few cities that can set out to do this. We started out just by greening the place and keeping it clean. Then we’ve tried to beautify it. Now we’re trying to give it some flourish,’ said the architect of Singapore’s Garden City concept.
He noted that as Singapore urbanised, there were less uncultivated open spaces here. So the authorities have now been building ‘cultivated open spaces’.
An example of this is the islandwide Park Connector Network, which links up parks and nature sites to give people better access to recreation and nature.
The National Parks Board (NParks) aims to develop a 300km network by 2015.
About 105km of this has already been built. This includes the 42km Eastern Coastal stretch, completed in 2007, a portion of which MM Lee visited yesterday with Minister for National Development Mah Bow Tan.
The stretch is one of the seven similar networks being planned islandwide.
Finance Minister Tharman Shanmugaratnam said in his Budget Statement on Thursday that $1.3 billion worth of government projects would be brought forward this year. These range from HDB lift upgrading to building of park connectors and upgrading of military facilities.
An NParks spokesman told reporters yesterday that it plans to build 42km of park connectors this year - about twice its original 20km target - in the light of the economic downturn. This will cost $40 million in all.
Mr Lee yesterday also commented on the issue of littering. Asked about the prevalence of the problem, he said it remains a constant battle which will have to be tackled by engaging the public and schools, and through the media. It is also something Singaporeans have to accept, given the presence of a large foreign worker population.
‘You’ve got one million foreign workers who are not part of the community, who come in with different habits. You need them to do the jobs that Singaporeans either don’t want to do or can’t do.
You can’t say ‘You’re going to go through a training course before you start work’. So we have to put up with all these aberrations.’
Source: Straits Times - 24 Jan 2009
PRICES of Housing Board resale flats continue to defy the gloom, although the pace of increase is easing off a little.
Data from the last three months of last year show that prices inched up 1.4 per cent, following a robust surge of 4.2 per cent in the third quarter and 4.5 per cent in the second.
Valuations are still rising but not as much as before, said C&H Realty managing director Albert Lu.
HDB resale prices are supported by a relatively strong base of potential buyers, particularly for three- to four-room flats, said ERA Asia Pacific’s associate director, Mr Eugene Lim.
Experts say the impact of the gloomy economic outlook has seeped into the HDB market, reflected in the significant drop in the median cash-over-valuation portion for resale deals.
It fell from $19,000 in the third quarter to $15,000 in the fourth - a drop of 21 per cent - and back to levels last seen around the third quarter of 2007.
Demand was also down: Fourth-quarter resale deals fell 24 per cent to 6,186 transactions, while the number of resale deals for the whole year dipped 3 per cent from the figure in 2007.
Despite the relatively large fourth-quarter drop, property experts expect fairly strong demand as the continued economic slowdown will bring new buyers.
‘If the economy does not improve, there will be more downgraders and increasingly cautious home buyers in the wake of retrenchments and tighter budgeting,’ said PropNex chief executive Mohamed Ismail.
If the recession drags on, prices may fall, albeit marginally, said ERA’s Mr Lim, although C&H Realty’s Mr Lu said they could just level off.
‘This is about the peak for HDB (resale) prices, but they won’t fall immediately because there is demand and valuations are still holding,’ he said.
Median sub-let rents remained steady and owners are still keen to rent out their homes.
The total pool of HDB flats approved for sub-letting grew from 21,400 units in the third quarter to about 22,200 units in the fourth.
But demand has been hit. While sub-letting deals for the whole of last year grew by 20 per cent, the number of such deals for the fourth quarter fell 7 per cent to 3,690.
Source: Straits Times - 24 Jan 2009
The 40 per cent rebate, for owners of industrial and commercial properties, is part of the $20.5 billion Resilience Package unveiled on Thursday by Finance Minister Tharman Shanmugaratnam.
A key component of it is to help Singapore’s companies cut costs.
Government-linked CapitaLand, Singapore’s biggest landlord, was the first to announce the same day that it would pass the rebate down in full.
Australian property and financial services group Lend Lease will be doing likewise with every one of its estimated 350 tenants in Parkway Parade and PoMo, but declined to reveal how much each would receive because ‘complex calculations have yet to be made’, said a spokesman.
Mapletree, which manages VivoCity and HarbourFront Centre, will pass the rebate down too, but was unable to reveal how or how much.
Tenants in these malls are grateful, but wonder how much relief they could get from this.
According to Association of Small and Medium Enterprises president Lawrence Leow, they might expect at most a 4 per cent adjustment in rents, if landlords passed on the savings in full.
The rebate each tenant gets will also depend on factors such as demand for the shop space, when the lease was signed and the relationship between tenant and landlord. ‘It is a difficult process, and rebate amounts may even vary from tenant to tenant,’ said Mr Leow.
Feeling happier are retailers like Mr Jason Ng, who owns the Swee Heng Bakery chain, and whose landlord is the Housing Board. The government agency is one of four taking the lead in giving their tenants a 15 per cent rental rebate from Jan 1 to Dec 31 this year. The others are JTC Corporation, the Singapore Land Authority and the National Environment Agency.
The 34-year-old entrepreneur, who rents 12 shop spaces from the Housing Board, will save more than $150,000 this year because of it.
‘It is the right thing at the right time,’ said Mr Ng. ‘Now, let us just hope private landlords follow suit.’
Private landlords have not yet said if they will give other concessions on rent, so for now, shopkeepers are just taking what they can get.
Small businesses are feeling the squeeze of high non-negotiable rental contracts signed in good times on one hand and falling sales on the other.
Figures from the Ministry of Finance show more than 130 businesses closed down last year, nearly a 25 per cent jump over 2007.
The owner of Leather Ark in Parkway Parade, Ms Jean Yeo, said: ‘We have not received news from our landlord yet, but we are happy that they are doing this. It will be a relief in these bad times.’
Mr Charles Wong, owner of Charles & Keith, hopes the rebates would be fairly distributed and done fast. ‘We can then immediately plough it back to help us train staff and prepare for the recovery of the economy,’ he said.
The Singapore Retailer Association hopes that more landlords will respond this time around.
The association’s executive director, Ms Lau Chuen Wei, recalls that in 2003, $64 million worth of property tax rebates were handed out to commercial property owners, as part of the Sars relief package, but only a handful passed it on to a few retailers.
One example was Lend Lease, which gave 50 per cent of its rebate to tenants, and ploughed the other 50 into advertising and promotions.
Retailers like Mr Wong remember the disappointment.
The 35-year-old owner of a successful local brand said he ‘hardly benefited’ from the rebate in 2003, something that he hopes will change this time.
Source: Straits Times - 24 Jan 2009
Surprise drop of 24% inQ4 volume, but analysts say HDB demand intact
IT WAS a drop that caught most analysts by surprise - raising fears of a demand downtrend amid a souring economy, even in the traditionally resilient public housing market.
After a strong showing in the first three quarters, the number of Housing and Development Board (HDB) resale flat transactions plunged 24 per cent in the last quarter of 2008 to 6,186. That brought the total transaction volume last year to 28,419 - or 3 per cent lower than in 2007.
Prices, on the other hand, have continued to climb, but at a much slower pace. The HDB resale price index rose 1.4 per cent in the fourth quarter, down from 4.2 per cent in the third quarter.
The widening gap in price expectations between buyers and sellers in a weakening market is one of the reasons for the decline in volume, said ERA’s Asia Pacific associate director Eugene Lim, who noted the longer time needed to negotiate a deal.
“Opportunistic buyers would offer below valuation … while sellers still want to have as high a cash-over-valuation (COV) as possible. So the haggling will take time,” he said.
Already, the overall median COV values have decreased about $4,000 - or about21 per cent - to $15,000 in the fourth quarter. In fact, going by HDB statistics, a buyer of a five-room flat in Ang Mo Kio would only need to pay a median COV of $7,000 in the last three months, compared to $20,000 in the previous quarter.
But Ms Carol Loo, a 26-year-old prospective buyer, is biding her time and hoping for a good bargain. The insurance agent, who is getting married in August and plans to buy a resale flat in June, is confident that prices will drop further.
“Already, some agents are willing to drop the COV. A lot of people are affected by the economic crisis. Some owners will find that they can’t finance their mortgages and … need to get it off their plate really soon. When it’s a fire sale, they are usually willing to go down below valuation,” said Ms Loo, who is looking for a flat in Pasir Ris.
Another reason for the low volume, said PropNex chief executive Mohamed Ismail, could be the lack of units put on the market by HDB upgraders due to the dearth of private condo launches in the fourth quarter.
While analysts say the fallout from the global financial crisis and economic downturn hurt buying sentiment in the fourth quarter, many think the HDB market will be largely resilient.
“HDB is the most affordable housing, so the base is there. It’s just a difference in expectations, that’s why sales have slowed. But support in terms of buyer interest is still there,” said ERA’s Mr Lim.
In fact, Dennis Wee Group’s vice-president, Mr Chris Koh, said the expected deterioration in economic conditions could ironically spur demand for HDB flats from private condo downgraders.
The Government’s move to increase the additional CPF housing grant for first-time HDB buyers to $40,000 from $30,000 in tandem with the raised household income ceiling to $5,000 from $4,000 will encourage low to middle-income young couples to buy their first flat through the resale market as well, said Mr Ismail.
Source: Today - 24 Jan 2009
To help developers improve their cash flow and give them more flexibility to plan their projects, the Ministry of National Development will allow developers of uncompleted Government residential sale sites to apply for a one-year extension of the completion period without having to pay an extension premium. But this only applies if none of the residential units in the project has been sold.
For projects in which homes have been sold, the extension will only be allowed up to the date of delivery of the sold units as stipulated in the sales agreement signed between the developer and the purchasers.
The Budget measure was announced just a day before the Urban Redevelopment Authority (URA) reported private home prices falling by the most a decade as they slipped 6.1 per cent in the fourth quarter last year.
This was much worse than the 5.7 per cent decline in the URA’s flash estimates and down from a 2.4 per cent decline in the third quarter. For the whole of last year, prices fell 4.7 per cent, compared to the 31.2-per-cent rise in 2007.
Rents for private homes also retreated along with home prices, declining 5.3 per cent in the fourth quarter, extending the 0.9-per-cent fall in the previous three months.
The URA data also showed there were 64,982 uncompleted units of private homes at the end of December, of which 31,004 units are expected to be completed between 2009 and 2011. Of the total, 43,414 or a hefty 66.8 per cent remained unsold, suggesting prices are likely to fall much further in the coming months.
Amid the gloomy prospects for the property market, analysts told Today developers - especially the larger ones - are likely to apply for the extension so that they can price their projects better at a later time.
City Developments (CDL), one of Singapore’s largest developers, welcomed the move. “The extended timeline gives us more flexibility in the way we market the property. We will certainly explore how best to utilize these measures in relation to the market conditions where necessary,” said a CDL spokesperson.
While prospects are bleak in the year ahead, Mr Li Hiaw Ho, executive director of property consultancy CBRE says the continued moderation of prices will kick-start the market, especially in the mid-tier and mass-market projects.
Saying that home prices are likely to see a further correction of 10 to 15 per cent this year, Mr Li added: “We believe sales momentum will pick up gradually from the second quarter onwards so that the total number of new homes transacted this year should be higher than the 4,264 units chalked up last year, at around 5,000 to 6,000 units.”
Source: Today - 24 Jan 2009
But Minister Mentor Lee Kuan Yew, who said on Friday that the evolution of green spaces here was “not bad”, believes the lessons learnt from building HDB flats could in a way be instructive for the Republic’s greening efforts.
In a word, variety. “We need some variations because in many of the open spaces now, you see the same pattern of vegetation. So we need to involve different shapes, sizes - give it some variety,” he said.
“Just like HDB houses ˜ they used to be all uniform, but as we progressed, we got them to design it differently. So we’re learning all the time and improving.”
Mr Lee spoke of the need to keep improving parks and outdoor recreation following a tour of the Eastern Coastal Park Connector Network.
In fact, it would require nothing less than ingenious green spaces across the island if Singapore is to be a unique city, he told reporters.
The Active, Beautiful and Clean Waters Programme and park connectors are some examples of “maximising our limited land space to give the most to everybody who wants to get out of the urban jungle”.
“Now we’re trying to give (Singapore) some flourish,” he said.
On Friday, the National Parks Board (NParks) announced that it will be accelerating the construction of its park connectors in light of the economic downturn.
It will build 42km of park connectors this year - double its target of 20km per year - more than 80 per cent of which will be for the western and northern loop of the island. With the acceleration, the western loop is targeted to be completed by the end of the year, and the northern loop in mid-2010.
Source: Today - 24 Jan 2009
Friday, January 23, 2009
Market-watchers have welcomed Budget measures, announced by Finance Minister Tharman Shanmugaratnam on Thursday, which are aimed at helping Singapore property developers through the current downturn.
While analysts had already expected the government to unveil help for the depressed property market, they noted on Friday that some of the moves are particularly creative.
These measures include allowing developers to rent out unsold units and deferring property tax for land approved for development. This deferment allows developers to hold back projects, easing near-term supply in the weak market.
Brandon Lee, investment analyst, DMG & Partners, said: “It’s a positive thing for the medium to long-term growth of Singapore’s property sector. If you look at these measures, a lot are pro-developer.
“It shows the government is giving a very definitive stance to help the developers tide through this tough period, while at the same time re-tweaking the demand-supply disequilibrium right now.”
On the flip side, some analysts said few measures actually benefit home buyers.
Nicholas Mak, director, Consultancy and Research, Knight Frank, said: “In the previous downturns, one of the measures announced was the deferment of stamp duty. That will lower the cost and demand for cash for home buyers.”
Demand-side concerns extend beyond the property market itself. For example, people are unlikely to buy a home when job security is an issue.
The government expects unemployment to increase this year due to the severe global economic downturn.
Source: Channel NewsAsia - 23 Jan 2009
Rentals of office space fell 6.5 per cent in Q4 2008, data released by the Urban Redevelopment Authority (URA) on Friday showed.
But for the whole of 2008, rents for office properties still rose by 5.8 per cent, lower than the 56.1 per cent increase in 2007.
The median rental for ‘Category 1′ office space, based on leases which had commenced, was S$13.00 per square foot per month (psf pm) in fourth quarter of 2008, lower than the median rental of S$13.57 psf pm in third quarter 2008.
Category 1 office space refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area.
URA’s data also showed that prices of office properties fell 4.9 per cent in Q4. For the whole of 2008, prices of office properties fell 7.0 per cent.
As at the end of Q4 2008, there was a total supply of about 1.39 million sq m gross floor area of office space in the pipeline, URA said.
Source: Business Times - 23 Jan 2009
Resale transactions decreased by about 24 per cent, from about 8,110 cases in third quarter of 2008 to about 6,190 cases in fourth quarter. The total number of resale transactions for 2008 was 28,419, about 3 per cent lower than in 2007.
The median cash-over-valuation (COV) amount among all resale transactions conducted in Q4 2008 was $15,000 - which was $4,000 lower than that in Q3.
Cases requiring COV constituted 85 per cent of all resale transactions in fourth Quarter 2008, 4 per cent lesser than that in the third quarter.
Source: Business Times - 23 Jan 2009
Private home prices fell 6.1 per cent in the fourth quarter of 2008, bringing the full-year price drop to 4.7 per cent.
The decrease is the second quarterly decline in private residential property prices following the 2.4 per cent fall in Q3.
The latest decline, announced the Urban Redevelopment Authority (URA) on Friday, is worse than expected. Initial estimates earlier this month forecast a drop of a 5.7 per cent.
The URA also said that private home rents in the fourth quarter slipped 5.3 per cent. But for the whole of 2008, private residential rents still rose 2.0 per cent.
As with previous quarter, homes prices in Singapore’s prime districts were hit the hardest. Prices of non-landed properties in Singapore’s Core Central Region (CCR) fell by 6.5 per cent in Q4 - the largest fall among the three regions URA tracks. Prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) fell by a slightly smaller 6.2 per cent and 5.9 per cent respectively.
For the year 2008 as a whole, prices of non-landed properties in CCR, RCR and OCR fell by 5.6 per cent, 4.7 per cent and 2.9 per cent respectively.
Source: Business Times - 23 Jan 2009
The economic downturn is hitting home, with private residential prices recording their steepest drop in a decade.
Private home prices fell by 6.1 per cent in the fourth quarter of 2008, worse than an early estimate of a 5.7 per cent drop.
The quarter-on-quarter decline in the October to December period follows a 2.4 per cent drop in the third quarter ended September.
Strong demand pushed up private home prices by about 31 per cent in 2007. But the picture changed very quickly in just one year.
In 2008, overall prices of private residential properties fell by 4.7 per cent, hurt by the global slowdown. Market watchers said they expect to see more downside.
Karamjit Singh, managing director of Credo Real Estate, said: “I expect the decline to accelerate, going forward, as the full effect of the meltdown that took place in the fourth quarter is being felt by the market. Q1 (2009) and Q2 would definitely be negative. In fact, I won’t be surprised if prices will reflect declines by more than 6.1 per cent.”
Donald Han, managing director of Cushman & Wakefield, said: “We think, probably, Q1 will be worse than Q4, mainly because we are at the epicentre of the economic downturn. We expect home buying mood to also descend from here… probably anything from 6 per cent to 7.5 per cent for Q1 and the same number for second quarter.”
Prices of homes in prime areas continued to slip faster than those in the mid-tier and mass market segments in the fourth quarter of 2008. They fell 6.5 per cent, compared with the 6.2 per cent drop for the mid-tier and the 5.9 per cent decline for the mass market segments.
It is unclear how long and how deep the recession will be, but some market players are already expecting the potential fall in private home prices to be comparable to levels seen during the Asian financial crisis when prices dropped by 42 per cent over two years.
Sales of private homes also declined in the fourth quarter. There were only 407 transactions, about 72 per cent lower than in the third quarter.
Despite the gloomy economic outlook, property analysts believe sales momentum will pick up towards the second half of the year. They expect 5,000 to 6,000 units to be sold in 2009, higher than the 4,264 transacted last year.
According to the Urban Redevelopment Authority, 706 uncompleted units were launched for sale by developers in the fourth quarter, down from 2,244 units in the previous three months.
Many developers have delayed projects as demand and prices head south. Analysts say that in total, about 10,000 units have to be deferred, easing concerns of an oversupply in the private residential market.
The frail market sentiment also impacted the private home rental market, which saw a 5.3 per cent drop in rentals in the fourth quarter.
Meanwhile, public housing prices remained more resilient. HDB resale flat prices in the fourth quarter rose by 1.4 per cent, albeit lower than the 4.2 per cent increase recorded in the third quarter.
But transactions fell by 24 per cent to about 6,190 units, while the median cash-over-valuation amount dropped by S$4,000 to S$15,000 in the fourth quarter. Property analysts expect the downtrend to continue.
Donald Han said: “You will have the (resale flat prices) beginning to taper off after a very strong 14 per cent last year. We probably expect the HDB prices to remain flat for the first half, before you see a slight dip towards the second half of 2009.”
Source: Channel NewsAsia - 23 Jan 2009