Tuesday, March 31, 2009

Far East sells 97 units of Mi Casa over past week

(SINGAPORE) Here's yet more evidence that there's still demand for attractively priced condos in the mass-market segment. Property tycoon Ng Teng Fong's Far East Organization has sold 97 units at its Mi Casa condo near Choa Chu Kang MRT Station since it began sales last week.

Mi Casa: Located near Choa Chu Kang MRT Station, the 457-unit 99-year leasehold condo has an average price of $625 psf. Buyers who wish to opt for an interest absorption scheme will have to pay 3% more

The 99-year leasehold condo has an average price of $625 per square foot. Buyers who wish to opt for an interest absorption scheme will have to pay 3 per cent more.

The 457-unit condo is being developed on a plot along Choa Chu Kang Drive which is diagonally opposite Lot One mall.

In a news release last night, Far East said Mi Casa is the first new private condo project in the Choa Chu Kang town centre in eight years and offers an 'attractive value proposition' to HDB upgraders and private home owners in the area.

Upgraders accounted for 80 per cent of Mi Casa's buyers. A number of buyers also own landed homes in the area and bought units at Mi Casa for investment and for their children, according to Far East. Mi Casa also drew some foreign buyers (such as China nationals and Malaysians).

Far East Organization unit Tian Hock Properties bought the Mi Casa site at a state tender in May last year for $116.01 million or $203 per square foot per plot ratio.

Over at the Balestier Road area, City Developments is understood to have sold another 30 units between Friday and Sunday at The Arte at Thomson freehold condo.

This brings total sales in the project to nearly 90 units. The 336-unit project, which will comprise two 36-storey blocks, is being offered at an average sellling price of about $880-890 psf.

At Somerville Road, boutique developer HLH Group has sold eight of the total 25 units at its D'Almira condo since it began previews three weeks ago.

The average price of the five-storey freehold apartment development is about $750 psf, says ERA divisional director Andrew Soh, who is marketing the project.

HLH is not offering any interest absorption scheme; buyers will have to make normal progress payments on their units when they are billed by the developer, in accordance with the stage of construction.

In the River Valley area, Fortune group sold another five units last week at The Mercury in Shanghai Road. The average price for the freehold project is '$1,200 psf plus', according to Fortune Development general manager Victor Soh.

Interest absorption scheme is available to buyers in exchange for a 3 per cent premium. To date, 64 of the total 67 units in the project have been sold.

Source: Business Times, 31 Mar 2009

New risks emerge for property companies

Credit crunch, price uncertainty affecting firms, says E&Y

(SINGAPORE) Real estate companies face new and growing risks amid the downturn in the world economy, says Ernst & Young (E&Y).

'The credit crunch, fluctuations in global economies and resultant pricing uncertainty are affecting real estate companies globally, including those in Singapore,' says E&Y Singapore's assurance partner and market leader for real estate Liew Choon Wai.

Many local developers have overseas portfolios, including in emerging markets, and a major concern is the economic vulnerability of these markets and possible changes to local regulations as a result, he says.

Another source of potential concern is the real estate investment trust (Reit) sector. 'Should the economic downturn be prolonged or worsen, we expect some form of consolidation in this sector, especially with its refinancing needs and the continuing pressure on rents.'

As for residential property, E&Y continues to see a 'rebalancing of selling prices and judicious timing of property launches', Mr Liew says.

E&Y's 2009 real estate business risk report itemises the top 10 risks faced by the industry as ranked by leading analysts.

The greatest concern is continued uncertainty and the impact of the credit crunch. As E&Y points out, the real estate sector has felt tighter credit conditions perhaps more than any other industry.

Restrictions on availability of credit and the short-term inability to deploy capital at acceptable levels of return have 'paralysed' the industry's transactions sector, says E&Y's global infrastructure and construction leader Michael Lucki.

'The only lending today is on deals with 50 per cent loan to value and at rates 200 to 400 basis points higher than six months ago, whereas towards the end of 2007 most loans were at 80-90 per cent loan to value,' he says.

But some lenders may be on the lookout to move real estate related assets off their books fast, paving the way for forward-thinking companies to develop strategies to take advantage of distressed assets and debt situations.

Besides volatility and a lack of credit, other risks for the real estate sector seen by E&Y are: the impact of ageing or inadequate infrastructure; the worldwide war for talent; changing
demographics; the inability to find and exploit global and non-traditional opportunities; pricing uncertainty; the green revolution, sustainability and climate change; and volatile energy costs.

Still, E&Y's global and Americas real estate leader Howard Roth still believes there is a lot of capital on the sidelines waiting to take advantage of distressed real estate opportunities when the time is right.

'A structured, comprehensive due diligence programme will be more important than ever as buyers and sellers evaluate their opportunities,' he says.

Source: Straits Times, 31 Mar 2009

Office location here is 10th most costly

S'pore's total annual occupancy cost per workstation stands at US$16,540: DTZ

(SINGAPORE) Total annual occupancy cost per workstation in Singapore slipped 3 per cent year-on-year to US$16,540 in the latest 2009 global ranking by DTZ.

This was due entirely to a decline in office rents. 'Prime office rents in Raffles Place fell 15.8 per cent in Q4 2008, resulting in a drop of 3 per cent for the whole of 2008,' DTZ Singapore senior director Chua Chor Hoon said.

The latest ranking placed the Republic as the 10th most expensive location out of 114 districts worldwide covered in the latest 2009 survey, which compared the total occupancy cost per workstation measured in US dollars as at end-2008. Singapore was seventh in the 2008 survey, which was based on end-2007 figures.
Tokyo (Central 5 wards) and London (West End) traded places. The former, which had been in fifth position in 2008, is now the most expensive location, while London's West End, which had been the most expensive office market since 2001 when DTZ first compiled the rankings, was in fifth spot in the 2009 survey.

'Due to the strong appreciation of the Japanese yen and increase in space utilisation standard per workstation, Tokyo (Central 5 Wards) occupancy costs per workstation grew 26 per cent year-on-year despite weakening occupier demand in the second half of 2008. Similar trends were noted in Hong Kong and Singapore, where occupancy costs started trending down towards the fourth quarter of 2008,' DTZ said in its report.

Total annual occupancy cost per workstation for Tokyo (Central 5 Wards) rose 26.1 per cent to US$22,820 in the 2009 survey. Paris, the second most expensive location in the latest survey, saw a 0.4 per cent decline to US$22,300. The cost for Hong Kong slipped 13.3 per cent to US$21,930, placing it in third position, followed by Dubai, with total occupancy cost per workstation of US$21,620 per annum.

DTZ defines total occupancy cost as the average total cost of leasing prime net usable space. This includes rents and outgoings such as maintenance costs and property tax, if these are normally payable by the occupier, but excludes rent-free periods, fitting-out costs and other leasing incentives.

The property consulting group's analysis of office occupancy costs is based on the space allocated to each office-based employee across 114 business districts worldwide.

As space utilisation standards per workstation differ in each business district due to local practices and culture, a comparison of the office occupancy costs based on the amount of space allocated to each employee gives a better comparison of the total costs of office occupation. The space takes into account not only the direct area used for a desk-station or a cubicle, but also common areas which the tenant/occupier has exclusive use over.

In terms of rents and other outgoings per square foot, Moscow, Hong Kong and London (West End) were the top three most expensive office locations in the 2009 survey. However, due to a higher space utilisation standard per workstation, Tokyo (Central 5 wards) was the world's most expensive office location on a cost per workstation basis. Its space utilisation per workstation was 144 square feet compared to Moscow (84 sq ft), Hong Kong (118 sq ft) and London's West End (118 sq ft).

The firm noted that apart from local market dynamics of supply and demand, as well as changes in space utilisation standards per workstation, occupancy costs of the business districts studied were also significantly affected by the volatile fluctuations in local currency values against the US dollar, the base currency used in the ranking.

DTZ observed a slight decline in the average space utilisation standard per workstation worldwide to 146 sq ft over the course of 2008. 'Going forward, space utilisation standards across most regions are likely to decline as companies focus on space optimisation and cost reduction measures. These include flexible work practices like hot-desking and teleworking, thereby utilising existing space more efficiently to avoid taking on more space or to consolidate and free up space for sub-leasing,' it added.

Looking ahead, the report said that amid the uncertainty of a long global economic downturn and further contraction in occupier demand, occupancy costs are expected to decline in many business districts. 'Prospects of an impending supply glut in some markets and the wider adoption of flexible work practices leading to reduced space consumption will also be factors helping to drive occupancy costs down, especially across Europe and Asia-Pacific,' DTZ said. It said that occupancy costs are expected to fall in 2009 for 78 per cent of the 114 business districts studied globally. 'Only 3 per cent of all business districts surveyed expect a slight increase in occupancy costs, with the remaining 19 per cent expecting occupancy costs to remain stable.'

In Asia-Pacific, 76 per cent of the markets surveyed foresee office occupancy costs to decline while 24 per cent predict occupancy costs will remain stable over the year.

Source: Business Times, 31 Mar 2009

John Hancock Tower may be sold for half its 2006 price

Boston skyscraper goes on the block today; it was bought for US$1.3b in 2006
(SEATTLE) Boston's John Hancock Tower, the tallest skyscraper in New England, may be sold to lenders led by Normandy Real Estate Partners for about half the US$1.3 billion paid in 2006 by Broadway Partners, which defaulted on its loan.

The John Hancock Tower: Probably worth less than US$750 million, according to a New York-based real estate research firm

The building goes on the block today in New York under state rules that govern mezzanine loan foreclosures. Mezzanine loans are intended to fill the gap between a first mortgage and the borrower's cash down payment.

While mezzanine lenders seeking to foreclose must hold an auction of ownership interests, they start out ahead of other bidders because they are credited the unpaid balance of their loan as part of their bid. Normandy controls about US$472 million of loans on the Hancock Tower, according to people familiar with the financing who asked to remain anonymous.

'By the time the process gets to a public auction, the most likely winner will be the senior-most foreclosing mezzanine lender,' said David Furman, a partner at law firm Gibson Dunn & Crutcher. 'It is allowed to credit bid the amount of its loan; therefore, it can usually outbid everyone else.'

Normandy, based in Morristown, New Jersey, was founded in 2002 by Finn Wentworth and David Welsh, who worked together at Gale & Wentworth, a real estate investment and development firm.
A spokesman for Normandy said the firm does not comment on 'transactions in process'.

Spokesmen for Broadway and Green Loan Services LLC, the unit of SL Green Realty Corp hired by the mezzanine lenders to oversee the loan workout, declined to comment.

The Hancock Tower, at 200 Clarendon Street in Boston's Back Bay neighbourhood, is probably worth less than US$750 million, according to Reis Inc, a New York-based real estate research firm.
Occupancy and rents have fallen since Broadway bought the 1.76 million square foot building in December 2006, said Reis.

The auction might help reveal how far commercial property prices have fallen. 'This sale will be a test of where values are in the office market,' said Michael Knott, a senior analyst at real estate research firm Green Street Advisors Inc.

Mr Knott said Normandy's desire to salvage its investment might lead to a higher bid than what a new buyer would be willing to pay. 'This is one of the most recognisable buildings in one of the leading markets in the country,' he said.

Also included in today's auction are the eight-storey garage at 100 Clarendon Street adjacent to the Hancock Tower and 10 Universal City Plaza, a 35-storey building in Los Angeles's San Fernando Valley that's located next to the Universal Studios Hollywood theme park.

After Broadway defaulted on mezzanine loans secured by stakes in both properties in January, the mezzanine lenders hired Green Loan Services to oversee the workout and Green hired property broker Eastdil Secured LLC to conduct today's auction.

It wasn't supposed to end this way.

The Hancock Tower, a 60-storey glass building designed in the 1970s by architects IM Pei and Henry Cobb, was the crown jewel in Broadway's US$3.3 billion purchase of 10 buildings from Boston-based Beacon Capital Partners LLC in December 2006. Broadway has acquired US$15
billion of office buildings since it was founded in 2000 by chief executive Scott Lawlor.

When Broadway bought the Hancock Tower, debt financing was readily available and office landlords were increasing rents and filling all the available space. The Hancock building was about 99 per cent occupied when Broadway bought it. At the time, some buyers even counted impending vacancies as a plus because it meant they might be able to charge higher rents when they signed new tenants or renewed leases.

Broadway's stakes in the Hancock Tower and 10 Universal City Plaza are part of the collateral for US$723.8 million in mezzanine debt originally underwritten by Greenwich Capital, a unit of Royal Bank of Scotland Group, and Lehman Brothers Holdings.

The Hancock Tower also has a first mortgage with an original face amount of US$640.5 million and 10 UCP has a first mortgage with an original face amount of US$294.8 million.

Unlike a mortgage, where the bank has a lien on the actual property, a mezzanine loan is secured by a pledge of equity ownership in the borrowing entity, usually a limited liability company; that pledge is akin to an indirect claim on the building.

Mezzanine loans also tend to have shorter terms than first mortgages.

Things went awry for Broadway soon after the purchase. The US real estate market peaked in early 2007 and lending dried up as defaults in the residential sub-prime mortgage market spread to commercial real estate.

When the US$723.8 million of mezzanine loans came due in January last year, Broadway paid a fee to extend the repayment deadline. As the credit crisis deepened, the firm put assets up for sale to raise cash and cut jobs.

By the time the last extensions expired in January this year, the firm had nowhere to look for refinancing because loss-ridden banks had stopped making loans pending a federal bailout of the financial services industry. Broadway defaulted on the mezzanine loans, paving the way for today's foreclosure auction. - Bloomberg

Source: Business Times, 31 Mar 2009

Private residential properties see sharp fall in rentals in Q1

SINGAPORE: Private residential properties in Singapore saw a sharp fall in rentals and a slight price decline in the first quarter of 2009.

Real estate consultancy firm DTZ in its report on Tuesday said monthly rentals of luxurious homes slid 18.8 per cent to S$5.20 per square foot, a level not seen since the third quarter of 2006.

Rent of units in prime districts also saw a drop, down 16.2 per cent to S$3.65 per square foot per month.

The decline was largely due to corporate downsizing and increased supply from newly completed projects.

DTZ's findings showed that some 10,122 private residential units were completed in 2008, about 17 per cent more than the annual average of 8,671 units recorded in the past 10 years.

Meanwhile, prices of private homes fell at a slower pace in the first quarter of 2009.

DTZ said prices of freehold private apartments in the prime districts of nine, 10 and 11 dipped by 3.7 per cent to S$1,120 per square feet, compared with the 14 per cent drop in the previous quarter.

Luxurious home prices declined 3.6 per cent after a 22 per cent plunge in the fourth quarter of 2008.

But despite the gloomy economic conditions and job losses, DTZ said response to the two new launches in February created a stir in the property market.

Overwhelming take up rate for Caspian and Alexis also prompted other developers to bring forward new launches and relaunched projects at lower prices. Units in the mid-tier and mass market segments went for under S$1,000 per square foot or about S$1 million per unit.

In all, some 1,323 private homes were sold in February, the highest since August 2007 when 1,731 units changed hands.

Source: Channel News Asia, 31 Mar 2009

Upgraders snap up Mi Casa condo units

BUYERS snapped up 97 units during a private preview at a Choa Chu Kang condominium, yet another sign that suburban projects are selling well with upgraders.

These sales at Mi Casa, Far East Organization's new development in the Choa Chu Kang town centre, comprise almost 80 per cent of the 123 units released.

Mi Casa has a total of 457 units in the estate.

Prices started at $580 per sq ft (psf). The average price achieved was $625 psf.

Two-bedroom units, with sizes that start at 990 sq ft, and three-bedders, sized from 1,259 sq ft, were sold.

Some also have an extra study unit. That brings the two bedders up to 1,119 sq ft and the three-bedroom flats to 1,281 sq ft.

The four-bedroom units have yet to be launched.

Buyers at the preview were mostly entrepreneurs and professionals, including teachers and engineers, said the private developer in a statement last night.

About 80 per cent of the buyers were 'upgraders' living in the surrounding vicinity and nearby areas such as Yew Tee, Bukit Batok and Teck Whye.

Foreign buyers, including Chinese and Malaysian nationals, accounted for about 12 per cent of sales.

Mi Casa - Spanish for 'my home' - is the first new private condo project built in the town centre in eight years since The Warren condo, which was launched in 2001.

The site for Mi Casa was acquired by Far East in May last year.

It is within walking distance of the train station, bus interchange, community library and the Lot 1 Shoppers' Mall.

Far East's chief operating officer for property sales, Mr Chia Boon Kuah, sees a healthy demand for new condos in that area.

'We are delighted with the preview sales so far,' he said in a statement yesterday.

'Currently, there are no new sites available in the Choa Chu Kang town centre in the government land sales programme.'

This makes Mi Casa 'an attractive value proposition to HDB upgraders and private-residence owners in the neighbourhood', he added.

Buyers enjoy an early bird discount until the condo's official launch on April 10.

The suburban market showed some real signs of life last month when more than 300 units at Frasers Centrepoint's Caspian condo in Jurong were snapped up within three days.

More than 70 per cent of its 712 units have been sold since.

Source: Straits Times, 31 Mar 2009

Top-end hotel opens on Sentosa

THE ultra-luxurious Capella Singapore on Sentosa opened its doors yesterday.

With room rates starting at $750 a night, it is the only top-end hotel to open here this year.

Despite the poor economic conditions and global paring down of travel budgets, the hotel's general manager, Mr Michael Luible, expressed optimism that it would do well because it was a 'unique product'.

He said the hotel would run on the philosophy that whatever guests want, they will get. For example, they can check in whenever they want.

This week, the Capella will be where British carmaker Rolls-Royce launches its new model 200EX; fashion house Gucci will also flaunt its spring collection there.

The 111-room hotel sits on a site more than 12ha in size. It has 61 'standard' rooms and 11 suites, and each of its 38 villas has its own swimming pool.

A standard room, at $750 a night, is 77 sq m in size - almost twice the size of an average 40 sq m hotel room here.

The private villas, starting at about $1,800, offer at least 133 sq m of space.

The property is the first for the luxury brand in Asia and will be its flagship in the region, said Mr Horst Schulze, the chairman and chief executive officer of the West Paces Hotel Group, the parent company for the chain.

Deputy Prime Minister S. Jayakumar was the guest of honour at the opening of the hotel, which departed from the practice of having a soft opening ahead of its official debut.

To mark its opening, the hotel is offering guests who are staying two nights an extra night free. This deal is available till the end of May.

Source: Straits Times, 31 Mar 2009

Park Hotel Orchard to get makeover

AN ORCHARD Road fixture will be revamped and given a brand-new look by next year.

The four-star Park Hotel Orchard, located across Bideford Road from Paragon Shopping Centre, will be closed for renovations from tomorrow.

When it reopens by the second quarter of next year, it will have been transformed into a five-star hotel with four storeys of retail space.

Its upgraded rooms and suites will also feature state-of-the-art technology, said its owners, the Park Hotel Group.

It will also boast a new name - Grand Park Orchard.

This is not the first name change for the 25-year-old hotel, which is still known among many Singaporeans by its first name - the Crown Prince Hotel.

The $80 million makeover has been in the works since it was bought over by Park Hotel Group in 2005.

Once an Orchard Road landmark with its eye-catching outdoor capsule lifts, the hotel looks distinctly dated now, overshadowed in recent years by newer and swankier neighbours such as Paragon and Ngee Ann City malls.

Other hotels along the stretch, such as the Meritus Mandarin, have already embarked on renovations.

Speaking at the unveiling event yesterday, Park Hotel Group director Allen Law said the revamp will create a new fashion-themed hotel.

Its familiar white and brown facade, for example, will be replaced by a glass one with a herringbone design more commonly seen in fabric.

'The idea is to transform the hotel into a fashionable icon. The facade is like a dress that clothes the building, and turns it into something elegant and stylish,' said Mr Law.

The facade will also have an eight-storey-tall LED screen for advertisements. At 27m by 21m, it will be one of the largest such screens in Orchard Road.

The 83,000 sq ft retail podium will have double-storey flagship stores of international brands, with entrances in Orchard Road.

Meanwhile, the hotel's lobby, currently on the ground floor, will be moved to the fourth floor.

Rates will likely start from $350 a night for a standard room, about $100 more than the current price.

The group's senior vice-president Mohamed K. Rafin is optimistic that business will roll in when the hotel reopens next year.

'By that time, the integrated resorts would have come up, and there would be an infusion of travellers,' he said.

Details on the retail tenants and room interiors will be made available in the coming months, Park Hotel Group said yesterday.

Source: Straits Times, 31 Mar 2009

Monday, March 30, 2009

Real estate agencies fully back govt review

I REFER to last Wednesday's report, 'Regulation of property agents under review'.

The Singapore Accredited Estate Agencies (SAEA) is fully supportive of the Government's move towards a more effective way of regulating housing agents.

The housing agent industry is largely fragmented and unregulated. The current basic requirement is to pass the Common Examination for House Agents and apply for a house agent licence from the Inland Revenue Authority of Singapore (Iras). This licence is issued to agencies - that is firms and not individual agents. Once licensed, the proprietor usually recruits many associates (not employees), who work based on an agreed shared commission. So many agencies recruit agents indiscriminately, many without proper qualifications.

Therefore, the industry ends up with more than 30,000 agents and most without sound understanding of real estate practice.

We believe professionalism arises from, first, basic certification of skills and knowledge with continuing professional development training; and, second, a code of practice which agents follow.

This can come about only if there is mandatory licensing and accreditation of individual realtors and a body familiar with real estate practice that is sanctioned by the Government to be a watchdog.

We understand the Government has always encouraged the industry to self-regulate. This is feasible if the industry is in the first place regulated. To exercise control on an industry which is unregulated is indeed daunting. Nevertheless, the SAEA scheme was officially launched on Nov 11, 2005 by the then Minister of State for Finance and Transport, Mrs Lim Hwee Hua. When launched, this scheme was supported by the HDB, Iras and Ministry of Finance.

As a result, there are now more than 300 accredited agencies and 6,000 accredited agents and salesmen, sharing the common vision of raising professional standards in the industry by certified competencies and compliance to a professional code. We believe this is a good scheme and leaders of all our accredited agencies, which comprise 23,000 agents in total, will endeavour to work with government bodies to build a better real estate agency force in Singapore.

Peter Koh, Chairman of Executive Committee, Singapore Accredited Estate Agencies

Source: Straits Times, 30 Mar 2009

Mortgage payments worry S'poreans; expats fret over pay

A MAJORITY of Singaporeans worry about their ability to pay their mortgages while expats are fretting over smaller incomes, a survey by Zurich International Life (ZIL) showed.

'I wonder about the result if the survey is done now,' said Andy Robinson, ZIL Asia regional director in a recent BT interview. Singapore is experiencing its worst downturn ever with some forecasting that the economy could shrink as much as 8-10 per cent this year.

Seventy per cent of Singaporeans in the November survey were confident in their ability to save adequately while 60 per cent worry about their ability to pay mortgages. Mr Robinson thinks the Central Provident Fund mandatory contributions accounts for the optimism on savings while job security anxieties are keeping Singaporeans awake over their mortgages.

The survey which involved 212 Singaporeans and expatriates with a minimum monthly income of $4,000 revealed a general low level of confidence in economic recovery. Ninety per cent of expatriates are making changes in the allocation of their wealth, with more going to savings. Eighty two per cent of expatriates report a reduction in disposable income which warranted 62 per cent feeling the need for a change in their lifestyle.

'Part of that is buying less property,' said Mr Robinson referring to the changes in allocation of wealth by expatriates. Foreigners had been big buyers of high-end properties in the past five years. And over the past five years, more and more expatriates have increasingly switched to local terms from expensive expatriate packages, he added.

The survey also showed that priority of saving or investing remains at the top of the list of those asked. ZIL prepares two research reports a year asking Singaporeans and expatriates about their attitudes to financial planning and the correlation between their financial and lifestyle behaviour.

ZIL which began business here four years ago selling investment-linked products has seen an increase in policyholders surrendering their policies, said Mr Robinson.

Part of the Zurich group, ZIL offers life insurance and investment products to affluent customers and expatriates.

To date ZIL has 4,000 policyholders, of which about 1,800 are Singaporeans. In 2008, annualised premiums reached US$71.2 million and he expects sales to be flat this year.

'Clearly we are seeing lower levels of business now compared to third quarter 2008,' he said.
For customers who want to surrender their policies because they have lost their jobs or they want to cut losses, ZIL does offer some alternatives such as a premium holiday, he said.

Minimum premiums of ZIL investment-linked products are $425 a month.

ZIL operates in Singapore as a branch of the Zurich Financial Services Group, an insurance-based financial services provider. Headquartered in Zurich, the group employs about 60,000 people and has customers in 170 countries.

Source: Business Times, 30 Mar 2009

Sunday, March 29, 2009

Price is right for second home

Despite industry talk that it isn't the wisest time to buy property right now, shipbuilding subcontractor Michael Chee, 52, brazenly went ahead with his search for a new pad.

He had only two criteria: It had to be easily accessible by public transport and it had to be cheap.

He said of his recent purchase, a three-bedroom unit in Northvale condominium located opposite the Choa Chu Kang MRT station: 'If I had a car, the location wouldn't have mattered to me, but I don't have a driving licence so I prefer to live near an MRT station or a bus interchange.

'I don't want to waste so much time on travelling and waiting for feeder buses. Time is money too.'
He paid about $640,000 for the 1,350 sq ft apartment last month and plans to move in in June.

'HDB prices are so high. If I buy an HDB flat near the MRT station, I will have to pay at least $450,000. I might as well pay a bit more and get to experience living in a condominium,' he said.
The condominium unit is his first private property purchase.

The family now lives in a five-room HDB flat in Choa Chu Kang.

His eldest child, a 26-year-old, will continue to live there with her husband and one-year-old daughter while he, his wife, a 50-year-old housewife, their 23-year-old daughter and 20-year-old son will move to the condominium.

'The search took only a few weeks because I was sure I wanted to buy an older condominium,' said Mr Chee.

'We went to see some new condominiums, but you have to make decisions based on drawings that may not be accurate and then you still have to wait a long time for it to be completed before you can move in.'

He paid half of the cost of the condominium up front from his savings and took a bank loan to finance the other half.

He said he has no plans to sell the HDB flat for now.

'With the economy in this state, at least if something happens to my job, I still have the HDB flat to fall back on. I could at least sell or mortgage it if I need the cash for the condominium payment,' he said.

On advice from others not to buy property now, he said: 'Why should I listen to others? Buying a house is a personal thing. It is up to your needs. If you like the place, the owners are willing to sell, the price is okay and you can afford to buy it, then why not?'

Source: Straits Times, 29 Mar 2009

Bad time to buy? It was the best time to upgrade

It could not wait. Tired of ferrying their two-year-old daughter Rachel between their parents' place in Ang Mo Kio and their Jurong West home daily, the Lohs decided that it was time to uproot.

And thus began their search for a new home in the Ang Mo Kio area last year.

'We knew it's not the best climate to buy property, but baby-sitting concerns were our utmost priority. This area also has some good schools, which will be timely for when Rachel grows up,' said Mr Loh Yew Hoe, 31, who works in a bank.

He and his wife, financial adviser Sharona Lee, 28, visited at least 20 HDB flats and condominium units in the neighbourhood before they finally settled on a two-bedroom unit in Seasons Park along Yio Chu Kang Road.

Said Mr Loh, who paid about $600,000 for the 1,100 sq ft unit last November: 'As Ang Mo Kio is a very popular place to live in, most of the five-room HDB flats we viewed were valued at about $500,000 and going for around $50,000 to $80,000 above valuation.'

The Lohs moved into their new home two weeks ago. Their place is now a five-minute walk to Ms Lee's mother's flat in Ang Mo Kio Avenue 5, compared to the 40-minute drive from Jurong West before.

It was also opportune timing, said Mr Loh, that the HDB resale market was still buoyant while they were selling off their HDB flat last year. The five-room flat, which the Lohs bought in 2004, sold for about double the price they bought it for.

Citing the 10 per cent to 15 per cent drop in private property prices, particularly in the suburban areas, in the last year, Mr Loh said: 'If I bought an HDB flat, I would be selling high and buying high, so I consider buying private property a better choice.'

Source: Straits Times, 29 Mar 2009

New, cheaper private condos see brisk sales

Despite the recent slump in the property market, new private properties are still being snapped up in the market.

Last month's sales of new private homes jumped to 1,323 units, harking back to the days of the property boom, said observers.

In January, only 108 units were sold.

The figure was largely propped up by two newly launched heartland condominiums - the 293-unit Alexis at Alexandra Road and the 517-unit Caspian in Jurong.

Prices started from $450,000 at Alexis and $340,000 at Caspian.

'Developers probably realised after January's dismal sales that they had to lower their prices, while buyers noticed these discounts and decided to buy,' said PropNex's corporate communications manager Adam Tan.

According to CBRE Research executive director Li Hiaw Ho, the majority of last month's buyers were HDB upgraders who put buying on hold while home prices surged in 2006 and 2007.

He estimated that private home sales this month would come up to about 400 to 600 units, bringing the total number of units sold to 1,800 to 2,000 for the January to March quarter.

'A few projects are still selling fairly well, but they are not as large-scale as the projects launched last month,' said Mr Li, who predicted that sales figures are likely to hover around 500 to 700 units a month for the second quarter of the year.

Developments that are anticipated to do well this month include Waterfront Waves in Bedok, which was first launched last year but relaunched in the middle of March, and Mi Casa condominium in Choa Chu Kang, which analysts are expecting to be launched at the end of the month.

They have 457 and 405 units respectively.

The rate of new launches this month is likely to be similar to last month's, said Dr Chua Yang Liang, the head of research and consultancy at Jones Lang LaSalle Singapore.

'This is backed by housing developers' confidence in the latent demand by genuine homebuyers, encouraging them to release more,' he said.

However, the islandwide take-up rate this month could dip as the market has been rather temperamental, especially in light of the volatile global stock market performance, he said.

So when is the right time to buy?

'Many people ask that question but they should really be asking themselves where they want to buy, what they are buying it for, and what are their risk profiles,' said PropNex's Mr Tan.

'Don't buy blindly just because the price is good. As some of these places have two or three years till their completion, one should also consider the property's surroundings, such as existing or future infrastructure. Go into this investment with about five to 10 years in mind.'

Source: Straits Times, 29 Mar 2009

Land a house for under $1 million

But be prepared to compromise on location, condition, size and lease tenure

A landed home for less than $1 million? To many, a landed property is both a desirable dream home and the ultimate - yet unaffordable - status symbol.

So they steer clear of looking for one, thinking they would never be able to afford it anyway.
But while the landed market is often less accessible than the condominium market, there are houses out there pegged below $1million.

Potential buyers just have to be prepared to look hard as their choices are limited, property experts say.

Also, these houses may sit on a small piece of land or be in relatively poor condition.

'If your budget is below $1million, expect to compromise on the location, size and condition of the house,' said HSR Property Group executive director Eric Cheng.

'It can be fun for a person who likes DIY, as you can really do up the house. But you have to take into account the renovation costs,' he added.

Where to look
First of all, rule out the central areas of districts 9, 10 and 11. Much of the coveted residential districts of 15 and 16 will also be out of reach, said managing director of RealStar Premier Property Consultant, Mr William Wong.

Buyers should look at areas in the north-east such as Hougang and Serangoon, he said.
There may also be opportunities in Upper Thomson and Sembawang, said Knight Frank auctioneer Mary Sai.

Mr Cheng said there are small single-storey terrace houses in Upper Thomson going for below $1million, though there is no parking space in front of these homes.

Other areas with houses below $1million include Jalan Gembira in MacPherson, Telok Kurau, Loyang Villas in Loyang and Sin Ming Walk, he said.

Aside from leasehold homes, freehold ones below $1million can also be found.

However, it is almost impossible to find a bungalow at those prices. Semi-detached houses and corner terrace units are also unlikely candidates, leaving buyers with just mid-terrace units, said Mr Wong.

Apart from the resale market, the auction market may from time to time offer some affordable landed home buys.

Property consultancy Knight Frank said it will have one freehold terrace house available for auction next month at under $1million.

With an indicative price of about $800,000 to $900,000, it is an old, narrow, two-storey terrace house sitting on 1,300sqft of land at 7 Jalan Mesra in MacPherson.

Some houses in the area were going for $700,000 to $800,000 a few years ago, before a run-up in property prices, with up to around $1million for a nicely-renovated one during the 2007 boom, said Ms Sai.

Recent deals in that area included one for a unit in Jalan Setia, with a land area of 885sqft, which went for $850,000 in November.

Atypical houses
There are also a few areas with unusual landed homes costing way below $1million.

The Housing Board itself has 285 leasehold landed flats in Whampoa and along Stirling Road in Queenstown. These 99-year units were built in the 1970s by the Singapore Improvement Trust, the predecessor of the HDB.

Relatively small houses sitting on varying plots from just under 1,000 sqft, can go for around $500,000 to $700,000, said Mr Cheng.

Such mid-terrace units are rather narrow, considering a typical mid-terrace unit sits on at least 1,600sqft of land, he said.

Then, there are houses with extremely short leases. Banks are not keen to offer loans for such properties, so buyers have to pay cash.

In Lorong 3 Geylang, for instance, run-down terrace houses can go for around $150,000. One such unit, with a land area of just 725sqft and a built-up area of about 1,300sqft, sold for half that sum last year. It had just 11 years left on the lease.

During the last boom, the landed homes sector was a laggard compared to non-landed homes. Because landed home prices have not risen as steeply or as fast as condominiums, their fall will not be as hard, experts say.

The most recent official data shows that landed home prices fell by 4.8per cent in the fourth quarter of last year.

Going forward, Realstar's Mr Wong projects that landed home prices could fall by another 10per cent this year.

While sellers may dither over acting now or sitting tight, this is good news for buyers with a tight budget looking for landed homes.

Source: Straits Times, 29 Mar 2009

HDB lease buyback scheme draws interest

Madam Cheng Ai King has lived in the same three-room Housing Board flat in Serangoon Central for the last 23 years.

At 67, she still works as a school canteen helper, earning $30 a day.

She could use some extra cash, but she has no wish to leave the familiarity of her neighbourhood.
'I have lots of good neighbours and my flat is conveniently located,' said Madam Cheng, who lives alone now, after her three grown children moved out.

So, when HDB officers at a community event told her about a new scheme that will give her an income for life, and allow her to stay on in her home, her interest was piqued.

This Lease Buyback Scheme was launched on March 1, and the HDB has been on an outreach drive since, to get elderly residents to understand how it works.

Eligibility is limited to those aged 62 and above, and living in three-room flats or smaller.
About 25,000 households are eligible. Under the scheme, the HDB will buy back the tail-end of a flat's lease at market rate, leaving a 30-year remaining lease.

A home owner under the scheme receives upfront a lump sum of $5,000 and a certain monthly annuity payout for life.

Yesterday, about 400 seniors were at Toa Payoh West Community Club to meet Education Minister and MP for Bishan-Toa Payoh GRC, Dr Ng Eng Hen.

Dr Ng, who is also Second Minister for Defence, said the scheme would be useful for older Singaporeans who may have stopped working early or did not have an opportunity to save enough in their Central Provident Fund accounts.

'Some used their money for their homes, some helped their children to buy homes. They may not have a steady income for life.'

Dr Ng said many residents told him on his rounds that they are comfortable where they are and do not wish to move or downgrade to a smaller flat.

Some value their privacy and do not wish to sublet rooms. 'If they don't like the other options, this is very attractive,' he said.

HDB will run exhibitions at six other locations in the next month, including MacPherson, Queenstown and Kaki Bukit.

Source: Straits Times, 28 Mar 2009

Property auction sales up in Q1

More mortgagee properties going on the block, with trend seen deepening.

SOME $18 million worth of properties was transacted at auctions in the first quarter of this year, more than three times the $5.4 million notched up in the preceding quarter and also surpassing the $9.5 million in Q1 last year.

The market revved up in March after a muted start in January and February.

Colliers International figures also showed that while the number of repossessed properties put up for auction sales by banks and financial institutions (or mortgagee properties) rose 17.8 per cent quarter on quarter to 53 in Q1 2009, the number of properties put on the auction block by owners themselves slipped 15 per cent over the same period to 136.

The property consultancy group's deputy managing director and auctioneer Grace Ng is predicting only a slight increase in the number of mortgagee sale properties being put up for auction in the next quarter. However, with an expected increase in retrenchments, which would result in more defaults by borrowers on loan repayments, Ms Ng reckons the pace of mortgagee sale properties going under the hammer could pick up later this year or next year.

'There's generally a lag time of about six months or more between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,' Ms Ng observed.

She recalled that during the Asian financial crisis, the number of mortgagee sale properties put up for auction rose markedly only in first-half 1999, although retrenchment numbers had begun to rise as early as Q4 1997.

However, she pointed out that some mitigating factors are also at play this round which may reduce banks' propensity to race to auction houses when borrowers default on mortgage payments.
'Financial institutions tend to be more sympathetic and flexible now compared with the Asian crisis days. For example, to help owners ride through this trying period, some financial institutions have provided options, like allowing borrowers in financial difficulty to service only interest payments.
Such a move helps reduce or delay the number of properties being repossessed,' Ms Ng said.

DTZ's senior director for investment advisory services and auctioneer Shaun Poh said: 'This time, both banks and borrowers are better prepared than during the Asian crisis, when some people panicked and just handed the keys to their banks. Now, banks are more prepared to talk to the borrowers; that's partly why we don't see a lot of mortgagee properties put up for auction. Banks are trying to space out the properties a bit, restructure, renegotiate. And they're asking owners to try and sell their properties themselves first, whether it's by auction or private treaty.'

'It's also a value preservation strategy. Banks have learnt from the last round that if they pull the plug and take over a property, its value falls. Potential buyers' perception is that they can strike a bargain for mortgagee sale properties as they're like fires sales,' Mr Poh added.

Colliers' Ms Ng suggests another reason for banks not being in a hurry to foreclose on properties this round may be due to a rule change in 2002 that gave banks first claim to a mortgaged property - ahead of the Central Provident Fund Board - in the event of borrower default. 'The pressure to foreclose the property by banks/financial institutions is now lower, as their exposure to losses - due to unrecoverable outstanding loan amount - is reduced,' she added.

Colliers' analysis showed that 77 per cent or 41 of the 53 mortgagee properties that went on the auction block in Q1 were residential properties; 27 were apartments/condos while the remaining 14 were landed homes. These landed properties were mostly in District 19, which includes Serangoon Gardens, Hougang and Punggol.

'We can expect to see more apartments/condos surfacing at auctions as there are about 14,600 non-landed properties due for completion in the next two years,' Ms Ng said.

Just four properties were sold at auction for nearly $5 million in January and February this year but things started to hot up a bit in March, with eight properties transacted for $13 million. 'The price gap between sellers' asking price and buyers' offer price appears to have narrowed in March. The rallies in the stockmarket, together with the positive take-up rate at developers' launches in the past two months, seem to have spilled into the secondary market - resulting in buyers' commitment to purchase the units.

'Interestingly, owner occupiers constitute the bulk of buyers making commitments to purchase now,' Ms Ng said.

Source: Business Times, 28 Mar 2009

Friday, March 27, 2009

Number of repossessed properties rises 18% in Q1

SINGAPORE: The number of repossessed properties put up for sale by banks and financial institutions in Singapore rose by 18 per cent in the first three months of 2009 compared to the previous quarter.

A total of 53 properties were repossessed in the first quarter of 2009, up from 45 in the previous quarter.

Real estate consultancy firm Colliers International said its findings indicate a continued trend in mortgagee sale as a result of the worsening economy and rising level of retrenchments.

It expects more properties to be repossessed in the later part of the year or in 2010.

Of the 53 properties put up for mortgagee sale in the first three months of this year, 41 were residential properties. And among those, 27 were apartments, with the remaining 14 being landed homes.

Colliers said 12 properties were sold at auctions in the first quarter, with a total sale value of over S$17 million, over two times more than what was recorded in the fourth quarter of 2008. They included seven mortgagee sales and five owner sale transactions.

Colliers said auctions would remain popular with owners, going forward. It also expects a greater number of high-end and luxury properties to be placed for sale via auctions.

Source: Channel News Asia. 27 Mar 2009

Punggol BTO project launched

THE Housing & Development Board (HDB) yesterday launched a build-to-order (BTO) project at Punggol - the second of the year after one launched at Woodlands in February.

The 519-unit Nautilus @ Punggol, at the junction of Punggol East and Punggol Field, will have 413 four-room flats and 106 five-room flats.

Four-room flats will sell for $228,000-$274,000, while five-room flats will cost $305,000-$357,000. These prices are cheaper than those of similar flats in the market, which makes them affordable for first-time buyers, HDB said. Nautilus units are priced lower than recent BTO launches there mainly because of differences in location and design, it said.

Recent offerings Punggol Arcadia and Punggol Regalia are premium projects with enhanced designs and better internal finishes, while Nautilus is a standard project with more basic features. Nautilus is also further from the town centre and main transport than the other two BTO projects.
Nevertheless, analysts expect solid demand. 'Nautilus is expected to be popular,' said Propnex spokesman Adam Tan. The flats are 'very attractively priced'.

Recent BTO offerings by HDB have seen strong demand. The Woodlands BTO project launched last month was more than four times subscribed.

And two other projects launched late last year - one in Choa Chu Kang and the other in Punggol - also saw good take-ups.

HDB intends to launch about 3,000 flats in Punggol this year as part of plans to remake the estate.

Source: Business Times. 27 Mar 2009

Something special

Amid the current climate and in an already tight hotel market, any project coming onstream has a tougher job than usual to achieve decent occupancy. AUDREY PHOON checks out three new properties to see if their unique concepts and competitive pricing give them a fighting chance

Blazing the all-inclusive trail
IN the current market, perhaps all that a hotel needs to cut itself a slice of the tight customer pie is a single tool: an all-in-one pricing system. That's the way Far East Organization sees it, and that is the company's business approach for Quincy, its latest hotel project.

The main selling point of the Orchard boutique hotel, which officially opened on Wednesday, is that it is Singapore's first all-inclusive hotel. And what that means is that for one price (the introductory rate is currently $208++), you get everything from three meals a day and a one-way limousine transfer service from the airport to evening cocktails, Wi-Fi and free access to a well-stocked mini bar. That's on top of the 400-threadcount sheets, feather-topped beds, 42-inch screens, and Molton Brown toiletries that are standard in every room.

Pretty unbelievable services
Considering the astronomical price of some hotel rooms these days (even as rates have dropped in view of the economic downturn) and the lack of value some of them provide, what you get at Quincy is pretty unbelievable. But there's 'no secret to it', says Chia Boon Kuah, executive director of Far East's hospitality business.

He explains that the hotel is able to keep costs down because it shares its back-of-house operations with the neighbouring Elizabeth Hotel, which is also owned by Far East. The company could have used the space to merely expand Elizabeth Hotel, adds Mr Chia, but it decided against it as 'that wouldn't have added any lifestyle options to the area'. 'There's a growing awareness of boutique products and yet, no such product like Quincy as far as supply is concerned,' he says.
Indeed, the new hotel - headed by hotel manager Franck Hardy, formerly of St Regis - is one of the grooviest in Orchard. Designed by architecture firm Ong & Ong, it houses 108 rooms (all the same size but in different configurations) behind a distinctive dark glass-and-steel facade that's emblazoned with the hotel's name in a white funky font. On the 12th floor, a cantilevered pool flanked by Dedon daybeds sits alongside a state-of-the-art gym while in the LED-lit lifts, LCD screens display quirky messages from the staff. And all common toilets in the hotel are unisex.

Everything is aimed at creating a 'modern, cool, surprising' experience, says Mr Hardy, adding: 'We want to surprise you upon check-in until when you check out.'

Travellers know a good deal when they see one, which is why the hotel averaged 76 per cent occupancy last month, with 100 per cent of its beds taken up going into its second week.

Source: Business Times, 27 Mar 2009

Rolling out the red carpet - all the way

EVEN as many hoteliers are reining in the luxuries and counting their dollars, one new project is rolling out the Rolls-Royces for its guests in a bid to stay competitive in the market.

Like its surreal landscape of manors, villas and lush rainforest, Capella Singapore - which will open on Monday - seems to be operating on a different plane altogether. But this, according to its general manager Michael Luible, is exactly what the hotel's target audience - independently wealthy individuals and business leaders such as CEOs and entrepreneurs - is looking for.

'The Capella guest is someone who knows what he wants and is used to luxury,' he says, adding that the hotel's client segment, in particular, is likely to choose 'understated luxury over more ostentatious offerings in the current economic climate'.

It is those preferences that the 111-room Capella seeks to fulfil. Developed at the cost of $400 million, the property aims to raise the bar in hospitality excellence both on the island and beyond with its 'architecture and design, luxury of space, unparalleled level of personalised services, and the opportunity for guests to experience exactly what they desire', pronounces Mr Luible.

Certainly, it's of the right pedigree: the project was designed by London's Pritzker Prize-winning architect Lord Norman Foster, with interiors by Jakarta-based Jaya Ibrahim, one of the world's top interior designers. New Yorker Elizabeth Weiner is the resort's art consultant while Honolulu firm Belt Collins International is responsible for its 30-acre landscape.

Luxury of space
Those sprawling premises are also being capitalised on by the hotel to differentiate itself from other luxury properties. 'Capella Singapore is the only resort-style hotel in Singapore that can afford such a luxury of space,' says Mr Luible, adding that the hotel's rooms, which start from 77 square metres, are some of the most spacious anywhere.

With so many big names behind it and room rates ranging from $660 to $7,500 per night, however, guests are bound to expect much more than large rooms and pretty views from their big picture windows. So Capella is going even further to provide its privileged guests with an ultra-luxurious experience, beginning from the moment they make a booking.

'Once guests confirm their reservations at Capella Singapore, they will gain access to a personal assistant, who will contact you before you arrive to help customise your stay,' says Mr Luible. This, he adds, should come in especially useful for business travellers as the assistant can arrange everything beforehand, from the use of one of the hotel's conference venues to reserving the best seats at one of Singapore's top restaurants.

Leisure travellers who wish to explore the city, meanwhile, won't have to trundle around in the likes of ungainly Ducktours vehicles - the resort has a chauffeured Rolls-Royce Phantom just for that purpose.

So far, the hotel has received 'a healthy number of advance bookings' boosted by the fact that its 'opening period coincides with several important holidays in Capella Singapore's key markets', says Mr Luible.

Still, it remains to be seen if all this is something that travellers will continue to fork out for in the coming months. Capella, however, is convinced that it is heading in the right direction. 'Hotels are increasingly moving towards providing differentiated products to emerge from the competition. For Capella Singapore, our key differentiation is to create experiences for the guests that will not be
able to be replicated at other hotels.

'As we build momentum with our sales and marketing operations and as we commence operations, we anticipate a strong interest,' Mr Luible concludes.

Source: Business Times, 27 Mar 2009

Designer hotels the next big thing

Hotelier Ted Fang wants to create a new breed of hotels to target independent-minded travellers

THE next big thing in the hotel industry is something which will be coined 'designer hotels', or so believes hotelier Ted Fang. And that's exactly what he plans to do next.

The Singaporean entrepreneur made his mark in the hotel industry when he acquired the master franchise of Day's Inn hotels in China (including Greater China) in 2003. With 58 hotels already in the chain, the Day's Inn brand is already the fastest growing three and four star hotel chain in China.

Now, though, he wants to go upscale, so Mr Fang - who runs the company Frontier Group with his brothers Harry and David Tan - is looking to create a new breed of hotels to target a growing breed of independent-minded travellers.

'Our idea of a designer hotel is a cross between a boutique and a luxury hotel,' says Mr Fang. 'Unlike a typical boutique hotel with about 50 rooms, we're aiming for at least 100 rooms with designer fittings created by international designers.

'But although it is designer, it won't be a six-star super luxurious offering. Instead our target market really would be a hip business traveller who doesn't want to live somewhere too staid and wants something that is comfortable yet fashionable.

'Imagine a W Hotel but less pricey and more functional and you pretty much get the picture.'
This new brand of hotels marks the company's first move to create a completely new brand separate from the already established name of Day's Inn.

He adds that the brand will be created by the brothers as an expansion to their hotel management business by buying over properties to gain more control over the hotels.

Through Tera Capital - an investment management company started and run by Mr Fang, the brothers are also looking to lease or purchase existing properties/projects in China.

Previous Day's Inn projects were franchise/ma nagement deals between Frontier and developers/owners in China. Frontier does not own any of the hotels outright, a situation Mr Fang says will change.

'In a short span of four years, from one Day's Inn hotel in China there are now 58,' says Mr Fang. 'Having done well, we think that now is the right time to take that step into actual ownership of hotels.'

Especially as he believes the hospitality market is on an upward trend.

He says: 'The hospitality market will continue to grow very rapidly and you will see a boom within the next five years in China's consumer market.

'As China becomes less reliant on export-oriented businesses, the domestic market and middle class will grow and expand very quickly in the coming years. And we are positioning ourselves to benefit directly from this by being the dominant player in our markets. We still have a very long road of growth ahead of us.'

Although the company has been looking into ownership for awhile, ironically it was the economic crisis that pushed them over the edge.

Muses Mr Fang: 'Previously, land and property prices were just too expensive. It didn't make economic sense to buy. Especially with the room rates of the Day's Inn (around US$50) and Day's Hotels (around US$90) so affordable, the numbers simply didn't add up.

'Now, with prices of property so much lower, our calculations show that it now makes economic sense to buy. In fact, with prices so attractive, I'm going to be bullish and say if we don't buy now, then when?'

Source: Business Times, 27 Mar 2009

Home hunters pack showflats in Balestier

SOME home hunters have been packing showflats in the Balestier area and buying units, even as the general property market remains weak.

City Developments (CDL) said yesterday it has sold 'about 60 per cent' of the 100 units at The Arte@Thomson at an average price of $880 per sq ft since a hush-hush preview started last Friday.

The Arte has 336 fairly large units in two 36-storey blocks in Jalan Datoh, off Balestier Road.

The 60 or so units were transacted at $852,800 to $2.46 million, said a CDL spokesman.

Most of those sold were two- and three-bedroom units. The two-bedroom units are 1,055sqft, while nearly half of the project comprises three-bedroom units ranging from 1,399 sq ft to 1,625sqft.

CDL said it had extended the interest absorption scheme (IAS) to buyers during the preview at no extra cost, but could not yet say how many buyers had taken advantage of it.

'Buyers are given some time to decide if they wish to take up the IAS,' said the spokesman.
The scheme allows buyers to defer the bulk of the purchase price until completion on condition that they take up a loan at the point of sale.

The CDL spokesman said the $880 per sq ft price was being offered for a limited number of units only. 'We will be reviewing the price and adjusting it upwards progressively,' he said.

The encouraging sales at The Arte came amid a still-slow market as some other launches see relatively weak interest. Demand for high-end homes, in particular, remains poor.

New home sales in February were lifted to a relatively high level, but that was largely due to the strong sales at three mass to mid-end projects. Many buyers went for small units as their absolute prices were low, and hence affordable.

Just last week, Keppel Land deferred the construction of two yet-to-be-launched projects - Marina Bay Suites in Marina Bay and Madison Residences in Bukit Timah - because of the slumping market.

In the Balestier area, the new showflats benefited from spillover crowds from the various launches, said Savills Residential director Phylicia Ang, who is marketing the 104-unit Domus in the area.

Released for sale two weeks ago, Domus, in Irrawaddy Road, welcomed visitors who had initially attended The Arte preview.

So far, 33 units - out of the 59 launched at Domus - have been sold at an average of $900 per sq ft, or from $480,000 to $1.2 million, said Ms Ang.

The sales included 20 one-bedroom units of 474sqft.

Novelty Group's I-Residences, a 70-unit project in Irrawaddy Road, is about 50 per cent sold since its private preview late last year.

Nearby, on the former Ruby Plaza site, Soilbuild had a preview for The Mezzo, which offers a 6 per cent rental guarantee for two years. It did not comment on sales.

Source: Straits Times, 27 Mar 2009

HDB launches new batch of flats in Punggol

Units are smaller and cheaper due to design and location

The Housing Board (HDB) yesterday launched its first batch of new Punggol flats for the year.
Units are priced at 10 to 16 per cent below the launch of Punggol Regalia in December, primarily due to location and design features.

The flats are slightly smaller and 'further from the town centre and main transportation nodes', said an HDB statement yesterday.
The Nautilus @ Punggol is a standard project - essentially new flats with minimal frills and basic features.
On offer are 413 four-roomers of 90 sq m going for $228,000 to $274,000 and 106 five-roomers of 110 sq m priced from $305,000 to $357,000.
The Nautilus, consisting of eight blocks of 18 storeys each, is on the eastern side of the suburb and further from the Punggol town centre.
It is served by the Riviera and Coral Edge LRT stations.
In contrast, Punggol Regalia, located at a prime spot next to Punggol MRT station , is a premium project priced at $252,000 to $316,000 for a four-room unit and $342,000 to $428,000 for a five-room unit.
Premium flats come with enhanced architectural designs and better internal finishes.
PropNex chief executive Mohamed Ismail said he expected healthy demand for the Nautilus although it 'may not be as good as' the response to HDB's Woodlands project launched last month.
Called Champions Court, that development offered 815 units, ranging from studio apartments to five-room flats.
ERA Asia-Pacific's associate director Eugene Lim said the Nautilus is 'very attractively priced' although its location may not be as alluring as previous Punggol projects.
In the long term, however, Punggol's transformation into a waterfront town will draw first-time home owners, he said.
The Nautilus will be constructed under the HDB's build-to-order (BTO) scheme where flats are built only if a certain level of demand is reached.
The HDB has said it plans to launch about 3,000 BTO flats in the first half of this year.
These include 1,400 smaller units, from studio apartments to three-roomers.
Buyers are likely to see more new flats in Punggol this year as the HDB moves to build up the suburb's population.
A site called Punggol Residences, next to Punggol MRT station, was recently marked as being under construction on Singapore Land Authority maps.
By 5pm yesterday, the HDB had received 72 applications for the 519 Nautilus flats.
In contrast, Champions Court attracted 205 applications for 815 flats on the first day of its launch.

Source: Straits Times, 27 Mar 2009

House Hunt 2009

Thursday, March 26, 2009

Renewed interest in UK homes

Sliding home prices and the weaker pound are wooing investors back to London. NEIL BEHRMANN reports

ASIAN, Russian and other foreign buyers are back, tentatively examining potential investments in London's residential property market, according to agents. These investors are at an exceptional advantage over local residents and investors as sterling has depreciated considerably since its peak in the first half of 2008. Compared with last year, a Singaporean investor can buy sterling at a third lower than its peak levels.

Bursting of the bubble: House prices in London have fallen between 20 and 30 per cent, and economists caution that in the current depressed economic climate property prices could slip further in the coming months

The UK property market reached its bubble heights towards the end of 2007. Since London residential real estate prices have fallen between 20 and 30 per cent, according to agents, prices for Singaporeans and other investors are at 40 to 60 per cent discounts from the top.

'There will be many stages and regional variations in the future trajectory of apartment and house prices,' says Yolande Barnes, director of research at Savills. 'The market will test the nerves of both home owners and investors but the opportunities for those wanting income returns and the prospect of long-term growth are clearly in place now.'

UK investors will benefit from the sharply lower home prices and mortgage rates; however, they face the disadvantage of banks now requiring deposits of at least 30 to 40 per cent, whereas during the free-wheeling boom days, deposits could be 10 per cent and sometimes even lower.

Ms Barnes and other estate agents and economists thus caution that in the current depressed economic climate property prices could slip further in the coming months. But they believe there are potential bargains. They expect the market to bottom out in 2010 and begin rising in 2011 and

There are some economists, however, who fear that the market will remain depressed for several years. Roger Bootle, head of economic forecasting agency Capital Economics, predicts a rise in repossessions and an increase in those entering negative equity. His figures indicate that about 3.5 million UK households will fall into arrears - double the number seen in the early 1990s downturn. Repossessions could hit 90,000 this year, he says - much more than the Council of Mortgage Lenders' prediction of around 75,000.

Mr Bootle, who had predicted property price declines some time before the bubble hit its peak, now expects a further drop in UK house prices with a peak-to-trough fall of between 40 per cent and 45 per cent..

There is also the danger that a depressed, over-borrowed British economy is vulnerable to further sterling weakness and that the present currency rally won't last. Thus foreign investors need to proceed with caution and be highly selective, both with properties and locations, if they intend to go bargain-hunting in the London and broader UK real estate market. For example, property in the London Docklands surrounding Canary Wharf, where several stricken major investment banks are situated, is very depressed. Supplies of apartments are well in excess of demand, estate agents say. The same applies to Notting Hill Gate, a favourite with investment bankers.

Anecdotal evidence, however, suggests that interest from foreign and local buyers who don't require mortgages is already much higher, says Ms Barnes of Savills. The decline in values has raised gross rental yields of prime properties to 4.5 per cent from around 3 to 3.5 per cent during the 2007/2008 property bubble while net yields have risen from 2.3 per cent to 3.5 per cent. This compares with money market rates of around one per cent and long-term government bond yields of around 3 per cent.

Brendan Brown, head of research at Mitsubishi UFJ Securities International, believes that considering the illiquidity of property as an investment and the risk of 'voids', or vacant periods, the rental yields are still inadequate. The crisis in the financial sector has caused banks in the City to retrench employees. Foreign banks and other corporations thus need to rent fewer properties.

According to the Land Registry index of houses and apartments traded, average prices in Kensington and Chelsea have fallen from £856,000 at the end of 2007 (S$2.6 million at the exchange rate at the time) to £752,000 (S$1.65 million at the current rate), while in the City of Westminster they have fallen from £612,000 to £564,000. Tower Hamlets, near the financial centre of Canary Wharf, has seen prices fall from £376,000 to £329,000 and in favoured areas such as Richmond they have fallen from £455,000 to £383,000.

These prices, however, are averages of properties ranging from small apartments to semi-detached and detached houses. In truth, house prices in Chelsea and Kensington currently trade from around £2 million with prices of £1.5 million to £3.5 million for areas surrounding Hampstead, St Johns Wood, Islington, Richmond and Wimbledon. Prices of two-bedroom purpose-built apartments in these areas have dropped to between £350,000 and £600,000.

Although Ms Barnes expects the market to bottom out in 2010 and revive in the following two to three years, she agrees that London prices could decline by a further 10 per cent by the end of the year. In that event, the fall from the peak would be around 30 per cent.

Liam Bailey, head of residential research at Knight Frank, estimates that from peak to trough, the price fall for prime London property from March 2008 to date is 23 per cent. Activity levels are beginning to rise, albeit from a low base, with viewings up 28 per cent in February on a year-on-year basis. After an absence of six months, Russian buyers are back in the market, he says.

'After a period of sustained price falls in the central London market, it is rather early to suggest that we are seeing the beginning of a recovery,' says Mr Bailey. 'However with bad news seemingly all pervasive, even a slowing in the rate of price falls can be viewed positively.'

With prices for some new build properties falling by as much as 40 per cent, yields of over 10 per cent are possible, he contends. The proviso is that the properties can be let. There are reports that the rental supply of apartments and houses is increasing. Financially-stressed owners with large mortgages who cannot sell their properties are being forced to downsize. They are renting out their pricey properties and seeking lower rentals.

Source: Business Times, 26 Mar 2009

Window of opportunity opens in Aussie commercial property

THE Australian commercial property market is currently offering global investors with a medium-term horizon a combination of relative stability and increasingly attractive investment returns.

Jones Lang LaSalle recently undertook a number of investor briefings across Asian markets, including Singapore. It was apparent from these briefings that there is significant Asian interest in the Australian property market, due to its relatively stable fundamentals. This has presented a window of opportunity for investment in Australia - with commentators suggesting that these are the best conditions for foreign investment that we have seen in the past decade.

The fundamentals of Australian commercial property markets have deteriorated moderately in the face of a broad economic slowdown. Australian institutional property investors have not been immune from the effects of softening asset prices, rising debt levels and tighter credit markets.

The A-Reit (Australian real estate investment trust) index has lost about A$120 billion (S$125.1 billion) in value over the past 15 months.

The benchmark S&P/ASX 200 A-Reit Index is around 690 points, down 73 per cent from its high of 2,575.6 points in February 2007.

A-Reits require debt refinancing of around A$60 billion over the next three years. About A$26 billion has been lent by foreign banks, some of which have shown an inclination to repatriate these funds during this difficult period. Given the imminent debt expiry profile in the next three years, there are now realistic vendors willing to offer quality assets for disposal in an attempt to reduce funding pressure.

Furthermore, the pool of funds invested in superannuation will continue to be a force in the domestic property markets. While the pool accounts for A$1.1 trillion today, it is forecast to grow to over A$3 trillion by 2016. With an average 10 per cent of this pool, or A$23 billion per annum, allocated to real estate, a significant amount of capital is destined to seek out a home in property markets in the years to come.

A window of opportunity does exist for foreign investors to capitalise on a culmination of market forces that make investment in Australian property an attractive proposition in 2009.

What we are currently seeing is a number of Asian-based institutional investors taking advantage of these market forces. Australia is not immune from what is happening in the global property market, but we do compare favourably to the United States, Europe and Asia in terms of the impact of the global credit crisis.

Due to the impact of the global economic environment, there are superior Australian assets on the market that have traditionally been tightly held and have not been on offer for over a decade.

There are estimations that these assets probably won't be offered again for years to come, so now is the time for opportunistic cashed-up investors to act. It is a rare opportunity and we are seeing some prospective investors who are awaiting further falls in values of prime Australian assets, but they should be careful not to wait too long.

We are currently witnessing investors out of Asia with an appetite for Australian property. These are largely private equity firms or groups acting on behalf of institutional investors. Such investors are best characterised as opportunistic funds with a focus on income stabilised assets, with no immediate vacancy.

The Australian market is attractive to foreign investors due to its high level of real estate transparency, historically low interest rates, lower hedging costs and relatively stable returns. Australia has historically been an attractive market for investors seeking to lower volatility in their portfolio.

International investors are now spoilt for choice, with significant levels of stock available on both a local and international level. Property markets are increasingly competing on a global scale with increased investigation of country economic fundamentals, property cycle position, vendors' willingness to transact and other property market specifics. We believe the Australian market is well poised to meet such criteria.

Australia enters this cycle with very low vacancy in the major CBD office markets. Research figures for the fourth quarter of 2008 show that the vacancy rate across all CBD office markets that Jones Lang LaSalle monitors nationally was only 5.5 per cent.

Vacancy pressures are clearly increasing. However, the headline vacancy rate remains below the long-term average of 8-9 per cent. The future supply pipeline is moderate, much different from the previous down cycle in the 1990s. Over the next three years there is presently only 1.31 million square metres under construction in the CBD office supply pipeline, which compares favourably to the 2.52 million sq metres that was completed in the three years leading up to 1992.

The headwinds buffeting the global economy have continued in recent weeks and we know that 2009 will be a tough year. There are many factors to consider in this economic environment and owners and investors need to constantly monitor their portfolios to ensure they are positioned to take advantage of the market fundamentals.

The writer is director, international investments, Jones Lang LaSalle, Australia

Source: Business Times, 26 Mar 2009

M'sia property: Waiting out the crisis

Malaysia's property players expect the sector to consolidate this year following decent gains in the past few years. PAULINE NG reports

THE Malaysian property market was relatively bullish at the start of last year, but as economic problems in the United States mounted and spread, interest headed south.

Many launches were put on ice. In the popular Klang Valley, for example, the launch of new residential units declined by 57 per cent from 2007 to 6,747 units in 2008. Holding back made sense given the over-supply - especially in the luxury and serviced condominium segments, noticeably in the prime Kuala Lumpur City Centre (KLCC) and Mont Kiara areas.

According to property consultants CH Williams Talhar & Wong (WTW), an additional 1,000 new luxury condos and 7,000 serviced apartments (some 10 per cent more) came on-stream last year, when occupancy rates were already inching down to around 80 per cent from 86 per cent in the first half of the year, even before all the new units were delivered.

On average, the developer selling price for units launched last year ranged from RM650 (S$270) per sq ft to RM1,180 psf for luxury condos, and RM800 psf to RM1,300 psf for serviced apartments.

Prices have generally held because they had not run up as much. But poorer sentiment and increasing supply have led to prices dipping in selected areas. In the KLCC area, which saw more feverish building over the past few years, prices have dropped by an estimated 15-20 per cent. In contrast, landed properties are holding firmer given the more limited supply.

But promoters with bigger wallets and risk appetites are taking advantage of lower commodity prices to push ahead. In the Klang Valley, the Four Seasons Place, located within a stone's throw of the Petronas Towers, is scheduled for completion in 2012.

Developed by businessman Syed Yusof Syed Nasir, together with his partners the Sultan of Selangor, Sharafuddin Idris Shah, and Singapore's Ong Beng Seng, piling works have been completed on the 65-storey tower mixed development comprising a hotel, apartments and a mall.

Design changes resulted in some delay but Mr Syed Yusof has said that contractors would proceed in the third quarter.

Property consultants had thought the Four Seasons Place apartments might set a new benchmark of RM3,000 psf for the city. But that was last year. Mr Syed Yusof recently indicated that the estimated 140 apartments would sell for about RM2,500 psf.

Another prestigious project within the KLCC vicinity is gearing up. Ground-breaking has begun on the 450-room Grand Hyatt hotel. The Brunei Investment Agency's 40-storey mixed development includes apartments and commercial offices, and is expected to be completed in three years.

The economic slump aside, property consultants say Malaysians have the buying potential but prefer to wait out the economic and political uncertainties. However, they might be tempted if attractive bargains come along - preferably at fire-sale prices.

According to a recent survey by iProperty.com, two-thirds of 137 respondents surveyed were of the view that there was a high likelihood that property prices would decline over the next six months. Ninety per cent of Singaporeans surveyed were of a similar view while in Hong Kong only 14 per cent agreed, the rest believing prices would not drop much further.

Website activity remains high, iProperty executive chairman Patrick Grove said. 'People are still buying, selling and renting, and are definitely on the lookout for great bargains and opportunities.'

In the main, property players are resigned to the sector consolidating this year following more than decent gains in the past few years - the last more applicable to the Klang Valley and Penang.

Leisure Farm Resort senior sales and marketing manager Koh Boon Teng told BT that the number of inquiries has 'definitely dwindled' but he is counting on the company's established name to continue to pull in buyers, nearly all foreigners, including Singaporeans. The Johor-located resort-style development has not reduced prices - currently about RM50 psf for land -'but if buyers are sincere we can consider giving construction rebates', Mr Koh said. Constructed bungalows start from RM1.5 million.

While Iskandar Malaysia has reportedly attracted RM47 billion in investments - a substantial chunk from Middle East investors - local businessmen complain that there has not been any discernible pick-up in business activity.

Mr Koh concedes the lack of activity, but believes the special economic zone will deliver in the longer term. For now it has rendered a new lease of life to infrastructure projects in Johor, WTW said, pointing to the start last year of infrastructure developments such as the 8.5 km Eastern
Dispersal Link joining the Customs, Immigration and Quarantine (CIQ) complex to the North-South Expressway, the 15 km coastal highway linking Johor Baru and Nusajaya, the 9 km Second Pernas Bridge and road to Pasir Gudang, and the Ulu Tiram flyover.

But patience is crucial. Johor recorded the highest percentage change value per transaction last year - likely because of much higher prices obtained for some land transactions in Iskandar, WTW managing partner Goh Tian Sui said. However, he cautioned that the overall data indicated the state 'is not an interesting market at the moment'.

One state which did reasonably well last year, recording a 27 per cent increase in value per transaction over the previous year, was Penang. Its residential sector was the dominant driver on the island as well as the mainland.

The electronics slump has hurt industries in Penang and created uncertainty, but the state is one of the more, if not most, creative in Malaysia. A Unesco World Heritage Site listing last year for its capital Georgetown, together with Malacca, gave it a tremendous boost, while the on-going construction of the second Penang bridge will make the state more accessible in the future.

Developers are admittedly more cautious now, but there are pockets of interest. WTW noted that the shophouse and residential property sub-sectors are relatively resilient, sought more for owner occupation as well as for investment.

Source: Business Times, 26 Mar 2009