Tuesday, June 30, 2009

Strong sales for new condo launches

Units in mass- and higher-market projects snapped up

STRONG sales in the property market continued over the weekend as mass- and upper-mid- market launches drew crowds of buyers.

Within three days of its preview launch last Friday, the 68-unit Residences @ Killiney project sold 39 of 60 released units - with sales ongoing, a spokesman for developer Hoi Hup Realty said yesterday.

Preview prices at the Killiney Road condominium ranged from $1,700 per sq ft (psf) to $2,000 psf.
Opposite the condo at Devonshire Road, Allgreen Properties' One Devonshire has sold more than 95 per cent of its 36-storey, 152-unit freehold condo since its launch about two weeks ago.

In the Thomson Road area, Far East Organization sold 84 per cent - or 74 homes - of an initial batch of 88 units at a private preview of its Vista Residences over the weekend.

The 280-unit freehold project offers a range of accommodation from one bedroom to penthouse units starting from $960 psf.

Far East will release another 45 units tomorrow - its official launch date - said Mr Chia Boon Kuah, chief operating officer of the firm's property arm.

HSR Property Group executive director Eric Cheng noted that the buying activity - which started in mass-market new condo launches - seems to have moved into the higher market segments.

'This is undoubtedly due to the stock market rally, more positive sentiment, and is enabled by the interest absorption scheme,' he said.

The scheme allows buyers to pay a deposit and postpone monthly home loan payments until the project is completed.

'This is attracting the investors to come out in droves,' he added.

In the mass market, sales continued with Frasers Centrepoint announcing yesterday that its two projects, 8@Woodleigh and Woodsville 28, were sold out.

All 330 units at 8@Woodleigh in Potong Pasir were fully sold last Saturday at an average price of $790 psf. And all 110 units of Woodsville 28 were sold by last Tuesday at an average price of $775 psf.

At Pasir Ris, half of the 142 units at Chip Eng Seng group's Oasis@Elias previewed over the weekend were sold, said its marketing agent CB Richard Ellis.

On the east coast, the 94-unit Parc Seabreeze in Marine Parade is selling well with the project close to 70 per cent sold, said HSR, which is marketing the project. Units are fetching from $1,050 psf to $1,550 psf.

Mr Colin Tan, Chesterton Suntec International's head of research and consultancy, noted that there had been 'pent-up demand' resulting in strong sales activity, but added that this was 'not sustainable'.

'Unlike the boom years, where foreigners made up a huge number of buyers, it is mostly locals who are on this buying spree,' he said.

Property expert Nicholas Mak expects a moderation of buying activity in the coming months, especially as developers continue to revise their prices upwards.

Source: Straits Times, 30 June 2009

Robust private home sales in June

But it is too early to call a recovery, cautions OCBC Investment Research

(SINGAPORE) Private home sales stayed strong in June.

Far East Organization sold 74 apartments in its 280-unit Vista Residences at a private preview last weekend, the developer said yesterday.

And Frasers Centrepoint said that it has fully sold two of its projects - the 330-unit 8@Woodleigh and the 110-unit Woodsville 28. Homes at 8@Woodleigh went for an average of $790 per sq ft (psf), while units at Woodsville 28 sold for an average price of $775 psf.

8@Woodleigh was launched just two weeks ago. Woodsville 28 was launched in July 2008 but most units languished until the buying momentum returned to the market this year.

Over at the freehold Vista Residences - on Jalan Dusun and Jalan Datoh at the corner of Thomson Road - prices start at $960 psf. The project will be officially launched tomorrow, but Far East released 88 units at a weekend preview, and 85 per cent of them were snapped up.

'Buyers are mainly Singaporeans and there is particularly strong interest from young professional managers, teachers and civil servants who are buying to occupy,' said Chia Boon Kuah, chief operating officer of Far East Organization's property arm.

While units at Vista Residences have sold for more than homes in the nearby The Arte - a City Developments project where units were launched at an average price of $880 psf in March - the difference in pricing is due to the difference in unit sizes and floor plans, analysts say.

'Vista Residences offer smaller size units that command higher psf pricing and also smaller balcony space than The Arte,' OCBC Investment Research analyst Foo Sze Ming said in a note yesterday. 'As such, we caution that the strong buying momentum at higher psf pricing for the new launch should not be viewed as a new uptrend for property prices.'

Mr Foo said that it is too early to call a recovery in the property market. 'We remain unconvinced by the recent 'recovery' in the physical property market,' he said.

'We believe buying strength over the recent weeks could have been driven by the spillover effect from earlier pent-up demand that drew cash rich local investors back into the market. In our view, potential catalysts for price increase will have to come from an inflow of foreign funds into the property market, as well as a pick up in employment opportunities.'

Foreign funds were the driving force of the property boom in 2007, but have not come back to the market in a big way.

Looking ahead, more mass-market and mid-market launches are expected in the coming weeks, including Oasis@Elias, a 388-unit, 99-year leasehold project at Elias Road by Chip Eng Seng, and The Gale, a 329-unit, freehold project at Flora Road by Tripartite Developers.

Source: Business Times, 30 June 2009

Monday, June 29, 2009

Sky@eleven sees resale gains of 28% and up

There was a significant jump in the number of secondary market transactions at projects near the CBD earlier this month. In the Thomson area, at Sky@eleven, three units were sold in the first week of June for between $1,140 psf and $1,200 psf. The most recent transaction was a 1,851 sq ft unit on the 24th floor, which changed hands at $2.2 million or $1,200 psf. The seller had purchased the unit from the developer for $1.7 million or $931 psf in 2007 when the project was launched. This represents a gain of over 28%.

On the 25th floor, a larger unit was sold for $2.59 million or $1,140 psf. It was the third time in two years that the property changed hands. It was sold for $2.5 million or $1,101 psf in April 2007 and $2.08 million or $917 psf in February 2007.

The project, by Singapore Press Holdings, is targeted for completion next year. Less than 1% of resale units were sold below launch price according to SPH’s 1H2009 results presentation slides dated April 13.

Over at the 545-unit RiverGate along Robertson Quay, a spike in transactions in the resale market is also evident. There were 16 transactions ranging from $1,270 psf to $1,582 psf from May 30 to June 5 according to caveats lodged with URA Realis. The largest unit sold during the period was a 3,842 sq ft apartment on the 38th floor that changed hands for $6.08 million or $1,582 psf.

Sentiment has improved in recent months. From January to March, the project saw only 11 transactions in the secondary market in the price range of $1,130 psf to $1,416 psf. Sales started to pick up thereafter, with 51 transactions for the period from April 1 to June 5 with prices trending higher, ranging from $1,146 psf to $1,582 psf.

As one of the few waterfront sites along the Singapore River, the 43-storey development was highly sought after by foreign and local buyers during its launch in 2005. RiverGate, a joint-venture project by CapitaLand and Hwa Hong Corp, received its TOP in March. In 2007, at the peak of the property market, prices of one of its units soared to as high as $2,701 psf.

Over at Orchard, a unit at Vida sold for more than $2,000 psf. The buyer of a 527 sq ft apartment on the 13th floor paid $1.07 million or $2,029 psf to the developer at the launch of this exclusive condominium. At Scotts Highpark, a 4,208 sq ft unit on the 17th floor changed hands at $8 million or $1,901 psf. The seller had purchased it for $8.05 million or $1,914 psf from the developer in 2006 during the launch.

About 10 minutes away from Orchard Road, along Leonie Hill Road, two leasehold apartments at Horizon Tower were sold at below $1,000 psf. On the 15th floor, a 2,486 sq ft unit changed hands for $2.03 million or $816 psf. On the 13th floor, a smaller unit was sold at $1.82 million or $751 psf. The seller had purchased the unit for $1.135 million or $439 psf in 2003.

While prices and sales volume have moved up, some market watchers warn that the upswing may not be sustainable given a weak rental market and oversupply.

Source: The Edge, 29 June 2009

Take two reveals a brighter property picture

Credit Suisse revises downward its initial estimates for a foreigner exodus

(SINGAPORE) Credit Suisse, which predicted in January that an astonishing 200,000 foreigners and permanent residents (PRs) might leave Singapore in 2009 and 2010 on the back of job losses, now thinks that the exodus may not be as bad as it had expected.

The evidence for this can be gleaned from the bank's forecasts for the property market.

Based on its economists' expectations of historically high job losses (up to 240,000) and an exodus of foreigners (up to 200,000) by the end of 2010, the firm's property analyst Tricia Song had previously assumed that 15,000 homes could be vacated by 2011.

But in a report dated June 19, she says she now believes that just 3,000 private homes will be vacant from 2009 to 2011 as foreigners leave the country.

'Anecdotally, we expect that the number of foreigners leaving Singapore will not be as high as we had expected,' said Ms Song in the report.

This also means that private home prices will not be as badly hit as the firm predicted just six months ago. Credit Suisse had expected private home prices to fall by as much as 60 per cent from the peak to 2005 levels, partly because of the projected 200,000-foreigner exodus.

However, in part due to the smaller-than-expected job losses and foreigner exodus, Ms Song now says home prices could dip 25 per cent in 2009 before recovering 10-15 per cent in 2010.

The main cause for the change of view is a recent update by economist Cem Karacadag, who was part of the team that in January predicted that some 200,000 foreigners and PRs might leave Singapore in 2009 and 2010.

Credit Suisse said then that the potential drop in employment and population would have far-reaching implications for the economy.

But in a recent report, Mr Karacadag said job losses have not been as large as he had feared.
'Singapore's labour market has held up remarkably well in this recession and much better than we had anticipated,' he said in a June 19 economics note.

Among various things, employers appear to have adjusted labour costs through salary cuts rather than cuts in headcount, he said.

Job losses so far this year have been surprisingly low against unprecedented job gains in 2007 and 2008, the note said. Net employment fell by only 6,200 in Q1 2009, although Singapore's real GDP was 10 per cent lower in Q1 2009 compared to Q1 2008.

Mr Karacadag also upgraded his forecast for Singapore's 2010 GDP growth to 4.4 per cent, from 3.9 per cent.

Source: Business Times, 29 June 2009

Slide in top grade office rent slows: JLL

Property consultants report a marked pick-up in leasing deals

(SINGAPORE) The average monthly prime Grade A office rental fell 11 per cent quarter on quarter to $9.50 per square foot (psf) in the second quarter, slower than the 28 per cent quarter-on-quarter slide in Q1 2009, according to property consulting group Jones Lang LaSalle (JLL).

The latest drop translates to an overall slide of 48 per cent from the peak of $18.40 psf in Q3 last year.

The vacancy level of Grade A space rose to 6.1 per cent as at end-Q2 2009, up from 5.4 per cent at end-Q1 and 2 per cent at end-2008. JLL's prime Grade A office basket covers the best properties in the Raffles Place area, and includes One Raffles Quay and One Marina Boulevard.
JLL expects office rents to continue falling for the rest of this year and into the middle of next year, albeit at a more moderated pace, as substantial physical supply and weak global demand continue to overshadow the market.

Property consultants point out that net demand remains in negative territory. And with around eight million square feet of new offices slated for completion between now and 2013, the office market isn't out of the woods yet.

But the silver lining is that Singapore will become more cost-competitive and regain its attraction as a hub for global banks and MNCs when they stabilise their headcounts, says JLL's head of markets, Singapore, Chris Archibold.

For now, the bright spot for the office market is a significant pick-up in leasing volumes lately.

'There has been a marked increase in the volume of leasing and inspection enquiries recently. A significant number of these tenants are looking at remaining within the CBD core area,' said Mr Archibold.

Said DTZ executive director (business space) Cheng Siow Ying: 'At least now, corporates are more willing to talk about their future real estate needs. There's recognition that a lot of good-quality office space is becoming available at competitive rents, presenting attractive leasing opportunities. Six months ago, most corporates were not even reviewing their space needs.'

CB Richard Ellis executive director (office services) Moray Armstrong, too, has seen a 'strong resurgence' of leasing activity in the past couple of months. 'But in truth, it's not representative of positive office demand. Rather what we appear to be seeing is the welcome transition to a phase of greater stability, which is allowing occupiers to re-visit premises planning. For the most part, the tenants that are active are chasing lower cost and better value - in some cases by relocating to newer buildings at the fringe of the CBD,' he added.

Giving some examples, Mr Armstrong noted that office developments such as 78 Shenton Way Tower 2 and Mapletree's The Anson - both of which are completing in the next two to three months - are attracting keen interest.

According to JLL, lease renewals continue to dominate deals in the current market where occupiers have generally cancelled if not deferred their expansion plans.

'While there has been more positive news of late, our domestic economic growth remains weak and this will likely continue to cast a shadow over the Singapore office property market over the next six to nine months,' says JLL's head of SEA research Chua Yang Liang.

Office leasing consultants say it's too early to declare a recovery. Projections of negative office take-up this year range from 500,000 sq ft to 1.5 million sq ft. Demand is expected to fall short of new supply in the next few years.

And that's not counting shadow space or excess space that companies try to sublet. In addition to some 400,000 sq ft of shadow space immediately available for occupation, JLL estimates there is a further 400,000 sq ft in the pipeline.

Summing things up, Mr Armstrong said: 'We can't really call a recovery in the office market until demand turns positive and vacancy rates reduce significantly. It's hard to imagine that will occur in the next 12-18 months, but there is a stronger case for the market turning 2011 onwards.'

Source: Business Times, 29 June 2009

Sunday, June 28, 2009

Er, what does a mortgagee sale mean?

Where do you see this?
In financial news articles, classified advertisements and auction houses' list of properties on offer.

Where do you see this?
In financial news articles, classified advertisements and auction houses' list of properties on offer.

What does it mean?
A mortgagee sale takes place when a bank force-sells a property after it has repossessed it, when the borrower cannot pay his mortgage. The repossessed property is usually sold via an auction by the bank - and often as a last resort - to recover the debt of the defaulted borrower.

Why is it important?
Such forced sales can throw up great bargains for investors.
A surge in the number of repossessed properties is a sign that the economy is not looking good. It signals a worsening property slump.

For instance, the number of such properties shot up at auctions during the economic crises of 1986 and 1998, when many homeowners struggled to pay their mortgage instalments.
But this time round, the number of mortgagee sales has not risen.

So you want to use the term. Just say...
'I have been monitoring auction houses' list of mortgagee sales to see if I can get my hands on a real bargain.'A mortgagee sale takes place when a bank force-sells a property after it has repossessed it, when the borrower cannot pay his mortgage. The repossessed property is usually sold via an auction by the bank - and often as a last resort - to recover the debt of the defaulted borrower.

Why is it important?
Such forced sales can throw up great bargains for investors.

A surge in the number of repossessed properties is a sign that the economy is not looking good. It signals a worsening property slump.

For instance, the number of such properties shot up at auctions during the economic crises of 1986 and 1998, when many homeowners struggled to pay their mortgage instalments.
But this time round, the number of mortgagee sales has not risen.

So you want to use the term. Just say...
'I have been monitoring auction houses' list of mortgagee sales to see if I can get my hands on a real bargain.'

Source: Sunday Times, 28 June 2009

Pickup in private homes market

Sales remain strong; top-end rents rebound slightly but analysts say it may be just a small 'blip'

The Singapore private homes market has been seeing quite a bit of activity on improved sentiment, in contrast to the prevailing weak economic climate.

New home sales have remained strong, crossing the 1,000-unit mark every month since February, and the sentiment has spilled over to the resale market.

Last week's data from Jones Lang LaSalle showed that resale home deals had risen 71 per cent so far in the second quarter to 1,464 units, from 856 units in the first quarter.

Even the prime homes market - believed to be the worst-hit sector, with prices and rents dropping significantly from figures in the boom days of 2007 - saw higher rents lodged at the top end.

A few luxury home deals were done at higher prices, bucking a downward trend that began a year ago, said CB Richard Ellis (CBRE).

For instance, a furnished high-floor 2,885 sq ft unit at the posh Ardmore Park was leased out in April at $19,500 a month, and another similar unit there was renewed at $20,000 a month.
It was only a few months ago when Ardmore Park units were leased out for $15,000 to $17,000 a month.

Over at Grange Residences in Grange Road, a well-renovated 2,853 sq ft unit recently fetched $20,000 a month, even though there were other similar-sized units available at a lower rent, said CBRE.

Demand for rental homes so far in the second quarter came from new expatriates as well as existing ones who were renewing their leases or moving to new premises.

CBRE executive director (residential) Joseph Tan said that even as multinational corporations in the financial sector are still reducing their expatriate teams, the commodity, petrochemical and energy sectors have been bringing in more expatriates recently.

But not all leases are at higher levels. CBRE said rents for the lower-tier apartments in prime areas and the rest of Singapore are lower.

Explaining the slight rise in luxury home rents, it said some expatriates whose housing budgets have not been cut took the chance to upgrade to better or bigger units as rents have generally fallen in the past year. Also, traditionally, the second quarter sees a high level of leasing activity because expatriates are getting ready for their children's new school year at international schools here, experts said.

'New expatriates will always make a trip in May or June to search for a place,' said Savills' director of residential leasing, Mr Patrick Lai. 'Based on the leasing activity in May and June, top-end rents appear to have stabilised. There may be some downward rental movements for condos but I don't expect any dramatic upheavals in rents.'

Property consultancy Jones Lang LaSalle's head of residential, Ms Jacqueline Wong, said that rents for luxury apartments did bounce back slightly recently but it is just a 'slight blip'.

It is due to a temporary short supply, she added. Quite a lot of prime projects with large luxurious apartments were sold en bloc during the boom. But they will be replaced with additional new prime supply from perhaps next year, she said.

Also, luxury home landlords with holding power are unwilling to reduce their rents, said CBRE.
Analysts at research houses have recently highlighted falling prime rents as a key concern in the residential market, given the expected rise in completed condos in the central region. For instance, Credit Suisse recently said in a report that prime rental yields could fall to 2.4 per cent, from 3.4 per cent, though they would still be higher than bank deposit rates.

Source: Sunday Times, 28 June 2009

Terrace house in HDB flat

Financial planner Sivakumar Arumugam tells Debbie Yong how an outdoor garden and country-style decor make his first-floor HDB flat feel more like a terrace house.

Sivakumar Arumugam, 37
Financial planner
Lives in a 148 sq m HDB executive maisonette in Bishan
Lives with his wife Raji, 36, a customer service manager

I love my home because...
It is very accessible. I also love my neighbourhood and the sunny garden we have created outside our main door as our unit is on the first floor.

My decor theme is...
Country. My wife and I lead hectic working lives and the moment we walk through the front door, we feel we've left the world of modern living behind, and that relaxes us. My friends always tell me they feel like they are in Australia or Europe when they visit our home.

My favourite corner is...
The dining room because it is so calming and relaxing. It is where we spend much of our time. We like to sip coffee and read the newspapers there, especially on Sunday mornings.

I am most proud of...
The decor. We have been approached several times to have our home featured in home decor magazines. Passers-by always comment that our home is more like a terrace house. We have travelled all through the United States, Europe and Australia and the antique clocks, vases and lamps displayed all over our house are the souvenirs we have accumulated over the past nine years.

Will I sell it?
No, I won't sell it unless an irresistible offer comes along.

Source: Sunday Times, 28 June 2009

Yishun town centre to get new look

Look out for a three-storey lookout tower.

That is one attraction that residents in Yishun can look forward to when the town centre is transformed in the coming years.

Coming up, too, are a new shopping complex linked to a condominium, an air-conditioned bus interchange and a remake of Yishun Pond.

Yishun is one of three towns selected for rejuvenation under the Housing Board's Remaking Our Heartland initiative. The other two are Punggol and Queenstown.

The HDB shared its plans with reporters yesterday.

The lookout tower at Yishun Pond, beside the new Khoo Teck Puat Hospital, will offer panoramic views of the town centre when its construction is completed by the end of next year.

The 12.5m-tall tower will have a 94m-long curving ramp that will take visitors to the top.

Said Ms Nina Yang, senior vice-president at CPG Consultants, the firm in charge of the design: 'The tower is designed according to the theme of nature and the metamorphosis of a butterfly. Similarly, it showcases the metamorphosis of Yishun New Town too.'

The area near the MRT station will have a shopping complex integrated with housing. The retail space is touted to exceed that of the Northpoint Shopping Centre. A tender for the project is expected to be called in 2011.

By next year, other developments that will be ready include an upgrading of the pedestrian mall and a heritage corner and trail.

Mr Fong Chun Wah, director for building quality at HDB, said the upgrading of the pedestrian mall will make it more elderly- and handicapped-friendly.

It will have ramps and newly paved floors.

Engineer Bryan Tan, 33, an Yishun resident for 10 years, is looking forward to the changes.

'I know that these projects will still take some time to complete, but I'm very glad they are making the bus interchange air-conditioned as it is rather old now,' he said.

Source: Sunday Times, 28 June 2009

Saturday, June 27, 2009

Auction sales surge in first half to $72m

Figures show uplift in property market over the past few months

AUCTION sales have surged in the first half of this year, with the number of transactions dramatically higher than what was clocked up last year.

The numbers tell a story of a property market rapidly gaining in confidence, especially in recent months, according to consultancy Colliers International yesterday.

Sales in the first half reached $72.39 million. That is 61 per cent up on the $45 million recorded in the second half of last year, and 87 per cent higher than the $38.64 million racked up in the same period a year ago.

Much of the pickup happened in the second quarter, after the stock market rallied and sentiment improved. This month has seen strong sales of $24.7 million, compared with the miserable $3.6 million sales in January and $1.4 million in February.

Jones Lang LaSalle, which conducted the last auction for this month yesterday, said it sold four properties worth $11.29 million, including a $3.45 million Leonie Towers apartment.

Sales were lacklustre in the first quarter because buyers had bid very low and opportunistic prices, said Ms Grace Ng, Colliers' deputy managing director (agency and business services) and auctioneer.

The mood in auction rooms now is decidedly more upbeat, with sellers keen on repricing properties about 5 per cent to 10 per cent higher, said Knight Frank auctioneer Mary Sai.

But the increased expectations do not signal a clear price rise yet. 'Prices were lagging behind the market so the sellers were moving up to match the market,' Ms Sai said. 'Those that we sold were mostly the $800,000 to $1 million types. These are the safe buys as mass market homes aren't likely to retreat much.'

The buying mood has even carried over from mass market homes to some landed and high-end property, said Ms Ng. These include two apartments at The Clift worth $605,000 and $1.047 million.

Few mortgagee sales have occurred this year despite the weak economic climate. The 103 repossessed units on the block represented only about 23 per cent of total properties put up for auction in the first half. This compares with 28 per cent last year, 44 per cent in 2007 and 50 per cent in 1998.

The number is about half of what was put up during the Asian financial crisis in 1998.

In all, there were 54 homes sold through auction in the first half.

'The continued low number of mortgagee sales could be partly attributed to financial institutions attempting to manage their distressed asset portfolio by giving property owners the opportunity to dispose of the property of their own accord,' said Ms Ng. 'There will be less contention over the sale price, as the price is determined through a consultation process with the owner.'

Ms Ng expects to see more mortgagee sales in the second half of the year due to the general lag time of approximately six months or more.

Ms Ng also expects the buying momentum to persist in the next few months, possibly leading average monthly auction sales to surpass $30 million in some months. That could send auction sales over $160 million for the year, almost twice the $83.67 million achieved last year, she said.

Source: Straits Times, 27 June 2009

Friday, June 26, 2009

Re-inventing Ascott as a real estate firm

KNOWN largely as an owner-operator of serviced residences, CapitaLand unit The Ascott Group will increase its focus on buying, investing in and trading serviced residence assets.

'One of the things I want to do is to re-invent Ascott to be a real estate company with a hospitality arm,' CapitaLand group president and CEO Liew Mun Leong said yesterday. CapitaLand too Ascott private last year. According to Mr Liew, the bulk of Ascott's earnings already come from trading real estate. Hospitality operations make up a small portion of the bottom line and are a 'laborious' way to profits, he said.

Ascott will pay greater attention to deals involving serviced residences but will not be interested in hotels, said Mr Liew. And even with the shift in focus, hospitality operations will remain an 'important value-add' to the business.

Ascott has some 25,000 serviced residence units in the Asia-Pacific, Europe and the Middle East through its three brands - Ascott, Somerset and Citadines.

Mr Liew said prospects are bright for the serviced residence industry in China, Europe and Australia.

Source: Business Times, 20 June 2009

S’pore’s rich list takes a beating

SINGAPORE’S rich were not spared the effects of the global financial meltdown last year, with the number of millionaires here shrinking 22 per cent to 61,000 people.

A year earlier, Singapore boasted one of the world’s top 10 fastest-growing millionaires’ clubs, with a 15.3 per cent expansion to 78,000.

A millionaire is defined as a person having net assets of at least US$1 million (S$1.45 million), excluding his main residence and everyday possessions.

Observers say the sharp drop is probably because the well-heeled here were invested heavily in equities and real estate, both of which have suffered in the crisis.

The figures emerged in the 13th annual World Wealth Report released yesterday by banking group Merrill Lynch and research firm Capgemini.

On average, Singapore’s ‘high net worth individuals’ were worth about US$3 million each, said Mr Kong Eng Huat, managing director and head of South Asia advisory at Merrill Lynch Global Wealth Management.

‘A lot of these (individuals) are in the US$1 million to US$5 million range. So that’s why you find a greater drop in terms of the high net worth population because…when the market comes down and they have invested heavily in equities then they would not be a high net worth individual any more,’ he added.

Globally, the number of people in the millionaires’ club fell by about 15 per cent to 8.6 million, which is below the figure in 2005. North America, Europe and the Asia-Pacific registered the largest declines.

The total wealth of these individuals fell to US$32.8 trillion, also below the levels in 2005. However, this is forecast to recover in all regions by 2013, with Asia-Pacific leading the growth.

More than half of the world’s millionaires last year came from three countries – the United States, Japan and Germany. The proportion is a slight increase from the year before.

China climbed one rung to become the country with the fourth largest millionaires’ population of 364,000.

The World Wealth Report also indicated that the millionaires have reacted to the crisis by moving more of their assets into cash and fixed-income securities – and away from equities.

A larger proportion of wealth was allocated to art collections and jewellery, gems and watches. This category hit 47 per cent last year, up from 38 per cent in 2006.

Mr Bhalaji Raghavan, Capgemini’s banking solutions leader for Asia-Pacific, said: ‘One of the reasons is that people believe that (these items) over a long period of time increase in value, so it’s a lot safer than putting their money in financial markets.’

Giving to charity was forecast to be on the decrease on average across the globe this year, especially in North America, but increasing in the Asia-Pacific region.

Private banks contacted by The Straits Times said their clients are now staying away from high-risk investment products.

‘Currently, it is back to basics of investment, and we have seen that cash positions in portfolios are high,’ said Mr Rajesh Malkani, Standard Chartered Private Bank’s head of Southeast Asia.

Mr Raj Sriram, RBS Coutts’ head of private banking in Singapore, agreed: ‘From a private bank perspective, the main challenge is that clients have become more risk averse due to volatility in the markets…Clients today largely prefer simpler, liquid investments.’

Source: Straits Times, 26 June 2009

Retail gets a facelift in Orchard Road

ORCHARD Road, Singapore’s most famous retail belt, is set to be the densest shopping street in the region, according to the Orchard Road Business Association.

With three new mega-malls scheduled to open for business by the end of the year, about 1.8 million sq ft of new retail space will be added, bringing the total space available on Orchard Road to 8 million sq ft. And the 2.2km stretch of road is also set to reveal a new look as $40 million worth of refurbishments and enhancements to infrastructure are nearing completion.

Naturally, the Orchard Road Business Association is pleased with the makeover.

“We see 2009 as a year that we will remember as a milestone in the modern Orchard Road, ” said chairperson Sng Ngoi May. “The government is spending about $40 million, resulting in wider, re-tiled pedestrian walkways, urban green rooms and state-of-the-art lighting, all of which will lend the environment for more street activities.”

The revamped Orchard Road is expected to draw in larger crowds. Already, it attracts more than 7 million foreign visitors every year, along with hordes of local shoppers. It has, in fact, been consistently ranked as Singapore’s most-visited, free-access tourist attraction.

Cushman & Wakefield’s associate director of retail, Mr Turner Canning, said the three new malls would allow existing brands to expand and provide “a format for them to express themselves in Singapore where they’ve never done so before”.

Orchard Central will be first new mall to open in the Orchard area in more than a decade when its soft launch takes place on July 2. The new kid on the block is upbeat about business prospects.
“This part of Orchard Road has not been maximised in terms of its potential, ” said Ms Susan Leng, director of retail management at Far East Organisation. “With the new Somerset precinct, and with ourselves, with established neighbours like Centrepoint, we’ll create a stronger magnet for both locals and tourists.”

ION Orchard is also set to open next month. It will change the look and feel of the shopping belt with its media wall, which will showcase the mall’s brands, and serve as a canvas for multimedia art.
The overall transformation is timely. Said Mr Canning: “18 months ago, Orchard Road was a bit behind the curve. There had been no significant developments or changes along the road for roughly 10 years, since the crash in 1997. What we’re seeing now is a rejuvenation.”

Source: Today, 26 June 2009

Not collectively speaking

IN HIS Monday Blues column, Today Editor-At-Large Conrad Raj opined that it is “Time to revamp the Strata Titles (ST) Boards” (June 22) .

In fact, it is not merely the composition of the ST Boards, but the present ST rules as well that need to be looked into, and a thorough “revamp” made in the larger interests of subsidiary proprietors (SP), as unit owners in private estates are described.

A report in The Business Times in March 2008 reported that “The Ministry of Law is understood to be planning a review soon (sic) of the revised en bloc legislation, which took effect on Oct 4 (2007)”, with a Ministry of Law spokeswoman on record as saying: “Since the amended Land Titles (Strata) Act came into effect, we have received feedback mainly from affected owners to make the collective sale process even more rigorous by introducing more safeguards”.

That was well over a year ago. All that has happened since is that there have been several legal suits involving collective sales, with some startling decisions. There is no escaping the stark reality that the threat of an en bloc sale will always exist whether the property market is robust or moribund as long as a collective sale will fetch more than scattered sales of individual units.

It is only fair to all who own and live in private estates that the Government makes known speedily whether the changes, once proposed, are likely to be reviewed.

For the huge majority, the purchase of a property is without question the biggest capital investment they make in their lifetime, and typically they spend most of their working lives to pay off for their homes. Seen in this light, and against the Government’s once-avowed objective of promoting self-houseownership, and its natural extension to sinking roots in Singapore, it bucks logic or even a sense of justice that many or even just some of them should be compelled to move out of such homes against their will because of an en bloc sale, even if some capital profit is realised in the process.

There are plenty of areas where the present rules can, and in fact, urgently need to, be changed.
The rate of success of collective sales varies depending on the age of the estate. In public-listed companies, where the individual stakes can be quite minimal and the emotional impact much less in comparison, the rule is that as long as 10 per cent of the capital still remains in the hands of minority shareholders, they cannot be compulsorily bought out.

Legislation should also be introduced that SPs who have an alternative property to which they can move in the event of a successful en bloc sale should be automatically disbarred from voting in favour of such sale, as they are in the privileged position vis-a-vis SPs who own just the property they stay in.

I have heard of some who buy a property with the intention of starting an en bloc sale, in the hope of benefiting from the resultant increased price at which it would most probably be sold.

SPs themselves and/or those who have close relatives in the property business should also similarly be disbarred from participating, as there is bound to be the suspicion of a conflict of interest, or even collusion.

One thing is certain when en bloc sales come into the picture: The harmony of neighbourly living is disrupted, and probably lost for ever, sometimes leading to acrimony and unsocial, even criminal, acts of vandalism as was widely reported in the media. If the changes in rules made in October 2007 have according to the Ministry of Law led to complaints by affected owners, it is probably time to scrap those rules altogether, and leave the purchase and sale process to individuals, and a collective sale to proceed only where there is total unanimity among owners, as is the case in landed property.

A Singaporean’s home should remain his castle, in which he can lock himself securely against en bloc raiders bent on ejecting families for their own purely selfish ends. It is imperative that Govenment moves swiftly towards the changes they intended to make early last year.
Narayana Narayana

Source: Today, 26 June 2009

Hotel 81 in Tiong Bahru?

ALTHOUGH the concerns raised by residents are not baseless, approval of a hotel development in the area is in line with demand for more hotels as Singapore gears up for the integrated resorts launch and major events like Formula One and the Youth Olympic Games.

It is shortsighted to claim that an hourly hotel will encourage vice in the area. Vice can be conducted in any hotel. Major five-star hotels see engagements between high-class call girls and their high-net-worth customers. Tiong Bahru residents may have overlooked the fact that the area was once home to drug peddlers and loan sharks. It was not exactly wholesome to begin with.

Hotel 81 started next to Upper Serangoon Shopping Centre in 2007 in the midst of landed properties and HDB flats. I have lived in this area for more than two decades and even after the opening of the hotel, there have been no vice activities.

Raymund Koh

AS NEW home owners in Tiong Bahru, my wife and I are naturally anxious about the imminent presence of Hotel 81 in Eng Hoon Street.

The crux of the matter is that if the hotel institutes hourly and transitory rates, it sets environmental conditions and encourages vice activities.

We choose to live in Tiong Bahru because of its vibrant community, rich history and robust heritage.

I find it difficult to appreciate the evolution of the neighbourhood without being critical about what this means to residents and how changes affect the community’s values and way of life.

In an estate with conservation status and tremendous cultural legacy, it is perplexing that there is a distinct lack of collaborative and consultative approach by the authorities in planning and developing the neighbourhood.

Sean Ng

Source: Straits Times, 26 June 2009

$44m bid triggers tender for New Bridge Road site

HOTEL site on New Bridge Road is up for public tender after an unnamed buyer put in a bid that matched or exceeded the Government’s minimum price. This has triggered the tender process.

The site was on a reserve list and goes on sale only when developers indicate a certain level of interest. In this case, an undisclosed developer committed to a bid of at least $43.8 million.

The Urban Redevelopment Authority (URA) said yesterday that it will launch the tender for the 99-year leasehold site in about two weeks and the launch date will be announced later.

The land parcel has a site area of about 0.45ha and can generate a maximum permissible gross floor area of 15,687 sq m and is ideal for a boutique hotel, said the URA.

This site is in Chinatown and suitable for a three- or four-star hotel.

A recent survey conducted by the Asian Real Estate Association showed that the hotel sector was the least preferred segment this year compared with land for residential, retail, office and industrial uses.

But there will still be keen investors given the improved sentiment, said a property expert.

He said that some hotel investors may believe that the worst is behind them and that the market will improve by the time the project is completed.

They could also be banking on the integrated resorts to bring more tourists to Singapore, he added.

Industry watchers said the triggering bid for the New Bridge Road site is also another sign of increased optimism about the economy.

Earlier this month, a small Short Street hotel site received 15 bids with the winning tender offering 76 per cent above the trigger price.

Source: Straits Times, 26 June 2009

ABC guide to green design for developers

RAIN gardens and plant-covered condominiums could become commonplace if new design guidelines from the PUB are implemented by developers.

The guide, part of the Active Beautiful Clean Waters (ABC Waters) Programme, is aimed at developers, both public and private, and details ways in which drainage systems and water features can filter rainwater before it reaches the canals and reservoirs.

One of the ways this can be done is by using bioswales or rain gardens – shallow ditches containing top soil and plants with drainage pipes beneath. The top soil acts as a filtration system, slowing down and cleansing the water before it reaches the public drains, cutting down on dirt and reducing surges.

The founder of city planning firm Atelier Dreiseitl Asia, Mr Herbert Dreiseitl, who contributed to the drafting of the guidelines, said the process mimics nature. ‘Rainwater very quickly goes down drains, taking all litter, rubbish and dirt with it to the the reservoirs. Top soil is like a treatment plant – it can filter out nitrates and phosphates, as a forest does, and it can really purify the water perfectly.’ The hope is that this will one day lead to cleaner reservoirs and thus cut down on treatment costs.

DP Architects director Tai Lee Siang, who is on the programme’s review panel, said that with climate change having a high profile, more developers are now taking an interest in green buildings. ‘It will be interesting to know if the private sector will take it up. For very small projects…it won’t be easy as there are already many constraints with land and cost pressures, but for larger projects, it will be considered.’

One private developer already implementing such ideas is GuocoLand Group, which was praised by Senior Parliamentary Secretary (Environment and Water Resources) Amy Khor at yesterday’s launch.

Its up and coming Goodwood Residence and Sophia Residence projects both have water recycling systems and have won the Building and Construction Authority (BCA) Green Mark Platinum Award – the highest accolade for green buildings here.

Green Mark points await developers which implement the ABC guidelines, and PUB director of catchment and waterways Tan Nguan Sen hopes the BCA will up the allotted points for ABC features.

He said the guidelines are not mandatory now.

There are now about 10 private-sector projects looking at incorporating water recycling in their designs, he said.

The guide is the final part of the ABC Waters Programme, launched in 2006 to transform Singapore’s 15 reservoirs, 32 major rivers and 7,000km of waterways into places of beauty for recreation.

Source: Straits Times, 26 June 2009

60% of Sentosa IR will be ready when it opens

THE Sentosa integrated resort (IR) is all set to throw open its doors in the first quarter of next year – but visitors will not get to see the finished product.

When the resort opens, just 60 per cent of it will be ready: four hotels, the casino, the Universal Studios theme park, the theatre and the retail and dining area.

Construction of the other attractions at the 49ha resort – including the world’s largest oceanarium, a marine museum and two more hotels – will begin next year and is slated for completion by 2012.

Giving an update on the progress of the IR yesterday, Resorts World at Sentosa (RWS) executive vice-president of projects Michael Chin said some 80 per cent of construction for the first phase of the resort has been completed.

What remain to be done are exterior works and outfitting the rides for the theme park.

This should be completed by August.

After that, the resort will be testing the rides and other amenities, and getting staff up to speed on operations.

Asked about prices for the rides, the resort’s head of communications Krist Boo declined to give details. But she said that charges would be kept ‘affordable’ and that they would be competitive when compared with other theme parks.

She added that prices would be comparable and likely cheaper, dollar-for-dollar, than those at Universal Studios’ other parks in Orlando and Osaka, where day passes go for US$70 (S$100) and 6,000 yen (S$90), respectively.

Ms Boo acknowledged that there are some clouds on the horizon for the IR.

Because of the tough economic times, the resort would have to slash its visitor forecast for the first year from 15 million to 12 million, she said.

She added that it had also lowered the expected growth rate of returns on investment for the $6.59 billion project by one to two percentage points from the previously projected 15 per cent.

Spending by visitors is also expected to be less, she said, but did not elaborate.

Also, there are no takers for some of the retail space at the resort.

‘To be honest, the retail landscape is a little challenging now,’ she said.

Despite these concerns, however, the Sentosa IR is still confident of pulling in large crowds.

‘For visitors in this region, they don’t have to travel too far to enjoy a world-class attraction,’ she noted.

The resort’s main target will be visitors from countries within a seven-hour flight range of Singapore.

The exact date of the IR’s opening is expected to be firmed up by the end of the year.

Singapore’s other IR, the Marina Bay Sands, is also scheduled to open in stages, with the first opening expected at the end of this year.

Source: Straits Times, 26 June 2009

RWS structural works ending

RESORTS World at Sentosa (RWS) will complete all structural buildings by next month – 27 months after it broke ground in April, 2007.

Michael Chin, RWS executive vice-president, said yesterday that the Ministry of Manpower (MOM) has approved the company’s request to increase the quota of foreign workers on site.

MOM is also understood to have approved an increase in the foreign worker quota at Marina Bay Sands (MBS) resort.

Mr Chin said that there are about 6,500 workers on the RWS site and this will increase to 8,000-9,000. ‘All effort is being made to open as early as we can.’

The first-mover advantage will be important, especially as both RWS and MBS have casinos and are likely to open around the same time. Mr Chin would not discount opening during the lucrative Chinese New Year period in February 2010 when gambling is a popular activity.

With about 80 per cent of the main construction work already completed, all that is left is to fit out the buildings. This will include Universal Studios Singapore, four hotels and the casino. Mr Chin said that by August, most of the rides and shows at USS will be ready for testing.

RWS is confident that its resort will attract 12-13 million visitors in the first year. But spokeswoman Krist Boo said that visitor spending may be affected by the global downturn. As a result, RWS has reduced its investor rate of return (IRR) by one to 2 percentage points. Ms Boo would not reveal the IRR on its $6.6 billion investment, but it is likely to be in the region of 15 per cent. She said that more than half of RWS’s revenue is likely to be generated by the casino.

USS will also be a revenue generator, but Ms Boo said that RWS is aware that ‘USS will have to be affordable’. Entry prices will be lower than those at other Universal Studios theme parks in Japan and the US, she said. A check with the Universal Studios websites shows a one-day pass costs 5,800 yen (S$88) at Universal Studios Japan and US$75 (S$109) at Universal Studios Orlando.

Source: Business Times, 26 June 2009

URA tender for hotel site coming up

THE Urban Redevelopment Authority (URA) will launch a public tender for a hotel site at New Bridge Road in two weeks’ time, it said yesterday.

The 0.45ha site was made available for sale through the government’s reserve list system in April 2007. Under the reserve list system, the government will put up a site for public tender only if it receives an application from a developer who commits to bid for the site at or above the minimum price which is acceptable to the government.

URA said that it has received an application from a developer who has committed to bid at a price of not less than $43.9 million for the land parcel, which triggers the public tender.

Analysts said that interest seems to be returning to small development sites with good attributes.
Earlier this month, a government tender for a small hotel site on Short Street closed with a whopping 14 valid bids received. The number of bids – 15 in all, including one bid judged invalid because it was below the minimum bid price – is one of the highest received for a Government Land Sales tender.

The New Bridge Road site, which can house a boutique hotel development with about 200 rooms, is also thought to be attractive as it is very close to Outram Park MRT Station and should receive several bids, analysts said. It has a maximum permissible gross floor area of 168,853 sq ft.

Source: Business Times, 26 June 2009

Current quarter sees big jump in property investment sales

Investment sales of Singapore real estate so far this quarter have hit $953.9 million, a jump of 248 per cent from $273.8 million in the first quarter, says CB Richard Ellis (CBRE).

The increase came as residential investment sales quadrupled on the back of a growing number of high-end condo purchases, a pick-up in transactions of Good Class Bungalows (GCBs) and the acquisition of a few small residential sites.

The sale of three office blocks – Parakou and VTB buildings on Robinson Road, and Anson House – for a total of $259.6 million also helped breathe some life into the moribund office investment sales market.

Investment sales are a gauge of developers’ and investors’ medium to long-term confidence in the property sector. The pick-up in Q2 was against the backdrop of a dramatic stock-market rally that has led to an improvement in home buying.

CBRE defines investment sales as transactions with a value of at least $5 million, comprising government and private sales of land and buildings, both strata and en bloc. It also includes change of ownership of real estate via share sales.

With a tally of $1.2 billion so far in the first half, CBRE executive director (investment properties) Jeremy Lake reckons full-year investment sales could come in at $2 billion to $2.5 billion, ‘depending on how long the burst of activity in the residential sector lasts’.

The figure for the whole of last year was about $18 billion, down from the record $54 billion in 2007.
As for the latest Q2 showing, 63.5 per cent or $605.6 million was from the residential sector.

This sum included 14 GCB deals, up from just three GCB transactions in the first quarter.

‘For the Singapore investment market, the first movers are the Asian private investors who are willing to buy at current prices which they deem reflect an attractive discount from the peak,’ Mr Lake said.

‘Their sweet spot is $20 million to $85 million and their focus is office and/or residential investments.’

On the other hand, institutional investors are mostly adopting a wait-and-see strategy for Singapore, judging that the fundamentals are weak and better opportunities will arise in six to 12 months.

‘For second-half 2009 there will be more investment deals, although most of the owners who wanted or needed to sell have already done so, and accordingly the choice of investment opportunities could be limited,’ Mr Lake said.

Agreeing, DTZ’s senior director for investment advisory services Shaun Poh said investment sales activity may ease slightly in Q3 because of a limited supply of small investment-quantum commercial properties available for sale.

‘However, we may see some deals that are currently cooking being sealed in Q3,’ he said.
‘For the residential sector, some developers who have enjoyed strong sales at their showflats over the past few months are looking to restock their residential land bank selectively,’ he added.

Source: Business Times, 26 June 2009

Thursday, June 25, 2009

ION Orchard to use technology to stand out from competition

ION Orchard is set to be only the second new mall to open on Orchard Road in the past decade on July 21, but it will face competition from new malls springing up along the iconic shopping belt in the next few months.

The shopping centre said it is looking to stand out from the rest through the use of technology, such as a multi-media wall that can change the appearance of Orchard Road.

It said it will be offering a unique shopping experience for patrons, and hopes to draw shoppers with a mix of large outlets and new concepts.

Said Soon Su Lin, chief executive officer of ION Orchard: “We wanted our tenant profile to be engaging and refreshing, and we set ourselves the ambitious target of having more than 60 per cent flagships, new to market, new concepts.

“Today we have exceeded this target – we have 70 per cent of tenants who are flagships, new to markets, new concepts.”

Among the new brands that have yet to be introduced to Singapore include the trendy Japanese restaurant Itacho Sushi.

Meanwhile, local tea salon TWG Tea Company will be making its largest investment to date at ION.
Said Maranda Barnes, director of TWG Tea Company: “The boutique will also be a bit larger. We can feature some museum pieces as well. Different teas, tea samovars, tea accessories that are one-of-a-kind pieces that we were not able to feature before.”

ION Orchard is pulling all the stops to make sure it is a success.

Apart from its retail offering, ION Orchard will also change the look and feel of Orchard Road.

For example, a multimedia wall will be programmed to display different lights and colours at different intervals to match different themed events.

Said Soon: “There are various factors to make the success of a mall. We felt we need to integrate all of this. Besides a strategic location, having a unique iconic building is important as well because we want to this be a must-visit destination in Singapore for shoppers as well as visitors to Singapore.”

The mall has its own art programme and a 5,000 square foot art gallery.

There will also be a calendar of events and promotions to be held at ION Square, which is right in front of Orchard Road.

The mall is jointly owned by Singapore’s CapitaLand and Hong Kong’s Sun Hung Kai Properties.

Source: Channel News Asia, 25 June 2009

Boom in resale homes

THE mini boom that started in the sale of new flats has now spread to the resale homes market, with transactions rocketing 71 per cent in the second quarter.

Sellers have quickly become attuned to the unexpected resurgence in demand and are jacking up asking prices, according to consultants Jones Lang LaSalle.

Much of the demand is coming from HDB upgraders who are still able to get reasonable prices for their flats, allowing them to move up the housing ladder.

The activity in the resale market follows strong sales of new private homes. Levels have exceeded 1,000 units every month since February compared with a monthly average of 330 units last year. Prices are also showing resilience amid the downturn, with resale prices beginning to rise in all categories.

The property sector rallies seem to contradict prevailing economic realities, industry experts acknowledge. DTZ’s head of Southeast Asia research, Ms Chua Chor Hoon, told a property seminar yesterday that it is too early to tell if the Singapore market is on its way to recovery: ‘Unlike Hong Kong, we don’t have a China behind us.’

Jones Lang LaSalle’s head of research for Southeast Asia, Dr Chua Yang Liang, told The Straits Times: ‘My concern is that the price rise in the resale market is not supported by economic growth or personal income growth.’ It is instead largely backed by money earned in the previous bull run, which is not sustainable, he said.

Resale demand, said Jones Lang LaSalle, is largely for finished projects, driven by the need for immediate occupation and good rental yields. Prelimary second-quarter estimates show HDB upgraders accounted for 46 per cent of resale deals, up 11 percentage points from a year ago.
HDB prices have not fallen much, so owners can still sell at attractive prices and upgrade to a private home. The demand has pushed up resale prices, even though affordability remains key.

While prices of freehold units were down 14.6 per cent on a per square foot (psf) basis in the second quarter, new mass market home prices were up nearly 7 per cent, said a CBRE Research statement yesterday. Subsale prices of 99-year leasehold apartments rose by 22 per cent in the second quarter.

When compared with prime market sectors, the mass market segment shows the highest rebound, said Jones Lang LaSalle. Average resale prices were up 9.4 per cent to $580 psf in the second quarter compared with the first quarter.

They are now 49 per cent above the low point of the second quarter of 2005 but remain about 17 per cent below the first quarter peak last year.

Average resale prices of prime luxury homes rose 7.8 per cent from the first quarter to $1,800 psf in the second quarter. But this is a fall of 45 per cent from the second quarter of 2008.

Some buyers are increasingly more willing to commit as they believe this discount is sufficient, said Jones Lang LaSalle. For instance, resale deals at Ardmore Park were done at an average of $2,146 psf in the second quarter compared with one deal at $1,976 psf in the first quarter.

Some analysts warn of too much exuberance given the ample supply and falling rents but others are more positive. A recent Credit Suisse report said that while new homes sales may slow, the resale market is likely to pick up the slack. An earlier UBS Investment Research report highlighted the rise in resale deals as evidence of sustainable recovery in the physical property market.

Source: Straits Times, 25 June 2009

Analysts see increased activity in investment sales market in Q2

There has been a huge spike in activity in the investment sales market in Singapore during the second quarter this year.

According to property consultancy CB Richard Ellis, total property investment sales in the period so far have amounted to some S$954 million.

The amount is up by more than three times from the previous quarter.

CBRE said Thursday the good showing was due to the sharp recovery in the stock market.
In particular, the residential market witnessed a substantial increase in buying activity.

Total residential investment sales, including Good Class Bungalows, accounted for 63.5 per cent of the total, or S$605 million in transacted value.

The figure is up sharply from S$150 million in the January to March period.

There was a sharp pickup in sales of Good Class Bungalows with 14 transactions, including the sale of 2 Binjai Rise, which was reportedly bought by actor Jet Li.

A hotel site at Short Street was also sold during the second quarter, under the government’s land sales programme.

Fragrance Assets was awarded the site after submitting the highest bid of S$15.5 million.

Source: Channel NewsAsia, 25 June 2009

Private resale home deals shoot up in Q2

Average resale prices up from Q1 but still significantly below peak levels last year
THE buying frenzy at property launches has spread to the secondary market. The number of private homes sold in the resale market – excluding sub-sales – has risen to 1,464 units this quarter, based on Urban Redevelopment Authority caveat data at June 19.

The figure is 71 per cent higher than the 856 units in Q1 this year, according to an analysis by Jones Lang LaSalle (JLL).

And more caveats could surface when full Q2 data emerges, with sales matching – or even surpassing – the 1,706 units sold in the resale market in Q2 last year, JLL reckons.

Average resale capital values have risen in Q2 from Q1 but are still below last year’s peaks across all tiers – mass market, prime and luxury prime. This could be a key factor fuelling resale deals.

Another factor could be HDB upgraders keen on buying a completed private home they can move into immediately. Also, rental yields from investing in completed property are higher than the measly interest rates earned on fixed deposits.

In another development yesterday, CB Richard Ellis said the median price per sq ft of freehold non-landed private homes sold by developers slipped 14.6 per cent from $1,051 psf in Q1 2009 to $898 psf in Q2, based on caveat data as at June 24.

However, once caveats for higher-priced projects like Martin Place Residences, The Wharf Residences and One Devonshire are lodged, the median psf price for Q2 is expected to be higher than the Q1 figure, CBRE added.

The firm expects developers to sell 3,500 to 4,000 new private homes this quarter, which would be 35 to 54 per cent higher than the Q1 figure of 2,596. The expected Q2 sales tally would be similar to levels achieved during the peak year of 2007, when developers sold an average of 3,700 units per quarter.

‘The stock market rally, coupled with strong liquidity and developers’ discounts, have resulted in a surge in new home sales this quarter,’ CBRE executive director (residential) Joseph Tan said.

JLL’s head of research (South-east Asia) Chua Yang Liang said additional factors buoying buying sentiment include pent-up demand and the interest absorption schemes. However, he cautioned: ‘I don’t reckon the current activity in the market is likely to remain if prices continue to rise unsupported by GDP growth.’

CBRE said that based on caveats lodged so far, HDB upgraders accounted for 65 per cent of buyers of new homes in the first half of 2009, higher than their 44 per cent share for the whole of last year. HDB upgraders have also been active in the secondary market, accounting for 49 per cent of buyers of resale and sub-sale units, up from their 33 per cent share last year, the firm added.

Sub-sales and resales are secondary-market transactions. Sub-sales involve projects that are yet to obtain a Certificate of Statutory Completion (CSC). Resales relate to projects that have received CSC.

JLL’s analysis shows the average resale capital value for non-landed homes in the mass market was $580 psf in Q2, up 9.4 per cent from Q1. It is also 17 per cent below the Q1 2008 peak and remains highly affordable to most HDB upgraders, JLL said.

In the luxury market, the average resale capital value rose 7.8 per cent quarter on quarter to $1,800 psf in Q2. Against the peak in early 2008, the latest Q2 figure was down 34 per cent.

Source: Business Times, 25 June 2009

NSW home sales soar

(SYDNEY) New South Wales Premier Nathan Rees revealed yesterday a record number of first home buyers in May showed there had never been a better time to enter the Australian property market.

About 7,300 first home buyers took advantage of government grants and stamp duty cuts, worth around A$178 million (S$207.9 million). It was the third record month in succession, with more than 21,000 first home buyers taking up the offers in that time, Mr Rees said.

'We're getting more young families into their first homes than ever before and helping them get on with establishing their lives,' he said.

The biggest amount of grants, which are worth up to A$24,000 for those buying new homes, were handed out for properties bought in Sydney's western suburbs.

Mr Rees noted the first home owner grants paid out in May were almost double those paid out in the same month last year. -- Xinhua

Source: Business Times, 25 June 2009

Asia developers eye new projects

Asian property firms are beginning to see light at the end of the tunnel and several are positioning for an upturn even as the world economy struggles to recover from its worst recession in decades.

The mood among US and European executives at this week’s Reuters Global Real Estate Summit is glum, but Asian counterparts are more upbeat with some revealing plans for new projects in anticipation of an upturn later this year.

For instance, Chinese commercial property developer SOHO said it has built up a war chest of US$1.9 billion to replenish its land bank and intends to start new projects in Shanghai and Beijing in coming months.

Indiabulls, India’s third-largest listed property developer, aims to launch six to seven residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand.

‘The general mood has been cautious, but there is also optimism. Asian companies in general are
in much better shape compared to their peers in other regions,’ said Ayala Land chief financial officer and Asian Public Real Estate Association president Jaime Ysmael.

Spurring the optimism in Asia is a recovery in residential markets, with price cuts drawing buyers in China, Hong Kong and Singapore, where saving rates are high and banks are prepared to lend.

The volume of transactions in these places are close to levels seen during the bull market of 2007 and residential property values have begun to edge upwards as developers such as Singapore’s City Developments raise prices.

Asian property values did not rise as much as in the US and parts of Europe this decade. In dollar terms, property in countries such as the Philippines are cheaper than before the onset of the Asian crisis in late 1997.

Interest rate cuts and government stimulus plans are also helping regional property markets recover.

Singapore residential prices were supported by mortgage rates that were below rental yields, a Bank of America Merrill Lynch report said this week.

‘At the current mortgage rate of around 2.75 per cent, our net cost of carry model implies that prices can rise by 30 per cent before home buyers enter negative carry,’ it said. The bank predicts Singapore home prices will rise 20 per cent next year.

Singapore’s housing market has been hit hard by the downturn, with home prices plunging nearly 14 per cent in the first quarter of this year, the steepest drop in over 30 years, according to government data.

Separately, Nomura said unemployment was stabilising in Hong Kong and forecasts home prices and rents in the Chinese territory will rise by 22 per cent and 11 per cent, respectively, this year.
A poll of 10 analysts conducted in conjunction with the Reuters Global Real Estate Summit showed China home prices are expected to gain an average of 10 per cent between now and the end of 2010.

The outlook for Asia’s office market remained negative but most developers said rents have stabilised after falling sharply in the fourth quarter of 2008 and earlier this year.

Some investors said any pick-up may not be sustainable.

Source: Business Times, 25 June 2009

Ion Orchard, Orchard Central have healthy lease figures

Ion is 94% leased, Orchard Central is 80% leased, say their developers

ION Orchard, which is due to open in a month, is 94 per cent leased, the mall’s developer, Orchard Turn Developments, said yesterday.

Previously, the developer said the mall was 80 per cent leased and it was in advanced negotiations for the remaining space.

At the other end of Orchard Road, 80 per cent of space in Orchard Central is also committed. Previously, developer Far East Organization said the mall was 65 per cent leased.

Orchard Central is already open to shoppers. Tenants have progressively opened for business since early June. The mall’s soft opening is slated for early July, by which time about 100 shops should be open, Far East says.

As for Ion Orchard, management hopes many of the 333 shops will open in time for the mall’s soft opening on July 21.

‘They (the tenants) are rushing to finish renovations and we hope as many of them as possible will open with us,’ said Soon Su Lin, chief executive of Orchard Turn Developments, which is building the mall. Orchard Turn Developments is jointly owned by CapitaLand and Hong Kong’s Sun Hung Kai Properties.

To give tenants an incentive to open on time, Ion Orchard said in March that they would get 30 per cent rebates off base rents if they opened for business by July 21. The response has been ‘very positive’ so far, Ms Soon said.

Neither Ion Orchard nor Orchard Central have given a recent update on asking rents. Ion Orchard has said previously that its rents range from $20 to $80 per sq ft per month (psf pm). Rents at Orchard Central range from $20 psf pm to more than $70 psf pm, Far East Organization said late last year.

But industry watchers have said that signing rents at most existing Orchard Road malls have since fallen, which means asking rents at Ion Orchard and Orchard Central could also have edged down.
Ion Orchard said yesterday that more than 21 per cent of its 640,000 sq ft of retail space will be dedicated to food and dining – with many casual and fine dining outlets offering local and international fare, plus food and confectionary stores and a gourmet supermarket.

28 restaurants and cafes will be spread over different levels of the mall, with the largest clusters on level 4 for fine dining, and basements 2 and 3 for casual dining. In addition, basement 4 will feature a food hall, with 80 stalls offering a range of cuisines for all tastes.

Ms Soon said that Ion Orchard remains on the lookout for suitable retail and F&B concepts for the 6 per cent of space that has yet to be leased.

Source: Business Times, 25 June 2009

A homely HDB neighbourhood is no longer a question

A homely HDB neighbourhood is no longer a question of bricks and mortar

I REFER to the Ministry of National Development’s proposed Town Council Management Report, which is intended to better inform and involve HDB residents ‘in shaping our housing estates into a more pleasant place for all to live in’.

In general, HDB dwellers already enjoy relatively well-managed estates, which have resulted in a good quality of life.

However, as the population grows and more affluent neighbourhoods are twinned with HDB estates, estate managers must move beyond bricks-and-mortar management and consider strategies that will allow residents to enjoy their home free from any nuisance, annoyance and disturbance.

Needless to say, to meet these challenges, managers of today’s HDB estates will need to go out more often and work more closely in partnership with other agencies and residents, to produce the highest possible quality of service and life for the communities in the estate they manage.

As residents can have a direct influence on the success or failure of estate management works, they too need to be assessed in terms of their cooperation with estate managers and other partners in making the estate they live and play in, clean and well-maintained; and in keeping the peace and forging neighbourliness and harmony among residents.

The Town Council Management Report should not be misused as a fault-finding mechanism by residents, or it will fail to deliver the desired outcome sought by them and estate managers alike.
Jolly Wee

Source: Straits Times, 25 June 2009

Signs of upturn in resale market: JLL report

As buyers thronged showflats amid improved sentiment in recent months, the resale market also saw an uptick in the second quarter, according to a report by Jones Lang LaSalle (JLL).

Using recent housing data, the consultancy estimated that resale volumes increased more than 70 per cent from the first quarter to reach 1,464 transactions.

The two main reasons were pent-up demand from Housing Development Board (HDB) upgraders – whose own flats were seeing slower price declines than private homes – and the affordable pricing despite marginal increases, said JLL.

HDB upgraders made up almost half the buyers in the second quarter’s resale market, some 11 percentage points above the 35 per cent recorded in the same period a year earlier.

Further attracting HDB upgraders was the fact that resale prices for private homes remain “highly affordable”, JLL said. While current average resale prices in the mass market have surged 9.4 per cent from the previous quarter to $580 per square foot (psf) – the highest rebound across other submarkets – they remain 17 per cent below the peak of the first quarter of last year, the firm estimated.

In the luxury segment, it found that buyers were more willing to commit, seeing that average prices of $1,800 psf represented a 34-per-cent discount from peak. This is despite current prices being 53 per cent above the last trough in the first quarter of 2005, JLL noted.

South East Asia head of research Dr Chua Yang Liang believes the uptick is not sustainable, as the buoyancy is coming from short-term factors such as pent-up demand, discounted pricing and attractive mortgage packages.

The sustainability of any market recovery, he said, depends on longer-term factors such as growth in demand and economic production.

“I do not reckon the current activity in the market is likely to remain if prices continue to rise unsupported by growth of gross domestic product,” Dr Chua said.

Source: Today, 25 June 2009

Are investors banking on a rental recovery?

Consider this: Rentals are sliding while residential property sales continue to scale new heights in the current troubled times. With almost half of recent buyers being potential investors with private addresses, could these people be punting on a rental recovery?

If so, they may be staring at a wait of several years for the uptick.

“I don’t expect any rental recovery for the rest of this year,” said PropNex chief executive Mohamed Ismail.

ERA Asia Pacific associate director Eugene Lim concurred. “Tenant demand has nothing to do with property prices, so even though sales have gone up, the rental market is still challenging,” he said.

Some analysts are even projecting that a rental recovery will not kick in until three years later.
According to the Urban Redevelopment Authority, rentals slid 8.5 per cent in the first quarter of this year – down from 5.3 per cent in the fourth quarter of last year – as the double whammy of a weak economy and new supply hit the market.

Mr Mohamed expects second-quarter rental rates to be even more dismal than those of the first quarter. After all, rentals went up 40 per cent in the two-and-a-half years since 2006 as the property market boomed, he noted.

Still, residential property buyers continue to pile in, shrugging off predictions that rentals would continue sliding for the rest of the year. Perhaps they are not even interested in rental yields.

Said Cushman and Wakefield Singapore’s residential head Connie Looi: “Buyers are rushing in to buy because there has been a downward adjustment in prices. It’s not so much because of rental yields, which is about 3.5 per cent on average. It’s more for capital appreciation down the road.

Mr Mohamed cautioned: “Even if you buy property from an investment angle now, it’s very hard to predict what the market will be in three years”.

Some market watchers, however, are bullish on the rental market. UBS Investment Research analysts said in a report dated June 18 that they expected rents to “stay flat for the rest of the year and potentially rise 2 to 15 per cent in 2010″. They calculated that prime rents had fallen 12 per cent in the year to date.

So who should invest now? “You need to have a greater appetite for risk and greater holding power to go in now – these are investors with mid- and long-term views, about five years and beyond,” said Mr Mohamed.

Source: Today, 25 June 2009