Friday, July 31, 2009

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HDB demand gathers steam on a dream

Day One of latest BTO sees strong demand; new flat supply totals 6,500

WHEN the original Punggol 21 vision was unveiled 13 years ago, enthusiasts who bought homes in the sleepy estate became disillusioned when the model waterfront living failed to materialised and facilities were slow to appear.

But then the dream was revived with a bang two years ago - and since then, interest has been strong, with recent HDB Build-To-Order (BTO) projects seeing robust demand.

Yesterday was a case in point: The HDB launched 769 new Premium units under its BTO system, and by 5pm there were already 408 applications for the 615 four-room flats, and 185 applications for 154 five-room flats.

At previous BTO launches, such as Punggol Regalia in January and Punggol Arcadia last November, units were roughly three times oversubscribed.

ERA Singapore says Punggol features among its top five choice locations for resale five-room flats.

"The main draw is that the flats are affordable and (fairly) new," said its Asia-Pacific associate director, Eugene Lim.

He noted that five-room flats in the estate were "struggling" with a selling price of $300,000 before Prime Minister Lee Hsien Loong's announcement of the Punggol 21+ plan in 2007.

Now, those flats "easily" sell for $400,000 each, said Mr Lim. But even so, they are easier on the pocket than flats in mature estates.

According to data from Dennis Wee Group, a five-room resale flat at Toa Payoh Lorong 1 is valued at $520,000 - while a five-room resale flat at Punggol is valued at $390,000 to $410,000.

Much of the demand for Punggol resale flats is from permanent residents (PR), making up 40 per cent of PropNex's sales in the estate, said chief executive Mohamed Ismail. "PRs don't mind its (far-flung) location and they realise the benefits of a new estate," he told Today. "They also don't have any emotional attachment to mature estates, unlike Singaporeans."

Not far from resale prices

But with the Government pushing out new flats in Punggol, would this put a downward pressure on resale flat prices in the area?

The supply at Punggol Residences launched yesterday brings total new flat supply in the estate to 6,500 since the unveiling of estate revitalisation plans in Aug 2007.

Property agents do not seem to think so, as BTO projects are targeted at first-time flat-buyers who can wait a few years for completion. Many who buy resale flats are looking to move in within three to four months.

Mr Mohamed Ismail further notes, the prices at Punggol Residences are just "marginally" lower than those of resale flats in the estate. He cited recent valuation figures of four-room resale premium units going for some $320,000, and five-room resale premium units going for up to $420,000.

Punggol Residences flats are priced at $264,000 to $322,000 for four-room and $344,000 to $409,000 for five-room units.

If market anticipation of the Punggol 21+ concept is anything to go by, prices are expected to remain steady, the analysts told Today.

"Punggol is basically a blank sheet of paper, it doesn't have the clutter of mature estates so there's a lot of scope for planners and Government to do many things as they bring about the waterways and so on," said ERA's Mr Lim. "I am sure it will be a very happening place in the future."

Punggol resident Faith Toh is holding out hope for that vision. She and her husband bought into the original Punggol 21 idea when they shelled out for their executive flat seven years ago.

Launched in 1996 by then Prime Minister Goh Chok Tong, Punggol was to have been a model waterfront town with modern amenities such as watersport centres, clubs and libraries. But the 1997 Asian Financial Crisis and construction industry problems in 2003 put a crimp on plans.

"We thought when it becomes like East Coast or Tampines, it'll be like living in town without having to go downtown," said Ms Toh. Even now, she said, going home to Punggol's "pretty" landscaping "feels like you're staying in a resort".

Source: Today, 31 July 2009

A late night property ballot … is this a sign of the times?

The showflat was only due to open today.

But on Monday, some, mostly property agents, were already lining up for units at the Optima condominium at Tanah Merah. They went home after developer TID made it clear the queue would not be recognised.

However, this did not stop hundreds from turning up early yesterday – leading to a massive queue and the occasional ugly spat over queue-jumping. The result? TID decided, at about 8pm, to open the showflat doors and, unusually, kick off open balloting.

The process began after 11pm last night and carried on well into the wee hours of the morning. Successful applicants paid the 5-per-cent deposit on the spot.

This came just a day after National Development Minister Mah Bow Tan had warned the Government would take action should property market speculation get excessive. Yet, it was apparent many aiming for a unit at the 99-year leasehold project yesterday were buying for investment.

For instance, a 62-year-old woman, who beat six other bids to snag a unit, told Today she was likely to rent it out.

Other buyers and property agents also said they or their clients were looking at a good investment, as the development was near the Changi Business Park, next to an MRT station, likely near the future fourth university, and was affordable – prices averaged $790 per square foot.

In all, 120 units were allocated yesterday, including some in the morning at a preview for staff and guests. Today understands that another 100 will be released today.

Asked why TID – a tie-up between Japan’s Mitsui Fudosan and Hong Leong Group – did not simply stick to the original launch today, Mr Gerry de Silva, spokesman for Hong Leong, said the big crowd was a factor, as was feedback from agents that they had “very interested” buyers with cheques ready.

“If we stick to our word, it may be good, but is it practical?” he told Today.

And the balloting, he said, was to “differentiate the genuine buyers” from the browsers. TID had earlier been pondering alternatives to the first-come-first-served system, he added.

Source: Today, 31 Jul 2009

A bubble that's a gleam in specuvestors' eyes

Mah Bow Tan's caution aimed at averting pain later, property market watchers say

(SINGAPORE) Better to suck out the froth now than to burst the bubble later - that was what market watchers saw as the government's intention in warning against rash property purchases.

National Development Minister Mah Bow Tan said on Wednesday that there are signs of speculation in the property market, and the government will act if it overheats. He also urged home seekers to buy only within their means.

On the surface, the message may seem puzzling. By most accounts, speculators from the boom years - those who 'flipped' their freshly bought units in the subsale market for a quick profit - have yet to make a huge comeback. Price increases have surfaced only at some projects, while several others still registered price falls.

At CapitaLand's results briefing yesterday, group president and CEO Liew Mun Leong also observed that home demand is 'healthy', supported partly by home seekers whose estates were sold en bloc.

But dig deeper and the cause for concern becomes more apparent. Some industry watchers acknowledge that a group of 'specuvestors' is emerging. These are buyers who are prepared to keep and lease out their properties over the longer term, but are also open to selling them for capital gains if the opportunity comes along.

Although Singapore's economy is shrinking, several factors are working in specuvestors' favour. Notably, interest rates on bank loans are low, and more small apartments going for less than $1 million have become available. Many of them are also lucky enough to still have jobs, and some could have made a killing from the recent stockmarket rally.

These investors, together with genuine homebuyers, have raised market activity to a level that authorities feel is out-of-sync with weak economic fundamentals. The fear? That some would not be able to repay their loans if they lost their jobs, or if banks raised mortgage rates in the future.

'I have seen sufficient cases in my Meet-the-People sessions, where people have over-committed and now find themselves in difficulty,' Mr Mah recounted on Wednesday.

CIMB economist Song Seng Wun said in a note on Wednesday that Singapore's Q2 09 jobless rate is expected to cross 5 per cent. The unemployment rate for Singaporeans and permanent residents rose to 4.8 per cent in Q1.

Falling rentals would also test buyers' ability to support home loans, said Chesterton Suntec International's research and consultancy director Colin Tan.

So to several industry watchers, the government is sounding a note of caution, just in case. As a developer told BT: 'What if the green shoots turn brown?' The formation of a bubble - particularly on shaky ground - would require overt intervention and the consequences are unlikely to be pretty.

Take a look back at 1996, when the government introduced a surprise anti-speculation package to curb sharp spikes in private home prices. Tighter credit, a tax on gains and higher stamp duty caused sentiment to sink and transaction volumes to plunge. This is history that most would not want to see repeat itself.

The key is whether the government's words will help calm the buying frenzy at this stage. Here, views are mixed.

Some people may cool off, said Wheelock Properties (Singapore) CEO David Lawrence. 'I think (Mr Mah is) more focusing on the greedy people who overgeared, took on too many liabilities, and he's just saying 'be careful' . . . I think that's a reasonable message to the market.'

But some also think the buying will continue as long as money from savings, banks or stockmarket winnings is around. A developer also suggested that a few people might bring forward their purchases in anticipation of anti-speculation measures coming on. 'Singaporeans are a bit 'gan cheong' (panicky),' he joked.

At Optima, where people started queuing days before the showflat was due to open, developer TID has conducted a ballot for the 120 units planned for release. All units have been tentatively accounted for with prices starting from $790 per square foot. TID is a tie-up between Hong Leong Group and Mitsui Fudosan. A Hong Leong spokesman said that the balloting process helps to sieve out genuine buyers and the crowds have thinned. BT understands that there were already plans to conduct a ballot when a queue first formed, before Mr Mah spoke to the press on Wednesday.

Market sources also say that around 80 units have been sold at Centro Residences, out of around 110 released.

Source: Business Times, 31 July 2009

CapitaLand reports loss, issues $1.1b in bonds

PROPERTY giant CapitaLand yesterday posted its first quarterly loss in six years and announced plans to raise $1.1 billion by issuing convertible bonds.

The money raised will be used primarily to refinance existing debts, said South-east Asia's largest developer. Any balance left over will go towards new investments and working capital. The firm announced a $156.9 million loss for the second quarter yesterday morning, its first red ink since the last quarter of 2003.

This was down from a net profit of $515.2 million in the same quarter last year. It was due to revaluations and impairment provisions for its office assets in Singapore, property in Australia and the former Char Yong Gardens estate here, CapitaLand said.

At 10pm, the developer issued a statement saying it plans to issue $1.1 billion in convertible bonds, which can be converted into new ordinary shares. The issue will be placed with institutional and sophisticated investors.

The latest bonds bear a coupon rate of 2.875 per cent per annum, lower than the previous two issues. This is not surprising given the low interest rate environment, which may be behind CapitaLand's decision to issue bonds now. Their conversion price is $4.79, a 20 per cent premium over yesterday's closing price.

This bond issue is CapitaLand's fifth and its third billion-dollar one in three years, following a record $1.3 billion bond issue in February last year and another $1 billion bond issue in May 2007. In February this year, CapitaLand also launched a one-for-two rights issue to raise $1.84 billion, which the firm said would allow it to pursue acquisitions and other investment opportunities. Yesterday, the developer said it had a cash position of $4.2 billion as at the end of last month and maintained a net debt-to-equity ratio of 0.43.

But CapitaLand has had to meet cash calls from some businesses. On Monday, it said it would inject A$281.6 million (S$333 million) into its Australian unit Australand by taking up all its allotted shares in Australand's latest rights issue.

Australand, which posted a net loss of A$268.8 million in the first half of the year, said the money would help strengthen its balance sheet as it goes into a challenging second half. For the Singapore property market, however, things are looking up, said CapitaLand chief executive Liew Mun Leong yesterday morning.

He believes the exuberance in the market could send prices up about 5 per cent to 10per cent by the year end and into next year.

Mr Liew told a results briefing that demand for private homes is in a healthy state at the moment and it does not appear there is a bubble forming.

'If people are buying homes only as investment tools, then it's a different story,' added Mr Liew, who pointed to demand from newly-weds needing homes and affordability as drivers of the recent buying activity.

He added that CapitaLand has been waiting on the sidelines while other developers launched projects to capitalise on the renewed buying interest.

The firm is waiting 'to pull the trigger at the right time', said Mr Liew. It will launch projects at the former Gillman Heights in Alexandra Road and the former Char Yong Gardens in Cairnhill for sale by the end of this year.

CapitaLand has seen strong buyer interest at the relaunch of The Wharf Residence, where 94 per cent of the 173 apartments have been sold, he added.

While the immediate future looks rosier than it has been for months, the second quarter was painful for CapitaLand.

Apart from revaluation and impairment costs, revenue also declined: It was down 27.9 per cent to $591.1 million for the three months to June30. Excluding revaluation and impairment costs, profit during the quarter was $124 million.

China continued to be a growth area, with healthy sales from new launches in Beijing, Chengdu and Foshan. In Vietnam, the group sold more residential units at The Vista in Ho Chi Minh City. Loss per share for the second quarter was 3.7 cents, down from earnings per share of 15.1 cents a year ago, while net asset value stood at $2.86, down from $3.78 as of Dec 31.

For the first half, the firm lost $114.1 million compared with a net profit of $762.7 million last year. Revenue dropped 25.7 per cent to $1.08 billion.

CapitaLand's stock, which has jumped about 55 per cent this year, closed 1 cent down at $3.99 yesterday.

Source: Straits Times, 31 July 2009

HDB launches 769 new flats in Punggol

Premium development includes 154 five-room flats, 615 four-roomers

THE Housing Board has launched a premium project offering 769 new flats in Punggol in a bid to build up critical mass in the estate.

The new project, called Punggol Residences, offers 615 four-roomers and 154 five-room flats in a central location just five minutes from Punggol MRT station.
HDB is launching the project under its build-to-order (BTO) scheme - flats are built only when certain demand is reached.

It has so far offered about 6,500 new flats in Punggol since it unveiled grand plans for the former fishing village to become the only waterfront public housing project in August 2007.
This is in line with the board's commitment to build up the population in the estate to attract and support new facilities, it said.

Punggol Residences is a premium development with enhanced architectural designs, interior fittings and landscaping, said HDB.

Four-room flats of 91 to 96 sq m are going for $264,000 to $322,000, while five-roomers of 114 sq m are on sale from $344,000 to $409,000.

According to HDB, premium resale flats in the vicinity are selling for a pricier $330,000 to $350,000 for four-roomers and $380,000 to $439,888 for five-roomers.

PropNex chief executive Mohamed Ismail said that, despite the higher prices, resale flats might still be more attractive given that buyers can enjoy a CPF housing grant of up to $80,000 depending on their income, and do not have to wait three years for new flats to be built.
On the other hand, buying new flats direct from HDB will attract those who prefer not to fork out any cash for resale flats.

This amount, known as cash-over-valuation, has started creeping up for premium resale flats in Punggol to about $15,000 to $20,000, noted Mr Ismail.
As of 5pm yesterday - the latest update from HDB - 593 applications for the 769 flats have been received.

Applications for the new flats can be submitted online at HDB's website until Aug 12.

Source: Straits Times, 31 July 2009

No property bubble forming, say developers

They say buying frenzy hasn't reached point where Govt needs to intervene
PROPERTY developers are enjoying the surge in interest from buyers but they do not believe that speculation has reached a stage where the Government needs to step in.

They also maintain that the prevailing economic conditions will begin to cool the buying frenzy and stop a bubble forming in its tracks.

'It's not a bubble, it's just a blister after the pain we experienced in the global financial crisis and it comes before a recovery,' said Cushman and Wakefield managing director Donald Han.

But some developers and industry insiders acknowledge that the comments from National Development Minister Mah Bow Tan this week are timely.

Mr Mah cautioned about a bubble forming, hinted at intervention if speculation got out of hand and advised buyers to tread carefully and not charge headlong into the market.

'The Government's message is quite clear: Don't rush as there is a lot of supply coming onstream,' said Sing Holdings chief executive Lee Sze Hao.

'It's good as a reminder so that people do not over-buy, over-chew. Developers do not want irrational exuberance,' said Mr Han.

A property consultant who declined to be named told The Straits Times: 'There shouldn't be panic-buying. Buyers may pull back a bit, not knowing whether the Government will step in or not. The fact is that the Government has opened its mouth; it can do things indirectly.

'But if the market hype continues to rise, they will have to do something.'

Many feel the hype, which centres on several condominiums, will likely be short-lived amid a recession.

'Inevitably, there will be speculative buyers, but they are for the smaller units...If the market is too speculative, you build up a bubble and that's not real demand,' said Mr Lee.

The market is seeing cashed-up investors ready to spend, which is different from speculators looking to buy another apartment to make a quick buck, he said.

The Government will do something only if there is a queue at every project and every unit is snapped up, he added.

The Real Estate Developers Association of Singapore (Redas) pointed out on Wednesday that only a selected few launches have been highly successful for various reasons.

Buyers have certainly been out in droves visiting the new showflats and buying new homes off the plan. Queues have been forming and developers have raised prices in response.

The interest was evident last night at Tanah Merah, where crowds gathered at the 297-unit Optima showflat although the public launch is scheduled for today.

The response was so strong that the developer TID held a ballot at midnight for about 300 genuine buyers who were queueing outside the showflat earlier so they did not have to stay overnight.

They had submitted cheques together with their application form by 9.30pm for the 120 units on offer at an average early-bird price of $790 per sq ft (psf), said a spokesman.

Another suburban launch, the 329-unit Centro Residences in Ang Mo Kio apparently attracted more than 80 buyers, even though it is priced at $1,150 psf and above - levels more suitable for prime or city-fringe projects.

Such enthusiasm for new projects, which is reminiscent of boom times, and the sudden spike in prices are likely causes for concern, said a developer who declined to be named.

Prices of some new mass market projects have gone above the peak 2007 levels, he said. 'But can the market sell 1,500 units every month in the next 12 months? I don't think so.

'The Government is observing, but it will cease to be overly concerned when things return to normal.'

CapitaLand chief executive Liew Mun Leong said at its results briefing yesterday that there is 'exuberance' in the market but no bubble. 'If it's investment driven, you could call it a bubble...but in our case, it is demand driven.'

He also said he would be the first to be worried if this frenzy is being driven by speculative demand.

He said there are buyers flushed with cash from collective sales in the recent property boom.

Mr Liew estimated there were about 13,000 home owners displaced by en-bloc deals from 2005 to 2007 and these buyers have ready cash of anywhere between $1million and $2 million each to spend.
Source: Straits Times, 31 July 2009

Thursday, July 30, 2009

Stirring back to life

Analysts hopeful of recovery in US property market

AFTER a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilising prices, generating hope that the real estate market is beginning to recover.

Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two others, Charlotte and New York, were flat. For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.

"We have found the bottom," said Mr Mark Fleming, chief economist for data firm First American CoreLogic.

The release of the surprisingly strong Case-Shiller Price Index, the most widely watched source of price information about the housing market, followed earlier reports that sales of existing homes rose last month for the third consecutive time, while sales of new homes rose in June by the largest percentage in eight years.

All of these improvements are tentative, and come after a relentless decline that knocked more than half the value off houses in the worst-hit cities.

Some sceptics say they believe the market is merely pausing before it resumes falling and that much of the life in the market is coming from speculators. Even the most enthusiastic analysts acknowledge that rising unemployment, another leap in foreclosures or a significant jump in interest rates could snuff out progress.

Still, hope is growing in some quarters. "Recession is over, economy is recovering - let's look forward and stop the backward-looking focus," Wells Fargo chief economist John E Silvia wrote on Tuesday in a research note.

Bargain hunting

A few weeks ago, Mr Kirit Shah, 64, a retired forensic chemist for the New York Police Department, closed on a house in Royal Palm Beach, Florida. "I'm on a lakefront. I never dreamed I would be on a lakefront."

But the thing he likes best is this: He paid US$260,000 ($375,000) for the five-bedroom house, half of what that model was fetching during the boom. "An excellent deal," he said. "Plus I got a good rate on my mortgage, under 5 per cent."

But if Mr Shah was one reason new home sales were up 11 per cent in June from May, it is unclear just how many others like him are out there.

Mr Brad Hunter, chief economist for research firm Metrostudy, said the new home numbers appeared to illustrate less a return of buyers like Mr Shah and more a resurgence of investors and speculators.

Metrostudy's own data showed that the number of buyers during the second quarter who actually moved into their new house declined 2.6 per cent.

"Investors are turning right around and putting the houses on the market for sale or for rent," Mr Hunter said.

"What appears to have been an absorption of excess inventory can be just a changing of ownership of that inventory."

One reason the market is perking up in some places, real estate agents say, is the encouragement offered by such measures as the first-time buyer's tax credit of US$8,000. Another reason is the prevalence of foreclosures, which make up about a third of all existing home sales. In some troubled regions, agents say they cannot remember the last transaction that did not involve a bank disposing of a property.

These communities are not yet showing any improvement in prices. Las Vegas was the worst-performing city in the May Case-Shiller index, falling 2.6 per cent. Prices have fallen there by a third in the last year. THE NEW YORK TIMES

Source: Today, 30 July 2009

Quintain sees UK property market revival signs

Uncertain rental prospects for vacant properties still a concern, however

(LONDON) UK developer Quintain Estates and Development says Britain's fractured commercial real estate market is showing signs of revival although uncertain letting prospects for vacant properties remain a concern.

The urban regeneration specialist, which is redeveloping almost 120 hectares of land in London's Wembley and Greenwich Peninsula districts, said yesterday that prices were stabilising in some parts of the market but the company did not rule out further reductions in values, especially for lower-quality assets.

Despite challenging economic conditions, Quintain said its ability to collect rents remained strong, with 99.5 per cent of rents due gathered at the last payment date.

While bad debts almost doubled in the period to £580,000 (S$1.38 million) following the administration of furniture retailer MFI, vacancy rates were unchanged since March 31.

Last month, Quintain said the net asset value of its properties plunged 40 per cent to 348 pence per share in the year to end-March 2009.

Shares in the firm have rallied 82 per cent since the start of the year as worries of cashflow pressures and poor access to debt funding subside.

But the stock, which closed at 67 pence on Tuesday, is still 60 per cent below its level of July 2008.

Quintain said it made cost savings of £11 million since April, bringing the total sum of savings to £108.5 million since April 2008.

The company has also renegotiated terms of key borrowing facilities with Barclays, extending repayment dates on some short-term loans to April 2013 from April 2010.

The company's maximum gearing ratio has increased to 150 per cent and net debts stood at £547 million on June 30. -- Reuters

Source: Business Times, 30 July 2009

NZ June home-building approvals fall 9.5%

(WELLINGTON) New Zealand's home-building approvals fell for the first time in three months in June, signalling that lower mortgage rates are yet to kick-start sustained demand for property.

Permits declined 9.5 per cent from May, Statistics New Zealand said in Wellington yesterday, citing seasonally adjusted figures.

Second-quarter approvals rose 16 per cent from the first quarter and the trend in approvals is rising by about 2 per cent a month, the agency said.

Reserve Bank governor Alan Bollard cut the benchmark interest rate to a record-low 2.5 per cent in April and will probably leave the rate unchanged at his review today to help the economy recover from its worst recession in more than three decades.

Economists expect building approvals to keep pacing gains in house sales and prices and eventually lead the economy out of recession.

'We expect core consent issuance to start to improve with the lift in housing demand, as indicated by the rise in house sales,' said Jane Turner, economist at ASB Bank Ltd in Auckland.

'We expect consent issuance to pick up off its lows over the second half of 2009.'

New Zealand's dollar bought 65.57 US cents at 11.55 am in Wellington from 65.65 cents immediately before the report.

Home sales rose 40 per cent in June from a year earlier, the Real Estate Institute reported earlier this month. Second-quarter house prices increased for the first time since late 2007, according to a government report published on July 6.

Excluding apartments, building permits rose 3 per cent in June and were down 27 per cent from a year earlier, yesterday's report showed.

Property construction has slumped amid the recession, which began in the first quarter last year, and as a credit crisis curbed development projects. Second-quarter approvals fell 39 per cent from a year ago, yesterday's report showed.

The value of home building and renovations approved in June plunged 18 per cent from a year earlier, the agency said. The value of non-residential approvals declined 7.4 per cent. -- Bloomberg

Source: Business Times, 30 July 2009

Fed's loan facility may help resume property bond sales

Fed may lend CMBS buyers up to 85% of the purchase price for TALF securities

(SEATTLE) Commercial property companies may sell about US$3 billion of mortgage-backed bonds starting in September as part of the government's programme to revive lending for shopping malls, skyscrapers and hotels.

More than a dozen real estate investment trusts (Reits) are likely to participate in the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF), said Steven Wechsler, chief executive officer of the National Association of Real Estate Investment Trusts. Vornado Realty Trust may raise US$600 million, a person familiar with the matter said on Tuesday.

The transactions would be the first new issues in the US$700 billion US market for commercial mortgage-backed securities (CMBS) since it shut down in 2008 as credit markets froze. Commercial property values tumbled and defaults accelerated. Reits turned to the stock market to raise capital to pay debt.

'If the first deals are successful, we think we can get US$10 to US$25 billion done in the next six months,' said Kenneth Rosen, who runs a US$310 million hedge fund in real estate securities and heads the University of California's Fisher Center for Real Estate and Urban Economics in Berkeley. 'The current pipeline is about US$3 billion.'

The central bank started TALF in March to help thaw credit by lending to investors who want to buy securities backed by car and credit card loans. The US$1 trillion programme was expanded to include bonds backed by commercial mortgages. Investors who buy the securities submit them to TALF as collateral and the government lends the investor a percentage of the purchase price, subsidising the investment.

Only top-rated securities will be accepted and loans on CMBS purchases must be repaid within five years.

Investors including Morgan Stanley and Colony Capital LLC are raising money to take advantage of TALF. Morgan Stanley completed a US$600 million fund this month, mainly to buy car, credit card and student loans rather than commercial property bonds.

The Fed is expected to lend CMBS buyers up to 85 per cent of the purchase price for TALF securities, said Nareit's Mr Wechsler.

That may limit the programme's effectiveness. Many landlords already owe more than their property is worth. TALF may help restart the CMBS market 'in a very modest way', said David Twardock, president of Prudential Mortgage Capital Co in Newark, New Jersey. As much as US$500 billion of commercial real estate loans mature this year and about US$400 billion each year for the next several years, said Jeffrey DeBoer, president and CEO of the Washington-based Real Estate Roundtable on July 9 in congressional testimony.

The spread on top- ranked commercial mortgage-backed debt relative to US Treasuries has narrowed 2.47 percentage points to 5.18 percentage points through last week since the Fed said on May 19 it would finance the purchase of CMBS debt sold before Jan 1, according to Barclays plc data. The narrowing reflects investor perception that CMBS risk is diminishing.

'TALF has been an effective tool for bringing spreads in to reasonable levels,' said Randy Reiff, president of Spartan Real Estate Capital LLC, a New York-based firm that invests in commercial real estate debt. 'That's obviously a critical component in market recovery but by itself is not going to lead to the regeneration of securitised lending on a large scale.' - Bloomberg

Source: Business Times, 30 July 2009

Slide in US housing prices slowing down

May's housing index the 4th consecutive month that price declines slowed

(NEW YORK) After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilising prices, generating hope that the real estate market is beginning to recover.

Eight cities, including Chicago, Cleveland, Denver and San Francisco showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, North Carolina, and New York, were flat.
For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.
'We've found the bottom,' said Mark Fleming, chief economist for First American CoreLogic, a data firm.
The release of the surprisingly strong Case-Shiller Price Index, compiled by Standard & Poor's, followed earlier reports that sales of existing homes rose last month for the third consecutive time, while beleaguered homebuilders saw sales of new homes jump in June by the largest amount in eight years.

Source: Business Times, 30 July 2009

Property developers celebrate Tower One topping out

KEPPEL Land, Cheung Kong (Holdings) and Hongkong Land jointly celebrated the topping out of Tower One at Marina Bay Financial Centre (MBFC) yesterday. National Development Minister Mah Bow Tan was guest of honour at the event.

Tower One achieved a 100 per cent pre-commitment rate when it was launched in 2007. Standard Chartered Bank is an anchor tenant and will be taking up 500,000 sq ft of office space. The 33-storey building will obtain its temporary occupation permit next year.

Towers Two and Three have secured pre-commitment rates of around 45 per cent and 55 per cent respectively. This translates to a pre-commitment rate of 61 per cent for the first two phases of MBFC.

Together, the three office towers will offer about three million sq ft of prime Grade A office space. MBFC also comprises retail space and two residential towers.

There has been an increase in leasing enquiries for space at MBFC in the past few months, said Raffles Quay Asset Management general manager Wilson Kwong.
Marina Bay has attracted investments of more than $27.5 billion from both the private and public sectors so far.

Source: Business Times, 30 July 2009

Speculation creeping back into market: Mah

Govt will act if housing market overheats; supply pipeline is strong

(SINGAPORE) Speculation is trickling back into the property market and the government is watching the situation closely, National Development Minister Mah Bow Tan said yesterday.

The authorities will take action should the market overheat but home seekers should also be careful about making purchases, he underlined.

'I wouldn't say that there is excessive speculation at the moment but there is some element of speculation involved,' Mr Mah told the press after the topping-out ceremony for Tower One at Marina Bay Financial Centre (MBFC).

'Some of the practices and habits that you saw in the last property boom are beginning to come back.'

Queues have started forming outside some showflats and property agents are reportedly armed with blank cheques from clients.

Median prices have also gone up at some launches - by up to 7 per cent a month in a handful of cases. This has stemmed the fall in private home prices, with the Urban Redevelopment Authority's (URA) price index sliding 4.7 per cent in Q2 from a quarter ago - much less than the 14.1 per cent tumble it took in Q1.

The question, though, is why a buying wave is forming when economic waters remain tepid. The slowdown has moderated but a contraction is still on Singapore's books, Mr Mah said.

The official forecast now points to the economy shrinking 4-6 per cent this year.

It is therefore unclear if the buying momentum is sustainable, he said. 'I'm not so sure whether the demand is due to pent-up demand, or whether it is due to buyers responding to lower prices by developers or even to the current low interest rates.'

While it is premature to call it the start of a property bubble, the government is monitoring the market closely and will take 'whatever action is necessary', Mr Mah said.

He also urged home seekers to research the property market thoroughly and seek affordable units.
'Don't panic - because there is a lot of supply in the market.'

According to URA, there were 62,350 uncompleted private homes from projects in the pipeline at the end of Q2. Of these, 38,482 units were still unsold.

The government can also inject supply through the Government Land Sales (GLS) programme, Mr Mah said. It is considering whether it should reintroduce the confirmed list (suspended last October) for the first half of 2010.

Responding to Mr Mah's comments, the Real Estate Developers Association of Singapore (Redas) said that developers share a 'common desire to see a steady growth, for greater stability and sustainability in the property market'.

It also highlighted that not all property launches have been snapped up.

'Only a selected few launches have been highly successful for various reasons. This could also be a result of pent-up demand.'

Industry watchers saw Mr Mah's message as a signal against excess exuberance in the market. The move could have contributed to a fall among major property counters yesterday: City Developments lost 10 cents to close at $9.94, while CapitaLand shed six cents to $4.00.

Colliers International's research and advisory director Tay Huey Ying felt that there is 'genuine concern' about the sustainability of current demand. Some buying has been driven by accumulated wealth from the boom years and when the funds dry up, it will take strong economic fundamentals to generate new demand, she said.

But she also believes that the government will 'tread cautiously' when it comes to tempering market sentiment, because the pick-up has only begun and is fragile.

Developer sales of private homes started to recover in February - interest first poured into mass-market projects and gradually filtered into mid- and high-end ones.

Over the last month, for example, KOP Group sold 11 units at its luxury site The Hamilton Scotts, at prices ranging from $2,500 to $3,000 psf.

Across liquidity-flush Asia, several economists have flagged the risk of property bubbles forming. However, many do not believe that policymakers will aggressively tighten measures when economic recovery remains nascent.

Source: Business Times, 30 July 2009

Tuesday, July 28, 2009

More professionals becoming property agents as market sentiment improves

SINGAPORE: The buoyant property market in the past six months has attracted not just home buyers but also mid-career professionals who have made the switch to become property agents.

Industry watchers said there are about 26,000 housing agents in Singapore and this number is likely to go up to 40,000 if the positive market sentiment continues.

During the lull in 2008, there were less than 20,000 agents. Since February, property agencies are hiring as many as 300 new agents every month.

ERA Asia Pacific said it has about 45 per cent more new hires in the first half this year compared to a year ago.

PropNex is getting about 200 new agents a month on average this year compared to about 165 in the previous boom period in 2007.

One pull factor is the higher commissions from private property sales as property prices continue to climb. Last year, property agents made about S$5,000 per sale last year.

Eugene Lim, associate director, ERA Asia Pacific, said: "There is a transition period, meaning that there is a learning curve. People making career switches tend to be very focused and learn very quickly.

"Once they are on the job and if they do property sales, an average per month is currently about S$6,000 to S$7,000. For private property rental, which some new people start off with, you can get average of S$3,000 to S$4,000 for a deal.

"The slightly more experienced ones will have higher volume because they are more established in the market. It's not uncommon to see a top producer in the company doing in the region of about S$50,000 to S$100,000 a month."

Mohamed Ismail, CEO, PropNex Realty, said: "We had one agent who has been in the airline industry. She was a senior crew for almost 19 years with our national carrier. She felt she might be retrenched and that's what prompted her to come in attend our courses in the month of February and March.

"She started in end-May and in the last 2.5 months, she closed transactions worth about S$87,000.

"If I look at those who are fully committed, even for newbies in the industry, earning an annual income, a conservative estimate of S$60,000 a year, is not a difficult task.

"When I break S$60,000 in 12 parts of a year, it's S$5,000. Imagine for a month of 30 days and the agent serves one client, selling a 4-room HDB house and either downgrading or upgrading to another house will give him a decent commission of S$5,000 to S$7,000."

Property agencies said they are also seeing more professionals with post graduate qualifications joining the industry.

Mr Lim continued: "In 2007, when the country had full employment and market was surging, we attracted people with short-term perspectives. This time, we are attracting quite a number of people who are higher qualified, making a mid-career switch. So they tend to be diploma or degree holders. Some even hold masters degrees."

Overall property sales are on the increase. Transactions of HDB resale flats were up 50 per cent in the second quarter this year compared to the three months before it.

The number of new private homes sold in the second quarter this year was more than the total figure for 2008.

But in a boom period, agencies advise homebuyers to be cautious of rogue agents.

Mr Lim added: "In any business, there will always be rogue agents. This will tend to increase when the transaction volume increase and also when the market is going up. Yes, we do hear of such cases and in-house, we have this policing process."

He said agents who behave badly will either be counselled or have service terminated.

Source: Channel News Asia, 28 July 2009

Online Only - Questions for estate agencies body...

I refer to "Dealing with the agent from hell....." (July 23).

As a property agent, I would like to respond to the comments and advice by Singapore Accredited Estate Agencies (SAEA) on "Case 1" - A prospective buyer of a 5-Room HDB resale flat who called an agent for a viewing and made an offer, but said he did not wish to appoint the agent for the purchase. However, the agent insisted that the buyer sign a commission agreement with his agency.

SAEA says the agent cannot insist that the buyer use his services ; neither can he refrain from selling to a buyer who refuses his services. SAEA further advises the buyer to bypass the agent by writing directly to the seller and to meet the seller personally to make the offer.

* Is SAEA making the comment and advice as a real estate organisation or as a consumers' organisation ?

* Does SAEA know that it is a legitimate and accepted industry practice for agents to serve buyers for HDB resale flat transactions and to levy commission thereof ?

* SAEA says that the agent cannot refrain from selling to a buyer who refuses his services. Is SAEA suggesting that the agent must broker the deal for the buyer for free ? (Since the buyer refuses the agent's services, it is obvious that the buyer is unwilling to pay commission.)

While the agent cannot insist that the buyer use his services; surely the buyer cannot insist that the agent broker the deal for him?

* Does SAEA think that it is ethical for the buyer who after viewing the property through the agent, bypass the agent to approach the seller directly ? Is this any different from buyers who after viewing properties through agents, bypass them to approach sellers directly to close the deal under the pretext that they do not wish to transact through the sellers' agents ?

Source: Today Online, 28 July 2009

HDB deploying more staff to up appointment slots

WE REFER to the letter from Mr Gopinath Maasi, 'Buying resale flat - Why does HDB take so long when most of the transactions are computerised?' (July 18).

HDB adopts a two-stage process to ensure resale transactions are carried out smoothly while safeguarding the interests of both buyers and sellers. At the first appointment, HDB meets both buyers and sellers to assess their eligibility to buy/sell the flat, and explains the relevant policies and procedures. Depending on the volume of resale transactions, it usually takes about five weeks to secure the first appointment.

The next stage involves preparing the legal documents, cheque for sellers, processing housing grants and loans, and so on. For buyers taking a mortgage loan from the banks, more parties will be involved, including the bank's solicitors. On average, this process takes about six to eight weeks, depending on the complexity of the transaction. Overall, a typical resale transaction takes about three months to complete, which is comparable with the time taken to complete a private housing transaction.

In recent months, the volume of resale transactions has increased by more than 50 per cent. As more appointment slots are taken up, some buyers or sellers of resale flats might not be able to book an earlier first-appointment date. HDB will be deploying more manpower resources to increase the appointment slots and shorten the waiting time for first appointments.

We thank the writer for the feedback.

Loh Swee Heng Deputy Director (Resale) for Director (Estate Admin & Property) Housing and Development Board

Source: Straits Times, 28 July 2009

Property upswing: Beware the exuberance

THE real estate sector is stirring, though not lustily yet. There is every reason to support the rationale that the upswing this time is better moderate than precipitous. The lesson learnt of the irrational exuberance in the second half of 2007 was that asset price inflation that began to eviscerate purchasing power in Singaporeans' foremost ownership ambition was socially fraught. The trap can be avoided. Now that the second-quarter GDP rebound and intermittent stock market rallies will provide real estate momentum, it is not too early to counsel caution.

But one should still be thankful. The property turnaround is tracking closely the people's confidence, which has withstood better than thought the effects of the recession. There are also the multiplier gains for businesses providing appliances, furniture, electronic gadgets, home decor and renovation works. Although the Urban Redevelopment Authority's monitoring showed that prices of private property declined again in the second quarter, what was noteworthy was that the slower rate of quarterly dip (4.7 per cent against 14.1 per cent) mirrored the improved buyer sentiment evident since February. In the HDB market, confidence has been more pronounced as prices and values stayed up through the worst of the economic slump.

Real estate companies have a responsibility to steer the recovery along a steady path that will bring them sustained earnings while keeping condominiums and flats affordable. The temptation to raise prices too sharply and quickly to catch the crest of the wave (it is not rolling fast yet) must be resisted. Precipitate repricing when the market is still tentative will set the recovery back - then it will be a case of all fall down. Property consultancies for their part should stay true to their ethical principles to not talk up the market and drive fear into people waiting to time their purchases correctly. So far, the actions of these two market catalysts have been mainly responsible. Long may this continue.

And buyers? They should never give in to the unwarranted fear of 'missing' their entree in a rising market. The evidence shows that HDB upgraders, en-bloc sellers and middle-aged types with savings have been the dominant buyers. Young couples with neither the CPF cache nor dependable careers can be expected to dive into the private market soon. They should stay well clear. The HDB is created for them as a step-up ladder. This cautionary tale may require review when rich foreigners and funds start buying sight unseen, as in 2007. Even then, prices can get out of whack only to the eventual dismay of developers - to say nothing of bona fide home owners.

Source: Straits Times, 28 July 2009

New home sales in US climb 11%

WASHINGTON: Purchases of new homes in the US climbed 11per cent last month, the biggest gain in eight years, adding to evidence the slump that began in 2005 is stabilising.

But prices are still falling.

Sales increased to a 384,000 pace, higher than any forecast of economists surveyed by Bloomberg News and the most since November, figures from the Commerce Department showed yesterday.

The number of houses on the market dropped to the lowest level in more than a decade.

Falling prices and near record-low mortgage rates have started to lure buyers even as the unemployment rate rises. The worst recession in five decades may end in coming months as the downturns in housing and manufacturing ease.

'Things are bottoming,' Mr Jonathan Basile, an economist at Credit Suisse in New York, said before the report. The gain 'continues that notion of stabilisation, but it's going to be difficult for builders to be selling at a much more rapid rate until the foreclosure issue subsides.'

The median price of a new home fell 12per cent to US$206,200 (S$297,000) from US$234,300 in June last year. Last month's value compares with US$219,000 in May.

Sales of new homes were down 21per cent from June last year. They reached a record-low 329,000 in January.

The jump in sales last month was led by a 43per cent surge in the Midwest. Purchases increased 29per cent in the North-east and 23per cent in the West. They dropped 5.3per cent in the South, to the lowest level since January 1991.

Builders had 281,000 houses on the market last month, down 4.1per cent from May and the fewest since February 1998. Unsold inventory fell a record 36per cent from June last year. It would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007.

Underscoring the stabilisation, the Wells Fargo/National Association of Homebuilders sentiment index has risen in five of the past six months and existing home sales have increased for three months in a row.


Source: Straits Times, 28 July 2009

US economy picking up but it could be early days

Official data looks good but it is less clear if growth can be sustained

WASHINGTON: The nice thing about a deep recession is that it does not take much of a rebound to make the official data look healthy even if the economy itself is not.

Recent readings across many of the world's biggest economies - including the US, China, Japan, Britain and Canada - suggest the global recession is petering out. What is missing is a catalyst for a sturdy, sustainable recovery.

Figures due this Friday are likely to show that the United States economy contracted for a fourth consecutive quarter, the first time that has happened in records dating to 1947.

But it will probably be the last negative quarter of this recession. Indeed, the second half is shaping up to be stronger than many economists had thought just a few weeks ago.

'We're starting so low, you can get some big numbers for a quarter, maybe even two quarters of good growth but then it all falls apart,' said Mr Joel Naroff, head of Naroff Economic Advisors.

Mr Naroff was one of only three economists in a Reuters poll of 67 who thought second-quarter US gross domestic product would be positive, although he acknowledged that his timing of the turn may be a tad early. The consensus forecast is for GDP to decline at an annual rate of 1.5 per cent, a vast improvement from the first quarter's 5.5 per cent drop.

The reason for Mr Naroff's optimism is largely a matter of mathematics. Home building and auto manufacturing have fallen so far and so fast that eventually the pace of decline must slow.

That is what began to happen in the second quarter.

The trend will probably pick up steam in the coming months - not because demand is bouncing back strongly but simply because stockpiles are depleted and need to be replenished.

'If you're selling 10 million autos (at an annual rate) and it goes to 11.5 million, that's a 15 per cent increase in durable goods,' Mr Naroff said.

In the boom years before the financial crisis struck in 2007, auto sales were running at closer to a 17 million annual rate, so an 11.5 million pace is still 'something worse than atrocious', he said. As far as GDP calculations go, it is an improvement and therefore a positive.

Forecasting Friday's GDP number is unusually tricky because this instalment comes with a once-every-five-years revision of data going all the way back to the Great Depression era.

Barclays Capital economist Michelle Meyer is looking for a few tweaks to the US figures. In particular, she thinks the rate of household savings will be revised higher. It has been climbing as Americans try to rebuild trillions of dollars in wealth lost in the cratering of the housing and stock markets.

'This could mean that much of the saving rate adjustment has already occurred, providing less of a drag to consumer spending in the future,' she said.

That would add one more modest positive to prospects for the second half. Add in a pick-up in housing and auto manufacturing from dismally low levels and a flood of government stimulus spending and it creates at least the potential for above-average growth in the next two quarters.

What might sustain that growth is less clear, particularly when unemployment is at a 26-year high of 9.5 per cent and likely to keep rising into next year. With joblessness stubbornly high, spending will suffer and so will economic growth.

Mr Naroff pointed to another key difference between now and then. In the 1980s, manufacturers laid off workers when the recession struck and hired them back when demand returned. But many of the jobs cut in this recession are unlikely to return.

That means the US will probably need help from beyond its borders in order to claw out of its economic hole.

That may be too much to ask.

Canada's GDP figures are also expected on Friday. Its central bank declared last week that the country's recession was virtually over, but said the recovery process was likely to be a long, drawn-out affair.

Britain produced its own nasty economic surprise last week with a report showing GDP fell 0.8 per cent quarter-on-quarter, far worse than economists had predicted.

This week, euro zone and Japanese unemployment data for June will be worth watching to gauge whether their economies are likely to provide much lift.

Both figures are expected to show modest increases from May in the jobless rate, which suggests that much of the rich world remains in the same slow recovery boat.


Source: Straits Times, 28 July 2009

Suburban condos drawing buyers

They could be paying prices seen in prime areas due to current euphoria

IN THE latest sign of the buoyant suburban property market, home hunters in Ang Mo Kio have been submitting cheques to buy homes at prices rarely seen outside Singapore's prime central areas.

Buyers are said to be paying prices starting from $1,150 per sq ft (psf) for the upcoming 329-unit Centro Residences by Far East Organization.

This means two-bedroom units cost more than $800,000, while three-bedroom apartments will cost $1.1 million and above.

Consultants said the Centro Residences is one of the few 99-year leasehold projects in the suburban areas that has crossed this level.

Jones Lang LaSalle's head of South-east Asia research, Dr Chua Yang Liang, said he was 'a bit shocked' by the pricing.

'I'm afraid at this moment there's a lot of euphoria, so there will be demand for this project even at this price,' he said.

Plus points for the project include its location in a popular mature estate right next to the Ang Mo Kio MRT station, as well as its proximity to international schools.

But Dr Chua voiced concern over the 'long-term sustainability of this pricing', saying that upgraders may not be able to afford it.

At another suburban condo, Optima, located next to the Tanah Merah MRT station, more than 40 people lined up yesterday afternoon to stake claim on the 297 units for sale, even before the showflat opens on Friday.

Many of those in the Optima queue were property agents holding places for their clients with blank cheques in hand.

However, some in the queue were possibly property agents lining up with a view to buying properties for their own investment purposes.

Pricing for the 99-year leasehold project has not even been finalised, according to developer TID, a tie-up between Hong Leong Group and Japan's Mitsui Fudosan.

Agents estimate that prices will be about $750 to $850 psf, with two-bedroom units going for about $600,000 to $700,000 and three-bedroom units from $700,000 to over $800,000.

They say buyers are so keen on the units that they have submitted blank cheques for them to fill in the amounts once the price list is available - a fairly common tactic in a boom market, and one that has resurfaced in recent weeks.

TID was alerted to the existence of the queue at about 5pm yesterday. At 10pm last night, TID representatives told those in the queue to go home, saying that the queue would not be recognised. The queue soon dispersed.

'We're not going to sell anything until Friday,' a Hong Leong spokesman had said earlier. A preview would be held for Hong Leong and TID staff on Thursday.

Last week, Hong Leong said in a press release that more than 1,000 inquiries have come in for Optima, which it said was 'the last condominium site available in the vicinity' of the Tanah Merah area.

With developers starting to tentatively raise prices for projects on the back of strong demand, Jones Lang LaSalle's Dr Chua warned that these price increases 'need to be supported by economic growth or wage growth in the long term', or they may lead to 'excess inflation' and a property bubble.

Far East will start its preview of Centro tomorrow and will release two-bedroom and three-bedroom units. Agents say some buyers have already written cheques to register their interest.

One reason for the relatively high price of Centro is the cost of the land. Far East bought the state-owned site in September 2007 for $601 psf of potential gross floor area, a record price for suburban condo land.

Over the weekend, suburban condos continued to do fairly well. Far East sold another 59 units at its Waterfront Key condo in Bedok Reservoir, bringing the total number of units sold to 278. The average price was $735 psf.

UOL Group also sold 70 units at Meadows@Peirce in Upper Thomson over the weekend, after selling 180 units on the first day of sales on Friday. The buyers, mainly Singaporeans, paid an average of $880 psf.

But weekend sales were slower at mid-tier projects closer to the city. Far East sold five units of Silversea in Amber Road at an average price of $1,380 psf, for a total of 59 units sold so far. At its Vista Residences in Thomson, seven more units were sold at prices starting from $1,100 psf, bringing total units sold to 144.

Source: Straits Times, 28 July 2009

313@Somerset offers free service training to tenants

ABOUT 1,000 people, including retail staff from the shops at 313@Somerset, will become the first to receive service training at a centre set up by the mall's landlord.

The free training will take place at the $1 million centre in the mall itself - a facility jointly funded by Australia-based landlord Lend Lease Retail and enterprise agency Spring Singapore.

The first batch of 40 trainees will begin class on Monday at the centre's temporary home in Lend Lease Retail's office in Faber House. The trainees are employees of the mall's tenants, those working for the mall and a few members of the public.

More than 120 tenants have pledged to send their staff for training.

They will be taught about maintaining a professional image, business etiquette and how to interact with customers.

Lend Lease estimates the centre will save the industry $3 million per year, based on the assumption that an employer spends an average of $3,000 per employee in training costs and loss of the employee during training, excluding government subsidies.

The training centre, launched yesterday by Australian Trade Minister Simon Crean, will also offer free lessons in retail to interested parties. Registration for these courses is to be done online at

Retail jobs are also listed there.

Ms May Sng, who heads the Orchard Road Business Association, hailed the centre as a 'magnanimous' gesture.

'One of my wishes is that Orchard Road service will increase to the level of Hong Kong and Tokyo. We are far from reaching that. So to have this facility sited on Orchard Road goes beyond expectations,' she said.

313@Somerset has filled up over 90 per cent of its space. Lend Lease's development director Mike Kenderes is confident that all its shop spaces would be taken up by its opening date in November.

Source: Straits Times, 28 July 2009

Grangeford owner seeks time to remove partitions

TENANTS who refused to move out of The Grangeford condominium in Orchard Road have stymied the building owner's efforts to tear down illegal partitions.
As a result, Cove Development, the owner, has applied to the Ministry of National Development for an extension of the original deadline, which expired yesterday.
Cove had been given more than a month to tear down the partitions, but said in its application that work had been held up by 'recalcitrant former tenants who had earlier shown resistance in vacating Grangeford'.
The firm did not want to say how long an extension it asked for.
When contacted, the Urban Redevelopment Authority (URA) would not say if the request would be approved.
The saga began after the previous master tenant of the condominium, Ideal Accommodation, was found to have illegally partitioned the units in the building.
On April 29, the URA ordered it to restore the apartments to their original condition by June 3.
Ideal's tenancy agreement was also terminated by Cove.
However, tenants were incensed that they were given only a short period to move out.
Several tenants claimed their leases with Ideal were still in force and refused to go.
Cove managed to get some of them to sign new leases with it, but others dug in and refused to go, despite having their utilities cut off.
Yesterday, however, Cove said that the remaining former tenants have been evicted.
It said in a statement that a court sheriff was at The Grangeford last Friday and Saturday to 'recover possession of locked apartment units and evict the remaining recalcitrant former tenants'.
'With this latest update, Cove Development has successfully recovered all the 171 apartment units previously leased to Ideal,' it added.

Source: Straits Times, 28 July 2009

China's property fever back after govt measures heat up prices

Beijing house prices rocket 27% from Jan to June as speculators return

(BEIJING) After getting on board China's property boom only three months ago, Beijing property agent Li Zhiwei already has plans to use the profits from his new career to open a karaoke complex.

The 26-year-old is close to making his first pot of gold - a commission on a luxury new apartment near Beijing's Sanlitun shopping and entertainment district that he is close to selling for two million yuan (S$421,000).

'I'm a young man and I love challenges. Sales bring quick money,' said Mr Li, who quit a lower-paying government job in his home city in the central province of Henan after six months of 'boring work'.

While Mr Li will get 10,000 yuan from his first sale, he said top performers at his company could earn more than four times as much each month, a wage that would put him on track to start his karaoke and bar business in a few years.

Such ambitions may have seemed impossible last year when China's property market slumped sharply, hit twice over by government efforts to rein in prices and the global economic crisis.
But China's real estate fever is well and truly back.

Government stimulus measures and speculative investors have helped forge a surprising turnaround, with rocketing prices in some large cities sparking concerns of a new bubble.

'China's residential market has touched rock bottom and is now recovering at a faster pace than expected,' said Alan Chiang, residential market head at property consultancy firm DTZ China.

In the Chinese capital, average house prices jumped 27 per cent from January to June, according to government data published in the state media.

Property prices across all major cities rose by 0.2 per cent in June from a year ago, government figures showed, ending falls since December, when the data posted the first decline since official records were published in mid-2005.

To lift the sector out of its slump, the government last year cut minimum deposits for first-time home buyers and slashed equity capital requirements on property investments.

It also lowered mortgage interest rates, while erasing stamp duty on all private home purchases and value-added tax for land on property sales.

The measures particularly helped average Chinese looking to buy a property as they improved general affordability, according to Hingyin Lee, head of research at Colliers International's China division in Shanghai.

'They gave a lift to ... the mass market,' he said.

But analysts said speculative money was also fuelling the rebound with the property market attracting hot money as a hedge against inflation.

Fears of inflation are rising, fanned by concerns about excess liquidity due to a record US$1.1 trillion of new loans in the first half, as Chinese banks followed government orders to pump-prime the economy.

'Many people have entered the property market to hedge depreciation risks on expectations of inflation, creating investment and even speculation demand,' said Yang Hongxu, an analyst at E-House China Research and Development Institute in Shanghai.

The frenzy seen in the Chinese market is in stark contrast with markets in the United States and other Western countries.

Prices of existing homes in the US - by far the largest segment of the US housing market - dropped by 15 per cent in June from a year before, the National Association of Realtors said. House prices in Britain also fell by 15 per cent year-on-year last month, according to mortgage giant Halifax.

'China's residential market is very different to its counterparts in the West,' said Mr Chiang of DTZ China.

He said China's massive population means there is still a long-term supply shortage. And Chinese
buyers have not been as hard hit by the financial crisis as they rely more on savings than mortgages to fund property purchases. -- AFP

Source: Business Times, 28 July 2009

UK home prices steady for a third straight month

(LONDON) House prices in England and Wales were flat for a third consecutive month in July, causing the year-on-year decline to slow to 7.7 per cent from 8.7 per cent, property data company Hometrack said yesterday.

But a broad-based recovery in house prices was still a long way off, with rising unemployment and a shortage of mortgage finance standing in the way, Hometrack said in its report.

Hometrack's monthly survey of estate agents' views of market conditions showed sellers were achieving an average of 91.5 per cent of their asking price, up from 91 per cent in June, and took an average of nine weeks to sell, down from 9.4 weeks.

'A lack of mortgage finance, low buyer confidence and growing fears of unemployment are currently being offset by increased demand, a pick-up in sales and a growing scarcity of housing for sale,' said Richard Donnell, Hometrack's director of research.

The lack of a change in average house prices at a national level masked sharp regional differences, with a scarcity of housing putting upward pressure on house prices in southern England, Hometrack said.

'When demand does start to feed back it will do so relatively slowly, starting in the equity-driven markets of London and the south, and only filtering down the rungs of the housing ladder as the economic recovery starts to gain momentum,' it said.

Surveys of house prices by mortgage lenders Halifax and Nationwide have shown sharper annual falls - down 12.5 per cent and 9.3 per cent respectively in June - than Hometrack's report, but also some sharp one-off monthly increases in house prices.

Mr Donnell said he did not think these marked the start of a durable recovery in house prices. 'The likelihood is that the tales of green shoots are proven to be little more than an unsustainable and short-term blip . . . fed by pent-up demand from opportunistic cash buyers and households looking for family homes in southern England where supply is most constrained.' - Reuters

Source: Business Times, 28 July 2009

Couple sue over reverse mortgage

Damages sought from NTUC Income over alleged contract breach

REVERSE mortgages - launched with much fanfare over a decade ago to help retirees unlock the cash value of their homes - will, for the first time, be at the centre of an upcoming court case.

Mr Derek Chua, 72, and his wife Madam Colleen Ng, 57, have filed a suit against insurer NTUC Income after their reverse mortgage turned sour.

In the writ of summons obtained by The Straits Times, the couple claim that the reverse mortgage scheme entitled Mr Chua to live in the property until he died or sold the property.

They also claim that Income was not entitled to force them to repay the loan if the loan exceeded 80 per cent of their property's market value.

When the reverse mortgage scheme was launched in 1997, it was seen by the Government as a way for the elderly to get some income from their homes without having to move out.

It offered an income stream for cash-poor but asset-rich retirees. They could use their homes as security for a loan that would be dispensed in monthly cash payouts.

Under the scheme, the lender would usually recover the cash it had paid out through the sale of the property after the borrowers had died. Any surplus would go to the estate.

Mr Chua and his wife signed up.

The property, which they bought in 1975, was valued at $2.1million in 1997. This allowed Income to lend them up to 80per cent of the valuation or about $1.68million.

Income also settled an outstanding overdraft of $495,000 that the couple had taken out from a bank using the house as collateral.

Income paid out $2,000 a month.

But things went wrong for the couple when property prices crashed after the Sars crisis in 2003. Their home's valuation virtually halved to $1.1million in 2004 and they were told by Income that the loan was reaching its 80per cent limit. As a result, the couple's monthly payouts were cut successively from $2,000 in 2004 to $300 by 2006.

In June 2006, the couple were told that their loan amount had exceeded 80per cent of their property's market value at the time. The monthly payouts stopped the following month.

By then, the couple owed Income almost $1.05million - comprising the $495,000 to clear their overdraft, plus the monthly payouts and the compounded interest on these payouts.

It became necessary to sell the property to recover the sum.

According to the couple, Income found a buyer who paid $1.05million in November 2006, but there was still a shortfall of almost $55,000, which the couple were to pay off in monthly instalments over the next 10 years.

The couple started making these payments and kept them up until recently when they decided to take legal action.

Mr Chua, a retired flight engineer, and his wife, a housewife, who now rent an HDB flat, will be represented by Senior Counsel Michael Khoo. The appointment of a lawyer was made by the director of the Legal Aid Bureau, after the couple passed a means test.

Mr Khoo said the case was 'the first of its kind', and declined further comment as the suit has been filed.

In the writ, the couple are seeking damages for an alleged breach of contract to be assessed, and costs.

Both Income and OCBC Bank - the only other institution to offer reverse mortgages - stopped offering such loans last year as their take-up was not high. Income has issued 500 such loans since 1997 but only 134 remain active.

Property consultant Nicholas Mak, former head of research at Knight Frank, said it was not surprising that the scheme fizzled out as its success relied on 'many factors, including the size of the market and its culture'.

A recent HDB initiative called the lease buyback scheme has broadly replaced the reverse mortgage, he said.

But this is available only to elderly folk who live in three-room or smaller flats. It monetises their flats to create annuities.

NTUC: We have been more than reasonable

NTUC Income said it empathises with Mr Derek Chua and Madam Colleen Ng, but believes it has acted more than reasonably to assist them.

Income's chief financial officer Jeffrey Lee told The Straits Times that before signing the deal, the couple were 'advised by lawyers on all the terms and conditions of the reverse mortgage'.

Under a reverse mortgage, the maximum that Income would lend to a borrower is capped at 80 per cent of the prevailing value of the property. When the ratio reaches or exceeds 80 per cent, it indicates that the maximum loan limit has been reached and steps would have to be taken to recover the loan in accordance with the terms of the reverse mortgage.

During a review in 2004, Income found the ratio of the loan to the home's valuation had exceeded the upper limit of 80 per cent, said Mr Lee.

Income's managers met the couple to discuss their options, which included transferring the loan to another family member and renting out rooms for income. The borrowers considered, and elected to sell their property, he added.

Income also said it did not insist that the property be sold immediately, and it gave a grace period of more than two years. It also gave the couple a 10-year loan, at their request, to repay the shortfall, starting in July 2007.

'NTUC Income has been more than reasonable in trying to assist the borrowers throughout the years,' it said.

Under the reverse mortgage scheme, the lender would usually recover the cash it had paid out through the sale of the property after the borrowers had died. Any surplus would go to the estate.

Source: Straits Times, 28 July 2009

Centre to help mall set service benchmark

313@Somerset to provide free training to employees of its retailers at new centre to raise service levels

SERVICE levels in Singapore are set to reach new heights as Lend Lease launched its $1 million 313@Somerset Training and Career Centre yesterday. The training centre was officially opened by Simon Crean, the Australian Minister for Trade, and will provide free service training to all employees of its retailers, its own mall staff and even members of the public who wish to pursue a career in the retail industry.

'The is an excellent example of commercial collaboration between Australia and Singapore. The substantial investment by Lend Lease in the 313@Somerset Retail Mall and the new Training Centre reaffirmed the importance of Singapore as Australia's largest trade and investment partner in Asean,' said Mr Crean.

This is the first time a mall in Singapore has received the Singapore Workforce Development Agency's Accredited Training Organisation (ATO) status, allowing it to conduct training.

The centre is also a first for Lend Lease globally and is expected to redefine standards for its malls around the world. The courses offered are funded by Lend Lease and Spring Singapore.
Since the announcement of the new training centre last year, response has been 'extremely enthusiastic, with more than 120 of the mall's retailers intending to put their employees through the courses,' said Lend Lease development director Michael Kenderes.

A total of 1,000 are expected to be trained in the centre's first year. Three hundred of them are expected to be matched to the employment needs of 313@Somerset retailers.

For a start, the centre will offer courses to help retail staff gain a clear understanding of the retail environment, the importance of retail service excellence, business etiquette and how to interact with customers.

The first two classes which commence on Aug 3 are already full.

It will also offer other courses that are not accredited and this will focus on retail tourism, centre brand induction and the 313 service factor.

These opportunities for training have been extended to retailers and staff in other Lend Lease malls, including Parkway Parade and PoMo. The centre will also help with job matching for those seeking employment within the centre.

The Training and Career Centre is expected to 'save the retail industry some $3million in training and hiring costs, and downtime when a staff member goes for training', said Mr Kenderes.

Source: Business Times, 28 July 2009

HSR - Striving to provide the best for the staff

ON the outside of the building that houses HSR International Realtors, a sign reads 'HSR Property, the #1 real estate group and largest real estate company in Singapore'. Inside the 80,000-square-foot compound in Toa Payoh is a karaoke lounge, games corner, spa, gymnasium, billiard tables, coffee tables and shades dotted around an open area for alfresco dining.

The provision of such elaborate amenities is to remind staff to take a break and achieve work-life balance. 'HSR is not only a workplace to them. It's like a second home or mini country club. They can bring their family members along and enjoy our facilities,' says the company's CEO, Patrick Liew.

A winner of the Enterprise 50 Award last year, HSR was founded as Hap Seng Realty by Lau Gek Poh and Helen Lau, with Kellie Lim the first executive director. It was renamed HSR in 1992.

Apart from the recreational facilities, the HSR building houses various subsidiaries which together provide a one-stop solution for real estate advisers and clients. For example, HSR advisers can print their flyers at the printing company while HSR clients can use interior design company Paxel to beautify their properties - all on the premises.

The focus on staff is pertinent in an industry where it is common for agents to switch to competing companies. This was exactly what caused HSR to hit a low in 2002-2003.

'Our management team left suddenly, and it dawned on us that for a company to flourish it is important to have people who have a sense of belonging and loyalty,' says Mr Liew. 'We are not just property agents. We see ourselves as advisers, providing the best advice for our clients. That is why we strive to provide the best for our staff. If we sincerely mean well, they will stay with us. It's not just about profits - it's about creating a better life for our people, and that will make them want to contribute.'

This strategy contributed to a six-fold increase in sales between 2004 and 2007 to $300 million. In 2007, the group netted a profit of some $5 million. According to the company, it has 41 per cent of the private resale markets - residential, commercial and industrial - and 36 per cent of the HDB resale market.

Other than a conducive environment, HSR is big on getting the best out of its people through education. Advisers can choose from a range of more than 30 courses. 'We see every one of our people as an F1 racing car,' says Mr Liew. 'Our job is to create a championship track for these racing cars to move further and faster.'

Staff with top sales records undergo in-house training courses to be recognised as trainers. And through training, they share their rich sales experience with fellow advisers.

All HSR advisers have to go through a continuous 20-hour boot camp. Beyond this, each can choose to sign up for other HSR courses that interest them. Courses are revised regularly, depending on the market conditions. 'When the market was booming, we set up leadership courses to help our advisers lead their teams better,' says Mr Liew. 'When the market is down, we set up negotiation courses to help our advisers work with clients to close their deals more readily.
One of our goals is to make sure our advisers attend at least six hours' training per week.'
HSR's training is backed up by a guaranteed income plan. 'If our advisers are not performing well, it means that we have not done a good job coaching them and we will compensate them,' Mr Liew says. 'We put our money where our mouth is.'

Besides courses, HSR has created an award-winning SMART Plus technology system to assist its advisers. This is a Web-based sales management system that allows advisers to match suitable buyers with sellers, and facilitates course enrolment and in-house communications. HSR says it is the only player in the industry that has implemented such a system. Human error in transactions has been minimised, while transaction processing has accelerated. The SMART Plus system also makes it quick and easy to monitor and assess the sales performance of the company's 8,000-plus advisers.

Advisers are also kept in the company loop through a monthly letter. As a part of its philosophy, HSR takes pride in its corporate social responsibility initiatives.

In 2007, it raised $50,000 by organising Glass-a-thon, when a record was set for the most number of people walking on broken glass. Some 521 HSR advisers created another national record by breaking arrows on their throats to help raise money for the President's Charity Challenge.

All HSR advisers are also given three days' additional leave to do charity work. Besides enhancing HSR's efforts to give back to society, this helps bond HSR advisers with one and the company.
In the midst of recent public frustration over dodgy real estate practices, HSR was very much unfazed.

'Every HSR adviser carries a Code of Honour with them everywhere they go. They recite it every time before a meeting or training course starts. Our advisers want to promote and protect our client's best interest in whatever they do,' says Mr Liew. The golden rule in the code is: 'I will do to others what I want others to do to me. I will not do to others what I do not want others to do to me.'
Mr Liew speaks plainly: 'If an unethical adviser breaches this code, we will not hesitate to turn them in to the authorities.'

The writers are students of the NUS Business School

Source: Business Times, 28 July 2009