Sunday, January 31, 2010

What properties can PRs buy?

The Government has no restrictions on permanent residents when it comes to buying, selling and sub-letting condominium units. But there are rules for landed property and HDB flats.

To buy landed property – bungalow, semi-detached house, terrace house and town house, whether freehold or leasehold – PRs need to apply for a permit from the Singapore Land Authority (SLA). They will be assessed on their economic contributions – qualifications, expertise and investments here.

PRs cannot sell their landed property within three years of buying it. After three years, they may sell it to a Singaporean or another PR, who has to seek SLA’s permission for the purchase. PR owners of landed properties are also not allowed to rent them out under the Residential Property Act. Offenders are liable to a maximum fine of $5,000 or a jail term capped at three years, or both.

PRs are allowed to buy resale HDB flats – but not new flats – without housing and mortgage subsidies.

Resale HDB flats bought without a CPF housing grant and with a bank loan can be sold one year from the date of purchase. To sub-let the whole flat, the PR must have lived in it for three years.

Owners of HDB flats are allowed to sub-let rooms if they own a three-room or bigger flat. There is no minimum occupation period for renting out rooms. Owners have to adhere to the number of tenants allowed by the HDB.

No prior approval from HDB is required for the sub-letting of rooms. But with effect from tomorrow, flat owners who sub-let rooms have to register with the HDB within seven days of doing so.

This applies to all, not just PRs. Those who illegally sub-let entire flats may have their units taken back by the HDB or may have to pay a fine of $1,000 to $21,000.

Source: Sunday Times, 31 Jan 2010

Private home owners eye HDB flats

The businesswoman already owned a semi-detached house. Two years ago, she spent $400,000 to buy another property.

Her choice? A four-room HDB resale flat in Sunset Way, for which she paid about $80,000 above valuation.

The 50-year-old, who declined to be named, said it was for her two grown-up children to live in, for them to ‘gain some independence’.

But then, last November, she sold it at a $100,000 profit, which she used to fund another purchase – an executive maisonette.

She claimed she is not speculating in HDB properties.

But there is growing concern that private home owners like her are snapping up such homes – either to flip them for gains or for rental income – driving up prices in the process.

Resale flat prices rose 3.9 per cent in the final three months of last year to hit a new record, taking the full-year jump to 8.2 per cent.

An HDB spokesman said it is unlikely that rising resale prices can be caused by any single factor, such as purchases by private home owners or permanent residents.

Prices are ‘influenced by a myriad of factors such as pace of economic growth and market sentiments’, the spokesman said.

Real estate agents said there is growing interest among private home owners in acquiring an HDB flat.

However, they note that the size of this group may be too small to influence prices greatly.

Private home owners, who can buy only resale flats and without subsidies, can sell the flat if they have lived in it for at least one year.

Those who buy three-room or bigger flats can rent out rooms. But they must live in the flat during the period of the sub-letting, and comply with other rules.

If they have lived in the flat for at least three years, they can rent out the entire unit.

Latest figures show that the median rental for a three-room flat in Ang Mo Kio is $1,450. Units in good locations can fetch yields of up to 8 per cent, said housing agents.

Last Wednesday, National Development Minister Mah Bow Tan said the HDB would conduct a review to check if any rules are ‘encouraging or allowing’ people to speculate in HDB flats.

It would also step up efforts to ensure people do not get away with abusing the system.

Mr Andrew Tan, a senior division director from Dennis Wee Group, said private home owners eyeing HDB flats include those in their 40s and 50s, and with savings of up to $200,000.

Since other types of private homes are beyond their reach, they look to three-room flats – which may be easier to rent out .

‘As an investment, a flat will not give super-high returns, but it’s a safe bet,’ he said, noting the volatile stock market and low returns from fixed deposits.

ERA agent Richard Sim received more than 10 queries from private home owners in the past year.

‘Most want to buy the flats for investment as they can make money in terms of rental or profit if they sell them. Some do buy them to retire in as well.’

The HDB has warned that those who rent out entire flats without approval and before fulfilling the minimum occupancy period can be punished.

From January 2008 to December last year, 56 owners were fined $1,000 to $21,000. Some even lost their flats.

Whatever their buying motives, Mr Syed Abdullah Alhamid, a senior division director with ERA, said private home owners can push up prices as they are cash-rich.

He said: ‘Some have two private homes and let go of one. With the money, they can pay a high price for the location of the flat they want. They will take you on.’

Source: Sunday Times, 31 Jan 2010

Number of homeless people doubles

The number of homeless folk picked up by welfare officers driving around Singapore’s housing estates, beaches and streets has doubled in the past two years.

A total of 253 people were picked up by officers from the Ministry of Community Development, Youth and Sports (MCYS) last year, up from 123 in 2007. More than half were found sleeping in void decks of Housing Board blocks.

More than six in 10 were men aged below 60 and ‘capable of working’, said MCYS. The rest were divided equally between women and older men. Around 85 per cent were Singaporeans.

Most of the vagrants were admitted to government-run homes for destitutes where they get free food, clothes and shelter, but face curbs on their freedom.

Those picked up from void decks and beaches last year included 17 families, up from just four in 2007.

But these numbers do not paint the full picture as about 260 other people, including 43 families, are staying at two temporary shelters for the homeless, run by New Hope Community Services, a voluntary welfare organisation (VWO).

One of the shelters is for families, the other for single men, many of whom are homeless ex-offenders. Five additional flats were released to the VWO last week and it expects to take in another 40 people by the end of next month.

A third shelter, operated by Lakeside Family Service Centre, was set up just a month ago and is currently housing 12 families.

The family shelters are located in a series of three-room HDB flats. Many of the families staying at these places were referred there by welfare agencies such as community development councils (CDCs) and family service centres (FSCs).

Unlike welfare homes, the family shelters allow residents to come and go as they please and charge between $50 and $150 a month, depending on the size of the families and their ability to pay. Families must also cook their own meals, though food rations are provided.

While the rise in numbers coincided with Singapore’s deepest recession in years, MCYS said there is no direct evidence to link this with the financial crisis.

Ms Ngo Lee Yian, the ministry’s deputy director for residential and after-care services, said the biggest cause for the spike was ‘greater awareness’ on the part of Singaporeans who called the ComCare Call hotline (1800-222-0000) to tip off the ministry on homeless people in their neighbourhoods.

The spike in hotline calls led to increased patrols by officers from MCYS’ Destitute Persons Service, which, in turn, saw more people being picked up, said Ms Ngo. There were around 280 patrols last year, up from 160 in 2007.

Members of Parliament such as Charles Chong and Seah Kian Peng have seen a rise in cases of constituents seeking help over housing problems.

‘The number of HDB-related cases I see rose significantly after flat prices started to rise,’ said Mr Chong, who gets about 15 such appeals every week. ‘Most are requests for rental units, though cases involving evictions or homelessness remain few.’

Pastor Andrew Khoo, executive director of New Hope Community Services which runs the eponymous shelter, said there are three main factors causing the down-and-out to land up on his doorstep.

Some shelter residents were forced to sell their homes because they lost their jobs and could not keep up with mortgage payments. About 60 flats are voluntarily surrendered to the HDB every month, The Sunday Times understands.

Others, said Pastor Khoo, had taken loans from banks and could not service them after interest rates were raised.

Such people also typically have strained relationships with family members and are often ineligible to rent or buy HDB flats.

‘So they have no one to turn to for help,’ said Pastor Khoo.

He added that about 60 per cent of the families staying at his shelter are Malay, and 20 per cent are Indian.

The shelters can house the homeless for only three months. During that period, families work with social workers to find alternative accommodation. On release, about 40 per cent go to live with friends or relatives and about 30 per cent rent a flat from the HDB.

New Hope has a waiting list of about 30 families, most of them fear losing their homes. Currently, two to three families are packed in each three-room flat.

‘Some may have to sleep in the hall,’ said Pastor Khoo. ‘But that’s better than living out in the open.’

Source: Sunday Times, 31 Jan 2010

Strict housing policies, illness and divorce leave some stuck

For 14 weeks between February and June last year, divorcee Zailan Abu Satamin, 40, and his third wife Faridah Atan, 26, drifted from beach to beach with an infant and two toddlers in tow. They say they were too poor to afford even a tent.

Instead, they lived in the rain shelters that dot Singapore’s parks.

After his last divorce, Mr Zailan sold the three-room Boon Lay flat he owned with his second wife in January 2007. He had remarried by then. Early last year, he lost the room he rented from a friend when he could not pay the rent.

He turned to the South West Community Development Council for help and it referred him to the New Hope Shelter where he now stays with his family.

Interviews with homeless folk, social workers and government officials indicate that divorce, dysfunction and disease, coupled with public housing policies that strictly regulate the amount of government help a family can get, may be making some people here homeless.

The number of homeless picked up by government welfare officers has doubled over the past two years – from 123 in 2007 to 253 last year, said the Ministry of Community Development, Youth and Sports (MCYS). About 60 families also give up their flats every month, unable to service the loans, though most end up staying with friends or relatives.

So who are these people and what makes them homeless in a nation that prides itself on having one of the highest home-ownership rates in the world?

Problems often start with divorce, and former spouses selling jointly-owned flats. HDB rules state a person cannot rent a flat within 30 months of selling one.

Mr Zailan sold off flats twice after his two divorces. After the second sale, he and Madam Faridah rented rooms from friends. The children came soon afterwards, straining his $950 monthly income.

‘There were times when we were unable to pay and landed up on the streets,’ he said. On such occasions, his family was of no use, he claimed. His parents are dead and his stepmother already has 17 relatives living in her three-room flat. Madam Faridah’s mother is dead and her father lives in Batam. She said she is not in touch with most of her 10 siblings.

Not planning for crises like job loss or illness also make some homeless.

Take, for instance, an unemployed 53-year-old who was wandering around one of Singapore’s beaches last weekend.

The former aerospace technician, who wanted to be known only as Mr Seah, said he has been homeless for a year since he was evicted from his rental room. Estranged from his former wife and three grown up sons, he showed The Sunday Times a doctor’s note stating that he suffered from depression and anxiety attacks.

His illness, he said, cost him two jobs. But because he has bought and sold HDB flats three times, he is not eligible to apply for a rental flat. He claimed the last sale in 2008 – after his divorce – netted $100,000 into his Central Provident Fund account. But as he had no cash, he could not rent from the open market. So a blue tent on a beach is his home for now.

Many of the homeless take refuge in tents at parks and beaches as they deem void decks too visible and unsafe. In April last year, the National Parks Board (NParks) introduced permits allowing applicants to camp on the beach for up to eight days every month. It issued 21,000 such permits last year.

NParks estimates 10,000 people camped in parks in 2005-2006. Indeed, some homeless folk are using the permits to take shelter at the beach. When The Sunday Times ran into Ms Alvar Magdelene, 38, and her husband, Mr Velayutham Agamuthu, 44, the couple were camping at a beach with a valid permit – and their dog, Angel.

Ms Alvar, a bankrupt divorcee who remarried three months ago, had to give up the one-room rental flat she shared with an acquaintance earlier this month.

Mr Velayutham also has no place to stay and no job. When their permit expired last week, they applied again under Ms Alvar’s name, only to find out they had been ‘blacklisted’ for six months.

That is because permits are meant for those who camp for ‘recreational purposes’, said NParks director for parks Kong Yit San. Homeless people, he said, are referred to MCYS officers.

Deputy director of MCYS’ residential and after-care services branch Ngo Lee Yian said the ministry has in place a mechanism to help such people.

First, officers work to establish the identities of the homeless and the reasons for their plight, she said. A stay in a welfare home or transitional shelter may be necessary for those with no ‘immediate accommodation options’. Families and individuals are also referred to community agencies for help with jobs, financial aid or counselling.

Ms Ngo said MCYS will set up more shelters for families in crisis over the next few months. ‘The important thing is for people to seek help early – and not wait till you are homeless.’

But this takes time. Mr Zailan, who now has a steady job, has applied for a rental flat – the debarment period is finally over. But it could be at least another six months before he gets one.

His tenure at the shelter, however, expires next month. ‘I can only pray that we don’t have to go back to the beach again.’

But Pastor Andrew Khoo, who runs the shelter Mr Zailan is in, is sanguine this will not happen. ‘Homelessness is never permanent in Singapore, given that there is so much help in the community.’

Source: Sunday Times, 31 Jan 2010

Shorter wait for rental flats

The average waiting time for an HDB rental flat has fallen from 21 months early last year to 13 months today. The number of applicants in the queue for a rental flat, meanwhile, has fallen from 4,550 in February last year to 3,465.

This is largely a result of the stricter eligibility criteria for rental flats which came into force last February, HDB’s deputy director for rental housing Mike Chan told The Sunday Times.

Under the tightened rules, those who previously owned private property, or whose children own private property, are not allowed to apply for a rental flat.

An applicant is also rejected if he has a child who owns an HDB flat with a spare room.

HDB has 42,000 flats under the public rental scheme. Another 7,500 flats will be added over the next three years.

The stricter criteria have helped ’sieve out those who have alternative housing options’ and ensure that these flats go to those who need them most, said Mr Chan.

Other safeguards to prevent abuse of rental flats include a rule that bars those who have sold their HDB flats in the open market from applying for a rental flat from HDB for 30 months after the date of sale. Some sellers, said Mr Chan, make profits from the sale of the flats.

But those facing ‘genuine financial hardship’ and with nowhere to live after selling their flats are given the flexibility they deserve, he said. On average, HDB waives the 30-month debarment requirement ‘for a few cases every month’.

But those in the rental queue who do not have the option of staying temporarily with their relatives or friends may be given ‘interim rental housing’ on a case-by-case basis. Under the scheme, they can rent a room at below market rates.

Various help schemes are also available for HDB lessees who run into financial difficulties. Short-term measures such as a reduced repayment scheme are in place.

If these are not enough, lessees are advised to seek longer-term and more sustainable solutions.

Source: Sunday Times, 31 Jan 2010

Cost, Location

When Mr Peter Breitkreutz decided to buy a Housing Board resale flat in July last year, living close to other Australians was hardly uppermost in his mind.

A permanent resident since 2008, all the Brisbane native wanted was a five-room unit on a mid to high floor, lift access on each floor and a flat that was not too old.

‘We were very open to many areas, except the west because we weren’t too familiar with places like Jurong,’ said the 43-year-old who works in the financial industry.

He and his wife, who is from China, viewed properties in Woodlands, Ang Mo Kio and Pasir Ris before settling for one in Sengkang.

The flat was close to a pre-school in Yio Chu Kang that they could enrol their two-year-old son in.

It was also a five-minute drive to his office in Ang Mo Kio, until he took up a new job in the city recently.

The flat’s valuation was $400,000 but, after negotiations with the seller, the couple knocked back the price to $375,000.

The factors influencing their purchasing decision are not unique, said property agents.

They, as well as other PRs from countries like India, China and Indonesia, confirm that similar considerations are at play behind their resale-flat transactions.

The issue of PRs and resale flats was in the spotlight last week. Minister Mentor Lee Kuan Yew said at a dialogue that the Government did not want to see new citizens congregate and would disperse them across HDB estates.

The HDB also disclosed that it was considering introducing a separate ethnic quota for PRs to prevent enclaves from forming in housing estates.

The latest statistics show there are 533,200 PRs. They own around 5 per cent of the nearly 900,000 HDB flats islandwide.

According to property agents, PRs pick a resale flat primarily based on what they can afford.

They also hope for the flat to be close to their workplace, transport options like an MRT station or bus interchange, and facilities such as schools and supermarkets.

Being near others of the same nationality is not a major pull factor, said agents, though certain locations may see a higher concentration of PRs from a specific country, compared with other districts.

PRs from Myanmar, for example, like Jurong West because they work in shipyards, offices and factories in the area.

PropNex agent Abdul Hamid has seen many Indian PRs going for flats near Lorong Ah Soo ‘as there’s an international school for Indians there’.

Proximity to places of worship sometimes matters, with some Indian PRs plumping for units in Race Course Road or Farrer Park, to access temples in Little India.

Filipinos choose areas such as Jurong West, Simei and Bukit Panjang for the relatively cheaper prices.

But PRs from Malaysia and China are scattered islandwide.

ERA agent Joyce Lim said her PR clients ‘don’t really say they want to stay near friends’. It is mainly pricing that influences where they buy, she added.

Deals involving PRs – usually young couples or those with kids – make up 20 to 30 per cent of property agents’ monthly transactions.

They note that PRs with higher incomes pick newer estates like Punggol or Sengkang and those closer to town like Queenstown.

In such areas, they may pay up to $350,000 for a three-room flat and $500,000 for a four-room one.

The less well-off opt for more mature neighbourhoods such as Bukit Batok where a three-room flat may cost $300,000, and a four-room type up to $430,000.

But while certain areas may be preferred, agents said they do not know any specific block that has a high concentration of PRs in general, or those from a specific country.

The fact is that PRs and Singaporeans are subject to the same quotas under the Ethnic Integration Policy, introduced in 1989.

Proportions for the main ethnic groups – Chinese, Malays, and Indians/Others – in each block, and each precinct of around 10 to 12 blocks, are subject to quotas.

Sale of a flat to a buyer from an ethnic group that has reached the block or precinct limit is not allowed.

The aim is to maintain a healthy racial mix in estates.

Dennis Wee Group agent Ivy Eyu said a Chinese customer of hers was unable to buy a five-room flat in Queenstown because the quota had been reached.

PRs from Japan, Myanmar, Europe and Africa fall under the Indians/Others category.

And given the influx of immigrants in recent years, agents like ERA’s Ms Angeline Lim said they have run into a roadblock when representing Indians.

They have been unable to close deals if the quota for a block or precinct has been reached.

Which is why ERA’s senior division director Syed Abdullah Alhamid said: ‘Looking into the policy now is a plus point, but I think it’s also time to up the quota for the Indians/Others group.’

His firm’s marketing director Tan Yam Seng agreed, saying: ‘If the Government wants to do anything about it, they should adjust it to reflect the current ratio of the market population.’

Source: Sunday Times, 31 Jan 2010

Building in security at property design stage

In this era of homeland security, a building should not be a house built on sand.

When a truck bomb went off outside a building in Oklahoma in the United States in 1995, most of the 168 victims died – not from the direct blast effects, but from the partial collapse of the building.

There would have been more survivors if it had been designed against progressive collapse, that is, the failure of one part leading to the crumbling of a much larger part, or even the entire building.

In hindsight, too, the 18-year-old building could have been retrofitted with added structures to strengthen it.

Meanwhile, one outcome of the Sept 11, 2001 terrorist attacks in the US is a worldwide drive to strengthen the security design of buildings.

In Singapore, the Ministry of Home Affairs (MHA) on Jan 20 produced a 138-page document to help those who design, construct and manage buildings to protect their properties against terrorist strikes.

The draft version of the Guidelines for Enhancing Building Security was first released in November 2007.

Home Affairs Minister Wong Kan Seng, in his foreword, called on the building and construction community to use the document to improve building security.

He described it as a ‘comprehensive compilation of international best practices in building security that can be applied to Singapore’.

The document cited several cases to bring home the reality of the regional threat.

Last July, seven people were killed and scores injured when suicide bombers breached the JW Marriott and Ritz-Carlton hotels in Jakarta and set off explosives.

The document noted that the terrorists’ targets ‘are now commonly hotels or resorts’.

It recommended different tiers of protection, based on factors like the number of people who use the building, its purpose, nature of activity and if it is symbolic or iconic.

The proposed modes of protection include access control and alarm systems, vehicle anti-ramming barriers and even how vegetation can help or hinder security.

‘Trees with a trunk diameter of larger than 50cm can be used to stop a vehicle, depending on the protection level required,’ said the document.

But thick vegetation can also be exploited to hide bombs and weapons, it said.

Building owners may claim that such measures are costly, but the ministry said costs will not increase much if security concerns are addressed from the beginning – during the design stage.

This is the practice of City Developments, which said security issues are addressed from the design phase of each new development, encompassing architectural design, building security infrastructure and the needs of the various stakeholders.

Its spokesman added that building security was of the utmost importance.

‘In our existing commercial buildings, we continually review security technology and innovation with the aim of enhancing security within our buildings,’ she said.

For example, independent assessors conduct regular security reviews at Republic Plaza. The company is studying the MHA’s guidelines ‘with the view of further enhancing security within our premises’.

At Marina Properties, which manages Millenia Tower and Centennial Tower, an annual budget is dedicated to upgrading security equipment and staff training.

Its measures include secure card access, regulated driveways to prevent unauthorised parking and the recording of vehicles moving in and out of the compound.

There are cameras at strategic locations, including the lifts, while security officers conduct regular patrols, sometimes in plainclothes.

‘Flowerbed bollards’ function as anti-crash barriers, proving that strong buildings need not look like fortresses.

A spokesman for United Engineers said: ‘The beauty of a good design lies in functionality and aesthetics co-existing. With advanced design technology and good creativity, this is increasingly possible.’

Source: Sunday Times, 31 Jan 2010

Affordable flats still available

Ever since the release of the latest housing statistics last week, public housing prices have become the talk of town.

And no wonder: Figures by the Housing and Development Board (HDB) showed resale flat prices rising 3.9 per cent in the final quarter of last year, hitting yet another fresh record.

They have risen about 40 per cent from 2007 to last year, and are now some 10 per cent higher than the previous peak achieved in the fourth quarter of 1996.

For the whole of last year, resale flat prices rose 8.2 per cent.

But while disgruntled home hunters lament that resale flats are now priced out of their reach, property analysts say there are still gems to be discovered in some housing estates.

An analysis of the latest statistics by The Sunday Times shows some estates still offer flats for less than $400,000.

Four-roomers in Yishun – an established estate – turned out to be the cheapest, going by the statistics. The median resale price for the fourth quarter was $292,000 – the lowest among all estates (see table). In comparison, four-room flats in the most expensive estate, Queenstown, had a median resale price of $523,000.

Bukit Panjang, Woodlands, Jurong West and Choa Chu Kang were some other estates that offered affordable four-roomers in the low $300,000 level.

For buyers looking for five-room units, the median resale price for such homes in Woodlands at $365,000 was the most affordable, followed by flats in towns such as Bukit Panjang and Sembawang.

Executive flats in Sembawang, Yishun and Woodlands were sold at the lower range of the $400,000 level.

Chesterton Suntec International research and consultancy director Colin Tan said that ‘from time to time, you see good value in some locations’.

For example, some estates have been slated for rejuvenation and upgrading such as Tampines, Yishun and Jurong. But because the plans are long term and have not materialised yet, flats in such estates remain affordable.

Buyers who are patient and buy units in such estates could see capital appreciation of their property when the rejuvenation is completed, say analysts.

But to some extent, the current prices of the more affordable flats already reflect the value that the market attaches to them, added Chesterton’s Mr Tan.

The fact that these estates are not in prime locations is reflected in the prices. Those who cannot afford flats in central locations can find good alternatives in the suburban towns, he said.

One upside about living in suburban areas is that you can typically get more space for your money, he added.

PropNex chief executive Mohamed Ismail noted that other estates which remained relatively affordable included Bedok, Hougang and Jurong East.

Suburban towns may also see an appreciation in flat prices if HDB does implement a quota on the number of flats permanent residents (PRs) can buy, he said.

The HDB said recently it is considering introducing a separate ethnic quota for PRs to prevent them from forming enclaves in public housing estates – but details are not available yet.

‘If there is indeed such a quota imposed and PRs are restricted from buying too many flats in a specific area, for example, central locations near an MRT station which they tend to favour, then demand for resale flats will spread more evenly throughout the island,’ said Mr Ismail.

Chesterton’s Mr Tan pointed out, however, that housing statistics serve only as guidelines. ‘In truth, market information is imperfect and bargains can be found just about anywhere – central as well as suburban. You have to be patient to look for it,’ he said.

ERA Asia-Pacific associate director Eugene Lim said: ‘My advice to home buyers is, buy what you can afford. Prices are at an all-time high now, home buyers will do well to be very prudent with what they spend on.’

Source: Sunday Times, 31 Jan 2010

Chasing away leasehold worries

The wait lasted nearly half a year.

Since I exercised the option to buy my first new home some time last August, I had eagerly awaited the day I could move in, pop open a bottle of champagne and bask in the smell of my freshly painted walls.

That day finally arrived just in time for New Year’s Day – the beginning of a whole new decade – and I was understandably excited.

But just before and after The Big Move, I was besieged by a phenomenon I had never thought about: post-purchase cognitive dissonance (PPCD).

I’m not making it up, really. Cognitive dissonance is defined as a condition of conflict or anxiety resulting from one’s actions. And PPCD is when, after buying something, you feel that an alternative would have been preferable.

In fact, you go through a rationalisation process in your head, questioning all the factors that made you decide to buy the said thing, and wonder if it was all one big mistake.

You see, in my quest for a spacious, affordable home somewhere in the suburbs, I had bought a 99-year leasehold apartment.

I surprised myself because I have traditionally been on the side of freehold property in the freehold versus leasehold debate.

I know the typical arguments for both sides of the case but I never gave it much thought till I became a home buyer and the cold, hard, facts were staring me in the face.

I had started off looking at freehold properties but, when it came down to dollars and cents, I realised that the difference between a freehold and leasehold apartment of the size I wanted was more than $150,000 and it made a big difference.

I took the plunge.

Today, my 1,650 sq ft property has 85 years left on its lease. After spending every penny my other half and I had on renovations and furnishings, we were thrilled the day we moved in.

Everything was gleaming and it felt good that we owned everything we saw.

But this lasted only a few days.

Acutely aware of the new depths my bank accounts had plunged to, I was overcome by an attack of PPCD during lunch with my mother one day while shopping for cutlery.

Mum, I asked, did I make a bad move sinking all my money into a property that will take me 30 years to pay off? And at the end of 99 years, would be worth absolutely nothing?

Also, given the price I’d paid for the property, is it likely that I could even break even on costs if I wanted to sell my apartment a few years later?

I was panicking, and convinced that nobody would buy my apartment when I want to sell it. I would incur a huge loss on it – something I wouldn’t be able to live down as a property reporter.

In an attempt to alleviate the symptoms of my PPCD, I spoke to some property analysts for an objective assessment of my choice to invest in a leasehold home.

This is the list of factors to consider that I eventually came up with:

1. Affordability

The major advantage of a leasehold property is that it is cheaper and offers a first-time home buyer a good opportunity to get on the property ladder without financial stress.

2. Yield

Leasehold homes also typically give you a higher yield compared to a similar freehold property as you can command the same rent but your capital outlay is lower.

3. Depreciation, and factors that will compensate for this

The main drawback is that the value of your property depreciates with age. I have now come to accept this fact, but there are some factors that can influence the rate of depreciation, such as location, quality of amenities and transport network.

For those contemplating a leasehold home, is it near an MRT station? Is your estate slated for major upgrading?

Thankfully, I thought, my new home will benefit from the upcoming Bukit Timah MRT line.

4. Collective sales

Leasehold properties typically receive less proceeds as developers have to pay the Government a fee to top up the lease, unlike for freehold properties.

I’m personally not one for collective sales. But it is comforting to know that even an old leasehold estate such as Farrer Court could command a premium of $2.15 million per home when it went en bloc.

5. Historic figures

Looking at property cycles in the last decade, analysts say the rate of appreciation of freehold homes does not always outperform that of leasehold homes.

In general, the numbers show that in an upswing, leasehold properties tend to gain more, although in a downturn, they also fall more rapidly – meaning prices are more volatile.

So if you buy a leasehold property and intend to hold on to your home for some time, you could easily choose to sell in an upswing instead of a downturn.

All in all, I felt my anxieties dissolve when I realised that my leasehold home was affordable, will give me a reasonable yield if I choose to rent it out, and would likely appreciate – or hold – in value when transport networks are improved.

Analysts say there is no conclusive evidence to show one is definitely better than the other, and that the decision you make depends mainly on budget and preference.

I now realise that my home, which I love because it has four bedrooms and is surrounded by four different nature parks, was really the best choice for me, given what I could afford.

My mum, in her infinite wisdom, said: ‘If history is anything to go by, you’ll be fine.’

My parents recently sold an HDB flat in Jurong after my grandmother who lived there passed away. It had aged 20 years since they bought it, yet they sold it at a price far higher than what they paid for it.

See? Why worry so much, my mum chided, HDB flats are also leasehold and their values go up every year.

It was a good point. I decided then I would just enjoy my first home, day by day.

Source: Sunday Times, 31 Jan 2010

Saturday, January 30, 2010

Is there a code for property agents?

I WOULD like to ask Singapore Accredited Estate Agencies (SAEA) and PropNex Realty about the new rule that all agents must pass the Common Examination for Salespersons. Does it apply to all agents who specialise in the buying, selling or renting of HDB, private or commercial properties? Are agents who specialise in rented properties not required to take the exam? If so, it is unfair to agents who specialise in other areas.

Can an agent who has been found not to have declared commissions or submitted transactions be employed by other company?

Does SAEA have any record of such an agent? The reason I ask is that some companies may not mind employing such an agent with this kind of attitude as long as he can do the work. If so, is this fair to other agents who take their careers seriously? If such agents can cheat the company, they can also cheat the customer and it will ruin the reputation of all agents.

What is the minimum qualification to be an agent? Why does SAEA not standardise it so all applicants have at least N or O levels?

Yusnita A. Raby (Miss)

Source: Straits Times, 30 Jan 2010

Marina Bay IR sued by would-be tenant

EVEN before it opens for business, the Marina Bay Sands (MBS) integrated resort is facing a High Court lawsuit.

A spa firm which had its tenancy rejected after a change of management in the IR has sued it for at least $250,000 – the minimum amount for High Court suits to start. Lawyers for both parties appeared in a closed-door court on Wednesday to discuss the exchange of documents in the run-up to the case.

Spa@Sands claims it was offered two units at the resort’s shopping complex, after which it paid close to $280,000 in upfront rent and stamp fees. It claims that it paid $233,660 for a month’s rent, along with about $45,000 in stamp fees.

According to court documents, its director, Mr Phang Song Hua, 43, was invited to make an offer to lease the premises in July last year. He is the founder of a geomancy and health lifestyle firm, New Trend Lifestyle. He registered Spa@Sands last July.

The rent offered by Mr Phang was priced at $10 per sq ft for the 23,366 sq ft area – about the size of 20 HDB five-room flats. In contrast, the rental at Ion Orchard is at least $30 psf.

Mr Phang claims that when MBS banked in the cheques for these sums, it showed that the IR had accepted the offer. Mr Phang had also signed and returned the lease that was attached to the letter of offer by the July 13 deadline.

Spa@Sands made a presentation to MBS senior management at their request and was told on Aug 12 that its offer had been accepted. At the same time, the two cheques were also cleared.

But a few days later, there was a change in the senior management at the IR. The following month, the spa was told that its offer had been rejected.

It is understood Spa@Sands is seeking damages to recover the manpower and other costs incurred in the preparations to start the spa. It is alternatively asking the court to declare there was a valid agreement between the parties.

MBS argued through lawyer Eugene Thuraisingam from Stamford Law that it had not accepted the offer, or it would have signed its acceptance in the letter of offer and returned it to Spa@Sands.

It pointed to a condition in the offer letter issued that states that unless the tenant’s offer is accepted by the landlord, the landlord had the right to deal with other parties. The sum paid by the spa was also refunded.

But the spa, through Unilegal’s Chan Fook Meng, took issue with the claim, pointing out that while MBS could have shown its acceptance by signing the offer letter after it was signed by the spa, that was not the only way which acceptance could be signified.

It said MBS showed acceptance by banking the cheques, and that there was verbal agreement by its staff. MBS was not limited to signing the offer letter but could vary its mode of acceptance.

Source: Straits Times, 30 Jan 2010

HDB’s tall stories

Ask a Singaporean to name a building that is distinctively local, and ‘an HDB block’ is most likely to be the answer.

Head out into the heartlands and blocks of public flats built by the Housing and Development Board (HDB) fill the landscape.

The HDB celebrates its 50th anniversary this year, and also at some point during the year, it will have built its one millionth flat.

It was set up in 1960, at a time when most residents were living in unhygienic slums and crowded squatter settlements that were packed in the city centre.

Its task in taking over from its predecessor, the Singapore Improvement Trust, was to solve Singapore’s housing crisis. The first pressing issue was to build a large quantity of public flats at a low cost.

And build them, it did. In less than three years, the HDB built 21,000 flats.

By 1970, it had put up more than 100,000 flats, successfully housing more than 35 per cent of the population in its flats.

Today, 84 per cent of Singaporeans live in such flats.

While public flats remain largely high-rise ones, their look has changed over the last five decades.

The early flats were designed with minimum room sizes in mind. Costs were kept as low as possible to make them affordable. The early designs were one-, two- and three-room flats.

Exteriors were also kept basic – rectangular blocks with single corridors on each floor giving users access to flats.

Dr Milton Tan, 54, associate professor of architecture at the National University of Singapore, describes flats in the 1960s as simple and functional.

He explains: ‘They were slabs, as the HDB had to build them fast, and there was no time for redesign.’

He adds that with the slab blocks, the HDB had created a kind of template that it ‘rubber-stamped’ over the island.

Indeed, pictures of early housing estates such as in Queenstown and Toa Payoh show flats of this kind.

In the 1970s, with more neighbourhoods being built, flats took on a different look.

To differentiate one new town from another, new block shapes were introduced.

The late and former national development minister Teh Cheang Wan wrote in the 1975 book, Public Housing In Singapore: A Multi Disciplinary Study, that rather than traditional rectangular slab blocks, newer blocks took differing forms and in shapes such as L, U, pin wheel, Y and square or point blocks.

In the 1980s, the precinct concept was developed to provide more conducive settings for community interaction. Smaller clusters of housing blocks were served by facilities that promote neighbourliness.

‘The focus here was more on creating neighbourhoods, with playgrounds and park-like settings among the blocks rather than just on the block level,’ says DrTan.

In the 1990s, the Design and Build scheme involving the private sector in design and construction was introduced.

Among the first blocks built under this scheme were 620 flats in Tampines Street 45, spread over three linked octagonal blocks, each sporting a courtyard in the centre. They were completed in 1994.

Veteran architect Alan Low, 67, a director at architectural firm P&T Group who headed the project, says of the design: ‘It opened up people’s eyes that there was more than one way to design the blocks of flats. Block design doesn’t have to be so rigid.’

With the completion of the Pinnacle@ Duxton last year, the look of HDB flats has changed dramatically: Built in Duxton Plain, where the first two HDB blocks in the area were built, it is the board’s first 50-storey development.

Public housing looks set to become more exciting with upcoming projects.

For example, at the upcoming Treelodge@Punggol, HDB’s first eco-precinct, the blocks here will have features such as vertical greenery, where plants are grown in vertical spaces, rather than just on the ground. The project will be completed by the end of this year.

The now sleepy Dawson estate is set to come alive with two new 40-storey housing blocks due for completion in 2015. Called SkyTerrace@Dawson and SkyVille@Dawson, these have more elaborate facades and landscaping, with features such as sky gardens, small pockets of greenery built on the intermediate floors, where residents can gather.

Mr Wong Mun Summ, 47, co-founder of Woha which is designing SkyVille, says: ‘We looked at ways the architecture could bring back the kampung spirit and built this community idea into the design.’

Singapore’s first waterfront public housing project will be launched later this year. These will be 1,200 flats featuring sky terraces, roof gardens and panoramic views of the Punggol Waterway.

These blocks of flats, which are expected to be ready by 2014 or 2015 and whose tiered layout echoes hills of rice terraces, are designed by international architectural firm Group8asia and local firm Aedas.

Mr Tony Ang, 56, managing director of Aedas, says HDB flats have ‘grown taller, are more colourful and have better built quality and public amenities’.

HDB’s head of design policy and coordination Jeremiah Lim, 33, says when it comes to the design of public housing today, ‘we work to keep up with the trends and aspirations of home seekers’.

The board will be holding an exhibition of its last 50 years at the HDB Hub in Toa Payoh, starting today, till next Sunday.

Life! takes a closer look at how public housing has changed over the past 50 years.

Slab-like blocks to condo-type flats

An ongoing exhibition at HDB Hub traces the board’s history and milestones. Here is a quick look at how its flat designs have changed in the last 50 years.

Early flats in Queenstown

When the HDB was set up in 1960, its task was to solve the nation’s housing crisis. Homes had to be built fast. The first flats were built in Queenstown.

The slab block look

Flats then were built in slab blocks, with a central access corridor on each floor. This was the most economical way of arranging the flats.

Variety in block design

Over the years, the designs of blocks changed to include more variety in their appearance. This included varying the heights, colours, columns, facade detailing and roof treatments.

First Design and Build flats

In 1991, HDB introduced the Design and Build scheme, which involved the private sector in design and construction. The first flats built under this scheme were 620 units in Tampines Street 45. Built by architecture firm P&T Group, the flats were spread across three linked octagonal blocks.

Condo-style HDB flats

In 2005, HDB launched the Design, Build and Sell Scheme, allowing the private sector to design, build and sell HDB flats. The result is The Premiere @ Tampines – its first condo-style flats. They came with glass-panelled private balconies, which were not found in normal HDB flats.


HDB’s first 50-storey development, which was completed late last year. It consists of seven blocks linked by skybridges on the 26th and 50th storeys. The blocks are designed in a hook shape, so no resident looks into his neighbours’ flats.


Launched in 2007, this is HDB’s first eco-precinct and will be ready by the end of the year. The flats will have green features such as solar-powered corridor lighting and common areas that will be cleaned using recycled rainwater, as well as vertical greening, where plants are grown on the higher floors.

First waterfront public housing project

These flats in Punggol will line the 4.2km Punggol Waterway. Its unique design are its blocks of flats that will ’step down’ towards the water like terraces and have solar panels on their rooftops to supply power to common areas.

SkyTerrace@Dawson and SkyVille@Dawson

Launched for sale last month and scheduled to be completed in 2015, these are two towers of flats that are more than 40 storeys high. Designed by award-winning firms SCDA and Woha respectively, these boast more elaborate facades and sky gardens.

Source: Straits Times, 30 Jan 2010

In with the old

IT is ghosts of the past that worry hoteliers most when they convert old buildings into new lodgings – and not the supernatural kind. ‘With old buildings, you never know what you are getting into. You find faults you didn’t see before, once you start work on them,’ says Loh Lik Peng, who owns Hotel 1929 and New Majestic Hotel in the Chinatown area, both of which occupy pre-war structures. On top of that, he adds, engineering is costly and ‘a pain’, because such buildings have no grid; as a result, there can be no replication in design as every room has different dimensions.

Then there are restrictions on the extent to which the original structures may be modified. Take Wangz Hotel, for instance: the month-old hotel, which occupies a 20-year-old building at Outram Road, is located near an MRT tunnel, so it had to work around a structural load constraint. Says its director, Wang Chang Yuin: ‘Our structural engineer had to perform meticulous calculations on both internal and external loading to ensure that we didn’t put additional load on the building. The existing facade tiles and internal walls were removed, and lightweight materials, such as the external perforated aluminium cladding, were used instead.’

Still, such hurdles have not stunted the growth of a new boutique-hotel culture – crafted out of mature buildings – here. Over the past few months, several such lodgings have sprung up and more will open within the first half of this year, including a new venture by Mr Loh.

The magnetic appeal of these projects, which are generally more costly than constructing something from scratch, lies in the fact that they are rich in history, local flavour and charm, says the hotelier. ‘There’s something about old buildings that really captures my interest. There are layers of history imbued in them, and it’s like you’re peeling them back when you do your renovations and incorporating them with a new interpretation. I would never look at an empty plot of land and say that,’ he says.

Adds James Ting, general manager of Nostalgia Hotel, a six-month-old business that takes up two heritage shophouses in Tiong Bahru: ‘These buildings possess rich historical value. In converting them into new premises, we can preserve a part of Singapore’s history, perhaps for the younger generation to appreciate in future. Additionally, through the hotel’s architecture and retelling of its history, guests can get an insight into Singapore’s story and have a unique experience that is different from the monotony of chain hotels.’

BT Weekend takes a look at four new-old hotels that form part of the burgeoning boutique accommodation culture here.

2 Dickson Road
To open by mid-year

DICKSON Road is a pretty offbeat location for a trendy hotel, what with the motor workshops, Chinese-style ‘beer garden’ and coffee shops that line it. But then, owner and lawyer-turned-hotelier Loh Lik Peng has never been one to follow convention. ‘Very often, a project is not about the location,’ he says. ‘It’s about falling in love with the building; looking at it and seeing a little gem there. It’s not about being near an MRT station; I never look at projects that way.’

His latest hotel, then, takes up a charming, tiled-front building that was constructed in the 1920s. ‘This was the Hong Wen School until the Buddhist Welfare Association took over in the 1970s, when Hong Wen moved to bigger premises,’ says Mr Loh. ‘Now I guess the association has outgrown it too – they’ve moved to Toa Payoh.’

To be called Wanderlust, the 29-room, four-storey establishment will be ’something a little more sophisticated and fun’ than the other hotels in the neighbourhood, and it’s being designed by cutting-edge creative agencies Phunk Studio, Asylum and fFurious, along with architects DP Architects. Each company is responsible for one floor.

On the hotel’s positioning, Mr Loh says: ‘There are very few nice, interesting hotels in Little India, nothing like what we’re doing. They’re all the budget sort, lacking in imagination and not leveraging on the uniqueness of the area. This is a really authentic part of Singapore, so I thought it’d be nice to do something special.’

No surprise then, that Wanderlust aims to bat creativity out of the park with visual treats like Asylum-designed bespoke wallpaper printed with modern images of Little India; neon lighting; and heavy play on light and shadow on the various floors. The rooms, to be priced from around $200 to $250 a night, promise to be ‘almost like a playground designed as furniture’: there’s a ‘monster room’, a ‘tree room’ and one with a spaceship concept, and all fittings are being custom-made because of the complex shapes needed.

Says Mr Loh: ‘We’re using fibreglass, concrete, steel, plywood … everything. It’s going to be the first hotel of this sort that I’m doing, as in working with this level of complexity.’

Additionally, the building will house a cantilevered pool on the second storey, as well as a small ground-floor bar and a casual French restaurant helmed by Anthony Yeoh of the Funky Chefs, who does ‘good, solid flavours’, proclaims Mr Loh.

Wanderlust’s site, says the hotelier, reminds him of Keong Saik, where he opened his first hotel, Hotel 1929, in 2003. ‘It was all hotels with hourly rates and brothels back then. In many ways, this area reminds me of that; it’s really local and I like that,’ he explains. As he sees it, going in early – wedged among those motor workshops and coffee shops – is a good thing. ‘You can’t help other people coming in and diluting the flavour,’ says Mr Loh, ‘but for a while, at least, you can capture the magic of an area.’

The Club 28 Ann Siang Road To open in April THOSE not content with just dinner and drinks at Harry’s will be glad to know that they can soon do bed and breakfast there as well: come April, the group behind the Harry’s chain of restaurant-bars will open a hotel under the newly-established Harry’s Hospitality umbrella.

To be called The Club, the 22-room establishment (rack rate: $400 a night) will also house function rooms plus a couple of F&B outlets that include a tapas restaurant, an outdoor terrace and a rooftop bar – necessary revenue-generating elements in such a small project, says Mohan Mulani, chief executive officer of Harry’s Holdings. ‘With a boutique hotel of this size, F&B is quite a key component in the business plan. You can’t just operate it on room sales alone,’ he says, adding that The Club plans to draw ‘a good 60 per cent’ of its revenue from that channel.

The project is a natural extension of his core business, he adds. ‘While it is a bit of a deviation from opening bars, it really isn’t that large of a deviation. And it gives the company a lot more depth also, plus more offerings for the customer.’

Bed and breakfast aside, what those customers will get is the opportunity to experience a bit of Singapore’s history too – The Club will be located in a historic shophouse that, most recently, used to be home to advertising agency Batey. ‘It’s where the Singapore Girl was born,’ says Mr Mulani, referring to the well-known Singapore Airlines campaigns that Batey produced. The area also used to house many remittance centres for the early Chinese immigrants, a fact that the architect Colin Seah of Ministry of Design, which worked on the hotel, played on.

The entrance, for example, will showcase murals that give a sense of what the place was in the past; there will also be features that hint of this history in the rooms, where the ‘modern day nomad and the nomad of yesterday cross paths for a moment’. The other key inspiration in The Club’s design is Singapore’s colonial past, which in one instance takes shape in the form of a larger-than-life Raffles statue standing with his head in the clouds.

Artists who have been involved in other Harry’s projects have also been tapped to contribute to the hotel – artworks from Romanian Valeriu Sepi (who did a mural in Harry’s Boat Quay outlet) and Singaporean Wyn-Lyn Tan, to name a couple, will decorate The Club.

The hotel’s site was selected for two reasons, says Mr Mulani. One, he has a ’soft spot’ for the area as he owned a wine bar there for more than a decade, which he had to give up three years ago when the building it was in was bought over. And two, ‘I hang around here a lot and I think Ann Siang Road is really heaving and happening again’. Even taking into account competition from the other boutique hotels in the Chinatown area, he is upbeat about the success of The Club. ‘With the product that we’re creating, I don’t think we have a very uphill task, in my humble opinion,’ he says.

Wangz Hotel
231 Outram Road
Tel 6595-1388

AS the saying goes, third time lucky – and so’s the case with the 20-year-old building that Wangz Hotel is located in. Originally called Tarng Chern Building, the unique barrel-shaped structure used to house offices and a jewellery shop. Some years later, it was renamed Hope Centre and became home to a student hostel and several non-profit organisations. But it is with its third and latest reincarnation that the building has really been revitalised with a fresh new look and a more permanent purpose.

The 41-room, six-storey hotel is owned by the Wang family, who have been involved in property development (including serviced offices) since the 1990s but had not previously done a hotel before Wangz. ‘The idea of opening a boutique hotel had been at the back of our minds, but we hadn’t found a suitable property,’ says director Wang Chang Yuin.

When the family was approached about the Outram Road building, however, they took to it immediately. ‘We were drawn to the strategic location of the building,’ says Mr Wang. ‘It is close to the CBD and Orchard Road, and we like its prominent location. We also like the charm of the art deco buildings in the area.’ In addition, he adds, the hotel is the tallest building in the immediate vicinity and offers great views of the city skyline, particularly from its rooftop.

The decision to develop the site and create ‘a modern hotel that would stand out from the nearby art deco buildings’ was made in 2007; some two years and $8 million later, Wangz Hotel has emerged from its chrysalis of scaffolding. And what a transformation it has undergone: the original dull tiled facade is now all gleaming perforated aluminium, teased by local architects CPG Consultants into a three-way curve to give the building a ‘bulging’ effect and a futuristic look, and its interiors are a cocoon for culture. The spacious rooms – priced from about $228 a night, and stuffed with creature comforts such as pillow-top mattresses, iPod docking stations, goosedown duvets and Molton Brown bath amenities – feature artworks by artists such as Hijran Seyidov, a Dubai resident who counts royalty among his clients; Singaporean Anthony Tan, who is known for his nature-themed abstracts; and contemporary South Indian artist P Gnana, whose works are in the Singapore Art Museum collection.

Apart from studying these aesthetic treats, guests can also have drinks at Halo, the rooftop lounge, dine at in-house restaurant Nectar, or work out in the fully-equipped gym.

Already, the hotel is reporting a 55 to 80 per cent occupancy rate, with most guests coming from Europe, the United States and Australia.

‘There is a growing market for tourists who specifically go to boutique hotels because of the cosy environment and personalised service they offer,’ says Mr Wang. ‘Because of this, and given the usually small number of rooms each boutique hotel has, we think demand for such hotels will remain high.’

Nostalgia Hotel
77 Tiong Bahru Road
Tel 6808-1818

WITH the warm lighting that spills out of its wooden shutters in the evenings and the comfortable, lived-in buzz that radiates from it, one can easily imagine No 77 Tiong Bahru Road to be a home straight out of the pre-war era. Step inside the perfectly preserved shophouse, however, and a reception area will reveal the truth: the more-than-half-a-century-old building actually forms part of a hotel.

That homely feel is exactly what owner Cornerstone Link, a mining company based in Indonesia, was looking for when it bought the property from developer Lion Properties Group in September, says the hotel’s general manager, James Ting.

He adds that Nostalgia is positioned to feed the growing demand for such boutique accommodation.

‘Travellers are becoming more savvy and most are looking for a unique experience,’ he explains. ‘They no longer crave the monotony of luxury chain hotels but are looking for a different environment with character and charm.’

The appropriately-named Nostalgia Hotel, then, has 50 rooms (some of which are housed in the heritage shophouse and others in a new extension built over what used to be a bird singing corner) and features design and decor inspired both by Singapore’s colonial years as well as the romantic history of the neighbourhood – Tiong Bahru in the past was known as an area where the well-heeled kept their mistresses. It’s ‘old-world charm with a dash of modernism’, as Mr Ting puts it, which translates to lush fabrics, furniture in warm colours, gilded mirrors and chandeliers, set against a backdrop of specially commissioned contemporary artwork by a local artist and other modern touches.

The rooms, which are priced from about $215 per night, are equipped with cutting-edge conveniences like LCD TVs and iPod docking stations, as well as bath amenities by French designer Pascal Morabito or Chopard, depending on the category of room. Meanwhile, in the Balcony rooms, which are situated in the heritage bit of the hotel and overlook the junction of Tiong Bahru Road and Seng Poh Road, architects AMC Architects International have preserved the original louvered windows, wooden panels and wall artifacts of the original structure.

The new-old juxtaposition is intended to ‘reflect the existent community of Tiong Bahru’, a mature estate in a modern age, says Mr Ting. ‘We want to echo the cultural and historical values of the area and allow guests to experience the Singapore of yesteryear comfortably; as such, Nostalgia provides accommodation that reflects the essence of Singapore in a luxurious environment.’

Source: Business Times, 30 Jan 2010

Friday, January 29, 2010

Singapore regains top spot of most globalised economy in 2009

Singapore has regained its ranking as the most globalised economy in 2009, beating economic giants such as the United States, China and Japan.

This is based on the latest Globalisation Index, compiled by Ernst & Young and the Economist Intelligence Unit.

The study covered 60 of the world’s largest countries and had polled 520 senior business executives, with in-depth interviews conducted with 30 senior executives and high-level experts.

The index measures a country’s degree of globalisation relative to their gross domestic product. It is based on five criteria – trade openness, capital movements, exchanges of technology and ideas, labour movements and cultural integration.

Singapore has been ranked number one since 2003, but it lost out to Hong Kong in 2008 and came in second.

In regaining its top spot, Singapore has high scores for its trade openness and labour movement, but lost out to Hong Kong on capital movements and cultural integration.

This time, Hong Kong was edged into second spot, with Switzerland in seventh place, while the United States came in at 24th in the index ranking.

Ernst & Young Country Managing Partner Steven Phan said: “There was greater movement of capital and finance in Hong Kong in terms of foreign direct investments (FDI), where as Singapore has done relatively well in the areas of investment protection schemes and creating a level playing field for all enterprises.

“Singapore is number one in terms of the movement of goods and services relative to all the other 60 countries we surveyed, so this is really the imports and the exports relative to the size of our small domestic market. So that was a strong indicator, but among the other four criteria as well, we are consistently among the top.”

Source: Channel News Asia, 29 Jan 2010

PRs may be subjected to ethnic integration policy in buying flats

Singapore’s housing authority said Permanent Residents may soon be subjected to a similar ethnic integration policy already imposed on citizens who buy public flats.

Observers say the move is reflective of Singapore’s changing demographics, where about a third of the population are foreigners.

But there’s already a racial quota for PRs in the purchase of public housing.

A shopping centre in Boon Lay in western Singapore gives an idea of the community it serves. It is filled with facilities for its foreign clientele including remittance units, money changers and provision shops catering to Thai and Myanmar nationals.

Tending one of the shops is a 52-year-old from Myanmar who has been living in Singapore for 15 years.

Like many PRs, Madam Yin Yin Winn, who peppers her sentences with the colloquial term “la” considers Singapore home.

In fact, she made several Singaporean friends while volunteering at her daughters’ school.

Madam Winn says her daughters, aged 19 and 16, go to neighbourhood schools.

“When I go to my daughter’s school, I talk with them, sometimes I bring our traditional food, they enjoy my food,” she said.

Like most Singaporeans, Madam Winn lives in a subsidised public flat, which is also subjected to an Ethnic Integration Policy (EIP).

Prior to the 1960s, various immigrant ethnic groups were concentrated in different parts of Singapore creating enclaves. So the Government introduced the Ethnic Integration Policy. This is where public housing is used as a tool to integrate Singapore’s multi-ethnic population.

The EIP is applicable to the purchase of new flats, resale flats, SERS (Selective En-bloc Redevelopment Scheme) replacement flats and DBSS (Design, Build & Sell Scheme) flats, as well as the allocation of rental flats in all HDB estates.

Under the policy, maximum proportions are set for all ethnic groups – Chinese, Malays, Indians and others, in each HDB block and neighbourhood.

There is no restriction on the sale and purchase of an HDB flat if the proportion of the buyer’s ethnic group is within the prescribed block and neighbourhood limits.

Once the block/neighbourhood limit for a particular ethnic group has been reached, no further sale of HDB flats to that ethnic group will be allowed, if it will lead to an increase of the proportion beyond the limit.

There is no restriction if the buyer and seller are of the same ethnic group.

Currently, PRs are already subjected to the policy according to their race.

For example a China national may fall under the ‘Chinese’ category and an Indian national under ‘Indian’.

What could change is expanding it to account for the immigrant’s nationality.

Mr Eugene Tan, Assistant Professor at the School of Law at the Singapore Management University, said: “The fear is that Permanent Residents are forming enclaves of Permanent Residents. What it would mean is that Permanent Residents could be subjected to two types of quotas. One is the original ethnic integration quota, and the other one could be a citizen/Permanent Resident quota.”

Mr Azhar Ghani, a Research Fellow at the Institute of Policy Studies, questions how an ethnic integration policy will affect Malaysian PRs.

“Malaysian PRs, whom I would say are quite acculturalised to our ways, who will face a new restriction to where they can buy HDB flats. This proposed change will just add another additional layer to the EIP categorisation, and current technology would mean that it would not be too big a challenge administratively to ensure adherence,” he said.

“So will PRs who have been here for many years but have not taken up citizenship for whatever reasons, be subjected to the new PR-related rule, in addition to the race quota, when they buy a HDB flat? Should there be a time-bar? For example, will the rule apply only to PRs who have been here for less than, say, five years?,” he asked.

The first indication that the Government is looking into the integration of foreigners within Singapore’s housing estates was revealed by National Development Minister Mah Bow Tan in Parliament in November 2009.

He said the Government “will keep a close watch on the distribution of PRs living in HDB estates and where necessary, consider measures to prevent the congregation of PRs and foreigner.”

Currently, PRs form only 5 percent of HDB households.

And housing analysts say that’s unlikely to create any surge in home prices.

Mr Eugene Lim, Associate Director of ERA Asia Pacific, said: “No issue, it’s just like the current ethnic integration policy, doesn’t affect re-sale prices because the number of PRs who would be buying flats are still there. It’s just “Oh, if I cannot buy this block, I buy another block.”"

“I think some people are under the impression that PRs are driving up the prices. It is not, it’s the whole market, that there’s a lot of people buying flats that’s together driving up the price.” Mr Lim said.

“Actually if you look by and large, the PRs, if they do congregate – actually they are all over the place – they are very practical group of people. They buy where they can afford. They buy where they need to stay near to, for example, a place of work or school.

“But because to them, if they feel a fellow countryman is staying nearby, they do build a community. So there’s this issue of – what if there are too many of them staying at a certain place? So it’s really looking forward, if we have more and more PRs coming, how do we then have a ratio to ensure they are spread out in Singapore?” Mr Lim asked.

Still, observers say even with an ethnic integration policy in place, the true test is in the community bonds forged between citizens and immigrants.

Source: Channel News Asia, 29 Jan 2010

Mohd Sultan Rd office site up for sale

THE Urban Redevelopment Authority (URA) will be launching a transitional office site at Mohamed Sultan Road for sale in around two weeks’ time, after a developer committed to pay at least $9.33 million for it.

The bid, which works out to $94 per square foot per plot ratio (psf ppr), is double that which URA received in 2008 when it last tried to sell the site. This has raised a few eyebrows, considering the soft state of affairs in the office market.

The 15-year-leasehold office site has a site area of 66,482 sq ft and a maximum permissible gross floor area (GFA) of 99,728 sq ft. It can accommodate a four-storey building.

DTZ executive director Ong Choon Fah believes that the parcel stood out because of its location, which is not too far from the central business district and is near entertainment spots at Clarke Quay. Companies in the creative industry may find the site attractive, she said.

Cushman & Wakefield Singapore managing director Donald Han agrees that the site’s location is appealing. Given the relatively high offer, he suggests that the bidder could be a firm looking to own and occupy the site, or a developer which ‘knows the game, and is confident of developing transitional office sites’.

He added that the bidder could be expecting a recovery in the office market and as a result, higher rents in future, after the development on the office site is ready around the second half of 2011.

Leasing activity in the office market has picked up in the last few months as the economy stabilised. ‘Although we expect office rents to continue to slide perhaps to the end of this year or early next year, the worst is probably over,’ says Mrs Ong. ‘There’s a lot more confidence.’

But both consultants do not expect to see many other bidders for the site when the tender is launched. With this bid being so much higher than the previous one, ‘there could be some segments saying ‘it’s not cheap’,’ Mr Han quipped.

URA had launched the site for sale in August 2008 when it was on the confirmed list. It received one bid of $4.65 million or $47 psf ppr from RSP Architects Planners & Engineers, but rejected it as it was too low. URA transferred the site to the reserve list in October that year.

The agency last sold a transitional office site at Scotts Road/Anthony Road in May 2008, for $32.99 million or $226 psf ppr.

Separately, owners of the freehold residential development Holland Hill Lodge have put their estate up for collective sale. The asking price ranges from $15 million to $16 million, and this translates to a land price of $1,038-$1,107 psf ppr, based on a gross plot ratio of 1.6.

The site measures some 9,033 sq ft and the existing GFA of the development is 18,086 sq ft. The owners are checking with the authorities on whether this GFA can be fully utilised upon redevelopment.

Credo Real Estate is marketing the site and the tender closes on Feb 25.

Source: Business Times, 29 Jan 2010

Let market forces decide

I READ with interest Wednesday’s letter by Mr Robin Chua, ‘Costly flats – How did it come to this?’

Mr Chua appears to allude to the fact that the procreation rate has not risen because of higher prices of public housing, and ‘mixed signals’ in which young couples are urged to marry and have children early to help increase the procreation rate but then told indirectly to wait five years to buy a flat and start a family.

Without doubt, there have been calls to stop the practice of high cash over valuation (COV) and lower HDB resale prices. My take is that things should remain as they are and be dictated by market forces.

My paternal grandparents bought their first HDB flat in Bedok in the 1970s for about $7,000 – a sum that was paid in full in cash. Today, that three-room flat in a mature estate could be sold for $200,000 or more.

I believe elderly Singaporeans who bought such flats would be thankful they can cash out and unlock the value of their fully paid-up flats to see them through their remaining years.

Other Singaporeans who bought their flats later, say in the 1980s, would also be exuberant as they can capitalise on the capital appreciation of their HDB flats to downgrade to smaller units and use the savings for retirement and other needs.

A case in point is the Lease Buyback Scheme, where Singaporeans living in three-room flats can unlock the value of their homes and live on regular monthly payments from the authorities. This mechanism shows how the housing system can enrich Singaporeans when they reach retirement age and that citizens have a stake in the country and their well-being is not forgotten.

Another group who would have benefited from high HDB resale prices and COV prices is those who were caught in the property craze of 1996-1997. Some Singaporeans bought their HDB flat at a peak, and the value of their home tumbled. In negative equity then, these owners must now be relieved and thankful for the system, plus other external factors that steered them back to positive territory.

In essence, these factors play a part in stimulating economic activity where sellers of HDB resale flats with excess cash and housing agents with their sales commission contribute to gross domestic product figures with their spending. When this happens, the economy is buoyant, jobs are created, people are employed and confidence is restored.

Again, my take is that we are fortunate to have a system to help citizens secure an HDB flat tailored to suit their household income, have a stake in the country and ensure capital appreciation of their assets which will come in handy for future needs.

Irwan Jamil

Source: Straits Times, 29 Jan 2010

Developer triggers office site for sale

A SHORT-TERM office site on Mohamed Sultan Road that the Government failed to sell two years ago has garnered renewed interest.

A developer has agreed to put in a bid of $9.33 million for the land – twice the offer that came in for the site in 2008.

The new bid for the 0.62ha spot has triggered a public tender that will start in two weeks’ time, the Urban Redevelopment Authority (URA) said yesterday. It did not identify the developer.

Located between Kim Yam Road and Martin Road, the site can host a four-storey building with a total floor area of almost 100,000 sq ft. It is being sold with a shorter-than-usual 15-year lease.

In August 2008, the URA put the site up for sale without waiting for a developer to make an offer. That was to ease a space crunch that was sending office prices soaring. But the financial crisis struck the next month, resulting in only one bid coming in, at $4.65million. The URA rejected the bid as too low.

Since then, the office market has slumped and is just starting to turn the corner. Prices rose 1 per cent in the final quarter of last year, the first increase in six quarters, according to URA data.

But property consultants do not see the fresh interest as a sign of brighter days for the market.

Mr Li Hiaw Ho, executive director of CBRE Research, said there is still more than ample supply of office space over the next few years, so the bidder for this site is more likely to be a company that needs office space rather than a developer anticipating an upturn in the market.

Separately, a housing site has also been put up for sale by its owners. Holland Hill Lodge, an 11-unit freehold development in Holland Hill, has been launched for collective sale.

The estate, built in the mid-1990s, sits on a 9,033 sq ft site with an existing gross floor area of 18,086 sq ft, said marketing agent Credo Real Estate yesterday. All the owners have agreed to the sale and are asking for $15 million to $16 million, or $1,038 to $1,107 per sq ft of gross floor area.

Source: Straits Times, 29 Jan 2010

Wellness firm enters hotel business

WELLNESS provider Mary Chia is looking to move into the hotel business with the launch of a new integrated hotel and lifestyle centre.

The company has entered into a joint venture with businessman Lee Boon Leng, the son-in-law of executive chairman Mary Chia, to set up a firm called Hotel Culture.

It has paid $20 million for three properties on Mosque Street that will be converted into a combined hotel, lifestyle and wellness centre. There will also be a food and beverage business on the 21,399 sq ft site.

Mary Chia is slated to run the beauty, facial, spa and massage business, Mr Lee will be responsible for the food and beverage aspect, while a third party will be appointed to manage the hotel.

The 92-room integrated hotel, which is to emerge from the four-storey conservation shophouses, is expected to be completed by the third quarter of this year.

Mary Chia chief executive Wendy Ho said the property in the heart of the Chinatown heritage zone would charge between $150 and $180 per night and benefit from the tourist flow generated by the integrated resorts.

‘We are targeting people… who will enjoy all the spa, F&B and entertainment facilities combined with a boutique hotel stay,’ she added.

Ms Ho is bullish about her company’s investment, citing positive feedback from the surveys it has conducted.

The bulk of the $20 million bill for the property will be funded by $16 million worth of bank loans, with Mary Chia and Mr Lee extending another $3.5 million to Hotel Culture as shareholders’ loans.

The remaining $500,000 will come from the paid-up share capital of Mary Chia and Mr Lee’s stakes in the company.

Mary Chia paid $255,000 for its 51 per cent stake in Hotel Culture, while Mr Lee owns the remaining 245,000 shares. The loans extended are proportionate to their shareholdings.

Ms Ho said most of the firm’s investment would come from its initial public offering, which succeeded in raising $3.9 million last August.

‘We believe it is a worthwhile investment, and we will look into our costing,’ she said. The firm reported a net profit of $119,000 for the six months ended June last year.

Restaurant operator, Taste Paradise, which currently operates at two of the three units Hotel Culture is acquiring, has confirmed that it will be moving out.

Source: Straits Times, 29 Jan 2010

Burden of disbanding panel shouldn’t fall on those against collective sale

THE Law Ministry’s reply on Thursday (‘En bloc sale panels already have a lifespan’) to my letter on Monday (‘Save owners from sword of Damocles’) has not addressed the following problem.

As I understand it, a collective property sale expires one year after the first subsidiary proprietor has signed the collective sale agreement. However, until this signing process is triggered, a collective sale committee has, in legal fact, indefinite tenure.

Which means that even if it chooses to stay around for 20 years, legally there is no mechanism to disband it automatically.

The ministry suggests that the owners can do so by holding an annual general meeting (AGM) or extraordinary general meeting to do so. No doubt this is so. This means that those who oppose a collective sale must become active in collecting signatures and rally for votes.

My question is: Shouldn’t the law be refined to have an automatic mechanism to disband a sale committee, which has, after say 12 months, not even collected that first signature?

This is a loophole in the law which should be addressed. No committee should have carte blanche to exist indefinitely.

The law is clear on management councils. These must be dissolved and re-elected at an AGM and have a limited tenure of one year.

Why should collective sale committees be allowed to operate indefinitely unless they choose to dissolve themselves or are booted out?

In my condo, the collective sale committee is restarting the process after 27 months. One member has sold and others have moved out of their condo units.

More than 10 per cent of the residents are new owners. They did not vote in this committee.

Moreover, the agents say they need even more time to ‘evaluate’ the situation.

Unless legal deadlines are set, those who want to stay on live with this situation hanging over their heads. I hope the ministry will consider a revision of the rules.

Susan Prior (Ms)

Source: Straits Times, 29 Jan 2010

HDB doing ’speculation’ checks, will root it out

The Housing & Development Board (HDB) is checking to see if buyers are using its government-subsidised flats to speculate in the property market – even as resale flat prices hit a new high in the fourth quarter of 2009.

‘There are some people who are saying that people are buying HDB flats for speculation,’ said Minister for National Development Mah Bow Tan. ‘So let’s look at that, see whether it is really happening and if so, whether any of our rules are allowing it to happen.’

Speculation ’shouldn’t be’ taking place as HDB flats under the government’s home ownership programme are for people to live in, Mr Mah added. He was speaking to reporters on the sidelines of the International Housing Conference on Wednesday.

The minister has asked HDB to relook its rules to make sure that prices are not being artificially inflated. ‘I have asked HDB to review its rules and see whether there are any rules that are encouraging and allowing people to speculate in HDB flats,’ he said.

The move comes as HDB resale prices hit a new record in Q4 2009, with prices climbing 3.9 per cent from the previous quarter. The median cash-over- valuation (COV) for all resale transactions doubled to $24,000 in Q4 from $12,000 in Q3.

Answering questions on whether HDB flats were still affordable, Mr Mah noted that the resale market should be allowed to operate as a free market, with prices set on a ‘willing buyer, willing seller’ basis. So if there is ‘genuine’ demand, prices will climb.

But he drew the line at speculation and stressed that public housing is for owner-occupation. He did not say which rules are being studied, but added that the review should be completed in a few months’ time.

Aside from reviewing regulations, Mr Mah said he has also asked HDB to step up enforcement. ‘I’ve asked HDB to also step up on any possible breaking of the rules. I don’t know if it’s extensive, but anecdotally you do hear of one or two cases,’ he added. ‘We want to make sure that this is not happening.’

Analysts BT spoke to said that there was little speculative activity in the HDB market – in the sense that few buyers are buying flats with the sole purpose of flipping them.

‘In my opinion, there is little or no speculative activity in the HDB market. I think the existing rules are relatively adequate,’ said PropNex Realty chief executive Mohamed Ismail.

Under existing rules, home buyers who receive a grant from HDB can sell their flats only after five years. Singaporeans who choose not to take up grants – as well as PRs who are not eligible for any grants – can sell their flats after a year if they have not received a loan from HDB.

However, there are concerns that people could be buying flats for rental investment. Recent media reports have suggested that some flat owners at the newly completed Pinnacle@Duxton have rented out their entire units without a minimum occupation period. This is illegal under HDB’s rules.

But market watchers pointed out that it will be difficult to check if an HDB flat is being occupied solely by renters.

Going forward, HDB will launch another 12,000 new flats this year as demand for public housing grows. Some 7,000 flats will be pushed out in just the first half of 2010.

‘So long as there is demand, so long as there is a genuine take-up rate, HDB will build,’ Mr Mah said.

Source: Business Times, 29 Jan 2010

54 units at Holland Residences sold

THE home buying buzz continues at showflats. Allgreen Properties is said to have sold 54 units at its Holland Residences condo at Taman Warna released this week. The average price of the 68 units released in the 83-unit project is $1,625 per square foot; but the figure is weighed down by private enclosed spaces for ground-floor units in the five-storey freehold project.

Singaporeans bought 80 per cent of the units sold, says Joseph Tan, executive director at CB Richard Ellis, which is marketing the project.

In a more upscale location, a joint venture between BBR Holdings and SP Tao’s Shing Kwan Pte Ltd has sold seven of the total 16 units at its six-storey freehold 8 Nassim Hill project since last Friday. The development is expected to receive Temporary Occupation Permit at the end of March this year.

The project comprises eight townhouses and eight penthouses – all of them triplex units spanning across three levels. The townhouses occupy the project’s lower three levels and range from about 4,200 sq ft to 4,500 sq ft, while the penthouses, which are on the upper three storeys, are about 3,200 sq ft each. Each of the 16 units has its own swimming pool; each townhouse also has its own garden at the back.

The 16 units are priced between $3,100 psf and $3,400 psf or $11-14 million apiece. Singaporeans bought two of the seven units sold so far; the other five were picked up by foreigners – from Europe and Hong Kong.

In the Beach Road area, Hong Fok Corporation is said to have recently released upper-floor units at its 99-year leasehold Concourse Skyline priced at $2,200 psf to $2,400 psf. The 360-unit development reaches up to 43 storeys.

Over at Holland Residences, one-bedroom units (601 sq ft) and two bedders (ranging from 957 to 979 sq ft) were the first to be snapped up at this week’s preview.

The project also has three- and four-bedroom units as well as penthouses. Prices of one bedders start from $1.06 million. Two bedders cost between $1.63 million and $1.73 million. The most expensive units sold was $3.6 million for a four-bedroom duplex penthouse.

The average price of $1,600 psf for Holland Residences is higher than the $1,500 psf at which Ho Bee is selling its nearby Parvis, a 12-storey condo at Holland Hill.

However, there are no one-bedroom units in Parvis; developers typically can command a higher per square foot price for smallish units as the lumpsum amount is still relatively small.

Hence the tendency among some developers to build projects with a higher proportion of smallish units to achieve a higher overall average psf price for the development.

At a Knight Frank auction yesterday, a 1,206 sq ft unit on the 10th floor of Leedon 2 changed hands for $1.38 million or $1,144 psf. Leedon 2, a freehold development, is said to be more than 20 years old.

Source: Business Times, 29 Jan 2010

New flats every month for first half

inTHE Housing Board will launch new flats every month over the next six months in response to growing fears that demand is outstripping supply.

National Development Minister Mah Bow Tan, speaking on the sidelines of a housing event on Wednesday, said that 'HDB will build flats to meet demand as long as there's genuine demand'. It is looking to offer 7,000 new flats in the first half of this year and is planning 12,000 for the whole of 2010.

For higher income earners who aspire to own private property, Mr Mah said the HDB was catering to this group by selling land for development into executive condominiums - a hybrid flat with condo facilities but HDB rules.

He assured first-time buyers that there was no need to rush into buying, given that there are 'more than sufficient flats'. 'If there is even stronger demand, of course HDB will build even more flats,' he said.
Mr Mah claimed the high subscription rates at recent launches - at popular projects such as Dawson, where 11 applications were received for every flat - was not a measure of genuine demand.

'We know that many of them are multiple applicants...they apply every month to make sure they have a better chance...that means the number of subscribers may appear large, but it doesn't mean that that is the total demand,' he said.

'The final test is when we finally offer the flats to these buyers, (we'll) see what the take-up rate will be.'
The minister emphasised that if there was real demand, the HDB would respond with its build-to-order (BTO) scheme.

'As the name order, we build. That's the situation.'

Mr Mah pointed out that waiting for a flat to be built was not new. In the past, home buyers have had to wait for as long as seven years for a flat, he said.

Under the BTO scheme, HDB is 'promising, in a way...that you will get your flat in three to four years, once you have booked it.'

Source, Straits Times 29 January 2010

HDB reviews rules to stamp out possible speculation


THE Housing Board is embarking on a review of its rules to ensure that property speculators are not abusing the system - and driving up flat prices.

It will check if any rules are 'encouraging or allowing' people to speculate on HDB flats, said National Development Minister Mah Bow Tan.

At the same time, it will step up efforts to make sure people do not get away with abusing the system.
Some disgruntled homebuyers, priced out of a rising market, worry that some HDB buyers are exploiting the rules to try to make a fast profit.

They claim these speculators snap up flats on the resale market and then either rent them out illegally or sell them legally after the stipulated one-year period.

Under HDB rules, citizens and permanent residents who buy resale flats without housing grants or HDB loans must live in the flats for at least one year before selling, or at least three years before renting out the entire flat.
Speaking on the sidelines of a housing conference hosted by the HDB on Wednesday, Mr Mah said these claims were worth checking and he wanted to ensure that such factors were not inflating the market artificially.
He said it would not do if buyers were buying flats because they hoped to make money through flipping or selling the flats later on, or by renting them out without living in them.

He did not know how prevalent such practices were, but added that 'anecdotally, you do hear cases, so I want to make sure that this is not happening'.

The HDB's findings will be out in a couple of months, he said.

Industry observers said that if there were speculators, they would be less likely to be flipping HDB flats - reselling them quickly - and more likely to be renting them out.

'HDB flats in good locations enjoy very high rental yields, up to 7 or 8 per cent. Even if owners are not legally allowed to rent out their whole flat, you hear of creative cases where they do so anyway,' said ERA Asia Pacific associate director Eugene Lim.

Agents said an owner might lock up a room to make it seem he is still living there, even though he has rented out the entire flat.

Chesterton Suntec International research and consultancy director Colin Tan said this has gone on for years, but these cases were hard to prove and needed a major effort to enforce.

Mr Mah acknowledged that recent housing data had raised fresh concerns about high resale flat prices.

Latest HDB figures showed the median cash amount paid by buyers for resale flats over and above a flat's valuation, known as Cash-over-Valuation (COV), doubled to $24,000 in the last three months of last year compared to the previous quarter.

Resale flat prices also rose 3.9 per cent in the final three months of last year to hit a fresh record, taking the full-year jump to 8.2 per cent.

Mr Mah said the Government did not wish to meddle in the resale market, and COV payments were part and parcel of the market.

'If you're a buyer, you feel anxious, understandably you want prices to be low. But if you're a seller, you want prices to be high. It's not possible for the Government to set the resale prices,' he said.

'The buyer might be happy today, but tomorrow he's a seller and if we set the prices of what he wants to sell, he'll be unhappy.

'Let the price be set by willing buyers and willing sellers. We don't, and should not, interfere in the resale market.'

Mr Mah also downplayed the impact of permanent residents on the resale market.

'Our numbers show that the PRs are buying about 20 per cent, or one in five flats sold. So yes, they do have some impact, but they don't have such a great impact,' he said.

Asked if PRs should be restricted from buying in the resale market, Mr Mah said that was not the right thing to do.

PRs also need a place to live, he said, and the solution was to make a clear distinction between Singaporeans and PRs in terms of the grants they get.

Existing rules

  • Resale flats bought on the open market without a CPF housing grant and with a private bank loan can be sold one year from the effective date of resale. 

  • Owners of HDB flats are allowed to sublet the whole flat after living in it for three years, for those who bought it on the open market without a CPF grant; or five years, for those who bought it directly from the HDB or on the open market with a CPF housing grant.

  • Owners of HDB flats are allowed to sublet bedrooms if they own a three-room or bigger flat. There is no minimum occupation period for renting rooms out. Owners have to adhere to the number of tenants allowed by the HDB.

  • No prior approval from HDB is required for subletting of the bedrooms. But with effect from Monday, flat owners who sublet bedrooms in their HDB flats will have to register with HDB within seven days of doing so.

  • HDB said yesterday that those who illegally sublet entire flats may have their flat compulsorily acquired or pay a penalty.

  • Source, Straits Times 29 Januray 2010