Buying within your means

IN THE rush to secure a home amid escalating property prices, first-time homebuyers, especially young adults, may inadvertently commit themselves to properties beyond their means.

Since mortgage payments and other home bills take priority over other basic necessities, rising mortgage rates may push some homebuyers to suffer a housing-induced fall in their standards of living. It is important, thus, to take a long-term perspective on housing affordability.

Affordability is usually measured by the ratio of monthly mortgage payment to current monthly household income. In the United States, if this ratio is less than 30 per cent it is assumed that the property is affordable. In Singapore, a cut-off ratio of 40 per cent is one of the criteria banks use to decide on home loans.

However, this is not a good measure of affordability for two reasons. First, by extending the amortisation period, monthly mortgage payment can be reduced. This can give the impression that affordability has improved, although the total interest burden has gone up. Second, the measure essentially focuses on short-run housing affordability by using current income instead of an estimate of permanent income. Undue reliance on short-run housing affordability measurements was one of the triggers in the US sub-prime mortgage crisis.

A much better indicator of housing affordability is the ratio of house price to lifetime income - house price being the discounted present value of future mortgage payments. Lifetime income can also be worked out as a discounted present value of the future income stream, using the same mortgage rate.

(For example, if the annual interest rate is 5 per cent, the discounted present value of $105 one will receive next year is $100. Alternatively, if one saves $100 today at the 5 per cent interest rate, one will receive $105 next year.)

Under some conditions, the two ratios - mortgage payment to permanent income, and house price to lifetime income - are the same. We can thus use a cut-off ratio like 30 per cent to define an affordability limit. We have not worked out an optimal cut-off value for Singapore yet.

Homebuyers know the prices of the houses they want and the transaction costs involved. What they need is an estimate of their lifetime income - that is, their accumulated savings plus the discounted present value (DPV) of their earnings, over their remaining working life.

Using survey data collected by the Department of Statistics, we can decipher predicted income profiles by birth cohorts for different income groups over the working ages of 20-64. We now have data only for three income levels: lower (25th), middle (50th) and upper (75th ) percentiles.

Since our focus is on young homebuyers, the accompanying table presents estimates of the DPV of household income for households headed by 30-year-olds. By adding their own accumulated savings to the income figures, young homebuyers can obtain an estimate of their lifetime income. They can then divide the price (including the transaction cost) of the home they are buying by their estimated lifetime income to see what percentage of their lifetime income will be consumed by the property.

The rest of the table provides illustrative computations of housing affordability for the three income group references. Accumulated savings (including interest earnings) were estimated from household expenditure survey data, and transaction costs were estimated using current rates on stamp duties and other fees and charges. Property taxes and costs of home insurance and maintenance were not included.

Some general observations that emerge from this table are worth highlighting:

# First, when the mortgage rate goes up, homebuyers have to spend a higher percentage of their lifetime income on housing, and affordability goes down.

# Second, given that current mortgage rates are above 5 per cent, and if we use the 30 per cent cut-off rule, HDB resale flats of four rooms and above are not that affordable for low-income groups.

# Third, at current mortgage rates, HDB resale flats are well within the affordable range for middle- and upper-income groups.

# Fourth, private properties are obviously for high-income groups. Still, even for those in the 75th income percentile, private residential properties at median prices are not within the affordable range at current mortgage rates.

Tilak Abeysinghe is deputy director of the Singapore Centre for Applied and Policy Economics, National University of Singapore. Gu Jiaying is pursuing a PhD at the University of Illinois at Urbana-Champaign.

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A much better indicator of housing affordability is the ratio of 'house price' to 'lifetime income'.

For a 30-year-old earning $5,520 a month with savings of $118,900, affordable homes would be an HDB executive flat or lower, using a cut-off ratio of about 30%.

Source: Straits Times, 4 Aug 2010

Buyers snap up 80 units at preview of The Greenwich

THE Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate on Monday when potential buyers flocked to its showflat to get the first bite of the cherry in a special preview.

Developer Far East Organization said yesterday that it has sold 80 out of 96 units released at the 319-unit The Greenwich on Monday. The showflat closed at 2am the following morning, in order to cope with the demand.

Prices ranged from $650,000 to $1.25 million, with the price per sq ft (psf) at $980 on average. The psf price is a record for the area, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

'The buyers are those who really like this corner of Singapore,' he said.

Singaporeans accounted for almost all of the buyers at the preview, Far East said in a statement yesterday. Most are from the Seletar estate area, it added.

More than 80 per cent of the one- and two-bedroom units released were snapped up, and all 10 of the three-bedroom units released were sold, it said.

The Greenwich, at the junction of Seletar and Yio Chu Kang roads, has residential units and retail shops. Of the 319 residential units, 160 are one-bedroom units that Far East describes as Soho-type (small office, home office) units.

Ranging in size from 603 sq ft to 721 sq ft, they offer users the flexibility to combine an efficient work environment with the comfort and privacy of a home, Far East said. It has since sold 32 out of 40 such units released in the preview. The two- to three-bedroom units go up to 1,485 sq ft in size.

The retail shops will be in a 45,000 sq ft two-storey mall called Greenwich V, which is close to 60 per cent committed.

Far East's executive director and chief operating officer of property sales, Mr Chia Boon Kuah, said The Greenwich is 'quite unlike the typical suburban condominium'.

'It differentiates itself as a new 'trans-urban' development, set to transform the suburban enclave into a vibrant live-work-and-play urban environment,' he said.

Recently, another new 99-year leasehold project, The Scala near Lorong Chuan MRT station, also attracted hordes of eager buyers.

It has since sold 90 per cent of the 468 units, said developer Hong Leong Holdings yesterday. The Scala was priced at $1,150 psf on average.

Source: Straits Times, 4 Aug 2010

Traders see property upside

DATA released by the Urban Redevelopment Authority and the Housing Board last week showed price increases had accelerated across the property sector, from resale flats and private housing to industrial and retail properties.

Rentals are also spiking, as the economy forges ahead strongly.

For the second quarter, private residential rentals registered a 5.9 per cent quarterly growth, while demand for office space rose about 71 per cent to 441,320 sq ft, from 258,334 sq ft in the first quarter.

Traders hope the rental increases mean bumper earnings for property counters going ahead.

In a report, Deutsche Bank said property companies are trading at an average discount of 18 per cent to their revalued net asset value.

'With rising risks for residential, we continue to prefer the office and integrated players and Reits (real estate investment trusts),' the report said last week.

But risks include an economic growth trend reversal and further government tightening measures.

Traders can get exposure to property counters by trading the covered warrants issued by foreign banks. For CapitaLand, Macquarie Bank will list two call warrants and one put warrant today.

One of the new call warrants offers investors the option to buy the mother share at $4.20 till next January, while the other call gives them till next June to buy at $4.30. This will enable a profit if the warrant moves in tandem with any gains made by CapitaLand.

For the put warrant, investors can sell the counter at $4 until next February. Investors stand to gain from any rise in the warrant, if CapitaLand falls in price.

Source: Straits Times, 2 Aug 2010

Taking the mickey out of home buyers

Prices of small projects and tiny apartments unlikely to hold up well, say experts

Property prices may be strong and on the uptrend.

But not all private homes will appreciate equally in value or be able to maintain their value in bad times.

For example, small projects and tiny 'mickey mouse' units of less than 500 sq ft may be the first to be hit should the market suffer a reversal, experts said.

A lot of risk also hinges on entry price levels, which can be high in boom times, they added.

A property expert, who declined to be named, said smallish developments - some having just 15 to 30 units - have limited appeal.

'These developments do not have full facilities and the road outside is usually very narrow,' he said.

'In the Telok Kurau area, you can sell a unit in a small development for maybe $900 per sq ft (psf) if you are lucky. But nearby, big condominiums such as One Amber or The Seaview can go for $1,200 psf.'

The lorongs in Telok Kurau are often narrow two-lane roads, whereas One Amber and The Seaview are on main traffic ways.

Investors should also do their homework before rushing to invest in 'mickey mouse' apartments of less than 500 sq ft.

These apartments, sometimes called 'bikini units', can work out well if they are located in the city or near an MRT station as single expatriates may be drawn to them, the expert said.

'It becomes a question mark when people start building them in the suburban areas,' he said. 'If investors want to sell or rent them out, there may be some resistance.'

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said the small apartments are like penny stocks. They have much speculative potential but have little worth otherwise, he said.

Ms Tay Huey Ying, director of research and advisory at Colliers International, said that generally, properties that have comprehensive recreational facilities and sufficient green areas will fare better in terms of rentals and values than apartments that do not.

Investors should also be wary of ageing 99-year leasehold developments, said the expert.

The price gap between a freehold and a leasehold property - which can be marginal in boom times - may widen as the leasehold property ages and its lease shortens.

Ms Tay said it all depends on what investors are looking for.

If they are looking for pure rental income, they can go for 99-year leasehold properties as these can generate more attractive yields than freehold properties, she said.

A freehold property may generate a rental yield of 3 per cent to 3.5 per cent while a leasehold property may offer a slightly higher yield of 4 per cent to 5 per cent.

But if they are looking for capital appreciation, ageing leasehold properties of 40 years and above may see weaker price appreciation compared with their freehold counterparts.

A second expert, who also declined to be named, said: 'There is the danger of facing limited capital appreciation or even losses if you chase new leasehold projects at sky-high prices.'

These high-risk investments are 99-year leasehold projects priced above $1,000 psf, he said.

'In five years' time, you may not be hit if the market is good. But in 20 years' time, the risks rise as the lease would have run down and the condo design will likely become outdated.'

Property experts also point to walk-up apartments, and cluster homes with basements located in flood-prone areas, as potential high-risk investments.

'The design of a walk-up is quite outdated. Many people, especially families with elderly members, do not want to climb three or four flights of stairs to their apartments. But investors buy these for their collective sale potential,' said one.

'Lower-priced properties - but not necessarily cheap properties - in red-light districts or in very inaccessible places' are also high-risk investments, said Mr Tan.

'Don't buy something just because it is cheap or cheaper. Get your priorities right. Buy for the right reasons,' he advised.

Source: Sunday Times, 1 Aug 2010

The Scala: Crowd ballots for chance to buy

Units fetch average price of $1,150 psf

The public launch of The Scala yesterday drew a huge turnout and defied official data of slowing private home sales in recent months. Over a thousand property buyers turned up and balloted for a chance to make a purchase.

The developer, Hong Leong, said it had sold over 75 per cent of the 468 units available as of yesterday. It said the units, sized between 474 and 2,142 square feet, were sold at an average of $1,150 per square foot.

Hong Leong also said that the buyers comprised a good mix of HDB upgraders and investors, with local buyers making up the majority.

Buyers who spoke to MediaCorp said properties in the central area were out of their price range. Instead, they picked The Scala because of its suburban location.

One of them is Mr Andrew Low, 43, an IT manager at an insurance firm, who wanted to buy a two-bedroom unit for investment. He said: “The Scala should not be affected by the recent dip in private sales. It is close to the Lorong Chuan MRT and near the NEX Mega Mall. I see a 10- to 20-per-cent increase in prices in two years.”

Some buyers were also encouraged by the potential rental yields as they reckon that the units can attract expatriates due to their proximity to international schools.

“If I rent it out, I’m looking at a monthly rent of between $3,000 and $4,000 a month. If not, I can move in here myself,” said Mr Low.

Also looking for a two-bedroom unit was Mr Zhao Han, a permanent resident from China, who had been working here as a technical specialist in the automotive industry for three years.

He said: “Mainland Chinese have too much cash but they can only invest in property because other sectors like manufacturing and enterprises in China have not been fully developed yet.”

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that bullish property investors may be willing to pay a premium and push the property prices higher still. “At $1,150 psf, the price can still go up to $1,200 and some units may even reach $1,250,” he said.

Source: Today, 29 Jul 2010

Mass market condos still hot property

200 units at The Scala in Serangoon snapped up at launch yesterday

HUNDREDS of eager buyers yesterday braved the early morning rain, making a beeline for the public launch of Hong Leong's The Scala, as keen interest in mass market condominiums shows no sign of abating.

Demand for the 300 or so remaining units of the 99-year leasehold project near Lorong Chuan MRT station was so strong that balloting was needed to sort out who got to enter the showflat first.

By late morning, more than 800 property agents and potential buyers who had submitted blank cheques had packed the balloting tent at the condo site in Serangoon Avenue 3. This is the biggest turnout at a mass market public launch since Trevista in Toa Payoh and Hundred Trees in the West Coast area were launched late last year.

A private preview was held on Tuesday for Hong Leong staff and buyers who had registered their interest with the developer. About 150 units were sold then.

Hong Leong said that as of yesterday, more than 75 per cent of the project's 468 units had been sold. That means more than 350 were sold, of which about 200 went yesterday.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the condo had set a benchmark price for new projects near MRT stations in the north-east.

'There is a demand for mass market homes among investors and they generally feel more comfortable buying projects near MRT stations,' he said.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said: 'The market is still hungry, and the proximity of the project to the Circle Line has given (buyers) a reason to buy.' He said worries over the euro debt crisis had receded so buying sentiment had turned positive again.

Property experts say the strong demand for mass market homes is expected to continue, with prices set to rise about 7 per cent in the second half of this year.

The Government is rolling out a record number of residential sites in the second half of this year, and has assured buyers that there will be no shortage of homes.

Units at The Scala, in five residential towers, are between 474 and 2,142 sq ft each and range from one- to four-bedroom apartments. They were sold at an average of $1,150 per sq ft (psf).

In terms of total price, the smallest units were priced from $600,000 while the four-bedders were from $1.5 million.

Hong Leong said the buyers, mainly locals, comprised a good mix of HDB flat upgraders and investors.

Most buyers The Straits Times spoke to listed as key selling points the project's close proximity to newly opened Lorong Chuan MRT station and the range of amenities such as the NEX mega mall due to be completed next year.

Some buyers also cited nearby schools such as the Australian International School and the Stamford American International School. They said this could mean high rental yields.

Sales executive Tammy Lim, 30, bought a two-bedroom unit. She said the project is near her parents' home.

In addition, the project is close to schools that her three-year-old daughter could attend later, she said. 'Prices keep increasing. We decided to buy now rather than keep waiting.'

Nearby Chiltern Park condo, completed in 1995, saw an average selling price of $746 psf for five units sold last month, according to caveats lodged with the Urban Redevelopment Authority.

The Scala is expected to be completed in the first quarter of 2014.

Source: Straits Times, 29 Jul 2010

More than 75% of The Scala sold

MORE than 75 per cent of the Hong Leong group's latest residential project, The Scala, has been sold at prices averaging $1,150 per square foot.

The 468-unit development in Serangoon Avenue 3 was publicly launched yesterday.

Hong Leong said yesterday that the units sold at the 99-year leasehold project are spread across five residential towers that feature one to four-bedroom units ranging from 474 square feet to 2,142 sq ft.

Buyers comprise a mix of Housing & Development Board upgraders and investors, with the majority being Singaporeans.

Betsy Chng, Hong Leong's head of sales and marketing, attributed the strong response to the project's location, unique features, finishing and pricing.

The Scala is next to the Circle Line's Lorong Chuan MRT Station and near several schools, including St Gabriel's Primary, Yangzheng Primary, Nanyang Junior College, the Australian International School, Stamford American International School and Lycee Francais de Singapour.

It is also close to a bus and MRT interchange at Serangoon Central, and the soon-to-be-opened NEX mega mall.

The project is slated for completion in the first quarter of 2014. Apart from the usual condominium facilities, The Scala will have features such as pavilions with wood-fired pizza ovens and teppanyaki hotplates, a Harvest Garden and a Green Gazebo.

Source: Business Times, 29 Jul 2010

NUS estimates confirm private home prices tapered off in June

(SINGAPORE) Latest flash estimates from National University of Singapore (NUS) confirm what property industry players have already experienced on the ground - a rapid slowdown in the growth of non-landed private home prices in June compared with May.

NUS's overall price index for non-landed homes for June rose 0.3 per cent month on month, compared with month-on-month gains of 2.4 per cent each for May and April.

It was the same story for the sub-index for the Central region, which covers a basket of properties in districts 1-4 and 9-11. It increased 0.7 per cent month on month in June, slower than gains of 2.1 per cent in May and 3.4 per cent in April.

The sub-index for Non-Central region was unchanged in June from the preceding month, after rises of 2.7 per cent in May and 1.7 per cent in April.

The Singapore Residential Price Index (SRPI), compiled by the NUS Institute of Real Estate Studies, covers only completed properties.

DTZ executive director (consulting) Ong Choon Fah said: 'The latest indices confirm the slowdown in buying momentum felt on the ground in June - because of the school holidays, World Cup and continued uncertainty in the eurozone economies.

'People found no reason to rush and buy a home. Developers have also been holding back launches and the projects they did launch were not priced at the top end of their own target range; so developers have also moderated their own price expectation.'

Since the end of last year, all three NUS indices have appreciated - to the tune of 8.7 per cent for the overall index, 8.2 per cent for Central region and 9.2 per cent for Non-Central region. Based on the latest June flash estimates, NUS's overall SRPI is now 36.3 per cent above the post-financial crisis low in March 2009. Over the same period, the growth for the Central region has been 42.1 per cent and that for the Non-Central region, about 33.3 per cent.

The June flash estimate for Central region is still 3.5 per cent below the pre-crisis high in November 2007. However, for the Non-Central region, the latest index surpassed its respective pre-crisis peak in January 2008 by 11.2 per cent. As a result, the overall SRPI flash estimate for June is 5.7 above its November 2007 high.

Looking ahead, Mrs Ong reckoned the overall and Central region indices are likely to remain flat in July, but the index for the Non-Central region could either be flat or post a marginal increase, supported by high cash-over-valuations in the HDB resale market.

Meanwhile Hong Leong Holdings said yesterday it has sold over 75 per cent of the 468 units available at The Scala, a 99-year condo at Serangoon Avenue 3. The units are sized between 474 and 2,142 sq ft, and sold at an average of $1,150 per square foot. Buyers comprised a good mix of HDB upgraders and investors, with the majority made up of locals.

Source: Business Times, 29 Jul 2010

'Imbalance' in HDB resale market: Mah

Record boost to supply should stabilise prices in about a year, he says

PRICES of HDB resale flats are high at present because of an 'imbalance' in supply and demand, which should be redressed by the record number of flats being released by the HDB this year.

The boost to supply should stabilise prices in about a year or so, said National Development Minister Mah Bow Tan yesterday, as he sought to address concerns over the cost of HDB resale flats, which has climbed steadily since 2008.

Speaking on the sidelines of a community event in Tampines, Mr Mah attributed the surge to strong economic growth and demand from first-time buyers, such as newly married couples, and owners looking to upgrade to bigger flats.

'I think at this point in time, there's still an imbalance,' he said. 'I hope that with HDB pushing out a record number of flats this year, this imbalance will be redressed over the medium term. I would expect that in another year or so, we should be able to stabilise everything.'

HDB launched almost 9,000 new build-to-order flats in the first half of the year, and will launch another 7,200 in the second half. The number is about 80 per cent more than for last year.

In addition, there are some 4,700 new flats under the design, build and sell scheme, in which HDB flats are built by private developers, and the executive condo (EC) housing scheme. In the pipeline are four more EC sites in Punggol, Pasir Ris, Bukit Panjang and Tampines, which should yield 1,900 units.

Resale prices for HDB flats rose for the eighth straight quarter between April and last month, surging 4.1 per cent from the previous quarter.

In the first half of this year, 17,598 resale applications were registered with HDB, compared to 16,630 for the same period last year and 14,121 in 2008.

The median cash over valuation (COV) - the cash amount paid upfront by a buyer over a flat's valuation by the HDB - also hit a record $30,000.

Mr Mah acknowledged this was 'equally a concern' as it made resale flats even less affordable, and urged first-time buyers to purchase their new home directly from the HDB instead.

He said: 'If you are a first-timer, then go for the build-to-order (BTO) market, where there is zero COV, where the prices are lower, where the flats are of newer design and so on.'

To newly married couples who say they cannot wait that long for a new flat, Mr Mah said the three-year waiting period was 'the norm for our standard, which is already higher than other cities'.

He added: 'If you want to, say, have a flat, zero waiting time, then obviously the price of the flats will be higher, and this is where the resale flat market comes in.

'That's why you have a disparity in price between resale flat and new flats. This cost difference reflects the time difference.'

Mr Mah said there were enough homes for first-time buyers and the increased number of flats being built would relieve the pressure on the resale market.

In the short-term, he said, it was not clear if prices would continue to rise.

'The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half; all indications are that there may be some slowdown. If that comes about, then obviously the demand for housing will also slow down,' he said.

PropNex chief executive Mohamed Ismail said the biggest group of people driving up the resale prices are owners of HDB flats who are motivated by the peak prices to sell.

'The majority of those who bought new four- and five-room HDB flats eight years ago, can probably make more than $100,000 cash profit now,' he said.

Newlyweds said getting a new flat from the HDB had its difficulties too.

Civil servant Jonathan Fong, 31, and wedding videographer Mylene Tong, 29, failed twice to get a new flat in the locations they wanted.

They eventually bought a three-room flat in Sin Ming Road in March for $237,000, with a COV of $29,000.

Source: Straits Times, 26 Jul 2010

HDB resale prices should stabilise in a year or so: Mah

(SINGAPORE) Prices of resale flats should stabilise in a year or so as the Housing & Development Board (HDB) releases a record number of new flats into the market.

This was according to National Development Minister Mah Bow Tan, who spoke on the sidelines of HDB's 50th anniversary celebrations at Tampines yesterday.

Resale flat prices have been climbing in the last few quarters and they rose 4.1 per cent in Q2 from Q1 to a new high.

There is an 'imbalance' in the resale flat market, Mr Mah said. With the economy doing well, demand for resale flats from both first-time buyers and upgraders has been strong.

'I hope that with HDB pushing out a record number of flats, this imbalance will be addressed over the medium term,' he said. There should be stability 'maybe in another year or so'.

HDB will be launching 16,000 build-to-order (BTO) flats this year, 80 per cent more than in the previous year. Another 4,700 flats from executive condominium projects and the Design, Build and Sell scheme are potentially coming up.

It would be hard to say how resale flat prices will move in the short term, Mr Mah said. 'The economy for the first half was very strong, but all indications are that it may not be so smooth going in the second half.'

If the economy cools, 'the demand for housing will also slow down,' he said.

Accompanying the rise in resale flat prices was a hike in cash premiums which buyers pay. The median cash over valuation (COV) across all resale deals in Q2 was $30,000, up from Q1's $25,000.

Rising COVs are a concern but they are determined by demand and supply in the market and the government cannot intervene, Mr Mah said.

He advised first-time buyers to turn to the BTO market 'where there is zero COV, where the prices are lower, where the flats are of newer designs,' he said.

Source: Business Times, 26 Jul 2010

Sales of landed homes picking up

Surge in demand sees buyers paying higher prices, but rate of increase likely to slow

More buyers are picking up landed homes and paying higher prices amid the strong economic recovery, said a recent Savills Singapore study.

It found that 2,198 caveats were lodged for landed houses between January and June this year, which is more than 57 per cent of the 3,832 caveats lodged last year.

And the total value of these transactions reached about $7.2 billion, which is about 75 per cent of the value of what was sold last year, it said.

Savills noted that more homes priced $5 million and above were traded this year.

'The surge in demand could be that purchasers are seeing better value in landed homes, as condominium prices have soared beyond peak levels,' said its prestige homes and investment director Steven Ming.

Also, compared with prices of their non-landed counterparts, prices of landed homes were relatively stable during the recent economic downturn, he said.

Median landed home prices have increased by 6.2 per cent from $745 per sq ft (psf) in the first quarter to $791 psf in the second, according to data from Savills.

The rise over the past year has been 31.4 per cent, it said.

Last Friday, the Urban Redevelopment Authority released data showing that landed home prices are still climbing, but at a slower rate of 6.2 per cent in the second quarter this year, compared with 8.3 per cent in the first.

Prices of detached houses saw the highest rise of 6.8 per cent among the landed housing types, while terrace house prices rose by 5.6 per cent.

Two to three years ago, buyers could easily find a typical freehold landed home of around 1,600 to 1,800 sq ft for about $1.3 million to $1.5 million, said Colliers International's deputy managing director (agency and business services) and auctioneer, Ms Grace Ng.

Today, they must be prepared to pay a higher amount of $1.6 million to $1.8 million, she said.

However, there are still bargains to be found in the resale market if 'you spend time doing your homework', she said.

These are likely to be run-down houses that need a lot of work.

Or they could be old houses that were bought a few decades ago at relatively low prices, such that the owners may be happy to sell around today's valuation price instead of above it, she said.

Property consultants say the attraction of landed homes lies in the scarcity factor, as there is limited supply.

Even the recent floods won't affect landed home values - that is, in the long term.

'Floods won't affect values in the long term, but in the short term, buyers may turn away,' said Ms Ng.

For instance, in the Bukit Timah area, where only the main roads were flooded, homes remain attractive because of their proximity to schools and the city, she said.

Unless the floods become a common occurrence, they won't weigh down on prices, she added.

Landed home prices are likely to continue rising, though the rate of increase could slow further as price resistance has set in, said Ms Ng.

Savills senior manager of research and consultancy Christine Sun believes that more buyers are likely to enter the market as the economy continues to improve.

'Landed home prices will still increase, but unlikely at the 10 per cent rate that we saw around the middle of last year,' she said.

'We believe that price rises will hover around 5 per cent to 6 per cent per quarter for the rest of the year.'

Source: Sunday Times, 25 Jul 2010

Private home sales slower, but prices up

Prices hit new high, could rise further with economic recovery

SALES of private homes slowed towards the end of the second quarter but prices still kept heading north into record territory.

Prices rose 5.3 per cent in the second quarter - above the preliminary estimate of 5.2 per cent and not far from the first quarter rise of 5.6 per cent.

According to Urban Redevelopment Authority (URA) data released yesterday, prices are up 11.6 per cent since January and are expected to continue climbing although the pace may ease, said analysts.

Prices are now at record levels, eclipsing the 1996 peak, after shrugging off a dip in sales that began in May when Europe's debt crisis rocked global stock markets, observers said.

Rents were also rocketing - up 5.9 per cent in the second quarter to take the half-year rise to 10.9 per cent. Rents fell by 14.6 per cent last year.

'The continuing recovery in the economy facilitated the increased hiring of expatriate staff, which in turn, drove the rental market,' said Mr Li Hiaw Ho, CBRE Research's executive director.

Cushman and Wakefield managing director Donald Han added: 'In the second half of last year, prices went up more than 20 per cent but rents fell. So, there was some fear of a bubble forming.

'But prices are now moving in line with rent rises. As long as rents go up, the price rise should be supported.'

Non-landed home prices rose the most in suburban areas, up 5.7 per cent, from a 4.3 per cent increase in the first quarter.

City-fringe home prices were up 4.6 per cent while city-centre ones rose 5.4 per cent.

Prices of landed homes also continued to surge, climbing 6.2 per cent in the second quarter after jumping 8.3 per cent in the first quarter.

Luxury homes are the only sector yet to reach record heights, experts noted.

Yesterday's URA data also showed that 4,033 new homes were sold in the second quarter, down about 8 per cent from the first.

As at the second quarter, there were 61,831 private residential units in the pipeline. Of these, 32,630 units were still unsold. The URA said: 'This number is equivalent to about three years of supply based on the average take-up of about 11,300 units per year over the last three years.'

While some buyers hesitate, others have been snapping up property.

Copywriter Daryl Lee, 34, said: 'The last thing I want is to lock my cash up in a mortgage when all people are doing is chasing higher prices to pay higher asking prices.'

Another potential buyer Alex Wee, 37, said: 'On the one hand, things are pricey. But on the other hand, we're afraid that if we don't buy, we will miss the boat.'

Accounts executive Kris Lau, 33, who bought a small investment unit at a newly released project, 368 Thomson, after selling her HDB flat, said: 'It's a good time to cash out and upgrade.'

Jones Lang LaSalle's head of residential project sales, Mr David Neubronner, told The Straits Times: 'Prices... should take a breather. But given the current backdrop where our economic recovery is generating wealth, they are likely to continue to rise this year.

'Quite a lot of people are parking their money in property for the long term. In the worst-case scenario, I think prices may stay flat.'

Ngee Ann Polytechnic real estate lecturer Nicholas Mak believes private home prices will continue to rise this year and possibly into next year but at less than 5 per cent a quarter as sales slow.

The level of speculation now is within manageable levels, he felt.

URA data shows that sub-sales fell to 723 units in the second quarter, from 996 in the first.

Mr Li said the surprisingly strong economic growth in the second quarter will help keep market sentiment positive.

'However, as the Government is also anticipating a slowdown in the growth momentum for the rest of the year, the residential market is likely to move at a more moderate pace,' he said.

Sales of new homes may still reach 14,000 units this year - below last year's 14,688 units while home prices may rise by 12 to 15 per cent, he said.

Mr Mak is looking at a price rise of 16 to 21 per cent this year.

Meanwhile, office rents rose 1.1 per cent in the second quarter compared with 0.4 per cent in the first quarter.

Rents for shops and industrial properties rose by 0.5 per cent and 1.3 per cent respectively in the second quarter.

Source: Straits Times, 24 Jul 2010

Resale HDB flat prices hit new high

Cash over valuation now $30,000 even as supply of new flats increases

RESALE prices for HDB flats have smashed records for the eighth straight quarter with a surge of 4.1 per cent in the April to June period.

Prices passed the 1996 peak back in 2008 and have not looked back since.

And the march shows no sign of letting up, with median cash over valuation (COV) at a record $30,000 in the second quarter.

This is 20 per cent ahead of the $25,000 in the January to March quarter.

COV is the cash paid upfront by a buyer over a flat's valuation, and is often an indication of demand levels.

The HDB figures out yesterday show resale prices are almost 18 per cent above the previous peak in the last quarter of 1996.

Meanwhile, the HDB said yesterday it launched almost 9,000 new flats in the first half - equal to last year's total supply - and will launch another 7,200 in the second half to meet demand.

It will launch 1,000 new flats in Jurong West and Bukit Panjang this month. The total home supply will be complemented by 4,700 new homes under HDB's design, build and sell scheme (DBSS) and recently sold executive condo sites.

Despite this, resale activity keeps growing. Transactions hit 9,114 in the second quarter, up about 7 per cent on the first.

Nearly all deals involved cash paid upfront. The percentage of resale transactions done above valuation increased to 96 per cent, up from 93 per cent in the previous quarter.

The pace being set by buyers and sellers has also prompted fresh concerns on whether the market is overheating.

In estates like Queenstown the median resale price for an executive flat was an eye-popping $781,500 in the second quarter and $685,500 in Bishan.

The median resale price for five-roomers was $682,500 in Marine Parade and $675,000 for Queenstown.

Associate Professor Sing Tien Foo of the National University of Singapore's real estate department noted that apart from the price index surpassing the 1996 peak, it has also increased by more than 60 per cent compared with 2003 prices.

He said that price increases appear to be supported by strong economic fundamentals for now, with demand coming from upgraders, downgraders, PRs and home buyers who cannot wait three years for new HDB flats.

As government policies on resale flats discourage speculation, this price growth is unlikely to be a housing bubble, observed ERA Asia-Pacific associate director Eugene Lim.

Prof Sing added: 'But if price rises continue unabated, we should be concerned. When deviations from fundamentals are too large, some corrections in prices could occur.'

Mr Lim noted that the robust resale market is having a spillover effect on private property as HDB owners can upgrade thanks to the relatively high prices they can get for their flats.

Values in the private property market rose 5.3 per cent in the second quarter over the first despite slowing sales.

But as private property prices inch up, some buyers in that market could turn to the HDB resale sector, adding to demand, said PropNex chief executive Mohamed Ismail.

Some analysts believe prices have reached a new era.

'Property prices move in cycles and prices will go up and down. But generally, it will move in an uptrend due to scarcity of land in Singapore,' said Mr Lim.

'Even if prices come down, I think it'll still be higher than five years ago. It is unlikely we will go back to that level.'

While property agents say home buyers - especially first-timers - are getting increasingly disgruntled about blazing resale prices, some estates are still selling at levels below the 1996 peak.

PropNex agent Steven Ng, who recently helped a couple in their 50s sell a five-room Bishan flat for $615,000 - $70,000 above valuation - said the sellers were happy as they bought it at less than half that amount more than 10 years ago.

'But some sellers in Bishan who bought at 1996 peak have still yet to see price levels at the price they paid,' he said.

Source: Straits Times, 24 Jul 2010

Broad-based growth in Q2 property prices

Momentum of recovery in private residential rents also picked up

PRIVATE home prices generally rose at a slightly slower pace in Q2 than they did in Q1, but latest official numbers show a broad-based growth in property prices - with stronger quarter-on-quarter gains for office, shop and industrial properties, as well as HDB resale flat prices in Q2 than in the first quarter.

The momentum of recovery in private residential rents also picked up in the second quarter, supported by an acceleration in hiring of expats as Singapore's economy continues to expand.

'Sentiment among developers and market watchers probably moderated from the end of first quarter as a result of the eurozone's economic problems, but the recent spectacular official GDP growth forecast for Singapore has probably helped to restore some confidence,' said Real Estate Developers Association of Singapore CEO Steven Choo.

The Urban Redevelopment Authority's (URA) benchmark overall price index for private homes rose 5.3 per cent in the second quarter over the preceding quarter, close to the 5.6 per cent per cent hike in Q1.

The price index for office space increased 4.6 per cent quarter on quarter in Q2, a bigger gain than the 1.8 per cent quarter-on-quarter rise in Q1.

Likewise, the shop price index went up 3.9 per cent in Q2, following a 1.8 per cent pick-up in the first three months. URA's flatted factory and warehouse price indices rose 5.4 and 9.4 per cent in Q2. In Q1, each of these increased 1.5 per cent.

In the private housing market, prices of detached houses rose 6.8 per cent in Q2, slower than the 9.6 per cent increase in Q1. Semi-D and terrace houses appreciated 6 per cent and 5.6 per cent respectively in Q2 - compared with increases of 7.5 and 7.4 per cent in the first three months.

Non-landed home prices in Core Central Region (which includes the prime districts, Marina Bay and Sentosa Cove) climbed 5.4 per cent in Q2, higher than the 4.4 per cent growth in Q1. Likewise, the price index for Outside Central Region (where suburban condos are located) rose 5.7 per cent in Q2 after increasing 4.3 per cent in Q1.

However, in Rest of Central Region the pace of price gain slowed from 7.9 per cent in the first quarter to 4.6 per cent in Q2.

In the primary market, developers sold a total of 4,033 private homes in Q2, down 7.9 per cent from Q1. In the secondary market, strong buying momentum was also seen in the resale market, with 4,682 private homes changing hands in Q2, although this was 5.6 per cent lower than the first three months of the year. However, subsale volumes eased 27.4 per cent, from 996 deals in Q1 to 723 in Q2.

'Resales were strong in Q2 because prices are more reasonable for older, completed properties than new project launches. On the other hand, subsales (which are secondary-market deals involving projects that have yet to receive Certificate of Statutory Completion) come in waves. Those who bought homes from developers in the past few months are probably waiting for prices to rise further before they offload their units,' suggests a market watcher.

In the leasing market, URA's All Residential rental index rose 5.9 per cent in Q2 over the preceding quarter, compared with a 4.7 per cent quarter-on-quarter gain in Q1. The index has appreciated 10.9 per cent since end-2009.

Rents accelerated for both landed and non-landed private homes. Terrace houses led the landed segment, with rents rising 6.6 per cent in Q2, followed by semi-detached houses (up 5.6 per cent) and detached (up 4.6 per cent). For non-landed homes, rents in Core Central Region appreciated the most, by 6.4 per cent, followed by Outside Central Region (up 6.1 per cent) and Rest of Central Region (5.1 per cent).

However, the latest All Residential rental index is about 11.1 per cent below its peak in Q2 2008.

Jones Lang LaSalles' head of residential Jacqueline Wong said the latest official figures confirm feedback from the ground. Monthly rentals of four-bedroom apartments in high-end developments such as Grange Residences, Draycott 8 and Ardmore Park are hitting $16,000-$18,000 on average - an improvement from $14,000-$15,000 in the second half of last year.

'But we still haven't achieved the peak levels of $18,000-$22,000 seen in the late 2007 to mid-2008 period,' Ms Wong added. 'We're seeing rehiring of expats again but housing allowances are not as generous as before.'

Ms Wong is predicting flattish rents until the end of this year, citing new competition with the impending completion of The Orchard Residences and The Marq on Paterson Hill.

URA numbers show 4,379 private homes received Temporary Occupation Permit (TOP) in Q2, compared with 1,407 units in Q1. The surge in new completions pushed up the islandwide vacancy rate for private homes to 5.4 per cent at end-Q2, from 4.6 per cent at end-Q1. But this could ease again as owners or tenants move into the new homes.

Major residential projects completed in April-June 2010 include One Amber, Marina Bay Residences, Dakota Residences and The Arte.

With a further 4,958 units expected to receive TOP by year end, the full-year tally will be 10,744, slightly above last year's 10,488 units

Source: Business Times, 24 Jul 2010

Prestige bungalows soar in price

Good class bungalow sales in first half pass $1b mark, and demand unlikely to flag: Report

THE priciest homes just keep getting pricier, with the values of upmarket, prime-area bungalows rocketing this year, and sales totalling more than $1 billion in the first six months.

And just to underline the boom in what are called 'good class bungalows', a Nassim Road house sold in April for $43.5 million, that is $1,800 psf and just shy of the record $1,899 psf set in 2007 for a plot along the same road, according to a Savills Singapore report.

The most expensive bungalow sold this year in terms of overall price was a sprawling Leedon Park plot that went last month for a whopping $59.4 million, or $1,419 psf.

Good class bungalows tend to be big and exclusive, and are arguably Singapore's most coveted landed homes.

They typically sit on plots of at least 1,400 sq m, or 15,070 sq ft, and can be found in 39 prime gazetted areas such as Nassim Road.

In the first half of this year, sales of good class bungalows reached about $1.12 billion, which is about 81 per cent of the value done last year, said Savills.

There were 54 deals done in the first six months, compared with 24 in the same period last year, it said.

Prices have continued edging higher on the revived demand from well-heeled buyers, added Savills.

The average price of good class bungalows rose from $928 psf in the first quarter to $1,082 psf in the second and is now 36 per cent higher than a year ago.

'This year we are seeing more demand from ultra-rich, new citizens and PRs in the market, which could possibly have resulted in the higher volume and prices,' said the firm's director of prestige homes and investment, Mr Steven Ming.

An agent who declined to be named added: 'Some new citizens from China are still looking for good class bungalows.'

He said the market has quietened down a bit recently as the gap between buyers' and sellers' price expectations widens.

CB Richard Ellis director (luxury homes) Douglas Wong said: 'Good class bungalow prices have continued to rise since 2007 and through the global financial crisis. Owners' expectations are still high due to the limited supply.'

Some sellers have been asking for higher prices after hearing talk of a Cluny Road bungalow achieving a record price of slightly over $2,000 psf, agents said.

Buyers may be sitting on the sidelines but they are likely to come back to market soon when they realise that prices are not going to fall, Mr Wong said.

The managing director of RealStar Premier Property, Mr William Wong, said he has already seen some local investors returning to the good class bungalow market recently.

But foreign buyers are few and far between. They need special permission and must be permanent residents to own landed property.

Foreigners who are not permanent residents can buy landed homes in Sentosa Cove, subject to government approval.

In recent years, the typically smaller landed homes in the 99-year leasehold gated residential enclave have also seen exceptional prices.

Average prices of Sentosa Cove bungalows rose 55 per cent to $1,959 psf in the second quarter over the same period a year ago, said Savills.

In the first half, there were 35 caveats lodged for bungalows in Sentosa Cove compared with 36 for all of last year, it said.

Just over half of this year's bungalow caveats were lodged by Singaporeans.

China accounted for 10 deals, the largest of the foreign buying contingent.

But Mr Ming said that good class bungalow prices are looking more attractive than the prices of leasehold Sentosa Cove bungalows.

He added that good class bungalow prices may rise by a further 5 to 10 per cent this year, given the more robust economic recovery and the fact that the buyer base has expanded.

Source: Straits Times, 20 Jul 2010

Room for growth in high-end market

Trends in other cities show demand for luxury apartments in S'pore may grow yet

Singapore has long been seen as a safe investment haven - and foreigners are responding by snapping up property across the island.

About 23,000 non-landed private homes have been bought by foreigners since 2007 - of which about 35 per cent are high-end homes in districts 1, 2, 4, 9, 10 and 11 - based on the Urban Redevelopment Authority's (URA) record of caveats lodged.

Yet, the high-end apartments sector still has room for growth if trends in other cities are anything to go by.

Data from Savills shows that the average price of high-end apartments was $2,154 per sq ft (psf) in the second quarter, while that of super luxury private homes was $3,055 psf.

Super luxury homes - a subset of high-end homes - are defined as developments that achieved an average of $2,500 psf in the fourth quarter of 2006.

In Hong Kong, however, prices for high-end residences in the same quarter hit HK$14,520 (S$2,570) psf, 20 per cent higher than those here. As common spaces like corridors are taken into account in computing unit prices in Hong Kong, the actual price disparity could be even greater.

In fact, prices for high-end apartments in Hong Kong rose 47 per cent last year, raising concerns about an already overheated market. On the other hand, high-end values here went up by only 3.9 per cent last year.

Moreover, the most expensive private apartment in Hong Kong is a 6,830 sq ft unit at The Albany - which sold for HK$49,488 psf, or HK$338 million in total, this year. This is about 58 per cent more than Singapore's priciest apartment, a 5,048 sq ft home at Orchard Residences, which sold for $28.3 million, or $5,600 psf, in 2007.

In addition, Sydney apartment prices are about 28 per cent up on Singapore's while London's values are an eye-watering 41 per cent higher.

China, however, is a mixed story. While prices in its two major cities are lower, they shot up 32 per cent in Shanghai last year and 15 per cent in Beijing - and are both at record levels, marginalising any potential short-term capital gains.

Furthermore, the high-end market in Singapore is the only sector where prices are still below previous peaks. Prices of high-end apartments are 11 per cent below record levels set in the fourth quarter of 2007 while super luxury prices are 17 per cent cheaper.

In contrast, mass market prices in May were already 15 per cent over previous peaks with mid-tier apartments a more modest 5 per cent above. As positive economic prospects for Singapore are likely to continue into the second half of this year, it is possible that prices of high-end apartments could reach previous peak levels by early next year.

Compared to the full year of 2009, the number of apartments sold above $2,500 psf has already more than trebled over the last six months, with some even falling in the $3,500 to $4,000 psf range.

With rising anxiety over bubble risks and fears of more tightening measures that could derail prices, many East Asian investors may shift their funds to Singapore.

The government imposed 11 cooling measures in China earlier this year, helping to send new home sales plummeting 60 to 70 per cent in Beijing, Shanghai and Shenzhen in May alone.

As a result, more foreign buyers, especially mainland Chinese, have flocked to Singapore, at times buying with full cash payments.

They have displaced Malaysians this year as the No. 2 buyers of super luxury homes priced $5 million and above.

The growing number of high net worth individuals and millionaire Singaporeans could also see an increasing demand for luxury homes.

However, prime redevelopment sites for sale are lacking. The average take-up rate of high-end homes between 2005 and last year is 3,500 units per year, sitting comfortably above the average of 2,500 units being constructed yearly from this year to 2014.

Therefore, the supply of luxury homes is expected to be limited in the coming years and this imbalance should continue to sustain prices.

Luxury apartment prices are expected to rise by 5 to 8 per cent in the second half of this year.

Optimism surrounding the integrated resorts and robust GDP growth - and the increased expatriate employment it brings - should keep drawing affluent foreign buyers here.

This should help sustain demand for high-end homes even as an approximate 1,800 luxury apartments are expected to be launched in the second half of this year.

The writer is the senior manager, research & consultancy of Savills Singapore

Source: Sunday Times, 18 Jul 2010

Brisk sales continue at new launches

Sales picking up after quiet June with World Cup, school holidays

SALES have stayed fairly hot at a new condominium in Bukit Timah with 114 flats in the 172-unit estate now sold in just over a week, including 24 of the 30 pricey penthouses.

Ten apartments were snapped up at the official launch of the Terrene yesterday following the 104 that have been sold since a private preview started on July 8, UOL Group said.

The 999-year leasehold condo in Jalan Jurong Kechil is priced at an average of $1,250 per sq ft (psf) for a typical unit, with a one-bedroom flat starting from $719,000.

The penthouses are priced from $1.7 million for a three-bedroom unit to $2.79 million for a five-bedder.

Terrene is a 50-50 joint venture between UOL and La Salle Asia Investment Management.

The newly released 368 Thomson has also done well.

City Developments (CDL) said yesterday that it has sold more than 90 per cent of the 157-unit freehold condo in Thomson Road since it started a private preview on July 8.

The Straits Times understands that 144 units have been sold, leaving a balance of 13 units.

Last Friday, CDL announced that it had sold 96 out of 120 launched units. Prices were about $1,350 psf, or from $918,000 for a one-plus-study unit to $4.4 million for a five-bedroom penthouse.

Since then, the developer has released more units with prices 2 to 3 per cent higher.

The market for new private homes quietened last month with buyers distracted by the euro zone debt crisis, school holidays and the World Cup. A certain amount of price resistance had also set in.

But this month will be a slightly busier month, say property consultants.

Hong Leong Holdings said in a statement yesterday that it will launch the 99-year leasehold The Scala at the end of this month.

The Scala, which is in Serangoon Avenue 3 and near the Circle Line’s Lorong Chuan MRT station, will have 468 units. It has one- to four-bedroom units ranging from 474 sq ft to 2,142 sq ft.

Hong Leong said the condo will have seven pavilions, each designed to give residents a different interactive experience. One will be an Italian pavilion with a wood-fired oven for residents to make their own pizzas.

More property launches can certainly be expected from September, after the traditionally quiet Hungry Ghost Month, experts say.

CDL said its 642-unit, joint venture condo in Pasir Ris will be released in the third quarter.

Source: Sunday Times, 18 Jul 2010

Home Run

A large number of new properties are set to be launched in the next six to 12 months. The Sunday Times looks at what savvy buyers should look out for.

Sovereign debt crises may have hobbled property markets elsewhere, but not here it seems.

Buoyed by Singapore’s strong economic recovery, optimism has staged a vigorous comeback, with property developers set to launch at least 3,500 new homes by year-end on top of about 8,500 they have already released so far this year.

This will result in an estimated total of between 12,000 and 14,000 new units this year.

And the supply of available building land shows no sign of drying up: 31 residential sites will be up for grabs from the Government Land Sales (GLS) programme in the second half of this year.

In the years ahead, new residential enclaves are predicted to emerge with the completion of the Circle Line, boosting once sleepy areas such as Paya Lebar, Mountbatten and Dakota.

Up, up and away

Analysts say that despite the uncertainty triggered by eurozone sovereign debt issues, overall buying interest here remains positive – especially in mass-market and mid-tier projects.

Although the overall upbeat sentiment has dipped slightly of late, with lower volume and slower price increases, the residential market looks set to remain largely strong given the strength of the economic rebound.

The Government forecasts a stunning 13 to 15 per cent growth in gross domestic product (GDP) this year, up sharply from an earlier prediction of 7 to 9 per cent, due mainly to the huge recent surge in manufacturing.

DTZ South-east Asia research head Chua Chor Hoon is upbeat about the market. ‘There is still buying interest and more new developments are being planned for launch in the coming months. If they are well taken up, that would motivate more developers to launch other projects and stimulate more buyer interest,’ she said.

Knight Frank manager of consultancy and research Ong Kah Seng is slightly more cautious about prospects, but still thinks the outlook is good.

‘Buyers are likely to rethink about rushing into home purchases and adopt a wait-and-see attitude… However, although sales will moderate, it is still reflective of a healthy residential market.’

Against this broadly bullish backdrop, prices have continued to climb ever higher.

Official estimates show they rose a higher-than-expected 5.2 per cent in the second quarter of this year after a 5.6 per cent jump in the first.

Prices are now 1.5 per cent above their peak in the second quarter of 1996.

And property experts are pencilling in price increases for the full year of between 12 per cent and 20 per cent, with the average estimate at about 15 per cent.

CB Richard Ellis (CBRE) residential director Joseph Tan thinks that because economic fundamentals ‘are still intact’, home prices will increase slightly in the second half of the year.

‘Projects which are well located and are close to main transport nodes could still enjoy a slight premium,’ he added.

Prime pickings

With developers looking to make the most of this positive market, Knight Frank is anticipating another 17 major launches (of at least 50 units each) within the next six months – a total of 4,056 apartments added to the market.

Upscale residences in districts 9, 10 and 11 are likely to make up almost half of these major launches, but a surge of mid and mass-market developments is slated from next year onwards as GLS land sites situated mainly outside the central regions are released, Mr Ong said.

CBRE notes that 38 apartment launches – inclusive of small to mid-size projects – are likely within the next six months.

Of these, 22 are located in the core central region, 10 in the rest of the central region and six outside the central region – allowing home buyers to cherry pick according to their budgets.

They range from Allgreen Properties’ prime 360-unit Skysuites @ Anson in Enggor Street to the mass market 408-unit executive condominium project in Yishun Avenue 10 by MCC Land.

In addition, experts say that prime developments are beginning to appear in numbers on the horizon as developers scent rising prices.

Mr Colin Tan, research and consultancy director of Chesterton Suntec International, said developers may have held back many of their high-end launch-ready projects, some of which were prime freehold sites from the ‘en bloc’ fever three years ago.

‘Some developers may have decided that high-end prices may take even longer to reach their desired levels. Given that there are still risks ahead, they may decide to make the best of an uncertain situation and launch within the next few weeks and months,’ he added.

A buyer’s spread

With 15 residential sites sold through the GLS programme in the first half of this year (four of which were executive condominiums) – and more than double that number planned for the second half – the property pipeline shows no sign of drying up.

Mass and mid-market homes are likely to be launched on these sites in areas such as Simei Street 3 and Hougang Avenue 2 as the Government attempts to dampen demand.

The plots are certainly being snapped up by developers eager to replenish their land banks and willing to pay top dollar for well-located plots.

A 99-year leasehold residential site at Simei Street was released for tender in March received a total of 18 bids, with the top bid at $152.7 million or $523 psf per plot ratio (ppr) coming from developer Chip Eng Seng. This was well above market expectations of between $300 and $400 psf ppr.

UOB Kay Hian property analyst Vikrant Pandey estimates the break-even price for the site to be in the range of $800 to $850 psf and, assuming a 15 per cent development margin, the average selling price to upwards of $970 psf.

‘Resale prices for the secondary market projects in the vicinity are in the range of $600 to $800 psf. The top bid is quite aggressive, factoring in a 20 to 30 per cent future price appreciation in the region,’ he said.

Similarly, the hotly contested tender of a choice residential plot in Boon Lay Way next to Lakeside MRT station attracted a whopping 14 bids in May, with Keppel Land (Mayfair) putting in the top bid of $499 psf ppr, or $302.98 million.

Property experts estimate the break-even level for units on the site will be $800 to $850 psf, with an eventual selling price of about $950 psf – which factors in a 10 to 20 per cent future rise in prices within the next year.

DTZ’s Ms Chua said that developers were already inching up prices at new projects, with many recent launches being priced higher than neighbouring projects.

However, the bumper release of 31 residential sites by the GLS programme in the second half of this year could dampen some of the exuberance in the market, moderating mass market prices.

There are 18 residential or residential/commercial sites on the programme for confirmed sale, with another 13 sites for residential use put on the reserve list.

The plots – which include 20 that are new and not rolled over – could accommodate 13,905 new homes and are anticipated for launch next year.

They are located in areas such as Jurong West and Pasir Ris but also in mass-market areas like Hougang and Tampines.

The sites commanding the most attention are, predictably, those with the best locations and amenities.

CBRE’s Mr Tan said sites with better amenities and close to MRT stations will generally attract more interest from developers. And mixed-use sites located at the town centre of HDB estates are likely to be vied for.

One of the most attractive sites is the land parcel at the junction of Woodland Avenue 1 and Woodgrove Avenue, he said, which is located within the American expatriate enclave and close to the Singapore American School.

Mr Tan pointed out that condominiums and landed homes in the nearby Woodgrove Estate were enjoying strong rentals, and the last condominium project launched in this location – Rosewood Suites in November 2008 – was fully sold.

Elsewhere, the commercial- cum-residential site in New Upper Changi Road and Bedok North Drive is expected to attract strong bidding, given that it will be the first comprehensive development in Bedok New Town and comprise a retail mall, residential units and a bus interchange.

Knight Frank’s Mr Ong added that close proximity to existing and upcoming MRT sites could well drive prices higher at a number of new plots.

These include the Alexandra Road site, the Tanah Merah Kechil site – near existing condos East Meadows and Optima@Tanah Merah – and the Petir site next to City Developments’ recently launched 429-unit Tree House.

Chesterton’s Mr Tan said: ‘The fact that there are still en bloc transactions taking place – most of which are in the suburbs – indicates that developers will still bid for land.’

However, with economists predicting a slowdown in growth in the second half of this year due to concerns over the European debt crisis and the bumper supply of land released, some analysts are less bullish.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that with an average of three tenders a month, developers were both limited in their budget and manpower resources.

‘We might see the level of interest in GLS sites drop towards the end of this year… If signs of economic uncertainty re-emerge and if companies start putting their expansion plans on the backburner, developers might start bidding more cautiously,’ he said.

Source: Sunday Times, 18 Jul 2010

New ‘hot’ residential districts coming up

Non-traditional prime areas have emerged as the property boom spreads to the suburbs

For years, Districts 9, 10 and 11 – covering Orchard, Holland, Newton and Bukit Timah – have been the must-have residential areas in Singapore.

But as the recent property boom spreads to the suburbs, a number of newly popular districts have emerged outside these traditional prime areas.

Developers with a keen eye snapped up land around city-fringe locations and suburban MRT stations, and have been launching projects in these areas over the last few months to great demand.

Some of these new sizzling spots may come as no surprise. District 2, for instance, comprises mainly the Tanjong Pagar area around the Central Business District, which is evolving into an inner-city residential hub. Recent launches such as City Developments’ 76 Shenton and Far East Organization’s Altez have been well-received.

Slightly farther from the city is District 14, where Waterbank @ Dakota and Casa Aerata have been sell-outs, and Dakota Residences is 95 per cent sold.

Property consultants say the opening of the two integrated resorts this year has boosted the popularity of these more centrally located areas.

Mr Joseph Tan, executive director for residential services at real estate consultancy CB Richard Ellis, said: ‘Not only do they attract people who bought for their own use, they also attract a good number of property investors with a view to future price appreciation or rental income.’

Ms Tay Huey Ying, director of research and advisory at Colliers International, explained: ‘District 2 has grown in popularity since 2006 and 2007 when the development of the two integrated resorts and Marina Bay Financial Centre popularised inner-city living.’

She added that homes there have remained popular since then, although sales have slowed, owing to their relatively high price tags, and especially with investors turning more cautious following the global financial crisis.

But there are also other ‘hot’ districts that may be less obvious, including District 5 in the West Coast and District 16 in Upper East Coast.

In District 5, recent launches such as Hundred Trees and The Vision were 95 per cent sold within three months, and Parc Imperial was 100 per cent sold, according to data from DTZ Debenham Tie Leung. Over in District 16, Optima @ Tanah Merah sold out in just three days.

These areas have drawn interest because of their proximity to current or future MRT stations, good local schools and international schools, said Mr Tan. Buyers of homes in the area are mostly locals – HDB upgraders and private homeowners – and also permanent residents settling down here.

‘These properties tend to be more affordably priced than those situated in the city or at the city fringe,’ he said.

Ms Chua Chor Hoon, head of South-east Asia research at DTZ Debenham Tie Leung, said in general, there are more ‘hot’ areas in Singapore now than in the past because of two main reasons: collective sales of estates in older areas and deliberate government policies to decentralise office hubs.

With more people, including expats, working outside the CBD, there is higher demand for rental homes – and hence more potential for property investors – in other parts of the island now, she said.

CBRE’s Mr Tan agreed: ‘With new initiatives to chart the progress of the country, future growth areas like Marina Bay, Jurong East, Kallang Riverside and Punggol Waterfront town are becoming more and more attractive because there is still room to encompass new ideas.’

It helps that the Government is constructing more MRT lines, consultants said. ‘The MRT network is reaching more areas of Singapore, making outlying places more accessible and desirable,’ said Ms Chua.

In the years to come, Ms Tay believes new emerging districts would include those with newly opened or soon-to-be-constructed MRT lines, as well as districts within growth areas designated by the Government.

These could include District 22 in Jurong and Boon Lay, which could benefit from the Government’s plan to develop the Jurong Lake District, and District 23 – Bukit Batok and Hillview – which would get a double boost from the construction of the MRT’s Downtown Line stage 2 as well as the spillover effects of the development of the Jurong Lake District.

Still, property consultants maintain that the traditional prime residential districts of 9, 10 and 11 will always retain their charm.

‘The exclusivity and prestige attached to certain addresses cannot be fully replicated in the new growth areas,’ concluded Mr Tan.

Source: Sunday Times, 18 Jul 2010

Brisk sales continue at new launches

Sales picking up after quiet June with World Cup, school holidays

SALES have stayed fairly hot at a new condominium in Bukit Timah with 114 flats in the 172-unit estate now sold in just over a week, including 24 of the 30 pricey penthouses.

Ten apartments were snapped up at the official launch of the Terrene yesterday following the 104 that have been sold since a private preview started on July 8, UOL Group said.

The 999-year leasehold condo in Jalan Jurong Kechil is priced at an average of $1,250 per sq ft (psf) for a typical unit, with a one-bedroom flat starting from $719,000.

The penthouses are priced from $1.7 million for a three-bedroom unit to $2.79 million for a five-bedder.

Terrene is a 50-50 joint venture between UOL and La Salle Asia Investment Management.

The newly released 368 Thomson has also done well.

City Developments (CDL) said yesterday that it has sold more than 90 per cent of the 157-unit freehold condo in Thomson Road since it started a private preview on July 8.

The Straits Times understands that 144 units have been sold, leaving a balance of 13 units.

Last Friday, CDL announced that it had sold 96 out of 120 launched units. Prices were about $1,350 psf, or from $918,000 for a one-plus-study unit to $4.4 million for a five-bedroom penthouse.

Since then, the developer has released more units with prices 2 to 3 per cent higher.

The market for new private homes quietened last month with buyers distracted by the euro zone debt crisis, school holidays and the World Cup. A certain amount of price resistance had also set in.

But this month will be a slightly busier month, say property consultants.

Hong Leong Holdings said in a statement yesterday that it will launch the 99-year leasehold The Scala at the end of this month.

The Scala, which is in Serangoon Avenue 3 and near the Circle Line's Lorong Chuan MRT station, will have 468 units. It has one- to four-bedroom units ranging from 474 sq ft to 2,142 sq ft.

Hong Leong said the condo will have seven pavilions, each designed to give residents a different interactive experience. One will be an Italian pavilion with a wood-fired oven for residents to make their own pizzas.

More property launches can certainly be expected from September, after the traditionally quiet Hungry Ghost Month, experts say.

CDL said its 642-unit, joint venture condo in Pasir Ris will be released in the third quarter.

Source: Straits Times, 17 Jul 2010