Property News!

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Oct 22, 2008
Property sub-sales net $95m profits
Third-quarter showing still strong but market will soften soon: Experts
By Fiona Chan
PRIVATE home prices may have slid in the third quarter but the sub-sale market was still going strong.
Ninety-six per cent of owners who resold an uncompleted home between July and last month pocketed profits from the deals, according to new data by property consultancy Savills Singapore.

These transactions, officially known as sub-sales, occur when you buy a home and resell it before it is built. They are used as a proxy for property speculation because the owner resells the home without ever living in it.

Only 12 sub-sale transactions out of the 306 that Savills analysed in the quarter incurred a loss, amounting to just under $1 million of red ink. The rest made a total of $95.1 million in gains, Savills said.

This continues the trend in the first half of the year, when 97 per cent of such deals turned in profits. But the profits seen in the third quarter were considerably narrower as home prices started softening more quickly.

Profitable sub-sellers made an average of $323,420 in the third quarter, but this was skewed upwards by a single large deal: a whopping $6.7 million profit from the sale of a 63rd-storey penthouse at The Sail @ Marina Bay.

Excluding this sale, the average gain was $301,784 - almost 40 per cent lower than the average gain in the first half of the year. It works out to an average profit for each seller of about 30 per cent over the purchase price.

Still, 'to be able to achieve such gains in a year when the property market has gone into a standstill is highly commendable', said Mr Ku Swee Yong, director of business development and marketing at Savills Singapore.

But in case would-be speculators become tempted by these gains, other consultants noted that the bulk of these deals probably occurred before the Sept 14 collapse of United States investment bank Lehman Brothers, which caused the financial crisis to take a sudden turn for the worse.

'The real estate market typically lags behind the stock market by six months or more, so we will probably start to see the real effect early next year,' said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

'These profitable sub-sale transactions took place before the market hit the skids. It is extremely risky to go and speculate in the market right now.'

Most sellers who made a profit in the third quarter had originally bought their units in the last two years and benefited from the sharp run-up in prices in the period, said Mr Ku. While values have weakened somewhat this year, they are still generally higher than in 2006.

Sellers who held on to their units for a longer time before reselling them in the third quarter made more gains, Savills' data showed. Even those who had bought a unit as late as this year and offloaded it in the third quarter made an average gain of $98,600.

If they had sold the unit in the first half of the year, however, they would probably have doubled their gain.

The biggest profits of more than $1 million each were for units at The Sail @ Marina Bay, St Regis Residences and Cairnhill Residences.

On the flip side, sub-sale losses for the quarter averaged $76,820 for each loss-making deal. A unit at Watermark Robertson Quay chalked up the biggest loss of $207,552, while units at Soleil @ Sinaran, 8 @ Mt Sophia and One Amber were also sold at losses of more than $100,000 each.

All the losses were for units that had been bought last year or this year, according to Savills' data. Sub-sellers who had bought their units at the peak of property fever, between June and September last year, bled the most.

'In any case, there are always desperate sale cases even during good times,' Mr Ku noted.

The Sail @ Marina Bay had the largest number of sub-sales in the quarter - 19 - with each deal netting its seller an average profit of $1.1 million. There was one loss, of $62,890, for a second-floor unit.

Other projects with more than 10 sub-sales included Parc Emily in Dhoby Ghaut, Park Infinia at Wee Nam, Riveredge in Tanjong Rhu and The Esta in Marine Parade.

But the profits were not just confined to developments in the prime districts.

At Casa Merah in Tanah Merah, 10 sub-sales yielded an average profit of $100,351, while Atrium Residences in Geylang saw four sub-sales with an average gain of $54,556.

 

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Oct 22, 2008
Construction sector in for tough times
Industry hopes the Govt will resume deferred public-sector projects
By Joyce Teo
THE construction sector will not escape the global financial turmoil but the Government will help cushion an anticipated fall in demand, said National Development Minister Mah Bow Tan last night.
'Accordingly, we must all be prepared to face some tough and challenging times ahead,' he told an industry gathering.

'Fortunately, we have had a good run so the momentum is sustaining us one year and, if we are lucky, another year.'

Domestic construction demand is estimated at $30 billion this year, but it is expected to fall, he said.

The global crisis has not caused any disruption or slowdown so far and progress payments of projects have remained prompt and stable.

'But we still need to be watchful because the situation is very fluid and can deteriorate as the financial crisis feeds into the real economy over the next few months and quarters,' warned Mr Mah, who was speaking at the Singapore Contractors Association's annual dinner.

The financial meltdown overseas has brought rapid changes to the once red-hot construction sector.

While there remains a lack of capacity, raw material prices have already started to come down, said industry experts.

Mr Jon Button, director of Gammon Construction, said: 'There'll be a levelling off of demand for the next couple of years. Quite a few (private-sector) projects are already deferred.'

He added that contractors continued to tender for work.

Association president Desmond Hill told the gathering that they hope to see the Government bring back deferred projects by next year or in 2010 as existing jobs will be coming to completion.

Mr Mah said in his speech the Government is prepared to consider suggestions that it resume deferred public projects.

'It is something that we are in a position to consider and will certainly do so, should the need arise. However, we must consider the timing carefully,' he said.

The Government has since last November deferred $4.7 billion worth of public- sector construction projects to ease the pressure on building costs.

Mr Mah said the Government will monitor the situation closely, taking into account construction demand, contracts awarded and cost trends.

Injecting some of the deferred projects back into the market now, when the availability of skilled manpower, equipment and other resources is still 'pretty tight', will not help, he said. 'It will only drive already high construction costs up.'

But there was a brighter note from Mr Mah: 'Look beyond the gloom...and see whether the slowdown presents an opportunity for the industry to consolidate and strengthen its capabilities after recent years of strong growth.'

The industry, he said, must start preparing to tackle the increasingly challenging business environment, as well as exploit future opportunities and 'continue to stay relevant and remain sustainable'.

 

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Oct 22, 2008
'Low' bid for Mohamed Sultan office site rejected
A SOLITARY bid for a transitional office site in Mohamed Sultan Road that came in way below market expectations has been rejected by the Urban Redevelopment Authority (URA) as 'too low'.
Local firm RSP Architects Planners & Engineers had offered $4.65 million - the only bid for the 6,176 sq m site, which has a 15-year lease and is aimed at easing the office supply squeeze here.

At just $46.67 per sq ft of gross floor area, the bid fell far short of market expectations of $10 million to $18 million.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, had last week anticipated that the URA was likely to reject the bid as it was very conservative. This is not the first time a transitional office site bid has been rejected. The URA earlier this year rejected the only bid - of $7.8 million or $38.35 per sq ft of gross floor area - for a transitional office site in Aljunied Road for the same reason.

The Mohamed Sultan Road tender, which closed last week, was launched in mid-August, when sentiment in the office market was already relatively subdued in the light of the global financial crisis.

Property consultants expect to see little interest in transitional sites from here on because a large supply of office space will hit the market in 2010.

But the site was tendered out nevertheless because it was one of three commercial plots on the Government's confirmed list of sites for sale in the second half of this year.

Confirmed list sites go up for tender on scheduled dates, regardless of developer interest. Another transitional office site - in Mountbatten Road - on the confirmed list was launched last month with the tender to close on Nov 18.

Whether the URA will put out more transitional sites in the future will depend on the response to the recent tenders.

A URA spokesman said yesterday that the Government will consider that and the demand for transitional office sites as part of the process of planning the next land sales programme.

As business costs will continue to be a problem, particularly given the financial crisis, the Government may decide that there is still a need for transitional office sites, said Cushman & Wakefield's managing director, Mr Donald Han.

'Such sites are a quick fix to rental problems and there are still bidders...But I would expect it to put it out at a less aggressive pace from now. It may also be tendering more central sites.'

 

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Oct 22, 2008
BULLS AND BEARS
Property and bank stocks hit by sell-off
Morning rally fizzles out as analysts' downgrades dampen sentiment
By By Yang Huiwen
THE display of exuberance by a briefly optimistic local market lasted little more than a day.
Singapore, like most Asian markets, started yesterday's trading day positively after a 4.67per cent surge in the Dow Jones Industrial Average overnight.

United States investors were buoyed by comments from Federal Reserve chairman Ben Bernanke that suggested a possible second fiscal stimulus package.

The benchmark Straits Times Index (STI) gained as much as 86 points in morning trade, but reversed gear in the afternoon, mirroring movements in the Hong Kong market.

The Hang Seng Index closed 1.84per cent lower, weighed down by a plunge in Citic Pacific, the Hong Kong arm of China's biggest investment company.

Locally, sentiment was fragile and the nascent rally was snuffed out quickly, dampened by analysts' downgrades on banks and property developers.

The STI ended the day 18.43 points, or 0.95per cent, lower at 1,920.79.

Banks bore the brunt of the sell-off, shaving a combined 16.24 points off the index after Morgan Stanley slashed their target prices with 'underweight' calls on all three local banks.

The US banking giant said fundamentals may deteriorate further amid the recession and the slump in the property sector. It added that it was 'too early to bottom-feed on the Singapore banks'.

OCBC slumped 20 cents to $6.18, DBS dropped 40 cents to $12.64 while UOB lost 28 cents to $15.32.

Property developers also lost ground after Deutsche Bank slashed their target prices by more than half.

City Developments lost 23 cents to $7.05 after the brokerage downgraded the stock to a 'hold' and lowered its target price to $7.15. CapitaLand fell seven cents to $3.06 after it slashed the firm's target price to $2.33 from $5.90.

'The market is likely to remain volatile going forward as more negative news is expected from economic releases as well as corporate earnings surprises,' said Westcomb Financial research head Goh Mou Lih in a report. 'Traders may want to take some profit and wait for better buying opportunities.'

Foreign funds continued to trickle out of the local market. In the week ended Oct15, US$32.1million (S$47.5million) was pulled out of Singapore equities. Over the past four weeks, the total withdrawals amounted to US$136.5million, according to data from EFPFR Global.

Trading volume on the local bourse yesterday was 1.2billion shares worth $1.1billion.

Citigroup strategist Chua Hak Bin noted that, according to past records, bear markets amid recessions typically retrace about 76per cent to 100per cent of bull market gains.

'This bear market has retraced only about 73per cent of the bull market rally which started at 1,170 in March 2003,' he said. 'Negative macro news and earnings disappointments will drag the STI lower as the recession deepens and broadens.'

Second-liners were mixed. The FTSE ST China Index slipped 1per cent, while the FTSE ST Mid Cap Index and FTSE ST Small Cap Index inched up 0.6 and 0.1per cent respectively.

 

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Oct 31, 2008
High Court wants STB to hear Regent Court sale appeal
THE Regent Court collective sale may yet happen: the High Court has thrown the case back to the Strata Titles Board (STB) to continue its hearing for the sale application.
The STB threw out the sale late last year but yesterday, Justice Judith Prakash upheld the sale committee's appeal against that decision.

It has been more than a year since the collective sale deal for the Serangoon Road estate was struck. The collective sale frenzy last year has since died, with a significant deterioration in sentiment in the real estate market.

Regent Development agreed to buy Regent Court in April last year for $34 million. There were several objectors, with one claiming a financial loss of $93,935.75.

Last December, the STB threw out the estate's sale application. It agreed that the objector had suffered financial loss, meaning that the sale proceeds would not cover his initial purchase price.

The sale committee, which wanted the sale to go through, appealed against the decision. It contended that the estate purchaser Regent Development had given an undertaking that it would top up the difference of $93,935.75 once the sale went through, ensuring that the objector would not suffer a loss.

But the STB did not consider this payment and took into account only the objector's purchase price and the sale price.

The case was heard only recently as disgruntled owners had wanted to disband the sale committee.

That move failed and the appeal went ahead. Justice Prakash did not give reasons for her decision yesterday. Drew and Napier represented the sale committee.

JOYCE TEO

 

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Oct 31, 2008
New Orchard mall 60% leased ahead of opening
Orchard Central and other upcoming malls to offer retail space even as economy slows down
By Joyce Teo
ORCHARD Central, the first of three new malls springing up in Orchard Road, is already 60 per cent leased five months ahead of its opening - despite the murky outlook for the economy, including retail spending.
Retail sales have started to slow, albeit slightly, just as Singapore's premier shopping belt is set to boast three new, quality malls.

Lend Lease is building 313@Somerset next door while CapitaLand and Hong Kong's Sun Hung Kai are building Ion Orchard on top of Orchard MRT station.

It has been a decade since a mall was built from scratch in Orchard Road, said Ms Susan Leng, Far East's deputy director, retail management.

Orchard Central, which has 12 floors and two basements, is expected to open in April, ahead of the other two malls.

Far East is working hard to set the mall apart. It aims to open till 11pm daily and its rooftop garden and a covered walkway will be open to the public 24 hours.

The mall even has a four-storey-high rock-climbing wall aimed at attracting its target group of shoppers aged 21 to 35.

Mr T.K. Goh, founder of The Happy People, which is behind the Ben & Jerry's stores in Singapore, will be setting up the mall's biggest food and beverage (F&B) outlet.

His ice-cream parlour-cum-restaurant and bar will take up a whopping 6,000sqft on the eighth floor.

On weekends, he plans to keep his shop open till 3am or 4am.

The mall's new F&B tenants also include a restaurant brand from Shanxi, China, and a Japanese brand.

Rents at the mall, said Ms Leng, remain in the range of $20 to $70 per sq ft, though they may soften a little going forward, depending on the type of tenants and space taken.

Data from the Urban Redevelopment Authority shows that shop rents dipped 0.6 per cent islandwide in the third quarter, reversing growth of 5.2 per cent in the second quarter.

Retail sales volume fell 1.5 per cent year-on-year from June to August, due to cautious local spending and lower demand from tourists, the Monetary Authority of Singapore said in its latest macroeconomic review. It added that retailers could see slower business towards Christmas and into next year.

'Retail sales have slowed but not significantly yet. But there are forward concerns among tenants. It's a confidence issue,' said an industry source.

Knight Frank's deputy managing director, Mr Danny Yeo, said Orchard Central and Ion Orchard started marketing their space from mid- to late last year so they are doing relatively well given current market conditions.

'Those that started marketing recently and are about to ramp up marketing efforts will face more challenging times.'

Specialists' Centre, Meritus Mandarin Hotel and 313@Somerset are among those with new space available on Orchard.

'Landlords are still holding out. The real test will come after seasonal sales, after the Chinese New Year period. Tenants will try as much as possible to drum up sales now,' said another industry source.

 

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Rental rates for mid-range retail space likely to fall
Date : 03 November 2008 2106 hrs

SINGAPORE: Mid-range retail spaces in Singapore are likely to see a fall in rental rates, due to a drop in tourist arrivals and slowing domestic spending.

Properties which are having rental rates renegotiated in the midst of the current economic downturn are likely to be the most vulnerable. Experts said landlords will have to rent out their spaces for less as retailers are hit by lower earnings.

Eugene Lim, associate director, ERA Asia Pacific, said: "For the whole of this year, we will probably see a 5 per cent increase for the retail sector in terms of rent. Next year, quite possibly, we will see less increases and the market will probably be flat for coming quarters."

But rents for high-end properties in prime shopping belts like Orchard Road, as well as low-end suburban mall space, are expected to be more resilient.

High-end tenants, such as luxury goods boutiques, would resist giving up top locations and are likely to be willing to pay more. Tenants in lower-end properties traditionally sell basic necessities which are still in demand, despite the economic slowdown.

Suburban malls also face the least pressure from new retail space supply next year. Only 20 per cent of the new retail space is in suburban locations. The remaining 80 per cent is located in the city centre.

 

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MND's move to cut land sales will not derail rejuvenation plans

Date : 03 November 2008 2224 hrs


SINGAPORE: The Singapore Government's move to cut the number of land sites it is putting up for sale will affect plans to redevelop certain parts of the country.

But analysts say it will not slow efforts to rejuvenate the overall landscape as there are many other projects underway.

In fact, the move was praised as a prudent one, given the difficult economic environment.

Last Friday, the Ministry of National Development said no sites will be released under the confirmed list in the first half of next year.

It also cut down the sites for sale in 2008 from seven to just one. Five sites were moved to a reserve list, while one was taken off entirely.

"In view of the current market, even if tenders were to carry on, market forces will result in either no bids or bids being received at not acceptable levels," said the director of research and advisory at Colliers International, Tan Huey Ying.

CEO and regional economist of CIMB-GK Research, Song Seng Wun, said: "In the current environment where there is a crunch as far as global credit is concerned, and a downside of global growth, from the government's standpoint, it doesn't make sense to proceed with selling valuable assets when they may receive less than they normally do in an upcycle."

The cutback may also help to prevent a potential supply glut and help keep property prices firm.

The last time the government cut back on land sales was exactly seven years ago - a month after the September 11 terror attack in the United States.

The global economy was then facing uncertainty and volatility similar to the current environment.

But the move means that plans to develop areas such as the Ophir-Rochor Corridor will be interrupted.

The Ophir-Rochor site was one of those removed from the confirmed list.

The development of this site would have doubled the size of Singapore's financial district to match that of Hong Kong's, at about 2.82 million square metres of office space.

But observers say this will not have a major impact on Singapore's overall development.

Tan said: "I think Singapore's progress of a nation is in no way pivotal on the development on these sites being taken off right now. Singapore also has a lot underway in terms of physical makeover.

“For example, we already have the two IRs, the Marina Bay Financial Centre, the three retail malls in Orchard Road and a host of other luxurious residential developments coming on… (at) Sentosa Cove, Marina Bay, Orchard Road. Singapore's competitive edge will in no way, be compromised by the slight delay in the development of these projects.”

 

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Nov 11, 2008
Fewer cluster homes: Well done, URA
I REFER to last Wednesday's article, 'Fewer cluster homes may be built', and applaud the Urban Redevelopment Authority (URA) for finally realising the problems cluster homes cause to landed residential estates.
I live in an intermediate terrace house in the central area and my small estate is accessible only by a single two-lane, two-way road. When we moved in 10 years ago, it was a pleasant estate comprising only 34 units of mixed housing with terrace houses, semi-detached houses and bungalows. Children used to play badminton and cycle along the road as traffic was minimal.

About three years ago, two adjoining bungalows were sold to a developer which subsequently built 11 units of five-storey cluster terrace housing on the 8,000 to 9,000 sq ft plot.

Subsequently, another two adjoining bungalows were acquired and the developer is building eight units of four-storey cluster bungalows. What was four units is now 19, nearly five times the number.

The whole landscape of this quiet small estate has changed, and houses now look so congested. Moreover, parking is bound to become a problem, especially during holidays and festivals, as these cluster developments do not provide parking for visitors, unlike condominiums with designated visitor car parking. Hence, visitors park along this two-lane, two-way road, making it difficult for residents to park their own cars in their own homes. It is also now dangerous for children to have some fun due to the increased traffic.

The URA should implement these rules with immediate effect. It should also re-examine all ongoing cluster housing developments to see if their plans can be changed to prevent future problems. I am sure residents in these landed estates will welcome any alleviation of problems that are bound to arise when topping out of these homes comes round.

Dr Francis Oen

 

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Nov 14, 2008
Condo launch goes ahead despite gloom
Developer to roll out Woodlands project on back of solid soft launch
By Joyce Teo
A DEVELOPER is rolling out a rare condominium launch in Woodlands this weekend - optimistic that lower-than-planned prices will draw buyers, despite the gloomy market conditions.
EL Development is launching the 99-year leasehold, 200-unit Rosewood Suites at $580 per sq ft (psf) on average.

The developer held a sneak preview to test the market a fortnight ago and then a soft launch last weekend, when it sold half of the 60 units launched.

Launches have been few and far between in recent months as most developers continue to hold off, given the volatile markets and poor sentiment.

'We tested the market...and we were pleasantly surprised that the response was good, so we are going ahead with the launch,' said Mr Lim Yew Soon, managing director of EL Development, a unit of local builder Evan Lim & Co.

'If we had waited till next year, there would be a lot of competition. It's better to have a first-mover advantage.'

Rosewood Suites is a five-storey development with one- to four-bedroom apartments. It is in Rosewood Drive, next to the 99-year, 478-unit Casablanca condominium and opposite Innova Junior College. The popular suburban mall, Causeway Point, and Woodlands MRT station are both within walking distance.

Prices start from $435,000 for a two-bedroom unit and go up to $1.1 million for a four-bedroom ground-floor unit. This works out to $500psf to $660psf.

'Our earlier price expectations were higher. We benchmarked current prices against the prices of older condos in the area,' said Mr Lim. Those who bought at the soft launch received a 2 per cent discount from these price levels, he said.

'It is a fair value in today's market,' said Knight Frank director of research and consultancy Nicholas Mak. 'There has not been a major development launch in the area for a long time so there will be some latent HDB upgrader demand.'

Mr Lim said the buyers were mostly dwellers of nearby flats and condominiums. There are two other condominiums in Rosewood Drive - Casablanca and Rosewood.

At Casablanca, two caveats lodged in September and October showed that two 1,184sqft units were sold at $541psf and $549psf, or $640,000 and $650,000.

Caveats lodged in the same months at the 437-unit Rosewood showed that two 1,173sqft units were sold for $537psf to $550psf, or at $630,000 and $645,000.

Rosewood Suites' penthouses, priced from $700,000 to $1.4 million, will be released only when 'times are better'.

EL Development bought the Rosewood Suites site from the Singapore Land Authority in November last year when prices were strong. It topped a tender that drew eight bidders with a price of $56 million or $232psf per plot ratio.

Mr Lim had then said that they had planned to launch the project in the third quarter of this year, and sell it for about $600 psf to $650 psf.

 

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CDL to shelve South Beach
Economic turmoil and high construction costs cited as reasons
By Joyce Teo
PROPERTY giant City Developments (CDL) and its two joint-venture partners have shelved the $2.5 billion high-profile South Beach project earmarked for a hotly contested site in Beach Road.
The consortium cited 'the economic turmoil and the high construction cost environment that Singapore is currently experiencing' as reasons for the move. It will delay the project until building costs fall to 'reasonable levels'.

The project was launched with much fanfare when CDL and its partners Istithmar - it is part of the Dubai World Group - and El-Ad Group clinched the 3.5-ha site with a $1.69 billion bid.

CDL said then that South Beach would elevate Singapore's unique branding as a global city. Designed by renowned British architects Foster & Partners, the project features two towers of up to 45 storeys, plus the restored conserved military buildings of the old Beach Road Camp. It will have premium office space, two hotels, shops and city residences.

In August, CDL executive chairman Kwek Leng Beng said the company already had people knocking on its doors, keen to buy one block or one hotel.

CDL said earlier that it expected to complete the 99-year leasehold project by 2012, though it had until 2016 to finish it.

The news came on a bleak day for CDL, which reported an 11 per cent fall in third-quarter net profit to $150.8 million and a 13.6 per cent decline in revenue to $688.2 million.

Prices and demand have fallen, although in the three months to Sept 30 it sold 'more than 330 units' of The Livia in Pasir Ris, which has 724 units.

Demand and rental expectations in the office market were also hit by the financial crisis, the group said.

While its 53 per cent subsidiary Millennium & Copthorne Hotels delivered credible results, its contribution to CDL's revenue and pre-tax profit fell due to the sterling's weakening against the Singdollar.

The property development business remains the biggest earnings contributor but its third-quarter profit before tax fell from $147 million to $91.1 million.

Hotel operations accounted for $70.47 million of third quarter profit before tax, down from $79.5 million. Rental properties contributed $74.3 million, up from $17.8 million.

CDL is holding back the launch of new residential projects due to the economic uncertainty, but it is proceeding with construction of The Arte at Thomson and The Quayside Collection at Sentosa Cove.

Both sites were secured at relatively low land and construction costs, it said.

CDL said its exposure to potential defaults was under control as it did not sell too many units under the deferred payment scheme and did not extend this scheme to sub-sales.

It said its investment properties would still benefit even if renewed rentals were moderated as they would still be far higher than the previous low rates. The firm added that its hotel business had never operated at a loss since it went public in 1996.

Earnings per share dipped 10.8 per cent in the third quarter to 16.6 cents. Net asset value per share reached $5.93, up from $5.72 at the end of last year.

Its gearing is at 46 per cent, with interest cover at 11.7 times.

CDL said it expected all core business segments to remain profitable over the next 12 months.

The shares closed 12 cents down at $6.09 yesterday.

 

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Nov 17, 2008
Oct private home sales dip
By Joyce Teo
PRIVATE homes sales in October hit just 112 units, down from 376 in September, according to data released by the Urban Redevelopment Authority (URA) on Monday.

Developers launched 159 units in the month, down from 767 units in September.

The dismal figures were a result of very weak sentiment in light of the global financial crisis.

Last month's sales figures were even lower than February, when the 170 units sold were the lowest level registered since the URA started releasing monthly data in June last year.

In the first three quarters of the year, sales of private homes were at 3,890 units.

During the market boom last year, sales of such homes reached 14,811 units.

 

[charlezz]

Great Effort! Thanks!

 

[jq75]

Nov 27, 2008
Mah sees softening of property prices
Future movements will depend on how industry adjusts to conditions
By Michelle Tay
PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.
Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'.

Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.

He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.

Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.

'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.

Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.

Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.

Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.

Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'

But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.

Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'

But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.

'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'

michtay@sph.com.sg

ON GUARD

'We cannot work against market forces and try to prop up property prices artificially...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'

Minister Mah Bow Tan

 

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Dec 5, 2008
Government offers fewer land sales sites
The move will help ease fears of a supply glut next year
By Joyce Teo
NO NEW sites have been added to the Government's land sales programme for the first half of next year, an anticipated move designed to tame fears of a supply glut in an already weak market.

Only sites on the reserve list will be up for sale, and almost all of these are carried over from this year. The amount of commercial space will also be reduced.

'The global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore's economy, including the property market,' said the Ministry of National Development, which releases the sales programme in June and December every year.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the programme announced yesterday reflects government efforts to give the market a chance to adjust to a new supply and demand equilibrium and to lessen the pressure of a glut.

Much of the announcement was flagged in a special statement made on Oct 31, when the Government said it will suspend outright land sales in the first half of next year, leaving only reserve list sites for sale.

It went further yesterday by limiting office space and ruling that no new plots of land will be made available as response to recent tenders was poor, said Mr Mak.

Also, no new supply of private residential units from other government agencies will be made available. It placed about 20 such units on the market in the second half of this year.

Developers prefer reserve list sites as the land goes up for tender only if a minimum bid acceptable to the Government is submitted.

There will be 38 such sites on offer next year, with 37 carried over from the reserve list for the second half of this year. The remaining one is the unsold executive condominium site in Punggol.

That site was from the confirmed list, which meant that it was for outright sale, but there was no demand when it went to market last month.

There are 18 residential sites, 10 for hotels, six commercial plots, three white sites and a commercial/residential site.

The property market has been hit by weak buying interest and a credit crunch. Private home sales are at a standstill as buyers await more price falls.

Developers have also been withholding launches, adding to the stockpile of potential houses, said Mr Mak, who expects 'very few' residential sites to attract buying interest next year.

However, Credo Real Estate managing director Karamjit Singh said supply is not much of a problem as there are still buyers around.

'The problem is buyers' lack of confidence. If the current low sales volume carries into the next year, there is the fear of a deep plunge in prices. The Government should do something soon to stimulate demand,' said Mr Singh.

The Government statement yesterday said that its reserve list system provides 'greater flexibility to the market' to adjust to the economic conditions.

As housing prices are expected to fall further next year, developers may be able to pick up the better-located sites - in Bishan Street 14 and Dakota Crescent - at attractive prices, said CBRE Research executive director Li Hiaw Ho.

'It is likely that most residential activity will be focused on the lower end of the market where prices will be more affordable,' he said, adding that likely launches in the first half of next year include leasehold condos in Boon Lay Way, Elias Road, Simei Street 4 and West Coast Crescent.

The supply of commercial space for the first half of next year has been cut from 143,000 sq m to 40,000 sq m. Transitional office sites have been reduced.

The new land sales programme also offers slightly fewer hotel rooms.

 

[jq75]

Dec 6, 2008
ADVICE TO PROPERTY INVESTORS
Don't buy, don't sell
Sit tight and wait for recession dust to settle, say financial and real estate experts in a survey
By Elizabeth Wilmot
PROPERTY investors here might feel like cutting and running but the best advice is to sit tight and hold on, according to a PricewaterhouseCoopers (PwC) report.
The report, now in its third year, asked about 180 experts from across the region - in fields from real estate to banking and property development - for their strategies on whether to hold their investments, buy more or sell.

Mr Stephen Blank, senior resident fellow of finance at the research firm Urban Land Institute, a co-publisher of the report, described the mood: 'Interviewees say that we are in a wait-and-see mode, and everyone's sitting on the sidelines waiting for the dust to settle.'

About 65 per cent of those polled urged investors in Singapore real estate to hold on to their investments in the hotel sector and in rental apartments.

'Visitor numbers have been slipping, and in 2009, the hotel sector might not perform as well as 2008,' said Mr Nicholas Mak, director of consultancy and research at Knight Frank.

'Nevertheless, the mid-term outlook is still positive due to the many new offerings in the tourism and Meetings, Incentives, Conventions and Exhibitions (Mice) market, which resulted in the relatively high hold calls.'

Other sectors here, namely office, retail and industrial/distribution, each attracted hold recommendations from at least 50 per cent of those surveyed.

This was up on last year, when the hold recommendations varied from 29 per cent in the office sector to 48 per cent in the industrial/distribution sector.

The strongest buy recommendations came from the industrial/distribution sector, with 34.8 per cent of respondents urging investors to plough in more cash.

Mr Colin Tan, director of research and consultancy at Chesterton Suntec International, said: 'The industrial sector is pretty diverse. Pockets of industries are doing well. This will help cushion the decline for the industrial sector.'

But there was a strong recommendation to steer clear of the residential rental sector, with only 11.6 per cent of respondents suggesting that now is the time to buy.

'There are many owners whose units are completing in the coming 12 months. As supply outstrips demand, there will be intense competition, which will drive rents down,' Mr Tan said.

The report also stated that the moment of truth has yet to arrive in the Asia-Pacific, indicating more gloom to come.

'The biggest threat to Singapore, other than the squeeze on credit, is the seemingly generous pipeline of development projects which may be completed during a period of sagging interest from foreign investors,' said Mr David Sandison, tax partner of PwC.

'Apart from this, local players in retail and office space are also seeking to cut costs by downsizing and relocating to more affordable parts of the island.

'Acceleration of government infrastructure projects and other measures aimed at buoying the economy should, however, be sufficient to stabilise the market.'

There was one bright spot in the report: Singapore maintained its second position from last year among 20 Asia-

Pacific cities for investment prospects. Tokyo was first.

 

[jq75]

Property agents say more private homes on sale amid downturn

09 December 2008 1957 hrs


SINGAPORE: Property agents said there's been an eight per cent jump in the number of private homes being put up for sale recently compared to previous two quarters.

HSR Property Consultants said about half of the sellers have bought units under the Deferred Payment Scheme.

The scheme which was scrapped last October allowed homebuyers to delay payments on new property until it is completed.

Eric Cheng, executive director, HSR Property Consultants, said: "They are afraid that the current loans may not sustain the current price which they bought. There's also concern that the banks may not want to loan them at least an 80 per cent loan. So they are afraid they have to top up more cash."

But calculations show that these sellers will still make marginal profits or break even if they cash in on their properties now.

Agents at ERA agree that concerns over the fallout from the Deferred Payment Scheme are legitimate but over-rated.

That's because many investors would have already sold their units when prices peaked towards the end of last year.

Homebuyers are also unlikely to forfeit deposits on new units as they are legally bound to buy them.

However, there is no data available on the number of transactions sealed under the Deferred Payment Scheme.

Agents expect the market to hold up without heading to a fire sale situation where assets go at 20 to 30 per cent below valuation.

Eugene Lim, associate director, ERA Asia Pacific, said: "There are cases of fire sales but they are confined to sellers who generally need to raise cash fast. For example, they may be running a business and run into some cashflow problems."

Despite the negative sentiment, market players said there's still demand for properties especially those that are realistically priced. These are sold at between three and five per cent below market value. - CNA/vm

 

[jq75]

Laguna Park condo looking to get majority vote to push through en bloc sale

11 December 2008 2021 hrs (SST)


SINGAPORE: Laguna Park condominium along Marine Parade Road could be up for collective sale. It's not yet a done deal but about 77 per cent of tenants there have agreed to it.

The sales committee could expect a few more signatures in the coming days to cross the 80 per cent trigger which will move the en bloc process forward.

Laguna Park has already engaged an agent to market the 99-year leasehold property, which has 528 units.

Channel NewsAsia understands the asking price is about S$1.2 billion.

Each owner stands to pocket between S$1.8 million and S$2.1 million if the deal goes through.

It works to about S$633 per square foot of gross floor area.

Nicholas Mak, director, Consultancy and Research, Knight Frank, said: "I think the figure of S$1.2 billion was derived somewhere in 2007 when the en bloc sale market was still very buoyant. In today's market, the owners will probably have to lower their expectation, easily by 20 per cent or so."

The en bloc market has slowed significantly.

Last year, there were 104 successful collective sales transactions. This year, it's just seven and the trend will likely continue next year.

Given the sheer size of the development, the bidder for Laguna Park will likely need several partners to join in as well.

Laguna Park condominium sits on 667,000 square feet of land with a plot ratio of 2.8.

Analysts said that based on the plot ratio and land area of Laguna Park, a developer will be able to build between 1,200 and 1,500 units of new homes there. That could pose a challenge as the developer may have to phase out its marketing efforts over a year incurring a fair amount of cost in the process.

Mr Mak added: "Another challenge facing the en bloc market is actually difficulty in raising financing from the banks because the banks are in a tight situation and they would also be looking at any sort of massive borrowing very conservatively."

Observers said given the quiet market, developers could have little appetite for collective sales.

But some may still grab a good bargain if the price is right. - CNA/vm

 

[jq75]

More than 70% of Park Central @ AMK sold

Date : 11 December 2008 2005 hrs (SST)


SINGAPORE: Mainboard-listed United Engineers has sold more than 70 per cent of its first public housing project, Park Central @ AMK, which is being developed by its subsidiary Greatearth Developments.

All four-bedroom and penthouse units are sold out.

The developer received more than 2,300 applications or four times the number of units available for sale when submissions closed in August.

The 578-unit estate is the third Design, Build and Sell Scheme (DBSS) project in Singapore.

Each unit will come with condominium-style fittings and finishes, including built-in wardrobes, kitchen cabinets and air-conditioning systems.

Construction is expected to begin in the first quarter of next year.

 

[jq75]

Dec 12, 2008
Condo-style losing allure
Falling prices in private home market chipping away at demand for DBSS flats

By Joyce Teo

PRICEY condo-style HDB flats have not been spared in the property downturn, going by what has been left for sale at Park Central @ AMK.
While over 70 per cent of the project's 578 units have been sold, the larger five-room units costing $600,000 to $670,000 each are still available.

These levels put the flats in the same price bracket as older condominiums, which might prompt some potential HDB buyers to turn to the private home market, where prices are falling.

Developer United Engineers announced the figures yesterday, and also said foundation works had begun at the Ang Mo Kio estate, which is being developed under the HDB's design, build and sell scheme (DBSS). Under the scheme, public flats are designed, built and sold by private developers.

Sales at Park Central have been favourable in view of the challenging economic climate, said Mr David Liew, the managing director of the group's integrated facility management and property development business.

Buyers include young couples, retirees and those with proceeds from collective sales, the group said.

The DBSS concept has been quite popular, but some experts fear the fall in private condo prices could leave buyers spoilt for choice.

Price is the key factor in DBSS projects as they are targeted at HDB buyers whose household income must not exceed $8,000 a month.

'It's a price-sensitive sector. These buyers can choose between HDB flats and lower-end condos,' said Associate Professor Sing Tien Foo, the deputy head of the National University of Singapore's real estate department.

'During a downturn, the price gap between these segments will narrow, so demand (at DBSS projects) may be affected,' he noted.

Most DBSS flats are priced at $500,000 to $700,000 each, roughly the level for executive condos, said ERA Asia Pacific associate director Eugene Lim. 'There is already an overlap.'

For a $600,000 unit, the monthly instalment on a 30-year, 80 per cent loan is about $2,000, assuming an interest rate of 2.6 per cent.

When the property market was rising in 2006, DBSS products met the needs of buyers who could not afford private homes.

The first such project, Premiere @ Tampines, was an instant hit, drawing 5,700 applications for 616 homes in late 2006. Although it sold only 500 flats initially, long queues formed when the remaining units were released for sale.

City View @ Boon Keng received 3,500 applications for 714 flats early this year, but only 460 were sold. Nearly 90 per cent of the flats have since been taken up, including all the three-roomers.

Park Central, Singapore's third DBSS project, garnered more than 2,300 applications. Prices average $490 to $500 per sq ft, putting the four-roomers at between $400,000 and $500,000 each.

The fourth DBSS project - Natura Loft in Bishan - saw about 680 applications for 480 flats last month. Its four-room units go for $465,000 to $586,000 each, while its five-roomers cost $600,000 to $739,000.

Once prices go above $600,000, the flats will be competing with old leasehold condos, executive condos and bigger executive flats, said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

Unlike exec condos, which are initially subject to sale restrictions similar to those on public housing units, but become fully private after 10 years, a DBSS unit is just a value-added HDB flat, he said.

Indeed, demand for DBSS flats might be more severely affected than that for other segments as potential buyers have more choices, said Dr Sing.

Nevertheless, Mr Mak feels the DBSS concept is sustainable if the Government accepts lower land prices.

The problem is that most developers of DBSS sites bought them in good times.

There are two DBSS projects slated for launch in the first half of next year: one in Simei and a huge project of nearly 1,200 units in Toa Payoh.