Property News!

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Total sales in Singapore property auction market hit 10-year low

Date : 18 December 2008 2313 hrs (SST)


SINGAPORE: Total sales by value fell to a 10-year low in Singapore's property auction market this year.

According to real estate services group Colliers International, nearly S$84 million worth of properties was sold under the hammer in 2008, down 79 per cent from a year ago.

This is even lower than auction sales of about S$136 million recorded during the last financial crisis in 1998.

Property analysts said the plunge in value reflects cautious sentiment amid worsening economic conditions.

All property sectors saw total sale value dropped with the sharpest decline in the residential sector.

Sales value there fell 88 per cent on year to S$25.23 million.

This is likely due to a slowdown in activity at the high-end residential segment in 2008 and fewer high net worth investors in the market.

The office sector was also badly hit with sale value falling from S$16.22 million in 2007 to S$2.31 million this year.

In contrast, the retail sector performed better. It garnered a total sale value of S$34.57 million.

Property Consultancy Knight Frank said the number of properties put up for auction this year also dipped 35 per cent on year at 852 properties.

Among them, only eight percent were successfully sold.

This was half the success rate seen in 2007.

Still, analysts said distress sales commonly associated with past economic recessions has yet to materialise.

However, they expect mortgagee sale to increase in 2009 as the potential rise in unemployment rate could result in loan defaults and forced sales. - CNA/vm

 

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10,450 private residential units sold under DPS still uncompleted

Date : 19 December 2008 1703 hrs (SST)


SINGAPORE: 10,450 private homes sold under the Deferred Payment Scheme are still uncompleted as of end-November, according to figures released by the Urban Redevelopment Authority for the first time.

The report comes amid concerns that a large number of uncompleted homes bought under the scheme may be sold at distressed prices as the property market softens.

68 per cent of uncompleted homes sold under the Deferred Payment Scheme will be built over the next two years. With falling property prices, there are concerns about whether home buyers have enough cash to complete their purchases.

Despite this, some property analysts said it is unlikely that home buyers will be forced to return their homes to developers.

Nicholas Mak, director, Consultancy and Research, Knight Frank, said: "I don't think it will come to that drastic level where many of them would return their homes to the developers because if a buyer were to return the home to the developers, the developers could firstly sue them for completion of the contract.

"Or, the other thing is that the buyer would actually lose all their deposits, which could be 20 per cent or so."

Under the scheme, selected developers were allowed to offer home buyers the option of deferring the progressive payments due after the initial 10 to 20 per cent down payment.

At the end of November, of the uncompleted units approved for sale under the scheme, 77 per cent or 18,208 units have been sold. Of these, 57 per cent or 10,450 units have not been fully paid for.

4,560 of these units will be completed next year, while another 2,540 will be completed in 2010.

Despite completion of the bulk of properties next year, market watchers said they do not expect home buyers to come under pressure to sell their properties below market value. They said home buyers would still be able to get good returns, despite the weak property market.

Mr Mak said: "Many of these homes were bought in 2005 and 2006 when prices were still relatively low. So the owners would actually have more leeway. If they were to take possession, they can still rent it out at a fairly attractive rate of return."

A total of 72,384 private homes has been allowed for sale under the deferred payment scheme. The scheme was introduced in October 1997 to help the sluggish property market then and was subsequently withdrawn in October 2007. - CNA/vm

 

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Dec 20, 2008
10,450 deferred payment homes weigh on prices
Cash-strapped buyers may sell low if they can't get sufficient loans
By Joyce Teo
PRICES in the the already fragile property market could be battered even more from next year if some of the 10,450 homes bought on deferred payment are dumped by cash-strapped buyers.
The danger is that when final payments are due at completion stage, buyers faced with falling values may just sell at fire-sale levels, putting even more pressure on prices.

And a key reason for buyers to dump units is that in today's tight credit markets, risk-averse banks will demand that buyers put in more of their own cash before they will agree to lending the balance.

Take a flat that was bought for $1 million with a deposit of $100,000. The buyer must provide $900,000 on completion but if prices have fallen too far, the bank will not come to the party with a loan for the full amount.

So the buyer either dips into his own pocket or cuts his losses and sells - likely into a falling market.

The numbers, revealed for the first time by the Urban Redevelopment Authority (URA) yesterday, are sobering.

Two-thirds of the 10,450 uncompleted homes will come on stream in the next two years - 4,560 in 2009 and 2,540 in 2010.

They were sold from 2005 to this year. That includes a period when many properties were being snapped up by eager buyers with little regard for price.

Deferred payment was introduced during the Asian financial crisis to boost the market, but scrapped late last year. It was blamed for encouraging speculation, as buyers could secure a property for little cash down and then flip it for a profit before a brick had been laid.

Down payments are 10 to 20 per cent with the rest deferred until completion a few years down the track.

To make things worse, the URA said that the 10,450 new homes include sub-sale units.

They were likely bought at even higher prices from speculators, who had already flipped the units for a profit.

The figures also show that the homes are spread far and wide - about 4,000 each in the core central and city-fringe areas and the rest in the suburbs.

Analysts say that the real danger lies in the 1,270 prime units in the core central region that will be completed in 2010. These were boom-time buys.

Knight Frank managing director Tan Tiong Cheng said possible defaults will likely come from people who bought at the height of the market last year.

'It is cause for concern but it is not a big problem when you look at it in percentage terms,' he said.

In contrast, projects slated for completion next year were bought in 2005 and 2006 when prices were not that high, so chances of defaults are slim, added Mr Tan.

Prime area projects in Orchard Road, Sentosa Cove and Marina Bay like Marina Bay Residences, One Shenton and The Orchard Residences were known to have lured the speculators.

Some of these projects also attracted consortia, which bought one floor at a time, but yesterday's data did not offer any insight into such buyers.

'This is the 'high-risk' group, particularly as banks have become cautious and demand has fallen,' said Standard Chartered economist Alvin Liew.

Jones Lang LaSalle's South-east Asia research head, Mr Chua Yang Liang, said: 'The 10,450 number seems large but...if buyers can get loans, the problem won't be as severe as some people think.

'But psychologically, buyers may see it as a reason to bring prices down.

Responding to the news, the Real Estate Developers' Association of Singapore said the figures released by the URA underscored the popularity of the scheme.

It maintained that the scheme was beneficial to the market and reminded buyers that although they can sell their units to other buyers on the market, they cannot easily repudiate sales contracts and return the homes they bought to developers.

 

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Dec 20, 2008
BULLS AND BEARS
Property, transport stocks under spotlight
Fresh buying interest in these plays but STI still ends flat
By Alvin Foo
PROPERTY counters and oil-related stocks shared the spotlight yesterday, even as the Singapore bourse finished fairly flat despite slumps in key markets elsewhere.
The Straits Times Index (STI) ended down 3.48 points, or 0.19 per cent, at 1,795.47. Over the week, it gained a respectable 55.13 points, or 3.17 per cent.

A dealer said: 'The lack of foreign fund participation was evident, as the STI did not mirror the movements of Hong Kong's Hang Seng Index or Wall Street's overnight slump.'

This was seen in the modest volume - 983.58 million shares worth $846.83 million. In contrast, the average trading volume last week was 1.13 billion shares worth $997 million.

Wall Street's 2.49 per cent overnight fall made for a weak opening, and the Hang Seng's 2.39 per cent fall looked set to compound the grim mood and drag the STI down further.

These factors, however, were quickly shrugged off by fresh buying interest in property and transport blue chips such as CapitaLand and Singapore Airlines.

CapitaLand and Keppel Land kept up their momentum in the wake of the United States Federal Reserve's rate cut, on hopes that lower borrowing costs would boost property demand.

CapitaLand surged 24 cents to $3.30, while Keppel Land gained 17 cents to $1.79.

This was despite news that 10,450 uncompleted homes had been bought under the deferred payment scheme. Analysts said this could produce a supply overhang in the property market.

The spotlight was also cast on transport stocks, oil rig counters and plantation plays after the price of black gold tumbled to near US$35 a barrel.

Singapore Airlines kept up its climb, adding another 56 cents to $12.16, while ComfortDelGro inched up two cents to $1.43.

In contrast, rig builders Keppel Corp dropped two cents to $4.47, while Sembcorp Marine lost four cents to $1.75. Palm oil giant Wilmar International retreated 23 cents to $2.71.

Index heavyweight SingTel sank 11 cents to $2.56 after it went ex-dividend. It was the biggest drag on the STI, pulling the index down by 11.4 points.

Banks ended mixed, with DBS Group Holdings adding 15 cents to $9.85. United Overseas Bank was unchanged at $13, while OCBC Bank dipped four cents to $5.07.

Nomura has slashed DBS' target price from $13 to $10.90 while keeping its neutral rating.

Overall, Citigroup predicts an Asian-led recovery after the tsunami clears, as regional market momentum will likely steadily increase from the middle of next year.

It said: 'We see the unstable movements persisting through the first half of 2009...But if equities sink further through to February-March or June, we think they will likely strike a medium-term bottom and head towards recovery in the latter half of the year.'

 

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Dec 28, 2008
property
Private home prices fall
Developers offer soft discounts, for example, by absorbing legal fees
By Joyce Teo
Private home prices are falling - and they will fall even more next year.
Property developers may disagree, but there is no question about it, if you ask industry observers.

The economy has slowed considerably and there have been retrenchments and wage cuts.

Sales volume of new homes looks set to reach an 18-year low this year, while supply is far from lacking.

'In every bear market, no matter what the developers say, it will happen,' Mr Leong Sze Hian, the president of the Society of Financial Service Professionals, said of the price falls.

The only unknown, he added, is the extent of the fall.

Manpower Ministry data already shows that average monthly real earnings - pay minus the effect of inflation - fell by 17 per cent from $3,982 in the first quarter to $3,307 in the third quarter.

Also, on an annualised quarter-on-quarter basis, gross domestic product growth in the third quarter declined by 6.8 per cent, continuing the 5.3 per cent contraction experienced in the second quarter.

'All these will filter through to the property market,' said Mr Leong.

Right now, most buyers are remaining on the sidelines. New launches are few, and there are not many desperate sellers out there yet.

'Most are not feeling any pain from the recession yet. In the secondary market, many sellers are still hoping to do sub-sale at a profit,' said Knight Frank's director of research and consultancy, Mr Nicholas Mak.

The result? There are no major price reductions yet, he said.

Going forward, though, there could be more speculators desperate to get rid of their properties because they do not want to be saddled with huge loans, experts say.

These are people who bought properties when the market was booming under the deferred payment scheme, which means they will have to pay the full sum for the property upon completion.

The Government has said some 10,450 units of private homes sold under the deferred payment scheme have yet to be completed. Some 2,540 units - largely bought during last year's boom - will be completed in 2010.

In the new homes market, there will be more new property launches or re-launches after Chinese New Year late next month, consultants say.

Frasers Centrepoint, for one, has plans to release Caspian, its 700-unit condo near the Lakeside MRT station.

'The smaller projects or those in less attractive locations will likely need to offer more discount,' said Mr Mak.

'Others may offer soft discount, so that the prices reflected in the caveats will not be reduced.'

Soft discounts can take the form of furniture vouchers or the absorption of legal fees or stamp duty.

There could be price cuts in some mid-tier or prime developments where prices are 'fairly toppish', Mr Mak said. 'They would, thus, have to adjust their prices to a more reasonable level.'

Novelty Group, for one, last month cut its price for the 75-unit Luma at River Valley Grove from $2,800 per sq ft (psf) to $1,450 psf.

Recently, City Developments adjusted its price for the 77-unit Shelford Suites in Shelford Road to $1,400 psf from a preview price of $1,600 psf on average in June. The price then was already lower than expected, as two units were sold in March at $1,869 psf and $1,905 psf.

Those seeking information on new launches can check out the Urban Redevelopment Authority's (URA's) website, which offers monthly sales and price data on the 15th of every month.

It shows the number of units sold in the past month, as well as the median, lowest and highest prices done.

The URA website also has information on individual caveats lodged for properties sold, so you can find out the prices done at a particular condo.

The problem here is that the information is not very up-to- date because deals take time to complete and caveats take time to lodge.

The price data can easily be two to three months old, which can be a long time in today's fast-moving market.

Potential buyers should check with their agents to ascertain the previous price levels done or check classified advertisements for the latest asking prices, experts say.

They should also try to get a bank valuation on the property they are eyeing, said HSR Property Group executive director Eric Cheng.

Those who want to buy a resale property now can bid below individual sellers' asking prices. They could aim for 5 per cent to 8 per cent below asking levels, said Mr Cheng.

Also, buyers should look for tenanted resale properties that can offer a 4 per cent to 5 per cent rental yield for at least the next year, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

'In today's market, it is wise to buy something that you can see and profit from immediately,' he said.

The risk with new projects is that they could be delayed or their prices could fall from today's levels, he said.

But, be prudent and patient, warned Mr Cheng. 'Don't buy on impulse.'

joyceteo@sph.com.sg

Buying opportunity

Those who want to buy a resale property now can bid below individual sellers' asking prices. They could aim for 5 to 8 per cent below asking levels, said HSR Property Group executive director Eric Cheng.

 

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Singapore's private home sales, prices & rents fall sharply in Q4

29 December 2008 1447 hrs (SST)


SINGAPORE: Private home sales in Singapore have taken a sharp fall in the fourth quarter of this year.

According to a report released Monday by property consultant DTZ, only 112 private homes were sold in the primary market in October, and 192 units sold in November.

This, compared to the monthly average of 444 units sold in the first nine months of the year.

The October sales volume is the lowest since the release of official monthly sales data by the Urban Redevelopment Authority (URA) in June 2007.

For the full year, DTZ estimated that the number of home sales will only make up about 35 per cent of last year's sales, which saw some 38,100 units sold.

The figure is based on caveats lodged with the URA so far.

At the same time, the fall in private home prices have started to gather pace in the fourth quarter, with prime non-landed properties the hardest hit.

Prices of non-landed freehold private homes in the prime districts fell by 14 per cent quarter-on-quarter in the three months ended December, according to DTZ Research.

Overall, average private home prices have fallen 21.6 per cent year-on-year to S$1,160 per square feet, below the level of S$1,200 per sq ft in the second quarter of 2007.

Meanwhile, average monthly rents of prime non-landed homes have fallen 9.2 per cent to S$4.36 per square feet.

DTZ expects home sales to remain low next year as the recession takes its toll and homebuyers are concerned over job security.

 

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Dec 30, 2008
Home sales 'to stay weak next year'
Job insecurity will deter buyers, says DTZ, as economic gloom prevails
By Michelle Tay
AMID difficult economic conditions, home sales are expected to remain weak next year, said real estate firm DTZ in a research report yesterday.

Job insecurity and further weakness in the market will deter buyers from committing to property purchases, it added.

This will weigh on consumer spending and create a 'contagion effect on the property market'.

Already, residential sales in the past two months have been 'dismal', said DTZ, adding that only 112 units were sold in October. This was the lowest figure since the Urban Redevelopment Authority (URA) started releasing monthly sales data in June last year.

Last month was slightly better with 192 units sold, but it was still a dramatic drop from the monthly average of 444 units sold in the first nine months of the year.

URA data showed that while 38,100 units were sold last year, only a third or so of this figure changed hands this year.

DTZ called these results a 'complete reversal of the trend in the private residential market', and said the fall in home prices gathered pace in the fourth quarter 'on the back of worsening sentiment'.

Non-landed properties were hit hardest, as prices of non-landed freehold private homes in the prime districts fell by 14 per cent in the fourth quarter from the quarter before. This was after the sector had already fallen by 4.5 per cent in each of the previous two quarters.

Overall, average prices fell 21.6 per cent from the year before, to $1,160 per sqft - a level not seen since the second quarter of last year.

Even landed housing prices, which had held firm up to the third quarter, 'succumbed to the weak conditions' and fell in the fourth quarter, said DTZ.

However, these did not fall as drastically as other sectors, with freehold prices slipping between 3.8 and 5.7per cent from the third quarter.

Rents have also been dropping.

DTZ said rents of non-landed private residential properties, which first corrected in the third quarter, 'continued to head southwards as more expatriates are being repatriated'.

It added that tenants, possessing lower housing budgets, are increasingly moving from prime locations to the suburbs, or downgrading to smaller units.

Average monthly rents of prime non-landed homes fell 9.4per cent from the previous quarter to $4.36 per sqft.

There is, however, a silver lining amid the gloom, observed DTZ.

Ms Margaret Thean, the firm's executive director, said: 'Housing loan rates are low despite more cautious lending from banks, and there are investors waiting to enter the market when prices have fallen to attractive levels.'

 

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Jan 2, 2009
Home prices fall again
By Jessica Cheam
PRIVATE home prices sunk 5.7 per cent in the fourth quarter of 2008, marking the steepest drop in a decade as the deepening economic crisis continues to dampen homebuyer sentiment.
Following a 2.4 per cent drop in the third quarter, home prices have now declined for two straight quarters, ending a four-year property rally in Singapore.

Prices fell 4.3 per cent in 2008 overall, compared to 2007, based on flash estimates released by the Urban Redevelopment Authority (URA) on Friday.

This is a dramatic turnaround from the 31.2 per cent spike in home prices in 2007 at the peak of the spectacular bullrun.

Despite the freefall in private home prices, new HDB data on Friday showed HDB flats continue to buck the trend, climbing 1.5 per cent in the fourth quarter - following a 4.2 per cent increase in the third quarter.

This means Housing Board (HDB) resale flat prices have reached a new peak since the last historical high in 1996.

Prices rose 13.8 per cent in 2008, adding to 2007's 16.5 per cent increase.

Analysts say the drop in private home prices - the largest since the last quarter of 1998 - is proof that 'fire sales' have started as sellers look to exit the market and raise cash flow amid an economic recession.

The Government warned on Friday that the economy may shrink by as much as 2 per cent this year, after posting a 12.5 decline in gross domestic product (GDP) in the October-December quarter - the third consecutive quarter of GDP decline.

Prices for apartments in the core central area dropped 6.3 percent in the three months ended Dec 31, and slipped 5.5 per cent in the rest of central region.

Outside the central region, prices slid 4.7 per cent.

 

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Angry buyers clash with developer Wing Tai over alleged defects

Date : 02 January 2009 1013 hrs (SST)


SINGAPORE : An ugly spat - that has already resulted in a police report lodged against a homeowner - is brewing between listed property giant Wing Tai and some foreign investors of its three-year-old luxury condo near Orchard Road.

The development, which briefly set a record price of more than S$2,000 per square foot when it was launched, has more than 130 units in all.

At least 15 unit owners - most of them foreigners who were buying their first Singapore properties - have come forward with a series of complaints claiming that poor workmanship has led to problems including cracked parquet flooring, chipped marble tiles, watermarks on walls and shattered glass panels on the balconies.

Some of these owners spoke to TODAY on condition of anonymity. They said they did not even want their condo to be named, for fear that it would drive down resale values.

The complainants said that the average cost of a two-bedroom unit had been more than S$2 million; one investor had bought six such units for a total of S$15 million, and one couple paid S$7 million for a single four-bedroom apartment.

The latest incident on Monday morning - which happened as contractors were called in to rectify problems after similar incidents - saw a glass panel fall more than nine storeys from an unoccupied unit on to the swimming pool area. The impact shattered the panel and flung broken glass shards into the pool and as far as 20 metres away. No one was hurt.

According to residents, it is the fifth time a glass panel on a balcony had either shattered or fallen from a height.

When contacted, spokesman Clement Augustine from the property developer Winworth Investment - a subsidiary of Wing Tai Land - said the company takes a “serious view on safety on all our developments”.

Mr Augustine added that the glass panels used had met all industrial safety standards. In addition, each panel had been laminated with safety film to prevent them from shattering.

Winworth has lodged a police report over the latest incident, with Mr Augustine suggesting that the glass panel could have been tampered with.

Mr Augustine said that the owner of the affected unit had refused entry to Winworth’s representatives to investigate the latest incident. “From the pieces recovered (on the ground), we noticed that the safety film was broken. We cannot rule out the possibility that there may be wilful damage to the glass,” Mr Augustine said.

In response, the unit owner brushed off the fact that a police report has been lodged against him. He told TODAY that the condo’s management council - made up of some of the homeowners - that decided to ask an independent surveyor to assess the damage in his unit before the developer was allowed access.

The owner said he had told Winworth’s representatives they could enter his unit the next day. “It’s like when you have a car accident, you let the police do its investigation first, then you call the insurance before you go and repair the car,” he said.

The face-off was a development in a saga - already involving a lengthy exchange of emails and letters - simmering in the quiet and exclusive neighbourhood.

Disputing Winworth’s assertion that the defects were due to “wear and tear”, a handful of frustrated homeowners claimed they had spent thousands of dollars out of their own pocket on interior repair works.

One resident described the situation as “frustrating and insulting”. She said: “Most of the people living here are CEOs or managing directors. They can easily afford the repairs. The issue is having to take time off from running their companies to stay at home and supervise the repair and enhancement works.”

Conceding that some unit owners may not have inspected the apartments thoroughly before buying, she added: “When you pay that sort of money, you would assume the unit would be of the highest quality or at least a minimum standard. You don’t go into a Gucci or Hermes shop and check on every stitch in the bag that you have just bought.”

Mr Augustine said that the development had been granted its TOP (temporary occupation permit) in mid-2005. He denied that there had been shoddy workmanship and said that in any case defects which had been highlighted within the one-year liability period “have long since been addressed”.

Homeowners should channel their current grouses to the condo’s management corporation, which is responsible for its maintenance, he said.

The condo is now managed by Knight Frank Estate Management, which residents say took over at the beginning of last month from PSF.

Mr Augustine insisted that the units had been handed over their buyers only after each buyer had been given the opportunity of inspecting their homes and declaring themselves satisfied with the quality.

Even so, the developer had provided complimentary repair service for “genuine” complaints, Mr Augustine said.

He said: “There remain isolated incidences where a few owners may not have carried out diligent maintenance works, or have suffered willful damage to property, or whose property is the subject of wear-and-tear. Obviously, we are unable to address these matters because these owners should be responsible for their own repairs.” -

 

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Jan 8, 2009
Unsold: 1,200 luxe flats
CBRE says growing supply overhang may see prices drop by up to 15%
By Joyce Teo
A STOCKPILE of up to 1,200 luxury homes in prime districts remains unsold, adding to a growing supply overhang that is likely to drag prices lower this year.
That grim assessment of the very top end of Singapore's property market has been made by leading property consultancy ** Richard Ellis (CBRE).

However, it has also concluded that despite the challenging market conditions, some developers may be able to hold on to projects until the market recovers.

'Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launch new projects,' it said.

'This would inevitably lead to price cuts,' the consultancy added.

CBRE is projecting a decline this year of about 10per cent in the prices of good-class bungalows (GCBs) - the most prestigious bungalow type here - and 10 to 15per cent price falls for luxury apartments.

Last year, 49 GCBs worth about $785million were sold, down from 87 GCBs worth $1.15billion in 2007 and 119 GCBs worth $1.23billion in 2006.

Average prices of GCBs hit $822 per sqft (psf) last year, up from $681 psf in 2007 and $501 psf in 2006.

The top-priced GCB deal last year was a 52,528 sqft Leedon Park property sold for $43.2million in May. On a psf basis, the most expensive deal was at $1,303 psf for a Leedon Road property, also in May.

CBRE said GCB prices hinge on the location and land characteristics.

Given the current downturn, buyers will be looking to pay competitive prices for GCBs, but fire sales will be hard to come by as most GCB owners have the capacity to hold, said director of luxury homes Douglas Wong.

The luxury apartment market also saw a drastic fall in sales last year, with just 1,096 caveats lodged. Government data showed this worked out to just 19per cent and 32per cent of sales in 2007 and 2006 respectively, said CBRE.

Caveats lodged for high-end apartments worth $1million to $3million stood at 777, which is about 22per cent of the 3,566 caveats lodged in 2007 and 29per cent of caveats lodged in 2006.

But a considerable number of more expensive homes were sold last year, with 82 caveats lodged for apartments worth $10million and above, though 63 were units in Nassim Park Residences. This compares with 143 in 2007, 22 in 2006 and none in 2004-2005.

Price-wise, new luxury projects saw average launch prices drop to $2,000 psf to $2,600 psf by the end of last year, from $2,000 psf to $4,000 psf in 2007.

Prices of existing luxury developments, such as Ardmore Park and Grange Residences, hit $2,000 psf to $2,400 psf, from $2,000 psf to $3,300 psf in 2007 and $1,600 psf to $2,000 psf in 2006.

Most of the luxury projects launched in early 2007 have been fully sold. But several projects remain on the market, especially those launched in the second half of last year when the sub-prime crisis hit.

As of last November, only 41per cent of units offered at these launches had been sold.

This year, luxury sales activity is expected to be lukewarm, similar to the second half of last year, said CBRE.

 

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Jan 8, 2009
Prime office rents fall 40%
OFFICE rents in prime districts could dive as much as 40 per cent by next year, says consultancy Cushman and Wakefield in a new report.
The industry has been expecting falls, but the magnitude of the projected slump is surprising. The consultancy blames a huge stock of office space that is rising amid tough times and rising job losses.

'The fact that Singapore is an international financial centre also means it will be badly hit during the downturn as a lot of investment activities are dependent on foreign participation,' it said.

Prime office rents, it said, will fall from a high of $14.20 per sq ft a month last year to $12 psf a month this year. It expects this to drop to about $8 psf next year, and to about $7.50 psf by 2011, when prime office vacancy rates are set to rise to 11 to 15 per cent.

But rents remain above the $7 psf witnessed in previous peaks of 1995 to 1997 and 2005 to 2006.

Three factors, said Cushman, are contributing to the fall in rents. First, office stock is rising at a time when economic growth is stagnating or falling.

Second, a huge pipeline of office inventory is building up because of the overwhelming optimism shown by developers during the boom years of 2006 and 2007.

And third, employment is likely to flatline or even shrink by 1 per cent, as seen in downturns in 1998 and 2001-2002.

'The rate at which new supply is added to existing stock in 2009 and 2010 will be one of the highest since 1992,' said the report.

Pre-commitments by tenants for office buildings due for completion this year and next are estimated to be only 30 per cent so far. The rate is not expected to improve in the near term, said Cushman.

A total of 10.7 million sq ft of office space will be available by 2013 - of which 2.7 million sq ft will be ready by 2010 - representing about 15 per cent of total stock, it said.

Office stock in the Central Business District will rise by up to 7 per cent by 2010 to 2011 - the second highest rate after 8.7 per cent in 1995 when economic growth was higher.

But demand, which averaged about 2 million sq ft a year in the past two years, is expected to fall by more than half, and possibly to just 500,000 sq ft a year.

 

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Jan 13, 2009
Pay-interest-only deal for cash-short home owners
DBS scheme eases borrowers' burden for six to 18 months
By Goh Eng Yeow
HOME owners with mortgages at DBS Bank can ease some of their financial burden by opting to pay only the interest on their loans for periods of up to 18 months.
The bank sees the scheme as a way of helping cash-strapped borrowers who are worried about their ability to repay their mortgages amid the deepening economic gloom.

The scheme could potentially benefit 'tens of thousands' of borrowers with home loans at DBS.

It can mean an immediate reduction in the monthly amount a borrower must fork out as a key portion of the payment - the loan principal - can be set aside.

Take a 25-year home loan of $500,000 pegged at an interest rate of 3.5 per cent.

A borrower will have to pay $2,504 a month - covering both interest and principal.

But by opting to pay the interest only, his monthly payment drops to $1,439, putting an extra $1,065 into his pocket.

So even if a working couple loses one income, which is a growing threat in the downturn, they can likely keep paying their mortgage - and keep their home.

They can also pay the monthly instalment using Central Provident Fund cash if they are only servicing the interest on the loan.

They can resume monthly payments on the principal portion of their loan when their cash flow situation improves.

The periods for paying interest only can extend from a minimum of six months to 18 months.

'The last thing we want to do is to foreclose on people's homes. Come and talk to us early if you have any financial problems,' said Mr Koh Kar Siong, head of consumer deposits and secured lending at the bank, yesterday.

Homeowner Rose Tan, 40, who has a DBS mortgage on her condominium flat, welcomed the move: 'This is a friendly gesture from DBS. At least, I know they won't treat me like a leper if I approach them for help in lowering my housing instalment.'

The flip side is that paying interest-only means you are not paying off any of the loan itself so you will have fallen behind.

DBS is the largest bank here and a key player in the private housing loans market. It is also a big lender to HDB flat-owners through its POSB network.

It has 'tens of thousands' of mortgage borrowers.

To get the go-ahead, a borrower must give the bank an update of details such as employment and other financial commitments.

The scheme is applicable to cash-strapped borrowers as well as those in the pink of financial health.

DBS will advise them within a week if their applications to pay interest-only on their loans has been approved.

Mr Koh said the updates are needed to enable DBS to fulfil its fiduciary duty and ensure that borrowers have the means to repay their loans eventually.

Besides offering interest-only instalments, DBS is extending an option to allow home owners to extend the tenure of their loans, which will lower their monthly instalments.

Mr Koh said there has not been any sharp rise in the number of borrowers asking DBS to alter their loan repayment terms but banks are unlikely to be immune to the economic slowdown.

'About 90 per cent of our home loans are taken up by borrowers who occupy their properties. We want to help them to tide over this difficult period,' he said.

DBS' move has stirred hopes among traders and home owners that by acting in such a pro-active manner, there will be fewer foreclosures and this will help the wobbly property market to get back on its feet eventually.

Banks such as MayBank and OCBC Bank told The Straits Times that they preferred to take a case-by-case approach to assist home owners who have taken up loans with them.

Mr Gregory Chan, OCBC's head of secured lending, said: 'In the event that our customers' needs change during the duration of their loans, we are open to reviewing their financial positions and borrowing limits, and advising them accordingly.'

 

[jq75]

Jan 14, 2009
Delayed projects to restart
By Irene Ngoo
TO help the construction industry ride out the current economic crisis, the Government will bring back some of the smaller public sector projects of up to $50 million that were deferred earlier, and advance other suitable new projects in the pipeline.
It has also put in place several credit assistance measures to help construction firms facing credit squeeze and cashflow problems.

For instance, public sector agencies will be making or frequent, prompt and full progress payments for completed and certified building jobs done.

They will also lower the amount of security deposits for government construction jobs from 5 per cent to 2.5 per cent, or even to zero.

These measures were announced by National Development Minister Mah Bow Tan on Wednesday morning, and come as construction demand has started to moderate due to the global economic downturn.

Speaking at a property seminar organised by the Building and Construction Authority (BCA) and Real Estate Developers Association of Singapore (Redas), Mr Mah said the building and construction sector enjoyed an 'exceptionally strong growth' in 2008, with a record high $34.6 billion of contracts awarded.

This stronger than expected construction demand was driven mainly by robust private sector demand in the first half of 2008, as well as the award of several major public sector infrastructure projects, such as the Marina Coastal Expressway and the MRT Downtown Line 1, in the last quarter.

But it, too, will not be left unscathed by the economic slowdown.

Mr Mah said BCA's projection shows that construction demand has started to moderate. For 2009, the value of construction contracts awarded will likely reach between $22 billion and $28 billion, and for 2010 and 2011, between $20 billion and $27 billion.

While the larger construction firms will be occupied with ongoing contracts awarded over the last two years and the pipeline of large government infrastructural works, small and medium sized firms have started to feel the drying up of projects, as private sector construction demand softens.

The number of tenderers for projects of up to $30 milion has doubled, compared to six months ago, said Mr Mah.

To help the industry and sustain the flow of jobs, the Government will focus attention on two areas of immediate concern - the slower construction demand and the liquidity squeeze.

It will bring back some of the smaller public sector projects, of up to $50 million in value, that were earlier deferred to ease the pressure on construction resources.

'We will also bring forward other suitable new projects in the pipeline, in addition to the projects that were originally planned for 2009. The details are being finalised and will be announced during the 2009 Budget Statement,' added Mr Mah.

Amid the gloom, there is a silver lining.

Mr Mah said public sector demand for construction services will remain strong in the next few years, as several large public infrastructure projects are scheduled to be rolled out.

These include the extension of MRT lines such as the Downtown Line, the North-South Line, Jurong East Connection, major road works, redevelopment of the Pathology Education Research Building of the Singapore General Hospital, National Heart Centre, the new International Cruise Terminal, as well new HDB flats to meet the ongoing demand for public housing.

He added that despite the projected dip in construction demand from 2009 to 2011, the level of demand is still considerably higher than the average annual demand of $13 billion from 1998 to 2006.

He also urged job seekers, especially those at Professional, Managerial, Executive and Technical (PMET) levels, to seriously consider career options in the built environment, where there are good long-term prospects and growing niche areas.

For example, with the demand for green buildings growing steadily, not just locally but also in many overseas markets, Green Building Technologies will be a new growth area for the local industry, noted Mr Mah.

Summing up, he said: 'The construction sector remains a vital pillar of our economy. It is therefore important that this sector continues to anchor itself on firm foundations, through continual manpower development and technological advancement. We can each play our part in building up a resilient and strong construction industry.

'While we cannot prevent the up and down cycles of the business sector, the government has and will continue to put in place measures to mitigate the impact of the down cycle. The quick turn of events in the global markets over the last six months holds many valuable lessons for all of us. We need to remain vigilant, be quick to adapt and be forward looking. '

 

[jq75]

Jan 15, 2009
Private home sales dip
By Joyce Teo
ONLY 131 new private homes were sold last month, down from 193 in November, but up from 118 in October, according to data released by the Urban Redevelopment Authority on Thursday.
Developers launched just 157 units last month, down from 382 in November and from 174 in October when the property sales sank to lows last seen in 2003 Sars period.

A total of 436 units were sold in the fourth quarter of last year, just a tad above the 427 units sold in the first quarter of 2003 when the Sars outbreak crippled economic activity.

The top-seller in December was the 104-unit Newton Edge in Makeway Avenue. Developer Macly Capital sold 43 units in December at a median price of $1,200 per square foot.

The 88-unit development Nova 88 in Balestier did relatively well, with 10 units sold at a median price of $988 psf.

Most of the other projects managed to sell less than three units each.

 

[jq75]

Private home launches in Dec 2008 at record low
15 January 2009 1825 hrs (SST)


SINGAPORE: Islandwide launches of new private homes in December 2008 slumped to a record low since the Urban Redevelopment Authority (URA) started releasing the monthly figures in June 2007.

Developers placed just 157 units for sale last month, down by 59 per cent from November.

Analysts said there has been softening demand for homes. But the low launch volume could also be due to seasonal adjustment and developers holding out for the government's Budget announcement next Thursday.

Analysts, however, said that not all developers can afford to delay projects.

Donald Han, managing director, Cushman & Wakefield, said: "Smaller developers may decide to sell in order to move assets and move their inventory. So, price cutting may happen at a strategic level for smaller developments... and also the secondary markets where there will be fiercer price cuts."

Overall, market watchers said they expect property prices to erode by another 5 to 7 per cent in the first quarter this year.

They said prices in the luxury home segment could see a 25 per cent drop, while suburban and mid-tier properties may be 10 to 20 per cent cheaper over the next 12 months.

December sales volume also fell, dropping 32 per cent on-month to 131 units, as home buyers continued to be cautious.

Analysts said that even the fairly resilient mass market segment is starting to feel the strain of the economic downturn. However, data also showed that home hunters are still in the market for good buys.

Dr Chua Yang Liang, head of research & consultancy at Jones Lang LaSalle, said: "The Ritz Carlton Residences, back in December 2007, some 3 transactions were reported at a median price of some S$5,000 per square foot. Now, some 8 transactions were reported by the developer at a median price of some S$3,000 per square foot."

Projects in prime areas like Newton Edge also saw good take-up, with 40 units sold in December at an average price of S$1,200 per square foot. Analysts said this translates to less than S$1 million for a unit, which is the threshold for most buyers in the current market.

For the whole of 2008, developers sold an estimated total of 4,287 units, 71 per cent shy of the 14,811 new units sold in 2007, bringing developers' sales volume to a nine-year low.

Industry players expect the property market to remain quiet over the next six months until there is a clearer indication of where the economy is heading.

They hope the Budget statement, to be announced next Thursday, will provide measures to support companies and save jobs, which will have an impact on the property market.

The items on their wish-list include vouchers to boost domestic spending and tax cuts to lower business costs.

 

[jq75]

Jan 16, 2009
Conned into renting same house
Malaysian couple shell out $4,300

Japanese expat coughs up $6,000

Conman duped would-be tenants and agents by posing as property's manager

By Joyce Teo
A MALAYSIAN couple and a Japanese expatriate have fallen prey to a rental scam run by a conman who took $10,300 from them - then went into hiding.
Neither party realised they had paid him to lease the same terrace house in Serangoon Gardens. But in a twist of fate, they ran into each another there - and discovered his scam.

The man who allegedly made off with their money - his full name is Axley Alexander Ryan Shah and he calls himself Ryan - had no legal link to the property. He pretended to be the property's manager. It is not clear how he obtained the house keys.

The couple, who are permanent residents, and the Japanese woman have filed separate police reports. A police spokesman said on Monday that two reports of cheating are being investigated.

The property agency involved, ERA, said it is probing the case. Two of its agents were apparently duped by Ryan.

ERA Asia-Pacific associate director Eugene Lim said such scams surface occasionally and often involve a conman fraudulently renting out someone else's home.

'We train our agents to do due diligence to ascertain the property's ownership,' he said. 'If they are dealing with a representative, they need to verify his identity and make sure he has the authority to act on behalf of the owner.'

In this case, the agents believed Ryan when he said he was the property manager and when he signed off as property manager-cum-landlord - even though they had run an ownership search that showed he was not one of the owners.

The couple - Ms Elena Fernandez, 35, and her husband, who have lived in Singapore for two years - paid cash to lease the house last November after responding to an online advertisement by an ERA agent.

At the house, they were met by two ERA agents and Ryan, who had asked one of the agents for tenant referrals. He said he represented Sisedel, a firm that owns 11 properties in Singapore, including - he claimed - the house in question.

He asked for $2,500 a month but Ms Fernandez, a part-time announcer at Gold 90FM, bargained it down to $2,150.

She said: 'We were a bit surprised as the house was in good condition even though it was old. Other houses nearby were going for $2,400 or $2,500.'

Ryan signed off on the tenancy agreement representing Sisedel and collected a two-month deposit of $4,300 in cash - witnessed by the two agents.

Later, he gave them the key. At the house, they were shocked to find sealed boxes in a bedroom and leftover food in the fridge. Ryan did not turn up.

Then a cab pulled up and the Japanese woman, who declined to be named in this article, told them to their dismay that she had paid to rent the house from Feb 1.

The woman, who had recently arrived in Singapore, told The Straits Times: 'After Christmas, Ryan SMSed me to tell me he could not rent out the house because his agent had found someone else. He said he would refund the deposit, but after that, we could not contact him.'

She had paid him $6,000 - two months' deposit and advance rent. She went to the house to try to find him.

Ms Fernandez still has the key to the house. She said Ryan had sent her an SMS before disappearing, to apologise, saying greed had got the better of him.

The agents have since found her another place and paid the deposit for it.

The owners of 19 Coniston Grove are listed as Madam Tham Shook Han and Mr Lam Kah Han, according to data from the Inland Revenue Authority of Singapore. They could not be reached for comment.

A company search showed that Sisedel was set up in April last year. Its shareholders and directors are Axley Alexander Ryan Shah and Tan Soon Kiat.

There is no official data on rental scams. At the Consumers Association of Singapore, the number of cases it handles involving rental disputes, including ones that involve misleading claims or misrepresentation, has grown, rising to 231 last year, from 177 in 2007 and 123 in 2006, said executive director Seah Seng Choon.

 

[jq75]

Jan 16, 2009
Owner told to pay $382k agent's fee
She withheld payment as she blamed agent for not telling her that buyer was neighbour

By K.C. Vijayan
A JUDGE has ordered the owner of a $25.5 million house to pay the commission that she had withheld from an property agent for alleged wrongful conduct.
Madam Lam Cheng Yee, who owned the unit at 32H Nassim Road, had claimed she was entitled to cancel the payment to Ms Cindy Wong of Areco International who had clinched the sale. At 1.5 per cent commission for the sale, the amount came to $382,500.

She argued that she lost the opportunity to get a better price because it later emerged that the buyer was a neighbour after the sale went through.

The agent, she said, had told her that the buyer, who remained anonymous during the transaction, wanted the house because of its feng shui.

She claimed that Ms Wong had been deceitful as the buyer's address on the option document was listed as an office in Temasek Boulevard, rather than 32K Nassim Road.

The buyer was Mr Chew Hua Seng, founder and chairman of Raffles Education Corporation. He was ranked No. 10 in the Forbes list of Singapore's top 40 richest persons in 2007.

Madam Lam's bungalow on the 1,250 sq m piece of land adjoins his unit at the rear with a narrow passageway leading to the main road. Seen from Nassim Road, both units are separated by another unit, 32G.

Madam Lam's husband, Mr Thio Keng Thay, a former deputy managing director of Malaysia Dairy Industries, handled the sale on her behalf.

Mr Thio had testified in his affidavit for the civil suit heard last July that an adjacent property would 'command a substantial premium over the market value'. He added he would not have sold the bungalow for $25.5 million if Ms Wong had told him the buyer was a neighbour.

Ruling against Madam Lam, Justice Kan Ting Chiu said in his written judgment made public on Wednesday that her allegation that she had been misled by Ms Wong could not be supported.

The judge said, among other things, that 'good feng shui' could not be the reason Madam Lam was willing to sell the house.

Mr Thio also did not say he wanted the buyer's residential address to be disclosed as a condition of sale and had in fact set the asking price of $25.5 million. Nor did he ask Ms Wong if it was a good selling price or if there were other factors he should consider in setting the price.

Even if he had sought advice from Ms Wong, the issue would then be whether an agent is expected to know that a property can command a higher price from the owner of an adjoining property.

Ms Wong, Justice Kan noted, was not engaged as a valuer and did not hold herself out to be know- ledgeable in property valuation.

Separately, the judge took issue with Madam Lam's lawyer Lin Ming Khin for following her instructions to revoke the commission payable to Ms Wong 'without demurral'.

He asked if this was appropriate as the agent's entitlement would be in jeopardy if the seller happened to be outside the jurisdiction of the Singapore courts or is unable to pay the commission by the time the court rules in the agent's favour.

'Prudent solicitors in such a situation', he said, would have taken steps to retain the commission pending the outcome of the dispute.

Property analysts say that generally, an adjoining property will command a premium as such opportunities are rare. Said Savills Singapore director Steven Ming: 'It makes sense to pay a higher price as when the buyer combines the cost with what was paid years ago for the property he currently owns, the cost per sq m would have averaged out to a lower level for the total lot.'

 

[jq75]

Jan 17, 2009
Playing the waiting game

Home buyers believe property prices are set to fall further and hence, are biding their time
By tay suan chiang
When investor relations consultant Gary Teo reaches for his newspaper every morning, he reads the property news first.
He and his wife, Grace Tan, 32, a senior QA engineer, are looking to buy a place of their own. They have been living with his parents in a terrace house at Novena since they got married in September last year.

'I've been wanting to live independently and now that I'm married, all the more I want to live on my own,' says Mr Teo, 31.

However, he is in no hurry, although he has been househunting since 2007. 'I'm waiting for prices to fall further,' he says, confident that it is now very much a buyer's market.

So he keeps tabs on property sales online and pores over the classified ads. The couple want to buy a three- or four-bedroom apartment in central Singapore. 'Our budget is no more than $1 million,' he says.

They either did not like the few apartments they have inspected or the asking prices exceeded their budget.

Many others are like Mr Teo: buyers playing a waiting game, believing that sellers will blink first.

And all signs point to buyers getting their way, although Mr Eugene Lim, 42, associate director at property agency ERA Asia Pacific, says the private property market is currently at a 'standstill' because sellers are still struggling to come to terms with the drop in property prices.

Mr Chris Koh, 42, director at Dennis Wee Properties, says it used to take about two to four weeks to sell an apartment. Now he sees some apartments on the market for more than three months because 'the prices asked for are too high and unrealistic'.

Home buyers prefer to wait till second half of the year

The truth is, private property prices have indeed fallen, some by as much as 25 per cent over the past year (see graphics).

Sensing this, 'buyers are just starting to bargain-hunt', says ERA's Mr Lim.

Mr Koh agrees that 'home buyers are taking the wait-and-see approach and thus are not committing to purchases'.

He adds that buyers expect property prices to fall even further and they are looking to buy only 'in the third or fourth quarter of this year'.

The reason is simple: Analysts are predicting further uncertainty in the economy and home prices may fall another 10 to 20 per cent.

Today's home-hunters are 'mostly young couples who are looking to buy their first home', says Mr Koh, unlike upbeat times such as in 2007 when people bought property for investment.

Graphic designer Edmund Seet, 35, and communications consultant Delicia Tan, 30, are getting married in June. Armed with a $600,000 budget, they are looking for a two-bedroom apartment in East Coast.

'This will enable us to have more cash for renovations and furnishings,' says Ms Tan.

Like Mr Teo, she believes that property prices will drop further during the year and so have yet to sign on the dotted line.

She and her fiance monitor property listings regularly, visit new showrooms in the area and keep a lookout for banners and signs that advertise units for sale.

'We may buy only in June,' she says.

They are playing it cool because they have a back-up plan: They will rent an apartment from a relative if they cannot find a suitable one to buy after their wedding.

There is no doubt buyers have the upper hand in today's market, says Mr Vincent Koh, 36, vice-president at HSR International Realtors.

He cites examples of sellers who will let go of their property at 10 per cent less than their desired selling price.

'Some are so desperate, they may offer to pay for the buyer's renovations, so they can get the property off their hands,' he says.

It is not just individual sellers who are finding it tough.

The property experts decline to give specific details but reveal that they have heard of developers who throw in sweeteners such as waiver of maintenance fees to entice buyers.

Which is good news, but not good enough for many buyers such as art director Adrian Low, who prefer to wait.

Currently renting a two-bedroom apartment in Lavender, the 36-year-old bachelor wants to buy a three-bedroom apartment in the Braddell Road area to be nearer his office in MacPherson but does not want to pay more than $900,000.

The 20 apartments he has viewed are not close to an MRT station and eating places. More importantly, the prices he has been quoted are not ideal.

'I'm waiting till prices drop to $800,000,' he says.

He could get his wish, because the times are a-changing.

In 2007 when sales were upbeat, 'sellers were more arrogant and would often increase their price once an offer was received', recalls ERA's Mr Lim.

In the current climate, he says, 'sellers' instructions to agents are to relay any offer to them for consideration'.

 

[jq75]

Jan 17, 2009
It's tougher to get loans
It may be harder for home buyers to secure bank loans now.
'Banks are a bit more cautious these days,' says Mr Chris Koh, director at Dennis Wee Properties. Two other property experts that Life! spoke to agree.

ERA Asia Pacific's director Eugene Lim says banks now take longer to process home loan applications. 'During good times, loans would be approved within 24 hours. Currently, it can take as long as two weeks,' he says, adding that it is a sign that banks are running more detailed checks.

They are also less willing to offer a loan quantum of 90 per cent, which was the norm during good times, says Mr Vincent Koh, vice-president of HSR International Realtor.

Loan quantum refers to the size of a loan in relation to a property's market valuation. Industry players say there have been cases where the bank's valuation of an apartment is lower than what a seller is asking for.

'Most usually offer 80 per cent now,' says Mr Koh of HSR.

Industry insiders say loans are generally smaller or harder to secure for the following people:

1) Those on commission-based income or are self-employed, compared to employees on fixed salary.

2) Applicants who are single, compared to married couples with dual income.

3) Those who have just started work.

To make up the shortfall, these home buyers will have to dig deeper into their savings or their CPF accounts.

Mr Gregory Chan, OCBC Bank's head of consumer secured lending, says the bank assesses and approves each loan application on the basis of the customer's credit worthiness.

'Ultimately, the loan quantum is determined by property valuation and credit worthiness of the applicant,' he says.

Among the factors considered are the individual's financial commitments, income and credit history.

United Overseas Bank's head of loans division, Mr Kevin Lam, says customers with a good credit record and stable income can be assured that UOB will consider their loan applications favourably despite the current economic environment.

Regardless of the size of the home loan, Mr Dennis Khoo, general manager of retail banking products at Standard Chartered Bank, says that in times of economic stress, it is prudent for customers to consider a smaller loan to ensure that they do not over-extend themselves.

'We recommend that customers work with their relationship managers to identify their individual situation and preferences, before selecting a home loan package,' he adds.

 

[satayxp]

Industry insiders say loans are generally smaller or harder to secure for the following people:

2) Applicants who are single, compared to married couples with dual income.

oh no....