Property News!

[jq75]

Apr 6, 2010
UE buys Ang Mo Kio property to site new HQ
UNITED Engineers (UE) has acquired an industrial property that it will use as its headquarters in Ang Mo Kio Street 64 for $25.18 million.

It will be centralising most of its business operations - including its headquarters currently located in UE Square in the River Valley area - at the new property by the end of the year.

The group will then rent out its prime headquarters space at UE Square, which takes up about 8,891 sq ft of lettable space on the 18th floor.

This move will enhance its operational efficiency, foster a closer working relationship and promote staff interaction, the group said in a statement yesterday.

The property, to be renamed UE BizHub Central, comprises a seven-storey building and a four-storey building that are linked by a sky-bridge.

The property has a total gross floor area of 378,426 sq ft.

The acquisition forms part of the group's strategy to develop and own a portfolio of build-to-suit properties in the strategic nodes of Singapore.

This refers to building space tailored to the needs of individual tenants.

Leveraging on its build-to-suit capabilities, it plans to further modernise and expand UE BizHub Central to 500,000 sq ft in the next phase.

However, the plans are subject to planning approval, the group said.

'We are looking out for other potential sites in Singapore that we could develop into build-to-suit, integrated space solutions under the brand name of 'UE BizHub' that will span the island state,' said Mr David Liew, divisional managing director of the group's property division.

 

[jq75]

Apr 6, 2010
Developers 'not rushing' into en bloc market yet
By Joyce Teo

MORE projects are expected to be put up for collective sale this year as the property market continues to hot up.

This should bode well for developers keen to beef up their land banks, but they are not rushing into the en bloc market just yet, experts say.

'The problem in the en bloc market is the gap between what sellers want and what developers are prepared to pay,' said Ms Chua Chor Hoon, DTZ's head of South-east Asia research.

Colliers International executive director of investment sales Ho Eng Joo said: 'Developers are hungry, but they would not take too high a risk to acquire land. The prices en bloc sellers are asking now may not yet be justified by what the new projects nearby are fetching.

'Given a choice, they would rather bid for a government land sales site than a private plot.'

Government land sales sites are usually located in established residential areas with ready comparable projects, making it easier for developers to work out their sums, he said. The sale process is also neater and faster, experts said.

The collective sale process, they said, can drag on if there are strong dissenters.

Unhappy minority owners have, in the past, taken their estate's collective sale case to the High Court and the Court of Appeal. This means that timing can be a big problem with collective sales.

In such a sale, both sides want to protect their interests. The developers would not want to bid too high in case the market does not turn out to be as strong as expected, said Ms Chua.

But sellers want to secure a higher price to safeguard their position when the deal is sealed, in case prices continue to rise and they are unable to afford a similar replacement property, she added.

But until prices of new private home launches improve further, the en bloc market may not take off in a significant way yet, said Mr Ho.

In the meantime, developers will still be very keen on government land sales sites. They are particularly interested in mass market sites, considering that most of the launches so far are in the mass and mid-market segments, experts say.

Ms Chua said the slide in developers' residential stock halted late last year.

Developers' stock of unsold inventory has improved from the third quarter of last year, when they had 36,481 units on hand, to a total of 40,224 units at the end of last year, she noted.

But they will still need to replenish and buy at a fairly aggressive pace if they continue to sell a lot, she said.

DTZ's research shows that half of 16 major developers here had fewer than 1,000 residential units left in their land bank as of the end of February.

Sales of new private homes have been brisk in the first quarter, with total sales estimated at close to 4,000 units.

Nevertheless, if such sales come down to a more sustainable level of fewer than 3,000 units a quarter, the tight supply situation should ease gradually now that the Government is pushing out more sites for sale, said Ms Chua.

 

[jq75]

Apr 10, 2010
New project selling well; 3rd en bloc site sold
By Joyce Teo

An artist's impression of Waterbank at Dakota, a 99-year leasehold condominium which has sold more than 200 units since its preview started on Wednesday. -- PHOTO: UOL GROUP

THE private homes market remains buoyant, with more than 200 units sold at a new launch and the year's third collective sale site sealed.

UOL Group said it has sold more than 200 units of Waterbank at Dakota in Dakota Crescent at a preview that started on Wednesday. Prices ranged from $1,000 per sq ft (psf) to $1,300 psf.

With 616 units, it is the first project here without bay windows and planter boxes. Industry sources said there was stronger take-up for the smaller, more affordable units. Units range from a 484 sq ft one-bedder to a 2,820 sq ft penthouse.

Meanwhile, Culford Garden in Siglap has been sold en bloc to Fragrance Properties for $39 million, making it the third collective sale to be sealed this year.
Marketer Credo Real Estate said the land rate is about $632 psf per plot ratio, or $574 psf ppr, based on a gross plot ratio of 1.54, which includes balcony space. The tender, which closed on Thursday, attracted four offers, all of which were within the asking range of $37 million to $40 million.

The owners of the 24 units stand to reap an average of $1.625 million each.

The year's first collective sale was a Balestier industrial site that can be converted to residential use. The second was a cluster of 16 terraces in Fort Road.

 

[jq75]

Apr 15, 2010
Wooing buyers the low-interest rate way
Developers of 2 residential projects tie up with finance houses to offer enticing deals
By Joyce Teo, Property Correspondent
TWO developers have tied up with financial institutions to offer low interest rates to buyers of certain residential projects.

Hong Leong Finance is offering rates of as low as 0.98 per cent a year on loans to buyers of its sister firm City Developments' (CDL) The Residences at W Singapore at Sentosa Cove.

For the Waterbank at Dakota condominium, United Overseas Bank (UOB) is offering an enticing deal: the commonly used benchmark rate SOR (Singapore swap offer rate) plus 0 per cent during the construction period. The project is being developed by UOL group, which has close ties to UOB.

Hong Leong Finance's package for the 228-unit The Residences at W Singapore is based on a special variable home rate, currently 7.25 per cent a year. The first year's rate now stands at 0.98 per cent or the special rate minus 6.27 per cent. The rate for the second year stands at 1.58 per cent, the third 2.58 per cent and thereafter 3.28 per cent.

A Hong Leong Finance spokesman said the firm had also offered a special financing package for another CDL project, Cube 8, but the rates were not as low as those for The Residences at W Singapore.

CDL is part of the Hong Leong group.

At The Residences at W Singapore, those who take up the financing package get an extra perk: a one-year membership offering dining privileges at F&B outlets under the Millennium & Copthorne International group, said Hong Leong Group.

The Residences at W Singapore was released for sale late last month at $2,500 to $3,000 per sq ft.

CDL said then that it had sold about a quarter of the 56 units released for sale.

At the 99-year leasehold Waterbank at Dakota, the special financing package is an SOR-pegged home loan. SOR is now at 0.46 per cent.

UOB and UOL could not provide details of the financing package but industry sources put it at the three-month SOR rate plus 0 per cent for the duration of the construction period.

Once the project obtains a temporary occupation permit, the rate becomes SOR plus 1.35 per cent.

The 616-unit project has seen sales already crossing 370 units. Prices, too, have risen and now range from more than $1,000 psf to more than $1,300 psf.

UOB also offered special packages for previous UOL projects but the rates were not as low as for Waterbank at Dakota, sources said.

'Banks have always been very keen to tie up with developers for new launches. They will offer a very competitive rate in such exclusive arrangements,' said Knight Frank's managing director of residential services Peter Ow.

'But in these two cases, for rates to go that low, I must say I have been in the business for more than 25 years and I have not heard of such rates. The conditions may be rather stringent.'

joyceteo@sph.com.sg

'I have been in the business for more than 25 years and I have not heard of such (low) rates. The conditions may be rather stringent.'

Mr Peter Ow, Knight Frank's managing director of residential services

 

[jq75]

Apr 18, 2010
The condo carpark crunch
Parking woes hit condos that do not have enough parking spaces to meet the demands of car-owning residents
By Goh Chin Lian

Car-owning condominium residents can get into lots of trouble.

That happens when the number of cars owned exceeds the number of parking spaces allocated to them.

A recent dispute involved a family unhappy with new condo rules that forbid them to park all four of their cars on-site. They live in Hillington Green in Hillview Avenue.

They had faced no such limit when they moved into their penthouse in 2002, said a family member who wanted to be known as Mrs Lim.

The dispute escalated last month when security guards turned away their Mercedes S-Class. Police were called in to mediate.

Managing agents of condos said they increasingly have to find ways to accommodate residents with two or more cars.

In the past, after allocating each family a space, they still had enough for those with more than one car.

But more families became multiple car owners as the price of certificates of entitlement to own a car stayed below $20,000 in recent years.

Mr Derek Soh, a regional director at real estate firm Jones Lang LaSalle, said a common practice now is to charge residents a fee to park their second or third vehicle.

Some residents may then think twice about owning more cars, or find another place to park.

The Sunday Times understands the monthly charge can be $50 to $100. The Centris, above Jurong Point shopping centre in Boon Lay, charges $270.

Balloting was used by one condo in Bukit Timah that Mr Soh's firm previously managed. About 40 people vied for 30 spaces for their additional cars.

'We balloted every quarter but people felt there was no certainty because for one quarter they had a space; for the next quarter, they didn't,' he said.

Allowing residents to park overnight along some driveways in the estate is another solution, said Mr Chan Kok Hong, managing director of CKH Strata Management.

A handful of the 105 condominiums it manages does so.

He also proposed a device that can stack cars vertically.

He estimates one machine occupying one parking space would cost about $10,000, excluding maintenance. The cost could be recouped by charging residents a fee to use it.

However, he is not aware of any condo here doing this.

While some older condos have 15 per cent more parking spaces than homes, those built in the past five years just meet the government standard of one space for each home.

A rule change in 2005 allowed condos within 400m of an MRT or LRT station, or in the Central Business District, to have up to 20 per cent fewer spaces.

Centro Residences, near Ang Mo Kio MRT station, will have 260 spaces for 329 units.

Waterbank @ Dakota, near Dakota MRT station, will have 554 spaces for 616 units.

Both are due to be ready in the next five years.

Some industry observers question the 2005 rule: Home buyers may choose to live near an MRT station not because they do not want to own a car, but for the convenience of their children. Such projects may face parking woes in the future.

For those who want worry-free parking, Mr Chan suggests condos popular with expatriates. They tend not to own cars.

The Lims, however, are staying put in Hillington Green and have engaged a lawyer. Their condo has 480 units and 492 parking spaces.

The new rules passed internally last September allow each home to have only one space. Those who have a second car, can park it in the estate until they sell it.

Mrs Lim said her family is prepared to give up one car and pay for the additional spaces.

chinlian@sph.com.sg

Balloting woes

'We balloted every quarter but people felt there was no certainty because for one quarter they had a space; for the next quarter, they didn't.'

MR DEREK SOH, a regional director at real estate firm Jones Lang LaSalle

 

[jq75]

Apr 18, 2010
Resident uses visitors' parking space

Mr J. Leong, 51, owns three cars but is allotted only one parking space at his condo in Meyer Road.

The solution? The investment banker parks his Mercedes-Benz in the space given to him. His wife uses one of the spaces meant for visitors to park her BMW.

Their daughter parks her Toyota Corolla Altis by the road outside the condo when she is back from university on weekends.

Mr Leong said: 'I've been doing this for the past two years and I've never been caught by the management. My wife always parks at a different space for visitors.'


Apr 18, 2010
He uses neighbour's second allotted space
At Ardmore Park condo in Orchard, every unit is given two parking spaces. But this does not serve the needs of one resident, who wants to be known only as Jeremy.

The businessman, 57, owns three cars. He said it was a headache initially to find a spot to park the third car.

'My family really does need all three cars for easy mobility so I didn't want to give up any car,' he said. Then, he found out his immediate neighbour used only one parking space.

He got the latter's permission to use the other space to park his Jaguar XK. 'It's an ideal situation since I'm not inconveniencing anyone,' he said.

 

[jq75]

Apr 21, 2010
Circle Line spells boom for property owners
Values of homes near new stations fare better than overall market: Report
By Jessica Cheam
Private home prices at projects such as Chiltern Park and Springbloom around Lorong Chuan station, which opened last May, have risen 27 to 40 per cent since June 2008. They outperformed the overall market during the period in anticipation of the Circle Line opening, said Credit Suisse.

PROPERTY owners big and small are on track to reap big benefits, thanks to the opening of 11 new stations on the Circle Line, according to a report.

Industrial landlords such as Ascendas Reit (A-Reit), Mapletree Logistics Trust (MapletreeLog) and Suntec Reit own large properties around these stations and will see gains from the new transport route, said Credit Suisse.

Its report also showed that property values of homes near these MRT stations - which opened last Saturday - have fared better than the overall real estate market.

The proximity of such homes to the MRT stations - the locations were announced back in 2003 - have been gradually factored in over recent years.

Private home prices at projects such as Chiltern Park and Springbloom around Lorong Chuan station, which opened last May, have risen 27 to 40 per cent since June 2008.

They outperformed the overall market during the period in anticipation of the Circle Line opening, said Credit Suisse.

Report authors Tricia Song and Sean Quek estimate that property near MRT stations fetch a 15 to 20 per cent premium to similar properties that are not close to them.

When the opening of the North-East Line coincided with the Sars-related economic downturn in June 2003, projects such as Compass Heights at Sengkang MRT station and Sunglade near the Serangoon station managed to hold up.

This was despite a 12 per cent dip in the property price index between 2001 and 2004, noted the report.

It also said property firms A-Reit and MapletreeLog, which have industrial assets near the new Tai Seng and MacPherson stations, will benefit from the Circle Line opening.

Credit Suisse is positive on both A-Reit and MapletreeLog shares. It has a target price of $2.24 on A-Reit, which closed at $1.98 yesterday.

It tips 98 cents for MapletreeLog, which ended at 85.5 cents yesterday.

Suntec Reit and its manager ARA were singled out for Suntec City's offices and mall, which will enjoy a greater footfall due to its location near the Esplanade and Promenade stations.

Property developer Hongkong Land's One Raffles Link and CityLink Mall, and the mega City Developments South Beach mixed project could enjoy similar increases in traffic thanks to the Esplanade station.

The new Nicoll Highway station will benefit office workers and patrons at The Concourse, Keypoint, The Furniture Mall and The Plaza, added the report.

But Chesterton Suntec International's research and consultancy director, Mr Colin Tan, said that as traffic patterns change due to the new line, 'shops lining the different routes will swop fortunes - more pedestrian traffic for some and less for others'.

'For malls, the competition level is raised. If you're better, you will grab a large market share, but if your mall is not as appealing, you will lose more traffic from your own surrounding catchment than you gain from others,' he said.

The report also noted that new residential developments such as Waterbank @Dakota by UOL and Dakota Residences by Ho Bee near the new Dakota station, with a range of $900 to $1,400 per sq ft, have been well received by buyers.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that although properties near stations tend to be more resilient, they are not immune to economic downturns and rental pressures.

Developers and sellers of homes near such stations can ask for a 10 to 20 per cent premium, but might not necessarily get it, depending on the property's other attributes, he said.

The 11 new stations extend the reach of the first five Circle Line stations, which opened last May.

These 16 stations are expected to serve some 200,000 people daily, with that number rising once the last group of stations opens next year, including one at Holland Village.

The entire Circle Line project will cost $6.7 billion to develop.

 

[jq75]

Apr 21, 2010
Two more residential sites open for tender
By Esther Teo
THE roll-out of land in response to high demand for homes has continued, with the Government launching public tenders for two more sites yesterday.

Both residential development sites - in Hougang Avenue 2 and Upper Serangoon Road - are 99-year leasehold plots.

The Upper Serangoon site, in Pheng Geck Avenue, is on the Government's confirmed list. These sites are scheduled for tender without developers having to first indicate interest.

The Hougang site, however, is on the reserve list but is up for sale after a developer lodged an acceptable offer of $109.9 million. It is suitable for a low-density condominium, flats or landed housing.

Reserve list sites are offered on top of those on the confirmed list and are triggered for tender if at least one developer lodges an initial bid that meets a minimum threshold.

The Government has sold four residential sites with the potential to yield 1,710 units under the confirmed list since the start of the year.

Tenders are ongoing for another four sites on the confirmed list, including the Upper Serangoon site, which will close in the next two months. In total, these could yield another 1,215 units, the Urban Redevelopment Authority said.

Another 10 sites with the potential to yield 4,280 units are still available for sale on the reserve list of the first half of this year's government land sales programme, it added.

Real estate consultancy CBRE Research executive director Li Hiaw Ho said that with the Upper Serangoon site just a stone's throw away from the Potong Pasir MRT station and the Central Business District just a 10-minute drive away, it would be popular with both home buyers and developers.

He expects the site to attract about 10 bids with a land price of around $84 million to $94 million, equating to $450 to $500 per sq ft (psf) per plot ratio.

'Based on caveats lodged in the last six months, units in Woodsville 28 and 8@Woodleigh, which are new condominium developments in its immediate neighbourhood with 99-year leasehold tenure, were sold at between $885 psf and $1,130 psf in the sub-sale markets.

'Therefore, units in the subject site may be able to fetch $950 psf to $1,000 psf on the average by the time they are launched,' Mr Li said.

The tenders for the Hougang and Upper Serangoon sites close on May 20 and June 2 respectively.

 

[jq75]

Apr 24, 2010
Private home prices continue upward climb
Values shoot up 5.6% for Q1 but there are signs of moderation
By Joyce Teo

[/IMG]
PRIVATE HOME PRICES BY HOUSING TYPES
PRICES of private homes are still heading north with values shooting up 5.6 per cent for the first quarter.

Strong demand from buyers last month helped to push prices beyond the flash estimate of 5.1 per cent but there are signs of some moderation amid the market heat.

The rise for the three months to March 31 was below the 7.4 per cent increase in the fourth quarter of last year, according to the Urban Redevelopment Authority (URA) yesterday, but prices are now just 1.4 per cent below the 2008 peak.

They are also 3.5 per cent below the heights hit in 1996 but will likely breach these levels by the second quarter, said Colliers International research and advisory director Tay Huey Ying.

Despite the robust numbers, experts said cooling measures imposed last September and in February appeared to have helped rein in runaway price rises and put a brake on speculation.

Ms Tay also believes the continued rise in prices has deterred some buyers and so helped moderate values.

Detached homes were the star performer in the first quarter, rising 9.6 per cent, up from the 7.9 per cent climb in the previous quarter.

Overall, the landed homes segment rose 8.3 per cent, after a similar rise in the fourth quarter last year. Non-landed home prices rose by 4.9 per cent.

Since the second quarter last year, landed home prices have risen 35 per cent, noted DTZ's head of South-east Asia research, Ms Chua Chor Hoon.

City centre non-landed homes - the only sector where prices have yet to cross the 2008 peak - rose by 3.3 per cent in the first quarter.

Prices in the city fringes and suburban areas increased by 7.9 per cent and 4.3 per cent respectively.

In suburban areas, prices of uncompleted homes rose more than prices of resale homes as some developers have set benchmarks for new launches. Apartments at The Vision in the West Coast area, for instance, sold for more than $1,000 per sq ft (psf) in March.

Yet while prices are still rising, they are now supported by rising rents. First quarter rents jumped by 4.7 per cent compared to a 0.6 per cent climb in the previous quarter, which followed five quarters of decline.

The rise indicates that residential rents could have bottomed out and are on the road to recovery, said CBRE Research executive director Li Hiaw Ho.

'Anecdotal evidence suggests an increase in the hiring of expatriate staff in the financial services and biomedical sectors as economic fundamentals improve, which, in turn, have translated to the increase in rents,' he said.

Ms Tay believes rents can strengthen by 10 per cent to 15 per cent this year as more expatriates arrive.

The resale market was also active, with 4,261 units transacted, up 6.5 per cent from the previous quarter.

In the first quarter, the 806 sub-sales accounted for 8.5 per cent of total sales. CBRE pointed out that the proportion of sub-sales fell below 10 per cent for the first time since the first quarter of 2007. Sub-sales are seen as a proxy for speculation.

This has helped take some pressure off prices, said Ms Tay.

While high-end and mid-tier home prices are forecast to rise 15 per cent to 20 per cent this year, mass market homes are expected to see a smaller gain of around 10 per cent, said Ms Tay.

In the new launch market, buying remains keen for selected projects.

A tie-up between Hong Realty and City Developments sold about 300 units of the 429-unit Tree House in Chestnut Avenue on Thursday, priced at about $800 psf.

 

[Citiguy]

jq75, thanks for the updates.

 

[long2010]

goverment will monitor the status as quo on private homes

 

[jq75]

May 2, 2010
Dream Home Loans
The Sunday Times checks out the best offerings from some banks
By Gabriel Chen and Harsha Jethnani

If you thought low mortgage rates would stay unchanged this year, think again.

Over the last month or so, some banks have upped the spreads they charge above Sibor - the rate at which banks lend to one another - making Sibor-pegged home loans more expensive.

The three-month Singapore Interbank Offered Rate, or Sibor, was at 0.54 per cent last week, below the previous all-time low of 0.56 per cent in June 2003.

At DBS Bank, a home-buyer taking a loan of 80 per cent of his property's value around March would have paid a rate of Sibor plus 0.5 percentage point for the first year and Sibor plus 0.75 percentage point for the second.

A buyer opting for this Sibor- linked DBS package now will have to pay Sibor plus 1 percentage point for the first two years.

Some fixed-rate packages have also shot up recently.

Standard Chartered Bank's one-year fixed package stood at 1.25 per cent in March, but has risen to 1.95 per cent.

Sibor, which is already low as it tracks prevailing United States rates which are at rock bottom, fell further following gains in the Singapore dollar last month.

In line with the improving global economic outlook, interest rates in some countries have moved higher - with more rate hikes expected globally in the second half of the year.

Some experts tip Sibor to rise later this year and to go even higher from next year.

Standard Chartered economist Alvin Liew predicts the three-month Sibor rate will likely rise to 3 per cent in 2012.

'Mortgage rates are hitting one of the lowest levels in recent years,' says Providend's head of financial planning, Mr Eddy Cheong. 'I think, going forward, there is a high chance that rates will move up if the economy continues to improve.'

When interest rates rise, monthly instalments on home loans that are not fixed will be driven up.

This could have severe implications for buyers who have over- extended themselves with big mortgages, believing interest rates will always stay low.

'Do your numbers properly. Buying a home should be a blessing, not burden,' says Mr Apelles Poh, a financial planner with Professional Investment Advisory Services.

While some home loan rates are now higher, there are still bargains and benefits out there for the cost-conscious home-buyer.

The Sunday Times shopped around to find out what some banks have to offer:

Fixed-rate loans

If you want loans with fixed rates locked in for a term of three or five years, try DBS Bank.

Last week, the bank introduced its five-year fixed package, an unusual tenor in the market.

Rates: Three-year package: The bank's current promotion requires a customer to also sign up for its mortgage insurance plan. Rates are fixed at 1.99 per cent for three years, and Sibor plus 1.25 per cent thereafter.
Standard rates are otherwise 2.2 per cent for three years, and Sibor plus 1.5 per cent thereafter.

Five-year package: For those taking up mortgage protection as well, rates are 2.25 per cent for five years and then Sibor plus 1.25 per cent.

Standard rates are 2.5 per cent for five years, and Sibor plus 1.5 per cent thereafter.

The managing director and head of DBS' consumer banking group, Mr Jeremy Soo, says: 'Our three-year fixed rate remains highly popular with home owners desiring more certainty in their repayment, especially with our three- and five- year fixed rates at a historical low'.

He says the current promotion includes mortgage protection, which is a 'key consideration for many home owners since mortgage is a long-term and significant commitment'.

Sibor-linked loans

If you are exploring Sibor-linked loans, HSBC will be the bank of choice. Its 'no lock-in' Sibor-pegged loyalty home loan is the only package that offers decreasing spreads over the tenor.

Rates: You pay the three-month Sibor plus an additional 0.9 per cent for the first year, three-month Sibor plus 0.8 per cent for the second year and then the three-month Sibor plus 0.7 per cent thereafter.
'The interest spread reduction feature serves to benefit customers regardless of how Sibor rates move,' says Mr Sebastian Arcuri, head of personal financial services at HSBC Singapore.

This bucks the conventional home loan package, which typically sees interest rate spreads rise over the loan tenor, he adds.

Sibor-linked loans with flexibility

Citibank provides the best solutions if you are looking for flexibility through the widest variety of Sibor- linked loans.

Unlike other banks, Citi offers loans pegged to the one-month Sibor. Other loans are pegged to the three-, six- and 12-month Sibor. Lock-in period varies from zero to two years, and spreads are determined based on the size of the loan and customer relationship.

Citi offers the lowest rate on one-year fixed packages at 1.5 per cent. For its two-year fixed package, it charges 1.88 per cent for the first two years.

Rates: For the first year, rates are Sibor plus 0.7 per cent to 1 per cent. For year two, rates are Sibor plus 0.9 per cent to 1 per cent, and thereafter Sibor plus 1 per cent to 1.25 per cent.
'Customers have the flexibility to switch from one tenor to another upon tenor maturity date,' says the business director for secured finance at Citibank Singapore, Ms Vibha Coburn.

As an example, clients can make use of the low one-month Sibor and subsequently, when the month is over, perhaps pick a 12-month Sibor if they feel that interest rates are likely to rise.

SOR-linked loans

For loans tied to the Swap Offer Rate, or SOR, OCBC and United Overseas Bank (UOB) are good picks.

UOB offers a package tied to the one-month SOR, now at 0.35 per cent, that allows customers to pay a fixed monthly instalment for a one-year period.

Rates: For the first three years, rates are one-month SOR plus 1.25 per cent, and thereafter the one- month SOR plus 1.5 per cent.
In the first year, if interest rates increase, 'customers can be assured that their monthly cash flow will not be disrupted. Conversely, if the rates decline, customers can pay off more of the principal amount', says a UOB spokesman.

The one-year constant monthly instalment feature can be re-continued for subsequent years as the fixed monthly instalments will be re-computed based on the remaining tenor and interest.

SOR-linked with lowest rates

OCBC offers the lowest rates on loans pegged to the three-month SOR, which is hovering at around 0.39 per cent, with a two-year lock-in.

Rates: SOR plus 0.75 per cent for the first year, SOR plus 1 per cent for the second year, SOR plus 1.25 per cent for the third year and SOR plus 1.5 per cent thereafter.
Ms Phang Lah Hwa, OCBC's head of consumer secured lending, advises buyers to guard against being swayed by just their sentiments.

Properly assessing your financial ability before making a commitment is important, she says.

'Consider longer-term issues, like affordability in the event that interest rates rise or instalment amounts increase,' adds Ms Phang.

Loans with variable rates

As for loans with variable rates, Maybank emerges the top of the lot, with the most affordable rates, with a two-year lock-in.

Rates: The loans are tied to the bank's board rate, currently at 3.75 per cent.
Rates on the loans are discounted from this 3.75 per cent, starting at 1.18 per cent for the first year. Customers will pay 1.68 per cent in the second year, and then 2.28 per cent in the third year, and 3.25 per cent thereafter.

To mark its 50th anniversary, Maybank is offering a cash gift of $5,000 to customers who pick up the variable-rate loan, says consumer banking head Helen Neo.

Rates for loans inclusive of the gift are slightly different, at 1.68 per cent for the first year, 1.88 per cent for the second year, 2.38 per cent for the third, and 3.25 per cent thereafter.

The two packages offer 'customers discounts off the bank's board rate throughout the period of their loan tenor', Ms Neo adds.

 

[jq75]

May 2, 2010
PROPERTY
New en bloc rules stricter but fairer
Proposed changes will cut time wastage and add more checks and balances
By Joyce Teo
Last week, the Government proposed changes to the Land Titles (Strata) Act, making the process of selling an estate enbloc stricter but also fairer than before. The changes are expected to take effect next month.

This came after the Ministry of Law received further feedback and suggestions on the Act. These range from requesting more procedural controls to loosening the regulations, as well as proposals to streamline and clarify the sale process.

The ministry had previously amended the Act in late 2007, when it introduced a raft of changes that made the process more transparent and regulated but also more complex and lengthy.

Here's a look at the changes this time round.

Role of the Strata Titles Board (STB)

Currently, STB both mediates and adjudicates on the objections filed by minority owners in en bloc sales.

But in recent years, some enbloc sale applications have become highly contentious, and have ended up in the High Court and even the Court of Appeal.

The proposed changes will reduce STB's role to only a mediatory one. This allows disputing parties to head straight for the courts without having to go through STB's adjudication process, thereby saving time and costs.

STB will be empowered to stop the mediation process if it is clear the parties are headed for the High Court.

'Any resolution at a mediation session is at the absolute discretion of the parties,' said the ministry.

'Any party that does not wish to proceed further with mediation may make known his intention to the STB and the STB shall decide if a stop order should be made.'

Another proposal stipulates that STB can spend no more than 60 continuous days mediating each case, to prevent undue delays and to give greater certainty to the mediation process.

STB can request any information or documents from any party related to the collective sale application, if deemed relevant, and order minority owners to share in the costs of the en bloc sale.

EGMs

Currently, extraordinary general meetings (EGMs) are required to elect a sale committee, appoint lawyers and consultants, and approve the apportionment method and the terms and conditions of the collective sale agreement.

During the sale process, EGMs are also required to be held to update owners on consent levels, sale proposals, bid amounts received, or the terms and conditions of the sale and purchase agreement.

One of the proposed changes will be to do away with those EGMs held to update owners as no decision-making is required.

Another change will enable an EGM to be dissolved if the quorum of 30 per cent (by share value of the development) is not reached within an hour of the start of the meeting.

If the quorum is not attained, the meeting will be considered a failed attempt.

This will address some concerns on lack of certainty when the sale committee convenes EGMs and owners are made to wait for an inordinate amount of time for the meeting to begin, said the ministry.

Failed attempts

There have been complaints about owners trying again and again to restart the en bloc sale process when previous attempts failed.

To discourage such repeated attempts when there is insufficient interest, a two-year restriction period will be imposed after a failed en bloc sale attempt.

This will give owners peace of mind and prevent the depletion of management corporation funds.

During these two years, the first retry to convene an EGM to reappoint a sale committee will require the agreement of 50 per cent by share value or of the total number of owners. This is up from the current level of 20 per cent by share value or 25 per cent of the total number of owners.

Any subsequent attempts to convene EGMs within this period will need 80 per cent by share value or the total number of owners. If there is another failed attempt, the stricter rules will apply for another two years.

A failed attempt occurs:

If the quorum for an EGM convened to elect a sale committee is not met within an hour;
When a resolution to elect the committee at an EGM is not passed;
When the sale committee is dissolved or terminated; or
When the collective sale agreement expires.
Sale committees

Currently, sale committee members have to disclose their interest in any property developer, property consultant, marketing agent or legal firm.

With the proposed amendments, sale committee members will also need to declare the extent of ownership that they or a connected person - either an immediate family member or a firm in which they have at least 5 per cent voting power - has in the development and when the purchase was made.

The additional disclosure requirements will allow owners to make a more informed choice on whom they want to elect into their sale committee.

Also, a sale committee member who does not consent to the sale can now be voted out by the other committee members by a simple majority when an application has been made to STB.

A sale committee will have one year to obtain the first signature for the collective sale agreement, failing which it will be dissolved automatically.

 

[jq75]

May 2, 2010
No permit, no display ad
By Melissa Pang

Housing agent Fabien Tan replaced a 4m by 2m banner ad with this smaller one after he was told the huge one was illegal. The BCA rules state that all outdoor ads - regardless of size - must have a licence. -- ST PHOTO: WONG KWAI CHOW

You could not have missed it if you had been walking or driving near the Lorong Chuan area last month.

A huge 4m by 2m banner advertising a home sale was draped over the fence at the back of a semi-detached house in Li Hwan estate.

It read 'For Sale Semi-detached $2.6 million' and gave the telephone number of the housing agent.

But the canvas display has since been taken down - and replaced with a much smaller one - because it broke the rules.

The banner was put up by housing agent Fabien Tan, 28, who felt that traditional publicity methods such as newspaper and online ads and fliers were either too expensive or took too much time to distribute.

So he spent $200 for the giant banner and placed it at the back of the house because it faces a busy traffic junction between Lorong Chuan and Ang Mo Kio Avenue 1.

But about a week after the banner went up, he was told by the Land Transport Authority to take it down as it was illegal and posed a danger to motorists.

He was also told that he would be fined if it was not removed.

Under Building and Construction Authority (BCA) rules, all forms of outdoor advertisements - regardless of size and where they are placed - must have a licence.

Outdoor advertisements are defined as 'outdoor display of any logo, symbol, sign, notice or other visual device, promoting any goods or services, brands of products or events'.

The rule applies even if the sign is placed within one's property.

The reason, said a BCA spokesman, is 'to ensure that such displays are mounted safely and befit the amenities of the place'.

Anyone who flouts the rules can be fined up to $5,000.

The cost of a display advertisement permit depends on its size. It is about $20 for displays not more than 1 sq m, and $140 for those between 5 sq m and 10 sq m.

Still, Mr Tan considers the $200 well-spent even though the banner was up for only about three weeks and the house remains unsold.

'I got more calls than usual from putting up the banner. But there were nuisance calls too,' he said.

BCA said that in the last year alone, it has compounded about 670 offences of unlicensed display of outdoor advertisement signs and signboards. These were put up by owners of properties, advertisers or advertising companies. There were 260 offences in 2008.

To curb the growing problem of unlicensed display advertisements, BCA conducts regular enforcement checks.

It also relies on feedback from the public and other relevant authorities.

Most residents in the Li Hwan estate interviewed said they were surprised when they saw the original banner.

Engineer Esmond Chua, 31, said: 'The first thing I thought was, 'Wow! It's very huge.' I was quite shocked when I saw it and thought it was quite distracting.'

But others did not mind.

Student Dylan Teoh, 18, thinks such banners are acceptable 'as long as it does not encroach on other people's space'.

 

[jq75]

May 3, 2010
Realty firms halt lending activities
Move comes in wake of MND plans to curb milking of flat sellers
By Mavis Toh
PROPERTY firms with moneylending arms that do a roaring business are now putting the brakes on their ventures.

Their activities came under the spotlight last Tuesday when Minister of National Development Mah Bow Tan said in Parliament that his ministry is drafting measures to stop moneylenders from exploiting cash-strapped flat sellers.

Property agency owners and moneylenders told The Straits Times there are about 10 realty firms that hold moneylending licences and operate credit arms along with their property businesses.

Moneylenders' Association of Singapore president David Poh estimates that there are at least another 30 individual property agents who are also licensed moneylenders.

There are currently 260 licensed moneylenders in Singapore, up from 173 in 2008 and 169 in 2007.

The draw? Licensed moneylenders are currently free to set interest rates for loans above $3,000.

Mr Poh said: 'Some of these black sheep charge interest up to 40 per cent and have hidden costs so the sellers don't get back much in their sales proceeds.'

Typically, flat sellers in urgent need of cash could apply for loans ranging from $5,000 to $100,000. The lenders in turn charge interest ranging from 1 to 10 per cent, depending on the loan amount, repayment period and their income.

A legal loophole allows moneylenders to lodge a caveat on the property to ensure they get the first bite of the profits when the flat is sold. This practice is not illegal, and neither is that of agents referring flat sellers to moneylenders for a fee.

However, industry players told The Straits Times that there is a conflict of interest. A property agent who is giving a loan to the home seller may no longer be objective. He may delay closing the property transaction to make the seller pay more in loan interest, or close it at a lower price so that the seller takes larger loans to raise the money needed.

PropNex chief executive Mohamed Ismail said business has proven so profitable that moneylenders are texting agents urging them to bring in flat sellers.

Mr James Lee, chief of James Lee Realty, which also has a credit service, said he sees at least 20 HDB flat sellers asking for loans each month.

Most borrow between $5,000 and $20,000: 'If we don't lend them the money, they will go to illegal moneylenders. While there are some unscrupulous lenders, you can't lump us all together.'

However, with the Ministry of National Development (MND) announcing a review of measures to curb such practices, the realty firms are now taking a step back and adopting a wait-and-see attitude.

Mr Lee has stopped giving loans to sellers: 'The rules are messy now, so we just want to wait till things are clearer.'

The chief executive of MindLink Realty, Mr Merson Chow, who also has stakes in two moneylending firms, has stopped lodging caveats.

'This means we don't extend large loans between $50,000 and $100,000 because it's risky without a caveat,' he said, adding that 20 per cent of borrowers default on payments.

His loan business started five years ago when he realised that two in every 20 sellers would ask his agents to recommend a moneylender they could trust.

Mr Mohamed Ismail wants it made illegal for agents to hold moneylending licences. He fired one such agent last month. 'I've made it a policy that any agent with a moneylending licence can't be a Propnex agent. We need tougher rules to weed them out from the industry,' he said.

When contacted, MND said it is working with the relevant authorities on legislative amendments to prevent flats from being used as a security for debt.

Advising owners against selling their flats to raise money, a spokesman said: 'While they may realise some cash from the sale, they will face a more serious problem of finding another roof over their heads.'

 

[jq75]

May 4, 2010
POSB discount pledge for home loans
0.1 percentage point off first-year interest rate if HDB loan approval not within 60 mins
By Gabriel Chen
IN A first for the banking industry here, POSB is dangling a small discount off the first-year interest rate if it fails to grant approvals for HDB home loans within 60 minutes of completing an initial appraisal.

In its latest effort to rejuvenate the so-called people's bank, POSB yesterday launched a '60-minute promise'.

Customers applying for a home loan simply have to complete and return the necessary documents via e-mail or fax between 9am and 3pm from Monday to Friday.

These include income documents such as the latest income tax notice of assessment. They are also required to submit a mortgage loan application form, the option-to-purchase form (for new purchases), and the loan statement of account (for loans refinancing from HDB).

Once the application is received and deemed satisfactory (this will take a few hours), the customer will get an SMS informing him the 60-minute period has started and another SMS when the letter of offer is ready.

The customer can then proceed to the POSB branch of his choice to sign the letter of offer.

POSB promises customers 0.1 percentage point off the first-year interest rate if the letter of offer is not ready in 60 minutes.

Assuming there are no problems with the application, a POSB customer who submits the documents in the morning should be able to sign the letter of offer the same day.

Mr Koh Kar Siong, managing director and head of POSB, said this is all part of the bank's ongoing initiatives to improve its efficiency and provide greater convenience to customers.

'Providing our customers with a quick turnaround time, giving them the approved letter of offer within 60 minutes is our service promise of enhancing their banking experience with us,' he said.

Some other banks can issue the letter of offer within a day too, though the difference is that POSB is underscoring its commitment by dangling an interest rate discount if they cannot deliver within a certain timeframe.

Citi, for example, offers customers in-principle online approval for a mortgage loan within 60 seconds of an application.

Upon obtaining the in-principle approval, if the customer can submit the necessary documents early in the day and fulfil the required criteria, a letter of offer can be prepared the same day.

OCBC Bank is another example. More than 80 per cent of its HDB home loan customers have received an approval and letter of offer within 30 minutes, if the applications were straightforward and the documents were in order.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, cautioned home buyers to first consider their circumstances and if they can afford to service the mortgage, before snatching a quick deal.

The initiative appears to be in line with DBS Group Holdings chief executive Piyush Gupta's strategy to beef up the POSB franchise.

He has signalled an intention to 're-create the full service relationship where the POSB client sees us not only as a place to put their savings in but also to get their mortgage, unsecured financing and simple investment products'.

 

[jq75]

May 5, 2010
Geylang cleanup leads to vice in heartland
MPs worry that these activities are moving to residential areas
By Sujin Thomas

Prostitutes waiting along Talma Road in Geylang on Monday. Some people think the crackdown in red-light areas simply leads to vice activities moving elsewhere. -- ST PHOTO: DESMOND WEE

WHETHER in Marine Parade or Bedok, Kovan or online, prostitutes are making their presence felt.

No longer are they plying their trade in traditional red-light districts such as Geylang, going by police vice raids over the past few months.

Their forays into the HDB heartland are upsetting MPs, who think that, among other things, the 'cleanup' of Geylang has simply led to the pimps and prostitutes moving elsewhere.

MP for Tanjong Pagar GRC Baey Yam Keng said: 'They are spilling out because of the raids. People accept what they do in Geylang, but may not be used to it elsewhere.'

A bigger concern they have is whether more will enter Singapore with the establishment of the two integrated resorts and the influx of gamblers and high-rollers the IRs are expected to bring in.

Mr Baey said: 'Singapore has always been welcoming to tourists who may seek different sorts of pleasure activities. When demand goes up, so will supply.'

Already, the numbers are not good: A total of 7,614 foreign women were arrested for vice-related activities last year, up from 5,047 in 2008.

Yesterday, police said 60 Chinese women had been arrested for offences such as vice activities at 32 unlicensed massage parlours in Bedok, Tampines and Marine Parade. They were nabbed over a 15-day operation in March.

Anti-vice raids had been carried out in Geylang, Kovan and two budget hotels at Balestier Road, in which 12 foreigners were arrested.

Some of those arrested had also hawked their sexual services online: Customers made an online booking and turned up at an appointed time at a pre-arranged hotel room, mostly in budget hotels in Bugis, Lavender and Little India.

On April 21, budget hotel owner Siah Chen Long, 52, was convicted of allowing prostitutes to carry out vice activities in his hotel, Shing Hotel, at Kitchener Road.

A day after, police raided a budget hotel at Lavender Street and caught 38 women for vice activities.

Criminal Investigation Department director Ng Boon Gay had said then: 'Vice operators who think they can operate freely under the anonymity of the Internet are sadly mistaken. We will continue to clamp down on syndicates and hotel operators who knowingly facilitate such illicit activities.'

The authorities had long held the view that vice could not be eradicated completely, and the strategy was to contain these activities within traditional red-light areas.

But pimps and prostitutes, both licensed and illegal, who do their business in Geylang say the police are coming down hard on them. A pimp who runs a brothel with Thai women said: 'Anti-vice officers raid a few times a day. It has affected our business as everyone scatters. We don't see as many streetwalkers these days as we used to.'

He said many streetwalkers had moved out of Geylang over the past two years into areas such as Balestier to get out of the eye of the authorities.

Asked about their vigorous enforcement in Geylang, a police spokesman said they have always taken a tough stand against vice activities 'regardless of where they occur'.

Lawyers said the crackdown in Geylang can be attributed to the influx of foreign prostitutes who come here on social visit passes.

But why hit Geylang so hard only to send the prostitutes moving to the heartland to ply their trade?

Lawyer Chia Boon Teck said: 'Residents and prostitutes in Geylang have always adopted a live-and-let-live attitude. But when the number of prostitutes rises and they become so blatant about it, the police have to do something.'

Lawyer Shashi Nathan suggested another possibility: The amendment to the Penal Code in 2008, which makes it illegal for anyone to obtain sexual services from someone under 18. He said: 'What the police are doing could well be about keeping controls in place, that is, to clamp down on unlicensed pimps who bring in young girls and then live off their earnings.'

MPs, such as Ms Lee Bee Wah of Ang Mo Kio GRC, said police are taking action because of residents' complaints about vice activities in their neighbourhoods.

She said: 'Their numbers may have gone up, and so complaints have too. Obviously, they (pimps and prostitutes) will go wherever they think there is business. If we don't do anything about it, it will get worse.'

Mr Christopher De Souza, an MP for Holland-Bukit Timah GRC, said the raids send the 'right signal' that vice in the heartland will not be tolerated.

Both he and Ms Cynthia Phua, an MP for Aljunied GRC, want some curbs on the establishment of budget or 'transit' hotels.

Mr De Souza suggested banning hotels from operating on an hourly rate in all residential areas. He said: 'Transit rates are a euphemism for hourly rates. Why would any traveller transiting here for an hour or so need to put up in a hotel about an hour away from the airport?'

Ms Phua is perturbed that two budget hotels have been allowed to operate between Upper Serangoon Road and Sireh Place.

She told The Straits Times: 'Residents have to come face-to-face with these activities, even if it may just appear to be a couple walking in and out (of the hotel).'

sujint@sph.com.sg

NO TO HOURLY RATE HOTELS?

'A longer-term solution to the problem is to not allow budget hotels to operate on an hourly rate. I can assure you that there would be great resistance if any hourly rate hotel tried to open in my ward.'

MP for Holland-Bukit Timah GRC Christopher De Souza, on budget hotels in the heartland

GENERAL CRACKDOWN ON VICE

'I think it is more a crackdown on vice, with the opening of the integrated resorts. Gambling is sometimes associated with other vices.'

Government Parliamentary Committee chairman for Home Affairs and Law Alvin Yeo, on the Geylang raids

CLEAN UP THE STREETS

'The current police controls at targeting pimps, prostitutes, syndicates and soliciting on the streets is the practical way to do it. You can't always catch people for what they do in a budget hotel bedroom.'

MP for Tanjong Pagar GRC Baey Yam Keng, on what more can be done to curb vice

 

[jq75]

May 5, 2010
Boon Lay Way site attracts 14 bids
Keppel Land puts in top bid of $303m for plot next to Lakeside station
By Joyce Teo

MORE than a dozen eager developers have vied for the right to build homes on a choice residential plot at Boon Lay Way, next to Lakeside MRT station.

The red-hot tender attracted a whopping 14 bids - including all the industry heavyweights - with the top three coming in well above analysts' expectations.

Keppel Land (Mayfair) put in the top bid of $499 per sq ft per plot ratio (psf ppr), or $302.98 million.

This was about 15 per cent above the No. 2 bid of $433 psf ppr, or $263 million, from China firm MCC Land (Singapore).

Qingdao Construction (Singapore) came in third, with a bid of $256.78 million, or $422.9 psf ppr.

Property experts had earlier tipped a wide range of possible bids, from as low as $260 psf ppr to $420 psf ppr. They had largely expected the units to sell for below $800 psf.

Other bidders included MCL Land, Far East Organization, Sing Holdings, Allgreen Properties, GuocoLand and Ho Bee Investment. Property giant CapitaLand's Cove Residential put in the lowest bid of $273 psf ppr, or $165.8 million.

The successful bidder will be announced at a later date, said the Urban Redevelopment Authority.

The 99-year leasehold plot is about 1.61ha, and could yield about 525 units.

Property experts estimate the break-even level of units on the site at $800 psf to $850 psf, based on the top bid.

This is already above average transaction prices of most condominiums in the vicinity, such as Caspian and Parc Vista.

Caspian has been selling for $650 psf to $800 psf in the subsale market in the past four months, while units in The Lakeshore have been sold at a slightly higher $680 psf to $900 psf, according to CBRE Research.

Its executive director, Mr Li Hiaw Ho, said: 'Assuming the residential market continues its present state of activity and growth, the future project on this site could fetch an average price of $900 psf to $950 psf by early next year.'

He is projecting a possible break-even level of $830 psf to $850 psf for the project.

Mr Li said the Boon Lay Way location will attract upgraders from nearby private and public housing estates as well as employees from surrounding industrial employment centres and Nanyang Technological University. Key attractions are that it is close to Lakeside MRT station and enjoys an unblocked view of Jurong Lake, among other attributes, he said.

DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said: 'The strong tender results reflect the growing popularity of the area.

'Sites that are close to MRT stations are still popular. This one is more so because plans for Jurong regional centre are starting to take shape.'

The site is near the Jurong Lake District, which is to be transformed into a world-class leisure destination, as well as Jurong Gateway, which is earmarked to become the largest commercial hub outside the city centre.

Still, even allowing for the site's many attributes, the tender had attracted a surprisingly high number of bids, indicating that developers in Singapore are still very hungry for development sites, especially those located near MRT stations, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

'For a suburban development site, there is a significantly high number of condominium developments around the subject site, which could contribute to the potential supply of resale units,' he said.

But top bidders did not appear to be deterred by this, which shows they are very confident of attracting buyers, he said.

He said the strong demand among developers for land in Boon Lay is also a signal to the Government that it should include another major condo site in this area in its next land sales programme.

The Boon Lay Way site was launched for public tender in late March, together with two other sites.

It was on the confirmed list, whereby sites are put up for sale according to a fixed schedule of dates, regardless of developers' interest.

 

[jq75]

May 6, 2010
Who really gains from runaway property prices?
Many will benefit, but too quick a surge can cause anxiety
By Fiona Chan

WHEN data released last month showed that the prices of private homes and HDB resale flats continued to rise in the first quarter of the year, the dismay from some people was palpable.

Online, netizens griped about property being priced out of their reach. In Parliament, MPs asked if the Government could do more to help home seekers.

Singapore's ongoing property boom appears to be downright unpopular - and not just among those yet to buy their homes. Why might that be so? After all, as the theory goes, higher prices benefit not only home sellers making a profit, but every home owner whose property is appreciating in value.

In Singapore, land of the highest home ownership rate in the world, this should mean that apart from a small group of home seekers being priced out of the market, the large majority of the population gains whenever home values go up.

Property developers have also always maintained that some level of froth is good for the property market. The president of the Real Estate Developers' Association of Singapore (Redas), Mr Simon Cheong, has said that speculation is unavoidable and not all bad.

'In any market...there is always the element of speculation, which I think is healthy,' he said in an interview in 2007.

The executive director of Hong Kong's Cheung Kong Holdings, Mr Justin Chiu, told reporters here in March that he likes property bubbles as they draw in more buyers and make the market more active.

But is it really true that rising home prices present more pros than cons for the majority? The short answer: Not if prices are surging sharply, and not if a significant proportion of home owners are aspiring to upgrade.

To be sure, a housing boom is incontestably better for home owners than a slump. When home prices plunge by so much that your property is worth less than the loan you took to pay it, you basically cannot afford to sell it even if you really need to.

But this does not mean that all home owners can afford to sell their houses in a boom either. Those with only one home can afford to sell only if they are willing to downgrade to a cheaper property, or move further from the city centre. Otherwise, whatever profit they get from selling in a high market will be wiped out from buying just as high, if not higher.

Suburban homes have an implied price cap as their main target market is Housing Board flat upgraders and first-time home buyers. But high-end homes in the prime areas have less of a limit, thanks largely to the well-heeled foreigners now firmly entrenched in the property scene.

All things being equal, this means that if your Upper Bukit Timah condominium rises in price by 10 per cent, chances are that condo prices in the posher Bukit Timah area will go up by 20 per cent, putting a spanner in the hopes of upgraders.

Today's home owners also worry about tomorrow's prices: They fear that if property values rise unceasingly, their children will never be able to afford a home.

So, who benefits from a runaway housing market? Investors clearly do: Those who own more than one home and can cash out. Higher home prices also usually mean higher rentals, so investors seeking rental yields love booms.

Also in this category are the property traders and speculators - those who have bet that prices will go up.

But because there are no publicly available figures on how many Singapore residents own more than one home, it is hard to gauge how dominant this group is.

Developers are also an obvious beneficiary of a boom. But to the extent that a sudden spike in home prices could trigger cooling measures by the Government, steeply rising prices may also portend uncertainty and instability in the real estate sector, making it less attractive to investors and property developers.

Of course, the Government itself gains when property values soar, from higher stamp duty and property tax collections, which are based on property values. When luxury home prices hit one high after another in 2007, stamp duty takings reached a record $3.8 billion.

Another advantage of a property boom is the impact on the wider economy. A rising housing market lifts the real estate and business services sectors. High prices also send a signal that a country's property sector is desirable, speaking well of its fundamentals and growth prospects.

It is no coincidence that property prices are highly correlated with gross domestic product. In rankings of cities with the highest home prices, thriving financial centres such as London, New York and Tokyo often dominate.

High home prices also have an indirect effect on the economy. Just sitting on a quickly appreciating asset makes people feel more secure about their finances and more willing to spend.

This so-called wealth effect should be magnified in a country like Singapore, where 90 per cent of the population own their homes. But a 2004 study by two National University of Singapore professors questioned this assumption, and instead found that the wealth effect is 'very much absent' in Singapore.

A key reason could be because Singapore, as both a city and a country, offers few options for home owners to realise their higher wealth by cashing out of their city homes and moving to cheaper quality homes in the suburbs, said Professors Tilak Abeysinghe and Choy Keen Meng.

There is also a lack of financial instruments such as reverse mortgages that allow home owners to convert the savings locked up in their houses to consumption of non-housing goods and services.

The professors argued that sharp escalations in house prices should be avoided here as, far from creating a wealth effect, they produce a negative 'price effect': As people anticipate further rises in home prices, they cut back on spending.

Rising home prices also increase the financial burdens of Singaporeans in the form of higher downpayments and monthly instalments, they said.

So, while high property prices benefit many, the truth is that a market that is too buoyant can create the opposite effect and cause anxiety even among home owners. This may be mere perception, but helps explain why the current unhappiness over high prices seems to extend beyond first-time home buyers.

The upshot of all this is that while falling home prices claim the most casualties, steeply rising prices can hurt as well.

Ultimately, home prices should be viewed like inflation: Best when rising at a slow and steady rate.

Property traders, speculators, developers and all those pushing the boundaries with significant price hikes would do well to keep that in mind.

 

[jq75]

May 6, 2010
Demand for office space in Asia rising
Region's rental market bottoming out; Q1 rents slid just 0.1%
By Joyce Teo

Office rents in Singapore shrank for the sixth straight quarter, says a ** Richard Ellis report, but rates are stabilising amid rising demand. -- ST PHOTO: ALPHONSUS CHERN

OFFICE rentals slid again across Asia in the first quarter of the year, albeit by a whisker, even as the economic recovery gained pace, according to a new ** Richard Ellis (CBRE) report.

But the good news is the market finally seems to be bottoming out in the region, including Singapore where rents are now almost 60 per cent below their peak.

Overall, office rents in Asia slid 0.1 per cent in the first quarter, a much milder fall than the 1.9 per cent in the previous quarter, it said.

'With an increasing number of companies putting in higher real estate budgets to support their overall regional corporate expansion plans, office leasing activity is expected to turn robust in the first half of 2010 and lead rentals out from the downward cycle,' said CBRE Research Asia executive director Andrew Ness.

Already, first-quarter demand for office space was 'robust' in Asia's major commercial centres as firms are now more willing to commit to space at the current rentals, CBRE said.

The report said firms are taking advantage of office rents generally having been lower for over a year in most markets. Some are taking the chance to upgrade to Grade A facilities.

At the same time, overall business sentiment was buoyed by the continued upswing in the regional economy.

The labour market has also tightened, with the jobless rate clearly falling in most markets as larger firms announce recruitment plans, said CBRE.

The overall office vacancy rate in Asian cities fell 0.8 percentage point quarter-on-quarter to 11.8 per cent in the first quarter, it said. Top quality or Grade A offices did better than those in the Grade B market as tenants looked to upgrade to nicer premises and lock in leases with favourable terms while conditions still permit.

First to record rental growth were cities in Greater China, CBRE said. Beijing, Shanghai, Guangzhou, Hong Kong and Taipei all posted quarter- on-quarter growth.

For instance, in Hong Kong, demand is growing amid limited new supply. In fact, rents in the territory's central region surged 9 per cent in the first quarter, the highest rise of all main office districts in Asia, it said.

A report by Colliers International on Monday said Singapore could enjoy spillover demand from Hong Kong, where an office supply crunch is expected to lead to a double-digit percentage jump in office rents this year.

The Republic was still the third most expensive office centre, with Tokyo and Hong Kong in No. 1 and No. 2 spots, respectively, it had said.

CBRE said office rents here shrank for the sixth straight quarter even as the economy powers ahead. But the rate of fall was marginal. Rents appear to be stabilising amid rising demand and the brighter economic outlook.

'We're seeing a very decent level of office leasing activities,' said CBRE's executive director of office services, Mr Moray Armstrong, yesterday. Office rents look increasingly set to rise despite huge impending supply, he said. Rents in better quality buildings are already moving up, but older buildings may take a little longer, he added.

In the first quarter, prime rents fell 0.7 per cent quarter-on-quarter to $6.70 per sq ft a month, and have now shrunk by 58.4 per cent since peaking in the third quarter of 2008.