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Banks, property to lead recovery

2010-01-07T08:46:00.000+08:00

If Singapore’s economy recovers as the pundits are forecasting, like Morgan Stanley which has raised its GDP growth to 5% y-o-y for 2010 and 2011, up from 4% and 4.5% respectively, then the best proxies to this recovery are the banks. In a report dated Jan 4, Thilan Wickramasinghe says banks will benefit from continued net interest margin growth and upside to fee income as macro-economic conditions improve. “The latest loan growth figures also point to positive momentum and this will strengthen as mortgage and SME credit demand flows through,” he adds.

Along with a stock market hitting new highs, demand for property should remain resilient. November loans expanded 2% y-o-y after a 0.2% contraction last October. “The key here were mortgages, which saw a 15.2% y-o-y increase; the highest pace of growth since March 2008,” notes Wickramasinghe. New property units sold rose 241% y-o-y in FY09 which translates to a rise of 127% in value terms. And as new developments are completed, he expects mortgage demand to continue to strengthen.
Separately, corporate credit saw a turnaround expanding 1% month-on-month after nearly a year of contraction. “With a 8.9% y-o-y GDP growth forecasted in FY10, we expect this momentum to strengthen as corporates and SMEs gear up for rising end-demand,” says CLSA. In past cycles, corporate credit has expanded on average by about 15% annually during periods of strong economic growth. This could translate into an 8% rise in loans according to Wickramasinghe. “Hence, our 7% y-o-y loan growth target is unchallenging,” he says.

A rising stock market could also be the driver for a steeper yield curve and hence gapping opportunities for banks as net interest margins are a function of gapping. “We forecast a 6 bps yoy increase here,” Wickramasinghe says. Clearly, loan- and trade-related fees will be key beneficiaries from rising loan growth and higher trade financing demand, especially from SMEs. Furthermore, as the market rises, there could be a revival in wealth management and fund management income.

In terms of capital, local banks are at a clear advantage. The Bank of International Settlements in Basle, which sets the standard for capital ratios, has put forward proposals to formalise global liquidity and gearing standards. As analysts see it, the banks here have the strongest ratios in Asia, with the highest loss absorption ratios in the region.

“With the sector already ahead vis-a-vis regional and global peers, we believe risks of incremental capital raisings will be minimal,” Wickramasinghe writes in his report.

Over at Nomura Research, Anand Pathmakanthan, Asean banks head, says Singapore banks are well positioned to meet the increased global regulatory standards. He says local banks are unlikely to need to raise additional capital and expects strong earnings growth from them this year.

United Overseas Bank (UOB), which has a total CAR (Capital Adequacy Ratio) of 18.5%, will see its core tier-one capital gain 40 bps from the sale of wholly-owned UOB Life Assurance to Prudential for $428 million, says CFO Lee Wai Fai. According to UOB, the unaudited net tangible asset value of UOB Life as at Sept 30, 2009 was $244 million and the book value of UOB’s investment was $343 million.

However, increased capital requirements for the trading positions of banks may see DBS Group Holdings having to set aside more capital, says Pathmakanthan.

Nomura has a “neutral” rating for DBS and “buy” recommendations for Oversea-Chinese Banking Corporation (OCBC) and UOB. CLSA’s top pick is DBS followed by UOB but has an “underperform” rating for OCBC.

Chart Watch
The STI broke out of the several-times tested 2,800 on Dec 22 (coincidentally on the winter solstice). It has been creeping up ever since, gaining 0.4% to 2,930.49 at the close today with stocks trading at 15.9 times estimated earnings, compared with about 10 times at the start of 2009, according to Bloomberg data.

Technically, the rising 50-day and 100-day moving averages are drawing apart after drawing together in December. This is a positive signal and suggests that the STI has further upside.

Analysts and strategists are forecasting levels of 3,200, which looks possible. Trader and chartist Daryl Guppy says that beyond 3,000, the next resistance area is 3,330 to 3,350, established by a trading band projection target.

Immediate support is at the breakout level of 2,800 and the best support line is the 50-day moving average, currently at 2,770.

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The coming China decade

2009-12-24T08:47:00.002+08:00

“China needs the world and the world needs China,” Chinese Premier Wen Jiabao announced on the eve of the celebration the 60th anniversary of the founding of the People’s Republic of China on Sept 30 this year. From the guessing game on the revaluation of the Yuan to the “carry trade” antics of the US Dollar, the timely or late unrolling of fiscal stimulus worldwide, climate change policies, to whether jobs and loan growth will return strongly, about the only certainty next year is that China will overtake Japan as the second economic power.

The first decade is already a lost decade for developed equity markets. As the comparative chart by Bloomberg on asset class performances from 1999 to 2009 shows, it was a golden decade for, what else, but gold. From record lows of US$252 ($355) per ounce in 1999, it is now being pushed to US$1,500 for next year, if you follow the gold pundits. As someone said, “it is fear of inflation, and not inflation” that is giving it a safe haven credential beyond its demand.

Next came commodities that despite the 80% retreat from its high are still the second best performing asset class from 10 years ago. Worst off is the investor who puts a dollar in the S&P 10 years ago. He would get back about 78 cents.

The STI has fared better, but not as hot as BRIC (Brazil, Russia, India, China) markets because the world recession hit western export-oriented economies like Singapore, Korea, Taiwan and Japan hard as well.
The STI closed at 2,841.56 today, recovering a sizzling 61% for the
year. But the record is mediocre over 10 years, up only 12.7% from
its Dec 30, 1999 high of 2,479.58. It barely beat the decade’s
inflation rate. By comparison, investors who bought Singapore property
fared much better. Over the decade, the URA residential property index
adjusted for inflation is still up more than 50% as of Oct 2009,
even after correcting from its 80% high set in 2007 before the market
fell.

So where do you put your money next year? Which sectors will take off? What will be the impact of the opening of the Integrated Resorts? Which Singapore companies should you watch out for next year?

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HDB offers more flats under the BTO scheme

2009-12-17T08:11:00.002+08:00

The Housing Development Board (HDB) on Tuesday launched four Build-to-Order projects with 2,670 new flats, bringing a total flat supply of 13,500 units for this year.

HDB said two BTO projects, the SkyTerrace @ Dawson and SkyVille @ Dawson, provide new flats for homebuyers who are prepared to pay for a prime location with better finishes.

HDB expects a good response to these projects. Prices start from $532,000 for five-room units, $373,000 for four-room units, $280,000 for three-room units and $112,000 for studio type units.

The 40-storey Dawson projects will offer new features such as the ‘paired flats’ – for those who want to live close to their parents – which is under the Multi-Generation Living Scheme.

HDB’s deputy CEO for Estates and Corporate, Yap Chin Beng, said "Altogether, we have 65 paired studio apartment with four-room flats, or studio apartment with five-room flats so that the married children and parents can apply under a single application.”

"The flats are connected through connecting doors, but each unit have their own main entrances."

Buyers of SkyVille can choose the layout of their flat under the Flexi-Layout Scheme. For instance, buyers can opt for a bigger living room area but with fewer bedrooms.

The other two BTO projects are Segar Grove in Bukit Panjang and Montreal Dale in Sembawang. The price for a four-room flat starts at $210,000; $125,000 for a three-room flat; and $72,000 for a two-room flat.

About 95 percent of the two- to five-room units offered under the BTO scheme are reserved for first-time homebuyers.

Market watchers noted that the latest BTO projects will give homebuyers a wider range of options to suit their preferences and budgets.

"Some of the new flat buyers have expressed that there is not many locations to choose from. But actually now, it is pretty much spread out. You have your central location and also what you call the suburban locations. So it sort of caters to the needs of flat buyers,” said Eugene Lim, associate director of ERA Real Estate.

HDB said homebuyers can expect more BTO projects next year. It is prepared to launch one BTO project a month if demand for new flats remains high.
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Sales of uncompleted private homes remain down in November

2009-12-17T08:10:00.000+08:00

Singapore’s sales of uncompleted private homes in November dropped 26 percent, making it the 4th successive month of decline.

About 600 units were sold in November, the second lowest level since January 2009 when private home sales dropped below 1,000 units.

But several experts said that 600 home transactions in November was not a bad figure.

The director and head of research services (Asia-Pacific) of Cushman & Wakefield, Ang Choon Beng, said "600 is still higher than the sales in November 2007, and is about three times higher than the sales in November 2008. So all in all, I don't think the number is bad, or anything to be alarmed about."

Real estate lecturer at Ngee Ann Polytechnic, Nicholas Mak, also said "This (November) is towards the end of the year, and coupled with the government's measures, we do expect some slowdown in the home sales."

The year-end result is traditionally slow for the real estate market. In September, the government implemented anti-speculative measures to cool off the market, and announced it would release more land for homes by the second half of next year.

"This situation (cooling of property sales) is likely to persist for the next few months. The sale volume is likely to remain less than 1,000 units per month,” said Mr. Mak.

"But what is interesting in the November figures is that there is a slight increase in the number of units launched and sold in the prime districts. We suggest that developers are trying to start up the sale momentum, the sale interest, in this area," he added.

More than half of the home transactions in November had median prices beyond S$1,500 per square foot (psf).

The top seller in November was the Parvis at Holland Hill, with 103 units sold for about S$1,507 psf. The Boulevard Vue at Cuscaden Walk had the most expensive price tag last month, with three units sold at a median price of $2,850 psf.

Market watchers said they expect mass-market property prices to remain steady for the next few months, but high-end properties may increase, especially with additional attractions such as the upcoming integrated resorts.

Looking forward, experts said the prices and units sold in March to April next year will give good indication of the real estate market boom
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Singapore office market turns resilient

2009-12-17T08:07:00.001+08:00

The Singapore office market in 2009 was marked by falling rentals, on the expectations that some 2.2 million sq ft of space was to come on-stream island-wide in this recessionary year. In 4Q09, the positive outlook of an economic recovery in US and Asia lifted business sentiments and led to a retardation of the rental declines seen in the previous quarters. Based on Jones Lang LaSalle preliminary estimates, average gross effective rent of Prime Grade A properties in CBD Core has slowed to only 4.9% q-o-q to $7.80 per sq ft per month in 4Q09.

The return of market activity has given office demand some much needed lift. Consolidation and ‘flight-to-quality’ remain the key trends as occupiers continue to consolidate into a single location and/or upgrade into the new and better quality buildings. In CBD Core where around 1.2 million sq ft of good quality space came on-stream this year, absorption of the new supply has been encouraging with around 46% of these new spaces being taken up.

Some expansions have also taken place on the back of occupiers’ improved business outlook. Norton Rose recently expanded in One Raffles Quay North Tower to occupy a whole floor while BHP Billiton increased its take-up from 150,000 sq ft to 230,000 sq ft in the upcoming Marina Bay Financial Centre Tower 2. Many financial institutions are now planning for moderate growth and have already withdrawn some of the shadow space that they were previously marketing from the market. This led to island-wide shadow space shrinking to circa 600,000 sq ft in 4Q09 from 800,000 sq ft at its peak in 2Q09.

Landlords have also turned more positive with the return of market activity and the recovery of the office market seemingly in sight. Most landlords who have secured their buildings’ occupancy are maintaining their rentals. However, those that are competing for tenants to fill up their buildings continue to lower rentals and roll out incentives including rent-free periods and capital expenditure subsidies, albeit at a more moderated pace.

If the global and regional economies remain on their recovery track, leasing activity is expected to become increasingly stronger over 2010 as firms become more confident about business outlook. “Many large MNCs see business opportunity ahead and are planning for moderate growth but are having difficulty establishing headcounts due to the uncertainty ahead,” Mr Chris Archibold, Head of Commercial Leasing at Jones Lang LaSalle, noted.

Given the recent developments in the office market, the end of this down cycle may be near. For the new Prime Grade A properties which have been well-received by the market thus far, the bottom of rentals for such properties may be as early as 2H10. However, the rentals of existing office buildings may continue to fall till the end of 2010 as vacancies are expected to rise on the back of ‘flight-to-quality’. Dr Chua Yang Liang, Head of Research of South East Asia at Jones Lang LaSalle, noted that the new supply amounting to almost 2 million sq ft per annum in the CBD Core over the next three years is likely to put a dampener on rental growth. “The rate at which the market is able to absorb the available space, which is dependent on new demand, is crucial when the new supply comes onto the market next year. A growing gap between newly completed Prime Grade A and other existing Prime Grade A buildings will emerge, similar to what was seen in 2006 with a premium gap of around 28% or $2 per sq ft per month.”

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Tiger burning bright

2009-12-17T07:59:00.000+08:00

Investors who have been smiling at CapitaMalls Asia’s sparkling debut (up 8.5% first day) and continued rise of more than 25% since its Nov 25 listing, now see another possibility with the reportedly soon-to-be-lodged IPO of budget carrier Tiger Airways.

Full-service airlines remain mired in losses and are flying below average premium passenger loads but budget carriers in Asia have fared better, with their low-cost operating structure and ability to pass on fuel and other service surcharges to passengers.

Tiger Airways Holdings, 49% owned by Singapore Airlines, is said to be aiming to raise $200 million. Bloomberg newswire says Tiger may lodge the offer as early as Dec 21 next week. Citigroup Inc., Morgan Stanley and DBS Group Holdings are mandated to manage the sale.

The carrier aims to price the shares in mid-January and plans for a listing in February, the news agency quoted a source. The initial share sale will value Tiger, which began flying in September 2004, at between $725 million and $910 million, according to the document.

By comparison, Air Asia Bhd, the only discount carrier in Southeast Asia that is listed (and which is also said to be considering listing its separate JV air carrier subsidiaries in Thailand and Indonesia) is valued at RM3.64 billion ($1.5 billion).

The market this week has been listless, awaiting signals from the US Federal Reserve Open Market Committee’s two-day meeting that starts today, while digesting uncertain news from Dubai, continued sovereign debt downgrades (Mexico was the latest) and China’s curbs on its property boom.

Meanwhile, news that The Abu Dhabi Investment Authority (ADIA) is trying to abort an agreement to buy US$7.5 billion ($10.5 billion) of Citigroup Inc. stock at eight times today’s price, saying the bank misled it about the investment, shows the tussle between shareholders and the management of bailed-out banks who are diluting the company’s worth as they issue shares to get out of state control (and better control their compensation packages, critics say) earlier.

Sovereign Wealth Funds like Singapore’s GIC and ADIA had helped saved Citigroup earlier when they needed funds during the credit crunch. They will now suffer dilution in their investments unless they top up since Citigroup announced on Dec 14 it would sell stock to repay US$20 billion in bailout funds to the US government. Abu Dhabi is also said to be trying to avoid further investment losses after this week agreeing to provide US$10 billion to help Dubai World avoid a bond default.

The news that Singapore’s jobless rate continued to slow confirmed recovery expectations but did not have much impact compared to regional concerns. What is interesting to note is that Singapore’s manufacturing continued to shrink, losing 6,400 jobs in the three months ended September, the fourth straight quarter of decline. It was offset by 12,700 new jobs in the services sector where the hospitality and Integrated Resorts are adding on more people.

Chartwatch: High-end developers still on a roll
The Straits Times Index closed up 0.5% to 2,813.93, led by Singapore Airlines, which said it would suspend some destinations but added more flights on others as it adjusted its services to suit different growing markets, and Singapore Telecommunications.

Singapore property developers sold 600 units in November, down 26% from 811 units in October. “While the mass market suffered from a lack of new launches, the upper-mid and high end volume started to pick up with Ho Bee Group’s Parvis being the top-selling project. Our property analyst expects 8,000–10,000 units sales next year (compared to 14,400 YTD) with the high-end enjoying a percentage improvement,” notes DBS Vickers. Their top buys areSC Global Developments (Buy, TP: $1.92), Ho Bee (Buy, TP: $1.99) and Wing Tai Holdings (Buy, $2.05 maintained). UOB KayHian also says similar, that the “high-end segment maintains strong sales momentum despite overall slowdown.” They have buys on Ho Bee, Wheelock Properties and Wing Tai.

For the rest of the week, the outcome of the US Fed’s FOMC (Federal Open Market Committee) meeting will be the decider. Most economists expect the Fed will leave rates unchanged as job and credit growth remains weak. “The FED is expected to raise rates only in 2H10. The USD strengthened with the USD Index up 0.78% to 76.96,” says DBS Vickers. “Oil price should trade from USD70–90pbl, averaging at USD80pbl in 2010.”
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Singapore leasing activity shows signs of recovery

2009-12-16T07:38:00.000+08:00

The Singapore office market has experienced some recovery since its dull start this year.

Although office rents are still expected to fall further in 2010, but at a much slower pace compared to the past 15 months, a recent unexpected rise of leasing activity has created speculation about office rents bottoming-out as early as mid-2010.

“We are currently witnessing a strong recovery in leasing activity. Some tenants are even starting to look at expansion,” says Moray Armstrong, executive director for office services at CB Richard Ellis.

Property consultants predict a return of positive demand in the Singapore office market to more than one million square feet in 2010, on the back of economic growth. However, with more than 2.7 million square feet of new space intended for completion next year, rents will continue to dip and vacancies will rise.

Older buildings with tenants transferring to new projects still face a challenging year ahead. Nevertheless, some anticipate the authorities to closely watch on the competitiveness of the Republic in office rents. Mr. Armstrong believes, “it is not unrealistic to foresee that the government may release a couple of prime office sites in the Marina Bay area in the second half next year.”

“A lot will hinge on how the office market performs in the next three months. The government wants to ensure the supply pipeline is healthy so that businesses feel confident about Singapore's ability to meet long-term demand for growth from headquarters and corporates.”

Chris Archibold, the head of markets and regional director of Jones Lang LaSalle, acknowledges “some talk in the market that office supply may become limited in 2013 and 2014 in the CBD Core.”

“The Singapore government is likely to continue monitoring the office market and inject supply into the market through the reserve list in anticipation of an upturn to avoid the supply crunch we saw in 2007,” he added.

The gross average monthly rental value of grade A office space has plummeted 7.95 percent quarter on quarter to $8.10 per sq ft in Q4 2009, as shown in the CBRE data. This is the lowest quarter-on-quarter dip since office rents started falling in the last quarter of 2008. The latest figure in the fourth quarter of 2009 reflects 46 percent decline for the whole of 2009 and 57 percent from the peak of $18.80 psf in the second and third quarter of 2008.CBRE estimates a further 13.6 percent contraction next year to hit $7 psf by end-2010.

The average grade A rental data of Colliers International for various CBD micromarkets shows a 1.9 percent quarter-on-quarter drop in Raffles Place/New Downtown and one percent in Bugis/ Beach Road in the fourth quarter of 2009, with rents unchanged in the Orchard Road, Shenton Way/Tanjong Pagar, City Hall/Marina Centre. For the whole of 2009, the declines ranged from 42 percent to 53 percent, but Colliers foretells rental declines to moderate 'within 5 percent' from January to June next year from current levels.

DTZ estimates a drop of 15 to 20 percent in the average monthly rental value for prime office space along the Raffles Place by 2010, which it says has dropped this year from $16 psf in Q4 2008 to $7.90 psf.

Mr. Armstrong expects rentals to stabilize by mid-2010 especially for better-quality buildings. According to Angela Tan, DTZ's SE Asia head of development and occupational markets, rents will likely bottom in 2011. “If the economy grows more strongly than expected, rents could bottom earlier in end-2010.”

The completion of recent projects creates a two-tier market. “Given the pick-up in leasing activity, we expect the bottom in rentals for new prime Grade A office buildings to be as close as H2 2010. However, there's likely to be longer downward pressure on rentals in existing prime Grade A office buildings as landlords seek to backfill vacancy caused by tenants relocating to new developments,” says Mr. Archibold of JLL.

On a brighter note, Mr. Armstrong of CBRE says he has already seen some of the resurgence in leasing activity fuelled by expansion and not just replacement needs. This will serve as the foundation for a more positive take-up.

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Industrial rents may fall further in 2010

2009-12-16T07:34:00.000+08:00

Production lines may have continued its operations but market watchers are not expecting the industrial property sector to recover in 2010.

The uncertainty of the economy, greater supply of industrial spaces and relocation of offices could cause rents to fall even further, although at a more moderate pace than this year.

“As the economy recovers and performance in the manufacturing sector improves, demand for industrial space may improve in 2010 although it is expected to remain weak,” says Chua Chor Hoon, the research head for DTZ Southeast Asia.

Conventional industrial space is expected to have a greater take-up as manufacturers bolster production, but doubts still remain over the sustainability of such growth. For the large part of 2009, warehouse and factory rents suffered as external demand for goods declined. The average monthly rent for multiple-user warehouses slipped 12.4 percent to $1.38 per sq ft (psf) between Q1 and Q3, according to the Urban Redevelopment Authority (URA). The industrial space rental index also incurred an 8.5 points loss over the same period.

However, “as the manufacturing sector returns to growth”, conventional industrial rental space could “hold firm” in 2010, says Tay Huey Ying, the research and advisory director at Colliers International.

Chua Yang Liang, head of Southeast Asia research at Jones Lang LaSalle (JLL), believes that these rents could either maintain its steady pace or slip at a more modest pace by up to 5 percent.

Sentiments have seen a slight improvement as the economy climbs out of the recession. The GDP could even expand by 5.5 percent in 2010, going by the average forecast from 20 economists polled in the latest survey by the Monetary Authority of Singapore.

2010 could also be tough for business parks and high-tech spaces, which saw immense demand from companies in 2007 and early 2008 due to soaring office rents. In fact, Ms Chua of DTZ expects these properties “to fare worst” in terms of rents and occupancies compared with other types of industrial space.

Meanwhile, CIMB analyst Janice Ding stated, “Sharply lower office rents in the central business district has reduced the attractiveness of pseudo-office space in business parks."

Dr Chua of JLL also noted, “Given the large high-tech industrial supply that is expected to come onstream, rentals are likely to continue sliding.”

Based on the JLL data, monthly high-tech space and business park rents dipped 28 percent to $2.70 psf from January to September. Dr. Chua anticipates seeing 4 to 9 percent declines in these rents in 2010.

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You Better Watch Out

2009-12-11T09:55:00.000+08:00

Santa Claus’ sleigh may have started its rounds in the North Pole but markets are watching out for other red signs as short-term uncertainties spur more profit taking and a rush to safe havens as the year winds down to an end. Strong economic headwinds (US Fed Chairman Ben Bernanke’s caution on Tuesday that “We still have some way to go before we can be assured that the recovery will be self-sustaining” set the Dow back a 100 points), continued sovereign debt downgrades and worries about Dubai’s problems spreading dominated Wednesday.

Dubai World’s property unit Nakheel PJSC’s US$3.52 billion ($4.9 billion) of Islamic bonds due Dec 14 dropped more than 10% yesterday to 46.5 cents on the dollar, according to Citigroup Inc., reported Bloomberg, and bonds sold by DIFC Investments and Dubai Holdings Commercial sank as low as 44.5 cents on the dollar after Moody’s Investors Service cut the credit ratings of six state-run companies.

Then Greece’s Finance Minister George Papaconstantinou came out to say there’s “absolutely” no risk that the country will default on its debt. “We’re moving swiftly to reassure citizens and markets that we’re moving in the right direction.” The minister also said that Greece would not seek a European Union aid package. Standard & Poor’s had placed the nation’s debt on watch for a downgrade two days ago, and Fitch Ratings followed yesterday by cutting Greece’s credit rating one level to BBB+ from A–.

Asian markets across the board followed the Dow down today, although it was more muted.

Locally, the FTSTI lost 0.3% to 2,797.21 at the close. The oil and gas sector dominated attention, with services provider KS Energy’s announcement that it is consolidating its distribution businesses into one new $320-million entity called KS Distribution, by taking private its subsidiary, Aqua-Terra Supply (ATS), and its associated company, SSH Corporation. For every ATS share, an ATS shareholder will stand to receive a combination of $0.23 in cash and 0.125 KS Energy shares, a 28.9% premium over last traded price. SSH shareholders will stand to receive $0.16 in cash and 0.1 KS

Energy shares. This represents a 14.6% premium over last traded price.

The developments are in line with DBS Vickers’ 2010 strategy theme released yesterday that said “our key investment thesis is for builders to outperform asset owners/operators, due to the resurgence in orders”.
“The key difference from the bull market in 2004 is that this order flow resurgence will be led by production-related contracts in 1H 2010, which are the bottlenecks for oil companies’ cash flows after a pause in capex in 2009.”
The broker picked Sembcorp Marine (+20% to Target Price: $4.26), PEC (+26% to TP: $0.88) and Swiber Holdings (+40% to TP: $1.24).

Another growth area is by acquisition of offshore assets. DBS says, “We believe that companies that raised equity early in 2009 should benefit as the industry recovers. They are well positioned to purchase in 1H 2010: 1) Distressed offshore vessels, and 2) Smaller-sized companies with the required skill sets, but weakened financials.”

It picked Ezra Holdings (+26% to TP: $2.77) and Mermaid Maritime (+40% to TP: $1.11). The report said the key “inflexion points” to watch for in 2010 are a W-shaped economic recession that may push oil back to US$50/bbl, weaker-than-expected margins for new orders due to stiff competition and slower than expected easing of tight credit.

Chartwatch: Sideways STI

Phillip Securities’ technical analyst said a day ago, “The odds in the equity market now are stacked in favour of the bears.”

“Right now, the odds are pointing towards a weaker equity market in the short term. The STI & S&P 500 have both been trading around rather key levels, (2,800 and 1,100 to 1,110 respective) and formed momentum divergences off those key levels. In addition, we have the Dollar appreciating very sharply from tagging strong support in the 74.50 to 74.00 region. We might see a continuation of Dollar strength, with the possibility of a push past 76.00 within the next week,” the analyst noted.

“At this point in time, we see a lot more down side risk present than upside potential and advise investors to stay out of longs for the time being.”

DBS Vickers says, technically, the Dow has been resisted at the 10,500 level in the short-term. A pullback to 10,000 is seen over the next 1–2 weeks. The 10,350 level however caps immediate bounces.

The focus is on this coming Friday’s data on November US retail sales and a deluge of Chinese economic data that will indicate how consistent and strong the global recovery really is.

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$38.5m bid for HDB’s Westwood Ave residential site

2009-12-10T07:37:00.000+08:00

Chappelis Pte Ltd submitted a top bid of $38.5 million for the Westwood Avenue residential site.

HDB said it received 32 bids, with the lowest one from Boon Keng Development, worth $16.8 million.

The second highest bid was $38 million, which came from a joint venture between Sunway Developments and Hoi Hup Realty.

Act-Nobel Homes completed the top three bids with its $35.1 million offer. Other bidders include Sim Lian Land, Sing Holdings, Soilbuild Group and Frasers Centrepoint.

The land parcel, which is located in Jurong West, has a total area of 14,098.9 sqm and is proposed to have a 99-year lease of landed housing development.

With its $38.5 million top bid, the selling price works out to around $254 psf. CB Richard Ellis (CBRE) said terrace houses built on the site are expected to have a selling price at around $1.25–S$1.30 million each.

"The alternative is cluster housing that can appeal to home buyers who are attracted by the facilities offered," said CBRE Research executive director, Li Hiaw Ho.

"Currently, houses in Westville and Westwood landed estates are sold in the resale market at $850,000 to $1.1 million each. Potential buyers could comprise locals working in the manufacturing firms in Jurong and Tuas, as well as academics at the nearby Nanyang Technological University," he added.

HDB will award the site after two weeks, when all the bids have been evaluated.
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Q3 private residential property transactions rise 20%

2009-12-10T07:35:00.000+08:00

Singapore's private residential market experienced a strong surge in the third quarter, as the volume of transactions increased 20 percent over the second quarter.

According to property consultancy firm Savills, around 11,000 units were sold between July and September, mostly in the mid-tier and mass market sectors.

Projects like the Optima at Tanah Merah, Hundred Trees at West Coast, and The Gale at Flora Road benefited from this buying interest.

However, the high-end sector observed that the government’s implementation of the cooling-off measures and the limited number of launches eased off transaction volumes in the third quarter.

Behind the buoyant sales, prices of private properties increased 15.8 percent in Q3 - the sharpest quarterly rise in 28 years.

Even in the high-end sector, prices recorded two consecutive increases, despite being around 22 percent under the previous peak in the last quarter of 2007.

Savills said that it expects to have slow transaction volumes in the private residential sales market in the next few months, as purchasing activity tends to ease during the year-end holiday season and there will be fewer major launches.

However, island-wide prices of homes are expected to stay firm, with a modest increase from Q3 to Q4.

Meanwhile, office vacancy rates surged 12.5 percent in Q3. The figure was up by 2.5 percentage points from Q2, as 1.25 million sqft of new office space was completed.

According to Savills, net supply now exceeds net demand by around 1.2 million sqft. Companies stayed cost conscious in Q3 despite a more positive outlook for the economy.

Consequently, tenants relocating to seize the chance of transferring to new office buildings that give them a more competitive rental package largely led the leasing activity.

Looking forward, Savills said that the slow pick up of business confidence will prompt more companies to revisit or to expand their space planning needs that will result in an increase in the demand for leasing.
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Property investment sales recover after slow start

2009-12-09T07:29:00.000+08:00

Investment sales of Singapore property recovered with a $9.4 billion year-to-date tally, after a slow start in the first quarter. CB Richard Ellis (CBRE) projects that the full-year figure will reach more than $10 billion after all transacted caveats in November and December have been lodged. However, the figure would only be around half of $17.9 billion in 2008.

Hitting investment sales deals of about $15 to $20 billion, property consultants anticipate 2010 to be a better year. Such transactions are the basis for the medium to long-term view of developers and investors to the property market.

Investment sales are defined by CBRE as transactions with a value of no less than $5 million, including landed residential property and apartments, private and government sales of buildings and land, both en bloc and strata. It likewise includes change of ownership of property through share sales.

“With 2010 expected to be a recovery year for the Singapore economy, investment sales could be in the region of $15 billion, similar to that of 2005. Economic fundamentals should start to catch up with the positive sentiments in the stock market and the residential market, with more stability in the financial and business sectors,” said Jeremy Lake, executive director for investment properties at CB Richard Ellis.

Chris Fossick, managing director of Jones Lang LaSalle (South East Asia and Singapore) said, “Investors are starting to focus on the recovery, and whilst still cautious about the short term, they are optimistic about the mid and long-term outlook of the Singapore real estate market.”

Most market watchers are expecting that the residential segment will lead the way for next year’s investment sales deals, with the Government scheduled to resume the sale of residential sites through its confirmed list from January. The collective sales market is also expected to be more active next year, after just one major deal this year (the $100.8m sale of Dragon Mansion).

According to Mr. Lake, investors' interest for retail malls in suburban areas continues to be strong.

“So the appetite for office space, which has been somewhat weak in the past 12 months or so, will pick up again. However, deal flow may be limited as many of the sellers who were keener to sell have probably already sold,” he said.

Shaun Poh, senior director for investment advisory services at DTZ, says there are reserved funds for office properties in 2010 but deal sizes will be limited to $200 to $300 million for each building. “Office investors are also more stringent, demanding initial property yields of at least 4-5 per cent, compared with 2-3 per cent during the 2007 boom. And they'll only look at buildings that are substantially leased, given supply overhang issues,” he added.

“The office market would likely see more investment activity next year as the rental slide eases or rents even begin to recover. And with credit loosening further, major institutions like real estate investment trusts could be priming themselves for further acquisitions, having addressed refinancing concerns,” said Karamjit Singh, Credo Real Estate managing director.
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HDB rents remain stable

2009-12-08T07:49:00.002+08:00

Take note all HDB owners near Sentosa who have room to spare.

Foreigners who are working at the upcoming integrated resort (IR) in Sentosa are looking for rental units.

But several property agencies said that with the large supply of HDB flats up for rent in the country, overall rental rates remained steady. This would most likely remain up until the first quarter of next year.

In fact, HDB wasn't affected much by earlier expectations.

Experts said that foreign workers recruited to work at Resorts World Sentosa (RWS) will contribute to the demand, but have yet to cause HDB rents to increase.

Two property agencies noted an increase in HDB rental rates in Q4, which is mainly attributed to foreigners working at RWS.

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Las Vegas Sands plans phased opening for resort

2009-12-08T07:48:00.000+08:00

Las Vegas Sands Corporation is expecting to launch its $5.5 billon casino resort with 2,700 rooms in phases starting in Q1 2010, a company spokesman said.

He refused to provide the exact schedule for the opening, which will include 800 to 1000 hotel rooms. However, one source said it would probably be “towards the end of March."

According to spokesman Ron Reese, the project’s first phase will include some of the convention and meeting spaces, retail operations and the casino.

In July, Sands said it was making every effort to launch the triple-tower Marina Bay Sands on the 15th of February next year.

The company is now in the process of constructing parts of the resort’s "sky park", the 1,200-foot-long span running across the top of the three hotel towers. About half of the 14 total segments have been completed.

According to Reese, Sands aims to launch the remaining hotel rooms, the sky park and several other retail spaces about 60 days after the first phase of opening.

The company expects to open the remaining attractions, including museums and theatres by the end of 2010.
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Singapore property prices increasing

2009-12-08T07:46:00.002+08:00

The dramatic rebound of the real estate sector in Singapore, including the renewed interest of foreign buyers, has become a big concern to government officials. This resulted in new measures being created to stop property speculations. The government’s earlier measures to boost the housing market were successful, and its effort to slow it down is working as well.

After the prices of residential property in Singapore increased 15.75 percent in the third quarter this year, the government warned against property speculations, as well as the formation of property bubbles. From 953 housing units sold in the fourth quarter of last year, home sales surged to 10,120 units in the second quarter and 11,518 units in Q3 2009 this year.

After strengthening from 2005 to 2007, home prices in Singapore declined in 2008 due to the global recession. As global demand plummeted, Singapore’s economic condition shrank 9.5 percent in 2008 to the first quarter of 2009, and there was a 24.9 percent fall in home prices during the year to the second quarter of 2009.

In Q3 this year, Singapore’s economic cycle reversed and GDP increased by 0.8 percent year-on-year. Prospects of an economic stability, combined with low borrowing costs, triggered the massive increase in home prices.

With this, the government warned that it will manage the housing cycle.

In September, the government implemented measures to cool down the housing market, including policies, making it difficult for all households to defer mortgage payments.

“We do want to manage the property cycle as best we can, prevent boom and bust,” said Finance Minister Tharman Shanmugaratnam, admitting that it’s uneasy to foresee the property needs of the country. The government is reviewing the use of other measures to manage the home price cycle, such as modifying rules on credit, adjusting land supply and in extreme cases, amending the tax policies of the country.

The MAS also noted in its Financial Stability Review released in November: "As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."
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Sentosa Cove draws more transactions

2009-12-08T07:45:00.000+08:00

Homes in Sentosa Cove drew strong interest in the first 10 months of 2009 from high-net-worth investors. More properties costing over $10 million were transacted over this period compared to the last four years.

According to property consultancy firm Savills Singapore, its analysis of URA Realis data as of Dec 1 showed that September and October 2009 were noticeably active months. In fact, Sentosa Cove’s three largest residential transactions to date – at $20.18 million, $22 million and $30 million respectively – happened during this time. The biggest transaction involved a completed bungalow at Ocean Drive, which changed hands in October this year in the secondary market. The selling price of $30 million works out to $1,753 per sq ft, based on the 17,115 sq ft land area.

Two Chinese citizens, who are also permanent residents of Singapore, were the buyers of the bungalow, and the seller is a locally incorporated firm.

The second and third biggest deals were transacted in September, involving the subsales of two villas at Paradise Island for $22 million and $20.18 million.

In general, the analysis of Savills showed that the number of lodged caveats for homes in Sentosa Cove costing more than $10 million jumped to 24 in the first 10 months of the year – from just 17 between the last quarters of 2004 and 2008.

More than half or 14 of the 24 transactions were sealed in September and October. According to the firm, a more optimistic outlook for the global economy at the time, before the recent debt problems of Dubai World, enhanced investor’s confidence in making big-ticket purchases like super-luxury homes.

Savills said that the stable recovery of Singapore’s economy in the past few months and the renewed prominence of the Republic on the global financial map have boosted optimism among investors to invest monies here.

Steven Ming, Savills director of investment sales & prestige homes, offered another reason for the flow of transactions in October. He related the anecdotal evidence that some high-net-worth mainland Chinese were in Singapore to shop for properties during their National Day Golden Week holiday.

Overall, the total number of caveats lodged for private homes in Sentosa Cove increased to 133 in the first 10 months of 2009 from 72 in the whole of 2008. Nevertheless, the latest figure is just 26 percent of the peak in 2006, having a record of 516 transactions.

Savills also confirmed that the bulk of transactions in 2009 were in the resale and subsale markets. Deals in the primary market, which involved developer sales accounted for just 9 percent of caveats. This reflected the limited release of new projects in 2009.

Ong Choon Fah, DTZ executive director (consulting), believes that prices of homes at Sentosa Cove will continue to appreciate in 2010, although a lot will depend on the wider property market. “Prices in Sentosa Cove could be more volatile than in the prime districts on the mainland because Sentosa Cove buyers are relatively more investment driven than motivated by owner occupation, compared to the prime districts. When markets go up or down markedly, investors may be more inclined to sell than owner-occupiers, whether it is to cut loss or realize a gain,” she said.
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Singapore is the 9th most expensive Asian city

2009-12-04T07:24:00.000+08:00

Singapore now belongs to the list of top 10 most expensive Asian cities for expats, due to the strengthening Singapore dollar.

A survey by ECA International, a human resource consultancy firm, showed that Singapore is now the ninth most expensive city in the region.

Last year, the city-state claimed the twelfth spot.

ECA International said the cost of living for tourists in Singapore is also increasing with that of its neighbouring countries.

Singapore’s cost of living last year was 15 percent lower compared to Hong Kong. But now, the difference is only 7 percent.

Lee Quane, regional director of ECA International, said the rise in the cost of living is unlikely to prevent several firms from relocating their staff in the country.

Tokyo remains in top spot as the most expensive location for expatriates, as Japan’s stronger currency has outweighed the impact of its deflation rates.

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Six whole floors purchased at Marina Bay Suites preview

2009-12-04T07:23:00.000+08:00

About half a dozen floors at Marina Bay Suites were sold during last week’s preview. Its buyers are believed to be Singaporeans, Indonesians and other Asians.

The biggest transaction recorded in the preview was about $45 million, including at least two whole floors that were purchased by an Indonesian party.

Some market watchers believe it could cost buyers between $17million and $18 million to buy a whole floor at the 99-year leasehold condo based on last week’s selling price.

Each floor has four apartments, two three-room units and two four-room units. The total area per floor is about 8,000 square feet.

Thomas Tan, head of marketing (residential) for Raffles Quay Asset Management (RQAM), said 87 out of 90 units released for preview were purchased. The total amount made from the sales is approximately $400 million.

Two-thirds of the total units were purchased by Singapore residents, including PRs. The remaining units were bought by non-PR foreigners, including Malaysians, Indonesians, Americans, Australians and mainland Chinese.

“We do have multiple-unit buyers, but due to client confidentiality and privacy reasons, we are unable to reveal such information,” said Mr. Tan when asked about the buyers.

RQAM is the asset manager for Marina Bay Suites, which is being developed through a joint venture between Cheung Kong Holdings, Hongkong Land and Keppel Land.

Mr. Tan declined to share the details but reiterated that “the average price range was between $2,200 psf and $2,500 psf.” It was understood that the selling price of the 90 units were close to $2,300 per square foot (psf).

However, the range of the apartments that were sold could be about $1,800 psf to over $2,600 psf.

Mr. Tan said the apartments that were released at last week’s preview were located at the 7th to 40th plus floors of the 66-storey project.

Marina Bay Suites consists of 218 three- to four-room units and three penthouses. The construction of the project is set to begin in the first-half of next year.

“We have no immediate plans to release more units for the rest of this year but we'll continue to register interested buyers. We'll monitor the market and determine the price at the time of launch,” said Mr. Tan.

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Dragon Mansion sold for $100.8 million

2009-12-03T08:08:00.000+08:00

A unit of Roxy-Pacific Holdings bought the Dragon Mansion located at 18 Spottiswoode Park Road for $100.8 million, including the development charge (DC). This works out to around $863 per sq ft per plot ratio (psf ppr).

The property has become the first successful collective sale in Singapore for 2009.

In July, CKS Property launched a tender for the site, after 80 percent of the owners consented to proceed with the en bloc sale.

This collective sale is still subject to approval from the Strata Titles Board. Each owner of the 72-unit apartment with three bedrooms is expected to receive $1.4m from the proceeds of the sale.

The entire 42,000 sq ft land area of the freehold site is designated for residential use with a 2.8 plot ratio. The new development could possibly accommodate around 120 units of apartments with a size area of 1,000 sq ft, said CKS Property Consultants.

According to property brokers, the sale price reflects the limited availability of freehold residential land close to the Central Business District, and introduces a new benchmark for the Spottiswoode Park area.

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Singapore plunges to 32nd spot in the global office rental price list

2009-12-03T08:06:00.002+08:00

In Singapore, office rental prices declined significantly, causing the country to fall to the 32nd spot in a list of the most expensive office rental markets around the world.

Previously, Singapore was in 9th place on the list a year ago and took the 15th spot in June 2009.

Singapore saw a 53.4 percent year-on-year decline in rents, said property consultant CB Richard Ellis (CBRE).

The office occupancy cost in Singapore now stands at US$63.89 per sq ft per annum. In 2008, rents in the country stood at US$135.13 per sq ft per annum. Singapore experienced the second steepest year-on-year decline in rentals – only behind Kiev, which dropped by 64.4 percent.

London's West End is once again the most expensive office market in the world, with rents at US$184.85 per sq ft per annum.

The Inner Central district in Tokyo came in second, with its Outer Central district in the number three spot.

Rounding up the top five are the central business district in Hong Kong in the number four spot and Moscow finishing at number five on the list.

Office markets around the world are going through declines in prime office occupancy prices, said CBRE.

In general, prices of prime office occupancy saw an average of 7.7 percent year-on-year drop worldwide.

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MAS closely monitoring Dubai World and UAE Developments

2009-12-02T07:03:00.003+08:00

The Monetary Authority of Singapore (MAS) said on Monday that it has been closely monitoring the developments in the United Arab Emirates and Dubai World, and their impact on Singapore's financial sector.

The total gross exposure of Singapore's banking sector to the UAE is way under one percent of the total banking assets, MAS said.

It also added that developments in Dubai are not expected to adversely affect the financial stability of Singapore.

The Singapore market performed better than expected in Monday's trade, sliding 1.09 percent compared to analysts’ forecasts of a 2 to 3 percent decline.

According to MAS, it will continue to be in close contact with central banks and regulators in key jurisdictions as well as with the financial institutions in the country.

“The international financial markets are linked, this may change some of the sentiments and it may knock some of the air out of the stock markets which had risen very rapidly,” said Prime Minister Lee Hsien Loong.

The government of Dubai announced last Wednesday that it would seek a six month payment freeze on debts of Dubai World, one of its largest conglomerates, which owns real estate developer Nakheel. It has an estimated liability of about US$60 billion.

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CDL open to increase shares in South Beach

2009-12-02T07:01:00.003+08:00

City Developments Ltd (CDL) said it is open to explore possibilities in raising its stakes in the South Beach project, wherein Dubai World also has a share.

“South Beach is an iconic development and one which has excellent potential,” said a CDL spokesperson.

She noted that the joint venture company that owns the project site may also issue notes if more funds are required. It is also open to any shareholder or note holder to subscribe for the notes.

CDL purchased the South Beach site for $1.69 billion in 2007 through a joint venture with El-Ad Group and Dubai World. In June 2009, JV Company refinanced a $1.2 billion land loan through a $400 million five-year secured convertible notes and an $800 million two-year secured bank loan. HK’s Nan Fung group subscribed for $205 million while CDL got the remaining $195 million.

Dubai World is now asking all the providers to finance itself and Nakheel to 'standstill' and extend the debt maturities until 30 May 2010.

The South Beach project will be comprised of residences, retail space, hotels and offices. Several market watchers suggest that aside from the options given by CDL yesterday, another way for the JV Company to finance the site’s development is to sell part of or the entire project. If the residences are launched and sold, its sales would help in funding some parts of the developments’ construction. The hotels could also be divested to CDL’s Hospitality Trusts, to its Millennium & Copthorne Hotels or even to a third-party buyer.

Alternatively, the said project, when completed, could become a real estate investment trust. A rough calculation showed that El-Ad and Dubai World would have pumped in around $200 million each of equity in the project.

CDL had cash equivalents of about $979.5 million as of 30 September 2009. Market watchers think the project consortium partners may have received proposals for their shares from potential buyers.

CDL said the South Beach's construction is more likely to start in the third quarter of next year, with Nan Fung and CDL to invest more money for the project.

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Affordability remains a key factor in purchasing property

2009-12-02T07:00:00.003+08:00

The rising housing prices and upturn in the economy makes 34-year-old communications manager Lisa Low worried.

She fears that when she finally finds her dream home, she may not have enough money for the cash-over-valuation (COV) that resale unit buyers must pay.

"Is there such a thing as affordable property in Singapore today? With skyrocketing COV, I wonder if I'm able to fork out the $10,000 to $20,000 upfront," said Ms. Low, who resides in Bedok.

According to Mark Teo, senior group division director of ERA Realty Network, potential home owners like Ms. Low are considering several factors prior to buying a property.

Affordability is still a key factor.

First-time buyers who qualify for the HDB criteria can make "the most economic sense" by passing their application for a flat directly from the HDB, since they may spend up to three times more for private properties than for public housing.

Home buyers can benefit from the housing-loan interest rates and subsidized prices that remain the same for an extended period, Mr. Teo said.

At present, there is an annual interest rate of 2.6 percent.

According to Nicholas Mak, a real- estate lecturer at Ngee Ann Polytechnic, the 99-year condos and second-hand executive condominiums are also attractive.

“Executive condos that are five to 10 years old are slightly cheaper and come with all the amenities of full-fledged condos, like carparks, swimming pools and tennis courts,” Mr. Mak noted.

“Ninety-nine-year condos are also cheaper but they may not be as conveniently located.”

Ultimately, selecting a property depends on the buyer’s personal savings from the time of purchase to their earnings in the future.

"As a rule of thumb, it is not prudent for anyone to use more than 40 per cent of their income to service their monthly home installment,” said Mr. Teo.

However, Mr. Mak said that primary residences do not usually make good investments, as they are only chosen for their proximity to certain amenities or schools.

Mr. Teo suggested that investors who can spare $1 million should consider condos in the Tiong Bahru area, which has 3 to 4 percent rental returns, a relatively high figure.

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Singapore prime rents rank as 18th most expensive in the world

2009-12-02T06:59:00.003+08:00

Singapore jumped a notch in the latest survey of the most expensive retail markets conducted by the property firm CB Richard Ellis (CBRE). Prime retail rents in Singapore ranked as the 18th most expensive around the world in Q3 2009, up from the 19th spot in the previous quarter.

Sydney surpassed London as the fourth priciest place to rent prime shop space. This was attributed mainly to the strengthened Australian dollar relative to the US dollar.

These tougher trading conditions cause gaps in shopping centers and high streets, as retailers cease trading and consolidate networks altogether, says CBRE in its latest Global MarketView on the retail industry. “There is increasing differentiation between 'the best and the rest’.”

Due to strong economic growth in some markets, as well as the designed programs of the government, which restored consumer confidence, the retail sector in the Asia-Pacific region is recovering quicker and better than anticipated.

Hong Kong still takes the second spot as the most expensive retail rental market around the world, with an annual value of US$976 per sq ft.

“Prime retail rents vary significantly across the different Asian markets, but in Q3, retail rents in most cities either declined at a slower rate, stabilized or showed a slight up-tick,“ said CBRE.

“However, the threat of supply-side risk remains significant in certain cities in mainland China, Singapore and India, where large amounts of shopping mall construction are expected to be delivered in the coming years.”

Danny Yeo, managing director at Knight Frank and a veteran of Singapore retail property, noted that for the last six months, the average rents for retail space inside suburban malls have been more flexible. It still manages to post low percentage of increases as supplies remain tight. However, along the Orchard Road, the launching of four new malls in 2009 has placed pressure on rentals.

“There's a window of opportunity, which is still open, for retailers to secure space at good rentals in the Orchard Road vicinity,” Mr. Yeo said.

The stock of shop space along the Orchard Road area grew around 17 percent in the first nine months of 2009 compared to the figures in end-2008, according to Knight Frank data.

According to CBRE, New York's reign as the most expensive retail market around the world continued in the third quarter despite a drop of 25 percent in rental rates over the past 12 months.

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Two Singapore casinos will have Las Vegas flavour

2009-12-01T07:54:00.002+08:00

The world’s newest casino will be opening in Singapore but a Las Vegas gaming company will be the centre of the competition.

Experts said that Marina Bay Sands will likely be the more visible and enduring property of the two that will open by Q1 2010.

Singapore has reversed a 40-year ban on gambling passed in 2005 and invited developers from around the world to bid and develop integrated resorts on two sites.

The $5.4-billion Marina Bay Sands will consist of three 55-story towers with 2,500 suites, capped with a rooftop terrace. Just like Las Vegas Sands, the Marina Bay Sands will feature two theatres, a casino, museum, retail centre and a major convention centre.

Its competitor will be the $4.2-billion Resorts World at Sentosa, developed by Malaysia-based Genting Group. Resorts World includes six hotels with different themes around the centrepiece of the development, making it the first Universal Studios theme park in Asia. The resort on the island of Sentosa will have a maritime museum, a water park, a retail district, a casino and a conference centre, as well as a theatre that will feature Asian cultural shows.

Resorts World, which is accessible by a ferry or a transport system on a covered boardwalk, is expected to become very popular. Analysts said that Marina Bay Sands should feature more attractions in the long run.

“Theme parks quickly wear out, so a casino-theme park marriage should lose its appeal over time,” said Grant Chum, the head of UBS Investment Bank’s China research.

“The Sands’ casino-convention centre development is an easier marriage, and I think that has been validated by the company’s success in Las Vegas.”

He added that the developer had established connections with UNLV and that relationship should be improved through its Singapore campus. The country has high hopes for another integrated resort aside from the two.

Singapore draws over nine million visitors, mostly from Australia, China and Indonesia, adding more the $12 billion Singapore dollars (US$7.2 billion) to its earnings.

Singapore Tourism Board’s assistant CEO of development, Margaret Teo, said that upon the completion of the two integrated resorts next year, it will attract two to three million visitors and will generate up to US $1.9 billion by 2015.

The gaming rules for the new resorts will be closely monitored.

Fredric Gushin, the managing director of Linwood, an industry consultant specializing in gaming research, said the country will implement a hybrid of gaming regulatory strategies from Australia, New Jersey and Nevada to monitor the casinos.

Among the strategies to discourage local residents from playing at the casino, residents will have to pay $100 (US$72) daily or $2,000 (US$1,443) annually to gamble in either casino.

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Reality check for REIT investors

2009-12-01T07:53:00.003+08:00

After a difficult year, investors in real estate investment trusts (REITs) seemed to have swallowed a dose of reality on what they can and cannot deliver.

It was a lesson learned the hard way. Once known for offering high capital earnings, the REITs sector has now lost its shine, as unit prices dropped as much as 50 percent from September last year to March this year. REITs were hit by various market concerns over earnings, as occupancy rates and property rents fell, and debt levels like credit line froze.

Saizen REIT, for instance, deferred its distribution payouts since the second quarter due to credit problems. Recently, the public dispute between Cambridge Industrial REIT and MacarthurCook Industrial REIT highlighted the financial issues that the sector has had to deal with.

The ability of REITs to deliver decent yields stood out amid the crisis, something that many investors neglected when pursuing capital earnings before the global recession. Looking at the annualised distributions per unit (DPU) in Q3 of 2009 and closing unit price on Thursday, all 13 REITs seemed to have distribution yields of about 5 percent.

This changed how several investors view the REIT. “People are becoming more receptive to REITs as yield instruments rather than as growth instruments,” said CIMB REIT analyst Janice Ding.

The global financial crisis tested the ability of the REITs and revealed the risk factors, which many investors had previously overlooked, market watchers said. “We believe this is for the better, as investors now have a more balanced perspective on the strengths and weaknesses of this investment vehicle,” said Analyst Meenal Kumar of OCBC Investment Research.

The overall distribution yields could be higher if not affected by weaker DPUs. Nine of the 13 REITs saw their DPU fall from a year earlier.

Five of nine REITs with lower DPUs were affected by reduced earnings. An example of these was the hospital sector such as CDL Hospitality Trust and Ascott Residence Trust, both of which had less distributable income as the crisis hit the tourism industry.

Equity raisings were common among REITs, as they tried to pay off maturing debts despite the credit crisis. So far, their efforts have been successful in lessening the pressure on its balance sheet. According to MAS’s Financial Stability Review, as of end-October this year, the local REIT sector had 18.5 percent total borrowings maturing in 2009 and 2010, down from 57 percent in the previous year.

For now, REITs investors remain cautious. As what MAS said in its report, several other risks remain possible – credit condition may worsen again due to sudden decline in financial markets and the rental yields for industrial and commercial space may also fall further.

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Two properties offered to investment players

2009-11-28T06:30:00.002+08:00

Two properties have been offered to players in the property investment sales market. One is a six-storey commercial property called Boon Building, located at 61 South Bridge Road, and an industrial site at Kaki Bukit Avenue 4, which can be found through the reserve list of the government.

The site at Kaki Bukit has a 2.5-plot ratio and 323,133 sq ft land area. This indicates that the maximum gross floor area translates to a massive 807,833 sq ft. It is zoned for Business 2 and is suitable for general industry, clean/light industry and warehousing.

Based on the reserve list system, the state will only launch the plot for tender, if a developer will apply with a minimum bid price that is acceptable to the government.

Tan Boon Leong, industrial director of Colliers International, reckons that the leading bids for the site could reach $70–80 per sq ft per plot ratio (psf ppr). This translates to around $56.5 million to $64.6 million of land cost. Compared to an earlier site in Kaki Bukit Road 2 that was sold in August 2009 after generating a total of 81 bids, the plot is in a lesser location according to Mr. Tan. “The latest plot is farther away from the main mature industrial estate in the Kaki Bukit/Eunos area.”

KNG Development obtained the earlier plot for about $105 psf ppr or $12.1 million. It is around 1.07 hectares with a plot ratio of 1.0 and is also zoned for Business 2 use, but came with a lease period of 30 years.

Mr. Tan said that the latest plot, which is located in Kaki Bukit Ave 4, has a great appeal potential to developers, who may then build flatted factories and landed terrace factories to sell to end-user industrialists.

“Perhaps some of the unsuccessful bidders at the earlier tender may bid for the latest plot,” said Mr. Tan. “However, as the latest site is much larger in terms of land area as well as gross floor area, developing it will entail a bigger investment. Hence, it will likely fetch a lower psf ppr unit land price.”

Sim Lian clinched in October 2008 a 1.15-ha, 60-year leasehold site with 2.5 plot ratio in Ubi Ave 4. It is zoned for Business 1 use for $85.05 psf ppr or $26.3 million.

Raffles Point Holdings is responsible for the sale of Boon Building, a 999-year leasehold property. The indicative guide price range of the property is $12-13 million, which works out to $1,165–$1,262 psf based on the 10,299-sq-ft estimated net lettable area.
DTZ is responsible for marketing the property through a tender exercise that will close on December 17, 2009.

“The property's appeal lies in the building's excellent location and investment quantum. The availability of naming rights also offers the opportunity to carve out a flagship building with its own corporate identity,” said Shaun Poh, DTZ senior director for investment advisory services.

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The issue of dollars and home loans

2009-11-28T06:29:00.002+08:00

Property buyers were recently advised to be careful in their anticipation to fulfill their Singapore dream of purchasing a private unit.

Earlier this month, the Monetary Authority of Singapore (MAS) provided two scenarios wherein the private property sector could likely falter. Lately, after a marked rebound in the economy, the property sector seems to have levelled off to some extent.

MAS cautioned that home buyers could not assume that home loans will maintain its interest rates at their present rock bottom levels for an indefinite period of time.

It is possible that the interest rates will increase over the longer term as the economy rebounds, MAS warned.

In turn, this will increase the monthly installments of home loans that are not fixed.

Home borrowers who over-extended themselves with a large loan are likely to face grave problems should this scenario happen.

The second scenario presented by MAS includes home buyers that could incur losses from plummeting prices of homes due to a possible market correction if the growth of the economy proves weaker than anticipated.

There are several key factors to consider when taking out a home loan.

First is the issue of its affordability. To ensure practical financial planning, Mr. Dennis Ng, the spokesman for mortgage consultancy portal, www.HousingLoanSG.com, suggests that all property buyers must track their total debt repayment obligations per month.

Such repayments must not go beyond 35 percent of their household income.

Global Creatif Financial, a mortgage consultancy firm, assists its clients to work out the maximum amount that they can borrow. However, there are certain matters that must be considered, including the income of the individual and/or combined with the income of the spouse, derived from property, trade, employment or other income.

According to Annie Lim, managing director of the consultancy firm, such amount will be used to deduct monthly obligations such as bank loans, car loans, mortgage loans, credit card and overdraft bills.

Global Creatif then calculates the amount of cash left after the client’s monthly commitments are fulfilled. Using an applied interest rate and a desired loan term, it computes the lump sum that the client can possibly borrow.

Interest rates movement is another key factor to consider when getting a home loan.

Financial experts generally suppose that rates of home loans will stay low for the next six to twelve months.

Mr. Ng pointed out that the Singapore Inter-bank Offered Rate (Sibor) has a great impact on the home loan interest rates in Singapore. “Sibor is in turn affected by two factors, United States Federal Reserve interest rates and the liquidity in the Singapore banking system. And the US has indicated it is likely to keep interest rates low for the time being,” he explained.

It is, however, possible that the US Federal Reserve will increase interest rates if the economy in the United States recovers. If that happens, Singapore is likely to follow the trend.

Fixed or variable home loan packages are also key factors to take into account before acquiring a home loan.

Naturally, the advantage of a fixed package is certainty. An individual will be aware of the amount he/she will be paying in installments for a specified period.

Fixed rate packages are perfect for clients who want peace of mind and certainty, and are not comfortable with a fluctuating interest rate.

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Strong sales recorded at Marina Bay Suites preview

2009-11-28T06:21:00.002+08:00

A one-day preview at the Marina Bay Suites project resulted in invited home buyers grabbing most of the 90 units released for sale at the average selling price, which ranges from $2,200 to $2,500 per square feet (psf).

About 81 units were sold yesterday at the 221-unit, 99-year leasehold condominium at Marina Bay. The launch had been delayed for two years according to a spokesman from Raffles Quay Asset Management, which supervises the Marina Bay Financial Centre.

The selling price of the condominiums were below the expectations of the developers in early 2008, just before the property market plunged due to the economic crisis.

It was then thought that each unit could be priced at around $3,000 psf, given the fact that the most expensive units in The Sail @ Marina Bay and Marina Bay Residences were sold beyond that price range.

The invited buyers on Wednesday were composed of directors, registered clients and a consortium including Cheung Kong Holdings, Hongkong Land and Keppel Land.

The condominium has three large penthouses and three- to four-room units ranging from 1,572 sq ft to 2,691 sq ft.

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3rd attempt for Pine Grove owners to engage in en bloc sale

2009-11-26T07:36:00.000+08:00

Several homeowners at the Pine Grove estate located along Ulu Pandan Road are on their third attempt since 2005 to sell their homes through an en bloc sale.

The minimum reserve price for the 660-unit estate is $1.33 billion.

Owners stand to pocket an average of $2 million per unit depending on the payable development charge and size of the unit.

This former HUDC estate has more than 893,000 sq ft of land area.

Farrer Court located along Farrer Road is also a former HUDC estate. It was sold in 2007 for $1.34 billion.

The reserve price of Pine Grove is higher than the expected price tag of $1.2 billion during the initial tender of Laguna Park estate in Marine Parade in September.

The Laguna Park collective sale was cancelled last week, even after the price was cut to $967 million.

At Pine Grove, there have already been three sessions to collect signatures for the potential collective sale since 15 November 2009.

An upcoming fourth session is scheduled next Thursday. Representatives from law firm Lee & Lee and property consultancy firm Jones Lang Lasalle will be there to answer the concerns of homeowners.

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Speculative activity fell in Q3, says DTZ

2009-11-26T07:34:00.002+08:00

Property consultancy firm DTZ said yesterday that there was little speculative activity taking place in Q3 this year.

In a report, DTZ said that the proportion of sub-sales declined 13 percent in the third quarter from 16 percent in the previous quarter.

Sub-sales, which signify the re-sale transactions before a project is complete, are usually used as a guide for speculative activities.

DTZ also learned that since Q2, price inflations in the private property market have resulted in the decline of the purchasing power of HDB upgraders.

Proportions of private home buyers with HDB addresses dropped to 37 percent in Q3, from 56 percent in Q1 this year during the recent peak.

However, the figure remains higher than the 22 percent result during the last property boom in 2007.

DTZ said that most buyers with HDB addresses purchased mass-market projects such as Trevista and The Gale.

Looking ahead, DTZ expects low sale activity for the rest of 2009 and even up to the early part of 2010 due to the continuous price hikes and the cooling measures implemented by the government.

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HDB to offer 10,000 new flats per annum

2009-11-26T07:32:00.002+08:00

National Development Minister Mah Bow Tan said in Parliament yesterday that measures taken to cool the private property market seemed to have been effective.

He noted that the monthly data of the Urban Redevelopment Authority (URA) showed that private residential property sales of developers plummeted month-on-month by 37 percent in September, and by another 29 percent in October.

This was attributed mainly to the interest-only loans scheme in September and the removal of the interest-absorption scheme.

He also noted that the Ministry of National Development’s (MND) reinstatement of land sales of eight residential sites included on the confirmed list was another factor. This signifies that the government intends to maintain the affordability of private homes.

The list was suspended by MND last month as the property market weakened. However, MND recently decided to reinstate it as prices and demand for private homes began to surge again.

According to Mr. Mah, these eight sites can hold around 2,900 units. He added that another 18 sites were placed on the reserve list. Overall, these sites can generate around 10,600 units – the highest figure for any half-yearly Government Land Sales Program since 2001, when the reserve list system began.

Mr. Mah said that the build-to-order supply was increased to 5,000 flats in Q4 of this year, in order to meet the demand for HDB flats.

"If we include the recent sale of balance flats last month, HDB would have offered over 7,000 flats in three months and a total of 13,500 flats this year,” he said.

“This is about half the number of flats in Bukit Panjang or Pasir Ris town. At this rate, HDB would have offered enough flats to fill another Bukit Panjang or Pasir Ris in just two years.”

He also predicted that HDB will need to offer around 10,000 to 12,000 new flats each year for the next five years to meet the housing demand in Singapore.

“The total cost of building flats varies based on when we build, where we build and what we build... It varies from $230,000 for a three-room flat in Punggol to $530,000 for a five-room flat in Tiong Bahru,” Mr. Mah explained as he addressed a question raised by Mr Chiam See Tong regarding construction costs.

He also reminded the House that HDB does not price its flats based on a cost-plus-profit.

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Singapore office rental third most expensive in Asia-Pacific

2009-11-26T07:29:00.000+08:00

Colliers International, in its 3Q Asia-Pacific office report, notes that there are signs the worst is over in this property sector, as the overall pace of decline across the region for 3Q2009 was 2%, ompared with 3.6% in the preceding quarter.

Singapore overtook Ho Chi Minh City as the third most expensive Asia-Pacific location for office rental, says Colliers, with Tokyo and Hong Kong retaining their first and second positions, respectively. Average annual gross rent per sq ft for Singapore in 3Q was US$53.55 ($74.28), a slight dip from US$55.70 in the previous quarter.

Even as the overall economic environment improves, Tay Huey Ying, director of research and advisory at Colliers International, believes that office rents will still come under downward pressure. “Rents and capital values of island-wide Grade A office space are forecast to remain soft and could continue to chalk up moderate declines of up to 5% for the last three months of the year, bringing the contraction for the whole of 2009 to 48%,” she says. The downtrend is expected to persist into 2010, with rental decline likely to drop no more than 15% more, she adds.

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Inflation rate to increase in 2010

2009-11-21T10:22:00.002+08:00

The inflation rate is expected to increase next year as the Housing Development Board (HDB) increased its property values.

Singapore revised its consumer price index (CPI) inflation forecast from 1 to 2 percent to 2.5 and 3.5 percent.

This is in connection with the recent revision of the Inland Revenue Authority (IRA)’s annual values for HDB properties, which factor into the Consumer Price Index (CPI) as imputed rents under the component of the accommodation cost.

Singapore’s Monetary Authority considered the revision as technical. The inflation forecast, excluding the cost of accommodation and private vehicles, remained at 1 to 2 percent.

“This core inflation should remain non-threatening in the absence of domestic price pressures, even as one-off factors push up headline inflation,” says Alvin Liew, an economist from Standard Chartered.

But some economists predict other risks may affect next year’s inflation rate.

Leong Wai Ho of Barclays Capital believes “the forecast adjustment may not have fully factored in the prospect of higher food prices,” due to the unfavourable economic conditions across Asia.

And although the government’s revision is technical, “the potential impact on inflation expectations cannot be completely ignored,” says economist Kit Wei Zheng of Citi.

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Singapore recession is over

2009-11-21T10:21:00.003+08:00

Singapore declared yesterday that its recession was over, as its economy grew for the second straight quarter in the three months to September.

Official data showed that Singapore’s gross domestic product (GDP) increased 14.2 percent in the third quarter for its quarter-on-quarter annualized basis, following a 21.7 percent growth in the previous quarter.

“Effectively, the recession in Singapore is over,” said Ministry of Trade and Industry’s (MTI) Second Permanent Secretary, Ravi Menon, during a media briefing.

"Economies around the world are now turning the corner," he said. "Singapore has benefited from these global and regional trends."

The country’s year-on-year GDP increased 0.6 percent in the third quarter, as compared to the 3.3 percent contraction in the second quarter, said MTI in its Q3 economic survey.

In its forecast for 2010, MTI predicted a 3.0 to 5.0 percent economic growth, while maintaining the existing 2.0 to 2.5 percent projection of a contraction this year.

The trade-reliant economy of the country was the first in Asia to decline due to the recession last year, as the global downturn hit demands for its exports, especially from the US.

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Slide in commercial rents leveling off

2009-11-21T10:21:00.000+08:00

The decline in prime office rents in Orchard Road, City Hall and Shenton Way are leveling off, going by mid-Q4 figures from Cushman & Wakefield.

The property consultancy firm observed that the monthly prime office rents in the Shenton Way area dropped just 0.8 percent in the first six weeks of Q4 from $6.04 per sq ft in Q3 to $5.99 per sq ft. This decline is too small compared to the 10 percent plunge during the second and third quarter.

Rents had sustained relatively well, although the Shenton Way district had a double-digit vacancy rate. This was due to the emergence of new space from buildings like 71 Robinson and Mapletree Anson.

There is “landlord reluctance to lower rents amid signs of improving office space absorption,” said a spokesman from Cushman & Wakefield.

Take-up of office space turned positive in the third quarter after its constant decline for three consecutive quarters, according to the Urban Redevelopment Authority.

Likewise, monthly prime office rents in the City Hall area were flattening. It only had a slight dip of 0.4 percent from $6.80 psf in the third quarter to $6.77 psf. The figure indicates a big improvement from the 5.4 percent slide between the second and third quarters.

Prime office rents in Orchard remained relatively stable at $6.89 psf, marginally lower than the $6.90 psf in the third quarter. Rents there dipped 6.3 percent between the second and third quarter.

Both the Orchard and City Hall areas have low rates for single-digit office vacancy. According to Ang Choon Beng, research director of Cushman & Wakefield, lease renewal has been more stable in these areas. There was also a relative lack of new space, unlike in the Raffles Place and Shenton Way areas.

Like those in Orchard Road, City Hall and Shenton Way, office rents in Raffles Place have yet to flatten out. Monthly Grade A rents for Raffles Place dropped 3.5 percent from $8.13 psf in the third quarter to $7.85 psf. Also, monthly prime rents in Raffles Place fell 2.6 percent from $7.80 psf in the third quarter to $7.60 psf.

On the other hand, Raffles Place’s commercial landlords are assured that rental declines are lower compared to rental declines between Q2 and Q3.

Mister Ang anticipates that for the rest of 2009 and during the first half of next year, prime rents will “remain soft”. “We think the influx of 2.2 million sq ft of new prime office space in 2010 needs to be well absorbed before we can see a bottoming of prime office rents,” he said.

“In markets with a large supply overhang, such as Singapore, there is likely to be continued upward pressure on incentives as owners seek to secure tenants,” said Jones Lang LaSalle in a separate report.

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DBS Group optimistic about the high-end market

2009-11-20T07:23:00.000+08:00

DBS group research has upgraded its calls on developers in the high-end segment of the market, including Wheelock (TP: $1.98), Ho Bee (TP: $1.64) and SC Global (TP: $1.69).

The positive outlook on the high-end segment is buoyed by various factors, including the likelihood of having higher transaction volumes of over $2,000 per sq ft in the third quarter of 2009and policies of the government that focus more on the mass-market instead of high-end, thereby controlling the policy risk for the latter.

Other factors include the launching of the Integrated Resorts early next year that is anticipated to be positive since this segment has the most demand from local and foreign buyers; recent status of Singapore high-end that looks relatively cheaper to the high-end of Hong Kong, the same valuation gap scenario that the group observed before the 2007 high-end run, with Singapore high-end as a potential beneficiary to the demands of the Chinese, and the segment is not sensitive to an expected growth in interest rates.

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IRAS to increase property tax on HDB flats

2009-11-20T07:21:00.002+08:00

The Annual Values (AVs) for HDB flat owner-occupiers will be raised by The Inland Revenue Authority of Singapore (IRAS), starting on 1 January 2010.

To help HDB owners adjust to the upcoming AV increase, the Singapore government will grant a one-time property tax refund to all HDB owners for their property tax payable next year.

This new property tax rebate is capped at $120 and set at 50 percent payable in 2010, after deducting the 1994 GST Rebate available to all residential property owners.

Currently, there are two property tax rebates existing—the $100 rebate and the 40 percent rebate that were part of Budgets 2007 and 2009, respectively. Both rebate programmes are scheduled to expire this year.

To provide more help to owners of smaller flats, the rebate will be lowered to $50 or to the actual amount of property tax. This means that owner-occupiers of HDB flats with a property tax of $50 or below are not required to pay property tax for 2010.

With the new rebate and the ongoing 1994 GST Rebate, all one- and two-room HDB flat owners will continue to pay zero property tax next year.

For owners of three-room flats, the increase in property tax next year after deducting the new rebates will amount to $72.

For owners of four-room flats, the average tax increase will be $97 for the whole year. For five-room flats, the tax increase will be $107 and for Executive HDB flat owners, they will pay $103 property tax next year.

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China’s housing prices to rise next year

2009-11-19T07:54:00.000+08:00

Housing prices in China will continue to increase next year due to a stronger inflationary expectations and the surge in bank lending, said the government’s top think tank yesterday.

But the property market may flow back slightly and become stable in the second half of next year, after the country implements its tighter monetary policy, said Ni Pengfei, a researcher from the Chinese Academy of Social Sciences (CASS).

“Our judgment is that property prices will keep rising in 2010, but that there will be some volatility,” he said during a press conference to launch the CASS annual housing market report.

The lending activity of several banks would be on full display in the early part of next year, with the monetary policy still relatively loose, giving enough cash for property purchases, said Mr. Ni.

On top of it, the rising inflation expectations would trigger Chinese investors to pour down cash in assets, especially in property that would benefit from the rising price levels, he added.

Housing prices in the country’s 70 biggest cities increased by 3.9 percent in October compared to last year, the fastest rate of property inflation since September 2008.

While China’s long-term urbanization program supported the property market, the affordability of its housing projects remained a big concern for ordinary Chinese. Local media has also debated whether the current housing prices, at a high level in some markets, were suitable.

Last year, Beijing introduced several policies to aid the real estate market, from reducing mortgage rates and down payments to making it easier for residents to sell their houses.

"The increase in bank lending, not the policies given by the government, was the main factor for the recovery in the real estate market," said Mr. Ni.

But he noted that Beijing must keep its property stimulus policies to ensure it benefited ordinary citizens who try to acquire homes, and not the speculators who are looking for a quick profit.

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CapitaLand raises $1.79 billion from CMA

2009-11-19T07:53:00.000+08:00

CapitaLand, the largest developer in Southeast Asia, raised $1.79 billion (S$2.47 billion) from selling stakes of CapitaMalls Asia (CMA), its retail arm which has a portfolio of 86 malls in China, India, Singapore, Japan and Malaysia.

According to a prospectus on the MAS website, CapitaLand sold 1.165 billion worth of CapitaMalls shares at S$2.12 a piece. The shares were offered at the average indicative range of $1.98 and $2.39.

The money raised was intended for the expansion of CapitaMalls in China, the fastest-growing major economy, where it controls a total of 50 retail properties, 18 of which are still underway. The company also plans to purchase existing portfolios of retail properties and completed malls, as well as buy land for new developments.

“CapitaMalls should do well because it’s a consumer story and right now, with the improved economic environment, that’s an area that should be robust going forward,” said Brandon Lee, an analyst at DMG & Partners Securities Pte. “That’s especially the case in China where you’re looking at GDP growth in the double digits.”

The sale price represents around 1.55 times CapitaMalls' September book value.

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HDB launches two new BTO projects

2009-11-18T08:31:00.000+08:00

The Housing and Development Board (HDB) launched its new build-to-order (BTO) projects with 1,078 flats located in Punggol, while four more BTO projects in Dawson, Sembawang and Bukit Panjang are expected to be released before the year ends with a total of 2,700 units.

Inclusive of its two latest projects in Punggol, Punggol Ripples and Punggol Sails, HDB offered about 10,800 units under the BTO scheme. Last month, it announced plans to increase the supply of new flats to meet the escalating demand for public housing.

With the effect of the BTO exercise, HDB said 95 percent of the flats with two to five-bedrooms will be reserved for first-time flat buyers.

“This will give greater priority to first-timers, who generally have more urgent housing needs than second-timers,” HDB said.

Punggol Ripples and Punggol Sails will have 109 five-room, 403 four-room, 436 three-room flats and 130 studio apartment units.

CEO of PropNex, Mohamed Ismail, expects that HDB’s new projects will boost public interest.

“Plans are already underway to construct the 4.9km Punggol Promenade linking the estate's two activity clusters,” Mr. Ismail said. “As part of the Punggol 21 Master Plan, this will enliven the area and increase the value of homes there.”

He expects the latest BTO projects to be five times subscribed as the increasing HDB resale price index continuous.

"The BTO projects are 10 to 20 percent cheaper compared to regular resale units," he said.

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New sites will ensure sufficient housing

2009-11-18T08:30:00.002+08:00

The Singapore government assured last week that there is sufficient residential supply in the country, so home buyers need not rush. Following this announcement was the government’s decision to sell eight residential sites in the first half of 2010.

The eight sites are located in non-city areas such as Tampines, Simei and Choa Chu Kang.

The government has several reserve lists for residential sites available for sale, but only if property developers commit to a minimum bid acceptable by the government.

The supply comes from the government’s twice-yearly land sales programme, giving home buyers more choices.

HDB upgraders for instance, will be happy to learn that the latest sales programme in the first-half of 2010 will see a slow progress on suburban residential sites.

Home owners living in the vicinity of the eight sites can look forward to new projects in the next few years and if the economy continues to improve, they can also expect an increase in the value of their homes when new projects are launched for sale.

“Generally, when a new project is launched, it will have a bearing on the developments in the vicinity,” said Ms Tay Huey Ying, research and advisory director for Colliers International.

“If a project is launched at bullish price levels, it could push up the prices of surrounding developments, though a lot can depend on project attributes,” she added.

Nicholas Mak, a Ngee Ann Polytechnic lecturer explained, “In a buoyant market, developers would launch at a higher price on a per sq ft basis than surrounding projects. In a less buoyant market, the premium would be smaller.”

He added, “The launch price does give some support to the asking prices of individual sellers in the area.”

The largest site is located in Tampines, which can hold a total of 605 units.

The 200-unit residential site in Choa Chu Kang Road is situated above the Ten Mile Junction and Bukit Panjang LRT Depot, near the upcoming Bukit Panjang MRT station.

The residential site near the Sembawang Shopping Centre can also hold 290 units.

“As Singapore becomes more populated, characterised by a relatively fast-paced lifestyle, accessibility and proximity to mass transit stations will be a key consideration for future home buyers,” said Leonard Tay, director of CBRE Research.

On the reserve list, the Bartley Road site, near the Bartley MRT station, will have 500 residential units while the Stirling Road site, near the Queenstown MRT station, will have 405 units.

In addition, the Singapore government is ensuring the availability of 10,550 private residential units—the largest residential supply since 2001.

However, the effect of these sites will not be felt immediately as it would take 1 ½ years before the eight projects can be launched, Mr. Mak said.

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URA October results down massively

2009-11-18T08:29:00.000+08:00

The number of private homes launched and sold by developers in October plunged to their lowest levels since home sales began to bounce back in February, according to official figures released recently. While the outcome was expected, the question now is: How long will it take for the home market to get active again?

Price-sensitive mass-market buyers have been stressed out by the continuous price increases, even before the government implemented its Sept. 14 measures to calm down the market. Property developers are also running out of projects which are ready to be launched.

“Everybody's more cautious now,” Chairman Tan Tiong Cheng of Knight Frank said, analyzing the current situation among developers and buyers.

Ong Choon Fah, executive director of DTZ, said: “Buying is likely to continue to be slow for the rest of the year. There's not much to launch; and people are away. Activity will probably return after Chinese New Year.”

While developers are expected to launch some projects soon, others have decided to delay their launches until next year, when they see clearer signs confirming that there's been an the economic recovery.

The data released yesterday by the Urban Redevelopment Authority (URA) showed that 811 private homes were sold in October, a 29 percent decline from September's 1,143 home sales. This also showed a decline for the third straight month since July where home sales peaked at 2,772 units.

According to Tay Huey Ying, research director of Colliers International, there were 250 units sold last month- with a range of $1,500 psf to $2,000 psf- accounting for 31 percent of home sales in October and showing a large increase from the 92 units sold in September. “This shows that as of October, filtering-up of demand from the mass-market to the high-end has not been derailed by the September cooling measures,” she said.

Li Hiaw Ho, executive director of CB Richard Ellis, noted that high interest in luxury-segment projects continued last month despite the slowdown felt in other parts of the market. “A unit at Boulevard Vue sold at $4,150 psf; a unit of Seven Palms fetched $3,429 psf in October after six units were sold in September at $3,091 to $3,353 psf. Over at Nassim Park Residences, five units were sold last month at a median price of $3,089 psf following the sales of nine units in Q3 at $2,800 to $3,450 psf,” he said.

The top-selling project in October was Far East Organization's Cyan project in Bukit Timah, with 81 units sold at a median selling price of $1,821 psf. Other chart toppers included Trilight with 58 units sold and Lincoln Suites with 53 units transacted. Both projects are located in the Newton area.

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More action may be needed if recent property measures inadequate: MAS Risk of speculation escalating as market expects low interest rates to persist

2009-11-17T09:19:00.003+08:00

(SINGAPORE) Further action to cool the Singapore property market may be needed if recent measures to dampen speculation prove insufficient, the Monetary Authority of Singapore said yesterday.

Looking ahead, 'price levels and transaction activity bear close monitoring', MAS said in its yearly Financial Stability Review, published yesterday.

'As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.' Despite lingering uncertainties in the economic outlook for Singapore and the rest of the world, 'the domestic property market activity has taken on its own dynamic', MAS said in a special section in the report highlighting what it sees as the key risks to Singapore's financial system. Other downside risks centre on the sustainability of the global economic recovery after governments start to withdraw their fiscal stimulus and tighten monetary policy, MAS said.

'Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will even ally rise and drive up financing costs with severe implications for those who have overextended themselves,' it said elsewhere in the rep , commenting on the recent sharp rise in private home prices.

'While the market rebound may appear to be aligned wit improved prospects for the domestic economy, the current low in rest rate environment has also played a part by reducing the cost of property financing,' MAS said.

'If unchecked, this could lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market,and expose the property market to the continued risks in the global economy.'

The steep increase in property prices here in recent months has already prompted the government to act to discourage speculation. In September, the government banned interest-only housing loans and the interest absorption scheme that allows developers o absorb interest payments for apartments that are still being built.

It also restarted the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes.

Unlike sites listed on the reserve list, confirmed-list land sites are put up for sale at a pre-determined date, without the need for the sale to be triggered by an application from developers. Last Friday, the National Development Ministry said that it would place eight residential sites on the confirmed list for the first six months of next year.

That definite increase in residential land for sale is expected to have a dampening effect on overall home prices. 'We would view the comments made by the MAS as more of a pre-emptive signal for now,' said Donald Chua, an equity analyst at CIMB here in a note to clients.

'A low interest rate environment coupled with strong property demand has led to fears of rising speculative activity.' However, since the recent measures to discourage speculation were announced, 'the euphoria on property has clearly cooled down in recent months, which should lead to more normalised property demand', he added.

If the latest measures aren't effective in curbing hom price increases quickly enough, the government's next step could be to reduce the limit on how much of a property's price may be financed with a bank loan, from 80-90 per cent now, Mr Chua said.

Banks' loan exposures to the property sector remain in line with historical trends, MAS said.

Its most recent aggregate bank lending data show that first of all Singapore-dollar bank loans at the end of September were to the broad property sector, with business loans to the building a construction sector making up 17.8 per cent of total bank lending, and consumer housing loans contributing another 31.6 per cent.

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Boustead’s property division lifts its Q2 profit by 13%

2009-11-17T08:59:00.000+08:00

The strong performance of Boustead Singapore’s real estate division boosted its Q2 earnings by 13 percent amid the unfavorable forex movement and challenging business conditions.

The infrastructure and engineering specialist posted $10.8 million profit for the quarter that ended on September 30 2009, compared to its profit of $9.5 million in 2008. This transpired despite the 12.7 percent decline in revenue to $114.3 million.

The results translated into H1 earnings of $20.2 million, a 33.4 percent increase from the previous year’s $15.2 million. The group’s revenue came to $233.2 million, up by 10.8 percent from last year.

As of September, the group had an order book in excess of $450 million and a net cash of $163.4 million.

It declared a 1.5-cent interim dividend.

The property solutions division remained the leading performer during the quarter, and generated revenue of $61.8 million, up by 7.7 percent year-on-year. The strong performance of the division was driven by the improving revenue of the new township business in Libya, where the group is building a township with 1,164 villas, as well as the stable progress of its industrial real estate solutions business. The unit is expected to continue securing a number of projects in Singapore and overseas.

The first-half financial results of the group were already expected given the generally tough operating environment, said Chairman and CEO Wong Fong Fui.

“Still, it was pleasing to see net profit growth of 33.4 per cent for the first half. Nonetheless, it is highly unlikely that we will be able to exceed our full-year record performance in FY2009, given that it is improbable that we will be able to unlock the value of any industrial leasehold facilities in FY2010.”

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Sentosa Cove deal not completed

2009-11-17T08:57:00.002+08:00

A foreign investor who purchased two adjoining bungalow sites located at the Sentosa Cove in 2008 did not complete the transactions.

One of the plots has been re-sold by Sentosa Cove to a local buyer at $1,688 per sq ft (psf) of land – the same price that the foreign investor proposed. However, the other parcel of land is still available for sale.

The re-sold plot has about 9,700 sq ft of land area, which means the total amount paid for the site was $16.4 million.

The parcel of land was initially put on the market in March 2008, and it was sold through a private treaty by the end of that year. However, after the Chinese investor failed to meet the payment obligation on schedule, the plot was again put on the market. About two months ago, it was sold to a local buyer.

"Having the plot sold again at a similar price as in 2008 means that the fundamentals of the residential enclave on the island of Sentosa still remain intact," said Jason Yeo, general manager of Sentosa Cove.

His firm, which manages State land sales at Sentosa Cove received offers to purchase the site at lower prices. However, he held on to the price until a buyer proposed the right price.

On the other hand, the second plot, which is larger in size, has not yet received an acceptable offer. The land parcel, with about 12,000 sq ft of land area, was sold to the foreign investor for about $1,650 psf. The total quantum works out to be approximately $19.8 million.

“There has been interest from the market for the site, but the parties are not able to meet our reserve price,” Mr. Yeo said.

The land is the only remaining unsold site in the entire residential precinct of Sentosa Cove, which will have 8,000 residents when all the homes in the area are finished by 2014.

According to Mr. Yeo, all earlier land deals, which includes the landed plots sold to investors and individuals as well as condominium sites sold to developers, have been completed. He added that work on Sentosa Cove is progressing well and around 3,000 residents will be residing on the island by the end of 2009.

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Better value for older homes

2009-11-17T08:56:00.002+08:00

While the local property market plunged in late 2008 along with the global economy, home values have since bounced back to its normal level. Since the second quarter of this year, a larger number of interested home buyers have lined up outside the showrooms of new condominium launches.

Property developers have responded quickly by pushing their launches to attract potential home buyers despite the high-prices. Houses in the heartlands are being sold higher than those in prime districts 9, 10 and 11. The 99-year leasehold Centro Residences at Ang Mo Kio was sold quickly at a starting price of $1,150 per square foot (psf).

“We have been seeing a bottom-up recovery in Singapore’s property market since February. Buying was initially driven by HDB upgraders who benefited from resilient HDB prices and price-cutting by developers. Subsequently, buying spilled over to the mid-end segment, with local and foreign investors returning to the market,” said Foo Sze Ming, an investment analyst from OCBC Investment Research.

The improvement in the property market was fuelled by the increased demand from home buyers who postponed their purchases last year, the recovery of the economy, high consumer liquidity, low interest rates and the possible en-bloc sellers who cashed out two years ago.

While the fast recovery of the property market must be applauded, home prices have driven up too quickly to a level that experts agree is unsustainable. CB Richard Ellis’ analysis showed that the price quantum of non-landed homes between Q1 and Q2 this year have increased by 28 percent. Between Q2 and Q3, prices escalated 11 percent from $825,000 to $916,000 for apartments ranging from 400 square feet to 700 square feet.

“In the first quarter, most of the new freehold homes sold were shoebox-sized units in mid- to high-end projects like  Alexis, Newton Edge, Parc Sophia, RV Suites and The Mercury at a median price of $1,000 psf to $1,200 psf. In the second quarter, a significant proportion were larger family-sized suburban projects like I Residences, The Arte and Versilia On Haig, which reflected a median price of $830 psf to $925 psf,” explained Joseph Tan, executive director of CB Richard Ellis.

The buying pattern for the property market shows that recession fears are over. The latest figures from the Urban Redevelopment Authority (URA) indicates a total of 2,767 sold private houses in July, showing a 52 percent jump from 1,826 units in June.

By the end of September, Viva sold 203 units at $1,537psf, Volari @ Balmoral sold 82 units at $2,059 psf and Sophia Residences sold 210 units at $1,590 psf. As developers push their prices, the resistance from home buyers sets in. “There appears to be a small upward trend. While the number of transactions declined, those that went through achieved slightly higher prices,” said Colin Tan, the international director for research consultancy firm Chesterton Suntec.

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Foreign buyers eyeing new investments

2009-11-17T08:55:00.002+08:00

Foreign property buyers are venturing out of the usual prime districts in Singapore to invest in other parts of the island.

A new study done by Savills shows that overseas investors are looking at districts 11 and 22, as well as district 12, which is the Balestier area.

The study also revealed that districts 15, 10 and 9 remained as top choices of foreign investors over the past three years.

District 15 covers Amber Road, Katong and Joo Chiat. District 10 includes Holland Road, Bukit Timah, the posh Ardmore and Tanglin neighbourhood while District 9 is comprised of the Orchard and River Valley areas.

Meanwhile, Districts 22 and 11 have become more prominent in recent years due to the high number of new developments and projects, said Savills.

For the past three years, there were at least 30 major projects launched in district 11, including Park Infinia at Wee Nam, Miro at Lincoln Road and Viva. District 22, which is the Jurong area is home to a number of major projects, including The Lakeshore, Caspian and The Centris.

Savills noted that district 12, which includes Toa Payoh, Serangoon and Balestier, became one of the top choices of foreign investors this year. New projects there include Vista Residences, Nova 48, Nova 88, Domus and The Arte.

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CDL sold 854 private homes in Q3

2009-11-14T07:21:00.000+08:00

City Developments Limited (CDL) sold 854 private homes amounting to around $1 billion in Q3 2009. Accordingly, for the first nine months of 2009, its sales tally reached 1,391 units worth around $1.72 billion - a large increase from the 360 units amounting to approximately $340 million during the same period in 2008.

Some of the residential projects that contributed to the latest sales of the group during the third quarter include Hundred Trees in West Coast, Volari in the Balmoral area, The Arte at Thomson and Livia in Pasir Ris.

For the third quarter that ended September 30, 2009, the company posted a net profit of $193.6 million, which is 28.4 percent higher than last year’s $150.8 million net profit. Such improvement was attributed mainly to its property development business. Unlike the third quarter of 2008, when the sale of Commerce Point was booked, no one-off divestment gain was recorded in Q3 2009.

CDL's net earnings for the first nine months of 2009 slipped 13.3 percent to $416.75 million.

According to CDL, it has agreed to sell all its 60 strata subdivided units located in the North Bridge Commercial Complex, a 999-year-leasehold land parcel, for $46 million. The sale is expected to be completed by March next year and its proceeds will be recorded in the first quarter of 2010.

CDL plans to launch a new 177 unit condo this quarter, which will be located at Thomson Road next to The Arte. This project will comprise one to four bedroom units. The group said the relatively small units will be offered at affordable prices.

For the first nine months of 2009, CDL yielded a total cash flow of $852.4 million from its operating activities. The amount was 175 percent higher than the $309.8 million cash flow last year. Gearing ratio improved from 48 percent at end-December 2008 to 42 percent at end-September 2009. CDL said such an improvement was not due to any fund-raising exercise like equity funding and rights issues.

Group revenue for Q3 increased by 36.7 percent to $940.9 million, while for the first nine months it increased by 5.5 percent to $2.35 billion.

Looking ahead, the group said that in the next few months, home buying interest is expected to stay comparatively stable, although not at a similar pace as that experienced in the second and third quarter of 2009. This is on the back of the recent statement made by the Monetary Authority of Singapore about the possibility of introducing further measures to calm the property market if there’s any risk of renewed escalation of speculative momentum.

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Four-room HDB flat sold for $653k

2009-11-14T07:20:00.000+08:00

A four-bedroom HDB flat in Queenstown was sold for $653,000. The sale sets a new record for price per square foot (psf), amid the continuing demand for resale units.

The buyers, an Indonesian male residing permanently in the country and a Singaporean woman, could have purchased a condominium unit in the suburbs for the same price.

But the couple was won over by the location, which is just five minutes walk from Queenstown MRT station. The unit is also on the 40th floor, with unblocked views of the surrounding greenery from all windows.

The four-year-old 969 sq ft flat located at Forfar Heights in Strathmore Avenue, was sold above valuation for $68,000 - a level determined by an independent appraiser.

The price works out to $674 psf, which is 10 percent higher than the previous record of $609 psf achieved in January last year.

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High-spec space loses its appeal with tenants

2009-11-13T07:47:00.002+08:00

High-spec industrial space has lost its appeal with tenants over the last few months. Some firms have returned to leasing commercial space as office rents have plunged, said Colliers International.

In turn, the move has reduced rents for high-spec space. The average gross rent of high-spec space per month fell 14.1 percent from $3.41 per sq ft at end-March to $2.93 per sq ft at end-September.

According to Colliers, these lower rents signify there is stiff competition among tenants. It also added that some firms had taken advantage of the decline in office rents to move to office premises.

This is a sign of a reversal of the trend which began in 2007. As office rents surged behind a booming economy, more companies moved away from the CBD to a more affordable high-spec industrial space.

However, office rents have dropped amid the economic hold back. The monthly prime office rents hit an average of $7.50 psf in Q3, down by 12.8 percent from last quarter, said CB Richard Ellis in September. They have fallen 53.4 percent from their Q3 peak the previous year.

On top of decreasing demand, a vast supply of high-spec space is anticipated to be released in 2010, which has also contributed to the declining rents, said Colliers.

On the contrary, some warehouses and factories have seen relatively stable rents. According to Colliers, the average monthly gross rent of single-user factories in central Singapore from end-March to end-September remained firm at $1.30 psf, while that of warehouses in eastern Singapore held up at $1.20 psf.

On the positive side, Colliers noticed a pick-up in sales of industrial space, which involved domestic companies, owner-occupiers and private investors.

Although industrial space markets all over the Asia-Pacific seem to be at its lowest point, Colliers has chosen to stay cautious in its outlook.

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Heeton Group acquires Mitre site for about $121m

2009-11-13T07:46:00.000+08:00

The Heeton Holdings Group has signed an agreement to purchase the Mitre Hotel, a freehold residential site located at Killiney Road, for around $121–122 million. The price works out to nearly $1,100 per square foot of potential gross floor area, which includes a $770,000 estimated development charge (DC).

Jones Lang LaSalle brokered the sale after the September closure of a tender exercise.

Intended for residential use, the 39,972 sq ft site has a 2.8 plot ratio under the 2008 Master Plan. The plot ratio is defined as the ratio of land area to the maximum potential gross floor area. The height of the building is also limited to 10 storeys. With around 110 units with an average size of 1,000 sq ft, the site can be developed into a new project.

Based on a unit price of about $1,100 psf per plot ratio (ppr), analysts estimate that the breakeven cost of Heeton for a new apartment project could reach $1,600 psf.

Earlier media reports stated that Mitre Hotel, which started operations in 1948, ceased letting rooms when it lost its license in 2002.

Owned mostly by the Chiam family, the Court of Appeal last year ordered that the property be put up for sale, ending its 12-year legal struggle over its sale.

The last time the property was put into the market was in August 2007, when it had a selling price of almost $1,800 psf ppr or about $200 million, including a $700,000 estimated DC at the time.

Analysts have observed a slight improvement in the latest property price of nearly $1,100 psf ppr, compared to the $1,022 psf ppr (including DC) that Hoi Hup paid in April 2007 for the nearby Killiney Apartments site. The site is currently being redeveloped by Hoi Hup into the Residences @ Killiney.

Heeton reported yesterday that its year-on-year net profit for the third quarter that ended 30 September 2009 jumped 143 percent to $10.5 million.

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HLF reduces rates for HDB home loans

2009-11-11T07:18:00.000+08:00

Hong Leong Finance (HLF) has reduced its rates for HDB home loans in a bid to compete better in an environment of low interest rates. However, it appears that some banks are even quicker on the draw.

HLF revealed the previous day that its latest rate for HDB home loans are down by 0.50 percent compared to its last promotional rates.

Variable rates are now offered at 1.33 percent for the first year, 2.13 percent for the second and 2.83 percent for the third. These variable rates are based on a board rate, currently standing at 4.25 percent. The latest two-year fixed-rate package from HLF charges 1.63 percent for the first year and 2.63 percent for the second, which totals to 4.26 percent.

However, its rival DBS also has new lower home loan packages that are applicable to both private and HDB properties. Home loan rates have just been revised by the bank, said the spokeswoman for DBS.

The variable package of DBS also charges 1.675 percent based on a three-month Singapore interbank or Sibor, which is 0.675 percent, plus one percent for every year of the loan.

The variable rate for three years at OCBC is 1.66 percent each year and is based on a 4.5 percent board rate.

“OCBC Bank's home loan packages will remain competitive to respond to market conditions,” said OCBC Bank’s head of consumer secured lending, Phang Lah Hwa.

According to HLF, the largest finance company in Singapore, the new rates are for up to 80 percent financing and are applicable until the end of the year.

“The revision in rates is to ensure that our package is one of the lowest in the market,” the spokeswoman for HLF said.

“We hope that with the new rates, our customers will continue to support us and allow us to capture a bigger slice of the HDB market which is presently very active and healthy,” she added.

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Central Bank wary of property market speculations

2009-11-11T07:16:00.002+08:00

The central bank of Singapore warned on Monday that it may need more measures to control the risk of renewed property market speculations, which is being driven by prospects of an economic recovery and low borrowing costs.

"As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted," said the Monetary Authority of Singapore during the yearly Financial Stability Review.

"More measures might then be necessary."

The remarks came after the government imposed cooling measures for the property market in September. Such measures made it harder for home buyers to delay their payments.

The property market activity in Singapore has taken its own dynamics despite the uncertainties in the global and domestic economy, said the central bank.

The Monetary Authority of Singapore also warned that the worldwide financial market rally has surpassed the fundamentals of the economy and any view that the economic upturn is stalling could prompt price changes of financial assets.

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MCL and Ho Bee sell 51 units at Parvis condo

2009-11-11T07:15:00.002+08:00

MCL Land and Ho Bee Investment last week sold a total of 51 units at their Parvis condominium located at Holland Hill at an average price of $1,480 per sq ft (psf).

What happened at Parvis was far from the recent trend, wherein the smallest units of a certain project are sold out first. At Parvis, the most number of units sold were four-bedroom apartments with 18 units, followed by two bedroom apartments with 15 sold units and the three-bedders with 14 sold units.

To address the buyer interest, Ho Bee and MCL even sold three penthouses, although these were not included in the first batch of 85 units they launched for the preview.

They are now planning to officially launch the project during the weekend. They will release more units at the freehold condo, which has 248 units. This 12-storey project is being constructed at the former site of Holland Hill Mansions.

Chong Hock Chang, the general manager of Ho Bee, revealed that Holland Hill Mansions’ former owners had already selected seven apartments.

Of the 51 units sold, 39 were bought by Singaporeans. Foreign buyers and permanent residents acquired the remaining 12 units; most of them from Malaysia, with some from Indonesia, added Mr. Chong.

The three penthouses sold comprised of two single-level units of 2,300 sq ft each, with three bedrooms priced at around $3.3 million each. It also included a duplex unit of 2,800 sq ft site area, with four bedrooms costing around $4.1 million. Singaporeans acquired the two single-level penthouses while a foreigner bought the duplex.

Last month, Ho Bee launched Trilight condo, a freehold development at Newton Road. The 30-storey project has already sold 61 units to date at an average price of $1,650 psf.

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Asian property markets fear a real estate bubble

2009-11-11T07:14:00.002+08:00

Growing prices of residential properties in Asia may cause mini real estate bubbles and stimulus packages from governments may be pulled out to cool down the market.

Finance ministries and central banks in several countries like Singapore and China are discussing and setting up measures to prevent the upward trend of property prices.

Prices of residential properties in Singapore have climbed 15.8 percent in Q3 from Q2, the first such increase in more than a year. Demands in the market are evidently increasing. Several home buyers are keen in securing apartments so they allow their property agents to fill up their blank checks while some patiently queue for hours during new launches.

In China, average prices have increased by 37 percent from the previous year. The recent analysis from Credit Suisse shows that almost all major cities in China have experienced property price increases from 26 to 96 percent in their new home sales within 12 months.

The China Banking Regulatory Commission wants to cut leverage at large state-owned companies that have entered the market and developers that have purchased lands at extravagant prices. There are claims that a number of developers borrowed a lot of money. Experts believe this can threaten to cause an increase in delinquent debts if property prices begin to collapse. The Singapore government has already taken measures, including shutting down bank lending programmes that permitted home buyers to delay their payments on developments that are yet to be completed. Other measures may have to be considered should this action fail to work.

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HDB to launch sale of Jurong West landed housing site

2009-11-10T07:13:00.000+08:00

The Housing and Development Board (HDB) launched a public tender on Monday for the Jurong West landed housing site.

The 99-year leasehold parcel, located in Westwood Avenue, Jurong West, has a site area of 14,098.9 sq m and is included on the government's reserve list.

The plot is close to the Pan-Island Expressway and next to Westville landed housing estate.

The minimum bid price for the site is $15 million, said the HDB. A developer who refused to be named had earlier committed to bid for the site at that amount, or equivalent to $99 per sq ft of land area.

Property consultants are expecting to see no less than five bids for the Jurong West site.

The tender will close on Tuesday, 8 December 2009, at around 12 noon.

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Foreign buyers stream back to private home market

2009-11-10T07:11:00.002+08:00

A growing number of foreigners, particularly those from China are streaming back into the private home market.

Recent research conducted by Savills Singapore, a property consultancy, showed that foreign buyers accounted for 22.7 percent of private home sales in the third quarter. The sales are more than the 19.7 percent average since the beginning of 2000.

With a contribution of almost 15 percent of the total foreign purchases, Chinese buyers have taken the No. 3 position in the rankings this year, dislodging those from India. This places China just behind Indonesia in the No. 2 spot and Malaysia in the first spot.

Two years ago, India had been in the No. 3 spot, but it went to the No. 4 spot this year.

Buyers from Myanmar came in at eighth spot although they failed to make it to the top 10 the previous year, and were only at No. 10 in 2007.

For the July to September period, foreign buyers, including permanent residents, lodged 2,448 caveats for private homes, a primary move to purchasing a home.

Based on the data that Savills compiled, the volume of caveats for the third quarter is up from 1,807 caveats during the second quarter and just 498 in the first quarter.

Overall, permanent residents purchased a total of 1,389 homes in Q3 this year.

Based on the preliminary data from DTZ for Q3, it showed that foreign buyers accounted for around 25 percent of total private home sales, compared to the boom of 2007 with about 33 percent.

Sophia Residence, a project which was launched in July was one of the most popular projects sought after by foreigners. Other projects popular with foreign buyers include One Devonshire, Caribbean at Keppel Bay, Viva and Ascentia Sky.

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More households sub-letting their HDB flats

2009-11-10T07:10:00.002+08:00

A growing number of Singaporeans are working abroad and simply consider their flats as investments.

They comprise the rising number of households that are sub-letting their flats. The figure climbed 21 percent during the previous fiscal year.

Between April 2008 and March 2009, the Housing and Development Board (HDB) approved 22,754 applications or 4,019 units more than the accepted applications last year.

According to property analysts, in spite of the present economic condition, such a trend is not necessarily because flat-owners are having difficulties in adhering to their mortgage repayments.

"The downturn happened in the middle of HDB's financial year, toward the end of last year. And while some households may have been affected, it's not enough to say they contributed to the increase – it's a variety of factors," said Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic.

One factor is that there is a growing number of Singaporeans heading overseas to work. Liz Choo, a property agent, told MediaCorp that over the last six years, there has been an increase of more than 20 percent in the number of flat-owners who approach her to sub-let their flats.

She added that most of them are heading to Vietnam, China, the United Kingdom and Australia.

Rents for flats with three bedrooms range between $1,500 and $1,800, while executive maisonettes, five-rooms and four-rooms can rent for $1,800 to $2,500 per month, depending on the location. According to property agents, a flat with five bedrooms located in the central area can rent for around $3,000.

The first increase in the number of Singaporeans who sub-let their HDB flats was prompted by the relaxation of the public housing policy in March 2007.

HDB loosened up its policy to provide greater flexibility for flat owners to monetize their flats when they retire or encounter financial difficulty. It will also expand the rental market of HDB flats.

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Singapore works to calm property fever

2009-11-10T07:09:00.002+08:00

The Singapore government gave a clear sign yesterday that it plans to keep private homes affordable, by declaring its land sales programme intended for the first half of 2010 at an earlier time.

With the introduction of 10 new residential sites through the reserve and confirmed lists, developers will be able to build more homes, few of these being executive condominiums (ECs). More plots will also be available in less expensive regions.

The forthcoming confirmed list is not only remarkable for its number of sites. Of the eight parcels, two of which are designated for ECs — a combination of private and public housing with resale restrictions and other limitations.

Such developments cater mainly to those who can afford to pay more than an HDB flat.

The 26 mixed-use and residential sites on the reserve and confirmed lists are located in the rest of central region (RCR) and outside central region (OCR), where less pricey homes can be constructed. Of the 10,550 potential supplies of units, 1,330 will be in CCR and the rest of 9,220 will be in OCR.

"Since the Minister of National Development, Mr Mah Bow Tan discussed in September the reinstatement of the confirmed list, the market has been waiting for further updates," said Choy Chan Pong, the land sales and administration senior group director of the Urban Redevelopment Authority (URA).

“Since people say there is some anxiety about housing supply, it’s better to tell people now,” he rationalized.

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HDB to remain affordable: SM Goh

2009-11-07T07:05:00.002+08:00

Senior Minister Goh Chok Tong announced during the 50th anniversary of the Real Estate Developer’s Association of Singapore (REDAS) how housing board flats remained the foundation of Singapore’s home ownership scheme.

It is in accordance with his vision for the nation: “A Distinctive City, A Harmonious Home”.

Mr. Goh said the government will ensure the affordability of public housing for every citizen. Eighty percent of Singaporean families are eligible for HDB subsidies. This is based on their current household income ceiling of $8,000.00. Increasing demands from Permanent Residents in the resale market will also be considered.

He also expressed understanding of the concerns of many Singaporeans about being priced out of the property market after its recovery from the financial crisis. He said young Singaporeans might feel the frustrations of being unable to purchase their first homes. Public housing policy however, will make sure they are able to adhere to the government’s pledge.

He also allayed fears about the price increase of units. The MND has made an assurance of the adequacy of the supply of homes. The Minister added the Government’s commitment to releasing more land to make sure property prices remain aligned with economic fundamentals.

In his speech, Mr. Goh highlighted the significance of being a competitive business venue. Businesses should be able to offer two things. The first is to keep rentals on par with other key financial hubs like Shanghai, Hong Kong, New York and London.

Second, is the ability to offer more affordable office solutions at the fringe of the city in addition to Grade A offices in the Central Business District.
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