Property News 22 July 2013

Residential market poised on a knife-edge

Record number of new homes nearing completion clouds outlook

DEPENDING on which set of data you are looking at, you will get a very different picture of the effectiveness of government measures to rein in property prices.

Urban Redevelopment Authority figures show that an astounding 1,806 new private homes were sold last month.

This was a 23.8 per cent jump over May's 1,459 units, which was, in turn, a 5.4 per cent improvement over the 1,384 homes sold in April.

However, flash data from the Singapore Real Estate Exchange (SRX) showed that only 605 resale condos were sold last month, a 21 per cent drop from May's 762 and a 10 per cent drop below the April tally of 671.

Some will argue that the June new home sales data was a fluke, as demand had been bolstered by blockbuster sell-outs at projects such as the 738-unit J Gateway in Jurong East and the Jewel@ Buangkok condo with 616 homes.

But the half-yearly data shows a similar divergent trend.

There were 10,061 new private homes sold in the first half - a drop of 16 per cent over the corresponding period last year.

But resale volume for the first six months was down a striking 30 per cent to 3,954 units from 5,675 transactions a year earlier.

Judging from the data, it would be safe to infer that the Government's January cooling measures, including imposing a 7 per cent additional buyer's stamp duty on Singaporeans for buying a second property and 10 per cent for a third or subsequent property, have been effective in dampening demand for resale homes.

However, the curbs are having a smaller impact on the new home sales market, perhaps due to developers' aggressive tactics such as giving cash rebates on stamp duties.

That leads to the next question: Will the tougher rules on home loans announced at the end of last month have an impact on the new home sales market?

Essentially, the rules cap how much a property buyer can borrow by ensuring that his monthly repayments, combined with all other debt obligations, do not exceed 60 per cent of his gross monthly income.

To plug the loophole whereby some parents use their children's names to buy a second property, loan guarantors will also be considered as co-borrowers.

Daiwa Capital Markets analyst David Lum believes that linking the loan to the debt will remove some demand from the market.

"Anecdotally, some buyers (near retirement age) have circumvented the additional buyer's stamp duty and loan-to-valuation restrictions by buying their second and third homes in their children's names," he wrote in a recent note.

But Mr Colin Tan, research head of property consultancy Chesterton Suntec International, believes that many property buyers have sufficient spare cash to overcome whatever measures are thrown at them.

"Most of us think all existing buyers are stretching themselves to the hilt. Personally, I don't think so. Investors borrow to the hilt because it is silly not to do so. Likewise, they use their children's names because it is silly not to."

Certainly, there are plenty of people with spare cash to buy a property or two, even after tightening the rules on home loans.

The Monetary Authority of Singapore data shows that there is plenty of liquidity sloshing around here, with Singdollar deposits jumping to $534.3 billion in May from $487.9 billion a year earlier.

Many home buyers also find the progress payment scheme in buying a new flat attractive. To them, this is like getting a long-dated option to buy a stock which magnifies any gains they may make, if property prices go up.

However, one challenge the market faces is the record number of new homes that will be completed in the next two years.

Using a stock market analogy, this is equivalent to a large number of stock options expiring simultaneously - an event that can trigger wild swings in stock prices.

There are about 290,000 completed private housing units and executive condos in Singapore but analysts estimate that a further 100,000 units will be completed in the next four years.

This means that the supply of private housing units will jack up by one-third - a huge increase by any measure, even after taking into account the recent increase in population.

Macquarie Equities Research analyst Soong Tuck Yin wrote: "As most of these (private home) completions may affect buyers seeking tenants, there will be pressures on rental yields. If this happens, yield spreads will be narrowed and weaker holders may be tempted to sell."

Throw in a couple more uncertainties such as an interest rate hike and a hard landing in big economies such as China, and you will understand the headwinds facing the residential market.

That is why it does not take a rocket scientist to explain why property counters seem stuck in the basement, unloved and neglected, even though new home sales stay buoyant.

Property developer Ying Li to explore new frontiers

Mr Ko became CEO and executive director of Ying Li in March. The Chinese property developer's next phase of growth aims to go beyond developing mixed-use property and into "thematic" real estate

CHINESE property developer Ying Li International Real Estate has kept a low profile since its listing on the mainboard in 2008 but the firm now wants investors to know that it has aggressive expansion plans.

Ying Li's transformation will involve raising capital, entering new markets, developing more ambitious real estate projects and spinning off a real estate investment trust (Reit).

The success of this wide-ranging strategy falls on the shoulders of Mr Ko Kheng Hwa, 58, who came on board as Ying Li's chief executive and executive director in March.

He was formerly the CEO of Singbridge International Singapore, a wholly owned unit of Temasek Holdings, which primarily develops and invests in large-scale integrated townships in China.

"We will expand our core business in Chongqing while entering new markets and investing in new real estate products," Mr Ko said in an interview with The Straits Times.

He has had 34 years of experience in the government service and government-linked companies, holding top positions at Keppel Corp, the Economic Development Board and JTC Corp.

Earlier this month, Ying Li also roped in Mr Tan Kiang Hwee, 50, the former chief executive of Temasek-owned urban planner Surbana, as its chief operating officer.

Since it started in 1993, Ying Li has focused on developing mixed-use commercial and office buildings in Chongqing's core central business district and selling them off, a business that has helped it to amass a market capitalisation of about $965 million.

But Ying Li has now set itself new targets. Its next phase of growth aims to go beyond developing mixed-use property and into "thematic" real estate.

Its buildings will house companies in the same industry class together for that additional competitive edge, akin to a media, health-care or education hub.

Mr Ko said Ying Li will also look at building residential townships which will offer social and commercial amenities.

Moreover, Ying Li will widen its focus beyond Chongqing's business district and suss out opportunities in the suburbs, and even possibly to other second- and third-tier cities in China.

"We want to build critical mass, presence and grow our reputation in these selected cities," said Mr Ko.

He noted that Chongqing has been selected by the Chinese government as one of the non-coastal regions to be developed under the "Go West" policy. Businesses there can therefore expect better incentives, infrastructure and policy implementation to drive economic growth, he said.

To fund these expansion plans, Ying Li will be placing out new shares to targeted investors who can contribute capital as well as add value to the business through their networks.

It will also issue bonds and consider entering joint ventures for certain developments. Finding a partner will allow Ying Li to be involved in more projects than when it was self-financing all its developments.

In the medium term, Ying Li is looking to list a real estate investment trust for its malls. Ying Li already owns and runs two retail malls and a third one, the size of VivoCity, is slated to open by the end of the year. Its malls, land banks and some office units which it retains are valued at about seven billion yuan (S$1.4 billion).

Plans are also in motion to make operations at Ying Li and its projects more eco-friendly and green by Chinese and international standards.

Property News 21 July 2013

Fewer HDB dwellers buy private properties

Number of HDB upgraders should fall as cooling measures bite, say analysts

Mayflower Gardens Private houses (foreground) and HDB public housing (background) in the Ang Mo Kio estate. Recent property measures have put a squeeze on the number of Housing Board dwellers buying private properties

RECENT property measures have put a squeeze on the number of Housing Board dwellers buying private properties.

According to the latest early figures, buyers with HDB addresses picked up 3,700 new private homes in the first six months of the year. This seems to mark a slowdown from last year, which saw 9,985 such transactions across 12 months.

A similar trend has been seen in the private resale market. HDB upgraders bought just 1,550 homes in the first half of this year, compared to 5,261 for the whole of last year.

R'ST Research director Ong Kah Seng said that the market is feeling the effects of the cooling measures introduced in January to prevent home buyers from biting off more than they can afford.

Not only must buyers borrow less on their second housing loan, they also need to stump up 25 per cent of the property's value, up from 10 per cent. Stamp duty for second property purchases also rose to 7 per cent, from none in the case of citizens.

"Besides, many HDB dwellers may have also bought their private properties last year due to a strong supply in attractive locations such as Punggol," said Mr Ong. There were 21,000 private property units launched last year, compared to 10,000 so far in the first half of this year.

The latest figures on HDB upgraders were culled from caveats lodged voluntarily with the Urban Redevelopment Authority. They do not take into account whether buyers own or rent their HDB flats, or if they were buying their first or second private property.

Analysts, including Mr Ong, predict that the number of HDB upgraders will continue to shrink over the next two years.

This is partly because of new rules issued by the Monetary Authority of Singapore last month, which cap a person's total monthly debt repayments at 60 per cent of his gross monthly income. That means that even car loans will be factored in when calculating how much a person can borrow to finance a property purchase.

DTZ's head of Singapore research Lee Lay Keng believes the introduction of the total debt servicing ratio could lead to HDB upgraders scaling back their private property plans. For instance, a buyer earning $8,000 a month who already pays $1,500 towards a car loan instalment will be restricted to buying a second property worth $1.1 million, down from $1.6 million previously.

"The biggest hurdle for this group lies in the cash outlay that includes stamp duties, downpayment and other costs. This can amount to three times the annual income," she added.

Finance executive Leong Yi Xing is waiting for the dust to settle in the wake of the new measures before deciding on upgrading from his five-room Bedok flat.

"HDB prices are still holding up very well compared to private property prices, which may have more room to drop. I'll wait for the price between the two to narrow," said the 31-year-old.

More ECs up for grabs

Seven projects to go on market in second half of the year

Sea Horizon, to be launched next month, boasts "panoramic sea views" and units with french balconies and full-height windows

EXECUTIVE condominium (EC) developers are again pulling out all the stops in the battle for buyers as competition intensifies in the second half of this year.

Developers of projects under this very popular public-private housing hybrid are no longer allowed to build gargantuan penthouse suites after unit-size restrictions were imposed in January.

The penthouses had been selling for sky-high prices.

But developers now aim to stand out from the crowd by offering ECs with features such as maisonette units, waterfront views, balcony entrances and even a "skypark" 50m above ground.

Of the seven EC projects slated for launch this year, five will go on sale some time over the next four months.

This means that of the 3,337 EC units in this year's supply, an expected 2,226 units will hit the market from now till October.

But EC supply next year is likely to plummet due to a 15-month rule on sales that was also imposed in January.

Under the rule, EC developers have to launch their projects for sale 15 months from the date of award of the sites or after the physical completion of foundation works, whichever is earlier.

Market watchers reckon that there will be no new EC launches for at least the first three quarters of next year and the number of new EC launches next year could be as little as two projects.

ECs are designed to cater to a "sandwiched class" of people who earn too much to qualify for a Housing Board flat but find private property prices too high.

Some first-time developers with solid track records in the luxury segment have also thrown their hats into the ring, lured by the lower total development costs for EC projects compared with private condominium projects.

The price developers pay for EC sites is lower than that for private residential plots because restrictions apply to EC resales during the first decade of occupation.

The new faces in the segment include boutique developers JBE Holdings and Sing Holdings, which are both better known for their high-end projects.

"We're very confident of the EC market... We know that EC buyers are getting more sophisticated," JBE Holdings director Patrick Lam told The Straits Times in an interview on Thursday at The Luxe at Handy Road, which JBE developed.

JBE's upcoming EC project is the 506-unit SkyPark Residences at Sembawang Drive, under a joint venture with construction firm Keong Hong. E-applications are likely to begin in September and bookings in October.

Mr Lam said the EC segment was a "good diversification" away from the luxury market and added that JBE's next project is also likely to be an EC.

JBE won the site for $211.9 million or $323.76 per sq ft (psf) per plot ratio (ppr) last December. The project's construction cost is likely to be just under $150 million, Mr Lam said.

Of that, $3 million to $5 million will be spent on a 1,250 sq m "skypark" straddling three towers about 50m above ground.

No official pricing has been released but market watchers say the price could be between $720 psf and $800 psf.

Both SkyPark Residences and the upcoming 373-unit WaterWoods in Punggol will also include five-bedroom maisonette units.

WaterWoods, next to the Flo Residence condo, is jointly developed by UE E&C and Sing Holdings. Sing Holdings won the site last December for $162.1 million or $351 psf ppr, nearly 9 per cent higher than the second-highest bid of $148.9 million lodged by JBE.

Sing Holdings chief executive Lee Sze Hao said the firm was using the same team working on its high-end projects for WaterWoods.

"This segment is, after all, least susceptible to market speculation, and all EC home owners will also eventually own just one property, which means they present relatively less credit risk... the EC market is one of the most stable housing segments," Mr Lee said.

Lush Acres, City Developments' 380-unit EC at Fernvale Close, was over-subscribed by about 1.6 times when it opened for e-applications last Saturday.

The next EC project to launch in upcoming months is Sea Horizon in Pasir Ris. E-applications are expected to start early next month.

Sea Horizon is Chinese developer Hao Yuan Investment's second EC project. Hao Yuan launched its first EC, Forestville in Woodlands, in June.

Its developer is touting "panoramic sea views" and units that come with french balconies and full-height windows.

"Sea Horizon is one of the rare few executive condominiums that boast a coastal location... We believe the close proximity to the coastline will be a big plus for many home buyers," a Hao Yuan spokesman said.

Unit sizes range from 71 sq m to 160 sq m. The project is expected to be priced below $1,000 psf.

Plenty of amenities in north-east

Checking out the page views on the STProperty website gives an instant snapshot of what projects buyers are keen on. This week, we look at developments in districts 19 and 20 that have drawn the most attention.

An artist's impression of Bartley Residences, a District 19 project with an average asking price of $1,231 psf for its units.

Sky Habitat headed the District 20 list of top five private homes by page views on STProperty last week

SINGAPORE'S north-east region comprises newer estates such as Punggol and Sengkang, and the mature estate of Hougang.

Together, the three areas make up District 19.

Residents in the area are served by popular shopping centres such as nex mall, Heartland Mall and Hougang Mall, and newer infrastructure such as the scenic Punggol Waterway.

The district is also connected by the North-East MRT line.

Based on the highest number of page views on website STProperty from July 8 to 14, the top five private homes which attracted the most attention were all 99-year leaseholds.

Topping the list was 702-unit Bartley Residences with an average asking price of $1,231 per sq ft (psf) for its one-, two- and three- or more bedder units. It also recorded the highest average transacted price among the projects at $1,191 psf between January and last month, according to data from the Urban Redevelopment Authority (URA).

The other four projects in the list were the 920-unit Riversails, the 380-unit Lush Acres, the 1,145-unit The Minton and the 700-unit The Topiary.

Farther to the west lies District 20 which covers Ang Mo Kio, Bishan and Thomson.

The Central Business District is easily accessible from these areas via the North-South MRT line, buses and expressways.

Many home buyers are drawn to this area because of the ample choices of food, leisure amenities and connectivity.

Heading the list of top five private homes by page views on STProperty in the past week was the 509-unit Sky Habitat in Bishan.

It offered one-, two- and three- or more bedders at an average asking price of $1,530 psf. URA data showed that the average transacted price for its units between January and last month was $1,546 psf.

The project with the highest average asking price between July 8 and 14 was the freehold Three 11 along Upper Thomson Road.

With only 65 units, its one-, two- and three- or more bedder units had an average asking price of $1,573 psf.

However, no caveats for the project had been lodged with the URA between January and June.

Its preview launch was held last month.

The other three projects that made it to the top five were The Gardens At Bishan, Belgravia Villas and Rafflesia condominium.

S'pore buyers flock to Johor's Medini project

Developers see good take-up at condo launches in Iskandar township

The Meridin @ Medini is launching a third block of units for sale today. Of the 5,000 people who have registered interest in the 161 units, more than 3,000 are Singaporean

THE township of Medini in Johor's Iskandar Malaysia is fast becoming a property hot spot as thousands of Singaporeans rush to sign up for launches there.

Located in the Nusajaya administrative zone, the 9.2 sq km flagship development is a 10-minute drive from the Tuas Second Link.

Iskandar's master planners envisage Medini as a vibrant commercial and business district, complete with malls, offices, high-end homes and a hospital.

Last month, Pulau Indah Ventres, a 50-50 joint venture between Temasek Holdings and Khazanah Nasional, launched the Afiniti Residences condominium in Medini to heavy fanfare.

The 88 units on sale were snapped up in under six hours.

This exuberance probably signalled to investors that Medini was heating up and that the time was ripe to get in, said Chesterton Suntec research head Colin Tan.

"Those who didn't manage to get an Afiniti unit but saw that things were picking up at Medini could now be going for upcoming projects in the area," he added.

They include The Meridin @ Medini by Malaysian developer Mah Sing.

The Meridin was selling well even before Afiniti came onto the scene - 75 per cent of the 495 units released in May had been taken up.

About half of the buyers were Singaporean, said Mah Sing chief executive Leong Hoy Kum.

Demand for the third block of units, which is being launched for sale today, is expected to go even higher.

Only 161 units are up for grabs but about 5,000 people have registered, of whom more than 3,000 are Singaporean.

The Meridin's location - it sits next to Legoland and across the road from Afiniti Residences - is probably a major draw for Singaporeans, said Mr Leong.

The project's price is probably another big factor, he added.

He said the units being launched this week are priced at RM730 (S$287) per sq ft (psf) on average. He noted that this level offers a lower entry point than Singapore property does and even beats the RM1,000 psf seen at some Iskandar properties.

"This is something we normally practise, to leave some room for capital appreciation for the units in future," he said.

Another developer that has seen strong interest in its Medini project is Zhuoyuan Iskandar - a joint venture between China-based ZhuoDa Real Estate Group and Malaysia's Iskandar Investment, the master planner for Nusajaya.

The company is building Paradiso Nuova, a 382-unit condominium that it expects to launch in mid-September.

More than 600 people have already registered their interest, about 40 per cent of whom are Singaporean, said sales and marketing director Liang Thow Ming.

"We expect a diverse group of buyers - investors who want to capitalise on Medini's story, as well as people who are keen to stay there, whether they are Malaysians who work in Singapore or Singaporeans who are seeking a lower cost of living," he said.

"EduCity, Iskandar's education hub, also provides good rental potential because there is a shortage of hostel space and the universities are enjoying exponential growth in student numbers."

'Shell' firms can't slip past new loan regime

TDSR to apply to individuals who set up entities to buy commercial, industrial properties

INDIVIDUALS who set up "shell companies" for buying commercial or industrial properties to try and circumvent the total debt servicing ratio framework may be in for a disappointment.

The Monetary Authority of Singapore, responding to queries from The Business Times, said that "when individuals set up local or offshore 'shell companies' which do not have substantive businesses with genuine commercial activities, FIs (financial institutions) should assess these cases thoroughly and apply the TDSR framework accordingly" for the individuals concerned.

However, existing companies trading in property and/or holding investment properties for rental income are deemed to be engaged in "genuine commercial activities" and hence will not be subject to the TDSR framework. Likewise, new entities set up by, say, an established property group or fund would not be subject to TDSR if the FIs can establish the new entity's parentage.

The onus will be on FIs to do a thorough investigation on the entities - including companies incorporated in places like British Virgin Islands, Cayman Islands and Mauritius - to establish whether they have any substantive business or are shell companies - for them to determine whether to apply the TDSR framework.

Under new rules announced late last month, all FIs have to abide by the TDSR framework when granting property loans to individuals.

In its response to BT, MAS reiterated that the framework is not applicable to corporates applying for property loans as they are generally subject to a different set of credit assessment criteria.

Market participants generally welcomed the clarification from MAS. OCBC Bank's head of consumer secured lending Phang Lah Hwa said it will provide clarity to potential property buyers.

Another banking source said: "We've been in dialogue with MAS since the implementation of the TDSR framework and the feedback given has helped to clarify initial queries."

DTZ's senior director of investment advisory services, Shaun Poh, told BT that initially, when the TDSR was announced, many individuals investing in commercial and industrial property had thought the framework applied only to housing loans

"It was only later that they realised that they too now come under the TDSR rules," Mr Poh said.

"In some cases, if they own existing companies with genuine businesses such as commodity trading, they are considering making the purchase through such entities."

On June 28, when MAS rolled out the TDSR framework for all property-related loans granted by FIs to individuals (including both residential and non-residential property, and whether it is in Singapore or overseas), it had specified that in cases where the borrower is a sole proprietor or an individual who sets up a company solely to buy property, FIs are required to apply the TDSR rules to the individual.

This had led to concerns among some existing smaller property trading and investment outfits for instance over whether their loan applications for any future property purchases would be subject to the TDSR rules.

Among other things, the framework stipulates that a borrower's total monthly debt obligations must not exceed 60 per cent of his gross monthly income. FIs are also required to apply a medium-term interest rate floor of 4.5 per cent for non-residential property loans (and 3.5 per cent for housing loans) in addition to applying a haircut of at least 30 per cent to all variable income and rental income.

The view on the ground is that MAS' target is to foster financial prudence among mom and pop investors and prevent them from overleveraging, particularly when interest rates rise.

As Lee Liat Yeang, real estate practice partner at Rodyk & Davidson, puts it: "MAS is trying to control the amount of loans extended by FIs to individuals. Therefore if it doesn't control individuals who use companies as an instrument for this purpose, it will not be able to adequately ensure that such individuals are not overly extended through their companies.

"Here, we are talking about a shell company or special purpose vehicle that will depend on the individual sponsors for repayment of loans."

The founder of a boutique property investment group said that a lot of mom and pop investors set up special purpose vehicles to buy commercial or industrial properties. "If they buy through a GST-registered company, they can claim back the 7 per cent GST on the purchase of the property."

Such individual investors - who previously could get loan quantums as high as 70 per cent of the property's valuation - will no longer have such easy access to cheap funding, points out Mary Sai, executive director at Knight Frank.

"So don't expect too much bank lending. Those who have been buying uncompleted strata commercial properties at new launches on progress payment and flipping them within a short time - their wings have been clipped. This is often the group that is financially stretched," says Ms Sai. (See table)

"On the other hand, the new environment benefits genuine investors with financial means who don't need much borrowing; they will feel less competition and can take their time to push for a fairer price," she added.

The level of enquiries for commercial property generally in the industry has fallen at least 20 per cent since the new rules were announced three weeks ago, said Ms Sai.

The phenomenon of individuals setting up companies to buy properties typically applies to the purchase of commercial and industrial properties. The property's vendor, if it is a GST-registered company, collects GST on behalf of the government. Residential property is GST-exempt.

RATES TABLE1 Singapore Dollar Rates table

Top 10Jul 20, 2013 04:32 UTC

Singapore Dollar	1.00 SGD	inv. 1.00 SGD
Euro	0.600864	1.664271
US Dollar	0.789603	1.266460
British Pound	0.516942	1.934454
Indian Rupee	46.893386	0.021325
Australian Dollar	0.860790	1.161724
Canadian Dollar	0.818593	1.221609
Emirati Dirham	2.900210	0.344803
Swiss Franc	0.743032	1.345837
Chinese Yuan Renminbi	4.846738	0.206324
Malaysian Ringgit	2.522338	0.396458

SIBOR Rates – 19 July 2013

	SIBOR	SOR
1 Month	0.31167	0.17193
2 Month	0.36333	0.21120
3 Month	0.37583	0.23442
6 Month	0.43500	0.35964
9 Month	0.49833	0.50330
12 Month	0.56208	0.64434

Property Market Updates (1 Dec 2010)

Hawaii Tower up for en bloc sale

One of the biggest collective sale sites in dollar terms so far this year is expected to be launched for sale next week. Hawaii Tower, on Meyer Road, has a reserve price of $700 million. This works out to about $1,401 psf ppr inclusive of a DC of about $55 million. The all-in investment for the successful developer of the 192,340 sq ft freehold site is expected to be around $1 billion. Based on the unit land price of $1,401 psf ppr, the breakeven cost for a new luxury condo project on the site could be about $1,950-2,100 psf. A 25th floor unit at the nearby Aalto was transacted at $2,373 psf this month. Over at Seafront@Meyer, units on the 17-20th floors have traded at $1,875-2,051 psf in the past few months. The Hawaii Tower site is zoned for residential use with a 2.8 plot ratio and height of up to 36 storeys. The plot may potentially be developed into a new condo project with about 345 units of an avg size of 1,500 sq ft or 430 units averaging 1,200 sq ft. A new development on the site will boast unobstructed views towards the sea, Marina Bay Sands and the city skyline as well as the Mountbatten landed housing estate. The regular-shaped plot has frontage of over 130 metres along both Meyer Road and the East Coast Parkway. CB Richard Ellis is marketing Hawaii Tower's collective sale through a tender which will close on Jan 26. Owners controlling slightly over 80 per cent of share values and strata floor area have signed the collective sale agreement. They stand to receive about $5-million-plus per apartment and $8.8-million-plus per penthouse. Hawaii Tower comprises three blocks holding 129 apartments of about 2,200 sq ft each and six penthouses of about 4,300 sq ft each. Two land deals in the vicinity earlier this year - two adjacent bungalows at Margate Road that sold for $1,023 psf ppr including DC, and 16 terrace houses at Fort Road which fetched about $1,080 psf ppr including DC and the estimated cost of buying a cul-de-sac from the state.

- The Business Times, P12

Developers may baulk at price tags

More and larger collective sales are in the pipeline as home owners attempt to cash in on the hot property market. Hawaii Tower along Meyer Road is among those in the latest batch to have secured the necessary 80 per cent approval from residents, along with former HUDC estate Pine Grove. And more than 53 per cent support has been secured so far in the collective sale process for Pearl Bank apartments in Outram. Although more collective sale tenders are expected to come on the market in the first half of next year, experts say a wide gulf could be opening up between owners' asking price expectations and what developers are willing to pay. They add that high reserve prices and the bumper release of state land in the government land sales programme might reduce demand from developers. Development charges have increased substantially and the new rules regarding the completion period for developers with foreign shareholders would place further downward pressure on what developers are willing to bid. But property market watchers say developers are often keen on such sites as they provide an opportunity to purchase freehold land in prime locations, unlike those from the government land sales programme, which are on 99-year leases.

- The Straits Time, B26

Exec condo surprises with DPS option

NTUC Choice Homes Co-operative (NCH) and Chip Eng Seng (CES) are launching an executive condominium (EC) project in Punggol with a surprising feature - a deferred payment scheme (DPS). Many in the property industry had assumed that the DPS was entirely scrapped in the boom year of 2007 to curb speculation. The two developers' move could trigger owners of other EC projects to also offer DPS. NCH and CES are behind the 99-year-leasehold Prive, the first EC to come up in Punggol. The site is at the junction of Punggol Field and Punggol Road, and average selling prices will be between $660 and $690 per square foot (psf). There will be 680 apartments ranging from two to four-bedders, located across four 17-storey towers. The developers bought the plot from the government in June this year. The developers will open the sales gallery on Dec 3 and allow viewings and applications up until Dec 7. Bookings will start on Dec 10 and home seekers have to gain entry to the gallery that day through a ballot. Developers of two earlier EC projects - Esparina Residences and The Canopy - did not offer DPS. Several developers and consultants whom BT spoke to were surprised to learn that DPS was allowed for EC projects. In October 2007, the government withdrew DPS for the sale of uncompleted private residential, commercial and industrial properties. The news release made no mention of ECs then. Following some checks yesterday, BT understands that the withdrawal of DPS in 2007 did not apply to ECs.

- The Business Times, P2

Upper Serangoon DBSS site draws just 2 bids

A land parcel offered for sale under the Design, Build and Sell Scheme (DBSS) at Upper Serangoon Road received just two bids at the close of the government tender. A unit of Low Keng Huat (Singapore) made the higher bid of $155.2 million. The price works out to $206 psf ppr. Based on the tender price, Low Keng Huat will be looking to sell the upcoming flats on the site at about $500-540 psf. New sites for private residential developments in the vicinity are now being sold for upwards of $300 psf ppr. ERA's data shows that four-room resale HDB flats in the area are selling for $400,000-420,000 while five-room resale flats are going for around $500,000-540,000. The 103-year leasehold site along Upper Serangoon Road is about 215,300 sq ft in size and has a maximum allowable gross floor area of 753,500 sq ft. It can accommodate an estimated 630 units.

- The Business Times, P1

- Also quoted in The Straits Time, B25, “Condo-style public housing plot attracts only two bids”.

Employment at highest level since 1991

Singapore’s robust economic recovery and tight labour market over the past year have brought cheer for workers on several fronts, going by data in a just-released report on employment and earnings. Employment among residents which is at its highest level since 1991 - when the Government started collecting and publishing data on the resident workforce and employment rate - was fuelled in part by more women and older residents being attracted to join the workforce. Also encouraging in the Singapore Workforce 2010 report, released yesterday by the Manpower Ministry, was data which showed a modest drop in the number of low-wage workers - those who earn $1,200 or less a month. There were 262,700 such workers holding full-time jobs in June this year - less than the 275,000 in June last year. The chief reason for the dip: They graduated to higher-paying jobs on the back of the stronger economy.

- The Straits Times, P1

- Also quoted in The Business Time, P2, “Economic recovery pulls up job numbers”.

India's GDP surges for 3rd straight quarter

India's economic growth has exceeded 8 per cent for the third straight quarter, adding to evidence of a strengthening in domestic demand that has stoked inflation by placing strains on the nation's transport and power systems. Gross domestic product rose 8.9 per cent in the three months through September from a year earlier, matching the revised pace of growth in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi yesterday. That was above the 8.2 per cent median estimate of 30 economists. Consumer prices are rising at a pace near 10 per cent, the fastest in the G-20 nations after Argentina. In comparison, the economy expanded 1.9 per cent last quarter in the 16-nation eurozone, 2.5 per cent in the US and 9.6 per cent in China.

- The Business Time, P16

INDIA - Indian developers face higher loan rates

India's real- estate developers may face rising borrowing costs and shrinking access to credit, as record corporate lending slows amid a bribery probe that led to the arrests of eight executives. The combination of the regulatory review and tighter central bank provisioning rules may cause rates on loans for developers to rise as much as 200 basis points, or two percentage points. Property companies in emerging markets are facing rising loan costs as central banks tighten policy to guard against concerns that monetary expansion by central banks in Europe and the United States will fuel asset bubbles. Indian developers that had managed to repair balance sheets after the global credit crisis may face delayed loan approvals. Bank financing will now be subjected to more screening and approvals, forcing developers to rely on cash flows and sales of property to service debt.

- The Business Times, P16

Exchange Rates (extracted from xe.com)

1.00 SGD = 0.75 USD

1.00 SGD = 5.04 CNY

1.00 SGD = 2.39 MYR

1.00 SGD = 0.48 GBP

1.00 SGD = 857.71 KRW

1.00 SGD = 34.69 INR

1.00 SGD = 6,837.39 IDR

ST Index change: 3,144.70 (-13.51) *As at Wed 1 Dec 2010 09:26 AM
SIBOR (3 mths): 0.43890 (S$)

SWAP (3 mths): 0.31367 (S$)

Property Market Updates (30 Nov 2010)

Punggol Town Centre site up for bidding

HDB is launching a tender for a mixed commercial and residential site in Punggol Town Centre - the first site sale along the Punggol Waterway - and industry watchers expect the site to see healthy interest. Located at the junction of Punggol Central and Punggol Walk, the 99-year leasehold site has a maximum permissible gross floor area of 1.4 million sq ft. According to HDB, the site can potentially yield 542,501 sq ft of gross commercial space, and 685 dwelling units. It has a project completion period of seven years from the date of acceptance of the tender. The site expected to draw about seven bids, with the expected winner to fork out between $400- $450 psf ppr. Assuming that the project is launched in the second half of next year, the expected selling price of the apartments should be between $800-$850 psf.

- The Business Times, P35

URA releases sales conditions for 2 industrial sites

URA released the detailed sales conditions for two industrial sites: one at Kaki Bukit and another at Tuas View Square. These are two of the four new industrial sites to be released for sale under the Reserve List of the second half 2010 Industrial Government Land Sales Programme. The 30-year leasehold land parcel at Kaki Bukit Road 4 has a site area of about 2.45 ha and a maximum permissible gross plot ratio of 1. It is zoned for Business 2 development. Under the Business 2 zoning, the site can be developed for uses such as light industry, general industry, and warehousing. The second plot at Tuas View Square has a site area of about 0.44 ha and a maximum permissible gross plot ratio of 0.9. It will have a lease period of 45 years and has also been zoned for Business 2 development. The use of land in the area is 'highly specific and predominated by end-users including marine, pharmaceutical and engineering services'. Developers interested in purchasing the sites can now apply to URA for them to be put up for tender.

- The Business Times, P35

Bukit Panjang LRT and MRT to be linked

A new bus interchange between the existing LRT station and a new station on the Downtown MRT Line in Bukit Panjang will allow commuters to seamlessly transfer from either line. The interchange - which may be air-conditioned - will be integrated with residential and commercial developments on a site in Jelebu Road and Petir Road.

The 1.89ha site, now partly occupied by an open-air bus interchange, was offered up for sale last Friday by the URA. The Downtown Line, scheduled to come up in 2015, is to be situated 120m from the LRT line, making transfers inconvenient. The bus interchange will provide a seamless link. The site on sale has a 99-year lease with a maximum permissible gross floor area of 56,864 sq m, with at least 35per cent of this area set aside for commercial use, the URA said. The MRT station, scheduled to open by 2015, is part of the Downtown Line that will run to the city centre, to places such as Bugis and Marina Bay. The Bukit Panjang development is in line with efforts to make public transport attractive, by making transfers seamless between bus and rail, as well as to link commuters to commercial activities. Similar public transport hubs operate in Toa Payoh, Sengkang, Ang Mo Kio and Boon Lay. Two others, in Serangoon and Clementi, are due to open by next year.

- The Straits Time, B4

New rule may weigh on prices of luxury condos

Many developers have picked their time to launch developments when sentiments are good and decent prices can be charged. But under the rule changes which are expected to kick in early next year, they may lose this luxury. If they bust the project completion period on sites bought from private sector sources, they stand to lose not just the 10 per cent bankers' guarantee for land cost, but could also end up making huge payments for time extension. All this could force them to launch earlier than they might like and affect prices. The median price of new luxury condo transactions stood at $3,265 per square foot in Q3 this year, an increase of 18.7 per cent year to date. A question mark now hangs over whether the previous peak median price of $3,750 psf can be scaled next year. The catch is the amendment to the Residential Property Act that will apply to private residential projects undertaken by foreign housing developers with Qualifying Certificates (QCs), a category which effectively covers all listed developers. Such projects, built on residential sites bought from private-sector sources, will in future have to be completed within the stipulated project completion period (PCP). Otherwise, the developers may not only lose their bankers' guarantees as is the case currently but also have to pay the state for any time extension. Below estimates by BT show that generally developers who bought sites through collective sales and other private sector sources in the 2006-2007 period are likely to have to complete their projects on them by 2014-2015, if they don't wish to make hefty payments to the state for any time extension.

- The Business Times, P1

Non-landed private home prices fall 0.7% in October

Prices of non-landed private homes fell 0.7 % in October, according to the monthly index compiled by the National University of Singapore (NUS). NUS' Singapore Residential Price Index (SRPI) shows overall home prices fell last month, after having climbed 1.1 % per month in both August and September. The last time the overall index fell was in July, when it dipped 0.1 %. NUS has been compiling the index since March this year. October's drop was caused by falling prices in the 'central' and 'non-central' locations. Home prices in central locations fell 1.1 % last month, after climbing 0.9 % in September. The central SRPI last fell in July, by 0.8 %. The non-central SRPI dipped 0.5 % in October - the first time it has fallen since NUS started compiling the index. The non- central SRPI rose 1.3 % in September. Year-to-date, the overall SRPI is up 10.7 %. Non-central prices are up 12.8 %, while prices in the central region have climbed a smaller 8.1 %. As a result, the overall SRPI flash estimate for October is 7.6 % above its November 2007 high. Analysts expect mass market home prices to moderate, given the impending large supply of development sites being offered for sale by the government. But it will have little impact on the mid-tier and luxury home prices, which could rise further, given the positive economic outlook for next year. NUS' index, which is compiled by the Institute of Real Estate Studies, was launched to serve as a resource for developing property derivatives in Singapore. It is computed using the market values of a basket of completed properties. Uncompleted projects are not included in the basket, as price movements for such projects can be different from those in the rest of the market. But the impact of new launches on the prices of completed properties in the vicinity is factored in.

- The Business Times, P35

Economists raise S'pore's growth forecasts for 2011

With 2011 just a month away, several economists have raised their growth forecasts for the Singapore economy next year - to beyond the official forecast range in some cases. Coming to the fore as a prime driver of this growth will be the services sector, even as the challenges of managing inflation and capital inflows persist. The Ministry of Trade and Industry is now looking at 4 to 6 per cent growth for 2011, which will be a sharp moderation from this year's record recovery but stays above the economy's estimated underlying growth potential of 3-5 per cent. Robust services growth will be led by tourism-related activities and the 'other services' segment which captures the two integrated resorts' contributions. Financial services are expected to be another key growth segment under services, as global firms position themselves to leverage on Asian growth. Regulatory tightening elsewhere has encouraged financial services firms to relocate some operations to Singapore.

- The Business Times, P2

Dutch company makes S'pore its regional base

A Dutch company which makes highly advanced chemical and food products has opened a regional hub here. Royal DSM will use its hub in the Apollo Centre in Havelock Road as a base, to help four of its units expand into the Asia-Pacific region.

The units make everything from super-strong fibres and plastics to special food products like enzymes and yeast extracts, and nutritional products such as vitamins and carotenoids. DSM Dyneema plans to open a technology centre here which will focus on life protection products, including devices like bulletproof cockpit doors in aircraft, said its parent company yesterday. Mr Pieter Nuboer, managing director of DSM Singapore, told a briefing yesterday that the number of employees here - now numbering about 180 - 'will definitely go up', though he declined to give a specific figure. He also explained why the company chose Singapore as its regional base.

'There is a big pool of high-quality talent in Singapore, and we also wish to tap into the huge investments that the Government is making in research and development,' Mr Nuboer said.

- The Straits Time, B15

Exchange Rates (extracted from xe.com)

1.00 SGD = 0.75 USD

1.00 SGD = 5.05 CNY

1.00 SGD = 2.39 MYR

1.00 SGD = 0.48 GBP

1.00 SGD = 876.34 KRW

1.00 SGD = 34.81 INR

1.00 SGD = 6,835.68 IDR

ST Index change: 3,163.86 (+5.65) *As at Tue 30 Nov 2010 09:32 AM
SIBOR (3 mths): 0.43890 (S$)

SWAP (3 mths): 0.31393 (S$)