Size of the DPS behemoth

Source : Business Times - 20 Dec 2008

SOME 10,450 sold and uncompleted private homes are now under the deferred payment scheme (DPS), according to official data released yesterday.

Of the amount, close to half - 4,560 units - will be completed in 2009, while another 2,540 homes will be completed in 2010, the Urban Redevelopment Authority (URA) said. Under the DPS, which was introduced by the government in October 1997 and withdrawn in October 2007, the bulk of the purchase price of a property is due only after a project obtains its temporary occupation permit (TOP).

The data was welcomed by both analysts and the Real Estate Developers’ Association of Singapore (Redas). Over the past several months, many market watchers and analysts have been estimating how big an impact the DPS will have on developers’ cashflow and earnings if buyers default on their homes as TOP approaches.

‘I think it provides a clearer picture as to the extent of the problem,’ said Citigroup’s head of Singapore equity research, Chua Hak Bin. ‘And it is good that the government acted to stop the system when it did. If not, things would have got a lot worse.’

Said Redas: ‘URA data, together with data compiled by Redas, helps to allay concerns that speculators may repudiate their DPS purchases at below-market prices as the completion date nears.’ In its statement, Redas highlighted 10 projects - including City Developments’ The Sail and Keppel Land’s Park Infinia - where the DPS was offered but full payment was still made to the developers once TOP was obtained.

Redas also said that while units may be affected by market sentiments, sales contracts cannot be repudiated easily.

URA’s data proves that the DPS scheme was ‘very popular’, Citigroup’s Dr Chua said. To arrive at its numbers, URA did a survey among property developers of uncompleted DPS-approved projects. In total, developers of 605 projects, comprising 72,384 units, were granted approval to offer the DPS. Of this amount, there were 18,208 sold but uncompleted units as at end-November this year. And of this figure, 10,450 (57 per cent) were still under the DPS.

The fact that the bulk of DPS units will be completed in 2009 is cause for some concern, analysts said. ‘2009 is going to be a tough year for the economy, and there are 4,650 units under the DPS that will be completed,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

But assuming a three-year construction period, a large proportion of the units that will obtain TOP in 2009 were probably launched and sold in 2006 and early 2007, at prices that are relatively lower than today’s level or the expected level in 2009. So even if the property market continues to weaken in 2009, the owners of these 4,560 units could still lease out the homes or sell them, analysts said. However, if developers had offered the DPS to many sub-purchasers when the original purchasers sub-sell the units, then defaults could be expected.

But for now, the real area of concern is thought to be the 2,540 units under the DPS that will obtain TOP in 2010. Of this number, 1,270 of the units are located in the core central region (CCR), which includes Sentosa and Marina Bay.

‘Generally, I’m more concerned over the units which will receive TOP in 2010-2011, which could have been purchased in 2007 at the peak of the property market,’ said DMG & Partners Securities analyst Brandon Lee.

And while developers have the legal right to pursue buyers who walk away from their deals, it could be harder to do this when it comes to foreigners, said Knight Frank managing director Tan Tiong Cheng.

Normally, about 75-90 per cent of uncompleted private residential units will be bought by Singaporeans, said DMG’s Mr Lee. But in 2007, the proportion fell to 63-68 per cent, with the remaining purchases made by PRs, foreigners and companies. ‘We see this segment as the most likely to return their units,’ he said. His back-of-the-envelope figure puts the amount expected to be returned as possibly somewhere between 20-30 per cent.

URA said that it provided the data to enable the public to make a better assessment of the private housing market. ‘This information was provided by developers in confidence and with the understanding that data for individual projects would not be released to the public. Hence URA is only releasing aggregated data and not data for individual projects,’ the government agency said.

‘Conducting a survey of developers of all uncompleted DPS-approved projects requires a lot of time and resources from the developers as well as the government. Given that the number of uncompleted units sold under DPS is likely to decline as projects are completed over time, we will monitor the situation and consider whether there is a need to conduct further surveys in future,’ URA said in response to a query from BT.

Big drop in building activity

Source : Today - 20 Dec 2008

THE value of projects under construction in Singapore is expected to be slashed next year, with the biggest impact to be felt in the central business district.

The value of construction activity in Singapore is likely to fall 32 per cent to US$17 billion ($24.6 billion) next year from US$25 billion this year, said BCI Asia Construction Information, a construction industry research company that undertook a study of the region’s building sector.

“The greatest impact in 2009 and 2010 will be felt in the CBD, in Singapore and Hong Kong,” said Mr Thor Kerr, managing director of BCI Asia.

As funding becomes scarce and rents start to soften, the high-end commercial and residential sector is likely to see more deferred construction activity next year, compared to projects in infrastructure and in the industrial space.

BCI Asia’s prediction is in line with forecasts from the Building and Construction Authority, which expects construction demand here to reach $30 billion this year, and slow down in the next two years.

“But in past crises, we see in these urban areas, at least Singapore and Hong Kong tend to bounce back very quickly. They bounce back slower in Indonesia and in other places,” said Mr Kerr. He added that Government spending on housing and other projects will help mitigate the slowdown.

Mr Kerr said that the decline in construction activity next year should not be taken as grim news because the value of these projects are not slipping to the levels seen during the Asian financial crisis.

“You’ve got to put it in context; US$17 billion gets you back to where you were in 2006. We’re getting back to a more reasonable level,” said Mr Kerr.

Frasers, Ascendas to invest $500m in Changi Biz Park

Source : Business Times - 20 Dec 2008

A JOINT venture between Frasers Centrepoint and Ascendas will invest about $500 million building an integrated retail, hotel and business park project next to Expo MRT Station and within Changi Business Park (CBP).

The two partners are paying $150.8 million or about $119 per square foot of potential gross floor area for the 60-year leasehold plot. The tender, conducted by JTC Corporation, is understood to have attracted just one other bidder, United Engineers, which is developing the plot next door.

JTC said bids were evaluated on concept and tender price under the two-envelope system. The 4.7-hectare site can have a maximum gross floor area of about 1.26 million sq ft. Groundbreaking for the project is expected to take place by June 2009, JTC’s assistant CEO Philip Su said in a release yesterday.

BT understands the project will be developed in stages. The first phase, for about 220,000 sq ft net lettable area of retail space, is expected to be completed around 2011. The hotel component in the project is likely to have about 250-300 rooms and will probably cater to longer-staying business visitors. There’s a shortage of hotel rooms and serviced apartments in the eastern part of Singapore. Frasers Centrepoint will bring to the partnership its expertise in the retail and the hospitality businesses while Ascendas (a fully owned subsidiary of JTC Corp) will contribute its experience with developing and managing business parks.

JTC launched the tender for the plot in June this year. It was the first time that private developers were invited to submit proposals to design, build and operate a mixed-use development in CBP. The plot has a 2.5 plot ratio (ratio of maximum potential gross floor area to land area) and is zoned ‘Business Park - White 40′. This means up to 40 per cent of the maximum GFA will be set aside for ‘white’ or commercial activities. And of this ‘white’ component, up to 60 per cent can be for retail activities with the rest for hotel.

Ascendas president and CEO Chong Siak Ching said: ‘This project will set a new benchmark for business parks in Singapore.’

‘When completed, we fully expect the development to inject a fresh vibrancy to the area and offer a unique alternative to companies seeking high quality business space outside the Central Business District,’ she added.

Frasers Centrepoint CEO Lim Ee Seng said: ‘The retail and hotel components are expected to capitalise on demand generated from the CBP, the Singapore Expo, the upcoming university at Changi as well as the nearby estates. On top of that, they are able to reach out to beyond the immediate catchment as a result of the convenience and connectivity afforded by the future Downtown Line and the present Expo MRT station.’

Next to the site awarded yesterday, United Engineers is developing a global information and communications centre with a hotel, offices and retail mall.

JTC yesterday noted that despite challenging economic conditions, pipeline projects in CBP remain strong. ‘Its current working population of 6,000 is expected to surge to 20,000 by 2011,’ JTC said.

The new mixed development by Ascendas and Frasers Centrepoint will support and leverage on the upcoming financial backend facilities to be located in CBP as well as Singapore’s fourth university and the Singapore Expo which are located nearby,’ JTC said.

Citibank, Credit Suisse, DBS Group Holdings and OCBC Bank are poised to set up backroom operations in CBP.

D-day for homebuyers

Source : Today - 20 Dec 2008

7,100 units ready in next two years, buyers may face difficulties: Analysts

JUST how vulnerable is Singapore’s :souring economy to a wave of defaults from private home buyers who had made use of the popular Deferred Payment Scheme (DPS)?

It’s a question that continues to split analysts, even as the Urban Redevelopment Authority (URA) on Friday released, for the first time, data on private homes sold under the DPS, a decade-old plan scrapped in October last year.

To “provide transparency”, the agency revealed that 10,450 uncompleted private homes had been sold under the scheme as at end-November.

As the DPS tends to be used by speculators, the data breakdown reflects the potential number of homes that could be returned to developers, should buyers fail to secure financing by the time a project is completed and receives the Temporary Occupation Permit (TOP).

For many, D-day approaches: Most of the units - 4,560 - will be ready next year, followed by another 2,540 units in 2010.

With these two years likely to be weighed down by a global economic slump, buyers with shallow pockets will have difficulty coughing up the bulk of the price tag by the TOP date, especially as banks have become tight-fisted. If the purchase falls through, units will return to the market, possibly depressing prices.

To Chesteron Suntec International research director Colin Tan, the statistics paint a grim picture.

“If we assume all the people buying under DPS meant to flip, the 4,560 units represent one year of supply for a bad year. It’s bad,” Mr Tan told Today.

Only 4,000 to 5,000 new private homes are expected to be sold this year, he said, way below last year’s 14,800.

Under the DPS, the downpayment is :only 10 to 20 per cent of the unit’s price and the customer makes no other payments during the construction period - typically two to three years - until completion. The arrangement appeals to speculators who, during boom time, made just a small payment upfront and managed to “flip” the unit for a quick buck before the TOP date.

Some feel the DPS may create a local version of a sub-prime meltdown. Will the market soon be flooded with desperados cancelling purchases or defaulting? Developers are putting up a brave front.

“We note that DPS cases will peak in 2009. These units would have been purchased in 2005/6 before property prices peaked in late 2007. As the purchase prices of these units are likely to be below current market price, we are confident that such property purchasers will want to proceed with completion of their sale, upon their unit’s grant of the TOP,” the Real Estate Developers’ Association of Singapore (Redas) said in a statement.

Redas also stressed that buyers have no right to cancel sale-and-purchase agreements; only the developer does. So if the buyer fails to adhere to the contract, the developer could not only keep the downpayment but also demand claims and resell the property.

Redas did not say if their members were witnessing an increase in customers asking to repudiate contracts.

According to Knight Frank director of consultancy and research Nicholas Mak, people who bought units outside the Core Central Region - plum areas including Orchard and Sentosa - are “less at risk of default because a relatively higher proportion of these homes were bought for owners’ occupation”.

Two-thirds of the unfinished homes bought on DPS are outside the Core Central Region.

In the first place, said Savills Singapore director of marketing and business development Ku Swee Yong, DPS customers do include genuine home buyers, not just speculators.

Mr Mak said even if the property market weakened further next year, homebuyers collecting their keys “could either lease out the homes at relatively good returns or sell the homes at their breakeven level or with a profit”.

As for those taking delivery in 2010, they are unlikely to be pressured to sell at distress prices as “we expect the property market to stabilise in 2010 and may show some signs of recovery”.

Changi Business Park to see new project

Source : Straits Times - 20 Dec 2008

A JOINT venture between Ascendas Land (Singapore) and Frasers Centrepoint has won a tender for a development in Changi Business Park including shops and a hotel, the second such project in Singapore.

The joint venture - known as Ascendas Frasers - had put in a bid of $115.8 million for the 4.7ha site, next to the Singapore Expo and Expo MRT station. That is $119 per sq ft of gross floor area.

Sixty per cent of the total gross floor area of 1.26 million sq ft will be set aside for business park space.

The rest will comprise ‘white’ or commercial activities - which will be for shops and a hotel projected to have about 300 rooms.

The retail and hotel components are expected to capitalise on demand generated from Changi Business Park, Singapore Expo, the upcoming university in Changi as well as nearby estates, said Frasers Centrepoint chief executive Lim Ee Seng.

The development will break ground in June next year, said JTC.

Late last year, United Engineers won a tender for an industrial project at Changi Business Park that comes with a hotel.

Its development, with an estimated development cost of $280 million, will comprise a business centre to house 200 IT companies; an IT training hub comprising exhibition and convention halls, an auditorium and seminar rooms; a business hotel with 200-300 rooms; and office and retail space.

In a joint statement yesterday, JTC and the 50-50 joint venture Ascendas Frasers said pipeline projects in Changi Business Park remain strong despite challenging economic conditions.

Its current working population of 6,000 is expected to surge to 20,000 by 2011, it said.

Singapore’s industrial market is weakening, with rents softening.

Bleak times ahead for region’s building sector

Source : Straits Times - 20 Dec 2008

THE construction sector in South-east Asia and Hong Kong faces bleak times next year, a new report by information provider BCI Asia has found.

The value of projects under construction in the region would contract by at least 16 per cent next year and, in a worst-case scenario, would shrink by a hefty 32 per cent - or about one-third.

The preliminary forecast is part of a major study on the construction industry to be released by the firm next month.

‘All the data indicates that construction spending in this region peaked in 2008. The value of projects at design and documentation phases has contracted 2 per cent this year and we have seen major projects abandoned for lack of finance,’ said BCI Asia’s managing director Thor Kerr.

‘There will be far fewer new industrial facilities and utilities being constructed from 2009. As local economic conditions deteriorate further, developers will postpone the construction of new offices, hotels, recreation facilities and downtown retail centres,’ he said.

BCI Asia reported that the value of projects under construction leapt from US$107 billion (S$154 billion) last year to US$140 billion this year. It estimates that this will decline to US$118 billion next year in a best-case scenario.

In the most pessimistic recession scenario, the value of the projects under construction would slump to US$96 billion.

Despite the grim predictions, some analysts say Singapore will not be as badly hit as the region as a whole.

Mr David Cohen of Action Economics said: ‘I think the situation in Singapore would not be as severe. There is still a substantial backlog of projects to go through.

‘The growth might slow down next year and we might see some job losses, but there would not be a major impact on the economy.’

Mr Cohen predicted that there would be a contraction of less than 5 per cent in the construction sector here next year.

Mr Ng Yek Meng, assistant secretary-general of the Singapore Contractors Association, agreed that things were still looking stable for the year ahead.

‘In general, the trend is that the construction industry is slowing down.

‘But in the next 11/2years, most contractors should have enough jobs and work in hand. When they signed on for jobs in 2008, they signed two-year contracts,’ he said.

‘We also haven’t seen any major retrenchments yet.’

He added that major construction projects such as that of the SMRT Downtown Line would continue to help boost the local industry.

But he warned of impending uncertainties for the industry in 2010, after the two integrated resorts have been constructed, and when contracts come to an end.

‘After contractors have finished their jobs, there might be no new jobs and some might have to go overseas to search for new projects,’ Mr Ng said.

‘No one knows what’s going to happen in the future for now.’

10,450 deferred payment homes weigh on prices

Source : Straits Times - 20 Dec 2008

PRICES in the the already fragile property market could be battered even more from next year if some of the 10,450 homes bought on deferred payment are dumped by cash-strapped buyers.

The danger is that when final payments are due at completion stage, buyers faced with falling values may just sell at fire-sale levels, putting even more pressure on prices.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nearly 500 applications received for Dew Spring@Yishun flats

Source : Channel NewsAsia - 19 Dec 2008

Close to 500 applications have been received for the public flats to be built at Dew Spring@Yishun.

The Housing and Development Board (HDB) launched the 864-unit project on Thursday.

Four-room flats were the most popular among home buyers. There were 393 applications for 504 units, while three-room flats had 81 applications so far.

One home buyer said: “The design of the flat is very much like that of condo design, so in terms of pricing, I think it is quite reasonable.”

Two-room units were the least popular, with 13 applications received for 144 units.

Dew Spring has the largest proportion of smaller flats in a build-to-order project ever.

HDB is anticipating an increase in demand for smaller flats, as home owners downsize to ride out the economic storm.

Those looking to downgrade and buy a smaller flat from HDB will have to pay a resale levy of between S$15,000 and S$50,000 depending on their current flat type.

In some cases, the levy would wipe out any gains they have made in the sale. In light of the current financial crisis, many hope that HDB will reconsider this policy.

One home buyer said: “With the resale levy, I could end up paying more. The economy is not good right now and I want to save. But in the end, I do not know whether I am paying more, or saving, if I downgrade.”

HDB plans to release another 4,000 units of smaller flats over the next two years.

David Poh, senior district director, Propnex Realty, said: “For these two years, I think HDB prices have been rising quite rapidly. In 2007, we have about 16 per cent price index rise for the whole year.

“For the first three quarters of this year, we already experienced about 12.4 per cent. By the end of this year, it is plus minus 16 per cent. So for the whole of these two years, HDB prices have risen about 30-over per cent.

“I think with the introduction of Dew Spring@Yishun, with new supply coming on to the market, it will stabilise prices in the HDB resale market so that houses in the HDB market will remain affordable.”

The application deadline for Dew Spring is December 31.

10,450 private residential units sold under DPS still uncompleted

Source : Channel NewsAsia - 19 Dec 2008

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

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

68 per cent of uncompleted homes sold under the Deferred Payment Scheme will be built over the next two years.

With falling property prices, there are concerns whether home buyers have enough cash to complete their purchases.

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

Nicholas Mak, director, Consultancy and Research, Knight Frank, said: “I don’t think it will come to that drastic level where many of them would return their homes to the developers because if a buyer were to return the home to the developers, the developers could firstly sue them for completion of the contract. Or, the other thing is that the buyer would actually lose all their deposits which could be 20 per cent or so.”

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

At the end of November, of the uncompleted units approved for sale under the scheme, 77 per cent or 18,208 units have been sold.

Of these, 57 per cent or 10,450 units are not fully paid for.

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

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

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

72,384 private homes have been allowed for sale under the deferred payment scheme.

Lifestyle enclave to get bigger

Source : Straits Times - 19 Dec 2008

THE popular lifestyle enclave of Dempsey Hill is set to get even bigger.

Country City Investment, the team that developed the zone in Tanglin Village, has won the bidding for a new plot of land from the Singapore Land Authority (SLA) that will add to its restaurants, bars and gourmet grocers.

The firm offered to pay rent of $378,300 on a three-year lease, renewable to 2018.

Country City general manager Nicholas Ng said the firm would spend ‘$2 to $3 million’ on redeveloping the 20,000 sq m plot, which includes Blocks 13, 14, 15, 16 and 26 on Dempsey Road.

The main tenants now comprise a few furniture stores, which Country City plans to use as the basis for boosting Dempsey Hill’s retail mix.

Mr Ng hopes to launch the new sector by the end of April next year.

To woo businesses in these difficult economic times, Country City said it will ‘not only be offering competitive rents to new and current tenants’, but also ’support them with various marketing activities’.

Mr Ng said that while Dempsey Hill’s food and beverage tenants are ’still doing okay’ in the downturn, the furniture retailers have reported that sales are ‘down some 30 per cent’.

But he remained ‘very confident’ that the development will be launched within the next two quarters.

Country City already rents a cluster of seven buildings on a one-ha plot from SLA on a three-year lease renewable up to 2015.

Last year, it transformed the buildings, many of them former barracks for the British army, into various food and drink outlets, such as Ben & Jerry’s ice cream shop, Harry’s bar and Mexican restaurant Margarita’s.

This was done in two phases. Dempsey Hill was launched in July last year and boasts about 20 restaurants, cafes, gourmet delis and bars.

Dempsey Hill Green, launched last December, is an extension of the original concept, with tenants including Samy’s Curry, Long Beach Seafood and RedDot Brewhouse.

About $3 million was poured into developing Dempsey Hill, and a further $1 million to $2 million into Dempsey Hill Green.

Mr Ng said: ‘It was natural for Country City to tender for the new blocks… because we already have two clusters and this one falls in between. It’s good if we can manage the whole area.’

4,000 smaller HDB flats coming up

Source : Straits Times - 19 Dec 2008

Supply over the next two years is a marked increase to meet demand

SMALLER flats are making a comeback, with the Housing Board (HDB) ramping up supply to around 4,000 over the next two years to meet surging demand.

It marks a dramatic turnaround for a style of flat that had not been been built for about 20 years.

Next year 2,000 three-room and smaller flats will be built, almost double the amount put up this year, with a further 2000 earmarked for 2010.

The HDB move will mean a steady supply of smaller flats for lower income families and homeowners who need to downgrade amid grimmer economic times.

National Development Minister Mah Bow Tan flagged the strategy in Parliament last month.

HDB deputy chief executive Tan Poh Hong said yesterday that the board has revived smaller flats on a large scale as ‘there are are more people who will need to downgrade, as well as first-timer families who would also like to start with smaller flats to be financially prudent’.

Analysts anticipate a good take-up as ‘difficult economic conditions’ encourage homebuyers to ’start small’.

Buyers like nurse Liu Li, 29, a home-hunter on the look-out for such affordable flats, said: ‘A bigger pool of new, small flats will widen choices for first-timers like me.’

Prices will start from as low as $76,000 for the new small units.

The HDB stopped building two- and three-roomers in the 1980s as growing families fuelled demand for bigger flats.

But they were re-introduced in 2004 and two years ago, the HDB said it would resume building two-roomers to meet increasing demand.

Demand for smaller flats has been red hot recently. HDB sales have attracted over 10 times more applicants than homes available. An October sale of 150 small flats was swamped with 2,426 applications in just a week.

Mr Kelvin Wang, who recently bought a three-roomer in Tiong Bahru, said he had difficulty finding the home, his first, because there were so few small ones around.

‘The increased supply will help ease demand for such homes,’ said the 24-year-old engineer.

Some of the new smaller flats form part of a new standard project launched by the HDB yesterday.

Dew Spring @ Yishun at the junction of Yishun Ring Road and Yishun Street 41 offers 504 four-room, 216 three-roomers and 144 two-room units.

The build-to-order (BTO) project has the largest number of smaller flat types among HDB’s BTO launches this year. BTO projects are built only when a certain level of demand is reached.

HDB’s Ms Tan stressed that the homes will be kept affordable.

Two-roomers at Dew Spring start at $76,000 to $90,000; three-roomers go for between $120,000 and $146,000 with four-roomers at $197,000 to $238,000.

For the first time, the HDB has released comparable prices of resale flats in the same area to show the affordability of the new flats being launched.

Prices of 20-year-old three-roomers nearby of similar size, for example, are selling for $175,000 to $180,000 - higher than the launch price, the HDB said.

PropNex chief executive Mohamed Ismail said that Dew Spring flats ‘are priced very attractively. The smaller units are below $200 psf (per square foot), which is much lower than the median resale prices for that area in the last quarter’.

The HDB has launched 6,600 homes this year under its BTO scheme, of which 883, or 13 per cent, were two-room and three-room flats.

It plans to launch a further 1,180 units in the next two weeks, which will include 280 studio apartments, two-room and three-room homes.

New Yishun HDB flats up for grabs at below-market resale prices

Source : Business Times - 19 Dec 2008

THE Housing and Development Board (HDB) has launched Dew Spring @ Yishun where a good number of units are smaller two and three-room flats.

Prices range from $76,000 to $90,000 for each of the 144 two-bedroom flats.

There are 216 three- room flats and these have been priced at $120,000 to $146,000. HDB says that prices of nearby resale flats (which are about 20 years old) are about $175,000 to $180,000 (on a pro-rated basis with units of the same 65 square metre size).

As such, HDB has priced the three-room flats at about 20 to 30 per cent less than comparable resale prices.

There are 504 four- room flats and these have been priced between $197,000 and $238,000.

HDB says that resale prices are between $225,000 and $257,000 (on a pro-rated basis with units of the same 90 sq m size) for the four-room flats nearby. As such, Dew Spring four-room flats are about 7-12 per cent cheaper.

HDB did not have comparable resale prices for two-room flats.

The board said that in pricing new flats, it considers several factors such as location, individual attributes of the flats, design of the project and the prevailing market conditions.

‘To ensure public housing is affordable for first- time home buyers, new HDB flats are priced below their equivalent market prices,’ it added.

Including Dew Spring, HDB has launched a total of 883 units of two-room and three-room flats this year and plans to launch another 100 smaller flats soon. It also plans to offer about 4,000 smaller units over the next two years.

The launch of Dew Spring follows National Development Minister Mah Bow Tan’s announcement in Parliament on Nov 18 that lower-income families and those who need to downgrade to smaller flats can look forward to a steady supply of smaller flats.

PropNex chief executive officer Mohamed Ismail believes that HDB’s launch of the smaller units is timely, considering the ‘current economic uncertainty’.

He added: ‘These flats are priced very attractively. The smaller units are actually going at below $200 psf, which is very much below the median resale prices for that area in the last quarter.’

As the units are situated not far from a golf course and a reservoir, Mr Ismail expects an oversubscription for these units of about four times.

HDB has so far launched 6,600 units under its Build- to-Order system in 2008. It plans to launch another 1,180 units by the end of the year.

Property auction sales at lowest point in 10 years

Source : Straits Times - 19 Dec 2008

SINGAPORE’S auction market has slumped to its lowest point in more than 10 years in terms of the value of properties sold this year.

But more mortgagee properties are expected to be sold under the hammer next year in the light of the weaker economy.

Only $83.67 million worth of properties have been sold via auction this year, down a whopping 79 per cent from last year, when $407.43 million worth of properties were sold.

This year’s total is also 38 per cent lower than the $135.7 million recorded during the Asian financial crisis in 1998, said consultancy Colliers International.

This year, 68 properties were sold at auctions, well down from 204 properties last year, said consultancy Knight Frank.

The worst performance was in the current fourth quarter, when only 5 per cent of the properties offered at auctions were sold, compared with more than 10 per cent in each quarter last year, it said.

The residential sector was the hardest hit, with sale values plummeting by 88 per cent to just $25.23 million this year, said Colliers International.

Despite the turbulent times, only 270 properties were put up for mortgagee sale during the year, down 58 per cent from 646 properties last year. This is the lowest number seen in 10 years, it said.

Distressed sales, often associated with past economic recessions that led to home foreclosures, have yet to emerge in significant numbers, which explains low auction sales, said Knight Frank.

Since this is seen as the start of a major economic crisis, the number of affected home owners is not significant, it said. But next year, mortgagee sales will rise, said property consultants who foresee loan defaults and forced sales.

Tight credit is likely to mean that when banks are faced with falling property values and growing non-performing property loans, real estate foreclosures could increase, said Knight Frank.

Also, some investors who had bought properties under the deferred payment scheme might need to sell their properties quickly as the completion date draws nearer, it said.

Property auctions of $83.7m at 11-year low

Source : Business Times - 19 Dec 2008

WITH the last two property auctions for the year concluded this week, the final tally of the value of properties sold at auctions in 2008 is $83.7 million - the lowest in 11 years, according to Colliers International.

This year’s figure is 79 per cent below last year’s number of $407.4 million and 38 per cent less than the $135.7 million plumbed in 1998 during the Asian financial crisis.

Colliers pointed out that the 2008 auction sales value of $83.7 million was worse than two trough points reached in 2001 and 2004, when auction sale values dropped to $160.5 million and $155.4 million, respectively.

All property sectors experienced a decline in their total sales value at auctions in 2008, with the residential sector registering the biggest drop of 88 per cent to $25.2 million from $202.4 million in 2007.

This decline was marked by a plunge in activity in the high-end residential segment in 2008. The year saw just three prime district properties worth a total $4.62 million changing hands at auctions - against 24 properties that sold for $106.1 million at auctions in 2007. In contrast, mass market and mid-tier properties dominated the list of of residential properties sold under the hammer this year.

Colliers’ deputy managing director and auctioneer Grace Ng attributed the drop in auctions sales this year to cautious buying sentiment amid the worsening economic outlook. ‘Additionally, sellers are also holding on to their asking price. This resulted in a stalemate between buyers and sellers, contributing to the decline in sales value,’ she added.

She predicts an increase in mortgagee sale properties at auctions next year against the backdrop of worsening economic outlook and expected rise in unemployment.

This could lead to a potential rise in loan default rates and raise the number of forced sales.

Rival property consultancy Knight Frank projects an increase in the number of properties offered for auction next year as there could be some investors who bought their properties with the deferred payment scheme and would need to sell their properties quickly as the completion dates draw nearer.

Sale of Kallang River hotel plot delayed

Source : Business Times - 19 Dec 2008

URA says release of the site will be deferred to June 2009

THE Urban Redevelopment Authority (URA) has deferred the release of a hotel site along Kallang River from this month to June 2009. The site was originally due to be made available for December 2008, as part of the government’s plans to transform the Kallang Riverside into a waterfront lifestyle precinct by the edge of the city.

‘URA is currently working with other agencies to finalise the detailed planning and development conditions of the Kallang River site to relate to the broader plans for Kallang Riverside and, as more time is needed, the release of this site at Kallang River on the reserve list will be deferred to June 2009,’ the agency said yesterday.

The deferment ‘makes sense’ as the site is unlikely to be triggered in the current market conditions even if it is made available, market watchers said.

URA also announced yesterday that a commercial site at the corner of Stamford Road and North Bridge Road is now open for application under the reserve list system.

The site contains three historical buildings - Capitol Theatre, Capitol Building and Stamford House - that are to be retained and restored for use. The Capitol Theatre, for one, is required to be restored into an arts or entertainment-related performance venue, said URA.

And to strengthen the hotel cluster in the area, the developer of the site will be required to develop a minimum of 40 per cent of the total gross floor area (GFA) for hotel use as well.

Analysts said that the site is unlikely to see interest anytime soon. ‘This is an irreplaceable site in terms of its location and heritage value but the timing may be inappropriate to realise its full potential,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

‘I don’t think the site will be triggered in the next six months,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

Other than the poor economic outlook, potential bidders are also likely to be deterred by a few other factors, he said. For one, the conservation element might put off some developers. Others are likely to be deterred by the fact that some of the GFA has to be devoted to hotel use.

Developers are also not too keen on the ‘two envelope’ system, under which the site is being sold, Mr Mak said. Under such a system, the government first picks out developers whose concepts gel with its vision, then awards the site to the highest bidder.

Analysts also expressed concern that if the government keeps releasing sites on the reserve list, there could soon be too many sites on the list.

No-go yet for Kallang site; Stamford put on reserve list

Source : Straits Times - 19 Dec 2008

URA needs more time to finalise plans; consultants cite market conditions

THE Government has again postponed the release of new land - this time a hotel site in the Kallang River area - as the property market continues to flounder.

However, a historic site in North Bridge Road - which contains Singapore’s first cinema Capitol Theatre and two other heritage buildings - has been released on the reserve list sale system as planned.

This means that the site will be put up for tender only if developers indicate interest by committing to a minimum bid.

The 1.59ha hotel site at Kallang River - part of plans to transform the Kallang Riverside into a waterfront lifestyle precinct - was also scheduled to be made available on the reserve list this month.

But its release has now been deferred to next June, said the Urban Redevelopment Authority (URA) yesterday.

It said it needs more time to finalise the detailed planning and development conditions of the site as they relate to the broader plans for the area. The URA is working with other agencies on that, it said.

‘(The deferral) could be a reaction to the current poor market conditions,’ said Credo Real Estate’s executive director Tan Hong Boon.

The URA is probably taking advantage of the slower market to re-do its plans for the site, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

The two consultants said the site would be unlikely to attract interest even if it were made available now.

They are also pessimistic on prospects for the 1.46ha North Bridge Road site, boasting three historically and architecturally notable buildings: Capitol Theatre, Capitol Building and Stamford House.

‘It’s a lovely site as it is very central and next to the MRT station, but it won’t likely be triggered in the next six to nine months due to the credit crunch and poor property market outlook,’ Mr Tan said

Indeed, the 99-year leasehold site was to have been put up for sale directly this month but was transferred to the reserve list in late October, along with other sites, given economic uncertainties, the National Development Ministry had said.

At least 40 per cent of the North Bridge Road site’s gross floor area has to be set aside for hotel use to strengthen the hotel cluster in the area, URA said.

However, in the current market, this may not be attractive to developers, said Mr Mak. ‘There are already quite a number of hotels nearby.’

He said the site’s development will be highly complex and the concept needs to be handled with great care. The developer will need to find the right mix of various uses such as retail to ‘draw in the crowds and sustain their interest’, he said.

‘If done successfully, it can be an iconic development like the Fullerton Hotel. If it is not done successfully, its failure could be magnified due to its prominent location,’ said Mr Mak.

To ensure its vision of creating a distinctive development is met, the URA will be selling the land parcel via a ‘two-envelope’ system, where developers have to submit their concept proposals and tender prices in two separate stages, with concepts considered first. The URA will open the price envelope only for shortlisted concepts and pick the highest bid. This is time-consuming with extra costs and this may deter some developers, said Mr Mak.

Construction sector in SE Asia, HK expected to contract by 16% in 2009

Source : Channel NewsAsia - 19 Dec 2008

The construction sector in Southeast Asia and Hong Kong is expected to contract by 16 per cent next year, according to a report by regional construction information provider BCI Asia.

BCI Asia predicts that in a worst-case scenario, the contraction could be up to 32 per cent.

It released a preliminary four-year forecast for the construction markets of Hong Kong, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam on Friday.

According to the report, the value of projects under construction in Southeast Asia and Hong Kong jumped from US$107 billion in 2007 to US$140 billion this year.

It estimates that this value will decline to US$118 billion next year, according to an optimistic scenario that applies the November 2008 growth estimates of the International Monetary Fund.

BCI Asia says as local economic conditions deteriorate further, developers will postpone the construction of new offices, hotels, recreation facilities and downtown retail centres.

Applying a model for construction market behavior, it projects that the value of projects under construction could drop to US$96 billion in the most pessimistic recession scenario.

BCI Asia’s managing director, Thor Kerr, said: “The value of projects at design and documentation phases has contracted two per cent this year and we have seen major projects abandoned for lack of finance. There will be far fewer new industrial facilities and utilities being constructed from 2009.”

Curtain to rise on Capitol, after all

Source : Today - 19 Dec 2008

FOR the past 10 years, this once-lovely icon has languished in disuse.

Seven years and $1.51 million spent on feasibility studies, maintenance and reinstatement works led only to the eventual conclusion that the historic Capitol Theatre was “not viable” as a performing arts centre.

So, it comes as some surprise that - in releasing a 1.46-hectare land parcel at the junction of Stamford Road and North Bridge Road for sale on the reserve list of the Government’s Land Sale Programme yesterday - the Urban Redevelopment Authority (URA) announced that the neo-classical style former cinema was “required to be restored into an arts or entertainment-related performance venue”.

In response to Today’s queries, a URA spokesperson said: “The previous feasibility study by the Singapore Tourism Board was based on Capitol Theatre being refurbished and operated as a standalone arts performance venue with no firm plans to redevelop the rest of the site. Whilst the proposal was implementable from a functional and operational point of view, it was found to be economically not feasible.”

It added: “The integration of a performance venue within the development will enhance the vibrancy and attractiveness of the project and strengthen the arts and cultural positioning for the Civic District and the nearby Bras Basah / Bugis area.”

As part of the conditions for the integrated development of the plot, developers have to commit at least 40 per cent of the 51,359-sq m total gross floor area to include a hotel.

The three historic buildings on the site - Capitol Building and Stamford House being the other two that were gazetted for conservation last July - have to be “retained and restored for adaptive reuse”.

The remaining space in the bustling City Hall area can be used for other commercial purposes such as retail, food & beverage and entertainment.

It is envisaged that the new building that will replace Capitol Centre will have a “modern or contemporary” design, and the site will feature lots of attractive public open spaces, plazas, courtyards and landscaped terraces and roof gardens.

The land parcel will be sold through a Concept and Price revenue tender system. This means the Government will only consider the bids of those developers whose proposed designs are deemed good enough.

While the plum site holds many promising possibilities, property experts feel that it is “very unlikely” there will be bidders in the coming months.

Knight Frank’s director of consultancy and research Nicholas Mak said: “The softening property market may deter developers from making any moves. It is also a very complicated development that requires a very creative concept, because developers have to get around how to maximise use of space while conserving the historic buildings.”

He added that the requirement to run a hotel in an area with several other large hotels such as Swissotel The Stamford and The Fairmont nearby may also put developers off.

“The developer may need to operate a niche hotel, which may not be as competitive economically,” he added.

Nonetheless, news that the Capitol Theatre may be restored to its past glory was met with cheers from those in the arts community. The Necessary Stage’s founder and artistic director Alvin Tan said he was “very excited” about the prospect of watching performances in the cavernous theatre again.

“Hopefully the developers will build it into a venue that is shared by many arts groups because there is a lack of mid-sized theatres here,” he said.

Priced for the market

Source : Today - 19 Dec 2008

Increased supply of flats in Yishun a response to demand, says HDB

BUOYED by demand for its previous Build To Order flats (BTO), the Housing and Development Board (HDB) announced yesterday the launch of its latest BTO project - Dew Spring@Yishun.

“The previous BTO launch in Yishun - Jade Spring Phase One and Two was five times subscribed, and therefore, we feel that there could be demand for flats in Yishun, which is why we’re putting out this contract,” said the Board’s deputy chief executive Tan Poh Hong.

A total of 864 standard flats will be built, comprising 144 two-room, 216 three-room and 504 four-room units, with Dew Spring@Yishun having the largest number of two- and three-room flats - 170 more than Senja Green, a BTO project launched in August.

Located at the junction of Yishun Ring Road and Yishun Street 41, prices for the two-room units start at $76,000, the three-room flats at $120,000 and four-roomers at $197,000.

With the latest release, the Board has launched a total of 833 units of two- and three-room flats, and there are plans to offer another 280 similar units soon.

In all, the HDB plans to offer 4,000 smaller flats over the next two years.

When it was pointed out that 90 per cent of BTO flats are reserved for first timers and that the remaining 10 per cent may not be sufficient to meet the demand of downgraders forced to monetise their flats during bad economic times, Ms Tan assured: “If there is a need for more, we will build more.”

This is in line with National Development Minister Mah Bow Tan’s statement to Parliament last month that lower-income families and those who need to downgrade could look forward to a steady supply of smaller flats.

Property firm, PropNex’s chief executive Mohamad Ismail called HDB’s launch of the smaller units “timely” amidst the current economic uncertainty.

“These flats are priced very attractively,” he said. “The smaller units are actually going at below $200 per square foot, which is very much below the median resale prices for that area in the last quarter.”

As the units are situated not far from the Orchid Country Club and the Sungei Seletar Reservoir, Mr Ismail expects an over-subscription for these units. He also commended HDB for reaching out to the lower-income bracket with more affordable units.

In pricing the new flats, HDB said it considers several factors, such as prevailing market conditions and the resale prices of similar units in the vicinity, making adjustments for differences like location, amenities, design of the project, age and orientation.

It added that when comparing prices of flats it should be like-for-like.

Said Ms Tan: “It is not correct to compare a flat in Yishun and Sengkang, because they are two different towns, having different attributes. When we do comparisons, we use comparables within the same vicinity.”

She was responding to media reports which compared the prices of new BTO flats to resale flats, and to criticisms that new HDB flats were not affordable.

The Board also clarified that construction costs do not affect prices of HDB flats as HDB adopts a market-pricing approach which reflects the true value of flats - how much Singaporeans are willing to pay for such flats in the open market.

It also ensures the optimal use of public resources.

Said HDB’s acting deputy director of marketing and projects, Mr Ignatius Lourdesamy: “If it’s too high, there will be no demand for new flats. If it’s too low, it diminishes the market value of existing flats and we will be over-spending public funds on housing.”

Dempsey gets bigger

Source : Today - 19 Dec 2008

Country City awarded bid to develop more land

FOR those who can’t get enough of the chic hangout places at Dempsey Hill, the good news is, more units and land have been released for development.

The Singapore Land Authority (SLA) has released a 20,146.9 sq m plot of land with a gross floor area of 7,502.8 sq m on the hill, made up of several blocks of old British army buildings, to add to the existing nest of restaurants, bars, gourmet grocers and shops that have drawn crowds despite its less-than-accessible location.

The land, part of what is known as Tanglin Village, has been awarded to property investor Country City Investment, which beat 13 other bidders with a monthly rental quote of $378,300.

Upgrading will be carried out to ease traffic congestion and boost visitorship, including improvements like brighter pathways and roads, new road signs and more free parking lots.

General manager Nicholas Ng said Country City aims to “add to the already vibrant urban sanctuary for businesses and Singaporeans, expatriates and foreigners to wine and dine among lush greenery, retail lifestyle and services, and education services”.

An SLA spokeswoman said approved uses of the new plot of land include food and beverage outlets, a dance, drama, arts or music school, a spa, a childcare centre and retail shops.

The tenancy is for an initial term of three years and can be renewed until 2017.

“We hope the wide range of approved uses will further enhance the vibrancy of Tanglin Village,” she said.

The new area will be completed by the first half of next year.

Country City said it was too early to comment on the expected development costs as “we are still in planning stages”.

The firm is looking for new tenants, and a spokesperson added: “Priority will be given to existing tenants and new tenants will be carefully selected to be part of Dempsey Hill and its new concept establishments.”

JLL sees property interest picking up here as investors exit other markets

Source : Business Times - 18 Dec 2008

BUYING interest in Singapore’s property market is beginning to pick up as the country benefits from investors who scale back in other markets, said Jones Lang LaSalle (JLL) yesterday.

Foreign property funds and developers are looking for investment opportunities in the residential and commercial sectors here, said Chris Fossick, JLL’s managing director for South-east Asia and Singapore.

Property, he said, is a long-term investment. So while most investors are not expecting to see an upside to their investments in the next 6-24 months, in the longer run, the Singapore property market is still seen as a good bet, he said.

‘Our clients are telling us that they expect growth in Asia, and they want to take advantage of that growth. This is one of the few areas where they can get good returns on their investments,’ said Mr Fossick.

In the light of this, buying activity, which has fallen sharply since the start of this year, is beginning to show some signs of recovery as prices fall, he said.

In particular, affordability has improved in the residential market, said JLL. Prices have come off their peaks some 5-24 per cent for luxury and mass market projects, the property firm’s data shows.

‘The affordability of both luxury and mass market projects are better now than they were about 6-9 months ago,’ said JLL’s South-east Asia research head Chua Yang Liang. ‘Lower pricing will encourage fresh capital investment.’

The gap between monthly mortgage payments and monthly rentals have also narrowed compared with 1998, which also makes buying properties more attractive now than 10 years ago, Dr Chua said.

While most funds and developers are still watching the market closely and waiting for the right time to buy, some of them are already at ‘entry point’, said Mr Fossick. These funds and developers will buy if sellers offer the right price.

Mr Fossick, however, said that he does not expect many distressed asset sales. ‘I don’t see there being distress at all.’

Value of properties sold through auctions plumbs 10-year low

Source : Business Times - 18 Dec 2008

The Singapore property auction market witnessed a 10-year low in the total value of properties sold in year 2008. Only S$83.67 million worth of properties were sold via auction this year, according to figures from Colliers International.

‘Not only does this represent an approximate 79 per cent decline from the total sale value of S$407.43 million registered in 2007, it is also 38 per cent lower than S$135.7 million recorded during the last financial crisis in 1998,’ Colliers said in a news release on Thursday.

All property sectors experienced a decline in their total sales value at auctions in 2008, with the residential sector registering the biggest drop of 88 per cent to $25.23 million from $202.36 million in 2007.

URA puts up Stamford Road/North Bridge Road site for sale

Source : Channel NewsAsia - 18 Dec 2008

Singapore’s Urban Redevelopment Authority (URA) has put a 1.46-hectare site at Stamford Road/North Bridge Road for sale.

It is available on the Reserve list of the Government Land Sales Programme for the second half of 2008.

The land parcel occupies a prime location in the heart of the city, and is strategically situated along the commercial and mixed-use corridor at North Bridge Road.

Retail, cultural and entertainment venues can also be found near the site.

The plot yields a maximum permissible gross floor area of 51,359 square metres.

URA said the developer will be required to develop a minimum of 40 per cent of the total gross floor area for hotel use. The remaining gross floor area can be use for other commercial purposes.

Under the Concept and Price Revenue Tender System, bidders are required to submit their concept proposals and tender prices in two separate envelopes.

Meanwhile, plans for the sale of site at Kallang River will be deferred.

URA said it is working with other agencies to finalise the detailed planning and development conditions of the Kallang River plot.

The site will only be released on the Reserve List in June 2009 instead of this month.

Parts of Tanglin Village to be redeveloped

Source : Channel NewsAsia - 18 Dec 2008

The Dempsey Road area which is home to restaurants, bars and gourmet grocers is set to get more vibrant.

The Singapore Land Authority (SLA) has awarded the tender to redevelop parts of Tanglin Village to property investment firm Country City Investment.

The project will cover 20,147 square metres of land with a gross floor area of 7,503 square metres.

The new land plots will complement the present area known as Dempsey Hill.

Nine blocks along Dempsey Road - Blocks 13, 13A, 14A, 14C, 14D, 14E, 15, 16, and 26 - which currently have more than 20 tenants, will be redeveloped.

The redevelopment of the cluster of old British army buildings is targeted for completion by the first half of 2009.

General manager of Country City Investment Pte Ltd, Nicholas Ng, said: “We are thrilled to be awarded this new tender so that we can expand our footprint and further extend the area of Dempsey Hill.

“We will not only be offering competitive rental prices to new and current tenants, but will support all of them with various marketing activities to assist them, especially during this financial climate.”

HDB to offer 4,000 smaller flats over the next two years

Source : Channel NewsAsia - 18 Dec 2008

The Housing and Development Board (HDB) has launched a new Build-To-Order (BTO) project at Yishun. It has the highest proportion of smaller flat types among BTO projects.

This is in line with HDB’s plan to supply more smaller flats.

The latest Build-To-Order project is Dew Spring@Yishun. 43 per cent of its 864 units are 2- and 3-room flats, the largest proportion in a BTO project so far.

Tan Poh Hong, deputy CEO, Estates & Corporate, HDB, said: “We are looking into building smaller flats because we think there will be people who need to downgrade to smaller flats as well as first-timer families who also would like to start with a smaller flat in order to be financially prudent.”

2-room flats at Dew Spring will cost S$76,000 to S$90,000. 3-room flats will cost S$120,000 to S$146,000 and 4-room flats will cost S$197,000 to S$238,000.

For the first time, HDB also provided prices of nearby resale flats to highlight the subsidy HDB buyers enjoy.

There are no 2-room flats nearby for comparison. HDB said it uses a market-based approach in pricing the flats.

First, professional valuers work out an equivalent market price. Then HDB makes adjustments to reflect individual attributes such as design and location before a subsidy is determined.

If market prices fall in the months ahead, then HDB flats will become cheaper, just as the converse is true.

HDB said it expects demand for Dew Spring@Yishun to be good despite the current economic downturn.

A Build-To-Order project in Punggol launched last month was 3.2 times oversubscribed, demonstrating that demand for public housing continues to remain strong unlike that for private developments.

There are plans for another 1,180 units to be launched by year’s end, including 280 units of smaller flats.

In the next two years, HDB will offer 4,000 smaller flats, which is welcome news for those hit by the financial crisis and want to downgrade.

ibis to set up largest hotel branch outside Europe in Singapore

Source : Channel NewsAsia - 18 Dec 2008

Global economy hotel chain, ibis, will set up its largest branch outside Europe here.

The 538-room hotel will be the first ibis in Singapore and will open its doors on February 24 next year.

ibis Singapore on Bencoolen plans to target leisure and business travellers with its debut nightly rate of S$148 per room.

Located along Bencoolen Street, the S$145 million hotel is being developed by LaSalle Investment Management.

It will be the 60th ibis hotel to open in the Asia Pacific region and will be managed by European hotel group Accor, which owns the ibis chain globally.

Construction sector set for slowdown after existing projects run out

Source : Channel NewsAsia - 18 Dec 2008

Singapore’s construction sector looks set to ride out the current economic downturn, thanks to a strong orderbook of projects lasting for at least another year.

These projects are expected to be valued at around S$30 billion by the end of 2008. That is 22.4 per cent higher than 2007.

But some experts are predicting a prolonged economic slowdown lasting past 2010. This could mean tough times ahead for the construction industry.

Singapore’s construction industry had one of its best years in 2007. Despite soaring prices of fuel and materials, the sector grew 20.3 per cent last year, and confidence was high at the beginning of 2008.

It expanded by 16.9 per cent in the first quarter, and saw 17.4 per cent growth by the end of the first half.

The projects secured in the 12 months ended June this year will ensure that the industry continues to thrive in 2009.

Desmond Hill, president, Singapore Contractors Association, said: “Most of the jobs that we have in hand were already obtained either in the first half of this year or last year.

“Most contracts are on firm price contracts, so most contractors would actually have a very busy year in 2009. So in that respect, the effect will not be felt or be so obvious to contractors.”

The economic slowdown took its toll on the industry and growth was halved to about 7.8 per cent by the third quarter of this year.

But industry players said their immediate concern is a tight labour market resulting from the slew of projects started in 2007 and 2008. This is especially the case when it comes to supervisory positions, and companies expect to continue to be short-handed next year.

Mr Hill added: “You’ll find that, although it’s picked up since 2006, contractors are still having difficulty getting the right number of people to come on board as supervisory and management staff. And I think that will go at least up until the end of 2009.”

But the financial crisis is expected to spread to the real economy and observers said this will mean fewer new construction projects from next year onwards.

Thomas Kaegi, Wealth Management director, Global Investment, Recommendation Head, UBS, said: “As demand for new projects is diminishing, we also see significant over-capacity now in the retail as well as in the office properties sector. As such, the demand for new projects will be significantly lower in 2009, which then has effects for 2010.”

Singapore’s construction industry last experienced a slowdown in the decade between 1995 and 2005.

Market watchers said that the companies that survived are better placed to weather this new crisis.

California home sales jump 27% in Nov

Source : Business Times - 18 Dec 2008

Foreclosed homes account for 54.6% of resale deals

November home sales in Southern California jumped 26.9 per cent from a year earlier as bargain-hunters snapped up foreclosed properties, but fell by 22.3 per cent from October, according to a report by MDA DataQuick released on Tuesday.

A total of 16,720 new and resale houses and condominiums were sold last month in the six-county region, the most heavily populated area in the state of California.

Properties that had been foreclosed at some point in the last 12 months accounted for 54.6 per cent of the transactions on resold homes in November.

‘Bargains and bargain-hunters have kept this market alive through some of the bleakest financial news in memory. There’s this renewed sense that you can score a ‘deal’ - something that had been missing for many years,’ said John Walsh, DataQuick’s president.

Sales of foreclosed properties helped push the region’s median home price last month down to US$285,000, down 5 per cent from October and a record 34.5 per cent from November 2007.

Some of Southern California’s home markets are among the hardest hit by foreclosures in the nation. ‘Foreclosure resales’ ranged from 44.1 per cent of November existing home sales in Los Angeles County to 70.4 per cent in neighbouring Riverside County.

‘Last month’s Southland (Southern California) sales weren’t great, given they were the second-lowest for any November in 16 years. But they could have been a lot worse,’ Mr Walsh said.

Since summer many of the region’s inland markets, where the foreclosures are concentrated, have seen home sales double or more from year earlier levels as their home prices have tumbled.

Markets posting those increased sales have a median resale home price under US$260,000, or at least 35 per cent below year-earlier levels.

‘Many first-time homebuyers are, understandably, cheering as foreclosures dominate sales, tugging down prices and raising affordability,’ Mr Walsh said.

‘For home sellers and the industry, though, one concern over foreclosures representing half of all sales is that those transactions simply repay lenders. They don’t trigger a move-up purchase,’ he added.

Home sellers in California had booked big profits earlier this decade amid the housing boom and routinely used them to buy more expensive ‘move-up’ homes, often new homes.

Now California’s new homes market is struggling amid weak demand for housing in general and because aspiring new-home buyers lack money to buy, are having a hard time obtaining financing because of turmoil in credit markets or are waiting for prices to fall further.

The California Building Industry Association, which represents home builders, said in a report released on Monday that new home sales in October in California fell 63 per cent from a year earlier, marking ’some of the worst monthly statistics yet seen over the course of the housing downturn.’

The Commerce Department’s report on Tuesday of November housing starts underscored the difficult market for home builders.

It said housing starts nationwide dropped 18.9 per cent to a seasonally adjusted annual rate of 625,000 units from 771,000 units in October, the lowest level since the department started collecting monthly starts data in 1959, and well below the 740,000-unit pace that Wall Street analysts had expected.

Economist Patrick Newport of IHS Global Insight expects double-digit declines for starts again in December and January because builders with viable projects are having a hard time obtaining credit and demand for new first and second homes is weakening further after the stock market’s collapse.

‘These are just horrible, horrible numbers,’ he said, referring to November’s housing starts. ‘They’re going to be quite a bit worse for the next couple of months.’

Loss in US home values to top US$2 trillion

Source : Business Times - 18 Dec 2008

Nearly 11.7m households estimated to owe more on their mortgage than their homes are worth

Homes in the United States have lost trillions of dollars in value during 2008, with nearly 11.7 million American households now owing more on their mortgage than their homes are worth, real estate website Zillow.com said on Monday.

US homes are set to lose well over US$2 trillion in value during 2008, according to an analysis of recent Zillow Real Estate Market Reports.

Home values declined 8.4 per cent year-over-year during the first three quarters of this year, compared to the same period in 2007, the reports showed.

US home values lost US$1.9 trillion from the first of the year through the end of the third quarter, and will probably fall further in the fourth quarter. One in seven of all homeowners, or 14.3 per cent, were ‘underwater’ by the end of the third quarter, the reports showed.

‘This year marked the acceleration of the market correction, and is likely to end with the eighth consecutive quarter of declines in home values,’ Stan Humphries, Zillow’s vice- president of data and analytics, said in a statement.

‘In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values. On the positive side, in the third quarter, some markets - particularly those hit hardest in the downturn - showed smaller year-over-year declines than in the prior quarter,’ he said.

‘Our optimism here, though, must be tempered by the knowledge that the larger economic problems that emerged in the fourth quarter will likely further challenge the real estate market,’ he said.

The US housing market is suffering the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.

Thirty of the 163 metropolitan statistical areas, or MSAs, covered in the Zillow Real Estate Market Reports showed gains in the Zillow Home Value Index, or median value of all homes in the area, over the first three quarters of the year, with the Jacksonville, North Carolina region seeing year-over-year appreciation of 4.9 per cent. The change in value was calculated by averaging the year-over- year change in each of the first three quarters of the year, the reports showed.

The US housing market, with falling prices, rising foreclosures, and large numbers of ‘underwater’ mortgages, remains the largest unresolved issue for the global economy.

The Stockton, California region fared the worst in the first three quarters of 2008, with home values sliding 32.3 per cent year-over-year. The Merced, California area followed with home values declining 31.2 per cent year-over-year in the first three quarters of 2008, the reports showed.

Long-term property investors should bet on S’pore: Analyst

Source : Straits Times - 18 Dec 2008

SINGAPORE looks a pretty good bet for long-term property investors, given its strong savings rate, low corporate taxes and near-full employment, according to a key real estate player here yesterday.

And if prices fall further next year, it would be a good time to buy, said Mr Christopher Fossick, Jones Lang LaSalle’s managing director for Singapore and South-east Asia at a media briefing at the firm’s office. There is a consensus that the economy will go through a tough time next year, which means it will be tough for everybody, including those in property, he said.

‘If prices are lower, that provides opportunities,’ Mr Fossick added. He pointed out that Asia, particularly Singapore, given its status as a financial services hub, is better off economically than the United States and Europe. The level of household borrowings and corporate loans here is lower than in the US and Britain, he said.

He quoted a recent report commissioned by London Mayor Boris Johnson that said that the rising status of regional hubs such as Dubai and Singapore is threatening London’s position as the world’s financial capital.

He listed some of the key factors that should continue to attract investors here. Singapore’s corporate tax rate of 18 per cent, he said, is a tad above Hong Kong’s 17 per cent but below the 29 per cent rate in Britain and the 40 per cent levy in the US.

There is near full employment and a strong savings culture here. Singapore has a gross national savings rate of 45 per cent, compared with 11 per cent in the US, 14 per cent in Britain and 32 per cent in Hong Kong. Also, about 76.5 per cent of Singapore’s population are working, compared with 67.1 per cent in the US and Britain.

Property is always a medium- to long-term proposition, he added. Most investors treat it as such and have an investment horizon of more than 24 months. Jones Lang LaSalle’s regional director and head of markets, Mr Chris Archibold, said the office market will have a lower take-up rate over the next year but most of the expected new supply will not come to market until late next year anyway.

There are a lot of institutional investors on the sidelines waiting to enter the Singapore market, according to Mr Fossick.

‘They are saying, come 2009 and 2010, there will be opportunities to buy properties in Singapore,’ he said. ‘Obviously, it’s going to be at some discount from prices we saw in 2007.’

Should you jump in now?

Source : Today - 18 Dec 2008

JLL says yes; other property pundits not so sure

THANKS in part to falling interest rates, the affordability for luxury homes in Singapore has improved by 24 per cent since the third quarter of last year, according to property consultancy Jones Lang LaSalle (JLL).

JLL compiles an affordability index for private homes, which takes into account factors such as property prices, national wages and interest rates.

Based on the movement of this index in the past year, JLL said during a media briefing yesterday that luxury residential properties have become 24 per cent more affordable since last year, while mass market homes have become 5 per cent more affordable.

Hence, the consultancy sees investment opportunities in the luxury segment.

In addition, resale capital values and rentals of residential properties have come off the highs seen last year, while monthly rental payments have caught up with monthly mortgage payments.

These reasons, according to JLL, coupled with the assessment by the Economist Intelligence Unit that Singapore’s economy will rebound and grow about 2 per cent in 2010, all point to one thing: This is a good time for property investment funds and developers to inject capital into the property market.

Similar investment opportunities exist in the commercial property sector, said JLL’s head of markets in Singapore, Mr Chris Archibold.

“We are very aware that there are issues in the financial market, but they’re not going to be there forever; it’s in the short term,” he said.

“If you look at the supply that is on offer to the banking and finance community and Grade A central business district (CBD) occupiers, currently of the CBD office stock, 78 per cent is less than 15,000 sq ft.

“If you looked at it in 2005, it was 81 per cent. So, we are slowly growing our pure Grade A office supply, and that’s something we feel we need to do, given the fact that we want to maintain and build our position as a financial hub going forward.”

As many financial firms typically need large spaces for trading and dealing floors, the past three years have seen an increasing proportion of Grade A office space being bigger than 15,000 sq ft to cater to such needs.

On the other hand, property consultancy Chesterton Suntec International would hesitate to plunge into the investment property market now.

Its consultancy and research head Colin Tan feels investors should hold back for the time being, until the market bottoms out, corrects itself and reflects the fundamentals.

“Prices and rentals are still pretty high. I think you have to wait for the indices to be really negative. Right now, we’re just past the turning stage, on our way down. We haven’t quite got the worst of it yet,” said Mr Tan.

Although he said now might be a good time for investors to look around, Mr Tan expects few transactions to be concluded in the next year or so, as property prices and rentals have not corrected much.

JLL sees property interest picking up here as investors exit other markets

Source : Business Times - 18 Dec 2008

BUYING interest in Singapore’s property market is beginning to pick up as the country benefits from investors who scale back in other markets, said Jones Lang LaSalle (JLL) yesterday.

Foreign property funds and developers are looking for investment opportunities in the residential and commercial sectors here, said Chris Fossick, JLL’s managing director for South-east Asia and Singapore.

Property, he said, is a long-term investment. So while most investors are not expecting to see an upside to their investments in the next 6-24 months, in the longer run, the Singapore property market is still seen as a good bet, he said.

‘Our clients are telling us that they expect growth in Asia, and they want to take advantage of that growth. This is one of the few areas where they can get good returns on their investments,’ said Mr Fossick.

In the light of this, buying activity, which has fallen sharply since the start of this year, is beginning to show some signs of recovery as prices fall, he said.

In particular, affordability has improved in the residential market, said JLL. Prices have come off their peaks some 5-24 per cent for luxury and mass market projects, the property firm’s data shows.

‘The affordability of both luxury and mass market projects are better now than they were about 6-9 months ago,’ said JLL’s South-east Asia research head Chua Yang Liang. ‘Lower pricing will encourage fresh capital investment.’

The gap between monthly mortgage payments and monthly rentals have also narrowed compared with 1998, which also makes buying properties more attractive now than 10 years ago, Dr Chua said.

While most funds and developers are still watching the market closely and waiting for the right time to buy, some of them are already at ‘entry point’, said Mr Fossick. These funds and developers will buy if sellers offer the right price.

Mr Fossick, however, said that he does not expect many distressed asset sales. ‘I don’t see there being distress at all.’

Value of properties sold through auctions plumbs 10-year low

Source : Business Times - 18 Dec 2008

The Singapore property auction market witnessed a 10-year low in the total value of properties sold in year 2008. Only S$83.67 million worth of properties were sold via auction this year, according to figures from Colliers International.

‘Not only does this represent an approximate 79 per cent decline from the total sale value of S$407.43 million registered in 2007, it is also 38 per cent lower than S$135.7 million recorded during the last financial crisis in 1998,’ Colliers said in a news release on Thursday.

All property sectors experienced a decline in their total sales value at auctions in 2008, with the residential sector registering the biggest drop of 88 per cent to $25.23 million from $202.36 million in 2007.

URA puts up Stamford Road/North Bridge Road site for sale

Source : Channel NewsAsia - 18 Dec 2008

Singapore’s Urban Redevelopment Authority (URA) has put a 1.46-hectare site at Stamford Road/North Bridge Road for sale.

It is available on the Reserve list of the Government Land Sales Programme for the second half of 2008.

The land parcel occupies a prime location in the heart of the city, and is strategically situated along the commercial and mixed-use corridor at North Bridge Road.

Retail, cultural and entertainment venues can also be found near the site.

The plot yields a maximum permissible gross floor area of 51,359 square metres.

URA said the developer will be required to develop a minimum of 40 per cent of the total gross floor area for hotel use. The remaining gross floor area can be use for other commercial purposes.

Under the Concept and Price Revenue Tender System, bidders are required to submit their concept proposals and tender prices in two separate envelopes.

Meanwhile, plans for the sale of site at Kallang River will be deferred.

URA said it is working with other agencies to finalise the detailed planning and development conditions of the Kallang River plot.

The site will only be released on the Reserve List in June 2009 instead of this month.

Iranians mired in Dubai property slump

Source : Business Times - 18 Dec 2008

Bursting of the emirate’s real estate bubble spells financial ruin for thousands

Habib Mostofi is one of thousands of Iranians who believed that buying property in Dubai would be safer than doing so in Iran, which is isolated by the West over its disputed nuclear plans.

But that was before the emirate’s property bubble burst.

‘I invested all my family savings in property in Dubai. I thought it was near Iran, politically safe and business- friendly,’ the 43-year-old businessman told Reuters. ‘How can I tell my family I was so wrong and lost the money?’

The economy of the United Arab Emirates, the world’s fifth-largest oil exporter, has surged 50 per cent in real terms since 2004, but the tide has turned as slumping oil prices and a global financial meltdown put an end to Dubai’s property boom.

In recent years, Iranians - as well as others from Iraq, Pakistan, Somalia, Sudan and Lebanon - have flocked to Dubai, the Gulf trading hub where construction cranes litter the skyline.

Many Western banks and export credit agencies have quit Iran, and Iranian executives face increasing difficulty opening letters of credit, vital for trade, with an Iranian address.

Some opened Dubai offices to avoid that problem, while others just saw Dubai’s property boom as a surefire earner.

At the height of the real estate bonanza, mortgages were easy and property could be sold for profit even before construction was finished - a practice known as ‘flipping’.

Reza Dabir-Alai, a businessman, 39, bought several apartments that together measured 1,541 square metres in Dubai.

‘Substantial profits could be earned in a matter of days, sometimes even hours immediately after buying a property,’ he said, adding that after signing a deal for one apartment, he was offered 2 per cent more as he left the real estate agent.

Then, the financial crisis began lapping on the beaches of Dubai’s many man-made islands. Rows of apartment blocks and exclusive villas have lost their value, as banks have reined in lending, casting a pall over corporate finance and construction.

‘I cannot sell these apartments . . . and I cannot cancel the contracts,’ said Mr Dabir-Alai.

Shahnaz Mirsoufi, an Iranian real estate agent based in Dubai, said that prices of villas and apartments in Dubai, on average, had doubled since early January last year but now, some premier property prices have dropped by as much as 50 per cent. ‘Even in the first quarter of the year, the price of villas and flats, many not yet built, rose by 43 per cent,’ she said.

Analysts, in a Reuters survey this month, said that Dubai property prices would fall 28 per cent from a peak earlier this year.

Hamid Sardari, an Iranian businessman, said that he was ‘penniless’ and feared for his shipping company.

‘My money that I need to run my business is stuck in Dubai property,’ he said. ‘I will be bankrupted soon.’

Now, some developers have put projects on hold after Dubai’s real estate regulator urged developers to slow down, saying that worsening financial conditions were driving up defaults.

Many foreigners were also attracted by a former promise that owning a property would secure them long-term Dubai residency rights.

But Dubai’s property regulator this year scrapped such a guarantee.

That spelt financial ruin for computer engineer Mohammad Reza Nouri: no visa, no job in Dubai and not enough salary from his Teheran work to pay off his UAE loan.

‘My aim was to get a residence permit in Dubai. Now, I cannot get the permit and I cannot pay the apartment’s monthly instalments,’ he said after investing US$50,000 of his savings.

Concern about the speculation even prompted a public warning from Iran’s ambassador to the United Arab Emirates last month. ‘I call on Iranians to avoid buying properties in Dubai. For those who want to make profit or get a residence permit, none of those is possible,’ Hamid Reza Asefi told state radio.

Selling is not always an option. Mina Vakili, a divorcee, said that she could not sell an 80 sq m apartment that she bought. ‘I wanted to profit from my Dubai apartment to buy one in Teheran. But now, it is not clear when the project will even be finished.’

Wall St blues come to NY elites’ play ground

Source : Business Times - 18 Dec 2008

Just months after he was ousted from Lehman Brothers, Joseph Gregory put his mansion in tony Bridgehampton on the market for US$32.5 million.

The former president of the sinking investment bank could not have picked a worse time.

The Hamptons, a summer vacation playground for New York’s financial and celebrity elite, are being hit hard as Wall Street power houses such as Lehman and Bear Stearns succumb to the financial crisis.

According to a report by Prudential Douglas Elliman, real estate prices fell 11.1 per cent in the third quarter in the Hamptons, an exclusive section on the eastern tip of Long Island, New York.

According to Mr Gregory’s real estate agent, he and his wife are selling because they have spent little time there after purchasing and upgrading the posh property two years ago.

But the Gregorys are not the only Wall Streeters opting out of the Hamptons as the financial markets crumble.

The financial sector has announced 220,506 job cuts so far this year, the most of any industry, according to a recent report by global outplacement consultancy Challenger, Gray & Christmas.

Last month alone, there were 91,356 job cuts announced, the report showed. Citigroup has said that it plans to eliminate a whopping 52,000 jobs, while Bank of America has said that it will cut 35,000, with some of the job losses expected to be in New York.

Wall Streeters who have not lost their job face bonuses that will pale sharply in comparison with previous years’. That bonus is the bulk of their compensation.

‘There is a palpable fear I sense right now from people who realise they may be in over their heads with a mortgage or are anxious about selling their homes,’ said Diane Saatchi, senior vice-president at Corcoran Group Real Estate in East Hampton. ‘While they have not pressed the panic button, more homes should be up for sale in the months ahead.’

She estimates that 25 to 30 per cent of homeowners and potential buyers are from the financial sector.

The average sales price in the Hamptons was US$1,537,512 in the third quarter of this year, down 11.1 per cent from the previous quarter and down 23.3 per cent from the third quarter of 2007, according to Prudential Douglas Elliman’s latest quarterly report.

The number of sales tumbled to 257, 27 per cent fewer than the previous quarter and 28.8 per cent below the third quarter of 2007, the report showed.

‘The region certainly looks vulnerable and there is a lot of concern because of its close ties to Wall Street,’ said Jonathan Miller, of appraisal firm Miller Samuel in New York.

Throughout the United States, the housing market is suffering its worst downturn since the Great Depression. A huge supply of unsold homes, tighter lending standards and record foreclosures have slashed home prices.

While high-end homes have weathered earlier housing market downturns, close ties with struggling Wall Street have hit the Hamptons this time.

One person looking to sell is Michael Hampton, a retired advertising executive. He put his luxurious home with panoramic ocean views on the market for US$5.995 million a year ago.

Instead of the bidding war he expected over a property nestled among the rich and famous in Montauk, the eastern-most town, he has received not a single offer.

‘It is as if somebody held up the stop sign,’ said Mr Hampton, who bought the property to renovate and sell it for a profit. ‘While I have no urgency to unload the property, it is frustrating that I cannot start another project because there is only so much in the piggy bank.’

Sitting tight is the advice that many real estate agents are giving their clients.

‘With some economists and politicians reporting this is the bottom and others predicting there is a long and deep global recession ahead, when there is a choice, inaction seems a wise decision,’ said Ms Saatchi.

Peter Turino, president of the Hamptons offices of luxury real estate agent Brown Harris Stevens, said that in the long term, the Hamptons should rebound strongly. ‘The ramifications of the global financial crisis have not been completely understood or qualified yet, and it will take time to understand just what it will do to to us out here,’ he said.

But, as in the wider real estate market, potential home buyers in the Hamptons have no incentive to buy right now, when home prices are widely expected to keep tumbling well into next year.

Eric Ellenbogen, co-founder of media company Boomerang Media TV, put his US$5.695 million second home in East Hampton up for sale six months ago. ‘There have been many lookers, but no offers,’ he said.

The number of lookers has diminished in a more pronounced way in the last several weeks due to uncertainty about the overall housing market, financial markets and the availability of financing, he said.

But, he said, patience is a virtue.

‘I am not a forced seller as so many home owners are right now, so I plan on riding this out and if I do not get an offer, I can always turn my house into a summer rental,’ he said.

Despite more available houses, summer rental prices, which can range broadly from US$12,000 to US$1 million for the season, seem to be holding steady, according to Ms Saatchi.

But this is not a good sign for sales, which typically rebound in the spring but may not this year because would-be buyers may have decided to rent instead.

‘This upcoming summer season will be all about renting,’ she said.