Strong recovery seen for Singapore

Source : Business Times - 10 Jan 2009

WITH the global economy facing substantial downside risks this year, there seems to be no escaping further pain in the short term. But in the medium to longer term, there are opportunities to be had - and Singapore can look forward to a strong recovery.

That was the message panellists had yesterday for the 300 members of the business community who attended the 7th annual Business Outlook Forum, jointly organised by the Singapore Chinese Chamber of Commerce & Industry and The Business Times.

Manu Bhaskaran, CEO of Centennial Asia Advisors, said Singapore’s high exposure to the world economy is not the only reason things could get more sticky.

The economy was overheated prior to the crisis, meaning Singapore entered it with a high cost structure that will require substantial restructuring measures to correct.

For Singapore, a key risk is unemployment, said Kelvin Tay, executive director of product and services consulting at UBS Wealth Management.

According to UBS, 30,000 jobs here will be cut this year. This, Mr Tay said, is more severe than it would have been if the economy had not been overheated going into the crisis.

As for investment strategies, Roy Varghese, foundation adviser and director of the financial planning practice at ipac financial planning Singapore, said that in an environment where asset quality is uncertain and valuation difficult, diversifying a portfolio and holding it for the long term would be wisest.

On a brighter note, Mr Bhaskaran said that if Asian economies rebound in 2010 as he expects them to, Singapore companies would be in a unique position to leverage on China and India’s resurgence, with opportunities for the stronger ones to scale up regionally.

At the global level, Mr Tay said that averting deflation will be an important challenge this year. Both he and Mr Bhaskaran also expressed certainty that a decline in the US dollar is only a matter of time as fiscal stimulus grows.

The forum closed with a panel discussion chaired by Vikram Khanna, associate editor of The Business Times.

House hunting undercover

Source : Weekend Today - 10 Jan 2009

Today reporters were offered discounts and freebies to sweeten the deal

BARELY an hour into the showflat tour, the senior executive of a property consultancy firm, brokering a private condominium, decided it was time to reveal his trump card.

“Don’t say I said it,” he said, almost whispering, as he pushed across the table to us a piece of paper with a blow-by-blow breakdown of his offer. The latest scribbled figure was 15 per cent just beside the previous offer of 11 per cent.

We had asked him earlier what the “threshold” level was for a discount should we decide to put in a bid with cheque attached for a two-room apartment in the 99-year mid-tier development.

Property watchers later told Weekend Xtra that 15 per cent is a good discount, especially for owner-occupiers.

“It is only during such times that you can see such packages. In good times, there is no room for bargaining; what you see is what you get,” said the agent for this site let’s just call it Property A who was pushing the unit for a large developer.

His sales pitch did not surprise us it was a sign of the times in the property scene.

It was not too long ago when condominiums were being snapped up before they were even launched to the public.

During the property bull run, from 2007 to early last year, some properties located in Orchard, the core central region, were fetching as much as $5,500 per square foot (psf). A development in Little India, priced at around $912 psf, was sold out within two hours of its launch.

But these days, with the property bears out in force, some developers are revising their prices to sell off their units. A CBRE report noted that prices of units in Evania at Upper Paya Lebar Road had been reduced from more than $800 psf, when it was first launched in March, to between $610 and $650 psf last November.

GOING HOUSE-HUNTING

To get a better picture of what is happening, a Weekend Xtra team visited the showflats of four mass-market to mid-tier developments over two weekends recently. We posed as an engaged couple out on a house-hunting spree with a budget of $800,000.

The surburban developments currently being built are located in areas like Bishan, Boon Keng, Kovan and Potong Pasir. They are owned by an even mix of small and big developers.

What we saw was not pretty: Barren car parks and empty showrooms with only property agents idling around. In one case, they were lining the front door to welcome us even before we stepped in.

We spotted only two other couples at the Property A showflat, while at the other showflats, we were the only ones.

Things have been so quiet in recent months that the four showflats are now open only on weekends “to save on electricity and manpower costs”, in the words of one property agent.

Still, the slowdown has not translated into aggressive price cuts and hefty discounts for all developments. And contrary to conventional wisdom, it is the small developers, rather than the heavyweights, who seem to be holding back on dishing out the goodies.

“Small developers usually start their launches already on a more affordable level, unlike the big boys, who can afford to mark up their price and then adjust downwards, ” explained one property agent, representing a small developer for a condominium.

For those who do budge, the sweeteners usually range from the absorption of stamp duties and maintenance fees to giving out furniture vouchers with an outright price discount offered only when all the other offerings refuse to do the trick.

Mr Melvin Goh, a property agent for six years, said most developers are careful not to lower the per-square-foot prices too drastically as they want to protect the overall valuation of their projects.

SWEETENING THE DEAL

At Property A, only 25 per cent of its 110 units have been sold since it was launched last July. That may explain the eagerness of the property agent who served us he went on a charm offensive the moment he saw us stepping into the showflat.

When we noted how his first quote for a two-bedroom unit was “way out of our budget”, he was quick to add: “Of course, there are sweeteners”, and offered furniture vouchers of up to $22,000 upfront without any prompting.

After a quick tour of the showflat, he promptly sat us down to start the negotiations proper even, as he sketched out a detailed repayment plan to fit our budget.

He gradually offered more concessions first a two-year waiver of maintenance fees, then a reimbursement of the 3 per cent stamp duty.

The sweeteners eventually amounted to an 11-per-cent discount and we could sense his desperation as we waited for his next move. Finally, he said: “Okay, now that push has come to shove, what can I do to sweeten the deal?”

We asked for an outright discount and we got it.

While the agent for Property A seemed keen to seal the deal on the spot, others, like the developer of Property B preferred to deliberate first before pushing out its offers with a vengeance.

No freebies were offered when we visited the showflat, not even when we asked for them, although the property agent of the 212-unit development a local company’s first foray into property promised she would contact us when the developer produced a revised listing the following week.

One week later, we received two calls and a few text messages from her to visit the showflat again. She told us the asking price had come down. The price of the unit we had told her we were interested in had been revised from $774,000 to $689,000.

She also said that after this promotion, the developer will no longer be offering any more units for sale until the temporary occupation permit is issued.

SMALL DEVELOPERS HOLDING OUT

On the other hand, the smaller developers we visited seemed to be holding on to their selling prices.

At two showflats, there were no freebies or offers to lower the asking price. Instead the property agents harped on about other factors, such as the location.

Property C, a 616-unit development, claimed that its prices are reasonable compared to the bigger players in the market. When we told the property agent there that the unit prices were beyond our budget and asked if there were any discounts or freebies, she said it is not the Mainboard-listed developer’s practice to give discounts.

She went on to explain that the condominium’s location is in a prime heartland district and the surrounding HDB flats commanded high prices as well.

However, she said we could consider the units closer to the ground floor, which might be within our budget. She added that we could table a bid by issuing a cheque with an amount equal to 5 per cent of our desired offered price, to indicate our interest.

“If the developer is not agreeable with the price, the cheque will be returned to you,” she said

The agent added that she would also try to negotiate with the developer for furniture vouchers.

We had a similar experience at Property D, where the marketing agent kept asking if we could show our interest to the developer.

The senior sales director told us that no gifts or discounts would be given. To differentiate his development with the others in the area, he mentioned that the freehold property would be completed by the end of this year and we could get it sooner than others.

However, he said he could propose to the developer for a rebate in stamp duties, on the condition that we issue a cheque with our asking price. “This is to show the developer that you are genuinely interested,” he said.

That, to us, did add up to a sweetener of sorts.

So, would the Weekend Xtra team have been tempted to buy any of the developments we visited had we been house-hunting for real, given the benefits of being the buyer in a buyer’s market?

Well, he would buy if he had the money while she would wait for the market to drop further before deciding.

Then again, when it comes to taking advantage of good property deals in these tough times, it may be wise to heed the words of Mr Colin Tan, research head at Chesterton Suntec International.

“You may have come out tops in the negotiation, but at the end of the day, you have to ask yourself whether you can afford it. You shouldn’t buy just because it’s on sale. You may not need it or it may get you into trouble,” Mr Tan said.

Will developers be the first to blink?

Source : Business Times - 10 Jan 2009

The holding power of the various parties will set the tone for the market in 2009

THE holding power of both developers and investors will be closely watched this year as it would have significant bearing on residential property prices.

While the extent of speculation by investors is not known yet, the recent uncharacteristic appeal by the Real Estate Developers Association of Singapore (Redas) president Simon Cheong for government support of a tripartite plan to deal with the current credit squeeze, does leave one wondering if holding power could be on the wane.

In his speech at the 49th Redas Anniversary dinner on Nov 26, Mr Cheong said that ‘a tripartite plan of action is needed between developers, financiers, and the government through moderating new supply, shoring demand, and introducing fiscal measures to help ease funding for the industry’.

Developers’ holding power has made upcoming supply a bit of a moving target. Cushman and Wakefield managing director Donald Han says that between the third and fourth quarters of 2008, 7,234 residential units out of a total 66,422 units were deferred and would only be completed after 2011. ‘We expect more deferment of residential projects in 2009,’ he adds.

DTZ Research also believes that supply has been ‘overestimated’.

Of the 60,048 units that the Urban Redevelopment Authority (URA) expects to be completed between 2009-2012, only 24,905 are under construction currently. ‘Actual supply in 2009 and 2010 will more likely be in the range of 18,000-19,000 units, less than two-thirds of the 30,296 units projected by the URA,’ DTZ adds.

Not surprisingly, 2009 forecasts for residential prices have been mixed, with one consultancy even saying it was not issuing forecasts at all.

Consultants do believe high-end property prices are expected to fall the most - anywhere between 15 and 30 per cent. The mid-tier segment is forecast to fall between 10 and 20 per cent, while the mass market is estimated to fall by a more moderate 5-10 per cent.

But if developers do not have holding power, they could be forced to launch developments at lower prices.

Jones Lang LaSalle head of research (South East Asia & Singapore) Chua Yang Liang says that developers are unlikely to defer projects that have been launched.

‘So, in those instances, they have to weigh the benefit of potential large sales volume against the negative publicity and possible issues associated with price cutting, especially if the difference between what earlier buyers paid and what new buyers will be paying is significant.’

According to OCBC Investment Research (OIR), the top nine developers in Singapore had a total current debt of about $5 billion and non-current debt of almost $20 billion in the third quarter of last year. Still, OIR investment analyst Foo Sze Ming notes that the amount of short-term debt owed is relatively lower now compared to the previous property downturn in 2001.

Using CapitaLand as an example, OIR noted that it used to owe $4.8 billion of short-term debt and $4 billion of long-term debt with a net gearing ratio of 0.88 times. ‘Now, its financial position is stronger with short-term debts of $2.2 billion, long-term debt of $8.2 billion and net gearing ratio of 0.5 times,’ Mr Foo says.

But he cautions: ‘In light of the tightening credit market, we do see heightened risk involving short-term debts that require refinancing. We are more concerned with the debt exposure of smaller and less-established developers who entered late during the property up-cycle as they may have over-geared and bought their landbanks at higher valuations.’

Prices in 2009 could also face downward pressure from defaulting speculators. OIR believes that default risk will be skewed towards the Core Central Region (CCR).

It expects that 3,069 and 2,888 units under construction in CCR are due for completion in 2009 and 2010, respectively. For illustration, it assumes that 50 per cent of the units were bought under the deferred payment scheme (DPS) and 40 per cent of the buyers (from speculators, foreign buyers and funds) are likely to default on their purchases.

‘Based on this, we estimate that 614 and 578 CCR property units could be returned in 2009 and 2010, respectively, and these will directly flow back into the market and push up the unsold supply,’ it says.

The impact of DPS will likely start to play out in 2009. But DTZ research senior director Chua Chor Hoon says that buyers ‘cannot simply walk away from their purchases as developers can sue them for specific performance over the sale and purchase agreement’.

‘In the past, developers have been known to work out some scheme to allow more time to make the final payment if a buyer has difficulty paying up upon TOP.’

With Budget 2009 in January expected to be pro-business, Colliers International director for research and advisory Tay Huey Ying reckons that to contain development costs, the government could look at reducing property tax and development charge payable by reverting back to the earlier formula of creaming off only 50 per cent of land enhancement value instead of the revised 70 per cent.

But Ms Tay notes that the main reason for the sluggish property market is the financial crisis. Coupled with ‘astronomical’ prices in the high-end and luxury segments, she says, ‘a correction such as the one we are witnessing now cannot be avoided’.

Sands puts eggs in S’pore basket, will open on time

Source : Business Times - 9 Jan 2009

LVS says it has sufficient cash and will scrimp and save on costs elsewhere

Las Vegas Sands (LVS) needs US$4 billion to complete the Marina Bay Sands (MBS) and says reassuringly that it currently has US$6.2 billion in borrowings and liquidity.

Speaking at an investor conference in the US, LVS president and COO William Weidner said that its ‘revised business plan’, which includes the monetisation of non-core assets, has put the company in a cash position (borrowings and liquidity) of US$6.2 billion.

‘The total need that we have is about US$4 billion to get us to the opening of Singapore (Marina Bay Sands). So there is cash available to open Singapore (Marina Bay Sands) in the first quarter of 2010,’ Mr Weidner said.

While LVS has ‘moth-balled’ development of sites five and six at the Cotai Strip in Macau, it is also developing other projects concurrently in the US, notably the Sands Bethlehem.

However, part of LVS’ revised business plan includes massive cost cutting at its Las Vegas operations. ‘If we take a look at our plan and the risk to that plan, the risk is the underperformance in Las Vegas. We are mitigating that by a tremendous amount of cost cutting,’ Mr Weidner said.

He revealed that LVS expects to cut US$100 million in cost in 2009 by cutting expenses, labour, head count and benefits. ‘Everywhere that doesn’t effect the customer experience, we are cutting, cutting, cutting,’ he said.

Indeed, LVS will be focusing on opening MBS on time. ‘Our focus is on the current operating environment and stickhandling through 2009 to the opening of Singapore (MBS),’ he said.

And for good reason too.

By cornering a good chunk of the 4- and 5-star hotel market around Marina Bay, Mr Weidner projected that with its 2,600 rooms, and an average daily rate of US$269 per room by 2011, LVS hopes to rake in an ebitda (earnings before interest, taxes, depreciation and amortisation) of US$161 million. He also forecasted a rental revenue from its retail component at US$179 million.

More important is that assuming a gross revenue of US$2 billion for MBS, which is about the same as its Macau operations currently, Mr Weidner said that earnings generated from the US$2 billion revenue in Singapore would amount to US$940 million because of the favourable tax regime compared to only US$504 million in Macau.

Mr Weidner’s bullish comments come after a particularly tough quarter fraught with speculation that LVS could file for bankruptcy. In November, it had made a regulatory filing that said it was unlikely to meet the maximum leverage ratio covenant, triggering defaults on loans needed to complete projects.

Since then, LVS has announced that it has raised US$2.1 billion of capital.

Addressing the issue of debt, Mr Weidner said: ‘The debt that we have is extraordinarily valuable. No one can generate about US$9.8 billion of debt at a blended rate of about 5 per cent in this environment.’

He said that the first maturity of this debt is in May 2011 of about US$800 million followed by May 2012 of about US$776 million.

Confirming the opening of Marina Bay Sands, a spokesman for MBS said it is still targeted to open by the end of 2009.

SMEs feel pinch of rising rents

Source : Straits Times - 9 Jan 2009

Some petition landlords for reductions; others seek help over disputes

SOARING rents for some industrial properties are becoming a hot issue among small and medium-sized enterprises (SMEs), with flashpoints opening up on a couple of fronts.

Worried tenants at Toa Payoh Industrial Estate have petitioned their landlord, Mapletree Investments, to reduce their rents by 20 per cent.

And the Singapore Business Federation (SBF) has helped to mediate bitter stand-offs between owners and tenants in recent weeks over rental demands.

The most serious dispute involved a landlord who tripled the rent for a local medical firm employing 75 staff.

The SBF said the firm will not renew its lease ‘and the business will have to be shut down because the owner cannot afford the rise in rent’.

Tenants at Mapletree’s estate in Toa Payoh North fear the same situation and have demanded a 20 per cent rent reduction.

One SME boss, who did not want to be identified, said: ‘I understand that about 80 per cent of the tenants here have signed the petition and Mapletree has said it is now reviewing our request for the rent cut.’

The director of a graphic design firm, located at Block 970 Toa Payoh North, said his three-year contract will need to be renewed soon.

‘My business volume has gone down by some 20 per cent but yet I have heard from my neighbours that Mapletree has increased rents by some 30 per cent - that is not a good sign for us,’ he said.

While there have been some delayed payments by tenants, Mapletree said the arrears situation at its properties is ‘well under control’.

‘There has been no perceptible trend increase in the monthly arrears from July 2008 to December 2008,’ said a Mapletree spokesman.

‘For tenants who are facing genuine difficulties in paying rent, we will sit down with them to work out solutions.’

The SBF acknowledged yesterday that landlords have a case for increasing rents, but it said the timing of rate hikes is a bugbear for firms already feeling the pinch.

The federation said five local firms, each employing between 20 and 100 staff, have asked for help over rental issues.

‘They said that they are seeing rental adjustments of between 20 and 100 per cent, and in some isolated cases, even higher,’ said SBF chief executive Teng Theng Dar.

‘In one particular case…the adjustment came up to about 2.5 to three times the old rate.’

Mr Teng said ‘there’s nothing wrong from a commercial standpoint’ as landlords are just adjusting rents to market levels, which are referenced to 2007 rates.

‘However, the economic slowdown and poor business sentiment make it extremely difficult for companies to manage when they are suddenly slapped with a spike in rent,’ he added.

SMEs already grappling with tighter credit markets have few options when it comes to rent hikes.

They could either relocate their operations, which involves considerable cost; grin and bear the higher rents and hope to struggle on; or, in the worst-case scenario, be forced to shut down.

While the situation may appear dire for some firms, the SBF said it is not critical yet and rents may still moderate.

In fact, new figures from DTZ Research show that rents of private conventional industrial space declined in the fourth quarter of last year - the first time since the third quarter of 2003.

Rents for first-storey and upper-storey private industrial space have also dipped by 2.1 per cent and 2.4 per cent respectively.

And rents for high-tech industrial property slipped 4.4 per cent in the last three months of last year compared with the same period in 2007 - the first fall since the second quarter of 2004.

The Straits Times polled 30 tenants in JTC Corporation and Mapletree properties, and found that those that renewed contracts within the last quarter of last year either did not have a rent increase or paid an additional 5 to 10 per cent.

Yet rent is a potent issue in a business community already battling a decline in orders.

All the SMEs that The Straits Times spoke to said they were hoping for rental rebates in the Budget later this month.

The SBF has raised the issue with the Government and hopes for some respite over rents, but it also cautioned against overreacting.

‘We have provided feedback to the Government that this is an issue we are concerned about, but we still need more facts, so we are now watching the situation very closely,’ said Mr Teng.

‘The global economic crisis is unprecedented and its scale and depth are something we are trying to understand, so we need to avoid speculating and just focus on getting ready for the worst-case scenario.’

Leading industrial landlords JTC, Mapletree and HDB have assured tenants that any rent adjustments will not be made without factoring in the economic conditions.

PAIN OF HIGHER RENTS

‘I understand that about 80 per cent of the tenants here have signed the petition and Mapletree has said it is now reviewing our request for the rent cut.’ - A director of a graphic design firm located at Block 970 Toa Payoh North

Bargain hunting starts in tepid property market

Source : Business Times - 9 Jan 2009

Four recent sub-sales have been transacted at 20% below launch prices

THE hunting season seems have begun in the property market, with at least four buyers making a killing.

A UBS report says that according to URA data, four recent sub-sales have been transacted at 20 per cent below launch prices.

Two units at Ardmore II were sub-sold for $2,000 per sq ft, compared with the last-transacted price of $2,400 psf. One unit at Scotts Square was sold at $3,050 psf, compared with the last-transacted price of $3,850 psf in the second quarter of last year.

And one unit at Sky @ Eleven was sold at $880 psf, compared with the last transacted price of $1,270 psf in Q2 2007.

‘Prior to this, we believe there has not been a single sub-sale transaction more than 11 per cent below the new sale price for the same unit,’ said UBS analyst Regina Lim.

UBS believes that the sharply lower sub-sale prices signal a major change in buyers’ risk appetite and the outlook for Singapore residential property.

It noted that some projects sold in 2006 and expected to be completed by Q4 this year could be the subject of defaults by buyers if sub-sale prices fall 30 per cent below launch prices.

‘This is especially as 40 per cent of buyers of new apartments above $1.5 million were foreigners or companies in 2006 and 2007, and it may be difficult not to repudiate the sale-and-purchase agreements for these buyers if they default,’ UBS said.

Cushman and Wakefield managing director Donald Han said that he does not expect many sub-sales to be transacted at big losses because developments that will receive their temporary occupation permit (TOP) this year - and hence, requiring loan draw-downs - are likely to have been launched in 2006 before prices peaked.

But he added: ‘People that bought in 2007 and 2008 will want to get out of the market.’

Knight Frank director (research and consultancy) Nicholas Mak said that ‘not all sub-sales lose money’. Some recent sub-sales showed price increases, he noted.

Still, prime properties are likely see the biggest drop in prices, as these rose the most in the past few years, he said.

In its report, UBS says that prices in the primary market have also been cut.

Among new launches, the 104-unit Newton Edge, priced at $1,201 psf, is some 23 per cent cheaper than Viva, where 15 units were sold in Q3 last year for around $1,550 psf. And at RV Suites in River Valley Road, 19 units have been sold at $1,350 psf, which is 15 per cent below Wharf Residences at $1,600 psf and 38 per cent below Martin 38.

More looking to refinance home loans with lower interest rates

Source : Channel NewsAsia - 9 Jan 2009

More people are looking to refinance their home loans in the past few months with lower interest rates, but not without difficulties.

Key benchmark interest rates have been dropping since governments around the world embarked on their rate cutting campaign a few months ago to revive the slumping economy.

As a result, the Singapore Interbank Offered Rate (SIBOR) has more than halved in the past three to four months. From as high as 2 per cent in September, the 3-month SIBOR is now below 1 per cent, at around 0.97 per cent as of Friday.

Many housing loan packages here are pegged to the SIBOR.

Spokesperson for loan consulting firm Housing Loan SG, Dennis Ng, said the rate decrease over the past few months has prompted more homeowners to look at the refinancing of their mortgages.

He said: “If they were to refinance their housing loans right now, they can save easily more than S$10,000 in interest savings. So as a result of this, we are seeing a surge in demand for refinancing, probably more than 50 per cent increase in the last three to six months.”

Some banks, including HSBC, also said they have seen considerable growth in such enquiries in the last six months.

But while there is an increase in interest, spokesman for another mortgage consultancy firm My Housing Loan, Goh Eck Hong, said many of the enquiries do not materialise into transactions.

Mr Goh said: “For the refinancing cases, we get quite a number who are actually looking to get additional equity term loans, and that is quite hard in this credit climate.

“And the second thing is of course valuations as well; valuations have actually fallen for quite a number of properties. If they refinance now, they actually have to top up cash to do so, so the clients could not afford to actually do so.”

Mortgage specialists said interest rates will likely remain low in the period ahead, as major global economies are expected to continue to lower rates to stimulate lending and growth in the current recessionary environment.

Punggol the next big thing?

Source : New Paper - 8 Jan 2009

PM Lee’s vision of water town has made once-sleepy town hot

WHEN business development manager Roy Lim moved into Punggol five years ago, he wondered if he had made a big mistake.

The infrastructure was lacking and the amenities were inadequate.

As a result, Punggol was often viewed as the poorer cousin to the up-and-coming, bustling Sengkang, which was just a street away.

Mr Lim, 34, who wondered then if he should have bought in Sengkang instead, may have the last laugh after all.

Like many Punggol flat-owners, he is now eligible to sell his five-room flat after fulfilling the minimum five-year occupation period.

To his delight, he found out that resale flat prices in his estate are higher than similar flats in Sengkang.

For example, the median resale prices for five-room flats in Punggol was about $391,500 in the third-quarter of last year, compared to $374,000 in Sengkang, according to figures from the HDB website.

A check on HDB’s resale transaction records showed that 20 out of the 58 five-room flats sold in Punggol last month fetched at least $400,000.

In contrast, only 12 out of the 57 five-room flats sold in Sengkang fetched $400,000 or more.

For Mr Lim, all those years of enduring the ‘ulu’ (Malay for remote) estate and its lack of facilities are finally paying off.

He and his wife put their place up for sale recently. Its current valuation is about $410,000.

They are looking at a tidy profit of about $160,000, as they had bought it for about $247,000 in 2003.

Said Mr Lim: ‘I was quite surprised but happy to find out that the valuation is so high. The money will come in useful because it’ll be a tough year. We’ll also be able to free up some cash to keep aside for a rainy day.’

The couple are planning to upgrade to a condo in the east.

He initially regretted buying a place in Punggol.

Mr Lim said: ‘It was frustrating when we first moved in. The LRT station was not opened, there were no coffee shops or provision shops nearby and my block wasn’t even cable-ready.

‘I couldn’t watch soccer and had to go to my friend’s place every weekend to catch the matches.’

To make matters worse, his handphone signal was so weak in the flat that it constantly switched to an Indonesian service provider.

Nights were depressing because many of the blocks seemed deserted, with few lights coming from the units. Many owners didn’t move in because of the lack of amenities.

But the situation has improved with the opening of the LRT stations, a mall, more bus services and schools over the couple of years.

So, what’s the appeal about Punggol?

Its prices received a boost when Prime Minister Lee Hsien Loong unveiled the Punggol 21-plus vision during his 2007 National Day Rally speech, said property watchers.

The coastal town will boast features such as a freshwater lake and a waterway running through the estate.

Also, Punggol’s condo-like and newer units add to their desirability.

HSR Property Group executive director Eric Cheng said that the Punggol 21-plus endorsement stirred up valuation prices in that area.

He said: ‘The estate is certainly more bustling now, with more amenities than before. I remember when I was in that estate many years ago and I couldn’t get a taxi. The situation is much better now.

‘If it’s going to be the only water town in Singapore, buyers will pay some premium for it. It will be the next big thing to come.’

Mr Cheng said that Punggol flat-owners typically enjoy higher profits from the sale of their units compared to Sengkang residents.

This is because the first batch of Punggol flats were eligible for sale at the end of 2006, when the property market was already on the mend.

In comparison, the first batch of Sengkang flats were available for sale in 2003, when the property market was still in the doldrums.

ERA Asia Pacific associate director Eugene Lim added that Punggol buyers are also looking at their purchases as a form of investment.

He said: ‘With the concrete plans to do up Punggol estate, flats there will command a higher premium compared to Sengkang.

‘If you go to Punggol, it’s not so congested. Some people are willing to pay more for a less built-up area, even though amenities are still quite lacking.’

Banks should pass on lower interest rates: Case

Source : Straits Times - 9 Jan 2009

I REFER to the letters, ‘Bank unfair to existing home loan clients’ by Mr Khor Eng Hao (Dec 31), and ‘Home loans: No interest savings despite falling market rates’ by Mr Toh Hai Joo on Monday.

The Consumers Association of Singapore (Case) agrees with Mr Khor and Mr Toh that banks should pass on the lower interest rate to consumers, especially when interbank interest rates had fallen. We strongly urge the banks to do so.

We are also of the view that banks should be more transparent and disclose how they compute the housing loan interest rate (whether called Special Mortgage Rate or otherwise) charged for their housing loans. Case has written to the Association of Banks in Singapore and the banks directly on the matter and will follow up with the authorities concerned if required.

Meanwhile, Case will continue to monitor the situation in the market, and will review feedback received, so as to raise the issue with the banks and regulatory authorities where appropriate.

We thank Mr Khor and Mr Toh for their feedback.

Seah Seng Choon
Executive Director
Consumers Association of Singapore

A lodger could be the answer

Source : Today - 8 Jan 2009

But proper screening required, say landlords

WITH job losses expected to spike and bonuses becoming restrained, more homeowners may resort to renting out spare rooms to make ends meet, say analysts.

Although carving out a space in your home for strangers may mean a loss of privacy and inevitable adjustments to the way you live, it can also help with monthly mortgage payments and other bills.

“Basically, if we are going to see an increase in the amount of retrenchment and increased incidences of companies adopting pay cut policies, homeowners could be affected, which is why they would explore that as an option to ease their (financial) burden,” said Ms Tay Huey Ying, director of research and consultancy at Colliers International.

Renting out rooms in a home is an easy way for homeowners in financial difficulties to raise cash, said a property agent who declined to be named.

Unlike renting out an entire Housing Development Board (HDB) unit, prior approval from the authorities is not required when renting out HDB rooms, although there are certain subletting conditions to observe.

The agent estimated that a room in a four-room flat could fetch around $600, depending on the location and room condition. Those nearer MRT stations or which come with ensuite bathrooms usually fetch better rents, he said.

Ms Tay expects an increase in supply from both private and HDB flat owners.

However, she feels HDB rooms would see higher demand, as there is a bigger pool of potential tenants, including students and blue-collar workers.

“Students usually don’t have deep pockets and will look towards HDB flats … In the past, there may have been blue-collar workers who rented an apartment together,” Ms Tay told Today. “But they may find difficulties when flatmates are retrenched and cannot maintain a whole apartment, so there would be more demand for individual rooms.”

But before renting out rooms, owners should protect themselves by preparing :a tenancy agreement, which clearly states clauses for rent, length of stay, rules and regulations, and that no more than one person is allowed to stay in the room, say agents.

New landlords should also be prepared to make some investments to attract tenants, say analysts. For example, they may need to buy new furniture such as wardrobes, cabinets or beds, as well as service the air-conditioning units in the rooms.

Carefully screening potential tenants is another must, say people with experience.

One landlord, who preferred to be known as Mr Chng, has had bad run-ins with local tenants who turned a property he once owned into a gambling den.

Now, Mr Chng conducts background checks on prospective tenants by calling their companies to reaffirm their occupation and identity.

“They have to show you proof of where they work. You can’t just believe them offhand when there may be no such company at all,” said the owner of a four-room flat in Tanjong Pagar, who prefers to lease to foreigners who work in established companies.

For foreign tenants, landlords can also check the validity of their work permit or employment pass using tools available on the Manpower Ministry website, said another landlord in Toa Payoh, a logistics worker who only wanted to be known as Jason.

Some landlords say there is no foolproof method of screening tenants.

“We just have to learn their habits. Sometimes after doing light cooking, they don’t bother to wash up,” said Simon, a freelance teacher who usually looks for “well-mannered” semi-professionals as tenants.

“The first two months can be quite difficult, but generally, things smooth out after that. Subsequently, after we get to know each other better, we’ll explain what we expect of them,” said Simon.

Nearly half of recent launches still unsold

Source : Today - 8 Jan 2009

En bloc projects being leased out instead of getting rebuilt

MANY new homes recently built for the well-heeled in Singapore are sitting empty.

Only 45 per cent of the luxury projects launched since June 2006 have been sold as of November last year, according to property consultancy CBRE.

This period saw the roll-out of 20 projects in this segment, which has a total of 2,209 units, some of which have yet to be launched.

Faring worse are high-end projects launched since the second half of 2007, during the period of peak property prices: Only 33 per cent of the 1,233 units have been sold.

“Several projects remain on the market, especially those that were launched in the second half of 2007 and thereafter. By then, news of the sub-prime crisis had caused the market to put on the brakes,” CBRE said in a report released yesterday.

Some developers have seen poor sales, while others held back on the number of units rolled out.

Some projects launched over the past two years - such as Belle Vue Residences, The Orange Grove, The Ritz Carlton Residences and The Hamilton Scotts - have over 90 per cent of their total units unsold.

This year, luxury apartment prices may drop by 10 to 15 per cent, predicted CBRE, while prices of Good Class Bungalows could decline by 10 per cent.

Already, the segment’s :average launch price has dropped from $2,000 to $4,000 per square foot (psf) in 2007 to a range of $2,000 to $2,600 psf last year, CBRE estimated. It added that developments like Ardmore Park, Four Seasons Park and Grange Residences saw prices drop to $2,400 psf last year from as high as $3,300 psf in 2007.

In light of the weak market, several developers have delayed the redevelopment of their en bloc projects, by renting out units. These include collectively-sold developments like Grangeford Apartment in Leonie Hill Road, Lucky Tower at Grange Road, and Leedon Heights, said CBRE.

”Most developers will start to launch when the market begins to recover, ” CBRE said of en bloc redevelopments. “Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launching new projects and add to supply.”

There were only seven residential collective sales last year, compared to 150 in 2007, DTZ Research said. “With high construction costs, financing difficulties and weak market sentiments, developers are shunning residential collective sales.”

Court upholds ruling on govt takeover of temple site

Source : Straits Times - 8 Jan 2009

THE Court of Appeal has upheld a High Court judgment that the Government did not discriminate against a Buddhist temple when it acquired its land for the MRT’s new Circle Line.

The new ruling brings to a close a year-long battle initiated by three devotees of the Jin Long Si temple, off Bartley Road.

The trio - Ms Eng Foong Ho, Mr Hue Guan Koon and Ms Ang Beng Woon - had asserted the acquisition was unconstitutional.

They argued that it was discriminatory because two other religious institutions in the same area did not suffer the same fate. These are the Ramakrishna Mission and Bartley Christian Church.

Disagreeing, the Appeal Court judges said an executive act might be unconstitutional if it amounted to intentional and arbitrary discrimination.

In this case, the temple devotees had not alleged any arbitrary action on the part of the Government. They had also conceded that the acquisition proceeded in good faith, said Justice Andrew Phang, in a written ruling released on Monday.

The two other judges who heard the appeal in August were Chief Justice Chan Sek Keong and Justice V. K. Rajah.

Noting that the facts were plain, Justice Phang said the temple site lay at the corner of what was a substantial plot of state land.

‘Its amalgamation with the state land would not only appear reasonable but would also enable the entire plot of land to be developed in as optimal fashion as possible,’ he said.

By contrast, the site of the church did not offer any reasonable opportunity for amalgamation, he added, citing statements made in an affidavit by Urban Redevelopment Authority planner Eng Gim Hwee.

As for the Ramakrishna Mission’s site, on which three buildings stand, it was already under study for conservation before 2002.

It is clear, he said, that the Government arrived at its decision to acquire the temple site based ’solely on planning considerations’.

However, the Court of Appeal agreed with the temple devotees on two other points in their appeal, overturning the High Court ruling.

They had the right to initiate court action on this matter and there had not been an ‘inordinate’ delay on their part when proceeding with this case.

As a result, the temple devotees have to bear only half the costs. The other half will be borne by the Attorney-General’s Chambers.

The 66-year-old temple site was acquired as part of redevelopment plans linked to the building of the Circle Line’s Bartley station.

The temple was given five years - from its acquisition in 2003 till Jan31 last year - to relocate. It was in talks with the authorities about an alternative site but the move was postponed following the lawsuit.

Yesterday, a Law Ministry spokesman said the Singapore Land Authority would discuss with the temple trustees the relocation of the temple to their preferred site in Tai Seng Avenue in Paya Lebar.

‘The schedule for the move will be discussed with the temple trustees as there is a need to prepare the site for sale,’ she said.

Prime office rents could plunge by up to 40%: Report

Source : Straits Times - 8 Jan 2009

OFFICE rents in prime districts could dive as much as 40 per cent by next year, says consultancy Cushman and Wakefield in a new report.

The industry has been expecting falls, but the magnitude of the projected slump is surprising. The consultancy blames a huge stock of office space that is rising amid tough times and rising job losses.

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

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

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

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

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

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

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

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

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

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

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

1,200 luxury homes yet to find takers

Source : Straits Times - 8 Jan 2009

CBRE says growing supply overhang may see prices drop by up to 15%

A STOCKPILE of up to 1,200 luxury homes in prime districts remains unsold, adding to a growing supply overhang that is likely to drag prices lower this year.

That grim assessment of the very top end of Singapore’s property market has been made by leading property consultancy CB Richard Ellis (CBRE).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Developers may want to take that haircut right away

Source : Business Times - 8 Jan 2009

PROPERTY consultancy groups have issued reports over the past couple of weeks reporting declines in Singapore residential property values, especially for the high-end segment, in 2008 - with pretty grim prognoses for 2009 too. This will mount pressure on listed property groups to make provisions for Singapore residential sites.

When listed property groups did not announce such provisions in their Q3 results last year, the thinking among analysts was that these companies would take haircuts in their books on their pricier residential sites only in second-half 2009, or even later.

DTZ recently published a report estimating a 21.6 per cent decline in average prime non-landed freehold private home prices in 2008 and predicted a further 15 to 20 per cent drop this year.

CB Richard Ellis last week also said that in 2008, average prices of new luxury homes under construction had slipped 30-35 per cent in prime districts 9 and 10 and by 10-13 per cent in Marina Bay and Sentosa Cove.

Developers could argue that while property consulting groups may talk about declines in property values, there has been a scarcity of transactions to confirm the declines.

Nonetheless, for companies that acquired sites at high prices which are above current values, there’s a case for booking the provisions in Q4 2008 - and moving on.

For one, most developers reported strong earnings in first-half 2008 that can help cushion against provisions on their Singapore residential landbank - if they choose to book them in their Q4 and full-year 2008 financial statements.

However, if they postpone the decision till 2009, the haircut could add further strain to bottomlines going ahead, which are already expected to weaken on the back of poor home sales, an all-round weaker economic showing and lower valuations for investment properties (these refer to assets like office buildings and shopping centres held for rental income). Right now the mood is so weak, that if developers were to announce provisions for their Q4 results, it would not dent sentiment much further. It may be better to flush out all the bad newsflow now.

Making provisions sooner also clears the decks for developers to price projects more attractively to tap any windows of opportunity to launch projects - and begin a new cycle of profit booking. As a big property group said over seven years ago when announcing massive residential provisions, the exercise provided it ‘pricing flexibility to generate cashflow’.

Beyond writing down sites to current values, at least one big developer in the past went a step further and provided more than it perhaps needed to.

This is what many analysts say CapitaLand did in August 2001, when it marked down the value of its residential assets, mostly landbank, by $508 million, in its half-year result statement.

Analysts said the group wrote down the value to below then market prices. In short, it overprovided. The group’s management refuted this point, but the strategy may be revisited by some property groups today spring cleaning their books.

Ask most property agents today and they’ll tell you potential buyers are asking at least 20-25 per cent off current property values before they will make a commitment. This is to cushion against future price falls. Indeed, expectations are running high among analysts for a further drop in home prices this year.

Given this scenario, some developers may find it sensible to mark down values of high-cost residential sites in one fell swoop (not just to current valuations but also to factor in likely future price movements), instead of making a series of piecemeal adjustments over a period of time.

Of course, such a strategy may be frowned upon as an exercise in earnings management in some quarters.

This time round, CapitaLand may not be the market leader in making provisions for its residential landbank.

Still, some analysts point out that breakeven costs for two sites it bought in 2007 - Farrer Court and Char Yong Gardens - are higher than what new projects on these sites would command today. Other listed property groups too acquired sites at steep prices during the property fever.

Examples include two 99-year leasehold condo plots on Sentosa Cove - the Beachfront Collection site that SC Global bought at $1,800 psf per plot ratio in 2007, and The Pinnacle Collection plot purchased by a Ho Bee and IOI Properties joint venture in early-2008 for $1,822 psf ppr.

The latter was the highest price paid for a condo site in the waterfront housing precinct. Then there was the 99-year leasehold Grangeford site, bought at $1,810 psf ppr by Overseas Union Enterprise in 2007.

In fact, a seasoned property agent says that pretty much most sites bought in 2007 would be below water today. There is indeed impetus for developers to make provisions.

However, there will be ramifications. Beyond issues of managing earnings, for some developers, there could be a real limit to how much they can write down their sites as provisions may trigger breaches in loan covenants. They may be asked by their banks to top up more equity.

That would stretch smaller developers, many of whom are already highly leveraged and cash strapped.

First cracks appear in Sentosa Cove haven

Source : Business Times - 8 Jan 2009

Bungalow owner defaults on mortgage payments, sale may follow

The first mortgagee sale of a bungalow on Sentosa Cove - an upscale waterfront housing haunt that was all the rage among well-heeled investors during the bull run - could be in the works.

BT understands that a permanent resident who developed his bungalow on a 99-year leasehold plot on Ocean Drive has defaulted on his mortgage payments and the financial institutions involved are considering whether to sell the property or - if the regulations permit - to lease it out in the meantime.

The two-and-a-half-storey waterfronting property has a land area of about 8,300 sq ft. The first storey has a swimming pool, separate living and dining areas, wet and dry kitchens and a guest room. The second level has a total of five bedrooms, each with an attached bathroom. The attic has an entertainment room.

A couple of bungalows on Sentosa Cove were put on the auction block last year. One, which had been put up for sale by its owner, was offered at an October auction conducted by DTZ. There were no takers at the asking price of $18 million, which reflects about $2,300 per square foot based on the bungalow’s land area of 7,800 sq ft. The Singaporean owner, who has lived in the unit, is now trying to sell the unit by private treaty, said Shaun Poh, DTZ senior director for investment advisory services and auction.

The asking price being sought is similar to the level that boutique developer Wah Khiaw is also said to be quietly seeking for a couple of completed and leased bungalows, which are also along Ocean Drive.

However, industry observers say that such asking prices are considered steep in today’s market. A more realistic price level for bungalows on Sentosa Cove today would be around the $11-12 million range or about $1,300 to $1,700 psf of land - but even then they would get ‘a good run for their money’ from freehold Good Class Bungalows on mainland Singapore. ‘For about $10-11 million, one could get a ‘decent’ GCB in a liveable condition in say, Yarwood Avenue in the Dunearn Road area,’ a property agent pointed out.

‘Sentosa Cove has lost its appeal in today’s market. A couple of years ago, this kind of waterfront living was the in-thing, when people had money, credit was easy and foreigners were rushing to buy such properties, especially with the expedited approval channel for foreigners to buy landed homes on Sentosa Cove. In today’s market, foreigners have suffered the most.

‘As for Singaporeans, they may still not be used to the idea of waterfront living. If you drive at Sentosa Cove on weekdays, you can see many empty completed bungalows. Some families have lived in the units but find the location inconvenient, for example, ferrying children to and from school,’ the agent said.

‘They would much prefer the convenience of owning a freehold GCB on mainland. The way I look at it, selling bungalows on Sentosa Cove is going to be very difficult in the near future,’ he added.

DTZ’s Mr Poh also revealed he is working with a few other Singaporeans keen on selling their Sentosa Cove bungalows. ‘In the past, many Singaporeans had bought sites for bungalow development with the intention of selling the completed properties to foreigners. But in the current climate, that’s going to be tough. So these sellers will have to be realistic in their pricing as they’ll face competition from both foreigners and Singaporeans trying to divest their bungalows on Sentosa Cove,’ he said.

Mr Poh also reckons the market for landed waterfront housing on Sentosa Cove has yet to mature among Singaporeans, who might take some time to catch on to a lifestyle of having their own bungalows, with their own jetty to moor their yacht outside their garden. ‘Even among valuers, there can be a wide variation of opinions on valuations of such homes, especially when there haven’t been many transactions,’ he said.

Agreeing, CB Richard Ellis executive director (valuation) Li Hiaw Ho said there have hardly been any transactions of bungalows on Sentosa Cove. ‘While we all know values have dropped, it is harder to pinpoint the extent of the drop until there is more evidence of transactions.’

Property investment sales fall in Q4 ‘08

Source : Business Times - 8 Jan 2009

It is the lowest level in five years, says a DTZ report

Property investment sales in the fourth quarter of 2008 fell to the lowest level since Q4 2003, with most players sidelined as prices weakened and credit tightened, a DTZ report shows.

Total transaction volume was just $352 million - a 74 per cent fall from Q3 2008. With sales falling rapidly towards the end of the year, total transaction value in 2008 plunged to $15.8 billion - a mere one-third of that in 2007 and two-thirds of that in 2006.

The investment market is expected to remain dormant in the first three to six months of 2009 as investors wait for prices to fall further and for tight credit conditions to ease, DTZ said.

Transactions will be confined to the private sector as government land sales through the confirmed list have been suspended and reserve sites are unlikely to be triggered.

‘The second half of 2009 is likely to see more deals as the price gap between sellers and buyers closes,’ said Shaun Poh, DTZ’s senior director of investment advisory services.

‘How much the investment market recovers will depend on the depth and length of the economic and property downturns.’

Although there was no major office deal in the second half of 2008, the office sector was still the main driver of investment sales during the year with $5.6 billion or 35 per cent of total sales - an increase from 24 per cent in 2007. All the major office transactions were in the first half of 2008. In the second half, all office deals were below $30 million.

The residential sector slowed tremendously in 2008 as interest in collective sales abated. Residential transaction value tumbled 82 per cent year-on-year to only $3.9 billion, accounting for 25 per cent of total sales, compared with 49 per cent in 2007.

There were only seven residential collective sales in 2008, compared with 150 in 2007. ‘With high construction cost, financing difficulties and weak market sentiments, developers are shunning residential collective sales,’ DTZ said.

Transactions in the industrial sector, by contrast, increased in 2008 as investors shied away from high office prices. Some $3.4 billion of industrial property was transacted, or double the amount in 2007.

About half of 2008’s deals resulted from the divestment of JTC’s industrial properties in Q2. And despite the restrained mood in Q4, several notable industrial transactions took place, including the purchase of Applied Materials Building by German fund manager Union Investment.

DTZ said that investment by real estate investment trusts (Reits) was subdued in the second half of 2008, as they shifted attention away from acquisitions and focused on refinancing and deleveraging.

There were only three purchases by Reits in Q3 2008 and just one in Q4, compared with 22 purchases in the first half of the year.

CBRE: More than half of high-end condos unsold

Source : Business Times - 8 Jan 2009

It also sees prices falling 10-15% from $2,000-$2,400 in Q4 last year

Fifty-five per cent of about 2,200 units in luxury projects launched by developers between 2006 and 2008 remained unsold in November 2008, according to CB Richard Ellis (CBRE).

And the property consultancy firm is tipping a 10-15 per cent fall this year in the price of luxury apartments/condos, which slid to about $2,000 to $2,400 psf of strata area in Q4 last year from $2,000-3,300 psf a year earlier.

The figures refer to existing luxury developments such as Ardmore Park, Four Seasons Park and Grange Residences.

As for new luxury condos/apartments, the average launch price fell to $2,000 to $2,600 psf in Q4 2008 from $2,000 to $4,000 psf in Q4 2007, says CBRE.

Caveats for only 1,096 luxury apartments/condos in prime districts 9 and 10 were lodged in 2008 based on filings by Jan 7, 2009 - a mere 19 per cent and 32 per cent of sales in 2007 and 2006 respectively.

The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. Still, the 2008 figure was above the 22 units sold in 2006.

Most luxury projects launched in 2006 and early 2007 are fully sold, such as Ardmore II and Tate Residences.

But several projects, particularly those released during or after second-half 2007, remain on the market. ‘By then, news of the sub-prime crisis had caused the market to pull the brakes,’ CBRE said.

In the landed housing segment, the firm predicts a drop of about 10 per cent this year in the price of Good Class Bungalows (GCBs).

Last year, the average price of GCBs rose 20.7 per cent to a record $822 per sq ft (psf) of land area.

‘GCB prices recorded very strong growth in 2006-7,’ said CBRE director (luxury homes) Douglas Wong. ‘This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark.

‘Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008.’

The highest psf price in a GCB transaction last year was $1,303 for a property in Leedon Road with only 21,097 sq ft of land. In absolute price terms, it fetched $27.5 million.

The all-time record price for a GCB in Singapore is $1,899 psf, set in October 2007 when 32H Nassim Road was sold for $25.5 million.

While the average price of GCBs rose last year, the number and value of transactions fell.

Forty-nine GCBs changed hands for a total of $785 million in 2008, down from 87 worth $1.15 billion in 2007 and 119 worth $1.23 billion in 2006.

CBRE said: ‘Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small.’

Fewer Good Class Bungalows sold last year

Source : Business Times - 7 Jan 2009

A total 49 Good Class Bungalows changed hands in Singapore for a total $785 million (US$532 million) last year, down from the 87 transactions worth $1.15 billion in 2007 and 119 deals at $1.23 billion in 2006, according to latest figures from property consultancy CB Richard Ellis.

On a dollar per square foot (psf) value based on land area, the average price of GCBs rose to $822 psf last year, from $681 psf in 2007 and $501 psf in 2006.

These figures reflect a 64 per cent increase in GCB prices in the two years.

Luxury residential sales market moved at slower pace last year

Source : Channel NewsAsia - 7 Jan 2009

2008 saw a drastic fall in sales of luxury apartments in Singapore. Property consultancy CB Richard Ellis said 1,096 caveats were lodged in 2008 – a fifth of the sales volume in 2007.

In 2007, the average launch price of luxury projects ranged from S$2,000 to S$4,000 per square foot. But by the end of 2008, the average launch price of such homes had fallen to a range of between S$2,000 and S$2,600 per square foot.

To date, only 45 per cent of the luxury units launched in the second half of 2007 have been sold.

Looking forward, CBRE expects prices of luxury apartments to fall by about 10 to 15 per cent this year. It added that activity in the luxury residential market is likely to be lukewarm due to the current financial crisis.

For good class bungalows, fewer were sold last year compared to 2007. But those that were sold achieved higher transaction prices.

CB Richard Ellis said 49 good class bungalows, worth S$785 million, were sold last year, compared to 87 in 2007.

The bungalows were sold for an average price of S$822 per square foot in 2008, up 21 per cent from S$681 per square foot in 2007.

Prime office rents in Taipei may dip 5-10% in ‘09: DTZ

Source : Business Times - 8 Jan 2009

Prime office rentals in Taiwan’s capital Taipei could fall 5-10 per cent this year and the value of real estate across the island will likely shrink further due to a sluggish economy, property services company DTZ said yesterday.

Listed companies that purchased land in Taipei after the third quarter of 2008 could also suffer a loss of about 20 per cent in the value of the real estate after Taiwan adopted new accounting rules on Jan 1.

‘Things are looking very cloudy for the real estate sector right now, and the industry will have to decide whether or not they want to push prices down further,’ said Billy Yen, general manager of DTZ’s Taiwan unit. Office rentals in prime Taipei areas fell 2.26 per cent in the fourth quarter from the previous three months, logging the first decline since late 2004, as the global financial crisis sapped demand for high-end real estate.

An expected increase in the supply of office space and weakened demand could push rents down even further this year, Mr Yen said.

DTZ figures showed that the value of foreign investors’ real estate investments fell to NT$19.9 billion (S$889.5 million) last year from NT$44.5 billion in 2007, and the company was ‘even more conservative’ on the sector’s outlook for this year.

UK home values may drop further 20%

Source : Business Times - 8 Jan 2009

UK homeowners should brace for an additional 20 per cent drop in the average value of their homes in 2009 as a vicious recession threatens to slash tumbling prices even further, data from the property derivatives market shows.

According to the latest swap pricing, average UK house prices are expected to fall by almost 30 per cent between December 2008 and December 2010, indicating that the worst of Britain’s housing slump is far from over.

The projected 2009 fall is almost double the forecasts for UK house price depreciation from the Royal Institution of Chartered Surveyors (RICS), and house price index (HPI) compilers Rightmove and Hometrack.

Average UK house prices, as measured by the non-seasonally adjusted Halifax house price index, have already sunk to £162,848 (S$351,360) in November from a peak of £201,081 in August 2007.

Halifax posted an 18.9 per cent fall in UK house prices in 2008, while rival Nationwide recorded a 15.9 per cent fall over the same period. Both groups originally predicted static house prices in 2008 and have declined to make a 2009 forecast.

Above are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax house price index derivatives.

The young and relatively illiquid over-the-counter market provides investors with an opportunity to increase or hedge exposure to the UK housing market synthetically - in a cheaper and more efficient way than buying or selling bricks and mortar.

The table is based on indicative HPI swaps mid-price data provided by interbank brokers Tradition Property, CB Richard Ellis-GFI and Tullett Prebon, and is made up of simple averages.

Mall vacancies nearing 10-year highs: Reis

Source : Business Times - 8 Jan 2009

Vacancies at US malls and shopping centres approached 10-year highs in the fourth quarter, and are set to rise further as declining retail sales put more stores out of business, research firm Reis Inc said.

Regional mall vacancies rose to 7.1 per cent last quarter from 6.6 per cent in the third quarter. It was the highest vacancy rate since Reis began tracking regional malls in 2000, as well as the largest quarter-to-quarter jump in vacancies, according to New York-based Reis.

More than a dozen retailers, including Circuit City Stores Inc, Linens ‘n Things Inc and Sharper Image Corp, filed for bankruptcy protection in 2008 as the credit squeeze and recession drained sales. Vacancies will rise further until the job market recovers, housing prices stabilise and lending resumes, restoring consumer confidence, said Reis.

‘So much of consumer spending depends on the wealth effect,’ said Victor Calanog, director of research at Reis. ‘Unfortunately, all three conditions are still in flux. Even when they stabilise we often observe anywhere from a 12 to 24 month lag until commercial retail properties begin benefitting.’

At neighbourhood and community shopping centres, the vacancy rate rose to 8.9 per cent from 8.4 per cent in the third quarter, the highest since Reis began publishing quarterly data in 1999.

Asking rents at malls fell 0.2 per cent from the previous quarter and rose 0.3 per cent from a year earlier. Mall vacancies have climbed two percentage points from the 5.1 per cent in 2005’s second quarter, the low for the last business cycle, said Reis.

Asking rents at shopping centres, which are typically anchored by a grocery store, fell 0.3 per cent from the prior quarter and rose 0.4 per cent from a year earlier. Effective rents fell 0.9 per cent from the prior quarter and were down 1.1 per cent from a year earlier, according to Reis.

At neighbourhood shopping centres, tenants vacated more space than they leased, causing so-called net absorption to shrink by 4.1 million square feet, according to Reis.

‘Neighbourhood and community centres coming online encountered tremendous difficulties in pre-leasing retail space,’ Mr Calanog said. ‘This has been prevalent all throughout 2008, with new projects coming online at around 50 per cent vacant, compared to the 25 per cent to 30 per cent vacancy levels for new projects in previous years.’

Retailers will close 12,000 stores in 2009, after the worst holiday sales in 40 years, according to Howard Davidowitz, chairman of retail consulting and investment-banking firm Davidowitz & Associates Inc in New York.

The Bloomberg REIT Shopping Centre Index of 20 companies led by Kimco Realty Corp lost a third of its value during the past year, about the same as the broader Standard & Poor’s 500 Index. Kimco, the largest US owner of community shopping centres, cut its earnings forecast for 2008, citing the credit crisis.

The Bloomberg REIT Regional Mall Index of seven mall owners fell 57 per cent. The index was dragged down by General Growth Properties Inc, the country’s second-largest regional mall landlord, whose shares tumbled 96 per cent. The company took on debt for acquisitions and couldn’t refinance once the credit crisis took hold.

Simon Property Group Inc, the biggest US mall owner, lost 435,000 square feet to bankruptcies last year through Sept 30, up from 50,000 square feet in the same period a year earlier, chief executive officer David Simon said in November. Mr Simon’s multi-year leases protect the company to some extent from monthly changes in consumer spending, Mr Simon said.

More US commercial property loans stressed

Source : Business Times - 8 Jan 2009

Credit market reluctant to renew financing of loans

The number of stressed commercial property loans increased at an accelerated pace in December, challenging a major segment of the US bond market that has shown recent signs of stability.

The percentage of commercial mortgages placed with companies that specialise in servicing troubled loans jumped 0.32 percentage point to 1.61 per cent, the highest in about four years, according to JPMorgan Chase & Co.

Erosion in fundamentals of commercial property has been long forecast as the slowing economy reduces demand for office space and cuts revenues from hotels and retail shops. Investors in 2008 fled commercial mortgage-backed securities (CMBS) as signs of recession led to increased aversion from risky assets, even as overall delinquencies fell far short of those in US residential real estate.

Many analysts claimed that the increase in CMBS risk premiums has been excessive, even under catastrophic loss estimates, having been fuelled by funds seeking cash or reducing borrowings as the financial crisis deepened. But a rally in the US$700 billion CMBS market in December is sputtering this week amid further erosion in market fundamentals and fresh signs of investor selling.

‘Sellers may have sensed a good exit point after the December (price improvement), but the CMBS fundamentals remain weak and are unquestionably worsening,’ said Chris Sullivan, chief investment officer at the United Nations Federal Credit Union in New York.

So-called special servicers are grappling with a credit market reluctant to renew financing on billions of dollars in loans, even those backed by relatively strong properties.

Borrowers with loans at or near maturity, including mall-owner General Growth Properties, are being forced to seek extensions from creditors or sell assets to avert bankruptcy.

Loans on retail and office properties appear to be leading those on servicer ‘watch lists’, or have been transferred to special servicers, said Erin Stafford, an analyst at bond rater DBRS in Chicago. Multifamily property delinquencies are high, but may reveal more ‘borrower issues’ than a fundamental problems with the properties, she said.

Possible solutions for a delinquent loan on The Mix at Southbridge - a 20,000 square foot Scottsdale, Arizona, retail centre - included modifying the mortgage, offering deed in lieu of foreclosure or an asset sale as the borrower tries to win leases, according to a DBRS report on the 2007 Bear Stearns-issued CMBS that contains the loan.

The special servicer on a delinquent loan for the 9,895 sq ft Natomas Crossing retail centre in Sacramento, California, was making progress on a forbearance agreement before the borrower decided to sell, DBRS reported.

But commercial property values are falling after being propped up in the 2005 to 2007 period by lax underwritings and investors eager to boost paltry yields with risky debt.

‘I think you’re going to see people giving back the keys and saying ‘We don’t think the asset is worth the debt’,’ Mark Weiss, president of McLean, Virginia- based JER Investors Trust, said in a December interview. ‘I think you will see people say ‘My cash flow is great, there’s just no financing today, so work through it with me.’ It’s going to be all across the spectrum.’

The market for commercial property is not dead, however. Glimcher Realty Trust on Tuesday said that it sold its Olathe, Kansas- based Great Mall for US$20.5 million and repaid a US$30 million mortgage that was to mature on Jan 12.

Apartment rents in America down 0.4% in Q4

Source : Business Times - 8 Jan 2009

Average rents for US apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released yesterday.

Rents fell 0.4 per cent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found. The vacancy rate rose to 6.6 per cent, a level last seen in the first quarter of 2005, and up from 5.7 per cent a year earlier.

While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.

‘The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide,’ Mr Calanog said.

The current global economic downturn can be traced back to the decline in US home prices that began in the middle of the decade. That led to a collapse in the sub-prime lending market, which last year snowballed into a global credit crunch.

The slump is not confined to residential properties. Reis data released on Tuesday showed that office rents across the United States fell 1.2 per cent in the fourth quarter, as a slumping economy drove vacancy rates higher.

Shares of major US owners of apartment complexes including Apartment Investment and Management Co , Equity Residential and AvalonBay Communities Inc have been pummelled in recent months.

HK property prices may fall by 20% in H1

Source : Business Times - 8 Jan 2009

Prices will fall as jobless rate rises, Credit Suisse analysts say

Hong Kong residential property prices may fall by about a fifth in the first half of this year, taking the decline from their peak last year to 41 per cent, Credit Suisse analysts wrote in a report.

‘Given that prices have already fallen by 23 per cent, we believe the remaining downside for the property market is about 20 per cent,’ Cusson Leung and Joyce Kwock, based in Hong Kong, and other analysts wrote in a report dated Tuesday . Prices will fall as the jobless rate rises, they wrote.

The Hang Seng Property Index, tracking six of Hong Kong’s biggest developers, has gained 12 per cent this year, amid signs of a rebound in real estate prices and transaction volumes. The gauge slumped 55 per cent in 2008, making it the worst performer among four industry groups within the benchmark Hang Seng Index.

Hong Kong’s Land Registry reported this week that the number of residential units sold in December rose 44 per cent compared with November. Still, sales last month were 65 per cent lower than in December 2007.

‘We believe it is not time to chase the entire sector now,’ Credit Suisse said in the report.

Office rents in Hong Kong are expected to fall this year as vacancy rates climb, Credit Suisse said. Rents in shopping malls may drop as much as 20 per cent as private consumption shrinks, they said.

Cheung Kong (Holdings) Ltd and Sun Hung Kai Properties Ltd, Hong Kong’s two biggest developers by market value, remain top picks at Credit Suisse with ‘outperform’ ratings, the report said. Sun Hung Kai has successfully marketed several projects recently and will start sales on another after the Chinese New Year holiday later this month, the analysts wrote.

Hong Kong landlords Wharf (Holdings) Ltd and Swire Pacific Ltd are also top picks because their offices in less-central locations and prime shopping malls will be relatively less affected than their rivals’ will be, the analysts wrote.

Office occupancy down in Q4 2008 due to economic crunch

Source : Channel NewsAsia - 5 Jan 2009

Office occupancy in Singapore is down in the last quarter of 2008 due to deteriorating global financial situation.

According to real estate adviser DTZ Research, office occupancy islandwide dropped by two percentage points to 95.6 per cent, compared to the same period last year.

This is because of weaker demand as companies shelved expansion plans or relocated to more cost-effective premises.

DTZ said office rentals have also declined. One example is office rentals at Marina Centre which fell by about 7 per cent to S$13.50 per square foot per month, compared to the same period last year.

DTZ said landlords have lowered their asking rents and offering attractive lease incentives to retain existing tenants and entice new ones.

It added that potential office supply from this year to 2013 is now estimated to be at 11.3 million square feet, compared to the earlier estimate of 12.1 million square feet.

With a larger supply of new office space this year, occupancies and rentals are expected to decline further.

Helping home owners

Source : Sunday Times - 4 Jan 2009

Two years ago, renovation contractor Ting Kah Ping was up to his neck in debt, owing the Housing Board more than $80,000 for his home loan. He was unable to meet the instalments.

Today, the father of four owns a flat without an outstanding loan - and he said it is thanks to the HDB.

Mr Ting, 54, and his wife bought a four-room flat in Tampines in 1998 for $112,800 but started having problems paying the instalments about five years ago.

Work as a renovation contractor was inconsistent and he was unable to service his loans regularly. He approached the HDB for help and it agreed to let him make smaller payments and, for a time, postpone his payments for half a year.

Still, despite his wife taking on part-time jobs while looking after their four children, now aged 11 to 21, they had difficulty paying their debts.

The HDB advised the couple to downgrade their flat and, earlier this year, they sold their home for $303,000. With the money, he bought a three-room home nearby and fully paid up his debt to the HDB.

‘I’m just glad the HDB did not force me to give up my flat or take it back. I think banks wouldn’t have had as much patience,’ Mr Ting said in Mandarin.

He is one of many home owners whom the HDB hopes to help with its various initiatives.

The board will consider allowing them to pay reduced loan instalments on a temporary basis and work out a solution to their financial situation.

Owners can also sublet a room to generate income, or include working family members as joint owners to help pay for the flat.

The board may also consider providing an additional HDB loan to help owners downgrade to a smaller, more affordable unit.

UK house prices down 15.9%

Source : Business Times - 7 Jan 2009

December’s fall steepest in 56 years, driven by global credit crunch, economic downturn

British house prices fell by their biggest annual amount in at least 56 years during 2008 as credit seized up and incentives to enter the market evaporated amid sliding home values, a leading mortgage lender said yesterday.

The Nationwide building society said house prices fell 15.9 per cent in December from a year earlier, the biggest annual fall since it started compiling statistics in 1952. ‘2008 has been a year of turmoil in the British housing market,’ said Fionnuala Earley, Nationwide’s chief economist. Prices fell 2.5 per cent in December from the previous month, much more than the 0.4 per cent decline recorded in November, and the biggest one-month drop since May’s 2.6 per cent drop.

Despite the historic declines recorded in 2008, the Nationwide did point to one ray of light in the data gloom. It noted that the three-month rate, which smooths out more volatile monthly numbers, showed only a 4.2 per cent decline, the lowest since May. Nevertheless, Ms Earley said the length and depth of the recession in the wider economy is so uncertain that it makes no sense to produce a meaningful forecast for house prices.

‘Conditions remain highly volatile going into 2009, making it more difficult than usual to arrive at a specific forecast for house prices. In these unsettled times a forecast subject to frequent change could itself add to greater uncertainty,’ she added. The last time Nationwide did not issue a full-year forecast was in 1993 when the British housing market last crashed.

Most economists doubt that 2009 will be any better, primarily because house prices continue to look expensive on affordability measures and the ongoing drying up of credit.

Moreover, with the economy set to contract by up to 3 per cent, according to some forecasts, and unemployment heading towards 3 million, the downward pressure on house prices will likely remain. ‘The upshot is that we expect house prices to fall by 20 per cent in 2009,’ said Seema Shah, economist at Capital Economics.

En-bloc row official on mischief rap

Source : Straits Times - 7 Jan 2009

He is accused of stuffing glue into padlocks and keyholes of residents

THE former chairman of the Laguna Park management committee was charged yesterday with mischief over incidents during the housing estate’s acrimonious drive to secure a collective sale.

Lee Kok Leong, a 62-year-old businessman, allegedly put glue into the padlock and keyholes in the front and rear entrances of the flats belonging to two residents last August.

At the time he headed the estate’s management committee and is understood to have been in the camp pushing for the collective sale of the sprawling 530-unit estate along Marine Parade Road.

His alleged acts of mischief cost one resident $410 to fix, and the other, $180.

Yesterday, Lee, wearing a long-sleeved white shirt and black jeans and clutching a small brown bag, listened attentively as the charges were read to him.

His lawyer, Mr Ramesh Tiwary, said he had just taken on the case and asked the court for time to make his representations.

If convicted, Lee could be jailed up to a year or fined, or both jailed and fined on each charge.

In the courtroom’s public gallery yesterday were two of the estate’s many residents who had filed police reports that their cars, mailboxes or doors had been vandalised.

The two men said they were among the residents affected by the dispute within the estate over the collective sale.

The Straits Times reported last July that at least eight cars, including a Lexus and Toyota, had been vandalised. They were all splashed with corrosive liquid or paint or had been scratched.

Mailboxes had glue jammed into their keyholes to make it impossible for residents to collect their letters.

The war that has split residents of the 30-year-old estate into two camps is not yet over.

Last month, the estate managed to surpass the 80-per-cent threshold for the sale to go through, so it now remains for an interested developer to step forward.

The asking price of $1.2 billion will mean payouts of $1.8 million to $2.3 million per unit, sharply lower than sums in excess of $3 million some owners had hoped for in 2007.

Lee’s next court date is on Feb 3.

Market Street car park to stay

Source : Today - 7 Jan 2009

CAPITACOMMERCIAL Trust (CCT) has scrapped plans to redevelop the Market Street car park into a grade A office building, which could have cost up to $1.5 billion.

“The manager, after taking into consideration the uncertain market outlook, tight credit conditions, high redevelopment cost and significant size of the project, has decided to abort the project immediately,” the Singapore-listed real estate investment trust, which has a portfolio of 11 commercial properties here, said yesterday.

The statement also said that CCT had secured the refinancing for $580 million in debt maturing in March.

CCT had initially planned to make a decision on the redevelopment after this mid-year.

The latest move is “in line with our prudent approach to capital management and the need to conserve cash in such turbulent economic times”, said Ms Lynette Leong, chief executive of CCT’s manager.

“This decision provides certainty to our investors in removing any overhang in capital requirement. It will also give assurance and security of tenure to our car park users as well as retail tenants,” she said. “CCT can move on to enter into longer-term leases and adopt longer-term plans through repositioning the retail tenant mix and other promotional events or activities to inject vibrancy into the area.”

The new financing arrangements also provide “financial flexibility in managing our capital and balance sheet”, said CCT.

It entered into a secured three-year term loan for up to $580 million with DBS Bank, Standard Chartered Bank, United Overseas Bank and The Bank of Tokyo-Mitsubishi UFJ.

The new facility is secured by a mortgage and other securities of one property, while the maturing debt was secured by seven properties.

Ex-committee chairman charged

Source : Today - 7 Jan 2009

Businessman accused of vandalising property at East Coast estate

WHEN the possibility of a collective sale for Laguna Park was announced in December 2007, some residents held back, hoping this would drive up the estate’s value.

But things turned ugly later at the East Coast area condominium, which was hit by a spate of vandalism cases after several residents opposed the sale. Cars belonging to residents known to have been against the sale were splashed with paint or scratched, while mailboxes were found with glue in their keyholes.

Still, many residents of the 667,000 square-foot estate were shocked to learn that their estate management committee chairman, Mr Lee Kok Leong, had been arrested last August on suspicion of perpetrating these acts.

During a brief appearance in court yesterday, the 62-year-old businessman, dressed in a white long-sleeved shirt and black jeans, stood emotionless as he was charged with two counts of mischief.

According to court documents, Mr Lee is accused of inserting glue into the padlock, rear gate keyholes and main wooden door of a flat at Block 5000E of Laguna Park at 12.44am on Aug 25 last year.

He also allegedly vandalised the front and rear wooden door keyholes of another flat on the same floor.

The damages amounted to $590.

The case was adjourned after defence lawyer Ramesh Tiwary said he needed time to make representations. Mr Lee will reappear in court again on Feb 3.

If convicted, he could be jailed for up to one year or fined, or sentenced to both on each charge.

Mr Lee made a quick exit after the hearing, avoiding the handful of residents who had turned up to witness the proceedings. The businessman also declined attempts to be interviewed, getting into a waiting car to avoid photographers.

A spokesperson for the management committee told Today that new chairman Reggie Chew took over last October following Mr Lee’s resignation in August.

While they declined to comment on the matter as the trial is still in progress, the spokesperson said they have increased patrols around the estate and are looking into installing closed-circuit television cameras.

Since Mr Lee’s arrest, three other vandalism cases have been reported in the estate said the spokesperson.

Despite the gloomy economic outlook, the 528-unit condominium crossed the 80 per cent threshold last month, enabling the en bloc sale process to proceed to the marketing stage.

Residents of the 30-year-old estate can expect to pocket between $1.8 million to $2.3 million for each of their units, down from the over $3 million some were hoping for last year. Most of the units are between 1,500 and 1,700sqf in size.