Property sector needs govt help in refinancing $12b of debt

Source : Straits Times - 5 Feb 2009

THE Government has been asked to help listed property firms here, especially real estate investment trusts (Reits), to refinance an estimated $12 billion in debt, given the frozen state of credit markets.

The appeal comes from the Singapore-based Asian Public Real Estate Association (Aprea), a body set up to represent the listed real estate sector in Asia.

‘Government assistance is needed to get liquidity moving and reduce the risk of plummeting real estate values and pressure on the capital positions of lenders,’ said a background paper by Aprea. ‘Its help is needed to restart the credit markets for commercial real estate debt.’

‘This is an issue for the general commercial real estate market and, by extension, the broader real estate market and the broader economy,’ said its chief executive Peter Mitchell yesterday.

Aprea has been submitting a series of proposals since last November to regulators in Singapore and Japan, seeking assistance in these unusual times, he said.

One assistance option would be a lending facility being implemented in Australia, said Aprea. The country announced a A$4 billion (S$3.86 billion) fund with four Australian banks to support lending in the commercial property sector.

The Singapore Government has unveiled measures to free credit to businesses here but nothing specifically aimed at listed real estate entities.

Inability to raise credit and refinance could lead to foreclosures, bankruptcies and forced sales, leading to market instability and a potential downward spiral, the paper said. ‘The more that real estate loans can’t get refinanced, the more risk there will be of losses for the banks, some of which can ill afford more losses.

‘Banks’ jobs are to make loans, not own real estate. There is a risk that banks will not be able to absorb, manage and turn around properties at this scale if they come back to the lenders,’ it said.

‘The collapse of an otherwise healthy real estate market caused by general credit paralysis has the potential to significantly aggravate recessionary pressures.’

There is a risk of default being forced upon property owners that hold property with good cashflows, a risk that would not exist in a normally functioning credit market, it said.

The current negligible activity in commercial real estate market is a particular issue for Reits, which the paper described as a ‘handle with care’ product.

Ratings agencies are talking about downgrading Singapore Reits because of refinancing concerns. But it is because of the dysfunctional credit environment and should not happen, said Mr Mitchell.

‘It is not the Reits themselves having problems. They are just being impacted by the freezing of credit.’

Of the estimated $12 billion of refinancing needs this year, one-third is attributed to Reits. It is important to help Reits through the turmoil as they are what will attract investors as Singapore moves out of this downturn, he said.

‘Investors are going to be risk-averse and will look for things that are liquid, transparent and lowly geared, equity-oriented
investment. That’s what Reits are.’

Former school put up for rent

Source : Business Times - 5 Feb 2009

The Singapore Land Authority (SLA) has launched the former Siglap Primary School for rent by public tender.

The 2,258 sq m property at 10 LaSalle St has a guide rent of $42,900, which works out to $1.77 psf.

Approved uses for the site include commercial, privately funded and foreign schools, arts/dance/ drama studios and child- care or kindergarten.

SLA has received enquiries from 10 interested parties. The director of its land operations (private) division, Teo Cher Hian, said: ‘Based on the favourable response to our recent tenders for sites with a commercial school as an approved use, we have reason to believe this site will be similarly well received, despite current economic conditions.’

Last year, two properties were awarded for education-related use. And in 2007, eight properties were awarded for such use.

Schools that have rented from SLA include Dimensions Commercial School, Westminster Unicampus, EASB Institute of Management, JCU Singapore, Canadian International School and Curtin University.

In January, Cambridge Institute put in the top bid for the former Mee Toh School in Race Course Road. It hopes to use the building to conduct diploma and tertiary courses.

Siglap Primary School is being offered on a three- year lease with an option to renew for a further three years, then a further two years.

Buyers and sellers at stand-off

Source : Today - 5 Feb 2009

Analysts caution that banks here may not rush into home foreclosures

THEY are flocking to the auction houses, hoping to find bargains. But each time the starting price is called out, there are audible sighs and shaking of heads. Still too high, say those who have been frequenting property auctions in recent weeks.

Expectations are growing for some fire sales in the local property market, which is increasingly weighed down by the global economic downturn. People who thronged two recent auctions told Today they were keen to sign on the dotted line, but the asking prices remained high, they lamented.

At a Colliers auction three weeks ago, only one out of 12 properties put up for sale was sold. It was a similar situation at an auction held by Knight Frank, where only one out of 17 properties went under the hammer while many attracted no bids at all.

So desperate was the auctioneer at one of the sales that she asked: “Are there any bids - or counterbids?”

A counterbid means an offer below the asking price.

One woman scouting for shop space said she had been visiting auctions and returning home empty-handed. What she is hoping for is a fire sale.

Analysts, however, caution that they do not anticipate such sales to be pervasive.

Said Mr Eugene Lim, ERA’s Asia Pacific associate director: “Isolated cases (of fire sales) will continue, but not very widespread. If it’s widespread, the market will crash … That has not happened and I don’t see it happening for the time being.”

There has been keen interest in both the residential and commercial property sectors from buyers looking to pick up bargains in well-located areas, said Ms Grace Ng, an auctioneer and deputy managing director at Colliers. She added that there have been several enquiries for commercial properties in places such as Toa Payoh, Ang Mo Kio and Clementi, which are in the heart of the town centres and with good frontage.

“There is a healthy interest from buyers, but price-wise, there is still a gap between what sellers are asking and what the buyers are willing to fork out,” said Ms Ng. “The prices that the sellers are quoting are close to valuation, but buyers are offering below that level.”

Both sides are adopting a wait-and-see attitude and the stand-off could last a while yet, for distress sales are few and far between. Last month, only two of the30 properties on two auction lists were court-ordered sales.

A one-storey JTC detached factory with a three-storey office annex along Gul Road was sold for $3 million, 14.3 per cent less than the $3.5 million asking price.

The situation could change in the coming months, with more distressed sales coming on board.

“But these will only come when there is no choice,” said Mr Colin Tan, research director from Chesterton Suntec International.

Mr Nicholas Mak, Knight Frank’s director of research and consultancy, agreed. But he added that banks here might not rush into home foreclosures. “Banks don’t want to send unintended signals,” he told Today. “There’s no joy for banks to force a family out of their home.

“Banks would want to help clients restructure their losses so that they don’t have to resort to foreclosures, which would hurt their relationship with their clients.”

Minister hopes to shorten rental flat queue with new criteria

Source : Channel NewsAsia - 7 Feb 2009

A shorter queue for the needy to rent a flat from the government. That’s what National Development Minister Mah Bow Tan hopes to achieve when he announced stricter rules for Singaporeans who want to rent a flat at subsidised rates from the Housing and Development Board (HDB).

Currently, it takes about two years to rent a HDB flat. But the waiting time may be reduced to one year, with stricter rules for applicants.

Mr Mah said he hopes the stricter rules will mean fewer eligible people will join the queue, and weed out at least a third of those who can afford other forms of housing.

“They (the stricter rules) are meant to allow the more needy to join the queue and allow them to get their flats faster,” Mr Mah told reporters at a Lunar New Year dinner on Saturday.

But, he said, enforcing the new rules may require HDB officers to do extra work, especially for exceptional cases.

“Those who don’t fit the criteria but we’re not sure, then HDB will have to do those checks,” said Mr Mah.

“This is where I think the process will be a little slower but this is something HDB is prepared to do.”

But, Mr Mah said, genuine cases can also be brought forward in the queue which is not based on a first-come-first-served basis.

He added that genuinely needy cases will also be exempted from the 13-month debarment.

Mr Mah, who is an MP for Tampines GRC, also called on residents there not to compromise on education expenses during tough times.

To help the residents, a grassroots organisation in Tampines has given out over $43,000 worth of bursaries to some 200 needy students in November last year.

Major China-listed developer sanguine about market in ‘09

Source : Business Times - 7 Feb 2009

CHINA Overseas Land, the largest local listed mainland property developer, said yesterday that the China property market has bottomed out and expects the overall property environment to improve in 2009.

‘The (China property) market had gone through a deep adjustment particularly in southern China last year and was already at its bottom,’ chairman Kong Qingping told reporters. ‘The environment this year will not be as bad as last year.’

Mr Kong said that Beijing’s measures to support the property market are likely to be effective, but home-buyers are still tentative after the China property slide. Brokerage CLSA and consultants Savills expect average home prices in Beijing and Shanghai to fall 20-25 per cent this year, similar to declines in Shenzhen and Guangzhou in 2008.

Beijing concocted a policy mix that included encouraging banks to resume lending to developers, as well as tax concessions and cheaper mortgages for home buyers, as part of efforts to support the ailing property market amid the global slowdown.

China’s economic growth slowed to 6.8 per cent in the last quarter of 2008, dragging down the annual rate of expansion to a seven-year low of 9 per cent. China targets annual growth of 8 per cent or above in order to absorb waves of new job seekers.

‘I’m confident in the (China) property market, especially if the 8 per cent growth is achieved,’ Mr Kong added, but gave no further comment.

HK luxury homes sales climb a notch

Source : Business Times - 7 Feb 2009

Lack of supply, lower prices bolster deals. But analysts think it is too early to say market has stabilised

SALES of Hong Kong luxury homes rose to their highest level in six months in January, indicating that prices may have stabilised, according to a report by Centaline Property Agency Ltd, as buyers seek out bargains.

Completed transactions of existing properties increased 31 per cent from December, and the value of the deals rose 9 per cent to HK$2.7 billion (S$522.8 million), the highest since July, the property broker said on Thursday. Luxury homes are those valued at more than HK$10 million.

A lack of supply and lower prices bolstered sales of existing luxury homes amid a deteriorating outlook for Hong Kong’s property market as a recession hurts sentiment. Prices for luxury homes dropped 19 per cent in the fourth quarter from the preceding three months, Marcos Chan, an analyst from Jones Lang Lasalle, said yesterday.

‘Since the meltdown of the financial markets in the fourth quarter, it’s no surprise to see a rebound after a sharp drop’ in prices, said Mr Chan, head of research for the Pearl River Delta at Jones Lang Lasalle. ‘Most buyers are those with old money and who hardly need to get financing from banks.’

Billionaire Joseph Lau, chairman of developer Chinese Estates Holdings and the city’s fifth-richest man, spent HK$170 million buying a 5,657-square-foot duplex, local newspaper Ming Pao said on Thursday, citing unidentified people. The price is about 16 per cent less than what the seller had paid.

A total of 144 transactions were completed in January, the Centaline report said. The data excludes new properties released to the market last month. January was the second straight month that transactions for existing luxury homes rose, posting a cumulative increase of 82 per cent, Wong Leung-sing, an associate director at Centaline, said in the report. ‘With the lack of new luxury homes, buyers are turning to the second- hand market, rejuvenating activity there,’ he said.

Sun Hung Kai Properties Ltd, Hong Kong’s biggest developer by value, said it expects to fetch HK$50,000 per square foot for its three-storey penthouse units at a new property, the Hong Kong Economic Times reported yesterday, citing a company executive. Buyers from China, Australia, Europe and the US have expressed interest in the pre-launch sale of the property, called The Cullinan, the paper said, quoting Victor Lui, executive director of Sun Hung Kai Real Estate Agency.

Overall, January home sales gained 3.6 per cent from December, the Land Registry said this week.

Still, it’s ‘too early’ to say that the luxury property market has stabilised, Jones Lang’s Mr Chan said. ‘We will continue to see pressure this year, whether it’s luxury or mass market real estate, as there are still uncertainties in the economy and unemployment will shoot up.’

Wing Tai changes tack as earnings fall

Source : Business Times - 7 Feb 2009

PROPERTY group Wing Tai will defer construction of housing projects where construction contracts have not been awarded.

It did not name the projects in its second-quarter results statement yesterday but BT understands that they include proposed developments on the Ardmore Point and Anderson 18 sites.

The old Ardmore Point has been pulled down, leaving a vacant site, while the existing Anderson 18’s units are largely vacant.

Market watchers reckon that Wing Tai and its joint venture partner for Anderson 18, City Developments, will probably consider the option of renting out the existing units to tide over the current weak property market until they decide to redevelop the site.

Wing Tai said: ‘Property market conditions in 2009 are expected to remain challenging.’

The group posted a 52 per cent year-on-year drop in net earnings for the second quarter ended Dec 31, 2008 to $20.9 million. For the six months ended Dec 31, 2008, net earnings fell 49 per cent to $53.5 million.

The weaker first-half bottom line was due to a $50 million or 66 per cent fall in the group’s share of profits of associated and joint venture companies as well as the absence of a $27.5 million one-off gain from disposal of an available-for-sale financial asset in Q2 of the preceding financial year.

Excluding the $27.5 million one-off gain, the group’s operating profit in the latest first-half period ended Dec 31, 2008 increased by 34 per cent from $42.6 million to $57.2 million; the boost was due chiefly to higher profit recognition from development properties.

Units sold in Wing Tai’s Helios Residences condo in Cairnhill, Riverine by the Park in Kallang and Belle Vue Residences at Oxley Walk in Singapore and Sering Ukay in Malaysia contributed to revenue and earnings for Q2 and H1 ended Dec 31, 2008.

Wing Tai said that the decline in share of profits of associated and joint venture companies was due to lower contribution from VisionCrest on the sale of residential units.

Q2 group revenue slid 17 per cent to $91.98 million, but the first-half revenue rose 7 per cent to $226.3 million.

Wing Tai’s net gearing ratio stood at 0.47 time as at Dec 31, 2008, up from 0.4 time as at June 30, 2008. The group’s total borrowings and debt securities stood at $1.15 billion as at Dec 31, 2008, up from $1.09 billion as at June 30, 2008. No dividend has been declared.

Net asset value per share excluding treasury rose one cent to $2.04 as at end-December 2008 from six months earlier.

Yesterday, the counter ended three cents higher at 71 cents. The stock has lost about 67 per cent of its value from the $2.19 peak on Feb 27 last year.

Private ayes

Source : Straits Times - 7 Feb 2009

The Premiere@Tampines’ residents are giving the thumbs-up to HDB’s first condo-style flats

The view is to die for as you stand on the balcony of Mr Alan Teo’s new 17th-floor home, gusts of wind whipping your hair.

Off to the horizon is an unobstructed view of rolling hills and far-off HDB flats that look the size of matchboxes.

Glancing left and right, you take in the sleek lines of the building that houses Mr Teo’s flat. Its smart white paint is a contrast to the brick red of its HDB neighbours.

This scene is from the highest floor of The Premiere@Tampines, Singapore’s first condo-style public housing built by a private developer - in this case, Sim Lian Land.

Excited owners took their keys, and gained possession, to the development last month. Nearly all - about 95 per cent - of them did so, says Sim Lian, but the building is still more than half empty as some residents are still getting renovations done.

Life! toured the swanky building last week and met some of the first residents.

The building, on 2.1ha of land, is HDB living, luxury-style. It has features you cannot get in normal HDB flats, such as your own glass-panelled private balcony, built-in wardrobes, kitchen cabinets and parquet flooring in the bedrooms.

Launched in 2006, The Premiere is the Housing Board’s first privately developed flat under its Design, Build and Sell Scheme (DBSS). There were two-, four- and five-room flats on offer at prices from $138,000 to $450,000 at that time.

But unlike a condo, it does not have facilities such as a gym, tennis courts or a swimming pool.

The Teos got their five-room flat for $428,000 during the launch and count themselves lucky as the project was an instant hit, with 5,914 applications pouring in over just two weeks. Of that number, 1,232 were invited to book a unit after balloting was done, but 121 flats were still not taken up when the deadline expired.

Sim Lian then informed more than 4,000 remaining applicants that units would be released for walk-in selections and long queues formed.

Although his flat came with posh fittings, Mr Teo, 46, a director of a bio-tech firm, tells Life! that he spent $70,000 on a face-lift. This included giving the living room a modern look with ceiling mirrors and a wall with a ‘black diamond’ theme.

As he shows Life! around his flat, he recalls: ‘During the renovations, we had strangers walking into the unit and saying, ‘Oh, we just want to have a look’.’

He says they were probably would-be residents, contractors or curious outsiders. ‘I told them, sorry but this is my home. I can’t just let anyone in,’ he says with a chuckle.

The family of four had to vacate their previous Tampines flat on Jan 15 as the buyer wanted to move in before Chinese New Year. Since renovations for the new unit were not completed, they stayed at an NTUC chalet in Pasir Ris for 10 days.

Although they made it into their Premiere unit in time for Chinese New Year, they visited relatives instead because the home was not ready for guests. Mr Teo says: ‘We still had a stick in the living room propping up those mirrors on the ceiling.’

Happy dwellers

Other eager owners who have moved in include Mr Patrick Lim. The 42-year-old father of three settled his family into The Premiere on Jan 25, just a day before Chinese New Year. His five-room flat cost $407,000 and he spent $15,000 on minor installations and furniture.

Mr Lim, who is a businessman and has an office five minutes away, says the location is convenient, with everything - from malls to a supermarket to sports facilities - just a stone’s throw away.

He jokes: ‘When my friends ask me, ‘Does it come with a pool?’, I say yes, and open my window to show them our Olympic-sized swimming pool.’ He is referring to the public Tampines Swimming Complex just across the road.

Another satisfied resident is Mr Timothy Chao, 42, who works in the shipping business. He got his five-room flat on the fifth floor for $364,000. The family of five consider their north-south facing unit ‘a good buy’, being away from the glare of the afternoon sun in the west.

‘I also like the fact that it’s quiet and peaceful on our side since we don’t face the central. We’ll enjoy it for now,’ says Mr Chao. His flat overlooks an empty field, which will be used for residential purposes in the future, say the authorities.

Announced by the Government in 2005, DBSS products were aimed at meeting the needs of buyers who could not afford private homes when the property market was rising.

Under the programme, developers are free to design and price the flats as long as they work within the rules of public housing. This means they have to sell the flats to families earning no more than $8,000 a month - the limit for households buying public housing. Other eligibility factors such as family nucleus and priority for first-time buyers also apply.

There are also slightly higher services and conservancy charges, due to more lifts and precinct facilities such as link buildings and playgrounds.

So far, three more DBSS projects by other developers have followed, with the fifth one also by Sim Lian Land, to be launched in the second quarter of this year, in Simei Road.

Other happy Premiere dwellers include newlyweds Muhammad Shahril Rahmat and Suraya Sukiman, both 26, whose four-room unit cost $297,000.

The couple made their purchase while they were still dating two years ago and got married in August last year, making them eligible for an HDB grant of $30,000.

Mr Shahril, a finance executive, stayed with his in-laws while waiting to move in because there was no space for the couple in his family’s Bedok executive maisonette.

The couple settled into their lovenest on Jan 24 and Mr Shahril says: ‘My entire extended family have visited us and they were all quite surprised by the bathroom fittings and the balcony. Most four-room HDB flats do not come with these.’

He wants to put grilles at his laundry-drying area for security reasons, but otherwise does not intend to do any major renovations yet due to ‘budget constraints’.

He has spent about $15,000 on painting and lighting, and basic furniture. The one remaining feature that his home lacks is a sofa set, which was actually ordered before he collected his keys.

He says with mock exasperation: ‘What to do? First to order, last to arrive.’

Govt should not bail out property sector

Source : Straits Times - 7 Feb 2009

I REFER to Thursday’s article, “Property sector needs govt help in refinancing $12b of debt”.

Over the years, the prices of private and public housing have increased tremendously. There were cases in which private property prices increased more than twofold.

During boom times, people seemed to have forgotten that their wage increase has not kept pace with the property price hike. It was certainly a signal to the build-up of a property bubble.

The article quoted a background paper by the Asian Public Real Estate Association (Aprea) as saying that “inability to raise credit and refinance could lead to foreclosures, bankruptcies and forced sales, leading to market instability and a potential downward spiral”.

No doubt, there are risks in any financial decision. If it is the will of the developers and individuals to partake in such risks for profit, then they should be willing to take on losses as well, be it in property dealings or otherwise, boom time or not.

Should it then be the Government’s responsibility to bail them out when things turn sour?

The Aprea paper also stated that “the collapse of an otherwise healthy real estate market caused by credit paralysis has the potential to significantly aggravate recessionary pressures”.

I would like to ask Aprea how to define a “healthy real estate market”. Does an upward price trend equate healthy real estate? Is a reduction in property prices, which has caused some property developers to fold or consolidate, a very unhealthy one?

There are peaks and troughs in any economic cycle. As much as we would like to ride through this difficult time as quickly as possible, it is my belief that prudence should prevail over haste.

Mr Christopher Ng

Private and luxe

Source : Straits Times - 7 Feb 2009

What is so ‘private’ about a privately developed HDB property like The Premiere:

~ Units come with bay windows and picture-frame windows - frames are only along the sides, with an unobstructed glass panel at the centre that is typical of private developments.The generous use of glass and bay windows has a lightbox effect.
~ Open balconys are included for all units. In HDB flats, this feature is mostly limited to five-room units.
~ Each flat comes with built-in floor-to-ceiling wardrobes.
~ Kitchens come with cabinets, cooker hood and a hob - features not found in standard HDB flats.
~ There is tiled flooring for all units for the living room, dining room and kitchen. Similar finishings are the standard only in HDB Premium flats.
~ Bedrooms are fitted with teak parquet floors and air-conditioning.
~ Bathrooms are equipped with water heaters, fittings and mirrors with back-lighting, which are not found in HDB flats.
~ Each unit has a small ‘yard’ that can be used to hang laundry. This is designed on the inner side of the building and hence, concealed from the public eye.

Urgent: Laws to tighten property brokerage trade

Source : Straits Times - 7 Feb 2009

IT HAS taken a High Court judgment to amplify an alarm that something is rotten in the real estate business. Justice Choo Han Teck said this week in a civil action, over which he found for the plaintiffs against ERA Realty Network, that property agents owed their primary duty of care to their client, not to themselves or to third parties related to them. It is an indictment of the trade and a comment on the shambles of its self-policing, that a judge needed to remind practitioners of what is commonsensical, so as to avoid conflicts of interest.

What ought to follow the development is a policy review by the Inland Revenue Authority, which licenses real estate agencies but, oddly, not individual agents. The objective should be legislation to professionalise the practice and subject violators to statutory penalties in the form of fines, suspension or a permanent ban. The only way ethical conduct can be entrenched is to require people wanting to be property brokers to pass a common national-level written test to obtain a licence. Practitioners will be subject to a professional code, with obligations, responsibilities and forms of censure spelt out.

Just now, the trade is a jumble of in-house courses, half-hearted tests that no one takes seriously, and non-existent censure for such common infractions as misleading clients, abetting payment of kickbacks and gross misconduct, as in the case Justice Choo heard. An agent sacked for questionable practices can work for another firm. And anybody can be an agent. During the last boom in 2007, numbers swelled to about 30,000. Complaints to the consumers’ association against shoddy service peaked that year, no surprise as brokerages and agents were in a race to make easy money. Many were nomads, who shipped out as soon as deals thinned.

It is partly the absence of a professional compliance code that has rendered the vocation vulnerable to abuse. It is an abysmal state of affairs that agents can work unregulated in a sector whose value to the economy is reckoned in the billions of dollars. It need scarcely be said that home ownership also defines Singaporeanness, a bedrock value of citizenship.

Until the vocation is tightened and even after, consumers have also a duty to themselves to not rely on an agent completely. In the case before Justice Choo, the plaintiffs, Mr and Mrs Yuen Chow Hin, could have saved themselves grief if they had obtained an independent valuation of the flat they were selling. Their agent not only gave them a low, false value but also did not advertise the flat for sale. The shabbiness could not have happened if there was an enforceable compliance code.

Energy audits in 121 buildings result in $30m savings

Source : Channel NewsAsia - 7 Feb 2009

As of December last year, the government spent $3.2 million subsidising energy audits in 121 buildings in Singapore. This resulted in energy savings of close to $30 million a year.

At Singapore Post (SingPost), changes to the air conditioning system alone saved the organisation $1.2 million in electricity bills a year.

To reduce friction and therefore lower energy consumption, renovations were made so that straight pipes instead of crooked ones pumped water in the chiller units.

SingPost also used a smart motor in its air-con cooling tower, so that it moves slower when it is less hot.

Most buildings have motors that move at one standard speed.

SingPost’s senior vice president for property management, Tan Swee Guan, said: “The energy audit is co-sponsored by NEA. They co-sponsored 50 per cent. It cost us about $50,000. And the project cost us a total of $1.9 million.”

To encourage others to implement similar changes, the National Environment Agency (NEA) will co-fund 50 per cent of the cost of energy-efficient technologies, capped at $2 million per project.

Besides retrofitting older buildings, the government also wants to encourage more efficient energy use in new buildings.

Hence the NEA will co-fund 80 per cent or $600,000, or whichever is lower, of an energy-use-design workshop before the building process.

Wing Tai to defer projects on profit slump

Source : Straits Times - 7 Feb 2009

MAINBOARD-LISTED Wing Tai Holdings yesterday reported a 52 per cent year-on-year slide in second-quarter net profits to $20.9 million.

The property group said that in the light of the challenging market conditions this year, it will ‘defer the construction of those residential projects where the construction contracts have yet to be awarded’.

The company blamed the profit slump in the period ended Dec 31 on a significant fall in contributions from associated and joint-venture companies, most notably the VisionCrest project.

Revenue for the second quarter fell 17 per cent to $92 million but revenue for the half-year ended Dec 31 rose 7 per cent to $226.3 million - a result the group attributed to the ‘higher contributions from the development properties division’.

‘Revenue for the current period came largely from the units sold in Helios Residences, The Riverine by the Park and Belle Vue Residences in Singapore, and Sering Ukay in Malaysia,’ said a group statement.

Wing Tai’s net profits for the half- year still slipped, however, by 49 per cent to $53.5 million.

Earnings per share for the quarter dropped to 6.8 cents from 14.39 cents previously. Net asset value per share as at Dec 31, 2008 rose by one cent to $2.04.

Also as at Dec 31, the group’s net gearing ratio - that is, debt to assets - rose to 0.47, from 0.4 as at June 30.

The increase in borrowings, said the group, is attributable to the drawdown of additional loans for development projects and working capital.

Home sales in Singapore fell sharply from 14,811 units in 2007 to 4,264 units last year, and Wing Tai said it ‘will continue to monitor the market closely’.

The firm has also said that it will persevere in the trying months ahead and continue to make the most of its extensive business networks and knowledge in its overseas markets.

The company said it intends to maintain a long-term presence in Malaysia through its listed subsidiary DNP Holdings, as well as develop its China real estate joint venture to take part in opportunities in the growing China market.

The group also has a retail arm, which distributes popular international brands here, such as Topshop and Miss Selfridge.

In April, Wing Tai will open South-east Asia’s first store for Japanese casual wear giant Uniqlo here, in suburban mall Tampines 1.

It will open a second store in upcoming Orchard Road mall Ion Orchard in June.

Lease buy-back for elderly from March

Source : Straits Times - 7 Feb 2009

STARTING from March 1, elderly folk can apply to the Housing Board to unlock the value of their homes for cash - while continuing to live in the flats.

Full details of the long-awaited ‘lease buy-back scheme’ were unveiled by National Development Minister Mah Bow Tan in Parliament yesterday.

The initiative, designed to allow the elderly to obtain cash for living expenses by drawing value from their homes, was first announced by Prime Minister Lee Hsien Loong at the 2007 National Day Rally.

Mr Mah yesterday strongly urged eligible home owners - those 62 and above - to sign on: ‘It is a good and generous scheme and I would like to urge MPs…to explain this scheme to their residents.’

He also stressed that HDB flats were not for ’speculation, or quick profit’.

The lease buy-back scheme reflects this point by recognising that home owners will be in a position to unlock the value of flats when they grow old, he added.

For retirees like 69-year-old Teng Kiat Hwa, who owns a three-room HDB flat in Toa Payoh, this scheme is a serious option. He fell ill years ago and stopped driving a taxi. He has had no income for at least five years and medical bills have depleted his CPF money.

If he signs on, he will be able to sell part of his flat’s lease to the HDB, receive cash upfront of $5,000 and a monthly annuity payout of $500.

This is how it works: HDB will buy back the tail-end of a flat’s lease at market valuation, leaving a 30-year lease for the household.

So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to a new CPF Life annuity in the flat owner’s name.

In addition, HDB will give the applicant a $10,000 grant. He will get $5,000 cash upfront, and the other $5,000 goes into the CPF Life plan.

The payout is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat’s ownership is transferred to HDB.

Mr Mah yesterday also allayed concerns from MPs such as Dr Muhammad Faishal Ibrahim (Marine Parade GRC) on what happens if the flat owner dies before the 30 years is up.

In this case, his family can either choose to live in that flat or get a pro-rated refund from the HDB.

In addition, his family will be given the full refund of the undrawn premium from the annuity plan, said Mr Mah.

If the owner outlives the 30-year lease, the HDB may extend the lease or find them alternative accommodation, added Mr Mah.

This scheme is currently only for those aged 62 and above and who own two- or three-room HDB flats. About 25,000 low-income households in Singapore will be eligible.

Mr Masagos Zulkifli (Tampines GRC) raised the question of whether it could be expanded to include elderly folk who own four-room flats.

Let us wait, said Mr Mah, until the scheme is rolled out and public response and feedback has been gathered.

‘But I am open to options of extending the scheme,’ he said.

Speaking to The Straits Times, Mr Teng said he would ’seriously consider’ the option now.

His son Teng Kang Cheng, 41, said it was a ‘good idea’ but was concerned that the flat could not be left to the next generation.

‘We have to discuss and weigh the options now,’ he said.

There is also the issue of conveying the details of the scheme to elderly folk who are Mandarin speakers like the elder Mr Teng.

This point was brought up by Madam Ho Geok Choo (West Coast GRC), who asked if HDB had any plans to raise awareness of the scheme.

Mr Mah said that there will be a ‘major launch’ for the initiative.

‘We will involve all the advisers, especially those who have larger numbers of senior citizens in their constituencies in this exercise,’ he said.

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Unlocking the value of flat: How it works

HERE is an example of how the scheme will work. Take a three-room flat with 70 years left on the lease, with a market value of $236,000.

1 Flat owner sells the Housing Board 40 years of the lease, and continues to live in the flat under the remaining 30-year lease.

2 HDB buys the 40-year lease at $104,000, a figure calculated by an industry valuer. In addition, it gives the flat owner an additional $10,000 grant.

3 Of this total value, flat owner gets $5,000 as cash upfront. The rest goes to buy a new CPF Life annuity for the flat owner.

4 He gets about $500 monthly for life.

If the flat owner dies before the 30 years is up, his family:
~ can choose to live in that flat
~ or get a pro-rated refund from the HDB
~ will be given the full refund of the undrawn premium from the annuity plan.

For example, if $100,000 was used from the sale of the flat to purchase the annuity plan and the owner dies after receiving $10,000, his family will be given the remaining $90,000.

If the flat owner outlives the 30-year lease, HDB may extend the lease or find alternative accommodation for him.

Conditions:
~ own three-room or smaller flat
~ outstanding loan is $5,000 or less
~ owner is 62 years or older
~ household income of $3,000 or less
~ owner has not previously owned a four-room or larger flat, or private property
~ owner has received only one housing subsidy
~ has owned existing flat for five years or more

HDB to help home owners avoid defaults

Source : Straits Times - 7 Feb 2009

THE Housing Board has prepared a range of measures to help the increasing number of home owners who are defaulting on their home loans in this downturn.

The steps include a mix of short- and long-term measures such as deferring or postponing payments, counselling and, only as a last resort, compulsory acquisition, said National Development Minister Mah Bow Tan yesterday.

The moves come as evidence mounts that more owners are getting into difficulties as the number of job layoffs increases.

MPs Amy Khor (Hong Kah GRC) and Teo Ser Luck (Pasir Ris-Punggol GRC) told Parliament there has been an increase in appeals by struggling home owners at their Meet-the-People sessions.

‘This number will certainly only increase,’ said Dr Khor.

One key measure is that the HDB can reduce or defer payments for up to six months as home owners adjust to tougher times.

However, Mr Mah said this is not a solution as the longer the payments stretch, the more interest will accumulate.

‘More seriously, households may be lulled into a false sense of financial security, and reduce their resolve to settle their financial problems decisively,’ he added.

Citing numbers from the last recession in 2003, Mr Mah said the HDB allowed ‘very long periods of reduced repayments’.

Today, there are some 6,500 households in arrears for periods of more than two years; some are in arrears for three or four years even.

This is why the HDB has shifted its focus from short-term relief to long-term sustainable solutions.

These steps include downgrading. To this end, the HDB is prepared to depart from usual practice and extend a second concessionary loan to downgraders on a case-by-case basis, said Mr Mah.

Many MPs, such as Mr Charles Chong and Mr Teo from Pasir Ris-Punggol GRC and Mr Baey Yam Keng from Tanjong Pagar GRC, have called for this step. Under current rules, such loans are only for upgraders.

‘There’s no overall change in policy but recognising the situation, HDB will be more flexible to help those in difficulty to get another loan,’ said Mr Mah.

The HDB will also source for low-cost flats, either from its existing stock or from the open market, for ‘exceptional cases of financial difficulties’.

It is introducing a new concept of ‘interim housing’, which is essentially for those who may need to downgrade urgently but have bought a new flat that has yet to be completed.

The HDB will refer such cases to its managing agent, for temporary rental of a room at below market rate, while their smaller flat is being built, said Mr Mah.

Although downgrading is a tough decision, Mr Mah stressed it is ‘ultimately in the best interest of the family as it allows them to get a fresh start to rebuild and recover from their financial setback’.

Gardener Tan Suay Yan, 52, is one person who has had to make this difficult choice.

She and her husband, a 59-year-old cook’s assistant, bought a five-roomer in Woodlands in 1999 for $210,000 but soon started defaulting on payments as he was in and out of jobs.

Madam Tan told The Straits Times that HDB officers advised her on her options for a long time and finally, after an eight-year grace period, the family bit the bullet and downgraded to a $90,000 two-room flat in Toa Payoh.

Today, they are debt-free and own their own home. Madam Tan wrote a thank-you letter to the HDB in Lianhe Zaobao newspaper, which was cited by Mr Mah in Parliament yesterday.

Such advice and counselling will continue to be offered by the HDB, he said.

HDB officers made more than 60,000 house visits on arrears-related matters last year and conducted over 35,000 interviews and financial counselling sessions.

This is a ‘complex and painstaking task…but HDB will press on, as we want home owners to find a viable long-term solution,’ said Mr Mah.

He also urged home owners to be realistic and spend within their means. ‘And we will do our best to support you every step of the way.’

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The HDB is introducing a new concept of ‘interim housing’, which is essentially for those who may need to downgrade urgently but have bought a new flat that has yet to be completed. The HDB will refer such cases to its managing agent, for temporary rental of a room at below market rate, while their smaller flat is being built, said Mr Mah.

Govt projects to give small contractors a leg-up

Source : Straits Times - 7 Feb 2009

THE Government is helping struggling small- and medium-sized contractors to get through this crisis with the offering of a range of small projects, each valued at $50 million or less.

About $1.3 billion worth of such projects, from upgrading lifts and parks to schools, will be tendered out this year.

It will bring the total value of small- and medium-sized public-sector projects this year to $4.8 billion.

This is a significant rise of 67 per cent over the average annual value of such projects awarded in the past five years, said Ms Grace Fu, Senior Minister of State (National Development) during the Budget debate on estimates for her ministry.

She was answering questions raised on the sustenance of the construction industry.

Overall, government demand, estimated at $18 billion to $20 billion this year, will make up for the slack in private-sector demand, she said.

The value of private-sector contracts is projected to drop by 55 per cent to 75 per cent, to anywhere between $5 billion and $9 billion this year. Thanks to government demand, total contracts to be awarded this year are estimated at $22 billion to $29 billion, compared with a record $34.6 billion last year.

‘Although the total annual demand will moderate to between $20 billion and $29 billion from 2009 to 2011, this is still substantially higher than the average annual demand of $13 billion from 1998 to 2006,’ Ms Fu said.

Public-sector demand will remain strong over the next two to three years, and help generate a sustained level of construction activities, she said.

Some of the small projects costing between $1 million and $8 million include the upgrading of hospital facilities, community clubs and parks and park connectors.

The medium-sized projects are set to include road improvement works worth about $2 million to $25 million, and the construction of indoor sports halls worth up to $27 million per bulk project.

The projects that may cost as much as $50 million include the upgrading of schools, lift upgrading and construction of rental flats.

The Government is ramping up lift upgrading and rental flat construction. It had earlier said the move to bring back these small projects, which were deferred during the building boom, is aimed at helping small- and medium-sized firms as the bigger firms already have jobs on hand.

The move will also help to sustain manpower demand in the construction sector, which requires a core group of professionals and skilled workers.

‘Many construction firms are, in fact, looking to hire more workers,’ Ms Fu said.

In a recent Building and Construction Authority survey of about 1,500 firms in the sector, half of them indicated that they are short of manpower, she added.

‘While we tackle the immediate concerns of the economic downturn, the Government will also remain focused on the long-term goal to upgrade the construction sector,’ said Ms Fu.

HDB tightens rent eligibility rules

Source : Straits Times - 7 Feb 2009

THE Housing Board has tightened criteria governing who is eligible for its heavily subsidised rental flats.

Eligibility tests include assessing not just a tenant’s income but also assets such as savings.

Those who previously owned private property, or whose children own private property, will now be excluded under the new rules. Also, an application will be rejected if the applicant has a child who owns an HDB flat with a spare room.

The new rules, which kick in today, were unveiled in Parliament by National Development Minister Mah Bow Tan, who described them as a way to ‘reinstate the public rental scheme to its rightful role as the final safety net and the housing option of last resort for the needy’.

‘If everybody jumps onto this safety net, whether they deserve to or they don’t, that safety net is going to break.’

Mr Mah’s announcement yesterday followed an HDB review of the eligibility criteria for rental flats.

The burgeoning queue for such flats became cause for concern after it emerged that more and more tenants were cashing in on their low-rent flats by illegally subletting them to foreign workers or students for big gains.

The announcement comes at a time when demand for rental flats has been rising, outstripping the supply of 42,000 units.

Mr Mah told Parliament yesterday that there are about 4,550 applicants in the queue, while 300 join the list every month but only about 150 people return flats in the same period.

MPs also submit 500 appeals a month on behalf of those who do not qualify for rental housing.

Responding to concerns raised by Mr Masagos Zulkifli (Tampines GRC) and Madam Ho Geok Choo (West Coast GRC), Mr Mah noted that although some in the queue were eligible, many can afford other housing options.

He cited a rental applicant who had sold his five-room flat and received proceeds of $325,000 - more than enough to buy another flat. Yet, he is in the queue because he has zero income and waited 30 months after selling his flat before applying.

Mr Mah said two-thirds of applicants in the queue used to own an HDB flat, with about 40 per cent receiving more than $90,000 in sale proceeds.

‘They could easily afford a studio apartment or a small resale flat. They…should not be competing with needy families for rental flats…We need to take decisive steps to correct this.’

HDB said yesterday the new rules will mean asking for more information at the time of application - regarding savings, car ownership, how many children the applicant has and what type of residence he has.

HDB will verify the information with the permission of the applicants before assessing their eligibility based on the new criteria. These are on top of the existing eligibility rules, which will continue to apply.

Apart from the new rules, Mr Mah also announced a set of measures to help low-income tenants.

Needy cases will get extra rental rebates under the GST offset package. As announced in the Budget statement, tenants will get another month of rebates for this year.

Existing tenants paying rents pegged at market rates will also get a helping hand. HDB will freeze rental adjustments and continue to peg rents to 2005 levels, instead of the current, more expensive levels.

It will also suspend the alignment of rents for this year for tenants earning above $800 a month. The second round of increases was originally scheduled for last November, which would have raised tenant payments according to their incomes.

Meanwhile, HDB will build more rental flats to boost supply. Since 2007, about 930 rental flats have been made available by converting old HDB flats. This year, a further 1,450 will come on-stream, through construction of new flats or the conversion of more old flats.

By 2012, HDB would have boosted supply from the current 42,000 flats to 50,000.

No let-up in remaking S’pore into top location

Source : Straits Times - 7 Feb 2009

NATIONAL Development Minister Mah Bow Tan said there will be no let-up in public building works even as the economic climate here worsens.

The Government will invest in public housing, new parks and plans, sustainable development and even accelerate the Lift Upgrading Programme for Housing Board flats, he said.

‘Nothwithstanding the current economic recession, we are taking the opportunity to remake our city,’ said Mr Mah during the Budget debate on estimates for his ministry yesterday.

‘In five to 10 years’ time we will see a new Singapore. We will have a new city as plans to transform and rejuvenate our downtown and our heartland take shape.’

‘We are striving to be a global city of distinction - a top destination for global businesses to base their operations, a choice location for global talent to work in, but above all, a city that all Singaporeans can be proud to call home.’

He was responding to questions from MPs.

One of them, Mr Liang Eng Hwa (Holland-Bukit Timah GRC), asked if development plans for Jurong Lake District and Paya Lebar commercial district would be put on hold because of the economic downturn. He also asked if there were plans to help rescue the severe slump in the property market.

The market has corrected with the current economic downturn, said Mr Mah.

‘The Government cannot artificially prop up prices, in the same way that we cannot suppress prices in a bull market.’

It has already acted swiftly to help, he said. For instance, the Government has introduced new measures in the Budget to help ease the cashflow of developers.

Mr Mah said his ministry will continue to monitor the property market closely and implement more measures if necessary to lend stability to the market.

‘While we tackle the current challenges, we must not forget that our economic fundamentals remain strong, and we should continue to position Singapore so as to seize new opportunities when the upturn comes.’

Yesterday, Mr Charles Chong (Pasir Ris-Punggol) also asked if there would be a slowdown in the Lift Upgrading Programme because of the downturn.

Senior Minister of State (National Development) Grace Fu responded: ‘On the contrary we intend to step it up.’

Yesterday, Mr Mah also highlighted the development plans in growth areas and its sustainable development thrust. Among them:

Punggol 21-plus: This, said Mr Mah, is not just a rehash of the Punggol 21 plan. ‘There are some very new aspects of the Punggol 21-plus plan which was never envisaged in the original Punggol 21.’

The construction of the first 2.4km of the Punggol Waterway costing $145 million is one of them. The contract has just been awarded and the waterway is slated for completion by the end of next year.

The first sale site for a mixed commercial and residential development at the town centre will be launched by 2011. When the two developments are completed, Punggol will enjoy a ‘first class’ waterfront environment, said Mr Mah.

Marina Bay: This precinct will take shape as a new premier business location by the end of the year.

The Government has invested close to $5.7 billion in the infrastructure there and will continue to pump in another $1 billion of infrastructural works for the next 10 to 15 years.

Many key developments such as Gardens by the Bay, Marina Bay Financial Centre and the integrated resort are being built now. When completed in two to three years’ time, Marina Bay will become the new downtown.

New hubs in Jurong East, Paya Lebar and Kallang: The Government is pressing on with the infrastructure development for these hubs and will invest a total of $2.9 billion on essential works in the three growth areas.

Lift Upgrading Programme (LUP): The programme is on track, with the Government having selected 80 per cent of eligible blocks for lift upgrading.

In the 2008 fiscal year, the Government selected 60 precincts for LUP, 10 more than the originally intended 50. These will be announced soon.

It plans to select more for the 2009 fiscal year and to bring forward this selection by about six months.

Over the next few years, HDB will select the remaining 1,000 eligible blocks so that these can be completed by 2014.

There are still about 1,500 blocks to be selected under the LUP. ‘This is a large number and we have to prioritise, but we are on track,’ said Ms Fu.

HDB heartland: The Government has spent $2.4 billion over the last five years on the various upgrading programmes and will almost double it with another $4.6 billion over the next five years.

Sustainable development: Recommendations from the Inter-ministerial Committee on Sustainable Development - set up last year to chart strategies - will be released next month. A sum of $1 billion will be spent over five years to implement the recommendations.

Dr Muhammad Faishal Ibrahim (Marine Parade GRC) had asked about the work of the committee. Mr Mah said the committee’s recommendations would centre on four key areas:

~ Measures to improve Singapore’s resource efficiency. ‘In particular, we will put in special efforts to promote energy-efficient buildings,’ said Mr Mah.
~ Measures to enhance the liveability of Singapore. ‘More efforts will be made to promote clean transport and enhance connectivity for cyclists and pedestrians.’
~ New resources to build up Singapore as a hub for sustainable development technologies and solutions.
~ New partnerships with people and private sectors to promote lifestyle changes to support a higher level of sustainability.

Measures to help new HDB flat buyers, existing owners

Source : Business Times - 7 Feb 2009

THE government yesterday announced measures to help existing HDB home-owners and people looking to buy a new flat.

To meet increased demand for smaller and more affordable flats, HDB will offer 2,000 studio, two- and three-room apartments each year in 2009 and 2010.

This is double last year’s supply of 1,000 smaller flats. And National Development Minister Mah Bow Tan told Parliament: ‘We will increase the supply of smaller and lower-priced flats further if necessary to meet demand.’

To make it easier for first-timers to buy a flat, the government also unveiled an enhanced Additional CPF Housing Grant Scheme (AHG).

Under this, the monthly income ceiling will be raised from $4,000 to $5,000, the maximum grant increased from $30,000 to $40,000 and the continuous employment condition cut from two years to one year.

The number of families benefiting from the AHG will double from about 4,000 in 2006 to about 8,000 each year.

HDB will also help existing home-owners amid the downturn.

Short-term measures to help those behind with repayments include a deferral scheme and instalment plan to pay arrears within a ‘reasonable period’.

Longer-term, HDB is willing to facilitate downgrading by providing second loans on a case-by-case basis.

Mr Mah said that HDB generally does not provide loans to downgraders as they usually have enough proceeds from the sale of a larger flat.

‘But for those who need help in these difficult times, HDB will be flexible and will help them with another loan to buy a smaller flat,’ he said.

‘So there’s no overall change in policy, but recognising the situation, HDB will be more flexible to help those in difficulty.’

Elderly home-owners will also get help - through a lease buy-back scheme that starts on March 1.

Under this, HDB will allow the elderly to monetise their flats by buying back the tail-end of the lease at market value, leaving a 30-year lease for the household.

HDB is also tightening eligibility rules for heavily subsidised public rental flats. Now, an applicant’s income and assets will also be considered, as well as existing rules.

Those who have previously received a housing subsidy and those who have significant savings or money from a previous flat sale will no longer qualify for a rental flat.

In addition, applicants must not have owned private property before, or have a child who owns private property or has a spare room.

The revised rules take effect immediately and are designed to manage demand and safeguard rental flats for the deserving, so they are not crowded out by the less needy.

Mr Mah said: ‘There are now 4,550 applicants on the rental queue. Some are really in need of help, but they are in the queue waiting.’

HDB also plans to accelerate its rental flat building programme. By 2012, there will be 50,000 rental flats, up from 42,000 now.

$8.5b to be spent to help remake S’pore

Source : Business Times - 7 Feb 2009

THE government will spend $8.5 billion to revamp Singapore’s HDB estates and develop the commercial nodes of Marina Bay, Jurong East, Paya Lebar and Kallang.

Some $2.9 billion will be spent on essential infrastructure to pave the way for future development at Jurong East, Paya Lebar and Kallang - three regional hubs earmarked for development in the Urban Redevelopment Authority’s 2008 Master Plan.

The government will pump in another $1 billion for infrastructure works at Marina Bay over the next 10-15 years.

As for HDB estates, National Development Minister Mah Bow Tan told Parliament: ‘We have spent $2.4 billion over the past five years on various upgrading programmes and we will almost double it, with another $4.6 billion over the next five years.’

Various government agencies will participate in the development of the three regional hubs.

At Jurong, the Land Transport Authority will upgrade Jurong East MRT station and redevelop the bus interchange, while JTC will expand the International Business Park and the Public Utilities Board will transform Jurong Lake for more leisure activities. The Health Ministry will build Jurong General Hospital.

At Kallang Riverside, new infrastructure will open up the area for future waterfront developments.

And at Paya Lebar Central, the Circle Line MRT and Paya Lebar MRT interchange will be operational in 2010, and the new Geylang Serai Market will be completed this year.

But the bigger price tag will be for remaking HDB estates. Rejuvenation works for the pilot town, Yishun, have started. Older estates will be rejuvenated through the injection of new flats and residents.

Mr Mah said: ‘Notwithstanding the current recession, we are taking the opportunity to remake our city. In 5-10 years, we will see a new Singapore. We will have a new city, as plans to transform and rejuvenate our downtown and our heartlands take shape.’

Senior Minister of State for National Development Grace Fu said that the government would remain focused on its long-term goal of upgrading the construction sector.

Responding to questions about measures to help the industry during the downturn, she reiterated that the government’s previous announcement that it would award an additional $1.3 billion of small and medium-size public sector contracts - each valued at $50 million or less - this year. Added to small and medium-size projects already planned, this will lift total public sector demand for such projects to $4.8 billion.

‘This is a sizeable 67 per cent increase over the average annual value of small and medium-size government projects awarded in the past five years,’ Ms Fu said.

Works to be brought forward include smaller-scale projects valued at up to $15 million, such as upgrading community clubs, roads, parks and park connectors. Projects of up to $50 million include building new rental flats and indoor sports halls in schools, upgrading hospitals and improving public housing lifts.

The government is also reducing the security deposits for public construction projects from the usual 5 per cent. In general, the deposit will be 1.25 per cent for projects of up to $15 million and 2.5 per cent for projects of higher value.

Mr Mah and Ms Fu said that the government would monitor the property market and the construction industry to see if further action is needed.

If it’s priced well, it still sells

Source : Business Times - 7 Feb 2009

Frasers Centrepoint brings cheer to market with sale of 80 units at Caspian’s preview

THE year’s first major release of a private housing project has shown that there’s still demand for projects priced attractively. Frasers Centrepoint had sold close to 80 units at its Caspian condo near Jurong Lake by late last night, the company’s CEO, Lim Ee Seng, told BT.

About 70 per cent of buyers are estimated to be HDB upgraders; the rest had private addresses. Singaporeans accounted for more than 85 per cent of buyers. Only a fifth of the buyers so far have opted for the interest absorption scheme offered by the developer. This means that they pay 3 per cent higher for their units.

The project is priced at $580 per square foot (psf) on average for buyers who opt for normal progress payment.

Property market watchers expect sales in the 99-year-leasehold condo next to Lakeside MRT Station to pick up steadily over the weekend.

Frasers Centrepoint had meant to open its showflat for sales to staff on Thursday, but decided to start selling in the evening to other buyers who had started gathering outside. The average price of $580 psf - or $598 psf for those who opt for interest absorption - is for the 250 units being marketed in the first phase.

Knight Frank executive director Peter Ow, whose firm is not involved with marketing the project, said: ‘The response is very encouraging in today’s market. It goes to show that there’s still demand in the market, as long as the project is priced attractively. Those who want the location will buy. I believe buyers would be buying predominantly for owner occupation.’

The 712-unit Caspian is being built next to LakeHolmz, an earlier condo by Frasers Centrepoint that was completed about four years ago. Units in LakeHolmz are going for about $600 psf on average in the resale market, while further away, units at The Lakeshore, which was completed more recently, are fetching an average price of around $750 psf.

Frasers Centrepoint indicated that 80 per cent of the Caspian units sold are two and three-bedders.

A strong draw of the project is its location in the Jurong Lakeside District, for which the government has big growth plans as a unique destination for business and leisure, and a vibrant regional centre serving the west region of Singapore. The project’s location next to Lakeside MRT Station will also receive a boost from the extension of the East-West MRT Line with the opening of new stations this month.

Frasers Centrepoint’s Mr Lim said: ‘We’re happy with the positive response generated by Caspian, which will hopefully create some impetus to the otherwise sluggish market.

‘We did a thorough market research and survey, which resulted in a substantial number of potential buyers indicating firm interest within a certain price range. We then launched below this price range to further boost the demand.’

He did not indicate what the surveyed average price range was, but BT understands that it was in the low to mid-$600 psf range.

To refinance or not to refinance?

We look at the various criteria you should consider before taking the plunge

WITH ever lower interbank rates, it would seem that refinancing your home loan is a good idea. You could save on loan servicing costs and avail of a number of incentives, including the absorption by banks of the penalty costs that you may incur.

But think again. The ongoing credit crunch has led banks to tighten their lending criteria as ‘overall lending conditions have changed’, says a banker who declines to be named.

In addition, softer property prices suggest that some borrowers may have to top up their home equity to be able to refinance their loans. This applies for property that was bought between 2007 and early 2008.

Even as the three-month Sibor rate continues to trend downwards - it is currently 0.69 per cent compared to 2.22 per cent in September - the spreads that the banks will charge above Sibor appear to be on the increase.

HSBC, for instance, which last September offered a margin spread against Sibor of 0.75 per cent, has raised the spread to 1.3 per cent. For home loans with no lock-in periods, some banks are charging an interest spread of as much as 1.75 per cent. A higher spread will compensate banks for risk as well as give them a better margin, even though deposit rates remain low.

Sibor isn’t the only benchmark that banks use. Some banks have chosen to use the three-month swap offer rate (SOR), which includes Sibor as a component. Hence, the SOR rate is higher than Sibor. The three month SOR is currently at 0.87 per cent, compared to 2.11 per cent in October.

Says Dennis Ng, who runs mortgage consultancy www.housingloanSG.com: ‘In general, risk has increased on a macro basis. Transaction volume of properties has gone down and there are retrenchments.’

Patrick Tan, director of Morgan Mortgage International, a mortgage consultancy set up last year, notes that some banks are applying a form of ‘risk-based’ pricing on their criteria, taking into account factors including applicants’ professions or jobs; the loan to value ratio; loan to income ratio as well as whether the property is an investment property or for owner occupation. Banks also tend to prefer a borrower to be employed, rather than self-employed, although the scale of expected job losses suggests that few jobs are secure.

DBS, for instance, has spelt out clearly on its website its rates for a number of permutations, depending on the loan to value quantum; whether the property is for owner occupation or investment; and whether the property is still under construction.

For instance, a borrower seeking a 90 per cent loan for an owner occupied property will pay Sibor plus 2.75 per cent for a completed property. For an investment property the spread rises to 3 per cent. The spread rises further to 3.5 per cent for an investment property that is still under construction.

Mr Ng believes refinancing should not be a problem for those with a strong credit profile. House price valuation, however, is another issue. ‘There are instances where we check with banks and everything seems ok, and a month later the valuation has changed. Even though we had pre-approval, the bank will still adjust the valuation.’

Clients who had bought their properties earlier may not have to make any home equity top-ups. ‘Prices went up 100 to 200 per cent in the last four to five years. If you bought your property more than two years ago, the current value should still be higher.’

Morgan’s Mr Tan believes Sibor and SOR rates could stay low for the near term, but the spreads that customers must pay are trending up. ‘Those who are out of any lock-in period should consider refinancing before they miss the opportunity.’

Some clients, however, still prefer the peace of mind that comes from a fixed rate. So far, among the packages surveyed by Morgan, one of the most attractive appears to be that offered by Standard Chartered Bank, where the first year fixed rate is 2.18 per cent, followed by 2.49 per cent in the second year.

Recognising that some clients prefer visibility in their mortgage payments, UOB has a package, dubbed ‘Clear’, where the monthly instalment is fixed for three years, even though the interest rate is pegged to the SOR. If the SOR falls, any excess payment goes towards servicing principal. If the SOR rises to the extent that the interest on the outstanding balance exceeds the monthly instalment, the customer will have to pay the difference.

As refinancing involves switching banks, borrowers will typically be charged a penalty of 1.5 per cent of the loan amount as a full redemption penalty by their existing bank. Mr Tan says some banks will absorb this cost, subject to a clawback if the borrower switches banks again within the lock-in period.

Meanwhile, if you are keen to explore refinancing your loan, consider the services of a mortgage broker, who can compile rates, costs and benefits for you. Most banks are open to dealing with brokers, although one bank has set criteria that brokers need to meet to be on its panel of agents.

The fee paid to brokers or property agents - who also refer clients to banks - is said to be competitive. Mr Ng says: ‘We try to match clients with the banks. Some banks are very strict on the loan to income ratio. Some banks may look at whether the client holds other assets and relationships with institutions . . . We help clients to find an institution that will welcome them.’ While banks generally deem a 50 per cent loan to income ratio as acceptable, a more prudent ratio is 30 per cent, he adds.

While loan applications for new property purchases have plunged along with a moribund property market, most of the volume has so far been driven by refinancing. Demand for the latter, however, may also soften going forward.

Mr Ng says: ‘Refinancing may become difficult. Recently we had some cases where we advised them to stick with the same bank even though it didn’t give them the best rates. If they switched banks, they would have to come up with cash for a top-up as the current valuation is 10 per cent lower. We’re starting to see some of these cases. Others should be able to refinance - as long as they keep their jobs.’

ERA told to return $257,000 to couple

Source : Straits Times - 6 Feb 2009

A HIGH Court judge yesterday criticised the unethical behaviour of two ERA Realty Network agents and ordered the return of $257,000 to a couple who used the agency to sell their apartment.

Mr Yuen Chow Hin, an IT company vice-president, and his wife, Madam Wong Wai Fan, a housewife, had let go of their two-bedroom downtown flat at $688,000. They took their ERA agent’s word that this was the best price they could get.

What they did not know was that the buyer of their Riverside Piazza unit was the wife of their agent’s boss, and that she re-sold it almost immediately for $945,000, making a hefty profit.

Yesterday, Justice Choo Han Teck ruled in favour of the Yuens, who had sued ERA for the ’secret profit’ made in the second deal.

Justice Choo found that the conduct of agent Jeremy Ang and his boss, Mr Mike Parikh, senior group division director at ERA, amounted to breach of duty and fraud.

He also had a stern reminder for the industry of its ethical responsibilities, as it had emerged in court that such practices were common.

The judge concluded that it was Mr Parikh who wanted to buy the flat in order to make a quick profit during the property boom.

To distance himself from the deal, he used his wife, Madam Natassha Sadiq, as the buyer and Mr Ang as the seller’s agent, the judge found.

Mr Ang was the link but Mr Parikh was the person behind the scheme, and his position made his subordinate’s breach of contract even more reprehensible.

The misconduct was of such magnitude that the judge said he felt bound to make the reasons clear in his judgment so that no property agent could now claim ignorance.

When a property agent is engaged to sell or buy property, he has a responsibility to act in the interests of the person who appointed him - not his own, or his friends’, or his relatives’ or his boss’, said the judge.

‘This responsibility that the agent bears is the foundation of the ethical rules and contractual principles that prohibit an agent from acting in conflict of interests and reaping secret profits for himself or his friends.’

Madam Sadiq was a party to the plan carried out by her husband and Mr Ang.

‘The result of the concerted efforts of Jeremy, Mike and Natassha resulted in the plaintiffs selling their flat for less than what they might have had they been properly and honestly advised,’ said the judge.

Justice Choo rejected the testimony of ERA’s top brass - president Jack Chua and senior vice-president Marcus Chu - that the two men had done nothing wrong.

The judge said it was clear why they thought so - Mr Chu admitted in court that he and others in the company, as well as agents in other companies, had done the same thing.

Justice Choo also rejected arguments by ERA that it was not liable for the actions of its agents, who are ‘independent contractors’.

The option form had ERA’s logo printed on it; the commission agreement was between Madam Wong and ERA; and the newspaper advertisements sought to persuade the public that they would have the backing of the company and its network by engaging an ERA agent.

It was also ERA - not Mr Ang - which took the couple to the Small Claims Tribunal when they refused to pay the commission on the sale.

Yesterday, a relieved Madam Wong said: ‘Naturally, I’m very happy. I respect the decision of the court.’

In a statement, ERA president Jack Chua said: ‘ERA intends to appeal the court decision that finds our company liable as we did not benefit from the transaction.’

Mr Jeff Foo, president of the Institute of Estate Agents, would only say the case could have been prevented if real estate agencies and their agents are licensed.

He said: ‘In this way, the industry will be regulated and everybody can be held responsible and accountable for their actions.’

The institute has a code of conduct and ethics for members.

Mr Ang is not a member of IEA.

Additional reporting by Diana Othman

WHAT THE JUDGE SAID: Justice Choo Han Teck said that Mr Parikh and Mr Ang were ethically wrong and in breach of contract by creating a conflict of interest between their client and themselves.

ARRANGEMENTS BASED ON DECEPTION

‘Jeremy’s duty to act honestly required him to disclose his boss’ interest in the sale and purchase. The arrangements made and carried out by him in collaboration with Mike and his wife Natassha depended on deception.’- Justice Choo

MANY OWNERS, BUYERS AT RISK

‘Mike has 200 agents working for him and we do not know how many agents the defendant has, nor how many housing agents there are in all. This kind of misconduct is never easy to discover because it is carried out in stealth and in breach of trust and far too many homeowners and potential purchasers are at risk. The defendant and its two agents have done a grave disservice to the honourable and honest members in their rank.’ - Justice Choo

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Timeline of events

WHO’S WHO:

The plaintiffs: Mr Yuen Chow Hin, 50, and his wife, Madam Wong Wai Fan, 48.

The agent: Mr Jeremy Ang, 40, who was hired by ERA senior director Mike Parikh after he was retrenched in 1999.

The boss and his wife: ERA senior group division director Mike Parikh, 44, and his wife, Madam Natassha Sadiq, 40.

WHAT HAPPENED

June 2007: The Yuens appoint Mr Ang to sell their Riverside Piazza apartment.The agent says the market value is between $650,000 and $700,000, and says a ‘regular client’ is interested in buying the property. No valuation is done and Mr Ang omits to mention that the interested buyer is his boss’ wife.

Mr Ang does not advertise the property for sale.

July 7 and July 9: Mr Parikh advertises the property for sale on behalf of his wife, Madam Sadiq, before she has an option to buy.

July 12: The Yuens give Madam Sadiq an option to buy for $688,000.

July 14: Mr Parikh places a third ad, setting the price at $945,106 and saying the property has en bloc potential. A buyer responds, and Mr Parikh handles the deal.

July 18: Madam Sadiq grants the buyer an option to buy at $945,000.

July 25: The new buyer exercises the option.

July 26: Madam Sadiq exercises her option from the Yuens.

October 2007: The couple discover the flat was resold after the CPF Board asks why they sold well below the valuation
obtained by the new buyer.

Dec 19, 2007: The couple find out that Madam Sadiq is married to Mr Ang’s team leader, Mr Mike Parikh.

Property agents exit in droves but…

Source : Straits Times - 6 Feb 2009

THOUSANDS of property agents have fled the industry over the past year amid the real estate slump but the tight job market here has forced new recruits to try their hand despite the lean pickings.

The number of people attending recruitment courses - anyone from housewives to sacked bankers have turned up - has leapt in recent months and property agencies believe the trend will continue.

But the loss of personnel has been dramatic, with industry experts estimating that around 8,000 to 10,000 have quit in the past 12 months, leaving about 18,000 to 20,000 active agents.

More are expected to drop out as the property market worsens but the extent of the fall is being offset by new recruits.

‘In the trough of the property cycle, the attrition rate is higher but the bulk of those who exit are ‘opportunist agents’ who came in during the peak,’ said Dr Tan Tee Khoon, head of KF Property Network, a Knight Frank subsidiary.

During the 2007 property boom, many people jumped into the market, hoping to make a quick buck as property agents.

Agencies were swamped with hopefuls from all corners of the economy, with new hires that included retirees, administrative staff, teachers, white- collar professionals and accountants.

Some property firms doubled their number of new hires from a year earlier.

‘It was the all-time peak when the market was at its crazy stage. We used to have 200 people joining our courses every month,’ said PropNex chief executive Mohd Ismail.

PropNex now has 4,000 active agents - defined as one who has closed at least one deal in the past year - after it terminated nearly 3,900 inactive agents over the past year.

Major agencies regularly axe agents who have not been active in 12 months.

ERA Asia-Pacific, with 2,500 active agents, had record recruitment in 2007.

‘We had 300 people on average a month (in training courses) but now we get 150 to 180 a month; back to normal,’ said associate director Eugene Lim.

While many more agents may drop out or be axed if they cannot seal deals, new ones will arrive.

‘This market is really challenging but there’s new blood…You don’t need an educational background to get in,’ said HSR Property Group executive director Eric Cheng. HSR has about 8,500 agents, with just over half who are active.

There is no fixed commission rate, though sellers may now pay 2 per cent, which works out to $10,000 for a $500,000 home.

The larger agencies - HSR, PropNex, ERA, Dennis Wee Group - all reported increased interest in recent recruitment drives and training courses which cost several hundred dollars.

A recent course attendee, who wanted to be known only as Kelvin, told The Straits Times: ‘I am in the manufacturing line. The market is pretty bad so I feel this is the right time to join the industry and learn so that I am ready when the market recovers.’

He did not want to give his surname as he is still in his full-time job.

‘As unemployment increases, we notice that more people are taking an interest in our free recruitment seminars,’ said Mr Lim.

‘We also have agents from other small companies joining us since a year ago. These are the five-man, 10-man shows.’

Mr Chris Koh, director of Dennis Wee Properties, said his recent training courses attracted housewives who were worried that their husbands may lose their jobs.

‘This time round, we are seeing a lot of people who are preparing for the worst. In the 1997 downturn, many who joined us had already been retrenched,’ said Mr Koh.

HSR’s Mr Cheng said several people who attended its course have not joined the industry. ‘Some people want a stand-by job in case they lose their jobs,’ he said.

C&H Realty managing director Albert Lu added: ‘During downturns, we usually see people who are retrenched come in and join us on a full-time basis.’

In recent days, he has recruited three agents. One was once a top performer at the agency who has made a comeback as his brother’s transport business has turned ‘very bad’.

The second agent was a small-time businessman in the construction field while the third was a retrenched banker.

C&H Realty has about 1,000 agents.

Agencies said the one good thing about a down cycle is the high chance of recruiting serious agents who will work hard and stay on in the industry.

14 Flyer tenants demand compensation

Source : Straits Times - 6 Feb 2009

A GROUP of tenants at the Singapore Flyer has decided to demand compensation from the attraction’s management over the incident on Dec 23 last year in which the giant wheel stalled.

A law firm representing the 14 tenants - the attraction has 30 in all - sent a letter of demand to the Flyer yesterday alleging breaches in their tenancy agreements.

The letter was also sent to GWC Holdings, a firm linked to the Flyer, and both companies’ directors.

The 14 tenants include Select Service Partner Singapore, which runs the Popeyes Chicken restaurant, Robert’s Coffee and sports bar O’Learys; Apex-Pal International, which runs Japanese restaurant Hibiki; and international retail chain Sunglass Hut.

They claim the Singapore Flyer, which they called the ’sole attraction of the area’, was not properly designed and maintained.

The giant observation wheel had broken down on Dec 23, causing 173 visitors to be stranded in mid-air for up to six hours.

This breakdown, they added, caused human traffic to become ‘non-existent’, and led to the Flyer becoming ‘no longer viable or profitable’.

Lawyer Navinder Singh of Navin & Co LLP, which is representing the tenants, said: ‘They now need prompt positive action to address their claims.’

The Flyer’s management has been given five days to admit it is liable and to offer compensation.

The letter did not specify what compensation was being sought.

The Straits Times understands that this was deliberately left unsaid to allow for negotiations, but that monetary compensation, or an agreement to allow early termination of leases, are among the options tenants hope to explore.

However, in a response last night, a Flyer spokesman dismissed the demand as ‘baseless’, adding: ‘The company will take all steps to protect its position. There is no breach in our agreement with our tenants.’

The spokesman expressed regret at the latest turn of events, saying the Flyer has been supportive of its tenants all along, including ‘those who have not been able to pay rent on time way before the Dec 23 incident’.

The letter of demand is the latest legal action to hit the beleaguered attraction.

One of its directors has asked the High Court to allow his auditor to access the Flyer’s financial records, while an audio company is demanding $10.8 million for an aborted effort to set up a commentary system.

There are also indications that the Flyer may be facing deeper trouble. The Commercial Affairs Department has received documents regarding the Flyer’s finances, including an audit report - since dismissed by the Flyer - which questioned its profitability.

At the root of the latest turn of events is a feeling among tenants that the Flyer has not done enough to help them during the breakdown, which occurred during what was expected to be a high point for the attraction in terms of the number of visitors - the Christmas and New Year holidays.

Tenants were given a one-week rental rebate, but many said it was not enough, as the attraction was closed for a month.

Some say they want more to make up for poor business even before the breakdown. Sunglass Hut, for instance, said it is hoping for at least six months’ rental waiver.

Yesterday, the Flyer’s spokesman said it will continue to work with and encourage tenants to ‘re-look their product mix and pricing structures to help drive patronage to the Flyer’, adding that the management has been meeting tenants for the past few weeks to ‘work out a mutually beneficial resolution to all parties’.

But these have failed to make headway. Tenants described how an idea to revamp the tenant mix and spaces, and bring in facilities such as a foodcourt, had hit a raw nerve.

Said Ms Serene Tjokro-Lau, director of Jalapeno’s Pepper: ‘We are paying premium rent and we were told the Flyer would be an upscale place with one-of-a-kind concepts. Everyone paid a bomb for renovations and branding because of that.’

Ms Tjokro-Lau’s company, Santorie, is one of the 14 tenants represented in the letter.

Yesterday, a Flyer executive committee member, Mr Chng Hee Kok, said these plans were only at the discussion stage.

When contacted, tenants who were not part of the action said they would sit on the fence, for now. Those staying clear tend to be smaller businesses such as jewellery stand Brilliante Collection.

Its managing director, Mr Richard Lim, said: ‘We would rather be subtle about this and wait for the outcome of our meeting with the management before deciding what to do.’

HDB to accept applications for Lease Buyback Scheme from Mar 1

Source : Channel NewsAsia - 6 Feb 2009

From Mar 1, HDB will accept applications for the Lease Buyback Scheme (LBS). LBS is a new monetisation option to help elderly households in three-room or smaller flats unlock their housing equity to meet their retirement needs.

This was announced by National Development Minister Mah Bow Tan in Parliament on Friday.

Under this scheme, HDB will buy back the tail-end of the lease of their flats, leaving them with a shorter 30-year lease.

There will be also be a subsidy of S$10,000 from the government. This is in addition to the value of the housing equity unlocked from the shorter lease.

Of the total value, S$5,000 will also be given upfront as a lump sum. The remainder will be used to purchase an Immediate Annuity from CPF Board to provide a monthly stream of income for life.

HDB help for homeowners affected by recession

Source : Channel NewsAsia - 6 Feb 2009

The Housing and Development Board (HDB) will temporarily reduce or defer loan repayments for up to six months to help households affected by the current recession.

National Development Minister Mah Bow Tan, speaking during the debate on his ministry’s budget estimates in Parliament, said this move aims to help homeowners who have had their incomes affected by retrenchments or pay cuts.

“This gives them time to make adjustments to their lifestyles and consider longer-term options,” he said.

“However, reducing the loan repayment cannot be a solution in itself, especially in cases where the poor financial situation is likely to persist.

“The longer we stretch the reduced repayments, the more the interest accumulates,” he added.

Mr Mah warned that households could also be lulled into a false sense of financial security because of this.

He pointed out that HDB allowed very long periods of reduced repayments during the last economic downturn in 2003 and 2004.

Because of this, there are now 6,500 households in arrears.

Mr Mah said: “So we’ve got 6,500 households who are owing arrears for more than two years. Some of them are owing three years, four years. We had hoped by giving them more time, they would be better able to resolve their financial problems. Instead, they remain unable to service their loans and they are not nearer to a sustainable solution. In fact their circumstances have worsened significantly and their arrears have gone up.”

That is why instead of providing short-term relief to its arrears cases, HDB now helps them find longer-term sustainable solutions to their problems, said Mr Mah.

To do this, affected households must be prepared to make tough adjustments and these include subletting a room or even the whole flat.

Homeowners can also consider downgrading their flats to help them get through these difficult times, said Mr Mah.

S’pore govt to spend billions of dollars on infrastructural projects

Source : Channel NewsAsia - 6 Feb 2009

The Singapore government will implement more measures to stabilise the property market if needed.

The assurance came from National Development Minister Mah Bow Tan in Parliament on Friday.

Mr Mah said the government will go also go ahead with multi-billion dollars worth of infrastructural projects.

Marina Bay, Singapore’s new premier business district, is taking shape.

So far, the government has invested S$5.7 billion on infrastructural works there.

And it is set to pump another S$1 billion into developing the area over the next 10 to 15 years.

Mr Mah said: “We are also pressing on with the infrastructure development for new regional commercial hubs at Jurong East, Paya Lebar and Kallang that were earmarked for development in URA’s Master Plan 2008.

“A total of S$2.9 billion will be invested to implement essential infrastructure works for the progressive development of these three new growth areas.”

These include the upgrading of existing transportation system, and building works for commercial developments, a hospital and the Science Centre.

More money will also be channelled to give public housing estates a facelift.

The government has spent S$2.4 billion on upgrading programmes over the last five years. And it has committed to invest another S$4.6 billion for the next five years.

With the global economic slowdown, demand in the construction sector is expected to moderate to about S$20 billion to S$29 billion over the next three years.

Still, the government is optimistic about prospects ahead.

Grace Fu, Senior Minister of State, National Development, said: “For 2009 alone, the value of government projects to be awarded will reach between S$18 billion and S$20 billion. This will make up for the slack in private sector demand.”

These projects include upgrading of community clubs and roads and building of new rental flats.

These are valued at between S$15 million and S$50 million each.

The government has previously announced a slew of measures to help developers and the construction industry ride out the tough times.

These measures include initiatives to ease the cash-flow of developers, and giving them more flexibility to stage the sale and construction of their developments in accordance with market conditions.

In addition, it is also promoting prompt and more frequent payment for public sector projects, as well as undertaking higher risk by lowering the security deposits for construction projects.

HDB to step up supply of smaller flats

Source : Business Times - 6 Feb 2009

The Housing Development Board (HDB) will step up its supply of new small flats to facilitate the process of distressed homeowners seeking downgrades.

Minister for National Development Mah Bow Tan said the HDB will launch 2,000 new small flats per year for 2009 and 2010 and 1,400 flats (studio apartments, two-room, three-room) in the first half of this year.

Some MPs have urged the HDB to faciliate the process of timely downgrading for those who genuinely need to do so to alleviate their financial woes and the government to provide more assistance for distressed homeowners.

Mr Mah told Parliament that HDB will provide distressed homeowners with additional loans to buy a smaller flat, but this is not a deviation from the usual policy of not offering a ‘downgrading loan’ as downgraders should have the cash from the sale of their previous house to buy a new flat.

HDB will also help those who are in financial woes source for suitable flats and if need be, buy directly in the open market and sell it to them so that they do not have to pay any cash-over-valuation. For those who cannot afford a smaller flat despite the help, HDB will consider renting a flat to them, Mr Mah said.

There is also an existing short-term assistance measure by HDB which provides temporary reduction or even deferment of loan repayment by up to six months for distressed homeowners. This gives them time to make adjustments to their lifestyle and make longer-term considerations.