Here’s the lift but there goes the view

Posted by luxuryasiahome on July 11, 2009

FOR some Eunos HDB residents, getting a lift that stops on every floor has been more of a nightmare than a dream come true.

They say that new lift shafts built on the outside of their blocks have robbed their flats of privacy and ventilation and blocked their views, as well as some light.

The external shafts being built under the Lift Upgrading Programme (LUP) affect 14 out of 116 units in each of three 13- and 17-storey blocks near the Geylang Serai market.

Blocks 411, 415 and 417 at Eunos Road 5 are U-shaped blocks combining two-storey maisonettes with single-storey corner units. This means that not every floor has a common corridor, and that is where the problem arises.

Last month, the small group of residents who have objected to the LUP since plans were first mooted in 2006 went so far as to ask that the lift shafts be torn down – even after the Housing Board had made several modifications to the design to address their complaints.

On Thursday, the HDB cited the Eunos example when it said that more such problems are likely to crop up as the LUP moves to other blocks across the island with unusual designs.

When the programme began in 2001, it said, the blocks involved were mostly slab-sided ones.

Providing lift upgrading was thus a straightforward affair of making existing lifts stop on every floor.

But since 2004, the LUP has been moving to blocks with more complex designs.

For example, there are about 180 maisonette-mixed blocks islandwide, at estates like Bishan, Bukit Batok, Bukit Panjang and Hougang, among others; and about 180 ‘half-landing blocks’ at places such as Sunset Way in Clementi and in Tampines.

These blocks present different challenges the HDB said, but it would work with residents to come up with solutions to problems, and will tweak its designs to address some of their concerns.

At Eunos, for example, the board made changes to the lift design before polling started because of residents’ feedback, said Mr Sng Cheng Keh, director of the HDB’s development and procurement department.

As a result, he said, the lift shafts are now positioned further away from the blocks – 6.3m, rather than the planned 5m.

More modifications may be in store: To allow more light and ventilation, the HDB is looking into replacing part of the length of brick wall linking the lift shaft to the corridor with aluminium fins instead, so residents of affected units do not look out onto a full brick wall.

Such fins have been used in lift upgrading in other HDB blocks. They also help protect residents’ privacy – the angle at which they are positioned blocks a direct view into a flat.

Despite the changes it plans, the HDB admits it is not possible to eliminate all inconveniences for affected units.

It can only reduce them, said Mr Sng, explaining that LUP solutions had to be ‘technically feasible, cost-effective and practical’.

For blocks with common corridors on just a few floors, for example, only the construction of an external lift shaft can ensure the lift stops on every floor.

ST checks at Eunos and two other estates with external shafts – Dakota Crescent near Old Airport Road, and Hougang – turned up mixed reactions to the new lifts.

But despite the complaints of some, other residents say a lift upgrade is worth it.

Take Eunos Block 415 resident Patrick Lim, 52, who lives on the 10th floor.

The sales executive said he had voted against the upgrading project because he felt construction would be messy.

Now he can see the positive side.

‘When it’s done, I don’t have to lug my golf bag down two flights of stairs.’

Homes at your service

Source : Straits Times – 11 Jul 2009

While the hotel industry has been hit by the economic downturn, serviced apartments – which come with their own kitchens, suiting professionals on short contracts who want a homely environment – are on a roll.

Two developments, totalling 204 rooms, have opened this year and two more with 675 rooms altogether will open within the next three years, all outside the city belt.

The latest to open is the 50-unit Fraser Place Fusionopolis located in the heart of Singapore’s thriving research and development scene at JTC Corporation’s Fusionopolis@one-north research hub at Buona Vista.

The serviced apartments, which are on levels 17 to 19 of the park’s ‘Symbosis’ Tower, opened last Wednesday and rates start from $6,300 a month.

The other serviced apartment development to open this year, in January, was the 154-unit Citadines Singapore Mount Sophia off Selegie Road, bringing to about 30 the number of such developments in Singapore.

Rates at Citadines start from $2,660 a week for a studio apartment.

Like Fraser Place Fusionopolis, the two upcoming developments see being located at business parks ideal for securing residents who want to live near their workplace.

The 370-room Park Avenue@Rochester is set to open in 2011 at one-north while the 305-room Park Avenue@Changi will open in 2012 at UE BizHub at Changi Business Park. UE BizHub has retail and business space, and a convention centre.

Serviced apartments are a popular choice with expatriates. Bigger than hotel rooms, they provide a home away from home, being fully furnished including a kitchen and coming with housekeeping services.

They differ from hotels in that the minimum stay is seven nights.

The new Fraser Place Fusionopolis certainly seems to have hit the right note with its target market.

Although it opened just several days ago, its general manager, Ms Tonya Khong, told Life! at the opening that it had already received many bookings. An earlier report on the opening said it had bookings that translated to a 60 per cent occupancy rate.

She is not worried about opening in a downturn. ‘There are no other serviced apartments in this area and we have a new market here,’ she says.

The development is targeted at researchers, academia and professionals who work nearby.

It is managed by Frasers Hospitality which has two other such properties in Singapore – Fraser Suites in River Valley and Fraser Place in Robertson Quay. Frasers Hospitality is the hospitality arm of Frasers Centrepoint, a subsidiary of Fraser and Neave.

The complex boasts the first all-loft residences in Singapore, with one-bedroom units ranging from 495 sq ft to 1,066 sq ft.

Its first guest is Swedish professor Jan Carlstedt-Duke, director of Medical School Project at Nanyang Technological University (NTU). He checked in last month even before it officially opened.

Prof Carlstedt-Duke, whose lease will end in December next year, says its location is ideal for him as his job requires him to travel between the NTU campus in Jurong, the nearby Ministry of Education and Tan Tock Seng Hospital in Moulmein.

Over at the other new kid on the serviced apartment block, Citadines Singapore Mount Sophia, Mr Gerald Lee, CEO of its owner Ascott Hospitality, says it stays ahead of the game by giving customers what they want.

‘In this current economic climate, residents are looking to get more value for their buck,’ he says. At Citadines, guests pay only for services that they want such as extra housekeeping services.

Occupancy rates at Citadines are now at about 90 per cent. Mr Lee adds that ‘the global slowdown has also brought opportunities for Citadines as business travellers become more cautious with their spending and look for options that give them greater value for their money and flexibility’.

One resident, Mr Kevin Ho, 41, who has leased a one-bedroom apartment, says he was attracted by its stylish and spacious look. The monthly rate for a one-bedroom executive apartment is $9,200.

The managing director at an investment bank, who is from Hong Kong, says: ‘I like the apartment’s minimalist look.’

Apart from a bedroom and wardrobe, his apartment has a sofa bed and a work desk in the living room.

Home away from home

As for the two upcoming serviced apartment projects, they are being developed by United Engineers and its managing director, Mr David Liew, says this new breed of guest-stay complex seeks to serve a particular business hub.

‘They can better cater to the needs of the hub dwellers or visitors, not just in terms of facilities and amenities, but also special packages relating to length and terms of stay.’

Overall, the serviced apartment sector here has an occupancy rate of about 75 to 80 per cent compared with 50 to 60 per cent for hotels.

The length of stay can vary from three months to a year or more.

While newer developments are opening away from the city area to meet new demands, it is the service factor that guests place a premium on, say those in the industry and guests themselves.

For example, the Pan Pacific Serviced Suites in Somerset Road prides itself on being the only serviced suites accommodation to offer ’round-the-clock personal assistants to provide residents local and reliable connections to the city, so that they may feel at home immediately’, says Mr Fabien Lindsay, its general manager. The 120-room complex opened in April last year and has an occupancy rate of over 80 per cent.

Singaporean housewife Sharon Wells has been living at Fraser Suites in River Valley with her husband, Mr Sultan Alfaheem, a senior vice-president of a petrol chemical company, for the past six years.

The couple, who are both in their 40s, have two school-going children. They moved into their three-bedroom penthouse when Mr Alfaheem was posted to Singapore from Abu Dhabi.

She likes that everything she needs, from the supermarket to the hair salon, is in the same building. She declines to say how much the apartment costs. But monthly rates for a three-bedroom apartment at Fraser Suites start from $14,500.

The couple had considered renting or buying an apartment but decided against it.

Ms Wells says: ‘If I need a lightbulb changed, I just pick up the phone and the apartment gets cleaned regularly. Where else can I get such convenient service?’

Developers market London homes here

Source : Business Times – 11 Jul 2009

DEVELOPERS are marketing London homes in Singapore. And by most accounts, they are not finding it difficult to find buyers.

A few weeks ago, Colliers launched a selected number of units in two London residential properties here, and all were snapped up. There were 23 Union Point units and 23 Dalston Square units, and they were bought at average prices of £250,000 (S$592,794) and £210,000 respectively.

And in May this year, Jones Lang Lasalle (JLL) launched Napier at West 3, its first development in London this year. Singapore was picked as the first stop for the launch of 86 units, and saw 18 sales.

To capitalise on the interest in London properties, more London residential properties will be launched in Singapore this weekend.

Savills will start marketing two projects in Singapore – Chevalier House in Knightsbridge, and Highbury Square in north London. Prices at Chevalier House start from £1.15 million for a one-bedroom apartment and go up to £5.75 million for a three-bedroom penthouse overlooking Harrods and Harvey Nichols. Homes at Highbury Square are relatively cheaper – one-bedroom apartments start from £275,000 while two-bedroom apartments will start from £375,000.

Colliers will also market two London developments this weekend. It will release 15 units in Draper’s Yard, where homes cost an average of £235,000 each. In addition, it will launch 32 units in 1010 Rochester, where prices start from £800,000 for a two-bedroom apartment.

Berkeley Homes (Urban Living) is also giving Singaporean purchasers the first worldwide opportunity to reserve a property at Ultima – the final phase of the popular Chelsea Bridge Wharf development – this weekend. The project will be marketed at a property showcase by agents King Sturge and DST International. Prices start from £345,000.

And JLL has also said that it has more London launches in the pipeline.

Marketing agents say that Singapore is a good location for international property launches because of the large pool of expatriates here and a well-travelled population.

Sellers report that both Singaporeans and foreigners buy their properties. At Union Point, for example, marketing agent Colliers said that half of the buyers were Malaysians who travelled to Singapore, while the other 50 per cent were made up of Singaporeans and expats based here. At Dalston Square, on the other hand, most of the buyers were Singaporeans investing in UK property for the first time.

Buyers at exhibitions have mostly been younger professionals buying UK property for the first time, said Ed Lewis, head of London new homes at Savills. But outside exhibition settings, the buyers appear more discerning and are targeting higher quality products in the prime areas.

‘Many buyers are motivated by the weakness in the London market, which is now improving. The weaker currency is also drawing buyers – particularly the trophy buyers,’ he said. ‘Others are buying with children in mind and for attractive yields.’

And Singapore is not alone – London properties are selling well in Hong Kong and Kuala Lumpur as well, analysts said. Mr Lewis said that it was difficult to provide actual numbers but his firm estimates that between the successful exhibitions and individual sales, there have been about 250 deals since the Easter weekend in mid-April. Most of these deals – some 60 per cent – were done in Hong Kong. Singapore accounted for another 35 per cent, while the remaining homes were sold in Kuala Lumpur.

Mr Lewis is currently on a tour of South-east Asia, advising investors on where they should – or shouldn’t – spend their money.

‘There have been huge price corrections in the London market which can give the impression that everything is a bargain,’ he said. ‘This is not always the case. While there are some bargains out there, there are also opportunities for wasting money, and the canny investor must differentiate between the two. Just because a property is cheap now, it does not mean it will be expensive in 25 years’ time. Chances are, in many non-established locations, it will still be cheap in 25 years’ time.’

Is there still trust in Reits?

Source : Business Times – 11 Jul 2009

THE Singapore real estate investment trust (S-Reit) sector has grown remarkably since the first Reit – CapitaMall Trust – was listed in July 2002. Between 2006 and 2008 alone, more than 13 Reits were listed, compared with only seven between 2002 and 2005.

Choices of Reits have also expanded. In 2005, investors could only choose between commercial (retail, office or mixed), industrial and logistics Reits. Today, they can find hospitality, healthcare and residential Reits. There are also Reits that own foreign assets.

S-Reit growth in 2006 was mainly driven by increasing speculative interest in the property sector after commercial rents started to rise strongly. The office rental index was up 30.3 per cent in 2006, compared with 12.7 per cent the year before. This was a stark contrast to a 5.6 per cent increase in the shop rental index in 2006. The median monthly rent for central office space at end-2006 was $6.24 per square foot (psf), compared with $4.24 psf in 2005.

Investors’ hunger for Reits grew dramatically. The market capitalisation of the Reit sector at the start of 2005 was $9.4 billion – but it hit $16.9 billion in June 2006. Furthermore, only one new Reit – Allco Reit, now known as Fraser Commercial Trust – was listed in the first half of 2006. The increased demand for Reits pushed their unit prices up and dividend yield down. Average dividend yield in January 2005 was around 6.5 per cent, compared with 5.6 per cent in June 2006. This together, with higher Sibor rates, squeezed dividend yield premiums – the difference between dividend yield and three-month Sibor rates – from 5.2 per cent in January 2005 to a low 1.9 per cent in June 2006.

Although office prices rose 17 per cent on the back of higher rents, the increase was more benign than the 30 per cent rise in rents. This resulted in an increase in median annualised rental yields of office properties from 8.1 per cent in 2005 to 9 per cent in 2006. Rental yields of shop space and industrial properties, on the other hand, remained at 7.9 per cent and 5.2 per cent respectively.

The combination of a lower cost of equities and higher rental yields spawned many new Reits between June 2006 and December 2007. Seven new Reits were listed in second half 2006 and another five in 2007. Reits’ assets under management (AUM) grew from $13.4 billion in 2005 to $23.2 billion in 2006. In 2008, AUM were $42.5 billion.

Given the increased competition, Reits started to enhance their yields with debt to attract investor interest. The average debt to total asset ratio of the Reit sector rose from 26.3 per cent in January 2006 to 30.7 per cent in June 2007. A few Reits even pushed this ratio above 50 per cent in June 2007.

Reit investors’ high hopes of continued price increases started to shake when the first sign of financial turmoil presented itself in July 2007 and Reit prices started to fall. The situation did not improve into 2008. Between June 2007 and December 2008, the S-Reit index fell more than 66 per cent, as opposed to 50 per cent drop in the Straits Times Index. Although Reit prices have recovered 16.8 per cent for the year, they are still 60.3 per cent lower than in June 2007.

High debt ratios employed by Reits became a concern as Reits started to signal that they would face challenges refinancing their loans – and even paying dividends. Loan-to-value ratios increased in 2008 as Reits revalued their assets downwards – adding more concerns over their survival. To improve the strength of their balance sheets, some Reits issued rights in 2008 and 2009.

There are, however, some positive developments from this debacle. First, dividend yield premiums have increased since July 2007. With lower prices, S-Reits now offer dividend yields of around 12.4 per cent, compared with around 7.3 per cent a year ago and 4 per cent in June 2007. Sibor rates have also fallen, from 2.7 per cent in June 2007, to the current 0.7 per cent. Dividend yield premium has thus improved to 11.9 per cent, from just 1.4 per cent two years ago.

Prices of Reits are also at more affordable levels now. For example, the prices of CapitaMall Trust, A-Reit and Mapletree Logistics Trust were at $1.40, $1.59 and $0.56 respectively as at June 30 this year – around half their prices in June 2007.

Most importantly, the good and bad Reits are now easier to differentiate. The lower ‘tide’ has exposed Reits that have bad assets and have been poorly managed – making investment decisions easier than two years ago.

Unfortunately, uncertainty still lurks in the sector. Although there are now signs that the economy is bottoming, economic recovery will probably be gradual at best. Furthermore, the Singapore economy is dependent on foreign demand, and therefore recovery will lag the developed nations.

Vacancy rates of offices and shops in March 2009 increased to 10.0 per cent and 6.6 per cent respectively from 7.7 per cent and 6.4 per cent a year earlier. Only industrial properties bucked the trend, with the vacancy rate falling from 7.6 per cent to 7 per cent.

Between March 2008 and 2009, rents for office space and industrial property were down 12.9 per cent and 6.5 per cent respectively, while shop space was up a marginal 0.5 per cent.

Even though developers have been holding back new projects, the chances of significantly higher rental and lower vacancy rates this year is not high. Reits may, therefore, have to reduce their dividends.

Reits do look attractive in the long term at current prices, but investors must choose carefully and diversify their investments accordingly. Here are a few important factors to consider:

A Reit’s ability to raise funds, especially in times of turmoil, will determine its ability to thrive and survive. This is an important factor. In good times, most Reits will enhance their yields through higher leverage, but only well-managed Reits will be able reduce this leverage in challenging times. Without this ability, badly managed Reits will find it difficult to refinance or raise sufficient equity to repay their loans, putting them in danger of liquidation.

The quality of assets is another important factor, and Reits that own properties beyond just Singapore would be a plus. Too much emphasis has been put on dividends and too little on assets. Investors must bear in mind that they are buying the underlying assets when investing in Reits – the dividends are the result of the ownership and management of the assets.

However, good assets can produce poor returns if poorly managed. The quality of the managers is therefore another important factor. Good managers will continuously enhance the yield of the assets and use an appropriate debt-equity mix at all times. A sudden fall in rental revenue, rental collection issues and below average rental yields are some signs of poor management. Such Reits should be avoided.

Last but not least, investors must check if a counter is a Reit, such as CapitaMall Trust, or a business trust, such as IndiaBulls Property Investment Trust. Business trusts and Reits are created to allow unit holders to receive dividend payments from operating cash flow instead of accounting profit. However, only Reits are required to pay 90 per cent of distributable income to unit holders. There is no such requirement for business trusts. Investors should therefore look closely at what they are picking, to ensure the counter they choose is in line with their investment intention.

The writer is vice-president, SIAS Research

Here’s the lift but there goes the view

Source : Straits Times – 11 Jul 2009

FOR some Eunos HDB residents, getting a lift that stops on every floor has been more of a nightmare than a dream come true.

They say that new lift shafts built on the outside of their blocks have robbed their flats of privacy and ventilation and blocked their views, as well as some light.

The external shafts being built under the Lift Upgrading Programme (LUP) affect 14 out of 116 units in each of three 13- and 17-storey blocks near the Geylang Serai market.

Blocks 411, 415 and 417 at Eunos Road 5 are U-shaped blocks combining two-storey maisonettes with single-storey corner units. This means that not every floor has a common corridor, and that is where the problem arises.

Last month, the small group of residents who have objected to the LUP since plans were first mooted in 2006 went so far as to ask that the lift shafts be torn down – even after the Housing Board had made several modifications to the design to address their complaints.

On Thursday, the HDB cited the Eunos example when it said that more such problems are likely to crop up as the LUP moves to other blocks across the island with unusual designs.

When the programme began in 2001, it said, the blocks involved were mostly slab-sided ones.

Providing lift upgrading was thus a straightforward affair of making existing lifts stop on every floor.

But since 2004, the LUP has been moving to blocks with more complex designs.

For example, there are about 180 maisonette-mixed blocks islandwide, at estates like Bishan, Bukit Batok, Bukit Panjang and Hougang, among others; and about 180 ‘half-landing blocks’ at places such as Sunset Way in Clementi and in Tampines.

These blocks present different challenges the HDB said, but it would work with residents to come up with solutions to problems, and will tweak its designs to address some of their concerns.

At Eunos, for example, the board made changes to the lift design before polling started because of residents’ feedback, said Mr Sng Cheng Keh, director of the HDB’s development and procurement department.

As a result, he said, the lift shafts are now positioned further away from the blocks – 6.3m, rather than the planned 5m.

More modifications may be in store: To allow more light and ventilation, the HDB is looking into replacing part of the length of brick wall linking the lift shaft to the corridor with aluminium fins instead, so residents of affected units do not look out onto a full brick wall.

Such fins have been used in lift upgrading in other HDB blocks. They also help protect residents’ privacy – the angle at which they are positioned blocks a direct view into a flat.

Despite the changes it plans, the HDB admits it is not possible to eliminate all inconveniences for affected units.

It can only reduce them, said Mr Sng, explaining that LUP solutions had to be ‘technically feasible, cost-effective and practical’.

For blocks with common corridors on just a few floors, for example, only the construction of an external lift shaft can ensure the lift stops on every floor.

ST checks at Eunos and two other estates with external shafts – Dakota Crescent near Old Airport Road, and Hougang – turned up mixed reactions to the new lifts.

But despite the complaints of some, other residents say a lift upgrade is worth it.

Take Eunos Block 415 resident Patrick Lim, 52, who lives on the 10th floor.

The sales executive said he had voted against the upgrading project because he felt construction would be messy.

Now he can see the positive side.

‘When it’s done, I don’t have to lug my golf bag down two flights of stairs.’

Homes at your service

Source : Straits Times – 11 Jul 2009

While the hotel industry has been hit by the economic downturn, serviced apartments – which come with their own kitchens, suiting professionals on short contracts who want a homely environment – are on a roll.

Two developments, totalling 204 rooms, have opened this year and two more with 675 rooms altogether will open within the next three years, all outside the city belt.

The latest to open is the 50-unit Fraser Place Fusionopolis located in the heart of Singapore’s thriving research and development scene at JTC Corporation’s Fusionopolis@one-north research hub at Buona Vista.

The serviced apartments, which are on levels 17 to 19 of the park’s ‘Symbosis’ Tower, opened last Wednesday and rates start from $6,300 a month.

The other serviced apartment development to open this year, in January, was the 154-unit Citadines Singapore Mount Sophia off Selegie Road, bringing to about 30 the number of such developments in Singapore.

Rates at Citadines start from $2,660 a week for a studio apartment.

Like Fraser Place Fusionopolis, the two upcoming developments see being located at business parks ideal for securing residents who want to live near their workplace.

The 370-room Park Avenue@Rochester is set to open in 2011 at one-north while the 305-room Park Avenue@Changi will open in 2012 at UE BizHub at Changi Business Park. UE BizHub has retail and business space, and a convention centre.

Serviced apartments are a popular choice with expatriates. Bigger than hotel rooms, they provide a home away from home, being fully furnished including a kitchen and coming with housekeeping services.

They differ from hotels in that the minimum stay is seven nights.

The new Fraser Place Fusionopolis certainly seems to have hit the right note with its target market.

Although it opened just several days ago, its general manager, Ms Tonya Khong, told Life! at the opening that it had already received many bookings. An earlier report on the opening said it had bookings that translated to a 60 per cent occupancy rate.

She is not worried about opening in a downturn. ‘There are no other serviced apartments in this area and we have a new market here,’ she says.

The development is targeted at researchers, academia and professionals who work nearby.

It is managed by Frasers Hospitality which has two other such properties in Singapore – Fraser Suites in River Valley and Fraser Place in Robertson Quay. Frasers Hospitality is the hospitality arm of Frasers Centrepoint, a subsidiary of Fraser and Neave.

The complex boasts the first all-loft residences in Singapore, with one-bedroom units ranging from 495 sq ft to 1,066 sq ft.

Its first guest is Swedish professor Jan Carlstedt-Duke, director of Medical School Project at Nanyang Technological University (NTU). He checked in last month even before it officially opened.

Prof Carlstedt-Duke, whose lease will end in December next year, says its location is ideal for him as his job requires him to travel between the NTU campus in Jurong, the nearby Ministry of Education and Tan Tock Seng Hospital in Moulmein.

Over at the other new kid on the serviced apartment block, Citadines Singapore Mount Sophia, Mr Gerald Lee, CEO of its owner Ascott Hospitality, says it stays ahead of the game by giving customers what they want.

‘In this current economic climate, residents are looking to get more value for their buck,’ he says. At Citadines, guests pay only for services that they want such as extra housekeeping services.

Occupancy rates at Citadines are now at about 90 per cent. Mr Lee adds that ‘the global slowdown has also brought opportunities for Citadines as business travellers become more cautious with their spending and look for options that give them greater value for their money and flexibility’.

One resident, Mr Kevin Ho, 41, who has leased a one-bedroom apartment, says he was attracted by its stylish and spacious look. The monthly rate for a one-bedroom executive apartment is $9,200.

The managing director at an investment bank, who is from Hong Kong, says: ‘I like the apartment’s minimalist look.’

Apart from a bedroom and wardrobe, his apartment has a sofa bed and a work desk in the living room.

Home away from home

As for the two upcoming serviced apartment projects, they are being developed by United Engineers and its managing director, Mr David Liew, says this new breed of guest-stay complex seeks to serve a particular business hub.

‘They can better cater to the needs of the hub dwellers or visitors, not just in terms of facilities and amenities, but also special packages relating to length and terms of stay.’

Overall, the serviced apartment sector here has an occupancy rate of about 75 to 80 per cent compared with 50 to 60 per cent for hotels.

The length of stay can vary from three months to a year or more.

While newer developments are opening away from the city area to meet new demands, it is the service factor that guests place a premium on, say those in the industry and guests themselves.

For example, the Pan Pacific Serviced Suites in Somerset Road prides itself on being the only serviced suites accommodation to offer ’round-the-clock personal assistants to provide residents local and reliable connections to the city, so that they may feel at home immediately’, says Mr Fabien Lindsay, its general manager. The 120-room complex opened in April last year and has an occupancy rate of over 80 per cent.

Singaporean housewife Sharon Wells has been living at Fraser Suites in River Valley with her husband, Mr Sultan Alfaheem, a senior vice-president of a petrol chemical company, for the past six years.

The couple, who are both in their 40s, have two school-going children. They moved into their three-bedroom penthouse when Mr Alfaheem was posted to Singapore from Abu Dhabi.

She likes that everything she needs, from the supermarket to the hair salon, is in the same building. She declines to say how much the apartment costs. But monthly rates for a three-bedroom apartment at Fraser Suites start from $14,500.

The couple had considered renting or buying an apartment but decided against it.

Ms Wells says: ‘If I need a lightbulb changed, I just pick up the phone and the apartment gets cleaned regularly. Where else can I get such convenient service?’

Developers market London homes here

Source : Business Times – 11 Jul 2009

DEVELOPERS are marketing London homes in Singapore. And by most accounts, they are not finding it difficult to find buyers.

A few weeks ago, Colliers launched a selected number of units in two London residential properties here, and all were snapped up. There were 23 Union Point units and 23 Dalston Square units, and they were bought at average prices of £250,000 (S$592,794) and £210,000 respectively.

And in May this year, Jones Lang Lasalle (JLL) launched Napier at West 3, its first development in London this year. Singapore was picked as the first stop for the launch of 86 units, and saw 18 sales.

To capitalise on the interest in London properties, more London residential properties will be launched in Singapore this weekend.

Savills will start marketing two projects in Singapore – Chevalier House in Knightsbridge, and Highbury Square in north London. Prices at Chevalier House start from £1.15 million for a one-bedroom apartment and go up to £5.75 million for a three-bedroom penthouse overlooking Harrods and Harvey Nichols. Homes at Highbury Square are relatively cheaper – one-bedroom apartments start from £275,000 while two-bedroom apartments will start from £375,000.

Colliers will also market two London developments this weekend. It will release 15 units in Draper’s Yard, where homes cost an average of £235,000 each. In addition, it will launch 32 units in 1010 Rochester, where prices start from £800,000 for a two-bedroom apartment.

Berkeley Homes (Urban Living) is also giving Singaporean purchasers the first worldwide opportunity to reserve a property at Ultima – the final phase of the popular Chelsea Bridge Wharf development – this weekend. The project will be marketed at a property showcase by agents King Sturge and DST International. Prices start from £345,000.

And JLL has also said that it has more London launches in the pipeline.

Marketing agents say that Singapore is a good location for international property launches because of the large pool of expatriates here and a well-travelled population.

Sellers report that both Singaporeans and foreigners buy their properties. At Union Point, for example, marketing agent Colliers said that half of the buyers were Malaysians who travelled to Singapore, while the other 50 per cent were made up of Singaporeans and expats based here. At Dalston Square, on the other hand, most of the buyers were Singaporeans investing in UK property for the first time.

Buyers at exhibitions have mostly been younger professionals buying UK property for the first time, said Ed Lewis, head of London new homes at Savills. But outside exhibition settings, the buyers appear more discerning and are targeting higher quality products in the prime areas.

‘Many buyers are motivated by the weakness in the London market, which is now improving. The weaker currency is also drawing buyers – particularly the trophy buyers,’ he said. ‘Others are buying with children in mind and for attractive yields.’

And Singapore is not alone – London properties are selling well in Hong Kong and Kuala Lumpur as well, analysts said. Mr Lewis said that it was difficult to provide actual numbers but his firm estimates that between the successful exhibitions and individual sales, there have been about 250 deals since the Easter weekend in mid-April. Most of these deals – some 60 per cent – were done in Hong Kong. Singapore accounted for another 35 per cent, while the remaining homes were sold in Kuala Lumpur.

Mr Lewis is currently on a tour of South-east Asia, advising investors on where they should – or shouldn’t – spend their money.

‘There have been huge price corrections in the London market which can give the impression that everything is a bargain,’ he said. ‘This is not always the case. While there are some bargains out there, there are also opportunities for wasting money, and the canny investor must differentiate between the two. Just because a property is cheap now, it does not mean it will be expensive in 25 years’ time. Chances are, in many non-established locations, it will still be cheap in 25 years’ time.’

Is there still trust in Reits?

Source : Business Times – 11 Jul 2009

THE Singapore real estate investment trust (S-Reit) sector has grown remarkably since the first Reit – CapitaMall Trust – was listed in July 2002. Between 2006 and 2008 alone, more than 13 Reits were listed, compared with only seven between 2002 and 2005.

Choices of Reits have also expanded. In 2005, investors could only choose between commercial (retail, office or mixed), industrial and logistics Reits. Today, they can find hospitality, healthcare and residential Reits. There are also Reits that own foreign assets.

S-Reit growth in 2006 was mainly driven by increasing speculative interest in the property sector after commercial rents started to rise strongly. The office rental index was up 30.3 per cent in 2006, compared with 12.7 per cent the year before. This was a stark contrast to a 5.6 per cent increase in the shop rental index in 2006. The median monthly rent for central office space at end-2006 was $6.24 per square foot (psf), compared with $4.24 psf in 2005.

Investors’ hunger for Reits grew dramatically. The market capitalisation of the Reit sector at the start of 2005 was $9.4 billion – but it hit $16.9 billion in June 2006. Furthermore, only one new Reit – Allco Reit, now known as Fraser Commercial Trust – was listed in the first half of 2006. The increased demand for Reits pushed their unit prices up and dividend yield down. Average dividend yield in January 2005 was around 6.5 per cent, compared with 5.6 per cent in June 2006. This together, with higher Sibor rates, squeezed dividend yield premiums – the difference between dividend yield and three-month Sibor rates – from 5.2 per cent in January 2005 to a low 1.9 per cent in June 2006.

Although office prices rose 17 per cent on the back of higher rents, the increase was more benign than the 30 per cent rise in rents. This resulted in an increase in median annualised rental yields of office properties from 8.1 per cent in 2005 to 9 per cent in 2006. Rental yields of shop space and industrial properties, on the other hand, remained at 7.9 per cent and 5.2 per cent respectively.

The combination of a lower cost of equities and higher rental yields spawned many new Reits between June 2006 and December 2007. Seven new Reits were listed in second half 2006 and another five in 2007. Reits’ assets under management (AUM) grew from $13.4 billion in 2005 to $23.2 billion in 2006. In 2008, AUM were $42.5 billion.

Given the increased competition, Reits started to enhance their yields with debt to attract investor interest. The average debt to total asset ratio of the Reit sector rose from 26.3 per cent in January 2006 to 30.7 per cent in June 2007. A few Reits even pushed this ratio above 50 per cent in June 2007.

Reit investors’ high hopes of continued price increases started to shake when the first sign of financial turmoil presented itself in July 2007 and Reit prices started to fall. The situation did not improve into 2008. Between June 2007 and December 2008, the S-Reit index fell more than 66 per cent, as opposed to 50 per cent drop in the Straits Times Index. Although Reit prices have recovered 16.8 per cent for the year, they are still 60.3 per cent lower than in June 2007.

High debt ratios employed by Reits became a concern as Reits started to signal that they would face challenges refinancing their loans – and even paying dividends. Loan-to-value ratios increased in 2008 as Reits revalued their assets downwards – adding more concerns over their survival. To improve the strength of their balance sheets, some Reits issued rights in 2008 and 2009.

There are, however, some positive developments from this debacle. First, dividend yield premiums have increased since July 2007. With lower prices, S-Reits now offer dividend yields of around 12.4 per cent, compared with around 7.3 per cent a year ago and 4 per cent in June 2007. Sibor rates have also fallen, from 2.7 per cent in June 2007, to the current 0.7 per cent. Dividend yield premium has thus improved to 11.9 per cent, from just 1.4 per cent two years ago.

Prices of Reits are also at more affordable levels now. For example, the prices of CapitaMall Trust, A-Reit and Mapletree Logistics Trust were at $1.40, $1.59 and $0.56 respectively as at June 30 this year – around half their prices in June 2007.

Most importantly, the good and bad Reits are now easier to differentiate. The lower ‘tide’ has exposed Reits that have bad assets and have been poorly managed – making investment decisions easier than two years ago.

Unfortunately, uncertainty still lurks in the sector. Although there are now signs that the economy is bottoming, economic recovery will probably be gradual at best. Furthermore, the Singapore economy is dependent on foreign demand, and therefore recovery will lag the developed nations.

Vacancy rates of offices and shops in March 2009 increased to 10.0 per cent and 6.6 per cent respectively from 7.7 per cent and 6.4 per cent a year earlier. Only industrial properties bucked the trend, with the vacancy rate falling from 7.6 per cent to 7 per cent.

Between March 2008 and 2009, rents for office space and industrial property were down 12.9 per cent and 6.5 per cent respectively, while shop space was up a marginal 0.5 per cent.

Even though developers have been holding back new projects, the chances of significantly higher rental and lower vacancy rates this year is not high. Reits may, therefore, have to reduce their dividends.

Reits do look attractive in the long term at current prices, but investors must choose carefully and diversify their investments accordingly. Here are a few important factors to consider:

A Reit’s ability to raise funds, especially in times of turmoil, will determine its ability to thrive and survive. This is an important factor. In good times, most Reits will enhance their yields through higher leverage, but only well-managed Reits will be able reduce this leverage in challenging times. Without this ability, badly managed Reits will find it difficult to refinance or raise sufficient equity to repay their loans, putting them in danger of liquidation.

The quality of assets is another important factor, and Reits that own properties beyond just Singapore would be a plus. Too much emphasis has been put on dividends and too little on assets. Investors must bear in mind that they are buying the underlying assets when investing in Reits – the dividends are the result of the ownership and management of the assets.

However, good assets can produce poor returns if poorly managed. The quality of the managers is therefore another important factor. Good managers will continuously enhance the yield of the assets and use an appropriate debt-equity mix at all times. A sudden fall in rental revenue, rental collection issues and below average rental yields are some signs of poor management. Such Reits should be avoided.

Last but not least, investors must check if a counter is a Reit, such as CapitaMall Trust, or a business trust, such as IndiaBulls Property Investment Trust. Business trusts and Reits are created to allow unit holders to receive dividend payments from operating cash flow instead of accounting profit. However, only Reits are required to pay 90 per cent of distributable income to unit holders. There is no such requirement for business trusts. Investors should therefore look closely at what they are picking, to ensure the counter they choose is in line with their investment intention.

The writer is vice-president, SIAS Research

Strong response from buyers for 2 new condos in eastern suburbs

Source : Channel NewsAsia – 11 Jul 2009

Private home buyers remain unfazed despite the global economic downturn and the government’s recent proposal to tax speculators who sell more than one property within a four-year period.

Freehold condominium “The Gale” in Loyang has certainly caused quite a storm.

Prices average S$700 per square foot and so far, half its 330 units have been snapped up.

It is an encouraging sign for developer Hong Leong Group, which attributes the response to pent-up demand for freehold properties in the area.

Demand is just as strong at the higher-priced, 99-year leasehold “Silversea” at Marine Parade.

Prices for the 380-unit condo start at S$1,300 per square foot and so far, 40 per cent of its 80 preview units have been sold.

However, compared to the property frenzy of 2007, developers say that buyers are displaying more caution this time.

Renovation works: Current HDB rules may not be effective

Source : Straits Times – 10 Jul 2009

THE Housing Board’s reply on Monday (’Noisy works: HDB rules safeguard residents’ interest’) to Mr Tay Xiong Sheng’s letter (’Levy an inconvenience fee that can be given to neighbours who bear the brunt of the noise’, July 2) did not address the crux of Mr Tay’s point.

Current rules and guidelines may have solved noise pollution arising from renovation work previously, but not these days. Previously, renovation work was less elaborate and shorter in duration because flats were new and did not need any excavation of concrete cement to lay new flooring.

The machine required to excavate cement generates deafening noise and the work usually lasts for three days with breaks only at lunchtime, and can go beyond 5pm at times.

I appeal not only to the Ministry of National Development, but also to the Ministry of the Environment and Water Resources as well as Members of Parliament, to study the problem.

The noise level is unbearable enough for those who are awake, but what about those who work shifts and return in the morning to sleep?

Mr Tay was understating his point about compensating neighbouring units affected by a flat owner’s renovation. In fact, an entire block is usually as badly affected.

One answer is to have parquet flooring in HDB flats, as parquet is usually made of teak wood and is very durable.

It will also produce less noise when one moves furniture. New or old lessees who want to do flooring should be allowed to change only to parquet.

We are temporarily enjoying some peace as the property market is now cool. When it was sizzling, there were several renovations done in my block in a year.

Renovation work on one unit took four to five months to complete and the owners did not make many friends when they moved in.

My point is that the key to taming noise pollution, and so ensuring quality of life for heartland dwellers, lies with the effectiveness of the HDB’s regulations.

Lau Kee Heng

Construction site din within limits

Source : Straits Times – 10 Jul 2009

I REFER to the letter by Dr Mei Yee Choy, ‘Non-stop din from port construction site’ (July 2).

All construction sites are required to abide by permissible noise limits set by the National Environment Agency, which vary during different periods of the day.

Stricter limits are imposed at night, on Sundays and public holidays, and in areas that are more sensitive to noise disturbance such as hospitals, schools and residential premises.

Construction companies are required to take noise abatement measures to comply with these noise limits.

The worksite at Pasir Panjang Terminal is monitored around the clock to ensure compliance with the maximum permissible construction noise limits.

We have investigated Dr Mei’s noise complaints against this worksite over the past year and the readings from the noise meter show that the contractor has been operating within the permissible noise limits to date.

Tan Quee Hong
Director, Pollution Control Department
National Environment Agency

Construction site din within limits

Source : Straits Times – 10 Jul 2009

I REFER to the letter by Dr Mei Yee Choy, ‘Non-stop din from port construction site’ (July 2).

All construction sites are required to abide by permissible noise limits set by the National Environment Agency, which vary during different periods of the day.

Stricter limits are imposed at night, on Sundays and public holidays, and in areas that are more sensitive to noise disturbance such as hospitals, schools and residential premises.

Construction companies are required to take noise abatement measures to comply with these noise limits.

The worksite at Pasir Panjang Terminal is monitored around the clock to ensure compliance with the maximum permissible construction noise limits.

We have investigated Dr Mei’s noise complaints against this worksite over the past year and the readings from the noise meter show that the contractor has been operating within the permissible noise limits to date.

Tan Quee Hong
Director, Pollution Control Department
National Environment Agency

It is not to penalise investors: Govt

Source : Straits Times – 10 Jul 2009

THE proposal to clarify the law on taxing profits from property sales is not a backdoor attempt to impose a capital gains tax or a pre-emptive strike against speculators.

The clarification from the Ministry of Finance (MOF) yesterday came after two days of confusion and disquiet over proposals to amend the Income Tax Act.

Concerns among property investors and analysts helped to send real estate shares plunging on Wednesday, but yesterday’s statement from the ministry sparked a stock rebound.

The MOF said the proposed change is aimed at ensuring that investors are not taxed on any gains made if they do not sell property frequently. It proposes that anyone who sells only one property in any four-year period will not be taxed on any profit. If it becomes law next January, it will provide certainty for owners. At present, they cannot be sure if they will be taxed on any gains, even if they have held the property for four years or more.

The proposal was made in response to public feedback over the years demanding more certainty over the tax treatment property-owning individuals might face, said the MOF.

It is believed to have arrived at the four-year timeframe, after studying the legal precedents on taxing property sale gains over the years.

The proposed tax change does not mean tougher rules in income tax policy for individuals who sell their properties.

Instead, the only proposed change involves assuring individuals who do not sell properties frequently that they will not be taxed on a real estate gain.

The ministry said the proposed change is also not an anti-speculation measure. It does not mean that individuals who have sold more than one property within a four-year period will automatically be taxed.

‘There is no change to the current and longstanding income tax treatment in this regard. Whether an individual who sells properties more frequently is subject to income tax depends on the facts and circumstances of each case,’ the ministry said.

It is believed that there are fewer than 100 instances each year where a property seller is deemed to be a trader and needs to pay tax on gains.

And unlike many countries, Singapore does not have a capital gains tax, but profits from selling a property can be taxed at the appropriate income tax rates if the Inland Revenue Authority of Singapore (Iras) deems the seller to be a trader.

Iras uses various yardsticks to determine if a seller is a trader. These include the circumstances leading to the sale, how long the individual has held the property and how frequently he has sold properties in the past.

The Finance Ministry also clarified that individuals will still not be required to report to Iras every time they sell a property.

‘Iras has always conducted its own audits of property transactions for possible cases of assessable income,’ it said.

Market experts welcomed the Government’s move to clear the air on the proposed tax change.

‘Individuals can take comfort that if they sell more than one property within a four-year period, this would not automatically subject them to income tax,’ said Mr Owi Kek Hean, KPMG’s head of tax services.

‘The statement removed any lingering misgivings investors might have over the proposed tax changes. They can go back to business as usual,’ said Mr Tan Tiong Cheng, chairman of property consultant Knight Frank.

The stock market also heaved a sigh of relief, as the statement quelled earlier fears raised by analysts that the proposed tax change might be a disguised move to impose a capital gains tax.

Property giant City Developments rose 5.5 per cent, while CapitaLand gained 3.5 per cent, following Wednesday’s sell-off when investors had reacted badly as news on the proposal broke.

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NO CHANGE to current and longstanding income tax treatment for individuals who sell properties frequently
NO NEED for individuals to report to Iras every time they sell a property
NO MOVE to impose a capital gains tax. Only those sellers deemed by Iras to be traders will be taxed

Nomura still cautious on Singapore property stocks

Source : Business Times – 10 Jul 2009

WHEN it comes to Asian property stocks, buy in China, take profit in Singapore and be selective in Hong Kong and India, Nomura Research is advising investors.

The strength of Asian property stocks was one of the big surprises in the first half of 2009, analysts said at the Nomura Asia Equity Forum yesterday.

‘Asian property stocks have risen 55 per cent year to date and rebounded 131 per cent from the 2008-2009 trough, but remain 48 per cent below their 2007-2008 peaks,’ Nomura said in a report.

But the fundamentals vary from market to market, the firm said. For Singapore, the recent rally in the shares of developers is simply ‘too far, too fast ahead of supporting fundamentals’, said analyst Tony Darwell.

‘Broader issues of rising inventory, weak residential leasing demand and markedly lower rents will likely weigh on underlying asset prices,’ he said.

Right now, investors have priced a 20 per cent-plus rise in home prices over the next 12-18 months into developers’ shares, he said. These expectations are ‘premature’.

Nomura remains bearish on Singapore developers, with ‘reduce’ calls on CapitaLand, City Developments and Keppel Land.

But it has a ‘buy’ call on CapitaLand’s office trust CapitaCommercial Trust (CCT), despite its overall bearish view on Singapore’s office market. This is because CCT’s management has shown it is able to contain the trust’s portfolio vacancy – which was a low 2.3 per cent at end-April after a difficult Q1 leasing market, Nomura said.

It also said Asian markets that have done better than expected include China residential, Hong Kong residential and Singapore mass residential.

Segments that have performed worse than expected include Hong Kong office vacancy, Singapore housing rents, Singapore offices and Singapore industrial.

URA launches hotel site at New Bridge Road

Source : Business Times – 10 Jul 2009

THE Urban Redevelopment Authority (URA) yesterday launched a public tender for a hotel site in New Bridge Road.

The 0.45 ha site, which went on the reserve list in April 2007, was made available after a developer triggered its release with a $43.9 million bid last month.

The site has a maximum permissible gross floor area of 168,853 sq ft, which means the trigger price equates to $260 per sq ft. But analysts say it could fetch more than $300 psf as interest seems to be returning to small development sites with good attributes.

Last month, a government tender for a small hotel site on Short Street closed with 14 valid bids received. The number of bids – 15, including one judged invalid because it was below the minimum bid price – is among the highest in a government land sale tender.

‘Small sites have been quite well-received recently,’ said Cushman & Wakefield managing director Donald Han, citing the Short Street tender as an example.

The New Bridge Road site is in the Chinatown historic district, a popular tourist area with many historic, cultural and architectural attractions.

Govt clears air over tax on property gains

Source : Business Times – 10 Jul 2009

Has the market worked up a storm in a teacup over a suggested change to income tax laws on gains from property sales? Keen to quell rumours about an anti-speculation drive, the Ministry of Finance (MOF) clarified yesterday that the proposal is unlikely to lead to more individuals being taxed.

Still, some industry watchers believe that the potential change is enough to worry property investors – many of whom have returned to the market only recently.

Currently, property sellers do not pay tax on gains unless the Inland Revenue Authority of Singapore (IRAS) sees them as traders and treats the gains as income. The IRAS makes its decision on a case-by-case basis, considering factors such as why the properties were sold, how long the sellers owned them and how frequently the sellers transacted properties in the past.

These factors are derived from case law and are not clear-cut. According to MOF’s statement, just ‘a small number of individuals’ have been taxed on gains from property sales in the past.

There are individuals who want greater clarity on whether their gains will be taxed, MOF said. Responding to feedback, it proposed last month a condition that would guarantee no tax: An individual who sells a property on or after Jan 1, 2010 will not be taxed on the gains if he has not sold any other property in the previous four years.

This is actually ‘a relaxation of income tax treatment aimed at giving certainty of non-taxation to individuals who do not sell properties frequently’, MOF explained.

The proposal does not mean that those who sold more than one property within a four-year period will definitely be taxed on the gains. In line with existing arrangements, IRAS will still assess these cases individually. ‘There is no change to the current and long-standing income tax treatment in this regard,’ MOF pointed out.

MOF did not reveal the exact number of individuals who have been taxed on gains from property sales. But it said in an email to BT: ‘If the proposed change is implemented, MOF does not expect the number of cases to increase. This is because the change does not involve a tightening of the rules.’

In fact, ‘the number of cases may fall if all things remain constant’ after the change, it says.

Rumours that the government was trying to curb speculation in the property market gained ground after news of the potential change got round. Property sales have been buoyant since February this year, and selling prices in some projects are said to have risen by a few per cent. Some market watchers attributed the improvement in part to the return of speculators.

In its statement, MOF emphasised that the proposed change is not an anti-speculation measure. It also reiterated that Singapore does not have a capital gains tax.

MOF’s clarification has soothed the market somewhat. On Wednesday, fear that investors could exit the property market and perhaps confusion over the proposal had pushed prices of several property counters down. The selling pressure eased notably yesterday. City Developments, for instance, gained 43 cents to close at $8.31, while CapitaLand rose 12 cents to $3.50.

Despite the official reassurance, there are still nagging worries that the potential change to income tax laws could hurt investor sentiment, particularly in the prime property sectors.

‘Demand for mass-market homes should hold, backed by HDB upgraders, while mid to high-end segments may experience slower take-ups from reduced speculative interest,’ said AmFraser Securities analyst Lau Wei Chong in a note yesterday.

There are also industry watchers who stand by the anti-speculation theory. ‘We remain believers of the idea that the government may be sending out a signal through this proposal to cool property transactions, especially in the high-end,’ said CIMB analyst Donald Chua in a note.

To curb speculation in the property market in 1996, the government had imposed income tax on gains which individuals made from selling properties within three years of purchase. It lifted the rule in 2001.

No sign of excessive speculation in private property: Mah

Source : Straits Times – 10 Jul 2009

THE recent spike in private property sales is being monitored by the Government but there has been no sign of excessive speculation, said National Development Minister Mah Bow Tan yesterday.

Mr Mah said ’speculation is always part and parcel of any market’.

‘Whether there’s excessive speculation or not, that is something we have to look at and watch out for.

‘So far, anecdotally, we don’t see any. But if there is, we will take the appropriate action,’ added the minister, who was speaking on the sidelines of an HDB event.

The private property market kicked back into life in February after a sluggish 2008 that saw home prices and sales volume plunge on the back of the global economic recession.

The surge in activity, primarily supported by the healthy sales of private suburban homes, has helped stem the slide in private property prices.

Recent flash figures from the Urban Redevelopment Authority show prices fell 5.9 per cent from April to last month, following a record 14.1 per cent slide in the first quarter.

Mr Mah yesterday acknowledged the spike in activity, but added that prices have come down some 25 per cent over the last two to three quarters.

‘I guess some of this increase in take-up rate is due to the property prices coming down. So whether this will be sustainable, I think it’s really hard to tell.’

Sustainability will depend on two factors – sentiment and fundamentals, he added.

How the public perceive the health of the local and global economy will be crucial as will various factors, such as the supply, take-up rate and transacted prices in the private market over the coming months.

As far as the Government is concerned, ‘our main interest is to make sure that the property market is an efficient one’, said Mr Mah.

‘By that, I mean that it functions well, and prices are more or less in line with economic fundamentals.’

The Government has released information on how much supply is coming onto the market, the transacted prices and how many units have been sold on the deferred payment scheme.

This gives buyers complete information, rather than to have reports of high prices alone, he said.

‘For example, there are about over 40,000 units coming onto the market in the next three or four years – I think people must know that.’

The Government is also monitoring the market and will adjust the supply through its land sales programme.

‘The objective is to keep the market efficient and (to do so), you need to give timely, accurate and comprehensive information to the public,’ said Mr Mah.

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KEEPING WATCH

‘Whether there’s excessive speculation or not, that is something we have to look at and watch out for. So far, anecdotally, we don’t see any. But if there is, we will take the appropriate action.’ – National Development Minister Mah Bow Tan

Draft income tax (admendment) bill 2009

Source : Today – 10 Jul 2009

Proposed change under spotlight:

Individuals who sell a property on or after Jan 1, 2010 will automatically not be subject to income tax, if he has not sold other properties in the previous four years. Even if he has, Iras will determine if a tax on income should be levied, just like existing practice.

What the situation is now:

When an individual sells a property for a profit, Iras decides if the gain is income in nature based on the facts of the sale. Factors include circumstances leading to sale, how long the individual held the property, how frequently he was selling properties in the past.

Intent of proposed change:

To provide certainty of non-income-taxation to individuals who sell a property.

Unintended effect:

Perceived to be an anti-speculation measure by some dampened market sentiment.

Delay in opening of Marina Bay Sands could potentially mean big losses

Source : Channel NewsAsia – 10 Jul 2009

The delay in the opening of Marina Bay Sands integrated resort could potentially mean millions of dollars in losses.

Analysts say that it is not just the integrated resort that stands to lose, but Singapore could potentially see lower tourism receipts as a result.

The opening of Marina Bay Sands at year-end was seen as one of the highlights in Singapore’s tourism calendar, in what has been a dismal year of falling visitor arrivals so far. But that has now been pushed back by a few months to early 2010.

While it is hard to pinpoint an exact dollar value for potential losses, some industry-watchers say it could go into millions.

Sands Bethlehem, for example, which has just opened in Pennsylvania on May 22, made US$5.9 million in its first full week of business alone.

But there is also the cost in terms of tourism revenue for Singapore.

Jonathan Galaviz, gaming analyst and partner at Globalysis Ltd, said: “There is a certain amount of economic loss that the Singapore government needs to be looking at as it relates to two things.

“One is the original contract that they made with the IR owners and operators as it relates to the construction timeline that they promised in their original proposal to the government.

“And second, what is the loss of tourism visitation on a month to month basis every month that the IR is not open or not 100 per cent open?”

H P Loi, chief executive officer of the Tourism Management Institute of Singapore, said: “Even if they are to open in first part of 2010, not all the facilities will be up… the perception of travellers might be ‘I will wait for whole resort to open, then I will come’.”

But some also note that the year-end is a low season for the conventions sector.

Loi said: “The November-December period – convention business is usually on the lower side because a lot of companies are closed for the holiday season. So even if you open in November-December, big conventions won’t come in yet.”

The government says it is currently in talks with Sands on contractual obligations but is hopeful of a good outcome.

Market watchers say that with both integrated resorts now trying to rush to possibly open before the important Lunar New Year holiday period in February next year, the country as a whole can have a more integrated approach towards marketing both resorts to the region – especially the China market, whose arrival figures into Singapore have been slipping in recent months.

Act to curb current hype in property market

Source : Channel NewsAsia – 10 Jul 2009

THE property market is now being hyped up to the point where a good minority are goaded into panic over escalating prices. There is also a play on phantom sales and resales advertised at exaggerated prices.

What is required now is a law that clearly prohibits sub-sales until legal completion. Another way is to remove deferred payment altogether. A third is to bar developers from marketing before at least 33 per cent of the works are completed and increase the down payment to at least 20 per cent.

A further means is to control developers and property agents. This will remove the current hype in the market and soften a sub-prime crisis, which seems imminent.

In the current scenario, a meltdown can be softened only with regulatory measures. Capital gains tax is not an effective instrument, though it would have some minor impact.

K. Rajagopalan

Source : Straits Times – 11 Jul 2009

Posted in General | Tagged: Singapore Property, Singapore Property Market | Leave a Comment »

Analysts say more feedback should be gathered before amending tax policy

Posted by luxuryasiahome on July 10, 2009

It may be best to gather more public feedback before changing the tax policy on profits earned from property sales, say analysts.

Analysts Channel NewsAsia spoke with said that it is because some are concerned the proposed amendment may hurt the property sector and Singapore banks.

The Singapore residential property market is showing signs of picking up, but analysts say the proposed tax amendment may hurt sentiment and derail the rebound.

That is because potential buyers may hold back on fears that if they sell more than one property during a four-year period, they may then be taxed on the profits.

The Finance Ministry has stressed that the proposed change is not an anti-speculation measure.

However, it is still something to think about for those with more than one property, or planning to own more than one.

Chong Lee Siang, partner at International & Corporate Tax Services at Ernst & Young, said: “It probably comes as a surprise to a lot of people. But the government has said that it’s not an anti-speculation measure so that may be a little assuring, but still (at the) back of people’s minds would be ‘when will I be taxed?’

“As you can see, the public is reacting and giving its feedback and expressing its concerns. So hopefully, the government will take a while to think through it more carefully and see what would work better or make people more comfortable.”

If the proposed change for the tax policy goes through, observers say local banks would get hit badly as housing loans make up a large chunk of their business.

Looking at the housing rental agreements, some say the government may want to consider introducing a two-year period of non-taxation if a person sells only one property, instead of the suggested four years.

As many HDB flats are financed through banks today, some believe the suggested tax amendment will hurt the banks’ portfolio.

Jeremy Goh, associate professor at the Lee Kong Chian School of Business in the Singapore Management University, said: “The banking business is basically taking deposit and making loans. If this proposal puts a damper in the market, then it will definitely have an impact on the bank.

“There will be less people needing loans, or people staying out of the housing market. So the demand for loans will be somewhat affected.”

The public consultation for the draft Income Tax (Amendment) Bill ends next Tuesday. So far, It has attracted about 50 responses.

Posted by luxuryasiahome on July 9, 2009

CURRENT Housing Board policy dictates that a private property owner who wants to downgrade to public housing must sell his property and wait two years before applying to buy an HDB unit.

So the owner, after selling his home, has to rent a property for two years before he can apply for an HDB unit. Not only that, he also has to rent the property for another three years or more to allow for construction of the HDB unit.

All in, he has to rent a property for five years or more in order to downgrade. Assuming rental of $2,800 a month, it will cost him $168,000 – a huge amount for a retiree.

It is time the HDB reviewed its policy and allowed private property owners a less costly option in order to downgrade.

For example, a downgrader who is at least 55 years old and has not owned any HDB property in the past 10 or 15 years could be allowed to apply for a new HDB unit without the two-year wait. He could also be allowed to sell his private property within six months after getting the keys to his new HDB unit.

Other conditions could be included, such as ensuring the downgrader does not own more than one private property at the time of application.

Anthony Koh

The allure of Sydney and Melbourne

Source : Business Times – 9 Jul 2009

However current asking prices are still above palatable levels; market expected to bottom out in about a year at best

AUSTRALIA’S currently under-supplied housing market will see increasing demand in the coming 12 to 24 months, which is likely to result in residential price increases as owner occupiers enter the market, and investors attempt to realise asset growth and secure strong yields.

Reaching up: The long-term investment fundamentals are quite solid for high-density projects in Australia’s capital cities

Residential price growth in most Australian capital cities has been strong for the best part of six years, with house and apartment prices holding up relatively well, albeit at a slower pace over the past 12 to 18 months. House and land ‘packages’ continue to dominate as the preferred housing type as has been the tradition in Australia, with large swathes of undeveloped land remaining around the main metropolitan regions set aside for development for future generations.

Higher density living, typically in CBD and inner suburban locations, has gained acceptance over the past 10 years in Australia. However, its uptake has fluctuated considerably as a result of market over-supply and price issues.

The provision of high-density projects in CBD locations has seen CBD populations grow from a virtually non-existent base to several thousand persons in a relatively short time.

House and land packages as investments are more likely to be attractive to those investors who want to hold assets for long periods, achieve consistent returns and potentially occupy the asset in the long term.

By buying ‘off the plan’ homes, investors can benefit from significant tax deductions and may lead to cash flow positive returns for those wanting to contribute minimally to holding a residential asset.

For example, display homes are often leased back by builders for several years at a fixed rate of return, often up to 2 per cent above lending rates. The combination of the current low cost of borrowing (around 5.5 per cent in Australia), tax depreciation benefits and a high guaranteed return (for residential), makes this an attractive investment for many Australians and foreigners alike. For many foreigners, Singaporeans included, high-density apartments in inner city or CBD locations are the preferred investment type due to the familiarity of their built form.

High-density apartments developed in the CBDs of Melbourne and Sydney have historically had around 70 per cent of their sales to investors. In Perth and Brisbane, large-scale high-density residential apartments have predominately been developed in the past five years.

Irrespective of location, the early stages of this market activity has been dominated by off the plan sales. Relatively low initial prices and tax depreciation incentives make the relative scarcity and above average quality of new apartments appealing to investors. In many cases, early investors attempt to sell properties prior to settlement.

This potentially enables them to benefit from the price growth resulting from increased demand during the 18-month or so development timeframe, while only having to fund the initial deposit.

There are hundreds of completed apartments across Australia’s capital cities currently competing with new stock and projects being marketed for sale.

Purchaser demand is stalling. However, in light of continuing strong population growth and historically low interest rates, investors are beginning to find value in this type of property asset again.

Gross yields for CBD apartments are around 3 per cent to 4.5 per cent. However, the yields vary considerably with building age, location and cachet.

A significant additional cost for these types of premises are body corporate fees (building maintenance, security, facilities, insurance) which are typically around 1.5 per cent of the purchase price per annum. These fees are tax deductible. However, they can significantly limit the attractiveness of potential long-term capital growth due to the relatively high holding costs.

The truism that increased risk equates with increased return holds true for CBD apartments. Purchasing at a time of oversupply in the market may limit short-term price growth, whereas investing when prices have bottomed will provide an increased chance of capital growth in the longer term.

The geographic separation of the Australian capital cities is likely to result in demand improving at different times across the country.

For example, Sydney and Melbourne are expected to see demand improve in the coming 12 months as the lack of stock and government grants drives up house values in the middle and outer suburbs.

Demand for CBD properties is also expected to improve with the investment fundamentals proving attractive for many.

In both cities, vacancy rates are at historic lows with few new large- scale apartment projects expected to commence marketing or construction in the coming year. While globally the economic climate is uncertain, there are many investors who are satisfied that both locations are likely to experience improving demand in the medium term.

Pent-up demand is significant for CBD apartments in Melbourne and Sydney. However, the palatable price for the majority of apartments is below current asking prices.

It is expected that demand will rapidly return once sentiment and market evidence suggest that prices have bottomed, which in the current climate will be around 12 months at best.

Brisbane and Perth are historically a year or two behind the larger cities at different points in the property cycle.

The recent resources boom in each state has generated high demand for housing. The improvement in demand in each of these capitals has been considerable from very low bases.

Overzealous developers seeking to make the most of strong conditions has resulted in an oversupply of CBD apartments. Accordingly each market is still absorbing the significant apartment supply marketed and developed in the past two to three years.

This is resulting in current asking prices falling as investors attempt to sell assets in the weaker economic climate, often at below purchase price. Both markets are likely to observe falling asset values in CBD locations for several years, as prices are driven down by the over-construction and falling demand.

To conclude, the long-term investment fundamentals are quite solid for high density projects in Australia’s capital cities.

Past the current economic hurdles, pent-up demand is likely to see appropriately priced apartments sold quickly, and high construction costs are likely to limit the number of new projects commenced.

Short-term investment horizons of typically less than five years have the potential to realise limited asset growth.

However, with careful research and an understanding of the risk involved, this can be minimised.

Long-term investors are likely to see strong capital growth in their assets over a 10-year period. The long- term stability of Australia, along with its favourable lifestyle, is likely to see it continue to be on the radar of local and overseas investors for many years to come.

By MARTIN PEPPER, associate director, research, DTZ Australia

KL, Penang markets looking good

Source : Business Times – 9 Jul 2009

Many property consultants believe branded developments or designer buildings are what discerning investors increasingly desire

ALWAYS a favourite, landed real estate is receiving more interest in the current property lull. According to property agents, there has been a slight pick-up in the past two months, mainly in primary sales and landed properties located in popular suburbs. Zerin Properties’ chief executive Previn Singhe described April and May as ’surprising months with very strong interest in landed properties’, centred mainly in the Klang Valley as prospective purchasers act on the premise that prices are unlikely to slip because of the limited supply.

Idyllic: Nusajaya’s jewel is Puteri Harbour with its integrated waterfront and marina development

In some places, demand continues to outstrip supply, he said, citing Bangsar, Bukit Damansara, Damansara Heights, Taman Tun Dr Ismail, Seputeh, Taman Desa and Jalan Ipoh where prices – which had held steady – have started to inch up as investors turn to property as a hedge against inflation.

‘If you want to buy for owner occupation, any time is a good time. If it’s for investment, you need to be looking now,’ advised CH Williams Talhar & Wong managing director Goh Tian Sui.

Mr Singhe lists those on the property hunt: the first timers attracted by low interest rates; investors in the 30-55 age group who are acquiring for their children; professional investors looking at Kuala Lumpur landed real estate for capital appreciation or condominiums for rental yields; and non-resident Malaysians.

There are also foreigners who have started to look at condos in the Kuala Lumpur City Centre and Mont Kiara areas since the price of some units have dropped by 20 per cent. Location-wise, Penang is another hot-spot, popular with Penangites and other northerners, as well as KL-ites looking to retire there.

Across the South China Sea, Kota Kinabalu real estate has received a boost from the oil and gas boom, as well as tourism which has led to numerous Koreans and Europeans succumbing to its charms, Mr Singhe said.

In the south of the peninsula, Johor’s Iskandar Malaysia remains a major point of interest. Central to Iskandar is the Nusajaya area with its strategic location across the Straits of Johor. Nusajaya’s jewel is the 687-acre Puteri Harbour with its planned integrated waterfront and marina development.

The precinct is to be gradually developed and because of its geography, has attracted the attention of a number of foreign builders which are keen to be involved. One of them is Limitless Holdings, a unit of Dubai World, which plans to jointly develop luxury residences with Nusajaya’s master developer, UEM Land.

Another planned joint venture between UEM Land and the Middle East’s Damac Properties was scrapped recently after Damac – which was to buy 43.5 acres in the enclave for nearly RM400 million (S$164.9 million) – did not fulfil conditions for the sale to proceed.

Still, most believe Puteri Harbour’s location, quality of build, management, and security will prove a big attraction to investors – especially foreign ones – just as they have in places slightly further afield such as Leisure Farm, Horizon Hills and Ledang East in Nusajaya.

Mr Singhe is of the view that the better quality products in Iskandar have allowed Johoreans to ‘upgrade’. Indeed, many property consultants believe branded developments or designer buildings are what discerning investors increasingly desire and could make a difference in a project’s ’sell-ability’.

KGV-Lambert (M) executive director Samuel Tan agrees that the higher-end developments in Iskandar have drawn the most interest in Johor. The rest of the market has been softer.

‘People think that Nusajaya is Iskandar Malaysia,’ he observed wryly, pointing out that it is only a fraction of the special economic zone which is three times the size of Singapore. He highlighted new developments in brownfield areas as well as mature ones in the Tebrau Corridor, Skudai and Pasir Gudang which have been under-promoted but which might be worth a second look. ‘There are more opportunities in the secondary market because the primary market development costs have gone up.’

For those considering the lower- to mid-range of the market, bad debts have created a ’sub-market’ of auctioned properties in Johor, he revealed, with auctions held weekly. Each auction offers 20-50 properties and they go for about 30 per cent less than their market value.

Despite the global financial crisis, Iskandar investors remain committed, the biggest to date being Middle Eastern firms which plan to develop the area called Medini, located near the Second Link.

Still, property developers caution that the pace of construction could be slowed. On the bright side, the state government has already moved into the new administrative buildings in Kota Iskandar, and overall infrastructure works are continuing.

Mr Singhe believes the 2003-04 pattern of funds sniffing for deals which resulted in a property boom in 2006-07 is being repeated now based on the number of funds that are making inquiries. Accordingly, he expects a property upswing to materialise in 2011-12.

The Quill Group of Companies, which designs and constructs purpose-built offices, confirms growing interest in Malaysia. Its property director, Ng Chee Kheong, said that multinationals were showing keen interest in the area of shared services, particularly in the Klang Valley and Penang.

Of late, Malaysia has started to speed up its liberalisation of many sectors of the economy to attract more investments. Should it succeed, the expatriate market ought to increase which would in turn stimulate demand for rented properties and help arrest some of the decline in yields.

Because of the downturn, a number of developments had been put on hold, including one by Singapore’s Kwek Leng Beng who was to have launched a 42-storey luxury condominium last year in the Kuala Lumpur golden triangle.

A prospective buyer expressed disappointment at the delay as he had been looking forward to purchasing a unit in the Carlos Ott-designed building which is to be constructed next to the tycoon’s Millennium Hotel.

Kuala Lumpur high-end condo prices have dipped to an average of RM1,000 per sq ft although the more prestigious ones still command a premium. Because of the weak ringgit, prices remain very affordable, especially for foreigners.

Ferrari team’s ex-boss Jean Todt, who is engaged to well-known actress Michelle Yeoh, recently revealed he had acquired a unit in OneKL, which sits opposite the iconic Petronas Twin Towers.

KL, Penang markets looking good

Source : Business Times – 9 Jul 2009

Many property consultants believe branded developments or designer buildings are what discerning investors increasingly desire

ALWAYS a favourite, landed real estate is receiving more interest in the current property lull. According to property agents, there has been a slight pick-up in the past two months, mainly in primary sales and landed properties located in popular suburbs. Zerin Properties’ chief executive Previn Singhe described April and May as ’surprising months with very strong interest in landed properties’, centred mainly in the Klang Valley as prospective purchasers act on the premise that prices are unlikely to slip because of the limited supply.

Idyllic: Nusajaya’s jewel is Puteri Harbour with its integrated waterfront and marina development

In some places, demand continues to outstrip supply, he said, citing Bangsar, Bukit Damansara, Damansara Heights, Taman Tun Dr Ismail, Seputeh, Taman Desa and Jalan Ipoh where prices – which had held steady – have started to inch up as investors turn to property as a hedge against inflation.

‘If you want to buy for owner occupation, any time is a good time. If it’s for investment, you need to be looking now,’ advised CH Williams Talhar & Wong managing director Goh Tian Sui.

Mr Singhe lists those on the property hunt: the first timers attracted by low interest rates; investors in the 30-55 age group who are acquiring for their children; professional investors looking at Kuala Lumpur landed real estate for capital appreciation or condominiums for rental yields; and non-resident Malaysians.

There are also foreigners who have started to look at condos in the Kuala Lumpur City Centre and Mont Kiara areas since the price of some units have dropped by 20 per cent. Location-wise, Penang is another hot-spot, popular with Penangites and other northerners, as well as KL-ites looking to retire there.

Across the South China Sea, Kota Kinabalu real estate has received a boost from the oil and gas boom, as well as tourism which has led to numerous Koreans and Europeans succumbing to its charms, Mr Singhe said.

In the south of the peninsula, Johor’s Iskandar Malaysia remains a major point of interest. Central to Iskandar is the Nusajaya area with its strategic location across the Straits of Johor. Nusajaya’s jewel is the 687-acre Puteri Harbour with its planned integrated waterfront and marina development.

The precinct is to be gradually developed and because of its geography, has attracted the attention of a number of foreign builders which are keen to be involved. One of them is Limitless Holdings, a unit of Dubai World, which plans to jointly develop luxury residences with Nusajaya’s master developer, UEM Land.

Another planned joint venture between UEM Land and the Middle East’s Damac Properties was scrapped recently after Damac – which was to buy 43.5 acres in the enclave for nearly RM400 million (S$164.9 million) – did not fulfil conditions for the sale to proceed.

Still, most believe Puteri Harbour’s location, quality of build, management, and security will prove a big attraction to investors – especially foreign ones – just as they have in places slightly further afield such as Leisure Farm, Horizon Hills and Ledang East in Nusajaya.

Mr Singhe is of the view that the better quality products in Iskandar have allowed Johoreans to ‘upgrade’. Indeed, many property consultants believe branded developments or designer buildings are what discerning investors increasingly desire and could make a difference in a project’s ’sell-ability’.

KGV-Lambert (M) executive director Samuel Tan agrees that the higher-end developments in Iskandar have drawn the most interest in Johor. The rest of the market has been softer.

‘People think that Nusajaya is Iskandar Malaysia,’ he observed wryly, pointing out that it is only a fraction of the special economic zone which is three times the size of Singapore. He highlighted new developments in brownfield areas as well as mature ones in the Tebrau Corridor, Skudai and Pasir Gudang which have been under-promoted but which might be worth a second look. ‘There are more opportunities in the secondary market because the primary market development costs have gone up.’

For those considering the lower- to mid-range of the market, bad debts have created a ’sub-market’ of auctioned properties in Johor, he revealed, with auctions held weekly. Each auction offers 20-50 properties and they go for about 30 per cent less than their market value.

Despite the global financial crisis, Iskandar investors remain committed, the biggest to date being Middle Eastern firms which plan to develop the area called Medini, located near the Second Link.

Still, property developers caution that the pace of construction could be slowed. On the bright side, the state government has already moved into the new administrative buildings in Kota Iskandar, and overall infrastructure works are continuing.

Mr Singhe believes the 2003-04 pattern of funds sniffing for deals which resulted in a property boom in 2006-07 is being repeated now based on the number of funds that are making inquiries. Accordingly, he expects a property upswing to materialise in 2011-12.

The Quill Group of Companies, which designs and constructs purpose-built offices, confirms growing interest in Malaysia. Its property director, Ng Chee Kheong, said that multinationals were showing keen interest in the area of shared services, particularly in the Klang Valley and Penang.

Of late, Malaysia has started to speed up its liberalisation of many sectors of the economy to attract more investments. Should it succeed, the expatriate market ought to increase which would in turn stimulate demand for rented properties and help arrest some of the decline in yields.

Because of the downturn, a number of developments had been put on hold, including one by Singapore’s Kwek Leng Beng who was to have launched a 42-storey luxury condominium last year in the Kuala Lumpur golden triangle.

A prospective buyer expressed disappointment at the delay as he had been looking forward to purchasing a unit in the Carlos Ott-designed building which is to be constructed next to the tycoon’s Millennium Hotel.

Kuala Lumpur high-end condo prices have dipped to an average of RM1,000 per sq ft although the more prestigious ones still command a premium. Because of the weak ringgit, prices remain very affordable, especially for foreigners.

Ferrari team’s ex-boss Jean Todt, who is engaged to well-known actress Michelle Yeoh, recently revealed he had acquired a unit in OneKL, which sits opposite the iconic Petronas Twin Towers.