PRIVATE HOME PRICES HIT NEW HIGH, GROWTH PACE SLOWS

Private home prices hit another all-time high even as the rate of increase continued to moderate, suggesting that caution had crept into the market amid heightened uncertainty in the macro-economic environment and a large supply pipeline.

According to the Urban Redevelopment Authority (URA), the price index of private residential properties increased 1.3 per cent in the third quarter this year from the previous quarter to hit 205.7. Still, the rise was significantly lower than the 2-per-cent increase in the previous quarter and the URA said it was the eighth consecutive quarter in which the rate of price growth had moderated.

Ms Chia Siew Chuin, director of Research & Advisory at property consultancy Colliers International, said: "This is the first time since 4Q 2010 when the final full-quarter price index remains unchanged from the flash estimate. This could be reflective of a more cautious market sentiment."

The URA said that as at the end of the third quarter, there were 76,255 uncompleted private homes from projects in the pipeline, higher than the 71,111 units at the end of the second quarter and the highest ever recorded.

A breakdown of the URA data showed that price growth in the city fringe and suburban areas outpaced that in the prime areas.
For the Rest of Central Region (RCR), prices increased 1.2 per cent, up slightly from 1.1 per cent in the previous quarter. In the Outside Central Region (OCR), prices rose 2.1 per cent, up from 1.7 per cent previously.

Prices of non-landed properties in Core Central Region (CCR) increased at a slower pace of 0.7 per cent compared to the 1.6 per cent in the previous quarter.
On the strength in OCR prices, Ms Chia said: "This is despite the grim global economic outlook and reflects demand from genuine home-buyers and longer-term investors as they remain confident about Singapore's economic fundamentals amid a continued low interest rate and ample liquidity environment."

Separately, the National University of Singapore yesterday released its Singapore Residential Price Index (SRPI) for September. The overall SRPI, which tracks prices of completed non-landed private homes, increased a marginal 0.1 per cent from the previous month after falling 0.2 per cent in August.
The SRPI Small, which tracks prices of homes under 506 sq ft, fell 1.9 per cent after rising 3 per cent in the previous month.

Source: Today - 29 October 2011

HDB resale flat prices up

Private home prices increased at slower rate in third quarter.

In defiance of the expected economic slowdown, prices of the HDB resale flats and private residential properties continued to march upward. 

And while private home prices increased at a slower rate in the third quarter - compared to the previous quarter - prices of HDB resale flats went up by 3.8 per cent between July and last month, compared to 3.1 per cent between April and June.

This, as the number of resale flat transactions fell by about 10 per cent, from 6,581 cases in the second quarter to 5,903 cases in the third quarter. 

According to HDB's data released yesterday, the Resale Price Index has risen from 180.3 in the second quarter to 187.2 in the third quarter - an all-time high since HDB began tracking resale prices in 1994. 

ERA Realty key executive officer Eugene Lim noted that the index has increased 11.6 per cent since the third quarter last year. Mr Lim attributed the falling number of resale flat transactions to "the lack of supply and high prices" which have made it "more difficult to conclude deals".

He said: "Demand in the resale market continues to be strong; and they are coming from first-timers and families that have immediate housing needs, singles, PRs, up-graders and down-graders. These buyers make up almost 80 per cent of the resale market."

Mr Lim reiterated that the rising prices were accentuated by the cash-over-valuation (COV) demanded by sellers. "They are able to do this as supply is tight and demand is strong," he added. 

According to HDB's data, COV ranged from S$29,000 for a three-room flat in Woodlands to S$68,00 for an executive flat in Tampines.

SLP International executive director of research and consultancy Nicholas Mak noted that the number of resale transactions is the lowest since the first quarter of 2004. 

"Home owners are not offering their flats for sale and are keeping it for rental instead," said Mr Mak.

Dennis Wee Group director Chris Koh added: "If you own a HDB flat and a private property, you won't want to sell the HDB flat because the next time you buy a HDB flat, you'll need to sell your private property. And for those who have just finished their minimum occupation period (MOP) and are upgrading to a private property, they will just rent the flat and move into the private property."

The number of HDB flats approved for subletting increased to about 39,100 units in the third quarter - up from 37,900 units in the second quarter. According to the HDB, subletting transactions fell from 7,177 cases in the second quarter to 6,549 cases in the third quarter. 

PropNex chief executive Mohamed Ismail felt the resale flat prices will continue to rise in the next quarter. 

But beyond that, he expects prices to stabilise with the new Build-to-Order flats that HDB will be introducing this year and next. This would draw more first-time buyers away from the resale market, he added.

Mr Mak pointed out that if the number of resale transactions continue to hover below 7,000 flats for the next "one or two quarters", the rate of increase of resale prices will slow.

Source: Today by Ong Dai Lin Oct 29, 2011

Of land costs and productivity

This week, two major employer groups raised the alarm about the labour woes faced by Singapore businesses.

The Singapore Business Federation said companies in certain industries found it particularly tough to hire locals - notably in the food and beverage, construction and service sectors - and that foreign worker rules needed to be fine-tuned and tailored to specific industries.

The Singapore International Chamber of Commerce warned that the difficulties in hiring locals coupled with the strict constraints on hiring foreigners for service jobs or skilled staff for specialist positions might well mean that multinational corporations have to rethink and resize their operations here.

Their problems arose from the Government's recent tightening of work pass rules and raising of levies to manage the size of the foreign workforce in this country. The authorities have announced that they now want to keep the foreign workforce to about one-third of the total as our physical infrastructure has strained at the seams in recent years. As such, the continued heavy reliance on imported foreign labour is not sustainable in the long run. 

At the same time, the authorities have been structuring programmes and encouraging employers to explore various ways and means to raise productivity levels.

However, if you speak to employers, they will tell you that foreign workers are necessary to keep costs down, raise productivity levels and keep Singapore competitive. You can automate in some industries or streamline work processes to enhance work efficiency but only up to a point. Beyond this, it takes a lot more effort to achieve that incremental increase in productivity.

The problem is complex, but I suspect this issue about our labour problems is one that neither employers nor the authorities can win by only raising productivity or right-sizing foreign worker inflows.

What, you may ask, has all of this to do with property?

Because, as all employers know, labour is not the only major cost faced by businesses. Rental costs are the other major expense.

Some years back, an American food and beverage firm asked a potential local partner about the rental costs for setting up a shop in Singapore. When told about the monthly rental the local firm was paying at a certain shopping centre, the American company asked if the amount was for a whole year.

To give you another example: Four years ago, our firm's office lease was up for renewal. The asking rate was almost double the previous amount.

What do you think that would have done to our productivity levels if we have committed to the new lease at that asking rate? All our efforts to streamline our work processes and improve staff productivity over the past years would have been completely negated.

I remember a speaker at a seminar some time back saying that Singapore's retail market had a lot of room to expand further. She said Singapore's retail space per capita was only about half that of Hong Kong. You have to ask why. Have our land costs risen too quickly such that demand from retail developers has been constrained?

But if you ask the retailers, there is still a lot of demand - but not at the current asking rentals. There are also a lot of potential entrepreneurs whose businesses cannot even get past the planning stage because of the lack of affordable space in our commercial market.

Land costs are significant in Singapore, and you could say there is a good correlation between rentals and land costs. If the land cost is high, everything else remaining constant, the asking rentals will have to be sufficiently high to eventually cover this cost.

In Singapore, the dominant supplier of land is the Government. As such, to a large extent, it determines the market price of land by the rate it releases sites to the market.

If it tightens supply, the price of land shoots up. If it increases the pace of land release, the price moderates.

With it being in such a dominant position, there are no true market guides as to the right amount to release. I turned to an academic for an answer. She only replied that it should be at a rate that is sustainable.

In any case, an out-of-the-box approach should be taken to solving our labour problems. I strongly suspect that, if it were just a matter of automation or improving work processes, we would have solved our labour problems by now. 

Source: Today - Oct 28, 2011

by Colin Tan is head of research and consultancy at Chesterton Suntec International.

Sofitel Singapore to open in early 2013

SINGAPORE'S first-ever Sofitel hotel will open in early 2013. The property, with 135 rooms and suites, will be located at the former Ogilvy Centre - a landmark conservation property opposite Lau Pa Sat.

Royal Group Holdings is pumping a total of about $130 million in the asset, including the $86 million it paid for the 60-year leasehold Robinson Road site at a state tender in January.

Sofitel is the luxury brand of the Accor Group. The property in Singapore will carry the Sofitel So label, which has been described as the boutique, trendy, and contemporary label for Sofitel Luxury Hotels.

Room sizes at Sofitel So Singapore will range from 24 square metres to 140 sq m (or 258-1
,507 square feet). The ratio of suites to regular rooms will be about 70:30. There will be various categories of rooms including loft suites and the blended average daily room rate is expected to be in the high $300 range.

Royal Group Holdings managing director Bobby Hiranandani revealed that the management contract with Sofitel Luxury Hotels is for 20 years. He and his father, Mr Asok Kumar, also said that Sofitel So Singapore will be 'for keeps' as a long-term investment. 'This will be the only hotel in the Shenton Way, Robinson Road and Cecil Street area,' said Bobby in an interview.

Source: Business Times – 25 October 2011

Offshore fund acquires 50% stake in Robinson Land

AN offshore fund controlled by a few high net worth individuals has acquired a 50 per cent stake in a company whose sole asset is the 12-storey freehold Finexis Building (formerly known as GMG Building) at Robinson Road.

The transaction was based on the office block's latest valuation of $110 million in July 2011. This works out to about $2,043 per square foot on its total strata area of 53,830 sq ft, which is understood to be close to the building's net lettable area. The share purchase agreement was signed early last week.

The half stake in Robinson Land Pte Ltd was sold by a partnership that includes private real estate investor and ex-Goldman Sachs banker Kishore Buxani and offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group.
They will continue to hold the remaining 50 per cent in Robinson Land Pte Ltd.

The company acquired the office block, located at 108 Robinson Road, in late 2006 for $48 million and is said to have invested a further sum of about $6 million sprucing it up.

Finexis Building is more than 82 per cent let, with anchor tenant Finexis Advisory occupying five floors. Other tenants include Cliftons and BoxHill Institute, both from Australia, and Melior International College, which has a tie-up with Australia's CQ University.

Finexis Building does not currently have any immediate redevelopment potential. Its current gross floor area of 64,766 sq ft is 11.67 times the land area of 5,549 sq ft - exceeding the 11.2 maximum plot ratio for the site under Master Plan 2008.

The latest rental transaction in the office block was done at $7 psf a month, but the current average monthly passing rental (that is, what is being paid by existing tenants) in the building is lower, at about $5.60 psf.

Assuming the building is fully let at this rate, the net yield based on the $110 million valuation works out to around 2.9 per cent. The building is said to have been completed in the 1980s.

Source: Business Times – 27 October 2011

Many flock to launch of Trivelis

The launch of the 888-unit Design, Build and Sell Scheme (DBSS) project Trivelis in Clementi yesterday saw crowds thronging its showroom, with more than 500 applications received on the first day - the third consecutive DBSS project to receive good responses since the public outcry over the prices of Centrale 8 in June. 

The Government is reviewing the scheme after the outcry over Centrale 8, which led to the developer lowering the prices. To date, Centrale 8 sold only 40 per cent of its 708 units - a figure that did not impress analysts then. 

But does the strong demand for subsequent DBSS projects make a case for the scheme to remain?

Although DBSS flats come with a premium ... if people have no issue paying for it and there's a good demand for DBSS flats, it may not hurt to keep the scheme. The Housing Board (HDB) gets to put new flats out and the flats are done by private developers - it's a win-win situation.

However, some analysts think that the scheme should be scrapped as HDB plays the role of providing affordable housing to Singaporeans. But when the flats are built by a private developer, the developer pays a premium for the land and they will also sell it for a profit.

At the end of the day, a DBSS flat is still a HDB flat and when it is priced so high and nearing the prices of executive condominiums … how much can the value of the DBSS flat increase in terms of capital appreciation.

Showroom visitor Chen Ming Feng, 38, said: "The location is good but the flats are a bit small ... the prices are also a bit expensive but I think it is reasonable as it is still cheaper than the resale prices in Clementi."

Source: TODAY – 27 October 2011

The Lake Vista DBSS at Yuan Ching received some 1,000 applications

The Lake Vista project under the Design, Build and Sell Scheme (DBSS) at Yuan Ching received some 1,000 applications as at 4pm Monday.

With 682 units available, this means that there are three applications for every two units, said developer Hoi Hup Sunway Pte Ltd.

Applications will close at midnight on Monday.

Analysts said demand for the Lake Vista project was as expected and not overwhelming. Although prices were competitive, buyers were put off by its distance from the city area, said analysts.

Compared to two other DBSS projects launched this month, Lake Vista is the furthest from the city.

Analysts said future developments in the Jurong Lake district should help to add value to Lake Vista.
Being the first such project in Jurong Lake, Lake Vista has helped to satisfy the demand for applicants such as upgraders and couples.

While the government reviews the DBSS policy, analysts said if prices for these projects are reasonable, they will continue to be attractive for buyers

Source : Channel NewsAsia – 24 Oct 2011

Martin Place Residences hits $2,150 psf

The fully sold, 302-unit freehold Martin Place Residences obtained its temporary occupation permit (TOP) just last month. Enterprising property agents are already milling about in the area, showing units for lease and sale on the secondary market.

There were two transactions at Martin Place Residences over the week of Sept 13 to 20, based on the latest caveats lodged and downloaded from URA Realis as at Oct 6. One was the sale of a one-bedroom, 592 sq ft unit on the 25th level, which changed hands for $1.25 million ($2,111 psf). The seller had purchased it for $1.022
 million ($1,726 psf) in June 2009, when the project was relaunched. The seller saw a price appreciation of 22.3%.

Meanwhile, at the neighbouring block of the twin tower development, a 1,722 sq ft, three-bedroom apartment on the 31st floor changed hands for $3.7 million ($2,150 psf). The seller had paid $2.87 million ($1,664 psf) when it was purchased in August 2009, hence, recognising a 29.2% price gain in two years. The 1,722 sq ft, three-bedroom units have seen prices escalating on the secondary market, with owners asking prices in the range of $1,900 to $2,200 psf, despite the uncertainty hanging over the global economy in recent months.
The riverfront neighbourhood of River Valley- Mohamad Sultan- Robertson Quay has become a sought-after residential district, given the short driving distance to both the CBD and Orchard Road, say property agents. There's also the waterfront lifestyle, with the waterfront promenade so that people can enjoy a pleasant walk along the Singapore River, and the numerous retail and F&B enclaves at Boat Quay, and Clarke Quay.

Projects such as Martin Place Residences therefore appeal to local and foreign investors, especially those from China and Indonesia. Three-bedroom apartments in the area tend to fetch good rentals, ranging from $7,500 to $9,500 per month.

Source : The Edge – 10 Oct 2011

New waterway heralds dawn of waterfront living

A space not just for kayaking, cycling and jogging but also a one-of-a-kind waterway unlikely to be built in other estates here - that was how Prime Minister Lee Hsien Loong described My Waterway@Punggol as he officially opened it yesterday.

Built over three years at a cost of S$225 million, the 4.2km-long waterway is the centrepiece in the Government's plan to transform the sleepy estate of Punggol into a waterfront town of the 21st century.
At 10 to 85m wide and 3 to 4m deep, the waterway - developed by Surbana International Consultants - spans about 22 football fields and connects to the Punggol and Serangoon reservoirs as well as the Lorong Halus wetlands.

Speaking at the opening ceremony, Mr Lee said he was happy to witness the completion of the waterway, a "green lung in the middle of our tight city".
Plans to build Punggol 21 were first conceived in the 1990s but were put on hold when the Asian financial crisis struck, he noted.

It was only after the economy had recovered that the plans were revisited and improved, culminating in Punggol 21 Plus, where waterfront living would become a reality.
The original idea was to build a simple pipeline connecting to Punggol and Serangoon reservoirs, "most practical, but unexciting", said Mr Lee. But it was the then-National Development Minister Mah Bow Tan who suggested a waterway instead.

"Make it something beautiful, something which Singaporeans can enjoy, something which can be special for the residents and which we can build on and appreciate for many more years," Mr Lee recounted of what Mr Mah had envisioned.

Looking ahead, around 21,000 public and private homes will be built along the Punggol waterway, including Waterway Terraces I, the first public housing precinct that was launched there, in June last year.
Three other Build-to-Order projects will also be built along the waterway. And by the end of this year, 23,000 families will call Punggol home.

In 2015, there will be a new commercial hub and town plaza by its MRT station, and the town will be almost as big as Ang Mo Kio.

Mr Lee said the Government is committed to improving amenties and conditions in older estates, too, like Yishun and East Coast, and is investing S$10 billion over the next 10 years in upgrading projects.
Lessons from Punggol's first "eco-precinct", the Treelodge@Punggol - from the use of solar panels to rainwater harvesting - will also be applied to other towns.

But even as Punggol is transformed, its heritage as a fishing village will be honoured, said Mr Lee. For example, a bridge along the waterway - the Kelong Bridge - is designed with stilt-like features along its structure.

Treelodge@Punggol resident Samuel Tan, who lives in a four-room unit overlooking the waterway, said he was pleasantly surprised by how much the waterway had been developed.

"In 2007 when I bought my flat, I thought the waterway would be something simple like a longkang (drain) ... but it has turned out well," said Mr Tan, who is in his 40s and works in the financial services industry.

Source: Today - Oct 24, 2011

NEW DBSS TO BE LAUNCHED IN CLEMENTI

A new Design, Build and Sell Scheme (DBSS) project, Trivelis, will be launched this week at Clementi Ave 4, about five minutes from Clementi Mall and the MRT station.

The developer of the project, EL Development Pte Ltd, has also released indicative prices for the units - S$375,000 to S$470,00 for a 3-room flat, S$530,000 to S$650,00 for a 4-room unit, and S$658,00 to S$770,000 for a 5-room flat.

More than 50 per cent of the flats are also expected to be 4-room flats for first-time applicants.
E-applications start on Wednesday and will be on till Oct 31.
Trivelis will have three 40-storey towers with 888 units.

Each unit comes with fittings such as built-in wardrobes, high and low kitchen cabinets with cooker hob, hood and sink.

Air conditioning is also provided in all bedrooms and living/dining room.

EL Development said the size of the units will be from 646 square feet for a 3-room flat to 1,130 square feet for a 5-room unit.
The project is one of the few for which tenders were given out before the government announced earlier this year that it will put DBSS projects on hold.
The DBSS scheme is being reviewed following complaints over the high asking price for units at a DBSS project in Tampines, Centrale 8, where the price of a 5-room unit was revised to S$778,000 from S$880,000.

Source: CHANNEL NEWSASIA - 24 October 2011

Investors shift focus to industrial property

Property investors with a budget of below $1.5 million are diversifying from the residential sector to other sectors, most notably industrial, in bigger numbers since the government began introducing measures to cool the residential sector in September 2009.

This is borne out by a study of URA Realis caveats data for private homes (excluding executive condos), as well as strata private industrial (factory) space, offices and retail properties (excluding shophouses) - all below $1.5 million.

The private residential sector's share of this pool of total caveats has fallen from a high of 96.6 per cent in Q2 2009 (before the first of four rounds of property cooling measures were rolled out) to 87.2 per cent in Q3 2011 (based on caveats data as of Oct 12). Over the same period, the percentage share of strata private industrial (factory) units has risen from 2.2 per cent to 8.8 per cent, while that for strata offices has gone up from 0.4 per cent to 1.4 per cent and strata retail, from 0.8 per cent to 2.6 per cent.

Analysts attribute the contraction in residential property's share to government measures to cool the housing market, such as a lower loan-to-value (LTV) limit for housing loans for property investors and seller's stamp duty to deter short-term trading of private homes.

Due to the punitive policies, investors have been seeking non-residential properties. The LTV an investor can obtain for commercial and industrial properties can be as high as 70 per cent, compared to only 60 per cent for a second residential property. Naturally, investors are driven towards the non-residential segment - especially industrial, which has a much larger stock of strata units than retail and office. Nonetheless, investor interest for strata retail and office space is still strong.

Another incentive for property investors to venture beyond the residential sector is yields. Net yields of 6.5 to 7 per cent for industrial property, 5 to 6.5 per cent for retail, and 3.5 to 4 per cent for office properties - are higher than the 2 to 3.5 per cent yield for private homes.
Industry observers say some marketing agents tout such premises for office use even though such use is unauthorised.
So far, residential volume is still a dominant force of about 80-odd per cent of total number of transactions. However, if the volume of non-residential transactions continues to rise, and speculation becomes rampant and affects the normal operations of businesses, the state may need to relook its policy.

Figures also show that the total number of caveats (for all property segments) rose about 33 per cent q on q to 6,949 in Q2 2011, reversing three consecutive quarters of contraction.

This rebound, however, may be shortlived. As of Oct 12, caveats were lodged for 4,268 deals in Q3 across all sectors, or 61.4 per cent of the Q2 volume - suggesting that market confidence has weakened on the back of global uncertainty.

Source: Business Times – 24 October 2011

Ramped up supply of BTO flats easing market imbalance

The HDB has ramped up the supply of new flats to meet demand and the market imbalance is showing signs of improvement.

The September BTO launch saw a moderate to low application rate, which means almost everyone will get a chance to select a flat.

Excluding a project in Ang Mo Kio which drew six applicants for each 3-room unit offered, other BTO projects in areas like Jurong East, Sengkang and Punggol received fewer than three applicants per flat - a comfortable range based on past launches as many applicants drop out.

HDB will launch another 4,200 BTO flats in November.

The HDB will also be creating a new town in Bidadari that can house up to 12,000 units, or a population of about 40,000 people in the next 5 to 10 years ahead.

The site is a former cemetery that was closed in 1972 and authorities completed the extraction of graves in 2006.

Although there is a stigma attached to the current location, given its proximity to the business district and being serviced by two MRT stations, it may prove to be the needed nudge for home buyers.

Source: Channel NewsAsia – 23 October 2011

Koh Brothers' $163m tops bids for Flora Drive site

KOH Brothers Group beat out seven other bidders with its top offer for a residential site at Flora Drive, in the Upper Changi area, at the close of the state tender yesterday.

The company offered $163 million or $361 per square foot per plot ratio (psf ppr) for the 99-year leasehold land parcel.

Koh Brothers managing director Francis Koh said that if his company is awarded the site, it will build a residential project with 'green' and 'sporty' elements and around 400-410
 apartments.

Koh Brothers' bid was 10 per cent above the second highest offer, which was from Hong Leong Group unit Tripartite Developers. Tripartite bid $147.6
 million or $327 psf ppr.

The location has a high expatriate tenant pool comprising Japanese and other nationalities working in Changi Business Park, Changi Industrial Park and Changi International Airport
The positive response to (yesterday's) tender follows the encouraging September sales data announced on Monday, which could have influenced tender participation as well a pricing for the site.

Some 1,631 private homes were sold by developers in September - a 21 per cent pick-up from August sales - suggesting firm underlying demand especially for mass market units. The bidders are obviously confident that demand can be sustained and would not be too dampened by the uncertain economic outlook.

Within the neighbourhood, units in freehold The Gale and Ferraria Park were sold at $900-1
,050 psf in August and September 2011. Units in the 99-year leasehold Hedges Park condominium have been marketed at $800-950 psf since April 2011; to date, about 65 per cent of the 501-unit project has been sold.

Source: Business Times – 21 October 2011