Punggol residential site draws top bid from Chinese firm

A 99-YEAR-LEASEHOLD residential site at Punggol Central/Edgedale Plains drew a top bid of $215.87
 million yesterday, or $330 per square foot per plot ratio (psf ppr).

Chinese firm Qingjian Realty (South Pacific) Group trumped four other developers to put in the top bid for the site, which measures 218,034.6 sq ft and has a maximum permissible gross floor area of 654,103.9 sq ft. It barely edged out the second-highest bid, by Soilbuild Group Holdings, which came in at $203.888 million, or approximately $312 psf ppr. The lowest bid came in from Opal Star and Lum Chang Building Contractors, at $290 psf ppr.

The narrow spread of bids indicates developers were more measured in bidding for the site. This could be due to the upcoming supply of around 1,500 private apartments and 700 executive condominiums in Punggol New Town, and the potential slowdown in demand for mass-market homes, in view of economic uncertainties.

While a slowing market may have deterred over-optimistic bidding, the top bid of $330 psf ppr is roughly in line with the $323 psf ppr fetched by the Punggol Field Walk site in September. It shows that tender bids in the Punggol location are holding, although there is lower tender participation today, with five bidders compared to eight in the previous one.

Zuo Haibin, managing director, Qingjian Realty Group, said they are planning for around 650 units of two to four bedrooms. The project should be launched within six to eight months, he added. The breakeven cost to should be around $700 psf.

Units at the nearby 882-unit A Treasure Trove have sold for a median price of $915 psf, based on the 750 units sold since its launch in early September.

Source: TODAY – 4 November 2011

Freehold still 'the preferred choice'

FREEHOLD home prices have proved more resilient in recent months than those of 99-year leasehold properties, according to a new report.

Price gains for freehold condominiums and terraced homes have outpaced those for similar homes with 99-year leases since the third quarter of last year - a period marked by cooling measures and economic uncertainty.

For example, while prices of leasehold condos inched up by less than 1 per cent each quarter in the 15 months to Sept 30, freehold condos averaged quarterly rises of 2.2 per cent.

Freehold condo prices have rocketed 62 per cent in the past 10 years while leasehold condos appreciated 48 per cent in the same period.

It is a similar story with landed homes.

While prices of leasehold terraced properties dipped 0.1 per cent in the three months to Sept 30 - the first contraction in at least 15 months - freehold terraced prices shot up 4.9 per cent. 

Prices have soared 97 per cent for freehold terraces in the past 10 years compared with 52 per cent for leaseholds, the firm noted.

Freehold or 999-year leasehold are the preferred tenure for many property buyers as many are concerned that the value of 99-year leasehold properties may not appreciate well when the duration of the leasehold reduces.

But transaction volumes and price increases for all home segments have taken a hit since July last year as the market coped with two additional rounds of cooling measures following similar moves in September 2009 and February last year.

More recently, the financial market turmoil and uncertainties surrounding the euro zone crisis have further dampened home buying sentiments.

While buyers should go for freehold properties from a purely investment point of view, 99-year leasehold homes will still be in demand.

They still have a price advantage over freehold equivalents and many 99-year leasehold projects are located near amenities and transportation nodes.

These are crucial factors, especially for upgraders, for whom affordability and convenience rank high on their priorities. Such attributes can be found in sites in or near HDB estates which the Government puts out for tender on a regular basis under its land sales programme.

Source: The Straits Times – 10 November 2011

Prices of DBSS flats now close to those of ECs

Design, Build and Sell Scheme (DBSS) flats have been attracting such strong interest that they now cost nearly as much as executive condominium (EC) units.

Their overall median price is only $100 to $150 per sq ft (psf) lower than that of the condo units.

The scheme's popularity comes despite the fact that it is under review, following an outcry when Centrale 8 in Tampines made the news for its high asking prices in July.

The high demand was due mainly to the fact that the projects are located in mature estates, near MRT stations.

Prices for Trivelis, the latest DBSS launch in Clementi, were about $580 psf to $728 psf. The cost of new EC flats ranges from $501 psf to $820 psf, according to data from sources such as the Housing Board and Urban Redevelopment Authority.  

DBSS properties were attractive also because, unlike resale flats, they require no cash over valuation (COV), the premium paid over and above the official value.
The cash down payment for a DBSS unit can be lower than the COV for a resale flat, making it more attractive. Although buyers have to wait for it to be constructed, they are also getting a brand new flat in the process.
DBSS has an inherent inflation mechanism as the tender goes to the highest bidder, which in turn sets the maximum price that the market can bear. This encourages a rise in prices.

Source: The Straits Times – 8 November 2011

Subsales lose their pull, especially with foreign buyers

A smaller percentage of private home buyers - especially among foreigners who are not permanent residents - have turned to the subsale market to make their purchase this year, compared with the previous property bull-run in 2007.

These trends are attributable to an increase in the supply of new units launched by developers over the past two years as well as an overall slowdown in subsales activity following the introduction of steep seller's stamp duty rates in January to deter short-term trading of private homes.

Subsales are secondary market deals in projects that have yet to receive a Certificate of Statutory Completion (CSC) and are often seen as a gauge of the level of speculative activity in the market.
An analysis of URA Realis caveats data shows that of the total number of private homes bought by foreigners, the percentage that they pick up from the subsale market has fallen from 18-21 per cent in 2007-2009 to 13 per cent last year and 11 per cent in the first nine months of this year.

Foreign buyers occupy a higher percentage in the subsale market as usually, those who are here (mainly Singaporeans and PRs) have the first bite of the cherry when it comes to new property launches as they can easily attend the launches, view showflats and book their units. In the past, foreigners who missed out on these launches often had to turn to the subsale market.

Indeed market watchers note that in earlier property bull runs including the one in 2007, local buyers often punted on new property launches with the prospect of offloading their units to a foreigner in the subsale market at a handsome gain.

Things are different now. The government has acted strongly to discourage short-term property trades by imposing punitive seller's stamp duty rates of up to 16 per cent for those who have bought a private home on or after Jan 14, 2011 and sell it within a year. This has shrunk the pool of units available for sale in the subsale market.

There has also been a step-up in the volume of private residential properties launched in the past two years, on the back of increased state land sales.

Foreigners, especially from China, have also found it easier to clinch properties from Singapore developers these days. This is because of the aggressive marketing blitz by developers that includes offering potential buyers in China incentives to travel to Singapore to visit showflats.
PRs tend to rely on the resale market for a higher percentage of their private home purchases - possibly because many have been renting and are therefore looking for a completed home for immediate owner-occupation.

On the other hand, most Singaporeans already own a home and therefore can wait a few years for a private project to be completed. Investors - many of whom are Singaporeans and foreigners - can buy either completed or uncompleted units, which could explain the higher percentage of new sales among these two groups.

Foreigners are more inclined to turn to the primary market also because it's easier for them to view developers' showflats than to make appointments to view a completed property in the resale market, and to buy more than one unit in the same project from a developer, given the limited amount of time they have. Also, the overseas marketing of uncompleted projects has made them more accessible to foreigners.

Source: Business Times – 8 November 2011

The Cuscaden Residences hits $2,262 psf

The neighbourhood of Cuscaden Road and Tomlinson Road, off Tanglin Road, is attracting the interest of high-net-worth individuals again, largely owing to the upcoming 29-unit boutique luxury condominium development, Hana, by Pontiac Land. The units at the 99-year leasehold Kerry Hill-designed project are said to average 3,500 sq ft each.

Nearby, Hotel Properties Ltd (HPL), one of the biggest stakeholders in the prime neighbourhood, launched the 70-unit Tomlinson Heights (on the site where Beverly Mai used to stand) in Cuscaden Road in August last year. Of the 30 units launched, 29 have been sold to date. The most recent recorded transaction according to URA was for a 4,004 sq ft, five-bedroom apartment that was sold for $12.53 million ($3,129 psf).
Existing high-end condos in the vicinity are also seeing renewed interest from buyers.

For instance, at the 150-unit freehold Cuscaden Residences, there were two transactions over the week of Sept 26 to 30, based on the latest caveats lodged and downloaded from URA Realis as at Oct 19. One was the sale of a three-bedroom, 1,485 sq ft unit on the 13th level, which changed hands for $3.33 million ($2,242 psf). The seller had purchased it for $2.28 million ($1,533 psf) in August 1999 when the project was first launched. The seller saw a price appreciation of about 46%.

Apartments at Cuscaden Residences have traditionally attracted investors, given the prime Orchard Road location as units there tend to be popular with high-level expatriate executives. The asking prices today
are considered attractive to buyers. However, buying activity is low at the moment as most investors are putting their property investments on hold owing to uncertainty of the global economy in recent months. The low transaction level could also have contributed to the sluggish prices.

Even though the current economic climate has affected transaction volume in the high-end segment as investors stay on the sidelines, interest for luxurious and exclusive condos in Singapore remain unaffected.

Source: The Edge – 24 October 2011

Foreign banks cutting jobs here

Foreign banks in Singapore may be reluctant to disclose numbers but industry observers note that jobs are being cut at these lenders.

Mr Gary Lai, managing director of recruitment consultancy Charterhouse, said most of the banks that had reduced staffing here had done so to consolidate operations in countries like the Philippines or India. 

"So while you may have one person that they let go here, they might be hiring one more in a lower-cost country," he said.

Foreign banks and financial institutions like Credit Suisse, Macquarie Group, Bank of America Nomura Holdings and Daiwa Securities are some of those that have retrenched staff in Asia recently. 

Reuters also reported last week that South Africa's Standard Bank had cut three jobs at its oil trading desk in Singapore.

Still, Mr Lai said that the job losses in Singapore were not significant compared to 2008 and 2009, when markets were hit by the collapse of Lehman Brothers.

Still, with no quick solution to the euro zone debt crisis, banks are likely to scale back operations - and job cuts are likely to be in the investment banking sector.

Mr Lai pointed out that companies like Daiwa have big trading arms as "they've been trying to beef up their investment portfolio". 

The job outlook at Singapore banks appears to be more secure.

Mr Leng Seng Choon, co-head of research at DMG, said the bulk of the earnings for local banks came from interest income. 

"For that reason, I think the (Singapore) banks will continue to keep the headcount at a level that is suitable for their operations," he said.

Source: Today – 9 November 2011

Rents of apartments in city fringe on the rise

Rents for apartments in the city fringe areas are on the rise and this is being attributed to the concurrent increase in the number of small units that are generally under 500 sq ft in size.

In a study, rents in the city fringe, which covers areas like Balestier, Bishan and Geylang, rose to S$3.36 per square foot (psf) per month (pm) by the third quarter of this year, up from S$3.15 last year. (Median rents in the city fringe were S$2.86 psf pm in 2008 and S$2.64 psf pm in 2009).

The increase in rents in the Rest of Central Region (RCR) corresponds to the rise in the number of small-format sized apartments in Serangoon, Balestier and Geylang over the last few years. Renting in the city fringe area, near the CBD, is a viable option with more expatriates having switched over to local packages in recent years.

Since 2009, the gap between city fringe areas (or RCR) and core central region (CCR) has narrowed from 29 per cent in 2009 to 24.5 per cent in Q3 2011. The gap will probably stabilise at around 26 per cent by the end of this year, as rents in both CCR and RCR remain at current levels in the coming months.

Rents in the CCR hit S$4.30 psf last year after having fallen to $3.72 psf in 2009. CCR rents have risen to S$4.45 so far this year, after recording a lower increase of 15.6 per cent over the 2009-2010
 period compared to the RCR at 19.3 per cent.

Outside of the Central Region (OCR), rents have seen steady increases. Last year, rents increased 17.5 per cent to S$2.68 psf from a low of S$2.28 psf in 2009.

Compared to RCR, rents in OCR have increased at a slower rate partly because of the large supply of HDB flats that are available for lease in the OCR.

Rents are likely to stabilise in Q4 as leasing activity eases. The sluggish economic growth projected for 2012 may translate to reduced job opportunities for expatriates. Coupled with a high number of new completions in 2011 and 2012, there will be some pressure on rents going forward.

Source: Today – 7 November 2011