Medium- to long-term prospects for S’pore property sector still strong

Singapore’s commercial and residential property sectors will remain attractive to investors in the medium to long term.

Property watchers told Channel NewsAsia that is because of Singapore’s status as an international financial hub.

2009 looks set to be a difficult year by all accounts, but market watchers said property investment fundamentals here remain strong.

As global financial institutions cut costs, they are likely to move operations out of expensive cities in the US and Europe to Asian countries such as Singapore, where the cost of doing business is cheaper.

For example, Singapore’s corporate tax rate is 18 per cent, compared to 29 per cent in the UK and 40 per cent in the US.

And this could spur demand for office space in financial centres like Singapore, presenting investment opportunities for the commercial property sector.

Christopher Fossick, managing director, Southeast Asia, Jones Lang LaSalle, said: “Financial institutions are growing, in many cases from hundreds to thousands of jobs here in Singapore. The bigger these institutions become, the more real estate they need.”

But there are opportunities in the residential market as well. The closing gap between debt servicing and rentals, as well as falling valuations in 2009, could see many investors looking for a good deal.

Eugene Lim, associate director, ERA Asia Pacific, said: “For example, those in district 9, 10, and 11, they tend to be more elastic, the prices. So when the economy is not doing too well, the prices come down quite a lot, especially amongst those who have, for example, bought from the developer and then now need to sell to raise cash flow. They are prepared to cut losses.”

Observers said Singapore’s property market will offer rich pickings to investors who have their eyes on long-term returns.

Source : Channel NewsAsia - 30 Dec 2008

URA gives go-ahead for three hotels

Source : Business Times - 26 Jul 2008

A number of residential projects also get the nod

A STRING of residential, commercial and industrial projects received provisional permission from the Urban Redevelopment Authority (URA) in the second quarter of this year.

Far East Organization unit China Classic received provisional permission to build a 384-room hotel at Cross Street, while Hotel Plaza got the nod for a 345-room hotel at Upper Pickering Street.

Resorts World at Sentosa got the go-ahead to build a hotel with 1,352 rooms as well as 45,090 sq m of retail space in the central zone of its integrated resort.

Residential projects that received URA’s provisional permission in April-June this year include Frasers Centrepoint’s 717-unit condo at Lakeside Drive in the Boon Lay area, Chip Eng Seng’s 372-unit condo at Elias Road in Pasir Ris; and UOL/Peak Century’s 643-unit condo at Simei Street 4. All these projects have 99-year leasehold tenure.

EC Prime Pte Ltd - controlled by Melvin Poh, Tan Koo Chuan and Saw Pik Kee - received approval to develop 228 apartments at Alexandra Road.

URA also gave the nod in Q2 for the development of 110,790 sq m of business park space in three new projects - to Soilbuild Group Holdings to develop a facility named Solaris at Ayer Rajah Avenue/Fusion Walk (42,780 sq m); to Lawrence Leow’s Crescendas Bionix Pte Ltd to develop 41,200 sq m at Biopolis Phase 3; and to Ascendas for a project at Changi Business Park Crescent (26,810 sq m). Business park space can meet the office needs of some firms, for example, backroom operations, URA noted.

Provisional permission for multiple-user factories were also granted for projects at Commonwealth Drive and Jalan Tepong. Trio Link Development clinched approval for a 21,570 sq m industrial development at Playfair Road.

UOB Kay Hian Trading obtained URA’s go-ahead for its transitional office development at Anthony/ Scotts roads (13,020 sq m).

URA also gave provisional permission to Ritzland Investment for 12,050 sq m of offices at Mountbatten Road.

The White House Residences

Majestically poised in the coveted environment of Tanglin, Singapore’s prime residential district, are the White House Residences, a prospective living development of grandeur and privilege. The owner says of this prestigious area, “Singapore is not a mere jewel in Asia but a whole jewelry box with its rapidly changing and ever-progressing business, entertainment, cultural, and lifestyle opportunities.” Surrounded by a mélange of romantic colonial bungalows, stately villas, and classic architecture, these homes sit amid verdant landscape surroundings and share the exclusive neighborhood of ambassadors, senior politicians, and captains of industry. Centrally located, yet secluded, the residences enjoy proximity to Singapore’s Botanic Gardens and the bustle of Orchard Road

Only 12 distinctive homes comprise this enviable community. They share a sheltered enclave clad in an elegant mix of contemporary white stones and expansive glass enhanced by a fully equipped gym and a reflective infinity-edge pool set against a sweeping tropical backdrop. Embracing a milieu somewhere between Modernism and Romanticism, each residence has an architectural weave of comfort, style, and class with finishes that are simple and understated.

Casa, one of the three distinguished developments, boasts homes of 5,000 to 5,600 square feet spanning three stories with five voluminous bedrooms. Roof terraces, a lap pool, and landscaped gardens highlight these four dwellings. Penthouse is the second hamlet of residences that are enviably spacious and feature a roof top whirlpool with timber decks and landscaped planters. Suite is the third set of resplendent homes and graces owners with four bedrooms and a secluded private garden.

Each division of the White House Residences features homes of exemplary designer finesse, outstanding architecture, and the finest finishes. The most renowned names in the creation of masterful domains have been employed, including Anotnio Lupi and Gaggenau. The custom kitchens, baths, and wardrobe structures have each been meticulously borne of a specialist’s discerning eye. A Home Intelligence System provides state-of-the-art technology to ensure each resident supreme comfort and security. A tasteful vision and white-glove standards have been imbued into each of these Singapore jewels. Breathtaking scenery, world-class structures, upscale shopping, and refined dining are just some of the alluring attractions of the urban centerpiece that frames these gracious homes.

Home price rebound could take time

Source : Today - 10 Jul 2008

Continued weakness comes amid caution caused by inflation and bleak outlook

RECENT developments in the local property market have sent conflicting signals to investors. Several developers have indicated willingness to delay launches as residential property prices show signs of weakness, while others are pointing to still-strong demand. Meanwhile, market data from the Urban Redevelopment Authority (URA) has indicated that the pace of increase is slowing down. In fact, the second quarter increase is the slowest rate of increase since the third quarter of 2004.

Market analysts have also downgraded their ratings on property stocks in view of the slowing demand, with certain segments more susceptible to further downward price revisions. While the delay in property launches looks negative at first glance, it is actually a good move to regulate the supply of units coming onto the market and should not be viewed wholly as a negative move.

Residential property prices stayed resilient in the first quarter of 2008, with the property price index up 3.8 per cent from a quarter ago, but this eased to a growth of a mere 0.4 per cent quarter-on-quarter in the second quarter, based on the latest URA flash estimate, pointing to likely weakness.

Transaction volumes have been declining since the second quarter of 2007, plunging to a low of 762 transactions in the first quarter of this year. Such a trend points towards an inevitable correction in prices as historically, a price correction would follow about one to five quarters after transaction volume has peaked in a rising property market.

A sharp recovery in transaction volume over the near-term may avert a price correction, but is unlikely to occur in view of present global woes resulting from record high oil prices and high inflationary fears.

First, foreign interest in local properties is waning, as foreign buyers turn cautious over subprime issues and the credit crunch. Secondly, the recent en bloc fever, which fuelled part of the demand for housing by the displacement of en bloc sellers, has slowed in recent months. Lastly, the withdrawal of the deferred payment scheme has taken out the speculative transactions in the property market, as seen from the declining number of subsale transactions.

I would also caution against using property as a hedge against inflation, as there is no conclusive evidence of the correlation between inflation and property prices. Properties are cyclical in nature and are subject to market sentiment. As such, inflationary pressure is unlikely to have any positive impact on property prices, as buyers are likely to exercise greater caution in light of the weakening sentiment in the property market.

The recent release of the sites under the Government Land Sales programme for the second half of this year further confirmed the weakening sentiment in the residential property sector. The number of residential sites under the confirmed list for the second half of this year has been halved, from eight sites released in the first half of this year to four sites planned in the second. Recent bids for government sites had also came in below market expectations, another sign of cautiousness among developers.

Going forward, we expect to seefurther weakness in residential property prices. Sentiment is likely to remain cautious against the backdrop of a weaker economic outlook, tighter credit market and rising inflation. This should deter buyers from spending on big ticket items. With the prevailing cautious market sentiment, and if prices trend lower, smaller developers with comparatively lower holding power are likely to offload their units onto the market to reduce gearings and holding costs.

The high-end segment of the property market is also likely to be at risk to price correction, as this segment has been the driving factor for the run-up in property prices since the beginning of 2006. With foreign investors turning wary, this could result in lower demand. For the mass market, a surge in launches in the first quarter of this year may have caused buyers to be more cautious, but we expect the take-up rate for mass market properties to move up once concern of over-supply eases. In addition, prices for the mass market segment have not moved up as rapidly as those for the high-end segment.

CARMEN LEE, head of research at OCBC Investment Research.