Home sales ‘to stay weak next year’

Job insecurity will deter buyers, says DTZ, as economic gloom prevails

AMID difficult economic conditions, home sales are expected to remain weak next year, said real estate firm DTZ in a research report yesterday.

Job insecurity and further weakness in the market will deter buyers from committing to property purchases, it added.

This will weigh on consumer spending and create a ‘contagion effect on the property market’.

Already, residential sales in the past two months have been ‘dismal’, said DTZ, adding that only 112 units were sold in October. This was the lowest figure since the Urban Redevelopment Authority (URA) started releasing monthly sales data in June last year.

Last month was slightly better with 192 units sold, but it was still a dramatic drop from the monthly average of 444 units sold in the first nine months of the year.

URA data showed that while 38,100 units were sold last year, only a third or so of this figure changed hands this year.

DTZ called these results a ‘complete reversal of the trend in the private residential market’, and said the fall in home prices gathered pace in the fourth quarter ‘on the back of worsening sentiment’.

Non-landed properties were hit hardest, as prices of non-landed freehold private homes in the prime districts fell by 14 per cent in the fourth quarter from the quarter before. This was after the sector had already fallen by 4.5 per cent in each of the previous two quarters.

Overall, average prices fell 21.6 per cent from the year before, to $1,160 per sqft - a level not seen since the second quarter of last year.

Even landed housing prices, which had held firm up to the third quarter, ’succumbed to the weak conditions’ and fell in the fourth quarter, said DTZ.

However, these did not fall as drastically as other sectors, with freehold prices slipping between 3.8 and 5.7per cent from the third quarter.

Rents have also been dropping.

DTZ said rents of non-landed private residential properties, which first corrected in the third quarter, ‘continued to head southwards as more expatriates are being repatriated’.

It added that tenants, possessing lower housing budgets, are increasingly moving from prime locations to the suburbs, or downgrading to smaller units.

Average monthly rents of prime non-landed homes fell 9.4per cent from the previous quarter to $4.36 per sqft.

There is, however, a silver lining amid the gloom, observed DTZ.

Ms Margaret Thean, the firm’s executive director, said: ‘Housing loan rates are low despite more cautious lending from banks, and there are investors waiting to enter the market when prices have fallen to attractive levels.’

Source : Straits Times - 30 Dec 2008

From factories… …to Fusionopolis

JTC Corp talks about how it has come this far since its birth in 1968

MUCH was at stake when Jurong Town Corporation (JTC) workers started hacking away at the uninhabited jungles and marshlands of the Jurong area in 1968.

The fate of not only the future industrial hub of Jurong, but also Singapore itself, might have been in the balance.

‘If JTC had failed, Singapore might have failed,’ said Mr Ong Geok Soo, assistant chief executive of the body now known as JTC Corp, in a recent interview.

He has been at JTC through almost all of its 40 years, and remembers well the early challenges.

‘We seeded the whole process. We developed Jurong town,’ said Mr Ong. ‘In the early days, JTC built roads, drains, sewers and worked with the Public Utilities Board to bring in power.’

Fortunately, the pioneers at JTC were a gung-ho bunch. There were some ‘daredevils’ who went all out to get the project done.

Back then, JTC was an all-round developer, building not only factories but even flats and gardens. It practically carved out Jurong town, and also built some of the flats in the area, which were later transferred to the Housing Board.

Although few entrepreneurs were initially willing to invest in Jurong, it eventually attracted huge foreign investment.

‘In the early days, we had to build confidence and trust as we had to show investors we were credible. Customers were not yet at our door,’ said Mr Ong.

Slowly, more and more customers came. Then began JTC’s evolution, from its founding purpose to develop the Jurong Industrial Estate, to a much wider role in Singapore’s development.

It began to build more no-frills low-rise factories elsewhere across the island in the 1970s.

Then it moved on to building multi-storey factories and high-tech business parks. ‘Customers became more sophisticated. They wanted labs, showrooms, warehouse space.’

Gradually, the private sector was also able to provide and manage the same sort of space that JTC had been providing.

That meant JTC had to do more. It then reclaimed land that was eventually offered to business clusters in need of space. Chemical firms were housed on Jurong Island and pharmaceutical players at Tuas Biomedical Park, for instance.

Then, plans were laid out for the $15 billion one-north - a 200-ha self-contained research hub in Buona Vista promoting a ‘work, live, learn and play’ lifestyle. It is to be built over 15 to 20 years.

JTC has played a key role in Singapore’s move into research and development and product design, helping the nation keep up with the times by offering innovative products to attract investors.

Since 2001, JTC has gone on to build Biopolis and then Fusionopolis at one-north. Media Park will follow.

These clusters of intelligent, cutting-edge ‘factories’ are striking examples of how far JTC has come since 1968. The high-rise buildings boast green features and combine work with leisure.

Apart from work spaces, the first phase of Fusionopolis, a $560 million two-tower-cum-podium development, has serviced apartments, shops and 13 public sky gardens, for instance. It even has a state-of-the art experimental theatre, which boasts a unique $380,000 timber beads-acoustic wall padding.

Construction of the 30-ha Fusionopolis, which will stretch over at least six phases, started in 2003 when the Sars outbreak was taking its toll on the economy. ‘We were prepared to put our money into it but nobody trusted us,’ said Mr Philip Su, JTC’s assistant chief executive.

Market confidence was then at a low ebb so JTC wasn’t sure if there would be takers for the space. Nevertheless, it forged ahead with the project, believing in its long-term potential. ‘Now I’ve got a problem. I don’t have enough space. Now, we have to launch phase 4,’ said Mr Su.

Due to a lack of space, JTC is also going underground to create more usable space for Singapore. It is building an underground oil storage facility called Jurong Rock Cavern, which will feature over 2.7 million cubic metres of storage space when completed.

There are plans for an underground science city catering to research and development and an underground warehouse.

Among its other new ideas is one which looks at housing business clusters in a high-rise complex. For instance, a car mart can be combined with warehousing and logistics facilities.

These projects, which the private sector finds too big, complex and risky to handle, will be the focus of JTC in future.

It recently sold $1.71 billion worth of its ready-built facilities to Mapletree Investments as it shifts focus to such strategic projects that will help take Singapore into the future.

‘In the early days, we had more flexibility as we had plenty of land,’ said Mr Ong. ‘Now, we are short of land so there’s more planning, more thinking… We are less visible because Singapore is more developed now.’

Nevertheless, there is always a place for JTC in Singapore, said Mr Ong.

‘Private developers won’t be holding a lot of land and pumping money into, say, Seletar Air Base, at the start,’ he said. ‘They will want to see some seeding in place first.’ JTC is turning Seletar into a business aviation hub.

Source : Straits Times - 30 Dec 2008