Plenty of upside left in mid-tier property market: Kwek Leng Beng

Plenty of upside left in mid-tier property market: Kwek Leng Beng

By Bryan Lee

DESPITE woes in the United States’ housing market, there is still plenty of zing in Singapore’s red-hot property market.
Banks are still lending a lot of cash and mid-tier homes are still on offer at prices below 1996’s peak, says Mr Kwek Leng Beng, executive chairman of leading developers City Developments and Hong Leong Group.

‘I believe that there is still a lot of upside. At the mid-tier, prices are still less than 90 per cent of the peak in 1996,’ he told delegates yesterday at the Forbes Global CEO Conference.

His bullish view was echoed by his counterparts from other parts of Asia, including China, India and the Middle East.

They agreed that real estate remains hot property in their countries even as problems in the US have thrown global financial markets into a tizzy.

‘The (Shanghai) market is very strong because the inherent demand is just tremendous,’ said Hong Kong developer Shui On Group chief executive (CEO) Vincent Lo.

Residences next to the hip Xintiandi area are commanding prices of up to US$10,000 (S$15,236) per sq m, he said, adding that the waiting list for office space in the city stretches to 2010.

In the United Arab Emirates (UAE), property development is growing at unprecedented rates, said Dubai 9 Group managing director Hayan Merchant, noting that 26.5 per cent out of the world’s 130,000 cranes are in the UAE.

About 30 million sq ft of office space will be added in Dubai next year, he said, while another 42 million sq ft - equivalent to all the office space in downtown San Francisco - will come online the following year.

Singapore’s boom should continue even though psychological fears over the ongoing global credit crunch may take a little of the fizz out, said Mr Kwek. He said that lenders in Singapore are a little more cautious but there is still plenty of liquidity.

He added that historic prices over the past 10 years imply that the ‘right’ selling price for top-end properties should be about $3,600 per sq ft on average.

‘We are doing about $4,000. It’s about 10 per cent up, which is not alarming.’

The Government’s efforts to make Singapore a ‘global city’ that attracts foreigners to live here will help sustain the property bull run, he said.

He said that last weekend, he had met a group of foreigners, some of whom were developers, visiting Singapore for the first time. After four or five days, they started asking about buying high-end condominiums and office blocks.

‘All the real estate sectors - industrial, retail, commercial and residential - have kicked off. And this has to do with growing interest in Singapore as a global city.’
Source : Straits Times - 12 sept 2007

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Investors load up on property contracts

Investors load up on property contracts

THE turmoil which has engulfed financial markets globally has hardly dented investor enthusiasm in Singapore’s red-hot property market.
The swift recovery of property giants such as City Developments (CDL) and CapitaLand after a region-wide selloff two weeks ago suggests that the Singapore equities market has decoupled itself from the volatility on Wall Street.

Yesterday, covered warrants on property developers were among the most actively traded contracts on the Singapore Exchange.

These included a call warrant issued by Deutsche Bank on CapitaLand which closed 0.5 cent lower at 21.5 cents on a volume of 8.15 million units, and a contract issued by Macquarie Bank on CDL which ended one cent down at 14 cents, with 6.67 million units traded.

Interest in these warrants was spurred by the $1.69 billion winning bid by CDL and partners for a plum commercial site at the old Beach Road military camp.

‘This hotly-contested bid is a strong testimony of the keen interest in the property market by foreign developers and the big boys here,’ said a dealer.

Deutsche Bank vice-president Sandra Lee expects warrants on property counters to remain popular with investors. These include a Deutsche Bank call warrant on CapitaLand which requires its holder to use five warrants after paying a strike price of $7.80 for conversion into one share.
Source : Straits Times - 12 sept 2007

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Third site for condo-like public flats in Ang Mo Kio

Third site for condo-like public flats in Ang Mo Kio

By Tan Hui Yee, Housing Correspondent

A PLUM site close to amenities in Ang Mo Kio has been earmarked for the third public housing project to be designed, built and sold by private developers.
The site, which analysts estimate can fit about 550 flats, and blocks that rise up to about 36 storeys, will be launched for tender by the HDB today. The tender closes on Nov 27.

Already, property analysts expect strong demand from developers, and later, by home-hunters. This comes after red-hot demand when the first public-private project went on sale in Tampines last year.

The 1.7ha plot in Ang Mo Kio Street 52 is a stone’s throw from Ang Mo Kio town centre and the recently-opened commercial and transport complex Ang Mo Kio Hub.

Some of the flats will appeal to homebuyers on lower budgets. The developer that snags the Ang Mo Kio site will have to reserve at least 30 per cent of the project for four-room or smaller units.

Property analysts say the site is set to be a winner. It is near the leafy Ang Mo Kio Town Garden East, as well as Ang Mo Kio MRT station and a host of shops in the mature town.
Property agency Propnex’s chief executive, Mr Mohamed Ismail said: ‘This is a sure-sell location.’

Dennis Wee Properties director Chris Koh expects the land to fetch $125 million, while Savills Singapore’s director of marketing and business development Ku Swee Yong predicted a range of $100 million to $125 million.

Mr Mohamed expects the flats there to go for between $350,000 and $400,000 each.

The land parcel has a 103-year lease, and the developer will have to complete the project within four years of buying the land. The apartments will come with elderly-friendly features, as seen in new HDB flats now.

Under the hybrid scheme launched two years ago, developers design, build, price and sell flats built according to the broad rules of public housing. This means that common spaces have to be easy to maintain, that buyers have to meet ethnic quotas, and that only family units can buy the flats, for example.

Interest in these flats has been keen so far because they are located in mature estates and come with fittings more commonly found in private housing, such as bay windows.

The first batch of 616 Tampines units, being developed by Sim Lian Land, received close to 6,000 applications last year. Most were five-room units in blocks up to 17 storeys high, priced at between $308,000 and $450,000.

The second batch of about 700 flats in Boon Keng Road will be launched for sale later this year by a consortium led by Hoi Hup Realty. It will comprise three 40-storey blocks.

Source : Straits Times - 12 sept 2007

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HDB launches design, build and sell site at Ang Mo Kio

HDB launches design, build and sell site at Ang Mo Kio

By ARTHUR SIM
THE Housing and Development Board has launched a third Design, Build and Sell Scheme (DBSS) site for sale. The latest site, which is at Ang Mo Kio Street 52, is the second to be launched for sale this year. The site area is 16,789.1 sq m (180,716 sq ft), with an allowable gross floor area of 58,761.85 sq m (632,506 sq ft). It is close to the Ang Mo Kio town centre with its MRT station, bus interchange and the AMK Hub.
Noting the attractive location of the new site, Savills Singapore director of marketing and business development Ku Swee Yong said that he believes the site could fetch between $110 million and $125 million or about $170 to $200 per square foot per plot ratio (psf ppr).

The development is targeted at HDB upgraders or en bloc sale downgraders, and Mr Ku said that he expects a good take-up because the stock of vacant HDB flats has fallen of late.

Mr Ku highlighted that recent suburban condominiums like The Parc condominium in the West Coast and The Soleil at Novena had sold well, ‘even though this is traditionally a quiet month for property sales’.

The successful developer will be required to build a minimum of 30 per cent of the flats with a floor area of 95 sq m or less - equivalent to flats of four rooms or smaller.

CBRE Research estimated that the site can yield more than 500 units. CBRE added: ‘Given the established residential environment in Ang Mo Kio, together with the known popularity of DBSS units, we expect a good response from mid-sized developers and joint venture of contractors and developers.’

Upon building completion, the successful developer will hand over the entire development site to the HDB for lease administration, and to the Town Council for maintenance of the common areas and car parks.

The tender will close at noon on Tuesday, Nov 27.

The second DBSS site, at Boon Keng Road, was awarded in June. It sold for $233.74 psf ppr - double the $113.64 psf ppr price for the first DBSS site in Tampines sold in Jan 2006.
Source : Business Times - 12 sept 2007

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Property boom far from over: Kwek Leng Beng

Property boom far from over: Kwek Leng Beng

By CONRAD TAN

CITY Developments executive chairman Kwek Leng Beng believes that the property boom here is far from over, despite the current financial market turmoil.
Mr Kwek: ‘Crisis means opportunity. I’m a bottom-fisher, I like to go in when the market is bad’
‘The boom actually just started in 2005, and if you’re thinking of a relapse, I don’t think that is possible,’ he told chief executives yesterday at the Forbes Global CEO Conference.

‘Sub-prime has to some extent affected Singapore … there’s a psychological fear of what will happen.’

But ‘our banks are still lending a lot of money’, Mr Kwek noted. ‘They’re a little bit more cautious, but we have plenty of liquidity.

‘The banking and financial systems here are very well controlled … they are well regulated and the central bank has taken action to pre-empt crises like what you’ve seen in sub-prime.’

The property tycoon, who is also chairman of Millennium & Copthorne Hotels, was speaking at a panel discussion on global real estate trends.

He said that, after adjusting for inflation, high-end residential property prices have risen only about 10 per cent in real terms from their lowest level over the past decade, ‘which is not alarming’.

He said: ‘My advice is, look at it realistically - crisis means opportunity. I’m a bottom-fisher, I like to go in when the market is bad.

‘I believe there’s still a lot of upside. The mid-end is still 19 per cent below the peak of ‘96.’

In addition, he said Singapore had introduced a lot of initiatives over the past 10 years to attract foreigners to live and work here, which has fuelled demand for property.

‘You may say it’s very dull, but we are going to have the integrated resorts, Formula One, and a host of other events that will make Singapore an exciting city to live, work and play.’

Other panellists were also optimistic on the prospects for further growth in property development in China, India, and the Middle East.

Vincent Lo, the chairman and chief executive of Hong Kong-based Shui On Group, who was also on the panel, said he was ‘very bullish’ on the property market in China. ‘We have waiting lists for our office space till 2010.’

Kushal Pal Singh, chairman of DLF Group, the largest real estate developer in India, said there remained a ‘huge gap between demand and supply’ of residential property there.

Hayan Merchant, chief executive of Dubai-based Ruwaad Holdings, said the current pace of development in Dubai and the United Arab Emirates more generally was ‘unprecedented’.

The property, hospitality and tourism investment and development company is looking at moving into Asia ‘in the next three to five years’, Mr Merchant told reporters in a separate briefing. He said Ruwaad was looking particularly at Singapore, Malaysia, China and India for expansion opportunities.

Source : Business Times - 12 sept 2007

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Q3 may see slowdown in private home sales

Q3 may see slowdown in private home sales

But new launches may accelerate activity again, say market watchers
By KALPANA RASHIWALA

(SINGAPORE) Private home sales are expected to slow this quarter - the result of the twin effects of the US sub-prime woes which made the headlines in August and the just-ended Hungry Ghost month.
But the pace of activity is expected to pick up again as developers step up launches and confidence recovers, say property market watchers.

Fresh price benchmarks may still be set for projects offering compelling propositions, but developers are likely to tread carefully before upping prices.

CB Richard Ellis (CBRE) estimates that the total number of new private homes sold by developers in the primary market during Q3 will be 3,500-4,000 units including sales from ongoing projects. This is lower than the 5,129 units sold in Q2 and 4,783 units transacted in Q1 this year.

Activity also decelerated in the secondary market in Q3. ‘Whereas the first and second quarters saw resale volumes of 4,645 units and 6,514 units respectively, it is likely that Q3 figures will be lower, probably in the region of 4,000 to 4,500 units,’ CBRE executive director Li Hiaw Ho says.

‘Anecdotal evidence suggests that subsale activities have been muted as investors become more cautious,’ Mr Li added. Subsales as a percentage of total private housing sales are likely to fall below the 7.4 per cent and 9.7 per cent in Q1 and Q2, he predicts.

Subsales, often used as a gauge of speculative activity, involve projects that have yet to receive a Certificate of Statutory Completion, while resales, which are also secondary-market transactions, cover completed developments.

But the current slowdown in activity is not such a bad thing, says DTZ Debenham Tie Leung executive director Ong Choon Fah.

‘The market has been going up quite dramatically. It’s good that people step back and evaluate their positions before moving on. This window also creates an opportunity for people to enter the market. When the market is so hot, everytime you put in an offer at the seller’s asking price, he raises his price,’ she says.

Ong Chong Hua, executive director of Ho Bee Investment, also describes the current slowdown as ‘a healthy consolidation after a robust period of growth in sales volumes as well as prices’.

‘Activity will start picking up slowly and I think confidence will come back, as developers start launching more projects. Buyers will be cautious but underlying demand is still strong. The share market seems to have consolidated and strong economic fundamentals are still in place for Singapore and the Asian region,’ he said.

Among the projects expected to be released soon are MCL Land’s Hillcrest Villas cluster terrace homes along Dunearn Road, Ho Bee’s Turquoise condo at Sentosa Cove, Bukit Sembawang’s Paterson Suites and SC Global’s Hilltops in so said to have Cairnhill. CapitaLand is albegun selling Latitude at Jalan Mutiara at around $2,800 per square foot on average.

Projects that are slated for launch in Q4 include Lippo’s condo on Sentosa Cove, Ritz-Carlton Residences at Cairnhill, and the second phase of Marina Bay Financial Centre.

Says DTZ’s Mrs Ong: ‘Sales activity may be slow for the next couple of months, but this will depend on the type of projects launched and their price points. If developers release projects that are targeted at home owners, demand is still very much there. But if they’re targeting investors or want to set benchmark prices, buyers will take a longer time to consider.’

Ho Bee’s Mr Ong said: ‘Developers will definitely be more cautious in moving up prices and trying to set benchmarks all the time. They will test the waters.

‘But I don’t think anybody will cut prices because fundamentals are still strong. There’s still a shortage of homes, with a lot of those who sold their homes in en bloc sales looking for replacement properties.’

CBRE’s executive director (residential) Joseph Tan reckons that the market could still see benchmark prices if the right kind of products are offered, such as branded residences.

Looking to the final quarter of 2007, the residential market will remain active as the government’s projected economic growth rate of 7 to 8 per cent for 2007 remains on track. ‘If developers sell around 3,000 to 4,000 units in Q4, then the total number of new homes sold in 2007 will be a new record of 17,000 to 18,000 units,’ CBRE’s Mr Li said.

This will be significantly higher than the 11,147 units sold in the primary market last year.
Source : Business Times - 12 sept 2007

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Ang Mo Kio condo site sets record

Ang Mo Kio condo site sets record
Far East’s $202.9m winning bid means suburban project may eventually launch at over $1,100 psf
By UMA SHANKARI

(SINGAPORE) A plum condominium site in the heart of Ang Mo Kio has set a new record for suburban land prices, fetching some $601 per square foot per plot ratio (psf ppr).
And when the project is eventually launched, it could set a record for private home prices outside the central areas, analysts said.

Yesterday, HDB said that Far East Organization put in the top bid for the 0.6-ha mass market condo site at Ang Mo Kio Avenue 8. The developer beat 13 other bidders with its bullish offer of $202.9 million - which works out to $601 psf ppr .

‘The price is probably the highest paid for a suburban site in recent years,’ said Donald Han, managing director of property firm Cushman & Wakefield.

Analysts said that Far East’s bid for the 99-year leasehold site beat market predictions that the top bid would be around $500 psf ppr.

Far East’s break-even cost for the site is now estimated to be in the region of $900-$1,000 psf, which means that units in the project could eventually be launched at $1,100-$1,200 psf - a record for private home prices in the suburbs.

‘If Far East can achieve prices of around $1,200 psf for the project, then yes, it will be a record for the suburban areas,’ said Ku Swee Yong, Savills Singapore’s director of marketing and business development.

By comparison, units in other projects in the vicinity - albeit in less attractive locations - are mostly going for around $400-$600 psf.

Far East’s bid was 11.8 per cent higher than the next highest bid of $538 psf ppr put in by Chip Eng Seng.

The bid was 68.9 per cent higher than the lowest bid of $356 psf ppr bid jointly put in by Wing Tai Holdings and United Engineers.

Far East also beat out other big names such as CapitaLand, Hong Leong Group and Frasers Centrepoint.

Experts said that the high prices and large number of bids signalled that developers had confidence in the strengthening suburban residential market - notwithstanding the US sub-prime mortgage fears that rattled stock markets here.

The plot also drew strong interest due to its good location. It is situated right next to Ang Mo Kio MRT station, and is just 15 minutes away from Orchard by train.

‘With an increase of 4.2 per cent in overall HDB resale prices in the past six months, more HDB households would be poised to upgrade to this conveniently located private development,’ said Li Hiaw Ho, executive director at CB Richard Ellis’ research unit.

Units in the project could be sought-after by HDB upgraders in the Bishan and Toa Payoh estates - where HDB resale prices command a premium - as well as Ang Mo Kio itself, Mr Li said.

In addition, the project may also prove to be attractive to private homeowners in Serangoon and the Thomson/Upper Thomson Road areas, he added.

The site, which was on the government’s reserve list, was launched in July after an unnamed developer bid $102 million, or $302 psf ppr area for it.
Source : Business Times - 12 sept 2007

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