Locals dwarf home-buying spree by foreigners in Q2

Locals dwarf home-buying spree by foreigners in Q2

Koreans become major players; foreign buying hits record 2,864 units

By KALPANA RASHIWALA
(SINGAPORE) Foreigners, including permanent residents, bought a record 2,864 private homes in Singapore in the second quarter, up 34 per cent from the preceding quarter and more than twice the 1,221 private homes that they invested in during the same period a year ago.

But even this brisk buying was dwarfed by Singaporeans, who accounted for 68 per cent of caveats lodged for private home purchases in Q2 this year, up from 65 per cent in Q1.

In contrast, foreign buyers’ and PRs’ share of total private home purchases slipped to 25 per cent in Q2 2007, from 27 per cent in Q1 2007.

Companies, meanwhile, accounted for the remaining 7 per cent of private home buyers in Q2 2007, reflecting strong collective sales as well as acquisitions by numerous funds investing in residential property, according to DTZ Debenham Tie Leung’s analysis of caveats captured by Urban Redevelopment Authority’s Realis system.

DTZ’s report also showed Koreans are growing in prominence and accounted for 6 per cent of foreign buyers in Q2, their highest share ever. Koreans’ share among foreign buyers has been growing steadily over the past year.

The figure used to be around one to 2 per cent in 2004 and 2005, but rose to 2 to 4 per cent in various quarters last year. Koreans hardly featured as buyers in the 1990s.

The 185 private homes Koreans bought here during April to June 2007 reflected a 76 per cent quarter-on-quarter increase.

Growing purchases by Koreans reflect not only acquisitions by Korean nationals residing here, some drawn to Singapore by their children’s education, but also efforts by major Singapore developers to market their projects in Korea, DTZ executive director Ong Choon Fah observed.

Indonesians and Malaysians continued to be the largest groups of foreign buyers, accounting for 22 and 18 per cent respectively of overall private home purchases by foreigners in April to June 2007. This was followed by buyers from India, United Kingdom and China.

Nearly 96 per cent of the 2,864 private homes foreigners picked up in Q2 were private apartments/ condos, with landed homes making up the remaining 5 per cent.

The 2,743 apartments/ condos foreigners bought in Q2 comprised 2,062 units purchased in the secondary market - up 44 per cent from Q1 and a record quarterly figure - and 681 units acquired from developers in the primary market.

A further split of the secondary market purchases showed that 455 units were acquired in the subsale market and 1,607 units in the resale market. The latter figure was up 37 per cent from the preceding three months and a fresh high.

Resale deals are secondary market deals in developments that have received their Certificates of Statutory Completion, while subsales involve projects that have yet to do so.

DTZ attributed the strong foreign interest in resale properties to the current buoyant leasing market. Given the tight supply of rental properties in the prime districts, many expats are choosing to buy homes. Their preference is for completed properties that they seek to occupy themselves.

The 455 subsale apartments and condos that foreigners bought in Q2 represented a 32 per cent quarter-on-quarter increase and was the second highest quarterly figure ever - trailing only the 485 units snapped up in Q4 1995.

The Sail @ Marina Bay, Sky@eleven and Icon were among the projects popular with foreign buyers in the subsale market in Q2.

In the resale market, the most highly-sought after developments among foreigners included Sanctuary Green, Pebble Bay and Water Place (all in the Tanjong Rhu area), Queens and Valley Park. In the primary market (units purchased directly from developers), Casa Merah, RiverGate, One-north Residences and The Solitaire were among foreign buyers’ favourite projects.

Mrs Ong predicts that foreign buying will continue to be steady in the second half of 2007.

‘Sub-prime has taken some froth out of the market; but this affects more the specuvestors (who buy for capital gains but don’t mind holding on to the property, waiting for its price to rise). Foreign buyers, however, are purchasing more for owner occupation or long-term investment, drawn by Singapore’s success in reinventing itself. Property prices here are higher than two years ago, but then Singapore today is very different. It is a very desirable place to invest and live in,’ she said.

Source : Business Times - 19 sept 2007

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61% of Upper Serangoon Shopping Centre for sale

61% of Upper Serangoon Shopping Centre for sale

By UMA SHANKARI

SOME 61 per cent of Upper Serangoon Shopping Centre has been put up for sale by its owner, who is asking for $35-37 million for the stake.
The price works out to an average of $595 to $629 per square foot (psf) over available floor area.

The 61 per cent share is made up of strata-titled units consisting of 66 shop units out of a total of 164, as well as the sole office unit and all eight apartments. The properties for sale have a total strata floor area of 58,750 sq ft.

Transacted prices of commercial units in the vicinity for this year are in the range of $600-770 psf, said Credo Real Estate, which is marketing the project.

The stake is being sold by the original developer of the building, Hong Huat Development Co, which is now in voluntary liquidation.

The property firm was previously trying to get owners holding at least an 80 per cent share value in the shopping centre to agree to a collective sale. But BT understands that the majority owner decided to go ahead and sell the 61 per cent stake rather than to wait.

Credo said that there is still an opportunity for an en bloc sale together with other proprietors who may be keen to explore the possibility.
The buyer can also embark on a refurbishment scheme to spruce up the units for potential higher rentals, the firm added.

The ageing Upper Serangoon Shopping Centre is a six-storey commercial and residential development on Upper Serangoon Road.

‘With its prominent visibility and good accessibility, Upper Serangoon Shopping Centre is an attractive investment to serious investors looking for higher returns compared with those of the residential properties,’ said Credo.

The area consists mainly of conventional landed housing and low to mid-rise residential and shophouse developments.

The tender for the property will close on Oct 17 at 2.30 pm

Source : Business Times - 19 sept 2007

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Two prime residential sites put up for tender

Two prime residential sites put up for tender

Bids of over $1.2b seen for Pinnacle Collection condo site at Sentosa
By ARTHUR SIM

TWO prime residential sites have been put up for tender, including the one at Sentosa which has been creating some buzz in the market, not least because of its billion-dollar price tag.
Sentosa Cove Pte Ltd launched its final condominium land parcel - The Pinnacle Collection - yesterday with a reserve price of not less than $963.8 million or $1,600 per square foot per plot ratio (psf ppr) for the 231,676.8-sq-ft site.

In July, SC Global put in the top bid of $268.3 million or $1,799.78 psf ppr for another Sentosa condo plot, so the reserve price for The Pinnacle Collection is conservative.

Savills Singapore director of marketing and business development Ku Swee Yong expects to see bids of between $1.2 billion and $1.3 billion, and believes the hefty price tag will see more joint ventures between foreign investors and local partners.

He also said the time frame for development, which will see The Pinnacle Collection receive temporary occupation permit (TOP) around 2011 when Resorts World at Sentosa is completed, will be perfect for a developer who wants to keep part of the development as an investment property for rental returns.

The news that the development of Marina South could be accelerated, with more potential waterfront living options, is not likely to have any impact as this is not expected any time soon.
Cushman & Wakefield managing director Donald Han says the market is still fairly hot. ‘The developer (for The Pinnacle Collection) will want to go in and out within a short space of time,’ he said.

One condition for the site, however, is that price and design will determine the winning bid. So as with the recent Beach Road land tender, the winning bid may not necessarily go to the highest bidder.

Sentosa Cove general manager Kemmy Tan added: ‘Design for this development is a key component in our evaluation.’

Design could raise the price of the units too.

‘As The Pinnacle Collection is conceptualised as an iconic project, the successful developer would allocate more in the way of resources to conceive an inspiring design as well as high-end finishes,’ said CBRE Research executive director Li Hiaw Ho.

As such, he estimates that the break-even cost would be between $2,800 and $3,000 psf based on a land price of $2,000 psf ppr. This would translate to an estimated selling price of about $3,200-$3,500 psf.

Separately, the Urban Redevelopment Authority (URA) put up a site in Enggor Street (Land Parcel B) in Tanjong Pagar for tender on the confirmed list of the Government Land Sales Programme.

Knight Frank director of research and consultancy Nicholas Mak reckons a condominium with about 190-210 units can be built at the site, which has been zoned ‘Residential with commercial at first storey’ with a maximum gross floor area of 252,091 square feet.

Mr Mak believes the site, apart from being well located, will also be attractive to developers because the URA temporarily disallowed the conversion of office use in the Central Area to other uses until December 2009, exacerbating limited supply in the area.

As such, Mr Mak expects the site to fetch bidding prices from $156 million to $177 million, equivalent to $620-$702 psf ppr.

Source : Business Times - 19 sept 2007

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Tourism industry needs more workers in coming years

Tourism industry needs more workers in coming years

Govt agencies to develop upgrading, training frameworks
By LYNETTE KHOO

MORE and more workers are going to be needed in Singapore’s tourism business in the years to come, as a result of projects including the two integrated resorts (IRs), the Singapore Flyer and the Formula One race, Hawazi Daipi, senior parliamentary secretary for the Ministry of Manpower, said in Parliament yesterday.
He said that government agencies are looking at ways to ramp up training through education in tourism-related disciplines and upgrading the skills of existing service workers to prepare them for the new tourism jobs. Much has also been done to encourage Singaporeans to be more open to jobs in the tourism sector.

From 2004 to end-2006, tourism employment grew by an average of 6.6 per cent per year from 157,000 to more than 178,000 workers, Mr Hawazi said.

‘The two IRs are expected to generate 20,000 jobs in the tourism industry, of which some will be new trades,’ Mr Hawazi said. ‘Many new jobs will be filled by workers in the existing services sector.’

The Ministry of Manpower (MOM), the Singapore Tourism Board (STB) and the Workforce Development Agency (WDA) are working with the two IR operators to understand their manpower needs and to formulate a targeted strategy to meet these needs.

Both IR operators have indicated that they require workers with key attributes such as strong service mindset and good service skills, pointing to the need for more generic traits rather than specific skill sets that can be picked up subsequently.
‘The WDA is working with key industry players to develop a set of service standards called the WSQ (Workforce Skills Qualifications), which are highly portable skills and service traits,’ Mr Hawazi added. ‘The WDA will launch these programmes at a later date.’

At the same time, WDA will continue to work with the STB and Spring Singapore to raise awareness among Singaporeans of the importance of good service and beef up its Gems (Go the Extra Mile for Service) movement, he added.

The WDA, STB and other government agencies have been working with education institutions to open up more places to students in tourism-related disciplines. Mr Hawazi noted that there has already been a higher intake of students for tourism-related disciplines in post-secondary institutes.

The number of places in tourism-related courses at polytechnics, universities and Institutes of Education (ITEs) has grown from 2,000 last year to 3,000 in this academic year.

To upgrade the skills of existing service workers, WDA has set up the WSQ training frameworks in culinary, retail, hospitality and conventions and exhibitions.

‘Apart from education institutions, companies have been working with WDA and other agencies to train their workers in various types of services activities,’ Mr Hawazi said. ‘This is to ensure that when tourism activities become even more vibrant, our workers will be in a better position to take up better-paying jobs.’
Source : Business Times - 19 sept 2007

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En bloc sellers ’set to spend over $4b buying new homes’

En bloc sellers ’set to spend over $4b buying new homes’

Savills expects sales to pick up as owners get paid and seek replacement homes
By Fiona Chan, Property Reporter
BOOM TIME: Some of the larger projects sold collectively in April to June include Leedon Heights and Farrer Court on Farrer Road.

CASH windfalls will soon be arriving for the hundreds of home owners who sold their property en bloc during the frenzied April to June period.
As they look for new homes, they could pour more than $4 billion into the market by early next year, according to new estimates from Savills Singapore.

The property consultancy said the ‘bunching up’ of collective sales in the second quarter will yield almost $6.4 billion in total collective sale proceeds.

Most of the amount is due to come in between December and February, which is likely to prompt a pickup in market activity, said Mr Ku Swee Yong, Savills Singapore’s director of marketing and business development. Assuming some sellers already have second homes, those who need a new place to live in will have about $4.2 billion to spend, he said.

His calculations showed that about 2,800 units were sold en bloc between April and June, for an average of $2.3 million a unit.

But he estimates that only about two-thirds of the owners will buy replacement homes. Still, this means almost 1,900 units in move-in condition will be needed in the months ahead.

Buyers are likely to seek these homes in areas such as Bukit Timah, Upper Bukit Timah, Clementi, Novena, Upper East Coast and Bukit Panjang, added Mr Ku.

This is because the bulk of the collective sales during the period were in the prime areas of Districts 9, 10, 11 and 15. Together, these cover Orchard, Holland, Bukit Timah, Newton and the East Coast.

Some of the larger projects sold en bloc in April-June include Farrer Court and Leedon Heights on Farrer Road, with more than 900 units between them. All these projects are in District 10, said Savills. In this prime district alone, 1,600 units were sold for $4.3 billion, it added.

‘Sellers in Districts 9 and 10 are likely to look for new homes in Districts 11 and 21 - Bukit Timah and Upper Bukit Timah,’ said Mr Ku. ‘Even if they have money to stay in the centre of town, they may have nothing to buy, as most of the older projects have already gone en bloc in the last two years.’

On the other hand, Bukit Timah and Upper Bukit Timah ‘have plenty of projects and not many collective sales’, he added.

He expects en bloc sellers to be out in full force buying new homes starting from December, thanks to the record run of collective sales this year - such deals from January to June hit almost $10 billion, according to Savills.

‘Almost all such sellers get their money within nine months of the sale,’ Mr Ku said, adding that Strata Titles Board sale approval takes about six months.

He added it has proven difficult for some sellers to buy a new home using a bridging loan. ‘So most of them won’t be able to buy a replacement unit until they actually get money in hand.’

Source : Straits Times - 19 sept 2007

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Singapore awarded top AAA credit rating for this year

Singapore awarded top AAA credit rating for this year

Fitch notes its strong fundamentals even as global markets tackle new economic risks
By Alvin Foo
GOING STRONG: Singapore’s rating is not expected to be affected by the recent volatility in capital markets, says Fitch. — PHOTOS: ST FILE PHOTO, LIANHE ZAOBAO

SINGAPORE is the only country in the Asia-Pacific region with an AAA credit rating, global ratings agency Fitch Ratings said yesterday.
After reaffirming the AAA rating for 2007 with a ’stable’ outlook, Fitch senior analysts said Singapore was in strong shape despite the new economic risks faced by global and emerging markets today.

The top-notch rating is not expected to be affected by the recent volatility in capital markets, they added.

‘Singapore’s credit fundamentals are strong across the board,’ said Mr James McCormack, Fitch’s senior director and head of Asia Sovereign Ratings. ‘It’s a small economy, but well-diversified. There’s a manufacturing centre, petrol refining sector, pharmaceutical industry.

‘It’s the only AAA that we have in the Asia-Pacific region… the management of public finance on the external side is exceptionally strong, we see no meaningful credit risk or credit issues.’

He was speaking here on the sidelines of the Fitch Ratings Sovereign Hotspots Asia Conference held in Singapore yesterday on the economic risks facing global and emerging markets today, particularly Asia.

Hong Kong, whose economy is more dependent on services, especially financial services, was upgraded from AA- to AA.

Fitch also forecast that Singapore will post economic growth of 7 per cent for both this year and next year.

Will the recent global credit crunch triggered by the troubled United States sub-prime mortgage market affect Singapore’s future rating?

Said Mr McCormack: ‘It’s not going to affect the credit fundamentals, but it definitely will affect growth.

‘There’s no avoiding that. It’s an open economy, depends on trade…and once there’s a slowdown in the US, Singapore will feel the effects.’

Mr McCormack said Singapore is the third-most vulnerable economy to a global economic slowdown and continued capital market disruption in the region after Hong Kong and Sri Lanka.

Vulnerable economies are those with higher gross external financing needs, lower external liquidity and growing gross external debt. However, he added that there is ‘no cause for concern’ as the vulnerability is due to Singapore’s open economy.

‘Singapore and Hong Kong are extremely open economies, international banking centres, vulnerable to slower global economic growth…but I won’t read too much into that. They’re not vulnerable from a credit and ratings perspective,’ he said.

‘The countries in Asia we’ll be concerned about are Sri Lanka, possibly South Korea…Indonesia and Thailand.’
Source : Straits Times - 19 sept 2007

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Fed’s interest rate cut for 1st time in 4 years

Fed’s interest rate cut for 1st time in 4 years

WASHINGTON - THE US Federal Reserve cut a key interest rate for the first time in four years, seeking with an aggressive half-point move to prevent a steep housing slump and turbulent financial markets from triggering a recession.
The Fed announced yesterday that it was reducing its target for the federal funds rate, the interest that banks charge each other, from 5.25 per cent to 4.75 per cent, its lowest level since May last year. The half-point reduction was double the quarter-point move that many economists had been expecting.

The action was designed to boost economic growth by lowering borrowing costs for millions of consumers and businesses.

Commercial banks were expected to quickly match the Fed’s action by cutting their prime lending rate. The prime rate has been at 8.25 per cent for the past 15 months.

It was the first cut in the interbank rate - the Fed’s main tool to influence the economy - since June 2003 and the first half-point reduction since November 2002. In a related move, the Fed also lowered the discount rate it charges for direct loans to banks by a half-point to 5.25 per cent.

Source : Straits Times - 19 sept 2007

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Horizon Towers majority owners break ranks ahead of court battle

Horizon Towers majority owners break ranks ahead of court battle

Some approach HPL group to seek resolution, avoid possible payout
By Joyce Teo, Property Correspondent
SOME majority owners at Horizon Towers have broken ranks ahead of a courtroom showdown with a developer over the condominium’s bungled $500 million collective sale.
Some owners, keen to avoid the potentially costly legal battle, have written to the Hotel Properties-led (HPL- led) consortium which agreed to buy the condominium in February.

A group of them say they are willing to sell their units to the consortium at the price agreed before the deal hit a brick wall. Another group of owners say they want to comply with the contract or seek any peaceful resolution.

HPL chief Ong Beng Seng and the consortium’s lawyers from Allen & Gledhill have agreed to meet these owners today, sources said.

The legal action, alleging breach of contract by the sellers, is due in the High Court on Thursday next week.

The consortium is seeking damages of more than $800 million - and if successful, that means every majority owner could face a massive payout.

The sellers now appear to be in disarray, having ignored a Sept 11 deadline given by the buyers for them to extend the sale completion date.

By the time the deadline came around, the sellers had no one to represent them as three remaining members of the sales committee had quit at a meeting on Sept 7. That meeting was attended by more than 200 sellers.

Sellers from 20 units who are keen to extend the sale completion date have called for a new meeting to elect a new sales committee. It has been scheduled for tomorrow evening.

HPL and its partners - Morgan Stanley Real Estate-managed funds and Qatar Investment Authority - had come in after the Horizon Towers tender closed in August last year without attracting a buyer at the $500 million reserve price.

But the sale fell through after the Strata Titles Board (STB) threw it out over a technical error in the sale paperwork last month.

The buyers then asked the sellers to extend the sale deadline by four months so that they could appeal against the STB ruling or try to refile the sale application.

If the sale had gone ahead, owners of 199 apartments would have reaped about $2.3 million each, while owners of the 11 penthouses would have received at least $4 million each.

Observers say HPL and its two partners will want to buy the site as a whole, which requires consent from the majority of the owners, and not individual units as some owners are proposing.

The buyers have asked the court for a ‘representative order’ which was served on all the owners yesterday.

If the High Court grants the order, any final judgment obtained against the seven defendants - who are sale committee members - will bind all the sale committee members and majority owners.

In an affidavit accompanying the summons, HPL said it would be ‘administratively inconvenient and extremely costly’ to pursue each of the 270 sellers as defendants.

Besides, the sellers have contracted with them on identical terms, it says.

Many others are waiting for the High Court hearing next Friday on their appeal to quash the STB order, before deciding on their next step.

They are mostly under major stress, faced with the prospect of possibly coughing up millions in damages. Some of them, including sale committee members, have sought their own legal advice.

More lawyers have jumped into this case, which already involves several firms and well-known lawyers.

Source : Straits Times - 19 sept 2007

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‘Iconic’ condo site at Sentosa Cove up for sale

‘Iconic’ condo site at Sentosa Cove up for sale
By Joyce Teo, Property Correspondent
THE best of the condominium sites in the wildly-popular gated residential enclave of Sentosa Cove was left till last.
That site went on sale yesterday, at a reserve price of $964 million, or $1,600 per sq ft per plot ratio - the price psf of the potential floor space.

But property consultants are already expecting bids for the 99-year leasehold site to come in above $2,000 psf per plot ratio, pushing the overall price well over $1 billion.

That would put the eventual selling price of completed condo units there at a hefty $3,200 to $3,800 psf - a level that some Orchard Road homes are going for.

‘This is an iconic site, the equivalent of the Orchard Turn site for Sentosa Cove,’ said Mr Ku Swee Yong of property consultancy Savills Singapore.

This 231,677 sq ft site, called The Pinnacle Collection, is one of two condo land parcels that flank the entrance of the marina leading into Sentosa Cove. It is set to be the tallest development in the enclave, with a height limit of 20 storeys.

Until now, the tallest has been the 15-storey The Oceanfront@Sentosa Cove, which sits on the other condo parcel flanking the marina entrance.

The newest site also allows the highest density development in Sentosa Cove, with a plot ratio of 2.6. That allows for a gross floor area of nearly 602,360 sq ft. Up to 357 luxury apartments can be built at the new site, said Sentosa Cove in a statement.

Despite the reserve price, property analysts feel certain this site will beat the price paid by SC Global in late July for another site at the enclave, which set a record of $1,799 psf per plot ratio.

Property consultancy CB Richard Ellis anticipates that the new site will be the ‘most coveted’ parcel of all the Sentosa Cove plots.

‘The interest level in the site could be a measure of developers’ confidence in the high-end residential market, and their reaction to the stock market turbulence,’ said Mr Nicholas Mak of property consultancy Knight Frank.

The successful bidder is likely to produce an inspiring design with high-end finishing touches, they said.

They expect the break-even cost for this residential project to be between $2,800 psf to $3,000 psf based on a land price of $2,000 psf per plot ratio. This would translate to an estimated selling price of about $3,200 psf to $3,500 psf for the homes, they said.

Mr Ku expects end selling prices at $3,400 to $3,800 psf.

The tender, which closes Dec 12, will be awarded based on price as well as design.
Source : Straits Times - 19 sept 2007

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