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Singapore Chinatown shophouse put up for auction at $3m
Price for the leasehold property works out to $4,274 psf
By KALPANA RASHIWALA
(SINGAPORE) A restored three-storey shophouse at the corner of Trengganu and Temple streets, often featured as an icon of Singapore’s Chinatown area, has been put up for auction.
15 Trengganu Street: The former opera house will be auctioned on Nov 22
The owner’s indicative price is $3 million for the property, which is on a site with a remaining lease of 65 years. This works out to $4,274 per square foot based on the property’s 702 sq ft land area.
That sounds steep, considering that No 20 Trengganu Street nearby, comprising seven shophouses also with a remaining lease of 65 years, was sold earlier this year for $18 million, or $1,722 psf of land area, to Asok Kumar of Royal Brothers Group.
That property has a total land area of about 10,450 sq ft and a total lettable area of nearly 24,000 sq ft.
However, Knight Frank’s auctions director Mary Sai, whose firm is offering 15 Trengganu Street at its auction at Carlton Hotel on Nov 22, points to the property’s aesthetic appeal, with intricate arches and columns, and its historical background - it was an opera house in the 1930s/1940s.
‘It also has dual frontage along Trengganu Street and Temple Street,’ Ms Sai says.
The property is being put up for sale by its owner, a local businessman active in the Chinatown circle.
He occupies the building’s upper floors, according to Ms Sai. He will vacate the property for the new owner, although he has leased out the ground floor to a tenant until September 2008.
The property has about 2,200 sq ft of floor area.
Knight Frank is also offering at the same auction a two-storey pre-war intermediate terrace house at Lorong 40 Geylang. The freehold property has been put up for auction by the Inland Revenue Authority of Singapore to recover outstanding property taxes.
The property has the address Nos 17 and 17A Lorong 40 Geylang. No 17A is the second storey, which is served by a separate external staircase.
The property’s land area is 1,392 sq ft.
Knight Frank, which points out that the property is not part of the Geylang red light district, says the indicative price is $700,000 to $750,000. Surrounding uses include residential and associations.
IRAS auctions off properties only as a last resort to recover property tax - after the owner repeatedly fails to pay or defaults on his payment despite many reminders. IRAS will return any balance on the sum received to the owner, after recovering outstanding tax, penalty payment, interest, and the cost of recovery.
Source : Business Times - 06 Nov 2007
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Mindy Yong
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Hugo Boss leads the way with IR boutique in Singapore
It’s the first luxury brand to confirm a space at Marina Bay Sands IR
By UMA SHANKARI
LUXURY brand Hugo Boss will set up a 2,000 square feet boutique in the upcoming Marina Bay Sands integrated resort (IR) - the first luxury brand to confirm taking space there - as it seeks to grow its sales in Singapore by as much as 50 per cent over the next three years.
Refresh: Hugo Boss is also looking at revamping its existing boutiques
‘I see a potential upside for growth of about 50 per cent over the next few years, especially with the new stores,’ said Hugo Boss chief executive Bruno Salzer. ‘We will definitely have a presence in the two casinos.’
In addition to the Marina Bay Sands boutique and the one targeted for Genting’s Sentosa IR, Hugo Boss is also keen to have a presence in upcoming Orchard Road mall Ion Orchard, said Brian Ang, managing director for the Hugo Boss franchise in Singapore and Bangkok. ‘It is important for us to be in Ion Orchard,’ he said. ‘Most probably we will be somewhere prominent in the mall.’
Hugo Boss recently celebrated its 20th anniversary in Singapore, for which Dr Salzer flew into town. The upcoming boutiques in Singapore are part of Hugo Boss’s push to expand in the region at a fast clip.
The label has about 170 stores in Asia (excluding Japan) at present, but Dr Salzer wants to grow the number by about 15-20 stores yearly over the next few years, he said. ‘Asia now contributes about 10-11 per cent of total sales, and I expect double-digit growth over the next couple of years,’ said Dr Salzer.
Within the region, Japan and China are the biggest markets for the group. Of the 15-20 new stores the brand aims to add each year, the bulk are likely to be in China, he said. But Dr Salzer is also excited about the potential for growth in Singapore, especially with the new stores coming up.
Mr Ang said that in addition to the planned new stores, Hugo Boss is looking at revamping its existing boutiques.
Right now, the brand’s flagship boutiques in Ngee Ann City are split across two levels. But by the end of next year, the brand hopes to have its space all on one floor, - with a 7,000 sq ft floor plate - Mr Ang said. He did not specify if the boutique will be in Ngee Ann City as well. In addition, there are also plans to revamp Hugo Boss’s 1,600 sq ft store in Paragon. Mr Ang is looking at taking up more space. The brand also has a boutique at Changi Airport.
The Boss boutique in Marina Bay IR will be ‘more luxurious’ and will be designed to appeal to high-rollers, Mr Ang said.
Source : Business Times - 06 Nov 2007
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Mindy Yong
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CDL-Wachovia JV buying two blocks at Cliveden at Grange Singapore
CDL hints it may retain units in some future residential developments
By KALPANA RASHIWALA
A JOINT venture between City Developments Ltd (CDL) and US-based Wachovia Development Corporation is buying two blocks at CDL’s Cliveden at Grange condo for $432.4 million or an average price of about $3,750 per sq ft (psf).
$432.4m deal: Joint venture firm Grange 100 Pte Ltd is buying two blocks at Cliveden, comprising 44 apartments, for $432.4 million
And according CDL executive chairman Kwek Leng Beng, the deal attests to the freehold project’s ‘high investment potential’ and reflects CDL’s ‘business strategy of leveraging on the capital appreciation potential of our developments’.
In an interview with BT in May this year, Mr Kwek said he was considering retaining a portion of some new residential developments for rental income and capital appreciation.
At CDL’s Q2 results briefing in August, he said he was considering retaining two blocks at Cliveden.
A Hock Lock Siew column in BT later that month speculated on whether CDL was mulling a residential real estate investment trust (Reit) to which it could spin off apartments held for investment.
CDL was silent on this in its statement to the Singapore Exchange yesterday. But market watchers reckon a possible exit strategy for the CDL-Wachovia joint venture for their investment in the two Cliveden blocks would be to divest them to a residential Reit.
Without elaborating, a CDL spokesman said yesterday: ‘We will look into this business model of retaining units in some of our future residential developments.’
CDL is taking a 40 per cent stake in the joint venture company Grange 100 Pte Ltd that is buying the Cliveden blocks, comprising 44 apartments. Wachovia holds the majority 60 per cent.
The 44 units are three and four-bedders, and two penthouses. The prices at which they were bought range from $3,392 psf to $4,313 psf.
Before the deal was announced yesterday, CDL had sold 42 units at Cliveden at an average price of $3,690 psf since the project’s soft launch in June. More than 90 per cent of these units were bought by foreign buyers from the UK, Australia, Hong Kong, China, Taiwan, Indonesia, France, Korea and Japan.
After the latest deal, only 24 apartments will be left at the 110-unit Cliveden, which is coming up on the former Kim Lin Mansion site.
Last year, CDL bought the Lucky Tower site, diagonally opposite the Kim Lin plot, for $1,134 psf per plot ratio.
Source : Business Times - 06 Nov 2007
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Mindy Yong
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Inflation may hit record 4% next year - Singapore
Citigroup forecast based on further tightening of labour and property sectors
By Bryan Lee
TOP ISSUES: Global energy and food prices are surging, but bigger challenges lie in property and labour markets here, says Dr Chua. — ST FILE PHOTO
INFLATION may hit a record- breaking 4 per cent in the first half of next year as a red-hot economy adds more strain on the already-tight labour and property markets.
The warning from Citigroup economist Chua Hak Bin also came with a call for the Government to allow the Singdollar to appreciate faster while possibly deferring less urgent major investment projects like the Marina Bay botanic gardens.
‘We maintain that overheating and inflation risks remain high,’ said Dr Chua in a research report out yesterday.
‘The economy is now at full employment, and the cost of hiring foreign workers has now increased considerably given higher accommodation cost.’
Despite greater uncertainty about the global economy, he said Singapore is likely to beat next year’s official growth forecast of 4 per cent to 6 per cent, as it has done so in previous years.
His assessment found backing among other economists while others felt a slowing world economy will keep prices in Singapore in check.
HSBC economist Robert Prior-Wandesforde agreed that the Monetary Authority of Singapore (MAS) may allow a faster strengthening of the Singdollar to curb inflation from imported goods at the next monetary policy review in April.
The tightening carried out last month is unlikely to have a dramatic effect on inflation, said Mr Prior-Wandesforde.
But Action Economics economist David Cohen brushed off overheating concerns, predicting that inflation in the first half of next year should come in at just over 3 per cent.
‘The bigger concern is a potential slowing in the world economy, so it’s a balanced outlook right now,’ he said.
Dr Chua’s report comes a month after Prime Minister Lee Hsien Loong said while there are shortages in office space, the economy, as a whole, is not overheating and inflation is well under control.
The MAS has attributed the rise in inflation largely to a July hike in the goods and services tax rate. It is expecting prices to increase by 3.5 per cent on average in the first half of next year, before moderating in the rest of the year.
‘We are probably less sanguine,’ said Dr Chua.
He said global energy and food prices are rising sharply, driven by record oil prices and adverse weather conditions in farming areas. But bigger challenges lie in the domestic property and labour markets.
Dr Chua said the consumer price index (CPI) is lagging behind the steep increases in property prices and rents.
Housing CPI costs rose 0.4 per cent in September. But official indexes show that residential rents surged 11.4 per cent in the third quarter, while those for commercial space jumped 14.8 per cent.
The labour market is also at its tightest in a decade, with unemployment at 1.7 per cent.
Unlike previous years when the Government could simply let more foreigners in to work, skyrocketing rents mean their wages have to be hiked to cover their housing costs.
Labour costs are thus likely to continue rising after surging 8.5 per cent in the second quarter, said Dr Chua.
Source : Straits Times - 06 Nov 2007
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Mindy Yong
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Singapore Horizon Towers: Seven vow to go all out to stop sale
$2m spent in fight to keep homes but they’re willing to pay more to win
By Joyce Teo, Property Correspondent
SEVEN owners who opposed the collective sale of Horizon Towers from the word ‘go’ vowed last week to spend as much as it takes to keep their homes.
They have already spent nearly $2 million to fight the sale and may rack up double that by the time the saga is resolved.
‘We have no budget,’ said one, a retired former chief executive. ‘In life, not everything has to do with money. For us, this is our only home.’
These owners are locking horns with the majority owners - those who voted for the collective sale - at the Strata Titles Board (STB).
The hearing, with all the twists, turns and fighting over legal niceties that has marked it from day one, involves majority owners seeking STB approval for the original sale application rejected in August.
A number of minority owners - including the defiant seven who are split into two groups, each represented by different lawyers - oppose this, on a variety of grounds.
Disgruntled owners are becoming more common in Singapore. The property boom and the surge in collective sales have led to increasing numbers of people finding that rising replacement costs mean their bounty from selling en bloc counts for little.
One of the seven minority owners, who lives in a 5,000 sq ft penthouse, said: ‘There are seven people in my family, including the helper. You cannot expect us to downgrade to a 1,000 sq ft place.’
But the problems at Horizon Towers go deeper than that. The unhappiness over the sale of the 99-year leasehold estate started in January, said the seven minority owners.
It was then that they and many others learnt - via a newspaper report - that their 210-unit estate had been sold for $500 million to Hotel Properties and two partners.
The seven are among the 10 groups of owners who did not agree to sell and subsequently filed objections. One has withdrawn his objections.
They say the $500 million price tag, which works out to $850 per sq ft, is an unfair sum because prices have risen considerably. Developments nearby sold for more than double the price per sq ft achieved at Horizon Towers this year.
The seven owners spoke freely about protecting their homes but were cagey about disclosing personal details. Six of the seven refused to divulge full names, although they are listed in the STB affidavit.
They were also reluctant to reveal job details. One is a businessman, one runs her own company and there are at least three retirees - a lawyer, a chief executive and a property developer.
What unites them is the fight for their homes - something they say money cannot buy, and certainly not at last year’s prices.
Apart from their ability to spend hundreds of thousands of dollars to fight the sale, they are also clued-up about the law. ‘We are very different from other objectors,’ said Ms J. Tan, one of the seven. ‘We are very well-informed and very well-educated.’
A second owner, who was bemoaning the fact that every day of delay costs them about $100,000 in legal fees, said: ‘Every time someone makes a mistake, it becomes my problem.’
Said another: ‘If I don’t have grounds, I will not throw away my money. If I win, nobody will pay us back.’
Source : Straits Times - 06 Nov 2007
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Mindy Yong
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CDL, US group to buy 44 units of Grange Road condo in Singapore
By Tan Hui Yee, Housing Correspondent
REIT IN PIPELINE?: The deal for two towers at Cliveden, which will have manicured gardens with playful sculptures, is in line with CDL’s strategy of leveraging on the capital appreciation potential of its projects, says Mr Kwek. — PHOTO: CITY DEVELOPMENTS
PROPERTY giant City Developments (CDL) has teamed up with United States financial services group Wachovia to buy 44 homes in CDL’s freehold Grange Road project for $432.4 million.
Industry analysts suggest CDL might be preparing to list a real estate investment trust (Reit) using the properties. Knight Frank executive director Peter Ow said: ‘The only reason I can think of for this deal is so that they can put the apartments in a Reit in the future.’
CDL, however, declined to say if a Reit was in the pipeline, but it acknowledged it was studying this as well as other business models.
Under the deal, which works out to an average price of $3,750 per sq ft (psf), Wachovia’s real estate arm, Wachovia Development, will take a 60 per cent stake in the joint-venture company.
According to CDL, there are plans to rent out the 44 three- and four-bedroom apartments and penthouses - which take up two of the four towers at Cliveden at Grange - as well as possibly selling them off later if prices rise.
CDL executive chairman Kwek Leng Beng said yesterday: ‘The development has seen strong foreign interest from both individual buyers and retail investors since its launch… The deal is in line with our business strategy of leveraging on the capital appreciation potential of our developments.’
He had earlier indicated that CDL was considering keeping two blocks of homes at Cliveden instead of selling them off in a rush.
The deal could also mark the start of CDL’s preparation for a residential Reit, property analysts said.
The venture would mean that there are now just 24 units left for sale at Cliveden, which was launched for sale in July.
A total of 42 units were sold at an average price of $3,690 psf before the joint venture was announced yesterday. Many of the buyers are foreigners from Britain, Australia, Hong Kong, China, Taiwan and Indonesia, among other centres.
Wachovia is not new to the local real estate scene. It is also teaming up with CapitaLand to redevelop Char Yong Gardens and Farrer Court.
Mr Ow said the deal was positive for CDL due to the limited upside now for luxury homes. Putting the homes in a Reit, he said, would allow CDL to keep the apartments over a longer period of time, say three to seven years, and ride out any possible drop in prices in the near future.
Source : Straits Times - 06 Nov 2007
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Mindy Yong
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Singapore Opposition MPs, PAP rivals team up for estate upgrading
Hougang and Potong Pasir will use funds to go barrier-free
By Peh Shing Huei
IT’S FOR THE PEOPLE: ‘The funds are meant for the people and are not going to the WP or the PAP.’ - Mr Eric Low (right), saying this is the first time he is offering the CIPC funds to Mr Low Thia Khiang (left). — ST FILE PHOTO
FOR the first time, Singapore’s two opposition MPs and their opponents from the People Action Party (PAP) have come together to work on a project to improve their estates.
After years of barbs and battles, the long-time rivals in Hougang and Potong Pasir are teaming up to create a barrier-free environment for the elderly and the disabled.
The money for the projects will come from the Community Improvement Projects Committee (CIPC) fund, the source of much frustration for the two opposition MPs who have not been able to dip into the kitty on their own previously.
The CIPC, which reports directly to the Minister of National Development, disburses funds for minor improvements to estates.
However, access to the money is possible only through a constituency’s Citizens’ Consultative Committee, a grassroots organisation whose adviser is always a PAP representative.
As a result, the two opposition MPs - Mr Low Thia Khiang in Hougang and Mr Chiam See Tong in Potong Pasir - have long complained that the CIPC discriminates against them, denying them money for improving their estates.
But in this instance, Mr Eric Low in Hougang and Mr Sitoh Yih Pin in Potong Pasir - the PAP men who had the funds - made the first move in approaching the MPs, who run the town councils.
They did so as the nationwide move to make Singapore elderly- and handicapped-friendly would require the building of ramps and handrails in public places, which come under the purview of a town council.
This tie-up is a break from the past, when Mr Sitoh, for example, had avoided the town council by leasing state land from the Government to build solar lamps and a playground in Potong Pasir.
National Development Minister Mah Bow Tan told The Straits Times last night the teaming up was a Government decision, prompted by the tight deadline to make Singapore estates barrier-free by 2011.
‘We have been encouraging them to work together. Both of them have been responding,’ he said, referring to the opposition MPs.
Mr Mah stressed that this project is unlike the Lift Upgrading Project (LUP), which all constituencies will get, but Hougang and Potong Pasir are at the end of the queue as they are opposition territory.
Under the LUP, almost all HDB blocks will have lifts that stop on every floor by 2014.
On whether the cooperation was a sign of things to come with more projects undertaken jointly, Mr Mah said: ‘If it is a project that benefits the residents, then I think both the advisers and the town councils should work together.’
Mr Eric Low said the Workers’ Party leader has accepted his offer of $100,000 for the project.
The PAP man said: ‘I asked him to give me the plans on where to install the ramps and handrails and he has done so.
‘I should be able to approve it within the next two weeks.’
Mr Low Thia Khiang confirmed with The Straits Times that he had handed over a plan but declined to elaborate.
Mr Sitoh also said he is working with Potong Pasir’s town council and added: ‘This project is for the good of the residents.’
Mr Chiam welcomed the move last night, saying it is a ‘very sensible thing’.
‘I have met residents who are in wheelchairs and they need to have barrier-free places,’ said the Singapore Democratic Alliance chairman.
Mr Eric Low said the upgrading will be done across the estate where over one-quarter of the residents are approaching their 60s or older.
‘Just as Mr Low said that he does not oppose for the sake of opposing, I also do not oppose for the sake of opposing,’ he added.
‘And don’t forget that I’m the opposition in Hougang.’
Hougang residents like retiree Chew Hiang Tiak are delighted. Said the 69-year-old: ‘It’s good the politicians put aside their differences to work for the residents. There are lots of old people here, so these changes will make our lives easier.’
Mr Eric Low and Mr Sitoh ran against the incumbents in the 2001 and 2006 General Elections, and lost both times.
Following their failure last year, the PAP suspended its weekly Meet-the-People sessions indefinitely in both wards.
Source : Straits Times - 06 Nov 2007
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Mindy Yong
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mindy@mindyyong.com
More now see gambling as a way to get rich quickly - Singapore
By Salma Khalik, Health Correspondent
THE past year has seen a change in attitude towards gambling here - and not for the better.
While more people can tell the signs of problem gambling and where to get help, they are also more accepting of gambling in that they see it as a path to riches and are more game to take gambling risks. And fewer people think gambling can break up families or that frequent gambling leaves a gambler the poorer for it.
These startling results come from two surveys, done a year apart, by the National Council on Problem Gambling (NCPG).
The council concluded: ‘These shifts suggest a decrease in rational beliefs in recognising that gambling is essentially a game of chance.’
This year, 28 per cent of people would gamble if one of their friends struck it rich, up from 20 per cent, and 60 per cent say buying lottery, Toto, 4-D or indulging in social gambling are leisure activities and does not count as gambling, up from 50 per cent.
Other significant changes between last year and this:
The number who believe it is possible to strike it big more than doubled from 14 to 32 per cent;
Only 65 per cent feel gambling can lead to unhappy family life, down from 81 per cent; and
The number of people who think it ‘makes sense to continue gambling to recover losses’ jumped from 11 to 19 per cent.
There were a few bright spots in the survey findings. One was that 44 per cent of the 2,013 people aged 15 to 75 who were surveyed said they had not gambled at all in the past year, up from 41 per cent last year. Another was that 56 per cent of survey participants, up from 37 per cent, are now willing to seek professional help for relatives with a gambling problem. And 61 per cent know how to identify a problem gambler, up from 32 per cent.
Almost all - 95 per cent - see gambling as ‘potentially harmful’.
Madam Halimah Yacob, who heads the Government Parliamentary Committee (GPC) for Health, suggested Singapore’s endorsement of casinos here may have contributed to the change in perception.
The decision to develop integrated resorts with casinos may have led people to feel that ‘their perceptions are validated by the establishment’, she said, adding: ‘When people begin to view gambling as a form of recreation and therefore harmless, it means they have become blindsided to its ills.’
Fellow GPC member Lam Pin Min said: ‘What’s worrying are the opinions that better gambling skills help in winning loads of money and loss recovery.’ He added that this may have been accentuated by the glamour with which gambling is portrayed in recent movies, and the telecast of the World Poker Competition.
The NCPG agreed. Council member Mildred Tan said a discussion of the survey findings by the council closely reflected the MPs’ views. She said the council offered a third possible reason for the change in people’s views on gambling: the Totalisator Board’s introduction of new ways to gamble, such as punting on football matches. But she stressed this came from the council’s thoughts and was not based on data.
Mrs Tan said the NCPG will focus on two areas: debunking the myth that the more one plays, the better one’s chances of winning or recouping losses, and giving religious leaders and community self-help groups the tools to help gamblers who turn to them. The survey found that 48 per cent of people will turn to religious leaders for help, up from 38 per cent.
Source : Straits Times - 06 Nov 2007
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Mindy Yong
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mindy@mindyyong.com
What’s NEW in the REAL ESTATE Market From 01 October to 30 October 2007
Introduction
As though they had planned this for a long time, in October 2007 the Singapore government, not once but twice, ‘flexed its muscle’ against property purchasers purportedly to keep property prices in check against a backdrop of a comprehensive inflation, global financial market uncertainties, dwindling supply of office space and prime residential homes, and a large inflow of foreign companies into Singapore along with their huge war chest.
In two swift and surprising moves, the government made into law the proposed new en bloc sale rules which aimed to make en bloc sales tougher; and later in the same month, it withdrew Deferred Payment Scheme for uncompleted properties – a move seen as preventing a property bubble and a prelude to more things to come.
Below describes the ‘nerves of the market’ after the respective government initiatives had been announced.
(A) Uncertainties reigns in October market
(A.1.) 2208 may not be as good – projected 4-6% growth
The Monetary Authority of Singapore (MAS) said that for the first time in four years, Singapore faces a very uncertain outlook for 2008 due to high oil prices and the chances of further turmoil in the global financial market.
The economic sectors that powered Singapore ahead this year – property, wealth advisory and capital markets – are likely to be subdued due to the above-mentioned negative factors.
Among the domestic asset market-related activities, financial services are expected to continue to perform well in the last quarter of the year. But equity trading activities may slow down in 2008. Domestic debt market could also be dragged down by a more tentative mood amid lingering concerns over the credit market. Demand for wealth management services may be affected as a result.
Prospects for the construction sector are very promising, as many projects will reach completion stages and payments will be forthcoming.
However, the Asian region will continued to be spooked by the uncertainties in the US. Exports and growth will be affected by the situation in the US.
(A.2.) Oil spike threaten to shave off Singapore’s GDP growth
Crude oil surpassed US$90 a barrel in late October. This will push up business costs in Singapore, noticeably in wages, rents and daily essentials.
One of the vital counter measures taken by Monetary Authority of Singapore (MAS) was to gradually strengthen Sing dollar to avoid importing inflation from outside. However, if oil prices continue to increase unabated, MAS will have to tighten the measure further.
Every US$10 increase in oil prices from the current levels would shave Singapore’s GDP growth by about 0.5 to 1 percentage point. Singapore’s GDP growth this year is estimated to be between 7% and 8%. (22 Oct)
(A.3.) US may go into recession next year
Although sub-prime mortgage assets account for only 14% of all securitised assets in the US, the crisis has become the largest economic problem in three decades. If it drags on, Asian economies will be similarly hard hit like in 2001.
In the first half of 2007 and before the sub-prime mortgage crisis reared its head, US consumption accounted for a record 72% of GDP, or about US$9.5 trillion.
Now that the economy is hit by the mortgage crisis, consumer spending may drop drastically. If the US consumers start to save, nobody on the demand side can fill the big shoe.
The root of the problem is that the high consumption in the past few years were not supported by rising income but by a wealth effect which was caused by a property bubble that has now burst.
The ballooning effect has all but disappeared and it is now unlikely for US consumers to extract equity from their home with prices still going through a free fall. (18 Oct)
(A.4.) With s strong Sing dollar more liquidity is expected
However, the mixed signal comes from a strong Sing dollar. Interest rates in Singapore are going to stay cheap for some time. This is because the Monetary Authority of Singapore (MAS) has announced that it will raise the pace of Singapore dollar appreciation to counter imported inflation. The move will lead to higher money inflows and will benefit home buyers, consumers and corporate borrowers.
Instead of a higher interest rate to combat volatility of the financial markets and the increased chance of a recession in the United States, borrowers will now enjoy lower interest rate as foreign funds began to flow back to take advantage of a strong Singapore dollar.
There will be higher liquidity in the local market which will continue to keep interest rates and cost of borrowing low.
A stronger Sing dollar will make people want to invest in local equity markets as they will get both capital and asset returns. (12 Oct)
(B) Government passed new en bloc rules to dampen collective sales
(B.1.) New collective sale rules took effect on 4 October
The Land Titles (Strata) (Amendment) Act, enacted by Parliament on 20 September 2007, took effect from 4 October 2007.
The new rules aimed at making the sale process more regulated and transparent. More stringent conditions would have to be met, such as setting up of a Sale Committee at an extraordinary general meeting (EOGM) and be endorsed by at least 50% of the residents. A new five-day cooling-off period after signing the collective sale agreement was also introduced.
The changes will apply to all developments that have not obtained the mandatory majority consent from at least 80% of owners by share value, or 90% for estates less than 10 years old.
Full details in attachment – Annex A
(B.2.) En bloc sale volume dwarfed in third quarter
Having been primed, en bloc sale volume had already nosedived in the third quarter even before the new en bloc laws were made official. From July to September of 2007, only 24 sites worth a total of $1.96 billion were sold compared with 51 sites worth $6.92 billion in the second quarter.
The cautious mood in the collective sales market was due to the global credit tightening, the higher price tags and the two hikes in DC rates in July and September 2007. (The July revision was ad hoc and aimed to douse the en bloc sale fever)
For the first time since 2006, the residential investment sales only accounted for $2.9 billion or 21.4% of the total investment sales in the third quarter.
The cautious mood in the third quarter had caused the residential investment sales to nosedive 68.3% from the previous quarter. (16 Oct)
(B.3.) Mad rush to meet new collective sale rules
As there was earlier no mention of the actual start date for the new en bloc rules, the sudden announcement caught many real estate agents by surprise. And what ensued was a mad rush for signatures. They had to knock on doors and cajole owners right up to the last minute.
Some of the projects got their go-ahead at the eleventh hours, such as the Newton Lodge when the last signature was faxed from Shanghai a few minutes before midnight. Chestnut Ville in Upper Bukit Timah had the last signature appended at 10pm.
Three prospective en bloc projects which barely made it were Amber Park, Thomson View and Villa delle Rose.
For those who have missed out the deadline, such as Clementi Park, Pine Grove and Botanic Gardens View, they would have to restart the process all over again under the new rules. (7 Oct)
(B.4.) Only one collective sale site sold – District 19 Toho Garden
District 19 Toho Garden, a condominium on Yio Chu Kang Road near the junction of Ang Mo Kio Avenue 3 and Hougang Avenue 2, has been sold en bloc to GuocoLand for $62.5 million or $594 psf ppr, inclusive of a development charge of $9.8 million.
The site has an area of 86,900 sq ft and a plot ratio of 1.4, which gives a maximum height of five storeys.
However, the other 17 collective sale projects in other parts of Singapore are not as fortunate. See details of other en bloc project in Annex B. (22 Oct)
Details of other en bloc projects – Annex B
(C) URA launched more land to meet increasing demand
In fact, more individual plots of vacant land were officially launched for tender in October than any other months this year. Below outlines the information:
(C.1.) Simon Road plot near Kovan Melody attracted fierce bidding
The URA land sale of Simon Road was awarded to Duke Development, a new property development company set up by former UOB Kay Hian brokers, amidst a fierce tender which included property bigwigs such as Far East Organization, Hong Leong Holdings, Frasers Centrepoint and Allgreen Properties.
The 190,000 sq ft site near Kovan Melody went to the top bid of $290 million or $437 psf per plot ratio. The breakeven point will be about $800 psf. To be profitable, the developer must sell above $900 psf. (3 Oct)
(C.2.) Jurong East land parcel for tender
URA has launched the tender for a 2.2-hectare site flanked by Lakeside MRT Station and LakeHolmz condo. The site can be developed into around 680 apartments averaging 1,200 sq ft.
The site is estimated to be worth about $300 psf ppr. The breakeven cost for a new condo should be about $650 psf and the average selling price should be around $700-750 psf.
A vacant plot of land near to Lakeshore has been earmarked for an International School. That may prompt more developers to bid for the land. (18 Oct)
(C.3.) State resumed sale of in-fill sites to meet rising demands
For the second time in history, the Singapore Land Authority (SLA) released in-fill sites at popular residential areas for private individuals to build their own dream home.
Two GCB sites in District 11 Eng Neo Avenue Good Class Bungalow (GCB) area had been auctioned off, along with Moonbeam Walk off Holland area, Bedok Close, Jalan Insaf at Bishan vicinity, and Somm Road off Petain Road. All the sites, including the pair in the GCB areas, will be granted a 99-year leasehold tenure.
In-fill sites are essentially disused state land within popular areas which have been put to economic use. They could be parks, gardens, sub-stations, or even septic tanks previously. At least four of the above sites are at a cul-de-sac (end of a no-through road).
The benefits of re-using this land within the popular and matured estates include saving resources since these sites are nearby or already connected to infrastructure and they are cheaper. (26 Oct)
(C.4.) URA auction of Sembawang land fully taken up
12 sub-divided landed housing plots near Sembawang Beach were sold at a competitive bidding held by URA for a total $37.09 million or an average of about $285 psf. The plots can be developed into a total of 57 landed homes. (31 Oct)
Response to the auction reflected the current bullish market mood as small-time developers, contractors/engineering firms and individual investors thronged the auction venue.
Here are some facts on the winning bids.
The only bungalow plot of 4,477 sq ft was won by an individual investor for $940,000.
The biggest plot of land measuring 43,687 sq ft and is designated for 23 terrace houses was won by an engineering firm at $14.3 million or $327.33 psf.
Two plots of land - one designated for 14 terrace houses and another for three terrace houses were won by Fragrance Group for $9.2 million and $1.76 million respectively. The bid prices work out to be $294 psf and $270 psf respectively.
Another single semi-detached plot was sold to the boss of Fragrance Group for $289 psf.
(D) Price trend in October 2007
Despite a general slowdown in new home market, a few benchmark home prices were created at some areas, giving testimony that the underlying strength of the market is still strong. However, having said that, it must be pointed out that the benchmark was made before the announcement of the withdrawal of Deferred Payment Scheme.
(D.1.) Prices of private properties rose in third quarter
According to the Urban Redevelopment Authority (URA), prices of all properties have increased from end-2006 to the end of the third quarter 2007. Below are the details:
|
Types |
From 2nd to 3rd Quarter | From end 2006 |
| Private residential | 8.3% | 22.9% |
| Office | 8.1% | 22.7% |
| Shop | 3.0% | 9.5% |
| industrial | 3.2% | 15.8% |
Likewise, rentals of all properties have also increased. The details are as follows:
|
Types |
From 2nd to 3rd Quarter | From end 2006 |
| Private residential | 11.4% | 32.2% |
| Office | 14.8% | 40.7% |
| Shop | 8.1% | 17.5% |
| industrial | 8.7% | 22.4% |
About 65,400 private residential units are in the pipeline, comprising the supply from projects that are already under construction and those that have been granted planning approval and will be constructed within 6 months to 2 years. (26 Oct)
(D.2.) New benchmark prices before DPS was scrapped
All the following sales had registered a new benchmark price for the respective areas including:
$2,772 psf for Turquoise at Sentosa Cove
$2,888 psf for Three Buckley in Newton area
$1,577 psf for The Rochester in the one-north vicinity
$1,449 psf for Gardenvista on Dunearn Road in the Upper Bukit Timah area
$1,327 psf for The Beacon Edge at Tembeling Road
$1,044 psf for Vetro at Mar Thoma Road
$1,080 psf for The Lakeshore in Boon Lay Way (16 Oct)
(D.3.) New record sale price for Orchard penthouse
The new sale record for penthouse is $28 million or $5,600 psf for a 53rd storey penthouse at the Orchard Residences. The buyer of the 5,048 sq ft unit is believed to be a foreigner.
The 175-unit condo right in the heart of Orchard Road has been 73% sold, with all four penthouses already snapped up. The project sits on a 99-year leasehold land. (12 Oct)
(D.4.) Average capital value of luxury apartment surpassed 1997 peak
In the first three quarters of 2007, the average capital value of luxury apartments in Singapore has risen 43.5% since the last quarter of 2006.
The average value of luxury apartments achieved in the third quarter this year has surpassed the 1997’s peak. At $2,827 psf, it is 59% higher than the $1,778 psf achieved in 1997 before the market suddenly ground to a halt in the aftermath of the Asian currency crisis. (13 Oct)
(D.5.) Private home prices rise unevenly
While property prices rose averagely across the board in the third quarter of 2007, the quantum of increases are uneven and the price gap between different projects at different locations and with different attributes can be quite wide. Quite a number of uncompleted private residential projects in the suburban areas are still very affordable. (See table below for information)
|
Project |
District | Lowest psf | Highest psf | Time period |
| Lakeshore | 22 | $590 | $866 | Aug – Sept 07 |
| The Centris | 22 | $486 | $661 | Aug – Sept 07 |
| The Raintree | 21 | $487 | $1,039 | Aug – Sept 07 |
| Yew Tee Res | 23 | $453 | $558 | Aug – Sept 07 |
| 17 | $521 | $750 | Aug – Sept 07 | |
| Northwood | 27 | $493 | $635 | Jun – July 07 |
| Sensoria | 27 | $556 | $642 | Jun – Jully 07 |
The number of vacant units has gone up from 11,506 units in the second quarter this year to 12,550 units. In percentage term, vacancy rate has gone up from 4.9% to 5.4%.
In the meantime, another 9,224 new units have been added into the supply line to be ready by 2011. In total, the potential new supply of condos and apartment has increased from 56,182 to 65,406 units. (26 Oct)
(D.6.) Rents for private home continue upward trend
According to URA’s statistics, rents for private homes have risen in the July-September period. Rents for private home are expected to go up by another 40%. The percentage increase across the island is as follows:
Rents rose 12.2% in the core central region, which covers Orchard, Holland, River Valley, Bukit Timah, Marina Bay and Sentosa.
Rents rose 11.9% in the rest of the central region, which covers Marine Parade, Queenstown, Geylang and Bishan.
Rents rose 11.8% in the Outside Central Region. (27 Oct)
See “Why rents for private homes will continue to go up?” – Annex C
(D.7.) Office rents continue to go up
Office rentals went up 14.8% in the July-September period. In the April-June period, office rents went up by 11%. From the end of 2006, office rents have gone up by 40.7%.
URA figures also showed that occupied office space rose by 645,840 sq ft in the July-September period. This was almost 54% higher than the 419,796 sq ft recorded in the April-June period.
Median rents for prime offices reached $11.89 per sq ft (psf) per month in the July-September period compared with the increase from $10.33 psf per month in the April-June period.
Median rent for general offices was up from $4.60 psf a month in the April-June period.
Vacancy rate for prime office space fell to 2.8% from 5% in previous quarter. (27 Oct)
(E) October 2007 price trend in HDB resale flats
(E.1.) Prices for new and resale flats to go up
HDB has managed to sell a huge portion of its stock of unsold new flats. For example, 1,269 new HDB flats were offered in the North and West zones in the April bi-monthly sale exercise. Out of these, 92% or 1,172 flats were sold. Then in June, 992 new flats in the North-east zone were offered and 97% or 892 flats were snapped up.
HDB has stated in general that the pricing policy takes into consideration the affordability factor for the public, changes in the market value of resale flats, individual attributes of the flats and the general demand and supply condition in the resale market.
So far, resale prices have been rising steadily with the latest resale price index registering an increase of 6.6% in the third quarter of 2007 quarter-on-quarter. (11 Oct)
(E.2.) Number of unsold new HDB flats drop to 3,500
The stock of unsold HDB flats has dropped to 3,500 units. It may be further reduced to about 2,200 units by year end.
In the recent HDB’s bi-monthly walk-in sale exercise, 4,800 people filed in online applications for 489 units available for sale. This means that the flats were almost 10-time oversubscribed.
The projected completion programme of HDB flats in the next few years is as follows: (18 Oct)
Financial Year 2006-2007 1,764 flats
Financial Year 2007-2008 6,300 flats
Financial Year 2008-2009 1,700 flats
Financial Year 2009-2010 4,000 flats
Financial Year 2010-2011 13,000 flats
(E.3.) Higher cash over valuation (COV) for HDB flats
According to data released by the Housing Board on 26 October 2007, five-room flats in popular areas like Queenstown, Tiong Bahru and Toa Payoh are being sold for more than $100,000 above valuation.
Since July this year, COV has become a norm and about 80% of HDB resale transactions attracted cash above valuation. This may be due to middle-income buyers, who had been priced out of the private home market, buying cheaper public flats.
According to HDB figures, buyers of executive flats are forking out the highest median cash-over-valuation amounts. For example, the median price is $155,000 in Clementi. Overall, the median amount for this flat type was $25,000.
The median price for four- and five-room flats, are $18,000 above valuation. For two- and three-room flats, the median amount was $15,000.
The highest amount paid above valuation for a five-room flat was $91,500. The figures were $57,500 for a four-room flat and $40,000 for a three-room flat.
In general, the areas requiring the least cash-over-valuation were Woodlands, Yishun and Bukit Panjang. The Central area, Queenstown and Marine Parade were the locations where buyers have to fork out more cash in order to stand a chance to own a flat there.
However, total HDB resale transactions in the third quarter were 8,700 units - a fall of 11% after rising 38% in the second quarter. (27 Oct)
See “Why HDB resale prices will continue to rise?” – Annex D
(E.4.) Median HDB rent went up
The overall median rental for HDB five-room flats went up by 21.2% in the July-September period.
For HDB resale flats, median rents crossed the $2,000 mark for five-room flats in Bukit Merah and the Central area, as well as executive flats in Bishan, Kallang/ Whampoa, Clementi and Queenstown.
Overall, median rents were $1,200 for three-room units, $1,400 for four-room units, $1,600 for five-room flats and $1,700 for executive flats. (27 Oct)
(F) Deferred payment scheme withdrawn
The government on 26 Oct 2007 made a surprise withdrawal of the Deferred Payment Scheme (DPS) for property purchases with immediate effect - in view of the strong economic and property market conditions.
The rationale for DPS is no longer valid with the current robust economy. In fact, with no requirement to prove repayment abilities, many speculators have taken advantage of the DPS to engage in sub-sale activities, causing a property bubble to form recently.
From now on, buyers will have to ensure that they have sufficient funds or are able to secure adequate loans from banks before they commit to buying a property. (26 Oct)
The withdrawal of DPS immediate brought about the following responses:
(F.1.)Stock exchange in tailspin
Except for CapitaLand which has extensive overseas operations, major local developers have become poorer in stocks. The table below gives a gist of their losses in share prices.
|
Developers |
Share price as at 27 Oct | Losses |
| CapitaLand | $8.10 | + 5 cents |
| City Developments | $15.80 | - 50 cents or 3.1% |
| Allgreen Properties | $1.69 | - 9 cents or 5.1% |
| Wing Tai | $3.44 | - 18 cents or 5% |
Many believe the sell-down was just a knee-jerk reaction to the Government’s surprise move on 26 Oct 2007.
Many bankers were of the view that the change would only affect only a small group of HDB upgraders who cannot afford two mortgages. Most property analysts were of the view that the run-up in the residential property market has been buttressed by strong economic fundaments such as high economic growth, rising rents, and a tight supply of new properties. (30 Oct)
(F.2.) Investors buy into bank shares
However, bank stocks rose after the announcement of the withdrawal of Deferred Payment Scheme (DPS).
The exit of DPS was seen as positive for banks whose risks have been considerably reduced as more genuine buyers will come forward. The buyers will be compelled to take up home loans which will be drawn down progressively. The net result, the property market will be backed by the correct fundamentals.
The second reason for the bank to cheer the government’s initiative is that the risks of default by corporate borrowers are always higher than individual households in a downward market.
The removal of the scheme will restore some balance, and the banks should have their exposure to households raised while lessening their exposure to developers.
The removal of DPS will definitely cool the property market somewhat and buyers will become more cautious in the near term. For the time being, newly launched projects may suffer from a slower take-up rate.
But in the longer term, property prices will be rising more realistically or falling in line with economic fundamentals.
(F.3.) All is not lost with DPS withdrawal – real economy is still red-hot
A report by Goldman Sachs Global Investment Research said that those who are likely to be affected by the withdrawal of the Deferred Payment Scheme (DPS) are speculators, foreign buyers and buyers who are stretching their affordability to buy a property.
While the high-end residential market will also be affected by the withdrawal, it is the mid to mass market which will take the full brunt of the government’s move. This is because such projects saw more buyers using the DPS. With the new rule, there will be a need for buyers in these two categories to secure financing before they could commit to the purchase.
As such, in the short run, the pace of new launches and take-up of new launches are expected to slow as property prices are likely to come under some downward pressure. This may lead the developers to offer lower discounts on price.
However, all is not lost as there are also positive factors to support the growth of the p