Leng Beng’s recipe for public housing - Singapore

Leng Beng’s recipe for public housing - Singapore

Lease new units to first-time S’porean buyers, with option to buy: CDL chief
By KALPANA RASHIWALA

CDL boss Kwek Leng Beng has a suggestion to make housing more affordable for young Singaporeans.
He says the government could build more public housing units, lease them out to young Singaporean first-time buyers and give them an option to buy the flats within 10 years, at fixed prices.

‘I think there’s demand for such housing from younger people, including singles. I think smaller flats with one or two bedrooms will be quite suitable for them,’ Mr Kwek, who is executive chairman of City Developments Ltd, said in a recent interview with BT.

‘Such a policy would cater to those who feel housing costs have gone up too high and they can’t afford them. Over time, as these people get more pay, they can afford to buy the homes,’ he added.

The Housing and Development Board currently has schemes to rent out public flats to Singapore citizens but these are for lower-income households with gross monthly incomes not exceeding $1,500 for the Public Rental Scheme, and $2,000 (at the point of application) for the Rent and Purchase Scheme.

The latter scheme, typically for three-room flats, allows those who rent flats to buy them later from HDB.
 
The schemes are open only to those who have a family nucleus, which effectively excludes single Singaporeans making solo applications.

Singaporeans also have a range of choices when it comes to buying public housing flats, whether directly from HDB or through the resale market.

However, the scheme Mr Kwek proposes would be directed at the younger set, including singles, who may just be starting out in their careers and find housing prices too high.

‘Their salaries may not be enough today,’ he said. ‘However, over time, their incomes will rise - but by then, they still may not be able to afford buying a home because property prices may have appreciated further. So the government could build new flats and rent these out to Singaporeans and give them the first right to buy the units within, say, 10 years, at a fixed price.

‘If eventually, they don’t buy these homes, the government can take them back and lease them to others.

‘This would be a way of helping our citizens. If I am young, talented, you should give me a chance to own a flat. It will give me something to work hard for. I’ll want to be successful. So we’ll also be encouraging them to be more entrepreneurial,’ reckons the father of two sons, one in his early 30s and the other in his late 20s.

Source : Business Times - 03 April 2008

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Office occupancy dips for two consecutive quarters: report - Singapore

Office occupancy dips for two consecutive quarters: report - Singapore
Two new office buildings added 538,100 sq ft of office supply in Q1
By ARTHUR SIM
ISLANDWIDE office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter-on-quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.
Soaring higher: Despite a dip in islandwide office occupancy, office rents continued to rise in Q1, with fresh record highs of $20 and $21 per square foot per month seen at 6 Battery Road and Republic Plaza (above) 
A report by DTZ Debenham Tie Leung also shows that the average occupancy of office buildings in Raffles Place dropped half a percentage point to 97.8 per cent in Q1 this year, while that in Marina Centre increased by 0.7 percentage point to 99.8 per cent.

DTZ attributed the slight dip in occupancy in Q1 2008 partly to the completion of two office buildings. The Central and VisionCrest Commercial added 538,100 sq ft of new office space that raised islandwide office stock one per cent quarter-on-quarter to 56.6 million sq ft.

It is understood that the new buildings are not fully leased yet.

The drop in occupancy is corroborated by data from the Urban Redevelopment Authority, which shows vacancy rates in the office sector - both private and public - remained at 7.3 per cent in Q3 and Q4 2007 after falling steadily since Q4 2003, when the rate hit 17.9 per cent in the wake of the Sars crisis.

Office rents have, however, continued to increase, with fresh record highs of $20 and $21 per square foot per month (psf pm) registered at 6 Battery Road and Republic Plaza in the first quarter of this year.

For prime office space in Raffles Place, average monthly gross rent was up 13.9 per cent quarter-on-quarter to $18.80 psf pm.

DTZ executive director Cheng Siow Ying said: ‘Although some occupiers are beginning to exercise caution in their medium-term leasing requirements, demand continued to be supported (in Q1) by occupiers requiring space in the immediate near future.’

But she added: ‘Growth in rental values is expected to moderate this year after a record increase in 2007.’

With an estimated 615,500 sq ft of space coming on stream, DTZ says 64 per cent has been pre-committed.

It notes that potential supply between 2008 and 2012 is forecast at 10.2 million sq ft of net lettable area, with 23 per cent having been pre-committed. This excludes an estimated 484,000 sq ft of space that will be demolished for redevelopment.

The impending supply will likely have an impact on occupancy rates.

Cushman and Wakefield (C&W) said the prime office vacancy rate was 1.1 per cent at end-2007 based on its basket of properties. It projects overall occupancy rates for 2008, 2009 and 2010 of 93.5 per cent, 95 per cent and 93 per cent respectively.

C&W managing director Donald Han said he has noticed that ‘take-up is not as fast’. However, he reckons that the outlook will remain positive until after the first half of 2009, with Grade A office rents rising a further 16.5 per cent this year.

After that, he believes ‘there will be more anticipation with tenants signing leases at moderated rents’.

Source : Business Times - 03 April 2008

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Leng Beng urges nimble feet in shifting landscape - Singapore

Leng Beng urges nimble feet in shifting landscape - Singapore

CDL chief suggests review of land sales, rethink on deferred payment scheme By KALPANA RASHIWALA (SINGAPORE) The uncertainty surrounding the local property market will last at least another six months and stakeholders must stay nimble to deal with the changing tides, says property tycoon Kwek Leng Beng. Free-market approach best: Mr Kwek says as S’pore competes with other global cities, it ‘must not be perceived as a city that interferes unduly in market forces. We should allow market forces to prevail in the property market’ Speaking to BT, he said that the standstill in the local property market would end only after the US sub- prime crisis clears. ‘I believe it will take another six months - if not more,’ the executive chairman of listed City Developments Ltd (CDL) added.

But any restoration of confidence in the property market will also hinge on stakeholders - in both the private and public sectors - remaining nimble and reviewing their strategies and policies to meet changing market conditions swiftly, Mr Kwek stressed in a recent interview with BT. ‘You have to cut your coat according to your cloth.

As a developer, if I said last year that I was planning to launch five projects this year, but you know this year the market is quiet, it would be unwise for me to say ‘because I decided last year to launch five projects this year, I must still go ahead’.’ He urged the government to likewise review its current land sales programme. The programme was fixed last year, when the market was buoyant, compared to conditions today. Mr Kwek says the government may have been too quick to scrap the deferred payment scheme last October. He suggests the authorities should reconsider the scheme.

The Government Land Sales Programme is announced every six months. The current H1 2008 slate of sites was announced early last December, which means that some of the decisions were probably made even earlier, property consultants say. ‘It’s been proven in the past that the Singapore property market is a very important pillar that is closely linked to other markets - for example, financial markets, and the construction sector - and is in part driven by sentiment. So it’s vital for stakeholders in the private and public sectors in the property industry to remain nimble.

They can do this by reviewing and modifying their practices quickly to stay relevant. By doing this, we can minimise potential problems and address them ahead of time,’ argues Mr Kwek, 68, who has about four decades of experience in the property business. He also advocates a free-market approach to policy at Singapore’s current stage of development. ‘As Singapore competes in the race among global cities, Singapore must not be perceived as a city that interferes unduly in market forces.

We should instead allow market forces to prevail in the property market - unless the situation gets out of hand,’ Mr Kwek says. ‘A global city does not necessarily mean your office rentals have to be cheap. Tokyo, London, New York all have high rents but continue to attract businesses. What’s important is that you have to create an environment where businesses can make money.’ He also says that the government may have been too quick to scrap the deferred payment scheme last October. Mr Kwek suggests the authorities should reconsider the scheme, which was started around 2002 to help stabilise the weak property buying sentiment at the time. Under the scheme, private property buyers could buy units in uncompleted developments with just a 10 or 20 per cent downpayment, with the payment for the rest of the purchase price in some cases postponed until the completion of the project. In contrast, under the normal progress payment scheme, buyers have to pay regular instalments to the developer, based on the stage of the project’s construction.

‘If I am a developer and I want to offer deferred payment schemes to my home buyers, perhaps the developers’ bankers may be in a better position to assess the viability of the scheme even whilst staying prudent. The assessment will take into account the project, as well as the developers behind the scheme,’ Mr Kwek argues. Many analysts had blamed deferred payment for fuelling property speculation.

Mr Kwek, while acknowledging this, argues that the scheme also served a useful function: it enabled buyers of new residential properties to dispose of their existing properties at a gradual pace, instead of being forced to sell them. The deferred payment scheme could be revived again - but this time with a higher initial payment of 30 per cent instead of 20 per cent, suggests Mr Kwek, who is also chairman and managing director of listed Hong Leong Finance. He praises the government’s handling of the office crunch. The Urban Redevelopment Authority’s introduction of transitional office sites - allowing temporary low-rise office blocks to be built quickly on 15-year leasehold sites - was a swift response to increase office supply for businesses that don’t need to be in a posh CBD office block. ‘But a global city does not necessarily mean your office rentals have to be cheap.

Tokyo, London, New York all have high rents but continue to attract businesses. What’s just as important is that you have to create an environment where businesses can make money. ‘Don’t forget, there are many cities fighting for investments. They can all copy Singapore. It’s very easy to duplicate. So to get ahead of the pack, we have to think of something different - something that nobody has done. This boils down to being nimble,’ Mr Kwek suggests.

Source : Business Times - 03 April 2008

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Mindy Yong
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Singapore HDB, private apartment rentals set to rise

Singapore HDB, private apartment rentals set to rise

By Wong Siew Ying,

SINGAPORE : Rentals for HDB and mass market private apartments are set to rise in the coming years, with more foreign workers heading for Singapore.

Property agents expect rents to climb by about 10 percent this year.

They say HDB flat-owners could gain from the spike in demand.

Singapore’s two integrated resorts will be ready in the next two years.

Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.

Resorts World at Sentosa says it will be hiring 10,000 people directly.

And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.

Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.

But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.

On average, monthly rentals for private apartments range between $2,500 and $3,500 dollars.

This may be too much for some workers.

Mohamed Ismail, CEO of PropNex, said: “The public housing becomes next best alternative where today people are still able to rent at $1,500 to $2,000. I expect this trend to continue, as far as estates that will have a greater demand … such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh. Anything that is not too far away from town or to the integrated resorts will definitely have greater take-up rates.”

Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.

All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de

Source : Channel NewsAsia - 03 April 2008

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Mindy Yong

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