2009 Q1 saw only 10 investments in Singapore’s property market

2009 Q1 saw only 10 investments in Singapore’s property market

By May Wong,

SINGAPORE: Singapore’s investment property market was quiet in the first quarter of the year, as the global recession continues.

The first three months of 2009 saw only 10 investment transactions, compared to 15 in the fourth quarter of last year.

All the deals were below S$40 million.

Real estate adviser DTZ said all the investment sales in the first quarter took place in the private sector.

This is partly due to the fact that government land sales through the confirmed list had been suspended and no reserve site was triggered.

DTZ added that private sales are expected to dominate for the rest of this year.

In addition, it said total investment sales plunged 58 per cent to S$153 million in the first quarter of this year.

This is the third lowest amount since 1998.

DTZ said residential investments contributed the most in total sales at 46 per cent in the first quarter.

The office sector was next with 34 per cent of total sales in the same period.

Investment sales in the industrial sector on the other hand fell the most in the quarter.

It dropped by 80 per cent to S$25 million.

DTZ’s senior director for investment advisory services and auction, Shaun Poh, said, “Activity in the investment market could pick up in the late part of the year when the economy is expected to recover and lending conditions ease. The market is not short of interested investors with money on hand, looking for prime properties.”

DTZ noted however, that there’s currently a mismatch in bid-ask prices, hampered by tight credit and expectations of falling rents.

Source : Channel NewsAsia - 09 April 2009

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Property tax reduced due to real estate slump

Property tax reduced due to real estate slump

OWNERS could pay up to 60 per cent less property tax after the taxman reduced the value of tens of thousands of sites following the real estate sector’s slump.
The Inland Revenue Authority of Singapore (Iras) recently held its annual review - brought forward in the light of dire market conditions - which found that 99 per cent of assessed properties had their values reduced.

Together with the 40 per cent property tax rebate announced in January’s Budget, owners of these properties will now pay 45 per cent to 60 per cent less property tax.

The values of properties are reviewed by Iras annually to ensure that they reflect prevailing rental market rates for property tax assessment.

Falling property prices and rents had prompted calls for Iras to also reduce property tax in line with market conditions.

The tax authorities reviewed a total of 116,200 properties in the first quarter.

Of the 84,900 private residential sites assessed, 99 per cent had values reduced by between 5 per cent and 20 per cent.

The total reduction in property tax payable for these homes is about 45 per cent to 50 per cent.

Of the 15,600 offices reviewed, 92 per cent had their annual values lowered by between 10 per cent and 35 per cent. This translates to a total reduction of tax liability by 45 per cent to 60 per cent.

And 98 per cent of the 9,700 industrial properties reviewed suffered a loss in value of 5 per cent to 30 per cent, translating to a total reduction of tax liability by 45 per cent to 60 per cent.

Based on current rentals, the annual values of HDB flats ’should be higher than the existing 2009′ ones, but Iras is keeping them unchanged ‘in view of the poor economic conditions and uncertainties in the HDB rental trends in the coming months’.

The taxman said that it would review the values of all private properties, including retail ones, by the third quarter.

MICHELLE TAY

Source : Straits Times - 09 April 2009

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Condo-style HDB flats: Peak price of $722k

Condo-style HDB flats: Peak price of $722k

By Joyce Teo, Property Correspondent

WILL house hunters spend more than $700,000 on a premium HDB flat with some condo-style features in Toa Payoh?
A Hoi Hup-led consortium is about to find out after offering premium five-room flats at its new The Peak project for up to $722,000.

Analysts question whether HDB flat buyers will bite, given that they are constrained by an $8,000-a-month income ceiling and are dealing with a recession.

Next Wednesday, The Peak @ Toa Payoh, boasting 1,203 units in two 42-storey blocks and three 40-storey blocks, will be launched.

The project, at Lorong 1A Toa Payoh, comes under the design, build and sell scheme (DBSS), and offers premium fittings. But unlike private condominiums, these projects do not have facilities such as pools and gyms.

The smallest units - 95 of them - are the 753 sq ft three-room flats. They are priced from $355,000 to $398,000.

The 306 four-room flats of 980 sq ft will go for $468,000 to $582,000.

The next rung up the price ladder are the five-room flats, which mostly go for $539,000 to $698,000, and range from 1,184 sq ft to 1,259 sq ft.

The priciest of the lot are the 24 five-room high-ceiling flats costing between $700,000 and $722,000.

The developer - a group comprising Hoi Hup Realty, Sunway Development and Hoi Hup J.V. Development - said the flats are about $500 per sq ft (psf) to $510 psf on average. A quick calculation shows the price can go up to $594 psf.

A spokesman said The Peak is near Toa Payoh MRT station. And like the earlier City View DBSS project by the same group, The Peak offers an exclusive touch with a card-access security system at all ground-floor lift lobbies.

Buyers will also get large bay windows, Daikin air-conditioning units, built-in kitchen cabinets and wardrobes.

Still, industry watchers note that for the same price, buyers are spoilt for choice in the current market. Experts have said DBSS projects have to be priced lower than private flats as they are essentially HDB flats. They face restrictions such as an income cap, an ethnic quota and a minimum occupation period.

‘Toa Payoh is a mature estate but in the current economy, there will be resistance at above $500,000,’ PropNex chief executive Mohamed Ismail said yesterday.

Resale five-room flats in the area now cost about $450,000 on average while three-roomers go for $260,000 to $270,000 on average, though the latter are more than 30 years of age, he added.

Knight Frank research and consultancy director Nicholas Mak said The Peak’s prices are comparable to those of resale executive condos (EC), which have condo facilities but also face public housing sale restrictions.

For just over $700,000, buyers can buy a private but older 99-year resale condo unit nearby, added Mr Mak.

For the same price as a five-room flat, they can buy a resale EC unit at a more distant location. In the first quarter, 94 EC deals were done at $579,000 on average.

The Peak is the fifth DBSS project. The sixth, in Simei, is expected to be released for sale soon.

Last year, three such projects were launched. City View in Boon Keng, Park Central @ AMK, and Natura Loft in Bishan have since sold the bulk of their units. The latest of the lot, Natura Loft, was launched late last year and has about 30 per cent left to sell, said developer QingJian Realty. Its five-roomers are already half sold, it said.

DBSS projects are now sandwiched in a narrowing gap between HDB resale flat prices and private condo prices.

‘DBSS flats will be relevant again when the gap widens. In the meantime, these developers will just have to do the best they can,’ said Mr Mak.

Source : Straits Times - 09 April 2009

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Rental-scam cheat conned 127 people

Rental-scam cheat conned 127 people

He is jailed for collecting deposits from them and then disappearing

By Esther Tan

PAYBACK time has come in the form of a jail term for a serial rental con artist.
The ruse of Eric Heng Jit Siang was to pose as the owner of a property seeking to rent it out, milking the tenant of a deposit on the rent, and then pulling a disappearing act.

Using both landed properties and flats he had rented, the 33-year-old conned 127 people, mainly foreigners and permanent residents, out of more than $242,500 in rental deposits between last April and January.

For doing this, he was yesterday put behind bars for six years and three months.

He pleaded guilty to 40 counts of deception and three of other crimes.

The court heard that he rented 10 properties across the island, got the keys to them and then placed advertisements in newspapers and train stations seeking tenants.

When people responded to his advertisements, he posed as the owner of these properties and arranged to show them the units.

When the tenancy agreement was signed - and each unit was ‘rented’ out to more than one house-hunter - he collected money from each of them as a deposit on the rental or the utility bill.

The victims found out that they had been taken for a ride only when they realised on moving day that they were not the only ones who had ‘rented’ the place.

This was Heng’s cue to make himself scarce.

Mr Amit Gurung, a 26-year-old graduate student at a private school, told The Straits Times yesterday that he paid Heng $2,800 to rent a flat in Ang Mo Kio Avenue 5 last August.

Everything seemed plausible then. The Nepalese said: ‘He introduced me to his wife and daughter. He said he wanted to rent out the flat because they were going to stay with his mother as she was ill.’

Three weeks later, as he was cleaning the unit before moving in, he had visits by no fewer than six people, all claiming to have rented the flat from Heng. They had the keys too.

Unable to reach Heng on his cellphone, Mr Gurung went to the police.

Deputy Public Prosecutor Andre Moses Tan pushed for a deterrent sentence, saying the offences were ‘deliberate’ and not committed in ‘a moment of folly’.

In sentencing, District Judge Eddy Tham reprimanded Heng: ‘What you have done is despicable. It has caused a lot of anxieties to these people.’

Heng, jobless at the time of his offences, was also fined $600 for driving without a valid driving licence.

He was arrested in February after having been on the run since last year.

None of the victims has got his money back. Mr Gurung said he is not banking on it.

No official data on rental scams exists, but the Consumers Association of Singapore said it has handled a steadily rising number of cases involving rental disputes, including misleading claims or misrepresentation.

The figures were 123 in 2006, 177 in 2007 and 231 last year. There have been 57 cases so far this year.

Last December, a Malaysian couple and a Japanese expatriate apparently lost $10,300 in all to a bogus property manager-cum-landlord of a terrace house in Serangoon.

Two agents from property agency ERA were apparently also duped by the man. It is not known whether he is still in hiding.

Source : Straits Times - 09 April 2009

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Two more projects coming onstream

Two more projects coming onstream

High-end Illuminaire launches this week; HDB’s The Peak hits the market April 15

By UMA SHANKARI

(SINGAPORE) EL Development will launch its high-end condominium Illuminaire along Devonshire Road this weekend.

The Peak: The project is expected to be about two to two-and -a- half times subscribed by the time applications close
Apartments in the 72-unit project will be priced at an average of $1,700 per sq ft.

But because they are small - the entire development consists of one-bedroom and two-bedroom units - the overall quantum buyers will have to fork out will be kept low, said the company’s managing director Lim Yew Soon.

One-bedroom units, which will be 441 sq ft or 463 sq ft, will all cost less than $800,000, Mr Lim said.

And all two-bedroom apartments, which will be 635 sq ft or 721 sq ft, will sell for under $1.25 million.

EL Development decided to go ahead with the launch as ‘we cannot wait indefinitely’, Mr Lim said. ‘We feel the market is slowly moving now.’

Analysts say an estimated 2,100-plus new homes were sold in Q1 - the highest number since the market was hit by the US mortgage crisis in the last quarter of 2007 and more than four times the number of new units sold in Q4 2008.

Despite a pick-up in transactions, luxury apartments are not selling well. Mr Lim said the reason is that most are quite big, which means the amount needed to buy one is quite high. The small units in Illuminaire are ‘more affordable’, he said.

Also on the market soon will be HDB’s design, build and sell project The Peak @ Toa Payoh. A consortium led by Hoi Hup Realty will launch the 1,203-unit project on April 15.

Homes in The Peak will sell for $500-$510 psf on average, said a spokesman for the consortium, which includes Sunway Developments and Hoi Hup JV Development, whose shareholders include Straits Construction and Hoi Hup Realty.

The consortium bought the site from the state for $198.82 million, or $160 per sq ft per plot ratio, in August 2008.

Most flats in The Peak - 802 of them - will be five-room units. There will also be 306 four-room flats and 95 three-room flats. Prices will be ‘affordable’, the spokesman said.

Three-room units will cost from $355,000 to $398,000, four-room units from $468,000 to $582,000 and five-room units from $539,000 to $698,000. There will also be about 24 ‘exclusive’ five-room units costing from $700,000 to $722,000.

The spokesman said the project is expected to be about two to two-and-a-half times subscribed by the time applications close on April 28.

Source : Business Times - 09 April 2009

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Orchard mall gets $4-5m ad blitz

Orchard mall gets $4-5m ad blitz

By UMA SHANKARI

(SINGAPORE) Far East Organization will spend $4-5 million from June to December this year promoting its upcoming Orchard Central mall, which is set for a soft opening in early June.

Going all out: Orchard Central’s A&P campaign is the largest that Far East Organization has set aside to promote a mall and is expected to drive tenants’ sales
But tenants will not get across-the-board base rent rebates - unlike at upcoming rival Ion Orchard. Susan Leng, Far East Organization’s director for retail management, said the company is working with tenants on a case-by-case basis and has offered rebates to a ‘handful’ so far.

According to her, Orchard Central will be a must-visit shopping destination. ‘Our extensive advertising and promotional (A&P) campaign over the second half of the year aims to attract shoppers to Orchard Central to experience a whole new level of retail and dining,’ she said.

The $4-5 million A&P budget is the largest that Far East Organization has set aside to promote a mall - and more than twice the amount it has spent promoting other malls it launched lately. The A&P campaign is expected to drive tenants’ sales, which is why the mall - even though it has a rent assistance programme in place - is not giving a standard rebate to all tenants.

‘Our key focus is not on rent assistance but bringing up sales,’ Ms Leng said. ‘But we review (each case) and if the case is valid, we consider rebates.’

So far, Orchard Central has received written submissions from 17 tenants asking for rent rebates and has granted rebates of 10-30 per cent to ‘less than 10′ of them, she said. The rebates will be valid until October. Last month, Ion Orchard - which is at the opposite end of Orchard Road and is due to open in July - said tenants will get rebates of up to 30 per cent of base rent.

Orchard Central has been 65 per cent taken up so far. Negotiations are still going on with several retailers, and Ms Leng is optimistic the take-up rate will increase to 75 per cent over the next few months. Signing-on rents have softened over the past few months, she said. Separately, shopping mall Tampines 1 will open its doors to the public today with 100 per cent occupancy.

Source : Business Times - 09 April 2009

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Q1 investment property sales plunge to just $153m

Q1 investment property sales plunge to just $153m

Residential sector accounts for largest share or 46% of the total sales

By EMILYN YAP

(SINGAPORE) Investment property sales shrank in the first quarter of this year to their lowest level since 1998, as fewer transactions of smaller value took place.

According to property consultancy DTZ, sales plunged 58 per cent quarter on quarter to just $153 million in Q1. They were spread over 10 deals, down from 15 in Q4 2008.

The poor Q1 showing is the third-worst ever. During the Asian financial crisis, sales dropped to $107 million in Q1 1998 and as low as $47 million in Q3 1998. Differing price expectations between buyers and sellers are making it difficult to close deals.

Knight Frank’s director of research and consultancy Nicholas Mak said investors are wary because they expect capital values to fall further.

According to DTZ, there is ‘a mismatch in bid-ask prices, hampered by tight credit and expectations of falling rents’.

The residential sector accounted for the largest share or 46 per cent of total investment sales in Q1.

Transactions included the $36 million sale of the four-storey furniture store Le Mercier House on Mohamed Sultan Road.

Two 19th-floor St Regis units also went. But the price was $2,153 per square foot - 21 per cent less than the developer received in June 2006. The office sector made up 34 per cent of Q1 investment sales.

The $27 million sale of Genesis Building in January - the first transaction involving an entire building since August last year - accounted for more than half of sales in this sector.

Investment sales in the industrial sector cooled most, DTZ said. The most significant deal was Premium Automobiles’ $12 million purchase of a showroom site on Alexandra Road.

Major developers, funds and real estate investment trusts were absent from the market in Q1, DTZ said.

All investment sales also took place in the private sector, as government land sales through the confirmed list remained suspended and no reserve sites were triggered.

Although the year got off to a slow start, DTZ’s senior director (investment advisory services & auction) Shaun Poh believes the investment market could pick up closer to year-end, when the economy could improve and lending conditions ease.

‘The market is not short of interested investors with money on hand, looking for prime properties,’ he said.

Knight Frank’s Mr Mak is more cautious about outlook and expects the investment market to stay quiet for the rest of the year. ‘It depends on the length of the downturn,’ he said.

Source : Business Times - 09 April 2009

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Banking on an interest rate play

Banking on an interest rate play

By offering higher interest rates, foreign banks are drawing in deposits

By SIOW LI SEN

(SINGAPORE) There was a time when people were almost embarrassed to admit that they were earning only 1.5 per cent on their money.

Not any more. In the present economic climate, savers are chasing after every sliver of interest, making a beeline for foreign banks which offer higher rates, and ignoring the blemished reputations of institutions caught in the financial debacle.

Observers say this is because of the blanket guarantee that the Singapore government has given to deposits until end-2010, a stand that has given comfort to savers.

‘Lots of people do that - move money from bank to bank - for people who don’t want to invest any more because they’re shell-shocked,’ said one high net worth former client of Royal Bank of Scotland (RBS).

She had closed all her accounts at troubled RBS last October and moved to a local bank, but said in hindsight that there was no need to have done that especially with the government’s deposit guarantee.

RBS, now 68 per cent owned by the UK government and selling its retail and commercial banking business in Singapore, in the meantime continues to garner funds with its promotions.

In February, RBS posted the biggest loss in British corporate history at a staggering £pounds;24.1 billion (S$53.6 billion).

Ajay Mathur, RBS head of retail banking Singapore, said the bank has ’seen a strong inflow of funds to the tune of hundreds of millions in the last one month from depositors and investors since we launched the promotional interest rates on RBS Millenium account’.

‘The attractive returns compared very well to other offers in the marketplace. Indeed, we have acquired funds not only from existing clients but also from a significant number of new clients, whose contribution amounted to approximately 20 per cent of the total inflow,’ said Mr Mathur.

RBS Millenium’s promotional interest rates, which offer interest rates as high as 1.54 per cent for top-up or new funds of $500,000 and above, ends on May 31. The promotion began in February. The attraction here is that RBS Millenium account operates as a regular current account where funds are not locked in to enjoy the high interest rate.

Usually, current accounts pay nothing or next to zero on outstanding balances.

‘The man in the street is pretty hard-nosed about that quarter per cent,’ said Lim Jit Soon, Nomura Securities’ head of Asean equity research.

Not to be outdone, Standard Chartered used its 150th anniversary to offer a short promotion lasting not quite two and a half months of 1.50 per cent on its e$aver Account if clients put in additional funds. And if customers open a current account called XtraSaver Account, they get 2 per cent interest on their e$aver Account. The promotion ends this month.

Dennis Khoo, StanChart Singapore’s general manager, retail banking, said the bank’s latest promotion, which bundles the e$aver and XtraSaver accounts, gives customers one of the best interest rates in the market and greater transactional convenience.

‘This campaign has resulted in double-digit growth in outstanding balances for e$aver accounts to date,’ said Mr Khoo.

StanChart’s customer deposits grew 60 per cent in 2008 to US$32.16 billion.

CIMB Singapore, in less than three years, has grown its loan portfolio to more than $1 billion, while its deposit base is slightly higher, thanks to aggressive savings rates, BT reported earlier this month. Its 1.8 per cent per annum Sing-dollar promotional fixed-deposit savings plan has attracted substantial deposits - so much so that the rate has been cut to 1.7 per cent.

Source : Business Times - 09 April 2009

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Investors warm to cooling condo prices

Investors warm to cooling condo prices

Sharp 40% drop in luxury Orchard Rd condo prices from peak in H2 2007 is making some investors sit up and take notice

By KALPANA RASHIWALA

(SINGAPORE) The sharp slide in high-end residential property prices is beginning to show up on the radars of serious investors.

From their peaks in the second half of 2007 to the first quarter this year, transacted prices of luxury condos in the prime Orchard Road belt have fallen by about 40 per cent.

This is the steepest islandwide decline in condo prices and the potential buying opportunities that this is opening up are not lost on investors keen on buying multiple units.

Credo Real Estate’s analysis of URA Realis’ caveats shows the average price transacted at St Regis Residences has fallen 38 per cent from $3,411 per square foot in H2 2007 to $2,099 psf in Q1 this year.

At Ardmore II, the average transacted price has slipped 43 per cent, from $3,073 psf in H2 2007 to $1,761 psf in Q1 2009.

Over the same period, Cairnhill Crest’s average price declined 36 per cent to $1,430 psf in Q1 2009.

‘The projects we selected were those that we believed stood as good proxies for their respective locations, and ideally have some history (that is, not launched recently),’ said Credo’s managing director Karam- jit Singh.

‘Transaction volumes were thin in Q1 this year; there were only three luxury projects in the Orchard Road belt with at least two transactions each in the first three months of this year. It’s not an ideal situation, where we would want to pick from a larger basket of transactions. But this study still serves to point towards where the market has been heading,’ he said.

Credo’s analysis also showed that, on average, condo prices in Sentosa Cove in Q1 2009 were about 30 per cent below H2 2007. In the city centre, the average price decline in the same period ranged from 22 per cent (for Icon) to 34 per cent (for The Sail @ Marina Bay).

In what Credo dubs the ‘mid-prime segment’ - covering River Valley, Bukit Timah, Novena/Thomson and Katong - it said average price declines generally ranged from about 20 to 30 per cent. Suburban condo prices generally fell less than 10 per cent.

‘The analysis shows the greater price volatility in the prime districts, which also presents opportunity for greater upside when recovery sets in, compared with suburban condo prices, which tend to move in a more subdued fashion,’ said Mr Singh.

The bigger price drops in the Orchard area have led to a narrowing price gap between the high-end and low-end segments. ‘At some point, not too far from now, buyers will start upgrading from one tier to the upper tier,’ Mr Singh reckons.

‘What the price convergence illustrates is the buying potential of prime properties. It will pay - whether at this point in time or not very far off from now - to bet on prime,’ he added.

The price declines have surfaced on the radars of potential investors - individuals, families and some property funds - who are studying top-notch prime- district projects, with a medium-term investment horizon. ‘Some have capacity to take about 10 units, some 20 units. Some have budgets of more than $100 million,’ according to Mr Singh.

CB Richard Ellis executive director Jeremy Lake said high-net-worth individuals here as well as in a three-hour flight radius from Singapore are among the key players actively looking for property investments here. ‘Some are keen on investing in offices; some in residential - most would go for the high-end, where prices have corrected the most,’ he added.

Mr Singh said acquisitions would be funded largely with equity. ‘Right now, they’re monitoring the big picture - homing in on a good time to make a swoop, which projects, at which prices,’ he added.

Mr Lake adds: ‘Some investors are willing to commit sooner rather than later, compared with a few months ago when everybody wanted to wait and found pricing to be unattractive. Now, some investors think pricing is good enough to go.’

Market watchers say the likelihood of deals being struck will also depend on the threshold of sellers, who could include individuals who are stretched from holding multiple condo units as well as developers of projects with low-cost land or who just want to clear unsold units.

DTZ senior director Shaun Poh says some private bankers are trying to arrange consortiums for high-net-worth clients and are sourcing for property investments of about $20-50 million per consortium. ‘Their main target would be high-end condos; some may also be interested in commercial properties. The banks will also provide financing for the acquisition.The mandate given to these private bankers is to look for opportunities priced 20-30 per cent below current values,’ he said.

However, Mr Singh’s advice is: ‘It’s close enough to the bottom that it makes sense to buy at this stage, rather than buy when it has turned the corner - by which time the number of competing buyers will be greater.’

Source : Business Times - 09 April 2009

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