Slower sales for HDB’s condo-style projects

Slower sales for HDB’s condo-style projects

Renewed interest in property more focused on private, HDB resale sectors

By Jessica Cheam

Parc Lumiere, a DBSS project, sold well because most of the units were priced below the $500,000 psychological barrier, said a market player.

The numbers show it: Singapore has been gripped by a buying frenzy that seems to have pervaded every segment of the property market.

Sales volume for HDB resale flats has surged 58 per cent in the second quarter, and private home sales have even spread from the mass market to the upper-mid-tier segment.

But while sales have been brisk at condos, the pace has been somewhat slower in the HDB hybrid condo-style flat sector, also called Design, Build and Sell Scheme (DBSS) projects.

These condo-style HDB flats have better finishes and facilities, and are built by private developers.

A survey by The Sunday Times shows that sales at three centrally located DBSS projects - The Peak@Toa Payoh, Park Central at Ang Mo Kio and Natura Loft at Bishan - do not seem to have moved as briskly compared to the pace seen in the HDB resale market and for private mass market homes, where projects such as 8@Woodleigh in Potong Pasir were fully sold out in a short timeframe.

Sales are hovering at the 70 per cent to 75 per cent level, despite the fact that buyers no longer have to ballot and can buy a flat via walk-in selection.

Analysts note that 70 per cent is a decent level of sales but point to a number of reasons these DBSS flats have not performed as well as their peers - the exception being Parc Lumiere at Simei, which has sold 93 per cent of its 360 flats since its April launch.

Firstly, the target audience - HDB home buyers - are highly price-sensitive. Prices for bigger flats - hitting the upper range of $600,000 and just over $700,000 each - are out of reach for many buyers, say analysts.

This is why Parc Lumiere was a sell-out, said PropNex chief executive Mohamed Ismail, although its location is less central. ‘Most of the flats were priced below the $500,000 psychological barrier.’

Also, the only flat types left are five-roomers, which may be too big for young couples buying their first property.

Secondly, new private projects have been attractively priced by developers during recent launches, narrowing the price gap between DBSS flats and private condos.

‘Home buyers will prefer to buy private property, especially if compared to the higher-range DBSS flats which cost up to $730,000,’ said Mr Ismail.

Furthermore, DBSS flats are subject to HDB rules such as the $8,000 household income ceiling, ethnic quota and a five-year minimum occupation period.

With this income ceiling, apartments priced above $700,000 will be a stretch for first-timers, said property veteran Nicholas Mak, former head of research at Knight Frank.

Amid the recession, such buyers are also more conservative and are unlikely to commit to pricey homes, he said.

Such DBSS projects, however, will start to see renewed interest if and when private property prices start to creep up, say market watchers.

‘When this happens, there will be a distinct price jump between DBSS properties and private condos,’ said ERA Asia Pacific associate director Eugene Lim.

Then, such HDB condo-style flats will appeal to those who cannot afford private property but find the main supply of HDB flats too basic, added Mr Ismail.

This is already starting to happen, according to DBSS developers.

A spokesman for United Engineers, which is developing Park Central, said that with the recent property market warming up, ‘there has been an increase in sales queries and appointments at our sales office, especially in the months of June and July’.

All DBSS developers have so far held on to their prices despite the recession.

Meanwhile, other developers such as QingJian Realty, which built Natura Loft, are pulling in buyers in innovative ways such as holding lucky draws in which home buyers stand to win cars.

As to whether DBSS buyers can make a profit from resale demand in the future - after the five-year occupation period - this will depend on how high prices are in the private mass market at that time, added ERA’s Mr Lim.

Source : Straits Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

HDB flats not for making money

HDB flats not for making money

Home-seekers may be snapping up HDB flats amid this recession as well, but don’t dream of making a killing by investing in a public flat.

For one thing, HDB flats are meant to provide basic housing for the masses, which means they are not investment-grade properties.

‘If you’re looking to make capital appreciation or good rental income, then it is still the private condominiums because people who rent look for facilities,’ said Mr Eugene Lim, associate director at property firm ERA Asia Pacific.

‘The highest you can fetch in rent for an HDB flat in a good location is probably $2,000 plus. Any higher, people will go to condos,’ he added.

HDB figures show that a three-room flat in Ang Mo Kio, Jurong West or Serangoon typically fetched rent of about $1,400 a month in the second quarter of this year.

Forget about making huge gains from selling your HDB property either.

‘HDB is not a market that swings very widely. It is a gradual market,’ said Mr Lim.

Strict HDB rules make it hard for anyone to profit from renting or selling his flat.

The board imposes a minimum occupation period on a home owner before he can sell his flat on the open market. This period depends on the mode of purchase, financing and the flat type.

Those who bought subsidised flats from the HDB would need to hold on to them for five years.

A flat owner who bought a resale flat without subsidy can sell it after 21/2 years if he has taken a loan from the HDB.

If he has not, or has taken a loan from a bank to finance his purchase, he can sell his flat after one year.

When it comes to renting out flats, those who bought resale flats without a housing grant from the government are allowed to sublet their entire flat only after three years of occupation.

Those who bought their flats from the HDB or from the open market with a housing grant will have to occupy their flats for at least five years before they are allowed to sublet their entire flat.

To sublet the whole flat, prior approval from the HDB is needed, and it is usually given if you have already fulfilled the minimum occupation period requirement.

Home owners do not need to seek permission from the HDB if they want to sublet just rooms in their flat, but they must continue to live in the flat during the period of subletting.

Only those who own a three-room or bigger flat are allowed to sublet a room.

Since the beginning of this year, the HDB has taken action against 12 flat owners who sublet their entire flat without prior approval. Last year, it caught 28 such flat owners.

It is understood that some got away with a warning and some were fined, but the most severe penalty could be having your flat taken away by the HDB.

The agency relies on tip-offs from the community and combs through the classifieds section of newspapers to sniff out those who illegally sublet their flats.

It also conducts half-yearly flat inspections for approved subletting cases.

Subletting rules for entire flats have been gradually relaxed since 2003 to allow flat owners to make some supplementary income and provide more rental options to those who do not own a home.

The maximum number of subtenants allowed per flat is four persons for one- and two-room flats, six persons for three-room flats, and eight persons for four-room and bigger flats.

Flat owners who own a private property can sublet their flat if they have met the minimum occupation period - three years for non-subsidised resale flats and five years for subsidised flats bought from the HDB.

But again, they must get written approval from the HDB first.

Source : Straits Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

CapitaMall Trust gets boost from retail sales

CapitaMall Trust gets boost from retail sales

By Charissa Yong

CapitaMall owns 14 retail malls, including Junction 8, Plaza Singapura and Lot One Shoppers’ Mall.

CAPITAMALL Trust (CMT), which owns a portfolio of retail malls, yesterday posted a 15.8 per cent jump in second-quarter distributable income to $67.9 million, over the same period last year.

Mr James Koh Cher Siang, chairman of CMT’s manager CMT Management Limited (CMTML), said there were improving signs in Singapore’s retail sales in the quarter ended June 30.

CMTML chief executive Lim Beng Chee said shopper traffic at the trust’s malls has also rebounded from the same period last year.

CMT owns 14 retail malls, including Junction 8, Plaza Singapura and Lot One Shoppers’ Mall.

The trust distributes all of its distributable income to unitholders. This quarter’s distribution date is Aug 28.

Its second-quarter distribution per unit was 2.13 cents, up from 1.85 cents in the same period last year.

CMT’s gross revenue for the latest quarter was $138.6 million, up 10.4 per cent - mainly owing to its acquisition of The Atrium@Orchard and the completion of major enhancement projects.

Its second-quarter net property income was $93.8 million. The second- quarter annualised distribution yield was 5.51 per cent, up from 4.8 per cent in the corresponding period.

Mr Lim said new tenants were paying more for rent while existing tenants were renewing leases at higher rates.

Enhancement work for Jurong Entertainment Centre is also on schedule to commence at the end of this year.

Mr Koh said the outlook for CMT will depend on the pace of recovery in the global economy. However, he added that he was ‘encouraged by the improving signs seen in the moderation in the rate of economic contraction in the second quarter of this year’.

CMT shares rose 3 cents to close at $1.58 yesterday.

Source : Straits Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

Next year may not see oversupply of homes

Next year may not see oversupply of homes

By Melissa Tan

GLUT? What glut? Fears of an oversupply of private homes next year have eased - in fact there could even be a shortage.

The Urban Redevelopment Authority’s (URA) second quarter real estate statistics, released yesterday, suggest any potential oversupply has been pushed back to 2011 or even later as private property developers delay and cut down on projects.

The number of private homes slated for completion for the whole of next year has fallen sharply to just 5,394.

That is down about 70 per cent from an estimated 17,454 early last year at the height of the last boom.

Just as developers have cut back on building, home buying has shot back up to boom-time levels.

For the past three months, more than 1,000 private homes have been sold each month. An average of 8,000 private homes have been sold each year since 2000.

This means that private home prices and rents could rise next year, as the supply of private property units in 2010 may not meet demand, especially if the current strong sales streak keeps up.

Caveats apply, of course, market watchers say. URA’s statistics rely on figures that developers have provided, and dramatic changes from quarter to quarter have occurred before.

Also, the number of completed units could differ from the number sold, as developers could sell uncompleted units or be unable to sell completed units.

According to URA statistics, during the last boom in 2007 and last year, developers - confident that people would snap up private homes - obtained licences to sell 11,150 private homes set to be finished this year, and 9,188 homes in 2010.

But the collapse of Lehman Brothers last September and the resulting recession triggered fears last year that there would be too many private homes on the market next year amid an economic slowdown.

Concerned that units would not sell, developers have since slashed some projects and pushed back the completion dates of others. As a result, URA’s figure for the total planned units slated for completion this year and beyond has fallen by 6,000 - from over 68,000 in the first quarter of 2008 to the current 62,350.

But although almost all of URA’s projected completion figures have declined gradually over the period from the third quarter of last year to the first quarter this year, the slide shows signs of having just bottomed out.

In the third quarter of last year it was projected that around 13,400-16,000 units would be completed every year after 2010. This fell to a range of 12,100-13,900 in the fourth quarter and then to 10,900-13,800 last quarter.

Although it still remains below pre-recession levels, this range has risen slightly in the last quarter to 11,200-13,600 units every year from 2011 onwards.

The bulk of project completions has been shifted from next year to 2011 and later, with project completion figures increasing by an average of 350 for each year from last quarter’s figures.

To date, 5,158 private units have been finished in the first half of this year, and URA expects 1,051 more units to be ready within the next six months.

Source : Straits Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

HDB prices up 1.4 per cent

HDB prices up 1.4 per cent

Decline in upfront cash required makes resale flats more affordable

By Jessica Cheam

PRICES of Housing Board flats rose 1.4 per cent in the second quarter to a record high, reversing a first-quarter dip of 0.8 per cent.

The number of transactions also soared - up 58 per cent in the three months to June 30 - as confidence grew and buyers rushed back into the market.

One reason for the HDB market’s resilience amid testing economic times is the decline in the amount of cash required upfront to buy a resale flat. This amount is called cash-over-valuation (COV) and is falling or at least stable across all flat types.

Fresh figures released by HDB yesterday showed that the median COV for all flat types fell to just $3,000 in the second quarter compared with $4,000 in the first quarter. The median COV is at a relatively low $5,000 for three- and four-roomers and stayed at zero for five-room and executive flats, for both the first and second quarter.

Median COV for two-roomers declined from $7,000 in the first quarter to $6,000 in the second.

This is a marked change from the 2007 property boom, when median COV hit $22,000 in the fourth quarter, pricing many first-time buyers out of the resale market.

COV has come down due to valuations of resale flats catching up, said ERA Asia Pacific associate director Eugene Lim.

So even though values of HDB resale flats are high, they have become more affordable as buyers can get bank loans for the purchase and do not have to fork out high amounts of cash.

Sales activity was robust in the quarter with transactions up to 10,184 compared with 6,446 in the first quarter. They were also up 31 per cent from the 7,763 units sold in the same period last year.

Sales of five-roomers rose 80 per cent - 2,713 were moved - over the first quarter while executive flat transactions surged 100 per cent to 753. Four-room flat sales climbed from 2,488 to 3,787.

PropNex chief executive Mohamed Ismail noted that sales of the bigger flat types had suffered in the three quarters up to the end of March amid growing concerns about Singapore’s worst recession.

‘These numbers are a clear sign that people’s market confidence is growing,’ he said, adding that feedback on the ground indicated that demand in mature estates far exceeds supply.

The sales of larger flat types also explain the strong demand from HDB upgraders who sold their flats to buy private homes, said property veteran Nicholas Mak.

Private home sales, especially in mass-market suburban condos, have enjoyed brisk sales since February.

Meanwhile, HDB rents were stable. Median rents for two-room and five-room flats for the second quarter were unchanged but fell by $100 for three-room, four-room and executive flats.

HDB plans to launch a further 6,000 units under its build-to-order scheme over the next six months. About 2,400 will be three-room and smaller flats. The bulk of new flat supply will be in Punggol. So far, HDB has launched about 2,000 new flats in Punggol, Sengkang and Woodlands this year.

Analysts predict that HDB flat prices will enjoy modest increases as confidence continues to grow.

But the falling COV for large flats could indicate limited upside for prices of these flat types, said Mr Mak. ‘This could also limit the HDB upgraders’ demand for private property in the short term,’ he said.

Source : Business Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com

Mass market buyers prop up home prices

Mass market buyers prop up home prices

Cheaper condos see smaller price declines; sales of big HDB flats up

By Fiona Chan

THEY were shut out of the property market during the most recent boom in 2007, when furious demand for luxury homes drove up home prices far beyond their reach.

Now, buyers of cheaper mass market homes - defined loosely as bigger HDB flats and condominiums in the suburbs - are back in the market with a vengeance.

They doubled their purchases of five-room and executive HDB flats between March and June, pushing overall HDB prices up 1.4 per cent to hit a new high in the quarter, according to Housing Board (HDB) data released yesterday.

Mass market buyers also picked up four out of every 10 private homes sold, a shopping spree that resulted in twice the number of homes being sold in the second quarter than the first quarter, said the Urban Redevelopment Authority (URA). The number of resales nearly trebled while sub-sales more than doubled.

The strong demand for cheaper condos meant that while private home prices still fell 4.7 per cent in the second quarter, it was a far smaller decline than the plunge of 14.1 per cent in the first quarter.

What helped jam the brakes on the decline were suburban homes, which saw the smallest price drop in the quarter - 2.3 per cent - compared to pricier prime and city-fringe properties, which saw prices fall by double that amount.

Rents for private homes continued to fall 5.2 per cent in the quarter, though 8 per cent more leases were signed.

Consultants had actually expected prices to increase in the second quarter, as home buyers flooded back and developers started to selectively raise prices.

‘Our own analysis showed that private home prices in the second quarter rose,’ said DTZ’s head of South-east Asia research Chua Chor Hoon. She said the price increases ranged from 3 per cent for some suburban resale homes, to 11 per cent for homes in the prime districts.

In response to queries, the URA said that while prices have risen in some projects, there were still other developments that saw prices fall in the quarter.

But private home prices are likely to show a definite pickup from the third quarter, consultants say. ‘The second quarter will possibly be the last quarter of price declines,’ said Ms Tay Huey Ying, director of research and advisory at property firm Colliers International.

‘If developers remain cautious and tread carefully with price increases, this momentum in the market could continue. But if developers are impatient and jack up prices too quickly, that may hurt demand as buyers are still price-sensitive.’

Mr Nicholas Mak, a long-time property consultant, said he expects overall prices to show an increase in the second half of this year. His reasons: the recovery in global stock markets, relief buying due to a shorter-than-expected recession, and low interest rates that make property purchases look more attractive.

The outlook has also been boosted by the fact that demand is no longer restricted to the mass market, he said. In recent months, more buyers have been keen on mid-tier and high-end condos such as The Arte at Thomson or One Devonshire in Somerset. Even at suburban condos, buyers seem to be opting for larger, more expensive units. Yesterday, developer UOL Group sold 180 units in a single day at Meadows@Peirce in Upper Thomson.

While the project offers smaller units from 517 sq ft in size, most units sold had at least three bedrooms and were priced at $1 million and above, said UOL’s chief operating officer Liam Wee Sin.

The improved economic outlook also meant that offices and shops also saw slower declines in prices and rentals in the second quarter. Office prices fell 3.9 per cent, while rents fell 7.7 per cent.

But these numbers are unlikely to turn positive soon as recent retrenchment exercises dampen the office sector, said Mr Li Hiaw Ho, executive director of CBRE Research. He was more upbeat about shopping malls, as there is still ‘healthy demand’ for existing shop space. Shop rents eased 2 per cent in the second quarter and prices fell just 1.4 per cent.

Source : Business Times - 25 July 2009

Buy Sell Rent invest In Singapore Property Real Estate

MINDY YONG

( +65 ) 91002985

mindy@mindyyong.com