HDB resale flat prices hit new high in Q3

HDB resale flat prices hit new high in Q3

By Ng Baoying

SINGAPORE: Prices of HDB resale flats in Singapore rose to record highs in the third quarter, according to data released on Friday.

The latest data from the Housing and Development Board (HDB) showed that the Resale Price Index rose 3.6 per cent in the third quarter over the previous quarter to 145.2 points.

This has raised concern among some potential homebuyers, who fear that prices may continue to rise.

The last time the HDB resale market saw such high transaction volumes was more than four years ago, in the fourth quarter of 2004. Back then, 11,562 changed hands, compared to the 11,649 seen in the third quarter ended September this year.

ERA Real Estate said the typical quarterly HDB resale volume ranges from 6,000 to 8,000 units at most.

Eugene Lim, associate director, ERA Asia Pacific, said: “We have seen the HDB resale volume jump to above 10,000 for second quarter and above 11,600 for the third quarter this year.

“The third quarter is a very good month for HDB resale. It’s likely to taper off partly because cash over valuation, due to increased demand, has increased.

“HDB homebuyers are a price sensitive lot. So it will probably hit a resistance level. And in that sense we will expect resale volume to taper downwards in the last quarter.”

Mr Lim also said that the slowing resale transactions will see 4th quarter prices increase at a slower rate, by about 2 to 3 per cent.

HDB homebuyers and sellers said they are concerned about the increase in prices, and are studying the market closely before making any buying or selling decisions.

“I just need to survey whether I and my girl can save up some money when we get married, whether we can share the burden to buy the house,” said Freddy Samsi, a potential homebuyer.

A private homeowner, John Bosco said: “I don’t think we’re really out of the economy, out of the woods yet. And yet housing prices have gone up to a level which I think will not sustain. I’m not sure if the government pegging it to resale is a good idea, because they should keep their own prices.”

He said that property and housing are close to people’s hearts and HDB should make things affordable for people. “Paying S$600,000 for a HDB flat is… obscene actually,” he added.

However, Mr Teo LT, a homeowner, said that he would prefer prices to be high. “I’ve already bought mine, so I want the price to be stable at the price I bought, and not dip immediately,” he added.

Going forward, analysts said they expect activity in the HDB market to maintain at current levels as the economy recovers.

Meanwhile, private home prices were similarly buoyant - up 15.8 per cent in the third quarter, compared to the second quarter. This is a sharp turnaround from the 4.7-per-cent fall seen in the second quarter, and snaps four straight quarters of decline.

- CNA/sc

Source : Channel NewsAsia - 24 October 2009

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Private home prices up 15.8% in Q3; HDB resale prices up 3.6%

Private home prices up 15.8% in Q3; HDB resale prices up 3.6%

By Irene Chan

SINGAPORE: Private home prices rose 15.8 per cent in the third quarter compared to the second quarter - slightly lower than the initial forecast of a 15.9-per-cent rise made by the Urban and Redevelopment Authority (URA) in early October.

The rise in prices between July and September is a sharp turnaround from the 4.7-per-cent fall seen in the second quarter, and snaps four straight quarters of decline.

According to the URA, non-landed private homes in the city fringe areas saw the highest increase in prices of 18.5 per cent in the third quarter, while the prime districts saw private home prices rising 15.2 per cent. In the rest of Singapore, private home prices climbed 16.1 per cent.

In the second quarter, all three regions had seen a decline in private home prices of between 2 and 5 per cent.

Meanwhile, property prices for office, shop and industrial properties decreased by between 1.2 and 2.1 per cent.

Rentals of private residential, office, shop and industrial properties also fell, with the decline ranging from 0.9 to 4.1 per cent.

URA said that the fall of rental rates for all property types in the third quarter moderated compared to the second quarter.

Meanwhile, prices of HDB resale flats rose 3.6 per cent in the third quarter. Resale transactions increased by about 14 per cent from the second quarter to 11,649 cases.

The Housing & Development Board (HDB) said the median Cash-Over-Valuation (COV) amount among all resale transactions has risen to S$12,000. It said in tandem with this trend, cases transacting above valuation has also increased to 79 per cent.

HDB said that in the next two months, the public can look forward to another 4,000 Build-to-Order flats in Punggol, Bukit Panjang, Sembawang and Dawson.

Together with other sale exercises, as well as flats offered under the Design, Build and Sell Scheme, the total flat supply for 2009 would be about 13,500 units.

HDB said it is monitoring demand and would adjust its building plan accordingly to ensure an adequate supply of new flats.

- CNA/sc

Source : Channel NewsAsia - 24 October 2009

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The problem in same-agent property brokerage

The problem in same-agent property brokerage

THE National Development Ministry’s draft plan to regulate real estate brokerage includes a radical suggestion to prohibit an agent from acting for both seller and buyer in HDB resale transactions. This is to eliminate scope to subvert the willing-buyer, willing-seller process by demanding commission from the buyer, usually 1 per cent of the price, or to keep the seller in the dark about the best offer if the bidder would not pay commission. The ministry says this is unacceptable, a conflict of interest. Those who have been victims will argue it is worse than that: The practice breeds dishonesty, and it has the perverse effect of making the agent care largely for himself in securing maximum commission. If a practice is liable to bring the trade into disrepute, it should be discarded.

There is no disputing that the public will favour a separation of agent functions. Real estate firms should warm to the idea, too, as it will shore up battered public confidence. Their income derived as a percentage of their agents’ fees will not be reduced if the current fee guidelines are retained in a segregated system. It is anticipated an accreditation board urged on the trade by the ministry will set the fees. Agents might have to contend with the remote prospect of reduced earnings, but better this than to carry with them a collective stigma.

The downside of separating functions is that it could introduce trade rigidities and some inconvenience to consumers. Many a foreign jurisdiction permits an agent to act for both parties, with no incident. That is because rules of licensing and censure set by the realtors’ governing body are clear; they are observed faithfully; and the trade is fastidious about preserving ethical standards. They have the public’s confidence. In Singapore, duality of function has created a problem because ethical standards were never high to begin with, assuming the common run of agents understood the ethics of responsible dealing. The poor image could be improved under proposals to subject agents to a standardised examination and accreditation by the industry board, which in turn will be answerable to a statutory authority which will have powers of censure for ethical and licensing breaches.

If segregation is desirable, it should be legislated. Setting it as an industry guideline will lead to fanciful interpretations and endless disputes. A prohibition is more practical than the ministry’s parallel suggestion of retaining duality but permitting an agent to charge the buyer a fixed fee for the paperwork done. This assumes commission from the buyer is outlawed. But where dubious ethics is abetted by consumer ignorance, having any fee ‘fixed’ is no guarantee against abuse.

Source : Straits Times - 24 October 2009

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Big jump in S’pore’s trade confidence

Big jump in S’pore’s trade confidence

Republic posts one of the biggest leaps among 12 markets surveyed

By Gabriel Chen

SINGAPORE’S importers and exporters are markedly more optimistic about the trade outlook, with confidence surging in the September quarter in line with the rapidly improving global economy.

The Republic registered 110 in the latest HSBC Trade Confidence Index, up from 100 in the three months to June - recording one of the biggest jumps in confidence of the 12 markets surveyed by the bank.

The index ranges from zero to 200, with any number above 100 indicating rising levels of confidence.

Singapore is heavily reliant on trade.

The only other country to post a similar leap in trade confidence was Australia, which earlier this month became the first developed economy to raise interest rates since the global financial crisis began.

Last month, HSBC polled more than 3,500 trade-oriented businesses in countries including Britain, the United States and key economies in the Asia-Pacific region about their three-month outlook on trade volume, buyer and supplier risk, and access to trade finance.

The index, released here yesterday, showed that while Indonesia, China and the United Arab Emirates were the most confident about trade activity and growth, Singapore and Australia saw ’significant jumps’ in confidence scores from the previous survey.

‘There are signs of a more sustained global trade recovery - trade volumes have stabilised and, in fact, Singapore and some neighbouring countries are posting notable growth in export numbers and gross domestic product compared to six months earlier,’ said HSBC’s head of trade and supply chain in Singapore, Mr Khuresh Faizullabhoy.

The survey results show that Singapore respondents are more confident on the growth of trade volumes when compared to the earlier survey. Up to 39 per cent of them indicate that they expect trade volumes to step up, from 29 per cent previously.

Businesses in Vietnam and China are among the most optimistic, with 65 per cent and 56 per cent of respondents respectively expecting trade volumes to grow.

The improving sentiment among local exporters and importers comes on the heels of a 3 per cent rise in September in Singapore’s non-oil domestic exports, which exceeded market expectations.

This was Singapore’s third straight month-on-month rise in shipments.

Companies interviewed by The Straits Times say that with economic conditions looking much better, there has been a significant pick-up in trade.

‘Orders have improved by about 50 per cent since our worst times in October last year,’ said Mr Jay Chiu, managing director of Grandwork International, which produces furniture and exports it to the Middle East and Europe.

Companies also agree that the level of risk they faced from buyers defaulting on their payments, or from suppliers not honouring their trade agreements, has dwindled significantly.

‘A year ago, we were worried about whether our customers would go bust but now, we don’t have that feeling any more. In fact, some of them are giving us more business,’ said Mr Lim See Hoe, managing director of Teho Ropes and Supplies, a company that distributes ropes to the marine and offshore sector.

But experts caution that while the near-term prospects for trade look much rosier compared with the gloom they saw last year, conditions remain unpredictable for any period longer than six months ahead.

‘Businesses are telling us that the general sentiment beyond the second half of next year is still quite cloudy and visibility is not there,’ said Spring Singapore chief executive Png Cheong Boon.

OCBC Bank economist Selena Ling warned that while sentiment has clearly improved, the key risk is that in Asia, if governments start to take away the various stimulus measures that helped economies, it will be a test of whether private-sector demand can then ’stand on its own two feet’.

Source : Straits Times - 24 October 2009

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Sub-sales fall to lowest in two years

Sub-sales fall to lowest in two years

DESPITE prices soaring in the third quarter, speculative activity in the private housing market fell in the period to its lowest level in two years.

The number of sub-sale transactions - a closely watched measure of speculation - dropped by almost 20 per cent in the third quarter compared with the previous quarter, according to Urban Redevelopment Authority (URA) data yesterday.

As a proportion of total sales, sub-sales also fell to their lowest level since 2007. Only 9 per cent of home sales in the third quarter were sub-sales, compared to 13 per cent in the second quarter and over 16 per cent last year.

Sub-sales occur when a buyer purchases a new home and then quickly resells it before it is built. These transactions are the most widely used proxy of property speculation as the original buyer does not hold on to his unit long enough to stay in it or rent it out.

One of the reasons sub-sales dropped in the third quarter could have been the measures introduced by the Government to cool the exuberance in the market, said property consultants.

Although the measures were only officially announced on Sept 14, towards the end of the quarter, the Government had indicated well before that it was going to intervene in the market.

Sub-sales had risen sharply in the second quarter, more than tripling to 1,309 transactions, noted Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

They fell across the whole market in the third quarter, indicating that home sales in the quarter were largely fuelled by genuine home demand.

Now that the Government has intervened, overall sub-sale levels are likely to stay low, at between 5 to 10 per cent of total sales, said Mr Mak.

FIONA CHAN

Source : Straits Times - 24 October 2009

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Prices jump but rents fall

Prices jump but rents fall

Rents in decline for the fifth consecutive quarter, down 2.2% in July-Sept

By Fiona Chan

PRIVATE home prices shot up 15.8 per cent in the third quarter, confirming the spectacular jump in the housing market flagged by earlier estimates.

But the massive surge in home prices - the largest in 28 years - has not been matched by a corresponding leap in rents.

Rents of private homes continued their decline for the fifth quarter in a row, falling by 2.2 per cent in the third quarter, according to Urban Redevelopment Authority (URA) figures released yesterday.

Since the beginning of the year, private home rents have fallen 15.2 per cent. Prices are down only about 5 per cent for the year, after the third-quarter surge reversed four previous quarters of decline.

While this could be a sign that the boom in the housing market is not being supported by fundamentals, property consultants are not worried just yet.

This is because prices are now being boosted by sales of brand-new homes, which will not be completed for a few years, said Ms Tay Huey Ying, director of research and advisory at Colliers International.

By that time, the economy is likely to have recovered and businesses will have rehired more expatriates, who are the main tenants of private homes here.

In any case, the decline in private home rents has eased considerably and is on the verge of turning, she said. Colliers’ research shows that rents of luxury homes already rose by 3.3 per cent in the third quarter.

Buoyed by improving economic data that showed Singapore’s recession ending, home buyers picked up 5,578 new homes from developers in the third quarter, the highest ever, said Mr Li Hiaw Ho, executive director of CB Richard Ellis.

They also bought 4,883 homes from resale market sellers, 17 per cent more than in the second quarter.

But this buying momentum is likely to slow for the rest of the year, said Ms Tay. Home sales in the fourth quarter are generally lower owing to school holidays and the festive season, and this year, sentiment will be further dampened by the Government’s recent cooling measures.

As it is, the moves have already had some impact on the market, said Mr Donald Han, managing director of property consultancy Cushman & Wakefield.

He noted that yesterday’s official figures on home prices came in slightly lower than the Government’s estimate earlier this month of a 15.9 per cent rise.

The estimate takes into account all transactions in the third quarter except for those in the last two weeks - exactly the period after the Government announced its cooling measures on Sept 14.

‘The highest price increases probably took place in the first half of the third quarter,’ said Mr Han.

The cooling measures appear to have had the biggest effect on homes in the central districts and city-fringe areas.

The URA said yesterday that prices of prime city-centre homes rose 15.2 per cent in the third quarter - down from the 16.2 per cent it had earlier estimated.

Similarly, city-fringe home prices rose 18.5 per cent, according to yesterday’s data, which is lower than the 19.1 per cent in the estimates.

Suburban homes were the only ones that rose in price more than estimated: 16.1 per cent, compared to the estimate of 15.4 per cent.

Apart from private homes, other segments of the property market stayed in negative territory in the third quarter, although they registered smaller declines.

Office prices and rents fell by 2.1 per cent and 4.1 per cent respectively, while shop prices and rents dropped by 1.2 per cent and 0.9 per cent respectively.

Source : Straits Times - 24 October 2009

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HDB resale prices at record high

HDB resale prices at record high

Up 3.6% in Q3, with 11,649 units sold; cash top-ups also soar

By Jessica Cheam

Cash-over-valuation amounts for resale HDB flats have quadrupled, from a median of $3,000 in the previous quarter to $12,000 in the third quarter.

PRICES of resale Housing Board homes have continued their relentless climb, rising another 3.6 per cent in the third quarter to hit a fresh record.

But despite the high prices, demand for resale flats remained hot. A total of 11,649 homes changed hands in the third quarter, reaching a level not seen in five years.

The latest figures, released by HDB yesterday, highlight another important trend. Almost 80 per cent of resale flats were sold above their bank valuations.

And this amount, known as the ‘cash-over-valuation’ (COV) - or the cash top-up payable by buyers - quadrupled from a median of $3,000 in the previous quarter to $12,000.

Together, the numbers show that resale HDB flats are not just becoming more expensive, but homeowners have to fork out more cash to buy them.

Analysts said yesterday that the feverish buying activity had been fuelled by recent positive economic sentiment, and also some panic buying.

Chesterton Suntec International’s research and consultancy director Colin Tan said that with resale prices surging upwards, more people are buying earlier in anticipation of more price increases.

‘The problem is, many buyers put off their purchases during the height of the recession. As resale prices start to run up, panic sets in and buyers, including PRs, start to buy at all costs, which adds further to the demand,’ he said.

COVs have been on a see-saw ride for the past two years. During the 2007 property boom, the median cash top-up for all flat types hit a record $22,000 in the fourth quarter, driving many home seekers to queue for new HDB flats.

Then, as the global recession tightened its grip on the economy, prices fell faster than bank valuations of flats.

Cash top-up values came down to almost zero and just a quarter ago, close to half - 43 per cent - of all sales were done at or below valuation.

Now, it seems the days of low cash top-ups are over and ERA Asia-Pacific associate director Eugene Lim believes they will continue to rise in the short-term.

‘We estimate the median COV for next quarter to be $15,000 to $18,000,’ he said.

The rising cash top-up figures were confirmed by HDB data, which shows them spiking in popular areas such as Marine Parade and Yishun, reaching a median of $20,000 for five-roomers.

Analysts said rising prices - they have risen 4.2 per cent since the beginning of the year - and cash top-ups will drive young couples back to the queue for new HDB flats, especially those who are cash-poor.

Prices ‘unlikely to ease’

And this will put even more pressure on the Government to quickly supply new units to meet burgeoning demand.

HDB recently addressed the problem by announcing the release of 7,000 new flats from October to December.

It added yesterday that it will offer 4,000 flats under its build-to-order scheme in Punggol, Bukit Panjang, Sembawang and Dawson in the next two months. It recently launched 1,200 new flats in Sengkang and Jurong West, which have attracted 3,007 applicants to date.

The release of these new flats could help to ease the rise of resale flat prices somewhat, said some analysts.

But others like ERA’s Mr Lim also felt that the new supply would have minimal impact on resale prices. He noted that most buyers in the resale market either do not qualify for new flats (like singles and PRs) or qualify but are unwilling to wait three years for them to be built.

This is why industry observers expect resale prices to continue to rise.

PropNex chief executive Mohamed Ismail thinks prices will likely rise another 2 to 3 per cent over the next quarter.

But while HDB’s latest figures may ‘fuel the ire of those who bemoan high COVs’, Mr Ismail says the data brings good news to existing HDB owners.

‘This is a prime opportunity for them to upgrade their property or gain cash by selling their flat - especially those who bought at the previous price peak in 1996,’ he said. ‘Their property assets would now see positive cash flow.’

Source : Straits Times - 24 October 2009

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Premium for HDB resale flats soar in Q3

Premium for HDB resale flats soar in Q3

Resale prices and volume also increase from the previous quarter

By EMILYN YAP

SELLERS of HDB flats have regained pricing power as demand for homes shows little sign of letting up.

According to the Housing and Development Board yesterday, the median cash-over-valuation (COV) for resale transactions quadrupled from Q2 to Q3 this year - from $3,000 to $12,000.

This premium, which buyers have to pay for HDB flats, had fallen in the six previous consecutive quarters from Q1 2008 as the economy slowed.

Except for one-roomers, all flat types registered an increase in median COV in Q3 this year. Notably, five-room and executive flats commanded median COVs of $10,000 and $9,000 respectively, whereas most were unable to command any premium in the preceding quarter.

Some of the highest COVs in Q3 were in Yishun. For four-room, five-room and executives flats in the area, buyers had to fork out median premiums of $17,000, $20,000 and $19,000 respectively.

PropNex notes that 28,279 resale transactions took place in the first three quarters of the year - just 140 fewer than in the whole of 2008.

Nevertheless, compared with a year back, Q3’s median COV of $12,000 was lower - down 37 per cent from $19,000 then.

As COVs soared from Q2 to Q3, the proportion of resale deals transacting over valuation also increased, from 57 per cent to 79 per cent.

According to ERA Asia-Pacific, COVs are still increasing, though at a slower pace. ‘We estimate the median COV for Q4 to be $15,000-$18,000,’ said ERA associate director Eugene Lim.

Robust demand for HDB flats was also reflected in higher resale prices. HDB’s resale price index grew 3.6 per cent from Q2 to 145.2 points in Q3 - a record since 1990. This figure exceeded a flash estimate of 144.7 points, or a 3.2 per cent rise.

Some of the most expensive units were in Queenstown, where five-room and executive flats went for a median $619,000 and $712,500 in resale transactions.

Mr Lim expects resale prices to continue growing. ‘However, COVs demanded by sellers are hitting resistance levels, as the economy is just starting to improve,’ he said. ‘We may possibly see a price increase of about 2-3 per cent for Q4.’

While rising prices are depressing for public home seekers, they spell good news for existing owners, says PropNex CEO Mohamed Ismail.

‘This is a prime opportunity for them to upgrade their property or simply to gain cash from selling their existing flats,’ he said. ‘This is especially so for owners who bought their flats during the previous peak in 1996.’

The emergence of more HDB upgraders could keep the private home market afloat. According to market watchers, these buyers were critical in reviving sales from the start of the year as they flocked to mass-market condominiums.

Strong HDB resale volumes underpinned the rising prices. The number of deals in Q3 was 11,649 - up 14 per cent from Q2. According to ERA, this could be the highest quarterly volume since Q4 2004, when 11,562 units changed hands.

PropNex notes that 28,279 resale transactions took place in the first three quarters of the year - just 140 fewer than in the whole of 2008.

In addition, the proportion of deals involving five-room and executive flats has grown in each quarter this year. ‘This increasing popularity for larger flats reflects greater market confidence,’ Mr Ismail said.

According to HDB, total flat supply this year will be about 13,500 units. Around 4,000 build-to-order flats will be available at Punggol, Bukit Panjang, Sembawang and Dawson in the next two months.

HDB said that it is ‘monitoring the demand situation and will adjust its building plan accordingly to ensure an adequate supply of new flats’.

Source : Business Times - 24 October 2009

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Office vacancies rise, rentals fall despite positive take-up

Office vacancies rise, rentals fall despite positive take-up

Fresh supply coming to the market outstrips rejuvenated demand

By KALPANA RASHIWALA

THE office market posted a positive take-up of 3,000 square metres (or 32,292 square feet) in the third quarter of this year - reversing three consecutive quarters of negative take-up, according to latest figures released by Urban Redevelopment Authority (URA).

SPANKING NEW
Among the projects that were completed in the July to September period this year were Mapletree Anson, 71 Robinson Road and transitional office developments at Scotts Road and Anthony Road
Office take-up shrank 247,570 square feet in Q2 this year, 322,917 sq ft in Q1 2009 and 365,973 sq ft in Q4 last year.

Despite Q3’s positive take-up figure, vacancy rates continued to rise and rents slipped further in the third quarter as the supply of new office space completed doubled to 1.25 million sq ft in Q3 this year from 552,188 sq ft in the preceding quarter.

Among the projects that were completed in the July to September period this year were Mapletree Anson, 71 Robinson Road and transitional office developments at Scotts Road and Anthony Road.

The islandwide vacancy rate for office space rose from 10.8 per cent as at end-June 2009 to 12.2 per cent as at end-September.

‘Demand will be reasonably strong next year, but vacancy rates will continue to rise through 2010 on the weight of new supply completion.’

– Moray Armstrong,
CB Richard Ellis

The vacancy rate for URA’s Category 1 space - which covers major office buildings in the Downtown Core and Orchard Planning Area that are modern or recently spruced up, and have big floor plates - increased from 6 per cent as at end-June to 6.5 per cent as at end-September.

The vacancy rate for Category 2 space - which refers to the remaining office space on the island - climbed from 11.9 per cent to 13.4 per cent over the same period, reflecting the flight to quality among occupiers that property consultants have been talking about.

The monthly median rental for Cat 1 space based on contracts inked in Q3 was $9.50 psf, down 10.3 per cent or $1.09 psf a quarter earlier. This brings the decline since the end of last year to 27.7 per cent. For Cat 2 space, the median monthly rent dropped 4.3 per cent to $4.89 psf in Q3 or a 17.7 per cent decrease since end-2008.

Cushman & Wakefield’s research director Ang Choon Beng expects positive office take-up seen in Q3 to continue. ‘Singapore’s economy has clearly come roaring back and we believe the momentum will likely lead to increasing levels of positive office space absorption through 2010.’

Knight Frank chairman Tan Tiong Cheng said that while office take-up will continue to be positive as the economy recovers, it is unlikely to catch up with the increase in new supply completions. As a result, office rents will continue to decline next year albeit at a slower pace. Likewise vacancy rates will continue to rise.

CB Richard Ellis executive director Moray Armstrong predicts that positive take-up will continue this quarter although this will not be sufficient to erase the negative take-up seen in the first half of this year.

‘Demand will be reasonably strong next year, but vacancy rates will continue to rise through 2010 on the weight of new supply completion.

Vacancy will probably peak at the end of 2010, by which time we expect rents will have bottomed out,’ he predicts. ‘It’s not unreasonable to project rental growth from 2011 onwards,’ he added.

Knight Frank’s Mr Tan said that in the absence of distressed or fire sales, office capital values are likely to find their bottom sooner than rents.

‘At worst, cap values may just stagnate until there is further evidence of improvement in the economy,’ he added.

Source : Business Times - 24 October 2009

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Nokia hurls a rock at iPhone, no ripples here

Nokia hurls a rock at iPhone, no ripples here

It accuses Apple of stealing its innovations

By ONG BOON KIAT

A POTENTIALLY market-shaking legal fight has broken out between Nokia and Apple, but the feverish demand here for Apple’s iPhone is unlikely to be doused by the news. Nokia, the world’s biggest mobile-phone maker, on Thursday sued Apple for alleged infringement of 10 patents, which cover wireless data, speech coding, security and encryption.

In its complaint filed with a US federal court in Delaware, Nokia said it was seeking compensation for Apple’s use of the patents, as well as a declaration that Nokia is entitled to an injunction until Apple pays compensation, along with interest, for past infringement. It has accused Apple of seeking ‘a free ride on the back of Nokia’s innovation’.

Both firms have reportedly been locked in long-running talks to agree on a deal for Apple to pay a licence fee to use technologies developed by Nokia that are already used in the iPhone.

The threat of a clash in court between the two handset titans and a possible injunction on Apple should not have an immediate impact on iPhone sales in Singapore.

‘Consumers would be pretty much oblivious to these legal spats,’ said Aloysius Choong, a research manager with technology analyst firm IDC Asia-Pacific. For one thing, the typically long-drawn nature of such patent lawsuits means consumers aren’t likely to worry at this early stage about the future viability of the iPhone, he noted. Moreover, ‘the iPhone is a profitable product, so it wouldn’t be in Apple’s interest to let it go to the extent of having an injunction on them’.

‘The other thing to note is when it comes to announcements like this, typically the companies have been involved in negotiations for a while. So the fact that Nokia has announced it is suing Apple for these patent issues doesn’t mean that both parties will stop negotiating,’ he added.

Singapore Telecommunications, which until recently held the exclusive rights to sell the iPhone in Singapore, declined to comment when asked about the possible impact on iPhone sales that the lawsuit might bring. MobileOne, which will be selling iPhones in the next two months, also declined to comment. The iPhone has been a runaway hit in Singapore since its debut last year, with one estimate putting sales of the previous-generation 3G iPhone models at over 60,000 units. According to SingTel, ‘tens of thousands’ had signed up for the current iPhone 3GS before it started selling in July.

In their previous fiscal quarters, Apple shipped 7.4 million iPhones while Nokia delivered 5.7 million touch-screen devices and 108.5 million phones in total. Last week, Nokia said its share of the global smart phone market fell to 35 per cent in the third quarter from 41 per cent in the second, as Apple and Research In Motion gained.

Source : Business Times - 24 October 2009

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