Measures to cool property market appear to have worked: Mah

Measures to cool property market appear to have worked: Mah

By Yasmine Yahya

SINGAPORE: The government said on Monday the measures taken to cool the property market appear to have had the desired effect.

Speaking in Parliament, National Development Minister Mah Bow Tan noted that since the measures were introduced, the sale of private homes fell 37 per cent on-month in September, and another 29 per cent in October.

In September, the government removed the Interest Absorption Scheme and Interest-Only Loans to temper the exuberance in the property market and to prevent a bubble from forming.

The government has also resumed land sales under the confirmed list of its land sales programme in the first half of 2010.

Mr Mah said the government will continue to monitor the property market closely to assess the market’s response to the measures introduced before deciding whether further measures are needed.

“Our key interest is to ensure that property prices and rentals remain competitive and move in line with economic fundamentals. We want to curb erratic spikes in prices due to excessive speculation, inaccurate information or market manipulation,” the national development minister said.

“But we must let market forces determine prices, based on genuine demand from home-buyers and investors.”

Mr Mah added that the measures introduced in September have also helped to control speculative activity. Government records so far indicate that the number of sub-sales today is not as high as it was during the height of the property market boom.

Sub-sales are closely watched as a gauge of speculative activity in the property market.

Mr Mah said the government may remove the cooling measures in future if the property market stabilises or weakens, but it is too early to say when that might happen.

- CNA/so

Source : Channel NewsAsia - 23 November 2009

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Bugis office block sold to private school

Bugis office block sold to private school

By Joyce Teo

An artist’s impression of the ERC campus in North Bridge Road, which will house state-of-the-art classrooms, a library and cafes.

A DULL-LOOKING office block just behind Bugis Junction has been sold and will be renovated for use as a campus for private school ERC Institute.

ERC Holdings, which owns the school, bought nearly all of the 999-year leasehold building in North Bridge Road for

$46 million earlier this month from City Developments. With 60 units, or 38,534 sq ft, ERC now owns 91.3 per cent of the strata-titled development.

It plans to spend between $3.5 million and $5 million to renovate the six-storey block, said ERC Holdings chief executive Andy Ong.

The price, which works out to about $1,194 per sq ft based on strata area, is considered fair as such space is hard to find in the city, said Mr Shaun Poh of DTZ, who sealed the deal. Mr Ong said he took 15 months to find the space.

Currently, ERC Institute, which has 2,000 students, operates out of two sites: a campus in River Valley Road and an office unit in Robinson Centre. Its most popular programme covers entrepreneurship.

Come September next year, when its long-term lease at Robinson Centre ends, ERC Holdings will give up that space and move to the Bugis building, tentatively named ERC Complex.

‘By 2012, we hope to get 6,000 to 8,000 students, of which 3,000 to 4,000 will be in Singapore,’ said Mr Ong.

ERC has started operations elsewhere in the region, including in Indonesia.

After the renovation, the new building will offer better facilities than the existing campuses, said Mr Ong.

It will have at least two cafes serving a variety of cuisines, a library, a student rest area and a recreation area.

About 30 to 40 state-of-the-art classrooms will be spread over three levels.

One floor will be reserved for the corporate office of ERC Holdings.

The ground floor has retail space, currently taken by a hair salon and a noodle shop. This Fashion has just moved out.

Nearby, another small office block, Premier Centre, could also be transformed. Budget hotel operator Fragrance Group bought it in July for $18 million, or $1,076 per sq ft, from a Hong Leong Group unit, and might turn it into a hotel.

Source : Straits Times - 23 November 2009

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Timing of HDB tax hike ‘avoids bigger increases later’

Timing of HDB tax hike ‘avoids bigger increases later’

By Sue-Ann Chia, Senior Political Correspondent

THE property tax of HDB flats is being raised next year partly to avoid having to introduce a bigger increase later should home prices continue to rise, said Acting Minister for Information, Communications and the Arts Lui Tuck Yew.

He gave the reason yesterday, after being asked at a dialogue with Aljunied-Hougang residents whether the Government could delay it, as the recession has just started to ease.

Noting that the adjustment had been delayed once, Rear-Admiral (NS) Lui said: ‘The problem is, the longer you defer it, the larger the increase will be…if HDB prices continue to go up.’

He also pointed out that the Government is taking steps to soften the impact of the tax rise early next year. It is giving HDB homeowners a one-off rebate, set at 50per cent of the property tax payable and capped at $120. This means low-income families with homes whose property tax is $50 and less will not have to pay any such tax next year.

The property tax rate is 10 per cent of a property’s annual value, although homes that are owner-occupied enjoy a concessionary 4 per cent tax rate. The annual value has increased with rising property prices.

HDB resale prices have risen a hefty 31.2per cent in the past two years, and a further 3.8per cent in the first nine months of this year.

Hence, the Government has decided to raise the property tax ‘to reflect the prevailing movement of HDB prices and also to give rebates’, said Rear-Adm Lui.

He also addressed residents’ concerns about the affordability of HDB flats.

Noting that existing owners gain from their asset’s increasing value, he said: ‘If they eventually need to sell…(it) releases more money for their old age.’

But the anxieties of those planning to buy a flat are not lost on him. He assured them that an HDB flat would not be beyond their means, saying that the Ministry of National Development has matched the prices of different flat types against the salaries of different groups of people in the population. ‘It tries to make sure that for every group, there is a flat type that meets their needs,’ he said.

In doing so, it aims for homeowners to pay no more than 30per cent of their salary every month towards their home loan.

More than 75per cent of HDB dwellers use only the contributions to their CPF savings to make their monthly loan payments, he said, urging residents to buy what is affordable.

Source : Straits Times - 23 November 2009

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Subsales in past 2 quarters among highest since 1995

Subsales in past 2 quarters among highest since 1995

Completion of large condo projects near MRT stations helps to boost demand

By KALPANA RASHIWALA

(SINGAPORE) The number of subsales in the second and third quarters of this year were among the six highest quarterly figures since 1995 - reflecting the build-up in subsale activity that led to the government announcing measures on Sept 14 to cool property prices.

The completion of several condos this year - many of them large projects, close to MRT stations or near new projects launched this year - helped to boost their demand in the subsale market.

As well, the rise in private home prices this year has given sellers an incentive to let go units bought earlier.

Savills Singapore’s analysis of caveats captured by URA’s Realis system as at Nov 17 showed that 1,249 caveats were lodged for subsales of private apartments and condos in Q3 this year, a tad below the 1,300 caveats in Q2.

Since 1995 (when the Realis caveats database was first set up), there had been four other quarters when subsales of condos/apart- ments exceeded the 1,000 mark - during the 1996 and 2007 property market highs.

In Q2 and Q3 2007, subsales hit 1,857 and 1,534 respectively; in Q1 and Q2 1996, subsales were 1,238 and 1,650.

Projects that topped the subsales charts in Q2 and Q3 this year had generally been launched a few years ago and many of them were completed this year. Examples include Rivergate in the Robertson Quay area, Casa Merah near Tanah Merah MRT Station, City Square Residences along Kitchener Road, The Metropolitan Condo in the Alexandra Road area, The Centris in Jurong and Botannia in West Coast.

Projects that have been recently completed or which are nearing completion offer added appeal to potential buyers keen to move in or rent them out soon.

Giving a seller’s perspective, Knight Frank chairman Tan Tiong Cheng said: ‘If they bought their properties with the intention of leasing them out and if they find today’s rental market challenging, it may make sense to simply cash out, especially if they can make a profit.’

Savills’ lists of the most popular projects in the subsale market in Q2 and Q3 2009 did not include developments launched this year, with the exception of The Quartz, which was relaunched this year.

‘Those who bought projects launched this year would find it harder to flip because their entry price may already be very high,’ says Lee Hon Kiun, owner of Landmark Property Advisers.

Subsales refer to secondary market transactions in projects that have yet to receive Certificate of Statutory Completion. This can take place three to 12 months after Temporary Occupation Permit (TOP).

While subsales are often tracked as a gauge of speculative activity, Mr Lee hesitates to equate the increase in subsales in Q2 and Q3 this year with speculation. ‘Those who bought two to three years ago and sold this year… in the Singapore context, that’s a very long time,’ he chuckled. ‘Speculation is when people buy a property and flip it within six months to make a profit,’ he added.

Savills senior manager (research and consultancy) Christine Sun said new property launches by developers also fuelled subsale interest for nearby projects released a few years ago. For example, the release of Alexis, Ascentia Sky and Interlace in the Alexandra Road area could have helped subsales at The Metropolitan Condo nearby, which was completed this year.

Agreeing, Landmark’s Mr Lee said buyers can pick up more attractive buys in the subsale market for earlier launched projects than at new launches in the same area.

A developer said: ‘Personally, I advise friends to buy in subsale projects as prices are discounted to new launches.’

HDB upgraders bought 39 per cent of the 1,300 private apartments/condos transacted in the subsale market in Q2 this year, although the figure has slipped to 36.6 per cent in Q3 and 33.7 per cent in October. Nonetheless, these figures are higher than HDB residents’ 20.8 and 23.1 per cent share of subsale purchases during the property bull market in Q2 and Q3 2007.

Analysts say the jump in HDB resale flat prices has narrowed the price gap with private housing and made it easier for HDB dwellers to upgrade to a private home; and the subsale market offers a ready supply of recently completed homes that are ready for occupation.

Secondly, existing HDB flat dwellers looking for a bigger home may be deterred from picking one up from the HDB resale market because of high prevailing cash over valuation premiums. ‘If they fork out a little more cash, they could foot the downpayment for a private condo in the subsale market instead,’ said the developer.

Savills also provided monthly subsales data for non-landed private homes, which showed that for this year, the figure peaked at 596 in June.

It has since declined to 483 in July, 441 in August, 325 in Sept and just 184 in October - as at Nov 17 when Savills extracted the Realis data. It also observed an increase in the number of foreigners (including permanent residents) snapping up condos and apartments in the subsale market. Their share of purchases in the subsale market rose to about 31 per cent in Q3 this year and 33 per cent in October - from 21 per cent in Q1 2009.

Between 2007 and the first 10 months of 2009, Indonesians were the top buyers in the subsale market, followed by Malaysians, mainland Chinese, Indians and UK nationals.

Source : Business Times - 23 November 2009

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