HDB projects 10,000-12,000 new flats needed annually over next 5 years

HDB projects 10,000-12,000 new flats needed annually over next 5 years

By Asha Popatlal

SINGAPORE: The Housing & Development Board (HDB) has projected it will need to offer between 10,000 and 12,000 new flats per annum over the next five years to meet the housing demand in Singapore.

Speaking in Parliament on Monday, National Development Minister Mah Bow Tan said there will be enough affordable flats for first time buyers.

This year, at least 13,500 flats will be offered in total – enough to fill at least half of Bukit Panjang or Pasir Ris, said Mr Mah.

In fact, the ministry was able to ramp up supply quickly at mid-year when demand rebounded.

The minister noted that despite the high demand for housing, expectations of first-time buyers have changed over the years, with many demanding flats in prime estates or on higher floors.

Mr Mah said: “We were living in a three-room flat in Kim Keat Avenue - eight of us (shared) three bedrooms, one toilet and bathroom. It was basic, but it was like a palace to us because I had just come from a one-room in Chinatown.

“I cannot build flats only in the mature estates, only in the city area. I cannot build flats that are only on high floors.”

Mr Mah explained that the five-year projection serves as a guide for the Build-To-Order system - which is more flexible and can then respond to changes in demand.

With more foreigners coming to live and work in Singapore, Members of Parliament (MPs) also asked whether this new group was adding further to the demand pressure for flats.

“PRs are not eligible for buying new flats, even in the resale market, quite a lot of them actually rent. They are under-represented as far as purchases are concerned,” explained the minister.

Mr Mah also gave an idea of how flats are priced, saying that they are not based on cost plus profit, but the flat’s market price minus the subsidy.

Hence, the cost of a flat could vary from S$230,000 for a 3-room flat in Punggol to a S$530,000 for a five-room flat in Tiong Bahru.

- CNA/yb

Source : Channel NewsAsia - 24 November 2009

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Greater investor education needed to drive Asian REIT market forward

Greater investor education needed to drive Asian REIT market forward

By Rachel Kelly

SINGAPORE: Real estate investment trusts (REITs) may have taken a battering in the wake of the global financial crisis, but according to experts, they have rebounded sharply and recovered more quickly than other equities.

Some market watchers said REITs hold great potential in the new post-financial crisis investment landscape.

Singapore’s Raffles City has undergone a major facelift since being managed by a REIT. While that translates into a better shopping experience for customers, the upgrade was mainly driven by a need to improve shareholder returns.

As REITs grow in popularity as an investment vehicle, experts said transparency and liquidity are key. This is especially so because of the ageing populations in the region.

Susan Wachter, Wharton School, University of Pennsylvania, said: “REITs are at an early stage in Asia and it took 20 to 30 years for REITs to grow to a substantial potion of the market in the US. So this is the beginning of what is probably an important role of REITs going forward.

“But REITs are particularly useful as an investment vehicle for yields, and in that respect, perfect for pension funds and retirement funds more generally. Thus as the needs for this grows in Asia, this will be an important vehicle.”

Japan, Australia, Singapore and Hong Kong are seen as leading the REIT market in Asia. Quality assets aside, market watchers said education is important for further growth.

Christopher Gee, executive director, J.P. Morgan Securities, Singapore, said: “We certainly need a lot more education, not just for the investors, but also the REIT managers need to know what is the right thing in the right formula.

“We had a big discussion about cost appropriate or the expenses are appropriate for the REIT project so there are a whole heap of things that need to be sorted. It’s not a perfect vehicle - regulators certainly need to understand a little more about this particular vehicle as well.”

With the booming property markets in China and India, market watchers said they could become the next big growth markets for REITs. - CNA/vm

Source : Channel NewsAsia - 24 November 2009

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Exec condo prices have risen 63% in last two years: CB Richard Ellis

Exec condo prices have risen 63% in last two years: CB Richard Ellis

By Jonathan Peeris

SINGAPORE: The median resale prices of executive condominiums (ECs) have increased 63 per cent in the last two years, riding on the bull-run in the private residential market.

Property consultancy CB Richard Ellis said caveats lodged for ECs in the resale market in October this year showed prices at S$519 per square foot.

This is 63 per cent higher from the bottom of the market in the third quarter of 2006 when ECs in the resale market were sold at S$319 per square foot.

Li Hiaw Ho, executive director at CBRE Research said the analysis shows that buyers who bought new ECs at various periods from 1996 should benefit from the price appreciation in the last two years.

Currently, a 14 per cent price gap exists between the median prices of ECs and mass-market non-landed projects in the resale market.

In the recently announced Government Land Sales programme for the first half of 2010, the government placed two executive condominium sites on the confirmed list and three others on the reserve list.

CBRE said it is a clear signal that the government wants to provide the EC as an alternative housing choice for homebuyers from next year.

The last EC launched was La Casa in May 2005 and it was completed in early 2008.

Going forward, CBRE expects the tender bids for the two new EC sites on the confirmed list, at Buangkok Drive and Yishun Avenue 11, will be a function of developers’ confidence in the EC market and their pricing strategy.

If the price gap between the next new EC project and a new private non- landed leasehold project in the same location is attractive enough, homebuyer demand for EC development will surely return. - 938LIVE/vm

Source : Channel NewsAsia - 24 November 2009

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Property speculative activity declined in Q3: DTZ

Property speculative activity declined in Q3: DTZ

By Mok Fei Fei

SINGAPORE: Property consultant DTZ said on Tuesday there was less speculative activity in the third quarter this year.

In a report, it said the proportion of sub-sales declined from 16 per cent in the second quarter to just 13 per cent in the third quarter.

Sub-sales, which refer to re-sales that occurred before the completion of a project, are usually used as an indicator of speculative activities.

Another finding by DTZ is that the price hikes in the private property market since the second quarter has resulted in the diminishing purchasing power of public housing upgraders.

The proportion of private home purchasers with HDB addresses declined to 37 per cent in the third quarter – down from the recent peak of 56 per cent in the first quarter this year.

But the figure is still higher than the 22 per cent seen in the last property boom in 2007.

According to DTZ, most purchasers with HDB addresses bought mass market projects like The Gale and Trevista.

Going forward, DTZ expects low sales activity for the rest of the year and even early next year due to the hike in prices and the government’s cooling measures.

- 938LIVE/so

Source : Straits Times - 24 November 2009

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Govt aims to cool property market, not crash it

Govt aims to cool property market, not crash it

By Jessica Cheam

MEASURES to cool the property market appear to have been successful in tempering market exuberance for private homes.

Addressing Parliament yesterday, National Development Minister Mah Bow Tan said that the latest figures from the Urban Redevelopment Authority (URA) showed sales of private homes by developers falling month-on-month by 37per cent in September and 29per cent last month.

In response to a query from MP Cynthia Phua (Aljunied GRC) on sub-sales figures, Mr Mah also highlighted that the number of sub-sales had fallen.

The minister said that the government’s intention had been to ‘cool the market, not crash it’.

The interest absorption scheme and interest-only loans scheme - which had allowed home buyers to defer the bulk of the cost of their home purchases - were both stopped with immediate effect in September. The Government also recently added to supply by resuming its land sales programme.

Mr Mah did not rule out restoring some of the schemes that have been suspended to temper property demand.

Responding to a question from MP Christopher de Souza (Holland-Bukit Timah GRC) about whether the measures would be temporary or permanent, he said it would take some time ‘to really gauge the response and the impact of these schemes’.

In the past, the Government introduced measures to curb excessive speculation only to later restore schemes when the market stabilised or weakened, he said.

‘So I won’t say that we will never restore these schemes, but I think it’s a little bit too early to make a call on that.’

The Government will continue to monitor the property market closely and ‘assess the market’s response to the measures introduced before deciding whether further measures are necessary to promote a stable and sustainable property market,’ he said.

Nominated MP Paulin Tay Straughan asked if the measures could be better targeted to distinguish between genuine and speculative home buyers.

But Mr Mah said the measures were already ‘rather targeted’ at speculators.

‘So I think we have…taken a calibrated approach to the property market. The idea is to cool the market, not to crash it. And I think this is the reason why we’ve been very careful in our approaches,’ he said.

Mr Mah noted that there was currently plenty of home supply. The URA’s latest figures show that the sites on its confirmed and reserve list can yield about 10,600 units - the highest number from any half-yearly government land sales programme since the reserve list system started in 2001.

He pointed out that there were about 35,000 units of planned private homes yet to be sold.

‘So the message must be that there’s a lot of supply out there (at) different prices, different locations. And I would urge Singaporeans to do their sums, but also to look around and not be rushed into buying something,’ he said.

Source : Straits Times - 24 November 2009

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Up to 12,000 flats yearly to meet growing demand

Up to 12,000 flats yearly to meet growing demand

By Jessica Cheam

THE Housing Board expects to offer between 10,000 and 12,000 flats every year over the next five years to meet growing demand, National Development Minister Mah Bow Tan said yesterday.

That will serve as a guide for HDB’s build-to-order (BTO) scheme, with the actual number made available depending on market conditions.

‘What actually happens a few years down the road is unknown. Also, demand is not constant - it varies from year to year, depending on economic and other factors,’ he told Parliament.

Taking questions from members on housing issues, he noted that HDB had responded swiftly to this year’s spike in demand, by raising its planned supply of 6,000 flats for the year to 13,500.

‘If the take-up of BTO flats remains strong, we will continue to push out more flats under BTO next year - at least one (project) every month if necessary,’ said Mr Mah.

While HDB does not have a policy of keeping vacant flats as a buffer, it nonetheless has a supply of flats that are ready for occupation, he disclosed. Such flats make up about 10per cent of all new flats.

He was responding to a query from MP Cynthia Phua (Aljunied GRC), who asked whether HDB could consider keeping a stock of ready flats for families who were in urgent need of a home.

‘Although I have said that we do not plan for a buffer, in actual fact there is a buffer of flats over and above the BTO (flats) which are available and have shorter waiting times,’ said Mr Mah.

These available flats are leftovers from other HDB schemes - such as the Selective En-bloc Redevelopment Scheme and surplus BTO flats - which are sold under HDB’s sales of balance flats exercise.

Ready flats are hugely popular because buyers do not have to wait to move in. This is in contrast to the BTO scheme, under which buyers typically have to wait three to four years.

Touching on the issue of cost, Mr Mah said that the total cost of flats varied according to ‘when we build, where we build and what we build’.

It included the cost of land, construction and ancillary services, and varied from $230,000 for a three-room flat in Punggol to $530,000 for a five-room one in Tiong Bahru.

He reiterated that HDB does not price its flats based on cost plus profit, but on a market price with a generous discount.

The selling price was sometimes more than total development cost and at other times, it was less than the cost - especially when construction costs are high, which has been the case over the past few years.

‘Overall, HDB incurs a large deficit in building and selling flats every year, as reflected in its audited annual accounts. In its financial year from 2008 to 2009, HDB incurred a deficit of $1.5 billion for the home ownership programme alone,’ he added.

First-time buyers were assured that there would be sufficient affordable housing.

HDB recently increased the proportion of flats set aside for first-timers from 90 to 95 per cent. And first-timers are 96 per cent likely to be given a chance to select a flat within two tries, he said.

Mr Mah said he was prepared to look into the cases of those who were unsuccessful after three tries, to see how HDB could help.

Analysts said yesterday the planned flat supply over the next five years would help ease demand.

‘This is a marked increase in planned supply, so it’s good for the market. The question going forward, is how will HDB more accurately gauge demand,’ said Chesterton Suntec International’s research and consultancy director, Mr Colin Tan.

Source : Straits Times - 24 November 2009

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Median resale prices for exec condos soar 63%

Median resale prices for exec condos soar 63%

Caveats lodged for ECs in October 2009 show prices at $519 psf, says CBRE

By UMA SHANKARI

(SINGAPORE) THE median resale prices of executive condominiums (ECs) have increased 63 per cent in the past two years, riding on the bull run in the private residential market, a report says.

Caveats lodged for ECs in the resale market in October 2009 showed prices at $519 per sq ft (psf), says CB Richard Ellis (CBRE). This is 63 per cent higher than at the bottom of the market in Q3 2006, when resale ECs were sold at $319 psf.

CBRE’s analysis of caveats lodged between 2004 and early 2007 shows median EC prices in the resale market fluctuated within the $300-400 psf band, bottoming out at $319 psf in Q3 2006.

ECs are a hybrid of private and public housing. They are similar to private condominiums in terms of facilities and amenities, but eligibility requirements are almost similar to those for new HDB flats.

The EC was first introduced in 1996 when the property bull run caused new private condo prices to soar to above $600 psf.

The last EC launched was La Casa in May 2005. It was completed in early 2008. Since then no new EC projects have been launched. Since the second half of 2007, when the private residential market was peaking again, the government has placed up to four EC sites on the reserve list, but there have been no takers.

But in the recently announced government land sales programme for the first half of 2010, the government placed two EC sites on the confirmed list and three others on the reserve list, which is ‘a clear signal that the government wants to provide the EC as an alternative housing choice for homebuyers from next year’, says CBRE.

Currently, a 14 per cent price gap exists between the median prices of ECs and mass-market non-landed projects in the resale market, CBRE says.

‘Our analysis shows that buyers who bought new ECs at various periods from 1996 when EC prices hovered at around $400 psf should benefit from the price appreciation in the past two years,’ said Li Hiaw Ho, executive director of CBRE Research. ‘The residential market run-up of 2007 lifted new EC prices to above the $500 psf mark.’

Going forward, CBRE says that if the price gap between the next new EC project and a new private non-landed leasehold project in the same location is attractive enough, buyer demand for EC developments will surely return. The firms expects the tender bids for the two EC sites to be offered in January 2010 on the confirmed list - Buangkok Drive/ Compassvale Bow and Yishun Avenue 11 - will be a function of developers’ confidence in the EC market and their pricing strategy.

Source : Business Times - 24 November 2009

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All set for the future

All set for the future

Despite the downturn, JTC is forging ahead with its new blueprint for an innovative industrial landscape

THE economic downturn curbed many organisation’s appetite for growth and risk in the past year. But taking a step back was not an option for JTC Corporation, the agency responsible for spearheading Singapore’s industrial development.

Cluster approach: Catering to the budding digital media industry, JTC is involved in developing the 19 ha Mediapolis (above) at one-north
JTC is forging ahead with its blueprint for the future - and has a new chief executive to lead.

‘For most, staying resilient in the wake of an economic crisis would mean taking measures to reduce costs and holding out until the storm blows over,’ JTC said in its fifth Periscope magazine for 2009.

‘JTC has done that and beyond. We charted new business territories targeted as future growth industries, while maintaining focus on investing in land infrastructure so Singapore will be ready to ride the next wave when the upturn comes.’

The agency’s new chief executive Manohar Khiatani took the helm on Oct 1 - and is ready to take JTC to the next level. Mr Khiatani, who was previously deputy managing director at the Economic Development Board, has more than 20 years’ experience in industrial development.

One of his priorities at JTC is to ensure the organisation stays close to its customers and understands their needs, he says in the foreword to Periscope. JTC is now better-positioned for this, having gone through an internal reorganisation recently.

Its business units used to be grouped according to development types, such as industrial parks and specialised parks. But since April, they have been arranged around key clusters such as electronics, info-communication, media, aerospace, marine, clean technology, bio-medicine, chemicals, engineering and logistics.

The reorganisation came after a strategic review, which began last year, to position JTC for the future. The review identified three strategic thrusts, one of which is to focus on economic clusters.

‘This allows us to better support you through targeted planning and infrastructural solutions customised for the individual clusters,’ Mr Khiatani said, addressing JTC’s customers. ‘You will have a single point of contact for all your needs and JTC officers will be in a better position to appreciate cluster trends and customer requirements.’

Besides internal restructuring, JTC continued to develop various large-scale cutting-edge projects. The strategic review also highlighted the need for the agency to continue investing in innovation and to optimise long-term land resources.

Projects include Seletar Aero+sPace (SAP), a 300 hectare centre for aerospace maintenance, repair and overhaul services; aircraft systems and components design and production; business and general aviation activity; and aviation research and education. Several aerospace players have signed up for space at SAP, which is expected to create more than 10,000 jobs when it is completed in 2018.

Catering to the budding digital media industry, JTC is also involved in developing the 19 ha Mediapolis at one-north. Collaborating with the Media Development Authority, Infocomm Development Authority and EDB, JTC will help build a centre with interactive digital media research labs, sound stages, media schools and other facilities.

Work on the Jurong Rock Cavern is also progressing. The underground cavern, measuring 27 metres high, 20 metres wide and 300 metres long, will provide secure storage for liquid hydrocarbons such as crude oil and naphtha when it is ready. The first phase will create 1.47 million cubic metres of storage when completed in 2014, and the planned second phase could generate another 1.32 million cubic metres of space.

Underground caverns are particularly functional in land-scarce Singapore - and JTC is coming up with more uses for them. It is exploring the possibility of building an underground science city at Kent Ridge and an underground warehouse-cum-logistics facility at Tanjong Kling.

Out at sea even, JTC is studying the creation of Very Large Floating Structures to provide storage capacity offshore.

‘We are looking at creating solutions that will not only help us optimise land use, but also create a unique and differentiating advantage for industry clusters in Singapore,’ Mr Khiatani told JTC’s customers. ‘We look forward to closely working with you to jointly generate and develop new ideas which will ensure that we are ‘future-ready’.’

Mr Khiatani added that JTC is working on creating a ‘borderless culture’ internally and with other government agencies. ‘This will enable us better understand and provide seamless solutions for you,’ he said.

With its blueprint for the future laid out, JTC is all set for better performance ahead. ‘With a strong foundation, we are confident of accelerated growth once global demand builds up again,’ it said.

Source : Business Times - 24 November 2009

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HDB boosts flat supply to 13,500

HDB boosts flat supply to 13,500

Ramp-up from planned 6,000 due to demand turnaround in H2

By EMILYN YAP

THE Housing and Development Board (HDB) estimates it has to offer 10,000 to 12,000 new flats every year for the next five years to meet demand, National Development Minister Mah Bow Tan told Parliament yesterday.

Up and coming: DBS Vickers estimates that HDB may have to build an average of 14,000 flats a year over the next 20 years to meet public housing demand, in a scenario where Singapore’s population hits 6.5 million by 2027
Responding to strong demand, HDB will offer 13,500 flats in 2009, he said. This is about ‘half the number of flats in Bukit Panjang or Pasir Ris town’.

Public housing was a hot topic in Parliament yesterday, as applications surged for new flats and resale flat prices soared to record levels in the third quarter.

According to Mr Mah, HDB started the year with a planned flat supply of 6,000, as the economy was stuck in recession. It had to ramp up flat supply as an unexpected turnaround in the second half of the year boosted demand.

‘If take-up of BTO (Build-To-Order) flats remains strong, we will continue to push out more flats under BTO next year - at least one every month if necessary,’ he said.

In the next five years, HDB projects that it has to offer 10,000 to 12,000 new flats per year, he continued. The agency arrived at these figures after taking into account various factors, in particular the number of new households formed from marriages and immigration, and resale flat transactions.

This medium-term projection serves as a guide for the BTO system, Mr Mah said. But he stressed: ‘What actually happens a few years down the road is not known. Demand is also not constant. It varies from year to year, depending on economic and other factors.’

Mr Mah also said HDB has a ’small buffer’ of flats over and above those from the BTO scheme. HDB did not intentionally plan this buffer - it comprises surplus flats from other programmes such as the Selective En-bloc Redevelopment Scheme.

PropNex chief executive Mohamed Ismail believes that the projected 10,000 to 12,000 new flats a year is adequate. ‘Over-supply would only serve to dampen the asset value of a majority of Singaporeans who live in HDB flats,’ he said. ‘We must also consider the continual supply of resale flats, potentially amounting to 40,000 transactions this year alone.’

Chesterton Suntec International research and consultancy director Colin Tan agrees the projected number of new HDB flats seems reasonable. But he is concerned about whether there is a mechanism to warn HDB of a potential sudden increase in demand.

Population growth and immigration will drive up demand for flats. In a report issued yesterday, DBS Vickers projected in a base case scenario that Singapore’s population could reach 6.5 million in 2027. It estimates that HDB may have to build an average of 14,000 flats a year over the next 20 years to meet public housing demand.

Source : Business Times - 24 November 2009

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Moves to cool property market worked: Mah

Moves to cool property market worked: Mah

Too early to decide whether to restore two loan schemes

By EMILYN YAP

(SINGAPORE) Measures introduced by the government in September to cool the property market have had an effect, National Development Minister Mah Bow Tan told Parliament yesterday.

The govt aims to curb erratic price hikes arising from excessive speculation or market manipulation.

- Mr Mah

But more time is needed to gauge the impact of the moves and it is premature to decide whether the interest absorption scheme (IAS) and interest-only housing loans (IOL) should be resumed, he said.

After months of rising property prices and swelling sales, the government announced on Sept 14 several measures to rein in sentiment. It scrapped the IAS and IOL with immediate effect, and said it would resume Confirmed List land sales for the first half of 2010.

‘These measures appear to have had some effect in tempering the exuberance in the private housing market,’ Mr Mah said yesterday, citing numbers on new private home sales.

According to the Urban Redevelopment Authority, developers sold 811 units in October, down 29 per cent from 1,143 the month before. And September’s volume was itself 37 per cent less than the 1,805 units sold in August.

The government aims to curb erratic price hikes arising from excessive speculation, inaccurate information or market manipulation, Mr Mah said. But ultimately, prices have to be determined by market forces, based on genuine demand from home buyers and investors.

‘The government will continue to monitor the property market closely and assess the market’s response to the measures introduced before deciding whether further measures are necessary,’ he said.

On the IAS and IOL, Mr Mah also said the government needs time to gauge the impact of their removal. ‘I won’t say that we will never restore these schemes, but I think it is a bit too early to make a call,’ he said.

The government has lifted anti-speculation measures in the past after the property market stabilised, he added.

Market watchers told BT yesterday it is not yet time to bring back the IAS and IOL. Chesterton Suntec International research and consultancy director Colin Tan cited a caution issued by the Monetary Authority of Singapore two weeks ago.

MAS said in its yearly Financial Stability Review that property buyers and speculators could face capital losses should growth turn out to be weaker than expected.

‘Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs, with severe implications for those who have over-extended themselves,’ MAS said.

Source : Business Times - 24 November 2009

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