Private home prices may hit new high in 2010

Private home prices may hit new high in 2010

By Ng Baoying

SINGAPORE: Private home prices here are expected to hit a new high in 2010 and perhaps rise even further after that, should the economy continue to grow.

But analysts said on Friday that sales volumes in 2010 are likely to fall back to sub-10,000 levels seen in previous years.

Observers are projecting that 15,000 to 16,000 units will be sold in the primary market in 2009 – the highest on record.

The launch of a mass market project in Jurong West – Caspian – broke the dam for new home sales in Singapore earlier in 2009.

Some 10 months later, home sales during the economic downturn are projected to exceed even July 2007’s record of 14,811 homes. Data already shows that about 13,905 units have been sold from January to September this year.

Analysts said this performance is driven by pent-up demand, and is unlikely to be repeated in the years ahead.

Donald Han, managing director, Cushman & Wakefield, said: “This has been a spectacular year by virtue of pent-up demand. The second and third quarter probably produced about 60 to 70 per cent of total demand for 2009.

“In the third quarter alone, we sold something like 5,700 new home units. We sold more in the third quarter than in 2008. That kind of demand is not sustainable.

“The fact is that the government put on the brakes by discontinuing the interest absorption scheme. Also, they are making promises to ensure enough supply in the marketplace by introducing more government land sales programmes in 2010.”

Mr Han said sales are likely to average around 800 new homes a month, or some 9,000 to 10,000 units for the whole of 2010. However, some analysts said prices will not be falling in tandem with lower sales.

That is because the strong economy and fundamentals of the country will support prices, and may even drive them higher.

Nicholas Mak, real estate lecturer, Ngee Ann Polytechnic, said: “Going forward, average home prices still have some way to grow. They could still expand conservatively at about 10 per cent, while in some segments they could go as high as 20 per cent.”

Units in the mid- to high-end segments will see prices rise higher than those in the mass market.

Analysts said this is mainly because prices in the mass market, which accounts for about 45 per cent of all private homes sold to date, started heading upwards earlier, and are close to their peak.

But they are not ruling out factors that could temper price growth such as government measures to cool the market, should speculation get out of hand.

- CNA/so

Source : Channel NewsAsia - 05 December 2009

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SPH’s property earnings serve as ‘buffer’

SPH’s property earnings serve as ‘buffer’

Real estate and other interests guard against ups and downs of media business, says CEO

By Fiona Chan

MEDIA group Singapore Press Holdings (SPH) will continue to pursue opportunities in real estate as a way to guard against the ups and downs of the media business.

Chief executive Alan Chan yesterday defended SPH’s property investments at the company’s annual general meeting.

He was responding to questions from shareholders about why SPH, which derives 85 per cent of its profits from its print business, is dabbling in property.

The company owns the upmarket Paragon mall in Orchard Road and is developing the Sky@Eleven condominium in Thomson Road, which is expected to be completed next year. Last month, SPH also teamed up with NTUC FairPrice and NTUC Income to buy Clementi Mall.

‘We are looking at all kinds of businesses to buffer any ups and downs of the media business,’ Mr Chan told about 500 shareholders at the SPH News Centre auditorium yesterday morning.

‘We want to bill ourselves as a company with as many advertising platforms as possible, and we will also be harnessing our skills in property to enhance shareholder value.’

Hit by the downturn this year, SPH’s core newspaper and magazines business lost 12 per cent in revenues for the year ended Aug 31. But a surge in property revenues from the Sky@Eleven condominium this year meant that overall revenue held steady.

‘Sky@Eleven’s contribution helped us maintain our profitability, and therefore our ability to pay 25 cents to the shareholders,’ Mr Chan said, referring to SPH’s full-year dividend this year of 25 cents per share.

Similarly, profits from Paragon have helped to offset losses on the print side of things, he said. SPH’s property segment turned in $242 million in pre-tax profits this year, a jump from last year’s $162.8 million.

Mr Chan recalled that when he joined SPH in 2002, ‘everyone was pushing me to sell Paragon’. Back then, the mall was valued at $1 billion; today, that figure has risen to $1.95 billion.

‘If I had sold Paragon in 2003 as per the wishes of certain shareholders, I don’t think we would be seeing that 25-cent dividend today.’

SPH chairman Tony Tan reassured shareholders that the company’s property investments would be selected with great care.

‘We see the property segment as being a very valuable part of SPH in the coming years, but we have to develop our property interests carefully, without straining our balance sheet,’ he said.

‘That’s why we’ve been very careful not to over-extend ourselves and to embark on initiatives only when we are confident that we have financing and where it will add substantially, in due course, to SPH’s revenue and profits.’

Shareholders also queried SPH’s bullish bid of $541.9 million for Clementi Mall, which was about 42 per cent above the next highest offer. One shareholder commented that the bid reflected SPH’s ‘eagerness and lack of experience’.

In response, Mr Chan said that the bid price was a ‘combined decision’ by all three partners. SPH owns 60 per cent of the mall, with the rest held by NTUC FairPrice and NTUC Income, which have more extensive property and investment experience, he added.

SPH is also continuing to invest in its print business, said Dr Tan. Despite the financial meltdown this year, the company revamped several products, including the website straitstimes.com and Her World magazine, and launched new products such as bilingual monthly ZbBz.

Next year, SPH is hoping to tap the advertising potential of the upcoming integrated resorts and the resulting buzz in the country, Mr Chan said.

On the flip side, he said, newsprint costs may rise as newsprint mills shut down, given that many newspaper companies in America and Europe have folded. But the weak United States dollar may help to offset some of these rising costs as the price of newsprint is denominated in US dollars.

Source : Straits Times - 05 December 2009

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