New 7th Storey Hotel makes way for new Bugis MRT station

New 7th Storey Hotel makes way for new Bugis MRT station

By Serene Loo/Ryan Huang,

SINGAPORE: One of Singapore’s oldest hotels has finally called it a day after 55 years. The New 7th Storey Hotel at Rochor Road is making way for the new Bugis MRT station.

The new Bugis station is one of the six that make up the 4.3-kilometre Downtown Line One, which is scheduled to open in 2013.

Authorities said demolition of the hotel is unavoidable due to engineering constraints.

The owners spent some S$100,000 renovating the budget hotel earlier this year.

Some people paid the hotel a final farewell visit on Friday.

Despite its name, the New 7th Storey Hotel actually has nine storeys comprising 38 rooms.

Many will remember its manually-operated lift and its spiral staircase.

However, there is some consolation as part of the hotel will still live on. Its charcoal steamboat restaurant will be moving to its new home at the Marina Barrage in December.

Parts of the hotel decor will be put up for sale. - CNA/vm

Source : Channel NewsAsia - 01 Nov 2008

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Union Investment buys $63m building

Union Investment buys $63m building

By UMA SHANKARI

(SINGAPORE) German fund manager Union Investment Real Estate has acquired the Applied Materials Building in Changi Business Park Vista for $63 million for one of its funds, it said yesterday.

Diversification: Acquiring the Applied Materials Building in Changi Business Park Vista, Union Investment Real Estate says business parks are well sought after by a different tenant profile than the typical CBD tenant
The 198,000 square foot industrial facility was owned by Applied Materials SEA - a supplier of products and services to the semiconductor industry - and is being sold with a sale-and-leaseback agreement. The development was acquired for Union Investment’s UniImmo: Global fund. It has a 30+30-year lease.

Union Investment entered the Singapore market in 2007 with its purchase of Vision Crest’s office block and the House of Tan Yeok Nee next door in the Penang Road/Clemenceau Avenue area for a total of $260 million. It bought the properties from a unit of mainboard-listed property group Wing Tai.

The latest purchase adds to the fund’s diversification as it is in a business park, Union Investment said.

‘Business parks are well sought after by a different tenant profile than the typical CBD tenant,’ said Steffen Wolf, managing director of Union Investment’s Asia-Pacific real estate unit. ‘ It offers us the possibility to diversify our portfolio in Singapore, both in usage and location.’

Apart from Applied Materials Building, which will lease back its existing space for one-and-a-half years, other prominent tenants in the building include EMC International and Discovery Channel.

The six-storey Applied Materials Building was designed as an environmentally conscious and intelligent building. It was given a Gold Green Mark award by the Building and Construction Authority in 2008. The building’s green features include energy-efficient air- conditioning and lighting systems with functions such as motion sensors for after-hours lighting control and the toilet lighting system.

Source : Business Times - 31 Oct 2008

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Singapore Marina IR not likely to open fully in end-’09

Singapore Marina IR not likely to open fully in end-’09 

By Lim Wei Chean 
  
The construction of the Marina Bay Sands integrated resort, which sources confirm is ’several months’ behind schedule, has run into problems including a delay in foundation works, a shortage of labour and the rising cost of building materials. — ST PHOTO: ALPHONSUS CHERN

THE integrated resort (IR) at Marina Bay is unlikely to be fully open for business at the end of next year, sources have said.
An old British-built sea wall on its site, which stands on reclaimed land, is among the problems. It delayed foundation works by three to four months, and then a shortage of labour and the rising cost of building materials also created setbacks.

When the Marina Bay project was awarded to Las Vegas Sands in 2006, its top executives announced that the entire resort would be ready by end-2009 - a departure from the industry practice of opening such mega projects in stages.

But sources now confirm that it is ’several months’ behind schedule and that, even if the physical structure can be ready by then, it will be ‘impossible’ for all its facilities to be fully operational.

The 2,600-room resort with a gross floor area bigger than 70 football fields is supposed to be the new hub for the meetings, incentives, conventions and exhibitions business with its 200 meeting rooms, exhibition hall for 2,000 booths and ballroom for 6,600 diners.

Asked about the delay, Marina Bay Sands general manager George Tanasijevich maintained: ‘As previously announced, we are scheduled to launch at the end of 2009.’

But show organisers and wedding couples hoping to book the venue at the end of next year have been turned away.

Bride-to-be Rachel Law, 27, called the resort in August to ask about holding her wedding dinner there next November and was turned down despite having begged for her booking to be taken.

An event organiser, who said the earliest booking available was for an April 2010 event, asked: ‘If they are opening next year, why are they turning away business until 2010?’

Construction woes aside, the free-fall in the stock value of the resort’s parent company Las Vegas Sands Corp - from US$178 13 months ago to under US$5 now - has also raised questions about the fate of the US$4.5 billion (S$6.7 billion) project here.

CIMB-GK economist Song Seng Wun, predicting that the gaming sector will be hit by the global recession, said the operators’ vulnerability is on everyone’s mind.

The collapse of banks like Lehman Brothers Finance Asia and Merrill Lynch International Banks has also put a question mark on the $5.25 billion loan secured by Marina Bay Sands. The two American banks were among the lead arrangers for the loan, along with local banks like DBS Bank, United Overseas Bank and OCBC Bank.

Mr Tanasijevich did not reply to questions on the status of the Singapore loan, nor those on whether the IR will open in phases and when it would accept bookings for events.

Singapore Tourism Board (STB) director of integrated resorts Margaret Teo told The Straits Times the board is monitoring the situation, but did not respond to other queries on penalties or whether the resorts will open in phases.

She said, however, that the STB was working with key agencies and the resorts to resolve potential delays and to enable the resorts’ completion.

Analysts note that the two resorts have up to eight years to finish construction, but delays are bound to hurt the Singapore economy because of the 60,000 new jobs and $5.4 billion in revenue that they are expected to generate.

Tourism and gaming consultant Jonathan Galaviz, reckoning the losses to run into millions of dollars every month, said: ‘It brings into question the true economic value each bidder promised the Singapore Government in the formal proposal.’

The rules of the awards of the two projects given in 2006 stated that both companies must start construction within three years and complete them in eight years.

They stand to lose their deposits of $200 million each and the Government could repossess the land as a penalty.

Source : Straits Times - 30 Oct 2008

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Singapore Hotel business still healthy but economic cloud dims outlook

Singapore Hotel business still healthy but economic cloud dims outlook

Singapore’s share of Asean’s tourism pie could be shrinking

By NISHA RAMCHANDANI

(SINGAPORE) Like a game of dominoes, the economic crisis is making its presence felt in most industries and tourism - which is dependent on the corporate dollar and discretionary spending - is unlikely to escape unscathed.

Filling the rooms: MICE events are proving to be a blessing for some hotels as they bring in the dollars
For now, it appears that local hotels are posting relatively healthy occupancies but as visitor arrivals continue to dwindle, what will happen next year seems to be anyone’s guess.

Singapore’s rapid increase in average room rates (ARR) over the last few years may have priced itself out of the market, reckons Citigroup economist Kit Wei Zheng.

‘The fact that until recently, tourist arrivals in the rest of Asean still maintained positive growth even as tourist arrivals in Singapore fell, attests to this. Not only is the size of the tourism pie shrinking, I suspect Singapore may be getting a smaller share of that shrinking pie,’ he said.

In a research note dated Oct 17, DBS Group Research noted that RevPAR (revenue per available room) in August was down 10 per cent from April’s peak of $210, but that FY08 RevPAR should finish off with a 20 per cent rise year on year, on the back of a stronger first six months.

For FY09, DBS Research is predicting RevPAR to worsen, chalking up a 15 per cent year-on-year fall, before strengthening 3 per cent in 2010.

Even then, DBS Research warned that downside risk still exists in its RevPAR estimates if Asia slumps into recession and the average length of stays is lower than expected.

While visitor arrivals in Singapore for the first six months of the year registered a 2.9 per cent increase to 5.1 million visitors, tourism receipts were 0.2 per cent less compared to H107 with $6.5 billion. June also marked the beginning of the decline, as it posted a year-on-year drop in tourist arrivals for the first time since early 2004.

Tourist arrivals contracted 4.1 per cent in June, a further 3.8 per cent in July and then as much as 7.7 per cent in August.

Speaking to the press at the sidelines of ITB Asia last week, Singapore Tourism Board’s (STB) assistant chief executive of business travel and MICE group Aloysius Arlando urged hotels to ‘cast nets wider’ as well as establish the optimum mix of business and leisure travellers. This is expected to put industry players in a better position to ride out the storm until the tourism sector regains its footing in 2010.

For now, MICE events seem to be proving a blessing for some hotels as they bring in the dollars. At the same time, the higher ARRs this year compared to 2007 should do well to protect profits even if occupancies dip slightly, as any increase in ARR generally goes straight to the bottom line.

The Mandarin Oriental, for one, was running a full house last week thanks to ITB Asia, and it expects occupancies for November and December to run into the 80s.

‘Bookings are on track compared to the past few years,’ said director of communications Ruth Soh. ‘People are still flying in. We’re not feeling the impact yet. We will have to see how next year goes,’ she added.

Grand Copthorne Waterfront Hotel is also banking on the MICE segment, which is fuelling demand for November and the first half of December.

‘The second half of December will be dependent on the leisure market, which might be hit by the financial turmoil,’ said DayLin Koh, director of marketing communications. Still, the hotel expects to post higher occupancy rates this November compared to last year, and December occupancies that are on par with last year.

The Raffles Hotel said bookings for its 103 suites are healthy because of the festive year-end.

Other hotels that have seen minor dips in occupancy include Swissôtel The Stamford and Fairmont Singapore, which saw occupancies in the low 80s and high 70s, respectively, this month, sinking a few percentage points year on year.

‘Bookings for November and December remain positive although we see a marginal drop in volume as compared with last year,’ said Belladonnah Lim, director of marketing communications at the group.

The two hotels will be ramping up sales and marketing efforts to actively seek out new business both here and abroad, in order to maintain market share.

And over at the Royal Plaza on Scotts, occupancy in recent months has been slightly below average. It expects occupancy to hit between 80-86 per cent for November, and 80 per cent in December.

‘Year-end is still good as most companies would have planned ahead and budgeted for their spending in 2008. However, Q109 would be challenging if the economic situation does not improve. It will be a real test of the room rates,’ said Patrick Fiat, general manager of Royal Plaza on Scotts.

Source : Business Times - 28 Oct 2008

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Singapore Luxury condo prices come off their peaks

Singapore Luxury condo prices come off their peaks

But most units in high-end projects still changing hands at above their launch prices

By UMA SHANKARI

(SINGAPORE) Prices for some luxury and high-end projects launched in 2006 and 2007 have come off their peaks by up to about 26 per cent, anecdotal evidence shows.

Data compiled for The Business Times by property firm DTZ shows that at selected high-profile upmarket properties launched in 2006 and 2007, prices started dipping in the third quarter of 2007 and are now between some 4 to 26 per cent off their highs.

At City Developments’ The Oceanfront @ Sentosa Cove, prices have fallen some 26.4 per cent since the third quarter of 2007.

On the other end of the scale, prices at Wheelock Properties’ Scotts Square, fell 3.6 per cent between their peak in Q3 2007, and the second and third quarters of this year.

In both cases, the caveat is that the volume of transactions was relatively low. There were only about 10 transactions for each project in the second and third quarters of 2008.

‘Right now, what everyone is saying is that cash is king.’

- Knight Frank’s Nicholas Mak

DTZ’s data supports what other property consultants are saying - that luxury apartments in prime districts are harder hit by the current downturn.

Knight Frank’s in-house numbers show for example that prices of luxury apartments in Districts 9, 10 and 11 have fallen by 12-13 per cent since the start of the year.

And the fall is gathering pace, said Nicholas Mak, director of research and consultancy at Knight Frank.

Savills also reported that its in-house price index, which tracks luxury and ’super-luxury’ projects, fell 10 per cent from January to July this year. Other analysts estimate that prices at some condos are around 20-30 per cent lower than during last year’s peak.

The drop has been larger than expected. Knight Frank, for example, was expecting to see a 10 per cent fall in high-end residential prices for the whole of 2008.

Official numbers show that residential prices in the upmarket core central region started to fall in the third quarter of 2008, and has to date registered a 2.7 per cent drop. These numbers, however, take into account all property transactions.

Despite the price correction, property firms say that most units in high-end projects are still being transacted at prices higher than their launch prices. DTZ’s data supports this.

The price falls from Q3 2007 are partially due to property investors and speculators selling out, said DTZ’s senior director of research Chua Chor Hoon. ‘For some projects launched in late 2006 and early 2007, there was a lot of speculation as the market was very bullish,’ she said.

Luxury and high-end residential projects attract more investors and speculators than the broader residential market. With the current economic downturn, many of them are off- loading their properties.

Knight Frank’s Mr Mak said: ‘Right now, what everyone is saying is that cash is king.’

The availability of cheap and ready credit in 2006 and 2007 boosted property sales then. But now, banks have cut back on the amount of financing they are willing to offer to home buyers who are seen to be speculators and/or investors - as opposed to owner- occupiers, who are thought to be lesser credit risks.

In the past, most buyers were able to obtain 80 per cent financing for homes. In contrast, banks now offer speculators and investors only 60-70 per cent financing.

Ku Swee Yong, director of marketing and business development at Savills Singapore, believes that prices at projects that will soon receive their temporary occupation permits (TOPs) could go even lower.

Speculators who bought homes under the deferred payment scheme (DPS) could sell as TOP approaches. Under the DPS scheme offered by most high-end properties launched in 2006 and 2007, buyers could pay only a 10 per cent or 20 per cent downpayment, with the rest due upon completion. With TOP, these speculators will have to fork out a big chunk of the remaining sum owing.

‘So there is the danger of price drops as TOP approaches,’ Mr Ku said. ‘But how much prices fall at each property depends on the profile of the buyers there.’

Most agents BT spoke to said they have yet to see fire sales though the pressure could continue to build up.

During the Asian Financial Crisis, the official Urban Redevelopment Authority price index fell 40 per cent from Q2 1997 to Q4 1998.

‘In the next six to nine months, we are going to see downward pressure (on prices) across the board,’ said Knight Frank’s Mr Mak. ‘And how severe the chill that spreads across the property market will be depends on the real economy in Singapore, especially the employment market.’

Phillip Securities Research analyst Alfred Low expects high-end property prices to fall by 15-25 per cent in the next four quarters.

Others are more bearish. Morgan Stanley analysts Melissa Bon and Brian Wee on Oct 24 took a more aggressive approach to cutting residential prices and projected that residential prices for the mid-high end segment will fall by 75 per cent for the next three years.

Source : Business Times - 27 Oct 2008

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Singapore URA data shows more completions put on hold

Singapore URA data shows more completions put on hold

URBAN Redevelopment Authority yesterday gave the public greater access to data on property supply in the pipeline, particularly for private homes, detailing the expected year of completion, location of the supply by regions, and development status.

The additional information was included in URA’s press release on Q3 2008 real estate data, although the information has always been available through its Realis system.

There were 66,422 uncompleted private homes from projects in the pipeline (with either provisional or written permission) as at end-Q3 2008, of which 23,008 units were in Core Central Region, 19,736 units in Rest of Central Region and 23,678 in Outside Central Region. About 51 per cent of the 66,400-plus total units in the pipeline are under construction.

URA said that 37,051 private homes are scheduled for completion between Q4 this year and end-2011. This is 20 per cent or 9,429 units lower than the 46,480 units slated for completion between Q3 2008 and end-2011 listed in URA’s end-Q2 data.

Of these, 2,195 units were completed in Q3 this year and have hence been removed from the supply pipeline. Other completions have been put on hold as some developments have been postponed. Weak market sentiment and higher construction costs have also delayed the construction of some projects.

Notwithstanding this, the 66,422-unit total supply of new private homes in the pipeline is not far off from the 67,569 units as at end-Q2 2008. More of these homes may now see completion post-2011.

URA’s data also showed that about 1.03 million sq m of office space, 500,000 sq m of business park space and 685,000 sq m of retail space are expected to be completed between Q4 this year and end-2011.

Projects that received provisional permission in Q3 include MGPA’s office, hotel and mall development at Marina View and a 46,010 sq m retail project at Serangoon Central by a unit of Pramerica Real Estate Investors (Asia). SingTel was also given approval for additions/alterations to its existing Pickering Operations Complex and City Exchange at George St/Pickering St. The approval is for 7,860 sq m of offices and 300 sq m of shop space.

Source : Business Times - 25 Oct 2008

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Singapore Private property prices, rents fall

Singapore Private property prices, rents fall

URA’s private-home price index down 2.4% in Q3; industrial property prices, rents make gains

By KALPANA RASHIWALA

OFFICIAL data released yesterday confirmed that the private property market has started sliding backwards, while analysts tried to work out how much of its recent gains it would eventually give up.

Price and rental indices for private homes, offices and shops fell in Q3 over the preceding quarter - for the first time since the market bottomed in 2004. Industrial property prices and rents still managed to register quarter-on-quarter gains in Q3, albeit at a slower pace than the increases reported in Q2.

Urban Redevelopment Authority’s (URA) price index for private homes declined 2.4 per cent in Q3 over the preceding quarter, more pronounced than the 1.8 per cent drop indicated in a flash estimate earlier this month.

The Q3 private-home price index is still 8.3 per cent higher than a year ago, leading some analysts such as JPMorgan’s Chris Gee to say the official price indices are lagging market expectations. ‘If you wanted to close a condo sale today, you’d expect the price to be around 20-30 per cent lower than last year’s peak.’

Between the trough in Q1 2004 and the peak in Q2 this year, URA’s price indices appreciated 68 per cent for offices, 58 per cent for private homes and 39 per cent for shop space. The question is how much of these gains will be surrendered during this downcycle and how long the slump will last.

‘This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don’t know what the entire suite of knock-on effects will be…’

A property industry veteran

The optimistic view is that about half the gains could be lost in a downcycle lasting until end-2009.

Some pessimists suggest the downturn will drag for around two to three years, and see prices easing back to the previous trough, that is, all the gains will be lost. ‘Although the Singapore economy is much broader-based today than a few years ago, financial services was a key driver of recent economic growth and had a disproportionate impact on the high-end residential and prime office markets. So if the financial industry tanks, the impact will be greater on these two property segments,’ said an analyst with a US bank.

A property industry veteran said: ‘This property slump will be much worse than the one during the Asian financial crisis; this time, we have a global crisis. We still don’t know what the entire suite of knock-on effects will be. Right now, it’s consumers lacking confidence. Failures may come from many other sources, some of which will be unexpected. The downtrend has begun and is not expected to reverse any time soon.’

URA’s data showed that developers sold 1,558 private homes in Q3, up 2.2 per cent from 1,525 units in Q2. The 3,845 private homes developers sold in the first nine months of this year are about a quarter of the 14,811 units they sold for the whole of last year.

A property analyst pointed out that an even more alarming trend was the decline in resale transactions of private homes, which have slipped from a high of 7,776 units in Q2 2007 to 1,974 units in Q3 this year.

‘Resale transactions are sometimes seen as a proxy for the level of genuine demand, whereas the primary market tends to attract more investment/speculative demand and the subsale market is an even more direct proxy for the level of speculation,’ the property analyst from the US bank said.

The number of private-home subsales islandwide fell 10.8 per cent quarter on quarter to 462 in Q3. Subsales accounted for 11.6 per cent of total private housing transactions in Q3, down from a 12 per cent share in Q2.

In the Core Central Region, subsales made up 24.1 per cent of total transactions in Q3, an increase from a 22 per cent share in Q3. The rising subsale share in the region was on the back of a 29 per cent drop in developer sales in Q3.

Meanwhile, URA’s Q3 price indices for non-landed private homes fell 2.7 per cent quarter on quarter in Core Central Region, 2.4 per cent in Rest of Central Region and 1.5 per cent in Outside Central Region (OCR).

The official price indices for office and shop space declined 3.9 per cent and 0.3 per cent respectively in Q3. The all-industrial property price index rose 0.9 per cent.

The public housing market continued to buzz, with Housing & Development Board’s resale flat price index rising 4.2 per cent quarter on quarter in Q3.

Colliers International director Tay Huey Ying said that developers’ sales failing to keep pace with launches led to a surge in the stock of launched but unsold private homes in uncompleted projects to 3,570 units in Q3, almost 30 per cent higher than Q2’s 2,755 units and more than double the recent low of 1,658 units in Q2 2007.

Knight Frank director Nicholas Mak expects the decline in private home prices and rentals to persist. ‘With the slowdown in the private residential market, it is anticipated that developers could sell between 4,900 and 5,400 units in 2008, which would be only about one-third of the primary market sales last year,’ he added.

Source : Business Times - 25 Oct 2008

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Singapore URA figures ease fears of housing glut

Singapore URA figures ease fears of housing glut

Only 8,538 new private homes to be ready in 2010 - down from 11,788 in 2nd-quarter forecast

By Joyce Teo, Property Correspondent

WORRIES about an oversupply of private homes are receding after the release of government figures that, for the first time, offer a detailed geographical breakdown of new homes in the pipeline.
It was the second straight quarter that the Urban Redevelopment Authority (URA) had lowered its forecast of home completions for 2010 and beyond.

The URA now expects only 8,538 homes to be ready in 2010 - down substantially from the 11,788 homes that it had forecast in the second quarter. Earlier, in the first quarter, it had forecast a whopping 17,545 homes.

In all, its forecast for the number of uncompleted homes in the pipeline dropped to 67,463 units in the third quarter, from 71,643 units in the second and 74,208 units in the first.

The lower supply figures would ease downward pressure on rentals, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

Earlier, concerns were building as the supply numbers remained high even as the market slowed considerably this year and the financial turmoil raged on.

The URA now expects to see 16,145 private homes completed in 2011, down from 19,559 in the second quarter.

And home completions in 2012 and beyond 2012 are now at 16,742 units and 13,565 units respectively, compared with 14,179 and 10,826 previously.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, said the lower URA completion figures are a result of developers deferring projects due to the slow take-up rates of new homes and high construction costs.

The delays in completion dates were expected, given insufficient construction resources, completion delays in collective sales and delayed launches, he said.

Since the market turned quiet at the start of the year, many developers have delayed launches.

In the first nine months of this year, developers launched 5,401 private homes for sale - just 44 per cent of the total launches in the same period last year, said Knight Frank.

In the same period, they sold a total of 3,845 private homes, which is only 29 per cent of the sale figures in the corresponding period last year.

Yesterday, for the first time, URA released more detailed pipeline supply data, breaking down supply by the three main regions and expected year of completion. The Straits Times proposed such a breakdown in a commentary last month.

The URA made this information available separately on its website.

The data showed that there is a pipeline supply of 23,008 private homes in the core central region which includes districts 9, 10 and 11, down from 24,582 in the second quarter.

Supply in city-fringe areas such as Bukit Timah, Newton and Toa Payoh, rose to 19,736, from 19,053 in the second quarter.

As for the suburban areas, the pipeline supply fell slightly to 23,678 units, from 23,934 in the previous quarter.

According to the new URA data, just 733 homes in the core central region would be ready this year, down from the 2,363 expected in the second quarter.

While the drop next year is not dramatic, considerably fewer high-end homes will come to market from 2010 onwards.

Coming up
Number of private homes expected to be completed:

In 2008: 2,440

In 2009: 10,033

In 2010: 8,538

In 2011: 16,145

In 2012: 16,742

After 2012: 13,565

Total 67,463

SOURCE: URA

Source : Straits Times - 25 Oct 2008

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Singapore Private home prices and rents down

Singapore Private home prices and rents down

By Joyce Teo, Property Correspondent

PRIVATE home prices in Singapore fell faster than expected in the third quarter as the global financial turmoil weighed heavily on already weakened market sentiment.
The price slide is expected to continue into next year, property consultants said.

But the HDB resale flat market continued to buck the trend, with prices rising 4.2 per cent in the third quarter following a 4.5 per cent rise in the second quarter.

They have now surpassed the peak seen in the fourth quarter of 1996. But analysts expect this growth trend to slow as buyers turn cautious.

Urban Redevelopment Authority (URA) data yesterday put the private home price dip at 2.4 per cent for the period ended Sept30, the first contraction after 17 straight quarters of growth.

This compares with an initial estimate of a 1.8 per cent drop released by URA earlier this month. In the previous quarter, private home prices rose 0.2 per cent.

The outlook is grim. Since the end of the third quarter, global markets have tumbled further and Singapore officially entered a technical recession. Buyers expecting a full-blown recession are set to become even more cautious, analysts say.

Colliers International’s director for research and advisory, Ms Tay Huey Ying, said the lower-than-expected third-quarter private home price figure indicates that sales recorded in the last two weeks of the quarter were done at lower prices.

The price fall was led by luxury homes, as such properties in choice areas like Orchard Road and Sentosa Cove posted a 2.7 per cent fall after slipping just 0.1 per cent in the previous quarter.

Prices of city-fringe homes dropped 2.4 per cent, compared with a 0.7 per cent rise in the the April-toJune period.

Suburban homes, which showed the strongest growth of 0.9 per cent in the second quarter, fell 1.5 per cent in the third. Landed home prices, which inched up 0.6 per cent in the second quarter, fell 1.9 per cent.

In a reversal from relentless rent increases of recent years, rentals of private homes fell by 0.9 per cent compared with a 2.5 per cent rise in the second quarter. Like home prices, the fall in rents was the first after 17 straight quarters of growth.

Mass-market homes saw a bigger fall of 2.7 per cent in rents, compared with 0.7 per cent for coveted high-end homes and 0.5 per cent for city-fringe homes.

The growing market caution was also reflected in resale and sub-sale deals. A total of 1,974 resale deals and 462 sub-sales were done in the third quarter, down from 2,291 resale deals and 518 sub-sales in the previous period.

Given the worsening global financial climate, private homes prices are expected to continue slipping. ‘The momentum of home sales will likely slow down due to either the increasing difficulty in obtaining loans or buyers’ anticipation of further price cuts,’ said CBRE Research’s executive director Li Hiaw Ho.

In the HDB market, resale transactions rose 4 per cent to 8,110 sales, amid continued buying from permanent residents and Singaporeans upgrading from a smaller flat or downgrading from a private home.

While the sector is still strong, property experts are expecting slower price growth ahead as current resale prices have hit a new peak. With slower economic growth and possible job losses, buyers are likely to turn more cautious and exercise more prudence by offering less for the flats so as not to overstretch, said ERA Asia-Pacific’s associate director Eugene Lim.

On a brighter note, URA revised down its supply figures, dispelling the prospect of a private home oversupply.

Its data also showed that office rents have slipped by 0.8 per cent, compared with 6.3 per cent growth in the second quarter.

Shop rents also dipped 0.6 per cent islandwide in the third quarter, reversing a growth of 5.2 per cent in the second.

Industrial rents rose, but at a slower pace.

Source : Straits Times - 25 Oct 2008

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Buy property stocks now, reap fruits later

Buy property stocks now, reap fruits later

S’pore is going to be the big beneficiary of current turmoil, says Wheelock CEO

By KALPANA RASHIWALA

WHEELOCK Properties (Singapore) CEO David Lawrence, in his private capacity, is currently investing in Singapore property counters. Although Wheelock is in the business of selling apartments, Mr Lawrence reckons that next year may be a better time to buy condos. Instead, his advice to investors looking for value is to buy property counters at the moment ‘because they are so cheap and can give you great returns over the next couple of years’, he said in a recent interview with BT.

Mr Lawrence: Singapore home prices will see a correction
‘The indirect market - which is property counters - is completely out of line with the physical market. So the real value at the moment - and it won’t be there for long - is the indirect market. Some of these shares have come down so much. They’re good companies.

‘It’s an arbitrage opportunity, because they’ve come down so much they bear no relationship to property prices. What’s probably going to happen is that stock prices will go up, property prices will come down a little. They will meet eventually but at the moment there is a big arbitrage opportunity for people,’ he added.

He acknowledged that it will be a tough couple of years for the local property market. ‘But then Singapore is going to be the big beneficiary of this crash, crisis, credit crunch, whatever you call it. Because there aren’t many places like this left to go. I have a lot of international friends - from Europe, India, China, USA - with lots of money who will be retiring or moving to Singapore.

‘When you look around, where else can you get good security, drug-free culture, government investing heavily in new businesses, a reasonable balance between financial services and manufacturing?’

Most importantly, Singapore has integrity in government and the banking and corporate sectors, as well as security. ‘If ever Singapore loses that integrity and security, then it’s finished. But I don’t think it will. It’s ingrained,’ says the 62-year-old, who became a Singapore citizen two years ago.

Singapore will also stand out in the race among global property investment destinations because of the strength of its judicial system, he argues. ‘For me, property investment is all about judiciary. There’s no point going into countries where they are very happy for you to lose money. As soon as you start making money, they want to cut it up. You get sued. It goes to a corrupt judiciary. You don’t make money. I am not interested. Now I think there’s lot of opportunity to invest in financial centres with good judiciaries.’

He takes issue with investment guru Marc Faber who suggests buying property in the countryside, not financial centres. ‘I totally disagree with that. If you buy in financial centres and you buy good-quality products from good developers, you will always be able to let the property. When markets get really bad, and property starts emptying out, people upgrade to the best, and Ardmore Park is a perfect example. . . And long-term, quality property is a good hedge against inflation.’ Ardmore Park is a condo Wheelock launched in 1996, around the height of the property bull run.

Given the current global financial crash, Mr Lawrence acknowledges that Singapore home prices will see a correction, without specifying the quantum of price declines. He does not think the slump will be as bad as the one during the 1997/98 Asian crisis. ‘I don’t think things will be that bad, particularly for good products, because fortunately we have a strong banking system here,’ says Mr Lawrence. ‘We have the Monetary Authority of Singapore and strong banks. They never allowed this crazy lending like they did in other countries. Most people can service their loans.’

Other plus points this time round are low interest rates and huge liquidity in the system, he adds. ‘There will be job losses. Some people might not be able to make their mortgage payments. I think most will, if they have not been speculating in too many properties.’

Wheelock recently collected 25 per cent of sales proceeds for The Cosmopolitan, its fully sold condo at River Valley/Kim Seng roads, when the project received Temporary Occupation Permit. ‘We had a 100 per cent payment on time. No problems,’ he reveals.

Mr Lawrence acknowledges that in the short term, some developers - new players and underfunded ones - will have to cut prices. ‘But the strong boys like (Kwek) Leng Beng and Ng Teng Fong (chairmen of Hong Leong Group and Far East Organization, respectively), these people are not going to cut prices. They’ve been here before. They’ll hold it through to the next cycle, which will come.’

For the Singapore office market, prime Grade A rents may ease about 10 per cent in the next 12 months, Mr Lawrence predicts. But this is ‘OK and reasonable’ given that rents had been getting out of hand previously.

‘But long term, the government has plenty of land to expand. I think as government policy, it’s very important to have reasonably priced office accommodation to expand the Singapore economy in the same way as the government always had reasonably priced industrial land and space to expand the industrial economy.’

Source : Business Times - 23 Oct 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

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