April 21, 2009
DPS buyer with 20 units at The Fernhill drags feet on payment
Episode watched by developers that had sold multiple units to foreigners under DPS
By KALPANA RASHIWALA
(SINGAPORE) A China investor that bought 20 units at MCL Land's The Fernhill condo has failed to pay roughly $30 million that became due when the project received Temporary Occupation Permit recently.
MCL sent the notice seeking payment to buyer Concordia Overseas Pte Ltd 14 days ago. By the due date yesterday, the payment had still not been made, BT understands.
This development on the deferred payment scheme (DPS) - which was scrapped in October 2007 - is being closely watched.
Under the Sale and Purchase Agreement (SPA), MCL will now wait for another 14 days and if the payment is still not made by then, the developer can serve a 21-day notice on Concordia to repudiate the SPA. After that, if there's no payment, MCL would be entitled to treat the 20 per cent paid so far by Concordia as forfeited and resell the units.
Concordia, controlled by Hong Kong resident Chan Ki, who has developed commercial buildings in Shanghai, had bought all 25 apartments in The Fernhill in January 2007 at $1,410 per square foot.
It flipped five of these units to foreigners at an average price of nearly $2,200 psf later the same year. JTResi brokered both sets of deals for the five-storey freehold project at the corner of Orange Grove and Fernhill roads.
Concordia bought the units from MCL on DPS, and paid an initial 20 per cent of purchase price in 2007. The 20 units it still holds were purchased for nearly $47 million and it was asked to pay another 65 per cent - around $30 million - after the project received TOP last month.
In case there is a hitch in receiving the payment, analysts say, MCL Land is pretty well covered, as it can walk away with the 20 per cent downpayment from Concordia. Its 'breakeven cost' so to speak on the 20 units would be $1,128 psf ($1,410 psf sale price to Concordia less the 20 per cent collected so far).
Based on recent transactions at Gallop Gables on Farrer Road and The Verdure on Holland Road, MCL should easily be able to sell the units individually for more than that sum. An average resale price of $1,250 or so could mean another round of profits.
BT understands that MCL did not extend DPS to the buyers of the five units who picked up their apartments from Concordia in the subsale market. They have been making normal progress payments to MCL.
While MCL is on a firm footing, other developers who sold their projects on DPS at peak prices in 2007 and early 2008, may have reason to worry in case buyers do not pay up once the projects are completed in the coming months.
This is because the values of many such units could be down more than the 20 per cent initial payment and the developer would be out of pocket if it were to treat the SPA as being repudiated. Such developers may have to sue buyers for specific performance - complete the SPA at the contracted price.
But some developers may agree to a payment extension or restructuring for local buyers in hardship.
Developers may find it tough to take legal action against foreign buyers domiciled offshore who walk away from purchases. 'The practical thing to do may be to treat the SPA as repudiated, take possession of the units and try to resell them or lease them out. Once you go down the route of suing defaulting buyers for specific performance, it will be some time before you can take possession of the units,' a developer said.
In case The Fernhill units end up being resold by MCL, the price could have implications for neighbouring projects. The price benchmark may hit DPS buyers in these projects who have yet to secure a loan. Even those that have secured loans may be affected as the bank may now assume a lower value for the properties and ask borrowers to top up more equity.
Some analysts said that the latest development at Fernhill may be a sign of things to come as more projects are completed. The situation of multiple unit buyers, especially if they are foreigners, will be keenly watched.
Monday, April 20, 2009
Another sign of the Return of Buyers
21 Apr, 2009
New showflats pull in crowds
Condo-style flats popular; private homes see encouraging sales
By Joyce Teo, Property Correspondent
THOUSANDS of people flocked to check out some of the new housing developments on sale over the weekend, scenes more reminiscent of a boom, not a recession.
As one industry watcher told The Straits Times: 'The mass market is still moving. If you price it correctly and reasonably, people will still buy.'
The hottest ticket in town was clearly the Parc Lumiere project, which drew an astonishing 6,500 visitors over the weekend.
Buyers had begun queueing last Friday before its viewing period started on Saturday, with 829 people eventually in the line for flats in the estate, which is being developed under the Design, Build and Sell Scheme (DBSS).
There was no balloting for the project: Just turn up and book.
Developer Sim Lian Group said it has already sold 306 units out of a total of 360. All the four-room flats, priced between $378,000 and $425,000, have been sold.
Only the low-floor five-room flats are left. The five-roomers are priced from $462,000 to $575,000.
'After going through Premiere @ Tampines, we thought we would try another way of selling. When you do it by ballot, a lot of people just try for fun. A lot who were keen didn't get the chance to book,' said Sim Lian executive director Diana Kuik.
But some potential buyers felt the walk-in selection sale method, essentially a first-come, first-served sale, was inconvenient. One said the sale came at too short a notice for him to take leave to queue. A parent said her son had been waiting for the project but was travelling in Europe.
Sim Lian said it has had feedback from happy buyers, including a pair of siblings happy to get a unit next to each other.
The second DBSS project, The Peak @ Toa Payoh, also had a busy weekend with 1,711 applications lodged as of 6pm yesterday for the 1,203 units.
This project by developer Hoi Hup Sunway is being sold by ballot, with applications open until next Tuesday.
About 22,500 people had visited the showflat from last Wednesday until it closed yesterday, said Ms Kellie Liew, executive director of projects at HSR Property Group, the marketing agent for The Peak. More than half of the applicants are interested in the five-room flats, with about 30 per cent looking at the four-roomers, she said.
In the private home market, the freehold The Arte in Jalan Datoh attracted about 1,000 people over the weekend, said developer City Developments (CDL).
The average price at the 336-unit project - which boasts relatively large flats - is $880 psf, with most units going for under $2 million each.
CDL said it sold another 20 units over the weekend for $30 million, bringing total sales to 170.
'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment,' said CDL group general manager Chia Ngiang Hong.
'This reinforces CDL's view that the current market is now attracting savvy but cautious investors.'
A large number of buyers have private home addresses, he said, with many saying they want to invest in another property or to move into a 'new and upscale residence'. CDL said it has extended the interest absorption scheme to these buyers.
Two other large projects that were launched last month also saw encouraging sales.
A further 22 apartments were sold at the 457-unit Mi Casa condominium in Choa Chu Kang in the past week, bringing total sales to 202 units. Prices hovered around $635 psf.
More than half of the 646 units at Double Bay Residences in Simei have been sold. This was the best-selling project last month, with 264 units being bought.
About 60 per cent of the 68-unit Verdure in Holland Roadhas also been sold since its preview more than a week ago.
New showflats pull in crowds
Condo-style flats popular; private homes see encouraging sales
By Joyce Teo, Property Correspondent
THOUSANDS of people flocked to check out some of the new housing developments on sale over the weekend, scenes more reminiscent of a boom, not a recession.
As one industry watcher told The Straits Times: 'The mass market is still moving. If you price it correctly and reasonably, people will still buy.'
The hottest ticket in town was clearly the Parc Lumiere project, which drew an astonishing 6,500 visitors over the weekend.
Buyers had begun queueing last Friday before its viewing period started on Saturday, with 829 people eventually in the line for flats in the estate, which is being developed under the Design, Build and Sell Scheme (DBSS).
There was no balloting for the project: Just turn up and book.
Developer Sim Lian Group said it has already sold 306 units out of a total of 360. All the four-room flats, priced between $378,000 and $425,000, have been sold.
Only the low-floor five-room flats are left. The five-roomers are priced from $462,000 to $575,000.
'After going through Premiere @ Tampines, we thought we would try another way of selling. When you do it by ballot, a lot of people just try for fun. A lot who were keen didn't get the chance to book,' said Sim Lian executive director Diana Kuik.
But some potential buyers felt the walk-in selection sale method, essentially a first-come, first-served sale, was inconvenient. One said the sale came at too short a notice for him to take leave to queue. A parent said her son had been waiting for the project but was travelling in Europe.
Sim Lian said it has had feedback from happy buyers, including a pair of siblings happy to get a unit next to each other.
The second DBSS project, The Peak @ Toa Payoh, also had a busy weekend with 1,711 applications lodged as of 6pm yesterday for the 1,203 units.
This project by developer Hoi Hup Sunway is being sold by ballot, with applications open until next Tuesday.
About 22,500 people had visited the showflat from last Wednesday until it closed yesterday, said Ms Kellie Liew, executive director of projects at HSR Property Group, the marketing agent for The Peak. More than half of the applicants are interested in the five-room flats, with about 30 per cent looking at the four-roomers, she said.
In the private home market, the freehold The Arte in Jalan Datoh attracted about 1,000 people over the weekend, said developer City Developments (CDL).
The average price at the 336-unit project - which boasts relatively large flats - is $880 psf, with most units going for under $2 million each.
CDL said it sold another 20 units over the weekend for $30 million, bringing total sales to 170.
'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment,' said CDL group general manager Chia Ngiang Hong.
'This reinforces CDL's view that the current market is now attracting savvy but cautious investors.'
A large number of buyers have private home addresses, he said, with many saying they want to invest in another property or to move into a 'new and upscale residence'. CDL said it has extended the interest absorption scheme to these buyers.
Two other large projects that were launched last month also saw encouraging sales.
A further 22 apartments were sold at the 457-unit Mi Casa condominium in Choa Chu Kang in the past week, bringing total sales to 202 units. Prices hovered around $635 psf.
More than half of the 646 units at Double Bay Residences in Simei have been sold. This was the best-selling project last month, with 264 units being bought.
About 60 per cent of the 68-unit Verdure in Holland Roadhas also been sold since its preview more than a week ago.
Buyer Seems to be coming in stronger and stronger
20 units of The Arte sold over weekend
This takes total sales since the official launch to 170 units
By ZHANG YI TING
CITY Developments Ltd (CDL) sold 20 units at The Arte at Thomson over the weekend. This takes total sales since the property's official launch to 170 units, with last weekend's sales fetching a total of $30 million.
'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment. This reinforces CDL's view that the current market is now attracting savvy but cautious investors,' said Chia Ngiang Hong, Group general manager of CDL.
Buyers' interest was also evidenced by the strong turnover of over 1,000 visitors at The Arte's showroom over the weekend.
Among other factors, these prospective buyers were drawn by the property's location and proximity to a MRT station, according to a CDL release.
The Arte is located within the Thomson area with convenient connections to the City and the expressways. It is also a short walk from Toa Payoh MRT station.
Priced at $880 psf on average, the freehold project comprises two 36-storey towers and will be completed in 2012. Most of the 336 units available are going for under $2 million.
Buyers can opt for CDL's interest absorption scheme (IAS), which allows them to defer the bulk of their purchase until The Arte's completion on the condition that they take up a housing loan at the point of sale.
A majority of buyers of The Arte have private home addresses and many say they want to invest in another property or to move into a new and upscale residence.
Singaporeans' renewed interest in private property saw the sales of 2,660 private homes in the first three months of 2009, which is about 62 per cent of total new home sales in 2008, according to the CDL release.
This takes total sales since the official launch to 170 units
By ZHANG YI TING
CITY Developments Ltd (CDL) sold 20 units at The Arte at Thomson over the weekend. This takes total sales since the property's official launch to 170 units, with last weekend's sales fetching a total of $30 million.
'The sales volume indicates that buyers have greater confidence in the property market and in the future of their investment. This reinforces CDL's view that the current market is now attracting savvy but cautious investors,' said Chia Ngiang Hong, Group general manager of CDL.
Buyers' interest was also evidenced by the strong turnover of over 1,000 visitors at The Arte's showroom over the weekend.
Among other factors, these prospective buyers were drawn by the property's location and proximity to a MRT station, according to a CDL release.
The Arte is located within the Thomson area with convenient connections to the City and the expressways. It is also a short walk from Toa Payoh MRT station.
Priced at $880 psf on average, the freehold project comprises two 36-storey towers and will be completed in 2012. Most of the 336 units available are going for under $2 million.
Buyers can opt for CDL's interest absorption scheme (IAS), which allows them to defer the bulk of their purchase until The Arte's completion on the condition that they take up a housing loan at the point of sale.
A majority of buyers of The Arte have private home addresses and many say they want to invest in another property or to move into a new and upscale residence.
Singaporeans' renewed interest in private property saw the sales of 2,660 private homes in the first three months of 2009, which is about 62 per cent of total new home sales in 2008, according to the CDL release.
Sunday, April 19, 2009
Punggol Water Way
19 Apr, 2009
Punggol Waterway built by teamwork
By Aaron Low
When Mr Samuel Ng heard in 2007 that the Government had plans to transform Punggol Town into a vibrant waterfront town, he could not wait for the makeover.
Yesterday, Mr Ng, 52, a Punggol resident for the last seven years, glimpsed the future at the groundbreaking ceremony of the new Punggol Waterway.
'The waterway will breathe new life and add vibrancy to this sleepy town,' he said. 'It will just be a stone's throw from where I live.'
But the waterway could have been a lost opportunity - if not for the spirit of innovation and teamwork between the Housing Board and Public Utilities Board, said Deputy Prime Minister Teo Chee Hean.
Indeed, he said the growth of Punggol, like Singapore itself, shows how citizens working as one with 'vision, determination and innovation can overcome the odds to build new communities and radically transform our living environment'.
Speaking at the groundbreaking ceremony, Mr Teo said the transformation of Punggol, an old fishing village, mirrors the experience of Singapore. The nation itself was a fishing village before it made the quantum leap to global city.
In the case of Punggol, the waterway was initially meant to be a 'drain' connecting Sungei Serangoon and Sungei Punggol at each end of Punggol Town.
But when the PUB engineers and the HDB planners discussed the town's development in the Punggol 21 masterplan, they spied an opportunity to build Punggol around this new waterway, he said.
The result? A 4.2km waterway which will flow beside 21,000 units of new public and private housing.
Cutting right through Punggol Town, the waterway is expected to be completed by the end of next year.
Then residents in Punggol and around Singapore can dine alfresco while overlooking the waterway. They can jog on scenic routes, and enjoy watersports such as kayaking.
Praising the HDB and PUB, he said the Government's long-term planning and ability to act on these plans is a key reason for Singapore's success.
'Anyone can have big plans,' he said. 'But working our plan, getting it executed effectively and efficiently is not so easily accomplished.'
Also important is the readiness to modify a plan to suit changing circumstances and to seek synergy, he said, 'while remaining connected to the ground - listening to and attending to our people'.
Indeed, yesterday he invited the people of Punggol to name the waterway.
He was joined by National Development Minister Mah Bow Tan. Also present were Mr Teo's fellow Pasir-Ris Punggol MPs - Mr Charles Chong, Ms Penny Low, Dr Ahmad Magad and Mr Michael Palmer - plus Ang Mo Kio GRC MP Lam Pin Min.
Mr Teo said the new-look Punggol is part of the larger transformation of Singapore's physical landscape that will take place over the next few years.
With the Double Helix Bridge at Marina Bay, the Gardens by the Bay and the integrated resorts being planned and built, the downtown will be rejuvenated.
Similarly, the heartlands will be spruced up, he said. Amenities will be added, such as bigger shopping malls, new hospitals and more luxurious public housing.
On Friday, Mr Mah invited Singaporeans to discover the changes all over the island, including Punggol. They can join a series of events named My New Singapore.
Said Mr Teo: 'We will press on with our efforts to remake our homeland, thus ensuring that Singapore will emerge stronger from the economic downturn when the global economy recovers.'
Punggol Waterway built by teamwork
By Aaron Low
When Mr Samuel Ng heard in 2007 that the Government had plans to transform Punggol Town into a vibrant waterfront town, he could not wait for the makeover.
Yesterday, Mr Ng, 52, a Punggol resident for the last seven years, glimpsed the future at the groundbreaking ceremony of the new Punggol Waterway.
'The waterway will breathe new life and add vibrancy to this sleepy town,' he said. 'It will just be a stone's throw from where I live.'
But the waterway could have been a lost opportunity - if not for the spirit of innovation and teamwork between the Housing Board and Public Utilities Board, said Deputy Prime Minister Teo Chee Hean.
Indeed, he said the growth of Punggol, like Singapore itself, shows how citizens working as one with 'vision, determination and innovation can overcome the odds to build new communities and radically transform our living environment'.
Speaking at the groundbreaking ceremony, Mr Teo said the transformation of Punggol, an old fishing village, mirrors the experience of Singapore. The nation itself was a fishing village before it made the quantum leap to global city.
In the case of Punggol, the waterway was initially meant to be a 'drain' connecting Sungei Serangoon and Sungei Punggol at each end of Punggol Town.
But when the PUB engineers and the HDB planners discussed the town's development in the Punggol 21 masterplan, they spied an opportunity to build Punggol around this new waterway, he said.
The result? A 4.2km waterway which will flow beside 21,000 units of new public and private housing.
Cutting right through Punggol Town, the waterway is expected to be completed by the end of next year.
Then residents in Punggol and around Singapore can dine alfresco while overlooking the waterway. They can jog on scenic routes, and enjoy watersports such as kayaking.
Praising the HDB and PUB, he said the Government's long-term planning and ability to act on these plans is a key reason for Singapore's success.
'Anyone can have big plans,' he said. 'But working our plan, getting it executed effectively and efficiently is not so easily accomplished.'
Also important is the readiness to modify a plan to suit changing circumstances and to seek synergy, he said, 'while remaining connected to the ground - listening to and attending to our people'.
Indeed, yesterday he invited the people of Punggol to name the waterway.
He was joined by National Development Minister Mah Bow Tan. Also present were Mr Teo's fellow Pasir-Ris Punggol MPs - Mr Charles Chong, Ms Penny Low, Dr Ahmad Magad and Mr Michael Palmer - plus Ang Mo Kio GRC MP Lam Pin Min.
Mr Teo said the new-look Punggol is part of the larger transformation of Singapore's physical landscape that will take place over the next few years.
With the Double Helix Bridge at Marina Bay, the Gardens by the Bay and the integrated resorts being planned and built, the downtown will be rejuvenated.
Similarly, the heartlands will be spruced up, he said. Amenities will be added, such as bigger shopping malls, new hospitals and more luxurious public housing.
On Friday, Mr Mah invited Singaporeans to discover the changes all over the island, including Punggol. They can join a series of events named My New Singapore.
Said Mr Teo: 'We will press on with our efforts to remake our homeland, thus ensuring that Singapore will emerge stronger from the economic downturn when the global economy recovers.'
City-fringe units not a sure bet
April 19, 2009
property
City-fringe units not a sure bet
Fall in prices in first quarter greater than that for properties in city centre, suburbs
By Joyce Teo
Values for city-fringe homes are typically thought to hold up better than those in the suburbs, but the fall in prices in the first quarter means that this belief may no longer hold true, at least temporarily.
These homes are in areas which are not attractive to institutional investors and are also not within the reach of many HDB upgraders.
In view of these dynamics, the question is whether the areas still present good buys.
The city-fringe areas are what the Urban Redevelopment Authority (URA) terms RCR, or rest of central region. They are sandwiched between the core central region (CCR) - which comprises districts 9, 10, 11, Sentosa and the Central Business District - and the outside central region (OCR).
RCR areas include Paya Lebar, Geylang, Amber Road, Lavender, Toa Payoh, Tiong Bahru and Telok Blangah.
URA data shows that last year, prices of non-landed properties in the city centre, city fringe and suburban areas fell by 5.6 per cent, 4.7 per cent and 2.9 per cent, respectively.
But first-quarter flash estimates show that prices of city- fringe flats slipped by 17.2 per cent - more than the 15.2 per cent drop for city centre flats and the 7.5 per cent fall for suburban ones.
* Price
The price index reflects the rate of growth for each region, said Ms Jacqueline Wong, head of residential at Jones Lang LaSalle.
That the RCR experienced the steepest first-quarter price drop based on the flash estimates may just imply that the region is undergoing a greater price correction as prices might have been inflated during the property market boom, she said.
In terms of pricing, RCR pales in comparison to CCR as the latter's branding and location are better, she said.
It is thus fair to say that RCR is 'a poorer cousin to CCR', added Ms Wong.
In some parts of the RCR nearer to the city, developers tend to leverage on prime areas when they sell their projects, said Chesterton Suntec International's Mr Colin Tan.
He said: 'It'll be a discount from prime areas rather than a premium over suburban areas.'
But a price correction is happening now in the RCR, as with other areas.
'At the moment, it is probably perceived as overpriced. Investors may want to wait for it to come down to a more realistic level,' said Mr Tan.
* Prime beats RCR
In general, where investors are concerned, prime areas are the best, experts said.
'If you can afford it, buy prime. Depending on the type of properties you buy, there is a better chance for capital appreciation when the market recovers,' said Knight Frank's Mr Nicholas Mak.
'If you cannot, buy a property near an MRT station farther away or in the suburbs if your objective is to cash out.'
Mr Tan said a price recovery, when it comes, will be quicker in an established area like Orchard.
The RCR has quite a few new residential areas, so it may take time for the value in these areas to rise, he said.
City centre properties generally enjoy 'unrivalled prestige, exclusivity and locational advantage', and are hence extremely popular with expatriates, particularly those with higher budgets, said Ms Tay Huey Ying, director for research and advisory at Colliers International.
As prices of these properties have eased substantially from their stratospheric levels in 2007, they would certainly be worthwhile investments for those who can afford it, she said.
* A mixed bag
Nevertheless, the RCR is not a write-off, experts stressed.
'Properties in RCR will, however, continue to be attractive to those who remain priced out of the high-end market, or those with a lower risk appetite,' said Ms Tay.
'The RCR is definitely an area not to be forgotten,' said Ms Wong.
February and March sales data has proven that RCR projects such as the sold-out Alexis at Alexandra Road and The Arte at Thomson Road are in strong demand, she said.
'In terms of the leasing market, developments in RCR remain popular among tenants as they are more affordable compared to those in prime areas,' said Ms Wong.
The good thing about RCR is that there is a higher probability that the properties are freehold, Mr Mak said.
Condos in the suburbs next to MRT stations tend to be 99-year leasehold properties.
But unlike the case in most suburban estates, not many RCR projects are near MRT stations.
'The RCR is a mixed bag. For instance, there is Tanjong Rhu which is quite popular and not too far north, and there is Geylang, an area that some people will not touch with a 10-foot pole.'
property
City-fringe units not a sure bet
Fall in prices in first quarter greater than that for properties in city centre, suburbs
By Joyce Teo
Values for city-fringe homes are typically thought to hold up better than those in the suburbs, but the fall in prices in the first quarter means that this belief may no longer hold true, at least temporarily.
These homes are in areas which are not attractive to institutional investors and are also not within the reach of many HDB upgraders.
In view of these dynamics, the question is whether the areas still present good buys.
The city-fringe areas are what the Urban Redevelopment Authority (URA) terms RCR, or rest of central region. They are sandwiched between the core central region (CCR) - which comprises districts 9, 10, 11, Sentosa and the Central Business District - and the outside central region (OCR).
RCR areas include Paya Lebar, Geylang, Amber Road, Lavender, Toa Payoh, Tiong Bahru and Telok Blangah.
URA data shows that last year, prices of non-landed properties in the city centre, city fringe and suburban areas fell by 5.6 per cent, 4.7 per cent and 2.9 per cent, respectively.
But first-quarter flash estimates show that prices of city- fringe flats slipped by 17.2 per cent - more than the 15.2 per cent drop for city centre flats and the 7.5 per cent fall for suburban ones.
* Price
The price index reflects the rate of growth for each region, said Ms Jacqueline Wong, head of residential at Jones Lang LaSalle.
That the RCR experienced the steepest first-quarter price drop based on the flash estimates may just imply that the region is undergoing a greater price correction as prices might have been inflated during the property market boom, she said.
In terms of pricing, RCR pales in comparison to CCR as the latter's branding and location are better, she said.
It is thus fair to say that RCR is 'a poorer cousin to CCR', added Ms Wong.
In some parts of the RCR nearer to the city, developers tend to leverage on prime areas when they sell their projects, said Chesterton Suntec International's Mr Colin Tan.
He said: 'It'll be a discount from prime areas rather than a premium over suburban areas.'
But a price correction is happening now in the RCR, as with other areas.
'At the moment, it is probably perceived as overpriced. Investors may want to wait for it to come down to a more realistic level,' said Mr Tan.
* Prime beats RCR
In general, where investors are concerned, prime areas are the best, experts said.
'If you can afford it, buy prime. Depending on the type of properties you buy, there is a better chance for capital appreciation when the market recovers,' said Knight Frank's Mr Nicholas Mak.
'If you cannot, buy a property near an MRT station farther away or in the suburbs if your objective is to cash out.'
Mr Tan said a price recovery, when it comes, will be quicker in an established area like Orchard.
The RCR has quite a few new residential areas, so it may take time for the value in these areas to rise, he said.
City centre properties generally enjoy 'unrivalled prestige, exclusivity and locational advantage', and are hence extremely popular with expatriates, particularly those with higher budgets, said Ms Tay Huey Ying, director for research and advisory at Colliers International.
As prices of these properties have eased substantially from their stratospheric levels in 2007, they would certainly be worthwhile investments for those who can afford it, she said.
* A mixed bag
Nevertheless, the RCR is not a write-off, experts stressed.
'Properties in RCR will, however, continue to be attractive to those who remain priced out of the high-end market, or those with a lower risk appetite,' said Ms Tay.
'The RCR is definitely an area not to be forgotten,' said Ms Wong.
February and March sales data has proven that RCR projects such as the sold-out Alexis at Alexandra Road and The Arte at Thomson Road are in strong demand, she said.
'In terms of the leasing market, developments in RCR remain popular among tenants as they are more affordable compared to those in prime areas,' said Ms Wong.
The good thing about RCR is that there is a higher probability that the properties are freehold, Mr Mak said.
Condos in the suburbs next to MRT stations tend to be 99-year leasehold properties.
But unlike the case in most suburban estates, not many RCR projects are near MRT stations.
'The RCR is a mixed bag. For instance, there is Tanjong Rhu which is quite popular and not too far north, and there is Geylang, an area that some people will not touch with a 10-foot pole.'
Compund interest
April 19, 2009
FINANCIAL QUOTIENT
Er, what's compound interest?
* Where do you see this?
In financial articles.
* What does it mean?
Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.
Compound interest is the interest you earn not only on your initial principal but also on the interest accumulated over earlier periods.
For example, if you put $1,000 in your fixed deposit and it earns 5 per cent in interest a year, you'd have $1,050 at the end of the first year. At the end of the second year, you'd have $1,102.50.
After two years, you'd have earned $100 on the $1,000 you put in initially, plus $2.50 on the $50 worth of interest you earned in the first year.
Even if you do not add another cent to that account, in 10 years, you'd have $1,628 thanks to the power of compound interest. And in 25 years, you'd have $3,386.35.
* Why is it important?
When you understand the power of compound interest, long-term investing makes a lot of sense because the amounts will add up rapidly over the years.
* So you want to use the term. Just say...
'This acount is for the long term, to earn compound interest.'
FINANCIAL QUOTIENT
Er, what's compound interest?
* Where do you see this?
In financial articles.
* What does it mean?
Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.
Compound interest is the interest you earn not only on your initial principal but also on the interest accumulated over earlier periods.
For example, if you put $1,000 in your fixed deposit and it earns 5 per cent in interest a year, you'd have $1,050 at the end of the first year. At the end of the second year, you'd have $1,102.50.
After two years, you'd have earned $100 on the $1,000 you put in initially, plus $2.50 on the $50 worth of interest you earned in the first year.
Even if you do not add another cent to that account, in 10 years, you'd have $1,628 thanks to the power of compound interest. And in 25 years, you'd have $3,386.35.
* Why is it important?
When you understand the power of compound interest, long-term investing makes a lot of sense because the amounts will add up rapidly over the years.
* So you want to use the term. Just say...
'This acount is for the long term, to earn compound interest.'
Tuesday, April 7, 2009
Property stocks surge but rally may not last
7 Apr, 2009
Property stocks surge but rally may not last
By Fiona Chan
PRIVATE home prices posted their biggest-ever plunge in the first quarter this year, but that has not stopped property stocks from surging in the ongoing market rally.
Almost all the local developers have seen their shares jump by at least 20 per cent from their lows last month, with some - such as Keppel Land - shooting up almost 80 per cent. The FTSE ST real estate index has risen by 35 per cent since March 9.
But analysts said this rally does not reflect an improvement in the property market's fundamentals and is unlikely to be sustained.
'Nothing much has changed since the stocks hit their low points in March,' said Mr Donald Chua, a property analyst at CIMB-GK Securities.
Instead, the property counters could be rising partly due to short-sellers covering their positions or funds wanting to get in on the rally, he said.
The dramatic drop in home prices in the first quarter had little effect on the market because most observers had already expected it, he added. Private home prices fell a record 13.8 per cent in the first quarter, according to the URA price index released last week.
Saying most people knew prices had fallen 'at that kind of levels'', Mr Chua added: 'In fact, as the index continues to fall, sentiment may get a little bit more positive because investors could think that a bottom is starting to form.'
Another analyst from a local brokerage said the shares could be rebounding because they had been oversold. Their values are also being boosted by the positive spillover from the G-20 summit and rallies in the United States stock markets, he said.
'There is a ripple effect from the US and it's translating into the Singapore market, so people are going for bigger plays like property and banks.'
Property stocks surge but rally may not last
By Fiona Chan
PRIVATE home prices posted their biggest-ever plunge in the first quarter this year, but that has not stopped property stocks from surging in the ongoing market rally.
Almost all the local developers have seen their shares jump by at least 20 per cent from their lows last month, with some - such as Keppel Land - shooting up almost 80 per cent. The FTSE ST real estate index has risen by 35 per cent since March 9.
But analysts said this rally does not reflect an improvement in the property market's fundamentals and is unlikely to be sustained.
'Nothing much has changed since the stocks hit their low points in March,' said Mr Donald Chua, a property analyst at CIMB-GK Securities.
Instead, the property counters could be rising partly due to short-sellers covering their positions or funds wanting to get in on the rally, he said.
The dramatic drop in home prices in the first quarter had little effect on the market because most observers had already expected it, he added. Private home prices fell a record 13.8 per cent in the first quarter, according to the URA price index released last week.
Saying most people knew prices had fallen 'at that kind of levels'', Mr Chua added: 'In fact, as the index continues to fall, sentiment may get a little bit more positive because investors could think that a bottom is starting to form.'
Another analyst from a local brokerage said the shares could be rebounding because they had been oversold. Their values are also being boosted by the positive spillover from the G-20 summit and rallies in the United States stock markets, he said.
'There is a ripple effect from the US and it's translating into the Singapore market, so people are going for bigger plays like property and banks.'
Tuesday, March 3, 2009
Office Rents are coming down again
Office rents for Grade A/Prime space in Singapore fell a steep 14 per cent in Q408 on a year-on-year (yoy) basis, the sharpest fall in Asia.
In Tokyo, office rents fell 13.4 per cent yoy while in Hong Kong (citywide), rents fell 13.2 per cent yoy.
In Hanoi, rents rose the fastest at 25.6 per cent yoy while in Kuala Lumpur, rents increased by 19.3 per cent yoy. In Seoul (Yeouido), rents rose by 9.5 per cent yoy.
In its report Asia Marketview (Q4 2008), CBRE Research said that Singapore landlords adopted a more 'defensive position' and 'tenant retention was given greater priority'.
'Cost-cutting measures by occupiers and the first signs of sub-letting initiatives on excess space taken up during the expansion fervour in the past year were evidenced,' it added.
According to CBRE, the fourth quarter saw prime office rents suffer the most severe quarterly correction since records began. At the end of the review period, Grade A rents fell to an average of $15.00 per square foot (psf) per month, down from $17.15 psf per month a year ago.
Grade A vacancy in the fourth quarter was 0.9 per cent compared to 0.2 per cent a year ago.
CBRE believed that tenants here will decide to stay put rather than relocate as landlords look to retain tenants, and corporates come under pressure to further consolidate and reduce costs over the next 12 to 18 months.
But it also reckoned that there are still many tenants with renewals and rent reviews falling in 2009 under leases committed three to four years ago who could still be faced with rents that could potentially increase by some 75-150 per cent.
Generally, however, rents will continue to fall throughout 2009 with the biggest threat to the office market likely to be job attrition, not only within the key financial services sector, said CBRE, but also from supporting business services.
In Tokyo and Hong Kong, falling rents was partially attributed to new office space supply.
The fourth quarter saw Grade A vacancy increase to 3.5 per cent quarter-on-quarter (qoq) in Tokyo. CBRE said that a major factor was the completion of a Grade A building in Marunouchi, which added 533,700 sq ft of net lettable area to the market.
Similarly, CBRE included two more sub-markets - Kowloon East and Island East - in its fourth quarter data for Hong Kong (citywide) Grade A office rents with Grade A office vacancy rising 65 basis points (bps) qoq to 8.03 per cent. In Kowloon East alone, vacancy rate was more than 30 per cent, putting pressure on landlords to offer flexible terms to potential tenants.
Across Asia during the fourth quarter, vacancy increased in 14 of the 17 markets tracked by CBRE. Overall vacancy across the region rose by 334 bps between January and December 2008.
Thursday, February 26, 2009
More mass market projects to launch
Developers are planning to launch more mass market projects this weekend to take advantage of a recent surge in buying interest.
Hiap Hoe Group, a niche developer, will officially launch its 118-unit The Beverly, located at Toh Tuck Road, this Saturday. The starting selling price is $648 per square foot (psf), which Hiap Hoe says is an 'attractive starting selling price'.
'We have designed The Beverly for those looking for affordable, high-quality residential developments in a good location,' said Teo Ho Beng, the company's managing director.
The Beverly's two, three and four-bedroom apartments range from 1,120 sq ft to 4,187 sq ft, while its double-storey penthouses range from 2,099 sq ft to 3,757 sq ft and are each outfitted with a private roof garden and pool.
On the other side of the island at Pasir Ris, Sustained Land Pte Ltd will also officially launch Coastal Breeze Residences come this weekend. Two and three-bedroom units at the 63-unit development will sell for $610-$660 psf.
Sustained Land has sold 13 units in Coastal Breeze Residences since the start of 2008 in a soft launch. The units, which were mostly prime apartments on higher floors, went at an average price of $690 psf.
The remaining units are mostly three-bedders between 1159 sq ft and 1356 sq ft in size and there are also duplex penthouses. In terms of absolute value, for example, the price for a three-room 1159 sq ft unit starts at $712,000.
Meanwhile, the UOL Group is expected to launch its 646-unit Double Bay Residences in Simei sometime next week. Market talk has it that the project could be launched at $650-680 psf.
The three projects are coming hot on the heels of two successful launches earlier this month. Units at Frasers Centrepoint's Caspian condominium near Jurong Lake and Alexis @ Alexandra, a project by joint venture partners Yi Kai Group and Fission Group, sold quickly upon the projects' launches.
One market insider said that developers are taking pricing cues from each other, and making sure their newly launched projects are priced to sell. 'There is a sense that people will only be willing to buy projects in the $600-plus psf range, and also only units that don't cost too much in total. People don't really want to pay more than $600,000 or $700,000-plus in these times,' he said.
Developers are also throwing in more upmarket features into their mass market offerings to entice buyers. Each of The Beverly's 118 apartments is served by private lifts that open into the lobby of its interior. UOL's Double Bay Residences will also offer extras such as full-length windows in the kitchen, the company has said.
Hiap Hoe Group, a niche developer, will officially launch its 118-unit The Beverly, located at Toh Tuck Road, this Saturday. The starting selling price is $648 per square foot (psf), which Hiap Hoe says is an 'attractive starting selling price'.
'We have designed The Beverly for those looking for affordable, high-quality residential developments in a good location,' said Teo Ho Beng, the company's managing director.
The Beverly's two, three and four-bedroom apartments range from 1,120 sq ft to 4,187 sq ft, while its double-storey penthouses range from 2,099 sq ft to 3,757 sq ft and are each outfitted with a private roof garden and pool.
On the other side of the island at Pasir Ris, Sustained Land Pte Ltd will also officially launch Coastal Breeze Residences come this weekend. Two and three-bedroom units at the 63-unit development will sell for $610-$660 psf.
Sustained Land has sold 13 units in Coastal Breeze Residences since the start of 2008 in a soft launch. The units, which were mostly prime apartments on higher floors, went at an average price of $690 psf.
The remaining units are mostly three-bedders between 1159 sq ft and 1356 sq ft in size and there are also duplex penthouses. In terms of absolute value, for example, the price for a three-room 1159 sq ft unit starts at $712,000.
Meanwhile, the UOL Group is expected to launch its 646-unit Double Bay Residences in Simei sometime next week. Market talk has it that the project could be launched at $650-680 psf.
The three projects are coming hot on the heels of two successful launches earlier this month. Units at Frasers Centrepoint's Caspian condominium near Jurong Lake and Alexis @ Alexandra, a project by joint venture partners Yi Kai Group and Fission Group, sold quickly upon the projects' launches.
One market insider said that developers are taking pricing cues from each other, and making sure their newly launched projects are priced to sell. 'There is a sense that people will only be willing to buy projects in the $600-plus psf range, and also only units that don't cost too much in total. People don't really want to pay more than $600,000 or $700,000-plus in these times,' he said.
Developers are also throwing in more upmarket features into their mass market offerings to entice buyers. Each of The Beverly's 118 apartments is served by private lifts that open into the lobby of its interior. UOL's Double Bay Residences will also offer extras such as full-length windows in the kitchen, the company has said.
Monday, February 23, 2009
Office rents may halve
AFTER two years of being squeezed by soaring rents, office tenants are finally seeing the market turn in their favour.
Up to four years of falling or flat rents are in store for them as a wave of upcoming office space outstrips lacklustre demand, according to a new report by property consultancy Savills.
Up to four years of falling or flat rents are in store for them as a wave of upcoming office space outstrips lacklustre demand, according to a new report by property consultancy Savills.
Grade A space rents of such offices are predicted to drop 30 per cent to 40 per cent this year, and a further 20 per cent to 25 per cent next year.
Office rents have generally come off by 10 per cent from the peak last year, although for new lettings we've seen more like a 25 per cent drop.
Cushman & Wakefield managing director Donald Han is tipping a 20 per cent decline in rents this year and another 20 per cent fall next year, although he said the drops may be bigger if Singapore's economic outlook continues to worsen.
Property firms earnings fall
Wheelock Properties posts 63% drop in profit; MCL Land reports loss of $165m
EARNINGS at property developers here have sunk like a tonne of bricks as confidence in the residential property market continues to take a beating.
In view of the poor market, Wheelock Properties says it is 'currently reviewing the building plans' for its proposed luxury project Ardmore 3, while MCL Land is reviewing 'the carrying value of development properties for sale in Singapore'.
Total sales for the project have now reached $903 million, and 'this revenue will be recognised progressively in the accounts until Scotts Square is completed' next year.
Wheelock Place was also revalued - from $700 million to $790 million - last year.
Earnings per share were 8.44 cents, down from 22.86 cents the previous year.
Net asset value per share stood at $1.72, down from $1.82 a year earlier.
Wheelock Place was also revalued - from $700 million to $790 million - last year.
Earnings per share were 8.44 cents, down from 22.86 cents the previous year.
Net asset value per share stood at $1.72, down from $1.82 a year earlier.
Thursday, February 19, 2009
Valuation And Buying Price Not Matched
The rapid slide in property prices has resulted in some banks slashing the loan amount to borrowers just before it is disbursed. This has put property buyers in a quandary, forcing them to either top up the difference or pay a penalty for backing out of the loan offered.
But borrowers who want to cancel the loan are hit with a punitive 1-1.5 per cent cancellation fee. Also, by this time, it would be hard to back out because they would have already committed to the purchase of the property.
This has caused many valuers to be under fire, judging from interview banks and valuation Company, i think we have to wait for the market to finds its equilibrium before valuation can be be more accurate.
Wednesday, February 18, 2009
More HDB rental flats to be available
In view of the worsening economic situation in Singapore, the Housing & Development Board (HDB) will convert about 1,100 three–room vacant flats into one– and two–room flats for rental. Only low-income households are allowed to rent such flats from the government.
The entire assistance programme, including building new rental flats for the low income group, will be completed by early 2009.
In fact, some 180 converted flats were allocated in January 2008. They comprised one– and two–room units in Block 852, Woodlands Street 83. In March 2008, Blocks 188 and 191 in Boon Lay Drive were also converted into rental flats. 290 converted units at Redhill will be added to the supply this year.
In the meantime, HDB is also building 976 new rental flats at Choa Chu Kang, Sembawang and Yishun. The new units will be ready by early next year.
Resale Market Hit NEW LOW
Only about 7,400 and 7,600 homes were sold in the secondary market in 2008, according to an international real estate consultancy CBRE. The latest figure pales in comparison with the 20,985 private resale deals in 2007. Likewise, sub–sale deals also fell from the height of 4,863 units in 2007 to between 1,600 and 1,650 units last year. In the primary home sale market, only 4,287 new home units were sold last year – not even a third of the record 14,811 private home units that were sold during the property bull–run in 2007. A miserable 131 new private homes were sold in December 208, down from 193 in November. Indeed, 2008 was the worst year for new sales in Singapore since 1990. A total of 6,114 units were launched by the developers in 2008, down 56% from a record 14,016 a year ago. The 2008 figure was the lowest in four years. |
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Tuesday, February 17, 2009
HDB resale prices will react to recession
Despite the on-going economic recession, prices of HDB resale flats have continued to rise in the last six months, hitting the all-time high in November 2008.
According to flash estimates of HDB's Resale Price Index released on 2 January 2009, prices of flats in the fourth quarter (Q4) of 2008 rose 1.5% over the preceding quarter.
However, the quantum of the growth in Q4 was smaller than in Q3 2008 which registered a much stronger 4.2% price rise. It was also the first time price growth has dipped below 3% in six months. This may be a sign of things to come.
For a start, the market sentiment has changed from ‘highly optimistic’ to one of cautiousness and more prospective buyers are sitting on the fence. It may become a self-fulfilling prophecy for the many buyers who remain passive in waiting. The overall prices of HDB resale flats may start to ease from the first quarter of 2009 onwards.
Experts expect the overall HDB resale prices to drop five to 10% in the full year.
According to flash estimates of HDB's Resale Price Index released on 2 January 2009, prices of flats in the fourth quarter (Q4) of 2008 rose 1.5% over the preceding quarter.
However, the quantum of the growth in Q4 was smaller than in Q3 2008 which registered a much stronger 4.2% price rise. It was also the first time price growth has dipped below 3% in six months. This may be a sign of things to come.
For a start, the market sentiment has changed from ‘highly optimistic’ to one of cautiousness and more prospective buyers are sitting on the fence. It may become a self-fulfilling prophecy for the many buyers who remain passive in waiting. The overall prices of HDB resale flats may start to ease from the first quarter of 2009 onwards.
Experts expect the overall HDB resale prices to drop five to 10% in the full year.
Retail Reits to be by 30%
Retail sales here could slide 4-5 per cent this year, says UBS Investment Research, which has also cut its distribution forecasts for Singapore's retail trusts by up to 30 per cent.
After several downgrades, UBS economists now expect Singapore's GDP to shrink 3 per cent and inflation to fall to 0-1.5 per cent this year, saying that this will hit retail spending and rents.
In the past, retail sales correlated with GDP growth, UBS says. In the 2001 recession, they weakened 2.2 per cent, in line with a GDP contraction of 2.3 per cent. And rents in the central area fell 19 and 14 per cent in the 1998 and 2001 recessions respectively.
'As a recession of minus-3 to minus-4 per cent is expected for 2009, we expect retail sales to fall around 4-5 per cent before recovering to 3 per cent a year in 2010-2012,' UBS says in a report issued on Friday last week.
Previously, when retail sales declined during recessions, the supply of new retail space was limited, providing support for rents, UBS says. But, as well as the current weak economic climate, there is an unprecedented supply of new retail space coming up, especially in the Orchard Road area.
UBS reckons overall retail space supply could rise 11 per cent in 2009-2011, with Orchard Road supply up by 37 per cent.
'As a result, we now expect retail signing rents to fall 8 per cent in 2009-2010 in the suburban areas, and around 23 per cent in 2009-2010 in the Orchard Road area,' it says.
So far, Singapore-listed real estate investment trusts (S-Reits) have not seen a substantial drop in retail sales at their malls, UBS notes.
But discretionary sales could deteriorate, it says. 'We expect the impact to be limited for the suburban portfolios but materially negative for central area malls, mainly due to high supply.' Based on the current trade mix, UBS reckons suburban malls will be less affected by weakening retail sales.
With this in mind, it has cut its distribution per unit (DPU) forecasts for Singapore retail Reits by up to 30 per cent this year and 40 per cent in 2012.
UBS has 'buy' calls on four retail S-Reits - CapitaMall Trust, Suntec Reit, Starhill Global Reit and Frasers Centrepoint Trust.
After several downgrades, UBS economists now expect Singapore's GDP to shrink 3 per cent and inflation to fall to 0-1.5 per cent this year, saying that this will hit retail spending and rents.
In the past, retail sales correlated with GDP growth, UBS says. In the 2001 recession, they weakened 2.2 per cent, in line with a GDP contraction of 2.3 per cent. And rents in the central area fell 19 and 14 per cent in the 1998 and 2001 recessions respectively.
'As a recession of minus-3 to minus-4 per cent is expected for 2009, we expect retail sales to fall around 4-5 per cent before recovering to 3 per cent a year in 2010-2012,' UBS says in a report issued on Friday last week.
Previously, when retail sales declined during recessions, the supply of new retail space was limited, providing support for rents, UBS says. But, as well as the current weak economic climate, there is an unprecedented supply of new retail space coming up, especially in the Orchard Road area.
UBS reckons overall retail space supply could rise 11 per cent in 2009-2011, with Orchard Road supply up by 37 per cent.
'As a result, we now expect retail signing rents to fall 8 per cent in 2009-2010 in the suburban areas, and around 23 per cent in 2009-2010 in the Orchard Road area,' it says.
So far, Singapore-listed real estate investment trusts (S-Reits) have not seen a substantial drop in retail sales at their malls, UBS notes.
But discretionary sales could deteriorate, it says. 'We expect the impact to be limited for the suburban portfolios but materially negative for central area malls, mainly due to high supply.' Based on the current trade mix, UBS reckons suburban malls will be less affected by weakening retail sales.
With this in mind, it has cut its distribution per unit (DPU) forecasts for Singapore retail Reits by up to 30 per cent this year and 40 per cent in 2012.
UBS has 'buy' calls on four retail S-Reits - CapitaMall Trust, Suntec Reit, Starhill Global Reit and Frasers Centrepoint Trust.
Monday, February 16, 2009
Record low sales for developers in 2008
Developers in Singapore managed to sell only 4,351 homes in the entire year of 2008. This is the lowest sales figure in a decade – worse than the previous low of 5,156 and 5,520 units in the last two recessions in 2003 and 1998 respectively.
The sales in 2008 were also significantly lower than the annual 10-year average (1998-2007) of 8,200 units.
In December 2008, only 131 new home units were sold, though the units available for sale had jumped to 8,350 units from 6,512 units in the previous month.
The sales in 2008 were also significantly lower than the annual 10-year average (1998-2007) of 8,200 units.
In December 2008, only 131 new home units were sold, though the units available for sale had jumped to 8,350 units from 6,512 units in the previous month.
'Secret profit' case sheds some light on the agent-agency relationship
THE world of Singapore real estate can seem all too murky to many, with opaque institutions and questionable deals.
There is no one single authority - either from the industry or the Government - with enough clout to decide who gets to ply the trade and who gets kicked out because of wrongdoing.
The regulatory vacuum means common practices that raise eyebrows are never discussed and analysed with a clear resolution. Questions like 'Should an agent get a commission from both the buyer and seller?', or 'Should an agent be allowed to buy property from his seller?' elicit robust views from both sides.
Earlier this month, we came a bit closer to getting some answers after a couple took housing agency ERA Realty Network to court over the conduct of their agents.
Mr Yuen Chow Hin and Madam Wong Wai Fan, who sold their downtown apartment for $688,000 in 2007, learned subsequently that their home was bought and resold almost immediately by the wife of their agent's boss for $945,000.
They claimed a conflict of interest and sued ERA for $257,000 - the difference between the two sale prices and about $7,300 in commission.
High court judge Choo Han Teck agreed with the couple and ordered that $257,000 be returned to them. ERA has indicated that it may appeal against the ruling.
The case was significant not because a housing agent had been found 'flipping' a property. Professional agents often invest in property themselves, sometimes buying directly from owners they represent. Rather, the case was valuable for the public nature of the disclosures and resolution.
Whether such 'flipping' by housing agents can be considered ethical depends on each transaction. But the line between what is right and wrong has never been drawn clearly because of the freewheeling nature of the industry.
Buyers and sellers who seek a clear resolution are forced to turn to the courts, but many often do not have the stomach, cash or legal muscle to do so. They fight shy of the stress of legal proceedings and settle away from the public eye, leaving other buyers and sellers none the wiser.
The Yuens didn't. This case let the public hear - for the first time in recent years - a large, well-established property firm argue that it is not liable for the actions of its agents because they are considered independent contractors.
The statement may sound surprising to many buyers and sellers who often hire an agent based on a firm's reputation. But the reality is that all agencies - not just ERA - hire agents as independent contractors and take a cut from their commissions. In return, the firms offer agents infrastructure and administrative support.
In the agent-agency relationship, the former has the upper hand because the departure of a star can hit the bottom line.
In the cut-throat world of real estate agencies, losing a top performer could mean also losing hundreds of agents working under him to a rival agency.
It means most property firms are loath to let top performers go, even if they are caught red-handed for unethical practices.
In 2006, for example, veteran ERA agent Syed Abdullah Alhamid was jailed for a month for being part of a scam which helped flat buyers secure loans with fake documents. He returned to ERA not long after being released from jail.
In the Yuens' case, Justice Choo was blunt in rejecting ERA's assertion that it was not liable, given that the transaction documents and advertisements gave the impression that the agents had the backing of the agency.
The fallout from the disclosure of ERA's 'independent contractor' argument is considerable.
It begs these questions: What does it mean when a large, well-established company claims to have a solid reputation, high service standards, and a good track record? How much value can someone place on such assertions, if the 'independent contractor' argument can be pulled out of the hat when things go wrong?
Justice Choo's judgment aside, the case was invaluable for helping to shake the average buyer and seller out of their complacency.
Singaporeans tend to forget that the clear rules and strong institutions they are so used to in their daily lives do not apply in the property industry. The safety nets are so small and legal recourse so fragile that the best bet one probably has is to pick the right agent in the first place.
It doesn't help that rivalry between different factions makes self-regulation near impossible.
The Institute of Estate Agents, formed in 1998 to try to centralise control over agents, has only a small fraction of the more than 20,000 agents in the industry on its membership roll. Since membership is not compulsory, it has no power to keep errant agents out of the industry.
Meanwhile, there is confusion over what it takes to be an accredited agency.
The voluntary Singapore Accredited Estate Agencies scheme, when launched in 2005, required accredited housing agencies to have all their agents pass the Common Exam for House Agents (Ceha) by this year. Last year though, it introduced a scaled-down test, the Common Examination for Salespersons (CES), after feedback that the Ceha was deemed 'too academic'.
This left many agents at a loss over which qualification to try for as it was not clear if Ceha was still necessary for a housing agency to get accredited.
Meanwhile, the Consumers Association of Singapore says it has been in talks with various government agencies to work on yet another accreditation scheme. Whether that - when it takes shape - will be made compulsory remains to be seen.
Until something concrete comes about, laymen will still have to rely on property owners with deep enough pockets to fight court cases for their answers.
There is no one single authority - either from the industry or the Government - with enough clout to decide who gets to ply the trade and who gets kicked out because of wrongdoing.
The regulatory vacuum means common practices that raise eyebrows are never discussed and analysed with a clear resolution. Questions like 'Should an agent get a commission from both the buyer and seller?', or 'Should an agent be allowed to buy property from his seller?' elicit robust views from both sides.
Earlier this month, we came a bit closer to getting some answers after a couple took housing agency ERA Realty Network to court over the conduct of their agents.
Mr Yuen Chow Hin and Madam Wong Wai Fan, who sold their downtown apartment for $688,000 in 2007, learned subsequently that their home was bought and resold almost immediately by the wife of their agent's boss for $945,000.
They claimed a conflict of interest and sued ERA for $257,000 - the difference between the two sale prices and about $7,300 in commission.
High court judge Choo Han Teck agreed with the couple and ordered that $257,000 be returned to them. ERA has indicated that it may appeal against the ruling.
The case was significant not because a housing agent had been found 'flipping' a property. Professional agents often invest in property themselves, sometimes buying directly from owners they represent. Rather, the case was valuable for the public nature of the disclosures and resolution.
Whether such 'flipping' by housing agents can be considered ethical depends on each transaction. But the line between what is right and wrong has never been drawn clearly because of the freewheeling nature of the industry.
Buyers and sellers who seek a clear resolution are forced to turn to the courts, but many often do not have the stomach, cash or legal muscle to do so. They fight shy of the stress of legal proceedings and settle away from the public eye, leaving other buyers and sellers none the wiser.
The Yuens didn't. This case let the public hear - for the first time in recent years - a large, well-established property firm argue that it is not liable for the actions of its agents because they are considered independent contractors.
The statement may sound surprising to many buyers and sellers who often hire an agent based on a firm's reputation. But the reality is that all agencies - not just ERA - hire agents as independent contractors and take a cut from their commissions. In return, the firms offer agents infrastructure and administrative support.
In the agent-agency relationship, the former has the upper hand because the departure of a star can hit the bottom line.
In the cut-throat world of real estate agencies, losing a top performer could mean also losing hundreds of agents working under him to a rival agency.
It means most property firms are loath to let top performers go, even if they are caught red-handed for unethical practices.
In 2006, for example, veteran ERA agent Syed Abdullah Alhamid was jailed for a month for being part of a scam which helped flat buyers secure loans with fake documents. He returned to ERA not long after being released from jail.
In the Yuens' case, Justice Choo was blunt in rejecting ERA's assertion that it was not liable, given that the transaction documents and advertisements gave the impression that the agents had the backing of the agency.
The fallout from the disclosure of ERA's 'independent contractor' argument is considerable.
It begs these questions: What does it mean when a large, well-established company claims to have a solid reputation, high service standards, and a good track record? How much value can someone place on such assertions, if the 'independent contractor' argument can be pulled out of the hat when things go wrong?
Justice Choo's judgment aside, the case was invaluable for helping to shake the average buyer and seller out of their complacency.
Singaporeans tend to forget that the clear rules and strong institutions they are so used to in their daily lives do not apply in the property industry. The safety nets are so small and legal recourse so fragile that the best bet one probably has is to pick the right agent in the first place.
It doesn't help that rivalry between different factions makes self-regulation near impossible.
The Institute of Estate Agents, formed in 1998 to try to centralise control over agents, has only a small fraction of the more than 20,000 agents in the industry on its membership roll. Since membership is not compulsory, it has no power to keep errant agents out of the industry.
Meanwhile, there is confusion over what it takes to be an accredited agency.
The voluntary Singapore Accredited Estate Agencies scheme, when launched in 2005, required accredited housing agencies to have all their agents pass the Common Exam for House Agents (Ceha) by this year. Last year though, it introduced a scaled-down test, the Common Examination for Salespersons (CES), after feedback that the Ceha was deemed 'too academic'.
This left many agents at a loss over which qualification to try for as it was not clear if Ceha was still necessary for a housing agency to get accredited.
Meanwhile, the Consumers Association of Singapore says it has been in talks with various government agencies to work on yet another accreditation scheme. Whether that - when it takes shape - will be made compulsory remains to be seen.
Until something concrete comes about, laymen will still have to rely on property owners with deep enough pockets to fight court cases for their answers.
Rental Coming Down.
Market watchers expect private home rentals in Singapore to slide a further 5 per cent in the first quarter of this year. That is partly due to falling numbers of expatriate staff based in the city state and lower housing budgets allocated to them. Singapore plays home to many foreigners working here. But the numbers could fall as firms cut costs to cope with the global recession. Real estate agency ERA told Channel NewsAsia that its corporate clients have been affected by the downturn. Eugene Lim, associate director of ERA Asia Pacific, said: "... about 20 per cent of the corporate leases that we have are actually looking for some replacement tenants, because these rentals were signed last year and now that the expats are leaving, they are still locked in the tenancy period." There are worries that the movement of staff out of Singapore could destablise the rental market. Nicholas Mak, Knight Frank's director for consultancy & research, said: "If there is a huge outflow of expatriate tenants and at the same time in the next few years... the number of private condominiums that are going to be completed would also increase... if we have a very sharp decrease in demand over a very short span of time, this could actually disrupt the market quite drastically." Observers say some expatriates are also moving out of more expensive apartments, as their companies slash housing budgets. Market players project that some 10,000 units of private apartments will be completed this year. Of these, 3,000 units could be put up for rent. And with demand softening, they expect rentals to fall by 10 to 20 per cent for 2009. Frail market sentiments affected the private residential rental market, which saw a 5.3 per cent drop in rentals in the fourth quarter of 2008. Still, observers say recent rule changes that allow the renting out of unsold units will help to improve the developers' cashflow. ERA Asia Pacific's Eugene Lim said: "It can also be packaged as an investment unit, where you can sell it with an existing tenancy. There are always ready buyers for this kind of unit where they do not want the hassle of finding a tenant when it's already tenanted. "So if it is packaged very effectively, viz-a-viz the rent versus the price, then you get an attractive rental return, then it makes the unit marketable." Despite falling rentals, market watchers are hoping to see a recovery in the private residential rental market as early as the second half of this year.
Source - CNA 16 Feb 2009
Source - CNA 16 Feb 2009
Private home sales down in January but more units launched
Private home sales further slowed in January, according to the latest Urban Redevelopment Authority (URA) figures. Some 107 deals were completed last month, compared to 131 in December. Property agents said this was the lowest level recorded in the last two years - even lower than last October when global stock markets slumped. Even so, developers placed more projects on the market, with 204 units released in January. This was slightly higher than the 157 private homes released a month earlier, which had been the lowest level since June 2007. Despite these gloomy numbers, real estate agency Propnex Realty expects a brighter February. The firm said this is because there has been good take-up from some recent launches this month. For instance, the new developments Alexis and Caspian had enjoyed strong take-up with over 750 units sold. CEO of PropNex Realty, Mohamed Ismail, said: "February has been a good month and is likely to post a record number of transactions, far exceeding the peak of last year - close to 800 over units." This will be about eight times the number sold in January. According to property consultant Colliers, potential buyers would have been waiting for the Budget announcement before making any purchase, and were also occupied with preparing for the Lunar New Year. But while sales were seen picking up, analysts said one trend would likely persist throughout the year. Director of consultancy and research at Knight Frank, Nicholas Mak, said: "Most units launched and sold by developers last month were in the suburban areas. Launch and sales activities by developers in the prime district almost came to a halt. Less than 10 units were transacted." Mohamed Ismail said: "The appetite for many consumers today is when the property price, the overall quantum is less than S$800,000. There are many people willing to buy. "Not only from the perspective of consumers, even financial institutions and the banks are very comfortable to lend to people for property that are below a million because the risk and spread for the bank is so much better." Thus analysts expect most upcoming launches to fall under this category. They said developers may ride the new wave of sales and launch more units in the second half of February. They said as many as 1,000 units may be launched next month, a level not seen since July 2008. And to support sales, analysts said that going forward, developers are likely to work with banks on financing schemes. For example, two recent developments launched - Alexis and Caspian - have interest-absorption schemes. -
Source - CNA Feb 16 2009
Source - CNA Feb 16 2009
Small Quantum? Good buy ?
PREVIEW sales of the 293-unit Alexis At Alexandra Road started yesterday and developer Fission Group said that at least 50 per cent of the development has been sold at prices ranging from $850 per square foot (psf) to $1,100 psf.
The company was coy on the exact number of units sold but it may have been a tad too modest. Some buyers BT spoke with at the crowded show flat said that they were told by marketing agents that up to 85 per cent of the units had been sold by 7.30 pm.
‘The prices are competitive compared with other condominiums, but its proximity to the MRT and CBD makes the Alexis a good investment,’ said Steven Kwok, a potential buyer who had been quoted a price of $1,050-$1,100 psf.Another buyer said that compared to the recently launched Caspian ($580 psf), Alexis is not cheap but he hopes to resell the property for a profit. He also said that compared to what was quoted in an invitation he had received earlier, prices quoted at the showflat were 10 per cent higher.According to official data, three units at The Anchorage next door sold at $848-$929 psf in the fourth quarter while a unit at Queens on Stirling Road sold for $894 psf this month.Fission Group has tied up with United Overseas Bank to offer an interest absorption scheme, which, like the now-scrapped deferred payment scheme, allows buyers to defer any payments beyond an initial downpayment until the project receives Temporary Occupation Permit (TOP).Alexis is being built on the former Alexandra Centre which was put up for collective sale in 2007 for around $300 per square per plot ratio. It is not known how much Fission Group paid for the site.A seasoned property consultant said that interest in Alexis is likely because most of the units are small. At between 400 sq ft for a one-bedroom unit and 650 sq ft for a two-bedder, prices range from $450,000 to $650,000.
He also said that there was ’still liquidity in the market’ and investors with a two-year investment horizon would still find property attractive. ‘There is no point putting money in a bank,’ he added.Over on the east coast, City Developments Ltd (CDL) will launch a new phase for its Livia condominium in Pasir Ris at an average price of $620 psf, or about $30 psf less than the launch price of the first phase. A total of 30 units in two stacks will be offered in the second phase.Chia Ngiang Hong, group general manager of CDL said: ‘The company senses a renewal of market interest and improvement in buyer sentiment. More people have been visiting our showrooms, and many have made offers for units that have yet to be launched.’
Source : Business Times - 13 Feb 2009
The company was coy on the exact number of units sold but it may have been a tad too modest. Some buyers BT spoke with at the crowded show flat said that they were told by marketing agents that up to 85 per cent of the units had been sold by 7.30 pm.
‘The prices are competitive compared with other condominiums, but its proximity to the MRT and CBD makes the Alexis a good investment,’ said Steven Kwok, a potential buyer who had been quoted a price of $1,050-$1,100 psf.Another buyer said that compared to the recently launched Caspian ($580 psf), Alexis is not cheap but he hopes to resell the property for a profit. He also said that compared to what was quoted in an invitation he had received earlier, prices quoted at the showflat were 10 per cent higher.According to official data, three units at The Anchorage next door sold at $848-$929 psf in the fourth quarter while a unit at Queens on Stirling Road sold for $894 psf this month.Fission Group has tied up with United Overseas Bank to offer an interest absorption scheme, which, like the now-scrapped deferred payment scheme, allows buyers to defer any payments beyond an initial downpayment until the project receives Temporary Occupation Permit (TOP).Alexis is being built on the former Alexandra Centre which was put up for collective sale in 2007 for around $300 per square per plot ratio. It is not known how much Fission Group paid for the site.A seasoned property consultant said that interest in Alexis is likely because most of the units are small. At between 400 sq ft for a one-bedroom unit and 650 sq ft for a two-bedder, prices range from $450,000 to $650,000.
He also said that there was ’still liquidity in the market’ and investors with a two-year investment horizon would still find property attractive. ‘There is no point putting money in a bank,’ he added.Over on the east coast, City Developments Ltd (CDL) will launch a new phase for its Livia condominium in Pasir Ris at an average price of $620 psf, or about $30 psf less than the launch price of the first phase. A total of 30 units in two stacks will be offered in the second phase.Chia Ngiang Hong, group general manager of CDL said: ‘The company senses a renewal of market interest and improvement in buyer sentiment. More people have been visiting our showrooms, and many have made offers for units that have yet to be launched.’
Source : Business Times - 13 Feb 2009
Getting the ‘real’ in real estate
New interest-absorption schemes offered by developers through banks are attracting the smart money
JUDGING by the response to the recently launched Caspian and Alexis, real estate remains a key element of the typical Singaporean’s wealth-management strategy.
While cash is still king, real estate - like gold - is something tangible to hang on to. And recent downward price adjustments are making it an increasingly attractive asset class. What is making new launches even more enticing is that investors are cottoning on to the fact that new interest absorption schemes (IAS) offered by developers through banks are very much like the former deferred payment scheme (DPS).
At the recent launch of Alexis, units were not only offered with IAS but did not come at higher prices, typically 3 per cent more. Buyers, said mostly to be Singaporean investors, homed in. The project was almost fully sold in less than a week. Considering the depth of the economic downturn, this would seem to defy logic. So, could real estate be where the smart money is migrating to now?
Looking at yields from stocks, bonds and even fixed deposits, and comparing these with IAS, which is essentially an interest-free loan on almost all new property, the argument for putting your money, or at least some of it, into real estate is compelling - especially if you subscribe to the notion that real estate values always rise in the long run.
This last point is what differentiates property buyers now from those who bought in the run-up to peak prices in 2007 - they are more realistic.
Certainly, few buyers today would be hoping to make a fast buck. Indeed, prices may actually have some way to go before they hit bottom.
Reality appears to have set in, with investment horizons now longer than the time it takes to flip a property. The only danger is that if the recent surge in sales has more to do with IAS and less with the fundamentals of the market, recent experience is just another round of speculation, albeit a tiny one.
Does IAS encourage speculation? Some believe that unlike DPS, IAS is much more stringent insofar as terms go. A purchaser who is offered the IAS has to take out a loan with a bank, which will carry out credit checks before granting the loan. In addition, the purchaser has to make progress payments, part of which may be disbursed from the bank loan, to the developer. This amounts to 60 per cent of the purchase price of the property before the temporary occupation permit (TOP) is granted, including 20 per cent at the downpayment stage.
With DPS, as little as 10 per cent of the purchase price was payable by the purchaser before TOP.
Given that a buyer has to commit to a loan and make progress payments, the authorities do not believe IAS encourages speculation.
Hopefully, then, what the market is experiencing now is the realisation that real estate is fundamentally a safe asset class - not a flash in the pan brought on by speculation.
Source : Business Times - 14 Feb 2009
JUDGING by the response to the recently launched Caspian and Alexis, real estate remains a key element of the typical Singaporean’s wealth-management strategy.
While cash is still king, real estate - like gold - is something tangible to hang on to. And recent downward price adjustments are making it an increasingly attractive asset class. What is making new launches even more enticing is that investors are cottoning on to the fact that new interest absorption schemes (IAS) offered by developers through banks are very much like the former deferred payment scheme (DPS).
At the recent launch of Alexis, units were not only offered with IAS but did not come at higher prices, typically 3 per cent more. Buyers, said mostly to be Singaporean investors, homed in. The project was almost fully sold in less than a week. Considering the depth of the economic downturn, this would seem to defy logic. So, could real estate be where the smart money is migrating to now?
Looking at yields from stocks, bonds and even fixed deposits, and comparing these with IAS, which is essentially an interest-free loan on almost all new property, the argument for putting your money, or at least some of it, into real estate is compelling - especially if you subscribe to the notion that real estate values always rise in the long run.
This last point is what differentiates property buyers now from those who bought in the run-up to peak prices in 2007 - they are more realistic.
Certainly, few buyers today would be hoping to make a fast buck. Indeed, prices may actually have some way to go before they hit bottom.
Reality appears to have set in, with investment horizons now longer than the time it takes to flip a property. The only danger is that if the recent surge in sales has more to do with IAS and less with the fundamentals of the market, recent experience is just another round of speculation, albeit a tiny one.
Does IAS encourage speculation? Some believe that unlike DPS, IAS is much more stringent insofar as terms go. A purchaser who is offered the IAS has to take out a loan with a bank, which will carry out credit checks before granting the loan. In addition, the purchaser has to make progress payments, part of which may be disbursed from the bank loan, to the developer. This amounts to 60 per cent of the purchase price of the property before the temporary occupation permit (TOP) is granted, including 20 per cent at the downpayment stage.
With DPS, as little as 10 per cent of the purchase price was payable by the purchaser before TOP.
Given that a buyer has to commit to a loan and make progress payments, the authorities do not believe IAS encourages speculation.
Hopefully, then, what the market is experiencing now is the realisation that real estate is fundamentally a safe asset class - not a flash in the pan brought on by speculation.
Source : Business Times - 14 Feb 2009
Gillman en bloc sale to proceed
(SINGAPORE) The Court of Appeal yesterday dismissed an appeal by the minority owners of Gillman Heights to stop the collective sale of the property.
CapitaLand, Hotel Properties and two private funds agreed to buy the property in 2007 for $548 million. But a group of minority owners have been fighting the sale since it was approved by the Strata Titles Board (STB) that year.
In a last-ditch attempt to block the sale, the minority owners went to the Court of Appeal to try to overturn a High Court ruling that allowed the sale to go ahead.
The main issue has been the level of consent needed for the sale to go ahead. Currently, 80 per cent consent is needed if a development is more than 10 years old, and 90 per cent consent if it is less than that.
The minority owners argued that because Gillman Heights obtained its certificate of statutory completion only in 2002, it needed 90 per cent consent - which the buyers did not have.
However, the judges ruled yesterday that only 80 per cent is required - which means the sale can go through.
CapitaLand, Hotel Properties and two private funds agreed to buy the property in 2007 for $548 million. But a group of minority owners have been fighting the sale since it was approved by the Strata Titles Board (STB) that year.
In a last-ditch attempt to block the sale, the minority owners went to the Court of Appeal to try to overturn a High Court ruling that allowed the sale to go ahead.
The main issue has been the level of consent needed for the sale to go ahead. Currently, 80 per cent consent is needed if a development is more than 10 years old, and 90 per cent consent if it is less than that.
The minority owners argued that because Gillman Heights obtained its certificate of statutory completion only in 2002, it needed 90 per cent consent - which the buyers did not have.
However, the judges ruled yesterday that only 80 per cent is required - which means the sale can go through.
Global property investment expected to slide further
(EDINBURGH) Global real estate spending on office buildings, stores and apartments may fall another 5.3 per cent this year to US$412 billion as lenders keep a tight rein on credit, property broker Cushman & Wakefield Inc said.
Lack of credit pushed commercial property acquisitions down 59 per cent to US$435 billion last year, the lowest since 2004, New York-based Cushman said.
'Although virtually all global markets had a decline in investment, it's been the mature markets which have suffered most,' David Hutchings, Cushman's London-based head of research for Europe, the Middle East and Africa, said in a statement yesterday. 'Emerging markets now account for 22 per cent of global investment when as recently as 2006 they only accounted for 9 per cent.'
Banks have been reluctant to lend or refinance real estate loans as they try to conserve cash after losses and write-downs totalling US$1.1 trillion. Recessions in the US and some European countries have crimped demand for office and retail space, causing values to drop because landlords cannot command as much in rent.
Commercial property values have fallen most in Europe, where yields rose 111 basis points, compared with an average 31 basis point increase in North America, Cushman said. The yield on property moves inversely to prices. One basis point is 0.01 percentage point.
'Pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income,' Mr Hutchings said. 'Pricing may now be becoming too conservative in some markets.' - Bloomberg
Lack of credit pushed commercial property acquisitions down 59 per cent to US$435 billion last year, the lowest since 2004, New York-based Cushman said.
'Although virtually all global markets had a decline in investment, it's been the mature markets which have suffered most,' David Hutchings, Cushman's London-based head of research for Europe, the Middle East and Africa, said in a statement yesterday. 'Emerging markets now account for 22 per cent of global investment when as recently as 2006 they only accounted for 9 per cent.'
Banks have been reluctant to lend or refinance real estate loans as they try to conserve cash after losses and write-downs totalling US$1.1 trillion. Recessions in the US and some European countries have crimped demand for office and retail space, causing values to drop because landlords cannot command as much in rent.
Commercial property values have fallen most in Europe, where yields rose 111 basis points, compared with an average 31 basis point increase in North America, Cushman said. The yield on property moves inversely to prices. One basis point is 0.01 percentage point.
'Pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income,' Mr Hutchings said. 'Pricing may now be becoming too conservative in some markets.' - Bloomberg
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