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.

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.

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.

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.

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.

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.

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.

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.

'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.

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

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

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

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

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.

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