Revenge of the "En bloc-er"..?

Property en-bloc sales have been picking up pace over the last few weeks, and so far, there are already eight en-bloc sites offered for sale since January.

Still, analysts say they are not too upbeat on the prospects of collective sales as demand for such sites remain soft.

Minister for National Development Khaw Boon Wan said in his blog last month that collective sales of private properties are receding.

This could be a sign of a more stable property market.

Yet, the emerging trend seemed to suggest a different story.

There have been eight en-bloc launches so far this year, including five sites offered just last week.

That is almost half the number of en-bloc sites offered for sale in the first quarter of last year.

Last year, there were 18 sites put up for collective sale in the first three months of 2011.

Analysts say the sudden surge is because sellers are rushing to sell off their properties on expectations that market sentiment could get worse later this year.

This came after the government introduced more cooling measures such as the Additional Buyer's Stamp Duty last year.

The uncertain economic outlook is another factor that may dampen buyers' sentiment, going forward.

Credo Real Estate managing director Karamjit Singh said: "More importantly, it's that they would need to complete the entire process of buying a site, building it and selling out all the units within five years from the time they enter the contract with the sellers.

"For small en blocs, that's manageable, but for medium to maybe large en blocs onwards, it's a very tall order."

Analysts say pricing of en-bloc sites is key to ensuring a successful deal.

They added that sellers cannot expect huge premiums for their properties amid current market conditions.

International Property Advisor CEO Ku Swee Yong said: "Fewer developers will be keen because if the market trend were downwards, they would be waiting for en-bloc sellers to reduce their asking prices as well, so if the market were to trend down, in fact, we could probably see very few en-bloc transactions today in this year."

The lower pricing has prompted analysts to expect the total value of en-bloc deals to decline this year to around $2 billion.

That is lower compared to the $3 billion worth of en bloc deals clinched last year.

It is a far cry from the $11 billion to $12 billion worth of en-bloc deals recorded in 2007, which is the height of the property market boom.

Analysts added with the higher risks attached to en-bloc deals, developers may go for government land sales instead.

This helps ensure a faster turnaround for developers and more financing support from banks.

Source: Channel News Asia

So are collective sales really back in favour, or is it a case of what the Chinese termed as "Hui Guang Fan Zhao" (i.e. the last few moments where a terminally ill person suddenly seemed in the pink of health, just before his death)...?

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Bumpy road ahead for both private home developers & sellers?

Paranoid or are we really heading towards a "pefect storm"...?

But even if it's the later, we the poor & helpless home buyers/investors can surely expect our Government to bail us out, no...?? (* with Aerosmith's "Dream On" echoing in the background *)

Dream on
Dream on
Dream on
Dream until your dreams come true
Dream on
Dream on
Dream on
Dream until your dreams come true
Dream on
Dream on
Dream on
Dream on
Dream on
Dream on
Dream on

The wife and I really gotta stop watching "The Sing-Off"...

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And speaking of "pent-up demand"...

Reference: "Why property prices will remain high"- The Straits Times Forum, 31st Jan 2012

The wife and I have a slightly different take on the matter:  According to the data provided, some 128,896 private homes were available for sale duirng the period of 1995 to 2010. And since population of citizens and permanent residents during the same period had supposedly expanded by some 216,628 households, the resulting "pent-up demand" for private home ownership should easily have absorbed all private homes available during the period. But reality of the matter is that 39,184 homes remained unsold as at end of last year.

Some may attribute the unsold units to "apartment type mismatch" or "pickiness of home buyers", but perhaps a fairly significant percentage of the increased households between 1995 - 2010 are not really in the market for a new home or prefer to go on rental instead?

So the question really becomes: Is the high property prices seen over the past 2 or so years really due to genuine pent-up demand (i.e. new households that need to buy a home to live in) or is it more a function of greed (i.e. despite the already high prices and cooling measures, there's still money to be made in the property market)?

We could jolly well be wrong of course...

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So is stamp duty rebate legal..?

This article appeared in The Straits Times forum page today.

Reference: "Is stamp duty reimbursement by property developer legal?" - The Straits Times Forum, 30 Jan 2012

While pondering over the questions raised by Samuel, the wife and I also wondered about "Free COE" offered by some car dealers and "GST Rebate" by retailers. Should these practices be deemed illegal as well?

And in all fairness, the stamp duty reimbursement by FEO (as we understand it) is offered not just to foreigners but for all buyers. However, we are unsure if foreigner gets a larger stamp duty rebate so maybe Sanuel knows something that we don't. (* would anyone from/marketing for FEO care to comment? *)

Here's our "2 cents" on the matter: Rebates that allow sellers (irrespective of product) to prop up their prices artifically should be prohibited. Any discount given should be straight off the selling price so that it is transparent to all parties concerned.

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End of the private property "bull run"? (Part 2)

Price declines could be exacerbated by the secondary market, where volumes have slowed down more sharply than in the primary market (that is, developer sales). The number of units (excluding executive condos, or ECs) sold by developers fell 2.4% from 16,292 units in 2010 to 15,904 units in 2011. However, the number of homes sold in the secondary market (resales and subsales combined) slipped 27.6%, from 22,608 in 2010 to 16,357 in 2011.

Developers are wooing buyers with nice showflats and appealing ad pitches. The ease of stretching out progress payments over a few years - compared with having to pay the full price upfront when buying a completed home in the secondary market - is another reason to buy a home directly from a developer.

DTZ's Asia Pacific research head Chua Chor Hoon said: "When secondary volumes come down, eventually it will affect prices. If demand slows down and sellers find it hard to sell after a few months hanging on to their prices, some owners will start to reduce prices. There will be more bargaining power for buyers as well as occupiers as rent start to ease."

URA stats also show that developers completed 12,469 private homes (excluding ECs), up 19.9% from the 10,399 in 2010. This has begun to weigh on residential rents, which are rising at a slower rate.

Savills Singapore expects a "mild correction" of 5% in rentals this year as more new apartments come on stream in the months ahead. It also expects the number of private residential leasing deals (excluding ECs) to hover around 45,000 in 2012, after hitting an all-time high of 45,062 leases last year. The figure for 2010 was 41,573.

"The strong 2011 showing may be attributed to Singapore becoming the preferred location among MNCs for their regional HQs. This has also attracted more senior and top executives to relocate here," said Savills' residential leasing head Patrick Lai.

DTZ's Ms Chua said rental pressure is greater in Core Central Region but this is likely to shift to Outside Central Region in three to four years due to expected completion of projects in suburban areas arising from the ramp-up in Government Land sales since the second half of 2010.

Source: The Business Times

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End of the private property "bull run"? (Part 1)

Prices rises for private homes almost ground to a halt last quarter while rental increases also tapered off. The latest official data has sparked a discussion in property circles on whether the market has peaked.

Most observers say that either the peak has already been touched, or will be touched very soon.

The Urban Redevelopment Authority's benchmark private home price index inched up just 0.2% quarter-on-quarter (q-o-q) in Q4 last year, its ninth consecutive quarter of moderation. For the full year, the index's 5.9% rise was a third of the 17.6% gain registered in 2010. The figures were identical to flash estimates released on Jan 3.

And for the first time since Q3 2009, the increase in URA's landed property sub-index was lower than that for the non-landed property sub-index. The landed sub-index rose just 0.1% q-o-q in Q4 2011, compared with 0.3% for the non-landed sub-index. In fact, for semi-detached houses, the price index actually fell 0.6% q-o-q in Q4.

" In that quarter, prices of semi-detached houses in the east fell 1.6% while those in the north-east softened by 1.3%. This shows that some segments of the landed market are facing stronger price resistance," says Credo Real Estate executive director Ong Teck Hui. " However, landed prices have risen 80% from the market trough in Q2 2009, outperforming the 48% increase for non-landed for the same period."

URA's overall rental index for private homes rose 0.4% q-o-q in Q4, or half the 0.8% rise it had posted in Q3. Full year 2011, the index was up 3.8% - a fraction of the 17.9% gain it had put on in 2010.

The outlook for private home prices look bleak. CBRE predicts a price drop of 5 - 15% this year, with luxury/prime properties taking the bigger hit and mass-market homes being the least affected.

Credo's Mr Ong says: " It's difficult for prices to regain momentum as the recently imposed ABSD (additional buyer's stamp duty) and the economic slowdown could ease demand. Sustained supply and competition among sellers will also keep a lid on prices."

Giving a different take, Savills Singapore research head Alan Cheong said: " We still believe it's difficult to conclude if we've reached an inflexion point, if any at all."

Mr Cheong cites the oligopolistic nature of the Singapore residential property market, with large developers with deep pocket who're likely to resist any price cut. " A cocktail of low interest rates till at least late-2014 (as pledged by the US Federal Reserve) and higher inflation will in due course reignite another round of interest in the residential market as it's deemed a good hedge against inflation," he said.

Credo's Mr Ong paints two scenarios. "In the best-case scenario, if the economic slowdown is milder than expected, then buying sentiment may remain positive, translating to sustained buying activity which will help to keep prices stable amid the build-up in supply. In the worst-case scenario, if there's a recession, we can expect demand to slacken, creating downward pressure on prices."

Lamenting the difficulty in making accurate predictions, Knight Frank chairman Tan Tiong Cheng said: "Each time after the government has announced cooling measures in the past two years, I thought the measures would be sufficient to cool the market. But things have turned out to be otherwise."

He admits the ABSD will have some effect in curbing investment and foreign demand for private homes. " Prices will come down - but to what degree before they go up again? What's the alternative for people with savings? Where should they put their money? If you believe in the longer term, property is as good a bet as any. After all, interest rates are expected to stay low for the next couple of years."

Source: The Business Times

{to be continued}

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Kim Eng Research: Price correction by mid-2012?

The rapid sales at developers' launches in recent weeks will not last, Kim Eng Research said in a report released yesterday, citing the potential supply of units coming on board and wider economic uncertainty.

These factors could lead to a correction in both average selling price and sales volumes by the middle of the year, it said.

Based on the sites sold under the Government Land Sales programme (GLS) that have yet to be launched, the brokerage estimates that the potential supply coming onto the market over the next 12 months stands at 12,248 condominium units, and 2,495 executive condominium units.

Coupled with a "daunting income and employment outlook" due to economic concerns, this could make upgraders more wary come mid-2012.

"That may then lead to the precipitation of mass market prices of up to 20% by end-2013. We also expect primary market sales to be reduced to 11,000 units per annum for 2012 and 2013," said Kim Eng.

In the meantime, home buyers and property developers are back in the market with a vengeance, just one month after the introduction of the additional buyer's stamp duty (ABSD).

Watertown, in Punggol Central, for instance, has sold more than 550 units of its 992-unit mixed-development project since its preview last week. The Hillier at Hillview, too, attracted strong demand, with units transacting at an average of $1,200psf.

"In the near term, demand for attractive suburban projects may continue to be supported by the benign interest rate environment, and our economists are not expecting interest rates to hike up markedly before 2H13," said Kim Eng.

Developers were also active in vying for well-located sites during GLS tenders: in particular, the two most recent tenders at Clementi Avenue 6 and Simon Road attracted eight and 11 bids, respectively.

The top bidder for the 99-year leasehold condominium site at Clementi Avenue 6 was IOI's property unit, Multi Wealth (Singapore), at $554.4psf ppr, while the site at Kovan Road/Simon Road was awarded to a consortium comprising Hoi Hup Realty, Investment Focus and Oriental Worldwide Investments, at $506.6psf ppr.

Industry players said that bids were within the current land price range for good suburban residential sites, and that attractively located sites will probably continue to draw strong participation from developers despite the uncertain market conditions and cooling measures.

Source: The Business Times

Click on link below to read the full report by Kim Eng Research:
http://www.scribd.com/fullscreen/79538140?access_key=key-230d9no2ewn098s8c6iw

The wife and I wonder if the recent hoo-ha about "strong take-up rate" (post ABSD) at selected  launches are boosted by the fact that developers have been rolling out projects in prime suburban locations (i.e. with integrated malls, near to Town Centre and MRT Stations etc).

If we are property developer ourselves (one can always dream!), we will also milk the current market to the last drop with our best sites. These then set a benchmark for other "less attractive" sites that we intend to launch around the area. And even if we have to sell at a bigger discount on the later projects when the market turns for the worse, we would have already made a killing on our earlier "prime" launches... not to mention the super-normal profits that we have accrued over the past years!

And while reading the Kim Eng report, the wife and I cannot help but notice the interest rate projections for this and next year. Some may call it "benign" but we rather see it as a false sense of security with deterimental consequences...

Below is an entry that we have posted earlier this month on the likelihood of mortgage rate increases in 2012 and its implications:
http://sgproptalk.blogspot.com/2012/01/sor-is-soaring.html
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Minister Khaw: En-bloc Fever Receding?

The en-bloc fever seen in the housing market a few years ago appears to be receding and Minister for National Development Khaw Boon Wan said it could be a sign of a more stable property market.

In his latest blog post -- entitled "En-Bloc Fever Receding?" -- made on Saturday, he said this will be a good development for Singapore in the Year of the Dragon.

An en-bloc sale refers to the collective sale of units in a private development, by way of majority consent.

En-bloc was a major buzzword in the housing market six years ago.

But last year, only some 1,400 private housing units were sold en-bloc, a low number compared to the peak in 2007 when 5,860 units were sold.

Mr Khaw said such sales reached "feverish heights" in 2006 and 2007.

Then, a wave of collective sales swept through the market, peaking during the two years, when some 10,200 units were sold.

Mr Khaw said "this added stress to an already hot property market as housing units were removed.

"Displaced owners or tenants had to look for replacement properties to stay and invest in, pushing up property and rental prices."

Mr Khaw added en-bloc sales have their "pluses and minuses".

They can rejuvenate the city by removing old and dilapidated buildings but if done excessively, en-bloc activity can waste resources, if relatively new buildings are prematurely demolished.

One property watcher agrees the en-bloc market has been relatively quiet in the past two years.

He said one reason is a slowdown in the sale of high-end developments, which are typically built on freehold land acquired through en-bloc activity.

Another reason - the strong supply of government land for mass market properties.

SLP International executive director Nicholas Mak said: "Since a lot of the housing demand is in the suburban region, developers are actually earning fairly decent profits through some of these suburban condominiums, (so) land sales in the suburban region have actually taken away some of the developers' demand for land from the en-bloc sale market."

En-bloc sales of apartments usually spell huge windfalls for their owners.

For example, Henry Park Apartments were sold last month, and each apartment owner stands to gain $2.3 to $2.9 million in profit.

But the road to a successful en-bloc deal is often long and difficult.

In some instances, neighbours have turned against one another to get the requisite 80% signatories.

Source:  Channel News Asia

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When then, Bradell View..?

So...only Bradell View remains "unprivatised".

Reference: "Potong Pasir HUDC blocks set to go private" - The Straits Times, 9 Jan 2012

The wife and I had posted an article back in August 2011 on the delimma (dilemma) that Bradell View faces with regard to privatisation - the main obstacle being that the estate is sitting on 2 separate land parcels with different lease expiry dates.

Click below to read our previous post on Bradell View:
http://www.sgproptalk.blogspot.com/2011/08/bradell-view-enbloc-potential-they-say.html

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Private home prices rise despite cooling measures...

Private home prices and rents in Singapore rose in 2011 from the previous year despite cooling measures, said property consulting firm DTZ.

The measures included imposing seller's stamp duty and a reduction in loan-to-value limit.

In its report released on Thursday, DTZ said resale prices of leasehold condominiums in suburban areas increased 8.2% on-year.

This makes it the fastest growing segment among non-landed housing according to a basket of completed condominiums tracked by DTZ.

Fourth quarter flash estimates also showed HDB resale prices went up last year by 10.7%.

But prices of luxury condominiums only saw a 1.0% on-year growth in 2011.

DTZ said the global economic uncertainties dampened demand for luxury condominiums, dragging prices down by 0.7% in the fourth quarter.

"As a larger proportion of purchases in the luxury segment are by foreigners who are now subject to the Additional Buyer's Stamp Duty (ABSD) of 10%, this segment is expected to see a sharper fall in prices than other segments in 2012," said Ms Chua Chor Hoon, head of Asia Pacific Research, DTZ.

Home prices in the prime freehold segment also took a hit, growing only 4.6% on-year, compared to 8.3% in 2010.

This contrasted with a sharp 12.8% on-year increase in resale prices of freehold landed homes in the prime districts. Leasehold landed homes in suburban areas also rose 12.4% last year.

Rents, meanwhile, were also higher in 2011, led by condominium rents which moved up by 8.9% due to demand from foreign professionals with higher housing allowances.

However, rents for luxury condominiums only grew 1.3% on-year.

From January to November, private home sales of 15,393 units in 2011 already outpaced the 15,288 units sold in the same period in 2010.

Volume is expected to fall in December and carry through in 2012 following the property cooling measures.

"Historically, significant price falls have been triggered by external events that affect the economy rather than cooling measures. The projected economic slowdown in 2012 will thus have a more significant impact on buyer sentiment and consequently on demand and prices," said DTZ's Ms Chua.

Overall, DTZ expects a take-up rate of 16,000 for 2012, slightly lower than the 16,292 units sold in 2010.

Source: Channel News Asia

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Rich as I am, it's still unfair to penalize me for wanting to be richer!

The wife and I are definitely NOT referring to ourselves...

The article below appeared in The Straits Times Forum page today.

Reference: Multi-property owner speaks up

Everyone is entitled to their own opinions (including Mr Tan) so here's our two cents: To say that every (rich) Singapore citizen should be entitled to own as many private residential properties as they desire without incurring additional taxes is akin to saying that owners of apartments in private condos should be entitled to as many free parking spaces as the number of cars they own. We have to acknowledge (even if we do not like it) that the later is impossible, especially with new condos these days. So why is it so difficult to accept the former?

Objectively speaking (and no, we do not work for the Government), the additional buyer's stamp duty (ABSD) is hardly putting citizens on equal footing with PRs or foreigners - Singapore citizens are allowed to purchase 2 properties before the ABSD kicks in, whereas PRs only get 1 and ABSD applies to the very first property that a foreigner buys.

So unless a native Singaporean has 3 wives that cannot live harmoniously under one roof (a situation that should warrant special exemption from ABSD, after he is charged with bigamy), we reckon that two private properties should more than satisfy his aspiration of home ownership with an extra for investment. Should he decides to plough more money into the market by investing in more than 2 properties, well... the Government has no obligation to continue supporting those profit aspirations, especially given the sky-rocketing home prices that many (not so rich) Singaporean are struggling to keep up with.

Finally, even the slightest hint that ABSD penalises one's "patriotism" to invest in local property is probably far-fetched. If the state of our property market is anything like those of the US or Ireland, we wonder how many of these "patriots" will continue to invest their monies here rather than abroad...


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Home prices are slated to fall this year. Question is, by how much?

Prices of private homes are poised to fall this year. This was foreshadowed in the official flash estimates for the fourth quarter of last year which showed a slowdown in growth.

Urban Redevelopment Authority's private residential property price index rose a mere 0.2% quarter-on-quarter in Q4 2011, its most anaemic growth in 10 quarters since the index bottomed out in Q2 2009.

From the 15.8% q-o-q increase in Q3 2009, the index has now moderated for nine consecutive quarters, according to CBRE's analysis. The 0.2% q-o-q hike in Q4 was lower than the 1.3% q-o-q rise for Q3 last year. For the whole of 2011, the index rose 5.9% - a marked slowdown from the 17.6% jump in 2010.

Most market watchers say it is a given that prices will go down this year, amid the weaker economic outlook and poorer sentiment, especially after the introduction of the additional buyer's stamp duty (ABSD) last month.

"Developers know they need to cut prices but the difficulty is in gauging how much. If they don't cut enough, buyers are not going to act. But if they give too much, there's always a fear that buyers will expect a bit more. What you want to do is to give enough for the fence sitters to come back into the market. Despite the weaker economic outlook, there's still a lot of cash and liquidity in the market," says Knight Frank chairman Tan Tiong Cheng.

DTZ's head of Asia Pacific research Chua Chor Hoon predicts a 10 - 15% drop in URA's overall private home price index in 2012 citing the ABSD which took effect on Dec 8 and the economic slowdown. The luxury housing segment, where there are more foreign buyers, is expected to take the biggest hit given the top ABSD rate of 10% levied on their residential property purchases.

CBRE executive director Li Hiaw Ho expects overall demand for new private homes to be trimmed by 15 - 20% this year.

"Price of luxury/prime condos may fall by 10 - 15% in 2012, and the mass-market condos, by 5 - 10%," he added.

URA's flash estimates show that the price index for non-landed private homes in Outside Central Region (OCR) - where mass-market condo projects are located - was the star performer, though it has also dimmed somewhat. It rose 0.6% q-o-q in Q4 last year, a slower rise than the 2.1% increase in Q3 2011. The full-year 2011 increase of 7.7% was also slower than the 15% climb in 2010.

Prices of non-landed private homes in OCR increased the fastest as demand was supported by HDB upgraders as well as investors, notes DTZ's Ms Chua.

Credo Real Estate executive director Ong Teck Hui notes: "The strong run in OCR market has led to their current (Q4 2011) prices being 28.3% above their pre-financial crisis peak in 2008, while prices in Core Central Region (CCR) and Rest of Central Region (RCR) are only 6% and 15.9% higher than their respective 2008 peaks."

The price index for non-landed homes in CCR - which includes the traditional prime districts, financial district and Sentosa Cove - appreciated 0.5% q-o-q in Q4, following a 0.7% gain in Q3. The full-year 2011 increase was 4%, significantly lower than the 14.2% rise in 2010. The index for RCR for Q4 was unchanged from the preceding quarter, taking the full-year appreciation to 4.4%, after rising 17.6% in 2010.

Source: The Business Times

Most market analysts have said that prices for mass-market private homes will only fall by between 5 to 10% this year. However, the wife and I will go on a limb here by saying that we think mass-market home prices will drop by more than 10%. This is because:

1. More mass-market projects are expected to be launched this year, adding to the rather substantial inventory of launched but unsold units in the market.

2. The furious pace in which the Government is releasing land parcels through its Government Land Sales (GLS) scheme - most of these are slated for mass-market homes or ECs.

3. The new additional buyer's stamp duty (ABSD) rule stipulating that all land parcels bought by developers have to be built and fully sold within 5 years - this is likely to put more downward pressure on home prices.

4. The ramping of supply of HDB flats (especially BTO) and easing of HDB flat purchase criteria (income ceiling increase, higher allocation for second-time buyers etc) may mean that some demand for mass-market private homes will be siphoned off to HDB flats.

Only time will tell if our observations are correct or just a load of bull...

But what do you think?

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Will the US$ Sibor rates affect home loan rates?

As reported in The Business Times today, the US-Dollar Sibor rates are at 52-week high.

Two questions come to mind:

1. Does this mean that the local Sibor-pegged loan rates will increase in tandem with the US$ Sibor rates increase?

2. Will we soon see a return of SOR-pegged housing loans, since we understand that the Singapore-US$ swap rates are set to increase?

Maybe some of you financial/banking folks out there can shed some light on the matter...

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Renewed interests in pre-war flats at Tiong Bahru...

A wave of transformation is sweeping through the once-sleepy Tiong Bahru estate.

Thanks to a new breed of indie retail shops and coffee houses, the 20 blocks of pre-war conserved flats have attracted renewed interest from home buyers and this has pushed up home prices in the area by about 50% over the last two years.

Located near Tiong Bahru Market and Food Centre, the area bounded by Seng Poh, Outram and Tiong Poh Roads was once an old estate.

The 20 blocks of pre-war flats were built in the 1930s and awarded conservation status in 2003.

In the past year, the estate has been gaining attention for the rising number of independent shops and coffee houses that has sunk roots there.

One of the shops specialising in Bhutanese art and home decor opened for business in March this year.

Tan Tiong Pin, owner of Bhutan Shop, said: "This was still considered an old estate two years ago. Many elderly folks lived here. But with new condominiums built, many expatriates and yuppies now live here."

A couple who moved into one of the Tiong Bahru pre-war apartments nine years ago fell in love with the estate.

Three months ago, they opened a shop selling curios and vintage items, which are attracting tourists and residents from other estates.

Terence Yeung, owner of Flea & Trees, said: "There's a charm in this space. When people come to this area, they find it's like an oasis in a big city, right next to the heart of the city and that's very charming."

With new life breathed into Tiong Bahru, prices of the pre-war flats have also gone up.

Property agents say conserved flats in Singapore are rare.

With the attractive amenities and shops in Tiong Bahru, agents say prices for the pre-war flats have jumped.
A 1,000sqft pre-war flat, for example, is now going for close to a million Singapore dollars.

Source: Channel News Asia

Would you pay a million bucks for a 1,000sqft "walk-up" with about 55 years left on its 99-year lease? 

Click below to access the URA web-page on the Tiong Bahru Conservation Area:
http://www.ura.gov.sg/conservation/tbahru.htm

Click below to access an informative blog-site that is dedicated to the Tiong Bahru Estate:
http://tiongbahruestate.blogspot.com/
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More EC, you see...

More land will be released for the development of executive condominiums (ECs) in 2012.

The Ministry of National Development (MND) says that it is prepared to supply land sites for 5,000 EC units next year.

This is part of the government's move to help more higher income Singaporeans own private housing by expanding the EC market.

The government has taken an earlier step by raising the monthly income ceiling for the purchases of new ECs from $10,000 to $12,000 in August this year.

Minister of State for National Development and Manpower Tan Chuan-Jin said that the increased income ceiling has benefited around 220 households who have booked their ECs since the widening of the scheme.

Mr Tan was speaking at the Real Estate Developers' Association of Singapore (REDAS) anniversary dinner.

The EC scheme was introduced in 1995 to provide a more affordable private housing option for Singaporeans.

Since the introduction of the scheme, 14,600 EC units have been launched by developers and 3,000 units are coming on-stream.

Still, Mr Tan pointed out that the majority of Singaporeans will continue to live in public housing.

He reiterated that the government remains committed to help first-time owners and newlyweds purchase their own homes.

But Mr Tan said that from next year, the government will begin to pay more attention to helping HDB second-timers.

On the recent move to introduce additional buyers' stamp duty, Mr Tan said that it is "natural and not unexpected" for the announcement to attract much public discussion with diverse views.

He added that the volatile equity markets and uncertainty in Europe may cause more foreign funds to be attracted to Singapore's property market.

The latest move is targeted to moderate such investment demand to avoid the need for a major correction in the future.

Mr Tan said that developers may not welcome such a move but he seeks their understanding for the good of the industry.

Source: Channel News Asia

Accelerated construction of public housing, increased number of Government Land Sales (GLS) sites and now more land release for development of ECs... The wife and I really hope that there will be enough demand over the next 3 - 5 years for all these new supply PLUS the substantial inventory of unsold homes that are already in the market.
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2011 private property demand by districts: What's hot and not?

What's hot

Bedok
The District 16 town of Bedok is the most popular pick this year, said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

So far this year, Bedok has recorded 3,848 caveats for both new and resale transactions. More than 100 units were sold at the 577-unit Archipelago project during its preview weekend earlier this month, at an average of $1,000psf.

Bedok Residences stirred up controversy over its queuing system last month, ultimately selling more than 470 units out of the project's 583 homes at a $1,359psf median price.

"Bedok benefits from a big pool of people who live in the east. This means the pool of potential buyers and sellers is also bigger than in other areas. Most of these people also tend to be reluctant to move outside the east and tend to seek out homes within the eastern neighbourhoods," said Mr Mak.

Punggol
The rapid redevelopment of the Punggol area has boosted the popularity of this fledgling waterfront new town.

According to SLP International, this has helped boost the ranking of District 19, which includes Hougang, Punggol and Sengkang, to the No. 1 spot for new home sales, with a total of 3,102 deals so far this year.

The neighbourhood recently entered a new stage of development, with more than 5,000 new private homes slated for completion over the next few years. Many buyers will be drawn by an attractive new waterway and plans for a new mall near the MRT station.

Still, some buyers have tended to dismiss the neighbourhood, saying it does not measure up to the amenities and infrastructure boasted by mature towns like Toa Payoh and Tampines.

But others have been more open to the area's development potential, encouraged by the Government's plam to establish Punggol as a waterfront town. In the first nine months of this year, close to 1,900 uncompleted units were launched for sale in District 19.

Projects such as A Treasure Trove and The Luxurie proved a hit, with each development achieving take-up rates of more than 70%.

These projects have helped to boost overall sales activity in Punggol by 9% year-on-year, and lifted new home sales in the area by 40%, according to date compiled by Jones Lang LaSalle (JLL).

Yishun and Sembawang
Yishun and Sembawang have also done well, riding on healthy demand for private homes with innovative designs, said Mr Ong Kah Seng, director of property research firm R'ST Research.

So far this year, 1,184 new homes have been sold in District 27, which encompasses the Admiralty, Sembawang and Yishun areas. Several notable projects such as Miltonia Residences and Canberra Residences have contributed to the boost in new home sales.

Still, Mr Ong added that such far-flung areas face some hurdles as they are not so well-located and do not have significant development potential.

This means some buyers may sideline these areas in favour of neighbourhoods like Jurong East and Paya Lebar which have better fundamentals like strategic location and long-term development goals.

District 15
Coming in third in new homes sales ranking is District 15, with nearly 1,149 deals closed this year. Made up of neighbourhoods such as Katong, Joo Chiat and Marine Parade, this location has once again proved to be popular among home buyers.

The area has also done well in overall home sales. According to data compiled by Savills, District 15 chalked up 11% of the total caveats lodged this year, second to the 12% garnered by District 19.

Ms Chia Siew Chuin, Colliers International's head of research, said the location's popularity stems from its proximity to the city, airport and recreational and leisure facilities such as East Coast Park.

"(Districts 15 and 14) also host a wide array of supporting amenities... as well as a large selection of food and beverage haunts," said Ms Chia.

What's not

District 9 and 11
Despite being among Singapore's most prestigious postal codes, Districts 9 and 11 have achieved less than stellar sales this year.

The two areas include high-end luxury homes in the Chancery, Bukit Timah, Orchard, Oxley and Cairnhill neighbourhoods.

It has been a lacklustre year for the high-end and luxury home segment. The poor transaction volumes in these two particular districts have dragged them to the bottom five postal districts for this year, said Dr Chua Yang Liang, head of research at JLL. Year-on-year sales in District 11 slumped 53% while those in District 9 tumbled 47%.

Dr Chua said limited new supply in the prime market is to blame: "People looked for better value options with a smaller overall quantum as the economy stuttered and buyers became more budget conscious."

"(This benefited) the mass market as the more affordable properties on offer drew in the buyers," he said, adding that foreign buyers have also been switching their location preference.

Promising

Marymount and Thomson
Interest in this District 20 neighbourhood has been building throughout the year, partly due to the opening of the remaining sections of the MRT network's Circle Line, which now links the area to Holland Village and Bouna Vista.

"(The neighbourhood) is one of the few low-rise estates available which is centrally-located, and perhaps still considered affordable for the average to above-average income buyer," said Mr Ong.

A 603sqft unit at Tresalveo, a condominium located opposite Marymount MRT station, sold last month for $748,000 or $1,241psf.

Mr Ong added that the smaller but more strategically located neighbourhood gives off an exclusive, quaint vibe, which could differentiate the area from the rest of the housing supply that will come on-stream in the next few months.

Set to underperform

Districts 9, 10, 11
Prime areas popular among foreign buyers are likely to be the worse performers next year, said JLL's Dr Chua. He explained that these areas will experience a drop in transaction volumes involving foreign buyers as they feel the pinch from the new 10% stamp duty.

Other analysts said the market for high-end properties had been slow even before the measures and this trend is set to continue, with prices and sale volumes remaining in the doldrums.

The changing profile of foreign buyers is partially to blame, said Mr Mak.

"More of them are from China and are turning to suburban residential projects, this compared to earlier batches of buyers like Europeans, Indonesians and Australians who tend to favour snapping up homes in the prime districts."

Next year will no doubt be a challenging one for the private residential market as it adapts to the new cooling measures and the economic slowdown.

Segments within the residential market will become more distinct, say analysts, with landed property to be a more resilient sector due to its limited supply and lower foreign participation.

For now, both buyers and developers are playing a waiting game, said property consultants, and a clearer picture of what tone the market will take will probably emerge only later next year.

Source: The Straits Times

Our two-cents worth on the subject: Unless a new world order takes over the local private property market scene next year, we reckon apartments in Districts 9, 10 and 11 will generally hold their values better than those in the other districts. This is especially when a major price correction does occur.

As such, these "prime" districts will continue to generate decent demands (albeit lower expected transaction volumes due to the new cooling measures that may discourage some foreign buyings).

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Sharp fall in number of properties going under the hammer

The Business Times has reported that value of properties sold at auction this year has plunged to a three-year low of $95.62 million.

This is due mainly to a chill in secondary-market sales of residential properties following higher seller's stamp duty rates introduced in January, says Colliers International.

It (Colliers) predicts a further decline with the figure for next year potentially coming in close to the $83.7 million low plumbed in 2008, during the global financial crisis.

In the past year, residential properties made up more than half of total auction sales value. This year, their share slipped to just 28.4%, compared with 51.3% in 2010 and 52.5% in 2009. Investors have diverted their attention to non-residential properties due to the cooling measures aimed at the residential sector.

Source: The Business Times

Seems like the hammer is more useful for breaking SMRT trains' glass windows (caveat: only when the train breaks down inside the tunnel and the ventilation fans start shutting down, although SMRT has strongly advised agianst doing so) than for auctioning properties these days...

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Discounts galore from developers post-ABSD...

Developers are already offering packages on homes to offset the stiff new stamp duty measures that came into effect only two days ago.

Far East Organization is offering a 5% relief package to affected buyers at all of its already-launched projects.

It will reimburse buyers 3% of the unit price to offset the new stamp duty. Buyers will also get a furniture voucher worth 2% of the flat price.

They will get the voucher only after putting down a 30% deposit if the project has not been completed.

The package applies across the board to Singaporeans, permanent residents (PRs) and foreigners, so foreigners will still be worse off after the new measures.

Far East's already-launched projects have another discount that differs between properties.

Prices of units at its Seastrand project in Pasir Ris Drive 3 are discounted by up to14%, making the cheapest unit an estimated $937psf. But with only three- and four-bedroom units left and the smallest three-bedder at 1,109sqft, the minimum purchase now would cost about $1.04 million before stamp duty.

With an additional 10% buyer's stamp duty for foreigners of $104,000 now, Far East's relief package would help a buyer save almost $52,000 - about $30,000 initially and the rest subsequently.

However, a Far East agent said that unofficially the discount rate could go up to 16% of the original unit price. This means buyers can negotiate a 21% discount off the original total price by combining the uniform 5% cut with the discount that applies to the Seastrand.

This would more than offset the extra stamp duty incurred, although it is believed that the discount applies on a case-by-case basis.

Far East has not announced a dateline for its relief package but the agent said it could last until the end of this month.

The Seastrand's temporary occupation permit (TOP) is expected on Dec 31, 2016.

Wing Tai's luxury Helios Residences at Cairnhill Circle is also offering a relief package, said a company sales agent.

Buyers will get a cash rebate of up to 2% of the total price upon payment. That goes up to 2.5% at the start of the second year of occupation and 3% at the start of the third year.

They will not be allowed to sell their unit for three years following purchase.

The smaller units can cost around $4.2 million, said the agent, adding that the relief package is meant to help "lessen the burden" on customers.

The agent said the deal is only applicable to Helios Residences, as its target market is foreigners, who are more likely to be affected by the stamp duty imposition, but did not specify a deadline. Helios Residences obtained its TOP on Jan 28.

Sales agents at Keppel Land, UOL and CapitaLand did not know of any discount packages being offered.

Real estate agents at DWG, DTZ and Huttons also said their firms were not offering discount packages, but some said they might be able to negotiate an additional 1% cash rebate.

Source: The Straits Times

Given the partial/full absorption of ABSD by developers through the additional discounts that they are giving on their projects, the latest property measure is looking increasingly like a transfer of wealth from developers to our Government...
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Enbloc News: Henry Park Apartments sold for $175.9 million!

A collective sale site at Henry Park located off Holland Road has been sold to Kentish View Pte Ltd, a unit of Far East Organization, for $175.888 million, making it the largest en bloc deal by value this year.

Its marketing agent Credo Real Estate says it has been a closely contested exercise that attracted five submissions for the prime District 10 apartment site.

The 999-year leasehold site with a land area of nearly 100,000sqft comprises 48 apartments and 16 shop units.

If the sale is approved by the Strata Titles Board, each apartment owner stands to pocket gross proceeds of between $2.3 million and $2.9 million, while the shop owner could receive between $3.2 million and $4.7million each.

Credo says this would be the largest en bloc sale deal by value out of the 47 known deals done this year, the average of which has been $60 million.

The Henry Park sale surpasses the collective deal for Hong Leong Garden Shopping Centre which fetched $171 million in September.

Credo says the sale price for Henry Park Apartments translates to a land rate of about $1,258 psf ppr.
It adds that the developer has also made an application to purchase an adjoining State land parcel of nearly 1,400sqft.

If the application is accepted, Credo says taking the same sales price, it will translate to a land rate of about $1,246 psf ppr.

Source: Channel News Asia

Well, the wife and I did say that this one has potential to go through successfully before the end of the year. It'll be interesting to see if Far East can build and sell out the new development on this site within the stipulated 5-year period...

Click below to read our previous post on the Henry Park Apartments collective sale:
http://sgproptalk.blogspot.com/2011/11/more-on-henry-park-apartments-en-bloc.html


Update  (10 December 2011):
The Straits Times today reported that the tender for Henry Park Apartments closed on Dec 1, with the sale concluded on Wednesday, just avoiding the new cooling measures which kicked in on Thursday. The new rules require developers to build and sell all the units in a new project within five years of buying the site.

The 99,800sqft site is zoned residential with commercial at the first storey in the 2008 masterplan. The authorities have allowed a gross plot ratio of up to 1.4 and a maxium building height of four storeys.

The wife and I stand corrected on our earlier comments.
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ABSD: Do you know that it applies to Developers too?

Reference: "New terms may hit large collective sales" - The Business Times

To put things in perspective, if a developer buys a residential site for $200 million and is unable to meet the five-year limit to complete building the new residential project on the site and selling all the units, it will have to pay an additional $20 million in ABSD.

And it looks like a much longer wait for "en-bloc aspirants" such as Pine Grove, Laguna Park, Pearlbank Apartments etc...

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