I REFER to the report, ‘Uproar over new rental flats going up’ (Feb 9).
People who raise this issue should be reminded that they too live in public housing.
Do not pigeonhole people in the lower-income groups as loud and aggressive and complain that living near these residents will lower the value of your property.
Even owners of multimillion- dollar property have no say in developments coming up in their neighbourhood.
Christine Ng (Madam)
Source : Straits Times – 22 Feb 2010
Prices of private property in the resale market could still head north despite the Government’s measures to curb speculation, said industry players.
The reason: People who held back hoping that prices would fall in the recession last year, but are now keen to enter, given the rebound in the market.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said that based on caveats for last month, the resale market is showing strong volume.
Statistics from the Urban Redevelopment Authority showed there were 3,353 resale transactions in the fourth quarter last year, compared to 5,798 in the third quarter and 4,164 in the second.
Mr Mak added: ‘With the economy picking up and greater job stability, people are buying as their sentiment has turned positive and there are expectations the market could pick up.’
Said ERA agent David Lim: ‘A lot of people reckon we are still probably at the foot of the mountain, and that they should go in now.’
His average monthly transactions for private resale properties have gone up, from three or four last October to five or six in December and January.
Buyers now face tighter rules to curb speculation.
Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, not 90 per cent.
Anyone who sells a property within a year of buying it must now foot stamp duty of around 3 per cent.
Still, those with deep pockets can still speculate but they may be less active, said ERA agent Eugene Ow.
Mr Lim forsees another peak this year in terms of prices. He said: ‘A large part of the investors with real money can still go in despite these measures.’
Even if they need loans, they might not need the full 90 per cent in the first place anyway, he added.
Commenting on the new measures, Knight Frank property consultant Peter Ow said mid- to long-term buyers with a horizon of more than two to three years would not be discouraged.
Also, the high-end and landed property segments should not be badly hit as people usually buy these for occupation, not speculation.
Mr Peter Ow added: ‘The upgrader market will be the one affected; these are the people moving up from HDB flats to condominiums. They’re the ones who borrow to the maximum of 90 per cent.’
Mr Steven Tan, executive director of property firm OrangeTee, said most banks have already been discouraging clients from taking up 90 per cent loans.
He said: ‘After the financial crisis, most banks tightened credit policies and put a much higher interest rate on those borrowing 90 per cent.
‘So buyers are prepared to borrow less.’
Another reason for prices possibly going up? The fear that more curbs will kick in.
Mr Mak noted the Government has yet to apply all the meaures at its disposal to cool the market.
‘They could put in capital gains tax, or extend stamp duty from one year to maybe two years,’ he said.
Source : Sunday Times – 21 Feb 2010
Rising too much and too fast? Not any more, it seems.
The prices of new private homes are expected to stabilise – and remain firm – this year, said analysts.
This is thanks to new measures which kicked in yesterday to cool the property market.
The two rules: Lending institutions can lend only up to 80 per cent of the value of the property, not 90 per cent; and a new stamp duty of around 3 per cent for those who sell the property within a year of buying it.
These moves could dampen sentiment temporarily as buyers pause and take stock, said Credo Real Estate managing director Karamjit Singh.
Ms Tay Huey Ying, director of research and advisory at real estate consultancy Colliers International, expects the measures to curb the buying frenzy.
Prices will stabilise instead of soaring like they did in the third quarter of last year, she added.
Then, private home prices spiked 15.8 per cent (from the second quarter) and 7.4 per cent in the fourth quarter (from the previous one), according to the Urban Redevelopment Authority.
Mr Singh expects the new measures to affect only a small proportion of buyers – those with a ’short-term view of their investments’.
‘On the whole, demand for private homes, especially at the low end, is still expected to remain strong. Hence, prices may continue to firm up this year,’ he added.
Similarly, Ms Tay said prices are likely to ’stand firm’.
The new financing rules are not expected to hurt genuine buyers, said analysts, because banks were conservative and not prone to doling out loans of 90 per cent anyway.
But some Housing Board upgraders may feel the pinch.
Dennis Wee Group’s associate director Elvin Tan said two out of 10 clients were getting loans close to the maximum allowed before – 90 per cent.
‘Now that they have to fork out at least 20 per cent of the price of a private property, they will suddenly feel strapped for cash,’ he said.
Commenting on the new stamp duty for sellers, analysts said fly-by-night speculators will be weeded out.
They said these speculators – who tend to ‘flip’ a property less than a year after buying it for quick profits – make up 10 per cent to 20 per cent of all new private home buyers today.
The latest move by the Government came swiftly after last month’s sharp rebound in new private home sales.
Developers sold 1,476 units, triple the 481 sold in December last year.
‘Although speculative activity has not reached a level deemed excessive, there is a likelihood that its volume may rise in tandem with improved confidence and economic conditions,’ Ms Tay said.
With the new measures in place, she expects private home prices to rise moderately by 10 per cent to 12 per cent this year.
What buyers say
The Sunday Times visited 10 showflats, including The Shore Residences in Katong, Altez in Tanjong Pagar and Meadows@Peirce in Upper Thomson, yesterday.
Mr Nick Chong, 43
Chief operating officer
‘The stamp duty will have a larger impact on speculators, but if the market has a good growth rate, they’ll do well regardless of the new rules. The rules will probably affect the middle-income speculators, those who have to borrow money to speculate, and not the richer ones.’
Mr William Shie, early 40s
Sales manager
‘It won’t affect people who need a house. I actually welcome the new ruling; the lower the maximum possible loan, the better, because it chases away speculators.’
Ms Doris Teo, 59
Teacher
‘I don’t want to borrow too much from the bank, and I definitely wouldn’t get a loan of as much as 80 per cent. The news just came out so I’m still unsure of how it would affect me. But it’s possible that I might have to find a flat in a cheaper location.’
Ms Elaine Lek, 31
HR executive
‘If I see a place and have a good feeling about it, even with the new bank limit, I’ll still figure out a way to buy the unit.’
Mr Sean Toh, 38
IT professional
‘I think the new measures will affect only those who are looking for condos as an investment; it won’t affect home buyers like me. I will be selling my condo in Yishun and we will use the money from that to buy a new one.’
Source : Sunday Times – 21 Feb 2010
Buyers with the financial means to hold a property will not be affected by the two new measures that came into effect yesterday, Senior Minister of State for National Development Grace Fu said.
She emphasised that the Government had acted to prevent a speculative bubble from forming.
In closely monitoring the property situation, it did not just look at prices, she said yesterday.
It also took into account a comprehensive range of indicators, including the volume of sub-sales and the ‘churn’ – also known as ‘flipping’ – in the market.
Ms Fu’s comments – made at the sidelines of a community event – came a day after the new measures were announced.
From yesterday, any property sold within a year of its purchase will attract stamp duty of around 3 per cent. This is on top of the stamp duty the prospective seller had earlier paid on the purchase.
Home buyers will also have to fork out more of their own money to buy property. Lending institutions will now be allowed to lend only up to 80 per cent of the value of the property, instead of 90 per cent.
Ms Fu said rising property prices were not the only reason that the Government decided to step in.
‘We don’t really comment on property prices. But we look at a whole host of indicators…So it’s not just about pricing,’ she said.
Asked why the new rules had come hard on the heels of last September’s market-cooling measures, Ms Fu said the Government had been monitoring the market very closely and felt ‘it was the right thing to do for the moment’.
‘We would like to, in a way, make sure that there’s no bubble formation and can do it before the bubble is being formed. We think it’s a suitable time,’ she said.
Emphasising that the aim was to deter speculative behaviour, she said: ‘We want our investors to be on a more solid ground when they invest in property.
‘It should not deter genuine buyers who have the financial resources to hold a property. So, to an extent, we think it’ll help maintain a healthy state of the market.’
Last September, the Government removed the interest absorption scheme and interest-only housing loans – both of which removed or reduced regular instalment payments for uncompleted properties. It had also announced the resumption of confirmed-list land sales in the first half of this year.
Asked if any financing restrictions on Housing Board loans were in the pipeline, Ms Fu said there were already stringent credit checks to curb speculation in public housing.
‘Plus the fact that HDB buyers who come to us for first-time loans, they are likely to live in the house that they buy,’ she said.
She added that the new rules were not meant to curb the rising cash-over-valuation (COV) sums.
‘COV happens when someone is prepared to pay a price above the valuation, so as long as a person has the means, then he will be willing to pay for the flat if he thinks it’s worth it.’
Meanwhile, home buyers yesterday continued to throng showflats across the island despite the new measures that had kicked in.
Those whom The Sunday Times spoke to said the new rules will not affect them.
Sales manager William Shie, who is in his 40s, welcomed the new rules.
Mr Shie, who was at the 408-unit The Shore Residences showflat in Katong, said: ‘It won’t affect people like me who need a house. I actually welcome the new ruling. The lower the maximum possible loan, the better, because it chases away speculators.’
Source : Sunday Times – 21 Feb 2010
Sub-sales of non-landed homes fell to a three-year low last year, with the proportion at 14 per cent of total non-landed sales, said the latest report from property consultancy DTZ.
This figure is below the 16 per cent in 2008 and 15 per cent in 2007, but much higher than the 2 per cent to 11 per cent registered between 1998 and 2006.
A sub-sale takes place when a buyer buys a new apartment, then resells it before it is built. These deals are usually used as an indicator of speculative activity in the property market.
There were some concerns about the rise in speculative buying in the middle of last year when prices were rising.
In mid-September, the Government announced cooling measures which appeared to have tempered speculative interest, said Colliers International director of research and advisory Tay Huey Ying.
New measures announced on Friday could further dampen interest a little.
The Government said it would levy a stamp duty on sellers of private homes if they were to sell the homes within a year of purchase on or after Feb 20 this year.
It also lowered the loan-to-value limit to 80 per cent for all housing loans provided by financial institutions, from 90 per cent previously.
The Government introduced these measures to ‘temper sentiments and pre-empt a property bubble from forming’.
The moves come despite the comparatively lower speculative activity now.
In 1995, sub-sales accounted for a hefty 29 per cent of total non-landed sales. This figure was at 23 per cent in 1996. Last year, median sub-sale prices rose by 24 per cent.
DTZ noted that the median sub-sale price of non-landed homes rose by 3.8 per cent to $1,090 per sq ft in the fourth quarter of last year.
In the last three months of last year, Casa Merah in Tanah Merah saw the highest number of sub-sale transactions, followed by Ferraria Park in Changi.
Median sub-sale prices at Casa Merah rose to $800 psf in the fourth quarter, up from $770 psf in the third quarter and $671 psf at the end of 2008. Both projects were granted Temporary Occupation Permits in the third quarter of last year, DTZ said.
Newly completed projects or those nearing completion usually attract a higher level of sub-sales as the new buyer can move in or rent it out quickly, consultants said.
Knight Frank managing director for residential services Peter Ow thinks sub-sales as a proportion of total home sales may rise this year as many projects will be completed this year.
Other experts think that with the new measures, sub-sale numbers may hold steady this year.
In any case, consultants generally do not expect sub-sales to rise significantly this year. Said Ms Tay: ‘Last year, many people bought mass market properties. But, as mass market prices may not rise substantially this year, there may not be many gains to be made in the sub-sale market.’
High-end prices are expected to rise more than mass market prices this year, but runaway prices are unlikely, said DTZ, given concerns such as credit tightening in China.
‘Those who want to flip can do so only when the market is rising very fast,’ said its head of South-east Asia research, Ms Chua Chor Hoon.
‘The new measures won’t scare away the speculators. But they will make them think very carefully about flipping as the Government could introduce more measures if needed,’ said Ngee Ann Polytechnic lecturer Nicholas Mak.
Source : Sunday Times – 21 Feb 2010
As last year drew to an end, so, finally, did my patience with my 786 sq ft ‘dollhouse’ apartment.
The single bathroom was just too small, the pretty-but-useless balcony too big, and the desire to move too overwhelming to ignore any longer.
And so began the arduous search for a new ‘Goldilocks’ house that was just right.
It didn’t take long for it to, ahem, hit home that that was a fairy tale. At least, for those of us who don’t rule a kingdom full of geese that lay golden eggs.
While a peasant like me can’t be much of a chooser, it soon became evident that there were still dozens of choices to be made in finding a new home.
That may sound like it’s stating the obvious, but it wasn’t all that apparent to my husband and me when we bought our first home two years ago, as a starry-eyed, idealistic young couple.
We simply set a budget, found a location we liked, and happily mapped out our future life based on a floor plan.
Now we knew better. We had Preferences. Priorities. Prejudices.
And every single one of them, as it turned out, was a reflection on the kind of adults we were becoming.
As a home-buyer, your self-definition process starts from the very minute you choose a category to peruse in the classified ads.
Young couples who buy Housing Board flats, for instance, are on the guaranteed track to riches and wealth one day.
Not just because these are the cheapest accommodations available, allowing them to invest the rest of their money elsewhere, but also because Minister Mentor Lee Kuan Yew has publicly decreed that flat prices will keep rising as long as the economy grows.
Those who buy HDB flats and then rent them out and continue living at home with their parents will be even richer – because they clearly know their way around the rules.
As for first-time home-seekers who manage to afford private property in Singapore, a few conclusions can be drawn about them too.
They can safely be assumed to already own a kingdom, be on the way to inheriting one, or be working feverishly to usurp the nearest viable throne – or their boss’ seat.
Then there’s the tenure test.
Young buyers who insist on freehold condos and refuse to consider anything else tend to turn into adults who always take the safe, conservative path in life.
They will minimise risk, equate price with quality, and pat themselves on the back for their ‘good investments’.
Those who opt for leasehold homes tell themselves they won’t be around for another 99 years anyway. They will forever live in the moment, on the edge, and under constant stress from the big ticking time bomb they imagine is built into their leasehold walls.
And the select few who snap up really old apartments with less than 30 years left on the lease are the true daredevils of our society. They are likely to be firemen, deep-sea divers and opposition politicians.
As we discovered with our first home, size is also, well, a huge factor in house hunting.
Anyone who thinks he can live comfortably in a few hundred square feet usually grew up with even less space – or just simply does not have any imagination.
At the other extreme, young adults who buy generously sized first homes are probably not very well-acquainted with the concept of housework.
Of course, there is a whole variety of other housing judgments to be made, in more than one sense of the word.
People who buy flats on high floors believe in obtaining only the best in life; those who stay on the second floor are the epitome of cost-conscious pragmatism.
But as every Singaporean knows, the most important part of choosing a home is deciding on its location.
This is not just a matter of rental profitability or resale value. It’s also a question of your fundamental, lifelong happiness.
According to Cornell economist Robert Frank, while people adjust quickly to a big house and start taking the space for granted, they never get used to a long and tedious commute to work.
The heavy traffic – whether vehicle or human – that they suffer through every day takes the same toll on their mood by the time they reach their destination, no matter how many times they have done it before. In fact, their irritation only gets worse with time.
And so the happiest people are not necessarily those who stay in the biggest houses, but those who live closest to where they work.
With that in mind, my husband and I set a budget, found a location we liked, made sure it was big enough for all our junk, and are currently happily mapping out our renovation plans.
Home may be where the heart is but, at least, now we have plenty of space for all our other organs as well.
Source : Sunday Times – 21 Feb 2010
Going green has its privileges for drivers of eco-friendly wheels, such as hybrid cars, who get to use reserved parking spaces at some malls.
At least two malls here – 313@Somerset in Orchard Road and City Square Mall in Kitchener Road – have such reserved spots, even if these tend to be mostly empty. The two malls’ spokesmen said they want to give drivers of eco-friendly cars a pat on the back.
Hybrid cars are so called because they have a petrol engine as well as an electric one. They pollute less but cost more than petrol-driven cars.
There are only 2,600 hybrid cars (the Toyota Prius, Honda Civic Hybrid and Lexus RX400h models) here, compared to 571,600 petrol-driven cars.
All-electric cars are also privileged at the two malls but there is only one such vehicle here as of last year, the Land Transport Authority’s website showed.
A spokesman for property developer City Developments Ltd (CDL), which manages City Square Mall, said: ‘We encourage shoppers to choose eco- friendly vehicles to save the environment.’
City Square Mall’s 10 hybrid- only parking spots are painted green and located close to lift lobbies. There are also four spots (painted light blue) for electric cars.
Over at Land Lease’s 313@Somerset, there are four ‘green’ parking spots. Drivers of hybrid and electric cars can use them. So can drivers of bi-fuel cars which can run on both petrol and compressed natural gas.
Honda Civic Hybrid driver Jannie Lim, 52, welcomes such parking spots. ‘It’s like icing on the cake,’ said the manager of a local multimedia firm. She said she has saved at least 30 per cent on her petrol expenses since buying the car three years ago.
Some other malls contacted remained non-committal.
But a spokesman for CapitaMalls Asia, one of Asia’s largest mall operators, told The Sunday Times it might take the cue from the two malls.
‘We are currently looking into the possibility of providing special spots for hybrid and electric cars,’ she said.
CapitaMalls’ properties here include Ion Orchard, Plaza Singapura, Junction 8, Bugis Junction and Raffles City Singapore.
Marina Centre Holdings, which manages Marina Square, said it is ‘keeping options open’ on such green parking spots.
This wait-and-see attitude may be for reasons ranging from the small number of eco-friendly cars to having to monitor the reserved spaces.
Even Land Lease and CDL admitted their reserved spots are not always taken up. Drivers of petrol-driven cars have also ignored the ‘wheel clamp’ warning signs on the pillars and walls next to these spots.
Since City Square Mall opened in September last year, it has issued 10 warning notes to such drivers but no car has been clamped to date.
CDL’s spokesman said: ‘Our guards patrol the area, cameras monitor the carpark and we place notes on cars which may have unintentionally parked in these spots.’
City Square Mall keeps a record of the car plate numbers of previous ‘offenders’.
A spokesman for Land Lease said security guards at its 313@Somerset mall randomly enforce the parking restrictions.
When they see unauthorised vehicles in the green spaces, they wait for the owners to return to their cars before telling them they are not allowed to park there.
But Land Lease does not keep tabs on unauthorised vehicles parking in the green spots, ‘to avoid offending our shoppers’.
Source : Sunday Times – 21 Feb 2010
YOU could hear a pin drop in the private homes market at the start of last year. No hype, no launches, no buyers.
Just six months later, it seemed as if all hell had broken loose.
Demand went through the roof, showflats were back on centre stage, buyers were queueing around the block and developers couldn’t believe their luck.
The astonishing surge in interest – it was a recession, after all – sent sales rocketing to 14,725 units last year, just a tad below the 2007 record of 14,811 units.
Turnarounds don’t get much more dramatic than that, but the tumultuous year did more than just get once-fearful buyers rushing back to the market.
It also underlined the huge risks – and rewards – that lie in property development, while igniting an intense Darwinian selection process that sorted out the quick-witted and cashed-up from the slow and complacent.
Property cycles seem shorter nowadays, said property tycoon Kwek Leng Beng.
‘The world moves so fast, you have to adjust your thinking to the new circumstances,’ said the executive chairman of the Hong Leong Group.
Indeed, it was a make-it-up-as-you-go sort of year for developers.
They certainly had no help from conventional wisdom, which dictates that property cycles take about seven years from boom to bust. The Urban Redevelopment Authority’s price index for private homes shows that values were relatively stable from 2000 to the early part of 2007 before a dizzying three-year spell that took the market from boom to bust and back to boom.
In 2007, prices in the high-end sector were largely chased up by foreign demand. Some new prime condominiums sold for more than $4,000 per sq ft – an unprecedented level – but mass-market homes attracted little interest.
But it was the reverse last year, with the mass-market sector under siege as HDB upgraders rushed in, sending prices at some new condos to record levels in their area, while the high-end segment had yet to recover fully.
‘The fluctuations within a cycle are more pronounced these days,’ said the chief executive of the Real Estate Developers Association of Singapore (Redas), Dr Steven Choo.
A CALCULATED GAMBLE
TO MANY of us, property development still seems like a no-brainer: Buy a patch of land, erect posh condo blocks with all the trimmings, sell for vast profits to cashed-up foreigners or starry-eyed locals. How hard can it be?
Well, as last year showed, it can be pretty darn hard. What looks like a licence to print money turns out to be a multi-million-dollar high-wire act of timing, taste, instinct, pluck and luck, according to Dr Choo.
‘It is very challenging. It may seem very glamorous but when you get down to it, it’s actually very tough,’ he said.
‘It does take a lot of experience to stay profitable and ride through the cycles. You must come up with the right product mix, time it right and calculate it right.’
The process starts with the initial land purchase and that is also the most crucial factor: Over-pay, and you can struggle to ever make the deal work, given that the land price can comprise 50 to 70 per cent of total development cost.
Analysts have been warning that developers risk over-paying for land this year as they rush to replenish their land banks.
But even assuming that the plot has been secured at a favourable price, time lag is always an issue, say consultants.
Developers have to work quickly as holding costs – fees, interest charges, taxes and so on – are high.
And once a project gets the green light, there are initial costs for professionals such as consultants, engineers and architects before a labourer even lifts a shovel.
‘Once you buy land, you have to follow through a development timeline. If you buy government land, you have to complete construction within a certain period,’ said Knight Frank chairman Tan Tiong Cheng.
This period is now seven years, after it was extended by a year last year.
This is where timing is vital and when any number of uncertainties can upset even the best-laid plans.
The sale price factored in at the start of the project may not hold up nine months or so down the track when the launch is held.
Construction costs may continue to rise while selling prices fall, as was the case in mid-2008.
And sales figures may not be what developers had hoped for.
And if they cannot sell their units before demand slows, they will be stuck with unwanted flats – possibly for years.
Singapore’s largest private developer, Far East Organization, for instance, still has a few unsold units from Rafflesia in Bishan, which was completed in 2003.
‘From a cashflow point of view, you can sell everything out,’ said the firm’s executive director and chief operating officer of property sales, Mr Chia Boon Kuah.
‘But if you’re fully sold, you can’t participate in the cycle. You need inventory to do so.’
Developers in Singapore have been known to hold on to unsold units for more than a decade, but holding on to a 99-year leasehold mass-market project poses another risk as the tenure runs lower every year.
‘Once the remaining lease gets closer to 80 years, the price depreciation starts to be more apparent,’ said Cushman & Wakefield managing director Donald Han.
During the Asian financial crisis, developers who bought sites at a high in 1996 could not turn a profit as demand waned and prices weakened.
That was after the Government increased land supply for private homes in May 1996 to temper prices, as well as lowered loan-to-value limits to 80 per cent, said a UBS Investment Research report last month.
‘In some cases, developers held the land for up to three to eight years before launching the homes for sale,’ it said.
Of course, it is impossible for any developer to get the timing perfectly right. All sorts of external factors, such as the health of the global economy, can affect property cycles.
When the property market heads south, what developers need are deep pockets.
‘There was nothing much one could do when the market was down. Those developers that did not have holding power undercut to sell,’ said Mr Kwek.
‘Those with financial clout could decide to hold instead because they knew the market was going to return and could wait for it.’
That is one thing that separates the big boys from the tiddlers, who often have limited capital and a hard time convincing nervous bankers to lend to them.
‘If you don’t have deep pockets, and you make a wrong development decision, you can keel over very quickly,’ said an industry observer who declined to be named.
In April 2008, small developer Bravo Building Construction pulled out of three collective sale deals when the market turned sour. The biggest of the deals was the mega $516 million Tulip Garden in Holland Road, which it bought in mid-2007 and for which it had to forfeit its $25.8 million deposit.
That is why alarm bells rang over some smaller listed players, such as SC Global and Ho Bee, around a year ago.
Analysts feared they had borrowed too much to buy land in prime areas where prices were falling fast. The concern was that these smaller firms could go under as they were stuck with the high cost of servicing their bank loans, and unable to launch or shift new high-end units.
Their stock was punished. SC Global shares lost more than 90 per cent of their value, falling from a high of $3.37 in 2007 to just 29.5 cents in March last year. They have since recovered to about $2, thanks to the market turnaround.
The banks got worried too. They started scrutinising the books of developers they had lent to, and looked at their collective loan position.
Credo Real Estate managing director Karamjit Singh said: ‘Because of the banks’ lack of confidence, it became very difficult for land transactions to take place. If anyone could buy land, he would need a lot of cash to cover the bulk of the purchase price. Basically, banks were not prepared to lend.’
To make things worse, developers faced the risk of previous sales coming undone.
The two great fears, said an industry observer, were the possibility of foreigners bailing out of Singapore, and large numbers of defaults from buyers who used the deferred payment scheme.
The scheme allowed buyers to defer paying the bulk of their purchase price until completion of the project.
‘Banks were worried. Everybody was sweating,’ said a property expert who declined to be named.
Many analysts were predicting fire sales and different degrees of defaults, as banks had turned very cautious on lending. Developers held their breath.
Fortunately, the large defaults that many had anticipated did not materialise, though there were some who lost out on their bets.
In February last year, a small developer, Jewel 1, backed out of a planned $44 million en bloc purchase of Cairnhill Heights at the 11th hour. It had bought the site during the collective sale frenzy in 2007, subject to government approval.
Two months later, a China investor made the news for failing to pay $30 million for 20 units at The Fernhill condo when the project obtained its temporary occupation permit. The investor later managed to resell 19 units, albeit at a loss.
Keppel Land also had to grant a six-month payment extension to a buyer who bought 51 units at its The Suites @ Central project.
MOVING FAST
LUCKILY, the global recession – while deep – did not last very long.
Just six months after the financial meltdown, the local property market stirred back to life together with a global rally in stock markets.
The suddenness and improbability of the turnaround caught everyone by surprise.
The pace at which things changed brought home to developers the need to be fast on their feet if they wanted to avoid being caught napping.
Being nimble, and being able to change tack to meet changed conditions, can make the difference between laughing all the way to the bank and crying into your beer.
ECG Property Group chief executive Eric Cheng told The Straits Times: ‘You can’t control the market but you can get a feel of it. So when the market is right, you must get your showflat and permits ready to launch as quickly as possible.’
Developers showed fast footwork last year when they quickly came up with small units to satisfy buyers shy about plonking down large amounts of cash amid a slumping economy and languishing stock market.
EL Development managing director Lim Yew Soon said his company was fortunate to have reacted fast by switching to small units for Illuminaire, when it had originally planned to ride out the year. If the firm had stuck to Plan A, it would not have been able to sell out the project at the price it achieved by switching to small units.
Some smaller developers slashed prices by up to half to move units and generate cashflow, while others offered sweeteners such as stamp duty waivers.
Far East Organization said it cut prices across the board after Lehman Brothers collapsed in September 2008. Prices of mid-end projects went down by 10 to 23 per cent.
But it quickly raised prices when it saw that demand was more resilient and pushed out several projects in the second half, said Far East Organization’s Mr Chia. In the end, the company had a record year.
The financial crisis was unlike anything that had hit the industry before and was more unforgiving on smaller players than big guns like Far East Organization.
‘If the worst-case scenario materialised – that is, the economy had shrunk 10 per cent – many businesses which had expanded during the previous three to four years would have failed,’ said CIMB-GK regional economist Song Seng Wun.
‘Many developers, especially the newer players which jumped into the fray in the high-end sector, or the highly leveraged ones, would have been under severe pressure. They may even have failed.’
The crisis was a sobering event for developers, coming right after the euphoria of 2007.
‘Every cycle will be an eye-opener for the smaller boys. They typically do not have strong holding power like the big boys do,’ said Cushman & Wakefield’s Mr Han.
Yet despite the victims and the bloodletting that occurs in every cycle, the lure of bricks and mortar and the profit they can bring soon work their magic again.
But as ECG’s Mr Cheng cautioned, it’s not a game for learners: ‘Developers must have the courage to buy land when others are not buying, and sell when you feel the market is right. And that’s when experience comes in.
‘Property development is not easy.’
Source : Straits Times – 20 Feb 2010
SENTOSA COVE was like Treasure Island for developer Ho Bee, which surfed on the wave of demand for high-end property at the enclave to make a mint. Then the tide went out.
The financial crisis and the crash in prime real estate suddenly gave the exclusive seafront estate a forlorn air and Ho Bee the look of a firm that had overplayed its hand.
The developer dismissed such concerns back then and it continues to maintain that the enclave will be a winner.
Ho Bee got in early on Sentosa Island, bought aggressively and made piles of money selling the developed units.
But when the downturn hit, that close association with Sentosa meant it quickly fell out of favour with investors.
Ho Bee shares dived to a 52-week low of 27.5 cents each at one point in March last year, but shares have since climbed as high as $1.90 in January.
There seemed cause for concern. Ho Bee, with IOI Properties, bought The Pinnacle Collection, the last condo plot on Sentosa Cove for $1.097 billion or a whopping price of $1,822 per sq ft (psf) of potential gross floor area just before the crisis set in.
Ho Bee chairman and chief executive Chua Thian Poh told The Straits Times he remained confident of the prospects of Sentosa Cove properties throughout the crisis because they are scarce.
But the market and analysts did not share that view. By early last year, Sentosa Cove values had plunged and there was talk of defaults. An agent reportedly said the enclave had lost its appeal.
Data from Colliers International then showed that some non-landed Sentosa Cove properties were sold at an average of $1,318 psf, or 46 per cent below the average of $2,431 psf at the peak in early 2008.
There were also fears of deferred payment scheme (DPS) defaults. Ho Bee completed four projects last year – The Coast, Vertis, Quinterra, Orange Grove Residences – that exposed it to risks from DPS defaults.
‘At the beginning of last year, many people were looking at whether those who bought under the deferred payment scheme could fulfil their obligations to complete their purchases,’ said Mr Chua.
‘Our board was very cautious. We went through a lot of simulations on what was the worst scenario.
‘We talked about a 10 per cent default, 20 per cent default on DPS and even up to 50 per cent default. But we were still very comfortable with it.’
Concerns lingered for a while as consumers had trouble getting financing at one point, said Mr Chua. But the situation turned the corner sooner than expected and DPS concerns evaporated.
Ho Bee said it has had just one default for The Coast in Sentosa Cove and one for Orange Grove Residences.
‘We hope to have more people default so we can then take (the property) back and resell it straightaway at a higher price,’ said Mr Chua with a laugh.
‘Most developers should be quite comfortable during the last six to eight months of 2009.’
While the financial crisis has not flattened Ho Bee as some have feared, it has given it an opportunity to reflect.
‘You focus on… your next step. You have time to think,’ said Mr Chua.
Ho Bee started to explore overseas opportunities at the start of last year, a strategy it used before. It moved to London during the 1996 property peak here to avoid a property bubble that it was convinced would burst.
The bubble did burst and Ho Bee found that its British move was a godsend: Its main income until 2000 came from London.
Things are not that desperate now. Prices have risen. Take Ho Bee’s The Coast condo: Sub-sale deals went for as low as $1,195 psf early last year but has since bounced back to above $2,000 psf, though deals are few.
Its gamble on Sentosa Cove has paid off, although the market has changed much in the past five years, making life harder for developers.
‘Previously, when you bid for land, your margin may be low, but you still have a margin,’ said Mr Chua.
But developers are now bidding for land at forward prices, he said.
‘You look at the Singapore market. Almost every project is an ad hoc project as you can’t have a big land bank.’
Ho Bee had the first mover advantage in Sentosa Cove, ‘but when you build up the market, you have to compete with other developers for the land in Sentosa.
‘Now, you are getting more and more competition in the bidding of land… less margins and more competition… so our next push will be to venture overseas,’ said Mr Chua.
Over the next one to two years, Ho Bee hopes to deploy 30 to 40 per cent of its capital overseas, focusing on residential and mixed development projects.
China is under intense scrutiny. The company is in the midst of a study on jointly developing a residential project in Tangshan Nanhu Eco-City with Yanlord Land Group. It also just acquired a residential development site in Shanghai with the same partner.
‘In China, you can have a big land bank. Land cost is only about 20 per cent to 30 per cent of project cost,’ said Mr Chua. ‘In Singapore, it is about 50 per cent to 70 per cent, so you can’t afford a big land bank here.
‘Hopefully, China will become our Sentosa Cove in two to three years.’
Source : Straits Times – 20 Feb 2010
WHEN the boss of the Popular bookstore chain answered the seductive call of property development some four years ago, his shareholders were horrified.
‘They probably thought I was drunk… I was already 70, why would I do something like a flash in the pan?’ says Mr Chou Cheng Ngok.
‘My shareholders gave me hell. ‘What if you flop? What are you doing?’ they asked.’
But Mr Chou, now 73, the firm’s chairman and managing director, decided to pursue his enduring interest in property.
When he first landed in Hong Kong from Singapore at the age of 27, he caught the real estate bug.
He has since handled several property developments there, a place he has called home for the past 45 years.
He told The Straits Times last week: ‘I came to realise that the book business is a high capital investment with a fixed profit margin. From the 100th to the 110th shop, can the profits still be phenomenal?’
‘Property is cyclical. The book business is not cyclical… You’ve got to be very sensitive about when you jump in and in which part of the cycle you are ready to sell.
‘Cycles are shorter and shorter but it is still about four to five years apart, so you can’t overstretch in case you have to hold.’
Popular’s first project here began in 2006 when it bought 15,070 sq ft of land in Robin Road in Bukit Timah for $12.5 million.
The firm sold all 14 units at the One Robin project from April last year for more than $1,310 per sq ft.
While it was a sell-out, the ride was not exactly smooth.
Popular held back the launch when the market weakened in 2008 but opted to sell last April when things got brighter. But as it turned out, ‘we actually sold it a bit early’, admitted Mr Chou, as prices started to pick up around May.
He hopes his timing will be better for his second project, the 19-unit 18 Shelford.
Mr Chou started building work in mid-2008 and will launch soon.
The firm has taken a hit from its property dealings. It reported a net loss of $17.6 million for the year ended April 30, instead of the previous year’s $13.6 million profit, due to the fall in fair value of 18 Shelford and another project, 8 Raja.
‘For a smaller player, the timing is even more crucial as you don’t have a name to rely on. You have to ride the wave,’ says Mr Chou.
Big projects are also out of the question. ‘We don’t have much capital. We don’t want or dare to try big developments.’
Fortunately, small projects give smaller firms like Popular the chance to showcase their design ideas and quality, as buyers warm up to them as developers.
That is why Popular insisted on building a full-sized show unit for its first two projects. ‘If you see the quality, you wouldn’t mind the name so much,’ says Mr Chou.
The margins could have been higher if they had cut corners, he says, but they are in it for the long haul.
Mr Chou sees his projects as places that he too would enjoy living in. ‘It’s more the thrill of building something that you think is nice and comfortable, nothing ostentatious.’
Property looks set to become one of Popular’s core businesses although for now it is playing it slow and steady.
Buying land is tricky for small players now. If Popular thinks a site is overpriced, it will walk away.
‘You need experience and discipline. You can get carried away because the profit is so phenomenal,’ says Mr Chou.
‘You cannot foresee everything. You must hope for the best and prepare for the worst.’
TRACKING THE CYCLES
‘Property is cyclical. The book business is not cyclical… You’ve got to be very sensitive about when you jump in and in which part of the cycle you are ready to sell.’
BEING CAUTIOUS
‘We don’t have much capital. We don’t want or dare to try big developments.’
BEING PRUDENT
‘Cycles are shorter and shorter but it is still about four to five years apart, so you don’t overstretch just in case you have to hold.’
TIMING IS CRUCIAL
‘For a smaller player, the timing is even more crucial as you don’t have a name to rely on. You have to ride the wave.’
Source : Straits Times – 20 Feb 2010
IT WOULD take a huge leap of imagination to come up with a more incompatible business mix than the one Heeton Holdings had been wrestling with since 2003.
The firm’s chalk and cheese make-up had the glamour, prestige – and risk – of prime property development on one hand and oh-so-last-century but oh-so-safe heartland wet markets on the other.
Irreconcilable business differences of that magnitude led to the inevitable divorce last year when Heeton sold off the wet markets.
The move also marked the completion of the firm’s makeover from old school market landlord to real estate player.
It has been a long time coming. Heeton listed in September 2003, branding itself largely as the first wet market operator on the Singapore Exchange. Its property business was seen as a side line.
While the wet markets contributed just 10 per cent of annual revenue, that became the firm’s defining characteristic.
‘Analysts always asked us about our wet market business,’ said chief operating officer Danny Low.
That distraction was removed last year when the firm sold its five wet markets to supermarket chain Sheng Siong, leaving it free to focus on its growing property business.
‘We knew it (wet markets) was a sunset industry. Our store operators are old. When they retire or pass away, our stores will be empty,’ said Mr Low.
He said Heeton intended to sell the markets as early as two years ago and there were offers but it was all or nothing. ‘There is no point selling one market. If we sell one, we’ll still be a wet market operator.’
Heeton chairman and founder Toh Khai Cheng, who led the firm into the wet market business in the 1990s, said Sheng Siong came knocking last year and they decided to sell.
‘The wet markets offer us a stable yield but they can never take the firm to a new high the way property development can,’ he told The Straits Times in Mandarin.
Mr Toh started out in property development more than 30 years ago and earned the nickname the ‘Sembawang King’ as he was behind numerous projects in that area, including Hong Lim Mansions and Hong Heng Garden.
Heeton’s focus now is mostly on prime, boutique projects. Its latest launch was the 175-unit Lincoln Suites near the Novena MRT station which it is developing with three other developers.
It bought the former Mitre Hotel site in Killiney Road late last year and is preparing to launch a Grange Road project.
‘In prime areas, you can try out new ideas,’ said Mr Low.
‘Otherwise, we’ll end up doing just run-of-the-mill projects. Nobody will remember us.’
Until three years ago, its aim was to focus on just selling. Little thought was put into product differentiation, branding and so on.
But now it is thinking long term, acknowledging that to be a trusted developer you need to show the buyers that you intend to be around for a while.
‘You want your project to not only be able to sell, but also at a premium,’ Mr Low said.
This is why it roped in an Italian architect as well as yoo, the design firm co-founded by popular designer Philippe Starck and developer John Hitchcock, to design its 29-unit Grange Road project.
‘You have to differentiate yourself when you build a brand. For instance, developers used to dangle branded appliances as carrots, but that’s now outdated,’ said Mr Low.
Grappling with changing tastes is one thing, coping with the financial crisis is another. The downturn made it clear that there was no sure way to the bank, although Heeton had recurring income from its investment properties and wet markets to fall back on.
Its Grange Road project has been one victim. The launch has been delayed for more than a year and Heeton may have to lower its price expectations slightly when it finally does hit the market sometime in April to June if the high-end market has yet to truly pick up.
Heeton and its partners also had to delay the launch of Lincoln Suites. They bought the site during the 2007 boom at a record price of $1,449 per sq ft of potential gross floor area for the Newton area.
The downturn forced them to alter their plans for the prime project, including ensuring there were several small units – they comprise 75 per cent of the block – to keep the price quantum low.
Heeton also plans to build mostly small units on the old Mitre Hotel site.
‘These few years, the risks in the market have increased,’ said founder Toh. ‘Land is so expensive now.’
To mitigate the risks, they will continue to venture into the region where markets require a ‘lower investment’ and yet come with ‘lower risk and greater potential,’ said Mr Toh.
Heeton is also building a hospitality arm to give it a new stream of recurring income. It is starting by converting its 39-unit El Centro project in Tanjong Pagar into high-end serviced apartments or a boutique hotel.
Whatever the project, Heeton acknowledges that it needs to provide an edge. If it is building suburban projects, then it wants to offer good quality.
Prime projects mean giving buyers ’something different’, said Mr Low.
‘I didn’t say I will give you a Porsche but I will give you a Mercedes, as we don’t want to shortchange people.’
Source : Straits Times – 20 Feb 2010
PROPERTY booms, crashes, fads… you name it, real estate tycoon Kwek Leng Beng has seen them all in his 68 years.
Yet even one as experienced and savvy as he could not have predicted the way the market has roared back to life after being knocked flat on its back by the financial crisis.
‘The recovery was expected but not its intensity and swiftness. I was quite surprised at how strong it was,’ said the executive chairman of Hong Leong Group Singapore.
‘The world took swift action and came up with stimulus packages which we have never heard of in our lifetime.’
Yet, ‘no one can time to sell at the highest price, so like many developers, Hong Leong Group decided to sell on the way up’, he said.
That was how Hong Leong ignited the property market in late 2004: Its launch of the huge The Sail @ Marina Bay galvanised buyers and developers across the island.
‘We knew the market would turn around soon but we didn’t know when… So we knew we would have a hard task selling 1,111 units but we bought the land cheap. So we priced to sell,’ Mr Kwek told The Straits Times.
‘We could try to hold on until we thought the price and time was right, but we didn’t because there was no way to get the exact time.’
Its motivation was to lock in profits for its listed development arm City Developments (CDL) as soon as possible but the firm also wanted its buyers to make some money, said Mr Kwek. At The Sail @ Marina Bay, the initial launch price of $900 per sq ft on average rose to about $950 psf on strong demand back in late 2004.
The second tower was launched a year later in a slightly improved market at an average of $1,080 psf.
The Sail strategy hints at the firm’s overarching gameplan – remain flexible in all things.
‘When the market is really bad, you have to accept it. You sort of improve, think of new designs, think of what you can do, further revise your old plans so that when the market turns, you are most up to date,’ said Mr Kwek.
Last year, the Hong Leong Group showed its flexibility by cutting prices, albeit slightly, as the downturn rolled in.
The market had tanked by the time it launched the later phases of the 724-unit Livia in Pasir Ris. Earlier units went for $650 psf, later for $620 psf.
But while some developers took deep cuts, it reduced prices by only 5 per cent. ‘We do not undercut or slash our prices to the bone,’ said Mr Kwek.
‘If you cut as much as other developers do, they will cut again, and you cut again. To some extent, we are financially strong so we can hold.
‘The other reason is if this project is 50 per cent sold, so what? I still have 50 per cent. I can take another piece out of my land bank that is cheap and launch it.
‘But people without a land bank do not have such flexibility.’
Hong Leong’s substantial land bank has given it a lot more flexibility – that word again – in timing its launches and when it comes to replenishing its stock of sites. ‘Otherwise, you have got nothing to do, all your people sit down, fold their arms and wait for the market to go up,’ said Mr Kwek.
But those developers with little or no land left will have to replenish their land banks urgently but the equation has became harder.
Mr Kwek pointed out that in bad times, land prices do not fall as much as condo prices.
In late 2008, he shelved the $2.5 billion high-profile South Beach project in Beach Road until building costs fall to ‘reasonable levels’.
Last year, when construction prices were slipping, it re-negotiated contracts with its contractors. It also went ahead to build developments like The Arte in Jalan Datoh before the launch as it could.
The Arte was then released in April. More projects followed. Optima@Tanah Merah hit the market in July and sold out within three days at $810 psf. Hundred Trees in West Coast Drive also sold well, achieving $910 psf on average last September. Hong Leong said it was the top seller last year with more than 2,100 units shifted.
But like other developers, the Hong Leong Group had to face a potentially big problem last year – defaults arising from property bought on the deferred payment scheme (DPS).
But that turned out to be a ‘non-event’, said Mr Kwek.
‘That was a genuine concern… But you cannot assume that everybody who buys on DPS is going to default,’ he said. ‘In practice, you can sue them.
‘Developers also understand hard times. So why do you go after them? Let them slowly pay. As long as they can pay, allow them the chance.’
The Hong Leong group had ‘a few cases’ where the buyers could not pay but there were only two defaults last year. They took back the units.
‘Theoretically, there should be more, but there weren’t as we were sympathetic,’ Mr Kwek said.
Apart from being flexible on the payment deadline, what they did was to alert the buyers on getting a loan early.
Early last year, consumers found it tough to get sufficient loans as the banks turned very cautious and valuations fell.
Said CDL group general manager Chia Ngiang Hong: ‘Two months before our projects obtained TOP (temporary occupation permit), we wrote to the buyers to say: ‘Hey, your payment is coming up soon’, and we told them we have spoken to some banks willing to arrange their applications, and they dealt with the banks themselves.’
‘Bankers are bankers. They have to be cautious,’ said Mr Kwek.
Still, Mr Kwek added: ‘The banks shouldn’t be looking at the loan quantum alone. They should look at how many years you have been working, etc, and then restructure the loan.’
‘Property moves in cycles… The majority do not understand what investing in property is about. They buy property one day and hope to sell it the next so as to make a quick and big profit,’ said Mr Kwek.
‘The key problem is that many of us lack confidence, we rush when prices are rising and then stay away frightened when prices are at rock bottom.’
ON WHEN TO SELL
‘No one can time to sell at the highest price, so like many developers, Hong Leong Group decided to sell on the way up.’
ON BEING ADAPTABLE
‘When the market is really bad, you have to accept it. You sort of improve, think of new designs, think of what you can do, further revise your old plans so that when the market turns, you are most up to date.’
ON SLASHING PRICES
‘We do not undercut or slash our prices to the bone. If you cut as much as other developers do, they will cut again, and you cut again. To some extent, we are financially strong so we can hold.’
Source : Straits Times – 20 Feb 2010
DEMAND for Housing Board (HDB) resale flats may ease in the wake of yesterday’s measures to toughen up rules on home lending.
The new regulations have lowered the maximum loan amount a bank can lend – this is known as loan-to-value (LTV) limit – from 90per cent to 80per cent.
That means buyers of private homes and HDB resale flats will now have to stump up a deposit of at least 20per cent of the purchase price, up from 10per cent.
The LTV for those eligible for HDB loans, such as first-time buyers and second-timers who are upgrading, is already at 90per cent and remains unchanged.
This is because there are already HDB measures in place to curb speculation and encourage financial prudence, said the Government yesterday.
For example, there is a minimum owner occupation period of three to five years and a restriction on ownership to one flat per household.
Housing analysts told The Straits Times yesterday that the new rules – they come into effect today – will hit the private property market more than the HDB resale sector, but there will be some impact.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said higher interest rates tended to deter most HDB buyers from borrowing up to 90per cent of the purchase price.
HDB resale homes are also cheaper than private property and there are fewer short-term speculators in the market.
But analysts say the demand for resale flats – which has been red hot and pushing prices to record levels recently – is likely to be tempered.
PropNex chief executive Mohamed Ismail said the segment of buyers that will be most affected are private property owners and permanent residents (PRs) who are not eligible for HDB loans.
The bulk of homeseekers – mostly first-timers and second-time upgraders – qualify for HDB loans and will not be affected.
But for those PRs who have not worked for a long period of time and accumulated enough CPF savings, the new rules may delay their home purchases, said Mr Ismail.
The amount of money paid upfront to a seller over a flat’s valuation – called cash-over-valuation (COV) – may also come down if buyers are less-cash rich and unable to afford high premiums, he added.
The median COV amount paid for HDB resale flats soared to a record $24,000 in the fourth quarter last year.
Resale flat prices have surged about 40per cent in the past three years.
Anxious buyers priced out of the market have pointed to private property owner-speculators and PR buyers as possible factors contributing to the sky-high demand, although the Government maintains that these buyers are a minority and not a significant market force.
A joint statement from the Ministries of National Development and Finance and the Monetary Authority of Singapore said the rules to tighten credit to the housing market were aimed at encouraging greater financial prudence among buyers.
Source : Straits Times – 20 Feb 2010
Seller’s stamp duty and tighter loan limits reintroduced in bid to discourage speculation
THE government yesterday administered another measured dose to cool the resurgent property fever. While mild by themselves, the latest steps could foreshadow more severe therapy if the fever refuses to subside, said industry watchers. And this could plant seeds of uncertainty in an investor’s mind.
It was announced that a seller’s stamp duty (SSD) will be levied on those who buy a residential property from today and sell it within a year. This is aimed at curbing short-term speculation. Also, the Loan-to-Value (LTV) limit on housing loans will be lowered from 90 per cent to 80 per cent.
The SSD applies to all residential properties and residential lands, except for HDB flats. The date of purchase for the purpose of computing the one-year holding period shall be the option exercise date. This raises the possibility that some speculators who have been granted options to purchase residential properties recently but have yet to exercise them may allow their options to lapse – and lose typically 1.25 per cent of the purchase price – rather than face the rule change.
‘True-blue speculators or flippers may fall out and return their options to developers,’ said a market watcher. ‘But specuvestors with the means of raising funding to make progress payments and who see prospects beyond a one-year horizon will likely continue with the purchase,’ he added.
Currently, stamp duty is levied only for the purchase of property, not its sale. SSD will be applied at the same rate as the buyer’s stamp duty – one per cent for the first $180,000 of the consideration, 2 per cent for the next $180,000 and 3 per cent for the balance.
The Inland Revenue Authority of Singapore released an e-tax guide, listing more details including exceptions on the payment of SSD – for instance housing developers when they sell residential properties within a year of purchase, or for an estate of a deceased person when interest in residential property is passed to the beneficiary.
The Real Estate Developers’ Association of Singapore (Redas) said: ‘The introduction of the SSD should not impact adversely activities in the property market. The reduced mortgage cap is also unlikely to have significant impact on genuine buyers and investors. Lending institutions have already been more prudent especially in the aftermath of the global financial crisis.’
The lower LTV ratio on housing loans applies to home buyers granted options to purchase from today and covers all housing loans given by financial institutions for private homes, executive condos, HUDC flats and HDB flats. However, loans granted by the Housing Board for HDB flats will still have a 90 per cent cap as such flats are already subject to other criteria to prevent speculation and encourage financial prudence, the government said.
Redas CEO Steven Choo says the lowering of the LTV ratio is not unexpected. ‘What was unexpected was when the limit was previously raised from 80 per cent to 90 per cent in July 2005.’
Currently, less than 10 per cent of housing loans are granted an LTVs greater than 80 per cent, ‘although there are signs that more housing loans are originating at higher LTV bands’, a joint statement by the Ministry of National Development, Ministry of Finance and Monetary Authority of Singapore (MAS) said. Besides instilling financial prudence among property buyers, the move is aimed at sending a ‘clear signal to financial institutions to maintain credit standards’, the statement added.
Banks’ total outstanding housing loans increased from $79.6 billion at end-2008 to $91.4 billion at end-2009, according to preliminary estimates released yesterday by MAS.
Market watchers note the latest two cooling measures bear some resemblance to tools used by the government in the historic May 1996 anti-speculation measures, which, compounded by the Asian crisis, led to a long property slump. However, the government’s approach now is to administer smaller doses, rather than to prescribe a massive dose that may prove lethal to the market. Previous cooling measures were announced on Sept 14 last year.
‘The government will continue to monitor the property market closely and will introduce additional measures, if required later, to promote a stable and sustainable property market,’ the joint statement read.
Credo Real Estate managing director Karamjit Singh said: ‘We suspect the market would have preferred the latest measures to have been part of last September’s package so that all the measures came out at one go rather than in instalments, as this creates uncertainty about what further measures could be in store. That can be unsettling in the minds of investors and developers.’
Mr Singh also argues while the latest measures may seek to address speculation and overgearing, these are not the real reasons driving up prices. ‘The real reason is a physical supply crunch in the lower end of the housing market – HDB as well as entry-level private.’
Last September, the government scrapped the interest absorption scheme and interest-only housing loans which had been blamed for fuelling speculation, and announced the resumption of confirmed list land sales in the first half 2010.
While those measures had some effect, developers’ private home sales resurged last month. Prices of private homes also continued to increase after the sharp hike in H2 2009, the government noted. ‘Mortgage lending has also increased steadily by around 12 per cent year on year through 2009,’ it added.
Source : Business Times – 20 Feb 2010
TOUGHER rules on bank loans and measures to rein in speculators take effect today, as the Government steps up moves to cool the sizzling property market.
First, anyone who sells a property within a year of buying it will have to pay stamp duty of around 3 per cent. That means from today, if you buy a home and sell it at $500,000 within 12 months, you will have to fork out $9,600 in stamp duty. This is on top of the stamp duty you had to pay on the purchase.
Second, lending institutions will now be allowed to lend only up to 80 per cent of the purchase price, not 90 per cent. Buyers will have to come up with at least 20 per cent themselves.
Housing Board loans are not affected by this change in what is called the loan-to-value (LTV) limit.
The sellers’ stamp duty will hit short-term speculators, observers said, while the change in the bank loan limit is likely to weed out marginalised buyers.
The measures will affect only a limited number of buyers but experts feel they could have a psychological effect on the market. There is also concern that tougher steps are in the pipeline.
In its surprise announcement yesterday evening, the Government made clear why it was acting: ‘There is a risk that the market could overheat in the next few months, fuelled by low global interest rates and positive sentiments associated with the economic recovery.’
The joint statement from the National Development and Finance ministries and the Monetary Authority of Singapore said: ‘Any excessive exuberance will make the property market vulnerable to the continuing risks in the global economy.’
If the market were to correct, property buyers and speculators could face capital losses, it added.
The Government also pointed to the sharp spike in sales of new private homes last month and rising prices.
It said that prices rose sharply in the second half of last year and at a faster rate than in previous rebounds. Mortgage lending is also up, hence its ‘calibrated measures now to… pre-empt a property bubble from forming’.
It added that it ‘prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed’.
The Government, which introduced market-cooling measures last September, also said that there is adequate supply and it will inject more sites on to its land sales list this year if needed.
Cushman & Wakefield Singapore managing director Donald Han said: ‘If the Government can come out with something so fast and without warning, it means they can do something faster and more painful if prices continue to rise rapidly. Investors won’t like it.’
Credo Real Estate managing director Karamjit Singh said the measures introduced last September and these new moves ’seem to be focused on preventing problems that aren’t here just yet’.
But he added: ‘The question that may unnerve developers and investors is, what’s next?’
The Real Estate Developers’ Association of Singapore did not think the sellers’ stamp duty would have an adverse impact on property market activity.
The reduced mortgage cap was also unlikely to have a significant impact on genuine buyers and investors, it said.
Under 10 per cent of home loans cover more than 80 per cent of the property’s valuation, but there are signs that more buyers are getting loans close to the maximum allowed.
OCBC chief executive David Conner told The Straits Times: ‘The banks have been pretty disciplined… because we’ve to put that much more capital against a 90 per cent loan than for an 80 per cent loan, the pricing has been significantly higher… and customers have declined to take that 90 per cent loan.’
PropNex chief executive Mohamed Ismail did not think the new measures would kill the market, but expected a knee-jerk reaction. ‘It may dampen speculators’ buying interest… in the next few months,’ he said.
Source : Straits Times – 20 Feb 2010
THE new rules mean a homebuyer will now have to fork out more of his own money to buy a property, and will reap a smaller profit if he sells it within a year.
Take, for example, a buyer who pays $1million for a home today and sells it in less than a year for $1.1million.
BEFORE THE NEW MEASURES
The buyer could take out a loan of 90per cent of the price – so he could purchase the property with as little as $100,000 as a downpayment.
By selling, he would have made a fast $100,000, less the stamp duty he paid when he bought the property – $24,600 under the stamp duty formula.
That means he would pocket a profit of $75,400.
His return on capital: 75,400/100,000 = 75.4%
AFTER THE NEW MEASURES
The buyer can take out a loan for only 80per cent of the price which means a downpayment of $200,000.
He would have made $100,000 minus his original buyers’ stamp duty ($24,600), and now minus an additional sellers’ stamp duty, of $27,600.
This means a greatly reduced profit of $47,800.
His return on capital: 47,800/200,000 = 23.9%
Source : Straits Times – 20 Feb 2010
CAPITALAND yesterday announced a $5 million donation to children’s charities both in Singapore and overseas this year to kick-start a year-long series of activities as part of its 10th anniversary celebrations.
The donation, which will be distributed through the CapitaLand Hope Foundation (CHF), is also to celebrate its philanthropic arm’s fifth anniversary. This sum alone is equal to the entire amount CHF has contributed to 40 charities in Asia over the past five years.
CHF’s main focus is helping underprivileged children with shelter, education and healthcare needs.
Some other activities that will take place during the real estate conglomerate’s celebrations include a photography competition of any CapitaLand property in collaboration with the National Geographic Channel, a 10th Anniversary Commemorative Book, and an art exhibition by renowned Chinese artist Wang Shuping at the end of this month.
The 350 guests and staff who turned up to join in a lo hei-dinner at ION Orchard last night, hosted by group president and CEO Liew Mun Leong, were treated to a medley of cultural performances.
CapitaLand Group chairman Richard Hu said: ‘Despite a difficult decade for the global economy, CapitaLand has emerged ahead of the curve as a stronger company.
‘The strategy of exporting our real estate value chain overseas has paid off tremendously and the group has been recognised as a trailblazer for Singapore companies expanding abroad. Overseas markets now account for approximately half of our profits.
‘Over the past 10 years, we have generated total shareholder returns of $17 billion for our loyal shareholders.’
Mr Liew said: ‘Since CapitaLand’s formation from the merger of Pidemco Land and DBS Land in November 2000, the company has grown exponentially over the past 10 years into an international real estate company with a presence in over 20 countries.
‘From a $9 billion company at inception, the CapitaLand Group now comprises eight listed companies with a total market capitalisation of $40.3 billion as at end-2009.’
Source : Business Times – 20 Feb 2010
But agents’ association criticises Office for Fair Trading report, says stricter rules are needed to protect customers
BRITAIN’S housing market needs a shake-up to give the public a better deal but there is no requirement for better regulation of estate agents, the Office for Fair Trading (OFT) said on Thursday.
A year-long OFT study into the housing market concluded that a lack of competition for traditional estate agents was an issue, but said existing measures to govern their activities were sufficient.
However, it advised customers to shop around and haggle over agents’ fees, estimating that a failure to do so could be costing house sellers up to £pounds;570 million (S$1.24 billion) a year.
A body which represents estate agents said the OFT report was disappointing and that tighter rules were needed to protect customers.
The OFT study said the law should be changed to make it easier for other providers to enter the housing market, in particular through online services. This would have a ‘dramatic’ impact on the cost of buying or selling a home, it said. But there should only be regulation where it was necessary to protect consumers.
‘In the present economic climate, it is more important than ever that people get a good deal when buying or selling a home,’ said John Fingleton, the OFT’s chief executive. ‘Encouraging new business models, online estate agents and private seller platforms could put useful competitive pressure on traditional models and lead to better value for buyers and sellers.’
It rejected tighter controls of estate agents, saying overall satisfaction with them had risen in recent years. A recent OFT survey found 88 per cent of buyers and sellers were happy with agents, up from just over 70 per cent in 2004.
While a third of those who used traditional estate agents thought the fees they paid represented poor value for money, 64 per cent did not negotiate a lower commission rate.
However, the OFT did say that there was need for more regulation governing fees received by agents for referring customers to companies providing extra services such as mortgage advice and surveys.
‘The OFT believes this could cause an estate agent to favour one buyer over another, to the seller’s disadvantage,’ it said.
Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA) which has around 10,000 members, said the OFT had ‘categorically failed to see that better regulation’ of the market was required.
‘Buying a home is often the largest single transaction of a person’s life and it is disappointing that the OFT has not thought it appropriate to acknowledge that a robust and appropriate level of consumer protection is needed,’ he said.
‘The NAEA would like to see a greater level of regulation to ensure that professional, qualified estate agents are not confused with agents that, all too often, fail to meet the basic professional standards we would expect from our members.’
Source : Business Times – 20 Feb 2010
THAKRAL Corporation chalked up a net profit of $5.7 million for the fourth quarter ended Dec 31 – a turnaround from an $11.2 million loss a year earlier – thanks to higher sales and bigger margins.
Revenue for the quarter surged 23 per cent to $111.7 million, from $90.56 million.
Earnings per share – for continuing and discontinued operations – were 0.22 cent, compared with a loss per share of 0.43 cent in Q4 2008.
For the full year, the group swung into the black with a net profit of $11.5 million, versus a loss of $20.47 million in FY 2008. Revenue rose 15 per cent to $438.8 million on the back of its consumer electronics distribution business, which accounted for 99.2 per cent of group revenue.
The group recently landed a three-year $20.6 million deal with Lenovo (Beijing) under which its subsidiary Thakral China will be the exclusive distributor of Lenovo’s game players and media players in China.
Thakral Corporation’s executive chairman Kartar Singh Thakral said: ‘Moving ahead, the group intends to divest certain listed investments to meet the cash requirements for the upcoming capital reduction approved by shareholders at the recent extraordinary general meeting. This will bring about a decline in dividend and interest income in FY 2010.’
Thakral is returning $130.6 million to shareholders, at five cents a share, by way of the capital reduction.
The group also said yesterday it remains upbeat about growth prospects as it continues to look for opportunities to invest in property ventures across Asia.
Thakral said in December that it was dropping plans to switch its core business from consumer electronics distribution to real estate, although it emphasised that it ‘has always had an ancillary business in real estate and will continue to evaluate and invest in property ventures within the available funds’.
Major shareholder Hong Leong Asia – which has a 34.4 per cent stake in Thakral through China Yuchai International – also announced in December plans to pare its stake through a placement.
Thakral shares closed unchanged yesterday at 7.5 cents.
Source : Business Times – 20 Feb 2010
HOTELIER Millennium & Copthorne (M&C), a unit of Singapore’s City Developments, says it is planning a project to convert the Copthorne Orchid Hotel Singapore into condominiums.
‘This is expected to generate cash and profit from an alternative use of an asset and save an estimated £10 million (S$22 million) of maintenance expenditure required to retain the property in its current use,’ the UK-based group said yesterday, in announcing its 2009 results.
It reported that trading had improved towards the end of 2009 and into 2010 as it reported full-year pretax profit at the top end of expectations.
M&C, which operates 120 hotels in 19 countries, said pretax profit fell 20 per cent to £81.9 million. Forecasts had ranged between £68 million and £81 million, with the consensus at £77 million, according to a Reuters Estimates poll of six analysts.
Revenue per available room (RevPAR), a key industry measure, dropped 6.2 per cent to £53.62 but the rate of decline slowed in the third and fourth quarters. In the fourth quarter, RevPAR increased in London, compared with the previous year, while the rate of decline slowed in New York and Singapore.
‘We were anticipating stronger demand towards the end of the year and the actual results for the fourth quarter have exceeded our expectations,’ said chairman Kwek Leng Beng. The improvement has continued into the current year, with group RevPAR up 3.5 per cent in the first five weeks. He said, however, it was too early to predict the trading performance for 2010. ‘We are encouraged by the signs of stability in some of our markets, while conditions remain challenging in others.’
On Tuesday, InterContinental Hotels, the world’s biggest hotelier, warned trading will stay tough until business travellers return in greater numbers, putting pressure on its shares after 2009 profit fell 34 per cent. US rivals expect bookings to improve, with Sheraton owner Starwood Hotels & Resorts looking for flat to 5 per cent RevPAR growth in 2010 and Marriott seeing RevPAR up 2 per cent to down 2 per cent. M&C shares closed on Thursday at 376.5 pence, valuing the business at £1.17 billion.
Source : Business Times – 20 Feb 2010
The Government has introduced two new measures to cool the property market and pre-empt a bubble from forming in the private homes sector. They come into effect Saturday.
The Ministry of National Development said this will help ensure a stable and sustainable property market, and to curtail the HDB resale market where prices tend to track private property movements.
From Saturday, it will be more difficult and expensive for speculators to own and flip properties. A Seller’s Stamp Duty will be imposed on all residential properties and residential land bought after Friday, and sold within one year from the date of purchase.
The housing loan limit will also be capped at 80 per cent – down from the current 90 per cent.
This new loan limit will apply to all housing loans granted by financial institutions for private homes, executive condominiums, HUDC flats and HDB flats, including those sold under the Design, Build and Sell Scheme. But loans granted by the Housing and Development Board (HDB) for flats, will still have a cap of 90 per cent.
Last September, the Government introduced anti-speculative measures to cool the private homes market. While these helped initially, there were signs the market was heating up again.
The new measures come as demand for private homes continues to soar. The number of units sold by developers in January was three times more than December. It was also the highest monthly total since September last year.
The Ministry said the objective of these measures is to discourage short-term speculative activity that could distort underlying prices. It is not targeted at the purchase of properties for owner occupation or longer term investment.
Market watchers said the measures are easiest to implement, without causing the market to come to a standstill.
Eugene Lim, associate director, ERA Asia Pacific said: “We are recovering. The economy is recovering and the market is picking up so what they want to do is to make sure the property market is moving up in tune together with the economy and not faster than the economic recovery.”
Analysts added that the prices and volume of private property homes are unlikely to be significantly impacted.
Donald Han, managing director, Cushman & Wakefield said: “It has got a fairly minimal impact to the market, mainly because a lot of investors from our records are buying for the medium term, at least for a period of two to three years.
“Some investors will probably stand by the sidelines and see how sales progress into February and March. It will take some wind out of the market; potentially it could be around 10-15 per cent in terms of the numbers of new home sales taken out of the equation.”
The Real Estate Developers’ Association of Singapore said the reduced mortgage cap is unlikely to have significant impact on genuine buyers and investors, as lending institutions have already been more prudent in the aftermath of the global financial crisis.
Source : Channel NewsAsia – 19 Feb 2010
FINANCIAL institutions in Singapore have remained prudent in giving out housing loans.
Currently, less than 10 per cent of housing loans are granted at over the 80 per cent limit, ‘although there are signs that more housing loans are originating at higher loan-to-value bands’, said a government statement on Friday.
In a further bid to temper exuberance in the private residential market, the Government will, from Saturday, cap all housing loans at 80 per cent of the total purchase price, from the current 80 per cent limit.
The lower cap will apply to all housing loans given by financial institutions regulated by the Monetary Authority of Singapore.
‘In line with the objective of ensuring a stable and sustainable property market, lowering the LTV limit sends a clear signal to the financial institutions to maintain credit standards, and encourages greater financial prudence among property purchasers,’ said a Government statement on Friday.
Source : Straits Times – 19 Feb 2010
THE just-announced seller’s stamp duty, which will be imposed on all residential lands and homes bought before Saturday and sold within a year, will not apply to Housing Board flats, said the Government on Friday.
This is because HDB flats are already subject to a minimum one-year occupation ruling.
The Government said the new tax measure is to ‘discourage short-term speculative activity that could distort underlying prices’, and it is not targeted at the purchase of properties for owner-occupation or longer term investment.
Loans granted by the HDB for its flats, including the Design, Build and Sell Scheme (DBSS), will still continue to be capped at 90 per cent because they are subject to other criteria to prevent speculation and encourage financial prudence, said the Government.
HDB loans are offered to only eligible first-time flat buyers or second-timers who are upgrading. And they are required to use all of their CPF Ordinary Account balance before HDB would give them the loans, which is in line with HDB’s home ownership policy of helping eligible buyers, especially first-time buyers, to purchase public housing in a financially prudent manner.
But for all other housing loans provided by financial institutions regulated by the Monetary Authority of Singapore, they will be capped at 80 per cent of the property purchase price, instead of the current 90 per cent, from Saturday.
Source : Straits Times – 19 Feb 2010
HOUSING Board (HDB) flat buyers taking private bank loans for their purchase will now have to fork out more cash for the downpayment on their homes.
The Government has lowered the home loan amount that buyers can borrow from banks from 90 per cent to 80 per cent of the total purchase price.
The new 80 per cent rule, also known as the loan-to-value (LTV) limit, will apply to both private and public flats.
But for those buying HDB flats with HDB loans, the LTV will still remain at 90 per cent.
In a joint statement on Friday, the Ministry of National Development, Ministry of Finance and the Monetary Authority of Singapore said that this is because HDB flats are already subject to other criteria to prevent speculation and encourage financial prudence.
For example, there is a minimum owner occupation period of three to five years and a restriction on ownership to one flat per household.
HDB loans are offered to only eligible first-time flat buyers or second-timers who are upgrading.
Housing analysts said that the new measures would have an impact on the HDB market. Buyers who are not eligible for HDB loans must now fork out a higher downpayment as they can only borrow up to 80 per cent of their home purchase price.
This could depress the amounts of cash upfront paid to the seller above the flat’s valuation, known as cash-over-valuation, since buyers are now less likely to have excess cash.
Source : Straits Times – 19 Feb 2010
THE Government has announced what it called two ‘calibrated’ measures to cool the exuberance in the private residential market and prevent a property bubble from forming.
From Saturday, it will introduce a seller’s stamp duty on all residential properties and lands that are bought after today and sold within one year from the date of purchase, and lower the housing limit to 80 per cent of the total purchase price.
These new steps came less than six months after the Government introduced a set of measures to temper the exuberance in the private residential market last September.
‘While the September 2009 measures helped to cool the property market, there are recent signs that it is starting to heat up again,’ said a joint statement from the Ministry of National Development, Finance Ministry and the Monetary of Singapore.
Demand for private housing units spiked sharply in January, with the the number of units sold by developers tripling that in December, and making it the highest monthly total since last September. Prices have also risen sharply in the second half of 2009, at a faster rate compared to previous rebounds from the troughs of property cycles.
There was no let up in the January price increases. Mortgage lending also soared by around 12 per cent year-on-year through 2009, said the statement.
‘While the current level of speculative activity in the market is still lower than what it was at the height of the property market boom, and overall price levels are below the previous peak, there is a risk that the market could overheat in the next few months, fuelled by low global interest rates and positive sentiments associated with the economic recovery.
‘Any excessive exuberance will make the property market vulnerable to the continuing risks in the global economy. Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves.
‘Therefore, the Government has decided to introduce calibrated measures now to temper sentiments and pre-empt a property bubble from forming.
‘We will tighten the supply of credit to the housing market to encourage greater financial prudence among property purchasers. The Government prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed.’
Source : Straits Times – 19 Feb 2010
THE Government has served notice that it will introduce additional measures, if necessary, to promote a stable and sustainable property market.
On Friday, it announced two measures – a seller’s stamp duty and a lower housing loan limit – to help temper sentiment in the simmering residential property market, which it said is showing signs of starting to heat up again.
To pre-empt a property bubble from forming, the government said it is tightening the supply of credit to the housing market ‘to encourage greater financial prudence’ among property buyers.
‘The Government prefers to take small steps early, rather than be forced to impose more drastic measures after a bubble has formed,’ said a joint statement from the ministries of National Develop and Finance, and Monetary Authority of Singapore.
‘The Government will continue to monitor the property market closely and will introduce measures if required later, to promote a stable and sustainable property market,’ added the statement.
At the same time, it will also continue to ensure that there is adequate housing supply to meet demand.
Already, it has made available sites under the Government Land Sales (GLS) programme that can yield 10,550 private housing units in the first half of this year. This is the highest supply level in the history of the GLS scheme.
Source : Straits Times – 19 Feb 2010
Property developer CapitaLand said it has generated S$17 billion in total shareholder returns over the last decade.
The company disclosed this at its 10th anniversary celebrations on Friday evening.
The firm celebrated its success in transforming itself from a S$9 million company to a group that now commands a market capitalisation of S$40.3 billion as of the end of last year.
CapitaLand was formed from the merger of Pidemco Land and DBS Land in November 2000.
Going ahead, CapitaLand said it will focus on growth in China, and also on being one of Asia’s largest owners of shopping malls through CapitaMalls Asia.
As part of the celebrations, CapitaLand said it will donate S$5 million to childrens’ charities across Asia.
Liew Mun Leong, group president and CEO, CapitaLand, said: “I see CSR (corporate social responsibility) as not so much directly (from the) business impact, but more from the point that our staff feel very close to the subject.
“It provides them with an opportunity to do volunteer work, and to sum it up, it gives the company a soul to work with.”
Source : Channel NewsAsia – 19 Feb 2010
With the opening of Genting Singapore’s Resorts World at Sentosa integrated resort, there has been a flurry of transactions at Caribbean at Keppel Bay and also the upmarket condominium projects in Sentosa Cove. In the week of Jan 15 to 22 alone, there was a total of nine new sales and resales.
The condominium that saw the most resale activity was the 969-unit Caribbean at Keppel Bay developed by Keppel Land and completed in 2004. In that period, there were five transactions at Caribbean ranging from $1,363 to $1,479 psf.
The most recent transaction was an eighth floor, 893 sq ft unit in one of the 10-storey blocks; it changed hands for $1.28 million, or $1,433 psf. The previous owner had purchased it from the developer in 2004 for $707,085, or $791 psf, enjoying an 81% capital appreciation in the last five years.
The highest price achieved in terms of price psf was for a 1,356 sq ft seventh floor unit sold for just over $2 million, or $1,479 psf. In that same tower, a third-floor unit was sold for $1.702 million, or $1,363 psf. Two other units at Caribbean changed hands, with caveats lodged on Jan 15: One was a 1,668 sq ft fifth-floor apartment sold for $2.43 million, or $1,460 psf; the other was a 1,335 sq ft apartment on the third level of another block that went for $1.9 million, or $1,426 psf.
Over at The Berth by The Cove, considered the first condominium development to be launched at Sentosa Cove by developer Ho Bee Group, the most recent transaction, according to URA Realis, was for a 1,647 sq ft apartment on the first level of one of the low-rise blocks that changed hands at $2.45 million, or $1,490 psf.
This is the third time the apartment has changed hands in the secondary market. The original owner had purchased the property in November 2004, when it was first launched, for more than $1.39 million, or $846 psf. It was subsequently sold in a sub-sale two years later for $1.647 million, or $1,000 psf, according to an October 2006 caveat. Thus, the first owner enjoyed a price appreciation of 18.2% in about two years. Barely a month later, the property was flipped for $1.9 million, or $1,154 psf, according to a November 2006 caveat. This owner enjoyed the greatest capital gain of 29% in more than three years when he sold the property most recently for $2.45 million.
The Berth at the Cove was completed in 2006, and Ho Bee’s upmarket 249-unit The Coast was completed just last year. The most recent transaction at The Coast was for a 2,024 sq ft sixth-level apartment sold for $4.768 million, or $2,357 sq ft, according to a Jan 15 caveat with URA Realis. The previous owner had purchased the property for $3.416 million or $1,688 psf, when it was launched in late 2006. Thus, he saw a 39.6% capital appreciation in just over three years.
The most exclusive condominium project that has set a new price benchmark at Sentosa Cove and that has gotten tongues wagging is SC Global Developments’ Seven Palms. Last October, the developer announced that it had sold six of 10 units released, and according to caveats lodged with URA Realis, the units ranged in price from $8.35 million for a 2,702 sq ft apartment to $13.9 million for a 4,273 sq ft apartment. Average prices ranged from $3,091 to $3,353 psf. Most recently, another unit was sold, according to a Jan 15 caveat. It was for a 2,723 sq ft apartment that went for $9.088 million, or $$3,337 psf. Unlike the other condominiums that are of a 99-year lease tenure, SC Global’s Seven Palms has a 103-year lease.
Meanwhile, at the luxury 124-unit condominium project, The Marina Collection, developed by a consortium-led by Lippo Group, a unit was also sold during that period. It was a 4,693 sq ft, five-bedroom penthouse that went for more than $10.3 million, or $2,200 psf. Construction of the project is underway and scheduled for completion late this year or early 2011. Another similar-sized penthouse was sold in early 2008 for $12.67 million, or $2,700 psf. The developer released 60 units for sale in the first phase in late 2007 for $2,700 to $2,900 psf.
With the opening of Resorts World at Sentosa, there is even greater interest in luxury residential projects in Sentosa Cove and the Harbourfront area. Upcoming previews of new projects at Sentosa Cove after Chinese New Year include Ho Bee and IOI Properties’ 150-unit luxury Seascape as well as the second phase of The Marina Collection.
Source : The Edge – 15 Feb 2010
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