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27 December 2012

27th December, Thursday




URA factors in shrinking condo unit sizes as it looks ahead

Source: Business Times

The Urban Redevelopment Authority (URA) seems to think that the average unit size of condos will shrink in its estimates of housing supply for the Government Land Sales (GLS) programme.

Based on Business Times' analysis of the first-half 2013 GLS programme, the average gross floor area (GFA) per home for typical private condo sites in Outside Central Region (OCR) and Rest of Central Region (RCR) has each been reduced by five sq m to 90 sq m and 80 sq m respectively compared with the 1H and 2H 2012 slates.

For sites designated for executive condominiums (ECs), the average home size assumption has been kept the same at 100 sq m in OCR, which is where suburban mass-market homes are located.

Analysts note that the URA's move to clip its average home size assumption annually in the past few years reflects developers' strategy of minting smaller units to keep lump-sum prices affordable while jacking up per sq ft prices.

When contacted, the URA's spokesman said that it regularly reviews space standards - that is, average GFA per housing unit - used to estimate the number of homes that can be generated from GLS sites. It takes into account the sizes of units in housing projects (including ECs) which have obtained planning approvals in recent years.

The URA highlighted that its estimates of the number of residential units for GLS sites is intended to serve as a guide only. "The actual number would depend on the decisions and development plans of the developers."

While the 90-sq-m and 80-sq-m average unit sizes in the latest revision for the 1H 2013 list applies to typical private condo plots in OCR and RCR respectively, there are a few exceptions. "For the residential sites at Kim Tian Road, Faber Walk and Jalan Bunga Rampai, URA in consultation with Land Transport Authority will impose a more stringent space standard to ensure that the residential units from these sites do not generate excessive traffic flow that cannot be supported by the surrounding roads. This is reflected in the estimated housing units for these sites," said the URA's spokesman.

The URA has estimated that the Kim Tian plot can yield some 500 units (reflecting an average unit size of 88 sq metres). Had the typical RCR average unit size of 80 sq m been used, the estimated supply would have been more: 550 units. The more stringent space standard takes into account narrow roads in the area. It's a similar case for the Jalan Bunga Rampai plot, off Bartley Road and next to a landed housing estate with narrow roads.

Similarly, the Faber Walk site in OCR, with an estimate that reflects a larger than average home size of 100 sq m, will likely churn out fewer units as it is next to several landed housing estates which typically have small roads.

Analysts reckon the URA could end up stipulating its estimated number of units for these three sites as the maximum units, taking into account the tight road capacity in the locations.


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Analysts see sustained demand for HDB resale flats next year

Source: Business Times

Hot, robust and pulsating. Three words market watchers have used to describe the resale flat market this year, and it looks like they will be saying the same next year.

Resale prices for Housing & Development Board (HDB) homes could go up by between 3 and 8 per cent in 2013, and cash-over-valuations, or COVs, could rise 5 to 10 per cent, analysts told The Business Times.

They foresee sustained demand in the face of constrained supply and easy monetary conditions.

Prices for resale units gained 3.9 per cent in the first nine months of the year, the HDB's latest statistics showed. That is down from 10.7 per cent last year and 14.1 per cent in 2010, but prices are still at a record high. Full-year growth could clock in at between 5 and 7 per cent, the consultants said.

Meanwhile, COVs have resumed their ascent after stabilising in the first half of the year. The median for this cash premium is now $34,000, based on the Singapore Real Estate Exchange's latest report, $2,000 shy of the record set last year.

Lee Sze Teck, DWG's senior manager for training, research and consultancy, noted that even as the authorities took measures to divert demand from the resale market, an expected stabilisation in prices and COVs did not materialise fully in 2012.

One analyst believes that even if the government continues to release large numbers of BTO units, it could take another two to three years to chip away at the buoyant resale market. Another analyst describes the fundamental issue as "a structural undersupply".

"The fresh supply of resale flats is quite low," said one analyst. One reason is the policies introduced in 2010 that required owners of private homes to sell them off if they buy HDB units, and extended the Minimum Occupancy Period (MOP) from three to five years. This has made upgraders reluctant to sell as it meant they could not buy an HDB flat in future.

Property measures introduced this year were a mixed bag.

One analyst said a restriction on loan tenures could have a chilling effect. On the other hand, restrictions on the number of shoebox units in private residential developments could chase demand back to resale flats. Low borrowing rates this year continued to spur interest from second-time buyers and permanent residents (PRs) for whom monthly instalments can be lower than rents.

Some buyers were bringing forward their purchases, worried that prices were still going to go up.

Analyst said that most of the same factors that contributed to the buzz this year will remain relevant next year.

The supply of resale flats will remain tight even as more BTO units roll out. A commitment to a new flat now means the unit is effectively eliminated from the market for eight years: assuming three years of construction followed by a five-year waiting period.

But there could be some relief as new flats and ECs released in 2010 near their completion. "The second-timers who buy a new flat or EC in 2010 are likely to collect their keys in 2013, adding to the available supply of resale flats starting 2013," DWG's Mr Lee said.

Owners of both private and HDB homes could also offload their flats if they are unable to rent them out, or if yields are unattractive.

Where housing policy is concerned, caution seems to be the watchword, with the consultants not advocating drastic measures.

"It might be a good idea for HDB to calibrate their supply of BTO flats and ECs in 2013 so as not to create a situation of imbalance in the resale market," said DWG's Mr Lee, noting that the full impact of ramping up supply will be felt only a few years down the road.

Another analyst sees the possibility of introducing taxes. For example, levies could be placed on owners who hold onto both their private and HDB homes, or taxes could be imposed on COVs above a certain figure.


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Tampines EC 'presidential suite' to be priced at $2.05m

Source: The Straits Times

The monster 4,349 sq ft "presidential suite" at an executive condominium (EC) project in Tampines will be the first EC unit to eclipse the $2 million mark if sold at its launch this weekend.

The Straits Times understands that the penthouse unit at 514-unit CityLife @ Tampines, which comes with a roof terrace of about 1,600 sq ft, will be priced at about $2.05 million - or $470 per sq ft (psf). The unit price rises to $744 psf if only liveable space is counted.

If sold, the overall price will set a new record for an EC - the latest in a string of sky-high prices that have raised eyebrows and led to a raging debate on whether buyers of such expensive ECs should be entitled to Housing Board grants.

CityLife was more than three times subscribed with about 1,800 applications received by the deadline earlier this month.


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Growing pool of seniors, singles 'could trigger housing rethink'

Source: The Straits Times

A new report suggests that the growing presence of senior citizens and singles here may prompt a rethink of housing options and policies by both developers and the Government.

The report has mooted suggestions such as longer land tenures for retirement villages and a quota for allocating Build-to-Order (BTO) HDB flats to singles.

The firm said that while senior citizens and singles are likely to remain minority groups here, their numbers are substantial enough to contribute significantly to potential housing demand.

The proportion of those aged 65 and older is expected to hit 15 per cent of the resident population by 2020 before ballooning to 20 per cent in 2030.

Developers could consider serviced apartment style housing with long-term leases or purchase options for homes that come with services such as housekeeping, it said. They could also explore the feasibility of retirement villages. Instead of shorter land tenures, however, selling land for a retirement village on longer tenures of 99 years, or up to 120 or 150 years, could be considered.

As for singles, the firm said a ratio or quota system could be used to allocate new BTO flats to them. Such an approach has worked fairly well for Singapore, the report noted.

The ethnic quota, for instance, ensures that different races live together. "In the same vein, singles and families should... learn from each other and help each other within the context of community."


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Good-class bungalow prices up

Source: The Straits Times

The elite end of the residential property sector, the bungalow market, has slowed since last year after cooling measures and tighter financing rules came in.

But analysts said prices were relatively resilient despite weak market sentiment stemming from poor global economic conditions.

Fewer good-class bungalows (GCBs) changed hands this year but, on average, the selling prices were higher.

Some 49 sales had taken place as of the first week of this month, compared with 57 over the full year of 2011.

The total value transacted this year fell to $1.05 billion in this period, down from $1.16 billion for the whole of last year. However, prices per sq ft (psf) have moved in the opposite direction.

The average price of GCB sales this year was $1,406 psf, about 10 per cent higher than the average of $1,276 psf recorded last year.

The most expensive sale was a bungalow in Ridout Road which changed hands in late March for $60.6 million, or $1,490 psf.

The second most expensive sale this year was a GCB at Leedon Park for $33 million in October or $2,110 psf.

The third and fourth most expensive GCBs sold were in Binjai Park, and the fifth was in Chatsworth Road. All of them are freehold.

If current sentiment continues, GCB deals may number around 50 next year, one analyst said. "We expect the GCB market to move at a cautious pace, given the weaker market sentiment as a result of the debt crisis in Europe, the slower global economic growth and the prohibitive nature of current bank loan terms."


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Investment Sales


AA set to quit River Valley site

Source: The Straits Times

An offer of $61.8 million has been made for the site, which has been the headquarters of the Automobile Association of Singapore (AAS) since 1967.

But the offer from Starlite Land Development, a subsidiary of listed property giant Far East Organization, is well below the indicative price that the AAS set in June when it sought expressions of interest.

It was expecting $90 million to $100 million for the building, which sits on a 33,751 sq ft freehold plot in the prime district.

AAS members will decide on Jan 9, at an extraordinary general meeting, whether to accept the offer. The potential sale, however, does not include the residential units that occupy the top seven floors of the 14-storey building.


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Industrial property prices to continue to climb in 2013, say analysts

Source: Channelnewsasia

Prices of industrial properties in Singapore have risen by some 27 per cent in the first three quarters of 2012.

Some analysts say prices could climb by 30 per cent for the entire year, one of the highest in recent years. They attribute the increase to buoyant demand for strata-titled industrial premises.

Low interest rates, high liquidity and cooling measures in the residential property segment have further fuelled demand.

Some market watchers however say the upward price trend is likely to continue in 2013.

Analysts expect rentals for industrial properties to fall in the coming year, in view of some 8 million sq ft of business and industrial parks that is due to be completed in the next 16 months.


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