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31 December 2012

31st December, Monday




EC developer was told not to sell units: URA

Source: The Straits Times

Property agents involved in the launch of executive condominium (EC) Forestville were told by the project's developer over the weekend to return cheques people had given them to book units in the development.

The move came after developer Hao Yuan Investment did not get approval from the authorities to sell units in the project, which was launched on Friday.

The Urban Redevelopment Authority (URA) told The Straits Times Sunday that Hao Yuan had not been authorised to sell any of the units in the development located in Woodlands.

Despite the orders, Hao Yuan went ahead with the launch but issued a "no-sale" instruction to agents. Agents were told not to collect any cheques, and prospective buyers were told that no Option-to-Purchase would be granted, said the firm.

Potential buyers could make only "expressions of interest" which Hao Yuan would honour. But some said that agents operated normally during the launch and continued to collect cheques for bookings made.

On Friday, people had placed an interest in about 150 units in Forestville.

The latest incident comes in the wake of controversy over the high prices of EC units.


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New supply may dampen prices next year

Source: The Straits Times

Industrial property has enjoyed a red-hot year but whether this can continue next year remains a question mark.

Analysts point to an increase of new supply next year that could cool the sector that has logged one of its best years in recent times.

Prices shot up a startling 26.7 per cent from the start of the year to the end of the third quarter, based on the Urban Redevelopment Authority's (URA) industrial property price index.

The contrast with the private residential market could not be starker with prices for new housing units up a minuscule 0.6 per cent year-on-year in the third quarter. Office sector prices rose 1.9 per cent in the third quarter year-on-year while shop values were up 1.1 per cent.

The story for industrial rents was more subdued. They rose 6.4 per cent in the third quarter from the preceding year, and have climbed 6 per cent over the first three quarters of this year.

Sky-high industrial property prices mean rental yields have been severely compressed.

They used to range from 5 per cent to 7 per cent but have now fallen to between 3 per cent and 5 per cent, said Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group.

Despite industrial property's apparent popularity, the number of strata industrial transactions in the first 10 months of this year was lower than that in the corresponding period last year.

This was probably because of some price resistance, said Mr Lee. "Some new industrial developments were going for more than $1,000 per sq ft, which could have caused some investors to baulk. These investors could have gone over to the residential or commercial markets," he added.

The "unabated" growth in industrial prices was largely due to investor purchases, said an analyst.

Based on caveats lodged with the URA, around a quarter of the purchases made this year were by individual Singaporeans. Companies accounted for 70.6 per cent of industrial property purchases as of October this year. The URA caveats do not include transactions with incomplete information.

Mr Lee noted there was no significant increase in the number of purchases made by Singaporeans, according to the data, but such purchases could have been carried out under the guise of companies. Some individuals use a goods and services tax-registered company to acquire strata industrial units so as to claim tax relief, he said.

The steep price rises for industrial property occurred as several rounds of cooling measures in the residential property market directed investors to look at alternatives.

But analysts say there were other reasons why investor demand for industrial properties has soared.

"The pick-up in interest in the strata industrial market was also in part due to an increase in the supply of industrial land from the Government and the private market, better designed developments and the possibility of better returns," said Mr Lee.

It is not just investors who are buying. Industrialists also want to purchase their own premises to gain more control and certainty over their real estate costs in the face of rising rentals when their leases expire.

The surge of interest from both investors and genuine industrialists has allowed sellers and developers to demand higher prices.

The pace of price increases may slow next year if the Government acts further to rein in the runaway market, analysts noted.

Another factor to watch out for is the upcoming supply, said Mr Lee, noting that more than 10 million sq ft of multi-user industrial space is expected to go on the market in the next few years and most of that will be completed next year.

The weak global economy could also weigh down manufacturing and exports, and make industrialists more cautious in buying up more factory space.

Still, one analyst expects industrial prices to rise faster than those in other sectors. "We would expect the price increase for attractive industrial properties in good locations, with superior building specifications and longer land tenures to have a 10 per cent to 15 per cent increase for the full year 2013," he said.


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