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03 July 2012

3rd July, Tuesday




HDB, private home prices up slightly

Source: The Straits Times

After a quiet start to the year, prices of both private and public homes rebounded slightly last quarter, even as the battle to keep a lid on prices rages on.

Housing Board (HDB) resale prices inched up 1.3 per cent in the second quarter to a new record high - rising more quickly than the 0.6 per cent gain in the three months before, according to preliminary data released Monday.

The 0.6 per cent first-quarter rise had been the smallest since the first quarter of 2009 and had sparked talk that prices had hit a ceiling and might even correct down the road.

The dip in private home prices in the first quarter was also shortlived with prices inching up marginally by 0.4 per cent, reversing a 0.1 per cent fall in the first three months this year.

Experts say the slowdown in the HDB resale market at the start of the year that led to lower cash premiums paid for resale flats - also known as cash over valuations (COVs) - has enticed buyers back into the resale market.

Some private property owners may have decided to cash out of their suburban condos to buy HDB flats instead, leading to an uptick in resale deals, they add.

DWG's senior manager of research and consultancy Lee Sze Teck noted that median COVs for five-room flats, for example, were 27 per cent lower in the first quarter from the quarter before, according to his agency's sales.

Buyers may also have turned to resale flats after failing to get a unit at the more than 8,000 HDB flats launched in March this year, leading to both resale activity and prices heading back up, he said.

Some owners of older mass market condos might have also decided to take profit and move to HDB estates to be closer to their children, another analyst noted. They are mostly older retirees.

Still, despite this uptick in market activity, HDB resale prices are expected to flatline or even dip towards the end of this year.

An analyst said prices have peaked and are unlikely to see substantial rises as buyers are becoming reluctant to pay high COVs.

However DWG's Mr Lee expects resale HDB prices to increase by about 5 per cent for the rest of the year.

One reason, said an analyst, is rising HDB flat valuations, which are catching up with selling prices. 'Valuations are based on previously transacted prices, and since the selling price of resale flats is not growing exponentially, cash premiums seem to be holding steady.' He cited a three-room flat in Potong Pasir valued at $360,000 in May and sold with a $60,000 COV at $420,000. A month later, in June, a similar flat was valued at $380,000, a difference of $20,000.

On the private front, experts also remarked on the resilience of the market, which has stood its ground despite a slew of cooling measures since September 2009.

The 0.4 per cent increase has yet again sent overall prices of private homes to a record high on the back of low interest rates and plenty of available loan funds.

Investor appetite for real estate also remains strong partly owing to turmoil in stock, foreign exchange and commodities markets, said an analyst.

However, one analyst sounded a note of caution. Rising price resistance and the onslaught of a fresh land supply may ease demand for private homes in the next six months with prices expected to be relatively stable with marginal upside for the rest of the year, she said.


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Lower COV spurs resale flat demand

Source: Business Times

Resale HDB flats are fast regaining interest among buyers, following several months of declining cash-over-valuation (COV) figures.

Notably, after falling more than 20 per cent in the first quarter, COV paid for HDB resale flats are starting to show signs of stabilising, enticing buyers back into the market, say consultants.

Said an analyst: "The stronger price growth exhibited could be a result of decreasing COVs and increasing valuations in the market. Valuations are catching up with selling prices and median COVs have been reduced to $25,000 in June 2012. Reduction in COVs encourages buyers to commit to flat purchases resulting in rising resale prices."

Aside from prices, transaction volumes also clawed higher during the quarter, rising 8 per cent from 5,126 in 1Q to 5,549 in 2Q, according to preliminary data.

Industry watchers attribute the jump to a growing number of second-timers opting for a resale unit as opposed to waiting for a BTO (build-to-order) flat as COVs have softened and become comparable to the resale levy that second-timers have to pay when purchasing the latter.

Lee Sze Teck, senior manager at DWG's research and consultancy division, said: "Buyers could have also returned to the resale market after failing to land their ideal home in the BTO and Sale of Balance (SBF) flats exercise in March 2012."

Offering another view, another analyst commented: "With the moderation of HDB resale prices in 1Q 2012, buyers who did not qualify under the BTO purchase requirements like the singles, permanent residents, HDB upgraders and downgraders, are still purchasing in this market segment."

Still, some consultants have argued that the current escalation of prices is not sustainable and that prices of resale flats are close to a peak with little room left to grow in coming quarters.


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Slowdown in rise of prices in suburban areas

Source: The Straits Times

Prices of suburban flats are still rising but the pace has slowed as buyers resist paying top dollar in a market flooded with new homes. Experts reckon the 'price stalemate' will continue throughout the year.

An analyst said Monday: 'The increasing price resistance in the mass-market segment should help to moderate any price increases for the next two quarters.'

Numbers from the Urban Redevelopment Authority yesterday show the trend clearly: Private homes outside the central region recorded a rise of just 0.4 per cent in the three months to 30 June compared with a 1.1 per cent increase in the first quarter.

One analyst refers to it as a 'price stalemate'. Buyers are less willing to accept high prices, particularly after the introduction of the additional buyer's stamp duty last December, he noted.

He said the high prices mean new launches now take longer to sell as buyers are more selective and price sensitive. Projects priced below $900 per sq ft are very well-received and garner keen interest from HDB upgraders, he said.

The ample supply of new launches in the heartland, especially in the north-east and Pasir Ris, helped slow rising prices as well, said an analyst.

Despite upcoming supply from the latest Government Land Sales programme, people are still buying at the new launches, in case new cooling measures are imposed. '(Thus), we expect sales volume to achieve a new record in 2012 with more than 20,000 units sold by year end,' said an analyst.


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Investment Sales


NOL selling HQ building in Alexandra

Source: Business Times

Neptune Orient Lines (NOL) Group has put its 26-storey freehold Singapore headquarters building at Alexandra Road on the market to "release capital for strategic investment".

Although the shipping and logistics group said it has not decided on the reserve price, Business Times understands that the indicative pricing for the 29-year-old office block could be around $400 million.

This reflects about $1,928 per sq ft based on the property's existing net lettable area (NLA) of 207,505 sq ft. The exclusive marketing agent for NOL Building - will conduct an expression of interest campaign, which is expected to close by mid-August.

NOL Building stands on a 108,060 sq ft site that is zoned for commercial use under Master Plan 2008.

The building's existing gross floor area (GFA) of 294,500 sq ft is just 8,068 sq ft shy of the maximum 302,568 sq ft allowed for the site, based on the site's 2.8 plot ratio under Master Plan 2008.

Even so, there is potential to redevelop the building, as this could boost its NLA by about 52,700 sq ft arising from a higher efficiency ratio (or ratio of NLA to GFA) of about 86 per cent achievable on a brand-new project, compared with slightly above 70 per cent currently.

Assuming NOL Building is redeveloped, the $400 million indicative pricing reflects a unit land price of about $1,337 to $1,339 per sq ft per plot ratio inclusive of estimated development charges of about $4.5 million to $5 million.

Depending on the buyer's requirements, NOL is willing to lease back the property on short-term to long-term basis, said the marketing agent.

Market rentals for NOL Building are estimated at around $5.50-6.50 psf per month. The building has 276 car parking spaces in a separate podium.


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17 units at 8 Napier changing hands again

Source: Business Times

Seventeen apartments at the completed freehold project 8 Napier, opposite the US Embassy and near the Singapore Botanic Gardens, are said to be changing hands.

Business Times understands that the units are being transacted through the sale of shares in the company which owns the apartments. Pricing details are fuzzy but the deal is thought to value the units - all three bedders of 2,013 square feet each - at around $2,800-3,000 per sq ft or in the region of $100 million in all.

The 17 units being sold are part of an original 19 that MGPA had bought in late 2007 (during the luxury residential property boom) at an average price of $3,550 psf.

In the latest deal, a unit of Keppel Land's real estate fund management arm, Alpha Investment Partners, is believed to be buying shares in Botanic Investments - which holds the 17 units - from Hasetrale Holdings, Mark Wee and former Parkway Holdings boss Tony Tan. The trio bought their shares in Botanic Investments - which was formerly known as MGP Reflections - from MGPA in 2010.

The 17 units in the latest deal are scattered from the second to eighth floors of the 10-storey project, which was completed around mid-2010. Currently, 15 of the project's 46 units have yet to be sold, including the six penthouses.


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Sims Drive freehold industrial plot up for sale asking $48-50m

Source: Business Times

A freehold, landed, light industrial factory located at the junction of Sims Drive and Lorong 17 Geylang is up for sale by public tender, with an indicative price tag of between $48 million and $50 million.

The 34,912.7 sq ft site at 53 Lorong 17 Geylang has a gross plot ratio of 2.5, which translates into a price of $550-$573 per sq ft per plot ratio (psf ppr), based on the indicative price.

No development charge is payable for the redevelopment of the site, which is zoned for Business 1 use - which includes clean industry, light industry, warehouse, public utility and telecommunication uses.

Market watchers note that the asking price is on the high side, even in the current booming industrial property market.

Said an analyst: "The current factory is quite old, so the buyer will need to tear it down and develop a new factory. Under such circumstances, the buyer will have to sell the new development at more than $1,100 psf to make it worthwhile."

However, "the average selling price of new freehold, strata-titled developments in the area is still below $1,000 psf", added the analyst. "Around the Sims Avenue area, the average selling price is about $800-$900 psf."

"The price they are asking for is in anticipation of further price increases but I wouldn't bank on that because that is not certain," said another analyst, adding that there is "uncertainty in further price movements given the recent context of substantial price run-ups". This is especially so given that the government has introduced new rules to keep prices in check, he added.


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Heeton, KSH and Zap Piling acquire Whitley Rd site

Source: Channelnewsasia

A joint venture comprising Heeton Holdings, KSH Holdings and Zap Piling has acquired a site at Whitley Road for S$31 million.

The 21,900 sq ft site is zoned for two-storey mixed landed residential units.

The District 11 site - which is freehold - is currently occupied by a single-storey bungalow and leased out to a kindergarten.

According to a statement released by the group, the site has the potential to be redeveloped into a combination of landed homes such as terrace houses, semi-detached houses or bungalows.

Heeton and Zap Piling will each own 30 per cent of the venture, while KSH Holdings will hold a 40 per cent stake.


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Agency acts against two errant property agents

Source: The Straits Times

The Council for Estate Agencies (CEA) has for the first time taken action against two property agents for acting against the interests of consumers.

One was handed a $3,000 fine and suspended for three months while the other had to pay a $2,500 fine and write a letter of apology to a complainant.

According to the CEA Monday, Kee Lee Ping, 32, failed to declare to her clients earlier last year that the sellers of an HDB flat were her husband and parents-in-law. It was also found that during the same transaction, the agent of six years did not comply with HDB resale procedures by extending the sellers' stay in the flat beyond what was allowed.

The other agent taken to task was Roland Pun Siew Hong, 45. A woman had contacted him earlier last year after coming across an advertisement he had put up about a property for rent.

Following several exchanges, she decided not to engage him as she was unhappy with his service. In a span of one week, the agent of four years sent her 51 abusive SMS messages at different times of the day, which led to her lodging a complaint.

Both agents also had to pay the CEA $1,000 for costs incurred during the investigation.

Property agents who breach the agency's Code of Ethics and Professional Client Care could have their registrations suspended or revoked, and pay a maximum fine of $75,000.

Ms Purnima Shantilal, CEA's director of licensing and investigations, said it takes 'a stern view' of breaches of the Code. 'We will not hesitate to take disciplinary action against offenders,' she added, noting that there would be more disciplinary hearings in the coming months.

Consumers are advised to check CEA's public register of agents at before engaging their services.


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International Markets


China home prices up in June for first time in 10 months

Source: Business Times

China's new home prices rose for the first time in 10 months as the government eased its monetary policies to bolster the economy, according to the nation's biggest real estate website owner.

Home prices increased 0.1 per cent from May to 8,688 yuan (S$1,750) per sq m, , based on a survey of 100 cities.

Beijing led gains among the nation's 10 biggest cities, climbing 2.3 per cent from May, followed by the southern business hub of Shenzhen, which added 0.8 per cent.


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