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03 November 2012

3rd November, Saturday



Reduced supply pushes prices up

Source: The Straits Times

Despite a record number of new flats launched by the Housing Board (HDB), prices of resale units continue to rise - 3.9 per cent so far this year - outpacing both the private market and economic growth.

This, said analysts, is largely due to a reduced supply of resale flats as more HDB dwellers choose to sublet their units when they upgrade to a private home.

Helped by low interest rates and healthy rentals from HDB units, these dual-property owners - of whom there are 33,000, or 4 per cent of all HDB flat owners - can use the rental to help cover mortgage payments on their private property.

Owners and analysts said a 2010 cooling measure - which barred private-property owners from owning both private and public homes - has also made HDB upgraders more determined to hang onto their flats.

Owners of private property who buy HDB flats must dispose of their private home within six months. However, those who own flats can still buy private property. And after they have stayed in the flats for the minimum five years, or less in some cases, they can rent out the whole unit while living in their condos.

The number of resale transactions has dropped by a quarter since the 2010 measure. In 2010, 32,000 resale flats changed hands. Last year, this fell to 25,000 and the figure for this year is expected to be the same.

At the same time, the number of HDB units rented out has skyrocketed. In 2009, about 24,000 units were approved for subletting by HDB. This has surged to 43,000 as of the third quarter of this year, an 80 per cent increase. This means that about 4.5 per cent of the stock of HDB flats is being sublet out.

Agency bosses said their subletting business has grown by 10 to 20 per cent while resale transactions have shrunk by about the same proportion.

DWG senior manager of training, research and consultancy Lee Sze Teck expects the bottleneck in the supply of resale flats to ease in a few years, when those who are waiting for their new flats to be built get their keys and sell their old units.

With the Government curbing the number of foreign workers and a huge supply of new flats and private units, analysts expect rental yields to fall in a few years.

The HDB has rolled out a record 27,000 new flats this year, and there are over 100,000 new private residential units and executive condominiums in the pipeline.


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Rents of private flats a mixed bag

Source: The Straits Times

Rents for private apartments have been varied this year, with sharp rises in places like Geylang and Eunos but dips in Macpherson and Braddell.

The variations, strikingly wide in places, could be due to several factors, including the size and quality of the apartments and what amenities are on offer.

Landlords with flats in District 14 - which include Geylang, Eunos, Paya Lebar and Kembangan - topped the table with per sq ft (psf) rents rocketing 22 per cent in the first nine months of this year, according to the Singapore Real Estate Exchange (SRX). This means average rents rose from $3.03 psf a month to $3.71 psf in the period.

Rental gains of more than 10 per cent were recorded in District 3, which includes Queenstown and Tiong Bahru; District 12, consisting of Balestier, Toa Payoh and Serangoon; and District 20, where Bishan and Ang Mo Kio are found.

It was a different story in District 13, which includes Macpherson, Braddell and Potong Pasir, where rents slid by 6 per cent to $3.34 psf a month.

Average rents were down 4 per cent to $5.17 psf a month in District 2, which covers areas such as Anson Road, Shenton Way, Raffles Place and Tanjong Pagar.

An analyst said that smaller units generally fetch higher rents on a psf basis. Tenants also pay more for newer projects.

The leasing market remained red hot with a record 14,029 leases inked in the third quarter - 8 per cent higher than the third quarter of last year, which was also a record.

Median rents reached historic highs for both landed and non- landed homes in the three months to 30 September.

But these strong transaction numbers belie a weakness. Transactions have been rising due more to shuffling within the market, creating an increased velocity of transactions, said another analyst.

The completion of new developments is intensifying competition for a limited pool of tenants, he added. There is also an increasing supply of completed units in general, and rising vacancy rates and a downward pressure on rents are expected next year.


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Selling Telok Blangah: It's parked in a good place

Source: The Straits Times

It is known for its nature spots and as a gateway to Sentosa but Telok Blangah has a more potent attraction - its proximity to the Central Business District and nearby business parks.

The quiet estate's prime position means demand for housing could grow as Singapore develops into a global financial hub and wealth centre, experts said.

Yet despite Telok Blangah's location at the city fringe, it remains largely tranquil, largely due to its vast expanse of parkland. A park connector, Henderson Waves, links Mount Faber Park and Telok Blangah Hill Park.

Being close to the CBD, Mapletree Business City, Merrill Lynch HarbourFront and Alexandra Technopark gives it even more powerful selling points, as the active rental market attests.

There is a ready pool of expatriate tenants who want to lease public or private housing for short- or long-term stays, analysts said. Tenants are also drawn there by the presence of the VivoCity mall, one of Singapore's largest shopping centres, and HarbourFront MRT station. The Telok Blangah MRT station along the Circle Line also opened last year.

Most leases are signed at newer condominium developments, particularly at the Caribbean at Keppel Bay.

Rents at the 969-unit Caribbean at Keppel Bay range from $6,000 to $6,500 a month for a 1,250 to 1,350 sq ft unit while a unit above 2,000 sq ft can command around $8,000 a month. Resale volume at the Caribbean at Keppel Bay also accounted for nearly a quarter of total new sale, sub-sale and resale transactions over the past five years.

Though the rental market is buoyant, the number of new developments completed over the past five years is fairly limited.

There are also no sites in Telok Blangah under the Government Land Sales programme for the second half of this year, though there are some vacant plots in the area that the Government may offer for sale in the future.

Only three new condominium projects have been launched since last year - Foresta@Mount Faber, Skyline Residences and Harbour Suites. These are expected to obtain their temporary occupation permits some time between next year and 2015.

Other recent projects at the Telok Blangah area include the 1,129-unit Reflections at Keppel Bay condo and the new 333-room Bay Hotel Singapore directly opposite Sentosa Gateway.


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S'pore among 10 most active cities for investments in commercial property: study

Source: Business Times

The Republic remained one of the 10 most active cities for investments into commercial property globally, a report has shown.

It was placed ninth out of 56 cities studied by a consultancy for its third-quarter Global Capital Flows report. The ranking is based on the total volume of commercial real estate transactions in the city for the quarter.

Investments made in Singapore totalled US$2 billion in the third quarter, up from US$1.3 billion a year ago.

Singapore's third-quarter figures compared with US$7.1 billion worth of deals done in London over the same period. London was the most active city for commercial real estate investments in the third quarter. New York took second place with transacted volumes of US$4.8 billion.

For the nine-month period that ended Sept 30, Singapore recorded US$5.8 billion in investments, which helped to improve its ranking to eighth overall.

Globally, total year-to-date volumes stood at US$295 billion, down 7 per cent from the same period last year. But the report still expects full-year figures to cross US$400 billion, given that the end of the year is usually a busy period.


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