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29 September 2012

29th September, Saturday




Redas: Cool down on cooling measures

Source: Business Times

The property sector does not need another round of cooling measures, at least not before a thorough review of the earlier measures put in place has been conducted.

This was the main message put forth by Wong Heang Fine, president of the Real Estate Developers' Association of Singapore (Redas), at the organisation's Mid-Autumn Festival Friday.

A host of issues, ranging from the potential oversupply of housing in Singapore, and fears of a slowdown in the macroeconomic resulting from economic woes in both Europe and the US, continue to plague developers, said Mr Wong.

According to Chia Ngiang Hong, group general manager at City Developments Limited, it is unlikely that further cooling measures will be implemented this year.

Added Lee Liat Yeang, a partner at Rodyk & Davidson's Real Estate Practice Group, said: "Based on what I see and sense, further cooling measures are neither necessary nor likely, at least for the rest of this year for the residential property market. It is hard to foretell next year's events. "While the residential sector should be 'safe' for now, the commercial sector, especially industrial sector may be more at risk of policy intervention."

A report issued by DWG earlier this month noted that speculation appears high in the strata-titled commercial and industrial markets with many new units being held for barely three months before they are flipped.

On the residential front, the month of August saw sales of private residential homes, excluding executive condominiums, fall 27 per cent to 1,421 units. This was mainly attributable to a dearth of major new project launches as developers avoided the Hungry Ghost month.


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Record home rents, leasing volumes in Aug

Source: Business Times

Private housing rentals in per sq ft (psf) terms as well as the volume of leasing transactions hit fresh highs last month, an analysis by a consultancy showed.

But some market watchers warn that this situation may not hold for large apartments (2,000 sq ft and above) in the prime districts of 9, 10 and 11 as more supply is completed and the influx of expats into Singapore slows.

The analysis of Urban Redevelopment Authority data showed that 5,006 leases were inked for private residential properties in August 2012, up 6.1 per cent from July and 12.4 per cent from the same period last year.

For the first eight months of this year, total transactions rose about 6 per cent over the year to 32,938 units. This figure covers leases for both landed and non-landed private homes but excludes executive condos, which are a public-private housing hybrid.

The monthly median rental value for non-landed homes was $3.67 psf in August, up seven cents or 1.9 per cent month on month, and up 22 cents or 6.4 per cent year on year. The median rent for landed homes was $2.86 psf a month in August, up 1.8 per cent month on month and 2.5 per cent year on year.

The robust residential rental market in August was attributed to "still-strong leasing support from a steady flow of employment pass (EP) holders". Two factors should cause rents to "ratchet up for the foreseeable future", said the consultancy.

First, EP holders who have a rental allowance, albeit a shrunken one, will converge towards smaller-format homes, driving up rents on a dollar psf basis.

"Two, there seems to be anecdotal evidence that there is another group of new EP holders who are given low or no rental allowance. Those in this set who do not want to rent HDB flats will come together and jointly rent a private apartment. Doing this significantly increases their affordability levels, pushing up rentals in both absolute dollar quantum and psf terms for larger apartments, since they can be shared.”

These two forces are expected to drive rents, transaction volumes and values upwards for the foreseeable future. This forecast is predicated on immigration policies not being tightened up.

Some agents say cracks are beginning to surface in the leasing market for larger apartments (at least 2,000 sq ft) in the traditional prime districts.

"Lately, we've seen properties that have been vacant for two to four months in between leases. In comparison, during a more active market like in 2009/2010, this turnover period could be less than a week and as short as three working days," said an analyst. That said, she noted that the total volume of leasing transactions has grown as new projects have been completed and added to the pool of rental apartments.


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Private apartments under $1m

Source: The Straits Times

News that a HDB flat sold for $1 million sent a chill through many home seekers but cheaper homes can still be bought without paying a king's ransom - just don't expect too much for your money.

Buyers willing to compromise on facilities, location, appearance and other features can land a private apartment for under the $619 per sq ft (psf) price paid for that 1,615 sq ft HDB home in Queenstown this month.

There are at least 10 private non-landed developments where units - not the shoebox variety - have sold for less than $600 psf this year, giving a total price tag of below $1 million.

Some of the projects are old and in suburban areas far from MRT stations while others may have been sold to relatives at a discounted price, were stress sales or recorded at a lower psf due to a flat's large size. Some might also not come with facilities.

The cheapest home sold this year was a 2,454 sq ft unit at Toh Tuck Lodge that went in January for $680,000 - or $277 psf, according to caveats lodged with the Urban Redevelopment Authority. But the unit at freehold Toh Tuck Lodge could have been sold at a discount to relatives or have a lower psf due to it having an open terrace or huge private enclosed space. The next most recent sale was in April last year when a unit went for a significantly higher $795 psf.

Other seemingly low-priced homes include a 2,282 sq ft unit at Sembawang Cottage that sold for $920,000 - or $403 psf - in June and a 1,970 sq ft apartment at Lakeside Tower in Yuan Ching Road that changed hands in January at $905,888 - or $460 psf.

Developments like Lakeside Tower and Lakeside Apartments, both in Yuan Ching Road, and Phoenix Heights in Bukit Panjang have consistently recorded prices of less than $600 psf although the three developments are at least 35 years old and on 99-year leases.

An analyst said it will get more difficult to find homes below $600 psf and buyers will have to compromise on factors like location.


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Geylang a growing hot spot for investors

Source: The Straits Times

Mention Geylang and an unappetising image of shabby shophouses, street girls and sleazy budget hotels springs to mind. But the much-maligned area is a growing hot spot for savvy property investors chasing high capital gains and rental yields.

Property consultant Lee Sze Teck said that since the second quarter of 2009, median prices of newly launched units there have shot up from $545 per sq ft (psf) in the second quarter of 2009 to $1,255 psf this quarter. Ness in Lorong 32, for example, launched early this year, drew average prices of $1,302 psf in June.

Mr Lee, Dennis Wee Group's senior manager of training, research and consultancy, said the interest in the area is growing partly because of the slew of new launches.

There are at least 40 projects, comprising 2,190 units, that will be launched or completed in the next five years or so. This will bring the total number of homes in the area to more than 5,500. There have been 22 launches since 2010 - putting a total of 1,438 units on the market - with 18 to come. About 93 per cent of the flats already launched have been sold, Mr Lee noted.

The 78-unit Casa Aerata at Lorong 26 and the 62-unit Centra Suites at Lorong 25A are the latest projects to be completed.

Another analyst noted that most new projects in the area are small, with fewer than 100 units of 818 sq ft on average. The small size and the lower capital outlay make them investor-friendly, he said.

Resale flats are also thriving, with prices rising from $410 psf in the second quarter of 2009 to $888 psf this quarter, Mr Lee said. But one analyst pointed out that the rate of increase over the last three years has slowed, partly due to new launches in nearby estates like Mountbatten and Telok Kurau.

The buoyant market seems to fly in the face of conventional real estate wisdom, which demands good transport links and other key facilities to attract buyers.

Geylang, which is infamous for its red-light district and registered brothels, does not have an MRT station, although it is a short drive or bus ride from the city centre. But bad traffic conditions often plague drivers, a situation worsened by the quick pace of development in recent years. There are no big malls in the area and at night, it is a common to see prostitutes plying their trade along some of the even-numbered lanes.

Yet rental demand is strong, with yields of about 5 per cent, higher than those at suburban condos, Mr Lee said. For instance, a two-bedder at Casa Aerata that was bought for $600,000 has been rented out at $2,800 a month, a yield of 5.6 per cent.

Analysts noted that Geylang's potential is set to rise as it benefits from the upcoming sports hub development at Kallang. The Government's plan to develop the 64ha Kallang Riverside and Paya Lebar Central areas will also give Geylang, sandwiched between both spots, an extra boost.

But experts warned that potential buyers or investors could face a problem getting bank loans, given the area's reputation and plethora of shoebox units. That could mean investors having to cough up as much as 50 per cent in cash, Mr Lee added.


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August resale property prices up slightly

Source: The Straits Times

Resale prices of private homes inched up across the board last month, reversing the overall fall in July as buyers were lured by new project launches.

Prices picked up 1 per cent overall, according to flash figures from the Singapore Residential Price Index (SRPI) Friday, after a 0.6 per cent overall fall in July.

The statistics are compiled by the National University of Singapore, and track a basket of completed non-landed projects.

Resale prices of non-central flats rose 1.5 per cent last month, the best performer for the month and a reversal of the 0.6 per cent drop recorded in July. Central region home prices increased 0.5 per cent, rebounding from the 0.5 per cent fall the previous month.

Prices of "shoebox" units - typically 500 sq ft and less - rose 0.8 per cent, the same increase recorded in July.

An analyst pointed out that buyers with budget concerns and those unable to secure choice units in new launches are increasingly open to options in the secondary market.

Another analyst said non-central homes have had the strongest resale price growth in the past 12 months. Although the prices for this segment have posted declines in some months during that period, the overall values have increased by 4.5 per cent year-on-year, he said.


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Investment Sales


Far East, UIC, Sim Lian vying for NOL Building

Source: Business Times

Far East Organization, United Industrial Corporation and Sim Lian are among the parties vying for the freehold NOL Building at Alexandra Road, Business Times understands.

Negotiations are said to be underway to up the price to as close as possible to the $400 million level, the indicative pricing reported when the building was put up for sale in early July by its owner, Neptune Orient Lines (NOL) Group.

An expression of interest closed in August, which is thought to have attracted over 10 offers. Of these, talk in industry circles is that three parties were shortlisted to take part in a final bid submission which closed about a fortnight ago.

The highest price attained so far is thought to be in the high $300 million range but still short of $400 million.

The 26-storey office block's existing net lettable area (NLA) is 207,505 sq ft. It is 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.

Market watchers reckon that contenders for the building are likely to look at redeveloping the site into a new commercial project with a view to strata titling the space into smaller units for sale to meet high demand for strata offices and shops.


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