Real News‎ > ‎2013‎ > ‎February 2013‎ > ‎

06 February 2013

6th February, Wednesday




Few bids for site in Queenstown

Source: Business Times

A plum, 99-year leasehold private housing site opposite the Queenstown MRT Station drew just three bidders, surprising property consultants who had expected between five and 10 contestants for the plot.

The top bid was, however, within expectations at $562.8 million, or $883 per sq ft per plot ratio (psf ppr). This came from a consortium backed by Hong Leong Holdings and City Developments. Predictions for the top bid had ranged from $700 psf ppr to $1,100 psf ppr.

Some market watchers whom BT had earlier spoken to had expected the plot to be keenly contested because strata landed homes could be built on it with prior written approval from the Housing & Development Board (HDB). They say that such sites are getting harder to come by.

Two tenders for 99-year leasehold residential plots at Lakeside and Ang Mo Kio after the latest property-cooling measures were announced had attracted more than 10 bidders. The plot is also located in an area known for its highly sought-after homes.

One reason the tender fell short of expectations could be the large sum of over $500 million that developers had to cough up for the plot. This could also have reduced interest in the site.

The effect of the cooling measures, rolled out in January, may be starting to set in, too. Said Lee Sze Teck, senior manager of Training, Research and Consultancy at DWG: "The recent government cooling measures may have put off some developers from bidding for sites in the Rest of Central Region."

He noted that supply likely to come onstream in the region could also have dampened interest in the site. "There have been quite a number of sites sold in the nearby Redhill area in 2012 - Prince Charles Crescent, Alexandra View. This could have affected interest from developers as well."

Located along Commonwealth Avenue and just next to Queenstown MRT Station, the 1.2-hectare plot can potentially yield about 700 homes, according to the HDB. It has a 4.9 plot ratio (ratio of maximum gross floor area to land area), which means it can accommodate a high-rise condo of over 40 storeys, said consultants.

DWG's Mr Lee estimates that the developer's breakeven price is between $1,300 and $1,350 psf. The estimated selling price is in the range of $1,550 to $1,600 psf.


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Indirect discounts for home buyers under review

Source: The Straits Times

The dangling of sweeteners to home buyers by developers to take the sting out of recent property cooling measures is being reviewed by the Government.

It is concerned that sweeteners such as stamp duty rebates and furniture vouchers cause home prices to be artificially inflated.

The Straits Times understands that the Urban Redevelopment Authority (URA) is looking into the practice and might act soon, as indirect discounts could make the cooling measures seem ineffective.

Unlike upfront discounts, some rebates and vouchers are given only after a buyer has completed a purchase, so the price cuts are not reflected in the sales caveats lodged with the URA.

That means home prices fed to the URA quarterly price index - based on caveats lodged - might not reflect real property values. Experts say this causes home prices to be less transparent and keeps them artificially inflated.

Developers say URA has already been encouraging them informally to be more transparent with prices. Some add there is no benefit in masking prices as the Government has stated its intention to see prices soften and artificially propping up prices might only attract more measures.

Some experts add that the review is overdue as developers' indirect discounts are negating the impact of the measures.

A National Development Ministry spokesman said the true purchase price of the property must be accurately conveyed to the potential buyer so that he can make an informed decision.

The Commissioner of Stamp Duties can also recover any deficient duties if the declared price of a property falls below its market value, he added.

The Monetary Authority of Singapore said that since 2002, it has required banks to factor in any discount or other benefit when calculating an appropriate loan.


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Affordability remains core principle: Khaw

Source: Today

Affordability remains the “core principle” in how new flats are priced so that Singaporean families can own their homes, National Development Minister Khaw Boon Wan told Parliament Tuesday.

That is why the Government applies a “substantial price discount” to new flat prices, which are set taking into account typical household incomes, the market price of similar resale flats in the vicinity, as well as the flats’ attributes, such as their size and location, he added.

Eligible first-time buyers also get a further S$60,000 in housing grants, he noted.


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S$22m paid in resale levies to HDB every year: Khaw Boon Wan

Source: Today

About S$22 million in resale levies are paid to the Housing and Development Board (HDB) every year.

National Development Minister Khaw Boon Wan said the HDB receives close to 3,000 appeals to waive or reduce the levy every year.

Several Members of Parliament rose to ask if help can be extended to those who have problems paying the levy.

Mr Khaw said for deserving cases, the HDB allows the levy to be incorporated into the price of the new flat, so it can be paid in instalments, or out of CPF.


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Demand for shoebox units cools off

Source: Channelnewsasia

The hype over shoebox property units seems to have cooled down.

Sales transactions in these small private apartments have fallen by 46 per cent in the second half of 2012.

In the second half of 2012, some 1,372 units were transacted compared to 2,539 units in the first half of last year.

Experts cited fewer launches as developers focus on building bigger units to meet demand.

Still, analysts said there is always demand for such units that are generally smaller than 700 sq ft.

Demand for shoebox units was the highest in the city area and its fringes last year and this was translated to large price increases. Prices of shoebox units in the city fringes or Rest of Central Region (RCR) grew eight per cent in 2012 from 2011 and those in the city up by 3.1 per cent. Shoebox units in suburban areas are less popular and their prices dipped 6.3 per cent last year.

With the latest property cooling measures, experts said the tables may now turn in favour of shoebox units that are further away from the city. Their lower prices have now become an attraction to home buyers.

With property developers now focusing on building larger homes, experts said a supply shortage for shoebox units is beckoning.

With supply now curbed, prices should also stabilise. Analysts expect prices of shoebox units to soften by one to two per cent this year.

But for the time being, prices may remain flat for at least the next six months as buyers stay on the sidelines to ascertain the effects of the cooling measures and the general direction of the world economy.


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Landmark ruling: Property taxes for landlords remain

Source: The Straits Times

Several million dollars that the taxman stood to lose will remain in his clutches after a recent landmark Court of Appeal ruling.

The closely watched court dispute centred on whether building depreciation expenses could be subtracted from gross rents when computing annual values for the purpose of assessing property tax.

The annual value of a property is its market rent per year. Higher gross rents for a building mean that it will have a larger annual value, which in turn means that its landlord has to pay more in property taxes.

Landlords usually include depreciation expenses - costs related to the deterioration of fixtures such as lifts - as a hidden item in the gross rents tenants pay.

The Court of Appeal ruled on 17 January that depreciation expenses must be included in gross rents when computing annual values, overruling a decades-old High Court case.

Depreciation expenses are separate from service charges, which tenants pay as part of the gross rent for services such as cleaning and security provided by the landlord.

Iras has all along included depreciation expenses as part of gross rents when computing annual values, and excluded service charges.

Iras said some other major building owners had also challenged its depreciation expense policy and as a result it had been facing close to 4,000 cases prior to the Court of Appeal's ruling.


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