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05 January 2013

5th January, Saturday




Alexandra becoming hot spot for new homes

Source: The Straits Times

Better known for its industrial and office buildings, the sleepy neighbourhood of Alexandra has slowly been gaining favour among home buyers in recent years.

More private property projects - such as the Metropolitan, Alexis and Echelon - have been or will be built on sites previously occupied by public housing.

The mature estate's proximity to the Central Business District, Orchard Road and public transport has made it a favourite locale for expats looking for rental properties. This demand for rental housing has led to an increase in investor interest, pushing up the prices of private homes in the area.

The average prices of new homes launched this year hovered between $1,600 per sq ft (psf) and $1,800 psf. Property prices of private homes in Alexandra rose about 8 per cent to 10 per cent in the final three months of last year, compared with the same period in 2011, outperforming the 2.8 per cent rise recorded in the Urban Redevelopment Authority's fourth-quarter flash estimates for the same period.

The heightened interest has also trickled down to land prices, with winning bids for government land tenders moving up 15 per cent to 27 per cent in the last year.

Prices of homes in Alexandra are set to increase as future purchasers who are keen to invest in the traditional prime areas such as District 9, 10 and 11 may consider alternative choices in the fringe areas."


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Big incentive to build large EC units

Source: The Straits Times

Large executive condominium (EC) units have been making headlines recently with their record high prices.

The move by developers to build these spacious, often lavishly appointed units has proved controversial, especially given the public policy objectives of increasingly popular ECs.

But there are many incentives for EC developers to build these larger units, so long as they are permitted to do so.

A few of these penthouses come with a large roof terrace - a concept that is hardly new in private housing. This feature is becoming increasingly common in ECs as developers build bigger homes to differentiate their projects.

Uncovered roof terraces are not part of a project's allowable gross floor area, but buyers pay for them even though they cost developers relatively little to build.

Building large penthouses is thus the easiest and most efficient way for developers to up the ante in the competitive EC landscape. Sometimes, it is simply a marketing tool, allowing them to package a project as luxurious and higher-end while having to fork out minimal extra cost.

And this formula seems to have worked well.

About 30 per cent of sales hotline enquiries about CityLife, for instance, were about the presidential suite or the six skysuites, its marketing agent said earlier, even though they make up only about one per cent of the 514-unit project. The 394-unit Heron Bay in Upper Serangoon - the first EC to introduce five-bedroom apartments - also saw healthy sales when it was launched in September last year. It was more than four times oversubscribed - one of the best responses to an EC project in a number of years.

The figures clearly show that large, fancy units get buyers interested in an EC project and into the showflat. Even if they do not buy the large unit, they might decide on another unit at the project.

It is also genuine demand that is driving developers to build units with bigger sizes for Housing Board upgraders. This is because large units allow more than one generation to be housed under one roof.

The HDB used to meet niche demand for large flats through its executive apartments and maisonettes, which average 1,600 sq ft. But it stopped building them in 1995 when ECs were launched.

As a result, there is a scarcity of big flats in the mass market. Most large units these days are ultra- luxe homes in prime districts selling for more than $3 million.

It is no surprise then that large EC units, marketed under the guise of dual-key units, skysuites or penthouses, are often the first to be snapped up. And it is this strong demand for such homes and the success of EC projects with large and luxurious units that prompt other developers to do the same.


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EC rules can be tweaked: analyst

Source: Channelnewsasia

The average number of penthouse units in executive condominium (EC) projects has climbed slightly in the past year, according to market watchers.

A property consultancy said that in 2010 and 2011, on average, penthouses made up about 3 to 5 per cent of an EC development. This number rose to between 5 and 6 per cent last year.

According to analysts, ECs still serve their purpose of providing alternative housing for the sandwiched class, but some rules could be fine-tuned.

One analyst suggested that the government could also put out guidelines to limit the size and number of large units within an EC project. For example, a penthouse unit should not be larger than 2,000 sq ft and larger units of between 1,200 sq ft and 1,500 sq ft should not constitute more than 15 per cent of the development.

Meanwhile, some analysts say the trend of developing large EC units is not very different now as compared to the 90s. One analyst said the number of sale transactions for EC units over 2000 sq ft remain quite similar at over two per cent on average, and the ongoing debate could be a result of rising property prices.

The National Development Ministry said it is watching developments in the EC market closely and will consider further measures if needed.


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Leasing of private homes to slow in 2013: forecasts

Source: Channelnewsasia

Rentals for private homes may have hit record prices and volume in 2012, but some market experts said the market will be slower in 2013.

Median rents as of October 2012 has reached S$3.75 psf, 14.3 per cent higher than the S$3.28 psf in Jan 2011.

Tenants' preference for newer properties has been driving up rentals to record highs (on a psf basis) in 2012. With new private homes getting smaller, rents on a per dollar square foot basis have been getting higher -- this despite the rising number of vacant private homes.

Yet, experts said Singapore's tighter foreign manpower policy may be a dampener to the leasing market as there will be fewer expats with a much leaner leasing budget.

Overall, rental should come down five to 10 per cent. But certain locations, particularly those in the suburban regions, should hold, said an analyst.

Looking ahead, experts said the expected increase of shoebox units available for leasing may keep rentals competitive in Singapore. The stock of shoebox units is expected to increase, hitting about 9,700 units by 2015. But unlike existing units, many new ones will be found in suburban areas.


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Investment Sales


Investment funds big sellers of property

Source: The Straits Times

Investment funds were big sellers of property here last year, with the value of sales more than double that of purchases amid weaker economic conditions.

The funds mainly sold off office buildings and industrial properties and invested in hotels and retail malls.

Analysts estimate that funds sold properties here worth a total of up to $3.36 billion last year. This was well above the value of purchases, of between $1.17 billion and $1.31 billion.

Fund acquisitions were lower last year compared with 2011 due to weaker economic conditions.

One of the biggest fund purchases last year was of Compass Point by Prudential's Asia Property Fund in a joint venture with Frasers Centrepoint for $519 million.

Fund divestments last year were mainly of office buildings, analysts said, likely because office yields have fallen as a result of rental declines while prices continued to hold firm.

Since many of the office properties sold were acquired between 2007 and 2010 and their prices have risen, funds could be selling them off to realise capital gains and channel their money to other countries that have the potential for higher returns.

Office buildings sold by funds last year include 16 Collyer Quay, formerly known as Hitachi Tower, 78 Shenton Way and 79 Anson.

Analysts said the trend of a net divestment of property by funds could continue this year.


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International Markets


China home prices inch up, snapping decline

Source: Business Times

Average home prices in China's 100 major cities edged up 0.03 per cent in December from a year earlier, snapping eight months of decline and reinforcing signs of a recovery in the property market, a private-sector survey showed Friday.

The data from China Real Estate Index System (CREIS) added to evidence that the property market has found support from broad monetary policy easing aimed at reviving economic growth, despite central government pledges to maintain curbs specific to the property sector.

Rising home prices could reignite official concerns about property inflation and trigger fresh property curbs.

Although the survey marked the first increase in prices over a year earlier for some months, it also showed the seventh straight monthly increase. Average home prices in the 100 largest cities rose 0.2 per cent in December from November. In the 10 biggest cities, including Beijing and Shanghai, average home prices rose 0.5 per cent from November and were up 1.1 per cent from a year ago, the second year-on-year increase in 2012.

The Chinese government is due to publish December home prices in 70 major cities on 18 January. Home prices rose 0.3 per cent in November from the previous month, after a 0.05 per cent rise in October, official data showed.


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