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23 January 2013

23rd January, Wednesday




Foreigners' share of private home buys seen shrinking in first half

Source: Business Times

Foreigners' share of private home purchases in Singapore is expected to decline in the first half of this year, given the harsher additional buyer stamp duty (ABSD) rates imposed on them under the recent property cooling measures, say property consultants.

Last year, foreigners who were not Singapore permanent residents (PRs) accounted for just 6.3 per cent of all private home purchases on the island - the lowest proportion since 2003 and a significant drop from the 17.6 per cent share in 2011, an analysis of URA Realis caveats data showed.

And with the ABSD rate for this group jacked up to 15 per cent since Jan 12 this year, analysts forecast that these non-PR foreigners' share of private home buying will shrink to as low as 3 per cent in the first six months of this year.

PRs' share of private home purchases increased from 13.4 per cent in 2011 to 15.8 per cent last year. This was attributed to first-time PR home buyers being spared the ABSD rod last year. However, things have changed. Since 12 January, PRs have to pay 5 per cent ABSD even on their first Singapore home purchase, and 10 per cent for any subsequent purchases.

As a result, analysts expect the PR buying share to slip in the first half to 5-15 per cent. "The ABSD's impact on PRs is a bit hard to assess as it depends very much on whether it's their first property purchase, in which case a 5 per cent ABSD rate is a figure that some people may be able to stomach, but some can't," says one analyst.

One analyst said that depending on economic sentiment and take-up at new launches, more foreigners (including PRs) could potentially return to the market assuming market conditions normalise towards year-end.

The analysis showed that despite mainland Chinese overtaking Malaysians as the top foreign buyers (including PRs) of private homes in the fourth quarter of last year with a 24.4 per cent share, Malaysians posted the lion's share on a full-year basis. They accounted for 26.1 per cent of caveats lodged by foreigners last year (including PRs), followed by mainland Chinese (22 per cent) and Indonesians (19.4 per cent).

Another trend gleaned is that among the pool of private homes acquired by foreigners including PRs, the proportion of homes located in the suburbs, or Outside Central Region (OCR), has been picking up in recent years. Last year, OCR accounted for 55 per cent of the 7,124 private homes bought by foreigners, up from a 49 per cent share in 2011 and 39 per cent share in 2010. The trend reflects a shift in foreigners' focus to more affordably priced suburban homes following the ABSD's introduction in late 2011. Furthermore, it predicts this OCR share will rise by up to 5 percentage points this year, given that the high-end market has become relatively less attractive as an investment asset or accommodation choice following the latest round of ABSD rate hikes.


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61% of Q Bay Residences sold so far

Source: Today

Q Bay Residences at Tampines has sold 312 out of its 510 launched units as of Monday, after its launch last weekend.

The project is jointly developed by Fraser and Neave (F&N), Far East Organization and Sekisui House.

According to a statement released by F&N on Tuesday, the units were sold at an average price of S$1,007 per sq ft.

Excluding Q Bay Residences, F&N said it has a total unsold inventory of 299 units, or about 5 per cent of projects currently under development.

The unsold inventory is primarily from the eCo, Palm Isles, Seastrand and Flamingo Valley private residential projects.

F&N said it plans to launch its remaining site in Woodlands by the second quarter of 2013. This will be jointly developed with Lum Chang Binjai Holdings, and is expected to yield around 500 units.


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Cooling measures need not be so ‘blunt’

Source: Today

Property developer GuocoLand, the Singapore-listed firm controlled by Malaysian billionaire Quek Leng Chan, would like to see a more calibrated approach to property cooling measures by the Government rather than a one-size-fits-all approach.

GuocoLand, which focuses mainly on the top end of the market, also feels that the Government should pay less attention to the private sector.

“It should concentrate on its role of providing affordable housing for the masses. It already caters to more than 80 per cent of the population compared with Hong Kong, where the public sector is less than 50 per cent,” said its Chief Operating Officer, Mr Cheng Hsing Yao. “If people can afford S$2 million EC (executive condominium) penthouses, they do not need government help. It should interfere in the remaining 20 per cent of the market as little as possible.”

While GuocoLand thinks that the current measures will have little adverse impact on its sector of the market, it expects sales across the industry to slow down but with prices staying broadly flat.

Meanwhile, GuoccoLand’s group head for Singapore, Ms Trina Loh suggested that changing the system of having “reserve” prices on land sales might offer another way of moderating property prices. As the reserve price is based on historic property values and not the future outlook of the market, “perhaps we should look at auctions, like how Hong Kong conducts its land sales”.

Ms Loh was also not happy with the decision to start charging for private enclosed space (PES). In a hot climate, such open spaces provide some relief and charging for the space will discourage developers from providing such amenities, she feels.

GuocoLand thinks the latest efforts by the Government to cool the market are “unlikely to be its last”, especially in the current low interest rate environment.


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SBF Center office units see keen interest

Source: Business Times

Far East Organization's SBF Center has been receiving keen interest in the weeks leading up to its official launch, as investors continue to flock to the commercial sector in search of better deals.

Business Times understands that the office space is being marketed from about $3,300 psf of which those within the $3,300-$3,500 psf range have met with keen expression of interest; the medical suites are being marketed at between $3,800 and $4,000 psf.

Specifically, some interest has been garnered for the whole floor plates (office), which are located around the middle floors.

The 99-year leasehold development features 197 offices - 192 smaller strata units ranging from 592-1,442 sq ft and 10,549 sq ft for five floor plate offices - and 48 medical suites of between 614 and 1,345 sq ft up for sale.

Lee Sze Teck, senior manager, training, research and consultancy, at DWG said that he expects keener interest in commercial projects as compared to industrial projects. "SBF Center should see very healthy interest because strata office space, especially new ones, are not easy to find," he said.

That being said, industrial projects that have completed construction and have a ready tenant might see interest from investors. "The rental will be able to help them cover some of the mortgage instalments," said Mr Lee. "And, these investors are likely going in for the long term and so are less concerned about the sellers' stamp duty."

Mr Lee said he expects strata office space prices to climb as much as 10 per cent this year, while prices of retail space could remain flat due to uncertain market conditions.

Another analyst said that those looking at longer term investment will continue to look to industrial properties.

"Sellers of the commercial/retail developments might increase their asking price by between 5 and 10 per cent - due to the heightened interest - resulting in a higher total quantum pricing. "On the basis that all things being equal, and with rents for commercial/retail developments expected to stay relatively flat, this may result in an erosion of yield returns. Investors may then return to the industrial sector, where they find yield comparatively attractive, on top of the lower upfront cash outlay," he suggested.


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Most experts see industrial property prices to continue rising

Source: Channelnewsasia

It's all quiet on the industrial property front more than a week after Singapore's first cooling measure on the sector kicked in.

Most market experts are confident that industrial property prices will hold steady and may even increase by up to 15 per cent this year.

But there're others who believe the sector is set for a correction.

Experts said unlike the Additional Buyers' Stamp duty on residential properties, the Sellers' Stamp Duty will not apply if a property is sold from the fourth year. There's also no additional cost immediately after buyers sign on the dotted line.

An analyst said: "The government only wants to wipe off speculators but not the investors. Since there is no increase in cost to industrial investments, you will probably see one or two months of digestion period. This year's increase won't be as strong as last year's - 20 over, 30 per cent. But in the range of 10-15 per cent, I think it is about there. The industrial segment is still supported by very strong investment demand.

DWG's senior research manager, Lee Sze Teck, said: "Property will remain in the positive territory, remaining in the positive territory this year, probably 5 per cent."

But some experts believe Singapore's slowing economy could hit industrial property prices.

One analyst said: "Prior to these measures, there is already a huge over supply in industrial strata units - in many areas like Woodlands, Kaki Bukit, Ubi, Yishun. So with these measures, definitely it will impact the market. I see a downward trend say 15-20 per cent in 2013, 2014.


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