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26 July 2013

Loan curbs expected to hit home prices, sales
CapitaLand's statement comes as it reports 0.7% dip in Q2 earnings

Source: Straits Times | Money 
By Melissa Tan

HOME prices and sales volumes are likely to head south over the next few months as various measures to curb excessive borrowing take their toll on demand, property giant CapitaLand said yesterday.

"The group envisages some headwinds for the private residential property market in the near term," CapitaLand said in its earnings statement.

"Prices and sales volume of Singapore residential property are expected to moderate as the cumulative impact of the various property measures continue to be played out in the coming months," it added.

CapitaLand Singapore chief executive Wen Khai Meng added at a results briefing held at Capital Tower yesterday: "It's difficult for us to make a call at this point, but it may flow to lower volumes. We have no crystal ball."

The comments come a month after the Monetary Authority of Singapore (MAS) unveiled a new framework for mortgage loans to ensure prudent borrowing. The framework specifies that a borrower's total debt repayments should not exceed 60 per cent of gross monthly income.

CapitaLand group chief executive Lim Ming Yan said yesterday that "on the whole, our households are still fairly prudent" and the Singapore market was still "fairly resilient despite the policies that have been implemented".

"We will continue to be active and continue to participate, but at the same time, we are mindful that the market is volatile, so we will take all this into consideration."

He added that while Singapore households are generally "fairly prudent", he was not surprised that up to 10 per cent of borrowers here are overstretched, a figure that MAS managing director Ravi Menon revealed last week.

He added that the proportion of at-risk borrowers could rise to 10 to 15 per cent if mortgage rates go up 3 percentage points.

Analysts are of the view that prices are likely to ease.

UOB Kay Hian research analyst Vikrant Pandey told The Straits Times yesterday that the impact on private home prices depends on their vacancy rate, which is a function of demand.

The vacancy rate for private residential units here is about 5 per cent at the moment, which is still quite low, but if it goes up to around 8 per cent, then home prices could drop by 5 to 10 per cent, Mr Pandey added.

Maybank Kim Eng analyst Wilson Liew reckons that property prices could fall by up to 10 per cent, though the drop would be seen mainly in the mass-market segment.

"The price run-up has largely been in the mass-market segment and that segment is more likely to include investors who tend to be over-leveraged compared with the high-end segment."

Religare Institutional Research analysts said earlier this week that over 9,000 households here may face problems paying off their mortgages when interest rates rise.

This is based on 10 per cent of 90,000 new homes coming onto the market from now to 2016.

CapitaLand yesterday posted a marginal 0.7 per cent dip in second-quarter earnings from the preceding year to $383.1 million due to lower portfolio gains.

Revenue for the three months to June 30 jumped 37.1 per cent to $1.18 billion.

The property giant sold 139 homes in the second quarter, 31 per cent fewer than in the corresponding period last year.

For the first half of the year, net profit rose 10.1 per cent to $571.3 million and revenue climbed 22.7 per cent to $1.84 billion.

Earnings per share stood at nine cents for the second quarter, down slightly from 9.1 cents the preceding year. Net asset value per share was $3.69 as at June 30, up from $3.55 as at Dec 31.

CapitaLand's share price rose a cent to end at $3.22 yesterday.

A few possibilities

If the vacancy rate for private residential units goes up to around 8 per cent from about 5 per cent now, home prices could drop by 5 to 10 per cent, said UOB Kay Hian research analyst Vikrant Pandey.
Property prices could fall by up to 10 per cent, mainly in the mass-market segment, which is more likely to include investors who tend to be over-leveraged, said Maybank Kim Eng analyst Wilson Liew.
Over 9,000 households may face problems paying off their mortgages when interest rates rise, said Religare Institutional Research analysts. That is based on 10 per cent of 90,000 new homes being completed from now to 2016.

90% of Marina Bay Suites units sold

Source: Straits Times | Money
By Cheryl Ong

ABOUT 90 per cent of the units at the Marina Bay Suites condominium have been sold.

The project, which received its Temporary Occupation Permit (TOP) last month, has offloaded 198 apartments in the 221-unit complex, which is next to The Sail @ Marina Bay.

Prices have averaged $2,700 per sq ft (psf), said Mr ThomasTan, head of residential marketing at Raffles Quay Asset Management, the 99-year leasehold project's manager.

He added that half of the buyers were Singaporeans, with Indonesians, Malaysians and mainland Chinese prominent among the other owners.

Marina Bay Suites has yet to be officially launched but units have been sold at private previews that have been held in Singapore, Malaysia and Indonesia since 2009.

The project has 108 three-bedders - all have been sold - 110 four-bedroom units and three penthouses, one of which went last October for $19.3 million.

The 23 unsold units - 21 four-bedders and two penthouses - are above the 48th floor.

"We are confident they will be sold out by the end of the year," said Mr Tan.

The three-bedroom units range from 1,572 to 1,625 sq ft, while the four-bedders are 2,045 sq ft to 2,691 sq ft in size.

Mr Tan noted that units at Marina Bay Residences, which is also managed by Raffles Quay Asset Management, were bought for $2,000 psf in 2006 and are now selling at $3,000 psf.

Marina Bay Suites was developed by a consortium controlled by Keppel Land, Cheung Kong Holdings and Hongkong Land Holdings.