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04 June 2013

13,600 flats on track to be ready by end of year

But Govt also wants to ensure there is no oversupply, says Khaw

Source: Straits Times
By Charissa Yong

THE Housing Board is on track to meet its target of building 13,600 flats this year, despite the tightening in the inflow of foreign labour.

At the same time, the Government is keeping a close eye on the supply of both public and private homes, to avoid creating a problem of having too many flats.

This delicate act of ramping up supply without causing a glut is a key strategy in the Government's move to engineer a soft landing in the housing market, said National Development Minister Khaw Boon Wan yesterday.

For the public sector, "I don't see (a glut) happening, not this year, not next year", Mr Khaw told reporters at a handover of a Build-to-Order (BTO) block of flats in Woodlands.

He is less sanguine about the private sector, where the threat of an oversupply is a bigger worry as owners may be unable to earn the rental income to pay their loans.

On the other hand, he is "slightly more relaxed" about oversupply in the public sector because "I want to build up a little bit of an inventory to allow for people to, almost on demand, buy a flat".

Still, the current building pace is not sustainable and he expects the number of new HDB flats built to moderate after 2015.

"As we clear the backlog, we should be able to move back to a steady state, not necessarily even 15,000 units a year," he said.

The reason: Some of the 15,000 couples who marry each year - HDB's core target group - may want to buy resale flats, he noted.

In the past two years, the pace of building has quickened, after Mr Khaw became the National Development Minister and set out to provide the backlog of married couples with their own homes.

The full impact of the move will be felt in the next two years, with 26,000 to 29,000 new flats set to be completed each year.

But this year, the supply is 13,600 and, at this mid-way point, 6,000 are ready and HDB contractors are confident of completing the rest by the year end, he said.

So, "if you're a first-timer looking in non-mature estates, there's guaranteed a flat for you to select". "That's the situation now," he said, referring to the current round of BTO applications which closes tomorrow.

Speaking at Treegrove@Woodlands, Mr Khaw also noted that buyers are now getting the keys to their flat earlier, soon after their block is completed, Previously, they had to wait for several blocks to be ready before they were given their keys.

With the problem of housing married couples resolved, Mr Khaw's priorities now include other groups as well, such as singles and second-timers. Singles aged 35 and above can apply for new two-room flats from next month.

Besides HDB construction, Mr Khaw also keeps close tabs on the building of private homes because, together, they form "an important element in our soft-landing mission".

As of end-April, 3,500 private units are completed. The Government estimates the remaining 14,900 units can be completed this year. He noted that people tend to buy private property for investment, so the danger is if there is a glut and "you cannot get tenants". "The rental yields will go south very quickly," he said, hitting hard those who bought a property out of their price range with a cheap loan.

"We are quite global and many factors are beyond our control," he said, citing the global low interest rates. "So far we've been lucky, but don't count on that for too long," he added.

Islamic banking sector has 'lots of room' to expand

It is set to burgeon in volume and across countries, say industry leaders

Source: Straits Times | Money 
By Rachael Boon And Aaron Low Assistant Money Editor

ISLAMIC banking has emerged as one of the fastest growing banking sectors in recent years but industry leaders believe that there is a lot more room to expand.

The sector, in which Singapore is a small player, is set to burgeon not just in volume but across countries and in sophistication too.

The bullish outlook for Islamic banking, amid rising demand, was laid out by a panel of industry leaders at a global seminar held at the Pan Pacific Singapore hotel yesterday.

Islamic financial products are designed to comply with the principles of Islam, by not offering interest or investing in businesses such as alcohol or gambling.

Last year, the global industry grew 18.4 per cent over 2011. This rate of growth is expected to rise to 25 per cent a year in the next few years, said Bank Indonesia deputy governor Halim Alamsyah.

"The Islamic financial market has a diverse range of financial products throughout the Middle East, Europe and Asia, with assets of approximately more than US$1.3 trillion (S$1.6 trillion), " Dr Halim added.

The sukuk - the Islamic banking version of a bond - has been one of the best performing asset classes in recent years.

The International Islamic Financial Market's (IIFM) Sukuk Report said global sukuk issuance has grown by 20 per cent to 30 per cent annually since 2008.

Last year alone, some US$137 billion of sukuk were issued around the world and in January alone, more than US$11 billion was issued, noted the IIFM.

Monetary Authority of Singapore (MAS) assistant managing director Ng Nam Sin said: "Sukuk issuance reached a record high in 2012. However, the increased volume of issuance is still insufficient to meet the huge demand for Islamic assets and investments, and for Islamic financial institutions to manage their liabilities."

To date, Malaysia has the biggest domestic sukuk market, with US$314.8 billion worth of sukuk issuances between 2001 and January this year.

But other nations are also now getting into the game, said Mr Saad Rahman, managing director and head of global Islamic banking at Credit Agricole CIB.

He said Saudi Arabia is an overlooked market which is "very much a counterweight to the Malaysian market".

"You see Saudi Arabia waking up to Islamic finance in the capital market arena."

Indonesia was also looking to this market, by coming out with an Indonesia sukuk, he said.

In Singapore, some banks offer a range of Islamic financial products but the sector here is not growing as fast.

Of the total international sukuk issuance from 2001 to January this year, Singapore made up 0.41 per cent compared to Malaysia with 12.4 per cent.

Last year, leading Islamic finance player HSBC exited the Singapore retail Islamic finance markets, among others, to focus on Malaysia and Saudi Arabia.

But even as sukuk volumes soar worldwide, Dr Halim noted liquidity in the sukuk secondary market is relatively low, with daily transactions of about US$300 million per day worldwide, compared, for instance, with US bond market transactions of up to US$800 billion a day.

Dr Halim added that the development of Islamic finance still faces various challenges, such as a lack of local Islamic infrastructure and liquidity management.

To help with liquidity management, the IIFM yesterday introduced a new set of global standards that allows Islamic financial institutions to manage their liquidity requirements.

The IIFM inter-bank unrestricted master investment Wakalah agreement will help harmonise such activities across the global Islamic industry, said IIFM's chief executive officer Ijlal Ahmed Alvi.

Robust property sales over weekend

Influx of newly launched homes and commercial units draws buyers

Source: Straits Times | Money 
By Cheryl Ong

BUYERS were out in force over the weekend to take stock of an influx of newly launched homes and commercial units in a mixed development.

Sales were particularly brisk at Jewel @ Buangkok, although KAP Residences in King Albert Park and Liv on Sophia near Dhoby Ghaut also fared well.

Knight Frank head of research and consultancy Alice Tan noted: "Buyers are interested to look at residential projects that have good location attributes, such as close proximity to transport nodes like MRT stations and good schools. Projects are likely to see healthy performance, provided they are priced reasonably."

Home-seekers took a shine to the Jewel with 203 out of 280 released units snapped up at its preview launch last Saturday.

Ms Tan noted: "To sell above a take-up rate of 70 per cent within one weekend is commendable."

The project near Buangkok MRT station has a total of 616 units and is priced at about $1,150 per sq ft (psf).

Developer City Developments (CDL) said two of the penthouses were among the homes sold, adding that "84 per cent of the buyers were Singaporeans, with a majority comprising young couples, PMEBs (professionals, managers, executives and businessmen) and HDB upgraders".

Ms Tan added: "The track record of the developer plays a part, and CDL has a good track record. Projects that it's launched have seen good take-up rates."

She also noted that the average resale price of The Quartz, which is next to Jewel, is $1,070 psf this year.

CDL group general manager Chia Ngiang Hong said Jewel's attractions lie in its proximity to Buangkok MRT station and the upcoming Seletar Aerospace Park, which will boost potential for rent and capital appreciation.

While owner-occupiers seemed taken with Jewel, investors were to the forefront in two other projects on the weekend.

Sales were robust at KAP Residences, a reflection of how such mixed-use developments have become increasingly popular.

The Straits Times understands that 92 per cent of the released units were snapped up at the project, which is being built by a consortium led by Oxley Holdings.

The preview launch for the commercial units was held last Tuesday while the flats were put up for grabs last Thursday.

The freehold development is in District 21 and near popular schools like Methodist Girls' School and National Junior College.

Oxley said that 93 of the 107 commercial units released were sold at an average price of $5,446 psf, while 135 of the 142 flats launched went at an average price of $1,705 psf. This brought the total number of units sold at the project to 228.

Investors were also keen on Liv on Sophia where about 15 homes were sold over the weekend, including some bulk sales, said Roxy-Pacific Holdings chief executive Teo Hong Lim.

The 64-unit project, which has now sold 40 units since the launch two weeks ago, comprises only two-bedroom, dual-key flats, ranging from 527 sq ft to 710 sq ft. Dual-key units have two separate entrances with their own keys, making them popular with investors looking for two streams of rental income.

Mr Teo estimated that Singaporeans made up 53 per cent of the weekend buyers, permanent residents comprised 42 per cent and foreigners the rest.

There is even more choice coming for home-seekers with the 512-unit executive condominium (EC) Ecopolitan being built by China-based property developer Qingjian Realty in Punggol Way expected to launch later this month.

E-applications for a Sing Holdings EC, expected to be named Coral Edge Residences and near the Coral Edge LRT station in Punggol, are expected to begin at the end of the month.