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20 June 2013

Rental relief

Two-year rent freeze for low-income earners whose monthly wages cross the $800 threshold

Source: Straits Times 
By Rachel Chang And Cheng Jingjie

FROM today, low-income families who rent flats from the Government will not be hit by a rise in rent when their monthly income exceeds $800.

Instead, their rents will stay unchanged for two years. They will get another two-year waiver should their household income still remain low compared to the rent increase they face. This will be decided by the Housing Board on a case-by-case basis.

These new moves for poor families were announced yesterday by National Development Minister Khaw Boon Wan in his blog. The change is to avoid the "cliff effect" of having a rise in rent nearly wipe out tenants' wage gains.

The prospect of such a rise may also inadvertently discourage some tenants from "working hard to improve their incomes", he added, noting that it was Emeritus Senior Minister Goh Chok Tong who had alerted him to the phenomenon two years ago.

There are about 46,000 HDB rental flats for low-income families earning no more than $1,500 a month. Rents are tiered: For a first-time tenant in a one-room flat earning $800 or less, the rent ranges from $26 to $33.

Should this tenant's income cross the $800 mark, he enters the second tier of those with household incomes of $801 to $1,500. Their rent for a one-room flat is $90 to $123.

Factory production operator Kartina Samah, for instance, had her wages raised from $800 to $930 last October. She was told by HDB that the rent for her two-room flat in Whampoa would rise from $44 to $138.

"I got a shock," said the 39-year-old divorcee, whose 55-year-old mother and 15-year-old daughter live with her. "After CPF (Central Provident Fund) deductions, I would be earning $700 plus. I did not know how I would cope with the rent." HDB granted her a two-year waiver, and she has welcomed the fact that it will now come automatically for others in her position.

Tanjong Pagar GRC MP Lily Neo, whose Kreta Ayer ward has the most rental blocks in Singapore, was happy to hear the news. She sees three to five cases a week of residents pleading for a waiver of their rent hike at her Meet-the-People Session.

"For these low-income families, every dollar counts," she said. "If their wages rise, they are so hopeful that it will help their daily living. But the minute it's eaten up by rental, their livelihoods are not improving at all."

While the appeals she makes to HDB are usually granted, she notes that making the waiver automatic will save residents the "headache" of seeking one.

There were 1,869 tenants who have crossed the $800 income mark, Mr Khaw said in his blog, and 1,004 of them have been granted a waiver on appeal.


For a first-time tenant in a one-room flat earning $800 or less, the rent ranges from $26 to $33.

Should this tenant's income cross the $800 mark, he enters the second tier of those with household incomes of $801 to $1,500.

Their rent for a one-room flat is $90 to $123.

$624m offer prompts tender of CBD site

Source: Straits Times | Money 
By Cheryl Ong

A COMMERCIAL site in the central business district (CBD) has been put up for sale by public tender, after a developer offered to pay $623.7 million for the land.

The 99-year leasehold plot between Cecil and Telok Ayer streets was made available through the reserve list on the Government Land Sales programme on Dec 19.Sites on this list go on sale only if a developer commits to buy the plot for an acceptable minimum sum.

The 7,603 sq m plot can accommodate an office block of up to 50 storeys with a direct connection to Tanjong Pagar MRT station.

There is also 1,612 sq m of open area which will be used to form a network of green spaces extending through Tanjong Pagar, Duxton Plain and Pearl's Hill parks.

The trigger offer translates to a unit price of about $750.97 per sq ft (psf) per plot ratio (ppr), excluding the open space, but experts feel the top tender will be far higher. They tipped last month, when the Urban Redevelopment Authority announced that an initial offer had been received, that the land would go for $830 to $980 psf ppr.

But Mr Donald Han, special adviser at HSR Property Consultants, said yesterday that he expects the top bid to cross the $1,100 psf ppr mark, pricing the site at about $913.6 million.

That would price the site, on a psf ppr basis, over the $1,006 psf ppr Guocoland paid for a nearby plot where it is now building the Tanjong Pagar Centre.

But it will still be far short of the CBD record of $1,409 psf ppr paid by Macquarie Global Property Advisors for a Marina View plot in 2007, noted Mr Han.

URA guidelines state that the maximum permissible gross floor area (GFA) for the latest site will be about 77,162 sq m, of which at least 61,730 sq m must be earmarked for office use. The remaining GFA can be for additional offices or other commercial uses.

The development cannot be subdivided into strata office units and sold off so the developer will have to rent out the space instead.

"This restriction could drive away boutique developers that would need the down payments of strata-subdivided units to fund the construction," noted SLP International research head Nicholas Mak. The tender closes at noon on Aug 15.

Developer gets nod to sell Forestville EC units

Sales had to be halted after Hao Yuan failed to secure URA approval for changes

Source: Straits Times | Money
By Cheryl Ong

THE developer of an executive condominium (EC) project that was previously told to halt the sale of units has been given the green light now.

In response to a Straits Times query yesterday, the Urban Redevelopment Authority (URA) said that conditions had been changed for Hao Yuan Investment's housing developer's licence to allow it to sell units at its Forestville EC in Woodlands.

"When we amended the licence for Hao Yuan earlier, a condition was imposed to prohibit the sale of any units in Forestville without Controller of Housing's (COH) prior approval," said URA.

In December last year, Hao Yuan launched the 653-unit condominium after changes it had made to the project's development plans were not approved, despite instructions from the COH not to proceed. Conditions in Hao Yuan's housing developer's licence for Forestville were subsequently changed such that it had to close its show-flat and stop all marketing activities.

The URA added: "COH is now satisfied that necessary approvals for the project's development plans have been given and that the plans in the sales brochures are in accordance with these approved plans."

The Straits Times understands that Hao Yuan had proposed adjustments to the private enclosed spaces of certain units at the condominium.

The Housing Board also confirmed yesterday that the measures announced in January affecting the sales of dual-key units and private enclosed spaces at ECs would not apply to Forestville, which has a number of such units.

Under the new rules, sales of new dual-key EC units will be restricted to multi-generational families, and private enclosed spaces and private roof terraces will be treated as gross floor area.

"Hao Yuan Investment had obtained provisional permission from URA before the policy changes, and is not subject to the new measures," said HDB.

Following the URA announcement, Hao Yuan apologised for "any inconvenience caused to all potential buyers of the project" in a statement.

The developer added that all applicants who had made an expression of interest in December will be invited to book their units from June 22 to 24.

A total of 1,201 applications were received by the developer before it stopped the sale.

During the launch, visitors who flocked to the show-flat were not granted an Option-to-Purchase, even after they had balloted for a unit. After the show-flat was closed, potential buyers were left uncertain if they would still get their desired unit and if the layout would change.

Some applicants who were initially interested in Forestville flocked to the Twin Fountains EC located next to Forestville. The project is jointly developed by Frasers Centrepoint and Lum Chang.

Forestville will be open for public sale on June 28, said Hao Yuan.

Condo residents vote in favour of parking charges

Source: Straits Times | Money
By Cheryl Ong

RESIDENTS of Parc Oasis who own more than one car will now have to pay parking charges, after a majority voted in favour of such a proposal.

At an extraordinary general meeting (EGM) held last Saturday, owners of the 950-unit condominium in Jurong East were asked to back the parking charges and pay higher management fees by voting.

The proposed move was aimed at covering a projected shortfall of $353,000 in the maintenance fund for the fiscal year ending June 30, 2014.

The resolution voted on comprised two parts - levying a monthly parking fee of $100 for a second car and $150 for each additional vehicle, and a rise in monthly management fees from $56 to $59 per share value.

For residents who do not wish to pay the parking fees, they will have to cough up higher monthly management fees at $64 per share value.

If the resolution had been rejected, the management said other cost-cutting measures would have been introduced, including reducing landscaping and pest control expenses, and carrying out only repairs that concern safety.

"Some 85 per cent of the residents and their proxies voted in favour of this proposal," said the Management Corporation Strata Title (MCST) chairman Lim Taik Leong.

About 200 residents were present at the EGM, Mr Lim said.

The Straits Times understands that 1,636 shares held by residents were cast in favour of the resolution, while 303 shares were against it.

The shares in favour included those from 366 proxies not present at the meeting.

Mr Lim added that 136 owners will be affected by the new rule.

Separately, people familiar with the matter said fewer than 120 owners have two cars.

"The deficit is still at $353,000. The money that we generate from the collection of the maintenance fund and the monthly parking charges for second and subsequent cars should cover a major part of the deficit," Mr Lim said. He estimated that the new collection would raise about $320,000. Following the vote, the MCST will not be implementing other cost-cutting measures.

In a bid to narrow the deficit, half the lights in the basement carpark have been shut off, and the management has terminated the services of four cleaners and three security guards. But over the next month, the MCST will reinstate the service of one security guard at the condo, said Mr Lim.

A resident affected by the new by-law, who declined to be named, said the revenue collected from the new measures could fall short of the MCST's expectations as some residents want to avoid paying the parking fees.

"Some residents have plans to park their second and subsequent cars at a nearby Housing Board carpark," he said.

Housing 'more affordable' now if measured against income growth

Source: Straits Times | Money 
By Anita Gabriel Senior Correspondent

MANY may find this hard to believe but property prices in Singapore are more affordable today than 10 years ago, when measured against income growth, said an economist from DBS.

While property prices in the city state are up 55 per cent since March 2009 - when the global crisis ended - income has grown much faster, said DBS managing director and economic and currency research head David Carbon.

"Based on simple averages, that makes housing more affordable, not more expensive," Mr Carbon said at a media briefing yesterday.

In Singapore, home prices have risen in tandem with income over the past five years. In addition, home prices are now 15 per cent lower compared with 2000.

In contrast, Hong Kong has seen home prices relative to income surging 78 per cent since 2000, which signals an asset bubble, he said.

In Asia, property prices are now as high as they were in the United States just before the eruption of the sub-prime mortgage crisis. The rise in real estate prices in the region has been fuelled by low interest rates spurring capital inflows and strong income growth.

In terms of the rise in regional property prices, Singapore and Hong Kong topped the list.

But even if income levels are rising in parity with property prices, Mr Carbon highlighted a potential red flag - growing debt loads.

Household debt in Singapore has risen significantly in recent years and this could pose a challenge when interest rates start to go up, Mr Carbon said. This is because real estate is the most interest rate-sensitive asset class, he added.

Analysts have projected that the US Federal Reserve could start to raise rates as early as late 2014 from near-zero levels now.

"If that happens, some people may not be able to make payment. It's a short-term difficulty but I doubt it'll turn into a systemic risk as income is still rising," he added.

Currently, housing debt levels in Singapore and Hong Kong, at about 45 per cent of gross domestic product, look manageable and are relatively low compared to the high debt levels in the US, which subsequently led to the housing meltdown in the world's largest economy, Mr Carbon said.

He expects housing payments in Singapore to rise 15 per cent to 20 per cent if mortgage rates return to "normal" pre-crisis levels.

But the impact will be cushioned by rising per capita income of homeowners, he said.

22 industrial land sites up for grabs

Smaller parcels with shorter tenures will help cool market, say experts

Source: Straits Times | Money 
By Yasmine Yahya

ANOTHER bumper crop of industrial land sites will be released for sale in a move that should help put the brakes on runaway prices.

The increased supply comes in the form of 22 sites up for grabs under the Industrial Government Land Sales programme (IGLS) for July to December - a total area of 22.84ha.

Like much of the land released in the first half of this year, the new batch announced yesterday includes many small land parcels with shorter tenures.

There are 14 plots under 1ha in size and with leases of 21 years. The rest are between 1.17ha and 4.03ha with 30-year leases.

Analysts expect heavy bidding for many sites, including ones at Gambas Crescent, Tai Seng Street and Woodlands Industrial Park as well as those in Tuas, a perennial favourite among industrialists.

The large supply of smaller sites will help meet the demand from firms that prefer to build their own customised facilities, the Ministry of Trade and Industry (MTI) said yesterday.

Sites with shorter tenures will also be more affordable, it added.

R'ST Research director Ong Kah Seng said a continuous of supply of smaller sites will help cool the market as the shorter leases make property harder to flip, and thus deterring speculators.

SLP International research head Nicholas Mak noted there has been strong demand for such plots: "It is quite hard for companies to find sites between 0.3ha and 1ha with low plot ratio in Singapore. In the IGLS tenders for the past year, the number of bids for each small site ranged from seven to 19 bidders."

The Government has placed 19 of the new sites on the confirmed list so they go on sale regardless of interest.

Two new parcels have been added to the reserve list, at Tuas Bay Close and Gambas Crescent. These join an unsold plot at Woodlands Avenue 12 that will be carried over from the reserve list from the first half of the year.

Reserve list sites go on sale once a developer makes an acceptable initial offer.

The flood of new land sites on to the market cannot come quick enough for industrialists.

Prices of industrial property rose 4.5 per cent in January to March from the previous quarter despite cooling measures in January that included higher stamp duties, although experts see signs of a slowdown.

R'ST Research's Mr Ong noted: "Buyers' demand for industrial properties have moderated significantly since January's cooling measures... and it has sieved out speculators and discouraged some investors.

But while the prices of small sites are stable, those for larger plots on 30-year leases are still rising, said Soilbuild managing director Lim Chap Huat.

"We have bid on several sites that were released in the first half of the year and prices have gone from about $70 or $80 per sq ft in January to over $100 psf now."

Orange Tee's head of research and consultancy, Ms Christine Li, said demand for these larger sites will stay hot. "There is a unique site at Tai Seng Street launched for sale in the second half, which we believe will be keenly contested by developers," she said.

At just 1.17ha and with a 30-year lease, the plot will appeal to small or medium-sized developers with a longer investment horizon, she added. Meanwhile, two sites in Gambas Crescent, of 48ha and 1.57ha, could fetch a price of between $80 and $120 psf per plot ratio, she said.