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28 March 2013

28th March, Thursday




PRs pull back sharply on private home buys

Source: Business Times

The 12 Jan cooling measures appear to have spooked Singapore permanent residents (PRs) looking to buy private homes here. Their share of private home purchases dived in February after the measures introduced additional buyer's stamp duty (ABSD) on a PR's first residential property purchase here. The ABSD rate on subsequent purchases by PRs was also raised significantly.

However, most analysts expect the PR buying share to recover, at least among PRs acquiring their first property.

An analysis of URA Realis caveats data shows that in February, PRs accounted for just 12.7 per cent of the 789 caveats lodged for the purchase of private homes excluding executive condominiums in that month. This marked a 5.7 percentage-point drop from the 18.4 per cent share held by PRs of the total 2,876 caveats in January.

Conversely, Singaporean buyers' share climbed 5.5 percentage points, from 71.1 per cent in January to 76.6 per cent in February. Singapore citizens acquiring their first residential property continue to be spared the ABSD under January's cooling measures.

Foreigners who were not PRs held their share at 10.1 per cent in February, from 10 per cent in January, despite the ABSD rate levied on them for any home purchase being raised from 10 per cent to 15 per cent.

The analysis covered private housing deals in both primary (developer sales) and secondary markets.

An analyst said the drop in the PR share in February probably reflects a knee-jerk reaction to the Singapore authorities introducing a 5 per cent ABSD on PRs for their first residential property purchase here and raising the ABSD rate for a PR's second and subsequent property purchases to 10 per cent from 3 per cent previously.

Looking ahead, she expects the PR buying share to start recovering, at least among PRs who are immigrating to Singapore with their families and buying a home for their own occupation. "This set will be more likely to accept the 5 per cent ABSD on their initial residential property purchase as part of the transaction cost," she reckons.

"However, for PRs looking for an investment property, the 10 per cent ABSD rate would eat into their yield and they may look at alternative investments," she added.


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Second-timers rush for three-room units

Source: The Straits Times

Punggol’s bigger flats proved to be the top draw for those looking for their first Housing Board home, when the latest Build- To-Order exercise closed last night.

But when it came to second- timers, it was the 306 three- room units in Bukit Batok and Sengkang that saw fiercer competition.

As 85 per cent of the flats in these non-mature towns were reserved for first-timers, it meant that the three-room units made available to second-timers were oversubscribed by more than 20 times.

The Housing Board had launched 3,898 flats across the three estates last week. Overall, there were about three applicants vying for each flat.

Property analysts told The Straits Times that those going for three-room units were likely older downgraders whose children have left. A mortgage cap introduced at the start of the year could also have deterred some applicants from seeking larger units, they added.

"The limits on how much income one can use to service a loan would restrict buyers in their choices," said DWG spokesman Lee Sze Teck. Since January, mortgage payments to banks have been capped at 30 per cent of a borrower's monthly household income, and 35 per cent if they take a Housing Board loan.

Under the new rules, a buyer with a monthly household income of $5,000 who takes a 20- year loan with a 3 per cent interest rate can borrow up to $270,000. Previously, with half his monthly income going to the mortgage, he could have taken a $450,000 loan.

This could make the difference between, say, buying a $255,000 three-room flat at the Housing Board's SkyPeak@Bukit Batok and a $532,000 five-room unit.

Still, it did not stop the four- and five-room flats in the latest BTO exercise from being oversubscribed by nearly three times. The 470 Punggol units, costing up to $348,000 for a four- roomer and $428,000 for five- roomer, pulled in around four applicants per flat.

Analysts believe young couples were attracted to the promise of waterfront living at the estate once known for rubber plantations and pig farms.

"Punggol has a good story and features waterfront living in some parts. Young couples could also see it as an asset that is likely to appreciate in later years," said an analyst.

Mr Lee, the DWG spokesman, noted that some buyers might be waiting for the upcoming measures before making a purchase.

Recently, National Development Minister Khaw Boon Wan announced plans to cut prices of flats in non-mature estates by 30 per cent, though details have yet to be revealed.

The Housing Board will launch close to 8,000 flats in May, when the quota of new two- or three-room flats for second-timers will double from 15 per cent to 30 per cent. It will include some 3,000 leftover flats that have either been built or are close to completion - allowing buyers to move into their new homes much sooner.

Ms May Chang, 23, an aspiring home owner, plans to wait. She said: "Many issues about HDB flats seem to be in a flux right now. I would rather make an informed decision when the dust settles than make a hasty one that I might regret."


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Four- and five-room flats in Punggol most popular among first-time home buyers

Source: Channelnewsasia

Four- and five-room flats in Punggol look to be the most heavily subscribed among first-time home buyers in this month's Build-To-Order exercise which closes at midnight.

A total of 3,898 flats were launched in this month's Build-To-Order exercise. They are all in non-mature estates of Sengkang, Punggol and Bukit Batok.

Analysts say this may be one reason why there has been a small dip in the overall application rates. This compared to the previous exercise in January when projects in mature estates were also on offer. The overall application rate as of 5pm was 2.9, compared to 3.8 in the January exercise. The application rate in the November 2012 launch was 2.9.

An analyst said: "Some people would prefer locations that is (are) beyond this and that could also be a reason where they say after all, there's many more in the pipeline and some people choose to take a wait and see attitude. Now that the success rates are much higher, people are not as anxious as they were couple of quarters ago, when they know if they're not successful, it might take a long period of time."

But there could be other reasons as well.

Mr Lee Sze Teck, Senior Manager of Research and Consultancy at Dennis Wee Group, said: "The government has announced it is trying to bring home prices down, maybe four years' annual income, and some of these plans are in the works, so some of them could be observing to see how the government plans to do that. And lastly of course, the construction period for BTO flats, these are as long as 40 plus months and people who do not want to wait, of course they will hold back."

The development in Punggol was the most popular among first-time home buyers. As of 5pm, there were 2.6 first-time applicants for each four-room flat and 2.4 first-time applicants for each five-room flat.

It is the first time the Housing and Development Board is launching a development in Punggol Town since July last year. It has been touted to be a town to watch - with seven different waterfront housing districts.

More than 4,800 new flats will be on offer in the next Build-To-Order exercise in May. But it's the additional 3,000 flats in the concurrent Sale of Balance Flats exercise that some analysts say will draw strong demand.

Mr Lee Sze Teck added: "All the while, Sale of Balance flats are very attractive to people because of the shorter waiting time. This time round also because of the construction period, we would actually see more people going for the Sale of Balance flats because they just want to get the keys to their flats faster."

Some analysts say some could be waiting for new housing policy changes to come into effect in the next BTO launch in May, including a higher quota of flats allocated to second-timers.

The HDB launched 25,000 flats in 2011 and 27,000 new flats in 2012. The government has also announced it will launch about 25,000 flats this year.


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More singles return to HDB resale market

Source: Channelnewsasia

Some real estate agencies say more singles have returned to the HDB resale market after getting more clarity about the government's plan to allow singles to buy new flats directly from the Housing and Development Board.

Dennis Wee Group has seen 20 per cent more enquires and viewings from singles in recent weeks.

Mr Lee Sze Teck, Senior Manager, Research & Consultancy, Dennis Wee Group, said: "Singles were expecting the government to actually open up a fair bit of housing market to them, but when the government announced that only two-rooms and with an income ceiling of $5,000 per month were the criteria, they were disappointed. As such, they came back to the resale market and for us, we witnessed about 20 per cent increase in enquiries."

Analysts say on average about 4,000 singles buy HDB resale flats each year. And some of them project that about 20 per cent of the buyers could opt to buy new BTO flats in the future. But it should not have any major impact on the resale market just yet.

Market watchers say allowing singles to buy new BTO flats is a step in the right direction, paving the way for more inclusive housing policies.

One analyst said: "We think what the government can do at the very basic, and I do think it is quite basic, is to consider opening up in terms of locations, to include a few more locations including the mature estates as well as allowing them a choice of other type of room units."

Another analyst said: "Perhaps the need for larger units for singles, should not just confined to a 35 or 45 square metres. Probably in the greying years some of the singles may need help, they may need helpers to be there to look after them, so the increase to allow a 3-bedroom could be more palatable."

An analyst added: "The authorities can consider some innovative ways of offering housing options for these singles such as a dual-key concept such as having a 2-room HDB flat with a studio apartment for their elderly parents. Perhaps such dual key concepts could appeal to singles who want to live near to their parents."

Analysts expect the government to offer more new flats for singles if demand at July's BTO exercise is strong.


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Pavilion Square retail units snapped up

Source: Business Times

In tandem with the continued strong demand for small strata retail units, all 93 units at Pavilion Square in Geylang Road were snapped up on Saturday.

Business Times understands that the prices achieved range from $2,000 per sq ft for third-floor units with open terraces and some "flat roof" space above to a whopping $10,879 psf.

The top price, for a 118 sq ft street-fronting food-and-beverage unit on the ground floor, is a record price for a retail unit outside the city and the Orchard Road shopping belt, analysts say.

Market watchers said that the buyers are predominantly investors.

Besides the $10,879 psf deal, six other ground-floor F&B units in Pavilion Square sold at above $10,000 psf. The remaining units on that level are all said to have fetched above $8,000 psf.

F&B units on the third floor were sold in the $2,000-$2,400 psf band, as their strata areas include open terraces for alfresco dining in addition to a "flat roof" on the fourth level, which can be used for maintenance.

Pavilion Square's 93 retail units, comprising shops and F&B units, have sizes of between 86 sq ft and 926 sq ft. The majority of the units are between 108 sq ft and 129 sq ft.

The basement and first level will have a mix of shops and F&B units; all units on level 2 will be shops, while the third floor will have only F&B units.

Absolute price quantums achieved for the 93 retail units varied from $558,000 (for a 108 sq ft unit in the basement, reflecting $5,184 psf), to nearly $2 million for a 377 sq ft unit on level 2 ($5,304 psf).

Some analysts reckon that by slowing down the creation of new small strata retail units, the move could put a lid on their transaction volumes.

But an analyst argued, however, that by limiting the existing stock of these small units, the new policy could raise prices. "Low interest rates being kept in place for a prolonged period of time means there's so much liquidity now that it's very difficult to use traditional measures to curb property demand," he said.

While Pavilion Square's retail units have sold fast, demand has been slower for its apartments. Only 15 of the 42 apartments are said to have found buyers, with prices ranging from $1,400 to $1,600 psf.

Apartment sizes in the development start from 398 sq ft for a one-bedder; the biggest unit is an 818 sq ft, two bedroom-plus-study unit.


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Lower rents keep office demand healthy in Q1

Source: Business Times

Office demand remained healthy in the first quarter of the year as rents stayed competitive, data from property consultancies showed Wednesday.

Vacancy rates for Singapore offices fell 0.7 percentage points to 5.1 per cent, from 5.8 per cent in the previous quarter. The vacancy rates are the lowest since the fourth quarter of 2008, when it was 4.8 per cent.

Net absorption was 375,000 sq ft versus 272,000 sq ft the previous quarter.

Rents for Grade A offices lost 0.3 percentage points to $9.55 per sq ft (psf) per month in 1Q compared with the previous quarter. Vacancy rates, however, corrected to 7.1 per cent from 8.8 per cent.

For Grade B offices, rents eased 0.3 percentage points to $7.09 psf per month from the previous quarter. Vacancy rates improved to 5.4 per cent from 5.9 per cent.

For the year ahead, the consultancies expect around 2.5 million sq ft of office space supply, with some notable projects being the Metropolis and Nexus@ one-north, JEM in Jurong East and Asia Square Tower 2 in the CBD.


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Investment Sales


Meyer Rd home asking for over $35m

Source: Business Times

A freehold bungalow in Meyer Road has been put on the market, with a price expectation exceeding $35 million or $1,371 per sq ft based on its land area of 25,525 sq ft.

On site is an old bungalow, which is expected to be redeveloped by the buyer.

The District 15 property is near East Coast Park. The regular-shaped plot is zoned for "residential - two-storey bungalow" use under Master Plan 2008.

The tender for the Meyer Road bungalow closes on 23 April.


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Restored Chinatown shophouse up for sale

Source: Business Times

A newly restored shophouse in the Central Business District has been put up for sale by expression of interest.

The three-storey property at 81 South Bridge Road, near the junction with North Canal Road, has a site area of 1,316 sq ft and a gross floor area of 5,656 sq ft. It has a mezzanine floor and an open roof terrace.

The 999-year site is zoned for commercial use; planning guidelines require its first storey to have activity-generating uses, such as retail, showroom, and F&B functions.

The indicative price is $13.8 million.

Expression of interest is open to locals and foreigners; no additional buyers' stamp duty will be imposed on the purchase of the property. The deadline for expression of interest is 3pm on 25 April.


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