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2 Sep 2013

Developers dangle rental guarantees to attract buyers

Source; The Straits Times
By: Melissa Tan

Developers keen to offload hard-to-sell property are bringing back rental guarantees as a way to entice reluctant buyers without having to slash prices.

Some shop units at the mixed-development Novena Regency offer a 4 per cent guarantee, a recent newspaper advertisement showed.

The Straits Times understands that some shop units at Icon @ Pasir Panjang, also a mixed development, will soon have a rental guarantee tacked on too.

A rental guarantee means the developer is giving a buyer the certainty of rental income for a predetermined period, usually two years. This saves the buyer from having to look for a tenant, particularly in the coming few years when economic uncertainty and a rising supply of homes and shop space may drive up vacancy rates.

21,000 Mt Vernon niches to make way for Bidadari estate

Source: The Straits Times
By: Poon Chian Hui

A cloud of uncertainty is hanging over affected funeral agencies following news that the Mount Vernon columbarium complex will have to make way for the new Bidadari estate.

The move affects some 21,000 niches there and may force two private operators out.

A smaller complex will be built to replace the current one, but it is unclear whether private operators will still be allowed to run funeral services there.

Bidadari is set to offer 10,000 new public homes and 1,000 private units, with the first few Housing Board flats to be ready in 2015.

More people are selling their HDB flats in the resale market without a cash premium. The Singapore Real Estate Exchange said transactions involving zero Cash-Over-Valuation have more than tripled

Source: Channel News Asia
By: CNA/al

More people are selling their Housing and Development Board (HDB) flats in the resale market without a cash premium. The Singapore Real Estate Exchange (SRX) said transactions involving zero Cash-Over-Valuation (COV) have more than tripled, from 14 in January to 49 in July. The overall median COV dipped to a low of S$20,000 in July, the lowest since 2011.SRX now said it is seeing more people selling their flats even below that level - without any cash premium. Zero-COV transactions made up 1 per cent of all HDB resale transactions in January.This went up to 3.9 per cent in July, and 5.7 per cent in August so far. There have been 32 zero-COV transactions recorded by SRX in August so far.

On a yearly basis, zero-COV transactions made up 1.7 per cent of all HDB resale transactions in 2011, compared to 1.9 per cent in 2012. From January till now, zero-COV transactions made up 2.1 per cent of all HDB transactions.

Christine Li, head of research and consultancy at OrangeTee, said: "Previously, I think it took about four to six weeks to close the deal. But now, it is taking longer. Some can be as long as four months. "A lot of sellers are still asking for high COVs, but the buyer pool is shrinking because of the January cooling measures as well as the ramp up in BTO (Build-to-Order) supply. "The seller actually has to compete with the BTOs to offer buyers the same kind of deals they can look for in the market."

According to SRX data, from the beginning of the year till July, 164 zero-COV transactions were recorded. The top five towns that have seen the most zero-COV transactions are Jurong West, Hougang, Woodlands, Punggol and Sengkang.These are places where new BTO projects were launched by the HDB in the past year.

Property analysts have said that even though HDB resale flats are being sold with zero cash premium at valuation level, property sellers are still likely to make a profit from their transaction.

Nicholas Mak, executive director for research and consultancy at SLP International Property Consultants, said: "If they were to have bought their flats brand new from the government, they would have bought it at a price that is below the current market price. Or even if they were to buy it as resale flats five years ago, during the financial crisis, chances are they would have bought it at a price that is cheaper than today." With more residential units being completed this year, analysts said more sellers can be expected in the HDB resale market. So more zero-COV transactions can be expected, and even some negative-COV transactions as well.