Real News‎ > ‎2014‎ > ‎December 2014‎ > ‎

5th December 2014

Singapore Real Estate

19 land sites released for sale; expected to yield 8,770 homes

The 19 sites - six Confirmed List and 13 Reserve List sites - can collectively yield up to 8,770 private residential units once developed, including 1,010 executive condominium units, and 265,000 sqm of gross floor area of commercial space.

Source: Channel News Asia / Singapore

SINGAPORE: Nineteen land sites were launched for sale on Thursday (Dec 4) under the first half of the Government Land Sales (GLS) Programme for 2015.

The 19 sites - six Confirmed List and 13 Reserve List sites - can collectively yield up to 8,770 private residential units once developed, the lowest in five years.

These will include 1,010 executive condominium (EC) units and 265,000 square metres of gross floor area of commercial space, the Ministry of National Development (MND) said. 

In October 2014, National Development Minister Khaw Boon Wan had said that the supply of sites under the GLS Programme will be reduced.

Confirmed List sites go on sale regardless of interest from developers, while Reserve List sites are triggered for a public tender only if a developer makes an acceptable opening offer.

The Confirmed List comprises six private residential sites, including one EC site in Choa Chu Kang. Altogether, the parcels can yield about 3,020 private homes, lower than the 3,915 units offered in previous land sales programme in the second half of 2014.

Property watchers said the reduction is expected.

Ms Chia Siew Chuin, director of research and advisory at Colliers International, said: "The Government is likely to have taken into consideration the upcoming supply and the fact that the sales market is very slow.

"All things considered, the Government would have then decided to pull back the number of supply in the private residential market." 

However, the significant drop in the number of ECs expected has taken property watchers by surprise. 

Only one EC site is on the Confirmed List and it can yield up to only 490 units. This compares to the estimated 1,520 units that could be developed from the Confirmed List of the last land sales programme in the second half of 2014.

Real estate firm PropNex said this is due to the fact that second-timers will have to pay a resale levy when they buy an EC in future.

Mr Mohamed Ismail, CEO of PropNex Realty, said: "Therefore, the Government probably has been a little bit more cautious not knowing how the demand is going to be and not to flood the market."

"The concern will only be because ECs are truly meant for the Singaporeans' aspirations, and those who cannot afford private property. And I suppose overall, I think we need a healthy number of ECs, in the ballpark of about 3,000 every year," he added.  

The Reserve List comprises nine private residential sites, one commercial and residential site, two commercial sites and one White site - where multiple uses are permitted. These sites can yield about 5,750 private residential units.

“Supply from the GLS Programme, together with supply from projects in the pipeline, will be adequate to meet the demand for private housing and commercial space over the next few years,” MND said.


The residential sites on the Confirmed List are located in the Outside Central Region and Rest of Central Region, the ministry said.

The commercial and residential site at Holland Road, originally placed on the second half of the 2014 Confirmed List, is the first sale site to be launched as part of the Holland Village Extension plan unveiled in the Master Plan 2014.

A Concept and Price Revenue Tender will be called for this site to ensure that the future development “enhances the unique charm and distinctive urban village character of the Holland Village Identity Node”, MND said.

It added that the site was transferred from the Confirmed List to the Reserve List to give developers more time to study the site and tender evaluation criteria before triggering it for sale.


A second commercial site in Woodlands Regional Centre at Woodlands Square has been released for sale under the Reserve List.

“This will sustain the development momentum of Woodlands Regional Centre as a major commercial node outside the city, in line with the Government’s objective of decentralising employment centres to bring job opportunities closer to homes,” MND said.

The Reserve List will have two other sites for predominantly office developments - a White site at Marina View and commercial site at Beach Road. Together with the Woodlands Square site, these sites will allow developers to initiate the development of more office space if they assess that there is demand, the ministry said.

Apart from the GLS Programme, the Government will also make available other supply of land and properties through its various agencies. These include localised retail facilities at parks, selected HDB estates, industrial estates, MRT stations, sport facilities, community centres and the leasing of vacant state properties for commercial uses, MND said.

- CNA/cy/dl

Land sales for private homes, ECs cut sharply

Potentially 23% fewer homes in first half of 2015 compared with second half of this year

Source: Today Online / Business

SINGAPORE — The Government has scaled back sharply the supply of land for the development of private homes and executive condominiums (ECs) in a move that property analysts say is timely following the slowdown in the housing market.

Under the Confirmed List of the Government Land Sales (GLS) programme for the first six months of next year, six residential sites that can yield about 3,020 homes, including 490 ECs, will be made available, the Ministry of National Development (MND) said yesterday. This is almost 23 per cent lower than the 3,900 units on the Confirmed List in the second half of this year and the fewest since the first half of 2010.

The cut comes after successive rounds of property cooling measures and loan curbs, including the Total Debt Servicing Ratio framework imposed in June last year, led to private home prices falling for the fourth straight quarter in the three months ended September, with sales remaining in the doldrums. And even while the measures have curbed buying, more homes are being completed to add to a rising wave of supply.

Analyst Wong Xian Yang from OrangeTee said: “The tapering of land sales signals the Government’s awareness of the huge supply in the pipeline. This should be positive for property prices and will help mitigate the current decline. Nevertheless, overall prices are still expected to edge lower slowly over the medium term as market sentiment remains muted and cooling measures remain unchanged.”

Property firm Chris International’s director Chris Koh said: “I think 3,000-plus units should be sufficient, going by market sentiment today. This sends a good signal that the Government has no intention to flood the market and, depending on sentiment, the developers can trigger any of the Reserve List sites if they are interested.”

Confirmed List sites are generally released on schedule, while those on the Reserve List are released only when a developer commits to bid at a minimum price acceptable to the Government. Sites close to the city centre, such as those in Sturdee Road, are expected to be well received. “Comparatively, sites located in the Rest of Central Region seem more attractive than those in the Outside Central Region,” said ERA key executive officer Eugene Lim.

The proportion of ECs as a total of Confirmed List units fell to 16 per cent from 39 per cent in the second half of this year, Mr Wong noted, saying this could be a sign that the Government is holding back amid waning interest for the hybrid housing type. “We see such evidence in the recent EC land tender in Sembawang Road/ Canberra Link, which ... had only two bidders. Developers have become more selective in their bids in view of recent measures targeting ECs, which saw the implementation of the resale levy and a Mortgage Servicing Ratio of 30 per cent.”

The Reserve List of the GLS for the first half of next year features nine sites that can accommodate about 5,750 homes. CBRE Research’s head for Singapore and South-east Asia Desmond Sim said such a plan gives developers the option to bid for sites when they think market conditions allow.

-By Lee Yen Nee

Govt scales back land sales in tepid market

Sites on offer in first half of 2015 to yield fewer homes amid slowdown

Source: Straits Times / Top of The News

AS MORE evidence emerges of an across-the-board slowdown in the property market, the Government has scaled back site releases further, giving developers much less land to fight over next year.

The six confirmed sites on offer in the first half of 2015 will be able to accommodate 3,020 private homes - the lowest number since the first half of 2010 and 22.9 per cent down on the number generated by land released in this half of this year.

If reserve sites are included - these go up for tender once a developer lodges an acceptable initial offer - a total of 8,775 new homes could be accommodated - the lowest since the second half of 2009.

The Ministry of National Development, which handles the Government Land Sales (GLS) programme, said yesterday that the reduced supply will be enough to meet the country's needs.

Both the private and public property markets have been tepid. Latest figures from the Singapore Real Estate Exchange showed that resale Housing Board prices have fallen for 10 months in a row and are down 9.8 per cent from their peak in April last year.

Experts said the Government is guarding against an oversupply.

The residential sites on yesterday's confirmed list - these go on sale regardless of interest - are in suburban and city fringe areas such as Dundee Road in Queenstown and West Coast Vale.

Buying demand has been stronger in these areas. Suburban non-landed home prices fell 1.3 per cent in the first nine months of this year compared with an overall 2.5 per cent non-landed home price slide.

The moderation in land sales will allow the market to absorb unsold inventory, experts said.

A potential 78,402 new private homes will be completed between now and 2018, of which 64,001 are under construction, said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

But buyers are staying away, with new home sales expected to come in at between 8,000 and 9,000 this year - the lowest since 2008 and well under last year's 17,590 transactions.

Only one executive condominium (EC) site - in Chua Chu Kang - is on the confirmed list for the first half of next year. It could yield 490 homes. "Demand for ECs has more or less been met," said Mr Ong Kah Seng, R'ST Research director.

EL Development managing director Lim Yew Soon said fewer GLS sites would benefit the firm, as it seeks to launch its 660-unit Symphony Suites condo in Yishun early next year.

"Reducing the number of sites would help equalise supply and demand in the market... Most developers with land banked, or unlaunched or unsold units will be happy; only developers with no stock might fear more competition for these sites."

-By Rennie Whang

Bigger share of new home loans now less risky

Incidence of bad loans for high-end homes also set to diminish: Moody's

Source: Straits Times / Money

LEVELS of mortgage debt held by Singapore households are easing further, thanks to government property cooling measures, a new report has concluded.

Ratings agency Moody's also said in its report that the incidence of bad loans for high-end homes - a major source of recent concern - is also set to diminish.

Significantly, this means a positive credit outlook for local banks, the agency said.

In its report, Moody's cited the data in the Monetary Authority of Singapore's (MAS) financial stability report released last week.

It said that the share of new borrowers with a total debt servicing ratio (TDSR) below 40 per cent has improved from 37 per cent in the fourth quarter of last year to 41 per cent in the third quarter of this year.

The TDSR is the proportion of income that goes towards paying off debt such as mortgages.

Moody's said this means more households with housing loans - accounting for 74 per cent of total household liabilities - are falling below the government mandated 60 per cent limit for TDSR.

In another positive sign, the share of new mortgage loans with a high, 70 per cent to 80 per cent loan-to-value ratio has also dropped from 70 per cent to around 60 per cent.

"This is credit positive for Singapore banks because less risky mortgages will alleviate some of the negative pressure on banks' asset quality that arises from elevated household leverage and property prices," Moody's said.

Over the past year, OCBC Bank and United Overseas Bank have reported a gradual increase in bad housing loans, with non-performing mortgage loans rising from $447 million to $502 million in the third quarter at UOB.

OCBC also saw its housing non-performing loans jump from $253 million to $272 million in the same quarter.

"A key reason behind the mortgage quality's deterioration is the rise of delinquencies in high-end property mortgages, most of which originated before the tightening of credit writing," the agency's vice-president and senior credit officer Eugene Tarzimanov told The Straits Times.

"The deterioration of credit quality in this segment will continue into next year, but the rate will be milder as the peak of the stress has already occurred."

He said: "We expect overall housing loan delinquencies to continue to increase into 2015, but the pace will also be slower and will not exceed 1.5 per cent (of housing loans)."

He said that the more moderate situation is a direct result of the Government's property cooling measures, which have curbed bad loans while forcing the banks to tighten lending rules.

The MAS and the Urban Redevelopment Authority have introduced various property and loan curb measures since 2009 in a bid to cool the market.

Moody's view reflects the MAS' own assessment last week that "the banking system remains sound and is resilient to risks arising from the property market".

Stress tests also show that the local banking system can still meet the minimum 10 per cent requirement for capital adequacy ratios while the proportion of delinquent housing loans has stayed below 6 per cent, the central bank said. The proportion of holders with housing loans more than 30 days past due is less than 1 per cent.

But MAS has said that it is unwilling to ease the property cooling measures yet, as the prospect of higher interest rates remains a risk for households with heavy debt levels.

-By Wong Wei Han

HDB resale prices at 40-month low: SRX

Flash estimates put the November price dip at 0.8%; property consultants see further softening

Source: Business Times / Real Estate

PRICES of HDB resale flats dipped 0.8 per cent last month to a 40-month low, going by flash estimates from the Singapore Real Estate Exchange (SRX). The monthly HDB resale price index published by SRX Property showed a 6.3 per cent year-on-year decline in HDB resale prices in November. 

Property consultants are expecting a further softening of resale prices, given a large supply of homes entering the resale market from the 6,000 HDB upgraders selling their current homes and moving to their new Build To Order (BTO) flats next year and also with several executive condominiums being completed.

SRX Property's data, released on Thursday, also put the number of resale transactions last month at 1,350 units, 13.1 per cent lower than in October, and 63 per cent down from the peak of 3,649 units in May 2010.

PropNex chief executive Mohamed Ismail said: "The fact remains the same - whether you look at the HDB resale price index from SRX or HDB, even though each has a different way of computing its index - that there is relatively weak demand for public housing and people are taking a longer time, as long as six months, to secure a buyer."

Noting that the greater supply in the resale market comes from more people collecting their keys to new flats and being required to sell their current homes within six months, he said that this trend was being compounded by lower demand, resulting in the continued downward pressure on HDB resale prices.

"This is expected to continue for the next few months because the landscape of the HDB market is not expected to change in the next year, unless there is any tweaking of policies."

Based on SRX flash estimates, prices have declined 9.8 per cent since the peak in April 2013, a fall which SRX said was "nearly double" the perceived government target of a 5 per cent decline.

In November alone, HDB resale prices declined across all housing types. Executive flats marked the steepest month-on-month decline of 2.2 per cent, followed by four-room flats, with a 1.2 per cent slide.

SRX Property estimates that the median price at which buyers snapped up HDB flats in November was S$3,000 below its computer-generated market value.

ERA Realty key executive officer Eugene Lim said that the continued slide in HDB resale prices is expected, given that the mortgage servicing ratio (MSR) of 30 per cent affects buyers of all flat types; those buying larger flats may, however, be more affected.

He said: "The overall price decline for 2014 is within ERA's projection of not more than a 8 per cent decline. In the absence of any change to the current resale policies and loan criteria, we can expect resale HDB prices to continue their decline in 2015 by another 5-8 per cent for the whole year."

ERA is projecting total HDB resale volumes this year to be 17,000 units, historically the lowest annual level, but is hopeful that volumes may rebound next year as HDB scales down its BTO programme, Mr Lim said.

R'ST Research director Ong Kah Seng said that, notwithstanding the drop in HDB resale prices this year, people were not making a loss from selling their units. This "soft landing" will entail a stabilising of resale prices next year, he added.

-By Lynette Khoo

HDB resale flat prices continue to head south

Prices fall across the board for 10th month; number of deals also down

Source: Straits Times / Top of The News

THE public housing resale market stayed gloomy in November, with prices falling for the 10th month in a row.

Buyers' spirits seemed dampened during the monsoon chill, with the number of deals falling after having risen for two months.

The volume is expected to rebound next year, said analysts, as fewer new flats are launched. But for prices, the dreary showing is likely to continue.

Housing Board resale prices fell 0.8 per cent to hit a 40-month low last month, according to flash figures from the Singapore Real Estate Exchange (SRX) yesterday.

Updated figures also showed that an apparent glimmer of light in October was an illusion.

In SRX's initial figures for October, resale prices edged up 0.1 per cent after eight months of decline. But yesterday's update showed that prices actually fell 0.1 per cent that month.

This makes November's fall the 10th in a row.

Prices fell for all flat types, dipping 0.8 per cent, 1.2 per cent, 0.2 per cent and 2.2 per cent for three-, four- and five-room and executive flats respectively.

Apart from the traditionally slow year-end season, the slide in prices was to be expected as loan curbs continue to bite, said experts.

ERA Realty key executive officer Eugene Lim expects prices to decline by another 5 per cent to 8 per cent next year, if resale policies and loan criteria do not change. He is more optimistic about transactions.

This year may see a historic low of about 17,000 flats changing hands, but there may be "some rebound" next year, he said. This is thanks to fewer new flats next year and the continued stabilisation of resale prices.

There were 1,350 resale flats sold last month. This was down from 1,553 in October, but still more than the 1,212 units sold in November last year.

R'ST Research director Ong Kah Seng also expects transactions to "recover slightly next year, especially after the Chinese New Year".

But this may not translate to price gains, he added.

"Most buyers will be 'opportunity buyers' who will buy a flat after a long wait (and prices have fallen)."

Madam Linda Ang, 38, for instance, has heard from only "one or two" interested buyers in the last month.

"This whole year is quite stagnant, so I don't expect many calls," said the clerk, who is selling a four-roomer in Woodlands.

But she, too, expects things to pick up next year. "It can't be going down all the way."

-By Janice Heng

HDB resale prices hit 40-month low in November: SRX

Prices of HDB resale flats fell 0.8 per cent in November, and are down 9.8 per cent since the peak in April 2013, according to the Singapore Real Estate Exchange.

Source: Channel News Asia / Singapore

SINGAPORE: The resale prices of Housing and Development Board (HDB) flats fell 0.8 per cent in November, hitting a 40-month low since August 2011, the Singapore Real Estate Exchange (SRX) said on Thursday (Dec 4).

Prices fell by 0.8 per cent for three- room HDB flats, 1.2 per cent for four-room flats, 0.2 per cent for five-room flats, and 2.2 per cent for executive flats.

Overall, prices have declined 6.3 per cent since the same period a year ago and 9.8 per cent since the peak in April 2013, SRX said.

Mr Eugene Lim, key executive officer of ERA Realty, said: "The continued reduction in HDB resale prices is expected because of the measures that have been put in place. A majority of the buyers are impacted by the mortgage servicing ratio of 30 per cent and this basically restricts their ability to take a larger loan, which therefore impacts those who are buying higher price quantum flats. This has led to a reduction in prices that are being offered to the seller, so that has brought down prices."

The Government is offering 22,400 Build-To-Order flats in 2014. Analysts said the increased supply contributes to the reduction in resale flat prices.

Transaction volume fell as well. A total of 1,350 HDB resale flats were sold last month, a 13.1 per cent decrease from the 1,553 transacted units in October. Compared with a year ago, resale volume was up 11.4 per cent, SRX said.


Overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX estimated market value, remained negative in November at -S$3,000.

For HDB towns with more than 10 resale transactions last month, Geylang reported the highest median TOX of S$8,000, followed by Queenstown with S$7,500 and Toa Payoh with S$3,500.

Among HDB towns with more than 10 transactions, the lowest median TOX were in Bukit Panjang, Pasir Ris and Yishun, at -S$10,000, -S$6,500 and -S$6,500, respectively.

PropNex CEO Mohamed Ismail said prices will continue to fall. "I am expecting the HDB prices not to increase, but neither can you expect a sudden drop of 10 per cent or so, it is highly unlikely. What we are going to expect in the next six months here is a further marginal drop of about 2 per cent."

He added that flats in mature estates will still command higher prices. "Looking at the index - which is islandwide - may not be applicable for some mature estates, where the demand is strong. People have the holding power, and sometimes they will go against the norm and because after all, it's been a willing buyer and willing seller system."

- CNA/cy/ac

Mass-market homes 'face price pressure'

OCBC report also says capital values of shoebox units could be tested

Source: Straits Times / Money

THE demand for mass-market flats has fallen sharply this year and is putting increasing pressure on prices, says OCBC Investment Research.

It forecasts that prices could fall up to 15 per cent over the next two years while sales of new homes will stay muted next year.

The numbers from this year point to the gloom ahead.

There were only 6,800 private homes sold - excluding landed properties and executive condominium units - in the 10 months to Oct 31, half the level of the same period last year, says OCBC Investment Research analyst Eli Lee, adding that the pain is especially acute in the mass-market segment.

"Mass-market home sales routinely made up the bulk of the total market volume - 69 per cent of total sales over January 2012 to June 2013. As we entered the bear market in the second half of 2013, the dominance of the segment waned and constituted 51 per cent of total sales over July 2013 to date."

High-end sales "spiked" in October from September, thanks to the launch of Marina One Residences, which sold 335 units over the month at a median price of $2,228 per sq ft, notes Mr Lee.

He expects demand for shoebox apartments - units up to 506 sq ft - to be more at risk than larger homes due to the "untested rental market for the large supply of shoebox units that will be completed next year".

The prevailing rents for shoebox units may have been skewed upwards as the smaller completed supply means the market has not really been tested yet.

Mr Lee also notes that 84 per cent of the 12,000 shoebox units sold since 2009 are outside the city centre, so "their capital values could come under pressure if rental yields decline significantly below current expectations".

OCBC Investment Research also tips new home sales to stay soft at between 8,000 and 10,000 units next year.

While some in the industry hope that cooling measures like stamp duties will be reviewed, OCBC expects that will happen only "when residential price declines approach a meaningful threshold of 10 per cent".

Deputy Prime Minister Tharman Shanmugaratnam said in a speech in October that private property prices still have "some distance to go in achieving a meaningful correction after the sharp run-up in prices in recent years".

This could happen in the second half of next year or later, said the OCBC report.

It also prefers large developers with strong balance sheets, a diversified regional presence and portfolios with significant investment asset exposures.

-By Marissa Lee

Private home prices to fall 10 to 15%: OCBC

Drop caused by oversupply of homes, anticipated rise in US interest rates: Analysts

Source: Today Online / Business

SINGAPORE — Private residential property prices in the Republic will dip 10 to 15 per cent over 2015 and 2016, while developer sales next year are likely to stay muted at between 8,000 and 10,000 units, OCBC analysts Eli Lee and Wong Teck Ching forecast in a research report yesterday, citing the large oversupply of homes here and the anticipated interest rate hike by the United States Federal Reserve.

However, they said significant buyer demand will come into the market at the lower price points to limit the overall decline.

After nine quarters of sluggish sub-2 per cent price appreciation from the third quarter of 2011 to the third quarter of last year, the Urban Redevelopment Authority’s residential price index succumbed to the Total Debt Servicing Ratio (TDSR) framework introduced in June last year and dipped 3.9 per cent from the fourth quarter of last year to the third quarter of this year.

While prices dipped, the decline in sales was even more pronounced, with primary private home sales, excluding landed properties and Executive Condominiums (ECs), falling by half in the first 10 months of this year from the corresponding period a year earlier to about 6,800 units. The downtrend was broad-based, with all three segments — high-end, mid-tier and mass-market — suffering the impact of weakening buyer demand after the loan curbs kicked in, the analysts noted.

Including Housing and Development Board and Design, Build and Sell-Scheme flats and EC completions, the OCBC analysts anticipated that 50,300, 71,500 and 37,200 homes will be added to the physical supply next year, 2016 and 2017, respectively.

With a forecast average population growth of about 75,000 individuals a year from this year to 2020 and assuming a conservative three persons per household, this translates to an incremental demand of about 25,000 physical homes a year, which points to a clear oversupply situation ahead, the analysts said.

However, they added that the unsold pipeline of homes held by developers — which forms the primary supply — is not onerous at 33,000 units, being below the historical 10-year average of 41,000 units.

If units under consideration — to which developers can exercise flexibility in terms of the pace of launch and construction — are excluded, the situation appears less pessimistic. While developers are likely to ease prices to move inventory, the analysts do not foresee a fire-sale situation.

The analysts also noted that the authorities had stated that their goal was not to cause excessive price correction and that they have been scaling back the supply of land for residential units on the Confirmed List of the Government Land Sales programme. From the second half of 2010 to the first half of next year, the semi-annual supply on the Confirmed List has fallen from 8,135 to 3,020 homes.

The OCBC analysts expect the TDSR framework to be retained, while other measures, such as the sellers’ stamp duties and additional buyer’s stamp duties, appear to be more probable candidates for easing if the Government looks to reverse property curbs in the future.

However, this scenario of policy reversal is likely to occur only when residential price declines in the market approach a threshold of about 10 per cent, the analysts said, adding that this could occur in the second half of next year or after. As indicated by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in late October, the authorities see “some distance to go in achieving a meaningful correction”, they noted.

The analysts were of the opinion that prices in the mass-market segment will be more at risk than those in the mid-tier and high-end. Before the TDSR was imposed, mass-market home sales made up the bulk of the volume, the analysts said, noting that 69 per cent of total sales over January 2012 to June last year came from this segment. However, the dominance of the mass-market segment has since waned, constituting 51 per cent of the total from July last year to now.

Rising costs of borrowing, with the US central bank expected to raise its interest rate target in the second half of next year, will probably keep buyers on the back foot, the analysts said. Singapore’s interest rates move broadly in line with those in the US.

Bloomberg News reported on Wednesday that Fed officials were signalling more confidence in the world’s largest economy that moves them nearer to raising rates and that they were stressing that the move would be linked to data.

Fed vice-chairman Stanley Fischer said the central bank was getting closer to replacing a vow to hold rates low for a considerable time, with guidance that tighter monetary policy will hinge on the economy’s performance.

The policy-setting Federal Open Market Committee will next meet on Dec 16 and 17 and officials are expected to debate retaining their “considerable time” pledge. If the US economy keeps improving, central bank officials will need to signal to investors that they will raise the key federal funds rate without sending bond yields higher and slowing growth. WITH AGENCIES

CapitaLand's Ascott buys Jakarta serviced residence for S$90m

It is also taking its Ascott brand to Vietnam and opening its first property in Laos

Source: Business Times / Companies & Markets

Capitaland's The Ascott is buying a newly-opened serviced residence in Jakarta for S$90 million, taking its Ascott brand to Vietnam and opening its first property in Laos. Ascott has signed a conditional agreement with a subsidiary of its long-time Indonesian partner, Jakarta-listed PT Ciputra Property Tbk, to buy the 185-unit Ascott Kuningan Jakarta, which it already manages. It expects the property to be handed over in the second quarter of 2015.

-By Teh Shi Ning

Company Briefs

Source: Straits Times / Money

CAPITALAND'S wholly owned serviced residence business unit, The Ascott, said yesterday that it has acquired the recently opened 185-unit Ascott Kuningan Jakarta for $90 million from its Indonesian partner, Jakarta-listed PT Ciputra Property.

Ascott has also secured a contract to manage the 222-unit Ascott Waterfront Saigon from Canh Hung Hai Thanh Corporation, an affiliate company under the management of developer M.I.K Corporation.

Woodlands, Holland Rd sites take spotlight in H1 GLS slate

Holland site goes to reserve list to allow more time to study evaluation criteria for dual-envelope tender

Source: Business Times / Real Estate

The government's much-awaited decision to move the commercial and residential site near Holland Village MRT Station from the confirmed list to the reserve list, as well as its decision not to offer any office sites on the confirmed list in the first half of 2015, were the two major talking points in the market following the announcementon Thursday of the latest Government Land Sales (GLS) Programme.

-By Kalpana Rashiwala

Holland Village site sale pushed back for 'nuanced' approach

Source: Straits Times / Top of The News

THE eagerly anticipated sale of a rare site in Holland Village has been pushed back, in a sign that the area's redevelopment is to receive more "thoughtful" treatment, experts say.

The plum 2.3ha site, near Holland Village MRT station, has been earmarked for an iconic integrated development.

Initially, it was to have been put out to tender this month amid moves to enhance Holland Village. But in a more nuanced approach, the site was yesterday put on the Government Land Sales (GLS) programme's reserve list for the first half of next year.

Now, developers must first make an opening offer acceptable to the Urban Redevelopment Authority (URA), under a "concept and price revenue" tender system - also known as the "two-envelope system" - in which developers submit their design proposals and bid prices separately.

This approach is adopted for the sale of "strategic sites", said URA. The site of the upcoming heritage redevelopment project Capitol Singapore was the most recent to be sold this way.

The move suggests that the redevelopment of Holland Village into an identity node - places with distinct character as outlined in the URA Master Plan 2014 in November last year - has taken on a "more thoughtful and introspective approach", said Ms Chia Siew Chuin, director of research and advisory at Colliers.

"URA has assessed that there is a need to give tenderers more time to study the site and tender evaluation criteria before triggering it for sale," said a URA spokesman. "This is because tenderers must submit concept proposals to be evaluated against URA's vision to ensure a future development which enhances the unique charm and character of the Holland Village identity node."

A change in tender systems also means financial muscle will not be the only criterion for winning the tender, said Mr Desmond Sim, head of research at CBRE, Singapore and South-east Asia.

In the north, moves to create decentralised hubs gained pace as a 2.45ha commercial site in Woodlands Square was made available on the reserve list. It is the second commercial site up for sale in the area, after a plot in Woodlands Avenue 5 was bought for $634 million by a consortium of Far East Organization, Far East Orchard and Sekisui House in April.

The attributes that drew bidders to the site then, such as proximity to an upcoming Thomson Line MRT station, are likely to attract bidders to trigger the new plot for tender, experts said.

Still, analysts were surprised that it was the only new commercial site introduced under the GLS, despite an upcoming supply crunch in office space here.

In city areas, new developments like the South Beach and Marina One integrated projects are set to add sufficient office space to the Downtown districts only up to 2018, said Ms Chia.

-By Cheryl Ong

Court removes caveat on debtor's HDB flat

Moneylender fails in bid to block its sale or transfer

Source: Straits Times / Singapore

A MONEYLENDER'S bid to recover a loan by blocking the sale or transfer of a debtor's HDB flat has been overruled by the High Court.

The lender, Micro Credit, had placed a notice on a flat owned by Madam Salbiah Adnan and her then husband Zam Zam Muhammad Kassim, both in their 40s, requiring the lender to be informed if someone seeks to sell or transfer the flat.

Moneylenders use such notices, called a caveat, with the Singapore Land Authority, to ensure that borrowers repay a loan before they proceed to remove the notice.

In judgment grounds released on Monday, the court explained that a caveat is not meant to be a kind of mortgage for an unsecured debt.

"If a moneylender wishes to take security over a borrower's property, he should take a mortgage or a charge," said Judicial Commissioner Edmund Leow.

Mr Zam, a senior technician, had borrowed $2,000 in two tranches from the firm in September and October 2009.

Micro Credit had obtained two caveats on the flat owned by the couple in the same year. The first was authorised jointly by the couple.

The second was signed by Mr Zam alone and filed by Micro Credit in November 2009.

Mr Zam repaid the first loan but defaulted on the second after he was jailed for drug offences and the debt owed with interest rose to $28,334 as of January this year.

Madam Salbiah divorced Mr Zam in 2012 in the Syariah Court, which ordered him to transfer the flat to her. But the transfer could not be carried out by HDB because of the notice lodged by Micro Credit.

Madam Salbiah, through lawyer Mohamed Hashim Abdul Rasheed, applied to the court for the caveat to be removed. But Micro Credit's lawyer S.R. Shanmugam argued that the couple's signatures on the loan documents meant the firm had a valid interest in the sale proceeds of the flat.

But the judge found that the loan documents did not grant Micro Credit any interest in the flat or in the sale proceeds when sold.

He said that "even if (his) analysis is incorrect" Micro Credit's interest in the sale proceeds vanished with the Syariah Court order handing ownership of the unit to Madam Salbiah.

This meant Mr Zam had no share in the flat even if it were sold and Micro Credit could not recover its money.

The judge ordered the caveat removed.

He noted that the notice was lodged before new HDB rules took effect in 2010, forbidding the use of an HDB flat as security for loans.

The relevant 2010 provision was "enacted precisely to address cases like the present where a home owner uses the sale proceeds of his HDB flat as security or collateral for a loan", he said.

Citing a speech in Parliament by then National Development Minister Mah Bow Tan, the judge noted that in 2009, there were 546 caveats lodged by moneylenders on HDB flats to claim an interest in the sale proceeds of the flats.

-By K.C. Vijayan, Senior Law Correspondent

Companies' Brief

Industrial S-Reits lagging regional peers in total returns

Source: Business Times / Companies & Markets

Singapore-listed industrial Reits, otherwise known as industrial S-Reits, are lagging their regional peers in total returns this year. Their relative trading underperformance is coming at a time when industrial landlords are facing pressures in occupancies and rents amid the government's ramp-up in supply of industrial space. According to a sector update by the Singapore Exchange (SGX) on Thursday, industrial S-Reits have generated year-to-date average and median total returns of 11.5 per cent and 12.2 per cent respectively.

-By Lynette Khoo

GuocoLeisure Ltd

Source: Business Times / Companies & Markets

Guocoleisure's re-branding initiative is progressing well with the Amba brand officially launched on Wednesday as the group's 4-star hotel offering. The group also recently completed a refinancing of its expiring £138 million, 10.75 per cent bond debentures at below 4 per cent. We estimate annual savings of US$14 million on interest expense from 2015 onwards. Meanwhile, non-core asset sales will be reviewed on an opportunistic basis at the right pricing.

Views, Reviews & Forum

Tax-free property annual value set too low

Source: Straits Times / Forum Letters

I AGREE with Mr David Goh Chee Hoe that property taxes should be reduced to more "realistic" levels during the current slowdown in the property market ("Home prices down, yet property tax unchanged"; Tuesday).

The authorities have said property tax is a tax on wealth in the form of property ownership, regardless of whether that property generates rental income ("Vacancy refund for property tax removed to ensure consistency" by the Ministry of Finance; Dec 23, 2013).

If the property is sold, the capital gain is tax-exempt, but holding on to it attracts yearly taxes that are levied on the "unrealised" rental income.

I am not against paying property tax as it is for the public good, but over-taxing owner-occupiers goes against the spirit of home ownership. In fact, it makes owning a home to live in a liability when one retires.

According to the Inland Revenue Authority of Singapore, no tax is levied on the first $8,000 of an owner-occupied property's annual value. This is unrealistically low.

The median subletting rent of an HDB flat is about $1,900 for a three-room unit and $2,600 for a four-room unit. This works out to $22,800 and $31,200 in annual value respectively.

It would be fairer to use the rental yield of a three-room flat as a reference, and raise the untaxed annual value to, say, $22,000. This would be more in line with the policy of progressive taxes.

-By Paul Chan Poh Hoi

Reduce price of studio flats to help retirees

Source: Straits Times / Forum Letters

IF MISS Tan Lin Neo ("Drop in resale flat values worries soon-to-be retiree"; Nov 26) intends to sell her flat and downgrade to a smaller resale HDB unit, then the drop in resale values should not be a concern as she would benefit from this.

Besides downgrading, there are other ways to monetise an HDB flat to fund one's retirement, such as subletting rooms or participating in the Lease Buyback Scheme.

One can even sublet the whole flat and move in with family members or relatives, or rent a smaller flat.

Some HDB resale flats have been sold for close to $1 million. Easing the property cooling measures may make it impossible for the younger generation to own a flat, let alone accumulate decent retirement funds.

Perhaps the HDB can help retirees by reducing the price of studio apartments.

-By Chee Chi Weng

Global Economy & Global Real Estate

Weaker ringgit may mean good time for foreigners to pick up Malaysian property

Source: Business Times / Real Estate

Richest UK homebuyers to face big tax rise; others to get relief

Revamped system replaces stamp duty organised in rigid brackets in favour of increases like income tax

Source: Business Times / Real Estate

Famous Boston shopping spot getting a makeover

Faneuil Hall Marketplace hopes to woo back the locals after its first major overhaul since the 1970s

Source: Business Times / Real Estate

China builders seize window for bond issues

Sentiment has improved after first interest rate cut in almost two years

Source: Business Times / Real Estate

UK house prices rise at slowest rate in 9 months

Source: Today Online / Business

LONDON — Housing price growth in the United Kingdom slowed again in the three months to November, as home values rose by 8.2 per cent compared with the same period last year, the smallest increase since February, mortgage lender Halifax said yesterday.

In November alone, prices rose 0.4 per cent, recovering from a 0.4 per cent fall in October, Halifax said. Economists had expected prices to rise by 8 per cent and 0.3 per cent, respectively, a Reuters poll showed.

The Bank of England — the central bank — has welcomed signs that Britain’s housing market is cooling off after double-digit price gains earlier this year, restrained in part by new controls on mortgage lending.

The annual price gains measured by the Halifax index peaked this year at 10.2 per cent in July. In October, prices were up 8.8 per cent.

Price growth is likely to slow further next year as the prospects of higher interest rates and the scale of recent gains discourage prospective buyers, Halifax said.

Halifax economists expect prices nationwide to rise in a range of 3 to 5 per cent next year, though a company spokesperson said the forecast had been made before the overhaul of taxes on property purchases announced by Finance Minister George Osborne on Wednesday.

Mr Osborne said the changes, which come ahead of a national election in May, would mean that 98 per cent of home buyers who have to pay a stamp duty will see their tax bill reduced.

Separate data, published by rival mortgage lender Nationwide last week, showed that the annual rate of increase in British house prices last month fell to its lowest level in nearly a year, rising by 8.5 per cent. 


China rate cut is cold comfort for developers

Source: Today Online / Business

BEIJING — China’s property developers, among the country’s most heavily leveraged companies, will get a negligible lift from the central bank’s first benchmark interest rate cut in two years as sales slip and banks pull back on lending to the sector.

After a long bull run, China’s property market, which makes up about 15 per cent of Asia’s largest economy and is the main driver of demand in about 40 industries from cement to steel, has grappled with soft prices and a mounting inventory of unsold homes for at least six months.

That was among the reasons that prompted the Chinese central bank to cut its benchmark lending rates by 40 basis points to 5.6 per cent on Nov 21, reversing in part its drive to cool a sector that many feared had become so bloated by speculative froth that it was crowding out other forms of investment.

However, the lowering of the lending benchmark will bring only marginal relief to the sector’s biggest headaches — too much unsold stock and tight liquidity.

“The fundamental problem of China’s housing market is oversupply,” said Mr Ding Zuyu, co-president of real estate services firm E-House China, adding that a few home buyers encouraged by the rate cut would not change that.

New home prices in China dropped for a seventh consecutive month in November from the previous month, a survey by the China Real Estate Index System showed.

The force of the rate cut will also be enfeebled because bank lending to the property sector is in steep decline, having slumped 23.3 per cent in the third quarter from the previous three months, Reuters calculations from central bank data showed.

“The impact on property will be limited because for developers, funding access is more critical than borrowing cost. Even if the interest cost falls, access to borrowing is poor, so weak developers still cannot avoid a liquidity crisis when their sales slow,” said Fitch Ratings analyst Lim Su Aik.

Ratings firm Standard & Poor’s also warned that liquidity was a key risk for some developers, as it forecast a 5 per cent fall in average selling prices next year.

And Moody’s Investors Services expects residential property sales to shrink between 0 and 5 per cent, too.

All of which will make banks even more cautious about lending to the weaker players, which leaves them ever more reliant on their ability to keep generating cash.

“The biggest most reliable source of funding is property sales. It is more important to boost sales than obtain more construction loans,” said Macquarie Securities property analyst David Ng.

Larger developers, such as Vanke, Country Garden and Shimao Property, have already been increasing their asset turnover in a bid to improve cash flows, taking market share from the smaller fry. That virtuous circle for the most successful becomes increasingly vicious for the strugglers as sales growth remains in the doldrums.

Meanwhile, the rate cut will not stimulate demand sufficiently for cities that face oversupply, said Mr Lim, who added that lower interest costs would be of only marginal benefit to even the most indebted builders.

“From the borrowers’ perspective, interest expense accounts for only 5 per cent of the home selling price. The impact from a 40 basis point cut will cut interest expenses by only about 6 to 7 per cent or around 0.3 per cent of the selling price,” he said. 


China Home Prices to Rebound Amid Strong Demand, JLL’s Dyer Says

Source: Bloomberg / Luxury

Home prices in China’s major cities will rise again next year now that local governments have lifted property restrictions that depressed demand, the chief executive officer of Jones Lang LaSalle Inc. (JLL) said.

The nation’s housing market will get a renewed boost from strong interest driven by urbanization, lack of other investment opportunities and relatively limited supply due to land shortages, said Colin Dyer, president and chief executive officer of the Chicago-based real estate broker.

“The fundamental thing that I always get reminded by colleagues is the huge demand for residential space in China,” Dyer said in an interview yesterday in Beijing. “We expect price rises will start again next year in the tier-one cities” before spreading.

Jones Lang LaSalle’s prediction of a price rebound puts it at odds with banks including JPMorgan Chase & Co. and Citigroup Inc., which remain skeptical that a recovery in sales is sustainable. Prices have dropped this year in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, and sales tumbled 10 percent nationwide in the first 10 months of the year.

“You can see the formation of a bottom on prices right now in tier one, and we can start to see positive month-on-month price growth early next year,” Steven McCord, Jones Lang LaSalle’s head of research for North China, said in the interview. “Buyers who were waiting on the sidelines for the last 12 plus months now have the confidence to return,” he said, citing mortgage borrowers’ reduced monthly payments.

The People’s Bank of China cut interest rates for the first time since 2012 last month. All but five of the 46 cities that had imposed home-purchase restrictions removed or relaxed them this year.

Raise Prices

Prices in second-tier cities, mostly provincial capitals, may increase later in the year because it will take longer to clear their higher housing inventories, McCord said.

Jones Lang LaSalle manages more than 50 million square meters (538 million square feet) of real estate across China, according to a statement in September. Its portfolio includes landmarks such as the Bird’s Nest stadium and CCTV Tower in Beijing, Shanghai Port International Cruise Terminal and Guangzhou IFC.

New-home prices in Beijing fell for the first time in almost two years in October from a year earlier. Property sales last month fell 1.3 percent from the same time last year in the 32 cities tracked by Barclays Plc, compared with a 7.4 percent drop in October as mortgage policies are “increasingly supportive.”

“Once we get a couple of months of solid sales rebound, that’s enough to lead us to believe that the market is turning a corner,” Jones Lang LaSalle’s McCord said.

-By Bloomberg News

WP Carey Buys $371 Million of Real Estate From Andalusia

Source: Bloomberg / News

The Spanish region of Andalusia agreed to sell properties to WP Carey Inc. (WPC) for 300 million euros ($371 million) in a sale-and-leaseback deal.

The Andalusian regional government sold 70 buildings to a unit of New York-based WP Carey, according to a statement posted on its website today. Andalusia will rent the properties back for 23.6 million euros annually over a 20-year period.

Cash-strapped regional governments are raising money from the sale of public real estate as investors flock back to Spain after commercial- and residential-property prices dropped an average of 40 percent following the market’s crash in 2007. Since 2012, Catalonia has raised more than 532 million euros from the sale of 34 buildings in Barcelona, Spain’s second-largest city, according to the government’s website.

Investors spent 4.93 billion euros on commercial-property assets in Spain last year, more than double the 2.32 billion euros invested in 2012, as the economy came out of its second recession since 2008 and prospects of a euro-currency breakup faded. Brokerage CBRE Group Inc. estimated total investment in Spanish real estate of 9 billion euros this year.

CBRE advised the Andalusian regional government on the sale to WP Carey.

-By Sharon Smyth

Brooklyn Worst in U.S. for Home Affordability

Source: Bloomberg / Personal Finance

One in five U.S. housing markets are now less affordable than their historic average as price gains outpace income growth from New York to San Francisco.

Of the 475 counties analyzed by RealtyTrac through October, 98 areas weren’t as affordable compared with the average level for the period starting in January 2000, the Irvine, California-based data company said in a report today. Brooklyn, New York, where a resident would need to devote 98 percent of the median income to afford the payment on a median-priced home of $615,000, was the least-affordable market, followed by San Francisco and Manhattan.

Investors and foreign buyers have helped drive up home prices in high-cost markets, keeping many residents locked into rentals, where costs also have been rising. Prices in 20 U.S. cities climbed 4.9 percent in the year through September, the S&P/Case-Shiller index shows. Across the country, values have gained 25 percent since their February 2012 bottom.

“Incomes have not grown nearly as fast as home prices” in the regions where affordability declined, Daren Blomquist, vice president at RealtyTrac, said in an interview. “That disconnected home-price growth has been driven by investors and other cash buyers who aren’t as constrained by income.”

As a result, many markets are out of reach for traditional buyers, he said.

Los Angeles and Orange County in California and the Houston, Dallas and Boston regions are among the 98 areas where homes were less affordable than the historic average, RealtyTrac said. The company based its calculations on the median household income required to make a monthly payment for a median-priced home from the beginning of 2000 through October, using a 10 percent down payment and the average 30-year fixed mortgage rate for each month.

Above Peak

About 12 percent of the counties studied now have a higher median home price than the peak of the 2005-2008 property bubble. In addition to Brooklyn, Manhattan and San Francisco, they include Honolulu; Travis County in the Austin, Texas, area; and Fulton County, Georgia.

In Brooklyn, the median sale price climbed to a record $587,515 in the third quarter, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Values in the borough, where almost 70 percent of residents rent, have been surging as wealthy New Yorkers priced out of Manhattan displace the poor.

In a deal completed last month, a renovated 1890s townhouse in the Park Slope section sold for $10.78 million -- a record for the neighborhood and Brooklyn’s third-most-expensive purchase, the Curbed real estate blog reported yesterday.

The median rent in Brooklyn was $2,858 in October, up almost 6 percent from a year earlier, Miller Samuel and Douglas Elliman said.

In the 475 counties analyzed by RealtyTrac, buying a median-priced home in October required 26 percent of the median income on average. That compared with an average of 41 percent in each county’s respective peak month during the housing bubble, according to the report.

-By Prashant Gopal

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