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26th July 2014

Singapore Real Estate

Private property prices down for third straight quarter: URA

Prices of private residential properties fell by 1 per cent on-quarter in Q2, following a 1.3 per cent decrease in the first quarter.

Source: Channel News Asia / Singapore

SINGAPORE: Prices of private residential properties in the second quarter fell by 1 per cent from the previous quarter – the third consecutive quarter of decline, the Urban Redevelopment Authority (URA) said on Friday (July 25).

The price decline was observed across all segments of the private residential property market, URA said.

Prices of non-landed properties in the Core Central Region (CCR) declined by 1.5 per cent from the previous quarter, following the 1.1 per cent decrease in the January to March period. Prices in the Rest of Central Region (RCR) declined by 0.4 per cent, after decreasing by 3.3 per cent in the previous quarter. In the Outside Central Region (OCR), prices declined by 0.9 per cent, after the 0.1 per cent decline in the previous quarter. Prices of landed properties declined by 1.7 per cent, significantly more than the decrease of 0.7 per cent in the previous quarter.

Rentals of private residential properties in the second quarter fell by 0.6 per cent from the previous quarter, compared with a 0.7 per cent decline in the January to March period.


Developers launched 2,843 uncompleted private residential units excluding Executive Condominiums (ECs) in the second quarter, compared with 1,964 units in the first quarter, URA said. A total of 2,665 private residential units (excluding ECs) were sold by developers during the quarter, compared with 1,744 units in the January to March period.

No new EC units were launched for sale during the quarter. Developers sold 154 EC units in the second quarter, compared with the 149 units sold in the previous quarter.


The number of resale transactions rose to 1,314 in the second quarter, up from 941 transactions in the previous quarter. Resale transactions accounted for 31.9 per cent of all sale transactions during the quarter, compared with 33.5 per cent in the first quarter.

There were 139 sub-sale transactions in the second quarter 2014, compared with 128 transactions in the previous quarter. Sub-sales accounted for 3.4 per cent of all sale transactions in the quarter, lower than the 4.6 per cent recorded in the January to March period.

- CNA/cy

Q2 home prices slide further, but at slower clip

URA private home index down 1%; HDB resale index retreats 1.4%

Source: Business Times / Top Stories

PRICES of private homes and HDB resale flats have continued to soften in the second quarter amid a pick-up in transaction volumes.

But even though the quarter-on-quarter dips are smaller than in Q1, the prognosis is hardly cheery - besides mounting supply, demand is clipped by the total debt servicing ratio (TDSR) framework, and in the case of HDB flats, the mortgage servicing ratio as well.

The Urban Redevelopment Authority's private home price index fell one per cent in Q2, after easing 1.3 per cent in Q1. This is the third straight quarterly drop. Total transactions - new sales, resales and subsales combined - rose 46.4 per cent to 4,118 units from 2,813 in Q1. Year on year, the Q2 index was down 2.8 per cent.

Meanwhile, HDB's resale flat price index eased 1.4 per cent, compared with 1.6 per cent in Q1. This is the fourth consecutive drop in the index. The 4,389 resale applications registered in Q2 was up 16.1 per cent from a quarter earlier. The Q2 index reflects a year-on-year drop of 5.3 per cent.

Property consultants expect the full-year drop for the HDB index to be 4-8 per cent and for the the URA index, 5-8 per cent.

The trend is expected to continue next year. Eugene Lim, key executive officer of ERA Realty, said: "MAS (Monetary Authority of Singapore) has maintained their stand that TDSR will remain for the long term and that it is still early days to tweak any of the cooling measures. Therefore, we can expect the moderation in property prices to continue into 2015. Volumes are likely to be flat.

"Economically, we are doing well. The employment situation is good. Logically, the property market should be moving upwards in tandem with the economy. However, we are seeing moderate price declines due to the increasing supply as well as policy measures which are designed to put a check on property prices."

JLL national director Ong Teck Hui said: "What I will be looking out for is whether the market has softened to a stable level, characterised by mild or gradual price decline of about one-odd per cent per quarter, and steady transaction volume - or whether the converse will happen: volumes could decline significantly further and leading to greater magnitude of quarterly price declines."

URA's Q2 data out yesterday shows that the price decline for landed homes has gathered pace - 1.7 per cent compared with 0.7 per cent in Q1.

The price decline for non-landed private homes, however, moderated to 0.8 per cent, from 1.3 per cent. Prices in suburban locations, or the Outside Central Region, retreated 0.9 per cent, faster than Q1's 0.1 per cent dip.

In the city-fringe, or Rest of Central Region, prices edged down 0.4 per cent, compared with a 3.3 per cent drop in Q1.

Core Central Region (CCR) fell 1.5 per cent, compared with Q1's 1.1 per cent drop. CCR covers the Downtown Core planning area, Sentosa and the traditional districts 9, 10 and 11.

Chia Siew Chuin, director at Colliers International, noted that "the CCR has been hit by a prolonged drought in foreign buying, high price tags and some potential buyers facing difficulty obtaining loans for higher-value properties due to TDSR".

She also said that developers of high-end properties affected by Qualifying Certificate rules are facing pressure to finish selling their projects within two years of obtaining Temporary Occupation Permit (TOP). This has made them more inclined to trim prices to move units.

Ms Chia forecasts a 10-15 per cent price drop for luxury and super-luxury condos for the year.

Meanwhile, URA's rental index for private homes dipped 0.6 per cent after shedding 0.7 per cent in Q1.

In the first half, 9,016 private homes were completed, that is, received TOP. With 8,066 more slated for completion in H2, taking full-year completions to a record 17,082, rents are expected to come under greater pressure.

The vacancy rate of private homes has risen to 7.1 per cent at end-Q2 from 6.6 per cent at end-Q1.

In the public housing market, substantial supply is also expected to put a dampener on resale flats. Based on HDB data, launches of Build-To-Order (BTO) flats are expected to total about 22,400 units this year, following 2013's 25,139 and 2012's 27,084.

On top of that, the Sale of Balance Flats (SBF) will amount to some 6,400 units this year. In 2013 and 2012, the figures were 7,074 and 7,153 respectively. The large numbers of BTO and SBF flats will reduce appetite for resale flats, say market watchers.

Adding further pressure on HDB resale flat prices, said PropNex CEO Mohamed Ismail, is an "imminent flood in supply of HDB resale homes from existing HDB flat owners collecting the keys to new BTO flats and private properties".

HDB resale transaction volumes, however, may improve slightly due to lower asking prices. Mr Ismail expects around 17,000 resale HDB flat transactions for this year. SLP International's Nicholas Mak forecast 15,500-16,800 units. Both their figures would be the lowest since 1997. Last year, 18,100 HDB flats changed hands in the resale market.

-By Kalpana Rashiwala

HDB and private home resale prices fall in Q2

SOurce: Channel News Asia / Singapore

SINGAPORE: Prices have continued to fall in the private home and HDB resale markets in the second quarter of this year. But more units were sold in both markets, according to the Housing Development Board (HDB) and the Urban Redevelopment Authority (URA).

This is the fourth consecutive quarter that HDB resale prices have fallen. Despite that, more transactions were made with about 4,389 resale flats sold. This is a 16 per cent increase compared to the previous quarter when 3,781 resale flats were transacted. Analysts say the increased activity is due to a lack of major festivities in the second quarter, and individuals getting familiar with the new resale procedure introduced in March.

The HDB adjusted its resale procedure in March to encourage buyers and sellers to focus on recent transaction prices instead of Cash-Over-Valuation (COV) figures. HDB now only accepts valuation requests, after buyers have been granted an Option to Purchase (OTP) by the sellers.

"They are not talking about the COV anymore," said ERA Realty Network's Key Executive Officer Eugene Lim. "In fact, when most buyers go house hunting, they will do their homework and look at resale transaction data. (So) you will now see more transactions getting more realistic prices.”

The double-digit growth however, is hardly something to ‘shout about’. "The Q1 transaction numbers were at a historical low,” said Lim. “So any rebound in the second quarter will seem to be a significant jump; 4,300-plus per quarter is actually pretty low. Traditionally, in the days before the cooling measures came into place, we typically would see between 5,000 to 6,000."

Transactions could possibly pick up later this year, as lower prices may entice buyers to upgrade to a larger flat, says PropNex's CEO Mohamed Ismail Gafoor. But the overall number of resale flats sold is likely to remain low this year, with the launch of more Build-to Order flats and another Sale of Balance Flats exercise by the HDB in November. ERA says resale transactions will be lower than last year's "historical low" of 18,000 units, while PropNex estimates that the number will hit around 17,000 units.

There was also no respite for prices in the private residential market. Prices dipped for the third straight quarter. In the second quarter of 2014, prices fell by 1 per cent, and price decline was observed across all segments of the private residential property market.

High-end non-landed properties were the hardest hit, with prices falling 1.5 per cent (after the 1.1 per cent decrease in the previous quarter). Homes in the suburbs saw prices decline 0.9 per cent, which is significantly more than the 0.1 per cent decline in the previous quarter, according to the URA. Prices in the city fringe area, meanwhile, dropped 0.4 per cent after decreasing by 3.3 per cent in the previous quarter.

"Overall private home prices have moderated by only 2 per cent for the first half of the year, and mass market home prices are only seeing 1 per cent moderation. So I think the current price moderation is acceptable for now," said Knight Frank's Consultancy and Research Director Alice Tan. "I think if we see another price fall of 5 per cent and beyond for the second half of the year, this would then cause some form of concern."

But developers sold more private homes between April and June. Excluding executive condominiums, 2,665 units were sold in the second quarter of 2014, compared to the 1,744 units sold in the first quarter. "There have been some key project launches (in the second quarter of this year). And the sales performance of these projects have been very encouraging mainly because the prices offered are reasonably attractive." said Tan.

Observers say prices will continue to be a key factor in driving sales, and developers are likely to take a cautious stance in future land bids. The Monetary Authority of Singapore said on Thursday (July 24) that it is too early to ease property cooling measures.
"The bulk of the transactions since (the Total Debt Servicing Ratio) ruling came into place, were priced between S$800,000 and S$1.2 million," said Mr Lim. "So if you were a developer, you would probably need to rethink your product and price strategy now. You would expect that for every land sale that goes on to the market now, there will be a moderated number of bidders. And generally everyone will be a bit more cautious to avoid over-bidding."

Excluding executive condominiums, more than 8,000 units will be completed in the second half of this year while another 21,948 units are expected to come on stream in 2015. The URA estimates that 23,876 units will be completed in 2016. 

- CNA/rw

More homes snapped up as prices slip in Q2

Buyers lured back as prices continue to fall for public and private housing

Source: Straits Times / Top of The News

BUYERS jumped back into the local housing market as prices of both public and private homes fell for another straight quarter, figures out yesterday showed.

A raft of cooling measures has kept a tight rein on the market, but clear evidence of softer prices is drawing buyers back.

Private property prices slipped by a gentler 1 per cent in the April to June period from levels in the preceding quarter, when they dropped by 1.3 per cent. However, the number of homes sold shot up 46.4 per cent to 4,118 units from the first quarter to the second.

A similar scenario played out in the public housing market: Prices of resale flats fell 1.4 per cent in the three months to June 30 - a slight improvement over the 1.6 per cent drop in the first quarter.

But 4,389 Housing Board (HDB) flats changed hands during the quarter, up 16.1 per cent from the previous quarter.

This was the fourth straight dip in the HDB's resale price index, which has seen a 5.3 per cent decline since the peak in the public market a year ago.

Although buying volumes are rising, analysts say that an increasing supply of completed condo units and public flats will continue to hold prices down.

R'ST Research director Ong Kah Seng said sellers of resale HDB flats can no longer demand high prices as the mortgage servicing ratio, which caps loans for public flats at 30 per cent of a borrower's gross monthly income, limits large home loans.

As more owners take possession of newly completed HDB flats, the number of public homes on the resale market is likely to rise, said SLP International research head Nicholas Mak.

"Buyers of Build-to-Order flats are required to dispose of their existing HDB flats within six months of taking possession," he said. And the supply will only increase as upgraders move into new private homes.

A total of 24,893 new units, including executive condominiums, are estimated to be due for completion by the end of next year, Urban Redevelopment Authority figures showed yesterday.

Prices on the private home front fell across all segments. City-centre prices declined 1.5 per cent, while city-fringe prices fell 0.4 per cent. Prices of suburban homes dropped 0.9 per cent.

Even though developers dangled competitive offers at new launches, the overall slide was led by non-landed resale units, which fell 1.3 per cent, while new condo units saw a 0.5 per cent dip.

Ms Chia Siew-Chuin, director of research and advisory at Colliers International, said: "This could indicate that the stalemate between home owners and buyers has given way to a softer stance among sellers."

Upcoming launches such as Keppel Land's The Highline Residences are expected to underpin sales volumes, which are likely to be around 4,000 to 6,000 for the second half, predicted Dr Tan Tee Khoon, executive director of residential services at Knight Frank. Private home prices could moderate by 5 to 6 per cent by the fourth quarter, he said.

-By Cheryl Ong

Semi-detached home prices hit all-time high

Consultants say it is too early to tell if rise is a blip or sign of longer-term trend

Source: Straits Times / Money

A CURIOUS bright spot has emerged among the dying embers of the once red-hot private home market - landed property.

Prices of semi-detached homes hit an all-time high in the second quarter this year, according to official data yesterday, although consultants say it is too early to tell whether the uptick was a blip or a sign of a longer-term rise.

Semi-detached home prices jumped 4.2 per cent from the previous three months, in stark contrast to every other segment of the private residential market, all of which posted either stagnant prices or declines.

This increase has brought the semi-detached price index almost on par with that of bungalows in the quarter - the first time that has happened since the depths of the financial crisis in 2009.

The index, computed by the Urban Redevelopment Authority, is based on prices per sq ft (psf) for transactions posted in the quarter, but it does not indicate actual psf prices.

The median price of a semi-detached was $853 psf in the three months to June 30, higher than the $784 psf for a bungalow, according to URA figures.

Overall, landed home prices fell 1.7 per cent in the second quarter from the previous three months, significantly sharper than the 0.7 per cent slide in the preceding quarter. Bungalow prices fell 3.1 per cent and terrace house prices dropped 4 per cent.

Consultants said yesterday that semi-detached prices may have moved up in the second quarter as people change their buying targets.

More people who may have wanted to buy bungalows still find these too expensive and go for semi-detached homes instead, they said.

"Those people looking to sell bigger houses such as bungalows are still holding their prices, since they have higher holding power," said ERA key executive officer Eugene Lim.

He noted that even if the average psf prices of semi-detached homes approach those of bungalows, the total price of a bungalow would still be a lot higher due to its larger size.

"We haven't seen firesales in bigger units so far. For those with the capacity to upgrade to landed, the next best would be semi-Ds," Mr Lim said.

He added that there was a limited supply of semi-detached homes due to a dearth of new landed homes being built, which could have contributed to the segment's price rise. However, he said it still remains to be seen whether the price rise was a one-off.

SLP International research head Nicholas Mak agreed, noting that the semi-detached price index has been quite volatile over the past few years. The small number of transactions could skew price statistics, he said.

There were only five semi-detached homes sold in the second quarter, and only one bungalow, according to URA data.

Given that, the price increase was more likely to be a blip than a sign people are "abandoning other landed housing types and rushing to buy semi-Ds... I won't be surprised if it drops next quarter", said Mr Mak.

-By Melissa Tan

More HDB flats sold in Q2, but prices continue to slide

The Housing and Development Board also notes there will be a rise in the supply of flats in the second half of 2014 - about 15,700, up from 13,090 in the first half of the year.

Source: Channel News Asia / Singapore

\SINGAPORE: While the number of transactions for HDB flats rose by 16 per cent in the second quarter of the year from the previous three months, resale prices for public housing fell by 1.4 per cent over the same period, the Housing and Development Board said on Friday (July 25).

The Resale Price Index slipped to 195.7 in the second quarter, down from 198.5 in the January-March period, but resale transactions increased by 16 per cent, from 3,781 to 4,389 cases.

The rental market saw a 0.4 per cent dip on-quarter in the number of transactions in the April-June period, from from 8,485 to 8,455 cases, said HDB. This is despite the total number of HDB flats approved for subletting rising slightly, by 0.8 per cent, from 46,637 units in the first quarter of 2014 to 47,015 units in the recent quarter.

The HDB said that more flats will be on offer in the second half of the year than the first. A total of 13,090 flats - 9,707 Build-To-Order (BTO) and 3,383 balance flats - were offered in the first half of the year. But in the 2nd half of 2014, HDB will offer another 12,700 BTO flats, as well as about 3,000 balance flats in a Sale of Balance Flats (SBF) exercise in November 2014.

This includes 3,841 BTO flats launched in the July 2014 BTO exercise. In September 2014, HDB will offer about 4,510 BTO flats in Bukit Batok, Hougang, Jurong and Kallang/Whampoa.

- CNA/es

Subscription rates up for July's BTO exercise

Analysts say this is partly due to the strong response for units in the mature town of Toa Payoh, where new BTO projects are rare. 

Source: Channel News Asia / Singapore

SINGAPORE: Applications for HDB's latest Build-To-Order (BTO) exercise close at midnight. As of 5pm, the overall subscription rates of 3.4 are up compared to the previous launch in May. The overall application rate was 2.1 during the May launch, 2.9 in March and 3.7 in January.

Analysts attribute this to the strong response for units in the mature town of Toa Payoh, where new BTO projects are rare. The Toa Payoh units on offer were oversubscribed - especially by second time applicants.

As of 5pm, there were about 43 second-timers applying for each three-room unit. For four-room flats, there were close to 49 second-time applicants per unit. Only 5 per cent of flats are allocated to second-timers in mature estates.

Overall, demand for two-room flats in Yishun was the highest - with about 10 people applying for each unit. This is largely due to the overwhelming response from singles - around 30 singles applied for each available unit. Only 120 two-room flats are on offer in the project, and 30 per cent are set aside for singles.

Another closely watched project is Kampung Admiralty - an upcoming mixed development in Woodlands. It has 104 studio apartments designed for the elderly on offer. As of 5pm, there were close to six applicants for each available studio apartment.

In this month’s exercise, 3,841 flats were launched. They are spread across five projects in Punggol, Sembawang, Woodlands, Yishun and Toa Payoh.

Analysts say although this month's BTO launch is more heavily subscribed , subscription rates for second-timers are still higher than first-time applicants.

With signs that first-timers have been largely taken care of, they add the Government could consider gradually adjusting the quota to allocate more units to second-time applicants.

- CNA/xy

Integrated project's studio flats prove to be a hit

Comprehensive amenities under one roof attract BTO applicants

Source: Straits Times / Top of The News

STUDIO apartments were hotter than usual in this month's launch of Housing Board flats, due to their being part of the Kampung Admiralty integrated project.

Also proving popular were two-room flats and a Toa Payoh project, as the Build-To-Order (BTO) exercise drew to a close last night.

By 5pm yesterday, there were 5.8 applicants for each Kampung Admiralty unit.

In contrast, other recent studio apartment projects, which can be bought only if one applicant is a Singaporean aged at least 55, have tended to draw about one to three applicants per unit.

"It is not always that studio apartments will be well received by the elderly," said R'ST Research director Ong Kah Seng.

But Kampung Admiralty is located near Admiralty MRT station and boasts comprehensive amenities, he noted.

Among these are a medical centre, an eldercare centre, a hawker centre and a community farm, all in one building.

Mr Ong expects studio units to gain popularity as the elderly grow used to the idea of monetising their current flats.

Madam Hazimah Aziz, 54, for instance, is planning to sell her five-room family home.

"All my children are getting married. For the two of us, a studio apartment is enough," said the housewife, who applied for one in Kampung Admiralty with her husband.

As usual, two-room flats were popular. Last July's BTO - the first time singles could buy the flats alone - saw 57.5 singles chasing each available one.

Demand has since cooled but is still high, with 17.5 singles for each available two-room flat at 5pm yesterday.

"This shows that demand has still not been satisfied," said ERA Realty key executive officer Eugene Lim.

Also sought after was Toa Payoh Apex, a rare BTO launch in a mature estate, with 3.9 applicants for each three-room flat and 9.1 for each four-room unit.

But projects in Punggol were less popular than expected, said Mr Lim. Two-room flats aside, application rates ranged from 1.2 for each five-room unit to 2.1 for each three-room flat.

This might have been due to buyers' fatigue from many BTO launches in Punggol, he added. "It has been one after another."

-By Janice Heng

Prices of office, retail space flat in Q2: URA

Source: Channel News Asia / Business

SINGAPORE: Prices of office space were flat in the second quarter after a 0.5 per cent increase in the first quarter, while prices of retail space fell 0.3 per cent after remaining unchanged in the previous quarter, the Urban Redevelopment Authority (URA) said on Friday (July 25).

Rental prices of office space in the second quarter rose 2.8 per cent from the previous three months, following the 2.4 per cent increase in the first quarter. Rental prices of retail space in the second quarter also increased, rising by 0.6 per cent in the second quarter, compared with the decline of 0.3 per cent in the January to March period.

As of end-June, there was a total supply of about 1.055 million square metre (sqm) gross floor area of office space in the pipeline, and a supply of 879,000 sqm gross floor area of retail space from projects in the works.

The amount of occupied office space increased by 22,000 sqm in the second quarter, compared with the 6,000 sqm increase in the previous quarter. During the quarter, the stock of office space decreased by 1,000 sqm, compared with the increase of 15,000 sqm in the previous quarter. As a result, the islandwide vacancy rate of office space at the end of June fell to 9.6 per cent, from 10 per cent at the end of March.

According to URA, the amount of occupied retail space increased by 38,000 sqm in the second quarter, while the stock of retail space increased by 49,000 sqm. As a result, the islandwide vacancy rate of retail space rose to 5.9 per cent at the end of June, up from 5.8 per cent at the end of March.

- CNA/cy

Q2 retail rents inch up 0.6 per cent

Greater competition for premium mall space possible factor: Analysts

Source: Straits Times / Money

RENTS for retail space went up in the second quarter and are expected to continue rising, consultants said yesterday.

However, any increase is likely to be small, they said, citing retailers' growing resistance to rental hikes amid rising business costs and slowing sales.

Retail space, which includes shops, restaurants and entertainment outlets, saw rents grow 0.6 per cent in the April to June period from the previous quarter.

This followed a 0.3 per cent slide in the first quarter from the preceding three months, according to Urban Redevelopment Authority (URA) figures yesterday.

Consultants said the slight rental increase in the second quarter could be the result of greater competition for premium space in shopping malls.

"Retailers are also more cautious in their expansion plans and typically go into 'tried and tested' areas and in well-established malls to enhance their revenue," said Knight Frank research head Alice Tan.

"The consolidation of operations to more prime, well-managed malls could have led to the continued strong rental performance, while at the same time leaving less prime spaces more susceptible to higher vacancy."

About 1.3 million sq ft of new retail space is expected to be completed this year, which Ms Tan said could weigh down occupancy rates to about 92.5 to 93.5 per cent by the end of this year.

Another possible reason for the rental growth could be that retailers are increasingly being pushed towards smaller shop sizes.

This means that although their total rents may be lower in absolute terms, the rental per sq ft (psf) per month could be higher.

"Retailers are increasingly going for smaller shop sizes as they seek to manage both rental and manpower costs," said Ms Tan.

Rentals for retail space in the Orchard Road shopping belt were a median $10.82 psf per month in the second quarter, up 0.5 per cent from $10.77 psf per month in the first quarter.

Malls along this prime stretch include Ion Orchard, Wisma Atria, Paragon and Ngee Ann City.

In the rest of the city area, median monthly retail rents went up 0.3 per cent from $6.39 psf to $6.41 psf over the same period.

Outside the city area, median monthly retail rents rose 0.8 per cent from $6.60 psf in the first quarter to $6.65 psf in the second.

Colliers research director Chia Siew Chuin noted that, overall, the rental increase has been relatively muted so far this year.

"Given the cautious sentiment evident in the first half, as well as retailers' resistance to rental increases in a highly challenging and competitive trading environment, retail rents generally plateaued in the first half of 2014."

Ms Chia added that "lingering challenges in operating environment" for retailers meant that retail rents were unlikely to increase "by any substantial degree" in the near future.

She expects rents for prime ground-floor retail space in Orchard Road to grow by around 1 to 2 per cent by the end of this year.

Retail space in popular regional centres could see rents rise a bit faster, at between 1 and 3 per cent, she added.

"The Singapore economy is expected to grow at a modest pace in 2014 and new stores and F&B outlets will continue to make inroads by setting up shop in a variety of locations," Ms Chia said.

URA's figures are based on rents that tenants declare to the Inland Revenue Authority of Singapore, which may include a percentage of the tenant's gross sales depending on the terms of the lease.

-By Melissa Tan

Office rents up 5.2% so far; further surge expected this year

Retail space a more subdued picture as landlords turn cautious about raising rents

Source: Business Times / Top Stories

WHILE retail rentals have proved fairly flat so far this year, office rentals have been on a roll. They have already risen 5.2 per cent in the year to date, outpacing the 1.3 per cent full-year growth last year - and are likely to continue going up.

Analysts expect prime Central Business District (CBD) Grade A office rents to surge further by 7-15 per cent for the rest of the year, as tenants jostle for limited options amid a dearth of office space supply.

URA data released yesterday showed office rentals rising 2.8 per cent in the second quarter of this year - the highest quarterly growth in more than three years, and coming on the heels of a 2.4 per cent increase in Q1.

Rentals for offices in the Downtown Core (the CBD, City Hall, Bugis and Marina Centre zones) and the Orchard Planning Area registered a more pronounced increase of 3.2 per cent to a median S$10.03 per sq ft (psf) a month in Q2 - above the "psychological benchmark" of S$10 psf.

No office projects were completed in the CBD in the quarter, and there will be none soon as well - at least until CapitaGreen in Market Street is completed in December.

In fact, no CBD offices are expected to be ready until 2016, which is when three developments - Guoco Tower, Marina One, and Duo - come onstream. Not surprisingly then, vacancies fell from 10 per cent in Q1 to 9.6 per cent in Q2, and rents rose.

Savills Singapore research head Alan Cheong said: "During lease negotiations, the pendulum has swung in favour of landlords and caused signing rents to move closer to the asking rents."

And tenants who seek smaller space tend to pay higher psf prices, partly also because they have less clout to bargain, he added.

This is all playing out against a backdrop of a global economy that has got on a more solid footing, creating a better business climate, which has in turn paved the way for more firms to ramp up growth plans, thus generating more demand for office space

R'ST Research's director Ong Kah Seng said: "Office rents have been on a downward trend for the past two years post-financial crisis, so we are seeing some laggard rental recovery this year, in sync with the global economic recovery."

Contrary to the upward trend in rents, however, the prices of office space - which is not so much a function of supply as it is a function of investment activity - stayed unchanged in Q2, following a 0.5 per cent increase in Q1.

CBRE research head Desmond Sim suggested that this could be because transactions in the quarter changed hands at market value, and so did not push up capital values.

Chia Siew Chuin, the director of research and advisory at Colliers, attributed this to a lack of new strata-titled office project launches in Q2.

Most office and retail space transactions tend to be of strata-titled units, rather than investment sales of a few floors or en bloc sales of entire buildings.

"The continued enforcement of the total debt servicing ratio (TDSR), which caps buyers' loans, and concerns of an impending interest rate hike weigh on the ability of strata-titled office owners to significantly raise prices during the quarter," Ms Chia said.

But she warned that the impending tightening in global liquidity could cause financial stress in open and trade-dependent markets like Singapore's, and that some firms could hold back from expanding if rental costs accelerate at an unsustainable pace.

In retail space, rents rose by 0.6 per cent in Q2, after falling 0.3 per cent in Q1, so they essentially plateaued in the first half of 2014. URA's index tracks base rents with gross turnover component for those to whom it is applicable.

Landlords may have become more careful with raising rents, now that they are under scrutiny; they also do not want to price themselves out of the market as retailers grow more resistant to rental increases, said CBRE's Mr Sim.

Prices of retail space fell 0.3 per cent in Q2 after having stayed unchanged in Q1, similarly restrained by buyers' loan restrictions.

"In the space of a year, the strata-titled retail sales market has had the wind dramatically taken out of its sails," said Colliers' Ms Chia.

Some 190 units changed hands in the first half, nowhere near the dramatic 642 transactions a year ago, pre-TDSR.

Most expect retail sales to stay flattish, or increase at inflationary levels at best, for the rest of 2014.

URA office and retail indices do not cover the whole island, but only 22 planning areas in the central area, including Downtown Core, Orchard, Marina East and South, and in fringe areas such as Newton, Outram, Bishan, Geylang and Queenstown.

Analysts like R'ST Research's Mr Ong took issue with this, arguing that the suburban shopping sector was as active, if not more so, and that offices are decentralising and moving to locations outside the CBD. Much of the action in these two markets are not currently reflected in the data, he said.

-By Lee Meixian

JTC awards tenders for two Tuas industrial sites

Source: Business Times / Singapore

JTC Corp has awarded the tender for a 30-year-leasehold industrial site at Tuas Ave 11 to Soon Hock Realty Pte Ltd, which submitted the highest bid of S$14.388 million for the 8,922 square metre plot. Another site at Tuas South St 11 (Plot 39) was awarded to Tiong Aik Construction Pte Ltd, which put in a bid of S$8.073 million. This parcel has a site area of 10,000 sq m and a tenure of 20 years and 10 months. The Tuas Ave 11 plot has a gross plot ratio of 1.4, while the one at Tuas South St has a gross plot ratio of one. Both are zoned for Business 2 use.

Seletar Mall more than 90% leased

Set to open in Nov, it will house Shaw Theatres, FairPrice Finest, Uniqlo, BHG

Source: Business Times / Singapore

THE Seletar Mall, due to open in mid-November, has secured tenants for more than 90 per cent of its space, it was revealed at its topping out ceremony yesterday.

Other than the three previously announced anchor tenants - Shaw Theatres, NTUC Foodfare and FairPrice Finest supermarket - the family-oriented shopping mall will also be home to Uniqlo, BHG and Amore Fitness.

Located at the junction of Sengkang West Avenue and Fernvale Road, the four-storey mall with two basement retail levels has a gross floor area of 284,000 sq ft and a net lettable area of 188,000 sq ft.

It is a joint venture between Singapore Press Holdings (SPH) and United Engineers Developments Pte Ltd.

-By Cheryl Tan

Seletar Mall completed, set to open in November

Family-oriented mall in north-east will have first cinema in the area

Source: Straits Times / Top of The News

A NEW mall set to open in Singapore's north-east in November will house the area's first cinema and aims to cater to young families.

The four-storey Seletar Mall, a joint venture between media group Singapore Press Holdings (SPH) and United Engineers Developments, also has two basement levels of retail.

A ceremony to mark the completion of construction was held at the development yesterday.

The mall along Sengkang West Avenue has a gross floor area of 284,000 sq ft and net lettable area of 188,000 sq ft, and is now more than 90 per cent leased.

Major tenants will include Japanese casual clothing company Uniqlo, department store BHG and fitness centre Amore Fitness, while FairPrice Finest, Shaw Theatres and Foodfare will be anchor tenants.

The mall aims to draw residents from Sengkang, Hougang, Punggol, Seletar and Ang Mo Kio, who are mainly young couples and parents with young children, SPH said in a statement yesterday.

It will feature tuition and learning centres offering enrichment courses ranging from languages to art and music.

Some of these tenants include Mavis Tutorial Centre, Mind Stretcher, Vienna Music School, Hi Art, and Han Language Centre.

Popular Bookstore and Mothercare, a newborn and parenting product retail specialist, will be tenants too.

Parents will also be able to shop for baby necessities and educational toys from Lamkins, 1010 Mother and Child Essentials, and BB Spa, while their children enjoy the Hokey Pokey indoor playground.

Tenants said they are eager to tap a new group of customers in the area.

"The Seletar Mall houses our first Amore Fitness and Boutique Spa outlet in the north-east region," said Ms Jasmine Teo, the chief operating officer and founder of Amore Fitness. "It is definitely an added convenience. Our members and all of us at Amore Fitness are very excited."

Dr Lee Boon Yang, chairman of SPH, said: "When Seletar Mall opens for business at the end of this year, it will cater to the needs of residents in the vicinity as a family-oriented shopping mall. We will provide a great retail mix and an enjoyable shopping experience."

The media group's other retail assets are Paragon and The Clementi Mall.

Spot Fresh look at Grange Road with Spring Grove's collective sale bid

Source: Straits Times / Money 

AT LEAST one property expert is questioning whether Spring Grove condominium, in the upscale Grange Road precinct, can secure the eye-popping $1.39 billion price sought in a collective sale.

The 325-unit condo would set a record for the largest collective sale concluded if its ambitious asking figure is met.

Spring Grove enjoys a premier location - nestled in a coveted residential enclave and also close to Orchard Road.

If sold, the price would work out to a breakeven price of $3,370 per sq ft (psf), analysts estimated. This translates to an expected selling price of $3,700 psf for the site's new development, assuming its developer plans for a slim profit margin of 10 per cent, they said.

Ms Christine Li, research head at OrangeTee, noted that new projects in the area can be expected to go for $2,800 to $3,200 psf today.

"It seems the Spring Grove price does not make sense," said Ms Li. "Developers would be taking a huge risk [with] such a large project in view of the Additional Buyer's Stamp Duty and qualifying certificate rules, together with the current tepid market conditions."

Foreign developers require a qualifying certificate to hold land in Singapore, and are given up to two years after obtaining the temporary occupation permit to sell all units. If they fail to do so, charges based on the proportion of unsold units will be levied.

Although the high-end market has been the biggest loser after stiff cooling measures were imposed on buyers, market watchers said the Grange Road area will not lose its shine given the quality of its projects and proximity to the shopping belt of Orchard Road.

Moreover, interest rates are expected to remain low in the near term, while Singapore is home to a growing pool of millionaires and affluent investors, they said.

Projects that have sprung up in the vicinity include SC Global's 66-unit The Marq on Paterson Hill, OUE's 462-unit Twin Peaks in Leonie Hill Road and Far East Organization's 28-unit Boulevard Vue in Cuscaden Walk.

Median prices of new units sold at these projects over the past two years were between $3,000 and $5,000 psf, figures from the Urban Redevelopment Authority show.

Since the total debt servicing ratio lending rules were introduced in June last year, deal making in the area has ground to a halt, said Ms Li. There were just 10 units sold in the first half, down from the 31 transactions a year ago.

"Many developers of new high-end projects in this area are proceeding with construction works, but have held back on high-profile project launches," noted Ms Elaine Chow, research head at Chestertons.

Examples include Bukit Sembawang's 85-unit Paterson Collection in Paterson Road as well as City Developments' 124-unit New Futura in Leonie Hill Road and 174-unit Gramercy Park in Grange Road.

Median resale prices have slipped as a result of slowing demand. They fell 20 per cent from $2,532 psf in the third quarter of last year to $2,018 psf in the second quarter this year, said Ms Chow.

On the leasing front, rents have fallen by 3 per cent in the first half, down from a 1.6 per slip in the second half of last year, DTZ data shows.

While rental data in the vicinity is limited, anecdotal evidence hints at a weakening market. For instance, a 2,600 sq ft four-bedroom unit at Grange Infinite that could fetch a monthly rent of $16,000 about a year ago is being marketed at $13,500 to $15,000, Ms Chow noted.

Despite the slow activity in the luxury segment, Ms Li suggested it could be the first to gain if the cooling measures are lifted. "The activities in this segment have little impact on the affordability and stability of the overall residential market in Singapore," she said.

-By Cheryl Ong

Dakota Crescent set for redevelopment, residents to leave by end-2016

Around 400 households in Dakota Crescent, one of Singapore's oldest neighbourhoods, will have to vacate their homes by end-2016. 

Source: Channel News Asia / Singapore

SINGAPORE: On Wednesday (July 23) evening, the Housing Development Board (HDB) issued notices stating that 17 blocks in Dakota Crescent, one of Singapore's oldest neighbourhoods, have been earmarked for redevelopment. About 400 households there will have to vacate their homes by end-2016. Affected flat types range from one- to three-room units.

The area is planned for future residential development, according to HDB, and the date for development has not been confirmed.This estate was formed in 1958.  

Two-thirds of the households have one or more elderly member who is at least 60 years old. The majority of the residents are living in rentals flats, paying between $60 and $75 a month. HDB says those who wish to continue renting will be given priority in the rental of flats in other parts of Singapore, subject to availability. Those who wish to remain in the area can opt for new or rental flats at nearby Cassia Crescent, which will be completed by the third quarter of 2016.

HDB said the tenancy agreement for these new rental flats will be for two years. For Dakota residents, rental flats in Cassia Crescent will start from $26 a month for a one-room flat and $59 for a two-room unit. 

For those who choose to buy a flat, first-timer households and singles may be granted a Central Provident Fund (CPF) relocation grant of $15,000 (for families and joint singles) or $7,500 (for singles), if eligible.

Tenants who have already booked new flats will be allocated temporary rental flats, if their new flats are not ready before their move-out date. HDB says eligible tenants will also be given a removal allowance of S$1,000.

Dakota residents had mixed views about the estate's demise. “I have been here for 51 years,” said Rahmat Bee. “It’s convenient to get around from here and it’s a great neighbourhood.”

Meanwhile, a newcomer to the area was surprised by the notice, having only opened his cafe a month ago. "It's really a pity because a lot of customers and neighbours love this place,” said Vincent Foo, co-owner of Tian Kee & Co. "We will stay until the end of December 2016 and at the end of it, we'll throw a party for all the customers and the residents here - past and present."

In an emailed statement to Channel NewsAsia, Member of Parliament for Mountbatten Lim Biow Chuan said residents have been anticipating the move as they are aware of the old and hard-to-maintain nature of the buildings in the estate. "In fact when I did a house visit six weeks ago, some of them asked when they would be moving," he said.

Asked if such estates with rich history should be conserved like Tiong Bahru, Mr Lim said while he personally felt the estate is "very quaint" and "unique", it is conservation experts who should decide this.

“There should be some meritorious criteria to consider before deciding whether to conserve the place," he said. "The state would have to strike a balance between conserving the place versus the need to provide more housing options to the residents in a prime area which is next to a MRT station."

- CNA/rw

Real Estate Companies' Brief

CDLHT Q2 distribution falls 8.1%

Source: Business Times

Heated competition in the hotel industry and a slowdown in visitor arrivals in Singapore, especially from China, dragged the earnings of CDL Hospitality Trusts (CDLHT), with second-quarter distribution per stapled security falling 8.1 per cent to 2.5 Singapore cents. But there are signs of improvement in the third quarter as forward bookings for CDLHT's hotels are looking stronger, said Vincent Yeo, chief executive of M&C Reit Management Limited and M&C Business Trust Management Limited, the managers of CDLHT.

Fortune Reit's first-half DPU rises 16%

Source: Business Times / Companies

FORTUNE Real Estate Investment Trust (Fortune Reit) yesterday posted distribution per unit (DPU) of 20.88 HK cents for the fiscal half-year ended June 30.

The DPU, which was 16 per cent higher, represents an annualised distribution yield of 6.2 per cent based on the unit price of HK$6.785, the average of the two closing unit prices in Singapore and Hong Kong as at the end of the reporting period.

The interim DPU will be paid on Aug 29.

Fortune Reit chalks up another record performance

Source: Straits Times / Money

FORTUNE Reit has delivered another record performance, with revenue and net property income in the first half rising by 33.5 per cent and 32.8 per cent to a record HK$813.5 million (S$130 million) and HK$581 million, respectively.

Income available for distribution for the six months to June 30 climbed by 27.2 per cent to HK$390.5 million. This translates to distribution per unit of 20.88 HK cents, up 16 per cent.

Reit manager ARA Asset Management (Fortune) attributed the exceptional performance to the success of Fortune Reit's three core strategies, namely:

  • strong rental reversions across its enlarged portfolio;
  • satisfactory returns from completed asset enhancement initiatives (AEIs); and
  • additional income contributions from Fortune Kingswood acquired in October last year.

Fortune Reit's private housing estate retail portfolio underlined its resilience by delivering a solid performance amid a softening of overall retail sales in Hong Kong.

Portfolio occupancy rose to 99.1 per cent against 97.8 per cent in the same period last year.

Also, rental hikes of 21.2 per cent were recorded for renewals in the first half, driven by the strong rental growth at Fortune Kingswood.

Consequently, portfolio passing rent stood at HK$34.2 per square foot.

Two AEIs, at Ma On Shan Plaza and Fortune City One Market, were successfully completed in the fourth quarter of last year, with return on investment of 60 per cent and 27 per cent respectively. They have since contributed fully to group portfolio.

Meanwhile, AEIs at Belvedere Square will commence in the second half, with completion scheduled by the end of 2015.

Fortune Reit reported a revaluation gain of HK$1.51 billion. Its 17 retail properties were appraised at HK$30.88 billion, up 5.3 per cent from Dec 31.

ARA Asset Management (Fortune) chief executive officer Anthony Ang said retail sales related to local consumption such as supermarkets held firm in spite of a moderation in Hong Kong's economic growth in the first quarter.

"As more than 60 per cent of Fortune Reit's tenants cater to the non-discretionary and necessity type of spending, Fortune Reit's portfolio of 17 private housing estate retail properties should continue to benefit from the healthy local consumption environment," he noted.

Fortune Reit units closed three cents lower at HK$7.20 last Friday

Mapletree China commercial trust posts 11.9% Q2 DPU growth

Source: Business Times / Companies

MAPLETREE Greater China Commercial Trust (MGCCT) has posted an 11.9 per cent year-on-year growth in distribution per unit (DPU) to 1.56 Singapore cents for the second quarter ended June 30 with strong rentals for its retail and office assets, beating its forecast by 9.3 per cent.

MGCCT's gross revenue rose 8.6 per cent to S$63.8 million as Festival Walk (a retail mall in Hong Kong) and Gateway Plaza (a Grade-A office in Beijing) both raked in higher revenues. Net property income rose 9.9 per cent to S$52.6 million, exceeding its forecast by 8.8 per cent.

The two properties cover a gross floor area of about 2.4 million sq ft and were valued at a total of S$4.7 billion on March 31.

-By Lynette Khoo

Views, Reviews & Forum

Reduce amounts allowed for buying property

Source: Straits Times / Sights

THREE forum experts dared to take a tilt at a sacred cow - the use of CPF funds to buy property.

Improve the Central Provident Fund scheme by lowering the current amounts of CPF money that can be used for this purpose, was their call to the Government.

Singaporeans have put too much of their nest egg in one basket - one that is illiquid, risky in terms of timing the market if it is to be turned into cash, and difficult to extract an income from, they said.

For the younger generation, using up too much CPF money for housing can spell problems later, warned Lee Kuan Yew School of Public Policy associate dean Donald Low, one of those who want the caps lowered, along with real estate expert Lum Sau Kim of the National University of Singapore (NUS) and NUS Business School professor Joseph Cherian.

It may not be easy to convert property into cash when needed. Also, the selling price depends heavily on the market at that point, and housing prices may be volatile.

This could come to a head if many decide to monetise their flats at the same time, which may happen with Singapore's ageing population.

Said economist Augustine Tan: "Asset appreciation is going to be very problematic in a very aged population. Who's going to buy your flats?"

Prof Lum tells Insight: "People spend 30, 40 years building up this (property) asset and then wonder how to get money out of it."

Also, if people have spent much of their CPF funds on property, they will have low cash balances later.

Nearly 20 per cent of younger Singaporeans' wages goes into their CPF Ordinary Accounts, with which they can buy flats. Only after they turn 51 does this proportion shrink markedly, with more CPF savings going into the accounts meant for retirement and health care.

For today's seniors, this can mean that they are sitting on a goldmine of valuable property, while not having enough cash for their daily needs. But they are reluctant to sell or lease out their houses for cash due to their emotional ties to their homes, or because they want to bequeath them to their children, says Prof Lum.

This is even though HDB flats are on 99-year leases, noted NUS' Prof Cherian at the forum.

But options for monetising flats tend not to be popular and have weaknesses. The Lease Buyback Scheme (LBS) lets the elderly sell part of their flat's lease back to the Housing Board, and they can keep living in it for the next 30 years.

"It's not for life," says Prof Cherian. "Although the Government says that they will take care of people if they live beyond that, I say, 'Put it in writing'.

"Tell people it will be for 30 years or until they die. If you start (the LBS) at 62, what if you live until 95? You don't want to find out you will be homeless at 92."

The HDB has also said that it may reintroduce reverse mortgages, which were phased out in 2008 after few people took them up. In this, flat owners use their home as security for a loan that is dispensed in regular cash payouts.

Prof Lum, however, says that the Government has to price reverse mortgages carefully, as people may not take them up due to worries that they will have difficulty repaying the loan.

"If we're not careful about creating proper monetisation options, many households may not have an orderly exit from the market," she tells Insight.

"If you don't want future generations to continually deal with this kind of risk, maybe we shouldn't allow so much CPF to be used on housing."

-By Charissa Yong

Global Economy & Global Real Estate

UK house prices grow marginally in July

Source: Business Times / Wealth

BRITISH house prices grew at their slowest rate in over a year this month in the latest sign that Britain's housing market may be starting to cool, a survey showed yesterday.

House prices rose by 0.1 per cent this month - the slowest growth rate since February last year - easing from a 0.3 per cent increase last month, according to property analysts Hometrack.

Britain's housing market has had a rapid recovery this year, with prices rising more than 11 per cent and more than double that in London by one measure.

-From London, UK

UK home buyers’ confidence tumbles over high prices

Source: Today Online / Business

LONDON — Confidence in the British housing market has tumbled to its lowest level in at least three years amid fears of over-inflated prices and a potential rise in interest rates.

Across the country, the net balance of people who believe the next year will be a good time to buy a home has plunged to 5 per cent from 34 per cent at the end of the first three months of the year, showed the quarterly Housing Market Confidence tracker issued by the Halifax bank.

The figure represents the difference between the proportion of those surveyed who are positive about buying in the next 12 months and the proportion who think it will be a bad time for buyers.

Halifax said there has been a sharp increase in people who say rising prices are a barrier to buying. About 35 per cent cited the concern compared with 20 per cent this time last year.

Worries about interest rates rising are also increasing.

Property prices in the United Kingdom have been steadily rising in recent years, supported by a shortfall in supply.

Prices in London have been particularly buoyant, with foreign investor interest acting as an additional spur.

However, data released last week showed house prices in the UK capital stagnated in July, the first month with no growth since December 2012, adding to the view that the market may have peaked. THE DAILY TELEGRAPH

Zillow will lead US home search with Trulia buy

Move is expected to lead to consolidation of search websites for US house hunters

Source: Business Times / Wealth

A ZILLOW Inc purchase of Trulia Inc would create a dominant search website for US house hunters, reshaping an online industry that the companies helped to popularise.

Zillow, the largest US real estate website, is seeking to buy No 2 Trulia for as much as US$2 billion in cash and stock, according to sources with knowledge of the matter.

An agreement may be announced as soon as next week, said one of them, who asked not to be identified because the information is private. Talks are ongoing and may not lead to a deal.

-From New York, US