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13th October 2014

Singapore Real Estate

Record high e-applications for Lake Life EC

Source: Business Times / Real Estate

The 546-unit executive condominium (EC) Lake Life has been more than three times subscribed, receiving a record number of e-applications for an EC project in Singapore. Developed by a consortium led by Evia Real Estate, the project - which is in the Jurong Lake district - received over 1,848 applications. Sea Horizon received more than 1,500 last year.

By Nisha Ramchandani

Jurong EC project, thrice oversubscribed, sees record number of applicants

A total of 1,853 e-applications were received for Lake Life executive condominium at the end of application on Sunday night (Oct 12). The number is the highest ever seen for an EC.

Source: Channel News Asia / Business

SINGAPORE: E-applications for Lake Life executive condominium closed on Sunday night (Oct 12) at a record high.

A total of 1,853 applications were received - more than three times the 546 units on offer. It is the highest number of e-applications ever seen for an EC. In 2012, Heron Bay received 1,664 applications while last year, Sea Horizon got over 1,500 applications.

More than 65 per cent of applications come from second-time applicants, said the developer of Lake Life. Located in the Jurong Lake District, it is the second executive condominium project for the year. Applications for Lake Life opened last weekend.

The project is being developed by a consortium led by Singapore property developer and property fund management company Evia Real Estate.

Artist's impressions (Images: Lake Life EC)

It said the average age of applicants is about 42, with close to 60 per cent of them earning between S$8,001 to S$12,000. The combined income cap to be eligible to buy an EC is S$12,000. Only about 10 per cent of applicants have a combined income of less than $5,000.

Pricing of the units will be announced on November 5. They are expected to go at around S$890 per square foot. Bookings will begin on November 8. 

- CNA/ir/dl

Jurong EC Lake Life 2-1/2 times subscribed

Source: Business Times / Real Estate

Jurong EC units snapped up ahead of cooling measures

Source: Today Online / Singapore

SINGAPORE — Jurong executive condominium (EC) Lake Life smashed the record for the number of e-applications yesterday, boosted by property hunters rushing in to catch the final few developments that will escape EC-specific curbs for second-timers announced last December.

An hour before applications closed yesterday, the 546-unit EC in the Jurong Lake District was more than three times subscribed, with 1,828 applicants — the previous highest was Heron Bay’s 1,664 in 2012. About two-thirds of Lake Life’s applicants were second-timers.

Noting that Lake Life is one of the last five projects that will not be affected by the resale levy rule — applicable only to EC land sales launched on or after Dec 9 last year — analysts were unsurprised by the strong demand.

The EC market will cool once the resale levy kicks in for the dozen or so projects that will be launched in the next 18 months and developers will have to price their projects more attractively, they added.

“Increasingly, from next year and into the first half of 2016, the sale of ECs is going to be challenging because the new projects in 2015 will be affected by second-timers’ resale levy — that’ll be a major stumbling block,” said SLP International’s executive director of research and consultancy Nicholas Mak.

ERA’s key executive officer Eugene Lim added: “While there’s no issue of a supply glut, there will be many EC launches, so developers should not expect their projects to be snapped up.”

Data from the Urban Redevelopment Authority projects that around 14,000 EC units will be completed between this year and 2017.

Along with the slew of launches in the past three years, this is exhausting the pool of potential buyers, Century 21 Singapore’s chief executive Ku Swee Yong said. “That’s why I believe Lake Life’s success is a one-off incident due mostly to its location. Developers are becoming cautious — recently, an EC tender in Sembawang received only two bids.”

But PropNex CEO Mohamed Ismail feels bullish about the demand for ECs. “The demand for ECs will continue to be there despite cooling measures (as) they are priced 20 to 30 per cent lower than mass-market private condos.”

-By Wong Wei Han

'Growing demand' for hotel stays as S'pore becomes exciting place

Source: Straits Times / Money

THE growing attraction of Singapore as a tourist destination has made the local hotel industry as competitive as that of the city's great rival, Hong Kong, according to a leading industry figure.

Mr Clarence Tan, InterContinental Hotels Group's (IHG) senior vice-president of development in Asia, Middle East and Africa, told The Straits Times: "We used to be a boring destination that was cheap to come to. But today, as Singapore matures as a city, it has become a much more exciting place to see and visit."

He said this trend is underlined by the recent sharp increase in new hotel rooms here.

Singapore added 15,746 rooms in the past five years, while Hong Kong added 14,527 rooms, according to a recent report by property consultancy CBRE.

The number is "a testament to the continued and growing demand here" for hotel stays, said Mr Tan.

He noted that Singapore is "constantly re-inventing itself" with many new projects, such as the Changi Airport revamp, that will keep drawing crowds.

Last year, Singapore welcomed a record number of 15.5 million visitors, up 7.2 per cent on 2012.

Mr Tan believes prospects for the hotel market are "firm to bullish" for the next two to three years, with the bulk of the demand set to come from the growing middle classes in nearby countries like Indonesia, India and China.

Two of IHG's three projects in the pipeline - Hotel Indigo Singapore Katong and Holiday Inn Express Singapore Katong - will cater to this market segment at different price points, he added.

The third is luxury development InterContinental Singapore Robertson Quay, the second InterContinental hotel in Singapore. This will replace the Gallery Hotel.

All three hotels are slated to open by 2016.

"The fact that Singapore has a stable environment appeals to many visitors," said Mr Tan, noting that the duration of tourist stays and the value of tourism spending have been growing.

And this demand for tourism will continue to head north, he added, especially as Singapore "continues to provide excitement for visitors in many ways".

The transformation of the Jurong Lake District, for instance, will be a key feature expected to bring in business and leisure travellers alike, noted Mr Tan.

He said that IHG will consider opening hotels there as well as in areas such as Sentosa and at Changi Airport.

While Mr Tan did not disclose the occupancy rates for IHG's hotels here, he noted that they are "above the market rate".

The average occupancy rate across all hotel segments stands at 86 per cent, based on Singapore Tourism Board data for the first quarter of this year.

Despite the rosy outlook, several challenges remain for hotel owners, said Mr Kaushik Vardharajan, partner managing director of HVS Global Hospitality Services in Asia Pacific.

"The biggest problem lies in having enough people to run the hotel," he noted. "The recent changes in labour laws have made it even more difficult to overcome this, and that's not going to change any time soon."

Mr Vardharajan also warned that pricey hotel room rates could backfire if travellers choose to visit other destinations with cheaper accommodation, such as Seoul or Bangkok.

"There is a large segment of people out there who want to spend less on hotels here, but more on other things like shopping or sightseeing," he said.

"So we need to ensure that we have a diversified product offering and enough supply at various price points that will cater to more people coming in."

-By Jacqueline Woo

Real Estate Companies' Brief

Changing the mindset

Prominent figures from across the built environment sector share their thoughts about the need to boost productivity among industry players

Source: Business Times / Hub

HDB industrial rent moves in tandem with market conditions

Source: Straits Times / Forum Letters

THE rent for Housing Board industrial properties fluctuates according to market conditions ("Huge rent increase in HDB-run industrial building" by Madam Kee Mui Hong; Oct 3).

When comparing the new rent with the current rent, one should note that the latter was contracted at the last tenancy renewal, typically three years ago.

However, the last three years have seen a significant rise in market rent for industrial properties in Singapore.

To help our tenants cushion the impact of rent increases, we have, since 2007, offered the Staggered Rent Scheme to our tenants. Should a tenant opt for a three-year tenancy term, the rent increase would be phased in gradually over the three years.

This is unlike private landlords, who would generally impose the full rent increase upon renewal of the tenancy.

-By Lee-Tang Li Fun (Mrs)

Director (Industrial Properties Management)

Housing & Development Board

Why 30-month wait to purchase a second EC?

Source: Today Online / Voices

My spouse and I are the owners of a three-bedroom Executive Condominium (EC). I am interested in a new EC development that offers four- and five-bedroom units to cater to the needs of my growing children.

To my dismay, I found out that I would have to first sell my current EC and wait for 30 months before I can apply for an EC from a developer.

If I had wanted to downgrade to a Housing and Development Board (HDB) flat, purchased directly from the HDB, the same condition would apply.

For some EC projects, depending on their completion dates, a resale levy would be payable for second-time applicants.

Could the HDB enlighten me as to why a 30-month period is imposed if, as Singapore citizens, we are eligible to purchase a flat directly from the HDB or an EC directly from the developer twice?

This is making it difficult for families with growing needs, or those who wish to downgrade for whatever reason, to purchase a second HDB flat or an EC.

Besides the 30-month period, there is still the resale levy to reckon with, if one chooses to buy a second EC.

-By Joanne Tan

Global Economy & Global Real Estate

Najib's Budget aid brings little joy to house hunters

Median monthly household income up 8% against 10% housing price rise

Source: Straits Times / Asia 

DESPITE being a partner in a law firm just outside Kuala Lumpur, Ms Puteri Mohamad, and her fiance, can only watch as apartments in the area where she lives spiral above RM500,000 (S$196,000).

When the government proposed measures in its 2015 Budget - released on Friday - to help households earning less than RM10,000 monthly to buy homes, she was not at all elated.

"We earn just over that but it's not enough for savings. We can convert rent into loan repayments but we can't pay the 10 per cent deposit," said Ms Puteri, 33, who lives in a rented flat in Petaling Jaya.

Many Malaysians like her find themselves locked out by a combination of what US-based urban development researcher Demographia rates as a "severely unaffordable" residential market and accelerating inflation.

Malaysia's consumer price index - which includes many subsidised goods - has risen by an average of 3.3 per cent so far this year and the government warns it may spike by 5 per cent next year, nearly triple the 2013 average.

Government data shows that since 2012 median monthlyhousehold income has risen 8 per cent annually to RM4,258, slower than the average housing price increase of 10 per cent to RM280,886.

Demographia rates housing as severely unaffordable if it is 5.1 times median annual income. Malaysia clocks in at 5.5x, higher than Singapore's 5.1x, while housing in the United States and Japan is "moderately unaffordable".

Prime Minister Najib Razak said in his Budget speech the government would provide another 80,000 affordable homes (priced at RM100,000 to RM400,000) under the 1Malaysia People's Housing Programme (PR1MA) and introduce the Youth Housing Scheme that will waive downpayments and subsidise ownership by up to RM10,000 for 20,000 married couples under the age of 40.

Both schemes, as well as the existing downpayment waiver under the My First Home scheme, are only for households with a combined monthly income of less than RM10,000.

The National Housebuyers Association lauded the moves to help aspiring homeowners in financing but criticised the lack of new measures to cool rising prices which are the root of the problem.

Its secretary-general, Chang Kim Loong, said speculators have taken advantage of the low entry cost of buying a property at the expense of genuine buyers.

Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have been unable to even think of home ownership until these schemes came along.

They applied for a PR1MA home, which the government says is priced 20 per cent lower than comparable units, worth about RM200,000 three months ago.

But they have not figured out how to afford the downpayment on their combined income of under RM4,000 a month that leaves them with little savings living in expensive Kuala Lumpur.

"We might not even be able to afford the repayment but we have to try before prices go up further," she said.

That is, if she can get a loan in the first place. The central bank reported that only a third of My First Home applicants in the first year received loans as banks refused to take the risk.

Tellingly, even PR1MA saw just 761 buyers for the 160,000 units launched since 2013.

-By Shannon Teoh, Malaysia Correspondent in Kuala Lumpur

Property weakness ‘will lower China’s GDP growth’

Latest forecast echoes those of other state-backed researchers in anticipating lower growth

Source: Today Online / Business

BEIJING — Weakening property demand will dim China’s economic prospects, dragging growth lower in the second-largest economy, said Mr Li Daokui, a former central bank adviser.

Gross domestic product will expand 7.4 per cent this year before growth slows further to 7.3 per cent next year, said Mr Li, head of the Economic Research Center at Tsinghua University. The centre previously put China’s growth rate this year at 7.6 per cent.

Mr Li’s latest forecast echoes those of other state-backed researchers in anticipating lower growth as economists from quasi-official sources assign little probability that leaders will splurge on stimulus to meet the government-set growth target. Premier Li Keqiang has reiterated this year that growth can be slightly above or below 7.5 per cent and said last week that China prefers reform to stimulate the economy.

“The property industry, which has been a traditional driving force for the Chinese economy, has lost power and is expected to remain weak,” Mr Li said.

China’s growth goal was 7.5 per cent in 2012 and 2013, and expansion came in at 7.7 per cent each year, said the statistics bureau. The International Monetary Fund (IMF) in July urged China to set a growth target of 6.5 per cent to 7 per cent for next year, warning of a “web of vulnerabilities” in the economy from real estate and rising debt.

Chinese policymakers eased some property restrictions this month for the first time since the global financial crisis, based on the central bank’s statement on Sept 30.

Still, slowing property investment and industrial production pose a threat to growth, while the government appears adamant in its resolve to press ahead with reform and eschew broad stimulus to repeat excessive investments in industries with overcapacity and a housing bubble.

In a speech in Germany on Saturday, Premier Li said China would avoid a hard landing despite worries of a slowdown in the world’s No 2 economy and a flagging real-estate market.

The comments, reported by state news agency Xinhua, echoed earlier ones he made in London in June.

“China’s economy will not suffer a ‘hard landing’ like some people fear, but will bring a positive impact to the global economy,” Premier Li said in the city of Hamburg.

China’s third-quarter growth is likely to be its weakest in more than five years as a property downturn weighed on demand, based on a Reuters poll of 20 economists released on Friday.

The poll said the economy may have expanded 7.3 per cent in the third quarter from a year earlier, the weakest reading since 6.6 per cent growth in the first quarter of 2009.

Premier Li said staying power will be more important to China’s economy than speed of growth. “Economic development is not a sprint, but a long-distance race without end. You need a certain amount of speed, but even more important are endurance and stamina,” he said.

Mr Ma Jun, chief economist at the People’s Bank of China, also said on Saturday that the chance of China facing a hard landing was very small. The Chinese central bank economist was talking at the IMF and World Bank fall meetings in Washington.

Mr Chen Dongqi, a deputy director of the research arm of the National Development and Reform Commission, said China’s growth may slow to 7.1 per cent next year from an estimated 7.4 per cent this year.

In the event growth slows to a range of 6.5 to 6.8 per cent, China can still opt for monetary policy tools including benchmark interest rates and required reserve ratio, Mr Chen said at a forum in Beijing on Sunday. On the fiscal side, the country may also dispense resources to boost investment in railways to cushion a slowdown, he said. 

-By Agencies

Aussie retirees in search of affordable homes turning to trailer parks

Australia's expanding ranks of retirees, faced with declining affordability of housing and inadequate savings, are set to boost demand for cheaper manufactured homes

Source: Business Times / Real Estate

Agile's HK$2.8b rights offer cancelled

Source: Business Times / Real Estate

Bargains for Rich as Costliest London Homes Get Cheaper

Source: Bloomberg / Luxury

Britain’s most expensive homes got cheaper this year as more central London mansions and super-prime apartments sported “for sale” signs.

The average value of homes sold for at least 10 million pounds ($16 million) in London’s most expensive neighborhoods was 2,757 pounds a square foot in the first eight months, according to broker Huntly Hooper Ltd. That was 7.4 percent lower than the record of 2,978 pounds set in 2013. Prices for other homes in the area known as prime central London increased.

“Whilst there are record sales being achieved, buyers should not be swayed by headlines suggesting there is a boom in average pricing,” Huntly Hooper director Oliver Hooper said in the statement.

More homes for sale in the Notting Hill and Holland Park neighborhoods have climbed into the top tier of London pricing, giving buyers more choice. Prices for super-prime properties have increased by at least 13 percentage points less than every other part of the prime central London market since 2009, Huntly Hooper said.

Apartments in the top category fared the worst, with a 9 percent decline to an average of 3,565 pounds a square foot (38,370 pounds a square meter) compared with the average value last year. Super-prime house prices dropped 6.3 percent to 2,458 pounds a square foot. There were 66 transactions this year through August compared with 92 for all of last year.

Huntly Hooper, based in the Knightsbridge neighborhood, defines prime central London as 11 postal districts that include Mayfair, Chelsea and Holland Park and Knightsbridge itself.

More Choice

The number of central-London homes offered for sale for more than 10 million pounds increased by 165 percent from 2009 to 2013, according to the report.

Possible tax increases on expensive homes, such as the Labour Party’s planned “mansion tax,” haven’t diminished demand in the market based on the number of sales, the report said. The opposition party plans to raise 1.2 billion pounds from a tax on homes valued at more than 2 million pounds if it gets into power after next year’s national election.

The mansion tax may still have an impact on the central London housing market, Charles Puxley, a Chelsea-based broker at Jackson-Stops & Staff said in an Oct. 9 Royal Institution of Chartered Surveyors residential market survey.

Fewer new homes than normal were offered for sale in September “and there is notably very little activity at just over the 2-million-pound mark,” he said. “Mansion tax seems to be a real worry; it will decimate London prices.”

Average home values in all of London rose about 0.1 percent in the three months through September from the previous quarter, broker Douglas & Gordon Ltd. said in a report today.

“Persuading a buyer to spend rather than just look is proving more difficult than it has for at least five years,” for homes costing more than two million pounds, sales director George Franks said in the report.

-By Neil Callanan