Real News‎ > ‎2014‎ > ‎October 2014‎ > ‎

16th October 2014

Singapore Economy

International visitors to Singapore slide 6% on-year in Q2: STB

Tourist spending also dipped 3 per cent, with lower shopping expenditure, particularly from China, Indonesia and Malaysia, contributing to the decline, says the Singapore Tourism Board.

Source: Channel News Asia / Singapore

SINGAPORE: The Republic saw a drop in both tourist spending and international visitor arrivals in the second quarter of 2014, according to the latest figures from the Singapore Tourism Board (STB) released on Wednesday (Oct 15).

Tourism receipts for the quarter were estimated at S$5.6 billion, representing a 3 per cent year-on-year dip, and the dip was attributed mainly to lower shopping expenditure, particularly from China, Indonesia and Malaysia, the STB noted.

Zooming in on the components, the tourism agency's figures showed shopping dipped 19 per cent on-year to S$957 million in the quarter, and was the largest drop seen among the components identified.

On the other end of the spectrum, Sightseeing, Entertainment and Gaming recorded the largest year-on-year increase of 12 per cent to S$1.47 billion, on the back of both integrated resorts reporting increases in their overall gaming revenues, according to the report.

In terms of international visitor arrivals for the quarter, there was a 6 per cent slide on-year to 3.6 million visitors, said STB.

Highlighting one of the causes for the dip, STB said: "Visitor arrivals from China were affected by the continued impact from China's tourism law enacted in October 2013, and regional socio-political issues."

As for gazetted hotel room revenue, STB reported a 5.2 per cent year-on-year increase to S$800 million in the second quarter of 2014.


- CNA/kk

China visitor arrivals almost halved in second quarter

But some economists believe the slide has bottomed; overall visitor number for the quarter slips 6% to 3.6m

Source: Business Times / Government & Economy

SINGAPORE'S second-quarter tourism was again hammered by the severe drop in China visitors. The retreat however appears to be easing, prompting some economists to say that the decline may have bottomed.

According to the Singapore Tourism Board (STB), Chinese arrivals dived a worrying 47 per cent in the quarter. But there was some consolation in their average spend, which helped total China receipts fall by a less sharp 24 per cent.

Overall, the number of visitors dropped 6 per cent year on year to 3.6 million in the second quarter. Receipts dipped 3 per cent to S$5.6 billion. The decline in tourism receipts was mainly due to lower shopping expenditure, particularly from China, Indonesia and Malaysia, which was down 19 per cent, possibly due to the strong Singapore dollar.

This was offset by the growth in sightseeing, entertainment & gaming expenditure, where spending was up 12 per cent in line with higher gaming revenues at Marina Bay Sands and Resorts World Sentosa.

In addition to China, visitor spend was also down for Indonesia (-7 per cent), Malaysia (-12 per cent) and the Philippines (-12 per cent) while Hong Kong bucked the trend to post a 30 per cent growth on the back of higher business travel and MICE traffic.

CIMB economist Song Seng Wun said signs were pointing to a possible recovery in 2H14, with 2Q likely to be the trough. "Going forward, we are seeing some tentative signs of the decline in visitor arrivals levelling off," he said, pointing to markets such as China and India.

Preliminary month on month data from STB seems to support this view. For July, visitors from China nearly doubled month on month. While arrivals from China were still down 27 per cent year on year in July, the decline eased from the steeper drops of 52 per cent and 45 per cent in May and June respectively.

For the first six months, total tourism receipts were up two per cent to S$11.8 billion, even as visitor arrivals declined three per cent to 7.5 million. "The disappearance of flight MH370, abduction of Chinese visitors in Sabah and political unrest in Thailand have all had a dampening effect on Chinese travel to the region," said STB.

It added that new tourism laws in China, implemented in October last year, which clamp down on "zero-dollar tours" that come with surprise fees have also contributed to weaker tourist arrivals from China.

Stripping out China, visitor arrivals from all other markets were up 2 per cent in the first six months. The number of travellers from China were down 30 per cent to 871,000 in 1H14, while Indonesian visitors - Singapore's top source market - edged up three per cent to 1.525 million. Arrivals from Hong Kong and South Korea were also both 16 per cent higher.

Last year, Singapore received S$23.5 billion in tourism receipts from 15.6 million visitors. STB earlier forecast visitor arrivals to clock 16.3-16.8 million this year, and tourism receipts to hit S$23.8-S$24.6 billion. However, it remains to be seen if those targets will now be met.

CIMB's Mr Song expects a slight growth in 4Q arrivals, which would result in flat growth or up to a one per cent slide for the total this year.

Total tourism receipts for the year are likely to be flat as well, even with 4Q14 receipts expected to grow by five per cent due to favourable base effects, which suggests hitting STB's target is unlikely, reckons Mr Song.

Meanwhile, gazetted hotel room revenue rose 5.2 per cent to about S$0.8 billion in Q214 and 9.1 per cent to S$1.6 billion for 1H14.

In 2Q14, average room rate (ARR) across the hotel industry dipped 0.2 per cent to S$255, while average occupancy rate (AOR) was down 2.1 percentage points to 84 per cent and revenue per available room (RevPAR) was 2.6 per cent lower at S$213. Of the various hotel categories, luxury hotels saw the highest growth in RevPAR.

And for the six months, ARR edged up 1.2 per cent to S$258, while AOR slipped 1.3 percentage points to 85 per cent. RevPar came to S$218, down marginally by 0.4 per cent.

-By Nisha Ramchandani

Fewer Chinese visitors, strong Sing$ hit tourism

Source: Straits Times / Singapore

SINGAPORE'S tourism industry took a hit in the second quarter of this year, battered by a fall in the number of Chinese visitors and the strong Singapore dollar.

The two factors contributed to a lacklustre quarterly showing, with both visitor arrivals and tourism receipts declining in a single quarter, the first time since 2009 during the global financial crisis.

Singapore welcomed 3.6 million visitors between April and June this year, a 6 per cent fall from the same period last year.

Spending also fell 3 per cent from a year ago to $5.6 billion, according to the Singapore Tourism Board's (STB) quarterly report released yesterday.

But STB was unconcerned by the fall in numbers, saying the half-year results are in line with its strategy of pursuing quality tourism: tourists who spend more time here while spending more.

From January to June, arrivals fell 3 per cent year on year to 7.5 million. But spending grew 2 per cent year on year to $11.8 billion.

Arrival numbers were mainly hit by a fall in Chinese visitors. Excluding China, arrivals from other markets grew 2 per cent over the same six-month period.

China's new tourism law - which clamped down on cheap shopping tours and took effect last October - and events such as the disappearance of Flight MH370 and political unrest in Thailand kept Chinese visitors away from the region, noted STB.

But the Chinese visitors who came here stayed longer, from an average of 2.7 days last year to 4.2 days in the first half of this year.

Another factor that contributed to lower spending, especially on shopping, was the strength of the Singapore currency, said STB. From January to May, the yuan fell by more than 5 per cent against the Singapore dollar.

Spending on sightseeing, entertainment and gaming helped to partially cushion the drop in shopping expenditure, it added.

Ngee Ann Polytechnic's tourism senior lecturer Michael Chiam said tourism numbers will fluctuate in the short term as it will take some time before Singapore reaches a stable state of attracting "quality tourists".

-By Melissa Tan

September retail sales down more than forecast

Manufacturing rebounds but construction contracts for a second consecutive quarter, advance estimates show

Source: Business Times / Government & Economy

Singapore's economic sectors turned in a mixed performance in the third quarter of 2014, with manufacturing staging a turnaround, services growing at a much slower pace, and construction posting a second consecutive quarter of contraction. The economy expanded 1.2 per cent on a seasonally adjusted quarter-on-quarter annualised basis, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Tuesday. This marked a reversal from the 0.1 per cent contraction in Q2, which was revised down from an earlier estimate of 0.1 per cent growth.

-By Kelly Tay

Global slowdown pulls back Q3 growth

S'pore economy up 2.4%; MAS to persist with strong Singdollar policy

Source: Straits Times / Top of The News

SINGAPORE'S third-quarter economic growth was dampened by the lacklustre global economy, a sluggish property market and the nation's restructuring efforts.

Still, despite the prospects of slower growth and stable inflation, the central bank yesterday said it will stick with its policy for a relatively strong currency.

The economy grew 2.4 per cent in the July-to-September period from a year earlier, with the construction and service sectors, in particular, seeing tepid growth.

Economists say the data - on a par with the second quarter's 2.4 per cent growth - shows Singapore is still grappling with restructuring challenges and the muted global economic outlook.

Still, bright spots emerged in the advance estimates released yesterday by the Ministry of Trade and Industry (MTI).

The economy grew a better-than-expected 1.2 per cent quarter-on-quarter - reversing a 0.1 per cent contraction in the preceding three months.

The official estimate is for full-year expansion of 2.5 to 3.5 per cent and similar growth next year.

Weaker private sector construction activity kept a lid on growth in the building sector, MTI said.

A pickup in electronics and precision engineering helped give manufacturing a slight uptick.

But service-sector growth was muted as the weakness in global commodity demand weighed on re-exports and trade financing.

Parts of the finance and insurance sector were also hit by rising tensions in Ukraine.

In its latest six-monthly policy statement, the Monetary Authority of Singapore (MAS) stuck to its policy of a "modest and gradual" appreciation of the Singdollar.

Singapore conducts monetary policy by managing its exchange rate against a basket of the currencies of its major trading partners.

A stronger Singdollar helps to dampen inflation by making the prices of imported goods lower.

An expected rise in the supply of certificates of entitlement and new homes will keep the cost of cars and accommodation down into next year, but food costs may rise owing to pricier regional food imports, the MAS said.

In a tight labour market, rising wages are likely to drive up consumer prices, especially in sectors such as health care and education.

This means core inflation - a measure of everyday out-of-pocket costs - is likely to stay elevated even as overall inflation numbers remain relatively subdued.

The MAS has narrowed its full-year inflation forecasts. Overall inflation is set to be 1 to 1.5 per cent this year, down from a 1.5-to-2.5 per cent previous estimate.

Core inflation is now forecast at 2 to 2.5 per cent, down from an earlier estimate of 2 to 3 per cent.

-By Chia Yan Min

Developer sales in Q3 lowest since worst phase of global crisis

Combination of sluggish sales and price declines spells painful journey ahead for property market, say observers

Source: Business Times / Real Estate

THE 648 private homes developers sold last month were up 48 per cent from 437 units in the Hungry Ghosts-struck month of August. However, the September figure is half that of the 1,237 units in the same month last year.

This takes the preliminary third-quarter tally to 1,596 units. This is a 40 per cent drop from Q2 and the lowest figure since the 419 units developers sold in Q4 2008 during the nadir of the global crisis, according to Urban Redevelopment Authority (URA) figures released on Wednesday.

"In the year before TDSR (total debt servicing ratio) was imposed (in late-June 2013), quarterly sales volume was about 5,000 units on average - or roughly three times more than the volume in Q3 2014," observed JLL national director Ong Teck Hui. "This shows the extent to which demand has weakened in the primary market," he added.

CBRE Research, Singapore head Desmond Sim too noted that there has been only a marginal improvement in sales, on a six-month rolling total basis.

In the first nine months of this year, developers sold 6,005 private homes, and property consultants polled on Wednesday predict the full-year tally will be in the 7,000-9,000 unit range. This marks a big downward revision from the 10,000-14,500 unit sales most consultants had indicated in a BT poll in mid-January this year. Some had been even more bullish; ERA Realty key executive officer Eugene Lim had forecast sales of 15,000 to 18,000 units.

When contacted on Wednesday, Mr Lim gave a drastically reduced estimate of 8,000-9,000 units for the whole of this year. "Now we can fully see the effects that the cooling measures as well as the TDSR framework are having on buyers; they force buyers to be very selective as they are constrained by the amount of loan they can get. Price quantum remains key. It is easier to move units priced S$800,000-S$1.2 million than units above S$1.5 million."

Mr Lim expects the pace of sales to be similarly measured next year. "In the absence of the government tweaking any of the cooling measures, we can possibly expect a similarly muted market going forward," Mr Lim said.

Agreeing, JLL's Mr Ong said: "The main threat is that our economy is slowing down and how that will affect sentiments in the property market."

A seasoned market watcher noted that developers have trimmed their price expectations for new launches and at times also cut prices of existing launches, sometimes through a "star buy" campaign of discounts on selected units.

"When prices soften, there is some buying before sales stall again. It is not a situation of cutting prices and you clear all your unsold stock. TDSR is biting hard," he said. "Developers are cutting prices selectively to avoid a downward price spiral - otherwise things will be messy."

This mix of price declines and sluggish sales, with no end in sight of the cooling measures, spells a painful journey ahead for Singapore's real estate market, reckon most observers.

URA's data also show that developers sold 59 executive condo (EC) units in September, just one unit more than the August sales of 58 units. But the EC sales engine is set to rev up in Q4, with sales bookings slated to begin for at least three EC projects - Lake Life near Jurong Lake, Bellewoods in Woodlands and Bellewaters in Sengkang.

Developers found buyers for 168 EC units in Q3, slightly more than the 154 units in Q2. In Q3 last year, the figure was 1,240 units.

In the first nine months, developers transacted 471 EC units.

Last year, they sold 3,588 ECs and 14,948 private homes.

Based on URA's latest data, last month's top-selling project was Keppel Land's Highline Residences condo near Tiong Bahru MRT Station, with 142 units transacted at a median price of S$1,848 per square foot (psf), followed by UOL Group's Seventy Saint Patrick's with 110 units sold at a median price of S$1,652 psf.

This quarter's sales numbers will be supported by the recent launch of Marina One Residences. The market is also expecting the release soon of Sophia Hills at Mount Sophia, as well as two mass-market projects: Tre Residences in Geylang East Avenue 1 and Symphony Suites in Yishun Avenue 9, noted CBRE.

Excluding ECs, developers launched 514 private homes last month, up from 399 units in August.

No ECs were launched in both months.

*Analysis shows median price declines of houses in majority of projects

-By Kalpana Rashiwala

Dismal quarter for new private home sales

Developers sell only 1,596 units in Q3, the lowest figure since late 2008

Source: Straits Times / Top of The News

A SLIGHTLY improved showing last month could not salvage a dismal quarter for developers.

New home sales recorded their lowest quarterly total since late 2008, reflecting the sustained impact of tighter mortgage rules.

Developers sold 1,596 private homes in the three months ended Sept 30 - the lowest quarterly figure since just 419 homes were sold in the fourth quarter of 2008.

Still, the 648 units sold last month represented a 48 per cent comeback off a low base in August, according to figures released by the Urban Redevelopment Authority yesterday. Including executive condominiums (ECs), 707 units were sold - a 44 per cent rise from August's figure.

"The increase in sales volumes comes after the end of the Hungry Ghost Festival, and buyers have started to come back into the market looking for deals," said an OrangeTee report.

In the first nine months of this year, developers sold about 6,030 private homes, a 52 per cent dive from the figure in the same period last year.

Sales totals this year are just a fraction of those before the total debt servicing ratio framework was imposed in June last year.

Quarterly sales averaged about 5,000 back then, or roughly three times this year's third-quarter total, said JLL national research director Ong Teck Hui. "This shows the extent to which demand has weakened in the primary market."

Developers launched 514 private homes last month, a 29 per cent rise from the 399 homes launched in August.

Demand for high-end homes remained lacklustre, as the sales volume for the core central region was unchanged from August with just 44 units sold.

The anaemic sales came despite two launches in the area last month, with none in August.

The top sellers last month were two newly launched projects - the 500-unit Highline Residences in Kim Tian Road, which moved 142 units, and 186-unit Seventy St Patrick's, which sold 110 units.

The main action in the current quarter is set to be in the EC market, with the launches of Lake Life, Bellewoods and Bellewaters, said Mr Desmond Sim, head of research for CBRE Singapore and South-east Asia.

On the private home sales front, the market is anticipating the launches of Sophia Hills at Mount Sophia, Tre Residences in Geylang East and Symphony Suites in Yishun.

Consultants estimated that 8,000 to 9,000 new homes could be sold for the whole year - far lower than last year's 17,590, and the lowest since the 3,840 recorded in 2008, said PropNex chief executive Mohamed Ismail Gafoor.

-By Rennie Whang

Singapore private home sales up sharply in September

Developers sold 648 new private homes last month, a 48.3 per cent increase from the 437 units sold in August, according to the Urban Redevelopment Authority.

Source: Channel News Asia / Singapore

SINGAPORE: Buyers returned to the private housing market in September, with sales of homes surging 48.3 per cent from the previous month.

Excluding executive condominiums (ECs), developers sold 648 new units last month, up from the 437 units sold in August and 511 units sold in July, data from the Urban Redevelopment Authority showed on Wednesday (Oct 15). Including ECs, 707 new units were sold in September.

The strong sales came as developers launched more units for sale, with 514 units launched last month, up from 399 units launched in August.

Most of the buying activity took place in the suburbs. Developers cleared 331 units in the Outside Central Region and 273 units on the city fringe. In the city area, only 44 new homes were sold.

The newly-launched Highline Residences at Tiong Bahru was the top performer last month, selling 142 units out of 160 at a median price of S$1,848 per square foot (psf).

In the second spot was also a new development, located at Marine Parade. Buyers snapped up 110 units of the 186-unit Seventy Saint Patrick's, at a median price of S$1,652 psf.

Lakeville at Jurong West, an old project, came in third. It sold 42 units at a median price of S$1,274 last month.

ERA Realty's key executive officer, Mr Eugene Lim, said that location and pricing are of importance to buyers. "In today's market, buyers tend to place a very strong premium on the price that they are paying compared to what they are buying," he noted.


Only three new launches with more than 100 units took place in September as developers tried to move old stock. Almost two-thirds of the sales came from older projects such as The Panorama, Eight Riversuites and The Skywoods.

One property observer said this is likely to be the trend going ahead. 

"New sales numbers have all the while been focused on new launches. But we are also increasingly seeing that a lot of the older stock, which are not completed, are clearing. The new sales projects will probably just make up 40 to 50 per cent of that, but in the past, it has been making up 70, 80 per cent of new sales," said Mr Alan Cheong, senior director of research and consultancy at Savills Singapore.


Pricing remains the key to attracting buyers. ERA said buyers affected by loan curbs and the Additional Buyer's Stamp Duty are very sensitive to the price quantum and are likely to buy units that they find affordable.

The real estate firm added that as much as 80 per cent of new home sales this year are priced S$1.6 million and below.

Property watchers expect October's numbers to be on par with, or slightly better than, September's figures, as developers are likely to step up their launches ahead of the year-end holiday lull.

Luxury project Marina One Residences, for example, has already sold some 300 units in the past two weeks.

- CNA/cy/dl

Private home sales rebound, but shadow of cooling measures remains

Source: Today Online / Singapore

SINGAPORE — The private housing market regained some momentum last month as buyers snatched up units amid a larger number of new launches by developers, following a lull in August when home buyers held off buying and developers held back new offerings to avoid the Hungry Ghost Festival.

Analysts expect some seasonal uplift in sales before the year’s end, but cautioned that the market is still far from a full recovery as cooling measures continue to pressure the market.

Based on Urban Redevelopment Authority data, 648 units (excluding executive condominiums) were sold last month, a 48 per cent increase over the previous month’s revised 437 units. Including ECs, the number of units sold in September was 707.

The number of private homes released into the market last month was also higher at 514, up from August’s 399 units, which was the lowest since last December.

But the rebound does not necessarily signal a definite recovery: September’s sales are still 48 per cent down from the 1,237 units sold in the year-ago period, Reuters reported.

SLP International’s executive director for research and consultancy Nicholas Mak believes that the cooling measures will continue to dampen the market despite what he calls September’s “modest recovery”.

“September to November is usually a seasonal window for better sales, but I don’t think we’re looking at a sustained recovery. In fact, sales volume hasn’t crossed the previous 1,000-unit mark so far this year except in May,” Mr Mak said.

Against this backdrop, attractive pricing and location remain key drivers in helping developers move units, analysts said. PropNex chief executive Mohamed Ismail said: “This is why Seventy Saint Patrick’s was able to sell more than 100 units over a weekend — because it’s rightly priced, freehold and near an MRT station.”

UOL’s Seventy Saint Patrick’s — which is near the coming Marine Parade station — was one of the top two sellers last month, moving 110 of its 140 units launched. Keppel Land unit Harvestland also launched 160 units of its Highline Residences at Tiong Bahru and sold 142 units.

In the coming months, buyers will also have more options as more ECs are launched after their absence from the market since October last year. Last week, Lake Life — the first EC launched in the Jurong Lake District since 1997 — received more than 1,800 e-applications, a record high. Subsequent launches such as Bellewaters and Bellewoods are expected to be similarly sought after.

“There’s some overlapping between the EC and mass-market condo market, and with more selection available to buyers, developers will be watching the EC segment closely and price their launches accordingly,” ERA key executive officer Eugene Lim said.

-By Wong Wei Han

ERA Realty beefs up strength in GCB dealmaking

A group of 60 sales agents from JLL Residential joins ERA, another 100 JLL agents cross over to PropNex

Source: Business Times / Real Estate

ERA Realty Network is bolstering its strength in the very niche segment of good class bungalows (GCBs) and landed deals, ushering in some seasoned dealmakers in GCBs into the firm. A total of 60 salespersons from JLL Residential specialising in GCBs and landed deals have officially joined ERA, bringing the latter's sales force to 6,016 agents - still by far the largest in Singapore.

-By Lynette Khoo

The Crest relaunched with prices 5% to 10% lower

Prices now from S$980,000 to S$3m, say marketing agents

Source: Business Times / Real Estate

Developers of The Crest, a 99-year leasehold project in Prince Charles Crescent launched in June, have re-opened the showflat, tagging the units at prices said to be 5 to 10 per cent lower than earlier. This follows sluggish sales since June. About 50 of the 469 units have been sold at a median price slightly above S$1,800, based on data on developers' sales from the Urban Redevelopment Authority (URA).

-By Lynette Khoo

Analysis shows median prices of units decline in some projects

Source: Business Times / Real Estate

A sampling of 20 existing private residential projects on the market by R'ST Research showed that 12 of them had declines in median prices on units sold by their respective developers, ranging from 0.4 per cent to 14 per cent, between June and September this year. Six projects saw price increases of one to 4 per cent. Developers of two projects did not sell any units in June, so a price comparison between that month and the latest sale month was not possible.

-By Kalpana Rashiwala

Ascott opens 3 new serviced residences

Source: Business Times / Real Estate

Capitaland's The Ascott on Wednesday announced that it has opened its first serviced residences in Hangzhou, China, and in Hamburg, Germany. It has also opened its second Ascott-branded serviced residence in Jakarta and secured a management contract for its second Ascott-branded serviced residence in Dubai, due to open in 2017.

-By Lee Meixian

Hiap Hoe snaps up unsold condo units

It purchases units at its own developments at bargain prices

Source: Straits Times / Money

TWO bulk purchases of units on the top floors of Skyline 360° at St Thomas Walk and Signature at Lewis condominiums have raised eyebrows over the basement pricing - and the fact that the developer itself has bought them.

Listed developer Hiap Hoe swept up remaining units at both luxury developments through a wholly-owned company last month, disclosures filed with the Singapore Exchange showed.

Units on the highest floors of a project almost always command a premium, yet the pricing is lowest for any level in the projects.

HH Residences, a unit set up in April, had snapped up five units at the 61-unit Skyline 360º condo in River Valley for $35 million from Bukit Panjang Plaza, another Hiap Hoe subsidiary.

This works out to $1,574 per sq ft (psf) based on a total area of 22,238 sq ft - well below the low pricing of $1,630 psf for a 2,131 sq ft unit sold in August 2009, caveats lodged with the Urban Redevelopment Authority showed.

A 4,015 sq ft penthouse unit on the 35th floor had set a record high for the condo in April 2012 when it sold for $10.07 million - or $2,508 psf. The units in the bulk deal were a 6,523 sq ft "super penthouse" on the 36th floor and four other 3,929 sq ft penthouses on the 31st to 34th floors.

HH Residences also picked up two penthouses on the 12th and highest floors of a smaller freehold project, Signature at Lewis, in Lewis Road. The units were bought for $7 million - or $1,071 psf - from another Hiap Hoe unit, Guan Hoe Development. One unit is 3,444 sq ft while the other is 3,068 sq ft.

The pricing falls below the lowest price of $1,227 psf set in January 2010, for a 1,841 sq ft unit.

Hiap Hoe told SGX the acquisition was "in connection with an internal restructuring exercise" but declined to elaborate when contacted by The Straits Times.

Penthouse units, particularly those in the posh districts, have lost their shine.

Buyers have shied away from the sizeable price tags that come with the large units given stringent mortgage rules and the additional buyers' stamp duty (ABSD).

Market watchers said that while such deals are not unprecedented among local developers, it is not a common practice either.

Developers that have made similar moves include City Developments, which bought 44 units at Cliveden at Grange from joint-venture partner Wachovia for $2,956 psf on average in December 2012 - a discount of about 20 per cent from what Wachovia paid in 2007.

A recent bulk deal for 12 apartments at Grange Infinite, another luxury condominium in the city centre, was made at an average of about $2,100 psf.

The sale included 11 four-bedders ranging from 2,560 sq ft to 2,700 sq ft and a penthouse of 6,039 sq ft.

An ABSD of 15 per cent was likely to be levied on the bulk deals, so experts said that could have resulted in a smaller net discount for Hiap Hoe. Also, the discounts might not lead to lower stamp duties, which are typically based on property valuations, but they would still lower the overall cost of buying the units.

Skyline 360º got its temporary occupation permit on Sept 28, 2012, while Signature at Lewis was completed on Oct 3, 2011, said Hiap Hoe. Fines are imposed if a developer fails to sell all the apartments in a project within two years of completion, under Qualifying Certificate rules.

However, Mr Donald Han, managing director of Chestertons, pointed out that it is within reason and a routine practice for developers to offer discounts for large units and bulk purchases, especially in a falling market where few are willing to stump up huge sums of cash.

"It makes sense to apply the same discount for bulk deals to a related party," he said.

-By Cheryl Ong

Reits accounted for more than half of Q3 buying activity

Property firms, net sellers in Q3 at home, upped their acquisition activity overseas, says DTZ report

Source: Business Times / Real Estate

Acquisitions by real estate investment trusts (Reits) pushed up real estate investments, and property companies became net sellers in the third quarter, said a report by DTZ on Wednesday. Real estate investment activity in Q3 rose 15.4 per cent quarter-on-quarter to S$5.5 billion, bringing the total nine-month investment volume to S$15.3 billion.

-By Lee Meixian

Real Estate Companies' Brief

Sabana Reit's DPU falls 23.9% to 1.81 Singapore cents in Q3

Source: Business Times / Companies & Markets

Sabana Shari'ah Compliant Industrial Real Estate Investment Trust's (Sabana Reit's) distribution per unit (DPU) fell 23.9 per cent to 1.81 Singapore cents per unit for the third quarter ended Sept 30, 2014, from 2.38 Singapore cents a year ago. For the same quarter, its net property income slipped 9.8 per cent to S$18 million from S$19.9 million.

Hotel Prop in JV to buy former Royal Mail centre in London

Source: Business Times / Companies & Economy

Hotel Properties on Wednesday said it has formed a 70:30 joint venture (JV) to buy the former Royal Mail Delivery Offices in central London for £111 million (S$225 million). The JV is with Anchorage View, a company owned by Ong Beng Seng, the managing director and deemed controlling shareholder of Hotel Properties, and David Fu Kuo Chen, a non-executive director and deemed substantial shareholder of Hotel Properties.

-By Lee Meixian

Views, Reviews & Forum

Home Protection Scheme: Why cover starts upon collection of keys

Source: Straits Times / Forum Letters

WE THANK Mr Wilfred Ling for his feedback ("Home Protection Scheme: Start coverage once payment is made"; Oct 8).

The Home Protection Scheme (HPS) is a mortgage-reducing insurance administered by the Central Provident Fund Board that aims to help CPF members settle their outstanding housing loans for HDB flats in the event of death or permanent incapacity.

HPS cover will commence when a member has become the legal owner of his HDB flat upon collection of the keys, and this is about the same time as the commencement of his housing loan.

At this point, flat buyers would have finalised the housing loan quantum, loan repayment period and share of repayment among the co-owners.

The HPS sum assured and coverage period can then be determined based on these parameters. This helps to ensure that members have the appropriate level of financial protection and do not pay excessive premiums using their CPF savings.

Members looking for earlier financial protection can consider alternative private mortgage or term insurance policies.

A forfeiture of 5 per cent of the price of the flat will apply when new flat buyers cancel their application after signing the Agreement for Lease. This is to deter frivolous applications and to protect the interests of serious buyers.

Nonetheless, the HDB is mindful that there could be situations that merit special consideration.

The HDB will look into the circumstances of each case and consider the best way to help buyers, including waiving the forfeiture for those facing extenuating circumstances.

We will take Mr Ling's feedback into consideration in future reviews of the HPS.

-By Irene Kang (Ms)

Director of Communications

Central Provident Fund Board

Loh Swee Heng

Director (Sales)

Housing & Development Board

Foreigners own 24% of commercial property in UK

Source: Business Times / Real Estate

Nordstrom seeking space for 2nd store in Manhattan: CBRE

Source: Business Times / Real Estate

Gingko Tree Investment in talks to buy Munich office park: sources

Source: Business Times / Real Estate

Premium Point invests in home-rental industry

Source: Business Times / Real Estate

Realtors fighting tax on rich absentee owners

Proposed measure would raise US$665m every year with surcharge on properties valued at over US$5m

Source: Business Times / Real Estate

NYU wins appeal over US$6b expansion in Manhattan

Source: Business Times / Real Estate

India needs to change tax rules to make Reits attractive

Source: Business Times / Real Estate

Mortgage refinancing driving US banks' growth

But their lending remains far below last year's levels as they struggle to increase home-purchase mortgages after imposing tough credit requirements

Source: Business Times / Real Estate

Tycoon Li Ka-shing calls for calm

Source: Business Times / Real Estate

China Easing Home Loans No Panacea for Sliding Market

Source: Bloomberg / Luxury

Zhou Bingguo expected to find a few buyers for the 20 apartments for sale next to Beijing’s Central Business District in the first week of October, he said. It was the Golden Week holiday, traditionally a peak time for homes sales, and China had just eased mortgage restrictions.

“Quite a few people visited, but nobody bought,” said Zhou, a consultant in the asset management department of CBD Private Castle, a residential project. “People are still waiting for prices to fall.”

China is lowering down payment requirements and discounting mortgages as declining housing sales put a drag on the economy. After four years of government restrictions to cool housing prices that had tripled since 2000, the central bank is reversing course, making it easier for homeowners to buy second properties. They are not likely to get back into the market, several analysts said, until prices become more affordable.

“The property downturn will continue as buyers stay on the sidelines in anticipation of further price declines,” said Bei Fu, a Hong Kong-based credit analyst at Standard & Poor’s. “Longer term, the central bank’s latest move is a big step forward. It will allow more buyers to qualify for preferential mortgage rules and should help to release pent-up demand.”

Premier Li Keqiang is trying to prevent economic growth this year from drifting too far below the government’s 7.5 percent target, already the slowest pace since 1990. UBS AG estimates that real-estate, including goods such as electric machinery, chemicals and metals used in construction, accounts for more than a quarter of final demand in the economy.

Sales Fall

New-home sales slumped 11 percent to 3.43 trillion yuan ($563 billion) in the first eight months of 2014 as the government curbed credit, reversing a 27 percent jump last year, according to the National Bureau of Statistics. The average new-home price in 100 cities tracked by SouFun Holdings Ltd. fell 0.9 percent in September from August, dropping for the fifth consecutive month. The price rose 1.1 percent from a year earlier, narrowing for a ninth month in a row.

Weakening demand in a property market that “has lost power” will dim China’s economic prospects, dragging growth lower in the world’s second-largest economy, Li Daokui, a former central bank adviser, said Oct. 12 in Beijing. Housing “remains the key downside risk to the economy,” Moody’s Analytics economist Alaistair Chan wrote in an Oct. 9 report.

The new rules give homeowners who have paid off their loans and want a second property the same advantages as first-time buyers, the People’s Bank of China said Sept. 30.

No Hurry

Lenders can now give these second-home buyers a mortgage discount of as much as 30 percent of the central bank’s benchmark rate. And buyers will need to provide a down payment of only 30 percent, a drop from the government’s earlier 60 percent requirement, which Beijing, Shanghai, Guangzhou and Shenzhen increased to 70 percent last year to curb soaring prices. The central bank also eased a ban on mortgages for people without home loan debt who want to buy a third home, allowing banks determine down payments and rates.

The central bank’s move comes after all but five of the 46 cities that imposed home-purchase restrictions since 2010 eased or removed such limits in recent months.

“Most people are not in a hurry to buy,” Jinsong Du, Hong Kong-based property analyst at Credit Suisse Group AG, wrote in a report Oct. 2, after analysts talked with industry experts, property sales agents, homebuyers and investors. “As one person put it, ‘The better deal for mortgage is just announced, so it won’t go away any time soon - I can afford to wait.’”

Circumvent Rules

Du said that homeowners had already managed to circumvent the rules to qualify for loans to new buyers: More than 80 percent of existing mortgages were for first purchases, even though in recent years such buyers made up only 35 percent of all home purchases.

Bank of China Ltd., the nation’s fourth-largest lender, moved to expand lending prior to the central bank’s announcement. On Sept. 24, it allowed branches to adjust mortgage policies in line with local market conditions and “actively support residents’ reasonable home-purchase demand,” according to a company statement that didn’t give details.

Cities such as Qingdao, Shaoxing as well as Fujian province also loosened mortgage rules starting in August. The moves haven’t revived sales as bank credit remains tight. Transactions rebounded shortly after the announcements in those cities before falling back to previous July and August levels, according to a Sept. 16 report by China Real Estate Information Corp., a property consultancy and data provider that monitored 31 cities that reduced home-purchase restrictions.


“The wait-and-see sentiment is still prevalent” among buyers, said Donald Yu, Shenzhen-based analyst at Guotai Junan Securities Co. Developers “still feel that the situation hasn’t reversed, and it’s still best to keep prices stable,” he said. “They will still moderately lower prices, but not as steeply as before.”

Lenders probably won’t significantly cut rates because profits are their primary goal, Moody’s Investors Service analysts led by London-based Marie Diron wrote in an Oct. 6 report. Mortgages typically generate lower returns than other loans, Essence Securities Co.’s Beijing-based analysts led by Wan Zhi wrote in a Sept. 23 report.

Smaller banks have trimmed their mortgage lending after seeing a rise in funding costs amid tight liquidity since mid-2013. Ping An Bank Co.’s home mortgage lending dropped by 1.3 percentage points in the first half of this year to 6.4 percent of its loan book, as the Shenzhen-based lender reduced such “low-risk, low-yield” loans, according to its semiannual report.

Discounts Rare

The average interest rate for personal loans, 66 percent of which are home mortgages, was 47 basis points lower than for corporate loans in the first half at Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, according to its report.

Mortgage-rate discounts on first homes have become rare since last year after banks tightened lending. In Beijing and Shanghai, first-home mortgage rates were the same as the benchmark rate in July, and in the southern business hub of Guangzhou they were 5 percent to 10 percent higher than the benchmark rate, according to Centaline Group, which tracks 40 cities. The benchmark rate for mortgages in China is the five-year lending rate, currently 6.55 percent, set by the central bank.

Only five banks had released revised mortgage rules as of Oct. 13 in Beijing to adapt to the central bank announcement, according to Bacic & 5i5j Group, the city’s second-biggest realtor for existing homes. While Shanghai Pudong Development Bank Co., Postal Savings Bank of China Co. and Bank of Beijing Co. now offer discounts of as low as 10 percent below the PBOC’s benchmark for first-home buyers, ICBC and China Construction Bank Corp., the nation’s second biggest, are keeping the mortgage rate unchanged at the benchmark, according to the agency.

Unaffordable Apartments

At Postal Savings Bank, clients still need to make a deposit of no less than 100,000 yuan to get the 10 percent discount on rates, the best deal offered, according to consultant Zhou Baoda at Homelink Real Estate Agency Co., the biggest broker in Beijing for existing homes. Homelink received a notice from the state-owned lender following the central bank’s announcement.

CBD Private Castle’s Zhou said lower rates won’t help much with his sales of apartments because prices have gone too far above income levels. In his project, where apartments mostly exceed 160 square meters (1,700 square feet), prices are above 8 million yuan.

“How many average Chinese households can afford that?” he said. “Even if you can buy it with a 3 million yuan loan, the interest payment over 20 years will be almost as much as the loan itself. Your entire life is ruined.”

-By Bloomberg News

Real-Estate Pros Fight NYC Tax on Wealthy Absentee Owners

Source: Bloomberg / Personal Finance

A political battle is brewing at the apex of New York’s property market.

The real-estate industry is mobilizing to kill a proposed levy on non-resident owners of apartments valued at more than $5 million, seeking to ensure the world’s biggest city doesn’t follow London, Hong Kong and Singapore in extracting extra cash from trophy properties.

The industry’s lobbying arm, the Real Estate Board of New York, says the measure will scare off investors who fuel a business supporting more than 500,000 jobs and generating 40 percent of the five boroughs’ revenue. Brokers warn of economic calamity if officials slap a luxury tax on apartments owned by someone who lives in the city less than half the year.

“The first e-mail I woke up to yesterday was from a gentleman about to sign a $25 million contract who said, ‘I’m not signing this until I understand better what the implications are of this new pied-a-terre tax,’” Pamela Liebman, chief executive officer of the Corcoran Group brokerage firm, said in an Oct. 8 interview.

The idea runs counter to the “reputation of New York as a city that welcomes citizens from around the world,” she said.

The measure would raise about $665 million annually by requiring part-time New Yorkers to pay a 0.5 percent surcharge on dwellings valued at more than $5 million. The tax would rise incrementally to 4 percent for units valued at more than $25 million.

Democrat’s Fight

New York Mayor Bill de Blasio, 53, who has called income inequality a defining issue and has already lost one fight over raising taxes on the wealthy, said he’s considering the proposal and remains undecided. The first Democrat to run City Hall in 20 years, de Blasio lost a bid to tap those with incomes above $500,000 to pay for universal all-day pre-kindergarten. The plan was rejected by the state legislature, which must approve changes to the city’s tax policies. It was instead funded within the state budget.

The most-populous U.S. city wouldn’t be first to zero in on the trophy real estate market to derive revenue from absentee homeowners and slow spiraling prices. People living outside the U.K. will have to start paying capital-gains tax on home sales starting in April 2015. Hong Kong and Singapore charge higher purchase taxes on non-residents.

Targeting the Rich

In New York, the proceeds would support de Blasio’s agenda, which includes 200,000 affordable-housing units, college scholarships, job training and reduced class sizes in schools, according to state Senator Brad Hoylman, a Manhattan Democrat and de Blasio ally who introduced the bill.

“It targets very wealthy non-New Yorkers who enjoy our services, don’t pay city income tax and pay very little property tax, particularly in buildings that got subsidies,” Hoylman said.

The city Finance Department reports about 89,000 co-operatives and condominiums owned by persons for whom the unit isn’t their primary residence. Of those, about 1,556, or 1.75 percent, would be affected by the luxury non-resident tax on units valued at more than $5 million, according to the Fiscal Policy Institute, the union-backed research group that developed the proposal.

One of those 89,000, Diane Francis of Toronto, who with her husband owns a part-time home on Manhattan’s Upper West Side, took to the pages of the New York Daily News to describe themselves as “walking wallets.” She wrote that they already pay plenty in property and sales taxes without using schools or other services she helps pay for.

No Thanks

“The money we spend, meantime, employs concierges, maintenance and cleaning personnel, masseuses, clothiers, hairdressers, tailors, cabbies, entertainers, vendors, museum curators, chefs, waiters, bartenders, comedians, singers, musicians, actors, artists, athletes and goodness knows who else,” she wrote. “And a new tax is the thanks we get?”

Steven Spinola, president of the real-estate board, whose 15,000 members include owners, builders, architects, brokers, bankers and lawyers, said in an e-mail the organization “will continue to communicate our serious concerns to the appropriate officials about the extraordinary chill in the sales and development market and the very negative impact this proposal would have on New York City’s economy.”

New York’s real-estate industry accounted for $15.4 billion of the city’s $41 billion in 2012 local revenue, more than enough to pay for its 70,000 teachers, 35,000 police officers, firefighters, sanitation workers, parks and libraries, according to a real estate board report.

Improbable Events

The industry’s reaction may be disproportionate to the tax’s chance of passage. For the idea to become city law, a lot of improbable political events would have to happen. The measure would require approval of the state legislature, whose composition will be determined in a Nov. 4 election and where the Senate, now run by a coalition of Republicans and Democrats, has been hostile to new taxes.

It also would need the signature of Governor Andrew Cuomo, a Democrat who built a campaign treasury of more than $30 million by accepting donations from corporate executives and real-estate developers. On his campaign website, he vows to “reverse the mentality of New York as the tax capital of the nation.”

More than 80 percent of the $665 million generated would come from 445 units valued at more than $25 million, whose owners would pay an average $1.2 million a year in taxes, said James Parrott, policy institute’s chief economist.

‘Arcane’ Structure

“Such non-primary owners are unlikely to be paying New York City personal income tax, and because of the arcane nature of the city’s property tax, or because such units benefit from tax breaks mainly intended to benefit more affordable housing for low- and middle-income residents, chances are they pay a very low effective property tax relative to the real market value of the property,” Parrott said.

Bob Knakal, chairman of Massey Knakal Realty Services, which represents owners in the sale, retail lease and financing of their properties, called the proposal “nothing but a dumb idea” that would reduce the ability to finance construction.

He predicted the surcharge would cut the market value of a $50 million apartment by 50 percent. At $15 million, the value would fall by 15 percent and at $6 million, it would be decreased by about 2 percent, he wrote in the New York Observer.

“When buildings don’t get built, construction jobs are not created and other local workers are not hired,” Knakal wrote. “Architects, designers, engineers, lawyers suppliers and a host of others who perform services for these projects would have less work.”

‘Slippery Slope’

At New York’s Citizens Budget Commission, a business-funded fiscal-monitoring group, President Carol Kellermann questioned the need for the pied-a-terre levy, particularly after de Blasio and the city council in June enacted a $75 billion spending plan that the mayor said would ensure five years of fiscal stability.

“It’s a slippery slope to say that property owners we don’t approve of should have a different property tax,” Kellermann said. “Today it’s Russian oligarchs. I don’t know who might be next.”

-By Henry Goldman and Allyson Versprille

HK’s New World Wins Tender to Build Homes on Station Site

Source: Bloomberg / Luxury

New World Development Co. (17), the builder controlled by the family of Hong Kong billionaire Cheng Yu-tung, won the tender for a HK$10.4 billion ($1.3 billion) site in the city that can provide at least 2,900 new homes.

New World will pay HK$2.9 billion of the land premium for the site atop a train station while MTR Corp. (66), Hong Kong’s government-owned railway operator, will pay the rest, MTR said in a statement yesterday. New World will fund and build the development, including the commercial portion which will be owned by MTR, according to the filing.

The project at Tai Wai station in the New Territories is part of a push by the government, the city’s largest supplier of land, to ease a housing shortage and contain surging home prices. MTR plans to tender two other sites this year that can provide at least 4,600 flats, Paul Chan, Hong Kong’s development secretary, said earlier.

The project, with a gross floor area of 2.1 million square feet, will become a “transportation hub” when a railway extension connecting to the Central business district is completed, New World Executive Director Adrian Cheng said in a statement. The company plans to invest as much as HK$20 billion, according to a Cable TV report yesterday, which cited Chairman Henry Cheng.

New World shares rose 2.9 percent, the most in 2 1/2 months, to close at HK$9.53. The stock was the biggest gainer today in the Hang Seng Property Index, which advanced 1 percent.

Proceeds from residential sales are to be shared between New World and MTR, according to the statement yesterday, which didn’t specify what the profit-sharing ratio will be.

The land premium is 19 percent lower than the first tender, which was later withdrawn due to low bids, according to Centaline Property Agency Ltd. MTR received nine submissions for this tender, which closed on Oct. 13, according to spokeswoman Angie Choi.

-By Michelle Yun

Foreigners Own Almost 25% of U.K. Commercial Properties

Source: Bloomberg / News

Overseas investors own almost a quarter of income-producing commercial property in the U.K. after more than doubling their holdings in a decade, Property Industry Alliance said.

Buyers from abroad held 24 percent of the shopping malls, warehouses, hotels and office buildings in Britain at the end of 2013, making them the biggest group of owners for the first time, the industry group said today in a statement. U.K. insurers and pension funds are the second-biggest set of landlords with 19 percent.

Britain’s political stability, legal system and infrastructure helped drive a 129 percent increase in foreign-held property to 94 billion pounds ($150 billion) in the 10 years through 2013, the group said. About three-quarters of the foreign-held assets are in London, it said.

“With the political uncertainty caused by an upcoming general election and a possible European Union referendum, it is important that politicians of all parties avoid measures that could dent investor confidence,” said Liz Peace, chief executive of the British Property Federation, which is a member of the lobby group. “Sudden or unexpected changes to our taxation system could make the U.K. lose its competitive edge.”

Last year, a unit of Kuwait’s sovereign wealth fund bought the More London office complex for 2 billion pounds and Singapore’s GIC Pte purchased Blackstone Group LP’s stake in the Broadgate office complex. Blackstone agreed to sell the holding for more than 1.7 billion pounds, Bloomberg News reported in August 2013.

Insurers and pension funds cut their U.K. holdings by 16 percent to 75 billion pounds from 2003 through 2013, according to the report. Managed funds, property unit trusts and limited partnerships are the third-largest owners of the real estate, the report said.

The value of commercial property in Britain stood at 683 billion pounds at the end of the year, the lobby group said. About 385 billion pounds of the assets are income producing.

London accounts for 35 percent of the total value of U.K. commercial property, while it generates 23 percent share of gross domestic product, after values in the capital rose faster than in the rest of the country, according to the report.

Total return on U.K. commercial property, which combines changes in value and rental income, was 19.7 percent in the 12 months through September, Investment Property Databank reported yesterday.

-By Neil Callanan