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22nd October 2014

Singapore Real Estate

Fewer BTO flats will not have significant impact on resale market: Analysts

Analysts Channel NewsAsia spoke to said that while first-time home buyers may consider resale flats, HDB resale prices are projected to continue to fall, but not so drastically.

Source: Channel News Asia / Singapore

SINGAPORE: On Monday (Oct 20), National Development Minister Khaw Boon Wan said that there will be a 25 per cent drop in the number of Build-to-Order (BTO) flats launched next year. However, real estate analysts believe that a lower number of BTO flats next year will not have a significant impact on the resale market.

Analysts Channel NewsAsia spoke to said that while first-time home buyers may consider resale flats, HDB resale prices are projected to continue to fall, but not so drastically. HDB resale prices have fallen for eight consecutive months.

Citing a falling application rate for BTO flats, as well as balance flats from past years which would be introduced into the market, analysts said the estimated 16,000 BTO flats to be launched next year are more than enough.

Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, said: "In 2007 and 2008, the Government actually offered less than 10,000 BTO units every year. The large ramp-up in BTO supply over the past three years was something necessary but not sustainable. Hence, the Government needed to scale back to a more sustainable level."

The Government also announced that land supply for executive condominiums and condominiums will be reduced, but no details were given.

A total of 16,700 private residence units were completed this year, while the number of new units sold by developers is the lowest in four years. Analysts expect 21,900 private units to be completed next year.

- CNA/ac

Cut in supply of BTO flats will ward off glut

Source: Straits Times / Singapore

PROSPECTIVE buyers of new Housing Board flats may be alarmed by the news that there will be a 25 per cent cut in the number of flats launched next year.

But there is, arguably, little cause for worry.

This is not a case of regular supply being choked off but, instead, a return to sustainable levels after three years of unusually high supply.

The move helps to avoid the damaging prospect of a supply glut - a problem that may seem alien to first-time buyers today but was a pressing issue just over a decade ago.

When announcing the move on Monday night, National Development Minister Khaw Boon Wan was careful to put it in context. From 2011 to last year, more than 25,000 Build-To-Order (BTO) flats were launched each year to meet "pent-up demand", he said.

This backlog has largely been dealt with, which is why the HDB is returning to a slower pace, cutting supply by 10 per cent this year, and another 25 per cent next year.

There are signs that demand for BTO flats is falling. For one thing, application rates have been dropping, so it makes sense to cut BTO numbers now. "The chances of first-timers securing their flats are quite high," said ERA Realty key executive officer Eugene Lim.

This year, there have generally been two or fewer first-timers chasing each three-room or larger flat available to them.

Application rates for flats in certain projects have been as low as 0.4 first-timers per flat.

"With a reduced supply, we may expect the application rates to increase but not significantly," added Mr Lim.

After all, the three years of higher flat supply were the aberration. This cut is part of a gradual return to the norm.

The 16,000 or so new flats next year will also exceed the estimated 15,000 new Singaporean families formed annually.

And if some first-timers turn to the resale market as a result, that is not necessarily a bad thing.

First-timers formed almost a quarter of resale buyers in 2011 but this fell as most people opted for BTO units instead. For many sellers reportedly having trouble finding buyers, the return of first-timer demand will be a boon.

In the longer term, there is a more important need for the supply cut, and that is, avoiding an oversupply down the road.

This was alluded to when Mr Khaw framed the 16,000 figure as "sufficient to meet demand, without causing a glut in the public housing market".

Policymakers are likely still haunted by the spectre of empty HDB blocks in estates such as Sengkang, as was the case in the late 1990s and early 2000s after the Asian financial crisis.

"A supply glut will have a severe impact on the one million HDB flat owners in Singapore," said PropNex Realty chief executive Mohamed Ismail Gafoor.

In other words, it is better to face a bit more competition for a new flat now, than to find your flat's value eroded a few years down the road.

-By Janice Heng

Takashimaya to open Bangkok store in 2017

Siam Takashimaya will be anchor tenant of shopping mall at ICONSIAM

Source: Business Times / Real Estate

In line with its strategy to grow its footprint overseas, Takashimaya Co will operate a department store, Siam Takashimaya, in Bangkok's upcoming large-scale mixed development ICONSIAM, which opens in 2017. Takashimaya Singapore, together with the development's owner ICONSIAM Co, will incorporate a joint venture company called Siam Takashimaya (Thailand) that will operate the department store.

-By Nisha Ramchandani

Pan Pacific Hotels Group launches Tianjin property

Source: Business Times / Real Estate

Singapore-Based Pan Pacific Hotels Group has opened its fifth hotel in China, the Pan Pacific Tianjin, making China its biggest overseas market to date. Aside from the hotel in Tianjin, Pan Pacific also has four other Pan Pacific hotels and serviced suites along the East coast and North, namely in Xiamen, Suzhou and Ningbo.

-By Nisha Ramchandani

Singapore Prestige Brand Awards 2014 (Pg 75 to Pg 102)