Real News‎ > ‎2014‎ > ‎September 2014‎ > ‎

15th September 2014

Singapore Real Estate

More owners of luxury condos selling at a loss

Yields also under pressure; low rentals leave more people struggling to pay mortgages 

Source: Business Times / Top Stories

[SINGAPORE] A larger percentage of high-end luxury condo homes on the resale market are selling at a loss and a smaller percentage at a profit, as the tide of the once-rosy property market recedes and reveals those who have been "swimming naked" - that is, those without adequate holding power for their extravagant purchases.

According to data compiled by STProperty.sg from URA Realis, 7 per cent of transacted units in the prime districts 9, 10 and 11 sold at a loss in the first eight months of this year, up from 5.5 per cent over the same year-ago period.


Fewer people are profiting from their resales too: only 62.2 per cent enjoyed any capital gains - a steep drop from 83.5 per cent a year ago. And 4.5 per cent sold without making a profit or a loss (versus 0.4 per cent a year ago).


Yields are also under pressure. The low-rental environment is leaving more owners struggling to repay their mortgages. Assuming a S$1.6 million loan (equivalent to an 80 per cent loan limit for a S$2 million property) is taken out at an annual 1.5 per cent interest rate over a 30-year tenure, this would amount to a monthly mortgage of S$5,500. Rentals would therefore have to be in excess of this to cover mortgage payments.


"In some cases, the monthly rental cannot cover the mortgage. Take a S$5 million Sentosa Cove condo: it would take a monthly rent of S$13,800 to cover your loan," said Christine Li, head of research and consultancy at OrangeTee.


"That said, it's quite common that rents cannot cover monthly instalments, especially for bigger units. But those who don't have holding power would have to let go of their units. Others may be forced to do mortgagee sales," she added.


But not all the sellers who were willing to stomach losses were over-leveraged. Some could simply want to exit the market because they don't see the cooling measures ending anytime soon (meaning, they expect that price recovery is still far off), or just as a way of rebalancing their overall portfolio.


"A large proportion of purchases in the prime districts are by foreigners; perhaps they are just pulling out of Singapore. But the fall in demand for private homes makes it harder for sellers to find buyers. So if they really need to sell, they will have to lower their prices significantly," said Lee Lay Keng, DTZ's Southeast Asia regional head of research.


Investors would also have bought into high-end properties in major cities in the US, Europe and Australia, where there have been exciting properties launched in recent years, RST Research director Ong Kah Seng said.


In all likelihood, despite pulling out of Singapore, they might have profited elsewhere as other countries saw an uptick in residential property prices after the global financial crisis.


Meanwhile, loan curbs and price cutting by developers at new condo launches also continue to sap strength from the resale market.


Condo homes in the prime districts 9 (Orchard Road, River Valley), 10 (Bukit Timah, Holland, Balmoral) and 11 (Novena, Newton, Thomson) have traditionally been purchased as investment homes for capital gains and rental yields.


Buyers bank on demand from expatriate lessees, most of whom enjoy staying near the city. But with corporate housing budgets having shrunk post-financial crisis, these foreign workers are moving instead to the city fringes and suburbs, with some even renting HDB flats.


Losses made in resale transactions from January to August 2014 range from S$9,300 for a unit at The Hillier in Bukit Timah, to S$2.06 million for a unit at St Regis Residences in Tanglin. The latter was purchased at S$6.8 million in 2007, and sold for S$4.7 million in April this year.


Four units at The Promont (at Cairnhill), St Thomas Suites (near River Valley), Tanglin View and Waterscape At Cavenagh also resold at considerable losses of S$800,000 to S$1.2 million each (see table).


Notably, there were also four units at Robinson Suites on Shenton Way which resold at losses of about S$300,000.


Many of the loss-making resale transactions from the first eight months of this year were from sellers who bought their units in 2007, in the run-up to the previous peak in property prices and just when the financial crisis was starting.


Prices of these prime-location condos have recovered since, but dipped back down slightly from 2012 due to cooling measures. As at Q2 2014, prices were roughly on a par with the previous peak in 2008.


This means that not only would buyers who picked up condo units fresh at launch in 2007 not enjoy much capital gains, they may also suffer a loss if they sell now.

While analysts expect the trend of loss-making resale transactions to continue, they say it is unlikely to worsen significantly as long as economic conditions - such as low unemployment and interest rates - remain favourable.


-By Lee Meixian

http://www.businesstimes.com.sg/premium/top-stories/more-owners-luxury-condos-selling-loss-20140915


Tiong Bahru condo draws good response

Keppel Land cites pent-up demand as 80% of 160 units released are sold

Source: Business Times / Singapore

KEPPEL Land, which started closed-door sales of its Highline Residences condominium over the weekend, said it has received a good response to the project, possibly due to pent-up demand for private housing in Tiong Bahru.

More than 80 per cent of the 160 units - or over a quarter of the 500 units available in total - released were sold, at an average price of S$1,900 psf after discount. Discounts ranging from S$28,000 to S$68,000 were offered during the preview weekend.


The price was in line with earlier expectations by market watchers of between S$1,800 and S$1,900 psf.

"This (positive response) may be due to pent-up demand for new private housing in Tiong Bahru, which has not seen a launch in the past seven years," said a Keppel Land spokesperson.


-By Andrea Soh


Keppel Land sells a quarter of Highline Residences condo


Source: Straits Times / Money


KEPPEL Land sold a quarter of its 500-unit Highline Residences condominium in Kim Tian Road over the weekend, the developer said yesterday.

Home buyers picked up more than 80 per cent of the first 160 units released on Saturday and yesterday at an average price of $1,900 per sq ft (psf).

The developer had previously given an indicative price of $2,000 psf for homes in the 99-year leasehold condominium, located within walking distance of Tiong Bahru MRT station and the Tiong Bahru Plaza mall.

But this was before taking into account a "special preview discount" for buyers, the amount of which was not disclosed.

The final average price was in line with property watchers' expectations.

Keppel Land described the response to its weekend sales as "positive".

"This may be due to the pent-up demand for new private housing in Tiong Bahru, which has not seen a launch in the past seven years," a spokesman for the developer said in a press release.

According to surveys conducted by Keppel Land, buyers are attracted to "Tiong Bahru's central location and heritage charm", the spokesman added.

They are also keen on the perks offered by Highline Residences, such as concierge services for limousines and housekeeping, as well as complimentary use of the golfing facilities in Keppel Land's Ria Bintan Golf Club.

The buyers over the weekend were "a good mix of home buyers and investors", the spokesman said without giving further details.

Highline Residences, which is expected to be completed by 2018, comprises seven blocks of residential units ranging from four storeys to 36 storeys tall.

The project's unit sizes span in from 506 sq ft for one-bedders to 1,227 sq ft for four-bedroom dual-key units.

There will also be six penthouses of 2,174 sq ft to 2,260 sq ft in size each.

-By Fiona Chan

http://www.businesstimes.com.sg/premium/singapore/tiong-bahru-condo-draws-good-response-20140915

http://www.straitstimes.com/premium/money/story/keppel-land-sells-quarter-highline-residences-condo-20140915


At your service - offices, some with secretarial support

Demand rises for short-term rentals of such spaces in convenient spots

Source: Straits Times / Singapore

MORE companies are turning to short-term serviced offices to avoid high start-up costs and to take advantage of the flexibility such offices offer.

Apart from being able to rent offices for short-term periods, from an hour to six months, companies also get help in the form of phone lines, Internet access and even secretarial support.

Regular offices are usually rented based on a three-year contract and typically require the company to spend money on furniture.

A check with four serviced office operators show that they are running at nearly full capacity and have plans to expand over the next year.

Ms Stella Ong, country manager of Compass Offices, which runs serviced offices in Raffles Place, said demand is especially strong from start-ups and international firms new to Singapore.

"With serviced offices, companies can start working immediately and focus on their businesses," she said.

Ms Benita Wahjudi, director of Signature Space, which runs serviced offices in Raffles Place and Ubi, said her clients, which include start-ups and consultancies, find it useful that they can tap on technology and administrative support teams.

"We take care of the daily operational and support issues," she said.

The rising demand for flexible working hours and spaces is another reason why workspace provider Regus has set up three work centres at community libraries in Toa Payoh, Geylang East and Jurong, said Regus' country manager, Mr Paul MacAndrew

"Employers and employees can cut down the commuting time and the stress of travelling to the city centre," he said.

Firms pay about $8 an hour or about $20 a day to rent deskspace at the libraries.

But such convenience is not cheap either. Property experts said monthly rents at serviced offices are higher than at permanent offices.

For regular offices, rentals for a workspace for one worker costs on average about $1,200 a month.

But for serviced offices, rents for the same space could be as high as $2,000 a month, said industry players.

Mr Raymond Lau, director of office lease and sales agency Griffin Rock Properties, said: "Some serviced offices also charge for everything, from paper to printing."

Ms Cheng Siow Ying, executive director of business space at property services firm DTZ, expects demand for serviced offices to remain strong as firms are drawn by cost savings from renovation and buying furniture.

One boss who believes he is saving money this way is Mr Lee Thiam Hock, general manger of European pipe systems manufacturer Klinger's Singapore office. He has been renting a serviced office from operator Signature Space in Raffles Place for six years. He pays $2,500 a month for the office, shared with a staff member.

"I save on employing a secretary, who will cost over $2,000 a month," said Mr Lee.

Other business owners like the rented workspaces for their convenient locations.

Mr Alex Yeo, who owns financial education course provider BigFatPurse, likes to work from the smart work centre at Jurong Regional Library, which is near his Bukit Batok home.

"The library environment is conducive. I get a lot of work done," he said.

-By Amelia Tan

http://www.straitstimes.com/premium/singapore/story/your-service-offices-some-secretarial-support-20140915#sthash.5uwZoNRF.dpuf


Work starts on HDB mechanised carparks

Source: Business Times / Singapore

CONSTRUCTION work will start on the mechanised parking systems in three HDB estates next week, and will be completed by the third quarter of next year.

These mechanised carparks, while already being used in some hotels and condos, is being tested as part of a pilot project in HDB estates to see how carpark shortages can be addressed, particularly in older estates, said National Development Minister Khaw Boon Wan in his blog on Sunday.


HDB has awarded the contracts for the Bukit Panjang and Yishun projects to Sato Kogyo (S) Pte Ltd, while BNF Engineering (S) Pte Ltd will work on the Changi Village project.

The three carparks will cost some S$18 million, and will add 219 parking spaces to the current 717.


-By Andrea Soh


HDB building high-rise mechanised carparks in trial


Source: Straits Times / Top of The News

RESIDENTS of Bukit Panjang, Changi and Yishun will get some relief from parking woes next year.

The Housing Board has started building high-rise mechanised carparks as high as 15 storeys in these estates, as part of a trial to see if a mechanised parking system (MPS) suits HDB estates.

"The MPS is not new in Singapore: several private condos and hotels have it. But it will be new in an HDB town," wrote National Development Minister Khaw Boon Wan in his blog yesterday.

He was in Bukit Panjang yesterday to launch the construction of a 15-storey mechanised carpark in Bangkit Road.

Costing about $18 million to build, the mechanised carparks at these estates will add 219 parking spaces, up from 717 currently. The cost excludes maintenance.

These mature estates were picked because they lack parking spaces as well as space for new multi-storey carparks.

To park using the mechanised system, a motorist drives his car into a car lift and parks in it.

He then keys in a PIN number and the system will automatically find a parking spot for the car. The driver keys in the same PIN number to retrieve his car.

Carpark charges will remain unchanged during the trial, said the HDB. Residents currently pay $65 a month to park their cars at unsheltered HDB carparks and $90 per month at sheltered ones. Visitors pay $1 an hour.

Dr Teo Ho Pin, the MP for Bukit Panjang, said the system will relieve the shortage of parking spaces during weekends. "The additional 60 (parking spaces) will provide more (parking) facilities for residents and visitors," said Dr Teo, who is also mayor of the North West District.

Office administrator Catherine Ng, 48, said the system will save drivers from having to hunt for parking spaces. "It will also help drivers like me who cannot park properly," she said with a laugh.

Shopkeepers were also happy at the prospect of more parking spaces. "It may bring more shoppers," said owner Lau Chye Tong of Choan Huat Trading, a shop supplying prayer items.

But a few residents were hesitant about using the new system.

"What if the waiting time is too long or if the car is damaged?" asked 37-year-old Ram Bijay. A 38-year-old salesman, who gave his name only as Mr Tan, said he will use it only if there are no regular parking spots available.

Mr Henry Tng, business development manager of Japanese construction and engineering firm Sato Kogyo, which is building the Bukit Panjang MPS, said his company has been building such parking systems in Japan for more than 20 years. "It is reliable. We are not only building it but also maintaining it."

The HDB said the systems will have hotlines manned around the clock and back-up generators in case of power failures.

It added: "If cars are damaged by the system due to mechanical failure, there will be insurance coverage by the contractor as the system provider."

-By Toh Yong Chuan

Mechanised parking system in 3 pilot HDB sites by end 2015


The pilot sites are at: Bangkit Road, beside Block 259A; Yishun Avenue 4, beside Block 666A; and Changi Village Road, behind Block 1.

Source: Channel News Asia / Singapore

SINGAPORE: Residents in three public housing estates trying out the mechanised parking system will find it easier to get parking lots. The system in these three estates, costing a total of about S$18 million, is on track to be ready by the end of next year.

The pilot sites are at: Bangkit Road, beside Block 259A; Yishun Avenue 4, beside Block 666A; and Changi Village Road, behind Block 1.

The mechanised parking system will help address the shortage of car parks, especially in older HDB estates where there is limited space to build more car park lots.

The new parking system will be fully automated, which means that motorists do not have to hunt for a lot. They need only park their vehicles in the car-lift and key in a PIN number.

The system will allow automatic transfer of the vehicles to an empty parking storage area. To retrieve the vehicles, motorists simply key in the same PIN number.

The commencement ceremony for Bangkit Road site took place on Sunday (Sep 14) , with National Development Minister Khaw Boon Wan, as the guest of honour. In a blog post, Mr Khaw said that the plans are progressing well, with construction to start next week.

The new mechanised parking system will add another 60 lots to the current 311, at a cost of about S$5 million.


Artist's impression of Car Park BJ15 beside Block 259A Bangkit Road, which will be adopting the “Tower Parking System”. (HDB photo)

The pilot project at Yishun will cost about S$3 million and will boast 246 lots, up from the current 224 lots.


Artist's impression of Car Park Y39 beside Block 666A of Yishun Avenue 4, which will be adopting the “Tower Parking System”. (HDB photo)

The project at Changi Village will cost around S$10 million and will increase the number of lots from the current 182 to 319.

This being a pilot study, HDB will keep the parking charges for the mechanised parking system at the same rate as existing car parks.

The pilot implementation will allow HDB to test bed the suitability of the technology in Singapore, gauge users’ acceptance of the system, and gain learning points, before considering future implementation to more sites.

Earlier in October 2013, Lee Bee Wah, Chairperson of the Government Parliamentary Committee (GPC) for National Development and Environment, announced that HDB would be implementing the mechanised parking system in the three pilot sites. The announcement came after a joint GPC-HDB study on the viability of mechanised parking in HDB estates in Singapore, initiated by Ms Lee in January 2012.

HDB has assured residents that a comprehensive maintenance regime will be in place to ensure the reliability of the mechanised parking system. Should the system break down, motorists can call a 24-hour service hotline for immediate assistance. The parking system is also fitted with a back-up power generator and a manual mechanism that allows the retrieval of vehicles. 

- CNA/ir


Mechanised parking trial in three estates to cost HDB S$18m

Systems in Yishun, Changi, Bukit Panjang to be completed by third quarter of next year

Source: Today Online / Singapore

SINGAPORE — The Housing and Development Board’s (HDB) bill for building mechanised parking systems in three estates — as part of a pilot to ease the parking crunch in several older towns — was yesterday revealed to be about S$18 million.

Work will start next week and the systems will be completed by the third quarter of next year.

With these systems yielding an additional 219 parking lots in total in land-scarce Yishun Avenue 4, Changi Village Road and Bangkit Road, the cost of each lot works out to about S$82,200, on average.

Plans to build such systems in a trial to address car park shortages in older HDB estates, where there is limited space to build more lots, were first announced in October last year. Then, some observers had cited concerns about the high costs of constructing and maintaining these systems.

Commenting on the cost of the mechanised parking system that the HDB will build in Bangkit Road, which is in Bukit Panjang, the constituency’s Member of Parliament Teo Ho Pin said yesterday that what is important to him is that residents or visitors are able to get a parking space.

“To me, the town centre always (faces a) demand for car park lots, so I think it’s definitely value for money to invest in this system. Many town centres, housing estates do not have land parcels for building multi-storey and surface car parks. So I think this is a very good, innovative solution to provide more car park lots.”

The 15-storey “tower parking system” to be built beside Block 259A Bangkit Road will add another 60 parking spaces at a cost of about S$5 million. A similar system to be built beside Block 666A Yishun Avenue 4 will cost about S$3 million for an additional 22 parking spaces.

The “cart system” that will be built behind Block 1 Changi Village Road will cost about S$10 million for 137 parking spaces. In comparison, the now-demolished mechanised parking system in Club Street, which also used a “cart system”, cost S$6 million to build and had 140 lots.

Dr Lee Bee Wah, who chairs the Government Parliamentary Committee for National Development and Environment, noted that construction costs have gone up tremendously over the past few years. “If you price in land costs, (the mechanised parking system) could be a viable option.”

Noting that Japan and South Korea had been using such systems since the 1950s, Dr Lee said mechanised parking systems should be “the way forward” for a land-scarce Singapore.

In 2012, she initiated a study on the viability of mechanised parking in HDB estates, where a team evaluated mechanised parking technologies and looked into potential implementation issues, such as residents’ acceptance.

Nanyang Technological University economist Walter Theseira said factors besides construction costs should go into determining whether it is a cost-effective parking solution. He cited the land’s value — which is affected by availability of and demand for land space — as a factor. The opportunity cost of land, which some residents would prefer using for amenities besides parking spaces, is another, he said.

He also noted that construction and maintenance costs could be lowered over time due to economies of scale, but that is also dependent on how aggressively the HDB chooses to roll out these systems.

Apart from costs of construction and maintenance, there was earlier feedback that motorists have to be taught how to use the systems.

In response, an HDB spokesperson said yesterday that during the initial period, it would deploy staff on-site to guide motorists on the use of the mechanised parking system. The system will come with instructions to guide them to park their vehicles properly. User guides detailing steps to use the system will also be displayed.

Such mechanised parking systems take between 90 seconds and two minutes to park or retrieve a car, estimates by the HDB and operators showed.

The HDB said a “comprehensive maintenance regime” would be in place, which includes fitting the system with a back-up power generator and a manual mechanism to retrieve the vehicle, as well as a 24-hour service hotline for immediate assistance.

For the pilot, the HDB said it would adopt the same parking charges for the mechanised parking system as those for existing car parks.

-By Siau Ming En

http://www.businesstimes.com.sg/premium/singapore/work-starts-hdb-mechanised-carparks-20140915

http://www.straitstimes.com/premium/top-the-news/story/hdb-building-high-rise-mechanised-carparks-trial-20140915?tokenSvcs=bts&error=3

http://www.channelnewsasia.com/news/singapore/mechanised-parking-system/1361730.html

http://www.todayonline.com/singapore/mechanised-parking-trial-three-estates-cost-hdb-s18m


The ultimate green building

Under the third Green Building Masterplan unveiled this month, the Government is giving developers more financial help to go green. A $52 million fund, for instance, will go to research on energy-efficient technology. But if money was no object, what would the ultimate green building look like? AUDREY TAN takes a peek into the future.

Source: Straits Times / Singapore

General

  • Passive architectural design that boosts natural ventilation
  • Non-toxic paint

Facade greenery

  • Plants help to reduce the need for air-con by lowering building temperatures by up to 18 deg C
  • Over 60 ha (equivalent to 84 football fields) of green roofs have been installed in more than 500 buildings here

Solar panels

  • Renewable energy using the sun that helps to reduce energy usage in buildings, cutting electricity bills by up to $60,000 a year
  • Scientists believe solar power could supply up to 30 per cent of our electricity by 2050

Interior

  • Motion sensors at staircases
  • Chilled beams and dehumidification chillers are being tested as alternatives to air-conditioning
  • Energy-efficient elevators with a “sleep mode”
  • Motion-sensor escalators
  • LED lighting

Rain-collection

  • Rainwater can be used to irrigate plants

Titanium dioxide facades

  • The self-cleaning compound is able to break down air pollutants, such as nitrogen oxide, into harmless compounds

Mandai area should remain untouched for our next generation

Source: Today Online / Voices

I refer to the report, “Mandai area set for major redevelopment” (Sept 5). Having visited Mandai’s forested area, I am overwhelmed by the natural settings that house some of our most vulnerable fauna and flora.

Many of our native animals survive in scarce spaces within our nature reserves, where human intrusion such as army training, jogging, cycling, school visits, et cetera, is pervasive.

These precious species include the banded leaf monkey, Sunda pangolin, lesser mousedeer, Asian palm civet and flying lemur, or colugo. Ground dwellers form the bulk of the wildlife.

In my assessment, the status quo is more ideal for our next generation to appreciate our natural forest, which is dwindling due to developments for housing and recreation.

Even our native freshwater fishes would suffer from the redevelopment. Many of our beautiful fish species still thrive in our forest streams. If the plans are carried out, fishes, such as the rare six-banded tiger barb, may be gone.

My concern, as a wildlife conservationist and advocate, is over the plan to relocate the Jurong Bird Park.

There would be more roadkill from heavier traffic and animals encroaching on human settlements due to lack of food and space, as well as an increase in the opportunities afforded to potential animal poachers.

I hope that our future generation will still be able to learn about and appreciate the joy of seeing our own wildlife.

-By Ben Lee, Founder, Nature Trekker

http://www.todayonline.com/voices/mandai-area-should-remain-untouched-our-next-generation


Use Punggol as a lesson in development

Source: Today Online / Voices

I was recently at the Punggol Waterway Park and it is an impressive development. No one was there, however, and I could guess why.

It was the early afternoon on a weekend. The sun was blazing and the trees were small and few. The bare grass and concrete around the park did not help.

I looked at the woods in the vicinity and wished that I could be in the shade. Then I remembered that Punggol had been a forest/mangrove, razed for residential development.

We are spending money to recreate the waterways and replant the trees. And if the trees do not provide sufficient shade, the park will be used only in the early mornings and late afternoons.

The redevelopment at Mandai should take this lesson into account. Instead of something “spectacular” made primarily for tourists, we should have attractions targeted at residents, which need not be big nor fancy. (“Mandai area set for major redevelopment”; Sept 5)

Residents cannot visit the zoo or bird park every week, but can take regular walks in a nearby forest, if only to escape the city briefly.

This may not bring in the tourist dollar, but it brings positive externalities and makes Singapore a more attractive place to live in.

We may attract fewer tourists, but more longer-term residents, such as expatriates and students, to work, spend and contribute to the local economy. We should distinguish ourselves as a tropical city and not a hot, overdeveloped concrete jungle.

We must decide when to spend and when not to spend. Big-budget activities look good on a civil servant’s curriculum vitae, but may not necessarily be the best use of Singapore’s scarce natural resources.

-By Sum Siew Kee

http://www.todayonline.com/voices/use-punggol-lesson-development