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9th September 2014

Top Stories

Those outliving lease under LBS won't be left homeless

HDB's restrictions on LBS flats enhance value of retained lease: Khaw

Source: Business Times / Top Stories

[SINGAPORE] The Ministry of National Development (MND) made it clear on Monday that under the Housing & Development Board's (HDB) lease buyback scheme (LBS), those who outlive the remaining lease of their flat will not be left homeless.

The ministry is also studying the option of insurance for the elderly to insure against the likelihood of their outliving the lease.

Minister for National Development Khaw Boon Wan noted, however, that such an insurance scheme "cuts both ways".

The benefits of such insurance are restricted only to a minority who outlive the lease, while there is downside for the majority, who will have to forfeit having any unconsumed lease refunded to their estate beneficiaries.

"Our commitment is nobody will be left homeless," Mr Khaw said. "The HDB will look into the circumstances of each case to work out an appropriate housing arrangement, taking into account the elderly's health condition, financial status and the availability of family support."

Mr Khaw was fielding questions from Members of Parliament (MPs) who raised concerns about the elderly outliving their retained leases under the LBS, which allows the elderly to monetise their flat by selling the tail-end of the lease to the HDB.

MP Baey Yam Keng asked the Minister if the HDB could specify the value of lease extensions when an elderly signs up for the LBS. Mr Khaw explained that the government "cannot commit to something so uncertain" due to the market vagaries of property prices.

Those who are concerned about outliving their lease can take up the option of retaining a maximum lease of 35 years under the enhanced LBS from April next year, he said.

Under the enhanced LBS that kicks in next April, joint flat owners only need to top-up to half the age-adjusted Minimum Sum, which allows them to receive more proceeds in cash than before, but still subjected to a cap of S$100,000. The scheme is also extended to four-room flats and households with income of up to S$10,000.

Mr Khaw pointed out that as for LBS flat owners whose flats are selected for the Selective En bloc Redevelopment Scheme (SERS), they will receive compensation for the residual lease of their flat and also SERS rehousing benefits. Compensation for the residual lease will be based on either the market value or the stated refund value, whichever is higher.

Other MPs also asked how the HDB determines the value of the lease under the LBS.

Mr Khaw explained that the flat is valued by a professional private valuer appointed by the HDB, based on widely accepted industry standards and valuation practice. But how the value is split between the front-end retained lease and the tail-end sold lease is "not a straight line depreciation" due to the time value of money and that property with a shorter outstanding lease depreciates faster than one with a longer lease.

Going strictly by industry valuation standards, valuers are likely to value the tail-end of the lease much lower than the lease retained by the owner, Mr Khaw said. This is why the HDB disallows subletting of the entire flat or resale under the LBS, he added. "When valuers value the front-end of the lease to be retained, they take that into account and discount it, so instead of the 75-25 split, it then ends up roughly 60-40."

The significant improvement of value of the tail-end lease sold to the HDB results in higher cash proceeds for the owners - making the LBS "a lot more attractive and meaningful to the owners", Mr Khaw said.

He noted that the property cycle can affect all monetisation options, whether it is lease buyback, right-sizing or disposing the flat.

The key is to make sure that there is proper counselling so that the flat owners are fully aware of the options and do not rush into making a decision, he said.

-By Lynette Khoo

Lease buyback: Owners can still benefit from Sers

Source: Straits Times / Singapore

A FLAT owner who has sold part of his lease back to the Government will still benefit if his flat is up for redevelopment, National Development Minister Khaw Boon Wan said yesterday.

He was fielding questions from five MPs about the Lease Buyback Scheme, under which Housing Board flat owners keep 30 years of their lease and sell the rest back to the Government.

From April next year, the scheme will have greater flexibility, like a range of lease lengths.

If such a flat later falls under the Selective En bloc Redevelopment Scheme (Sers), the owner will be compensated based on the market value of the remaining unsold lease, said Mr Khaw.

Under Sers, old estates are redeveloped, and affected owners get compensation and rehousing benefits, including new replacement flats at subsidised prices.

Those who have taken up the Lease Buyback Scheme can choose a replacement flat with the same remaining lease as their existing one, or one with a fresh 99-year lease at a subsidised price, said Mr Khaw.

He was replying to Mr Baey Yam Keng (Tampines GRC), who had asked what options owners had if they outlived their leases.

Such owners will not be left homeless, said Mr Khaw.

"HDB will look into the circumstances of each case to work out an appropriate housing arrangement, taking into account the elderly owner's health condition, financial status and the availability of family support," he said.

This is done on a case-by-case basis as the owner could be bedridden, for instance, and thus may need a place in a nursing home rather than a flat. The HDB would work with the Health Ministry to ensure the owner is "well- placed", said Mr Khaw. This will depend on whether his children, if any, are able to look after him.

The lease can also be extended, taking a cue from studio apartments that are sold on 30-year leases. For these, the HDB commits to a 10-year lease extension at the prevailing market value.

From April, flat owners opting for the Lease Buyback Scheme can choose to keep a 35-year lease. "Those who are concerned about outliving their lease can take up this longer lease option," he said.

Insurance is another option the Government is studying, said Mr Khaw. Flat owners could buy insurance such that, if they outlive the committed lease, the insurer takes over and pays for the extra lease needed.

But the downside is that if the owner dies before the lease is up, he will lose the remaining value.

This is in contrast to the current practice, which is that any unconsumed lease will be refunded to the owner's estate, he said.

-By Janice Heng

Value of flat lease determined by market: Khaw

The lease is calculated based on the flat’s market value with its full remaining lease, less the value of the first 30 years of lease and any outstanding housing loan, Minister for National Development Khaw Boon Wan said.

Source: Channel News Asia / Singapore

SINGAPORE: Under the Lease Buyback Scheme (LBS), the value of the flat’s lease is determined from the market value of the flat, based on industry-accepted standards and valuation practice, Minister for National Development Khaw Boon Wan said in Parliament on Monday (Sep 8).

Under the scheme, eligible seniors can choose to retain part of their flats' lease and sell the remainder back to the Housing and Development Board (HDB) for retirement income. Authorities had announced enhancements to the LBS last week, to allow greater flexibility and more seniors to benefit.

In Parliament, questions were raised as to how the sales proceeds for those participating in the scheme are calculated.

Ms Foo Mee Har, MP for West Coast GRC, asked: "Even when the duration of the lease sold to HDB is equal to the duration of the lease retained by the owners, why are the sale proceeds to owners lower? How does HDB calculate the depreciation in determining the value of the lease that they purchase? Would they vary the depreciation rate depending on the years of lease retained? How is the calculation done?"

Mr Khaw responded: "So it doesn't mean that for the first 'X' years of a lease to be retained, its value will equal the tail-end of the lease that the owner is selling to HDB. It is not a straight line."

Mr Khaw pointed to two reasons for this. The first is the time value of money - a thousand dollars today is worth more than a thousand dollars in 35 years’ time. The second reason is that properties with a shorter outstanding lease tend to depreciate faster than properties with a longer lease.

Mr Khaw said: “The end result is, if I may use the example that the member (Ms Foo) gave, which is a 50-50, equal period. The valuers are likely to value the first part of the lease, which will be retained by the owner, at about maybe 60 per cent. So instead of 50-50 share of the full value of the lease, it will be roughly 60-40. So the lease that they are selling is probably worth about 40 per cent of what the market value of the lease is today."

The restrictions imposed on flats under the LBS are also taken into account as those under the scheme cannot sublet the whole flat, nor sell the unit in the open market. They can, however, choose to sublet a room. 

In response to Ms Foo's question about how HDB determines the value of the lease under the scheme, Mr Khaw said: “The Lease Buyback Scheme proceeds is the market value of the flat with its full remaining lease, less the value of the first 30 years of lease retained by the household and any outstanding housing loan.”

A professional valuer from HDB’s Panel of Private Valuers first assesses the market value of the flat with its full remaining lease, after a physical inspection of the flat and reference to recent comparable market transactions, Mr Khaw said.

“Adjustments are made to reflect restrictions placed on the LBS flat - namely no subletting of whole flat and no resale. Because of these adjustments, the LBS proceeds are higher,” he said.


Workers’ Party MP Png Eng Huat also asked if HDB would consider relaxing restrictions on the subletting of flats under the scheme, as well as the minimum occupation period.

Flat owners who have spare bedrooms can choose to sublet them after taking up the LBS, Mr Khaw said. There are no plans to relax the minimum occupation period which is applied to the purchase of all HDB flats, he said.

Another question that came up was what happens to flats under the LBS, if they are chosen for the Selective En-Bloc Redevelopment Scheme (SERS). Mr Khaw said these households will receive compensation based on the balance lease of their flat at the time of the SERS announcement.

The Ministry of National Development said this compensation will be the market value of the balance lease or the Lease Buyback refund value, whichever is higher. The market value varies according to the property market situation and the flat's remaining lease, while the refund value is what the owner under the scheme would have received if he terminated the lease voluntarily.

They will also get SERS re-housing benefits. This includes the option to buy a new replacement flat with the same balance lease as their LBS flat or a fresh 99-year lease, at a subsidised price.

Enhancements to the Lease Buyback Scheme kick in next year.

- CNA/cy/ms

Why unsold lease is worth more than portion sold

'Time value of money', different rate of depreciation the reasons: Khaw

Source: Straits Times / Singapore

IF A Housing Board flat owner keeps half his remaining lease and sells the other half back to the Government, what he keeps is worth more than what he sells - even though the number of years for each is the same.

This aspect of the Lease Buyback Scheme has puzzled many and yesterday National Development Minister Khaw Boon Wan explained what was behind the unusual situation. The reason, he said, is that a property's value does not fall at a steady rate.

First, there is the so-called "time value of money".

Under the scheme, a flat owner keeps the next 30 years of his lease. The Government pays now to buy the far-flung remainder of the lease - say, the final 30 years.

But $1,000 today, for instance, is worth more than $1,000 in several years' time, said Mr Khaw.

This is why the immediate half of a lease is worth more than the future half.

Second, properties with a very short lease left tend to depreciate faster than properties with a very long lease remaining.

As a result, when half the lease is kept and half sold, the first half is likely to be valued at about 60 per cent and the second at 40 per cent, said Mr Khaw in reply to Ms Foo Mee Har (West Coast GRC).

He later added that this 40 per cent, which the owner receives, is already higher than would be the case under "strict computation".

The first half of the lease is rightly worth 75 per cent, and the other half just 25 per cent. But that would mean much lower proceeds under the scheme.

This is why HDB introduced conditions. Owners who have sold part of their lease cannot resell the flat and cannot sublet it entirely, though they can sublet rooms.

"Because of those conditions put in, when valuers value the front end of the lease to be retained, they take that into account and discount it," he said.

This is why the second half is worth 40 per cent instead of 25 per cent. "So that enables the Lease Buyback Scheme to be a lot more attractive and to be a lot more meaningful to the owners."

He was replying to Workers' Party MP Png Eng Huat (Hougang), who wanted to know why such restrictions existed.

The need for substantial sales proceeds is also why HDB requires at least 20 years of lease to be sold back, Mr Khaw told Ms Lee Bee Wah (Nee Soon GRC).

Mr Hri Kumar Nair (Bishan-Toa Payoh GRC) wanted the Ministry of National Development to reveal how its calculations are made.

"How valuers value properties is not secretive," replied Mr Khaw. "It's an established practice and there are tables which are published by valuers." If owners object to the valuation of their flats, they can appeal, he added.

Ms Foo and Mr Baey Yam Keng (Tampines GRC) wondered how property cycles would affect the scheme as payouts are based on market value.

Mr Khaw said the ups and downs of the property market will affect all monetisation options, from lease buyback to selling one's flat and moving into a studio apartment. The key is proper counselling so that a flat owner is aware of all the options, he said.

Since the Lease Buyback Scheme began in 2009, 1,083 seniors from 812 households have taken part in it.

The sales proceeds go towards topping up their Central Provident Fund savings which are used to buy the CPF Life annuity.

The average monthly annuity payout for people in the scheme is $550. The highest payout is $1,200, and the lowest $50, which was for an owner with only a 5 per cent share of the flat.

-By Janice Heng

MPs ask how flats in lease buyback plan are valued

Source: Today Online / Singapore

SINGAPORE — The enhancements made to the Lease Buyback Scheme (LBS) drew a flurry of questions from parliamentarians yesterday, with some asking how the Government determines the value of flats that are eligible.

Others wanted to know what would happen under various scenarios, such as if a flat on the scheme came up for sale en bloc or whether flat owners would be able to obtain their proceeds in a one-off cash payment if they meet their Central Provident Fund (CPF) Minimum Sum requirement.

During the National Day Rally last month, Prime Minister Lee Hsien Loong announced that the scheme would be extended to owners of four-room flats. Other tweaks to the scheme were subsequently announced: Relaxing the Minimum Sum top-up rules, allowing home owners to choose a range of leases to keep and increasing the household income ceiling for eligible participants. These changes will come into effect in April next year.

Hougang Member of Parliament Png Eng Huat asked if the Government would consider relaxing restrictions on the sale and subletting of the LBS flat and the minimum occupation period. Currently, those on the scheme cannot sublet the entire flat nor sell it.

In response, National Development Minister Khaw Boon Wan said these rules will not change as the LBS is an option for those who want to continue living in their homes.

He also explained that the restrictions, in fact, help the Housing and Development Board (HDB) to buy the lease back at a price higher than its value, resulting in a higher payout for the home owner.

A person who has lived in his flat for 30 years and wishes to sell half of the remaining 70 years on the lease would not be able to obtain half of the lease’s total value as a result of depreciation. This is due to the fact that money is worth more today than in the future and that shorter leases depreciate quicker.

“If it’s a strict computation (of the value), it is 75:25. The tail half of your lease is a lot less than the front end of the lease which you are retaining,” he said. “If you work on that basis, the cash proceeds on the lease buyback will be much less,” Mr Khaw said.

Hence, the HDB “quite rightly” introduced conditions for the scheme — one cannot sell or wholly sublet their flats under the LBS.

“Because of those conditions, when valuers value the front end of the lease to be retained, they take that into account and discount it so that instead of 75:25 split, it then ends up roughly 60:40,” he said. This 25 per cent to 40 per cent jump is a “significant improvement in the value”, he added.

The minister also explained that the LBS proceeds are calculated by taking the market value of a flat and its remaining lease, minus the value of the lease retained by the household and any outstanding loan amount.

Should an LBS flat come under the HDB’s Selective En bloc Redevelopment Scheme, the owner will receive compensation based on the remainder of the lease on their flat at the time.

They will also be given the option of buying a new replacement flat with the same lease as their LBS flat or a fresh 99-year one at a subsidised price.

Mr Khaw also said those who have topped up their CPF Retirement Accounts to meet the Minimum Sum requirements can take any remaining proceeds of up to S$100,000 in a lump sum.

-By Kok Xing Hui

Impact of home-leasing websites like Airbnb needs to be studied: Lee Yi Shyan

There is a "need to study further and balance out the interests of the larger public with the appeal of such resource sharing," says Lee Yi Shyan.

Source: Channel News Asia / Singapore

SINGAPORE: The growing popularity of home-leasing websites like Airbnb needs to be studied in relation to the Singapore public housing market. Home owners offer their residential apartments for short stays of under six months on such websites.

Replying to a question in Parliament from Aljunied GRC MP Pritam Singh about short-term rentals for private properties, Senior Minister of State for National Development Lee Yi Shyan said this is currently illegal in Singapore. He added that websites like Airbnb have disclaimers which state that those offering such accommodation must comply with local laws and regulations.

Mr Lee added: "In this context of renting out properties less than six months, clearly they are in infringement of our planning act, so the necessary actions will be taken. But going further, in the long-term, we have to study the implications on whether such promoting of sharing of resources in an economy, which is itself positive, but is at the expense of existing regulations that tend to protect both consumers and service providers."

He said that the Government did not want to end up with a situation where people are promised certain services or products but do not receive them. Hence, there was a need to study further and balance out the interests of the larger public with the appeal of such resource sharing.

Mr Lee said that since 2013, URA has received about 520 complaints regarding the alleged rental of individual strata-titled private residential properties for less than six months. Complainants have cited privacy and security concerns resulting from the presence of transient guests, and their use of common facilities which were intended for residents.  

- CNA/ac

1,800 allowed to sublet flat before MOP in 2012 and 2013: Khaw

Flat owners were unable to occupy their flats for a short period of time due to valid reasons such as overseas work or study, said Minister for National Development Khaw Boon Wan.

Source: Channel News Asia / Singapore

SINGAPORE: The Housing Development Board (HDB) allowed 1,800 applicants to sublet their flats within the Minimum Occupation Period (MOP) in 2012 and 2013. This is about three per cent of the 57,200 flat owners who gained approval over the two years.

In a written reply to a question posed in Parliament on Monday (Sep 8), Minister for National Development Khaw Boon Wan said that these flat owners were unable to occupy their flats for a short period of time due to valid reasons such as overseas work or study.

Flat owners are usually allowed to sublet their flats only after the MOP.

- CNA/ac

Singapore Real Estate

Resale prices of condos up a tad in August

But that doesn't mean the market has turned around, warn analysts

Source: Business Times / Property

[SINGAPORE] Resale prices of non-landed private homes rose a slight 0.4 per cent in August, compared to July, but analysts say this cannot be construed as a turnaround in price performance. They pin it instead on some pent-up revival in buyers' interest, among other factors.

This was according to flash data released by the Singapore Real Estate Exchange (SRX) on Monday.

August's price gain was surprisingly led by properties in the city area and city fringe, which reported increases of 4.8 per cent and 1.5 per cent, respectively. In contrast, resale prices in the suburbs fell 1.1 per cent.

This may go against the conventional thinking that high-end homes would be the most affected by cooling measures and loan curbs, but RST Research director Ong Kah Seng said this was simply because their prices have already fallen drastically in previous months and there was no way to go but up.

-By Lee Meixian

Condo rents fall again, but prices of units sold edge up

Property curbs continue to dampen market as rents dip for a 7th month

Source: Straits Times / Top of The News

RENTALS for condominiums slipped further last month, although there was some respite for those trying to sell their units.

Fresh estimates from the Singapore Real Estate Exchange (SRX) yesterday underscored the downbeat sentiments in the property market, which has been mired in gloom after cooling measures and stricter financing requirements kicked in.

Landlords saw rents for private apartments slide for the seventh straight month, easing 0.6 per cent last month. This was a low not seen since May 2011.

"With more projects being completed, there is an increase in competition for tenants," said Mr Eugene Lim, key executive officer of ERA Realty. "Landlords have to be realistic about rents to secure tenants quickly, and very often, it would mean lowering rents to attract or keep good-quality tenants."

There were 3,539 condo units rented out last month, slightly up from 3,416 in July, said SRX. A record number of units that will be completed in the next few years means tenants will be spoilt for choice, experts said, and as a result, investors are in no hurry to buy up more condo units.

"These are tough times, the supply of homes for rent is more than demand," said property agent Peter Wan, 49.

A client, who owns a two-bedder at The Lakefront Residences in Lakeside Drive near Jurong, found a tenant only after he dropped asking rents from $3,800 a month to "below $3,000", said Mr Wan. There were 762 rental listings on online portal PropertyGuru for the 629-unit project.

Meanwhile, prices of condo units that changed hands last month crept up by just 0.4 per cent, picking up from a 1.3 per cent slip recorded in July.

Luxury home prices helped underpin last month's gains, as they registered the biggest increase of 4.8 per cent. But this follows months of declining prices in the luxury market.

"Buyers are finding high-end properties more affordable than before, although they are still very much concerned about weak leasing interest for high-end homes," said Mr Ong Kah Seng, director of R'ST Research.

In contrast, prices of resale units in the city-fringe areas rose by a smaller 1.5 per cent, while suburban condo prices fell by 1.1 per cent. A total of 418 resale condo units were bought last month, similar to July's 417 units.

The lacklustre market seems to be giving homebuyers the upper hand, as the overall median transaction over X-value (TOX) has stayed in negative territory since last October.

TOX, an indicator of how much buyers pay over past transacted prices of comparable units, was $10,000 lower than the market value last month. This was an improvement from the $20,000 buyers were underpaying in July.

-By Cheryl Ong

Private home resale prices up marginally in August: SRX

Resale prices of non-landed private homes rose 0.4 per cent in August from the previous month, while resale volume was flat, according to flash estimates from the Singapore Real Estate Exchange.

Source: Channel News Asia / Singapore

SINGAPORE: Resale prices of non-landed private homes in August rose 0.4 per cent month-on-month, according to flash estimates from the Singapore Real Estate Exchange (SRX) on Monday (Sep 8).

Still, when compared with August 2013, resale prices of non-landed private homes have dropped 5 per cent. Compared with the recent peak in January 2014, prices have declined 5.3 per cent, SRX said.

Resale prices of private homes in the Core Central Region rose the most last month, rising 4.8 per cent compared with July. In the Rest of Central Region, prices were up 1.5 per cent. In comparison, resale prices in Outside of Central Region fell 1.1 per cent.

Resale volume remained flat, with 418 non-landed private homes resold in August, similar to the 417 transacted units in July.

Real estate agency OrangeTee expects resale volume to pick up next year as owners do not need to pay the Sellers' Stamp Duty (SSD) if they bought their property in 2011 - the SSD is imposed on property sold within four years of buying it. However, OrangeTee added that heavy discounts are unlikely.

Mr Steven Tan, Managing Director of OrangeTee, said: "Most of the owners have no urgency to sell at a much lower price because the overall economic outlook is still positive and many owners now have strong holding powers."

The overall median Transaction Over X-value (TOX), which measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value, remained at negative S$10,000 last month, up from negative S$20,000 in July.

For districts with more than 10 resale transactions, districts 15 (Katong, Joo Chiat, Amber Road), 23 (Bukit Panjang, Choa Chu Kang) and 16 (Bedok, Upper East Coast) posted the lowest median TOX at -S$40,000, -S$38,000, -S$30,000, respectively.

Conversely, district 11 (Watten Estate, Novena, Thomson) had the highest median TOX of S$50,000, followed by district 18 (Tampines, Pasir Ris) and district 25 (Kranji, Woodgrove) with S$16,000 and S$9,000, respectively.


As for rental transactions, the number of non-landed private homes rented out last month was 3,539 – a 3.6 per cent increase from July. Year-on-year, rental volume improved by 25 per cent from the 2,831 contracts signed in August 2013, according to SRX.

However, rental prices continued their fall, slipping 0.6 per cent from the previous month – the seventh consecutive month of decline.

The decline was greatest in the Core Central Region at 2 per cent, while prices in the Outside Central Region fell 1.1 per cent. Prices in the Rest of Central Region, however, rose marginally by 0.4 per cent.

- CNA/cy/ac

Tranquil garden now worth $50m

Cluster housing project stands on part of bungalow's former garden

Source: Straits Times / Singapore

TEN years ago, the garden of the bungalow along Gerald Crescent had a lily pond as well as durian, rambutan, papaya and jambu trees - a sanctuary for the ageing couple who lived there.

Today, the trees are gone and in their place stand 25 terraced houses, as well as a swimming pool and gym.

Gone also is the idyllic tranquillity that the bungalow once afforded its owners, Madam Chung Khin Chun and her husband, Dr Chou Sip King.

The bungalow is at the centre of a legal battle between Madam Chung's niece and a Chinese tour guide, whom Madam Chung met while on holiday in China.

Madam Chung and Dr Chou sold their 39,000 sq ft backyard garden - about the size of half a football field - to private developer Oaktree Land for $7.6 million back in 2004.

The developer built the terraced houses which were sold for about $1.2 million each in 2004. Based on recent market data, these houses are now worth over $2 million each, making the value of the cluster housing project well over $50 million in total.

Dr Chou and Madam Chung continued to live in their 32,000 sq ft bungalow, after selling off part of their garden, which is hidden away from the main Yio Chu Kang Road. Dr Chou died in 2007.

The gated Gardens at Gerald cluster housing project houses 25 three-storey, four-bedroom homes ranging from 3,300 sq ft to 4,100 sq ft in size. The land has 864 years of lease remaining.

Little of the old garden's fruit trees remained when The Straits Times visited the site yesterday.

"It was hard to keep the trees but we retained the Balinese flavour of the original garden," said Mr Raymond Tan, who was one of the project's architects. He is now a director at Ong and Ong.

The trees that could be preserved were those that line the perimeter of the estate, said the project's landscape consultant Chang Huai Yan, director of landscaping firm Salad Dressing.

Architect Alan Tay of Formwerkz, who was also involved, said the developer could have squeezed in one or two more units, but decided not to "pack in so many units" so as to preserve the tranquil charm of the place.

While the original trees and ponds may have been removed, a resident who was having tea outdoors told The Straits Times yesterday that some of the kampung charm has lingered.

"We get together for parties once a week," said the male resident in his 40s who declined to be named.

Property agent Joseph Lim is trying to sell a unit there for $2.38 million. "The recent publicity can increase awareness of the area," he said, before turning to the reporters to ask: "Are you interested in buying?"

-By Toh Yong Chuan & Carolyn Khew

Average price of S$386,000 for new 5-room flat in non-mature estate

"Prices of BTO flats in mature estates are higher, given their locational advantages and wider range of facilities," Minister for National Development Khaw Boon Wan wrote in response to a question in Parliament.

Source: Channel News Asia / Singapore

SINGAPORE: The average selling prices of BTO flats in the non-mature estates are S$110,000 for a two-room flat, S$187,000 for a three-room flat, S$295,000 for a four-room flat and S$386,000 for a five-room flat. The single mature estate BTO project this year held at Toa Payoh saw offered prices for three-room and four-room flats at around S$321,000 and S$470,000 respectively.

In a written reply to a question posed in Parliament on Monday (Sep 8), Minister for National Development Khaw Boon Wan said that the "prices of BTO flats in mature estates are higher, given their locational advantages and wider range of facilities".

As for the average wait time for BTO projects completed in the past year, it is about three years from booking the flat to key collection. 

- CNA/ac

Real Estate Companies' Brief

Lippo to invest US$5b in retail and healthcare

Focus of expansion in 3-5 years are Vietnam, Philippines, Myanmar: Riady

Source: Business Times / Property

[SINGAPORE] Indonesian conglomerate Lippo Group is looking to invest up to US$5 billion in healthcare, food retailing and telecoms mainly in the Philippines, Vietnam and Myanmar over the next three to five years, its top executive said.

"Partly, it's diversification, but partly also new growth markets," James Riady, chief executive of one of the biggest conglomerates in the country, told Reuters in an interview on Monday.

"In Asean, outside of Indonesia, we could be investing US$3-5 billion over the next three-five years. Healthcare is a big part of it and retailing, primarily food retailing," Mr Riady said on the sidelines of a regional conference in Singapore. He identified Vietnam, the Philippines and Myanmar as the main markets for Lippo's expansion strategy.

The Riady family's listed companies include Indonesia's biggest private hospital operator Siloam International Hospitals, the biggest property developer Lippo Karawaci, and Matahari Department Store.

-From Singapore

JLL losing investment sales ace, recruits veteran

Ashish Manchharam to set up boutique property investment firm; Tang Wei Leng joins on Nov 1

Source: Business Times / Property

[SINGAPORE] JLL's top investment sales broker Ashish Manchharam is leaving the group to set up his own boutique property investment outfit.

Meanwhile, Colliers International's executive director of investment services Tang Wei Leng will join JLL on Nov 1 as regional director of investments. Her arrival at JLL is not linked to Mr Manchharam's decision to move. Talk in the market is that JLL has been courting Ms Tang for a few months as she brings to the firm her network of relationships with local property players.

Mr Manchharam, on the other hand, is best known for doing deals involving institutional players such as big overseas property funds. The 36-year-old, who has spent all 12 years of his career to date at the property consulting giant, confirmed the move when contacted by BT. "JLL has provided incredible opportunities for me throughout Asia-Pacific, being based in both 

Singapore and Hong Kong. After spending over 12 years in investment sales I have decided to pursue my personal entrepreneurial ambitions.

"It has been a difficult decision but I would like to thank my colleagues for all their support in my journey," he said on Monday.

-By Kalpana Rashiwala

Global Economy & Global Real Estate

Banyan Tree sticking to its guns in China

The hospitality operator is determined to adhere to its core values as it expands into new markets and business segments, in particular targeting China's growing middle class, reports FRANCIS KAN

Source: Business Times / Focus

THERE was no grand strategy, or public relations-fuelled timetable. Put it down to good timing. But as luxury hospitality operator Banyan Tree celebrates its 20th anniversary this year, it has embarked on its most ambitious expansion yet.

After years of being defined by its eponymous chain of high-end resorts spread across Asia, the company will soon double the number of brands within its stable, as well as expand into new markets and business segments.

"We are at an inflection point because it happens to be 20 years, and because I'm in my 60s now," said Ho Kwon Ping, 62, the charismatic executive chairman of Banyan Tree, which he co-founded with his wife Claire Chiang.

"Also for the first time since our listing in 2006 the world is clearing up again and the West is beginning to recover. Because of all these factors we are taking the company into new areas."

-By Francis Kan

Harvard receives US$350m from HK developers

Source: Business Times / Property

[BOSTON] Harvard University received a record donation of US$350 million for its public health school from the family foundation of real estate developers Gerald and Ronnie Chan of Hong Kong-based Hang Lung Group.

The gift from the Chan brothers' Morningside Foundation is focused on addressing pandemics, humanitarian crises, failing health systems and social and environmental threats to health, said Julio Frenk, dean of the Harvard School of Public Health in Boston. The school will be renamed the Harvard T H Chan School of Public Health in honour of the Chans' late father.

The public health school will be the second at Harvard, along with the John F Kennedy School of Government, to be named for an individual. The Chan family's donation is a "transformational" gift that will provide resources for researchers and students to address complex threats from around the world, Mr Frenk said.

"This is a gift that is incredibly generous and timely as we're starting our second century," Mr Frenk said. "This allows us to invent the future of public health as we create a base of sustainability for our school."

-From Boston, US

China's home buyers spooked by market

Prices of new flats falling amid growing weakness in property sector

Source: Straits Times / World

This time last year, Dr Li Jianing was busy hunting for apartments in Changchun city, the capital of China's north-eastern Jilin province.

With prices at about 7,500 yuan (S$1,530) per sq m at the time, the 46-year-old splashed out about 1.6 million yuan for two residential units in the city's Erdao district. One was for his own use and the other, for his son.

It's a different story this year.

"People are more careful; they can see the huge number of new projects," Dr Li said, adding: "Even if I had the cash now, I wouldn't buy."

Across China, home buyers are exercising caution on fears that the country's frothy property market might soon register a steep fall, as prices continue to weaken with the supply of new homes outstripping demand.

In Changchun, property prices are already lower, compared with those in other provincial capitals.

While the second-tier city's situation is not considered that dire, its 15 months' worth of residential inventory, still unsold, is making developers nervous.

When The Straits Times visited Changchun about two weeks ago, red banners running down the sides of buildings screamed steep discounts and zero down payments, a rare sight a year ago. Similarly, the city's highways were lined with billboards promoting the latest housing projects.

This reporter visited six showflats, with all the projects offering discounts. Local reports noted that more than two-thirds of the 305 housing projects in Changchun were dangling carrots to entice buyers. This proportion is the highest in a year.

Starting prices, for instance, have been slashed to as low as 3,500 yuan per sq m at some projects, from average listed prices of more than 6,000 yuan per sq m - a marketing strategy to drum up interest.

Growing weakness in the crucial property sector, which accounts for more than 15 per cent of the country's annual gross domestic product, has sparked fears that it might drag down the broader economy.

After rising continuously since June 2012, the prices of new flats fell by 0.9 per cent in July for a third straight month, with the decline seen in a record 64 out of 70 cities, including Beijing.

But analysts do not see China's 8 trillion yuan property sector, which directly impacts more than 40 other sectors from cement to furniture, crashing.

This is because China still has many economic levers at its disposal, such as loosening buying restrictions, to manage the slowdown.

"The worst may not be over for the sector, but we do not see signs of a sudden deterioration into a fire-sale environment," Standard Chartered economists Shen Lan, David Mann and Li Wei said in a recent note.

Mr Kaven Tsang, Moody's property analyst, said year-on-year prices in first-tier cities such as Beijing and Shanghai, which have limited land, will continue to grow but at a slower pace because of weaker market sentiment.

In Changchun, Mr Gong Jibo, 32, is helping to prop up the market as urbanisation brings more farmers like him to the cities.

Mr Gong, now a taxi driver and married with one son, bought a 54 sq m apartment for 350,000 yuan recently. Before that, the family of three lived in a rented flat for four years.

"Since we are buying for our own use, we're less sensitive to the price," he said.

-By Esther Teo, China Correspondent in Changchun

Blackstone Warehouse Landlord IndCor Files for U.S. IPO

Source: Bloomberg / News

IndCor Properties Inc., the warehouse landlord owned by Blackstone Group LP (BX), filed for a U.S. initial public offering as a real estate investment trust.

The Chicago-based company confidentially filed a registration statement with the Securities and Exchange commission, according to a statement today. Blackstone plans to raise about $1 billion, a person with knowledge of the company’s plans said in August. That would value IndCor at about $8 billion, the person said.

An IndCor offering by year’s end would extend the run of real estate IPOs by Blackstone, the biggest private-equity investor in property. The New York-based firm has been taking advantage of stocks at record highs to exit some of its biggest investments in stages.

Blackstone in April took public La Quinta Holdings Inc., an operator of limited-service hotels in the U.S. Last year, it completed IPOs for Brixmor Property Group Inc. (BRX), the No. 2 U.S. shopping-center landlord, and Hilton Worldwide Holdings Inc. (HLT), the world’s largest hotel chain. Another hotel company co-owned by Blackstone, Extended Stay (STAY) America Inc., went public in November.

Hilton is trading 28 percent above its IPO price, while La Quinta is 21 percent higher. Brixmor and Extended Stay have both gained 19 percent since their debuts.

Peter Rose, a spokesman for Blackstone, declined to comment on the Indcor sale.

The number of shares to be sold and price range haven’t been determined, Indcor said.

Confidential IPO filings are made under the Jumpstart Our Business Startups Act, which allows companies with less than $1 billion in revenue to keep applications private until shortly before they promote the share sale. Blackstone made a similar filing for its La Quinta offering.

-By Hui-yong Yu

U.K. Home-Price Growth May Ease as Supply Improves, Halifax Says

Source: Bloomberg / Luxury

U.K. house prices barely rose in August and the pace of increases may be kept in check by an increase in supply and the prospect of interest-rate increases, according to Halifax.

The mortgage lender said today that values increased 0.1 percent from July and were up 9.4 percent compared with a year earlier. It also said there are “tentative signs that a better balance between demand and supply may be emerging which, if sustained, would help to dampen the pace of house-price growth.”

Recent reports indicate the property market may be cooling as the Bank of England, which has already introduced tougher lending rules, edges closer to raising interest rates. That, coupled with a surge in prices over the past year, has made potential buyers wary of stepping into the market.

Halifax said number of new buyer inquiries fell marginally in July, the first decline since January 2013, citing a separate index by the Royal Institution of Chartered Surveyors. New instructions from sellers increased for a second month.

In the three months through August, house prices rose 3 percent compared with the previous quarter. From a year earlier, prices were up 9.7 percent in the period, down from 10.2 percent in the quarter through July.

The BOE kept its benchmark interest rate unchanged at a record-low 0.5 percent last week. In August, two of the bank’s nine policy makers wanted to increase the rate.

-By Jillian Ward

Spanish Home Prices Rise 0.8% on Annual Basis

Source: Bloomberg / Luxury

Spanish home prices rose in the second quarter for the first time since 2008, adding to signs that the property market is stabilizing more than six years after triggering the worst recession in the country’s democratic history.

Prices rose 0.8 percent from a year earlier, the first annual gain since the first quarter of 2008, according to data compiled by the National Statistics Institute. Values climbed 1.7 percent from the previous quarter, the Madrid-based Statistics Institute said.

“It’s still too early to say that prices have bottomed or that there is a change in tendency,” said Fernando Encinar, co-founder of, Spain’s largest property website. “We have to take into account the low number of transactions and the fact that deals now are probably more focused on the high end of the market.”

Two years since applying for a European Union rescue, Spain has become one of the fastest-growing euro-area economies as exports surged and investment rebounded. The Bank of Spain projects growth of 1.3 percent in 2014 and 2 percent next year.

Spain’s General Council of Registrars said earlier this month that home prices rose about 1 percent in the second quarter from a year earlier. The organization estimates that prices have fallen 32 percent from the peak and are now at levels last seen in 2003.

Prices rose year-on-year in all but one of the nation’s 18 regions, with the highest growth in Murcia and Valencia, according to the National Statistics Institute.

-By Sharon Smyth and Angeline Benoit

Real Estate Crowdfunding Firm Seeks Lending Revolution

Source: Bloomberg / Tech

The head of consumer-product marketing at Google Inc. (GOOG) and a former general counsel for a travel website are seeking to transform the mortgage-finance industry. Michael Burry, the hedge-fund manager who foresaw the housing market’s nosedive, is betting they can.

Brett Crosby left his post at Google last week to join Brew Johnson, once a lawyer for a company acquired by TripAdvisor Inc. (TRIP), to start PeerStreet Inc., a Los Angeles-based online platform for financing real estate through a form of crowdfunding. They’re partnering with small, non-bank lenders whose short-term commercial-property loans they can fund using a throng of individual investors.

“These guys are really out to solve a market inefficiency,” Burry, an early investor in PeerStreet and a subject of Michael Lewis’s 2010 book “The Big Short,” said in a telephone interview. “A number of large markets are not adequately being served by the financial sector, so it really is time for new thinking.”

Crosby and Johnson, who met at the University of Southern California’s Sigma Alpha Epsilon fraternity chapter, aspire to create the go-to website for real estate crowdfunding, a market already teeming with companies that raise large amounts of money through small contributions for U.S. property investments. PeerStreet also is part of a wave of businesses seeking to profit by providing alternative financing at a time when banks are reluctant to lend.

Loan Partners

The company is focused on raising money for debt, rather than other types of crowdfunding that buy physical properties. PeerStreet is partnering with existing originators, such as Los Angeles-based Thorofare Capital Inc., which makes short-term loans of $2 million to $25 million each.

In most cases, the originators will hold a portion of the debt on their balance sheets, giving them an incentive to issue high-quality loans and preventing crowd investors from assuming all the risk, Crosby said.

“The goal is to get loans in front of people that are very easy to understand,” Crosby said. “We don’t want many variables. We want people to understand the terms, loan-to-value ratio and interest rate.”

Crowdfunding has been gaining steam since April 2012, when the Jumpstart Our Business Startups Act, or JOBS Act, went into effect. When final rules related to the law are enacted, restrictions will be eased on investments in closely held companies, including those set up to own commercial property, by people making less than $200,000 a year and with a net worth of less than $1 million. Firms can now market only to people who exceed those levels, known as accredited investors.

First Deals

Real estate crowdfunding companies, which completed their first deals last year, have raised more than $110 million, according to Nav Athwal, co-founder and chief executive officer of San Francisco-based crowdfunding company RealtyShares Inc.

Crosby and Johnson said their experience leading the growth of technology companies will help them quickly expand their fledgling company.

Crosby, 41, co-founded Urchin Software Corp., a Web-analytics service purchased by Google in 2005. From his office at Mountain View, California-based Google, Crosby helped start the company’s mobile-advertising business and the Google+ social network. Until last week, he ran marketing for the Chrome browser, Gmail, word processor Docs and the Drive cloud storage service.

Johnson, 39, is an attorney with a background in real estate and technology. He was general counsel for the website VirtualTourist and oversaw its sale to TripAdvisor in 2008.

Last Market

He said he wants to use PeerStreet to eliminate unnecessary parts of the lending chain and create a more transparent and inclusive platform for anyone who wants to put money into real estate, including residential properties bought by investors.

“Real estate is like a dinosaur,” Johnson said in a telephone interview. “It’s like the last financial market to be really transformed by technology.”

For loan originators such as Thorofare, PeerStreet offers a secondary market that helps fill the void of securitization, which for private lenders, or non-traditional banks, dried up with the bursting of the housing bubble.

“It’s like a more efficient alternative mortgage-backed security,” Johnson said.

The businesses may provide needed liquidity to private lenders just as banks expanded their loans with the help of U.S.-owned Ginnie Mae, which guaranteed the first mortgage-backed security in 1970 and now backs $1.5 trillion of debt. Crowdfunding has the potential to disrupt the mortgage market, according to Burry.

‘Big Short’

He’s known for predicting disruption. Burry, at his Scion Capital LLC hedge fund, bet against bonds backed by the riskiest home loans, and investors in his hedge fund walked away from the housing crash on top, having more than quintupled their money from 2000 to 2008, according to “The Big Short.”

While crowdfunding is a relatively new method of investing in real estate, PeerStreet is entering an already crowded field, with RealtyShares, Fundrise LLC and dozens of similar companies financing deals. The firm also has to wait before it can solicit money from non-accredited investors.

Property investors can’t yet take advantage of the JOBS Act, which changed parts of the Securities Act of 1933, because proposed investor-safeguard rules are still being worked on by the Securities and Exchange Commission. The SEC missed its own end-of-2013 deadline for drafting the regulations.

Minimum Investment

“Ideally we’d like to let as many people as possible in in the future,” Johnson said. Initially, PeerStreet will require a minimum investment of $1,000 per deal. Johnson and Crosby wouldn’t disclose their funding goals for PeerStreet.

Burry, who declined to say how much he invested in PeerStreet, said he’s backing the company because of the management team, the unique way Johnson and Crosby are approaching the business and their focus.

“There could be a problem here if you try to be all things to all people,” he said. “Like I’ve often said,Chipotle (CMG) didn’t invent or reinvent the burrito. They just had a management, an approach and a focus that made them more successful than other burrito shops. And I think that’s what these guys can do in this space.”

-By Heather Perlberg