Real News‎ > ‎2015‎ > ‎February 2015‎ > ‎

11th February 2015

Singapore Real Estate

New private homes likely to be more competitively priced: Analysts

New home prices have weakened over the past year, and analysts say new units are likely to be more competitively priced.

Source: Channel News Asia / Business

New home prices have weakened over the past year, and analysts say new units are likely to be more competitively priced.

SINGAPORE: Going into 2015, property developers are gearing up to roll out new private residential projects. Amid challenging market conditions, analysts said the new units will likely be more competitively priced.

Looking at past transactions, real estate agency PropNex Realty said prices of new homes have weakened by 10 to 12 per cent on average over the past year.

Symphony Suites at Yishun was launched over the weekend. To appeal to homebuyers, its developer EL Development said the project was designed with affordability in mind.

Prices at the 660-unit development average at over S$1,000 per square foot. As at Monday, 61 units have been sold.

“In order to keep units affordable, we have done away with large units, we have no balconies, no personal enclosed space, no roof terraces and no penthouses. We have tried to keep the layout of our units optimised,” said Mr Lim Yew Soon, managing director at EL Development.

The largest unit type at Symphony Suites is the four-bedroom unit, which spans 1,023 square feet. The project does not have studio units or five-bedroom units.

Another upcoming project is GuocoLand's Sims Urban Oasis at Sims Drive. Market watchers said the units there could potentially be priced from S$1,300 to more than S$1,400 psf. They expect to see the about same prices for North Park Residences - an integrated development by Frasers Centrepoint in Yishun Central.

Sales of new homes have slowed down substantially in recent years - following the introduction of property cooling measures and loan curbs, including the Total Debt Servicing Ratio framework in June 2013.

In 2014, new home sales dipped by more than half on-year to over 7,000 units, and this is having an impact on how new homes are priced.

“What the buyers can expect is this - the price will be relatively attractive because today, buyers are price sensitive, developers are also relatively anxious in many of the launches to have that momentum,” said Mr Mohamed Ismail, CEO of PropNex Realty. “You look at it today, the different segments, OCR, RCR, CCR, prices have taken a dip especially for new launches in the tune of about 10 to 12 per cent lower than a year ago.”

Based on transactions at the end of 2014, PropNex said the market prices of new units in the suburban areas range from S$1,000 psf for projects further away from MRT station, to S$1,400 psf for those that are well-located.

The range hovers around S$1,400 to S$1,900 psf for units in the city fringe and between S$1,900 and S$2,400 for homes in the core central region.

But while home prices moderated, property consultancy Century 21 believes there is room for further downside.

"The potential target customer base has shrunk a lot and this current pool that has money and is looking around would expect a bit more discount before they would step in,” said Mr Ku Swee Yong, CEO of Century 21 Singapore.

“Right now according to the latest URA statistics, new launch prices versus completed homes - there is still a gap of 15 per cent on average price, so I would believe that the new launch price has to come down by 15 per cent to be at the resale home prices before people would find it attractive."

Private home prices in Singapore fell by 4 per cent in 2014 - the first year of overall price decline since 2008. This year, analysts are expecting home prices to fall further, by about 3 to 5 per cent. 

- CNA/xq

Resale condo prices ease again in Jan: SRX flash estimates

Non-landed resale price index dips 0.2%; market players expect resale volumes to rise after Chinese New Year

Source: Business Times / Real Estate

The resale market for non-landed private homes continued to languish in January, SRX Property's latest flash estimates released on Tuesday show. Its overall resale price index for non-landed private homes continued to slip month on month in January. The overall median transaction over X-value (TOX) remained at negative S$10,000. Resale volumes also hovered around the 300-plus level for the third consecutive month.

-By Kalpana Rashiwala

Home resale prices head lower on poor transaction volumes

Source: Straits Times / Money

THE horror stretch for home resale prices continued last month, with values down amid lacklustre transaction volumes.

Apartment prices fell 0.2 per cent in January from December, according to SRX Property's flash estimates yesterday.

That left the index at 167.2 for January, the lowest since the 166.1 level in September 2012.

Prices have slipped 6.5 per cent since home values hit a record high of 178.8 in January last year, as cooling measures dampened buying sentiment and crimped property sales.

The low number of transactions did not help matters.

Only 282 private homes changed hands last month, compared with 363 resales in December, according to compiled data as at Feb 5.

However, the SRX, which collects data from property agencies and the Urban Redevelopment Authority, expects transactions to hit 370 units when revised figures are released next month.

"The overall trend points unmistakeably to the fact that private residential property prices will continue to weaken in 2015 until the Government significantly adjusts the housing policy," said Mr Nicholas Mak, executive director of SLP International.

City-centre homes led the dip, with resale prices down 1.7 per cent in January from December, while suburban homes suffered a 1.1 per cent fall.

The only bright spark was in the city-fringe market, but analysts said the 1.5 per cent gain there was a statistical blip and did not point to a price recovery.

Mr Eugene Lim, key executive officer of ERA Real Estate, said more buyers will take the chance to pick up homes as prices soften, yet most sellers are not under "tremendous pressure" to offload units.

"Buyers are not likely to make any headway with ridiculously low offers," said Mr Lim.

While resale activity is expected to pick up after Chinese New Year, transaction volumes are still expected to be tempered because of an overhang of new units and restrictive credit conditions.

SRX's median TOX - a measure of whether buyers were overpaying or underpaying - stood unchanged from December at negative $10,000, a clear indication that buyers were still cautious in their bids amid uncertain conditions, experts said.

"The spectre of rising interest rates in 2015 should make buyers pause, and prices are likely to be negotiated lower," said Mr Wong Xian Yang, manager of research and consultancy at OrangeTee.

Going by the number of units sold in the past three months - between 360 and 375 units each month - Mr Mak reckoned that resale volumes would tumble to 4,300 to 4,500 units this year - a low not seen since the Asian financial crisis in 1998.

Last year, 5,407 condominium units were resold, which was an 11-year low.

Homes in District 11, which encompasses Watten Estate, Novena and Thomson, recorded the highest TOX of $60,000, while resale transactions in District 23 had the lowest TOX at negative $31,000. District 23 includes the Bukit Panjang and Choa Chu Kang areas.

-By Cheryl Ong

Non-landed private home prices down 0.2% in January: SRX Property

TODAY reports: On a year-on-year basis, prices were 6.5 per cent below that of January 2014.

Source: Channel News Asia / Singapore

SINGAPORE: The non-landed private residential resale market here continued to weaken in January with prices falling and sales volume staying flat compared to the previous month, SRX Property said Tuesday (Feb 10).

Resale prices for the segment dipped another 0.2 per cent in January from the preceding month, a flash report by SRX showed. On a year-on-year basis, prices were 6.5 per cent below that of January 2014.

The city centre, or Core Central Region (CCR), led the fall in prices with a 1.7 per cent decline month-on-month. This was followed by the suburban, or Outside Central Region (OCR), where prices slipped 1.1 per cent during the same period.

However, the city fringes, or Rest of Central Region (RCR), saw an increase of 1.5 per cent.

On resale volume, SRX estimated that around 370 non-landed private homes changed hands last month, 2 per cent higher than December. On a year-on-year basis, this was 25.9 per cent higher than the 294 units resold in January 2014.


Sturdee Rd site would have seen 'red hot' demand in better times

Source: Business Times / Real Estate

Property consultants gave a wide range of forecasts for the number of bids - from three to 15 - for a 99-year private housing site along Sturdee Road released by the Urban Redevelopment Authority (URA). However, their forecasts for the top bid bunched around S$700 per square foot per plot ratio (psf ppr).

Located near City Square Mall and Farrer Park MRT Station, the 0.6-hectare site can be developed into a 30-storey project with an estimated 265 homes. Property consultants noted that the site boasts an attractive city-fringe location with shopping, eating places and other conveniences nearby.

-By Kalpana Rashiwala

191 construction worksites penalised for poor WSH practices

In Operation Sunbird, MOM inspected 214 construction worksites, focusing on formwork, work-at-height and lifting operation. A total of 191 worksites were penalised, and they received 272 Notices of Non-Compliance and 147 fines totalling S$156,000. Six were also issued Stop-Work Orders.

Source: Channel News Asia / Singapore

SINGAPORE: A total of 191 construction worksites have been penalised for poor Workplace Safety and Health (WSH) practices, said the Ministry of Manpower (MOM) in a press release on Tuesday (Feb 10). 

In an operation launched last month, Operation Sunbird, MOM inspected 214 construction worksites for a period of three weeks focusing on formwork, work-at-height and lifting operation. MOM said the 191 worksites penalised received 272 Notices of Non-Compliance and 147 fines totalling S$156,000. Six worksites were also issued with Stop-Work Orders, it added.

This proactive enforcement operation was spurred by the fatal accidents that occurred during the lead up to the Chinese New Year festive period last year, said MOM.

Manpower Minister Tan Chuan-Jin said: “The outcome of Operation Sunbird shows that some contractors are still not placing emphasis on the safety and health of their workers. MOM has received feedback and observed that some companies chose to take the easy way out by cutting corners in safety to meet project deadlines. Such an attitude is irresponsible and unacceptable." 

"Tight schedules should not be an excuse to put workers at risk. Deadlines must be met, but never at the expense of our workers’ lives and wellbeing," Mr Tan added.

In an Instagram post on Tuesday, the minister also highlighted an example of poor workplace safety detected during the checks.

Director of MOM’s Occupational Safety and Health Inspectorate, Chan Yew Kwong said: “Our inspections found that the majority of worksites had WSH contraventions, the most common of which were open sides of buildings or work areas that were not barricaded, failure to install guard-rails and toe-boards and failure to provide safe access to scaffolding.

“These hazards should have been addressed by carrying out proper risk management and putting in place the preventive measures to eliminate or mitigate risks. We remind all occupiers of their duty to ensure the safety and health of their workers, and not to cut corners in the interest of meeting project schedules.”

MOM added that it will continue to carry out regular worksite safety inspections. It also said members of the public who are aware of poor WSH practices can call the MOM safety hotline at 6317 1111 or email to report these practices. All tip-offs will be kept strictly confidential, it said.

- CNA/xk

Companies ' Brief

'Disappointments' to hit office Reits: Nomura

For 2015, it predicts less-than-expected returns from projects, space returned to landlords

Source: Business Times / Companies & Markets

Nomura Research has predicted that Singapore's office Reits will be headed for potential disappointments in the next 12 months, as some banking and financial tenants - due to move into new offices - return space to their landlords upon the expiry of their leases next year. Other disappointments could come in the form of lower-than-expected returns from the Golden Shoe Car Park redevelopment, CapitaGreen and Suntec City Mall's asset enhancement, it said.

-By Lynette Khoo

Fragrance Q4 earnings hit by weaker fair value gains

Source: Business Times / Companies & Markets

Amid the fall in property prices, Fragrance Group on Tuesday said the majority of its residential-project units has been sold, and it is working to lease out the commercial space at its Alexandra Road property.

This comes as the property firm reported that net profit for the fourth quarter dropped 40.4 per cent mainly on a weaker fair-value gain on its investment properties.

-By Jamie Lee

Cache Logistics Trust

Source: Business Times / Companies & Markets

Cache Logistics Trust has initiated presence into the warehouse market in Australia with the acquisition of three Australia warehouses for A$75.6 million (S$79.6 million). Reiterate "neutral" with a dividend discount model-derived target price of S$1.22. We think this acquisition is mildly yield-accretive and constitutes ~6 per cent of our estimated gross asset value. We adjust our FY15-17F DPU estimates by 0.1-2.1 per cent per annum and remain wary of a depreciating AUD.

Rate cut seen inflating Australia housing bubble

Source: Business Times / Real Estate

U.K. Commercial Real Estate Investment Climbs to Record

Source: Bloomberg

(Bloomberg) -- Investors spent a record 70.7 billion pounds ($108 billion) on U.K. commercial real estate last year as they sought alternatives to the low returns of fixed-income assets.

The total for 2014 was 32 percent higher than a year earlier and compares with the previous record of 67 billion pounds in 2006, according to data provider CoStar Group Inc. There were 140 deals valued at 100 million pounds or more.

Buyers from around the world are competing for offices and other U.K. commercial properties as the economy improves and a shortage of space in London pushes up rents. Foreign investment climbed 25 percent to 25.4 billion pounds during the year. In the capital, the proportion of transactions by overseas purchasers rose to 61 percent.

“The U.K.’s economic strength was a major factor but the continuation -– and indeed strengthening -– of the flight of capital chasing higher-yielding investments played a major part in deals being done,” Managing Director Giles Newman said in a statement on Wednesday.

-By Patrick Gower

Brokerage Colliers Splitting From Parent in Bid to Expand

Source: Bloomberg

(Bloomberg) -- Colliers International plans to split from parent FirstService Corp., Canada’s largest real estate services provider, to focus on acquisitions and expanding in the commercial-property market.

The current publicly traded company will change its name to Colliers International Group Inc., and FirstService will become a new public company, according to a statement Tuesday. Financial details of the transaction, which is being structured as a tax-free spinoff to shareholders, weren’t disclosed.

“Today we are taking the next bold, but logical, step in unlocking even greater value for FirstService shareholders,” Chief Executive Officer Jay Hennick said in the statement.

After the separation, FirstService will focus on residential-property services and generating a return for shareholders through regular dividends, the company said. Colliers will seek to add services and acquire other firms, according to the statement. The transaction is subject to board, regulatory and shareholder approval.

North American real estate firms have made deals to gain greater access to market data and new clients in a competitive industry. Altus Group Ltd. acquired closely held Canadian property-data provider RealNet last July, and Toronto-based researcher Urbanation bought a 50 percent stake in the Marsh Report in September. In the U.S., Colliers rival Cushman & Wakefield Inc. purchased Massey Knakal Realty Services, a brokerage specializing in New York City commercial property sales.

Hennick will be executive chairman of Colliers and chairman of FirstService. Scott Patterson, currently chief operating officer of FirstService, will become CEO. John Friedrichsen, now chief financial officer at FirstService, will move to Colliers for the same post. Doug Frye, global president and CEO of Colliers, and Dylan Taylor, global COO of Colliers, will stay in their roles.

Shares of FirstService have gained 47 percent in the past year, outperforming the Standard & Poor’s/TSX Composite Index by almost five times over the period.

-By Katia Dmitrieva

Revel Moves to Scrap Second Casino Sale as Deadline Passes

Source: Bloomberg

(Bloomberg) -- Revel AC Inc. asked a bankruptcy court to let it scrap the second proposed sale of its Atlantic City, New Jersey, casino, a $95.4 million deal with Florida real estate developer Glenn Straub, after the closing deadline passed last night.

The company asked the court to reject a request by Straub’s Polo North Country Club Inc. to extend the deadline to later this month. Revel also asked to keep Straub’s $10 million deposit, according to documents filed Tuesday in federal court in Camden, New Jersey.

Revel “satisfied all conditions” required to close the deal and was “ready, willing and able to close,” but Polo North “was unwilling,” the casino company said.

Revel, which opened in April 2012 at a cost of $2.4 billion, filed for bankruptcy in June and closed in September as Atlantic City lost business to competitors in neighboring states.

Brookfield Property Partners LP won a bankruptcy auction for the assets with a $110 million offer last year, but walked away, leaving Polo North as the only suitor left.

‘Take Months’

“It will take months before they can bring anybody in, if they can find any bidder at all,” Stuart Moskovitz, a lawyer for Straub, said in an e-mail Tuesday. No buyer will offer “close to what we are willing to pay,” he said.

Straub had said he needed a clean slate, free from liens, contracts and leases, to revive Revel as either a casino resort, water-park or university. Current tenants had challenged the terms of the sale, saying it improperly stripped them of their property rights.

Last Friday, a three-judge panel for the U.S. Court of Appeals in Philadelphia sided with the owner of a Revel nightclub fighting the deal. Polo North said it was unwilling to close without knowing how that dispute would turn out.

Polo North has asked for court approval to extend the closing deadline to Feb. 28. That request as well as Revel’s bid to ditch the sale are set for a hearing Wednesday.

The bankruptcy is In re Revel AC Inc., 14-bk-22654, U.S. Bankruptcy Court, District of New Jersey (Camden).

-By Michael Bathon

Starwood Rises Most in Three Years on Timeshare Spinoff

Source: Bloomberg

(Bloomberg) -- Starwood Hotels & Resorts Worldwide Inc., owner of the Sheraton and W brands, climbed the most in three years after announcing plans to spin off its timeshare business into a new publicly traded company.

The hotel operator’s shares gained 6.6 percent to $75.93 on Tuesday, their biggest increase since October 2011.

The spinoff is part of Starwood’s plan to cut its real estate holdings and focus on property management and franchising. The company’s recent dispositions include the Sheraton on the Park in Sydney, which it sold for A$463 million ($399 million) to China’s Sunshine Insurance Group, Starwood said in November.

“This is the right time for us to spin off our vacation ownership business and move Starwood forward in its asset-light strategy,” Chief Executive Officer Frits van Paasschen said in a statement.

The spinoff is likely to be tax-free to Starwood investors, the Stamford, Connecticut-based company said. It plans to distribute the new company’s stock to existing Starwood shareholders.

“The spinoff is absolutely a positive because it removes a cash-drag business from them,” Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Virginia, said in a telephone interview. “The vacation-ownership business requires continuous investments in the existing properties and development of new ones.”

Brand Names

The new company, whose name hasn’t been disclosed, will have a licensing agreement to continue using Starwood’s Westin and Sheraton brands. Matthew Avril, who retired as president of Starwood’s hotel group in 2012, will head the spun-off company, which had about $640 million of revenue last year. The spinoff, scheduled for completion by the end of the year, doesn’t require a shareholder vote.

Starwood also announced fourth-quarter earnings today. The company reported net income of $1.33 a share, up from 68 cents a year earlier. The average estimate of nine analysts was 76 cents a share, according to data compiled by Bloomberg. Revenue fell to $1.49 billion from $1.51 billion.

Starwood forecast growth in revenue per available room, an industry measure of occupancy and rates, of 5 percent to 7 percent worldwide without adjustment for currency fluctuations.

“If the spinoff was not announced today, we think the shares would have been down on a rather disappointing outlook,” Bhalla said.

-By Nadja Brandt