Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

20th January 2015

Singapore Real Estate

Private home resales up 8.4% in H2 from H1

But new sales by developers and subsales continue to fall, down 36% and 9.4% respectively, according to DTZ analysis

Source: Business Times / Real Estate

In what could be a ray of hope for a recovery in resale volumes of private housing transactions, the number of units transacted in this segment rose 8.4 per cent to 2,528 in the second half of last year from 2,332 in the first half, according to DTZ's analysis of caveats data from URA Realis. Resales refer to transactions of completed properties.

-By Kalpana Rashiwala

Demand for executive condos cools

Lacklustre EC sales on mortgage cap, more flats, falling HDB resale prices

Source: Straits Times / Money 

BUYERS have showed scant interest in The Amore executive condominium (EC), with only 18 per cent of the units believed to have been sold on the opening weekend.

About 70 flats were moved at the 378-unit project in Edgedale Plains, following its launch on Saturday.

Prices at the project, a joint development between Keong Hong Holdings, Master Contract Services and JBE Holdings, averaged about $800 per sq ft (psf).

The Amore is the last project where buyers who have already bought an HDB flat or EC will not have to pay a resale levy.

But sales have been muted across the EC market, with the exception of Lake Life in Jurong.

The Terrace EC in Edgedale Plains has sold about 150 of 747 units at a median price of $813 psf. The project by Kheng Leong launched on Dec 7.

Qingjian Realty had sold 186 of 651 units at a median price of about $804 psf at Bellewaters EC in Sengkang as at Dec 31 and 78 of 561 units at the Bellewoods EC in Woodlands. Prices there were about $794 psf. Both projects were launched in November.

Mr Donald Ng, Qingjian's head of sales and marketing, noted that the pace of sales has doubled since it launched a "CoSpace Flexi" concept about two weeks ago.

These units come with minimal furnishing - no floor tiles, wardrobes or doors - allowing owners to customise their units. It also shaves off prices by $25,000 to $45,000 per unit.

About 20 units have been sold across both projects since Jan 1, including two CoSpace Flexi units. About 10 units were being sold every two weeks previously.

Lake Life in Jurong has bucked the EC sales trend, almost selling out in the first weekend of its launch in November. It was the first EC to be built in the area in 17 years.

The significant cooling of EC demand is somewhat unexpected.

About a year ago, demand was tipped to be robust following a nine-month period without any launches, said SLP International executive director Nicholas Mak.

However, a large supply of Built-To-Order flats and falling HDB resale prices have weakened demand from would-be upgraders, who are now opting for HDB flats. The 30 per cent mortgage servicing ratio (MSR) cap introduced in December 2013 has also hit demand, said Mr Mak.

Many of the new projects are also in areas where existing ECs have soaked up demand, said R'ST Research director Ong Kah Seng.

The Amore is the eighth EC to be launched in Punggol since 2010, Bellewaters the fifth in Sengkang and Bellewoods the third in Woodlands, said Mr Ong.

"Current EC sales are fairly slow compared with all projects launched from 2010," he said.

New EC projects are now expected to sell about 30 per cent of their units within three months from launch.

In contrast, at least half of EC developments from 2010 were almost fully sold three months from launch.

Based on land sold, about 10 more EC projects totalling about 5,600 units could potentially enter the market in the next 12 months, said Mr Mak.

Sales for these could be even slower, given that the resale levy will apply, said Rodyk & Davidson partner Lee Liat Yeang.

"Buyers would naturally converge on the current batch of ECs without the levy," he said.

-By Rennie Whang

Companies' Brief

Keppel Reit's Q4 DPU down

Earnings affected by Prudential Tower sell-off and later inclusion of MBFC Tower 3 contribution

Source: Business Times / Companies & Markets

Keppel Reit's divestment of its stake in Prudential Tower led its fourth-quarter distribution per unit (DPU) to fall to 1.51 Singapore cents for the period ended December 2014, down from 1.97 cents a year ago. This was a "one-off impact to the distribution", the Reit manager said. Keppel Reit had sold its 92.8 per cent stake in the building for S$512 million to a consortium comprising KOP Limited, Lian Beng Group, KSH Holdings and Centurion Global last year.

-By Lee Meixian

Full-year distribution for Keppel Reit dips 3.7%

Source: Straits Times / Money

THE divestment of Prudential Tower in Cecil Street last September delivered a "one-off impact" that dented full-year distribution for Keppel Reit.

The Reit (real estate investment trust) posted a distribution of $206.1 million to unit holders for the year ended Dec 31, down 3.7 per cent from the year before. This translates into a distribution per unit of 7.23 cents, an 8.2 per cent drop from the 7.88 cents posted in 2013.

The distribution represents a yield of 5.9 per cent, based on its closing price per unit of $1.22 on Dec 31.

The decrease was also partly due to a two-week contribution from Marina Bay Financial Centre (MBFC) Tower 3 as it was acquired only in mid-December last year, said Keppel Reit Management, which manages the trust.

It added: "From 2015 onwards, unitholders can look forward to the full contribution from MBFC Tower 3."

Net property income grew 9.5 per cent year-on-year to $151.4 million, mainly because of better performances from Ocean Financial Centre in Collyer Quay and contributions from 8 Exhibition Street in Melbourne, in which the Reit has a 50 per cent stake.

The net property income for Ocean Financial Centre rose 14.3 per cent to $82.7 million, while that for 8 Exhibition Street nearly doubled to $13.1 million.

The Reit also saw an upside in rents across its properties - rates at new office leases grew about 23 per cent, while renewals and reviews increased about 16 per cent.

New leases and renewals at its properties in the Raffles Place and Marina Bay precincts, for instance, recorded an average of $12 per square foot (psf) a month, with some leases even reaching $15 psf each month.

This is higher than the monthly average rent of $11.20 psf for Grade A offices in the core Central Business District as at the end of last year.

Keppel Reit's portfolio, comprising 12 office towers in Singapore and Australia, was valued at about $8.2 billion as at Dec 31.

The appreciation in value was due to the addition of MBFC Tower 3, as well as the growth in capital values of its other properties, thanks to "improved building performances and market outlook", said Keppel Reit Management.

It expects rental reversions to be "healthy" this year, given that its buildings are in prime Central Business District locations, and market expectations of positive demand and limited office supply.

Keppel Reit units closed two cents up at $1.23 yesterday.

-By Jacqueline Woo

Acquisitions lift MapletreeLog Q3 DPU

Source: Business Times / Companies & Markets

Six properties acquired this financial year helped Mapletree Logistics Trust's distribution per unit (DPU) climb to 1.87 Singapore cents for its third quarter ended December 2014, a tad higher than the 1.84 cents a year ago. This came on the back of a 2.7 per cent increase in its total amount distributable to unitholders to S$46.19 million,

-By Lee Meixian


Source: Business Times / Companies & Markets

The continual flattening of the yield-curve will benefit more Reits than developers in our view. Most Reits have hedged their interest rates risk to fixed rates over the coming one-to-three years. According to their sensitivity analysis, a 50 basis-point increase in interest rates will hit their distribution per unit (DPU) by around 1-3 per cent.

First Reit 

Source: Business Times / Companies & Markets

First Reit's (FReit) Q4 2014 results came in within our expectations. Distribution per unit (DPU) of 2.04 Singapore cents represented a 3.6 per cent y-o-y increase on the back of a 4.6 per cent growth in gross revenue. Its balance sheet also remains healthy.

Views, Reviews & Forum 

Rental revision not 10%; no renovation cost deal

Source: Business Times / Opinion

I refer to the Bloomberg article "S'pore empty homes may climb to highest since 1998" (BT, Jan 19). I am Sam King's landlord, and I can confirm that the rental revision was 3.75 per cent lower, not 10 per cent as the article stated, and that I have not agreed to "split some renovation costs, and provide new curtains and lights".

Exciting potential of being a Smart Nation

Source: Straits Times / Forum Letters

SINGAPORE'S Smart Nation blueprint mentions quite a bit about the deployment of sensors and making sense of the data collected.

In essence, it is about giving "eyes and ears" to an already established information and communications technology network. The scope of possibilities is immense.

Throw in utility vehicles that drive themselves and flying drones that "see" and "sniff", and you can imagine the productivity boost we can achieve and the manpower shortages we can overcome.

Ultimately, the software that runs these systems has to be good, and the people managing the systems must be savvy.

I wonder if the Government is amenable to setting up a crowdfunding platform to attract funds for new ideas.

Professor Dani Rodrik's commentary ("Moving from welfare state to new innovation state"; last Friday) highlighted the need for "public venture funds" to sustain innovation and provide equity.

It seems a very good model for technocratic Singapore to follow. A government getting involved and having ownership trumps the old private-enterprise approach. Innovators will perceive this to be less risky and come up with altruistic solutions to issues - something private enterprise might otherwise shun for lack of attractive returns.

For example, if a nation owned its own communications network, any "usage tax" - currently in the form of telco subscriptions - can be pooled and channelled to finance even more out-of-the-box thinking.

It will certainly give our Smart Nation the legs to run on and even lead innovation to become a new cultural phenomenon.

-By Lai Tuck Chong

Unfair for home buyers if land usage changes

Source: Straits Times / Forum Letters

THE Sengkang columbarium issue throws up more questions than answers.

The authorities seem to be implying that sufficient land usage information had been provided for prospective home buyers to make an informed decision, since they said the land had been zoned as a "place of worship" in the Urban Redevelopment Authority's Master Plan since 2003.

This implied that it is the responsibility of buyers to scrutinise the sales brochure and Master Plan prior to making the biggest financial commitment of their lives.

From my personal experience, land usage in the sales brochures and Master Plan is not set in stone; the Master Plan is subject to reviews and does change every five years or so.

The onus is on home owners to proactively find out if there is a change in the land usage plan after purchasing their properties, and an "informed" decision is valid only at the point of purchase and not thereafter.

If it is unfair for the Sengkang residents to seek refunds since they had made an "informed" decision, what about residents affected by changes to land usage after they had purchased their properties?

Does the land usage indicated in the sales brochure serve any purpose since it is subject to change? And why aren't decisions to change land usage made more transparent?

Also, why are the details of land usage that might adversely affect the take-up of residential projects stated in fine print?

Since future use of a reserve site will take into consideration how it can complement surrounding developments ("Columbarium in Sengkang: FAQ on death-related facilities and sites in Singapore"; ST Online, Jan 12), what are the exact factors and planning parameters being considered?

Are there "humane" considerations - health impact and inconvenience - involved in the decision-making process?

For instance, pockets of land parcels are set aside for future high-rise buildings right in the middle of completed HDB clusters, especially in non-mature estates like Punggol.

Are such land parcels a reflection of poor land planning, or a calibrated move to market to private developers for even higher profits?

-By Liew Yea Ling (Ms)

Global Economy & Global Real Estate

Johor reclamation: No word or reports from Malaysia yet 

Impact studies not received, but S'pore committed to working with KL on issues

Source: Straits Times / Singapore

SINGAPORE has not yet received Malaysia's official response and environmental impact assessment (EIA) reports on the two land reclamation projects in the Strait of Johor, Second Minister for Foreign Affairs Grace Fu said yesterday.

The Republic also remains committed to working with Malaysia to address its concerns over the reclamation projects, she added.

Her comments, in reply to a question from Mr Ang Wei Neng (Jurong GRC) on the EIA studies, come as media reports from both sides of the Causeway said Malaysia had given the green light to restart work on the two projects.

According to the reports, a Malaysia-based consultant had completed a detailed EIA and found that the reclamation would "not be contributing too much negative impact to its environment".

Ms Fu told the House: "Singapore has yet to receive the Malaysian government's official response on this issue, including the finalised EIA reports.

"We are seeking clarification from Malaysia and have reiterated our request for Malaysia to provide the finalised EIA reports, and all relevant information, expeditiously, prior to the commencement of such works," she added.

Work on the two projects, Forest City near Tuas and Princess Cove near the Causeway, had been suspended last June.

Singapore had asked for work to be suspended until it received and studied relevant information from Malaysia, including EIAs, to assess if there would be any transboundary impact.

It also conveyed its concerns to Malaysia on several occasions, said Ms Fu, who is also Minister in the Prime Minister's Office.

She said that at these consultations, Singapore reiterated to Malaysia that both countries are obliged under general international law to undertake and share EIA reports on all work that could have any transboundary impact, before the work begins.

"I think both countries are committed to work according to this protocol. The Malaysians have agreed to let us have the EIA report, so we are waiting for that report," she added.

Four MPs - Mr Ang, Dr Lim Wee Kiak (Nee Soon GRC), Mr Alex Yam (Chua Chu Kang GRC) and Mr Low Thia Khiang (Aljunied GRC) - sought further comments on Singapore's next steps.

Ms Fu said: "We would just like to reiterate that we prefer to work closely with them - getting the report from them, getting the information from them, and sharing our studies with them."

-By Charissa Yong

Go-ahead for Johor projects could open way for petro-hub

Meanwhile, Chinese developers are still racing to put up marina-lifestyle townships in the area

Source: Business Times / Real Estate

Ornate malls mushroom in Iran to attract elite

Developers have broken ground on 400 shopping malls across the country, 65 in Tehran alone

Source: Business Times / Real Estate

Chinese property loans come under selling pressure

Source: Business Times / Real Estate

Investors shun China property developers on fears of debt default

Source: Straits Times / Money

LOAN investors are shunning Chinese property developers amid speculation that the government will target more builders after pledging to step up anti-graft probes.

Loans from Shimao Property Holdings, Country Garden Holdings, Evergrande Real Estate Group and Greentown China Holdings which are maturing within four years are at levels that indicate impending stress, according to offered prices compiled by Bloomberg from two traders.

President Xi Jinping last week said there will be no let-up in his "fierce and enduring" war on corruption, which has embroiled thousands of officials. Kaisa Group Holdings, a home builder based in Shenzhen, roiled credit markets after founder Kwok Ying Shing quit as chairman on Dec 31, triggering a loan default.

"There's selling pressure coming from people who want to trim their portfolios to better manage any outsized concentration in developers," said Mr Andrew Tan, head of secondary trading for loans and special situations in Asia ex-Japan at Nomura Holdings in Singapore, last week. "I haven't seen such a big motivation to sell in Chinese property loans for some time."

As Europe grapples with terrorism and Switzerland scrapped a currency peg, the troubles of Kaisa became something investors from New York to London could not ignore. The builder missed a US$23 million (S$30.5 million) coupon payment on US$500 million of bonds on Jan 8, while a local court has accepted more than 30 cases from creditors to seal its assets. The firm is being investigated for links to a senior Shenzhen official under a probe, people familiar with the matter said.

A court in the north-eastern province of Liaoning has frozen 640 million yuan (S$136.7 million) of deposits belonging to Kaisa as part of two separate lawsuits, people familiar with the matter said.

A sell-off in US dollar-denominated bonds accelerated even as firms including China Overseas Land & Investment and Fantasia Holdings Group clarified the status of their projects. Chinese high-yield dollar notes have lost 5.67 per cent this year, the worst start on record, a Bank of America Merrill Lynch index showed.

China's property industry accounted for 16 per cent of the country's economic expansion in 2013, said the World Bank. Gross domestic product will expand 7 per cent this year, down from an estimated 7.4 per cent last year, according to economists surveyed by Bloomberg.

"There's a lot of nervousness in the market," Nomura's Mr Tan said. "People are uncertain about which real-estate company will be targeted next in China. You can't accurately analyze or price in this kind of events."

-By Bloomberg

U.K. Property Asking Prices Rebound on Tax Cut, Rightmove Says

Source: Bloomberg / Luxury

Asking prices for U.K. homes rose this month as an overhaul of the property-tax system lowered costs for prospective buyers.

Average prices increased 1.4 percent from December to 273,275 ($414,000), snapping two months of declines, according to property website Rightmove Plc. Values sought in London rose 0.9 percent to 566,404 pounds.

A change to stamp duty, a tax on homebuying, was among the giveaways from Chancellor of the Exchequer George Osborne last month as his Conservative Party courts voters before May’s general election. A lack of supply is also supporting prices, with stocks of property for sale down 10 percent from a year earlier, Rightmove said.

The tax change may be “the spur for people making New Year resolutions to get on with moving,” Rightmove Director Miles Shipside said. “We are only a few days into the year and it remains to be seen whether this initial flurry is sustained.”

Prices across England and Wales rose 8.2 percent from a year earlier. Seven of 10 regions tracked by Rightmove showed increases, led by a 3 percent jump in the southwest.

The marginal increase in London followed a 2.1 percent decline in December and left average prices in the capital 12.8 percent higher than a year earlier, Rightmove said.

On the month, gains were driven by inner London boroughs, with asking prices jumping 14.1 percent in Merton and 10.1 percent in the City of Westminster. Prices fell in outer districts, with Richmond-upon-Thames witnessing a 9.1 percent decline.

Oil Boost

Across the U.K., the number of properties for sale per real-estate agent dropped to 57 in December, the latest month for which data are available, from 64 the previous month. The number of days taken to sell a property increased to 79 from 72.

In a separate report, the Ernst & Young Item Club said falling oil prices will push average inflation close to zero this year while economic growth picks up to 2.9 percent, compared with a forecast in October of 2.4 percent.

“Not every economy will be a winner from oil prices collapsing, but the U.K. certainly is,” said Peter Spencer, chief economic adviser. “While it is not a game changer in terms of growth prospects, falling oil prices come just as the recovery was losing momentum and will move the game up to a higher level for a year or two.”

Britons head to the polls on May 7, with surveys showing neither Prime Minister David Cameron’s Conservatives nor the Labour opposition is on course for a parliamentary majority. Osborne’s stamp-duty revamp will save the average U.K. homebuyer 4,500 pounds, according to the Treasury. Only buyers of homes costing more than 937,000 pounds will see their tax bill go up.

-By Jennifer Ryan

Hong Kong, Sydney Housing Affordability Worsens But N.Z. Improves

Source: Bloomberg / Luxury

Housing affordability in Hong Kong and Sydney worsened in 2014, a study of 378 metropolitan areas in nine countries showed.

The median home price in Hong Kong was 17 times its median pretax household income, the highest recorded in the 11 years of the survey, and compared with 12.6 times a year earlier, according to consultancy Demographia. Homes in Sydney, the most unaffordable market after Hong Kong and Vancouver, were 9.8 times incomes, compared with 9.2 times earlier. Vancouver remained the same at 10.6 times. All three are considered “severely unaffordable.”

Hong Kong home prices surged 12 percent in the first 11 months of 2014 to a record in November, despite curbs introduced by the government to quell demand. In Sydney, a shortage of supply combined with growing demand for homes pushed prices up 12.4 percent in 2014, according to CoreLogic Inc. data.

The most expensive markets “have severe land use restrictions that have been associated with higher land prices and, in consequence, higher house prices,” Demographia said in the report released Jan. 19.

Markets where homes cost more than 3.1 times incomes are unaffordable, and those where the multiple is 5.1 or higher are “severely unaffordable,” Demographia said. Cities where homes cost 3 times incomes or less are affordable. The survey compared cities in the U.S., Canada, U.K., Ireland, Hong Kong, Japan, Singapore, New Zealand and Australia.

New Zealand Improvement

New Zealand had the biggest improvement in affordability, with prices at 5.2 times incomes compared with 5.5 times in the previous survey. Home price growth there slowed to 4.9 percent in December from a year earlier, the slowest pace since August 2012, after the government introduced restrictions on loans for more than 80 percent of a property’s value.

The 10 most affordable housing markets were all in the U.S., led by Detroit and Rochester and Buffalo in New York. San Francisco, San Jose, San Diego and Los Angeles, all in California, were among the least affordable, as were Melbourne, London and Auckland.

Affordability across all markets in the U.K. deteriorated slightly, to five times household incomes from 4.9. While house price growth slowed in England and Wales, values still rose 9.6 percent in December from a year earlier, according to LSL Property Services and Acadata.

Singapore’s housing affordability improved marginally, to five times incomes from 5.1 last year. Home sales in the city state dropped to the lowest in six years in 2014 as government property measures and lending curbs stemmed purchases.

-By Nichola Saminather

Saudi Arabia’s Fakeeh Hospital May Sell 30 Percent Stake in IPO

Source: Bloomberg / News

Dr. Soliman Fakeeh Hospital, owner of one of Saudi Arabia’s largest private hospitals, may sell a 30 percent stake through an initial public offering after the kingdom opens its bourse to foreign investors.

“We’re applying corporate governance standards and we are ready to go for listing whenever we feel the market conditions are appropriate,” Mazen Fakeeh, president and chairman of the group, said in an interview in Dubai yesterday. The hospital would probably sell shares “within the next three years,” he said.

The company, which opened its first hospital in the kingdom in 1978, plans to spend 1 billion dirhams ($272 million) building a 300-bed hospital and a research-focused university in Dubai. The Silicon Oasis-based project will be the company’s first expansion outside its home market. It will be followed by construction of a diabetes care center in Dubai in about two years, Fakeeh said.

Saudi Arabia, the biggest economy in the oil-producing Gulf Cooperation Council, may open its stock market to foreign direct investment from April, three people briefed on the plans said last month. Opening the market may prompt MSCI Inc. to include the bourse in its emerging market gauge by 2017, luring as much as $40 billion of foreign cash, Schroders Plc said in July.

Dr. Soliman Fakeeh Hospital will fund about 40 percent of the project and will use bank loans to pay for another 30 percent, the chairman said. The remaining 30 percent will be offered to investors through a private placement, which Ernst & Young LLP was hired to help with, Fakeeh said.

Work on the hospital in Silicon Oasis started last month and the project will be completed in two phases in 2017 and 2019, he said.

-By Zainab Fattah

Additional Articles Of Interests - Local & Overseas Real Estate