Singapore Property News Upfront 8

Where foreigners flock to
The Americans head for Woodgrove Estate, the Indians to Meyer Road and the well-heeled to Nassim Hill.

American housewife Lisa McMullen used to be scared silly of her countrymen who lived in Woodgrove Estate in Woodlands, the new American expatriate enclave. Mrs McMullen, who used to live in Shelford Road in Bukit Timah, recalls: ‘I was told how gossipy everyone was, like wanting to know what you were having for dinner. But when we finally moved here, we found that everyone here leads such busy lives they have no time to gossip.’

Since 1997, the American expat community has flocked to Woodgrove from the longstanding American enclaves of Bukit Timah, Tanglin and Holland Road. This is chiefly because the Singapore American School uprooted from Ulu Pandan to Woodlands Street 41 at around that time. Mrs McMullen’s three daughters all attend it. Freelance interior designer and Woodgrove resident Cheryl Newman recalls of rentals back then: ‘You couldn’t get anything under $16,000′ - so hot was demand for the neighbourhood among American expat parents.

Woodgrove, to the uninitiated, is a neighbourhood on a slope and comprises some 34 three-storey country mansions along lanes with names such as Ashwood, Beechwood and Cedarwood.
It was completed in 2001 by developer Far East Organization. The houses are between 2,800 and 3,000 sq ft each and there is a great concentration of American families there.

Might Woodgrove Estate be just another name for Wisteria Lane, though, home to the Desperate Housewives of TV fame? After all, the spacious houses with bay windows, lofts and more than four bedrooms each actually mirror homes in wealthy American suburbs, a la the fictional Wisteria Lane. Mrs Newman, a former president of women’s expat club the Singapore Oilwives Association, and her posse hoot long and loud at this.

Aside from the fact that they are all housewives and love cosying up for ladies-only chats, they’d have you know they are ‘anything but desperate’. Says Mrs Newman: ‘In downtown condos, everyone tends to keep to themselves outside of the club. Here, if you walk your dogs, you will run into at least half a dozen folks you know.’ And no worries if any of Woodgrove’s denizens run out of eggs - just holler to your neighbour for some. Or get them to pick your children up after school.
Halloween, that most American of festivals, is huge here, with even pet dogs being dressed up as ghouls for fun.

It’s a lifestyle leg-up in many other ways: With more space to play with than downtown, they have their own swimming pools and sprawling Balinese-inspired backyards. But there’s a price to be paid for such lavish living. Some basic amenities they took for granted when they called Bukit Timah or Orchard Road home, such as wet markets and grocers, are sorely lacking in Woodlands.
‘There isn’t even a Starbucks to be had,’ laments Mrs Janet Andrew, who says the nearby Woodgrove mall and Causeway Point have poor pickings, catering more to heartlanders than cosmopolitans. ‘Even the Cold Storage does not stock food expats are used to,’ she says. So the women of Woodgrove drive to the Farrer Road wet market for ‘good fresh chicken’. For slices of Americana, though, it’s still Tanglin Mall.

Mrs McMullen says: ‘When I was living in Shelford Road, my husband Mike used to ring me up after his workday and ask me to join him for a drink downtown. Now I think of the long drive down in the rush-hour jam and just have to say no to such quiet times we used to enjoy.’ Lucky for them then that they and their neighbours are a tight-knit bunch. They’ve even set up an online neighbourhood bulletin board which has come in handy now that burglaries are on the increase in Woodgrove. The families are extra vigilant after a break-in on April 11, and two other attempted burglaries. They also put up with petty thefts - of bicycles, mostly.

The other downside is Singaporean skateboarders who cause a ruckus with their antics well into the wee hours. The police had to be called in to disperse them. Despite the spectre of intruders, the going rental rate for a Woodgrove country mansion has now gone up to as much as $25,000 a month, they say. This is by far the largest threat looming over this lush suburbia.

The women point out that their husbands’ companies are not likely to tolerate such a spike in rentals. So, if push comes to shove rent-wise, they may just move out. Says Mrs Andrew: ‘Our husbands and their colleagues are telling us that Shanghai is the next Singapore, and rents there are lower than those here, so you may soon see more American companies relocating their overseas staff to China.’

Still, the estate’s sorority sister vibe should have most American families staying put in the neighbourhood for quite a while to come. As Mrs Newman puts it: ‘We’ve eaten together at hawker centres here at 3am in our ballgowns and high heels. It’s the stuff that long friendships are built on.’
‘Sometimes people will act like I’m not there, or they think I don’t speak English. But these are only some Singaporeans, so I don’t let that affect me’ Lena Garcia, 30, a maid from the Philippines who has been here on a work permit for the past three years.

Source: The Sunday Times, 06 May 2007
Posted by Property Wizkid

Enbloc blues for the earlier sellers
Reason: Finding a comparable property to replace the one sold will now cost a whole lot more
Scoring a collective sale is usually seen as the real estate equivalent of hitting the jackpot, but try telling that to Mr Sulistiowati Kusumo. The businessman should be overjoyed - after all, he’s going to pocket $2.3 million for his Horizon Towers flat - but he feels shortchanged.

The Leonie Hill condo was sold en bloc last year for $500 million but that now looks cheap as values since then have sky-rocketed. But what really gets Mr Sulistiowati, 51, steamed is that he did not agree to the sale in the first place. ‘I’m at the losing end and I did not want to sign from the beginning,’ said Mr Sulistiowati, one of 34 minority owners of the 210-unit 99-year leasehold property.

And finding a flat comparable to his 2,400 sq ft one at Horizon Towers would now cost the earth.
There are many like Mr Sulistiowati, whose tales of woe are starting to drown out enthusiasm about collective sales. Take Grangeford Apartments, near Horizon Towers. It is up for a collective sale, asking about $2,000 per sq ft (psf) - more than double the $850 psf achieved at Horizon Towers.

This has prompted some Horizon Towers owners to try to get their own deal scrapped.
‘The agreement was signed last year so the price is capped. Now the price increases every month,’ said Mr Sulistiowati. Businessman Ajay Kumar Dhar, 40, backed the sale but admits to have lost out and has yet to find a new unit in the area. ‘Naturally I regret it, but it’s fate. I may have to go to other districts,’ he said.

The 99-year leasehold Pine Grove has avoided the problem by recently rejecting an offer that would have paid each owner about $1.2 million. Many owners refused to back the proposal, fearing they would not find replacement units as spacious as those at Pine Grove.

Gillman Heights owners signed its deal last year and finally sold in February for $548 million - about $890,000 for 1,700 sq ft units and $950,000 for 1,900 sq ft ones. Retiree Cheng Wai Chuen, 68, who has a smaller flat, said he has been priced out of the market. ‘I’ve looked around and I would have to pay about $1.2 million for a place that’s about 1,200 sq ft,’ he said.

Software businessman Mah Kah Hoe, 54, added: ‘Even if I want another 99-year flat in the area, I have to top up another 30 to 40 per cent of what I’m getting.’ He will also receive about $890,000.
Others like Mr Cheng have no spare cash to buy a new place until the sale goes through. ‘I have no money, how do I buy?’ he asked. The sale paperwork can mean the cash is not paid out until nine months after a buyer has been found.

A Gillman Heights resident who wanted to be known only as Madam Ong, has already bought another flat but it was a forced purchase in view of the rising prices. Her new Pasir Panjang unit is smaller, further from town, has worse facilities and she even had to fork out about $200,000 on top of the proceeds from the collective sale. Said Madam Ong, a housewife in her 50s: ‘We think it’s queer that people are congratulating us about the en bloc because we never wanted to sell in the first place and now we have to bear the brunt of it.’

Source: The Sunday Times, 06 May 2007
Posted by Property Wizkid

Is it wise to speculate in Enbloc potentials?
If you like a gamble, you don’t have to wait for the casinos to open. Just roll the dice for a collective sale instead. The game plan is simple: Pick a condominium block that looks ripe for a collective sale and buy in before the big payday.

Prices of such blocks are showing rapid price rises as hopeful buyers rush in with an eye on the possible windfall. Their desire to get a slice of the potential action is driving them to meet inflated asking prices from sellers willing to cash out. But they are taking a huge bet buying in at inflated levels, if they are merely out to make a quick buck rather than buying a home to live in.

The heightened demand could drive values to an artificial high, said Credo Real Estate’s managing director, Mr Karamjit Singh, with the obvious risk that the anticipated collective sale gets derailed. ‘If the sale does not proceed, the prices could fall from the perceived value.’

Investors should be wary of suburban 99-year leasehold properties selling at prices that include a large premium for a possible sale en bloc, said market watchers. This is because the chances of a successful sale in such estates are slimmer than the chances of one in estates that are freehold.

Savills Singapore’s director of marketing and business development, Mr Ku Swee Yong, said a freehold site can cost around 20 per cent more than a 99-year leasehold one located next door.
Sale prices have surged at the 280-unit Pearl Bank Apartments near Outram Park MRT Station, thanks to attempts at the 99-year leasehold estate to get a collective sale off the ground.

An agent said that last month he sold two 1,755 sq ft units on high floors: one for $1.01 million and one for $1.09 million. The buyers were a local banker and an Indian permanent resident. But they might not benefit much if such a sale occurs, as the minimum collective sale price of their units is about $1.19 million, although there is talk this could increase if a higher plot ratio for the site is approved.

The sellers were happy to cash out quickly and buy another property before prices went even higher, the agent said. They also do not have to wait out the collective sale, which might not happen. Caveats lodged showed that three 1,755 sq ft Pearl Bank apartments were sold last month for $857,000 to $905,000 - compared with just slightly over $600,000 for deals done involving units of the same size last June and July.

At Farrer Court, coming up for an en bloc sale by tender, a 1,453 sq ft unit was sold for $900,000 in March. That beats the $870,000 fetched by one unit in February and the $660,000 fetched for another last September. The price of the land on which a development sits tends to move faster than the price of individual units, said Mr Singh. ‘It would be unwise to buy into a development that is priced close to the collective sale value,’ he noted.

Nevertheless, not all estates are created equal. The well-located properties will attract more demand than those in less favourable areas. ‘If the collective sale of Pearl Bank doesn’t go through, prices will definitely fall, but maybe by just 10 to 20 per cent, because it is a very central development,’ said a property agent.

The story is different for outlying projects, particularly those with poor rental prospects, said a consultant. A person buying into such developments - and paying a collective sale premium - would find himself with a bad investment if the collective sale failed, she said. Still, better rental levels could ease the pain.

At the 99-year leasehold Chiltern Park Condominium in Serangoon, whose residents are working towards a collective sale, a three-bedder sells for $421 per sq ft on average. If a collective sale goes through, the sum fetched could actually fall below that level once the potential charges that developers have to pay are factored in, according to Savills Singapore.

But investors who recently bought units there could at least get relatively good rents, said Savills, noting that asking rents there now average $2,400 for a three-bedder. This level and the average price give a rental yield of about 5.4 per cent - a very good return in the local market.

If a collective sale fails to come through at a condominium, investors must be able to ride out the market and wait for the next round, which could be years away, said a market watcher. Anyway, that might not turn out to be such a gamble. ‘At the rate things are going, every old development will find its end and give way to new developments,’ said Mr Singh.

Source: The Sunday Times, 06 May 2007
Posted by Property Wizkid

Developers root for bigger homes
As prices of luxury property continue their seemingly unstoppable climb, the heat is on developers to give buyers more bang for their buck. And they are rising to the challenge by offering more “”exclusive’’ projects with fewer, bigger units full of fancy trimmings.

Some 39 luxury projects with a total of more than 3,600 units could be launched this year, says Colliers International. And about two-thirds of these developments will have 100 units or less. The number of units per project is shrinking as apartments get bigger, market watchers say. For example, penthouse sizes have grown by 20-100 per cent since the 1990s, according to Colliers’ director of research and consultancy Tay Huey Ying.

“”In the 1990s, penthouses were usually about 3,500-5,000 square feet,’’ she says. “”Today we are looking at more and more penthouses in the range of 7,000 sq ft and above.’’ Developers are also throwing in goodies such as European designer fittings, spas in all apartments and a separate pool for each unit to sweeten the pot. “”As prices go up, people expect more,’’ Koh Brothers chief executive Francis Koh told BT. “”If you buy a new unit instead of a resale unit, it has to be value-added. So we need to innovate.’’

Luxury home prices in Singapore are indeed on the way up. In just the first quarter of 2007, prices of uncompleted projects in the Core Central Region - which includes Districts 9, 10, 11, Marina Bay and Sentosa - rose 7.3 per cent. And for the whole of 2006, prices of uncompleted projects in these prime areas rose 25.4 per cent. With prices expected to keep climbing for the rest of the year, developers are getting creative, making sure their offerings have the works.

SC Global Developments has a few firsts in mind. Its Marq On Paterson Hill will feature one tower with a 15-metre private lap pool in every apartment on every floor. The Marq is expected to be launched this year at upwards of $2,800 per square foot. And another SC Global project, Hilltops, promises a resort-style steam spa in every apartment. Hilltops is expected to be launched this year at $2,500 to $3,000 psf.

Similarly, Koh Brother’s 53-unit The Lumos, in the Leonie Hill area, will have a sky garden on every floor. Every unit will open on to a landscaped plot of green living space, which Koh Brothers says will provide residents with “”a refreshing sanctuary and an access to nature that is unrivalled among high-rise developments’’. Besides exclusives like these, developers are splashing out to install the latest designer fittings in their apartments.

At The Lumos, each unit will come with an Italian-made Visentin Rainbow Shower, so you can change the backlight colours to suit your mood while showering. The master bathroom in each unit will be walled with Strass Swarovski Crystal tiles. And in what the company says is another first, the exterior-facing bathroom windows are made of Liquid Crystal Glass, so you can turn from frosted to clear at the flick of a switch.

With features such as these, says Colliers’ Ms Tay, developers are trying to create a lifestyle that sells their apartments. But some analysts say all the extras are adding to the cost - which again leads to increased prices. “”It’s a cycle,’’ said an analyst with a foreign brokerage here. “”People pay more, so the developers spend more money to justify the price. And this again drives prices up.’’ But with luxury home prices still continuing to climb, the trend can be expected to continue this year, the analyst said.

Source: The Business Times, 05 May 2007
Posted by Property Wizkid

Will US rental glut affect Singapore's property market?
The glut of US properties for sale is about to hit the rental market.

A record number of homeowners who can’t sell condominiums and houses are competing for tenants with the country’s biggest apartment owners led by Chicago-based Equity Residential, said Jack McCabe, the founder of Deerfield Beach, Florida-based McCabe Research & Consulting LLC. Rents in metropolitan New York, where demand for housing exceeds supply, may be the only place where rents increase, albeit at a slower pace, he said. ‘Competition already is forcing the big apartment owners to offer concessions like two months free rent,’ Mr McCabe said.

Vacant rental apartments rose to 6.1 per cent in the US during the first quarter, the most in almost two years, even as the average monthly rent reached a record US$991, said Sam Chandan, chief economist of New York-based real estate research company Reis Inc. New York had the lowest vacancy rate in the first quarter, he said.

Nationwide, 2.8 per cent of houses for sale were unoccupied in the first quarter, the highest since the Census Department started collecting the data in 1956. Unsold properties on the market totalled a record 3.45 million in 2006, according to the Chicago-based National Association of Realtors. ‘Unsold properties being turned into rental units are creating a shadow market that’s driving up the vacancy rate and slowing the growth of rents,’ Mr Chandan said in an interview. ‘Areas that saw the most speculative investing, particularly in condos, will see the biggest pressure on rents.’

Anthony De Silva said he’s not happy to become a landlord. He bought a two-bedroom condominium on the ocean in Hollywood, Florida, 18 months ago expecting to sell at a US$100,000 profit. Instead, he’s looking for tenants at US$1,700 a month. ‘I don’t want to sell for less than I paid, so my only choice is to rent it,’ said Mr De Silva, 45, a New Yorker who made US$80,000 in November 2005 by flipping, or selling quickly, his first Florida real estate investment, a condominium in Ft Lauderdale. At the time, prices had gained 29 per cent from a year earlier, the peak of the market in that area.

The increase in competition is spurring apartment owners to offer enticements. Lincoln Green Apartments, a Philadelphia complex that rents units from US$840 to US$1,370 a month, is offering two months free rent for people who sign a one-year lease. Citrus Park Apartments in Tampa, Florida, and Ten Faxon in Quincy, Massachusetts, have the same deal. ‘Increasing vacancies does not bode well for rental incomes,’ said Nabil N El-Hage, a professor at Harvard Business School in Boston, across the Charles River from Harvard University’s main campus in Cambridge, Massachusetts. ‘We’ve seen a softening in apartment Reits as a result.’

A Bloomberg index of 19 apartment-focused real estate investment trusts, or REITs, has fallen 14 per cent over the last three months, the longest consecutive monthly decline since a three-month rout that ended February 2003. Frustrated sellers who become landlords have created an inventory of for-sale properties that could derail a housing recovery next year, Mr Chandan said. If home sales improve in early 2008, as predicted by Freddie Mac, the No 2 mortgage buyer, properties now being rented could reappear in 12 months time to flood the spring market.
‘Those homes that are disappearing off the sales market can just as easily appear again when demand is stronger,’ he said.

US real estate prices ‘continued to weaken’ in many districts during March and April, the Federal Reserve said last week in its regional survey known as the Beige Book. The report cited the San Francisco and Richmond, Virginia, markets as ‘falling or soft’. Sales dipped in the Cleveland, Atlanta, Kansas City, andSt Paul, Minnesota regions, the Fed said.

The exception was New York, where homes were ’selling well’, the Fed survey said. Manhattan’s median apartment price rose 1.2 per cent to US$835,000 in the first quarter from a year earlier, said Jonathan Miller, president of New York residential appraiser Miller Samuel Inc. For all of the US, the median fell 2.1 per cent to US$212,300, according to Fannie Mae, the largest mortgage buyer.

The city’s average rent was US$2,605 a month in the first quarter, the highest in the nation, and the vacancy rate was the lowest, at 2.5 per cent, according to Reis. Fairfield County, Connecticut, had a 3 per cent vacancy rate, central New Jersey was 3.6 per cent, and New York’s Long Island was 3.9 per cent, fuelled by demand from New York commuters, said Mr Chandan of Reis.

In markets such as South Florida, Nevada and Arizona that led the country in speculative buying, owners who can’t rent their properties may default on their mortgages, Mr Chandan said.
Demand to purchase real estate will begin to improve in the final quarter of 2007, the Mortgage Bankers Association said last week. Until then, home prices may decline 2 per cent, the Washington group said on April 24.

Source: The Business Times, 03 May 2007
Posted by Property Wizkid

China and their power of buying properties
China could soon come to play a greater role in global markets as a source of capital, DTZ Research believes. The growing reliance of the world’s economy on Chinese growth could also extend to global real estate and capital markets, it says in a report.

Although China’s phenomenal growth is well documented, ‘a different and, potentially, more important story over the medium term is that of China, not as a destination for global investment, but as a source of capital increasingly active on the world’s stage’, says the report.

Already in Singapore, a Chinese company is said to be part of a consortium that has just bid for a residential redevelopment site in the Cairnhill area, setting a new collective-sale benchmark price in the process. DTZ says that if the deal goes through, it would be the first direct foreign investment by a Chinese company in Singapore real estate here.

Whether this will lead to more Chinese capital flowing into Singapore is not known, but DTZ China head of investments Frances Li says: ‘At the moment, pension funds and insurance companies in China have generally not been allowed to invest in real estate by regulations. ‘I do know the insurance authorities are considering the possibility and in discussion to draft the policy. It is estimated to take at least two years for them to open the real estate market by the current pace.
‘Therefore, I believe most investors (here) will be developers.’

In its report, DTZ also says that Chinese capital could play an instrumental role in ‘plugging’ the estimated shortfall in household wealth of most mature economies as a result of the impending ‘demographic shift’. The report says that China’s savings pool now makes up about 50 per cent of GDP, with foreign exchange reserves expected to double to US$2 trillion in the next two or three years. ‘This represents a potentially enormous investment capital if deployed internationally,’ DTZ says. ‘An increasing likelihood given the need to diversify risk, maximise returns, as well as improve the general management of these funds.’

For the moment though, more capital is likely to be flowing into China rather than out of it. For 2006, global investment transactions in direct real estate totalled US$551 billion, a 35 per cent increase from 2005. Cross-border investment activity accounted for 40 per cent of this, up from 30 per cent in 2005. DTZ estimates that US$2.5 trillion of capital is currently looking to be deployed in real estate worldwide, roughly a ratio of US$5 of capital chasing every US$1 of investment grade stock. In China, the ratio is estimated to be 15:1.

Source: The Business Times, 03 May 2007
Posted by Property Wizkid