Singapore Property News Upfront 19

Take heed. URA advises. Government is a "little bit" concern.
Official flash estimates show the rise in home prices spreading beyond the high-end to other parts of the market including private condos in the city fringe, mass market areas and even to the HDB resale market - prompting some words of caution from the Urban Redevelopment Authority (URA).

Market watchers say the trend is being driven by people who have sold their prime district homes through en bloc sales finding replacement properties further from prime locations. The URA price index for private homes rose 7.9 per cent in the second quarter over Q1 - the biggest quarter-on-quarter gain since Q2 1999. The latest flash estimate shows a year-on-year gain of 20.6 per cent for Singapore as a whole.

The biggest price gains were not in luxury homes, as reflected in URA’s Core Central Region, covering districts 9, 10 and 11, Downtown Core (including Marina Bay), and Sentosa. While non-landed private home prices in this region increased by 7.6 per cent in Q2 over Q1, the Rest of Central Region (which covers places like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong) posted an even bigger 7.9 per cent gain over the same period.

Prices in the Outside Central Region - which covers suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok - were 6.5 per cent higher in Q2 than in the first three months of the year. The Housing & Development Board’s resale flat price index registered a 2.9 per cent increase in Q2 over Q1, going by the board’s latest flash estimate. This shows prices for public housing rising faster than before, as there was a quarterly gain of just 1.3 per cent in the index in Q1.

In a departure from recent tradition, the URA yesterday advised potential home buyers that they should take into account that there is ’sufficient pipeline supply of private housing, as well as the potential supply from Government Land Sales sites, when deciding to make a property purchase’. The URA reminded people that the Government will ensure there are sufficient homes to meet demand, saying that it will continue to monitor the market closely.

DTZ Debenham Tie Leung executive director Ong Choon Fah said: ‘There has been a sense of urgency for some people to buy a home when they see the market going up. Obviously the Government is a little bit concerned, but this market is driven by fear and greed. Fear of missing the boat, and greed to make more. These are very emotional things, so people may not act rationally.’

Another property consultancy, CB Richard Ellis, noted that the URA’s overall price index for private homes has increased 13.1 per cent in the first six months of this year. It predicts a full-year gain of 20 to 25 per cent for the whole of this year. ERA Singapore similarly forecasts an increase of 20 per cent or more for 2007. For the HDB resale flat price index, ERA predicts an increase for the whole year of about 8 to 10 per cent. PropNex also reckons the gain will be about 10 per cent.

Market watchers see yesterday’s data as evidence that the recovery in the high-end residential sector is at last filtering through to other parts of the market. Knight Frank managing director Tan Tiong Cheng says the key driver of this trend is the growing number of owners of prime district homes who went through en bloc sales and are priced out of the most expensive districts. ‘They are instead forced to find replacement homes outside these locations, starting with city-fringe locations and even spreading to the suburbs,’ Mr Tan said.

In some cases, especially en bloc sales of privatised HUDC estates, the replacement homes may even be HDB resale flats in Queenstown, Bukit Merah and other areas, Mr Tan reckons. ERA Singapore assistant vice-president Eugene Lim reckons that fear among home buyers that they may miss the boat and lose out on good property buys is also fuelling the current buying frenzy.
‘Everyone seems to want a piece of the action. Those who can’t afford the high prices in prime locations are moving outwards,’ Mr Lim added.

PropNex CEO Mohamed Ismail reckons the increases in the price indices for the Rest of Central Region and Outside Central Region are due to many buyers previously sitting on the fence deciding to buy out of fear that prices may escalate further. CBRE executive director Li Hiaw Ho highlighted projects in several locations that saw new price levels being achieved in Q2, including Kallang (The Riverine By The Park, $1,400-1,500 psf), Novena (Novelis@Novena, $1,400 psf) and suburban areas (Botannia in the West Coast area, Casa Merah near Tanah Merah MRT Station, Northwood in Sembawang, and Parc Mondrian at Woodleigh Close, in the $600 to $720 psf range).

PropNex’s Mr Mohamed warned that the 7.9 per cent hike in the private home price index for Q2 is ‘bullish and if the growth continues at this pace, it is not healthy for the property market in the long run’.

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

Government will continue to monitor
In a departure from tradition in recent years, the Urban Redevelopment Authority (URA) yesterday commented on the state of the private residential market when it released the latest price indices. It also seemed to have some advice for potential home buyers who may be carried away by the current market frenzy.

The departure is seen in industry circles as reflecting official concern about the run-up in private residential prices which, as yesterday’s flash estimates show, is no longer confined to just the luxury segment but has spread to other segments as well. ‘The government will continue to monitor the market very closely,’ URA said yesterday. Its subsequent elaboration dwelt on measures to ensure there is sufficient supply of homes, without even a hint of any possible measures to tackle demand, or subsales, market watchers noted.

URA said: ‘The government will ensure that there will be sufficient supply of residential space to meet demand. The GLS (Government Land Sales) Programme for the 2nd half of 2007, which was just announced recently, comprises 20 residential sites and five other commercial and residential, and white sites which have a potential supply of about 8,000 units of private housing and executive condominium (EC) housing.’

The government has also re-introduced an EC site to give an additional housing option to Singaporeans. ‘If necessary, the government will make available even more sites for private residential development through the GLS Programme next year,’ URA said. The authority reiterated that besides new GLS sites, there are some 42,200 new private homes slated for completion from H2 2007 to 2010. About 22,700 of these units have not been sold by developers yet.

‘Prospective home-buyers should take into consideration the sufficient pipeline supply of private housing, as well as the potential supply from GLS sites, when deciding to make a property purchase,’ URA said. In its release, URA also gave its take on the rise in private home prices in recent quarters, which it said is ‘in line with greater economic growth and rising confidence. Private housing prices are now increasing at a faster pace because of good economic prospects going forward and the increasing attractiveness of Singapore as a global city,’ it added.

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

Many go up, some came down
For property prices, this could be a tale of two cities. While housing prices in many parts of Singapore have shot up over the past two years, there are some places where they have only crept up, and others where they have even dropped. While private home prices in general have climbed 27.9 per cent from the Q2 2005 to Q2 of this year, official estimates released yesterday showed, in some parts of the island the price increase has been marginal, or even negative.

Partly because of this, a range of units in projects across the island are still available for under $500 per square foot (psf). Data from property firm Savills Singapore show that while prices for the rest of the island have climbed by as much as 40 per cent over the past 24 months - with home prices in the prime districts of 9, 10 and 11 climbing by over 50 per cent - housing prices in the north, north-east and west of the country have either remained flat, or dropped.

‘Home prices in the north, north-east and west have dropped about 10 per cent on average over the past two years,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore. Savills identified Districts 23, 25 and 27 - Bukit Batok, Choa Chu Kang, Hillview Avenue, Upper Bukit Timah, Admiralty, Woodlands, Sembawang and Yishun - as those that have seen price drops.

At Euphony Gardens at Jalan Mata Ayer, prices have dropped from $404 psf in the second quarter of 2005 to $362 psf in the second quarter of this year - a fall of 10.4 per cent. At Palm Gardens at Hong San Walk, the price has fallen by 4.6 per cent to $373 psf, from $391 psf two years ago. The supply of private homes in these areas still outstrips demand for them, Mr Ku said. ‘Demand has not spilled over far enough from the core central region into these areas,’ he said.

It is then not surprising that a whole lot of projects going for under $500 psf can be found in these districts. The data from Savills show that there are 65 properties - 14 freehold, 35 with 99-year leases and 16 executive condominiums - where units have transacted at under $500 psf over the past few months. Nineteen of these 65 projects are in Districts 23, 25 or 27.

The relatively low going rates means that buying a private condo in these projects might even be cheaper than picking up a HDB flat in a popular area. Last month, a 1,240 sq ft HDB flat at Kim Tian Place went for $720,000 - setting a record for five-room flats. ‘At less than $500 psf, a 1,200 sq ft unit will sell for less than $600,000,’ said Mr Ku. ‘There are a lot of private units that are not as expensive as top-tier HDB flats.’

Mr Ku however pointed out that the comparison does not hold true when comparing a private condo and a HDB flat located in the same area, when the price fetched by the condo will always be higher. Over the past two years, prices in the core central region of Singapore - which includes Districts 9, 10, 11, Marina Bay and Sentosa - have climbed much faster than in the rest of the island.

The latest estimates by the Urban Redevelopment Authority put the increase of homes prices over the second quarter of this year at 7.6 per cent in the core central region, and a smaller 6.5 per cent in the ‘outside central region’ category. As prices in the outlying areas of Singapore recover, property prices in Districts 23, 25 and 27 should see better growth, analysts said. And in line with this, the number of properties selling for under $500 psf can also be expected to drop.

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

Industrial tech space moving up
Average rents for high-tech industrial space have increased by 11.9 per cent, the highest quarterly increase in the past five years, boosted by a migration of businesses from the Central Business District (CBD). Sources show that American Express is the latest financial institution to have moved its back-of-house operations, which have gone to Mapletree’s The Comtech at Alexandra Business Hub.

In its quarterly report on industrial space, CB Richard Ellis (CBRE) said it expects rents to keep rising. CBRE director (industrial and logistics services) Bernard Goh said: ‘Further rent increases for high-tech space during the second half of the year are expected as demand for offices is unlikely to let up while supply of office space will still remain tight.’

Mr Goh says limited supply of office space coupled with rising rents has encouraged qualifying companies to look to high-tech properties to meet their needs. And average rents have increased from $2.10 per square foot (psf) in Q12007 to $2.35 psf in Q2. DTZ Debenham Tie Leung also noted the double-digit increase in rents for high-tech space, compared with 9 per cent and 7per cent for average monthly industrial rents for first-storey and upper-storey industrial space.

In its quarterly report on industrial space, DTZ said: ‘Strong demand has led some landlords of high-tech industrial space, especially business park space, to ask for above $4 psf.’ It added that this compares favourably with rents for decentralised office space which averages $6 psf.
Supply for business space is expected to be alleviated with the completion of Cintech4 in Science Park1 with an estimated 103,340 sq ft coming on stream.

More significant supply can be expected in end-2010 when Mapletree completes its redevelopment of Alexandra Distripark to become part of its new business hub there.
Mapletree will demolish three existing industrial blocks with a gross floor area of around 1.6 million sq ft and build four new blocks with an estimated 1.96 million sq ft of business park space.

Mapletree COO Tan Boon Leong added that redeveloping Alexandra Distripark is part of its efforts to ‘rejuvenate our assets’, following earlier projects at its HarbourFront Precinct.
Mr Tan added: ‘Apart from the Alexandra Business Hub, we are seeking planning approval to redevelop the SPI Building, our remaining redevelopment site at the HarbourFront Precinct. Upgrading works are also ongoing at PSA Building and Tanjong Pagar Distripark.’

Apart from high-tech space, other industrial space sectors also showed increases in average rents in Q22007. CBRE notes that warehouse rents for ground-floor units rose to $1.45 psf quarter-on-quarter or 11.5 per cent and 4.5per cent for upper floors. Factory space also increased about 4 per cent quarter on quarter to $1.35psf for ground-floor units and $1.10 psf for upper-floors.

With average capital values also rising, CBRE’s Mr Goh did, however, say: ‘Keen competition for investment-grade industrial properties could see Reit (real estate investment trust) players lowering their yield expectations for properties to be acquired.’

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

Prices shot up but what's the rush?
Private home prices have shot up across the board with everything from luxury condos to humble suburban homes reaping the benefits. Figures out yesterday - still just estimates at this stage - for the April-June period show that private property is on a dramatic upswing with plenty of momentum.

Prices rose 7.9 per cent - the biggest jump since the third quarter in 1999, when the market staged a brief recovery before sliding into a lengthy slump. The increase comes on top of a 4.8-per-cent rise in the first three months this year. ‘We are clearly in the middle of a property boom now and the growth is escalating,’ said Knight Frank head of research Nicholas Mak.
The central core region, scene of some eye-catching condo launches and collective sales, turned in another solid performance, according to the Urban Redevelopment Authority (URA) yesterday.

Prices of non-landed private homes in the core zone - it includes districts 9, 10, 11, downtown and Sentosa - rose 7.6 per cent in the second quarter, compared with a 5.5-per-cent rise in the first. But for all this area’s golden glow, the figures that stood out were from areas outside the central core. Non-landed homes in the rest of the central region - this includes areas like Toa Payoh - saw prices leap 7.9 per cent, well up on the 3.7-per-cent increase in the first quarter. Rises were even more impressive outside of central, where non-landed home prices surged 6.5 per cent in the second quarter, trumping the anaemic 2-per-cent effort in the first.

There was occasional panic buying as some feared they could miss bargains, said agents.
Yet despite the positive numbers, private home prices are still about 18.8 per cent below the 1996 peak. The positive sentiment has also spilled over to HDB resales, where prices rose 2.85 per cent - again, the highest growth since the third quarter of 1999 - and up from a 1.25-per-cent rise in the first.

‘We’re seeing a broad-based recovery plus a tiny spurt from the HDB side,’ said Savills Singapore marketing director Ku Swee Yong. The climb in the high-end market, where prices have hit $5,100 psf, is likely to be sustained, he said. Property experts are looking at a 20- to 25-per-cent rise for private homes for the whole year. They said the strong collective sales market - with about 30 to 40 more estates waiting to hit the market in the next year - will keep demand for suburban and HDB flats chugging along.

PropNex chief executive officer Mohamed Ismail expects HDB prices will clock up a 10-per-cent rise this year. The URA statement yesterday also touched an issue vexing many - is the market overheating and should some cold water be thrown over it? It said the Government would continue to monitor the market ‘very closely’ and ensure there is sufficient supply to meet demand.

Many residential sites have been released in Government land sales (GLS) programmes with more earmarked for next year if there is a need. The URA said the good stock of private housing and more GLS sites in the pipeline means supply should keep up. Or as Mr Mak puts it, there is no need to rush in.

Source: The Straits Times, 03 July 2007
Posted by Property Wizkid

$20m for East Coast 20,000sft?
An eight-unit freehold residential site in East Coast has been put up for collective sale with an asking price of $20 million. The price for the land at 16-22A Pulasan Road, measuring 21,334 square feet, works out to $548 per sq ft per plot ratio, and includes a development charge of $56,000, said marketing agent Newman & Goh yesterday. ‘Together with potential alienation of adjoining state lands totalling 6,826 sq ft, it can be built up to a gross floor area ceiling of 39,424 sq ft,’ said Newman. The site can be redeveloped into about 36 units of boutique apartments averaging 1,100 sq ft per unit for an average price $1,050 psf, said Newman. The sale has received full approval from the owners. The tender closes on July 20 at 3pm.

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

Plenty of homes to buy - 22,700 if you wish
The Government has taken the unusual step of reassuring private home buyers that there are plenty of brand-new unsold units in the pipeline - about 22,700 of them. It offered this new figure in what is being seen as a move to calm the booming property market, even as the latest estimates show that private home prices shot up 7.9 per cent over the last three months.

In an unusual addendum to the price estimates released yesterday, the Urban Redevelopment Authority (URA) reassured home buyers that the supply of homes over the next few years will be plentiful.It reiterated that around 42,200 new homes will be completed between now and 2010. Of these, slightly more than half have yet to be sold, it said.

These include units that have already been launched but not yet taken up, as well as those that have not yet been launched for sale. While the URA did not provide details of where these homes will be located, property consultants estimated that most of them will be in the central areas. For the rest of the island, the Government has already taken steps to alleviate the situation. Last month, it announced it will release a slew of land plots in the second half of this year, enough for developers to build about 8,000 homes.

This comes as some property watchers issue alerts of a potential supply crunch of homes in the market, following an unprecedented wave of collective sales that will lead to thousands of homes being torn down. But the Government was quick to assure buyers that ‘it will continue to monitor the market very closely’. The Government will ensure that there will be sufficient supply of residential space to meet demand,’ the URA said. ‘If necessary, the Government will make available even more sites for private residential development… next year.’

It added that ‘prospective home buyers should take into consideration the sufficient pipeline supply of private housing, as well as the potential supply… when deciding to make a property purchase’. Dr Chua Yang Liang, head of Singapore research at Jones Lang LaSalle, saw the Government’s statement as ‘quite a strong indication to tell the market there is adequate supply, and not to go on a panicked buying spree’.

The URA also appeared to be addressing fears of a property bubble in its statement. It was quick to say that the jump in home prices was due to strong fundamentals. ‘The increase in private housing prices in recent quarters is in line with greater economic growth and rising confidence,’ it said. 'Private housing prices are now increasing at a faster pace because of good economic prospects going forward and the increasing attractiveness of Singapore as a global city.’

Source: The Straits Times, 03 July 2007
Posted by Property Wizkid

How much is the lawyer's fees, actually?
When my son’s estate was ready for en bloc sale, the appointed sales committee engaged a property agent to market the property and a lawyer to represent the owners in the documentation. However, this lawyer adopted a ‘didn’t ask, don’t mention’ attitude while vetting the contract that the owners had to sign with the property agent.

As a result, the contract was worded in favour of the agent, e.g., the agency fee was pegged at 5 per cent of the reserve price and any price above the reserve price would incur a fee of 6 per cent. Laymen would assume that the commission would be calculated at 5 per cent up to the reserve price and the balance thereafter at 6 per cent.

As the sale was concluded above the reserve price, the agent charged the owners
6 per cent of the total sale proceeds. When they approached the lawyer for advice, he confirmed that it was correct. Why didn’t the lawyer explain it clearly in the first place? Then the lawyer quoted a fee of 2 per cent on the sale proceeds and an additional charge for bank redemption. The quotation for the additional charge was not included in the documentation and subsequently the bill consisted of a charge for handling the bank redemption, $X, and a charge to the lending bank for handling the case, $Y (which the bank claimed back from my son.)

When he queried the lawyer about the four separate charges (including the CPF Board’s lawyer’s fee), he claimed that they were standard charges and the fees were based on a scale. Why do we have to engage a lawyer to redeem a mortgage loan? Would not the CPF lawyer be sufficient? Why was there a double charge - imposed on the borrower as well as the lending bank - when the lawyer handled the same document?

Source: The Straits Times, 03 July 2007
Posted by Property Wizkid

Surging towards the pre-crisis levels of 1996
It looks like an outright seller’s market — even for those in non-prime districts. Across the board, private home prices are quickening their surge towards the pre-crisis levels of 1996, according to official data released yesterday.

Worrying? Yes, for aspiring public housing upgraders who may be priced out of the suburban areas, say analysts. The Government doesn’t seem to be resting easy, either. Private home prices spiked 7.9 per cent in the second quarter, surpassing the first quarter’s 4.8-per-cent increase at a pace not seen since late 1999, said the Urban Redevelopment Authority (URA), basing its data on caveats lodged for new units sold during the first 10 weeks of the quarter. It will release updated figures in four weeks.

The URA also took the unusual step of warning that “the Government will continue to monitor the market very closely”, besides bolstering supply. “Prospective homebuyers should take into consideration the sufficient pipeline of private housing, as well as the potential supply from Government Land Sale (GLS) sites, when deciding to make a property purchase,” it said.

Private housing prices have been increasing at a faster pace because of economic prospects and the increasing attractiveness of Singapore as a global city, the URA added. According to ERA Singapore’s assistant vice-president Eugene Lim, the boom, which ignited in the downtown core, has “filtered outwards”. Condominiums in the core central area — districts 9, 10 and 11, as well as downtown and Sentosa — rose 7.6 per cent in the second quarter. The rest of the central region — such as Upper Thomson Road and Alexandra Road — rose even faster at 7.9 per cent, while the remaining districts typified by mass-market condominiums registered a 6.5-per-cent rise.

Sales at new launches moved at a brisk pace as foreign funds and investors, confident of Singapore’s growth as a regional financial centre, bought multiple units in several projects, said CB Richard Ellis Research’s executive director Li Hiaw Ho. But “another cause of the current frenzy in the market is the ‘fear’ among home buyers that they may lose out on good property buys,” said ERA’s Mr Lim. “I’m worried it’s becoming like a stock market,” said Chesterton International’s research director Colin Tan, who frets that Housing Development Board (HDB) upgraders are being increasingly priced out. The latest figures show that private residences outside the core region jumped at three times the pace of the first quarter’s 2 per cent.
Mr Tan wants the Government to “stop monitoring and act fast” by issuing a warning that prices are getting out of hand.

A URA spokesperson told Today “the Government will ensure there is sufficient supply to meet demand. If necessary, the Government will make available more sites for private residential development through the GLS Programme next year.” URA has released sites “that can generate substantial new supply of private housing under the GLS programme for the second half of the year. There will also be 42,200 units expected to be completed from now till 2010″, the spokesperson added.

Still, CBRE’s Mr Li expects home prices to rise by 20 to 25 per cent for the whole of this year, after the first six months registered an increase of 13.1 per cent. This exceeds last year’s growth of 17 per cent.

Source: Today, 03 July 2007
Posted by Property Wizkid