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Integration policy no bar to selling flats http://t.co/5L7HC6b

Integration policy no bar to selling flats

The price of resale flats cannot be attributed solely to the Ethnic Integration Policy (EIP). -myp

Fri, Sep 17, 2010
my paper

By Victoria Barker

The price of resale flats cannot be attributed solely to the Ethnic Integration Policy (EIP), said Parliamentary Secretary for National Development Mohamad Maliki Osman yesterday.

The policy aims to promote racial harmony and to prevent ethnic groups from forming enclaves by determining quotas for each group in Housing Board estates.

Responding to a question from Nominated MP Viswa Sadasivan on whether the EIP causes difficulty for sellers, Dr Maliki said: “We also see sellers who are affected by EIP restrictions (and yet) are able to sell at way above market valuation.”

Of 162 neighbourhoods affected by EIP, only 14 per cent have reached their quotas, he said.

Dr Maliki added: “Even when the EIP limit for a particular ethnic group is reached, sellers can still sell their flats to buyers from the same ethnic group, as it will not increase the ethnic group’s proportion.”

Those who are “realistic in setting their asking price” should have no problem finding buyers even if they are affected by EIP limits.

A suggestion to revive the suspended Transitional Rental Housing Scheme, aimed at newlyweds and young couples, was met with Dr Maliki’s response that the HDB “will look into its feasibility”.

‘First crack’ for 1st-time buyers http://t.co/Ld1yCjT

‘First crack’ for 1st-time buyers

Mr Mah said new property rules reinfornce the use of a HDB flat as being for long-term occupation. -myp

Thu, Sep 16, 2010
my paper

BY VICTORIA BARKER

THE new property rules introduced by the Government are intended to give first-time buyers “first crack” at the market by reinforcing the use of a Housing Board (HDB) flat as being for long-term occupation rather than a mode of investment, said National Development Minister Mah Bow Tan yesterday.

Responding to questions from Non-Constituency MP Sylvia Lim and Mr Lim Biow Chuan (Marine Parade GRC), Mr Mah said: “If you already own a private property, then, please don’t, at this point of time, compete with others to buy HDB resale (flats) unless you’re genuinely downgrading.”

Under the new rules, buyers of non-subsidised HDB flats can no longer have concurrent ownership of both a private residential property as well as the flat within the Minimum Occupation Period of five years.

Mr Mah said that though the rules may inconvenience or disadvantage some demographics – such as some retirees and genuine upgraders – they would ultimately encourage buyers to be more prudent.

vbarker@sph.com.sg

PRs not only factor in home demand http://t.co/UJrYors

PRs not only factor in home demand

Mr Mah was responding to why the ministry did not increase flat supply earlier to cater to the increased number of immigrants. -myp

Thu, Sep 16, 2010
my paper

THE influx of permanent residents and foreigners is not the only factor driving the demand for housing, National Development Minister Mah Bow Tan said yesterday.

He was responding to a question from Mr Liang Eng Hwa (Holland-Bukit Timah GRC) on why the ministry did not increase flat supply earlier to cater to the increased number of immigrants.

Mr Mah cited the “sentiment- driven nature of the market” as well as broader economic forces as contributing to overall demand.

The recent increase in property prices, for example, reflects improved economic sentiment and low interest rates, he said.

An uncertain economic outlook in the first half of last year also resulted in the ministry further cutting back on supply.

“We take a long-term view, but we also need to be cognisant of the short term… We have to be very flexible and view our housing supply in a very pragmatic manner,” Mr Mah said.

VICTORIA BARKER

URA releases two residential sites for sale http://t.co/8MQ73ex

Shoe-box units shrink median price of developers’ sales http://t.co/rjyYXKx

Shoe-box units shrink median price of developers’ sales

Rise in caveats of small units also keeping prices above $1,000 psf.

Wed, Sep 15, 2010
The Business Times

By Kalpana Rashiwala

SINGAPORE – Small is not only the new popular as far as private apartments go; it’s also what has skewed per square foot (psf) prices skywards in recent years.

The median price quantum of private homes sold by developers has fallen from about $1.4 million in April this year to $1.2 million in May and June and $1.1 million in July – but median psf prices have hovered above $1,000 psf for most months this year.

At the same time, the median unit size of new homes sold has shrunk to below 110 square metres (1,184 sq ft) since April this year – after staying at or above this size for most of the preceding 12 months, according to CB Richard Ellis’ analysis of caveats of developer sales since January 2007 based on URA Realis data captured as at Aug 25.

CBRE executive director Li Hiaw Ho said that the figures could be due to an increasing number of caveats lodged for ‘small-format’ or ‘shoebox’ apartments from projects such as Siglap V, Parc Elegance, Suites @ Katong, Parc Somme, Centra Studios, La Brisa and Casa Aerata, all of which have been selling very well since April this year.

‘These units were transacted at between $900 psf and $1,350 psf but their absolute price quantum ranged from $350,000 to $700,000, which made them affordable,’ said Mr Li.

Some developers are drawn to building shoebox apartments – which are typically 500 sq ft or smaller – as these small units can often push up their average per square foot prices past the $1,000 psf mark. At the same time, the lumpsum investment – typically well below $1 million – looks affordable and therefore appeals to a wider pool of investors and speculators.

CBRE studied the monthly median absolute price quantum, median psf prices and median unit sizes of private homes sold by developers since January 2007. It found that the median price was at its highest in October 2007 – during the previous property boom – at $2.47 million. In that same month, the median unit size was 159 sq m or 1,711 sq ft, reflecting the popularity of large units at the time, with the median psf price at $916 psf.

In contrast, even as the average size of new apartments sold has since shrunk, the median psf price for most months this year has been above $1,000 psf. For instance, in April, it was $1,245 psf and in May, $1,128 psf.

Many shoebox units are coming up in projects being built on plots of 20,000 sq ft or less in the ‘Rest of Central Region’, in places such as Geylang, Guillemard and Telok Kurau, where they are being touted for their high rental yield potential.

‘From a developer’s viewpoint, smaller units are more saleable and from a buyer’s perspective, easier to buy, whether for speculation or investment, because of the relatively affordable lumpsum investment,’ says Knight Frank managing director (residential services) Peter Ow.

Developers also achieve higher psf prices for these tiny units, he added.

For precisely this reason, however, a seasoned developer was critical of shoebox units, saying: ‘They have distorted the market by creating the impression of runaway prices at four-digit psf average prices. This in turn fuelled demand for HDB resale flats, which in comparison represent better value for money.’

For instance, Casa Aerata’s freehold apartment units of 45 sq m at Geylang Lorong 26 were sold at between $459,600 and $474,200 in June, according to caveats data. Nearby at Jalan Tiga, transactions of HDB resale flats of 110 sq m (with 99-year lease terms starting from 2005) were completed in July at $680,000-683,000, said ERA Asia Pacific associate director Eugene Lim.

The trend of small apartments comes in waves, but the current wave – which began with the release of The Alexis near Queenstown MRT Station in February 2009 – has seen unit sizes sink to new lows.

Apart from shoebox developments, where most units are 500 sq ft or smaller, unit sizes in regular projects have also shrunk over the years.

‘About five years ago, studio units were about 500 sq ft; now it’s common to find 350-400 sq ft units. Two-bedders used to be around 900-1,000 sq ft; now they could be 700-800 sq ft,’ said the developer who declined to be named.

While this trend is not expected to fizzle out anytime soon, developers may move away from the shoebox model when more of these projects are completed, and if these tiny units do not quite achieve their touted high gross rental yields of 8-10 per cent, says Mr Ow.

Agreeing, the developer said: ‘It may not be so easy to resell these units when they are completed as buyers can actually see how tiny the apartments are. I think this phase of exuberance in owning tiny apartments will fade when they’re ready for occupation. When more shoebox apartments are completed, the supply will be saturated vis-a-vis the demand.’

This article was first published in The Business Times.

Home buyers return as Ghost Month ends http://t.co/3OytlUP

Home buyers return as Ghost Month ends

At NV Residences’ preview, 250 out of 300 units taken up.

Wed, Sep 15, 2010
The Business Times

By Emilyn Yap

SINGAPORE – With the hungry ghosts fed, private property buyers are coming back to the market.

But the end of the Hungry Ghost Festival isn’t the only reason that there was a discernable uptick in buying activity over the long weekend.

A new major launch also helped, along with home seekers given more time to mull over the property cooling measures.

Most of the deals were concentrated on NV Residences in Pasir Ris. City Developments and the Hong Leong Group opened the doors of the project for preview last Wednesday. Some 160 units were quickly snapped up at an average price of $830 per square foot.

Since then, the developers have disposed of another 90 units or so and demand has pushed the average price up slightly. As at 5pm yesterday, a total of 250 out of 300 units launched were taken up.

Most – some 80 per cent – of the buyers were Singaporeans. The rest were permanent residents or foreigners.

The developers plan to close the showflat from today onwards to prepare it for the project’s official launch this coming weekend.

At The Minton in Hougang, buyers picked up some 10 units over the past weekend, according to Knight Frank’s managing director (residential services) Peter Ow. The sales number was similar at Oasis@Elias, which is near NV Residences.

Both The Minton and Oasis@Elias projects performed better than they did a week ago, Mr Ow said. Buyers have had time to think through the new cooling measures and ‘it looks like people are settling down,’ he explained. ‘Those who are really keen, they are willing to commit.’

Far East Organization, which launched the second phase of sales for The Greenwich in August, sold another nine units at the Seletar project over the long weekend. This brought the total number sold to 225 units, at an average price of $1,074 psf.

Over at Telok Kurau, World Class Land previewed its freehold 46-unit Espira Suites last week. Most of the apartments are one-bedders, and the average price for these is said to be around $1,300 psf.

Agents have offloaded several units, though the project has not been sold-out. When the property market was at its hottest several months back, it was common to see small projects dominated by shoebox units snapped up in days.

Industry watchers will be keeping on eye on upcoming launches for a clearer sense of where the property market is headed.

One project to look out for is Hoi Hup Sunway’s Vacanza@East at Kembangan. Agents are preparing for its soft launch, said to be happening at the end of the month, and the average selling price could be in the range of $1,100 psf.

This article was first published in The Business Times.

Keeping speculators at bay http://t.co/Sxw7rYu

Keeping speculators at bay

Are the Aug 30 property-related measures appropriate or do they need to be fine-tuned?

Wed, Sep 15, 2010
The Business Times

THIS WEEK’S TOPIC:

Are the Aug 30 property-related measures appropriate or do they need to be fine-tuned? Will they be sufficient to cool the property market and alleviate speculative pressure, or would other measures be needed?

Lim Soon Hock
Managing Director
Plan-B Icag Pte Ltd

I THINK the newly introduced property-related measures to cool the property market and to alleviate speculative pressure are appropriate and sufficient. They are timely, as they will be rendered more effective by two other important underlying factors.

One, according to industry experts, the prices which we have seen thus far, will not peak for another seven years. Two, there is the apprehension that there will be a double-dip recession. The measures that have been introduced will only compel buyers, both genuine and speculative, to dig deeper into the ground to wait and see.

Given this scenario, I would expect investors to unload properties to take as much profits as they can and wait for a property downturn to happen, before they go into the market again. It may turn out to be a win-win for both buyers and sellers, as prices are now likely to trend below the peaks.

Laura Deal
Executive Director
The American Chamber of Commerce in Singapore

GIVEN that the top source of dissatisfaction for US companies with Singapore is the soaring cost of housing, the American Chamber of Commerce welcomes the government’s moves to cool the property market.

According to the 2010 AmCham Asean Business Outlook Survey, 89 per cent of respondents expect an increase in housing costs this year as compared to last year. This survey was conducted for nine years and each year, housing has been of increasing concern and is now being the highest ranked concern, with 78 per cent either being dissatisfied or extremely dissatisfied.

Moreover, the survey showed that 43 per cent of companies are dissatisfied with office lease costs. Our members find that the fluctuation of the office lease costs challenging for business planning, in particular for SMEs.

While Singapore has rated high on our survey compared to other Asean countries on most other issues such as infrastructure, transparency, political stability, and ease of doing business, it is important that the government addresses the property market issue to maintain Singapore’s competitive edge.

Ajay Kanwal
Regional Head of Consumer Banking, Singapore and
South-east Asia
Standard Chartered Bank

AGAINST the backdrop of a robust economic performance in the first half of 2010, the outlook remains cautiously optimistic. We expect a more subdued economic momentum in the second half. Nonetheless, the Singapore government’s move to increase its GDP growth forecast to 13-15 per cent indicates a continued upward trend in economic recovery. Overall, we see confidence at an industry and consumer levels improving.

The recovery in confidence is evident in regulators drawing the experiences from the financial crisis, at the same time, taking swift and active steps to strengthen governance framework and policies to ensure a sustainable future ahead. We believe companies, banks and the governments will continue to work with greater coordination and appreciation to ensure a sustainable economy ahead.

In this regard, at Standard Chartered, we welcome the new measures announced by the government as, for many Singaporeans, property is their single largest investment. We believe that these new measures will curb speculation in the property market, create greater home ownership opportunities, and build a more sustainable property market and economy in the long term.

Mohamed Ismail
CEO
PropNex Realty

FROM a macroscopic perspective, the new measures that aim to ensure the affordability of HDB resale flats and mass market projects over the long term are to be commended. The non-introduction of a capital gains tax means that the high-end properties in the Core Central Region are not affected and are still open to investment by high net worth investors, both local and foreign alike.

In the short term, the revised five-year minimum occupation period and the lowered loan-to-value ratio (LTV) of 70 per cent for the bank loans will have significant ramifications on the HDB resale and mass market condominium prices, which should soften by about 10 per cent over the next two quarters.

I feel there are a couple of measures, however, that could be fine-tuned and I urge the authorities to seriously look into them because of the people that they will impact.

Firstly, genuine upgraders from HDB flats to executive condominiums or new launches will be most affected by the “70 per cent LTV on the second mortgage” ruling. Thirty per cent of the price for a reasonably-sized Outside Central Region condominium, with stamp duty, would easily require the upgrader to raise over a quarter of a million dollars in cash and CPF money.

This would hamper the aspirations of many middle-class citizens whose only option for qualifying for a 80 per cent bank loan on their new property would be to sell their existing flat, forcing them to rent alternative accommodation for the 2-3 years that their new home will take to be completed.

An alternative to this policy could be to grant these genuine upgraders an 80 per cent bank loan, on the condition that they sell their existing flat within six months of their new property’s TOP.

Secondly, there will be many genuine HDB upgraders who are moving to another HDB flat. They will face the same problem in getting an 80 per cent bank loan for their new flat. If they want to have an 80 per cent bank loan, they would have to obtain a copy of the letter of approval from the HDB on the sale of their existing flat, as well as a document from their first mortgagee that certifies their existing mortgage will be discharged upon completion.

However, that leaves them with a mere six weeks before they have to vacate their current flat; their new flat’s purchase would not yet have been completed. Finding interim accommodation for three months as well as moving their household items twice will be both time-consuming and costly.

An alternative would be to allow the exercise of the option on their flat to apply for a new bank loan at 80 per cent, on the condition that they sell their existing flat within six months of their new flat’s sales purchase.

Finally, with the continued drive to attract and retain foreign talent, one policy worth considering to fine-tune would be PRs having to sell their overseas properties within six months of buying an HDB flat. There are more than a few instances where this would not be practical, especially if the PRs are from Asian countries.

Many of them who do own property in their native countries usually have their families, parents or siblings living in it. Or they may have inherited property such as farmland, but they co-own this property with their siblings. Such land may have little value and be difficult to dispose of because of the multi-ownership and low valuation. Also, PRs owning property overseas do not contribute to the speculative purchases of resale flats. It would not be entirely fair to apply the same rules of non-subsidised flats to PRs since they already do not qualify for any subsidies and can only take a bank loan.

The new measures, while effective in curbing speculation and reining in runaway prices, should also not impede the natural aspirations and advancement of genuine upgraders and permanent residents who would call Singapore home.

Tan Tiong Cheng
Chairman
Knight Frank Pte Ltd

THE government’s latest set of property cooling measures cuts across a broad spectrum with implications for investors, upgraders, downgraders and first-time buyers alike.

Whilst the intent is to curb property speculation, the measures have other unintended effects: not all buyers and sellers are speculators, and not all are investors. People buy and sell properties for a myriad of reasons. Some downgrade to an HDB flat to prepare for retirement, others upgrade to accommodate an expanding family, and yet others simply want a more appropriate property. While the new policies benefit some people, they also affect many others adversely.

Obviously time will tell whether these measures are well calibrated or excessive. The authorities are equally anxious to measure their impact and may well adjust or ease back if they hurt more widely and deeply than intended. It’s to no one’s benefit if the residential market is badly de-stabilised.

Property has been ingrained as a valuable investment option for Singaporeans and not just a roof over their heads. The present conundrum reminds me of a Chinese proverb: “both the front and the back of your palm are also flesh, choosing one puts you in a dilemma”.

Michael Zink
Country Head and Citi Country Officer for Singapore
Citi Group

THE latest measures are indeed a proactive and precautionary move by the government to prevent any potential bubble from forming in the booming property market. Like all measures, they will have a differentiated effect on buyers.

Generally, it seems to be having the desired immediate impact of stabilising property prices without penalising genuine home buyers. In particular, it has sent a strong signal that the government is prepared to step in to ensure that the mass-market and HDB properties remain affordable, especially to first-time buyers and upgraders. The move is distinctive of the way the government seeks to stabilise the marketplaces and is in line with expectations.

Andrea Ross
Managing Director (Singapore)
Robert Walters Singapore

SINGAPORE is becoming a destination of choice and a number of foreigners are making Singapore their home and therefore investing in buying flats and condominiums, with some even becoming permanent residents to allow them to buy landed property.

Property is a significant topic in Singapore – affecting almost everyone from the lower to middle income, to those who make property purchases for the purpose of investment. It is therefore welcomed that the government is putting adjustments in place to curb speculative activity to protect those individuals who are genuine home buyers.

With the economy picking up and the return of market confidence, lowering the loan-to-value limit on housing loans from 80 per cent to 70 per cent may not be an effective curb, particularly for the higher-income individuals/families and long-term speculators. I do feel that for many speculative buyers, most would probably be flush with enough capital/cash not to feel the pinch. However, it might be a bit of a stretch for the lower-income and even some middle-income families as the initial deposit outlay would now be higher.

I do, however, feel that the principle behind the move should be applauded as it is a positive attempt to cool the market, moderate rising property costs and to put a brake on speculative demand.

The set of measures safeguards the interest of genuine home buyers, those who are owner-occupiers, whilst targeting repeat buyers and speculators who buy and sell over the short term, which is now defined as within three years.

Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd

THE rationale behind most property anti-speculative measures is to prick and contain the bubble. Too strong a move and it dampens the economy and penalises genuine buyers. Too little, the speculative froth goes on to dangerous levels. In my opinion, the recent measures are enough for the moment. Genuine first-time buyers need not fear.

However many buyers are upgraders, and they may be adversely affected. Where previously they hoped to get a better property through a higher valuation of their existing property perhaps even by holding on to it longer after buying the new property, and topping up with a generous available loan amount, they now have to be more circumspect. They also have to be very sure that the property bought is something they are comfortable with, lest they be penalised for an early sale.

Older buyers hoping to buy properties ahead for their children amidst a frenzied fear that properties will be out of reach, would now take comfort that there will always be enough supply, with the government showing a commitment to release public flat units and land sales when needed.

And by addressing the sandwiched class of those earning $8,000 to $10,000, the government is cooling the market further by assuring this cohort they need not worry about being pushed out to the private property sector where prices can go atmospheric and where the government is reluctant to exert a heavy hand.

David Leong
Managing Director
PeopleWorldwide Consulting Pte Ltd

THE fundamental plank in the current cooling-off measures, the third set in two years, is to ensure that property prices are not escalated beyond economic fundamentals and are fuelled by mere speculative activities. Pointedly, these measures will temper sentiments, ensure that buyers will exercise greater financial prudence and create a bias for genuine home buyers for own occupation.

Schemes such as the interest absorption or interest-only loans were concocted and syndicated to encourage new property sales in lacklustre market conditions. But as we move into a state of quite irrational exuberance, such measures should be taken off and rightfully withdrawn from the market to temper the feverish purchases due to low commitment at the front end of the purchase cycle. Should the market turn, which is likely to be since the economic boom-bust cycle is shorter, property buyers and speculators can stare horror in the face and with a possible interest rate hike, the financing costs will severely impact those who have over-extended. In both situations, capital losses, as the market corrects, are imminent.

David Leong

The imposition of a stamp duty on property held for less than three years to curb speculation will eliminate a layer of buyers punting the markets and will substantially reduce the rate of sub-sales.

The most serious thrust by the HDB is its “one and only” policy where the HDB disallows concurrent ownership of HDB flats and private residential properties within the minimum occupation period and that also includes disallowing the concurrent owning of foreign properties. This will impact those investors who purchase an HDB flat and keep their private property for investment purposes and permanent residents (PRs) looking to acquire an HDB flat for their own stay and who owned a foreign property in their country of origin. This will seriously curb buying sprees from PRs who have over the years increased in substantial numbers. This move effectively will force a drop in the cash-over-valuation in the coming months.

This third round and possibly the harshest slew of cooling-off measures in two years will force the market to correct.? Purchasing an HDB flat in Singapore is a privilege extended to all Singaporeans and PRs, and should not be treated as an investment gambit. Private property is open play for anyone, but those in the game must have the gumption, appetite, financial leverage and holding power to last through interest rate hikes and market corrections.

David Low
CEO
Futuristic Store Fixtures Pte Ltd

PROPERTY prices continue to rise with significant surge in the last six months despite measures introduced earlier this year in an attempt to douse the heat. Speculation is rife after the global slump – which is an economic concern if uncontrolled, leading to a likely asset bubble with over-extenders getting the hit. It is timely and appropriate for the government to implement new measures in less than a year, with more severe cash penalty and longer holding period to rein in speculative housing purchases.

These measures should moderate the market without affecting real appreciation, therefore allowing genuine buyers to enter the market at prices based on real demand. Economic conditions do not solely dictate the fortunes of the property market. Global low interest rate environment coupled with stable high employment rate will continue to attract buyers, but the new measures will cool the market at least in the short term.

Dora Hoan
Group CEO
Best World International Ltd

THERE are a number of factors why the Singapore property market is very vibrant. It is propelled by our double-digit economic growth as well as the strong performance of key economies in Asia and most importantly, it is driven by our nation’s attractiveness as an emerging global city.

Singapore ranks as one of the most liveable cities in the world with an enviable lifestyle that has become a magnet for global attention. The downside is that rapid increase in valuations of real property runs the risk of not being sustainable as it grows at an accelerated pace relative to incomes and other economic factors. We are keenly aware that the global financial crisis of recent years had its roots in the bursting of the real estate bubble in the US.

Given all these, I believe the government has done well to put in place necessary mechanisms to prevent any speculative buying that may hurt what should ideally be a robust growth that is in line with our economic fundamentals. While I believe the package of measures is justified and will help to temper the situation, I also am all for policy changes that would strike a balance in promoting both real property investment as well as the energising of entrepreneurial activities as it generates employment, raises national productivity, encourages innovation, and has a remarkable impact on sustainable economic growth.

Teng Yeow Heng Michael
Managing Director
Corporate Turnaround Centre Pte Ltd

I AM heartened to learn that the government has now recognised the need to quickly increase the supply of HDB flats to address the shortage of affordable HDB flats. However, the other policies are a bit untimely and draconian.

The property prices are already moderating as the global economy is again slowing down in the second half of 2010. This recent policy does not curb speculation as there are not many speculators left after the first two policy measures to dampen the real estate market were introduced. Instead, this third policy introduced within a year is an “overkill”. It penalises many genuine investors who own HDB flats and can afford to acquire private property so that their wealth can be enhanced.

The interest rates will remain low and it may not make sense to keep the money in the bank. If they cannot invest their money in Singapore, these Singaporeans will invest their money overseas or venture into other riskier financial instruments with which they are not familiar. This potential outflow of funds will be a loss to Singapore’s real estate.

The policies also hamper caring parents who want to buy property in the future for their children. Notwithstanding the policies, the private real estate prices in Singapore will continue to go up with the foreigners buying in as the land is scarce. Many Singaporeans owning HDB flats will be deprived of an opportunity to do so as they will not want to sell their HDB flats.

Sam Yap
Group Executive Chairman
Cherie Hearts Group International

I WELCOME the government’s proactiveness in introducing tough measures to cool the overheating property market. The new rulings will ward off unhealthy property speculation and help Singaporeans own a home at affordable prices.

However, there should be flexibility for children to receive transfers of property ownership from their parents, regardless of whether they own a property. Curbing unhealthy real estate speculation will bring cheer to genuine home buyers, but we must be careful not to unwittingly bring pain to groups of Singaporean sons and daughters who may be disadvantaged through ill-considered policy deliberations and implementation.

In addition, the government should relook the types of property that HDB is building. To me, HDB should be for the needy and not for luxury living. Projects like the Pinnacle unfairly advantage successful bidders, who gain from taxpayers’ money used in the huge subsidies. Prime areas should be for commercial or private property development, rather than HDB’s.

Pramod Ratwani
President & Executive Chairman
Consilium Software Inc

I FEEL the measures should be fine-tuned. Based on feedback coming from various quarters, a segment of genuine buyers is affected by these measures. Real estate can thrive with strong financing fundamentals and sensible lending, keeping speculative buyers in check as we have seen in countries such as Canada.

With the current measures the property prices will cool down, helping the rich and foreigners to take advantage, which can be counter-productive to the objectives of introducing these measures. Also, foreign ownership monitoring will be a tough task with so many variables such as inherited property where you are part-owner on paper but do not actually have possesion.

Daniel McConaghy
Vice-President and Managing Director
Fico Asia Pacific

THE decisive action taken by government on Aug 30 may just have what it takes to restore market equilibrium and cool speculative activity.

We’ve spent the past 18 months working with our customers – which comprise two-thirds of the top world banks and 90 of the 100 largest US financial institutions – to recover from the housing bubble burst and have more strategically leveraged data to make smarter decisions. The government’s moves will cool before Singapore experiences a similar bubble.

At Fico, we’re monitoring how this affects the mortgage and banking sector. Singapore banks now have an opportunity to assess risks in their business that likely were put on the backburner during the housing boom, when high levels of lending activity forced banks to focus on mortgage portfolios. It’s time for a rebalance, where banks reduce risk by growing unsecured portfolios and deposits. With banks competing more aggressively for deposits, Singaporeans in turn will receive greater return on investment when they’re saving for their home and future.

Gary Harvey
CEO
Wealth Management Asia, ipac

IN taking steps to cool sentiment, the government has taken a pragmatic approach by introducing measures gradually and not repeating its 1996 approach. The latest measures are appropriately targeted at concerns over the affordability of housing, especially in the area of public housing where prices have risen, as demonstrated by the high cash-over-valuations.

The potential risks faced by home owners and investors in the property market should not be underestimated. Should a property bubble continue to form, those who lack the holding power and who disregard the risks involved in real estate investing will suffer when it bursts.

By restricting liquidity for additional mortgages beyond the basic need of a mortgage for the primary residence, the government is also pre-empting the potential problem of investors over-stretching themselves and the banking system when mortgage interest rates revert to more normal levels.

This article was first published in The Business Times.

Bulk deals for high-end apartments picking up http://t.co/nUPH7x4

Bulk deals for high-end apartments picking up

Property funds offload units as prices rise again.

Wed, Sep 15, 2010
The Business Times

SINGAPORE – Bulk deals involving high-end apartments are gathering pace again. Some property funds which invested in Singapore’s upmarket residential sector are taking advantage of a price recovery in this segment to exit their investments.

In the Draycott Park area, a German core fund managed by Morgan Stanley is understood to have recently sold 23 apartments it owned in the Draycott Eight condo for slightly over $157 million or about $2,300 per square foot (psf) of strata area.

The buyer is understood to be a fund managed by Alpha Investment Partners, which is part of Keppel Land group.

The German fund incurred a small loss on its late-2007 purchase price of $2,600 psf. Market watchers say the $2,300 psf sale reflects a discount of perhaps 10-15 per cent to what the units could have fetched if they had been sold on an individual basis. But the divestment reflects the fund’s ongoing plan to monetise assets globally.

Savills Singapore is understood to have brokered the deal, but it declined to comment.

The 23 apartments transacted, most of which are currently leased, are in the same block. Another Morgan Stanley-managed German core fund owns the remaining 23 units in the block, which were purchased at the same time in 2007 at the same $2,600 psf price. For now, the plan is to hold these units, BT understands.

Draycott Eight comprises three 24-storey blocks with a total 136 units. The project, developed by Wing Tai, was completed in 2005 and its site has a balance lease term of about 86 years.

In the Balmoral Road area, Real Estate Capital Asia Partners (Recap), a Singapore-based investment fund, is said to have recently sold 20 apartments at the Sui Generis freehold condo for around $95 million or $1,935 psf. The buyer is understood to be a Singaporean investor.

Recap earlier sold one unit, a 2,594-sq-ft ground floor unit, in June for $4.9 million or $1,889 psf.

The sales represent a nice profit for Recap, which bought 21 units in the project for about $1,260 psf or $65 million in August last year from the project’s developers, United Engineers and Kajima. Sui Generis received temporary occupation permit (TOP) recently.

Recap is headed by Suchad Chiaranussati, who is married to a niece of City Developments executive chairman Kwek Leng Beng.

Meanwhile, Hasetrale Holdings – the controlling shareholder of Napier Properties, developer of the 8 Napier project opposite the US Embassy – has acquired back the 19 freehold units that Napier Properties had sold to an MGPA fund three years ago. This was done in July through Napier Properties director Mark Wee and Hasetrale buying Botanic Investments, the company through which MGPA bought the 19 units in late 2007 at an average price of $3,550 psf.

Botanic had paid a 20 per cent deposit and was due to pay the rest of the purchase price when the project received TOP in June this year. Napier Properties still has some units to sell in the 46-unit project and rather than risk MGPA attempting a subsale below its purchase price, Hasetrale struck a deal to buy MGPA’s stake in the 19 units via Botanic Investments, BT understands.

In another bulk purchase, Arch Capital, linked to the Ayala Group of the Philippines, recently bought all 34 units in Royal Oak at Anderson – formerly known as Anderson Green – for about $200 million or an average price of $2,337 psf.

Some investors who bought apartments in bulk are seeking to sell the units individually to secure higher prices than if they were to divest en bloc.

The ARA Asia Dragon Fund, which purchased 53 units at the Grange Infinite condo in early 2008, has begun to sell the units at an average price of about $3,200 psf, on individual unit basis. The fund’s average purchase price was earlier reported to be in the $2,600-$2,700 psf range.

Above Outram MRT Station, a local investor entity is said to have picked up 30 units earlier this month at Dorsett Residences at an average price of slightly above $1,700 psf during the project’s launch. The units have since been advertised for sale. Most of the units have apparently already been flipped and asking prices for the remaining units are said to be slightly over $2,000 psf.

This article was first published in The Business Times.

Bedok land parcel for sale under DBSS scheme http://t.co/LchRfGp

Bedok land parcel for sale under DBSS scheme

The public housing development is expected to yield 430 housing units. -AsiaOne

Tue, Sep 14, 2010
AsiaOne

The Housing and Development Board (HDB) is launching the 1.67 hectare land parcel Bedok PH1 for sale by public tender under the Design, Build and Sell Scheme (DBSS) today.

The public housing site, located at Bedok Reservoir Crescent, will have a lease term of 103 years. This will include the 48-month construction period.

It is expected to yield 430 dwelling units, with a maximum permissible gross floor area (GFA) of  46,670.96 sq m.

The tender will close at noon on November 2, 2010.

Including this land parcel, DBS would have released for tender 3 DBSS sites with a combined estimated yield of 1,710 flats in 2010 so far.

Two more sites, with an estimated yield of 1,210 tenders will be launched for tender in the coming months.