Wednesday, March 31, 2010

Straits Times: Property in China 'still affordable'

Mar 31, 2010 
Property in China 'still affordable' 
By Gabriel Chen 

CAPITALAND president and chief executive Liew Mun Leong said at a forum yesterday that there is no widespread asset bubble in China, because outside certain major cities, people's mortgage payments have not become unaffordable relative to their incomes.

Mr Liew told students at the National University of Singapore Business School that there are 'speculative forces' in major cities like Beijing, Shanghai, Guangzhou and Shenzhen.

This can be seen from the so-called affordability ratio, which measures the proportion of the actual monthly cost of the mortgage to monthly take-home income, he said.

High numbers were flagged for Shanghai (47 per cent) and Beijing (45 per cent).

However, for the 'whole of China', it was only about 17 per cent - way below the 30 per cent to 40 per cent benchmark of debt service to income which experts regard as the international standard for housing affordability.

Mr Liew urged the Chinese government to continue to rein in speculation and increase the stock of affordable housing.

Affordable housing should come under a different set of policies from high-end housing because strong fundamentals underpin demand, he said. 'Income growth still exceeds housing price growth for affordable housing.'

Mr Liew's comments come at a time when new figures have shown that China's property prices rose at the fastest pace in almost two years last month.

Residential and commercial real-estate prices in 70 cities climbed 10.7 per cent from a year earlier, topping a gain of 9.5 per cent in January.

To cool speculation, the authorities in January re-imposed a tax on houses sold within five years of their purchase, after having cut the taxable period to two years in January last year to bolster the then-flagging market.

Mr Liew said while China has plenty of growth potential, human capital will pose the ultimate challenge.

'China will have 25 million tertiary students in 2010 but by this time, China will need 75,000 top level executives with global experience. Where will they come from? How will they be trained?' he questioned.

Still, the rise of China is unstoppable, at least for now, he said.

'There will be a rebalancing of global economic power between Asia/China and the rest of the world. The world has to adapt to this new rebalance of economic power and China too has to adapt to her new role in the changing economic world to sustain its renaissance growth.'

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: Tender for Yishun DBSS site launched

March 31, 2010
Tender for Yishun DBSS site launched

THE Housing and Development Board (HDB) has launched a land parcel in Yishun for sale under its design, build and sell scheme (DBSS). Around 700 flats can be built on the site located at the junction of Yishun Avenue 11 and Yishun Central. 

Analysts estimate that the top bid could be in the region of $132-166 million, which translates to around $160-200 per square foot (psf) per plot ratio. They added that the site should draw healthy interest from developers. 'Developers, especially those with a construction arm, will be keen on the site,' said Ngee Ann Polytechnic real estate lecturer Nicholas Mak. 'If the flats there are priced sensibly, they will be well taken up.'

The site will also be popular because it is in a mature housing estate, said PropNex chief executive Mohamed Ismail. He expects flats on the site to sell for around $400 psf eventually. 

Others have pricier estimates. Eugene Lim, associate director for ERA Asia-Pacific, said that a three- bedroom flat of around 1,100 sq ft on the site could sell for around $600,000, which works out to $545 psf.

HDB also said that it will continue to monitor demand for public housing and release more sites for development under the design, build and sell scheme in coming months if there is demand.

Under the scheme, the developer who wins a site will enjoy some flexibility in designing, pricing and selling the flats. But flats will still be sold only to buyers who meet HDB eligibility conditions. 

HDB has offered a total of 3,653 new flats under its build-to-order scheme in Q1 2010. Potential flat buyers can also look forward to another 1,200 flats in Punggol in April. 

These launches are part of HDB's plans to offer at least 12,000 new build-to-order flats this year - or even more if there is demand. The new projects will be spread across various locations such as Punggol, Sengkang, Yishun and Jurong West. The tender for the site in Yishun will close at noon on May 18. 

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: Sales of new private homes double to nearly 4,000 in Q1

March 31, 2010
Sales of new private homes double to nearly 4,000 in Q1
Overall prices rise 2-5%, with new highs in resale prices in some segments

(SINGAPORE) Demand for new private homes in the first quarter of 2010 more than doubled compared to Q4 2009, according to a new report. Close to 4,000 new units were sold in Q1 2010, compared to only 1,860 in the previous quarter.

The report, by CB Richard Ellis (CBRE), also said that overall private home prices rose by 2-5 per cent in Q1 2010. The price growth was supported mainly by resale transactions as developers maintained the prices of new launches in the same locations at last quarter's levels. 

In fact, resale prices in some segments hit new highs in Q1. Research from DTZ shows that resale prices of freehold landed homes as well as leasehold apartments outside the prime districts (a proxy for mass market homes) saw new peaks in Q1 2010.

Buyers continued to be out in force despite compressed yields, government measures and the large number of new land sites released during the quarter by the government.

'Many investors are buying in anticipation of future rises in rents and prices as the economy is improving and the long-term fundamentals of Singapore are strong,' said DTZ's executive director for residential Margaret Thean.

In the prime districts of 9, 10 and 11, the average resale price for freehold landed homes rose by 5.7 per cent to reach a new high of $1,529 per square foot (psf) in Q1 - a 28.2 per cent rebound from the bottom one year ago. Resale prices of landed properties have now climbed for three consecutive quarters.

Prices of leasehold homes outside the prime districts (mass market homes) also hit a new peak. Non-landed resale home prices rose 2.1 per cent to $623 psf in Q1 2010, surpassing the $615 psf achieved in Q4 2007.

But the resale prices of luxury and prime freehold non-landed homes are still some 10.7 per cent and 1.9 per cent respectively below their previous highs, DTZ said. Prices of luxury homes rose 4.2 per cent to $2,500 psf in Q1, while prices of prime homes climbed by a smaller 3.7 per cent to $1,456 psf. 

The two segments still have room to gain as market interest has shifted from mass market to luxury and prime freehold homes. 

'Most of the new launches in the first quarter were freehold projects located in prime districts 9, 10 and 11,' noted Joseph Tan, CBRE's executive director for residential. These included Cube 8, Holland Residences, The Laurels and Waterscape. Sales were also strong for upmarket projects in the central business district. In Tanjong Pagar, the takeup at Altez and 76 Shenton Way was brisk because of their city locations and composition of small apartments.

The buyer profile for new units also changed substantially in Q1. Based on caveats lodged to date, about 33.7 per cent of the buyers in the first quarter of 2010 were HDB addressees (who can be considered HDB upgraders), CBRE said. The proportion of HDB upgraders in Q1 is lower than the 63.7 per cent of HDB upgraders who bought new homes a year ago in the first quarter of 2009, after the lull in 2008.

Added Mr Tan: 'Most of the new launches then were mass-market type projects such as Caspian, Double Bay Residences and Mi Casa. In the first quarter of 2010, most of the projects launched were more upmarket and are located in the prime districts of Sentosa Cove and in the Downtown Core.' 

Foreigners bought around 23.5 per cent of the new homes in Q1 2010. The top three nationalities were Indonesians, Malaysians and PRC Chinese.

CBRE expects the take-up of new homes to fall to around 3,000 units in the second quarter of 2010. Home prices are expected to rise at a gradual pace, held in check by the government measures.

Chua Chor Hoon, head of DTZ's South-east Asia research unit, likewise said that if the buying fever and price increase continue or intensify, more government measures are likely to be introduced. She expects private home prices to climb by 5-15 per cent in 2010.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: 60 Goodwood Residence units sold in past 2 weekends

March 30, 2010
60 Goodwood Residence units sold in past 2 weekends
However, at Sentosa Cove, buyers spoilt for choice from 3 projects on offer

(SINGAPORE) Malaysian tycoon Quek Leng Chan's GuocoLand has sold 60 units at the freehold Goodwood Residence along prime Bukit Timah Road over the past two weekends at prices ranging from $2,355 psf to $2,555 psf for typical units.

Mr Quek himself picked up the biggest unit in the 12-storey project - a penthouse - for $18.8 million. His brother Leng Hai purchased another penthouse for slightly over $13.8 million and their sister Guat Kim bought an apartment on the eighth floor for about $6.03 million, according to statutory filings by Guoco-Land to the Singapore Exchange.

However, it was a mixed bag of results last week at Sentosa Cove for developers of three 99-year leasehold condo projects as they laboured to move units to savvy buyers who were comparing the relative merits of the three developments against their pricing.

Of the three Sentosa Cove projects, the best sales result was achieved by the joint venture between Ho Bee and Malaysia's IOI; it sold 25 of the 40 units released at the 151-unit condo The Seascape. The development has a better orientation - directly facing the sea and located in Sentosa Cove's choicer Southern Residential Precinct - than the other two projects on offer in the waterfront housing precinct.

The Seascape units sold comprise 18 three-bedroom apartments, six four-bedders and a penthouse. The Seascape does not have smaller units such as two bedders. The majority of the buyers were Singaporeans. About a quarter of the units were purchased by foreigners - from the US, Malaysia and Hong Kong.

The 25 units fetched an average price of about $2,700 psf, with achieved prices ranging from $2,619 psf to $2,880 psf. The sole penthouse sold was a four-bedroom unit of 4,252 sq ft on the sixth level; it sold for nearly $12 million. The Seascape is an eight-storey project with an attic level.

City Developments Ltd (CDL) said it has sold 14 of 56 units units released at the weekend at its 228-unit condo, The Residences at W Singapore Sentosa Cove. The units were released at $2,500-$3,000 psf. The condo comprises two- to four-bedroom apartments as well as penthouses. BT understands the units snapped up were mostly two and three bedders.

Lippo Group, which relaunched Marina Collection last week, is understood to have received expressions of interest from potential buyers but these have yet to translate into sales. Some potential buyers are said to have tried to seek discounts off Lippo's $2,500-2,700 psf pricing.

'This is the first time buyers have a choice of three new projects from developers at Sentosa Cove, whereas in the past, it was usually one launch at a time. So for now, buyers have the luxury of choice and the time to think about their purchase,' said a property agent.

Buyers who visited Goodwood Residence's showflat were drawn by the greenery of the location as well as within the proposed development, GuocoLand Singapore managing director Trina Loh told BT yesterday.

The site shares a 150-metre boundary with the Goodwood Hill tree conservation area. The development will also have about 500 trees planted to complement the existing 58 preserved tree. A manicured lawn of about 60 metres by 30 metres, greenwalls, two tennis courts and an Olympic-size swimming pool are among the other offerings.

GuocoLand has previewed the 12-storey project this month in Hong Kong and Singapore. Of the 60 units sold lately, 40 per cent were clinched by foreigners, led by Indonesians. Other foreign buyers include Malaysians, Australians, Indians and Europeans.

Two-bedroom apartments (of about 1,100 sq ft) in the development cost about $2.8 million on average, while the four-bedroom deluxe units - which have been popular - are priced at about $7.5 million on average. The average price of typical units among the 60 units transacted lately is $2,409 psf, according to Mrs Loh. In June 2008, Kuwait Finance House acquired 36 units in the condo at an average price of $2,800 psf. The project has a total 210 units.

Property giant Far East Organization sold a total 25 homes last week. The units span the group's portfolio of projects, from the upgrader market to the luxury segment, and last week's take-up was comparable to the preceding week, says the developer's chief operating officer, property sales, Chia Boon Kuah.

High-end properties were also in demand at property auctions last week. An auction conducted by DTZ saw a one-bedroom unit of 775 sq ft at the freehold Claymore Plaza sold for $1.55 million or about $2,000 psf. A fourth floor studio apartment of 882 sq ft at The Beaumont, a freehold development at Devonshire Road, changed hands for $2,131 psf or $1.88 million at the same auction. Colliers International at its auction sold a 16th floor, 5-plus-1 bedroom apartment, of 2,701 sq ft for about $2,007 psf or $5.42 million. The buyer is Malaysian.

This weekend, market watchers expect CapitaLand to release new units at The InterLace in the Alexandra Road area.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: From non-core to preferred asset

March 30, 2010
From non-core to preferred asset
It's clear skies for the industrial investment market with the influx of foreign investors, say LEE PEI YING and DONALD HAN

THERE has been a change in foreign investors' perception of the industrial market over the last 10 years. Industrial properties have evolved from being a non-core investment product to a preferred asset class. This became more marked around 2008. Before that, en bloc industrial investment deals were dominated by local players, primarily Ascendas, A-Reit, Cambridge Industrial Trust and Mapletree Logistics Trust. 

Post-2008, foreign and institutional investors started paying more attention to this sector once ruled by the local Reits. For instance, prior to 2008, foreign investors accounted for only one per cent of the total value and number of en block industrial transactions.

The change in attitude came about in 2008, when the proportion of the total value and number of en bloc industrial transactions jumped to 52 per cent and 24 per cent in favour of foreign funds. In the first three months of this year, foreign funds were responsible for almost 60 per cent of the en bloc industrial sales value and 67 per cent of the transactions.

Higher yields derived from industrial properties were deemed as one pivotal reason. The lure of an improving economy is likely to see more foreign investors jumping on the bandwagon. This may lead to further yield compression in the medium term.

Let's analyse the reasons behind the increasing appetite of foreign investors for this asset class.

* Chasing higher yields 

Traditional asset classes such as residential, office, retail and hospitality properties yield between 3.5 per cent and 5.5 per cent annually. Average cost of funds for foreign investors range between 3.5 per cent and 4.5 per cent for a Sing dollar loan. Investors from the US and Europe need a higher hurdle rate to justify investing abroad. In their respective property markets, they can achieve yields of 6 per cent a year. For investors to venture abroad, they need a buffer of 100-150 basis points above their 6 per cent yield to justify undertaking the risk of a foreign investment risk. Industrial properties here can provide such high returns, and are deemed a safer bet. 

* Syariah-compliant investments

The buyers' landscape changed significantly in 2008, when JTC Corp offloaded $1.7 billion of its assets to Mapletree Industrial Reit and the Bahrain-based Arcapita Bank. It was the latter's first foray into the Singapore property market.

Arcapita and its fund were on the lookout for Syariah- compliant investment opportunities in the region. Together with Mapletree, Arcapita bought into a majority 56.5 per cent stake. This comprised, among others, 39 blocks of flatted factories, six stack-up industrial buildings and three multi-tenanted business parks.

Under Syariah mandate, investors are not allowed to invest in properties where the tenants are involved in the sale or consumption of alcohol and cigarettes or are in the business of banking and finance, since Syariah laws prohibit the collection of interest. This leaves out market sectors such as prime offices (where tenants are mainly financial institutions) , shops and hotels. Investments in industrial properties provide the perfect gateway. Another Middle Eastern investment group, Dubai-based Emirates Tarian Capital, recently purchased 29 Tai Seng Avenue for $53 million, with a leaseback to its vendor, Natural Cool, for 10 years. This would generate an annual yield in excess of 8 per cent.

* Asset diversification

Core investors such as German funds SEB and Union Investments Real Estate invest in prime office premises in the financial district. SEB bought a 50 per cent stake in 79 Anson Road and 12 floors of Springleaf Tower in 2007. Union Investments Real Estate purchased Vision Crest Commercial, including the adjacent Chicago School of Business, in 2007. In 2008, these investors turned to industrial property as part of an asset diversification strategy. SEB paid $200 million to buy Starhub Green, a 412,000 sq ft high-tech industrial building at Ubi Avenue 1. Union Investment acquired Applied Materials Building, located at Changi Business Park. 

* Abundant industrial alternatives

There is a lot of money in the market chasing prime office assets. The recently reported sale of Robinson Point and 1 Finlayson Green clearly demonstrates the amount of ready cash, liquidity and available buyers in the market eyeing prime office properties.

Foreign (and local) investors are hungry for core office assets and there isn't enough investment stock out there for sale. This inadvertently pushes up the sale price despite a softening rental environment, thus suppressing yields to the current sub-5 per cent level. It is estimated that there are no less than 20 foreign investors in Singapore looking for prime office investments (anything in the range of $20 million to $500 million) and they could not engage in serious negotiations over the past six months as sellers raised prices. The dearth of office investment deals has swung investors' attention to industrial assets such as business parks and high-tech industrial buildings instead. 

* Long leases

Industrial properties, particularly owner occupied ones, are sold on a leaseback basis, often presenting investors with attractive long secured leases. Sale and leaseback premises offer the security of tenures from five years to as long as the land lease itself (up to 30 years). Such long leases are seldom found in office assets, and even if they exist, are seldom offered for sale. 

In 2007, when office rents hit the stratosphere, major office users such as DBS Bank, Standard Chartered Bank and Citibank started looking at minimising occupancy cost and decentralising backroom operations to suburban business parks. They would build to suit, lease back (almost) in entirety and monetise the assets by selling them to institutional investors, funds and Reits. Such assets remain one of the favourite investment options of foreign funds. These properties are usually leased back to reputable occupiers, providing financial warranties and a stable income base. These assets present defensive characteristics to investors, minimising risk of short term space vacancies and rental cycles. 

* Niche asset play

Foreign fund managers are always looking for a growing niche sector to put their investors' money in. A niche play has benefits. Firstly, it provides the necessary product differentiation that helps separate one fund from another. Secondly, if the right strategy is adopted, one can be a substantial player in a niche sector, enabling some control over market pricing. 

Avery Strategic Investment did just that and invested in a niche asset class where there were hardly any competitors. They went in, took control of a niche market and raised standards. Their investment - workers' dormitories - is classified under industrial use. The venture is controlled by US-based Morgan Stanley and Averic Capital Management, the asset managers with a stake of 97 per cent and 3 per cent respectively. 

Together, they bought three foreign workers' dormitories (Kian Teck Dormitory in Jurong, Woodlands Dormitory and Tampines Dormitory, totalling 13,544 beds) from JTC Corp in 2008 for $153 million. A $100 million 'upmarket' dormitory called Avery Lodge housing 8,000 workers was also built and is now the largest dormitory in Singapore. Amenities and features include dining and kitchen areas, bay windows, larger floor-to-ceiling heights and space per worker, gym, video game room, sick bay, Internet cafe, mini-mart, canteen, biometric card access and 24-hour guard patrols. Avery Strategic Investment is now one of the largest developers and owners of workers' dormitories in Singapore. 

Investors with bigger appetites can embark on an Arcapita-style acquisition by buying stakes in a company. Investing via the company route allows the investor to gain control of a larger asset chunk instead of slowly accumulating properties on an organic basis. AMP Capital Investors, headquartered in Australia, recently made headlines by acquiring 16.1 per cent of MacarthurCook Industrial Reit, listed on the Singapore Exchange (SGX). The Reit was later renamed Aims AMPCI Reit and its portfolio consists of 25 industrial properties in Singapore and Japan, with an appraised value of $637.4 million (as at Sept 30, 2009). 

ARA Asset Management, an affiliate of the Cheung Kong group, recently made its maiden foray into industrial property through a joint venture with listed CWT. The company, known as ARA-CWT Trust Management and 60 per cent owned by ARA, will invest mainly in logistics properties in Singapore and the Asia-Pacific. 

This new regional logistics real estate investment trust - to be called Cache Logistics Trust when listed on SGX - will initially have a portfolio of six high-quality logistics properties, injected into the Reit by its operators and owners as part of a sale and leaseback arrangement, with an aggregate gross floor area of 3.86 million sq ft and a value of about $730 million. 

As Singapore strengthens its position as a premier logistics and value-add centre in the Asia-Pacific, we can expect more investment dollars to be pumped into this sector. More high value-add manufacturing businesses will be lured to set up operation in Singapore to take advantage of its seamless infrastructure and various tax incentives. Last year, the Economic Development Board brought in some $11.8 billion worth fixed asset investments. This figure is likely to rise in 2010 with the recovering economy. 

We expect more foreign investors to start taking notice of the industrial sector here. Local developers too are taking the cue from the active industrial investment market by re-igniting a slew of industrial development projects. 

Since July last year, three industrial sites have been successfully triggered and sold to private developers. Two more sites, in Woodlands and Yishun, have just been triggered after receiving minimum bids. Developers are likely to remain confident in the medium to long term with an improving leasing market. They can then offload completed projects to investors such as Reits and funds, ploughing funds back to develop more industrial properties. 

Right now, it's clear skies ahead for the industrial investment market with the influx of foreign investors. What a remarkable transformation this sector has undergone over the decade.

Lee Pei Ying is research analyst and Donald Han, managing director, of Cushman & Wakefield

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: Stamford Land may sell Perth tower for A$140m: report

March 30, 2010
Stamford Land may sell Perth tower for A$140m: report

(SINGAPORE) Stamford Land Corporation could be selling its Grade A office tower in Perth's central business district for at least A$140 million (S$179 million).

According to The West Australian, the 13-storey Dynons Plaza at Hay Street is under construction and Stamford Land is 'gearing up to place the asset on the market'.

Industry sources told the Australian paper that the building has a value of A$130-140 million. Chevron will be leasing the entire place - which has 13,000 square metres of office space - when it is ready in the next few weeks.

'It is a new building, a quality long-term lease, so those sorts of assets are attractive to the market,' said Colliers International director of investment sales Ian Mickle to The West Australian.

BT understands that Stamford Land is expecting offers of more than A$140 million. This could reap a considerable profit for the company given that the total cost of buying, holding and developing the land could have come up to some A$80-90 million.

Dynons Plaza is located next to Woodside Plaza, which serves as the headquarters for another energy firm Woodside Petroleum. 

The Dynons Plaza site is part of a bigger parcel which Stamford Land bought for A$20 million in 1996. The company has sold the other parts of the land.

The West Australian reported that Stamford Land had originally planned to build a five-star hotel at the Hay Street site, but it later constructed an office block when there was no business case for a hotel.

The change seems to be working in Stamford Land's favour. BT understands that Chevron's lease for Dynons Plaza lasts for ten years, and its rents are set to escalate every year. Despite this, Stamford Land is said to be selling the site to focus on its core business of running luxury hotels.

Stamford owns and operates Stamford Hotels in Australia and New Zealand. The Singapore-listed counter gained 1.5 cents to close at 47.5 cents yesterday.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: UK mortgage approvals fall to 9-month low

March 30, 2010
UK mortgage approvals fall to 9-month low
Lenders grant 47,094 home loans in Feb, down from 48,099 in Jan

(LONDON) UK mortgage approvals unexpectedly fell to a nine-month low in February, adding to signs that credit constraints are impeding the housing market's recovery.

Lenders granted 47,094 loans to buy homes, compared with 48,099 in January, the Bank of England (BOE) said yesterday in London. That was the lowest since May. The median of 19 economist forecasts in a Bloomberg News survey was for 48,400. 

Britain's property market is showing signs of faltering as the economy struggles to cement its recovery from the worst recession since World War II.

Prime Minister Gordon Brown's Labour Party, which faces an election by June, last week eliminated a tax for most first-time home buyers in a bid to unblock strains in the market.

'This reinforces our belief that house prices will be no more than flat this year,' said Howard Archer, an economist at IHS Global Insight in London. 

'The government's stamp-duty holiday will probably give the market a boost but the economic fundamentals of the housing market are pretty poor at the moment.'

Yesterday's mortgage approval figure compares with a low of 26,600 at the trough of the financial crisis in November 2008, though it's still less than half the 120,000 reading at the peak of the boom.

Recent data on house prices have been mixed. Hometrack Ltd said on March 23 prices rose 0.3 per cent this month from February, while Lloyds Banking Group plc's Halifax division says the average cost of a home fell 1.5 per cent last month.

Mr Brown's government, which is narrowing the gap in opinion polls with the opposition Conservatives, is trying to help potential homebuyers in the run-up to the election.

Chancellor of the Exchequer Alistair Darling last week scrapped a tax on house purchases for first-time buyers spending £250,000 (S$524,273) or less. The tax previously started at one per cent for properties costing more than £125,000.

Mr Darling said the policy will mean nine in 10 first-time buyers will avoid the levy.

A ComRes Ltd poll conducted after Mr Darling ended his Budget speech on March 24 showed 33 per cent of respondents now trust him and Mr Brown to run the economy, compared to 27 per cent favouring the opposition Conservatives.

The BOE said net mortgage lending rose £1.6 billion, the most since December 2008.

Yesterday's report showed that households added to their unsecured debts in February. Net consumer credit rose by £528 million. Economists predicted a £400 million increase, according to the median of 15 forecasts in a Bloomberg survey. 

Credit-card lending increased £374 million, while personal loans and overdrafts climbed by £154 million. 

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: Slower rise for London luxury-home prices

March 30, 2010
Slower rise for London luxury-home prices
Prospect of lower bonuses for bankers, increased taxes for higher earners cited

(LONDON) Luxury-home prices in central London increased at the slowest rate since a recovery started a year ago on the prospect of lower bonuses for bankers and increased taxes for higher earners, Savills plc said.

The average value of houses and apartments costing more than £1 million (S$2.1 million) increased 3 per cent in the first quarter from the previous three months, according to the London-based property broker.

Prices gained almost 17 per cent from the year-earlier period, when an 18-month slide ended.

'Some of the heat has come out of the market,' said Yolande Barnes, head of residential research. 'We've also yet to see any significant influx of bonus money, suggesting buyers are still keeping their options open.'

The British government announced in December a one-time 50 per cent tax on bonuses exceeding £25,000 paid to bankers in the current fiscal year. This was in response to the outcry over their compensation following state bailouts or aid that enabled banks to weather the financial crisis.

Ms Barnes predicts that prices will decline one per cent this year, following an 8.8 per cent gain in 2009, as the fragile economic recovery and higher taxes on luxury properties damp buyers' appetite to buy homes in neighbourhoods like Chelsea, Kensington and Belgravia.

For properties worth more than £10 million, prices were 6.8 per cent higher than a year ago. 'This sector of the market was far more resilient in the downturn, growing throughout most of 2008,' Savills said.

Next month, a 50 per cent tax on earnings exceeding £150,000 also takes effect and the governing Labour Party will be campaigning to win a fourth term in legislative elections that must be held by June.

Chancellor of the Exchequer Alistair Darling last week announced that the property transfer tax, known as stamp duty, for homes costing more than £1 million will be lifted to 5 per cent from 4 per cent starting in April 2011.

'With the expectation of a second, more unforgiving Budget later this year, activity is already noticeable lower as buyers wait to see how the wind blows,' said Charlie Ellingworth, founder of Property Vision, the unit of HSBC Private Bank that advises wealthy buyers. 

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: New home price index makes a light splash

March 30, 2010
New home price index makes a light splash
Much-anticipated index shows private home prices edged up just 0.2% in February

(SINGAPORE) Prices of non-landed private homes held steady in February, a new index set up to track residential property prices here shows.

The Singapore Residential Price Index, or SRPI, showed that private home prices across the island rose just 0.2 per cent month-on-month in February 2010, after climbing 2.2 per cent in January.

But the gains come on the back of a 22.2 per cent rise in 2009 - putting the index's current value just 0.4 per cent below its peak in November 2007.

The new index, which is compiled by the Institute of Real Estate Studies at the National University of Singapore, was set up last week to serve as a resource for developing property derivatives in Singapore. It tracks month-on-month price movements in the private non-landed residential property market using a basket of 364 completed projects.

By contrast, the official Urban Redevelopment Authority (URA) private residential property price index, which is released every quarter, includes transactions at new launches and sub-sales.

According to the URA index, private home prices hit a recent high in the second quarter of 2008 - before falling for the next four quarters. Home prices then recovered somewhat, rising 15.8 per cent in Q3 2009 and 7.4 per cent in Q4. But the URA index is still some 6.6 per cent off its recent Q2 2008 peak.

Analysts said that the SRPI moved up only slightly in February as most of the market activity centred around new launches.

Developers sold 1,196 new homes in February 2010 (slightly less than the 1,480 new homes sold in January). But market watchers said that in the resale market (sales of units in completed projects) there was a larger month-on-month fall in the transaction volume.

'The new index is for completed properties and most of the price movements and market activity over the last few weeks have been seen for new launches,' said Colin Tan, director of research and consultancy at Chesterton Suntec International. 'Prices at completed properties are also more stable as these projects tend to draw a different type of investors as compared to new launches.'

Tay Huey Ying, Colliers' director for research and advisory, similarly said that the index was flat in February 2010 as only properties completed between October 1998 and September 2009 are included in the basket.

Associate Professor Lum Sau Kim, who leads the group that compiles the new index, said one key feature of the SRPI is that it is not too affected by new launches. It is also designed to not be unduly influenced by low transaction volumes in a quiet market.

She attributed the marginal movement in the index for February to the Chinese New Year season, when buying activity traditionally tapers off.

The SRPI also showed a drop in home prices in the central region (postal districts 1-4 and 9-11) in February. Prices there fell 0.1 per cent last month after climbing 1.6 per cent in January.

For the whole of 2009, prices in the central region rose 27.3 per cent. But prices in the central region are still around 10 per cent off the pre-crisis peak, according to the index.

Elsewhere, prices in the non-central areas rose 0.5 per cent in February after climbing 2.7 per cent in January. Private home prices in the non-central regions have now exceeded the pre-crisis peak.

Analysts predict that when the URA flash estimates are released early next month, it will show that private home prices climbed 5-8 per cent in the first quarter of 2010.

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Straits Times: District 15 still the top draw

Mar 30, 2010 
District 15 still the top draw 
Attractions include sea views and food haunts
By Joyce Teo 

WHETHER the property market is up or down, some areas are always popular, according to new analyses from property consultancy Savills Singapore. 

Its list of perennial property hot spots includes one surprise locale far from the city centre.

District 15, which includes the Katong, Joo Chiat, Amber Road, Marine Parade and Tanjong Rhu areas, consistently topped all 28 regions in terms of the number of non-landed resale homes sold from 2007 to February this year. Savills Research found 4,289 resale non-landed deals were done in the three-year period.

District 10, consisting of the Ardmore, Bukit Timah, Holland Road and Tanglin areas, was No. 2, with 3,622 transactions.

District 23 came in a surprise third, and registered the highest price growth of the top 10 hot spots, with prices rising 25.5 per cent. It takes in Hillview, Dairy Farm, Bukit Panjang and Choa Chu Kang, and had 2,837 sales.

If transactions in 2007 were excluded, District 23 would have surpassed District 10 in popularity. In other words, District 23 has become the second most popular hot spot for non-landed resale homes since 2008. 

Ms Christine Sun, Savills' senior manager for research and consultancy, said demand in District 23 could be due to attractive pricing, as the average unit price registered from 2007 to last year was still within the $500-$600 per sq ft range. Average prices reached $649 psf in the first two months of this year.

Given its proximity to the Bukit Timah belt and the nature reserves, this district has an edge over other areas in that price range, such as Tampines, Pasir Ris, Serangoon Gardens, Hougang and Punggol, Ms Sun added.

There are also a lot of developments in the area, such as The Warren, The Petals, The Madeira, Cashew Heights, Dairy Farm Estate, Regent Heights, Hillview Regency and Guilin View.

Ms Sun said the popularity of resale homes in District 15 may have been driven by the many launches in the area. Prices have risen in line with the launches, which draw attention to the area, she explained. 

New launches since 2007 include Aalto, Parc Seabreeze, Silversea and The Seafront on Meyer. 'People think the area is becoming hot and they start to see value in the area,' she said.

Property experts said the area's appeal lies in its sea views and proximity to well-known food places, the airport and the city. 'It is an established residential area with ample amenities,' said DTZ head of South-east Asia research Chua Chor Hoon. 

'There's also a wide range of prices to suit different budgets, from the bigger, higher-priced condos in Tanjong Rhu to the small developments in Telok Kurau.'

Said Ms Sun: 'In general, the next best areas to live in outside of Districts 9, 10 and 11 are in District 15, largely because of the sea view and the many good schools there such as Tao Nan School, CHIJ (Katong) Primary, Victoria Junior College and Chung Cheng High School.'

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: 'District 15 has quite a big catchment of private homes so that may be why it has a high number of resale deals.

'It has also been popular with the middle class and the upper middle class for a long time.'

Popular projects in District 15 include Water Place, The Waterside, Neptune Court, Mandarin Gardens and Cote D'Azur, Ms Sun said.

It came as no surprise that District 10, as a prime location, is popular with foreigners. Demand for homes in this area fell significantly in 2008 but has recovered somewhat since, she added.

Still, District 10 resale non-landed homes showed just 2.3 per cent growth in prices since 2007, from $1,386 psf in 2007 to $1,417 psf in the first two months of this year.

District 15 registered 14.8 per cent price growth, from $783 psf in 2007 to $899 psf on average in January and February this year.

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Straits Times: More living near parents: HDB

Mar 30, 2010 
More living near parents: HDB 
Study of 8,000 households shows HDB policies work
By Ang Yiying 

MORE married children now live in the same estate as their parents.

The proportion of such children rose from 29.3 per cent in 1998 to 35.5 per cent in 2008, according to a 2008 Housing Board survey of around 8,000 households. 

The count comprises married children, aged 21 to 54, who live in the same flat, the same block, a neighbouring block or a block in the same estate as their parents. 

HDB said it saw the 6 percentage point rise over 10 years as an encouraging sign that its housing policies to get people to live near their parents were a step in the right direction. 

Since getting married in 2001, store assistant Kok Chee Keong, 43, and his wife have been living one floor below his parents in Ang Mo Kio. It was a deliberate choice, borne out of his desire to take care of them.

'My parents are getting old,' he said of his 72-year-old father and 69-year-old mother, who had until last year helped baby-sit his children who are aged seven and eight.

The HDB survey did not ask respondents why they chose to live with or near their parents but noted that such couples usually have children aged 12 and below or no children.

HDB said the findings suggest that such families appreciate the benefits of living near their parents for the convenience of childcare or meal-sharing.

But Assistant Professor Chung Wai Keung, a sociologist at the Singapore Management University, was more cautious about drawing too many inferences from the 6 percentage point rise. 

He said he did not think the increase was particularly significant over a decade, and that the trend could be a result of more opportunities for the younger generation to buy resale flats in mature estates. 

Another trend revealed in the survey: The number of married residents living under the same roof as their parents also rose over the same time period, from 10.7 per cent to 14 per cent. 

For some though, this was a temporary arrangement while they waited for their new flats to be completed. 

Mr Edmund Ang Yew Huat, 30, and his wife have been living with his parents in Holland Close since they got married in January.

It will be five years before the young couple's flat in nearby Queenstown is ready. 

Mr Ang, an executive in a non-profit organisation, said he and his wife could have had a shorter wait had they gone for a new flat in Punggol, but he ruled it out.

'My parents didn't want me to live so far away,' he said.

For some couples though, proximity to their parents' home was less important than the cost of their flat and how soon they could get it. 

Teacher Simranpal Singh Sandhu, 29, and his wife would have liked to live near his parents in Yishun. But they found the cash-over-valuation of four-room resale flats there too high and opted for a new flat in Boon Keng instead. 

The flat is not cheaper than the ones in Yishun, which cost over $300,000, but they do not need to pay cash upfront and can move into the flat in six months or so.

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Martin Koh/ Sherry Tang
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Straits Times: JTC unveils cleantech building

Mar 30, 2010 
JTC unveils cleantech building 
$90m Cleantech One will offer space for up to 50 green businesses
By Jessica Cheam 

INDUSTRIAL landlord JTC Corp has unveiled the first cutting-edge building to be built at Singapore's recently announced Cleantech Park for green businesses on Nanyang Avenue.

The $90 million building - called Cleantech One - will offer about 404,000 sq ft of office space that can house up to 50 green businesses when it is completed by December next year.

The building will incorporate state-of- the-art green features such as solar energy systems, rainwater harvesting, sky gardens and sustainable construction, said JTC at a briefing yesterday.

'If the solutions we implement are successful, we will replicate this throughout the rest of the Cleantech Park and share it with the rest of Singapore and the region,' said JTC's director of aerospace, marine and cleantech cluster, Ms Tang Wai Yee. 

The masterplan for the Cleantech Park - which will be Singapore's first business park catering to green firms - was announced last month by JTC and the Economic Development Board (EDB).

When fully completed in 2030, the 50ha park will create 20,000 'green-collar' jobs. It will be built in three phases at an infrastructure cost of $52 million, which does not include buildings.

The park will also serve as Singapore's first large-scale integrated development, allowing firms to test-bed cleantech products and solutions - especially those catering to the tropics - before they are commercialised for the market.

JTC launched a design competition for the park's first building last December and local architecture firm Surbana International Consultants emerged the winner from 31 entries.

JTC said Surbana's entry won for its ecological features and highly compact design, which will offer office and laboratory space specially catering to cleantech firms.

Surbana senior vice-president (architecture) Frven Lim said yesterday that the building's main features include a green corridor to connect tenants to the green centre of the Cleantech Park.

'Cleantech One will also feature a 'living atrium' where tenants can interact in a lush, green landscape that is well- ventilated and makes use of natural lighting,' he said.

JTC is aiming for the building to achieve the highest accolade for environmental performance - the Green Mark Platinum award.

Construction of the six-storey building will begin in June.

The park is located next to the Nanyang Technological University (NTU), which will be Cleantech One's first tenant. 

JTC said it is in discussions with other firms which may be interested in taking space at the building.

Team Marshe
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Straits Times: Mah to meet HK housing officials

Mar 30, 2010 
Mah to meet HK housing officials 

NATIONAL Development Minister Mah Bow Tan is on a three-day working trip to Hong Kong, starting today. 

He will meet senior officials from the Transport and Housing Bureau, the Hong Kong Housing Authority, and the Estate Agents Authority, to learn more about their experiences in regulating

real estate agents, said the Ministry of National Development in a statement yesterday.

The ministry had announced plans last October to improve the industry's professionalism, including setting up a new regulatory authority, an accredited industry body and an independent tribunal for dispute resolution.

Complaints against such agents have risen in the past few years in tandem with Singapore's property boom.

The ministry said yesterday the details of the new framework will be announced within the next few months.

Mr Mah is being accompanied by ministry officials, and will also take the opportunity to update himself on public housing and other developments in Hong Kong, said the ministry.

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Straits Times: Sentosa Cove condos post strong sales

Mar 30, 2010 
Sentosa Cove condos post strong sales 
By Gabriel Chen 

ABOUT a quarter of the 56 units released for The Residences at W Singapore Sentosa Cove were sold over the weekend for prices starting at $3.4 million.

This upscale condominium, which is part of the trendy 'W' boutique hotel brand, is being built by City Developments. Its spokesman said the price achieved during the exclusive by-invitation- only preview was in line with its launch price of between $2,500 per sq ft (psf) and $3,000 psf.

He said 40 per cent of the buyers were foreigners who were drawn by the project's 'unique lifestyle concept', particularly its strategic location in Sentosa Cove. It is located within the only integrated development in Sentosa Cove - the Quayside Isle, which will house trendy cafes, restaurants, speciality shops and entertainment spots.

The condo will boast 228 apartments. It has two- to four-bedroom units and penthouses, all with 99-year leases. Two bedders start from 1,227 sq ft, three bedders from 1,625 sq ft, and four bedders from 2,067 sq ft. 

It is expected to be completed before year end.

Buyers will have to pay at least $3.4 million for the smallest unit of the seven, six-storey blocks. 

Also at Sentosa Cove, Ho Bee and IOI said they sold 25 out of 40 units released for the 151-unit Seascape condo over the weekend. The units were sold for an average of $2,700 psf. In terms of absolute price, they were transacted between $5.7 million and $12 million.

The eight-storey development is expected to be completed late this year or early next year. It comprises three- and four-bedroom units. 

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Straits Times: Horizon Towers lawsuit set to go on

Mar 30, 2010 
Horizon Towers lawsuit set to go on 
High Court throws out appeal by two ex-sales committee members to halt suit
By K.C. Vijayan, Law Correspondent 

MINORITY owners will get to go ahead with their suit over the failed $500 million Horizon Towers en bloc deal.

The High Court yesterday threw out an appeal by two former sales committee members who had applied to block the owners' action against them.

Three sets of minority owners are suing the pair - ex-committee chairman Arjun Samtani and ex-member Tan Kah Gee - over costs incurred in the course of trying to block the collective sale from the start.

They want to be reimbursed for the more than $800,000 they spent, including the cost of hiring lawyers to advise them and other administrative costs.

The sum is expected to be partially offset when the costs awarded to the owners by the Court of Appeal in a separate action last year, after the deal was quashed, are assessed.

Senior lawyer N. Sreenivasan and Senior Counsel Tan Cheng Han, appearing on behalf of the two appellants, had urged the court to throw out the suit by the minority owners, claiming it was an abuse of the court process.

They pointed out that the matter of costs had already been decided by the Court of Appeal in an earlier judgment and only the quantum remained to be determined.

They argued that the damages sought for alleged breach of fiduciary duties were actually a disguised move for costs and 'it would have been reasonable for them to raise the costs issues at the (earlier) hearings'. 

They added in court submissions that the minority holders would have incurred legal costs even if Mr Samtani had not done any wrong as their goal was to stop the collective sale. 

But lawyer Kannan Ramesh, acting for the owners, countered that this suit was aimed at different people than was the case with the costs awarded by the Court of Appeal at the earlier hearing.

He argued that the alleged acts committed by the defendants were of a different category that called for different issues to be considered than the other consenting subsidiary proprietors' decision to go ahead with the failed deal.

Among other things, both had failed to disclose to the others their potential conflicts of interest arising from their purchase of additional units while spearheading the implementation of the sales process.

Judicial Commissioner Steven Chong, who presided at last week's closed-door hearing, ruled yesterday in a reserved oral judgment that there was no abuse of process by the minority owners in filing this suit as the subject matter was not covered in the previous court cases.

The appeal was dismissed with costs. A pre-trial conference to move the case will be held next week.

The Horizon Towers collective sale process spanned more than two years and involved two Strata Titles Board hearings and two High Court hearings before being thrown out by the Court of Appeal last year.

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