Sunday, May 29, 2011

More HDB flats - and at a faster rate

NEW National Development Minister Khaw Boon Wan has wasted no time in addressing the backlog in demand for new Housing Board (HDB) flats.


He promised yesterday to build even more flats this year and next year, and get them ready faster.


A record 25,000 new flats will be built this year, up from earlier plans for 22,000, which was already a record.


He also committed to keeping up the new pace of building next year. This could mean launching an unprecedented 50,000 new HDB flats in just two years.


Buyers can also expect their keys sooner. Flats will be built 'ahead of order', a key shift from the build-to-order (BTO) system where the construction tender is called only after there are buyers for at least 70 per cent of the units launched.


Now, the HDB will call for a tender as soon as architectural drawings and tender documents are ready.


'Given robust demand, I told (HDB) to proceed to build, knowing that the orders will definitely come. In other words, build ahead of demand, during this period of demand backlog,' he wrote in his blog.


The HDB said it was in the process of determining how much waiting time this will save for flat buyers. Experts estimate that the change could see buyers getting their flats one to three months sooner.


It means the HDB will go ahead and build new flats regardless of the response. Previously, if the take-up was less than 70 per cent, construction would be delayed until that threshold was met.


The move builds on an earlier move to cut the waiting time for new flats - from the point of booking a flat to collecting the keys - to about 21/2 years.


Mr Khaw made clear though that building ahead of orders would only be a temporary measure to clear the demand backlog; the HDB would go back to the BTO approach once the situation stabilised.


For this year, 22,000 flats will be launched by September, while 3,000 flats originally scheduled for early next year will be brought forward.


Yesterday, HDB launched close to 4,000 new flats in six BTO projects - the largest batch in a single launch.


Mr Khaw said the bigger supply would help young couples own their homes as soon as possible so they could start a family, which is a national priority.


There are 15,000 first marriages each year among Singaporeans, a possible gauge of demand for new flats.


'As we intend to ease the $8,000 income ceiling on HDB flats, we can expect additional demand and we have to prepare for that,' Mr Khaw said.


He is keen to see more new couples get their first homes through BTO flats. About 70 per cent currently do so while the rest buy on the resale market, he said.


'This is not bad, but I think there is scope to do more. I think we should strive to have the vast majority of new couples start off their first set of homes in HDB, preferably via the BTO route.'


But even as the pace of building is ramped up, he emphasised the need to ensure that the quality of finish, workmanship and worksite safety stayed strong.


Responding to the minister's action to build more and build faster, experts said Mr Khaw was keeping his word to help young couples buy their first home.


But they said the change also underscored the size of the demand backlog.


ERA Realty key executive Eugene Lim warned, however, that even as the building pace is quickened, the HDB would have to be careful not to overbuild and end up with large stocks of unsold flats as had happened in the past.


'There are 10,000 more homes than... marriages yearly. Since 95 per cent of new flats must be sold to first-timers, the HDB will have to watch this closely to avoid having unsold homes.'


PropNex chief executive Mohamed Ismail welcomed the changes, as most recent BTO launches had been oversubscribed and many interested buyers were left on the waiting list.


Engineer Lee Wen Pin, 28, who is getting married in June next year, said: 'I think the change that sees the waiting time shortened is the most beneficial.


'A couple usually get married about two years after the proposal so any time saved that allows them to get a home sooner is always welcome.'

Thursday, May 26, 2011

The news says exec condos are sexy again

(SINGAPORE) Executive condos, a hybrid of public and private housing, are back in the spotlight.


Yesterday, the government launched the 11th EC site since last year, a plot in Punggol that can yield about 720 homes; while in the Pasir Ris/Elias Road area, NTUC Choice Homes and Chip Eng Seng did brisk first-day sales for their Belysa project.


As at 5pm yesterday, they had sold 147 of the total 315 units in the 99-year leasehold project, which was priced at $670 psf and comprises three- and four-bedroom units.


'There is a big market for EC units priced between $600,000 and $700,000,' said CB Richard Ellis executive director (residential) Joseph Tan. That is because the price gap between EC projects and 99-year suburban private condos has widened once again.


Typically the price gap used to be around 25-30 per cent when ECs were introduced in 1996 to cater to the sandwich class of buyers, he said. This spread narrowed over the years because of weak suburban condo prices, resulting in dwindling demand for ECs. Before the latest wave of new EC projects rolled out last year, the last EC project had been launched in 2005, namely La Casa in Woodlands.


However, the sharp recovery in 99-year mass market condo prices has revived the demand for ECs.


'Today, 99-year mass market condos which are not near an MRT station could be priced around $900-950 psf on average while an EC project in a similar location would be around $650-700 psf,' said Mr Tan.


Many analysts expect the monthly household income ceiling for ECs to be raised from $10,000 to $12,000 or higher, assuming the government proceeds to raise the ceiling for those buying new Build-To-Order (BTO) flats from the HDB from $8,000 to $10,000 pending a review.


'That will create more realistically-priced alternatives for the sandwich class and siphon off some demand from 99-year mass-market private condos,' reckoned Mr Tan.


On the other hand, ERA key executive officer Eugene Lim suggests increasing income ceilings for buyers of ECs and DBSS (Design, Build and Sell Scheme) flats - these are HDB flats designed and developed by the private sector - could boost demand for these homes and lead to developers bidding higher for EC and DBSS sites. This in turn may result in higher prices for DBSS flats and EC projects but could have little impact on the private condo market.


Credo Real Estate executive director Ong Teck Hui points to the uneven sales performance in the first four EC projects released since last year. Esparina Residences and Prive have fared better than The Canopy and Austville Residences. 'The better performing projects were nearer to MRT stations and realistically priced.'


Knight Frank's research head Png Poh Soon observed that while there are now fewer bids for EC sites compared to March 2010, prices of well-located sites have held up well.


Most property consultants expect top bids for the latest EC site at Punggol Way/Punggol Field launched yesterday to be in the $300-350 psf per plot ratio range, and with the average selling price for the project likely to be around $700-750 psf.


Credo's Mr Ong said some EC developers may be more cautious about bidding for this site if they are concerned that the income ceiling for EC buyers will stay unchanged while that for HDB BTO flats is raised. In such an event, more people would qualify for new HDB flats and this would lower demand for ECs.


An EC developer told BT that he is worried about the substantial supply all round. The government has pledged to sell land for 4,000 ECs and 4,000 DBSS flats in 2011, up from about 4,000 ECs and 3,000 DBSS flats last year. HDB will also offer up to 22,000 BTO flats this year.

Sim Lian leads in unsold units from GLS residential sites

SIM Lian Group has the highest number of unsold residential units in its land bank - some 2,781 homes - built up from government land sales (GLS) sites bought in 2010 and 2011, a new report shows.


According to the new report from Knight Frank, Sim Lian has in its portfolio 1,441 private homes, 660 executive condo (EC) units as well as 680 HDB flats that will be offered for sale under the design, build and sell scheme (DBSS).


City Developments was placed second. The developer has 211 private homes and 1,060 EC units left from GLS sites it bought from 2010 onwards.


Five other developers each have more than 800 unsold units from GLS sites acquired in the last 17 months: United Engineers, Hong Leong Group, Far East Organization, MCL Land and Chip Eng Seng.


Developers are likely to grow their land banks in the second half of this year as the government is expected to roll out another bumper supply of residential sites under its twice-yearly GLS programme, Knight Frank said.


'We expect a significant new supply of private housing for the H2 2011 GLS programme to meet demand,' said Knight Frank's head of consultancy and research Png Poh Soon. In particular, more new EC sites could be released following the strong take-up seen for recent EC launches such as Esparina Residences, Prive and The Canopy, he said.


'Developers with a sizeable number of mass market homes in their land banks are likely to be more selective. Some may choose to offload their existing land banks before acquiring new sites, creating a window of opportunity for others,' Mr Png said.


Developers with substantial land banks should be able to clear their stock if demand for mass market homes continues to hold up in the absence of new cooling measures, he added.


Savills Singapore similarly noted that demand for mass market homes can be expected to remain robust in the coming months. 'With more mass market launches coming on stream, the fresh infusion of housing would bring more attractively priced units onto the market,' Savills said in a new report.


But analysts noted that policy changes could soften demand for private properties as well as ECs and DBSS flats.


To determine the housing stock held by each developer, Knight Frank reviewed all the winning bids for GLS sites launched in 2010 and year-to-date in 2011, then discounted those units that have already been sold in launched projects.

$969m bid for suburban site in Jurong

A PRIME mixed-use site in the Jurong Lake District has shattered price records with a top bid of just under $1 billion - almost $200 million more than the market expected.


The huge offer stunned analysts and dramatically underscored demand for well-located land in the up-and-coming area.


The knockout bid of $969 million - or $1,012 per sq ft (psf) per plot ratio (ppr) - came from heavyweights CapitaMalls Asia, CapitaMall Trust and CapitaLand.


It is easily the highest offer for any mixed-use site outside the city centre and reflects confidence in the suburban office market, the remaking of Jurong and the value that developers see in choice locations near MRT stations, say experts.


The second highest bid - $917 million lodged jointly by United Engineers and Singapore Press Holdings - was also far ahead of market expectations.


A Keppel Land-led joint venture with Perennial Real Estate offered $785 million. Frasers Centrepoint and private fund Phoenix trailed the field of five with a joint bid of $640 million, 34 per cent lower than the top offer.


At least 40 per cent of the maximum permissible gross floor area (GFA) on the site in Boon Lay Way and next to Jurong East MRT station must be for offices.


Savills Singapore's director of commercial leasing, Ms Agnes Tay, said she was 'pleasantly surprised' with the aggressive bids.


They suggest a shift of developers' interest to explore opportunities in suburban commercial land, especially when a substantial amount of office space has been released in the city over the past few years. 'Given limited suburban office supply, the Jurong site might provide good opportunities that developers see value in,' she added.


Experts also weighed in on what the site might be used for apart from offices.


Savills' Ms Tay said the remaining 60 per cent GFA could be used for apartments as there will be a good market for well-located homes.


However, CB Richard Ellis Research executive director Li Hiaw Ho said the project is likely to be a pure commercial development with a high proportion of retail space. Average monthly rents could be around $15 psf a month for retail and $6 psf for offices, he added.


'The successful award of this parcel would hasten the development of Jurong East as a vibrant commercial hub,' said Mr Li. 'Given the sizeable amount of retail pipeline supply from the neighbouring Lend Lease's and JCube projects as well as existing retail amenities in this area, it would offer residents and workers a retail experience rivalling that of Tam-pines in the east.'


SLP International research head Nicholas Mak also noted that CapitaMalls Asia and its partners looked keen to retain their market share of commercial space in the Jurong East MRT Station area. The IMM and JCube malls are both in the area and managed by CapitaMall Trust.


CapitaMalls Asia will hold a 50 per cent stake in the Jurong Lake project, HSBC Trust Services - as trustee of CapitaMall Trust - 30 per cent, and CapitaLand will hold the remaining 20 per cent.


The five bids the tender attracted suggest developers still want relatively big parcels of land, added Mr Mak.


'An estimated 1,000 homes will also be added around Jurong East MRT station to provide more opportunities to live and work in the area,' he noted.


'Office and retail development on the subject site stand to gain ready access to a large pool of labour and customers - of more than one million residents - from the surrounding established towns of Clementi, Bukit Batok, Jurong East and Jurong West.'


In June last year, Australian developer Lend Lease beat five other offers with a bid of $749 million, or $650 psf ppr, for a 1.9ha site in the same area. It has since clinched the National Development Ministry as an anchor tenant, which experts say would have encouraged developers to bid for the second Jurong Lake District site.


The previous record for a mixed-use site outside the Central Business District was for the site of nex shopping mall in Serangoon which sold for $850 psf ppr in 2008.

More developers may target EC sites

THE impending move to raise the income ceiling for public housing could prompt more developers to target sites zoned for executive condominiums (ECs) and Design, Build and Sell Scheme projects, say industry experts.


The Government has said that it may increase the income ceiling from $8,000, which would allow households with a higher combined income to buy a Housing Board (HDB) flat.


If that happens, analysts expect the income ceiling for ECs - now at $10,000 - to be raised correspondingly.


Market experts say that developers who focus more on private residential projects may also bid for government land tenders to tap into this increased pool of buyers.


However, the increased buyer pool for HDB homes could also depress private property market prices.


Mr Png Poh Soon, head of consultancy and research at Knight Frank, said: 'Buyers who are looking to purchase mass-market homes might be lured to buy executive condominiums and public housing now that they might qualify for it.


'Some developers believe that potentially, mass-market home prices could become cheaper as other players adapt more competitive strategies to attract buyers in the same income bracket.'


Mr Png said that the market will be keen on the increased supply of land expected to flow from the second half of this year's Government Land Sales programme.


'We've seen strong sales figures in April and in the absence of any new cooling measures, there's no reason why developers should shy away from tenders,' he added.


Last month, developers sold 1,788 residential units, the highest monthy volume since November last year.


But Mr Png added that the injection of land will put pressure on companies that already have a lot of government sites in their landbanks.


He said that such developers might decide to roll out their projects earlier to reduce their risk and ensure a better cash flow.


'But companies with fewer government sites may be more aggressive when bidding, especially when well-located plots with good amenities nearby come up for sale.'


Knight Frank released an analysis yesterday detailing the holdings by developers of government land stock.


The survey was based on sites launched from last year to the present. It recorded the number of units being developed on a site, any unsold flats or in the case of undeveloped land, estimated number of units each site could support.


The Sim Lian Group topped the list with 2,781 units, City Developments was next with 1,271 and United Engineers third with 1,101.

Thursday, May 19, 2011

Developers rolling out 2 new projects in Pasir Ris, Hougang

AFTER chalking up a 29 per cent month-on-month increase in private home sales in April, developers continue to release new projects this month.


At least two new residential projects will be rolled out this week - Belysa, an executive condo project in Pasir Ris, and Terrasse, a private condo development in Hougang. Both projects have 99-year leasehold tenure.


While units in recent EC projects start from two-bedroom apartments, NTUC Choice Homes and Chip Eng Seng Corporation unit CEL Development are developing only three and four bedroom units at Belysa, their 315-unit EC project at Pasir Ris Drive 1/Elias Road - to promote three- generation family living.


The average price will be $670 per square foot for buyers who opt for the normal progressive payment scheme. Developers of EC projects are allowed to offer the deferred payment scheme and buyers who choose this payment route for Belysa will pay an additional 2 per cent on the price.


ECs are a hybrid of public and private housing with initial buyer eligibility and resale restrictions, which are completely lifted 10 years after the completion of an EC project. There is a $10,000 monthly household income cap for those buying ECs from a developer. Developers must set aside at least 95 per cent of units in the first month of launch for first-time home buyers. Qualifying first- time home buyers will enjoy a $30,000 CPF Housing Grant.


At Belysa, which means illumination in Swedish, a three-bedroom compact unit starts from 829 sq ft and is priced from $574,000. A four-bedroom apartment of 1,335 sq ft is priced from $882,000. The most expensive unit in the development, a four-bedroom (suite) unit, costs $952,000.


The project comprises a 16-storey block and two 18-storey blocks. A seasoned property consultant described the project's $670 psf average price as within his expectation, given that the project does not include small units, which can be sold for a higher psf price.


Over at Hougang Avenue 2/Yio Chu Kang Road, MCL is previewing Terrasse condo later this week at an average price expected to be around $950 psf. The five-storey project will comprise 414 units - including one to four-bedroom apartments, five-bedroom penthouses and 15 garden duplex units (spread over the ground and basement levels).


For businesses looking for their own premises as well as property investors thinking of venturing into strata industrial properties, Soilbuild Group will be soft launching North Spring BizHub at Yishun Industrial Street 1 on Monday. The seven-storey light and general industrial development will offer direct vehicular access to every level for containers up to 40 feet in length.


The 60-year leasehold project will comprise 454 units ranging from 1,507 sq ft to 36,511 sq ft. Prices for the units begin from $478,000 or about $311 psf. Colliers International, which is marketing the project, said the units are suited for businesses from clean, light and general industries such as R&D, printing and publishing, engineering, warehousing and manufacturing.

Two redevelopment sites up for sale

TWO redevelopment sites have been put on the market - Elizabeth Tower and 70 Shenton Way.


A five-member consortium which includes Roxy-Pacific Holdings which bought 70 Shenton Way for $148 million in April last year is now seeking to sell the office block, which has approval for redevelopment into a 60:40 commercial-residential project, at a price said to be around $270 million.


This price works out to $1,583 per square foot per plot ratio (psf ppr) including an estimated $56.72 million for topping up the site's lease to 99 years from the balance term of 58 years and an estimated $6.93 million development charge (DC).


This calculation is based on the new development retaining 70 Shenton Way's existing gross floor area of 210,729 sq ft.


This is the maximum GFA allowed for the redevelopment under provisional permission granted by Urban Redevelopment Authority (URA) on Aug 31 last year and extended till Aug 31, 2011.


However, property consultancy group DTZ, which is marketing 70 Shenton Way's sale through a tender exercise, said that the unit land price could potentially be lowered to $1,534 psf ppr if the successful developer is allowed to tap the maximum 10 per cent bonus gross floor area for balconies for the residential component of the proposed development.


This would entail a higher DC of $11.2 million but a lower lease upgrade premium of $54.9 million (based on the lower unit land price).


Such a scheme would take the potential GFA to 219,158 sq ft inclusive of the 8,429 sq ft bonus balcony allowance.


URA's provisional permission is for a 32-storey project on the 19,736 sq ft site which will include shops on the ground floor.


The proposed project will have mechanical carparking in basement 1, as well as conventional car park lots in a podium carpark on levels two to five.


Above that will be offices, while 135 apartments will be spread across the 24th to 32nd levels. There will be three sky terrace levels - on the sixth, 14th and 23rd floors.


Singapore Land Authority has granted in-principle approval for topping up the site's lease to 99 years, although the amount payable for this has not been made known yet.


Besides Roxy-Pacific, the other members of the consortium which owns 70 Shenton Way are Fission Group, Macly Capital, Pinnacle Assets and architect Chee Hsian Sing. All five hold equal stakes.


The tender for 70 Shenton Way will close on June 23.


Roxy-Pacific executive chairman and CEO Teo Hong Lim told BT that while the consortium had originally planned to redevelop the site itself, it has now decided to try and sell the site through a formal tender process after receiving unsolicited enquiries from property agents keen on finding buyers for the site.


'This will also give us an opportunity to ride on the increase in office capital values over the past year,' he added.


'If the consortium does not get the kind of price we have in mind, we can still proceed to redevelop the property itself,' he added.


Separately, the majority owners of the freehold Elizabeth Tower at Mount Elizabeth off Orchard Road have put their homes up for collective sale with an asking price of $630 million.


The site is zoned for residential use with 2.8 plot ratio and 36-storey maximum height under Master Plan 2008. URA has verified the project's existing GFA reflects an equivalent gross plot ratio of 4.6474.


Based on this, the $630 million price tags works out to $2,496 psf ppr (with no DC payable).


However, the unit land price could potentially be lowered to $2,323 psf ppr assuming the successful developer is allowed to tap the maximum 10 per cent bonus balcony allowance, which would entail an estimated DC of $15 million being payable, according to Credo Real Estate, which is marketing the site.


On both calculations, the breakeven cost for a new project would cross the $3,000 psf mark, say analysts. The tender for Elizabeth Tower closes on June 22.


The $630 million price tag for Elizabeth Towers is lower than the $673 million asking price during the previous collective sale attempt for the property in late 2007.


The last successful large-scale collective sale site sold in District 9 was Westwood Apartments, which transacted at $453 million or $2,525 psf ppr in 2007.

Wednesday, May 18, 2011

Industrial, commercial projects more popular

 numbers of property developers are dipping their toes into industrial and commercial projects over concerns of a slowing residential housing market.


Higher prices for residential land and uncertainty over another possible round of cooling measures have suddenly made the grittier end of the real estate sector look more appealing.


The past few months have seen keen competition among developers for industrial and commercial sites released under the Government Land Sales programme. A plot in Kaki Bukit Road 4 attracted 18 bids in February while there were 13 offers for an industrial site in Ang Mo Kio Street 62 in March. A commercial site in Paya Lebar Road closed with 10 bids last month.


Developers could also make more money from commercial and industrial buildings if the projects work out.


Some developers told The Straits Times that residential projects typically yield a profit margin of between 15 per cent and 23 per cent, while industrial and commercial properties could reap a profit margin of up to 50 per cent.


Take Wee Hur Development for example. It bought an industrial site in Woodlands Avenue 4 for $22.9 million, or $34 per sq ft per plot ratio (psf ppr). The Straits Times understands that units at the Harvest@Woodlands project were sold at an average of $240 psf.


Listed firm Oxley Holdings is one residential builder trying its hand in the new area with its maiden industrial property project, Oxley BizHub, in Ubi Road 1.


The industrial complex, which occupies an area of 375,153 sq ft, is currently under construction. It consists of three podium blocks and four tower blocks housing 728 factory and warehouse units, and is targeted at clean and light businesses.


Chairman and chief executive Ching Chiat Kwong said Singapore's robust economy has led to more entrepreneurs taking a stab at new businesses and companies planning to expand their operations.


Mr Lim Swee Hoe, director of Aston Investments Development, said businesses may start small but would need facilities for production work, design, and research and development as they grow.


But Mr Lim and Mr Ching said that merely providing space for business operations is not enough these days.


'It's not as easy as just getting an office space somewhere and just starting a business,' said Mr Ching.


'The image and environment play a part in how people perceive a brand, and that carries more weighting nowadays.'


Oxley BizHub tried to integrate lifestyle elements into the building's features, including eco-decks with sky gardens, a swimming pool and a gym.


Mr Ching said the design concept was aimed at changing the perception of how industrial spaces should look.


'People who work there deserve a better place to work too,' he said.


'Providing a working space for a healthier lifestyle will enhance productivity, reduce a high turnover rate and improve morale when workers have to stay to work longer hours.'


The experience developers have in building residential properties gives some of them an edge.


Aston Investments Development's project in Senang Crescent has 'condominium-style' bathrooms in each unit so there are separate toilets for both genders instead of unisex facilities, which are the standard for such properties.


'These new industrial and commercial properties have raised the benchmark on how much you can sell for such spaces,' said Mr Tan Boon Leong, Colliers International's director for industrial services.


In August last year, Oxley paid $158.1 million, or $169 psf ppr, for the Oxley BizHub 60-year leasehold plot. Since its launch, more than 300 of the 728 units have been sold at an average of $677 psf.


But Mr Tan said not all properties will be able to hit such prices, with factors like the leasehold, location and nearby amenities affecting values.


Colliers International said in a report yesterday that the continued economic expansion is expected to shore up demand for industrial properties.


But it added that factors like a slower gross domestic product growth rate of between 4 per cent and 6 per cent this year and global events in the Middle East and Japan should moderate the demand.


This would cause rent, land and capital values of single-user factory and warehouse land to climb by up to 10 per cent over the next 12 months.

Apartment at The Marq fetches $5,842 psf, sets a new price record

(SINGAPORE) A new record has been set for the price of a private residential property in Singapore. Sources say that a four-bedroom apartment at SC Global Developments' The Marq on Paterson Hill recently fetched $5,842 per square foot, surpassing the previous high of $5,600 psf set in October 2007 at The Orchard Residences.


The latest transaction at The Marq also sets a new benchmark for the project, surpassing the $5,262 psf that was achieved in 2007 for a 16th floor unit which was sold for $15.8 million, according to caveats data. Both units are of the same size, 3,003 sq ft.


The latest record breaker at The Marq, which involves a lump sum price of $17.5 million, is understood to be on the mid-to upper levels of the 24-storey project but is not a penthouse unit. The freehold development received Temporary Occupation Permit (TOP) earlier this year and with the latest transaction, slightly over 40 per cent or 28 of the development's 66 units have been sold.


The penthouse unit at The Orchard Residences that held the previous record price of $5,600 psf is on the 53rd level and involved a lump sum price of $28.269 million. However, a caveat for that 5,048 sq ft unit does not appear to have been lodged, probably because the high net worth party who bought the apartment did not take any financing for the purchase and wants to preserve anonymity.


The Orchard Residences, which received Temporary Occupation Permit late last year, is on a site with a 99-year leasehold tenure starting around March 2006.


Pointing to a dearth of condo/apartment transactions above $5,000 psf since the previous property boom in 2007, Jones Lang LaSalle's head of residential and national director Jacqueline Wong attributes this to a lack of new project launches in the ultra-luxury segment, as well as the fact that demand from foreign investors in this segment has yet to recover to the level seen in 2007 because of the current state of the global economy.


'I don't recall any launches at $4,500 psf or higher, post 2007. Right now there are five new projects in the prime Ardmore Park area whose developers could launch them if they chose to - but they haven't,' she added.


Analysts say that developers' strong balance sheets and the difficulty they face in finding replacement land banks in the luxury residential sector at viable prices are some reasons for developers to hold back launches in this market segment.


'If any developer were to launch a new condo at above say $5,000 psf today, demand will likely come from owner occupiers rather than those buying with a view to collecting rental income because the yields won't be attractive,' JLL's Ms Wong said.

Home sales hot up with 29% April spike

SALES of new private homes (excluding executive condos) rose 29 per cent in April to a five-month high as developers pushed out more projects to ride on the buying momentum amid risk of further policy changes from the government.
Developers sold 1,788 units last month - the highest monthly volume since 1,915 units were sold in November 2010, according to data from the Urban Redevelopment Authority (URA). In March 2011, 1,386 new private homes were sold.


The number of homes launched by developers climbed by 64 per cent to 2,049 units.


'It (April) is the strongest performing month since November 2010, when 2,331 units were launched and 1,915 units sold following a short lull in September and October after the cooling measures of August 2010. At that time, potential buyers stayed away from the market for a couple of months, only to return optimistically in November, pushing up that month's figures,' said Credo Real Estate executive director Ong Teck Hui. 'The question is whether we are seeing a repeat of November's phenomenon. After the measures in January 2011, we saw a moderation in February and March and now there is a resurgence in April, indicating that more buyers are back in the market. A sustained uptrend in May will confirm that the market is getting buoyant again.'


The government imposed a seller's stamp duty of up to 16 per cent for private homes in January this year, and further cut the loan-to-value ratio for buyers with existing mortgages to 60 per cent.


Much of the buying momentum in April came from the Outside Central Region (OCR), where suburban condos are located. URA's data showed that 1,010 homes were sold in the OCR in April, up from 631 homes in March.


The preference for cheaper suburban homes could also be seen in a price band analysis by Colliers International. Some 779 units went for $1,000 per square foot (psf) or less in April, which amounted to 44 per cent of all units sold in the month.


In comparison, just 391 homes were sold for $1,000 psf and under in March, making up 28 per cent of all units sold.


Two large projects in the OCR region, Eight Courtyards (from Frasers Centrepoint and Far East Organization) and Hedges Park (from Hong Leong Group, City Developments and TID) accounted for 32 per cent of all units sold in April. At Eight Courtyards, 340 units were sold at a median price of $789 psf, while at Hedges Park, 224 units were sold at a median price of $889 psf.


Looking ahead, analysts expect May home sales to hit at least 1,500 units - and maybe even outstrip sales in April - as there have been many launches this month. Take-up should be strong as developers are rolling out more small units, which sell at relatively more affordable prices of under $1 million per unit, analysts said. 'We visited three showflats and noted that demand on the ground remains fairly strong,' said DBS Group Research analyst Lock Mun Yee yesterday. 'Buying interest is still centred on well-located developments with units priced at smaller quanta, as well as mass market projects.'


At Wing Tai Holdings' 496-unit Foresque Residences at Upper Bukit Timah, around 100 units have been sold at about $1,100-1,300 psf, sources said.


Other developments that saw steady sales recently include Hoi Hup Realty's 141-unit The Forester @ Mount Faber, where around 50 per cent of units were sold at an average price of about $2,000 psf; and the 69-unit 10 Shelford from Adam Properties, which saw a take-up of about 60 per cent of units at about $1,800-2,000 psf. Both developments offer a large proportion of small units.


But analysts noted that policy changes could affect market sentiment in the coming months.


During the campaign for the general election, National Development Minister Mah Bow Tan mentioned that the household income ceiling for buying new HDB flats will be reviewed in the next six months. The ceiling has been unchanged at $8,000 for the past 17 years, and could be raised to $10,000 - although the actual level will be decided after the review.


'As the market is aware that the government is reviewing the income ceiling for public housing, there is some degree of apprehension as to how it will impact the mass market,' said Li Hiaw Ho, executive director for CBRE Research.


Measures in the HDB sector will have an indirect impact on the demand for mass, and to a certain extent, mid market properties, said Citigroup economist Kit Wei Zheng.


'First, higher HDB income ceilings would channel some of the current demand from the HDB resale and mass market private properties away. If HDB resale prices decline, it would also affect the ability of potential HDB upgraders to move to mass or mid-market private properties,' Mr Kit said.


For now, buyers are likely to adopt a 'wait-and-see' approach, said Colliers' director of research & advisory Chia Siew Chuin. 'They are likely to be more selective and price-sensitive. However, affordably priced projects with good attributes are still expected to enjoy healthy sales.'

Monday, May 16, 2011

Developers nudged to rightsize shoebox homes

(SINGAPORE) The Urban Redevelopment Authority seems to be encouraging developers of shoebox units to increase the size of their apartments. The minimum apartment size that URA is likely to approve these days, especially in projects with many micro apartments, seems to be 35 square metres, up from 28 sq m a couple of years ago, developers told BT recently.


Analysts say that promoting an increase in the size of shoebox units may help to cool the property market since these micro apartments have been blamed for fuelling increases in per square foot prices at some property launches.


A URA spokeswoman stressed that the planning authority does not stipulate a minimum size for apartments to give developers flexibility to build apartments of varying sizes to cater to home buyers' needs. Rather, it adopts a consultative approach, working closely with developers and architects in a negotiated process to enhance the quality of new developments in Singapore.


'When we receive development proposals comprising many small residential units, our immediate concern would be the quality and liveability of the space for home owners as well as the potential impact on the living environment of the neighbourhood and the local traffic situation. In such cases, URA's planners will work with the developers and architects to finetune the design of the development, unit size and unit layout.


'Thus far, the revised (minimum) unit sizes are typically in the range of 35-50 sq m gross floor area, excluding features such as bay windows, balconies and air-con ledges.'


Where necessary, the applicant and URA may jointly do studies to determine the impact of the development proposal on traffic in the location, she added.


The concern is whether the location can handle the additional traffic load arising from an increase in car population if a project with many small apartments is built. This is because the more units a developer packs into a residential development, the higher would be the number of car park lots it has to provide in the project.


BT understands that since around Q3 last year, developers planning to build projects with a substantial number of smallish apartments have been given 'verbal advice' by URA that apartments should be no smaller than 35 sq m in gross floor area excluding balconies and air-con ledges.


This 'verbal advice' seems to have been issued to developers and their architects when they made enquiries after their applications had been turned down, according to some market players.


Industry participants suggest that URA has thus effectively increased the minimum apartment size it would allow, which was previously understood to be 28 sq m (or around 300 square feet), as reported by BT in October 2009.


It was reported then that URA had turned down some applications involving apartments below 28 sq m. In that year, the market had seen what was believed to be Singapore's smallest ever apartment - at 258 sq ft - at the Suites@Guillemard.


In URA's response to BT last week, its spokeswoman said that in processing development proposals, it assesses, among other things, the overall building design, site configuration, unit layout as well as the localised traffic situation to ensure that a proposed development involving small units can provide a good living environment for home buyers. 'In general, residential units should be self-contained with basic amenities such as a living area, bedroom, kitchen and bathroom.'


A developer estimates that an apartment with gross floor area of 35 sq m (excluding balcony and air-con ledge) may have saleable area of about 40.5 sq m (about 436 sq ft) including the balcony and air-con ledge. He reckons that URA is more likely to be stringent about ensuring that apartment sizes are not too small for projects with a large proportion of one bedders and one-bedroom-plus study units.


'But if the one bedders make up a relatively small proportion of units in a large development, which also has bigger units like two, three and four-bedroom apartments, URA's planners may allow a few units even if they're under 35 sq m. A lot will also depend on the layout of these units,' said the developer.


UOL Group president (property) Liam Wee Sin, said: 'Ultimately, what is important is that buyers are made fully aware of the size of apartments they're purchasing and the new requirement for showflats to accurately reflect the actual size and layout of the units will help in this aspect.'


Another developer who declined to be named said that URA's approach to encourage bigger units may have an impact on developers who specialise in shoebox apartments. 'Very often they have been able to achieve relatively high psf prices on these small apartments since they've been able to keep the lumpsum price affordable, at below $500,000. They can price say a 320 sq ft unit at around $1,400 psf and it would cost $448,000. If they now charge the same psf price rate for say a 435 sq ft, the absolute price would be $609,000.'


DTZ executive director Ong Choon Fah suggests that the completion of some of these shoebox developments over the past year or so may have called into question the practicality of living in these small spaces and highlighted the impact of this housing type on the lives of residents and social fabric in the neighbourhood.

Sunday, May 15, 2011

Clock ticks on for older leasehold condos

 Straits Times: Sat, May 14
IT MIGHT seem like a long time, but 60 years can be a worryingly short time for a property lease.


The 60-year mark is a key milestone for private properties: go under that, and values often depreciate quicker as there are fewer interested buyers and banks can be reluctant to lend.


Owners of ageing properties, it seems, have little choice as the clock ticks on, other than to watch their homes fall in value or try to offload their homes in a collective sale.


Actually, things are not quite that bad. Banks can be flexible with mortgages on older homes, while the Central Provident Fund (CPF) can also accommodate buyers eyeing mature properties.


The plight of owners of older properties made headlines last month when the Singapore Land Authority (SLA) refused to grant The Arcadia condo a lease top-up.


The decision came despite The Arcadia obtaining 100 per cent support from owners, who also agreed to foot the bill if permission was given to top up the project's lease to 99 years. There are 67 years left on the lease of the 164-unit condo.


The SLA decision has turned the spotlight on other ageing condos such as Hollandswood Court, One Tree Hill Mansions and Lutheran Towers. The Peace Centre and Peace Mansions complex, which has 58 years left on its lease, has turned to the collective sale market, but others like Hillcrest Arcadia have resisted that option.


While collective sales have been the main way for owners to unlock the value of their homes, experts say there are other ways to stem the slide in value.


Cushman & Wakefield's senior manager of Asia-Pacific research, Mr Ong Kah Seng, said owners who want to stay put should keep the property in good condition. This is especially so if it has historic features that enhance its value and make it a candidate for preservation, he added.


Even if a lease top-up request is denied, there are still resale opportunities if the development is well maintained and the infrastructure and amenities are enhanced. 'Owners of some aged prime developments may be able to expect better buying interest from purchasers who are cash-rich and do not require home loans.'


Mr Colin Tan, research and consultancy director at real estate firm Chesterton Suntec International, said owner-occupiers are often less concerned about leases.


'When the green movement gets stronger, we might also see fewer en blocs. Instead of tearing down older buildings, which is a blatant wastage, they can be refurbished like in other countries,' he added.


Banks can help out as well. While they are reluctant to finance loans for older properties, they told The Straits Times that other factors, such as location, the tenor of the loan and the borrower's profile, are also taken into consideration.


Ms Lui Su Kian, DBS managing director and head of deposits and secured lending, said that while most banks do not finance homes with fewer than 30 years left on the lease, applications are reviewed on a case-by-case basis.


OCBC Bank head of consumer secured lending Phang Lah Wah added that banks generally reduce the loan tenor or quantum of financing if the remaining lease falls below 40 years on loan maturity.


The CPF has specific policies regarding older homes. In 2005, it reduced the minimum outstanding lease of qualifying homes to 30 years from 60 years for Singaporeans and permanent residents looking to buy a private home.


But the remaining lease must be long enough so that the youngest owner using CPF savings to buy the property can live in the home until he or she turns 80. The buyer will also be subject to lower CPF withdrawal limits. So, a 45-year-old buyer has to buy a home that has at least 35 years left on the lease.

Wednesday, May 11, 2011

Industrial plot in Tuas will go to tender

AN INDUSTRIAL site at Tuas View Square is slated to come up for public tender in about two weeks.


The 45-year leasehold land parcel was made available for sale under the reserve list of the first half of this year's Government Land Sales programme.


The 0.4ha site was triggered after a developer agreed to pay at least $4.89 million for the land.


With the land's plot ratio at 0.9, this price translates to a minimum sum of $116 per square foot per plot ratio.


Sites under the reserve list will be made available for public tender only after a developer comes forward to commit a minimum price for the land.


The Urban Redevelopment Authority (URA) said the site's launch date will be announced later.


Market watchers say an increasing demand from investors for industrial spaces has resulted in more competitive bids being submitted for Government Land Sales industrial sites.


'Now with the current curbs on the residential market, more developers might see industrial sites as a more attractive option that carries a lower investment risk,' said Mr Dominic Peters, director of industrial real estate at Savills.


Land prices have grown significantly in the last few quarters, say property consultants, with the winning bids for sites in locations like Ubi almost doubling in the past 21/2 years.


The relatively affordable prices of industrial land may be another draw for buyers.


'Buying a residential site would usually require that developers submitted a bid of hundreds of millions,' said Colliers International director for industrial services Tan Boon Leong.


'Industrial sites, on the other hand, usually go for a much lower price.'


Last September, a plot of industrial land in Kaki Bukit Avenue 4 attracted nine bids. It sold for $76.8 million, or $95 psf ppr.


In February, a neighbouring plot attracted double the number of bids and sold for $41.4 million, or almost $157 psf ppr.


But this price spike is location-specific, said Mr Tan.


He said land sites in suburban locations may not see as much price gain compared to more mature industrial estates like Ubi.


This is because investors may baulk at taking up spaces in newer industrial estates where it can be difficult for them to find tenants for their properties, he said.


However, other factors, such as the accessibility of public transport networks, would also affect prices.


Recent statistics from the URA show that prices of multiple-user factory space climbed 8.6 per cent in the first three months of this year.


This was an improvement compared to the 6.3 per cent increase seen in the last quarter of 2010.

Pasir Ris leasehold condo site gets only three bids

A STATE tender for a 99-year leasehold private condo site at Pasir Ris Drive 4, close to Pasir Ris Park/beach and Downtown East, drew just three bids yesterday. The top bid, from Hongkong Land unit MCL Land, was $246.1 million or $402.41 per square foot per plot ratio (psf ppr) - 5.2 per cent higher than the next highest offer by Robert Kuok's Singapore property arm, Allgreen Properties.


The only other bidder at yesterday's tender was a joint venture among Frasers Centrepoint, Far East Organization and China Construction (South Pacific) Development which bid $360 psf ppr - slightly ahead of the $335 psf ppr that an earlier tie-up between Far East and Frasers Centrepoint paid for the next-door 99-year private condo site at a tender in September last year. The duo is expected to preview their project, The Seastrand, within the next couple of months. It will have 473 apartments - one to four-bedroom units - in 11 and 12-storey blocks.


Giving his take on yesterday's tender, Credo Real Estate executive director Ong Teck Hui described the interest level as 'rather subdued' but added that it did not signal any major change in market reading. Rather, the latest tender outcome was partly a case of 'an average site commanding lower interest' - compared with some of the more hotly contested 99-year private residential sites at state tenders this year, he added.


Last September's tender for the next-door Seastrand site too had drawn just four bids, he noted. As well, the potential competition from the impending preview of The Seastrand may have affected interest and bidding at yesterday's tender, he reckons.


CB Richard Ellis executive director Li Hiaw Ho said that the government's upcoming review of the monthly household income ceiling for buyers of new public housing flats may impact demand for mass-market private homes.


He estimates that MCL could break even at about $750 psf. 'Units in this new project will be able to fetch above $800 psf on the average. Based on caveats lodged between February and April 2011, units in NV Residences at Pasir Ris Drive 1 were sold at $800-$890 psf and Oasis @ Elias along Elias Road at $680-$830 psf.'


MCL chief executive Koh Teck Chuan said that the plot could yield about 580 units averaging 1,000 sq ft. However, MCL's proposed scheme is likely to have a higher number of units, roughly half of which will comprise one and two-bedders; and 30 per cent, three-bedders. The rest will be four-bedders and penthouses.


He also said that MCL is getting ready to preview a 99-year leasehold condo at Hougang Avenue 2/Yio Chu Kang Road next weekend. The five-storey project, named Terrasse, will comprise 414 units - including one to four-bedroom apartments, five-bedroom penthouses and 15 garden duplex units (spread over the ground and basement levels). The average price is likely to be $950-1,000 psf, Mr Koh said.


Separately, URA has accepted an application from an unnamed developer seeking the release from the reserve list of a 45-year leasehold industrial site in Tuas View Square. The party has committed to bid at least $4.89 million, which works out to $115.95 psf ppr. The plot is zoned for Business 2 use. URA will launch the tender for this site in about two weeks.

Tuesday, May 10, 2011

Marine Parade Rd freehold site up for sale

(SINGAPORE) A 47,400 square foot freehold site on Marine Parade Road (near Parkway Parade), which includes a conservation bungalow built 113 years ago, has been put up for sale by tender with a price expectation of about $100-110 million.


This works out to $1,164-1,262 per sq ft of potential gross floor area inclusive of an estimated $19.5 million development charge (DC), assuming the new project has a gross floor area (GFA) of 102,648 sq ft.


The GFA is based on the 2.1 plot ratio allocated for the site under Master Plan 2008, plus a bonus GFA of 3,108 sq ft equivalent to the conserved bungalow's GFA accorded under guidelines set by the Urban Redevelopment Authority; this is subject to payment of DC if applicable, explains Karamjit Singh, managing director of Credo Real Estate, which is marketing the property.


The site can yield a new condo with about 98 units averaging 1,000 sq ft each. The conservation bungalow may be used as a clubhouse in the project, in the fashion of Draycott 8, Grand Duchess at St Patrick's and The Sea View. Alternatively, the conservation bungalow could be sold as a strata unit.


The bungalow was built in 1898 by Choa Kim Keat, after whom Kim Keat Road in Balestier is named. Mr Choa is understood to have been a compradore (or a go-between) at Straits Trading Company. The imposing villa was Mr Choa's weekend retreat by the sea, long before much of Marine Parade was reclaimed.


In the early days, until around 1970, Marine Parade was a stretch of sandy beaches, lined with grand old bungalows surrounded by lush gardens and coconut palms. The bungalow was formerly known as Sea Breeze Lodge.


Up for sale are No 37 Marine Parade - where the conservation bungalow stands - and 42 A/B/C/D/E/F East Coast Road - a three-storey block of six apartments and servants' quarters. The two adjoining plots have a total land area of 47,400 sq ft and are being put up for sale by the estate of the late Eric Choa, who was a lawyer and the grandson of Mr Choa Kim Keat. Mr Eric Choa died in 2009.


The bungalow was occupied by the Choa family, except for a few years during World War II when it was used to house Japanese officers during the occupation of Singapore.


'According to Mr Victor Choa, Mr Eric Choa's son, his parents moved back into the bungalow after the war in 1946, where they lived until 2010,' said Mr Singh.


The family has a long and rich history in Singapore, dating back to the early 1800s. Many of Singapore's familiar roads and landmarks have been named after them.


'Mr Choa Kim Keat married the grand-daughter of the late Mr Tan Tock Seng, who was a merchant and respected philanthropist after whom Tan Tock Seng Hospital was named. Mr Eric Choa's wife, Madam Hoo Yan Meng, was the great granddaughter of noted Chinese businessman Mr Hoo Ah Kay, who was also known as Whampoa,' said Mr Singh. 'The 113-year-old single-storey bungalow was identified for conservation by URA in 2009 much to the delight of the descendants of Mr Choa.'


The tender for the property closes on June 6.


In a separate transaction, Spring Court and the adjoining Spring Mansion in the Balestier area were sold last month for a combined $74 million under a collective sale. The price works out to $794 per sq ft of potential gross floor area excluding DC, which is payable subject to URA's approval of the proposed new development for the site, according to Strata AMC, the property agency which brokered the sale.


The two properties are on the same freehold plot of 32,593 sq ft. However, they have different zonings under Master Plan 2008. One is zoned for commercial and residential use with a 3.0 plot ratio (ratio of maximum GFA to land area), while the other is zoned for residential use with 2.8 plot ratio.


The buyer of Spring Court and Spring Mansions is a consortium comprising Nobel Design Holdings, 2E Capital and Lian Huat Group.


Rodyk & Davidson are the lawyers who acted for the buyer.


The deal is conditional upon approval from the Strata Titles Board or the High Court or Court of Appeal as the case may be.

Monday, May 9, 2011

Market may react negatively to GE results

THE Singapore stock market could see some negative impact from a more 'pro-worker' stance which analysts expect the government to adopt, following the ruling People's Action Party's share of the popular vote falling to a historic low of 60.1 per cent.


Property stocks, in particular, may be affected if the income ceiling for buying new HDB flats - a review promised during the hustings - is raised, as this will likely affect demand for private housing, they add.


'The government has a sense from the ground that there are a lot of concerns, such as the higher cost of living and rising home prices,' said Bank of America Merrill Lynch economist Chua Hak Bin.


'Going forward, the market will have to take into account a probable shift in policy emphasis from GDP growth to growing wages, and addressing the concerns of lower-income and middle-income workers as well as issues such as the growing cost of living and rising housing prices.'


This could tilt the government's stance from mainly 'pro-growth' and 'pro-business' towards being slightly more 'pro-worker', Dr Chua said, adding that this could cause a negative market reaction.


Terence Wong, the co-head of DMG & Partners Securities research, similarly said that he expects the market to have a 'slightly negative' reaction.


'It is no longer like in the past, when the main concern was being pro-business,' he said. 'Now, they have to look after the workers a bit more.'


Prasenjit Basu, an economist at Daiwa Capital Markets in Singapore, has a different take. Some of the anxiety was already priced into the market in the days leading up to the General Election, he said. Since only six out of 87 seats were lost to Opposition parties, the market will recover today, he said.


Analysts said investors will, however, be worried that Singapore's foreign worker and immigration policies may be tightened further.


In addition, the government has in the past demonstrated its political will by cutting the employer's CPF contribution rate during economic downturns. It may not be as quick to take such an action in future with an electorate that is increasingly concerned about the rising cost of living and dwindling retirement savings.


Noted Nomura analyst Lim Jit Soon before Polling Day: 'If the PAP achieves a significantly reduced popular vote, it may review some of its policies which have affected its popularity like foreign workers, property and the integrated resorts.'


Property stocks, for example, were depressed after National Development Minister Mah Bow Tan said early last week that the income ceiling for buying new HDB flats - unchanged for the past 17 years for first-timers - could be raised from the current $8,000 to $10,000 in a few months.


One developer noted that this could channel some demand away from the private housing market.


'If the income ceiling for BTO (build-to-order) flats is raised, so will the ceiling for EC (executive condominium) flats,' he said. 'Some buyers could switch to buying EC or HDB flats instead of private property.'


In addition, there are worries that more measures to cool the property market could be introduced. This will continue to depress property stocks until there is greater clarity, DMG's Mr Wong said.


PAP won 60.1 per cent of all votes cast in this year's GE - its lowest vote share since Singapore's independence and a tad lower than the 61 per cent it received in the 1991 GE.


Based on the past five GEs, there is no clear historical trend as to how the benchmark Straits Times Index (STI) will perform over a one-month period post polling day, noted DMG.


But in the 2001 GE, when the PAP won 75 per cent of votes - the highest over the past five GEs - there was an 11.9 per cent rise in the Straits Times Index (STI) in the one-month period after polling day.


This is in stark contrast to the 1991 GE, when the PAP secured 61 per cent of votes (the lowest in the past five GEs) and the STI fell 3.1 per cent over the next month.