Sunday, July 31, 2011

GCB slowdown continues with just one caveat lodged for July

GOOD Class Bungalow (GCB) deals have continued to dry up this month following the slowdown seen in the first half of 2011, say agents polled by BT.
So far, just one caveat for a bungalow in a GCB area has been lodged for July - for a property at Andrew Road that sold for $8.88 million, or about $780 per square foot on land area.

However, a few more caveats for deals sealed in July may trickle in over the next few weeks, say market watchers. Among them would be a bungalow at Coronation Road West that was just transacted for $12.6 million (about $1,140 psf).

Newsman Realty managing director KH Tan said: 'We've seen more viewings for GCBs in July compared with June but these have yet to materialise into sales.'

Agents say the last major GCB deal was in June, when a bungalow at Dalvey Road fetched $34 million, or $1,688 psf. It sits on 20,139 sq ft of land.

The seller is understood to be Teng Ngiek Lian, founder of boutique fund manager Target Asset Management.

CB Richard Ellis' analysis of caveats shows that a total 17 bungalows in GCB areas were sold in Q2 this year for $396.8 million. While the dollar quantum is 6.3 per cent higher than the $373.5 million done in Q1 (involving 21 deals), the latest Q2 number is about half the $777.7 million achieved in Q2 last year.

The first half of this year has now seen $770.3 million of GCB deals, down 40 per cent from the nearly $1.3 billion in the same period last year.

However, transacted prices have appreciated. 'While every GCB is unique, for a ballpark comparison based on per square foot of land area, the average price of GCBs sold in H1 2011 is $1,216 psf, an increase of 19.6 per cent over the $1,017 psf for GCB deals in H1 2010,' says CBRE director (luxury homes) Douglas Wong, who specialises in GCB sales.

He attributes the slowdown in GCB deals in H1 2011 to the January 2011 property cooling measures, which introduced stiff seller's stamp duty rates to discourage speculation and lower loan-to-value ratios for property investors.

Mr Wong expects the market to move along at a similar pace in the second half, resulting in a possible full-year 2011 tally of about 60-70 GCBs that may fetch about $1.4 billion-$1.5 billion. This would be a marked slowdown from last year's record showing, when 121 deals were sealed for a total of nearly $2.3 billion.

'Weaker market sentiment resulting from the debt crises in Europe and the US will overshadow the Singapore property market in the second half of this year,' says CBRE's Mr Wong.

RealStar Premier Group managing director William Wong suggests that the second-half figure may even fall below that of the first half. 'This is due primarily to fears that the Singapore government may come up with further property cooling measures which, if implemented, may soften prices,' he said.

Property agents also attribute the current paucity of GCB transactions to a standoff between potential buyers and sellers amid a widening price gap.

AC MacGyver managing director Alex Chua points to a lack of urgency among potential buyers to make a commitment, as most may already own a GCB and are looking for further properties just for investment. 'We still receive offers but the prices are deemed conservative by the sellers,' he said. The lack of urgency to purchase a GCB at this juncture is due to the view that the market may soften. 'But even if the market does soften, most owners are likely to withdraw their properties from the market rather than sell them at lower prices, just like what we saw after Lehman's collapse in late 2008,' Mr Chua added.

Agreeing, RealStar's Mr Wong adds that many GCBs on the market are being offered by parties who may already have sold some of their earlier GCB properties over the past two to three years. 'For these owners, they will only divest any remaining GCBs if the price is irresistible as they don't really need the cash from the sales.'

Market watchers say that another factor discouraging GCB investors from offloading their properties is the difficulty of finding replacement GCBs, given their limited supply, plus the fact that the January cooling measures will apply to any new purchase.

GCBs - an exclusive housing class on mainland Singapore that's governed by stringent planning requirements - typically have a minimum land area of 1,400 square metres (15,069 sq ft). However, when GCB areas were gazetted in 1980, they included some slightly smaller existing sites. These are still considered GCBs as they would be bound by the other GCB planning rules if they were to be redeveloped. For instance, such plots cannot be further sub-divided and they cannot be built more than two storeys high.

Friday, July 29, 2011

Lower land prices offset by rising costs

BIDS by developers for suburban plots may be coming down somewhat but that does not mean that home prices at launches are certain to fall too, top executives of various property firms said yesterday.
Rising development costs - such as an expected jump in labour and construction costs - are challenges that developers are grappling with, they warned.

These cost factors might offset lower land prices, the developers added on the sidelines of a Real Estate Developers' Association of Singapore (Redas) seminar held at Orchard Hotel yesterday.

Frasers Centrepoint group chief executive Lim Ee Seng said developers do not look at land price alone when pricing their launches. Market expectations are the most important factor.

'If the market prices it at a certain level and you sell it way above, you cannot sell. But if you can sell it at a certain level, why would you deliberately want to underprice it?' he added.

But the lower break-even cost brought about by lower land prices gives developers the advantage of more flexibility and a buffer in case the market turns, he added.

However, Mr Lim emphasised that the fall in tender prices has not been significant yet.

Construction costs are expected to rise with strong building demand from the Housing Board, which plans to launch 25,000 new flats this year, more infrastructure works and similarly robust demand from the private sector.

Developers said that, coupled with the reduction in the number of foreign workers and higher material costs, overall costs are expected to spike further.

On the residential property market as a whole, however, Mr Wong Heang Fine, president of Redas and chief executive of CapitaLand Residential Singapore, expects a period of stability without the runaway prices seen in the past couple of years.

Still, while it is too early to call for a reversal of the various cooling measures introduced by the Government, it is clear that they have worked to remove the speculative froth from the market and stem the sharp rise in prices, he said.

'All the cooling measures that are in place presently; the position that we take is to let the dust settle (and to) let nature take its course... Singaporeans who own private properties make up less than 15 per cent of the total residential market in Singapore.

'Given this, the private residential market should be given the opportunity to independently adjust to achieve its demand and supply equilibrium.'

Home hunters are taking longer to decide on a purchase, which shows that sentiment has been affected. However, basic demand is still present. In fact, if healthy economic growth, low interest rates and ample funds are present, they will continue to fuel purchases, he noted.

City Developments group general manager Chia Ngiang Hong said that despite concerns of an impending oversupply, the government is able to tweak the six-monthly land sales programme according to market conditions.

'We are hopeful that along the way, if the market situation does change, the government will take that into consideration and proportion the sites between the confirmed and reserve list,' he added.

Confirmed list sites go on sale regardless of interest and are often an indication of the Government's strategic development plans. Land on the reserve list is put up for tender only if developers make an acceptable initial offer.

Thursday, July 28, 2011

Moderate demand expected for Upper Serangoon site

(SINGAPORE) The government is releasing a private residential site at Upper Serangoon for sale via tender today and market watchers expect to see moderate demand for it.
The plot, at Upper Serangoon Crescent/Upper Serangoon Road, has a 99-year lease which includes a 60-month construction period. At 2.46 hectares, it has a maximum allowable gross floor area of around 927,500 sq ft and can yield an estimated 860 dwelling units.

The site is located some distance away from Buangkok MRT Station, though it is near Punggol Park and Serangoon Reservoir. Just across the road is the upcoming Austville Residences.

'As this is a mediocre site and market uncertainties have increased, bidders are expected to be more cautious in the tender,' said Credo Real Estate executive director Ong Teck Hui.

He believes there could be three to five bidders, and the top bid could come in at $300-350 per square foot per plot ratio (psf ppr).

Cushman & Wakefield senior manager of Asia Pacific research Ong Kah Seng expects to see around five bids for the site, with the winning bid reaching $380-450 psf ppr.

The site might draw 'average interest' from developers as home buying interest could be affected by global uncertainties, a possible slowdown in Singapore's economic growth, and concerns that more property cooling measures could come, he said.

Under the H2 GLS programme, the government placed 17 sites on the confirmed list and 13 sites on the reserve list for private residential development which can potentially generate around 14,200 units altogether. Next month, it will be releasing four residential sites.

Monday, July 25, 2011

Private home prices rise but at slower pace

PIVATE home prices in Singapore have inched up to a new record high though the once rapid rate of increase has again moderated as buyers turn cautious.
Analysts say their caution is the result of higher asking prices, uncertainty over possible new government property measures and a slowing economy.

Prices in the sector rose 2 per cent in the April to June quarter, slowing from 2.2 per cent in the previous quarter, according to Urban Redevelopment Authority figures released yesterday.

It was the seventh straight quarter of moderation. Landed property posted the biggest gains of 3.6 per cent.

This overall 2 per cent gain is, however, a slight rise from the 1.9 per cent flash estimate released earlier this month, indicating that sales recorded in the last two weeks of the quarter continued to show some price increases.

The slowing rises suggest a stabilised property market, analysts say, with runaway prices unlikely now that the number of new private home sales has fallen in recent months as well.

Total sales volume in the primary and secondary - or resale - market has also fallen 18 per cent in the six months to June from the same period last year.

'Home buyers have begun to resist the higher asking prices by sellers and they have also become more selective. There are some uncertainties as they await clearer housing policy directions from the Government,' said ERA Realty key executive Eugene Lim.

Tighter lending rules and sellers' stamp duty of up to 16 per cent have helped weed out speculative purchases.

The Housing Board's move to ramp up new flat supply has also helped calm demand and thus prices, said PropNex chief executive Mohamed Ismail.

Across the various segments - whether landed homes or condos, on the city fringe or suburban areas - prices largely slowed their pace of increase as well.

One exception was homes in the city centre, which saw values gain 1.6 per cent in the second quarter - quicker than the 1.1 per cent rise in the previous quarter.

The outlook for home hunters is positive, with experts predicting a continued price slowdown for the rest of the year.

They cautioned that while the residential market is still driven by low interest rates and ample funds, sentiment will be tempered by the record home supply in the pipeline, tepid global economic conditions and expected housing policy shifts.

PropNex's Mr Ismail said that data from his firm's transactions showed median per sq ft (psf) prices already falling across the island this month.

He expects prices to edge up a further 3 per cent to 4 per cent in the second half of the year.

Mr Png Poh Soon, Knight Frank's head of research and consultancy, expects an 8 per cent to 10 per cent jump in prices for the full year, significantly slower than the 18 per cent advance in prices last year, though still healthy by any standards.

Developers, however, may find themselves in a delicate situation in the light of the general slowdown and uncertain market sentiment, he added.

'Good quality developments will continue to attract demand, but they must be priced attractively to entice home buyers especially with the prospects of a quiet Hungry Ghost Month looming ahead.'

Private home rental growth also held steady with a slight increase of 1.3 per cent - marginally faster than the 1.2 per cent uptick in the previous quarter - led by rental growths in the semi-detached and terraced landed housing segments.

The broad-based softening also affected other property sectors, with the office and industrial segments mostly taking a hit. Gains in rents and prices mainly held steady or moderated quarter-on-quarter.

Cushman & Wakefield senior manager of Asia-Pacific research Ong Kah Seng said this reflected the effect of an economic slowdown and the increased price sensitivity of tenants as business costs rose.

Office rents, for example, inched up 1.5 per cent from 5.4 per cent the three months before, while prices rose at a slower pace of 3.6 per cent from 4.9 per cent.

'The office property sector is expected to achieve continued leasing and rental growth momentum, although (tenants) may be increasingly realistic in the face of modest economic growth, increased business costs and more space options,' Mr Ong added.

Price growth for industrial space eased to 5.5 per cent from 8.3 per cent, while rents slowed to 5.7 per cent from 6.3 per cent.

Shop space values, however, gathered pace to 1.1 per cent from 0.5 per cent in the first quarter as rents held steady with a 0.8 per cent increase.

Friday, July 22, 2011

Slow going for en bloc sales, especially those above $100m

(SINGAPORE) Home owners keen to sell their property through an en bloc sale were less likely to be successful in the first half of this year as compared with the whole of 2010, with estates going for $100 million and above the most difficult to sell.
Data published by property consultancy firm Credo Real Estate showed that plots put up for sale enjoyed a 51 per cent successful selling rate from January to June this year, as compared with 65 per cent for the whole of 2010.

Dragging down the overall selling rate were bigger sites, with more put up for sale this year to tepid interest.

According to Credo, 26 sites valued at $100 million and above were available for sale in the first half of this year, compared with 11 for the whole of last year.

Of the 26 sites, just six - valued from $100 million to less than $300 million - were sold, while none of those priced above $300 million were picked up. This translates to a success rate of 23.1 per cent.

Last year, three of the 11 sites valued at $100 million and above were sold, putting the success rate at 27.3 per cent.

In contrast, plots valued at below $50 million enjoyed an 87 per cent success rate for the first half this year, higher than the 76 per cent garnered by sites put up for sale from January to December last year.

The different reception that big and small collective sale sites saw stem from the uncertain property market environment, and the higher supply of land available under the Government Land Sales (GLS) programme, said Credo's deputy managing director Tan Hong Boon.

With the Singapore government intent on keeping property prices in check, developers are keen to see quicker turnaround times, especially for mega sites, he said. And collective sales - unlike plots sold under the GLS programme which are also large in size - generally take a longer time to change hands.

'For collective sales, you need to factor in the 3-4 months that it takes for the strata title board to give the sale order', for instance, said Mr Tan. Then there is the six-month period where the developer has to allow residents to stay rent-free before it can begin to redevelop the land.

In contrast, land available under the GLS programme has a more straightforward process, said Cushman & Wakefield Singapore vice-chairman Donald Han. 'The land sale can be completed within three months, while collective sales may take a while. And there is the unknown factor: developers cannot be sure that there won't be dissidents and appeals against the sale.'

What has added to the lack of interest in large en bloc sites is the huge land supply coming into the market under the GLS scheme, added Mr Han. In June, the Ministry of National Development (MND) released 17 residential sites on the confirmed list of the GLS programme for the second half of the year. Analysts have said that this is a bumper supply of land.

'The smaller collective sale sites are usually bought by boutique or mid-sized developers, who are not big enough to purchase land under the GLS,' said Mr Han. This explains why they are seeing a higher take-up rate.

Large sites that have been launched for collective sale this year include Pearlbank Apartments in Outram, which carried a $750 million price tag; Pine Grove condominium in Ulu Pandan, which asked for $1.7 billion; and Tulip Garden in Farrer Road, going for $600 million.

None of the eight estates priced above $500 million that were put on the market up till June have been sold. Last year, four such plots were up for sale, and none were snapped up.

Private home subsales rise 10.6% in Q2

THE number of private homes sold in the subsale market, which is often used as a proxy of speculative activity, rose 10.6 per cent quarter on quarter to 712 units in the second quarter of this year, but this pace of increase was slower than a nearly 27 per cent jump reflected in the 4,562 new private homes sold by developers, according to Savills' analysis.
'With speculators weeded out from the market after the higher seller's stamp duty (SSD) rates introduced in January, more genuine home buyers now have direct access to choice units from developers in the primary market. So the supply chain has become more efficient with the 'middlemen' or speculators cut out', said Savills Singapore research head Alan Cheong.

'The full impact of the January 2011 anti-speculation measures will need time to work their way through the system since the SSD would affect only those who bought a private home from Jan 14 and sell it within four years of purchase,' he added.

The SSD rates are 16, 12, 8 and 4 per cent respectively for those who sell their properties in the first, second, third and fourth year of purchase respectively.

Those who had, a few years earlier, picked up private homes which are now still under construction, would generally still find it worthwhile to divest them, given the recovery in property values since the global financial crisis, say property consultants. This is expected to continue to contribute to a steady stream of subsale activity.

'This will especially be the case for projects which are close to or have just been completed since buying interest in such developments is typically higher among those who would like to purchase a property that they can move into or rent out immediately,' says Ong Choon Fah, DTZ's COO and head of consulting and research, SE Asia.

Subsales refer to secondary-market deals in pro-jects that have yet to receive a Certificate of Statutory Completion (CSC).

Resales, which are also secondary-market transactions but involve projects with CSC, rose 17.5 per cent quarter on quarter to 4,144 units in Q2 2011, shows Savills' analysis of caveats captured by URA Realis.

The subsale and resale figures were based on caveats lodged (excluding en bloc sales) while new home sales by developers were based on developers' submissions to Urban Redevelopment Authority's surveys. The latest Q2 developer sales figure was compiled as the sum of monthly sales from April to June 2011; however, the final tally to be released by URA today may be lower as it will take into account units returned by buyers.

Savills' analysis covered landed and non-landed properties, excluding executive condos, which are a hybrid of public and private housing.

The study showed that the most popular non-landed project in the subsale market in Q2 2011 was Livia in Pasir Ris (29 subsales), followed by 10 Shelford (24 subsales), The Clift along McCallum Street (22 units), Clover by The Park in Bishan (21 units) and Double Bay Residences in Simei (21 units).

The Clift received Temporary Occupation Permit (TOP) in Q1 this year while Livia and Clover by The Park clinched the same approval this month. Typically, CSC for a project can be obtained one to six months after it has received TOP.

District 12 (which includes Balestier and Toa Payoh) was the most popular subsale district among non-landed homes in Q2, followed by prime districts 9 and 11.

Among non-landed resale transactions, the most sought-after districts were 15 (which includes Katong, Telok Kurau, East Coast Road and Siglap), 10 and 16.

In the landed resale segment, District 19 (which includes Upper Serangoon and Hougang) topped the chart, followed by District 15 and 16. The last includes Upper East Coast, Bedok and part of Upper Changi Road East.

Thursday, July 21, 2011

3 buyers vie for each flat in BTO exercise

THREE buyers applied for every Build-To-Order (BTO) flat on offer when applications for the latest projects closed yesterday.

The 3,556 flats, originally slated to be offered over two exercises, were combined into one launch as part of National Development Minister Khaw Boon Wan's move to provide more choices and lessen repeated disappointments for buyers.


As of 5pm yesterday, 11,548 applications were received for the seven projects in Sengkang, Tampines, Jurong West, Bukit Panjang and Yishun.


A range of units, from studio apartments to five-room flats, were on tap, at prices from $83,000 to $381,000.


With the exception of the studio apartments aimed at the elderly, 95 per cent of the supply is for first-time applicants who may find resale flats too pricey for them.


New flat costs are typically pegged to prevailing resale prices, but they are sold at a discount.


Resale flat prices climbed 2.9 per cent last quarter, according to official estimates, while data from real-estate firms indicate that cash premiums, paid on top of a flat's valuation, had risen by as much as 50 per cent.


The huge release of 1,829 standard units in Sengkang - the most among all five areas - met with an equally enthusiastic response of 5,805 applications - about three per unit.


The small pocket of premium flats - 140 four-room units and 112 five-room types in Yishun - drew the most interest, with seven and six applications per flat respectively.


Least in demand were the 232 studio apartments in Jurong West, which drew 340 applications.


Flats under the standard contract come with minimal fittings, while the premium ones boast better quality finishes.


Dennis Wee Group director Chris Koh linked the strong demand for Yishun flats to the fact that the area has a strong transport system and facilities like Khoo Teck Puat Hospital.


'Although the site is near the perimeter of Yishun, there haven't been any new flats released there for a while so there is definitely pent-up demand,' he said.


Mr Koh added that the downward trend of overall subscription rates showed that Mr Khaw's move to have larger launches seemed to be working.


'Smaller launches can create an artificial shortage because people might rush out to grab the few units on offer. Sold in bulk, it should deter panic buying,' he added.


On Monday, Mr Khaw said he was monitoring the outcome of this exercise.


Referring to the previous launch in May, where 3,957 units garnered about four applications each, he said he was now assured that 'quite a big number will have a chance to say 'yes'.'


Saying a solution to BTO woes was within sight, he added that he planned to offer projects slated for August and September in a combined launch.


These could potentially yield more than 6,000 units in areas such as Ang Mo Kio, Jurong East, Jurong West, Punggol, Bedok and Sengkang, according to data culled from the Housing Board's website.


The Housing Board has released about 15,500 BTO flats so far and plans to deliver 25,000 units by the end of the year.


To supplement supply, about 2,000 surplus flats will also be put up for sale.

Keppel Land to launch new project in Sengkang

PROPERTY firm Keppel Land will launch a new 620-unit Sengkang project by the end of this year, despite a cooling market.
The announcement yesterday came on the day the company said its second-quarter net profit fell 65 per cent, largely due to the adoption of a new accounting policy.

Earnings were $50.5 million for the three months up to June 30, down from $143.8 million a year earlier, while revenue was down 67 per cent to $104 million.

The accounting change requires developers to recognise revenue and profit only on completion of certain projects. In the past, developers had smoothed out their revenue streams from projects, progressively recognising income over the contract period as certain milestones were met.

Keppel also faced slower home sales in China after a raft of cooling measures. It sold 400 homes in China in the first half of this year, well under the 1,200 sold in the corresponding period last year, but the firm said it does not plan to cut prices.

Group chief executive Kevin Wong said while cooling measures here and the impending supply from government land sales dampened Singapore's private home sales in the first six months of the year, property in selected suburban regions and near MRT stations will still attract interest.

Healthy economic growth, a buoyant job market, ample liquidity, a low interest rate environment and the sustained influx of foreigners will also provide support for the residential market here, said chief financial officer Lim Kei Hin.

The company sold 160 homes here in the first half of the year, with a total value of $245 million.

Mr Wong said future investments - whether here or overseas, commercial or residential - will simply depend on opportunities. 'In China, we started doing some commercial developments. In the past, we had not gone in in any big way; we focused on residential because that was a market that we thought had the most profits.

'And of course, now with all these cooling measures, there are locations and opportunities where commercial markets will become attractive.'

Net profit for the six months fell 34 per cent to $134 million from a year earlier. Revenue rose 9 per cent to $462 million.

Earnings per share for the half-year dipped to 9.1 cents from 14 cents last year, while net asset value per share was $2.72 as of June 30, down from $2.85 as of Dec 31.

Tuesday, July 19, 2011

Wrong to say prices for new flats are falling: Khaw

IT IS wrong to compare the prices of the latest Build-to-Order (BTO) flats - offered last week - and those launched in May and conclude that the Housing Board's prices for new flats are coming down.

National Development Minister Khaw Boon Wan said this yesterday and added that there is no reason for a sharp decline in prices unless market sentiments dip.

Speaking to reporters after his first official visit to the HDB Hub, he noted that 'pricing a flat is quite tricky as there are many factors at play', citing variables like the floor the unit is on, location and proximity to amenities like MRT stations.

The prices of HDB's new flats are typically pegged to prevailing resale prices but are discounted.

Referring to previous media reports, Mr Khaw noted that in each BTO launch, there is a range of products 'so you cannot just look at the July BTO, the lowest is so much, and then the May one, and say there is a 18 per cent drop'.

In last week's launch of 3,600 BTO flats in seven locations in Sengkang, Tampines, Jurong West, Bukit Panjang and Yishun, the indicative starting prices for three-, four- and five-room flats were $137,000, $217,000 and $274,000.

In May, the starting prices for 4,000 BTO flats in Pasir Ris, Punggol, Tampines and Woodlands were $166,000, $264,000 and $335,000 respectively.

Calling broad-based comparisons akin to comparing apples with oranges, Mr Khaw added: 'What I'm trying to achieve at this stage is to try to stabilise the pricing. So you can largely see that prices are not increasing but it is also not dropping sharply because there's no reason to... unless the market begins to drop.'

Market watchers have said the BTO rollouts in May and last week, after Mr Khaw assumed the National Development portfolio, demonstrated his commitment to ramp up supply aggressively to alleviate demand while being cost-effective.

According to official estimates, resale flat prices have climbed a further 2.9 per cent in the second quarter, following a 1.6 per cent increase in the previous quarter and a 14.1 per cent hike last year.

Data from real estate agencies also indicated that cash premiums, paid on top of a flat's valuation, have been rising as much as 50 per cent to $32,000.

This is likely to affect price-sensitive first-timers most.

In new flat launches, 95 per cent of the supply is set aside for first-timers.

Mr Khaw also referred to his recent blog post on Sunday, which said that almost all applicants who ballot for a unit that is twice oversubscribed would get a chance to select one because many applicants back out. Calling such data crucial to him as a policymaker, he said that 'I need to know this - that a subscription of two practically means a 100 per cent chance'.

Applying this principle to May's BTO, which was about four times oversubscribed, he added: 'I can be assured now that I think quite a big number will have a chance to say 'yes'.'

On the topic of larger, combined launches which he advocated for last month to reduce the frequency of repeated disappointment, he said: 'The key is that you must push out more, and (with a) wider range. So previously, when HDB releases small launches, in fact, it's worse.

'Each time you release a few hundred units, everybody rushes for these hundred units and many will get disappointed for sure.'

So far, 15,500 new flats have been launched this year. HDB has said it is on track to offer 25,000 in all by year-end.

Asked if more flats would be released next month, Mr Khaw said while he could release them in small batches, he saw 'value in having sufficient critical mass', and that he would be combining the next two months' launches into one.

A review of the income ceiling for first- timers to buy BTO flats, as well as the Design, Build and Sell Scheme (DBSS), is still under way, he said.

Right now, the monthly household income qualifying criteria is up to $8,000.

Mr Khaw also explained why prices for new flats and surplus ones under the Sale of Balance Flats (SBF) exercise are different.

'Because they (SBF) are almost available, so pricing them would have to be different. Because if the product is available next month, versus three years' time, obviously you have to price it differently, otherwise it would not be fair to those buying BTO flats today,' he added.

To supplement the main flat supply this year, Mr Khaw also promised 2,000 surplus flats, none of which has been launched to-date.

Ghosts may not vanish after seventh-month blip

(SINGAPORE) The Hungry Ghosts may provide their usual scare, but the real menace for developers lurks deeper. They could be sailing into a perfect storm.

Even before this month kicks off on July 31, several other factors are already weighing down private home buying sentiment. 'The Ghosts' Month will provide developers with a good excuse if sales slow down even further in the next few weeks,' said one developer.

Colliers International's analysis shows that since 2007, developers' private home sales have dipped anywhere from about 19 per cent to 70 per cent month-on-month in the calendar months during which the Hungry Ghosts Month falls. The property consultancy used the monthly sales data that developers have been submitting to Urban Redevelopment Authority since June 2007, excluding executive condos (ECs).

Official stats released by URA on Friday showed that developers' sales slipped 25 per cent month-on- month in June, following May's 12.7 per cent month-on-month drop.

Market watchers say that while traditional Chinese may avoid buying homes during the Ghosts' Month, the younger generation are less likely to observe the taboo. When the property market is hot, the dip in sales during Ghosts' Month tends to be less marked; however, when sentiment is weak, the drop in sales tends to be more pronounced, say property agents.

As DTZ's SE Asia research head Chua Chor Hoon puts it: 'It's an additional factor that will affect sentiment in a weak market.'

She points to a whole host of factors which are already weighing down sentiments - including resistance to high prices, economic uncertainty in the US and Europe, cautionary market pronouncements by the National Development Minister and uncertainty about the impact of the increase in the supply of new HDB flats on the private housing market. Analysts also say the sharp slowdown in Singapore's economic growth in Q2 will affect sentiment among home buyers.

Said one developer: 'Hopefully we're not sailing into a perfect storm. Things have been quiet in the past few weeks. The market has come off a bit... In the past, when there were property cooling measures by the government, there was a knee-jerk reaction and after that, buying recovered. This was the case even with the last round of measures in January.

'But this time, the slowdown may be for real. Even sales of some of the shoebox projects have been affected,' he added pointing to The Interweave at Kim Keat Road in the Balestier area. The freehold development has 169 units, including about 110 one-bedders (from 344 sq ft to 441 sq ft). According to URA's data, 59 units were sold in May, when the project was first released, followed by 19 units in June. BT understands that so far this month, about half a dozen units have been sold. The project is priced at an average of $1,390 psf.

This year the Ghosts' Month, or the seventh month of the Chinese lunar calendar, stretches from July 31 to Aug 28, just before the one-week September school holidays begin on Sept 3.

Some developers like Hoi Hup usually do not release new projects during Hungry Ghosts' Month. However, Colliers' research and advisory director Chia Siew Chuin observed: 'In recent years, it is becoming apparent that projects with strong attributes and those which are attractively priced can perform well even if launched during the Ghosts' Month.

'For example, Trevista at Lorong 3 Toa Payoh and The Trizon (in the Mount Sinai area) were launched during the Ghosts' Month in 2009 and had encouraging take-up rates - of 90 per cent of 460 units released for Trevista and 100 per cent of 99 units released for Trizon - during the month of launch.' Trevista is a 590-unit development while Trizon comprises 99 units.

Talk in the market is that Far East Organization may release its euHabitat condo at Jalan Eunos very soon. The low-rise 99-year leasehold project will comprise 748 units including one to four-bedroom apartments, SoHo-style units and four-bedroom townhouses. BT understands that agents have started gathering interest and collecting cheques at an indicative average pricing of slightly above $1,000 psf, ahead of an imminent preview.

Far East, Frasers Centrepoint and Sekisui House are also expected to preview in August, during the Chinese seventh month, their Boathouse Residences at Upper Serangoon View, a 99-year condo comprising 493 apartments and a shop unit. The average price is expected to be $900-plus psf.

However, Hoi Hup told BT that it plans to wait till the eighth month begins before releasing its Arc at Tampines, a 574-unit executive condo project at Tampines Avenue 1/8.

Knight Frank executive director (residential) Wendy Tang said: 'Developers may just take a break given the current cautious sentiment and not push out projects until the eighth month. We're likely to see less buying activity in the seventh month. Some people may also take a holiday during the National Day period.'

'There's still movement in the market but showflats are generally quieter. Those who visit showflats know exactly what they want,' she added.

Meanwhile developers continue to sell units in existing projects. Last week, Kheng Leong is understood to have sold 19 units at The Minton, a 99-year leasehold condo in the Hougang area with an average price of just below $900 psf. CapitaLand is said to have found buyers for seven units at d'Leedon, a 99-year project at Farrer Road priced at $1,680 psf on average, last week.

Sunday, July 17, 2011

Gone fishing ... waiting for lower home prices

A SHARP slowdown in private home sales last month also carried with it a stark message for developers: they will have to keep a close watch on pricing if they choose to roll out more projects in the months ahead.

This view was echoed by property consultants after official numbers yesterday from the Urban Redevelopment Authority showed that the number of private homes (excluding executive condos or ECs) sold dropped 25 per cent month-on-month to 1,182 in June. This marks the second consecutive monthly decline and takes the figure for the second quarter to 4,562 units. The final tally (factoring in returned units) will be released by URA on Friday, July 22.

The preliminary Q2 figure (compiled from adding up monthly sales from April to June) is nearly 27 per cent ahead of the final figure for the first quarter of 3,595 units. The 8,157 units sold in H1 is in the ballpark of the 8,413 private homes sold in H1 last year and 7,879 units in H2 last year.

Market watchers were not surprised by June's slower sales - which they attributed to the mid-year school holiday season when many families are overseas, price resistance and buyer caution. As Jones Lang LaSalle SE Asia research head Chua Yang Liang puts it: 'Home buyers are holding back their purchases, confident that the new National Development Minister Khaw Boon Wan's leadership would bring home prices to a more affordable level in the near future.'

Some players also said that greater 'price sensitivity' has set in among buyers. Colliers International analysis showed that nearly half of the 1,182 private homes which developers sold in June were priced at no more than $1,000 per square foot. The Outside Central Region (OCR) continued to make up the lion's share, accounting for 70.5 per cent of units sold. It also made up nearly 70 per cent of the 1,614 private homes that developers launched last month. That is the result of the substantial amount of land sold at state tenders, which provide private housing land mostly in OCR to cater to strong demand for suburban entry-level private homes.

Credo Real Estate executive director Ong Teck Hui says: 'Going forward, it could be a more difficult period for developers as they decide on whether to launch new projects and at what prices. Some may prefer to wait and see and pull back on new launches if they assess that demand is being adversely affected by current market conditions. If this happens, it will increase the build-up in unsold inventory.'

On the other hand, it is precisely to avoid being forced to launch projects later, when market conditions may worsen, that some developers may still go ahead with launches in the coming months, he reckons. 'Pricing will be key; if you are prepared to price realistically you can still move units.'

Wendy Tang, Knight Frank executive director of residential services, also points out that developers will still have to roll out projects as soon as possible, especially those on sites which they had bought at state tenders due to the stipulated five-year timeframe for project completion.

'But developers may slow down when it comes to tendering for new sites. They may become more selective about the sites they bid for and cautious with their land bid prices, taking into account an expected increase in construction costs - partly due to the ramping-up in building of public housing flats. Also, developers may not be able to raise selling prices on their projects as buyers are more cautious.'

Analysts point to worries about the economic situation in the US and Europe, the sharp slowdown in Singapore's economic growth in Q2 and concerns about the impact of the record supply of public housing on upgrader demand in the private housing market.

CB Richard Ellis executive director (residential) Joseph Tan acknowledges that affordability remains a concern in the mass-market segment. 'Developers will manage this by keeping three-bedroom family-sized units compact at around 1,000 sq ft and priced below $1 million.'

URA's numbers show that the 1,614 private homes (excluding ECs) that developers launched in June was 32.8 per cent higher than the 1,215 units they released in May.

Developers did not launch any new EC projects last month. However they continued to sell units in earlier projects such as Belysa in Pasir Ris (153 units sold in June) and Austville Residences in Sengkang (28 units). Total sales including ECs was 1,394 units in June, a 23.6 per cent drop from May's sales volume of 1,825 units.

ECs are a hybrid of private and public housing with buyer eligibility and resale conditions which are completely lifted 10 years after an EC project is completed.

Excluding ECs, the top-selling private housing project last month was Woodhaven in the Woodlands area (155 units at a median price of $981 psf), followed by The Miltonia Residences in Yishun (149 units at a median price of $877 psf), Seastrand in Pasir Ris (120 units at a median price of $879 psf) and Sims Edge at Lorong 33 Geylang, a shoebox development which saw 77 units transacted at a median price of $1,329 psf.

The priciest unit sold by a developer in June was $4,362 psf for a unit at Wing Tai's Le Nouvel Ardmore in the posh Ardmore Park area. UOL also found buyers for the last three units at its 100-unit Nassim Park Residences at $3,642-$3,997 psf. Wheelock Properties sold a Scotts Square unit for $3,690 psf. SC Global Developments sold a unit at Seven Palms Sentosa Cove for $3,606 psf.

Friday, July 15, 2011

HDB launches 3,556 flats at cheaper starting prices

CHEAPER prices - and a wide range of new flats - are the big draws for first-time buyers in the latest launch of Build-to-Order (BTO) flats.
The Housing Board (HDB) is offering 3,556 flats in seven locations in Sengkang, Tampines, Jurong West, Bukit Panjang and Yishun.

Indicative prices for the three-, four- and five-room flats are cheaper than those in previous BTO projects.

They start from $137,000 for a three-room, $217,000 for a four-room and $274,000 for a five-room flat.

The starting prices were $166,000, $264,000 and $335,000 for the same flat types in May's launch of 4,000 new flats.

The lower prices announced yesterday come even as the HDB resale price index continues its upward march - suggesting a widening price gap between new flats and resale ones.

HDB's new homes are typically pegged to resale prices but are discounted.

The new launch follows National Development Minister Khaw Boon Wan's recent pledge to combine launches. In a previous blog post, he had noted that large ones 'offer buyers a wider range of choices and reduce the odds of repeated disappointment'.

'I am therefore working with HDB to see how the June and July launches can be combined for a larger launch. And I will price them wisely,' he had said.

Analysts whom The Straits Times spoke to said yesterday's rollout demonstrates Mr Khaw's commitment to aggressively ramp up supply in a cost-effective manner to relieve the hot demand for homes.

Current median cash premiums - paid on top of valuation - for resale flats have risen to about $32,000 from $21,000 in the last quarter, noted property agency PropNex spokesman Adam Tan, which hurt more price-sensitive first-time buyers.

HDB resale flat prices have climbed a further 2.9 per cent in the second quarter according to official estimates - on the back of a 1.6 per cent increase in the first quarter and a 14.1 per cent hike last year.

He noted that though the new launch's lower prices could be due to the location of the flats, there was a distinct trend of offering a bigger discount.

'In the past, new flats were discounted at a range of 15 to 25 per cent from similar resale flats in the area - we are seeing this range expanded to 23 to 32 per cent now,' Mr Tan said.

Mr Nicholas Mak, head of research at SLP International, said the attractive pricing will further alleviate demand in the resale market and shift first-time buyers' preference to HDB's new flats.

The launch yesterday offers 381 studio apartments in Tampines and Jurong West - ranging in price from $83,000 to $96,000.

There are 459 three-room, 1,674 four-room and 1,042 five-room flats - with the option of standard and premium finishes - in Sengkang, Bukit Panjang and Yishun at a price range of between $137,000 and $421,000.

The launch will bring HDB's supply of new flats this year to about 15,500. It said yesterday it is on track to deliver 25,000 new BTO flats for this year.

Mr Tan expects the new flats to be 'very well received'.

As of 5pm yesterday, HDB had received 1,541 applications for the 3,556 flats.

The closing date is next Wednesday.

WHAT'S ON OFFER

381 Studio apartments

459 Three-room flats

1,674 Four-room flats

1,042 Five-room flats

3,556 Total number of flats offered

As of 5pm yesterday, 1,541 home buyers had applied for the flats available.

Saturday, July 9, 2011

Bukit Sembawang sells 80 Skyline units

BUYERS continue to shop for homes.

Bukit Sembawang Estates began previewing Skyline Residences, a freehold condo in the Telok Blangah area, earlier this week. According to marketing agent Knight Frank, about 80 of the 100 units released so far in the 283-unit project have been sold.

The average price is understood to be in the $1,800-$1,900 per square foot (psf) range. The cheapest unit, a 484-sq-ft one-bedder on the third level, costs about $950,000.

The 24-storey project, on the former Fairways Condo site, is designed with an elevated podium to incorporate higher views for the units. Skyline Residences will offer its residents views of Keppel Golf Links and the sea, and is near the upcoming Telok Blangah MRT Station under the Circle Line.

Skyline Residences comprises three towers and offers one-bedroom to four-bedroom units, as well as three penthouses (of 3,165 sq ft, 3,251 sq ft and 3,681 sq ft).

City Developments Ltd (CDL), meanwhile, confirmed it has sold about 150 units at its Blossom Residences executive condo (EC) project at Segar Road in the Bukit Panjang area since it began sales on Thursday. The 99-year-leasehold project is priced at $685 psf on average. Prices of two-bedroom units start from $548,000 while four-bedders begin at $841,000.

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.

As per rules for EC launches set by the authorities, CDL has to set aside at least 95 per cent of the project's 602 units for first-time home buyers during the first month of the launch. Qualifying first-time home buyers will enjoy a $30,000 CPF Housing Grant.

BT understands that all 30 units (5 per cent of the project) of Blossom Residences reserved for second-timers are fully taken up. CDL will be able to sell more units to second-timers only after the first month.

The project is a three-minute walk to Segar LRT Station, which will be connected to the upcoming Bukit Panjang MRT Station (under Downtown Line).

The group noted that the last time an EC project was launched in the Bukit Panjang area was in 1997.

Along Upper Thomson Road, Hong Kong's Cheung Kong Holdings has sold all of the initial batch of 50 units at its Thomson Grand condo project in Singapore set aside for the first day of preview yesterday and has released a new batch of 20 units, according to a release issued by the developer yesterday afternoon.

The two-to-four-bedroom apartments (among the initial 50 units sold) were priced from about $1,100 psf to $1,600 psf, reflecting an average price of about $1,400 psf, Cheung Kong said.

However, BT understands that those who bought yesterday received an early-bird discount of 4.5-5.5 per cent depending on the unit type. Based on this, the average price would be closer to the $1,330 psf level, said market watchers.

The early-bird discount is not expected to be offered after yesterday.

In its release, Cheung Kong said that 11 of the 22 strata terrace homes in the 99-year-leasehold project opposite Singapore Island Country Club have also found buyers, with the highest transacted at $4.1 million.

Over at Farrer Road, CapitaLand releases today about 180 units - comprising two, three and four-bedders - in a new block at d'Leedon. The average price of the 99-year-leasehold condo remains unchanged at $1,680 psf.

Day of contrasts for EC market

a day of contrasts in the executive condominium (EC) market yesterday.

Even as caution reigned at a state tender for a Punggol EC site which drew just three bids with the top bid coming in below earlier expectations, City Developments Ltd (CDL) managed to sell slightly over 150 units on the first day of sales at its Blossom Residences EC project at Segar Road in the Bukit Panjang area. This pace of sales would be in line with the previous EC launch of Belysa in late May, say market watchers.

Some analysts declared that the cautious bidding mood for 99-year private condo sites at recent state tenders has started to filter through to the EC market. The three bids for an EC plot at Punggol Way/ Punggol Field yesterday was the poorest turnout since tenders for EC sites resumed last year. Also, the top bid of $270.08 per square foot per plot ratio (psf ppr) for the Punggol plot yesterday was lower than the $300-350 psf ppr which most property consultants had predicted for the site when it was launched in late May.

Another marker of the weakening sentiment among developers of EC land was that yesterday's top bid - which came from a joint venture between Frasers Centrepoint and Keong Hong Construction - was 12 per cent below the $308 psf ppr that NTUC Choice Homes and Chip Eng Seng paid for a comparable EC site in June last year on which they are now developing the Prive project. That tender drew five bids.

Credo Real Estate executive director Ong Teck Hui said that the two sites are quite similar in terms of distance to the Punggol MRT/LRT Station, bus interchange and amenities.

'The latest result just shows the cautious bidding at this tender. With several ECs under active marketing and some more to be launched, plus new EC sites in the second-half 2011 Government Land Sales Programme, the potential supply has become more significant, and would have deterred keen participation and optimistic bidding in this tender,' Mr Ong added.

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. Mr Ong reckoned that developers may also have preferred to err on the side of caution for yesterday's tender, given the uncertainty about the impact that an expected increase in income ceiling for buyers of Build-to-Order public housing flats and the significant BTO supply for this year will have on other segments of the housing spectrum including ECs. CBRE Research executive director Li Hiaw Ho estimated that Frasers Centrepoint/Keong Hong's top bid for yesterday's tender would result in a breakeven cost of about $570-600 psf for a new project. Prive was sold at a median price of about $700 psf when it was released last December.

'Another EC project, River Parc at Punggol Drive/Punggol East, is currently open for application and the average price is around $650 psf,' Mr Li added.

Frasers Centrepoint and Keong Hong's top bid was just 0.4 per cent above the second highest bid of $268.90 psf ppr from Chip Eng Seng unit CEL Development. The lowest offer, from EL Development, was $217.94 psf ppr. Frasers Centrepoint said that its scheme entails about 700 units, over 10 17-storey blocks. The developer is no newbie to the area - it has a stake in a retail and residential project at Punggol Central.

Over at Segar Road, CDL has priced its 602-unit Blossom Residences EC at $690 psf on average for the normal progress payment scheme. Those who opt for the deferred payment scheme will pay 3 per cent more.

Two-bedders range from 753-969 sq ft and cost $548,000 to $590,000. 'Compact' three-bedders start from 969 sq ft and $659,000 while normal three-bedders begin at 1,055 sq ft and $723,000.

Blossom Residences also features dual-key units. A four-bedroom dual-key unit of 1,356 sq ft is priced from $931,000. Penthouses (1,615-2,088 sq ft) cost $1.088 million to $1.276 million.

In the private housing segment, Cheung Kong Holdings today previews its Thomson Grand project opposite Singapore Island Country Club. The posh sales gallery cost over $8 million and incorporates more than 100,000 Swarovski crystals, including the chandelier centrepiece. The sales gallery embodies certain features of the project's Faberge Clubhouse, which will resemble a bejewelled egg.

The initial batch of 50 units in the 361-unit project comprises two, three and four-bedroom apartments as well as strata terrace houses.

Cheung Kong said that the terrace houses, with strata areas of 5,102-6,566 sq ft, will be priced at $3.5-4.6 million while apartment prices will range from $1.4 million for a two-bedder to $3.8 million for a four-bedroom unit. It said that all apartments will cost above $1,400 psf. However, sources suggest that $1,400 psf is more likely to be the average price.

Cheung Kong clinched the 99-year leasehold site for $533 psf ppr in late 2009.

Thomson Grand is being marketed by CBRE and Huttons, while CBRE and ERA are marketing Blossom Residences.

Thursday, July 7, 2011

Crystal Tower, Daisy Apts up for collective sale

THE tender for the collective sale of Laguna Park at an asking price of $1.33 billion has closed. Its marketing agent Knight Frank was quoted by Channel News Asia (CNA) as saying it was negotiating with an interested party.

It has another 10 weeks to finalise a sale or negotiate a private treaty before the en bloc sale process collapses. If the sale goes through this time, residents could pocket about $2.2 million each.


Elsewhere, two residential properties - Crystal Tower at Ewe Boon Road and Daisy Apartments near Serangoon Gardens - have been put up for collective sale.


Crystal Tower carries an indicative price of $155 million, CNA reported yesterday. The 28- unit, 11-storey residential development sits on a 60,482 sq ft freehold site with a gross plot ratio of 1.6.


The breakeven price for Crystal Tower is estimated to be in the region of $2,200-2,300 per square foot (psf). There may be no development charge. Based on the indicative pricing of $1,600 psf per plot ratio (ppr), current owners at Crystal Tower can expect to receive between $5 million and $10 million each from the sale proceeds.


Daisy Apartments sits on a 13,000 sq ft site at Daisy Road. The expected en bloc price is above $14.5 million. The land is zoned for residential use at a plot ratio of 1.4 and an allowable height of up to five storeys.

10,000 new private homes in pipeline

MORE than 10,000 new private homes are expected to hit the market over the remainder of the year, according to a new report.
Property consultancy Savills said these projects will mainly come from the Government Land Sales (GLS) programme with most of the upcoming homes catering to the mass market segment.

Based on the 8,000 units, including executive condominiums, put up for sale in the first five months this year, Savills estimates the total this year will surpass the 18,000 - including executive condominiums - launched for sale last year.

The Urban Redevelopment Authority (URA) has said the expected supply of new homes poised to hit the market over the next few years could be as high as 53,000.

Mr Alan Cheong, Savills' head of research, said it could take around four to five years for the market to fully absorb these unsold homes. His calculations are based on the average annual take-up over the past five years of about 12,000 new homes.

Data compiled by Savills shows that about 70 per cent of the homes will be in neighbourhoods along the city fringe such as Thomson and Bendemeer while 17 per cent will be in suburban areas, including Tampines, Bishan and Upper Serangoon. These are mainly GLS sites.

The remaining 12 per cent will be in city centre areas like Newton, Holland and Orchard Road. These mainly come from private land sales.

The large number of homes to be put up for sale later this year suggests that developers may be keen to launch their projects soon due to uncertainty about the global economy and the outlook for the property sector.

Another factor is that many of the sites are from the GLS programme.

Mr Lim Yew Soon, managing director of EL Development, said developers who have bought GLS sites are less likely to hold back from launching their projects.

He said: 'The Government is still releasing a lot of land so it doesn't make sense to hold on to the site and wait.

'GLS sites also come with a condition that the land must be developed within five years of its sale, so developers can delay their launches for up to two years but anything longer than that is not possible.'

Analysts are still cautiously optimistic that the buying momentum experienced so far this year will continue for the rest of the year.

Ms Wendy Tang, Knight Frank's executive director of residential services, said that while the market is cautious because of the uncertainty about future housing policies, she expects demand for new homes to remain healthy.

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said global issues such as the euro zone debt crisis that have been impacting the stock market have also influenced buying sentiment.

'The recent (euro zone debt) crisis... has now passed. The economic fundamentals present in the first half of this year are still present so I don't see why the buying shouldn't continue,' he said.

Wednesday, July 6, 2011

Govt halts DBSS land sales as it reviews scheme

THE sale of land for Design, Build and Sell Scheme (DBSS) projects has been put on hold while the Government carries out a review, said National Development Minister Khaw Boon Wan.

But developers which clinched sites last year will launch their projects as scheduled in the next few months, he added, noting that 'these are old tenders beyond my control'.

Mr Khaw made these points on his official Facebook page over the weekend, in response to a member of the public who called for the scheme to be scrapped in the wake of high asking prices at a Tampines project called Centrale 8.

The developer, Sim Lian Group, initially estimated prices at $880,000 for five-room units, later revising them to $778,000 after a public uproar.

Yesterday, the Ministry of National Development (MND) said that pending the results of the review, the Housing Board would not proceed with the sale of a DBSS site in Bendemeer slated for later this month.

However, the sale of a site in Sengkang - expected to yield 790 units - will still proceed, with a July 20 deadline.

DBSS was rolled out six years ago to give private developers a chance to participate in the public housing market and to introduce more building and design innovations in such housing.

Since then, 13 sites have been awarded and 5,500 flats have been built and sold.

DBSS flats make up less than 1 per cent of the total HDB stock.

Analysts say the current review is timely, given the changing housing landscape. Recent flash estimates from HDB revealed that resale flat prices jumped 2.9 per cent from the first quarter of this year, while data from major real-estate firms put the median cash premium paid above a flat's valuation at about $30,000, an almost 50 per cent increase.

PropNex chief executive Mohamed Ismail noted that when DBSS kicked off in 2005, the market was in the doldrums and there was a surplus of public housing.

'The scenario now has changed with soaring prices,' he said, adding that DBSS flats are in demand because most are in mature estates or central locations.

Mr Colin Tan, Chesterton Suntec International's research and consultancy director, said that if the objectives are to inject variety and engage the private sector and smaller contractors, 'then perhaps the sites should be in newer towns which are less in demand'.

Dennis Wee Group director Dennis Wee said that if a revision of the monthly household income cap is being studied for public housing, then it makes sense to put DBSS on hold.

'Moreover, eligible flat buyers for these units are a smaller group compared with the main supply,' he said.

Currently, the income ceiling for build-to-order (BTO) flats is up to $8,000, while that for DBSS and executive condominiums is up to $10,000.

Meanwhile, DBSS developers with projects in the pipeline say it is business as usual for them.

The launch of the 488-unit Belvia in Bedok is still on track to take place this year, said a spokesman for CEL Development.

'We've already submitted the necessary documents; the prices have yet to be confirmed and will depend on prevailing market prices then,' she said.

Mr Lim Yew Soon, managing director of EL Development, which clinched a DBSS plot in Clementi in March, said it would be to its advantage to 'sell flats as soon as possible to ease cashflow'.

Although he expects the top price to cross $800,000, it would not hit the peaks that sparked the Centrale 8 furore.

Sunday, July 3, 2011

Small homes a hit with singles and expats

LIVING in a tiny apartment might be a claustrophobic nightmare for some, but the prospect of a home, however small, that is affordable and centrally located is a hard combination to beat.
The smallest types, the so-called shoebox apartments - they are less than 500 sq ft - have certainly proved popular, particularly with young singles and expatriate professionals.

Consultants say they offer healthy yields of 3 per cent to 4 per cent depending on the project, while residential yields in general hover around 3 per cent.

Earlier this year, a 474 sq ft unit at Robertson Edge went for $858,000. Assuming a monthly rental of $3,000, the yield works out to 4 per cent.

The popularity of shoeboxes has stumped some market observers, who wonder how people could opt to live in such small spaces, yet tenants and owner-occupiers told The Straits Times they were happy with their tiny homes.

While there were inconveniences, including clearly the lack of storage space, the ease of upkeep was a big plus. Ms Natalie Sheguy, 26, who lives in a flat of about 500 sq ft at Robertson Edge off Mohamed Sultan Road, cited storage as one of her biggest challenges.

The Korean banker, who pays rent of $3,000, said the project's convenient location - a 10-minute drive from her office - and privacy were the key draws.

Ms Marianne Kroha, who lives in a slightly larger apartment of about 700 sq ft spread over two floors at the same project, had told her agent to find her a small but centrally located home.

Her previous apartment - a 2,000 sq ft unit at Pearl Bank in Outram - was too big for just one person and lacked nearby facilities, she said. 'Location is key. Over here, it's very convenient as I'm close to restaurants and bars and to my office at Raffles Place. This is the smallest apartment I've ever lived in but the small size also makes it easy to clean,' she added.

Ms Kroha, a 34-year-old American who works in financial services, moved in in April and pays $3,800 a month in rent.

But finding adequate storage, for example, has been tough. Her mail and books are packed in kitchen drawers while excess clothes and shoes are stuffed in the unit's bomb shelter.

Entertaining guests has also been 'challenging', she admitted. The narrow L-shaped living room means little space to place a table when guests come for dinner.

Other tenants agreed the city-fringe location of most newly built shoebox developments - but without the sky-high rents - appealed most.

Developers use measures such as higher ceilings, more windows and a more squarish layout to make the space seem larger. Another reason why these projects can be tenanted out is that all the developments on the market are practically brand new. An expatriate tenant at the Axis in Balestier, who declined to be named, said: 'It's almost brand new. When we were first looking, we found that it's not that easy to find an HDB flat for rent.'

Experts say shoebox units are fetching healthy rents now as there are not many of such completed projects. Some of the smallest ones, such as Suites@Guillemard with units under 300 sq ft, are not ready yet.

But ERA Realty key executive Eugene Lim said the test will be to see if rents hold even when thousands of completed shoebox units enter the market over the next few years.

National Development Minister Khaw Boon Wan recently noted that the number of completed shoebox units will more than triple to 3,800 by 2014. He said on his blog that many newer shoebox units will be in the suburbs, an untested market, which should make buyers weigh the benefits and risks carefully.

Cushman & Wakefield Singapore vice-chairman Donald Han added that it will be 'survival of the fittest' once more of these tiny apartments enter the market.

'Demand for such homes is limited and only the most well-located ones will continue attracting interest as tenants are sacrificing space for convenience... The fad will pass and yields might come down for some,' he added.