Monday, December 31, 2012

14,000 Private Residential Homes to Come for First Half of 2013

The Ministry of National Development (MND) has announced that 12 private residential sites, including 5 Executive Condominium (EC) sites and a mixed commercial and residential site, make up the Confirmed List for first half of 2013 (1H2013) of the Government Land Sales (GLS) programme.

These plots of land will be developed into 14,000 new private homes in the first half of next year. Of the targeted 6900 private residential units, 3100 will be ECs. The aim of releasing this supply is to keep the price of housing steady after it hit the roof in the third quarter of 2012.

Most of these private residential sites will be situated at the city fringe or the suburbs, where home prices are generally lower. The sites will also yield 33,000 sqm gross floor area (GFA) of commercial space.

The expected number of 14,000 homes that will be developed from these sites is similar to the 14,185 and 14,140 units achieved in the first and second half of this year respectively.

On top of the abovementioned sites on the Confirmed List, the MND said that the Government has also put 19 sites on the Reserve List. These sites include 11 private residential sites, one commercial-cum-residential site and two commercial sites. In total, they can provide about 7100 private residential units and over 3 million sq ft of commercial space.

Four hotel sites with a total of about 1740 hotel rooms and one white site are also included in the list. Developers are permitted to choose a combination of uses for white sites as well as the amount of floor space allocated for each use, as long as the overall GFA for the entire development is kept within limits.

A tender will only be considered under the Reserve List system when the Government agrees to the minimum bid price of the developer submitting an application.

Industry insiders have observed that the number of sites on the Confirmed List is lower than that on the Reserve List in this latest GLS exercise. Excluding the 3100 EC units, only 3800 private residential units will be created from the Confirmed List in 2013. This number is 300 lower than what was released in the same period in 2012. The reason for the decrease could be the fact that supply is still rather healthy.

As of the third quarter of this year, 93,800 private residential units, not counting 9800 EC units are under construction. Of this, 40,000 units and 3400 EC units are still unsold.

Nonetheless, developers will be attracted to, and still bid aggressively for sites in the Confirmed List that are in prime locations for landed housing, like at Coronation Road or Victoria Park Road. These plots are situated among mostly low-rise housing and good schools.

Experts predict that until private housing prices movements are steady, the Government will keep monitoring land supply for private residential development.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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The lure of ECs

Dec 31, 2012 -

Demand for executive condominiums (ECs) has been red hot this year due to their potential price gains and features that rival those of private condominiums, reported The Straits Times.

The launch of the S$2.05 million “presidential penthouse suite” at CityLife EC project in Tampines further highlighted the allure of such properties. However, the record-selling prices at new launches have created controversy as to whether buyers of these pricey units should be entitled to HDB grants.

Mohamed Ismail, Chief Executive of PropNex, said: “It’s almost a given that if you buy an EC today and wait 10 years, you could make a quarter of a million dollars in profit.”

Units at new EC launches are usually priced 20 to 25 percent lower than 99-year leasehold private condos. Only households with a monthly income of S$12,000 and below are eligible to buy one.

However, unlike HDB flats which cannot be sold to foreigners, ECs can be sold to foreign buyers after 10 years and to Singaporeans and permanent residents (PRs) after five years.

For Chief Technical Officer Kim Kerh Chay and his family, price was the reason they bought a 2,400 sq ft penthouse at Windermere in Choa Chu Kang in 2010.

The family bought the resale unit for S$1.14 million, which was roughly what its previous owner had paid for. Since then, its value has soared by around 40 percent to between S$1.55 million and S$1.65 million. They have plans to sell the unit for S$1.8 million and buy a semi-detached house in Bukit Timah.

“It all boils down to price... After 10 years, it becomes a private condo, there’s no difference. The facilities are also the same,” said his son Lawrence Kim, a 30-year old entrepreneur.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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Govt keeping close eye on ECs

The Straits Times
Monday, Dec 31, 2012

THE National Development Ministry (MND) has warned that it is closely watching developments in the executive condominium (EC) segment and will consider further measures if needed.

It was responding to The Straits Times' queries on whether sky-high prices for some EC units at recent launches are of concern.

The latest focal point in the EC debate is a huge 4,349 sq ft "presidential suite" at 514-unit CityLife @ Tampines, which will be the first EC unit to eclipse the $2 million mark. The penthouse unit, with a roof terrace of about 1,600 sq ft, is priced at about $2.05 million.

Lately, many ECs, a public-private housing hybrid, have come with million-dollar price tags. Some large, luxurious units come with fancy designs such as private pools, rivalling private homes.

"Minister for National Development Khaw Boon Wan has recently blogged about his concerns that the EC developers should observe the intent and spirit of the EC housing scheme when marketing their projects," a spokesman said.

Industry players have raised suggestions such as imposing a minimum number of units to be built on an EC site - or a maximum size for an EC apartment.

Savills Singapore research head Alan Cheong said more measures are needed if developers overstep the limit. "We get this feeling that ECs are now going to buyers who can well afford a private home... I think developers should always bear in mind the social responsibility involved when it comes to ECs," he added.

International Property Advisor chief executive Ku Swee Yong said the authorities could consider caps on the price of an EC unit so they are "reasonably priced" for a household meeting the $12,000 monthly income ceiling for ECs.

"I think home buyers with a budget of more than $1.5 million should purchase private homes instead of depriving a genuine sandwich-class household of an EC unit," he noted.

Potential EC buyer Bernadette Chen, 34, who works in finance, wants a unit under $1.2 million. "The Government should make sure that ECs remain affordable for the middle-income."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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No plans to revise SC Global offer price: CEO

New Supply may dampen prices next year

EC Developer was told not to sell units: URA

Iskandar: Boon or bane for Singapore real estate?

04:45 AM Dec 28, 2012

Iskandar Malaysia was launched in November 2006 with the aim of developing the southern Johor region into a strong and sustainable metropolis of international standing.

With a total area of 2,217 sq km, the region will have five flagship zones including the Johor Baru City Centre, Nusajaya and Senai-Skudai, and will incorporate work, live and play elements. A number of key projects have been planned to attract investments into Iskandar, and some have been successfully completed, such as the Johor Premium Outlet and LegoLand.

According to recent reports, as of last September, Iskandar had recorded nearly RM100 billion (S$40 billion) in investments, about 40 per cent of which came from foreign sources.

A number of Singaporean companies such as Ascendas and Raffles Education, and even Singaporean billionaire Peter Lim, have invested in Iskandar-related projects -proof that it is gaining momentum and critical mass.

Given Iskandar's rising prominence and proximity to Singapore, one cannot help but wonder what impact it may have on the property market here.

Industrial real estate to get hit

In my view, the impact will be felt most keenly in the industrial property sector.

Due to the recent shift in government policy, Singapore's immigration and foreign worker rules have been tightened, resulting in rising wage costs, especially for labour-intensive industries such as manufacturing and construction.

In addition, industrial property prices have hit a new record high, driven by low interest rates and buoyant investment demand.

And while industrial property rentals have not risen as much as sale prices, the almost 40 per cent increase in rentals since the third quarter of 2009 has significantly increased tenants' cost base.

With the higher labour and occupancy costs here, industrial firms in Singapore may increasingly find Iskandar to be a good relocation destination.

While this may be a good option for tenants, it could be negative for industrial property demand and prices.

Besides industrial property, Iskandar could also have an impact on Singapore's housing sector.

Current record-high home prices, coupled with the Government's cooling measures and the risk of further curbs if prices continue to rise, could sap potential investment demand for residential property.

Instead, such demand may be diverted towards Iskandar, given the increasing buzz there and the fact that Iskandar's home prices are currently only a fraction of Singapore's.

And if Iskandar's transportation network and security situation are further enhanced, it could add to the attractiveness of residential properties in the region.

Currently, engineering studies are being conducted on the proposed MRT link from Woodlands to Johor Baru that would significantly enhance the convenience of commuting between Iskandar and Singapore.
Indeed, we have recently seen evidence of more Singaporeans investing in residential properties in Iskandar, either for rental income or as a second home.

Long-term gain, short-term pain

Thus, Iskandar Malaysia may be a boon for industrial property tenants and residential real estate investors in Singapore looking for lower-cost alternatives.

It may also be a boon to the Singapore Government's cooling efforts by helping divert investment demand away from the red-hot residential market.

In the long term, with the recent improvement in bilateral relations between Singapore and Malaysia, Iskandar could become a natural hinterland for Singapore, helping the Republic overcome its land constraints.

In the near term, however, Iskandar could be a bane for Singapore industrial property landlords and residential property developers, as it could divert demand away from these two market segments.

Tan Chin Keong is an analyst at UBS CIO Wealth Management Research.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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Sunday, December 30, 2012

Potential for profit drawing buyers to EC market

Nearly 150 units snapped up at launch of Woodlands EC

$2m Tampines EC penthouse sold in two hours

Goldman heads for S'pore property market exit

The Business Times
Sunday, Dec 30, 2012

SINGAPORE - NTUC Income, which early last year acquired a 49 per cent stake in 16 Collyer Quay from Goldman Sachs, is now believed to be stitching a deal to buy out the remaining 51 per cent in the 999-year leasehold office tower from the US bank to gain full ownership of the asset.

The two sides are thought to have agreed on terms, although a deal is expected to be inked only next month at the earliest.

BT understands that the transaction values the office tower at around $660 million, or close to $2,400 per square foot on net lettable area of 278,356 square feet. Income's acquisition last year valued the property at about $626 million or $2,250 psf on NLA.

Goldman paid $811 million or $2,900 psf for 16 Collyer Quay - formerly known as Hitachi Tower - in early 2008.

When Goldman sells its remaining 51 per cent in Savu Investments, which owns the 37-storey office tower, it will mark the divestment of its last major Singapore real estate asset, say market watchers.

Its Savu stake is held by an entity, the shareholders of which are funds managed by affiliates of Goldman and an indirect subsidiary of the bank, according to an earlier report.

In 2010, Goldman funds sold DBS Towers on Shenton Way and Chevron House (formerly Caltex House) in Raffles Place (behind 16 Collyer Quay).

Income has been active in the Singapore property investment sales market this year. In July, Mercatus Co-operative Ltd - whose shareholders include Income - acquired a 50 per cent stake in nex, a mall in Serangoon, for $825 million.

In the same month, Income increased its stake in real estate fund Parkway Parade Partnership, which owns Parkway Parade in Marine Parade, to 46 per cent from 22 per cent, in a deal that valued the mall at slightly over $1 billion.

According to figures from Savills Singapore, about $5.3 billion of office investment sales originating from the private sector have been transacted year to date, down from $6.2 billion in full-year 2011.

Topping the list is DBS's purchase earlier this month of a 30 per cent stake in Marina Bay Financial Centre Tower 3 for $1.035 billion or $2,555 psf. Another transaction in December involved 79 Anson Road, a freehold office building that has been sold by Singapore's Central Provident Fund Board and German fund manager SEB to United Engineers for $410 million. The price works out to $2,029 psf.

A half stake in 78 Shenton Way changed hands in September in a transaction valuing the asset at $608 million or $1,686 psf. The property is on a site with a remaining lease of about 70 years. Other office deals announced this year include Mapletree Anson ($2,049 psf) and the Twenty Anson next door, which changed hands at $2,121 psf (without yield stabilisation support).

Meanwhile, Goldman seems to be stepping away from the market for now. In 2010, it sold Chevron House, on a site with a remaining land tenure at the time of about 78 years, to a fund managed by Deka Immobilien of Germany for $547 million or around $2,083 psf, and DBS Towers on Shenton Way for $870.5 million or $970 psf. At the time, DBS Towers had a remaining land lease of around 56 years.

Goldman reaped a profit from the DBS Towers divestment, having paid $690 million for the office blocks in 2005. However, its sale prices for Chevron House and 16 Collyer Quay are below its acquisition prices.

It paid $730 million or about $2,780 psf for Chevron House in 2007.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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