Saturday, March 30, 2013

Property auctions going, going upwards

The Business Times  |  March 30, 2013
Total sales value so far this year higher than all of 2012

The property auctions market jumped back to life in the first quarter following a sleepy 2012, with total sales value in the first three months alone exceeding that for the whole of 2012, said Colliers International.

The auctions market recorded a total sales value of $76.08 million from January to March this year, exceeding the $62.44 million chalked up for the entire 2012. The figures exclude the sale of land put up by statutory boards through auction.

Colliers now expects more than $150 million worth of transactions for the market this year.
The first quarter's strong showing came despite the lull in the secondary market - a result of the recent round of government cooling measures implemented in the residential sector. Helping to pick up the slack, however, were four high-value sales, involving mostly commercial and industrial units, which generated a total sales value of $70.1 million. Together, the four transactions accounted for 92.1 per cent of the quarter's total sales value. Of the four, two involved shophouses.

Said Grace Ng, deputy managing director at Colliers International: "Shophouses are a main draw for investors, as such property types are not affected by the punitive measures, such as the Additional Buyer's Stamp Duty or Seller's Stamp Duty, among others.

"Additionally, given that shophouses typically generate yields in the region of 2-4 per cent per annum, investors who are on the lookout for alternative investments to bank deposits which offer an average paltry interest rate of less than one per cent per annum, would find shophouses a more appealing proposition."

Among the four high-value deals was the sale of a Good Class Bungalow at Chee Hoon Avenue close to the Botanic Gardens MRT station. It was sold for $22.9 million.

In total, eight of the 113 properties put up for sale by auction were sold. Most of the properties put up for sale (103) were from owners, while 10 were listed by mortgagees, noted Colliers.

Of those sold, five were put up by owners while three were mortgagee sales - which were concluded for a total value of $4.38 million. All four of the high-value properties were put up by owners. The fifth property sold by an owner was a HDB shophouse in Bedok that was knocked down at $1.6 million.

Said Ms Ng: "Property auctions are also gaining traction with owners who own high-value properties which are traditionally put up for sale via other modes such as a private treaty, tender or expression of interest.
"The phenomenon could be attributed to the organised marketing campaign which is carried out in a transparent and targeted process, and the ability to reach out to a wider pool of potential buyers from the generated publicity."

She expects that more owners will put up high-value properties - in particular, commercial and industrial properties - for sale by auction.

But while the auction market will "continue to enjoy a healthy flow of transactions in landed residential, commercial and industrial properties, the number of residential apartments and condominium transactions is expected to be low", said Ms Ng. This is due to the continued stalemate in the secondary residential market between buyers and owners. "Buyers will continue to adopt a wait-and-see attitude, hoping for downward price adjustments, while owners are expected to hold on to their prices due to the current low interest rate environment and the general reluctance to dispose the property now - a result of the subsequent higher acquisition cost from the Additional Buyers' Stamp Duty imposed by the government," she said.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

Cooling measures drive property investors to look to Europe

The Straits Times  |  March 30, 2013

Mar 30, 2013

Cooling measures in Singapore and Hong Kong have forced investors in both places to look to Europe for their property fix.

The key cities of Munich, Berlin and London have emerged as the main centres for Asian buyers, said IP Global, a Hong Kong-based property company.

"The recent cooling measures in Hong Kong and Singapore have made investors, especially non-residents, think twice about the additional costs (of buying properties there)," said Mr Tim Murphy, founder and chief executive of IP Global, which buys and manages international real estate for clients.

"Most Singaporeans look for $1 million to $3 million price points for overseas developments," he said.

"They prefer one- and two-bedders for these investment properties and are looking for strong rental yields and capital growth. "Some factors that investors consider before taking the plunge include foreign ownership, market performance, ease of buying and financing."

An IP Global report found that Germany came out tops for investors. It noted that there are no restrictions for Singaporeans owning property there.

Munich is particularly attractive to investors as its population is expected to grow by about 11 per cent to 1.5 million by 2025.

Office vacancy rates are also low compared with other major cities, thanks to global and medium-sized businesses driving the strong service-based economy.

Munich residents have purchasing power of about €25,200 ($40,000) per capita per year - one of the highest in Germany.

Berlin is also a popular pick for investment properties.

Tourism is a mainstay of the residential sector with nearly half of the 11 million visitors each year opting for private apartment accommodation instead of hotels, said the report.

Demand for homes and rentals is also attributed to the influx of people into the city.

The report said that 30,000 to 35,000 people move to Berlin every year, creating demand forup to 20,000 new homes annually.

London properties continue to attract foreign investors, lured by the city's status as an investment safe haven.

Mr Murphy said: "Buyers from Singapore and Hong Kong accounted for 40 per cent of purchasers of new-build property in central London in 2011 and 2012."

Homes in Mayfair, Kensington and Chelsea still attract the most investment, while the private rented sector is drawing attention as a potentially undertapped market. The report also indicated that the Crossrail project - which will be completed in 2018 - is expected to boost real estate values in the city's outer districts.

IP Global also tipped Istanbul, Turkey, as Europe's real opportunity market.

"Half the city's population is under 29 years old and global firms are setting up local bases there due to its strong economic potential," said Mr Murphy.

Investment in real estate in Istanbul is expected to grow by US$5 billion (S$6.2 billion) a year as the city eases restrictions on foreign ownership, said the report.

Another strong driver of European real estate comes from Chinese investors.

They have pumped in US$10 billion annually in recent years, up from US$1 billion in 2007.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

No stamp duty relief for singles switching homes

The Straits Times  |  March 30, 2013

A single person who buys a home to live in will be hit with the additional buyer's stamp duty (ABSD) if he does not dispose of his existing residence first.

That means a single person might have to find accommodation in between selling the old home and completing the purchase of the new one.

The clarification came from the Ministry of Finance (MOF) on Thursday, following uncertainty over whether stamp duty concessions for married people would also apply to singles.

Some married couples will get a refund of the ABSD if they dispose of their first property within six months of buying a resale home or the completion of an uncompleted one.

This relief is provided for joint purchases by married couples with at least one Singaporean spouse. Both parties must also not own any other property at the time of purchase to qualify.
But these do not extend to singles, the ministry told The Straits Times.

This means singles will have to sell their existing home first before buying another - even if the new unit is meant for occupation and not investment.

If they do not comply with this rule, they will be hit with a hefty additional tax in the form of the ABSD.

Experts say the rule could mean much inconvenience, with single people having to find a rented place for the short term, bunk in with a family member temporarily or secure an extension of stay with the buyer between the transactions.

The new levy was part of the seventh and most extensive set of property cooling measures that were unveiled in January.

These slapped a 7 per cent ABSD on Singaporeans buying their second home.

An MOF spokesman said that the Government raised the ABSD rates to moderate demand for properties and help cool the market.

It limited ABSD concessions to a narrow group of buyers, namely Singaporean married couples, to help them acquire and upgrade their matrimonial homes.

The MOF spokesman said that if more groups, such as singles, were able to qualify for ABSD concessions, it would defeat the purpose of the cooling measures.

"As such, Singaporeans will need to dispose of their first residential property if they wish to avoid ABSD on their next purchase. Singaporeans, including Singaporean singles, can buy their first residential property without any ABSD," he added.

"The ABSD measures announced in January are significant, but they are temporary. They will be reviewed in future depending on market conditions."

Some experts disagree with the policy, noting that all Singaporeans should be treated equally, regardless of their marital status.

Mr Chris Koh, director of Chris International, said singles should not be penalised as long as they will own just one house eventually.

The ABSD relief offered to married couples should be extended to them as well, as long as they commit to selling their current home within six months of the purchase, he said.

"The ABSD tax should apply to just investment homes, and if a single is buying a home for owner occupation, he should be eligible for the refund," he added.

Most singles The Straits Times spoke to said they were unaware of the policy, but felt that it was unfair.

Real estate agent Isabella Lim, 36, said she was surprised to find out that she had to sell her home first if she wanted to upgrade to a bigger flat without paying the ABSD.

"If I'm not investing in another home, I'm not sure why I would need to pay more in taxes. But this will probably make me stay put for a while," she added.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

Lots of money to be made in Asian real estate: Report

The Straits Times  |  March 30, 2013
Rise of casinos, Iskandar among the attractions

The rise of casinos in Asia and of Iskandar Malaysia are two factors that should encourage investors to keep placing their cash in high-yielding Asian real estate.

That is the assessment of Singapore-based real estate investment house Pacific Star Group in its latest report on the sector's outlook.

The firm also said structural shifts in industrial production will spur real estate growth.

Pacific Star specialises in managing funds, Reits and private equity, among other assets.

In the past 12 years, it has transacted US$12 billion (S$14.9 billion) of property deals for clients.
It said upscale casino resorts will propel the next phase of tourism growth in Asia beyond Macau and Singapore.

Multibillion-dollar integrated resorts are being planned in South Korea and the Philippines, and on a smaller scale in Vietnam and Cambodia, said the report.

Casinos could also be legalised in Japan and Taiwan.

With the rise of China, Pacific Star said the shifting production model for quality industrial and logistics sectors will present investors with interesting options.

This applies to production lines moving to inland China, Thailand and Vietnam, it said.

Iskandar Malaysia is another reason for investors to park their money in Asian real estate.

Last year, the Malaysian development received cumulative committed investments of RM106 billion (S$43 billion), 6 per cent more than its target set in 2006.

The report attributed Iskandar's success to government-backed companies, major investors, its strategic proximity to Singapore, bilateral governmental support and the active participation of developers.

Pacific Star vice-president of research and strategic planning Lam Chern Woon said: "It is now opportune for investors to cast the net wider beyond traditional markets and sectors while riding on Asia's growth story.

"There are opportunities... in new markets like Iskandar Malaysia, Jakarta and Manila."
For the office sector, Hong Kong and Singapore remain favourites for their sound political fundamentals and business competitiveness, said the report.

Mr Lam said: "Investors should also continue to keep an eye on quality assets in the gateway markets of Hong Kong and Singapore where pricing may be contained in the near term due to rental correction."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)