Challenges for property sector

New engines drive Singapore’s property market but pitfalls remain

THE Singapore property market has weathered the storm from the US sub-prime crisis, soaring oil
prices and overall inflation, pretty well.

Runaway increases in property values in the high-end residential and prime office sectors seen in the
past couple of years, for instance, have started to ease. But they have not dived, and panic has not
set in, at least not so far.

Knight Frank managing director Tan Tiong Cheng says: ‘To some, this is a welcome breather from the
breakneck pace of increases recorded in the last 24 months.’

CB Richard Ellis chairman (Asia) Willy Shee too observes: ‘The overall market has displayed some
resilience. In the office market, there’s still demand for office space with occupiers still looking to precommit office space in yet-to-be completed buildings.’ While the private housing market is not as
buoyant as last year, transaction volumes have picked up in second quarter this year with
encouraging sales from mid and mass-market projects, he adds.

Market watchers feel that in the short-term, property values could head south, driven by near-term
fundamentals. However, the mid-term prospects for Singapore’s real estate sector are generally
considered sound. As a major developer puts it: ‘Population growth, global and regional wealth
creation, sustained government investment in infrastructure, the perennial sharpening of Singapore’s
competitive edge, limited land, security and political stability, internationalisation of the property
market – all these must be good for Singapore real estate prices in the long run.’

The Remaking of Singapore has helped create sound fundamentals for the local property market. The
government’s decision to break from the past and go ahead with developing two integrated resorts
with casinos as well as its efforts to position Singapore as a leading contender in the race among
global cities to attract wealth and talent have boosted the island’s prominence on the radars of
international property investors.

New engines for growing the Singapore economy have also been put in place and this to some extent
may also help shield the island and its property market from the full impact of what’s happening in the
US.

Investments and job creation from the IRs, Sports Hub, expansion plans for rail network and other
infrastructure projects, Singapore’s policy of welcoming foreign talent to its shores, and the strategy of
positioning Singapore as a hub for various industries – financial industry/wealth management, tourism,
education and healthcare – are expected to provide momentum for Singapore’s economy.

‘The IRs, F1, Sports Hub and Youth Olympic Games surprised observers who think that Singapore is
only a clean and safe place to do business but never a place where you can let your hair down,’
observes Knight Frank’s Mr Tan.

‘What do these initiatives mean to savvy investors? They mean that we are perceptive in discerning
changes in the global world, have the will to question old assumptions and have the courage to move
a population to accept initiatives that can be potentially divisive.

‘That the government and its people can move together to tackle challenges ahead demonstrates the
inherent strength of the country as a global city to do business and a place to live,’ Mr Tan added.
DTZ executive director Ong Choon Fah said: ‘Wealth management industry is still a very big thing
here. Wealth from high networths in Asia – China, India – is flowing into Singapore. With IRs and the

F1 race, Singapore is being marketed as a playground for the rich and famous. Family offices and
philanthropy are fast being added to the suite of services offered by private bankers.
‘The removal of estate duty has been a major boost to Singapore’s ambitions to be a wealth
management hub.’

New challenges
But the road ahead for the local property market is paved with challenges. Colliers International
director of research and advisory Tay Huey Ying argues that the ‘mid-term optimism for the Singapore
property market is underpinned by the IRs and the Marina Bay Financial Centre (MBFC). ‘If these
projects do not deliver, confidence may be shaken,’ she warns.

To be considered successful, the IRs will have to be able to continuously attract visitors year after
year and not fizzle out after the initial novelty wears off. Similarly, the MBFC can be truly considered
an achievement for Singapore’s aspirations to be a leading financial centre if the movement of tenants
into MBFC does not create a vacuum in existing office buildings that can’t be filled within a short span
of time; otherwise, it may just show there’s not that much depth in Singapore’s financial industry, Ms
Tay reckons.

In the residential property market, a short-term challenge that could materialise is if substantial
numbers of home buyers who’ve purchased private homes on deferred payment schemes in the past
few years begin to panic and dump their properties as the projects’ completion dates loom closer.
That would be the time when these buyers have to pay the bulk of the purchase price to developers,
and if some of them think they may have difficulty finding home loans, especially if they are still
holding on to several such units, they may panic and dump their properties at lower than current
market prices.

Such a scenario would be a house hunter’s dream, but could destroy wealth for the majority of
Singaporeans who already own their own homes.

‘Instead of subjecting themselves to panic selling, these property owners may wish to bear in mind
Singapore’s mid-term prospects and should try to hold their properties by securing a financing
package or a tenancy for their property,’ Ms Tay suggests.

Escalating construction costs
Escalating construction costs are another big concern going ahead. ‘The high construction costs
could translate into high purchase cost for buyers and investors of private property assets as well as
contribute to inflationary pressure for end-users of public infrastructure,’ says CBRE’s Mr Shee.
‘The high construction costs would also eat into developers’ profit margins and hence reduce the
incentive for developers to undertake new projects or acquire sites from the Government Land Sales
programme,’ he adds.

On the macro political front, Knight Frank’s Mr Tan says an immediate challenge is the confluence of
unstable political situations in three neighbouring countries – Malaysia, Thailand and Indonesia (which
will have a election next year). ‘Put simply, we’re a good property in a bad neighbourhood,’ he said.
CBRE predicts that office rentals are approaching a peak. The average monthly Grade A rental value
rose to $18.80 per square foot in Q2 this year, an increase of 43.5 per cent from the same period last
year. With completions of major office projects from 2010, including MBFC Phase 1 and 50 Collyer
Quay, the property consultancy group predicts the average Grade A office rental will ease to $12-15
psf post-2010.

On a more optimistic note, it highlights that with all the new office developments coming up, a
significant amount of future office stock will constitute world-class modern Grade A buildings. ‘Around
64 per cent of the office completions in the next five years will be Grade A quality,’ Mr Shee says.
For the private residential sector, CBRE has said a correction of residential prices to the tune of 5 to
10 per cent in the second half of this year is likely as the global economy suffers the continued
onslaught from the sub-prime mortgage meltdown and inflation.

Riding the turbulence
Colliers’ Ms Tay highlights the importance of a sound government land supply policy – ‘not just shortterm reactions’ – will help the local property market to ride out the challenges ahead.

‘For individual home buyers and sellers, they should arm themselves with the right information instead
of succumbing to herd instinct or following their emotions,’ she adds.

Knight Frank’s Mr Tan says: ‘Demand for real estate is dependent on economic prospects. With
strong economic fundamentals, I have no doubt that interest in real estate in Singapore by local and
foreign institutional investors will return once the current market turmoil blows over.

In similar vein, CBRE’s Mr Shee says: ‘Fundamentally, the long-term development of the office, retail,
residential and hospitality sectors will not change in spite of the present global financial worries.

‘It was all these government initiatives that attracted a fresh wave of foreign investment into
Singapore in the last 24 months, and it will be these developmental drivers that will continue to attract
investment from various parts of the world to Singapore.’

HDB imposes checklists on resale flats

Business Times – 25 Mar 2008

THE Housing and Development Board will introduce mandatory checklists for housing agents handling resale flat transactions from May 1 – a move welcomed by industry players.

The checklists cover key policies and procedures that housing agents will need to advise resale flat buyers and sellers on before they commit to a transaction, HDB said yesterday.

‘This is part of HDB’s ongoing efforts to ensure that buyers and sellers are aware of the relevant HDB purchase and financing policies when buying/selling an HDB flat,’ it said.

The move comes after a new scam involving HDB flats surfaced recently. Under the scam, a seller and buyer together report a falsely low sale price to HDB.

The buyer then pays the difference between the actual and declared price to the seller in cash, which means the seller has more cash in hand – rather than having any leftover money go back into his CPF account. To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.

Under HDB’s new initiative, housing agents will have to submit a completed resale checklist to HDB with a resale application. Resale applications that do not comply with this requirement will be rejected and there will be ’serious penalties’ for false declarations.

Housing agents engaged by both sellers and buyers will have to go through a resale checklist with clients before an option to purchase (OTP) is granted or exercised.

Buyers and sellers who do not engage the services of housing agents need not submit a checklist. PropNex, which says it has more than 40 per cent of the public housing resale market, welcomed HDB’s move.

Public housing has many policies and financing requirements that many may not be familiar with, said PropNex chief executive Mohamed Ismail.

Most buyers tend not to read the important notes attached to OTP, he said.

The new resale checklist for housing agents engaged by buyers, for example, will ensure that buyers are aware of their rights as well as of financing matters. It will also highlight to them the fact that any form of cashback arrangement, such as over or under declaration, is punishable by law.

Similarly, the checklist for sellers’ housing agents will ensure prospective sellers understand the various eligibility rules.

Mr Ismail said that while many agents already educate potential buyers and sellers, some may not, leaving them in the dark.

‘This initiative should lead to greater transparency for buyers and sellers, and ensure a consistently high level of professionalism amongst the agents,’ he said.

Home, retail, office rental growth to ease

Business Times – 25 Mar 2008

Housing rentals to rise 5-15% year-on-year in 2008: Knight Frank

PRIVATE housing rents are expected to grow at a slower pace this year than last year, Knight Frank said in a report yesterday.

The property consultancy firm expects a year-on-year rise of 5-15 per cent in 2008 – after a massive 40 per cent year-on-year increase in 2007.

Knight Frank’s estimates are based on the resistance of tenants and companies to even higher rents, and the limited availability of places at foreign schools for children of expatriates.

‘Due to the fact that foreign schools are full and there are long waiting lists faced by children of foreign families who relocated here, housing demand from new foreign family tenants is projected to decrease,’ Knight Frank said.

‘On top of this, foreign tenants as well as corporate HR (departments) have readjusted housing allowances this year, which constricts rental demand according to their budgets.’

Despite this, a demand-supply imbalance could still result in rental rises until a supply of new units is felt significantly from 2009.

About 8,400 new private homes will be completed this year. But the number will expand dramatically in the three years from 2009 to 2011, with an estimated 16,000 to 17,000 units completed each year.

This could put downward pressure on rents, Knight Frank said.

The same holds true for the retail sector. Knight Frank predicts that landlords could face stronger resistance from retailers to rising rents in the later part of 2008 as more space comes on stream.

‘Rents are forecast to maintain at their current level only until early 2008,’ it said. ‘Faced with a larger supply in the pipeline in the second half of 2008, island-wide prime retail rents are projected to appreciate by a relatively modest 5-10 per cent for entire 2008, compared to 22.1 per cent growth in 2007.’

Knight Frank also said growth in office rents and capital values in 2008 and 2009 will likely to be more moderate than in 2007. Office rents are forecast to rise 10-20 per cent year on year, while capital values are expected to increase 10-15 per cent year on year.

3,500 vied for 714 condo-like flats in Boon Keng, but only 460 sold

The Straits Times March 25, 2008

THOUSANDS of applications poured in for a condo-like Housing Board project in January – but as of last week, less than two-thirds of the flats had been taken up.

About a third of the 714 units – or about 250 units – in City View @ Boon Keng remained unsold, said HSR Property Group, which is marketing the project.

These flats will be offered to the public, probably via walk-in selection.

The number of leftover units came as a surprise to market watchers, given that 3,500 applicants had vied for them.

This works out to five would-be buyers for each flat at City View, the second public housing project to be built by a private developer.

It boasts condo-like features such as timber floors, built-in wardrobes and air-conditioning.

All the applicants were given a chance to book the flats they wanted, said HSR project director Kellie Liew.

The selection process stretched over 20 days and ended last Thursday, with more than 3,000 potential deals falling through.

Developer Hoi Hup Sunway sold about 460 units, including six of the top-priced five-room units at $727,000 each, said Ms Liew.

But she added that some buyers backed out of their purchases due to the weakening property market, while others did not meet the required criteria to buy the flats.

‘We’ve been having a series of not-too-positive news about the market, so that could have affected the sentiment of the buyers,’ she said.

‘Also, some applicants were over-qualified, with combined monthly incomes of more than $8,000, so they were not eligible for the flats.’

Hoi Hup declined to comment.

Market watchers suggested that the relatively high prices for the City View units could also have proved a deterrent at crunch time.

The three-room flats were priced between $349,000 and $394,000, double the price tag of similar flats in the vicinity.

Five-room flats went for up to $727,000, which experts said was close to condominium prices.

‘Some people may have jumped on the bandwagon because of the hype, but when it was time to pick up a unit, they felt it was actually too expensive,’ said Mr Mohamed Ismail, chief executive of property agency PropNex.

‘In today’s market, there are many 99-year leasehold properties with full condo facilities that are going for less than $600 per sq ft, so some buyers may have thought twice.’

But Mr Chris Koh, director of Dennis Wee Properties, believes the remaining units could be snapped up quickly.

‘Fundamentals are still strong,’ he said. ‘We don’t see property prices sliding at all.’

He added that the situation could mirror that of The Premiere @ Tampines, the first developer-built public housing project.

The Premiere drew almost 6,000 applications for its 616 units when it was launched in 2006, but fewer than 500 units were sold when the booking process was over.

When the remaining flats were released to the public, long queues formed and would not disperse despite a downpour.

All eyes on govt land tenders this month

Business Times – 11 Mar 2008

$500m site above Serangoon MRT, 3 suburban housing plots on offer

AMID the current quiet market, all eyes will be on four 99-year leasehold suburban Government Land Sale site tenders that close this month.

They comprise three private residential sites including one for landed housing, and a ‘white’ site above the Serangoon Circle Line MRT station that could potentially be worth more than $500 million.

The action kicks off today, with the closing of a tender for a landed housing parcel in Westwood Avenue, Jurong West, big enough for about 50-60 landed homes.

Cushman & Wakefield managing director Donald Han reckons the 151,759 sq ft plot could fetch about $200-250 psf of land area. The plot is next to the landed housing area at Westville. Those looking for clues on how developers read the suburban mass-market residential sector will have to train their eyes on tender closings for two plots this month, both boasting scenic locations.

One is at West Coast Crescent next to Blue Horizon condo and faces West Coast Park and overlooks the sea. The other is in Yishun, fronting Lower Seletar Reservoir and close to Singapore Orchid Country Club/Golf Course. It is also near Khatib MRT station.

Property consultants polled by BT in January, when the tenders for the two sites were launched, indicated bids of about $200-300 psf per plot ratio (ppr) for the Yishun plot.

Mr Han reckons the winning bid will be closer to $300 psf ppr, reflecting a breakeven cost of about $550-600 psf and a possible average selling price of $700-800 psf for the new condo.

As for the West Coast plot, consultants earlier indicated a wide range of bids – $260-400 psf ppr. Mr Han estimates the plot’s value at the higher end of that range, around $380-400 psf ppr as ‘it is near parks, recreational facilities and the sea’, translating to selling prices of about $850-950 psf for a new condo on the site, on a project-average basis.

He expects the Yishun and West Coast condo sites to attract at least five bids each, while the landed housing plot at Westwood Avenue could draw more bids, about five to eight.

‘Developers may be willing to look at smaller profit margins because these are sure-sell markets, given pent-up demand in the mass market. However, buyers are still price-sensitive,’ he said.

While some analysts and consultants still feel the mass-market will be relatively resilient this year, City Developments executive chairman Kwek Leng Beng recently offered a different perspective.

‘The mass market will do well, but selectively. It’s not going to be what you’ve seen before. . . people queuing up,’ he said, noting that the Housing & Development Board provides a credible alternative to mass- market private housing.

The Serangoon Central site was quietly launched in December by the Land Transport Authority. The 269,180 sq ft plot can be developed into an estimated maximum potential gross floor area (GFA) of about 850,000 sq ft excluding a bus interchange that the successful bidder will have to build. The developer will be reimbursed the cost of building the interchange.

The site can be developed into any combination of commercial, hotel, residential, and sports and recreational use.

Cushman’s Mr Han said that assuming 30-40 per cent of the GFA is for retail use and the rest for residential, the plot could be worth about $400-450 psf ppr, or a total of around $340-380 million.

‘So the breakeven cost would be about $700 psf for the residential component and the developer might be able to achieve selling prices of say $900-1,000 psf on average. The retail component will break even at about $1,200-1,400 psf,’ he reckons.

However, other property insiders say that assuming an all-retail development, which would be the ‘highest and best use’ of the site, land bids could come in closer to the $600-700 psf ppr mark (about $500 million to $600 million in total).

Suburban malls are generally valued at about $1,800-2,000 psf of net lettable area currently,’ one player pointed out.

However, another major player countered that sentiment today is subdued, and said the challenge of securing bank finance for such a big project with a likely total investment of about $1 billion or more will put a dampener on bullish bidding for this site.

The action and market watching continues next month, with at least two interesting offerings at state land tenders – a private condo site at Toa Payoh Lorong2/3, and a 1.56-hectare site in Choa Chu Kang for residential development that comes with the existing Ten Mile Junction mall.

Punggol River set for big change

Work starts on $7.13m project to create reservoir park with man-made island by 2010

WORK to transform the Punggol River into a scenic reservoir park, complete with a man-made island, got off the ground yesterday.

Prime Minister Lee Hsien Loong, who was at the official opening of the adjoining Anchorvale Community Club in Sengkang, symbolically released the first piece of the floating island – a clump of soil and grass – into the water.

For its design, the $7.13 million project will draw inspiration from a nearby fruit park being developed by the National Parks Board. Its pavilions will be shaped like mangosteens and its benches, like limes.

Work will be completed by 2010.

Punggol River is the first of five sites to be improved this year under the Active, Beautiful, Clean (ABC) Waters programme.

Launched by national water agency PUB in 2006, the $200 million programme is an ambitious island-wide revamp of 28 waterways.

The aim is to rejuvenate Singapore’s drainage and water-supply infrastructure, including the canals and reservoirs, and turn it into a scenic network of streams, rivers and lakes where people can enjoy water activities and even commute.

Giving a preview of the projects during the Budget debate a fortnight ago, Minister for the Environment and Water Resources Yaacob Ibrahim said, for example, that the Lower Seletar Reservoir would sport a heritage bridge, featuring story panels which will tell of the area’s kampung history.

Work on the pilot projects of Kolam Ayer and the Bedok and MacRitchie reservoirs is in its final phases and will be unveiled this year.

‘With these projects, we hope to bring waterfront living to the heartland, improve the quality of our living environment and enhance property values,’ said Dr Yaacob.

Source: The Straits Times 10 Mar 08

‘Magic dollars’ scam lets HDB flat sellers pocket cash

They declare a lower price, thus keeping the difference instead of returning funds to CPF

A NEW scam involving HDB flats has surfaced, this time allowing flat sellers to pocket extra cash by craftily getting around the rules.

The so-called ‘magic dollars’ scam involves reporting a falsely low sale price to the HDB – an offence which is punishable by a jail term and/or a fine.

Agents say they are seeing these cases pop up on a more regular basis, but it is not rampant yet.

This is how it works.

The seller is typically a flat owner who bought his HDB flat at the peak of the last property boom, so he has made significant paper losses despite the recent run-up in prices.

If he sells the flat, the proceeds may be barely enough to cover the balance of his mortgage and any leftover will probably have to go back into his CPF account. So he ends up not getting his hands on any ready cash at all.

To pocket some cash or what is sometimes known as ‘magic dollars’, he strikes a deal with the buyer of his flat.

He gets the buyer to agree to declare to the HDB that the flat was sold for a much lower price. The buyer then pays the difference between the actual and declared price to the seller in cash.

To sweeten the deal, the seller usually gives the buyer a discount on the market value of the flat.

The scam is crafty because, on paper, these transactions can look flawless and are hard to detect.

Privately, the agent drafts a ‘letter of undertaking’, binding the buyer to pay the seller cash – sometimes under the pretext of paying for furniture and fixtures.

When the buyer pays up and the deal is done, the agent destroys the document and any paper trail. Neither the HDB, property agencies or lawyers will ever see it.

Everyone is a winner. The buyer gets a good deal and the seller gets some cash. But the catch is: The scam carries a jail term and/or a fine.

The deal is illegal because the seller is indirectly siphoning off money in advance from his CPF.

The HDB told The Straits Times that it was a ’serious offence’ to declare false resale prices, adding that if there was sufficient evidence, the case would be referred to the police.

Conviction could bring fines of up to $5,000 or jail of up to three years.

Such scams are not new to the market and HDB flat owners sometimes resort to them when they want to unlock cash.

In 2001, a ‘cash-back’ scheme was exposed, which involved over-declaring the agreed selling price.

It allowed the buyer to get a higher loan either from a bank or the HDB, with the ‘extra’ cash divided out among those involved.

Agency bosses told The Straits Times that they strictly discourage agents from handling these sales.

But despite the risk of getting caught, agents say such deals are popular in estates such as Simei, Pasir Ris and Bishan, which commanded high prices in the previous boom.

Some say the deals started surfacing as early as last April, when the HDB market started to pick up.

Resale prices rose 17.5 per cent last year after years in the doldrums, prompting more flat owners to think about selling their flats.

An agency boss, who declined to be named, has heard of up to 30 such cases.

PropNex chief executive Mohamed Ismail said it was hard to determine exactly how many such deals are being done, but he estimated that about 80,000 – or 10 per cent – of HDB homes are still in negative equity.

Negative equity means a flat owner’s mortgage is worth more than the home’s value now. Owners of these flats are more likely to take part in such deals.

Another agent said he is approached at least once a month to take part in such deals but he turns them down. ‘This is my rice bowl.

Why would I want to risk going to jail for just a sale?’ he said.

Source: The Straits Times 5 Mar 08

HDB will cater to buyers with different income levels: Mah

THE Housing & Development Board (HDB) will continue to provide a range of housing options to cater to buyers of differing income levels and aspirations, Minister for National Development Mah Bow Tan told Parliament yesterday.

He was responding to concerns that the price gain in the HDB market is putting flats out of the reach of many. HDB resale prices rose by about 17 per cent last year. In addition, reports said that buyers forked out up to $727,000 for a five-room flat in a private-developer built, condo-style project offered under the Design, Build and Sell Scheme (DBSS).

The price gain for resale homes should slow this year. Mr Mah said: ‘The HDB resale price index grew by only one per cent in January, and I expect prices to grow at a more moderate pace in 2008.’

The HDB plans to release three more DBSS sites to build up a ‘reasonable stock’ of DBSS flats, Mr Mah said. Together with the four sites already released, the new sites will yield about 4,000 flats.

He said HDB will continue to cater to buyers with different aspirations and means by providing a range of housing options.

However, Mr Mah said that flats built by HDB will continue to be the mainstay of new supply.

‘Similar to executive condominiums, DBSS flats serve a small niche market of buyers that can afford to pay higher prices for public housing with different designs and features,’ he said.

Mr Mah also unveiled details of HDB’s new Lease Buyback Scheme, which aims to help low-income and elderly households.

Under the scheme, which will be implemented next year, the HDB will purchase the tail-end of the flat lease from an elderly household. The occupants will continue to stay in the flat, which will be left with a 30-year lease. On top of the housing equity unlocked, it will provide an additional $10,000 subsidy.

Of the total amount, $5,000 will be given to the household as an upfront lump sum, while the remainder will be used to purchase a CPF Life Plan to provide the owner with a monthly stream of income for life. If the flat is jointly owned by an elderly couple, they will get individual CPF Life Plans.

Source: Business Times 29 Feb 08

HDB unveils ‘income for life’ scheme for the elderly

It will buy back tail-end of flat lease at market rate, with money going to CPF Life

FOR 68-year-old retiree Teng Kiat Hwa, who owns a three-room HDB flat in Toa Payoh, his home is his only asset.

Since he fell ill and stopped driving a taxi, he has had no income and his CPF money has been dried up by medical bills.

But come next year, Mr Teng will be able to sell part of his flat’s remaining lease to HDB, and receive a cash payment of $5,000 and an annuity payout of about $500 monthly from CPF Life.

Details of the long-awaited ‘Lease Buyback Scheme’, which helps the elderly sell their HDB flats to the Government for cash – while still being able to stay in them – were unveiled yesterday by National Development Minister Mah Bow Tan.

This is how it works: HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household. So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner’s name.

According to Mr Mah, the cash is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat’s ownership is then transferred to HDB.

If the flat owner dies before the 30 years is up, his family gets a pro-rated refund from the HDB. If he outlives the 30-year lease, HDB may extend the lease or relocate the flat owner to rental housing.

To encourage people to opt for the scheme, HDB is also providing a $10,000 ‘bonus’ for anyone eligible for the scheme who signs up.

Half of this – $5,000 – will be paid immediately in cash. The other $5,000 goes into the CPF Life annuity.

One catch: the scheme will be available only to 25,000 low-income households in Singapore. That’s because the eligibility criteria restricts the scheme to those aged 62 and above and who own two- or three-room HDB flats.

Among other things, they must also have fully paid up for their flats, or else have a loan amount outstanding of less than $5,000.

Mr Mah said in Parliament yesterday that this is consistent with the objectives of the scheme, which was first announced by Prime Minister Lee Hsien Loong at last year’s National Day Rally.

He said the scheme is meant to supplement the recently announced CPF Life annuity by providing a stream of retirement income for poor households who may not have the minimum sum needed to sign up for CPF Life, but still need steady income in old age.

He added that the 25,000 households that qualify for the scheme represent about 70 per cent of elderly households in two- and threeroom flats.

Asked for his reaction, Mr Teng said in Mandarin that it was ‘an interesting option’.

‘But we must consider it thoroughly before taking it up. My wife and I wanted to leave this flat to our kids,’ he added.

Meanwhile, industry players yesterday welcomed the scheme, but expressed concern that the criteria were too strict.

This was also brought up in Parliament by Madam Ho Geok Choo (West Coast GRC), who asked if owners of larger HDB flat can qualify for the scheme.

Mr Mah replied that this can be examined after the scheme was implemented and feedback given.

Mr Eugene Lim, the assistant vice-president of ERA Realty Network said renting out the flat may give better yield or payouts than the annuity.

Source: The Straits Times 29 Feb 08

HDB launches 494-unit Punggol project

Four-room flats in BTO project meant to meet high demand; 278 applications so far

THE Housing Board has released another new build-to-order (BTO) project in Punggol to meet surging demand from house hunters.

It is offering 494 flats, all four-room units, at Punggol Spring – the first batch of 4,500 BTO flats planned for the first half of this year.

Already, 278 applications have come in for the flats, following their launch yesterday. They are priced at between $204,000 and $259,000 – about two-thirds the current price of resale flats in Punggol.

Industry players expect demand to continue to be strong, given the overwhelming response to recent HDB flat releases. Earlier this month, almost 10,000 hopeful buyers applied for just 278 surplus flats in Toa Payoh and Tampines.

By the time the BTO exercise for Punggol Spring closes on March 17, the flats could be four times oversubscribed, predicted Mr Mohamed Ismail, chief executive of property agency PropNex.

To address the shortage of flats – estimates show only 2,000 surplus units in stock – the HDB has recommended that would-be buyers consider resale flats and BTO projects.

It will release another 4,000 BTO flats between now and June, mainly in Punggol and Sengkang. The HDB also said it still has 711 flats available from recent BTO launches in Punggol and Sengkang, including more than 200 each in Punggol Vista, Fernvale Vista and Coral Spring.

But the HDB’s last four BTO projects have all seen at least twice the number of applicants than flats available.

The most recent were Damai Grove in Punggol and Jade Spring @ Yishun, which were released late last year. There were 1,888 applications for the 738 flats in Damai Grove and 1,908 applications for Jade Spring’s 384 flats.

PropNex’s Mr Ismail said that for many first-time buyers with relatively low income, BTO flats have become their only housing option as home prices soar.

But Mr Eugene Lim, the assistant vice-president of ERA Realty Network, pointed out that more BTO projects will not address the immediate housing shortage, as they take a few years to be constructed.

‘BTO is a longer-term solution,’ he said. ‘The segment of buyers that go through BTO may not be the same as the 10,000 applicants looking for leftover flats that are available sooner.’

Punggol Spring is expected to be completed by 2011. It is located within walking distance of the Damai LRT station, next to Punggol Secondary School and near the future town centre where the MRT station and bus interchange are located.

Source: The Straits Times 27 Feb 08

Mass-market safe, high-end may take a hit

Property players sketch the best and worst-case scenarios for private homes in 2008

(SINGAPORE) Luxury-home prices could fall by up to 20 per cent in 2008, assuming sub-prime woes don’t end this year. But the mass market may hold its own or ease 5-10 per cent at most. This was the worst-case scenario according to most property players polled by BT.

In a best-case scenario with sub-prime woes clearing by mid-year, high-end prices could rise up to 10 per cent and mass-market homes as much as 15-20 per cent, the majority of respondents said.

The most optimistic is Jones Lang LaSalle Research, which forecasts an 18-22 per cent increase in luxury/prime prices and a 20-25 per cent gain in mass-market prices in a best-case scenario.

Sales activity is generally expected to be quiet in the first half, before picking up in the second half. ‘Interest is still very much there, but investors see no strong push factor to get into the market just yet,’ says DTZ executive director Ong Choon Fah.

Most developers and property consultants are hoping the sub-prime-related gloom will vanish in the second half. Voicing a common view in the industry, City Developments group general manager Chia Ngiang Hong said: ‘We expect the situation to improve after mid-year. Most of the high-profile sub-prime-related writedowns by major international financial institutions are already out. Hopefully, the rest of the write-downs, if any, should be out by March/April. This current period is good for consolidation.’

UOL Group chief operating officer Liam Wee Sin said: ‘If the sub-prime episode is short-lived, it can be seen as a welcome breather for the Singapore property market.

Both home and land prices in the high-end segment escalated too quickly, especially in Q2 and Q3 last year.’

But Wing Tai deputy chairman Edmund Cheng feels it may not be realistic to expect sub-prime problems to fade away by mid-year. ‘They are likely to linger beyond this year, as the exposure has extended to many other areas, and it may still take some time for the full extent of exposure to be discovered,’ he said.

But on a more positive note, he believes mid/ upper-mid projects near Orchard Road will be more resilient ‘as they should benefit from demand for replacement properties by those who have sold prime district homes through en bloc sales, as well as demand from expats who find prime district housing too expensive’.

Agreeing, Credo Real Estate managing director Karamjit Singh thinks mid-tier private home prices will appreciate 10-15 per cent this year in a best-case scenario, outpacing his estimate of gains of 10 per cent for the suburban/mass market and 5-10 per cent for upmarket homes.

In the high-end category, many property analysts with stockbroking firms see an oversupply of potential launches as sites sold through en bloc sales are redeveloped.

In a worst-case scenario, a major factor that could hurt high-end prices is if demand dries up and ’specu-vestors’ who bought luxury homes in the past few years offload them below current prices, as they still stand to reap huge gains given their low entry cost, reckons Knight Frank executive director Peter Ow.

In the primary market too, some smaller developers may drop prices to generate sales. But Mr Ow acknowledges that the bulk of the unlaunched high-end housing stock is in the hands of a few major players who have the financial capacity to delay launching projects. Instead, they could focus on selling their mid-tier and massmarket homes this year to generate cash flow.

Giving his take, a major developer said: ‘High-end depends on the appetite of foreign buyers and their perception of liquidity and value in the Singapore market. The strong Sing dollar will help persuade these investors that the property market here will be a good store of value.’

Observers also believe overseas funds are likely to turn increasingly to parking money in Asia, instead of the United States and Europe. Other demand drivers for the Singapore residential sector, especially in the mid and mass segments, include falling mortgage rates, the continued influx of expats from China and India setting up home here, and wage growth arising from the tight labour market.

Most market watchers say the upside for high-end residential prices will be limited even if the sub-prime problem clears around mid-2008.

‘Price increases would not so much apply to luxury-class homes as these have already increased significantly since 2005,’ CB Richard Ellis managing director Pauline Goh argues.

However, mid-tier homes could appreciate 5-10 per cent and mass-market prices 10-15 per cent this year, assuming things become more positive after June, Ms Goh added.

Frasers Centrepoint CEO Lim Ee Seng said: ‘Even in a worst-case scenario, I don’t really see mass-market home prices coming down much because construction costs are still going up and that raises the breakeven cost of such projects.’

Knight Frank’s Mr Ow says the mass-market will benefit from strong demand from HDB upgraders, given the shortage of HDB homes.

 

Source: Business Times 21 Feb 08

Jurong Lake area: Big changes planned

URA in talks with stakeholders about plans for tourism, retail and entertainment centre

A WAVE of changes has been planned for Jurong Lake.

Government officials and industry captains have met and discussed the area’s potential as a commercial, retail and entertainment centre.

Preliminary discussions centred on developing office space, a commercial centre with retail shops, four to five hotels and a resort or theme park for Singaporeans and tourists alike – all clustered around the Chinese and Japanese gardens on the shores of Jurong Lake.

The site will also take in the 12ha area occupied by the now-defunct Tang Dynasty City theme park. Built at a cost of $100 million in 1991, it was forced to shut down in 1999 when it failed to pull in enough visitors.

When news broke last year that Tang Dynasty City was to be demolished, landlord Jurong Town Council and the Singapore Tourism Board said then that they were ‘evaluating the area for redevelopment’ into an attraction.

Multiple sources confirmed – on condition of anonymity – that a feedback session with more than 100 stakeholders was held last month on developing the area. At the session, the Urban Redevelopment Authority (URA) shared its proposed plans and sought reactions to it.

One source said: ‘The plan is to try and do something similar to what was done in Tampines – to have a commercial centre, but also to add leisure elements.’

Another source said Jurong Lake was at the heart of the proposed development, and the viability of a water theme park was discussed.

The Singapore Science Centre, in Jurong Town Hall Road since 1977, will also be moving, but it is unclear when this will happen or where it will move to.

Also unclear is the fate of Snow City. The Straits Times understands that Singapore’s first permanent indoor snow centre has a three-year lease and recently started turning in profits.

URA declined comment, but industry players who have heard about it are excited. A lakeside site, served by the East-West MRT line and near industrial parks and residential areas, is suitable for a mixed development, some said.

Source: The Straits Times 20 Feb 08

278 HDB flats swamped by 9,900 applications

Unsuccessful buyers urged to consider build-to-order flats

THE Housing and Development Board received 9,900 applications for 278 flats offered in its February bi-monthly sale.

Most of the units offered are four-room flats, plus 64 five-room units and 20 executive flats in 13 estates.

There are 119 units in Toa Payoh and 39 in Tampines.

HDB said the strong demand was ‘because the flats offered are in established HDB towns which are popular with buyers, but the supply of new flats is tight as there is limited land available’.

HDB advised unsuccessful applicants to consider booking a flat under its build-to-order (BTO) scheme. About 4,500 flats will be launched under this scheme in the first half of the year.

More than 500 are still available from recent BTO launches at Punggol and Sengkang, such as Treelodge@Punggol, Fernvale Vista, Punggol Vista and Coral Spring.

HDB also suggested that buyers also consider resale flats, which it said still remain largely affordable. It said that in January, 25 per cent of resale transactions were completed at prices no more than $10,000 above valuation.

The recently closed sale is HDB’s fifth bi-monthly sale exercise for four-room and larger flats in the combined balloting/walk-in system. HDB is currently reviewing the scheme.

 

Source: Business Times 19 Feb 08

HDB flat still very affordable for average S’porean

Some get up to $88k in subsidies, says Mah Bow Tan; also flats still cheap enough for families to use CPF for full mortgage payments

PROPERTY prices may be on the rise but HDB flats still remain very affordable for the average Singaporean, National Development Minister Mah Bow Tan emphasised yesterday.

That is because families have access to subsidies which can go as high as $88,000 for some households, he noted.

And flats are still cheap enough for families to be able to fund their mortgage instalments entirely from Central Provident Fund (CPF) contributions – without the need to stump up cash.

Mr Mah made these points at a Chinese New Year dinner at the Tampines East Community Club yesterday.

With HDB resale prices rising about 17.5 per cent last year, he said he is well aware that younger Singaporeans are becoming increasingly concerned about the affordability of HDB flats.

He reiterated the Government’s commitment to providing affordable public housing and said there were two ways to achieve this.

One was to give big housing subsidies to help newly-weds buy their first HDB flat. The other was to provide mortgages at a concessionary interest rate.

In terms of subsidies, an Additional CPF Housing Grant (AHG) introduced in March 2006, provided lower income families with an additional grant of between $5,000 and $20,000 to buy their first HDB flat.

The income ceiling for this grant was raised from $3,000 to $4,000 to allow more families to benefit. And the grant limit was also increased by $10,000 so that the highest tier grant is now $30,000.

Mr Mah said: ‘A recent Ministry of Finance simulation estimated that the typical young low-income household could enjoy housing subsidies worth about $88,000.’

He also revealed that HDB’s records show that recent buyers of new HDB flats use only about 20 per cent of their monthly household income to service their housing loans.

‘This means that families can service their housing loan entirely from their CPF Ordinary Account contribution, without any cash outlay,’ he noted.

In any case, rising resale prices seem also to have stabilised for now so there is no need for buyers to rush in at this point, said Mr Mah.

‘The HDB Resale Price Index grew by only 1 per cent last month, and we expect prices to grow at a more moderate pace in 2008,’ he added.

Mr Mah also noted that the proportion of resale transactions with a positive cash over valuation, as well as the median cash over valuation also dipped marginally last month.

He said HDB will continue to monitor the situation closely.

 

Source: The Straits Times 18 Feb 08

PROPERTY: Where to find homes at or below $600,000

They include executive condos as well as older private apartments in suburban locations

THE property market has quietened considerably this year, but prices have yet to fall.

Nevertheless, if you have a modest budget of about $600,000 for a home, your choices are not just confined to HDB flats.

Some fairly new executive condominiums as well as older private condos or apartments are within reach, if you look hard enough.

These are typically 99-year leasehold properties in suburban locations such as Woodlands, Choa Chu Kang and Jurong.

Some city-fringe locations such as Geylang, where the red-light district is nestled, or small apartments in places such as Upper East Coast Road, may also offer some bargains. Landed homes, however, will require a bigger budget. So will new condo launches, unless you do not mind tiny studio apartments.

New versus Old

BUYERS tend to prefer buying new properties directly from developers, rather than old ones. They are drawn by the slick marketing promotions put out by developers and pay a premium for their new homes. But new properties may not be worth buying when you have a tight budget.

‘In 2006, all the record prices were achieved by new launches,’ said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

‘Units at Ardmore Park, an older development which is in a very good location and is well-maintained, were transacted at much lower prices than those in new high-end condos in not-so-good locations.’

It is the same in suburban locations, as buyers pay more for what is new, he said.

The 99-year leasehold apartments at the 636-unit Maysprings in the Bukit Panjang area are mostly going for $650,000 and below. A year ago, they went for $500,000 and below.

The 17-year-old, 616-unit Orchid Park Condominium in Yishun, which faces Lower Seletar Reservoir, also had some units that went for around $600,000.

At the West Bay Condominium, a 936 sq ft unit was sold for $585,000 in January, while a bigger 1,216 sq ft unit went for $650,000.

Studio apartments, which can range from around 500 sq ft to 600 sq ft, can be bought for $600,000 or less.

The only problem is that there are not many of them in suburban projects, Mr Mak pointed out.

Private versus HDB

NOW that HDB prices have risen and there is overwhelming demand for new HDB flats, buyers may do well to consider private homes if they can afford them.

‘There will be growing demand for mass market properties as Singapore continues to create jobs,’ said Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong. The opening of the two integrated resorts alone will create a significant number of entry-level jobs, he said.

‘Our unemployment rate is at a 10-year low, which means that we will need foreigners for some of these jobs,’ he said. ‘As long as rental values remain strong, capital values should also trend up.’

For those buyers who may one day want to rent out their homes, a private property could be a better choice than an HDB flat.

First of all, not everybody can buy an HDB flat. Also, there are leasing restrictions.

Yields may be higher for some HDB flats than private homes, but a private condo unit may be easier to rent out as condos usually come with amenities and security, property consultants said.

On average, net rental yields for private homes across Singapore are at 3.6 per cent, said Mr Mak.

Government data shows that the median rental rate in the fourth quarter of last year for Maysprings was $2.38 per sq ft a month. For a 904 sq ft unit at Maysprings, the rent would work out to $2,151 a month, or a 5.2 per cent gross yield.

The median rate was $2.09 psf for Orchid Park Condominium and $2.98 psf for West Bay Condominium.

Using this rate, the rent at West Bay Condominium would work out to $2,789 a month for a 936 sq ft unit.

Whether you are buying a property to live in or to rent out, know that you have a fair number of choices even if your budget is only $600,000.

 

Source: The Sunday Times 17 Feb 08

HDB offers 278 flats for sale

By end of yesterday, there were 2,224 online applications

THE Housing and Development Board launched the sale of 278 flats in various towns and estates yesterday. And by the end of the day the units were many times subscribed, with 2,224 online applications received.

Most of the units are four-room flats, plus 64 five-room units and 20 executive flats. They are spread over 13 estates.

Toa Payoh had the largest number of flats available at 119, followed by Tampines with 39 and Bukit Merah with 30.

Cushman & Wakefield managing director Donald Han said: ‘Obviously we’re seeing a better response for mature estates in fairly central locations. These are the first to experience demand and price increases.’

This is HDB’s fifth bi-monthly sales exercise for four-room and bigger flats under the combined balloting/walk-in system. Some 3,350 units have been offered so far.

In the first four exercises, 2,917 of the 3,034 units offered were selected, representing a take-up rate of 96 per cent.

There is also healthy demand for HDB’s build-to-order (BTO) flats. The 698-unit Coral Spring @ Sengkang, launched in September 2007, is about 70 per cent taken up, with just 200 units remaining. ERA Singapore assistant vice-president Eugene Lim said this is ‘not bad’ considering the location.

The strong economy has helped boost BTO and bi-monthly sales. But Mr Lim said increasingly higher asking prices for resale HDB flats are pricing some people out of the resale market. ‘There appears to be a stand-off between buyers and sellers in the resale market at the moment,’ he said, though there is still demand for resale flats.

HDB, which has stepped up its building programme since 2007, will offer 4,500 new BTO flats in the first half of 2008.

Whether this will help cool the resale market – where at the top end a 21st-storey executive flat in Queenstown went for a record $890,000 last month – is uncertain.

PropNex CEO Mohamed Ismail reckons the resale market will remain strong for now.

‘Supply (of flats) through walk-in selection is drying up and BTO flats will take time to build,’ he said. ‘I also believe the first half of 2008 will see people who sold their private flats en bloc earlier start to receive their collective sale proceeds, and some will downgrade to HDB resale flats.’

As such, Mr Ismail believes the resale market could see more than 30,000 transactions this year.

 

Source: Business Times 12 Feb 08

2,224 in HDB line and it’s only Day 1

A BATCH of 278 surplus Housing Board flats in established towns like Bedok, Geylang and Toa Payoh drew more than 2,200 buyers within hours of going on sale yesterday.

Buyers have until Feb 18 to submit online applications for a computer ballot that will fix their position in the queue to pick a flat. The results will be out on Feb 21.

Yesterday’s ‘apply to buy’ rush will not have come as a surprise given the past response to the HDB’s year-old sales scheme.

A batch of 316 flats offered in outlying towns drew 5,147 applications in December, while about 840 others offered in two prior sales exercises were fully taken up.

The latest batch comprises mainly four-room units, with some five-room and executive flats – all in mature locations with amenities.

‘There will an overwhelming response,’ predicted Mr Albert Lu, the managing director of C&H Realty.

By 5pm yesterday, 2,224 people were in the queue.

The biggest group of units is in Toa Payoh, with 105 four-room and 14 five-room flats on offer. Flats are also available in Jalan Membina in Bukit Merah town and Geylang Serai.

The four-room flats cost $141,000 to $398,000, the five-roomers cost $218,000 to $532,000 and the executive flats, $333,000 to $470,000, depending on location and features of the units.

Demand is expected to come from buyers who want flats urgently but cannot stomach the prices that owners in choice areas are demanding.

Administration assistant Ellis Ang, 26, who plans to get married this year, has struck out in three ballots for a new flat so far.

‘There are a lot of couples like us out there,’ she said.

Unlike build-to-order flats, where construction starts only after most of the units are booked, most of the 278 flats on offer are ready and the rest are expected to be completed by 2011.

The HDB said: ‘Given the overwhelming popularity of new flats in established towns and the limited number of new flats available here, HDB would like to encourage flat buyers to consider flats in non-mature estates as well.’

Increased demand has shrunk the HDB’s surplus stock from more than 10,000 four years ago to about 2,200 at the end of last year.

But it is ramping up the number of build-to-order flats, with about 4,500 new flats offered this way in the first half of this year.

There is ‘ample supply’ of such new flats, it said, pointing out that 200 flats in the 698-unit Coral Spring estate in Sengkang were not taken up when booking ended last month.

 

Source: The Straits Times 12 Feb 08

Stock of surplus flats vanishing fast

Buyers on tight budgets looking for finished flats will be vying for fewer units

THE Housing Board’s offer of 278 surplus flats in mature towns yesterday will be likely to slash its stock of readily available units to less than 2,000, down from 17,500 in 2002.

Surging demand and a shortage of affordable completed property has dramatically cut the surplus supply.

At the end of last year, HDB was estimated to have just 2,200 surplus flats left. The almost 100 per cent takeup rate in previous sales exercises will push this figure down further.

It means that buyers on tight budgets hoping to purchase a completed flat will find themselves vying for fewer and fewer units, with the only alternative being coughing up more cash to buy a resale flat.

Those who were unlucky in ballots or who lack the cash will just have to wait.

Most new HDB flats come under the build-to-order (BTO) scheme. These flats are constructed only when most units are taken up. A person booking a BTO unit today could still have to wait three years or more for his home to be ready.

In the meantime, newly married couples will just have to rent or live with their parents until their new flat is ready, said PropNex chief executive Mohamed Ismail.

The resale prices of HDB flats jumped 17.5 per cent last year, prompting hordes of buyers to try their luck in the queue for surplus new flats, which come at highly subsidised prices.

A batch of 316 flats in Hougang, Punggol and Sengkang drew 5,147 applications, while 840 units offered in other parts of Singapore were all snapped up.

While the Government has committed to offering more flats under the BTO system – 4,500 in the first half of this year – it cannot guarantee that these new flats will be available on the spot.

It learnt a hard lesson in the 1990s when it built too many flats in anticipation of demand that fizzled out fast in the Asian financial crisis.

The subsequent overhang, which numbered 17,500 in 2002, meant that families wanting a flat could simply walk into an HDB branch and pick a ready-built flat on the spot.

In 2005, the HDB even sold about 100 of its older surplus flats on the resale market. This had HDB flat owners fearful that the move could depress the value of their homes.

Those days look set to be over, say property experts.

C&H Realty managing director Albert Lu said that buyers will simply have to choose between waiting for a new flat or paying more for a resale one in move-in condition.

 

Source: The Straits Times 12 Feb 08

A touch of glass for Moulmein HDB flats

RESIDENTS of HDB flats in Cambridge and Owen Roads will be the first in Singapore to get see-through, bubble lifts like those found in hotels and shopping malls.

They will be up and running by next year, said Minister of State (Education) Lui Tuck Yew yesterday at a Chinese New Year dinner for Tanjong Pagar GRC.

These lifts are cheaper to install because they are not enclosed in a concrete shaft. They cost about 25 to 35 per cent less than that of the lifts now found in HDB blocks.

Residents in Buffalo Road in Serangoon will also have such lifts by 2010, said Rear-Admiral (NS) Lui.

The authorities had previously said that by installing shaftless lifts, they could quicken the pace of upgrading so that HDB blocks would have lifts that stop on every floor.

In all, 1,200 HDB homes in the MP’s Moulmein division will gain from lift upgrading in the next two years.

Residents strongly support the programme to improve their lifts, with 85 per cent to 100 per cent of them giving the green light in polls, RADM Lui said at the dinner attended by the GRC’s six MPs, including Minister Mentor Lee Kuan Yew.

Meanwhile, efforts to upgrade private estates have been less successful.

Three submissions last year to the National Development Ministry’s Estate Upgrading Programme were not selected. RADM Lui did not identify the estates.

He plans to approach the ministry’s Community Improvement Programme for funds to do minor improvements to the private estates.

He also disclosed that ‘after much deliberation and some persuasion’, the Government gave more money for the renovation of the iconic Tekka Market, at the corner of Serangoon Road and Bukit Timah Road.

The sum has been raised from $5 million to $12 million for a more thorough make- over, he added.

Beyond the physical improvements, RADM Lui also highlighted the need for more community awareness. He urged the residents to play their part in helping the needy and be more neighbourly.

One resident who is looking forward to the bubble lift is deliveryman Tan Soy Tee.

The 61-year-old lives in a three-room flat on the sixth floor of Block 46 in Owen Road. The lift does not stop on his floor but on the seventh floor.

Daily, he would have to take the flight of steps to and from his home.

He expects to pay about $760 for the lift upgrading, a sum he finds affordable: ‘I earn $1,200 a month and cannot afford it if I have to pay much more than that,’ he said in Mandarin.

 

Source: The Straits Times 12 Feb 08

New HDB upgrading scheme won’t add much more to resale prices

The Home Improvement Programme will not boost prices of resale flats as much because upgrading is on a smaller scale, say property experts

THE Home Improvement Programme (HIP) is the newest kid on the block in the Housing Board’s two-decade long upgrading scheme.

Property experts, however, say that it will have a far smaller impact on the value of flats compared to previous upgrading plans. This is because upgrading under HIP will be smaller in scale.

HIP and another scheme, the Neighbourhood Renewal Programme (NRP), are devised to stretch the government dollar over many more households and to pay closer attention to residents’ views. They will be rolled out soon in up to 12 locations islandwide, including Yishun and Tampines.

The outgoing Main Upgrading Programme (MUP) involved more extensive work as it overhauled the insides of flats with new toilets, extra rooms and doors, as well as the common areas of the blocks and precincts.

The MUP proved a gold mine for people like Mrs N. L. Chan, who bought her four-room flat in Holland Close for $290,000 in September 2006, when her estate was in the last throes of the upgrading programme.

Just eight months later, she sold it for $330,000 as she had to move closer to her daughter in Dover Crescent.

Such jumps in value may be harder to come by under HIP, say property agents.

The new programme focuses on the essential improvements in the flat, such as the repair of spalling concrete and replacement of waste pipes.

Once at least 75 per cent of flat owners vote for such upgrading, this essential work is compulsory, although it is fully paid for by the Government. The flat owners, however, have the option of having their doors and toilets replaced at a subsidised rate.

Meanwhile, the NRP promises to spruce up a few adjoining sites together, unlike the previous Interim Upgrading Programme Plus scheme which was conducted in one precinct at a time.

Apart from the economies of scale, the bigger budget under the amended programme would make it possible for items such as tennis courts and skating parks to be considered.

About 300,000 flats will be eligible for the HIP, while 200,000 units can undergo work for the NRP.

A third programme – lift upgrading – will run concurrently with the new schemes. This aims to give almost every HDB flat resident direct lift access to his floor by 2014.

The director of Dennis Wee Properties, Mr Chris Koh, estimates that while the MUP usually boosts a flat’s value by $20,000 to $30,000 over and above what the flat owner pays for the upgrading work, the equivalent expected for flats which undergo HIP is only about $10,000.

This is because the work done will be smaller in scale.

While flats which undergo the MUP make a big impression with their additional rooms, new doors and windows, and spanking new precinct facilities around them, the improvements under the HIP may not be that noticeable.

More people, for example, are now likely to opt out of having new doors and windows to reduce their bills under the HIP.

It may not produce the ‘entire fresh look’ needed to raise the value of the home by much, said Mr Koh.

Similarly, the executive director of Roof Real Estate Group, Mr Dave Lau, does not expect the value of a home under the HIP programme to rise by more than 2 to 3 per cent, compared to 10 to 20 per cent under the MUP before.

But he reckoned that ‘the HIP would probably make property easier to sell’.

Both programmes were devised from the feedback received during a series of forums held last year to find out what it takes to strengthen bonding within HDB estates.

During these discussions, participants wanted a greater say in how their estate turned out.

No matter the smaller increase in value, the executive director for HSR property group, Mr Eric Cheng, said that buyers can usually wrangle a better price from sellers if they buy a flat that is undergoing upgrading, compared to after it is done.

Most of the time, sellers try to hold off putting their flat on the market until after upgrading, when the new look of their estate will bolster their position at the negotiating table.

 

Source: The Straits Times 10 Feb 08

590 HDB blocks picked for upgrading

58 locations selected for improvement under revised schemes

ABOUT 590 Housing Board blocks in 58 locations islandwide have been picked for the next batch of improvement works under the HDB’s recently revised upgrading schemes. Areas set to benefit include Yishun, Tampines and Hougang.

These schemes include the new Home Improvement Programme (HIP) and Neighbourhood Renewal Programme (NRP) – unveiled last year – as well as the ongoing lift upgrading programme.

The HIP focuses on essential improvements within a flat, such as repairing spalling concrete. It also gives residents the choice of opting out of certain items to cut costs.

This scheme replaces the more extensive Main Upgrading Programme, which had been more expensive because work was done both inside and outside the flat.

Under the other new programme, the NRP, a few adjoining estates will be spruced up together, with the cost fully borne by the Government. The bigger budget involved makes it possible for larger items such as tennis courts and skating parks to be considered as part of the works.

Residents will also be consulted on how they want their estate improved.

The HDB, which said earlier that the HIP would be first done in two precincts in Yishun and Tampines, announced yesterday that it will double that number to four and include other towns in view of strong public support shown in recent surveys.

Meanwhile, eight estates have been selected for the NRP and another 52 for lift upgrading – where housing blocks are renovated to give residents lift access at every level.

The lift upgrading programme is still the mainstay of improvement works as the Government has pledged to give direct lift access to almost every block by 2014. In 2006, for example, the Government said it was selecting 70 precincts comprising 600 to 700 blocks for the programme. In 2005, it was 480 blocks in 64 precincts.

The Minister of State for National Development, Ms Grace Fu, said yesterday the Government was on track to meet the 2014 deadline.

Tampines GRC MP Irene Ng said that 16 blocks in Tampines Street 11 under her charge have been picked for lift upgrading in the latest list.

She added: ‘Many of the elderly fear becoming isolated in their flats as they find it increasingly hard to climb stairs. Over the years, some in wheelchairs had to move out of the estate, even though they loved the place, because they could not negotiate the stairs without help…’

Residents in about 70 per cent, or 3,600, of the eligible blocks have been offered lift upgrading so far.

Some estates in the latest list will have more than one type of upgrading work done at the same time to reduce inconvenience.

Six precincts comprising about 30 blocks previously picked for the Main Upgrading Programme under the old regime will also be switching to the new programmes, at the request of their MPs.

About 300,000 flats out of almost 900,000 islandwide will be eligible for the HIP, while 200,000 units can undergo work for the NRP.

Details of the specific locations of these selected precincts will be announced by their respective MPs later.

Work on this batch is expected to be completed within five years.

 

Source: The Straits Times 5 Feb 08

HDB resale deals at a new low in 2007

Rising resale prices and higher COVs result in last year’s total of 29,436

THE number of resale HDB flats which changed hands fell to a new low in 2007 – with just 29,436 transactions recorded – as buyer resistance set in, in the face of escalating resale prices and more sellers asking for large amounts of cash-over-valuation (COV), fresh HDB data shows.

The number was lower than the 29,723 resale transactions seen in 2006, which was itself a new low. Stock-market jitters in the fourth quarter also caused resale transactions in the last three months of 2007 to fall 13 per cent to 6,700.

The fall in transaction volume came despite a 17.5 per cent increase in HDB resale prices last year. In the fourth quarter, HDB resale prices rose 5.7 per cent, lower than the increase of 6.6 per cent seen in the third quarter.

‘With escalating resale prices and more and more COV transactions, we saw the resale market hitting resistance level in the fourth quarter as HDB flat buyers do not have or are not willing to part with so much cash,’ said Eugene Lim, assistant vice-president of property agency ERA.

The COV is the amount that is paid above the valuation of a flat and cannot be paid with a home loan or monies from the Central Provident Fund (CPF). With high COVs demanded by sellers, buyers are required to fork out more cash.

In the fourth quarter, cases requiring COV constituted 86 per cent of all resale transactions, up from 80 per cent in the third quarter. The median COV amount also increased to $22,000 in the last three months of the year, from $17,000 in the previous quarter.

However, a closer look at some of the traditionally popular estates show that median COVs have actually decreased as buyers resisted forking out large sums of cash. For example, in the third quarter, the median COV for a five-room flat in Queenstown was $110,000. In the fourth quarter, it had fallen to $79,000.

But despite the lower total resale volume, the number of five-room and executive flat transactions actually increased in 2007 over 2006, ERA’s Mr Lim pointed out.

The number of five-room resale transactions rose 13.3 per cent to 7,275 in 2007. Similarly, for executive flats, there were 2,627 transactions in 2007 – a jump of 17.9 per cent compared with 2006.

The robust numbers are mainly due to cash-rich buyers from enbloc sales or private property sales downgrading to larger HDB flats in choice locations, experts said. These buyers also account for the robust COVs fetched by larger flats.

‘Based on our data, more than 50 per cent of the high COVs of $80,000 or more seen in 2007 are from private property downgraders,’ said Mohamed Ismail, chief executive of property firm PropNex.

Sellers of these larger HDB flats are either upgrading to private properties or downgrading to smaller HDB flats, Mr Ismail said. He added that there was little upgrading from smaller to bigger HDB flats.

ERA’s Mr Lim said the fact that sellers of larger HDB flats are upgrading is good news for developers of mass market condos as traditionally, the support for their projects comes from buyers living in these HDB flats.

 

Source: Business Times 26 Jan 08

Buyers paying $22k over valuation for resale flats

Median cash over valuation amount up a third; trend filters to outlying areas

BUYERS of resale Housing Board (HDB) flats paid a median amount of $22,000 in cash over the property’s valuation for their new homes from October to last month, a whopping 30 per cent rise from the previous quarter.

The good news for HDB flat owners in outlying areas is that this trend is filtering outwards towards them from the most popular districts downtown.

HDB data released yesterday showed that 86 per cent of all resale transactions in the fourth quarter of last year required cash payments over valuation, up from 80 per cent in the previous quarter.

However, greater resistance from buyers to the surging prices of resale flats last year resulted in a 13 per cent drop in the number of flats sold, to 6,700. For the whole of last year, 29,436 flats changed hands.

In fact, despite the overall rise, the median cash over valuation (COV) of some units in traditionally more popular estates such as Queenstown actually dropped. The median COV for a five-room flat in that area, which hit $110,000 in the July to September period, actually shrank to $79,000 in the period after that – albeit off a high base.

This, said the assistant vice-president of ERA Singapore, Mr Eugene Lim, showed the extent of the current market resistance towards high COVs.

‘Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV transactions,’ he said.

The chief executive of PropNex, Mr Mohamed Ismail, said another reason for this phenomenon is that the number of flat buyers with thick wads of cash in hand – mostly due to the collective sales of their private homes – is shrinking.

Most people buying HDB flats rely heavily on home loans to finance their purchase.

Resale prices of HDB flats rose 5.7 per cent during the quarter to bring the year’s growth to 17.5 per cent.

Last year’s growth is the biggest in a decade but property agents are not expecting a repeat for now as the HDB is offering at least 4,500 new flats for the first half of this year to calm buyers worried that housing is growing out of their reach.

These flats, which are highly subsidised, have an advantage over resale flats because they do not require buyers to fork out cash over valuation.

While ERA’s Mr Lim expects the price of resale flats to grow by 5 to 8 per cent this year, Mr Ismail reckons it would move by about 10 per cent.

Mr Ismail pointed out: ‘The economy is still doing well. And the labour market is tight.’ 

Source:  The Straits Times 26 Jan 08

Bumper prices fetched by HDB flats fuel condo demand

High cash over valuation provides ‘filter-up’ demand for private homes

(SINGAPORE) More Housing Development Board flats in prime locations are now being sold for more than halfa-million dollars each, and the trend is pushing up the asking prices for mass market condominiums and adding to demand for entry-level private homes.

Data compiled by property firm ERA showed that 269 HDB flats were sold for $500,000 or more in the fourth quarter of 2007 – a 69 per cent increase over the 159 flats sold for more than $500,000 each in the previous quarter.

While most of such flats in the fourth quarter of 2007 went for between $500,000 and $599,999, 50 were sold at $600,000 to $699,999.

And 12 changed hands at $700,000 or higher.

Anecdotal evidence also suggests that larger HDB flats in Singapore’s central locations are fetching more money than before.

For instance, a 21st-storey executive flat along Mei Ling Street in Queenstown sold for a record $890,000 earlier this month.

Last November, another executive flat along the same street went for a then-record $780,000.

The sellers of such flats will now have the capacity to buy entry-level private homes, said ERA assistant vice president Eugene Lim.

New homeowners could also look at private homes for their first property purchases, rather than at resale HDB flats in the more central parts of Singapore.

‘HDB flats provide the support for entry-level types of private housing,’ said Mr Lim. ‘If HDB prices keep moving up, people will begin to look at private properties.’

CB Richard Ellis executive director Joseph Tan pointed out that the recent surge in HDB prices has narrowed the price gap between public housing and private homes.

Many of the pricier flats are being sold for high amounts of cash-over-valuation (COV), which means that sellers will have cash on hand to make the downpayment when they purchase private properties.

‘The HDB sellers now have greater purchasing power, especially with the high COVs, which can be used for downpayments on private properties,’ said Nicholas Mak, director of research and consultancy at Knight Frank.

HDB statistics show that the median COV for executive flats in Bukit Timah rose to $137,500 in the third quarter of 2007.

In Marine Parade, the COV for five-room flats hit $84,000 in the same quarter.

The massive growth in COV for larger flats in central districts can largely be attributed to homeowners that have sold their properties through en bloc sales and are now moving into HDB flats.

But the reverse also applies now, analysts said. Sellers of these flats are starting to upgrade to mass market private homes with spare money fetched from the high COVs of their old flats.

Property agents told BT that sellers of HDB flats with cash on hand are looking mostly at mass market condominiums in the resale market as they need replacement properties to move into.

New mass market homes, by contrast, are not as popular.

But eventually, this ‘filter-up’ demand will cause mass market property prices to climb, analysts said, which could once again put private homes out of reach of HDB upgraders.

Property agents also report that sellers of mass market private homes are upping their asking prices as they see HDB prices in prime locations head skywards.

‘Sellers are seeing five-room and executive HDB flats fetching $700,000,’ said one property agent. ‘So they think, I can ask for $1 million for my four-room private home.’

The agent said that at least two sellers of mass market homes that he is representing have recently upped their asking prices, even though the new prices are not ‘realistic’, in his opinion.

Knight Frank’s Mr Mak agreed. ‘Word gets around that HDB prices are going up, and quite quickly, sellers (of mass market private homes) start upping their asking prices.’

 

Source: Business Times 25 Jan 08

HDB may offer 6,000 flats in H1

SOME 6,000 housing board flats are expected to be offered for sale in the first half of this year, Parliament was told yesterday.

Minister of State for National Development Grace Fu said this matches the sales pace seen in the same period last year.

For the whole of 2007, HDB sales programme offered 13,000 flats – more than double the 5,700 flats sold in 2006.

Ms Fu was responding to questions about HDB’s planning parameters and had cited those figures to illustrate the flexibility in the government’s building plans.

For instance, if the HDB sees high subscription rates in a certain area, it would also increase the supply of flats in that area.

Ms Fu also stressed that it is ‘difficult to predict with precision what the actual demand is in a three-year time frame’. For this reason, the build-to-order (BTO) scheme helps prevent an excess supply of flats.

Under BTO, construction will proceed only if booking for a sizeable number of the flats has been confirmed.

Yesterday, Ms Fu also urged first-time flat buyers to check out information on flats supply in different locations, and to consider factors like the chances of success in the balloting exercise, the waiting time, and their budget before deciding on a location.

 

Source: Business Times 23 Jan 08

Why it’s difficult for HDB to predict demand

THE Housing Board cannot accurately predict demand for HDB flats years down the road.

However, it will be flexible and boost the supply of flats when needed, Minister of State for National Development Grace Fu said yesterday.

She gave this assurance in response to a question from Madam Cynthia Phua (Aljunied GRC), who wanted to know how long newly married couples can expect to wait for a new flat.

With rising property prices and surging demand for HDB flats, some young couples have reportedly had to postpone their customary wedding ceremonies because they could not get a flat in time.

Madam Phua also noted that the HDB seems to face a problem of ‘excesses’: Three years ago, it had 10,000 excess flats. Now, it has 27,000 applicants for more than 4,000 flats.

She asked if the ministry would consider providing data on the potential supply of flats over the next three years, to help young couples plan.

In response, Ms Fu said it would be difficult to ‘predict with precision’ demand for HDB flats over a three-year time frame.

‘There are certain market forces that affect supply, demand of public housing vis-a-vis private housing, for example, that are not possible to predict with accuracy,’ she said.

Ms Fu pointed out that while demand far outstrips supply in popular projects like Telok Blangah Towers, that is not the case in others.

For example, first-time flat owners have a one in two chance of getting a flat in upcoming projects in Sengkang and Punggol.

She advised buyers to carefully consider their budget and how long they are prepared to wait before making a decision on which project to apply for.

She also assured MPs that the supply of flats will be adjusted when necessary.

Last year, for instance, the HDB offered 13,000 flats for sale, more than double the number in 2006.

This year, it expects to offer about 6,000 flats in the first half of the year.

‘Our building plan has flexibility and where we see there’s a high subscription rate, we will increase the supply of HDB flats,’ said Ms Fu.

 

Source: The Straits Times 23 Jan 08

Chip Eng Seng wins $188m HDB contract

CHIP Eng Seng Corporation has been awarded a contract worth $188 million by the Housing & Development Board for the construction of 1,394 dwelling units in Queenstown.

The contract, won through wholly-owned subsidiary Chip Eng Seng Contractors (1988) Pte Ltd, also includes the construction of a multi-storey carpark, link bridges, a roof garden, an education centre and other facilities.

Building works are expected to begin next month and to be completed by 2011. This is Chip Eng Seng’s first construction contract won this year.

With construction demand on the rise, Chip Eng Seng said it expects its construction division to be busy with tenders and construction work this year.

‘After many lacklustre years, an upturn in the construction industry is in view. We are very positive about our prospects for 2008,’ said Lim Tiam Seng, executive chairman of the group.

As at June 2007, Chip Eng Seng had a construction order book of about $590 million that will take the group through to 2011. The company is undertaking two other HDB housing projects. One is in Sembawang and the other is the Pinnacle @ Duxton, which features seven 50-storey residential blocks with skybridges, and communal and commercial facilities.

When completed, Pinnacle @ Duxton will be the tallest public housing in Singapore.

Chip Eng Seng, which is into property as well as construction, has undertaken a broad spectrum of construction projects in both the private and public sectors. It has also been actively acquiring and developing properties in Singapore, spanning residential, commercial and industrial properties.

 

Source: Business Times 22 Jan 08

Poor will not be neglected in HDB upgrading

Revised schemes allow for more flexibility and govt subsidies

THE Housing Board will not neglect the needs of the poor, or be rigid, as it upgrades flats under schemes which have recently been revamped.

The Minister of State for National Development, Ms Grace Fu, gave this assurance as the Housing and Development (Amendment) Bill, which paves the way for one of the new programmes, was passed in Parliament yesterday.

During the debate on the Bill, various MPs had put forward wish-lists.

Madam Cynthia Phua (Aljunied GRC) wanted the Government to absorb the co-payment that will be required for lower-income households to get their homes upgraded.

Under the new Home Improvement Programme (HIP), which focuses on essential improvements within a flat such as repairing spalling concrete, residents will have to pay between 5 and 12.5 per cent of the total bill.

They can opt out of some items.

The other new scheme recently introduced – the Neighbourhood Renewal Programme, where improvements are made across several precincts – will be fully paid for by the Government.

Mr Liang Eng Hwa (Holland-Bukit Timah GRC) asked for items such as aluminium window frames or accessibility features for the elderly and disabled to be added to the list of essential improvements under the HIP programme.

He also wanted the Government to consider extending its upgrading schemes to private estates.

Ms Fu rejected Mr Liang’s suggestion that government-subsidised upgrading be offered to private estates, pointing out that private homes could be owned by foreigners as well as permanent residents. Unlike owners of HDB flats, private home owners also have the option of selling their homes collectively.

On the question of lower-income households, Ms Fu said flat owners can cut their bills by opting out of various improvements.

Ms Fu assured members that the HDB has in place ’sufficient financial help’ for struggling flat owners, who are given the option to pay their share of the upgrading bill through instalments over a long time. To date, it has not taken any flat owner to court over unpaid upgrading bills.

Meanwhile, the HDB will consider elderly-friendly features like grab bars as part of the optional improvement items under the HIP if they prove popular. Current options are limited to upgrading toilets, new entrance doors, grille gates and refuse hoppers.

However, flat owners are free to make separate requests to HDB contractors to install such items in their flats at the same time as their flats are upgraded.

Ms Fu stressed that the upgrading programmes are ‘not a substitute for outine maintenance, cyclical repair the home owner and town councils will have to undertake’.

Meanwhile, opposition MP Chiam See Tong (Potong Pasir) asked why the flats in his ageing ward have not been upgraded over the two decades in which upgrading has been available.

Ms Fu replied that while his ward is eligible for the upgrades, the Government prioritises districts based on their support of government policies.

 

Source: The Straits Times 22 Jan 08

1,098 HDB flats now open for balloting

THE Housing Board yesterday launched a ballot for the sale of 1,098 flats in Bedok, Clementi, Queenstown and Jurong West with demand for public housing staying on the boil.

The flats are surplus units from the board’s Selective En bloc Redevelopment Scheme, which relocates residents from ageing blocks to new ones nearby.

Such flats are usually highly coveted as they are located in mature estates near transport nodes and amenities.

Adding to the demand is the fact that recent hikes in private property prices have pushed more buyers to these government-subsidised flats.

Last month, an HDB ballot for 316 surplus flats in the outlying towns of  Hougang, Sengkang and Punggol drew an overwhelming 5,147 applications.

The Government responded by committing to putting out about 6,000 new flats between last month and June.

Its latest sale exercise includes 234 studio apartments for the elderly in Queenstown and Jurong West, at a cost of $54,000 to $89,000 each.

There are also 164 three-room flats priced from $180,000 to $266,000, 516 four-room flats going for $282,000 to $400,000 and 184 five-room flats between $400,000 and $520,000.

Five unfurnished sample units in Clementi and Queenstown will be open for viewing.

While some of the flats are immediately available, others will be ready by 2012.

Online applications from potential buyers must be submitted by Feb 6.

A computer ballot will determine the queue position of eligible applicants and those shortlisted will be informed in April.

 

Source: The Straits Times 18 Jan 08

Home prices stay firm even as property stocks retreat

Amid weak sentiment in a quiet market, many players are adopting a wait-and-see attitude

SINGAPORE’S property stocks have been taking a hammering lately but the property market has so far remained unscathed.

After riding the boom to dizzy heights, property counters have now dropped by up to 60 per cent or so from their high points over the past 12 months. Home prices, on the other hand, have not softened noticeably, if at all, although the number of transactions has shrunk significantly.

The share price of Wheelock Properties, for instance, closed at $1.87 yesterday, down 48.9 per cent from its one-year high on Nov 4.

But caveats lodged with the Urban Redevelopment Authority and anecdotes of more recent transactions showed no evidence of property sellers lowering their prices.

‘The stock market must fall convincingly before property prices will be hit,’ said DMG & Partners Securities head of research (retail) Terence Wong, explaining the apparent disconnect between physical properties and stock prices.

Stock investors’ worries stem from serious trouble in another housing market – the United States, which is currently embroiled in a sub-prime mortgage crisis. Fears are growing that the US is headed for recession.

In Singapore, while property buying sentiment is weakening as liquidity dries up, prices are not likely to head south any time soon, analysts said.

They say that is because most potential buyers are believed to be taking a breather for now and watching to see what comes next.

If and when these would-be buyers believe the worst of the current financial worries are over, they are set to jump back into the market, they said.

Mr Ku Swee Yong, director of Savills Residential, said: ‘Asia is still very strong and so is the Singdollar.’

‘The problem is not bad enough that expatriates have to be repatriated. Our finance industry is still growing and the expats are still renting.’

But things could get worse in the US and that would hit the general investment mood. ‘Sub-prime is but the tip of the iceberg,’ said Mr Ku.

Knight Frank managing director Tan Tiong Cheng said: ‘A prolonged US recession could contain any price increases in the property market this year. But the property market is fundamentally sound and there are buyers on the sidelines.’

Prices of upcoming launches are expected to remain firm, analysts say.

‘I believe the major developers will hold as their pockets are deep enough,’ said DMG’s Mr Wong.

Favourable interest rates will enable them to hold for a longer period, analysts say.

While launch prices are not likely to be hit, resale prices could fall, one analyst said.

Still, analysts believe many people bought properties at high prices in the past year or so and are unlikely to dump them now. Many of them are believed to have strong holding power.

Mr Ku said buyers who made use of the deferred payment scheme before it was scrapped will not be worrying about their buys for several years.

But analysts think some speculators who bought high, hoping to make a quick buck from high-end properties in Sentosa Cove, Marina Bay and the Orchard Road area, are now panicking.

High-end homes have crossed the $5,000 per sq ft mark – more than double the record price in the last peak in 1996.

The days of making quick money from the high-end property market are likely over. ‘The clock is running and there would be some speculators out there who cannot service the loans on their property,’ said one analyst.

Even so, speculators do not form a large part of the market, analysts say.

With buyers adopting a wait-and- see attitude given the current uncertainty, the market is expected to remain quiet for a while.

 

Source: The Straits Times 18 Jan 08

4-room Jalan Membina flat sells for a record $609 psf

It is believed to be the first time an HDB flat has crossed the $600 psf mark

A FOUR-ROOM flat at Jalan Membina has smashed the record for the most expensive Housing Board (HDB) flat ever to change hands in terms of price per sq ft (psf).

The 969 sq ft flat sold for $590,000 two weeks ago, which works out to $609 psf – believed to be the first time an HDB flat has ever crossed the $600 psf threshold.

A fabulous view towards Sentosa, and a superb location near Tiong Bahru MRT station and Tiong Bahru Plaza, are being cited as key factors for the very high price.

The last record, reported only days ago, was set by an executive flat in Mei Ling Street with a much larger floor area of 1,614 sq ft, which sold for an eye-popping $890,000, or $552 psf.

Smaller flats usually command higher psf prices – if the Mei Ling flat had been sold at the same $609 psf price as the Jalan Membina flat, it would have fetched $983,000.

Ms Mylene Kwan, 33, a PropNex housing agent who brokered the latest deal, told The Straits Times yesterday that the buyers were a middle-aged couple who recently sold a Queenstown executive flat and needed a new home.

The flat, in Block 21, had a valuation of $475,000. It is a five-year-old unit on a high floor of the 30-storey block, said Ms Kwan.

‘The flat was quite attractive, well-maintained, relatively new, and quiet.’ The sellers, a couple aged over 50, declined to be interviewed.

The latest record stunned some industry players.

Knight Frank director of research and consultancy Nicholas Mak said the price was ‘unusual’ – even ‘irrational’ – given that buyers spending more than $600 psf were typically looking at mass market suburban condos.

‘With this price now, you could buy a 99-year condo at outlying estates,’ said Mr Mak.

HDB’s latest data show four-room units in the same area sold for $415,00 to $495,000 late last year.

Mr Mohamed Ismail, head of property agency PropNex, said the flat’s location was likely to be the main factor.

‘If bigger five-room, executive units at prime locations sell at this price, HDB prices will push towards the $1 million mark,’ he said.

Mr Eugene Lim, assistant vice-president of ERA Singapore, said this was very unlikely. He was not surprised at the price as smaller units usually get higher psf prices.

Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, said the sale was likely to be a ‘one-off’ event. It was likely the result of a ‘ripple effect’ from the private sector, where recent en bloc sales have flooded the market with cash-rich homebuyers looking to downgrade to an HDB home.

 

Source: The Straits Times 12 Jan 08

Queenstown flat sold for record $890k

21st-storey executive flat in Mei Ling Street was bought for $300,000 in 1992

THE brief for the property agent was simple: Find an HDB flat with great views and near an MRT station. Top floors only – and, it appears, never mind the price.

Two intense days of door-knocking and a record $890,000 later, the buyer has his dream home – and the most expensive Housing Board flat in the country.

For his money, he gets a spacious 21st-storey executive flat in Queenstown, with expansive views towards Sentosa and leafy Mount Faber on one side and Queenstown Stadium on the other.

The 13-year-old flat in Block 150, Mei Ling Street, is just a few minutes away from Queenstown MRT via a sheltered walkway, and a swimming complex is just around the corner.

The owners, Mr David Ho Khoi Seng, 72, and wife Judy, 64, had paid just over $300,000 for the 1,614 sq ft flat, which has four bedrooms, a living room and a study, in 1992.

Mr Ho, who runs a stationery shop, said he had no intention of selling when PropNex agent David See and his son came knocking last Thursday.

The couple tried to deter the buyers – believed to be an elderly couple who own private property – by asking for what they felt was a ridiculous $900,000.

‘We thought $900,000 was too high a price for anyone, but the buyers seemed pretty desperate to find a suitable flat,’ said Mr Ho.

Mr See, 47, said he roped in his 20-year-old son Wilson for the quest to give him some work experience before he starts university later this year.

But knocking on doors, he said, is something he would only do for ‘genuine buyers’.

‘It was a challenge. It’s not easy to get people to sell high-floor units at this time,’ he added.

Demand had sent HDB resale prices up 17.4 per cent last year, the highest in a decade, but executive flats in coveted districts near the central city like Queenstown and Bukit Merah have been extra hot.

The old record for an HDB flat was $780,000 – also for an executive flat in Mei Ling Street – achieved last November.

Five other such flats in Mei Ling Street changed hands between November and December, ranging in price from $728,000 to $765,000.

Median resale prices of executive flats in Queenstown hit $719,000 between July and September last year, a jump from $609,000 in the previous quarter. This type of flat in Queenstown commanded $120,000 in cash over their valuation in the same period.

A five-roomer in Kim Tian Place in nearby Bukit Merah changed hands for $720,000 last June.

With prices of resale HDB flats expected to climb further, the latest deal has prompted some people to ask when a public housing unit will cross the $1 million mark.

Agents reckon that is a way off yet.

Mr See thinks his record deal was more a reflection of the buyers’ eagerness, rather than market sentiment.

Meanwhile, Mr Ho and his wife will live with their 35-year-old son in his Siglap terrace house until they find a suitable home.

When they move, Mr Ho will have to give up a pastime of his: Watching S-League football matches at Queenstown Stadium from the balcony of his Mei Ling Street flat’s master bedroom.

$1m flat? Not yet

THE latest deal has some people asking when a public housing unit will cross the $1 million mark.

Mr Eric Cheng, executive director of HSR Property group, said it was unlikely to happen in the next two years.

PropNex agent David See, the agent for the Mei Ling Street deal, thinks the record sale was more a reflection of the buyers’ eagerness, rather than market sentiment.

Source: The Straits Times 9 Jan 08

High-density homes may complement Paya Lebar hub

Study says they may come up on sites that are currently industrial estates

(SINGAPORE) The development of vacant state sites already zoned for commercial use immediately around Paya Lebar MRT Station will spearhead the transformation of the area into a commercial hub.

More interestingly, however, high-density homes may also come up slightly further away on sites currently occupied by industrial estates to support an expected influx of population as Paya Lebar shapes up as a subregional centre.

Jones Lang LaSalle (JLL), in a recent study of likely changes in the upcoming Master Plan 2008, identified three sites – two currently part of Eunos industrial estate owned by the Housing and Development Board (HDB) and the third also in an industrial estate but privately owned – that could be developed into high-rise homes, whether public or private. Despite the fact that the three plots are currently being used as industrial facilities, two of these sites are actually zoned for residential use under the existing Master Plan 2003, while the third is slated for reserve use.

The need to inject a bigger live-in population to complement the development of Paya Lebar as a sub-regional centre may see HDB offering the three sites for development into housing, especially if the plots are accorded relatively high plot ratios of 3.5 to 4.0 to optimise their proximity to Paya Lebar MRT Station, which will be an interchange station, at the cross section of the new Circle Line and existing East-West Line.

JLL argued these plot ratios – which reflect the ratio of maximum potential gross floor area to land area – are similar to the plot ratios granted for housing projects in the Tiong Bahru vicinity. ‘Injecting more homes in the Paya Lebar area will help maintain a balance between residential and commercial uses in the location,’ JLL said.

And with the increased live-in population will arise the need for having more schools, which can be developed on a plot already zoned for education under the current master plan, JLL’s study suggests.

The property consultancy also suggests that two sites currently zoned for Business 1 (suitable for clean and light industrial/ warehouse use) – one each in Aljunied and Eunos industrial estates – are likely to be rezoned to Business Park or Logistics Park to better complement the proposed commercial developments that will be built closer to Paya Lebar MRT Station.

The plot ratios of these two sites are also likely to be raised from 2.5 currently to 2.5 to 2.8, JLL said.

‘The improved accessibility of the Paya Lebar location that will result from the area serving as an interchange between two MRT lines will boost the location’s image and attractiveness as an alternative office location in the longer term,’ JLL said.

The property consultancy does not envisage a plot ratio increase for the vacant state sites currently zoned for commercial use immediately around Paya Lebar MRT Station, as their existing 4.2 plot ratios are in sync with the Tampines Finance Park.

Last year, the government said Paya Lebar will be developed into a business hub to provide space for Singapore’s continued growth as a global business centre. Plans for its transformation are expected to be fleshed out in Master Plan 2008, which will be ready later this year.

National Development Minister Mah Bow Tan in June last year ruled out massive, across-the-board hikes in plot ratios islandwide in Master Plan 2008.

 

Source: Business Times 8 Jan 08

YOUR PERSONAL ADVISER: FINANCE

How can landlord reclaim house when tenant fails to pay rent?

Q MY FRIEND’S three-room terrace house in Singapore was rented out to a divorcee and her daughter. The tenant put down a total deposit of $1,200, consisting of one month’s rental of $1,000 and $200 for utility bills.

The tenant last paid rent in April last year. She owes four months’ rent, or $4,000. Before that, she had been late in making payments for several months. Unpaid bills for utilities add up to about $100.

The landlord has chased the tenant for rental payment since June. At first, the tenant gave many excuses and promises, but they all turned out to be false.

Since late July, the tenant has stopped answering the landlord’s calls to her mobile phone and has also not returned any SMSes. She and her daughter were hardly ever at home.

In late July, the landlord locked the front and back gates of the house with extra padlocks but did not enter the house. The tenant’s possessions are still in the house. The tenant did not attempt to enter the house or contact the landlord.

The landlord made a police report that the tenant owed money and could not be contacted. The landlord’s primary goal is to reclaim the house and rent it to someone else. The money owed is secondary.

A notice containing details of the amount owed and of the police report that had been made was posted on the front door of the house. The same notice was circulated to neighbours.

The tenant’s furnishings were bought from a furniture company on instalment.

My questions are:

a) Does the landlord have the right to lock up the front and back gates of the house without entering the house?

b) What are the landlord’s liabilities if he enters the house and then sells the tenant’s possessions to reclaim part of the money owed?

c) What are the landlord’s liabilities if he enters the house, takes photos of the interior of the house with all the tenant’s possessions, for documentation purposes, and then moves the possessions into a storage room?

After that, can the landlord rent out the house to another tenant but keep the storage room for his own use in order to store the previous tenant’s possessions?

d) If the tenant makes a police report that the landlord entered the house and took her possessions, can the police arrest the landlord?

e) Can the furniture company make a claim against the landlord for selling the furnishings that are still being paid for by instalment?

f) What is the best method to evict the tenant in my friend’s case?

A WHEN a tenant fails to pay rent, the landlord may of course sue the tenant for the arrears of rent, just as he could with any other debt due and owing.

The action must be brought within six years of the date that the arrears became due.

However, the landlord has two other specific remedies, namely, distress under the Distress Act and forfeiture of the lease.

Distress is an ancient remedy that is quite similar to seizure and sale – that is, the tenant’s goods are seized and sold, and the rent owing must not exceed 12 months of the tenancy.

Such an action may be brought if the tenant is still in occupation or has his goods or belongings on the property. The procedure starts with the filing of a writ of distress that is addressed to the sheriff. The sheriff will seize the goods, and make an inventory and a valuation. He will also give the tenant a notice of the seizure, informing him of the rent owed and that the goods seized will be sold at a stated place and time.

Such a notice may be pasted in a conspicuous place on the premises. The tenant has five days to pay up from the date of notice or to apply to court for an order to stop the sale.

On the tenant’s application, the court may order that the goods be released unconditionally, direct that an issue be tried and so suspend the writ, or hold that the goods may be sold.

Of course, if no application is made, the goods will be sold and the proceeds applied first to pay the sheriff’s costs and then to satisfy the outstanding rent. The balance, if any, would be returned to the tenant.

Certain items cannot be distrained, such as things in actual use in the hands of the tenant, tools and implements, and his necessary clothes and bedding for himself and his family.

Only movable items may be seized, so fixtures are excluded. It is also common for most hire-purchase companies to expressly provide in the hire-purchase agreement that the hiring shall automatically terminate if the hirer’s landlord takes any steps to levy distress. Therefore, such goods cannot be seized and, if seized, would be released by the court.

Where the tenant has abandoned the premises and there is insufficient property for distress, then if (a) the rent is not less than 75 per cent of the annual value of the property and (b) the rent has been in arrears for at least two months, the landlord may apply to court to enter and take possession of the premises.

The sheriff will paste a notice informing the tenant that possession will be given to the landlord unless the tenant applies within 10 days, or the court orders otherwise, on the application of the tenant or some other interested party.

If the distress action is brought after bankruptcy proceedings have started against the tenant, then only three months of arrears of rent are recoverable against him. The landlord may also file a proof of debt with the Official Assignee against the bankrupt tenant, just as he could with any other unsecured creditor.

The landlord may also apply for forfeiture of the lease, which would effectively bring the lease to an end. This is usually an action for possession, and a well-drafted agreement will usually contain a clause for re-entry in the event of the tenant’s failure to pay rent.

However, the tenant may apply to court before judgment for relief from forfeiture by paying into court all the arrears of rent and costs, in which case the tenant would be able to continue with the lease and not have to enter into a new lease.

Even after judgment for possession, the tenant is still entitled to relief if he pays up the judgment sum with costs within four weeks of the judgment. The law is not explicit about whether relief is still available to the tenant where the landlord has entered into possession peaceably and changed the locks. While the court might still be able to grant relief, it would, however, take into account the lapse of time as it would not be fair to the landlord if the tenant were to appear out of the blue and pay the arrears to reclaim the lease. The tenant’s significantly long absence could well be read as an implied surrender of the lease.

In your friend’s case, it appears that he has entered into possession peaceably and that has effectively brought the lease to an end.

However, your friend should be mindful of the tenant’s right to apply for relief. The tenant’s right to relief is extinguished only if your friend issued and served proceedings for possession, obtained judgment and then entered the premises on the strength of that judgment.

As for the tenant’s goods, it is prudent and best to apply for a court order as the tenant might make all sorts of allegations that his property had not been properly valued or had been sold at an undervalued price.

The police usually treat disputes between landlord and tenant as a commercial matter.

 

Source: The Sunday Times 6 Jan 08

PROPERTY: Are condo-like HDB flats good value?

They might come with fancy trappings but can’t be bought and sold freely like private condos

THE high-end HDB flats launched yesterday at Boon Keng are the talk of the town.

Styled to look like private condominiums, the flats in City View @ Boon Keng will boast timber flooring and large bay windows, as well as built-in wardrobes and kitchen cabinets.

These more luxurious HDB flats, built under the Design, Build and Sell Scheme, are being snapped up by homebuyers. Even before the project’s launch, more than 1,000 inquiries had been made. But these trappings come at a price: The 714 flats in the project will be offered for an average price of $520 per sq ft (psf).

While this makes them significantly cheaper than actual condos in the area, the prices are a cut above those for regular HDB flats. City View’s three-room flats will go for between $349,000 and $394,000 – about double what similar flats in the vicinity cost.

The five-room flats will range from $536,000 to $727,000, which also makes them far pricier than nearby flats. The average price of a five-room flat in Boon Keng is about $450,000, said Mr Nicholas Mak, the director of research and consultancy at Knight Frank.

As a result, even as would-be buyers form long queues for City View, property experts are divided as to whether the project is really worth its heftier price tag.

The main point of contention is what City View, and projects like it, should be compared to as a baseline: HDB flats, executive condos or private condos.

City View is only the second public housing project to be built by a private developer – in this case, Hoi Hup Sunway. The first, The Premiere @ Tampines, is being built by Sim Lian Land.

Property agents believe City View should be compared to condos. They highlight the premium finishings and central location, and the fact that the flats are much cheaper than condos in the area. ‘The furnishings, design and layout are comparable to those of private properties,’ said Mr Mohamed Ismail, the chief executive of property agency PropNex.

‘I think the price is worth it, especially if you’re talking about a three- or four-room flat for $300,000-plus in such a location.’

He noted that a three-room flat in the Rochor area that is over 30 years old can command $80,000 to $100,000 over valuation.

He added: ‘In eight years, City View will still be half the cost of private property and I’m very sure it will be able to find buyers. It will be a golden investment then.’

HSR Property Group, which is marketing City View, pointed to the strong demand for the project even before its launch.

‘The resale value will be there because consumers will pay for the convenience and rarity,’ said Ms Kellie Liew, a project director at HSR. ‘When you look at private condos, you can’t get this price.’

In contrast, property consultants said City View flats were more readily comparable to other types of HDB flats than to condos. They lack the security and amenities provided in condos and cannot be resold to foreigners, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

‘The project is more expensive than HDB, but you still have HDB rules and HDB guidelines for ownership,’ said one consultant who asked not to be named. ‘The better location doesn’t justify the higher price tag – it’s supposed to be public housing!’ City View flats are sold under the same rules that apply to new HDB flats. Buyers qualify only if they fall under an approved family nucleus scheme, among other things. Mr Mak noted that the flats cannot be resold for the first five years. ‘This sort of thing tends to be a consumer item – you buy, you use, and if you make money from it, you’re lucky,’ he said.

‘If you buy direct from HDB at a subsidised rate, it’s a better investment as there’s more room for capital appreciation. But if you buy the flat at a high price to begin with, the upside is limited.’

Even owners of executive condos – which have condo facilities and can be resold to foreigners after 10 years – are finding it difficult to make a profit on their homes, added Mr Mak.

 

Source: The Sunday Times 6 Jan 08

Condo-like flats in Boon Keng going on sale

Hot demand expected for second lot of public housing offered by private developers

A FLURRY of applications is expected for the latest batch of flats that look like condominiums but sell for just about two-thirds the price of condo units in the same area.

The second batch of public housing being offered by private developers goes on sale tomorrow, one year after the first lot was launched to overwhelming demand.

Like the first project in Tampines, the latest 714-unit project in Boon Keng, to be ready in September 2011, offers condo-like trappings such as timber flooring, built-in wardrobes and kitchen cabinets, and airconditioning.

In fact, some boast features condo owners would love.

Some flats will have wall-to-wall balconies in living rooms and master bedrooms that look out onto the Kallang River and beyond.

Large bay windows will extend to all bedrooms – and even the shower stalls in the bathrooms. And lift lobbies will come equipped with a card access system.

Giving a sneak peak of showflats at the development called City View @ Boon Keng yesterday, developer Hoi Hup Sunway Development said it is offering 72 three-room flats, 168 four-room flats, and 474 five-room flats – housed in three 40-storey blocks.

Under this programme, private developers are given a free rein over the design, pricing and sale of the homes, as long as they adhere to the general rules of public housing.

For the Boon Keng development, three-room flats units are priced at $349,000 to $394,000; four-room units at $523,000 to $597,000; five-room units at $536,000 to $727,000. On average, they are going for $520 psf.

Their prices are wedged between those of resale Housing Board flats and private 99-year leasehold condos in the same area.

A five-room, 11-year-old HDB flat near the project site changed hands for $545,000 in November, for example, while units at private condo Kerrisdale in Sturdee Road sold for $731 psf to $786 psf late last year.

Property agency chief Chris Koh, from Dennis Wee Properties, expects demand to be good. He said that the prices are ‘very reasonable’, considering the flats are near central Singapore and owners of HDB flats in the area are asking for $50,000 to $70,000 above the valuation of their properties, even if they are more than 10 years old.

Potential buyers are also watching closely. Hoi Hup Sunway has received about 1,000 inquiries in the past month. Those who sign up for a unit face a computer ballot to decide who books a unit.

The 616-unit project in Tampines attracted nearly 6,000 applications – just before the property market recorded a huge upswing. Last month, 316 surplus flats offered by the HDB in the outlying towns of Hougang, Sengkang and Punggol attracted a staggering 5,147 applications.

Competition for these Boon Keng flats is expected to be intense. Businesswoman Serene Sia, 38, wants a unit ‘badly’ as she thinks private property is out of her reach. Asked what she thought her chances would be, she said: ‘I seriously don’t know.’

Those interested can apply online at www.hoihup.com from 9am tomorrow. Applications close on Jan 16.

Other similar developments – which could house about 2,500 more units – are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok.

But Hoi Hup Sunway spokesman Wong Chee Herng does not think it will dent the response to his project. ‘The demand is still very much greater than supply,’ he said.

 

Source: The Straits Times 4 Jan 08

Home prices feel pull of gravity after 31% rise

Q4 tempers spectacular growth of 2007; mass market may shine this year

(SINGAPORE) Private home prices rose 31.0 per cent in 2007 – the biggest year-on-year jump since 1999 – despite a slowdown in the fourth quarter caused by the withdrawal of the Deferred Payment Scheme (DPS) and sub-prime woes, flash estimates show.

HDB resale prices also climbed some 17.4 per cent last year – the fastest growth seen since 1996 – as private home price gains filtered down. But HDB resale prices also saw a slowdown in growth in the fourth quarter.

At a doorstop yesterday, Minister for National Development Mah Bow Tan said that over the last few months, the government had taken several steps to try and cool down speculative activity in the property market. However, the market is also being affected by external factors beyond the authorities’ control, he said.

‘For Singapore, we are optimistic that we will continue to do well but there are many things beyond our control,’ Mr Mah said. ‘It is up to us to keep a close eye on the market and be able to tweak those policy levers that we can in order to keep property prices stable.’

Private home prices rose 6.6 per cent in the fourth quarter – down from the 8.3 per cent growth seen in the third quarter.

Similarly, HDB resale prices grew 5.6 per cent in the fourth quarter of 2007 – down from the 6.6 per cent rise for the previous quarter.

Experts said that the slowdown was brought on by both poor global market conditions as well as the removal of the DPS scheme.

Knight Frank managing director Tan Tiong Cheng said that the fourth-quarter slowdown was not surprising considering the sub-prime crisis in the United States.

‘People are still waiting for signs as to how bad the sub-prime situation will turn out,’ Mr Tan said. ‘It affects the whole outlook; people are uncertain.’

Demand could also be muted as lending by banks in the US, UK and Europe has been tremendously curtailed since the crisis, he said.

On the other hand, OCBC Investment Research analyst Winston Liew believes that the bigger culprit is the withdrawal of the DPS. ‘After the DPS was withdrawn, the whole market went down – the resale market, new launches and the stock market,’ he said. He has a ‘neutral’ rating on the Singapore property sector.

For the HDB resale market, the slowdown could also be attributed to buyers holding back in the face of rapidly increasing asking prices, said ERA assistant vice-president Eugene Lim.

‘The slowdown in price increase was largely expected as the market hit resistance level in the light of unrealistic sellers demanding for high cash-over-valuation (COV) transactions – particularly for the five-room and executive flat-types,’ said Mr Lim.

The slowdown in price growth, experts said, will continue in the first quarter of this year.

‘It is unlikely that there will be much activity in January or February,’ said Knight Frank’s Mr Tan. Agreed OCBC’s Mr Liew: ‘I would expect the rate of growth to slow down.’

CB Richard Ellis (CBRE), for example, expects the take-up of new homes to be between 9,000 and 11,000 units for 2008. By comparison, the property firm estimated that a record 15,000 new homes were sold in 2007, 34.5 per cent more than the 11,147 new homes sold in 2006.

This year, the property market will be driven by mid-end and mass-market homes, experts said. Prices and take-up of luxury homes are expected to moderate.

In the fourth quarter of 2007, the price increase was led by non-landed homes in outside central region (OCR) where the index showed an increase of 7.5 per cent.

The strong showing, CBRE said, could be attributed to new project launches during the quarter, such as Park Natura and Hillvista. Prices in the core central region and rest of central region rose by 7.0 per cent and 7.3 per cent respectively.

For 2008, ‘we expect a moderate rise in overall prices as luxury prices are likely to firm up at current levels while mid-tier and mass-market prices have the potential to rise by about 10-15 per cent’, said Li Hiaw Ho, executive director for research at CBRE.

Others were more bullish about the mass market. Ku Swee Yong, director of marketing and business development at Savills Singapore, predicts that mass-market prices will climb by 30-50 per cent this year.

In response to a question about the rapidly climbing prices in the mass market, Mr Mah told reporters that the government is watching the segment closely and will take action if necessary.

‘People who can’t afford the central region to buy or to rent are starting to look outside, which I think is the sensible thing to do,’ he said. ‘We will continue to keep an eye. We’re watching it every day. If necessary, we’ll do something, if not necessary we’ll just let it be.’

The overall price index for private homes could climb by anywhere between 10 per cent and 25 per cent this year, depending on how quickly the market recovers, experts said.

And for the HDB resale market, prices could climb by between 10 and 15 per cent, they said.

‘With the buoyant economy and expected positive market sentiment in 2008, the HDB property market in Singapore is likely to enjoy a double-digit growth in the 10-11 per cent range,’ said Mohamed Ismail, chief executive of property agency PropNex.

 

Source: Business Times 3 Jan 08

Rental flats for needy to be allocated from this month

A TOTAL of 2,194 rental flats will be added to the public housing supply by early 2010 to help the needy, in a move first announced in November 2006.

The first batch of newly converted flats – consisting of 180 one and two-room units at Block 852, Woodlands Street 83 – will be allocated from this month. One-room flats generally go for about $30 a month and two-room flats for $50-60.

In March, 748 units will be made available when the Housing and Development Board (HDB) completes the conversion of vacant blocks at Boon Lay. In addition, 290 converted units at Redhill will be added to the supply early next year. HDB is also building 976 new rental flats at Choa Chu Kang, Sembawang and Yishun. This last batch will be ready by early 2010.

National Development Minister Mah Bow Tan said the flats will help ease the burden of those who are really needy. ‘This additional supply will help meet demand from lower-income Singaporeans who cannot afford or are not yet ready to buy their own flats,’ he said.

While demand seems to be increasing, Mr Mah attributed this to rental flats being an attractive option, rather than more people suffering financial hardship.

‘There is always strong demand for rental flats as they are heavily subsidised,’ he said. ‘Those who are financially capable of owning a flat or renting accommodation from the open market, and those who have family who can support them, should not deprive the more needy of subsidised rental housing.’

From this month, HDB will suspend the allocation of rental flats under the Daily Selection Scheme.

Rental flats will continue to be allocated through monthly selection exercises.

 

Source: Business Times 3 Jan 08

Rental flats: Review to weed out less needy

As demand rises, 2,200 more HDB rental flats to be made available over next three years

PEOPLE who have sold a property could find themselves barred or placed at the back of the queue for subsidised rental housing as part of a policy review to weed out the less needy.

National Development Minister Mah Bow Tan said yesterday that the Housing Board was getting an increasing number of applications from the elderly, as well as divorcees with kids in tow.

Some of these applicants already own homes but were looking to sell them and move into subsidised rental housing to save money.

Existing rules state that those who sell a property have to wait 30 months before being eligible to rent.

Mr Mah, who was visiting a batch of 180 newly converted rental flats in Woodlands, said these applicants may not be as needy as others in the queue.

‘If you owned a bungalow, you sold it, you wait for 30 months; to be fair to others, you shouldn’t be joining the queue.’

The rental homes are for Singaporeans who ‘really have no other options’.

The minister said that the number of applicants facing such hardship has gone up, but not significantly.

‘For them, we will have rental flats available,’ he said.

The HDB is also assessing cases of couples who have to sell their flats following a divorce and then seek rental housing after they find alternative accommodation too costly.

Rising property prices and rentals islandwide have swelled the ranks of those seeking subsidised rental housing.

There are about 3,000 applicants in the queue and they have to wait for five to 11 months to get a flat – twice as long as a year ago.

Demand is so high that the HDB yesterday scrapped its Daily Selection Scheme. This let applicants pick leftover rental flats for immediate occupation after monthly flat allocation exercises.

It said the ‘high take-up’ of rental flats in the monthly exercises made the daily scheme unnecessary. The HDB, which allocates subsidised flats to families earning no more than $1,500 a month, charges $26 to $205 a month for a one-room rental flat and $44 to $275 a month for two-room flats.

The first batch of 180 flats in Woodlands, which were converted from three- and four-room flats, will be ready for allocation this month.

Another 748 rental flats in Boon Lay will be added to the pool in March, while 290 in Redhill will be ready early next year. Meanwhile, 976 rental flats will be built from scratch in Choa Chu Kang, Sembawang and Yishun and will be ready in 2010.

The new projects will add a total of 2,194 homes to the stock of 42,000 rental one- and two-room flats.

On another note, Mr Mah downplayed talk that many couples were delaying marriage because of rising property prices and the long wait for new subsidised HDB flats.

‘(Getting a flat is) not the reason why people get married, right?’ he asked, pointing out that they could still rent a flat or live with their parents while they wait for their new homes to be built.

 

Source: The Straits Times 3 Jan 08

HDB price gains expected to ease after 17.4% rise

IT’S official: HDB flat prices enjoyed a spectacular bull run with a 17.4 per cent gain last year – the strongest growth in a decade – but market watchers say a repeat this year is unlikely.

Industry experts estimate that this year’s total growth figure will be less than 10 per cent, due to general resistance in the HDB mass market to higher prices.

Flash estimates released by the Housing Board (HDB) yesterday for the fourth quarter ended Dec 31 showed home prices grew 5.6 per cent from the previous quarter. This is a dip from the strong 6.6 per cent rise in the third quarter and brings the total growth for last year to 17.4 per cent.

The fourth quarter slowdown was expected, due to the recent onset of a more cautious mood among home buyers, said housing analysts.

‘The high resistance level in the resale market is also due to unrealistic sellers demanding high COVs,’ said ERA Realty’s assistant vice-president Eugene Lim.

COV, or cash over valuation, is the cash buyers need to pay upfront over and above a flat’s market valuation.

HDB’s third-quarter data, for example, showed median COVs pushing $100,000 for five-room flats in the Marine Parade, Queenstown and Central areas.

Most HDB buyers cannot afford such money upfront, and this led to a drop in transactions in the fourth quarter, said Mr Lim.

The hiatus in property launches in the private sector also contributed to a general slowdown in resale activity, said HSR Property Group executive director Eric Cheng.

He has put this year’s forecast for HDB flat price growth at a modest 5 per cent to 8 per cent.

‘HDB resale prices also have limited growth, as the government tries to keep homes affordable by offering more supply,’ he added.

PropNex chief executive Mohamed Ismail, however, is more bullish, saying growth could hit 10 per cent or 11 per cent, if Singapore’s economy continues to perform well.

‘There are still many cash-rich buyers from en bloc sales looking in the resale market,’ he said.

Prices in the resale market will still be fuelled by high demand this year, he added.

To address the current housing shortage, HDB recently announced plans for about 4,800 new flats in the first half of this year under its build-to-order scheme, in which flats are built only when a certain level of demand is reached.

It also recently launched a plum site in Bishan for condo-style HDB homes to be built, with more such sites in Simei, Toa Payoh and Bedok to come.

The full data for the fourth-quarter of last year will be released at the end of the month, said HDB.

 

Source: The Straits Times 3 Jan 08

Strong showing in some suburban areas and projects

Bukit Batok home prices soar 43% but other districts drop as much as 20%

PRIVATE homes in some suburban areas proved the most resilient amid a general slowing in price rises across the board, the latest government figures show.

Some suburban areas performed very strongly, but others showed uneven price growth.

Data from Savills Singapore showed that prices in districts 23 and 24 – which include areas such as Bukit Batok, Choa Chu Kang and Hillview – rose 21 per cent to $694 per sq ft (psf) in the fourth quarter.

Within that overall region, average prices in Bukit Batok soared 43 per cent in the fourth quarter to reach $795 psf. But other districts, such as 16, 17, 18 and 19, paled in comparison.

In fact, some districts saw significant price dips. For instance, prices in districts 21 and 22, which include Clementi and Jurong, fell about 20 per cent to $737 psf in the fourth quarter.

Overall, fourth-quarter prices of non-landed homes outside the central region rose 7.5 per cent, according to initial estimates released yesterday by the Urban Redevelopment Authority.

Although that figure is below the 7.9 per cent rise in the third quarter, it is nonetheless higher than the 7.3 per cent fourth quarter rise in the rest of the central region and the 7 per cent rise in the core central region covering Orchard Road and Sentosa Cove.

While these are preliminary estimates, they lend support to a theory put forward by some property analysts – that mass market home prices will rise more than those of high-end and, possibly, mid-end homes.

The fourth-quarter price rise of homes outside the central region was largely supported by resale deals, considering there were few launches, said Savills Singapore director of marketing and business development Ku Swee Yong.

Existing projects, such as the 99-year leasehold Sun Plaza in Sembawang Drive, saw a 39 per cent rise in average price to $595 psf in the fourth quarter.

The only notable launch was the freehold 192-unit Park Natura across the road from Bukit Batok Nature Park.

Buyers picked up 152 units in October and November at a median price of $945 psf.

Mr Ku is sticking to his earlier forecast for a rise of between 30 per cent and 50 per cent for mass market homes this year, which could send the current average mass market price of $730 psf to as much as $950 psf.

However, growth in the private mass market sector – which has the closest correlation to the HDB market – may be weighed down by the public housing resale market, said Mr Nicholas Mak, director of research and consultancy at Knight Frank.

Initial estimates showed that fourth-quarter HDB resale prices rose 5.6 per cent, which placed the full-year rise at 17.4 per cent.

‘I don’t think HDB resale flat prices can keep growing at this rate for a year or so, because this group of buyers has a natural resistance to too much of an increase,’ said Mr Mak.

Besides, the Government will step in if HDB prices are growing too fast, he said.

Mass market launches expected this year include four projects on the former Waterfront View estate in Bedok Reservoir Road. Of the four, the 405-unit Waterfront Waves is expected to be launched in the first quarter.

 

Source: The Straits Times 3 Jan 08

Second batch of condo-like flats to go on sale

A FLURRY of applications is expected for the latest batch of flats that look like condominiums but sell for just about two-thirds the price of condo units in the same area.

The second batch of public housing being offered by private developers goes on sale on Saturday, one year after the first lot was launched to overwhelming demand.

Like the first project in Tampines, the latest 714-unit project in Boon Keng offers condo-like trappings such as timber flooring, built-in wardrobes and kitchen cabinets, and air-conditioning.

In fact, some boast features condo owners would love.

Some flats will have wall-to-wall balconies in living rooms and master bedrooms that look out onto the Kallang River and beyond.

Large bay windows will extend to all bedrooms – and even the shower stalls in the bathrooms.

And lift lobbies will come equipped with a card access system to keep out intruders.

Giving a sneak peak of showflats at the development called City View @ Boon Keng on Thursday, developer Hoi Hup Sunway Development said it was offering 72 three-room flats, 168 four-room flats, and 474 fiveroom flats – housed in three 40 storey blocks.

Under this programme, private developers are given a free rein over the design, pricing and sale of the homes, as long as they adhere to the general rules of public housing.

For the Boon Keng development, three-room flats units are priced at $349,000 to $394,000; four-room units at $523,000 to $597,000. Five-room flats will be offered at $536,000 to $727,000. On average, they are going for $520psf.

Their prices are wedged between those of resale Housing Board flats and those of private 99-year leasehold condos in the same area.

A five-room, 11-year-old HDB flat near the project site changed hands for $545,000 in November, for example, while units at private condo Kerrisdale in Sturdee Road sold for $731 psf to $786 psf late last year.

Potential buyers are also watching closely. Hoi Hup Sunway has received about 1,000 inquiries in the past month. Those who sign up for a unit face a computer ballot to decide who books a unit.

Those interested can apply online at www.hoihup.com from 9am on Jan 5. Applications close Jan 16.

Other similar developments – which could house about 2,500 more units – are being planned for Ang Mo Kio, Bishan, Toa Payoh, Simei and Bedok.

 

Source: The Straits Times 3 Jan 08

LETTER TO THE EDITOR: New HDB flat prices based on market prices of resale flats

I REFER to the letter, ‘Since when did resale prices decide cost of HDB flat?’ (BT, Nov 30) by Lu Keehong.

The prices of new HDB flats are based on the market prices of resale HDB flats, and not their costs of construction. In order to provide affordable housing to Singaporean families, new HDB flats are priced below their equivalent market values. In this way, new flat buyers can enjoy a substantial subsidy. This point has been explained in Parliament and reported in the media on many occasions.

As resale prices move up, so do new flat prices. Similarly, when resale prices move down, as happened during the property market downturn in recent years, the prices of new HDB flats were also reduced significantly.

By selling new flats with a market subsidy, HDB has been unable to recover the development cost of new flats. HDB has incurred an average deficit of $457 million a year in its home ownership programme in the last five years. These figures are reported in HDB’s audited financial statements, which are available to the public.

HDB periodically reviews its building programme, and makes adjustments to respond to and anticipate changing market conditions. With the increased demand for new HDB flats, HDB is gradually stepping up its building programme to ensure a steady flow of public housing supply to meet the needs of present and future generations of Singaporean families.

Kee Lay Cheng (Ms)

Deputy Director (Marketing & Projects)

For Director (Estate Administration & Property)

Housing & Development Board

Buyers snap up new flats from HDB

• HDB’S LATEST LAUNCH IN NORTH-EAST

• NO. OF FLATS: 316

• APPLICANTS: 1,700

  DEMAND for Housing Board flats has hit an all-time high.

  More than 1,700 applications were made for 316 new flats in the north-east zone released yesterday – just hours after the homes went on sale.

  In terms of sales, almost every unit of the HDB’s unsold stock, released once every two months, has been snapped up immediately.

  In the August and October sale of flats in established towns and in the north and west zones, the take-up rate was 100 per cent for the first time, said HDB.

  All 843 units offered in both sales were snapped up.

  Just three years ago, about 10,000 flats were languishing in the market unsold. But this figure had been slashed dramatically to 2,400 as at Oct 31, an HDB spokesman told The Straits Times.

  The flats released yesterday were the HDB’s fifth sale under its once-in-two-months sales scheme for four room and bigger flats, introduced in April to replace its previous walk-in selection system.

  Earlier this year, the old system drew flak when queues formed outside HDB Hub, sparking rumours that leaked tip-offs had been given to the early birds – a charge since refuted by the HDB.

  The new sales exercise has received very good response with a 96 per cent overall take-up rate of the 3,034 units released, said HDB.

  It said yesterday that ‘the robust property market has given rise to strong demand for HDB flats’. HDB’s latest launch offers 233 four-room, 57 five-room and 26 executive flats in Hougang, Punggol and Sengkang.

  The prices range from $142,000 for a four-room flat in Hougang, to $358,000 for an executive flat in Sengkang.

  Half of the 316 flats are ready and the other half are being built. They include new, unsold and repurchased units. Interested buyers can submit their applications online before next Monday, said HDB.

  High demand may mean HDB is clearing its backlog, but newly-wed first-timers such as operations officer Mohammed Samsudin, 29, struggle to get that dream home.

Yesterday was Mr Mohammed’s eighth attempt this year at getting an HDB flat. He has been trying since he got married almost two years ago, and holds out little hope.

‘The demand is so high now, and families like mine are priced out of the resale market. It’s been difficult to get our own home,’ said Mr Mohammed, who rents a room of an HDB flat with his wife. HDB’s latest sale also follows a recent announcement that it will offer more than 7,000 new flats for sale over the next seven months, as well as seven plots of land which could boast another 3,200 units.

Some couples, such as Mr Mohammed and his wife, in desperate need of homes, said these homes – not ready for three to five years – do not address the current shortage.

The HDB has said it would progressively offer its unsold stock, located across various estates, in upcoming sales exercises.

 

Source: The Straits Times 11 Dec 07

Rents for state-owned homes rise

(SINGAPORE) Now, you too can live like the colonial sahibs of old, as long as you are prepared to make the highest offer for monthly rental in an open bid.

But be warned, rents of homes under the Singapore Land Authority’s (SLA) first bidding exercise held recently, increased by between 40 to 230 per cent over previous rents.

Before the open bidding system, the allocation of homes was done through a balloting exercise or on a first-come-first-serve basis.

But in October and November, SLA piloted the new open bidding system of allocating homes to make the process fairer and more transparent with five homes awarded so far. One of these, a bungalow on a 2,687 sq m site at King Albert Park, also set a new benchmark rent of $23,222 a month for a state-owned residential property.

On the new system, SLA deputy director of land lease private Teo Cher Hian said: ‘This way, market forces decide the rental that can be fetched for the state properties.’

The new system appears to be popular with 84 bids received for the first five properties. Of these bidders, 64.3 per cent were locals, with companies and foreigners making up 22.6 per cent and 13.1 per cent of the bids respectively.

Mr Teo also said that many of the bids were higher than the guide rents set by SLA.

Although the widely held perception is that these state-owned properties are cheap to rent, SLA says that guide rents are determined by an independent valuer based on the size, condition, location and proposed tenure of each property.

The properties are also let in their existing condition, usually unfurnished with rents starting as low as $400 per month for a small flat. Enhancement of these properties is also not a primary objective as some of these units sit on sites that could eventually be redeveloped.

SLA has a total stock of 2,360 homes comprising landed and non-landed properties, representing about 19 per cent of the total estimated gross floor area of state properties it manages.

SLA’s rental homes have an occupancy rate of about 91 per cent. But existing tenants are usually allowed to directly renew their leases although the rents may be increased.

In its last financial year (April 1, 2006 – March 31, 2007) SLA says that its residential rental revenue was $78 million, up 2.6 per cent or $2 million from the previous year. SLA added that rents increased by an average of 5 per cent in this period with the highest increase of 23 per cent recorded for just one property.

Previously, rents for apartments ranged between $400-$3,800. Terrace, semi-detached and bungalow rents ranged between $600-$3,333, $800- $11,500, and $1,100- $23,222 respectively.

But the impact of the new bidding system to SLA’s rental revenue is, however, not likely to show any immediate significant increase, as so few of these properties actually come up for rent. For the first half 2008, SLA expects only about 36 homes to be made available for rent – upon being vacated – with six homes expected in January followed by seven in February and six in March.

Those interested in bidding for these can submit their bids to SLA at a stipulated time and date. The bidding period will be six days. More details will be available on SLA’s website www.spio.sla.gov.sg from Dec 14.

But do take note that for a bid to qualify, the bidder’s average monthly income has to generally be at least three times the monthly rental bid so only those earning over $60,000 a month need bother looking at those grand old black and white bungalows.

 

Source: Business Times 10 Dec 07

Want to rent this? Make a bid for it

New allocation system for select state-owned homes expected to cut long waiting lists

RENTERS who have long hankered after that state-owned black-and-white colonial bungalow but are put off by the long waiting list can now bid for their dream home.

State landlord Singapore Land Authority (SLA) said it is opening up its properties for bidding to make their allocation more transparent.

Currently, tenants check SLA’s portal www.spio.sla.gov.sg for information on available properties and then register their interest with SLA-appointed agents.

There is usually a long waiting list for these properties as demand is high. State properties can be 5 to 50 per cent cheaper than properties in the private market.

Renters have said that getting one is like winning the lottery – a tenant is selected either on a first-come, firstserved basis or through a balloting exercise when a property is released.

Under the new scheme, anyone interested in these properties will be invited to view them during open houses.

They then have up to one week to submit a private bid to the SLA. Bidding will close the following Friday and results will be announced the same day.

The new system will allow these buildings to be secured within a week or so of their being made available.

All in, SLA has 2,360 units available for rent and the occupancy rate is 91 per cent. However, not all of them will come under the bidding scheme.

An SLA spokesman said the new method ‘encourages a fairer allocation process’. The bidding system also allows market forces to decide the value of the properties, ensuring a ‘more accurate market value’.

At least 36 houses in popular locations – ranging from terraced and semi-detached houses to bungalows – will be open for bidding in the first half of next year.

Mr Kevin Barrios, 29, a postgraduate student from the United States due to start work in Singapore, expressed concern that the new procedure will drive up rents. He pays $700 for a one-bedroom apartment in the Portsdown Road area.

But Mr Eric Cheng, executive director of property agency HSR Property Group, said the bidding system is fairer.

He said many of his clients faced months, or even years, of waiting for such properties to become available.

‘If someone really needs a house and is willing to pay for it, it’s fair that he should get it,’ said Mr Cheng.

SLA held a pilot bidding exercise for five of its properties last month and Belgian pilot Bernard Latierre was one of the successful bidders.

The price he paid – $6,550 a month for a semi-detached house in Seletar with a land area of 738 sq m – is reasonable, he said.

He had waited more than eight months for it. ‘It’s near my children’s school, has lush greenery and lovely architecture. We wouldn’t have got to live here if not for this new bidding system,’ he said.

SLA said properties that have a two-year tenure and are in popular locations will be selected for bidding.

Wherever possible, SLA will also allow existing tenants to renew their tenancies directly, provided the rental is adjusted to the market rate.

The SLA manages more than 2,300 residential state properties and has a 91 per cent occupancy rate.

Range of properties:

• Flat/Apartment – 1,090 units; rental from $400-$3,800

• Terrace – 340 units; rental from $600-$3,333

• Semi-detached – 390 units; rental from $800-$11,500

• Bungalow – 540 units; rental from $1,100-$23,222

Some of their locations:

• Alexandra Park

• Seletar Airbase

• Telok Blangah

• Scotts Road

• Malcolm Park

• Medway Park

• Goodwood Hill

• Bukit Timah

• Woodleigh Park

  Most of the black-and-white bungalows are in Sembawang, Alexandra Park and Adams Park.

  The next list of properties available for rental will be on the SLA portal, www.spio.sla.gov.sg, from Dec 14.

  They include a bungalow in Hyderabad Road, three two-room apartments in Clemenceau Avenue North and a two-storey bungalow in Maidstone Road.

Source: The Sunday Times 9 Dec 07

2008 seen as year of mass market homes

Developers, consultants predict 10-20% hikes for this segment in 2008, high-end gains seen tapering to 0-10%

(SINGAPORE) As the year draws to a close, developers and property consultants are cautiously optimistic about prospects for the Singapore property market next year despite the US sub-prime mortgage crisis and rising oil prices.

For the residential sector, they expect the action to be concentrated in the mass market next year, after the stellar increases in high-end home prices this year.

They also generally expect the authorities to adopt a more measured approach to the Government Land Sales programme in the first half of next year, given the relatively thin bidding seen for most state sites recently.

CB Richard Ellis chairman (Asia) Willy Shee predicts high-end home prices will likely remain more or less at current levels next year – after a nearly 50 per cent price gain this year – on the back of new supply coming into the market. Prices of mass-market private homes are likely to appreciate 10 to 15 per cent in 2008, after rising about 25 per cent this year, he added. ‘I think building costs have already gone up over 30 per cent so far this year,’ he says.

Similarly, Ho Bee Investment executive director Ong Chong Hua says: ‘We cannot see the same magnitude of price growth in 2008 that we’ve seen in the past two years. It’s not sustainable. We’ll see more steady growth next year.’

Overseas Union Enterprise chief executive officer Thio Gim Hock says: ‘High-end prices will at least maintain or go up by 5 to 10 per cent, while the mass market will rise between 10 and 20 per cent in 2008.

‘By next year, sub-prime will be behind us and confidence will recover again.’

Mr Ong predicts a 10 per cent price gain for both upmarket and mass-market homes next year. ‘The increase in mass market home prices will be very measured until the sub-prime cloud clears,’ he says.

Knight Frank managing director Tan Tiong Cheng expects the fate of the high-end market to be determined by foreign investors (and their reading of the global economic outlook) as well as the extent to which those who’ve sold their prime district homes through en bloc sales buy replacement homes in the high-end of the market.

Hong Leong Group executive chairman Kwek Leng Beng says: ‘Even in a period of consolidation, the market will come back. The fundamentals of real estate in Singapore are still very good. There’s still upside for mid-range home prices, which are still below their peaks.’

Knight Frank’s Mr Tan said: ‘Fundamentally, Singapore is in a very sound position, property-wise. But what will determine the state of the market will be external events, especially sub-prime, oil prices and the US economy. If the external forces turn out to be quite benign, the Singapore property market recovery will continue. But if the external forces turn out to be malignant, then all bets are off.’

Mr Kwek stresses that because developers have enjoyed good profit margins over the past three to four years, they are now in a strong financial position and can afford to take longer to sell their projects.

After the current lull, Knight Frank’s Mr Tan expects developers to resume launches next year when the market’s direction becomes clearer. ‘They’re likely to start launching closer to Budget time, when the Government gives its official reading of the Singapore economy,’ he says.

Chesterton International’s head of research and consultancy, Colin Tan, reckons that high-end residential property will weather any market downturn better than the mass market, as luxury homes typically offer a more resilient long-term investment proposition because of their superior location. ‘Someone who buys a high-end home can always rent it out, even if he has to accept a lower rent,’ he says.

Market expectations have been running so high that the authorities will step up the Government Land Sales Programme to stem rising property prices and rents. However, some property players suggest the uncertainty may make the authorities think again. ‘Supply will continue to be released mostly through the reserve list, but some new housing sites in the city may be introduced in the confirmed list, as developing the Marina Bay area and rejuvenating the existing CBD seem to be a priority,’ Knight Frank’s Mr Tan suggests.

At Ho Bee, Mr Ong says that recent bidding at state tenders shows ‘developers are re-calculating the risk premium because of uncertainty created by sub-prime’.

‘(The) government will be careful about the confirmed list,’ he says.

 

Source: Business Times 5 Dec 07

Easing in property rally can be good: Developers

PROPERTY developers are so rushed off their feet that they say the idea of the United States sub-prime crisis taking some froth out of the exuberant market can only be good.

CapitaLand’s chief executive, Mr Liew Mun Leong, said in Ho Chi Minh City yesterday that market confidence has been affected a little by the sub-prime issue but a slowdown may not be bad.

‘If the economy moderates, the property market will moderate… It is not necessarily a bad thing,’ he said.

‘Sometimes you need a little bit of slowdown,’ he added. This is so that businesses can be sustained.

Mr Liew also said that developers will probably not pay bumper high prices for collective sale sites and that supply volume may slip.

However, prices have been holding and he does not see them falling next year.

A similar note was struck by Mr Simon Cheong, the president of the Real Estate Developers’ Association (Redas).

He told the Association’s 48th anniversary dinner last night that the build-up of new projects has left the industry a little breathless.

‘We are now the victims of our own success. Our biggest worry is now rising costs, shortage of construction materials and inadequate skilled labour,’ said Mr Cheong at the Ritz-Carlton Millenia Singapore hotel.

He added that developers share the Government’s concerns about rising exuberance in the market and backed its efforts to apply a touch of the brakes.

Mr Cheong was also quick to add that it has taken almost 10 years for the property market to turn around.

‘Redas is of the view that it is difficult to micro-manage, especially in a global context where the flow of funds into Singapore property is driven by a bigger picture than just short-term opportunistic buy-ins,’ he said.

Singapore is no different from other major gateway cities, where prime real estate commands premium rents, he added.

Trade and Industry Minister Lim Hng Kiang, who was the guest-of-honour, said rising costs are a challenge that accompanies the growth in all parts of the property market.

The Government, he reiterated, is ensuring there will be a sufficient supply of office, residential and hotel space.

Mr Cheong also said that Redas has created a foreign investment committee, to be chaired by Hongkong Land director Robert Garman, to encourage foreign companies to come to Singapore and stay invested.

He warned that developers should take stock of the storm brewing globally as they respond to local opportunities.

‘Rising oil prices, a weakening US dollar, the sub-prime crisis and occasional shocks in the supply of construction materials cannot be taken too lightly.’

 

Source: The Straits Times 5 Dec 07

Sell my sea-view flat? Not even for $1 million

YOU can keep your $1 million; retired technician Jim Klass won’t sell his Marine Parade flat for any amount.

‘So what if my flat can fetch a good price? Where are we going to live after that? Here, we have the sun, sand and sea,’ said Mr Klass, 75, who has lived in the five-room HDB flat with his wife, Carmen, for the past 30 years.

Last week, Mr Klass’ neighbour on the 23rd floor sold her 1,300 sq ft flat for a record $750,888 – about $200,000 above valuation – thanks mainly to the superb sea view from the living room.

And last month, another five-room flat in Marine Parade went for the then-record price of $730,000.

But news of prices has not sparked a flurry of sale orders. Many owners are retirees who have grown attached to the area and want to stay put.

Retired principal Chee Teck Kion, who lives on the 24th floor, gets such a cool sea breeze that he has never needed an air-conditioner in his more than 30 years there.

‘Sometimes, when it gets too windy, I have to wear a sweater in the house,’ said the 80-year-old who lives there with his wife.

Software consultant Janice Mun, 33, bought a third-floor flat in the block last year for its ‘excellent location’.

‘This place is near good schools, the beach and the city,’ said the mother of three, who paid just $375,000.

But some residents are now wondering if their five-room flats could fetch as much as $1 million.

A 40-year-old businesswoman, who declined to be named, said: ‘I’m very attached to this place but I might consider selling it if I’m offered $1 million.’

Her father paid about $40,000 for the flat in 1974.

Property agents said sellers have to be realistic.

Agent Benny Lim, who specialises in the Marine Parade area, said: ‘Such buyers are one in 100. Only people who have made money from en-bloc sales or retirees with pension payouts have that much cash.’

PropNex chief executive Mohamed Ismail thinks it doesn’t make economic sense to pay so much for a HDB flat because the valuation price will remain low.

Mr Ismail said: ‘At the end of the day, a HDB flat is a HDB flat. You can pay $1 million for it and come home to a neighbour who lives like a karang guni man. There might be urine in the lift. It is not comparable to private housing.’

 

Source: The Sunday Times 2 Dec 07

Privatise Neptune Court? Pay $144m

Finance Ministry’s estimated quote may dash hopes of unit owners hoping to seal en bloc deal

RESIDENTS at Neptune Court may have to bury their dreams of reaping a windfall of up to $2.4 million each from a collective sale.

The Ministry of Finance, which owns the land the estate sits on, has estimated that the cost of privatising it is $144 million.

That means the 752 apartment owners at the leafy Marine Parade estate with sweeping sea views will have to fork out about $191,000 each.

But residents of HUDC estates need pay only $25,000 to $30,000 to the HDB to privatise their estates.

The huge difference has prompted many residents to ask how the ministry came up with the $144 million sum.

One resident in his 70s, who declined to be named, said: ‘I don’t know why the ministry has to sell the land at such an expensive price when HDB can do it for so much less.’

The ministry said its estimate was derived by comparing ‘the capitalised value of the annual net rents at Neptune Court with those of a comparable private condominium’.

This means it took into account the enhanced value of the privatised Neptune Court, said Credo managing director Karamjit Singh.

‘There are various valuation principles which can be adopted by the valuer. (Those) adopted by the ministry and HDB seem to be different,’ he added.

When HUDC estates are privatised, residents pay mostly for the cost of common areas such as the carpark and landscape.

The Sunday Times understands that HUDC estates and Neptune Court were sold under different schemes, and comparisons could be unfair.

Neptune Court is on a site of about 780,000 sq ft, about three times the size of Chancery Court, a privatised HUDC estate in Dunearn Road.

The huge ministry estimate has come as a blow for Neptune Court residents who were keen on selling.

A retired civil servant in his 60s told The Sunday Times: ‘I’m a pensioner, I don’t have that much money!’

Retired civil servant Michael Chia, 67, has the $191,000 but is in a dilemma: ‘I’m afraid if I pay for the privatisation, the en bloc will not go through. On the other hand, I’m also afraid the Government will one day claim our estate and give me a replacement flat elsewhere.’

But others are relieved.

A 74-year-old housewife, who has been living at Neptune Court for more than 35 years, said: ‘I was so happy when I heard the ministry is asking for so much money. Maybe now, most residents will no longer want to privatise and go for an en bloc.’

 

Source: The Sunday Times 2 Dec 07

October property loan growth hits 8-year high

Bank lending to sector reaches $105.7b, up 18%

(SINGAPORE) Bank lending to the property sector continued to accelerate in October, growing at the fastest annual pace in eight years, according to new data from the Singapore central bank yesterday.

Overall loans growth in the banking sector also picked up in October, the latest estimates from the Monetary Authority of Singapore (MAS) show.

Loans to the broad property sector, comprising consumer home loans and business loans to the building and construction industry, reached $105.7 billion at end-October – up 18.1 per cent from a year ago.

The year-on-year expansion was the fastest since October 1999, when property-related lending grew by 19.5 per cent.

Over the month, property-related loans grew 3.2 per cent from $102.4 billion at end-September, the fastest monthly pace since Nov 1998.

Consumer home loans, which include mortgages as well as short-term ‘bridging loans’ offered by banks to buyers of new homes who are waiting to receive the cash from selling another property, grew 14.3 per cent from a year ago to $71.8 billion, the fastest since October 2004. Over the month, the growth was 1.9 per cent, slightly slower than the 2 per cent growth in September.

Much of the period covered by latest data precedes the government’s withdrawal on Oct 26 of the deferred payment scheme for private property purchases, which was aimed at discouraging speculative buying.

David Conner, chief executive of OCBC Bank, said at the release of the group’s third-quarter results on Nov 6 that he expects to see an increase in demand for mortgages over the next two years, partly due to the withdrawal of the scheme, as buyers of new private homes will now have to pay a larger portion of the cost of a property while it is being built instead of deferring payments until the building is completed.

Meanwhile, loans to businesses in the building and construction sector rose 27.1 per cent over the year – the fastest since December 1996 – and 6 per cent over the month to $33.9 billion at end-October.

Total customer deposits grew 20.8 per cent over the year to $311.9 billion at end-October, while total loans grew just 15.5 per cent to $224.1 billion.

On a monthly basis, however, loans growth has outpaced growth in deposits since June. Over the month of October, loans grew 2.4 per cent compared to 1 per cent for deposits.

With the rapid expansion in loans, the ratio of loans to deposits in the banking system has recovered slightly to 71.8 per cent at the end of October, after falling as low as 67.1 per cent at end-May – the lowest in the published MAS data series, which started in Jan 1991.

Overall, loans to businesses grew at a faster pace than consumer loans, both on a monthly basis and when compared to a year ago.

Loans to businesses grew 18.5 per cent over the year and 2.6 per cent over the month to $120.1 billion. Other than the building and construction industry, the rapid growth in business loans was mainly due to expansion in loans to financial institutions and to the transport, storage and communications sector.

Meanwhile, consumer loans expanded 12.2 per cent over the year and 2.2 per cent over the month to $103.9 billion, driven mainly by the surge in home loans. Share financing and credit card lending also continued to grow, although these account for less than 8 per cent of total consumer loans.

The number of credit cards in circulation grew 15.3 per cent over the year and 2.4 per cent over the month to 4.45 million at end-October, excluding supplementary cards. But the total credit card rollover balance – that portion of the credit card debt that is subject to interest charges – dipped slightly over the month to $2.85 billion.

 

Source: Business Times 1 Dec 07

Demand for subsidised HDB rental flats surges

Rise – fuelled mainly by soaring open market rents – has doubled waiting time for those in queue

SOARING rents in the open market are forcing more people to opt for subsidised HDB rental flats, but the extra numbers have doubled the waiting period.

Eligible low-income households now must wait five to 11 months to move into a rental HDB flat, compared with two to six months a year ago.

The pressure had been mounting for some time: In the financial year that ended in March, HDB’s stock of one- and two-room rental flats dropped slightly, but it had to deal with an 11 per cent increase in applications.

Most of the 3,000 or so applicants in the queue now are unlikely to get a home until the first quarter of next year, when the first batch of recently- refurbished flats comes on stream.

Members of Parliament, who have noticed the longer wait among their needy residents, have cited another factor: People who were unable to sell their flats during the property downturn are now offloading their flats to repay debts but find themselves priced out of the hot market.

An MP for Aljunied GRC, Madam Cynthia Phua, said: ‘The alternative is to rent a flat on the open market, but that is increasingly very expensive.’

Rents for HDB flats have shot up in the past year, in some cases by more than 30 per cent.

Families who have recently sold their flats are also caught by a longstanding HDB rule that requires them to wait 30 months after selling their flat before being eligible for subsidised rental homes.

Many turn to their relatives, but Pasir Ris-Punggol GRC MP Charles Chong said: ‘In cases where they have no relatives, or have conflict with the rest of their families, some end up sleeping on Changi Beach, at void decks and so on.’

The HDB allocates subsidised rental flats to families earning no more than $1,500 a month. Depending on their income and whether they have had a previous housing subsidy, they pay $26 to $205 a month for a oneroom flat, and $44 to $275 for two-room flats.

These rates are far lower than in the open market, where the median monthly rental for a two-room flat in Queenstown in the July to September period was $800.

The squeeze on rental flats is hitting applicants like Ms Jannath, 41, hard. The former cleaner, who has no savings, sold her four-room flat a few months ago to help pay for her unemployed husband’s medical bills.

The HDB helped her in June by waiving the 30-month waiting debarment period for a rental flat.

Her family must leave its four-room flat by Dec 5, but the waiting list for rental flats has meant that she has yet to get one.

Ms Jannath told The Straits Times: ‘They can give me (a flat) anywhere…I just want a shelter for the three of us.’

In March, the HDB was managing about 42,000 one- and two-room rental flats, with about 95 per cent occupied. More are coming on stream from next year.

The Board is converting three blocks in Boon Lay and Woodlands into 938 rental units expected to be ready early next year. Next year, it will also convert two blocks in Redhill to about 290 rental homes and build 976 units in Choa Chu Kang, Sembawang and Yishun.

The stock is more limited on the open market, with only about 16,000 rented out.

The HDB said: ‘HDB rental flats are…limited in stock. They are meant for poor and needy households…Those who can afford to buy or rent from the open market, as well as those with family support, should not turn to rental flats…and compete with more needy families.’

 

Source: The Straits Times 30 Nov 07

More supply but HDB prices will go up: Mah

Board may offer another 6,000 units through build to order scheme

(SINGAPORE) The Housing and Development Board will continue to monitor demand and could offer another 6,000 units through its build-to-order (BTO) system. However, prices are also likely to go up.

Saying that he did not want to ‘fudge the issue’, National Development Minister Mah Bow Tan said: ‘Prices will go up as a result of resale prices going up.’ Mr Mah was speaking at the launch of two new housing projects under the BTO system.

The projects, Segar Meadows in Bukit Panjang town and Compassvale Beacon in Sengkang town comprise a total of 1,162 flats.

Three- and four-room flats (68 sq m-93 sq m) at Segar Meadows will cost between $116,000 and $231,000, while two- to four-room (48 sq m to 97 sq m) flats at Compassvale Beacon will cost between $69,000 and $233,000.

Although the precise formula for fixing prices was not revealed, Mr Mah explained that it would be based on average resale prices rather than the ’spectacular prices’ reported for some flats recently.

Mr Mah also let on that he had received a few letters and e-mails from constituents saying that they had not been successful in getting flats through the BTO system.

But he reiterated that the government was committed to providing a variety of affordable public housing to meet the ‘aspirations’ of first-time buyers and young couples.

To this end, he revealed that 4,800 units have been launched through BTO this year, twice the number compared to 2006.

On affordability, Mr Mah said that the majority of households spent a manageable 20-25 per cent of their monthly household income servicing loans for their flats. He also added that since the implementation of the Additional Housing Grant scheme in March 2006, 4,100 eligible households have benefited from grants amounting to about $50 million.

And demand from first time buyers has been strong. According to HDB, about 92 per cent of those who applied for the 4-room flats for the two BTO launches in August and September and were successfully short-listed within the first 100 per cent flat supply were first timers.

Mr Mah also had this advice for those looking to buy a flat now: ‘If you cannot afford a big flat, then buy a smaller flat. If you can’t get a new flat, then get a resale flat. In life, we make trade-offs all the time.’

To meet the needs of the ’sandwiched class’, Mr Mah revealed that HDB will be making more sites for executive condominiums (ECs) and the Design, Build and Sell scheme (DBSS) available in the first half of 2008.

Up to three EC sites with a total of 1,300 units, and four DBSS sites with a total of 1,900 units are set to go on the reserve list of Government Land Sales Programme for H1 2008.

Knight Frank director (research and consultancy) Nicholas Mak said that the supply of more public housing flats could cool resale flat prices but the impact will be felt next year. ‘It could be a signal that the government will release more sites to control runaway prices in the resale market,’ he added.

Managing new supply and demand will be a tricky job for HDB because it does not want to be stuck with a surplus of flats.

A tight hold on supply could, however, push up prices.

But demand seems stable. Mr Mak points out that so far, demand as measured by the number of applications received for new flats between 2000 and 2007 has ranged from 7,900 to 13,800. This pales in comparison to the 60,000 to 70,000 applications received in the mid-1990’s, he said.

Mr Mak also added that he expects the impact on the private property market to be minimal.

 

Source: Business Times 29 Nov 07

More than 7,000 new flats expected over next 7 months

Over 1,000 flats in 2 projects launched yesterday; 6,000 more to come by next June

NEWLY-WEDS need not worry about not having a new HDB roof over their heads.

More than 7,000 new Housing Board flats will be offered for sale over the next seven months, as well as seven plots of land which could boast another 3,200 units.

To cater to different income groups, flats on the drawing board range from the humble two-room flat to privately-designed estates and executive condominiums.

This increase in flat supply, the biggest in recent years, is expected to ease the bottleneck that has emerged in recent months as buyers, put off by the high prices of private homes and resale flats, turned to new subsidised HDB flats.

Prices of resale HDB flats grew by 11 per cent in the first nine months of this year, while prices of private homes shot up 22.9 per cent.

An indication of the rush for new flats: the HDB recently received almost 8,000 applications for just 400 flats in Telok Blangah and more than 1,600 applications for 516 homes in Punggol.

National Development Minister Mah Bow Tan yesterday made clear the HDB was stepping up flat building ‘in a very major way’.

At 4,800 units, the number of HDB’s build-to-order flats offered by the end of this year is already more than double the number launched last year.

Property agents say the move will also encourage HDB flat sellers to be more realistic about their asking prices.

Mr Albert Lu, managing director of C&H Realty, thinks that prices may drop. ‘But it’s a good thing, as more people will be able to afford flats,’ he added.

Two build-to-order projects were launched yesterday:

• Segar Meadows in Bukit Panjang Ring Road, comprising 412 three- and four-room flats.

• Compassvale Beacon in Punggol Road, comprising 750 two-, three-, and four-room flats.

From next month till June, the HDB will also launch for sale another 6,000 new flats under the build-to-order system, where projects are built only if the majority of flats are booked.

It will also launch for sale four plots of land in Bishan, Simei, Toa Payoh and Bedok for flats to be built and sold by private developers. Another three sites – in Yishun, Jurong, and Sengkang – will be made available next year for development of executive condominiums.

Mr Mah reassured homebuyers – especially those buying their first subsidised home – that there were enough flats as well as a variety of properties to meet their needs.

About 80 to 90 per cent of applicants for each build-to-order project are such ‘first-timers’, many of whom are newly-weds. In the two recent balloting sales exercises, 92 per cent of shortlisted buyers fell into that category.

He urged them: ‘Don’t be too choosy…It’s not possible or realistic for the HDB to offer only new flats in mature estates in the heart of the city.’

The boost in supply buoyed buyers like Ms Affizah Aziz, 40, who turned to the HDB resale market after failing to get a new flat in a recent ballot. The housewife said: ‘I still would like to have a new flat. Its surroundings and atmosphere are much better.’

Mr Mah promised that new flats will remain affordable. Their prices, long pegged to the values of resale HDB flats, will not be affected by a rise in building costs.

He also rejected suggestions that the release of the flats was meant to prevent a property bubble from forming. ‘I don’t see any bubble forming,’ he said. Unlike the private property sector, the HDB market is a much bigger and more stable. ‘The growth we are seeing is a healthy one in the resale market,’ he said.

 

Source: The Straits Times 29 Nov 07

Condo-like housing plot nets $134m bid

A THIRD site earmarked for public housing to be designed, built and sold by private developers has attracted a top bid of $134.2 million.

Greatearth Development placed the bid, which was 13 per cent higher than the one submitted by its closest rival, AMK Development, and well ahead of those of the other three contenders.

Consultants say the higher-than-expected price – it works out at $212.4 per sq ft (psf) per plot ratio – reflects developers’ confidence in the demand for public housing and suburban condominiums. The 1.7ha plot in Ang Mo Kio Street 52 can house about 550 flats in blocks that can reach 36 storeys.

Savills Singapore’s director of marketing and business development, Mr Ku Swee Yong, estimated that the break-even price for the Ang Mo Kio plot would be about $500 psf.

This means the flats can be launched from $580 psf, putting the starting price of a four-room unit at about $560,000.

The first such project, developed by Sim Lian Land in Tampines and launched last year, met with an overwhelming response.

 

Source: The Straits Times 28 Nov 07

RECORD PROPERTY DEAL NO. 1: Paying a premium for ocean views

But analysts say price tag is not typical of HDB market, which is more moderate

IN AGEING five-room HDB flat in Marine Parade has been snapped up for a record price of $750,888 – and all because of its sweeping ocean views.

The buyers, who paid cash, bought the 32-year-old Marine Terrace flat as their retirement home.

They had the field to themselves as the high asking price of $800,000 deterred many prospective buyers.

Agent Francis Ng from HSR Property Group said the couple were the only ones to view the flat.

Mr Ng said the flat has had its walls knocked out to make an expansive living room that takes advantage of the sea view, so there is only one bedroom.

Owner Sally Sim, who lives in a landed property, renovated the flat about two years ago at the cost of just over $80,000.

She kept the property as an extra home that could one day be used as a retirement haven or for her children’s use.

‘But since the market is good, I might as well sell it,’ she said in Mandarin. ‘It’s quite tiring keeping it clean.’

ERA Singapore’s assistant vice-president, Mr Eugene Lim, said: ‘People who buy HDB flats at such record prices are not your typical HDB buyers.

‘They are cash-rich and most of them are looking for unique features, such as a full sea view.’

The Marine Parade flat is about 1,300 sq ft in size, which would put its price at $577 per sq ft (psf).

HDB flats are not usually measured on a psf basis, but pricing it this way does give an idea of how much the property is worth when compared with private housing. Mass market condominiums now cost $650 to $700 psf on average.

Executive flats, which are limited in number, have sold for a bit more but are far bigger in size. Take the seemingly stratospheric price achieved for an executive HDB flat in Mei Ling Street. It went for $755,000 but cost only $474 on a psf basis.

But such deals are certainly are not reflective of the market, which is operating at a more moderate level, said Mr Lim.

HSR executive director Eric Cheng said the market was crazier back in the mid-90s. It is rather calm currently, except for sporadic record deals, he said.

 

Source: The Straits Times 28 Nov 07

Record property deals: $750,888 for 5-rm Marine Parade flat

IN FRESH signs the property market is still pretty hot, an HDB flat has sold for a record $750,888 – and a developer has paid a record price for a collective sale site.

A retired couple yesterday bought the 32-year-old recently renovated flat in Marine Parade. The couple, who declined to be named, have lots of time to enjoy the full 23rd storey sea view.

The wife said: ‘The view is not blocked. There is morning sun and it’s very near the underpass to East Coast Park.’

They have lived abroad, enjoying sea views in previous homes in Germany and Australia.

The last HDB record of $730,000 was set earlier this month – also for a five-room Marine Parade flat with a sea view. Both are on high floors and near East Coast Park with what agents call the ‘X-factor’. An executive HDB flat in Queenstown recently sold for $755,000, but it is newer and nearly 300 sq ft bigger than the record five-room Marine Parade flat. Executive flats are limited.

$435m for Orchard Boulevard condo

A 30-YEAR-OLD condominium at Orchard Boulevard has smashed the record for Singapore’s most expensive collective sale.

Westwood Apartments was sold yesterday for $435 million to Malaysian conglomerate YTL Corp. That is an eye-popping $2,525 per sq ft per plot ratio (psf ppr), including a $4.6 million development charge.

This beats record-holder The Ardmore, a 24-unit freehold property off Orchard Road – sold in June for $262 million, or $2,338 psf ppr.

Owners of the 50-unit condo will each get about $8 million. Owners of two penthouses will get about $17 million each, said deal broker Savills Singapore.

The deal caught the industry by surprise, given the lukewarm response to government land sales and a slowdown of collective sales, recently.

Hot 5-rm sales

$750,888

Marine Parade

$730,000

Marine Parade

$720,000

Kim Tian Place

$710,000

Marine Parade

$700,000

Mei Ling Street

 

Hot en bloc deals

$2,525 psf

Westwood Apartments

$2,338 psf

The Ardmore, Ardmore Park

$1,820 psf

The Grangeford, Leonie Hill

$1,788 psf

Char Yong Gardens, Cairnhill

$1,735 psf

The Parisian, Wheelock Place

 

 

Source: The Straits Times 28 Nov 07

ECs gain appeal as HDB, private home price gap widens

Easing of rules expected to increase demand for exec condos

THE rising property market has brought executive condominiums (ECs) back from the brink of extinction.

These homes – which are halfway between public housing and private condominiums – suddenly looked much more appealing after rules for buyers were relaxed on Tuesday.

Property consultants now expect that more plots for ECs, such as the 2.27ha site placed on the market on Tuesday, will soon be offered.

The main reason: the widening gap between prices of resale Housing Board flats and those of private condos.

ECs, which come with condo facilities but with sale restrictions similar to those for public housing, were introduced in 1995 to bridge this gap.

They became relatively unpopular, however, after the property market plunged a few years later, making private condos more affordable.

In fact, when the first few ECs hit the resale market in 2004 after the minimum five-year occupation period, many were sold at a loss or at breakeven prices. This was because they were booked when prices were at their peak in 1996.

Many people expected Far East Organization’s La Casa in Woodlands to be the last EC project on the market when it was launched for sale in 2005.

‘Mass market condo prices were in the doldrums, making ECs redundant. Today, that’s a different story,’ said Colliers International’s director of research and consultancy, Ms Tay Huey Ying.

Private home prices surged 22.9 per cent in the first nine months of the year – more than twice the rate achieved by resale HDB flats.

Lower-priced ECs are more attractive now because prices of condos in the suburbs – where ECs tend to be sited – have started to move up significantly. In the July- September period, prices of non-landed homes outside the central region rose 7.9 per cent. Consultants expect this growth to continue.

The easing of EC rules is also expected to increase demand from people looking to move from HDB flats. The HDB removed a hurdle for upgraders by scrapping a resale levy payable by EC buyers who had previously bought government-subsidised flats.

Buyers of new EC units are also no longer barred from buying second new EC units or new flats. In addition, the HDB now requires developers to reserve 90 per cent of units for first-time buyers in the first month of sale.

Although ECs still cannot be sold within the first five years and remain out of bounds to foreigners within the first 10 years, the easing of rules has helped ECs shake off their tag as second-rate condos, said Mr Eric Cheng, the executive director of the HSR property group.

Potential buyers include property agent Lester Tan, 27, who has been living with his parents for the past five years since he got married.

He and his wife started looking for a condo about two years ago, but regretted waiting so long to buy one, as prices have shot up.

He said: ‘We heard that the Punggol EC may be launched, and we are quite excited about it.’

Potential upgraders like Ms Elsie Cheng, 31, are also eyeing the future EC in Punggol. The teacher – who lives with her husband, seven-month-old son and maid in a two-bedroom EC unit in Tampines – is looking to move into a bigger EC.

‘Why pay so much for a private condo?’ she asked.

Knight Frank’s head of research and consultancy, Mr Nicholas Mak, said the changes were likely to raise the proportion of upgraders among EC buyers, from an estimated 5 per cent to 10 per cent, to 20 per cent to 25 per cent.

Developers such as Frasers Centrepoint Homes, which built the Lilydale and Quintet ECs, are optimistic. Its chief operating officer, Mr Cheang Kok Kheong, told The Straits Times: ‘The EC will do well in today’s market as a hybrid property – apartments with condo facilities but without private condo price tags.’

He added: ‘As a reflection of the strong confidence and growth potential of the EC market, we expect to see increased competition in this market segment and more developers taking part in upcoming EC land tenders.’

Buyers hoping to make a quick buck from ECs, however, should take heed. ‘The (full) value of the EC will not be realised immediately but in 10 years, subject to the property market being buoyant at that time,’ said PropNex chief executive Mohamed Ismail.

For now, all eyes are on the EC site in Punggol Field. Estimated to be able to fit about 620 homes, it will be put up for tender once a developer commits to a minimum bid that meets the Government’s reserve price.

The EC units, however, will meet only a small portion of the current demand for new homes. In a recent HDB sales exercise, almost 8,000 families applied for just 400 flats in Telok Blangah, while more than 1,600 applied for 516 homes in Punggol.

 

Source: The Straits Times 22 Nov 07

No resale levy for second-timers buying ECs

NEW executive condominiums (ECs) will be even more attractive now that the resale levy is no longer payable.

The Housing and Development Board imposes the levy on those who sell their first flat to buy another from the board. It is a fixed sum that ranges from $15,000 to $50,000 according to flat type, and $55,000 for ECs.

In a statement yesterday, HDB said: ‘To align the purchase of new ECs with the Design, Build and Sell Scheme (DBSS), second-timers buying a new EC unit from the developer will no longer have to pay the resale levy.’

HDB also said that previously, first-timers who bought new ECs were barred from buying another new EC, HDB or DBSS flat. This bar has now been lifted.

PropNex CEO Mohamed Ismail believes the change will give ‘greater incentive’ to HDB dwellers who aspire to a condominium lifestyle by way of an EC.

Mr Ismail reckons the dropping of the resale levy, coupled with rising HDB resale flat prices, could leave some second-time buyers with up to $100,000 to add to their housing budget, depending on the size of the flat they sell.

He also believes developers could be encouraged to bid for EC sites, as demand will grow.

The government has said it intends to release more EC sites.

The first to be released, after a gap of more than three years since the last EC site was sold in 2004, will be at Punggol Road/Punggol Field.

The 2.27ha site with a plot ratio of 3.0 was put on the reserve list of the Government Land Sales Programme yesterday. And with the dropping of the resale levy, consultants expect interest in the site to increase.

Cushman & Wakefield managing director Donald Han says the last EC site at Woodlands, where La Casa now stands, was sold for $150 per sq ft per plot ratio (psf ppr). Since then, two DBSS sites – launched at Tampines in October 2005 and Boon Keng Road in March 2007 – sold for $114 psf ppr and $234 psf ppr respectively.

Mr Han says EC sites typically fetch more than DBSS sites. And based on the last DBSS site price at Boon Keng Road, but factoring in Punggol’s location and EC site status, he expects the Punggol EC site to fetch $190-$220 psf ppr.

‘We expect strong interest from developers and contractors for this site due to revival of HDB market activity and recent price increases – supported mainly by HDB upgraders and new home buyers,’ he said.

‘In addition, the government has committed its resources to turning Punggol into a major waterfront township and Punggol itself has been a news focal point lately.’

 

Source: Business Times 21 Nov 07

Walk along coast, golf in Punggol

A 4.9km waterfront promenade will feature a host of attractions by 2010

THE vision of Punggol as a vibrant waterfront town was given more flesh yesterday.

A $13 million plan to redevelop a part of its surrounding coastline will put at residents’ doorsteps a 4.9km walking trail that opens up access to the Punggol coast.

Activities such as horse riding, golf and fishing will also feature in the area.

These attractions were unveiled by Mr Teo Chee Hean, an MP for Pasir Ris-Punggol GRC.

He noted that adventurous young families had already taken to walking along the coast, which is largely reclaimed land.

Mr Teo, who is also Defence Minister, told reporters that there was a bit of a track there, but not a whole lot of facilities, so the walking trail would ‘enhance accessibility’.

The developments are part of the Parks and Waterbodies and Identity plans drawn up by the Urban Redevelopment Authority (URA) in 2002.

The plan singled out five coastal areas – Changi, Pasir Ris, Coney Island, Pulau Ubin and Punggol Point – to develop as recreational destinations.

The waterfront promenade coming to Punggol will have three segments:

• Punggol Point Walk: A 1.2km promenade will be added to this popular fishing and camping spot.

• Nature Walk: A 2.4km stretch between Punggol Point and Sungei Serangoon will become a nature trail.

• Riverside Walk: A 1.3km- long promenade will be built along Sungei Serangoon to make the riverfront more accessible.

The 4.9km promenade will link the proposed sports and recreational clusters in Punggol Point and Sungei Serangoon and the new park connectors along the Punggol and Serangoon rivers.

Construction of the promenade will begin in the middle of next year and will be completed by 2010. The work will not disrupt fishing or other activities there, said the URA.

The public will be invited to give feedback on the proposals, which went on show at a carnival in Punggol yesterday.

Many residents said they were looking forward to it.

Mr Roy Mathiew, 58, said: ‘It is a good idea; it brings us closer to nature. I will definitely go there for walks.’

In August, Prime Minister Lee Hsien Loong first unveiled plans for a jazzed-up and vibrant Punggol in his National Day Rally speech.

He described a waterway winding through the town, with parks, water sports and alfresco dining on its banks.

Mr Teo said yesterday that Punggol – with more than 18,000 households now – will grow as more flats, schools, shopping centres and an improved transportation network are added.

However, littering is a problem. The Pasir Ris-Punggol Town Council received more than 1,000 complaints of highrise littering last year. This year, there have been already more than 500 complaints by the end of last month.

Next year, the town council will launch a three-pronged campaign to promote graciousness and to rekindle the ‘kampung spirit’.

Pasir Ris-Punggol MP Ahmad Magad said that with Punggol’s population of young families, ‘it was important to… sensitise them to what communal living and kampung living means to the entire community’.

 

Source: The Straits Times 19 Nov 07

En bloc fever catches on in HUDC estates

Shunfu Ville, Eunosville, Serangoon North residents trying to go private to enable collective sales

THE collective sale fever that has swept through condominiums has spread to three HUDC estates.

Residents in Shunfu Ville, Eunosville and Serangoon North are trying to privatise their estates so that they can sell their flats to private developers for a premium in collective sales.

These HUDC flats, which come with a 99-year lease, were developed in the 1970s and 1980s for people who did not qualify for HDB flats but could not afford private apartments.

In privatisation, the residents essentially pay the HDB to take over the ownership of common property such as carparks and landscaped areas. They also take over the management of the estate from town councils.

Owners pay about $25,000 to $30,000 each for privatisation. This covers the cost of common property that has been transferred to owners, legal costs, survey and other processing fees, all of which can be paid using their Central Provident Fund savings.

At least 75 per cent of the owners must agree to privatisation. Of the original 18 HUDC estates in Singapore, 11 have already been fully privatised. The latest was Laguna Park in Marine Parade in July.

For the 358-unit Shunfu estate, this is its third attempt at privatisation. The first try in 2001 failed because only half the residents were for the idea.

In July this year, the residents tried to speed things up by launching a privatisation and collective sale exercise at the same time. They appointed Knight Frank as the marketing agent and even got a developer willing to foot the privatisation fees.

But HDB put a stop to their efforts, saying the estate must first attain privatisation before attempting any collective sale, said Shunfu’s pro tem committee chairman Philip Liau.

Thanks to talk of a collective sale, a 1,700 sq ft flat in the estate was sold for $850,000 this month – $200,000 more than the average price before. Some residents hope to receive up to $1.2 million for their flats in a collective sale.

At Eunosville – where many residents of the 10-block estate are retirees – getting owners to part with $30,000 for the privatisation fee can be difficult.

To overcome this, some residents have offered to help them apply for a bank loan.

Retired nurse Maznah Ahmad, 68, said: ‘They said I can pay back the bank after I get my en bloc money. But what if there is no en bloc?’

She and her husband, a 70-year-old retired teacher, have been living in their 1,700 sq ft maisonette for 20 years. The couple plan to transfer ownership of their home to their son, who will then pay the privatisation fee from his CPF savings.

Eunosville’s pro tem committee chairman Suhaimi Mustapha told The Sunday Times yesterday that the panel has almost secured the 75 per cent vote needed.

Serangoon North’s pro tem committee declined comment, saying its privatisation efforts are still in the early stages.

Over at Neptune Court in Marina Parade, residents are also trying to privatise their 752-unit estate, which is built on land owned by the Finance Ministry, not HDB.

A committee of residents is in talks with the ministry.

 

Source: The Sunday Times 18 Nov 07

No flat = No wedding

Newly-weds who find it hard to get a flat amid buoyant property market are putting off their weddings

AS PROPERTY prices rise, some newly-wed couples are postponing their traditional ceremonies while they wait for a new Housing Board flat.

Many have been priced out of the resale market while others want to buy a new home, which means joining the hordes trying their luck at ballots in HDB sales exercises.

It is leaving couples in a dilemma. While they have registered their marriages officially, they are reluctant to hold the customary ceremony that legitimises the union in the eyes of the community, until they have a home to call their own.

Members of Parliament say they are getting more appeals from distressed couples.

Aljunied GRC MP Cynthia Phua, who raised a question on the availability of flats in Parliament this week, told The Straits Times that one or two such couples bring up the problem at her Meet-the-People session every week.

Although technically married, many of them live apart, in their family homes, while waiting to get a flat together.

Madam Phua said: ‘For us Asians, once you hold back your customary wedding, you can’t live together, and you can’t even have babies.’

Deliveryman Ang Kah Liong, 34, has unsuccessfully applied for a new flat 10 times since he registered his marriage with his girlfriend three years ago. The couple – who earn $3,000 a month – live with Mr Ang’s parents and three elder brothers in their family’s two-bedroom flat.

They were determined to wait until they had a flat of their own before holding the customary ceremony but family pressure finally prompted them to hold it in September.

‘I had no choice,’ said Mr Ang. ‘I could not wait anymore.’

People like Mr Ang are being caught in a supply-demand crunch.

The buoyant resale market, which has seen prices grow by 11 per cent in the first nine months of this year, is fuelling a demand for new HDB flats.

In the July to September quarter, five-room flats in Queenstown – a coveted district – sold for a median sum of $110,000 above their valuations. This means a buyer had to pay at least $110,000 in cash as that amount cannot be covered with a home loan.

So young couples who cannot afford such resale prices – even with government grants that can go up to $40,000 – are turning to new HDB flats.

MPs told The Straits Times that many seek help to get a new flat near their parents’ homes but this can be difficult as these are usually in older estates where few new flats are being built.

Jalan Besar MP Lily Neo said: ‘Many couples want to live near their parents in the Central Business District, but as you know, there aren’t many flats there.’

They stand a better chance of getting a flat if they are willing to consider other locations, said Dr Neo.

Application figures for recent HDB sales exercises show how competitive the flat race can get.

The HDB received almost 8,000 applications for just 400 flats in Telok Blangah recently, and more than 1,600 applications for 516 homes in Punggol.

The HDB is pumping up the supply of new homes to meet demand. A further 3,600 flats are expected to be offered under the build-to-order system from now until March.

However, the Government has stated that it cannot meet all the demand for new HDB flats as that would risk creating an oversupply in the future.

Meanwhile 28-year-old secretary Koh Bee Leng and fiance Julius Lim, 30, who hope to marry next year, carry on with their house-hunting.

The couple have set their eyes on four-room flats in a mature estate such as Ang Mo Kio and Toa Payoh, but have had no luck in two sales exercises this year.

Ms Koh said: ‘Everything is uncertain now, because of the issue of the availability of the flat. That’s delaying our plan to get married.’

 

Source: The Straits Times 17 Nov 07

9 Hougang blocks to be torn down for estate makeover

Move aimed at better land use, says HDB; part of area will be used for private homes

NINE blocks of rental flats, shops and workshops, and a hawker centre in the opposition ward of Hougang are being cleared by the Housing Board.

 

The board said yesterday that the move was ‘part of ongoing plans to rejuvenate older estates and to facilitate better land use’. It will give tenants a chance to move to newer or upgraded homes and ‘inject new life to the estate and offer new housing options and modern commercial facilities’, said the HDB.

 

Similar clearing exercises have been conducted in Clementi and Tanjong Pagar. The selected blocks – 3, 4, 8 to 11, and 11A to 14 in Hougang Avenues 3 and 7 – are about 33 years old. The site occupied by blocks 12 to 14 – which has 60 workshops – will be put up for sale for private homes in 2009.

 

The remaining land freed up will be developed for residential or commercial use after 2010, depending on market conditions. The Hougang cluster includes 654 one- and three-room rental flats as well as a hawker centre described by residents as the heart of the ageing community.

 ‘The stallholders are very close to the customers…the community spirit is very strong,’ said Ms Nur Aidah Abdullah, 39, who sells drinks at a stall. The food centre is also a place where local MP Low Thia Khiang, who is the Workers’ Party’s secretarygeneral, meets his residents. The incumbent MP defeated People’s Action Party challenger Eric Low in last

year’s election.

 

Among the 654 rental flats being cleared, 400 are let out to low-income families. The rest are leased to companies – which use them mainly to house foreign workers – and managing agents, who let them out in turn.

 

All residents will have to move out in about a year. Many, like Ms Lin Caifeng, 65, said they will miss the place. ‘I’ve been living here for 10 years and have friends from all the blocks. If I move elsewhere, I won’t have anybody,’ she said.

 Unlike HDB’s selective en-bloc redevelopment scheme – which is offered to property owners – relocated tenants are not offered a single alternative development to move to.

The HDB will offer flats in housing estates such as Pipit Road, Beach Road, Geylang Bahru and Ang Mo Kio, but has reserved small clusters of flats so that some tenants can be rehoused together.

 

Eligible low-income tenants and stallholders will get the standard clearance benefits and aid when necessary. Tenants who want to continue renting will receive priority in getting flats. Those who choose to buy will be given priority over other buyers.

 Tenants will also get a $1,000 allowance to help with the move. MP Mr Low told The Straits Times by e-mail that he was informed about the plan only yesterday morning.

‘I would expect the HDB to provide adequate assistance to residents, market stall holders and shop tenants who are affected,’ he said.

 The removal of the market and shops will inconvenience Hougang residents, he added.

‘Since the market and commercial area, according to HDB, will only be developed for residential and commercial use after 2010, depending on prevailing market conditions, why is there a need to clear them by August 2008? What is the urgency?’

 

He did not reply when asked how he would help affected residents.

 The PAP’s Mr Low said the residents would be better off on the whole after the move: ‘The kampong spirit may have to be given up. But on the whole, this will be better for them.’

ADDITIONAL REPORTING BY KUA ZHEN YANG, KEITH LIN & GOH CHIN LIAN

MOVE TOO RUSHED?

 ‘Since the market and commercial area, according to HDB, will only be developed for residential and commercial use after 2010…why is there a need to clear them by August 2008? What is the urgency?’ HOUGANG MP Low Thia Khiang, who is also the Workers’ Party’s secretary-general, on the clearing exercise Source: The Straits Times 16 Nov 07

S’pore home price gains set to slow

Buyers holding back purchases on US sub-prime fears, says Frasers CEO

(SINGAPORE) Singapore’s home prices will probably increase at a slower pace as buyers hold back their purchases amid the US subprime crisis, said Lim Ee Seng, chief executive officer of Frasers Centrepoint Group.

Losses related to US housing mortgages have sapped consumer confidence, Mr Lim said. Some buyers returned apartment units bought at the Singapore-based company’s new project, Soleil@Sinaran near the city’s downtown, forfeiting initial deposits, he said in an interview late on Tuesday.

The outlook among homebuyers may also slow land purchases by developers including Frasers, one of the biggest buyers of older apartments in the city-state’s downtown, where they’re torn down for new home developments through so-called en bloc sales.

The developer is a unit of Fraser & Neave Ltd, the city’s biggest beverage maker.

‘The sub-prime crisis has shaken investors’ confidence,’ he said. ‘We are still looking to boost our land bank, but we are opportunistic and won’t pay current values because our costs would be too high,’ he added, referring to the purchase of existing apartment buildings to increase its land holdings.

Singapore’s home prices have climbed 14 consecutive quarters since 2004, soaring to a 10-year high this year as the island- state’s economy posted its longest economic expansion since 1991. The developer’s outlook for property sales also indicates its appetite may ease for new land purchases.

The price gain has helped the developer on earlier purchases of existing apartments, which are sold at a profit.

An example is the St Thomas Suites development in the city’s downtown, where apartments were recently sold at $2,189 a square foot.

For a 2,605-square-foot apartment, the latest sale recorded by the government, the price was $5.7 million.

‘We bought the site of St. Thomas Suites at $600 per square foot,’ Lim said. ‘But nearby properties put up for en bloc sales are asking over $1,800, and a developer has to sell at at least $2,500 to cover costs.’

‘The sub-prime crisis has shaken investors’ confidence. We are still looking to boost our land bank, but we are opportunistic and won’t pay current values because our costs would be too high.’ – Mr Lim

 

Source: Business Times 15 Nov 07

Essential homework before taking loan

KEVIN LAM discusses five key areas that your home loan banker would be looking very closely at

THIS has been a special year for the property market. Not since the early 1990s has there been such euphoria about the property market – long queues at property launches, stories of someone we know making fast money by ‘flipping’ new property purchases in a matter of weeks, even days. Many people who have yet to join the party have been wondering if they should also jump on to the property bandwagon.

With the latest government measures to discontinue the deferred payment scheme, some measure of stability should return to the market such that even as prices continue to go up given our transformation into a global city, it would rise in a more measured manner.

For those who need to think very carefully about the finer details of taking out a loan with a bank to finance what would be one of the biggest financial commitments, you may want to consider some finer details as part of your overall decision-making process.

What should I consider about buying a house and financing it?

In Singapore, we have seen two boom-and-bust cycles of property price peaks and troughs in the past 17 years. While many people may think that we are currently in the midst of a boom, many others remain cautious and conservative about making a property financing commitment, and rightly so. The first and most important thing potential home owners should be looking at when they consider buying a house and taking up a mortgage to finance it is this – are you over-stretching yourself? To answer this, you have to look at five key areas that your banker would probably be also looking very closely at:

2. Quantum of financing: Since July 2005, the Monetary Authority of Singapore (MAS) has liberalised the quantum of financing for housing loans, up to 90 per cent loan-to-value (LTV). This means that as a home buyer, the minimum that one needs to raise is 10 per cent of the value of the property and the cash component can be a minimum 5 per cent with the balance of 5 per cent made up from the Central Provident Fund (CPF).

Typically, because the capital and credit cost associated with granting these higher quantum loans are higher, these loans come with higher interest rates when compared to 80 per cent LTV loans. In this market, a comfortable level for financing for banks would generally be at 80 per cent quantum of financing. This means that home buyers must have a minimum of 5 per cent cash and 15 per cent CPF lump-sum from their CPF Ordinary Account. For a $1 million property, this works out to $50,000 in cash and $150,000 in CPF OA monies, or if one prefers, this amount could be paid in cash.

With more cash upfront, this is generally viewed more favourably by the banker, that is, if you could use more than the minimum 5 per cent cash. For example, if there are two borrowers looking for 90 per cent financing, both of equal standing, the one who can put up the entire 10 per cent in cash downpayment, would be better positioned from a bank’s credit standpoint than the other who uses 5 per cent cash and 5 per cent CPF monies. More cash upfront shows more commitment from the potential customer, and this would generally put your financing request in a better light. Likewise, if a potential customer has the ability to fork out up to 30 per cent or more, cash or CPF down payment, and request only 70 per cent financing, he or she can be more confident of your request for financing.

3. Employment profile: The potential customer’s employment status is also one of the most important considerations to review when taking out a housing loan. He or she should consider the stability of his/her employment, regardless of whether the potential customer is a working employee or selfemployed.

Typically two years of qualified income coming from the same employer or same source of business should be a good indication of the borrower’s employment profile. On the other hand, if a borrower changes jobs frequently, even with higher income, it may be viewed by banks as being less secure and stable in employment.

4. Income and your CPF reserve: In home financing, one of the key commitments is to ensure that monthly housing loans instalments remain uninterrupted and consistent.

As a good rule-of-thumb, if housing loan instalments are kept to below 40 per cent of a person’s monthly income, the borrower would be better positioned in his/her monthly servicing ability. This is especially so if the borrower’s monthly CPF OA contribution is able to fund a good part of the housing loan instalment.

It would also be a prudent measure to have a reserve of at least six to 12 months of monthly instalments in the CPF OA. This provides more cushion should there be a change in a borrower’s employment status, and he/she needs time to find another job. This means that when one uses CPF for the initial downpayment, it is important to be conservative and keep a reserve, rather than using up all of one’s CPF for downpayment. As one goes through the sums for mortgage financing, one will realise that income, CPF resources, employment profile, and the quantum of financing are all interrelated.

Any home buyer should sit down and work out the numbers to ask the question: ‘Am I overstretching myself financially?’

5. Interest rate, monthly instalment and rental yields: One of the key considerations in taking a housing loan is interest rate. However, borrowers almost always ask the wrong question with regards to interest rate. ‘How low is your interest versus other banks?’ is the typical question.

Consider this alternative thinking; instead of asking how low a bank’s interest rates are, borrowers should seriously consider the exact opposite: ‘How high can interest rates be, while I can still afford the housing loan payment? Look at the accompanying table and consider various scenarios, such as a higher interest rate (note that the SGD mortgage interest rate is one of the lowest in the region) and whether a borrower can continue to service the loan, even if interest rate would double. Not possible?

Those of us who can remember the 1990s recall that housing loan rates were once at 8 per cent. These difficult economic periods when interest went up were often accompanied by periods where people found the stability of their income at risk. So, under such circumstances, if you were to lose your job, do you have sufficient reserves to last – and for how long?

This is where the difference of taking a fixed or a floating rate should be reviewed. Floating rates, while lower, do not have the stability of fixed rate loans. So a borrower may want to consider taking a two-in-one loan where a borrower can combine both fixed and floating rate loans in one mortgaged property. For example, the UOB two-in-one loan.

With rising rental yields, many are also thinking of buying a property as an investment which they intend to rent out to cover mortgage payments. Here. the question to ask would be: ‘Would I still be all right if rental should fall by half?’ Rents go up quickly due to shortage of housing, especially for foreigners with good housing budgets, but they can drop as quickly if there is a downturn.

In the current climate, these may seem faraway possibilities, but whether you are buying for your own stay, or for investment – consider the various scenarios and do your sums carefully.

Your credit performance: One of the other lesser known issues one should consider before taking up a housing loan is credit performance. In Singapore, all your credit performance in terms of number of loans applied for, whether for housing, cars, credit cards or other loans is stored in the Credit Bureau.

When you apply for a loan, you would have signed a consent for your bank to obtain a copy of your credit performance.

Some borrowers have been caught in a situation where they committed to a property by paying the option money, only to find that when they apply for a loan, their application is either turned down, or their request for financing reduced. This could be due the credit history, showing a habitual lateness for other loans. These information are transparent across banks, and a borrower would be advised to get a home financing in-principle approval before committing to a property. One of the ways to ensure that one is not ‘caught’ by credit performance is to ensure that payment is prompt in the borrower’s other loan repayments.

Many people think that housing loans are commodity products, but that cannot be further from the truth. In a very competitive market like Singapore where rates are so low, banks have learnt to compete not by price competition, but through value-added features.

All said, it is key for every potential home buyer to do some homework. Ask yourself if you have the resources both now and in the future to service the mortgage for the amount of loan you intend to take to buy that property. As daunting an exercise as this may be, it is one exercise that we must spend time pondering. At the end of the day, there is no free lunch.

Kevin Lam is head, loans division, United Overseas Bank

IRAS to raise annual values of HDB flats

Market rental values have increased significantly, it says

THE Inland Revenue Authority of Singapore (IRAS) is raising annual values (AVs) for all Housing & Development Board (HDB) flat types for the first time in about four years, to reflect the ’significant increase in their market rental values’.

From Jan 1, 2008, the average AVs will go up between 18 and 25 per cent, with the biggest hike for three-room flats.

IRAS’ spokeswoman noted that IRAS regularly reviews AVs of properties in Singapore to reflect their prevailing rental values.

‘In the case of HDB flats, however, AVs had not been increased since 2004 as they had been supportable by actual rental evidence. The AVs of most private residential properties have already been re-assessed to reflect the current market rental levels during the year,’ she added.

In a joint statement with the Ministry of Finance, IRAS yesterday said it will be revising upwards the AVs of most properties, including HDB flats.

Generally, HDB flats in more centralised and popular areas like Bishan, Bukit Merah and Marine Parade would have higher AV increases, compared with other areas, the statement added.

The property tax rate in Singapore is set at 10 per cent of a property’s AV, although owner-occupied residential properties enjoy a concessionary 4 per cent tax rate.

Island-wide, the average AV hike in percentage terms for the various HDB flat types are: 20 per cent for one-room and two-room flats, 25 per cent for three-room flats, 18 per cent for four-room flats, 20 per cent for five-room flats, and 18 per cent for executive flats.

However, the increase in AVs for owner-occupied HDB flats does not translate to a proportionate increase in property tax actually payable, due to the property tax rebates granted by the Government, including those announced as part of the GST Offset Package in Budget 2007.

As a result, 90 per cent of all HDB flat owners will not pay more property tax in 2008 even after the AVs of their flats go up.

For four-room, five-room and executive flat owners, about 15 per cent will pay a higher property tax but the increase will be less than $40, or about $3 a month.

All HDB flat owners will receive their valuation notices and property tax bills by Jan 1.

‘IRAS encourages HDB flat owners to join the Giro scheme as it allows them to enjoy up to 12 interest-free monthly instalments,’ the joint statement said.

 

Source: Business Times 13 Nov 07

No plans for more measures to cool property market: Mah Bow Tan

(SINGAPORE) No further measures are planned to cool Singapore’s booming property market, the government said yesterday, following the end of the deferred payment scheme (DPS) for buying uncompleted private properties.

‘There is no need and there is no intention for us to take any further action,’ National Development Minister Mah Bow Tan said in Parliament yesterday.

The DPS allowed homebuyers to put down just a 10 per cent or 20 per cent of the price when purchasing a property, with the rest due only upon the project’s completion.

Critics said that this was fuelling speculative activity and driving up property prices – leading to the government’s Oct 26 announcement that it was withdrawing the scheme.

When asked in Parliament yesterday if the government would look at more measures – such as increasing interest rates – to rein in property prices, Mr Mah said that no further measures are planned. But the government, he said, will continue to monitor the property market closely to ensure that property prices are supported by economic fundamentals.

He added: ‘The government will make sure that there is sufficient supply to meet the demand of private housing.’ As at the end of September, there were about 65,000 units planned or under construction, he said. Private home prices in Singapore have climbed 22.9 per cent since the start of the year on the back of a supply crunch, official data shows.

The increase in property prices and rentals has contributed to inflation hitting a 12-year high of 2.9 per cent year-on-year in August – and the figure could rise further.

During Parliament yesterday, Trade and Industry Minister Lim Hng Kiang said that inflation could hit 5 per cent in the first quarter of next year.

Mr Mah told Parliament that while it is too early to ascertain the overall impact of withdrawing the DPS, he is confident that the move will pay off.

‘I believe that over time, the withdrawal will encourage homeowners to be more financially prudent and dampen some of the speculative activity in the market,’ he said.

In the longer term, the withdrawal will encourage the property market to grow in a healthier and more sustained manner, he added.

The DPS was introduced in 1997 when the economy was in recession and the property market was slow.

Before the end of the scheme, up to 90 per cent of buyers in some high-profile projects launched by Singaporean developers were opting for such payment schemes, reports have said.

The government said that ending the scheme would compel investors to have enough funds or bank loans available before they agree to buy properties.

 

Source: Business Times 13 Nov 07

Property market: No further plans to cool it

Govt assurance dampens speculation on capital gains tax

 

THE Government is not planning any fresh measures to cool the property market for now, National Development Minister Mah Bow Tan said yesterday.

His statement effectively hosed down speculation that a capital gains tax might be reintroduced to stop people flipping units for quick gains.

The news brought some relief to players in the property market, which has been hit by uncertainty after the scrapping of the deferred payment scheme two weeks ago.

The 10-year-old scheme, allowing people to buy property with a downpayment but no further payments until the completion of the project, was abolished to curb speculation.

Now, buyers have to make progressive payments while their homes are being built.

The change spooked developers, and was seen as the reason why there were only two bids when the tender for a residential site in Enggor Street in Tanjong Pagar closed on Nov 1.

That followed a sizzling 22.9 per cent growth in private home prices in the first nine months this year.

Sub-sales, when uncompleted properties change hands, made up almost 22 per cent of total sales in central Singapore from July to September.

Addressing questions on the scrapping of the scheme in Parliament yesterday, Mr Mah said it was too early to ascertain its overall impact.

But he did not think genuine home buyers would be unduly affected because they could still get home loans from banks. Over time, the change will encourage the property market to grow in a ‘more healthy and sustained manner’, he said.

Responding to a question from MP Ho Geok Choo (West Coast GRC), he said the Government will closely monitor the market to ensure that prices are supported by economic fundamentals, and that there are sufficient private homes.

He said there is no need for any new measure, and that the Government is not considering any for the property market now. ‘Our bias is really not to over-regulate or to interfere in the market if we don’t have to,’ he said.

If a capital gains tax – which was introduced in 1996 but lifted in 2001 – was imposed again, it would dampen foreign investor sentiment, said the director of research and consultancy at Colliers International, Ms Tay Huey Ying. ‘This is good news for the market. It brings stability.’

Mr Mah stressed that there was no reason to panic over a perceived shortage of homes, as there was a stock of 65,000 private homes in the pipeline at the end of September this year.

About two-thirds are likely to be built and made available over the next three years.Still, househunters such as bank executive Luanne Lim were disappointed at the Government’s declaration.

The 33-year-old bank executive, who feels private homes have become ‘unaffordable’, said: ‘I think people can still afford to speculate without the deferred payment scheme.’

On the public housing front, Mr Mah said the Housing Board was ramping up its building programme to meet demand for new homes.

MP Cynthia Phua (Aljunied GRC) asked about the supply in the next three years, saying newly-weds found it harder to get new HDB flats.

But Mr Mah said about 4,000 flats will be launched under HDB’s build-to-order programme this half year. He did not think the HDB should meet all demand for new flats. If it did, it would be laying the groundwork for a future oversupply problem.

These same newly-weds would then find it hard to sell their homes if they wanted to upgrade. It was better to channel some of the demand for new flats to the resale market, he said. Source: The Straits Times 13 Nov 07

Annual values of HDB flats to rise

GET ready to pay more property tax next year. Along with the rise in home prices, the taxman is revising the value of most properties upwards.

However, rebates given to offset the impact of the goods and services tax (GST) hike this year will soften the move’s impact.

The annual values of all types of Housing Board (HDB) flats will be raised from Jan 1, said the Inland Revenue Authority of Singapore (Iras) in a statement yesterday. This means property taxes, which amount to 4 per cent of the annual values of owner-occupied homes, will rise.

Asked about private homes, Iras said: ‘The annual values of most private residential properties have already been reassessed to reflect the current market rental levels during the year. The average increase for these private residential properties is about 20 per cent.’

Annual values of private residential properties in the central core area have generally increased between 20 per cent and 50 per cent this year.

The annual values will increase by an average of 18 per cent for HDB four-room and executive flats and 20 per cent for one-, two- and five-room flats. Three-room flats will face the greatest increase of 25 per cent.

Most HDB flat owners, however, will not pay higher taxes even after the revision, because of property tax rebates granted earlier this year to offset the impact of the GST hike.

Currently, owners of all one- and two-room flats, as well as 13 per cent of owners of three-room flats, do not pay property taxes because of earlier GST rebates.

The 2007 GST offset package gives all owners who are living in their property an extra $100 rebate annually for next year and 2009.

This means 90 per cent of all owners of HDB flats will not pay more property tax next year. In fact, 60 per cent of three-room flat owners will pay zero property tax, while 40 per cent will pay less tax than now.

About 15 per cent of owners of four- and five-room and executive flats face a hike in tax payable, but not more than $40.

The last time the annual values of HDB flats were raised was in 2004, and that doubled the number of home owners paying property tax. The increase brought in an extra $40 million a year for the Government.

 

Source: The Straits Times 13 Nov 07

Katong Hostel wins master lease tender for Tiong Bahru flats

THE Housing & Development Board (HDB) yesterday awarded the tender for the master lease of 120 three- and four-room vacated flats in Tiong Bahru to Katong Hostel at a tender price of $230,280 per month. The company was the highest of 15 bidders at the tender which closed on Oct 9.

Katong Hostel will be given a master lease on the flats on a 3+3-year tenancy. The flats were vacated under the Selective En bloc Redevelopment Scheme (Sers) and the tender to seek a master tenant was a pilot project by HDB to boost the supply of flats for rental housing.

‘This will put these flats to better use in the interim period, pending their redevelopment,’ HDB said. ‘HDB will assess the response to this pilot project before deciding whether to expand the scheme in future. If needed, HDB has a potential supply of about 4,000 to 5,000 units that can be introduced to bolster rental supply in the HDB market over the next three years.’

 

Source: Business Times 8 Nov 07

Tiong Bahru Sers flats to be rented for up to $4,500

Winning bidder in HDB pilot scheme aims to target foreign students, expatriates

A COMPANY that has just won an HDB tender in a pilot scheme plans to rent out 120 flats at Tiong Bahru for up to $4,500 a month to foreign students and expatriates.

It is the first step to boost the supply of flats in the rental market amid growing demand. It aims to put flats vacated under the Selective En Bloc Redevelopment Scheme to better use.

Former residents of the 120 flats have moved to new and better flats nearby.

The HDB said the flats that had been vacated were identified for its rental scheme, pending long-term development plans.

The Tiong Bahru flats will get a $3 million facelift and be ready for tenants by the year’s end.

The winning tenderer, Katong Hostel, which provides international student housing, will be the managing agent for the 60 three-room and 60 four-room walk-up flats.

The firm, part of the privately-held Vita Group of hostels, plans to rent out at least two blocks to students and possibly the rest as service apartments to expatriates.

Katong Hostel won the tender with the highest bid of $230,280 a month, 22 per cent above the next bid of $188,000 a month.

That price is the sum the firm will pay HDB to lease the flats for three years, with an option for three more years.

Katong Hostel aims to rent out these flats – Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road – at a relatively high price of between $3,500 and $4,500 a month.

While rents in the Tiong Bahru area have risen significantly, the HDB flats there have so far achieved only up to $2,500 a month in rent, said HSR property group’s executive director Eric Cheng.

But the Tiong Bahru flats are different in that they will be managed and aimed at a specific clientele, said Ms Joyce Sim, 25, a Vita group director.

She said the student housing – to be charged on a per person basis with two to a flat – is aimed at those looking for quality housing.

These could be doctorate students, for instance, who could be paying their own fees or sponsored by firms.

‘These Tiong Bahru flats are among the early batches of flats,’ Ms Sim said. ‘We will preserve the heritage of the buildings, which have a unique design.’

 

Source: The Straits Times 8 Nov 07

$730k view – 5-room HDB flat in Marine Parade sold for record sum

AN UNRENOVATED 32-year-old five-room flat in Marine Parade, on a high level with a full sea view, has been sold for $730,000 – a new record for an HDB flat.

This trumps the previous record of $720,000, set in June by a fairly new five-roomer in Kim Tian Place.

The buyer, who declined to be interviewed, did not bother to wait for the flat’s valuation when he negotiated the price down from $750,000, said the seller’s property agent, Ms Joyce Lau, of agency ERA.

She said the deal was inked in half a day on Oct 13. The buyer viewed the 18th-floor flat in the daytime and confirmed the buy that night.

Mr Ken Ng, the 48-year-old son of the flat’s seller, said the flat has been vacant since his parents moved out to live with him some four years ago. His father agreed to sell recently.

‘I actually like the flat. I jacked up the price so high, thinking it is a crazy price. If nobody wants, I can withdraw it,’ he told The Straits Times.

‘But the first person who saw it liked the full sea view and wanted to buy it.’

The flat is in a prized point block with four flats per level.

The record sale comes as HDB resale prices have registered significant increases in a buoyant property market.

The HDB market has also benefited from spill-over demand. The dramatic spate of collective sales in the past year has created a pool of eager buyers, some of whom are downgrading to HDB flats.

The buyer of the run-down Marine Parade flat is believed to be in his 50s and an owner of more than one property.

It is understood that he may use the flat as his retirement home. He will have to pay $130,000 in cash for his flat, which is valued at $600,000.

This is well above the median cash-over-valuation sum of $85,000 for Marine Parade in the third quarter.

In the third quarter, the median resale price of five-room flats in the same town was at $560,000 – the second highest median price for the flat type after Queenstown.

But deals have been done at prices of up to $710,000.

Last month, a 30-year-old high-floor five-room Marine Drive flat sold for $710,000, while another five-roomer in the same block sold for $695,000 in September.

PropNex’s chief executive Mohamed Ismail said the difference lies in the lifestyle a home in the area offers.

‘It’s not too congested, near town and East Coast Park.’

But paying record prices or large cash amounts for it will not become a norm.

‘Those who pay such large cash amounts are private property downgraders or people who have profited from en bloc sales,’ said Mr Ismail.

‘Typical HDB buyers cannot afford such prices.’

 

Source: The Straits Times 2 Nov 07

Analysts see no property bubble

They’re mum on whether it’s a good time to buy, but agree S’pore fundamentals are pretty robust.

PROPERTY: boom or bust? This was the intriguing question to which a capacity turnout of about 170 investors recently sought answers, at a dinner hosted by financial advisory firm ipac. The good news is that the experts at the evening’s panel do not foresee a bubble in the offing, based on three presentations – albeit with some concern expressed by Jones Lang LaSalle’s head of research, Chua Yang Liang.

The not-so-good news is that the experts shied away from the multi-million-dollar question of whether this was a good time to buy. What is more, over the past weekend, the surprise news of a halt to  the popular deferred payment scheme for uncompleted properties appears to have cast a cloud over residential property’s upward trajectory.

In a deferred payment scheme, developers effectively extend free financing to buyers of uncompleted properties.

Buyers need only pay an initial deposit of 10 to 20 per cent, with the balance due when the property is completed in a couple of years.

Thanks to this form of free credit, a sizeable number of speculators have rushed in to new home launches, as a rising market gives them a window to sell their units at a substantial profit in a short period.

The base case of one panellist, HSBC senior Asian economist Robert Prior-Wandesforde, is that there are few obvious triggers for a sharp deceleration in prices.

‘If we’re in a bubble, we’re in the early stages. The fundamentals are pretty robust. The mass market is just starting to see a recovery and that’s probably the safest area for investment,’ he told the audience. The supportive factors include the expected growth in employment and personal incomes. 

The cost of servicing mortgage debt also remains relatively low at just about 14 per cent of household income, compared to 50 per cent in mature markets like London.

Contacted yesterday, he said: ‘I think the measure (to halt deferred pricing) will take a little bit of froth out of the market, but with employment booming, wages soaring and the real mortgage rate at its lowest level since 1990, the outlook still looks very promising.

‘We should also bear in mind that valuations are still way below the levels of the previous boom. When adjusted for the growth in incomes, the private residential property price index is little more than half of what it was in 1996.’

At the discussion, Dr Chua of JLL expressed concern over the price gap between new and resale homes in the prime districts. The gap has widened sharply this year, reaching a peak of 60 per cent, against a medium to longterm premium gap of 32 to 38 per cent. The resale market, he says, reflects true demand better, as deferred payment schemes in the new home market have inflated prices.

In terms of rental yields, rentals in the luxury prime segment have edged below the 10-year Singapore bond yield.

The clampdown on deferred payment schemes should remove the speculative froth, he says. ‘Generally prices will take a breather in the next two to three years with the sheer volume of (new) stocks coming on stream. We expect some kind of softening, not a correction, but a softening.’

Sing Tien Foo, deputy head of the National University of Singapore’s department of real estate, pointed to property’s ability to help diversify a portfolio, thanks to a low correlation with stocks and bonds.

Prof Sing’s research has shown that property provided a positive hedge against inflation between 1992 and 2007, a period in which stocks and bonds did not provide such a hedge.

While all types of property offered a more-than perfect hedge against inflation, the best hedge was that offered by detached housing, followed by semi-detached homes.

Meanwhile, advisers are sounding caution. Roy Varghese of ipac says: ‘If you’re looking to invest, be very careful.

You need to have an investment objective and that includes looking into the IRR (internal rate of return). You should be able to hold it for seven to 10 years. If you bought your property at a peak, your IRR will be low.’

Joseph Chong of New Independent expects the price gap between new uncompleted homes and resale homes to narrow. ‘The market should see a more moderate ascent in prices – instead of 20 per cent, perhaps 10 per cent in line with nominal GDP.

‘You should see more upside…But if your portfolio is not big enough, I don’t think you should bet on investment property in Singapore.’

Those with modest resources are better off investing in a global property fund or Reit, he adds.

Analysts, however, remained mostly sanguine over the medium-term outlook. Merrill Lynch’s property team wrote in a paper market that sentiment will be weak over one to two months. ‘However, we are of the view that genuine buyers do not buy houses on innovative purchase schemes by developers alone. We believe the more important considerations will be where Singapore is heading, will they be able to keep their jobs or businesses and will their salaries/profits increase.’

The firm’s economics team recently wrote that Asian property prices were not high relative to per-capita income, and advances have been modest compared to those in the UK, the US and Australia. The drivers include low real interest rates and positive demographics.

Citigroup analyst Wendy Koh said that while sentiment will weaken in the short term, residential prices are supported by strong fundamentals. In a note on Friday, she said: ‘We believe the current price increase is well supported by strong fundamentals such as the extremely tight physical supply and economic and wage growth.

‘We maintain our view that rental rates for residential units will continue to climb on the back of the relative net increase in housing stock due to low completion and relatively high demolition due to en blocs. The rise in rental rates will likely continue to support further price appreciation.’

 

Source: Business Times 31 Oct 07

Using HDB equity to pay for annuities

The median CPF member holds three times more in HDB housing equity than CPF cash holdings

A NEW scheme making annuities compulsory for Central Provident Fund (CPF) members has been greeted quite negatively by the public.

The scheme involves setting aside a small portion of the Minimum Sum to buy the annuity. When the individual reaches a certain age, say 75 or 80, the annuity gives a monthly payout for the rest of his life. The annuity is a form of longevity insurance.

One option of making annuities more palatable is by allowing CPF members to finance the annuities with their HDB housing equity. The median CPF member holds about $145,000 in HDB housing equity, more than three times the $45,000 in CPF cash holdings.

Retirees are generally asset rich but cash poor. Using the cash portion to purchase annuities would leave even less cash for retirement. That may not be the most optimal financial solution for most CPF members who are already holding a large portion of illiquid assets, their HDB flats, at retirement.

By design, the government’s social support and CPF system encourages citizens to invest their savings in housing during their working lives. We recommend that the government should also help citizens monetise their savings locked into HDB housing at the end of their working lives.

One option is for HDB to accept the pledging of the retiree’s HDB flat as collateral for a loan to purchase the annuity. This would allow HDB owners to partly monetise their assets and leave them with more cash at retirement. Such flexibility on HDB refinancing would also allow CPF retirees to stay in their existing HDB homes without necessarily having to sell their homes for the purpose of realising their savings.

Moreover, moving or downgrading from their existing homes can be a stressful experience for the elderly.

HDB can clearly play a financial intermediary role for the elderly. Retirees are not able to secure housing finance from private banks because they no longer hold a job, have a stable monthly wage, or are simply too old.

Retirees do not, moreover, want to completely reverse mortgage their HDB homes as they may want to leave an endowment and pass on some residual housing equity for the next generation. The retiree can also live on in his existing home for the rest of his life, if some refinancing is allowed.

From the perspective of the government, lending to an individual for the purchase of an annuity is probably more acceptable.

The withdrawal of the HDB housing equity is not for cash that will be wastefully spent. Allowing the housing equity to be tapped for buying longevity insurance improves the welfare and financial security of the individual.

Such an option might improve the public reception to the compulsory purchase of annuities.

The writer is an economist with Citigroup and chairperson of the Policy Study Workgroup on Economic and Employment Opportunities

 

Source: Business Times 31 Oct 07

Median COV for HDB resale flats up 140%

But number of resales falls 11% in Q3 to 7,700

(SINGAPORE) Housing and Development Board (HDB) flats are re-selling on the open market for a median of $17,000 above valuation. HDB said that 80 per cent of resale flats in Q3 required cash over valuation (COV).

HDB only started to release data on COV recently – and in the previous quarter the median COV was just $7,000.

HDB’s Resale Index Price Index also increased 6.6 per cent in Q3 – more than double the 3 per cent in the previous quarter.

But while the median COV increased 140 per cent in Q3, the number of resale transactions fell 11 per cent from 8,700 to 7,700.

In an analysis of HDB’s data, real estate agency PropNex said that price increases were more significant in popular neighbourhoods.

Increases in the median prices of three-room flats in Ang Mo Kio (central), Bedok (east) and Queenstown (central) were 11.8, 6.4 and 5.6 per cent respectively. And for larger five-room flats they were higher at 13.1, 16 and 20.6 per cent respectively.

In Clementi, Bukit Timah and Toa Payoh, the median COV for executive flats hit $155,000, $137,500 and $127,00, but HDB said that the number of units transacted in this category was below 20 in these areas.

PropNex CEO Mohamed Ismail said that it was too early to tell if there was a meaningful correlation between rising resale prices and falling resale volume.

The 11 per cent drop in transactions is not significant because HDB records show transaction volume ranges between 6500 and 8000 in most quarters, he said.

According to him ‘it may be too early to conclude from this dip that consumers are price-sensitive’.

But he warned: ‘If the resale market does slow down, the mass market could be affected because potential HDB upgraders will not be able to sell their flats to upgrade.’

ERA Singapore assistant vice-president Eugene Lim said that prevailing prices were ‘unrealistic’ and added: ‘HDB homebuyers are beginning to show some resistance and this could translate into lower resale volume.’

He also said that demand from private-sector downgraders for five-room and executive flats meant that sellers will continue to lift their asking prices for such flats. ‘A market survey indicates that asking prices for these larger flat types may vary some $50,000 to $200,000 above valuation,’ he said.

In the light of increased demand, HDB has ramped up its building programme. More than 26,700 flats are expected to be completed between 2007 and 2011.

In a Citigroup report, economist Chua Hak Bin noted that the ‘previous surge in HDB construction units was blamed for the severity of the post-1996 housing slump’. But he added that future supply seems manageable.

For comparison, he highlighted the fact that during the early-1990s property boom more than 120,000 HDB flats were constructed from 1993 to 1997, representing more than 15 per cent of HDB housing stock. But upcoming supply of 26,764 flats represents only about 3 per cent of current HDB stock and is probably less than half of the upcoming supply of private residential units.

On the increase in COV, he said: ‘The increase in cash over valuations probably reflects the spilling-over of steep price increases seen for private property to HDB.

‘The discount to equivalent-size HDB apartments over private apartments has widened considerably over the past few years. Buyers are starting to take advantage of that wide discount.’

HDB has also revealed that the number of flats approved for sub-letting rose to about 16,000 in Q3 from about 14,600 in the previous quarter. And overall rents have increased about 20 per cent, except that for two-room flats, which increased about 10 per cent.

HDB said that if needed it has potential supply of 4,000 to 5,000 units that can be introduced into the market to bolster rental supply over the next three years.

 

Source: Business Times 27 Oct 07

HDB resale flat prices surge 6.6%

Private homes see 8.3% rise; strong demand filtering to suburban areas

THE Hungry Ghost Festival did little to cool the property sector last quarter with prices of HDB flats and private homes continuing to soar.

New data yesterday also reinforced a trend that emerged from early figures – intense demand is filtering out from prime areas, bringing price rises to most sectors including public housing.

HDB resale prices shot up 6.6 per cent – well up on the 3 per cent rise in the April-July period – taking their total rise this year to 11 per cent.

HDB flat owners will be cheered by the new data, which showed HDB prices finally starting to catch up with private home prices, said National Development Minister Mah Bow Tan.

‘If the private property market is moving, I don’t see why the HDB market should not move as well. HDB owners can look forward to higher prices if they sell.’

The price increase was even more striking among private homes. Overall prices – these include flats and landed homes – rose 8.3 per cent in the three months ended Sept 30, a similar result to the previous quarter.

That brings the price growth so far this year to 22.9 per cent – more than twice the 10.2 per cent growth in the whole of last year.

Non-landed homes continued their steady trajectory, rising 8.3 per cent, with prices in central Singapore and Sentosa Cove, where luxury properties are located, also rising by the same amount.

A key finding: prices of non-landed homes in suburban areas grew 7.9 per cent, positive proof that demand has filtered outwards from the central region.

Prices of suburban mass market homes could rise further. The demand will be driven on two fronts: downgraders from estates sold en bloc and HDB upgraders motivated by rosy prospects and wage growth, said Mr Ku Swee Yong of Savills Singapore.

Landed homes, which recently sprung into life, continued their ascent, climbing 7.5 per cent, up from 7.1 per cent in the previous quarter. Terrace houses were the star performer, with prices rising 8.1 per cent.

Not all the numbers went north, however. Fewer homes were sold in the third quarter, which consultants put down to a lack of launches and uncertainty over turmoil in global stock markets and sub-prime mortgage woes in the United States.

There were 3,367 new homes sold, well below the record 5,129 moved in the second quarter, and the lowest in the past three quarters. But it is still a healthy level, said property consultancy CB Richard Ellis.

The more tentative market also weeded out some speculative activity, bringing sub-sales – owners’ sales of uncompleted properties – down to 1,163, from 1,791 in the previous quarter.

In the central core region, sub-sales comprised 21.6 per cent of all sales, down from the revised 24.1 per cent in the second quarter.

Government figures yesterday also showed increases in the rental rates of residential, office and shop space.

HDB resales fell 11 per cent to 7,700 in the third quarter, after a 38 per cent rise in the previous quarter.

Third-quarter HDB data showed the amount of cash- over-valuation that buyers are paying has increased substantially across the board.

 

Source: The Straits Times 27 Oct 07

Buyers paying way above valuation for HDB flats

IF YOU are looking to buy an HDB resale flat, make sure you have plenty of cash on hand.

Due to soaring home demand, an average HDB resale flat now costs $17,000 above its valuation from $7,000 just three months ago.

This figure, called the cash-over-valuation amount, has to be paid in cash by a buyer under current rules.

Five-room flats in popular areas like Queenstown are going for about $110,000 above valuation, according to data released by the Housing Board yesterday.

In addition, more flats are being sold at higher prices.

Between April and June, only three out of every 10 resale flats went above valuation. Since July, however, this has applied to eight out of 10 flats, the HDB said.

The higher prices, however, may be starting to deter buyers.

The number of resale flats sold in the third quarter fell 11 per cent to 8,700, after rising 38 per cent in the previous three months.

HDB resale prices are soaring because rising private home prices are pushing buyers to the cheaper public housing segment.

Taking advantage of growing demand, flat sellers are now asking for prices that are significantly higher than valuations.

But this is creating unhappiness among buyers, said property agents.

‘With these kinds of asking prices, we are beginning to see some resistance in the market,’ said Mr Eugene Lim, assistant vice-president at property agency ERA Singapore.

‘The typical HDB homebuyer does not have or does not want to fork out too much cash. It just does not make sense.’

ERA’s data show that in the third quarter, there were fewer resales of all types of flats, from one-room units to executive flats.

But Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, suggested that the lower sales could simply be due to the Hungry Ghost month in the third quarter.

Another property agency, PropNex, said the drop in flat sales is only slightly significant.

Over the last 10 years, the number of resale flats sold was 6,500 to 8,000 for most quarters.

Even with the fall in transactions in the third quarter, 7,700 resale flats were sold, said PropNex’s chief executive, Mr Mohamed Ismail.

‘It may be too early to conclude from this dip that consumers are price sensitive,’ he said, unless ‘the number of transactions continues to drop’.

Mr Ismail agreed, however, that the cash-over-valuation amount had increased significantly.

‘Today, without at least $50,000 in cash, homebuyers will not be able to purchase a resale flat in the Central location,’ he said.

According to HDB figures, buyers of executive flats are forking out the highest median cash-over-valuation amounts.

The median amount – the point at which half the homes sold for more cash and half for less – hit $155,000 in Clementi.

Overall, the median amount for this flat type was $25,000.

For four- and five-room flats, buyers paid a median of $18,000 above valuation. For two- and three-room flats, the amount was $15,000.

The highest amount paid above valuation for a five-room flat was $91,500. The figures were $57,500 for a four-room flat and $40,000 for a three-room flat.

In general, the areas requiring the least cash-over-valuation were Woodlands, Yishun and Bukit Panjang.

On the other end of the spectrum was the Central area, Queenstown and Marine Parade.

The HDB said, however, that in some of these cases, there were fewer than 10 sales of the specific flat type in that area. This means the figures may not be representative.

 

Source: The Straits Times 27 Oct 07

Rentals for private homes, HDB flats continue to soar

Private home rents jump 11% while HDB flat rents surge 21% on landlords’ increased expectations

TENANTS complaining about rising home rentals now have official figures to back them up.

Rents of private homes and HDB flats soared in the July to September period, according to the latest data released by the Government yesterday.

They climbed 11.4 per cent for private homes, on top of the 10.4 per cent increase in the previous three months.

This means that since January, private home rentals have already jumped by 32.2 per cent, compared with only 14.1 per cent for the whole of last year. They are now at their highest level in at least nine years.

As for HDB five-room flats, the overall median rental – the level at which half the rents are higher and half are lower – surged by 21.2 per cent in the third quarter.

One reason for the strong growth in rents could be the increased expectations of landlords, said Mr Leonard Tay, the director of research at consultancy CB Richard Ellis.

Rents are also being pushed up by an increasing demand for completed homes, and a shortfall in supply at the same time, he added.

A large number of collective sales in the last two years has led to the demolition of existing homes and has forced the sellers to become home seekers.

With no respite in sight – fewer homes are expected to be completed next year than average – rents will continue to surge, said Ms Tay Huey Ying, the director of research and consultancy at Colliers Internaitonal.

She said that according to yesterday’s data, only 5,541 homes are expected to be completed next year. This compares with a net average of 7,670 new homes between 2000 and 2004, before the collective sale fever set in.

‘If we take into consideration the withdrawal of units because of collective sales, there will probably be a net addition of only 3,500 to 4,000 homes next year,’ she said. Due to this acute shortage of completed homes ready for immediate occupation, Ms Tay expects rents to rise between 40 per cent and 43 per cent for the whole of this year.

But she also predicts that the rate of growth will moderate after that. Her forecast for next year: a rise of 30 per cent to 35 per cent.

‘We expect rents to continue to grow strongly, but we do expect growth to be slightly slower than it was this year,’ said Ms Tay.

‘This is partly because we are already coming from a high base. Also, we could be seeing resistance to higher rentals; people could be reconsidering Singapore as a place to live.’

Beyond that, she believes that home completions will shoot up in 2009, which may help to stabilise rents.

Yesterday’s figures showed that rents grew across the board for non-landed private properties.

They rose 12.2 per cent in the core central region, which covers Orchard, Holland, River Valley, Bukit Timah, Marina Bay and Sentosa.

In the rest of the central region – stretching to Marine Parade, Queenstown, Geylang and Bishan – rents increased 11.9 per cent. For the rest of the country, rents went up 11.8 per cent.

This even rate of growth is likely to be the trend ahead, said Colliers’ Ms Tay.

For HDB resale flats, median rents crossed the $2,000 mark for five-room flats in Bukit Merah and the Central area, as well as executive flats in Bishan, Kallang/ Whampoa, Clementi and Queenstown.

Overall, median rents were $1,200 for three-room units, $1,400 for four-room units, $1,600 for five-room flats and $1,700 for executive flats.

HIGH DEMAND, LOW SUPPLY

Rents of homes are also being pushed up by an increasing demand for completed homes, and a shortfall in supply at the same time, says

Mr Leonard Tay, director of research at consultancy CB Richard Ellis.

 

 

Source: The Straits Times 27 Oct 07

HDB launches BTO projects in Bukit Merah, Punggol

The Housing and Development Board (HDB) yesterday launched two new housing projects – Telok Blangah Towers in Bukit Merah town and Punggol Lodge in Punggol town – under the Build-To-Order (BTO) system.

All in, 916 new premium and standard flats are on offer comprising studio apartments (SAs), three-room and four-room flats. The application period for this sales exercise is from Oct 25 to Nov 14.

HDB said in a press statement yesterday that Telok Blangah Towers is an integrated development with a total of 400 flats, comprising 90 SAs, 100 units of three-room and 210 units of four-room premium flats.

The SAs are sold with elder-friendly features such as grab bars and non-slip flooring. Fittings include built-in wardrobes, kitchen cabinets and cooking facilities.

The project is located at the junction of Telok Blangah Street 31 and Telok Blangah Drive, and is next to a range of shops and eateries, a supermarket, wet market and hawker centre. It is also near the Bukit Merah Town Centre, and the upcoming MRT stations at Labrador Park and Telok Blangah.

Punggol Lodge, located in Punggol East along Punggol Road, has 516 flats comprising 52 units threeroom and 464 units four-room flats.

The project is across the road from upcoming commercial facilities such as an eating-house, supermarket and shops, and is within walking distance from the Damai LRT station. It is also near the Punggol MRT Station, bus interchange and future Punggol Town Centre.

An exhibition will be held at the Habitat Forum, HDB Hub, during the application period. Those interested can obtain the sales brochure, and view the 3D models and sample finishes on display.

Potential buyers can also visit HDB’s e-Sales website at www.hdb.gov.sg/esales, or look out for newspaper advertisements on the two projects.

 

Source: Business Times 26 Oct 07

400 new flats offered for sale in Telok Blangah

687 applicants register for units in central area; 516 new flats also launched in Punggol

POTENTIAL buyers have rushed to put their name down for 400 new premium flats near the heart of town, launched for sale by the Housing Board yesterday.

By 5pm yesterday – nine hours after applications opened – 687 people had registered their interest for the flats, which will be built within an existing HDB estate at the foot of Mount Faber. Another batch of 516 flats were also launched for sale yesterday, further out in Punggol. They received 152 applications by 5pm.

Both projects are being offered under the build-to-order programme, so they will be built only when most flats have been booked.

Going by recent red-hot demand for new HDB flats, housing agents do not expect any problems on that front.

As the level of the response yesterday shows, the Mount Faber area project – called Telok Blangah Towers – is the more popular.

The premium project in Telok Blangah Street 31 comprises 90 elderly-friendly studio apartments, 100 threeroom flats and 210 four-room units. Its prime location near the Central Business District, VivoCity mall and Sentosa is one reason behind the high level of interest.

It will be built within the established town of Bukit Merah – one of the few occasions when a build-to-order development will be located in a mature town with established facilities.

Its flats will have timber strip flooring in the bedrooms and ceramic floor and wall tiles in the bathrooms.

Build-to-order projects are usually located in new towns like Punggol and Sengkang – both far from the city centre. This has meant home buyers wanting to live closer to central Singapore have had to settle for older resale flats or pay a higher price for private condominiums.

The attractive location in Telok Blangah comes at a price: Four-room flats will cost between $308,000 and $402,000, more than 50 per cent above similar units in the Punggol project. Three-room flats will cost between $187,000 and $238,000, while studio units will go for $70,000 to $91,000.

The Punggol development, called the Punggol Lodge, will offer standard flats without flooring, with more modest prices.

Four-room ones are between $190,000 and $234,000, with three-room flats priced between $122,000 and $150,000.

Property firm ERA Singapore said four-room flats in the Telok Blangah area built from 1999 onwards cost between $370,000 and $408,000 on the resale market.

From April to June this year, resale four-room flats in Bukit Merah town – where flats in the Telok Blangah area are located – went for a median price of $371,000.

Mr Chandran Pillay, a senior division director of Global Real Estate Services, felt the new Telok Blangah flats were far from cheap.

‘I think $400,000 is a bit high, but anybody who wants to live close to the city knows they have to pay a higher premium,’ he said.

The HDB said this month that it was stepping up sales to meet rising demand for new flats. Its stock of unsold flats has dwindled from more than 10,000 three years ago to 3,500 now, and is expected to drop to 2,200 by the end of the year.

It will also offer about 4,500 new flats in the next six months under the build-to-order system.

 

Source: The Straits Times 26 Oct 07

Prices of HDB resale flats keep accelerating

RIDING on the property boom, HDB resale prices are on the rise.

The price index of resale flats was 6.6 per cent higher in the third quarter compared to the previous quarter, the HDB said in a press release on Friday. Price increases were seen across most flat types and towns.

‘As at end-September, the HDB resale price index has increased by about 11 per cent since the start of the year,’ the HDB said.

For five-room flats, the median resale price in Queenstown is the highest at $603,000, followed by Marine Parade at $560,000 and Bukit Merah at $530,000.

Queenstown tops the list for median resale prices of four-room flats as well, fetching $410,000. This is followed by Bukit Merah which commands a price of $396,500 and Central at $382,500.

The median Cash-Over-valuation (COV), which is the difference between the Resale Price and Market Value of the flat, in the July to September period was $17,000.

Eighty per cent of all resale transactions required COV while 20 per cent of the transactions were conducted at or below valuation.

Five-room flats in Queenstown commanded the highest median COV of $110,000, followed by the Central region with $91,500 and Marine Parade at $85,000.

For four-room flats, apartments in Central fetched the highest median COV of $57,500. Queenstown at $57,000 and Bukit Merah at $40,500 were the next two highest on the list.

Highly popular in the last quarter were four-room flats, which made up the bulk of resale transactions. There were 2,833 in total.

Three-room flats were more popular than 5-room flats in the last quarter, with 2,179 transactions compared to 1,901.

New flats

With good take-up rates for public housing projects launched under the Build-To-Order system, HDB launched about 2,700 new flats under four BTO projects in the first three quarters of the year.

It launched another 916 units on Thursday and has plans to offer another 3,500 in the next six months.

‘There are also plans to release another three Design, Build and Sell Scheme (DBSS) sites with an estimated combined yield of 1,500 units over this period,’ the HDB said.

The new flats will be in addition to those offered under the Balloting Exercises for surplus Selective En bloc Redevelopment Scheme (Sers) flats and the bi-monthly or monthly sales exercises for unsold flats.

Rental market

Rents for subletting HDB flats were also up in the last quarter in line with higher rents for private residential properties.

Marine Parade commanded the highest median subletting rents for both three- and four-room flats at $1,250 and $1,700 respectively.

HDB approved the subletting of 3,500 flats in the third quarter, bringing the total number to about 16,000 units, up from about 14,600 units in the second quarter.

HDB said it will be leasing out flats vacated under Sers to the general public under a special pilot project. It recently concluded a tender for the leasing of vacated Sers flats at Tiong Bahru Road, and will assess the response to this pilot project before deciding whether to expand the scheme in future.

This scheme puts ‘the vacated Sers flats to better use in the interim period, pending their redevelopment’, it said.

HDB said it ‘has a potential supply of about 4,000 to 5,000 units that can be introduced to bolster rental supply in the HDB market over the next 3 years’.

 

Source: The Straits Times 26 Oct 07

Prices of HDB resale flats keep accelerating

RIDING on the property boom, HDB resale prices are on the rise.

The price index of resale flats was 6.6 per cent higher in the third quarter compared to the previous quarter, the HDB said in a press release on Friday. Price increases were seen across most flat types and towns.

‘As at end-September, the HDB resale price index has increased by about 11 per cent since the start of the year,’ the HDB said.

For five-room flats, the median resale price in Queenstown is the highest at $603,000, followed by Marine Parade at $560,000 and Bukit Merah at $530,000.

Queenstown tops the list for median resale prices of four-room flats as well, fetching $410,000. This is followed by Bukit Merah which commands a price of $396,500 and Central at $382,500.

The median Cash-Over-valuation (COV), which is the difference between the Resale Price and Market Value of the flat, in the July to September period was $17,000.

Eighty per cent of all resale transactions required COV while 20 per cent of the transactions were conducted at or below valuation.

Five-room flats in Queenstown commanded the highest median COV of $110,000, followed by the Central region with $91,500 and Marine Parade at $85,000.

For four-room flats, apartments in Central fetched the highest median COV of $57,500. Queenstown at $57,000 and Bukit Merah at $40,500 were the next two highest on the list.

Highly popular in the last quarter were four-room flats, which made up the bulk of resale transactions. There were 2,833 in total.

Three-room flats were more popular than 5-room flats in the last quarter, with 2,179 transactions compared to 1,901.

New flats

With good take-up rates for public housing projects launched under the Build-To-Order system, HDB launched about 2,700 new flats under four BTO projects in the first three quarters of the year.

It launched another 916 units on Thursday and has plans to offer another 3,500 in the next six months.

‘There are also plans to release another three Design, Build and Sell Scheme (DBSS) sites with an estimated combined yield of 1,500 units over this period,’ the HDB said.

The new flats will be in addition to those offered under the Balloting Exercises for surplus Selective En bloc Redevelopment Scheme (Sers) flats and the bi-monthly or monthly sales exercises for unsold flats.

Rental market

Rents for subletting HDB flats were also up in the last quarter in line with higher rents for private residential properties.

Marine Parade commanded the highest median subletting rents for both three- and four-room flats at $1,250 and $1,700 respectively.

HDB approved the subletting of 3,500 flats in the third quarter, bringing the total number to about 16,000 units, up from about 14,600 units in the second quarter.

HDB said it will be leasing out flats vacated under Sers to the general public under a special pilot project. It recently concluded a tender for the leasing of vacated Sers flats at Tiong Bahru Road, and will assess the response to this pilot project before deciding whether to expand the scheme in future.

This scheme puts ‘the vacated Sers flats to better use in the interim period, pending their redevelopment’, it said.

HDB said it ‘has a potential supply of about 4,000 to 5,000 units that can be introduced to bolster rental supply in the HDB market over the next 3 years’.

 

Source: The Straits Times 26 Oct 07

Property booms, busts make economy vulnerable

SINGAPORE ECONOMIC POLICY CONFERENCE

Bubble cuts private spending, raises reliance on volatile foreign demand

PROPERTY price booms and busts make Singapore’s economic growth more vulnerable to volatile factors and should be prevented, an economist at a think-tank said here yesterday.

While the impact of a spike in property prices on overall GDP growth is ‘quite subdued’, a property price bubble causes private consumption expenditure to shrink, making the economy more dependent on foreign demand and business spending which are much more volatile, said Tilak Abeysinghe.

The deputy director of the Singapore Centre for Applied and Policy Economics (Scape) at the National University of Singapore, was speaking at the inaugural Singapore Economic Policy Conference organised by Scape at Four Seasons Hotel.

His team’s research found that while higher property prices spur construction investment, an accompanying dip in private consumption means overall economic growth does not change much as a direct result of property price inflation.

But the overall effect is still undesirable as it makes the economy far more dependent on business spending and foreign demand for its exports, both of which are more volatile than domestic consumption, he said.

The consumption expenditure share of Singapore’s GDP has fallen from more than two-thirds in 1997 to about 40 per cent today. ‘If consumption expenditure in Singapore falls further, GDP growth will be very vulnerable to external demand and investment demand,’ he said.

Research found that in contrast with economies such as the US, higher housing prices here do not seem to encourage more personal spending.

In Singapore, ‘housing wealth is relatively illiquid,’ he said. ‘You just can’t sell your house and move to a suburban house.’ This means the ‘wealth effect’ of housing price inflation seen in countries such as the US – when people spend more as the value of their homes rise – is much less noticeable in Singapore.

Also, ‘when housing prices go up, mortgage payments also increase, so people have less to spend on consumption,’ he said.

He believes policymakers here should ‘do their best’ to prevent a property price bubble because of its effect on private consumption spending and its tendency to widen the income gap between the rich and poor.

‘It should be possible’ to prevent another bubble from building by identifying the main cause of the recent run-up in property prices – likely to be people buying properties for investment rather than owner-occupiers – and introducing measures to dampen demand from this source, he said.

But he also cautioned against flooding the market with a vast supply of new homes, which could trigger a price crash and set the conditions for a new bubble.

 

Source: Business Times 19 Oct 07

No bubble in property market: NUS study

DESPITE Singapore’s red-hot property prices, no bubble is forming in the property market here, according to a study by National University of Singapore (NUS) economists.

In fact, the rise in home prices is below the market’s long-run ‘equilibrium’ level, based on factors such as income and property supply, preliminary findings of the ongoing study show.

In other words, the pace of housing price rises is still below the level that would be expected based on market fundamentals, according to the study conducted by a team led by Associate Professor Tilak Abeysinghe.

This is unlike the case in the early 1980s and mid-1990s, when property price inflation shot up above its longterm equilibrium levels, the study noted.

Early findings from the study, still a work-in-progress, was presented to a small audience at the Singapore Economic Policy conference yesterday.

House-price inflation is expected to hit 18 per cent this year, before easing to 13.7 per cent next year, and then to 3.2 per cent in 2009 and 3.4 per cent in 2010, the NUS team’s model predicted.

Factors used to determine the equilibrium price level include disposable income per person, housing stock and the new supply of property.

The study also found that it takes a long time for property price inflation to adjust to its long-run equilibrium.

And a rise in property price inflation would lead to a spike in construction investment a year or so down the road, but its effect fades after that.

The study concluded that price bubbles should be avoided, as they affect private consumption as well as income redistribution, among other things.

Prof Abeysinghe is the deputy director of the Singapore Centre for Applied and Policy Economics at the NUS, which organised yesterday’s meet.

The one-day conference also saw speakers examine issues ranging from fertility, migration and labour market trends, to CPF savings and the elderly.

The paper, entitled Singapore’s Property Market And The Macroeconomy, can be viewed at http://nt2.fas.nus.edu.sg/ecs/cent/ESU/conference.htm

 

Source: The Straits Times 19 Oct 07

HDB expects stock of unsold flats to drop to 2,200 units by year-end

THE stock of unsold Housing and Development Board (HDB) flats, which stood at about 10,000 three years ago, is now down to 3,500, and the board expects the stock to fall to 2,200 units by the end of the year.

Speaking at a press conference to release the HDB Annual Report 06/07 on Tuesday, HDB CEO Tay Kim Poh said: ‘Positive growth has resulted in strong demand for HDB flats.’

Indeed, according to the figures in the latest annual report, demand appears to have outstripped supply.

For the financial year ended March 31, HDB sold 5,712 new flats, down from 10,100 flats in the previous year, a drop of over 40 per cent. But the number of flats completed in the year was also down, to just 1,764, a decline of nearly 60 per cent from the 4,378 flats of the 2005-06 period, perhaps explaining the recent spike of 6.5 per cent in HDB’s Resale Price Index (flash estimate) for open market flats.

As at March 31, 14,212 flats were under construction, compared to 12,571 in the previous year. These flats have already been launched, and Mr Tay said: ‘BTO (Built-to-Order) subscription is also very high.’ HDB’s latest bi-monthly balloting/walk-in sale exercise also suggests that demand is high, with the 489 flats offered now almost 10 times oversubscribed. Four thousand and eight hundred online applications have been received so far.

New supply of about 6,000 flats from BTO exercises and the Design, Build and Sell Scheme is expected over the next six months but managing supply and demand will be a challenge.

HDB said that a projected 6,300 flats will be completed in FY07-08, followed by 1,700 in FY08-09, 4,000 in FY09-10, and 13,000 in FY10-11.

Savills Singapore director (marketing and business development) Ku Swee Yong said: ‘Assuming about 5,000 to 7,000 flats are completed between 2008 and 2009, we are at best even on supply and demand.’

Mr Ku said improved economic conditions and population growth could have some impact on this balance.

It is, of course, difficult to predict future demand. A case in point would be the backlog of 10,000 unsold flats just three years ago.

Knight Frank director (research and consultancy) Nicholas Mak said that in the past, HDB built flats ’speculatively’, hence the backlog. But, with the current practice of BTO exercises, the building programme has become more ‘market responsive’.

For now, any unsatisfied demand will have to be supplied by the resale market. ‘The resale market is very big and has great capacity to increase demand,’ added Mr Mak, but he also cautioned: ‘If the economy and job market continues to expand, we can expect demand for new flats to spill over into the resale market and this could impact prices.’

While resale prices have gone up, the HDB said that the number of resale applications actually fell 7 per cent in FY06-07. This could be because HDB buyers are still very price sensitive.

HSR Property Group senior vice-president Donald Yeo said that he does not believe a supply crunch is imminent because many potential buyers already own HDB flats. Based on feedback from HSR property agents, Mr Yeo said that about eight out of 10 buyers already own flats, so even if there is a desire to buy a new flat – regardless of whether it is to upgrade or downgrade – there is no dire need to.

‘Buyers who find resale prices too high are also prepared to wait for new flats rather than buy from the resale market,’ he added.

 

Source: Business Times 18 Oct 07

HDB expects stock of unsold flats to drop to 2,200 units by year-end

THE stock of unsold Housing and Development Board (HDB) flats, which stood at about 10,000 three years ago, is now down to 3,500, and the board expects the stock to fall to 2,200 units by the end of the year.

Speaking at a press conference to release the HDB Annual Report 06/07 on Tuesday, HDB CEO Tay Kim Poh said: ‘Positive growth has resulted in strong demand for HDB flats.’

Indeed, according to the figures in the latest annual report, demand appears to have outstripped supply.

For the financial year ended March 31, HDB sold 5,712 new flats, down from 10,100 flats in the previous year, a drop of over 40 per cent. But the number of flats completed in the year was also down, to just 1,764, a decline of nearly 60 per cent from the 4,378 flats of the 2005-06 period, perhaps explaining the recent spike of 6.5 per cent in HDB’s Resale Price Index (flash estimate) for open market flats.

As at March 31, 14,212 flats were under construction, compared to 12,571 in the previous year. These flats have already been launched, and Mr Tay said: ‘BTO (Built-to-Order) subscription is also very high.’ HDB’s latest bi-monthly balloting/walk-in sale exercise also suggests that demand is high, with the 489 flats offered now almost 10 times oversubscribed. Four thousand and eight hundred online applications have been received so far.

New supply of about 6,000 flats from BTO exercises and the Design, Build and Sell Scheme is expected over the next six months but managing supply and demand will be a challenge.

HDB said that a projected 6,300 flats will be completed in FY07-08, followed by 1,700 in FY08-09, 4,000 in FY09-10, and 13,000 in FY10-11.

Savills Singapore director (marketing and business development) Ku Swee Yong said: ‘Assuming about 5,000 to 7,000 flats are completed between 2008 and 2009, we are at best even on supply and demand.’

Mr Ku said improved economic conditions and population growth could have some impact on this balance.

It is, of course, difficult to predict future demand. A case in point would be the backlog of 10,000 unsold flats just three years ago.

Knight Frank director (research and consultancy) Nicholas Mak said that in the past, HDB built flats ’speculatively’, hence the backlog. But, with the current practice of BTO exercises, the building programme has become more ‘market responsive’.

For now, any unsatisfied demand will have to be supplied by the resale market. ‘The resale market is very big and has great capacity to increase demand,’ added Mr Mak, but he also cautioned: ‘If the economy and job market continues to expand, we can expect demand for new flats to spill over into the resale market and this could impact prices.’

While resale prices have gone up, the HDB said that the number of resale applications actually fell 7 per cent in FY06-07. This could be because HDB buyers are still very price sensitive.

HSR Property Group senior vice-president Donald Yeo said that he does not believe a supply crunch is imminent because many potential buyers already own HDB flats. Based on feedback from HSR property agents, Mr Yeo said that about eight out of 10 buyers already own flats, so even if there is a desire to buy a new flat – regardless of whether it is to upgrade or downgrade – there is no dire need to.

‘Buyers who find resale prices too high are also prepared to wait for new flats rather than buy from the resale market,’ he added.

 

Source: Business Times 18 Oct 07

HDB prices likely to go up as unsold flats dwindle

1,600 apply online for 489 flats offered in balloting/walk-in sale yesterday

THE number of unsold Housing and Development Board (HDB) flats is getting smaller, with prices expected to go up.

HDB put up 489 flats in the North and West zones for sale yesterday through its Bi-monthly Combined Balloting/Walk-in sale exercise, and at the end of the day, over 1,600 online applications had been received.

The number of flats offered, however, is significantly smaller than in previous sale exercises.

In April, 1,269 flats were offered in the North and West zones, with 1,172 sold, reflecting a take-up rate of 92 per cent.

In June, 992 flats in the North-east zone were offered and 892 were sold – a take-up rate of 97 per cent.

A spokesman for HDB said: ‘HDB has managed to clear a significant part of its stock of unsold flats; fewer unsold flats are now avail- able for sale under HDB’s Bi-monthly Combined Balloting/Walk-in sale exercises.’

HDB said that it would continue to inject the balance stock from the Built-to-Order (BTO) and Balloting Exercises, and make them available for sale under the bi-monthly sale exercises.

‘However, the total flat supply offered under these exercises is not expected to number into the thousands as it did in the past, given the gradual reduction of the stock of unsold flats,’ said HDB.

HDB would not say if prices have been increased but added: ‘In pricing HDB flats, one major consideration is the affordability of flats. In addition,

HDB also takes into consideration factors such as changes in their market value, arising from factors such as buyer demand and prevailing conditions in the resale markets and, individual attributes of the flats.’

HDB also suggested that buyers look to the resale market, ‘if they are unable to find a new flat that suits their needs and preferences’.

The backlog of unsold flats was estimated at 9,000 in 2006.

Propnex CEO Mohamed Ismail believes that this has dwindled to less than 2,000 units.

Interestingly, Mr Mohamed believes that the previous glut of unsold flats came about because the value of resale flats had dropped to below valuation in the last slump.

Resale prices have, however, been rising, with the latest resale price index registering an increase of 6.5 per cent in Q3 ‘07, quarter-on-quarter.

And ERA Singapore assistant vice-president Eugene Lim believes that the ‘push down’ effect from the private market could price some buyers out.

These price-sensitive buyers will have to wait for the supply of about 4,500 new HDB flats offered under the BTO system, or the 1,500 units through the Design Build Sell Scheme, over the next six months.

Still, Mr Lim does not believe that there is a supply crunch at the lower end of the property market. ‘People are

looking for value though,’ he added.

Singapore Roundup

Interest in old Tiong Bahru flats

A STATE property consisting of some old flats at Tiong Bahru Road has attracted much interest, with the highest bid of $230,280 per month coming from Katong Hostel Pte Ltd. Blocks 1, 3, 5, 7 and 9 along Tiong Bahru Road, which together have 120 flats with a total floor area of 9,840 square metres, have been slated for residential use. The development, which has a lease of three-plus-three years, has 60 three-room flats and 60 four-room flats. Fifteen companies have put in bids for the properties, according to the provisional tender results.

Singapore, Hungary scientific pact

A*STAR has signed a master collaboration agreement with Hungary’s National Office for Research and Technology (NKTH) to promote scientific R&D and enhance human capital development. The signing of the pact by A*Star chairman Lim Chuan Poh and NKTH president Ferenc Partos was witnessed by Prime Minister Lee Hsien Loong and his Hungarian counterpart Ferenc Gyurcsany. A joint committee will identify scientific fields of mutual interest and encourage joint projects between scientists of both countries.

 

Source: Business Times 10 Oct 07

Next-gen HDB housing to offer greener lifestyles

Minister notes keen interest in such housing: 80% of first eco-precinct taken up

SINGAPOREANS increasingly aspire to greener lifestyles and the next generation of public housing will cater to these needs.

Minister for National Development Mah Bow Tan delivered this message on growing interest in environmentally sustainable housing at the annual Housing Board awards and public housing seminar yesterday.

Nearly 80 per cent of Singapore’s first eco-precinct, Treelodge@Punggol, a public housing project launched by HDB in March, has already been taken up.

‘The strong public interest for this project demonstrates support from Singaporeans for a greener lifestyle,’ Mr Mah stated in a speech delivered by Parliamentary Secretary (National Development) Mohamad Maliki Osman to a 500-strong audience on his behalf.

Some green features at Treelodge@Punggol, due for completion in 2012, include solar-powered corridor lighting and common areas washed by recycled rainwater.

Mr Mah also called on the private sector to play a ‘key role’ in remaking the heartland. ‘A holistic approach, with close collaboration among industry partners, is needed for sustainable development of public housing to succeed,’ said Mr Mah.

This year’s seminar featured industry speakers addressing the theme: Sustainable Construction And Technologies.

HDB also launched a guidebook for the industry yesterday, called The Green Housing Book, which showcases its environmental initiatives over the years.

This included HDB’s innovations in the areas of environmental sustainability, energy, water, and resource materials.

Local firms were also recognised for their contribution towards good-quality public housing at the HDB awards.

Building firm Ho Lee Construction received two HDB Quality Awards for the building and upgrading categories.

One of its projects, Seng Kang Neighbourhood 2, was commended by HDB as ‘quality public housing with finishes comparable with that of private developments’.

‘We’re very happy and encouraged to receive the award, as it’s the first for the company from HDB,’ said Ho Lee senior project manager Susan Seah. Four other firms, including Teambuild Construction, a contractor, and EM Services, a supplier, also won the awards.

Local architectural firm Surbana International Consultants was the big winner of HDB’s design awards, bagging all three awards in the architecture category for its work on The Coris in Seng Kang, Ghim Moh Gardens, and Marine Terrace Walk.

Four construction firms, including Welltech Construction and Fonda Construction, won the HDB Construction Safety Awards.

 

Source: The Straits Times 10 Oct 07

MANAGING AGENT FOR 120 FLATS – Katong Hostel top bidder in HDB tender

A SMALL firm, Katong Hostel, has emerged as the top bidder in a tender to find a managing agent to lease out 120 HDB flats.

The flats – likely to be let to international students and expats – have been vacated ahead of redevelopment under a pilot HDB scheme.

They will be leased out for three years with an option for three more years.

The 60 three-room flats and 60 four-room flats are in Blocks 1, 3, 5, 7 and 9 in Tiong Bahru Road.

The residents have moved to new flats under HDB’s Selective En-bloc Redevelopment Scheme which is designed to add new flats to meet demand.

Katong Hostel’s bid of $230,280 a month is 22 per cent above the next bid of $188,000, the provisional tender results released by the HDB yesterday showed.

That price is the sum the agent proposes to pay HDB to lease the flats – to be leased in turn to tenants.

Katong Hostel, which provides international student housing, is part of the Vita Group of hostels.

The tender, which attracted 15 widely varying bids from small firms and individuals, comes amid growing demand to lease HDB flats in a rising market.

The lowest bid came in at a mere $600 a month.

HDB has said that it will decide whether to expand the scheme, based on the tender response, as it has a potential supply of 4,000 to 5,000 flats which could boost supply in the next three years.

 

Source: The Straits Times 10 Sept 07

Ang Mo Kio attracting many suitors, high prices

District now a top draw for its accessibility, amenities and job opportunities nearby

A RECENT battle over a condominium site should silence those who still doubt whether Ang Mo Kio is becoming a property hot spot.

The land attracted 14 suitors and eventually went for more than $200 million – probably a record bid for a suburban district plot.

Such is the growing appeal of the district. Homes in Ang Mo Kio, well positioned just north of central Singapore, command a premium compared to those further out.

Four-room resale flats sold at a median price of $260,000 in the April-June period, 30 per cent higher than those in Yishun.

ERA Singapore’s assistant vice-president, Mr Eugene Lim, estimates that prices of resale Housing Board (HDB) flats in Ang Mo Kio have grown 10 to 20 per cent so far this year.

Private housing is thriving as well.

Consultancy Knight Frank said prices at Castle Green condo along Yio Chu Kang Road grew 39 per cent this year to hit $584 per sq ft (psf) in the July-

September period, while Grandeur 8 in Ang Mo Kio Central 3 rose 26.8 per cent to $606 psf.

It is a sign of things to come, given the advantages Ang Mo Kio has to offer.

Key among these advantages is Ang Mo Kio Hub, a mall in the heart of town that is integrated with an airconditioned bus interchange. It was completed last year and sits just across the road from the Ang Mo Kio MRT station.

Knight Frank’s director of research and consultancy, Mr Nicholas Mak, puts that development on par with major regional retail centres like Causeway Point, Tampines Mall and Jurong Point.

Ang Mo Kio Hub even has an edge over them, as it is far closer to the central business district – about 15 minutes by train from Orchard Road.

This means good demand from tenants wanting to be in flats close to the action. Four-room flats rented for a median $1,000 from April to June, while five-room units went for $1,300.

Upcoming developments may add more vibrancy to the area. The HDB last month put up for sale a plum 1.7ha plot along Ang Mo Kio Street 52, which private developers can use to build about 550 homes.

Private companies are being involved in designing, building and selling public housing in two other projects elsewhere in Singapore – and the idea looks a winner.

The first consisted of condominium-like flats in Tampines that sold like hot cakes last year, while the second, in Boon Keng, is expected to be equally well-received.

The Ang Mo Kio plot is expected to get just as enthusiastic a response.

Add to this the dogfight over a 0.6ha private condominium plot near Ang Mo Kio Hub along Ang Mo Kio Avenue 8.

Far East Organization trumped 13 rivals with a record bid of $202.9 million, or $601 psf per plot ratio.

Far East’s break-even cost is estimated to be around $900 to $1,000 psf, which means apartments will likely be priced at a record $1,100 to $1,200 psf.

Savills Singapore director of marketing and business development Ku Swee Yong believes this could lead to higher prices in the area if sellers use future condo units there as a pricing benchmark.

All in, Ang Mo Kio is ‘one of the few housing estates in Singapore’ that is accessible, has well-developed amenities and job opportunities in clean and well-organised industrial estates nearby, says Mr Mak.

PropNex senior associate manager Lester Tan and ERA’s Mr Lim expect HDB prices in the area to rise by 10 to 20 per cent by the end of next year.

Mr Mak, meanwhile, expects condo prices to grow by 25 to 30 per cent this year and by 15 to 20 per cent next year.

 

Source: The Sunday Times 7 Oct 07

Gap between new and resale homes at a high

But the difference is expected to narrow down the road, say analysts

(SINGAPORE) The gap between prices fetched by new and resale homes in the prime districts is now at a record high, an analysis of official data shows.

A preliminary analysis of caveats lodged in the third quarter of 2007 by Jones Lang LaSalle (JLL) shows that for new homes there was a record premium of over 60 per cent from July to September this year.

Since 2000, the average premium has been between 20 and 42 per cent, JLL said.

But strong demand for new luxury projects in the third quarter – such as for Scotts Square, Cliveden at Grange, Helios Residences and The Lumos – means that the price gap between new apartments and homes in the resale market has widened rapidly over the past year, said Chua Yang Liang, JLL’s head of research for South-east Asia.

In addition, prices of new homes could be climbing faster as buyers can use the deferred payment scheme for new projects, but not for resale units, said Knight Frank’s director of research and consultancy Nicholas Mak.

Resale transactions take into account sales of homes in completed developments, while sales of new units are in projects that have been launched, but are yet to be built.

However, JLL added that gap is likely to narrow as prices of resale homes will look more attractive.

‘Buyers will find it increasingly less attractive to purchase new developments when perfectly habitable resale dwellings at much more affordable price range are readily available,’ Dr Chua said.

The preliminary average selling price for new sales – based on caveats lodged in the prime districts – is estimated to be around $2,500 per square foot (psf) in the third quarter, JLL said.

In comparison, amidst the continuous strong interest in new sales, prices in the resale market rose to close at an average of $1,220 psf for the same three months, albeit during a traditionally seasonal weaker period.

This puts the price gap at around 105 per cent, but JLL’s Dr Chua says that once more caveats are lodged for third quarter transactions, the gap will come to ‘more than 60 per cent’.

In the short term, the high premium gap seen in the third quarter is unlikely to be sustained, experts said.

JLL, for one, estimates that the price gap will stabilise to between 32 per cent and 38 per cent over the next three to five years.

But with the gap narrowing, the collective sales market can be expected to slow down, JLL said.

‘The attractiveness and success of en bloc transactions depends largely on this premium gap. The wider the gap, the more attractive is the market for collective sales,’ the property firm said.

Dr Chua reckons that the collective sales market is likely to slow down in the medium term, given that growth in new sales prices are likely to decline over the same period.

As the premium gap narrows, en bloc activities should slow down as developers find it increasingly less attractive to undertake such redevelopments, especially in light of diminishing returns and impending changes to the Strata Titles Act.

 

Source: Business Times 5 Oct 07

En bloc effect pulls up HDB resale prices

Private home prices also up smartly; govt may make more sites available

(SINGAPORE) The property price boom seen in the past two years has filtered down to the heartlands. The Housing & Development Board’s Q3 2007 flash estimate for its resale flat price index was 6.5 per cent higher than in the preceding three months. This is the biggest quarter-on-quarter jump in the index since Q2 1999, when it rose 8.1 per cent.

Market watchers say the key factor driving the increase this time around is the army of en bloc sellers downgrading for their replacement property.

Meanwhile, the party continues in the private housing market. The Urban Redevelopment Authority’s (URA) flash estimate shows that the official price index for private homes jumped 8 per cent in Q3 over the previous quarter, after rising 8.3 per cent in Q2. To ensure that prices do not run ahead because of a shortage of supply, the URA indicated that more sites could be made available through the Government Land Sales programme.

For now, the gains appear pretty evenly spread across regions. The URA said its price index for non-landed private homes in the Core Central Region – which includes the prime districts, Downtown Core and Sentosa – increased 8.3 per cent quarter-on-quarter in Q3, followed by an 8.1 per cent rise for Outside Central Region, which covers suburban mass-market locations like Woodlands, Yishun and Jurong, and 7.7 per cent for Rest of Central Region, including places like Bukit Merah, Toa Payoh and Katong.

The big price disparity among the three areas at the beginning of the year is clearly dissipating, notes PropNex CEO Mohamed Ismail. DTZ Debenham Tie Leung executive director Ong Choon Fah said yesterday’s official property data is ‘not such a bad thing. Everybody should feel a little richer’. CB Richard Ellis executive director Li Hiaw Ho says the URA’s Q3 flash estimate shows that ‘confidence in the residential market was unshaken despite periods of volatility in global stock markets caused by the sub-prime mortgage problems’.

‘While it’s not surprising that the high-end market continued to lead the way as more and more projects were marketed at above $3,000 psf, it was a big step made by several suburban projects that were launched at $850- 1,000 psf,’ he added.

The URA’s flash estimate for its Q3 overall private home price index reflects a 22.6 per cent gain in the first nine months of this year, since Q4 2006.

Mr Li reckons the gain for the whole of this year may come in at 25 to 30 per cent. The uptrend will continue as there are more high-end projects to be rolled out in Q4, including Hilltops, Ritz-Carlton Residences, Grange Infinite, Phase 2 of Marina Bay Financial Centre and projects on Sentosa Cove, he noted.

Mrs Ong notes that other factors driving private home prices include still-strong liquidity, the trend of tenants deciding to become home owners, and the appeal of buying apartments for investment, given the tight rental market.

As for the HDB resale price index, Mr Ismail predicts the full-year increase will reach 15 per cent, considering that the increase in the first nine months alone amounted to 11 per cent. ERA assistant vice-president Eugene Lim forecasts an increase of 13 to 16 per cent for the whole of this year. He laments the unrealistic prices sought by many owners who are still riding on the euphoria created by record prices achieved for some five-room resale flats in the Bukit Merah area. HDB homebuyers are beginning to show some resistance and this could translate into lower resale volumes later down the road.

Mr Ismail estimates that transacted prices of HDB resale flats in Q3 reflect premiums over valuations ranging from $10,000 to $50,000. ‘A year ago, for the smaller three and four-room flats, the premium could have been $10,000- $15,000, while for bigger flats in outlying areas, many were not fetching any premium over valuation at all,’ he added. He reckons that for the next year, HDB’s resale flat price index could go up 10-12 per cent. Mr Ismail does not expect HDB resale flat prices to run away as they did in 1996, when the index rose 34.3 per cent, as the authorities will step up supply quickly to prevent public housing prices from becoming unaffordable.

HDB said it will continue to monitor the market closely to ensure ‘an adequate and affordable supply of flats’. It will be increasing its supply of new flats with plans to offer about 4,500 units under the Built-To-Order system over the next six months, after offering about 2,700 BTO flats from January to September. In addition, HDB plans to release three new sites under the Design, Build and Sell scheme that can generate about 1,500 HDB flats in central and eastern Singapore in the next half year.

As for the private housing market, the URA also gave a clear signal yesterday on its intention for the Government Land Sales programme for H1 2008, which it is currently reviewing. ‘The government will make available more sites for private residential development through the GLS programme next year if the demand continues to remain strong,’ it said.

Click here for URA’s News Release 

 

Source: Business Times 2 Oct 07

Property boom spreads to mass market

Suburban, HDB homes post best quarterly price growth in years

NEW government figures released yesterday will bring cheer to the average Singaporean homeowner.

This is because prices for so-called ‘mass market’ properties – comprising mainly suburban condominiums and HDB homes – have posted their best quarterly growth in years.

This has brought the prices of both public and private homes to their highest level in a decade.

The flash estimates for the third quarter, which are based on home sales in July and August, show that private home prices rose 8 per cent, while prices of HDB homes jumped 6.5 per cent for the same period.

The numbers show that the effects of Singapore’s property recovery, which have been largely focused on highend luxury apartments for the last year or so, are finally filtering down to the typical homeowner.

Most significantly, prices of non-landed private homes outside the central region – in areas such as Clementi and Bedok – surged 8.1 per cent, almost on par with the increase of 8.3 per cent for homes in the core, or central, area.

Growth in prices of homes located in prime areas like districts 9, 10, 11, downtown and Sentosa have far outstripped that of suburban homes since 2004, the earliest period for which price changes in different districts are available. But the gap in price increases has now narrowed to just 0.2 percentage points.

Property analysts say the figures show a confident local market generally unshaken by the recent volatility in the stock market – due to the sub-prime mortgage crisis in the US.

Savills Singapore’s director of marketing and business development Ku Swee Yong said future growth is now likely to be fuelled ‘from the bottom up’ by mass market homes.

CBRE Research’s executive director Li Hiaw Ho also marked this quarter as a ‘big step’ for suburban projects, which were launched at $850 to $1,000 psf.

Suburban projects were usually defined as those costing around $600 psf – but projects like The Parc Condominium in West Coast, for example, fully sold all 659 units in August at a median price of $880 psf, said Mr Li.

Meanwhile, HDB home prices are also driving the mass market recovery. The 6.5 per cent jump in prices is the highest since 1999, and comes on the back of a 3 per cent rise in the last quarter.

‘HDB home prices have languished in the doldrums for many years so it’s heartening for homeowners to see them pick up pace now,’ said property firm Propnex’s chief executive Mohamed Ismail.

The bullish figures have prompted some analysts to revise their forecasts. Property experts say private home prices have increased 21.1 per cent so far this year, already surpassing their forecasts of between 20 and 25 per cent.

Knight Frank’s director of research and consultancy Nicholas Mak gave a revised forecast of between 23 and 32 per cent.

As for HDB homes, Mr Mohamed expects the HDB price index to rise 15 per cent for the whole year.

Last year, in comparison, HDB’s price index only rose 2 per cent for the whole year, while for private homes, it was about 10 per cent.

The Government also highlighted that about 43,000 new private homes are expected to be completed from now till 2010, and almost half are still unsold.

Separately, the HDB also said it plans to launch up to 6,000 new homes in the next six months, subject to market demand.

The Urban Redevelopment Authority and HDB’s official third-quarter statistics will be released at the end of this month.

 

Source: The Straits Times 2 Oct 07

Govt to boost supply of homes

Observers view supply increase as a signal to calm market amid high property prices

THE Government has sent its strongest signal yet that it plans to increase the supply of homes and residential sites – a move that comes amid soaring real estate prices.

It will offer 6,000 new Housing Board flats over the next six months and might release more land for private homes next year if necessary.

The initiative comes as lower-end homes see a price spurt that is finally starting to match that in luxury homes.

Property consultants said the increased supply is the latest Government move to calm the market.

‘The Government is seeing a very strong take-up for homes, and it wants to avoid panic buying,’ said Mr Nicholas Mak, the director of research and consultancy at Knight Frank. ‘So it’s just telling potential buyers there is a lot of supply out there.’

Prices of entry-level private homes in suburban areas were 8.1 per cent higher in July to September than in the previous three months. The pace about matched that set by more expensive homes in the central region, going by initial estimates out yesterday.

In the same period, prices of HDB resale flats jumped by 6.5 per cent. This is double the 3 per cent rise in the previous quarter and is by far the biggest quarterly jump since 1999.

Given the recent ‘good response for new flats’, HDB will release a slew of new units in the coming months. Of these, 4,500 will come under the Build-to-Order (BTO) system. Another 1,500 units will be in three new Design, Build and Sell Scheme (DBSS) sites in central and eastern Singapore.

So far this year, HDB has released 2,700 BTO flats – about the same number as for the whole of last year. In the same period, it has sold a DBSS site at Boon Keng and launched another at Ang Mo Kio. The two combined can host at least 1,100 units.

HDB also said it ‘will continue to monitor the market situation closely, to ensure that there is an adequate and affordable supply of flats’.

A similar reassurance was issued by the Urban Redevelopment Authority (URA) with respect to private homes.

It reiterated that it ‘will continue to monitor prices closely’.

In an unusual move, the agency added that it is reviewing the Government Land Sales scheme, launched every six months, for the first half of next year. It said it ‘will make available more sites…if the demand continues to remain strong’.

Experts interpreted this to mean that the URA intends to put out more sites for private home development, especially under its confirmed list.

The confirmed list system offers sites for sale outright, while the other option – the reserve list – follows a more cautious approach. Reserve sites are put out only when a developer submits a minimum acceptable bid.

While consultants believe the new HDB flats can be absorbed easily, some question the need for more land for private homes.

‘I don’t think there would be a glut on the HDB side,’ said Knight Frank’s Mr Mak. ‘If there is any risk of oversupply, it would be with private homes, three to four years from now.’

He noted the record run in collective sales in the past two years. Even if developers can sell all the new homes on these sites, those buying to rent out might not be able to find enough tenants when all the homes are finished.

This could bring rents and prices down, said Mr Mak. But for this year, he expects a record take-up of 15,000 new homes, compared with 11,000 last year and 7,500 in an average year.

On the other hand, collective sales will remove about 9,000 homes from the market, said Mr Ku Swee Yong, the director of marketing and business development at Savills Singapore.

‘If job growth continues to be strong, absorption may not be the problem; actually, there may not be enough to go around,’ he said.

The URA also removed a hotel site in Balestier from its land sales list yesterday. The 0.86ha site has been on the reserve list for a year or so, but the URA is reviewing its land use together with that of other vacant plots nearby.

 

Source: The Straits Times 2 Oct 07

Mass-market sector rebounded in ‘06: CBRE

Non-landed projects in non-prime areas turn in strong sales volume

MASS-MARKET property sales actually staged a recovery last year, earlier than widely believed, said property consultant CB Richard Ellis (CBRE) yesterday.

In a study of the take-up rates of new non-landed projects in non-prime areas, CBRE found that the mid-tier and mass-market projects turned in strong sales volume in 2006, although prices for these segments only began rising this year.

‘Until now, the market had perceived that these segments trailed the luxury segment in their recovery, and had begun to recover only in early-2007, in terms of volume and price,’ it said.

An analysis of the new units launched last year and the corresponding take-up volumes ’shows otherwise’, it said.

It found that 68 per cent of the new projects launched last year in the West Coast, in districts 5 and 21, were taken up. Similarly, take-up rates for projects in districts 15 and 16 were about 90 per cent – ‘not far’ from the take-up rates of 74 per cent for projects in the prime districts 9 and 10 and 96 per cent for those in the downtown and Sentosa Cove areas.

‘Of course, in terms of pricing, the mass market and mid-tier projects have only begun to inch up in the previous two quarters of 2007,’ said Joseph Tan, executive director for residential property at CBRE.

‘But the strong sales of non-prime projects since a year ago show the return of buying power for upgraders and private homeowners, who, at that time, saw good investment value in the projects, while anticipating the upside in prices later on.’

Since then, the number of projects on the market has increased dramatically.

The number of new units launched in the west has tripled from a year ago, with the launch of One-north Residences, One Rochester, Botannia and The Parc Condominium, it said.

Meanwhile, the number of new units launched in the Newton/Novena area has doubled from 578 units in 2006 to 1,351 units so far this year. Take-up rates have been ‘very healthy’ at 90 per cent, said CBRE.

In districts 15 and 16 in the east, the take-up rate so far this year has been ‘equally strong’ at 85 per cent.

Residential rents have also risen sharply ‘due to the shortage of apartments for lease following the slew of collective sales of existing developments in the past two years’, said CBRE.

After rising 18.7 per cent on average in the first half, rents are expected to increase by another 8-10 per cent in the third quarter.

Rents in the popular areas of Tanjong Rhu, Meyer Road, East Coast, Dunman, Joo Chiat and Siglap have gone up 40.9 per cent since the fourth quarter of 2006, with median rents now at $2.62 per square foot per month.

The next biggest increase in rents were for apartments in the Orchard Road, Grange Road, Tanglin and Bukit Timah areas, where rents have gone up by 37.5 per cent to $3.74 per square foot per month on average.

The residential market is likely to remain active in the final quarter of this year, amid strong growth in the economy, CBRE said.

 

Source: Business Times 29 Sept 07

My HDB flat’s a condo – Dawson Estate in Queenstown will be the new face of public housing – flats done condo-style by top homegrown architects

GROUND-LEVEL parks extend to the doorsteps of residents’ homes and flats come with ceilings tall enough for lofts to be built.

These perks are not the latest offerings of swanky condo projects but new ideas for public housing in Queenstown.

Conceived by top local architects and unveiled at the Housing Board’s (HDB) ongoing Remaking Our Heartland exhibition, the new concepts also promise to bring high-rise communities closer and promote an environmentally sustainable lifestyle.

At the heart of all this future action is Dawson Estate, a 60ha district in Queenstown bounded by Margaret Drive, Tanglin Road, Alexandra Road, Commonwealth Avenue and Queensway.

This former housing and entertainment hot spot was developed in the 1950s by the HDB’s predecessor, the Singapore Improvement Trust.

It now has just 3,000 flats and tracts of land ripe for redevelopment after blocks of flats were cleared in the 1980s and 1990s.

It is expected to house about 10,000 more apartments in the future.

To bring a fresh spin to public housing, the HDB took the unprecedented step of commissioning Surbana International Consultants, Woha Architects and SCDA Architects earlier this year to conceptualise three separate precincts comprising 3,100 homes.

The brief: to introduce flats with seamless access to greenery, waterscapes and surrounding facilities, and promote closer ties, all on a tight budget.

While the HDB was tight-lipped about the construction budget it gave the architects to work with, SCDA’s design principal Chan Soo Khian estimated that he had to design flats that could be built with roughly half of what it would cost to put up luxury condos fully fitted with items like wardrobes and cabinets.

Most HDB flats do not come with fittings.

The HDB said it will work closely with the private architects to develop a cost-effective design.

Each firm had its own ideas: Surbana extended a future linear park into a winding landscaped path around the blocks; SCDA gave the bigger flats enough vertical space for lofts; and Woha envisioned a block facade reflecting individual home owners’ tastes.

Said Mr Chan: ‘Doing a public-housing project means you have to work within tighter constraints. It means, in a modern way, your design is purer.

‘You don’t depend on embellishments to make it a good project. You’re not worried about the inside, what kind of fitting is going where. In some (private) projects, you spend so much time just worrying about the kitchens and fittings.’

But certain private-housing elements are likely to pop up in the Dawson projects.

Woha, which recently won a prestigious Aga Khan Award for Architecture for its private project 1 Moulmein Rise, wants to offer the monsoon window it introduced there as one of the options for Dawson home buyers.

This contraption is a bay window with a horizontal opening that lets the breeze in but keeps out the rain.

Woha’s founding director Richard Hassell said: ‘It’s not going to be expensive housing, just smarter in design.’

Work on the first of these Dawson flats is expected to begin in the next three to four years.

The upcoming estates will give new families a higher chance of living near the city centre, said head of HDB’s urban design unit Kathleen Goh.

Currently, new flats near the central areas tend to be built only when existing residents in the vicinity are being resettled, leaving a limited number for newcomers.

The upcoming 3,100 homes in Dawson are likely to be fully available to new families.

Ms Goh revealed that families buying separate homes in the same housing estate would be able to buy adjoining units.

These units could also be combined sideways or even vertically to encourage different generations to live together. Their layouts will be flexible so that families can make adjustments if their needs change.

So far, the exhibition has drawn 62,000 visitors. One of them is architect Khoo Peng Beng, who designed the first 50-storey public-housing blocks here, now under construction in Tanjong Pagar.

Back in 2002, when his firm ARC Studio Architecture + Urbanism proposed having high-rise gardens and sky bridges link seven towers for the international design competition for that project, such ideas were still relatively novel.

He said: ‘HDB has come a long way. For a long time, the evolution of HDB design was very functional. This time, I think there is a more emotional and integrated approach to how we look at public housing.’

If the Dawson proposals are well-received, the HDB will consider inviting private architects again to conceptualise future public-housing projects.

 

Source: The Straits Times 29 Sept 07

S’pore property seen as top buy in Asia-Pac

Sentiment strongest in rental apartment, office, hotel/resort, retail sectors: survey

SHANGHAI, Singapore and Tokyo have emerged as the top three most promising Asia-Pacific cities for real estate investment prospects, according to a report from the US-based Urban Land Institute (ULI) and the accountancy firm PricewaterhouseCoopers (PwC).

‘Sentiment was strong among survey participants to either buy or hold all types of properties in Shanghai, Singapore and Tokyo, rather than sell properties, illustrating the cities’ strong popularity with the investment community,’ a news release by PwC and ULI said.

For Singapore, the strongest sentiment for buying property was in the rental apartment sector, followed by the office, hotel/ resort, retail and indus- trial/distribution property.

The report, Emerging Trends in Real Estate Asia Pacific 2008, is the second annual investor survey from ULI and PwC. It shows that Singapore has jumped from fourth to second placing for investment prospect rankings, and from ninth to third spot for development rankings. Singapore is ranked first for city risk ratings.

One respondent in the survey said Singapore was ‘certainly one of the markets in the area that provides a very stable legal and tax environment, and property rights that are beyond question. And it therefore is certainly one of the markets where many, especially Westerners, are very comfortable.’

The report was based on interviews and surveys with more than 190 professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

The survey covered 20 cities. Shanghai was in the top position in the latest 2008 investment prospect ranking, up from second spot in the earlier ranking. Tokyo maintained its third position, while Osaka, which was first in the 2007 ranking, moved down to fourth position. Hong Kong was ranked fifth in the latest survey, moving up six positions.

While Singapore moved from fourth to second spot in investment prospect, sell recommendations increased for office, retail, and hotel/resort from 0 per cent in the 2007 report issued last year to 19 per cent, 13 per cent and 13 per cent respectively in the latest 2008 report.

Buy recommendations for industrial/distribution property increased from 35 per cent to 44 per cent.

The 2008 survey also shows that the growing Asia-Pacific real estate market still offers opportunities for investors and developers next year. Asia-Pac real estate executives’ response remains strong on overall economic and market fundamentals, regardless of interest rate increases.

High levels of equity capital continue to pour into the Asia-Pacific property pool. For 2008, the hotels sector tops the list of real estate performance prospects, followed by the office sector.

PwC’s tax partner in Singapore, David Sandison, said: ‘It’s expected that even greater amounts of capital will be flooding Asia Pacific real estate markets in 2008. The real challenge for investors will lie in finding the right assets against the backdrop of yield compression and scrutiny by regional governments and tax authorities.’

The strongest sentiment for buying in Singapore was for rental apartments, with about 53 per cent of respondents recommending a buy, 34 per cent hold and 13 per cent sell.

For office space, 52 per cent advised buying, 29 per cent hold and 19 per cent sell.

The survey also showed that 48.5 per cent recommended buying hotel & resort property, 38 per cent advised holding, and 13 per cent, selling. For retail property, 45 per cent advised buying, 41 per cent holding and 13 per cent selling.

In the industrial/distri- bution sector, about 44 per cent of respondents recommended buying, 42 per cent holding and 14 per cent, selling.

ULI is a global education and research institute championing responsible leadership in land use to enhance the total environment.

 

Source: Business Times 28 Sept 07

Mass market on the rebound

The outlook for this sector is bright, riding on strong demand fundamentals

PRICES of mass market residential property are finally seeing a clear uptrend, as reflected in the latest Urban Redevelopment Authority’s (URA) statistics. Non-landed residential properties sited outside the central region (OCR) – where most suburban mass market properties are located – enjoyed a price rise of 7.2 per cent in Q2 2007.

This trumped the 2 per cent rise in Q1 2007. It was the highest quarterly gain since the market bottomed in Q2 2004, and indicates that confidence in the high-end residential property market has filtered down to the mass market.

Upswing seen across all locations and projects

Based on caveats lodged, the upswing in prices of mass market developments occurred across most suburban locations, although to different degrees. (See Table 1) The steepest price rise was seen in District 5. Median prices in this district rose by some 46 per cent from the low point in Q3 2005 to Q2 this year. This was followed closely by District 22, with a 42 per cent price rise. District 21 saw a 41 per cent gain in median prices. District 18 had a slower recovery. As of Q2 2007, median prices of mass market projects in the east picked up by 13 per cent from its trough in Q4 2006. A similar trend was observed in district 27, where the median price of private homes registered an increase of 16 per cent between Q1 2007 (the district’s record low) and Q2 2007.

The upswing is also more pronounced in larger and newer projects, which boast comprehensive facilities, as well as in those close to MRT stations and amenities.

One example is Kovan Melody, located next to the Kovan MRT station in District 19. Median prices there rose by 16 per cent, from $520 per sq ft when it was launched in 2004 to $605 psf in Q2 2007. At the other end of the spectrum, smaller and older developments located further from amenities, saw slower or flat price recovery. For instance, Central View in district 19 recorded a price gain of about 6 per cent between Q4 2006, when median prices were at the lowest for the development and Q2 2007.

Buyers of mass market homes are genuine purchasers

URA figures show that new projects sold by developers and resale deals make up the bulk of transactions in mass market districts located in OCR. Such sales made up more than 95 per cent of all deals since the general market bottomed out in 2004. On the other hand, sub-sales – which refer to secondary market transactions in uncompleted projects and often seen as a proxy for speculative activity – remained low at under 5 per cent.

Although sub-sales as a percentage of total transactions in OCR have been rising since Q3 2006, they are still relatively low at 3.1 per cent as of Q2 2007. This compares to 19.4 per cent for high-end properties in the core central region (CCR) and 10.4 per cent for private homes located in the rest of central region (RCR).

When taken as a percentage of total new sales within the respective regions, the proportion of sub-sales was just 7 per cent for the OCR, compared to 53 per cent for the CCR and 27 per cent for the RCR.

Supply crunch driving the mass market recovery

The rapid pace at which residential developments in the central area have been collectively sold in the last two years created an acute supply crunch, stemming from the massive withdrawal of homes from the existing stock.

This became one of the main drivers of the recovery in the mass market, which enjoyed a filtering down of demand, both in the sale and rental markets. Evidence of this can be seen in the much higher proportion of mass market property buyers with private residential addresses – from a low of 12 per cent in Q2 2002 to 61 per cent in Q2 2007.

However, the supply crunch is expected to be short term. The estimated 6,200 homes already withdrawn or about to be withdrawn from the stock in the central area – due to collective sales between 2005 and June 2007 – will be replaced by some 13,000 spanking new, modern and more luxurious homes in the next two years.

Moreover, the recent injection of private residential sites into the government land sale programme for H2 2007 could add another 5,580 new mass market homes.

Upswing in the mass market sustainable

Unlike the mid-1990s upturn that was propelled largely by speculative buying and weak demand fundamentals, the current upswing is supported by strong demand fundamentals on the back of bright economic prospects.

Historically, Singapore’s property cycles, measured from trough to trough, last between 10 and 13 years. Taking that as a guide, the current upswing in the mass market, which commenced in mid-2004 and picked up momentum this year, is likely to continue and peak in 2010. This coincides with the expected completion for many of the infrastructure programmes (such as the integrated resorts and Marina Bay Financial Centre) which support Singapore’s economic restructuring.

However, downside risks remain and they stem from the recent turbulence in world financial markets and uncertainty over the impact of the US sub-prime mortgage woes. Nevertheless, while the US and Europe may suffer a hit over the next few months, the economic fundamentals of Singapore and Asia remain strong.

Mass market prices could hit the 1990s peak

Launch prices of new mass market residential projects during the 1990s property boom ranged between $550 psf and $1,050 psf. One of these projects was Bishan 8, which was launched at a median $1,050 psf in 1997. The highest unit price achieved for a mass market project during the mid-1990s peak was a unit in Heritage View, which sold for $1,127 psf in September 1997.

In comparison, in the first eight months of this year, new mass market housing was launched at prices ranging from $500 psf to $880 psf, just some 9 to 16 per cent lower than the levels achieved at the last peak. The highest price achieved for mass market property in the current market was for a unit in The Parc, which sold for $1,040 psf in August this year.

Meanwhile, in the secondary market, the median resale price of mass market properties as of Q2 2007 was $516 psf, just some 14 per cent below the peak in Q3 1996. However, for those projects that were launched at the height of the boom in the mid-1990s, their median resale prices as of Q2 2007 are still some 11 to 45 per cent off from their highs. (See Table 2)

With the upswing expected to be sustained until 2010 at least, and assuming a conservative price growth of 5 per cent per quarter, prices of new mass market projects are likely to attain the 1990s peak level by H1 2008, barring unforeseen circumstances. For mass market properties in the secondary market, resale prices should match the last high by the end of 2008.

 

 

Source: Business Times 27 Sept 07

HDB resale market rides high

It’s certainly a seller’s market as prices trend upwards and demand for larger units rise

HDB resale prices have been recovering slowly but surely since a dip in late 2005 when anti-cashback measures were introduced to stamp out the illegal over-declaration of resale prices.

The recovery was based purely on the market fundamentals of an improving economy and employment market; as well as the actual play of supply and demand.

From Q4 2006’s 103.6 points on the HDB Resale Price Index, resale prices for HDB flats jumped 4.2 per cent in the first half of this year to reach 108 points in Q2 2007. Besides demand being fuelled by improving sentiment, the spate of collective sales in the private property market has unleashed a group of cash-rich house hunters, many of whom are opting for high-end resale HDB units. These buyers are willing to pay top dollar for flats that fit their criteria.

In June, wide media coverage of two five-room HDB flats that changed hands in the resale market at recordbreaking prices of $675,000 in Jalan Mebina (off Tiong Bahru) and $720,000 in nearby Kim Tian Place spun the HDB resale market into euphoria. It led hopeful sellers all across Singapore to hike asking prices overnight, some by up to $200,000 above valuation.

This led to a mismatch of price expectations between sellers and buyers as these high-priced deals are limited to fairly new, well-renovated, high-floor resale flats in coveted estates such as Tiong Bahru and Queenstown.

The HDB was quick to respond to concern among home buyers about runaway prices and released additional data on median resale prices and median cash-over-valuation in all the housing estates. Median prices give a more accurate picture of the market and minimise the distorting impact of headline-grabbing prices.

With these additional statistics, to be provided by HDB on a quarterly basis from the second quarter, home buyers have better information on which to base their decisions. Sellers are also able to use these statistics to price their flats realistically and competitively.

Going forward, HDB resale prices are expected to continue trending upwards. HDB’s Resale Price Index rose by 3 per cent in Q2 2007 over the previous quarter, with price increases across most flat types and towns. Seventy per cent of the resale transactions in Q2 2007 were transacted at an average of $7,000 cash-over-valuation. As at the end of the first half, HDB resale prices have increased by 4.2 per cent. With such positive market sentiment, prices are likely to continue to rise in the subsequent quarters and we may possibly see an overall price increase of 6-9 per cent for the full year.

Resale volume

With improving sentiment, the volume of resale transactions jumped 39 per cent in Q2 2007 to 8,708 units from an all-time market low of 6,258 units recorded in Q1 2007.

HDB’s data also indicates a strong preference among buyers for larger flats. Between Q1 2007 and Q2 2007, executive flats saw the largest increase in resale transactions of 67 per cent (343 units); followed by five-room flats at 64 per cent (903 units); four-room flats at 31 per cent (726 units) and three-room flats at 25 per cent (482 units).

The resale mix for H1 2007 showed three-rooms making up 29 per cent (down from 2006’s 32 per cent; four-rooms at 37 per cent (about the same level as 2006); five-rooms at 25 per cent (up from 2006’s 22 per cent); and executive flats at 9 per cent (up from 2006’s 7.5 per cent).

This preference for larger flats is likely to continue for the rest of the year as the demand is fuelled by those upgrading from smaller flats as well as buyers who have been priced out of the booming private residential market.

By year-end, we may possibly see three-room flats accounting for 25 per cent of resale transactions, four-rooms at 37 per cent, five-rooms at 28 per cent and executive flats at 10 per cent.

Assuming the current momentum holds, we are likely to see this year’s total resale volume surpassing last year’s 29,723 units, which was an all-time low. Some 30,000 to 32,000 are estimated to be transacted for the whole year.

Changes in housing policy

At last month’s National Day Rally, Prime Minister Lee Hsien Loong announced a slew of housing policy changes.

These include:

Revised additional CPF housing grant: The Additional CPF Housing Grant (AHG) Scheme will be enhanced to provide more subsidy to lower-income families to help them buy their first HDB flat. The income ceiling for AHG will be raised from $3,000 to $4,000, while the maximum grant will be raised from $20,000 to $30,000.

The enhanced scheme can be used to subsidise the cost of buying a new or resale flat. It is expected to benefit an additional 1,300 first-timer households annually. In total, some 4,000 households are expected to benefit from this programme every year; and this may boost the demand for three-room flats which has been lessened in view of the current upgrading trend.

New HDB buy-back scheme: This scheme helps unlock the value of flats for elderly Singaporeans aged 62 and above, providing them with an income stream. HDB will buy back the tail-end of the lease on their two- or three-room flats, leaving them with a shorter lease of 30 years on the same flat.

The flat owner will then receive a payout from HDB in two parts – a lump sum upfront and monthly payments for the rest of his or her life which will serve as a form of annuity. This scheme is not expected to have a significant impact on the resale market as it focuses on the elderly.

Two new upgrading programmes: HDB will be introducing two new upgrading programmes, namely, the Home Improvement Programme (HIP) and the Neighbourhood Renewal Programme (NRP).

The HIP aims to address common maintenance problems in ageing flats, such as spalling concrete and ceiling leaks; while the NRP focuses on precinct- and block-level improvements.

These upgrading schemes are designed to improve the internal and external environment of affected flats. While the flats’ condition and aesthetics are improved, the possibility of fetching higher prices is basically dependent on supply and demand rather than upgrading per se.

With strong market fundamentals, supported now by added transparency in transaction information, the HDB resale market is expected to continue its uptrend for the rest of the year.

 

Source: Business Times 27 Sept 07

Getting the right look

Looking to dress up that brand new home? Here’s a peek at some of the latest trends in furniture design

THE humble sofa is set to get all touchy-feely, judging by the emerging trends from the design capitals of the world.

Furniture designers often take their cue from what is put on show at cutting-edge exhibitions like the International Furniture Fair in Milan. And this year, whether the designs were whimsical or staid, much attention appears to have been put into getting the textures just right.

Mod Living’s director of sales and marketing Kim Foo said: ‘There was a lot of research and development done on manufacturing techniques and combinations of different and new materials for production.’ Putting your finger on the right trend is not just about being avant garde. It is also about good business, as Ms Foo well knows.

For Mod Living, Ms Foo estimates that their customers generally spend about $40,000 to furnish a living and dining room. This may sound like a lot but a good sofa can easily cost upwards of $10,000.

If you are looking to buy your next armchair, you might want to invest in exotic timbers too. Ms Foo expects a return to natural timbers with accentuated wood grains, ‘especially wood species from South Africa’.

A trend that has endured for several seasons now is classical styling with a modern twist, notes Ms Foo. For Mod Living, the Nube Sir armchairs epitomise this fascination. A combination of a traditional Chesterfield-inspired club chair with its typical deep, quilted-leather upholstery and state-of-the-art moulded teak-wood panels, the Nube Sir armchair consists of materials and technology that are as disparate as two ideas can possibly be, yet it somehow makes sense.

Retro designs still maintain their hold on the market as re-launched fabrics and designs from the 1950s and 1960s still prove popular. Examples of this are Moroso’s Print sofa by Marcel Wanders and Pierre Paulin’s Le Chat chair for Artifort, both brought in by Mod Living. Le Chat, designed in 1967, has been re-issued in a vintage fabric designed by Jack Lenor Larsen.

And this mood for visual experimentation is already catching on here. Nanyang Academy of Fine Arts’ (Nafa) head of the school of visual arts, Sabrina Long, who also makes a point of visiting fair shows around the world predicts more cutting edge designs too. ‘There was a lot of exploration into materials and technology,’ she noted of her recent jaunts.

These trends are, of course, nothing if they do not filter down and get accepted by the mainstream. It remains as art otherwise.

But already, touchy-feely designs by local designers are emerging, most recently by Sarafina Han Sisi, also a Nafa alumni whose hand-made ottomans or mini sofas made of PVC balls and covered in yarn take experimentation to an extreme. On Ms Han’s design, it is, ‘the willingness to explore a new material and execution’, that makes it very ‘current’, says Ms Long.

The truly creative, however, do not wait until something appears in a catalogue before recognising it as good taste.

Rather, they go in search of it themselves. And architect Andrew Tan of Seeds Architecture is finding inspiration in casinos. But it is not the obvious ‘casino style’ that appeals but rather the concept of ‘excess’ and the materials and textures that this implies.

Mr Tan also believes rich textures like leather will remain a mainstay in fashionable homes in the form of large sofas, preferably by Fendi. But these could be layered with bold foral prints, not unlike those that appeared on wallpapers not too long ago. ‘But wallpaper is out now,’ he says.

There are limits, though, to excessive excess. Chandeliers made a huge comeback several years ago for its outre glamour. Cheap imitation ones have since flooded the market – the scourge of most trends – and they hardly have the same appeal anymore.

Instead, stick to quality materials, suggests Mr Tan. ‘Swarovski makes chandeliers that are both modern and classic,’ he says. Any designer who can manage that will have a sure hit on their hands.

 

Source: Business Times 27 Sept 07

Dispelling some auction myths

Acquiring properties through an auction is not a taboo, says MARY SAI

WHEN one flips through the property classifieds these days, it not uncommon to see properties advertised for auction. It is also not uncommon for a prospective buyer to immediately get the impression that the property to be auctioned, or the owner, must have some problems, otherwise why auction?

This misconception stems mainly from the days when auctions were the main mode of sale for banks when they repossessed property from owners who defaulted in their loans. In the 1980s and 1990s, most of the property auctions were mortgagees’ auctions. So many people saw them as forced sales.

But today, in a bullish property market, auctioneers are seeing more owners choosing to auction their property. In this article, we try and dispel some of the misconceptions about auctioned property.

Myth No 1: Auctions are fire sales

Contrary to widespread belief, an auction can secure the best price through open competitive bidding. Even the courts recognise an auction sale as an appropriate way to sell a property under dispute. It is deemed that through competitive bidding, a fair open market value can be realised for the seller. An auction sale is not tantamount to a desperate sale. Although the auction sale can be organised within a fortnight, it does not mean that the vendor has to sell in a hurry at bargain basement prices! Similarly, in mortgagee auction sales the bank exercises due diligence and is guided by valuations when they sell repossessed properties. They are genuine sellers, not desperate sellers.

In a recent forced sale of a dilapidated two-storey building at 27 Onan Road, two auctions conducted failed to secure a buyer. However, instead of an expected fire sale in the third round of auction, the property went under the hammer for $610,000 – a whopping 36 per cent increase from the opening price of $450,000.

Another good example was a auction of a bungalow plot at 59 Goodman Road in January this year. Vigorous bidding from more than eight parties saw the property knocked down at a record price of $626 per sq ft while comparable sales then were transacted around $350-$400 psf. Similarly, the recent auction sale of bungalow plots at Sentosa Cove also saw benchmark prices established way above $1,000 psf for their 99-year leasehold titles.

Myth No 2: ‘Challenging’ properties are auctioned

Many people consider the auction route as the last resort for the sale of properties. It would be the mode of sale for ‘challenging’ properties – those with inauspicious numbers like 4, 14 or 44 or with irregularly-shaped sites.

Going through past auction data, we see no anecdotal evidence to show that auction properties carry more inauspicious house numbers or are of inferior quality. In the past year and a half, several investors have picked up gems like good class bungalows in Bukit Timah/Holland; heritage properties at Emerald Hill Road and shophouses fronting main roads like Serangoon Road, Geylang Road, South and North Bridge Roads. These properties have appreciated substantially, with some doubling from the time they were bought at auction.

Recently, there has been a trend of luxury properties put on the auction block, as well as those in developments with en bloc potential. Some of these include apartments in The Beaumont, Stevens Loft and Watten Estate Condo.

Hence, there is no lack of quality properties to buy in the auction market.

Myth No 3: Auctioned properties bring bad luck

This superstitious belief can be traced to the days when auctions were mainly for banks’ foreclosed properties.

People refrained from buying such properties as they feared they would suffer the same fate as the previous owners.

Today, this superstitious view is slowly disappearing with a younger generation of property buyers.

Again, not all auctioned properties are forced sales by banks as more owners are now choosing the auction route on their own accord. They see the many advantages of auction sale and want to leverage it in a bullish property market.

As a matter of fact, buyers who successfully bid for apartments at Leedon Heights, Tulip Gardens and Silver Towers are now laughing all the way to the bank as these developments have just been collectively sold. Good fortune was theirs as a result of their smart purchases at auctions.

Myth No 4: Hungry ghosts

The seventh lunar month has been traditionally the ‘Hungry Ghost Festival’ – an inauspicious period when buyers refrain from buying property. All the more so at auctions.

Generally, businessmen and property buyers who observe Chinese religious rituals during this period, would rather bid for goods that have been ceremoniously blessed by their gods which they believe will bring them good luck – items such as ‘black charcoal’, symbolic sculptures, etc.

However, in the past few years, many property buyers are breaking away from this trend and are buying properties during the Hungry Ghost month, even at auctions. In the latest auction on Aug 16, which fell on the third day of the Hungry Ghost month, a dilapidated two-storey conservation terrace house at Spottiswoode Park was aggressively bid for by six parties from an opening price of $680,00 to an eventual $1.36 million. That’s a 100 per cent increase!

Two other properties were also sold at the same auction and these transactions defy the myth that property auctions are a ‘no-no’ during the Hungry Ghost Festival.

Conclusion

Auctions will go on, be it bullish or bearish markets. With technological advances, improvements such as electronic biddings may complement conventional auctions. At the same time, myths and misconceptions relating to property auctions will be erased over time as people become more familiar with this mode of sale. Having cleared the suspicions and doubts concerning auctions, buyers can safely head to the weekly property auctions and pick up some good buys.

The writer is Knight Frank’s auctions director

 

Source: Business Times 27 Sept 07

25% more HDB flats rented out since March

MORE Housing Board (HDB) flatowners are cashing in on the rising rental market by letting out their units following a relaxation of the rules on doing so.

The new rules have spurred 5,700 more people to rent out their flats over the past six months.

The latest figures from the HDB show that a total of 15,773 flats have been given the green light for rental by the middle of this month.

This is a 25 per cent jump on the total figure before the March 3 rule change. About 39 per cent of these additional homeowners would not have qualified had the rules not been eased.

Previously, flatowners could rent out their flats only five years after buying them – or 10 years if they had not paid off HDB home loans.

Now, they can do so after living in their flats for just three years – or five years if they had bought it with a government subsidy or grant. It no longer matters if the home loan has been paid off.

The change almost doubled the pool of eligible flats to 645,000, out of more than 800,000 across the island.

The relaxation was part of a series of measures to make it easier for flatowners to earn income from their units.

Besides easing subletting rules, the HDB also allowed homeowners to take out reverse mortgages on their flats. It is also looking into a novel scheme to buy back the tail-end of flats’ leases from homeowners.

Newly minted landlords included Madam Yee Kin Moi, 58. The retired hawker and her husband rented out their four-year-old flat in Choa Chu Kang just last month for about $1,000 a month, and moved in with their daughter to help take care of their 18-month-old grandson.

The rental income, said Madam Yee, covers their monthly housing instalments and helps pay daily expenses as well.

She told The Straits Times: ‘The good thing about renting the flat out is that we do not need to sell it. We can go back to live in it if our children choose to migrate elsewhere.’

According to the HDB, about 27 per cent of flats rented out after March 3 belonged to owners who were older – aged 55 years and above.

Most of those renting out their flats under the revised rules moved in with their family members. About 22 per cent now live with their children, while another 36 per cent live with their parents, siblings and other relatives.

About two-thirds of flats being rented out are three- and four-room units.

HDB statistics show that three-room flats fetched a median rental of $980 islandwide from April to June, while four-room flats fetched $1,180.

Property agents estimate that rents are up about 10 per cent to 15 per cent since then, but say demand for rental flats remains strong as tenants, deterred by rising private rentals, choose public housing instead.

Median rentals of non-landed private homes islandwide grew by 11 per cent from April to June to $31.87 per sq m per month. This means it would cost about $3,200 a month to rent a 100 sq m, three-bedroom home.

As a result, rental flats being put on the market are being snapped up within a month, said the chief executive of property agency Propnex, Mr Mohamed Ismail.

Most homeowners, though, will not rush to rent out their flats even if rental rates become even more attractive. This is simply because they would have nowhere else to live if they did.

The director of Dennis Wee Properties, Mr Chris Koh, pointed out: ‘Not every elderly couple would want to live with their children.’

 

Source: The Straits Times 24 Sept 07

Home market will grow even if punters retreat: report

Developers may go for higher volumes, lower margins in mass, mid-segment

(SINGAPORE) Recent events could make the residential property market vulnerable to declines in collective sales and speculative activity.

However, Goldman Sachs believes that other demand drivers such as the increase in resident population will help mitigate the fall in those selling their homes through collective sales and looking for replacement homes.

It reckons there will be little adverse impact from a drop in speculation while foreign buying will be relatively sticky. And the silver lining from the recent market slowdown brought about by the sub-prime mortgage crisis in the US is that it has weakened reasons for the Singapore government to curb price rises, argues a paper by Goldman Sachs Global Investment Research.

‘Going forward, we think all developers will see more of their residential exposure being tied to mid- and mass market projects via new site acquisitions so as to meet expected demand in those segments.

‘We look for achievement of strong selling prices and take-up in forthcoming residential launches to demonstrate the strength of demand in the residential market and drive share price performance of Singapore developers,’ according to the paper, titled ‘Residential market shaken but still good for developers’.

The paper, authored by Goldman Sachs executive director (Asia-Pacific Investment Research) Leslie Yee, says the sharpest increases for Singapore residential property prices are over.

However, the operating environment in Singapore for developers is good, as they can still enjoy fat margins from developing their existing prime district residential landbanks, and reinvesting the money they make from selling such projects into mass/mid market sites where profit margins will be lower but volumes will be high.

‘We see developers achieving margins of about 20 per cent in mid to mass market projects and tapping into opportunities as population increases,’ Mr Yee said. He expects a positive demand picture, with net incremental annual demand of around 19,000 private homes over the next few years.

New demand will come from increases in the resident population, of which an increase in the number of permanent residents is a major driver; increase in the non-resident population; sellers of properties that are the subject of en bloc sales; and Housing and Development Board (HDB) upgraders.

The bank said its demand numbers do not factor in speculative buying. ‘Given the speed and scale of price increases this year, we think a fall in speculative activity benefits the property market in the longer run by reducing pressure for government intervention to cool prices,’ it added.

Goldman Sachs says it is not overly concerned about a decline in en bloc sellers looking for replacement properties arising from a near-term slowdown in collective sales amidst higher development charges and changes in legislation. This is because other components of demand will remain strong.

As for a slowdown in the supply of redevelopment sites if en bloc sales cool off, the paper argues that developers have enough residential projects on hand to execute, and the ability to acquire mid- and mass-market land from state tenders.

Goldman Sachs says it does not expect foreign buying, which has been instrumental in driving up residential property prices here, to dissipate as the factors attracting these buyers to the local property market – including transparency, openness to foreigners, and absence of capital gains tax – still hold.

Also, foreign buyers include permanent residents, whose property purchases here are likely to remain strong provided the momentum of new investments and jobs is maintained.

Goldman Sachs favours GuocoLand and City Developments for their leverage to the Singapore residential sector, accounting for 35 and 38 per cent respectively of their revalued net asset values.

In the mass segment of the private housing market, ‘we see strong domestic economic factors and rising HDB resale prices underpinning price performance’, the paper says.

‘We think the government will be happy to see HDB resale prices rise so that larger segments of the population can enjoy the fruits of Singapore’s success while continuing to ensure affordable housing for citizens through the HDB primary market,’ Goldman Sachs reasons.

 

Source: Business Times 21 Sept 07

HDB launches sixth build-to-order project in Fernvale

The 698 4-room flats will have full floor finishes, sanitary fittings

TO MEET the increasing demand for homes, the Housing Board (HDB) yesterday launched 698 flats for sale in Sengkang.

HDB’s latest build-to-order (BTO) project, Coral Spring, offers premium four-room units of 95 sq m to 96sq m, priced between $188,000 and $252,000.

These premium flats will be provided with full floor finishes and sanitary fittings.

Home buyers can choose other components to be installed under HDB’s Optional Component Scheme.

The project, which will consist of five 25-storey buildings, is located at the junction of Sengkang West Avenue and Fernvale Road.

The flats are within walking distance of Fernvale LRT station and Fernvale Point, which houses a wet market, supermarket and foodcourt.

It is also near schools such as Fernvale Primary School and Pei Hwa Secondary School.

Prices are higher than the last BTO project, launched in May, Fernvale Vista Phase 2, where four-room flats were priced between $145,000 and $200,000.

Four-room flats at Fernvale Court, launched two years ago, were priced from $138,000 to $177,000.

Coral Spring is the sixth BTO project in Fernvale.

With the exception of Coral Green, which was launched in 2004 and later dropped because of weak demand, the other projects have been well-received, said HDB.

Three – Fernvale Grove, Fernvale Court and Fernvale Vista Phase 1 – are now at construction stage. HDB is selecting applicants for Fernvale Vista Phase 2.

An HDB spokesman told The Straits Times yesterday it is confident there will be good demand for Coral Spring.

If the response is good, applicants will be called to select their flats.

HDB will assess the take-up rate before deciding whether to call for a building tender under the build-to-order scheme.

Applications for the new homes close on Oct 9.

If Coral Spring is given the green light, it is expected to be completed by the end of 2011.

An exhibition of the project will be held at the HDB Hub’s Habitat Forum during the application period.

 

Source: The Straits Times 21 Sept 07

HDB move to cut concrete use pays off

It adopts alternative materials and techniques following Indonesian sand ban

STEEL, aluminium and even glass are to be the new concrete for many of the Housing and Development Board’s latest projects.

Materials and techniques which might not have been cost-effective in the past have become increasingly viable following the rise in the price of concrete caused by January’s ban on exports of sand from Indonesia.

The HDB says that initiatives it has already taken, such as using steel instead of concrete to construct lift shafts, have already achieved positive results.

The HDB told BT that using steel in a conventional 12-storey block has reduced the amount of concrete needed for lift shafts by 90 per cent. ‘This leads to an overall cost savings of about 20 per cent and a shortening of construction time by 20 per cent,’ a board spokesman said.

A conventional 12-storey concrete lift shaft can require up to 90 cubic metres of concrete.

This new method of construction was piloted in projects in Yishun, Jurong East and Marsiling and the HDB says that since April, use of the technique has been extended. Another upside of the new method is that an additional 250 blocks which previously exceeded the budget for the Lift Upgrading Programme now become eligible.

Following the sand ban, the HDB – probably Singapore’s biggest developer – said that it would try to cut the use of sand by as much as 30 per cent. By volume, sand is the main ingredient of concrete.

‘While engineers work towards economising on materials and designs, architects will continue to ensure that the outcome retains its desired aesthetics and functionality,’ said the HDB.

Building layouts and structures are being fine-tuned to optimise concrete usage. But some of the new architectureled initiatives include the simple tweaking of previous HDB design guidelines.

One new idea involves providing much larger glass windows. The HDB has been providing bay windows in flats since 2004. ‘Taking this a step further to improve economy and reduce sand use, we now provide three-quarter and full-height glass windows for bedrooms and living rooms respectively,’ the board said.

Other simple solutions include changing the design of concrete parapets along corridors. Since 2000, most parapets have been built using perforated aluminium panels. HDB says that all HDB buildings tendered from June onwards will have parapets designed with slits or perforations to reduce the concrete use – or simply have metal parapets.

Other solutions involve replacing concrete designs with metal ones. For new shelters and linkways, HDB plans to use steel columns instead of concrete.

Modular steel ramps were tried out at Woodlands Street 83 and will be introduced to more HDB estates in line with its Barrier Free Access initiative.

The HDB said: ‘As the industry exploits new materials, methods and technology in our move towards sustainable construction, we believe home buyers will also grow more receptive to the use of these new materials and designs.’

 

Source: Business Times 17 Sept 07

Punggol waterway project sparks interest and ideas

THE proposed 5.5-km waterway cutting across Punggol town drew enthusiastic discussion yesterday at a dialogue on the Housing Board’s future plans for its estates.

While there were concerns over its safety from the 500-strong audience – made up of residents, potential flat buyers and grassroots leaders – there were also calls for less rules on how the future waterway could be used.

The ambitious project in Punggol involves the building of a roughly 4.4-m deep waterway linking two reservoirs that would be created after Sungei Punggol and Sungei Serangoon are dammed.

When completed by 2013, it will be the centrepiece of Punggol, by which time new homes and its future town centre will be built.

The proposal was unveiled about a week ago through the HDB’s Remaking Our Heartland exhibition which showcases its future plans for public housing estates. Yesterday’s dialogue was meant to draw feedback on the plans and was chaired by Minister of State for National Development Grace Fu.

Preliminary results of an HDB survey on the visitors to its exhibition showed that 94 per cent of the 2,800 respondents liked the idea of the waterway running through Punggol. Eighty-one per cent said they were prepared to pay more service and conservancy charges to enjoy the new housing designs, which included flats with balconies overlooking the waterway.But residents and prospective flat buyershoped that new types of public housing would not be too expensive.

The Remaking Our Heartland exhibition will be held at various housing districts until Oct 3. More details can be found at http://heartland.hdb.gov.sg/ .

 

Source: The Sunday Times 16 Sept 07

HDB upgraders are back in force

Big hike in secondary market deals shows genuine demand: analysts

(SINGAPORE) The broad-based recovery in the property sector is gathering pace with data showing a spike in the number of property transactions by Housing and Development Board (HDB) upgraders.

Looking at data which captures transactions made by buyers with registered HDB addresses – traditionally considered HDB upgraders – Citigroup noted that, in Q2 2007, HDB upgraders made about 1,750 transactions in the secondary market, an increase of 75 per cent from the previous quarter when around 1,000 transactions were recorded.

On the significance of secondary market transactions, Citigroup analyst Wendy Koh said that these represented ‘genuine demand as full payment is required for completed developments’.

Although there is always some level of speculation in a rising market, the mass market appears to be safe for now, with Citigroup noting that subsales in the mass market segment stood at about 9 per cent of total sales compared to 27 per cent at the peak of 1995/1996.

DTZ Debenham Tie Leung executive director Ong Choon Fah also believes buyers in this segment are genuine.

‘Most speculation still takes place in the prime districts because price increases (in the mass market) are still not as significant,’ she said

Mrs Ong added that the recovery of prices for the HDB resale segment has also boosted the number of upgraders and noted that about 70 per cent of resale flats transacted at above valuation in Q2.

DTZ’s figures show that combined primary and secondary market transactions by upgraders increased by about 50 per cent in Q2 over the previous quarter. Popular new developments among upgraders were The Quartz near Buangkok MRT Station, Northwood in Sembawang and Ferraria Park Condo in Pasir Ris. Upgraders made up 80 per cent, 58 per cent and 54 per cent of the buyers respectively.

‘There is also now more urgency to buy because there is the belief that prices seen in the prime areas will filter out into the suburban districts,’ she added.

Upgraders have also bought into more upscale developments.

A spokesman for UOL said that they formed about 16 per cent of the buyers for Pavilion 11 at Minbu Road while Frasers Centrepoint said a similar 16 per cent have bought into The Soleil at Novena. Even at the more expensive The Seafront on Meyer, CapitaLand said that just under 5 per cent are buyers with HDB addresses.

HDB upgraders are still, however, price sensitive and Mrs Ong attributed the spike in secondary market transactions to this as the secondary market offers lower-cost private residential alternatives.

Speculation could, of course, raise prices. A recent report by Credit Bureau (Singapore) revealed that people living in the heartlands of Serangoon Gardens, Hougang and Punggol recorded the highest number of borrowers with multiple property loans, suggesting that they owned homes for reasons other than to live in.

Savills Singapore director (marketing and business development) Ku Swee Yong, who also believes speculation has yet to hit the mass market, reckoned that the increase in the number of borrowers with multiple loans could be due to the fact that several developments in the area, including Kovan Melody and Tangerine Grove, have obtained temporary occupation permits (TOP), requiring existing homeowners who opted for deferred payment schemes to apply for loans.

He also noted that some collective sale beneficiaries have had to apply for housing loans because more banks are refusing to give bridging loans.

CB Richard Ellis executive director Li Hiaw Ho does believe that speculation is increasing in new suburban projects like One Rochester and Sky@Eleven. Although Mr Li said that it is still ‘quite minimal’, he believed that it will impact overall prices, and that mass market projects will not be spared. ‘You just have to look at the recent land sales price at Ang Mo Kio,’ he added. The site in question sold for about $600 per square foot per plot ratio and is expected to sell for over $1,000 psf.

Source: Business Times 14 Sept 07

HDB launches design, build and sell site at Ang Mo Kio

THE Housing and Development Board has launched a third Design, Build and Sell Scheme (DBSS) site for sale. The latest site, which is at Ang Mo Kio Street 52, is the second to be launched for sale this year.

The site area is 16,789.1 sq m (180,716 sq ft), with an allowable gross floor area of 58,761.85 sq m (632,506 sq ft). It is close to the Ang Mo Kio town centre with its MRT station, bus interchange and the AMK Hub.

Noting the attractive location of the new site, Savills Singapore director of marketing and business development Ku Swee Yong said that he believes the site could fetch between $110 million and $125 million or about $170 to $200 per square foot per plot ratio (psf ppr).

The development is targeted at HDB upgraders or en bloc sale downgraders, and Mr Ku said that he expects a good take-up because the stock of vacant HDB flats has fallen of late.

Mr Ku highlighted that recent suburban condominiums like The Parc condominium in the West Coast and The Soleil at Novena had sold well, ‘even though this is traditionally a quiet month for property sales’.

The successful developer will be required to build a minimum of 30 per cent of the flats with a floor area of 95 sq m or less – equivalent to flats of four rooms or smaller.

CBRE Research estimated that the site can yield more than 500 units. CBRE added: ‘Given the established residential environment in Ang Mo Kio, together with the known popularity of DBSS units, we expect a good response from mid-sized developers and joint venture of contractors and developers.’

Upon building completion, the successful developer will hand over the entire development site to the HDB for lease administration, and to the Town Council for maintenance of the common areas and car parks.

The tender will close at noon on Tuesday, Nov 27.

The second DBSS site, at Boon Keng Road, was awarded in June. It sold for $233.74 psf ppr – double the $113.64 psf ppr price for the first DBSS site in Tampines sold in Jan 2006.

 

Source: Business Times 12 Sept 07

Third site for condo-like public flats in Ang Mo Kio

A CHOICE site close to amenities in Ang Mo Kio has been earmarked for the third public housing project to be designed, built and sold by private developers.

The site, which analysts estimate can fit about 550 flats, and blocks that rise up to about 36 storeys, will be launched for tender by the HDB today. The tender closes on Nov 27.

Already, property analysts expect strong demand from developers, and later, by home-hunters. This comes after red-hot demand when the first public-private project went on sale in Tampines last year.

The 1.7ha plot in Ang Mo Kio Street 52 is a stone’s throw from Ang Mo Kio town centre and the recentlyopened commercial and transport complex Ang Mo Kio Hub.

Some of the flats will appeal to homebuyers on lower budgets. The developer that snags the Ang Mo Kio site will have to reserve at least 30 per cent of the project for four-room or smaller units.

Property analysts say the site is set to be a winner. It is near the leafy Ang Mo Kio Town Garden East, as well as Ang Mo Kio MRT station and a host of shops in the mature town.

Property agency Propnex’s chief executive, Mr Mohamed Ismail said: ‘This is a sure-sell location.’

Dennis Wee Properties director Chris Koh expects the land to fetch $125 million, while Savills Singapore’s director of marketing and business development Ku Swee Yong predicted a range of $100 million to $125 million.

Mr Mohamed expects the flats there to go for between $350,000 and $400,000 each.

The land parcel has a 103-year lease, and the developer will have to complete the project within four years of buying the land. The apartments will come with elderly-friendly features, as seen in new HDB flats now.

Under the hybrid scheme launched two years ago, developers design, build, price and sell flats built according to the broad rules of public housing. This means that common spaces have to be easy to maintain, that buyers have to meet ethnic quotas, and that only family units can buy the flats, for example.

Interest in these flats has been keen so far because they are located in mature estates and come with fittings more commonly found in private housing, such as bay windows.

The first batch of 616 Tampines units, being developed by Sim Lian Land, received close to 6,000 applications last year. Most were five-room units in blocks up to 17 storeys high, priced at between $308,000 and $450,000.

The second batch of about 700 flats in Boon Keng Road will be launched for sale later this year by a consortium led by Hoi Hup Realty. It will comprise three 40-storey blocks.

12sept07_st_3rdsite4condolikepublicflatsinamk2.pdf 

 

Source: The Straits Times 12 Sept 07

Lifestyle hub at one-north could boost housing prices, retail rents

THE upcoming integrated development at one-north is expected to generate more interest in the area and drive up housing prices and retail rents there, market watchers said.

On Sunday, property giant CapitaLand and New Creation Church’s Rock Productions said they will be investing some $660 million to build a lifestyle hub in one-north, JTC Corporation’s science hub. The project will be located right next to Buona Vista MRT station.

The hub, which will be the biggest retail development by far in the area once it comes up by 2011, will push up residential prices and rents as well as rentals for retail space in the vicinity, experts said.

‘You probably will see residential and retail prices going up in the area,’ said Mavis Seow, CB Richard Ellis’ executive director for retail services.

‘The Holland area is already a very much sought after location. Once the project is developed, it will only get better.’

Rents in the Holland Village area are now between $8 and $15 per square foot per month (psf pm), she said.

CapitaLand, which will invest some $380 million, will own the retail and entertainment component of the project, which will have some 180,000-200,000 sq ft of net lettable area.

Rock Productions will invest $280 million. The company, which is the business arm of the 16,000-strong New Creation Church, will manage the hub’s civic and cultural zone, which will include a 5,000-seat stateof-the-art theatre. The civic and cultural zone will have a gross floor area of some 323,000 sq ft in all.

Pua Seck Guan, chief executive of CapitaLand’s retail arm, said that in line with the developer’s asset-light strategy, the retail and entertainment component could eventually be injected into the developer’s listed real estate investment trust (Reit) CapitaMall Trust.

‘The hub will not be a traditional shopping mall,’ he said. ‘As the developer, we will take the risk – until investors are convinced it is sustainable – before selling.’

The mall will have mostly F&B and entertainment units as is the case with Clarke Quay, Mr Pua said. The retail component will be smaller than in CapitaLand’s other malls.

Possible tenants could include a gourmet supermarket, trade services catering to people living and working in one-north, and even a dance club, he said.

The hub is however guaranteed some footfall from New Creation Church’s congregation, said Matthew Kang, director of Rock Productions.

New Creation Church will be the theatre’s ‘anchor tenant’ and will hold both its Sunday and weekday service there.

At present, the church uses the Rock Auditorium at Suntec City, which seats about 1,400 people.

‘We wanted to look for a place to move to; the congregation was getting bigger,’ Mr Kang said.

 

Source: Business Times 11 Sept 07

Time to raise the $8,000 income ceiling for HDB flat buyers?

THE economy is booming and property prices are heading north. Although the housing market moves at a frenetic pace these days, one thing has stayed the same for more than 12 years now – the $8,000 ceiling on monthly household income for those buying new Housing Board flats.

Of late, some people have wondered if home prices are getting out of reach. The Government appeared to try to tackle those concerns last month by expanding the pool of low-income households which qualify for extra housing aid.

Households earning up to $4,000 a month, instead of up to $3,000 previously, are now eligible for grants of as much as $30,000 to buy their first home. With this change, more people now qualify for the aid, and households already qualifying will now get an even bigger grant.

But what about the $8,000 income ceiling? Will it be raised too? The current cap has not changed since it was last raised from $7,000 in December 1994. For most of 1992, it stood at $6,000.

Yet many things have changed since 1994.

Data from the General Household Survey, which is conducted once every 10 years, shows that the proportion of resident households earning $8,000 and above every month has nearly doubled from 10.85 per cent in 1995 to 19.9 per cent in 2005.

This means that the proportion of households qualifying to buy new flats shrank by roughly 9 percentage points.

More recent data from the Department of Statistics shows that the proportion of employed households earning $8,000 or more stood at 23.4 per cent last year.

This means that the proportion of households not qualifying for new public housing is even bigger when we factor out the number of households made up of unemployed people, who probably would not be in a position to buy homes.

And in real terms, taking into account inflation, $8,000 in 1994 had the same spending power as $9,110 in July.

Meanwhile, the price index of HDB resale flats grew 36 per cent from 1995 to June this year.

New HDB flats are the cheapest homes in Singapore, a refuge for home seekers feeling the heat from the buoyant private and HDB resale market.

So the real question for policymakers is this: Have market conditions changed sufficiently since 1994 that households earning somewhat more than $8,000 now need the option of buying new HDB flats?

One can tell what a difference that option makes by comparing the prices of flats within one area. A batch of new four-room flats in Sengkang were offered at $145,000 to $200,000 in May. Resale four-room flats in the same area, for the period from April to June, changed hands at a median price of $245,000, notably higher.

In the more volatile private market, prices of 99-year leasehold condominiums – a typical choice for many home buyers who could otherwise have picked HDB flats – grew 11 per cent between the third quarter of 1999 and the second quarter of this year. Given the massive slump that followed the 1997 Asian financial crisis, there’s a chance they could be cheaper now than they were in 1994.

But families with only a little more than $8,000 in monthly income may not be in a strong position to buy a home for $600,000.

New HDB flats, by comparison, are a ’safer’ choice. Although their prices generally follow market trends, it is understood that the changes are moderated by the Government in order to keep public housing affordable.

The Singaporeans caught between public and private housing are the proverbial ’sandwich class’ – not well off enough to cruise into private housing but not poor enough to be entitled to much government aid.

Is housing becoming less affordable for them? Are they left with the option of spending an increasing – or perhaps disproportionate – part of their income on housing?

If so, is it time to adjust the $8,000 income limit to put them back under the HDB umbrella?

After all, a household earning above $8,000 a month is not just barred from new HDB flats, but also disqualified from subsidised housing loans and housing grants of up to $40,000 to buy resale flats. (Those earning not more than $4,000 a month are entitled to additional grants, as explained above.)

The HDB does ‘exercise flexibility on a case-by-case basis’ for home buyers whose household incomes marginally breach the limit.

But rather than bending the rules occasionally, perhaps it should be reviewing the limit instead.

For if encouraging home ownership is a key strategy to root Singaporeans to Singapore, then shouldn’t the Government be concerned about the increasing proportion of Singaporeans possibly finding homes less affordable?

Public housing here plays a different role from that in other countries, where it is often merely a roof for the poor. In Singapore, more than 80 per cent of the population live in HDB flats. These properties are seen not just as a store of value but also a source of retirement income.

To be fair, the HDB has to perform a delicate balancing act. It cannot lift the income ceiling by too much lest demand for resale flats collapse. This would depress the value of what, for many people, is their single biggest asset.

But perhaps the balance has now swung too far against the middle-income group.

It could have been something on the minds of policymakers when they recently decided to raise the income limit of families receiving aid for their children attending independent schools. From next year, the ceiling will be set at $7,200 monthly, almost double the current cap.

The HDB income ceiling question rings even louder these days as the Government looks at ways of getting its rapidly ageing population to save enough for retirement.

An obvious way of doing so is simply by not overspending on housing in the first place. And that can best be done when someone actually has the choice of buying the cheapest home available.

 

Source: The Sunday Times 9 Sept 07

Cutting-edge HDB designs on display

Ideas include ‘granny flats’, pick-your-own unit facades and ’sky villages’

EXTENDED families could live side by side, in separate but specially designed flats, while other home buyers could pick the specific facade they want for their unit.

These are some of the new faces of public housing and will soon be found first in Queenstown and then across the country.

These cutting-edge proposals were on show last night at the HDB Hub as part of a Housing Board exhibition. If the public backs them, work will start in three to four years.

Dawson Estate, highlighted by Prime Minister Lee Hsien Loong in his National Day Rally speech last month, will be the testbed for such ideas.

Residents will eventually have their pick of more than 3,000 homes in three developments designed by awardwinning Singapore architecture firms – Surbana International Consultants, Woha Architects and SCDA Architects.

The companies were told to design estates with spaces for neighbours to linger and chat while retaining the area’s heritage.

‘They have more than fulfilled this brief,’ said National Development Minister Mah Bow Tan last night as he opened the exhibition, which also showcased plans for Punggol and Yishun.

SCDA’s housing blocks, for example, will be more than 40 storeys high, comprising flats with lofts that could be joined to smaller adjacent units if extended families choose to live together.

If built, they will mark a return of the HDB’s multi-generation flats, or ‘granny flats’, which were introduced in 1987 for extended families.

They comprised a four- or five-room flat with an adjoining studio apartment with a separate entrance. A total of 367 units were built before they were scrapped due to poor demand.

Another idea, put forward by Woha, allows buyers to pick from a range of facades for their flats – which include balconies, monsoon windows, planter boxes and bay windows.

Woha also mooted the idea of ’sky villages’ – common high-rise spaces shared by every 10 floors – to encourage interaction.

There are also plans to retain the now defunct market along Commonwealth Avenue and integrate it with new developments, which would include a new plaza for community events.

Longtime Queenstown resident Hu Nguk Mee, 57, looks forward to the return of the district’s former bustle. It was one of the first new towns to be built by the HDB and used to teem with banks, eateries and entertainment outlets.

‘The new designs look really beautiful,’ said Madam Hu.

Singapore Institute of Architects president Tai Lee Siang said giving residents more flexibility in flat design and configuration will allow them to stay longer even as their household needs change over time. This will help foster a stronger sense of community spirit.

 

Source: The Straits Times 1 Sept 07

Lease Buyback Scheme: Govt to give extra cash subsidy to home owners

A flat’s value will be based on current market value: Mah

THE government will hand out an additional cash subsidy to encourage elderly owners of public housing flats to join its proposed Lease Buyback Scheme (LBS).

About 25,000 HDB flat owners are already eligible for this scheme and the number is set to rise.

Speaking on the sidelines of the launch of the Housing and Development Board’s Remaking Our Heartland exhibition yesterday, National Development Minister Mah Bow Tan said the government will ‘top up the cash value’ that flat owners receive after HDB buys back the tail end of a lease from them.

The value of a flat will be based on current market value.

The news comes two weeks after Prime Minister Lee Hsien Loong first said the government was working on a scheme to allow elderly people to monetise their HDB flats to provide them with retirement income.

Mr Mah said LBS could be finalised next year, around the time of the Budget debate in Parliament.

Elderly owners who sign up for the scheme will be left with a 30-year lease on their HDB flats.

Mr Mah said the scheme will pay cash from the buyback of a flat in three tranches – a lump sum, monthly payments for a fixed number of years and longevity insurance.

He also said LBS is likely to ‘ride on the Central Provident Fund (CPF) scheme when it is ready’.

The onus will, however, be with HDB.

The housing board now has a bigger role, Mr Mah said: ‘It is a provider of a roof over people’s heads through the subsidies; it maintains value (of property) through upgrading schemes; and it is an old-age pension scheme as it were.’

He said the new Home Improvement Programme that replaces the Main Upgrading Programme ‘gives residents what they want, and they pay less for it because the government is going to increase subsidies’.

Mr Mah also revealed that HDB has comprehensive plans to upgrade old, middle-aged and new housing estates, starting with Dawson Estate, Yishun and Punggol 21+.

Dawson Estate could see a ‘new generation’ of public housing designed by local award-winning architects, while Yishun’s new town centre could be home to a large educational institution. The most ambitious plans are for Punggol 21+, which is envisioned as a waterfront community that could eventually have up to 92,000 flats.

Mr Mah said development of a town centre could start as early as 2010, when work to create new reservoirs there is completed.

A spokesman for PUB confirmed that construction work on dams to create reservoirs at Sungei Punggol and Sungei Serangoon started at the end of 2006 and will be completed in 2009.

So far, at least one commercial-cum-residential development site in Punggol 21+ has been identified for the Government Land Sales Programme and could be made available within five years.

Punggol 21+ will have a 60:40 public-private development ratio.

Noting that as a development model Punggol 21+ resembles Sentosa Cove in its infancy, property consultant Cushman & Wakefield’s managing director Donald Han said: ‘There should be some buyers looking to have the first-mover advantage there.’

 

Source: Business Times 1 Sept 07

25,000 may gain under HDB lease buyback scheme

Payouts will be in 3 parts: a lump sum, instalments and insurance

THE new HDB lease buyback scheme, which allows flatowners to sell back a portion of their lease, could mean as many as 25,000 elderly folk cashing in.

That number – an initial estimate – will increase over the years, revealed National Development Minister Mah Bow Tan last night.

The scheme, announced by Prime Minister Lee Hsien Loong last month, will be open to people at least 62 years old who own a two- or three-room unit and who have had only one HDB subsidy.

It is is designed to supplement the retirement savings of older, low-income owners while allowing them to continue living in their own homes.

Under the plan, the Government will shorten a lease to 30 years and pay the owner for the amount of time that has been deducted.

Take a 99-year leasehold flat with 50 years left to run. That 50-year balance would be shortened to 30 and the owner compensated when the HDB buys back the 20-year portion.

The actual amount ‘unlocked’ by the buyback will depend on each flat’s market value, said Mr Mah, who opened an exhibition showcasing future public housing projects last night.

But the Government will give owners a subsidy on top of the market value as a way of encouraging people to sign up for the scheme.

The payout will be divided into three parts. The first is an initial lump sum, followed by monthly instalments over a fixed number of years.

If the owner dies during that period, the unpaid amount will go to his family.

The third portion of the payment, said Mr Mah, will go to an insurance plan that will give owners an income for life after the first two payment batches run out.

Mr Mah said his ministry and the HDB are still working out the details of this ’safety net’ with agencies like the Central Provident Fund Board, which is looking into a way to ensure people have enough savings to get by.

Mr Mah also guaranteed home owners who join the buyback scheme that they will still have a roof over their heads if they outlive the 30-year lease. But some may not be able to continue living in their own flats.

The full details of the plan are expected to be ready by next year’s Budget.

Mr Mah also unveiled a wide range of proposals for housing in Punggol, Yishun and the Dawson estate in Queenstown last night.

On display were designs by three leading architectural firms – Surbana International Consultants, WOHA Architects and SCDA Architects. They conceptualised 3,000 cutting-edge homes in three housing precincts in Dawson Estate in Queenstown.

The new generation of public housing will give buyers more choices of homes and landscaped community spaces while bringing greenery and waterscapes to their doorstep, said Mr Mah.

Punggol, for example, will get a 4.2km waterway that will link two future reservoirs and become a centrepiece for housing.

But, Mr Mah cautioned: ‘All these plans…are really premised on continued growth.

‘That is unspoken, but that must be so. If there is another major crisis or slowdown, it’s not just a matter of building it – who’s going to buy it?’

The exhibition will be at the HDB Hub in Toa Payoh until Sept 8 and then moves to various estates.

The HDB will gather feedback before proceeding with the plans.

 

Source: The Straits Times 1 Sept 07

Property, financial boom drives growth in services

Overall turnover in the sector expands by 15.6 per cent in second quarter

SINGAPORE’S services sector racked up a robust second quarter, thanks to the booming property and financial sectors.

Overall business receipts for the three months ended June 30 were up 15.6 per cent over the same period last year, according to the Department of Statistics.

Financial services, real estate and business services were among the sectors that enjoyed bumper growth but economists were not optimistic that such robust expansion will be sustainable.

Fortis Bank strategist Joseph Tan said: ‘The main question is how the sub-prime activity in the United States will affect the market. If it is risk-averse, we will be negatively affected if trading volume falls.’

Financial services led the way with a 35.6 per cent rise in turnover, thanks mainly to brisk business in banks, stock brokers, funds managers and investment advisors.

The related field of insurance rose 28.2 per cent. If the financial and insurance sector figures were stripped out of the overall picture, services industry growth in Singapore was still 10.5 per cent.

United Overseas Bank economist Alvin Liew believes, however, that those two sectors are still key to further strong expansion. ‘Growth without financial services remains rather strong, but because financial services registered strong growth, if it slows, the overall robust growth seen here might not be sustainable.’

Real estate, excluding developers, grew by 27.2 per cent, which, in turn, came on the back of robust 19.2 per cent first-quarter growth.

The bumper figures stemmed from the dramatic recovery in the housing market but experts are divided over whether the good times will roll for much longer.

Mr Liew feels real estate ‘can be expected to do well over the next 12 to 18 months’, while Mr Tan believes demand could dry up.

‘A lot of the positive vibes in the property markets have been driven by gains in the equity markets,’ he said.

‘If activity in the markets slow down, real estate activity could slow down too.

‘But there are two trends in the sector. Fundamental demographic demand, such as with the integrated resorts and inflow of migrants, will continue to drive demand over time. But cyclically, we can expect retardation of demand as speculative buying and positive sentiments slow.’

Leasing services, a related field, also enjoyed a good quarter, with receipts up 12.7 per cent, thanks mainly to more business for firms leasing land and water transport gear.

Education services were up 15.9 per cent while business services rose 15.6 per cent. This sector covers fields such as legal and architecture but it was the 36.8 per cent surge in market research and management consultancy firms that really gave the sector a boost.

Transport saw growth across all sectors reflecting the higher returns from freight as regional trade boomed.

Receipts in storage and supporting services rose 12.4 per cent.

Economists expect the services sector to grow fairly strongly for the rest of this year and into 2008.

 

Source: The Straits Times 28 Aug 07

Over 3,000 needy families benefit from HDB grant

THE Housing and Development Board (HDB) said that 3,300 lower income families have received the Additional CPF Housing Grant (AHG) between the scheme’s start in March 2006 and last month. The total disbursed is $40 million.

The HDB said that with the income ceiling for AHG eligibility now increased from $3,000 to $4,000, it expects to reach an additional 1,300 households annually, costing the government an estimated additional $35 million annually.

A spokesman for the HDB added: ‘The actual amount to be spent under the revised AHG would depend on the number of applications received, the number who are eligible and the quantum of loan they get.’

The HDB announced the revised income ceiling for AHG yesterday.

It follows the announcement by Prime Minister Lee Hsien Loong during the National Day Rally that more steps would be taken to make it easier for lower income first-time buyers to own flats.

The maximum grant has also been increased, from $20,000 to $30,000. To receive the maximum grant, a household’s income needs to be $1,500 or less.

The AHG depends on household income; for instance, those earning between $3,501 and $4,000 may receive $5,000. The HDB said it now expects 4,000 households to benefit from AHG each year.

The HDB figures show that the quantum of grants is evenly spread among the different lower-income groups.

HDB said: ‘The distribution of AHG beneficiaries is fairly even across the previous four categories of $5,000, $10,000, $15,000 and $20,000.’

The board spokesman said: ‘The proportion of recipients buying new and resale flats with AHG was about equal. More than 80 per cent of the benefiting households purchased four-room or smaller flats.’

As with the existing AHG scheme, at least one of the flat buyers must have worked continuously for a minimum of two years when they apply to buy the flat.

When the scheme was launched in 2006, HDB estimated that 6,000 households, or roughly 40 per cent of first-time buyers, were expected to benefit from the grant annually.

Prices for resale flats have been increasing. For Q2 2007, HDB’s resale price index registered an increase of 3 per cent quarter-on-quarter.

 

Source: Business Times 25 Aug 07

HDB upgrading: more groups will benefit

Subsidised optional improvements will cheer sandwich class

(SINGAPORE) The Housing and Development Board (HDB) has released details of two new upgrading programmes which are seen as benefiting a broad spectrum of Singaporeans, including the middle class.

The two new programmes, which Prime Minister Lee Hsien Loong mentioned during his National Day Rally speech, are the Home Improvement Programme (HIP) and the Neighbourhood Renewal Programme (NRP).

The government will pay for essential improvements like spalling concrete and repairing ceiling leaks under HIP.

Compared to the existing Main Upgrading Programme (MUP), it will be a targeted programme that will also offer optional improvements like the upgrading of toilets and the replacement of entrance doors, for which the government will subsidise between 87.5-95 per cent of the cost.

Speaking on the sidelines of an event yesterday, Minister of State for National Development (MND) Grace Fu added that the new programmes are expected to, ‘benefit a large number of residents’.

National University of Singapore sociology professor Paulin Straughan told BT: ‘Generally, what was announced focuses on the lower income and the lower-income elderly.’

But she noted that general housing estate upgrades that can be expected through HIP and NRP ‘will benefit everyone’.

Although some of the improvements under these programmes may not cost a lot – renovating a toilet is expected to cost around $2,000 – Prof Straughan believes that there is a growing middle class, or, ’sandwich class’ that finds itself over-stretched.

Typically in their 40s and 50s, with children and ageing parents, some of these people do not even have the option of downgrading. ‘Selling their flats and downgrading is not feasible because they would have bought their homes at a high,’ she added.

That’s why the help will be handy.

HIP will apply to flats built in 1986 or before. MUP applied only to flats built in 1980 or before. Up to 300,000 flats are now eligible compared to just 100,000 flats under MUP.

Co-payments under HIP are also significantly less at an estimated $550-$1,375 compared to $2,490-$6,225 under MUP. ‘One must see co-payment as part of stake-holding,’ said Prof Straughan.

NRP – a general upgrading programme which could be more comprehensive and consultative than in the past – will be completely funded by the government.

While more people are expected to benefit from upgrading works, PropNex CEO Mohamed Ismail pointed out that under MUP, upgrades were more extensive and even included the addition of extra rooms or toilets. ‘In terms of adding value, HIP cannot compare with MUP,’ he said.

Mr Mohamed did add however, that with HIP, homeowners, ‘will enjoy the benefits earlier with fewer disturbances and the value of their property will be enhanced in general’.

With their values, ‘enhanced’, it could be more feasible for cash-strapped home owners to monetise their assets and downgrade.

However, resale figures from ERA Singapore suggests that the downgrading trend has plateaued as the economy has improved.

ERA’s vice-president Eugene Lim notes that the percentage of resale three-room flats has dropped from 36 per cent two years ago to about 30 per cent today. Four-room flats also make up less of the resale market at 38 per cent, down 2 per cent from two years ago, while the the number of resale five-room and executive flats have gone up.

Mr Lim believes that upgrading flats through HIP and NRP is more about improving living conditions. ‘There is a world of difference between a new flat today and a flat built 20 years ago,’ he added.

MND’s Ms Fu also said that HIP and NRP applies to opposition wards as long as they meet the criteria.

 

Source: Business Times 22 Aug 07

Residents look forward to ‘Punggol 21-plus’

They hope new plans for estate will materialise fast; HDB says more details to be revealed soon

PLANS announced by Prime Minister Lee Hsien Loong for Punggol 21 have revived residents’ hopes for more amenities and infrastructure to be built in their growing estate.

Mr Lee said in his National Day Rally speech on Sunday that Punggol 21 is ‘back on track’.

The new ‘Punggol 21-plus’, as Mr Lee called it, will boast features like a freshwater lake and a waterway running through the estate with homes and a town centre built on both banks. The north-eastern coastal suburb will also get recreational facilities like water sports, gardens and parks with jogging tracks, and eateries for al-fresco dining, Mr Lee said.

Residents told The Straits Times on Monday that they hoped the plan will bring more developments to the estate – and fast.

Punggol 21, launched in 1996 by former PM Goh Chok Tong, was heralded as a bold vision to transform the area into a resort-styled ‘new concept housing’. But plans were hit by the 1997 Asian financial crisis which sent demand for flats nosediving, and then by financial troubles in the construction industry in 2003.

Marketing executive Shermaine Tan, 35, said it was with a ‘feeling of deja vu’ that she heard the latest news.

She, like many others, had excitedly signed up for a Punggol flat after hearing it ‘announced with a big bang’.

‘Almost 11 years on, I still haven’t seen the realisation of that dream estate,’ she said.

Punggol Plaza remains the only shopping mall in the estate and there are no recreational facilities like cinemas or swimming pools for her family, said the mother of one.

But one resident, shopkeeper William Lee, 49, said that on the plus side, transport is improving as the estate is now connected by the MRT and LRT. The Kallang-Paya Lebar Expressway will also provide a more direct route to the city for Punggol and Sengkang residents when completed.

Entrepreneur Henry Koh, 33, acknowledged that ‘it takes time’ for estates to develop and is happy to wait: ‘I think the plans are excellent, but will take the next five to 10 years to be realised.’

An HDB spokesman told The Straits Times on Monday that more details about the plan will be revealed soon.

HDB data shows there were 15,727 occupied units in Punggol as of March 31 last year. The estate is projected to have 96,000 units when fully developed.

Speaking at the sidelines of a Singapore Chinese Chamber of Commerce and Industry event, Minister of State for National Development Grace Fu said yesterday that Punggol will have to be built at ‘the right pace’.

‘I don’t think we can put a timeline to it because we do not want to build ahead of demand. But with the increased demand we have seen recently, Punggol’s development will pick up speed.’

Mr Mohamed Ismail, chief executive of real estate firm PropNex, said he expects the value of properties in Punggol to go up. ‘It’s only a matter of time. It will be a different township that shows Singapore lifestyle at its best.’

 

Source: The Straits Times 22 Aug 07

Additional CPF housing grant for lower income to be increased to $30000

Household income ceiling to qualify for grant will be raised to $4,000

THE government will increase the maximum additional Central Provident Fund (CPF) housing grant to the lower income to $30,000 and raise the household income ceiling for the grant to $4,000.

A new scheme will also be introduced to make it easier for older Singaporeans to monetise their Housing Board (HDB) flats.

These were all part of a slew of housing policy changes announced by Prime Minister Lee Hsien Loong yesterday during his National Day Rally speech.

HDB housing policy forms a major pillar of the government’s strategy to narrow the income gap and help the elderly build a retirement nest-egg – major themes in Mr Lee’s speech.

About 85 per cent of Singaporeans live in HDB flats.

Home ownership through an HDB flat is the ‘best form of social welfare for citizens, as it gives every Singaporean a stake in Singapore’s success’, he said.

‘When we help you to buy a house and give you something which is valuable and which is rooted in Singapore, when Singapore grows, property values go up, your flat value goes up.’

To help more of the lower income own their own homes, the cap on the Additional CPF Housing Grant, which was introduced last year, will be raised from $20,000 to $30,000, which is substantial considering that a three-room flat cost $120,000 if bought directly from HDB, said Mr Lee.

More people will also become eligible for the grant as the household income limit will be increased from $3,000 to $4,000, said Mr Lee.

About half of all households here have an income of $4,000 or less.

The prime minister also said that the government will pave the way for elderly Singaporeans to unlock the value of their flats and convert it into a stream of income to supplement their retirement expenses.

The government in 2005 made it easier for the elderly to downgrade to HDB studio apartments sold on a 30-year lease.

An alternative to this will now be offered to elderly Singaporeans – aged 62 and above – living in two or three-room HDB flats, said Mr Lee.

These are the people, unlike those living in bigger flats, who do not really have the luxury of monetising their flats either by renting out a spare room or downgrading to a smaller place.

Under the new scheme, HDB will buy back the tail-end of the lease on their flats and leave them with a shorter lease of 30 years on the same flat.

The flat owner will then receive the payout from HDB in two parts – a lump sum paid upfront and monthly payments for the rest of his or her life which will serve as a form of annuity.

‘A 30-year lease is quite long but we are also studying what happens if it turns out that 30 years is not long enough and have some arrangements if you live longer,’ said Mr Lee.

The Ministry of National Development is looking into this, he added.

 

Source: Business Times 20 Aug 07

Waterfront ‘buzz’ for Punggol in revamped plans

Also in the works: expanded upgrading programme for HDB and private estates

PRIME Minister Lee Hsien Loong yesterday unveiled the new face of heartland living in Singapore which will be represented by Punggol 21+ – the revamped vision of Punggol 21.

This will be a modern waterfront lifestyle with lots of greenery, said Mr Lee during his National Day Rally speech.

To accomplish this, the river mouths of Sungei Punggol and Sungei Serangoon will be dammed up and a waterway will be built to link the two freshwater lakes that would be created.

New housing will be built along both sides of the waterway, and a town centre will be built on the waterfront.

There will be malls, retail outlets, and even al fresco dining by the water, said Mr Lee.

This will offer heartlanders a Marina Bay-type of waterfront living.

A view from one of the proposed flats facing the waterway will be ‘blue and green in lots of places because we will have trees, plants, shrubbery by the water, on top of carparks, on top of buildings, make it cool, make it ecofriendly, green’, said Mr Lee.

The coastline in Punggol 21+ will also be developed to allow water activities such as canoeing and kayaking. The new coastal promenade will offer residents a scenic route to jog or cycle.

The earlier blueprint for Punggol estate – Punggol 21 – was started in 1998 but work on it slowed as a result of the financial crisis. But now is the time to get things back on track – and on a new track at that, said Mr Lee.

Punggol 21+ will represent the ‘face of the new Singapore – a city with fun and buzz’.

‘But even with the fun and buzz, we retain our present image – clean, green, safe island. This is Singapore. And it’s quite important that we keep that brand recognition even as we acquire new attributes and new lifestyles,’ said Mr Lee.

Older estates will not be forgotten and several enhancements to various housing upgrading programmes were announced by Mr Lee yesterday.

These will benefit not only HDB dwellers, but those who live in private estates as well.

Currently, private estates are eligible for grants under the Estate Upgrading Programme (EUP) for major upgrading purposes.

‘But even then private estates sometimes still feel like they are step-children – neglected,’ noted Mr Lee.

He said that the government has accepted the recommendations made by a committee formed to look into this. The committee was chaired by Minister of State for Finance and Transport Lim Hwee Hua.

The recommendations include a revamp of the EUP to bring together and coordinate all the works done under the programme and an extension of the Community Improvement Project Committee (CIPC) funds to private estates to carry out smaller scale – but more timely – enhancements.

The CIPC funds are currently only available to HDB housing estates.

As for HDB estates, selected sites within old estates are being redeveloped. But in estates where a large piece of land can be cleared, HDB will do more to transform the whole area, said Mr Lee.

This has already started in Dawson estate in Queenstown where a Selective En-bloc Redevelopment Scheme (Sers) project – Forfar Heights – has been completed.

About 10,000 new HDB and private flats will be built in three HDB precincts and the precincts will be integrated with a new linear park to be built on top of the Alexandra Canal.

Middle-aged estates will also be given a new boost with new upgrading programmes to replace existing ones. The Interim Upgrading Programme (IUP) – which was for individual precincts – will be replaced by the Neighbourhood Renewal Programme (NRP) which will combine two or more precincts so that more and better facilities can be built.

This means that in addition to standard items such as BBQ pits and community gardens, non-standard items like street soccer courts and skating parks can be introduced as well, said Mr Lee.

For individual flats, the existing Main Upgrading Programme (MUP) will be replaced by the new Home Improvement Programme (HIP) which will make possible practical improvements within the flat such as the fixing of spalling concrete on ceilings and the upgrading of toilets.

These new programmes are being introduced in response to feedback from residents, said Mr Lee.

About 100,000 flats – half of those built up till 1980 – have benefitted under the MUP. The HIP will benefit the remaining half.

In addition, the HIP will be extended to flats built between 1981 and 1986, which will cover another 200,000 flats, one quarter of the total flats here.

All these flats will also be eligible for the NRP.

In fact, the NRP will be extended to even younger flats – those built between 1987 and 1989, which means another 60,000 flats will enjoy improvements.

The effects of all these, will be that nearly all the estates in Singapore will enjoy some form of upgrading or enhancement, said Mr Lee.

The new look of public housing will be one of a first-class living environment with greenery and water, where communities are brought closer together.

‘No other city in the world can do this – public housing that is attractive, that is affordable, that’s appealing, that gives a quality home for every citizen and gives you an asset that can appreciate in value and also help to provide for your old age. But in Singapore we can do it, provided we make the effort and work hard together,’ said Mr Lee.

 

Source: Business Times 20 Aug 07

HDB boosts first-timers’ chances of getting a flat

90% of flats offered in build-to-order, balloting exercises reserved for them

THE Housing Board has tweaked its priority scheme to greatly increase the chances of first-time buyers and newly-weds getting sought-after new flats.

From now on, 90 per cent of all new flats offered in the HDB’s build-to-order (BTO) and balloting exercises will be reserved for such applicants.

In the HDB computer ballot, only 10 per cent of the homes on offer will go to second-time applicants.

Once this level has been reached, all other applicants from this segment will be withdrawn.

It effectively leaves the field clear for those who have never bought a new HDB flat.

For newly-weds who want a flat nearer a set of parents, their chances are further boosted.

Such couples already have a helping hand under the Married Child Priority Scheme (MCPS), which gives them double the chance during the balloting. This will improve since 90 per cent of flats are now set aside for firsttimers.

Under the old system, there was no quota, so first-timers were in the mix along with everyone else. If there are not enough second-timer applicants to take up the 10 per cent allocation, the leftover flats will also be freed up for first-timers.

The revised scheme also gives a leg-up to applicants who have tried and failed in four or more ballots. On your fifth attempt, for example, you will be accorded one extra chance. This means your name goes into the ballot one more time.

For your sixth try, you get entered two more times, and so on.

An HDB spokesman said about 380 applicants were unsuccessful for four or more times in BTO and balloting exercises under the priority scheme run from January 2002 to March this year.

Balloting is used when the number of applicants outstrips available flats in an estate. It often occurs when new flats, or those in popular, mature estates are up for grabs.

The move follows a recent announcement by the Minister of State for National Development, Ms Grace Fu, that the HDB would refine the priority scheme for home-seekers with greater needs.

This was one of the central issues raised during several dialogues with residents, called Forum on HDB Heartware, that started last November.

The forum set out to find ways of boosting community ties and giving residents more say in how estates are run.

The HDB said yesterday that under the old scheme, 80 per cent of flat supply generally goes to first-timers. It also added that ‘the improvement in chances will depend on flat supply and the number of applicants’.

The new priority scheme gets its first tryout at Punggol Vista, a BTO project launched yesterday.

Located at the junction of Punggol Central and Punggol Road, the project has 628 units ranging from two-room to four-room flats. Applications close on Sept 3.

First-timer Leonard Tan, 27, who has been unsuccessful in balloting for an HDB flat, welcomed the change. The air force regular and his wife qualified as a newly-wed couple who wanted to live near their parents, but they were assigned a queue number in excess of 2,000 in a balloting exercise for 465 flats.

‘I’m more confident now of my chances, although with so many first-timers in the market, I know competition will still be tough,’ he said yesterday.

 

Source: The Straits Times 15 Aug 07

HDB Statistics

Resale price index

What it is

This is an index that shows the overall price movement of resale HDB flats, with the fourth quarter of 1998 as the base period when the index started at 100.

The index is calculated using resale prices by date of registration.

In the second quarter, HDB’s index grew by about 3 per cent over the previous quarter – the strongest growth in almost a decade.

This shows a general increase in prices across most flat types and towns.

Why it is important

The index reflects price appreciation across time.

It allows both homebuyers and owners to track overall price movements of the market, and reflects the general sentiment of the HDB resale market.

Median cash-over-valuation by town and flat type

What it is

Cash-over-valuation (COV) refers to the sum of cash that needs to be paid by a buyer over and above the market valuation of a flat.

What the median COV indicates is that half of the units were sold for a COV above that value and half below.

The latest HDB data for the second quarter shows 30 per cent of all resale cases were transacted at or below valuation, with an overall median COV of about $7,000.

Why it is important

Again, these figures give a more accurate indication of the premium that buyers are paying for HDB flats. It disregards the high COVs paid for flats in exceptional circumstances.

Buyers can use this figure as a gauge when buying, and sellers can use this as a starting point in deciding their asking price.

Number of resale applications by flat type

What it is

This figure gives an indication of the volume of flats transacted, according to flat type.

Transactions grew 38 per cent from 6,300 last quarter to 8,700 this quarter.

Why it is important

It shows how hot the HDB resale market is, and what sort of flats are available to meet the location and flat type preferences of flat buyers.

It also reflects general market sentiment.

Median resale prices by town and flat type

What it is

Median prices are provided for resale transactions of a particular flat type in a given housing estate.

What the median price tells you is that half of the units were sold above that value, and the other half below that value.

Instead of the median price, HDB used to provide the average price each quarter, but this was misleading as a single large transaction can distort the overall picture, HDB said recently.

Why it is important

These figures give a more accurate picture of what the typical price of a flat is in reality, in contrast to muchpublicised ‘headline’ prices for flats with exceptional conditions such as good views and location – for instance, the five-room flat at Kim Tian Place that sold for $720,000 in June.

Buyers can use this figure as a gauge of average prices, and sellers can manage their expectations, using this to decide on realistic asking prices.

Individual resale transactions

What it is

This search engine enables members of the public to find out the transacted prices of individual flats by block and flat type.

Detailed enquiries can be made at http://www.hdb.gov.sg/

Why it is important

Individuals can get specific information relevant to their own situations.

 

Source: The Straits Times 12 Aug 07

HDB subletting market statistics

Median subletting rents by town and flat type

What it is

Median prices are provided for rental rates by town and flat type registered in that quarter.

What the median price tells you is that half of the units were rented above that price and half below.

Why it is important

These figures give a more accurate picture of subletting rates for HDB flats, by town and flat type.

They discount rare cases of flats that fetch high rents due to special attributes.

The data is based on rents that landlords themselves have declared when filling out HDB subletting application forms. Still, HDB believes it serves as a useful reference for prospective tenants.

Number of subletting approvals by flat type

What it is

It shows the number of approved flats available for rent by flat type.

Why it is important

This is the first time HDB has released such data. It paints a detailed picture of how many rental HDB flats are available for potential tenants.

HDB data shows a 50 per cent increase in the number of subletting approvals, from 2,400 cases in the first quarter to 3,600 in the second quarter.

HDB also says there are currently about 14,600 HDB flat owners who have been given approval to sublet their flats on the open market.

 

Source: The Straits Times 12 Aug 07