Source : The Straits Times, Nov 27, 2008
IN THESE leaner economic times, the cheapest public housing option for newly-wed couples has been three times subscribed.
The Housing Board's latest Build-To-Order (BTO) flats, Punggol Arcadia, closed yesterday with 2,344 applications for just 750 units. The final update will be made today at 2pm.
The overwhelming response 'demonstrates that there is still a high demand for public housing', said the chief executive of property consultancy PropNex, Mr Mohamed Ismail.
HDB launched Punggol Arcadia, at the junction of Punggol Place and Punggol Field, two weeks ago.
Buyers could choose from 120 three-room, 465 four-room, and 165 five-room flats. The flats cost between $181,000 and $211,000 for a three-room unit, between $268,000 and $327,000 for a four-room unit, and between $356,000 and $416,000 for a five-room unit.
The prices represent an increase of 7 to 8 per cent from those at neighbouring Punggol Sapphire, another BTO project HDB launched six months ago.
PropNex noted that the median price for the flats was 'only a few thousand dollars below that of Punggol resale flats'.
This means buyers still want new flats, otherwise they could easily opt for a resale flat where they would not have to wait to move in, and can enjoy grants of up to $70,000.
According to HDB data, only 262 applications were received on the first day of application. Yet, yesterday's results mean less than 40 per cent of applicants will get a flat.
'Given these results, we can expect to see the HDB resale market continue to do well for the whole year with overall 14 per cent growth,' said Mr Ismail.
He added that demand for three- and four-room flats will not wane in the slowing economy, but 'there may be more cautious sentiments where five-room flats are concerned'.
Thursday, November 27, 2008
Mah Sees Softening Of Property Prices
Source : The Straits Times, Nov 27, 2008
Future movements will depend on how industry adjusts to conditions
PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.
Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'.
Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.
He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.
Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.
'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.
Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.
Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.
Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.
Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'
But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.
Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.
'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Future movements will depend on how industry adjusts to conditions
PROPERTY prices will inevitably soften and demand will weaken amid slower economic growth, National Development Minister Mah Bow Tan said yesterday.
Private housing prices fell 2.4 per cent in the third quarter, and further price movements will 'depend on the severity of the economic slowdown'. Mr Mah was speaking at the 49th anniversary dinner of the Real Estate Developers' Association of Singapore (Redas) at the Shangri-La Hotel.
He said future price movements will also depend on the 'ability of the industry to make adjustments in response to the changes in economic conditions'.
Meanwhile, Mr Simon Cheong, Redas president and chief executive of upscale residential developer SC Global Developments, said he expects construction prices to ease off with the trend of falling oil prices and easing inflation.
'Current pressure on construction services (will) begin to moderate once the lag in demand kicks in with a slowdown in new commitments by developers,' he said.
Mr Mah also addressed recent moves by Redas to present market analysts with other sources of market data after they had drawn bearish conclusions about the industry recently.
Redas had said the analysts' findings were based on official numbers from the Urban Redevelopment Authority (URA), which they felt are too general. Reports said the industry body met property analysts from local and foreign research firms two weeks ago to advise them that URA data may not give an accurate picture of specific sections of the market.
Mr Mah said the Government has a vital role in guarding against 'irrational market behaviour, such as excessive speculation, that is not in sync with economic fundamentals', to ensure the long-term stability and smooth functioning of the property market.
Mr Cheong agreed: 'The market is at best currently fragile and nervous. Market stability is important to prevent a widespread decimation of asset values...Redas will do its best to work closely with the Government to provide timely market feedback to facilitate a timely and effective response that the property market needs.'
But there are limits to what the Government can and should do, said Mr Mah. For one thing, it cannot work against market forces and try to prop up property prices artificially.
Mr Mah explained: 'Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run. Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further...It is in our interest to ensure that the property prices move in line with economic fundamentals as it affects home ownership, asset values, retirement savings and other sectors of the economy.'
But Mr Cheong said: 'Only with confidence will demand return to the market.' He advised Redas members to 'take this opportunity to do our house cleaning, improve our product and get ready for the next upturn'.
'Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Serangoon Central To Get Mega Shopping Mall
Source : The Straits Times, Nov 27, 2008
$1.3b centre, about twice the size of suburban malls here, is expected to be completed by 2010
IT IS full steam ahead for a $1.3 billion mega shopping mall being built at Serangoon Central - in defiance of the current gloomy times.
Construction firm Low Keng Huat was yesterday awarded a $295 million contract to build the mall and the firm is grabbing the contract with both hands.
Its chief financial officer, Mr Chin Yeok Yuen, said private contracts of such a scale are 'hard to come by' these days as many developers have delayed projects in light of the slowdown.
Developer Gold Ridge, a special purpose vehicle made up of mainly institutional investors from the United States and Europe, is confident of the project's long-term success.
Ms Victoria Sharpe, the chief executive of Pramerica Real Estate Investors (Asia) which is advising the investors, said the mall has tremendous potential to be developed into an iconic retail centre serving Singapore's north-east.
It is also strategically located in the heart of Serangoon with its large residential population and numerous schools.
The yet-to-be-named six-storey mall - which sits above Serangoon MRT station and the upcoming Serangoon Circle Line station - will be integrated with the stations and a new bus interchange.
It will boast a 24-hour zone with shops, food and beverage outlets, a 10-screen cineplex, a 60,000 sq ft hypermarket and a 10,000 sq ft gourmet supermarket. Also, SAA Architects has conceptualised a 'green necklace' along the exterior of the eco-friendly building. This involves a series of lush green spaces. There will also be a landscaped sky terrace and an internal roof garden.
A new 16-bay bus interchange will take up part of the mall's ground floor. The mall will have a total net lettable area of slightly more than 618,000 sq ft. That will make it bigger than Ang Mo Kio Hub, a suburban mall that is also linked to a bus interchange and an MRT station.
'Suburban malls are usually about 300,000 to 400,000 sq ft in size. This one is big and will be more exciting as it can accommodate more concepts, activities and experiences,' said property consultancy Knight Frank's head of retail, Ms Sherene Sng.
Gold Ridge plans to include a department store that may occupy up to 60,000 sq ft, as well as a 500-seat food court. There will be more than 400 specialty shops. The firm is investing $1.3 billion, including land cost, in the project. It had successfully tendered for the site in March this year, with a bid of $800.9 million or $850 per sq ft per plot ratio.
The existing shopping centre portfolio of Pramerica Real Estate Investors (Asia) includes Tiong Bahru Plaza, Century Square and upcoming Tampines 1.
The weak economic outlook is expected to hit retail sales but suburban malls with high traffic may fare better than some prime downtown malls. Said Ms Sng: 'Suburban mall rents will remain fairly resilient, going ahead. If they were to fall, the decline will not be as great as the fall in rents in prime areas.'
Builder Low Keng Huat yesterday said it had been awarded the construction contract for Serangoon Central Mall, which comprises the mall and bus interchange. The project is expected to be completed by October 2010.
The total value of the firm's ongoing construction projects, including Serangoon Central mall, is about $900 million as of yesterday, it said in its statement.
Guthrie Consultancy Services is the project manager, retail consultant and marketing manager for the mall. The mall will eventually be held by two or possibly several funds managed by Pramerica.
--------------------------------------------------------------------------------
Coming up
WHAT'S planned for the mall:
More than 400 specialty shops
A 10-screen cineplex A hypermarket, a gourmet supermarket and a department store
A 500-seat food court
A 24-hour zone with shops as well as food and beverage outlets
A new 16-bay bus interchange will take up a portion of the ground floor of the shopping centre
$1.3b centre, about twice the size of suburban malls here, is expected to be completed by 2010
IT IS full steam ahead for a $1.3 billion mega shopping mall being built at Serangoon Central - in defiance of the current gloomy times.
Construction firm Low Keng Huat was yesterday awarded a $295 million contract to build the mall and the firm is grabbing the contract with both hands.
Its chief financial officer, Mr Chin Yeok Yuen, said private contracts of such a scale are 'hard to come by' these days as many developers have delayed projects in light of the slowdown.
Developer Gold Ridge, a special purpose vehicle made up of mainly institutional investors from the United States and Europe, is confident of the project's long-term success.
Ms Victoria Sharpe, the chief executive of Pramerica Real Estate Investors (Asia) which is advising the investors, said the mall has tremendous potential to be developed into an iconic retail centre serving Singapore's north-east.
It is also strategically located in the heart of Serangoon with its large residential population and numerous schools.
The yet-to-be-named six-storey mall - which sits above Serangoon MRT station and the upcoming Serangoon Circle Line station - will be integrated with the stations and a new bus interchange.
It will boast a 24-hour zone with shops, food and beverage outlets, a 10-screen cineplex, a 60,000 sq ft hypermarket and a 10,000 sq ft gourmet supermarket. Also, SAA Architects has conceptualised a 'green necklace' along the exterior of the eco-friendly building. This involves a series of lush green spaces. There will also be a landscaped sky terrace and an internal roof garden.
A new 16-bay bus interchange will take up part of the mall's ground floor. The mall will have a total net lettable area of slightly more than 618,000 sq ft. That will make it bigger than Ang Mo Kio Hub, a suburban mall that is also linked to a bus interchange and an MRT station.
'Suburban malls are usually about 300,000 to 400,000 sq ft in size. This one is big and will be more exciting as it can accommodate more concepts, activities and experiences,' said property consultancy Knight Frank's head of retail, Ms Sherene Sng.
Gold Ridge plans to include a department store that may occupy up to 60,000 sq ft, as well as a 500-seat food court. There will be more than 400 specialty shops. The firm is investing $1.3 billion, including land cost, in the project. It had successfully tendered for the site in March this year, with a bid of $800.9 million or $850 per sq ft per plot ratio.
The existing shopping centre portfolio of Pramerica Real Estate Investors (Asia) includes Tiong Bahru Plaza, Century Square and upcoming Tampines 1.
The weak economic outlook is expected to hit retail sales but suburban malls with high traffic may fare better than some prime downtown malls. Said Ms Sng: 'Suburban mall rents will remain fairly resilient, going ahead. If they were to fall, the decline will not be as great as the fall in rents in prime areas.'
Builder Low Keng Huat yesterday said it had been awarded the construction contract for Serangoon Central Mall, which comprises the mall and bus interchange. The project is expected to be completed by October 2010.
The total value of the firm's ongoing construction projects, including Serangoon Central mall, is about $900 million as of yesterday, it said in its statement.
Guthrie Consultancy Services is the project manager, retail consultant and marketing manager for the mall. The mall will eventually be held by two or possibly several funds managed by Pramerica.
--------------------------------------------------------------------------------
Coming up
WHAT'S planned for the mall:
More than 400 specialty shops
A 10-screen cineplex A hypermarket, a gourmet supermarket and a department store
A 500-seat food court
A 24-hour zone with shops as well as food and beverage outlets
A new 16-bay bus interchange will take up a portion of the ground floor of the shopping centre
Reserve-List Hotel Site At Bt Chermin Now Open For Application
Source : The Business Times, November 27, 2008
Urban Redevelopment Authority on Thursday released for application through the reserve list a hotel site at Bukit Chermin. The 3-hectare site is being offered on a 60-year leasehold tenure.
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'The release of the site at Bukit Chermin for a distinctive lifestyle hotel development will contribute to and further enhance the attractiveness of the Southern Waterfront and Southern Ridges,' URA said.
Located along a beautiful coastline with panoramic views of Keppel Harbour, the plot, which has a maximum permissible gross floor area of 10,000 square metres, is envisaged to be developed into a distinctive lifestyle hotel.
In addition to accommodation facilities, the proposed hotel development is planned to include offerings of lifestyle programmes and services that will cater to discerning international visitors, URA said.
'This will add value and strengthen the appeal of Singapore as a premium tourism destination,' Singapore's planning authority added.
Developers interested in bidding for this site may make an application to URA accompanied with an undertaking of their minimum bid.
If this price is acceptable to the state, the site will then be launched for tender. The tender will be evaluated under a dual-envelope system.
Tenderers are required to submit their concept proposals and tender prices in two separate envelopes.
The concept proposals will first be evaluated against a set of criteria including business and development concepts.
At the second stage, the price envelopes of proposals with acceptable concepts will be opened for consideration and the site will then be awarded to the tenderer with the highest bid among those with acceptable concept proposals.
The site includes four black and white bungalows.
Urban Redevelopment Authority on Thursday released for application through the reserve list a hotel site at Bukit Chermin. The 3-hectare site is being offered on a 60-year leasehold tenure.
+Logo.gif)
'The release of the site at Bukit Chermin for a distinctive lifestyle hotel development will contribute to and further enhance the attractiveness of the Southern Waterfront and Southern Ridges,' URA said.Located along a beautiful coastline with panoramic views of Keppel Harbour, the plot, which has a maximum permissible gross floor area of 10,000 square metres, is envisaged to be developed into a distinctive lifestyle hotel.
In addition to accommodation facilities, the proposed hotel development is planned to include offerings of lifestyle programmes and services that will cater to discerning international visitors, URA said.
'This will add value and strengthen the appeal of Singapore as a premium tourism destination,' Singapore's planning authority added.
Developers interested in bidding for this site may make an application to URA accompanied with an undertaking of their minimum bid.
If this price is acceptable to the state, the site will then be launched for tender. The tender will be evaluated under a dual-envelope system.
Tenderers are required to submit their concept proposals and tender prices in two separate envelopes.
The concept proposals will first be evaluated against a set of criteria including business and development concepts.
At the second stage, the price envelopes of proposals with acceptable concepts will be opened for consideration and the site will then be awarded to the tenderer with the highest bid among those with acceptable concept proposals.
The site includes four black and white bungalows.
New York Home Prices See Steep Decline
Source : The Business Times, November 27, 2008
(NEW YORK) The economic crisis is finally crashing New York's real estate party, forcing the city's residents to start sharing the rest of the country's pain.
Feeling the heat: It is the end of a chapter in the storied annals of Manhattan real estate, with some brokers advising sellers of apartments in the area to slash their asking prices by 10 per cent to 15 per cent compared with prices on similar properties
And with so much of the city's financial well-being and its citizens' psyche invested in both Wall Street and the prices of its homes, the decline is triggering fears of a return to the dark days of the 1970s and 1980s. At its worst that triggers images of trash piling up on the streets and a higher crime rate.
In a few pockets of the city, prices have already fallen as much as 30 per cent from their highs, according to some brokers, and the declines will spread to other areas by January as job losses mount and as bankers come to terms with vanishing, or at least diminishing, bonus cheques because of the financial mayhem of the past year.
'There's going to be even more supply, people are going to have to drop their prices even more,' said Elaine Clayman, a broker at the high-end realty group Brown Harris Stevens, which has operations in the Hamptons and Palm Beach as well as New York.
She is already advising sellers of Manhattan apartments to slash their asking prices by 10 per cent to 15 per cent compared with prices on similar properties, and will not work with sellers who overprice. 'It's just going to be a bad relationship. I don't need that.'
It is the end of a chapter in the storied annals of Manhattan real estate. Until about three months ago, the real estate industry was issuing calming noises and pointing to figures that showed the average price of an apartment in Manhattan was still climbing.
'New York was an oasis,' said Bob Toll, chief executive of Toll Brothers Inc, the largest US luxury builder, which has projects in Manhattan and Brooklyn. 'New York had its own separate market.'
Now, Toll is saying layoffs in the financial sector, 16,000 from securities companies in October alone, means that New York has lost some of the advantage it had.
'In another market, this apartment would be gone,' said broker Maureen Smith as she walked up the sunny stairs of a US$799,000- priced one-bedroom duplex in an Upper West Side high-rise.
Two years ago, Lynna Gott, Ms Smith's partner, sold a similar unit in the building for US$860,000. Ms Smith was there last Sunday afternoon to show the apartment, but traffic is thin, Ms Gott said. 'It's a slow season,' Ms Smith said. 'But it's also the market.'
Inventory is piling up because of the falling numbers of sales, and the move by some people in financial distress to put their homes on the market. A strong dollar is also damping foreign demand.
Manhattan's October listings were up 37.3 per cent compared with last year, said Jonathan Miller, president and CEO of appraisal firm Miller Samuel.
While the median price of a Manhattan apartment, US$928,263 in the third quarter, still rose 7.4 per cent compared with a year earlier, that might not hold true in the fourth quarter, Mr Miller said. Today's typical apartment is often worth less than it was a year ago.
The latest Standard & Poor's/Case-Shiller home price indices released on Tuesday showed that prices in the larger metropolitan New York area fell an annual 7.3 per cent in September. That was before the worst of the stock market meltdown in October.
Prices in parts of the city have been sliding rapidly. In Harlem and East Harlem, areas that had been gentrifying quickly, they were down 20 per cent in the third quarter from a year earlier to an average US$440,000, according to Miller Samuel.
In the areas of Hamilton and Morningside Heights, which are in and just south of Harlem, the drop has been an even steeper 30.1 per cent to US$397,500 median price for co-op apartments and condominiums.
Even the average price in Soho and Tribeca, two of New York's toniest neighbourhoods, fell 21 per cent to US$1.9 million.
And while some neighbourhoods have seen prices hold up or even rise that may be deceptive, said Jed Cohen, a vice-president at brokerage Cooper & Cooper. More and more developers are paying closing costs, which can amount to 6 per cent of the sales price. For tenants, landlords are often paying the broker's fee and up to two months' rent, Mr Cohen said.
'I'm encouraging all of my clients at this point, 'Hey, make an offer'. Some landlords are more desperate than others,' Mr Cohen said. -- Reuters
(NEW YORK) The economic crisis is finally crashing New York's real estate party, forcing the city's residents to start sharing the rest of the country's pain.
Feeling the heat: It is the end of a chapter in the storied annals of Manhattan real estate, with some brokers advising sellers of apartments in the area to slash their asking prices by 10 per cent to 15 per cent compared with prices on similar propertiesAnd with so much of the city's financial well-being and its citizens' psyche invested in both Wall Street and the prices of its homes, the decline is triggering fears of a return to the dark days of the 1970s and 1980s. At its worst that triggers images of trash piling up on the streets and a higher crime rate.
In a few pockets of the city, prices have already fallen as much as 30 per cent from their highs, according to some brokers, and the declines will spread to other areas by January as job losses mount and as bankers come to terms with vanishing, or at least diminishing, bonus cheques because of the financial mayhem of the past year.
'There's going to be even more supply, people are going to have to drop their prices even more,' said Elaine Clayman, a broker at the high-end realty group Brown Harris Stevens, which has operations in the Hamptons and Palm Beach as well as New York.
She is already advising sellers of Manhattan apartments to slash their asking prices by 10 per cent to 15 per cent compared with prices on similar properties, and will not work with sellers who overprice. 'It's just going to be a bad relationship. I don't need that.'
It is the end of a chapter in the storied annals of Manhattan real estate. Until about three months ago, the real estate industry was issuing calming noises and pointing to figures that showed the average price of an apartment in Manhattan was still climbing.
'New York was an oasis,' said Bob Toll, chief executive of Toll Brothers Inc, the largest US luxury builder, which has projects in Manhattan and Brooklyn. 'New York had its own separate market.'
Now, Toll is saying layoffs in the financial sector, 16,000 from securities companies in October alone, means that New York has lost some of the advantage it had.
'In another market, this apartment would be gone,' said broker Maureen Smith as she walked up the sunny stairs of a US$799,000- priced one-bedroom duplex in an Upper West Side high-rise.
Two years ago, Lynna Gott, Ms Smith's partner, sold a similar unit in the building for US$860,000. Ms Smith was there last Sunday afternoon to show the apartment, but traffic is thin, Ms Gott said. 'It's a slow season,' Ms Smith said. 'But it's also the market.'
Inventory is piling up because of the falling numbers of sales, and the move by some people in financial distress to put their homes on the market. A strong dollar is also damping foreign demand.
Manhattan's October listings were up 37.3 per cent compared with last year, said Jonathan Miller, president and CEO of appraisal firm Miller Samuel.
While the median price of a Manhattan apartment, US$928,263 in the third quarter, still rose 7.4 per cent compared with a year earlier, that might not hold true in the fourth quarter, Mr Miller said. Today's typical apartment is often worth less than it was a year ago.
The latest Standard & Poor's/Case-Shiller home price indices released on Tuesday showed that prices in the larger metropolitan New York area fell an annual 7.3 per cent in September. That was before the worst of the stock market meltdown in October.
Prices in parts of the city have been sliding rapidly. In Harlem and East Harlem, areas that had been gentrifying quickly, they were down 20 per cent in the third quarter from a year earlier to an average US$440,000, according to Miller Samuel.
In the areas of Hamilton and Morningside Heights, which are in and just south of Harlem, the drop has been an even steeper 30.1 per cent to US$397,500 median price for co-op apartments and condominiums.
Even the average price in Soho and Tribeca, two of New York's toniest neighbourhoods, fell 21 per cent to US$1.9 million.
And while some neighbourhoods have seen prices hold up or even rise that may be deceptive, said Jed Cohen, a vice-president at brokerage Cooper & Cooper. More and more developers are paying closing costs, which can amount to 6 per cent of the sales price. For tenants, landlords are often paying the broker's fee and up to two months' rent, Mr Cohen said.
'I'm encouraging all of my clients at this point, 'Hey, make an offer'. Some landlords are more desperate than others,' Mr Cohen said. -- Reuters
US Commercial Property Sales To Fall 70%
Source : The Business Times, November 27, 2008
Value of such deals will slump to US$142b this year, says research firm
(SEATTLE) The value of US commercial real estate sales this year will fall to US$142 billion, 70 per cent less than last year's record US$467 billion, as the economy slows and borrowing costs rise, according to Reis Inc, a New York-based real estate research firm.
Office, apartment, retail and industrial property transactions totalled US$110 billion through the third quarter, Reis said in its capital markets survey. Sales are slowing as 2008 draws to a close, likely resulting in a yearly total of less than the implied annual rate of US$147 billion if the pace through nine months were to continue, said Reis chief economist Sam Chandan.
'The credit crisis has proven recalcitrant and has spilled over to the real economy,' Mr Chandan said on a conference call on Tuesday.
Property values fell as the global credit crunch caused financing to become scarce and boosted borrowing costs. Office building prices declined 15.4 per cent in the third quarter from their peak, and were down 1.8 per cent from the second quarter, Reis said. Apartments declined 17 per cent from the high and fell 3.7 per cent from the second quarter.
Retail property prices dropped 7.3 per cent from the peak and 0.8 per cent from the second quarter. Industrial properties such as warehouses fell 10.6 per cent from the high and 2 per cent from the prior quarter, Reis noted.
Commercial mortgage delinquency and default rates will increase in 2009, said Mr Chandan. The recession will result in rents and occupancy 'differing significantly from expectations in underwriting in 2006 and early 2007' when landlords took out loans for the properties, Chandan said.
While commercial mortgage delinquency rates 'are on a par with the residential sector' and defaults remain low, 'the performance of properties will be insufficient to cover debt service and escrows are being drawn down' as a result, Mr Chandan explained. 'As those gaps increase and escrows begin to evaporate, the potential for distress increases in markets across the country.'
As the end of this year approaches, demand to refinance loans will rise, Mr Chandan predicted. 'We expect an imbalance will emerge between demand for refinancing and availability if new sources don't emerge over the next year,' he said.
'We're in the middle of deleveraging,' he added. 'That has the potential to depress values below' what properties generate in rental income. -- Bloomberg
Value of such deals will slump to US$142b this year, says research firm
(SEATTLE) The value of US commercial real estate sales this year will fall to US$142 billion, 70 per cent less than last year's record US$467 billion, as the economy slows and borrowing costs rise, according to Reis Inc, a New York-based real estate research firm.
Office, apartment, retail and industrial property transactions totalled US$110 billion through the third quarter, Reis said in its capital markets survey. Sales are slowing as 2008 draws to a close, likely resulting in a yearly total of less than the implied annual rate of US$147 billion if the pace through nine months were to continue, said Reis chief economist Sam Chandan.
'The credit crisis has proven recalcitrant and has spilled over to the real economy,' Mr Chandan said on a conference call on Tuesday.
Property values fell as the global credit crunch caused financing to become scarce and boosted borrowing costs. Office building prices declined 15.4 per cent in the third quarter from their peak, and were down 1.8 per cent from the second quarter, Reis said. Apartments declined 17 per cent from the high and fell 3.7 per cent from the second quarter.
Retail property prices dropped 7.3 per cent from the peak and 0.8 per cent from the second quarter. Industrial properties such as warehouses fell 10.6 per cent from the high and 2 per cent from the prior quarter, Reis noted.
Commercial mortgage delinquency and default rates will increase in 2009, said Mr Chandan. The recession will result in rents and occupancy 'differing significantly from expectations in underwriting in 2006 and early 2007' when landlords took out loans for the properties, Chandan said.
While commercial mortgage delinquency rates 'are on a par with the residential sector' and defaults remain low, 'the performance of properties will be insufficient to cover debt service and escrows are being drawn down' as a result, Mr Chandan explained. 'As those gaps increase and escrows begin to evaporate, the potential for distress increases in markets across the country.'
As the end of this year approaches, demand to refinance loans will rise, Mr Chandan predicted. 'We expect an imbalance will emerge between demand for refinancing and availability if new sources don't emerge over the next year,' he said.
'We're in the middle of deleveraging,' he added. 'That has the potential to depress values below' what properties generate in rental income. -- Bloomberg
Abu Dhabi Moves To Revive Housing Market
Source : The Business Times, November 27, 2008
(ABU DHABI) Abu Dhabi deepened efforts to stave off economic damage from the credit crisis yesterday, launching a government- backed lender to revive the housing market as major Dubai developers were reported to halt sales.
The lender, called Abu Dhabi Finance, would back mortgages to the emirate's top three developers as a first step, and would extend its reach countrywide into the United Arab Emirates (UAE), the new company said in a statement.
The UAE suffered a direct hit from the credit crisis after lending to its booming real estate sector dried up and property prices plunged, forcing the government to create a rescue vehicle called Emirates Development Bank that would serve to consolidate and absorb finance firms under pressure.
Leading banks have cut off consumer lending to some customers and the country's biggest lender, Amlak, has stopped underwriting new mortgages due to the credit crisis.
The new company would be a joint venture between Mubadala - the government development agency - Abu Dhabi Commercial Bank, Aldar Properties, Sorouh Real Estate and the Tourism Development and Investment Company.
'The company aims to play a major role in helping Abu Dhabi meet its long term goals of sustainable economic growth by financing the growing demand for real estate,' the company said.
Mubadala Development is an investment vehicle owned by Abu Dhabi, the dominant emirate within the seven-member UAE and holder of most of its oil reserves.
Separately, newspaper Emirates Business reported that two Dubai developers, state-owned Nakheel and Limitless, which is controlled by government- owned Dubai World, would halt property sales until Dubai's real estate market improves.
Earlier this week, Dubai announced that it will pull back on its building spree in light of the financial crisis, according to Mohamed Alabbar, a Dubai government official and chairman of Emaar.
The paper also said that Dubai-based developer Emaar had moved to ease the impact of the credit crisis by loosening restrictions on the resale of properties, allowing investors to sell before paying Emaar 30 per cent of the property value, a newspaper reported yesterday.
Previously, properties purchased off-plan - or before they are built - could only be resold once 30 per cent of the agreed price had been paid. -- Reuters
(ABU DHABI) Abu Dhabi deepened efforts to stave off economic damage from the credit crisis yesterday, launching a government- backed lender to revive the housing market as major Dubai developers were reported to halt sales.
The lender, called Abu Dhabi Finance, would back mortgages to the emirate's top three developers as a first step, and would extend its reach countrywide into the United Arab Emirates (UAE), the new company said in a statement.
The UAE suffered a direct hit from the credit crisis after lending to its booming real estate sector dried up and property prices plunged, forcing the government to create a rescue vehicle called Emirates Development Bank that would serve to consolidate and absorb finance firms under pressure.
Leading banks have cut off consumer lending to some customers and the country's biggest lender, Amlak, has stopped underwriting new mortgages due to the credit crisis.
The new company would be a joint venture between Mubadala - the government development agency - Abu Dhabi Commercial Bank, Aldar Properties, Sorouh Real Estate and the Tourism Development and Investment Company.
'The company aims to play a major role in helping Abu Dhabi meet its long term goals of sustainable economic growth by financing the growing demand for real estate,' the company said.
Mubadala Development is an investment vehicle owned by Abu Dhabi, the dominant emirate within the seven-member UAE and holder of most of its oil reserves.
Separately, newspaper Emirates Business reported that two Dubai developers, state-owned Nakheel and Limitless, which is controlled by government- owned Dubai World, would halt property sales until Dubai's real estate market improves.
Earlier this week, Dubai announced that it will pull back on its building spree in light of the financial crisis, according to Mohamed Alabbar, a Dubai government official and chairman of Emaar.
The paper also said that Dubai-based developer Emaar had moved to ease the impact of the credit crisis by loosening restrictions on the resale of properties, allowing investors to sell before paying Emaar 30 per cent of the property value, a newspaper reported yesterday.
Previously, properties purchased off-plan - or before they are built - could only be resold once 30 per cent of the agreed price had been paid. -- Reuters
Frankurt Office Property Market Seen Softening
Source : The Business Times, November 27, 2008
But it won't be as bad as London given smaller bank job loss
(FRANKFURT) The office property market in Frankfurt, Germany's banking capital, looks set to soften but is likely to hold up better than London, Europe's top financial centre, mainly because fewer bankers are losing their jobs.
Property yields are expected to rise less in Frankfurt than in London, and rents, which generate crucial cash flow for real estate investors in times such as these when properties are hard to sell at a profit, will fall less, industry watchers say.
Thanks to its lower volatility, Frankfurt offices will play a key role for long-term institutional investors such as insurers, pension funds and sovereign wealth funds - all of which are expected by analysts to increase their real estate exposure as part of a more diversified asset allocation mix.
The return on real estate as an asset class was negative to the tune of 30 per cent in January-October, broadly on a par with the S&P 500 US equities benchmark.
Real estate has been hit by falling commercial property prices, lack of access to deal financing, rising re-financing costs, higher vacancy rates and lower rents, investment bank Morgan Stanley said in a report.
Financial firms worldwide have slashed over 150,000 jobs in the current crisis with the drain the most pronounced in New York and London.
Last month, the Centre for Economics and Business Research estimated that London would have lost 28,000 financial-sector jobs by the end of this year, and a further 34,000 in 2009.
'The crisis is also hitting Frankfurt . . . but the impact is quite moderate compared to London,' said Carsten Ape, head of Frankfurt office rentals at property consultancy CB Richard Ellis (CBRE).
In Germany, the biggest finance sector job cut announcement to date has come from Commerzbank, which plans to axe 9,000 positions in the wake of its takeover of Dresdner Bank. About 2,500 will be outside Germany.
Deutsche Bank, the country's top bank, is expected to sack about 900 traders, with most of those layoffs in London and New York.
Frankfurt may not have lost many banking jobs yet, but its office property market took an indirect hit last month when real estate fund managers KanAm pulled out of a deal to buy a skyscraper under construction in the heart of the city.
Swiss bank UBS, which is cutting 7,500 jobs, has signed up as the main tenant of the OpernTurm office tower. KanAm said that its fund did not want an increased rental exposure to banks as the financial market turbulence was making the outlook for the sector uncertain.
Fewer buyers usually translate into lower prices, which move in the opposite direction to yields.
'In a worst-case scenario, you might still see a lot of pressure on prices in Germany,' said Olivier Elamine, chief executive of Alstria Office, which manages a portfolio of 90 properties in Germany valued at about 1.9 billion euros (S$3.7 billion). -- Reuters
But it won't be as bad as London given smaller bank job loss
(FRANKFURT) The office property market in Frankfurt, Germany's banking capital, looks set to soften but is likely to hold up better than London, Europe's top financial centre, mainly because fewer bankers are losing their jobs.
Property yields are expected to rise less in Frankfurt than in London, and rents, which generate crucial cash flow for real estate investors in times such as these when properties are hard to sell at a profit, will fall less, industry watchers say.
Thanks to its lower volatility, Frankfurt offices will play a key role for long-term institutional investors such as insurers, pension funds and sovereign wealth funds - all of which are expected by analysts to increase their real estate exposure as part of a more diversified asset allocation mix.
The return on real estate as an asset class was negative to the tune of 30 per cent in January-October, broadly on a par with the S&P 500 US equities benchmark.
Real estate has been hit by falling commercial property prices, lack of access to deal financing, rising re-financing costs, higher vacancy rates and lower rents, investment bank Morgan Stanley said in a report.
Financial firms worldwide have slashed over 150,000 jobs in the current crisis with the drain the most pronounced in New York and London.
Last month, the Centre for Economics and Business Research estimated that London would have lost 28,000 financial-sector jobs by the end of this year, and a further 34,000 in 2009.
'The crisis is also hitting Frankfurt . . . but the impact is quite moderate compared to London,' said Carsten Ape, head of Frankfurt office rentals at property consultancy CB Richard Ellis (CBRE).
In Germany, the biggest finance sector job cut announcement to date has come from Commerzbank, which plans to axe 9,000 positions in the wake of its takeover of Dresdner Bank. About 2,500 will be outside Germany.
Deutsche Bank, the country's top bank, is expected to sack about 900 traders, with most of those layoffs in London and New York.
Frankfurt may not have lost many banking jobs yet, but its office property market took an indirect hit last month when real estate fund managers KanAm pulled out of a deal to buy a skyscraper under construction in the heart of the city.
Swiss bank UBS, which is cutting 7,500 jobs, has signed up as the main tenant of the OpernTurm office tower. KanAm said that its fund did not want an increased rental exposure to banks as the financial market turbulence was making the outlook for the sector uncertain.
Fewer buyers usually translate into lower prices, which move in the opposite direction to yields.
'In a worst-case scenario, you might still see a lot of pressure on prices in Germany,' said Olivier Elamine, chief executive of Alstria Office, which manages a portfolio of 90 properties in Germany valued at about 1.9 billion euros (S$3.7 billion). -- Reuters
HK's Mortgage Loans Drop 40% In October
Source : The Business Times, November 27, 2008
(HONG KONG) Hong Kong mortgage loans fell for a third month in October as banks tightened lending amid an economic slowdown and a freeze in global credit.
Banks in Hong Kong approved some HK$13.7 billion (S$2.7 billion) of new mortgage loans last month - 40 per cent less than a year earlier, figures from the Hong Kong Monetary Authority (HKMA) show. Loans fell 5.9 per cent from September, the central bank said yesterday.
Hong Kong home prices have slumped at least 22 per cent from their March peaks, according to Centaline Property Agency, and the number of people whose homes are worth less than their outstanding mortgages more than doubled in the third quarter. The collapse of Lehman Brothers in September deepened the global credit crunch, pushing the Hong Kong interbank lending rate to its highest in almost a year on Oct 13.
'Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector,' Citigroup analysts Tony Tsang and Marco Sze said in a Nov 18 report.
The outlook for mortgage lending may worsen as unemployment rises. HSBC Holdings, which has the biggest bank network in the city, this month cut 500 jobs in Asia and said that most of these would be in Hong Kong as the economy slows.
The proportion of new loans approved at more than 2.5 per cent below the best lending rate almost halved to 51.7 per cent in October, from 94 per cent a year earlier and 83.1 per cent in September, HKMA figures show.
The so-called best lending rate is 5 per cent at HSBC, Hang Seng Bank and BOC Hong Kong (Holdings). The benchmark lending rate at Standard Chartered and Bank of East Asia is 5.25 per cent.
Hong Kong's economy this month entered its first recession since the outbreak of the deadly Sars epidemic in 2003 as the global financial crisis cut exports and spending cooled, forcing the government to lower its full-year growth forecast.
Gross domestic product shrank a seasonally adjusted 0.5 per cent in the third quarter from the previous three months, the government said on Nov 14. The measure fell 1.4 per cent in the second quarter. The decline was more than the median estimate of a 0.2 per cent drop in a Bloomberg News survey of six economists.
The number of homeowners with apartments worth less than the mortgages they borrowed - negative equity - almost doubled in the third quarter to an estimated 2,568 cases worth HK$6 billion, the HKMA said.
The number of negative equity loans is still about 98 per cent less than the peak of 106,000 cases at the end of June 2003, when the city's economy was battling the effects of the severe acute respiratory syndrome outbreak.
Still, not all the news is gloomy. Hong Kong existing home sales posted a fourth consecutive weekly gain last week as falling prices lured buyers who have previously shunned the city's property market.
Transactions at 10 of Hong Kong's biggest private apartment projects rose to 44 in the week ended Nov 23, from 39 a week earlier, according to figures compiled by Centaline, one of the city's biggest real estate agencies. Home prices have fallen 22.4 per cent since reaching a near 10 year-high in March, according to Centaline figures. -- Bloomberg
(HONG KONG) Hong Kong mortgage loans fell for a third month in October as banks tightened lending amid an economic slowdown and a freeze in global credit.
Banks in Hong Kong approved some HK$13.7 billion (S$2.7 billion) of new mortgage loans last month - 40 per cent less than a year earlier, figures from the Hong Kong Monetary Authority (HKMA) show. Loans fell 5.9 per cent from September, the central bank said yesterday.
Hong Kong home prices have slumped at least 22 per cent from their March peaks, according to Centaline Property Agency, and the number of people whose homes are worth less than their outstanding mortgages more than doubled in the third quarter. The collapse of Lehman Brothers in September deepened the global credit crunch, pushing the Hong Kong interbank lending rate to its highest in almost a year on Oct 13.
'Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector,' Citigroup analysts Tony Tsang and Marco Sze said in a Nov 18 report.
The outlook for mortgage lending may worsen as unemployment rises. HSBC Holdings, which has the biggest bank network in the city, this month cut 500 jobs in Asia and said that most of these would be in Hong Kong as the economy slows.
The proportion of new loans approved at more than 2.5 per cent below the best lending rate almost halved to 51.7 per cent in October, from 94 per cent a year earlier and 83.1 per cent in September, HKMA figures show.
The so-called best lending rate is 5 per cent at HSBC, Hang Seng Bank and BOC Hong Kong (Holdings). The benchmark lending rate at Standard Chartered and Bank of East Asia is 5.25 per cent.
Hong Kong's economy this month entered its first recession since the outbreak of the deadly Sars epidemic in 2003 as the global financial crisis cut exports and spending cooled, forcing the government to lower its full-year growth forecast.
Gross domestic product shrank a seasonally adjusted 0.5 per cent in the third quarter from the previous three months, the government said on Nov 14. The measure fell 1.4 per cent in the second quarter. The decline was more than the median estimate of a 0.2 per cent drop in a Bloomberg News survey of six economists.
The number of homeowners with apartments worth less than the mortgages they borrowed - negative equity - almost doubled in the third quarter to an estimated 2,568 cases worth HK$6 billion, the HKMA said.
The number of negative equity loans is still about 98 per cent less than the peak of 106,000 cases at the end of June 2003, when the city's economy was battling the effects of the severe acute respiratory syndrome outbreak.
Still, not all the news is gloomy. Hong Kong existing home sales posted a fourth consecutive weekly gain last week as falling prices lured buyers who have previously shunned the city's property market.
Transactions at 10 of Hong Kong's biggest private apartment projects rose to 44 in the week ended Nov 23, from 39 a week earlier, according to figures compiled by Centaline, one of the city's biggest real estate agencies. Home prices have fallen 22.4 per cent since reaching a near 10 year-high in March, according to Centaline figures. -- Bloomberg
Occupancy Costs Fall In S'pore: CBRE
Source : The Business Times, November 27, 2008
But survey finds Republic is world's 9th most expensive office market
The republic is still one of the most expensive places in the world to do business in, even though office occupancy costs here have dropped, the latest survey by CB Richard Ellis (CBRE) shows.
As in the firm's previous survey in May, Singapore was the world's ninth most expensive office market, though occupancy cost dropped to US$135.13 per square foot per year from US$139.31 in May.
In CBRE's November 2007 survey, Singapore posted the world's biggest 12-month increase in office occupancy costs. But in the May 2008 survey, it dropped to third place. And in the latest ranking, it is 13th.
Occupancy costs here rose 27.8 per cent in the 12 months to November 2008, down from 86 per cent in the 12 months to May 2008. CBRE's chief global economist Raymond Torto said that globally the rate of change is generally slowing, and in some markets the pricing direction is down. 'Our current perceptions are greatly affected by the current economic malaise.' he said. 'We tend to forget how fast rents and occupancy costs were rising over the past 12 months. The turn in rent trajectory will provide some relief to occupiers and angst to owners.'
Abu Dhabi in the United Arab Emirates (UAE) registered the fastest-growing office occupancy costs in CBRE's November 2008 Survey. Costs there jumped 94.6 per cent in the past 12 months.
'The rise in occupancy costs in the UAE has reflected market fundamentals - limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE,' CBRE said. Ho Chi Minh City in Vietnam, which registered the fastest-growing occupancy costs CBRE's May 2008 ranking, fell to second spot in the latest survey. Costs there rose 51.4 per cent in the past 12 months.
London's West End and Moscow remain the world's two most expensive office markets. Hong Kong's CBD, Tokyo's Inner Central District and Mumbai's Nariman Point round out the top five.
But survey finds Republic is world's 9th most expensive office market
The republic is still one of the most expensive places in the world to do business in, even though office occupancy costs here have dropped, the latest survey by CB Richard Ellis (CBRE) shows.
As in the firm's previous survey in May, Singapore was the world's ninth most expensive office market, though occupancy cost dropped to US$135.13 per square foot per year from US$139.31 in May.In CBRE's November 2007 survey, Singapore posted the world's biggest 12-month increase in office occupancy costs. But in the May 2008 survey, it dropped to third place. And in the latest ranking, it is 13th.
Occupancy costs here rose 27.8 per cent in the 12 months to November 2008, down from 86 per cent in the 12 months to May 2008. CBRE's chief global economist Raymond Torto said that globally the rate of change is generally slowing, and in some markets the pricing direction is down. 'Our current perceptions are greatly affected by the current economic malaise.' he said. 'We tend to forget how fast rents and occupancy costs were rising over the past 12 months. The turn in rent trajectory will provide some relief to occupiers and angst to owners.'
Abu Dhabi in the United Arab Emirates (UAE) registered the fastest-growing office occupancy costs in CBRE's November 2008 Survey. Costs there jumped 94.6 per cent in the past 12 months.
'The rise in occupancy costs in the UAE has reflected market fundamentals - limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE,' CBRE said. Ho Chi Minh City in Vietnam, which registered the fastest-growing occupancy costs CBRE's May 2008 ranking, fell to second spot in the latest survey. Costs there rose 51.4 per cent in the past 12 months.
London's West End and Moscow remain the world's two most expensive office markets. Hong Kong's CBD, Tokyo's Inner Central District and Mumbai's Nariman Point round out the top five.
Redas Urges 3-Way Plan To Boost Confidence
Source : The Business Times, November 27, 2008
Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.
The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.
'For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,' he said. 'First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.
'Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Mr Cheong was giving the president's address at Redas's 49th Anniversary dinner, the theme of which was 'Living In a World Class Sustainable City'.
The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.
In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.
But property consultancy Knight Frank's managing director Tan Tiong Cheng made a few suggestions. 'Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,' he said.
He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.
The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.
And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don't have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.
Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.
'This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don't panic,' he said.
He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. 'If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,' he said.
Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.
The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.'For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,' he said. 'First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.
'Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Mr Cheong was giving the president's address at Redas's 49th Anniversary dinner, the theme of which was 'Living In a World Class Sustainable City'.
The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.
In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.
But property consultancy Knight Frank's managing director Tan Tiong Cheng made a few suggestions. 'Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,' he said.
He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.
The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.
And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don't have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.
Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.
'This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don't panic,' he said.
He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. 'If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,' he said.
Limits To What Govt Can Do, Says Mah
Source : The Business Times, November 27, 2008
It cannot dictate to banks on loans or work against market forces on property
National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.
Toast to the future: (from left) Simon Cheong, president of Redas; MND Minister Mah; Kwek Leng Beng, Redas's patron, at its 49th anniversary
'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.
'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'
Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.
'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'
But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.
Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.
Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.
He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.
On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.
'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.
The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.
First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.
Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.
'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'
It cannot dictate to banks on loans or work against market forces on property
National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.
Toast to the future: (from left) Simon Cheong, president of Redas; MND Minister Mah; Kwek Leng Beng, Redas's patron, at its 49th anniversary'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.
'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'
Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.
'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'
But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.
Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.
Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.
He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.
On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.
'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.
The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.
First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.
Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.
'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'