Tougher Rules Cut Queues

Source : The Straits Times, Jan 29, 2009

THE queue of buyers for new Housing Board flats has become shorter and it is moving faster too.

Serious house-buyers are getting the flats they want sooner because a group of 'frivolous' buyers, who used to clog up the queue and waste everyone's time by rejecting flats offered to them, appear to have dropped out.

PHOTO: INTERNATIONAL ARCHITECTURAL DESIGN

The change has followed new HDB rules introduced last May to deter time-wasters from applying for flats they are not really keen to buy.

The HDB says that since the change, the number of applications has dropped. It now gets two to three times the number of applications than flats available; previously, the number received could be 5.6 times the number of flats.

Fewer are also turning down the flats offered to them. The rejection rate used to be between 22 and 77 per cent; now it is between 14 and 50 per cent.

The changed behaviour of applicants is seen as a vindication of the HDB's 'two strikes and you're out' approach to discourage frivolous applications. People appear to be more selective when applying and more likely to say yes when offered a flat.

The rule change meant that a first-time buyer who rejects an offer to buy a flat twice or more in any HDB sales exercise, loses his first-timer priority for a year. That effectively moves him to the back of the queue with second-timers.

Mr Mark Zhou, 26, a first-time home buyer working in the financial industry, said the change made him think twice before applying. 'I think the new rules have changed the behaviour of home buyers for the better,' he said. 'It makes getting a flat more efficient, and people give it more serious thought before applying.'

Chesterton Suntec International head of research and consultancy Colin Tan said the change has likely 'shortened the whole booking process'.

Property agency ERA Asia-Pacific's associate director Eugene Lim said latest data has proved that the new rules do work. 'Demand has stabilised due to the tweaking of rules, and also due to market sentiment. First-timers are shown to be taking their applications seriously,' he said.

The changes have also reduced the HDB's administrative load considerably.

Previously, a new HDB project would see many more applicants than units, but the high rejection rate would see many flats still available for sale in the end.

After the rule change, projects such as Compassvale Pearl in Sengkang last May saw no units left over.

The tougher HDB regime was put in place to allay growing concern that the thousands of applications for HDB's build-to-order (BTO) projects bore little relation to the actual take-up rate.

Demand for new flats picked up at the end of 2007 and shot up last year after young couples priced out of the resale market swamped the HDB with applications for new homes.

Such homes are only built when a set demand level is reached, take up to three years to complete, and are typically cheaper than flats in the resale market.

Koh Brothers Wins $145m HDB Contract

Source : The Business Times, January 29, 2009

The Housing and Development Board (HDB) said yesterday that it has awarded a $144.6 million contract to build the first part of Punggol Waterway to Koh Brothers. The win brings the value of contracts Koh Brothers has on hand to over $690 million.

Waterfront town: An artist's impression of the new Punggol development. Construction of the first part of Punggol Waterway - a 2.4km stretch of a total 4.2km waterway connected to Sungei Punggol - is set to start next month and will be completed by the fourth quarter of 2010.

Construction of the waterway is scheduled to start next month and will be completed by the fourth quarter of 2010. The waterway is part of the government's plan to make Punggol a 'waterfront town'.

Koh Brothers expects the contract win to have a material impact on its financial performance for the year ending Dec 31, 2009. Chief executive Francis Koh said he is confident the company's track record and ability to innovate will serve it well as it continues to tender for higher-value projects.

The contract, awarded to Koh Brothers' fully-owned subsidiary Koh Brothers Building & Civil Engineering Contractor, includes construction of the 2.4km waterway and related engineering works in Punggol Town. This 2.4km stretch is the first part of a planned 4.2km waterway connected to Sungei Punggol.

'Residents can look forward to enjoying various recreational activities ranging from water sports to a leisurely walk along a landscaped promenade on both banks of the waterway,' HDB said.

HDB launched more than 4,000 flats in Punggol last year. The agency also plans to launch the first site at Punggol's town centre for a mixed commercial and private residential development by 2010/2011.

By end-2011, there will be about 23,000 completed flats in Punggol. In the longer term, another 21,000 public and private homes will be built along the waterway, HDB said.

Koh Brothers shares closed unchanged at 13 cents last Friday, the last day the stock was traded.

First Step In Shaping Punggol Waterway

Source : The Straits Times, Jan 29, 2009

THE grand vision of transforming Punggol into Singapore's first waterfront public housing town begins in earnest next month when construction gets under way.

A $144.6 million contract for the first part of the Punggol Waterway has been awarded to Koh Brothers Building and Civil Engineering Contractor, said the Housing Board (HDB) yesterday.

The 2.4 km stretch - the entire waterway will be 4.2 km long - is expected to be completed late next year, the HDB said.

Punggol Waterway is part of the 'Punggol 21-plus' masterplan unveiled by Prime Minister Lee Hsien Loong in his National Day Rally speech in 2007.

The new town will boast features like a freshwater lake and a waterway running through the estate, with homes and a town centre on the banks.

The coastal suburb will also have facilities for water sports, gardens and parks with jogging tracks, and eateries for al-fresco dining, Mr Lee had said.

The Punggol Waterway, which will be connected to Sungei Punggol, will have an average depth of 4m, with its width varying from 10 to 85m.

HDB said yesterday its plans to launch the first sale site at Punggol's Town Centre for a mixed commercial and private residential development 'are also on track'.

The board launched more than 4,000 flats in Punggol last year. By end-2011, there will be about 23,000 completed flats in the area.

In the longer term, a further 21,000 public and private homes will be built 'along the waterway for residents to enjoy waterfront housing', said the HDB.

Rush For URA Approvals Before Window Closed

Source : The Business Times, January 29, 2009

Developers sought provisional nod in Q4 2008 just prior to new rule on GFA

All's quiet on the property front but developers secured a raft of approvals (provisional permission) for private residential projects from the Urban Redevelopment Authority in the last quarter of 2008.

The key reason for this is that developers rushed to make their submissions for provisional permission (PP) before a new ruling that scraps the exemption of bay windows and planter boxes from gross floor area (GFA) took effect on Jan 1, noted Credo Real Estate MD Karamjit Singh.

He said: 'With effect from Jan 1, 2009, for any submission for PP, URA will consider bay windows and planter boxes as part of GFA, and that brings down the total saleable area in a project by about 5-12 per cent. So developers were making submissions to secure PP before the change in ruling kicked in - even if they didn't intend to develop or launch their projects in the near future, given the current downturn.'

Agreeing, DTZ executive director Ong Choon Fah said: 'Bay windows and planter boxes are an important contributor to developers' profit margins. In the past when they bought land, they would have assumed these would be exempt from GFA.'

Hong Realty (part of the Hong Leong Group) received PP in Q4 2008 for a 1,517-unit condo project at Pasir Ris Drive 8, while Far East Organization unit Arts Associate Co secured URA's approval for a 234-unit condo at Jalan Datoh/Jalan Dusun in the Balestier area. And Bukit Sembawang bagged PP for a 200-unit condo at St Thomas Walk.

Horizon Partners Pte Ltd - whose shareholders are Hotel Properties, Morgan Stanley Real Estate and Qatar Investment Authority - picked up URA's consent to develop a 253-unit condo and eight detached houses on the Horizon Towers site at Leonie Hill Road.

URA also granted PP between October and December to NTUC Choice Homes unit Choice Homes Gamma for a 571-unit condo at Lor 2/3 Toa Payoh; to TID Pte Ltd for a 282-unit condo at New Upper Changi Road/ Tanah Merah Kechil Ave; and to an MCL Land unit for a 520-unit condo at Yishun Ave 1/2 fronting Lower Seletar Reservoir. The three proposed developments are on 99-year leasehold sites sold through the Government Land Sales Programme last year.

Casuarina Properties, controlled by the Lee Foundation and members of the Lee family, received URA's permission for a cluster housing development at Mount Rosie comprising 191 terrace homes and two semi-detached units.

The proposed Pasir Ris condo project by Hong Realty is on a massive 2.1 million square feet plot that Hong Leong Group owns in Pasir Ris - which the 1,822-unit Livia condo launched last year is part of. City Developments has a 51 per cent stake in the site. Sources say the site was bought for just $10 million decades ago, was originally treated as land for rural or agricultural use and had restrictions on its title.

In the commercial property segment, Hotel 81-linked Citywide Land secured PP to develop a 902-room hotel at Kallang Road in Q4. The project will also have about 4,090 sq ft gross floor area of shop space.

At Jalan Besar/Laven- der Street, Prominent Plaza Investments/Prominent Site Pte Ltd secured URA's consent to develop about 133,800 sq ft of offices and 13,500 sq ft of shop space. Over at Changi Business Park Ave 1, United Engineers Developments picked up URA's consent for a project comprising a 301-room hotel and 59,740 sq ft of shop space.

URA also approved several industrial property projects in Q4. Keppel Shipyard received PP for additions and alterations to its existing factory at Pioneer Sector 1, as did Yamazaki Mazak Singapore for its existing plant at Joo Koon Circle.

URA also granted PP for factory developments to General Magnetics (at Lorong 4 Toa Payoh), Index-Cool Furniture Design & Construction's (Eunos Avenue 3) and Oxley Opportunity #9 Pte Ltd (Pioneer Crescent).

Foreclosures Benchmark US Home Prices

Source : The Business Times, January 29, 2009

Distressed homes generate almost half of existing homes' sales in December

(NEW YORK) The US housing industry has seen the future, and it is foreclosures. The data released on Monday by the National Association of Realtors (NAR), in which distressed homes generated almost half of total sales of existing homes in December, sent a clear signal that those homes are setting prices.

Unsold lot: Despite the plunging prices that are moving so many foreclosed and distressed homes, about 850,000 foreclosed homes are sitting on the market right now

Yet for most of the US housing downturn, which started in 2006, the price-setting power of distressed homes was not as overwhelmingly apparent as it is today.

As recently as May, D.R. Horton Inc told analysts that foreclosures were not yet a significant part of the vast majority of its markets, although chief executive Don Tomnitz did say foreclosures would come to have a negative impact.

That cautious tone has darkened as the volume of people losing their homes swelled and forced banks and other lenders to lower prices. 'The snowball is now an avalanche,' said Meritage Homes spokesman Brent Anderson, adding that the spike in home sales is a double-edged sword. 'Nobody likes prices to go down, but it has to happen to clear inventory.'

In south-eastern California's Inland Empire, foreclosures have accounted for 75 per cent of sales since September, said Tom Eggleston, who used to run a private homebuilder and now has a business helping banks sell foreclosures.

The tipping point for the Inland Empire came when banks holding those properties lowered prices to a full 75 per cent off the mortgage. In Denver, Colorado, the necessary reduction on the banks' part was not so dramatic. Bank-owned homes in that market proved compelling for investors once banks had accepted a 40 per cent cut to the mortgage.

The typical investor getting into this business is a local who usually buys commercial real estate and sees commercial as oversupplied and residential as a source of bargains.

At Denver's current rents, Mr Eggleston said, an investor who buys a home for US$220,000 can make about a 9 per cent net profit - after taxes and management expense - while waiting for prices to stabilise, at which point the property can be sold. 'In these markets the rental of single-family homes has remained pretty robust,' Mr Eggleston said. 'People are out of homeownership but need more than apartment-sized dwellings.'

Despite the rapidly plunging prices that are moving so many foreclosed and distressed homes, about 850,000 foreclosed homes are sitting on the market right now, according to research firm RealtyTrac, which for 2009 tentatively projects about a million additional actual foreclosures and about two million more homes in some stage of the process.

The market's total inventory of homes for sale in the United States is about 3.7 million homes, or 9.3 months supply at current prices, according to the NAR.

Nobody knows exactly what percentage of the market is distressed homes because many auctions and short sales - where the lender agrees to sell for less than the mortgage's value - do not appear in the NAR's data sources. But whatever the number, it is big enough to lower prices further.

The US housing downturn's roots lie largely in rampant risky lending practices that fuelled the housing boom by generating demand from aspiring homebuyers who previously could not get a mortgage. Many of them defaulted, dumping an excess of supply on the market and triggering a plunge in prices.

Indeed, the Standard & Poor's/Case-Shiller Home Indices released on Tuesday revealed prices of US single-family homes fell a record 18.2 per cent in November from a year earlier.

Bank sales were responsible for some of that decline. They have a strong financial incentive to clear these units off their balance sheets as soon as possible, and are therefore 'an increasingly important factor in setting the new market clearing prices for homes', wrote Raymond James analysts Paul Puryear and Buck Horne in a client note.

Banks, they said, have been known to price homes at about 20 per cent below the asking prices of similar new homes in their markets. UBS analyst David Goldberg expects an additional 5 per cent to 10 per cent drop in new home prices. Below that level, he said, the big publicly traded builders won't start construction as projects would increasingly generate negative free cash flow. As this occurs, construction activity will slow further.

'We'll probably see the builders shrink their footprints to some extent moving forward,' Mr Goldberg said. 'But the bigger outstanding question is, 'Can they generate cash on new projects?' - Reuters

California Home Prices Down 42%

Source : The Business Times, January 29, 2009

(LOS ANGELES) California home prices plunged 42 per cent in December from a year earlier as the US housing slump deepened and foreclosures hit record levels.

Affordable: The price of a single-family home fell to US$281,100 in December from US$480,820 a year ago

The median price for a single-family home in the most populous US state fell to US$281,100 from US$480,820 a year earlier, the California Association of Realtors said in a statement on Tuesday.

'The decline in home prices has brought the cost of housing more in line with household income, improving affordability across the state,' Leslie Appleton-Young, its chief economist, said. 'This should be especially helpful for first-time buyers who can qualify for a home loan.'

More than 236,000 homes, or 2.8 per cent of California's housing stock, were foreclosed on in 2008, MDA DataQuick said on Tuesday.

Foreclosed properties tend to sell at a discount of 25 per cent or more, and California home sales rose 85 per cent in response to last month's drop in prices, the realtors' association said.

The number of existing single-family detached homes sold jumped to 544,580 on an annualised basis from 294,520 a year earlier, the group said.

The median number of days it took to sell a property dropped to 46.1 days in December from 66.7 days a year earlier.

The Realtors' Unsold Inventory Index, which indicates the number of months needed to deplete the supply of homes at the current sales rate, fell to 5.6 months from 13.4 months a year ago.

California mortgage defaults dropped 7.7 per cent in the fourth quarter after the state enacted a law to delay foreclosures, MDA DataQuick said in a separate report on Tuesday.

Homeowners in the state received 75,230 default notices in the fourth quarter, down from 81,550 a year earlier.

Fourth-quarter defaults were down 20 per cent from the previous three months, according to the research company.

A law that requires lenders to discuss ways to avoid foreclosure with California borrowers before filing a default notice went into effect in September. Defaults plunged to 14,995 that month, and were back up to 39,993 in December. - Bloomberg

New York Office Vacancies May Rise To 12% By 2011

Source : The Business Times, January 29, 2009

(NEW YORK) Manhattan office vacancies may rise to 12 per cent within 24 months, SL Green Realty Corp chief executive Marc Holliday said on Tuesday.

SL Green, New York's biggest office landlord with 23.2 million square feet of space, will be protected from the worst of the decline because it is signing tenants to new leases at rents 65 per cent higher than what they were paying, Mr Holliday said.

'The portfolio has an extraordinary amount of embedded growth in rents that were done in the mid-to-late 1990s, and are now maturing,' Mr Holliday said on a conference call.

Manhattan office vacancies rose to 7.6 per cent in the fourth quarter, the highest since 2004, according to a Jan 14 report by CB Richard Ellis Group Inc, the world's biggest commercial real estate services firm.

SL Green reported fourth-quarter funds from operations before gains or losses of US$1.40 a share, the New York-based company said in a statement on Monday. The median estimate of analysts in Bloomberg's survey was US$1.32.

The company also reported strong leasing results in the period, UBS analyst James Feldman wrote in a research note on Tuesday.

It signed 37 Manhattan office leases totalling 248,600 sq ft in the quarter and got Viacom International Inc to extend its lease on 1.3 million sq ft at 1515 Broadway.

Citigroup Inc may pay 13 per cent of SL Green's rental income in 2009, the company said.

'It's pretty notable,' Mr Feldman said in an interview. 'New York Class A occupancy declined, and SL Green's occupancy is actually up. That shows they're doing a very good job holding the line as the market is getting much worse.'

Mr Feldman rates SL Green a 'buy'. The stock is down 41 per cent this year, making it the worst performer in the Bloomberg Real Estate Investment Trust Index.

The company's fourth- quarter net income fell 29 per cent on investment losses in Gramercy Capital Corp, a commercial property financing firm. Funds from operations is net income excluding items and doesn't conform with generally accepted accounting principles.

Gramercy's performance has been hurt by US$188.7 million of non- performing loans and another US$174.5 million it classified as 'sub-performing', according to its third- quarter earnings report.

Last month, Gramercy withheld its fourth-quarter dividend 'for working capital purposes', it said in a statement. The company hasn't yet reported fourth- quarter earnings.

SL Green chairman Stephen L Green is also Gramercy's chairman. Last October, Gramercy hired Roger Cozzi as CEO, replacing Mr Holliday.

Mr Holliday said on Tuesday that he expects Gramercy to be completely self-managed by the end of this year.

As Gramercy's largest investor, 'we have seen our stake rise and fall over the past five years, but we have concluded that after much effort, it was appropriate to take the writedown in our investment, with limited near-term market relief in sight', he said. -- Bloomberg

Real Estate Slide Expected To Worsen

Source : The Business Times, January 29, 2009

(NEW YORK) Boston Properties Inc chairman Mortimer Zuckerman said that the US commercial real estate decline is likely to get worse this year as the credit crisis continues.

'We are still in a downdraft of a very, very serious credit crunch,' Mr Zuckerman said in an interview on Bloomberg Television. 'I don't think that the credit crunch will be over for quite a while. We may see a much tougher 2009 than many people are expecting.'

Capitalisation rates, or rental income as a proportion of a building's value, are likely to increase as prices decline, Mr Zuckerman said.

Harry Macklowe, who spent US$7 billion buying office buildings from Equity Office Properties Trust in 2007, is an example of a buyer who bought at the market's high point, he said.

'Harry Macklowe bought them at 3.1, that was the peak of the market,' Mr Zuckerman said. 'Now, cap rates for really good office buildings are at 5.5 to 6 per cent, and if they are not prime buildings, it will go up to 6.5 to 7.5 per cent.'

Loans remain difficult to obtain, he said.

Getting a loan to buy a major New York office building used to take just one phone call, he said. 'Now we have to scramble to put together five, six, seven lenders to raise US$350 - 450 million,' Mr Zuckerman said.

Boston Properties shares declined 40 per cent last year. The company has 8.8 million square feet of office space in New York City. -- Bloomberg

Gold Coast Property Sold At Huge Discount

Source : The Business Times, January 29, 2009

(MELBOURNE) A beachfront property on the Gold Coast sold at the weekend for A$5.5 million (S$5.51 million) less than what was offered for it six months ago.

The 963 square metre property on Main Beach Parade, just north of Surfers Paradise, sold for more than A$9 million at an auction where no reserve price was set, the Australian Associated Press reported.

The owners, offshore investors Maxwell and Cleo Conrad, rejected an offer of A$14.5 million for the property last July when it was first put on the block. The Conrads paid A$13.5 million for the property in June 2006.

An independent valuation before the July auction had estimated the value of the property at A$17 million.

The double corner block has 180-degree ocean views, 21m of beachfront and a 1930s renovated beach house.

The buyer, who asked to remain anonymous, put in the winning bid of A$9.01 million by telephone.

The auction had been billed as a 'once-in-a-lifetime opportunity to buy one of the best beachfront blocks on the Gold Coast'.

Ray White Broadbeach real estate agent Michael Kellosche said upmarket properties were selling at rock-bottom prices on the Gold Coast as the wealth of sellers and buyers shrank in this difficult economic times. However, he believed the market had bottomed out, and the first quarter of this year would see housing prices going up again. -- Bernama

Property Transactions With Contract Dates Between Jan 1st - 17th, 2009

修改申请条例初见成效 申请后选购组屋者增加

Source : 《联合早报》January 29, 2009

去年5月修改的组屋申请条例取得初步成效，申请组屋但却不选购的人明显减少，弃权率不如之前那么多。

建屋发展局数据显示，修改前约22%至77%的申请者未选中任何单位，显示他们并不急于购屋。条例修改后，不选购的申请者减至14%至50%，跌幅不低。

建屋局是在去年5月调整预购组屋（BTO）和抽签选购计划申请条例，使不急于买房子的公众不会随便申请组屋，剥夺真正要买组屋者的机会。

新条例规定，两度获邀选购组屋、但放弃机会的首次购屋者，接下来一年内将不享有首次购屋者的优先权，如同坐一年“优惠监”。他们可继续申请新组屋，但会被当作一般的购屋者看待。

第一次购屋者比其他申请者多一个抽签机会，建屋局也会保留多达90%新组屋单位供他们选购。

预购组屋供不应求

建屋局发言人受询时并未透露有多少名首次购屋者的优先权被取消。

目前，预购组屋仍供不应求，申请人数还是比所提供的单位多，不过超额申购的比例已比条例修改前来得小。

建屋局发言人说，自条例修改后，在去年5月和6月推出的预购组屋项目Compassvale Pearl和Straits Vista @ Marsiling，申购率介于2.3至3.1，也就是每个单位有二、三人申请。之前，榜鹅预购项目申购率达5.6，即每个单位大约5人申购。

除申请人数减少，放弃选购组屋的申请者也减少，以致剩余单位不如以往多。

发言人说，Compassvale Pearl的420个单位已全部售出，Punggol Sapphire和Straits Vista @ Marsiling也分别剩下53和102个三房式至五房式单位，分别占所供应单位的5%和27%。“一旦选购活动结束，剩余单位估计会减少。”

值得关注的是，虽然放弃选购组屋的申请者大致上已减少，不过一些预购组屋项目仍有约一半的申购者未选中任何单位，放弃选购者大有人在。

Punggol Sapphire的760个四房式单位共收到1721份申请，却有867名申请者最终没选购组屋，弃权率是50%。此外，有234人申请Compassvale Pearl的84个五房式组屋，放弃选购的有91人或39%。

询及公众放弃选购组屋的原因，HSR房产经纪公司执行董事郑来明说，一些申请者可能较挑剔，宁可放弃选购机会，也不要购买低楼或不符合他们要求的单位。经济不景也可能使申请者更慎重考虑是否购买组屋，以及是否有能力支付每月的房屋贷款。

郑来明说：“一些申请者也认为，失去首次购屋优先权没什么大不了，何况在失去优先权那一年还是能选购组屋，只是获选概率较低。”

修改后的申请条例也照顾到屡次申请、却无法获得选购机会的申请者的需要。有至少两次失败经验的申请者会获得更多抽签机会，不过这些额外机会只限于未完全发展组屋区的组屋。