No Property Bubble Forming, Say Developers

Source : The Straits Times, July 31, 2009

They say buying frenzy hasn't reached point where Govt needs to intervene

PROPERTY developers are enjoying the surge in interest from buyers but they do not believe that speculation has reached a stage where the Government needs to step in.

Crowds had gathered at the 297-unit Optima showflat last night even though the public launch is scheduled for today. The developer TID held a ballot at midnight for about 300 genuine buyers who were queueing outside the showflat so they did not have to stay overnight. -- ST PHOTO: AZIZ HUSSIN

They also maintain that the prevailing economic conditions will begin to cool the buying frenzy and stop a bubble forming in its tracks.

'It's not a bubble, it's just a blister after the pain we experienced in the global financial crisis and it comes before a recovery,' said Cushman and Wakefield managing director Donald Han.

But some developers and industry insiders acknowledge that the comments from National Development Minister Mah Bow Tan this week are timely.

Mr Mah cautioned about a bubble forming, hinted at intervention if speculation got out of hand and advised buyers to tread carefully and not charge headlong into the market.

'The Government's message is quite clear: Don't rush as there is a lot of supply coming onstream,' said Sing Holdings chief executive Lee Sze Hao.

'It's good as a reminder so that people do not over-buy, over-chew. Developers do not want irrational exuberance,' said Mr Han.

A property consultant who declined to be named told The Straits Times: 'There shouldn't be panic-buying. Buyers may pull back a bit, not knowing whether the Government will step in or not. The fact is that the Government has opened its mouth; it can do things indirectly.

'But if the market hype continues to rise, they will have to do something.'

Many feel the hype, which centres on several condominiums, will likely be short-lived amid a recession.

'Inevitably, there will be speculative buyers, but they are for the smaller units...If the market is too speculative, you build up a bubble and that's not real demand,' said Mr Lee.

The market is seeing cashed-up investors ready to spend, which is different from speculators looking to buy another apartment to make a quick buck, he said.

The Government will do something only if there is a queue at every project and every unit is snapped up, he added.

The Real Estate Developers Association of Singapore (Redas) pointed out on Wednesday that only a selected few launches have been highly successful for various reasons.

Buyers have certainly been out in droves visiting the new showflats and buying new homes off the plan. Queues have been forming and developers have raised prices in response.

The interest was evident last night at Tanah Merah, where crowds gathered at the 297-unit Optima showflat although the public launch is scheduled for today.

The response was so strong that the developer TID held a ballot at midnight for about 300 genuine buyers who were queueing outside the showflat earlier so they did not have to stay overnight.

They had submitted cheques together with their application form by 9.30pm for the 120 units on offer at an average early-bird price of $790 per sq ft (psf), said a spokesman.

Another suburban launch, the 329-unit Centro Residences in Ang Mo Kio apparently attracted more than 80 buyers, even though it is priced at $1,150 psf and above - levels more suitable for prime or city-fringe projects.

Such enthusiasm for new projects, which is reminiscent of boom times, and the sudden spike in prices are likely causes for concern, said a developer who declined to be named.

Prices of some new mass market projects have gone above the peak 2007 levels, he said. 'But can the market sell 1,500 units every month in the next 12 months? I don't think so.

'The Government is observing, but it will cease to be overly concerned when things return to normal.'

CapitaLand chief executive Liew Mun Leong said at its results briefing yesterday that there is 'exuberance' in the market but no bubble. 'If it's investment driven, you could call it a bubble...but in our case, it is demand driven.'

He also said he would be the first to be worried if this frenzy is being driven by speculative demand.

He said there are buyers flushed with cash from collective sales in the recent property boom.

Mr Liew estimated there were about 13,000 home owners displaced by en-bloc deals from 2005 to 2007 and these buyers have ready cash of anywhere between $1million and $2 million each to spend.

A Bubble That's A Gleam In Specuvestors' Eyes

Source : The Business Times, July 31, 2009

Mah Bow Tan's caution aimed at averting pain later, property market watchers say

Better to suck out the froth now than to burst the bubble later - that was what market watchers saw as the government's intention in warning against rash property purchases.

National Development Minister Mah Bow Tan said on Wednesday that there are signs of speculation in the property market, and the government will act if it overheats. He also urged home seekers to buy only within their means.

On the surface, the message may seem puzzling. By most accounts, speculators from the boom years - those who 'flipped' their freshly bought units in the subsale market for a quick profit - have yet to make a huge comeback. Price increases have surfaced only at some projects, while several others still registered price falls.

At CapitaLand's results briefing yesterday, group president and CEO Liew Mun Leong also observed that home demand is 'healthy', supported partly by home seekers whose estates were sold en bloc.

But dig deeper and the cause for concern becomes more apparent. Some industry watchers acknowledge that a group of 'specuvestors' is emerging. These are buyers who are prepared to keep and lease out their properties over the longer term, but are also open to selling them for capital gains if the opportunity comes along.

Although Singapore's economy is shrinking, several factors are working in specuvestors' favour. Notably, interest rates on bank loans are low, and more small apartments going for less than $1 million have become available. Many of them are also lucky enough to still have jobs, and some could have made a killing from the recent stockmarket rally.

These investors, together with genuine homebuyers, have raised market activity to a level that authorities feel is out-of-sync with weak economic fundamentals. The fear? That some would not be able to repay their loans if they lost their jobs, or if banks raised mortgage rates in the future.

'I have seen sufficient cases in my Meet-the-People sessions, where people have over-committed and now find themselves in difficulty,' Mr Mah recounted on Wednesday.

CIMB economist Song Seng Wun said in a note on Wednesday that Singapore's Q2 09 jobless rate is expected to cross 5 per cent. The unemployment rate for Singaporeans and permanent residents rose to 4.8 per cent in Q1.

Falling rentals would also test buyers' ability to support home loans, said Chesterton Suntec International's research and consultancy director Colin Tan.

So to several industry watchers, the government is sounding a note of caution, just in case. As a developer told BT: 'What if the green shoots turn brown?' The formation of a bubble - particularly on shaky ground - would require overt intervention and the consequences are unlikely to be pretty.

Take a look back at 1996, when the government introduced a surprise anti-speculation package to curb sharp spikes in private home prices. Tighter credit, a tax on gains and higher stamp duty caused sentiment to sink and transaction volumes to plunge. This is history that most would not want to see repeat itself.

The key is whether the government's words will help calm the buying frenzy at this stage. Here, views are mixed.

Some people may cool off, said Wheelock Properties (Singapore) CEO David Lawrence. 'I think (Mr Mah is) more focusing on the greedy people who overgeared, took on too many liabilities, and he's just saying 'be careful' . . . I think that's a reasonable message to the market.'

But some also think the buying will continue as long as money from savings, banks or stockmarket winnings is around. A developer also suggested that a few people might bring forward their purchases in anticipation of anti-speculation measures coming on. 'Singaporeans are a bit 'gan cheong' (panicky),' he joked.

At Optima, where people started queuing days before the showflat was due to open, developer TID has conducted a ballot for the 120 units planned for release. All units have been tentatively accounted for with prices starting from $790 per square foot. TID is a tie-up between Hong Leong Group and Mitsui Fudosan. A Hong Leong spokesman said that the balloting process helps to sieve out genuine buyers and the crowds have thinned. BT understands that there were already plans to conduct a ballot when a queue first formed, before Mr Mah spoke to the press on Wednesday.

Market sources also say that around 80 units have been sold at Centro Residences, out of around 110 released.

Property Buzz Warning

Source : The Straits Times, July 30, 2009

Government will take action if excessive speculation develops

THE Government will take 'whatever action necessary' to prevent excessive speculation in the property market, said National Development Minister Mah Bow Tan on Wednesday.

The topping out of the first tower at the Marina bay Financial Centre yesterday is a key step for the giant project, planned as an extension of the Central Business District. The tower will be complete next year and much of its office space has been pre-leased. -- ST PHOTO: ALPHONSUS CHERN

Mr Mah's note of caution comes amid a buying frenzy that has gripped the real estate sector in recent months.

He told the media on the sidelines of an industry event: 'I wouldn't say there is excessive speculation at the moment, but there is some element of speculation involved.

'Some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we'll have to be careful.'

He also warned about a property bubble forming. 'Obviously it is not in our interest for such a bubble to form, because when it does, and bursts, which it inevitably must, then I think a lot of people will get hurt,' said the minister, adding that all parties concerned must ensure that such a bubble does not materialise.

'A little bit of speculation is inevitable in every market, but when it becomes excessive, then it is something that we should try to avoid.'

There are certainly signs of a red-hot market, including queues forming days before the launch of a new project.

Suburban condo Optima, next to the Tanah Merah MRT, drew lines snaking outside the showflat on Monday, though the unit does not open until Friday.

Real estate agents were also in the queues with blank cheques from clients.

Buyers at Ang Mo Kio were equally keen to put their money down at the 329-unit Centro Residences, reportedly paying $1,150 per sq ft, a price level typically seen in central districts.

Read the full story in Thursday's edition of The Straits Times.

No Bubble Forming

Source : The Straits Times, July 30, 2009

THE recent exuberance in Singapore's property market could see prices creeping up some five to 10 per cent by end of this year and into the next, said CapitaLand's chief executive Liew Mun Leong on Thursday.

CapitaLand's chief executive Liew Mun Leong said the firm is waiting 'to pull the trigger at the right time' with regards to project launches and will be launching its Gillman Heights (left) site for sale soon. --PHOTO: CAPITALAND

At the moment, the demand from homes is in a 'healthy state' and it does not appear there is bubble forming yet, said Mr Liew.

'If people are buying homes only as investment tools, then it's a different story,' he said at the firm's results briefing.

The firm is Singapore's biggest property group by market capitalisation.

National Development Minister Mah Bow Tan on Wednesday said speculation is creeping back into the property market, even though it is not execessive at the moment, adding that the government is watching the situation closely and will take 'whatever action necessary' to make sure it does not overheat.

Mr Liew said the firm is waiting 'to pull the trigger at the right time' with regards to project launches and will be launching its Gillman Heights site for sale soon.

The developer paid $548 million for the condominium but a lengthy legal tussle spanning more than two years had delayed the redevelopment of the estate.

Meanwhile, the firm has seen strong buyer interest at its project, The Wharf Residence, in which 94 per cent of its 173 apartments has been sold, said Mr Liew.

Despite improved sentiment however, the global economic crisis continued to weigh on the firm's financial performance due to weaker market valuations.

CapitaLand posted a second quarter loss of $156.9 million, down from net profit of $515.2 million in the same quarter last year.

This is due to revaluations and impairment provisions primarily related to the Singapore office portfolio, real estate assets in Australia and the former Char Yong Gardens site in Singapore, said the firm.

Revenue also declined 27.9 per cent to $591 million in the second quarter.

For the first half of the year, revenue dropped 25.7 per cent to $1.08 billion compared to same period last year, while profit was a negative $114.1 million compared to $762.7 million in the same period last year.

HDB Launches 769 New Flats In Punggol

Source : The Straits Times, July 31 2009

Premium development includes 154 five-room flats, 615 four-roomers.

THE Housing Board has launched a premium project offering 769 new flats in Punggol in a bid to build up critical mass in the estate.

The new project, called Punggol Residences, offers 615 four-roomers and 154 five-room flats in a central location just five minutes from Punggol MRT station.

HDB is launching the project under its build-to-order (BTO) scheme - flats are built only when certain demand is reached.

It has so far offered about 6,500 new flats in Punggol since it unveiled grand plans for the former fishing village to become the only waterfront public housing project in August 2007.

This is in line with the board's commitment to build up the population in the estate to attract and support new facilities, it said.

Punggol Residences is a premium development with enhanced architectural designs, interior fittings and landscaping, said HDB.

HDB is launching the project under its Build-To-Order (BTO) scheme. --PHOTO: HDB

Four-room flats of 91 to 96 sq m are going for $264,000 to $322,000, while five-roomers of 114 sq m are on sale from $344,000 to $409,000.

According to HDB, premium resale flats in the vicinity are selling for a pricier $330,000 to $350,000 for four-roomers and $380,000 to $439,888 for five-roomers.

PropNex chief executive Mohamed Ismail said that, despite the higher prices, resale flats might still be more attractive given that buyers can enjoy a CPF housing grant of up to $80,000 depending on their income, and do not have to wait three years for new flats to be built.

On the other hand, buying new flats direct from HDB will attract those who prefer not to fork out any cash for resale flats.

This amount, known as cash-over-valuation, has started creeping up for premium resale flats in Punggol to about $15,000 to $20,000, noted Mr Ismail.

As of 5pm yesterday - the latest update from HDB - 593 applications for the 769 flats have been received.

Applications for the new flats can be submitted online at HDB's website www.hdb.gov.sg until Aug 12.

榜鹅将建769预购组屋单位

Source : 《联合早报》July 31, 2009

四房式组屋在经济不景之际仍是最受欢迎的屋型，建屋发展局在榜鹅推出769个预购组屋单位，其中约八成是四房式单位。

这个组屋项目靠近未来的榜鹅镇中心，距离榜鹅地铁站和轻轨站约5分钟距离，估计会引起买家兴趣。

昨天是组屋接受申请的第一天，截至傍晚5时，769个单位已获得593份申请。

名为Punggol Residences的这个组屋项目，有769个单位，面积从91平方米到114平方米不等。

名为Punggol Residences的组屋项目，位于榜鹅径（Punggol Walk）和榜鹅域（Punggol Field）交界处，共建造615个四房式和154个五房式单位，估计在2013年第一季完工。

组屋单位面积从91平方米到114平方米不等，四房式组屋的售价介于26万4000元至32万2000元，五房式介于34万4000元至40万9000元。

建屋局说，组屋售价比同区转售组屋来得低，也仍维持在国人可负担的水平。

要是月入4100元的中等收入家庭购买一个29万5000元的四房式组屋，每月约1063元的房屋贷款，完全可从公积金户头扣除。

比同区预购价更高

然而，与今年3月推出的The Nautilus@Punggol预购组屋项目比较，这批新组屋的价格较高，因为它的地点更为适中，所建造的也是设计较出众的优质组屋。

HSR房产经纪公司执行董事郑来明说，Punggol Residences靠近地铁站，对买家有一定吸引力。况且，买家也无需为新组屋支付溢价（cash-over-valuation，简称COV），进一步提高它们的吸引力。

“虽然溢价数额已下跌，不过靠近地铁站的组屋，现在还是得支付不少溢价。”

OrangeTee执行董事陈道俊相信，这个新组屋项目的需求会相当强劲，因为它距离榜鹅人工水道不会太远。

“政府之前已宣布榜鹅的新发展计划，加上这批组屋的地点适中，相信公众的反应会不错。”

他说，榜鹅是个仍在发展的新镇，组屋售价比成熟组屋区来得低，但增值空间不能忽视。

榜鹅人工水道估计在2010年或2011年完工，部分水道会穿越濒水镇中心，不过这个新组屋是否会享有水道景观还不知晓。

国家发展部长马宝山前天谈及组屋市场时说，要是四房式和五房式组屋有需求，政府下来或许会推出更多这类单位。

公众可通过建屋局网站www.hdb.gov.sg提出新组屋申请，并可到大巴窑建屋局中心3楼展示厅参观及索取销售资料，展示厅平日开放时间是上午8时至下午5时，星期六是上午8时至下午1时。

公众也可上建屋局网站，或电邮hdbsales@hdb.gov.sg，或办公时间拨1800-8663066询问。截止日期是8月12日。