Saturday, April 26, 2008

Property Market Sentiment Softens

Source : TODAY, Weekend, April 26, 2008

Supply of homes, vacancy rates up, but buyers discouraged by high prices

THE lacklustre property market seen in the first quarter of this year is likely to persist, with developers expected to launch more projects in the months ahead, increasing the supply of new homes even as buyers stay away.

The prices of homes in both the private and public sectors rose at a much slower pace in the first quarter while the volume of transactions remained thin.

Private home prices rose 3.7 per cent in the first quarter, according to the Urban Redevelopment Authority (URA), lower than its earlier estimate of 4.2 per cent and well below the 6.8-per-cent rise in the previous quarter.

Developers sold 762 private residential units in the quarter, the lowest number of transactions since Sars-stricken 2003.

The URA data released on Friday for the full three months were an update from its April 1 estimates, which were based on transactions in the first 10 weeks of the quarter.

“This is quite a marked difference and it shows that in the last two weeks of the quarter, there has been some evidence of price cutting in the market,” said Mr Donald Han, managing director of real estate firm Cushman and Wakefield.

The vacancy rate for completed private residential units rose 6.3 per cent, up from 5.6 per cent in the previous quarter, the URA data showed. With more supply in the market, there is added pressure to reduce prices.

“If the vacancies continue rising at this rate, the market will definitely turn this year. Prices will peak for sure,” said Mr Colin Tan, head of consultancy and research at Chesterton International.

Among the projects to be launched in the coming months are the Marina Bay Suites and Duchess Royale on Duchess Avenue. They add on to developments such as The Verte at Telok Kurau and Waterfront Waves at Bedok Reservoir Road that were launched in the first quarter.

Foreigners — who have been a key catalyst in the 30-per-cent jump in private home prices last year — are increasingly being discouraged by high asking prices.

This is especially so amid the continued uncertainty over the United States economy and the fallout from the sub-prime mortgage crisis.

Kuwait Finance House, which last December took an option to buy 97 units of the luxurious Goodwood Residence condominium for $818 million from Guocoland, has decided not to go through with the purchase.

The lacklustre real estate market in Singapore and the region has affected the performance of listed property firms.

Keppel Land reported a 7.6-per-cent fall in property sales to $273.1 million in the first three months of the year due to the increasingly cautious sentiment.

Mr Ku Swee Yong, a director at property consultancy Savills, said that until global stock markets show clear signs of a recovery, investors would remain wary of putting their money in real estate. He noted that banks here had not been selling many home loans this year.

“Other parts of consumer expenditure are still going strong, it’s just that property is taking the brunt of it,” said Mr Ku.

For the office sector, rentals increased at a slower rate of 7.3 per cent, down from 10.9 per cent in the previous quarter.

The URA said there was a total supply of 16 million sq ft in gross floor area of office space at the end of the first quarter.

Since last July, the Government has made available land on short-term leases for transitional office sites to meet the high demand for such space.

Mr Han said that the pace of office rental increase would continue to moderate for the rest of the year.

Mr Nicholas Mak, a director from Knight Frank, said that despite this moderation in pace, rentals will still rise by 15 to 20 per cent this year as “demand for office space is still healthy”.


The public housing market is also showing nascent signs of waning.

The number of resale transactions of Housing and Development Board (HDB)flats fell 6 per cent to 6,360 in the first quarter of the year from 6,750 in the previous quarter. Meanwhile, the HDB Resale Price Index rose 3.7 per cent from the previous quarter, down from 5.7 per cent in the fourth quarter of last year.

“HDB flat buyers were resisting the rise in resale prices,” said assistant vice-president of property agency ERA Eugene Lim.

The median cash-over-valuation (COV) for resale transactions was $21,000 in the first quarter, slightly lower than the previous quarter’s $22,000. The COV is the difference between the actual transacted price of the flat and its valuation. It cannot be paid from a loan or from savings in the Central Provident Fund.

“We saw the resale market hitting resistance level in the fourth quarter last year as HDB flat buyers do not have or are not willing to part with so much cash. This resistance carried through to the first quarter,” said Mr Lim.

“Very often, the deal cannot be closed or takes much longer to close because of unrealistic sellers demanding high COV,” he added.

Also, with more new flats coming on stream, some demand will be removed from the resale market. Buyers who can afford to wait up to three years for the completion of the flats may prefer to buy new flats directly from the HDB as this often involves a very small or no immediate cash outlay.

For His Daughters, He Fought En Bloc Battle Alone

Source : TODAY, Weekend, April 26, 2008

IT HAS been his home for about 30 years, one he bought with his late parents. His two daughters attend school close by and they have pleaded with him not to sell the apartment.

His is a familiar dilemma for minority dissenters caught up in en bloc deals across Singapore. Some have, like him, fought determinedly to cling to their homes.

But in one respect, 52-year-old business consultant Ken Lee has gone where none has yet.

Single-handedly, he has taken his case against the $202-million sale of Airview Towers to the authorities and won it twice. Each time, the father of two, who has had no legal training, represented himself.

Then on Thursday came a reversal of fortune that left him bewildered.

After both the Strata Titles Board (STB) and the High Court threw out the sale of the drab, 100-unit estate on River Valley Road — on a technicality — the Court of Appeal overturned the lower court's decision and threw the case back to the STB.

He has also been ordered to pay his opponents' legal costs for the STB, High Court and Court of Appeal hearings. Today understands this amount, to be decided in court, could be anywhere from $150,000 to $300,000.

"I am confused and disappointed, but I will take it in my stride," Mr Lee told Today.

During an hour-long chat on Friday at a cafe, Mr Lee — who was initially reluctant to be interviewed — seemed guarded and declined to be photographed.

Mr Lee, who travels frequently for work, had bought the apartment at Airview Towers some three decades ago. He now lives there with wife and two daughters, who are in Secondary 1 and 4.

He told Today his decision to fight the en bloc sale was partly about fulfilling a vow to his children.

"They said: 'Papa, if you sign, we'll throw rotten tomatoes at you.' They know I am keeping my promise to them," he said. "For me, it's a home. I lived there with my parents for a long time before they passed on."

A pragmatist, he had originally decided that if 80 per cent of the owners agreed to the sale, he "wouldn't go against it, since that is the law".

And so sure was he that this consent would be obtained that he shopped around for a new home and bought a "replacement unit" in April last year, which he renovated. He is now leasing out the new place.

So, why did he lodge an objection? Because he felt the proper application process "had not been followed" (see box).

Why not rally the other minority dissenters behind his cause?

"I don't rope people. If they come and support, I am thankful," he said.

Mr Lee said he has not decided if he would engage a lawyer for the next STB hearing, saying that it would add to his legal costs should he lose again.

So far, he says, he has experienced no animosity from the other residents, many of whom — like Mr Lee — have already bought new homes.

Many neighbours are still friendly, he said, although there were a few "unhappy that their plans were not working out".

Had the sale gone according to plan, they should all have moved out this month.

Said Mr Lee: "If they had done everything properly, this is the time everyone would be shaking hands and saying their goodbyes."

THE Airview SAGA

Last July, Mr Lee filed an objection to the sale, saying due process was not followed.

The sale committee had applied for the estate to go en bloc after the legal quota of 80 per cent of signatures was attained. Listed property player Bukit Sembawang, which won the site tender, was planning a 36-storey condominium project.

But then Mr Lee found that two of the units had changed hands during the one-year period given for residents' assent to be garnered – and the new owners had not signed the collective sale agreement in time.

The STB voided the en bloc application as the two new owners could not be included in the consensus that had expired; their consent was needed for the sale to proceed. The majority owners appealed, but the High Court dismissed their case on the same grounds.

On Thursday, the Court of Appeal overturned that decision – ruling that the order of sale would apply as long as 80 per cent of signatures in assent were garnered within 12 months. This is to avoid the deal being complicated should owners change their minds and transfer ownership.

The plaintiffs are represented by Senior Counsel Harry Elias, Foo Soon Yien and Toh Wei Yi of Harry Elias Partnership.

His 27-Year Affair With Numbers

Source : TODAY, Weekend, April 26, 2008

Straight-talker Dr Tony Tan has never been afraid to air contrarian views on the country's economy

CRYSTAL ball-gazing is a risky business. Miss the mark and it's egg on your face. Hit the bullseye and acclaim follows.

Of course, whether there is a reaction at all can depend on who you are and whether people even remember what you'd said.

With Dr Tony Tan Keng Yam, people remember. They will recall the former Deputy Prime Minister's ominous words earlier this week, when he said the world could be facing the worst recession in 30 years.

Media agencies flashed the pronouncement coming from a man who is now No 2 at the Government of Singapore Investment Corporation (GIC), a major sovereign wealth fund. When the news reached economists' ears, they said the prognosis was too bearish.

Three days later, the newsmaker put in qualifiers.

"Let me state clearly that this is not GIC's forecast for the global economy. It is a scenario which GIC is considering," Dr Tan, 68, who has been GIC's deputy chairman and executive director since retiring from politics in 2006, said in a statement Today received on Friday.

To be precise, it was the gloomiest of three scenarios on the investment firm's radar. One, optimistically, sees the end of the credit crisis and no recession anywhere. The second scenario is a mild US recession and no world recession, while the third is a deep, prolonged global recession.

"In light of the current fluid and uncertain times, the probability of the pessimistic scenario, while not the highest, has risen to a level that warrants serious consideration by GIC," he said, on why he highlighted the scenario during GIC's Staff Conference on Monday.

Dr Tan and his oft-surprising economic talk go a long way back. In his 27 years in politics, he would regularly offer his take on the economy's pulse, even when his portfolio did not include trade or finance.

He also came to be known as having an independent mind, confident enough to air opinions contrary to those of his Cabinet colleagues. One of those watersheds was in 1985.

Singapore was buckling under a global slowdown and a domestic burden: The Government's high-wage policy aimed at moving the labour-intensive industries towards high-tech activities had made the island an unattractive place to do business.

A rescue team was despatched in April 1985. Mr Lee Hsien Loong, then the Minister of State for Trade and Industry, led a committee to dish out remedies including tax breaks. Still, the recession raged on.

In December, Dr Tan — the Minister for Trade and Industry — proposed the unthinkable: Slash employers' Central Provident Fund (CPF) contribution rate, then set it at 25 per cent.

This was resisted initially by many, including Mr Lee.

But cool-headed calculation prevailed and the employer's CPF rate tumbled to 10 per cent in February 1986. The pro-business move was credited with saving the economy and prompting a rethink of CPF as a macroeconomic tool.

"That was brave and correct," says Mr Charles Chong, who served as a rookie Member of Parliament at Sembawang constituency under Dr Tan from 1988 to 1991.

"He was never hesitant to express views that deviated from the mainstream."

Such as in 1999.

Dr Tan publicly called Government scholarships "silly", because employers are forced to hold positions for a scholar, who might turn out to be unsuitable for the job or unwilling to join them after his studies.

Why not give out tuition loans instead, he suggested.

No, came the reply from then-Prime Minister Goh Chok Tong and Mr Lee, the other Deputy PM at the time.

A deviating prognosis

Behind Dr Tan's refreshing views, say those who know him, is his private-sector background.

Before standing for elections in 1979, this nephew of the late Tan Chin Tuan — OCBC's long-time chairman — was the local bank's general manager for 10 years. The stint must have sharpened Dr Tan's keen interest in financial matters and attuned him to the concerns of commercial businesses.

In fact, on wide-ranging matters, Dr Tan could "quickly distil the main issues", said Mr Chong.

One of his passions was scrutinising the economic forecasts of the Ministry of Trade and Industry (MTI). There were times when he stated, on record, his own prognoses — and they would differ from those of the ministry.

In August 1997, for example, he said that while the MTI had predicted full-year growth to be 5 to 7 per cent, the turmoil in Asia's currency markets might result in "slower growth" for the whole region.

Three days after he spoke, the MTI upgraded its forecast range to 6 to 7 per cent because of a rebound in the manufacturing industry.

On how Singapore's economy should evolve, Dr Tan had myriad ideas, some of which involved using words that flew over the head of the layman.

"Sawtooth economy", "growth discontinuity" and "creative destruction" have all been bandied about by the politician, who was once a university lecturer and has a Master's in Operations Research and a doctorate in Applied Mathematics.

'Look after the downside …'

Today, he chairs the National Research Foundation and Singapore Press Holdings.

"He is a very good but serious speaker. Tony Tan never entertains you. He tells you what the problem is," former Prime Minister Goh said in 2001 during the General Election.

Mr Lee Kuan Yew, the country's first Premier, was so impressed that his top-choice successor was actually Dr Tan, who turned down the offer.

In 1995, Dr Tan was called out of retirement. After two other heavyweights, Mr S Dhanabalan and Mr Yeo Ning Hong, resigned in 1994, Mr Goh requested that he return to strengthen the Cabinet.

Dr Tan agreed and rejoined as Deputy Prime Minister and Defence Minister, saying he would participate in decision-making on trade, industry, banking and other areas of the Singapore economy — even though they were not his primary portfolio.

As GIC's No 2, Dr Tan continues to watch the economy. His stated philosophy is: "If you look after the downside, the upside will look after itself."

It's redolent of his cautious demeanour — one that, political commentator Seah Chiang Nee argues, is "necessary in today's Singapore, when everyone's talking about renewal. You need an old hand to come and sort of introduce a jolt of reality sometimes".

Bush Says US Economy In Slowdown

Source : AsiaOne, Apr 26, 2008

WASHINGTON - PRESIDENT George W. Bush said the United States economy is in a slowdown but tax rebates that will start hitting consumers' bank accounts next week should help.

Mr Bush spoke as a measure of consumer confidence hit a 26-year low.

'It's obvious our economy is in a slowdown,' Mr Bush said on Friday in urging taxpayers to contact the federal government about their eligibility for rebates amounting to as much as US$600 (S$817) per adult and US$300 per child, depending on their income.

'The money's going to help Americans offset the high prices we're seeing at the gas pump and the grocery store and it will also give our economy a boost to help us pull out of this economic slowdown,' he added.

Top Democrats in Congress, however, said the rebate cheques may not be enough to spark a recovery and a second stimulus package may be needed.

'The strain of the economic downturn on middle- and low-income families demands, in my view, consideration of a second stimulus package,' House of Representatives Speaker Nancy Pelosi told reporters in Washington.

Ms Pelosi, a California Democrat, declined to say whether she was making any progress in talks with the Bush administration on additional legislation. She has suggested new spending on infrastructure projects, increased food stamps and expanded unemployment benefits - measures that were left out of the US$152 billion (S$207 billion) stimulus package swiftly passed in February.

US Treasury Secretary Henry Paulson said on Thursday he was willing to listen to Ms Pelosi's ideas to further aid the economy in connection with arranging a vote on the Bush administration's proposed Colombia free-trade agreement.

Mr Paulson also said in an interview that the Treasury had accelerated its schedule for distributing the rebate payments to start on Monday from a previous planned start in early May after tax returns were processed.

He said Americans would receive nearly 7.7 million Americans direct deposit payments next week, with US$50 billion in rebates flooding into the economy by the end of May.

Distribution of more than US$100 billion in rebate payments would be largely complete by the end of June.

Mr Bush said the first paper rebate checks would be sent out on May 9. He urged Americans to file their tax returns with the Internal Revenue Service to ensure that they receive a cheque.

Mr Bush has said the US economy is experiencing a slowdown, but not a recession against a background of rising unemployment as well as increasing energy and food prices and continued declines in home prices in many areas.

Gloomy sentiment
But the Reuters/University of Michigan consumer sentiment index on Friday showed a sour mood among Americans, hitting its weakest level in 26 years amid heightened worries over inflation and housing.

The April gauge fell deeper into recessionary territory, to 62.6 from 69.5 in March. As a result, Americans are increasingly likely to use their tax rebate to reduce debt or build savings, rather than spend on big-ticket items that would bolster economic activity.

Consumers worried about future living standards were reining in spending, the survey group said in a statement.

'Although the tax rebate will boost spending temporarily, the global rise in food and fuel prices, the declines in home values, and changes in credit conditions are likely to persist for some time and lengthen the period of stagnation in consumption,' the group said. 'Coupled with weaker job and income growth, these factors have the potential to cause deeper cutbacks in consumption than now anticipated.'

The survey group said the data now points towards the likelihood of a relapse in spending later in 2008 and continuing into early 2009.

'Whatever the American people do with these cheques will benefit the economy, whether they're buying products, whether they're helping to pay their gas bills, or whether they're paying off their credit cards, putting more liquidity back into the market, said House Republican Leader John Boehner of Ohio.

'The American people are bright. They'll figure out how to spend this money the best way possible.' -- REUTERS

Waiting For The Opportune Moment Pays Off For Frasers

Source : The Business Times, April 26, 2008

FRASERS Hospitality only opened for business in Japan last month - seven years after the Singapore-based serviced residence owner and management company started spreading its wings overseas.

During those years, Frasers - a wholly owned subsidiary of food and beverage company Fraser & Neave, which has branched aggressively into property development - has acquired more than 5,000 apartments in Asia, India, Europe, Latin America and Russia.

But the late start in Japan was a question of timing, according to Frasers chief executive Choe Peng Sum.

'We believe the timing is still ideal for us to enter Japan,' he said. 'Even international hotels have just recently surfaced in Tokyo - Peninsula, Mandarin Oriental, Four Seasons, Ritz Carlton and Conrad. In fact, the trend has been that the newer five-star international hotels are now starting to enjoy high occupancy, as opposed to existing hotels.'

Occupancy at Frasers' Fraser Place Shinjuku in Tokyo, which is in its first month of operation, is 'greater than expected', according to Mr Choe.

'Although we have been to Japan since 2004, getting the right project with the right project size and the right location, with the right partners and conditions, takes time,' he said. 'To have a close to 200 apartments in Shinjuku, giving the business a good economy of scale, was indeed a wait worth waiting for.'

Some 175 units in the East Tower of Fraser Place Shinjuku have been open to guests since March. Another 209 units in the West Tower are due to be ready in June.

'We are close to signing a property in Osaka, looking at Yokohama, and also a second property in Tokyo, which together will make Frasers Hospitality the largest international serviced residences player in Japan,' Mr Choe said.

Explaining Frasers' foray there, he said: 'Japan is an attractive market. There is growing demand for premium serviced residences as a result of investments by foreign and Japanese companies. Both are making frequent inter-city travel. Demand for serviced residences exceeds supply.'

But land, despite the decline in prices in recent years, remains very expensive, Mr Choe pointed out.

HDB Loan Scheme Lifeline For Bankrupts

Source : The Straits Times, Apr 26, 2008

ABOUT 40 people who have been made bankrupt and face trouble securing home loans from a bank or the Housing Board (HDB) have found a lifeline in the form of a new loan scheme.

Introduced in July last year by the HDB, these loans are designed to make it easier for bankrupts to find new homes and pay off their debts.

But loan applicants must first satisfy the HDB's criteria, which include having the money to service monthly mortgage instalments while still satisfying creditors.

An HDB spokesman told The Straits Times on Friday that proceeds from the sale of an existing flat should be used to finance a smaller home.

'To be realistic in determining what they can afford, buyers should consider their existing financial commitments.'

'(These include) allowances to support children and parents, payment towards utilities and transport,' said the spokesman.

There were 25,961 undischarged bankrupts - people who are still paying their debts - in Singapore as at the end of February this year, according to government statistics.

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

Major Remaking Of Collyer Quay

Source : The Straits Times, Apr 26, 2008

Waterfront area around Marina Bay to be transformed over next few years

TALL wooden hoardings now block off both ends of the once-bustling thoroughfare of Change Alley.

The moneychangers after whom it was named are long gone. All is eerily quiet at the glass-framed bridge linking Collyer Quay and Raffles Place.

However, the 32-year-old landmark will be reborn in 2010 as a shopping arcade with 12 retail shops, as part of a multimillion-dollar makeover now taking place at historic Collyer Quay.

It's just one of many changes in the waterfront area of Marina Bay that are set to create a buzz.

The eight-year-old One Fullerton, a three-storey entertainment complex occupying a prime spot along the quay, will be relaunched in August with four new eateries.

Business owners there are racing to open new restaurants and bars in time to cash in on the three-day Formula One SingTel Singapore Grand Prix that is expected to draw 240,000 spectators in September.

The new eateries include Forlino, a 5,000 sq ft traditional Italian restaurant to be helmed by Michelin-star chef Osvaldo Forlino from Italy. It is run by Mr Beppe de Vito, who owns the Il Lido Italian restaurant at Sentosa Golf Club.

Hotelier Loh Lik Peng, who owns the hip New Majestic and 1929 hotels, will open an upscale 80-seat Cantonese restaurant on the ground floor.

Even the space under the Esplanade Bridge next to One Fullerton has been transformed. A $500,000 Spanish-themed bar, The Tapas Tree, which can seat 120 people, will open there.

These will add to One Fullerton's current crop of 10 food and office tenants, some of which are undergoing renovations.

The changes come as the entire Fullerton strip waterfront area gears up to cater to F1 crowds, office workers in the vicinity, and the tourist throngs expected to be drawn to the rejuvenated Marina Bay, once it is completed.

Next to One Fullerton, the newly refurbished Clifford Pier will reopen with a restaurant and bar by September.

Both One Fullerton and Clifford Pier are part of an area being transformed by developer Sino Group into a waterfront development called The Fullerton Heritage. It will feature a new 98-room Fullerton Bay Hotel and a dining zone in the old double-storey Customs House, both of which will open next year.

And in 2010, diners can look forward to a rooftop restaurant overlooking Marina Bay at the new 50, Collyer Quay office building on the site of the former Overseas Union House.

The 18-storey block is being developed at a cost of $257 million by Clifford Development, a wholly owned subsidiary of Overseas Union Enterprise.

Next to it, the Change Alley Aerial Plaza Tower, a 39m-tall tower that once housed the popular Red Lantern Restaurant, will be upgraded from September. In 2010, it will reopen with two Chinese eateries on the fourth and fifth levels.

Urban Redevelopment Authority director for urban planning and design Fun Siew Leng says the developments, together with international events such as the F1 and Singapore Biennale 2008, will contribute to its vision of Marina Bay as an exciting and vibrant waterfront destination.

Diners such as administration manager Celeste Lim, 27, cannot wait for the revamped Collyer Quay. 'With the new eateries and bars, it will be the next hot spot. Also, the view at the waterfront will be spectacular, as it overlooks the Singapore Flyer and upcoming Marina Sands integrated resort.'

URA Decides Not To Award Ten Mile Junction Site

Source : The Business Times, April 26, 2008

Top bid of $61m, or $162 psf ppr, deemed too low

THE Urban Redevelopment Authority (URA) yesterday said that it has rejected the bid by Peak Green for a residential site at Choa Chu Kang/ Woodlands Road as the price offered was too low.

Peak Green's offer was $61 million, or just over $162.40 per square foot per plot ratio (psf ppr).

It was the higher of two bids which the 99-year leasehold site attracted. The only other bid was from Sim Lian Land which offered $45.68 million, or $121.60 psf ppr.

Peak Green is understood to be linked to Kheng Leong, the privately-owned property group controlled by the family of banker Wee Cho Yaw.

The tender for the Choa Chu Kang/ Woodlands Road site was launched last December and closed on April 3 this year.

At the time, estimates by consultants pegged the value of the site, on which the state-owned Ten Mile Junction currently sits, at between $200 psf ppr and $250 psf ppr.

The 15,645 sq metre (168,403 sq ft) site has a residential potential gross floor area of 254,394 sq ft, which can house between 200 and 240 flats or serviced apartments.

The existing commercial gross floor area is 121,191 sq ft.

Consultants had been divided on whether the URA would award the site but at least one noted that the bid price was one of the lowest in years.

The last time land tender bids of below $200 psf ppr were submitted was between 2000 and 2002.

Separately, URA said yesterday that it has awarded a transitional office site at the Scotts Road/ Anthony Road area to UOB Kay Hian Trading which submitted the highest bid of $34 million, or $243 psf.

The tender was launched on Feb 28 and closed on Thursday. The 8,683 sq metre site was offered for sale on a 15-year lease.

Office Property Prices Edge Up By Just 1.1% In Q1

Source : The Business Times, April 26, 2008

Growth slows as foreign investors leave the market, demand lower prices

OFFICE property prices took a hit in the first quarter of 2008, with foreign investors either withdrawing from the market or demanding lower prices.

According to data from the Urban Redevelopment Authority (URA), office property prices grew a marginal 1.1 per cent in Q1, compared with an 8 per cent increase in the previous quarter.

DTZ Debenham Tie Leung executive director (research and consultancy) Ong Choon Fah believes the office sector has been bolstered by foreign funds that have since been hurt by the global credit crunch, and that there are worries over impending new supply post-2010.

'Funding is now an issue,' she said. 'Investors are adopting a cautious approach.'

URA said that at end-Q1, a total of about 1.49 million square metres of gross floor area of office space was in the pipeline. This includes the new space from the redevelopment of former UIC Building (79,900 sq m) and the former SPI Building (32,000 sq m), both of which were granted planning approval for development in the quarter.

Cushman & Wakefield managing director Donald Han notes that price retreats from Q4 2007 to Q1 2008 could be due to lower prices achieved for 1 Phillip Street and potentially 1 George Street, which saw transactions at $2,500 psf and $2,600 psf respectively. Previous highs include Chevron House and Hitachi Tower at $2,700 psf and $2,900 psf respectively.

On the upside, overall office rents remained relatively stable in Q1, growing 7.3 per cent in Q1 compared with 10.9 per cent in the previous quarter.

'Yields will rise from 3.5-4 per cent per annum last year to 4.5-5 per cent per annum this year to compensate investors from the global financial market uncertainty,' Mr Han said.

'As such, we will see capital values stabilising this year, with moderated rental growth to provide the necessary yield uptick. We will see the emergence of Reits and owner occupiers as primary base investors.'

Knight Frank director (research and consultancy) Nicholas Mak believes one reason for the slower price and rental increases is that office tenants have become resistant to higher asking prices. He also noted some demand has been diverted to office space located outside the CBD.

URA also said a total of 435,000 sq m of business park space is in the pipeline from projects expected to be completed between the current Q2 and 2011.

The overall office vacancy rate rose marginally to 7.7 per cent in Q1, from 7.3 per cent in the preceding quarter. DTZ's Mrs Ong attributes this to office buildings being vacated for retrofitting or renovation.

Market Turmoil Expected To Hit Developers This Year

Source : The Business Times, April 26, 2008

SINGAPORE'S top two developers are expected to report strong core earnings from apartment sales thanks to a three-year property boom, but slower sales since late last year will hit full-year results in 2008.

Private home prices in the city-state jumped 31 per cent in 2007 for the largest increase in eight years, but growth slowed for a second consecutive quarter in January-March as volumes slumped to the lowest since the Sars epidemic in 2003.

Government moves to cool the market, by ending a scheme that allowed delayed payments, coupled with the impact of a global economic slowdown, are expected to hit top developers CapitaLand and City Developments.

This week, Singapore's third-biggest developer Keppel Land by market value, reported a 3.5 per cent fall in quarterly net profit as new property launches were hurt by the US sub-prime mortgage crisis.

'Volumes have dwindled down to a trickle as the halt of the deferred payment scheme coincided with the sub-prime issue,' said Kim Eng property analyst Wilson Liew, who has cut annual forecasts for Singapore developers by 15-18 percent to reflect lower sales.

For the first quarter, CapitaLand, South-east Asia's largest developer by market value, is expected to report a 59 per cent drop in net profit in the absence of divestment and revaluation gains, analysts said.

Divestment gains, coupled with the sale of an office building and the sale of units in its Ascott Residence Trust, had lifted results five-fold in the first quarter of 2007.

'CapitaLand will probably continue to book some revaluation gains this year, but most of the increments would already have been booked in 2007,' Mr Liew said.

CapitaLand's aggressive moves to grow in overseas markets such as China and India are expected to help it weather a slowdown in Singapore's property sector. Overseas operations contributed 40 per cent to CapitaLand's profits in 2007.

City Developments, Singapore's second-biggest developer, is expected to report a 63 per cent jump in first-quarter net profit, boosted by strong sales of its luxury apartments in the last two years.

'CityDev is best poised to ride out the current downturn in the property sector and will be a key mover upon the first signs of a market recovery,' said DBS Vickers analyst Lock Mun Yee, adding that the developer had a large landbank and deep pockets to delay launches until conditions improved. -- Reuters

HDB Resale Transactions Decline 6% In Q1

Source : The Business Times, April 26, 2008

Median COV was $21,000, compared to $22,000 in Q407

TRANSACTIONS of resale HDB flats fell 6 per cent from the fourth quarter of 2007 to 6,360 in Q1 this year, against the backdrop of rising asking prices and high cash-over-valuation (COV) demands.

'With escalating resale prices and more and more COV transactions, we saw the resale market hit resistance in Q4 last year as HDB flat buyers do not have or are not willing to part with so much cash,' said property agency ERA's assistant vice-president Eugene Lim. 'This resistance carried through to the first quarter this year.'

In Q4 2007, a total of 6,750 resale flats changed hands, which was itself a 13 per cent drop from Q3 2007.

HDB's resale price index rose 3.7 per cent in Q1 this year compared with Q4 2007.

But this increase was lower than the 5.7 per cent quarter-on-quarter rise in Q4 2007.

The median COV of all resale flats in Q1 this year was $21,000, slightly down from $22,000 in Q4 2007.

In some estates, the drop was much larger.

The median COV of executive flats in Bishan, for instance, plunged $25,000-$45,000 in Q1 2008, and that of five-room flats in Marine Parade fell $15,000-$50,000.

On the resale price trend, PropNex CEO Mohamed Ismail believes an increase is sustainable in the long term and that double-digit growth this year is attainable, given the robust economy.

Mr Ismail reckons the falling COV reflects a smaller number of private property and en bloc downgraders in the market.

He expects the COV to stabilise at $20,000 islandwide for the year, as demand for resale flats increases and the number of surplus flats falls.

ERA's Mr Lim also expects the resale market to remain healthy for the rest of the year, though price growth may be more measured.

'For the whole year, we do not expect resale prices to increase more than 10 per cent,' he said.

He noted that some demand for resale flats may be diverted to the increasing number of new flats coming on stream.

'First-timers and those that can wait a couple of years are likely to go for new flats, as buying direct from HDB involves little or no cash outlay,' he said.

HDB said yesterday it plans to offer 5,000 new flats under the Build-To-Order (BTO) system during the next six months.

Together with 1,100 launched in Q1, the planned BTO supply of 6,100 new flats for January to September will exceed the numbers of BTO flats launched in 2007 or 2006, which were 6,000 and 2,400 respectively.

Home Prices Rise More Slowly In Quiet Market

Source : The Straits Times, Apr 26, 2008

Lower-than-forecast 3.7% growth could signal start of decline

THE property market may have gone quiet, but home prices continued their steady climb in the first three months of this year, albeit at a much weaker pace.

Private home prices rose 3.7 per cent between January and March, down from the 6.8 per cent growth in the previous three months.

It was also notably lower than the 4.2 per cent rise that had been predicted early this month, based on sales in the first 10 weeks.

This suggests prices may have started declining last month, dragging down the whole quarter.

'Price growth is starting to weaken severely and the volume of transactions has halved,' said Mr Chua Yang Liang, Jones Lang LaSalle's head of South-east Asia research.

'The rate of increase in coming quarters is likely to be even slower and prices may peak in the third or fourth quarter.'

Observers have suggested that private home prices could be holding partly because developers are putting off project launches, thus curbing the supply of new homes.

Developers had 10,239 new units ready for sale in the first quarter that were not launched - that is a three-year high and 3,000 more than in the previous quarter.

The number of units actually launched in the quarter - 1,343 - was the lowest in almost four years.

'There's a lot of supply but it hasn't been released into the market yet, and that could be one reason why prices are still growing,' said Mr Nicholas Mak, director of research and consultancy at property firm Knight Frank.

Almost half of these unlaunched units were in the core central region, comprising the prime districts 9 to 11, the Marina Bay area and Sentosa. The rest were evenly divided between the city-fringe and suburban regions.

Mr Ku Swee Yong of Savills Singapore said developers may not be delaying launches to deliberately prop up prices but, rather, to wait out the weak market sentiment and uncertain global outlook.

Whatever the reason, the lack of launches has forced buyers to turn to the secondary market, where they bought 2,304 homes in the quarter - three times what they bought directly from developers.

This shows there is still an underlying demand for homes, and may also have helped sustain prices at current levels, analysts said.

The slowdown affected private homes in all areas, from prime to suburban regions. Each region saw prices rise only 3 to 4 per cent, from 7 to 8 per cent the previous quarter.

Sub-sales - this is when a person buys an uncompleted home and then sells it again before it is built - made up a tenth of all sales.

In the case of public housing, resale prices rose 3.7 per cent in the first quarter, down from 5.7 per cent previously. But sales dropped 6 per cent to 6,360 transactions.

The median cash-over-valuation amount - the portion of a flat's price that buyers have to pay in cash - dipped slightly to $21,000. This shows that buyers are starting to resist having to fork out too much cash for HDB flats, especially since valuations have climbed recently.

All other types of properties also saw lower growth, with office prices logging the biggest slowdown. They rose only 1.1 per cent in the first quarter, down from 8 per cent in the previous three months.

But office rentals stayed strong, as businesses continued to expand and space remained tight.

Developers Hold Off Launches In Quiet Market

Source : The Straits Times, Apr 26, 2008

Number of private flats that have not been launched hits three-year high

DEVELOPERS are so gun-shy of the quiet property market that they are continuing to hold off launching units, creating fears of a supply glut and possible price slump.

The pool of unsold, uncompleted private flats that can be launched for immediate sale rose by more than 3,000 units in the first quarter of this year.

This brings the number of such units to 10,239, a three-year high, according to Urban Redevelopment Authority figures released yesterday.

Of the 10,239 unlaunched flats, 4,824 units were in the core central region, which includes districts 9, 10 and 11. These are areas with high-end properties - the very sort facing lacklustre demand now.

Things are even worse in the rest of the central region, where the number of unlaunched units rose by 77 per cent to 2,934 in the first three months.

High-end projects that have not been launched include Marina Bay Suites, Sentosa Quayside and Nassim Park Residences.

CBRE Research expects more suburban launches this quarter as developers focus on mass market projects.

Developers on the whole remain wary of new launches, said Dr Chua Yang Liang, Jones Lang LaSalle's head of research for South-east Asia.

But there was significant growth in suburban areas, where 813 units - or 60.5 per cent of total launches - were released in the first quarter. Yet demand was weak.

'This could result in a supply overhang that may encourage a more conservative approach by developers in the next quarter,' said Dr Chua.

The industry uses launches to sell units to generate cash flow. Big developers have the resources to hold on for years if the market is flat, but smaller firms may be under pressure to sell at lower prices.

Mr Nicholas Mak, Knight Frank's director of research and consultancy, said that if sales volume remains thin, more small developers will likely cut prices of their projects to improve cash flow, but the impact of their action may be lost on the market because of their size.

But big-name developers able to launch units may not do so until the United States sub-prime crisis eases, said Mr Ku Swee Yong from Savills Singapore.

Major developers such as Wheelock Properties, Far East Organization, City Developments and Keppel Land have, in the past, been willing to hold back their launches for several years, he added.

Take Far East. It topped up the lease of its 99-year leasehold property, Orchard Scotts, while it delayed the launch several years ago.

While the quarter was flat, there was naturally some sales activity. Developers sold 762 new homes in the first quarter, but that was one of the smallest numbers in 12 years.

By the end of the first quarter, there were 2,526 flats that had been launched but remained unsold. These could include units launched several months ago.

In the pipeline are another 29,920 units that have yet to obtain a sales licence

The vacancy rate of private homes has also been rising steadily since the second quarter of last year, when it was at a low of 4.9 per cent. It hit 6.3 per cent in the first quarter.

Developers sell about 8,000 homes a year. If their inventory of unsold private homes exceeds 17,000, it could indicate a supply glut, said Mr Mak.

We are not anywhere near that point, he added. But it is now a stand-off. Buyers are waiting for prices to fall while sellers are waiting for buyers to return.

But Mr Ku said that unless developers flood the market, which they are not expected to, the significant increase in stock is not a real concern.

Homes Held Back From Launches In Staring Game

Source : The Business Times, April 26, 2008

Buyers not forthcoming, so developers delay projects that are ready for market

The number of homes that could be launched for sale immediately, but have been held back, has increased to 10,239 in the first quarter of 2008, an increase of 44.2 per cent over the 7,099 units in the fourth quarter of last year. This, perhaps, is a reflection of the standoff between developers and buyers.

'The only project targeted at the mass market, the 405-unit Waterfront Waves (above) at $800 psf, met with a certain degree of success as evidenced by the 108 units sold.'- CB Richard Ellis director Leonard Tay

The Urban Redevelopment Authority's (URA) property data for the quarter also revealed that there were 2,526 homes launched, but unsold at the end of the first quarter of 2008, an increase of 22.4 per cent over the previous quarter.

CB Richard Ellis director Leonard Tay said simply: 'As homebuyers were less forthcoming, developers decided to delay their launches.'

Mr Tay highlighted that most of the new projects launched were small projects located outside the prime residential districts. 'The only project targeted at the mass market, the 405-unit Waterfront Waves at $800 psf (per square foot), met with a certain degree of success as evidenced by the 108 units sold,' he added.

According to URA, prices of private residential property increased by 3.7 per cent in Q1 2008 compared to 6.8 per cent in the previous quarter.

Mr Tay said that while there were no new luxury projects launched, a few units from existing projects were known to have been sold at above $3,300 psf in Q1 2008, with several units in Marina Collection sold at above $2,600 psf.

'These, and probably some high-priced transactions in the resale and sub-sale markets, could have contributed to the 3.7 per cent rise to the private residential price index from the previous quarter,' he added.

Interestingly, the 3.7 per cent increase in the PPI is lower than the earlier forecast of 4.2 per cent.

URA said that the last time the flash estimate of the change in private residential property price index (PPI) was revised downwards by more than 0.5 per cent points was in Q4 2001, when it was pegged downwards by 1.4 percentage points.

Jones Lang LaSalle local director and head of research (South-east Asia) Chua Yang Liang also noted that PPI was down by 3.1 percentage points from the 6.8 per cent growth recorded in Q4 2007, the biggest quarterly drop since Q3 2000, when prices declined by 4.2 percentage points.

Dr Chua said that overall, developers remained conservative on their new launches.

But while there was a significant growth in Outside Central Region (OCR) where a total of 813 units were released in the quarter - 60.5 per cent of total launches in Singapore in Q1 2008 - he noted: 'Demand in this region was however not as strong.'

Take-up rate for OCR was only 38 per cent whereas Core Central Region (CCR) and Rest of Central Region (RCR) reported healthier take-up rate of 89 per cent and 71 per cent respectively.

And Cushman & Wakefield managing director Donald Han believes buyers are prepared to wait. 'Property is sentiment-driven, and if buyers believe the economy will slow down, they will be prepared to wait it out on the sidelines,' he said.

The disappearance of speculators from the market may have also dampened sales, as reflected by the lower number of subsales at just 346 transactions, down from 649 in the previous quarter.

'Short-term speculators have been weeded out,' Mr Han said. But, as Mr Han notes, it is now also 'a smaller market'.

Savills Singapore director (marketing and business development) Ku Swee Yong also believes sub-sales have reached a plateau with current data 'reflecting true demand'.

According to Savills' own basket of properties launched and sub-sold in 2007 and 2008, the level of subsales fell from 34 transactions in Q4 2007 to just six transactions in Q1 2008. Subsale prices, however, remained stable, suggesting that panic selling for the time being at least is unlikely.

On whether the increasing backlog of unsold homes could pose a potential over-supply situation in the future, Mr Ku said that he believes not all the potential developments will be built.

URA projects that 56,501 units are expected to be completed between Q2 2008 and 2011, of which 29,685 units are already under construction.

Mr Ku said there are certain 'control mechanisms' which could see a lower number of units completed by 2011 with the first being the construction factors. Mr Ku said that a project that has not already begun construction is not likely to be finished within two years, simply because of the costs and shortages within the construction industry currently.

Another control mechanism lies with developers. 'In the previous downturn, some developers held off projects for 10 years,' he said.

UOB-Kay Hian To Build Site For Own Use

Source : The Business Times, April 26, 2008

INVESTMENT house UOB- Kay Hian will develop the Scotts Road/Anthony Road site which it clinched this week for its own use, a senior company official told BT yesterday.

'It will be our new office when fully developed,' said Esmond Choo, the company's executive director. 'It will give us some 140,000 square feet of office space, which should be sufficient to house our 2,500 staff. The location is a nice, upmarket area, near the MRT station and next to the prime shopping and hotel areas.'

UOB-Kay Hian beat out seven other bidders with its record $34 million tender for the 15-year-lease site this week. This works out to $242.5 per sq ft for the 93,461 sq ft plot - double original estimates by property market insiders.

UOB-Kay Hian's bid was also some 11 per cent more than what had been paid for the first transition office site in Newton in August 2007.

Asked why UOB-Kay Hian paid record prices for a 15-year-lease property, Mr Choo said: 'We see the office rental market continuing to tighten up and rentals trending up in the foreseeable future. So we decided to take ourselves out of the equation. This way, we will not face major disruptions and it will give us more predictability in terms of our operating costs.'

Rentals in the prime Raffles Place area, where UOB-Kay Hian has its 100,000 sq ft office, averaged over $15-18 psf amid continuing tightening in the office space supply market through the first quarter. This is much higher than the $6-8 psf monthly gross rent commanded in the Scotts Road area.

UOB-Kay Hian itself is said to be paying around $10 psf despite operating out of its parent UOB's premises. But Mr Choo added that UOB-Kay Hian would keep its outlay on the new property within reasonable limits, bearing in mind that it would be a transitional office with a relatively short lease.

'We expect to spend about $200 psf to develop it into a nice low-rise office headquarters housing our entire operations,' he said. 'It will be a nice, comfortable, efficient and attractive glass-and-concrete building.'

Mr Choo did not say what the company would do after the 15-year lease is up.

露出更多冷却迹象 私宅价格升速减半

《联合早报》Apr 26, 2008



仲量联行(Jones Lang LaSalle)研究部主管蔡炎亮博士说:“疲弱的房地产价格指数反映了越来越谨慎的市场情绪。”








世邦魏理仕(CB Richard Ellis)研究部董事郑卫铭相信,由于发展商将把重点放在销售大众化共管公寓项目,因此需求量应该会稍微改善。



组屋转售价稳健上涨 售价和溢价仍偏高 交易量减6%

《联合早报》Apr 26, 2008