Monday, July 28, 2008

Older Landed Homes Now Within Reach

Source : The Sunday Times, July 27, 2008

Prices are attractive in suburban areas but buyers need to be aware of the property's condition

Owning a landed property may feel like a distant dream for some after the prices of such homes surged significantly last year, but the dream may not be as distant as it seems.

If one looks hard enough in suburban locations, such homes can be found for as little as $800,000.

Price growth for landed homes is slowing in line with the general market, and suburban bungalows and terrace houses have already registered a drop, according to data. -- ST FILE PHOTO

The good news for potential buyers is that price growth in landed homes is slowing in line with the general market.

Indeed, suburban bungalows and terrace houses have already registered a drop in prices, according to data from Savills Singapore.

For instance, in the second quarter, prices of suburban terrace houses dropped 6.8per cent to an average price of $605 per sqft, compared with a 2.4per cent rise in the first quarter.

Overall, official data from the Urban Redevelopment Authority on Friday showed that landed home prices rose 0.6per cent in the second quarter, down from a rise of 3.9per cent in the first three months of the year, and 23.4per cent for the whole of last year.

While the downward growth trend may continue, landed home prices are at least supported by a limited supply of such homes and a relatively illiquid market, market watchers say.

As more houses are being converted into apartment blocks, landed homes could become rarer in 15 years' time, says the director of Savills Residential, Mr Ku Swee Yong.

He foresees an annual rise of at least 5per cent in the general landed home market in the next three years even as growth slows.

What to look out for

Those with a small budget of around $800,000 should check out locations such as the MacPherson area, or Jalan Hari Raya in the Thomson area, according to Mr Eugene Lim, assistant vice-president of ERA Asia-Pacific.

Those with a slightly bigger budget of around $1million might like to consider older, 99-year leasehold landed homes in Paya Lebar, Hougang and Rifle Range Road.

They could also look at the terrace houses in Choa Chu Kang, Kallang, Pasir Ris, Sengkang, Sembawang and Toa Payoh, or semi-detached homes in Jurong West.

A 2,399sqft terrace unit in Pasir Ris Heights, for example, was sold for $870,000 last month, while a bigger 3,674sqft unit in the same area went for $818,000 in April.

Generally, though, landed homes below $800,000 are few in number, are likely to be very old and are often single-storey terrace houses. Buyers would likely need to spend money on renovation, said Mr Lim.

With older homes, potential buyers should pay particular attention to the structure and look for signs of leakage, he said.

But even if a buyer has money set aside for renovation, said experts, he may find it tough securing a contractor, as the construction sector is stretched in the current market.

Aside from location and the cost of renovation, buyers should also consider the shape of the site on which the house sits.

'Odd-shaped land means there is less effective land area for built-up space, and that compromises on space maximisation as well as the prospect for redevelopment or even sub-division,' said the head of KF Property Network, Dr Tan Tee Khoon.

Fortunately, most houses sit on rectangular or square-shaped plots.

'Other practical considerations include ensuring that there is no termite problem and that the property has no illegal extensions or erection of structures,' he added.

Also, buyers typically want a landed home for their own use. Those buying for investment should note that landed homes are generally less attractive to tenants than condominium units because of the lack of facilities, said Savill's Mr Ku. Many tenants also do not want to be bothered with maintaining a landed property.

Median rents for suburban terrace units have remained stable this year at $1.84 psf - the same median rent level for semi-detached houses in the second quarter. Median rents for surburban bungalows have fallen to $2.40 psf in the second quarter, from $2.67 psf in general.

'In general, the lower rental value is reflected in the lower price on a per square foot basis. This is why landed prices are a laggard to the general market,' said Mr Ku.

Beware extra costs

Generally, landed homes below $800,000 are few in number, likely to be very old, and are often single-storey terrace houses. Buyers would likely need to spend money on renovation.

Huh? What Is A Reserve List?

Source : The Sunday Times, July 27, 2008


Where do you see this?

In articles about property and Government announcements about the sale of land.

What does it mean?

It refers to a method of selling land that the Government introduced in June 2001.

A site on the reserve list will be put up for tender only if developers indicate interest in it by submitting a minimum bid that is acceptable to the Government.

Every six months, the Government rolls out its latest land sales programme. If sites on a reserve list are not triggered for sale in the six months they are made available, they will probably be carried over to the list for the following six months. Alternatively, the Government could put the sites on the confirmed list (see next week's column) for the following six months.

Why it is important?

This system introduces greater flexibility into the land sales programme, enabling the Government to respond to market demand. This land sale method was the only one employed by the Government for nearly four years, following the economic and property slowdown that set in after Sept 11.

Developers like this system as it is market-driven, allowing them to adjust supply to meet demand.

So you want to use the term. Just say ...

'Put off by weak sentiment and sales volumes, developers have held back from applying for reserve list sites so far this year.'

Record 13,400 Homes To Be Completed Next Year

Source : The Sunday Times, July 27, 2008

Rents expected to fall, especially in prime districts and East Coast. Fiona Chan reports.

Next year is likely to be a bad one for landlords.

A bumper crop of newly completed homes is scheduled to flood the market, making more apartments available for rent and pushing down rents, which saw record rises last year.

And with lower rents, private home prices - which industry observers say have reached their peak - may drop further, especially those in the prime districts.

A massive 13,399 new private homes will be ready for occupation next year. This is double the average in recent years and the most in a single year, according to property consultancy CB Richard Ellis (CBRE).

Official supply numbers show 10,500 completions next year and 11,800 the year after, but CBRE's analysis, based on construction progress and delays, reveals more completions next year.

It expects this new supply to depress rents by 5 to 10 per cent on average next year, coming on top of a global economic slowdown that might lead firms to hire fewer expatriates, the main source of tenants.

In the prime areas, rents could slide up to 15 per cent next year, on top of a decline that has already begun this year, predicted CBRE.

Popular rental areas such as the East Coast and Orchard will be among the worst hit as keen demand for homes there in recent years led developers to build aggressively.

An 'alarming' 3,341 new homes will be completed in the East Coast next year, double the number this year, CBRE said. Major projects in the area, which covers Katong and Marine Parade to Bedok and Changi, include the 562-unit One Amber and the 556-unit Casa Merah.

In the prime districts 9, 10 and 11, some 4,240 homes will be ready in areas such as Orchard, Holland, River Valley, Tanglin and Newton. RiverGate, with 545 units, is the biggest condominium scheduled to open its doors.

Suburban areas will also see a large jump in finished homes next year. In the north and north-west, for example, there will be 10 times more than this year.

But this is unlikely to result in a glut or lower rents as most suburban home buyers intend to occupy their units.

Property experts warn that many major prime projects to be ready this year and next are those that had attracted investors rather than owner-occupiers, which means their units will add to the rental supply.

'Some big condos in the downtown areas have a higher proportion of investors,' said Mr Colin Tan of property firm Chesterton International. These include the 1,111-unit Sail @ Marina Bay, which will be fully completed by the end of this year, and the 312-unit Clift in McCallum Road, expected next year.

'We don't even have to wait for the 14,000 homes next year; rents are already moderating and should come down in the third quarter,' he said, adding that landlords are lowering their asking rentals.

He cited the case of The Sea View in Amber Road, whose 546 units were completed this year. 'I asked someone there, how are the rents? He said: 'I'm not sure really, there's no demand'.'

This will be welcome news for renters, who have had to face ever-increasing rents over the last two years.

Rents have shot up 60 per cent on average since 2006 and even doubled in some places, thanks to an influx of expats and a shortage of rental homes.

For example, in Cuscaden Residences in the Tanglin area, a typical 1,485 sq ft unit could fetch $9,200 in monthly rents last year, from about $6,500 in 2005. This year, it has fallen to $8,100, according to recent reports. Next year, it could fall by another 10 per cent to $7,300, if CBRE's predictions come true.

Entrepreneur Sebastien Dechamps, 29, who came here from France three years ago and started a website for expatriates, said high rents have seen more expatriates moving away from the city to places in the north and the east.

'The fall in rental prices is definitely good news. It might encourage expats to move to the city, which is great because they can put more vibrancy back into the city and into its nightlife,' he said.

A fall in rentals generally leads to a fall in home prices for two reasons: landlords, less able to service their mortgages, are willing to let go of their units more cheaply, while would-be investors will only pay as much as a home can fetch in rents.

The supply situation is not likely to improve beyond 2010: The latest official data shows that apart from the 21,000 or so homes to be completed over the next two years, there are another 20,000 homes scheduled to be built in 2011.

But Savills Singapore's director of business development and marketing, Mr Ku Swee Yong, is still optimistic.

He expects higher than average housing demand during 'the next few years of growth', and believes that after accounting for demolitions of collective sale estates, the 'net supply should be balanced by demand'.

Private Equity Real Estate Funds In Asia Still Booming

Source : The Straits Times, July 28, 2008

They raised more cash this year and helped stave off property slump

THE global financial turmoil has deflated the private equity boom in Asia but regional real estate buy-out funds are still going strong.

Private equity real estate funds - many holding Asian assets - raised 32 per cent more cash in the first half than in the same period a year ago.

ACTIVE IN ASIA: Capitaland's new fund will invest in Raffles City Beijing. -- CAPITALAND COMMERCIAL LIMITED

This contrasts with Asian private equity funds, which have seen the amount of funds raised slump 21.5 per cent in the first half of this year to US$19.2 billion (S$26.1 billion), according to Asia Venture Capital Journal.

Private equity funds typically invest in private companies or take control of listed firms. Private equity real estate funds invest in property and may get involved in development through joint ventures with local players.

Recent data suggests that the funds are sufficiently cashed up to keep investing in regional markets, including Singapore, and so help stave off a severe property slump, said some analysts.

In the first five months of this year, 13 new Asia-focused private equity property funds were set up and raised a combined US$13 billion, said research firm Private Equity Intelligence (Prequin).

For the full year, Prequin said 78 funds are looking to raise US$81 billion for Asian property investments.

Property funds were particularly active in Singapore in the first half of last year, but the market has since quietened, noted Mr Nicholas Mak, Knight Frank's director of research and consultancy.

The funds helped drive up prices in high-end residential property as well as certain commercial segments. They also bought tens of units - or even whole buildings - at bulk discount prices, said a Singapore-based fund manager.

There had been some concern that the credit crunch and the slowing property market here would prompt such funds to cash in their investments, and so bring down prices further, he noted.

But these fears look unfounded as the recent fund-raising numbers suggest that private equity real estate funds are not suffering from a drastic drop in liquidity.

'Real estate private equity is still going pretty strong,' said Mr Mark Pawley, chief executive of Singapore-based private equity firm Oxley Capital. He noted that Singapore was a 'hot market last year' for private equity players, and certain funds may still allocate fresh funds here - albeit much less than last year.

For instance, two new Asia-focused entities - the US$3.9 billion fund raised by Macquarie Bank unit MGPA and Keppel Land's US$1.2 billion fund - will allocate part of their portfolios to Singapore.

Oxley Capital is still looking at some opportunities for relatively 'small deals' in residential units here.

It will also help to grow the portfolio of the Cambridge Industrial Trust (CIT), an industrial property Reit. Oxley has a stake in the manager of CIT.

However, some funds may exit their Singapore investments if they have hit their profit targets or they may shift their focus and strategy to other markets such as Australia, Japan and Vietnam, said Mr Pawley.

Funds are looking to snap up so-called 'distressed assets' - properties whose prices have plummeted as their developers may have encountered financial difficulties - in these markets, which have been affected by a housing slump.

Kim Eng analyst Wilson Liew noted that volatile markets have prompted some Singapore property players to raise funds from institutional rather than retail investors.

Fraser & Neave's unit Frasers Hospitality, for instance, has said that it is not the right time to list a real estate investment trust (Reit). Instead, it is tying up with private equity players to buy serviced residences.

This year, CapitaLand raised US$1 billion for its Raffles City fund focused on property in China cities, and a further 500 million yuan (S$100 million) for the Citic CapitaLand Business Park fund.

Other Singapore-based players involved in real estate private equity include ARA and Pacific Star.


'Real estate private equity is still going pretty strong.'

MR MARK PAWLEY, chief executive of Oxley Capital. While other Asian private equity funds remained in a slump, private equity real estate funds raised more cash in the first half of this year than last year.

Resident's Usual Vigilance Slips, And Car Is Hit

Source : The Straits Times, July 28, 2008


Most vandalised cars belong to those yet to sign collective sale deal

THE Laguna Park car vandals have struck again: At least two more cars have been hit, including one which had already been targeted before.

A brand-new Toyota Altis was found scratched last Saturday.

The other car, a silver Nissan Cefiro, understood to have already been sprayed with black paint last week, was also scratched on Saturday. Its owner confirmed these details but declined to be named.

This Mercedes Benz is streaked with black spray paint.

The Straits Times reported last Thursday that several cars in the estate had been damaged - sprayed with black paint or a corrosive liquid, or scratched. Residents there are divided over putting the place up for a collective sale.

Residents of the 530-unit development in Marine Parade Road say the three latest attacks bring the total number of vandalism cases to at least nine in the last month.

Coincidentally, all but one of the cars belong to owners who have not yet agreed to the sale.

This Toyota Corona is scratched and sprayed with black paint.

The owner of the Altis, Mr Lau Cher Chye, said he has been parking his three-month- old car near the security guard post at the condominium's entrance as a precaution after reading the report about the spate of vandalism.

The 57-year-old financial adviser said: 'My wife and I thought we would be targeted soon.'

True enough, it happened last Saturday afternoon - on the one occasion when the couple had parked their car away from the guard post. They had just returned from the supermarket at 3.45pm and had many bags of groceries to lug home, so they parked the car nearer their block, Mr Lau explained.

A corrosive liquid is splashed on the bonnet of this Lexus as well as that of a Toyota Altis.

He added that since they were going out that evening, the car would be left there for only a couple of hours.

As it turned out, that was enough time for several gashes to be made on the doors on one side of the champagne-coloured car.

Like other affected residents, Mr Lau said he believed he became a victim because he did not put his signature down for the collective sale.

Mr Lau's three-month-old car is scratched when he parks it further away from the security guard post - for just two hours. It is one of at least two cars vandalised over the weekend.

'It is quite obvious. In one month, there are already so many cases, and most victims have not given their consent yet. Why such a coincidence?' he asked.

Nothing like this has happened to him before in his 30 years there, he said.

As of last Saturday, close to 64 per cent of home owners had voted for the proposed sale, according to notices put up around the estate.

The sales committee has until the end of the year to garner the 80 per cent vote needed to proceed with the deal.

A distraught Mr Lau said: 'We are very upset by this act of gangsterism. We love this estate. It's been very peaceful all this while. That's why we refuse to sign.'

He has made a police report but has not had repairs done to the car yet. He will also park his car near the guard post from now on, he said.

The estate's management committee will hold a dialogue with residents this Saturday to discuss the vandalism problem.

Notices posted around the estate said the committee would look into installing closed-circuit television cameras, and added that the management took 'a very serious view of the matter' and would hand over offenders to the authorities.

至今有上万人参观示范单位 宏茂桥私人组屋吸引千人登记

Source :《联合早报》July 28, 2008




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