Tuesday, January 13, 2009

Sobering Times For New York Property Market

Source : The Business Times, January 13, 2009

(NEW YORK) No one knows the giddy highs of New York's property market - and today's groaning lows - better than hot dog vendor Pasang Sherpa.

In mid-2008 he paid the city a staggering US$642,000 for two sidewalk spots outside the Metropolitan Museum of Art, expecting sole control over the best vending turf in New York.

But when he set up his carts last week he discovered one location blocked for construction and the other unexpectedly invaded by rival hot dog sellers - military veterans who don't have to pay a cent in rent.

Sherpa's huge investment suddenly looked less bright.

'I paid crazy money,' the Nepalese immigrant, aged 50, said in halting English. 'The economy is down, there are more vendors and the other (location) is closed. My mind is not working now. I'm going crazy too.' For everyone, from hot dog men to millionaires, these are days of scary sobering up on the New York real estate market.

Gone is the time when no price seemed too silly, when buyers came begging, and developers made Manhattan's spiky skyline their plaything.

Luxury apartments now sit unsold, empty storefronts are appearing in prime zones, and the Wall Street collapse has flooded the commercial market with inventory.

'We have a crisis of hope, because people don't necessarily see their way out of it,' said Joseph Harbert, chief operating officer at commercial real estate giant Cushman and Wakefield in the New York region.

Manhattan has traditionally been a real estate fortress, protected from wider trends simply by the facts that so many people want to be here and space on the island is finite.

Not any longer. Cushman this week reported that office leasing in Manhattan is at its lowest level since just after the Sept 11 terrorist attacks in 2001. Available space in Manhattan totals 31.1 million square feet (2.9 million square meters), which is 43 per cent up on the end of 2007 and the highest level since May 2006, Cushman said.

That's partly because the entire US economy is in recession, but also because September's Wall Street crisis freed vast amounts of office space almost overnight.

'With lightening speed we had people go out of business,' Mr Harbert said.

'Those things shook our confidence.' Construction, one of the great New York industries, is also stuttering.

Reports suggest that at least US$4 billion worth of construction projects have been cancelled or delayed, among them a 16-storey tower and basketball arena project in the Atlantic Yards neighbourhood.

'No one wants to take the risk of putting up a new building,' Mr Harbert said.

The picture is similar in the residential market.

This was long a seller's dream, with bonus-wielding Wall Street types helping drive prices to absurd levels for the tiniest properties.

Today, inventory is soaring, banks are loathe to make loans, and the recession has put a huge hole in the annual bonus bonanza. Investment bank Goldman Sachs reports that sales dropped 25 to 30 per cent in the fourth quarter of 2008 compared to 2007.

Residential construction output is set to drop from 35,000 units a year to 18,000 by 2010, by some estimates.

Battling this financial gale is Paula Del Nunzio, a broker specialising in multi-million dollar sales.

Top of her current list is the Henry T Sloane mansion, a limestone townhouse within spitting distance of Central Park, with 11 fireplaces, an elevator, 15 bedrooms, 17 baths and a marble stair case.

The place went on the market for US$64 million in February last year - well before stockmarket and commodity price collapses sent Wall Street tycoons and wealthy foreigners, such as Russians, reeling.

'It's going to be very picky. People will be picking what they want,' Ms Del Nunzio acknowledged. 'The price will be under discussion.' But, like Mr Harbert and other market watchers, she is confident that Manhattan property prices will bounce back.

'The thing about New York residential real estate is that it's an island and you can't create anymore.' Certainly Mr Sherpa the hot dog vendor prays his mammoth deal will pay off.

'I was hopeful,' he said. 'Now I am very shaken.' - AFP

US Housing Market Still Offers Hidden Value

Source : The Business Times, January 13, 2009

But buyers won't return until they can build wealth through home ownership

(CHICAGO) If you were searching for pockets of optimism in the US housing market, where would you look? Easy guesses would be to avoid Detroit, Cleveland or any cities with domestic automobile plants or troubled manufacturers.

In need of help: There's much the government can do by mandating new rules on modifying loans, allowing refinancing and bankruptcy protection if it wants to halt foreclosures. It could even let more homeowners stay in their homes as renters.

Then there are the foreclosure gulches of Central and Southern California, which include the Modesto, Stockton, Bakersfield, Riverside and Sacramento areas. Those cities will take a long time to recover. Too many homes there were sold at bubble prices to people with dodgy finances.

Most shortlists of regions likely to experience prolonged housing slumps include Las Vegas, Phoenix and South Florida. You may be able to find some bargains there, although that doesn't mean you will achieve any gains for years to come - unless demand roars back and supplies are diminished.

Not everyone cares about home-price appreciation, though. People still want to live in safe, stable neighbourhoods where services abound, schools are decent and they are surrounded by educated, caring neighbours. To many people, that's an intangible and worthwhile investment.

Rates on 30-year fixed-rate mortgages now average about 5 per cent, after 10 consecutive weeks of decline, Freddie Mac said in a report last week. Where can you be reasonably assured that your housing investment won't evaporate? Like buying a stock or company, you need to gauge a home's risks, which many buyers neglect to do.

How many foreclosures are in the neighbourhood you like? How many nearby homes have been repossessed by banks for cheap resale? Are average home prices steady or falling? The bottom line: What are the chances your property will depreciate? Most agents can't tell you this, so you have to do the work yourself.

Some of the most durable areas have shown lower volatility because they experienced less bubble appreciation, show fewer foreclosures and have residents with higher average income levels. A few of these havens might surprise you. The Connecticut areas of Bridgeport-Stamford, Hartford and New Haven are most resilient, according to HomeSmartreports.com, a San Capistrano, California-based online service that measures 'collateral risk', or the chance you will lose money on a property purchase.

Also on the 'least-risky' list are Boston, Essex County and Worcester, Massachusetts; Honolulu; Bethesda-Gaithersburg, Maryland; Edison, New Jersey; New York/Nassau-Suffolk county; Albuquerque; Seattle and El Paso.

Neighbourhood stability is almost always anchored by employment, above-average wealth and education. Highly compensated professionals, managers and business owners with college degrees and large incomes tend to stay in their homes.

The absence of speculators and buyers with adjustable-rate mortgages also makes a difference.

Michael Ela, president of HomeSmartreports.com, says California, with seven of the 15 riskiest areas in his survey, 'was rampant with speculators who got caught in the worst possible vice; many bought at the top of the market with variable-rate loans.'

Although he doesn't have the data to prove it, Ela says the Northeast has been traditionally risk-averse.

That could explain the strength of the central and southern Connecticut/Boston corporate and higher-education corridor.

The Bethesda area tends to be dominated by federal-government workers. Edison, with a median income of US$80,000 in 2007 - compared with about US$67,000 for the rest of the state - is nestled between Manhattan and northern New Jersey corporate campuses.

Don't mistake preserving home equity and stability with reaping future home gains. The Northeast and Hawaii are already far above the national home-price average.

You might find better overall value and growth opportunities in lower-priced places such as Austin, Dallas, McAllen and San Antonio in Texas; Jackson, Mississippi; and Pittsburgh, according to the Center for Economic and Policy Research, a Washington-based organisation that regularly rates 100 areas for the prospects of building home equity.

The centre says you may be able to reap US$60,000 to US$90,000 in home-equity appreciation over the next four years in the above-mentioned cities. It also favours Buffalo, Rochester and Syracuse in New York.

Is it time to buy now? Provided you are interested in solid neighbourhoods and don't care about finding bargains or timing the market. Mortgage rates are certainly favourable.

The recent Federal Reserve interest-rate cuts and the lower mortgage rates aren't everything.

The market may not have hit bottom. A meaningful number of new buyers won't return until they are confident of building wealth through home ownership.

For that to happen, foreclosures must stop dumping more houses on the market at fire-sale prices. To date, government efforts to shut down this poverty mill have been dismal. A programme run by the Housing and Urban Development Department called 'Hope for Homeowners' was empowered by Congress to halt as many as 400,000 foreclosures, but had received only 312 applications through the end of December. Far too many didn't qualify because of restrictive rules in this voluntary programme.

There's much Congress can do by mandating new rules on modifying loans, allowing refinancing and bankruptcy protection if it wants to halt foreclosures. It could even let more homeowners stay in their homes as renters.

If Washington is to restore the wealth-building of homeownership, it can't turn a blind eye to the rules of supply and demand, which still linger - even after a national election. -- Bloomberg

蔡厝港金光阁预购组屋 四房式每单位八人抢购

Source : 《联合早报》January 13, 2009

蔡厝港预购组屋项目金光阁(Sunshine Court)的申请昨天截止,其中四房式单位获得极为热烈的反应,平均每个单位有约八个人抢购。

截至昨天傍晚5时,“Sunshine Court”的171个四房式单位共收到1364份申请,反应非常热烈。


金光阁将建在蔡厝港3道,对面是金光坊(Sunshine Place)邻里购屋中心,因此非常靠近超级市场、食阁和商店。蔡厝港小学、克勤小学和武吉班让政府中学也在附近。




另外,建屋局去年底也同时在榜鹅域(Punggol Field)和榜鹅坊(Punggol Place)交界处推出“Punggol Regalia”预购组屋。它们临近榜鹅地铁站和巴士转换站,未来的榜鹅镇中心也近在咫尺。


Dennis Wee房地产经纪行董事许家荣受访时说,虽然现在经济不景气,但这两个项目仍能吸引这么多申请者,在在显示组屋市场仍有需求。





楼市虽趋软 房地产税普遍上涨

Source : 《联合早报》January 13, 2009


国内税务局回答本报询问时透露,去年在调整了本地房地产的年值(annual value)后,商业房地产(包括办公楼和零售商店)业主需缴付的房地产税平均激增了60%,工业厂房和私宅的房地产税,也分别平均起了40%和30%。




位于乌节路一带的办公楼和零售商店也见“身价”大起。远东购物中心其中一个办公楼单位的房地产税从2008估税年的2万3400元,猛增至5万2300元,起了2万8900元,或123.5%。位于国际大厦(International Building)的一个办公楼单位则见证了房地产税从7750元,提高到1万5500元,涨幅达一倍,或7750元。




私宅方面,位于凯联大厦(International Plaza)的一个私宅单位,今年需缴付的房地产税上涨了43.3%,从去年的1800元,增加至2580元。据了解,乌节路一带的私宅单位,房地产税也平均起了50%以上。



莱坊(Knight Frank)新加坡董事经理陈忠青说:“由于税务局是根据房地产上一年租金收入(preceding year basis of assessment)的平均总额来估税,年值上涨只是反映本地楼市荣景时的实况,政府在重新估算后调高年值是天经地义。”




卓登新达国际(Chesterton Suntec International)研究部主管陈瑞谨也指出,由于房地产税受滞后效应(lag effect)影响,年值增值反映了楼市过去走高的情况,但很不巧,这次的房地产税调整碰上又急又猛的经济萎缩情况,使业主受双重打击而倍感吃力。

他说:“最好反映实况的方法是以当前所得来计算(current year basis of assessment),但这意味政府必须舍去今年的房地产税收,这是不可能的事。”

Pay-Interest-Only Deal For Cash-Short Home Owners

Source : The Straits Times, January 13, 2009

DBS scheme eases borrowers' burden for six to 18 months

HOME owners with mortgages at DBS Bank can ease some of their financial burden by opting to pay only the interest on their loans for periods of up to 18 months.

The bank sees the scheme as a way of helping cash-strapped borrowers who are worried about their ability to repay their mortgages amid the deepening economic gloom.

The scheme could potentially benefit 'tens of thousands' of borrowers with home loans at DBS.

It can mean an immediate reduction in the monthly amount a borrower must fork out as a key portion of the payment - the loan principal - can be set aside.

Take a 25-year home loan of $500,000 pegged at an interest rate of 3.5 per cent.

A borrower will have to pay $2,504 a month - covering both interest and principal.

But by opting to pay the interest only, his monthly payment drops to $1,439, putting an extra $1,065 into his pocket.

So even if a working couple loses one income, which is a growing threat in the downturn, they can likely keep paying their mortgage - and keep their home.

They can also pay the monthly instalment using Central Provident Fund cash if they are only servicing the interest on the loan.

They can resume monthly payments on the principal portion of their loan when their cash flow situation improves.

The periods for paying interest only can extend from a minimum of six months to 18 months.

'The last thing we want to do is to foreclose on people's homes. Come and talk to us early if you have any financial problems,' said Mr Koh Kar Siong, head of consumer deposits and secured lending at the bank, yesterday.

Homeowner Rose Tan, 40, who has a DBS mortgage on her condominium flat, welcomed the move: 'This is a friendly gesture from DBS. At least, I know they won't treat me like a leper if I approach them for help in lowering my housing instalment.'

The flip side is that paying interest-only means you are not paying off any of the loan itself so you will have fallen behind.

DBS is the largest bank here and a key player in the private housing loans market. It is also a big lender to HDB flat-owners through its POSB network.

It has 'tens of thousands' of mortgage borrowers.

To get the go-ahead, a borrower must give the bank an update of details such as employment and other financial commitments.

The scheme is applicable to cash-strapped borrowers as well as those in the pink of financial health.

DBS will advise them within a week if their applications to pay interest-only on their loans has been approved.

Mr Koh said the updates are needed to enable DBS to fulfil its fiduciary duty and ensure that borrowers have the means to repay their loans eventually.

Besides offering interest-only instalments, DBS is extending an option to allow home owners to extend the tenure of their loans, which will lower their monthly instalments.

Mr Koh said there has not been any sharp rise in the number of borrowers asking DBS to alter their loan repayment terms but banks are unlikely to be immune to the economic slowdown.

'About 90 per cent of our home loans are taken up by borrowers who occupy their properties. We want to help them to tide over this difficult period,' he said.

DBS' move has stirred hopes among traders and home owners that by acting in such a pro-active manner, there will be fewer foreclosures and this will help the wobbly property market to get back on its feet eventually.

Banks such as MayBank and OCBC Bank told The Straits Times that they preferred to take a case-by-case approach to assist home owners who have taken up loans with them.

Mr Gregory Chan, OCBC's head of secured lending, said: 'In the event that our customers' needs change during the duration of their loans, we are open to reviewing their financial positions and borrowing limits, and advising them accordingly.'

Strong Recovery Seen For Singapore

Source : The Business Times, January 10, 2009

WITH the global economy facing substantial downside risks this year, there seems to be no escaping further pain in the short term. But in the medium to longer term, there are opportunities to be had - and Singapore can look forward to a strong recovery.

That was the message panellists had yesterday for the 300 members of the business community who attended the 7th annual Business Outlook Forum, jointly organised by the Singapore Chinese Chamber of Commerce & Industry and The Business Times.

Manu Bhaskaran, CEO of Centennial Asia Advisors, said Singapore's high exposure to the world economy is not the only reason things could get more sticky.

The economy was overheated prior to the crisis, meaning Singapore entered it with a high cost structure that will require substantial restructuring measures to correct.

For Singapore, a key risk is unemployment, said Kelvin Tay, executive director of product and services consulting at UBS Wealth Management.

According to UBS, 30,000 jobs here will be cut this year. This, Mr Tay said, is more severe than it would have been if the economy had not been overheated going into the crisis.

As for investment strategies, Roy Varghese, foundation adviser and director of the financial planning practice at ipac financial planning Singapore, said that in an environment where asset quality is uncertain and valuation difficult, diversifying a portfolio and holding it for the long term would be wisest.

On a brighter note, Mr Bhaskaran said that if Asian economies rebound in 2010 as he expects them to, Singapore companies would be in a unique position to leverage on China and India's resurgence, with opportunities for the stronger ones to scale up regionally.

At the global level, Mr Tay said that averting deflation will be an important challenge this year. Both he and Mr Bhaskaran also expressed certainty that a decline in the US dollar is only a matter of time as fiscal stimulus grows.

The forum closed with a panel discussion chaired by Vikram Khanna, associate editor of The Business Times.

Will Developers Be The First To Blink?

Source : The Business Times, January 10, 2009

The holding power of the various parties will set the tone for the market in 2009.

THE holding power of both developers and investors will be closely watched this year as it would have significant bearing on residential property prices.

While the extent of speculation by investors is not known yet, the recent uncharacteristic appeal by the Real Estate Developers Association of Singapore (Redas) president Simon Cheong for government support of a tripartite plan to deal with the current credit squeeze, does leave one wondering if holding power could be on the wane.

In his speech at the 49th Redas Anniversary dinner on Nov 26, Mr Cheong said that 'a tripartite plan of action is needed between developers, financiers, and the government through moderating new supply, shoring demand, and introducing fiscal measures to help ease funding for the industry'.

Developers' holding power has made upcoming supply a bit of a moving target. Cushman and Wakefield managing director Donald Han says that between the third and fourth quarters of 2008, 7,234 residential units out of a total 66,422 units were deferred and would only be completed after 2011. 'We expect more deferment of residential projects in 2009,' he adds.

DTZ Research also believes that supply has been 'overestimated'.

Of the 60,048 units that the Urban Redevelopment Authority (URA) expects to be completed between 2009-2012, only 24,905 are under construction currently. 'Actual supply in 2009 and 2010 will more likely be in the range of 18,000-19,000 units, less than two-thirds of the 30,296 units projected by the URA,' DTZ adds.

Not surprisingly, 2009 forecasts for residential prices have been mixed, with one consultancy even saying it was not issuing forecasts at all.

Consultants do believe high-end property prices are expected to fall the most - anywhere between 15 and 30 per cent. The mid-tier segment is forecast to fall between 10 and 20 per cent, while the mass market is estimated to fall by a more moderate 5-10 per cent.

But if developers do not have holding power, they could be forced to launch developments at lower prices.

Jones Lang LaSalle head of research (South East Asia & Singapore) Chua Yang Liang says that developers are unlikely to defer projects that have been launched.

'So, in those instances, they have to weigh the benefit of potential large sales volume against the negative publicity and possible issues associated with price cutting, especially if the difference between what earlier buyers paid and what new buyers will be paying is significant.'

According to OCBC Investment Research (OIR), the top nine developers in Singapore had a total current debt of about $5 billion and non-current debt of almost $20 billion in the third quarter of last year. Still, OIR investment analyst Foo Sze Ming notes that the amount of short-term debt owed is relatively lower now compared to the previous property downturn in 2001.

Using CapitaLand as an example, OIR noted that it used to owe $4.8 billion of short-term debt and $4 billion of long-term debt with a net gearing ratio of 0.88 times. 'Now, its financial position is stronger with short-term debts of $2.2 billion, long-term debt of $8.2 billion and net gearing ratio of 0.5 times,' Mr Foo says.

But he cautions: 'In light of the tightening credit market, we do see heightened risk involving short-term debts that require refinancing. We are more concerned with the debt exposure of smaller and less-established developers who entered late during the property up-cycle as they may have over-geared and bought their landbanks at higher valuations.'

Prices in 2009 could also face downward pressure from defaulting speculators. OIR believes that default risk will be skewed towards the Core Central Region (CCR).

It expects that 3,069 and 2,888 units under construction in CCR are due for completion in 2009 and 2010, respectively. For illustration, it assumes that 50 per cent of the units were bought under the deferred payment scheme (DPS) and 40 per cent of the buyers (from speculators, foreign buyers and funds) are likely to default on their purchases.

'Based on this, we estimate that 614 and 578 CCR property units could be returned in 2009 and 2010, respectively, and these will directly flow back into the market and push up the unsold supply,' it says.

The impact of DPS will likely start to play out in 2009. But DTZ research senior director Chua Chor Hoon says that buyers 'cannot simply walk away from their purchases as developers can sue them for specific performance over the sale and purchase agreement'.

'In the past, developers have been known to work out some scheme to allow more time to make the final payment if a buyer has difficulty paying up upon TOP.'

With Budget 2009 in January expected to be pro-business, Colliers International director for research and advisory Tay Huey Ying reckons that to contain development costs, the government could look at reducing property tax and development charge payable by reverting back to the earlier formula of creaming off only 50 per cent of land enhancement value instead of the revised 70 per cent.

But Ms Tay notes that the main reason for the sluggish property market is the financial crisis. Coupled with 'astronomical' prices in the high-end and luxury segments, she says, 'a correction such as the one we are witnessing now cannot be avoided'.

US Faces Longest Recession Since WWII: Economists

Source : The Business Times, January 12, 2009

(WASHINGTON) The US recession will probably be the longest since World War II and could worsen without heavy government spending, according to a closely watched survey of economists released last Saturday. The Blue Chip Economic Indicators poll of 52 economists from top financial firms, major companies and academia found that most expected a tepid recovery to begin later this year, with growth returning to more normal levels in 2010.

A majority of those polled thought the recession would officially end in the third quarter of 2009, which would make this the longest downturn since World War Two.

However, more than half of respondents thought unemployment would peak no earlier than 2010, suggesting that economic pain may linger long after the recession is technically over.

For 2009, the consensus view was that real gross domestic product would fall 1.6 per cent, gloomier than the previous month's forecast for a 1.1 per cent decline. A drop of that magnitude would be the worst yearly performance since 1982.

Merrill Lynch held the most pessimistic view, predicting a 2.8 per cent decline, while Fedex Corp was the most optimistic of the bunch, forecasting just a 0.2 per cent dip.

'Much will likely depend on the relative success or failure of ongoing and prospective stimulus measures applied by government,' Blue Chip's monthly newsletter said, adding that absent a stimulus package, 'prospects would be much darker'.

The consensus opinion was that the stimulus plan would total US$778 billion, with estimates ranging from US$635 billion to US$900 billion. President-elect Barack Obama has encountered some resistance in Congress, but a large spending package is widely expected to be approved next month.

The economists seemed to conclude that government efforts to push down mortgage rates may stall. On average, they expected rates on 30-year conventional mortgages at 5.1 per cent at the end of 2009, roughly where they are now.

They forecast that the consumer price index would fall 0.4 per cent this year, which would mark the first year-over-year decrease since 1955 and no doubt deepen investors' worries about deflation.

The panelists were split on the outlook for the US dollar, which some economists have warned may be headed for a steep slide this year as the US deficit soars and the Treasury Department issues a record amount of debt.

Nearly 48 per cent thought the trade-weighted value of the US dollar would end 2009 higher than its current level. -- Reuters

Er, What Is Rental Yield?

Source : The Sunday Times, Jan 11, 2009

Where do you see this?

In property brochures or advertisements.

What does it mean?

Rental yield is the annual rental return from a property, or the amount of rent the property earns over a year. It is expressed as a percentage of the purchase price.

The higher the yield, the better the return.

It is calculated this way:

rent x 12 months
------------------------- x 100
purchase price

To work out the net rental yield, you will have to subtract maintenance costs, commissions and other expenses from the rent figure. If you have spent money on renovation, add the amount to the purchase price.

In Singapore, rental yields of 3 to 4 per cent are common.

Why is it important?

It gives you an idea of the returns from your property investment and allows you to compare different properties.

As one of the indicators of the investment potential of a property, it can help you decide on the purchase of an investment property. So

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

'I want to buy property in District 9 or 10 because I hear the rental yields are good.'

Raking In Rent - Minus The Rant

Source : The Sunday Times, Jan 11, 2009

It's a tenants' market but all is not lost for landlords. Here's what they can do

The private homes leasing market is softening as the financial turmoil continues to wreak havoc.

Residential rents are falling and there has been a noticeable rise in the number of tenants cutting short their leases and leaving behind debts.

And with new developments still being completed, tenants now have more choice than ever before.

Indeed, it is now a tenants' market, so landlords need to have realistic rent expectations, be more flexible and do more in order to secure a good tenant, those in the property business say.

Condominiums that were recently completed or are being completed may have a few hundred units for rent, so landlords have to be willing to lower their asking rents, said Savills associate director Patrick Lai.

For instance, the 1,111-unit The Sail@Marina Bay still has many units available for rent and owners there have generally lowered their expectations.

In a hot market, landlords can easily rent out their properties, even if they are run-down or have only old appliances. Things have since changed. Tenants can now take their time to choose, property specialists said.

'Now you need to invest first in your property if you want to attract a good tenant,' said Ms Jacqueline Wong, Jones Lang LaSalle's residential head.

Spruce up or lose out

Landlords have to make sure their property is in a 'reasonable tenant- able position', she said.

This is something some landlords do regardless of market cycles, but it becomes more of a necessity in a down cycle.

'You need to do the basics, such as putting on a fresh coat of paint, proper lighting and reasonable appliances,' said Ms Wong.

Be creative

There are different ways of making a property attractive to tenants as long as landlords are flexible and creative.

One way, said Ms Wong, is to leave the property vacant or partially furnished and give the tenant a budget to buy whatever he likes, such as a sofa set.

For a two-year lease, the budget can be anywhere between 1.5months' and two months' rent.

Be flexible

A standard lease is for two years, but one-year leases become more common in bad times when rents are falling.

While it may be better to lock in rents for a longer period, landlords may have to agree to one-year leases if their tenants insist on them.

What landlords can do then is to negotiate a slightly higher rent for a shorter lease, said ERA Asia-Pacific associate director Eugene Lim.

Go for corporate leases

For personal leases, once a tenant leaves the country, there is little the landlord can do to get back any rent owing. It would be too costly to track the tenant down.

The ones who run away are usually low-level executives tied to low-budget rental deals, property agents say.

If possible, go for corporate leases. With such leases, the company is the tenant and even if the occupier gets sent home, the company will still have to pay the rent.

Get an experienced agent

To mitigate risks such as tenants defaulting, landlords should appoint an experienced agent who can carry out due diligence for them.

'We do a lot of tenant profiling, so the likelihood of the tenant defaulting is low,' said Ms Wong.

A high-risk tenant may be someone who is very young and who is new to the job and the country.

Do your own homework

Said Mr Lim: 'Find out more about what your tenant does before committing to a deal. For example, if he is here to develop a new business at present, he could prove to be a high-risk tenant.'

Have a diplomatic clause

Landlords should insist on collecting a two-month deposit for a standard two-year lease.

Furthermore, they should make sure their tenancy agreements have a diplomatic clause. This allows tenants to break a lease legally after a year by giving two months' notice if they lose their job or have to leave Singapore for good.

It is to protect tenants but in bad times, it may also protect landlords as the tenant will have to pay for a minimum of 14 months before breaking the lease, said Mr Lim.

There tend to be more pre-terminations in a downturn.

Don't forget the minor repair clause

Disputes in tenancy agreements usually centre on general repair works and replacement.

To avoid disputes over minor items, landlords should put in a minor repair clause in tenancy agreements.

It means that tenants are responsible for minor repairs. The amount can range from $150 to $250 for condominiums, said Ms Wong.

The amount for landed properties varies greatly, depending on the state of the property and the standard of furnishings, she said.

When major disputes happen...

In cases of disputes over larger repair items, landlords and tenants can turn to mediation to solve their problems.

Property agents usually become mediators when disputes arise. Some landlords and tenants also turn to the Small Claims Tribunal, which extended its jurisdiction in early 2006 to include tenancy disputes arising from a residential lease of two years or less.

The number of claims filed rose to 1,137 last year, from 665 in 2007 and 401 in 2006, according to data from the Subordinate Courts. Most of them were filed by tenants.

However, about 90 per cent of the claims were resolved at the consultation stage without the need to proceed to a hearing, it said.

The maximum one can claim is $10,000, but it will raise that to a maximum of $20,000 if the parties involved agree.

'Significant Pick Up' In 2010

Source : The Straits Times, Jan 12, 2009

BASEL (Switzerland) - THE global economy will slow sharply this year before posting a 'significant pick up' in 2010, the Group of 10's central bankers said on Monday.
'If there is (the) overall sentiment that the global economy will slow down significantly in 2009, with industrialised economies having negative figures, it is also noted that 2010 should be the year of the recovery,' European Central Bank head Jean-Claude Trichet said as the spokesman for the G10 central bankers meeting at the Bank for International Settlements (BIS).

'If there is (the) overall sentiment that the global economy will slow down significantly in 2009, with industrialised economies having negative figures, it is also noted that 2010 should be the year of the recovery,' said European Central Bank head Jean-Claude Trichet (left). -- PHOTO: AFP

Unprecedented measures taken by governments and central bankers to avert a financial system meltdown had not been 'fully priced in' by the markets but they will 'progressively play a positive role' in the recovery of the global economy.

'That's why we think that 2010 will be the year of significant pick up,' Mr Trichet said.

But for this year, a 'synchronised slowing down' of the world economy which began in the second half of last year is expected to go on, said Mr Trichet.

Emerging markets, which have been lending support to global economic growth, are now also slowing, he noted, underlining that the negative effects of the financial crisis are feeding into the real economy.

However, he stressed that emerging markets as a whole were not at risk of negative growth.

'All taken into account, the emerging world is slowing down but remains as a group in positive territory and is still of course, contributing to global growth,' said Mr Trichet.

World financial markets have been in turmoil since the collapse of the US subprime or higher-risk mortgage sector in 2007.

In the fallout, the credit essential for business has virtually dried up as the banks have been hit by billions of dollars in losses on their subprime exposure.

Central bankers of major economies have in recent months taken coordinated action to pump in liquidity to unfreeze credit and slashed interest rates in an effort to kickstart economies.

Governments have also bolstered ailing banks through recapitalisation and they have also provided guarantees for savers' deposits in order to restore confidence in the banking system.

'These have proved efficient to avoid a meltdown and have been progressively priced in by the financial (sector) ... but we are far from markets fully pricing in all those very important decisions that have been taken,' Mr Trichet said.

He noted that restoring confidence remains 'of the essence.' 'The large part of the slowing down that has been observed comes from the confidence channel and it is important for all authorities ... to do whatever is appropriate to preserve confidence ... and permit again the channel of confidence to function positively after having functioned in a negative direction over the second semester of last year,' he said.

The Group of 10 comprises Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States. -- AFP

Bull Run Over For Singapore Property

Source : AFP, Sun, Jan 11, 2009

The Year of the Ox begins later this month but the bull run is already over for Singapore's property sector, described as the world's hottest market just two years ago.

Prices of private homes fell 5.7 percent in the fourth quarter, following a 2.4 percent drop in the preceding period, according to the latest data from the Urban Redevelopment Authority (URA), the state agency responsible for land use planning.

The fourth quarter marked the sharpest drop in home prices in a decade, the URA said.

"Further contraction is on the way," analysts from the Hong Kong-based CLSA brokerage and investment group said in their outlook for the property sector.

"We continue to expect the URA index to see an accelerated fall in the next quarter," they said.

Local home prices have not fallen so far since 1998 when Singapore was stung by the Asian financial crisis that pushed the local property sector into a slump lasting until 2005, when the government approved the construction of two multi-billion-dollar casino complexes.

By 2007, real estate giant Jones Lang LaSalle was describing Singapore's market as the world's hottest, and the city-state's property prices surged 31 percent overall.

Rents at condominium units favoured by the many expatriates here also dramatically increased, and in some cases doubled.

While fourth-quarter data is preliminary, analysts say the casino-inspired property boom is history now that the economy is in recession.

Analysts said the duration of the current property slump was difficult to predict but they agreed it will hinge on when Singapore pulls out of the recession.

"A lot of it depends on the economy," said Ong Choon Fah, executive director for consulting and research with DTZ real estate consultancy.

"The economy really underpins the market... People have to feel safe about their jobs. That is the first thing," she said.

Serious buyers see pockets of opportunity in the current slump but are being unusually cautious because of the recession, Ong added.

Property agents at a show flat for a yet-to-be built condominium, located less than 20 minutes' drive from the main Orchard Road shopping belt, said they were hopeful, despite the dismal market.

"There will always be buyers even in a tough market and our prices are rather attractive," said one agent, who did not want to be named.

A two-bedroom unit at the condominium, which will come with a heated swimming pool and a gym, sells for about 860,000 Singapore dollars (583,249 US).

In good times, the 915 square-foot (82 square-metre) apartment could fetch at least 915,000 dollars, the agent said.

At another condominium project, launched last year, prices have also eased substantially. A one-bedroom unit measuring 624 square feet is priced at around 800,000 dollars -- compared with almost a million dollars before the slump, the agent for the project said.

Some unsold units remain and the developer is offering incentives, including the absorption of interest charges in the first three years of the loan, providing the mortgage is taken with a preferred bank.

Until the economy recovers, prospective property buyers are likely to hold out in hope of better bargains, said Song Seng Wun, a regional economist with CIMB-GK brokerage.

"I think it's a natural reaction to any big-ticket spending," said Song. "If you are not in a hurry to buy, you will want to wait."

Singapore's economy shrank 12.5 percent in the fourth quarter on a seasonally adjusted annualised quarter-on-quarter basis, its biggest contraction since records began in 1976, the government said.

The city-state was the first country in Asia to fall into a recession when figures released in October showed two straight quarters of economic contraction.

Trade dependent Singapore has suffered as exports to key markets, including the United States and Europe, have fallen during the worst global economic crisis since the Great Depression of the 1930s.

Earlier this month, the government again slashed its economic forecast for 2009, predicting something in the range between a contraction of 2.0 percent and an expansion of 1.0 percent.

Punggol The Next Big Thing?

Source : The Electric New PaperSat, Jan 10, 2009

WHEN business development manager Roy Lim moved into Punggol five years ago, he wondered if he had made a big mistake.

The infrastructure was lacking and the amenities were inadequate.

As a result, Punggol was often viewed as the poorer cousin to the up-and-coming, bustling Sengkang, which was just a street away.

HOT: Some flats in Punggol are fetching a higher price than those in Sengkang. TNP PICTURE: DESMOND NG

Mr Lim, 34, who wondered then if he should have bought in Sengkang instead, may have the last laugh after all.

Like many Punggol flat-owners, he is now eligible to sell his five-room flat after fulfilling the minimum five-year occupation period.

To his delight, he found out that resale flat prices in his estate are higher than similar flats in Sengkang.

For example, the median resale prices for five-room flats in Punggol was about $391,500 in the third-quarter of last year, compared to $374,000 in Sengkang, according to figures from the HDB website.

A check on HDB's resale transaction records showed that 20 out of the 58 five-room flats sold in Punggol last month fetched at least $400,000.

In contrast, only 12 out of the 57 five-room flats sold in Sengkang fetched $400,000 or more.

For Mr Lim, all those years of enduring the 'ulu' (Malay for remote) estate and its lack of facilities are finally paying off.

He and his wife put their place up for sale recently. Its current valuation is about $410,000.

They are looking at a tidy profit of about $160,000, as they had bought it for about $247,000 in 2003.

Said Mr Lim: 'I was quite surprised but happy to find out that the valuation is so high. The money will come in useful because it'll be a tough year. We'll also be able to free up some cash to keep aside for a rainy day.'

The couple are planning to upgrade to a condo in the east.

He initially regretted buying a place in Punggol.

Mr Lim said: 'It was frustrating when we first moved in. The LRT station was not opened, there were no coffee shops or provision shops nearby and my block wasn't even cable-ready.

'I couldn't watch soccer and had to go to my friend's place every weekend to catch the matches.'

To make matters worse, his handphone signal was so weak in the flat that it constantly switched to an Indonesian service provider.

Nights were depressing because many of the blocks seemed deserted, with few lights coming from the units. Many owners didn't move in because of the lack of amenities.

But the situation has improved with the opening of the LRT stations, a mall, more bus services and schools over the couple of years.

So, what's the appeal about Punggol?

Its prices received a boost when Prime Minister Lee Hsien Loong unveiled the Punggol 21-plus vision during his 2007 National Day Rally speech, said property watchers.

The coastal town will boast features such as a freshwater lake and a waterway running through the estate.

Also, Punggol's condo-like and newer units add to their desirability.

HSR Property Group executive director Eric Cheng said that the Punggol 21-plus endorsement stirred up valuation prices in that area.

He said: 'The estate is certainly more bustling now, with more amenities than before. I remember when I was in that estate many years ago and I couldn't get a taxi. The situation is much better now.

'If it's going to be the only water town in Singapore, buyers will pay some premium for it. It will be the next big thing to come.'

Mr Cheng said that Punggol flat-owners typically enjoy higher profits from the sale of their units compared to Sengkang residents.

This is because the first batch of Punggol flats were eligible for sale at the end of 2006, when the property market was already on the mend.

In comparison, the first batch of Sengkang flats were available for sale in 2003, when the property market was still in the doldrums.

ERA Asia Pacific associate director Eugene Lim added that Punggol buyers are also looking at their purchases as a form of investment.

He said: 'With the concrete plans to do up Punggol estate, flats there will command a higher premium compared to Sengkang.

'If you go to Punggol, it's not so congested. Some people are willing to pay more for a less built-up area, even though amenities are still quite lacking.'