Sunday, April 5, 2009

Landed Home Values Hold Up Well

Source : The Sunday Times, April 5, 2009

However, rental yield may be lower than that of similarly priced private apartments

Owning a piece of land in land-scarce Singapore is something many here dream of.

A landed home often offers more space as well as a certain prestige.

Landed homes are not necessarily subjected to depreciation over time as a major part of the value is locked up in the land. -- PHOTO: ORANGETEE.COM

Its value also typically holds well over the years as the market has a limited supply of landed properties.

The landed home market does not attract many speculators because it is relatively small. Foreigners are not ordinarily allowed to buy landed homes.

Many landed home sellers also have better holding power and can wait for a better price, said Mr Steven Tan, executive director, residential, of property firm

At the moment, landed home prices are still falling, although at a smaller extent than apartments.

In the first quarter, landed home values slipped by an average of 1.5 per cent to $542 per sq ft for leasehold houses and fell by 2.2 per cent to $1,193 psf for prime freehold houses. In comparison, private flats fell by a greater margin of 2.6 to 3.6 per cent, according to DTZ data.

Still, what is music to the ears of owner-occupiers may not sound as sweet to the ears of investors.

For one thing, few landed home investors make the type of quick and sometimes very high returns that have been witnessed in the condominium market, experts said. Rental yields are also comparatively lower.

Renting out a house

If you want to keep your house for rent, it would be great if you can hit a yield of at least 3 per cent. The average is about 2 per cent, said Ms Mary Sai, Knight Frank's director and auctioneer.

If you buy a 2,000 sq ft four-bedroom condo unit located in a convenient area for $1.5 million, or $750 psf, you can, in good times, rent it out for about $6,000 a month, she said. That would give a rental yield of 4.8 per cent.

In comparison, if you spend your $1.5 million on a terrace house in say, Watten Estate in Bukit Timah, you may get a lower rent of $4,000 a month. This works out to a 3.2 per cent yield.

Generally, people prefer to rent a condo unit as the development comes with a host of facilities that they can enjoy. They also do not have to worry about the maintenance of a house, which may include work like mowing the lawn.

On the flip side, there are people who favour landed properties because the rent can be comparatively lower, said Ms Sai.

Mr William Wong, managing director of RealStar Premier Property Consultant, said: 'My advice to most is to go for those with a rental yield of 3 per cent to 4 per cent, which is still above the mortgage interest quoted by the banks.'

Generally, houses in districts 9, 10 and 11, as well as 15 and 16 in the east, can command better rental returns.

Buying a house

Most investors who buy landed property for investment are looking more into capital appreciation than long-term rental income, industry players said.

Over a longer period, houses can prove to be better investments value-wise.

One distinct difference between landed homes and private apartments is that the former do not necessarily depreciate in value over time.

This is because the land - and not the building - constitutes the major part of the total value, said Mr Wong.

Also, landed homes are scarcer. Foreigners are not allowed to buy a landed home unless they have a special permit.

A condo or apartment may still fetch a good value if it is less than five years old, said Mr Wong. Once it reaches the five-year mark, 'in general, its value will depreciate unless there is an opportunity to go en bloc, which is highly unlikely nowadays', he said.

To make sure you land a house that could appreciate in value over a three- to five-year period, choose one that has an excellent land shape, is on a hilltop or has redevelopment potential, he said.

A site with redevelopment potential could be one that can be developed into a low- to mid-rise apartment block or a pair of semi-detached houses, he added.

Patience may pay off for landed homes owners. 'Landed properties generally double in value every seven to 10 years,' said Mr Wong.

More Expats Fall Prey To Rogue Property Agents

Source : The Sunday Times, April 5, 2009

Many caught in rental scams unable to get back their deposits

More expatriates have become victims of tricky landlords, dodgy tenancy agreements, disappearing deposits and other rental snares.

According to the Consumers Association of Singapore (Case), foreigners lodged 32, out of a total of 365, complaints against real estate agents from last October to March this year.

This was a 23 per cent increase from the 26, out of 516, complaints within the same period a year earlier .

The Institute of Estate Agents itself has received five complaints from foreigners since last October. None of the agents mentioned was registered with it.

Case executive director Seah Seng Choon said that most of the complaints it received concerned rental agreements.

Commonly cited were overcharging and failure to honour agreements, especially with regard to refunds.

The onset of the economic crisis, with many retrenched foreigners terminating their leases early, may be a push factor for rogue agents.

Mr Chris Koh, a director at realty company Dennis Wee Group, said: 'There are probably dishonest agents acting alone, desperate to collect their full commission, who resorted to underhand tactics to withhold deposits.'

American technician Robert Jones, 36, and Mauritian IT professional Ashwin Ramdeehul, 29, spoke to The Sunday Times. They claimed they were cheated out of their deposits by the same person they had separately contacted.

Both had sought an HDB flat to rent, and had contacted an 'agent' through his advertisement.

When taken to view their prospective units, they were introduced to the 'landlord', a 40-year-old woman.

In Mr Jones' case, he signed a tenancy agreement with her on Feb 20 to rent a four-room HDB flat in Woodlands for $1,050 a month. He wanted to move in without delay as his wife was due to give birth to their first child soon.

He said that in his haste to rent, he did not pursue the fact that the owner was listed as someone else, but the 'landlord' on the documents was listed as the woman.

After paying her $5,250 (the deposit plus four months' rent), he then found he was unable to contact her. Anxious, he approached the owner's family at the Woodlands flat on Feb 23 and was told that the unit was being rented to the woman from March 7.

The owner assured him that he could move in as agreed on March 20.

He later went to the flat again, just to be sure, but was told that the woman had found another tenant. 'I was offered another flat in Ang Mo Kio, which I rejected,' said Mr Jones, who then asked for a full refund from the woman.

However, he was told he would get only $4,200, or four months' rent, as $1,050 was being forfeited because he 'backed out' of the agreement, a contention he disputed.

When contacted by The Sunday Times, the woman said: 'The owner did not want to rent to him because he was a nuisance who harassed them even before he was allowed to move in.'

She said she was acting on behalf of the owner, and produced a written agreement that was signed by the owner.

To date, she said, she has refunded Mr Jones $1,889 and added she would repay him $4,200 eventually.

However, Mr Jones wants all his money back. 'I paid $5,250, never got the house, and now she wants to return me $1,050 less?' he said.

He made a police report on March 5 and furthered his case at the Small Claims Tribunal on March 25, where he was granted a money order to collect the full amount from her. However, he has yet to get the money as she has remained uncontactable.

Like Mr Jones, Mr Ramdeehul paid a deposit in December last year to the same woman after signing a tenancy agreement for a two-room flat in Ang Mo Kio. He said she even provided a set of keys.

But he claimed she later told him the owner no longer wanted to rent out the flat and offered to find him a similar unit. When he refused, she returned only $550 of his $3,200 deposit, he said.

He made two police reports after he used the keys she had given him. 'When I opened the door, I saw a family who told me that she never gave them my deposit like she had promised,' he said.

He, too, filed a complaint at the Small Claims Tribunal and was issued a money order to collect the full amount but, like Mr Jones, has been unable to contact her since.

A check by The Sunday Times found an advisory on the Chinese Embassy's website which said that since many cases of rental disputes involve the sublease of property estates handled by that woman, 'the embassy would like tenants to stay alert when working with her'.

The Sunday Times spoke to other foreigners here who found themselves involved in complicated rental disputes or were allegedly cheated of money.

Mrs Nadya Begum, 37, and her engineer husband from Manchester, England, said they have been cheated not once but thrice in their seven years here.

'The first time, we were ignorant and did not ask for the agent's personal details. We ended up paying a deposit for a flat which had already been 'rented' out to four other couples, also foreigners.

'The second time, the agent cut off his phone line after he collected our deposit. The last time, in November 2008, we were smart enough to get the details of the agent and all the paperwork, but the landlord absconded with the money and is still uncontactable.'

ERA Reality associate director Eugene Lim said: 'Some unethical agents prey on the ignorance of foreigners, especially those who cannot speak English or Chinese and face a language barrier.'

South Korean housewife and study mama Kim Ae Ran, 46, said she was cheated of a $6,000 housing deposit by a real estate agent who claimed to be working for PropNex agency.

When she decided on Dec 9 last year to terminate her lease early and return to South Korea because her husband's business in Seoul was ailing, she gave two months' notice via e-mail to her landlord through her agent.

The landlord replied, also via e-mail, that he would refund her the full deposit of $6,000 with the 'expiry or lawful termination' of her lease.

But it has been 11/2 months since she and her two children moved out. They are now staying with a friend and she has not received any of the promised money.

When contacted by The Sunday Times, the agent said that Mrs Kim had 'unlawfully terminated' her lease and was not entitled to her deposit. He added that he was 'only an agent, not responsible for the sum', and that the landlord was away in China and uncontactable.

When PropNex was contacted, it investigated and found that the agent had already left the company when he signed the tenancy agreement with Mrs Kim.

It also found that the tenancy agreement he drew up stated that commission would be paid to an agent of 'PropNex Reality', rather than 'PropNex Realty'.

PropNex has since lodged a police report against the man.

Meanwhile, industry players say the recent announcement in Parliament to review and regulate agents could not have come sooner.

Mr Koh of Dennis Wee Group said: 'At the moment, only about one-third of real estate agents here are CEHA-certified.'

CEHA is the Common Examination for House Agents started in 1996 to raise the standards of real estate agents here.

He added: 'The industry badly needs both regulation and proper training, as well as penalties for rogue or scamming agents - it should be a two-pronged approach.'

Collective Sale Impetus Fizzles Out

Source : The Sunday Times, April 5, 2009

The once fever-hot collective sale market is now stone-cold, and property experts predict it will take at least five years for transactions to reach the pitch seen before.

At the height of the property boom in 2007, 116 collective sales were completed. This figure was whittled down to just eight last year, after the onslaught of the global economic crisis.

There was no collective sale done in the first three months of this year.

Industry players expect the market to stay dormant in the coming months as developers remain mindful of the lukewarm response to new residential launches and have also to contend with high construction costs and tighter credit measures.

Mr Steven Ming, Savills Singapore's director for investment sales, said: 'At this point, developers are not on an acquiring mode, not until they have cleared their inventory of apartments bought over the last few years.'

Most collective sale sites put up for tender late last year have closed without any bids.

They include Spanish Village in Farrer Road, Villa delle Rose off Holland Road and Elizabeth Towers in Mount Elizabeth.

Two months ago, developer Jewel 1 pulled out 20 days before a planned $44 million purchase of Cairnhill Heights. It cited 'difficult, uncertain and deteriorating market conditions' for its decision.

Property experts, however, said low- to mid-range properties may be the one bright spark in the property market.

Mr Ming said the popularity of recently launched 'mass market' condominiums like Caspian and Mi Casa showed that there was still a healthy demand for cheaper, suburban projects.

Mr Karamjit Singh, managing director of Credo Real Estate, noted that the eight collective sale projects which found buyers last year were of lower value.

The experts agreed that any return to the collective sales peak in 2007 was not possible for now.

Mr Ming said: 'Right now, I don't see any return of significant interest in en bloc sales, not until the economic outlook becomes more certain.'

Singapore Is 10th For Highest Expatriate Rents

Source : The Business Times, April 4, 2009

Some are leaving and for those staying on, prospects of allowance cuts loom.

SINGAPORE is still one of the 10 most expensive cities for expatriates to rent housing, a survey has found. Comparing residential rents in 300 cities for expats, Mercer placed Singapore in tenth spot for costs in February this year. It ranked ninth in September 2008.

According to Mercer, weakening demand for property caused rents to ease and helped Singapore move down a notch on its rental property index.

Property consultant DTZ said in a report this week that average monthly rents for luxury condos and apartments in prime districts fell as much as 18.8 per cent in Q1 2009 to $5.20 psf from a quarter earlier. This brought rents back to Q3 2006 levels.

'The leasing market bore the brunt of corporate downsizing and increased supply from new completions,' DTZ said. 'Some investors have resorted to renting out their units for the time being, hoping to sell when the market recovers.'

Other property consultants have noted that expats are leaving Singapore. And for those staying behind, there is the prospect of a cut in allowances.

Mercer says Hong Kong is in a similar situation. Ranked last year as the second most expensive city for expatriate rental housing, it now takes third place after the economic slowdown eroded demand.

While Singapore and Hong Kong have slipped down the chart, a few other Asian cities have become costlier places for expats to rent as their currencies rose. Because Mercer based cost comparisons on the US dollar, exchange rate movements affected rankings.

'The world's housing markets have been sliding since 2008, and strong currency fluctuations in the past few months have also had a strong impact on the comparative cost of expatriate housing,' said Mercer's information product solutions business principal and Asia-Pacific global mobility leader Cathy Loose.

Tokyo, for instance, has moved up one spot from last September to second place on the rental property index as the yen appreciated 17 per cent against the US dollar. And Beijing has jumped four spots to number six. Together with Mumbai and New Delhi, six Asian cities are in the top 10.

Moscow leads the latest index, while New York City, Geneva and London take fifth, seventh and ninth positions respectively. London has fallen five places from last year as the pound depreciated and residential rents softened.

In the region, Jakarta, Kuala Lumpur and Bangkok are ranked 34th, 36th and 44th respectively. 'Over the next few months, we would expect to see a general decline in rents due to the economic slowdown,' Mercer said. In Singapore, DTZ says average monthly rents for non-landed luxury homes could drop 25 per cent or more this year.

Companies sending their employees abroad will benefit from falling rents, Mercer noted: 'Multinational companies should closely monitor the changes in markets so as not to lose out on opportunities for cost savings.'