Monday, June 15, 2009

Property Market Warning

Source : The Straits Times, June 13, 2009

Analysts point to over-supply and weak rental demand

THE optimism in Singapore's property market is unsustainable, given an impending over-supply of new flats, weak rental demand and the fact that the country remains in a recession.

While there has been strong resale demand, the call for new homes is patchy and rental demand remains weak. -- ST PHOTO: LAU FOOK HONG

That is the pessimistic view of two research houses, which concluded that the price recovery is highly fragile.

Citigroup said the market is not at the start of a cyclical upswing and that the spike in home prices cannot last. 'We caution against over-optimism, because fundamentally the market is not ready for a sustained price recovery,' analyst Wendy Koh wrote in a report on Thursday.

In the same report, she downgraded Allgreen to 'sell', putting the developer in the same 'sell' basket as City Developments, CapitaLand and Keppel Land. Citi also downgraded Wing Tai to 'hold'.

While there has been strong resale demand, the call for new homes is patchy and rental demand remains weak, Ms Koh said.

Resale prices of some projects have risen and some developers are reducing discounts for new projects but Nomura Singapore believes these seemingly positive factors are misleading.

It maintained that the demand for new homes was boosted by price discounting and the interest absorption scheme.

'A rapid deterioration in rents amid higher supply and weaker demand has undermined yield expectations,' it said.

Nomura also pointed to the damaging effect of rising unsold inventory and forced sales by defaulting or distressed buyers who bought on deferred payment.

These properties form a source of 'hidden' inventory that will place further pressure on asking prices.

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

A Merry May For Home Sales

Source : The Straits Times, June 16, 2009

Figure at near record level, with prime areas doing particularly well.

SALES of new private homes rocketed to an 'outstanding level' last month thanks to price cuts and the share market rally boosting buyer confidence.

Last month, developers launched 1,161 new homes, up from 1,085 in April, according to data released by the Urban Redevelopment Authority on Monday. -- ST PHOTO: STEPHANIE YEOW

Recession-defying numbers out on Monday showed there were 1,668 units sold in May, just a tad below the all-time high of 1,731 set in the boomtime month of August 2007.

Last month's figure was also well ahead of the already-strong developer sales of 1,214 units in April and 1,220 in March.

PropNex chief executive Mohamed Ismail cited recent rallying of the stock markets and launches by developers at attractive prices as reasons for what he described as outstanding sales last month.

Many speculators who had been sitting on the fence were spurred into action, hoping to take advantage of the low prices in the market across all levels, he said.













Other experts cited pent-up demand and buyers' fear of missing the boat as explanations for the sales spike.

Developers stepped up a gear last month as well, launching 1,161 new homes, up from 1,085 in April, according to Urban Redevelopment Authority data.

The total sales of 2,882 units recorded in April and last month exceeded first-quarter sales by 11 per cent and they were generally done at prices higher than the first quarter's, said CBRE Research.

One striking aspect of last month's bumper numbers is that sales of homes in the core central or prime region nearly doubled from April to 617 units. This comprised 37 per cent of total sales.

Despite being in the midst of an economic downturn, this region's May sales have outshone the August 2007 performance by 6 per cent, said Jones Lang LaSalle's associate director of research, Mr Desmond Sim.

The high-end segment, while still mired in the doldrums, recorded 15 transactions, up from three in April, noted PropNex. Two units at The Orchard Residences atop the Orchard MRT station, for instance, were sold at $2,787 per sq ft (psf) and $3,299 psf - prices that have not been seen for a while.

Sales were also well up in city-fringe areas. There, 609 units transacted at median prices of $735 psf to $1,200 psf over April's 362 units.

But sales of suburban homes reflecting a median price range of $580 psf to $760 psf fell 16 per cent to 442 units.

The best-selling project last month was the 302-unit Martin Place Residences in Kim Yam Road, which had sales of 186 units at a median price of $1,423 psf.

Buyers flocked there after Frasers Centrepoint cut prices to a seemingly attractive level - initial units at the condo had gone for $1,700 to $2,000 psf last year.

Other popular projects included The Wharf Residence in Tong Watt Road and The Arte in Jalan Datoh. Buyers picked up 140 units at The Wharf Residence at a median price of $1,186 psf and units of The Arte at $933 psf.

Experts said the unexpectedly strong May showing was rather exceptional.

Mr Ismail said the number of transactions this month could well exceed 1,000 units while CBRE Research expects second-quarter sales to exceed 3,500 units.

If the present strong sentiment persists, this year's new home sales will exceed 10,000 units, which is way above the 4,264 units sold last year and close to the 11,147 units sold in 2006, it said.

Property Auctions Shedding Bad Image

Source : The Sunday Times, June 14, 2009

Home owners become more receptive to mortgagee sales as a way to secure a better price

Property market watchers will likely be keeping an eye on the 'forced-sale' auction on June 23 of two units at Jasmine Court condominium along Upper Thomson Road.

The two units, owned by one person, will be offered as MCST (management corporation strata title) sales at the Knight Frank auction.

The last time Knight Frank offered such a sale was in April last year. A condo's management can initiate an MCST sale if a unit owner is in arrears on monthly maintenance and service payments.

Given the current downturn, there has also been talk that the number of mortgagee sales - when owners are unable to refinance their home loans - may increase.

Mr Shaun Poh, DTZ's senior director for investment advisory services and auction, said, however, that in the short term 'maybe (in the) next three to six months, I will not expect any increase in the number of mortgagee sales'.

He said banks this time round are quite prepared.

'That's why I think there is no panic repossession or foreclosure. The banks are not pulling the plug and are more prepared to talk to borrowers about restructuring their loans,' he explained.

Colliers International's figures show that the number of mortgagee sales across all auction houses has not seen a large jump in the first five months of the year.

The highest number of mortgagee-sale auctions was 21 - in February - while the lowest was 15 - last month.

Ms Grace Ng, Colliers' deputy managing director and auctioneer, said: 'I think the banks prefer to give the owners time to manage the property on their own.'

She said, however, that the number of mortgagee sales might rise in the third or fourth quarter of the year.

'Normally, there is a lag time between when the bank repossesses the property and when it puts it on the market.'

Colliers' data also showed that some $18.5 million worth of properties were sold across all auctions - forced sales or otherwise - last month.

'Owners are now quite receptive to putting properties up for auction. They have more or less accepted it as an acceptable mode of sale, compared to maybe a decade ago, when mortgagee sales had a bad image,' said Ms Ng.

Ms Mok Sze Sze, the head of auction and sales at Jones Lang LaSalle, said some good deals were transacted during her firm's last auction last month.

An example, she said, was a semi-detached house in Namly Garden. It was withdrawn in an auction in January at the highest bid of $2.8 million. Last month, it was sold for $3.7 million.

'With the recent improved market sentiment, we are seeing more owners' sales coming on board, with some owners looking at auctions as a way to attain the desired optimum price within a definite timeframe,' she said.

Perhaps another sign of the improved times is the confidence the owner of a colonial bungalow, in the choice Belmont Road area, has in getting an optimum price.

He will put his property, with a whopping land area of 32,627 sq ft and an indicative price range of $850 to $1,000 per sq ft, up for bidding at Knight Frank's auction next Tuesday.

Ms Mary Sai, the executive director of Knight Frank, said: 'Bungalows are hardly put up for auction. It's basically very rare property.'

'Optimism In Property Market Won't Last'

Source : The Straits Times, June 13, 2009

Analysts point to over-supply and weak rental demand

THE optimism in Singapore's property market is unsustainable, given an impending over-supply of new flats, weak rental demand and the fact that the country remains in a recession.

That is the pessimistic view of two research houses, which concluded that the price recovery is highly fragile.









Citigroup said the market is not at the start of a cyclical upswing and that the spike in home prices cannot last. 'We caution against over-optimism, because fundamentally the market is not ready for a sustained price recovery,' analyst Wendy Koh wrote in a report on Thursday.

In the same report, she downgraded Allgreen to 'sell', putting the developer in the same 'sell' basket as City Developments, CapitaLand and Keppel Land. Citi also downgraded Wing Tai to 'hold'.

While there has been strong resale demand, the call for new homes is patchy and rental demand remains weak, Ms Koh said.

Resale prices of some projects have risen and some developers are reducing discounts for new projects but Nomura Singapore believes these seemingly positive factors are misleading.

It maintained that the demand for new homes was boosted by price discounting and the interest absorption scheme.

'A rapid deterioration in rents amid higher supply and weaker demand has undermined yield expectations,' it said.

Nomura also pointed to the damaging effect of rising unsold inventory and forced sales by defaulting or distressed buyers who bought on deferred payment.

These properties form a source of 'hidden' inventory that will place further pressure on asking prices.

Also, as competition among new launches increases, there will be further risks of price declines.

The Citigroup report said a short-term price spike is possible, even in the luxury segment, given strong liquidity and the widening gap between Singapore and Hong Kong property prices.

But it cited the same over-supply risk highlighted by Nomura in its June 10 report, pointing out that supply scheduled for completion will reach a five-year high of 10,300 units this year and exceed 10,000 units a year through to 2011.

Knight Frank consultancy and research director Nicholas Mak is equally sceptical: 'The stock market fuelled much of the recent exuberance in the property market. People tend to think the recovery of one market is the recovery of another.'

If there was a time lag of six to 12 months, the property price rise would have been more sustainable, he added.

The private housing market has seen unexpectedly strong new home sales, at a rate of over 1,000 units a month.

'While this is good as it helps clear the backlog of over-supply, I am very concerned as rentals are still falling - by my estimate - at 3 per cent every month for some time now,' said Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.

There is a clear disconnect if prices are improving while rents are falling, he said.

What is worrying is that most purchases now are made by investors, not owner-occupiers. These buyers will need to find tenants for their investment homes.

Around two-thirds of the completed supply coming through this year and next is in the central region, said Citigroup.

Couple this with the absence of a strong inflow of expatriates with large housing budgets, and rents in the upper-middle and luxury segments are likely to fall by another 20 to 30 per cent in the next two years. This would make a price spike unsustainable, said Citigroup.

It is more upbeat on the mass market sector as supply is limited, but rents there are also sliding, so any price rise is likely to be capped at 5 to 10 per cent.

The upside for the Housing Board resale market is limited as there is no wage rise in sight.

Nomura expects a shallow decline in mass market prices from now.

It tips the likelihood of a W-shaped recovery in asset prices, rather than the previously expected U-shaped recovery.

Dempsey: White Hot Or Too Hot?

Source : The Straits Times, June 13, 2009

Yet another F&B cluster is to open on hilltop area come September

TANGLIN Village, already home to the hip, hungry and thirsty, is getting a third lifestyle cluster.

Five furniture shops now occupying the seven blocks slated for this new cluster along Dempsey Road will move out by the end of this month.
























In their place come September: A $2 million lifestyle complex called 6ix and 7even @ Dempsey, comprising restaurants, bars and retailers taking up 11 units.

The master tenant for this part of Tanglin Village is Forward Alliance, a logistics and warehousing company making its first foray into the food and beverage (F&B) industry. It is now sourcing for tenants to rival the two other nearby clusters of restaurants and bars in Dempsey Hill and Dempsey Hill Green.

Forward Alliance has a few tricks up its sleeve. It plans to bring in restaurants that will serve food that is new in the neighbourhood such as fusion cuisine; 'live' music joints are also on the cards.

It is planning to have a bicycle boutique housed in a 300 sq m space as well - a one-stop store for bicycle enthusiasts with a cafe, bicycle racks and services like showers and limousine transport home for tired cyclists and their wheels.

Another novel idea: A caravan park-turned-restaurant. Forward Alliance plans to import about five caravans of between 30 sq m and 50 sq m in size, and then kit them out as private dining rooms for up to 12 people.

The debut of 6ix and 7even @ Dempsey will mark the latest chapter in the area's transformation from sleepy furniture town to hip dining and drinking destination.

Nearly half of the 72 businesses there now are restaurants or bars, each paying rents of between $8 and $15 per sq ft.

Tanglin Village started out in the 1860s as army barracks. In the 1990s, it became known for its furniture shops. Then in 2004, the Singapore Land Authority (SLA) stepped up its search for tenants who would put the pre-war blocks to other uses.

In came upmarket restaurants and wine bars such as Oosh and PS Cafe. Schools, shops, art galleries and offices also moved in.

In 2007, when Country City Investment (CCI) opened the Dempsey Hill and Dempsey Hill Green F&B clusters, the buzz in the area went up several notches.

CCI is now taking over several more Dempsey Road blocks to expand these two clusters. Several furniture shop tenants in this area moved out in February, complaining of rocketing rents.

So the entrance of yet another F&B cluster poses the question: Is the hot spot getting too hot for its own good?

After all, there are signs that the Government is getting wary of overkill. The Straits Times understands that for the upcoming Dempsey Hill expansion, the SLA has capped the amount of space occupied by F&B outlets to 20 per cent of the area.

The SLA has also stipulated that some space should be used by furniture shops, in an apparent bid to preserve the original feel of the place.

But real estate experts - and Dempsey F&B owners themselves - say the area still has room to grow. They also say its unique charm, thanks to the greenery and old buildings, will continue to attract diners.

Mr Michel Lu, who owns the Hacienda bar, said: 'The nice thing is that the buildings are quite spread out. It is very green, not compact, and does not feel like Singapore.' He is so upbeat about the growth prospects of the place that he is building a cafe extension to Hacienda. It will open in a month.

Mr Danny Yeo, managing director of property consultancy Knight Frank, said the success of the place depends on its variety of offerings. So as long as the new operator creates new concepts, then it should still do well, he said.

Mr Eric Cheng, executive director of property consultancy HSR, said master tenants will also need to choose their sub-tenants carefully to protect the area's upmarket atmosphere.

'Look at Pasir Panjang Village. It used to have that 'niche restaurant' feel. But now, it is just not really there,' he said.

Foodie Michelle Quah, who has been to Tanglin Village only thrice since its redevelopment, said the offerings will have to be more than just 'pleasant but predictable' to draw her back there.

Referring to the upcoming outlets, the 29-year-old legal counsel said: 'The food, decor and experience must set them apart from any of your usual yuppie haunts.'

Divide & Prosper?

Source : The Straits Times, June 12, 2009

Some landlords are partitioning apartments and renting them out for a larger profit even though it is illegal

THE practice of illegally partitioning apartments to create more units for rent is widespread, said real estate agents.

At one apartment in Holland Crest, paper labels have been placed next to the doors leading to the partitioned units in order to distinguish them. -- ST PHOTO: MUGILAN RAJASEGERAN

Checks by The Straits Times at 20 developments found 11 had apartments or houses that had been subdivided into smaller rental units or broken into many rooms, in areas such as Orchard, Chinatown, Little India and Bukit Timah.

Last year, the Urban Redevelopment Authority (URA) acted on 400 such cases, most of which involved illegal refurbishment of dwellings for unauthorised use as workers' dormitories. This year, there were 90 cases from January to April.

The practice was highlighted recently when tenants at The Grangeford in Leonie Hill were asked to move out of their illegally subdivided units.

The Grangeford case was unusual because so many units in the condominium had been subdivided.

This overflowing shoe rack parked outside a room in one of the illegal units is a tell-tale sign of how many tenants are being crowded into the room. -- ST PHOTO: ANG YIYING

But up to 10 per cent of developments in areas popular with renters - such as Geylang, Joo Chiat or near Chinatown - might have partitioned or subdivided apartments, said Dennis Wee Group vice-president Alex Leow.

Checks by The Straits Times at 20 developments islandwide found that such units had attracted not only foreigners working in the service industry, but also visitors needing short-term accommodation such as medical tourists, students and office workers who wanted cheap rental accommodation near town.

Some apartments were divided into two, with the kitchen on one side. Other apartments were partitioned to create more bedrooms; the toilets and kitchen were shared. Some did away with the kitchen to allow for an additional room.

Another agent said subdivisions were more common in older apartments, especially those up for collective sale. Such apartmentsare unpopular with expatriate families, who are put off by the ageing facilities and uncertain leases. Subdividing them makes them attractive shorter-term accommodation.

Claiming that subdivisions were the norm in popular rental districts, real estate agent Benny Teo, 37, said: 'Don't talk about poor foreign workers. Even office workers earning up to $5,000 are looking to save a lot on rent by sharing a large partitioned unit with a friend as it might cost them only about $1,400.'

Another property agent, Mr Tan Weixiong, 36, said demand for such units is so great that a day after a subdivided or partitioned apartment is advertised, all the units are snapped up.

At The Grangeford, URA discovered in April that 600 units had been carved out of 140 apartments. -- BT FILE PHOTO

This practice of converting individual homes into boarding houses is not condoned by URA, which says it poses safety issues for other residents. URA has said it will step up enforcement measures to stamp out the practice.

At Kimsia Court, located in the Orchard area, the management has dealt with such cases before, taking action by informing the authorities about the subdivided units, said resident and management corporation treasurer Tony Thong.

He said that at one of the apartments there, two of the bedrooms and the maid's room had been divided into six rooms last year. Each subdivision had its own lock and key.

Agents said such housing 'solutions' had sprung up because of the increasing number of foreign workers in Singapore who need cheaper accommodation. Last year, the island's foreign population surged past the one million mark for the first time.

Many tenants are attracted by what they see as a good deal - affordable rates, convenient locations, more exclusive accommodation and condo facilities.

Thai postgraduate student May Eddison, who has lived in a partitioned unit in Holland Crest since December, said the $1,800 she pays in rent is worth it because the condo has a swimming pool and is located near Holland Village and the National University of Singapore.

'We also get a fairly big unit, with a bedroom, a kitchen and a small living room. But I feel rather trapped sometimes as there is no window, and it's inconvenient having to leave my unit to go to the toilet, which we share with the other tenants,' said Mrs Eddison, who lives there with her husband.

At Moonstone Apartments in Bendemeer, a 40-year-old IT professional from the Philippines who rents a subdivided unit there said he liked the quiet environment, which he said he would not find in an HDB estate.

Property agent A.L. Tay, 41, noted: 'If you clamp down on these places, where are these people going to go?'

However, URA said there was enough accommodation to go around, including affordable rental homes. 'There are currently about 240,000 private residential units in the market for owner occupation or for rental.

'As rentals of private properties have been moderating since peaking in the second quarter of 2008, a wider range of private housing has become more affordable, meeting the different budget needs of foreign residents.'

But where there is demand, there will be supply, it seems. Dennis Wee Group's Mr Leow estimated that a 2,000 sq ft apartment in Katong or Chinatown could rake in $3,000 if rented out whole, but could fetch $5,000 altogether if broken up into five subdivisions asking $1,000 each.

'Of course, if you have more rooms, you get more money,' said one landlord, who wanted to remain anonymous.

Firm Has Partitioned Units At Several Sites

Source : The Straits Times, June 12, 2009

IDEAL Accommodation, which was behind the unauthorised refurbishment of The Grangeford condominium, is renting out partitioned apartments in at least five other developments, checks by The Straits Times found.

One is Holland Crest, a development which was sold in a collective sale in 2007 to BBR Group.

Residents moved out last year, and Ideal moved in to lease the empty apartments to tenants.

At least two blocks on the grounds - blocks 19 and 21 - have partitioned units on every floor.

Residents, who are expatriates, students and long-term tourists, say they pay about $1,800 per partitioned unit per month.

At Dalvey Court, off Stevens Road, a walk-up apartment complex which had nine units originally, each apartment has been partitioned into three or four units.

One studio unit - with a master bedroom and balcony - was going for $1,300.

Some partitioned units were also found at Moonstone Apartments near Serangoon Road, No. 8 Kim Keat Road and No. 144 Race Course Road.

Ideal was the master tenant of The Grangeford condominium in Leonie Hill Road but was booted out by the owner of the property after it failed to comply with an order by the Urban Redevelopment Authority (URA) to remove and restore its 600 partitioned rooms.

Tenants were told of the URA order very late, leaving them little time to clear out.

A check on the company under the Accounting and Corporate Regulatory Authority shows that the two directors in charge are Mr Tang Yong, a Singapore PR, and Ms Tang Xuemei, a Chinese national.

The company, started in 2004, has $170,000 in capital.

Mr Tang Yong was uncontactable for a response.

URA would say only that it is 'already following up on the feedback received on residential properties managed by Ideal Accommodation'.


When partitioning of apartments is illegal

AN URBAN Redevelopment Authority (URA) spokesman said adding partitions inside homes for family use is not illegal but letting out the partitioned units to multiple tenants, so that it becomes a dormitory, hostel or boarding house, is.

'Residences with such unauthorised uses cause disamenity and inconvenience to residents and pose public safety concerns,' said its spokesman. For instance, People's Park Centre resident Don Kok, 30, said some owners partition their kitchens to rent out, blocking off the common rubbish chute.

URA said unauthorised additions and alterations to apartments must be demolished and its use reverted to being a single dwelling.

The Singapore Civil Defence Force (SCDF) also acts against such illegal partitioning.

It issued 527 notices last year and 264 notices between January and April for unauthorised conversions to workers' quarters. Partitioning a dorm could compromise fire safety and it requires SCDF approval.

Demand Rising For Homes In 3 Asian Cities

Source : The Business Times, June 13, 2009

But Singapore, HK and Tokyo office markets will continue to to be depressed

(Hong Kong) DEMAND for residential property is seen picking up in key Asian cities but economic recession will continue to depress the region's office markets, pushing Grade A rents in Singapore and Tokyo down nearly 40 per cent in the next 18 months, a Reuters poll shows.

BRIGHT FUTURE - Hong Kong looks to be the healthiest of the three markets, with the poll showing that home prices would be flat for the rest of this year but rise 10-15 per cent in 2010

'The office market is driven more by headcount and employment issues,' said Aaron Fischer, head of property research at CLSA. 'On the residential side, liquidity in the market place is affecting property, in Hong Kong and Singapore, particularly at a time when interest rates are low.'

Hong Kong looks to be the healthiest of the three markets covered in the poll as apartment prices have rebounded 15 per cent this year from a slump.

Analysts, however, warn that the rally is driven mostly by liquidity and is losing steam as the economy could shrink up to 6.5 per cent this year based on the government's forecast. The poll showed Hong Kong home prices will be flat for the rest of this year but rise 10-15 per cent in 2010.

In Singapore, demand is picking up but strong supply means apartment prices are poised to decline 6.8 per cent between now and the end of the year before recovering 4 per cent in 2010.

Tokyo residential prices are forecast to drop 10 per cent between now and the end of the year and fall 6.3 per cent in 2010.

House prices in Hong Kong, Singapore and Japan have fallen so much that they are starting to look attractive given the added incentive of very low interest rates, analysts say.

In Singapore, monthly flat sales have tripled since February as apartment prices are down 20 per cent since the middle of 2008.

Developers including City Developments and UOL have stopped discounting new projects and in some cases are raising prices slightly although overall prices remain weak.

Tokyo residential prices are only 10 per cent off last year's peak, but have more downside than the other markets as falling wages and rising unemployment will dampen demand.

Economic recession will continue to depress office rents although in Hong Kong they are poised to stabilise next year amid dwindling new supply.

The city's biggest new project, International Commerce Centre - a 118-floor skyscraper in Kowloon - has lured Morgan Stanley, Credit Suisse and other multinationals across the water from Hong Kong Island, and is 80 per cent leased.

The poll forecasts Hong Kong Grade A office rents will drop 10 per cent by the end of this year and then be flat next year.

Singapore, on the contrary, faces a rush of new supply and prime rents, already 40 per cent off their peak, will skid 20 per cent by the end of this year and 18.8 per cent in 2010.

'Next year, the new supply will hit and rents will start falling again,' said David Lum, Singapore property analyst at Daiwa Institute of Research.

Tokyo Grade A rents - already down 29 per cent from a peak in late 2007 - are poised to fall 10 per cent between now and the end of the year and drop 15 per cent in 2010, according to the poll.

New supply, however, is relatively limited and analysts expect companies to take advantage of the weak market and upgrade to better quality office space at little or no increase in rent. -- Reuters

Time May Run Out For Keppel Club

Source : The Business Times, June 13, 2009

Lease may not be renewed as prime site can be put to other uses

ONE of Singapore's best-known golf clubs could be forced to give up its prime location - close to the upcoming Sentosa integrated resort - and seek a new home.

BT understands from industry sources that the lease on Keppel Club's site near Telok Blangah, across from Sentosa Island, might not be renewed when it expires in just over 11 years as the land has been earmarked for redevelopment.

KEPPEL COUNTRY CLUB - Members could be asked to cough up cash for part of the new redevelopment

A senior club official declined to comment when reached and members said they had not been told of any potential changes. When contacted, the Singapore Land Authority, which is the lessor of the land, issued a one-line statement which read: '10 Bukit Chermin Road is on a 30-year lease to Keppel Club. The lease expires end-2021.'

Land-scarce Singapore already has 11 golf clubs with transferable memberships, including a combination of proprietary outfits like Laguna and members' clubs like Singapore Island & Country Club. There are also several public and quasi-public courses like Marina Bay and NSR Country Club.

All sit on land which are leased on 30-year terms from landlords who include the Public Utilities Board, Jurong Town Corporation and other government agencies. Most have had no problems getting their leases renewed.

But the development of the Sentosa Island, with its Integrated Resorts, has increased the value of the land around the vicinity. The area has seen massive redevelopment with prime waterfront commercial and residential properties like VivoCity, Keppel Corp's Reflections and Caribbean.

'This is prime property,' said an informed industry insider. 'Most golf clubs in Singapore sit on water catchment areas, land adjacent airports or other real estate which cannot house infrastructure. Having a golf club on this Bukit Chermin site is the least productive use of prime land in land-scarce Singapore.'

Going by past practises, this means Keppel Club could be offered a new location. But given that the construction of an 18-hole golf course and full club facilities could easily take five years or more (after several years to source a suitable location), Keppel will have to work quickly.

And with the cost of development likely to be around $100 million, there is also the question of funding.

According to the club's annual report, it had just over $20 million in cash. This means members could be asked to cough up cash for part of the new redevelopment. But the Port of Singapore Authority, which became patron of the club in 1973, could also help finance part of the redevelopment.

The last time that a golf club relocated was about a decade ago, when Warren moved from Kent Ridge to Choa Chu Kang and members had to pay a tidy sum each.

Keppel Golf Club, as it was originally known, was founded on November 1904 on a piece of land first owned by the New Dock Co Ltd. The land and club were later transferred to the Tanjong Pagar Dock Board. The Singapore Harbour Board subsequently took over that piece of land.

By 1973, when PSA took over its operation, Keppel Club occupied approximately 43 acres of PSA-owned land. Four years later, in 1977, PSA leased more land to Keppel Club for the extension of the golf course. By 1980, ambitious plans were fast underway to remodel and upgrade the 18-hole to a new 6,000 metre Ronald Fream-designed golf competition course.

Some $14 million was spent refurbishing the golf course and clubhouse. More upgrading works were carried out in 1994. $22 million bought members a bowling centre, gymnasium, outdoor and indoor tennis courts, movie house and the Olympic-sized swimming pool.

In 2005, a Master Plan was presented to the members to further expand the facilities to take advantage of the sea view, with a sea fronting gymnasium and dancing/aerobic studio, a boardwalk offering alfresco dining, children's play area, video games arcade and roof top dining area. A new multi-storey carpark was also built.

Short Street Hotel Site Attracts Strong Bids

Source : The Straits Times, June 11, 2009

A SMALL hotel site in Short Street has received 15 bids, with the winning tender coming in at more than double the trigger price.

Budget hotel chain Fragrance Group's bid of $15.5 million, or $353 per sq ft (psf) per plot ratio, is about 76 per cent higher than the trigger of $201 psf per plot ratio, or $8.8 million.

The price is more in line with analysts' projections last August, when the site was first made available on the Government's land sales list, than recent ones.

The second highest bid - from Hotel 81's Regal Land - was at $14.01 million, or $319 psf per plot ratio.

Centurion Properties, largely owned by UOB-Kay Hian stockbroker pair Han Seng Juan and David Loh, put in the third-highest bid of $12.89 million, or $291.70 psf per plot ratio.

Other bidders included Sim Lian Land, Hotel Royal Investment, Wah Khiaw Developments, Mayhew, Heeton Commercial and Orchard Parade Holdings' First Choice Properties. The first nine bids all came in above $10 million.

Singapore's largest bar chain operator, Harry's Holdings, which recently said it was keen to buy a small hotel, also put down a bid - at $9.5 million or $217 psf per plot ratio.

'The strong response to the tender of the Short Street site signals that hoteliers still believe in the fundamentals of Singapore as a tourist destination and its long-term ability to attract tourists,' said CBRE Research director Leonard Tay.

The Urban Redevelopment Authority put the 99-year leasehold Short Street hotel site up for tender when an unnamed developer triggered it for sale after committing to a minimum bid of $8.8 million. It is a reserve list site, which is put up for sale only if developers indicate their interest.

The 14 valid bids received - the 15th undercut the trigger bid - reflect a return of interest for development sites with good attributes, Mr Tay said.

Given that the site area is relatively small and construction costs are expected to decline this year, the overall investment should not prove costly, making this an attractive opportunity for developers and hoteliers, he added.

The site, which has a maximum gross floor area of 43,885 sq ft, can accommodate around 90 rooms.

Apart from the affordable investment sum, the site's location within the Bras Basah/Bugis district was another key factor, said Colliers International's director for research and advisory Tay Huey Ying.

Mr Leonard Tay said its location near the upcoming Rochor MRT station and the Bugis area meant that a themed or design-oriented boutique hotel would be most likely.

A new boutique hotel could capitalise on the growing arts scene in the Bugis area and cater to tourists looking to stay in a hotel offering something more than a typical hotel chain, he said.

For now, the hotel industry is faced with rising supply, shrinking revenue per available room and falling visitor numbers.

No new hotel sites were added to the Government's land sales programme for the second half of the year. It already has nine hotel sites available for tender.

Mortgage Sales May Rise

Source : The Sunday Times, June 14, 2009

Home owners become more receptive to mortgagee sales as a way to secure a better price

Property market watchers will likely be keeping an eye on the 'forced-sale' auction on June 23 of two units at Jasmine Court condominium along Upper Thomson Road.

The two units, owned by one person, will be offered as MCST (management corporation strata title) sales at the Knight Frank auction.

The last time Knight Frank offered such a sale was in April last year. A condo's management can initiate an MCST sale if a unit owner is in arrears on monthly maintenance and service payments.

Given the current downturn, there has also been talk that the number of mortgagee sales - when owners are unable to refinance their home loans - may increase.

Mr Shaun Poh, DTZ's senior director for investment advisory services and auction, said, however, that in the short term 'maybe (in the) next three to six months, I will not expect any increase in the number of mortgagee sales'.

He said banks this time round are quite prepared.

'That's why I think there is no panic repossession or foreclosure. The banks are not pulling the plug and are more prepared to talk to borrowers about restructuring their loans,' he explained.

Colliers International's figures show that the number of mortgagee sales across all auction houses has not seen a large jump in the first five months of the year.

The highest number of mortgagee-sale auctions was 21 - in February - while the lowest was 15 - last month.

Ms Grace Ng, Colliers' deputy managing director and auctioneer, said: 'I think the banks prefer to give the owners time to manage the property on their own.'

Read the full story in today's edition of The Sunday Times.