Tuesday, July 7, 2009

Residents Have Mixed Feelings Over New Sixth Avenue MRT Station

Source : Channel NewsAsia, 06 July 2009

The Sixth Avenue MRT station will be the first to be located in a private residential estate once it is ready in 2015.

Train tunnels of Circle Line network

Residents in the area welcome the new station and hope it will lead to fewer traffic jams in the area.

The elderly and school-goers are expected to benefit from the convenience of having an MRT station close by. Nearby shops are also optimistic that the station will help bring in more customers.

However, some residents are concerned that it may lead to a surge in human traffic with more people flocking to use the station.

Real estate agents said the new station will not benefit the prices and rental rates of landed properties in the area.

This is because the owners and tenants of such properties tend to be car owners and do not use public transport such as the MRT.

However, they said it could lead to a 5-10 per cent increase in the prices of condominiums located nearby. - CNA/ms

Office Rents Decline

Source : The Straits Times, July 7, 2009

Fall accompanied by rise in vacancies and unlikely to recover anytime soon

LANDLORDS took a one-two punch in the second quarter, with rents continuing to decline for offices and industrial space as vacancies kept rising. Rents were under the most pressure in the city-fringe and high-tech sites while more space was vacated, particularly in the core Central Business District (CBD) area.

Rents were under the most pressure in the city-fringe and high-tech sites while more space was vacated, particularly in the core Central Business District (CBD) area. -- ST PHOTO: LAU FOOK KONG

Consultants DTZ said office rents in Beach Road and North Bridge Road fell 20 per cent to $6.20 per sq ft (psf) per month in the second quarter. This followed a 13 per cent fall in the first quarter.

Rents along the Alexandra Road belt fell 23 per cent to $5 psf a month in the April to June period, compounding a 13 per cent drop in the first quarter.

The decline was driven mainly by competition from a converted state property and high-tech industrial sites in the area.

Generally, rents in the office market have been falling as demand weakens in the face of rising supply. The amount of grade A space, in particular, will double in the next five years.

CBRE said monthly prime office rents fell about 18 per cent to $8.60 psf in the second quarter, after a 18.6 per cent quarter-on-quarter drop in the first quarter. Grade A office rents are down 17.5 per cent to $10.15 psf a month. They also fell 18 per cent in the first quarter.

The rental gap between office space in the CBD and that elsewhere has narrowed. Offices in Marina Centre are now 12 per cent cheaper to rent than those of prime space in Raffles Place, compared with a rental gap of 18 per cent at the peak of the market. The gap has closed even more in the Harbourfront area - from 47 per cent at the peak to 35 per cent in the second quarter.

Some firms, particularly those driven to relocate outside the CBD during the 2006-2007 boom, are now likely to return, said DTZ.

Office leasing activity continues to be driven mainly by lease renewals as firms downsize. Take-up has been negative for the past two quarters and is likely to remain so for the rest of the year, said CBRE's executive director (office services), Mr Moray Armstrong. 'We are seeing greater incentives including, for instance, capital expenditure contributions to attract or retain quality tenants,' he said.

The good news is that the rate of rental decline will ease from the dramatic falls seen since last September but demand will still be 'severely constrained'.

Please read the full story in Tuesday's edition of The Straits Times

Geylang Market Opens Next Week

Source : The Straits Times, July 7, 2009

THE NEW and upgraded Geylang Serai market will resume business on July 13.

This follows a facelift headed by the National Environment Agency's (NEA) Hawker Centres Upgrading Programme which took 40 months and costs $18.2 million.

The upgraded Geylang Serai Market will repon on 13 July 2009 after a 40-month makeover. -- ST PHOTO: NG SOR LUAN

The new market is designed to be iconic and simulates the 'rustic quality' of the old kampong houses, said NEA in a statement on Tuesday.

Some of its features include an entrance lobby with an integrated drop-off porch, similar to that of a Malay verandah. Decorative elements such as louvers and timber panels synonymous with features of Malay architecture were integrated in its designs.

Located along Changi Road, the two-storey structure consists of 162 market produce stalls and 34 lock-up stalls on the first storey, and 63 cooked food stalls and 106 lock-up stalls on the second level.

The upgrading also resulted in a more spacious layout, enhanced ventilation and improved fire safety features. For example, all cooked food stalls have been fitted with a new mechanical exhaust system to improve the ventilation of the centre.

The total seating capacity has also been increased by more than 100 per cent to cater to more crowds.

NEA said the new market provides a 'more pleasant and refreshing environment blended with the rustic Malay charms' for marketing and dining needs.

Stallholders are expected to resume business at the hawker centre from July 13 July.

NEA currently manages 109 hawker centres. To date, 74 hawker centres have been upgraded under the upgrading programme.

Some hawker centres that are currently undergoing upgrading include Tekka Centre, Blk 628 Ang Mo Kio Ave 4 and Blk 270 Queen Street.

10th Most Expensive City

Source : The Straits Times, July 7, 2009

SINGAPORE is now the 10th most expensive city in the world for expatriates, having climbed up three places from last year, according to a survey conducted by human resource and financial consultant Mercer.

The Republic knocked Milan out of 10th place in this year's Worldwide Cost of Living survey, securing a spot in the top 10 largely dominated by European and Asian cities. -- PHOTO: STB

The Republic knocked Milan out of 10th place in this year's Worldwide Cost of Living survey, securing a spot in the top 10 largely dominated by European and Asian cities.

Tokyo overtook Moscow as the most expensive city for expatriates, with the Russian capital city slipping to third spot but still maintaining its lead as the most expensive European city. Johannesburg is the world's cheapest city.

The significant reshuffle of cities in this year's ranking is mainly due to considerable currency fluctuations worldwide.

A table of countries surveyed by Mercer.

All the US cities have become more expensive, with New York City jumping to 8th place because of the stronger US dollar.

London, on the other hand, fell to 16th spot from third last year due to the decline of rental prices and the weaker British pound.

European cities are cheaper to live in, with Warsaw, for example plummeting from the 35th to 113th spot.

In Asia, Chinese cities are on the rise as the Chinese renminbi gained strength over others. Beijing, for instance, is in ninth place.

In Mercer's survey, New York is used as the base city for the index and scores 100 points so all cities are compared against New York and currency movements are measured against the US dollar.

The survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment.

House-Buying Tips For Newly-Weds

Source : The Straits Times, July 07 2009

Yearning for a love nest to call your own? To-be-weds should check out this article for some property purchasing and home financing tips.

Going on a round-island hunt for the perfect abode can be a tiring affair, especially if one doesn’t drive and has to pack it in with other people on the public transport system.

Having to jostle with other commuters when one is pregnant is worse. That’s why I try to make it a point to give up my seat for a mums-to-be.

“Would you like to sit?” I asked a few moons ago, when a lady with a slight paunch boarded the bus (but I couldn’t be sure if she was house-hunting though.)

I had expected the usual “thank you”, but that didn’t ensue.

“Er, no. I don’t need it,” came the sheepish and fractured reply, after a pregnant pause (no pun intended).

I then realised that I had bestowed the ultimate disfavour upon a woman. I had put a dirty label on her – assuming that she’s pregnant instead of just, er, well-endowed. But hey, look on the bright side! At least the enduring efforts of Singa hadn’t gone unnoticed. But that said, I certainly hope what went around won't come back to me any time soon. (Better start jogging. Or avoid taking the bus altogether.)

But I’m jumping the gun here, what with preggies, fatties and all. I really should start touching on the main stuff - house-buying tips for newly-weds, pregnant or otherwise - before you threaten to give up your seat for me.

* * *

A big ticket item

Property acquisition is a huge investment, and possibly the single, largest one a couple will bear. So, newly-weds who may not have accumulated enough savings and tend to borrow substantial amounts must resist rushing into a purchase – no matter how much they like it. They will have much to bear should theirs turn out to be a wrong decision.

The first step towards budgeting and measuring affordability lies in making sure they have enough cash for the 20 per cent down payment. A couple should also find out if their combined incomes can support monthly mortgage payments.

Although salaries for a young couple should rise over time, loan periods usually stretch from 20 to 30 years, during which time interest rates will fluctuate. At the end of the day, they'll have to repay principal plus interest, which could be tantamount to twice the original amount borrowed, for every dollar they borrow.

Be a wary buyer, not a weary one

The recent economic lull goes to prove one thing: salaries can be cut and jobs can be lost. Combined with a withdrawal of promotional interest rates, possible losses on the stock market and perhaps the arrival of a baby, cash flow can suddenly become very tight. One must remember that property is the most illiquid asset of all, so a couple should try to keep monthly instalments in as manageable a manner as they can. As a general gauge, a couple could try to not spend more than a third of their gross monthly income on their mortgage.

‘House’ it going?

A couple should think about the tenure of their property. A 99-year leasehold property will cost less than a similar freehold property, which means that for the same budget, they can either get a newer or bigger leasehold property compared to a freehold one. Better still, if they decide on an HDB flat or EC, they can enjoy an ‘extra’ government grant.

A 99-year leasehold home can provide a very affordable choice for someone who, with the same budget, cannot buy freehold property and still enjoy all the facilities and resort-style living that goes with it. Of course, those who must have a freehold property will just have to be prepared to fork out a bigger budget.

Access your accessibility

If a couple cannot yet afford a car, then look for a home which is conveniently linked to the public transport system, or better still, close to their workplace. One has to be comfortable with the time taken to travel, taking into account hassles involved, in order to be convinced about living in a certain place.

Facilities & amenities

A couple should also take into consideration about the perks of living near schools, supermarkets, shops, restaurants, their parents (especially if they plan to have kids soon). If not, they may land up having to uproot themselves disruptively if a short-sighted decision has been made.

Size (and other) matters

In terms of size, a two-bedroom unit could probably be good enough for a couple starting out, as it will provide room in case a baby or live-in maid comes along. On a separate and still related note, an older or BTO property should cost less (ceteris paribus). However, house-proud newly-weds could fall into a trap of overspending on renovations in order to improve its look. Any savings made would therefore be offset as high renovation loans attract high interest rates.

With new developments, a couple should save on high-cost items which are already included, such as built-in wardrobes, air-conditioning and kitchen cabinets and equipment, so as to minimise their expenditure.

Old is gold?

With older developments, especially those above 15 years, good maintenance is critical to keep their value. For really old developments, buyers need to evaluate if it’s worthwhile to cough up thousands of dollars for upgrading work. Some people may be keen to take a bet on properties with a potential for en bloc, which could result in a ‘windfall’ should it follow through. There’s no harm in subscribing to this notion. One just has to make sure he’s taking a calculated risk.

Be patient

If a couple is planning to upgrade in a couple of years, then it may make sense to settle for less for the time being.

* * *

Here’s hoping you’ll have a fulfilling time searching for your dream home with these pointers. Oh, if you intend to bus-hop while at it, do me a favour: let me know if you genuinely need my seat and I’ll gladly give it up; it’ll save me the hassle of guessing if it's actually a fat baby – or baby fats – that's residing beneath that belly.

Wee Hur Devt Puts In Top Bid For Woodlands Industrial Site

Source : Channel NewsAsia, 07 July 2009

Wee Hur Devt has submitted the highest bid of S$22.9 million for an industrial site at Woodlands Avenue 4.

The Urban Redevelopment Authority (URA) has closed the tender on Tuesday for the site after receiving 8 bids in total.

The site spans about 2.5 hectares and has a gross plot ratio of 2.5. Wee Hur's bid translates to about S$34 per square foot.

Soilbuild Group put in the second highest bid of S$21 million. The lowest bid of S$12.5 million came from Precise Development.

The site was offered for sale in May on a 60-year lease.

Property consultancy CB Richard Ellis said the top bid is about 45 per cent higher than the application bid of S$12.5 million.

Executive Director at CBRE Research, Li Hiaw Ho, said the healthy response to the tender could be a reflection of the expected turnaround for the manufacturing sector.

After six consecutive months of negative figures, the manufacturing output finally recorded positive figures in April and May 2009.

URA said it will decide on the winning bidder after evaluating the offers. - CNA /ls

Upgraded Geylang Serai Market To Progressively Reopen From 13 July

Source : Channel NewsAsia, 07 July 2009

The newly upgraded Geylang Serai Market will progressively resume business from 13 July after a 40-month closure.

This follows a S$18.2m revamp under the National Environment Agency's Hawker Centres Upgrading Programme.

Built on a larger site along Changi Road, the upgraded two-storey Geylang Serai Market is designed to reflect the area's ethnic and cultural heritage.

The building itself bears intricate Malay motifs and design elements, such as sloping roofs, louvres and timber panels, as found in traditional "kampong" houses.

Seating capacity has been doubled and the centre comes with enhanced ventilation and improved fire safety features.

There will be 162 market produce stalls, 63 cooked food stalls and 140 lockable stalls in the centre.

NEA currently manages 109 hawker centres and 74 of these have been upgraded under the Hawker Centres Upgrading Programme. - CNA/ir

Mall Rents Down? Not For Lease Renewals

Source : The Straits Times, July 6, 2009

Existing complexes still ask for higher renewal rates, says retail giant

THE new malls taking shape in Singapore are offering lower rents to lure tenants in trying times but existing complexes are demanding higher renewal rates, said a senior executive of retail giant RSH Group.

Chief operating officer Kesri Kapur pointed to a paradox in the local market: Most retailers are grappling with falling profits, yet most lease renewals are done at higher levels.

One suburban mall is even asking RSH for 20per cent more to renew the lease of a shop of less than 3,000 sq ft.

'We are moving out of that particular location. Obviously, business is not what we would have expected when we signed the lease,' said Mr Kapur.

'This is one example where we have taken a decision... There are a couple of other locations that we are reviewing.'

Mr Kapur conceded that landlords may have lowered their expectations of how much more they might get in rent renewals, but they are still renewing leases at a higher level.

'Whenever we renew rents in Orchard Road, the rents have not declined,' he said. 'For the newer malls, for those who have not signed before December, their offers would probably be better.'

A typical retail lease lasts three years so a higher rent now means one above the level committed three years ago.

Retail rents have indeed fallen from the peak rates of last year, but they may not all have dropped to levels done three years ago.

According to consultancy DTZ, rents of prime retail space in Orchard Road, Scotts Road and other city areas have fallen by more than 6per cent from last year's peak and are close to 2006 levels.

But suburban rents have fallen by only 2.1per cent and are at 2007 levels.

Property experts said the rental declines would be more evident in malls that still have space to lease.

These include new complexes, such as those in the Orchard strip, as well as nearby existing malls that may have lost some tenants to the recent arrivals.

DTZ's associate director of retail, Ms Anna Lee, said in a report on Friday that many retailers and food and beverage (F&B) operators have delayed expansion plans or changed their business strategies under the pressure of the economic downturn.

'Some F&B operators have or are considering moving to business parks, where rents are much lower and the worker catchment is considerable,' she said.

More retailers are also feeling the pressure of having to move out of unprofitable locations, said an industry source.

The Singapore Retailers Association had earlier called for landlords to lower rents, saying many firms will go under if something is not done.

Executive director Lau Chuen Wei said the association started its 'crusade' to highlight to landlords that their high rents may cause the closure of some retail stores - and cost retail jobs.

They have since seen indications that some landlords are more open to exploring creative ways of collaboration, though most would not reduce rents.

'However, we also hear that new sign-ups have seen more success in achieving rents that are lower than initially offered,' she said.

Mr Kapur said he anticipates consumer demand to be challenging in the next 12 to 18 months.

'Everybody is facing challenges now. What is important is whether you can hold hands and work together.'

Developers Rush To Catch Buying Wave

Source : The Sunday Times, July 5, 2009

More condo launches are due this month but market-watchers say price recovery will not last

The stream of new property projects being launched continues to be strong. Another mass-market development, Oasis@Elias, has officially hit the market, after a quiet round of sales.

The Gale, located in Flora Road, is one of the many condominium projects that are slated to be launched this month. -- PHOTO: HONG LEONG HOLDINGS

The 388-unit condominium near Pasir Ris beach was launched yesterday after it sold 71 units - or half of the units previewed - at $670 per sq ft on average at last week's preview.

CB Richard Ellis, which is marketing the condo, said units with a sea view were popular. Some 80 per cent of the buyers were HDB upgraders. The units are fairly large, ranging in size from 947 sq ft to 2,659 sq ft.

Generally, developers are rushing new launches to capitalise on the strong buying wave, particularly for affordably priced mass-market developments.

Releases in the past three weeks include Vista Residences in Jalan Datoh, Residences @ Killiney and the already sold-out 8@ Woodleigh.

Developments that are available for sale this month include Ascentia Sky, next to Metropolitan condominium in Alexandra Road, Silversea in Amber Road, The Gale in Loyang and Sophia Residence on the former Sophia Court site near Selegie Road. An 85-unit development in Balmoral Road is also coming to market soon.

The 373-unit, 99-year leasehold Ascentia Sky is expected to hold a public preview in the middle of the month, said a Wing Tai spokesman. The indicative price before the preview discount is $1,300 psf to $1,500 psf, he said.

Wing Tai and Greatearth Developments had bought the Ascentia Sky site for a bullish $639 per sq ft per plot ratio in late 2007. Property analysts had said then that the land price would translate into an estimated breakeven price of $1,000 psf to $1,100 psf for the future condo, and the units there should sell for at least $1,100 psf to $1,200 psf.

Projects such as Ascentia Sky, Silversea and Sophia Residence have been lined up for launch for some time now.

In late 2007, developer GuocoLand had said it hoped to push out the 272-unit Sophia Residence in the third quarter of last year. But that did not happen.

As for the 383-unit Silversea, there was already talk as early as late 2007 that it would be launched soon. It did go out to market for a while last September, selling several units at a median price of $1,400 psf and three at a median level of $1,242 psf in October. Because of the poor market conditions, sales were then stopped.

Developers are a bit more upbeat now that buyers, including speculators, have been coming out in droves, though they remain fairly cautious and price-sensitive.

Still, buyers should exercise prudence in the light of market uncertainty, advised property experts. Ms Chua Chor Hoon, head of DTZ South-east Asia research, said in a report last Thursday that the rise in prices in the second quarter is likely a 'temporary blip' as it is largely due to the fear among buyers of missing out on the bottom, pent-up demand and low interest rates.

Average resale prices have fallen by only 10 per cent to 35 per cent from the fourth quarter of 2007 to the first quarter of this year, compared with a larger fall of 35 per cent to 45 per cent during the Asian financial crisis, she said.

'Without a clear recovery in sight for the United States and Singapore economies, the price recovery in the second quarter is not sustainable and sales volume would be affected if prices continue to rise,' said Ms Chua.


# Ascentia Sky
Where: Alexandra Road next to Metropolitan condominium
How big: 373 units
How much: Indicative pricing, before a preview discount, is from $1,300 psf to $1,500 psf.

# Sophia Residence
Where: Adis Road near Parklane Shopping Mall
How big: 272 units
How much: Indicative pricing said to be $1,500 psf to $2,000 psf.

# Silversea
Where: Amber Road on the former Amberville site
How big: 383 units
How much: Preview prices said to start from $1,300 psf

# The Gale
Where: Flora Road
How big: 329 units
How much: Indicative pricing said to be $650 psf to $700 psf

Condo-Style Granny Units

Source : The Straits Times, July 4, 2009

Frasers Centrepoint's two-room units with adjoining studios prove a big hit with buyers

Always close, but never too close. That is the carrot dangled before extended families buying new condominium units which come with adjoining studio apartments.

The layout of Frasers Centrepoint's "dual key" apartments at 8@Woodleigh (left) has a studio unit attached to a two-bedroom unit. CapitaLand's The Metropolitan also offers options for multi-generational living. -- PHOTO: FRASERS CENTREPOINT

Apart from the usual two-, three- or four- bedroom layout options, property developer Frasers Centrepoint Homes has introduced what it calls 'dual key' apartments at two recent two projects, Caspian at Lakeside and 8@Woodleigh.

This new layout has a studio apartment attached to a two-bedroom unit and is about 10 per cent larger than a regular three-bedroom unit.

And it has been an unqualified success.

The layout of Frasers Centrepoint's "dual key" apartments at 8@Woodleigh has a studio unit attached to a two-bedroom unit. CapitaLand's The Metropolitan (left) also offers options for multi-generational living.

At the recently sold out 8@Woodleigh at Potong Pasir, the 390 sq ft studio apartment comes fully equipped with its own kitchen, bathroom and dining and living areas. It also has its own entrance, which opens up to a foyer that is shared with the 682 sq ft two-bedroom unit.

Frasers' chief operating officer Cheang Kok Kheong says such units are 'specially conceptualised to promote inter-generational ties within families'.

All 30 units of this new layout at Woodleigh have been sold. Scheduled to be completed in 2013, the project has a total of 330 units, including one-, two-, three- and four-bedroom types.

Over at Caspian, a 712-unit project, all 17 such 2+1 bedroom units are also sold out.

The layout of Frasers Centrepoint's "dual key" apartments (left) at 8@Woodleigh has a studio unit attached to a two-bedroom unit. CapitaLand's The Metropolitan also offers options for multi-generational living.

Global investor Simon Yong, 50, bought one such unit at Woodleigh. He nows lives with his wife in a semidetached home at Braddell. When the Woodleigh project is completed, he hopes to move in with his mother, who is in her 90s. She will live in the studio apartment.

'My wife and I still have our privacy, but we can take care of my mum easily too,' he says.

CapitaLand is another developer that has offered a similar adjoining unit option to encourage multi-generational living.

Its The Metropolitan at Tanglin contains 29 single units with two entrances. In these apartments, a partition wall can be built to divide the living space.

Another option the development offers for multi-generational living are adjacent separate units. There are 14 pairs of such units, which offer buyers the option of removing the partition between the two units to create a single living and dining area.

The condominium was completed recently. At its launch in 2006, Ms Patricia Chia, chief executive of CapitaLand Residential Singapore, said: 'Many families today would like to live near to, or with, their ageing parents, while enjoying a certain amount of privacy.

'We also recognise that every family's lifestyle needs would change with time. The flexibility that we have built into the unit layouts at The Metropolitan is ideal to meet these needs.'

There is another use for 2+1 bedroom units: rental.

Frasers' Mr Cheang says: 'The new layout also gives buyers the option to finance their purchase by renting out the studio component of the unit.'

It is still about four years before they can move in, but buyers of units at Woodleigh that Life! spoke to are already thinking the same way.

Ms Teresa Kwan, a manager in a financial institution who is in her 50s, has bought a 2+1 bedroom unit at Woodleigh. She says: 'I can live in one and rent out the studio, or I can rent both units out.'

At Lippo Realty's Newton One, one of the bedrooms in its five-bedroom units comes with its own kitchenette and entrance - ideal for extended families and also rental.

Mr Chris Koh, director of Dennis Wee Properties, says these units are a good option for property hunters, particularly those who are looking to lease out the unit. 'Both the tenant and the landlord still have their privacy.'

Such apartments are a new trend in the private property sector, but HDB introduced them about two decades ago. In 1987, it launched multi-generation flats, or 'granny flats'. They comprised a four- or five-room flat with an adjoining studio apartment with a separate entrance. Around 367 units were built in Bishan, Tampines and Yishun.

However, HDB stopped building them 'as the demand then was not high. The completed multi-generational flats are still available in the resale market', says a spokesman.

Dennis Wee's Mr Koh believes that 2+1 units are a hit now because they can generate extra income.

A check with other property developers, such as UOL Group and City Developments, showed that they are not implementing these special two-in-one units in their upcoming projects.

Still, tutor Leah Teo, 35, hopes that more developers will offer such units. 'I can rent out one unit for extra income, and later on, I can have my elderly parents living next to me,' she says.

Is Property Rally Sustainable?

Source : The Straits Times, July 04, 2009

A YEAR after it started, the recession to end all recessions has yet to hit bottom officially.

But private home buyers in Singapore don't seem to care. Since February, they have been snapping up almost as many homes each month as during the frenzy of 2007.

The strong demand has caught even property veterans by surprise, and set off furious discussions among property-obsessed Singaporeans.

Their million-dollar question: is this rally for real?

Opinion is divided. For every analyst proclaiming a sunny recovery, there is another warning of a false dawn.

To recap: after a hiatus of several months following the credit crunch last year, the property sector came back to life in February with unexpectedly healthy sales of new condominiums.

Even the stock market collapse in March didn't deter buyers of new homes, who picked up more than 1,000 units that month for the second time in a row - 10 times what was sold at the low point in October last year. The buying momentum has held steady since then, despite more doomsayers predicting anew each month that the numbers are unsustainable.

Interest in new homes has spilled over to resale homes in the secondary market - which clocked a 70 per cent increase in sales in the second quarter over the first - as well as the harder-hit luxury home segment, where sellers are starting to turn a profit again.

As confidence in the property market builds up, boom times seem to have returned to the showflats. At the recent launch of One Devonshire in Somerset, the two-bedders were so much in demand that buyers had to ballot for them.

Agents for the upcoming Ascentia Sky project in Redhill have begun to take orders - and cheques - even before the showflat opens in the coming weeks.

There is certainly no denying that the property market is faring much better than expected, given that in the first quarter of this year, the economy contracted a record 10.1 per cent and shed the most number of jobs since Sars in 2003.

But some industry veterans, such as Knight Frank managing director Danny Yeo, are reluctant to call the increased buying activity a true rally. Even though sales are up, prices generally are not.

Between April and June, even as buyers returned to the market, the price index for private homes dropped 6 per cent, according to estimates released by the Urban Redevelopment Authority on Wednesday. Prices have now fallen for four straight quarters and are about 25 per cent off their peak last year.

Experts say that demand for private homes is returning precisely because prices have nosedived. They plunged a precipitous 14.1 per cent in the first quarter, the biggest drop in history.

This is a far cry from 2007's property boom, when some developers raised prices for their projects multiple times in a single weekend.

Some consultants believe the price index is lagging and will show a slight increase when all the second-quarter sales are taken into account at the end of the month. Wednesday's estimates are mostly based on deals done in April and May.

But even if this happens, the index isn't expected to keep rising. Analysts say a sustained increase in the price index that develops into a full-blown rally by the end of the year is unlikely.

A more probable scenario is a plateau: prices and sales stabilising at their current levels for the next few months, with occasional moderate dips or increases, until there is more certainty about the economic outlook next year.

Would-be buyers hoping for another crash in the market are likely to be disappointed unless a major shock takes place, such as a delayed economic recovery, a stock market collapse, or the H1N1 virus turning more deadly, analysts say.

In fact, many dire predictions trumpeted by bears have failed to materialise. Fewer expatriates have left the country than expected. Unemployment is below the all-time high in 2003.

Home-owners and buyers are still able to afford their properties, especially as they have lowered their debt levels and increased their savings. The surprisingly low level of mortgagee sales so far this year - half of that during the Asian Financial Crisis - seems to bear this out.

Concern about oversupply of new homes crashing prices have abated in the light of the robust take-up of recent launches. Instead, low interest rates are encouraging buyers to take up mortgages.

The gravity-defying rise in HDB resale flat prices, which hit an all-time high in the second quarter, provides a firm floor for prices of mass market condos and helps support all the other price levels.

On the other hand, sellers who hope to hold out for a marked improvement in prices, could end up waiting a long time.

For one thing, the stock market resurgence appears to be tapering off, as sentiment gives way to the sobering fundamentals of an uncertain economic recovery, underscored by still-rising unemployment in the United States.

Anecdotally, buyers are also still price-sensitive, a further sign of the fragility of their confidence, although more seem willing to jump on the buying bandwagon for fear of rising prices in future.

Demand may also be limited. Most buyers now are owner-occupiers who were shut out of the 2007 market surge and are unleashing their pent-up demand. When this runs out, sellers and developers will be relying on investors and foreigners to pick up the slack, which may not happen as rentals are expected to continue falling with more homes being completed.

Then there is the deferred payment scheme. Properties sold via the scheme reach completion this year and next, and analysts fear some buyers will dump their units when full payments are due.

In the near term - say, six months - the market should be stable, given that supply and demand factors seem more or less balanced at this point.

But Singapore's sentiment-driven property market has seldom been rational and hardly predictable, as the last six months have shown.

So it ultimately comes down to which typical Singaporean home-buyer behaviour wins out: the panic of being left out of a property boom, or the fear of buying now and being left high and dry if there is a slump.

HPL To Pump $13m Into Concorde Hotel's Renovation

Source : The Business Times, July 6, 2009

HPL Hotels & Resorts, the hotel arm of Hotel Properties Ltd (HPL), is spending $13 million to renovate and refurbish its four-star Concorde Hotel Singapore.

The work has been taking place in phases to ensure business continuity and is expected to finish early next year, general manager Andrew Khoo told BT. Response to the overhaul has been good, he said. 'Regular customers who have stayed with us under Le Meridien have said very positive things. They like what they see.'

The hotel was previously managed under the Le Meridien brand. When the contract ended in September last year, HPL Hotels & Resorts took over and rebranded it Concorde Singapore.

Meanwhile, as the travel and tourism industries deal with the fallout from the H1N1 flu outbreak, the hotel has received emails asking whether it is safe to travel to Singapore, but there are few cancellations, Mr Khoo said. Most countries have reacted pro-actively to the outbreak, he pointed out. 'People are still travelling.'

But the hotel, like most, is feeling the impact of the economic downturn. Occupancy has dropped about 15 percentage points this year from an average of 70 per cent, and room rates have come down 27 per cent. Rates start around $198++.

Bookings also tend to be made with shorter lead-time, such as two or three days, versus two to three weeks previously, Mr Khoo said.

Still, events such as CommunicAsia and Water Week have helped bolster occupancy. The hotel is managing costs by negotiating terms with suppliers, rather than cutting jobs or wages. Retrenchment benefits no one, said Mr Khoo. 'It takes one year to train someone. It's cutting your nose off to spite your face.'

Concorde Singapore is HPL Hotels & Resorts' fourth Concorde hotel - the other three are in Malaysia. HPL Hotels & Resorts is looking to expand the brand in other markets, such as Thailand, Indonesia and India.

Prime Office Rents Fall 19% In Q2

Source : The Business Times, July 7, 2009

DTZ notes decline rate eased slightly after Q1's plunge

OFFICE rents in Raffles Place fell 19 per cent in the second quarter of this year, after sinking 25 per cent in Q1, according to a new report from DTZ.

Still falling: The average monthly gross rent for prime office space in Raffles Place slipped to $9.70 per sq ft per month in Q2 - 49per cent below the Q32008 peak

The average monthly gross rent for prime office space in Raffles Place slipped to $9.70 per sq ft per month (psf pm) in Q2. The figure has now fallen close to the level at end-2006 - and is 49 per cent below the Q3 2008 peak.

However, DTZ notes that the rate of decline eased slightly in Q2 2009, after a deep plunge in Q1.

Research from CB Richard Ellis (CBRE) shows the same trend. Prime office rents averaged $8.60 psf pm in Q2 - an 18.2 per cent quarter-on-quarter fall. This was a slight moderation from the 18.6 per cent drop in Q1.

'While office rents fell for the third consecutive quarter, the rate of decline showed signs of easing as sentiment improved and the economy stabilised,' CBRE said.

But DTZ says that office rents on the CBD fringe and in decentralised areas fell faster in Q2 than in Q1. The firm's data shows rents in Beach Road/North Bridge Road slid 20 per cent to $6.20 psf pm in Q2, after a 13 per cent fall in Q1.

Along the Alexandra belt, competition from converted state property and hi-tech industrial property also led to a bigger decline in office rents in Q2 than in Q1. Rents there fell 23 per cent to $5 psf pm, after dropping 13 per cent in Q1.

With CBD office rents falling, the rental gap between office space in the CBD and outside it has narrowed.

In Q2, office rents in Marina Centre were 12 per cent lower than those for prime offices in Raffles Place, compared with an 18 per cent gap during the peak in Q3 2008.

In the Harbourfront area, the gap closed even more - from 47 per cent in Q3 2008 to 35 per cent in Q2 2009. As the gap in rents between CBD and CBD fringe narrows, some companies driven to relocate outside the CBD during the boom years are likely to return, DTZ reckons.

Occupancies were hit further in Q2, although at a slower rate than in Q1. DTZ says the island-wide average office occupancy rate eased 0.9 of a percentage point to 92.8 per cent, lower than the 1.9 percentage point contraction in Q1. Average occupancy in Raffles Place fell 1.1 percentage points to 91.8 per cent in Q2, lower than the 2.7 per cent drop in Q1. Among the micro markets, offices in Orchard Road saw the biggest drop in occupancy. The rate slid 2.8 percentage points to 91.5 per cent as more shadow space became available there.

But CBRE and DTZ say leasing enquiries are starting to pick up. 'It is likely to be a busy H2 for the office leasing market,' said CBRE's executive director for office services Moray Armstrong.

'New lease transaction volumes will be higher, but the focus is likely to remain on lower-cost and better-value options. The best occupier deals may well emerge in the next six to 12 months before market recovery is at hand.'

But take-up is likely to remain in negative territory for the rest of 2009 and occupancies are expected to dip further, according to CBRE and DTZ. The office market is expected to stay soft until 2011, says Chua Chor Hoon, head of DTZ's Southeast Asia research.

'A large supply of space overhangs the office market over the next few years, which will delay the recovery of the sector even though the economy is expected to recover by 2010,' she said.

Industrial Sector Weakens Further

Source : The Business Times, July 7, 2009

DEMAND for private industrial space continued to shrink in the second quarter of this year, says property firm DTZ.

And private industrial rents - in decline since Q4 2008 - registered steeper falls in Q2 2009 than in the two preceding quarters.

Average monthly gross rent fell 6.8 per cent for first-storey private industrial space and 8.1 per cent for upper-storey space in Q2 this year. This was the sharpest contraction since Q3 2003, when rents tumbled 8.3 per cent and 11.1 per cent respectively for first and upper-storey space.

Compared with the peak in Q3 2008, average rents for first-storey and upper-storey private conventional industrial space have fallen 12.8 per cent and 17.1 per cent.

Hi-tech industrial properties were again hit harder than other types of industrial properties space in Q2.

Amid lower demand in the industrial and office markets, hi-tech industrial rents posted their biggest contraction since Q2 2003, falling 12.8 per cent in Q2 2009 to 24.4 per cent below the peak in Q3 2008. Hi-tech industrial properties include business park and science park space.

New private industrial space of 30.6 million sq ft is expected to be completed between Q2 2009 and 2013. According to Urban Redevelopment Authority statistics, 24.6 million sq ft - or 80 per cent of the 30.6 million sq ft of private industrial space in the pipeline - is already under construction, with most scheduled for completion by 2011.

'2009 will see substantial new supply of 16.9 million sq ft private industrial space, which is 46 per cent above average annual demand of 11.6 million sq ft per annum during the past five years,' said Chua Chor Hoon, DTZ's head of South-east Asia research. 'The outlook for the industrial market remains weak through 2009 to 2011 due to demand-supply imbalances and weakness in the office sector.'

The hi-tech segment is likely to be most affected, with 5.1 million sq ft of private business park space in the pipeline, on top of 8.6 million sq ft of existing stock, Ms Chua said.

NZ House Prices Rise Amid Call For Cheaper Loans

Source : The Business Times, July 7, 2009

(WELLINGTON) New Zealand house prices rose for the first time in six quarters, a sign the economy may be starting to recover from the worst recession in more than three decades.

Average prices gained 0.4 per cent in the three months ended June 30 from the preceding quarter when they fell 2.1 per cent, Quotable Value New Zealand Ltd, the government valuation agency, said in an e-mailed report.

The Reserve Bank yesterday said there is scope for home-loan interest rates to fall further. Reserve Bank governor Alan Bollard has cut the official cash rate 5.75 percentage points since July to a record-low 2.5 per cent to help kick-start demand. House prices may keep rising as lower borrowing costs stoke consumer confidence and encourage more people into the property market.

'Houses prices are pretty much at the bottom,' pointed out Nick Tuffley, chief economist at ASB Bank Ltd in Auckland. 'There is a lot more buying demand starting to pop up, and interest rates have a lot to do with it.'

The average variable home-loan interest rate was a 41-year low of 6.4 per cent in May, according to central bank figures. One-year loans are available from the nation's largest banks at fixed rates as low as 5.5 per cent.

'Interest rates are on the very stimulatory side,' said Mr Tuffley. 'The prospect of further cuts in rates probably looks fairly slim even if the Reserve Bank cuts the cash rate further. The Reserve Bank is no longer in the driver's seat.'

Parliament Committee Lenders have come under fire from business groups and politicians for failing to lower their home-loan rates by the same amount as the Reserve Bank.

'Banks should listen carefully to what the Reserve Bank is saying,' Prime Minister John Key said in Wellington yesterday. 'We would like to see lower interest rates because it is healthy for the economy.'

Last month, Parliament's finance and expenditure committee said banks should reduce their lending margins and 'take on a greater role in sharing the burden of the current recession'. New Zealand's four largest banks are units of Australian lenders. Last month, Australian Treasurer Wayne Swan said a decision by Commonwealth Bank of Australia to raise its variable mortgage rate was 'selfish' and hindered the government's efforts to support the economy.

The Reserve Bank of New Zealand yesterday published an analysis of lending trends and concluded that a large part of its rate cuts had been passed on to borrowers. It said funding costs for banks have increased as deposit rates rise and international borrowing became more expensive.

'The pricing of floating-rate mortgages appears unusually high over recent months and we believe there is some scope for further reduction in these rates without compromising the viability of this lending,' the central bank said.

Mr Key said the Reserve Bank was 'irked' that lending rates weren't reduced when it cut the official cash rate by half a percentage point in April, and that banks may have been widening their margins instead of passing benefits on.

New Zealand house prices began falling last year amid the global credit crunch and the onset of a domestic recession. House sales dropped to a record low in January and prices in March were 9.3 per cent less than a year earlier. -- Bloomberg

Office Rents Continue Slide

Source : The Straits Times, July 6, 2009

OFFICE rents continue to fall, weighed down by rising supply as demand weakens.

CBRE said monthly prime office rents fell about 18 per cent to $8.60 psf in the second quarter, after a 18.6 per cent quarter-on-quarter drop in the first quarter.

Raffles Place office rents are now close to the levels at the end of 2006 and are 49 per cent below the peak in the third quarter of 2008. -- ST PHOTO: FRANCIS ONG

Grade A office rents are down 17.5 per cent to $10.l5 psf a month. They also fell 18 per cent in the first quarter.

DTZ said Raffles Place office rents are now close to the levels at the end of 2006 and are 49 per cent below the peak in the third quarter of 2008.

Ms Cheng Siow Ying, DTZ's executive director (business space), noted that there has been an increase in the level of leasing enquiries as companies began to explore leasing options given that rental values had fallen substantially.

There is intense competition among new and existing developments and incentives such as longer rent-free periods, more rent holidays and fit-out contributions are increasingly being offered by landlords to lower the effective rents for tenant, she said.

However, in such cases, tenants are expected to commit to longer lease periods, she added.

Islandwide average office occupancy eased by 0.9 percentage point to 92.8 per cent. Offices in Orchard Road saw the largest fall in occupancy rate, which plunged by 2.8 percentage points to 91.5 per cent due partly to more shadow space being made available in the area.

About 406,000 sq ft of shadow space - space given up by occupiers before lease expiry through subletting, pre-termination, assignment or novation - were available for lease in the second quarter.

The quantum of shadow space will probably peak in the next six months, said CB Richard Ellis. Sub-lease space competes with primary vacant space from landlords and tends to have a dampening effect on rents as sub- lessors often offer space at a discount, it said.

There is no lack of supply in the office market, with 8.3 million sq ft of new space in the development pipeline between now and 2013, it said.

CBRE's executive director, office services, Mr Moray Armstrong said the second half of this year will likely be a busy period for the office leasing market.

However, while new lease transaction volumes will be higher, the focus is likely to remain on lower cost and better value options, he said.

'The best occupier deals may well emerge in the next six to twelve months before market recovery is at hand.'

In the industrial market, rents continue to fall, particularly for the high-tech space segment.

Resale Flats: 3 Groups Of Ready Buyers

Source : The Straits Times, July 04 2009

Young couples, families upsizing or downsizing and PRs prop up market.

HOME buyers rushed to the HDB resale market in the second quarter and sent sales up as much as 60 per cent over the first quarter, according to property agencies.

These buyers, ranging from young couples to permanent residents and families upsizing or downsizing their homes, have propped up the resale market amid the recession.


They have also contributed to the surprising turnaround in HDB resale flat prices. Flash estimates stated that they rose 1.2 per cent in the second quarter to hit a record high after dipping 0.8 per cent in the first quarter.

Industry observers point to the recent improved market sentiment and low mortgage rates as key factors luring buyers.

The economic downturn has also delivered sellers a reality check, meaning buyers no longer have to fork out high amounts of upfront cash, known as cash-over-valuation, to buy a resale flat.

While agencies differ over the level of sales in the second quarter, they all agree that activity has rocketed.

Data from the Housing Board's website captured by C&H Realty ahead of official figures due at the end of the month showed a 9 per cent rise in sales transactions for the second quarter compared to the first.

Agencies say the actual figure is much higher due to the large number of transactions done in the last month or so when sales activity picked up across the public and private markets. This would not have been registered by HDB in time.

Property agencies HSR Property Group, PropNex, ERA Asia Pacific and C&H Realty - which together account for almost the entire HDB market - told The Straits Times that sales transactions had surged by between 52 and 60 per cent in the April to June period compared with the preceding three months.

Surprisingly, larger flat types which fast lost popularity when the recession started came back into favour.

HDB data showed that five-room flats climbed 18 per cent, while C&H Realty saw transactions soar 75 per cent, with most done in the past month.

Executive flats enjoyed almost a 20 per cent rise in sales volume, said HDB data.

PropNex chief executive Mohamed Ismail said prices of bigger flats have come down since their peak. HDB valuations have also caught up, so the cash-over-valuation sum needed to buy a resale flat is very low or zero, he added.

Businessman Melvin Chua, 39, is one such home owner who felt that the time was ripe to upgrade.

He recently sold his four-room flat in Jalan Membina at $550,000 and last month, bought a five-roomer for about $638,000 in the same estate.

The same unit would have cost more than $700,000 last year, said Mr Chua, who is married with one son.

'Larger flats, like my new home, have been selling below valuation, so I felt it was a good deal,' he added.

But smaller flat types - the three- and four-roomers - still dominated by market share, thanks mainly to young couples, PRs and downgraders, say agency bosses.

All agencies showed that sales transactions were high for suburban, mature estates such as Woodlands, Jurong West and Tampines.

'This is due mainly to the fact that comparable HDB flats in these estates are generally more affordable compared to other central estates,' said C&H Realty managing director Albert Lu.

Agency bosses noted that the spike in sales has prompted agents to return to the business - a turnaround for an industry that suffered an exodus of staff last year when the recession set in.

The strength of the HDB resale market has spilled over to the private sector, where sellers of resale flats - the HDB upgraders - have been snapping up mass market condo units, say analysts.

But sustaining such a level of sales depends on the economy's performance over the rest of the year, said ERA Asia Pacific associate director Eugene Lim.

'The momentum will sustain, provided there are no unforeseen circumstances,' he said.

'For now, the uncertain outlook will continue to keep pressure downwards despite high demand, and deter sellers from jacking up asking prices if they are serious about selling.'