Thursday, August 20, 2009

Bids Pour In For Bukit Panjang Condo Site

Source : The Straits Times, August 20, 2009

THE fast-improving property market has prompted 13 developers to submit bids to buy a 99-year leasehold suburban land parcel in Bukit Panjang.

The top bid for the Chestnut Avenue condominium plot came in higher than expected at $143.68 million or $280 per sq ft (psf) of gross floor area. This was 132 per cent above the minimum acceptable bid of $120 psf of gross floor area.

The bid came from a joint venture between City Developments' Sunny Vista Developments and Hong Leong Group's Hong Realty. The 22,700 sq m of land can accommodate about 450 flats.

Some of the other top bids are: Sim Lian Land with a bid of $113 million and First Changi Development, a GuocoLand subsidiary, with a bid of $93.38 million.

Frasers Centrepoint put in the most conservative bid of $77 million or $151 psf of gross floor area - still within the range consultants had projected last month.

The 'impressive' number of bids reflects the renewed interest and the growing positive outlook among developers for mass-market residential projects, said CBRE Research director Leonard Tay.

This has been helped by the strong sales of suburban condominiums such as Meadows@Pierce in Upper Thomson and The Gale in Flora Road, experts said.

Still, the developers' bids indicate that they remain cautious. 'The pricing shows that the developers are realistic and not bidding at exceedingly high prices,' said property expert Nicholas Mak.

Based on the top bid, the estimated break-even price for the project should be about $550 to $580 psf, said Mr Tay. This means the eventual selling price might be about $650 psf to $700 psf.

Currently, resale prices of the nearby 99-year leasehold Maysprings range from $480 psf to $600 psf.

Prices at nearby 999-year leasehold and freehold projects such as The Linear, Hazel Park Condominium and Dairy Farm Estate range from $560 to $650 psf.

In a separate development, a group of investors has put up three landed housing sites for sale. Two are in District 15 while the third is in Lornie Road in District 11. These sites, zoned for two-storey bungalow or semi-detached houses, were purchased about two to three years ago when the market was booming.

'The property market growth is gathering pace and looking better these days. Prices have risen and there are not many sites around for sale,' said Mr Steven Ming, director for prestige homes at Savills Singapore, which is marketing the sites. The tender closes on Sept 17.

Global Recovery Has Started, Says IMF

Source : The Business Times, August 20, 2009

(WASHINGTON) The global economy is beginning to recover from the worst recession since World War II, one that has left 'deep scars' likely to affect consumers and businesses for years, said Olivier Blanchard, the chief economist of the International Monetary Fund (IMF).

Mr Blanchard: Notes that the crisis has left deep scars which will affect supply and demand for years to come

'The recovery has started,' Mr Blanchard said in a paper that the Washington-based lender released on Tuesday. 'The crisis has left deep scars, which will affect both supply and demand for many years to come.'

He said that the financial crisis had made Americans more conscious of 'tail risks' - events that are unlikely to occur but when they do, have devastating consequences.

That means that US consumers are unlikely to return to their free-spending ways, and both the US and its trading partners will have to adjust. Emerging Asian countries, especially China, must play a big role.

'From the point of view of the United States, a decrease in China's current account surplus would help increase demand and sustain the US recovery,' he said. 'That would result in more US imports which would help sustain world recovery.'

But in order for China to boost domestic demand, it will need to provide a stronger social safety net and increase household access to credit, which will encourage its consumers to save less and spend more.

'Both higher Chinese import demand and a higher (yuan) will increase US net exports,' he said.

The IMF, which has rescued economies from Pakistan to Iceland in the past year, is advising officials around the world to keep economic stimulus programmes in place no longer than necessary to chart a path to sustainable growth.

In his paper, Mr Blanchard says that the process requires a 'delicate rebalancing act'. Capital flows to emerging markets 'may not fully come back in the next few years,' he said. While most economies may expand for the next few quarters, 'growth will not be quite strong enough to reduce unemployment, which is not expected to crest until some time next year,' he said.

Mr Blanchard cautioned that rising government debt levels, particularly in advanced economies, mean that fiscal stimulus programmes cannot continue for 'very long' unless private consumption and investment replace public support for growth.

'All this means that we may not go back to the old growth path, that potential output may be lower than it was before the crisis,' he said in the paper. 'Sustaining the nascent recovery is likely to require delicate rebalancing acts, both within and across countries.'

A sustained global recovery may hinge on the ability of nations in Asia to boost domestic demand to levels that help US exports, he said.

'The United States was not only at the origin of the crisis, it is central to any world recovery,' he said.

An inability or unwillingness by China, Japan and other Asian economic powers to reduce their current account surpluses may lead to a slower US recovery and political pressure to pump in more fiscal stimulus and borrow more, eventually raising questions about US inability to trim debt.

'Fiscal deficits might be maintained for too long, leading to issues of debt sustainability, worries about US government bonds and the dollar, and causing large capital flows from the United States,' Mr Blanchard said. 'Dollar depreciation may take place, but in a disorderly fashion, leading to another episode of instability and high uncertainty, which could itself derail the recovery.'

In the short term, most countries will see positive economic growth for the next few quarters, Mr Blanchard said, although it will be probably too tepid to reduce unemployment, which is not expected to crest until some time next year. -- Bloomberg, Reuters

Mass-Market Site Draws Strong Developer Interest

Source : The Business Times, August 20, 2009

Hong Leong puts in top bid of $280 psf ppr for the plot in Pasir Panjang

An impressive 13 bids were received for a residential site at Chestnut Avenue in Bukit Panjang at the close of the tender yesterday, reflecting the renewed interest and the growing positive outlook among developers for mass market residential projects.

And the top bid of $143.7 million - or $280 per square foot per plot ratio (psf ppr) - put in by two companies in the Hong Leong Group stable was also much higher than expected by analysts, who had predicted a top bid of $200 psf ppr just a month ago.

Analysts said that developers are looking to restock their landbanks after selling a large number of homes - mostly in the mass market - over the past few months.

'The level of interest shown by the bidders of this site at Chestnut Avenue indicate a growing appetite for mass market projects, especially so with suburban condominiums selling well in the present market,' said Leonard Tay, director of CBRE Research.

'With developers' landbank of suburban sites running low, more of the suburban land parcels on the government land sales reserve list are likely to be triggered in the remainder of the year.'

Colliers International's director for research and consultancy Tay Huey Ying agreed. While most developers still have fairly large high-end and luxury landbanks (as sales in these segments have been slow), their mass market landbanks have diminished greatly since the start of the year, Ms Tay said. And since mass market sites are hard to come by in the private sector, the government's land sales programme is expected to be popular.

Among the bidders were large property groups such as Far East Organization, Sim Lian Land, Ho Bee Investments, Allgreen Properties and Frasers Centrepoint. Far East Organization made the second highest bid of $129.1 million, or $252 psf ppr.

The 99-year leasehold site in the state's reserve list was triggered for launch last month, marking the first time in a year that the government has offered a residential site for tender. Then, the applicant who triggered the tender agreed to bid at least $62 million for the site, which works out to $121 psf ppr.

Under the reserve list system, the state offers a site for sale only if there is an application by a developer undertaking to bid at a minimum price acceptable to the government.

Property consultants said then that the successful bid for the site could come in anywhere between $136 and $200 psf ppr.

The top bid by Hong Leong Group is some 132 per cent above the minimum bid price.

The estimated breakeven price for a residential project based on a land price of $280 psf ppr should be around $550-580 psf, said CBRE's Mr Tay. So the eventual selling price might be around $650 psf to $700 psf when the project is ready to launch, he added.

DC Rates Poised To Change Amid Churn

Source : The Business Times, August 20, 2009

Commercial DC rates may dip while rates for landed homes may go up in some areas

With revisions to development charges (DC) due on Sept 1, some property pundits say that the Chief Valuer (CV) may have a challenge on her hands, given the shift in the direction of the residential property market.

Balancing act: In revising the DC, how much weight should be placed on the current market sentiment?

'Chief valuer employs historical data to revise DC rates that will be applied over the next six months. But these historical transactions may be too far off from the market conditions in the next half year,' says JLL's head of SE Asia research Chua Yang Liang. 'In short, the CV has the difficult task of balancing past decline and future growth. The key question is: How much weight should she place on the current market sentiment?'

Agreeing, Colliers International director Tay Huey Ying says: 'The main challenge facing the CV in assessing DC rates this round would be to assess accurately the conditions of the various sectors of the property market for the next six months.' And while the economic outlook remains clouded, the residential market is showing signs of recovery.

DC rates, payable for enhancing or intensifying the use of some sites, are tracked in property circles as they reflect land values. The rates - revised on March 1 and Sept 1 every year - are specified according to use groups across 118 geographical sectors. They are also significant because they are an indication of government's reading of land values.

Most market watchers feel that commercial DC rates will ease as office market fundamentals are still weak. Credo Real Estate managing director Karamjit Singh reckons that commercial DC rates in the CBD may decline about 10-15 per cent.

CB Richard Ellis executive director Li Hiaw Ho is predicting a marginal decline while JLL's Dr Chua expects a reduction of around 10 per cent mainly in the CBD core areas where prime office capital values have corrected some 38 per cent from the peak in Q2 2008 - while DC rates have fallen much less.

Colliers's Ms Tay expects a drop of up to 5 per cent in the average commercial DC rate.

Ms Tay suggests industrial DC rates will stay largely unchanged despite the bullish bids received for a site in Kaki Bukit at a recent state tender, as the manufacturing sector outlook remains uncertain.

CBRE predicts selective increases in rates for landed residential use in prime areas, citing a surge in Good Class Bungalow deals in Q2. This may marginally push up the overall average DC rate for this use group.

But the rates for non-landed residential use could remain largely unchanged until the economic condition becomes clearer, says Colliers' Ms Tay.

JLL's Dr Chua suggests a 0 to -10 per cent change in non-landed residential DC rates, with the maximum cut mainly in Districts 1 to 4 (including the financial district and Sentosa). There's room for further DC cuts as median prices for transactions in completed projects in these locations have fallen an estimated 40 per cent from the Q4 2007 peak to Q4 2008, while DC rates fell relatively less.

When the collective sales market was active, non-landed residential DC rates were keenly watched as some sites had a considerable DC component payable to the state to build a bigger project on the site. Things are different now as most en bloc sale projects are in their early stages. The next DC revision will be more significant to en bloc sellers as they approach their marketing phase, says Credo's Mr Singh.

Another discussion topic on DC rates is whether the Ministry of National Development (MND) will revert to the pre-July 2007 DC calculation formula which creams off 50 per cent of the enhancement in land value instead of 70 per cent currently.

'We feel MND should consider reverting back to 50 per cent. We believe the 50 per cent formula is principally equitable and had worked well for 22 years before 2007. Under this arrangement, the state and developers co-share the upside when a property's potential is maximised,' says Mr Singh.

However, others are not holding their breath for MND to make the change just yet. 'With the revision enforced only in July 2007 as well as recent improved sentiment in the real estate market, we do not expect any major changes to the DC formula,' says Dr Chua.

Agreeing, Colliers' Ms Tay says: 'Market conditions for assessing DC rates were likely to have been at their worst for the March 2009 review exercise. Yet the government did not revert to the previous DC formula.

'In view of the fact that some segments of the property market are showing nascent signs of recovery, it will be even more unlikely government will see it necessary now to revert to the previous DC formula,' she said.

Seletar Site Up For Sale

Source : The Straits Times, Aug 20, 2009

A COMMERCIAL and residential site along Yio Cho Kang Road and Seletar Road is up for sale by public tender, the Urban Redevelopment Authority (URA) said on Thursday.

Located within the established residential area at Seletar Hills and near the future Seletar Aerospace Park, commercial amenities such as shops and food and beverage outlets can be built within the proposed development.

The parcel has a site area of 2.1 ha and is designated for a mixed commercial and residential development.

URA said it had received an application from a developer to put up the land parcel for tender. The developer has committed to bid at least $40.5 million for it.

URA said selection of the successful tenderer will be based on the tendered land price only. Any tender below the minimum bid price will not be accepted.

IR Fills 75% Retail Space

Source : The Straits Times, Aug 20, 2009

MARINA Bay Sands said it had secured tenants for three-quarters of its retail space, including French luxury brand Chanel, which will open its largest boutique in Singapore.

The integrated resort is expected to have about 300 stores for the well-heeled shopper in more than 800,000 sq ft of retail and restaurant space.

But only half of the retail space will open with the resort early next year along with the casino, 1,000 hotel rooms and most of the convention centre.

Marina Bay Sands said it is confident of its success as a 'compelling shopping destination'.

'We have enjoyed enthusiastic responses from retail tenants from all over the world,' said Mr David Sylvester, vice-president of Asia retail at parent company Las Vegas Sands.

Chanel is the first tenant to be announced. More names will be revealed at a later stage, said the resort's spokesman.

The Chanel boutique will be the third store in Singapore and its largest.

At 7,600 sq ft, the two-level boutique will be more than double the size of its first flagship outlet opened here in 1990 at Ngee Ann City. In March, it opened a second outlet specialising in watch and jewellery, also at Ngee Ann City.

Chanel said it expects Asia to be a growing market for upscale brands. The new outlet will be designed by New York-based architect Peter Marino, who is behind Chanel's most notable boutiques.

One of them is the 10-storey Chanel building in Ginza, Tokyo, built in 2005. It features a shimmering facade made of liquid crystal glass, woven stainless steel, and more than 700,000 LED lights.

Cash Upfront For HDB Resale Flats Doubles In A Month

Source : The Straits Times, August 20 2009

Private property exuberance spills into public housing, with units selling $10k over valuation.

THE amount of cash needed upfront to buy an HDB flat resale roughly doubled last month as the exuberant sentiment in the private homes market spilled over into public housing.

Three property agencies told The Straits Times that the median cash-over-valuation, or COV, has shot up across all flat types and has gone above $10,000 for some units.


In two of the more startling examples, a five-room flat at Depot Road sold for $70,000 above its $490,000 valuation, while an executive flat in Pasir Ris sold for $35,000 above its COV of $550,000, according to figures from PropNex and the HSR Property Group.

COV is cash that buyers pay to a seller over and above a flat's market valuation. It cannot be covered by a mortgage or CPF money, and so serves as an indicator of flat affordability.

What is surprising is the speed at which it doubled in a month, said Mr Colin Tan, Chesterton Suntec International's research and consultancy director.

Figures from the Housing Board (HDB) for the April to June quarter showed that median COV was zero for five-room and executive flats.

But data from PropNex, ERA Asia Pacific and C&H Realty for last month showed that this now ranged from $5,000 to $13,000.

The three agencies have a share of about 70 per cent of the HDB resale market between them.

There was a similar surge for three- and four-room flat types: HDB data put median COV at $5,000 in the second quarter, but the agencies said it rose to the region of $10,000 to $15,000 last month.

Based on ERA's sales, the median COV for three-room units rose from $6,000 in the second quarter to $14,000 last month. The median COV is a mid-point: Half the units were sold for a COV above that value, and half below.

Industry observers say that the COV rise was inevitable given that the optimism in the private market was bound to spread to HDB flats.

HDB flat prices have staged a surprising comeback amid the recession, reversing a first-quarter dip of 0.8 per cent to rise 1.4 per cent in the second quarter and reach a historical high.

Analysts now predict further price increases for resale flats for the third quarter on the back of climbing COVs - as long as buying momentum is sustained.

PropNex chief executive Mohamed Ismail said high demand for resale flats is supporting surging COVs, as supply remains tight.

A cascading effect in the market is driving buyers to more affordable sectors.

Chesterton's Mr Tan said some buyers who are being priced out of the rebounding private market are turning to HDB resale flats.

Private home prices have started to climb, buoyed by high buying activity that saw a stunning 2,767 units sold last month.

This, in turn, has resulted in first-time HDB buyers, hit by soaring COVs, being forced out of the resale market and into new HDB flats, said ERA associate director Eugene Lim.

This is already evident: The HDB was flooded by 5,392 applications for 769 flats at the recent launch of Punggol Residences. Applications closed last week.

That is a subscription rate of seven times in a market where a typical rate is three or four times.

New HDB projects, which take three years to build, have not seen such numbers since the 2007 property boom.

However, C&H Realty managing director Albert Lu observed that most of the sales are still done at reasonable COV levels of around $10,000.

'There are some unrealistic sellers asking for high COVs as in the last boom, but buyers can choose not to bite,' he said.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that mass market private properties have a strong link to HDB resale flats, and COVs will stop rising only when mass market buying interest dies out.

Banking executive Goh Hui Min, 25, is one HDB buyer who is glad she bought her five-room flat in Telok Blangah for $590,000 about a month ago before the latest COV rises.

'I paid $35,000 below the flat's valuation, which, given the current market, is quite a fabulous deal,' she said.

Property Transactions For Districts 1 To 16 With Contract Dates Between July 29th - Aug 4th, 2009

South California July Home Prices Fall

Source : The Business Times, August 20, 2009

(SAN FRANCISCO) Southern California house and condominium prices fell 23 per cent last month from a year earlier as foreclosures dominated sales, MDA DataQuick said.

The median price dropped to US$268,000 from US$348,000 a year earlier, the San Diego-based research company said on Tuesday in a statement. The number of homes sold increased almost 19 per cent from a year earlier to 24,104 for Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.

'There's still quite a bit of distress out there,' John Walsh, Dataquick's president, said in a statement. 'Even if we are at or near bottom, history suggests we could bounce along that bottom for quite a while.'

Foreclosures accounted for 43 per cent of sales, down from 45 per cent in June and from a peak of 57 per cent in February, MDA DataQuick said.

Foreclosures as a proportion of all sales hit the lowest since June 2008. Homes priced at US$500,000 and above were 20 per cent of transactions, compared with 15 per cent in March.

The July median price rose one per cent from June, the third consecutive monthly increase, according to MDA DataQuick. That was due in part to a larger share of home purchases financed with loans of more than US$417,000. About 15 per cent of transactions involved such loans, the highest in 11 months.

Values are likely to fall more in expensive coastal areas as employers cut jobs in the recession and homeowners reduce asking prices, said MDA Dataquick analyst Andrew LePage.

'Sellers are getting more realistic,' Mr LePage said in an interview. 'It looks like prices are coming down.'

Investors and absentee buyers, driven by discounts on foreclosed properties, bought 19 per cent of homes in the six-county region last month, up from 16 per cent a year earlier and more than the monthly average of 15 per cent since 2000, MDA DataQuick said.

The company defines absentee buyers as those whose property-tax bills are sent to a different address.

Purchases financed with loans backed by the Federal Housing Administration, often used by first-time buyers, accounted for 37 per cent of July home sales, up from 20 per cent a year earlier, MDA DataQuick said.

Prices fell in all six counties, led by a 39 per cent drop in San Bernardino to a median of US$140,000. The median fell 29 per cent to US$185,000 in Riverside; 20 per cent to US$321,000 in Los Angeles; 12 per cent to US$320,000 in San Diego; 11 per cent to US$375,000 in Ventura; and 9 per cent to US$420,000 in Orange.

The July median was 47 per cent below the market peak of US$505,000 in the spring and summer of 2007, MDA DataQuick said.

Sales increased in five counties, led by San Bernardino's 41 per cent gain. Sales rose 23 per cent in Los Angeles, 14 per cent in Riverside, 12 per cent in Orange and 11 per cent in San Diego. Sales fell 4 per cent in Ventura.

MDA Dataquick is a unit of Richmond, British Columbia-based MacDonald, Dettwiler & Associates Ltd, and compiles data from county property records to sell to public agencies, lenders and title companies. -- Bloomberg

Biggest Drop In Aussie Property In 18 Yrs

Source : The Business Times, August 20, 2009

(SYDNEY) Capital values in the Australian property market plumbed 18-year lows in the year to end-June 2009, as increasing numbers of fund managers bit the bullet and marked down assets, property research firm IPD said.

The IPD and the Australian Property Council index showed capital values for all property sectors fell 13.3 per cent in the period.

This was the largest fall in asset values since the trough of the property crash in 1991, property research firm IPD said.

'There is a clear move by the industry towards stronger governance and reporting, with many more organisations now valuing all of their assets each quarter,' Adrian Harrington, non-executive chairman of IPD Australia's Board, said in a statement on Tuesday.

About 80 per cent of the 1,100 assets in the IPD database were revalued in June, up from about 60 per cent in June 2007 and June 2008. - Reuters

Over 75% Of Shops At Marina Bay Sands Let

Source : The Business Times, August 20, 2009

Chanel - the first tenant announced - will open two-floor, 7,600-sq-ft boutique

MORE than three quarters of the shops at the Marina Bay Sands (MBS) integrated resort have been let, the resort's management said yesterday.

Large-scale retail: The Marina Bay Sands integrated resort has about 300 shops and 800,000-plus square feet of retail and restaurant space. Its tenants will include international designer brands and emerging labels

The US$4.5 billion resort, set to open next year, has about 300 shops and 800,000-plus square feet of retail and restaurant space. About 50 per cent of retail space will be up and running when the first phase of the project opens in early 2010, and 80 per cent of the retail space that will be open in this phase has already been let, MBS said yesterday.

It also said French fashion house Chanel will open a 7,600-sq-ft boutique in the Marina Bay Sands Shoppes - the first tenant announced.

'We have secured commercial terms for over 75 per cent of Marina Bay Sands Shoppes,' said David Sylvester, vice-president of retail for Asia at US-based Las Vegas Sands, which is developing the resort. 'We have enjoyed enthusiastic responses from retail tenants all over the world. Part of our attraction is our prime location - Marina Bay Sands Shoppes will bring large-scale retail to Singapore's central business district for the first time.'

Tenants will include a mix of international designer brands and emerging labels, Mr Sylvester said.

Chanel is excited to be part of the Marina Bay Sands concept, said Vincent Shaw, president of Chanel Asia-Pacific: 'It is a great opportunity to join the ultimate house of luxury with a truly innovative and creative retail environment. Singapore has a young, progressive and energetic retail scene.'

The concept boutique, which will be spread over two floors, will be designed by New York-based architect Peter Marino, the man behind the black-and-white signature design of Chanel's boutiques worldwide.

The MBS boutique will showcase Chanel's ready-to-wear women's clothing and footwear, and accessories such as bags, eyewear, costume jewellery and fragrance and beauty products.

New Home Construction Down 1% In July

Source : The Business Times, August 19, 2009


(WASHINGTON) Construction of new US homes dipped slightly last month, missing expectations, in a sign that the building industry's recovery from the housing bust is likely to be bumpy and gradual.

The Commerce Department said yesterday that construction started on homes and apartments fell one per cent last month to a seasonally adjusted annual rate of 581,000 units, from an upwardly revised rate of 587,000 in June. Economists polled by Thomson Reuters expected a pace of 600,000 units.

Builders slammed the brakes on construction after the housing bubble burst, and in April, housing starts plunged to the lowest point in a half-century. Then construction began a recovery, rising to the highest level in seven months in June before slipping again last month.

But the industry is still a long way from a return to normal. Last month's housing starts were still nearly 38 per cent below last year's levels.

The decline in construction was led by a drop of more than 13 per cent in multi-family properties. Construction of single-family homes rose one per cent last month.

Applications for building permits, an indicator of future activity, fell 1.8 per cent to an annual rate of 560,000 units.

Economists expected an annual rate of 580,000 units.

The industry is seeing increased demand from consumers who want to take advantage of a new federal tax credit for first-time homebuyers. It covers 10 per cent of a home price up to US$8,000. It is set to expire at the end of November.

While numerous signs have emerged that the US housing market has stabilised after the worst housing recession since the Great Depression, there are several threats to any recovery.

The unemployment rate, now 9.4 per cent, is expected to surpass 10 per cent, leaving even more homeowners unable to pay their mortgages.

Mortgage rates are still at attractive levels, but they could rise, making buying a home less affordable.

Nevertheless, builders have been growing more confident. The National Association of Home Builders said on Monday that its housing market index rose to the highest point in more than a year in August. The trade association's index rose one point to 18, a level not seen since June 2008.

Meanwhile, wholesale prices dropped sharply last month, and over the past 12 months fell by the largest amount in more than six decades of record-keeping.

The Labor Department said yesterday that wholesale prices dropped 0.9 per cent last month. That's triple the decline economists had expected and was driven by big decreases in both energy and food costs. Over the past 12 months, the prices of goods before they reach store shelves fell 6.8 per cent. - AP