Interest Absorption Scheme Gains Popularity But Not All Buyers Satisfied

Source : Channel NewsAsia, 03 March 2009

Private property developers are offering schemes to help Singapore’s homebuyers amid the current economic recession.

One of the schemes is the Interest Absorption Scheme (IAS). It sees developers paying the interest on home loans instead of buyers, until the project receives its Temporary Occupation Permit (TOP).

It is similar to the Deferred Payment Scheme which the Singapore government scrapped last year.

The IAS has gained popularity as it helps buyers manage their cashflow and can even result in cost savings. But some purchasers say they are surprised by an indemnity clause included in the scheme.

One homebuyer, who chose to remain anonymous, is worried about the consequences should developers fail to pay the interest.

He said: "It says that if the developer does not pay the interest, we will have to pay the bank. And if the developer defaults on paying the interest, we will have our credit standing affected. And we have to bear all indemnity losses, damages to the bank, which is ridiculous!

"We already took a bank loan. And in the bank loan's terms and conditions, there is an indemnity (clause) already. So why is there a need to sign another form which basically relieves the developer from paying interest?"

But experts say the risks are low.

CEO of PropNex Realty, Mohamed Ismail, said: "The current practice is the bank charges interest to the purchaser's lawyer, and the purchaser's lawyer invoices the developer to pay for it...

"The IAS amount is so negligible in the overall cost of the project and I don't think any reputable developer is going to not oblige the conditions. (This will) have a greater impact on their future launches."

Most developers charge a three per cent premium for the scheme, although some have chosen to waive this, which means cost savings for buyers.

PropNex's CEO said: "If a developer has only one price list... I will strongly recommend you seriously consider IAS, because there will be indirectly some cost savings in the interest until TOP. But before that, you may also want to check with the developer - are there any kinds of special discounts or anything if you're not taking IAS."

He added that if the developer has already factored the IAS into the pricing, then it can work out to be a good deal for buyers. - CNA/yt

Developers Get ‘Kiasu’

Source : TODAY, Tuesday, March 3, 2009

Some want original buyers to indemnify them from sub-sale problems; Controller of Housing says such a clause is wrong

SOME developers are getting so “kiasu” (afraid to lose out) that they are getting the original buyers of homes to indemnify them should a sub-purchaser fail to pay. However, the Controller of Housing has told at least one developer, Keppel Land, that this is wrong.

The issue was raised when the buyer of an apartment at Park Infinia at Wee Nam Road, just off Keng Lee Road, tried to sell the unit bought from KepLand. The developer had wanted the original buyer to not only be liable for breaches by the sub-purchaser, but also to ensure that property tax and maintenance bills are paid. Asked to sign such a form, the original buyer asked lawyers to look into its enforceability. The lawyers then wrote to the Housing Controller for advice.

In response to the law firm, the Controller of Housing said in a letter seen by Today: “We are of the view that requiring your clients to sign a Letter of Authority with the indemnity clause stated above is contrary to the intention of rule 16 of the Housing Developers Rules, which requires a developer to enter into a fresh S&P Agreement (Sale and Purchase) with the sub-purchasers on the same terms and obligations as the original purchasers. This will place the sub-purchasers in a direct contractual relationship with the developer and releases the original purchasers from their obligations under the original S&P Agreement.”

The Controller added: “We have therefore written to the developer to request that the indemnity clause be deleted from the Letter of Authority which your clients have been asked to sign and complete the sub-sale expeditiously.”

A KepLand spokesman said the matter had since been resolved between the company and the purchaser, and the offending clause taken out of the S&P agreement.

A lawyer-friend of the purchaser said: “The clause should never have been included in the first place. How can any purchaser keep tabs on the financial position of a sub-purchaser down the road?”

Sources said this was not first time that KepLand had asked original purchasers to sign the indemnity form. It also appears that other developers have asked their purchasers to sign similar forms or are keen to follow KepLand’s example.

“In the current climate where scores of purchasers are said to be defaulting on their mortgage payments, it’s not hard to see why developers have to resort to such measures to protect their own interests,” said a prominent developer.

Against a backdrop of rising business failures and unemployment, property industry observers think mortgage defaults could increase this year. As a result, banks have become stricter on their mortgage financing, especially for those buying second and third properties.

全球房市去年底加速下滑

Source : 《联合早报》March 4, 2009

（新加坡讯）环球房地产指南调查显示，全球房地产市场去年年底加速下滑。

据该公司新闻稿，环球房地产指南调查显示，去年是房地产市场暗淡的一年。

还在加速下滑

从全球范围来看，房屋价格下滑的情况还在加速。

2008年与2007年比较，房屋价格加速下跌。只有德国和瑞士价格加速上涨，有28个国家房地产市场恶化。其中，新加坡房屋价格去年第四季度较上一季度下跌6％。2008年新加坡私人住宅价格下跌9％，2007年则是上升26％。

在经过通货膨胀调整后，2008年，32个国家中，只有8个国家的房屋价格上升，20个国家房屋价格下跌。

与此相反，在2007年，房地产市场价格下跌的情况刚刚开始，只有6个国家房屋价格下跌，24个国家价格上升（数据经过通货膨胀调整）。

2008年，房屋价格下跌的情况非常严重。房屋价格下跌的国家，幅度均超过10％。

去年第四季度与第三季度比较，房屋价格加速下跌，显示情况恶化。

第四季度，9个国家价格下跌5％或以上，3个国家和地区价格下跌10％以上，其中拉脱维亚里加下跌15％，乌克兰基辅下跌13％，香港下跌15％。其他第四季度价格下跌5％或以上的国家包括阿联酋（8％）、立陶宛（7％）、冰岛（7％）、新加坡（6％）、保加利亚（5％）和英国（5％）（除了阿联酋之外，所有数据经过通货膨胀调整）。

该公司指出，亚洲房地产市场中，2008年新加坡私人住宅价格下跌9％，2007年则是上升26％。香港房屋价格2008年下跌6％，第四季度下跌14％。菲律宾马尼拉马卡蒂区三房式公寓价格去年下跌2％。

S'pore Office Rents Fall Sharpest in Asia

Source : The Business Times, March 3, 2009

Landlords here more defensive, tenant retention given priority: CBRE report

Office rents for Grade A/Prime space in Singapore fell a steep 14 per cent in Q408 on a year-on-year (yoy) basis, the sharpest fall in Asia.

In Tokyo, office rents fell 13.4 per cent yoy while in Hong Kong (citywide), rents fell 13.2 per cent yoy.

WORST QUARTER: According to CBRE, the fourth quarter saw prime office rents suffer the most severe quarterly correction since records began

In Hanoi, rents rose the fastest at 25.6 per cent yoy while in Kuala Lumpur, rents increased by 19.3 per cent yoy. In Seoul (Yeouido), rents rose by 9.5 per cent yoy.

In its report Asia Marketview (Q4 2008), CBRE Research said that Singapore landlords adopted a more 'defensive position' and 'tenant retention was given greater priority'.

'Cost-cutting measures by occupiers and the first signs of sub-letting initiatives on excess space taken up during the expansion fervour in the past year were evidenced,' it added.

According to CBRE, the fourth quarter saw prime office rents suffer the most severe quarterly correction since records began. At the end of the review period, Grade A rents fell to an average of $15.00 per square foot (psf) per month, down from $17.15 psf per month a year ago.

Grade A vacancy in the fourth quarter was 0.9 per cent compared to 0.2 per cent a year ago.

CBRE believed that tenants here will decide to stay put rather than relocate as landlords look to retain tenants, and corporates come under pressure to further consolidate and reduce costs over the next 12 to 18 months.

But it also reckoned that there are still many tenants with renewals and rent reviews falling in 2009 under leases committed three to four years ago who could still be faced with rents that could potentially increase by some 75-150 per cent.

Generally, however, rents will continue to fall throughout 2009 with the biggest threat to the office market likely to be job attrition, not only within the key financial services sector, said CBRE, but also from supporting business services.

In Tokyo and Hong Kong, falling rents was partially attributed to new office space supply.

The fourth quarter saw Grade A vacancy increase to 3.5 per cent quarter-on-quarter (qoq) in Tokyo. CBRE said that a major factor was the completion of a Grade A building in Marunouchi, which added 533,700 sq ft of net lettable area to the market.

Similarly, CBRE included two more sub-markets - Kowloon East and Island East - in its fourth quarter data for Hong Kong (citywide) Grade A office rents with Grade A office vacancy rising 65 basis points (bps) qoq to 8.03 per cent. In Kowloon East alone, vacancy rate was more than 30 per cent, putting pressure on landlords to offer flexible terms to potential tenants.

Across Asia during the fourth quarter, vacancy increased in 14 of the 17 markets tracked by CBRE. Overall vacancy across the region rose by 334 bps between January and December 2008.

UK Under Pressure To Shore Up Housing, Home Owners

Source : The Business Times, March 3, 2009

Mortgage arrears, repossessions seen rising in 2009 as help schemes kick in

THE British authorities are under growing pressure to support the property market and offer respite to distressed home owners, as repossessions - already at a 12-year high - are expected to hit 200 a day within the year.

The Council of Mortgage Lenders (CML) says that the number of repossessions will exceed 75,000 by year-end, as rising unemployment puts further pressure on borrowers already struggling with mortgage repayments.

Last year, the number of homes repossessed by banks increased 54 per cent to 40,000, CML said. This was 11 per cent less than it expected, as mortgage lenders are taking steps to ensure repossessions are a last resort.

But CML director-general Michael Coogan said: 'There seems to be a sharp rise in cases where borrowers are handing back their keys or abandoning their properties. We strongly urge them to contact their lender and work with them before taking this step.'

Debt arrears among mortgage holders are rising steadily. By the end of last year, 1.57 per cent of all mortgages in Britain had arrears of 2.5 per cent or more on the outstanding balance.

Almost 220,000 mortgages were in arrears for three months or more by year-end, up from 166,000 at the end of the third quarter.

Particular areas, such as the Midlands, are seeing a sharp rise in repossessions. Housing charity Shelter says that 24 per cent more homes in this region were threatened with repossession last year than in 2007.

The charity's chief executive Adam Sampson dubbed CML's prediction of 75,000 homes being affected by repossessions in 2009 as 'all too realistic'.

'With CML also estimating that half a million people in Britain will fall into mortgage arrears this year, there is no doubt that many home owners will plunge further into debt as they turn to credit cards and loans in an effort to keep the bailiffs from the door,' he said.

The government has adopted several measures to ease the burden of home owners, such as a mortgage-rescue scheme that enables housing associations to buy a property and rent it back to the former owner.

The Mortgage Support Scheme, to start next month, will enable home owners to hang on to their homes by taking a repayment holiday.

But policy-makers have faced criticism that not enough is being done to stem the growth in repossessions and stimulate the housing sector.

A group of Labour Party members, for example, is urging the government to boost the property market by imposing a freeze on stamp duty for homes worth less than £1 million (S$2.2 million) for the rest of this year, and offering a tax credit to home buyers.

Home prices have dropped as much as 30 per cent in some parts of the country. Transactions are thin on the ground, despite the Bank of England cutting official interest rates to one per cent in the past few months.