Singapore Hotel Market 'May Firm Up In 2010'

Source : The Straits Times, May 25, 2009

IRs could boost room demand across the board, says consultancy

HOTELS are feeling the pinch of recession, with occupancy down and room rates falling in the wake of plunging visitor arrivals.

The upcoming Marina Bay Sands IR (right, background), which is set to open next year along with Resorts World at Sentosa, could increase visitor arrivals here and generate significant demand for hotel rooms, says Horwath HTL managing director Robert Hecker.-- ST PHOTO: ALPHONSUS CHERN

But the good news is that the market could stabilise as soon as next year, according to hotel consultancy Horwath HTL. It bases its optimism on the two integrated resorts (IRs) drawing plenty of visitors when they open in Marina Bay and Sentosa next year.

In the first three months of this year, occupancy fell 12per cent to 67per cent for mostly three- to five-star hotels. The crunch has already prompted a 16 per cent decline in average daily rates (ADRs) to $260.

'We are projecting a further decline for full-year 2009, but with the strengthening of the (Singdollar), the US dollar ADR remains approximately in the same range,' said Horwath HTL managing director Robert Hecker.

Hotel demand started to slip early last year, but hotels were driving their ADR growth even though occupancies were falling, he added.

Mr Hecker said the ADR was positive until last September's Formula One race, and then the situation 'caught up with Singapore. We'll see a few more months of decline'.

This decline is unavoidable, given the downturn, and the industry has basically written off this year, he added.

'It's all about 2010 and trying not to lose anything in 2009,' Mr Hecker told the Hotel Investment Conference Asia Pacific here last week.

Singapore had around 39,000 hotel rooms last year and will add 1,100 more rooms in the three- to five-star range this year and a further 20per cent next year, thanks mainly to the IRs, he said.

But the huge additional supply coming onstream concerns some analysts, given the falling tourism numbers.

Visitor arrivals recorded a 10th consecutive month of decline in March. About 10.1million visitors arrived last year, short of the 10.8million target.

Before the global downturn hit home, Singapore was aiming to attract 17million visitors by 2015.

Singapore Tourism Board (STB) data for March showed that the average occupancy rate for all hotels here fell 13percentage points to 74per cent, while the average room rate stood at $196, down 18.5per cent from the figure a year ago. Revenue per available room fell nearly 31per cent to $145in March.

But Mr Hecker told the conference that the market will hold next year.

'We believe the opening of the two IRs next year will generate significant amounts of induced demand to help absorb their new rooms and prop up the overall market,' he said. 'There will be visitors at all price points such that demand will spread across the market.'

Additional business in the Mice - meetings, incentive travel, conventions and exhibitions - industry will also be significant, he added.

Another conference speaker, Park Hotel Group director Allen Law, who is keen to invest further in Singapore, said a lot will depend on how the IRs release their hotel rooms. It will have to be in phases so as not to flood the market, he told The Straits Times.

Horwath believes occupancy this year and the next will average 65 per cent to 70per cent, with ADR hovering around $250 to $255.

Unlike the STB, which surveys all hotels, its forecast is primarily for those in the three-to five-star range.

Meanwhile, the hotel investment market will remain subdued going into next year, according to Jones Lang LaSalle Hotels' managing director of Asia investment sales, Mr Mike Batchelor.

He said there would be buying opportunities and postponement of new projects while a few deals are being discussed now.

In the general Asia-Pacific market, institutions and funds are selling while the buyers are Asia-based high-net-worth individuals and families.

Mr Batchelor told the conference that hotel owners should prepare for further asset value write-downs, but he sees light at the end of the tunnel.

So does property tycoon Kwek Leng Beng, who attended the conference. He told The Straits Times that he would restart the South Beach project in Beach Road next year.

City Developments, of which he is executive chairman, announced last November that it was shelving the $2.5billion leasehold project due to the economic turmoil and high construction costs.


Falling rates

Singapore Tourism Board (STB) data for March shows that the average occupancy rate for all hotels here fell 13percentage points to 74per cent, while the average room rate stood at $196, down 18.5per cent from a year ago.

Horwath believes occupancy this year and the next will average 65per cent to 70per cent, with average daily rates hovering around $250 to $255. Unlike the STB, which surveys all hotels, its forecast is primarily for those in the three- to five-star range.

Gradual Rise In Home Prices Seen

Source : The Straits Times, May 25, 2009

Hong Leong boss says many buyers out there, but luxury sector still listless

PRIVATE home prices in most sectors could start to rise gradually this year but high-end property will stay in the doldrums until later next year, according to tycoon Kwek Leng Beng.

Mr Kwek - executive chairman of the Hong Leong Group - said there are many cash-rich buyers waiting for the right time to buy.

'Every time the market turns, some people would get caught out,' he added.

The key question that many buyers are asking is: Has the market turned?

Urban Redevelopment Authority data shows that 1,207 new private homes were sold in April, making it the third consecutive month that sales have crossed the 1,000-unit mark.

It is a level reminiscent of the boom period and one that some analysts believe is unlikely to be sustained for long.

But Mr Kwek, who was speaking to The Straits Times on the sidelines of a recent hotel investment conference, feels that these levels of sales can be maintained 'if the world economy stabilises'.

'Confidence is the quick key to recovery. When you have confidence, you will invest,' he said.

Mr Kwek said developers are sometimes wrong but the key is to be more often right than wrong.

He also reiterated that property is an investment over the medium to long term, anywhere from three to 10 years.

Developers got the market message this year and have cut prices to meet buyers' expectations, following a stand-off that saw just 100-plus units sold in January.

'If you're listed, you'll have to sell something. Otherwise, every quarter, you have no sales,' said Mr Kwek.

Some developers have actually started to raise their asking prices slightly from their adjusted lows.

The strong sales so far this year have largely prompted two foreign investment houses to turn more positive on the residential market.

A recent UBS report points out that the sales momentum has been stronger than expected, with the possibility of higher prices in the second half of this year and next year.

It had already in a late April report called a 'buy' on the property sector, saying that demand from domestic upgraders - not foreign buying - will jump-start the recovery, as with previous recoveries in the 1990s.

Goldman Sachs has also projected a 5 per cent gain in Singapore private home prices next year, reversing its earlier tip of a 10 per cent fall.

'We think the alignment of developers' asking prices and buyer expectations would be key for generating sustainable demand,' said the UBS report.

Nevertheless, not all are optimistic about the market.

'This wave of purchases, once it's over, won't come back until the economy has recovered and embarked on its way up,' said a property fund manager who declined to be named.

The pent-up demand is coming mostly from owner-occupiers or small investors and these people usually cannot afford to buy more than one unit, he said.

'Foreigners are still leaving Singapore. When there are not enough real users for all the supply, prices will continue to fall.'

What is happening now in the real estate sector could be similar to the bear rally some analysts foresee for the stock market, he said, adding that the only good news is that mass-market prices are likely to hold at current levels.

Unlike high-end prices, which have fallen at least 35 per cent to 40 per cent from their all-time peak, the mass and mid-market sectors have had falls that are much less steep.

The price fall in high-end homes - which shot to more than $5,000 per sq ft during the boom from around $1,800 psf - is thus steeper, he said.

Average high-end prices may dip to around $2,300 psf, which is still higher than pre-boom levels.

Mr Kwek said the Hong Leong Group - which includes listed Hong Leong Finance, developer City Developments, Hong Leong Asia and London-listed Millennium & Copthorne Hotels - will hold off high-end home launches for now, preferring to start building first.

City Developments, the developer behind projects such as The Sail @ Marina Bay, has in its pipeline The Quayside Isle Collection in Sentosa Cove, a 99-year leasehold enclave where values have more or less collapsed.

High-end home prices were to a large extent boosted by foreign buying. 'Foreigners will slowly come back but not so soon,' said Mr Kwek.

The Indonesians, he said, are very slowly returning. Although the trend is barely discernible, it is a change from the previous downturn where they had all but disappeared.

Still, he cautioned against comparing prices with levels done a decade ago: 'Ten years ago and now, Singapore has changed. Fundamentals are good.'

The country will soon benefit from two integrated resorts, for instance.

'Worldwide, it is the worst downturn ever. But you see the amount of stimulus around. You can't see the effects immediately. It will take some time,' he said.

Changes To CPF Act Afoot

Source : The Straits Times, May 25, 2009

CHANGES to the Central Provident Fund Act were tabled in Parliament on Monday to provide for the proposed establishment of the CPF Life scheme and the Housing and Development Board's new Lease Buyback Scheme.

The CPF (Amendment) Bill is to allow for the setting up of a LifeLong Income Fund, which will be used to collect premiums and also make payments under the Lifelong Income Scheme, or CPF Life. --PHOTO: ST

The CPF (Amendment) Bill is to allow for the setting up of a LifeLong Income Fund, which will be used to collect premiums and also make payments under the Lifelong Income Scheme, or CPF Life.

This scheme, which will begin in 2013, seeks to provide CPF members from age 65 with a regular stream of income for the rest of their lives.

The Bill also includes changes relating to the Lease Buyback Scheme, which allows elderly owners of smaller flats to sell to the HDB the tail-end of their lease at market price.

The proceeds will be used to buy an annuity from the CPF Board.

Other amendments will further refine the Mental Health (Care and Treatment) Act and the Mental Capacity Act. Both were passed last September and are expected to take effect later this year.

Read the full report in Tuesday's edition of The Straits Times.

Location Is Key If Buying To Rent Out

Source : The Business Times, May 24 2009

Properties in prime areas or near MRT stations are more lettable and their capital values hold better.

Now that rents for condominiums are falling, investors looking for buy-to-let homes should be mindful of declining rental yields.

Prices at St Regis Residences range from $1,700 to $2,100 psf, giving yields of 2.8 to 3.4 per cent. -- ST FILE PHOTO.

'Rentals in the private housing market are now falling at an estimated average rate of 3 per cent per month, so expect your rental yields to continue falling,' warned Chesterton Suntec International's head of research and consultancy, Mr Colin Tan.

Still, falling yields shouldn't be an issue over the longer term. Said Knight Frank's director of research and consultancy, Mr Nicholas Mak: 'There will be short-term adjustments, but long-term, yields tend to be stable at 2.5 to 3.5 per cent on a net level.'

Low rental yield means either lower rental value per sq ft (psf) per month or higher capital value per sq ft, noted Ms Jacqueline Wong, who heads Jones Lang LaSalle's residential division.

For now, the fall in rents looks set to continue and even gather pace. Urban Redevelopment Authority (URA) data shows private home rents fell 8.5 per cent in the first quarter - the largest quarterly fall since the fourth quarter of 1998. Rents for non-landed prime homes fell the most, by 10.3 per cent.

CBRE Research expects rents to stay on a downtrend for the year. It sees a 3 to 5 per cent fall per quarter till year-end, which would add up to a full-year decline of 15 to 20 per cent.

If you are thinking of buying a newly completed unit for rental income, remember there are now fewer expatriates and smaller budgets, but plenty of supply.

Many new developments were bought by investors or speculators. 'Speculators are turning to the rental market to cushion their debt obligations while they wait for prices to improve,' Mr Tan said.

One property investor, who declined to be named, advised: 'If you're buying a resale home for rent, you should try to buy in at a 5 per cent rental yield so you will have, say, a 4 per cent yield when the rental contract ends and has to be renewed at a lower rent.'

This is because leases typically run for two years and rents take a while to catch up.

For those still keen on buying to let, Ms Wong's advice is to go for areas popular with expatriates, and be aware of the supply, both existing and upcoming.

Homes in prime districts continue to enjoy stable yields as expats still prefer these areas, she said, adding that projects in such areas posted an average rental yield of 3.5 to 3.7 per cent in the first quarter.

Still, posh homes in prime areas do not command the highest psf rents.

First-quarter URA data shows median rents at Icon in Tanjong Pagar and Strata in the Novena area came to $6 psf and $5.11 psf respectively. In contrast, the newly completed, upscale St Regis Residences commanded just $4.80 psf. Ardmore Park, a coveted property, went for $5.42 psf, down from $6.15 psf in the previous quarter.

'The rental rates for Strata and Icon may seem high, but most of the units are 45 to 100 sq m, whereas those at St Regis Residences and Four Seasons Park are 210 to 300 sq m, so the absolute quantum is smaller,' said CBRE Research.

Rentals are a function of location, unit size, age, condition, quality and other factors. And generally, yields from luxury homes tend to be lower because of their high prices, experts said. At St Regis Residences and Four Seasons Park, prices range from $1,700 to $2,100 psf, so yields would come to 2.8 to 3.4 per cent, lower than those at Icon, said CBRE Research.

Ms Wong noted that mid-tier projects with smaller units would have higher psf rental values than luxury market projects, as they would still be affordable. Such mid-tier projects would appeal to a middle management expat with a budget of $3,000 to $6,000 a month, she added.

For example, at $5.08 psf a month, a 689 sq ft one-bedder at The Sail @ Marina Bay would cost him $3,500 a month. At $4.83 psf a month, a 1,100 sq ft two-bedder at the swankier Cosmopolitan might appear cheaper at first, but he would have to fork out $5,300 for the larger unit.

All things being equal, 99-year leasehold properties enjoy higher rental yields than freehold ones as they usually cost less. A property's tenure - freehold or leasehold - does not affect the rental value as much as it does the price, experts said.

Location is key, said Ms Wong, so look for a property that is more lettable - one in a prime area or near an MRT station. 'The capital values of such properties will also hold better.'

实龙岗北25座组屋 明年进行更新计划

Source : 《联合早报》May 24, 2009
　
继后港6道成为阿裕尼集选区首批展开邻区更新计划（Neighbourhood Renewal Programme，简称NRP）的组屋邻区后，实龙岗北的邻区也获选进行同样翻新工程。

总理公署部长、财政部兼交通部第二部长陈惠华，昨天下午在实龙岗常年社区嘉年华会上，宣布以上消息。

陈惠华宣布，实龙岗北邻区的25座组屋获选展开邻区更新计划，2100户居民将受惠。（邬福梁摄）

实龙岗北1道第121至127座、第142至148座、第151至154座，以及实龙岗北2道第135至141座共25座组屋获选进行邻里更新计划，不过计划须获得至少75%居民的支持，才会展开。

2012年第四季竣工

一旦获得居民赞同，这批组屋将获得政府的705万元拨款，在明年第四季展开翻新工程，并于2012年第四季竣工，共有2100户居民将受惠。

在邻区更新计划下，可提升的组屋设施项目包括有盖走道、社区公园、烧烤台、健身角落、游乐园、卵石步道等。

居民希望建更多有盖走道

陈惠华也是的阿裕尼集选区议员。她在受访时说，该邻区将成立一个委员会负责收集居民对邻区更新计划的意见，这包括要为邻里增添什么设施，确保能满足居民的需要。

住在四房式单位的吴利达（40岁，技术人员）认为，实龙岗北邻区的走廊不多，每次下大雨，居民都觉得很不方便，希望当局可建造更多这类有盖走道。

他也指出：“母亲经常推着手推车到巴刹买菜回家后，往往得扛起笨重的手推车爬上楼梯，非常不便，所以希望建屋局可建更多斜坡走道。”

李显龙总理在前年的国庆群众大会上宣布，政府将推出邻区更新计划。与中期翻新计划不同的是，邻区更新计划的规模更大，将同时为两个或更多邻里改善设施。

居民也将有更大的发言权，可以决定要为邻里增添什么设施，所有的费用都由政府承担。1989年以前建造的组屋，将有机会展开邻区更新计划。

另一方面，陈惠华也主持了该区的常年“零垃圾月”推展仪式，要把该选区打造成无垃圾的居住环境。

她同时颁发“新加坡OK”标签给实龙岗北1道第147座组屋的咖啡店，以及附近的忠忠熟食中心。

“新加坡OK运动”是在2003年沙斯来袭时，为鼓励国人注意个人和环境卫生而推出的。

环境局本月1日宣布在小贩中心、巴刹、餐饮店和公共厕所重新启动“新加坡OK运动2009”。只有符合清洁卫生准则的场所，才会被贴上新的OK标签。